chemelot ventures master thesis
TRANSCRIPT
Master Thesis Global Management
Understanding how startups utilize innovative materials and process technologies to disruptively impact industry and market dynamics.
The research will reveal the market dynamics of the orthopedic implants market, the trends of various
materials used for implants and the advancements in process technologies related to implant manufacturing. Furthermore, this analysis will be the foundation for measuring the attractiveness of
startups as viable investment opportunities.
Internship: Submitted in order to obtain the degree of Master of Global Management
Academic Year 2015-‐2016
June 10th, 2016 Master Of Global Management Antwerp Management School
Master Thesis Group Members:
Emanuel Ponzo Dieu (Antwerp Management School) Michael Calo (Antwerp Management School)
Master Thesis Supervisors:
Drs. P. Vervinckt (Antwerp Management School) Drs. L. Berghman (Co-‐Reader University of Antwerp) M.Sc J. Williams (Chemelot Ventures)
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Executive Summary
The main objective of this thesis is to understand the orthopedic implant market from a market
dynamics, materials and process technology point of view in order to identify startups that are potential
investment opportunities for Chemelot Ventures. The central research question of this thesis is: ‘‘what
are the critical criteria for selecting startups in the orthopedic implant market?’’
To solve this research question, the Business Model Canvas framework of Alexander Osterwalder
and Yves Pigneur, 2010 has been applied. Qualitative research has been conducted by interviewing
various industry specialists in order to understand the trends in market, materials and process
technologies that are impacting the implant industry. The criteria identified in the interviews with
industry experts have been combined with the Business Model Canvas framework as well as objective
criteria from the LuxResearch and Pitchbook databases. The management team, technological value,
addressable market size and growth rate, industry competitiveness, regulatory factors, IP positions and
key partnerships have been identified as being the most important criteria for potential startups to
become successful in the orthopedic industry.
The aforementioned criteria have been used consequently for analyzing 208 startups in the
LuxResearch and Pitchbook databases, as well as additional sources. Each startup could score 1-‐5 points
on each criteria with an average score of approximately 27. From the 208 startup companies, 11 have
been chosen for more analysis due to their above average scores and alignment with the Chemelot
campus. Out of the 11 startups, 4 have been identified as having the highest investment potential for
Chemelot Ventures. These 4 startups, BRECA Healthcare, Nanovis, Meotec and Syseng are thus
recommended for further analysis and contact by the Chemelot Ventures investment team. These
startup companies fulfill the critical criteria for selecting startups in the orthopedic implant market, as
well as align with the Chemelot Ventures investment profile.
By using the PESTEL analysis to understand the market dynamics, the regulatory environment
surrounding implant certification emerged as the greatest determinant of the future trends in
orthopedic implant manufacturing. The tendency dragging the potential down is the resistance by
medical teams to adopt new technologies. These uncertainties in the regulatory acceptance of new
orthopedic implant practices serve as the largest threat for orthopedic implant manufacturers. To
facilitate the regulatory interactions with government, many startups are cooperating with
physiotherapists and government-‐supported research centers in hopes of pushing the regulatory
adoption of emerging implant manufacturing materials and process technologies. Another important
factor impacting the market dynamics and value chain is the presence of key partnerships with suppliers
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and the level of control a startup has over aspects in the value chain. For this reason, many startups are
attempting to bring more manufacturing-‐related control in house, in order to add more value to the
startups position in the value chain.
The original scope of research was in the field of high-‐performance thermoplastic (HPTP)
polymer implants. Upon thorough analysis, findings began to imply that the orthopedic implant
manufacturing market had several material alternatives to high performance thermoplastic polymers,
with their own distinct advantages and disadvantages. Additional materials included magnesium,
titanium and regenerative stem cells. The main findings regarding the progression of implant materials
are focused around the transition from biocompatible implants to implants with more active and
regenerative capabilities. Due to the various strength, weight load and processing cost characteristics of
the different implant materials, there has been an array of responses regarding the optimal implant
material. Interviews with industry experts have indicated that the preferred materials are implant and
patient specific, thus many startups have addressed this trend by utilizing various material combinations
that best serve their desired customer segment.
From a process technology point of view there has been intense industry attention and hype
invested in the potential for 3D printing to replace CNC/lean manufacturing as the status quo for implant
manufacturing. Similarly to trends in implant materials, the belief in 3D printing capabilities as the future
status quo varies from startup to startup depending on what key activities make up their core
competencies. As a result of the research and interviews conducted, it is apparent that the increase in
3D-‐printing capabilities is directly correlated to the trending development of more complex, patient-‐
specific, customizable implants. As this trend gains momentum and regulatory support, many implant
manufacturing startups are investing in R&D to develop these key resources capabilities, while
continuing to develop standardized implants via CNC and lean manufacturing techniques, such as
injection molding.
As a result of the research conducted throughout the thesis, 10 of the original 208 startups have
been recognized for investment potential with 4 ultimately being recommended. Given the analysis
provided, Chemelot Ventures is advised to conduct further analysis and establish contact with these 10
startups. The findings have implied that the startups responsible for creating the most value in the
orthopedic implant value chain are the implant manufacturers. It is thus recommended that Chemelot
Ventures continue analysis on startups that engage in implant manufacturing, with both 3D printing and
lean manufacturing capabilities, as well as R&D in the field of active and regenerative implants.
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Acknowledgements
We would first like to acknowledge, Jeffrey Williams, Investment Analyst at Chemelot Ventures, for
serving as our project supervisor throughout the thesis. His constant advice and assistance played an
integral role in completing all aspects of the research and thesis construction.
We would like to thank the investment managers at Chemelot Ventures, including Marcel Kloosterman,
Casper Bruens, Kim de Boer and Patrick Claessen for welcoming our participation as interns at
Chemelot Ventures, as well as their willingness to continuously assist in our understanding of the venture
capital arena and the realm of startup investments.
We would like to acknowledge members of the Brightlands Innovation Factory for their assistance in
understanding the Business Development process and the relevant materials, process technologies and
market dynamics at play in the orthopedic implant market. Key contributors included Patrick van der
Meer, Kurt Gielen and Ed Rousseau.
We would like to thank Jose Manuel Baena, CEO of BRECA Healthcare and Regemat 3D, Dario
Porchetta, intern at Meotec GmbH & Co. KG and Simon Vanooteghem of Materialise, for their
contributions to our interview process. Their input assisted in the understanding of the orthopedic implant
value chain, as well as the key differentiating criteria for startups looking to emerge in the implant market.
We would like to thank industry experts, Jens Thies, Director of Science and Innovation and Jac Koenen,
Biomedical Materials Scientist, of DSM contributing to our understanding of megatrends of implant
materials and process technologies.
We would like to thank orthopedic surgeon, Tony Van Tienen, for providing his perspective on the
downstream orthopedic implant market and value chain.
We would like to thank Amanda Tobin, knowledge expert at McKinsey & Company, for establishing a
foundation of knowledge regarding market dynamics in the field of orthopedic implants.
We would finally like to thank Jeffrey Lutje Spelberg, Investment Manager at LIOF, for providing an
alternative perspective regarding the process of startup valuation and gauging of investment potential.
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Table Of Contents
Executive Summary Acknowledgments Chapter 1: Research Proposal ...................................................................................................................... 5
1.1 Company & problem background .................................................................................................... 5
1.2 Demarcation .................................................................................................................................... 6
1.3 Introduction to research method .................................................................................................... 8
1.4 Academic & managerial relevance .................................................................................................. 9
1.5 Report structure .............................................................................................................................. 9
Chapter 2: Literature review ...................................................................................................................... 10
2.1 External macro environment framework ..................................................................................... 10
2.2 Industry competitive landscape model ....................................................................................... 10
2.3 What is the Business Model Canvas? ........................................................................................... 10
2.4 Value chain analysis framework ................................................................................................... 15
Chapter 3: Research methodology ............................................................................................................ 16
3.1 Data collection methodology ....................................................................................................... 16
3.2 Data analysis methodology ........................................................................................................... 18
Chapter 4: Results ...................................................................................................................................... 20
4.1 Qualitative results ......................................................................................................................... 20
4.2 Quantitative results ...................................................................................................................... 25
Chapter 5: Discussion and conclusion ....................................................................................................... 28
5.1 Discussion ..................................................................................................................................... 28
5.2 Conclusion .................................................................................................................................... 36
5.3 Practical recommendations .......................................................................................................... 37
5.4 Shortcomings and limitations ....................................................................................................... 38
Chapter 6: Appendices ............................................................................................................................... 39
Works cited ......................................................................................................................................... 39
Interview questionnaire ..................................................................................................................... 42
Research population .......................................................................................................................... 43
Interviews ........................................................................................................................................... 45
Desk research data ............................................................................................................................. 78
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Chapter 1 -‐ Research Proposal
This first chapter serves as an introduction of the thesis by introducing the company, explaining the
problem together with the applicable problem statement and research questions. Next, the research
method will be formulated and the academic and managerial relevance will be presented.
1.1 Company and Problem Background
1.1.1 Company Background
Chemelot Ventures (CV) is an independent regional venture capital fund in the south of the Netherlands,
with a focus on smart materials and life sciences. Chemelot Ventures was established in 2014 as a Dutch
limited liability company. The limited partners of the fund who have each a commitment of € 10 million
are DSM Nederland, NV Industriebank LIOF, Limburg Province and Rabobank. The capital fund invests in
product-‐based as well as technology startups, whose long-‐term visions align with the ecosystem of the
Brightlands campuses. Chemelot Ventures proactively searches for startups in three focus areas:
sustainable chemicals & materials, regenerative medicine & biomedical materials and diagnostics &
analytics. There is a great deal of overlap between these focus areas and the activities that take place
within the Brightlands Chemelot campus. This report will primarily discuss investment opportunities
regarding startups that have the potential to add value to the regenerative medicine and biomedical
materials focus areas. The investment opportunities should result into a short list of corresponding warm
leads (startups) that Chemelot Ventures as well as Brightlands Innovation Factory can follow-‐up on.
1.1.2 Mission and Vision
Mission: “We aim to accelerate your company’s growth and to quickly enable your breakthrough innovations by
sharing funding opportunities, as well as a unique Dutch/German/Belgian ecosystem of chemical, technology &
supporting businesses, knowledge institutes, governmental bodies and co-‐investors.
Vision: “CV believes in a world where people, companies and organizations work together in a highly diverse
ecosystem that aims to improve the quality of life with ongoing innovation.
Company Objective: Achieve status as #1 Player in all focus areas, across Europe, by 2025.
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1.1.3 Problem Background
The problem addressed in the research report surrounds the disruptive, process and material
innovations within the orthopedic implant industry and how these technologies can be integrated into
the market at a comparably, affordable cost to current practices. Due to the fact that product
customization is integral to the development of orthopedic implants, this research will delve into the
potential of numerous startups to foster technologies that can customize while being cost-‐conscious.
Ultimately, the problem being addressed is the universal affordability of orthopedic implants. With
today’s process technologies and materials, orthopedic implants are too costly for the majority of our
global population. This research will address how startups are attempting to reduce these costs through
the development of alternative implant materials and innovative process technologies that allows
implants to be developed and customized at a significantly lower cost.
1.1.4 Research Question
What are the critical criteria for selecting startups in the orthopedic implant market?
1.1.5 Sub-‐questions
Ø What innovative materials are used in the creation of orthopedic implants?
Ø How does the 3D printing technology impact the ability of startups to manufacture
orthopedic implants in comparison to conventional methods?
Ø How does the introduction of innovative materials and process technologies impact the
market dynamics of the orthopedic implant industry?
Ø What are key indicators of a startup’s investment potential, according to industry specialists?
1.2 Demarcation
The demarcation of this thesis is segmented into three distinct aspects: the relevant materials scope,
process technologies scope and market dynamics scope, relating to the orthopedic implant industry.
1.2.1 Material Scope
The history of orthopedic implant technology has been highly impacted by the development and use of
biomaterials such as metals, polymers and ceramics that are placed in the human body to replace an
important bodily function. The scope of this report will cover megatrends in the materials used for
implant manufacturing in the past, present and their future implications on the orthopedic implant
industry. To narrow the scope of the materials analyzed within this report, the focus of the research will
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be around polymer-‐based, high-‐performance thermoplastics (HPTP) such as Polyetheretherketone
(PEEK) and Polyetherketoneketone (PEKK), that present innovative implant material alternatives. The
emergence of these polymer-‐based materials will be compared to the current use of metal alloys, as well
as the introduction of active and regenerative, cell-‐based implant materials.
1.2.2 Process Technology Scope
How are metal implants traditionally created and implemented and how is 3D printing changing the
game? The orthopedic implant market has been revolutionized with the introduction of the 3D printing
technology. As the technology continues to develop, a wide variety of materials are being introduced to
the possibility of being 3D-‐printable. The scope of this report, regarding the process technology, will
surround how the introduction of 3D printing will impact the manufacturing of orthopedic implants.
Despite the currently high tooling costs to manufacture a printer and then use that printer to create an
implant, advances in the technology are creating 3D printers that are precise and affordable. This report
will analyze the advantages and disadvantages that this technological development has in relation to
lean manufacturing and CNC processes.
1.2.3 Market Dynamics Scope
Within this scope of the research report, the market dynamics of the orthopedic implant industry will be
analyzed through a business model canvas approach. This focus will allow a deeper understanding of
how the industry supply chain is impacted by emerging megatrends in the realm of 3D printing and the
use of HPTP polymers as a potential implant material alternative to titanium. With the growth of 3D
printing as a viable future for implant manufacturing, it is important that this report critically analyze
how value is created at every stage from the production of the raw material to the surgical procedure of
inserting the orthopedic implant into the patient. With these rapidly growing and continuously improving
developments in the 3D printing technology, a shift in the industry’s implant manufacturing standard will
impact how the market conducts business and how startups and other key players utilize their core
competencies to develop a sustainable competitive advantage.
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1.3 Introduction to Research Method
1.3.1 Literature Review
In order to provide a list of warm startup leads in the field of orthopedic implants, an in-‐depth
understanding of the industry characteristics and market dynamics is crucial. In addition to market
information found through desk research and the LuxResearch and PitchBook databases, the PESTLE
analysis as well as the Porters 5 Forces Model are thus applied to provide an understanding of the
opportunities, threats and trends present in the orthopedic implant market. Once the market is
understood, the startup will be assessed through the lens of the Business Model Canvas, discussed in
the book ‘’Business Model Generation,’’ written by Alexander Osterwalder and Yves Pigneur. Lastly, a
traditional Value Chain Analysis will be implemented to assist in understanding which key players
provide the most added value.
1.3.2 Qualitative Research
The findings of the literature review will be used as the starting point for the qualitative, in-‐depth
interviews. In-‐depth interviews will be conducted with industry specialists, startups, investment bankers
and business developers, by using a flexible questionnaire set that can be catered to the desired
audience. The main objective of the qualitative research questioning is to gain insights about market
dynamics, megatrends from various industry perspectives and develop criteria for assessing potential
startups. To ensure the validity of the qualitative research, all of the interviews conducted will be
recorded and the full interview’s content will be typed and provided in the appendices.
1.3.3 Quantitative Research
By understanding the market dynamics as depicted through our in-‐depth interviews, objective criteria
will be developed to find startups that present potential investment opportunities. Once establishing a
list of objective criterion, each startup will be assessed and directly compared on a standardized scale. To
assist in the search for these startups, databases such as LuxResearch and Pitchbook will be used.
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1.4 Academic and Managerial Relevance
The relevance of this research topic and report is founded in the multi-‐faceted importance that venture
capital plays in the funding of businesses and the introduction of innovative technologies across
countless industries. This research and report bridges the worlds of biomedical technology and the
entrepreneurial spirit of startups, through the lens of a venture capitalist. In addition to the complex,
technical nature of manufacturing polymer-‐based materials and the process innovations such as 3D
printing, the need for analytically comprehending the past, present and future market trends within the
orthopedic implant industry is also of ultimate importance. By understanding the startup development
cycle and the dynamics of the orthopedic implant market, the report’s scope connects the academic
theories covered within the curriculum to the capital investment decisions that are relevant to
investment managers’ attempts to maximize returns.
1.5 Report Structure
Below is an outline of the research and report construction process, originating at market analysis and
arriving at a list of warm startup leads.
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Chapter 2 -‐ Literature Review
In this chapter, the frameworks that assist in identifying potential startups will be addressed. Through the
use of the Business Model Canvas as the foundational framework, the investment potential of each
startup’s business model will be assessed.
2.1 External Macro-‐Environment Framework: PESTEL
To begin understanding the environment in which startups in the orthopedic implant market exist, it is
key to first uncover what macro-‐environmental factors are most impactful in determining the
opportunities and threats startups face, given their position in the value chain. The model used to
understand these factors is known as the PESTEL Analysis Framework, originally created by Harvard
professor, Francis Aguilar in 1967. The factors: political, economic, socio-‐cultural, technological, legal and
environmental, provide indications of an organization’s external macro-‐environment. This framework
will provide a foundation for understanding the influential factors that may assist or inhibit a startup’s
attempt to create a sustainable competitive advantage in the orthopedic implant market.
2.2 Industry Competitive Landscape Model: Porter’s 5 Forces
Once the influential macro-‐environmental factors are identified, the Porter’s 5 Forces framework is
implemented to analyze the attractiveness/value of the industry’s structure. As designed by Michael
Porter, the model gauges the impact of five distinct industry forces including: bargaining power of buyers
and suppliers, threat of new entrants and substitutes and rivalry among existing firms.“ The 5 Forces
Model provides an “outside-‐in” perspective that enables competitor analysis, competitive strategic
adjustments, as well as industry evolution.” The framework provides a clear understanding of how
startups differentiate themselves in the implant market and where the opportunities and threats to a
sustainable competitive advantage exist.
2.3 What is the Business Model Canvas?
The Business Model Canvas, discussed in the book ‘’Business Model Generation,’’ was written by
Alexander Osterwalder and Yves Pigneur and published in 2010. The objective of the business model
canvas is to develop a shared language for describing, visualizing, assessing and changing business
models. According to Osterwalder and Pigneur is: ‘‘a business model describes the rationale of how an
organization creates, delivers and captures value.’’ (Osterwalder, 2010) Figure 1 below shows the 9 fields
of the Business Model Canvas that will be applied in this report to address the three designated research
scopes: innovative materials, process technologies and the market dynamics. The business model canvas
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will be the foundational framework of the report, used in combination with other relevant models that
relate to understanding specific fields within the Business Model Canvas.
Figure 1: The Business Model Canvas
2.3.1 Key Partnerships
“Alexander Osterwalder and Yves Pigneur define the key partnerships building block as “the network of
suppliers and partners that make the business model work.” Partnerships are created to optimize
business models, acquire resources and minimize uncertainty and risk. There are four partnership
models to consider:
Ø Strategic alliances between non-‐competitors
Ø Coopetition: Strategic partnerships between competitors
Ø Joint ventures to develop new businesses
Ø Buyer-‐supplier relationships to assure reliable supplies
To comprehend the orthopedic implant value chain and assess startups’ investment potential, a startup’s
partnerships are a key indicator. For example, a startup that specializes in implant manufacturing, that
also has a stable buyer-‐supplier relationship with a material producer, is in an advantageous position to
assure reliable supplies at a reasonable price. Assessing key partnerships among startups in the
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orthopedic implant market provides an understanding of which startups have a network of relationships
that can create sustainable growth and a viable investment opportunity for Chemelot Ventures.
2.3.2 Key Activities
The Key Activities Building block describes the most important things a company must do to make its
business model work.” Similar to key resources, these activities are needed to provide a value
proposition that reaches the market, maintains long-‐term customer relations and ultimately earns
revenues. When assessing startups that fit scope of research, (orthopedic implant and 3D markets) this
building block will be integral in understanding what each startup does that is truly innovative and
valuable to the customer. Due to the variety of business models within the orthopedic implant value
chain, the key activities of each startup that provide value to customers will be subjective to the model.
2.3.3 Key Resources
This building block describes the resources/assets necessary to create and offer a value proposition,
reach markets, maintain relationships with customer segments and earn revenues. Resources can be
physical, financial, intellectual or human and are often subjectively related to the type of business
model. In relation to the report, potential startups within each part of the value chain are likely to have a
wide assortment of physical, financial, intellectual and human resources. For example, the polymer
manufacturer is likely to have capital-‐intensive production facilities as well as intellectual resources such
as patents and proprietary knowledge regarding the creation of innovative polymers. By understanding
the business models behind startups at each point in the orthopedic implant value chain, an analysis into
the positioning and investment potential of each startup can be conducted.
2.3.4 Value Proposition:
The value proposition building block addresses the questions: ‘‘what bundles of products and services
are we offering to each customer segment?” and ‘‘which one of our customer’s problem are we helping
to solve?” According to Alexander Osterwalder and Yves Pigneur does a value proposition define the
creation of value for a customer segment through a distinct mix of elements? The values can be
quantitative such as price, speed of service or qualitative such as design and customer experience. Other
distinct elements can be product newness, product performance, product customization, brand
awareness, cost reduction, risk reduction accessibility and usability. The value proposition theory of
Alexander Osterwalder and Yves Pigneur will be applied by assessing startups that form an eventual
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investment opportunity. Elements such as product performance and cost reduction will be taken into
account by assessing the different startups.
2.3.5 Customer Relationships
Alexander Osterwalder and Yves Pigneur define customer relationships as the type of relationships a
company develops with specific customer segments. The questions addressed in this building block are:
‘‘what type of relationship does each of our Customer Segments expect us to establish and maintain with
them?’’ The customer relationship can be established due to customer acquisition, customer retention
or for boosting the sales (upselling). The relationships can range from personal to automated. Alexander
Osterwalder and Yves Pigneur distinguish between several categories of customer relationships: Personal
assistance, dedicated personal assistance, self service, automated services, communities and co-‐
creation. By assessing startups on the motivation behind establishing relationships with a specific
customer segment, the way the relationship can be maintained can be understand. Due to the nature of
startups, will the ability for customer acquisition be assessed when looking for startups as an investment
opportunity?
2.3.6 Channels
According to the text, the channels building block “describes how a company communicates with and
reaches its customer segments to deliver the value proposition.” Channels are specifically the customer
touch points that are an integral part of the customer experience. Functions include: raising customer
awareness, helping customers evaluate the value proposition, allowing customers to complete purchase,
deliver value proposition and provide post-‐purchase customer support. Channels can be categorized by
being direct/indirect or owned/partner channels, each of which provides their own advantages and
disadvantages when interacting with customer segments. In the context of the research report, the
channel used to present an orthopedic implants value proposition to the defined customer segments is
crucial. Due to the strict regulations regarding the approval of new biomedical materials and
technologies, governments and insurance companies play a key role in the adoption of new implant
materials and process technologies, such as 3D printing. Although patients are the end users of the
implant, it is important to understand who is responsible for choosing the implant’s material and method
of manufacturing. By understanding all players in the value chain, starting from material creation to the
surgical procedure, the report will properly address what customer segment hold the most power and
how they prefer to be reached.
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2.3.7 Customer Segments:
The customer segment building block addresses the questions: “For whom is the startup creating
value?’’ and ‘’who are the most important customers of the company?’’ Alexander Osterwalder and Yves
Pigneur define customer segments in the book ‘’Business Model Generation, 2010’’ as different groups
of people or organizations, which the company wants reach and to serve. To better satisfy customers, a
company may group them into distinct segments with similar needs, similar behaviors, or other
attributes. Alexander Osterwalder and Yves Pigneur segment customers into 5 segments, mass market,
niche market, segmented diversified and multi-‐sided platforms (or multi-‐sided markets). The aim of this
research report is to find startups that are potential investment opportunity for Chemelot Ventures, in
the field of polymer-‐based orthopedic implants in combination with 3D printing technology. Due to the
customized nature of orthopedic implants, the customer segments that the startup serves is assumed to
be a niche market. People who need to have a replacement implant or implants due to bone fractures
are seen as potential clients. Thus, the age of the people can vary between 5 to 80 years. Startups who
are targeting these client segments are seen as potential investment opportunities.
2.3.8 Cost Structure
The cost structure building block describes the most important costs that a company incurs to operate its
business model. Alexander Osterwalder and Yves Pigneur address the question: ‘‘what are the most
important costs inherent in our business model?’’ According to the book, business models can operate
under cost structures: cost-‐ driven and value-‐driven business models. Cost-‐driven business models try to
minimize costs wherever possible by using low-‐price value propositions, maximum automation and
outsourcing. Companies who are less concerned with the implications of costs have a more value-‐driven
focus, such as highly personalized services. The different cost structures can have the following
characteristics: Fixed costs, Variable costs, economies of scale, and economies of scope. The theory of
this building block will be used for making criteria to assess startups that present potential investment
opportunities. Because orthopedic implants are customized to each patient, criteria such as the
allocation of fixed and variable costs can be used to understand the cost structures of potential startups.
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2.3.9 Revenue Streams
The revenue building block represents the cash a company generates from its customer segments to
create earnings. The question which Alexander Osterwalder and Yves Pigneur address is: ‘’For what value
are our customers really willing to pay?’’ According to the book there are several ways for a company to
generate revenue streams: Asset sale, usage fee, subscription fees, lending, renting, leasing, licensing,
brokerage fees and advertising. The different revenue streams can have different pricing mechanisms
such as fixed and dynamic pricing. Fixed prices are predefined prices and are based on static variables.
Dynamic prices are based on changing market conditions. The pricing strategies of startups are key for
Chemelot Ventures when analysing startups’ investment potential. Other important figures, which are
used by Chemelot Ventures, have been studied in the book ‘’Finance for Executives: Managing for Value
Creation, 4th Edition by Gabriel Hawani and Claude Viallet, 2015.’’ Profitability figures such as Earning
Before Interest, Taxes, Depreciation and Amortization (EBITDA), which indicates the operational income
of a company, and Earning After Taxes (EAT) which indicates the net profitability of a company are used
by Chemelot Ventures. Key indicators such as ROE that measures the amount of return on an investment
relative to the investment costs. For calculating the ROIC Chemelot Ventures uses committed capital
versus company gain when exiting the startup. The different figures will be used when creating criterias
for analysing startups who are potential investment opportunities.
2.4 Value Chain Analysis Framework
The Philip Kotler ‘’Principles of Marketing’’ is used to understand the value chain framework. It states
that a value chain is ‘‘a network made up of the company, suppliers, distributors, and ultimately
customers who partner with each other to improve the performance of the entire system.’’ In this report
the value chain analysis will be conducted to understand where the most value is created in the
orthopedic implant industry. The value chain analysis will be applied in combination with Alexander
Osterwalder and Yves Pigneurs ‘’Business Model Canvas,’’ for understanding the business models of
startups positioned throughout the value chain.
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Chapter 3 -‐ Research Methodology
In this chapter the qualitative and quantitative research methodology is discussed together with the
selection of the sample for data collection, the formation of the questionnaire and the interview
technique. As result of the qualitative and quantitative methods outlined in the chapter, a list of objective
criteria to assess startups will be formulated.
3.1 Data Collection Methodology
3.1.1 Qualitative Data Sample
The objective of the qualitative research is to gain a scientific understanding of biocompatible implant
materials, developments in processing technologies and the trends in market dynamics. The
interviewees consist of market specialists, material scientists, business development managers, 3D
printing companies, investment managers and surgeons. The goal is to use 12 specialists from
organizations throughout the value chain, as seen in Figure 2 below.
Interview scope Market dynamics Material Technology
Companies McKinsey & Co Materialise Materialise
Brightland Innovation Factory
Brightland Innovation Factory
Oxford Performance Materials
Biomet Canada Xilloc Regemat 3D
Chemelot Ventures DSM Breca Healthcare
LIOF Inv. Banking Meotec Meotec
Figure 2: Interview scope
3.1.2 Quantitative Data Sample
The lead generation calculation method developed by Chemelot Ventures will be used as the starting
point for the quantitative research in the different databases (Pitchbook & LuxResearch). According to
Chemelot Ventures only 2-‐5% of leads present potential investment opportunities. Given our goal of
providing approximately 10 warm startup leads and Chemelot’s estimated percentage of potential
investment opportunity, the desired sample size will range from 175-‐225 startups.
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3.1.3 Strategy
The strategy supporting the report’s research methodology is based on the combination of qualitative
and quantitative-‐based sources to create a holistic understanding of the orthopedic implant market. To
establish a well-‐rounded view of the market, this strategy incorporates the qualitative viewpoints of
industry professionals with the quantitative data provided within the industry-‐related databases. This
combination will provide perspectives on the market that would not be as easily attained without
personal interaction with experienced industry professionals and opinion leaders. The research will
address the concerns and developments throughout the value chain and will analyze how the
development of biocompatible materials and 3D capabilities are revolutionizing orthopedic implants.
3.1.4 Data Sources
During the data collection procedure, the sources of the research conducted are of ultimate importance.
The interviews must provide subjective opinions of opinion leaders in each relevant sector of the
orthopedic implant market. To create this list of startups, the report combines database information as
well as industry professionals’ opinions. The primary sources and their value added are as follows:
● Industry Professionals: Industry professionals recognize opportunities, threats and developing
megatrends that may impact the ability for new materials and technologies to emerge.
● LuxResearch: Lux Research is an independent research firm that provides strategic information
on startups. Lux Research conducts primary research in which the company interviews
managers, partners, customers and outside experts. The database is widely used by venture
capital firms to understand market trends and to select startups that fulfill the criteria.
● Pitchbook: The Pitchbook database is a business intelligence database, widely used by venture
capitalists, private equity, investment banks and corporate developers. Potential investors can
find information regarding valuations, growth, market traction and financing history of startups.
Pitchbook will emphasize financial information related to a startup’s’ investment potential.
3.1.5 Quality Control: Validity of Sources
Due to the fact that much of the research collected contain subjective viewpoints of industry
professionals, the credibility of the source and validity of the information is crucial. To guarantee the
quality of data collected, the industry professionals referenced must be a professional within the
project’s scope. Although the content of each interview may vary in structure, topic and length, the
interviews validity will be guaranteed through the use of taped recordings. The interview’s line of
18
questioning and responses will be provided within the report’s appendix. In addition, the research
collected through the databases must also be valid. Therefore, our report will rely on reputable
databases such as PitchBook and Lux Research.
3.2 Data Analysis Methodology
Objective Criteria Definition Score of 1 Score of 3 Score of 5
Technology Value How strong is the startup’s technical solution related to the necessary material?
Solution does not offer better value in terms of performance
Solution offer incremental improvements on material or performance
Solution offers discontinuous improvements on materials and performance.
Addressable Market Size
If the startup had 100% market share in all operational segments, what would its annual revenue be in U.S dollars?
< $ 10 million to $ 100 million
$ 100 million to $1 billion
$1 billion to $10 billion.
Market Growth Rate
Is the startup making rapid progress, stagnant, or backsliding?
Startup is backsliding and doesn’t have competitive growth rate
Startup is stagnant or achieves same market growth rates as competition
Startups sign frequent deals, releases products, attract funding and achieves above average market growth rates.
Competitiveness Are many other startups doing the same thing?
Many competitors with similar solutions
Number of competitors but startup offers additional benefits
Startup offers a unique
solution with little or no
competition.
Regulatory Factors Will the regulatory factors facilitate operations or impede the startup’s development?
The startup is unlikely to be able to proceed
Regulatory issues slow down the startup
Favorable regulatory
factors drive progress
IP Position How likely is it that the startups patent or trade secret will be valuable?
Weak IP position or the startup doesn’t yet focus on IP as a property
Defensible IP position which can be challenged by competition
Defensible IP position
which is already highly
protected by the startup
Management Team
How strong is the organization's management team?
Inexperienced management team
Competent management team with some gaps
Experienced and well-‐
connected management
team with no apparent
gaps
Partnerships How strong are the startup’s partnerships
No partnerships 1+ significant partnerships that are likely to drive growth
Exceptional partnerships which are vital for growth
Figure 3: Selected Criteria
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3.2.1 Qualitative Data Analysis
The qualitative data is gathered by conducting personal interviews with a flexible questionnaire that can
be adjusted to address all industry professionals within the orthopedic implant industry. The interview
material consists of a The results will provide the foundation for the quantitative research to be
conducted later in the report. The aim of the qualitative research is to enhance the understanding of the
orthopedic implant market from a market dynamic, material and process technology point of view. The
formulated questions need to give more insight into the megatrends in the market, competition, value
chain composition, key success factors and industry attractiveness. The outcome of the interviews are
then analyzed through frameworks such as the business model canvas, Porter’s 5 Forces and PESTEL.
3.2.2 Quantitative Data Analysis
In total, 11 specialists are interviewed to understand the criteria that influence startups active in the
orthopedic implants market. The results of the interviews are compiled with the databases, as well as
important criteria of the ‘’Alexander Osterwalder and Yves Pigneur’s Business Model Canvas.’’ 8 criteria
are identified as key indicators that influence the startup’s investment potential. Criteria drawn from the
databases include: Technology Value, Addressable Market Size, Competitiveness and Regulatory Factors.
During interview sessions, professionals included Growth Rate, IP Position and Management Team as the
most important criteria for startup companies. The final criteria ‘’Key Partners’’ has been taken from
Alexander Osterwalder and Yves Pigneur’s Business Model Canvas. The criteria have a scale from 1 to 5
as seen in figure 3.
20
Chapter 4 -‐ Results
This chapter provides the results of qualitative and quantitative observations gathered during research.
First, the findings and megatrends discovered throughout the interviews will be displayed. An
explanation of each criterion’s relevance and scoring will then be discussed. Next, a statistical and
graphical representation of the 208-‐startup sample’s data will be provided. Finally, an in-‐depth report of
the results for startups with the highest potential will be given.
4.1 Qualitative Results
4.1.1 Key Macro-‐Environmental Factors
Figure 4 discusses the main environmental factors, which are a result of the industry professionals’
responses. The main factors and key factors are discussed in the figure below.
Factors Drivers Impact
Regulatory Directive 93/42/EEC
concerning medical devices
Orthopedic surgeries such as Hip,
Knee, Shoulder joint
placements/replacements
Prevents entry of non-‐certified
implants. Manufacturer must show
clinical data to support claimed
performance of the implants to get
an approval.
FDA Good Guidance
Practice
Orthopedic surgeries for
placing/replacing implants and
production of orthopedic devices.
"For evaluating the substantial
equivalence and/or safety and
effectiveness of modified
orthopedic implant surfaces that
are in contact with tissue or bone
cement.’’ (FDA.gov, 1994)
Warranties Responsibility for 3D implant
production and successful surgical
procedure
“Terms and conditions are created
to place end responsibility on the
surgeon. The surgeon is liable as
long as all regulatory stipulations
have been met.” (Simon
Vanooteghem)
Technology 3D manufacturing Patient specific or mass-‐
customization of medical implants
Decreases cost of original and
revision surgeries and increases
efficiency due to implant’s patient
specificity
Active and Regenerative
Implants
R&D in breakthrough
biocompatible materials that
foster cell-‐tissue regeneration
“We will use regenerative stem
cells for injury and temporary
metallic implant to support the
loads and provide adaptive
implants that provide signals to the
regenerative part to improve
recovery processes.” (Jose Baena)
21
Political Insurance Coverage and
Reimbursement
3D manufactured implants “The government’s regulatory
acceptance is a deciding factors in
the adoption of 3D printing
technologies due to the impact
their regulations have on insurance
coverage.“ (Simon Vanooteghem)
Figure 4: Key Macro-‐Environmental Factors
4.1.2 Results on Industry Attractiveness
The Porter’s 5 Forces framework is implemented to analyze the attractiveness of the orthopedic implant
industry. The model gauges the impact of five distinct industry forces. Using the qualitative information
gathered through the interviews with industry specialists and the 5-‐Forces framework, figure 5 below
outlines the intensity of the industry force and its impact on the industry's competitive landscape.
Threat/Force Intensity Impact
Rivalry High Orthopedic Market Value: $38 Billion; Intense competition related to R&D and proof of concept
Substitutes Low No alternative for the need of orthopedic implants
Buyers Medium Surgeons primarily responsible for demanding new implant technology
Suppliers Medium Need for stable partnership with material and process technology providers
New Entrants Medium High initial capital investment for Property Plant & Equipment and establishment of value chain network needed
Figure 5: Porter’s 5 Forces Framework for the Orthopedic Implant Industry
22
4.1.3 Results on Value Chain Analysis
Figure 6 discusses the results of the value chain analysis. The value chain is restricted to the most
important chains which influence the research field of this paper. According to Ed Rousseau, Business
Development Manager at Brightlands, the most important positions in the value chain are the materials
supplier, equipment supplier, implant producers, surgeon, patients and insurance companies.
Value Chain
Material Suppliers à Equipment Suppliers à
Implant Producers à
Surgeons è
Patients & Insurance companies
Activities Polymers (PEEK/PEKK/PLA)
Titanium Magnesium Regenerative Cells
3D manufacturers CNC machines manufacturers
Hip Implants Knee implants Spines Screws Cranial implants
Public Hospitals Private Hospitals Independent Surgeons
Young People Adults Older people
Companies
DSM DuPont BASF Solvay Victrex Arkema
3D Systems EOS Arcam CNC Manufactures
Oxford Performance Materials Xilloc Materialise Meotec
N.A.V N.A.V
Value Creation
Probably 20% of the value is created in this chain
Probably 20% of the value is created in this chain
Probably 60% of the value is created in this chain
Figure 6: Value Chain Analysis
4.1.4 Results on materials
The most applicable materials for developing orthopedic implants are, according to the conducted desk
research and interviews: PEEK polymers, PEKK polymers, plant based polymers (PLA), Titanium,
Magnesium and Regenerative Cells.
23
Materials Characteristics Applications Trends Research method
Polymer PEEK
+ High strength
+ Biocompatibility
-‐ Weight load
-‐ high selling price $ 75-‐150/kg
-‐ high production costs
Orthopedic implants,
oil & gas and
aerospace
+ Sustainable
manufacturing
practices
+ 3D Printing
applications
Desk research
Emanuel Orlando and
Vicari, 2015
Polymer PEKK
+ High strength to weight property
+ Biocompatibility
-‐ high selling price $ 75-‐150/kg
-‐ high cost of production
Orthopedic implants,
oil & gas and
aerospace
+ lightweight
materials
+ Sustainable
manufacturing
practices
+ 3D Printing
applications
Interview & desk
research
Emanuel Orlando and
Vicari, 2015
Plant based
polymer PLA
+ Biodegradable
+ Enhanced processability
+ High strength
+ 3D properties
Orthopedic implants
+ multifunctional
applications
+++3D Printing
applications
-‐ alternative fuel
based materials
slow down growth
Interview &
Desk Research
Hackett, Adam Bland,
2015
Titanium
+ Biocompatible
+ 10 year product lifecycle
+ Corrosion resistance
-‐ absorption of temperature
-‐ Implant failure due to loosening of
material
-‐ Too Strong
+ Current status quo
for implants
+multifunctional
application
-‐ revision surgery
needed which
increases costs
Proven track record
for orthopedic
implants
-‐ alternatives such
as polymers are
gaining market
share
Interview &
Desk research
Wilson Wang & Chye
Khoon, 2015
Magnesium
+ Highly biocompatible
+ Active communication with bone
+ Biodegradable
-‐ limited material track record
compared to other materials
Orthopedic implants,
Automotive industry
+ Reduces revision
surgery which
decreases
healthcare costs
Interview
Dario Porchetta 2016
Regenerative
Cells
+ Biocompatible
+ Faster Healing
+ Biodegradable
-‐ limited material track record
compared to other materials
Orthopedic implants
-‐ No favorable
regulatory
environment
Interview
Dario Porchetta 2016
24
4.1.5 Results on process technology
Figure 8 shows the most applicable technology for manufacturing orthopedic implants.
According to the interviews, Computer Numerical Control (CNC) machines and 3D Printers are
the most used manufacturing methods. An important remark is that CNC machines are currently
the status quo, with 3D printing acting as a disruptive technology.
Technology Advantages Disadvantages
Computer Numerical Control
Machines (CNC): Status Quo
Many CNC manufacturers available Specialist knowledge required for
software updates and maintenance
Machines capability 24/7 for
implant production
Not able to produce patient specific
implants
Efficient lean manufacturing High initial outlay costs
Proven manufacturing process,
knowhow of machines widely
available
Feedstocks: titanium, polymers and
carbons are widely available
3D Manufacturing
Technology can be used for
developing patient specific implants
A few manufacturers (3D Systems,
EOS, Arcam Stratasys) specialize in
producing the hardware
Technology is capable of
developing more complex implant
structures
Feedstock: titanium, magnesium
and polymers are not widely
available
Low waste due to additive
manufacturing
Higher feedstock prices vs. CNC
feedstock prices
Figure 8: Orthopedic implant manufacturing technologies
25
4.2 Quantitative Results
4.2.1 Statistical Results of Sample Observations
As noted below, the sample size assessed during research and analysis comes to a total of 208 startups.
In total, about 96% of startups analyzed originate from the databases, while the additional 4% of
startups came from the personal knowledge and experience of the interviewees. Given the possibility of
reaching a maximum score of 40, the average score that a startup received during analysis came to a
value of 27. When measuring investment potential, this mean serves as a basic measure of how a startup
measured up to others in the sample. A score too low or too high in relation to the mean does not
exclude the startup from analysis but provided an indicator that additional analysis may be necessary.
The range of values collected during the analysis of the 208-‐startup sample fell between the scores of 16
and 36 out of a possible 40 points. This wide range in scores indicates the varied potential of startups in
the orthopedic implant market. A range of 20 points indicates the severity of risk and uncertainty in
establishing a startups’ in this market. Understanding the score as positioned against other startups in
the sample provides a comparable basis for gauging investment potential.
General Observations of Entire Sample
Figure 9: Normal Distribution of Scores for Entire 208-‐Startup Sample
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0
0.02
0.04
0.06
0.08
0.1
0.12
0 5 10 15 20 25 30 35 40 45
TOP 10 STARTUPS
General Observations of Top Potential Startups
Ultimately, a list of 10 startups with the highest degree of alignment and investment potential were
compiled and subject to further investigation. This sample of 10 startups selected for additional analysis
constituted 5.3% of the entire pool of startups. The average score of the 10 startups identified as having
portfolio alignment and investment potential was 32 points. In comparison to the mean of the entire
sample (27), a score of 32 indicates an average result that is one standard deviation (5) above the entire
sample’s mean. It is believed that this higher mean (32) and narrower range (10) indicates a more
promising investment potential and opportunity for successful exits for Chemelot Ventures.
Figure 11: Normal Distribution of Scores for Top Potential Startups
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Detailed Observations of Top Potential Startups vs. Key Criteria
This section provides data related to the raw observations made during the assessment of the highest
potential startups. To understand the importance of each objective criteria, the average values of each
criteria for the entire sample are compared to the average values for the 10 selected startups. The
startups with the highest investment potential distinguish themselves by their scores on each criteria as
well as their feasible alignment into the Chemelot Ventures portfolio and Brightland Innovation Factory.
Figure 12: Recommended Startups for Additional Analysis
Figure 13 below displays the average score per criteria of both the 208 and 10 startup samples. The chart
serves as a visual comparison of the variation in quantitative scores to assist in understanding the extent
to which the high potential startups differ from the results of the entire sample. On average the 10
selected startups scored highest on addressable market (4.5) followed by technological value (4.3),
management team (4.3) and competitiveness (4.1).
Figure 13: Average Score Per Criteria
Addressable Market Competitiveness Growth Rate IP Position Regulation Management Partnerships Total Points Stage
Syseng 5 3 3 3 3 3 3 28 Lab
Layerwise 5 3 3 3 5 3 1 26 Scale
Organovo 3 3 3 3 3 5 5 30 Introduction
Epibone 5 5 5 3 3 5 5 36 scale
Nanovis 5 5 3 5 3 5 5 36 introduction
Osteonovus 5 5 3 3 3 5 5 34 scale
T&R Biofab CO 5 5 3 3 5 5 5 36 scale
Teknimed 5 5 3 3 3 5 5 34 scale
Meotec 5 3 3 5 3 5 5 32 Scale
Breca Healthcare 3 5 5 3 5 3 3 32 Scale
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Chapter 5 – Discussion and Conclusion
The discussion and conclusion will provide the explanation of the results through the discussion of the
relevant market megatrends and patterns, as well as an in-‐depth analysis of the startups with the highest
recognized investment potential. The conclusion will serve to address the 3 sub-‐questions related to
market dynamics, innovative materials and process technologies in the orthopedic implant industry, the
thesis’ limitations, as well as answer the research question, ‘‘what are the critical criteria for selecting
startups in the orthopedic implant market?’’ Ultimately, all findings will be converted into concrete,
practical recommendations for Chemelot Ventures’ future endeavors in the orthopedic implant market.
5.1 Discussion
Figure 14: Recommended startups for additional analysis
5.1.1 Trend and Pattern Analysis: Via the qualitative and quantitative data collected through
interviews and desk research, megatrends and underlying patterns that impact the orthopedic implant
market are discussed below from three perspectives: market dynamics, innovative materials and process
technologies. In combination with these megatrends, Meotec and BRECA Healthcare will be analyzed to
exemplify the various strategies startups employ to capitalize on these emerging market patterns.
Sub-‐question 1: How does the introduction of innovative materials and process technologies impact
the market dynamics of the orthopedic implant industry?
Upon using the PESTLE framework to assess the macro-‐environmental factors at play in the orthopedic
implant market, the regulatory environment surrounding implant certification is the greatest
Addressable Market Competitiveness Growth Rate IP Position Regulation Management Partnerships Total Points Stage
Syseng 5 3 3 3 3 3 3 28 Lab
Layerwise 5 3 3 3 5 3 1 26 Scale
Organovo 3 3 3 3 3 5 5 30 Introduction
Epibone 5 5 5 3 3 5 5 36 scale
Nanovis 5 5 3 5 3 5 5 36 introduction
Osteonovus 5 5 3 3 3 5 5 34 scale
T&R Biofab CO 5 5 3 3 5 5 5 36 scale
Teknimed 5 5 3 3 3 5 5 34 scale
Meotec 5 3 3 5 3 5 5 32 Scale
Breca Healthcare 3 5 5 3 5 3 3 32 Scale
29
determinant of the future trends in orthopedic implant manufacturing. According to Meotec, “The
tendencies dragging the potential down are the resistance by medical teams to adopt new technologies.
This is impacted by the surrounding regulatory acceptance. Certification of each phase of the process
(Code 13428) is necessary but it doesn’t guarantee doctor support.” Additionally, Mr. Baena states that,
“In BRECA, high costs and lack of historical data have created slow progression to get EU regulation
confirmation in the field of biomaterial printing.” These uncertainties in the regulatory acceptance of
new orthopedic implant practices serve as the largest threat for orthopedic implant manufacturers.
Despite the circumstances, startups like BRECA Healthcare and Meotec cannot wait for full-‐fledged
government support, as prior R&D is necessary. To facilitate the regulatory interactions with
government, many startups, including BRECA are cooperating with physiotherapists and government-‐
supported research centers to foster communication in hopes of pushing the regulatory adoption of
emerging implant manufacturing materials and process technologies.
When analyzing the forces at play via the Porter’s 5 Forces Model, rivalry among competitors and the
power of buyers emerged as the most prominent forces affecting the orthopedic implant industry.
Supported by the growing hype of 3D printing, a vast number of startups have attempted to develop
implant-‐manufacturing capabilities via additive manufacturing techniques. Along with the transition to
more active and regenerative implants, BRECA Healthcare has recognized greater than 30 emerging
competitors currently in the research phase of developing bio-‐printing capabilities. In the case of
Meotec, they have reported that one other company is currently producing magnesium-‐alloy based
implants and conducting human tests, with several others still in the R&D phase. With competition stiff
and constantly growing, the differentiating factor lies in the startup’s superior resources, partnerships,
knowhow and value proposition. Meotec, for example, is attempting to differentiate their value
proposition from the existing market of mostly non-‐personalized titanium implants by offering a
degradable implant with heightened biocompatibility, ultimately delivering better results. According to
Meotec, “Investments in analytical machinery and the knowhow behind it are crucial. Competitors must
have top-‐notch analytical capabilities as well as the right scientist for the right machine. Lastly, an
optimized chain of communication is also necessary.” According to BRECA Healthcare, their value
proposition lies in “their level of clinical knowhow and alignment with surgery room standards and
regulations.”
30
In addition to the presence of stiff competition, the power of buyers, specifically surgeons/doctors is a
prominent force at play in the orthopedic implant market. According to both Meotec and BRECA
Healthcare, frequent communication with surgeons and doctors is crucial to determining what new
technologies and treatments are in demand. According to Mr. Baena of BRECA Healthcare, “It is my
belief that research and development into 3D printing as a technology will be temporary. It is the need of
surgeons that will use new solutions to enhance their practice in the orthopedic surgery market that
demand these new technologies. It is the need of new treatments by surgeons that want to try new
treatments and create new sources of revenue.” For this reason, startups must rely on key partnerships
with surgeons to truly understand the future needs of the orthopedic implant market. It is important
that orthopedic implant manufacturers engage in a demand-‐pull strategy to ensure that the R&D being
invested in will ultimately be adopted by doctors/surgeons.
An important factor impacting the market dynamics and value chain is the availability of material
feedstock via key partnerships with suppliers and the level of control a startup has over aspects in the
value chain. For this reason, many startups, including BRECA Healthcare and Meotec, are attempting to
bring more manufacturing-‐related control in house. According to Meotec, “everything manufacturing
related is done in house. We are trying to establish the whole chain from design to manufacturing in-‐
house in smaller batches. The printer hardware is manufactured elsewhere.” With a unique magnesium-‐
alloy material as the basis of their value proposition, Meotec is looking to use their partnerships with
magnesium providers “to round up internal knowhow in-‐house so that we are able to produce from the
melting of the material itself to the production of the implant. By ensuring the feedstock of the
magnesium alloy upstream, Meotec assures a more stable future for their patented, plasma electrolytic
oxidation (PEO) process.
In BRECA Healthcare’s case, their partnerships with material providers are also extremely important to
their stability and control over their cost structure. According to Mr. Baena, “Our printer system can use
several materials that are constantly being created but we tend to work with partners that request
material that are already authorized and regulated. We know if we want to print more complex
structures and applications we will need new materials.” There is a growing development of desire to
bring more and more knowhow in-‐house through these key partnerships. Many startups like Meotec and
BRECA Healthcare are attempting these tactics in a hope that more control of over key activities will lead
to lower and more stable cost structures.
31
Sub-‐question 2: What innovative materials are used in the creation of orthopedic implants?
The current market megatrends regarding the progression of implant materials are centralized around
the transition from biocompatible implants to implants with more active and regenerative capabilities.
Due to the various strength, weight load and processing cost characteristics of the different implant
materials, there has been an array of responses regarding the optimal implant material. Interviews with
industry specialists have indicated that the preferred materials are implant and patient specific, thus
many startups have addressed this trend my utilizing various material combinations that best serve their
desired customer segment. Representation of the markets various perspectives on the future
developments of implant materials are expressed through the interviews conducted with BRECA
Healthcare and Meotec. As two of the potential startups identified during analysis, they exemplify the
spectrum of opinions on the future of implant materials.
According to Jose Manuel Baena, BRECA’s current key activities include “printing PEEK through CNC
machines and titanium through 3D printing systems, creating customizable planning of shapes of
personal implants. Our goal is to continue to develop more customizable and complex shapes, with the
ability to be used for more complex, developing applications.” During the interview, Mr. Baena indicated
that BRECA is also looking to advance with these material trends to provide more bio-‐regenerative
capabilities. The value proposed by a combination of stem cells and biomaterials is the ability to provide
a more effective and cost-‐efficient implant in the future, to the longevity of the implant and reduced
need for revision surgeries. Since 2011, Mr. Baena has partnered with physiotherapists and a
regenerative medicine research center to develop the processes for the use of stem cells and
biomaterials. BRECA currently use PLA and titanium to provide stability and to support the weight load
specific to the patient and implant, discovered in the model. We then use bio-‐regenerative materials. We
need degradable materials that unlike PEEK and titanium can degrade en vivo. This takes time and we
think we still need implant metals until regeneration of the injury takes place. In future, we will continue
metallic implants that are customized and temporary to provide structure and some electro-‐chemical
signal to improve the regenerative process of biomaterials/stem cells.”
In the case of Meotec, they have addressed the transition from biocompatible to active and regenerative
implants through the use of different material technologies, while providing a similar value proposition.
Within the biomedical realm of their business, Meotec manufacturers fixated orthopedic devices
including pins, screws, nails and plates and all devices that allow post-‐operational fixation. This occurs
32
through the creation of magnesium alloy-‐based devices that degrade after implementation. According to
Dario Porchetta of Meotec, “The magnesium material creates a degradable material that limits cost
related to additional implant removal surgeries needed for temporary titanium implants. Any
complication due to post-‐healing migration of the implant is nullified because the implant is absorbed in
the body. It has become more popular due to its cost-‐saving nature.” Similar to BRECA Healthcare,
Meotec is looking to target similar customer segments with a cost-‐saving and efficiency-‐improving value
proposition, via different material combinations. Unlike BRECA Healthcare, Meotec doesn't believe in the
structural capability of polymeric implants. Mr. Porchetta states, “It's not about purity, it's about
structure. It’s inherently very different from a metal. It’s not in its nature to withhold such stresses.”
Sub-‐question 3: How does the 3D printing technology impact the ability of startups to manufacture
orthopedic implants in comparison to conventional methods?
Advancements in the process technologies to manufacture orthopedic implants have surrounded the
capability of 3D printing. There has been intense industry attention and hype invested in the potential
for 3D printing to replace CNC/lean manufacturing as the status quo for implant manufacturing. Similar
to trends in materials, the belief in 3D printing capabilities as the future status quo varies from startup to
startup depending on what key activities make up their core competencies. As a result of the research
and interviews conducted, it is apparent that the increase in 3D-‐printing capabilities is directly correlated
to the trending development of more complex, patient-‐specific, customizable implants. As this trend
gains momentum and regulatory support, many implant manufacturing startups are investing in R&D to
develop these key resources capabilities, while continuing to develop standardized implants via CNC and
lean manufacturing techniques, such as injection molding. As two of the potential startups identified
during analysis, BRECA Healthcare and Meotec exemplify the various points of view on the potential of
3D printing, found throughout the implant manufacturing market. As 3D printing capabilities progress,
Meotec, BRECA Healthcare and many other implant manufacturers have CNC/lean manufacturing and 3D
printing capabilities. Both Meotec and BRECA Healthcare possess the means to manufacture
standardized implants via lean manufacturing/CNC, as well as custom-‐made implants via additive
manufacturing. Found through interviews with industry specialists, many specialists believe that 3D
printing will never fully replace traditional manufacturing methods as the industry standard. This is due
to fact that 3D printing doesn’t present the same cost advantages for standardized implants as
customized implants. The higher comparative processing and tooling costs of a 3D printed implant are
only necessary if the implant must be patient-‐specific, as additive manufacturing enables the production
33
of more complex, personalized structures. For these reasons, both Meotec and BRECA Healthcare see a
future that optimizes the use of both manufacturing techniques, dependent on the patient needs. For
off-‐the-‐shelf products, such as those offered by Meotec, the benefits of economies of scale and lean
manufacturing techniques outweigh the unnecessarily high processing costs needed to create the same
implant via additive manufacturing. As the trend of patient-‐specific applications continues to explode
onto the medical devices market, 3D printing capabilities will continues to be researched and developed
for new orthopedic implant applications, but will never fully replace CNC/lean manufacturing methods.
Sub-‐question 4: What are key indicators of a startup’s investment potential?
1. Syseng; http://syseng.de; https://portal.luxresearchinc.com/research/profile/Syseng
Syseng, with a score of 29, is recognized for its investment potential due to the value of their technology,
market potential and experienced management team. The Syseng business model as analyzed by using
the ‘’Business Model Canvas of Yves Pigneur and Alexander Osterwalder, 2010’’ is to sell products and
provide 3D printing services. They sell printers co-‐developed by a contract manufacturer, with
customized systems to fit specific customer application and materials. Syseng has developed the
“Bioscaffolder” which can print tissue, biomaterials, thermoplastics and two-‐component systems, with a
wide array of materials. Their primary customers include university researchers (80%), government
research institutes (15%) and corporate research development (R&D) groups (5%), particularly in the
implant, surgical tool and tissue engineering markets. Syseng currently has several patents granted and
other filed, with additional IP owned in EnvisonTEC’s bioplotter technology. Customer-‐printed tissues
and parts have been implanted in patients in trials. The addressable market size for polymer and
biomaterial printers is in the hundreds of millions, despite competition with EnvisionTEC, Stratsys,
Organovo, 3D Systems and others. The management team’s decade plus, 3D printer experience and
long-‐term startup involvement is promising. With additional investment, Syseng can continue to expand
market reach, value chain partnerships and material printing capabilities.
2. Nanovis http://www.nanovisinc.com/
Nanovis with a score of 36, is recognized for investment potential due to the value of their technology,
addressable market, partnerships, competitiveness and management team. Founded in 2006, Nanovis
key activity is the development of biomaterials, nanotechnology implant surfaces, cervical plates and
growth factors for developing tissue regenerating implants. The company is specialized in the
development of spines, scaffolds and screws from materials such as PEEK polymers. Three-‐dimensional
34
process technology is being used for manufacturing the implants. Nanovis pursues, in terms of
manufacturing, a product-‐focus strategy which leads, according to their website, to ‘’scientifically
innovative products and value-‐based growth.‘’ The company distinguishes itself from competitors by
having the best-‐in-‐class technologies such as an advanced R&D platform and nanotechnology-‐developed
implants. The other distinguishing factors are company support such as their biomaterials and scientific
advisory board and their compensation schemes such as competitive commissions for distributors.
Nanovis has already received several FDA clearances such as the FDA 510(k) for cervical and lumbar
interbody fusion devices and the FDA 5010(K) for cervical plating. The company received the ‘’National
Institute For Health Awards Grants’’ in 2015 for conducting more research into their FortiCoreTM Spinal
Implants and in March 2016 for conducting more research into Spinal Implants with Nanotube-‐Enhanced
Surface Material. The Venture Capital and Private Equity firms who are involved in Nanovis are Apex One
Equity, Elevate Ventures and Indiana Economic. Due to the lack of primary information, more research is
needed to gain insight into Nanovis’ investment potential.
3. BRECA Healthcare; http://www.brecahealthcare.com/
BRECA Healthcare, with a score of 32, is recognized for investment potential due to the value of their
technology, market position and their potential for future growth. Founded in 2011, BRECA’s key activity
is the manufacturing and sale of implants in cooperation with the EU. BRECA develops custom made
healthcare products manufactured with 3D printing technologies. According to BRECA CEO Jose Manuel
Baena, “our advantages are related to our specialization in medical aspects, efficiency and cost savings,
such as no geometry restrictions in implant fabrication, ability to develop implants with geometries that
promote bone growth into the implant for better fixation, cost reduction in the global process and
shorter patient recovery and reductions of revision surgeries.” Despite uncertain regulatory
circumstances, BRECA is currently operating for within a research capacity, with one system installed in a
surgery room with authorization of the hospital. BRECA will continue to develop models for different 3D
printing applications including pharmaceuticals and bones. CEO, Jose Manuel Baena believes that
regenerative medicines will be a key component of BRECA’s future business. Found in the scaling stage
of startup development, BRECA “recognizes the potential for the regenerative materials and application
market in other emerging countries including Mexico, Peru, Costa Rica and Argentina.” As a contributor
to the industry specialist interviews, Jose Manuel Baena, the CEO of BRECA Healthcare is looking to
attain an investment from Chemelot Ventures to assist in developing new 3D printing applications, more
35
complex implant shapes and capabilities in the field of regenerative materials. The full interview with
Jose Manuel Baena, CEO of BRECA Healthcare can be found in the Appendix.
4. Meotec http://www.meotec.eu/
Meotec, with a score of 32 is recognized for investment potential due to their IP position, value of
technology, partnerships and management team. The company was founded in 2012 by Alexander Kopp
and Christoph Ptockl. As described by during the interview with Dario Porchetta, Meotec’s key activity is
‘’to develop metallic materials for biomedical applications and for the automotive sector.’’ The company
develops biodegradable implants including pins, screws, nails, plates and all devices that allow post-‐
operational fixation. The implants are developed through the creation of magnesium alloys and are
converted to implants by using 3D manufacturing and by using lean manufacturing methods such as
CNC. The main distinguishing factor of Meotec is its magnesium-‐alloy composition, which creates a
degradable material that limits cost related to additional implant removal surgeries that are normal
when using temporary titanium implants. According to Dario Porchetta, “any complications due to post-‐
healing migration of the implant nullified because the implant is absorbed in the body.” Another
distinguishing factor is its patented technique of developing the magnesium alloy through plasma
electrolytic oxidation (PEO). Meotec has the ambition to establish the whole chain from material
characterization and material development to manufacturing of the implant in-‐house. Meotec is looking
to increase in-‐house material development from 60% to 80%, according to Dario Porchetta. The
company has strong partnerships with universities, suppliers and other institution for supplying the
magnesium materials that will be further processed in-‐house by using the PEO technique. In terms of
downstream demand, Meotec is in contact with surgeons, doctors, clinics and medical related institutes.
Meotec’s earning model is characterized by performing material characterization for 3rd parties,
investigation of materials and their involvement in European projects. Meotec is privately owned and
funded by the owners, European Funds and by the the Ministry of Innovation in Germany. Meotec future
outlook is to increase and improve analytical capabilities, achieve more control via in-‐house operation
and to move to a larger facility The investment opportunities for Chemelot Ventures are in the area of
growth financing in location, equipment and people.
36
5.1.3 New Understandings
The original scope of research was in the field of high-‐performance thermoplastic polymers and the
growing use additive manufacturing (3D Printing) technologies to manufacture orthopedic implants.
Upon thorough analysis, findings began to imply that the orthopedic implant manufacturing market had
several material and process technology alternatives to polymers and 3D Printing, with their own distinct
advantages and disadvantages. Additionally, the development of active and regenerative implants
enlarged the scope of analysis into other materials such as titanium, magnesium and biomaterials/stem
cells. As analysis continued, specialist interviews facilitated the understanding of process technologies
beyond the scope of 3D printing, including CNC and injection molding. Ultimately, it was established that
the implant material composition and manufacturing process is subjectively dependent on the individual
patient’s need in each case.
5.2 Conclusion
To provide a general conclusion to this research paper, the implications of the results are related to the problem definition. Due to the currently high costs associated with the manufacturing and use of orthopedic implants
worldwide, the megatrends impacting the orthopedic implant market surround the importance of
developing more affordable, patient-‐specific orthopedic implants. Through the creation of innovative
materials and processing technologies, startups are looking to provide implant alternatives with more
active and regenerative capabilities, ultimately improving the effectiveness and universal affordability of
orthopedic implants. The central research question of this thesis is: ‘‘what are the critical criteria for
selecting startups in the orthopedic implant market?’’ To answer this research question, the Business
Model Canvas framework of Alexander Osterwalder and Yves Pigneur, 2010 has been applied. A
qualitative research has been conducted by interviewing various industry specialists in order to
understand the market dynamics, materials and the most important process technology criteria for
startups. The criteria, which have been found in the conducted interviews, have been combined together
with the criteria of the Business Model Canvas framework of Alexander Osterwalder and Yves Pigneur,
2010 and with the most applicable criteria of the LuxResearch and Pitchbook databases. The
technological value, addressable market size, market growth rate, competitiveness, regulatory factors, IP
positions, management team and key partnerships have been identified as being the most important
criteria for potential startups to compete in the orthopedic industry. The identified criteria have been
used consequently for analyzing 208 startups in the LuxResearch and Pitchbook databases, as well as
additional sources. Each startup company could score 1-‐5 points on each criteria with an average score
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of approximately 27. From the 208 startup companies 11 have been chosen for more analysis due to
their above average scores and alignment with the Chemelot campus. Out of the 11 startups, 4 have
been identified as having the highest investment potential for Chemelot Ventures. These 4 startups,
BRECA Healthcare, Nanovis, Meotec and Syseng are thus recommended for further analysis and contact
by the Chemelot Ventures Investment Team. These startup companies fulfill the critical criteria for
selecting startups in the orthopedic implant market, as well as align with the Chemelot Ventures
investment profile.
5.3 Practical Recommendations
As a result of the research conducted throughout the thesis, 10 startups have been recognized for
investment potential with 4 ultimately being recommended. Given the analysis provided, Chemelot
Ventures is advised to conduct further analysis and establish contact with these 10 startups. The findings
have implied that the startups responsible for creating the most value in the orthopedic implant value
chain are the implant manufacturers. It is thus recommended that Chemelot Ventures continue analysis
on startups that engage in implant manufacturing, with both 3D printing and lean manufacturing
capabilities, as well as R&D in the field of active and regenerative implants.
Number Startup Companies Description 1 Syseng 3D bio-‐printing for medical applications 2 Layerwise 3D, metal-‐based implant developer 3 Organovo 3D bio-‐printing 4 Epibone Developer of a bone reconstruction technology 5 Nanovis Developer of tissue regenerative implants 6 Osteonovus Developer of synthetic bone generation biomaterial 7 T&R Biofab CO Manufacturer of bio-‐absorbable implants with 3D Technology 8 Teknimed Manufacturer of orthopedic implants and biomaterial 9 Meotec magnesium based implant manufacturer 10 Breca Healthcare 3D implant manufacturer Figure 15: Recommended Startup companies
38
5.4 Shortcoming and Limitations
The majority of the project’s limitations stemmed from the time restraints placed on the completion of
the thesis. Given the limited foundation of prior knowledge related to the orthopedic implant market,
materials and process technologies, a substantial amount of preliminary research was necessary to
become familiar with the overall climate of the market. This in turn limited the available time to visit key
opinion leaders and companies’ headquarters, some of which may have had key insights for research on
value chain characteristics. Given the scientific nature of the thesis, the time restraints restricted the
thoroughness with which the process technologies and materials used could be analyzed. This in turn
caused the scope of research to be based more on the general orthopedic implant market, not
specifically targeting a specific implant that has preferred material, process technology and value chain
characteristics that differ among implants. Interviews with industry specialists revealed that the value
chain varies slightly for each type of implant. The last limitation caused by the time constraint was the
depth with which startups could be analyzed. The time limitations resulted in the ability to contact only
50% of the final 11 startups for further analysis. More time would have enabled the collection of more
primary data regarding the startups’ investment potential. An additional limitation came from the
confidentiality and lack of information made available. During interviews with certain industry
specialists, there were several instances where topics couldn’t be discussed due to confidentiality
clauses. Although understandable, this serves as a small impediment to the thoroughness of analysis.
Additionally, the availability of data on the Pitchbook and LuxResearch databases varied for each startup,
making it difficult to provide a uniform analysis of each startup’s investment potential.
39
Chapter 6 – Appendices
Works Cited
"$2.8 Billion Global 3D Printing Medical/Healthcare Market 2016-‐2022 Featuring 3D Systems,
Arcam, Eos, Envisiontec, Materialise,, Nano 3D Biosciences, Organovo, Optomec, Renishaw & Stratasys."
Http://www.prnewswire.com/. PRNewsire, 30 Mar. 2016. Web. June 2016.
"Aromatic Ketone Polymers." -‐ Chemical Economics Handbook (CEH). IHS Inc., Oct. 2015. Web.
June 2016.
Barbella, Michael. "A Bright Future for 3-‐D Printing in Orthopedics." Odtmag.com. N.p., 11 Sept.
2015. Web. 31 May 2016.
Cai, Hong. "Application of 3D Printing in Orthopedics: Status Quo and Opportunities in China."
PubMed Central (2015): n. pag. Http://www.ncbi.nlm.nih.gov/pmc/articles. PubMed Central, 23 Jan.
2015. Web. June 2016.
Frederickx, Ilse, and Katrien Bollen. "Producing Biodegradable Plastic Just Got Cheaper and
Greener." KU Leuven. KU Leuven, July 2015. Web. June 2016.
Grunewald, Scott. "Bodycad Introduces Bodycad OnCall for Custom 3D Printed Orthopedic
Implants and Restorations." 3DPrint.com. 3DPrint.com, Apr. 2016. Web. June 2016.
"High-‐Performance Thermoplastics." -‐ Specialty Chemicals Update Program (SCUP). IHS Inc., Dec.
2015. Web. June 2016.
"Is the Plastic Used in Knee and Hip Implants Safe?" BoneSmart.org. Bonesmart, June 2015. Web.
31 May 2016.
"Lactic Acid, Its Salts and Esters." -‐ Chemical Economics Handbook (CEH). IHS Inc., Nov. 2015.
Web. June 2016.
Leandri, Alban. "A Look at Metal 3D Printing and the Medical Implants Industry." 3DPrint.com.
3DPrint.com, 19 Mar. 2015. Web. 31 May 2016.
40
Manner, Paul. "Knee Replacement Implants-‐OrthoInfo -‐ AAOS." Http://orthoinfo.aaos.org/.
OrthoInfo, Apr. 2016. Web. June 2016.
Morrison, Crystal. "Metal Implant Liability Invigorates Advances in Polymer Alternatives -‐ RJ Lee
Group, Inc. (RJLG)." Http://www.rjlg.com/. RJ Lee Group, 15 Oct. 2012. Web. June 2016.
"Orthopedic Industry Overview." Harriswilliams.com. Harris Williams and Co., May 2014. Web.
June 2016.
Osterwalder, Alexander, Yves Pigneur, Tim Clark, and Alan Smith. Business Model Generation: A
Handbook for Visionaries, Game Changers, and Challengers. Chichester, United Kingdom: John Wiley &
Sons, 2010. Print.
PRNewswire.com/news-‐releases. Rep. no. 3633297. N-‐tech Research, Mar. 2016. Web. June
2016.
"Qualitative Research Methods: A Data Collector’s Field Guide." CCS NEU (2010): n. pag. June
2010. Web. June 2016.
Reisch, Marc. "Resurgence For Medical Polymers." Http://cen.acs.org/. C&en Chemical and
Engineering News, Sept. 2012. Web. June 2016.
Schiavo, Anthony. 3D Printing Update 2016 Edition. Rep. no. 21550. N.p.: n.p., 2016.
LuxResearch. Web. June 2016.
Sieniawski, Jan Ziaja, and Waldemar Ziaja. Titanium Alloys -‐ Advances in Properties Control. N.p.:
InTech, 2013. Print.
Van Eck, Caroline, AF Chen, J. D'Antonio, and F. Fu. Http://www.ncbi.nlm.nih.gov/. Rep. no.
20939778. PubMed.gov, 2009. Web. June 2016.
Vicari, Anthony, and Ross Kozarsky. Building the Future: Assessing 3D Printing’s Opportunities
and Challenges. Rep. no. 13277. N.p.: n.p., 2013. LuxResearch. Web. June 2016.
41
Vicari, Anthony. How 3D Printing Adds Up: Emerging Materials, Processes, Applications, and
Business Models. Rep. no. 16609. N.p.: n.p., 2014. LuxResearch. Web. June 2016.
Vicari, Anthony. Innovating High Performance Thermoplastics: Scouting Process and Material
Technologies for Existing and Emerging Markets. Rep. no. 15819. N.p.: n.p., 2013. LuxResearch. Web.
June 2015.
Relevant Regulatory Documents
"CFR -‐ Code of Federal Regulations Title 21." TITLE 21-‐-‐FOOD AND DRUGS CHAPTER I-‐-‐FOOD AND
DRUG ADMINISTRATION DEPARTMENT OF HEALTH AND HUMAN SERVICES SUBCHAPTER H-‐-‐MEDICAL
DEVICE 21.8 (2015): n. pag. Www.accessdata.fda.gov. U.S. Food and Drug Administration, 1 Apr. 2015.
Web. June 2016.
"Commission Directive 2005/50/EC." Reclassification of Hip, Knee and Shoulder Replacements in
the Framework of Council Directive 93/42/EEC concerning Medical Device (n.d.): n. pag. 11 Aug. 2005.
Web. June 2016.
"COUNCIL DIRECTIVE 93/42/EEC of 14 June 1993 concerning Medical Devices." Http://eur-‐
lex.europa.eu/. Eur-‐lex, 14 June 1993. Web. June 2016.
"Directive 90/385/EEC: Active Implantable Medical Devices." Http://ec.europa.eu/. European
Commission, 20 July 1990. Web. June 2016
"Guidance Document for Testing Orthopedic Implants with Modified Metallic Surfaces Apposing
Bone or Bone Cement." Fda.gov. U.S. Food and Drug Administration: Orthopedic Devices Branch, 28 Apr.
1994. Web. June 2016.
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Interview Questionnaire
Questions related to Market Dynamics
1. In terms of orthopedic implants, can you elaborate on how the value chain appears and where in the chain is value added most?
2. Which environmental factors (PESTEL) have the most impact? 3. How do main players in the implant manufacturing market compete? 4. Who is the decision-‐making unit on materials used in the implant and why? 5. Is it accurate that the patients are the users, the doctors are the subscribers and the insurance
agencies are the payers and what is the impact of this structure on the price-‐setting procedure?
Questions related to Material 1. What materials were used I the past and why? 2. What/who determines the material used within orthopedic implants? How does material affect
implant performance? 3. What are the advantages and disadvantages of titanium implants? 4. In regards to manufacturing implants via 3d printing, what advantages do polymers such as
PEEK, PEKK and PLA have in comparison to titanium? 5. In your opinion, what are the necessary catalysts to encourage the orthopedic implant market to
make the switch from the titanium standard to other materials? Questions related to Process Technologies
1. Can you walk us through the process of producing an implant, from the raw material to the finished good?
2. How has 3D printing affected the value chain process for implants? 3. Explain the regulatory environment surrounding implant production, where’s it heading in
coming years? 4. Which technologies prior to 3D printing have been used for manufacturing orthopedic implants? 5. What aspects do you consider when choosing a manufacturing partner?
Other questions related to Attributes
1. What would be the minimum criteria for startups to survive competition in this orthopedic implant market?
2. Are there other criteria to consider when analyzing startups in this market? 3. Can you think of reasons why you would/wouldn't use them as a supplier? 4. Can you refer any contacts that can help with further questions?
43
Research Population
Network Amanda Tobin Contact: [email protected] Position: Knowledge Expert @ McKinsey Background: Market access, pharma industry, biotech, competitive intelligence
Aylvin Diaz Contact: [email protected] Position: Principal Scientist @ DSM Background: Polymers, biomaterials and coatings Casper De Bruen Contact: [email protected] Position: Director @ Chemelot Ventures & Sr Investment Manager DSM Venturing Background: Business strategy, investments, M&A, venture capital, consulting Dario Porchetta Contact: [email protected] Position: Intern in Biomaterials and Degradation Testing at Meotec GmbH & Co. KG Background: Chemical analysis and biomaterials synthesis and characterization Ed Rousseau Contact: [email protected] Position: Brightlands Innovation Factory Business Development Manager Background: Materials: polymers, coatings, six sigma and 3D printing Jac Koenen Contact: [email protected] Position: DSM Biomedical Materials Scientists Background: Polymer Materials Jeffrey Lutje Spelberg Contact: [email protected] Position: Investment Manager LBDF at NV Industriebank LIOF Background: Life Sciences, Medtech, Chemistry and Agro/food
Jeffrey Williams Contact: [email protected] Position: Chemelot Ventures Investment Analyst Background: Entrepreneurship, operations mgmt, portfolio and market analytics Jens Thies Contact: [email protected] Position: Director Science & Innovation @ DSM Biomedical B.V. Background: Materials and formulations for drug release/implants Jose Manuel Baena Contact: [email protected] Position: CEO at BRECA Health Care and Regemat 3D Background: Medical devices, biotech, bioprinting, product development Kurt Gielen: Contact: [email protected] Position: Brightlands Innovation Factory Business Development Background: Biomedical materials: Product marketing, strategy, life sciences, biotech Marcel Kloosterman Contact: [email protected] Position: Director @ Chemelot & Sr Investment Manager @ Limburg Ventures Background: Startups, Venture Capital, Biotech, Strategy/Investments Nico Stam Contact: [email protected] Position: Brightlands Chief Development Officer @ Maastricht Health Campus Background: Biotech, lifesciences, pharma industry, commercialization, R&D Patrick van der Meer Contact: [email protected] Position: BIF Director of Deal Flow Management
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Background: Business Development, startup consulting, materials sciences Simon Vanooteghem Contact: [email protected] Position: Medical Account Manager @ Materialise Background: 3D Printing, materials and business strategy Tony van Tienen Contact: [email protected] Position: Orthopedic Surgeon @ CSO Trammpolin; Nijmegen Background: Knee, healthcare, clinical research Events Tuesday May 10th -‐ Wednesday May 11th ICT Spring Europe; Morpheus Cup Luxembourg City, Luxembourg http://www.morpheuscup.com Tuesday 24th May 3D DESIGN AND ENGINEERING CONFERENCE Eindhoven, Netherlands http://3ddeconference.com/attend/ Monday May 30th -‐ Tuesday May 31st Biomedica 2016: The European Life Sciences Summit Aachen, Germany http://www.biomedicasummit.com/ Organizations Meotec Contact: http://www.meotec.eu/home/ Activity: Plasma electrolytic oxidation(PEO) manufacturing of metals/Mg for implants
Origin: Aachen, Germany Xilloc Contact: http://www.xilloc.com/ Activity: Custom-‐made Implants Origin: Geleen, Netherlands Oxford Performance Materials Contact: http://www.oxfordpm.com/ Activity: 3D Printing & Implant manufacturer Origin: Connecticut, United States Materialise Contact: http://www.materialise.com/ Activity: 3D Printer manufacturer Industry: 3D Printing industry Origin: Leuven, Belgium Biomet Inc Contact: http://www.biomet.com/ Activity: Orthopedic Implants manufacturer Origin: Indiana, US Mimedis Contact: http://www.mimedis.com/ Activity: Bone Implant Manufacturer Origin: Basel, Switzerland Epibone Contact: http://epibone.com/about Activity: Bone Implant manufacturer Origin: New York City, USA http://epibone.com/about Stratasys Contact: http://www.stratasys.com/ Activity: 3D printer manufacturer Origin: Minnesota, USA
45
Interviews
1. Interview Script: Ed Rousseau: Business Development Manager @ Brightlands
What are the previous materials, current materials and future materials to be used in the
manufacturing of orthopedic implants?
“Very specifically for patients skull and hip implants, one of the current technologies in Amsterdam is the
use of bone cement by surgeons to create a implant through an exothermic reaction up to 80 degrees
celsius. This existing technology has disadvantages of heat generation that can lead to damaged brain
cells, it is manually produced, limiting its ability to be suitable for 3d printing.”
What are the advantages and disadvantages of titanium as an implant material?
“Titanium advantage is that it is easily 3d printable, can produce precisely accurate and strong parts. A
disadvantage is the high heat conductivity of metal makes the implant subject to environmental factors,
for example a titanium skull implant has the potential to attract heat from the sun, increasing the
temperature load on the brain.” In the summer you get to hot, in the winter to cold and this can cause
headaches for the patient.”
In terms of pricing, where is titanium positioned? How are they paid?
“Very Expensive. In Europe and Holland specifically, health insurance companies have the power in the
value chain. They decide if the patient is allowed to get such an expensive implant. They decide to pay
the producer of the part.”
What kind of patient target group are the users of this titanium implants?
“You can't say that. It's much more driven by the strategy and decision of the insurance companies. That
is different from country to country. For instance in Germany, the producer of such an implant is paid a
certain amount by the insurance companies that differs from country to country, despite being the exact
same implant. Pricing is absolutely driven by the insurance companies.”
We see the insurance companies as the payers, the patients as users and the doctors as
subscribers/advisors as to new implants in the market. Is this accurate?
“It is correct what you say.”
46
Can you explain the value chain components of the orthopedic implant market?
“You have the materials supplier, you have the production equipment supplier, you have the company
who buys the production equipment and material and then produces the implant, Xilloc for example.
Xilloc is advised by surgeon or doctor, the patient get the implant as the end user, and the insurance
company is the payer.“
If we take this 3D printing process technology into account, how would the value chain change in
relation to orthopedic implants?
“No, that same producer of implants also has machining equipment. Although they need to produce the
plastic implants, the process isn’t yet certified to be done via 3D printing. Therefore that same company,
Xilloc, also has the computer numerically controlled (CNC) manufacturing equipment to produce the
same kind of implants under approved industry regulations.”
You have said the development of plastics is restricted as of now due to regulations. What is your
opinion in terms of polymer materials, which ones will be used predominantly in this process?
“It is accurate what you say about PEEK and PEKK and PLA. In my opinion, PEEK and PEKK are over
designed according to specifications. You will probably see in the future, the downgrading of polymers to
be used in those implants. Once there is a regulation and more qualified polymers to produce via 3D
printing, i think PEEK and PEKK will lose a lot of the marketplace, as compared to cheaper and easier to
produce polymers.“
And what are those easier to produce and cheaper polymers, according to you?
“PLA is one of them. PMMA and probably also polyethylene, more specifically known as ultra high
molecular weight polyethylene. (UHMWE)”
According to you, the high performance thermoplastics will lose position in the market due to their
high cost per kilogram. How many kilogram is needed to make an average implant. How can it be
compared to titanium in relation to cost?
“For example, I said PEEK is overdesigned, as it can be used at temperatures up to 200 degrees celsius,
making it a very high heat thermoplastic. In the human body, you need temperatures up to 37-‐40
degrees Celsius and that's it. You don't need that high of heat resistance, that's why PEEK is too
overdesigned and expensive”
47
If you take PLA for example, how can we see it is more cost effective than titanium?
“When you produce a PEEK implant via 3D printing, depending on the volume of the implant, you
probably need 5 kg of PEEK to make a part that weighs around only 100-‐200 grams. The rest of that
material is considered to be waste and must be thrown away. The material price of the part itself is
limited but because of the high costs of waste, it makes the use of these high heat polymers
unattractive.”
In terms of 3D printing technology, is the technology process an important cost factor in the allocation
of what a patient/insurance company pays.
“No, when you look at the price of the part, what is paid by the insurance companies is completely
independent of the cost price of the part. The pricing policy is not cost price plus but is a completely
market driven price. What you pay and what the cost to produce the implant are not correlated.
How can you make a comparison between what is cheap and expensive in terms of PLA vs. titanium in
order to switch to this new material technology in the future?
“I think that policy of insurance companies will change in the future. As these implants become more
commoditized, making insurance companies more wary of the implant’s cost price. Then it's important
that they transition to lower-‐cost materials. So let's say in the lifetime of the product, in the first period
of your lifetime, the product has considered to be speciality, sold in the market at a market price. As it
gets more mature, more competition and suppliers of the same material, the cost game begins and
producers must look to optimize the cost efficiency of the manufacturing process. Cost structure is highly
dependent on lifetime of the product.
2. Interview Script: Amanda Tobin: Market Access Expert @ Mckinsey
We would like to know more information about the current trends in the pharma industry related to
the value chain. We have found a trend that equipment development has been outsourced to third
parties, such as startups that specialize in the development of these technologies. Is this industry trend
accurate?
“The reality is that there is a lot of physical technologies that have the chance to be very disruptive to the
healthcare business in the next 10-‐20 years. The really far out stuff isn't delivering yet, (like 3d printing)
but its getting closer and closer. The industry is excited and concerned because it brings threats and
48
opportunities. The medical devices industry is stand to change most drastically. With 3D printing for
example, they can already print orthopedic implants, because they are physical/mechanical components
in the body, but they are also working on the ability to 3D print biological organs with the use of stem
cells. This is absolutely being worked on by small companies and stand to drastically change the industry.
Nowadays, when it comes to orthopedic implants, medical device companies produce these implants
from metal and are incredibly expensive. If you can produce them through 3D printing, costs would be
reduced and customizability would be maximized. Clearly, either a medical device company will go out of
business or get involved and become a player.”
What determines the material used within orthopedic implants?
“It depends on variables such as cost, the state of the patient, degree of customization needed,
private/public treatments. Different materials exist and all are fairly expensive.”
What determines the implant manufacturing process used and how does it compare to the past
production processes in the industry?
“The manufacturing technology for orthopedic implants has already peaked for the most part. Only
changes left are to incorporate materials that are nice and more durable materials. The improvements in
the current technology are incremental in nature, with more emphasis on facilitating usability for
surgeons, implant longevity and implant smoothness. While 3D printing would take the cost out of the
implant procedure. The hospitals could literally print their own implants. Drastic cost differences will
provide more discontinuous innovation.”
Therefore, the value captured will shift to the cheaper implants offered and also the surgery process
conducted? Is this correct?
“In my opinion, the way to make it cheaper… For example, there are implant manufacturers in asia that
aren't very successful in the European market for example, due to dominance by a few major players
that have solidified relationships with hospitals that aren't willing to sacrifice potential quality of these
Asian implants for a cost advantage. When implants are produced in Asia they are often used in the
Asian market. There isn't much of a global market in cheaper implants because it's very complex
precision is needed. I think 3D printed implants are closer to replacing the existing implants than cheaper
implants are. You'll start seeing actual implants in the next 5 years.”
49
In this case, how does the “government as a payer” affect the price setting procedure and
implementation of the implant process?
“Well of course it will be highly regulated because you can't just produce an implant and stick it in
someone from a home 3D printer. Therefore there will have to be certain regulatory standards. The
government as a payer will also care if you can reduce the cost of the healthcare bill with these
technologies. They will embrace this opportunity if the technology can be cheaper. Now doctors always
like using new technologies, new techniques, new innovations, etc. Finally the patients won’t care as
much about the cost as long as the surgery fixes the problem. Rest of the decision making will be in the
hands of the surgeons/doctors.”
Did you encounter startups busy with this technology, that may be in an early stage, have the
technology and are investing in developing scaling up the technology?
“There are definitely companies looking at this that aren't making any money. One company i know of is
called Organova. What they are doing is developing the 3D printing technology in relation to organs,
which is much further off in the development process. There are also several venture capital firms that
specifically invest in startups within these far-‐out fields of process technologies. Hospitals are also doing
their own research, with spin-‐off research funding from large organizations.”
3. Interview Script: Jose Manuel Baena: CEO Regemat 3D and Breca Healthcare
What is the company background?
“Founded Breca in 2011, our core business is the manufacturing and sale of implants in cooperation with
the EU. BRECA develops custom made healthcare products manufactured with 3D printing technologies.
Our advantages are related to our specialization in medical aspects, efficiency and cost savings, such as
no geometry restrictions in implant fabrication, ability to develop implants with geometries that
promote bone growth into the implant for better fixation, cost reduction in the global process and
shorter patient recovery and reductions of revisions surgeries.
Our process: We first receive medical imaging data and have our engineers analyze using software to
create a 3D model based on the image, giving precise anatomy of patient to provide means of providing
the perfectly customized device. The first proposal is then sent to the healthcare professional for
confirmation and screw placement if needed. The implant is then validated via simulation software.
Once studied, the healthcare professional gives final feedback and confirmation, approving the devices
fabrication, shipment and sterilization prior to the surgical procedure. We currently are printing PEEK
50
through machines and titanium through 3D printing systems, creating customizable planning of shapes
of personal implants. Our goal is to continue to develop more customizable and complex shapes, with
the ability to be used for more complex, developing applications.
REGEMAT 3D is a biotech company focused on regenerative medicine and being a leading pioneer in a
new and promising field of bioprinting, that uses 3D printing technologies for regenerative therapies. We
provide bioprinting solutions for the community. We will support you to generate IP by promoting the
creation of an open community to boost the clinical applications of bioprinting. The three Research Areas
are surround but are not limited to cartilage regeneration, tumoral models and ultrasound monitoring.”
What is your overall impression on the future developments in the orthopedics implant market and
the current industry standards relating to 3d printing and the materials used?
“We think that the future developments will continue in metals like titanium as a commonly used
material but we also see a shift to regenerative implants using biomaterials such as stem cells. As of 2011
I have partnered with a group of physiotherapists that are developing all the processes for the use of
stem cells and biomaterials. I have also been in cooperation with a regenerative medicine research
center to create a 3D printing system that is able to combine stem cells with other materials to create a
more effective implant.“
Are printers made at Regemat used at production at Breca?
“No, Regemat is in charge of selling the 3D printing systems/machines. Our business primarily revolves
around sales and developing this technology for applications in the medical/chemical fields. I have
recently been invited by the EU to discuss their interest in launching new regulations for bioprinting and
have requested my attention.”
Is regulation and government holding back the stem cell progression development?
“In Breca, high costs and lack of historical data have created slow progression to get EU regulation
confirmation in the field of biomaterial printing. Given these circumstances, we still do not wait for
government support. EU regulators and governments are starting to consider but prior research in the
field of biomaterials and regenerative implants is necessary. Progression with stem cells is different in
different countries, in EU we are selling our system for research but implementation must be
accompanied by authorization by EU. We don't have to wait for all authorization to sell the product we
can now make money in some applications such as bioprinting in tissues. This year 15 have been sold,
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with an estimated 45-‐50 sold for research purposes by years end. Our system has been installed in one
surgery room with authorization of the hospital. You can print and make money from bioprinting right
now but the real future is 20-‐30 years out.”
How is the current state of competition in the market?
“There are several emerging competitors currently in the field of bioprinting. We have acknowledged
estimated 30 that are in the research phase. It may be more but real players are about 30, most are from
academia and research. We differ due to our clinical knowhow and familiarity with surgery room
standards that align with authorization and regulations. We know regulation takes time but our
knowhow and clinical experience and passion with Breca, we believe is a successful business model.”
What certain groups, (doctors/insurance/governments) are demanding the development of new types
of implants/materials?
“It is my belief that research and development into 3D printing as a technology will be temporary. It is
the need of surgeons that will use new solutions to enhance their practice in the orthopedic surgery
market that demand these new technologies. It is the need of new treatments by surgeons that want to
try new treatments and create new sources of revenue. In the knee prosthesis market for example,
surgeons wants to sell something better, get better results and ultimately a better reputation in the field.
There is definitely a clinical need. We are making money now from research market but I believe the
future is less about a research devices company but more emphasis on pharmaceuticals and
regenerative medicines, selling treatments that go into clinical application.”
How do u see Breca and Regemat developing in the next 5-‐10 years due to adjustments and
developments in the market?
“Right now we are continuing to develop our model of selling 3D system to hospitals. In addition, we
recognize the potential for the regenerative materials and application market in other emerging
countries including Mexico, Peru, Costa Rica and Argentina. In the next 2-‐3 years, we recognize
customized knees and joints as the largest potential markets.
We will also continue to develop models for different 3d printing applications including pharmaceuticals
and bones. In the future we think regenerative medicines will be a key component of BRECA’s business.
We will use regenerative stem cells for injury but also temporary metallic implant to support the loads,
and provide adaptive implants that provide signals to the regenerative part to improve recovery
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processes. Ultimately our development plan is to create competencies that complement both Regemat
and Breca, in a hope to align both companies. In our model we hope that we can soon development a
model that is for drug testing, muscle and bones that differ from our current clinical applications. We
believe the potential for developing new applications are endless. This year's investments will allow us to
continue our research into new potential applications.“
Can the printers you develop use several materials?
“Our printer system can use several materials that are constantly being created but we tend to work
with partners that request material that are already authorized and regulated. We know if we want to
print more complex structures and applications we will need new materials.”
Are you currently partnered with different researchers to find materials?
“We are but they are customers. If they work with us they are going to buy the bio printer. We sell at
better price than the market to provide benefits but with the agreement that all developments will be
providing acknowledgement to our technology.”
What is the progression of materials to be used for orthopedic implants in the future?
“We currently have PLA and titanium to provide stability and to support the weight load specific the
patient and implant, discovered in the model. We then use bio-‐regenerative materials. We need
degradable materials that unlike PEEK and titanium can degrade en vivo. This takes time and we think we
still need implant metals until regeneration of the injury takes place. In future, we will continue metallic
implants that are customized and temporary to provide structure and some electro-‐chemical signal to
improve the regenerative process of biomaterials/stem cells.”
4. Interview Script: Kurt Gielen: Business Development Manager @ Brightlands
In terms of polymers, what materials were used for making implants in the past and why? What are
used now? Why are they better?
ADD LINK OF REPORT HE FORWARDED (DUTCH)
-‐Within the history of biomaterials, three generations of biomaterials have been acknowledged from the
1960’s to the present: They are Inert, active, absorbable and lastly regenerative implant materials that
drive the body to respond in a certain way.
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What are the benefits of the absorbable implants?
“The polymer absorbs and disintegrates and the implant would be replaced by bone again, creating room
for the body to create new tissue. The next step of material is active, where the material sends signals to
the body to stimulate bone growth.”
Do active materials currently exist?
“Yes and no. yes exist but still in early research phases of development.”
What is the main advantage of these polymers over titanium?
“If you relate it to the generational progression, it is the future because with titanium it’s hard to change
the specs of the material. You can increase purity but the question remains if the impact will be big.
Polymers can do many notifications to drive the body to respond in a desired way. That's where the
market is expanding.”
Without 3D, how are implants typically made?
“Standard manufacturing practices use injection molding techniques and other manufacturing
techniques that operate on standard automated production systems, similar to other products.”
Why should industry step into 3D printing if the current models are efficient?
“There is always a patient specific necessity in the implant market that is more achievable via 3D
printing. The ability to personalize complex structures to the patient creates immense benefit. If you
were to use standard injection molding techniques, you would have to make a new mold every time and
that would be ridiculously expensive.”
What are relevant startups and how do they differentiate?
“Xilloc and Oxford Performance Materials are the two most common startups I know of in this field. In
the polymer space, Materialise in Belgium is a reputable startup.”
What is the future in the development of active polymers?
“Like I said in the first generation they were looking for inert materials. For example, a titanium implant
creates stability but does not provide any source of signals to the rest of the body. This is good but it
won’t do any good for people that have nerve damage. If you can make an implant that is just as strong
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but also has a specification that triggers the body to repair nerves, then you can fix that problem as well.
Two things must happen including understanding the biology of the body to figure out what it takes to
repair that spine. That knowhow has rapidly grown in last 20 years. It didn't exist when titanium implants
first came out. Second is you must develop materials that actually enhance those effects in the body.
That knowledge is currently being built up. For example coatings are being used in combination with
titanium to induce and stimulate the growth of bone. Coating is one option, second is playing with the
surface of the material, done by Materiomics in Maastricht, is changing the topography of materials on a
micro-‐scale. If a stem cell attaches to that surface, it has a particular stimulation depending on the
shapes on the surface. You can also play with material specifications and make new polymers that have
similar yet slightly varied outcomes.”
How long until titanium will be obsolete and replaced by polymer implants?
“I don't know because I don't ever know if it will be obsolete. For example in 3D printing its very
reproducible and well known. It is possible that with the development of coatings that apply to titanium,
these developments could provide easier access to the market. But assuming it will be replaced, it would
have to be 20-‐30 years out. Due to the regulatory environment of surgical implants, that will add a
decade to the process. For that it would be good to look at the funnel of developments already taken
place around the world.”
Are the approvals of OPM’s new 3D printing of implants by the US government an example of the
regulatory progress needed to further the polymer implant production development and company
value?
“Absolutely, one of the issues is the lack of approval due to the customer-‐specific aspect that is hard to
standardize and guarantee. Normally when you get approval for a medical product, specs are very
detailed and are the same from product to product. When you make it patient specific, it will have
personalized customizations that change specs and makes it hard for regulatory body that views it as a
new process for every implant. That's what I am not sure of with OPM, did they get approved of patient
specific approval or just approval of creating 3D implants that are standardized and don't provide
customization capabilities.”
Although OPM has FDA approval to 3D print implants, as long as the material stays that expensive,
won’t it take a long time before these polymers become the new standard to replace titanium?
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“I would assume those prices can and drop significantly. That's something you see with every material
and manufacturing of polymers is every time they scale up with production in factors of 10-‐100, prices
tend to drop significantly.”
Do you have any more advice for us?
“I see china and Asia are having an enormous impact on the development of the polymer market and
they place from very different rules than anyone else due to their size and economic status that supports
the development of this market. I would definitely make a note of the impact that the Asian market is
having on the development of these materials. For example, OPM needed years for FDA approval of their
materials. People in China can copy those materials at a fraction of the time and cost and introduce it to
the market, giving them a head start in compared to everyone else. The only question is if these Asian
companies have the ability to penetrate the European markets, it is yet to be seen.”
5. Interview Script: Marcel Kloosterman: Director at Chemelot Ventures and Senior Investment
Manager at Limburg Ventures
What are the most effective for generating startup leads?
“It's a mixture. Its essential to be outgoing, going to startup meetings and analyzing fit (Europe Limited),
internet research, connections/conferences with other VCs that may share interest in startups within
other portfolios, pitchbook and other databases, literature and magazines.”
What are the most important risk criteria within early stage?
“A major problem is the period in which you don't have any financing, often during early stages when
there is seed present but there is an intermediary gap of no financing. In general risk we are willing to
invest in a team of 1-‐2 that are capable but they should be open to expand with the right people that
provide a balance of competencies and risk tolerance.”
How do the startups survive this financing gap?
“Usually by using smart ways of financing. There are some companies which focus on equity financing
but that's kind of stupid but easy. You get money if you have something to deliver. Its more practical to
get non-‐dilutive financing such as subsidies and grants, some even supplied by the Dutch state. If you
would 3 million for next 2 years, you could ask 3 million in equity but the control of shares may dilute.
Dividing up into equity and loans provides the opportunity for more control of shares.”
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Is it an emotional decision by startups to choose equity or non-‐dilutive financing?
“No, it is just a lot of paperwork but VCs can explain that this process can be outsourced and gives
opportunity for VC to hold on to more shares.”
What are most important factors to survive early stage competition?
“Usually IP generation is the first step, without anyone can do your trick. We have one company that still
has no sales after 3 years and they are only generating IP, but this is what we want because it can be a
company that has 3-‐4 business models that we want to protect and are willing to have a high burn rate
with no sales but it isn’t something you do on a regular basis because you want some security of cash
flow and market attractiveness. If you give away your product to early, you’re stuck in a certain business
model and cannot earn maximum returns.”
How do you compare the weights of cash flows vs. the burn rate?
“It should be part of that budget within the business plan. When you reach a certain milestone
(financial/regulatory) then we continue to finance. All investments have tranches that are paid upon
reaching milestones. It helps to have the company focus because if you pay full amount, startups will act
as they prefer without regard for the investor’s opinions.”
What are the basic assumptions for valuing a startup?
“Can be anything, including gut feeling, discounted cash flow methods, peer evaluations and license fees.
It is important to take final exit into account during valuation. Usually I like to have a company that has a
strategic trade sale that has synergies that are aligned with the startup’s core competencies.”
Which financial instruments are used for financing a startup? You mentioned subsidies and equity?
Which are commonly used at Chemelot?
“Of course the subsidies, grants, loans that can be obtained from the Dutch state but they have limited
understanding of startups that Chemelot possesses. They think that if we put in the money, it’s worth
the risk. It’s an interest-‐bearing loan and if the startup goes bankrupt then it is covered by the Dutch
state. If it’s going well then in due time the loan must be repaid with interest. It is much cheaper than VC
money. Often startups use consultants to advise them on how to submit and use subsidies and grants.
Companies in this field are PNO consultants and Ttopstart.”
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Is there a certain stage where you can use the most accurate financial instruments?
“It depends on the time horizon. If we are lead investor then we determine conditions, but when co-‐
investing it isn’t just us deciding. We never put all of the investment capital at closing. Usually what we
would do is supply the money for a certain period with milestones that determine if additional financing
will be necessary and profitable.”
After IP, what would be the next criteria to assess the potential of a startup?
First before IP is management. Management is more important than IP or patentable technologies. The
next part would be the kind of commercial/financial timetable for competitive positioning and
marketability. Just because they will test it doesn't mean the customer will order it. It must be scalable,
margins must be realizable, regulatory issues must be clear and reimbursement, which is often
overlooked. If you have all regulatory and specification thresholds, an insurance company's’ hesitance to
adopt is often due to the unwillingness for insurance companies to reimburse. The relationship with the
final buyer is crucial.
What role does a Brightlands incubator play in your startup assessment process?
It's not yet a major part but they contact startups worldwide, partially through out assistance. We have
communication with their business development team as a collaborative effort to bring startups to the
campus. Depending on specialization areas, opportunities are shared among the Brightlands business
development team and the Chemelot investment team.
What distinguishes you from other investment companies?
We are a regional investor. Most other VCs are financial investors, corporate investors, etc. Financial
investors don’t require proximity as long as it makes financial sense or presents a strategic trade sale in
due time. For Chemelot Ventures its more difficult because we require proximity through expansion or
complete transplant of operations to the Limburg region.
Do you assist these companies in logistics related to moving locations?
Discussions on this topic must start early or it presents a sure-‐stop later on. It must be discussed straight
away to gauge sincerity of commitment to relocation. It’s difficult if you're a regional investor because
we must convince startups to move locations to Geleen.
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6. Interview Script: Jeffrey Lutje Spelberg: Investment Manager @ LBDF
From a startup perspective, what are the common deal structures in early stages?
“We use one common structure and the problem is valuation. We invest in early phase, they present
business plans for future growth. We don’t know if their valuation is accurate and we are unsure of the
true potential. First thing we try to do is cut the potential investment money into parts. We try to make
smaller steps, including the required investment for creating a prototype that can provide proof of
concept and can convince other investors. We invest in very early phase, and the goal is to reach another
phase where other investors step in. Sometimes we co-‐invest with Chemelot Ventures and depending on
the level risk, we share the investment. If we look at the first deal, we require the entrepreneur to share
in the investment. We don't like to do this with shared capital, so we most of the time do it in tranches,
creating a series of investments that are dependent on the startups’ ability to reach set milestones. If
milestones are reached, investments continue through the form of convertible loans. Depending on
results and type of company, the investments stay as a loan. If the valuation is poor then the loan is
converted to shares. That is the most common structure we use. This mediates the risk of a startups
potential failure to reach set milestones. In these tranches we put mild milestones according to the
business plan and milestones set by the startup. It’s very difficult for startups to oppose because they are
responsible for setting their own expectations and believing in their cause.”
How do you prevent share dilution?
“That is the problem because we have funds that can only go up to $500,000. Once we reach our
$500,000 we cannot invest failure and our shares become diluted. What we don't do is an anti-‐dilution
clause because it never works. That is in the contract that if another investor comes in with a lower
valuation than our valuation, then I am correct and receive shares back from the entrepreneur. In our
experience, investors that come in later are interested in the entrepreneur not the seed investor so anti-‐
dilution doesn't support the efforts. If we take same shares (type a) as the entrepreneur the advantage is
that if an investor comes in later who wants to be special and give entrepreneur an advantage, he cannot
do anything with the type a shares because we have the same type of shares. It is dangerous also
because if you give up preferred shares, the entrepreneur becomes very demotivated.”
Is the exit taken into account when valuing and what is is your investment horizon?
“In general, our investment horizon is between 5-‐7 years. Typically what we do is not focus on dividend
payouts, we only focus on total exit at end of horizon. What we like most is an exit to an external party
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who pays a lot but our experience is that is only 10-‐20% of the cases. The other cases are when shares
are sold back to the entrepreneur. External parties offer up to 10x your investment in return while the
entrepreneur presents a 2x to 3x return on the investment.”
How do you keep this rate of return stable if the scope of investments is so diverse?
“The conditions we choose companies by have the potential to have worldwide marketability and IP
protection that provide a potential return of 10x the investment. It’s difficult to reach that with software
and smart services. We have subsidies, loans and seed capital to invest depending on the startup. For
seed capital, my idea is we invest in 10 companies and 9 go caput. We also have subsidies and loans. For
smart services companies we provide loans and subsidies because they are a little further and the
business model is more appropriate for subsidies and grants that support marketing functions that aren’t
part of the core function of the investment fund. The type of funding is dependent on the startup model
and scope. Seed funds are for larger returns and the smaller returns use convertible loans and subsidies
to fund the desired investment.”
How is risk mitigated, are you board members?
“No, I don't like that. When startups are small teams, a board is unnecessary due to the amount of red-‐
tape/rules hinder the process. I personally think board members should be independent and shouldn't
be a shareholder but it's a good way to have a lot of influence and power.”
What is the difference between a great and average entrepreneur?
“First is experience. Often academia comes with mistakes and misplaced passion. We prefer industry
experience within the management team that is familiar with how functions operate in the real world.
An entrepreneur that is willing to invest is a key component. Trust is of most importance. You have to sit
with them every month for years, so the initial phase must uncover the ability for the entrepreneur to
tolerate negativity and tough situations. It is more important to understand the people because the
product adapts to the market but the people stay the same. The flexibility of an entrepreneur is key.”
In terms of business development, how do you get your leads?
“The nice thing about LIOF is we have a regional investment company that talks to entrepreneurs,
incubators, business developers and a whole network in Limburg that connects us with all the startups.
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We look to keep in constant contact, investing about 7 times a year and interacting with around 20 total
companies.”
Do you operate with same proximity clause as Chemelot?
“Yes, we believe in investing in startups that are located or move their operations to the Limburg region.
About half are from Limburg themselves, while the other half move to the region from geographical
locations across the globe. If I see an interesting company, I will ask somebody from business
development to contact the startup and brief them on the benefits that Brightlands presents.”
What is your added value as an investor?
“What we try to sell is our network. We provide capital, services, business developers, connections and
subsidies. We take them in and share our network.
What is the benefit of an incubator program, such as Brightlands?
“Advantages exist in the ecosystem that is available for these startups with assistance in business
development and idea sharing.”
Do you operate with similar databases such as Pitchbook and LuxResearch?
“We have our own databases that compile all startups in Limburg. We also go to pitch events and look
around the region for who is looking for capital.”
Is your relationship with Chemelot more of a partnership or competition?
“We have formal meetings every two months but we speak weekly. We have done 12 cases together and
we are also in the process of two co-‐investments. It is better to co-‐invest due to the investment limits we
have. We are more flexible and less risk of our shares diluting. The difference between VCs are the
stages invested in.
Is VC partnership dependent on familiarity and trust with the management team or synergies in the
investment portfolio?
“Both, we co-‐invest regularly with trusted VCs, but cash is king. We always approach those we know well
first. We don't want to partner with investors that go to a valuation of zero causing us to dilute.
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Corporate investors do that because it makes sense for their business but it doesn't align with our
strategy.”
What objective criteria due you use for financial indicators?
“Of course we take IRR into account but we invest in very early stage startups and they paint us a nice
picture without assurance of an accurate value. We look at the uniqueness of the product and potential
for high margins. We ask if there is a market for it and is the market demanding the product. The need
for a CE authorization in the market is crucial. You can develop a lot but if the regulatory environment
isn’t supported for certain applications then the potential is minimal.”
When assessing a startup do you prefer startups that exist in multiple value chain activities or
specialize in one specific value chain function?
“The thing is that if you have the total value chain, you have the potential for the highest margin. If one
part is two bring the product into humans it is impossible. If you can have the whole chain, you have the
highest value. In time, a startup with specialization in one chain link, the less sustainable the growth of
the startup will be. The market is more accessible for others when you specialize because you are more
dependent on partners and other players in the value chain that can look for alternatives to your
services. Investing a lot of money in the whole chain creates higher margins and more control in
exchange for a larger investment. We first look to see if there are follow up investors because our
$500,000 limit often won't cover the required investment for a startup looking to cover more aspects of
the value chain.”
What are the characteristics of each fund?
“Seed funds are the first investment done by a professional investor. What we see a lot is that investors
invest themselves or with a strategic partner. The average capital invested in seed funds lies between
€200,000-‐€700,000. I would rather invest in good entrepreneurs than an academic with a business plan.
The most common source of failure is our failure to invest enough early on as well as the seasonal
demand for a product. The degree of operating leverage is often too high for the seed fund. The
Nedermaas portfolio consists of subsidies, convertible loans and seed funds. We do an average of 50
investments a year that vary in function. When it is too early for the risk of a seed fund, we would
provide a subsidy/loan that provides investment capital at a lower risk until proof of concept is provided.
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7. Interview Script: Dario Porchetta: Intern in Biomaterials @ Meotec
What is your background?
“I am a biomedical engineer with extensive background in material sciences and characterization. I did
my master thesis at Meotec in relation to magnesium degradation for medical use. I am responsible for
the characterization of the biomaterials and the characterization of the plasma electrolytic oxidation
(PEO) materials.”
What are the core activities at Meotec?
“We have two overlapping fields. It revolves around the PEO process for developing of metallic materials
for biomedical and automotive uses.”
Which area of biomedical?
“We are talking about fixated orthopedic devices including pins, screws, nails and plates and all devices
that allow post-‐operational fixation. We are talking about implants that degrade after implementation.
This occurs through the creation of magnesium alloys.”
How do you manufacture these magnesium components?
“The development originates with the alloy composition. There is a very fine balance between the
mechanical properties and the biocompatibility properties. It all starts with a literature research and we
look at the biocompatibility of the different elements. You have to draw a very fine line between these
two important aspects because if u have an implant that is able to withstand your mechanical stress but
is poisonous to the body it isn’t wanted and vice versa.”
Do you make custom-‐made implants or is it a lean manufacturing process?
“Yes and no. We are very closely moving to a new facility where we will possess both possibilities. Lean
manufacturing for standardized implants and personalized implants via additive manufacturing (SLM).”
In terms of 3D printing, what collaborative partnership do you have?
“Everything manufacturing related is done in house. We are trying to establish the whole chain from
design to manufacturing in-‐house in smaller batches. The printer hardware is manufactured elsewhere.
The magnesium material creates a degradable material that limits cost related to additional implant
removal surgeries needed for temporary titanium implants. Any complication due to post-‐healing
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migration of the implant is nullified because the implant is absorbed in the body. It has become more
popular due to its cost-‐saving nature.”
How are you achieving this while other companies are not?
“There is currently one company that is producing and has human tests. It is because we really invested
into the research. The other company doesn't have as much knowhow in the whole value chain.”
Where do you get your raw materials?
“At the moment, we get different magnesium profiles done by other companies and institutions that we
have partnered with. We rounded up everything to produce internal knowhow and we are bringing
everything to the new facility so that we are able to produce from the melting of the material itself to
the production of the implant. Then we also rely on external characterization. We currently do about
60% in-‐house and we hope this percentage of in-‐house characterization will expand to nearly 80% in the
future.”
Are the materials delivered and ready for processing or is it done in-‐house?
“We still have to do some processes including the PEO process that augments the biocompatibility and
greatly reduces the degradation time to cater to needs of the patient. This is a process that cannot be
done by anyone else, as it is one of our points of excellence.”
Are your partners the material providers doing any processing?
“We hardly ever receive the raw material without some extent of prior processing.
Do you have the same partners or are you constantly looking for new partners?
“We look for new partners wherever opportunities arise but in the near future we will be producing our
own metals.”
How will you be acquiring that core competency?
“We will first need a metallurgical engineer that will be joining the team, as well as the relative
machinery. The time horizon for this investment is within the next year.”
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Who is responsible for demanding the product?
“We will develop a product that we will subcontract to other companies. We will develop technologies,
and then the marketing and packaging of the implant will be done by our commercial partner.”
Will the partner be responsible for relationships with surgeons/doctors?
“Small part is done in-‐house but probably the partner will do it as well.”
What potential threats to market success?
“The tendencies dragging the potential down are the resistance by medical teams to adopt new
technologies. This is impacted by the surrounding regulatory acceptance. Certification of each phase of
the process (Code 13428) is necessary but it doesn’t guarantee doctor support.”
Are standardized implants more easily regulated than the customized implants?
“Yes but the process itself will be standardized so although the customized implant may differ in
structure, the steps will be done according to regulation.”
What is the main difference between your product and the competition?
“The product that exists today in the market is mostly non-‐personalized titanium implants. We are
offering not only a degradable implant but also one with more biocompatibility. We can offer this
product that offers two properties through a process that delivers better results.”
What is the difference between an implant with magnesium vs. stem cells?
“Polymeric implants are wonderful for combining with stem cells for degradation. They just aren’t tough
enough. On one side titanium implants are too strong and present a stress-‐shielding event, caused by
titanium’s high mechanical characteristics in compared to the bone. The magnesium serves to relieve
this stress and creates a more degradable implant.”
Why aren’t polymers more promising?
“It's not about purity, it's about structure. It’s inherently very different from a metal. It’s not in its nature
to withhold such stresses. It doesn't mean that revolutionary polymer materials aren’t capable of being
discovered. But if we look at the feed of research, I don't see encouraging results on the matter. For
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some applications, polymers can work. Their advantage lies in the ability to provide lightweight
orthopedics for injuries with lower load factors on the implant.”
Do you invest in lowering costs related to the processing of the titanium material?
“We don't deal with titanium as much as magnesium. We have specialized in advancing the magnesium
capability and haven’t really tried to develop the cost-‐effectiveness of the titanium material. We are very
heavy on R&D in relation to the development of magnesium.”
How do you make money?
“We perform material characterizations for 3rd parties; we provide investigation on materials that are
sent to us. We are also involved in European projects, so we receive European funds. We finally receive
funds from the Ministry of Innovation in Germany. They are not really our shareholders, as we are
privately held. We can also insource research from other organizations and make money via providing
analysis of technologies that align with our core competencies.”
How are you funded?
“We currently do not have external investors. We are privately funded.”
What characteristics would a competitor need to rival you in the market?
“Investments in analytical machinery and the knowhow behind it are crucial. They must have top-‐notch
analytical capabilities as well as the right scientist for the right machine. Lastly, an optimized chain of
communication is also necessary.”
How important are your IP rights?
“We have a mixed behavior. Part of our IP is patented, including the PEO processes.”
How is your management team constructed?
“Management is run by two minutes, both with 5 years’ experience. The founder’s experience comes
from their studies in the field during their master thesis research.”
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What synergies exist between the medical and automotive fields?
“The alloys that have biocompatible properties are also stable, cheap and easy to produce. All of the
processes are useable in the automotive industry because they need lightweight materials with a special
combination of lightness and corrosion resistance.”
When looking at the next 5-‐10 years, what is the purpose of the investments?
“Collect all knowhow with the partnerships and bring it in house to establish this chain of production
internally, increase and improve analytical capability to achieve the 80% characterization and movement
to larger facility: Location, equipment, people”
How big is the market in your estimation?
“The first step after our big investment we will probably talk about approximately 4,000 pieces the first
year. We have the option in our next facility to get a large modular warehouse that can be adapted to
our production needs. What the will production will be, we really don’t know.”
What’s the biggest threat to your long-‐term, sustainable growth at Meotec?
“The biggest threat to us is the processing of the certifications within the regulatory environment. It has
the most uncertainty.”
What is the geographic reach of your market penetration?
“At first just Europe is our market. It’s not strictly Germany. The certifications are EU applicable making
all of Europe a viable market upon certifications in the regulatory market. The market will be broad as
possible depending on the regulations that pass through on a world-‐scale.”
8. Interview Script: Patrick van der Meer: BIF Director of Deal Flow Management
What is the rate of warm/cold leads eventually resulting in a successful deal?
“That depends. It could be 10% if the quality is at a decent level. I have 450 cold leads in the databases. If
we get into contact with 15, I would say that's a lot, the rest won't react at all. Of those 15, eventually 1
from that list of cold leads should come out. With warm leads, if I speak with LIOF for example, and they
tell me of startups that are currently looking for financing, have some issues but may fit into our scope
and acceleration program; then those are warm leads. The chance that they come out is closer to 40%.
The challenge is to get the right funding at the right moment in time. Chemelot may only pop in at a later
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stage. We offer the ability for startups that align with our field, regardless of phase, access to a subsidy
grant of up to €50,000 and a 6-‐month lease at the Brightlands Campus. You need good quality deals or
you get rubbish results. We’ve seen projects explode due to lack of cooperation or poor technical due
diligence, so the desired results weren’t capable of being met. We need to select much better especially
for the accelerator phase. Thus, they usually have a minimum viable product, prototype or sample. We
look to check the quality of your claim and it’s authenticity. There can be some unknown but a certain
standard must be met. For the incubator that is less the case because of these technical due diligence
costs and time. We don't want to devote too much money to an incubator candidate because we say, to
supply 5 scale ups, we need to start with 100 incubators. 95 will not make it so anything I invest in them I
lose. A certain investment is needed but it’s always a question of how much.”
Who are the parties making funds available for the startups?
“That depends on the phase of the startups. For very early stages for example, you have a large part of
funding from the three F’s: Family, Friends and Fools. Or you have some subsidies, grants or loans that
can be used. The money can be monitored but it’s only a few €100,000 so it’s quickly gone. You have to
be careful that you’re not personally liable for that money or you’ll fail as a startup. Subsidies and the
solid deals with the three F’s that remove risk of failure are keys to succeeding at working on your dream
while earning a low salary.
The shift comes when you need to make a product/sample. You may need a bigger loan by the likes of a
regional investment bank that requires a business plan and visual representation of the product before
financing it. If you have your product and your market validation, you must then validate that it does the
job and has some advantage in comparison to the current standard. The long length of time needed for
proof of concept often provides an issue of funding. Due to the uncertainty of the future and the
product’s potential, many VCs such as Chemelot aren’t willing to invest in projects with lengthy time
horizons. The question is then, where do they get their millions in funding? Some early VCs may come in
but it's a challenge. Often angels exist but they are expensive investors. They often put your back against
the wall but if they have extensive industry knowledge and can help in the process then it’s advisable.
Smart money is the best. You must have investors that align with your goals as a startup.”
Where then does Brightlands Innovation Factory come into play?
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“As BIF, we support the startups with programs, services, facilities and expertise. So We have the
Chemelot campus, Maastricht health campus, hospital and University and in Heerlen, the Smart Services
campus that focuses on IT and big data related solutions. We have experts in the network that we
mobilize to support the startups in their respective fields. They do that free of charge during the
programs. For example, IP is a huge thing in material science. In our program, we plan time to determine
the startups IP and product strategy. If additional services regarding attaining patents are needed then a
cost is incurred. By bringing the right expert at the right moment, they can go quicker through
development. Due to vast networks and business developers across key industry players, doors are
opened that expedite the startups’ development. We also have programs the 4 stages of startup
development: Incubate, Accelerate, Validate and Scale.
In the first, incubator phase, we offer a 4 week boot camp. 3 weeks of master classes, workshops,
speakers and the fourth week to work on the plan to approach a proof of concept from your ideas. We at
Brightlands support the startup during that period which can reach a maximum of 2 years. During those
2 years the startup gets a manager that has weekly communication. Further expertise and business
development support is provided to accelerate the development of the startup. Through advisor
assistance, you get the right funding at the right time, making it more cost and time-‐effective. We
alleviate the startups’ need to focus on funding, directing all their attention on the development of the
product.
In the accelerator, the process is shortened to about 6 months. 3 months is a program boot camp with
intensive support on several topics including strategy, marketing, sales, IP, operations, team dynamics
and others. Critical analysis is conducted through multiple business model canvas drafts and continually
adjusted assumptions. At the end of the program, you know your key customers, market dynamics,
problem-‐solution, branding, industrial partners, marketing tactics, etc. Then the business plan can be
prepared and the validation phase can be addressed.
In validating and scale up phases we don't offer programs because each case has specific, customized
needs. We offer our services and facilities that come at a cost. The first two stages we work with equity.
We offer a convertible loan of 4% of the equity for an incubator and 8% for accelerator. You also get
€700,000 worth of funding and temporary housing in close proximity to the campus. We believe the
ecosystem where the startup develops highly impacts the chance of success.”
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What is your portfolio’s scope?
“It is materials and chemicals in the broadest sense. We have a now split in bio-‐based materials, with
some focus on polymers and composites due to the campuses’ history. We don't reject startups focusing
on pure metals and ceramics, but the Chemelot campus is often too expensive for an imperfect fit.”
9. Interview Script: Jens Thies: Director Science & Innovation @ DSM Biomedical
What is the unmet need in the market?
“When looking at diseases of the knee and other joints: If left untreated will uncertainly cause
osteoarthritis and if that is left untreated, a full replacement is necessary. Current knee replacements
have a lifetime of about 15 years, with additional revision surgeries increasing in cost and complexity due
to less healthy bone to work with. This can lead to a higher chance of infection. For this reason there has
been an effort within orthopedics to extend the first knee replacement procedure as long as possible to
delay future operations. From a healthcare economic point of view, the more you delay revisions, the
more people die before they need an additional operation, ultimately lowering costs. There’s huge
economic benefit by delaying the need for revisions by even a few years. That is in fact the unmet need
in the market. The tricky thing is economics and cost. Microfracture procedures don't cost much. It takes
only about 15-‐20 additional minutes to clean up, eliminate rough edges and drill the hole in the bone.
The patient would then need a few months of physiotherapy and rehabilitation. The more advanced
therapies require an additional procedure and the culturing of cells in a stabilized and sterile
environment that is comparatively complex and costly. There are low-‐end procedures, being
microfracture surgery, high-‐end via cell therapies and procedures in the middle of the complexity/cost
scale that also exist. Studies like this take a very long time so many of these procedures don't have
enough historical data to compete directly with microfracture procedures.”
Who demands the use of these different procedures?
“You've got to segment the patient by age, lesion size, position and ability to pain. If you’re a sports med
doctor with a 38-‐year-‐old person with good health insurance, then more expensive procedures are
recommended. Someone that is older with more standard insurance would be recommended to use the
microfracture procedure that is less costly, complex and durable. It comes down to the type of patient
and clinician’s preferences. As a non-‐expert in surgeries, it seems to me that in comparison to more
proven technologies such as stents in the heart, knee cartilage operations are less assured of results. It
has been documented that these procedures help but aren’t proven to really work. There’s no home run
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technology. That's great from an entrepreneurial point of view because there is an impression that the
market need still hasn't been met.”
What is holding the market’s adoption of new implant materials back?
“If you’re looking at this from a materials development point of view, its even more difficult because
introducing a new material into a medical device is a long, hard and expensive road. In order to show
that a new procedure is better than the standard, a lengthy clinical trial is necessary. You would have to
have hundreds of patients, at least 5 years per patient and patients that are suitable for research. To
assure a sufficient sample, finding patients with isolated defects but no additional issues is highly
difficult. The clinical trials often look at pain as an outcome, with patients grading pain from 1-‐10. This
makes it hard to standardize and isolate the specific defect pain source. Imagine you want to make a
new knee that lasts not 15 years but 20 years. Your clinical trials must then be greater than 20 years,
often too long of a horizon for investors and industry professionals to risk.”
What is the risk of adopting new materials as the standard?
“The time horizon and the investment are crucial. When talking about knees, the devices are good you
just get old. These implants are primarily made of titanium and UHMWPE (ultra-‐high molecular weight
polyethylene.) That works well so I don't think there will be a huge amount of innovation in the implant
composition.”
Is the adoption of new process technologies more feasible?
“It’s possible that there are benefits in making piece-‐specific implants. Companies like Episurf use
machining to construct their implants. I’ve heard a lot about how 3D printing has the opportunity to
revolutionize healthcare but I don't see the need. Its cool technology and I know people will use it but I
only see two reasons for using it: customizable, patient specific, on-‐demand capabilities, as well as the
ability to construct complex designs that are able to be made in another way. The additive
manufacturing technologies present limited benefits in comparison to traditional machining methods for
manufacturing standardized implants.”
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Is there any chance of price impact through changing the supply chain?
“Maybe, but I don't think the benefits are huge. I wouldn't be surprised either way. I think supply chain
management, warehouse inventories are important but is it worth investing the amount of initial capital
outlay needed to establish localized, quality-‐assured plants? The costs of altering the supply chain at this
point are an enormous investment. I see the fantasy there but I see the reality being pretty tricky.
I approach it in this way: can you find an unmet need that would be possible to address with better
technologies and materials. Really understand the unmet need and why the current offerings don't
satisfy the clinicians. Only then can you understand what technologies and processes are needed to
make that device. If the process requires new materials and potentially 3D printing capabilities, then that
is the only time I would agree to adopt the new process technologies.”
Do companies in emerging nations have the potential to impact the European market due to more lax
regulatory environments?
“No, although the regulatory environment may be more lenient in those countries, Europe and the US is
where the value is located. If you want to exist in our markets, they must go through our regulatory
system. They may have an advantage to get a head start in their market but we all have to go down the
same regulatory paths to achieve a global scale.”
What are key success factors for startups in this market?
“They need four things from a business point of view: clear and well-‐formulated understanding of the
unmet need, technology that works, operational and profit feasibility and the character of the team. It’s
important to see the passion, drive and awareness of what it takes to truly succeed.”
What factor(s) are the biggest determinants of the technological progression in this market?
“The regulatory environment is crucial throughout the product development process. You can get a first
thought on potential via animal models. To reach human clinical trials, proof of efficacy in animals isn’t
needed, only safety and biocompatibility.”
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Who is the decision-‐making unit in this value chain, responsible for the shift in materials/process
technologies?
“It’s in flux. It used to be the doctors. If a surgeon requests a device/product, generally they get it. If it's a
standard, mass-‐produced product such as a stint, there is currently more control vested in the
purchasing departments of hospitals/groups of hospitals. Hospitals often team up to put pressure on
medical device companies to get a good discount on standardized products. Other things that are less
standardized are still under more control of the surgeons. A market trend is the shift in purchasing
power from the clinicians to the purchasing departments in hospitals.”
What is the insurance company's position in the value chain?
“Everything is reimbursed. Depending on your health care coverage, there are certain cost and
treatment levels covered by the insurance company. As long as the hospital fits with the coverage then
costs are reimbursed to the patient without issue. Insurance companies never show preference in the
specific product used, as long as they are in the same price range.”
Where is the most value created in the value chain?
“We call the implant manufacturer the channel captain in the value chain. Another huge player on the
other side of the customer in the value chain is the insurance company that reimburses the patient. The
most important link is the medical device companies. Any small startup exit strategy is to be acquired by
the medical device company. It would be insane for the small startups to directly supply hospitals due to
the need for hundreds of salespeople. 20-‐30 salespeople would be more appropriate to provide a proof
of concept on a regional scale until adopted by a global medical device company.”
10. Interview Script: Simon Vanooteghem: Account Manager @ Materialise
How do 3D printing and implant manufacturing align?
“The goal is to provide patient specific solutions. We are aiming where conventional technological
treatments aren’t sufficient. 3D printing won't be the standard for conventional implants but more
necessary for complex patient-‐specific solutions. We have created “guides” that predetermines holes for
the implant via a simulating software package. We 3D print the guide, align it on the location of the
surgery and can more efficiently and quickly perform the screwing necessary during an implant surgery.
This increases surgical accuracy and minimizes the manual invasiveness of the surgery. Because guides
pre-‐define the drill holes, the surgical procedure time is also drastically reduced by about 50%. Recovery
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time is also reduced. The advantage is that its patient specific, guaranteeing fit in the patient the first
time and assurance of a long-‐term recovery. Patient specific implants are currently very expensive, so
only complex cases are applicable. To make these solutions cost effective, we have been gathering data
to make hybrid implants that use a population analysis to fit the largest part of population.”
How is the patient-‐specific data collected?
“You got to a hospital. You have scanners (MRI, CT, Ultrasound, etc.) that provide layered images. The
Materialise software bundles that stack of images to enable the creation of the 3D implant model.
Engineers do the designing because surgeons don't have time. Surgeons are collaborating with
engineers. Surgeons prepare surgery, engineers provide approval and the surgery is performed. We
provide a platform that facilitates communication between surgeons and engineers. The software
package is closed to provide revenues. It is important that our software has FDA approval that gives
certification to the tool that makes it hospital-‐certified as well as research certified. These procedures
are often highly monotonous and time consuming.”
What is the ratio of engineers to surgeons?
“It can be one on one. The engineers often work at Materialise, not on a specific-‐hospital basis. Surgeons
send the data to Materialise’s engineers. The engineer then creates the implant via the software/data
and then sells it back to the surgeon. There are also engineers that work at a specific hospital when the
hospitals are maintaining their own 3D printing departments.”
Can you walk us through the selection of implant material?
“It’s dependent on the type of application. For implants, its usually titanium because its positive ratio
between strength and weight. It is also important that the titanium implant has a porous structure,
which means it has small holes. This allows the implant to basically merge with the bone, which is a
stronger interaction than a smooth implant would provide. Porous titanium has less heat-‐absorption
characteristics, making it less sensitive to environmental temperatures.”
Do you buy the materials pre-‐processed or in their raw form?
“We usually buy materials that are already prepared. We don't process raw materials; we focus more on
the development of the associated 3D printing software.”
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Where is the market going in relation to trends in orthopedic implants?
“There are more and more patient specific solutions. 3D printing solutions are a bit more expensive but
do provide a more assured long-‐term recovery.”
What is the main driver of patient-‐specific solutions?
“Standard implants don't work anymore. They require more frequent revisions and also have the
potential to create additional injuries due to improper fit with the bone. A patient-‐specific solution can
take the anatomy into account. 3D printing will never be the standard technology because the implant
must be complex enough to justify the cost. For now there is also no reimbursement. This is important
because if a surgeon wants to adopt 3D printing, they must ensure that the patient is capable of paying
for it. There is also not enough historical data to prove the long-‐term success and effectiveness of 3D
printing, creating uncertainty in the market.”
Who is responsible for reimbursement of costs?
“The surgeon still pays in most countries. In others, such as Belgium, the patient must pay for it. The
government and regulatory environment are deciding factors in the adoption of 3D printing technologies
due to the impact these regulations have on insurance coverage.“
How do you view implant progression from biocompatible, active to regenerative?
“It’s heading nowhere for now because its still in the research phase. Universities have started projects
in that field. We are collaborating with companies to investigate regenerative implants but it’s definitely
futuristic at the moment. The regenerative, stem cell and bio-‐scaffolding technologies are now being
researched.”
In terms of warranties, who is responsible for mishaps in the implant process?
“Terms in conditions are created to place end responsibility on the surgeon. The surgeon is responsible
as long as all regulatory stipulations have been met.”
What environmental factors are most influential in supporting or hindering the advancements in 3D
printing technologies?
“3D manufacturing technologies will never fully replace traditional manufacturing methods for more
standardized products. The amount of materials and costs of manufacturing are expected to improve. It
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is highly dependent on the regulatory acceptance of governments. Without the proper CE Markings and
FDA approval, the advancements in 3D printing will never reach it’s potential. Our focus is on the
software application. We have the largest European printing facility here in Leuven but more and more
commercial companies have their own 3D printing parts. What is really important is the constant need of
software. Our software capabilities increase efficiency, speed and value of the 3D printing process
11. Interview Script: Tony van Tienen: Orthopedic Surgeon
What are shortcomings of polymers at implant materials?
I started with the concept of a resolvable, porous polymer but it didn't seem strong enough. I realized its
impossible to create a complete polymer, knee replacement implant because the weight load placed on
the knee is just too strong. You can make stiffer polymers but in the knee, you need to protect cartilage.
It needs to be flexible and strong. Up to now, I have found no polymer that can resist that force without
reinforcement with other polymers/materials. The polymers are in development but to say that
everything can be done with one single polymer isn’t possible.
What is the main advantage of polymers at implant materials?
It would be very easy to make implant out of one single polymer. 3D printing doesn't create a strong
enough implant while injection molding is proven to do so. If you can deliver one-‐polymer implants that
are strong and flexible enough then it is very easy to injection mold. Currently, layering must be done to
create a combination of stiff, strong material and flexible material. Polymers within the same family
attach easily to each other.
Does the surgeon demand these technology progressions or is it pushed down from the
technology/material developers?
We both are. I’ve always had to work with polymer chemists or biomechanical engineers. They all ask
questions and I deliver requirements. I request implants with certain characteristics and the engineers
look up feasibility and attempt to cater to demands. If it isn’t possible, a collaboration to meet
requirements occurs.
Who is the payer of the implant?
It depends on the country. Insurance companies have codes for different types of implants. If an
abnormal procedure is needed then it is probable that the insurance company will not cover it.
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Does the process technology affect reimbursement?
No, insurance companies don't care about implant origination or manufacturing procedures. As long as
long-‐term historical evidence is given and proof of a reduction in costs to the insurance companies are
likely, then insurance companies are more willing to cover the implant procedure. They aren’t looking for
something new, just something more cost-‐effective. They are short-‐term oriented. Within 1-‐2 years, cost
reductions must be notable.
In terms of liability, who is ultimately liable for implant defects/failures?
As long as it's a surgical procedure failure, then the surgeon is liable. If a problem occurs, the surgeon
does his homework and analyzes data related to the clinical feasibility of the implant. From there the
surgeon can understand where the mistake was made, either by him or the implant manufacturer. If
there is an improper CE marking or a technical problem, then liability is placed on the manufacturer.
What level of skepticism do surgeons have when anticipating the possibility of a new
material/technologies eventual certification?
A very high level of skepticism exists. When looking at the potential for new polymer materials to use, I
start with materials that have met all the necessary regulatory requirements. This improves the chance
of getting that implantable material into human trials and to the market as soon as possible. If you
attempt to use materials that have no prior human trials or proof of concept then the time horizon to
getting that material into a human body can take upwards of a decade.
What is your stance on 3D-‐printed implants?
I think there is a lot of marketing involved in 3D printing. If you are really critical about how many
implants are used that are made via 3D printing, then you see that is a very few amount. It is mostly
metal-‐based materials not polymers. There is hype but I really doubt that it is legitimate. You need the
medical device companies to get interested in the new developments because you need global support.
What must occur for 3D printing of implants to become an industry norm?
I think Materialise is a company that is assisting in this, through their development of guides that
facilitate the implant procedure. The other advantage of 3D printing is that you don't need the molds,
making it much cheaper. First, it must be proved that the strength of the implant made via 3D printing
has the same or stronger strength properties as an implant made via injection molding.
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What about the 3D printing process is cheaper than injection molding?
The mold itself is extremely expensive. A personalized mold can cost around $1000. 3D printing is
essential for personalized medicine because it uses computer model instead of molds for every patient,
which is a very costly exercise.
Where is the market heading from a process technology viewpoint?
I think the market moves slowly. I don't see the introduction of 3D printing making a huge difference. I
see the introduction of new polymers with better characteristics will make a larger difference. 3D
printing may assist in reducing costs of injection molding techniques but I am unsure if the 3D
manufacturing technique can guarantee the reproduction of identically sound implants. In conclusion, I
think we need better polymers instead of better ways to produce them.
How do large medical device companies impact startups?
Startups are always looking for an eventual exit and large medical device companies represent an
opportunity to sell their innovations to an organization that can implement them on a worldwide scale.
What is your opinion on the development of regenerative cells?
I have no confidence in that development. It's more a scientific exercise than it is a real solution. The
limitations of my beliefs are the introduction of active but not full-‐fledged regenerative implants.
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Desk Research Data
This section briefly introduces the reader to the current publications on the biocompatible materials,
process technologies and market dynamics within the orthopedic implant market.
What innovative materials are used by startups in the creation of orthopedic implants?
Innovations High Performance Thermoplastics: Scouting Process and Material Technologies for Existing
and Emerging Markets, December 2013. (Anthony Vicari)
According to lead analyst, Anthony Vicari, “high-‐performance thermoplastics operate at the frontier of
current polymer performance capabilities and offer the possibility to replace advanced metal, ceramic,
and thermoset parts with lighter weight, multifunctional thermoplastics that are often faster to
manufacture.” High performance thermoplastics are a subset of polymers that soften or melt when
heated, “offering a combination of high strength, high melting point (defined here as having Tm above
150 degrees Celsius) and chemical robustness or inertness (resistance to acids, bases and/or organic
solvents).” HPTPs currently have the opportunity to gain traction due to growing megatrends supporting
more sustainable manufacturing practices, creating lightweight alternatives for incumbent materials that
have been developed to their limits. Anthony Vicari’s analysis provides a detailed account of the
potential for HPTPs to create viable material alternatives in the medical implants arena. The analysis
gives insights into the benefits, challenges and implications of developing HPTPs to be used in orthopedic
implants. In general, HPTPs offer the possibility of having materials that are lighter, multifunctional and
faster to manufacture than the metal and ceramic materials used previously. Despite this potential,
market penetration of these materials remains highly limited due to the severity of costs. Given the
increased amount of purity and stability needed, these HPTPs require higher levels of energy during
manufacturing, ultimately increasing tooling costs and limiting the ability for small industry players to
adopt the materials as the industry standard. The report will incorporate several aspects of this analysis,
using Vicari’s findings on high-‐performance thermoplastics to gauge the potential for HPTPs to
revolutionize how orthopedic implants are created and used.
High Performance Thermoplastics: Specialty Chemicals Update Program, December 2015 (Emanuel
Ormonde, Masahiro Yoneyama, Uwe Loechner, Xu Xu)
This report focuses on “high-‐performance thermoplastics, which are highly specialized polymers used in
very demanding applications.” The report delves into the HPTP industry, the profiles of HPTP producers
and market megatrends that are revolutionizing the opportunities made available for HPTP producers
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and end users of the material. This report will provide concrete data on the world consumption of HPTPs,
the major drivers of growth in the market and the relative advantages and disadvantages that HPTP
manufacturing has over materials such as metal and ceramics, that were the prior industry standard for
orthopedic implants. By understanding the recent market developments, key drivers of change and
notable producers of HPTPs, a holistic view of the industry can be seen. This will provide the basis of the
objective criteria that is to be used for the analysis of emerging producers and users of these high-‐
performance thermoplastics. This report will account for a large portion of the foundation of our
research pertaining to the development of innovative HPTP materials that can compound polymers by
combining HPTPs and other materials. Ultimately, these findings will provide a source to define the limits
of the materials scope applied in this research report. In order to ensure that the findings provided are
conclusive, the materials scope will be limited to “semi-‐crystalline high-‐performance thermoplastics.”
The basis of our analysis will be to understand the relevant advantages and disadvantages that these
specific polymers offer, in comparison to prior, standard, metal and ceramic orthopedic implants.
Aromatic Ketone Polymers, Chemical Economics Handbook, October 2015: (Emanuel Ormonde,
Masahiro Yoneyama, Xu Xu) Polyetheretherketone (PEEK)
Within the Polyaryletherketone (PAEK) family of semi-‐crystalline, high-‐performance thermoplastics is a
specific colourless, organic thermoplastic polymer known as Polyetheretherketone (PEEK). As discussed
by Emanuel Orlando and Vicari in the Chemical Economic publication of October 2015,
Polyetheretherketone or PEEK is globally recognized as the most commonly used member of the PAEK
family, accounting for 85-‐90% of the world production. Classified as a member of the PAEK family (AKA
aromatic ketone polymers or AKP), the crystalline, thermoplastic material combines high strength, high
biocompatibility and chemical robustness together with exceptional high temperature performance. The
average melting point or Tm is between 340 °C and 390 °C and the glassy transition to a more liquid
state or Tg is between 140 °C and 160 °C. According to Mr. Orlando, PEEK has been used since Victrex
(world leader in the manufacturing of polyketone or polymers) launched medical-‐grade PEEK products in
1998. The material has been used in implantable medical devices, such as orthopedics, due to its
inherent purity and resistance to virtually all organic chemicals. Other industries in which PEEK is used
are aerospace, oil and gas. The disadvantages of PEEK are its high price and the processing complexity.
Raw PEEK sells for $75/kg to $150/kg. Due to its high melting point, molding PEEK parts requires
processing under high temperatures. This process results in increasing tooling and energy costs and
consequently it prices the material out of the market for most demanding applications. Emerging
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methods such as 3D printing may provide a solution for lowering the process costs, however this
technology still needs to be validated.
Aromatic Ketone Polymers, Chemical Economics Handbook, October 2015 (Emanuel Ormonde,
Masahiro Yoneyama, Xu Xu) Polyetherketoneketone (PEKK)
Found in the same PAEK family as discussed above, PEKK is also a semi-‐crystalline thermoplastic, sharing
similar traits including, “high heat resistance, chemical resistance and the ability to withstand high
mechanical loads.” Manuel Orlando further states in the same article that Polyetherketoneketone
(PEKK), comparable to other polymers found in the PAEK family, can also be used for the development of
orthopedic implants. The average melting point or Tm is up to 204 °C while that of PEEK 390 °C. The
glassy transition to a more liquid state or Tg is between 159 °C and 250 °C while that of PEEK is between
140 °C and 160 °C . PEKK has an advantage over PEEK when it comes to the development for more
lightly materials. It is used to replace aluminium in structural components and, medical components and
in aerospace application where high strength to weight properties are needed. PEKK has an outstanding
resistance against flame, smoke and toxicity. The material has also a high toughness and damage
tolerance. Raw PEKK sells at the same price point as PEEK, a approximately $75/kg to $150/kg.
Disadvantages of PEKK are similar to PEEK in that the high tooling and energy costs to manufacture these
polymers create barriers against the industry’s complete adoption of the technology. Due to “high
monomer costs, the difficult processing conditions required and the small plant sizes” all share in the
responsibility for the high cost of production for these polymers, ultimately limiting the amount of
players in the industry that can afford to use and sustainably develop this technology further into the
industry.
Lactic Acid, Its Salts, and Esters, Chemical Economics Handbook, November 2015 (Marifaith Hackett,
Adam Bland, Lei Zeing, Rita Wu, Takeshi Masuda
Plant-‐based lactic acid is the starting material for polylactic acid (PLA). It belongs to the family of semi-‐
crystalline thermoplastic polymers that are composed of compostable (biodegradable) bioplastic. The
main advantages of PLA are due to the material’s heat resistance and additive properties that enhance
the material’s processability, toughness, and stability. It has the potential to be used for the
development of biomedical devices and orthopedic implants. Other applications are for instance food
packaging, compostable drinking straws and compostable trash bags . Due to the material’s structural
adaptability, the processability of PLA aligns perfectly with the application of the three-‐dimensional (3D)
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printing filament. However, due to low crude oil and natural gas liquid prices, prices for competitive,
fossil fuel-‐based polymers could lead to a slower growth in demand for PLA.
Titanium Alloys-‐Advances in Properties Control, May 15 2013. (Wilson Wang & Chye Khoon Poh)
According to Professor Wilson Wang and Chye Koon Poh, titanium implants are the current status quo
for developing orthopedic implants, due to their biocompatibility, low modulus of elasticity, and good
corrosion resistance. Other favorable factors that are discussed are high strength, rigidity, fracture
toughness and their reliable mechanical performance as replacement for hard tissues such as bones. The
product life cycle of titanium based orthopedic implants is approximately 10 years, however, lack of
integration into the bone occurs often and leads to the failure of the implant, according to professors.
The resulting problems due to implant failures are revision surgeries that increase costs to the patient.
The article further discusses the reason for implant failure, known as ‘’aseptic loosening’’ or the failure of
the bond between the implant and the bone. The implant failure, together with absorption of
temperatures can lead to complications, causing alternatives such as polymer implants to become more
relevant. Both professors argue that titanium will stay the status quo for orthopedic implants until
polymers provide concrete proof that the material complies with the demanded regulations.
How does the 3D printing technology impact the ability of startups to manufacture orthopedic
implants in comparison to conventional methods?
Building the Future: Assessing 3D Printing’s Opportunities and Challenges, March 2013. (Anthony
Vicari, Ross Kozarsky)
According to Vicari, “3D printing’s biggest benefits include enhanced materials utilization and part
complexity, potential for multifunctional customized structures, streamlined manufacturing and boosted
open innovation. The major challenges currently hindering the technology’s commercial penetration
include material cost and selection, printer throughput and resolution and adequate design software.
The analysis in this report uses the Lux Innovation Grid and other forecast model analyses to understand
how the 3D printing market will develop, how the competitive landscape will shift and how global
megatrends are driving interest in 3D printing. Vicari’s analysis also provides detailed background on the
numerous technological processes within 3D printing, including stereolithography, digital light
processing, sintering, melting, fused deposition modeling and more. This report provides an excellent
foundation for understanding the 3D printing landscape and how global megatrends may impact the
future market size, competitiveness and sustainability.
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How 3D Printing Adds Up: Emerging Materials, Processes, Applications, and Business Models, March
2014. (Anthony Vicari)
In this report, Vicari provides an overview of 3D printing including the relevant printable materials by
industry and a view of the competitive landscape through the Lux Innovation grid. With this grid, the
report provides a clearer depiction of the emerging printer developers and printed part developers. With
this landscape, Vicari then provides a forecast for the 3D printing market, for the next decade. With this
report, Vicari provides his interpretation of the potential of the 3D printing market. The competitive
implications of shifts in emerging materials, process and applications are provided through the use of
business models and scenario analyses, ultimately providing a deep level of insight into how megatrends
in the market may impact the 3D printing’s technological development. To conclude the report, Vicari
creates an overview of key 3D printing companies, establishing a foundation for future research on
potential warm leads within the orthopedic implant industry.
3D Printing Update 2016 Edition, April 2016. (Anthony Schiavo)
As stated in the Executive Summary, “the 3D Printing Update report assesses emerging start-‐ups and
established players on the Lux Innovation Grid to identify winners, losers, over-‐hyped start-‐ups and
hidden gems. The central messages of this update are meant to highlight the current trends within the
3D-‐printer manufacturing market as well as the industry life cycle across all printing platforms and
applications. With this report Schiavo attempts to show how “established printer corporations have
come under attack from a wave of startups with alternate technological approaches and business
strategies.” It is Schiavo’s belief that the maturity of the printing platform/application market has shifted
the core challenge for end users has taken a shift from the technology itself to a more centralized focus
on strategy development and implementation. As stated in the report, 3D printing is defined as the
additive manufacturing of objects by depositing and patterning successive layers of material. With this
2016 update, a clear image is created, regarding how the 3D printing technology value chain has
developed and where developers of the technology find themselves positioned within the orthopedic
implant industry. Given the background information within Schiavo’s report, LuxResearch has also
provided an innovation grid that assists in determining 3D developer positioning by gauging against two
criteria, technical value and business execution. By also incorporating variables such as maturity and a
ranking referred to as the “Lux Take,” Schiavo’s report provides a basis for fundamental comparing the
potential of 3D-‐Printing technology developers. With this additional insight into key players in the
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market and emerging startups, Schiavo creates a foundation to understand how value is created within
the orthopedic implant value chain.
Application of 3D printing in orthopedics: status quo and opportunities in China, May 2015. (Cai Hong)
According to Cai Hong, the application of 3D printing in orthopedics is experiencing a rapid transition,
with “real world” clinical translations as the only valid opportunity to comprehend 3D printing’s place in
the future of orthopedics. “Currently a major limiting factor may be the policies and regulations from the
government, particularly those on the manufacturing of the 3D printing-‐based patient-‐specific implants.”
Hong’s report provides a perspective on the implications that the introduction of the 3D printer has on
the global orthopedic implant market. With the use of computed tomography (CT) and magnetic
resonance imaging (MRI) technologies, 3D images and ultimately 3D prototypes of bones can be
obtained through the use of a layered manufacturing technique (LMT). These techniques are being
mimicked for teaching, presentation and surgical design purposes and are becoming the basis for rapid
prototyping manufacturing (RPM) techniques. As the 3D printing technology gains traction in the field of
orthopedic implants, it is noteworthy that this technological development is accompanied by the
possibility for less-‐developed countries to attain, use and benefit from this technology. The differing
policies and regulations and hesitance by national governments to fully acknowledge and adopt 3D
printing as the future industry standard of patient-‐specific implants is the key hindrance to 3D printing’s
emergence as the globally-‐adopted implant manufacturing technology. It is believed that with time to
test and prove the validity of the 3D printing technology in the manufacturing of orthopedic implants,
governments will notice significantly less risk of changing the status quo. Thus, the global acceptance and
adoption of 3D printing as the orthopedic implant industry standard manufacturing process will be
attainable to governments throughout all regions of the world.
How does the introduction of innovative materials and process technologies impact the market
dynamics of the healthcare segment?
Orthopedic implants are a component of the Life Science industry. In order to effectively analyze the
market dynamics and how organizations interact within the orthopedic implant value chain, the market
and scope of research must be clearly defined. Within the Life Science industry, the healthcare segment
incorporates medical devices such as orthopedic implants. According to the Institute for Orthopaedic
Surgery, implants are defined as, “a device (or tissue or substance) that is transferred, grafted, or
inserted into a living body,” with the intention to replace a missing joint or bone or to support a
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damaged bone. (Institute for Orthopedic Surgery, 2016) To be more specific, our report will address
implants characterized by the FDA as Class III implants. As stated by Carola Van Eck, “This is the most
scientifically rigorous classification of medical devices and encompasses most of the orthopedic implants
on the market today.”(Van Eck, 2016) In addition to this definition, the scope of the report will
incorporate biocompatible, active and regenerative orthopedic implants. Incorporating one more level of
specificity, the scope of research will investigate the compatibility of 3D printing biocompatible, implant
materials and the market dynamics surrounding this discontinuously, innovative process. To gain a clear
understanding of the market dynamics, it is important to provide an idea of how the value chain may
look and who the major players are in the market. In order to properly assess startups during analysis, it
is key to first understand how each company creates and captures value.