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Majority of Proteomic Stimulus Winners Not Likely to Buy Equipment, Analyst Report Finds

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Proteomic tool vendors may not see much benefit from the $10.4 billion stimulus package passed by the US government in February, according to a report from an investment firm.

Last week, Thomas Weisel Partners issued a report on a survey of 54 life-science researchers that sought to gauge the current funding environment, expectations for future funding, and likely beneficiaries.

While the stimulus funding includes numerous grants for proteomics and proteomics-related research, the report found that a majority of researchers do not anticipate using the additional funding to purchase equipment such as mass spectrometers and liquid chromatographers used for proteomics work.

According to the report, less than 10 percent of respondents said they expect to buy a mass spec, and less than 5 percent said they expect to add an HPLC. Indeed, the picture was rather gray for instrument sales as a whole with 32 percent of respondents saying they "were unlikely to add any high-end equipment to their lab," while 25.7 percent said they expect to buy high-end instruments.

The vast majority — 71 percent — said they anticipate using the additional funds to hire personnel, while 40 percent said they would buy basic lab equipment such as bench-top centrifuges.

If there is a glimmer of hope for proteomics from the survey, it's that nearly half of respondents said cancer would see large increases in funding, which could benefit biomarker research in the area. Additionally, 31 percent said they expect to spend some of the stimulus cash on biomarker research.

Much has been made about the new funding going to the National Institutes of Health as part of the American Reinvestment and Recovery Act, better known as the stimulus bill meant to reinvigorate the economy. The $10.4 billion being funneled to the NIH is in addition to the approximately $30 billion in annual funding that the agency regularly receives.

With the new money, the NIH has created new research programs and added new money to existing programs across all scientific research fields [See PM 03/12/09]. Life-science firms are looking to tap into the new money stream by offering their assistance to researchers with their grant proposals — as long as the proposals include use of the companies' technology.

Anecdotal evidence also suggests that there will be a tsunami of grant proposals from researchers to take advantage of the new funds.

But according to the Weisel report, any benefit to vendors from the new NIH funds will be offset by declines in falling university endowments as well as spending cuts from pharma and biotech firms due to the recession, expiring patents, and healthcare reform.

Thirty-eight percent of respondents said they expect government funding to be up during the next 12 months, but 32 percent said it will be down, and 30 percent anticipate it will be flat.

In addition, the report said that new NIH funding probably would not be disbursed until late 2009, and benefits from it would not reach the life-science vendor level until the first quarter of next year.

"We do not expect to see a substantial near-term benefit to spending," wrote Peter Lawson, an analyst at Weisel and author of the report.

Another report issued this week by investment bank Leerink Swann said that NIH officials have suggested to it that some grant recipients could be informed as early as August, and, as a result, "we expect revenues driven by the NIH funding programs in the ARRA are likely to emerge beginning in Q4 '09 and accelerate meaningfully into 2010."

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