Illumina (ILMN, Financial) is the leading manufacturer of high-speed machines used to sequence, analyze and "unlock the power of the human genome". The latest flagship product, HiSeq X Ten can sequence DNA at a cost of $1,000 per genome, a five order of magnitude reduction from $100 million cost when this industry was born 15 years ago.
However, at a cost of $1,000 per gene sequence, it would cost $100 million to build a gene library from 100,000 volunteers, thereby pushing researchers to focus on only the most prevalent diseases. Looking ahead, as Illumina continues to drive down gene sequencing cost at a pace faster than Moore's Law, drug companies will continue to assemble larger and larger genomic data sets and invest in increasingly powerful computing clusters to decipher the slightest genetic variations and systematically unlock new knowledge about the human genome.
Note that the cost curve improvement accelerated dramatically in 2007 which coincided with massive value creation in the biotechnology industry. Illumina is also positively impacted the broad move to digitization. Illumina acquired NextBio and is positioning to offer cloud-based delivery of DNA sequencing as a service.
Here is a link to a Reuters story discussing the expansion of DNA sequencing and the gathering of DNA data, called “precision medicine.” http://bit.ly/Precision-Medicine.
From Meridian Growth Fund’s annual letter.
