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Genomics Technologies Motivate Merger

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MADISON, NJ--Last week's announced merger plans between American Home Products (AHP) here and Monsanto could be a signal that the powerful research and development technologies enabled by bio informatics and genomics are poised to transform the business landscape of the field of biotechnology.

The deal, valued at more than $34 billion, would create a company with operations in pharmaceuticals, agriculture, animal health, consumer healthcare, and nutrition with an estimated research budget of $3 billion.

In an interview with CNBC (http://www.cnbcdowjones.com) the companies' chairmen said that the revolution in biological sciences and genetics is driving the merger. An industry insider pointed out that a shorter time-to-market cycle for crop biotechnology products is one reason pharmaceutical companies are now transferring their genomic technologies to agriculture.

But another observer said that while the advantage of pooled bioinformatics and genomics capabilities "was clearly a major driver" of this merger, neither company has developed large bioinformatics of software shops in-house. "Monsanto has its agreement with Millennium, but internally both companies' bioinformatics expertise has been rather adhoc," he said.

Analysts predicted the move will enhance the combined companies' chance to take the lead in the race to find gene targets for agricultural and pharmaceutical products. The new company could also position itself as the world's largest agricultural products company.

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