Genomics: How to Invest in the Sector, Which Companies and Which ETFs

Jennifer Doudna and Emmanuelle Charpentier received the 2020 Nobel Prize in Chemistry. For what? For discovering how to cut and rewrite DNA precisely like a text editor. CRISPR-Cas9 proved to be a revolution in the laboratory setting. But from laboratory to drug is a long road — and from drug to shareholder profit is an even longer and more winding one. Genomics is fascinating science that is still learning to be a business.

What the genomics investment theme actually encompasses

• DNA sequencing — technology that reads the genetic code of an organism. Illumina dominates this market with over 90% market share in research sequencers. Without sequencing, the rest of genomics would not function — it is the basic infrastructure of the entire industry.
• Gene editing — CRISPR Therapeutics, Editas Medicine, Intellia Therapeutics, Beam Therapeutics. Companies working on drugs that repair defective genes directly in the patient's body using molecular scissors.
• Gene therapy — delivering a functional gene to patient cells instead of editing the existing one. Bluebird Bio, Spark Therapeutics (part of Roche). The number of approved products is growing, but the commercial ramp is slow due to pricing and reimbursement issues.
• Genomic diagnostics — tests identifying genetic mutations associated with cancer or hereditary diseases before the disease manifests. Exact Sciences (Cologuard), Guardant Health. Growing commercial traction, but still negative EBITDA for most companies.

Illumina: monopoly with problems

Illumina (ILMN) is a special case. The company has dominance that can without exaggeration be called a monopoly in the research sequencing market. Yet the share price has undergone a brutal collapse from its 2021 peak. Why? A combination of factors layering on top of each other.

The first problem was the acquisition of diagnostics company Grail at a price the market found excessive. The acquisition also ran into strong regulatory resistance in Europe — the EU labelled it anticompetitive and launched an investigation. Years of legal battles cost the company money, management attention and reputation points on Wall Street.

The second problem is Chinese competition. BGI Genomics and its American offshoot MGI Tech offer sequencing equipment at dramatically lower prices. Geopolitical concerns around Chinese genomic data and security restrictions on BGI equipment in the US and EU complicate but don't eliminate this competition.

The third factor was the paradox of technological progress: the new NovaSeq X sequencing platform significantly reduced the cost of sequencing per sample, stimulating demand for sequencing services but also reducing the premium for the new machine. Illumina partially cannibalised its own margins with this move.

CRISPR companies: binary bets with Nobel laureate founders

In 2023, CRISPR Therapeutics and Vertex Pharmaceuticals received approval for Casgevy — the world's first CRISPR therapy approved in the US and EU for sickle cell disease and beta-thalassemia. A historic medical milestone. But:

The therapy costs over two million dollars per patient. The number of eligible patients is limited. Reimbursement from insurers in the US and Europe is slow, complex and uncertain. The commercial ramp is therefore significantly slower than the enthusiastic headlines from the time of approval would suggest.

Let me say it plainly: being the world's first CRISPR therapy does not automatically mean commercial success. The market waits for commercial traction and share prices stagnate or fall even as the science moves forward unstoppably. This is a typical trap of genomic investing.

Hype vs. profits: where are we in the cycle?

Genomics went through a classic Gartner hype cycle as a textbook example. The peak of inflated expectations in 2020–2021 was driven by a combination of Covid's longing for scientific miracles, zero interest rates, aggressive ARK fund marketing and a flood of retail investors. Then came the hangover — interest rates rose, distant cash flows were devalued and the sector deflated.

Today we are in a different phase. The technology genuinely works — Casgevy is proof. Clinical trials of CRISPR therapies for leukaemia, eye conditions, liver amyloidosis and heart diseases are progressing with advancing data. But the transition from scientific breakthrough to profitable business is taking longer than the 2020 optimists assumed.

How to add genomics to a portfolio without unnecessary gambling

Genomics is one of the most speculative sectors we discuss in this series — above biotech in general, comparable to the space industry. Healthcare is defensive. Biotech is speculation. Genomics is speculation on the edge of science with binary clinical trial outcomes.

If you want exposure, consider a spectrum of approaches. Illumina as an established player with real revenues and reduced valuation — less speculative, but still volatile. ARKG or a UCITS equivalent as an ETF for diversified exposure — but with full awareness of the higher TER and extreme volatility. A genomics position should not exceed 2–5% of the portfolio — anything more means excessive concentration in a sector where the majority of companies still don't earn money.

And a reminder: this is not investment advice. For the vast majority of investors, a global index ETF like VWCE is the better starting point, including genomics and biotech automatically at their natural weight. Adding a sector ETF consciously increases concentration — that should be a deliberate intention backed by conviction, not an impulsive reaction to an interesting scientific story in the news.