Spotlight Illumina: Unlocking DNA to Protect Humanity from Disease (Including Coronavirus)February 20, 2020
When companies commit to investing in innovation, the results compound over time, leading them to possess deep reservoirs of knowledge. We call these companies Knowledge Leaders, and such is the case for San Diego, California-based Illumina, the world leader in DNA sequencing and the No. 1 most innovative company in Life Sciences Tools & Services sub-industry in the Developed World. According to our intangible-adjusted data, Illumina spends 18.3% on R&D as a percent of sales, and today those innovations are at work in the global effort to stem the Coronavirus outbreak.
A laser focus on innovation, Illumina says, is precisely the strategy that has established it as the global leader in genomic sequencing. A genome is a set of instructions encoded in the DNA of all living organisms, and DNA is made up of individual genes. Sequencing is used in cancer treatment, tumor profiling and reproductive health, to name a few. The analysis – usually from blood samples – takes place inside Illumina’s hardware, machines that resemble a family of sleek printers, copiers and scanners and work in conjunction with Illumina’s cloud-based software to process and share results.
Most recently, Illumina’s technology was used along with other sequencing technologies to sequence the genome of the novel Coronavirus confirmed by Chinese authorities in Wuhan City, Hubei Province of China, or COVID-19. The results were published in the New England Journal of Medicine last month and aim to empower public health officials worldwide to respond to the outbreak. Illumina teams and equipment continue to assist health authorities in China as well as other global health teams, local hospitals and infectious disease laboratories including the Centers for Disease Control.
It was a historic first, Illumina says, to have published the complete genome of COVID-19 in such a short period after the outbreak was discovered. The genome has been shared “open source” style in a worldwide effort to enable research, diagnostics, treatments and potential drugs and vaccines. Publishing the virus’ complete genome also is an important factor in preventing fear of the unknown, the company said. For example, the early availability of the COVID-19 genome has made it possible to develop more accurate tests for infected people, and to understand how the virus is spreading and whether it is mutating as it spreads. Finally, knowing the virus’ complete genome will allow epidemiologists eventually to track its origins. Illumina’s technology also has served on the front lines of previous outbreaks, such the Ebola virus in Africa.
Genome analysis from Illumina’s sequencing equipment has been published in tens of thousands of scientific papers, the result of research and clinical work from academic institutions, research centers, government labs, hospitals, and pharmaceutical, biotechnology and commercial diagnostic labs.
The company’s sales look similar to the razor/razor-blade model. Last year, for instance, equipment sales were 15% of revenues with 68% of sales in what the company calls consumables, including proprietary reagents and microarrays. About 17% of revenue came from services. Last year, shipments to customers outside the U.S. made up 47% of total revenue. Investment in R&D has grown each year for the last three years: $647M in 2019, $623M in 2018 and $546M in 2017. With 799 patents and 617 pending patents, Illumina’s technology is responsible for generating more than 90% of the world’s DNA sequencing data.
The cost of genomic sequencing has seen exponential cuts in the last 20 years, due in no small part to Illumina’s efforts since its founding in 1998. In 2003, the first whole human genome sequencing cost about $2.7B. Today, it costs less than $1,000 to have your genome sequenced, something about one million people have done, most often as part of genetic counseling for example for the presence of mutations in two BRCA genes that can increase the risk of certain kinds of cancer. Genomic sequencing is different from consumer tests sold by companies like 23andMe which analyze certain DNA strings to determine gene associations, but do not sequence the entire genome.
Illumina works with partners to provide sequencing technology to larger audiences, for example, the firm announced a deal in December with Boulder, Colorado-based ArcherDX to develop in-vitro diagnostic tests to be used in labs and hospitals and run on Illumina sequencing equipment.
All humans share about 99% of their genetic code. Ilumina believes a better understanding of that 1% difference could create an important shift in medicine toward the preventive and predictive for a new era of precision health care. In the big picture Illumina aims to understand genetic variations between people, what makes cancer cells mutate and diseases spread, help prevent outbreaks and safeguard the world’s food supply.
Headquartered in San Diego, Calif., the firm employs 7,700 people worldwide and has offices, labs, manufacturing or distribution facilities in San Francisco, Calif., Madison, Wis., Singapore, China, the United Kingdom and the Netherlands.
Intangible-adjusted data source: Knowledge Leaders Capital, as of 2/18/20. As of 12/31/19, Illumina was held in the Knowledge Leaders Strategy.