We publish the first of two big features on the dentistry sector (see below). So what is happening?

Three factors stand out. Firstly, this remains a completely unconsolidated sector. Even in the UK, chains hold only around 15-20% of the market. Apart from Finland and Spain, (where Vitaldent claims 7-8% marketshare), in most countries chains make up between 1-5% of the total number of practices. Of course, the journey hasn’t even started in Germany, France, Belgium and Austria, where you have to be a dentist to own a dentistry clinic.

Secondly, there has been a wave of M&A in the sector, very recently. In Finland, Capman is in the process of acquiring Oral, Europe’s only quoted dentistry chain. In the UK, Oasis has just swallowed Apex, after gulping down Smiles in April 2014. That should take its 2014 sales to £240m. Meanwhile, EQT has bought into Swiss Smile, a Swiss chain which is now in India.And in the UK, Europe’s largest dental group, IDH is planning to sell or float for £1bn.

Thirdly, it is a sector which is rapidly internationalising with Oaktree backing Hesira, which plans to grow massively over three years and has just acquired Dental Clinic, the second largest chain in the Netherlands. Portuguese chain Malo Clinics is now in China, Columbia and the USA. Internationalisation has taken off. (In the second half of the report we look at dental tourism and Eastern Europe).

We think you can differentiate between chains which seek to grow by offering consumers something extra – typically long opening hours, a brand promise of quality, specialisations and a city centre location – and those which have grown by buying clinics and then cutting costs.  The latter includes many UK dental chains, who have grown their profits by keeping down dentist salaries. The sustainability of such a route is questionable when it leads to high staff turnover and forces dentists to work hard and fast to earn a professional crust.  Let’s hope it doesnt lead to a rash of negative online reviews, shall we?  Similar conflicts would exist in primary care generally between investors and the profession.