Helpful as the analogy to a tech stack may be, it’s important to keep its limitations in mind. Not only does the analog-and-physical nature of the syn-bio industry present challenges that are different from those of the purely virtual digital world, business’ understanding of syn-bio today is at a different stage than its knowledge of information technology. Consequently, the manner in which the syn-bio technology stack changes over time; the roles that companies can play in the stack; and, above all, how incumbents will gain competitive advantage will differ from the manner in which business responded to digital disruption.
The syn-bio industry stack is currently constituted of two operational levels, according to our research: the back end (or the technology level) and the front end (or the product and process level). Underlying them are meta-level conventions, protocols, and laws that govern scientific research and applications development in syn-bio the world over. (See the sidebar, “The Global Governance of Synthetic Biology.”)
Several conventions, protocols, and laws govern scientific research and applications development in syn-bio. At a universal level, the multilateral UN-sponsored Convention on Biological Diversity focuses on the industry’s regulation, its key protocols being the Cartagena Protocol—a framework for the safe use, handling, and transfer of modified organisms—and the Nagoya Protocol, which deals with access to, and sharing of, the benefits of genetic resources.
Other UN forums are discussing the creation of archives for biological samples as well as genetic data, which could affect the syn-bio industry tomorrow. While several countries, such as India, Malaysia, and Kenya, currently regulate access to genetic sequences from biological samples drawn in their countries, their attitudes could change over time.
Several not-for-profit organizations are designing, developing, and disseminating guidelines for the application of syn-bio by business. Institutions such as the International Genetically Engineered Machines (iGEM) Foundation, BioBricks, and MIT’s Registry of Standard Biological Parts have jointly developed standards for syn-bio parts, or bio bricks, which serve as the infrastructure for an open, commons-based approach. iGEM, for instance, was set up in 2001, and fosters education, boosts competition, and helps cultivate a collaborative and cooperative community. Similarly, the BioBricks Foundation, founded in 2006, supports the open and ethical development of biotechnology, and manages several open-source projects. And the MIT Registry has grown rapidly since its inception in 2003, with the number of parts in its catalog rising from fewer than 1,000 in 2004 to more than 20,000 in early 2023.
Skeptics fear that as business interest in syn-bio grows, startups scale, and investments increase, the current push to democratize syn-bio will change. If the rise of open source in software is any indication, though, these qualms may be misplaced. Digital technologies have successfully developed along two different paths: The closed-source route of proprietary software (exemplified by Microsoft Office) and the open-source world (symbolized by Linux). Similarly, business’ push for a syn-bio commons could be an opportunity, allowing it to access the expertise of a global syn-bio community, gain early access to emerging technologies, and develop value by sharing knowledge.
Still, many consumers will view syn-bio products and processes with suspicion. Business has no option but to participate in the discussions at the global, national, and industry levels about the conventions and protocols that will shape the syn-bio industry’s future as well as the critical role of the syn-bio commons.
Dominating the Back End of the Synthetic-Biology Industry Stack
The back end of the syn-bio industry stack is in a state of rapid evolution. In July 2022, for example, the London-based DeepMind announced AI-based predictions of the structures of around 200 million proteins. In November 2022, Meta’s researchers unveiled the probable structures of around 600 million proteins from bacteria, viruses, and many unclassified microbes. All that data will be made available for free, so researchers can type the name of any protein on a search engine and learn what its structure could be. This will save years of laboratory work and reduce R&D costs across the industry.
More paradigm-shifting changes of this kind are likely in the syn-bio industry, so it’s important for incumbents to stay abreast of the latest technologies. Operating at the cutting edge will demand specialized expertise, and organizations will be able to create new capabilities only by investing a great deal of time and capital. They must start by analyzing the changing nature of the three building blocks of the back-end stack: components, software, and hardware.
Components. These are the physical sections of biological materials that syn-bio firms create and supply to other firms to make manufacture and testing easier. These biological bricks—the equivalents of transistors in the IT industry—consist of several standard components that can be produced in large volumes. Among them are DNA lengths such as oligos and genes; RNA enzymes used in biosynthesis and protein modification; expression hosts such as model micro-organisms; and restriction and ligation enzymes—such as the popular CRISPR/Cas-9—which help scientists read, write, and edit DNA.
The early movers making syn-bio components in bulk, such as Twist Bioscience, are trying to dominate the components market. Their strategy is to become the largest sources of supply of the major syn-bio parts by using economies of scale to deliver components at prices lower than the costs at which incumbents will be able to produce them in-house. Many syn-bio components, such as DNA oligos and genes, are already close to becoming commodities although only a few ventures are manufacturing them at scale.
Other ventures have created syn-bio platforms that incumbents can use to develop, and even customize, components themselves. For instance, the Colorado-based Inscripta’s Onyx platform provides gene-editing tools that allow academic and commercial customers to create syn-bio components. At the push of a button, companies can design complex, CRISPR-edited cell libraries in two to four days’ time, generating up to 10,000 microbial strain designs per run and making thousands of edits to them.
Software. There’s a pressing need for different types of software solutions in the industry, from in-silico design and simulation to biosecurity tracking. So far, no company has developed off-the-shelf software that can satisfy every customer’s end-to-end requirements. Some ventures have developed software to meet their own needs, but that trend is unlikely to persist.
As the number of software tools needed increases; the sharing of standard parts rises; and more startups enter the market, syn-bio firms will increasingly rely on outsourced software such as ThreatSEQ’s biosecurity DNA screening software. And because of the network effects that software platforms generate, integrated solutions that connect easily and effectively with IoT-equipped laboratory devices will, probably, dominate the industry. (See the sidebar, “Software for the Synthetic Biology Industry.”)
Most syn-bio firms use six different kinds of software. They are:
- Design and workflow automation software for different parts of the design-build-test-and-learn cycle.
- Lab design software to conduct experiments in silico rather than in vitro. The programs simulate complex reactions and pathways, and startups can avoid the time and expense needed to carry them out in wet labs. The development of syn-bio CAD/CAM software, which can run through millions of permutations before suggesting physical experiments, is well under way. It will enable computer aided design for the discovery of new genes as well as the statistical optimization of component design, data inference, and pattern recognition. Databases such as KEGG (for metabolic pathways) and GenBank (for genetic sequences) can codify biological processes in machine terms while DNA can be printed, put into living cells, and the physical experiments can run alongside virtual ones.
- Biomolecular visualization software enables researchers to picture synthesized molecules in three dimensions to facilitate design. They are a great way of raising awareness about biological processes. For instance, PyMOL by Schrodinger is an open-source visualization software that provides a comprehensive solution to render and animate biological structures, such as proteins, in 3D.
- Laboratory information management systems to track samples and workflows. For instance, Moderna used Dassault Systemes’ Medi Data suite to accelerate clinical trials when it was developing its COVID-19 vaccine.
- DNA-screening software that preemptively assess the creation of dangerous biomolecules, such as pathogens and allergens, through gene synthesis. This will grow in importance as syn-bio products come under more scrutiny. ThreatSEQ’s DNA screening software, built on a compilation of more than 10,000 sequences of concern, claims to provide actionable information to developers about the threat level of any sequence.
- Web portals for interacting with customers.
Hardware. Companies will need many kinds of hardware depending on the syn-bio technique and process they use to automate processes in laboratories as well as bio-industrial facilities. They will include micro-fluidic growth kits and fluid-moving robotics, for instance. Much of this hardware can be controlled through digital interfaces and integrated into automatized workflows.
Companies will require equipment to manufacture products at scale. They may be able to use the same hardware for more than one process in the future, but doing so today requires customization and retrofitting, which will add to costs. Meanwhile, the rise of cell-free biology—which entails using a cell’s processes, rather than the entire cell, to minimize complexity and increase precision—will catalyze the creation of tools for cell miniaturization, integration, and tracking.
The hardware market is likely to be extremely competitive, the extent of which will depend on the technology, the degree of precision customers need, and the capital costs of manufacturing hardware. However, a few leaders, such as Thermo Fisher Scientific and Beckman Coulter in automatized robotic laboratory systems, are likely to emerge in specialized niches. These firms enable lab optimization, scheduling, and testing, and make experimentation easier, less expensive, and reproducible.
Some back-end pioneers offer innovation-as-a-service to help incumbents create syn-bio applications and processes. The London-based Synthace’s software, for instance, allows scientists to communicate with its lab hardware, so they can design, run, analyze, and repeat experiments effectively and efficiently. Similarly, the San Francisco-based Strateos has developed cloud labs— remotely accessible labs with lab control software—where companies can conduct experiments in facilities they may never see.
Because they need to provide turnkey solutions, the innovation-as-a-service companies are being compelled to enter into alliances, licensing arrangements, and collaborations with each other and with incumbents. That will make vertical integration between different back-end players, and incumbents, possible and inevitable.
Having said that, bringing together cutting-edge hardware and software tools to build an integrated bio-foundry—a facility which designs, builds, and tests genetic constructs for syn-bio strains as well as discovery pathways for applications—will be quite expensive. All the data shows that the capital required to set up a modern bio-foundry is an entry barrier, and increases in speed, scale, scope, and precision will only demand more investment. One telling indicator: in 2022, Schmidt Futures estimated that biotechnology facilities would require a capital investment of between $150 million and $200 million while earlier, in 2014, Berkeley Lab projected that Berkeley Open BioFoundry’s maintenance expenses would be around 15% of the capital investment.
Only a few large corporations and startups therefore possess the ability to raise the resources needed to build integrated bio-foundries and develop the capabilities to operate them 24x7. Incumbents that already employ some syn-bio talent and see syn-bio applications disrupting their futures will, most likely, invest in bio-foundries. Others will find different ways of engaging with firms that have already invested in setting up bio-foundries.
Distinguishing Between the Front-End Players of the Synthetic-Biology Industry Stack
That shifts the spotlight to the front end of the syn-bio industry stack. By deploying the stack’s back end, companies can create syn-bio applications, which constitute the consumer-facing end. Those may be syn-bio products such as cell-based meats; syn-bio processes such as those that can leach minerals or manufacture chemicals; and all-new materials such as mycelium-based leather.
Interestingly, a company can use the same raw materials and technology to manufacture different syn-bio products, albeit with some modifications, so, over time, the front end of the syn-bio stack is likely to become more fragmented than the back end. Our studies show that two different kinds of syn-bio application firms have emerged and are likely to play a key role tomorrow: vertically specialized developers and horizontally structured platforms.
Vertically specialized syn-bio application developers focus on making syn-bio products or processes and bringing them to market. They include, for example, syn-bio food companies such as Impossible Foods and Beyond Meat; leather-makers such as Modern Meadow and Myco Works; dye makers such as PILI; and collagen and elastin makers such as Geltor.
Most syn-bio product makers are vertically focused and product oriented even though they use different raw materials and technologies. These firms have built relatively small bio-foundries whose scope is limited, and, over time, they are likely to scale. This approach was pioneered in the pharmaceuticals industry, with one of the most prominent examples being BioNTech, a startup which is using Messenger RNA to develop a range of therapies.
Learning from pharmaceutical startups, several syn-bio startups are experimenting with using related processes to make different products. For instance, Mosa Meat specializes in manufacturing meat from cow cells, but it has also diversified into making bio-leather because the mammalian cell-based processes for meat and leather are quite similar. Likewise, companies such as Amyris and Geltor have started producing specialty chemicals as well as other industrial raw materials because of the economies of scope they’ve realized by studying microbial chasses and their metabolic pathways.
The trouble is that the development of syn-bio products is expensive and time-consuming. In 2000, for instance, DuPont worked with a syn-bio startup, Genencor, to develop a process to create 1,3-propanediol (an organic compound used mainly as a building block in the production of industrial polymers such as adhesives, laminates, coatings, and moldings) from a plant-derived starch instead of a petroleum-based derivative. However, it took six years before DuPont and Tate & Lyle Bio Products were able to kick off the commercial production of the bio-engineered propanediol at a newly built $100-million facility. Incumbents must be prepared to manage many surprises when scaling syn-bio technologies.
Horizontally structured application platforms use continuous process technology stacks to develop syn-bio applications but don’t market the applications themselves. Bio-foundry platforms such as Ginkgo Bioworks and Arzeda keep development costs attractive for partners in different industries by continuously finetuning research processes; refining foundries; and training AI/ML models on data, theory, and research from different industries. By investing human and financial capital up front, the bio-foundry platforms hope to stay ahead, especially in tomorrow’s cell-free environment.
The syn-bio platforms have ambitious visions; they believe that incumbents in many industries will have to use their services. They plan to map a large number of metabolic processes; become the biggest sources of syn-bio discovery; and emerge as the innovation layer that bridges the back and front ends of the syn-bio stack. Their business models include entering into revenue-sharing agreements, charging R&D fees, and even taking equity stakes in the ventures that will make the products and processes they develop—all without their having to manufacture or market them. As Jason Kelly, Ginkgo Bioworks’ CEO, told Bloomberg Businessweek Debrief in a recent interview, “. . . You’ve got to build a lab. [. . .] (That’s) an enormous upfront expense [. . .] So, what we’re saying is: Just use our platform. We’ve already built all that. We have those huge, fixed costs and you get a low marginal cost. And I will program that cell for you . . .”
Despite the potential that syn-bio application-development platforms have displayed, the strategy remains relatively untested. Not only is it tough for the bio-foundry platforms to keep costs competitive, large customers are often reluctant to partner with them. That’s partly because the scalability of output isn’t a given and because the platforms insist on retaining the rights to the intellectual property they create. Until the syn-bio platforms figure out how to become commercially viable, they will continue to be in a state of flux.
Some are hence looking for new approaches. For instance, the California-based Zymergen pivoted from its original strategy of creating a general syn-bio innovation platform to becoming a creator of applications only for the chemicals and plastics industries (before Ginkgo Bioworks acquired it). Much of its revenues came from helping companies re-engineer microbes they were already using to increase production, reduce costs, or both. Similarly, Checkerspot, a syn-bio material innovation platform based on algae, is also showing signs of shifting strategies. It is integrating its operations vertically by making bio-sourced polyurethane and has spun out firms such as WNDR Alpine, which markets snowboards made from green plastic, to manufacture the novel products it has developed.
Paradoxically, incumbents, which possess many tangible and intangible assets as well as well-honed technical capabilities and talent, may be best positioned to help syn-bio startups persist with their strategies. The latter face many challenges, in addition to discovery and development, such as capital requirements, manufacturing expertise, market access, and especially regulatory knowhow, which can prove to be a major hurdle. For instance, startups such as Impossible Foods, Mosa Meat, and Meati all use syn-bio techniques to cultivate meat substitutes, but their processes are based on, respectively, microbes, cells, and fungi. Governments will regulate them differently, depending on their processing methods and raw materials, so these firms will need different regulatory approvals to get through each stage of their processes. That’s why striking partnerships with seasoned incumbents will help.
Going it alone in syn-bio is a challenge for incumbents too, even those that have technological expertise such as pharmaceutical manufacturers. The knowledge barriers are too high for incumbents to orchestrate the development of new genetic strains, so it’s likely they will prefer to partner with other firms to develop new products and processes. Many will team up with, or acquire, startups that have developed applications that fit into their existing product pipelines. That will allow the incumbents to move up the syn-bio learning curve and profit from the new opportunities that syn-bio brings to their industries—a strategy the pharmaceutical majors have honed for two decades now.
Synthetic Biology Strategies for Success
Few incumbents will be able to execute a successful syn-bio strategy unless they engage with the right players and use the right partnership approach. Moreover, syn-bio technologies and firms at both the front and back ends are changing rapidly, so engaging with an emergent stack demands a shift in the incumbents’ approach.
Instead of instinctively entering into transactional (buyer-seller) relationships, as they are prone to, established companies would do well to fashion a strategy of codevelopment and partnering with several companies. In other words, they must learn to create syn-bio ecosystems (or actively participate in emerging ones), which are ideal to tackle new opportunities that extend across traditional sectoral boundaries as well as fast-changing businesses that require the acquisition of novel capabilities.
Depending on the context, incumbents can pursue one, or more, of three strategies, asking themselves key questions that will help them make the most effective choices. (See Exhibit 2.)