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ANALYSIS: Japan Looks to Niche Markets to Gain Piece of Microarray, Biochip Pie

TOKYO, July 4 – Japan has lately been making quite a show of its interest in the DNA biochip and microarray market. Every week or two reports of newly developed technologies appear, the government has launched two multi-year research projects, and the domestic microarray leader, Takara Shuzo, entered the global market earlier this year, becoming the first Japanese company to do so.

Yet, while Japan struggles to jumpstart its microarray efforts and to overcome a host of international patent restrictions, many experts question whether this technologically innovative country missed a major opportunity.

“In Japan, unlike the United States, large corporations have borne [the burden of] of bio research,” said Mitsuaki Komoto, director of technology research at the Japanese External Trade Organization in New York. “Large corporations are often slow at coming to a decision, so the companies’ decision to get into DNA chips was delayed.”

As a result, many experts are writing off Japan’s ability to make a name for itself in the research microarray and biochip arena and, instead, are hoping that Japanese companies can gain a foothold in the diagnostic and protein chip markets.

“I think 2001 will be the peak for the DNA array market,” said Tsuyoshi Karasawa, the vice president of business development at SCBiosciences Corporation, an offshoot of Sumitomo Corporation that is developing protein chips with Ciphergen. 

“My forecast is that 2001 will become the turning point where the investment focus will shift from DNA chips to [the] next generation of research such as the proteome,” he said.

The government has designed several initiatives to boost Japan’s prospects for increasing its role in the specialized biochip and microarray arena. About a month ago, Japan launched a three-year collaborative effort, bringing together eight corporations, including Hitachi, Canon, and Seiko Instruments, to develop a low-cost diagnostic chip.

In addition, under the auspices of the semi-governmental New Energy and Industrial Technology Development Organization (NEDO), the Ministry of Economy, Industry and Trade has offered 300 million yen ($2.4 million) to fund a collaborative effort between three Japanese universities and corporations, such as Shimadzu and Otsuka Pharmaceutical. Through this project researchers will focus on developing nanotechnologies that can support multiple functions on a single chip. 

Another area where Japanese companies are hoping to make their mark is in SNP research. Through the government’s high-profile Millennium Project, researchers are hoping to develop chips with Asia- or Japan-specific SNP assays.

Experts say that a lack of patent restrictions should help Japan to find its place in the niche microarray and biochip markets. Unlike the research market, where Affymetrix holds the lion’s share of patents, the market for diagnostics and specialized chips currently offers a more wide-open playing field. 

Nevertheless, the structure of Japan’s biotech market may continue to restrict innovation. Unlike the US, where small, agile genomics and biotech companies spring up almost daily, Japanese startups are rare – some 1,500 venture-stage biotech companies exist in the US, compared with just 50 in Japan.

In addition, Japanese companies have a tougher time raising money through venture capital. So, whereas American researchers are likely to launch their own companies, the government and big corporations provide a more sluggish engine for research and development in Japan.

“For the most part such [start-up] businesses are developed under the umbrella of large corporations,” said Hidekatsu Yoneda, the general manager at Nippon Laser and Electronics.

As a result, the Japanese biochip market is today valued at $9.6 million to $20 million, compared with the US market which has been estimated at about $874 million for 2001, according to consulting firm Frost & Sullivan.

So, what does the future hold?

The eyes of Japanese scientists, researchers, and business managers are now currently focused on the protein chips, lab-on-a-chip, and whole-cell chips as avenues for gaining market share. 

“There [are] so many basic technologies in Japan,” said Yoshinobu Baba, a NEDO project leader and a physical chemistry professor at Tokushima University, adding that Japanese companies should be able to gain a presence in the micromachine and microfluidics markets, areas that have traditionally benefited from government largesse.

After Japan’s poor showing in the DNA chips market, Baba noted that Japan’s government and leading conglomerates are now busy promoting biotech, which should ultimately help the country to close the gap with its European and American counterparts.

“The situation is quickly changing,” Baba said.

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