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We estimate
that the worldwide orthodontics market is a $50 billion opportunity.
OCAs business model is readily transportable, particularly given the
extensive reliance on technology and our ability to communicate via the
web and electronically. We have few competitors internationally, and when
we move into an international market, we have encountered strong demand
for our services and strong interest among practitioners.
Our approach is to move carefully and expand gradually,
getting to know the characteristics of each market and its economic and
cultural issues before moving forward. Japan is a perfect example. We entered
the Japanese market in 1998. By year-end 2001, we had 34 affiliated centers
and 20 affiliated orthodontists, all through de novo development. Our experience
in the vast, untapped Japanese market demonstrates the transportability
of our business model. While the typical Japanese practitioners will start
only one to three new patients per month, our top-performing centers in
Japan now average 30 new patient case starts per month. In 2001, fee revenue
from our Japanese affiliated orthodontists grew rapidly and we experienced
a significant increase in call volume from prospective patients. As an added
benefit, we are helping to promote affordable, high-quality patient care
to an underserved population that views orthodontics as something only the
affluent can obtain.
We entered Mexico in 1999, taking a similar measured approach.
With a strong local management team, three affiliated centers and two affiliated
practitioners, our Mexican affiliated orthodontists have achieved profitability,
and we have many practitioners wanting to join us. We see strong prospects
for future expansion there.
In 2001, we entered the European market with the opening
of our first centers in Spain, and we expect to open additional centers
there this year. We are exploring opportunities in Taiwan, Korea and the
United Kingdom. Its all part of a gradual process that involves entering
new markets one step at a time and creating opportunities for long-term
growth. |