It had nothing to do with the $17 million patent suit his company lost. No, it was the $600 million acquisition that did it.
That’s how John Stuelpnagel, co-founder and chief operating officer of San Diego-based Illumina Inc. surmised the reason behind his company’s decision to close its Wallingford factory.
Growth is a double-edged sword, it seems. On one hand, it’s a problem most businesspeople would like to have. But when you’re the fastest growing company in the country — as Forbes magazine ranked Illumina earlier this year, ahead of even Google Inc. — that growth can strain a business.
“It was just one of those tough decisions,” Stuelpnagel said.
That decision: Close the factory and relocate it to the main headquarters in San Diego. That should happen sometime by the end of the year.
About 35 people work in the factory, located in the Barnes Industrial Park in Wallingford. About half them have been told they have jobs waiting for them in San Diego if they choose to move, although it’s unknown how many plan to. The rest, Stuelpnagel said, have been encouraged to apply for the more than 100 open positions with the company in Southern California or near Cambridge, England.
Stuelpnagel said employees have been offered packages to remain with the company through the end of the year.
Patent Loss
In the week before announcing the closure, in mid-March, a U.S. District Court in Delaware ordered the company to pay $17 million in damages to a rival, Affymetrix, for patent disputes. Illumina has appealed the judgment.
Illumina, which makes devices that perform genetic analysis, acquired the Wallingford factory when it bought CyVera Corp. in February 2005 for $17.5 million. CyVera had been spun out of CiDra Corp., which had developed a technology to measure liquid flows in oil and gas drilling equipment. CyVera was formed to transfer that technology into the biomedical field.
The technology — which ultimately became Illumina’s BeadXpress system — is used in microwave-sized devices that can analyze genetic material.
The tools for genetic analysis are powerful, expensive machines and the march to dominate them has become big business, largely because of what they enable researchers to do. Early last month, for instance, The National Institutes for Health used Illumina’s machines to help pinpoint some of the genetic markers for prostate cancer and Lou Gherig’s disease.
Those machines fetch hundreds of thousands of dollars, according to the company’s Web site. With dollars at stake and its stock riding high, Illumina acquired yet another analysis tool-maker, Solexa Inc. of Hayward, Cal., in a stock for stock swap valued at $600 million. That acquisition closed in late January, and brought the company’s total number of employees to 850.
And since the development of the BeadXpress System was completed less than a month later, it was also the move which ultimately meant a death knell to the Wallingford factory.
“There was just not enough critical mass to sustain manufacturing and R&D in Wallingford,” Stuelpnagel said. “We just needed to find synergies in our manufacturing.”
Ultimately, he said, Illumina just grew too fast for Wallingford.
