ILLumina (Nasdaq: ILMN) is a manufacturer of genome sequencing machines/consumables and is almost a monopoly in the US with few credible competitors in the space. BGI, a Chinese company is one of the few credible competitors which is able to provide genome sequencing with almost the same accuracy and lower price. Earlier today, Twenty-eight Chinese firms were sanctioned in an action by the Commerce Department. They included the Chinese genetics companies BGI Research, BGI Tech Solutions (Hong Kong), and Forensic Genomics International.
This sanction comes on the heels of BGI winning a patent dispute in the US with ILMN over the use of similar technology for genome sequencing. They both use similar methods and hence were in a patent dispute till last year. BGI prevailed and the courts removed an injunction on BGI against selling its sequencing machines in the US. BGI had counter-sued ILMN on patent infringement and ILMN was ordered to pay more than $333 million to a U.S. unit of Chinese genomics company BGI Group after finding that Illumina’s DNA-sequencing systems infringed two patents. Eventually, they settled and ILMN agreed to pay $325 million to BGI in July 2022. Moreover, BGI was now able to compete with ILMN in US, the largest market for genome sequencing. Since they both use similar chemistry, the results were comparable and BGI was offering it at a much lower price compared to ILMN. ILMN’s stock had also suffered to a certain extent due to competitive concerns. These sanctions eliminate the possibility of BGI competing in the US in the short to medium term.