Everyone is concerned about data nowadays.
Technology companies are obsessed with the various different kinds of data generated by users, be it your purchasing history, search history or your contacts. As long as the data could give any slight indication of how you are as a person to allow them to do certain profiling of you, most companies could probably be interested in that as long as it is legal and compliant to certain privacy data standards.
However, none of these varieties of data come as close to describe you as a person as your own genome data. And the genomics market is a market you cannot afford to ignore as an investor.
Genomics market is expected to grow at 19.5% CAGR and has the potential to reach a market size of USD 82.6 billion by 2027. That's certainly a growing market which you would like to tap on in your investing journey. And there's a lot to be optimistic about this market if you have been following the development in this space for the past few years.
In 2003, the Human Genome Project was completed after 10 years and cost around $3 billion. This project is a milestone in human history as we successfully map the first human genome in this project. However, it wasn't practical for the technology to be wide scale back then due to the huge costs and long durations. Things evolve quickly from then on. Today, you can now map your DNA in a matter of a few hours with a cost of around $1000. And in the near future, we can expect this cost to further drop to around $100. This is essentially an example of Wright Law in place- a reduction of 15-20% in costs with every doubling of production. And this is pretty much a big deal as this could mean mass adoption of this new technology.
(Source: Cobloom)
If you were to look at the technology adoption graph above, this will mean the adoption has now crossed the chasm- from the early market to the mainstream market. This crossover will have a significant impact on the earnings and revenues of companies whose products and services are in this technology realm- which is why investors should be excited about this.
Before I proceed to list a few companies who are in the frontier of this space, let's probably take a step back and talk about why genomics is a whole different world compared to genetics which we are probably familiar with.
Very broadly speaking, genetics refers to the study/focus on a single gene while genomics refers to the study/focus on all the genes and their interrelationships. While genetics could shed light on a person's disease risk or reaction to certain drugs, there are many things it couldn't really answer as the totality of the interactions of the genes (as a system) isn't looked into. Ever wonder why someone could smoke and drink all day yet lives to a 100 while another person could be working out every single day but only lives till 50? This is the kinda question which genomics could answer.
That then brings in many different possibilities in the healthcare sector. For instance, we could now begin to explore providing personalised treatment/medicine to different groups of people instead of a "one size fits all" treatment/medicine approach to everyone. By understanding the genetic makeup of individuals, we could better understand what works/not works for them and hence increase the success of their treatments. Also, genomics could bring about a very fundamental shift in the business model of the pharmaceutical companies. Currently, sales for the pharmaceutical companies are largely derived from chronic sales of drugs to the patients in their combat against diseases. With genomics, we could possibly alter genes in individuals in the early stages to prevent them from even getting the diseases in the first place. This could then mean chronic sales will no longer materialise. Instead, one-time treatments will take over.
If we were to explore deeper within genomics, we would see the potential of specific technologies in this space being increasingly look at or utilised today. Last year, the Nobel Prize for Chemistry is being awarded to two scientists for the development of Crispr-Cas9 (which is a molecular scissors for gene editing for simple understanding). Such gene editing technique has huge market potential when mass rolled out. For example, it's estimated that 1 in 5 adults may be carrying disease-related genetic mutations. Right now, we are probably looking at only being able to treat 5% of the diseases caused by one gene. With gene editing, we have the potential to treat 100% of such diseases from just editing this one gene. That alone could be a potential $2 trillion opportunity, without taking into account the market for diseases from multiple genes. Therefore, gene editing definitely has huge potential to replace the current gene-replacement therapy (which does not permanently alter the genome) in future healthcare related applications.
Now, which are the few companies that are trailblazing this genomics space?
The few start-ups that have been in the limelight recently are Crispr Therapeutics, Editas Medicine and Intellia Therapeutics. The core technology behind all these few start-ups is Crispr-Cas. You might like to read up more about Crispr-Cas here. Beside these start-ups, there is also another start-up called Beam Therapeutics whose their core technology is different from those listed above. Their core technology is base editing which is an even more precise form of gene editing- which makes it more suitable for treating diseases such as progeria. You might also like to keep a lookout for this company.
Generally, the genomics market is exciting and evolving quickly. New technologies are constantly put into place. You may have Crisp-Cas now, with base editing in the horizon and potentially even prime editing in the not so distant future. While these might all sound revolutionary, the immaturity of these technologies would mean that investors need to be aware of the risks they are carrying when investing in such companies. If the technology that particular company is carrying becomes obsolete, you shouldn't be surprised to see the share price of the company taking a nose-dive.
Hence, it might be a better decision to invest in ETFs instead of individual stocks for this particular space to spread out your risk. Also, the genomics market is one which requires substantial understanding of the various technologies. This is likely not something I or any other readers who are not in this field is able to understand on an in-depth level. Bearing these in mind, I personally prefer to invest in ARKG (ARK Genomic Revolution ETF). (I wrote about ARK ETFs in another post and you might like to check it out here.) This allows me to participate in the rise of this market by letting the experts actively manage the investments.
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