Technical Hurdles and Market Prospects in the Gene Sequencing Industry: Insights from the 'Gene Sequencing Track Scan Salon'

Recently, scholars engaged in medical investment and genomic medicine research gathered at the “Gene Sequencing Sector Scan Salon” hosted by iResearch to discuss the technological bottlenecks impeding industry development, with the aim of clarifying a strategic “roadmap” for the sector’s growth.

In March 2016, in the relevant notice on the guidelines for declaring key special projects issued by the Ministry of Science and Technology, “Precision Medicine Research” was listed as one of the key special projects to be prioritized in 2016, supporting the precision medicine industry based on gene sequencing.

From the National Health and Family Planning Commission’s brief clinical suspension of gene sequencing in 2014, to the release of the pilot program list and the subsequent policy resumption that same year, these measures set in motion China’s gene sequencing industry’s “train heading toward spring.”

Over the past year-plus pilot period, relevant industries, enterprises, and research institutions have clearly identified their strategic directions, rapidly initiating registration processes for related instruments, reagents, and software, thereby driving focused research efforts and capital concentration.

Deciphering the “Secondary Code” to Connect with “Disease”

From Research to Clinic: With the Biggest Obstacle—Funding—Resolved, What Other “Hurdles” Remain?

Compared to the publication of the human genome draft in 2001, the cost of gene sequencing has dropped to one ten-thousandth, yet clinical applications have not increased proportionally.

In fact, “sequencing” only completes the interpretation of the “primary code” of living organisms. To link it with diseases, it is also necessary to “decrypt” which diseases are caused by genetic mutations, match “gene segments” with “disease occurrence,” and complete the deciphering of the “secondary code.”

Fang Xiangdong, a doctoral supervisor at the Beijing Institute of Genomics, Chinese Academy of Sciences, attributes the realization of clinical applications to three elements: cohorts and biobanks as the foundation, actionable medical interventions as the core, and data integration and analysis as the key.

Therefore, standalone gene sequencing data cannot guide clinical treatment. To decipher the “secondary codebook,” it is necessary to establish biobanks, accumulate multi-dimensional data, and conduct analyses to progressively unravel the “code of life” and inform clinical practice.

“It is the ability to interpret genetic data and multi-dimensional data that has propelled gene sequencing technology into clinical diagnosis and treatment,” said Fang Xiangdong.

However, current capabilities in genetic data analysis and interpretation remain inadequate. Interpretation of genetic data largely remains at the gene level rather than at the precise level of specific genetic mutations. Furthermore, genetic data cannot yet be comprehensively analyzed in conjunction with multi-dimensional data such as patients’ physiological signs, lifestyle metrics, and microenvironmental factors.

Investment Circle “Heating Up”: Domestic Equipment Production Must Not Become an “Achilles’ Heel”

“To be honest, only slightly over 10% of companies are worthy of investment.” Reflecting on his experience in financing and investment within the gene sequencing industry, Cai Daqing, General Manager at Legend Capital, stated that investors should clearly determine whether they are funding basic research or research with commercialization potential.

“Many investments are directed toward research to be conducted by scientific research institutes.” He believes that the current investment model is misaligned, with a large volume of capital flowing into various types of research, while startup teams may not be addressing the actual gaps in the field. A sound business environment should involve “multiple scientific research institutions jointly funding basic research; once it reaches a certain stage, commercial entities take over and apply the findings to patients.”

Not only has investment failed to coalesce, but the gene sequencing sector is also considered a “niche” area within internet healthcare. According to the “Global Next-Generation Sequencing Industry Investment Research Report” released by iResearch, the internet healthcare sector received a total of 141 investments amounting to $1.51 billion in 2015. In contrast, China’s gene sequencing industry secured only 16 investments, totaling $70 million—approximately one-twentieth of the investment in the broader internet healthcare sector. Surveys indicate that this disparity stems from the Chinese gene sequencing industry’s heavy reliance on imported upstream equipment manufacturing, the availability of existing alternative testing methods, and the lack of substantial formation of actual medical demand.

Regarding the localization of equipment, Fang Xiangdong believes that although it started late, it is now catching up rapidly. “BGI has launched the BGI System, a cloud computing platform for genomic data analysis with fully independent intellectual property rights. Huayinkang has produced a domestically made high-throughput sequencing system. The Pad sequencing device developed by Zhongke Zixin completes sequencing within a few hours; it is portable and compact, making it suitable for clinical use, and has recently received RMB 60 million in special national funding for instrumentation.”

Pad-based sequencing may help domestically produced equipment achieve a "leapfrog" advantage. "If handheld devices can perform sequencing, it will bring about structural changes," said Cao Junbo, Dean of iResearch Institute. The portability of hardware has facilitated the development of the internet; similarly, gene sequencing can be "integrated" into various industries. "Handheld devices make massive data collection easier, and the sample database for analysis will become larger, leading to an extremely vast market size in the future."

“Big Data” Official Integration: Multi-Angle Access to Leverage the Market

Biobanks are the “foundation” for advancing gene sequencing into clinical practice. Over the past 30 years, a biobank comprising samples from more than 200,000 individuals has been established in Taizhou, Jiangsu Province. Additionally, data from over 600,000 esophageal cancer cases, along with complete genomic, transcriptomic, and proteomic datasets from more than 400 esophageal cancer cases, have been compiled over several years.

These disparate databases require further integration. Fangxiang Dong stated, “For clinical data analysis, an authoritative data repository is essential. The Ministry of Science and Technology launched relevant projects the year before last, investing hundreds of millions of yuan in data integration efforts.”

“What does the future trajectory of this industry look like? Will it converge with trends in the internet sector?” Cao Junbo responded affirmatively: “It indeed exhibits similar characteristics. Over the past decade or so, sequencing technology has undergone continuous transformation, and sequencing costs have steadily declined, aligning with the hallmarks of tech-driven innovation. If multiple segments of the industrial chain become involved, market potential can be rapidly unlocked.”

Current applications of gene sequencing span both medical and non-medical fields, including the diagnosis of genetic disorders, cancer diagnosis and treatment, and biodiversity conservation.

“Gene sequencing can support a larger industrial chain behind it,” said Cao Junbo. Similar to “Internet+,” many investors and enterprises currently value not just gene sequencing itself, but the other related markets it can leverage. In other words, as technology and market layouts gradually improve, “Gene+” will also transform many industrial sectors.