Continuing on a previous post on genetics, here are some thoughts about the genetics and software industry.
Many people compare the software bubble of 2000 to the genetics bubble of today.
Both genetics and software have experienced high growth patterns, and also big investments and a lot of innovation has lead to a bubble of growth.
I think we’re talking of about 40 years of software growth and processes getting established compared to around 15 years of genetics.
I feel genetics is more specialized and less established currently and harder to outsource.
Also, the qualifications required are not so easy to get in the developing countries and so the related industry is not as mobile and ripe for cost-reduction as software used to be.
Applications of genetics, other than for the individual’s health (which investors don’t really care about), are being brought about by:
- the spiraling medical costs in the US and Medical Insurance companies don’t like this since they bear most of it. Targeted genomic analysis can reduce this and it is felt that Insurance companies drive Healthcare and so can accelerate genetic applications
- pharmaceutical companies that want to ensure their drug is effective given the genetic makeup of the target consumer.
They seem to be less interested nowadays in the one size fits all pattern (e.g. making a single breast cancer drug for all breast cancer types) and prefer a more personalized approach (e.g. have different breast cancer drugs applicable to different patients) that will know that their pill will work well when a person has particular genes. This seems like a simple and logical choice now that we think about it, but till now we have had 1 medicine for a condition without any personalization.
I feel this is a sniper approach in terms of precision as opposed to the current shotgun approach, where not only which drug but effective dosage is a guessing game.
Nowadays, industries are judged by Moore’s law which states that the rate of growth will double every 18 months.
Moore’s law was made by Dr. Gordon Moore who co-founded Intel and was a prediction that the power of hardware would double every 18 months because the number of transistors that fit in a given space would double because of improvements in manufacturing hardware.
Any industry that follows Moore’s law is a great investment and has great innovation potential because it has a high level of growth.
Genetics is looking to beat Moore’s law and the cost of genome sequencing and the time taken for it has dropped from a few million dollars and 2 years in year 2000 to under $1000 and 30 minutes today.
Direct-to-consumer services offered by companies like 23 and Me for genome sequencing to find out certain disease risks and origins and traits is under $100.
The buck does not stop there though and a number of small companies can also process this raw data and provide you with more info. on it.
There is a kind of bubble for Healthcare with genetics being used to make more effective cancer drugs to sequencing a genome.
Of course, genetics also fuels software and the large amounts of data involved I think will get larger and we need software to analyze all this and make sense of it.
Just in terms of growth, it seems like genetics is beating software but I don’t think it’s an apples to apples comparison. Software is a kind of support and it is being applied to genetics, and hence can lead to innovation at all levels. Software is a commodity while genetics is the target application.
Of course, software has tremendous growth outside genetics too but is also a more established industry unlike genetics which is more in the research phase than application.
This all leads to a great growth potential and innovation for genetics and software.
Look for many future companies in their intersecting space.