IBO 2018 Company of the Year: Illumina

At the beginning of each year, IBO takes a look back at the prior year to spotlight a company that has demonstrated strategic accomplishments, solid execution and strong financial fundamentals. Measurements include financial performance, business developments, market penetration and new product introduction.

IBO’s 2018 company of the year is Illumina. In 2018, Illumina’s revenues increased an estimated 21.0% to $3.3 billion, the fastest growth in four years. For the nine months ending September 2018 (the company has not yet reported annual operating income), operating income jumped 82.4% to $686 million due in part to a decline in cost of product revenue and operating expenses as percentages of revenues.

In general, Illumina has defied conventional expectations for the instrument and lab products industry with a consistent record of double-digit revenue growth. After all, it is in the enviable position of being at the center of the NGS technology revolution in biology, dominating that instrument market and being the largest provider of premium consumables for the that market. Nonetheless, 2018 was especially noteworthy.

In 2018, the success of the company’s latest flagship sequencing series, NovaSeq, which was launched in 2017, was confirmed, with system installment up around 111% to approximately 600. The company’s cost effective iSeq instrument also showed rapid uptake, with approximately 350 shipments in its first year of release.

As important to Illumina was the success of the platforms was adding new customers, just as it had planned. Fifty percent of iSeq shipments and over 30% of placements of NovaSeqs went to new customers. This not only opens up new runways for consumable demand, but the company also realized its goal of serving a greater portion of the addressable market.

On the technical side, the iSeq offers the same accuracy as Illumina’s benchtop sequencing, as well as 1.2 Gb per run, but at a much lower cost at less than $20,000. Consequently, the company expanded its product portfolio to address smaller labs, among others, driving its sequencing technology into new labs.

The company also rolled out the S1 flow cell, the third of its four announced flow cells for its NovaSeq 6000 system. The S1 runs a smaller number of samples, adding further flexibility and another source of consumables revenue. Announced in October, the TruSight Oncology 500 panel addresses the immunotherapy market, measuring both tumor mutational burden and microsatellite instability, capitalizing on the latest research trends.

In 2018, Illumina’s results also indicated a solid foothold in fast growing markets that are a strategic focus, namely China, the consumer market, and rare genomic disease testing. The advancements in these markets were supported last year by regulatory approvals, an ongoing goal of the company, opening up further opportunities and setting the stage for future approvals.

Last year was also a significant year for Illumina as it announced two of its biggest acquisitions to date, Edico Genome (see IBO 5/15/18) and Pacific Biosciences (see IBO 11/15/18), to build internal capabilities addressing the future of the sequencing market specifically bioinformatics and long-read sequencing, respectively. These investments can be expected to better position the company in the fastest growing NGS markets, in particular diagnostics, as well as add new platforms for portfolio diversification.


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