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Boom amidst Bust

Biotech: Computing plus biology equals big money.
September 1, 2001

Amidst the ashes of the dot coms, one ember of the computing economy remains red hot: bioinformatics. The potential of the field-which brings the combined power of computers and biological data to bear on problems ranging from agriculture to drug discovery-is so great that otherwise technology-wary investors are continuing to back new startups, and deals in the area are taking off. One catch: a deficit of qualified people with the right blend of skills in computer science and molecular biology to staff the booming business.

“By almost any measure [bioinformatics is] growing,” says David Searls, head of bioinformatics at GlaxoSmithKline. “You can look at number of positions; you can look at number of companies; you can look at academia.” Indeed, deals between bioinformatics firms and other biotech or drug companies are on the rise, according to a recent report from Cambridge Healthtech Institute; 79 were inked in the first quarter of this year, compared with 55 for the same period in 2000. Leading the way was the sale of Kirkland, WA, bioinformatics firm Rosetta Inpharmatics to drug giant Merck for $620 million in May.

As investment has dried up completely in many technology sectors, the venture capital market has held for bioinformatics firms. “It’s definitely decoupled from the downturn in technology funding,” says Emmett Power, CEO of London-based Silico Research. Several bioinformatics companies have closed on funding in 2001: life-sciences peer-to-peer computing company Entropia received $23 million in second-round funding in January; Spotfire, a data analysis software maker, announced $15 million in additional funding in February; and life-sciences computing infrastructure provider Viaken Systems announced $13 million in its second round in June.

Staffing problems, however, threaten to put the brakes on the surge in bioinformatics activity. The field is so hot, says Nat Goodman, senior vice president of Cambridge, MA-based bioinformatics consultancy 3rd Millennium, that companies and universities alike can find only about half the number of people they need.

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