A few nights ago I hosted a fascinating dinner with a dozen CEO’s and founders from exciting diagnostics start-up’s as well as two extraordinary academics – George Church (Harvard) and David Altshuler (founder of Broad Institute). I posed a series of questions like “What is most relevant in your field today?” and “What products and services that don’t yet exist will be available in ten years?” Some of the most engaging debate though revolved around the role of social networks in personalized medicine – an area I have been thinking a lot about recently.
First some brief background. Broadly speaking the diagnostics industry is about $100 billion in revenues (products and services) and is considered the fastest growing medtech sub-sector. In 2010 VC’s invested approximately $500 million in 60 new diagnostics companies – thus you can see why I have been saying for some time now that there is a renaissance in diagnostics underway.
The impact of new diagnostic technologies will improve clinicians’ abilities to predict, monitor and treat all of us. Given the ageing population (people over 65 test 5x more frequently than all others), the volume of tests is expected to explode. And fortunately credible diagnostic tests can avoid unnecessary treatments thereby lowering overall cost of care. Specifically, “companion” diagnostics (those tests wedded to specific therapies) are expected to reduce cost of care by $15 billion annually when fully deployed. More shockingly, drugs are only effective roughly 50% of the time they are used; in cancer the efficacy rate is around 22% (36% for surgical procedures) which means nearly $39 billion of treatment is wasted. Effective diagnostic tests will dramatically improve that.
Some of the other highlights and possible conclusions from the dialogue that night were:
- The cost to sequence the genome is nowhere near the mythical $1,000 target – which ironically is comparable to the cost of an MRI or CAT scan – which would you rather have? The sequencing field is dominated by technologists who have over-hyped the value of unit of genomic data.
- George Church observed that people will spend $10k per year on insurance but over a 70+ year life span are not comfortable spending ~$10k for their genome to be sequenced. Quite ironic.
- The cost of data storage will far outstrip the actual cost of sequencing which is emerging as the real issue in this field. It may be cheaper – at some point – to simply re-sequence you every time you need your genomic data rather than storing the data! Others felt that babies will be discharged from the maternity ward with their genome on a CD at some point.
- This means there may be some exciting business opportunities in managing one’s genetic data so that it can be interrogated in appropriate and timely ways.
- Facebook will be very important in the field of genomics. In addition to organizing people by certain traits and diseases more efficiently and effectively, it may drive people to adopt EMR (electronic medical records). A theme I am excited about is the transition from a doctor-centric healthcare delivery system to a patient-centric one; maybe Facebook drives that?
- Advertising – what are the opportunities as we better understand our genomes? Clearly there is a near-term direct opportunity as disease states and risk profiles are better understood – with very murky legal and political risks. But what about indirect opportunities? Will people sharing the same genetic mutation be inclined to buy red cars? Would Ford pay for that information? You bet – and probably a lot. Gets very tricky but is fortunately quite far over the horizon so we have plenty of time to sort it all out.
- Everyone agreed that all cognitive therapies (psychologists, etc) are way undervalued.
- And David Altshuler smartly observed that we have yet to find someone without DNA – so this will affect all of us.
My next dinner will be with this group and the search engine marketing group we convened last fall. That will be really interesting!