16 May 2013

Neil Hall is Responsible for Rising NGS Prices

“Wait, what?! Neil Hall is responsible for NGS prices actually inching up rather than continuing down to ever lower depths?”

No, not really.

Well, he kind of is. And most likely so is everyone reading this blog. (All three of you.)

It’s because DNA sequencing consumers didn’t ramp up their usage as quickly as Illumina was driving down the prices. When Illumina bumped HiSeq capacity from 300Gb per run to 600Gb per run, their customers said:

“Yay! The same amount of sequencing for half the price.”

To which Illumina responded:

 “What? No, no, no, no! You’re supposed to sequence twice as much. Actually, you’re supposed to sequence even more because the cost is so low that new applications are now feasible”.

And the stock market said:

“Hmm, I’ll have half that market cap back, thank you.”

So Illumina learned their lesson and decided to be more careful about releasing upgrades for the HiSeq. Right around the time they launched the 600Gb system, they said they were able to generate runs of over 1Tb in house. It’s been around two years since then, but still no update.

Why not? Because there isn’t any market pressure to do so. The only competition HiSeq had was SOLiD, but that platform has essentially been abandoned by Life Technologies as a commercial failure. (You can love SOLiD reads all you like, but even with a much bigger marketing and sales budget, it was still getting trounced by HiSeq. Too bad they didn’t release Wildfire a couple of years earlier – we might not be having this conversation right now.)

And while Illumina was busy dominating the high throughput NGS market, Ion Torrent came out and tried to carve out a different niche: much faster, much cheaper machines (albeit with lower throughput). And that niche has really taken off (especially in the clinical space). Illumina responded with their own machine (the MiSeq) and since this is the only space where they’re facing serious competition, it’s where they are concentrating most of their resources. This means we’re now getting much faster reads, but they aren’t really getting any cheaper.

So is the party over for cheaper reads? Since the ‘plateau’ was caused by market forces and not technological advancements, the answer is almost certainly “no”. Researchers will figure out ways to creatively use ever more sequencing capacity, and when they start bumping into the limits of what the current machines can do, those machines will almost certainly improve. And the competition could come back. Ion Torrent has stumbled on their original road map, but if they ever release the PIII chip, that could put pressure on the HiSeq. And while Oxford Nanopore is the latest to suffer from the hype-hate cycle, there are a lot more companies waiting in the wings to dethrone Illumina. Check out BlueSEQ’s ‘Emerging Technologies’ section of the NGS Knowledge Bank for a partial list.

Dr. Hall is right that the field would benefit from genome scientists focusing on “new ideas”.  He’s also right that the cost of sequencing will plateau. But I don’t think we’re quite there yet. And where it plateaus, whether that’s $1000, $100 or $10, will make a big difference. 

Edit: Gah! I totally forgot to include a link to Mick Watson's excellent take on the cost of sequencing.