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ANALYSIS: New Deal Could Make Lion King of Bioinformatics Jungle

 

NEW YORK, Nov 9 - With a new Celera alliance in its clutches, Lion Biosciences is poised to become king of the bioinformatics jungle, analysts said Thursday.

 

“Celera’s use of Lion’s product is a validation of Lion’s bioinformatics capabilities,” said Winton Gibbons, an analyst at William Blair. “It’s a little bit of a coup.”

 

Under this new agreement, which Lion and Celera announced Thursday, the companies will work together over the next three years to unify Celera’s system of databases on Lion’s bioinformatics platform, and Celera will market Lion’s Scout products.

 

Although Gibbons pointed out that this deal isn’t all new - Celera’s Discovery Link Databases have run on SRS for a while - the two companies have both indicated they are taking the collaboration to a new level, in which Lion moves beyond a software product provider to an integrated informatics platform for Celera’s customers.

 

“The important message is, this is likely to be the first really serious platform for internet-intranet solutions” for the industry, Lion CEO Freidrich von Bohlen told GenomeWeb. “We want to become the SAP of corporate solutions for the life sciences.”

 

SAP, which is also a German company, has become the standard software platform for the automotive industry, among others.

 

To achieve a similar level of recognition as SAP, von Bohlen said, Lion will have to ally with or acquire other companies that are “upstream” or “downstream” in the informatics process.

 

Lion’s agreement with Tripos to provide bio- and chem-informatics solutions represents an example of the partnering route, but Lion said it is also considering acquisitions that extend its capabilities to “close the loop” in the software arena.

 

Current market conditions, however, make it a difficult hunting season for Lion - or any company - that wants to acquire another biotech concern, making the partnership avenue more attractive.

 

“It’s hard to predict whether companies will be increasingly ‘gobbled up,’ especially with venture capital’s friendlier attitude towards biotechnology-related companies lately,” said Justin Saeks, an analyst for Drug Discovery Technologies at Frost & Sullivan.

But in order to avoid getting gobbled up, bioinformatics companies are going to have to form alliances with content providers like Celera, said Gibbons.

 

“You need to have more than bioinformatics to succeed,” Gibbons said. Since Celera and similar companies provide some bioinformatics tools to its subscribers free, a software provider who is not allied with content provider is “trying to sell something that people could get for free with the content.”

 

By hitching its wagon to Celera, Lion is betting customers will think this way and choose the two companies’ integrated platform over a motley assortment of specialized solutions. But there is always the possibility for lightning-quick gazelles on the bioinformatics landscape to outrun or outwit Lion, analysts warned.

“There are many small companies with unique technologies, or simply with specialized expertise,” said Saeks. “They definitely have a chance, and innovations will continue to transform the life science research field.”

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