Market Upswing Continues
Hearing Industries Association (HIA) statistics for the first quarter of 2004 provide some good news to kick off May’s “Better Speech and Hearing Month”: hearing instrument sales have continued their brisk upward pace with a strong 13.6% gain over first quarter 2003 statistics. This follows an impressive rally in hearing instrument sales during the second half of 2003 that saw double-digit quarterly sales growth (12.1% and 9.9% in Q3 and Q4, respectively). When disregarding government (Veterans Administration) sales of hearing instruments, net hearing instrument unit volume still grew by 12.2% from January to March 2004. This is, indeed, good news for an industry that has experienced flat sales and nominal growth in unit volume during the last 5 years.

The Industry is Now 80% Digital: If the first quarter is any indication for the rest of the year relative to trends in hearing instrument technology, we can expect digital hearing instrument market share to move into the upper-80% range during 2004. About 4-in-5 hearing aids (79.5%) dispensed from January to March 2004 were digital. When looking at total sales of hearing aids for last year, HIA statistics show that 66% were digital, 14% were analog programmable, and 20% were analog non-programmable; in the first quarter of 2004, those same figures were 79.5%, 6.6%, and 13.8% respectively. Clearly, digital hearing aid sales are continuing to grow and dominate the dispensing landscape. In fact, analog programmable hearing aid sales may eventually drop off the dispensing landscape, being completely consumed by digital sales.

BTE Sales: Going European? For years, the US hearing instrument market has been distinctly different from the European market in terms of its greater reliance on ITE-type hearing instruments. Part of this is due to European health care programs that often tend to favor BTEs. However, in only the last 3 years, the percentage of BTEs prescribed by dispensing professionals in the US has increased sharply and is now in line with England, for example, and is closing in on some other European countries. More than one-in-four (25.9%) hearing aids dispensed in the First Quarter of 2004 were BTEs compared to one-in-five hearing aids (20.2%) for 2000. It appears likely that digital—and, in particular, directional—technology is driving this trend. The advantages of directional microphone technology in multi-listening environments has been well established in the literature. For example, MarkeTrak VI (February 2003 HR, page 22) suggests that, when a good directional microphone system is employed, programmable hearing aids can attain satisfaction ratings in the 81% range—a level comparable to people’s satisfaction with consumer electronics. Last year’s HR Dispenser Survey showed that about 29% of hearing aids contained directional microphones, and the 2004 survey (published in June) is likely to show an increase in this area. Directional hearing aids remain the only proven way to increase the signal-to-noise ratio in noisy environments, and it’s possible that BTEs may have some distinct configuration advantages over other types of hearing aids relative to directionality.

These positive trends in hearing instrument sales—as predicted by HR in its annual market summary (see March HR, pgs 18-26)—are likely to continue through the year. However, one should keep in mind that percentage increases in second-half sales as reported by HIA will take a significant downturn due to the high percentage sales gains experienced last year during that period (ie, sales in 2004 should remain strong, but it’s unlikely that the industry will continue to experience double-digit growth compared to the strong 2003 second-half statistics).

When looking at the last 5 years of flat hearing instrument sales, this all comes as extremely positive and welcomed news! w

Karl Strom
Editor-In-Chief