Though array vendors that sell genotyping chips have experienced a sales slump over the past year as customers wait for new products with rare variant content, a recent market report suggests the market is set for a revival.
Market research firm Kalorama Information's recently published analysis largely agrees with vendor forecasts of a second round of genome-wide association studies that will stimulate array sales over the next few years. The report also predicts increased demand for genotyping tools for use in agricultural research, pharmacogenomics, and consumer genetics.
"There has been a period of limbo while the customers wait for the next generation of GWAS products," Kalorama analyst and report author Justin Saeks told BioArray News last week. "The large-scale studies have been indicating that the common SNPs are not as informative as expected, and it's likely that rare SNPs play a larger role. This has required the suppliers to develop new chips with more content, which is being generated on an ongoing basis through collaborative efforts such as the 1000 Genomes Project."
While some researchers, such as Duke University's David Goldstein, have questioned the need for additional GWAS, proposing smaller, sequencing-based studies instead, Saeks said that there is "still the expectation that valuable information about drug response, disease predisposition, and other genetically influenced traits will be found" using the new arrays.
"This was the hope with the previous generation of chips, but it turned out to be a simple issue of numbers — not enough people were used to create the content on the chips, along with not enough people being included in the large-scale GWAS using them," he said.
Such predictions mirror those of large chip makers like Affymetrix and Illumina. Officials from both firms believe researchers will embark on a second round of GWAS as they launch new products (see BAN 1/19/2010). Both companies reported small rebounds in their genotyping businesses in the fourth quarter of 2009.
According to Kalorama, the SNP-analysis tools market in general, of which the GWAS segment is most prominent, declined by 5 percent last year, but is expected to grow by 9 percent this year, and by 15 percent in 2011, peaking at a growth rate of 18 percent in 2012 before leveling off in following years. The firm estimated that 2009 SNP analysis revenues were about $700 million, but predicted that to rise to $1.3 billion by 2014.
"The growth is expected to get a boost for a couple of years, with many large studies occurring in a cluster partly as a result of the new tools being introduced," Saeks said. "Other factors such as decreased funding may play a role in the longer term."
Whole-genome SNP microarrays are expected to drive this revival in demand in the short term. But over the longer term, Saeks predicted that more targeted, multiplexing products will propel the market forward, with particular demand from agbio and pharmacogenomics researchers, as well as the consumer genetics market. It is unclear if these applications will favor arrays or other approaches, though, such as RT-PCR.
"The variables are constantly changing. For example, arrays are getting cheaper," said Saeks. "One of the big wild cards is the question of how many variants need to be analyzed per patient in a given study. There is a threshold somewhere, probably in the realm of 100 variants, where arrays should be more cost-effective."
In terms of consumer genetics, Kalorama said that array sales to firms like 23andMe, Navigenics, Pathway Genomics, DeCode Genetics, and others have amounted to at most $50 million in sales to the main technology suppliers Affy and Illumina. While the market has been growing slowly for such services, he said it has the potential to accelerate in the future.
Saeks said that the market has been constrained because "most potential customers" are aware that "the science is somewhat premature." There are early adopters "who will buy anything new, but people who look closely at the different services find that there are inconsistencies between the companies, and this arises from the lack of consensus about the genes being analyzed, and their effects," he said. "It makes spending a few hundred dollars seem like potentially a waste."
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While Kalorama forecasts sunshine ahead for genotyping array vendors, these companies will also face challenges, not only from one another, but from the size of customers' new projects. Also potentially darkening the horizon are "disruptive technologies" like high-throughput sequencing.
According to Saeks, bioinformatics challenges loom for those who plan to use Affy and Illumina next-generation chips in their association studies. "The data-management and analysis challenges are big, especially as the studies are growing to perhaps tens of thousands of patients," Saeks said. "The number of SNPs on the chips is also increasing by an order of magnitude, from around one million to ten million."
Saeks added that GWAS are also being constrained by an absence of standards, from the "design of experiments, to sample preparation, to statistical approaches, to the exchange of data between different software and laboratories."
Saeks said that of the two main genotyping array vendors, Illumina is the "bellweather" for the market, as its growth has mirrored growth in the SNP analysis market as a whole. Illumina is currently in an "enviable position, with synergies going across different product segments," Saeks said, citing the San Diego firm's success in the sequencing market. He said that, looking ahead, the company faces "unique challenges related mostly to managing rapid growth, and keeping on its toes as the science can change within months."
Santa Clara, Calif.-based Affy has been "somewhat hindered" in its competition with Illumina, due partially to manufacturing issues that caused quality problems at an "inopportune moment, when it first introduced the Human GeneChip SNP Array 5.0 in 2006," the Kalorama report states. This setback "occurred around the time that whole-genome SNP analysis began its explosive growth, and undoubtedly hurt the company’s position," according to the firm.
Despite this, Kalorama said that Affy's new family of products that run on its GeneTitan system could improve its position in SNP analysis. "While Illumina appears to have established its dominance for the time being, the market is expected to become more volatile as these leading companies compete more aggressively," the report states.
Affy has done "fairly well in the SNP market but the company's growth has not been moving along with the rest of the market," said Saeks. However, "[t]he company has recently introduced new hardware, which could re-invigorate sales. Maintaining its customers, and transitioning them to the new products, appears vital for Affymetrix right now, as profitability has been a challenge."
"Disruptive technologies," as Kalorama describes sequencing, are also "imminent." While the firm predicts SNP chips to maintain their economic advantage over sequencing for at least two to three years, in three to four years, if sequencing a genome drops to around $1,000, it could present a challenge "even if SNP arrays are only $10," the report states.
"It appears, in relation to SNP studies that sequencing fits in mostly in follow-up studies in the near term" said Saeks. "This is due to the higher cost and higher level of detail with sequencers, and the fact that large-scale SNP studies typically identify a smaller targeted set of genes that merit investigating further. Longer term, if sequencing costs drop dramatically as expected, it could be difficult to make arrays cheaply enough to compete."