Rivals Illumina and Thermo Fisher Join Forces to Defend Market Share at J.P. Morgan Healthcare Conference

Another YearJ.P. Morgan Healthcare Conference. Each year, numerous biotechnology companies choose this event to announce their major breakthroughs. Illumina is no exception, with announcements such as the “$1,000 Genome” in 2014 and the NovaSeq in 2017. Every year, the company sparks intense discussion during the conference.

Although Illumina has yet to unveil its long-awaited “$100 genome” product, the two announcements it made on January 8 are equally intriguing.

1. Collaboration. Illumina and Thermo Fisher Scientific jointly announced the signing of a commercial agreement that licenses Illumina to sell Thermo Fisher Scientific’s Ion AmpliSeq technology to researchers using Illumina’s next-generation sequencing (NGS) platforms for scientific research.

Ion AmpliSeq features advanced amplicon technology that efficiently amplifies DNA and RNA from trace samples, making it suitable for various research areas including scientific research and in vitro diagnostics.

The agreement emphasizes that Illumina will obtain the research sales rights for Ion AmpliSeq, and Illumina will sell the products directly to customers under the name "AmpliSeq for Illumina." Thermo Fisher Scientific will continue to sell Ion AmpliSeq reagents to Ion Torrent’s NGS customers for in vitro diagnostic (IVD) and research use only (RUO) purposes, and retains the right to apply this technology to other next-generation sequencing platforms.

Mutual benefit through resource exchange is not uncommon in inter-company licensing agreements. However, the collaboration between these two companies is rather surprising.

Illumina and Thermo Fisher Scientific are both giants in the sequencing equipment market, with Illumina being the dominant player globally (2016 data shows that Illumina and Thermo Fisher Scientific held market shares of 71% and 16%, respectively). The two companies occupy the top two positions in market share rankings and are each other’s most direct competitors.

For instance, in the Chinese market, Illumina partnered with Berry Genomics, and Annoroad Gene Tech developed the NextSeq CN500 and NextSeq 550AR sequencers tailored to the needs of China’s non-invasive prenatal testing (NIPT) market. These instruments have received approval from the China Food and Drug Administration (CFDA) and are commercially available in China. Sequencing platforms approved by the CFDA can be deployed in hospitals, where they can be operated independently.

In addition, Illumina has successively established partnerships with Burning Rock Biotech, Novogene, and AmoyDx. Under these collaborations, Illumina provides instruments and related reagents, while its partner companies develop assay kits for applications in areas such as oncology diagnostics and reproductive health.

Thermo Fisher Scientific has licensed Daan Gene and CapitalBio to jointly develop the DA Proton and BioelectronSeq sequencers, respectively. Meanwhile, Thermo Fisher Scientific also has a large number of followers.

The domestic battlefield is merely a microcosm of their global markets, where these two companies are each other’s most direct competitors.

So this time, rivals have come together to discuss cooperation. What is the reason? A significant factor is the emergence of a common competitor in the market.

Illumina, Thermo Fisher Scientific, and Roche are the three giants in the sequencing instrument market. They control the lifeline of the upstream sequencing industry and hold absolute sway globally. As the sequencing industry matures and the market expands, some of their customers have begun to enter the upstream market, becoming competitors.

In the early years, as these companies’ technologies and market presence were still immature, few products emerged even when they announced their entry into the upstream market, posing little threat to later entrants. Over time, however, these companies have gradually matured in both talent and technological reserves, allowing former followers to grow increasingly competitive.

Today, Illumina and Thermo Fisher Scientific are surrounded by a new wave of competitors eyeing their dominance, eager to break into the core of the market.

BGI Genomics has launched two new sequencers this year. Although their market share remains far behind that of the HiSeq X and Life Ion Proton, BGISEQ has demonstrated product feasibility through scientific research applications and is gradually gaining industry acceptance and recognition.

In April 2017, the open-access journal GigaScience published the first human whole-genome resequencing data generated by the BGISEQ-500 sequencing platform. The release of these BGISEQ-500-related sequencing data laid a foundation for the development of domestically produced sequencers in China. Among the datasets published by GigaScience, a portion consisted of comparative analyses between sequencing data from the BGISEQ-500 and Illumina’s HiSeq 2500. The results demonstrated that the BGISEQ-500 PE100 and HiSeq 2500 PE150 datasets exhibited high alignment rates, similar genome coverage, and concordant variant detection outcomes.

In just over a year, the BGISEQ-500 platform has yielded 23 high-impact publications in international academic journals, with a cumulative impact factor of 142.

Furthermore, for Chinese enterprises, domestically produced equipment holds greater advantages in terms of product pricing and after-sales service quality. With products offering both Price Guarantee and Quality Guarantee, coupled with the macro trend of import substitution in the medical device sector, BGI Genomics is highly likely to gradually challenge their position in the domestic market.

The general-purpose sequencer of the BGISEQ-500 platform, along with its supporting reagents, the NIFTY® test kit, and the nucleic acid extraction kit, all obtained the EU CE Mark for medical devices in 2017. This signifies that the sequencers and their products, intelligently manufactured in China, comply with the regulatory requirements of the European In Vitro Diagnostic Medical Devices Directive and meet the EU’s stringent safety and health standards. Furthermore, this indicates that BGI’s sequencers are positioned not merely as domestic alternatives but are poised to expand into international markets.

Joydeep Goswami, President of Clinical Next-Generation Sequencing and Oncology at Thermo Fisher Scientific, stated, “Through this agreement, more research customers can now benefit from the advantages of Ion AmpliSeq technology. Meanwhile, Thermo Fisher Scientific will continue to promote its Ion Torrent targeted sequencing solutions in the research market and accelerate their momentum and attention in the clinical sector.”

This agreement enables Illumina’s customers to leverage targeted resequencing as a follow-up to large-scale exome and whole-genome exploratory studies. It ultimately supports both companies in driving scientific progress in human disease research by providing comprehensive NGS workflow solutions.

“This collaboration represents a significant step forward in making high-performance, flexible amplicon reagents available for Illumina’s market-leading sequencing systems,” said Mark Van Oene, Chief Business Officer at Illumina. “Existing customers can now leverage AmpliSeq reagents to get more out of their systems.”

In addition to competing next-generation sequencing (NGS) platforms, third-generation sequencing instruments are gaining increasing acceptance. In China, Hanhai Gene’s third-generation sequencer has received approval from the China Food and Drug Administration (CFDA) for clinical use and sequencing applications. These developments have placed pressure on NGS manufacturers, who face not only the risk of losing market share to competitors within the same sector but also threats from a different “species” of technology.

Third-generation sequencers are not an upgrade of second-generation sequencers, but rather a sequencing technology based on an alternative technical approach. Third-generation sequencing technology refers to single-molecule sequencing technology, which enables the individual sequencing of each DNA molecule.

The principles of third-generation sequencing technology are primarily divided into two major technical camps:

The first major category is single-molecule fluorescence sequencing, with representative technologies being the SMS technology from Helicos Biosciences (USA) and the SMRT technology from Pacific Biosciences (USA).

The second major camp is nanopore sequencing, represented by the UK-based Oxford Nanopore. The novel nanopore sequencing method employs electrophoresis technology.

Third-generation sequencing compensates for the short read lengths of second-generation sequencing, but its accuracy has long been considered underwhelming. Fully aware of this critical weakness, the technology is undergoing continuous upgrades and iterations.

Taking Oxford Nanopore’s MinION as an example, the error rate during its early trial phase in 2014 was approximately 30%. By 2016, the latest R9 version had reduced the error rates for various types of DNA sequencing to 2–13%. The R9.4, officially released in October 2016, further enhanced the overall performance of the device.

Furthermore, Oxford Nanopore has exclusively launched miniaturized sequencers, such as the PromethION, a flatbed sequencer slightly larger than an iPad, and the MinION, a handheld sequencer about the size of a USB flash drive. Its conceptual product, the SmidgION, is even compatible with mobile phones, potentially ushering gene sequencing into the smartphone era.

In addition to its sequencer products, Oxford Nanopore is also pursuing other breakthroughs. In 2016, the company launched an automated sample preparation system, aiming to reduce sample preparation time to just 10 minutes. The new product can convert raw biological samples into a form ready for immediate sequencing without manual intervention, while retaining the portability characteristic of its predecessors and enabling direct integration with MinION or PromethION sequencers.

Oxford Nanopore is a young company that represents not just the production of sequencing products, but more importantly, conceptual breakthroughs. Traditionally, gene sequencing was believed to require laboratory settings, involving cumbersome procedures and large-scale instruments. However, manufacturers of compact sequencers, exemplified by Oxford Nanopore, have moved the sequencing process out of the lab—even into outdoor environments and outer space.

Perhaps these portable, real-time sequencing products have the potential to change the game in the industry, much like Apple’s release of the iPhone in 2007.

Faced with market threats, it is a prudent strategy to join forces and first undermine new entrants. However, if the product remains unchanged, merely altering distribution channels appears insufficient to defend market share; consequently, both companies unveiled new products at the conference.

Thermo Fisher Scientific announced the launch of its latest next-generation sequencing instrument, the Ion GeneStudio S5 Series, at the conference. This benchtop sequencer is accompanied by five chips for the Ion 550 system.

The Ion GeneStudio S5 Series can achieve read lengths of up to 600 bp, making it suitable for research in oncology, genetic disorders, microbiology, and infectious diseases. With its flexible chip configurations, the new sequencing platform supports both small- and large-scale projects across various research fields while reducing experimental costs.

Illumina has also launched another compact sequencing system, the iSeq™ 100. Occupying just one square foot, the iSeq 100 integrates NGS testing capabilities in a form factor more compact than any of Illumina’s previous sequencers. The new product combines the company’s mature Sequencing by Synthesis (SBS) technology with Complementary Metal-Oxide-Semiconductor (CMOS) detection technology, representing an entirely different architecture that significantly reduces costs while delivering high-accuracy data.

More notably, the sequencer is currently priced at just $19,900, making it affordable for nearly all laboratories.

“With a price tag of under $20,000, the iSeq 100 enables any researcher to enjoy the precise performance of Illumina sequencers in their own laboratory,” said Francis deSouza, President and CEO of Illumina. “The iSeq 100 provides stable and reliable service for a range of applications, including germline and somatic tumor analysis, 16S microbial analysis, and targeted gene expression.”

Illumina will continue to develop the iSeq architecture, progressively increasing data output while reducing run times. These future improvements will help the company tap into new markets, expanding NGS technology into application areas such as rapid microbiome sequencing, foodborne pathogen detection, and surveillance of healthcare-associated infections.

The iSeq 100 is now available for pre-order and will ship in the first quarter of 2018. However, the $19,900 price tag applies only to the United States; prices in other regions may vary.