Harry Glorikian is a principle partner of TSG-Partners, a life-sciences strategic consultancy, and a former senior manager at Applied Biosystems, with responsibilities in new technology assessment, business development, and product and sales management.
His firm has advised Becton Dickinson in its acquisition of Atto Bioscience, and Carl Zeiss in its purchase of Bio-Rad's confocal microscopy business. BioCommerce Week spoke to Glorikian about the emerging molecular diagnostics market as the core PCR patents are set to expire on March 28.
Why should people be interested in hearing what you think [about the PCR patents]?
I think people need to understand [that] the patent landscape and licensing arrangements set up are very complicated. So just because a few patents go away doesn't mean the bottom falls out from underneath the way this was structured in the first place. The group that is probably going to be hurt the most is the basic research area, or the area [where] ABI has the most at stake.
Because of the way that the agreement is set up between ABI and Roche. There are two sets of patents: the process patents and the instrument patents. The instrument patents are assigned to Applied Biosystems, and the process patents are assigned to Roche. The fields of use defined by the fields of agreement are such that Roche has rights to human diagnostics, veterinary, and human paternity, and AB has exclusive deals in R&D, QA/QC, forensics, environmental, agricultural, etc.
How will that affect basic researchers?
If you make a complete kit, it has the primers, and it has a polymerase. So, if you are talking about a research kit, then people are probably going to be able to sell into the research market without an ABI license for the basic process. They are still going to need a license for basic research from Roche to sell into the R&D market for the polymerase. So instead of paying for more than one master, you may only have to pay one.
This is a highly complicated area. People shouldn't jump to any conclusions because a piece of this is going away. They should step back and look at their product and what they want to accomplish and ask, 'What do I need to do what I want to do?' The basic process patents go away, but the polymerase patents are still in effect for thermal-stable polymerases. The thermal cycler patents are still valid.
So if you are creating a complete instrument, you are going to need the thermal cycler license and you are going to need a polymerase license. And, this is just basic PCR, not real-time PCR. That's another whole layer on top of that. If someone is going to do a quantitative assay, you have flopped into the real-time space, which the fact that some of these patents are going away, doesn't impact that world at all.
So, what happens on March 28?
I do believe [the patent expirations] will have impact on the basic research and certain parts of the applied markers — forensics and agriculture areas. But for the diagnostics market, I don't know if Roche is making any fundamental change to its licensing program. They haven't said anything publicly.
How do you see Roche's licensing effort?
From what I know, Roche's licensing effort has been open. For the diagnostics market, there is a pretty wide range for the per-target cost — $1 per target vs. $10 per target — that type of variation in range.
What are the global implications?
If you are a global company and you want to sell in the US, depending on what you are trying to make, whether it is a diagnostic kit or a research kit, you are still going to need rights. Certain patents are still enforceable in some of the largest areas of the world.
If you are a regional company, and there is no patent protection there, you can probably get away with it. If you are making a thermal cycler in Europe and you are only selling a thermal cycler in Europe, because the patent was overturned, you can get away with that because the patent was overturned.
But if you are going to sell in the United States, you are going to need a license. Every company that enters this space needs to ask, 'What is it I am trying to do? What product am I trying to create? What do I need to do to legally maneuver in this space?' If you are creating a diagnostic, you still need a polymerase license from Roche in the diagnostics area for the polymerase, and you will need a thermal cycler license. So it's not as simple as people would like to believe.
Why is this important for the molecular diagnostics market?
It is the fastest growing segment of the diagnostics segment as a whole Depending on how you cut it, it can be from $18 billion to $22 billion and $1.9 billion of that is molecular diagnostics, growing at rate of 20 percent.
What is the catalyst of that growth?
It depends on which subsegment — a pharmacogenomics companion, or the general medical field — but I believe that the concept of molecular diagnostics is being accepted more readily and we are coming up with better complete assays. A good example is the cystic fibrosis assay developed by Celera Diagnostics, probably the widest used test in the field right now for that particular target. There are a lot [of other companies] aiming at the target, but from a revenue standpoint, the group getting the lion's share of that is Celera.
What are the low-hanging fruits for these tests?
The largest area is infectious disease; Gen-Probe and those companies are probably making the lion's share of the $1.9 billion in molecular diagnostics. But as more PCR-based assays come up to challenge some of those assays, the Probes of the world will get a run for their money. And the FDA is going to have a lot of impact on the growth of this market, as they release guidelines and look toward reimbursement that will drive how quickly these assays are adopted.
This space has been active. We have been in the field for the last 20 years, have been actively pushing this forward for a long time. Roche's chip being approved is a huge milestone, now how that is going to be used and how people will interpret the data — that is something that is still being massaged. It's a growth market. I don't know of many companies that are not thinking of taking their research products and aiming it at the molecular diagnostics segment. People have to have an understanding of that segment, the regulatory requirements, which targets to go after. I think the companies that are successful are those who are making a product aimed at a critical decision point. 'I'm going to do this assay, and if it's positive, I'm going to follow with another test, which is an expensive test.' Or, 'It is going to tell me not to do that next expensive test.' Those are the types of assays that in the beginning will grow the fastest because insurance companies will look at it favorably from a reimbursement standpoint.
Where are the opportunities for the tools companies?
All have different technologies and all of them are going to be applicable. BD is already an active player in the diagnostics arena with [its] flow platform. Looking at the mass spec area, mass spec is gaining in the clinical area because of its quantitative capability. Neo-natal screening is the perfect example, or applications for drugs of abuse or therapy monitoring. For the ABs of the world, they have already made their bets by forming Celera Diagnostics because the regulatory requirements of Celera Diagnostics are very different from what they would be for AB as a research company. We watch that area a lot because all these research companies have products that could have impact on the diagnostics arena or the applied areas like forensics or food or ag.
Are there disruptive technologies?
There are a whole host of them that could potentially be disruptive. It will come down to the money that is put behind the technology. As much as Affymetrix would like to have its chip become the gold standard, that is a very difficult row to hoe because quantitative information based on Taqman is the gold standard.