Reshaping for the future

SAN DIEGO—Illumina has split. Not as in "gone away" of course—but rather in terms of its operating structure. As of early January, the company had completed a reorganization by which it has a newly created Life Sciences Business Unit that will include all products and services related to the research market, such as the BeadArray, BeadXpress and Sequencing product lines. Alongside it stands the new Diagnostics Business Unit, which is intended to put more focus on emerging opportunities in molecular diagnostics, with the unit being charged with developing diagnostic content for the BeadXpress system now, and ultimately for Illumina's Sequencing products.
In a broad sense, the new organizational structure is intended to increase synergies between Illumina's sequencing and genotyping businesses.
"Over the last few years we have experienced incredible growth," says Jay Flatley, president and CEO of Illumina, and he says the new changes will help leverage the company's technology assets to capitalize on future opportunities. One result will be the acceleration of the integration of its sequencing and genotyping technologies.
"Additionally, it will enable us to put more focus on developing our diagnostics business," Flatley notes.
"One of the challenges with our hyper-growth that we've had in recent years is that we needed to figure our how to keep scaling our business and scaling our management teams as well to keep up with that growth, and having these two divisions accomplishes that," notes Christian Henry, Illumina's CFO. "This kind of reorganization has actually been in the works since we acquired Solexa and we always figured that sometime in 2008 we'd make these kinds of changes to get better business focus and integration of our platforms."
Henry points out that while the new diagnostics unit will see most of its business trending toward patient care—with a particular eye toward cancer applications and personalized medicine—it will see action in the drug discovery and development world as well, such as diagnostic tools for use in clinical trials.
"This sounds like a huge reorganization and big shift in our business, but it's really just a way of formalizing what we had already begun to do in terms of having our various teams working together more efficiently and in a more focused way," Henry says.
Although the changes were always intended to happen this year, the specific timing was driven in large part by some key management changes. For example, John Stuelpnagel, senior vice president, COO and general manager for arrays had decided to move to part-time status as of April 1, 2008. Although Stuelpnagel is expected to have a continuing role with the company working on key projects as an Illumina Fellow, he will be stepping down from the board and having less direct impact day to day.
"John has spent the last 10 years founding, building and leading Illumina into a pre-eminent life sciences company," Flatley says. "Although we are disappointed that John has decided to step down from his full-time role, we expect to continue to benefit from his broad experience, leadership and vision."
In addition, John West, senior vice president and general manager for sequencing (and former CEO of Solexa) announced his resignation effective Feb. 1, 2008.
Both announcements, Henry says, made this the perfect time to split into two distinct operating units. He says that general managers have been hired for both new business units, though their names have not yet been announced. The company is also beginning a search for a senior vice president, product development and a senior vice president, operations—two new positions that will report to the general manager, life sciences.
"We expect to integrate all product development activities from the array and sequencing businesses under the senior vice president, product development. Similarly, all manufacturing and materials activities will be integrated under the senior vice president, operations," Flatley says. "We will continue to operate in all our existing development and manufacturing locations, namely San Diego, Hayward and Little Chesterford, U.K." ddn
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