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Illumina Poised on Product Innovation, Global Expansion

On Oct 2, 2015, we issued an updated research report on Illumina Inc.ILMN . With its primary focus on reproductive and genetic health, Illumina seeks to expand its portfolio by providing the verifi laboratory-developed non-invasive prenatal test ("NIPT").

Management believes that NIPT revenue will continue to grow with the launch of Illumina's next-generation solution - the VeriSeq NIPT assay - in Europe. Currently, the company is in the final stages of the European regulatory process for the software and hopes to receive CE mark soon.

llumina's oncology market - another area of focus for its market expansion strategy - also continues to witness considerable growth. Last quarter, Illumina's oncology customers grew almost 50% compared to the prior year, driven by a large, multi-unit order from a liquid biopsy company, as well as orders from customers focused on gene panels. Increased demand was also noted from reproductive health customers with the availability of NextSeq 550 in Jun 2015 that enables both sequencing applications and microarray scanning for cytogenetic testing on a single platform.

Moreover, the company is working on expanding its portfolio with several product launches. In addition, expansion through strategic partnerships is expected to add value. Based on its collaboration with Berry Genomics, the company successfully generated huge business in the Chinese market. At present, management believes that this partnership is progressing well after the recent Chinese FDA approval of Berry's assay and the NextSeq CN500. In addition, it teamed up with China-based genomic enterprise, Annoroad, to co-develop a NGS diagnostic system that will improve patients' reproductive health. This tie-up reflected Illumina's attempt to expand its footprint in the rapidly emerging Chinese market.

However, government budget cuts, including NIH funding issues, foreign exchange headwinds and a tough competitive landscape remain major downsides. For 2015, the company expects revenues to bear a 3% negative impact from unfavorable foreign currency translation.

Illumina currently carries a Zacks Rank #3 (Hold).

Key Picks from the Sector

Investors interested in the bio-med/gene sector can also consider stocks like Acceleron Pharma, Inc. XLRN , Regeneron Pharmaceuticals, Inc. REGN and Anika Therapeutics Inc. ANIK . All three stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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