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Bucking a Trend, New Research Report Issues Cautionary Forecast for Microarray Market

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A new report predicted that the biochip sector will grow to just $1.1 billion by 2005, sharply undercutting recent projections by other research market firms.

The report entitled “The Surging Microarray/Biochip Business,” published by Business Communications Company of Norwalk, Conn., estimated the market to be $397.3 million at the end of 2000 and projects that this market will grow at an average annual growth rate of 21.8 percent for the next five years.

This estimate pales in comparison to the $3.3 billion forecast issued by Frost & Sullivan in a report last month — and that was for 2004. An earlier report on genomics, released by Dain Rauscher Wessels analyst Todd Nelson in December 2000, forecast that the market for DNA microarrays alone would reach $4.5 billion by 2004.

“I chose a more conservative swing because, when I talked to industry managers, they gave a cautionary note, and said they did not think the market was going to be that big,” said the report’s author, Valerie Kellogg.

Two other reports on the sector have also hewed toward caution. A Cambridge Healthtech Institute report published recently said the microarray market would reach $1.2 billion by 2006, and a January survey of the market published by Drug Market & Development Publications estimated that the biochip market would grow from an estimated $330 million in 2000 to $2.43 billion in 2006.

These projections have depended in part on how the author defined the boundaries of the microarray or biochip market. The BCC report just covers DNA microarrays, microfluidics, arrayers, and scanners, while the Frost & Sullivan report also included protein and “other” biochips. Kellogg said she excluded protein chips because the technology was too new to accurately evaluate in terms of potential.

“The market for microarrays is already a slippery eel,” said Kellogg. “If you try and put protein chips in, you will lose all handle on the market.”

Another reason the BCC report is so much less bullish is that it does not see new microarray technology evolving as fast as others have predicted. While the report, for example, notes the oft-observed trend toward pre-fabricated arrays, it predicts that this trend will result in a tepid 18.9 percent growth rate for microarrays in the next five years, while arrayers will still continue to occupy market share, even growing at a modest 11 percent average annual growth rate over the next five years, from $51.4 million market to $86.6 million.

Also, Kellogg said, the leap from research to point-of-care diagnostics — the real potential gold mine — may not take place for another decade. “Point of care [diagnostic applications] won’t really take off until the chips get down to $10 to $15 each,” she said.

A major area the report targeted for growth in the meantime is the scanner market, which it said could grow from $86 million at present to $224.8 million by 2005.

“The scanner is often considered the bottleneck in the laboratory,” the report stated. “The researcher may obtain the latest in microarrays and may have purchased a high-quality pin printer or non-contact arrayer, but if the scanner is a low-tech or older model, then the entire process slows down.”

The report also predicted a 45 percent growth rate for microfluidics, from a $34 million market in 2000 to $219.8 million by 2005.

The total market, including microfluidics, arrayers, scanners, and microarrays, could even reach $1.5 billion, the report concluded. “But that will depend upon the speed with which the various technological developments see market launch,” it said.

— MMJ

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