Why Does Biotech Ignore the Diagnostics Opportunity?

For the last two decades, diagnostics has been the poor stepsister of pharmaceuticals. But in the era of proteomics, diagnostics will come of age for those companies smart enough to exploit its two major market opportunities: diagnosing diseases which, caught early, can be successfully treated; and selling tests which can identify whether or not a specific drug will work for a particular patient. As their strategic options narrow--platform strategies are now virtually unfinanceable--those biotechs wearing pharmaceutical blinders are ignoring important paths to sustainability.

At a crowded lunch table at Windhover's Euro-Biotech 2001 conference, the CFO of a new proteomics company describes his start-up's ability to identify sets of disease-associated proteins. Like every other biotech start-up executive, he's staying far away from articulating a platform strategy and instead talks about product alliances. "We've got a far more certain set of drug targets," he argues. "But no one's paying a lot for targets," says a senior European executive.

We interrupt: why not focus on the diagnostic possibilities? "Because you can't raise money for diagnostics," the European says categorically....

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