To Build or Buy? Microsoft Amps Up Life Sciences Strategy By Buying Rosetta Biosoftware

6/2/09Follow @xconomy

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that help researchers sort through results from machines that can tell researchers which genes are turned on or off in a tissue sample, whether patients have a genetic abnormality that might lead to disease, or whether the proteins made by genes are somehow off kilter.

Piecing together this complex mosaic of information was supposed to help give Merck an edge over its Big Pharma competitors in the development of new drugs. The industry is plagued by horrible R&D productivity, in which it typically takes more than a decade and $1 billion to develop new drugs. After all that, the industry has a 1-in-10 success rate with drugs making it through clinical trials to become FDA approved products. Rosetta’s products are supposed to help Merck, and other companies, raise this batting average by helping identify which patients are more likely to respond to certain drugs, and which are likely to suffer side effects.

It’s still early days for Amalga Life Sciences, which was introduced at the end of April. Karkanias didn’t identify any new customers, or new partnerships lined up with genomic instrument makers. He declined to get specific when I asked about how big the market opportunity is, and how much Microsoft has left to capture. He called the market “gigantic” and the opportunity to change current research practice is a biggie. “We want to change data into knowledge,” he says.

This all sounds great, but to hear companies that market software to biologists, you’d think these guys are still living in the age of VHS cassette tapes. The main barrier for Microsoft and all companies trying to enter the biosoftware market is to get researchers to switch from homemade software programs to capture their data, or even cobbled together versions of Excel or Access in some cases. Seattle-based Geospiza, one of the companies trying to tap this market, hopes that Microsoft’s move will help blaze a new trail. “This announcement should provide some reassurance to investors that biosoftware is an attractive acquisition/growth market,” says Geospiza president Rob Arnold.

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  • Joshua Daniel Franklin

    I’d argue that it’s the vast majority of basic science and translational researchers that use Excel or homemade systems. The reason is simple: cost. They know about commercial systems, CROs, etc. but can’t afford it on an RO1 budget. I’ve heard this from other CTSAs around the country, too. The only exceptions are centers with dedicated informatics budgets.