Next Generation Sequencing (NGS) Market Assessment Trends (2017- 2023)

Next Generation Sequencing (NGS) Market Assessment Trends (2017- 2023)

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Author: Stephane Budel

Date: December 3, 2020

Pages: 142 pages

Price: $6000

  • Abstract

    Next Generation Sequencing (NGS)* has transformed the life sciences and diagnostics landscapes. This technology is used for applications including human whole genome sequencing (WGS), whole exome sequencing (WES; 1-2% of the genome that encodes proteins), targeted sequencing using panels of a few-to-thousands of genes, and expression profiling (i.e., RNA-Seq). We forecast that the manufacturer market size will reach ~$4.2B in 2020 (a 6% contraction vs. 2019), and grow at 18% p.a. to reach $6.9B in 2023, driven primarily by adoption from clinical customers worldwide.

    The 6th edition of this report was published to provide granularity on the market landscape given the COVID-19 pandemic. We make the following observations and predictions with regards to the pandemic:

    • SARS-Cov-2 testing using NGS is not expected to be a significant contributor to NGS market growth, and will not offset the large impact that the pandemic had on academic, biopharma and clinical labs
    • We estimate that SARS-Cov-2 testing will represent only $150M and $500M in NGS manufacturer revenues in 2020 and 2021 respectively, before decreasing to <$300M in 2022
    • Interestingly, we believe that a significant rebound will exist on NGS budget spend in 2021 across customer types
  • Select NGS Companies

  • Market Drivers, Moderators, and Trends

    Drivers

    • Accelerating adoption in clinical settings (both in clinical trial and routine testing) now representing about half of the market, especially for clinical oncology where liquid biopsies are utilized across the patient journey from early (asymptomatic) detection (in trial stages at GRAIL, Freenome, etc) to therapy selection (e.g., Guardant Health, Foundation Medicine), or therapy monitoring and cancer recurrence testing (e.g., Natera); many of these tests have now received FDA approval
    • Increased reagent usage on an expanding instrument installed base across applications, especially for higher throughput instruments (i.e., NovaSeq)
    • Increased adoption of the technology by new customers (e.g., Forensics, AgBio, Biopharma for patient stratification during clinical trials)
    • Increased usage for new scientific applications built upon sequencing detection (e.g., [single cell] RNA-Seq, ChIP-Seq, methylation studies, spatial profiling on NanoString GeoMx, microbiome analysis)
    • Overall, we believe that a silver lining of the COVID-19 pandemic will be the acceleration of NGS adoption for personalized medicine purposes, beyond oncology applications (e.g., infectious diseases, women’s health) as tools and diagnostics took centerstage in the public discourse in 2020; despite being discussed, NGS-based SARS-Cov-2 testing won’t contribute meaningfully to this market in the long term

    Moderators

    • Excess capacity, with some installed (primarily low throughput) instruments operating at only 20-30% of capacity
    • Pricing pressure has decreased cost per Gb moderating overall revenue growth, due to competitive pressure (particularly from MGI), and the availability of more affordable instrument options (e.g., Illumina’s iSeq, Oxford Nanopore’s Flongle)
    • Reimbursement uncertainty and pushback in clinical settings (due in part to lack of education even in some cases where tests are covered by insurance companies) limiting access to the vast majority of clinical samples in the U.S.
    • Out-of-pocket pay for some tests (60-80%) in China limiting adoption
    • Continued bioinformatics and data analysis challenges, especially for structural variants or translational and clinical applications (e.g., clinical variant interpretation), gating access to most potentially addressable samples
    • Low growth in research funding in established markets

    Other Trends

    • Increased use of native long read technologies, most notably Oxford Nanopore
    • Increased number (and scale) of population sequencing programs (e.g., Korea planning to sequence 1M genomes by 2029)
    • Diversification of sequencing options driven by the launch of multiple new platforms by new players (e.g., MGI’s T7, Oxford Nanopore’s PromethION, Genapsys GENIUS), and many additional companies with novel sequencers
    • Consolidation of applications on increasingly differentiated platforms, based on their workflow, turnaround time and cost (e.g., human WGS on NovaSeq, field-based pathogen sequencing on the MinION)
    • Simplification of the overall workflow, with the launch of more automated instruments (e.g., Genexus) or automated sample preparation instruments (e.g., Ion Chef, NeoPrep, VolTRAX), saving time, and increasing reproducibility
    • Continued decentralization of sequencing runs driven by the availability of low cost desktop sequencers (e.g., MiSeq), but in turn a centralization of sequencing volumes as high throughput platforms can cost-effectively run 10,000’s of samples
    • Increasing use of service providers, particularly in the US, offering an alternative to in-house platform adoption, as many customers don’t have the budget for large capital expenditures, and many such service providers offer unique applications
    • Increasing number of players participating in this fast growing market, typically offering front end (sample preparation) or backend (bioinformatics) solutions, with most targeting (clinical) oncology
    • Increasing competitive intensity on dimensions others than cost per base pair (e.g., workflow, portability, clinical content)

     

    Overall, our analysis suggest that over the next 3 years, the spotlight will be on three NGS manufacturers:

    • Illumina, given its high reliability and the existence of an entire ecosystem to support “Illumina sequencing”; the company will there fore remain dominant
    • MGI, given the equivalent quality of data output at a lower cost, but limited by its commercial reach, especially in the U.S.
    • Oxford Nanopore, given the value of long reads, form factor, and additional information “for free” (e.g., methylation) but gated by the need for expertise in order to obtain high level of accuracy

    While a battery of small players are expected to enter the field, our expert feedback indicates that all appear to face an uphill battle –as has been the case for a dozen established and emerging players by now (e.g., 454, SOLiD, Helios, Lasergen, QIAGEN)– to avoid becoming the next “Illumina roadkill”.

  • Market Segmentations

    Company

    Companies that offer NGS products:
    • Illumina
    • Roche (Kapa Bio, Genia)
    • Thermo Fisher (Ion Torrent)
    • Pacific Biosciences
    • Oxford Nanopore
    • Others

    Product Type

    Type of product that manufacturer sells to its customers
    • Instruments (inc. software)
    • Reagents (inc. consumables)

    Customer

    Buyers of NGS instruments, reagents, and consumables from manufacturers

    • Academic Basic Research
    • Population Studies
    • Biopharma R&D
    • Biopharma  Clinical  Trials
    • Liquid Biopsy Clinical Trials
    • Clinical Diagnostics (Oncology)
    • Clinical Diagnostics (NIPT)
    • Clinical Diagnostics (All other)
    • Liquid Biopsy (Dx)
    • Applied Markets, Industry

    Geography

    Country / region of the world
    • U.S.
    • Europe
    • China
    • Asia Pacific (APAC)
    • Rest-of-the-world (ROW)

    Application

    Key scientific research question being investigated
    • Human WGS
    • WES
    • Targeted Resequencing
    • RNA-seq
    • Others

    Therapeutic Area

    Research focus including broad non-disease specific biological area as well as specific disease areas
    • Genomics
    • Oncology
    • Infectious Diseases
    • Method Development
    • Others