Precision Medicine in the Eyes of Venture Capital: Hype Exists, but Prospects Are Vast

Precision Medicine Has a Certain Bubble

Regarding whether precision medicine is overheated, Liu Liang, CEO of Blue Rainbow, the venture capital incubation platform under BGI Group, believes that capital markets always experience cycles of bubble formation and subsequent correction. To some extent, there is indeed a certain degree of bubble in precision medicine. “As far as I know, companies originally engaged in logistics were planning to purchase obsolete second-hand testing equipment and partner with hospitals to conduct genetic testing. From this perspective, precision medicine is indeed overheated,” said Liu Liang.

In Liu Liang’s view, so-called genetic testing serves as an entry point, akin to internet gateways. While profits from genetic testing are limited, offering value-added services can generate greater revenue. Examples include personalized medication services and future applications and services that may emerge. He draws a parallel between genetic testing and the internet, noting certain similarities. Just as online payment and online video models gradually evolved following advancements in internet technology, similar derivative models are expected to arise from genetic testing.

Due to monopolies and other factors, the cost of gene sequencing has remained high and difficult to reduce. In 2012, BGI acquired the U.S.-based Complete Genomics (CG) for RMB 4 billion. It officially launched its sequencers at the end of 2014. Over the next decade, it is possible to lower the cost of gene sequencing to $100. Liu Liang stated that the decline in gene sequencing costs will change not only the gene sequencing segment but also the entire industry chain. The previous business model generated profits primarily in the upstream sector. In March 2015, the Ministry of Science and Technology convened China’s first expert meeting on precision medicine strategy, proposing the China Precision Medicine Initiative. The meeting indicated that China would invest RMB 60 billion in the field of precision medicine by 2030. Liu Liang noted that China currently accounts for half of the global number of sequencers. As upstream sequencing costs decline, the existing business model will be disrupted. Therefore, in 2015, BGI Capital established Blue Rainbow to provide relevant resources to downstream entrepreneurs. Beyond precision medicine, there are opportunities for entrepreneurship and innovation in many other fields.

Data indicates that China’s genomics market is valued at RMB 60 trillion. Within the pharmaceutical industry, segments including personalized medicine and new drug development platforms account for nearly RMB 10 trillion; the food and beverage sector represents a RMB 20 trillion market; and the ecological sector has a market size of RMB 1 trillion. In the life and health sector, pharmaceutical companies currently constitute the largest market. Patented drugs hold a significant market share, while 95% of enterprises are engaged in the production of generic drugs. Analysis of the industry chain reveals that high R&D costs are primarily driven by the substantial expenses associated with target identification. Liu Liang stated that the company is currently leveraging a small-molecule library; if the target is correctly identified, the project can proceed to in-depth R&D. This approach eliminates the need for R&D enterprises to independently establish dedicated R&D centers and DNA small-molecule targeted libraries.

Liu Liang stated that gene-based applications are still in their nascent stage. Simply put, the workforce size is insufficient, with no more than 100,000 professionals currently employed in this field in China. Blue Rainbow serves as a platform providing technology, data, intellectual property, capital, and business support. It channels resources from these five core platforms to downstream partners, enabling them to pursue innovation and entrepreneurship in these areas. Specifically, the scope of gene-based applications is extensive, encompassing six major sectors: pharmaceuticals, medicine (such as gut microbiota), food, agriculture, ecology (including environmental governance in livestock and poultry farming), and health.

“We now have a middle class of approximately 100 million people, with demands for health and consumption upgrades. However, domestic entrepreneurs are still accustomed to imitating European and American markets rather than developing new health products tailored to this 100-million-strong Chinese middle class,” said Liu Liang. He stated that whether in pharmaceuticals, healthcare, food, or various service products, if companies can truly capture this market, they will effectively achieve supply-side structural reform, and China’s market will give rise to its own leading enterprises. Liu Liang believes that the market is still in its nascent stage, with substantial room for growth.

Precision Medicine May Ultimately Transform the Disease Classification System

Li Guolin, a business partner at GTJA Investment Group, stated that precision medicine revolves around three key concepts: “disease,” “patient,” and “drug.” From the current development landscape, the true etiologies of diseases remain poorly understood, and patients have not been effectively classified on a large scale. Furthermore, the range of drugs available to enable precision medicine is currently very limited. In the long term, over the next 5–10 years, precision medicine may ultimately transform the existing disease classification system.

What is the ultimate vision of precision medicine? Li Guolin begins his analysis with the definition of precision medicine: utilizing omics technologies to analyze populations and diseases, identify causes and therapeutic targets, perform classification, and achieve precise treatment. From a visionary perspective, patients are stratified into subgroups based on their susceptibility to specific diseases or their responses to particular treatment regimens. Preventive or therapeutic interventions are then concentrated on those patients who are likely to benefit, thereby avoiding unnecessary costs and side effects for non-responders. He proposes three key keywords for precision medicine: “disease,” “patient,” and “drug.” Through precise diagnosis, accurate disease subtyping is achieved; simultaneously, patient populations are analyzed to identify and classify distinct subgroups. By subtyping diseases, classifying patient populations, and conducting targeted drug development, the ultimate goal of precision treatment can be realized.

“Precision medicine may ultimately transform the current disease classification system,” said Li Guolin. In the next 5–10 years, cancer classification may no longer follow the current organ-based approach but instead be based on the underlying mechanisms of tumorigenesis.

After analyzing the definitions and vision, Li Guolin further introduced the current state of precision medicine. He broke it down using the aforementioned keywords: “disease,” “patient,” and “drug.” Patients seek medical care for “diseases,” which are traditionally classified by organ system, such as tumors. Regarding diseases, the true etiologies remain poorly understood. Meanwhile, in terms of “patients,” there has been no effective large-scale stratification. Furthermore, the arsenal of drugs capable of delivering on the promise of precision medicine is still very limited; currently, there are only a dozen or so targeted therapies, with varying efficacy rates across different populations. Taking lung cancer as an example, it was traditionally divided into two major categories: small-cell lung cancer (SCLC) and non-small-cell lung cancer (NSCLC). Advances in molecular biology have revealed that NSCLC is driven by diverse genes and various types of mutations. Li Guolin cited a Phase III clinical trial involving nearly 1,000 patients with advanced-stage tumors who had not previously received oncology treatment. The study compared the use of two drugs in combination versus other regimens and found differences in survival outcomes. The final findings indicated that if patients exhibited high protein expression levels of the target gene, the efficacy of monotherapy was comparable to that of combination therapy. However, if patients had lower protein expression levels, those receiving combination therapy derived greater benefit than those receiving monotherapy. Therefore, when selecting pharmacological treatment plans for tumor patients, prior diagnostic testing and screening are essential, rather than relying on the broad, generalized treatment approaches used in the past.

The challenges of precision medicine can also be analyzed using the keywords “disease,” “patient,” and “drug.” From the perspective of “disease,” our understanding of the molecular mechanisms underlying disease progression remains limited, necessitating extensive basic and clinical research. Each type of tumor may involve numerous pathogenic factors, requiring substantial data accumulation and sharing to decipher the complexities of the disease. From the perspective of “patients,” once the disease is characterized, it is essential to identify and precisely classify the patient populations suitable for specific therapies. Finally, the challenges related to “drugs” have two dimensions: one is drug repurposing (“old drugs for new uses”), and the other is accelerating the new drug development process. During Phase II and III clinical trials, the study populations traditionally consist of patients diagnosed with the disease in question. With precision medicine, relevant patient subgroups can be precisely identified and screened in advance, enabling the recognition of specific disease subtypes and achieving precise classification, thereby accelerating the pace of new drug development.