We purchased shares of Illumina, Inc. (ILMN), a leading provider of tools and services for advanced genetic analysis. We have been following the company for several years, and we have long admired its business model and management team. During the quarter, we had an opportunity to buy Illumina's shares at a price we believed to be favorable. Roche Holding Ltd., a large Swiss-based pharmaceutical and biotech company, walked away from its hostile bid for Illumina, and Illumina's share price fell.
Illumina is the recognized leader in next generation DNA sequencing, a fast growing market with enormous potential. Until recently, DNA sequencing has been primarily used for research purposes. In the research market, Illumina's technology is the gold standard with approximately 90% of the world's DNA sequencing output currently produced on Illumina's instruments. As a result of rapid advances in technology, the cost of sequencing has declined dramatically over the past decade, and it is expected to fall to $1,000 per human genome in the near future. As the cost of sequencing declines, new applications for DNA sequencing are emerging. For example, sequencing is being used in cancer diagnosis and treatment. In some cases, a physician treating a cancer patient may have the patient's cancer tumor sequenced and may prescribe drugs that target mutations specific to the patient's cancer.
Illumina's sequencing platforms have been adopted by some well-known diagnostic reference labs, and Illumina is partnering with other labs to develop diagnostic kits. Illumina is conducting research and development on proprietary cancer diagnostic panels, initially focused on ovarian, gastric and colorectal cancers. In the future, Illumina management believes that infants will be sequenced at birth and their genetic profile will be used to manage their health throughout their lifetimes. Other market opportunities for Illumina include agricultural biology, veterinary medicine and forensics. Combined, we believe that these new markets have the potential to more than double the size of Illumina's addressable market from $4 billion to over $8 billion.
Although Illumina faces competition, and technology in this field is advancing at a rapid pace, Illumina has a proven track record of innovating, and we believe it will remain a technology leader. Illumina spends a significantly higher percentage of its revenue on research and development than its peers. The management team is highly regarded in the industry and we think has attracted some of the best talent in the field.
Illumina's business comprises an attractive "razor/blade model" in which the company sells instruments and then generates recurring revenue from consumables used with those instruments. The company generates high profit margins, which we think will expand over time as the company's revenue mix shifts to a higher percentage of high-margin consumable revenue generated from its installed instrument base. Illumina has a strong balance sheet, which provides management financial flexibility to re-invest in its business, repurchase shares or acquire new technologies.