Amgen Fortifies IT Expertise With Immunex Buy

How is IT figuring into the value proposition of the Amgen/Immunex acquisition?

InformationWeek Staff, Contributor

December 22, 2001

4 Min Read

Amgen Inc., a leading biotech company, said last week that it would acquire rival Immunex Corp. for $16 billion, pending Federal Trade Commission approval. The crown jewel in the purchase is the rheumatoid arthritis drug Enbrel, but Immunex's IT systems sparkle, too.

Amgen, a $3.45 billion-a-year maker of drugs to treat cancer, inflammatory disorders, and metabolic and neurodegenerative diseases, wants to broaden its catalog of protein-based drugs. The Thousand Oaks, Calif., company would gain access to Immunex's bioinformatics data and systems, which were critical to the development of Enbrel and other drugs and continue to play a role in enhancing those products.

"We've developed a strong bioinformatics organization in-house through our own proprietary programming and algorithms," says Carl March, senior VP of IT and biochemical sciences at Immunex. The Seattle company has developed sophisticated bioinformatics systems to make sense of the huge amount of data it collects, from equipment such as its DNA sequencing and imaging devices.

Information is poured into Oracle and Informix relational databases so researchers can investigate the proteomic changes in humans that cause disease, and perform protein- and genome-searching analysis to develop effective protein-based treatments. One massive IT project is creating a unified Web portal for various gene and protein databases, so that researchers companywide can access information easily from one place.

The importance of IT systems in biotech research can't be underestimated, say executives at Caprion Pharmaceuticals Inc., a Montreal drug research company that specializes in the study of proteins. "IT enables much of the science we do," says Paul Kearney, Caprion's director of bioinformatics. "Without cutting-edge IT development, Caprion wouldn't be able to manage the petabytes worth of data we generate from proteomics research."

Since January, Caprion has raised more than $37.5 million in venture-capital for its bioinformatics division. That group works with Caprion's IT department to design the systems that help researchers harvest, organize, and analyze data for drug manufacturers. The division also helps develop the software that drives devices such as mass spectrometers and micro-array imaging devices that measure the amount of certain types of proteins in a tissue sample.

The value of trained bioinformatics and biotech-savvy IT personnel shouldn't be discounted as the industry consolidates rapidly and companies seek greater efficiencies in an arena where only one of some 10,000 new drugs proposed each year will actually make it to market. "It's important that the people who've designed these bioinformatics systems come with any merger or acquisition because they know how to make these systems work," says Peter Crowley, head of health-care investment banking at CIBC World Markets.

"There's no longer a distinction between IT and biotechnology," says Doug Williams, Immunex's executive VP and chief technology officer. The company's IT staff and bioinformatics researchers work together to develop and implement the applications, equipment, and databases it needs to bring drugs to market, he says.

But there's no guarantee that integrating the IT systems of separate biotech companies will be easy. The oceans of data these systems feed to researchers are generated from a litany of highly specialized scientific applications, which might perform functions as varied as analyzing tissue samples or creating clinical simulation models. Caprion, which is considering making an acquisition next year, plans to look carefully at a company's IT operations before committing to a purchase. Integration can be the "most costly area, and I haven't heard of anyone in biotech who's had a pleasant time integrating IT," Kearney says.

But don't expect the mergers and acquisitions activity to slow. Earlier this month, Millennium Pharmaceuticals agreed to pay about $2 billion in stock for COR Therapeutics, which makes the heart drug Integrilin, and MedImmune plans to pay about $1.5 billion in stock for Aviron, which is seeking approval for a nasal-spray flu vaccine. Dana Ono, director of early-stage VC firm Venture Investment Management Co. in Boston, says 2002 will see more merger and acquisition activity because the window for initial public offerings is closed. Promising biotech companies that are privately held will look to established biotech and pharmaceuticals firms to get into the public market, he says.

As biotech companies grow via mergers or acquisitions, they'll face additional IT challenges. For instance, as they expand into new drug markets, they'll conduct an increased number of clinical trials, so they'd be wise to use their pooled IT talent to deploy the same types of demand-driven supply-chain replenishment strategies and tools that are becoming prominent in the consumer packaged-goods arena, AMR Research analyst Roddy Martin says. Such tools can help biotech companies make sure the supplies needed for clinical trials are delivered where they're needed, when they're needed.

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