China's Thaw on Illumina Masks Deeper Biotech Rivalry

China to lift 8-month ban on imports of Illumina's gene sequencers

San Diego gene-sequencing giant faces mounting IP threats and market erosion as U.S.-China technology competition intensifies

By [Staff Writer]

SAN DIEGO—China's decision to lift an eight-month ban on Illumina Inc.'s gene-sequencing equipment next week offers scant relief for the embattled San Diego biotechnology giant, which faces escalating threats to its intellectual property and shrinking market share in the world's second-largest economy.

The Chinese Ministry of Commerce will allow imports of Illumina's sequencers starting Nov. 10, the company disclosed Wednesday, but will keep the firm on its "unreliable entities list," requiring government approval for each sale. The partial reprieve comes as Illumina confronts intensifying competition from Chinese rival BGI Group, years of contentious patent litigation, and allegations that Beijing-backed genomics companies have systematically appropriated Western technology.

"We are pleased with the announcement from MOFCOM, which is a very positive step forward," said Jacob Thaysen, Illumina's chief executive. But industry analysts warn the company's China troubles run far deeper than tariffs, touching on fundamental questions about intellectual-property protection in a market where domestic competitors enjoy state backing and nationalist procurement policies.

A Beleaguered Market Leader

Illumina's China revenue has declined for six consecutive quarters due to national policies favoring domestic sequencers from BGI and MGI Tech, falling 6% in 2022, 18% in 2023, and 20% in 2024. The company derived approximately 7% of its revenue—roughly $300 million—from Greater China in 2024, making it the firm's fourth-largest geographic market behind the Americas and Europe.

The ban, imposed March 4 following President Trump's doubling of tariffs on China, represented "the last straw in a challenging relationship," according to Leerink Partners analyst Puneet Souda. Even with the ban's lifting, Souda projects continued revenue decline as Beijing's policies drive customers toward domestic alternatives.

The competitive pressure extends beyond market access. Analysts attribute Illumina's listing on China's unreliable entities list not only to trade retaliation but also to the company's patent litigation with MGI, its lobbying for U.S. biosecurity measures targeting Chinese competitors, and broader cybersecurity concerns.

The Patent Wars

The intellectual-property battlefield between Illumina and China's genomics champions reveals the high stakes in a technology race with implications for medicine, agriculture, and national security.

Since 2019, courts worldwide have issued injunctions against BGI products, with victories for Illumina in the U.S., UK, Germany, Spain, Finland, and Sweden over patent infringements of its sequencing-by-synthesis chemistry. In 2019, Illumina initiated multiple patent lawsuits against BGI, accusing the company of intellectual property theft.

Yet BGI scored a stunning reversal. In May 2022, a Delaware federal jury found that Illumina's two-channel sequencing technology—featured in its commercially critical NextSeq and NovaSeq instrument lines—infringed two patents held by Complete Genomics and awarded $333.8 million in damages. The jury determined the infringement was willful.

The companies reached a $325 million settlement in July 2022, with Illumina receiving a license to two-color sequencing technology and BGI obtaining licenses to Illumina's "image mix patents," along with a litigation ceasefire lasting until October 2025. That truce expires in less than two months.

"BGI has misappropriated Illumina's proprietary, groundbreaking technology," Charles Dadswell, Illumina's senior vice president and general counsel, said following a UK court victory. BGI disputes such characterizations, arguing it developed its technology independently.

The IP Theft Question

The patent battles unfold against broader U.S. government warnings about Chinese genomics companies' handling of intellectual property and sensitive data.

Beijing Genomics Institute has engaged in the illicit collection of pregnant women's DNA and conducted research with the Chinese Communist Party's People's Liberation Army, according to the House Select Committee on the Chinese Communist Party. The U.S. government has placed export control restrictions on BGI for its involvement in the genetic tracking of ethnic minorities in Xinjiang, where the CCP is conducting genocide against the Uyghur people.

According to U.S. Deputy FBI Director Paul Abbate, China runs "a massive, sophisticated cyber theft program" and "conducts more cyber intrusions than all other nations in the world combined," with the FBI opening a new Chinese counterintelligence investigation every 12 hours. The U.S. Department of Justice reports that 80 percent of its economic espionage cases involve China.

Industry concerns about intellectual property protection in China's genomics sector date back over a decade, with researchers questioning whether Chinese companies would respect Western IP laws. In 2013, BGI purchased U.S. genomic sequencing firm Complete Genomics, giving the Chinese company direct access to American technology and markets.

If Illumina remains blacklisted and other non-China-based sequencer producers face similar restrictions, biotech and pharmaceutical companies may be forced to partner with Chinese counterparts, raising concerns that such companies may misuse their know-how or trade secrets, according to legal analysis by Ropes & Gray.

The BIOSECURE Backlash

Illumina's aggressive lobbying for the BIOSECURE Act—legislation targeting BGI, MGI, Complete Genomics, and other Chinese biotechnology firms—appears to have backfired spectacularly.

Illumina spent $380,000 during the first quarter of 2024 lobbying Congress on the BIOSECURE Act and related legislation, according to disclosure forms. The bill would ban federally funded medical providers from using products manufactured or services provided by Chinese genomics companies, including BGI Group, its affiliate MGI Tech, and MGI subsidiary Complete Genomics.

Professor Liao Shiping of Beijing Normal University Law School, a prominent Chinese legal expert involved in handling cases under WTO dispute settlement, stated that Illumina was reportedly using political donations to push the U.S. Congress to pass the BIOSECURE Act. News reports indicate China may have targeted Illumina specifically due to its lobbying efforts to restrict Chinese competitors through the BIOSECURE Act.

The legislation passed the House of Representatives in September 2024 with bipartisan support but stalled in the Senate. A revised version has been introduced as an amendment to the 2026 National Defense Authorization Act, though its fate remains uncertain.

Complete Genomics fired back with its own lobbying campaign, spending $200,000 in the first quarter of 2024, and launched a website arguing the bill would "strengthen the monopoly in the genomics market held by one dominant U.S. player"—an unmistakable reference to Illumina, which controls over 90% of the sequencing market.

The Strategic Dimension

The Illumina-BGI rivalry has become a proxy for broader U.S.-China competition in biotechnology, an industry both governments view as strategically critical.

The U.S. Office of the Director of National Intelligence warned in February 2024 that Beijing is prioritizing biotech and trying to fast-track its science and technology development through IP theft and other means, noting that "China now rivals the United States in DNA-sequencing equipment and some foundational research".

The PRC is investing heavily in the "biotech revolution" and has enacted national policies prioritizing the collection of healthcare data both at home and abroad to achieve its goal of becoming a global biotech leader, designating biotech as a "strategic emerging industry" in national plans like Made in China 2025.

In April 2025, the U.S. National Institutes of Health began barring researchers from China and five other "countries of concern" from accessing 21 controlled databases containing genomic and health data, a move that prompted Chinese scientists to warn of reduced international collaboration.

In October 2022, the Department of Defense added BGI Genomics to its list of Chinese Military Companies operating in the U.S., and in March 2023, the Commerce Department added BGI Tech Solutions to the Entity List for concerns the unit poses a significant risk to contributing to PRC Government surveillance.

Market Reality

Despite geopolitical tensions, BGI has made substantial inroads in the U.S. market following the 2022 patent settlement. MGI entered the U.S. market in August 2022, ending years of legal battles that Illumina had used to keep the Chinese competitor at bay.

In 2010, BGI purchased 128 Illumina HiSeq 2000 gene-sequencing machines, backed by $1.5 billion in "collaborative funds" from the state lender China Development Bank. The Chinese company has since developed its own sequencing platforms and expanded globally, operating laboratories in more than 20 countries.

Academic researchers report that Complete Genomics offers "the most cost-efficient and best performing gene sequencing equipment in the industry," with some noting that "Illumina has been overcharging for a long time because it had a monopoly". Stanford genetics chair Michael Snyder said his lab selected Complete Genomics equipment primarily for lower instrument prices and operating costs.

Looking Ahead

The November 10 lifting of China's import ban offers Illumina little comfort. The company announced in March it would cut $100 million in costs to offset China losses, and recently lowered its 2025 revenue guidance, expecting Greater China revenue of just $165 million to $185 million—a dramatic decline from $300 million in 2024.

"Next-gen sequencing remains strategic to national interests, thus we believe Illumina has limited avenues to grow in China," Souda concluded. "Management is in dialogue to identify a resolution, but with limited options we see an upcoming exit from China."

The real threat to Illumina may not be Chinese government restrictions but rather the emergence of a formidable domestic competitor with state backing, deep pockets, and increasingly sophisticated technology—circumstances that raise fundamental questions about whether Western companies can compete in China's strategic industries while protecting their intellectual property.

For Illumina, the challenge is existential: how to maintain its global dominance in gene sequencing while navigating a geopolitical landscape where technology, trade, and national security have become inseparable.

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