Illumina plans to chop prices because it faces shrinking margins
A building on the Illumina World Headquarters campus is shown on September 1, 2021 in San Diego, California.
Mike Blake | Reuters
Enlightenment on Tuesday unveiled cost-cutting plans to improve the DNA sequencing company’s shrinking margins.
The plans aim to cut Illumina’s annualized spend by more than $100 million starting later this year, according to the company’s first-quarter release.
The company reported a gross margin of 60.3% for the period, up from 66.6% for the same period last year.
“These cost savings will accelerate progress toward higher margins and free up capital to increase investment in high-growth areas,” Illumina said in the press release.
The company is also struggling with criticism and a declining market cap following its controversial acquisition of Grail, a cancer screening company.
The San Diego-based company’s market value has fallen to about $34.5 billion from about $75 billion in August 2021, the month it completed its acquisition of cancer test developer Grail.
Antitrust authorities have repeatedly pushed back on the $7.1 billion Grail deal.
Earlier this month, the US Federal Trade Commission ordered Illumina to divest the acquisition, saying it would stifle competition and innovation.
The EU’s executive body, the European Commission, blocked the deal last year over similar concerns.
Illumina said it is appealing both orders and expects a final decision in late 2023 or early 2024.
The grail deal is also at the center of a proxy fight between activist investor Carl Icahn and Illumina, who have been trading jabs for more than a month.
Icahn, who owns a 1.4% stake in Illumina, is seeking a seat on Illumina’s board of directors and is urging the company to back out of the deal. He’s also urging Illumina to oust its CEO Francis deSouza “immediately.”
The company is asking shareholders to vote down Icahn’s three board nominees during the company’s May 25 annual meeting.
Illumina has repeatedly claimed that Grail has “tremendous long-term value creation potential.”
Grail claims to offer the only commercially available early detection test that can detect more than 50 types of cancer from a single blood draw.
The cancer test generated about $55 million in sales in 2022 and is expected to bring in up to $110 million this year, Illumina said last month.
Comments are closed.