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Pharmacopeia Completes Acquisition of Oxford Molecular s Software Subsidiaries

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Pharmacopeia of Princeton, NJ, has completed its $27 million acquisition of the software subsidiaries of Oxford Molecular Group. The company said it will now focus on integrating OMG’s operations.

“We completed this acquisition and look forward to a rapid and successful integration process,” said Joseph Mollica, Pharmacopeia’s chairman, president, and CEO. “The products and technologies we acquired will enhance and complement our existing drug discovery and chemical development [software] solutions.”

Pharmacopeia originally announced its intention to acquire OMG’s software subsidiaries on August 9. Pharmacopeia paid $27 million in cash and the assumption of certain liabilities to acquire Oxford’s assets, which it considers a good price.

“We paid roughly two-times earnings,” said Susan Rodney, a spokeswoman for Pharmacopeia. “That’s a very decent price for these assets.”

Included in the acquisition are Oxford’s cheminformatics products, including its popular RS3 software package, and Oxford’s Madison, Wis.-based Genetics Computer Group unit, which develops and markets bioinformatics software.

“With the addition of these assets, and the 120 highly skilled OMG employees to our team, we are confident we can continue to accelerate the drug discovery and chemical development needs of our customers,” Mollica said.

According to Pharmacopeia, there is a definite need among biotechnology and pharmaceutical firms for better informatics applications. Pharmacopeia’s goal is to serve those markets with the broadest possible range of products. The company said it will be able to leverage GCG’s offerings as part of its product mix.

“We already had a strong position in cheminformatics, but not much in the way of bioinformatics,” explained Rodney. “GCG fills a significant gap in bioinformatics.”

According to analysts, GCG has a strong foothold in the bioinformatics and gene sequence analysis software markets. For example, GCG is estimated to have 40,000 users for its Wisconsin Package and thousands of other users for its desktop applications for DNA sequence analysis, including its MacVector and Omiga products.

As the excitement of the acquisition fades, Pharmacopeia must begin the challenging task of integrating Oxford’s products and 120 employees and into its own business structure. The integration, however, is not expected to result in many redundancies.

“There are not many overlapping functions,” said Rodney. “There are approximately 10 administrative functions at OMG that will be eliminated.” She added there are no plans to eliminate any jobs among the ranks of OMG software developers.

Pharmacopeia will integrate Oxford’s cheminformatics franchise into its San Diego-based Molecular Simulations and UK-based Synopsys Scientific Systems subsidiaries. Both MSI and Synopsys develop and market cheminformatics tools. Conversely, GCG’s bioinformatics business, including the sales force, will be kept separate for the time being.

Pharmacopeia said that consistent with its previous acquisitions--including MSI in June 1998 and Synopsys in February--it has no immediate plans to relocate any of OMG’s 120 employees. GCGwill continue to operate from its base in Madison. Pharmacopeia said it considers OMG software developers to be the key asset in deal, and therefore, they don’t want to start moving employees and risk losing top talent. Looking forward, Pharmacopeia said its software units will grow through organic growth as well as additional acquisitions.

“We have an aggressive mergers and acquisition strategy,” Rodney said. “We’ll continue buying firms, eliminate overlapping functions, and then move forward to grow the businesses.”

In a related move, Pharmacopeia has promoted Michael Stapleton to executive vice president of software operations with responsibility for all commercial software development and marketing. Stapleton will oversee Pharmacopeia’s Molecular Simulations, Synopsys, and the newly acquired OMG subsidiaries. Stapleton previously has served as Pharmacopeia’s vice president of worldwide marketing, and most recently as general manager of its materials science business unit.

--Ron Rogers

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