ON THE DECLINING COST OF DNA SEQUENCING - DO WE NEED A NEW MOORE'S LAW?
Most readers should be aware of the Moore`s law and the role it played in the rise of the semiconductor industry. The law is essentially the Intel business model allowing long-term planning for both the companies on the supply chain and the potential customers alike. The results are the exponential productivity gains in computing power we all benefit from today.
The DNA sequencing industry is in many ways very similar. It is dominated by a single large player (Illumina) and it too is showing exponential productivity growth. In fact the marginal price of sequencing a base pair of DNA has been recently falling at a much faster pace than the Moore`s law would suggest:
The numbers are compiled by the US National Human Genome Research Institute and are regularly updated on their web page. The pace of decline is staggering: the average DNA sequencing cost has fallen by 78% in the last year and by more than 97% since 2010. Actually prices for sequencing the human genome have already fallen bellow the symbolic mark of 1000 USD:
If you think about it just several years ago the UK government started the The 100,000 Genomes Project and had to limit the number of sequenced genomes due to cost reasons. It is off-course true that the majority of the cost of such an initiative will be in the analysis phase after the DNA data is collected, nevertheless with the current price dynamics a similar project will be within the reach of a Kickstarter campaign very soon.
While at a slower pace the DNA writing cost is also falling exponentially. In fact there is very limited market for writing DNA estimated at between 300 to 400 million USD. The number is small indeed, but in order to interpret it, we have to consider the role DNA plays in product development. Unlike most other resources new DNA (and DNA writing respectively) is needed only as long as the final version of the product is being developed (i.e. a gene allowing yeast to produce a specific chemical compound like artificial vanilla substitute). Once this is done the final organisms will be produced and they will replicate as production expands. DNA is in fact similar to software, with no need for new investments as production is scaled.
Biotechnology across Agriculture, Medicine and Manufacturing & Energy is estimated at approximately 1/3 of the world GDP. All of these industries have traditionally had very high barriers of entry requiring high fixed investments. The price of sequencing/writing approaching 0 essentially means that most of these fixed costs will disappear opening one third of the world economy to practically everyone. This development is further accelerated by on-demand DNA sequencing and synthesis services allowing people without any formal training in Biology or Medicine develop products in this area - a democratization not unlike the one we have seen in software development.