Illumina is the undisputed leader in DNA-sequencing: It’s owns more than 70% of the market. But this week, shares plummeted 25 percent after the company unveiled a weak sales forecast. Is it a victim of its own success?
Analysts have been speculating about how this could have happened, especially given that the company’s stock has risen 600% in the past five years. Part of the problem seems to be that Illumina’s newest DNA sequencing machine, the HiSeq X, is extremely expensive ($10 million for a 10-system configuration) but it can sequence genomes much faster and more affordably than its predecessors. For that reason, researchers and clinics are opting to send out samples to the facilities with the HiSeqX rather than use their older systems. “Illumina has cannibalized themselves,” Bryan Brokmeier, director and senior equity analyst at Cantor Fitzgerald, told CNBC.