The Internet May Transform Health Care
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Genome Research is Changing Pharmaceuticals
May 10, 2000
GRADUATE SCHOOL OF BUSINESS — The Human Genome Project will spur the development of several new types of businesses, according to the panelists at a biotechnology discussion at Stanford Business School's Health Care Technology Conference on May 6.
Areas of growth include pharmocogenomics or the using of genetic information to match the right drug to a given patient; genetic databases and clone storage; targeted drug discovery and development; and the making of tools and supplies for other genomic companies, according to Michael King, vice president and senior biotechnology analyst at Robertson Stephens in San Francisco.
The conference, the first at the Business School to explore emerging areas of health care and how the Internet will change medical devices and their underlying technology, was organized by the MBA student Health Care and Biotech Club.
Investors appear to have figured out that genomics signals an end to the traditional pharmaceutical business with its large, slow vertically structured corporations. Genomic stock prices, King noted, soared during the past year, while traditional pharma stocks fell or flat-lined. Incyte, a genomic information company, for example went from $25 a share in December to more than $268 a share in March, though the price has since dropped to the $70 to $100 a share range.
"Genomic stocks resonated with Internet companies and followed similar patterns," King said. While genomics high profile accounts for part of the increase, the soaring stock prices also reflects investor expectations that genomics will dramatically increase the speed and efficiency with which new drugs are produced. Currently, pharmas spend 40 percent of their research and development costs on clinical trials, which have a huge failure rate, with the average pharma introducing only two successful chemical entities a year, King noted.
"Pharma needs more winners," concurred Arthur Holden, chairman and CEO of SNP, a nonprofit Boston Consortium, which seeks to take genomic knowledge another stage by creating a genome SNP (single nucleotide polymorphism) map, tracking differences in gene expression.
Creation of a human genetic map will enable drug companies to much more efficiently target and test drugs. "All drugs are going to come from genomics," said Roy Whitfield, MBA ’79, CEO of Incyte Genomics Inc. of Palo Alto. "It's as inevitable as the PC."
Though genomic-based drugs are still a ways off, companies such Incyte and Affymetrix, which places genetic information on chip wafers using genetic information with miniaturized, high-density arrays of oligonucleotide probes, are already in the genomic business as pharmas and biotechs scramble to assimilate the explosion of genetic information.
While the pharmaceutical market is a vast one, Fodor suggested that this is only the beginning of a myriad of uses for genomics. "It's a much bigger pie than how we make the drug faster," said Stephen Fodor, chairman and chief executive officer of Affymetrix Inc. of Santa Clara. He sees potential applications in the cosmetics and other consumer industries and more as the effect of genetics on behavior and preferences are more fully understood.
by Margaret Young