In an attempt to expand its next-generation sequencing (NGS) platform in the rapidly emerging markets of China, Illumina, Inc.ILMN recently entered into a strategic collaboration with its Chinese counterpart - Novogene. The financial terms of the deal have been kept under wraps.
Per the deal, both these genomic solutions providers will co-develop a user-friendly diagnostic system based on NGS technology, which will facilitate clinical prenatal DNA and oncology testing in the emerging markets of China.
Per management, this strategic alliance reflects the increasing importance of genomic applications required for healthcare improvement in the Chinese province. We expect this collaboration to expand Illumina's share in the Chinese healthcare market, which of late, is progressing significantly on the back of the recent reformation of the health policy and the considerable population expansion in the country.
With population explosion - a dire problem all nations are facing today, and emergent recognition of complex diseases, genomic research currently demands more detailed information beyond the capacity of traditional DNA sequencing technologies. NGS has filled this gap, evolving rapidly in the recent years, on virtue of advancement in modern scientific innovation.
Through this collaboration, Illumina's expertise in next-generation sequencing will join Novogene's advanced clinical application development capabilities. Specifically, Novogene will offer its nucleic acid extraction, library preparation and data analysis software while Ilumina will offer NGS instrumentation components and related reagents.
Consequently, the companies aim at developing advanced NGS technology-based clinical applications in the fields of reproductive health and oncology.
As Novogene is the largest distributor of Illumina-based sequencing capacity in China, this alliance should benefit Illumina immensely. The diagnostic assay resulting out of this alliance will cater to a large customer network. This in turn will raise Illumina's profit from the sequencing systems. Notably, Novogene is the first Chinese company to buy Illumina's HiSeq X Ten System, which can deliver over 18,000 human genomes per year.
Interestingly, this partnership with Novogene takes further Illumina's latest collaborations in the Chinese NGS market. In June 2015, Illumina had joined hands with Annoroad, a Chinese genomic enterprise, to co-develop an NGS-based diagnostic system that will help improve patients' reproductive health. In August, the company collaborated with Chinese diagnostics company Burning Rock to develop advanced clinical applications for molecular diagnostics in oncology, based on its NGS technology. Soon after, in September, Illumina joined forces with Amoy Diagnostics to accelerate the adoption of precision medicine and targeted therapies in China.
The Asia Pacific NGS market is expected to grow at a rapid rate of 41.6% during 2015-2022. Japan and China being the two noteworthy ones among other regions, the above mentioned developments should allow Illumina to adequately capture larger share of this growing market potential in the times ahead.
Currently, Illumina has a Zacks Rank #3 (Hold). Some better-ranked medical stocks are Natus Medical Inc. BABY , Masimo Corporation MASI and Steris Plc STE . All the three stocks hold a Zacks Rank #1 (Strong Buy).
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