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The New Service Model for Diagnostics

 
• By Roger Longman

Amidst a slew of disappointing IPOs, the moderate success of Genomic Health's IPO signals investor interest in a new diagnostics model: a combination product/service business -- technologically agnostic -- focused on coming up with an answer to a specific yes/no question that will either lead to or discourage an expensive therapy by a specialty physician audience. Several other start-ups are following the same model.

One constant refrain from the late September rEvolution 2005 Symposium for Chief Scientific Officers on Kiawah Island—other than the knotty issue of research productivity—was the increasing importance of diagnostics. The basic challenge: given the attrition rates of drug candidates in company pipelines, the safety requirements from FDA, and the costs of therapy—all rising--the importance of markers that can either determine which drugs to develop or which therapies to use has become patently obvious.

At least four of the attending companies—Roche , Affymetrix Inc. , Perlegen Sciences Inc. and XDx Inc. —have important diagnostic or biomarker programs that are central...

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