The commercialisation of bioinformatics and the threat of open-source software
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Joseph F. Greco is a financial economist who has done research in the field of commercialisation of biotechnology since being named as the Director in 2003 of the first high-tech US Small Business Administration’s Small Business Development Center, known as TriTech, at the California State University, Fullerton in the College of Business and Economics. Since 1998, he has held the position of Executive Director of the Center for the Study of Emerging Markets where he is currently researching the impact of offshore outsourcing on high-tech companies of Southern California. He also teaches courses in International Finance.
Abstract This study investigates the commercialisation process of a select group of bioinformatics companies and the impact of open-source software. Using the research–development–application translation model provides a framework for managers as an iterative mechanism. A Value Creation Pipeline is then introduced with five phases of the commercialisation process that provide specific financial benchmarks that can guide the firm through to successful commercialisation. Using trend and financial ratio analyses relative to returns, profitability and liquidity, the study finds that the surge in open-source licenses between 2003 and 2005 limited the sales for some firms. As for the claim that open-source software negatively impacts the success of bioinformatics commercialisation, there was little evidence to suggest a direct cause-and-effect relationship. Losses in returns, profitability and liquidity were just as common before the rise of open source as after its emergence. When firms report an overall record over a nine-year period of poor return on investment, assets and equity, there is little to attract potential investors. The lesson that can be drawn is that the innovation process and financial tracking must be integrated to ensure efficient and profitable use of investor funds.
Journal of Commercial Biotechnology (2007) 13, 183–194. doi:10.1057/palgrave.jcb.3050051 Keywords: bioinformatics, financial analysis, open-source software, biotechnology
INTRODUCTION The commercialisation of technology remains an inexact science especially in the bioinformatics sector, and many investors doubt that the majority of technology companies can be profitable there. Once considered the premier investment in the late 1990s, the recent history of the sector shows the fallout from high-profile burnouts. To compound their challenges, bioinformatics firms were confronted with a
Correspondence: Joseph F. Greco, Department of Finance, College of Business and Economics, California State University, Fullerton, 2600 E. Nutwood Avenue, CP1060, Fullerton, CA 92831, USA Tel: 011-714-278-2375 Fax: 011-714-278-5019 E-mail: [email protected]
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new trend evident by 2002 and traceable to 1992, when Philip Green, a University of Washington biologist, wanted to decipher the human genome with a more accurate reading of DNA letters. At the time, he was using a Celera-made machine
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