Declining costs are viewed as one of the biggest factors driving the genomics and data suggest those costs continue falling, a scenario that could benefit ETFs, such as the Global X Genomics & Biotechnology ETF (Nasdaq: GNOM).
GNOM tracks the Solactive Genomics Index and “seeks to invest in companies that potentially stand to benefit from further advances in the field of genomic science, such as companies involved in gene editing, genomic sequencing, genetic medicine/therapy, computational genomics, and biotechnology,” according to Global X.
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%. 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.
“Demolishing the expectations of Moore’s Law, the total cost of sequencing per individual human genome has fallen drastically,” said Global X in a recent note. “Technological progress doesn’t seem to be stopping. Chinese genomics company, BGI Group, recently communicated in a conference that have breached the $100 threshold for the first time in history.”
Costs Matter
Genomics 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.
GNOM components are only eligible for inclusion if they generate at least 50% of their revenues from genomics related business operations. The index is market cap weighted with a single security cap of 4.0% and a floor of 0.3%. The ETF provides exposure to CRISPR, gene editing and therapeutics companies.
“DNA sequencing costs have fallen from $100 million in 2001,” according to Global X. “Decreasing costs of all kinds of genetic testing have already made sequencing readily available to consumers via a simple online purchase of a home DNA kit. This trend is expected to continue for the foreseeable future and improve the ability of healthcare industry participants, from doctors to pharmaceuticals and medical device manufacturers, to better diagnose patients and develop new treatments.”
Genomics companies spend a plethora of time and massive amounts of money to fund breakthrough biological treatments and diagnostic tools. Blossoming developments can literally change their fortunes, and the fortunes of shareholders overnight. Genomics is likely to be an integral part of the biotechnology growth story in the years ahead.
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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.