Hot competition for genetic testing market share is a signal to medical laboratories to ramp up their molecular and genetic testing capabilities
Financial analysts see something of an “old west” style shootout on the horizon for genetic testing in the clinical laboratory testing market. Market leaders in next-generation gene sequencing are prepared to use acquisitions to build dominant shares in a gene testing market that experts say could hit $25 billion by 2022.
Reporters at Bloomberg Businessweek believe that San Diego-based Illumina, Inc. (NASDAQ: ILMN) is girding up to take on industry giant Roche Holding AG (ROG.VX). Both Illumina and Life Technologies Corp. (NASDAQ:LIFE) are buying up smaller players in the gene testing market.
These two market leaders in DNA sequencing equipment have played important roles in revolutionizing genetic testing. Now, they intend to stake out a share of the fast-growing genetic diagnostics market themselves, a recent Businessweek story reported.
As evidence, Bloomberg writer Michele Fay Cortez cited Illumina’s recent acquisition of BlueGnome Ltd. Cambridge, U.K.-based BlueGnome is a leading provider of cytogenetics and in vitro fertilization screening solutions. This is Illumina’s first step into the clinical diagnostic testing, Cortez noted.
According to Nick Haan, Ph. D., President and CEO of BlueGnome, the move will allow the Cambridge University spin-out to leverage Illumina’s industry-leading microarray and sequencing platforms to develop next-generation gene sequencing products.
Genetic Testing Has Reached Industry Inflection Point
Genetic testing currently accounts for only $5.6 billion of the $44 billion diagnostics market, according to the Bloomberg story.
However, the sector grew by 17% last year. This makes it the fastest growing segment of the market, according to India market research firm Koncept Analytics. Health insurance giant UnitedHealth Group, Inc. (NYSE: UNH) expects the genetic test market will grow to $25 billion within a decade.
It is the rapid and ongoing advances in cancer genetics that currently drives the race to capture bigger shares of the molecular testing market, stated Bloomberg. The rush to identify cancer-causing genes is already fueling demand for DNA tests that can lead to better diagnoses and help in the selection of more cost-effective therapeutics.
“You have this amazing amount of money being invested by pharmaceutical companies—billions of dollars—to find pathways that lead to cancer,” stated Ron A. Andrews, President of Medical Sciences at Carlsbad, California-based Life Technologies, in a telephone interview with Bloomberg. Andrews noted the new knowledge about the role of genes in causing various types of cancers is the factor that spurs growth in the gene testing sector. He pointed out that these advances have created an “inflection point” in diagnostics not seen since researchers first focused on the AIDS virus.
Illumina Fights Back After Hostile Takeover Offer from Roche
Earlier this year, Illumina fought off a hostile takeover bid from Roche. Now it will compete directly with both Roche and fellow industry heavyweight Abbott Laboratories (NYSE: ABT). In an interview with Bloomberg, Flatley insisted the growing importance of Illumina’s expanding gene testing technology demanded more value than Roche’s earlier offer of $51 per share.
For its part, Life Technologies has made nine acquisitions in the past 10 years, totaling $8.3 billion, Bloomberg reported. In July, Life paid an undisclosed sum to acquire Navigenics, Inc. a company that has been developing gene sequencing technologies and systems. “We want to be the go-to companies for small biotech and academics that have [gene technologies and] content that matter,” Andrews told Bloomberg.
Other players are similarly scrambling to snag market share within the genetics space. Two days prior to Illumina’s announcement that it would buy BlueGnome, China’s BGI-Shenzhen announced that it would acquire Mountain View, California-based Complete Genomics, Inc., Bloomberg reported. BGI-Shenzhen operates genome-sequencing centers.
New Genetic Testing Opportunities for Clinical Labs and Pathology Groups
For their part, pathologists and clinical laboratory administrators will do well to note Andrews’ words from his presentation on what to expect in the era of genomic medicine at the 2012 Executive War College in New Orleans. Addressing the general session, Andrews recommended that: “Large and medium sized hospital labs should begin preparation to become molecular labs and embrace their role in bringing personalized medicine to the community!”
—Pamela Scherer McLeod