DNA sequencing powerhouse Illumina announced a partnership with diagnostics giant Qiagen this week that is exactly the kind of shrewd tactical move that has long cemented the firm’s dominance in the market for machines that read genetic code. Investors, however, seem to feel that, in this case, past performance is no guarantee of future results.
The 15-year partnership gives Qiagen the right to develop diagnostic test kits using Illumina’s MySeq and NextSeq DNA sequencers — in other words, to create tests that are used to help pick the right drugs for cancer patients, and, eventually, in other diseases. This, it would seem, is hopeful news for medicine. Kevin Keegan, senior director of oncology marketing at Illumina, said the deal will help Illumina “reach a segment of the market that is much broader than what we could do on our own.”
But the news came amid turmoil at Qiagen, a Dutch firm with $1.5 billion in annual sales. Peer Schatz, its chief executive since 2004, is departing, and sales growth will be a little more than half the 5% the company previously expected. Qiagen shares, unsurprisingly, fell 21% Tuesday, a reminder that promised growth doesn’t always happen. The disappointment seemed to spread to Illumina, which fell 4.4%, about in-line with biotech stocks.