DOF Inc's Interconnected Innovations for Advanced Crown Production

South Korea currently faces a unique demographic situation. On top of becoming the world’s first country to see its fertility rate fall below 1.0, experts estimate that by 2025, more than 25% of the South Korean population will be over the age of 65, turning the nation into one of the first super-aging societies in the world. This trend holds significant implications for the medical industry. While this demographic challenge may appear daunting, it also presents a distinctive opportunity for the Korean medical and pharmaceutical sector. What challenges and opportunities does Korea's unprecedented demographic scenario offer to medical companies?

The primary challenge associated with an aging population is a shortage of workers. We are already experiencing difficulties in recruiting developers. Simultaneously, I believe there are significant advantages in the medical sector, given that an aging population implies a higher number of patients in Korea. I believe that medical devices can play a pivotal role in addressing the challenge of increasing patient numbers by reducing treatment costs and improving efficiency. Korea, in my view, possesses distinct advantages in these two aspects.

In other industries, I believe that Korea can excel in providing cost-effective products, meaning we can offer high-quality products at competitive prices. In many general areas, Chinese companies can indeed offer cost-effective products. However, in the medical sector, credibility holds paramount importance. Consequently, I find it challenging for Chinese companies to enter this market due to their lower credibility.

South Korea’s medical device exports increased by approximately 79 percent between 2019 and 2020. With this recent surge in international medical device demand, Korean medical companies have become highly competitive on the global stage. How important is international cooperation for the development of the Korean medical industry?

As you all know, people from different countries have distinct dietary preferences, which necessitate more customized solutions. Let me illustrate this with dentistry as an example. Various countries have different staple foods. For instance, Korea, Japan, China, and the United States all have their unique dietary habits. Consequently, the materials used for artificial teeth, including their hardness, must be adapted to these preferences. To provide the most appropriate treatments for each patient, we collaborate with doctors and dentists from around the world.

Take the example of Koreans, who tend to consume hard foods. Therefore, our milling machines need to be capable of processing hard materials. In contrast, people in Western countries often consume softer foods, so milling machines must be designed to work with softer materials while maintaining higher speeds.

Furthermore, dental treatments encompass not only addressing cavities but also aesthetic treatments. Preferences for tooth style and color vary from one country to another. In Korea, many patients opt for dental implants because they are covered by medical insurance. Thus, it's vital to develop efficient machines for performing implant treatments. However, in the United States, where the geography is vast, dental clinics and dental laboratories are often quite far apart. To address this challenge, systems have been developed to transmit dental images digitally between these locations instead of physically transporting dental impressions.

The overall process works as follows: a dentist at the dental clinic treats a cavity, makes a 3D digital impression, and directly transmits it to the dental laboratory. The laboratory then fabricates artificial teeth and returns them to the dental clinic, where the dentist fits them to the patient. This streamlined process eliminates the need for physical impressions.

In dentistry, adapting products to different markets is crucial due to varying regulations and customer needs. South Korean companies like InBody and Osstem have succeeded globally. What are the key factors for international success in dentistry, and how do companies like Osstem achieve it while others struggle?

Two key factors come into play here. The first factor is the exceptionally high caliber of dentists in Korea. In Korea, top high-school students often aspire to attend medical school, resulting in an abundance of highly skilled doctors in the field of dentistry. I firmly believe that Korean dentists rank among the best in the world. Given the sophistication of these clients—meaning the doctors themselves—medical device manufacturers must continually strive for excellence to meet their demands.

The second reason relates to regulations. Medical devices are subject to various regulations, which differ based on the devices' impact on the human body. As you previously mentioned, there exists a wide array of medical devices, and South Korea heavily relies on foreign medical devices and technologies. Nevertheless, I believe that South Korea particularly excels in fields with lower-level regulations, such as dentistry and cosmetics, leveraging the strengths of our manufacturers.

In 2021, the South Korean medical device market reached a size of 9.1 trillion KRW. However, critics like Professor Sun Kyong of Kyung Hee University argue that this growth has largely benefited foreign companies, rather than domestic ones. Why do you think Korean companies have not been able to establish a dominant position in the Korean market? How can Korean companies regain their share of the domestic market?

Foreign companies undeniably hold a dominant position in South Korea, particularly those hailing from Western countries like the United States, France, Germany, and Switzerland. These nations boast a rich history of developing medical devices, having done so for many years. In the early stages of medical device development, regulatory frameworks were not as well-established. Over time, regulations evolved alongside the devices themselves. This allowed these foreign companies to emerge as leaders in the field, securing a strong foothold in the South Korean market. Given the existing regulations, it is challenging for Korean companies to rapidly reach the same level as these established market leaders, especially in the short term. As I mentioned earlier, medical devices are subject to various regulations based on their risk levels. For high-risk devices, Korean companies face lengthier regulatory hurdles, even if their device quality matches that of Western counterparts.

Moreover, it is worth noting that medical devices with higher risks often come with higher added value. This emphasizes the pivotal importance of product credibility for such high-risk devices. It requires decades of treatment data to trust and use these devices, even if they offer superior functionality and performance. For example, one of my acquaintances attempted to import an affordable MRI machine from China, intending to sell it in Korea at a fraction of the cost of other MRI machines, only to face insurmountable challenges.

I believe that South Korea should pursue a two-pronged approach. Firstly, large conglomerates and the government should collaboratively plan and implement a long-term strategy for developing high-risk medical devices. Secondly, private companies, like ours in dental, cosmetics, and other sectors, should focus on developing mid-risk devices and penetrate these markets. We believe we've already made significant strides in this direction.

Over the past five years, the South Korean medical equipment industry has made significant strides in specific areas. South Korea is now a global leader in In Vitro reagents, dental implants, and various types of X-ray imaging for dentistry. When looking ahead to the next five years, which specific products or segments do you believe hold the potential for South Korean dominance?

I believe that dental implants have been a major driver of growth in the dental industry for the past 10 to 20 years. Looking ahead, I see the CAD/CAM (Computer-Aided Design/Computer-Aided Manufacturing) technology as having the most significant growth potential. Historically, human dental technicians manually manufactured artificial teeth, a task that demands extensive knowledge and craftsmanship. However, as we enter an aging society, there is a shortage of skilled human labor to perform this job. This is where I see substantial opportunities in the CAD/CAM market, which involves producing artificial teeth using computer software and machines, over the next five years and beyond.

In South Korea, there are prosthodontics programs in colleges, but currently, there aren't many students aspiring to study prosthodontics. Even if students graduate with this specialization, they often do not want to become dental technicians due to the challenging nature of the work and less-than-ideal working conditions.

CAD/CAM technology can significantly simplify this process. When a patient has a cavity, the dentist can remove the decayed portion and scan the remaining tooth with a 3D scanner. The scanned data is then transferred to a computer, where it digitally designs a replacement tooth. It's even possible to utilize AI for optimizing the design. The final design is then sent to a milling machine, which manufactures the artificial tooth. This streamlined process not only accelerates the procedure but also ensures consistent quality, eliminating issues arising from variations in knowledge or skill.

This digitalization addresses the challenges associated with an aging population. Furthermore, it has positive global implications. Developed countries, including South Korea, have had skilled human technicians to create dentures. However, in other regions like Southeast Asia or Latin America, such skilled practitioners have been scarce. Patients in these areas have often resorted to tooth extraction due to the high cost of treatment. With the advent of digitalization, more efficient and cost-effective treatments become possible for these patients. I anticipate that this will create a much larger market than the current dental device market, with an influx of new patients who previously had limited access to treatment.

Currently, AI and digital technologies are prevalent in various fields. You've previously mentioned that digitalization will reshape the industry. Can you explain how AI is integrated into your product and elaborate on your plans for further developing AI technologies?

Let's delve into the current state of AI utilization in our product. When we scan the oral structure, our primary objective is to capture images of the teeth and gums. However, the scanner also inadvertently captures images of the tongue and cheeks. These tongue and cheek parts constitute unwanted noise data that must be removed. Conventional algorithms struggle to distinguish between the gums and the cheek since they share similar colors and forms. To overcome this, we have trained AI using historical data. This AI is then capable of effectively filtering out the tongue and cheek from the scans.

In the future, we envision an extended role for AI in the design of dentures. Currently, following a dentist's removal of a decayed portion of a tooth, a human dental technician scans the removed segment and uses a computer program to design ceramic material for replacing the missing part. This meticulous process ensures a precise fit with the original tooth and adjacent upper/lower teeth. However, our goal is to leverage AI for the automatic design of dentures.

Given that DOF Inc. provides dental scanners to numerous countries globally, the data collected by our machines can be transmitted to a central server, enabling autonomous design. Historically, human workers were responsible for this design work, with associated costs ranging from $5 to $10 per task. Unfortunately, the availability of skilled human workers in this domain is decreasing. By implementing AI-equipped machines, we can significantly reduce the cost to approximately $1 per task, making this technology accessible to dental professionals worldwide.

Moreover, for a dentist who acquires our dental scanner and milling machine, the scanned data can be transmitted to our server. Subsequently, AI will facilitate the denture design process and send the design directly to our milling machine for fabrication.

FREEDOM X5

Your firm specializes in three distinct dental solutions: dental scanners, including the main product Freedom X5, face scanners for regenerating 3D images, and milling machines used for crafting implants. Can you explain the synergies created by having these three interrelated components in the dental process?

As I mentioned earlier, credibility is paramount in the realm of medical devices. Currently, a dentist might purchase a scanner from company A and a milling machine from company B. If a negative outcome or impact on a patient occurs, the dentist is faced with the challenging task of identifying the root cause, often involving analysis of devices from different manufacturers. This process demands both time and effort. In light of this, many healthcare professionals prefer the idea of a single manufacturer assuming full responsibility for medical devices throughout the entire process. This becomes one significant advantage of offering a range of related devices.

Another notable advantage is the ability to provide a simpler and more efficient workflow. By manufacturing the entire set of machines, we streamline the entire process, encompassing all the necessary devices.

At present, patients typically have to return to the dentist one or two weeks after their initial visit for a dental impression, as it takes that long to manufacture dental prostheses. However, with our planned advancements, we envision the entire treatment process being completed within just one or two hours in the near future. For instance, if you visit a dentist located in a department store, you could consult with the dentist, spend an hour or two shopping, and then return to receive your crown. This significantly benefits both dentists and patients, as the process becomes much simpler and less time-consuming. Moreover, South Korea is witnessing an increasing number of medical tourists, for whom time is of the essence. Our technology can greatly benefit this demographic as well.

Dental lab scanners typically come with a set of limitations. Firstly, to obtain an accurate 3D scan, you traditionally need to reposition the piece and capture different camera angles, often requiring fixation on a jig from multiple angles and sources. Secondly, the scanning and the construction processes are traditionally carried out separately. Could you please explain how the Freedom X5 overcomes these conventional limitations of dental scanners?

The concept of camera movement initially dawned on me a decade ago when I founded this company. Back then, dental CAD/CAM technology was still in its nascent stage, with just a handful of 3D scanners available worldwide. I recognized this as an opportunity for innovation. Up until that point, products typically involved fixing the piece in place using a jig, while I proposed moving the camera instead. This shift in approach was possible because the market was still evolving. As we introduced camera movement, it had several other positive impacts as well. We initially launched our devices in the United States, followed by Japan and Germany, and Korea came into the picture afterward. The introduction of camera movement marked our initial success in more advanced countries.

Our model scanner previously required silicone impressions. However, we have been developing a new technology, set to be released this month, which incorporates a small 3D camera placed inside the mouth for scanning the oral structure. This innovation eliminates the need for impressions. The intraoral scanner will be seamlessly integrated with the rest of our products.

Once the 3D scan data is transferred to the machine and uploaded to our platform, technicians across the globe who use our devices can access it. For example, a dentist in the United States can upload the data, and dental technicians in Korea or China can apply for bids using their own designs. The U.S. dentist can then select the technician for their patient based on both quality and cost. I firmly believe that this digitalization will have a profound impact on our industry.

In developing countries where skilled technicians are scarce, patients often struggle to receive proper treatment. However, if a dentist in a developing country has access to this 3D scanner, patients can receive high-quality treatment. In summary, we've witnessed significant growth in the field of dental implants, and the next frontier for our industry is CAD/CAM technology.

As per what you've said, DOF Inc. appears to be akin to Apple in the dental industry, offering a comprehensive ecosystem with various solutions. With your range of solutions, which can be quite extensive and costly, doctors can reduce treatment time but may incur higher expenses. However, in developing countries, clinics may opt not to invest in higher-quality equipment due to cost constraints. How does your product cater to this diverse customer base?

In several Southeast Asian countries, our products face challenges in achieving high sales due to price barriers. Many clinics in these regions tend to opt for Chinese-made devices. Recently, we established a branch in Malaysia and took a different approach. In this branch, we've set up a milling center. Dental clinics only need to purchase an intraoral scanner. Once a dentist scans a patient's oral structure, they transfer the data to one of our milling machines in the milling center. The machine then designs and processes the artificial tooth, delivering the finished product to the dentist.

Another approach we plan to implement is offering discounts, installment payment options, or leasing the scanner in exchange for committing to a certain number of scan cases per month.

In fact, we already provide a rental service in Korea, where dental clinics can rent our scanners for $90-100 a month, with the flexibility to return the device whenever they wish. This rental model has been highly successful.

CRAFT 5X

How do you envision expanding this rental business model to other countries?

Currently, we operate this model exclusively in Korea due to payment limitations in overseas markets. However, we are in the process of planning to integrate this model with the milling center in our Malaysian branch.

Could you please share more about your internationalization strategy for these three advanced economies and your expectations from each of these markets?

Dental markets tend to be more significant in advanced economies compared to developing countries, primarily because dental care often comes at a substantial cost. Currently, we are homing in on a noteworthy observation in these advanced countries: people in these regions tend to prioritize dental health from an early age. This emphasis on dental well-being is particularly prominent in the aesthetic aspect of dentistry, where the market for cosmetic procedures surpasses that of strictly treatment-based dental care. When considering facial aesthetics, teeth are often regarded as just as important as one's hairstyle. Therefore, I anticipate that the aesthetic dental market will continue to expand in the advanced nations in the future.

Furthermore, it's worth noting that, historically, dental technicians have crafted dentures without ever seeing the patient's face. They relied solely on scanned images of the oral structure, without any knowledge of the patient's appearance. However, our face scanner allows dental technicians to view the patient's actual face, facilitating the creation of dentures tailored to the patient's unique features. This not only enhances patient satisfaction but also represents a significant advancement in dental technology.

In addition to the growing demand for cosmetic dentistry, advanced economies continue to require dental treatments for therapeutic purposes. Dental clinics in these countries often take dental impressions and send them to countries like China, where large dental laboratories are located. These labs receive dental impressions from the United States and European nations, manufacture artificial teeth, and ship them back to their respective countries. This approach is favored by advanced countries due to cost considerations. However, I firmly believe that digitalization has the potential to transform this industry as well. By investing in our scanners and milling machines, dental clinics can streamline the process, saving both time and cost. They can receive artificial teeth without the need for international outsourcing, which can ultimately make the entire process more efficient and cost-effective.

Your company is relatively young, having been founded in 2012. Let's imagine that I return for an interview with you again in 2032, on your 20th anniversary. What ambitions or goals would you like to have achieved by then? What message would you like to share in that second interview?

To begin, our corporate motto is "together we innovate." In the medical device manufacturing sector, I believe that it's the desires and needs of practitioners and doctors that drive the market forward, often more so than technological innovation. Therefore, our approach is to develop our products by incorporating the feedback and opinions of our clients, the doctors. If we continue to adhere to this strategy, I am confident that we can establish ourselves as a global leader in the market. In fact, we are already integrating a wealth of client input into our product development process. From the consumer's perspective, when their voices are heard, it enhances the credibility of our products.

Moreover, my background is in engineering, not dentistry. I have transplanted our company's technology into the field of dentistry. With our 3D technology, we have plans to extend our reach into other industries as well. For instance, we are interested in combining robots with 3D scanners for applications in the manufacturing industry. I hope that a decade from now, DOF Inc. will have evolved into a large organization that applies 3D technology not only to the dental field but also to a wide range of other industries. Our vision is to expand our impact across various sectors and continue to innovate in partnership with our clients, echoing our motto of "Together, We Innovate."

For more details, explore their website at https://doflab.com/