(1) Since Illumina was included in the "Unreliable Entity List", a number of domestic gene sequencing companies have issued replacement and alternative plans;

(2) Illumina issued two statements in succession stating that it was seeking a solution and communicated with the Ministry of Commerce and relevant departments of the People's Republic of China.

Finance Associated Press, February 10 (Reporter Zheng Bingxun) Since the global gene sequencing leader Illumina, Inc. (Illumina, Inc.) was included in the "Unreliable Entity List" by China's Ministry of Commerce earlier this month, including MGI (688114. SH) and many other domestic gene sequencing companies have successively released replacement and alternative plans in order to seize more market share, and the speed of domestic substitution is expected to accelerate.

"The most direct impact (after Illumina's sanctions) will be the acceleration of domestic substitution, and the penetration rate of domestic products will increase." A senior medical researcher told a reporter from the Financial Associated Press. He believes that at present, enterprises with relatively large domestic gene sequencing business will benefit significantly.

MGI recently released the product "Refresh" plan on its official WeChat, stating that "the development of China's life sciences industry has ushered in a major turning point", and "from now on, MGI will provide discounts on suitable equipment or reagents according to the user's replacement model and boot frequency, and provide free trial and demo experience." ”

The above replacement plan also shows that MGI is not only able to independently develop and mass-produce clinical-grade gene sequencers with different throughput from Gb to Tb, but has also become the only company in the world that has three gene sequencing technologies and products at the same time: "excitation", "self-luminescence" and "non-luminescence".

The reporter of the Financial Associated Press tried to learn more details about the replacement from MGI today, and the relevant personnel said that it was unfair to speak out. However, according to a "Illumina Platform Replacement Demand Collection Form" released by MGI, in addition to basic personal information, the applicant for replacement also needs to fill in information such as "Illumina platform model" and "current projects".

Screenshot of the "Illumina Platform Replacement Demand Collection Form" released by MGI

Affected by the Illumina incident, MGI's share price has been "red" in the last four trading days, and closed up 20% today, with the stock price rising to 66.00 yuan/share from the opening price of 43.00 yuan / share on February 5 to the close today.

Following MGI, Zhenmai Biotech and Sikun Biotech have also released detailed replacement and migration plans.

Zhenmai Biotech said that its sequencer is highly compatible with Illumina in terms of technical routes, data formats, and bioinformatics analysis processes. Sikun Biotech also said that it has launched a number of high-throughput sequencers in the field of gene sequencing, and has achieved a layout in multiple fields and multi-throughput ranges.

According to CIC Consulting, the global gene sequencer and consumables market size increased from about US$2.8 billion to about US$5 billion from 2017 to 2023, and is expected to reach about US$20.2 billion by 2032. According to Frost & Sullivan data, China's genetic testing market will grow from 48.7 billion yuan in 2025 to 153.6 billion yuan in 2030, with a compound annual growth rate of 25.8%.

It is understood that due to the high concentration of the gene sequencing industry, in recent years, Illumina, MGI and Thermo Fisher have a combined market share of nearly 90% (in terms of revenue), and before that, Illumina has been the largest sequencing company in the world.

According to the market report released by Grand View Research in 2020, in 2019, the upstream market size of the global sequencing industry was about US$4.138 billion, and Illumina's related business revenue was US$3.068 billion, with a market share of about 74.1%; Thermo Fisher's market share was approximately 13.6%, with related business revenues of US$563 million, and other companies, including MGI, collectively accounted for approximately 12.3% of the market share. In 2020 and 2021, Illumina's global market share remained as high as 78% and 71% respectively.

However, with the rise of domestic brands, Illumina's market share in China has been declining year by year. According to the data, Illumina's market share in China's gene sequencer and consumables industry decreased from 64.50% in 2021 to 54.2% in 2023 in terms of annual revenue. In contrast, the market share of domestic brands such as MGI increased from 19.9% in 2021 to 32.6% in 2023.

The report of the Clinical Laboratory Center of the National Health Commission also pointed out that MGI's sequencing platform surpassed Illumina for the first time in 2023 and became the platform with the highest utilization rate in domestic laboratories.

After being added to the "Unreliable Entity List", Illumina issued two statements in a row. Among them, the statement on February 5 said, "The company is conducting a detailed assessment of the impact of the relevant matters and actively seeking solutions." Today's statement further revealed that the company attaches great importance to it, acted quickly, and communicated with the Ministry of Commerce and relevant departments of China. Collection

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