Business Economics Assessment: Illumina Inc. Acquisition of Grail
Business Economics Assessment 1
This assessment is individual work. It counts for 30% of the overall mark. It is individual and NOT teamwork. Please ensure that academic integrity is maintained throughout and you do not fall foul of the regulations. Please answer all questions. Feel free to make use of other materials, but make sure you reference and paraphrase appropriately.
Illumina Inc. (ILMN) (illumina.com) acquired Grail (GRAL) (grail.com) without seeking permission from regulatory authorities.
Use the Porter’s 5 Forces model of competitive advantage and the PESTEL (Political, Economic, Social, Technological, Environmental and Legal) analysis to analyse the two corporations. Make sure you use one type of analysis to analyse one corporation and the other type of analysis to analyse the other corporation. Also briefly discuss the organisational architecture of Illumina.
Discuss advantages and disadvantages of the acquisition of Grail by Illumina from the viewpoint of Illumina. Discuss the advantages and disadvantages of the acquisition from the viewpoint of regulatory authorities.
(1000 words maximum +/- 20%)
BUSINESS ECONOMICS ASSESSMENT: ILLUMINA INC. ACQUISITION OF GRAIL
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Business Economics Assessment: Illumina Inc. Acquisition of Grail
Introduction
Grail, a healthcare company specializing in potentially life-saving early cancer detection, was acquired by Illumina Inc., a well-known genomics and DNA sequencing firm, in 2020 (Illumina 2023). The aim was to make the advanced technology widely available to patients for early cancer detection (Grail 2023). It was a $7.1 billion vertical purchase (Farrar 2023). The EU fined Illumina a record 432 million euros for finalizing its acquisition of Grail (Arianna 2023). According to Constantino (2023), the acquisition has faced regulatory and scrutiny challenges from authorities due to anti-competitive consequences and the potential stifling innovation within the genomic cancer detection market.
The Porter's 5 Forces Model: Grail
Threat of New Entrants:
The specialized biotech sector of early cancer detection is characterized by a relatively low threat of new entrants posed by rigid regulatory standards and hefty R&D expenditures.
Bargaining Power of Suppliers:
Suppliers' bargaining power levels can range from modest to considerable (Goyal 2021). Due to the highly specialized nature of the biotechnology business, providers of distinctive biological materials or specialized laboratory equipment may wield significant influence. Bargaining Power of Buyers:
The bargaining power of buyers, such as healthcare professionals or consumers, to exert significant negotiating power is attributable to the vital importance of items and services related to human life.
Threat of Substitute Products:
While there may be alternatives to Grail, Inc.'s cancer detection/screening technologies (Grail 2023), they may pose less of a threat if Grail can show that its method is more accurate or can detect cancer earlier.
Competitive Rivalry:
The level of competition is high in the relevant healthcare sector. Numerous established entities, such as Guardant Health and Foundation Medicine, are actively researching appropriate technology.