Gene-Sequencer Illumina Faces Tough Competition as It Officially Enters China

American gene-sequencing giant Illumina Inc. has received approval to launch its next-generation system in China, marking a milestone in its second-largest overseas market.

The China National Drug Administration has greenlighted the company’s MiSeqDx Sequencing System, which can now be marketed and sold to hospitals and other medical institutions for in vitro diagnostic testing throughout the country, the company said in a statement.

Garret Hampton, Illumina executive vice president of clinical genomics, called the approval “a significant milestone” for the San Diego-based company as the product is already available in other markets, including the U.S., Canada, Argentina and Singapore, and certain European countries.

Illumina already has a presence in China, co-developing machines with Chinese peers and selling unbranded systems to domestic buyers that market Illumina products under different brand names. Even under this model, China is already a huge market, with Greater China contributing nearly 13% to total revenue in the quarter ended July 1, following the U.S. and Europe.

The other big names in the market are Thermo Fisher Scientific Inc. and Life Technologies Corp., both from the U.S., but they have a smaller share. Chinese gene-testing giant BGI Genomics Co. acquired San Jose-based Complete Genomics Inc. in 2012 in order to shed its dependence on foreign suppliers.

But so far, BGI has managed to sell its equipment only to firms it has incubated or invested in, a professional from a private equity investment firm told Caixin. The Shenzhen-listed company has never disclosed income from the self-made gene-sequencing systems.

A professional surnamed Zheng from the gene-sequencing industry told Caixin that although Illumina’s official entry in China will pressure rivals, domestic ones like BGI will have an advantage in pricing.

The Chinese firm’s BGISEQ-500 sequencing platform costs only $600 for each test, lower than Illumina’s $1,000 per test on the HiSeq X platform. However, Illumina last year launched its new NovaSeq series, which can test a human genome within an hour and will “one day” help the company to cut its price to only $100 per test, the company said, without specifying how far in the future this will be.

Earlier this year, BGI vowed to halve the cost of its gene sequencing service to $300 per person by 2020.

Illumina’s just-approved system is to fit small-sized sequencing tasks, which is a large and flexible market, Zheng said.

“So far many companies are still buying Illumina products, which is a solid standard” to see if the company can be competitive in China, said Li Ruiqiang, founder and CEO of Beijing-based gene testing firm Novogene Corp., an Illumina client.

“The gene-sequencing systems produced by BGI are still exposed to controversies in terms of technology advance,” Li said.

In July, a woman in Hunan province gave birth to an infant with a gene defect, even though she went through a BGI test that showed low risks. There have been 19 such cases in China so far, according to Chinese media company Huxiu.

BGI said in a response said that the company has provided such services to 3.13 million pregnant women, and out of the 2.48 million born babies, 70 had an abnormal number of chromosome s “due to various reasons,” without elaborating.

BGI is to raise $1 billion for its gene-sequencing equipment unit in preparation for a separate listing in Hong Kong, sources familiar with the matter told Caixin.

Contact reporter Coco Feng (renkefeng@caixin.com)