Competitive Advantages from Additive Manufacturing in the Medical Device Industry
Stryker (NYSE: SYK) is Michigan-based manufacturer of technologically-advanced medical devices. In 2017, the company earned $12.4 billion revenue and $1.0 billion net income, primarily from its “MedSurg” (medical instruments, endoscopy, etc.), Orthopedics, and Neurotechnology & Spine market business segments. For a complex manufacturer such as Stryker, additive manufacturing offers an unparalleled opportunity to revolutionize the product development and production processes.
For product development, additive manufacturing increases speed-to-market and simplifies the multi-stage prototyping processes. The technology makes it possible to create samples in hours, rather than days or weeks. This provides Stryker with a competitive advantage in creating novel products, such as their additive manufactured Tritanium spine implants, which were launched in 2014. Successfully transitioning R&D to into new products improves patients’ health outcomes, fulfilling the company’s overarching mission to “enhance patient care”.
In comparison to traditional manufacturing processes like forging or CNC machining, additive manufacturing reduces capital investments and volume requirements for a product line. This enables medical device manufacturers to produce a broader assortment of devices (improving patient and physician choice) without adding overhead from extra product lines or more set-up time from switching between low-volume SKUs. Additionally, additive manufacturing significantly reduces material waste inherent in traditional manufacturing processes, improving Stryker’s margins to offset industry-wide cost cutting pressures in healthcare.
Management’s Short- and Medium-Term Strategy
Stryker has publicly recognized additive manufacturing as a driver of orthopedic innovation, a key part of the company’s mission. Short-term, Stryker has demonstrated a commitment to pursuing R&D. The company collaborates with Ph.D. programs to develop innovative applications of additive manufacturing to orthopedics. For instance, the company has applied porous printing techniques to knee, spine and hip implants to improve an implant’s ability to integrate with human bones post-surgery, reducing the risk of rejection and infection. In addition, Stryker has formed partnerships with cross-disciplinary industry leaders (e.g., GE Additive) to accelerate innovation.
The company is also significantly investing in additive manufacturing over the medium-term time horizon. Stryker opened an additive manufacturing-focused global technology center in 2017. The Cork, Ireland-based facility, called the AMagine Institute, provides best-in-class manufacturing resources and signals the company’s strong commitment to investing in this topic.
Recommendation for Additional Steps
Building on Stryker’s existing commitment to additive manufacturing, I recommend that Stryker expands its additive manufacturing initiative through partnerships, thought leadership, and market engagement.
By expanding its diversity of partnerships (e.g., contract manufacturers, 3D printing start-ups), Stryker can benefit from diverse perspectives and broader subject matter expertise. Additionally, partaking in joint ventures and strategic minority investments can increase Stryker’s access to cutting-edge additive manufacturing technology (e.g., range of printable materials, printer hardware).
Participating in industry thought leadership and advocacy, such as to increase insurance coverage for additively-manufactured implants and to set best-in-class quality protocols, will perpetuate Stryker’s reputation in the medical device industry. The FDA is actively involved in developing guidelines for additive manufacturing; Stryker can further cement its market leadership by assisting in these efforts.
Finally, engaging key opinion leaders (KOLs) and patients will facilitate successful market entry. Starting a dialogue to ensure stakeholders understand the benefits of additive manufacturing, such as improved product choice and design elements that lower the risk that the human body rejects the implant post-surgery, can accelerate how quickly the market adopts these products, improving Stryker’s revenue opportunity.
Open Topics for Discussion
Additive manufacturing represents an exciting opportunity for Stryker and other medical device companies to accelerate product development and improve patient choice. However, as with most innovation, the new technology raises several broader questions.
For one, devices manufactured using additive manufacturing may have higher production costs versus mass produced devices. How should the benefits of additive manufacturing be balanced with other industry considerations for healthcare, such as escalating cost of care?
Secondly, as additive manufacturing creates an opportunity to manufacture individually customized devices in the distant future, who should be responsible for interfacing with patients and handling their data – medical device manufacturers, physician practices, or other industry groups?
 “Stryker Annual Review, 2017.” Link: https://stryker.gcs-web.com/static-files/8ba65de6-2145-45da-a2ea-82a6d83fdff8
 “How Additive Manufacturing is Transforming Medical Manufacturing.” Medical Product Outsourcing (July 29, 2015). Link: https://www.mpo-mag.com/issues/2015-07-01/view_columns/how-additive-manufacturing-is-transforming-medical-manufacturing
 Banerjee, Dr. Preeta M. “3D opportunity for technology, media, and telecommunications.” Deloitte (December 7, 2015). Link: https://www2.deloitte.com/insights/us/en/focus/3d-opportunity/3d-printing-in-technology-media-telecom-tmt-industry.html
 “Stryker Tritanium Manufacturing Overview.” Stryker. Link: http://www.stryker.com/builttofuse/media/assets/TRITA-BR-2%20Tritanium%20Manufacturing%20Overview%20FINAL.pdf
 Matassi, F., Botti, A., Sirleo, L., Carulli, C., & Innocenti, M. “Porous metal for orthopedic implants.” Clinical cases in mineral and bone metabolism : the official journal of the Italian Society of Osteoporosis, Mineral Metabolism, and Skeletal Diseases (October 11, 2013). Link: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3796997/
 “The 3Rs of 3D Printing: FDA’s Role.” U.S. Food and Drug Administration (December 21, 2016). Link: https://www.fda.gov/ForConsumers/ConsumerUpdates/ucm533992.htm