Is "Huge" Business Downturn Coming in the Sequencing Industry?

[Note: Following post is not investment advice.]

Illumina stock (ILMN) looks very weak. If you compare the charts of $SPX and ILMN, you will find that ILMN did not participate in the stock market rally over the last few weeks. One possible explanation is that people with knowledge (aka insiders) are sensing bad business condition for the company or the entire sector, and are taking the opportunity of the rally to sell their stocks.

We alerted our readers about possible worldwide saturation in sequencing capabilities in June last year (Check “Peak Sequencing? BGI Unveils Nation- scale Sequencer”). Incidentally, Illumina stock peaked within a month of that post, and BGI made surprise announcement to cancel its plan for ‘nation-scale’ sequencing in October (Peak Sequencing Consequence? BGI Delays Launch of Nation-scale Sequencer). In another surprising decision made around that time, BGI also closed its UC Davis sequencing facility.

The BGI@UCDavis was located in the School of Medicine on the Sacramento campus and did provide sequencing services for large scale sequencing projects up until September 2015. This BGI facility is now closed. Since our DNA Technologies Core operates the latest generation of sequencers (HiSeq3000/4000), which offers a 7 times increased throughput compared to the previous generation, our Core is now taking on also large sequencing projects. The DNA Technologies Core is offering all the services previously provided by the BGI@UCDavis. In addition we offer many specialized services and support for custom sequencing projects.

Also see - “Major UC Davis genetics partnership with Chinese firm ends”

BGI-UC Davis collaboration was initially touted in 2013 as ‘huge leap forward’ (Huge Leap Forward in Genome Sequencing Research Capabilities at UC Davis). Does that mean the closure of the same facility within two years was a ‘huge leap backward’, or was it rather a consequence of less demand than supply for sequencing machines? The 2013 press release (see below) suggests the later. Maybe the world needs less ‘huge’ ‘major’ ‘drama’ going forward :)

An historic collaboration between the University of California Davis and China’s BGI, the worlds largest genomics organization, has dramatically increased the University’s genome sequencing capabilities and promises to open up altogether new research opportunities in the life sciences community with genomic studies of plants, animals, humans and microbes. The new joint endeavor is called BGI@UC Davis and will benefit both UCD and China’s first citizen-managed, non-profit research institution.

The above observations are consistent with our forecast made a month back (“Our #AGBT16 Forecast Oxford Nanopore Will Go Out of Business by 2017”).