The FTC Ordered Illumina To Divest Its $7.1 Billion Acquisition Of Grail

(CTN News) – It was announced on Monday that the Federal Trade Commission (FTC) had ordered Illumina to divest its controversial acquisition of cancer test developer Grail, which it deemed would stifle competition and innovation.

It reverses a September decision in which an administrative judge dismissed the FTC’s initial challenge to the $7.1 billion deal.

FTC officials asserted that the acquisition would reduce innovation, raise prices, reduce choices, and reduce quality for tests that detect multiple cancers early in their development. It is crucial to have effective and affordable tools available at an early stage in order to detect cancer.

Illumina intends to appeal the FTC’s decision in federal court and will request an expedited resolution. Following its victory over the FTC last year, DNA sequencing company said it would appeal.

More than 2% of Illumina’s shares declined on Monday afternoon.

A final decision on the appeal is expected in late 2023 or early 2024, according to Illumina. The company also expects a decision on its appeal of a similar order issued by European Union regulators at that time.

As a result of similar concerns, the EU’s executive body, the European Commission, blocked Illumina’s acquisition last year. The European Commission, Illumina said last month, lacks jurisdiction to block the merger between the two U.S. companies.

Furthermore, Illumina stated on Monday that it would maximize shareholder value in the event that these appeals are successful.

With this acquisition, Illumina will be able to expand the availability, affordability, and profitability of its groundbreaking Galleri test in the $44 billion multi-cancer screening market.

Illumina referenced a test product known as the Grail that screens for more than 50 cancer types in one blood sample.

According to Illumina, the test generated $55 million in revenue in 2022 and is expected to generate up to $110 million in revenue this year.

A statement accompanying the FTC’s order on Monday highlights how Illumina is the market leader in next-generation genetic sequencing platforms. The commission noted that these products are crucial components of multi-cancer screening tests because they are used to analyze genetic material from blood samples obtained for the tests.

According to the FTC, Illumina is likely to remain the “only viable supplier” of those platforms in the near future, which would harm competition.

According to the FTC, “Grail’s acquisition could give Illumina incentives to favor GRAIL over its competitors by providing GRAIL with preferential access or preferential terms for acquiring NGS inputs.” This could result in distorted competition in the development, commercialization, and research of [multi-cancer early detection] tests.

Moreover, Illumina “stands to earn substantially more profit by selling GRAIL tests than by supporting rival test developers,” it noted.

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