Henry Schein 2009 Annual Report Download - page 16

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We believe that consolidation within the industry will continue to result in a number of distributors,
particularly those with limited financial and marketing resources, seeking to combine with larger companies
that can provide growth opportunities. This consolidation also may continue to result in distributors seeking
to acquire companies that can enhance their current product and service offerings or provide opportunities to
serve a broader customer base.
In recent years, the healthcare industry has increasingly focused on cost containment. This trend has
benefited distributors capable of providing a broad array of products and services at low prices. It also has
accelerated the growth of HMOs, group practices, other managed care accounts and collective buying groups,
which, in addition to their emphasis on obtaining products at competitive prices, tend to favor distributors
capable of providing specialized management information support. We believe that the trend towards cost
containment has the potential to favorably affect demand for technology solutions, including software, which
can enhance the efficiency and facilitation of practice management.
Competition
The distribution and manufacture of healthcare supplies and equipment is highly competitive. Many of
the healthcare distribution products we sell are available to our customers from a number of suppliers. In
addition, our competitors could obtain exclusive rights from manufacturers to market particular products.
Manufacturers also could seek to sell directly to end-users, and thereby eliminate or reduce our role and that
of other distributors.
In North America, we compete with other distributors, as well as several manufacturers, of dental,
medical and animal health products, primarily on the basis of price, breadth of product line, customer service
and value-added products and services. In the sale of our dental products, our primary competitors are the
Patterson Dental division of Patterson Companies, Inc. and Benco Dental Supply Company. In addition, we
compete against a number of other distributors that operate on a national, regional and local level. Our
primary competitors in the sale of medical products are the General Medical division of McKesson Corp.,
PSS World Medical, Inc. and the Allegiance division of Cardinal Health, Inc., which are national distributors.
In the animal health market, our primary competitors are MWI Veterinary Supply Inc. and the Webster
Veterinary division of Patterson Companies, Inc. We also compete against a number of regional and local
medical and animal health distributors, as well as a number of manufacturers that sell directly to physicians
and veterinarians. With regard to our dental practice management software, we compete against numerous
companies, including PracticeWorks, Inc. and Patterson Dental division. In the animal health practice
management market, our primary competitor is IDEXX Laboratories, Inc. The medical practice management
and electronic medical records market is very fragmented and therefore we compete with numerous
companies such as NextGen Healthcare Information Systems, Inc., eClinicalWorks, Allscripts, LLC and
athenahealth, Inc.
We also face significant competition internationally, where we compete on the basis of price and
customer service against several large competitors, including the GACD Group, Pluradent AG & Co.,
Planmeca Oy, Omega Pharma NV, Billericay Dental Supply Co. Ltd., National Veterinary Services and
Alcyon SA, as well as a large number of dental, medical and animal health product distributors and
manufacturers in Australia, Austria, Belgium, China, the Czech Republic, France, Germany, Hong Kong
SAR, Ireland, Israel, Italy, Luxembourg, the Netherlands, New Zealand, Portugal, Spain, Switzerland and the
United Kingdom.
Significant price reductions by our competitors could result in a similar reduction in our prices. Any of
these competitive pressures may materially adversely affect our operating results.