Market Report

Next Generation Sequencing (NGS) Market Assessment Trends (2018-2024)

December 9, 2021

142 pages

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). Following a “soft” year in 2020 (~$4.2B) due to the COVID-19 pandemic, we forecast that the manufacturer market size will reach ~$5.8B in 2021 and grow at 18% p.a. to reach $9.4B in 2024—driven primarily by adoption from clinical customers worldwide in a broad range of therapeutic areas, especially in oncology. Despite dropping cost per Gb, the market growth is accelerating.

The 7th edition of this report was published to provide granularity on the “post-pandemic” market landscape. We predict that:

  • While novel players will gain traction across customer types for a broad range of applications, Illumina will maintain strong market share in clinical settings, most notably in clinical oncology, as their instruments start to be used across the patient journey (including multiple cancer monitoring applications [e.g., MRD, recurrence monitoring] and early cancer detection) in addition to the penetration for therapy selection (now moving from metastatic to earlier-stage cancer patients [stage IIB and stage III])
  • While new entrants will gain share given their revenues start from a low / inexistant base, established customers, especially in Biopharma and in the clinic will continue to use established players that they trust and have established a strong ecosystem that cover the bookends of the workflow (i.e., sample preparation and bioinformatic pipelines)
  • Epidemiology testing for SARS-CoV-2 testing will decrease but persist in the near future; many of the centers that adopted NGS platforms will “recycle” capacity by adopting novel tests, or expanding their surveillance reach (e.g., Other pan/epidemics, bioterrorism)

This report reviews the market size, segmentation, growth and trends of the manufacturer NGS (i.e., excluding NGS services [e.g., Foundation Medicine]) market. We assess the NGS market across six segments:

  • Company: Illumina, Thermo Fisher (Ion Torrent), Roche (Kapa Bio, Genia), Pacific Biosciences, and others**
  • Product Type: Instruments (including software) and Reagents (including consumables)
  • Customer: 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, Epidemiology (including SARS-CoV-2)
  • Application: human WGS, WES, Targeted Resequencing, RNA-Seq, Other
  • Therapeutic Area: Genomics, Oncology, Infectious Diseases, Method Development, and Others
  • Geography: U.S., Europe, China, Asia/Pacific (APAC), and Rest of the world (RoW)

For each segment, we provide the market size annually from 2018 to 2024, and commentary on key growth drivers and moderators. Major factors driving future growth include:

  • Accelerating adoption in clinical settings (both in clinical trial and routine testing) now representing more than half of the market, especially for clinical oncology where liquid biopsies are utilized across the patient journey from early detection (e.g., GRAIL) 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 (e.g., 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 center stage in the public discourse in 2020. NGS-based SARS-CoV-2 testing won’t contribute meaningfully to this market in the long term (peaking at ~8%of the manufacturer market in 2021 [~$450M])
  • Increase number of competitors with differentiated offerings (most notably Oxford Nanopore)

Key factors moderating growth include:

  • 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 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
  • Moderate growth in research funding in established markets

We also review interesting market trends, such as:

  • Increased use of native long read technologies, including in clinical settings (e.g., PacBio / Invitae)
  • 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 U.S., 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 analyses suggest that over the next 3 years, the spotlight will be on four NGS manufacturers:

  • Illumina, given its high reliability and the existence of an entire ecosystem to support “Illumina sequencing”, the company will remain dominant
  • ThermoFisher, given the continued success of its solutions with convenient workflow and global reach
  • 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)

While many start-ups are expected to enter the space, our expert feedback indicates that all 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)

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