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Invitrogen Hopes to Entice Researchers With Lower-Priced Tube-Based Oligos

A year after announcing a collaboration with Illumina to develop and sell new tube-based oligonucleotides, Invitrogen recently launched the first products from that pact. According to the company, a key selling point of the products is their price.

Invitrogen launched the oligos two weeks ago, taking aim at a market estimated to be worth between $250 million and $340 million and growing at low single digits. Pricing competition in the oligo market is fierce — with rivals including Sigma-Aldrich and IVT, among others — but Invitrogen and Illumina said their partnership will enable researchers to buy twice as much primer for the same price as they were previously paying for tube-based oligos.

Prior to the launch, "we were providing our customers with 10nmole [starting synthesis scale], and now we've increased the scale to 25nmole, and we haven't done a thing to change the pricing," which is 35 cents per base, said Sallie Cassell, business area manager for DNA oligos at Invitrogen. "So, our customers are getting twice as much now for the same price."

Pricing competition in the oligo market is fierce — with rivals including Sigma-Aldrich and IVT, among others — but Invitrogen and Illumina said their partnership will enable researchers to buy twice as much primer for the same price as they were previously paying for tube-based oligos.

Cassell also said this week that Invitrogen's ability to offer the oligos at that price is due to efficiencies at Illumina's manufacturing facility, which Illumina executed using Invitrogen's $3.4-million investment (see BioCommerce Week 12/23/2004). She told BioCommerce Week, "The technology we're using over there at Illumina is …not the same stuff that's been used over and over. They've really applied new technologies … and we've got an amazing quality-control program over there."

Prior to the collaboration, Illumina's focus on the oligo market was solely on producing and selling plate-based oligos — primarily because of the firm's focus on high-throughput genotyping — while Invitrogen primarily provided tube-based oligos. Invitrogen CEO Greg Lucier said that the firm's oligo business was roughly 80 percent tube and 20 percent plate.

"We partnered together so that [Illumina's] strength in the tube market, and [Invitrogen's] strength in the plate market made a really nice marriage … for our customers," Cassell said. "We have a broad swath of products that we offer, and we're probably in every single molecular biologist's lab ... [but] we've always supported those customers primarily with tubes."

The partnership makes sense for both firms. Invitrogen gains a reputable manufacturing partner and adds new products to its portfolio. But perhaps more importantly, the alliance could enable the company to take advantage of the market links between primer purchases and other research products in its arsenal, thus expanding its market share and fattening its top line.

"There is an affinity of primer volume with the rest of our products," Lucier said, so "this is a novel solution."

For Illumina, the alliance enabled it to update its manufacturing capabilities and provide new products to the market with a partner that has an extensive global reach. It also provides Illumina with a potentially significant revenue stream, as the firms agreed to split revenues 50-50.

The combination of the two firms' capabilities is expected to be a formidable competitor to market leaders IVT, Sigma-Aldrich, and Operon Biotechnologies, which was spun out of Qiagen last year.

Lucier said that the alliance could produce a $100-million-plus business "in the next couple of years." The cost savings from transitioning Invitrogen's oligo manufacturing in Frederick, Md., to Illumina's San Diego facility is not expected to impact the company's financials this year, but it likely will have a positive effect in 2006 and beyond, Lucier said.

With the signing of the pact, Invitrogen shifted its production work in Frederick to RNAi technologies. Invitrogen's distribution, which provides one-day turnaround times, also moved from Frederick to San Diego.

"Delivering on the same or the next day is a critical element of being a player in the oligo market," Lucier said. "It was a key consideration in the discussions. We can serve all our customers inside the US the same from San Diego as we did from Frederick."

As part of the pact, Illumina shifted seven sales representatives to Invitrogen. "We have experts in certain areas, and they would be our oligo experts," Cassell said. "They know that market very well." She added, "They [will] partner with our standard account managers who have a bigger bucket of products."

Invitrogen also assumed responsibility for marketing and technical support for the products.

The former Illumina employees are a prime example of Invitrogen's recently announced plans to create technology specialist sales teams in an effort to better reach customers (see BioCommerce Week 12/8/2005).

"We're still going to have a large generalist sales force, but now augmented and complemented by teams of specialists in this technology workflow set of areas," Lucier said last week. "Those specialist teams will then align with product development teams in the organization, and then those development teams [will be] part of these new divisions."

Those changes were part of a greater plan to realign Invitrogen's divisions with an aim of better serving its customer base and accelerating revenue growth.

— Edward Winnick ([email protected])

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