Slightly Off KIlter

A company I used to work for is restructuring. When I started working for them (in late 1997) they’d been in business for several years doing genetic sequencing – human, plant, animal. They had a huge lab full of sequencing machines that ran 24×7. They created sequence databases and sold them (for what seemed to me to be an appallingly large amount of money) to other Biotech companies (what seemed to me to be an appallingly small number of customers). They had a “boutique niche” serving companies such as Genentech, Hoffman-La Roche and others.

This past year, they’ve decided to restructure themselves. They laid off nearly half of their employees in Jan/Feb, then more a few months later. Another large group (the sequencing team) will be laid off at the end of this year. The company plans to remake itself as a “drug discovery” company.

This makes little sense to me. They’ll be in direct competition with Genentech, Roche, Wyeth, Chiron… companies that have been in the drug discovery business for decades. Drug discovery is a difficult path to follow. For every 5 or 6 or 10 possibles, maybe one makes it into real research. Then there’s the FDA and clinical trials and… it’s not an simple plan for a company to just decide to go into drug discovery.

I wish them luck. But I won’t be holding my breath or buying stock…