Invisalign: A Pioneer of Mass Customization through 3-D Printing
Align Technologies disrupted dentistry with Invisalign, a 3-D printed alternative to braces – but now the wide availability of additive manufacturing technology threatens their competitive advantage.
Introduction
Align Technology is a manufacturer of medical devices designed for orthodontic, restorative, aesthetic dentistry, which they produce under the Invisalign brand1. The company uses additive manufacturing (AM) to create customized, patient specific medical devices called “aligners”. According to the company’s 2018 10k filing and interviews with executives, Align produces 1,066,000 aligners per year through a “mass customization” model in which it produces completely custom products in a centralized facility in Mexico2,3. The processes for creating a custom, patient specific aligner is as follows4:
- Using stereolithography technology (a type of additive manufacturing), a series of molds depicting the future position of teeth are constructed.
- Aligners are fabricated by pressure-forming polymeric sheets over each mold.
- The stereolithographically produced molds are discarded, commonly referred to as “sacrificial tooling”.
Similar to other companies in the medical device and pharmaceutical industries that rely upon proprietary patent protected technology, Align is subject to a finite amount of time in which they enjoy patent protection. According to Align’s SEC filings, many key patents have already expired and newer ones will expire 2018 through 20355. Even in today’s environment when Align still holds some patent protection, there are many small, private laboratories and private practice dental offices that are utilizing similar methods of stereolithographic additive manufacturing to create medical devices like Align’s.
Role of Additive Manufacturing at Align
Align’s competitive advantage originated from their application of stereolithography technology to manufacture aligners. As AM technology has become more available to individual dentists and local laboratories Align’s competitive advantage has diminished. Essentially, their AM technology has become repeatable on a small scale for similar cost. In traditional manufacturing systems, economies of scale provided a barrier against competitors as new entrants were unable to drive down variable manufacturing costs without significant capital investment6. However, a mass customization model leaves companies like Align vulnerable to competitors since increasing volume in a mass customization model does not drive down variable costs.
Corporate Strategy
The Align Technology management’s key strategic objectives are focused on refining existing stereolithography technology,
“To increase the efficiency of our manufacturing processes, we continue to focus our efforts on software development and the improvement of rate-limiting processes or bottlenecks… In addition, to improve efficiency and increase the scale of our operations, we continue to invest in the development of automated systems for the fabrication and packaging of aligners.”7
Through its actions, management has also indicated that it places strategic priority on vertically integrating its sales and customer acquisition efforts through partnerships and programming. I believe this is an effort to consolidate and solidify their user-base in order to preempt them from investing in smaller-scale AM capabilities. Although it cannot be known what the internal strategy plan entails, based on public information it seems that the company is focused on improving existing technology and methods while driving additional demand for its product.
Discussion & Recommendations
Additive manufacturing is going to play an important role for Align as they work to defend against competitors of all sizes. Richard A. D’Aveni, Professor of Strategy at the Tuck School of Business hypothesized in the Harvard Business Review that AM will drive manufacturing away from centralized production to local production to eliminate shipping costs and leadtime8. I see an opportunity for Align to utilize their R&D, expertise and superior equipment to create new competitive advantages. Specifically, I believe there are two areas of product development that Align needs to focus on.
One is differentiating their current stereolithography process through providing improved experience for the dentist or the end user, which may take the form of improved user interaction with the company or more convenient and timely production. AM provides a clear opportunity in addressing convenient and timely production. Smaller, localized production centers utilizing Align’s current technology or future technologies could produce and deliver products faster and perhaps more cost effectively.
The second area of development is innovating their additive manufacturing to move from their current process in which they use stereolithography/sacrificial tooling towards a 100% additive process where the polymers are being printed instead of utilizing a wasteful sacrificial mold. A method with signs of viability as proven in an academic setting by Al Mortardi et. al.9 I believe pursuing a more technologically advanced method of additive manufacturing may create differentiation as well as yet-to-be-realized advantages that may drive increased future capability such as localized manufacturing or less invasive treatments.
Ultimately, Align has a history of innovation and disruption which propelled to its current level of success, however as their once patented and novel technology becomes replicable, the path to continued differentiation and advantage become less clear. I believe the most important question to be considered is:
Should management pursue difficult potentially fruitless additive manufacturing innovation, or continue to refine and improve their existing technology?
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Sources
- Align Technology, 2018 Form 10k, p. 3, http://investor.aligntech.com/static-files/5c71a6cb-7b25-461d-9de7-4d4c3add44da , accessed 11/9/2018
- Align Technology, Q2 2018 Corporate Fact Sheet, https://www.aligntech.com/documents/Align%20Technology%20Corp%20Fact%20Sheet%202018%20Q2.pdf , accessed 11/9/2018
- 3D Systems, “Align Technology Delivers Mass Customization with 3D Printing”, YouTube, published Sep 11, 2018, https://www.youtube.com/watch?v=bKsGNrEKx9M, accessed 11/11/2018
- Align Technology, 2018 Form 10k, p. 4
- Align Technology, 2018 Form 10k, p. 10
- Baumers et. al. “The cost of additive manufacturing: machine productivity, economies of scale and technology-push” Technological Forecasting and Social Change, Vol. 102, January 2016, Pages 193-201
- Align Technology, 2018 Form 10k, p. 9
- Richard A. D’Aveni, “3-D Printing Will Change the World”, Harvard Business Review, March 2013, https://hbr.org/2013/03/3-d-printing-will-change-the-world, accessed 11/11/2018
- Al Mortadi et. al. “Fabrication of a resin appliance with alloy components using digital technology without an analog impression” American Journal of Orthodontics and Dentofacial Orthopedics, November 2015 Vol. 148 Issue 5
Very interesting article on Align. My question before we even get into the additive manufacturing is around whether Align is targeting the right dentists and orthodontists to roll out the product. Many orthodontists are still hesitant to recommend Invisilign because it is not always proven to work as well as traditional orthodontia, and the dentists who are selling the product don’t always have the end user’s best service in mind. I wonder if additive manufacturing could help another competitor to create a better product which is more of an amalgamation of traditional orthodontia and Invisilign technology which better serves the customer at a lower price point or easier point of access. I think Align should be looking at potential threats from additive manufacturing in order stove off this disruption.
Two aspects of your post struck me. First, you said that Align’s management are “focused on refining existing stereolithography technology,” which made me wonder whether they are doing enough to investigate other forms of additive manufacturing (besides stereolithography). My understanding is that new ways of 3D printing are evolving rapidly, and I would not want Align to overlook an opportunity to incorporate a better form of technology.
Second, I wonder whether materials are a constraint. I assume that they are stuck with the wasteful sacrificial molding process because they are not able to print the aligner directly. I recommend that Align hire materials scientists, or work with materials scientists at other companies, to stay abreast of the latest developments in materials for additive manufacturing.
As you have pointed out, I would worry about how long Align could keep its competitive advantage in 3D printing of liners, given that it has been replicated by other startups. For example, Candid, a direct-to-consumer teeth alignment company has managed to use the same technology in producing customized liners for consumers at a fraction of Invisalign’s cost (Candid costs ~$2000 while Invisalign costs ~$8000), because it removed the middlemen (i.e. the dentists) and is able to ship liners to consumers directly, making the product more accessible. Rather than pursuing innovation in additive manufacturing that could easily be adopted by competitors, I would recommend Align to focus on improving their existing technology in areas such as designing liners that could help consumers correct their teeth faster and more accurately.
I think Align should focus on trying to use their technology and expertise to disrupt another industry rather than continuing to try and be competitive in the aligner industry. For instance, I wonder if the same technology could be used to build customizable, disposal, and small tools for factories? Trying to enter a new industry and pivoting might allow them to continue being industry leaders rather than tryin to catch up in the dentistry field. It seems that they will be unable to stay ahead of the curve because AM technology is becoming more prevalent and thus decreasing Align’s current competitive advantage in the medical field.
Great article! Moving forward, I think Align should focus on i) ensuring that their product continues to be the best in the market (in terms of convenience of software for dentists, ease of access, consumer experience wearing the aligners, etc.), ii) Thinking of ways to access the customer more directly. In this line, I do think that having smaller, localized production centers may be helpful, and also see the opportunity to a) offer dentists a product that enables them to produce the invisalign themselves, b) assess the possibility of going direct to consumer (don’t know exactly how they would get access to the consumer’s teeth). I believe that direct to consumer is where the future is going both in terms of reducing middle-man costs and in terms of building brand loyalty.
Interesting point about an AM company not having the advantage of economies of scale as a barrier to new entrants. I think in that case then Invisalign needs to decide whether it wants to compete on service or compete on innovative technology. If competing on service, they need to focus on making their product so entrenched in their distribution channels that switching costs are too high for new entrants to bear. If competing on innovation, then it seems they probably should invest in AM innovation – the technology is still developing rapidly, and I don’t think Invisalign should give up too quickly. If we think about the “Change Adoption Lags Effort” chart from LEAD, perhaps Invisalign right now is at the bottom of the curve, where a bit more time & effort can lead to an exponential increase in the extent of the change. They shouldn’t admit defeat too quickly.