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As instrument technology advances, lab software booms.

During the 1980s, when smaller, cheaper and faster computers began emerging from engineering workshops, technologists heralded a fast-approaching era when machines would organize increasing amounts of data and paper would become obsolete. In the two decades since, technology has barreled forward at a dizzying pace and the personal computer has become ubiquitous at home and in the laboratory, but for the most part the paperless office has proved to be a disappointing myth. Instead of leading to simplicity, improved computing efficiency and networking has in fact created an information glut.

Life science labs, which today are embarking on more complex and expansive endeavors than ever before, are largely turning to innovative data-handling software systems to alleviate clutter. Led by explosive growth in informatics and recent developments in data management, the lab software market doubled in size between 1997 and 2002, with demand shooting tip from $1.2 billion to nearly $2.5 billion.

Once explanation for this upward trend resides in the technology itself: faster processors and greater automation requires newer and more numerous applications to keep laboratories functioning properly. Less apparent, but just as predominant, though, are the byproducts of computing growth. As software becomes more prevalent in laboratories, instruments are increasingly seen as essential parts of an integrated network, rather than as isolated tools. To enable interaction between different pieces of equipment, scientists are taking a hard look at more comprehensive systems. In addition, software sales have been driven by legal obligations stemming from 21 CFR Part 11--the law enacted by the FDA in 1997 that calls for increased electronic reporting to the agency and requires pharmaceutical and other life science companies to preserve data and maintain an auditable trail within their electronic systems.

Instrument companies, noting the broadening technology demands of consumers, have worked quickly to in crease their stakes in the burgeoning software market. In a newly released report entitled "Laboratory Software: A Plethora of Growth Opportunities," Strategic Directions international (SDi) reports that informatics, the branch of software dealing with access and analysis of databases, enjoyed a cumulative growth rate of more than 35% over the last five years. Led by companies such as Incyte, Accelrys, Celera, GeneLogic and Lexicon Genetics, informatics has transformed itself from merely an interesting side note to an important market player.

Much of this growth has emerged from the value of bioinformatics databases, which amounted to over $320 million in 2002. Commercial subscriptions to these information storehouses have been a boon to informatics companies over the last decade. More recently, though, many database companies have entered therapeutics and drug discovery and have focused their efforts toward expanding intellectual property and technical prowess. SDi defines the emerging business arrangement between database vendors and pharmaceutical and biotechnology companies as "Discovery Platforms" and estimates this segment will grow more than 10% over the next five years.

The informatics software market has proved similarly capricious. Strong business emanating from interest in databases has been challenged by freeware and enterprise software. Slowdowns in life science spending have likewise put a damper on sales. As data from gene expression and microarray studies becomes more cumbersome, though, demands for novel enterprise systems have increased. Although informatics software development remains a risky, crowded business, opportunities abound for companies offering creative solutions to nagging technological problems.

One of the most significant software developments has been the birth of the Laboratory Data Management System, or LDMS--a rising segment of the software market that just five years ago was nonexistent. Built on the idea that labs need a single, flexible interface both to convert raw data to usable data and to protect and distribute information to users, LDMS has been quickly embraced by life science companies during its short lifetime. Laboratory Information Management Systems, or LIMS, is often used to store and catalog laboratory data, but it does not offer the versatility and networking capabilities of LDMS. The popularity of LDMS is illustrated by the mixture of companies working in the field: both startups and multidisciplinary companies have produced promising new software.

At the end of July, Waters announced it was acquiring the German software company Creon Lab Control for approximately $16 million (see IBO 7/31/03). Creon Lab Control offers a line of data management software including its Q-DIS/PANDA products, which are designed especially for LDMS. Commenting on the deal, Waters said it envisioned Creon's software matching well with its own Empower chromatography and MassLynx 4.0 software. The goal, Waters said, was to create a total lab informatics solution from one vendor.

One advantage LDMS possesses over other software systems is its ability to organize data from disparate instruments into a format that removes many of the complications of 21 CFR Part 11 filing. This has made it particularly popular with life science companies. As government agencies such as the EPA consider enacting similar electronic requirements, other industries, too, have eyed LDMS with great interest. Although the software market has endured the effects of global economic difficulties along with other technology sectors, SDi projects LDMS sales to grow more than 10% annually over the next five years.

Waters' forward-looking comments suggest another business trend shaping the software market--a shift away from proprietary software and toward acquiring outside products. Buying software systems instead of hiring informaticians can generate a finished product faster and help life science companies cut costs. It also enables businesses to take a top-down approach to instrument development; by purchasing ready-made software and tweaking it to suit individual needs, instrument manufacturers can focus on their specialty--making instruments--and not worry about being left out of promising developments in the software market.
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Publication:Instrument Business Outlook
Date:Sep 30, 2003
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