Align Technology Inc. Case

Introduction

Align Technology Inc. was founded in Santa Clara by two Stanford MBAs, Zia Chishti and Kelsey Wirth. The company designed, manufactured, and marketed the Invisalign System, a patented method for treating the misalignment, or malocclusion, of teeth (Exhibit 1). The system consists of a series of clear, removable trays called “aligners” that slowly moved teeth to the planned final position (Exhibit 1, 2). The process of fabricating the aligners involved highly complex three-dimensional scanners and software analysis to predict teeth movement over a timed sequence. This system has clear advantages over the traditional metal or ceramic brackets and wires by offering a more comfortable and highly aesthetic experience for patients (Exhibit 2).

The two founders came upon this idea when Chishti noticed that after forgetting to wear his orthodontic retainer for a few days, he could realign or return his teeth to its previous position by reinserting the plastic retainers. With his computer science background and Wirth’s business acumen, the two started Align Technology in 1997. Neither founders had any dentistry experience (1).

The market for malocclusion is substantial. It is one of the most common clinical conditions that affect around 75% of the U.S. population. Roughly 2 million people will seek orthdontic treatment annually, generating around $7 billion. Besides aesthetic concerns, malocclusion can have other detrimental dental problems such as tooth decay, tooth loss, gum disease, jaw joint pain, and headaches (1). Yet only a small proportion of patients will seek treatment because of aesthetic concerns, discomfort and pain, and other disadvantages associated with traditional orthodontics.

Align’s core target customers are orthodontist who traditionally offered brackets and wires, or “braces”, to fixed malocclusion. To improve treatment aesthetics, orthodontists use ceramic, tooth colored, brackets or placed brackets on the inside of teeth surfaces of patients. The average treatment time takes 2 years, costs around $4,000, and require many visits for adjustments to the planned outcome. By 2001, the company had trained 75%, or 6,500, of all participating U.S. and Canadian orthodontists who then treated roughly 35,000 patients (1).

Invisalign system is comprised of two products: the Aligners and the ClinCheck software. The ClinCheck software is an interactive Internet application that allowed orthodontists to diagnose and treatment plan patient cases (Exhibit 2). A dental impression of the patient was made and 3-D scanned into the ClinCheck software for simulation and manipulation so that the orthodontist and the software’s proprietary algorithm can agree upon a design for the fabrication and shipment of the series of trays for the orthodontist. This process take 6 weeks and costs $5,500.

In the early phase of the company, the primary channel