Life Technologies Chief Sees 20%-30% Growth in DNA Testing
Stock Chart for Life Technologies Corp (LIFE)
The market for using genetic scanning machines to analyze large swaths of DNA will grow by 20 percent to 30 percent annually, and is likely to reach $10 billion in the next few years, Life Technologies Corp. (LIFE) Chief Executive Officer Greg Lucier said.
“Theoretically, it could be tens of billions,” Lucier said today in an interview in New York. “If every cancer patient in the future is going to get genetically tested on their genome, that’s $50 billion right there. It’s an enormous market.”
Currently at “several billion” a year, the genetic- testing market is divided among Carlsbad, California-based Life Technologies and competitors including Illumina Inc. (ILMN), in San Diego, and Pacific Biosciences of California Inc. (PACB), in Menlo Park, California. Life Technologies gained new technology with its $375 million purchase last year of Ion Torrent Systems Inc., the maker of desktop-sized machines.
“This first generation Ion Torrent machine is selling faster than any sequencer I think ever historically,” Lucier said. “That’s because it’s cheap. The typical sequencer machine has been half a million to $800,000. This costs $50,000, and it’s fast -- 2 hours -- and it’s really simple.”
Drug companies and research laboratories use the machines to create a precise map of the billions of data points that make up the DNA of cells from blood, saliva, cancerous tumors or bacteria. Now, hospitals are increasingly buying the new, lower- cost machines in order to devise new tests to personalize care for patients with cancer and inherited diseases.
“When these hospitals see the future of genetic testing in a big way, they’re saying, ‘Wow, I could create a heck of a lot of business for myself if I do this right,’” Lucier said. “There’s an opportunity to bring back in revenue, revenue that will be created, and keep it inside the hospital.”
Life Technologies’ Ion Torrent machines will face competition from Illumina’s MiSeq systems in the next few months, said Ross Muken, an analyst with Deutsche Bank Securities in New York.
“Both technologies look promising,” Muken, who recommends buying Illumina shares and holding Life Technologies, said today in a telephone interview. “Based on the simplicity of the workflow and the scalability of the box, we think the MiSeq will be a superior offering.”
Life Technologies gained 33 cents to $53.11 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares are down 4.3 percent this year. Illumina fell 47 cents to $74.13, and has gained 17 percent this year.
Gene Machine Market
Muken said the market for genetic scanning machines is about $1.5 billion to $2 billion now, and estimates it could reach Lucier’s $10 billion projection in 15 to 20 years. Growth will come from new adoption of the technology in hospitals, clinical laboratories and diagnostics researchers, he said.
Life Technologies also makes tools for use in laboratories, including cell-culture agents and protein-separation products, and for forensic and food-safety work. Lucier said he plans to grow the company partially through acquisitions.
“We’re looking more for tuck-in acquisitions, up to a couple hundred million” dollars, he said. “That’s simply because we were and are very focused on rolling out this Ion Torrent technology. But in time, there’s no reason we wouldn’t do larger deals.”
Lucier said the company is considering purchases that would fit into its genetic-analysis strategy.
“There are a lot of start-ups in that space doing sample preparation, how you deal with the DNA, a lot of IT companies coming up that are thinking about how to analyze this data,” he said. “That whole workflow of where a patient comes in and you take a sample, to all the way out, you give them an answer.”
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