Can General Electric make Amersham a “mainstream” healthcare player? This has become one of GE’s main goals as the giant conglomerate absorbs the British life sciences-tool company and sets its sights on personalized medicine.
Broadly, GE hopes to put to work the early-stage discovery technologies found in Amersham’s Biosciences unit in order to develop molecular diagnostics platforms that can be used arm in arm with its imaging tools in the “mainstream” healthcare setting.
This disclosure is significant because, until the acquisition was finalized late last week, GE had limited its public discussions about the acquisition to Amersham’s Health division — which held the company’s imaging chemistries — while keeping suspiciously quiet about the Biosciences unit.
In the end, not only has GE decided to retain both units, but the company has begun to be more open about its pharmacogenomics goals. “How can we take [Amersham Biosciences’] products and services … and begin to apply those in … the mainstream healthcare markets?” asked Trevor Hawkins, senior vice president of development and new business initiatives, a couple of hours after the acquisition was sealed last Thursday. “We also have begun a path of moving into the diagnostics field.”
GE chairman and CEO Jeffrey Immelt has also latched onto the pharmacogenomics angle, saying that “the combination of [Amersham’s] technological and market knowledge will allow GE to accelerate the development of molecular imaging and personalized medicine.”
But can the “mainstream” healthcare market — physicians, reference labs, and hospitals — afford to wait for GE to realize these goals?
The £5.7 billion ($9.5 billion) acquisition, announced last October, split GE’s $14 billion Healthcare division into two units: Healthcare Technologies, which is worth $11 billion and will be run by Joe Hogan, and Healthcare Biosciences, which is worth $3 billion and will be overseen by Peter Loescher. Hogan’s group will control GE’s medical imaging, services, and IT businesses, while Loescher’s unit will oversee all of the assets that used to belong to Amersham Biosciences and Amersham Health. The Amersham brand will eventually dissolve, a company spokeswoman said.
With Amersham on board, GE Healthcare now employs 42,000 staffers worldwide; the breakdown in staff between Healthcare Technologies and Healthcare Biosciences was not immediately clear, though Amersham employed around 10,000 people before the acquisition. The entire division is overseen by Bill Castell, Amersham’s former CEO, who was named president and CEO of GE Healthcare.
For GE, a key component in its pharmacogenomics designs is to continue developing the CodeLink array and MegaBACE sequencing technologies. Hawkins said GE Healthcare will continue to market Amersham’s CodeLink platform to the research community — where it is currently used for gene profiling and SNP studies — and to the burgeoning molecular and in vitro diagnostics segment. He also said GE will continue developing a protein-array line based on the CodeLink system that GE expects to launch at the end of the year.
One of GE’s goals is to enable physicians to integrate data from its imaging tools with information from the CodeLink platform. “The concept of being able to link together in vivo- and in vitro-based solutions, we think, is very powerful,” Hawkins told Pharmacogenomics Reporter last week. “There’s in vivo imaging from the PET [scan], but there’s also information that has just come back from ... a SNP-based assay courtesy of CodeLink. We see that there’s going to be some great growth potentials here.
“We’re really at the very beginning,” Hawkins added.
In fact, CodeLink, which Amersham bought from Motorola in 2002 for $20 million, has yet to generate a profit. Andrew Carr, who ran Amersham Biosciences’ discovery systems segment, conceded last October that second-quarter 2002 sales of the product line have been “disappointing,” and that 70 percent of the $10 million in operating loss through the end of the second quarter for the discovery systems segment were net expenditures for CodeLink. But Hawkins, who had been vice president of development at Amersham Biosciences, had said two months earlier that the CodeLink line could be profitable as early as this summer. An Amersham spokeswoman said the company will not break out revenues by product segments for 2003. However, Hawkins, speaking with Pharmacogenomics Reporter this week, said that the CodeLink customer base “has grown tremendously all the way through last year.” He added that the CodeLink business grew “in excess of 200 percent” in 2003 over 2002. “Today we have well over 100 continual repeat-use customers,” Hawkins said.
“There is going to be a huge need in moving tools and systems that we today sell to the research field and moving those into the diagnostic field,” he added.
Hawkins said that Amersham’s MegaBACE gene-sequencing technology will also become a player in the firm’s drive to develop pharmacogenomics offerings. In fact, Amersham brass have already given the MegaBACE unit its first pharmacogenomics marching orders in this regard: Chase chief rival Applied Biosystems.
Traditionally, Amersham’s sequencer competes with ABI for a decreasing number of high-throughput gene-sequencing customers. And like ABI, Amersham has been looking for additional ways to generate revenue from traditional genomics-based research technologies. Again like ABI, to Amersham the prospect of pharmacogenomics in a post-sequencing age came into sharp focus. For both companies, the picture that emerged was that of molecular diagnostics.
Two months ago, Amersham penned a deal with Bayer’s diagnostics unit to co-develop a platform built around the MegaBACE technology and Bayer’s Trugene assay that could be used by high-end reference labs to monitor HIV drug resistance [see 2/19/04 Pharmacogenomics Reporter]. Abbott currently markets ABI’s PRISM-based ViroSeq product to low-, medium-, and high-throughput reference labs as part of a broad molecular diagnostics collaboration signed by the two companies in June 2002. Consequently, the deal not only pits Amersham against ABI, it also forces Abbott, the No. 2 diagnostics shop in the world, to compete against Bayer, the No. 3 company, in the $50 million high-throughput reference lab market.
To be sure, both Bayer’s Trugene and ABI’s ViroSeq may find it challenging to gain traction in this market, according to Timothy Alcorn, director of molecular pathology at Esoterix, and a former director of LabCorp. For instance, he said, reference labs are not inclined to develop home-brew assays based on CLIP sequencing technology — which is central to Bayer’s Trugene. However, because the assay is “fairly inflexible in terms of its multifunctionality,” Bayer should “look [for] a platform that is more user-friendly and more flexible.” Alcorn said the MegaBACE fits this bill.
Ian Mehr, president of pharmacogenomics consulting firm Dianoetica, of Research Triangle Park, NC, said that GE’s goal of combining in vitro and in vivo testing is “an interesting proposition.” However, he believes it will probably take GE at least 10 years before an integrated offering is available to physicians. Hawkins agreed, saying: “I think we’ll start to see early examples of that within a five-year time frame, [but] I think it’s going to be 10 years before … we see the complete coming together of in vivo and in vitro into one diagnostic platform.”
“You’re talking about physicians on the cutting edge who have MRI access, know how to use it, and know how to interpret it,” said Mehr. “And then you add in the genomic component ... it really adds another layer of complexity.”
Mehr said it would be more likely for GE to offer a single genetic test — say, an analyte-specific reagent looking at Factor V Leiden — while physicians use an MRI concomitantly to observe the circulatory system. “That’s a little bit easier to get your arms around,” he said.
Asked if GE’s direction may spur its imaging competitors to take similar steps, Mehr said that “maybe you’ll see a Siemens or a Toshiba begin working with an academic center on combining a genomic test with their imaging data and seeing if they can get better or more accurate results. I think this is what you’ll probably see.”