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Bioinformatics Startups Strategies Include Specialty Solutions vs. Complete Packages

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MENLO PARK, Calif.--Bio informatics startup companies all face the same challenge: to provide solutions to help pharmaceutical and life sciences companies grapple with genomic data overload. But bioinformatics firms do not share a single philosophy for how best to serve this market. BioInform spoke recently with entrepreneurs at six bioinformatics companies that provide data mining and gene discovery technologies about their approaches to meeting the industry's needs.

Some said that in order to provide customers with a complete solution, a bioinformatics firm must provide a complete product. Others preferred to focus efforts in an area or technology where they excel, then form partnerships to create a complete package.

Niche marketing

Manuel Glynias, president and CEO of NetGenics, a bioinformatics tools vendor in Cleveland, Ohio, said that when his company started out two years ago, it looked at what pharmaceutical companies seemed to be lacking. "All these companies have their own bioinformatics groups," Glynias said, "so clearly the stuff they could buy was not sufficient." He found that what companies wanted most were enterprise-wide solutions that would allow a team to share data with groups at other locations and with people working on all phases of the drug discovery or product development process.

Glynias said that NetGenics provides a piece of the total solution companies are after and forms partnerships with related companies to provide the rest. Some of these partners are already widely used by pharmaceutical companies, so NetGenics adds a new piece to an accepted product, he explained. "We can solve the parts we are really good at," Glynias said. That's a better use of his company's resources than competing with established companies. "We pick fights that are one-sided in our favor," he concluded.

NetGenics's products are also CORBA compliant, Glynias added, so they are compatible with other tools their customers might have. "What ever else they buy, they can glue it in," he said. "The intent is that they get the product they want."

"If you want to remain small, you can find a niche and come up with a value-added tool. If you want to become a credible IT solution provider, you have to become a huge quality provider."

Glynias said that companies take different approaches to meet what they see as the customer's needs. "We are all going to listen to the people who are our customers," he said.

Similarly, Oakland, Calif., bioinformatics software company Pangea Systems chooses to focus on a single area of expertise. It also makes CORBA-compliant products that can easily integrate with other products. Joel Bellenson, Pangea's chief strategist, said that many companies are trying to write all their own bioinformatics pieces, a process that can take years and delay time-to-market. Bellenson said that by creating a platform for data storage, Pangea can help its customers get products to market faster.

Instead of writing traditional applications, Pangea forms partnerships and encourages companies to write applications that run on Pangea's platform. "The market has so many areas of need," Bellenson said. "Why reinvent the wheel?"

Molecular Applications Group, Palo Alto, Calif., provides high-throughput protein discovery technology rather than database platforms, but also takes the specialty-provider approach. "I don't want to know everything," said Myra Williams, CEO. "We want to continue to focus on the science side of things."

Williams said that forming partnerships is a matter of priorities. "We have a lot of people who want to work with us," she said, "but we are too small to be a good partner with many companies." Molecular Applications will pick partners that can best complement its products, she said, and the company will continue to produce products with open, modular architecture that are easy to fit into existing environments.

Bellenson said that small companies that are trying to do everything will have a hard time making it in today's bioinformatics market. "The window is closing for some of these people," he noted. "There are some companies who want to be a one-stop shop. I don't think that's a valuable dream."

One-stop shops

But David Jackson, chief operating officer at Oxford Molecular in Oxford, UK, disagreed. "The essence to being successful--and the way the market will go--is a small number of large solution providers," he contended. The major challenge facing pharmaceutical companies today is staying on top of the huge amount of data they generate, Jackson said. They need to be able to manage, process, and extract data to get the right chemical and gene target. "It can only be a large company that can supply quality solutions to keep abreast of the problem," he said.

Jackson said he doesn't see a role for small, niche companies. "It's a big task, one that needs a large, credible supplier. If you want to remain small, you can find a niche and come up with a value-added tool. If you want to become a credible IT solution provider, you have to become a huge quality provider."

Of the products Oxford Molecular provides, he said the software is the glue that holds the process together. "We are very much about software tools."

Susan Strong, vice-president of sales and marketing at Genomica, isn't quite as adamant as Jackson about providing comprehensive packages. But, she said, "We are proud of our complete approach." One of Genomica's products, for instance, DiscoveryManager, can provide an entire solution to a startup pharmaceutical company.

But Genomica's CORBA-compliant products can also integrate with a customer's existing bioinformatics tools. "You can't be so arrogant as to say that you can do it all yourself," she said. "You have to take both approaches."

So far, Genomica hasn't formed partnerships with other companies, Strong said. But the company will work with customers' bioinformatics groups to provide tailored solutions.

"Nobody can really do everything. You have to make tradeoffs--provide a whole solution with an eye to integration."

Cyrus Harmon, CEO of Neomorphic in Berkeley, Calif., said that when he talks to pharmaceutical companies they have different answers to what they want in a bioinformatics provider. Some want to buy everything from one vendor, supporting Oxford Molecular and Genomica's approach. Others just want the best, and they want it all to integrate.

Harmon said that for now, Neomorphic is focused on three niches: data visualization, analytical tools, and databases. The company chose these areas because that's where its founders had expertise when they started out a year and a half ago. Where they go from here depends on the pharmaceutical companies.

"Right now we are focusing more on what we do," Harmon said. "Nobody can really do everything. You have to make trade-offs--provide a whole solution with an eye to integration."

Gregg Heldt, Neomorphic's chief technology officer, said that there are gaps in what Neomorphic can provide so the company is looking at partnership options. "For now, we are focusing on areas where we have products out."

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