As part of an effort to enter the budding array-based molecular diagnostics market, Siemens purchased the biochip technology division from its 1999 semiconductor spin-off Infineon late last month, acquiring its biochip-related patent portfolio, personnel, and laboratory for an undisclosed price.
Siemens has kept a low profile as it targets array-based molecular diagnostics, but Mohammad Naraghi, senior vice president of business development at Siemens, told BioArray News that the purchase of Infineon's technology represents the latest step in a series of moves the company has made recently to enter this market.
"We have had activities to develop biochips for a couple of years now," Naraghi said. "This [acquisition] has enriched our IP and assets in this field."
Naraghi said that Siemens recognizes the potential for molecular diagnostics and that the company plans to "engage in and continue [its] effort to develop biochips for diagnostics." The company estimated the current total market for molecular diagnostics at €1 billion, with 20 percent annual growth.. Siemens Medical Solutions reported total sales of €7 billion for fiscal year 2004, with orders of €8 billion and profit of €1 billion.
Siemens has also partnered with San Diego-based Sequenom to apply its MassArray platform to diagnostic applications, but Naraghi said that the purchase of Infineon's biochip assets and its work with Sequenom are "two distinct activities."
Naraghi stressed that Siemens is just beginning to explore the options for Infineon's biochip technology, and declined to disclose any particular applications, or a timeline for launching them. "It is in the developmental stage," he said. Naraghi would not disclose how much the company paid for Infineon's assets.
"The transfer to Siemens involved patents, a high-tech biochip lab, as well as experts with the know-how of silicon biochip manufacture," Infineon spokesperson Reiner Schönrock told BioArray News last week.
According to background material provided by Infineon, the company had developed three microarray applications: an optical biochip that was sold as part of Toronto-based MetriGenix's Flow-Thru Chip system; a chip that uses electrical current to measure enzyme activity; and a neuro-chip, developed with the Max-Planck Institute for Biochemistry, which is essentially an electronic nerve cell tissue array.
According to Schönrock, when Siemens bought Infineon's biochip division, it got access to all of these applications. However, Schönrock said that Infineon had ceased to produce optical biochips for MetriGenix. MetriGenix and Infineon began their collaboration in 2003. MetriGenix, which just acquired GeneXP Biosciences last week, did not return calls or e-mails to determine the status of its relationship with Infineon or the Flow-Thru Chip.
Siemens considers Infineon's electronic chip, part of a larger system called Quicklab, to be the most mature and market-ready of its applications.
"It is [Siemens'] objective to bring Quicklab to market maturity. The entire analysis system is integrated on a smart card and provides the basis for comprehensive as well as cost-effective analysis methods in clinical routine diagnostics," Siemens said in a statement.
Siemens said that Quicklab could run experiments with DNA probes as well as proteins, and that it would be competitive in terms of cost, speed, and quality when compared with other microarray-based molecular diagnostics, such as the AmpliChip.
Siemens also stated that Quicklab already had a number of potential applications.
"It is possible to detect viruses of infectious diseases as well as allergies, hereditary diseases, and incompatibilities with respect to medications or transplantations," the company said.
Schönrock said that Quicklab had actually been developed to the point of commercial viability, but that Infineon had scrapped plans to launch it itself when Wolfgang Ziebart joined the firm as CEO eight months ago. Ziebart determined that commercializing Quicklab would force Infineon to incur unnecessary losses before the system could generate revenue, Schönrock said.
"The company decided to be profitable," Schönrock explained. "[The biochip division] had to be transferred to a company acting in the medical market. As this is not a core competence of Infineon and the business might need a couple years to generate revenues, we decided to sell it off."
Schönrock said that in the eight months since Ziebart took over as CEO, Infineon has divested its venture capital, optical networking, fiber-optic electronics, wearable electronics, and biochip technology units, aiming instead to generate growth in its key markets of wired and wireless communication, smartcards, and power semiconductors.
"[We have to deal] with the so-called pig cycles, where we have very good years followed by very bad years," said Schönrock. "We had several businesses, that in the long run had [a] great outlook, but in the short and mid term we would have had to invest in those businesses. So the company decided to spin out and get rid off all businesses that are not contributing to profitable growth."
— Justin Petrone ([email protected])