Agilent and Accelrys this week announced an agreement to resell each other’s software solutions to pharmaceutical companies — an alliance that company officials consider a watershed for both firms, and the bioinformatics industry.
Senior management from both companies stressed how rare such an arrangement is in this market, where acquisitions are more the norm.
The agreement follows a string of purchases that Agilent has made over the past few years to shore up its informatics offering, beginning with its acquisition of Silicon Genetics in 2004, which gave it the GeneSpring microarray analysis platform; and the acquisition of Scientific Software in 2005, which provided the OpenLab platform for chromatography data management. This year, the company acquired the Kalabie Electronic Laboratory Notebook from the Klee Group, as well as Stratagene, which gave it the Pathway Architect pathway-analysis platform and the ArrayAssist array analysis package.
Now it appears that the company is moving more toward a partnership model for serving its customers’ informatics needs.
Francois Mandeville, M&A and partnerships business integration manager, informatics solutions for Agilent noted that the Accelrys product line is “highly complementary” to all of the products Agilent has picked up in those acquisitions. In particular, he said, “When Agilent acquired the [Kalabie] ELN, we looked at the entire marketplace and asked, ‘What is the suite of technology that pharma needs to assemble to get its job done?’”
By integrating the Agilent and Accelrys product lines, Mandeville said, “together we have a series of technology and go-to-market capabilities.”
He added too, that “one could try to buy everything out there, but I am not sure if it’s financially practical [to do so], and I think it comes with different challenges.”
Mandeville explained that "while acquisitions are an important tool to enhance the breadth of your portfolio and capabilities, partnerships can be more rapid and effective to get value to customers and shareholders. Because acquisitions involve a change of ownership, they typically require more initial efforts — such as legal, financial, HR, IT and facilities, for example — before value can be derived from the transaction. Acquisitions also typically require a greater upfront investment of capital.”
He added that both acquisitions and partnerships are “critical tools to our informatics strategy,” but the latter route was “the most effective way to offer integrated informatics solutions.”
Mandeville’s comments would seem to be in line with comments from Agilent’s general manager of life sciences, Nick Roelofs, who said earlier this year that although informatics is the “fundamental backbone across the laboratory,” the market — which he pegged at approximately $600 million — is “not a particularly high revenue opportunity for any company, and certainly not a particularly high revenue opportunity for us.” [BioInform 01-26-07]
Kalabie is Key
The partnership covers the informatics portfolios of both companies and is expected to enable pharmas to better integrate laboratory and experimental results.
Accelrys will resell Agilent’s OpenLab Enterprise Content Manager, Kalabie Electronic Lab Notebook, and GeneSpring gene expression solutions. Agilent will resell Accelrys’ Accord cheminformatics solutions and Pipeline Pilot workflow software.
“Pharmas [need] technology from different vendors, but they would far prefer if the informatics industry would relieve them of the burden of integration.”
Under terms of the agreement, the companies agreed to integrate and cross-license these products. Bill Taylor, vice president of marketing at Accelrys, told BioInform that each company bought the other’s products at a discount and that the list price for existing customers remains the same.
Further financial terms of the agreement could not be disclosed, principals from both companies said.
One draw for Accelrys was Agilent’s Kalabie ELN, Taylor said.
“Accelrys does not have an ELN in its portfolio, but we have cheminformatics that many ELNs are built on top of, and the Kalabie ELN is the one that fits our vision the best because [Agilent] share[s] our strategy of creating an open and flexible ELN product line,” he said.
Accelrys’s relationship with Kalabie actually preceded the resale partnership with Agilent. The company had already integrated the ELN with its Accord cheminformatics line about a year ago.
In a statement, Accelrys CEO Mark Emkjer said, "Agilent's strength in laboratory informatics, QA/QC and manufacturing are a natural complement to Accelrys' expertise in research, early development, and scientific data management."
According to Taylor, the alliance came about when Emkjer ran into Agilent’s CTO, Darlene Solomon, at a conference. Taylor said the discussion regarding a possible partnership took place over the last year, and that it didn’t take long before it went from an idea to formal planning within both companies.
“They were discussing the visions and strategies of our respective businesses, and they were the ones that initially saw the synergies and they asked their respective teams to begin the discussion, and the more we got into the discussion the more we saw the synergies and how complementary our products were, and then it was just a matter of crafting the right agreement,” Taylor said.
Further, he said both companies recognize a market need, that each is responding to customer demand. “Many of the customers who use [Agilent’s] OpenLab product today are at least aware of Pipeline Pilot — some know from personal experience, and some from other areas of their companies,” he said.
For its part, Agilent sees in Accelrys a partner that will help it better serve its life sciences customers.
“If you look at what we, the informatics vendors, impose on customers … We have been, for decades, putting the burden on customers, the burden of integrating these products we sell,” Mandeville said. “Pharmas [need] technology from different vendors, but they would far prefer if the informatics industry would relieve them of the burden of integration.”
By integrating their informatics suites beforehand, Mandeville said, the companies relieve their clients’ existing burden of deploying these technologies together. “They want to see ownership for making these things work, transparency in how they deploy them, and transparency in how they are supported,” he said.