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Report Says Biochip Market Poised to Reach $3.3B by 2004

NEW YORK, April 10 - The worldwide market for microarrays, microfluidics devices, and other biochips is expected to grow at an annual growth rate of 65 percent and reach $3.3 billion by 2004, a new report by market research firm Frost & Sullivan says. 

The report, a preview of which was obtained by GenomeWeb prior to its release later this month, outlines the way in which the market for microarrays, microfluidic devices, and other biochips is likely to develop in the next three years. 

The report divides the sector into three different subgroups based on the current companies in the market, while acknowledging that distinctions between types of biochips may blur or disappear as all-in-one experimental solutions are developed or as one technology becomes the predominant one for diagnostic or research applications. 

“Any of the various biochip segments could eventually emerge in the next five to 10 years as the major cash cow diagnostic tool that everyone is anticipating,” the report says. “But it will likely incorporate some elements of the other segments’ technologies.” 

In the microarray segment, the report forecasts that revenues will increase from an estimated $232 million in 1999 to $874 million this year to $2.6 billion in 2004. It says this segment will be characterized by continuing patent disputes, consolidation, a trend toward higher density arrays, and an increase in labs making their own microarrays. 

The report predicts that litigation over microarrays will continue as Affymetrix, the dominant player, continues to be involved in patent infringement litigation. Affymetrix recently settled a suit with Oxford Gene Technology, but its legal battles with Incyte and Hyseq continue. 

Over 100 companies have already entered the microarray arena, the report says, but both the ongoing litigation surrounding market leader Affymetrix, and market conditions will force a trend toward consolidation.

Noting that acquisitions have become more common, the report says the trend will continue due to the difficulties companies will have raising money during the “economic slowdown.”

The report predicts that the microfluidics market, which it says is just getting off the ground, will surge from $17 million in 1999 to $77 million this year and to $395 million in 2004. A wave of alliances is beginning to emerge between companies in this sector and liquid handling companies, the report notes, citing deals between Aclara and Packard as well as between Gamera Bioscience and Tecan. 

Revenues for other types of biochips, such as Ciphergen’s protein chips, Nanogen’s NanoChip, Clinical Micro Sensors' probes, and Sequenom’s SNP detection technologies, are projected to grow from $23 million in 1999 to $81 million this year and to $311 million in 2004, according to the report.

Particularly promising technologies in this category include biochips that use bioelectric detection, the report notes.  

However the report warns that the microfluidics sector, which depends on emerging technologies, could face key patent battles such as the one between Caliper and Aclara, which was recently resolved.

The Frost & Sullivan report is more bullish than the last major biochip market survey, “BioChips: Progress and Prospects,” released by Drug & Market Development Publications in January. That report predicted the biochip market would grow from an estimated $330 million in 2000 to $2.43 billion in 2006. 

The difference between reports can partially be accounted for by the previous report’s more narrow focus on microarrays and microfluidic devices and instruments. Another factor could be an unanticipated upsurge in the number of players that have recently entered the market. 

The Frost & Sullivan report also highlights the strong prospects for biochips in research and diagnostics.

“Currently, the number of labs performing microarray experiments is on the order of thousands – there are tens of thousands of molecular biology labs which potentially could use this technology if it were more easily acquired,” the report says, adding that slight price decreases coupled with improvements in customer services could makes a big difference in the number of labs using the technology. 

Looking even further down the road, the report says there is the potential for tremendous growth for the sector in the long term. “If diagnostic tests (human or otherwise) using biochips become widespread, the market for such products could reach the tens of billions by 2010," it predicts. 

The Frost & Sullivan report was prepared using interviews with biochip manufacturers and users, existing Frost& Sullivan market data, newsletters, journals, and other periodicals, internet-based data, and public filings on companies.  

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