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Funding Optimism Grows Among Genomics Researchers, Mizuho Survey Finds

NEW YORK (GenomeWeb News) – Funding expectations for 2013 have improved among genomics researchers, despite potential delays or cuts to budgets, according to the latest survey conducted by Mizuho Securities in collaboration with GenomeWeb.

In the survey, which was taken by 93 genomics researchers from academia and industry, respondents expressed a brighter outlook for the genomics space than respondents to similar surveys conducted by Mizuho for the academic and drug discovery end markets, with optimism highest for next-generation sequencing technologies.

As a result, Illumina and Life Technologies remained the best-positioned vendors, while Affymetrix was the worst-positioned among the 19 tool providers. Fluidigm also was named among the top vendors likely to see an increase in purchases by researchers due to its presence in the digital PCR market.

The survey provides a glimpse of how the research community thinks the funding environment may shape out, what they believe are the technologies of most interest to them, and possibly how they plan to spend their budget dollars.

Overall, the survey, which was conducted at the end of the second quarter, found improving sentiments, compared to a survey taken at the end of the first quarter. In that one, Mizhuo found that while the funding outlook for genomics research in 2012 was positive, opinion had turned negative for 2013.

The current survey, however, found that expectations became progressively more positive as researchers looked further into the future. During the second quarter, funding expectations were down 1.7 percent. In the third quarter, funding is expected to be down .3 percent, and for full-year 2012, funding is expected to increase 1.1 percent from 2011.

In 2013, the survey further found, expectations are that funding will rise 1.9 percent year over year. That compares to the first-quarter survey findings in which researchers said they believed funding would be pulled back 1.1 percent when compared to 2012.

In all spending categories, except for basic laboratory equipment, researchers said that they expect to spend more during the next 12 months, compared to a quarter ago. The greatest improvement came in expectations about spending on outsourcing. Respondents said they plan to spend 2.5 percent more in funding for outsourcing compared to 12 months ago. The first-quarter survey found that researchers planned to keep outsourcing-related spending flat year over year.

That greater spending on outsourced services is expected to benefit Illumina, through its Genome Network partners, and Complete Genomics, Mizuho analyst Peter Lawson said in a research report.

Reagent spending, meanwhile, remained the most consistent, expected to be up about 1.8 percent and largely in line with survey findings from the first-quarter 2012, as well as fourth-quarter 2011. The result, Lawson said, suggests a plus for consumables-driven vendors such as Life Technologies and Qiagen.

Spending on infrastructure, which had been expected to decline .5 percent according to the first-quarter survey, is now expected to increase .5 percent. The outlook on spending on equipment, while still anticipated to be down year over year, also improved. Equipment spending is now expected to be trimmed .2 percent compared to a year ago, up from a reduction of 1.4 percent year over year found in the earlier survey.

As Europe continues on its path of economic austerity and the National Institutes of Health faces the possibility of a nearly 8 percent cut in its funding for 2013, much focus has been on how the research community will react. According to the Mizuho survey, the effect of budget debates seem to be minimal, with respondents saying that spending is slightly delayed. Compared to the Q1 2012 and Q4 2011survey results, the delays also seem to be improving.

Further out into the future, respondents expressed greater optimism about government funding. Five years out, they said they believe government funding will be flat to down .4 percent annually, slightly better than down .6 percent annually expressed in the survey conducted a quarter ago.

The survey also found that among the different technologies in the genomics space, next-gen sequencing is expected to command the greatest share of spending during the next 12 months, consistent with previous survey results. The percentage of respondents saying they plan to spend more on next-gen technologies also increased from the first-quarter survey, boding well for Illumina and Life Tech, Lawson said.

The two firms were also cited by researchers as the companies that they would most likely purchase from during the next 12 months.

"The strong results are expected, given the genetic focus of the survey and leading positions of both companies," Lawson said.

RNA sequencing was next as the technology most likely to see increased spending, while nanopore sequencing had the largest jump, compared to results from the prior four surveys, a positive for Oxford Nanopore, which is expected to launch two nanopore sequencing platforms sometime this year.

Additionally, digital and real-time PCR may also see increased spending, a plus for Fluidigm and RainDance Technologies, Lawson said.

As genomic research increasingly migrates toward next-gen sequencing, microarrays are seen as outdated technology, and within three years, respondents said, they think sequencing will "substantially replace microarrays in DNA/genotyping and gene expression" research. This led the respondents to list Affymetrix last among the vendors from which they intend to purchase products.

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Additionally, Lawson noted that the Q4 2011 survey had found that RNA sequencing is expected to replace RNA arrays in less than six years, "indicating an acceleration of replacement expectations."

With excitement over sequencing technologies showing no signs of braking, respondents indicated that they may purchase a new NGS platform during the next 12 months, a change from a year ago when the overriding sentiment from researchers was that they would hold off on such purchases.

Interest in the technology also led to increased expectations about the number of whole human genomes that will be sequenced. In 2012, more than 34,600 whole genomes are anticipated to be sequenced, up sharply from about 14,000 in 2011. Next year, more than 48,600 genomes are expected to be sequenced.

The researchers also predicted that sequencing will eventually be medically driven rather than consumer driven. A year ago, Mizuho found that 56 percent of researchers noted personal/consumer reasons as the driving force behind sequencing within a five-to-10 year period. This year's survey found that figure was less than half of respondents.

Respondents also said they were willing to pay a maximum of $850 to get their genome sequenced, up from $700 reported in the second-quarter 2011 survey.

Lastly, the survey found that cancer research (57.6 percent of responses) and translational research (44.1 percent) would receive the largest increase in spending during the next 12 months, with translational research seeing the largest increase over its prior four-survey average, Lawson said.

Cellular research, however, saw a large drop, with only 3.4 percent of responses saying it was the research area that would receive the largest spending increase, negatives for Life Tech and Becton Dickinson, he said.

The survey consisted of 24 questions e-mailed to a subset of GenomeWeb readers. Ninety-three people responded with 81 percent completing each question.

About 68 percent of respondents worked in government/academic settings and about 12 percent are from the industry side. Approximately 64 percent were from the US or Canada; 17 percent from Europe; 5 percent from Australia/New Zealand; 4 percent from other parts of the Americas; 3 percent from China; 1 percent from Japan; 3 percent from other parts of Asia; and 3 percent from other geographies.