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It won’t be news to anybody to say that most of the technologies that are tagged as “disruptive”… are simply not. So what is disruptive innovation? According to Clayton Christensen, who developed the theory of disruptive innovation: “Disruptive innovation (…) describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors”
Take Next Generation Sequencing (NGS) as an example. Anybody following the industry will be familiar with the fact that over the last 10 – 15 years sequencing throughput has grown exponentially, and with it, sequencing cost per base pair has decreased exponentially.
In light of the exponential increase in sequencing throughput and feels compelled to tag this a truly disruptive technology. Surely a sustained exponential increase in throughput and decrease in costs must be disruptive. No?
What do we make of it?
No. It may have been in the past, but it is not anymore. The progress has been and continues to be astounding, and has brought a wealth of benefits to scientists, physicians and patients. But it’s not disruptive.
It’s not disruptive because innovation is mostly focused at enabling the most sophisticated among current NGS customers to do more, cheaper. Yes, the latest systems have lowered the price of a whole genome analysis to less than $1,000, but most of the customers for such systems were already using NGS.
To focus on your core customers is perfectly rational and probably the right thing to do for industry incumbents. If you serve the NGS market you realize that your best paying customers are the high throughput laboratories, and you need to cater to them: you provide higher throughput systems that enable them to do more, quicker and cheaper. A glance at Illumina’s installed base and revenue estimates based on the utilization rates (as of late 2017), is revealing. The high throughput systems not only cost more, but they punch above their weight in terms of utilization. Despite being many more benchtop instruments in the field (think “MiSeq”), the revenue generated by high throughput instruments (think “HiSeq”) is much higher. It makes sense that that Illumina focuses most of their efforts on the NovaSeq, the latest and greatest high throughput instrument.
Why do we find it interesting?
For the industry
If NGS is not disruptive, what will disrupt NGS? Going back to Clayton Christensen: “Characteristics of disruptive businesses, (…) can include: lower gross margins, smaller target markets, and simpler products and services that may not appear as attractive as existing solutions when compared against traditional performance metrics. Because these lower tiers of the market offer lower gross margins, they are unattractive to other firms moving upward in the market, creating space at the bottom of the market for new disruptive competitors to emerge.”
We think that a technology that enables users to have some of the key benefits of NGS but at a lower cost and with a much simpler set up has the potential to disrupt NGS.
At the core of the benefits sought by NGS-naïve labs lies access to actionable genomic information. Most of these labs rely on integrated, easy to use workflows to run tests efficiently and reliably. A disruptive technology in this space will be simple, providing a hands-off sample-to-answer solution.
The bigger picture
If we really want to enable broad access to genomic information, we need to enable the masses. We’ve seen this again and again in other industries, and we feel the time has come to realize the potential of the genomic revolution by developing a sample-to-answer genomic analyzer. Anybody remember the mainframe and companies that argued that none of their customers would want a paired down, simpler to use, personal computer at home?