First it was GE Healthcare. Then it was Nanogen. And later still it was Applied Biosystems. The playing field certainly got smaller over the past 12 months as several manufacturers gave up on marketing arrays for use in both research and diagnostics, despite that fact that vendors such as Affymetrix and Illumina reported increasing array revenues driven by new chips.
From the perspective of long-term consumers of microarray technology, the exit of several array vendors from the marketplace was a predictable consequence and indicative of any new technology market as it matures.
According to Shawn Levy, director of the Vanderbilt Microarray Shared Resource at Vanderbilt University in Nashville, Tenn., over the past 12 months the array market has behaved “similar to any other technology-driven consumer market.”
“Overall, biotechnology is very similar to other technology areas in that you see expansions and contractions of certain markets dependent on what people are interested in,” he wrote in a recent e-mail to BioArray News.
The VMSR currently offers a variety of array platforms to its users, including Applied Biosystems’ 1700 Chemiluminescent Expression Analysis System. ABI announced its plans to discontinue the 1700 system and move users to the SOLiD, its next-generation sequencing platform, in October (see BAN 10/30/2007).
According to Levy, firms that have managed to maintain market share have done so by “either offering a product that has unique capabilities” or by sustaining a strong service and marketing capability.
“If you look at the major vendors as they stand now, Affymetrix has a service and marketing strength that is unmatched,” Levy said. He added that the flexibility of Affy’s instrumentation plus its high-density arrays, such as its tiling arrays and exon arrays, have enabled the GeneChip maker to retain a large market share.
In terms of other players, Levy wrote that Agilent‘s relatively lower price point and custom capabilities have ensured a reliable customer base, while Illumina has benefitted by producing arrays with “outstanding quality control.” These attributes have enabled both firms to gain market share even while other companies decided that they did not have the resources or interest to compete.
For Scott Magnuson, CEO of Northbrook, Ill.-based array services firm GenUs Biosystems, 2007 began with a question mark over the future of GE Healthcare’s CodeLink bioarray platform — a technology he had helped to develop as a scientist at Motorola and the foundation of GenUs’ services business.
GE announced in December 2006 that it was discontinuing CodeLink because it was ill-matched for its molecular diagnostics business plans. With or without a buyer, GE pledged to close the business by April 2007 (see BAN 12/19/2006, BAN 5/8/2007)
“I think the array platforms were all too close. There was nothing to distinguish them from each other.”
Faced with the prospect of losing its core platform, GenUs then adopted Agilent’s array platform to replace CodeLink should GE shutter the business. A last-minute sale to Applied Microarrays in April saved the platform, but according to Magnuson the damage was already done to GenUs’ customer base.
“What absolutely hurt us was that long period while GE decided whether or not to sell [CodeLink],” he told BioArray News last week. “GE said that they were going to do away with it, but all of a sudden [AMI] bought it,” he said. “By that time we had already spent three months converting customers to Agilent, so right now the bulk of the work we are running is on Agilent,” Magnuson said.
According to Magnuson, certain developments made the exodus of some vendors from the market inevitable, though the reasons varied from firm to firm. He said one factor was the Microarray Quality Control project, which published its findings in Nature Biotechnology in September 2006 (see BAN 9/12/2006).
Those results, which established concordance between major array platforms, generally showed that sample preparation and processing played a major role in variability between array platforms, a result that Magnuson said discredited sales and marketing campaigns that sought to differentiate between platforms based on content.
“I think the array platforms were all too close,” he said. “There was nothing to distinguish them from one another. They were trying to say that their content was better, but it really wasn’t – it was mostly derived from the same databases,” he said. “The MAQC showed that it came down to sample processing.”
Another factor that may have driven some companies out of the market is that some firms, like ABI, sold closed systems that could not be integrated into other array instrumentation, Magnuson said.
“Everybody wants you to buy their box. But why should we buy their box?” he said. “They should give away the box and we’ll buy the razor blades. That’s the way to build a microarray business.”
Magnuson added that the litigious nature of the array market, where frontrunners like Affymetrix or Oxford Gene Technology have sued competitors who do not sign licensing deals, may have contributed to the shrinking market landscape over the past year.
“What usually happens in a technology market is that you have a pioneer company like Affy that brings the technology to the market but does not necessarily improve on it,” he said.
“Then new firms emerge that have better technologies and chip away at the gorilla’s market share,” said Magnuson. “Because of the IP environment, it made it less attractive for new companies to do that.”
Steve Scherer, a senior scientist at the Hospital for Sick Children in Toronto, wrote recently in an e-mail to BioArray News that the reduction in the number of market players in 2007 was at least partially due to the “tight control on IP by early-entry companies.”
Scherer added that this situation would probably not lead to stagnation in the marketplace, but “it could be that the technology has not made it into the mainstream as quickly as anticipated.”