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As Proteomics Companies Proliferate, Pharma Considers How to Outsource

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For most well-known proteomics companies, partnering with pharma is a little like trying to hold on to the back of a bus while bicycling: the longer you can hang on while a protein target works its way through the pipeline, the better chance for seeing royalties down the road.

But not all proteomics companies take this approach to doing business with big pharma. As the demand for proteomics services has grown — both at pharmaceutical and biotech companies — smaller proteomics operations have sprung up to perform fee-for-service research without demanding a stake in the intellectual property in return.

These companies, such as ProteEx, Larial Proteomics, and Proteomic Research Services, a spin-off of Genomic Solutions, are all betting that they can make a living performing research for companies overwhelmed with protein analysis or just too wise with their dollars to build their own expertise in a certain area of proteomics.

“By and large, most [proteomics companies] are looking for royalties and IP, but the demand for proteomics services is so huge that we don’t have to,” said Ira Goldknopf, COO of ProteEx, based in The Woodlands, Texas. ProteEx currently has several research contracts with the University of Texas, and undisclosed contracts with pharmaceutical and biotech companies, according to Goldknopf.

Despite the seemingly endless stream of reports predicting growth in proteomics, what remains to be seen is how big pharma companies will respond in the long run to the various offerings proteomics companies supply them. The answer will undoubtedly determine whether little guys like ProteEx can compete with the Oxford GlycoSciences and GeneProts of the proteomics world.

For some proteomics reseachers in big pharma, fee-for-service research companies nicely jibe with the corporate agenda. In addition to building an in-house proteomics group, outsourcing is essential, they say, given the range of techniques for analyzing proteins and sheer volume of samples to analyze. The question is whether it’s necessary to share the downstream revenue with the research provider.

“When you really can buy in a service, just a fee-for-service outsourcing for example, I think this is always our preferred option,” said Hanno Langen, head of proteomics for Roche in Basel, Switzerland. “Very often [a company will require] licensing fees and up-front payments for any discovery, and then it becomes much more difficult to have an agreement.”

In most cases, added Langen, proteomics companies are offering basic biochemical technology augmented with automation and higher throughput, a package that isn’t worth the price of sharing intellectual property or downstream revenue. “When you look at OGS , GeneProt, [or] LSB, I would say these are all service companies, but they don’t understand themselves as service companies,” he said. “There is a clear need for service companies, but it’s true services, not this collaboration type of project.”

Other pharma researchers say the demand for these kinds of services is overstated, given the importance of closely integrating protein analysis with other aspects of drug discovery. Outsourcing proteomics research may be cheaper, they say, but the pharma company pays a price in the usefulness of the data.

“In my opinion, there’s sort of a shift in big pharma from outsourcing to moving [proteomics research] in-house,” said Stanley Hefta, executive director of proteomics at Bristol Myers-Squibb. “It’s particularly true in proteomics, because you have to have a close working relationship [with proteomics researchers] to turn what you’re observing into something that has value.” BMS has built up a large proteomics effort in-house, he said, because “we’re a big company and we can afford to.”

Brian Musselman, an independent consultant to proteomics companies, argued that the tendency for big pharma to build in-house labs has diminished the demand for fee-for-service research. Companies such as OGS and Protana worked to develop unique technical capabilities because they weren’t able to generate enough demand for their fee-for-service business. “It doesn’t seem to me that big pharma is interested anymore in funding [proteomics research] on a per-sample basis,” he said.

Futhermore, small fee-for-service companies without unique or proprietary technology often face stiff competition in vying for pharma and biotech business from university labs with grants to pay for equipment overhead. University labs [see chart p. 3] “are probably just as well-equipped,” Hefta said.

For this reason, a fee-for-service company can’t charge a lot for performing routine protein analysis, such as with 2D gels, and margins are therefore slim, said Mary Lopez, a proteomics researcher at Proteome Systems’ US subsidiary who worked previously at Genomic Solutions.

“There was a window of opportunity, but it seems like that window is closing,” she said. “It’s really difficult [for fee-for-service companies] to survive.”

Not surprisingly, ProteEx’s Goldknopf does not agree. “The margins are good for what we do,” he said, because the company’s researchers add value through their biological and medical expertise. In addition, the company serves as a beta site for next generation mass spectrometry systems such as Applied Biosystems’ MALDI TOF-TOF, he said.

Likewise, Toronto-based Larial Proteomics is developing proprietary techniques for separating low-abundance and membrane proteins, said Jeff Charuk, chief scientist at the company. “We find the right instrumentation for [the project],” he said. “If it’s not in-house, we’ll hunt it down.”

Although the competition is stiff, Goldknopf and Charuk nevertheless insist that the work is out there for the taking. Charuk launched Larial in May, and has already entered into research agreements with Aventis Pasteur and Cangene, he said.

“In order [for big pharma] to get this work done in-house, it might take 1-2 years before they get approval,” Charuk said. “They don’t want to go through confusing budgets, they’re simply looking for contractors.”

— JSM

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