On March 4, China's Ministry of Commerce announced a ban on Illumina, a U.S. biotechnology company, from exporting gene sequencers to China due to discriminatory measures against Chinese companies.

At noon on March 11, Illumina responded to the incident, saying that Illumina fully respects the decision of the Ministry of Commerce of China, and will continue to follow the principles of marketization and legalization to carry out global operations, and strictly abide by the laws and regulations of the countries or regions where the markets are located, including China. Since entering the Chinese market, Illumina has been serving clinical and scientific research clients in the region.

Illumina also announced that it expects non-GAAP earnings per diluted share of Illumina's core business to be approximately $4.50 in fiscal 2025. At the same time, the company is developing an incremental cost-cutting plan of approximately $100 million for fiscal 2025. These savings will help mitigate the impact of a number of potential scenarios, including lower revenues and related operating income in Greater China. The cost-cutting plan includes optimizing stock-based compensation and nonlabor expenses, as well as accelerating some productivity measures.

Founded in 1998 and headquartered in the United States, Illumina is a leading global gene sequencer company. In the Chinese market, Illumina's market share has been eroded by local gene sequencer companies in recent years. For example, in 2022, MGI surpassed Illumina for the first time in terms of market share in China.

However, China does not account for a high proportion of Illumina's global market revenue. In the first three quarters of 2024, Illumina's operating income was $3.268 billion, of which $228 million was from the Chinese market, down 25% year-over-year. Illumina's China revenue accounted for only about 7%.

After Illumina was banned from exporting gene sequencers to China, is it expected that the market share of China's local gene sequencer companies will continue to expand? Since the beginning of this year, MGI (688114. SH) shares rose by more than 90% on the secondary market.

Although Illumina has been banned from exporting gene sequencers to China, its reagent consumables business has not been affected. In addition, since entering the Chinese market in 2005, Illumina has launched a strategy to "accelerate the localization process" in China and expand its investment. For example, in 2023, Illumina's manufacturing base in China in Shanghai will be expanded, and its first batch of localized series products will be delivered.

Ankur Dhingra, Illumina's Chief Financial Officer, said, "Our new guidance for fiscal 2025 sees a relatively limited revenue contribution from China and expects current macro trends to continue. The Company will continue to invest in our growth strategy while taking steps to achieve fiscal 2025 earnings of approximately $4.50 per share, and continue to grow on that basis. ”

Jacob Thaysen, CEO of Illumina, said, "We remain focused on delivering high-single-digit revenue growth through 2027 while improving margins. We are confident in the tremendous opportunities we face in the global market for our solutions, the strength of our business, and our continued leadership in genomics and multi-omics innovation to support our customers' corporate strategies."