Identifying Hot Spotsof Innovation in Advanced Materials
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March2015 ResearchSample Hot and Not: Identifying Hot Spotsof Innovation inAdvancedMaterials The advanced materials space covers a broad spectrum of technologies, and understanding the dynamics of a multitude of industries requires identifying the key points of high momentum and strong potential, particularly given the long development timelines involved in bringing new materials to market. To assist our clients in assessing emerging technology developers for potential relationships, we compared Partnership, Technology, Profitability, and Momentum data; located the technology categories that offer the highest potential for future success; and identified key trends and challenges. To better understand the implications of the technology category trends identified, we also conducted case studies of individual, leading companies. Table ofContents LeadAnalyst AnthonyVicari EXECUTIVESUMMARY 2 ResearchAssociate LANDSCAPE 3 +1 (857)284-5688 Average Lux Research scorecard metrics highlight key [email protected] Momentum,Partnership,and Technology trendsin Advanced Materials. Contributors AnthonySchiavo ANALYSIS 11 RossKozarsky Enhancingmaterialstechnologiesderive moreMomentumgain MichaelHolman,Ph.D. from partnershipsthando platformmaterialstechnologies. OUTLOOK 14 ABOUTLUXRESEARCH 15 Lux ResearchInc. Lux Research does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. This report is based on information obtained from sources believed to be reliable but no independent verification has been made, nor is its accuracy or completeness guaranteed. This report is published solely for informational purposes and is not to be construedas a solicitationor an offer to buy or sell any securitiesor relatedfinancial instruments. Lux Research Inc. • Boston• New York• Amsterdam• Singapore• Shanghai•www.luxresearchinc.com Hot and Not: Identifying HotSpotsof Innovationin AdvancedMaterials 2 ResearchSample ExecutiveSummary The advanced materials space covers a broad spectrum of technologies, and understanding the dynamics of a multitude of industries requires identifying the key points of high momentum and strong potential, particularly given the long development timelines involved in bringing new materials to market. To assist our clients in assessing emerging technology developers for potential relationships, we compared Partnership, Technology, Profitability, and Momentum data, located the technology categories that offer the highest potential for future success, and identified key trends and challenges. To better understand the implications of the technology category trends identified, we also conducted case studies of individual, leadingcompanies. • Carbon nanotubes (CNTs) have long beena technologylacking a clear target application, as their impressive material properties proved difficult to capture in real-world products beyond niche, high-end spaces. However, after cycles of hype and dashed expectations, in recent years key start-ups have brought viable CNT- based intermediates closer to commercial reality. • The graphene space has seen enormous hype in academia, in the press, and in the proliferation of start-ups producing this so-called “wunderkind material.” However, the forefront of technical and commercial progress is still concentrated in a handful of leadingstart-ups. • Since 2012, average 3D printing technology scores fell from 3.8 to 3.1. However, a smaller number of more disruptive start-ups like Arevo, which is developing printable fiber-reinforced plastics, or Syseng and 3-Spark, which are developing printers that can handle multiple classes of materials in one part, represent to clearest long-term path to improving the performance of 3D printed parts and the ability of the technology to address commercial and industrialneeds. • In addition to momentum, one key factor in tracking a company’s progress is the transition to profitability. In general, in each technology category, companies that have achieved profitability tend to have higher Technology scores than those that have not. However, metal lightweighting companies are a clear outlier,the only technologycategoryin which profitable companies have, on average, Technology scores 0.4 points lower than those of unprofitablecompanies. PartnershipsHave the HighestImpactin EnhancingMaterials Enhancing materials technologies derive more Momentum gain from partnerships than do platform materials technologies. • Platform technology start-ups respond weakly to partnerships, with comparable Momentum scores regardless of partnership quality and quantity.In contrast, enhancing technologycompanies without strong partnerships struggled to generate positiveMomentum. © 2015 Lux Research, Inc. Copyrightstrictlyenforced Hot and Not: Identifying HotSpotsof Innovationin AdvancedMaterials 3 ResearchSample Landscape Average Lux Research scorecard metrics highlight key Momentum, Partnership, and Technology trends in AdvancedMaterials. AggregatedCompany Profile Data Highlights Key AdvancedMaterialsTrends The advanced materials space covers a broad spectrum of technologies, and understanding the dynamics of a multitude of industries requires identifying the key points of high momentum and strong potential, particularly given the long development timelines involved in bringing new materials to market (see the report “Planning for Ripe Fruit: Materials Innovation Lifecycles as a Predictive Scouting Tool”). To help our clients better navigate the perilous waters of materials development,weasked: • Where are the hotspots in materialsdevelopment? • Where can our clients get the most value from partnerships andinvestment? • Whatshould our clientsavoid? To answer these questions, we analyzed aggregate data from 471 Advanced Materials company profiles in 10 technology categories published since 2011 (see Figure 1). In each company profile, Lux’s scorecard ranks companies on 10 metrics, from 1 to 5, based on a common rubric to enable direct comparisons of companies across disparate technology categories (see Figure 2; note that several companies do fall into more than onetechnology category). The Momentum score is specifically designed to chart a company’s level of recent business and technological success. However, this metric is a lagging indicator – it is determined by successes that have already occurred, whereas we seek to predict success that has yet to happen. To evaluate how our remaining metrics correlate to technical potential and business execution, we compared their averages to that of momentum and found that Technology solution value (Technology) and Partnerships each correlate strongly (see Figure 3). However, strong Technology and strong Partnerships typically precede high Momentum, and so to find likely future hotpots, we charted these scores over time – showing which technology categories are struggling, surging, or rebounding. To assist our clients in assessing emerging technology developers for potential relationships, we compared Partnership, Technology, profitability and Momentum data, located the technology categories that offer the highest potential for future success, and identified key trends and challenges. To better understand the implications of the technology category trends identified, we also conducted case studies of individual, leadingcompanies. TechnologySolutionValue and PartnershipScoresShowTwoAxes of Momentum While the Technology and Partnership scorecard metrics each correlate strongly with overall company momentum, they do not correlate strongly with each other. Thus, analyzing each separately highlights distinct trends over time affecting different technologycategories. Functional and ProtectiveCoatingsShow StrongTechnologySolutionValueTrends Functional and protective coatings have seen significant technical advances and an influx of new companies in recent years. Shifting Technology scores over time highlight the underlying changes in maturity and competition in these technologycategories. • Coating technologies show consistent high Technology score performance. The average Technology score for protective coatings – which we define as coatings that combat degradation mechanisms such as corrosion, wear, friction, and fouling – has remained high and steady since 2011 (3.2), rising slightly to 3.3 in © 2015 Lux Research, Inc. Copyrightstrictlyenforced Hot and Not: Identifying HotSpotsof Innovationin AdvancedMaterials 4 ResearchSample Figure 1: Lux AdvancedMaterials Intelligence Profiled 471 Companies Since2011 Technology Category Number of ProfiledCompaniesSince2011 3Dprinting 39 Advancedceramics 49 Antimicrobialcoatings 18 Carbon nanotubes(CNTs) 47 Compositelightweighting 60 Compositeprocessing 51 Graphene 57 Hydrophobiccoatings 49 Metallightweighting 29 Protectivecoatings 84 Figure 2: ScorecardMetrics Providea CommonRubric forCompanyAnalysis ScorecardMetric Description Technology solutionvalue How strongis the company’stechnicalsolution? Addressable marketsize If this companyhad 100% marketshare,what wouldits annual revenuebe? Competitivelandscape Are many otherorganizationsdoingthe samething? Barrierstogrowth How imposingarethe barriers thatthe companymust overcometo generategrowth? IPposition How likely is it thatthe company’s patents and/ortradesecrets will be valuable? Regulatoryfactors Will regulationspeed