The healthcare sector has always been about innovation. From the smallpox vaccine at the end of the 18th century to the first organ transplant in the middle of the 20th, the long-term growth in healthcare industry has thrived on new technologies and therapies. As our population continues to age and grow, finding those new innovative healthcare solutions will take on a new urgency. To that end, broad-based healthcare sector funds like the iShares S&P Global Healthcare (ARCA:IXJ) have found their ways into a variety of long-term oriented portfolios. Perhaps, the most exciting and potentially lucrative innovation in the healthcare sector is the emergence of personalized medicine. For investors, the upcoming trend could be one of the biggest portfolio plays of all time.

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Genetic Mapping Gets Cheaper
One of the more sobering medical statistics is that an estimated 90% of prescription drugs work only about 50% of the time. That leaves plenty of waste and potential errors, especially when time is a critical factor. But, what if doctors were able to tailor treatments specifically to your genetic makeup in order to make sure they work better? Advances in gene sequencing are making that dream a reality.

At its core, genome sequencing is a process that reads the DNA in an organism. The first human genome was sequenced in 2003 after more than 13 years and at a cost of nearly $3 billion. However, new advances in equipment and software have now driven that cost down to a mere $10,000. At $10,000, sequencing would cost less than routine imaging MRI scans and could become a widely used diagnostic tool across hospitals. Analysts estimate those costs will continue to fall by the end of the year.

SEE: Where Can Americans Go For Cheaper Healthcare

This will allow doctors to prescribe therapies and drugs that will work for each individual patient. That means fewer trial and error prescriptions, lower overall healthcare costs and a steep drop in the number of adverse drug reactions/deaths. Already, several biotech and pharmaceutical firms have begun using sequencing data to design custom drugs for patients. All in all, analysts at Fidelity predict that the U.S. personalized medicine market will more than double to $450 billion by 2015 at roughly a CAGR of 11% per year.

Betting on the Trend
Given the booming long-term potential in personalized medicine, investors may want to consider adding the sector to a growth portfolio. The broad-based iShares Nasdaq Biotechnology (Nasdaq:IBB) makes a great starting point for investment. The ETF tracks 120 different biotech firms, including many that are working on personalized medicine products. This includes exposure to life science technology equipment companies like Qiagen (Nasdaq:QGEN) as well as molecular diagnostic company Myriad Genetics (Nasdaq:MYGN). The fund charges a rock bottom expense ratio of 0.48% and should see higher gains, as personalized medicine takes off. Likewise, the PowerShares Dynamic Biotech & Genome ETF (ARCA:PBE) can be used as well.

SEE: An Inside Look At ETF Construction

For investors looking to bet on the firms that are really responsible for making this movement happen, look no further than Life Technologies (Nasdaq:LIFE) and Illumina (Nasdaq:ILMN). Life sells a plethora of various biotech and science tools, but its Ion Proton Sequencer is the game changer. The $149,000 device is capable of decoding a human genome in one day at a cost of only $1,000. Already Life has shipped several of the units to universities. Likewise, Illumina has launched its HiSeq 2500 multi-mode next-generation sequencer for commercial launch in the second half of 2012. However, Illumina's future promise has not gone unnoticed. Swiss pharma giant Roche (OTC:RHHBY) has set its sights on growing its diagnostics segment and recently launched a hostile bid for Illumina.

SEE: Earning Forecasts: A Primer

The Bottom Line
With our population continuing to age and grow, innovation in the healthcare sector will need to move just as fast. One such game-changing innovation is the growth of genetic sequencing and personalized medicine. For investors, this mega-trend could lead to long-term profits. The previous picks, along with Bio-Rad Laboratories (NYSE:BIO), are interesting ways to play the growth in the sector.

At the time of writing, Aaron Levitt did not own shares in any of the companies mentioned in this article.

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