by Tammy Lee
Bioinformatics has changed dramatically over the past three years. What was once considered the "Darling of Wall Street" is now a market rife with uncertainty and consolidation. However, new opportunities emerge as the bottleneck shifts from data acquisition to data interpretation, and understanding within and across biological data types evolves. The biopharmaceutical industry will look to bioinformatics with the hopes of translating gigabytes of biological data into quality targets and better drugs in reduced time.
Front Line had the opportunity to speak with bioinformatics group heads and scientists from leading pharmaceutical and biotechnology companies in order to get an inside look at the demand for bioinformatics. This article will highlight particular insights and present implications for market outlook.
Bioinformatics within Drug Discovery and Development
Bioinformatics is being applied at all stages of the drug discovery chain. Currently, the greatest level of contribution is at the target identification stage, followed by target validation. In the future, the contribution of bioinformatics along the discovery chain is expected to shift downstream, with a primary role in target validation and secondary application in lead optimization. Based on assessment by pharmaceutical and biotech end-users, bioinformatics has the potential to reduce the current time of drug discovery by approximately 30%, and to reduce annual costs by 33%. The promise of huge savings has contributed to the industry frenzy around bioinformatic advancements.
Bioinformatics has thus far affected drug development to a much lesser degree than discovery. Its current application is primarily at the preclinical stage, and a more significant role is expected in later stage clinical development (primarily Phase III). Pharmacogenomics will be a main driver for use of bioinformatics in drug development. The value of bioinformatics in drug discovery (i.e., more quality targets and lead compounds) is expected to improve success rates and length of drug development.
Genomics, cheminformatics, proteomics, and pharmacogenomics are the main application areas for bioinformatics. The expected trend in the biopharmaceutical industry is to diversify beyond the current focus on genomics, ramp up on cheminformatics, and move toward proteomics and pharmacogenomics over the next five years. The completion of sequencing the human genome has set the stage for more complex types of analysis, such as:
While the expectation is an increased role for bioinformatics in drug discovery and development, outstanding bottlenecks exist. Pharma/biotech companies identify the following bottlenecks as impeding data flow and analysis within their organizations:
The Market Out look
Most major pharmaceutical and biotech companies have budgets set aside for bioinformatics. The level of bioinformatics spending tends to vary between "large" pharmaceutical companies (e.g., Aventis), "medium" pharmaceutical companies (e.g., Novo Nordisk), and biotechnology companies (e.g., Chiron).
Bioinformatics spending can include in-house development and external purchase from commercial vendors. Pharmaceutical and biotech companies currently allocate approximately 39% to in-house development and 61% to external purchase.
The bioinformatics market within drug discovery and development can only grow as rapidly as the bioinformatics budgets of pharma/biotech companies. Based on expected levels of increase in bioinformatics spending, the bioinformatics market is forecasted to grow at a CAGR of 20% through 2006.
Pharmaceutical and biotech companies expect external purchase from commercial vendors and in-house development to rise at nearly equivalent rates.
Growth in particular market segments will be affected by what types of products companies need and for what particular applications.
A number of threats and barriers stand to impede overall market growth. Capital market volatility has inflicted growing pains upon nascent bioinformatics companies. Those that successfully launched IPOs during the wake of human genome sequencing have seen their stock prices falter. Increased competition from in-house development and the public sector as well as between commercial vendors has created an environment in which only the "fittest" survive and thrive. Celera and Incyte have managed to stake their claim in the content segment. Accelrys and Informax have been able to establish a foothold in the analysis software segment.
Limited proof of concept is another threat to market growth. Pharma/ biotech organizations still wait for evidence that bioinformatics can put a new drug on the market. Lack of standardization and shortage of manpower are current constraints faced by organizations. A finite customer base stands to limit overall growth potential. A response to these threats and barriers has been increased consolidation and collaboration (e.g., bioinformatics suppliers with life science instrumentation providers and large IT conglomerates) within this market.
Despite challenges, the demand for bioinformatics
remains. Bioinformatics offers the prospect of identifying better
targets earlier on, optimizing lead candidates, and improving success
rates in development. As a result, R&D cost and length is
reduced, and time on the market before patent expiration is extended.
The ends (better drugs in the pipeline, more drugs on the market,
greater profits) seem to justify the means (investment in
bioinformatics) for pharma/biotech companies. Ongoing genome
sequencing, combinatorial chemistry, microarray analysis, advances in
proteomics, and pharmacogenomic research will require increasing
investment in bioinformatics over the next five years.
Tammy Lee is an Associate at Front Line, specializing in Bioinformatics, Diabetes, Neuroscience and Drug Discovery Technologies. Tammy has a B.A. in Human Biology from Stanford University.
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