Francis deSouza, CEO of Illumina Inc., during a panel session on the third day of the World Economic Forum (WEF) in Davos, Switzerland, on Thursday, January 19, 2023.
Stefan Wermuth | Bloomberg | Getty’s paintings
The Federal Trade Commission ordered on Monday Illumina dispose of the controversial takeover of Grail, a maker of cancer tests, claiming the deal would stifle competition and innovation.
The decision overrules the decision of the administrative judge September a ruling that overturned the FTC’s initial challenge to the $7.1 billion deal.
“The commission said the acquisition would reduce innovation in the US market [multi-cancer early detection] tests, while increasing prices and reducing the choice and quality of tests” – FTC said in a press release. “This is extremely worrying given the importance of rapidly developing effective and inexpensive tools for early cancer detection.”
Illumina said in a statement that it intended to appeal the FTC’s decision in federal court and would seek an expedited decision. The DNA sequencing company noted that it believes it has a “strong case for appeal”, pointing to how it prevailed over the FTC last year.
Illumina said it expects a final decision on the appeal in late 2023 or early 2024. At that time, the company expects a decision on appealing a similar injunction by European Union regulators, Illumina added.
The EU’s executive body, the European Commission, last year blocked Acquisition of Illumina amid similar concerns that it would hurt consumer choice and innovation. Illumina said last month it challenged the European Commission, arguing that the agency did not have jurisdiction to block a merger between two US companies.
Illumina said Monday that winning these appeals will “maximize shareholder value,” the company added.
“Enables Illumina to increase the availability, affordability and profitability of its groundbreaking Galleri test in the $44 billion multi-cancer screening market,” said Illumina, referring to Grail’s test product, which detects over 50 types of cancer with a single blood drawing .
According to Illumina, the test generated $55 million in revenue in 2022 and is expected to bring in up to $110 million this year.
FTC on Monday released opinion attached to his order, insisting that Illumina is the dominant producer next-generation genetic sequencing platforms. These products are a “critical ingredient” in many cancer screening tests as they are used to analyze genetic material from blood samples taken for testing, the committee noted.
Illumina is likely to remain the “sole viable provider” of these platforms for the foreseeable future, which could hurt competition, the FTC said.
“The GRAIL acquisition potentially gives Illumina an incentive to favor GRAIL over its rivals by providing GRAIL with preferential access or preferential terms to acquire NGS input,” the FTC said. “Such preferences could distort competition in research, development and commercialisation [multi-cancer early detection] tests”.
Illumina “makes far more money from selling GRAIL tests than it does from supporting competing test developers,” the commission added.
The FTC also rejected Illumina’s claims that the acquisition would “save lives” by accelerating the development, approval and adoption of Grail’s cancer tests. The committee’s opinion stated that, according to the committee, allowing competition to flourish “would do more to save lives than allowing a monopolist to vertically integrate and take over the market”.
Illumina’s takeover of the Grail sparked a backlash from another adversary, activist investor Carl Icahn. His resistance to the deal stems from Illumina’s decision to shut it down without antitrust approval. Icahn launched a power of attorney fight last month, seeking seats on Illumina’s board of directors and urging the company to terminate his contract.
Icahn did not immediately respond to a request for comment.