Illumina, Inc. (NASDAQ:ILMN), the leading manufacturer of DNA sequencing machines, said on Monday that it will buy Verinata Health for about $350m in cash.

The move is intended to spearhead Illumina’s push into the diagnostics business.

250px-Illumina_(company)_logoThe privately held Verinata Health, based in Redwood City, Calif., sells a diagnostic test which uses only a blood sample to determine if a pregnant woman’s baby will have Downs Syndrome or other chromosomal abnormalities.

The test – and others like it – have become popular over the last year they became widely available. One reason for  their popularity is that they are less invasive – other alternative tests such as amniocentesis carry a slight risk of inducing a miscarriage.

“The agreement with Verinata demonstrates Illumina’s commitment to developing innovative diagnostic solutions and providing our partners with the most advanced technologies for improved patient care,” Jay T. Flatley,CEO of Illumina, Inc. (NASDAQ:ILMN), said in a statement.

The company says there are about 500,000 high-risk pregnancies per year in the US that would be suitable for a non-invasive prenatal test. Illumina, Inc. (NASDAQ:ILMN) says the potential market for these tests will exceed $600m in 2013.

Verinata will work as a subsidiary of Illumina. Besides the initial $350m payment for the company, Verinata shareholders will be eligible to receive a further $100m in milestone payments through 2015.

Illumina’s stock fell by nearly eight percent on Monday, though this was likely a market response to reports that Illumina itself would not be acquired by Roche Holding Ltd. (PINK:RHHBY), a Swiss pharmaceutical and diagnostics company.

Roche’s chairman, Franz B. Humer, was quoted in a Swiss newspaper on Sunday as saying that the acquisition deal was off as Illumina wanted too-high a price.

Earlier, in April, Roche Holding Ltd. (PINK:RHHBY) dropped a hostile bid for Illumina, valuing the company at $51 per share, equivalent to about $6.7bn.

But December brought fresh reports from a Swiss newspaper that Roche was again trying to buy Illumina, Inc. (NASDAQ:ILMN), this time for $66 per share. Neither company commented on the report.