Molecular Diagnostics: New Business Models in Personalized Medicine
In an industry that experienced pharmaceutical sales of $450 billion in 2003, diagnostics has always been a relatively
small segment of the business. In 2003, the entire category of In Vitro Diagnostics (IVD) totaled $20 billion in sales,
with most of that activity driven by cancer, infectious disease and glucose monitoring. Molecular diagnostics, at $1.6
billion, is still small but is rapidly growing, especially in the field of cancer.
At a recent "EMTM Presents" evening in Princeton, New Jersey, participants from several area biotech and pharmaceutical
firms, including Bristol-Myers Squibb, GE Healthcare, Johnson & Johnson, Merck, Sanofi-Aventis and Siemens met to hear
EMTM faculty member Scott Diamond discuss emerging trends and business models in genetic diagnostics and personalized
medicine. Those interested in learning more about EMTM also had the chance to talk informally with current students
and alumni, as well as with EMTM co-directors Dwight Jaggard and Ziv Katalan.
While molecular diagnostics may be a relatively small player in the biopharm field, says Diamond, it is one of the
fastest growing, both in size and importance. Why? First, it offers the ability to perform complex tests more quickly,
accurately and economically. Second, it offers hope for researchers to "rescue" many drugs that might otherwise fail
(or have previously failed) in clinical trials, with the emerging ability of molecular diagnostics to target individual
drugs to specific responders based on their individual genetics.
In looking at business opportunities, however, the best business model may not always be where you expect it. One
example given by Diamond: Luminex, an Austin,
Texas-based firm that developed the xMAP® technology (formerly known as LabMAP®) a sophisticated system for
biological testing that uses lasers and high-speed digital-signal processors to dramatically increase the number
of tests that can be run, measuring 100+ attributes simultaneously from a single drop of plasma. Unfortunately,
the total market for the system is relatively small. Few researchers or physicians need its full functionality,
and at more than about $100,000 per unit, few organizations can afford the price-tag and dedicated expertise.
What was a different business model? A group within Luminex saw an opportunity to capitalize on their knowledge of
the system and become a service provider. With an entry point of about $250 per blood sample, the market suddenly
opened up. Rules-Based Medicine started as
a wholly owned subsidiary of Luminex and completed a spinout transaction in 2002 to serve clinical trials, preclinical
studies and post-market approval studies.
Other areas Diamond discussed included intellectual property issues on genetic markers; the emergence of new drugs
so tightly linked to diagnostics that they are only prescribed in conjunction with a specific diagnostic and genetic
profile; the use of SNPs (Single Nucleotide Polymorphisms) and Genotyping to predict or identify an individual's risk
factors for diseases and likely responses to medications; and home diagnostics, one of the fastest growing segments
of the diagnostics market, with about 10% annual growth in sales, led by HIV, cholesterol and pregnancy tests. With
HIV testing, the consumer environment has shown it can handle a complicated and difficult diagnostic arena such as AIDS.
Scott Diamond, PhD, is Professor of Chemical Engineering, Bioengineering and Pharmacology, and Associate Director of
the Institute for Medicine and Engineering at the University of Pennsylvania. Prof. Diamond currently teaches two
popular courses at EMTM that bridge the science and business of technological innovation: "Drug Discovery and Development"
and "Clinical Technology Innovation." He will offer a new course in Fall 2005 on "Business Development in Biotechnology."
Scott Diamond, PhD
Professor of Chemical Engineering, Bioengineering and Pharmacology
Associate Director, Institute for Medicine and Engineering
University of Pennsylvania
Biotechnology is one of three broad technology tracks offered by EMTM. To fulfill EMTM's 6-course technology requirement,
students can select courses from across all categories, or they can focus on a minimum of 4 courses within a specific
track, with additional courses selected from electives in other areas. For more information, see: