Sigma-Aldrich, hoping to grab a bigger slice of the biopharma industry's expanding appetite for outsourcing, this week expanded its services business to include mass spectrometry-based protein characterization, protein expression, and protein purification.
The new offerings, which add to existing services such as solid-form studies and application development, come at a time when biopharmas' demand for outsourcing continues to grow, Susan Riley, director of international business development for Sigma-Aldrich, told ProteoMonitor.
Pharma and biotech shops first began sourcing out work in the "medicinal chemistry area, where they were outsourcing screening of small molecules," said Riley. Now, as that industry is increasingly exploring therapies based on biological content, such firms are also outsourcing that work to the tune of $500 million to $1.5 billion annually, she added.
"And so we felt that was a trend [that] we wanted to capitalize on … given the fact that we had core competencies within the company and certainly many relationships external to the company that we thought could facilitate that," she said.
Prices for the new services range from $550 for identifying proteins from gel bands to around $19,500 for recombinant protein expression from a mammalian cell line, though actual costs may vary depending on the complexity of the customer request, according to Sigma-Aldrich's website.
A full list of the services provided and their prices is available here.
The new offerings are services that Sigma-Aldrich has been doing for its own internal work. For example, SAFC Biosciences, a unit of Sigma-Aldrich that provides biopharmas with cell culture materials and development services for upstream and downstream processes, works extensively in media optimization.
For that "you have to work with lots and lots of mammalian cells and … optimize yields and do analysis on them for customers," Riley said.
She stressed that the idea is not for Sigma-Aldrich to collaborate with biopharmas on large-scale projects and manage them; "that's what a classic CRO does, and this is definitely not a classic CRO offering." Rather, what the company is offering is the chance for customers to choose individual services from a menu without fear of jeopardizing their intellectual property, she said.
In fact, the executive of one CRO said that because of the limited offering of services by Sigma-Aldrich, the two are not competing for the same business.
"Monarch is providing a much more comprehensive menu as we offer protein biomarker discovery, selection, assay development, as well as routine monitoring services," Shawn Comella, president and CEO of Monarch Life Sciences, told ProteoMonitor in an e-mail. "Most of these services are extremely tailored, such as peptide and protein bioanalytical PK/PD/ADME services — as such they are difficult to 'productize.' We also tend to focus on very long term projects from discovery though assay implementation vs. routine testing."
In addition to CROs, a number of pure-play firms exist to help drug makers conduct and manage large-scale projects. Among them are Ann Arbor, Mich.-based NextGen Sciences and Germany's Kinaxo Biotechnologies, both of which offer an extensive menu of protein services. But Sigma-Aldrich was finding that after clients purchased its products, they would ask for suggestions on other firms for certain services.
While Sigma-Aldrich could not offer the same number of options as a pure-play protein service firm, it decided it could offer services in those areas where it had core competencies "and set up partners [who] are capable of doing this so that we have the ability to serve that customer request at the same time they order products," Riley said.
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When Sigma-Aldrich surveyed a number of large pharma customers about its plan to offer the three new services, the response was overwhelmingly positive, Riley said. One complaint of pharma customers had been about the hassles of dealing with multiple service companies providing different services.
"We had some large pharma who were already dealing with service providers and [they] basically said to us, 'Can you take care of this for me?' They wanted us to be the interface because it was too much trouble for them to deal with all these baby service providers," she said.
Eventually, the company would like to offer a broad menu of services that would be "most pertinent to our products," she said. The services business contributed about $50 million, or about 2 percent, to Sigma-Aldrich's total sales of $2.2 billion in 2008, she added.
In an e-mail, Michael Pisano, president of NextGen Sciences, said that Sigma-Aldrich's entry into the protein-services space increases competition "and as such we need to react by increasing value in our offering."
Earlier this year, his firm sold its electrophoresis business to Sigma-Aldrich to become a pure-play protein biomarker company [see PM 03/05/09].
Pisano added that "as the pharma, biotech, and even academic institutions reshape themselves and rethink how they operate, it is clear that outsourcing is the direction they are moving to. So I think there is plenty of business to be had."
One thing Sigma-Aldrich is not offering, at least yet, is biomarker services. It is, however, researching whether it is a market it wants to enter, particularly biomarker validation and verification. "It's something that we are very much looking into and very much exploring," Riley said.
The new services are being provided by a network of researchers within Sigma-Aldrich as well as Sigma Certified partners. Riley declined to say how many such partners are in the network but said they are located throughout the world.
Each partner had to go through a six- to eight-week qualification process that included being tested on their capabilities on simple tasks such as mass determination as well as more sophisticated work such as N-terminus sequencing and cleaved glycan analysis. Sigma-Aldrich scientists designed experiments "that were fairly complicated that tested the limits of their capabilities. We challenged them with unknowns and we had them do all kinds of manipulations," Riley said.
In addition to their technical skills, the partners were evaluated on their communication skills — "That's important obviously when you're dealing with emergent locales," Riley said — and their professionalism. Many potential partners were eventually rejected because, even though they may have had the scientific skills, they tripped on things such as responsiveness and ability to do correct report formats, Riley said.
Riley said that the company has a handful customers for the services already, and some more projects are in the pipeline, though she declined to disclose the names of the customers.