Illumina teams up with Chinese genomics firm for noninvasive prenatal test development

Illumina's Tristan Orpin

Illumina ($ILMN) and Chinese genomics company Annoroad are joining forces to develop noninvasive prenatal screening tools based on next-generation sequencing technology (NGS), a potentially fruitful collaboration as Illumina looks to gain ground in emerging markets and strengthen its foothold in a saturated prenatal testing field.

The companies will use Illumina's sequencers and Annoroad's clinical development tools including its nucleic acid extraction, data analysis software and library preparation to create a prenatal DNA diagnostic system for the Chinese market. But Illumina and Annoroad will also develop other, advanced clinical tools for reproductive health based on Illumina's NGS technology, the companies said in a statement, allowing Illumina to cash in on China's rapidly growing med tech market.

"Illumina is very excited to collaborate with Annoroad to increase access to reproductive health solutions in China," Tristan Orpin, senior vice president and general manager of Illumina's Reproductive and Genetic Health business, said in a statement. "We are committed to partnering with Chinese companies who share our vision of improving human health by unlocking the power of the genome."

Illumina has not wasted any time expanding its reach in prenatal testing. In April 2014, the company launched its VeriSeq sequencing technology for preimplantation screening of embryos to generate momentum in the field. In December, Illumina announced it would lend its NGS technology to Australia's Victorian Clinical Genetics Services for its prenatal testing service.

But Illumina faces a swath of competition in the prenatal testing arena, with big names such as Sequenom ($SQNM), Roche's ($RHHBY) Ariosa Diagnostics and Natera vying for a piece of an industry poised to grow to $3.6 billion by 2019. Illumina is working hard to defend its share of the market, slapping rivals with patent infringement suits over noninvasive prenatal testing technology.

Last year, the company resolved its long-standing feud with Sequenom over patents for noninvasive prenatal tests, agreeing to settle all pending infringement claims and pool its resources to develop new products. In May, Illumina filed suit against Roche, claiming the company's Harmony Prenatal Test violates a patent for technology used in its verifi Prenatal Test for Down syndrome, Edwards syndrome and Patau syndrome.

Meanwhile, Illumina continues to rely on its NGS technology to generate upward momentum. Last year, the company achieved its highest growth rate since the second quarter of 2011, with CEO Jay Flatley attributing the eye-popping numbers to increased demand for Illumina's sequencing technology. And the way Morningstar analyst Michael Waterhouse sees it, the company's winning streak isn't set to end anytime soon.

"Illumina's ongoing innovation and capital allocation should preserve the company's growth opportunities and returns on capital," Waterhouse said in a note to investors earlier this year.

- read the release

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