Biological revolution drives medical and other healthcare advances

October 2021

Key points

This article is part of the Disruptive Innovation series.

  • Advances in our understanding of biology will transform the economy and society
  • New types of medical treatments are already being made possible by biotechnology companies whose platform-based business models more closely resemble the internet giants than traditional pharmaceutical firms
  • This type of disruptive innovation requires a multi-disciplinary approach and the right type of business culture, not just know-how

All investment strategies have the potential for profit and loss. Your or your clients’ capital may be at risk. Past performance is not a guide to future returns.

Biology is at an inflection point.

A convergence of technologies - including gene sequencing, biomedical imaging and machine learning – is making it possible to study biology at a scale, depth and speed that was unimaginable a short time ago.

For much of human history, our internal workings have been viewed as a kind of ‘black box’, explained investment manager Rose Nguyen at a Baillie Gifford event exploring disruptive innovation across several industries.

We could observe certain treatments as being effective, but the complexity of what was involved made it difficult to know in advance what would or would not work, she said.

New drug discoveries typically involved a lot of random screening and luck. Indeed, several of the biggest breakthroughs – including the common use of aspirin, penicillin and Viagra – came about in the unlikeliest of circumstances.

Viagra, for example, was originally developed to dilate blood vessels in the heart, but nurses checking on test subjects noticed many of the men were lying on their stomachs. Its active ingredient worked, but on a different body part to that expected. It was consequently developed as an erectile dysfunction treatment.

Vaccines have also traditionally taken years and vast sums of money to develop, with all the risks involved in dealing with live viruses.

But now smaller biotech companies are starting to create therapies via a more rational, automated and industrialised process.

In doing so, they aim to make biology a more predictable and controllable information science.

“The impact on humankind would be tremendous,” said Nguyen.

“And we can all be part of this journey by being supportive, long-term shareholders of the companies that are making this happen.”

WATCH: Baillie Gifford webinar on the biological revolution.


Programming cells

Advances in gene sequencing illustrate how quickly things are moving.

The cost of mapping out all the genes of a human being – known as the genome – was a little under $100m in 2001. It’s since fallen to just $700.

This dramatic drop in cost exceeds even that of Moore’s Law – Intel co-founder Gordon Moore’s observation that the relative cost of computing halves roughly every two years in line with a doubling of the number of transistors that can be put on a chip.

Cost per human genome

Source: National Human Genome Research Institute. Cost per genome data – August 2020.

The genomic sequencing provider lllumina – in which Baillie Gifford has been an investor since in 2011 – played a significant role in delivering these savings.

But identifying the order of the letters that represent the genetic code is only the first step. The next task is to see how the various genes relate to each other to help figure out the ‘computing language’ of biology.

To do that you have to get down to the cellular level. And there another holding, 10x Genomics, has developed machines that can profile tens of thousands of individual cells in a single run.

This makes it possible to compare healthy and diseased cells at scale to figure out which genes cause a disease. The technology also helps map out the biochemistry signals passing between cells in different parts of our body tissue. By narrowing down what to target, it’s possible to speed up the development of new drugs and establish which patients will be most responsive to them.

WATCH: Baillie Gifford animation on disruptive innovation


mRNA Covid vaccine

One of the clearest examples of how technological convergence is fuelling biotech advances is the development of messenger ribonucleic acid (mRNA) vaccines for Covid-19.

To understand why, this analogy may help:

Think of a cell as being a restaurant, and the DNA in its nucleus as being a recipe book. Now imagine a photocopy of a page from the book (mRNA) being sent to the kitchen (the cell’s ribosome) to tell the chef how to make a cake (a protein).

By substituting in alternative mRNA, you can cause different proteins to be made.

“Most of the time diseases occur because there are some problems with the information flow,” Nguyen explained.

“mRNA is just a piece of genetic code, and we can send it to the cell to instruct it to produce any protein that we want.

“Historically the problem was to deliver the mRNA to the right cell. But once you’re able to do that you can scale very quickly to treat different diseases of the same cell type simply by tweaking the code.”

Moderna, a Baillie Gifford investment, was able to develop an mRNA molecule in just 48 hours after obtaining the genetic blueprint of the virus.

This taught cells how to make copies of the spike protein that drives immunity against the virus.

Incredibly, Moderna was able to download the genetic data it required from the internet rather than having to experiment with the virus itself.

But what’s truly exciting for the future, is that this shouldn’t be a one-off. mRNA has the potential to become a technology platform that creates new drugs to treat cancers, autoimmune disorders and other ailments.

“We can turn our own cells into mini-factories to produce any proteins we want,” Nguyen said.


Scalable technologies

Other biotech investments made by Baillie Gifford’s fund managers include:

  • BioNTech. A German biotech company that teamed up with Pfizer to produce an mRNA vaccine to Covid-19. It also develops immunotherapies for cancer and other infectious diseases.
  • CureVac. A German biopharmaceutical developing an mRNA Covid-19 vaccine in collaboration with GlaxoSmithKline.
  • Argenx. A Belgian antibody specialist developing treatments for rare immune system disorders.
  • Exscientia. A Dundee University spin-out that uses artificial intelligence pattern-recognition techniques to precision engineer new drugs.
  • Alnylam Pharmaceuticals. A US biotech that uses RNA interference therapeutics to destroy faulty mRNA, preventing the creation of disease-causing proteins.
  • Lyell Immunopharma. A Californian start-up, which is reprogramming T-cells to help fight off solid tumour cancers.


All the companies mentioned above have something in common: they are trying to create a means to deliver multiple treatments over time rather than a single drug.

“Our approach is to identify companies that have a scalable technology platform that can be applicable to many different diseases,” Nguyen said.

“We believe repeatability is really key to commercial success, but also key in terms of the impact that they can deliver to society.”

Scalable technologies can lead to higher success rates and lower costs of drug development. For example, compared with the historical success rate of 10 per cent of drugs tested in humans, Alnylam has achieved an impressive success rate closer to 60 per cent. 

However, for companies operating at the intersection of biology and technology, success can come down to their culture.

It’s not merely a matter of bringing together data scientists and biologist under one roof, Nguyen explained. Companies must also foster an environment in which the two have mutual respect and can understand each other’s language.

“We have seen quite a few examples of companies that have failed because they could not foster that sort of collaborative culture,” Nguyen added.

“It starts at the top. You need the executive teams to be able to understand what it takes to do research in biology, what it takes to do research in computing, and what it takes to bring the two worlds together.”

Exscientia is one example.

Co-founder and chief executive Andrew Hopkins has a background in both drug development and data science. With this he was able to assemble an interdisciplinary team whose skills span medicinal chemistry, bioinformatics and machine learning

Accelerating change

The route to our current understanding of how best to provide medical care had been arduous.

Bloodletting was the standard for more than two millennia, Nguyen noted.

“President George Washington died after his doctors drained litres of his blood to treat him for a throat infection,” she said

It took just over 200 years to get from there to a point that a novel virus could have its genetic code sequenced and a vaccine molecule developed in a matter of days.

Now a confluence of technologies and a select number of companies capable of harnessing biology’s power means there’s an opportunity to accelerate the pace of change still further.

And while some investments may not achieve their promise, over the long term there should be major returns for patients as well as those who backed the healthcare revolution.


About the investment manager

Rose Nguyen
Rose joined Baillie Gifford in 2013 as an investment analyst. Rose worked on various regional and global strategies before joining the Health Innovation team as a Portfolio Manager. Having observed the innovations in multiple industries, she believes that the great convergence of different technologies and sciences will ultimately transform life science. Biology can move from alchemy and randomness to become a more predictable, deterministic and repeatable science, that will give rise to a plethora of exciting investment opportunities. She joined the Health Innovation team in September 2018 at the inception of the strategy. Rose graduated BA (Hons) in Economics and MPhil in Finance and Economics from the University of Cambridge in 2012 and 2013 respectively.

Words by Leo Kelion
Assistant editor, Intellectual Capital

You can read our other articles on disruptive innovation via the links below.

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