Well, in the research market this changes things by absolutely nothing. QIAGEN's strategy was to focus exclusively on the clinical market. Personally I think this was a serious mistake. Sure, focus is often a useful commodity and this represented extreme focus. But it also meant that there was no research market to breed advocates and users and assays. No research market for interesting ideas to be tried out and then launched as a startup. The extreme focus had another side effect that may have hurt them. QIAGEN felt that since they were selling an end-to-end solution, there was no reason to even talk about the traditional metrics of a sequencer such as read length, reads per flowcell, error rates, error modes or time per sequencing run. Sure, that wasn't important to their targeted customers, but again for anyone thinking of whether GeneReader was an appropriate platform for a dreamed-up clinical application, finding those stats to vet a concept was an exercise in frustration (I know; I tried to do this once). Nor were they interested in non-traditional PR: when they presented at AGBT I offered to interview them for this space, which was politely declined.
QIAGEN always felt they could take care of generating the assays. Who needs anyone else? The value would be delivered by having popular assays ensconced in their end-to-end process. But building that walled garden apparently didn't work out.
This approach comes as no surprise; talk to anyone who has worked there and the level of slow and careful goes up exponentially the closer you get to QIAGEN headquarters. They deliver quality products, but fast innovation isn't their forte. How much that played into the slow launch of the device is hard to know, but it took over three years for QIAGEN to get the instrument on the market after buying startup Intelligent Biosystems. The original idea was an instrument with a carousel of independent flowcells to enable clinical assays to start at any time; the final product was a much simpler dual flowcell instrument.
Also not helping was Illumina successfully knocking GeneReader out of the U.S. market, obtaining an injunction in September 2016 -- less than a year after the instrument hit the market. QIAGEN quickly got a new chemistry to existing customers in December of that year, but that still meant a nasty disruption for their customers. They wouldn't relaunch the platform overall until sometime in 2017. One can't help imagining all the MiSeqs and NextSeqs that were sold over the same time period.
Knocking QIAGEN out of the clinical market and snagging them as a partner is a win for Illumina, but one that might have a significant negative side effect. Anyone following the Pacific Biosciences acquisition attempt has been treated to weeks of no real news. But if you wanted to construct the case that Illumina is an aggressive monopolist, then the QIAGEN story plays into that narrative -- aggressive wielding of IP. And now the defeated has decided in becoming an arm of the victor, marrying their fortunes for fifteen years.
So what happens on that front? One idea out on the nets is that Illumina might ratchet down their play on Pacific Biosciences to a strategic partnership, perhaps with an equity investment. Such an arrangement isn't immune to antitrust issues, but would be different. Wish I had paid more attention in all the antitrust law courses I never took, as you really need someone who actually knows the law to judge the odds of success there. But certainly the markets haven't altered their take much; Pacific Biosciences is still selling at a significant discount to the offer price of $8, despite at least one Wall Street analyst rating them as a buy (with the unremarkable price target of $8).
Realistically, what else could QIAGEN have done? Illumina is the market leader, with everyone else nearly rounding error. Ion Torrent has a toehold in clinical labs, but that's it. MGI is still a question mark in terms of worldwide reach. So swallowing their pride -- and perhaps some more potential sparring in the IP courts -- made good sense.
QIAGEN isn't the only company to try some form of the end-to-end vertical approach. Roche also acquired a heap of companies to offer such an approach, with the gap being the sequencer piece. It's been over five years since Roche acquired nanopore developer Genia, which has become the Schrรถdinger's cat of new instruments, neither officially alive nor officially dead.
Perhaps who should be paying most attention to this are potential new entrants such as Genapsys, Agilent and a long list of startups with unconventional technologies. If QIAGEN, with their heft and deep pockets couldn't dent Illumina's position, you'd better think very carefully about your own strategy. I've made my opinion clear on how I feel about ignoring the research market, but "target research" isn't exactly a full strategy. Genapsys potentially has low capital cost and speed, but unless you really identify a community for whom those are critical that willing to take a flyer on an emerging platform, that just isn't enough. Agilent isn't planning to jump in for a while; will there be any room for another short read sequencer by the time they launch? And be prepared: Illumina has previously shown the ability to strike quickly. Just ask Ion Torrent vets about how the surprise launch of MiSeq spoiled their dreams of having the low capital market to themselves for an extended period.
What sequencer industry shoe will drop next? The UK's CMA's deadline on PacBio is still two months away. The U.S. FTC has had a perfect poker face as to when they will rule. Unlikely there will be any major platform announcements before the JP Morgan meetings in January. The AMP meeting sometimes attracts announcements, but that's a few weeks away and usually the buzz would have started by now. So the regulators are likely the only opportunities for any further fireworks in 2019.
Knocking QIAGEN out of the clinical market and snagging them as a partner is a win for Illumina, but one that might have a significant negative side effect. Anyone following the Pacific Biosciences acquisition attempt has been treated to weeks of no real news. But if you wanted to construct the case that Illumina is an aggressive monopolist, then the QIAGEN story plays into that narrative -- aggressive wielding of IP. And now the defeated has decided in becoming an arm of the victor, marrying their fortunes for fifteen years.
So what happens on that front? One idea out on the nets is that Illumina might ratchet down their play on Pacific Biosciences to a strategic partnership, perhaps with an equity investment. Such an arrangement isn't immune to antitrust issues, but would be different. Wish I had paid more attention in all the antitrust law courses I never took, as you really need someone who actually knows the law to judge the odds of success there. But certainly the markets haven't altered their take much; Pacific Biosciences is still selling at a significant discount to the offer price of $8, despite at least one Wall Street analyst rating them as a buy (with the unremarkable price target of $8).
Realistically, what else could QIAGEN have done? Illumina is the market leader, with everyone else nearly rounding error. Ion Torrent has a toehold in clinical labs, but that's it. MGI is still a question mark in terms of worldwide reach. So swallowing their pride -- and perhaps some more potential sparring in the IP courts -- made good sense.
QIAGEN isn't the only company to try some form of the end-to-end vertical approach. Roche also acquired a heap of companies to offer such an approach, with the gap being the sequencer piece. It's been over five years since Roche acquired nanopore developer Genia, which has become the Schrรถdinger's cat of new instruments, neither officially alive nor officially dead.
Perhaps who should be paying most attention to this are potential new entrants such as Genapsys, Agilent and a long list of startups with unconventional technologies. If QIAGEN, with their heft and deep pockets couldn't dent Illumina's position, you'd better think very carefully about your own strategy. I've made my opinion clear on how I feel about ignoring the research market, but "target research" isn't exactly a full strategy. Genapsys potentially has low capital cost and speed, but unless you really identify a community for whom those are critical that willing to take a flyer on an emerging platform, that just isn't enough. Agilent isn't planning to jump in for a while; will there be any room for another short read sequencer by the time they launch? And be prepared: Illumina has previously shown the ability to strike quickly. Just ask Ion Torrent vets about how the surprise launch of MiSeq spoiled their dreams of having the low capital market to themselves for an extended period.
What sequencer industry shoe will drop next? The UK's CMA's deadline on PacBio is still two months away. The U.S. FTC has had a perfect poker face as to when they will rule. Unlikely there will be any major platform announcements before the JP Morgan meetings in January. The AMP meeting sometimes attracts announcements, but that's a few weeks away and usually the buzz would have started by now. So the regulators are likely the only opportunities for any further fireworks in 2019.
1 comment:
Thanks for sharing.
The IP story between Qiagen and illumina sounds like the ongoing 10x and Bio-Rad disputes, and 10x has said that if the giants of sequencers - maybe only illumina launch new single cell handling technologies, that would be tough of 10x.
By the way, after illumina discontinued its Ribozero products, Qiagen's alternative FastSelect shows good performance. Through Ribozero is still the state of the art, perhaps for illumina, the Ribozero accounts for too littler of its revenue.
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