Satisfying revenue growth but with a few bumps in the road is one way to describe the first three months of the year for the Danish hearing apparatus manufacturer William Demant.

“The big headline in our wholesale business is strong unit growth, but unfortunately in connection with this instance we have seen markets and channels where the average price was below normal, so we have seen a decline which pulled a great deal of the growth out with it,” says Søren Nielsen, deputy CEO of William Demant, to MedWatch in reference to the company's interim report.

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The interim statement from the Danish hearing apparatus manufacturer is largely devoid of concrete figures, but gives an indication of the market and growth at William Demant.

At the major hearing aid conference AudiologyNOW (AAA), held in Phoenix in the US back in mid-April, William Demant unveiled its new hearing aid Oticon Opn, which is expected to hit the market at around the beginning of June.

“We are now seeing some buying restraint on the existing products. This is not that strange given that we announced Opn at AAA, which meant that in the US we saw a decline in sales in the high price segment. There’s nothing surprising about that. Of course, we expect to bounce back when Opn hits the market,” says Nielsen.

Implant business under pressure

The company’s surgical business for bone-anchored hearing aids and implants has felt the squeeze partly because of the economic slowdown on the oil-dependent markets. Nielsen points out that the business for bone-anchored hearing aids is doing well with new products, but that the CI business (cochlear implant) is the one causing discomfort.

“We must acknowledge, that if we compare our performance with last year, that some tenders have changed and that many markets are not the same type of market they once were.  And we are very exposed, in terms of the oil-dependent markets in North Africa and Russia, where we have not been able to set aside the same amount as with last year’s existing products,” he says.

Referring to the the commercial launch of Oticon Medical’s own cochlear-implant Neuro One, the press release asserts:

“To launch a new CI-system is, however, a relatively slow process, actually a little slower than expected – and the cost of launch activities will continue to sit high.”

A launch takes times

 Neuro One will function as a battering ram to push into completely new markets where William Demant has not yet secured a presence with its implant business. 

“Things take time, allowing for the process entering clinics and getting surgeons to perform the first operations, and then our own ability to be there for training, education and attendance at the first operations. The process of ensuring that everything is going smoothly is naturally very delicate, and we would rather have that, than to rush forward,” says Nielsen, adding:

“Better to ensure that we come in successfully, because we are completely new in Denmark and in Germany and in a range of European countries, which are markets we want to open, but which we will open with the new product. This means quality and success rather than speed.”

Is the nature of the launch of Neuro One disappointing to you?

“No, it is a minor deviation which is going really well. We’re still getting positive responses, but it is just taking a longer time than we had perhaps expected,” he says and elaborates:

“We must simply forge ahead with the new implant within the markets where we already have a presence with the old, and open new  markets with the new implant. It’s just a matter of hard work. There’s no magic to it.”

Farewell Audionova

Last year, the world’s largest hearing apparatus manufacturer Sonova announced that it had purchased the Dutch hearing apparatus Audionova – a dealer chain, which was also rumored to be interesting to William Demant.

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Did you make a bid on Audionova?

“We look at everything that goes up for sale. Some things we find interesting, and some things we don’t find interesting. Sometimes we are able to buy and sometimes we aren’t, and it was the same in this case. It is the sellers who choose the buyer.” 

William Demant is well aware that the acquisition will likely mean that Oticon hearing aids will disappear from the Audionova shelves.

“Certainly, when manufacturers buy up in retail, one of the goals is obviously to convert the retailer to its own products over time. That’s also our goal with the purchase of Audika and surely their goal with the purchase of Audionova,” says Søren Nielsen, adding:

“In the long term we must recognize that we will not sell nearly as many apparatuses – if any – through Audionova in the future, so we must make the most of other opportunities. An acquisition like that will always ruffle the market, and we must see whether we can get anything out of it instead. We are of course banking on that,” he says, but points to the fact that William Demant will not be pushed out overnight. 

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“It can be said, however, that just as Audika had a range of duties with respect to their current supplier, Hal (Hal Investments – ed.) also has the same and Audionova has a  range of duties projecting out into the future, and we expect and believe that they will comply with these,” says Søren Nielsen, adding that Sonova has not been stingy in terms of the takeover.

“If you compare it with our purchase of Audika in France, they have in any case, paid a high price, but that is their assessment of what it is worth,” says Søren Nielsen.

Sonova has acquired Audionova for EUR 830 million, while William Demant paid EUR 90.7 million for a 53.9 percent stake in Audika and has since increased its share to a price of EUR 17.78 per share. 

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