EU regulators to order Illumina to sell $8bn cancer treatment group

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EU regulators will order US biotech Illumina to sell cancer test developer Grail after it bought the $8bn company without the approval of Brussels, according to three people with direct knowledge of the matter.

The step is intended to deepen the punishment for Illumina after Brussels fined the world’s largest gene-sequencing company €432mn in July for defying what regulators described as a “cornerstone” of their authority.

New York-listed Illumina and Brussels have been locked in a legal fight since 2021 when the San Diego-based company completed the purchase of Grail even as EU regulators were still examining whether the deal would hurt competition.

Brussels chose to block the transaction a year later, saying it would stifle innovation and limit choice for consumers. Illumina had disputed the EU’s right to scrutinise the deal, pointing to the fact that Grail does not have any revenues in Europe. It completed the deal in August 2021.

Illumina is already challenging a similar order from the US Federal Trade Commission, which in April demanded the sale of Grail, saying the deal would hurt efforts to develop ways of detecting cancer. The company said it had a “strong case” to appeal the order.

An order from competition regulators in Brussels for Illumina to sell Grail could come as early as next week, the people said. But the timing could still slip, one of these people warned.

The move is a rare one for regulators to take and is designed to dissuade other companies from defying their authority. Under EU law companies must submit deals for scrutiny and can only close a transaction once it has been signed off by regulators.

“They bought something illegally and now they need to sell it,” said a person with direct knowledge of the matter.

Illumina intends to appeal any order to sell Grail, according to people familiar with the matter. Illumina and the European Commission declined to comment.

The fine imposed on Illumina was equivalent to 10 per cent of its revenue — the largest penalty available to authorities for this type of infringement.

When it announced the fine, the commission said that Illumina had “considered the potential profits it could obtain by jumping the gun, even if it were ultimately forced to divest Grail. It then intentionally decided to proceed and to close the deal while the commission was still investigating the transaction that was ultimately prohibited.” 

Grail, which counted Bill Gates and Jeff Bezos as early investors, is aiming to create a cancer screening test for people without symptoms. Illumina has accused Brussels of putting lives at risk by blocking a deal that aims to bring to market a blood test to screen dozens of different cancers.

The acquisition of Grail also angered some of Illumina’s shareholders. Activist investor Carl Icahn attacked the deal as reckless and pushed for the exit of Illumina’s longstanding chief executive Francis deSouza, who in June agreed to step down.

Additional reporting by Hannah Kuchler in London