Rough Few Months for DNA Sequencing Companies

by jtaylor on October 11, 2011

It’s been a pretty rough ride for many of the life science tools companies, particularly for those involved in DNA sequencing.

Illumina recently saw its share price tumble as sales plummeted in the third quarter (Reuters article). Illumina stated that the drop in sales was primarily due to uncertainty in the future levels of US and Europe government research, as well as over capacity of sequencing capability (Illumina statement).

Pacific Biosciences recently let go of 28% of staff (130 folks) due to slower than expected adoption of their technology (PacBio statement).

Complete Genomics stock tumbled following lower than expected 2nd quarter earnings (Complete Genomics statement).  This was largely due to orders being filled slower from its largest customer, the Institute for Systems Biology, and downward price pressures due to the decreasing costs of sequencing.

The tight and uncertain economy has (finally) taken it’s toll on these companies as reduced US and Europe Government R&D budgets are putting downward pressure on sales.  However, it should be noted that there have been bright spots.  As highlighted by XconomyIon Torrent‘s low cost sequencing platform is (potentially) seeing rapid adoption in spite of this challenging environment. It will be very interesting to watch Ion Torrent’s longer term trends – maybe the current economic pressures will be a boon to its low-cost business model.

I’m still very bullish that these companies will continue to innovate their way to large markets.  The weak economy has been a frustrating fact of life for all companies and the life science tools sector is no exception.  However, if Jonathan Rothberg is right and sequencing creates a $100 billion technology market, the best tools companies will be well placed for long term success.

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