Genencor Returns To Its Roots
Executive Summary
Genencor is using many of the same technologies which helped it become a leading producer of industrial enzymes to build a health care business. But in running a profitable industrial operation along side an unprofitable, resource- consuming biopharmaceutical unit, the company faces the challenge of effectively managing two distinct business models under one roof, while maintaining investor confidence during a transitional period. Although the company's management acknowledges that they may eventually have to split its health care and industrial businesses, they are now seeking to take advantage of the scientific synergies between the two to create a diverse, yet focused portfolio of near- and longer-term opportunities. They are also attempting to use the protein engineering expertise previously applied in the industrial setting to reduce the risks and shorten the timelines typically associated with drug development by making improving others' inventions, for example, creating next-generation versions of late stage--or even marketed--therapeutic proteins.
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Second-Generation Proteins
A steadily growing group of companies is using a variety of technologies to help shorten the path from platform to product company by creating improved versions of known and, in some instances, already marketed therapeutic proteins. Companies like Neose, Genencor, Applied Molecular Evolution and Maxygen, hope that by starting out with molecules already known to possess therapeutic properties, they can reduce the risks normally associated with drug discovery and development. The technologies employed by these second-generation protein players vary widely: from new methods, like directed evolution, to refinements of older ones such as glycosylation modification and PEGylation. And their business models run the gamut from a pure human therapeutic focus to the use of protein engineering in agriculture, industrial chemicals, as well as health care. But the fact remains for each of these companies that, whatever the improved odds for success afforded by second-generation protein work, they're still in a very risky business where more than half of their programs will fail. And, at least when it comes to the small universe of already marketed drugs, there will be plenty of competition among the companies. Still, there may be plenty of lucrative service opportunities to go around, as biotechs desperate for pipeline diversification, and with money to spend, look for ways to fully exploit the potential of their protein drugs.
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