Global Gene Sequencing Leader Illumina Cuts 2023 Guidance Amid Rising Competition from Chinese Rivals

　　【Pharmaceutical Network Industry Dynamics] Recent news indicates that Illumina, a leading global manufacturer of gene sequencing instruments, has announced a reduction in its 2023 performance guidance, which is below market expectations. The company forecasts this year's revenue to reach between $4.99 billion and $5.03 billion, representing a year-over-year growth of 7% to 10%, lower than the market's general expectation of approximately 11% growth.
 

Illumina expects its non-GAAP operating margin to remain around 8%, with adjusted earnings per share for 2023 reaching $1.25 - $1.50, also below the market consensus of $3.10.
 

Affected by this news, Illumina's pre-market stock price fell 13.49% on Tuesday.
 

Data shows that Illumina, Inc. is mainly engaged in the development, manufacturing, and sales of life science tools and integrated systems for large-scale genetic variation and functional analysis. It provides services to customers in research, clinical, and applied markets through a variety of genomic solutions. The company was founded in April 1998 by David R. Walt, John R. Stuelpnagel, Anthony W. Czarnik, Lawrence A. Bock, and Mark S. Chee, with its headquarters located in San Diego, California.
 

In China's gene sequencing market, Illumina has occupied a vast market share in the past, almost monopolizing the entire market. In recent years, with the domestic opportunities brought by the policy of replacing imports with domestically produced alternatives, numerous local companies have continuously increased their R&D investment. Companies such as BGI Genomics, Berry Genomics, and MGI Tech have already made a name for themselves in the gene sequencing sector, actively competing for a share of the large market "cake," and are expected to embrace overseas market opportunities with their rising capabilities.
 

Among them, BGI Group has been listed on the ChiNext Board, with its market value once breaking through 100 billion yuan. Its subsidiary, MGI Tech, since its establishment in 2016, has achieved mass production of clinical-grade sequencers in the gene sequencing instrument field through technological innovation and product iteration. Its product layout and performance advantages can rival those of Illumina, Inc., and it has a more competitive cost advantage, showing strong growth momentum in performance; Berry Genomics successfully landed on the Shenzhen Stock Exchange by reverse merger with "Tianxing Instrument" and consecutively achieved eight limit-up trading days.
 

However, affected by the pandemic and other factors, the performance of Chinese companies has also shrunk. For example, BGI Group's Q3 report for 2022 showed that revenue for the first three quarters was 4.514 billion yuan, a year-on-year decrease of 12.38%; net profit was 747 million yuan, a year-on-year decrease of 47.16%. The company’s revenue has declined for six consecutive quarters, with the Q3 2022 revenue at 1.353 billion yuan, only half the scale of 2020. Berry Genomics' Q3 report for 2022 showed that its main business revenue was 1.053 billion yuan, a year-on-year decrease of 5.32%; net profit attributable to shareholders was -16.1942 million yuan, a year-on-year decrease of 157.74%. However, in Q3 2022, although the company's single-quarter main business revenue decreased by 1.54% year-on-year, the net profit attributable to shareholders was 2.4207 million yuan, increasing by 175.95% year-on-year.
 

The industry believes that, in the medium to long term, the gene sequencing market will continue to grow driven by downstream market demand. Everbright Securities recently mentioned that, based on the development experience of the U.S. sequencing market, the expansion of downstream application scenarios will significantly drive the demand for upstream sequencers. Among many downstream fields of sequencing, customer penetration in the reproductive health field is constantly increasing, tumor companion diagnostics are maturing, the early tumor screening market is poised for growth, new fields such as pathogenic microorganism detection are developing rapidly, and the demand from the research market is expected to drive a surge in demand for upstream sequencers in the mid-term.
 

According to BCC Research data, the global gene sequencing market size has rapidly increased from $2.4 billion in 2010 to $15.7 billion in 2021, with a compound annual growth rate (CAGR) of over 20%. It is expected to grow at a CAGR of 19.1% to reach $37.721 billion by 2026. In China, according to Markets and Markets' forecast, the sequencing instrument market size will reach 30.4 billion yuan by 2030, with a compound annual growth rate of 19.7% from 2019 to 2030.
 

Disclaimer: In no event shall the information or opinions expressed in this article constitute investment advice to any person.