Precision Medicine (PM) is a transformative healthcare approach for disease prevention and treatment; it uses a patient’s genetic information, medical history, environmental factors, and lifestyle to determine the most effective treatment option that has the least amount of side effects.
PM has already gained traction in the pharmaceutical industry and is poised to become an integral part of the healthcare space. Nearly 25% of new molecular entities approved by the US Food and Drug Administration were classified as precision medicine in 2019, up from a mere 5% in 2005. Many drug developers have turned to biomarkers (biological markers or gene variations present in a patient, or disease such as a tumor), which is the foundation PM uses to generate accurate targets. For example, biomarkers were used in more than 61% of clinical trials for cancer treatment in 2019 compared to just 18% in 2000.
The precision medicine industry can be categorized into six broad segments based on the type of solution offered, encompassing: genetic testing companies, pharmacogenomic test developers, bioinformatics companies, in-vitro companion diagnostic devices, and test manufacturers, drug discovery and development companies as well as multiomics platforms. Overall, there is a high concentration of startups in the genetic testing and drug development segments.
Traditional diagnostic companies, meanwhile, have branched out into companion diagnostics, while big pharma companies such as Pfizer, AstraZeneca, GSK, and Roche, have a presence in multiple segments.
Having opted for early-stage public listings due to the heavy capital needed during the development process, more than 60% of the drug discovery and development startups as well as companion diagnostic testing companies in the industry hub have access to public funding.
A majority of drug development startups (nearly 80%) were incorporated in or after 2015, coincided with the launch of the Precision Medicine Initiative in the US. They have seen rapid advancements in recent years, and several of them are now conducting clinical trials for their drug candidates while partnering with leading incumbents as part of their go-to-market strategy. Larger players in the companion diagnostics segment have also tapped into public funding via initial public offerings to support commercial operations and enhance clinical studies.
The genetic testing startups have raised significant funding from private investors and the segment is dominated by early and growth-stage startups Grail, Tempus, Color, and Helix. Early-stage startups PathAI and Syapse are the highest privately funded companies in the Bioinformatics segment.
Illumina, a next-generation sequencing (NGS) company, is engaged in developing, manufacturing, and marketing DNA sequencing and array-based solutions for genetic and genomic analysis. It is focused on serving the life science research market, including academic institutions and genomic research centers as well as biotechnology and pharmaceutical companies. The company entered the NGS space by acquiring Solexa in 2006. Since then, its sequencing technology has aided the decline in genetic testing costs from USD 100 million in 2001 to less than USD 600 in 2020. The company has developed a range of sequencing instruments to accelerate research into diseases, the development of drugs, and molecular tests. These instruments have applications in areas such as oncology, genetic diseases, population genomics, consumer genomics, and prenatal testing. By 2020, it had installed more than 17,000 active sequencer systems.
In terms of acquisitions, Illumina acquired competing startup GRAIL in August 2021. GRAIL was originally founded by Illumina and later spun out. The company was to operate as a separate entity and the merger was still being reviewed by regulators at the time. In June 2022, the firm acquired the metagenomics company IDbyDNA. The two firms had initially partnered in May 2020 to co-market IDbyDNA’s Explify platform, a DNA search engine that can detect and identify more than 50,000 microorganisms and 3,000 pathogens.
Key customers and partnerships
Additionally, Illumina develops a variety of next-generation sequencing products intended for in vitro diagnostic use (companion diagnostics) via partnerships with large pharmaceutical companies such as Eli Lilly, Bayer, Bristol-Myers Squibb, Merk, Janssen Biotech , and Roche. The company also collaborates with other precision medicine companies, such as Syapse , QIAGEN, and GeneSeeq, operating in the same segments.
Funding and financials
The company set up a venture fund called the Illumina Accelerator in 2014 to invest in genomic startups. By September 2021, Illumina Accelerator had invested in 61 genomics startups globally and had raised more than USD 1 billion in funding. Founded in 1998, Illumina became a public company in 2000, trading on Nasdaq under the symbol “ILMN.” It reported a non-GAAP net income of USD 892 million for the fiscal year 2021, up 34% YoY. Revenue reached USD 4.5 billion for the year, up 40% YoY. Illumina expects topline growth of 14% - 16% for 2022, while non-GAAP earnings per share is forecast to reach USD 4.0 - 4.2. It expects GRAIL to contribute USD 70 million - 90 million in revenue for the year.
Companion Diagnostics (CDx) tools:
Two main types of incumbents are actively involved in the precision medicine space: 1) traditional diagnostic companies such as Abbott Molecular and Thermo Fisher Scientific that have entered the genetic testing space and companion diagnostics (CDx) for precision medicine, and 2) traditional drug developers such as AstraZeneca, Roche, GlaxoSmithKline, and Pfizer that have added precision oncology and other targeted therapies to their portfolio.
In most instances, big pharma companies and traditional diagnostic companies have developed/built out in-house capabilities to branch out into precision medicine. Some big pharma companies such as Roche and Janssen also have in-house diagnostic operations and expanded into companion diagnostics required for precision drugs. Other incumbents have expanded their precision medicine capabilities and service via acquisitions. There are several collaborations and strategic partnerships that have also taken place between different players in the precision medicine ecosystem including partnerships between 1) traditional drug developers and diagnostic companies where the latter develops CDx tests for the former’s targeted treatments, 2) traditional drug developers and startup drug developers to co-develop, combine, license and commercialize precision drugs or targeted treatments, as well 3) traditional large pharma companies and startup companion diagnostic developers that co-develop CDx tests.
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