Last week, we published the 5th version of our single cell report. We estimate that the global market for single cell analysis was $1.2B in 2022 and will grow at 13% p.a. to reach ~$1.7B in 2025. Our numbers are squarely in line with 10x Genomics’ recent earnings, where 10x’s CFO forecasted “low- to mid-teens growth year-over-year…” for single cell product lines.
In just a few short years, single cell analysis (SCA) has rapidly grown from being a niche, specialized technology to being a commonplace tool in academia. Its utility has begun to spill into biopharma, with many companies supporting their R&D with single cell analysis. 10x Genomics has spearheaded SCA’s success, growing at a staggering ~62% CAGR from 2017 to 2021. However, 10x’s growth has dramatically decelerated – reporting 5% in growth in 2022 and forecasting 14% growth for 2023. Many, including investors, are left questioning what has caused this slowdown and where the SCA market is headed.
10x has cited acute factors such as COVID19-related lab closures, commercial hiccups, and currency exchanges. However, these factors do not explain the entirety of the slowdown. We believe there are two other key dynamics shaping the market: high pricing and maturing utility.
Pricing: The high price of SCA is likely the biggest factor moderating growth. On average, users have been paying over a thousand dollars per sample (all in). Although this price is manageable for well-funded academic labs and some biopharma, it significantly restricts access for the average lab. In any case, price is likely slowing utilization and thwarting new customer adoption.
Utility: The maturing utility of SCA is another key factor limiting growth. This approach is powerful for characterizing cells and organ systems (i.e., atlasing) – but does SCA enable novel insights that justify its high price point for the average bulk RNA-seq user? Skeptics argue that utility is limited to atlassing; consequently, the slowdown in growth we are seeing now is due to a decrease in these experiments. We believe that this conclusion is an oversimplification: atlassing is ongoing, and there are more growth opportunities beyond atlassing. New applications (and improved economics) are still expanding the utility for new and established users, particularly in drug discovery and translational settings.
So where is the market headed? What will determine the growth trajectory in the coming years? We see several key factors to keep an eye on.
New 10x Genomics Applications & Technologies:
10x Genomics is staying ahead of the market on multiple fronts. In 2021, they released the X Series of instruments, which are positioned as an entry device for new users and can be upgraded for high-throughput experiments and new applications. In 2022, they released kits that extract single cell information from FFPE slides, opening up previously-unaddressable, archived samples to 10x’s platforms. They also released BEAM, a workflow to characterize the binding specificities of B- and T- cells, a potential driver of single cell activity in biopharma. During their 2022 investor presentation, 10x emphasized their spatial offerings, which could accentuate its positioning in the single cell market. At the 2023 AGBT conference, 10x shared proof-of-concept data showing that Chromium Flex can scale to 8+ million cells and multiplex hundreds of samples in a single run. Such level of scale alleviates key SCA pain points by increasing throughput and lowering the price per sample. The market’s price elasticity will determine whether the drop in price per sample that Chromium Flex provides will increase experimental volumes and expand adoption. 10x’s commercial execution will also be a key determinant of growth.
Several newer entrants (e.g., Parse Biosciences, Singleron Biotechnologies, Fluent BioSciences, Scale Biosciences, and CS Genetics), supported by >$250M in collective funding, are aiming to challenge 10x’s dominance with instrument-free, modular, and scalable offerings. Several of these companies have released new offerings in the past 3 months (e.g., Parse’s Evercore TCR and Gene Capture kits, Fluent’s improved PIPSEQTM v4.0 chemistry, Scale’s transcriptomic and epigenomic profiling kits), a clear indicator that competition is heating up. How much traction will these box-less approaches gain in the coming years/months remains an open question – if they gain significant adoption, these new approaches could siphon existing users from 10x Genomics and/or expand the market by lowering the entry barrier for new users.
Existing competitors (e.g., Bio-Rad, BD, Takara), have attempted to chip away at 10x’s market dominance in the past 5 years but have been largely unsuccessful. BD’s recently launched Rhapsody™ HT Xpress System or Bio-Rad’s long-awaited SCA platform (currently slated for the end of the year) could improve either company’s standing. However, stiff competition from both 10x Genomics and the wave of box-less approaches may mean it is too little too late for these legacy competitors.
Falling Sequencing Costs:
This past year was a banner year for the sequencing market. Illumina’s NovaSeq X is offering $200 genomes. Emerging competitors such as Element Biosciences, Complete Genomics, Singular Genomics, and Ultima Genomics all made a splash in 2023. At AGBT 2023, these companies showcased modular, scalable, and / or flexible offerings that could potentially offer an even lower price point than Illumina. The new entrants and product updates in the next-generation sequencing market (NGS) are covered in detail in our recently updated NGS report.
Sequencing, the dominant downstream technology in SCA, represents 40-50% of spend per experiment. As the sequencing market competition intensifies and pricing pressure continues to manifest, the overall cost of SCA experiments is expected to decline and make SCA more accessible to the next generation of users.
The tissue dissociation market is an increasingly important aspect of the SCA market and is thus a new addition to our report. We estimate tissue dissociation spend represents on average ~10% of SCA spend. Archived FFPE tissue has been historically unaddressable by existing methods of tissue dissociation, but now the tools are now emerging to access this key sample type. For instance, 10x’s Flex kit (launched without much fanfare in 2022 but rebranded and reemphasized in recent months) is compatible with FFPE tissue, likely opening up biopharma as a major customer type. Other emerging players (e.g., S2 Genomics, Cellsonics) are looking to automate tissue dissociation and improve on existing commercial approaches (e.g., Miltenyi Biotec MACS kits).
China’s zero-COVID policy effectively placed the world's second largest economy into a 3-year cycle of lockdowns, with its effects felt across the world. For SCA, these lockdowns have caused supply chain issues and frozen a rapidly growing market segment – effects that manifested clearly in 10x’s 2022 earnings calls. In December of last year, China rescinded many of these policies, giving the market a chance to rebound. What remains unclear is how much pent up demand there is, how / if it has evolved during lockdowns, and if other players besides 10x Genomics have improved their positioning in the Chinese market.
We plan to assess the changing demand in the coming year and release the data via our Ad Boards – stay tuned.
Single Cell vs Spatial:
The long-term interplay between single cell and spatial analysis is unclear. Both are powerful sequencing approaches that interrogate biology at similar scales. 10x Genomics has positioned these two techniques as complementary, capable of providing deeper insights when integrated together. Our primary research, included in our report, indicates that the high costs of these two approaches make them antagonistic -- limited budgets force users to “choose” between the two. In other words, single cell budgets are at risk of shifting to spatial analysis. This emerging dynamic is likely contributing to the SCA market slowdown as some potential customers may be holding off on investing in new instruments as they wait for more spatial data / upcoming spatial instrument releases (like 10x Genomics' Xenium).
Each of these factors are expected to impact growth to varying degrees; together, they have made a once-simple market far more complex, dynamic, and exciting.
For an in-depth analysis of the single cell market, see DeciBio’s updated Single Cell report, with detailed information on market size, segmentation, growth, competition, and trends. Feel free to email us if you are interested in discussing recent events in the field or if you would like help characterizing the evolving market, evaluating an opportunity or M&A target, or updating your strategic planning.
Look at our recent reports and Ad Boards for analyses of related markets:
Disclaimer: Some of the companies listed above may be DeciBio clients or customers