>>LONDON -- British telecommunications-equipment company Marconi PLC moved Friday to tap the biotechnology industry's growing appetite for computing power through a new joint venture with drug-research concern Oxford GlycoSciences PLC.
The two companies envision the joint venture, called Confirmant Ltd., having three sources of revenue: It will manage information technology on behalf of biotech companies; make databases mapping the proteins in the human body available to pharmaceutical firms; and eventually offer online diagnostic services. Both companies are investing 15 million pounds (24.5 million euros or $21 million) in Confirmant, which is due to be up and running early next year, and the deal also calls on Marconi to invest 10 million pounds in Oxford GlycoSciences.
Although Marconi manages some communications services on behalf of companies that buy its telecom equipment, this is the first time it has taken a stake in this kind of operation. While Marconi acknowledges that Confirmant is unlikely to generate significant revenue in the near future, it is hoping its investment will be a lucrative long-term bet.
"Revenues in the first two to three years will only be in the tens of millions," said John Mayo, Marconi's deputy chief executive, at a news conference. "But in five to 10 years the prospect for this business to be very large indeed is obviously there through online diagnostics." Oxford GlycoSciences hopes to have developed a complete map of the proteins in the human body within 24 months, allowing Confirmant to launch a service that lets doctors perform a swift diagnosis of many diseases by comparing samples of a patient's proteins with those in the joint venture's database.
The deal also highlights the increasing collaboration between the information technology and biotech industries to handle the huge amount of number-crunching required to research the causes of disease and develop drugs. In January, for example, U.S. computing company International Business Machines Corp. and MDS Proteomics, a majority-owned subsidiary of Canadian biotech company MDS Inc., formed an alliance focused on understanding the interactions among proteins that trigger chemical reactions in cells and cause diseases such as cancer, AIDS and depression.
"The computational requirement of the biotech industry continues to grow. OGS [Oxford GlycoSciences] alone requires several tens of terabytes of data," said Mr. Mayo. One terabyte is enough to contain 20,000 music CDs.
Analysts at Credit Suisse First Boston described the link up between Marconi and Oxford GlycoSciences as "extremely creative," arguing that it has the potential to create significant value and should give Marconi a better understanding of the communications needs of biotech, pharmaceutical and health-care companies. "The joint venture has minimal downside risk to Marconi given the relatively small investment," CSFB wrote in a research note. Mr. Mayo said that Marconi is open to doing similar ventures with companies in "leading positions in their fields."<<
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