When combinatorial chemistry was first developed in the late 1980s, it represented a paradigm shift that totally changed the way chemistry was done. Yet the first generation of chemistry companies failed to build sustainable businesses because they offered a limited menu of products and services, and more importantly, because their combinatorial libraries were comprised mainly of relatively simple chemical structures that were quickly commoditized.

A new generation of chemistry companies has taken those lessons to heart, building broader businesses based around chemistry that is far more sophisticated. As a result, they believe that they will be able to build and retain a base of customers, and that it will be difficult for others to cheaply replicate their technologies and their business systems.

Chemistry companies have taken advantage of the outsourcing trend by biotech companies with expertise in biology but little in chemistry, and by pharma companies looking for as many preclinical compounds as they can find, as quickly as possible.

The existing cohort of chemistry companies all are putting resources into improving their chemistry technologies, including expanding their synthetic repertoire, improving prediction of chemical, biochemical and biological properties, and improving compound quality in terms of drug-likeness and purity.

Combinatorial chemistry and parallel synthesis have been integrated into the lead discovery cycle. In almost all discovery companies medicinal chemists synthesize 10 to 100 compounds at a time, often called a focused library, for testing in screening assays rather than making a single compound then testing one by one (see "The Integrated Lead Discovery Cycle", A5). The concept of parallelization has been applied to the biochemical assays as well, with many companies performing high throughput assays on multiple drug targets simultaneously, obtaining potency, selectivity and toxicity data at the same time.

Why buy chemistry

What the first generation of combichem companies lacked was a monopoly on the approach, as well as a broad menu of services. Early combinatorial chemistry companies made peptide, peptoid and benzodiazapine libraries and worked out the practical problems of applying the technology to discovery. But as a result, pharmaceutical companies and other chemistry companies soon were able to develop their own chemistries to produce their own libraries.