Although the Federal Trade Commission (FTC) of the United States has sued to block this transaction, and the European Union is also launching an antitrust investigation, the acquisition case has still been completed.
On August 18, 2021, global sequencing leader Illumina announced that it had acquired GRAIL, a leader in the early screening industry for cancer.
GRAIL was initially founded in 2016 with funding from Illumina. After 5 years of development, Galleri, a pan cancer gene early screening product, will be launched in 2021, embarking on a commercialization process. Galleri is based on detecting cfDNA methylation in blood, covering over 50 types of cancer, with market potential far exceeding similar products. Just like a carefully trained adopted son who has finally come of age! Illumina also had the idea of officially being included in the legitimate lineage.
On September 21, 2020, Illumina announced its acquisition of GRAIL for the first time. GRAIL accepts Illumina's acquisition terms of 52.3 billion RMB (8 billion US dollars). The transaction will be completed in the form of cash and stocks, with $3.5 billion in cash and the remaining $4.5 billion in Illumina common stock. Illumina will own up to 93% of the shares after the merger, while other existing GRAIL shareholders will own the remaining 7% of the shares.
Illumina established GRAIL separately in the past to control costs in an uncertain field and attract external capital to share risks; As GRAIL's achievements gradually emerge and commercialization is approaching, it is also natural to recycle GRAIL. However, as a leading enterprise in the field of early screening of tumors, will GRAIL's accumulated patents become a big stick for Illumina to crack down on industry competitors in the future?
The United States and Europe are investing in antitrust investigations one after another
Illumina is known as the oligopoly of gene sequencers, once occupying 70% of the global market share, with 90% of gene sequencing data provided by its equipment. The news of Illumina's acquisition of GRAIL immediately attracted high attention from regulatory authorities, and the United States and the European Union immediately launched antitrust investigations into it.
FTC is the first to file a lawsuit
As the only DNA sequencing supplier in the United States, Illumina's economic motivation to acquire GRAIL is suspected.
The Federal Trade Commission (FTC) believes that the Galleri test can be used to detect up to 50 types of cancer, most of which currently do not have early screening methods. This test product can save millions of lives worldwide. The acquisition will put GRAIL's competitors at a disadvantage, thereby hindering industry competition and innovation, ultimately hindering consumer protection, and forming an industry monopoly.
Based on this, FTC filed a lawsuit against Illumina in the District Court for the District of Columbia, with an administrative trial scheduled for August 24, 2021.
EU expansion review
Although Illumina and GRAIL are both American companies, in the context of trade globalization, any industry monopoly that arises will affect the world.
The European Commission revised the merger regulations in March of this year. France has made a review request for Illumina's acquisition of GRAIL in accordance with Article 22 (1) of the new EU Merger Regulations (which allows member states to make review requests for mergers that do not belong to the EU level but may affect trade within the single market, particularly potentially seriously affecting competition within the requesting member states). After France submitted a review request, Belgium, Greece, Iceland, the Netherlands, and Norway also submitted the same review request.
On April 20, 2021, the European Commission decided to initiate a review process on Illumina's acquisition of GRAIL and stated that it would conduct a comprehensive investigation into the merger of this transaction. On July 22nd, the preliminary review was completed and a second round of review will be conducted. The review results will be determined before November 29th.
Firstly, Illumina believes that it has no plans to sell Galleri in Europe, so the EU is not qualified to review the merger case.
GRAIL is currently selling Galleri testing in the United States for $950, which is not currently covered by insurance reimbursement. Illumina's experience in market development will help accelerate market coverage and reimbursement.
GRAIL was formed by Illumina, and the first batch of GRAIL employees were also from Illumina. Illumina and GRAIL are not competitors, and this is a vertical acquisition.
Illumina has promised to the US Federal Trade Commission and the European Commission to take these remedial measures: to guarantee a 12 year supply agreement to US/EU customers and to reduce the sequencing price per GB by 40% by 2025.
GRAIL standing on the shoulders of giants
Thanks to Illumina's full support, GRAIL can be said to have developed smoothly and also created three "best" in the industry: the largest financing scale, the best early screening technology, and the largest number of clinical trials.