Genetic sequencing gets personal

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NEW YORK (Fortune) -- Price competition is coming to the rarified world of genome sequencing.

For $48,000, San Diego-based Illumina (ILMN) will sequence your genome -- in other words, your entire genetic code.

Until now, the only other company offering personal genome sequencing services is biotech startup Knome. It charges $99,500.

Genome sequencing can alert individuals if they have inherited genes that cause illnesses like diabetes, Alzheimer's or cancer. Using the information as a guide, people could alter their lifestyles in an attempt to dodge potentially latent diseases. They also could find out the probability of passing along a genetic disease like cystic fibrosis to their children, or uncover interesting details about their ancestry.

Illumina is tossing in an iMac computer loaded with a customer's genetic data to round out the deal. But spending nearly $50K on a genetic code will not fit most people's budgets, even though that pricetag is hundreds of millions of dollars cheaper than sequencing the first human genome in 2003. Illumina says it expects just tens, perhaps hundreds, of people to sign up for the service within the next year.

"It will be people who want to be among the first 100 people ever to be sequenced on the planet," says company CEO Jay Flatley. "Or it may be people who have particular diseases like cancer who want to see if there is any way to uncover novel information."

Illumina is a leading manufacturer of life science research tools. Last year the company reported a net income of $50.5 million with $573.2 million in revenue, up 56% from 2007. Illumina entered the sequencing business after acquiring Solexa, a gene analysis systems maker, for $600 million in 2007. Since then the company has continued to invest heavily in the technology.

So far, personalized genomics make up just a small fraction of Illumina's revenue. High costs keep sequencing out of reach for most people. But prices will fall substantially as the technology improves. In fact experts say costs could reach $1000 within three to five years, making more people privy to their entire genetic code.

For now, the benefits of accessing one's entire genome are limited to what scientists have already uncovered about our DNA. In the meantime, persons with less cash floating around could opt to get a smaller portion of their genome analyzed for a fraction of what Illumina is charging for the entire genome. The much-hyped genetics startup 23andMe, for instance, will analyze nearly 600,000 genetic markers for just $399.

Despite the high costs, Illumina is selling its genome service now with the hopes of getting a jumpstart in the market. It also wants to work out glitches before the service becomes mainstream. Illumina is developing tools to make the service user-friendly in anticipation of that growth.

An iPhone application, which the company says could be available within a year, is one plan in the works. Flatley envisions the app as a handy way to access genetic information when visiting a physician or genetic counselor. Illumina also plans to set up a website where clients can voluntarily blog about their sequencing experiences.

To gain wider appeal, Illumina foresees customers someday measuring up their genetic makeup to famous people, like bioscience gurus Craig Venter and James Watson.

"There are probably a lot more people who would rather compare themselves to George Clooney. But he isn't in line to be sequenced now," says Flatley.

One area Illumina is not diving into is sequence analysis. Instead, it is partnering with genomics companies Navigenics, 23andMe, deCODE Genetics (DCGN), and Knome, which are developing platforms to decipher the data generated by Illumina. So far, the partners are keeping mum on how much they plan to charge the customers Illumina sends their way. Based on the costs of their current genotyping services, prices could range from a few hundred to a few thousand dollars.

Ultimately Illumina could be missing out if analysis doles out sizeable earnings. Indeed, interpretation of genes will become even more relevant as researchers uncover additional information about the human genome. Sequencing the entire genome could be a one-time endeavor, but genetic analysis could continue to reap payoffs for a long time to come.