This move highlights the increasing interest of Biopharma in personalized medicine and potential of clinical NGS ---Roche has launched a $5.7B hostile offer for Illumina, the SD-based genomics company, in a deal that may transform the life industry. This offer follows Roche’s frustration to engage in substantive discussion about a potential deal with Illumina in recent months.This move highlights the increasing interest of Biopharma in personalized medicine, especially in oncology. A key tenant of personalized medicine is the access to a person’s genetic code, or genetic information. Multiple genomic methods, such as CE sequencing, qPCR or microarrays give a snap shot of a person’s genome, looking for instance at the sequence at one location (base pair) of one of our 30,000 gene. Next generation sequencing, on the other hand, allows to sequence a person entire genome –all 3 billion base pairs of all 30,000 genes- for as few as $3,000 in 10 days, and soon for $1,000 in a day (see related article). The combination of Roche and Illumina may accelerate the adoption of NGS during clinical trials, as well as the transition of NGS into routine molecular diagnostics use for patient screening, diagnostics and monitoring.While many observers believe Roche may have to raise its offer, the company indicated it had no intention of upping its bid that " […] represents full and fair value for Illumina […]” according to Roche executive Severin Schwan. This transaction would be Roche’s largest deal since its acquisition of the remaining stake in Genentech, for ~$46B in 2009. Illumina’s share surged ~45% to ~$55 on Wednesday after Roche made its offer to pay $44.50 a share for the US business. This number is still shy of the $70 the company was trading on a year ago. While scientific excitement around genomics remains high, Illumina’s shares have plummeted in the last 12 months, given headwinds in government funding, as well as excess capacity at some customer site that find it difficult to keep up with the face pace of a technology in which data analysis and bioinformatics represent a key bottleneck.The two companies may benefit from significant synergies from this deal. To the table, Roche brings leadership in personalized medicine (e.g., Heceptin) and molecular diagnostics (e.g., COBAS, Lightcycler); Illumina brings leadership in next generation sequencing (NGS) platforms that can sequence an entire human genome for a few thousand dollars.With ~60% share, Illumina is the clear market leader in the $1.0B next generation sequencing (NGS) market (also known as deep sequencing). In 2011, DeciBio estimates that Illumina derived ~60% of its $1.05B in revenues from NGS. The company offers instruments (e.g., HiSeq 2000, MiSeq), reagents and services (Illumina Genome Network, IGN). Other revenues are generated primarily from its microarray business, and a small fraction is derived from qPCR sales.Interestingly, Roche has also been offering NGS platforms via its 454 Life Sciences, but with <20% share, the company has been falling beyond due to its technology’s lower throughput and ease of workflow. As a result, Life Technologies (via its Ion Torrent division) and Illumina currently appear best positioned to deliver full genome information for clinical use. However, on its own, many experts believe Illumina may have difficulties penetrating clinical markets. The backing of Roche would greatly facilitate the entry into molecular diagnostics.---Authors: Stephane Budel, Partner at DeciBio, LLCConnect with Stephane Budel on Google+https://plus.google.com/+StephaneBudel