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2021-04-01| M&A

FTC Blocks Illumina’s $7 Billion Acquisition Bid to Restrict Monopoly of Cancer Diagnostic Market

by Tulip Chakraborty
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The U.S. Federal Trade Commission (FTC) has thwarted Illumina’s approximately $7.1 billion bid to acquire Grail, a pre-commercial company that focuses on breakthrough cancer detection technologies. This news led Illumina’s shares to drop by 5%.

Grail was originally a part of Illumina and spent approximately five years developing its own diagnostic test to detect fifty different cancers at once. As neither Illumina nor Grail competes in any way, reuniting these two organizations would give Illumina the leverage it needs to dominate the cancer market.

The FTC does not seem to agree with this merger as they feel this could disrupt the multi-cancer kit development market. Additionally, as Illumina is the sole developer of the hardware for these kits, they would have the liberty to raise the prices leading to undue advantage for the competitors of Grail.

Additionally, Illumina’s sequencing instruments and consumables are probably the best available in the market as of now. Assuming a new platform does enter the market, the FTC argued that it would take years to validate their tests for the new platform.

FTC has always been the thorn in Illumina’s expansion path. In 2019, it stopped Illumina from acquiring their rival Pacific Biosciences for a staggering $1.2 billion. After contemplating and exploring all their options, Illumina stepped away from its acquisition plans in less than a month.

 

Illumina Plans Forward

Cancer which kills around 10 million people globally per year and approximately 600,000 people in the US alone, can have a higher survival rate in patients if detected early.

Approximately 71% of the deadly cancer types do not have any detection method, so Grail’s kit could be a game-changer in this field as it is capable of detecting multiple types of cancer with extremely high accuracy.

Thus, acquiring Grail would open the floodgates for Illumina to control this highly competitive market. This is why the company intends to go out in full force with their legal team to challenge FTC’s decision.

“Illumina’s commitment to advancing human health by innovating next generation sequencing is unwavering. Improving early cancer detection is the most promising approach to bending the cancer mortality curve,” said Francis deSouza, Chief Executive Officer of Illumina.

“We have a deeply vested interest in ensuring that all organizations have equal and fair access to high quality, reliable and cost-effective sequencing to enable them to develop breakthrough products, such as liquid biopsy, and make them accessible to the greatest number of patients possible, quickly and safely.”

Illumina’s determination in acquiring Grail has led them to offer new standard contracts that guarantee sequencing access for its clinical oncology customers, with a strong commitment to lowering their prices over a four-year period by approximately 40%.

Additionally, the contract also includes 12 years of supply of sequencing instruments and consumables at no price increase, along with the assurance of no product discontinuation purchased by a test developer.

It remains to be seen if the FTC buys into Illumina’s words and their commitments. If they do, it will potentially make Illumina the most powerful gene sequencing company globally.

Related Article: Illumina Advances Talks to Acquire Healthcare Start-up Grail

 

 

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