Red-Hot IPO Coming to DNA Testing Market
“Please check this box if you’d like to be screened for genetic testing today.”
While answering a questionnaire at an annual doctor’s visit, this question popped up on their patient check-in tablet screen.
The tablet listed a smorgasbord of genetic screening tests from which to choose.
If you’ve visited your doctor recently, I’m sure you’ve been posed this question too.
After all, genetic testing is a booming industry.
Do You Really Know Your Family Tree?
To see how fast the industry is growing, just look at the direct-to-consumer DNA testing market.
Players like Ancestry.com are growing leaps and bounds in this niche market.
By 2022 the market for direct-to-consumer DNA testing is projected to surge to $310 million.
Even I couldn’t resist.
After participating in the Ancestry.com heritage testing, I now have further knowledge of my genealogy and family tree.
It’s fantastic information to know.
I enjoy sharing with friends and family how many countries my DNA traces back to.
And apparently, I’m not alone.
Ancestry.com’s business is performing so well that, per Bloomberg, the Utah-based company is potentially readying itself for an initial public offering (IPO) the second half of this year.
But this niche market is just a drop in the bucket when compared to the growth projections for the medical genetic testing industry.
5 Types of Genetic Testing
This is a market that’s steeped in the genetic testing questions posed to me on the doctor’s office patient check-in tablet.
Valued at $10.6 billion in 2017, the genetic testing market is forecast to soar to $22.5 billion by 2024.
Global Market Insights projects the compound annual growth rate for the industry will grow at 11.6% through 2024.
The genetic testing market includes multiple test types, like:
- Predictive testing — helps detect familial genetic disorders early.
- Prenatal and newborn testing — applied before or after birth to detect and treat genetic disorders early in a child’s life.
- Carrier testing — alerts patients if they carry certain genetic mutations.
- Pharmacogenomic testing — a drug-based genetic test that shows how a person’s body will respond to various medications.
- Diagnostic testing — used to help rule out or confirm genetic conditions.
Of the available test types, diagnostic testing encapsulates the largest market share of genetic testing.
Per Global Market Insights, diagnostic testing now accounts for $5.7 billion of the market.
Diagnostic testing is huge because the earlier a person can detect a disease, the faster it can be treated and hopefully eradicated.
How to Invest in DNA Testing
Overall, increased awareness of the benefits of early diagnosis for various diseases and growing patient demand for customized medicines will fuel the genetic testing market for years to come.
To ride the genetic industry wave, consider investing in the Ark Genomic Revolution ETF (NYSE: ARKG).
Per Bloomberg, this exchange-traded fund (ETF) invests in companies across many sectors, including health care, information technology, materials, energy and consumer discretionary, that are relevant to the genomics revolution.
Company holdings in the ETF include Illumina, Invitae and Intellia Therapeutics.
Since its inception in 2014, ARKG’s total return is 65%.
And year-to-date it’s up 16.6%.
To participate in this burgeoning industry, ARKG is a promising play.
Until next time,
Director of Investment Research, Banyan Hill Publishing