Since the enactment of the act on medical devices on May 29th, 2003, the medical devices have experienced a dramatic advancement. Among such, the dental device market has been persistently growing for the last several years along with the aging of the population, illness onset rate, technology advancement and such, and as people came to recognize the importance of dental hygiene.
Currently, the domestic dentistry level is close to that of developed countries, but only a part of related components, materials, and medical devices are produced domestically, and cutting-edge products mostly rely on imports. A rapid change in the dental device industry requires subsequent changes on the part of the companies such as reduced prices in infrastructure investments, etc. Such changes will clearly have a negative impact on the dental device industry, which will lead to the sales performance of the companies, and small-sized or non-listed companies will have difficulties in securing profitability, and eventually will be at stalemate or deteriorate to dying out.
This study utilized DEA and Malmquist productivity index in order to analyze the corporate efficiency against 15 domestic dental device companies. DEA is a static analysis on the efficiency as of the current moment, and Malmquist is a dynamic analysis on the changes in efficiency between two different points in time. The analyzed period is the recent five years from 2011 to 2015, and the input parameters used for the analysis are the number of employees, fixed assets, and sales management expense, and the calculated variables were set to the sales and current term net profit.
The analysis result on the efficiency and efficiency changes of domestic dental device businesses can be summarized as follows. First, as the result of the technical efficiency analysis, there were 8 efficient dental device companies on average, and from 2011 to 2015, the technical efficiency has increased. As for the net technical efficiency, the number of companies with the efficiency value of 1 was increasing every year, and from 2011 to 2015, the net technical efficiency has increased. There were 8 companies with the size efficiency value of 1 on average, and from 2011 to 2015, the size efficiency has decrease.
Second, the efficiency was found to be high with non-listed companies, companies with history of 15 years or longer, and large enterprises, and in case of companies with longer history or large enterprises, it is possible that the operation know-how’s and technology accumulation may lead to higher competitiveness in the market, resulting in higher efficiencies.
Third, the causes of inefficiencies were analyzed for inefficient dental device companies beside efficient dental device companies. As the result of the analysis, the company with the characteristics of decreasing profit of size over the 5 years was the large enterprise “Ostem Implant Co., Ltd.” In contrast, “Nibec” has the characteristics of increasing profit of size since 2012.
Fourth, as the result of analyzing the change in efficiency of telecommunication businesses, 5 and 6 companies, respectively, had Malmquist productivity index of 1 or higher in the period of 2011~2012 and 2012~2013. After 2013, 7 companies had Malmquist productivity index of 1 or higher, and the efficiency increased against the year before. Also, the trends of productivity index and technological advancement are similar, that is, the speed of the efficiency change is related to the speed of technological advancement, and until 2013~2014, the speed of the technological advancement increased, but in 2014~2015, the speed of the technological advancement decreased.
As for the implications of this study, first, it is impossible to achieve efficiency perfectly even for companies over a certain size in an overheated market. Second, the competition circumstances have been furthered within the dental device market. Third, small/mid-sized companies and large enterprises have greatly varying human resources and R&D related to dental devices. Fourth, the overall awareness and support for domestic dental device industry are still lacking. The limitations of this study are as follows. First, the analysis of the efficiency and efficiency change of dental device companies involves the limited field of dental devices, and there were no comparisons to other medical device companies. Second, a frequently raised issue in efficiency research is the estimation from non-econometric model, and it appears that comparative analysis of efficiency between companies through an econometric model is necessary. That is, Tobit regression Analysis or SFA (Stochastic Frontier Analysis) should be considered.