Who will win Asia’s precision medicine race? Who will be able to wring the greatest value from healthcare spending on aging populations (e.g. China, Japan) and to treat soaring rates of chronic disease (e.g. diabetes, cardiovascular disease.) Who will be able to improve the first-line treatment response rates? Who will improve overall population wellness by incentivizing healthy behaviors?
No matter who wins, all in the race will rely on a key intermediary: genetic testing companies.
Today, Asia’s genetics testing market is worth about USD$1.3 billion (2017). It’s expected to reach ~$4 billion by 2023, according to BBC Research. If adoption rates for personal genetics information increase and regulations ease that 2023 number may be low.
The Asia market can be examined through several lenses. One is by end-use segments, i.e. direct-to-consumer testing; treatment related testing; and research testing. For most investors, the DTC and TRT segments present the most interesting opportunities.
In the DTC segment, market leaders include Prenetics and Asia Genomics: they are the region’s equivalents to 23andme in the United States. The TRT segment is by far the largest addressable genetic testing market at ~70 percent of revenues. This segment includes China’s BGI, Foundation Medicine and Illumina. The TRT segment is expected to grow rapidly as companion diagnostics increasingly becomes a standard part of drug treatments. We are also starting to see TRT and DTC companies push into each other’s markets to protect growth – even though the majority of Asia remains unserved.
Another lens is a value chain view. This divides the market into upstream, midstream and downstream (where the end-use segments, e.g. DTC, operate). Upstream equipment developer and consumables providers (e.g. reagents) and midstream data services also represent attractive plays. As innovation grows, the cost of equipment from the likes of ThermoFisher, Helicos and new entrants is likely to continue to fall, creating a virtuous cycle.
Another intriguing play is the emerging data-services segment currently served by players such as Qiagen, SevenBridges and Bina. Data analytics and security around libraries of DNA embedded in patient electronic records may become the most important electronic assets –perhaps even more than financial assets. Data security is of the utmost importance. Hence it is likely that a disruptive storage, encryption and sharing platforms will emerge to address this need. Innovations using a combination of technologies e.g. biophysics and blockchain will spawn a range of start-ups over the next three years to solve for this issue.
Recognizing the potential for jobs, initial public offerings, and tax revenues, governments are thinking about how best to support the emergence of a genomic cluster and its related businesses. These measures include reviewing regulatory provisions around privacy, building a publicly financed library of genetic data, integrating genetic data with population health data, and supporting the growth of specialized talent, e.g. biostatisticians.
Many of these efforts are at pilot stage. South Korea recently began a program to create a library of its citizens genetic maps. Such de-identified data, if made accessible to biopharmaceutical and devices companies, would allow the creation of more drugs targeted to treat patients with shared genetic traits. IQVIA has developed a strategic framework required to align private investors and public good to create a productive genomics industry cluster.
Investors are in the early wave of opportunity. Start-ups and more established players offer investors an opportunity to win by improving therapy targeting, reducing the cost to treat, and leveraging data in profound new applications.
The most attractive companies for investment are those that engage closely with their host jurisdictions to unlock the potential of genomics while protecting privacy and patient decision-rights over their health data.
- Michele Valente
Consultant, Asia Pacific
- Yu Xiang
Analyst, Asia Pacific