IDENTIFY THE VALUE IN AN ENTERPRISE-WIDE DEPLOYMENT OF ADDITIVE - PowerPoint PPT Presentation

IDENTIFY THE VALUE IN AN ENTERPRISE-WIDE DEPLOYMENT OF ADDITIVE MANUFACTURING PROCESS INDUSTRIES Chris Krampitz, P.E. Stratasys Consulting Principal Consultant - Americas 1

OBJECTIVES Identify industry challenges addressed by Additive Manufacturing (AM) Define the potential benefits from enterprise-wide AM deployment Explain approaches to identify and define enterprise-wide AM value 2 2 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS

Section One OUR EXPERTISE 3

STRATASYS AT THE FOREFRONT OF DIGITAL MANUFACTURING FOR OVER 25 YEARS Industrial Machines Global AM Leadership Industrial AM Contract Manufacturer Innovation Deployment Deep Vertical Market  Over 1,200 granted  $696 MILLION in Expertise or pending AM revenue (2015) patents globally Technical & Commercial  Over 150,000 AM Solution Consulting Services Ecosystem  Over 30 technology systems sold and leadership Materials Development  Comprehensive awards ecosystem to facilitate the adoption AM Software and integration Prototyping Machines 4 4 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS

DEPTH & EXPERTISE TO ADDRESS KEY OBSTACLES IN AM ADOPTION & INTEGRATION …to apply their expertise to capture Team of technical and commercial people ready for deployment … the maximum value from AM Advanced 3D Printing 3D Printing Design & Materials Technologies Simulation Post Testing & Regulations Inspection & Standards Processing Quality Supply Chain Strategic Management Management Management 5 5 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS

Section Two AM-ENABLED MANUFACTURING TRANSFORMATION 6

TRANSFORMATION IN PRODUCT COMMERCIALIZATION Current State: Mass Production and Centralized Manufacturing Economies Product Design for Mass of Scale Distribution Manufacturing Production Emerging State: Mass Complexity and Distributed Manufacturing Economies Mass Distributed Design for Customization Manufacturing Use of Scope 7 7 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS

RISE OF MASS COMPLEXITY AND DISTRIBUTED MANUFACTURING …fueled by the growth in manufacturing Global AM installations are growing rapidly… # of installed machines $80,000 Expected 30% CAGR 450,000 25,000 (USD million) 2015 Distribution of Capacity 400,000 $60,000 U.S. 38% N.A. 40% 20,000 350,000 $30B Germany 9% Europe 28% 300,000 Japan 9% APAC 27% 15,000 $40,000 250,000 China 9% $ 9B 200,000 10,000 $ 8B $20,000 150,000 $ 10B 100,000 5,000 $ 11B 50,000 Industrial Systems $- 0 0 2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2008 2010 2012 2014 2016F 2018F 2020F 2022F SOURCES: Wohler's Report 2016, MorganStanley, UL SOURCES: Wohler's Report 2016, MorganStanley, UL AM technology is fueling the creation of distributed Manufacturing networks are allowing mass manufacturing networks complexity and better designs Elements of the Manufacturing Network Independent 20K (2006) to 220K (2016) Designers (US) Innovation Platforms AM contract manufacturer on average uploads & prints 120K new Development time for new Microfactories $425M (2008) to $3,574M (2015) designs per month designs is over 90% faster SOURCES: Wohler’s Report 2016, BLS, UL SOURCES: Shapeways, Wohler’s Report 2015, PDMA, UL 8 8 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS

AM IS CATALYZING CHANGES IN THE CONCEPTUALIZATION, DESIGN, AND PRODUCTION PROCESSES (1 OF 2) 1  Increases likelihood of product launch success Product  Increase customer loyalty Co-Development  AM prototypes to validate user requirements 2  Rapid identification of worthy product concepts Real-Time  Decreases market research costs Market Testing  AM pre- production prototypes to conduct “split testing” across markets 3  Selective specialization across target markets Optimal Market  Identify modularization across market segments Selection  AM used for small scale production in specialized markets 9 9 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS

AM IS CATALYZING CHANGES IN THE CONCEPTUALIZATION, DESIGN, AND PRODUCTION PROCESSES (2 OF 2) 4  Rapidly identify product variants warranting large scale Production production across market segments Scale Up  AM used for production of complex parts and for manufacturing tooling 5 Maintenance &  AM used to producing low turnover spare parts and to Sustainment produce tooling for moderate turnover spare parts Potential Benefits from AM Technology  Increase speed to market by over 50%  Increase part consolidating by over 20%  Decrease tooling costs by over 50%  Decrease unit total landed cost by over 15% 10 10 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS

POLL QUESTION #1 In which areas in the product realization process is your organization MOST interested in applying additive manufacturing technologies? (Select One) A. Product Co-Development B. Real Market Testing C. Optimal Market Selection / Small Production Runs D. Production Scale Up / Bridge Tooling E. Maintenance & Sustainment F. Other 11 11 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS

Section Three PROCESS INDUSTRIES LANDSCAPE 12

PROCESS INDUSTRIES Food Oil & Gas Pulp & Paper Chemicals & Pharmaceuticals Beverage Utilities Printing Resin & Plastic Products  High complexity, high value assemblies & processes  Short lead time requirements & rapid development  High change over costs 13 13 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS

CURRENT STATE OF THE PHARMACEUTICAL SEGMENT Development costs have been hard to reduce Segment has experienced prolonged low growth Global R&D Spend per NME Global Number of New 60 $6 Prescription Generics Orphan Molecular Entities 50 $5 Global Drug Sales CAGR = 2.2% (USD billions) $1,000 (USD billions) 40 $4 $800 30 $3 $600 20 $2 $400 10 $1 $200 0 $0 $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2008 2009 2010 2011 2012 2013 2014 2015 2016 Complexity has increased demand for Costly developments fail to reach the market outsourcing Contract Manufacturers 80% Number of NME & Share of COGS 50 U.S FDA Fillings 60% 40 BLS 30 40% 20 20% U.S. FDA Approvals 10 0% 0 2013 2017 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 SOURCES: U.S. FDA, Evaluate Group 14 14 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS

KEY TRENDS IN BIOPHARMA CONTRACT DEVELOPMENT AND MANUFACTURING  Supply chain consolidation  Flexible manufacturing  Offloading more product Increased Demand for Management of High Smaller & Specialize development Broader Services Potency Substances Production Runs  Equipment and process complexity  Product complexity Trends that additive Rising Demand for Single Use Overall Equipment manufacturing technologies are Inspection Technology Components Effectiveness well suited to address SOURCES: Pharmaceutical Manufacturing, Pharmaceutical Processing, Contract Pharma, CPhI Pharma Insights 15 15 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS

TRENDS IN THE FOOD & BEVERAGE PROCESSING SEGMENT Processing & Packaging Equipment Processing Growth  FDA Food Safety Modernization Act Processing Packaging  Accurate sorting to reduce waste $40 Global Revenues (USD billions) CAGR = 4.2%  More compact manufacturing $30 $20  Inspection for smaller foreign particles $10  Automation consolidating processing $0 2015 2020  Energy efficiency Packaging Key Pressure on Food Companies  Standardizing for ecommerce  Greater variety and innovation due to  Reduction of food waste; safety shorter product life cycles  Growth of newer, smaller brands  Commercializing packaging innovation  Rationalization of costs and improve  Holistic packaging returns on capital SOURCES: BCC Research, Rabobank 16 16 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS

Process Intensification in the Oil & Gas and Chemical Segments 17 17 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS

AM CAN BE A STRATEGIC ELEMENT IN ADDRESSING INDUSTRY CHALLENGES Potential Decrease in Time to Market from Using AM Potential Decrease in Total Landed Cost from Using AM 40% 100% Traditional Cost 80% 15% 60% 15% 7% 40% 1% 6% 1% 17% 20% 0% 3-5 years w/o AM <1-2 years w/ AM Near-Term Benefits: Quick Wins: Medium-Term Benefits:    Accelerating new product development More complex designs driving weight Customization and improved market  reductions and incorporation of Enhancing quality through rapid prototyping responsiveness   electronics Customized fabrication tooling Smaller supply chains with greater   Reducing assembly and production Reducing tooling costs in product design contributions from members costs through simplification SOURCES: U.S. Census Bureau, Department of Commerce, US FDA, Stratasys Consulting 18 18 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS