OEM — or original equipment manufacturer — agreements are commonplace in the mainstream IT market, but have been few and far between in bioinformatics. In the last week, however, BioDiscovery announced an OEM agreement for its ImaGene and GeneSight software with Bio-Rad’s microarray platform; Visualize announced that its Visual Genetics software will be bundled with Beckman Coulter’s CEQ 8800 genetic analysis system; and Spotfire said that its DecisionSite for Functional Genomics will come pre-installed on Applied Biosystems’ new Expression Array system for a 90-day trial evaluation period.
“It’s always sort of a make-or-buy decision for instrumentation companies regarding software,” said Greg Moore, vice president of business development and marketing for BioDiscovery. While different vendors have different approaches, Moore said, “I think that partnering in general is becoming a little more commonplace than it once was.” Moore said that BioDiscovery’s OEM sales channel is “steadily growing,” and that OEM sales currently make up greater than half of the company’s software sales.
For Spotfire, which has a number of co-marketing and integration partnerships with many life science instrumentation providers, the ABI Expression Array deal marks the first time its software will be bundled with a vendor’s system — albeit on a trial basis. “The model around our relationship with Applied Biosystems and their microarray platform is a new one for us,” said Kristen Stoops, director of business development at Spotfire. The arrangement offers advantages for both parties: “It allows Applied Biosystems to round out their offering with analytic software that they have worked with, and that demonstrates the capabilities of their system very well,” she said, while Spotfire gets the opportunity to work with customers during the evaluation period “and hopefully bring them to closure on a sale.” Pleased with what it has seen so far in its work with ABI, Spotfire is planning to create a formal evaluation program for other instrumentation vendor partners, Stoops told BioInform.
ABI and Spotfire did not disclose the financial terms of their agreement.
Visualize, meanwhile, is a relatively new player in the bioinformatics market, so the endorsement of a major instrumentation vendor marks a significant win. “Our go-to-market strategy has been focused on this instrument vendor space, because we don’t have a real large independent sales organization,” said Janice Kurth, vice president of life sciences at Visualize. “For us, this is a great thing to be able to announce because we made this investment in the life science space a couple of years ago when Visualize acquired [Genomica’s software], and we’ve been working hard to get it out on the market, and we’re pleased that Beckman has the confidence to also make a sizable investment in this technology,” she said. “Hopefully, [the software] will help their product have a significant competitive advantage, and early indications are telling us that that is true.”
Visualizing Increased Sales
Kurth said that the OEM deal with Beckman Coulter also provides a marketing shortcut by directly targeting the end users who need the software the most — a boon for the customer as well as the software vendor and the instrument vendor. Beckman’s CEQ 8800 is a medium-throughput genetic analysis platform that comes with basic software for base calling, allele calling, and the like, but researchers previously had to manually export this data into one or more third-party packages for downstream analysis. Now, data from the instrument is automatically fed into the Visual Genetics software, and users can add phenotypic data to the genetic information in order to perform linkage analysis, association studies, and pharmacogenomics analysis. The software also automatically formats data for other common linkage analysis packages, like GeneHunter, SimWalk, and CriMap.
Financial terms of the agreement were not disclosed, but Kurth said that it is a royalty-bearing deal. Visualize is free to enter similar partnerships with other instrument vendors, aside from a “narrow realm of exclusivity” with Beckman that Kurth was unable to elaborate on.
Noreen Galvin, manager of strategic marketing for Beckman’s CEQ product line, said the OEM agreement falls under the company’s recently launched GenomeLab initiative, which is an effort to remove many of the bottlenecks that researchers currently face in their analytical pipelines. “With the systems biology approach, customers aren’t just running their experiment on an instrument and sending the data off to the IT department to analyze,” Galvin said. “They want to look at it themselves, draw some quick conclusions, and then maybe send it off to someone else for further analysis, if necessary.”
Galvin said that the software has already had a “positive effect” on sales of the CEQ 8800, although the combined product has only been available for a few weeks. Beckman is planning to install Visual Genetics on a broader range of its genetic analysis instruments, Galvin said.
A Growing OEM Network
The agreement with Bio-Rad was BioDiscovery’s third major OEM partnership, Moore said. The company currently has similar arrangements with GE Healthcare (formerly Amersham) and Eppendorf. “The OEM strategy is something that we’re definitely promoting and trying to encourage,” Moore said.
In the Bio-Rad agreement, BioDiscovery will customize its ImaGene image analysis software and its GeneSight data analysis package for use with Bio-Rad’s microarray scanner and arrayer.
In the microarray market, it’s common for instrument vendors and software suppliers to strike up co-marketing and integration partnerships, but OEM deals for downstream data analysis are relatively rare. Moore said that BioDiscovery’s arrangement with GE Healthcare is focused on image analysis, rather than data analysis. “We’re the image analysis engine, if you will, for some of the CodeLink products,” he said. He noted, however, that “there seems to be a greater willingness — in my opinion — to look at data analysis and streamlining that process than there once was.”
Bio-Rad officials declined to comment on the agreement.
Old Partnership, New Model
Spotfire and Applied Biosystems have partnered in the past — in 2002, the companies collaborated to integrate the ABI/MDS Sciex Pro ICAT software with Spotfire’s DecisionSite for Functional Genomics. But the launch of ABI’s Expression Array platform — a new technology area for the company, and a highly competitive market — demanded a new level of software capability. ABI “approached us in the early days of development of their microarray platform and were not exactly fixed on how they wanted to offer software,” said Stoops. “The relationship that we have with them now evolved from those early discussions.”
For ABI, the pre-installed version of Spotfire’s software gives customers instant access to a de facto standard for data analysis — a clear advantage in overcoming early skepticism over the new array system. An ABI representative was not available to speak about the company’s software strategy for the Expression Array system, but Lydia Nuwaysir, application software product manager for Applied Biosystems’ discovery proteomics and small molecule business, outlined the company’s general approach to software partnerships: “When we are assessing the market, and where we need to be, we take a look at what we have to offer there, and what our resources are there in terms of creating a solution in that particular space. If we decide we have the technical expertise, and can deliver something in a timely fashion that meets the customers’ needs, then we prefer to do that, since it offers us the flexibility and specificity of a particular tool that we developed in house.” However, she said, “When we don’t have the expertise in house, or the time to create a tool, then we look to third-party tools or software packages.”
In proteomics, ABI has had a long-standing OEM partnership with Matrix Science for its Mascot software — as do many other mass spectrometry vendors. The move toward a bundled solution for its gene expression platform could signal a similar strategy in the future for the company’s microarray business.
According to Stoops, ABI offered Spotfire’s software to customers who had early access to the microarray platform, “and we have already seen success in terms of sales with some of the beta customers,” she said.
Landing the Deal
Alliances between instrumentation and software vendors could benefit all parties involved, so why aren’t there more of these deals in the market?
For one thing, Moore said, “There isn’t much loyalty in the research market. People use whatever [software] they think is best” — regardless of what comes installed on their machine. Another stumbling block is the lack of standardization in the field, as well as the immaturity of many software packages. In addition, typical OEM arrangements favor software packages with a substantial market share — a rare find in the highly fragmented and quickly evolving bioinformatics market.
For software vendors seeking OEM or other bundled marketing deals, Moore warned that it can take some time to gain the trust of instrumentation vendors. “It usually starts with buying one or two packages, or a prolonged evaluation period. It takes time for both sides, and it takes a little while to get to that point,” he said.
In addition, synchronizing the R&D schedule of a small software firm with that of a large corporation can also present a challenge once the deal is signed. “In working with a big company there are a lot of steps that you have to go through to get things done,” Kurth said. “Having this product on [Beckman’s CEQ 8800] coincided with some additional upgrades and things they’ve been doing with their instrument, too. So we had to kind of coordinate when it would actually hit the market with this new software on it.”
But once the work is out of the way, “there are significant advantages for both sides,” Moore said: The platform vendor gets a product that is tuned specifically to their instrumentation, “and we get a partner that has in most cases a better distribution reach than we have.
“You hate to say win-win, but it kind of is,” Moore said.