Illumina 2020 Review and 2021 Predictions

I like to procrastinate to the very last second, so here’s the initial entry of a review of my 2020 predictions and what I see for 2021. I’ll start off with Illumina because they’ll be presenting today at JPMorgan Health. I'll try to get to the others as quickly as I can. As far as predictions went, everything got thrown off hard by Covid, but there have still been some pretty clear calls.

2020 Predictions

Talk up internal long read projects = MISS

Since the PacBio acquisition got called off, I thought Illumina would once again start talking about (or hinting at) internal projects for long reads (e.g., nanopore). If they DID start talking this up again, I must have missed it. 

Launch a new mid-throughput instrument = HIT/MISS

Illumina did indeed launch a new instrument, the NextSeq 2000, a sleek, upgraded version of the NextSeq 550. But I only get partial credit as this isn’t the instrument I thought they’d launch. I thought they were going to replace the MiSeq or launch a new instrument between the MiniSeq and NextSeq.

Clinical acquisition = HIT/MISS

Again, I’m only giving myself partial credit here. I’ve been saying for YEARS that Illumina will buy their way into the clinical market (which they kinda sorta did with Verinata). They kinda sorta did it again, albeit in a much bigger/more expensive way with their $8B purchase of their GRAIL spinout. This is a risky bet into a very hot market with a potentially big payoff. But it’s still not the clinical play I was expecting. I was thinking someone more like Qiagen who has years of experience selling directly to clinical customers. 

What else happened in 2020

Apart from the partial pivot to COVID testing (along with every other company on the planet), the biggest thing Illumina did was to release the NovaSeq 6000 v1.5 reagents. It’s not entirely clear to me why this required a new kit, but what they essentially did was give ALL of their NovaSeq customers the high level discounts that had been reserved for owners of multiple NovaSeqs. This is great news for smaller labs who owned just one box, but pretty terrible news for the larger service providers who were counting on the differential pricing to drive their business. I know of service providers who are looking to offload their excess NovaSeqs as they no longer really need them. This is countered, of course, by customers buying their first NovaSeq because now they can more or less get the same price as the big players. So, perhaps a wash, but it’s quite clear that not all of Illumina’s customers are happy with the price drop. So why did they do it? They aren’t really seeing pricing pressure yet. And even if they were, this doesn’t really lower the actual best price for an Illumina whole genome. Sequencing prices have been relatively steady for years due to the lack of pressure and Illumina doesn’t have a habit of lowering prices for no good reason. My guess is this is part of a two pronged defensive strategy against BGI/MGI. The first is the vigorous legal response, preventing MGI from even placing free machines in the US. That fight will surely continue. The v1.5 pricing is probably to get as many customers as possible locked into the NovaSeq platform ASAP, blunting the desire for a new box from MGI.

Looking forward to 2021

It’s really hard to say what they’ll do, especially given how COVID really threw off everyone’s schedule. The “easy” prediction I would have said a year ago is that 2021 is when they would launch a new version of NovaSeq with superresolution capabilities like the NextSeq 2000. They still might, but I’m less certain that they’ll announce something like that at JPMorgan. The timing might be driven by whatever progress they think BGI is making towards the $100 genome (which apparently now involves using polymer films of reagents rather than buckets). Maybe later in the year. I'll also carry over my MiSeq upgrade/replacement prediction from last year as that platform is now even longer in the tooth.

I still wonder if they’ll make some sort of announcement about a long read program (or acquisition). I don’t think they can likely make a play in the single cell and spatial genomics space (apart from selling the sequencers that most of those customers use). I think we’ll see their main focus is on the clinical side - more co-developed testing panels, FDA cleared instruments, and Grail’s liquid biopsy assays.

One other thing to keep an eye on is employee turnover, from the C-suite on down. A lot of my colleagues have left for greener pastures, looking to capture the startup magic again in new places (like Element, Omniome, and Seer). Even PacBio (hopefully more on them soon) now has ex-Illumina people in key positions. This doesn’t mean that Illumina no longer has good people, just that it’s a very different company than it was even just a few years ago.

Shawn Baker

View posts by Shawn Baker
Founder and principal consultant at SanDiegOmics

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