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Survey Finds Researcher Expectations Pessimistic for 2012 Genomics Funding

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Researchers expect funding in 2012 for genomic research to decline year over year, reversing a positive outlook from just four months ago, according to survey conducted by investment bank Mizuho Securities in cooperation with GenomeWeb.

In the survey, a follow-up to one conducted in the spring, respondents said that for 2012 they expect funding for genomic research to decline by 2 percent, flipping results of the earlier survey in which respondents said they believed funding would increase by 2 percent.

With funding to the National Institutes of Health as well as other government agencies in the US and elsewhere still largely up in the air, the survey indicates that the unsettled government budget picture is weighing heavily on the minds of genomics researchers and may affect their purchasing decisions.

The survey of a subset of GenomeWeb readers was conducted between Oct. 7 and Oct. 17 and comprised 20 questions. Ninety-four individuals responded with 64 percent of respondents completing all 20 questions.

The survey responses contain some positive news about next-generation sequencing technology and outlooks for some firms, including Illumina, Life Technologies, and Complete Genomics, but on funding, the pervasive mood was pessimistic.

Mizuho analyst Peter Lawson said in a report that the deterioration in the outlook may be the result of recent events, including the announcement from Washington University in St. Louis that it had laid off 54 employees from its Genome Institute as a result of cuts in funding from the National Human Genome Research Institute for its large-scale sequencing program.

He added that NIH stimulus funding is "clearly winding down" with less than 5 percent remaining that will be used by academic institutions during the next six months, and that recent bills passed by Congress "established likely NIH funding in the range of a low-single digit cut to a low-single digit increase."

The continuing debate over the 2012 budget has also cooled off any desire to spend, as roughly 58 percent of respondents said their spending has been delayed by the debate and austerity talks.

For the third quarter of the year spending was down 1 percent on average from the second quarter, with more than 10 percent of respondents saying they reduced spending by more than 10 percent sequentially.


Moving ahead, the spending freeze may not improve much either. For the fourth quarter, spending by researchers is anticipated to be flat compared to the third quarter, though again more than 10 percent said they expect to cut spending in the quarter by more than 10 percent.

Further out, spending during the next 12 months is also likely to be curtailed. Though respondents said that spending on reagents could stay flat, spending on basic lab equipment could go down by almost 3 percent while investments into high-end equipment are expected to slip by 2 percent.

Moreover, money directed at personnel could be reduced by about 1.5 percent and infrastructure costs could be reduced by more than 1 percent, according to the survey results.

The spending freeze is not expected to be uniform, however, and in spite of their concerns, researchers said that three main technology areas would be the focus of any purchases during the next 12 months: RNA-sequencing, informatics, and next-generation sequencing.

Respondents, in particular, expressed strong interest in RNA-sequencing, and about 60 percent said they expect to increase their spending on this technology during the next year. That, Lawson said, could be bad news for array technology in general and for Affymetrix specifically. The company came in last in the survey when it came to vendors with whom researchers expect to increase their spending in the next year.

Caliper Life Sciences — which is being purchased by PerkinElmer — as well as Waters and Bruker could also be left out of the spending loop, according to the survey.

Lawson said he was "somewhat surprised by Caliper's ranking, given its strength in NGS sample preparation, an area of need."


Sequencing Provides a Bright Spot

It is widely expected that in spite of the cloud hanging over the NIH budget, sequencing could be the technology that will be saved from cuts. In correlation, the two leading firms in the next-gen sequencing space, Illumina and Life Technologies, were ranked the two firms most likely to benefit from any increased spending by respondents, mirroring results from the May/June survey.

"We believe that if overall funding declines, Illumina will gain share … and overcome reduced funding," Lawson said.

By many estimates, the company already has the majority share of the next-gen sequencing space, and according to the survey 62 percent of respondents said that they use an Illumina platform, including 2 percent who said they use the MiSeq instrument, which was broadly launched just weeks ago.

Nineteen percent of respondents said they use a Life Tech system. "Significantly, Life Technologies Ion Torrent had a higher share approximately (10 percent) than with the SOLiD system (8 percent), despite Ion Torrent launching only last year," Lawson noted.

Single-molecule sequencing also fared well with 25 percent of respondents saying it would be a technology they expect to invest in, though Lawson noted that Pacific Biosciences seems not to have benefitted from the interest in that technology. Two percent of respondents who said they use next-gen sequencing use PacBio's technology, and last month the Palo Alto, Calif.-based firm announced 130 layoffs, or 28 percent of its workforce, due to "uncertainties associated with the economic environment."

Despite the more upbeat view of next-gen sequencing, a large share of survey takers, 42 percent, said they are not likely to buy any new sequencing platform during the next 12 months "indicative of the cautious outlook for equipment spending, especially capital equipment," Lawson said.

Those who said they plan on buying new instruments cited Illumina's HiSeq and MiSeq instruments and Ion Torrent's Personal Genome Machine as the platforms they would most likely purchase.

Another company that Lawson cited for its growth potential is Complete Genomics. Among respondents who have used next-gen sequencing technology, 2 percent said they outsourced their services to the Mountain View, Calif.-based firm. While that is still a small share of the total market, Lawson said that Complete Genomics' service model "is making inroads into the instrument-dominated market."

The survey also found that 75 percent of respondents said that whole genome sequencing is "ripe" for outsourcing, another positive for Complete Genomics, Lawson said. About 11 percent of respondents who outsource their next-gen sequencing work use the company's services, tying it with the Illumina Genome Network for third place.

Researchers who outsourced their sequencing projects, by and large (42 percent) did so to large genome centers, such as the Broad Institute and Wellcome Trust Sanger Institute, while 24 percent said they used BGI's services.

The area of research in which respondents said they expect to see the largest increase in funding during the next 12 months is cancer, followed by translational research and biomarker validation and development. Cellular, metabolic, and diabetes research had the lowest response rate.

GenomeWeb Daily News sister publication In Sequence has published a separate article looking at the survey results with a focus on sequencing-specific trends, while BioArray News has published an article exploring the outlook for microarray technology.