The life sciences market
Illumina (ILMN) is currently targeting opportunities worth $5 billion in the life sciences market, which includes the consumer, forensics, genetics, infectious diseases, biopharmaceutical, research, agriculture, reproductive health, and cancer segments.
The above diagram shows Illumina’s sample-to-answer products. Samples to be analyzed are prepared using sample prep kits, and then analyzed to generate answers. BaseSpace is llumina’s cloud computing platform, which has been integrated with the sequencing tool for easy storage and analysis of data. Illumina has also introduced a product called NeoPrep, which is used to create and analyze 16 samples in a single run of Illumina’s sequencers.
Life sciences market penetration
Life sciences research is Illumina’s core market. Academic centers purchase the company’s tools to research complex diseases and understand their causes. $4.5 billion of the $5 billion life sciences market is research-based, while $0.5 billion is agriculture. Currently the life sciences market is only 35%–40% penetrated. Illumina could earn substantial revenues from the life sciences segment.
Inclusion of BaseSpace, Illumina’s cloud-based application, has made the product more attractive to life science customers. Illumina allows its sequencer clients to store huge amounts of generated genome data in their BaseSpace application. This helps clients overcome data storage constraints as well as collaborate with other players in the market. With Illumina partnering with major pharmaceutical companies such as Johnson & Johnson (JNJ), AstraZeneca (AZN), and Sanofi (SNY) to develop NGS (next-generation sequencing) oncology testing systems, the need for data storage and collaboration will continue to rise. The demand for Illumina’s offerings integrated with BaseSpace is expected to rise steadily.
You can get exposure to Illumina’s life sciences opportunity yet avoid company specific risks by investing in the iShares Nasdaq Biotechnology ETF (IBB). Illumina accounts for 4.09% of its total holdings.