Illumina (ILMN -0.67%) is a giant in the world of next-generation sequencing (NGS). It sells gene-sequencing platforms as well as the consumables and services that are needed to operate them -- and business has been booming. Its revenue climbed 40% to more than $4.5 billion last year, and GAAP net income rose 16% to $762 million.
But there's even more good news for Illumina's growth outlook. And it's illustrated clearly in the two charts below.
Where gene sequencing is being used
The first chart breaks down the global market for next-generation sequencing -- also known as massively parallel gene sequencing -- by the types of end-users, for 2017 and forecasting out to 2028. Academic and research institutes hold the biggest single slice of the market, and they are expected to maintain that leading spot. But the chart also shows the share of corporate users is growing. The biopharmaceutical industry is set to represent 26% of users by 2028, up from 21% in 2017. And diagnostics industry users are expected to grow from 18% of the market to 21%.
This is a positive trend because it shows NGS is becoming a bigger part of drug development and diagnostics. Given that, more companies can be expected to acquire Illumina sequencers as they work to develop their products.
The second piece of good news has to do with revenue potential. The following chart tracks the size of the NGS market worldwide, with projected figures out to 2025. This year, the NGS market is expected to hit nearly $12 billion, and it's forecast to increase to $22.7 billion by 2025.
The market leader
Right now, Illumina dominates the NGS market with about an 80% share, and it won't be easy for competitors to upset this leader. The technology is complex, and research labs that already have invested in Illumina products may not easily switch over to rival systems. So, Illumina should benefit in a big way from the projected growth in the NGS market.
Illumina, like many other companies, has suffered during certain periods of the COVID-19 pandemic. At certain points, research customers temporarily halted operations or reduced hours. But these disruptions won't change Illumina's long-term outlook. And the two charts above suggest more bright days ahead for this market leader.