Home' Technology Review : March April 2014 Contents 29
MIT TECHNOLOGY REVIEW
VOL.117 | NO.2
50 SMARTEST COMPANIES
Its business services are making
cloud file storage more pervasive.
200 million: number of users
At the forefront of adding self-
driving capabilities to cars.
2020: when BMW expects to
begin selling cars that are autono-
mous on highways
See story on p. 34.
Not just giving merchants a way to
collect payments on phones; now
you can e-mail someone money.
$20 billion: estimated annual
value of transactions processed
Raising expectations for what
e-commerce can deliver.
12: the number of top online retail-
ers whose sales would have to be
combined to match Amazon’s
of an individual human genome (that
of DNA scientist James D. Watson),
Flatley knew Illumina had to have
a sequencing technology of its own,
and he had a choice: build it or buy
it. “We had an internal development
program, but we were also looking at
anyone in the market that already had
a sequencing technology,” he says now.
Ultimately he settled on buying a com-
pany called Solexa.
Solexa took advantage of a novel
way of sequencing, known as sequenc-
ing by synthesis, that was 100 times
faster than other technologies and
correspondingly cheaper, says Flatley.
But it was a small business, with just
$2.5 million in revenue in 2006. After
Illumina provided the global distribu-
tion Solexa needed, “we built it into a
$100 million business in one year,” he
says. “It was an inflection point for us.
We began this super-rapid growth.”
The deal also turned out to be a
turning point for Illumina’s competi-
tors, which quickly fell behind tech-
nologically. Roche, which bought 454
Life Sciences in 2007, announced
last October that it would shutter the
company and phase out its sequenc-
ers. Complete Genomics, another com-
petitor, cut jobs and began looking for
a buyer in 2012; last year the Chinese
company BGI-Shenzhen bought it,
although Illumina made a failed bid
for it as well.
The Solexa deal was far from the
last time that Flatley transformed
Illumina by buying the technology he
thought it needed. Another pivotal
point came last year, when the com-
pany bought Verinata Health, maker of
a noninvasive prenatal sequencing test
to identify fetal abnormalities. That
gave Illumina a service that consum-
ers can buy (through their doctors), in
a market that could be worth billions
of dollars in revenue.
Since 2005 Illumina has spent
more than $1.2 billion on acquisitions.
But it would be a mistake to dismiss
the company as just a deep pocket.
Illumina has a knack for improving the
technology of companies it buys, says
Doug Schenkel, managing director for
medical technology equity research at
Cowen and Company. When Illumina
bought Solexa’s sequencing technol-
ogy, Schenkel says, it was considered
inflexible and was thought likely to hit
a “ceiling”—after which it could prob-
ably not be improved further—within
three years. “Illumina took that tech-
nology and, with innovation and
investment, has made it flexible
enough to not only dominate existing
markets but open up multiple new
opportunities,” he adds. “Even today—
six years later—the ceiling is still at
least three years away.”
Illumina’s soup-to-nuts strategy—
of providing fundamental sequencing
technologies as well as services that
mine genomic insights—appears to
be a winner as genomic information
begins to touch the practice of medi-
cine and enter everyday life. Illumina
already has an iPad app that lets you
review your genome if it has been
analyzed. “One of the biggest chal-
lenges now is increasing the clini-
cal knowledge of what the genome
means,” Flatley says. “It’s one thing to
say, ‘Here’s the genetic variation.’ It’s
another to say, ‘Here’s what the varia-
tion means.’ ” Demand for that under-
standing will only increase as millions
of people get sequenced. “We want to
be at the apex of that effort,” he says.
— Eilene Zimmerman
The cost of
fallen faster than the
cost of computing.
2/5/14 4:07 PM
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