Supplier Blow-Out

Post-genome space hanging tough

The biotech market may be becoming saturated with big ticket items such as DNA sequencers, particularly for instruments used in the first generation of genomics work. But companies working downstream in the post-genomics tool space are - so far at least - not anticipating the kind of slowdown in growth that Applied Biosystems reported last week.

The downstream companies cite three reasons for their optimism. First, the pharma sector always has been insulated from the cycles of the macroeconomy. Second, their tool space is new and growing, in contrast to the maturing sequencer market. Finally, while most of these companies aren't profitable, many have absorbed the message that sensible business plans with multiple revenue streams are necessary. As a result, although their stocks may have been trashed last week, the companies argue that their fundamental business remains intact, and they either have enough cash or their burn rates are low enough that they don't need to retrench or go back to the public equity markets any time soon.