Innovation in healthcare: The effects of 3D printing on the health sector

Absztrakt (kivonat)

My thesis focuses on innovations in healthcare, more specifically on 3D printing in healthcare. The aim of this paper is to analyze the healthcare sector and various innovations and to show that companies from different sectors are getting involved in the medical sector through 3D printing. Based on the findings, it can be concluded that 3D printing techniques are being used with increasing popularity in various industries, one of the most important of which is healthcare. The production of medical products, instruments and implants helps the healthcare sector by making the work of healthcare professionals easier and offers better and more comfortable solutions for patients than before. For the company analysis Teece’s Win-Lose Model and Chesbrough’s Open and Closed Innovation Model and the Triple Helix concept were applied. Teece’s model helps organizations understand how it is possible to capitalize on innovation and gain an advantage over the competition and to analyze why innovations frequently fail to succeed on the market. He states clearly that innovations often fail because innovator are not able to appropriate returns to the investment. There are two vital factors for successfully commercialize an innovation: the appropriability regime and the specialized complementary assets. The appropriability regime includes Intellectual Property Rights and technological elements. A weak appropriability regime means that it is hard to protect the innovation because its intellectual property right is not effective enough, while in case of a strong appropriability regime the innovation’s intellectual property rights are secured and it possesses tacit knowledge. The specialized complementary assets are specifically customized to the innovation, covering three main fields: marketing, manufacturing and after-sales services. When it comes to commercialization there are three possible scenarios: the innovator does everything by himself, creates a joint venture or licenses the innovation to a company in exchange for royalties. The choice depends on whether the innovator owns the necessary complementary assets, the height of imitation barrier, meaning how easily can the innovation be duplicated by competitors, and the level of competition. The question is who will make the profit once the innovation is out on the market in each case. In the first one it is the innovator, in a joint venture the profit is shared and the ratio is set by the bargaining power of the parties, but the innovator is still able to make a proper return. Licensing offers the least rewarding profit but it will give protection against imitators. 3D printing in healthcare is a very competitive segment of the market. It requires a lot of research, data, specific materials, know-how and resources. It takes time and precise work to create a 3D printed tissue or organ that will function and feel like just as the original one. Because of this complexness the imitation barrier is quite high and there are very strict regulations regarding Intellectual Property. The particular criteria 3D printing has makes it harder for innovators to have access to all the necessary complementary assets by themselves, but offers an opportunity for them, start-ups and small businesses to get involved in the industry by offering specific products (software, specific component etc.) in exchange for specialized complementary assets that they lack (hardware, manufacturing capacity etc.). In terms of innovation models, it is typically dominated by the three spirals, the Triple Helix, which is nothing more than a spiral of companies, governments, research organizations. This makes it possible to link social and technological innovation, to the solutions and to involve the customer himself within the framework of effective cooperation. Based on Chesbrough’s publication, closed innovation is when an organization does not allow the outflow of assets, materials, process, and related information and expertise that it owns. Thus, the organization must face its own boundaries, as the tool, knowledge and expertise do not flow outwards. The community-oriented strategy implementers are profit-oriented, protect their values, and try to carry out production, design and distribution in consultation with the end user. In contrast, open innovation allows these resources to flow and stream freely, both inside and outside of the company. This allows collaboration, knowledge sharing and real value creation with more experts and experienced companies. The digital economy and society make this even more possible, and now these companies can operate and cooperate with each other without borders. In the case of the companies presented in the analysis, it was shown that the 3D System company acquired more and more tools, resources and expertise through mergers and acquisitions trying to create innovations in-house. Although the company is now successful, there is the chance of not being able to keep up and falling out of the competition. HP applies the open innovation model and has been partnering with many companies through its open innovation and online platform, allowing it to quickly implement, share ideas and information with other partner companies by outsourcing many of its activities. I am of the view, that open innovation model is more rewarding in 3D printing in healthcare. It is a very complex field, using very special materials, which reduces the imitation barriers. Certainly, it has its flows of being dependent on external players but it can help to maximize returns on innovations, stay on top and increase competitive advantage. It also offers support and helps the start of start-ups and small businesses, getting talent and new perspective in return. It is easier to keep on being innovative – inevitable for market leadership - with this business model because of the many sources of knowledge and numerous Research and Development opportunities. In addition, it is a flexible strategy, adjusting to new market realities requires less effort. I truly believe, that with time, more and more companies will realize the upsides and the endless possibilities that open innovation offers in today’s globalized world.