Regional Factbooks

SUMMARY

The Romanian market for dental equipment is potentially very large and its needs are extensive because the majority of dental equipment currently used in public dental clinics is outdated, worn-out, and must be replaced. Demand for dental instruments and equipment is growing due to the rapid development of the private sector and to the forthcoming privatization of the state sector, requiring the replacement of worn-out equipment.

Most of the Romanian health care system is still state-owned, and financed from the state budget. A long-awaited health insurance reform plan introduced by the Ministry of Health is expected in late 1999. This reform is expecting to spur the development of a competitive market for medical care by boosting the private sector; however, the first visible changes are not expected to occur for another two to five years. Dentistry is one of the medical sectors experiencing a faster privatization process.

However, Romania's budget for health care is limited: For the last few years, the health budget has been 2.2 to 2.8 percent of GNP, one of the lowest in Eastern Europe, not to mention the Western countries. Out of this limited budget, 60 to 80 percent is spent for salaries. Although equipment purchases come in second on the ministry's expenditures list, this leaves very little money for investment in medical instruments and equipment.

1998 was the year of transition from the centralized medical assistance state system (Semasko) to the one based on social health insurance (Bismark). Starting from July 1, 1998, 31 national programs are funded by the state budget and the health care supply is financed by the social health insurance budget for different health medical sectors. The government also has provided funds for a program designed to prevent dental infection.

Out of the 3,600 private dentist's offices only about 500 have up-to-date instruments and equipment, the others being equipped with ancient instruments taken from state clinics. Thus, there is real pent-up demand in Romania for imports of new dental equipment produced in other countries, including the United States.

On the Romanian market the acquisition costs for the instruments produced in the United States and in Western Europe are roughly the same. The fact that the production cost of these instruments is lower in the United States is counterbalanced by the shipping expenses and especially by duties. Products from West European countries enter Romania duty-free.

The major obstacle that prevents Romanian dentists from purchasing up-to-date instruments is scarcity of credit. Romanian banks do not supply affordable credit for dentists; when loans can be arranged, typical interest rates run from 60-130 percent.

Companies providing installment purchase plans for dental equipment, or leasing options, or banks providing hard currency loans at reasonable interest rates are badly needed. We believe that the risks taken by such banks and companies can be minimized.

A good market for instruments and equipment producers is the dental faculties that are funded by the Ministry of National Education. Due in particular to the ever-increasing numbers of foreign students in Romania, these clinical instruction centers represent strong potential demand.

The present study refers to the dental equipment and instruments sector, analyzing HS 901841 and 901849 medical codes.

A. MARKET HIGHLIGHTS & BEST PROSPECTS

The following section describes the general environment of the Romanian health care sector, the most recent restructuring plan, the government's health policy and its influence on prospective dental equipment purchases, procurement regulations and statistical data.

I. MARKET PROFILE

As of this writing, there are 8,106 dentists practicing in Romania. Another 1,250 graduates from the country's 12 dental faculties (nine state-run, three private) will joint the dental workforce in 1999. Although the dentists' training is highly professional, their number cannot begin to adequately serve Romania's population. Currently, there is about one dentist and one dental surgeon for every 2,700 inhabitants.

Romania's dentists work in tandem with 3,635 dental technicians, of which only 185 have their own laboratories. Like the dentists, many dental technicians work in both the state and private sectors. A number of new graduates (roughly 5,000-6,000) are being shut out of the marketplace because they have no access to credit and face stiff opposition from older, more established technicians.

The Public Sector

According to the Romanian Ministry of Health Statistics Department, there are 6,627 public dental offices: 2,619 are part of general health units; 1,898 are part of polyclinics; 1,603 are in rural areas; and 707 are dedicated to serving children. These dental offices cannot provide the volume and quality of service that most Romanians need. Currently, 68 percent of all dentists work simultaneously in both the state system and in the private one.

As noted above, the state dental offices have outdated equipment and materials, which render them virtually useless in terms of providing adequate care to the public. Quite frequently, public sector dentists come to their offices only to receive their salaries ($80-$100 a month), and simply turn down patients if they lack the appropriate instruments to treat their cases. Currently, the most critical needs in this sector are for more dental offices, prosthetic laboratory equipment and supplies, and dental laser and X-ray equipment.

The Private Sector

As a result of the poor care provided by the public sector, private dentistry is a growth industry in Romania. There are now 3,600 private dental offices where almost 5,000 dentists work. These offices now handle 85 percent of Romania's dental needs. However, only 17 percent of Romania's dentists work exclusively in the private sector.

Although private dental offices are generally better equipped than their public counterparts, only 16 percent use equipment that is up to Western standards. Fees charged by private dental offices are higher than those charged by the public dental offices and although they are low in comparison with Western fees, many Romanians cannot afford them. Generally, a tooth filling costs $10-$20, a root canal $10-$15, and an X-ray $1-$2; prosthetics can range anywhere from $70-$120. Despite the relatively high prices, however, demand for private dental services and up-to-date technology is increasing among Romania's growing middle class.

The most pressing needs of the private sector mirror those of the public sector: construction of more dental clinics, dental prosthetics, and laser and X-ray equipment.

Some Background

For more than 50 years, dental care in Romania was provided free of charge by the national health system, through a network of medical centers at schools, workplaces, hospitals and clinics. This system proved unsustainable after the revolution of 1989. Due to the Romanian government's pressing financial problems throughout the 1990's, many public dental centers were closed, companies shut their medical/dental units to lower costs, and dental care in school was all but terminated.

In an effort to cope with the country's dental care problems, the government launched a dental assistance reform program on July 1, 1997. Its major goal was to privatize a significant portion of the country's dental industry by October 1, 1997, but it fell far short of legislation to move Romania from a centralized state system of medical insurance to one based on social health insurance. Thus, the government had to readdress the issue of dental care. New legislation offers children a 100 reimbursement and adults a 40-60 percent reimbursement for dental care. It continues the effort to privatize dentistry.

Although staff at the Ministry of Health have obstructed the implementation of the privatization program thus far, a new government order on the privatization of dentists' clinics, dental labs, and radiology offices is allegedly to be issued in October, 1999. By privatizing the dental sector, the government hopes to recoup the roughly $40 million it loses annually on public dental care.

The new legislation does not, unfortunately, allow medical clinics to be sold; under the Romanian Constitution, these facilities may be only rented or granted to physicians, dentists, and other medical practitioners.

The country's dentists will, however, be able to receive grants of medical space for periods of 35 years. As the newly created Social Health Insurance Office will not be able to finance many dental assistance services, many more private clinics may be established to cover the expenses of dental care. The clinics may have to operate for two or three years before the Romanian population fully grasps the advantages of subscribing to private insurance funds.

HEALTH INSURANCE SYSTEM

As of July 1, 1998, medical assistance is paid for by the social health insurance budget. Revenues for this insurance are borne by employees, who contribute seven percent of their income and employers, who pay an equivalent amount.

The first sector to operate under law 145/1997 is that of primary medicine - the family doctor.

Specialized medical care (dental care, too) will eventually be included. For information about the type of government special programs in health care, contact:

DENTAL ASSISTANCE CARE REFORM AND ITS PROSPECTS:

On July 1, 1997 the Romanian dental assistance reform program was completed; it suggested October 1, 1997 as the deadline for concluding the process of privatization. After the first three stages the process was interrupted. On July 1, 1998 another project of dentistry privatization was designed, but the ministry's staff has obstructed its implementation.

The Medical Practice Law and the Government Order on the privatization of dentist's, clinics, dental laboratories and radiology offices are scheduled to be issued in October, 1999. The privatization of dentistry will put an end to the lei 350 billion loss per year (about $40.42 million) which is caused by the inactivity of the public dentistry system.

Since financing the dental assistance services cannot be fully covered by the Social Health Insurance Office, private clinics are likely to be created in order to cover the expenses of dental care. They will have to operate for 2-3 years so that the people could understand the advantage of subscribing to private insurance funds.

Dentists, who will be granted the right to use former public clinics, will find themselves with 35-year old instruments whose service is going to be expensive. Under these circumstances the dentists will be encouraged to take credits for purchasing equipment in order to upgrade their clinics.

Development of denture production techniques for prosthesis manufacture increases the pressure on Romanians to purchase up-to-date dental laboratory instruments for technologies such as powdered metal, compounds, titanium, etc.

There are prospects for U.S. exporters in dental radiology and the use of lasers in dental practice. Only six percent of private dentists' clinics have adequate equipment for dental X-ray diagnosis. Bio-stimulating lasers are to be found in only two percent of the total number of dentist's offices and there are very few surgical lasers.

If Romanian dental technology and dentistry can be developed to the standards of even some Central European countries, Western European visitors, as well as U.S. and Canadian citizens of Romanian origin, may come here for dental care, given that Romanian fees are ten to fifteen percent of those charged at home. Western standard clinics already have special customers--businessmen, resident foreign citizens, western citizens, foreign company representatives or foreign diplomats.

METHODS OF PROCUREMENT

Dental equipment for public hospitals and clinics is purchased through a competitive bidding process. All tenders are announced in a central newspaper - Romania Libera. For information on the announced tenders, please contact:

For information on tenders financed from the foreign loans (World Bank, PHARE), please contact:

For more info on medical equipment, please contact:

Private dental clinics and dentists can purchase dental equipment independently from any source they wish or through any trading organization they choose. Information about private dentist's clinics is provided by:

II. STATISTICAL DATA

Statistical data on the customs codes HS 901841 and HS 901849 are not included in the Romanian statistical yearbook.

III. BEST SALES PROSPECTS

Best prospects were identified through an informal survey conducted by Commercial Specialist with dentists, and dental equipment distributors. The most often expressed needs are for:

• Dental units
• Prosthetic laboratory equipment and supplies
  
• Dental laser equipment,
• x-ray equipment

SECOND-HAND EQUIPMENT

Romania is still a good market for second-hand dental equipment. Used dental instruments will sell well in Romania to replace the worn instruments of the former public dentists' offices. However, university clinics and private dentist's offices must purchase only new equipment.

The used equipment importer has to be aware of Government Order no. 629/August 5, 1996. This order specifies that used equipment shall not be older than 8 years and it must have at least 50 percent residual function or value.

B. COMPETITIVE ANALYSIS

I. DOMESTIC PRODUCTION

The competitive position of Romanian manufacturers is extremely weak due to high production costs, lack of modern technology, medium to low quality products and lack of marketing skills. The range of dental equipment produced in Romania is very limited. Production is based on outdated technology.

There are only a few producers of dental equipment in Romania. The following is a short description of these companies:

CALORIC manufactures dental laboratory equipment. In recent years the company has invested in modernizing production and improving quality standards. CALORIC sells its products only on the domestic market.

SAM manufactures dental units (dental chairs, mobile units, water units, dental lamps, and junction boxes).

IOR manufactures dental units. They are the biggest supplier on the Romanian market.

II. THIRD-COUNTRY IMPORTS

Over 90 percent of the dental equipment in Romania is imported. The main dental equipment suppliers to Romania are:

• Dental equipment: Germany, Italy, and the Czech Republic
• Dental equipment for labs: Italy, Germany, the Czech Republic, and Hungary
• Radiology Equipment: Italy, Germany, and Ukraine

German companies are the strongest competitors for Americans. Competition for U.S. firms from third country suppliers, on a scale of 1 (heavy) to 5 (light), is considered 1 by Commercial Service Bucharest. German companies, e.g., Siemens, Kavo, and Kentzler Kaschner are the strongest competitors for Americans on the Romanian market. U.S. firms also face strong competition from Zhermack, Italy, and Chiradent, Czech Republic.

III. U.S. MARKET POSITION

U.S. dental equipment has good reputation for quality among Romanian dentists, and it generates more and more interest. The United States has a 10 percent share of the Romanian dental equipment market. Local dentists observe that U.S. dental units, which are wider and more comfortable than European ones, are becoming more popular in private dental clinics where patients are looking for quality service and a friendly environment. The strongest U.S. companies in this market are NOVIDENT and DENT-A-AMERICA.

The most successful companies in the dental equipment domain use major distributors in Romania, or sell through their European subsidiaries. U.S. companies interested in selling to Romania are strongly encouraged to find a Romanian partner to assist them in introducing the equipment to the local market and negotiating tendering procedures.

Price is the most important factor for potential buyers, due to the country's economic difficulties. The second factor is the local availability of service and spare parts. Another sale-making factor is short delivery term.

C. END-USER ANALYSIS

The current economic trends in Romania clearly indicate that the old state-owned dental-care system will disappear over the next few years. That is why the most promising end-users of moderns dental equipment are to be found in the growing private dental offices and private clinics. Currently they cover 85 percent of the dental assistance provided in Romania, and have already proved their keen interest in keeping pace with latest developments in the sector.

D. MARKET ACCESS

I. IMPORT CLIMATE

TARIFFS:

U.S. equipment faces unfavorable customs tariffs compared to imports from the European Union. While the customs tariff for dental equipment is 20 percent if imported from the United States, EU products are exempt from duty. In addition to customs duty, the following taxes are levied on all imported equipment: 11 percent VAT and 0.5 percent custom commission calculated on CIF.

REGISTRATION:

Dental equipment, new and used, for use in public hospitals and/or private clinics and medical centers has to qualify for a certificate from the Ministry of Health.

For new equipment, authorization requests/declarations are to be supplied by the representatives of the manufacturer or by the Romanian distributors. All instruments are to be clinically and technically tested. The testing procedure will last for 45 days. Registration fees are between $100 and $150. The registration certificate is valid for 5 years after the registration date. Additional tests for B type protection under CEI 601 standards are also necessary.

Used equipment can be imported with the approval of the Direction of Medical Equipment, Ministry of Health. It is compulsory that it be tested by the DMIIT (Direction for Medical Instruments and Equipment Testing) within the Ministry of Health. All instruments must be re-tested every two years.

To purchase the register of certified medical equipment and devices, please contact:

Dental equipment is tested by the following:

Dental radio-diagnosis devices will be tested by another dept.:

- OTHER REGULATIONS:

Registration of Private Clinics:

Private dental offices must be registered at the Preventive Medicine and the Medical Policy Center for each county.

To get in touch with the center for medical care of the city of Bucharest, please contact:

Private dental clinics are to be registered in accordance with the Ministry of Health Order no. 84/1998. Only dentists of Romanian nationality are authorized to practice in Romania under law 74/1997.

II. DISTRIBUTION / BUSINESS PRACTICES

Romania lacks a well-organized distribution network for dental equipment. While there are many small distributors employing up to 10 people, there are several large distributors covering 70 percent of the Romanian market. The largest are:

• Medimex 2000 Srl,
• Dental Partners Srl,
• Medica 3M Srl,
• American Praxa Dent Srl,
• Dentotal Protect Srl,
• Nika Det Srl, and Val Medica Srl.

U.S. suppliers are advised to familiarize themselves with the Romanian distribution network to take advantage of Romanian distributors' expertise in the Romanian market, Romanian law, etc.

III. FINANCING

Medical equipment procurement is primary financed from the State Budget, and World Bank or PHARE loans. As noted, state funding for clinics normally covers only salaries and drugs, with very little money left for purchases of medical equipment.

The private sector enjoys no special financing facilities. Private dental clinics, which are mainly small-sized or medium-sized companies, have to make their own financial arrangements when trying to upgrade their equipment.

Dentistry has not been included in the U.S. support for Romania, financed by the World Bank. The U.S. Agency for International Development (AID) has focused only on family planning and children programs.

Import financing procedures adhere to Western business practice. All payments go through a qualified bank. The bank asks for the original pro forma invoice in order to remit the money to the manufacturing company.

The most important Romanian banks that make external payments are Bancorex, BRD, Bucharest, and Ion Tiriac.

USEFUL CONTACTS:

For information on dental equipment please contact:

For information on health care policy, contact:

For information about government's special programs in medical sector, contact:

OTHER MEDICAL ORGANIZATIONS:

DENTAL ORGANIZATIONS:

Major Romanian Distributors of Dental Equipment:

Source: U. S. Department of Commerce - National Trade Data Bank, June 22, 2000

Demographics & Economic Situation

Source: Factbook.net