4 in 5 Hearing Aids Are Digital

StromAccording to statistics from the Hearing Industries Association (HIA), US net unit sales of hearing instruments in the third quarter of 2004 totalled 574,000 units, exceeding last year’s third-quarter sales by 3% and setting a new industry record for hearing aids sold in a quarter. While a 3% growth rate doesn’t exactly provide a reason to pop the champagne corks, it is somewhat a relief to see that current unit sales are continuing to remain in positive territory after last year’s large double-digit market turnaround in the second half. During the third quarter of last year, hearing instrument unit sales broke records for quarterly unit sales (558,000 units) and quarterly unit percentage increase (12.1%). So, although it would be nice if this year’s third-quarter statistics (3%) were higher, I believe they can still be taken as a positive sign that the market is moving forward—and, hopefully, it will grow at a slightly faster pace in the future.

For the first three quarters of 2004, a net total of 1.63 million hearing aids were sold in the United States, compared to 1.49 million during the same period in 2003—for an increase of 9%. When the dispensing activities of the Veteran’s Administration are taken out of equation, unit sales by private dispensing offices/practices were 1.39 million units, for an increase of 7.9% over last year. HR projects that 2004 year-end unit volume figures will be approximately 2.15 million units, exceeding the 2-million mark for the first time in industry history, with unit volumes increasing over last year’s totals by about 7.5%. When including exports, hearing aid unit volume totalled 1.71 million units through the third quarter of 2004 compared with 1.56 million units in 2003, for an increase of 9.6%.

For the “average” dispensing business/practice, HR estimates that this increase roughly equates to 12-13 more hearing aids sold compared to the previous year. This corresponds with anecdotal reports from dispensing professionals in the field, many of whom say their volume numbers are up but their revenue growth is comparatively flat. The rapid stratification of the digital market and the increasing availability of quality economy digital aids may be the reason for this.

More than 4 in 5 Hearing Aids Dispensed Are Digital. Digital hearing instruments made up an impressive 84.6% of the US market in the third quarter, according to HIA statistics. By comparison, about 2 in 3 (66%) hearing aids dispensed in 2003 were digital, and less than half (45%) were digital in 2002. Thus, in a period of only 3 years, digital aids have gone from 45% to around 82% of the market. Meanwhile, analog programmable hearing aid market share is shrinking fast. In the third quarter of 2004, these hearing aids made up only 4.5% of sales, compared to 14% in 2003 and 26% in 2002 (year-end statistics). Analog non-programmable (“traditional”) hearing aid market share also decreased, but at a slightly slower pace. About 1 in 10 (10.1%) of hearing aids dispensed in the third quarter were of the traditional technology, compared to 20% in 2003 and 29% in 2002.

BTEs Make Up More than 1 in 4 Hearing Aids. Although behind-the-ear (BTE) hearing instruments didn’t make any substantial percentage gains during the third quarter, they merit a mention because of their recent surge in popularity during the last 2 years. BTEs now make up one-quarter (26%) of hearing instrument unit sales, up from 23.7% in 2002. The popularity of directional hearing aids, smaller BTE packaging combined with nearly invisible tubing options, and other new product offerings (eg, Sebotek PAC, starter aids, etc) may also be impacting this category.

The US hearing instrument market is set for possible 7-8% overall unit gains in 2004, unit sales will top 2 million in the United States for the first time ever, and digital and directional hearing aids are continuing to gain in popularity. Hopefully, this is all good news to build on as we head into 2005!

Karl Strom