Sequencing Companies Dominate Investment
The market for personalized medicine is growing: according to PricewaterhouseCoopers, the core market will reach $42 billion by 2015. However, that growth is not uniform. Some areas, such as genomic sequencing, are surging ahead; others, such as translating genetic data into clinically useful information, languish.
In this environment, startups developing sequencing technologies, such as Pacific Biosciences, Illumina, and Complete Genomics, have attracted sustained investor interest as they race to create ever cheaper ways to decode DNA (see “Faster Tools to Scrutinize the Genome”). In their most recent rounds of venture funding last summer, Pacific Biosciences and Complete Genomics received $68 million and $45 million, respectively.
Diagnostic technologies, too, are moving at a rapid pace. Startups from Boston to Silicon Valley have been pinning down disease-related genetic markers and creating many new tests that are already in the clinic or on their way. As these companies grow and bring more tests to market, large diagnostics companies are likely to acquire them, says venture capitalist Brook Byers of Kleiner Perkins Caufield and Byers.
One of the biggest undeveloped areas in personalized medicine, however, is the information technology needed to analyze and store the huge quantity of genetic data that is starting to pour forth (see “Drowning in Data”). Of the few bioinformatics companies working to digest the data, Proventys, based in Newton, MA, is among the furthest along. Its technology combines biomarkers and other information to make risk predictions about diseases.
Meanwhile, pharmaceutical companies are responding to the nascent market for personalized therapeutics in different ways. Pfizer, for example, is collaborating with existing biotech companies to develop drugs and diagnostics based on genetic testing. AstraZeneca recently announced a partnership with the Danish diagnostics company Dako, the first of many alliances it plans in a strategy for bringing genetic tests to market. Novartis is taking a different tack, dedicating a large portion of its own resources to developing personalized medicine.
In the United States, benefit management companies, which act as middlemen between patients and insurers or employers, are aggressively moving into the market. One of the largest, Medco, has established a personalized-medicine group to recommend which genetic tests insurers should pay for. In February it acquired DNA Direct, a firm that specializes in analyzing genetic diagnostics, to aid in this effort. One of its largest competitors, CVS Caremark, increased its stake in a similar company, Generation Health, last December. Because such companies serve millions of people, they will play a critical role in making genetic tests broadly available and educating doctors about the benefits of offering such tests to their patients.
A machine for DNA sequencing was invented by Leroy Hood and his colleagues at Caltech. In 1992, Hood and several others were granted U.S. patent 5,171,534 for an “Automated DNA Sequencing Technique.” Replacing slow and expensive manual methods, this is one of the most important pieces of intellectual property in biotechnology; explore this interactive analysis by IPVision of the patent’s impact on the innovation landscape.
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