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Instrumentation

FTC seeks to block Illumina’s deal for PacBio

Agency labels Illumina a ‘monopolist’ and sets a hearing on the next-generation sequencing acquisition for August

by Marc S. Reisch
January 3, 2020 | A version of this story appeared in Volume 98, Issue 1

 

A photo of a technician in a lab.
Credit: Pacific Biosciences
A technician prepares samples for DNA sequencing.

The US Federal Trade Commission has challenged Illumina’s planned $1.2 billion acquisition of Pacific Biosciences of California, its smaller next-generation DNA-sequencing (NGS) rival. The antitrust regulator says it has ordered an administrative trial on the deal for August and will seek a restraining order in federal court if necessary to prevent it from going through until then.

DNA sequencing is used for prenatal testing, to diagnose disease, and to enable ancestry research services offered by companies like 23andMe. Illumina is by far the leading provider of NGS instruments and systems.

“When a monopolist buys a potential rival, it can harm competition,” Gail Levine, deputy director of the FTC’s competition bureau, says in an agency announcement.

Illumina issued a statement saying that it “strongly” disagrees with the FTC’s decision and that it “will continue to work through the regulatory approval process as we consider next steps.”

The deal, first announced in November 2018, would unite Illumina, the leader in short-read DNA-sequencing technology, and PacBio, the long-read sequencing leader. The companies have annual sales of about $2.8 billion and $79 million, respectively. The FTC calls the combination “illegal because it may substantially lessen competition in the U.S. NGS market.”

Long-read sequencing is traditionally more expensive and less accurate than short-read technology. But because of advances PacBio has made by increasing accuracy and throughput and lowering costs, it is “a closer alternative to Illumina than ever before,” the FTC says, noting that customers have switched some business to PacBio.

The US agency isn’t the only regulator to question the merger. In late October, the UK’s Competition and Markets Authority (CMA) issued provisional findings skeptical of the deal.

Speaking at a financial conference in early December, Sam Samad, Illumina’s chief financial officer, said the firm has suggested remedies to the CMA “that would allow the merger to go ahead.” Primary among them is a proposal to offer third parties licenses to PacBio and Illumina long-read patents.

However, by setting a hearing date for August, the FTC has further complicated Illumina’s plans.Illumina’s agreement to buy PacBio, already extended once, expires March 31.

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