Last week's Economist has another story on biohacking, "Hacking goes squishy", that contains a nod or two to the economic context and also has a version of my cost curves. I have a couple of thoughts.
The cost curve figure in the article was finished early August, and since then I have decided to add additional data points. Just a couple of days ago, an ad from Mr. Gene (a division of GENEART) showed up in my inbox advertising synthesis for $.39/base pair. I haven't had time to figure out why GENEART itself charges $.44/base, but presumably there is some additional customer service/sequencing/etc. thrown in. The latest commercial cost for oligos (in low volume) appears to be about $.15/base, which is actually a slight increase compared to prices I found a couple of years ago. More on this later.
On the sequencing side of things, Illumina has delivered its first commercial human genome at $48,000. Here is the Bio-IT World summary: "Illumina completed the sequence at its CLIA-certified laboratory, producing more than 110 billion base calls, good for 30X coverage of the genome and the identification of some 300,000 novel single nucleotide polymorphisms." I'll call it $8x10^(-6) per finished base, even though they actually sequenced many more bases than are in a human genome.
In other sequencing news, Complete Genomics just announced (PDF) the sequencing of 14 individuals for various academic projects. They claim to be on track to offer $5000 human genomes in the next six months. Helicos made a lot of noise last month with the publication of Steve Quake's genome at a cost in reagents of ~$48,000. While all the numbers in the article are impressive, like many observers I still have questions about the actual cost per base in a commercial operation. Labor? Cost of capital? Nonetheless, the technology is impressive.
The cost of sequencing continues to fall rapidly. The race to the bottom is well under way. Here is the figure:
It is interesting that the oligo and gene synthesis numbers have the appearance of slowing down. I don't believe this is evidence of a real trend, but rather that the cost of synthesis is now about labor and finance rather than about raw materials. And sequencing (proof reading) of synthetic genes now accounts for a good hunk of the cost, depending on what exactly you are synthesizing. Since I have now seen several different technologies that can be used to reduce costs, I expect prices to continue falling in the years to come. One technology nearing the marketing stage enables the use of unpurified oligos in gene assembly, including those synthesized on chips, through true error correction rather than error removal. While the consequent reduction in the cost of raw materials may not add up to much, there should be substantial cost improvements from 1) reducing required sequencing and 2) the ability to automate assembly.
I can also now update my "genetically modified domestic product" (GMDP) numbers for the US. My earlier article "Laying the foundations for a bio-economy" (journal link), contained an estimate that genetically modified systems generate revenues that are the equivalent of about 1% of US GDP. It turns out that is too small.
The reason for the underestimate is that I was overly trusting of reporting by The Financial Times, Nature Biotechnology (upper left panel), and others, who all published stories claiming that 2007/8 revenues from genetically modified crops were about US$ 8 billion worldwide and a bit over $4 billion in the US. It is interesting to me that all these organizations misreported in exactly the same way a number published by the ISAAA in its report "Global Status of Commercialized Biotech/GM Crops: 2008". In their defense, the reporters probably just had access to the executive summary, which contains the phrase "the global market value of biotech crops... was US$7.5 billion", and they were probably in a hurry to meet deadlines. But the very next sentence in the executive summary reads "The value of the global biotech crop market is based on the sale price of biotech seed plus any technology fees that apply." So that ~$8 billion worldwide is just seeds and related fees. And seeds grow. Into bigger things. With greater value. Like crops.
A quick visit to the USDA reveals US revenues from GM crops that is in the neighborhood of $100 billion. Here is a nice figure showing crop adoption since 1996, which gives us the percentage of acres planted in GM seeds. Then, jumping over to the National Agricultural Statistics Service, you can figure out the revenues per crop. Put it all together and you find out that in 2007 the value to US farmers of revenues from GM crops was close to $70 billion.
Here is a table from Biology is Technology that lays out some of the global numbers up through 2007:
|
Table 11.1 Revenues from genetically modified systems in 2007 |
||||
|
Sector |
Worldwide revenues ($ billions) |
US revenues ($ billions) |
% of US GDP (total of $~14
trillion) |
Revenue growth rate in US (%) |
|
Biotech drugs ("biologics") |
79 |
67 |
.48 |
15-20 |
|
Agbiotech/GMOs |
128 (est) |
69 |
.49 |
10 |
|
Industrial |
~110 |
~85 |
.61 |
15-20 |
I left out of the book any discussion of what benefit GM crops give compared to non-GM crops because I don't yet trust any of the numbers I have found; estimates range from -30% to +30%. When I have time to sort it out for myself, I will publish something. Until then, I would note that it seems unlikely to me that farmers around the world would keep buying GM seeds (that are more expensive than non-GM seeds) -- and buying more GM seeds every year -- if they didn't benefit financially from making that choice.
By the way, for those who have asked or are curious, I just learned that the book comes off the presses in the first week of December, though I don't know when they actually will be available in stores and whatnot. No news yet on e-versions for the Kindle, etc., but let me know if you are interested.
Anyway, although not all the numbers for 2008-2009 are available (including GDP), at this point I am pretty comfortable with the estimate that revenues from GM systems in 2009 will be the equivalent of about 2% of US GDP. That is a big number. As big as mining in the US. And there is no way mining is growing at ~15% a year. The future of the economy is biology.