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China's Genomic Testing Driven by Government and Private Investment, Consumer Acceptance

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SAN FRANCISCO (GenomeWeb) – With a growing clinical market, nascent consumer demand, and increased government investment, China is poised to become one of the largest markets for genomic testing. 

Next-generation sequencing will fuel the surge in genomic testing, and according to a July 2017 report by life science consulting firm DeciBio, the NGS market in Asia Pacific is expected to grow 17 percent between 2017 and 2020, driven by China. Growth in the region will outpace the global average, anticipated at 12 percent.

Already, US-based technology firms like Illumina, Pacific Biosciences, and Thermo Fisher Scientific have felt the impact of this growth.

For PacBio, Chinese customers represented 30 percent of the firm's 2017 revenues, with sequencing service provider Novogene emerging as the company's largest customer.

Illumina has seen orders for its NGS instruments from Chinese customers soar. In particular, its NextSeq instrument, a version of which has China Food and Drug Administration approval, has been in strong demand for noninvasive prenatal testing applications. In addition, customers gearing up for large-scale whole-genome sequencing projects as part of China's Precision Medicine Initiative have been purchasing high-throughput instruments such as the NovaSeq.

Thermo Fisher said at this month's JP Morgan Healthcare conference that it estimated the total market opportunity in China as $9 billion and growing. The company set up a Precision Medicine Center in Guangzhou to further advance the use of its genomics tools in the country.

The areas of reproductive health, oncology, and rare disease have seen the largest adoption of genomic testing in China, similar to the trends seen in the US, Europe, and elsewhere. But the consumer genomics market in China is also growing rapidly, due to dropping sequencing costs, greater acceptance, and a more favorable regulatory environment for sequencing asymptomatic individuals.

"When the [Chinese] government gets behind an approach, there's widespread market adoption very quickly," said Hannes Smárason, CEO of WuXi NextCode. "That's an important component that characterizes the market in China and makes it different."

Regulatory framework

China has a unique regulatory framework for genomic testing that has both gated growth and spurred adoption. For diagnostic testing, such as noninvasive prenatal testing, the sequencing instrument itself, as well as the reagents and assay, must both receive CFDA approval as Class 3 instruments and tests, the strictest level of approval. In addition, the instruments must be manufactured in China. Hence, when companies like Illumina and Thermo Fisher wanted to enter the clinical market, they partnered with Chinese firms to make a version of their instrument in the country for clinical use.

Laboratories that perform diagnostic testing must be registered as a clinical lab, however the country does not have the equivalent of laboratory-developed tests or CLIA certification like the US, so clinical labs have to run CFDA-approved tests.

CFDA approval of NGS tests is "a lengthy process, since it's a new technology in the diagnostic area," Novogene CEO Ruiqiang Li said. "But the CFDA is trying very hard and has been recruiting more people for in vitro diagnostic regulation."

The regulatory agency has implemented a couple of programs designed to speed up the process, including a so-called "green channel" for genomic cancer testing, which clinical labs can apply to have their cancer tests fast-tracked, Yikon Genomics CEO Sijia Lu said. Yikon develops single-cell sequencing technology for clinical tests.

In 2015, the country also instituted a pilot program whereby hospitals could get a license from the National Health and Family Planning Commission to offer clinical genomic testing in one or more of four fields: preimplantation genetic screening or diagnosis, NIPT, oncology, and genetic disease.

Local governments, too, have been increasingly interested in genomic testing and in some cases have helped spur adoption by covering completely or subsidizing the costs of tests. For instance, the local government in Shenzhen pays for noninvasive prenatal testing, and as such there has been widespread adoption at no cost to patients, BGI Genomics' CEO Yin Ye said at the recent JP Morgan Healthcare conference.

Aside from NIPT, some local governments are allocating funds to pay for a self-sampling NGS-based HPV test BGI launched last year, and China's Health Commission and Planning Commission have started to focus on preventative measures, particularly for breast and cervical cancer.

Clinical testing

Noninvasive prenatal testing remains the leading clinical genomics test in China and the country is expected to become the largest market for NIPT by 2020, with 10 million tests run annually, according to DeciBio's report. So far, more than 7 million NIPTs have been performed in China in total, with BGI performing around 2.8 million of those, BGI's Ye said.

NIPT prices are also significantly lower in China than the US, in part due to investments by regional governments. As noted, testing is free for patients in Shenzhen, for example, and as a result, Down syndrome has essentially disappeared there, Ye said. Overall, the average cost of NIPT in China is $308.

The NIPT market in China is also decentralizing, with more than 100 labs currently approved to run tests and more than 500 labs anticipated to be approved in coming years, according to DeciBio.

Other areas of reproductive health, such as preimplantation genetic screening and diagnosis and carrier screening, as well as oncology and rare disease diagnostics, are also expected to grow in the coming years.

Novogene, for instance, is developing clinical oncology tests. Li said that the firm has submitted its first oncology test to the CFDA for review. If approved, the firm would sell an IVD kit for a targeted lung cancer sequencing test to help physicians choose the appropriate therapy. That test will be based on the Thermo Fisher Scientific Ion Proton platform, Li said.

Yikon Genomics has focused primarily on preimplantation genetic screening and diagnosis, and has developed a single-cell technology known as MALBAC to screen embryos for genetic diseases prior to implantation. Lu said that the firm has now developed a noninvasive form of that test, where rather than testing the embryo itself, the culture on which the embryo grows can be tested. Lu and his colleagues described the method in Proceedings of the National Academy of Sciences in 2016.

In addition, he said, the firm has been working with some local governments to educate on and implement carrier screening.

Lu noted that aside from some of the larger companies like Novogene and BGI, most Chinese genomics companies are highly specialized, focusing on just one area of the field, rather than trying to develop tests for multiple markets.

Consumer market

It's not just the clinical market in China that has seen a boost but the consumer market as well. WuXi NextCode's Smárason thinks that both an increased acceptance of genomics as part of everyday life plus a slightly different regulatory structure have been boons to the growing market.

"China at pretty much all levels — key opinion leaders, government, companies, and individuals — seems to have embraced this new technology," Smárason said.

While diagnostic sequencing has strict regulations — the sequencing must be performed on an approved instrument in a certified laboratory and the assay itself must also be approved — sequencing for the purposes of predicting disease risk has much fewer restrictions.

As such, WuXi is one company that is aiming to tap into the consumer market with its HealthCode tests. The firm offers whole-genome sequencing direct to consumers and reports back disease risks related to the 59 genes flagged by the American College of Medical Genetics and Genomics as being highly penetrant and medically actionable, as well as a risk assessment for around 30 common diseases like hypertension, cardiovascular disease, and diabetes, and also carrier status and wellness- or lifestyle-related traits like how well you process carbohydrates versus fats, or lactose intolerance, Smárason said.

Consumers can order a kit to be sent to them on the mobile social media app WeChat. After sending back a spit sample to WuXi, the report can also be accessed via WeChat. Along with the relative risk information, the report includes a set of recommendations, which can range from lifestyle modifications related to diet or exercise to follow up with a physician for a medical workup.

The test is self-pay and costs from RMB 30,000 to RMB 40,000 ($4,664 to $6,218) for the whole-genome solution or less than RMB 1,000 for HealthCode Light, which runs on a SNP chip.

"If you're not providing a diagnosis, but just a risk assessment, that's still an unregulated area in China," Smárason said. "Although we anticipate that changing in the future and so are starting an active dialogue with the authorities about steps that will be needed."

One such step is demonstrating that such testing can deliver valuable information without causing harm or significant distress to the consumer. At last year's ACMG meeting, the company presented data from a pilot of 190 customers who had ordered the HealthCode test, showing that it provided actionable information.

Smárason said that the company has also been in discussions with regional governments in China that are interested in subsidizing the costs of genomic screening. He said that the governments have expressed interest in both the HealthCode test as well as the firm's carrier screening test, FamilyCode, and the company expects to have its first projects with regional governments for one or both of those tests in the first half of this year.

New technology

Aside from adopting genomic technology for clinical and consumer purposes, Chinese companies are developing their own sequencing technologies. BGI has been at the forefront of this technology development effort and has launched its own line of sequencers based on the combinatorial anchor probe technology it secured when it acquired Complete Genomics. Ye said that the company has installed more than 700 of its instruments so far, including systems from both its BGISEQ line and the newer MGISEQ family.

In addition, researchers from Peking University have developed technology and a prototype instrument for potentially highly accurate fluorogenic sequencing. The group licensed the technology to Beijing-based startup Cygnus Biosciences and aims to commercialize the technology in about two years.

Another company, Direct Genomics, has developed a single-molecule sequencing platform that is based on Helicos' core technology.

Li said it's still unclear whether any of these technologies have the potential to compete with the likes of Illumina, but "from a user point of view, I feel that we need different sequencing technologies for different applications."

The Chinese government is also funding technology development as part of its Precision Medicine Initiative. Li explained that tech development would be one arm of the program and would include not only sequencing technologies but also mass spec, metabolomics, and other 'omics technologies.

Overall, the government is expected to spend around $9 billion on the Precision Medicine Initiative, according to the DeciBio report. Recently, Li said the government announced a project to sequence 100,000 healthy individuals from various regions throughout China as part of the work to build out reference databases. The goal, he said, is to capture the genetic diversity from different geographic areas. Novogene will be one of the partners working on the sequencing, he said.

The other two arms of the initiative are to sequence various disease cohorts, including in oncology, metabolic disorders, neurology, and immune-related diseases; and to develop the data analysis and management tools and build out the infrastructure, Li said.

"The field is going to grow very fast," Lu predicted. "Two years ago, it was unclear how regulations were going to work but now it's becoming more clear and everyone will have a route to follow."

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