ILMN Illumina Inc

Last week, Life Technologies (LIFE) introduced the new Benchtop Ion Proton sequencer in India. The significance of the emerging markets cannot be over-emphasized for companies like Life Tech.  As a result of its increasing focus on the emerging markets, this region now accounts for approximately 10% of total sales.

Earlier this year, the company had unveiled the Benchtop Ion Proton sequencer at the Consumer Electronics Show in Las Vegas. The company is already taking orders for the same, which is expected to hit the market in mid-2012.

Based on next generation semiconductor technology, the device will be able to sequence the entire human genome in one day for $1,000. The DNA sequencing market is likely to get more competitive as San Diego-based Illumina (ILMN) is also looking at launching its HiSeq 2500 in the second half of 2012.

Genome sequencing, currently in vogue, uses optical based technologies that may take weeks to deliver results and is also dearer at $5,000−$10,000. In addition, the high cost of the instrument ($500,000−$750,000) has been a deterrent to its expansion in research labs. The first sequencing of the human genome was announced more than a decade ago in the White House in June 2000. Since then the focus has been on reducing the cost of sequencing a gene so that this specialized know-how can benefit the patient community at large.

The Ion franchise was inducted into Life Technologies’ portfolio with the acquisition of Ion Torrent, a DNA sequencing company, in October 2010. For the past few quarters, the company has been recording robust growth from its Ion personal genome machine (“PGM”) that was launched in December 2010, taking the total number of system placements to 700 in 2011.

The company is satisfied with the progress made so far with Ion Torrent technologies and expects the growth momentum to continue. This will be supported by more PGM placements and the scheduled launch of the Ion Proton Benchtop sequencer. In October 2011, the Ion franchise was further boosted by the launch of the Ion AmpliSeq Cancer Panel to help scientists to sequence dozens of genes in cancer research samples using a simple workflow. With the launch of new products, contributions from the Ion portfolio are expected to increase over the next few quarters.

We have a Neutral recommendation on Life Technologies. The stock retains a Zacks #3 Rank (Hold) in the short term.

 
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