Six Reasons Why Illumina Has Nothing to Fear from Thermo/Life
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the machines they have from Illumina. They can do a lot of cool stuff with them. And when they publish career-making results in Nature or Science based on experiments done on an Illumina machine, other genomics labs take note.
—The clinical genomics movement is catching on, and it depends on Illumina. While the Ion Torrent machine and PacBio instrument have some nice features, accuracy is king when physicians get involved and start using DNA sequencing for diagnostic purposes. Illumina instruments aren’t perfect—no machine is—but it has the best combination of speed, price, and accuracy in its product lineup. It can look at gene expression, gather data on certain regions of the genome (genotyping), or it can sequence the whole shebang, the complete 6 billion-letter genome signature of an individual. Illumina was also shrewd to make sure that its smaller MiSeq instrument could be used to double-check the accuracy of runs done on its high-end HiSeq instrument, which makes it so researchers don’t need to buy a different company’s tool for validation runs.
Just in the past couple weeks, I’ve spoken to a couple of different genomic diagnostic companies on the West Coast—Seattle-based Adaptive Biotechnologies and San Carlos, CA-based Natera. Their business, like many other aspring clinical genomics players, depends on their creative use of Illumina’s HiSeq machine. While Ion Torrent and a couple other machines are OK for research, Illumina is the only platform technology that diagnostic companies can seriously consider at this point.
—Illumina has shown a ruthless streak lately, and it will pounce on weakness. I have no way of knowing, but it wouldn’t surprise me if Illumina’s management team is thinking about how to twist the dagger into Ion Torrent now that it has been swallowed up by Thermo Fisher Scientific. Illumina plays to win and isn’t afraid to ruffle feathers along the way. It raised prices last year on diagnostic companies it supplies with reagents. It fights hard over intellectual property in the legal arena. It tried to block the BGI/Complete Genomics sale by offering Complete’s shareholders a higher bid, and when that didn’t work, it tried to derail the deal by appealing to the U.S. government that some special genomic sauce shouldn’t be given away to China. It would make sense if Illumina pushed hard now to poach some top talent out of Life Technologies, right when many are uncertain about their future with the company.
Remember, Illumina has fought some hard battles and won. It fended off a hostile takeover from Roche just one year ago, when the Switzerland-based company offered $44.50 a share, which I argued was an insulting low-ball offer. Illumina stock closed Friday at $62.61. Looking at that stock price has to remind Illumina management every day that they were rewarded for their toughness.
—Illumina has been building an Apple-style “walled garden” that’s attractive to join, and painful to leave. No other company, certainly not Ion Torrent or even a version of Ion Torrent with a smart new corporate sugar daddy, can come close to Illumina’s full product lineup. Illumina has a high-end machine (HiSeq), an excellent low-cost alternative (MiSeq), automated sample prep to make the experiments easy, cloud computing service (BaseSpace) to handle the DNA data from the machines, and a growing array of independent software applications you can get through Illumina to interpret/analyze the DNA data.
“You can see Illumina trying to consolidate it into a big vertically integrated system. Like Apple, they basically have control over the whole workflow from beginning to end,” MacArthur says. While Illumina has made some awesome tools that are driving biological innovation, that sort of market power in such an important field worries me a bit. But that’s another column for another day.