As drug discovery becomes increasingly reliant on large collections of information, companies in the high-tech and IT spaces have seen an opportunity to develop products to serve the biotech and pharmaceutical industries. Indeed, Motorola Inc. has pinpointed molecular biology as one of the next sciences upon which the company will be based. MOT is using its expertise in semiconductors and electromagnetic science to compete in the biochip sector, in bioinformatics and in an area of medical instrumentation that it believes will expand with the growth of knowledge from genomics.
To drive its growth, MOT (Schaumberg, Ill.) looks for sciences at an immature stage in their application to business, and to which the company can add value using its existing capabilities, said Rudyard Istvan, senior vice president and general manager of future businesses. MOT first invested in applications of electromagnetic theory, such as radio, in the 1920s. In the '50s, the company adopted the applications of solid state physics, which were semiconductors and transistors. The next science for MOT, Istvan said, is molecular biology.
The biochip and bioinformatics businesses were created by start-up companies. But MOT, with 1999 sales of $30.9 billion and earnings of $817 million, has concluded that some of these new opportunities can be exploited best by a company its size. "There are certain parts of the space that require so much capital that they are better, and more quickly done, by a pre-existing large entity," said Istvan. Biochips require such an infrastructure as well as high precision factories, "which is much easier for us to do than for a start-up."
By the same token, MOT will not enter businesses it believes
are better suited to start-ups, such as drug discovery. The company's activity
in these areas will be limited to equity investments in its partners, Istvan
said. (see "Motorola's Biochip Partnerships", A2).
The company started to investigate how it could marry biology with its areas of expertise in 1994. "A convergence is happening between biology and high tech," Istvan said. "But only part of it is in bioinformatics. That's a software problem. The second convergence is the need to bring ultra-precise, very high volume manufacturing to bear," to develop the products now needed to do biology.
MOT believes it has expertise that it can apply to both the software issues raised by bioinformatics and the hardware issues raised by the need for precision, high volume manufacturing. In the first instance, the software problems faced in bioinformatics are analogous to those found in developing cell phone technology and voice recognition software, sectors where MOT has a strong presence. "Algorithmically, it's very similar," Istvan said. In the second, semiconductor manufacturing, a significant business for MOT, again bears a close resemblence to biochip production.
Five years after beginning its strategic assessment, MOT now is focused on two business areas where it believes it can excel: biochips and electronic devices for the biomedical and agricultural industries.