'Post-genomic era' challenges instrument makers

Soft revenues recorded by life science instrument giant Applied Biosystems in the second quarter of its 2002 fiscal year sent a shockwave through the markets last month.

Applied Biosystems is owned by the Applera Company, which also owns Celera Genomics. For the first six months of US fiscal year 2002, Applied Biosystems reported net revenues of US$777.7 million, compared with US$774.6 million in the same period in the prior year.

Applera CEO Tony L White admitted the company was going through "an unusually challenging period".

"The economic outlook is uncertain, weak capital market conditions have hurt spending by some of our biotechnology customers, and the late passage of the National Institutes of Health's fiscal 2002 budget is disrupting the normal pattern of sales to government labs," he said.

"Additionally, we are transitioning to a new era where the emphasis is changing from generating genomic information in 'big biology' projects such as the sequencing of the human genome to applying that information to specific areas of biomedical research and drug discovery" - the so-called 'post-genomic' era.

But in the same week of Applied Biosystems' announcement, competitor Beckman Coulter announced that its earnings had swelled more than 12 per cent.

Stephen Paull, Beckman Coulter's Australian and New Zealand life science sales and marketing manager, said that the high-throughput sequencer market was saturated, and Beckman Coulter was developing less costly sequencers such as the 8000 Genetic Analysis System, launched early this year.

"We are supplying those small to medium sized biotechnology companies that want a simple (sequencing) facility where scientists can just walk up to it and use it," Paull said. "In Australia there's a 10 per cent growth in the market for these types of DNA sequencers."

Paull said that Beckman's clients included smaller research institutes, in agricultural biotech, for example, that wanted to control their own facility or that require privacy for their sequencing data.

Both companies face the challenge of supplying equipment to an evolving biotech industry. "The human genome project spiked our sales over the past couple of years but since the project was completed, people are looking at the next step - functional genomics and proteomics," said Dan Headon, Asia-Pacific sales and marketing manger at Applied Biosystems.

Later this year, Applied Biosystems will launch new instrumentation for functional genomic and proteomic research. Celera will invest in the technology and use it to identify drug targets and diagnostic marker candidates and to discover novel therapeutic.

Meanwhile, Dr Elizabeth Kuczek, head of sequencing projects at the Australian Genome Research Facility (AGRF), said there was plenty of sequencing still to be done.

"Now that we have the holy grail there's all the comparative genomics to do, comparing other genomes back to the human," she said. "We also have a lot more sequencing to do with the human genome - it will take at least a year to finish off the 10% of gaps."

Although the AGRF is seeking to purchase another high-throughput sequencer, local demand for such instrumentation is minimal, according to Headon.

"Australia didn't rate in its contribution to sequencing the entire human genome," Headon said. "It seems that due to lack of funds, once again it may miss out on the functional genomics too."

A few weeks ago Applied Biosystems released its new 4700 Proteomics Analyser, which has a price tag of more than AUD$650,000. "Korean research institutes bought three in one week," Headon said. For Australian proteomics researchers, the price tag is simply too high.