Illumina Steps Up Diagnostics Game, Acquires UK’s BlueGnome

9/19/12Follow @xconomy

Illumina wants to become not just a genomic instrument company, but a more diversified maker of genetic diagnostic tools that make it into everyday clinical use. Today it took another step in that direction.

The San Diego-based maker of DNA sequencing tools (NASDAQ: ILMN) said it has agreed to acquire Cambridge, UK-based BlueGnome for an undisclosed sum. BlueGnome is a leading player in the field of cytogenetics, in which researchers look at the structure and function of cells for genetic abnormalities that can lead to cancer, developmental delays, or infertility.

Illumina is the market leading maker of high-speed DNA sequencing instruments, which are making it possible to get an individual genome for $1,000 or less, and allowing scientists to answer all kinds of new biological questions that were impossible to answer before. While the research market has made Illumina a success story with a market valuation of almost $6 billion, its growth has slowed, and the company and its competitors see a much bigger market developing once genomics gets applied in everyday use for diagnostics and personalized medicine. Illumina earlier this year showed its commitment to these markets when it fought off a hostile takeover bid from Roche, saying it believed it had a better chance of capturing the new clinical opportunities on its own.

“The BlueGnome acquisition supports Illumina’s goal to be the leader in genomic-based diagnostics and enhances the company’s ability to establish integrated solutions in reproductive health and cancer,” said Jay Flatley, Illumina’s CEO, in a statement. “BlueGnome is the leader in the rapidly growing IVF market and is well-known for their software and comprehensive assay workflows.”

BlueGnome was founded in 2002 and has seen its flagship CytoChip product used in more than 200 labs since its introduction in 2006, according to a note this morning by JP Morgan analyst Tycho Peterson. The cytogenetic test is seeking to prove that it is better than traditional karyotyping—a method in which researchers look at the number and type of chromosomes in a cell—when they seek to detect genetic abnormalities. The company claims on its website that it has had some success in this push, achieving profitability.

By acquiring BlueGnome, Illumina is positioning itself to be a stronger competitor in the cytogenetics field to other toolmakers like Agilent (NYSE: A) and Affymetrix (NASDAQ: AFFX), Peterson said.

“With research somewhat challenged vs. prior years, Illumina has clearly increased its presence within this specific market, as part of the company’s strategy to expand in applied markets,” Peterson said.

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