Jeremy Gibson

If anyone has watched an episode of the TV series House, you will be aware that there is a consistent theme.

A patient enters hospital with a rare, and generally life-threatening, condition. House and his team make three or four failed attempts at patient diagnosis / treatments, before an epiphany, where they finally find the right treatment to bring the patient back to full health.

Thankfully, this is TV, and the costs of undertaking numerous incorrect treatments for an illness through MRIs, blood tests, surgery, 2-3 near fatal relapses and four or more doctors mulling over the patient’s condition for days isn’t calculated.

This type of trial and error approach is currently prevalent due to incomplete patient information and people having individual characteristics in reacting to certain treatments. However, as innovations in healthcare continue to improve exponentially, this trial and error approach will become comparable to more archaic medical practices.

Recent innovations in diagnostics, medical technology and genomics will allow the treatment of patients as individuals with greater accuracy - thus reducing costs, improving patient outcomes, along with preventing and curing diseases.

This could also go some way to addressing rising global costs in health care, exacerbated by the ageing population and obesity.

This rapidly developing health care innovation or “Innovative Health” is an Area of Interest for Munro Partners.

For this to become a reality, there needs to be more accurate information regarding the patient’s history. This can be achieved through DNA testing and sequencing, leading to more accurate testing and diagnosis, and therefore treatment.

 

The Genomics Revolution

For context, DNA sequencing is the key to the genomics revolution, providing insights into an individual's genetic makeup. It is effectively an instruction manual. This type of complete picture can assist in researching a wide variety of applications from understanding the causes of cancer or potential illnesses in newborns.

The Human Genome Project cost $3 billion in 2003. Whilst, the first fully sequenced and mapped individual genetic code of a human being cost $20 million in 2006. The cost has since fallen to $1,000.

Earlier this year, DNA testing kits were one of the hottest selling items on Amazon Prime Day. DNA testing has gone mainstream.

The cost of DNA sequencing has reduced faster than Moore’s Law. With an estimated cost of $100 in the foreseeable future, DNA sequencing becomes more accessible and opens up new use cases, such as wider adoption of population sequencing.

Genomic insights allow for such fundamental opportunities as:

  • Screening, such as non-invasive prenatal testing;
  • Predicting an individual’s predisposition to a disease;
  • Personalised medicine, providing optimal therapy for the treatment of disease

 

One company that is benefiting from Innovative Health is Illumina, the world’s market leader in DNA sequencing systems, providing equipment and consumables to genomic labs globally.

To give a sense of its dominance, Illumina recently reported that 90% of all sequencing performed has been generated on Illumina technology.

Ostensibly, the reduction in DNA testing prices might threaten Illumina’s top line, but in practice this is protected by volume growth which should offset price deflation. Illumina’s attractive razor-razorblade business model ensures highly recurring revenues.

The holy grail for genomic insights is curing cancer. Significant funding and research are currently being undertaken with DNA sequencing the backbone for such research.

The future of DNA technology is all about: right patient, right test, at the right time.

A House episode would be under five minutes.

About Munro Partners

Munro provides all investors with an institutional-quality, global fund manager with the ability to identify sustainable growth trends that are underappreciated and mispriced by the market, and the resulting winning and losing stocks. Find out how.

 

 

 



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