Affymetrix, BGI Join Forces

Genetic products maker Affymetrix (AFFX - Analyst Report) has inked a Memorandum of Understanding (“MOU”) with leading genomics center “BGI” to co-develop and commercialize microarrays for genotyping analysis (a process used to analyze genetic differences between organisms or cells). The collaboration will aim at developing and marketing a range of plant, crop, and livestock microarrays in an effort to broaden the use of molecular tools in agriculture.

The partnership is expected to benefit the agricultural community globally by offering cost-effective and high-throughput solutions that leverage Affymetrix’ expertise in microarray technology and BGI’s next-generation, high-quality sequencing platforms, bioinformatics capabilities and sequencing database.

The alliance will offer scientists a vast range of genomic markers from the “1000 Plant and Animal Reference Genomes Project”, which BGI launched in 2010 with an aim to generate reference genomes for 1,000 economically and scientifically important plant/animal species. The collaboration will help advance the use of genomic selection to scientists looking for better outcomes in breeding plants, crops, and livestock.

Affymetrix holds a leading position in the gene expression products and services market. Along with Illumina Inc. (ILMN - Snapshot Report), it is one of the two major providers of microarray technologies primarily used in the field of genetic research.

Affymetrix is pursuing a number of strategies (including expansion into new markets) aimed at expanding its top line. The company is shifting its R&D focus from discovery and exploration markets to the faster-growing validation and routine testing markets.

However, Affymetrix is operating in an intensely competitive industry and faces risks associated with lower R&D spending by its customers due to a soft economy and government actions including budget cuts.

Affymetrix has been beset by uncertainties surrounding National Institutes of Health (“NIH”) funding. Decline in government research grants may substantially affect its sales. We are currently Neutral on the stock, which is in agreement with a short-term Zacks #3 Rank (Hold).

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