Although therapeutics companies working in the stem-cell arena are far from commercializing their results, companies that equip laboratories with analytical instruments and reagents are already beginning to gain from advances in the field and an influx of outside funding.
At the end of 2007, the field of stem cell research is experiencing rapid evolution. A series of important scientific discoveries may help to ease one of the biggest obstacles it faces: the ethical and political controversy surrounding the need to destroy human embryos in order to obtain human embryonic stem cells (hESCs). The latest significant advance, announced in November, involved ways to turn mature human skin cells into cells that behave like hESCs, in the hopes that these cells could be a viable alternative source of hESCs. While these discoveries will take years to sort out and transform into effective medicines, the field's rapid progress is already increasing researchers' demand for cutting-edge life sciences tools.
At the same time, more money is flowing into the field. Tallying R&D spending on stem cell research is tough, because it's such a fragmented, complex niche, bogged down by government restrictions. Governments are the biggest source of funding, but since 2001, the U.S. federal government, which has the world's largest R&D budget, has forbidden use of its money on hESC research, with the exception of a few specified cell lines. The National Institutes of Health, however, allocates about $600 million a year for animal and human stem cell research. And while the government prohibition had a temporary negative impact in the United States, alternative sources of funding--state governments and private donors--are emerging, which in turn is spurring a boom in supportive tools. California has the largest and most established program: it is setting aside $3 billion over 10 years to fund hESC research--and other states are organizing similar, albeit smaller, efforts. In addition, in September 2007, the federal government said it would fund research on ways of obtaining hESC cells that don't destroy embryos.
Stem cells are of great interest to scientists because they are plentiful, unspecialized, and can be programmed to grow into many kinds of specialized cells. Human stem cells come from several sources, including organ tissues, umbilical cords, and, even amniotic fluid. Of all stem cells, hESCs are by far the most versatile because they are the only kind that can grow into any human cell type. However, hESCs are the most controversial because the process of creating them destroys human embryos. Adult and umbilical cord stem cells, which are also being studied, are easier to obtain and not the target of political and ethical battles, but they are more limited in what they can do.
Many kinds of new technologies are needed to do complicated stem cell research. These include special cell cultures for growing stem cells, automated instruments that handle, count, and sort cells, and reagents, which are various chemicals and proteins that can tag them and differentiate them at different stages, keep them from dying during strenuous laboratory tests, and help to monitor their efficacy once they are transplanted in animals or human subjects.
Stem cell tools and other emerging technologies are barely noticeable contributors to the $25 billion life sciences research market, which consists of hardware, consumables, and services. Despite the small size, giant laboratory supply companies view stem cells as an important, high-margin part of their broad bioscience product lines, which are aimed at government, industry, and academic researchers. Sales of stem cell-related laboratory equipment is growing at 15% to 20% a year, and is poised to accelerate, compared to the total life-sciences research market growth of 5% to 7%. Invitrogen, Millipore, Techne, Sigma-Aldrich, among others, are investing accordingly in the business. Stem cell reagent sales alone are about $100 million and are benefiting from the influx of state funding, like the California initiative, Invitrogen says. Invitrogen is particularly excited about technologies that track how accurately an hESC differentiates into a specific cell type and, this fall, introduced a kit that improves the monitoring process and another product that helps divide up hESC cultures as they grow, a laborious process called passaging. Other companies are selling products that make stem cell cultures more reliable and reproducible, and those that have automated instrumentation that sorts and transfers stem cells. Another line includes culture media, which "feeds" the cells.
Thermo Fisher Scientific, the largest life sciences tools company, notes that its analytical technologies group, which accounts for 40% of its nearly $10 billion in revenues, is generating strong growth, due to demand for emerging technologies to study proteins, RNAi, and stem cells. The company offers industry, government, and academic scientists integrated systems, which combine instruments, software and consumable chemical reagents dedicated to stem cells. Millipore says its stem cell business helped its Biosciences Division grow 15% organically in the third quarter of 2007, against 8% total company growth (excluding the impact of foreign currency) in that period. Its stem cell sales growth has come mostly from the United States, but, it says, the rest of the world is catching up. In December, the company licensed several stem cell technologies, which it now sells, including a proprietary antibody that detects embryonic stem cells.
Small laboratory tools companies have also moved aggressively into the space. Velocity11 makes a high-throughput robotic system that uses stem cells to rapidly identify compounds that might be effective against certain disease targets. In November 2007, Agilent Technologies bought Velocity11 for an undisclosed price. Stem Cell Sciences Ltd., an Australian company that specializes in production of neuronal stem cells, also is developing assays that use stem cells to screen for new therapeutic compounds. It recently received a three-year $3.5 million grant from the European Community to develop drug screening technologies using stem cells.