Skip to main content
Premium Trial:

Request an Annual Quote

Analysts Predict 'Muted' Array Demand in 2011, Cut Expectations for Illumina


By Justin Petrone

Investment firm Leerink Swann has lowered its growth expectations for microarray sales worldwide based on a recent survey, its own analysis, and anecdotal information.

The company, which disclosed its findings in a research note last week, also reduced its 2011 forecast for Illumina's microarray business but maintained its previous forecast of a single-digit decline for Affymetrix.

The survey was conducted by MedaCorp, a network of healthcare professionals, attorneys, physicians, and other specialists that Leerink Swann relies on as part of its research.

The 2011 survey measured array demand in terms of numbers of samples run rather than dollars. According to Leerink Swann, this measure is "more straightforward and easier to communicate in a questionnaire."

At the same time, the bank acknowledged that this measure is "imperfect in an environment where average price per sample has continued to fall over the past couple of years."

Based on the survey results, which solicited the opinions of 36 lab directors and managers, the bank reduced its estimate for total microarray market growth in 2011 from "low-single-digit growth to flat." Leerink Swann had predicted single-digit growth in a note released on Feb. 22.

In last week's research note, Leerink Swann analysts Dan Leonard and Julian Cochran said they had "muted expectations" for the array market this year as compared to last year's "strong growth."

The analysts have forecast a year of zero growth for arrays, with total sales of slightly under $1 billion. According to Leerink Swann, array demand grew 4 percent in 2010 after a slight decrease in 2009.

The analysts have valued the annual array market at around $900 million since 2008.

The predictions are based partly on the results of the recent survey. Forty-five percent of respondents said they expect flattish demand in 2011 of plus or minus 3 percent compared to the demand they saw last year, while one-third of labs said they anticipate demand will fall, and 22 percent predicted that demand will grow.

This is in contrast to actual demand in 2010, when half of the labs in the survey said they saw growth in microarray demand, 17 percent experienced flat demand, and 33 percent experienced a decline, the analysts noted.

The survey results also prompted the analysts to cut in half — to 5 percent — Illumina's array growth for the year.

As of Feb. 22, when the bank released its original prediction, its analysts had projected double-digit growth in Illumina's microarray business and a single-digit decline for Affymetrix's microarray business this year.

The analysts said at the time that a "rebound" in genome-wide association studies was a "key" factor in making their prediction.

The bank said the reduction in expected array revenues for Illumina will likely be offset by demand for its next-generation sequencing products. As a result, it did not alter its overall 2011 outlook for the San Diego vendor.

Leerink Swann's forecast for Affy remains unchanged. The analysts said that an expected 3-percent decline in the firm's core research microarray business should be offset by double-digit growth in the firm's cytogenetics and research and clinical validation products, such as its Panomics QuantiGene kits, resulting in flat revenues for the year.

Leerink Swann said that research array sales comprise 80 percent of Affy's product revenues.

It continues to rate Illumina's stock as Outperform and Affymetrix's stock as Market Perform, the first- and second-best ratings, respectively.

Discussing demand for array instruments, Leerink Swann said Illumina may "widen its lead" over Affy, citing the results of the survey.

The bank said respondents who plan to purchase new microarray instruments in 2011 favor Illumina by a ratio of more than two to one. At the same time, most respondents — 56 percent — said they do not plan to purchase new instruments, the firm said.

About 44 percent said they would acquire an Illumina system such as the HiScan or iScan, while 17 percent said they intended to buy an Affy GeneChip 3000, GeneAtlas, or GeneTitan. Labs were allowed to check all responses that applied on this survey question.

Have topics you'd like to see covered in BioArray News? Contact the editor at jpetrone [at] genomeweb [.] com.