Proteomics tools expected to lead the way with a 14 percent compound annual growth rate
LONDON—Sales of bioinformatics tools in Europe hit $310 million in 2004 and are forecast to more than double to $720 million by 2011. This, according to the recently released market report "Bioinformatics in European Drug Discovery Market", from market research company Frost & Sullivan.
At an estimated compound annual growth rate (CAGR) of 14.4 per cent from 2004 to 2011, proteomics is expected to have the highest growth potential within the European bioinformatics market. While the information manipulation segment will maintain its current revenue contribution levels—about 40 percent—to the overall market until 2011, the genomics software tools segment is likely to exhibit low growth.
Despite projections of strong growth, challenges are persisting in the market. Even as companies have achieved the leap to mainstream acceptance of bioinformatics solutions, the general perception is that currently available bioinformatics tools are restricted for use to only specialised end user groups.
"With the tools not as user-friendly as they are required to be, the critical need is to facilitate their transfer from trained users to those performing the actual research on the workbench, " says Frost & Sullivan Industry Analyst Raghavendra Chitta. "In the long run, if the tools are put in the hands of the actual users, the entire user base will increase, making it an attractive proposition for the bioinformatics companies."
Similar to the worldwide bioinformatics market, the European market is highly fragmented, featuring both local and global providers, the report notes. Large pharma companies typically account for 65 percent of total R&D expenditure but have less than 30 percent of drugs in the pipeline. On the other hand, smaller biotech companies account for just 30 percent of total R&D spending, but lay claim to nearly 60 percent of the total drugs in the pipeline. All of which has changed the market dynamics for bioinformatics companies.
Despite the challenges, Frost & Sullivan reports a number of factors contributing to the sector's growth. Efforts to effectively manage the flood of genetic and protein data being generated, the pressing need to boost drug research productivity together with solid government support, are driving the European bioinformatics industry.
With the quantity of genetic and protein data reaching petabytes (quadrillion bytes), scientists are finding it increasingly difficult to collect and analyze all this data. At the same time, the limited value of stand-alone data sets has triggered the search for tools that can help study disparate data in the same conceptual framework. Moreover, high-throughput systems are significantly augmenting the yield of promising compounds. Accordingly, bioinformatics, which fulfils these multiple needs, is growing in appeal.
Dwindling drug pipelines, the lack of potential blockbuster drugs and the anticipated patent expirations of existing drugs are compelling the pharmaceutical industry to develop tools that increase drug research productivity, accelerate the drug discovery process and reduce R&D expenditures. In the short term, bioinformatics will establish itself as a vibrant segment in the total drug discovery tools market, with competition set to intensify as profitability levels rise.
Governments of European countries, such as Germany and the United Kingdom, have taken initiatives to promote the benefits of bioinformatics. They have also increased their overall R&D investments, which is likely to have a positive impact on the growth rate of the European bioinformatics market.
For more information on this and other market reports from Frost & Sullivan, visit http://healthcare.frost.com or contact Katja Feick at katja.feick@frost.com.
