The 3D printing market and more specifically, the medical 3D printing market, is still very much in a development stage as opposed to a mature state. Given this, a valuable exercise for existing and potential industry players is to examine the market along Porter’s Five Forces. This classic b-school framework shows where competitive power lies within an industry and thus how the industry is shaped going forward.
Figure 1: Porter’s Five Forces
Threat of New Entrants
This force is high. While there are barriers such as high R&D costs and IP protection, other key criteria for successfully entering into a new market look to be advantageous for new entrants in this area. This includes lack of a traditional manufacturing distribution channel needed as solutions can be printed and offered through e-commerce channels, lack of significant initial capital needed including labor costs, and the significant market growth forecast.
This force is high. The buyers here are medical and surgical centers, pharmaceutical and biotech companies, and academic institutions. Because 3D printing in the medical space is still considered a novel concept rather than a mature solution, there is little information on what price or quality buyers require before moving forward with a purchase. This gives them significant bargaining power over the minds of 3D printing companies. Moreover, much of the buyer base in concentrated in a small number of powerful institutions.
This force is low. The materials used for 3D printed solutions use commodity substances, though the printers require highly specialized components supplied by a small set of vendors. On a broader perspective, the 3D printing supply chain brings many of the components in traditional manufacturing in-house or near-house. This includes local printing and distributing solutions versus pushed-out-through distributed warehouse networks; low versus high transport costs; and customized production via “pull” demand from customers versus mass factory productions.
Threat of Substitutes
This force is low. The 3D printing technology in the medical industry is very much a brand new technology and it would take several years for another technology to prove it would be a viable alternative. Continuous advances in 3D printing itself are occurring, making any likely threat of substitutes from outside the industry unlikely. More likely, substitutes would occur from within the industry (e.g. quality of solutions in terms of material, durability, lifespan, etc.).
This force is medium. While companies such as Stratasys, 3D Systems, and Materialise have developed brand names for themselves within this industry, brand notoriety outside of this industry is less strong. Moreover, there are currently few major differentiators between solutions provided by each of the existing companies. One major differentiator is the time required to print a solution, however other key factors such as material selection, resolution, color variety, ease of use have not yet been established as unique selling points from any player.
Predicting the future of any developing industry is a challenging task. However, understanding the driving forces within the industry is valuable for determining areas of opportunity as well as areas of caution for firms who are in the industry and firms considering entering the industry.