Gene Testing Market Contraction? Illumina VP Li Qing Highlights Divergence Between U.S. and Chinese Markets

Upstream Monopoly in the Gene Sequencing Industry Is Evident: The Combined Revenue of the Second- through Tenth-Largest Global Genetic Testing Companies Falls Short of Illumina Alone, Yet Business Contraction Has Emerged as a Key Theme for Illumina This Year.

On July 11, Illumina announced preliminary revenues for the second quarter of fiscal year 2019. The company projected Q2 revenues of approximately $835 million, compared to $830 million in the second quarter of 2018, indicating essentially flat revenue with no significant growth.

Regarding the reasons for the decline, the primary factor was that revenue related to the Population Genomics Project was approximately $30 million lower than expected. This included large-scale purchases of sequencers and consumables for certain projects, which were scheduled to be completed in late June but were not finalized as planned; they are now expected to be completed later in 2019.

In addition, the consumer-facing (DTC) market remained weak, with related revenues approximately $10 million below expectations, primarily impacting the chip business.

Meanwhile, Illumina lowered its full-year revenue growth forecast from 13%–14% to 6%. Sequencing business revenue is expected to grow by approximately 10%, driven by a roughly 15% increase in consumables, while sequencing services and other businesses saw a slight year-over-year decline. Microarray business revenue is projected to decrease by about 14% year over year, primarily reflecting the current weakness in the direct-to-consumer (DTC) market. NovaSeq system shipments in 2019 are expected to be flat to slightly higher compared with 2018.

On November 7, during the Fortune Global Tech Forum held in Guangzhou, Li Qing, Vice President and General Manager of Greater China at Illumina, pointed out that many of Illumina’s customers in the United States are mass-market genetic testing companies. These companies initially rose to prominence by leveraging advances in genomics to provide ancestry analysis to the general public. However, due to the relative saturation of the U.S. market this year, these mass-market genetic testing firms have experienced a certain degree of business decline, which has subsequently led to a contraction in sequencer-related commercial activities. Nevertheless, in the field of genomics, future exploration of the impact of genes on health, lifestyle, and nutrition offers promising directions for development.

However, unlike the contraction in the U.S. market, most Chinese gene companies are still in a phase of continuous investment increase and rapid growth.

Li Qing pointed out that Illumina’s customers, such as 23Mofang and WeGene, are rapidly expanding in this field, while Illumina is also prioritizing the establishment of an IVD enterprise platform.

Illumina focuses on the market for sequencing instruments and consumables, while collaborating with numerous partners to develop comprehensive end-to-end solutions.