3D Printing Industry Analysis

8/10/2019 3D Printing Industry Analysis

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3D Printing

Contents

1 Executive Summary ............................................................................................................................... 2

2 3D Printing Technology Analysis ........................................................................................................... 3

2.1 3D Printing Market Segmentation ................................................................................................ 9

2.2 Market Size and Growth Prospects ............................................................................................. 10

2.3 3D Printing Market Dynamics ..................................................................................................... 11

2.4 3D Printing Company Market Share Analysis ............................................................................. 13

3 Additive Manufacturing Application Analysis ..................................................................................... 13

3.1 Manufacturing ............................................................................................................................ 13

3.2 Automotive ................................................................................................................................. 14

3.3 Aerospace ................................................................................................................................... 153.4 Consumer Products ..................................................................................................................... 16

3.5 Medical ........................................................................................................................................ 16

3.6 Military ........................................................................................................................................ 19

3.7 Others ......................................................................................................................................... 20

4 3D Printing Raw Material Analysis ...................................................................................................... 21

4.1 Polymers ..................................................................................................................................... 22

4.2 Metals ......................................................................................................................................... 23

4.3 Ceramics ...................................................................................................................................... 23

4.4 Others ......................................................................................................................................... 24

5 3D Printing Regional Analysis .............................................................................................................. 24

5.1 North America ............................................................................................................................. 25

5.2 Europe ......................................................................................................................................... 25

5.3 Asia Pacific................................................................................................................................... 25

6 Competitive Landscape ....................................................................................................................... 26

6.1 Economic Impact ......................................................................................................................... 286.2 Possible Future Scenarios ........................................................................................................... 29

7 Investment Thesis ............................................................................................................................... 31


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1 Executive SummaryThe purpose of this paper is to present a broad overview of 3D printing and the potential impacts and

opportunities in the industry. The information presented represents an aggregation of a multitude

sources to create a high level summary.

What is 3DP?3D printing, also known as additive manufacturing, is the process through which hundreds or even

thousands of layers of material are printed, layer upon layerto form a three dimensional object, using

a range of materials, or inks, most commonly plastic polymers and metals, but rapidly expanding into

new possibilities such as fabrics and consumable powders to replicate food products.

The additive process, which manufacturers have been using for prototyping since the late 1980s,

contrasts with traditional subtractive manufacturing process thats based on the removal of material to

create products. But recent advancements in speed, capabilities and lowering prices in printers and

materials have broadened the use and popularity of the technology.

3D printers range from small personal hobbyist machines (under $200) to industrial printers (hundreds

of thousands of dollars and more). Digital files (i.e., Computer Aided Design (CAD) files), which are either

drawn up by a designer or are created by a 3D scan, communicate to the printer the dimensions of each

required layer or horizontal slice to complete the object.

The 3D printing technology began in 1986, but did not gain importance until 1990. It has traditionally

not been popular outside the world of engineering, architecture and manufacturing and is still in the

early stages of applications to multiple industries.

For the foreseeable future, additive manufacturing will not replace the economies of scale associated

with the mass production of subtractive manufacturing or injection molding. However, it has a number

of distinct advantages that collectively have the capacity to change the entire manufacturing paradigm

because of its ability to create in a complexity that is impossible to achieve with other methods at agreatly reduced cost.

While 3D printing does have the potential for disruptive impact on how products are designed, built,

distributed, and sold, it could take years before that impact is felt beyond a limited range of goods.

Nonetheless, rapidly improving technology and a variety of possible delivery channels for 3D printed

goods, such as using the local print shop, could ultimately result in many products being 3D printed.


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2 3D Printing Technology AnalysisAdditive Manufacturing technology is continuously improving and increasing at an accelerated rate.

Breakthroughs in materials and methods are allowing printers to print using multiple materials and

colors in a single print. Below are the most prevalent technologies that are currently being utilized in

additive manufacturing.

Binder Jetting:Also called inkjet head or powder bed 3D printing, this technology is used to print

with sand, powders or metal, employing inkjet-like printer heads that jet layers of material and a binder

like glue to fuse the layers of material together.

In the binder jetting process the product material is in a powdered form and the inkjet head is used to

locally disperse glue, thus binding the powders locally. Typically two bins are used, a bin where the

product is formed and an extra bin with fresh powder. After the powder in a layer has been solidified

using the glue, the build container is lowered and the powder bin is raised. A roller or a doctor blade is

used to move the powder from the storage bin to the build bin. A big advantage of this method is that

all kinds of powders can be used, albeit only one powder type per build. Also it is very easy to add color

to the printed final products. If no other post processing steps are used (for example oven sintering) the

final products is not very strong.


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Stereolithography (SLA):Uses an ultraviolet beam to harden selectively deposited liquid resin, bonding

each successive layer. For each layer, the laser beam traces a cross-section of the part pattern on the

surface of the liquid resin. Exposure to the ultraviolet laser light cures and solidifies the pattern traced

on the resin and joins it to the layer below.

Advantages are the speed it can print in being one of the fastest and efficient processes available at the

tradeoff of increased cost both for the printer and resin. The cost of photo-curable resin ranges from

$80 to $210 per liter, and the cost of stereolithography machines range from $100,000 to more than

$500,000


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Fused Deposition Modeling (FDM):A stream of melted thermoplastic material is extruded from an

extrusion nozzle to create layers, with each layer bonding to the previous layer. Common inks include

ABS (acrylonitrile butadiene styrene) and PLA (polyactic acid polymers). Usually a plastic filament is fed

through a heated nozzle that melts the plastic so it can be deposited. Once deposited the filament will

stick to underlying layers and neighboring filaments and will almost directly solidify. Due to the nature of

the FDM process overhanging features should be held by support material.

FDM is one of the most popular printers available both for home and commercial use. This is usually

attributed to the patent for the technology expiring in 2009 making it available from multiple companies

bringing prices down and improving efficiency.


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Selective Laser Sintering (SLS):Using powdered materials (nylon, titanium, aluminum, polystyrene,

glass) instead of liquid or solid polymers used in SLA and FDM, SLS employs a laser, which sinters or

fuses the powder, layer by layer.

Powder bed based methods use two (or three) powder beds filled with power that will be used as

product material. The layers are created in one of the beds by using thermal energy to locally bind the

power in the top layer of the bed. After a layer is finished, the bed in which the product is created is

lowered and new powder is swept from to second bed onto the building bed. Many powders can be

used in this type of process; the only demand is that heating the powder will result in local binding of

the powder. Powder bed fusion systems are the most used additive manufacturing production process.

An advantage of powder bed based methods is that the powder also serves as support material, so no

support structures have to be built.

The patents for this technology are set to expire in 2014.

Selective Laser Melting (SLM):Similar to SLS, but rather than fusing the powdered material, the powder

is melted at very high temperatures. Due to the liquidity of the melt, support structures are still

required.

Electron Beam Melting (EBM):Similar to SLS, but employs an electron beam as its power source. This

technology improves the quality of metal printing, increasing the density and decreasing the occurrence

of internal voids and microporosity. Usually requires additional machining to produce finalized product.

Direct Metal Laser Sintering (DMLS): Similar to EBM, but has superior finish at the cost of less strength

and slower build speed.


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MICA Freeform:Patented process owned by Microfabrica. Similar to SLM used for the mass production

of millimeter-scale metal parts with micron-size features. Trade off in build time taking much longer

than SLM.

Laminated Object Manufacturing (LOM):Additive process involving the layering of laminates of

materials (e.g., metal, plastics or paper) bonded in successive layers, then cut into shapes and, in some

cases, worked on further (e.g., through machining or drilling) to finalize the product. LOM does so by

stacking plastic sheet material on top on the sheets below and for uses a computer controlled cutting

device (laser, knife) to cut the lines that form the edges of the desired shape. When the product has

been printed the excess material is removed. Paper Lamination Technology (PLT) uses especially develop

paper sheets instead of plastic; successive layers are glued to each other by thermally activated glue.


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Direct Energy Deposition (DED): Direct Energy Deposition is a group of processes process where the

material is directly deposited on the final location in the product. It does so by jetting the build material

into the heated zone, created by a laser, electron beam or an ionized gas. As with the other methods

that jet the product material, DED can change the product material easily, thus allowing for the graded

functional materials.

Inkjet-bioprinting: Bioprinting uses a technique similar to that of inkjet printers, in which a precisely

positioned nozzle deposits one tiny dot of ink at a time to form shapes. In the case of bioprinting, the

material used is human cells rather than ink. The object is built by spraying a combination of scaffolding

material (such as sugar-based hydrogel) and living cells grown from a patients own tissues. After

printing, the tissue is placed in a chamber with the right temperature and oxygen conditions to facilitate

cell growth. When the cells have combined, the scaffolding material is removed and the tissue is ready

to be transplanted.

Hot Isostatic Pressing (HIP): A process that is used on 3D printed metals that turns objects made from

metal powders into compact solids achieving 99-100% density. The application of heat and pressure

eliminates internal voids and microporosity that hampers the structural integrity of the 3D printed metal

parts. The HIP process subjects a component to both elevated temperature and isostatic gas pressure in

a high pressure containment vessel.


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2.1 3D Printing Market Segmentation

The past three years have seen a relatively stable revenue split between the various industries that are

implementing additive manufacturing technologies. The aerospace, medical, and dental industries were

the first to take advantage of additive manufacturing capabilities, primarily because low production

volumes of high-value parts make AM economically feasible.

Automobiles and Consumer Electronics are the biggest users of 3D printing technology, almost

exclusively for rapid prototyping, followed by Medical, Industrial and Aerospace that uses the

technology for prototyping and final use products.

Source: Wohlers Report 2013


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2.2 Market Size and Growth Prospects

Source: Wohlers Report 2014

The 3D printing industry growth rate has been accelerating

The global 3D printing industry grew 34.9% in 2013, which is the highest annual growth rate in 17 years.

Over the last 26 years, which is essentially the life of the industry, revenue has grown an average of 27%

annually, while the compounded annual growth rate for the past three years (2011-2013) was 32.3%.

Typically as base numbers get larger, it becomes more difficult to show the same percentage growth. So

it seems a very bullish sign for the industry that the growth rate accelerated in 2013 over both the long-

term and short-term average rates. The dip in 2009 was the result of the deep global recession.

With the expiration of several patents for Selective Laser Sintering (SLS) in 2014 added growth is

expected mimicking the growth of lower cost FDM printers that occurred after FDM patents expired.

Services


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2.3 3D Printing Market Dynamics

Legal Implications

The 3D printing industry is now filled with heavily guarded IP, 3D Systems and Stratasys are each

involved in aggressive litigation to protect it, because of this expiring patents may not influence

innovation as much as it could. According to its 2013 Annual Report, 3D Systems closed the year with973 patents, and another 204 applications in wait. At the end of 2013, Stratasys had more than 550

granted or pending. This creates a problem of knowing where one patent ends and another begins. The

large amount of patents creates a complex landscape for new entrants to innovate effectively free from

fear of litigation from the large established players.

There are considerable legal complexities around 3D printing concerning intellectual property and

copyrights. Under existing US patent law distributors of digital representations of products, such as CAD

files, are not making, selling, or using the products or any component thereof. Indeed, the legal

implications of 3D printing are not clear cut and could entail significant hurdles for policymakers. This

potential digital piracy situation is comparable to the way the internet challenged the movie and music

industries for copyrights, trademarks, and illegal downloads.

The challenges for policy makers include addressing regulatory issues, such as approving new materials

for use, ensuring appropriate intellectual property protections, and assigning legal liability for problems

and accidents caused by 3D-printed products. Governments will also be called upon to clarify how

intellectual property rights will be protected. 3D printers have already been used to make handguns,

raising another set of issues. Policy makers face the challenge of evaluating and addressing these risks

without stifling innovation or limiting the value that this technology can provide.


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Patent Applications

Some of the top applicants, such as Fujitsu and NEC, have been involved in the patenting of 3D printing

related technology for over 20 years. In contrast, some of the other top applicants, such as Stratsys and

Corp Z, have filed for patents in this area only relatively recently. Thus this figure also shows when

certain applicants have entered the technology space (Objet Geometries since 1989) and others have

stopped patenting in the field (LG Phillips after 2004).

Source: Intellectual Property Office 2013

Energy Consumption

3D printers consume about 50 to 100 times more electrical energy than injection molding to make an

item of the same weight, according to research by Loughborough University. Direct metal deposition

(where metal powder is fused together) used 100 times more electricity than traditional forged casting.


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2.4 3D Printing Company Market Share Analysis

3 Additive Manufacturing Application Analysis

3.1 Manufacturing

3D printing currently is widely used for rapid prototyping purposes. It allows designers to identify and

correct design flaws quickly and cheaply, thereby speeding up the product development process and

minimizing commercial risks, this was earlier only done with subtractive methods such as machining

(typically slowly and expensively). According to business analysts CSC, prototyping remains the largest

commercial application of the technology, accounting for some 70 percent of the 3D print market.

With technological advances in additive manufacturing and the dissemination of those advances into the

business world, additive methods are moving further into the production end of manufacturing. Parts

that were formerly the sole province of subtractive methods can now be made more profitably via

additive ones in a limited scope. Additive manufacturing is able to accomplish this by increasing

complexity of produced parts without increasing cost.

Additive manufacturing comes into its own with the capacity to customize products. Unlike traditional

manufacturing end users can participate in the very design of products. But additive manufacturing,

even with increased printing speeds, will not be able to match the efficiency, scale and speed of the


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current mass manufacturing and next day delivery models. What it does offer is a new market for

bespoke and unique objects, which will set consumer standards unmatchable by mass manufacturing.

In the near term additive manufacturing is more likely to impact current production and consumption

ecosystems rather than directly replace it. We dont believe 3DP adoption will significantly affect

manufacturing jobs overall, its more of a shift in the demands for more workers with technical know-

how, said Gardner Carrick, Vice President of the Manufacturing Institute. The advancement in

technology and how its changing the image of manufacturing for next generation employees is

attracting a new skill set thats necessary on the shop floor. Its the perception of manufacturing jobs

becoming less blue collar and more white collar.

Almost half (47 percent) of the manufacturers surveyed in a Price Water House Coopers survey

identified the top barrier to implementing a 3DP strategy is the uncertainty of a 3D printed products

quality, followed by lack of talent to exploit the technology (45 percent).

Todays 3D printing technology is more expensive than traditional manufacturing alternatives. 3D

printing machines, particularly metal producing machines, are expensive. Laser melting machines cost

from $500K to millions of dollars each. They are complex pieces of capital equipment on par withsophisticated machine tools in regard to operating environment (vacuum or gas-filled chambers) and

control software. 3D printing machines are also much slower than the current manufacturing

alternatives. It takes thousands of beads to build up a metal part one layer at a time, and most metal

parts take hours or even days to build and powder metal feedstock is up to 30 times more expensive, by

weight, than its bulk counterpart. These costs will come down with time and volume of production, but

there are some physical limits, such as the speed of laser melting, that will ultimately define the

inherent cost structure of metal 3D printing.

Almost half (47 percent) of the manufacturers surveyed identified the top barrier to implementing a 3D

printing strategy was the uncertainty of a 3D printed products quality, followed by lack of talent toexploit the technology (45 percent).

The adoption of 3D printing also raises the question of if the supply chain will be shortened to almost

one linkeliminating those connecting development, prototyping, production, delivery and

warehousing of parts. The survey showed that 30 percent of manufacturers believe that the greatest

disruption to emerge from widespread adoption will be restructured supply chains.

3.2 Automotive

The automotive industry is arguably one of the earliest adopters and holds the largest market share of

current additive manufacturing installations. So far it has been almost exclusively for the benefits in

rapid prototyping of new parts that is part of the ongoing development of new vehicle models.

An example of this is how Ford uses 3D printing to quickly produce prototype parts, shaving months off

the development time for individual components used in all of its vehicles, such as cylinder heads, intake

manifolds and air vents.

With traditional methods, an engineer would create a computer model of a part like an intake manifold,

the most complicated engine part, and wait about four months for one prototype at a cost of $500,000.


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With 3D printing, Ford can print the same part in four days, including multiple iterations and with no

tooling limitsat a cost of $3,000.

3D printing saves millions of dollars by eliminating the need for special tooling, or dedicated molds, for

parts likely to change during the development process. The technology also allows engineers to

experiment with more radical, innovative part designs inexpensively and quickly.

In the near term it is unlikely to see additive manufacturing move into the production process by

producing finalized parts because it does not benefit from economies of scale given the high production

numbers making traditional methods more profitable.

3.3 Aerospace

The aerospace industry takes advantage of all of the benefits offered by 3D printing for rapid

prototyping and is well suited to utilize the capability to create finished parts with a complexity that

would be impossible to achieve with normal subjective or injection molded methods.

An example of this is how GE recently produced jet fuel nozzles for its newest LEAP engine via 3Dprinting. These nozzles are increasingly complex and are normally made of 21 cast parts, requiring

assembly and quality control of 21 different production processes. The 3D printed model is printed in

one piece, is 33% lighter, and much stronger than the cast version and it was designed in 6 weeks rather

than the normal 6 months.

Parts that previously were made out of solid materials can be created with hollowed interiors reducing

weight and materials used without compromising structural integrity. The ability to do this with

materials such a titanium provides a solution to a major obstacle in the aerospace industry call the Buy-

To-Fly ratio or the pounds of material needed to make one pound of flight quality material can be

reduced by more than 50%.

The design process is also affected as complex parts like air ducts and jet engines previously had to be

designed within the constraints of traditional subtractive and injection molding limitations. Boeing was

able to leverage these new capabilities when designing the 787. Boeing now prints more that 20,000

parts that are used in 10 different types of military and commercial airplanes, the 787 Dreamliner has

about 30 3D printed parts.

Manufacturing companies are anticipating 3DP-driven savings in materials, labor and transportation

costs, when compared to traditional subtractive manufacturing processes. A PwC analysis of 3D printing

adoption by the global aerospace industrys MRO (maintenance, repair and operations) parts market,

estimates a $3.4 billion annual savings in material and transportation costs alone, assuming a scenario in

which half of that industrys MRO parts are 3DP manufactured. And, even at a more conservative 20%

3DP adoption, savings could easily exceed $1 billion, according to the analysis.


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3.4 Consumer Products

Itsestimated that consumer use of 3D printing could have potential economic impact of $100 billion to

$300 billion per year by 2025, based on reduced cost, compared with buying items through retailers,

and the value of customization. 3D printing could have meaningful impact on certain consumer product

categories, including toys, accessories, jewelry, footwear, ceramics, and simple apparel. These products

are relatively easy to make using 3D printing technology and could have high customization value forconsumers.

Itsestimated that consumers might 3D print 5 to 10 percent of these products by 2025, based on the

products material composition, complexity, cost, and the potential convenience and enjoyment of

printing compared with buying for consumers. A potential 35 to 60 percent cost savings is possible for

consumers self-printing these goods despite higher material costs. The savings over retail come not only

from eliminating the costs of wholesale and retail distribution, but also from reducing the costs of

design and advertising embedded in the price of products.

It is possible that consumers will pay for 3D printing designs, but it is also probable that many free

designs will be available online, especially considering that online networks of peer-to-peer sharing of

3D files already exist and are growing.

3.5 Medical

3D printing is ideally suited to grow exponentially in the medical sector due to its ability to profitably

make custom parts usually meant for short-run production that dont benefit from economies of scale.

As a result, it becomes an ideal technology for fabrication of parts requiring customization such as

biomedical applications. By 2018 the market for 3D printing in healthcare could increase to over $4

billion, according to a study by Visiongain. Much of that market may come from the increased use of

customized prosthesis and other devices.

The medical sector contributed almost 16% of the overall revenues of 3D printing technologies. Thatputs medical behind only automobile and consumer electronics, both key users of the technology.

However, the major difference between the sectors is that the medical industry uses additive

manufacturing for direct production of final products, while the others currently use it primarily for

prototyping purposes.

3D Printing is already used to create dental implants, hearing aids, contact lenses and prosthesis that are

custom tailored to the individual. It is also used to facilitate pre-surgery calculations and study for

physicians by creating an exact replica of the targeted surgery area. The medical implants space holds

particular promise for 3D printing.

Orthopedic ImplantsAccording to a report released by the Agency of Healthcare Research and Quality in 2011, the number of

people in need of orthopedic implants has risen drastically in the past few years. The most notable

statistic is that the number of people between the ages of 45 and 60 in need of such implants, especially

knee replacements, has risen sharply.


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Currently, five major implant manufacturers in the United States hold the majority of the market share.

These companies have large control on the U.S. knee implant market, mainly because of strongfinancials and the high barriers to entry presented by strict FDA regulations. This seems to contribute to

immensely high cost of treatment and lack of new suppliers in the market.

Several organizations are looking to take advantage of this trend. Arcam AB has developed an electron

beam melting (EBM) technology for additive manufacturing of harder metals such as titanium and

associated alloys and is focusing on the market for orthopedic implants. Several other companies such

as LayerWise and EnvisionTEC are also focusing on the use of 3D printing for orthopedic implant

development.

There have been several successful uses of 3D printed bones made out of a biomedical polymer in

surgeries, the artificial bones can be created to exact specifications for the patient, and include surfacedetails that encouraged easy attachment and new cell growth.

Prosthetics

Almost 185,000 amputations take place in the U.S. every year. A majority of these amputations are of

extremities, which are subject to high levels of variance from individual to the next. Although a number

of effective low-cost prosthetics for extremities are available (such as the Jaipur foot), these are often

uncomfortable to the amputee, especially on the point of contact between the stump and the

prosthetic. More comfortable prosthetics are available but at a much higher cost. Additive

manufacturing can address the cost and customization factors inherent in the prosthetics space.

Dental Implants

Dental implants are another area with a growing customer base where additive manufacturing has seen

a high level of acceptance. Dental implants are usually not covered by insurance, and a single tooth

implant can cost thousands of dollars. Traditional methods of manufacturing dental implants would

often involve development of standard implants of various sizes, from which a dentist would choose the

one that most closely fits a patients dental structure. This often led to people finding dental implants

uncomfortable and often painful. Similar problems occur in ear implants and hip replacement

procedures. These problems are often manifestations of a simple issue: Lack of customization of

implants to meet individual patient needs.


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Dental implants using additive manufacturing have long gained acceptance by the medical community

and are now being used widely to fabricate accurate braces and dental restorations. This has, in turn, led

to a number of companies developing 3D scanning software, materials for crowns and mandible sets,

and dental restoration pieces.

Tissue and Organ Implants

The next step in healthcare is in Bio-Printing. The difference is instead of creating a replacement out of

composite dead metals or polymers, living cells are used. This could have a profound impact on the

current market for organ implants.

There are currently over 120,000 people in need a lifesaving organ transplant with 50,000 added to the

list every year with roughly 28,000 that receive a transplant while an average 7,000 die before a donor is

located. Patients must either find a donor who matches his or her requirements or wait for a suitable

donor (or look to the black market, where the average cost of a single kidney is approximately

$150,000). If bioficial organs become a reality the market demand would be at least 50,000 a year, with

the current average cost of a transplant being $700,000 the potential market would be more than $35

billion a year. As technology improves and costs come down there could also be a secondary marketdemand from individuals seeking non-lifesaving organ transplants to improve quality of life.

Source: Organ Procurement and Transplantation Network

Bio-Printing3D Bio-Printing uses bio ink harvested from stem cells or human cells, and feeds that inkthrough a printer that's programmed to assemble the cells to construct three dimensional tissue

structures. Scientists and doctors think that within the next two to five years joint cartilage, vertebral

disks, skin, nerves, and meniscus tissue could start to be used in surgery. Within in the next ten years

the trachea, heart valves, ligaments, and connective tissue may begin human trials. Someday in the

future, scientists hope to be able to print hearts, livers, kidneys, and other complex organs.


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Researchers from the University of Louisville have already printed living heart valves and veins and

expect to have their first finished product which they call the bioficial heart within the next 3 to 5

years. The challenges of creating a living replacement organ comes from integrating all of the various

tissues involved. If successful, a bioficial heart would have none of the issues of heart transplants like

transplant rejection by the body requiringa lifetime-regimen of anti-rejection drugs.

Bio-Printing technology is advancing so quickly that some scientists believe after organ creation research

may push the technology even further. Dr. Ibrahim Ozbolat, co-director of the University of Iowa's

Advanced Manufacturing Technology Group, believes that the prospect of developing a brand new

organ that doesn't exist in nature but which could be transplanted to enhance the functionality of the

human body is in the long term future of Bio-Printing. An example of this would be an organ that

generates an electric current to power a medical device such as a pace maker effectively eliminating the

need for batteries.

In Situ Bio-PrintingScientists at the Wake Forrest School of Medicine have invented a Bio-Printer that

can print cells directly onto or into a patient. The idea is that instead of printing the tissue needed then

transplanting it to the patient the tissue could be printed directly onto or into the patient. One

advantage to this method for treating wounds compared more traditional methods is the time it takesto heal. In recent tests it has been shown that in mice, healing time is about two to three weeks instead

of the usual five to six weeks. One possible application for In Situ Bio-Printing is for military use in war

zones. An example would be if a soldier were to sustain a skin injury. Instead of having to travel back to

a larger base to receive medical treatment, they could be treated locally with a Bio-Printer. The chances

of infection and further complications are reduced if the wound can be treated more quickly. Although

this technology is still in pre- clinical testing, human trials are not too far away.

3.6 Military

3DP technology is particularly advantageous in low-to-moderate volume markets like defense and

aerospace that regularly operates without economies of scale. Many military applications also oftenrequire miniaturized, custom-designed units in relatively small numbers. Additive manufacturing also

supports rapid development and production to meet the militarys specialized functional requirements.

The Army is already using 3D printers near combat zones. The Army's Rapid Equipping Force (REF)

deployed to Afghanistan with mobile fabrication shops equipped with 3D printers and CNC milling

equipment. Engineers then worked with units in Afghanistan to develop solutions to combat problems

without having to ship parts into Afghanistan. If a problem is found with equipment under normal Army

procurement procedures, designing, commissioning, manufacturing and distributing an updated design

would take months or years. But with the ELMs a solution can be implemented within days.

The Air Force is looking at how advanced manufacturing by 3D printers could influence tactics and

strategies of future aerial combat. In 1983, top-brass initiated development of a new fighter jet to

maintain a tactical edge during the cold war. The resulting aircraft, the F-22 Raptor, was the most

technologically advanced fighter ever created, but the first Raptor wasnt delivered until 2005, 22 years

and $39 billion after the program was conceived, and 14 years after the fall of the Soviet Union. This

illustrates a common problem of new programs taking too long to develop new platforms and, as the

military faces budget cuts, being too costly.


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This problem has emerged again with the latest fighter program, the F-35 Joint Strike Fighter initiated in

1996. One of the solutions to this problem is a shift in the current paradigm, instead of building large,

expensive manned aircraft in tiny numbers the military could build thousands of customized drones out

of 3D printed parts, using robotic assembly lines. The new paradigm would be characterized by shorter,

more frequent acquisition cycles based on an iterative development process that could quickly develop

many different aircraft systems, thus allowing planners to focus on nearer term and therefore better

understood threats.

If such a paradigm shift took place the capital expenditure in creating 3D printing manufacturing plants

would be tremendous.

The Navy is also looking at the possibility of putting 3D printers aboard naval ships to alter the way it

handles its supply chain. It is impossible to include spare parts for everything that could break on a

naval ship, but if the goal of implementing 3D printing on naval ships is realized then a ship could carry

basic raw materials and produce parts on demand to replace damaged parts. This is already possible

with land based printers as 3D printed parts are used on several current systems. The F-18 fighter jet,

for example, has 90 parts that are 3D printed and can be placed directly on the plane, according to Jim

Williams, general manager of on-demand aerospace manufacturing for 3D Systems.

3.7 Others

Transportation

The impact on transportation depends on if additive manufacturing will lead to more or less travel of

both objects and people overall. This question is tied to issues of recycling and reuse because much of

the haulage involved in moving manufactured objects will be less.

As 3D printers creep their way into homes, businesses, and office supply stores, with rapidly advancing

technology it may become cheaper to simply purchase or download a file off the internet and have aproduct printed at the office, home, or a local 3D printing hub. Naturally this will cut down, perhaps

significantly on the travel by consumers and the shipping of finished products. Society may start to shift

toward demanding raw materials, rather than finished goods.

If this transition takes place the supply chain of raw materials being transported from the source of

extraction to the factory and a finished product then going to a retailer will become obsolete being

replaced by raw materials going straight to the consumer with only minimal treatment. This has many

ramifications for how materials are moved about in global production networks.

The current off shoring system is significant here, as this has become one of the most complex systems

of transportation. 3D printing innovations offer possible futures of rapidly demobilizing global

manufacturing, distribution and production. Already 3D printing was featured in a Delphi panel on the

future of air cargo. Current research by the Fabbing Society describes scenarios where personal home

fabricators and decentralized additive manufacturing facilities combine to wreak havoc on the existing

air-freight industry.

There are a number of trends converging in additive manufacturing, which seem to be changing the

rules of supply chains: the cost of the printers is dropping dramatically, indicating economies of scale

and rapid innovation; printer design files are beginning to be stored, shared and sold; and the material


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base used in printing is expanding to include ceramics, metal alloys and even food. Moreover, 3D model

creation is being democratized through alternatives to traditional CAD programs that use visualizations

and templates. This convergence is gaining the attention of venture capitalists and fuelling investments

into further developing the technology.

The technology is improving to the point that is becoming possible to print fully assembled gadgets with

multiple materials, different colors, embedded electronics and moving parts. So 3D printers could be

network technologies connected to online repositories of designs downloadable in any location. This

could be in the home, the high street, the community center, or the office. Each of these spaces, or

combinations of them, will have distinct implications for society and transportation and whichever

dominates will set the tempo going forward. Each space will involve different implications for transport

patterns.

Food

Food products such as chocolates that are shaped like company logos, names, and other unique objects

can currently be printed. Anything that can exist in liquid or powder form - ingredients that can then be

extruded through a nozzle or syringe - can currently be printed. This includes sugar, cheese, sauces, and

others. Estimates show that by 2020, food could potentially make up 5% of the overall 3D printingmarket.

Current researchers have created a prototype printer that can print finished food products, like pizza

that cooks while it prints, with the goal to be able to print in space to provide food variety for

astronauts.

4 3D Printing Raw Material AnalysisThe materials used in 3D printing still remain costly, generally about 30 to 100 times greater than

materials used for injection molding, but prices are declining and can be expected to decline further asvolumes increase.

The 3D printing materials market may be worth in excess of $600m by 2025, according to recent

research by Market Research Reports. Additive Manufacturing now encompasses a vast selection of

materials that can be used including multiple types of plastics, resins, ceramics, and metals. Bio-printing

is also making progress in printing with various types of living tissue.

The materials market for 3D printing is possibly the most contentious issue in the 3D printing industry

today. 3D printer manufacturers are increasingly engaging in practices which are perceived by end-

users as anti-competitive by locking customers in to their own material supplies via key-coding and RFID

tagging of feedstock cartridges, an activity which is effectively enabling monopoly pricing of the

feedstock materials involved.

Development of new materials for 3D printing is hindered by lock-in practices by some 3D printer

manufacturers. Barriers to entry for 3rd party materials suppliers are high, and those who do enter the

market are unable to get the economies of scale required to accelerate both materials development and

progress towards a competitive market.


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In the short to mid-term, downwards pressure on material prices will be driven mainly by new entrants

to the 3D printer manufacture arena that do not engage in lock-in practices and enable customers to

source materials from the supplier(s) of their choice, and also by pressure from large end-users wielding

buying power to force prices down.

High growth can be expected in the market for metal powders if rapid manufacturing grows at a

significant pace by replacing traditional subjective methods, although production, currently placed at

less than 30 tons/year, will remain relatively low. This, in combination with high raw material and

processing prices, will combine such that prices for these materials will fall more slowly than for

alternative 3D printing materials.

Current breakdown of the materials market

Source: IDTechEx

4.1 Polymers

Polymide (Nylon): Models constructed from a white, but can be different colors, very fine, granular

powder. The result is a strong, somewhat flexible material that can take small impacts and resist some

pressure while being bent. The surface has a sandy, granular look, and is slightly porous.

Alumide: Constructed from a blend of gray aluminum powder and polyamide, a very fine, granular

powder. Alumide is a strong, somewhat rigid material that can take small impacts and resist some

pressure while being bent. The surface has a sandy, granular look and is slightly porous.

ABS (Acrylonitrile Butadiene Styrene): Strong oil based thermoplastic that is very similar to PLA. ABS is

made from wire like filament with many color options. Stronger, longer lasting, with a higher melting

point compared to PLA.

PLA (poly lactic acid): A bio-degradable type of thermoplastic that is manufactured out of plant-based

resources such as corn starch or sugar cane. It is very similar to ABS. Requires less specialized printing


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equipment, provides more detail capabilities than ABS. It comes in a variety of colors and

transparencies.

Resin: Liquid Photopolymer used in Stereolithography that is strong, hard, stiff, water resistant, and

usually transparent.

4.2 Metals

Metals are printed from a powdered form that can achieve density and porosity that is better than

normal forged metal parts. It is also able to reduce waste and create in complexity that is not

achievable or cost effective using traditional machining methods.

Currently cost of metal printing is so prohibitively expensive that it will not replace normal subtractive or

forged methods except when complexity is impossible or where weight and strength of the final part are

key components such as in the aerospace industry and justify the added cost.

I dont see average consumers ever being able to print in metals with hobbyist printers as the dangers

involved when handling these metals requires extensive metallurgical expertise. Metal powders areextremely dangerous if inhaled and very explosive if ignited. This is part of the reason why metal

printers cost is so much because the printing has to take place in a pressurized environment filled with a

neutralizing gas like argon.

Current metals that can be 3D printed

Stainless Steel

Gold

Silver

Titanium

Brass

BronzePlatinum

Aluminum

Nickel

4.3 Ceramics

Ceramic: Powder that is printed using a binder agent. Surface is glazed then fused and hardened in a

kiln. Final product is hard, rigid, but fragile. Not a good material for detail.

Gypsum (Sandstone): Sandstone is the only material capable of full-color 3D prints. Models are created

by printing binder material and colored ink layer-by-layer into a bed of gypsum-based powder. After

printing, the models are finished with a cyanoacrylate sealant (super glue) to ensure durability and vivid

colors. The final product is a hard, brittle material that works great for figurines and visual models, but

isn't well suited to functional parts or daily handing.


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5.1 North America

North America was the largest market for 3D printing in 2012 and 2013 owing to high adoption of the

technology across different applications sectors including consumer products and electronics and

automotives among others. Another factor is the presence of key players such as 3D Systems and

Stratasys in the region, coupled with strong focus on technological advancements. This growth will be

further supported by the further development and adoption of metal printing technologies.

5.2 Europe

The demand for 3D printing in Europe has increased in the recent years mainly owing to the presence of

emerging players in countries such as Germany, Italy, France and Sweden. The market in Europe is

expected to supersede that in North America by the end of the forecast period and is estimated to be

valued at USD 3,505.9 million in 2020.

In developed areas such as Western Europe, 3D printing market value will be supported by the growing

presence of metal-based 3D printers for the production of finished parts, as such systems are

significantly more expensive than plastics-based 3D printing systems

5.3 Asia Pacific

Japan is the largest market for 3D printing in Asia Pacific, with favorable policies for the production and

sale of professional-grade 3D printers in the country. The economy ministry is also aiming to include 4.5

billion yen (USD 44 million) in the budget so as to stabilize high-end printers' development.


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China is striving to play a key role in the industry, and its inventory of 3D printers has grown manifold

over the past few years. The primary reason for the Chinese government's focus on 3D printing in the

region is to create high-value finished products and combat rising labor costs. A new 3D research center

was opened in 2013, with plans of opening nine more in the coming years; a step which will aid in

expanding the country's manufacturing capabilities beyond the traditional assembly line process.

6 Competitive Landscape

Intensifying competition is expected to result in lowered prices and increased shipments of 3D printers

in the coming years. With products maturing rapidly, and iteratively enhancing technology reducing the

gap between objects made using 3D printing and conventional methods, the market is expected to

witness growing demand into the future.

Direct

Stratasys(Ticker: SSYS)Manufactures 3D printers and production systems for rapid prototyping and

manufacturing applications. They are the clear leader in both the commercial and consumer spaces.

Geographic Sales for Q1-2014 were 50% North America, 27% EMEA, 22% APAC, and 1% Other. Currentlytheyre focused solely on plastic printing. Derives 30% of current revenues from outsourced printing

services (acting link the Kinkos of 3D printing).

3D Systems(Ticker: DDD)Develops, manufactures and markets worldwide 3D printing, rapid

prototyping and manufacturing printers and parts solutions. It also provides scanners for a variety of

medical and mechanical X-Ray film digital archiving. It provides 3D authoring tools for digital imaging

and design including 3D CAD modeling, feature capture, manipulation, replication and measurement.

ExOne Co.(Ticker: XONE)Manufactures and sells 3D printing machines and printing products. It also

offers other associated products, including consumables and replacement parts & services. Biggest 3D

company specializing in metal industrial printing.

Organovo Holdings, Inc.(Ticker: ONVO)Currently the only publicly traded 3D Bio-Printing company,

which designs and creates functional and three-dimensional human tissues for medical research and

therapeutic applications. The company also collaborates with pharmaceutical and academic partners to

develop human biological disease models in three dimensions.

Voxeljet AG(Ticker: VJET ADR)Manufactures and operates industrial 3D printing systems and provides

on-demand parts services to industrial and commercial customers.

Materialise NV (Ticker: MTLS ADR)IPO scheduled for June/July 2014. Provides printing services and

produces software solutions specializing in the transfer of data to Additive Manufacturing machines.

Arcam AB(Ticker: ARCM-SE)Engaged in the manufacture of technology for production of fully dense

metal parts. It offers equipment for direct manufacturing of metal components by additive

manufacturing. Its products include Electron Beam Melting machines, auxiliary equipment, software,

powder metals, and service and training to customers.

SLM Solutions Group AG(Ticker: AM3D-DE) - Engages the development, production, and distribution of

additive based manufacturing and prototype construction as well as consumables and services. It


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operates through the Selective Laser Melting (SLM) and Rapid Prototyping (RP) segments. The SLM

segment markets and sells metal based additive manufacturing systems and accessories, provides

related services, and sells consumables for these systems. The RP segment assembles and sells vacuum

casting systems, metal casting systems as well as related services, and consumables for different rapid

prototyping uses.

Renishaw Plc(Ticker: RSW-GB)Engaged in the designing, manufacturing and marketing advanced

precision metrology and inspection equipment. It operates through two segments: Metrology and

Healthcare products. Renishaw's products are used for applications as diverse as machine tool

automation, co-ordinate measurement, additive manufacturing, gauging, Raman spectroscopy, machine

calibration, position feedback, shape memory alloys, large scale surveying, stereotactic neurosurgery,

and medical diagnostics.

Kinpo Electronics, Inc.(Ticker: 2312-TW)Consumer electronics manufacturer that is releasing their

own 3D printer targeted at the consumer market. It is headquartered in Taipei, Taiwan.

SecondaryProto Labs(Ticker: PRLB)an online and technology-enabled manufacturer of quick-turn computer

numerical control (CNC) machined, injection molded and 3D printed custom parts for prototyping and

short-run production.

Faro Technologies Inc. (Ticker: FARO) - Operates as a 3D measurement, imaging and realization

technology company. It develops and markets computer-aided measurement and imaging devices and

software. The company's devices are used for inspecting components and assemblies, production

planning, documenting large volume spaces or structures in 3D, surveying and construction, as well as

for investigation and reconstruction of accident sites or crime scenes.


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6.1 Economic Impact

Its estimated that 3D printing could generate economic impact of $230 billion to $550 billion per year

across currently realized applications by 2025. The largest source of potential impact among the current

applications would come from consumer uses, followed by direct manufacturing (i.e., using 3D printing

to produce finished goods) and using 3D printing to make molds.


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6.2 Possible Future Scenarios

The future impact of additive manufacturing is difficult to predict beyond the point of that it will be a

disruptive technology that will have an impact. There seems to be mainly two camps with differing

views of where the future of 3D printing is headed in the next 20+ years. I believe that localized

manufacturing is a more likely outcome over desktop factories in the home. Both scenarios have major

hurdles to overcome if either is to become a reality.

Desktop Factories in the Home

This scenario has unlimited products available at the push of a button. The tactile physical world of

consumer objects is developing the same way as digital audio and visual media, facilitated by the rise of

file sharing networks.

Ownership and development of easy-to-use design software will culminate in consumers having

the desire and ability to fabricate their own goods, resulting in most homes having a desktop 3D

printer.

With people becoming used to printing on demand, new social practices around convenience

will emerge. Such as buying or sharing a product online then immediately printing in the home.

Completely eliminating the need for consumer travel and/or product shipping.

There may be a greater reuse and repair ethic as more people fix things by printing off a new

version of the broken part. Recycling capabilities will help reduce the amount of waste and

clutter in homes by being able to reuse the material of old products to produce new ones.

A persistent problem is design piracy, facilitated by the proliferation of file sharing networks.

In-home 3D printing will disrupt global systems of production and distribution but supply chains

and distribution networks will remain intact due to the demand for raw material and other

printer feed stocks.

Who Loses?

Specialized Retail/ Department StoresPrinting simple goods to start but possibly complex items

ranging from a brush, picture frame, or trash can at home instead of purchasing from Wal-Mart, Target,or one of the dozens of other chain department store may be good for the consumer, but may be a

nightmare for retail/department and specialty stores. Its possible that eventually there will come a

time when nearly anything can be produced from a 3D printer. If that time comes, how retail stores

adapt will be key to just how severe a loss hits the entire retail industry.

Barriers

Currently, the wide variety of products to be substituted by small desktop printers will require

exceptional design and technical innovation; currently printers found in the home consumer price range

(less than $1000) are only able to print in a limited number of plastics and cannot print in metals and/or

mixed/multiple materials and will most likely never print in metals because of the dangers involved.

Another obstacle for wide spread consumer adoption is the ease of use or steep learning curve of the

software involved. To produce a scratch built part takes hours of design work even for a trained

operator familiar with computer aided drafting (CAD) software. Ergo, vast online repositories would

have to be created before the benefits would be seen by a casual consumer to purchase a home based

3D printer.


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The introduction of 3D scanning could potentially reduce the level of knowledge required to create 3D

models, making printers more accessible to non-professionals making this scenario more viable.

Hobbyists are currently using Microsofts Xbox Kinect to create 3D scans, and smartphones can be

converted into basic 3D scanners via the use of an app. Consumer-oriented, sub-$1,000 3D scanners

could soon be coming to market as well. But scanning an item currently does not eliminate the need to

use CAD software as internal parts will still have to be modeled or put together in order to print

anything more complex than a garden gnome.

Localized Manufacturing

Individuals engage with 3D printing not in the home but through local or online businesses. The

consumer experience remains largely unchanged with the impact of additive manufacturing being

largely behind the scenes. Manufacturing would return to post-industrial countries fuelled by new

market opportunities to satisfy the demand for products provided by a just-in-time and print-on-

demand business model. Many large multinational companies would abandon their global production

networks and invest in local bureau systems and feedstock refineries.

Technological or economic limitations restrict the viability of 3D printing in the home. However,

the opportunities afforded by digital materialization could create a new industry of local printshops for local and online retailing.

Consumers go to these print shops to print the personalized 3D designs they have purchased

from the databases of suppliers or peer-to-peer networks. Large retailers would also find it

more efficient to print products locally to reduce supply chain costs and shipping time to

consumers.

This would mean that localized manufacturing would be widespread and would return to the

Global North. As a result, the demand for STEM graduates would increase in these countries.

A new market for garage entrepreneurs would open up, alongside the resurgence in local

investment based on protecting regional interests.

Who Loses?While 3D printing is unlikely to be economical for large production runs of products by comparison with

traditional modes of manufacturing, this scenario would involve all sorts of disruptions to freight due to

the adoption of print on-demand business models where products are made for individual consumers

willing to pay a bit more for unique, bespoke products.

Localized manufacturing would result in the replacement of diverse networks for the large-scale

transport and distribution of mass-manufactured objects from the Global Southwith standardized and

monopolized supply chains based for the most part on raw resources. This could potentially cause

geopolitical tensions by de-globalization.

Barriers

Cost of implementation and operation will have to come down further to make this scenario

competitive with traditional subtractive and injection mold manufacturing. Speed of production will

also need to increase.


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7 Investment ThesisCompanies directly related to the research, development and production of additive manufacturing

equipment command large valuations that are linked to the rise in popularity of printing being the next

big thing. Companies linked to 3D printing have had gains ranging from 50-300% over the past 2 years.

While much of the hype holds truth that 3D printing is a disruptive technology that definitely has a

place, it still has a long ways to go before it meets expectations that it will replace or even compete withtraditional manufacturing.

I largely agree with the chart below that illustrates that the expectations of most 3D printing

applications hold largely inflated public expectations verses the current reality. Put in perspective, the

3D printing consumer market, for its enormous hype, remains microscopic. According to a report by

Gartner, in 2013 there were roughly 57,000 sub-$100,000 3D printers sold for the entire year, globally.

Source: Gartner 2013


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The reality is that 3D printing is fantastic for rapid prototyping and for producing finalized complex

products that do not benefit from economies of scale. But this knowledge has been around for 15 years

and most major companies that use some form of prototyping already use 3D printing either in house or

through a 3rdparty service provider. While there is still room for growth with professional users, the

current hype influencing the stock run ups revolves around 3D printing entering the consumer market as

prices for home printers continue to drop, the cheapest being around $100. The recent sell off in the

space has been attributed to Stratasys and ExOne cutting back 2014 guidance.

The ability to scale 3D printers price points to be within an average consumers price range comes at the

cost of quality, accuracy, and durability and comes with some significant caveats. Many of the new

printed products that are making news headlines are produced with machines that cost $300,000+ with

materials not available or outside the price range of budget printers.

While the cost of machines is coming down, raw materials continue to cost 30-50 times that of their

generic counterparts and the energy consumption is as much as 100 times that used in injection mold

casting, making it impractical for home consumers to produce their own products. Its illogical to think

the average consumer will spend $50 and 6 hours of their time to print a coffee mug.

The ability to properly use current 3D printers requires a level of expertise that far exceeds that of the

average potential user. The talk that it is possible to download a premade design and print it at the

push of a buttonjust is not true, at least not at this time. The current online repositories of 3D designs

need to increase exponentially with the backing of major companies contributing designs of

replacement parts for their products to truly make consumers interested in home printing. The

alternative is for consumers to design their own products, making the scenario even less likely. In order

to create custom prints requires hours of design work even with extensive knowledge of CAD software.

For these reasons I dont believe the high valuations are justified. In the short term I expect valuations

to remain inflated until expectations come more in line with the realities of the technologies current

capabilities. The catalyst for this will probably be the continued guidance corrections if consumerprinters dont sell nearly as well as was originally forecasted. With these corrections I expect valuations

to come back down.

When this decline happens I estimate there will be value to be had from markets overreacting

potentially bringing valuations down below fair market price for companies like Stratasys and others

that possess solid business models with strong earnings and growth.

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3D Printing Industry Analysis

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