Leading Suppliers Gain Market Share In Slow-Growth Hearing Aid Industry

Three of the world’s biggest hearing aid manufacturers are all claiming market share increases in a global industry that has rebounded from last year’s slowdown but that still is only seeing single-digit growth in units sold and, because of lower prices, even slower growth in overall revenue.

  • Sonova Holding AG, the world’s biggest hearing aid maker and parent of the Phonak and Unitron brands, reported organic growth of nine percent in the first half of its fiscal year compared to the previous year.
  • GN Store Nord said revenue from its ReSound hearing aid business grew 13 percent in the company’s third fiscal quarter.
  • And the William Demant Holding Group, parent of the Oticon, Bernafon and Sonic hearing aid brands, reported an organic growth rate in its third fiscal quarter “that exceeds the market growth rate.”

All three reported strong profitability and bright prospects for continued market share gains through the end of the 2013 fiscal year.

With three of the hearing aid industry’s dominant “Big 6” suppliers reporting such strong gains (the others are closely held and don’t report financial results), it’s clear that the six manufacturers with a combined share of more than 80 percent of the global market are continuing to consolidate their control of the industry.

However, the Big 6 — which also include Starkey Hearing, Siemens Hearing Instruments, and Widex — appear to be taking a bigger slice of a pie which, while it’s not shrinking, is hardly enjoying the kind of robust growth that’s been expected of the hearing industry for years.

In fact, even with faster growth among the leaders this year, expansion of  the hearing aid business is continuing at a relative snail’s pace, with estimates for 2013 market growth ranging from two-to-five percent. Which leaves open the question whether any breakout products or technologies are on the horizon with the potential to change the value equation and at long last jump-start growth in the hearing solutions market.

Currently, the only strong reported growth is in the mid-range and premium segments of the market where hearing aid prices can range anywhere from $1,200 to $3,000 USD each. The Big 6 focus their energies in the premium segment, where their continuing innovations in product and technology are rewarded with new revenue and healthy profits.

But all three noted that as costs of manufacturing digital hearing aids technology continue to come down and as competition increases at the low-end and mid-range, pressure is building to lower hearing aid prices. William Demant Holding Group said that in spite of strong growth in units sold, the pricing pressure has only allowed “moderate growth” in global hearing aid revenue:

It is estimated that the average selling price on the global hearing aid market dropped in the third quarter, particularly because the significant increase in the demand by the NHS (National Health Services in Europe) pulled the average selling price on the market down. Fiercer competition in connection with major tenders, changes to public subsidy schemes and increasing sales to channels that address more price-conscious end-users also contributed to this development. However, the unavailability of official statistics on market selling prices means that estimating trends in average selling prices on the market for hearing aids is rather uncertain. We estimate that in terms of value, the global market for hearing aids has seen modest growth in the third quarter.

With three quarters of the world’s hearing-impaired population currently living without hearing aids, one would expect to see stronger growth in both units and revenue. But only recently have component costs come down low enough to deliver quality hearing aids at prices that a broader market can afford. And the Big 6, comfortable serving the profitable high end of the market, have been slow to start competing with each other on price.

That leaves plenty of room for upstart competitors in the industry. Watch for new growth from new competitors in 2014 from several different directions:

  • Makers of personal sound amplification products (PSAPs) have been delivering more sophisticated digital products to the market at multi-hundred-dollar price points, versus multi-thousand-dollar sales.
  • Online merchants selling FDA-approved hearing aids at prices undercutting the Big 6 started to come into their own in 2013 and are gearing up for rapid expansion in the coming year.
  • And “big box” retailers, led by Costco, have started to build the delivery infrastructure required to provide complete audiology services and programmable hearing aids at lower costs than independent audiologists have charged in the past.

Do these competitors signal gloom and doom for the traditional hearing aid makers? It’s doubtful. The Big Six have a number of ways to continue their steady growth with strong profitability:

  • There’s plenty of room in such a large under-served global market for many, many new competitors, who can find new customers in new segments never served in the past by the Big 6 providers.
  • The Big 6 are finding new sources of revenue in other related high-end, high-profit market niches such as audiology testing equipment, cochlear implants, and bone-anchored hearing aids.
  • And the Big 6 also have the capability to drive more affordable products into their existing sales channels, working with their networks of audiologists to accelerate growth by finding more efficient ways to sell more lower-cost hearing aids to a far greater number of customers than in the past.

Will 2014 be a breakout year for the hearing industry? The ongoing success of the Big 6, even as new competitors race to market with products designed to amp revenue growth in an industry that’s been growing far more slowly than people think it should, gives me some hope that it may be.


  1. says

    This market is ripe for the introduction of Group Purchasing Organizations (GPO’S) as I personally was involved with in the early 1970’s’.I am considering creating a GPO,to change the dynamics of the entire hearing aids industry.Anyone want to join my venture ? Investors,former healthcare GPO mgrs?,hearing aids industry specialists,etc ?

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