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Illumina Inc. (ILMN - Analyst Report) announced the signing of a multi-year supply deal with Laboratory Corp. of America Holdings (LH - Analyst Report). With the agreement, LH gained expanded rights to use ILMN’s next-generation sequencing (NGS) platform, and microarray equipment and supplies to develop and market laboratory-developed tests. The financial details of the transaction, however, remain undisclosed.

The expanded deal will now allow Laboratory Corp. access to a wide range of Illumina’s products to develop innovative diagnostic tools. The focus will be on enhancing treatment in multiple areas like genetic testing, oncology and medicine, and forensics transplant.

Last week, ILMN announced plans to enter emerging markets in mid-2014 by launching a human leukocyte antigen (HLA) typing product, developed using its NGS platform. The HLA typing assays that LH will develop based on the NGS platform will enable physicians to accurately match bone marrow donors to recipients.

However, Laboratory Corp. will market these tests in the U.S. and Canada. Thus, the agreement seems to be in tandem with Illumina’s mission to enhance cancer research and treatments by expanding the use of the NGS platform.

Next generation sequencing is a hi-tech platform designed to perform advanced research on DNA or RNA molecules. We believe the NGS platform offers great market potential. The LH deal is in line with ILMN’s efforts to strengthen its presence in this space.

Earlier this month, Illumina signed an agreement with Amgen Inc. (AMGN - Analyst Report) to develop and market a multigene NGS based test to be used as a companion diagnostic for Amgen’s cancer treatment, Vectibix. In the same month, ILMN also entered into a strategic partnership with Quest Diagnostics Inc. (DGX - Analyst Report) allowing the latter to use its MiseqDX platform and related reagents for molecular laboratory-developed tests.

We are optimistic about Illumina’s expansion strategy through the enhancement of its portfolio of sequencing products, and development of strategic partnerships with therapeutics and diagnostic services providers. Currently, ILMN has a Zacks Rank #3 (Hold).

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