Synthetic biology in consumer goods: The next big frontier
Contributor: Galya Laskar
10 Feb 2022
Synthetic biology ("synbio") uses genetic engineering to alter a cell’s DNA to make target molecules for manufacturing use across industries. It already plays a role in healthcare, has shown promise in energy and our Research team believes that consumer goods are the next big frontier. Our team estimates a $50-125bn market opportunity today, yet synbio’s full potential isn’t on investors’ radar.
Contributor: Galya Laskar
10 Feb 2022
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1. Synbio is more sustainable than traditional manufacturing methods
Synbio is not new; it’s how insulin and even cheese have been made for decades. But against a backdrop of heightened ESG focus among consumers, corporations and investors, synthetic biology has the potential to be very effective in replacing carbon-heavy manufacturing methods at scale.
Since synthetic biology processes are based on coaxing plant, animal or microbe cells to effectively turn into “cell factories,” (see Figure 1), they do not require the same resources and raw inputs that traditional manufacturing processes may require. As a result, synbio manufacturing likely has dramatically lower greenhouse gas emissions, and uses less land and water. Furthermore, to the extent that synbio manufacturing processes can use renewable energy and renewable inputs (if not waste product), they could well be carbon-neutral or carbon-negative.
Figure 1: Synthetic biology is often described as being just like the beer-making process, with the yeast cells programmed to make something else instead of beer
2. The possibilities – from a scientific perspective – are limitless
The more researchers learn about genomics, the more they can program DNA; much like software engineers can program computers. This translates to a wide range of roles that synthetic biology can play in consumer goods production (see Figure 2).
Figure 2: Synthetic biology can play a wide range of roles within consumer goods supply chains
Source: Barclays Research
3. A key hurdle is capacity
Synbio processes often occur in bioreactors and fermenters, for which there is limited capacity across the industry. Consulting firm McKinsey estimates that for the cell-based meat market alone, the industry would need 220-440mm liters of fermentation capacity to reach a $25bn market size by 2030. To put that into perspective, the pharma industry’s current cell-culture capacity is estimated to be between 10-20mm liters.1 Increasing capacity is an expensive endeavor and key questions are 1) who will fund it? and 2) who will build it?
Our Research analysts believe synthetic biology is still in its nascent stages, but its adoption by various industries is poised to accelerate. Total funding behind synthetic biology ventures has rapidly accelerated in recent years, and this momentum, along with consumer demand for more sustainable products, ultimately supports our Research team’s view that synbio is poised to play a bigger role in consumer supply chains over time.
Figure 3: Total funding behind synthetic biology ventures has rapidly accelerated in recent years, from roughly $1bn in 2016 to nearly $8bn in 2020
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About the expert
US Thematic Research
Galya Laskar joined Barclays' Equity Research department in 2014 and covers U.S. Thematic Research, focusing on Consumer and Healthcare. From 2014 to 2019, she supported coverage of the Packaged Food sector. Prior to joining Barclays, Galya was a Senior Associate at a boutique TMT investment banking firm. Galya started her finance career in 2011 at a global investment bank. Galya received her B.A. from the University of California, San Diego, where she majored in Urban Studies & Planning and Political Science. She received her M.B.A. from Columbia Business School.