The hearing aid market - United States

1.2 The Global Market’s Rapid Growth

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The global hearing aid market was valued at $*.** billion in **** and is anticipated to grow to $**.** billion by the end of ****. This is equivalent to a CAGR of *.*%. Key drivers for this increase in demand include an ageing population; indeed, older people pertain to the demography that is most likely to need hearing aid.

Moreover, in **** it is expected that around *** million people in the world suffer from hearing disabilities, caused by rising noise pollution levels, genetic factors, ear infections and other complications. [***]

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Logically, in line with a past trend of growth in the market value of hearing aids, volumes sold have also grown. In ****, ** million units were sold around the world. Moreover, year on year growth from **** to **** was *.*%.

Again, global volumes growth is likely to increase due to two primary reasons: first, demographics are changing and by **** one in six people worldwide will be over **. [***]

1.3 The United States’ Growth Will Continue

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According to FBI the market size for hearing aids in the US amounted to $*.** billion in ****. Moreover, the market is expected to grow at a CAGR of *% until ****, valuing it at $*.* billion. [***] Relatively to the world, this market value in **** of $*.* billion is equivalent to **.*% (***).

Moreover, there is a large potential upside to this market: according to apnews about one-third of Americans above ** years use hearing aid devices due to various reasons. The user penetration is limited by the very high cost of the equipment (***); if cheaper alternatives are introduced, the market is most likely to experience even higher growth.

Volume

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In ** years, the volume of hearing aids sold have increase by **%. With regards to the previous graph on the US market size forecast, it is likely that this trend will apply to sales volumes as well, given that the two are closely related. We can thus expect volumes of hearing aids sold to be above * million in **** and the years following.

1.4 International Trade

UN Comtrade provides information on the exchange of goods or services among countries, in terms of value and volume. The following data is based on the code ****** labelled “hearing aids excluding parts and accessories”.

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The coverage rate is calculated by dividing exports by imports. From this, we can conclude that the United States imports more hearing aids than they export. In **** the value was **.*%. This follows by the fact that components and models are assembled and manufactured in other countries such as Vietnam, Canada, China, and the US. [***] Moreover, this trend is increasing, as we can see from a higher coverage rate in **** compared to ****.

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The United States’ main export recipients of hearing aids are Mexico (***).

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The United States’ primary countries from which it imports are Mexico and Poland (***).

2.1 Profile Analysis: The American Consumer

This section’s goal is to highlight and analyze consumer behavior patterns in the United States. Moreover, it breaks down demographics and which hearing aid products American consumers seek. Finally, it looks at trends which have, and will, shape the US market for hearing aids.

Receiver in the canal (***) dominates

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There are different models and types of hearing aids; the most commonly used in the US is the RIC (***)

Geography

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The state with the largest fraction of hearing impaired is West Virginia; around *.*% were suffering in ****. In the state of California, the equivalent number was around *%. From this graph it is clear that no region or cluster in particular in the US is suffering from hearing impairment. In other words, the problem is spread throughout the country.

Men overrepresented

Finally, it is important to note that men in the United States are at much larger risk than women to suffer from hearing impairments; according to the State of Hearing Report ****, in the age group **-**, men are twice as likely to experience issues compared to women. This is not biologically related, but rather due to the fact that men are more exposed to noisy environments.

2.2 Demand Trends

Ageing Population

In the United States, around ** million people suffer from some sort of hearing loss. Naturally, older adults make up the largest segment of these people. Around one third of people aged between ** and ** report problems with their hearing. When considering people at the age of **, this number increases to about half. [***]

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The hearing impairment amongst adults is likely to increase in aggregate numbers, since the population of the United States is ageing. Indeed, as can be seen from the graph above, in **** it is expected that **% of adults are aged above **, up from today’s value of around **%. Consequently, the demand for hearing devices will most likely continue to increase in the long run as well.

The Causes for Hearing Impairments

The most common causes for hearing loss adults are:

Infectious diseases [***] Harmful Medications Noise Exposure [***] Aging [***]

In other words, these four factors can be of relevance when considering where the market is heading.

3.1 Market Structure - Manufacturers

The market for hearing aids in the US is similar to an oligopoly; in **** around **% of the market was captured by six players, a figure which hasn’t changed much until today [***]. The “Big Six“ include Phonak, Sonova, Oticon, ReSound, Signia, and Widex. In other words, entry barriers are high, and it is hard for smaller players to capture market share. One reason for this is the fact that the industry is heavily reliable on large R&D expenditures, which makes it difficult for smaller firm with less liquidity to enter the market. Below follows a breakdown of the most used brands by audiologists, highlighting the dominance of the six largest brands.

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From this graph we can see that Sonova as a company is dominating the products sold and thus brand confidence. Together, they have three products on the market which was redistributed on average **% of the times by audiologists.

3.2 Market Structure - Distribution

In general, two categories of professionals can distribute hearing aids: audiologists and hearing aid dispensers. The former requires four year of graduate school, and the latter requires high school graduation and a six-month training program. Consumers buy hearing aid from hospitals or retail clinics in department stores, which range from small private vendors to large chain stores. [***]

Private vs Department of Veteran Affairs (***)

In ****, **.*% of sales of hearing aids were through the Department of Veteran Affairs. Consequently, the remaining **.*% were distributed privately. [***] The same source reports that both channels are experiencing growth: the private sector had average sales growth of *.*% in the ten years preceding **** and *.*% in the last five. Moreover, the VA grew *.*% and *.*% respectively.

Below follows a breakdown of how the private selling of hearing aids is distributed.

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The top six non-independent distribution channels included in this list account for **% of sales (***). This implies that the distribution of the retail of products by private players is fragmented. Indeed, small chains and independent distributors account for over **% of the market share. Independent channels are defined as not being part of a hearing aid manufacturer that is company-owned or franchised. Again, this goes to show that the distribution channels are ...

4.1 Types of hearing aid

Components which are common to all hearing aid devices include: a microphone (***).

As mentioned, one can decompose hearing aids into two macro categories – Customs and Standards. An additional distinction can be made based on the position of the aid. The picture below shows three different typologies:

In the same order as the one displayed on the image:

BTE (***): Behind-the-ear hearing aids are placed behind the ear and channel sound into the ear canal via a thin, transparent tube connected to a custom-made earmold. RIC (***): RICs hearing aids use a thin plastic tube that extends from behind the ear into the ear canal. ITE (***).

The choice of prostheses by the patient depends on several factors obtained through medical diagnosis - performed via an audiogram - and the discussion between the doctor and the patient. The determining criterions are:

- The intensity of hearing loss

- The need for discretion

- The patient's ability (***)

- The patient's lifestyle

- The patient's budget.

Below we further dissect the different models of hearing aids and provide an overview of the different attributes.

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As we saw in section two, the most commonly used model is the RIC, followed by BTE and CIC.

4.2 What hearing aid attributes are in demand?

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The above graph shows what attributes are sought after when audiologist select hearing aid for patients. Respondents were asked to give a score between zero to ten, where ten signifies the highest perceived priority, and one is the lowest importance. From this graph, it is evident that the respondents value sound quality above other qualities. Moreover, reliability and ease of use are also highly valued. On the bottom of the spectrum we find branding; in other words, the audiologists interviewed value product quality not necessarily based on the reputation of the manufacturer but the actual attributes of the device in question.

4.3 Product Comparison

Below follows a comparison of which brand performs the best in several categories, based on answers from a sample of audiologists. The criterions chosen are based on the three most prioritized attributes (***) from the previous graph. A remark regarding this comparison is that, although the brands included in the analysis below account for **% of the market value, they make up the premium segment of hearing aids. Hence, lower cost hearing aid devices are not covered here.

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When asked about sound quality, Oticon is the clear favorite, capturing **% of respondents vote. Phonak places second (***).

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When it comes to battery life, Phonak (***).

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Finally, Phonak is also regarded to be the best value for money brand, with (***).

4.4 Price Comparison

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4.5 Supply Trends

Bluetooth on the rise

Technological evolution in the past three years include the increasing popularity of Bluetooth technology and advanced digital platforms for better performing hearing aids. [***]

*D printing

*D printing is used in hearing aids to create increasingly customized models. For instance, this technology can be used to adapt the equipment to a client’s ear canal and degree of hearing loss. *D printing is starting to gain traction amongst producers; Sonova for example uses advanced *D printing technology to produce customized hearing aid devices, where models such as EnvisionTEC’s E-Shell *** Series and E-Shell *** *D Printer Material series are included in the product portfolio.

Hearing aid price bubble?

Audicus states that “in the last decade the price of an average Behind-the-Ear (***)

5.1 Current Regulation

Federal level

According to the American Speech-Language-Hearing Association (***), any potential hearing aid user must provide the distributor with the following information a written statement by a medical officer that the patient has been medically examined and is a candidate for a hearing aid. This examination must take place within * months that before the date of purchase of the hearing aid. The doctor will then refer to an audiologist or hearing aid specialist. to the patient. Nevertheless, distributors are restricted in their advertising and cannot make claims about addressing hearing loss. [***]

State level

California, Florida, Missouri, Texas, and other states have specific restrictions on the marketing of hearing aids in relation to the requirements of the FDA.

5.2 Future Regulation

The WHO restates the fact that hearing aids can only be distributed by licensed professionals. However, technological advances have facilitated hearing aid which can be self-fitted. For example, with older analogue hearing aids, calibrating and properly fitting a hearing aid could involve crafting a custom ear-mold to minimize audio feedback and manually adjusting sound levels, but regulatory models in most countries preclude such devices from being sold directly to patients. Nevertheless, the United States are leading the way in making such products more accessible to the public which will be implemented through regulated OTC markets. A key feature of this legislation is that the Food and Drug Administration will define explicit performance and labelling criteria this year (***) to ensure that hearing aids purchased over the counter are both safe and effective. Essentially, this would increase competition in the market, which, as we’ve seen previously, is dominated by six players.

6.1 Segmentation des acteurs

• Oticon
• WS Audiology (Widex Sivantos)
• ReSound (GN Hearing)
• Signia
• Starkey
• Amplifon
• Beltone (GN hearing)
• GN Hearing
• Demant groupe