Investors looking for the intersection of healthcare and disruption need to look to genomics and DNA sequencing, two of the core focuses of the ARK Genomic Revolution Multi-Sector Fund (CBOE: ARKG).
ARKG includes companies that merge healthcare with technology and capitalize on the revolution in genomic sequencing. These companies try to better understand how biological information is collected, processed and applied by reducing guesswork and enhancing precision; restructuring health care, agriculture, pharmaceuticals and enhancing our quality of life.
The $488 million ARKG has been one of the top-performing healthcare ETFs since inception in October 2014, indicating that some actively managed strategies can and do deliver for investors. With the genomics and DNA sequencing markets expanding at rapid rates, stock picking can be difficult in these areas, underscoring the utility of ARKG. Declining costs actually bode well for the DNA sequencing arena.
“Next-generation DNA sequencing (‘NGS’) is the driving force behind the genomic revolution. Since 2003 the cost to sequence a human genome has dropped from nearly $3 billion to less than $1,000,” said ARK Invest in a recent note. “ARK believes that as costs continue to drop, NGS will become a standard of care in oncology. It will introduce more science into healthcare decision-making, enable personalized medicine, and accelerate drug discovery.”
Big growth is expected for NGS with ARK forecasting that market to swell to $21 billion in 2024 up from $3.5 billion in 2019.
The DNA sequencing market is experiencing significant growth, with estimates expecting the market to grow from $6.2 billion in 2017 to $25.5 billion by 2025 – representing a compound annual growth rate of 19%.i As a result of significant technological advances in the field, it’s estimated that anyone with $100 can now sequence their DNA, down from the $100 million it was estimated to cost in 2001.
Those declining are boosting demand, a scenario that underpins the long-term thesis for ARKG.
“ARK believes that the number of whole human genomes sequenced per year should scale 110% at an annual rate, from roughly 2.6 million in 2019 to 105 million in 2024, thanks to the clinical adoption of molecular diagnostics. Among these sequencing-intensive tests are liquid biopsies, solid tumor profiling, germline testing, immune-oncology, and non-invasive prenatal screening,” according to the investment manager.
Advancements in artificial intelligence (AI), NGS and CRISPR – another market accessible via ARKG – bode well for the fund over the long-term.
“ARK’s research shows that the convergence of AI, NGS, and CRISPR gene-editing could add trillions to the market capitalization of the Biotech and Pharmaceutical industries while creating a more efficient healthcare system,” ARKG’s issuer.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.