The Human Genome Project (HGP), the first whole human genome sequencing in 2000, cost over $3.7 billion and took 13 years of computing power. Today, it costs roughly $1,000 and takes fewer than three days. With trillions of genomes waiting to be sequenced, both human and otherwise, the genomic revolution is in its infancy.
Since 2000, the cost to sequence a whole human genome has continued to collapse. From $3.7 billion, it dropped to $10 million in 2006, and to $5,000 in 2012. Today it costs $1,000. To date, the rate of the decline has outpaced Moore’s Law by three to four times. As shown below, at either the historic rate of decline or Moore’s Law, the cost to sequence a human genome will fall below $100 in the next five years.
The price elasticity of demand for sequencing has been stunning. By the end of 20121, the most recent data available, only 30,000 human genomes in the world had been sequenced. Thanks to Illumina ILMN, the latest breakthroughs in sequencing technology now will enable triple that number to be sequenced this year. Illumina has 80%- 90% market share of all of the base pairs sequenced in the world today. Its next generation sequencer (NGS), the Hi-Seq X10, costs $10 million, and sequences 18,000 human genomes per year. It currently has little direct competition in a winner-takes-most market. After the HiSeq X10 launched, the industry’s other large competitor, Hoffman-La Roche RHHBY, shut down its sequencing business, convinced that it could not compete.
Illumina originally planned to sell only five Hi-Seq X10s in 2014, but the response to its debut was so strong that it sold out after the first quarter. Thanks to significant government spending commitments, Illumnia has entered into numerous research partnerships focused on cancer and rare diseases. Most recently, it agreed to partner with the UK government to sequence 100,000 genomes by the end of 2017, 75,000 of which will be completed by 2015.
While the HiSeq X10 can sequence an unprecedented volume of genomes, it is limited only to humans, which represent a fraction of the potential volume. The graph below shows the number of whole genome sequencing (WGS) projects, human and otherwise, catalogued in the National Center for Biotechnology Information’s GenBank database. Clearly, the sequencing database is growing at an accelerating rate.
Bacteria, viruses, cancer tumors, plants, and microbes offer exponential growth potential. Illumina’s product portfolio consists of a broad range of systems capable of genome sequencing all of these genomes. Given a continuation of the current price elasticity of demand, by 2019 more than two billion genomes, including 50 million human genomes (as shown in the chart below), could be sequenced representing a 200% compound annual rate of growth.
While robust, Illumina’s current product offerings are not complete. Its gap is in “long read length” genome sequencing, the sequencing of several thousand base-pair-long strands of DNA at high resolution in a single run. The advantage of long reads is the ability to analyze long repetitive regions of DNA. Pacific Biosciences (PACB), called PacBio, excels at long read lengths, though the price point of its sequencers is too high to allow for scale at this time. PacBio could be another market leader in the space, but it would have to drop the cost of its machines by orders of magnitude to compete with Illumina.
The genome sequencing market is in its infancy, poised to grow at rates difficult to comprehend. Sequencing is introducing deeper scientific knowledge into medical decision making, eliminating wasteful guess work, and moving us closer to a truly personalized healthcare system.
- 2012 has the most recent reliable estimates, while 2013 data is pieced together. ↩
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