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Schott-Nexterion Competes on Corning s Turf in Battle for US Home-Brew Market

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BOSTON — Having bitten off a piece of the European market from the global market leader in glass slides for microarray applications, a German company is now positioning itself to challenge Corning on its home turf in the US.

Schott-Nexterion is putting the finishing touches on a complete self-spotting microarray kit that it sees as its new flagship product, and will soon ink a deal with a US distributor to sell its product line throughout North America, a representative of the 3-year-old microarray tools spin-off from German glass manufacturing giant Schott, told BioArray News at the Microarrays in Medicine conference held here last week.

Markus Boehm, the international product manager of microarray solutions at Schott-Nexterion, said that the company plans to release a kit that will include the company's glass substrates along with reagents, dyes, and 70-mer oligos supplied through an agreement that it signed last month with Operon Technologies (see BAN 4/20/2005).

The yet-to-be-named kit is expected to roll out by the end of September, Boehm said, and will initially be available in Europe with a North American launch date slated for some time in 2006. The kit will be the first complete microarray kit launched by the German company to date.

Corning offers a similar microarray kit through a collaboration with Promega that it entered in 2003. The Pronto Plus System includes slides and reagents for the home brew market (see BAN 9/10/2003).

Boehm also said that the company was close to finalizing an agreement with an undisclosed American distributor that would allow it to expand its products and services to the US slides market, which he estimates to be $20 million or a third of the global market.

Boehm said that Schott-Nexterion already had garnered a 10-percent stake in the US market for microarray slides through its sales office in St. Louis, Mo., and that the new product and the distribution agreement would be part of its overall strategy of challenging Corning, the US market leader in glass substrates for microarrays.

According to Boehm, in its three years, Schott-Nexterion has managed to displace Corning in Europe, where it once was the dominant slide provider in the microarray market.

"We had the same situation [several] years ago, when Corning was 40-50 percent of the market [in Europe]," said Boehm.

Boehm said that through a more affordable and diverse product line, his company was able to gain an advantage and "switch Corning users" to Schott-Nexterion. Boehm estimated that Schott-Nexterion has approximately 40 percent of the European market, while Corning has less than 40 percent.

Robb DeCosta, the microarray manager at Corning, said that Corning still retained its superior position in the European market, however. "Our position is probably same in the European market as it is in the American market — in that we're the market leader in providing substrates," DeCosta said.

Still, Boehm said that Schott-Nexterion has a number of advantages over its primary competitor. "Our quality is at least as good as Corning," Boehm said. "Plus we have coatings that they don't have, a larger product portfolio, and better technical support."

Another advantage Boehm said his company has is its competitively priced products, which he said will not only appeal to customers of rival home-brew tool providers, but will help it fend off pre-spotted microarray companies, such as Illumina, which are trying to drum up new clientele from the self-spotting microarray market. The company's slides sell for $11-$12 apiece, Boehm said. Corning did not provide a price for its slides, but Boehm said that they cost $2 more per slide on average.

"The home-brew market is still growing. There are no signs that it won't exist in five years," Boehm said, dismissing the idea that commercial array vendors would make companies like his obsolete.

Illumina CEO Jay Flatley told BioArray News last week that his firm was eyeing the home-brew market as a promising customer base for Illumina's new gene-expression platform.

"Cost is an important issue for academic customers and commercial platforms are too expensive for our customers," Boehm said. He said that Schott-Nexterion would continue to diversify its product line in order "to build the brand and its credibility" by introducing a 3D hydroxyl substrate for protein arrays this quarter. The company currently offers coated slides for peptide, protein, oligonucleotide, and tissue arrays.

Can Corning Defend Its Position?

Corning appears to be taking Schott-Nexterion seriously.

DeCosta told BioArray News this week that Schott-Nexterion was an "up-and-comer" in the market for spot-it-yourself microarrays and that the company was now Corning's greatest global competitor for glass substrates.

"I would agree that Schott would be considered our biggest rival in the slide market across the world — they are the big up-and-comer, for sure," DeCosta said.

Still, he maintained that Corning would seek to defend its position by enhancing the quality of its products. "[Our strategy is] constant innovation," DeCosta said.

"We realize that they are trying to catch up with how good our slides are and our market position, so we have to come out with some new surfaces that no one has that improve on the surfaces that we currently have."

In the pipeline for Corning is a recently launched epoxide substrate, as well as an upgraded microarray kit that will be launched next month through its partnership with Promega, called Pronto! Plus.

DeCosta disagreed with Boehm's statement that Schott-Nexterion had gained the upper hand in the European market, but acknowledged that the company has been competitive.

"We realize that Schott probably has a good foothold, but from all data we've seen, we believe that we are still the market leader there as well as in the US."

One region Corning shouldn't face much of a challenge from Schott-Nexterion in for now is the Asian market. DeCosta said that Corning continues to dominate in Asia due to its developed distribution networks which include a regional office in Japan and distributors in China and South Korea.

According to Schott-Nexterion's Boehm, Asia represents 30 percent of the total market of $60 million for microarray slides, but the company has yet to make major inroads in signing up distributors in the region.

— JP

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