DNA sequencing is revolutionising the diagnosis and treatment of everything from cancer to Down syndrome at breakneck speed, changing health care forever. Incredibly, only one company—Illumina—is making it all possible. It's just getting started
When Renee Valint’s daughter Shelby was born in 2000, she seemed weak, like a rag doll. Shelby learnt to walk and talk, but she did so slowly, missing developmental milestones. By age four she was confined to a wheelchair, and she started using a computerised voice to communicate in the fifth grade. Desperate, Renee took her from Phoenix to the Mayo Clinic in Rochester, Minnesota, for one last week of tests and discussion with some of the country’s top doctors.
“They all put up their hands and said, ‘We have no idea what’s wrong with her,’” says Renee. “At that point she couldn’t even move. I bathed her, fed her. She couldn’t even swallow. I had to thicken her liquids so she could swallow without choking. It was like a nightmare. That was it. There was nowhere else to go.”
But then doctors at the Translational Genomics Research Institute in Phoenix used a new technology—DNA sequencing—to look at Shelby’s genes. Based in part on what they found, they guessed that she might respond to the same dopamine-boosting medicines that are given to Parkinson’s patients. Three months later Shelby got up out of her wheelchair. The next day she walked to school, and she hasn’t used the wheelchair since. Now she likes to dance.
Stories like this are creating an exploding market for DNA-sequencing machines. Major cancer centres are using them as a standard way to pick medicines for patients who have little other hope. DNA sequencers now allow disorders like Down syndrome and other conditions to be detected in a foetus using a vial of the mother’s blood. They are replacing older, more expensive methods of genetic testing.
And the change is coming at breakneck speed. How fast? In the 1980s and 1990s the PC revolution was driven by an insight that legendary Intel co-founder and chairman Gordon Moore had as a researcher in 1965: The number of transistors on an integrated circuit doubles every two years. This was not a law of science but of will: It was a target for engineers to hit.
But over the past 13 years, the cost of sequencing DNA has dropped 1,000 times more than Moore’s Law, from $100 million per human genome to only $1,000. The only thing more extraordinary than the growth rate of the sequencing revolution is that the beneficiary is a single company, Illumina of San Diego, and most of the credit for the rate of change can be laid at the feet of one entrepreneur, Chief Executive Jay Flatley. Thanks largely to Flatley’s leadership, Illumina emerged as the dominant maker of DNA sequencers eight years ago and has maintained 80 percent market share despite an assault by several well-funded competitors.
Since 2008, Illumina’s sales and profit have both increased 147 percent, to $1.42 billion and $125 million, respectively, as the stock increased 617 percent and the company’s market capitalisation reached $23 billion. “We have predictors of market sizes,” says Flatley, 61. “Anything we’ve done so far says that in our time horizon, which is five or 10 years, if we remain the leader in sequencing we can grow our company with a much more fantastic return on investment than anything else.”
Macquarie Securities forecasts that the DNA-sequencing market could become 10 times bigger, reaching $23 billion. Illumina itself is going on a hiring and manufacturing binge, bracing itself to create $5 billion to $10 billion of DNA-reading gear a year.
“It’s rare that you find a company that has 80 percent to 90 percent share of anything and is driving the technology so fast that nobody can catch up,” says Cathie Wood, the chief investment officer at ARK Investment Management. “This is a stock in its infancy. I know that sounds crazy, given that it’s over $20 billion, but it is true.”
The Illumina story isn’t one of a fundamentally better idea or a eureka moment no one else had. Instead, it’s a story of dogged, near-perfect execution that traces back entirely to the tone set by CEO Flatley, a Stanford-trained industrial engineer. “I’m not a scientist,” Flatley says. “I’m not at Illumina, frankly, for us to make a scientific breakthrough. I’m at Illumina for us to deliver great products and get them to the market as fast as we can.”
Meanwhile, a host of well-funded competitors, including Life Technologies, a $4 billion (sales) company, and Pacific Biosciences, a startup that raised $570 million from private investors and the public markets, tried to catch Illumina but failed to even come close. Life’s original technology was competitive for a while but didn’t keep pace. PacBio promised to use lasers to sequence DNA, but the technology ended up having a high error rate and couldn’t match Illumina’s throughput.
(This story appears in the 03 October, 2014 issue of Forbes India. To visit our Archives, click here.)