Illumina, the leading maker of gene-sequencing machines, has been ordered by the Federal Trade Commission (FTC) to divest Grail, a cancer-test developer. This call to action follows the decision last September by the European Union to block the acquisition. It is seen as a test of regulators’ attempts to hamper major companies from purchasing developing innovators.
The pressure on Illumina has been compounded with the emergence of activist investor Carl Icahn who, last month, initiated a proxy fight against current management. Icahn has argued that the Grail deal was an overpriced mistake and admonished the return of Illumina’s former leader, Jay Flatley, to replace Francis deSouza, the designer of the Grail purchase.
The result of these events has caused a fluctuation of Illumina’s stock; a 37% drop in the past year. Even as the company declared its plans to file appeals of the ruling with the federal appeals court–and also to the European decision–it has stated that if it losses, it would “move expeditiously” to sell Grail.
According to expert antitrust law, if this case is affirmed, it could influence a precedent to restrain large companies from getting budding innovators. Furthermore, the case makes not only reference to this biotech transaction worth $7.1 billion, but also stands to communicate a warning to tech giants and dominant businesses.
Grail has developed technology to detect some types of cancers in its early stage. Even if its businesses is small right now, it may have the potential to become a big industry in the future. Illumina and Grail, however, do not rival each other in terms of gene sequencing.
The F.T.C. chairwoman, Lina Kahn pushes a policy of pre-emptive arbitration to merger legislation. The brand has argued that it has the necessary resources and proficiency to advance the implementation of Grail’s blood tests. It’s no surprise that Grail’s tests have the potential to be life-saving.
This decision of the F.T.C. came in a 4-0 vote from the commissioners and was supported by a statement from the commission showing how the possession would weaken creativity in the American market for Multi-Cancer Early Detection tests, by rising prices and decreasing choice and quality of tests.
The article was first written last year by Steve Lohr, who covers technology and economy for New York Times.
Carl Icahn is an American businessman, investor and philanthropist who is currently the majority shareholder in Icahn Enterprises, a diversified conglomerate holding company based in New York. He has specialized in easy corporate takeovers, famously opposing executives whom he perceives as wasteful or incompetent. He is best known for his break-up campaigns and his investment in Apple Computer.
Illumina is a San Diego-based biotechnology company specializing in medical sequencing. It took the world by storm when it emerged in 1998 as the first company to truly commercialize DNA sequencing. Since then, Illumina has been providing the world with groundbreaking breakthroughs in the study of genomics. Illumina’s products are used in hospitals, labs and research institutions across the world, and they recently launched the world’s first direct-to-consumer genetic sequencing product.