| In
today's drug discovery environment the leading players
are under intense pressure to discover, develop and
bring to market the first novel products expected
from the advances of the Human Genome Project, the
so-called "low-hanging fruit" of the genomics
and proteomics revolutions. This will require identifying
a target and moving it through research and development
to a marketed product as quickly and efficiently as
possible.
In recent years, Nycomed Amersham has emerged as a
leading provider of many of the advances in biotechnology
systems that are accelerating this process, through
its joint venture, Amersham Pharmacia Biotech (APBiotech),
which was formed when Amersham's Life Science business
was merged with Pharmacia Biotech in 1997.
APBiotech, which is 55%-owned by Nycomed Amersham
and 45%-owned by Pharmacia, is to be partially floated
on Nasdaq in March 2001. Some of the funds are intended
to be used to develop what Nycomed Amersham calls
"personalised medicine for the individual", using
the new "gene economy". This move led to speculation
among industry observers that APBiotech will eventually
be spun off as a separate entity.
APBiotech
is already a leading supplier of genomics technology
platforms and services focused on pharmaceutical research
and development, and has recently begun channelling
its energies into what promises to be a key area within
the drug discovery process: proteomics.
Proteomic studies identify and investigate the differences
between proteins from normal and altered tissue in
order to identify potential protein targets for the
thousands of drug candidates being produced by combinatorial
chemistry. APBiotech's goal is to accelerate the proteomics
research phase in drug discovery by speeding up target
identification.
Nycomed Amersham's Finance Director, Giles Kerr, speaking
to IMS HEALTH, commented, "Given the way things are
developing at the moment, with proteomics, the need
to do SNP
analyses and the need for faster screening, we can
see 20 - 30% growth in our Drug Discovery business
for the next four or five years."
Indeed, APBiotech's Drug Discovery stream saw 37%
sales growth in the first half of 2000, and the company
expects to see continuing strong growth in this market,
which it values at around $1.4 billion, over the next
few years.
Mr Kerr went on to discuss APBiotech's strategy with
respect to the vertical integration of the company's
contribution to the drug discovery process: "What
we're finding is that our customers want us to do
more of the drug discovery steps for them. We're not
going to turn ourselves into a drug company, a Millennium
or an Amgen, but we intend to integrate more and more
of the steps involved in the process. We see ourselves
moving along the value curve."
One example, according to Mr Kerr, was the company's
DNA Microarray product. "We are already looking at
the possibility of working with other companies to
provide the DNA material, so the microarray slides
are ready prepared. We're not doing drug discovery
ourselves, but we're doing more of the steps for our
clients." The company is also looking at the business
case for setting up a sequencing facility, or "gene
factory", which would provide contracted-out sequencing
facilities for pharmaceutical clients.
Mr Kerr spoke of a move into bioinformatics, in an
attempt to integrate the various discovery platforms.
The company recently took a 25% stake in a US bioinformatics
software company, which is developing a package that
will take the data from APBiotech's various platforms
and link it together.
When questioned on the potential constraints of pharmaceutical
industry consolidation on the market for APBiotech's
technology, Mr Kerr was upbeat: "The one thing that
these companies do not cut when they merge is R&D.
In fact, the tendency for them to spend on this kind
of tool [high-throughput sequencing and screening]
is increasing. For instance, although we had two separate
clients in Astra and Zeneca before they merged, their
increased expenditure on our technology since they
merged has more than offset the fact that they are
now just one client."
During the interview
with IMS HEALTH, Mr Kerr described the motivation
behind the merger with Pharmacia Biotech. One of the
main drivers was a change in Nycomed Amersham's customer's
requirements. Most of the top pharmaceutical companies
had worked with Nycomed Amersham in the past to advance
their drug discovery and development programs.
Previously, however, Amersham's main business had
been providing testing kits and reagents. It became
clear that the company's clients required high-throughput
automated systems, an area in which Pharmacia Biotech
had complementary skills in systems engineering. The
merger means that APBiotech can not only provide its
clients with the high-throughput technology, but it
also creates a market for its proprietary reagents.
Nycomed Amersham is using the cash generated by its
profitable Imaging business to expand its Life Sciences
business. APBiotech is well placed to benefit from
the outsourcing of R&D that is being seen in the pharmaceutical
industry and the fallout from the Human Genome Project.
It recently won a key victory in its ongoing litigation
with rival biotechnology groups, Applied Biosystems
and Celera, to protect its patents on energy transfer
dyes, which played a vital role in decoding the human
genome. The decision by a US district judge that the
latter two infringed APBiotech's patent increases
the chances that the two sides will eventually agree
an out-of-court settlement.
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