"Science and Technology Innovation Board Daily" on February 5 (Reporter Xu Hong) For the first time, the list of unreliable entities includes foreign entities in the field of biotechnology.

Recently, the market expects that domestic gene sequencers are expected to benefit from the inclusion of global gene sequencing giant Illumina in the list of unreliable entities by the Ministry of Commerce of China, which may affect its business in China.

On the first trading day of the Year of the Snake (February 5) of the Lunar New Year, MGI (688114. SH) share price has also made a good start. As of the close, it was 45.7 yuan / share, up 14.36%.

"We don't know exactly why Illumina was included in the list, but it's bound to be good for domestic brands. Gene sequencers will fully shift to domestic production, especially the stock market of Illumina is considerable, if reagent consumables can not be sold, then the stock market will also be a domestic opportunity. An analyst who did not want to be named told the reporter of the "Science and Technology Innovation Board Daily".

▌Gene sequencing giants are included in the list of unreliable entities

On February 4, the official website of the Ministry of Commerce released the Announcement of the Working Mechanism of the Unreliable Entity List on the Inclusion of PVH Group and Illumina in the Unreliable Entity List.

According to the announcement, in order to safeguard national sovereignty, security and development interests, in accordance with the "Foreign Trade Law of the People's Republic of China", "National Security Law of the People's Republic of China", "Anti-Foreign Sanctions Law of the People's Republic of China" and other relevant laws, and in accordance with the relevant provisions of the "Provisions on the Unreliable Entity List", the working mechanism of the Unreliable Entity List decided to include the United States PVH Group and Illumina, Inc. in the Unreliable Entity List.

The above-mentioned two entities violated the principle of normal market transactions, interrupted normal transactions with Chinese enterprises, and took discriminatory measures against Chinese enterprises, seriously harming the legitimate rights and interests of Chinese enterprises. The Working Mechanism for the Unreliable Entity List will take corresponding measures against the above-mentioned entities in accordance with relevant laws and regulations.

On September 19, 2020, the Provisions on the Unreliable Entity List were approved by the State Council of the People's Republic of China and promulgated by the Ministry of Commerce of the People's Republic of China, and came into force on the date of promulgation.

For foreign entities included in the Unreliable Entity List, the Working Mechanism may, based on the actual situation, take one or more measures against the listed enterprises, including restrictions on import and export activities, restrictions on investment in China, restrictions on entry of persons, work permits, and residence qualifications in China.

Among them, in 2025, the working mechanism completed four law enforcement on January 2, January 14, January 15, and February 4.

This is the first time that a foreign entity in the biotechnology sector has been included in the Unreliable Entity List. As for what specific misconduct Illumina has carried out in the Chinese market, the reporter of "Science and Technology Innovation Board Daily" also tried to obtain further information through the industry, but has not received any clear reply as of press time.

According to relevant media reports, the direct trigger for the sanctions against Illumina this time was its behavior of "cutting off the supply of key reagents" and "unilaterally terminating technology authorization" to Chinese companies. According to industry insiders, Illumina has abruptly suspended cooperation with a number of Chinese biopharmaceutical companies on the grounds of "supply chain security review", and even seized paid orders, resulting in the suspension of 10 domestic early cancer screening and genetic disease research projects.

It is worth mentioning that the Unreliable Entities List is a dynamically updated list, and new companies may be included for non-compliance, and those already listed may be removed from the list for corrective actions. In response to the emergency, Illumina issued a statement on the 5th, saying that the company is currently conducting a detailed assessment of the impact of related matters and actively seeking solutions.

▌ Rapid development of domestic products

The decision of the Ministry of Commerce of China to include Illumina in the list of unreliable entities has aroused widespread concern in the industry, and a very important reason is that Illumina is an out-and-out global gene sequencing giant that has long dominated the Chinese market.

Founded in 1998, Illumina is a biotechnology company focused on the R&D and commercialization of gene sequencing technology, including high-throughput gene sequencers, gene chips, and related analysis software. Illumina has long monopolized the global gene sequencing market, so it is also known as the "Google" of the gene technology industry.

China is one of Illumina's most important markets in the world. Since entering China in 2005, Illumina has quickly gained a dominant position in the Chinese market with its advanced sequencing platform and comprehensive services, and many of the country's top medical institutions, research institutes, and biopharmaceutical companies rely on its equipment and technology.

However, in recent years, the rise of domestic sequencers has challenged Illumina's competitiveness in the Chinese market, and its market share has continued to decline. According to the data, from 2020 to 2022, Illumina's share of the Chinese market was 59%, 48%, and 37%, respectively, shrinking year by year. In the past 2023, Illumina's market share of new installations in the Chinese market has further declined to 26.5%.

As one of the leading companies in domestic gene sequencing equipment, data from CIC Consulting shows that in 2023, MGI has surpassed overseas brands such as Illumina and Oxford Nanopore, ranking first in the domestic market share with a share of 47.3%, and the number of new installed units in China has reached 695.

At the same time, in addition to the most mainstream next-generation sequencing technology, domestic enterprises also have a comprehensive layout in other technical routes such as single-molecule sequencing and nanopore sequencing, and continue to make breakthroughs.

"There is still a gap between domestic high-throughput sequencers and Illumina in terms of industrial integration and upstream and downstream ecological construction. At this stage, the total amount of data and the application scope of Illumina sequencers are significantly ahead of domestic sequencers. In terms of technology, Illumina's super-resolution optics, machine learning algorithms, and chip design are also advanced. Zhenmai Biotech previously told the media.

With Illumina's inclusion on the Unreliable Entity List, the analysis is expected to bring new development opportunities to China's gene sequencing industry in the long run, while it may cause problems for companies that rely on its equipment supply or brand licensing, accelerating the independent R&D and technological innovation of domestic gene sequencing companies.

"In particular, after the equipment is purchased, it is necessary to use supporting reagents and consumables, and if the reagent consumables are also limited, not only the incremental market, but also Illumina's domestic stock market may also shift to domestic production." Analysts told the reporter of the "Science and Technology Innovation Board Daily".

(Science and Technology Innovation Board Daily reporter Xu Hong).

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