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Report Says Desktops Will Drive 20 Percent Annual NGS Growth; Illumina, Life Tech to Remain Dominant

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The next-generation sequencing market is poised to grow 20 percent per year from around $1.2 billion currently to $2.1 billion by 2015, driven in large part by desktop sequencers, according to a recent report by Los Angeles-based market research firm DeciBio.

The report, published this week, builds on a report the firm published on the NGS market in 2011 (IS 12/13/2011). While many of the firm's projections have stayed the same, the second edition incorporates interviews from an additional 16 experts in the field from the original 34, an update on projected growth through 2014, an expanded analysis of the clinical market, and profiles of emerging companies in the space such as Nabsys.

The report's authors conclude that Illumina and Life Technologies will likely remain dominant, capturing around 85 percent of the total market by 2015, thanks to Illumina's MiSeq and Life's Ion Torrent PGM and Ion Proton systems.

Additionally, desktop sequencers are projected to capture around half of the market and reach a combined installed base of 10,000 systems by 2015, generating between $50,000 and $70,000 in reagent pull-through per instrument, per year.

The advent of lower-cost systems like the MiSeq and PGM have "transformed the NGS landscape" and "created a new mid-throughput segment," defined as up to 100 gigabases per run, said Stephane Budel, senior author of the report.

This new market has opened up a broad range of applications like whole-exome sequencing and transcriptome sequencing to new customers like individual research labs, niche service providers, and clinical labs.

The low-cost desktop market is also putting increasing pressure on companies like Pacific Biosciences and Roche's 454, which are facing "significant headwinds" because the "market has largely lost its appetite for expensive instruments," the authors wrote.

As such, any new entries into the market — such as Oxford Nanopore's GridIon and MinIon, and systems being developed by Nabsys, GnuBio, and Qiagen — will have to have a similarly low price.

In 2011, DeciBio estimated that by 2015, Life Tech's Ion Torrent platforms could capture up to 51 percent of the desktop sequencing market, with MiSeq grabbing 41 percent, and the remainder going to Roche's 454 GS Junior. In its latest assessment of the market, those numbers have been revised slightly, lowering Life Tech's share of the desktop market to 44 percent, while increasing MiSeq's share to 45 percent due to its "superior customer experience." The remaining 12 percent is expected go to the GS Junior and emerging players.

This slight shift in favor of MiSeq over PGM is in line with a survey conducted by GenomeWeb and investment bank Mizuho Securities USA, in which respondents ranked the MiSeq higher on a number of features including usability and accuracy (IS 1/22/2013).

Also in line with the DeciBio report, which found high-end sequencers were reaching saturation, respondents to the GenomeWeb/Mizuho survey gave the Ion Proton high marks for its future potential and price.

Looking at new instrument purchases and reagent spending across the entire sequencing market, Illumina is projected to capture 62 percent and Life 26 percent over the next three years, which reflects the large current installed base in the research and applied science markets as well as increased adoption in the clinical market. The sequencing-by-synthesis technology that underlies Illumina's HiSeq "continues to scale beyond expectations," making it the dominant player, while Roche is "struggling" and PacBio is "falling short of (high) expectations," the authors wrote. Additionally, they expect 2015 to be an "inflection point" in the clinical sequencing market that will largely benefit Illumina and Life.

Sequencing Front and Back Ends

The rapid advances in sequencing technology have also opened up new markets on the front and back ends of the sequencing workflow, which remain bottlenecks.

A slew of independent bioinformatics companies have begun offering software and services, including companies focusing specifically on clinical interpretation, such as Knome and Omicia.

Additionally, there is a growing market for sample-prep tools and solutions, with companies like Agilent developing tools to automate and streamline exome capture, and others such as Fluidigm broadening out to new applications like single-cell sequencing. Additionally, these companies, as well as the sequencing manufacturers themselves, have begun developing targeted gene panels.

"These adjacent markets represent an opportunity to non-NGS manufacturers to participate in the high-growth NGS market," the authors wrote.

Clinical Market

The DeciBio report also forecasts rapid growth in the clinical sequencing market. Currently, clinical customers represent around 7 percent of the market for sequencing instruments, but that could grow to around 27 percent by 2015, representing around $570 million in sales, especially if Illumina and/or Life Tech receive US Food and Drug Administration 510(k) clearance of their MiSeq and PGM instruments, respectively.

This growth will be driven in large part by the services market. Clinical sequencing services could grow from around $100 million in 2012 to more than $1 billion by 2015, the majority of which will be for noninvasive prenatal testing — such as offered by Sequenom, Verinata, Ariosa, and Natera — as well as oncology.

Around three-fourths of clinical sequencing services will remain targeted panels through 2015, the report estimates, with exome sequencing taking around 15 percent of the market and whole-genome sequencing five percent.

Currently, the sequencing companies themselves, commercial molecular diagnostic companies such as Ambry and GeneDx, as well as academic institutions are the primary providers of clinical sequencing, but FDA clearance of desktop instruments could drive "decentralization into the clinic further," according to the authors.

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