An Analysis of the 1994 Computational Chemistry Marketplace

Merry Ambos and Allen B. Richon

Molecular Solutions Incorporated
1116 Miller Mtn. Road
Washington, DC 20008 USA
E-mail: mambos@molsol.com
Published December, 1995

Introduction

Several analyses of the the marketplace which encompasses computational chemistry (defined for this report as molecular modeling, structural chemistry, and chemical information) have been published. Each of these profiles approached the task from the viewpoint of the vendor community; i.e., what volume of hardware or software has each vendor sold during a given year. Since most of the software vendors that service the chemistry community are privately held or their financial results are rolled into a larger corporation, this exercise was frequently a guessing game.

Molecular Solutions estimated total world-wide expenditures by commercial organizations for computational chemistry in 1994 to be $450M. These funds included purchases of software, dedicated hardware and on-going maintenance for molecular modeling, structural chemistry (NMR and x-ray) and chemical database systems. During 1994, many of the vendors observed the third consecutive year that spending for their market segment remained relatively flat.

Estimates for the number of commercial groups actively using some form of computational chemistry in their research program range from 300 to 450 world-wide. During 1994, Molecular Solutions contacted several of these companies which were located in the United States to assess their level of investment in and use of molecular modeling, structural or biophysical chemistry and chemical information systems. These organizations included established pharmaceutical companies, start-up pharmaceuticals, established biotechs and start-up biotechs. For the purposes of this article, companies that responded to the survey were divided into three categories according to annual research budget. The designations are:

  • small companies - up to $12M;
  • medium companies - between $13M and $90M and
  • large companies - $91M or higher.

With the exception of chemical information systems, the survey found that the general trend in this market showed a reduction in both head count and spending. Market segments were summarized as follows:

Molecular Modeling: Research managers indicated that spending would shrink due to industry-wide downsizing and cost containment. Purchases will be limited to "new science" and hardware upgrades. Many organizations will seek to reduce maintenance payments.

Structural Biochemistry: As in modeling, spending will decrease. Several managers stated that timelines for projects which rely on this technology were out of sync with company mandates for rapid results.

Chemical information: Rapid changes in research paradigms coupled with advances in computer software and hardware are forcing companies to re-engineer their information systems. There is a requirement that new systems support combinatorial chemistry and high throughput screening.

Small pharmaceutical and biotech companies

As a group, the ten companies in this category accounted for:

  • 10% of the total number of synthetic chemists in the survey;
  • 3% of the total research budget;
  • 18% of the total number of computational scientists reported and
  • 15% of the industry-wide budget for computational chemistry.

The average number of computational scientists per company for this segment of the industry was calculated to be 7 while the average of synthetic chemists was 17. The budget for computational chemistry groups in this bracket was calculated to be an average of $700K (ca. 10% of the research budget). Spending for 1995 was projected by the organizations surveyed to remain at 1994 levels or, in some cases, be reduced. Head count was projected to be flat.

This tier of companies accounted for 18% of all workstations reported in the survey with an average number of 10 UNIX systems. As expected, while PCs and Macintosh systems were reportedly used for chemical databases (an average of one system per chemist), their use for modeling was limited. Groups reported using an average of 13 computational programs for molecular modeling and structure determination. Chemical information systems were found to be in limited usage by this segment of the industry.

The ratio of chemists to computational scientists for this segment of the industry was found to be roughly 2.4:1. Molecular modelers for the group reported working on an average of 3 projects at any given period. The ability to work on basic research (as opposed to project or applied research) was mixed; half of the companies reported that scientists were not permitted to engage in basic research and the other half reported that scientists were permitted to spend up to 15% of their time on research.

Medium pharmaceutical and biotech companies

As a group, the eleven companies in this category accounted for:

  • 38% of the total number of synthetic chemists in the survey;
  • 21% of the total research budget;
  • 37% of the total number of computational scientists reported and
  • 44% of the industry-wide budget.

The average number of computational scientists per company for this segment of the industry was calculated to be 13 while the average number of synthetic chemists was reported at 61. Average budgets for groups in this bracket was calculated to be $1,935K (4.3% of the research budget). Spending for 1995 was projected by the group heads to be reduced relative to 1994 levels. Head count was projected to be flat.

Medium-sized companies accounted for 32% of all workstations reported in the survey (an average of 15 UNIX systems). PCs and Macintosh systems were listed as being used for chemical databases with an average of 90 systems per company or more than one system per chemist. Groups reported using an average of 13 computational programs for molecular modeling and structure determination. Chemical information systems were used in most companies. In addition, modeling groups stated that they had purchased their own databases for 3D structures from MDL, Daylight and Tripos.

The ratio of chemists to computational scientists for this segment of the industry was calculated to be 5:1. Molecular modelers for the group reported working on an average of 3 projects at any given period. The ability to work on basic research varied significantly, however, an average of 20% of time (with a range of from 5% to 30%) was allocated for non-project related research within this group of companies.

Large pharmaceutical and biotech companies

Large organizations accounted for:

  • 52% of the total number of synthetic chemists in the survey;
  • 76% of the total research budget;
  • 45% of the total number of computational scientists and
  • 41% of the industry-wide budget for computational chemistry.

The average number of computational scientists per company for this segment of the industry was calculated to be 21.6 working with an average of 116 synthetic chemists. The combined average budget for computational chemistry groups in this bracket was calculated to be $2,500K. Spending for 1995 was projected to be reduced significantly compared to 1994 levels. Head count was projected to be reduced as well.

Large companies accounted for 50% of all workstations reported in the survey. The average number of UNIX systems for the nine companies was 32. PCs and Macintosh systems were reported to be widely used for chemical databases with an average of 242 systems per company. Several organizations reported using desktop computers for molecular modeling and NMR structure processing. Groups reported using an average of 23 computational programs for molecular modeling and structure determination. Each company had large commitments to chemical information systems as well as 3D databases supporting molecular diversity projects within the molecular modeling groups.

The ratio of chemists to computational scientists for this segment of the industry was calculated to be 5:1. Molecular modelers for the group reported working on an average of 3 projects at any given period. The ability to work on basic research was mixed; half of the companies reported that scientists allocated up to 25% of their time for basic research while the other half reported that they allocated up to 50% of their time for basic research (an overall average of 35%).

Trends

Data in this survey highlights several of the changes occurring within the chemical industry including cost containment, restructuring and down-sizing. One of the companies which participated in the survey has been closed. Several others are consolidating and reducing their staffs to control expenses. The potential exists for computational chemistry groups to see their budgets and head count reduced by these actions.

In addition, many organizations have instituted project reviews for structural chemistry-based research programs. This, combined with the new emphasis on combinatorial chemistry, portends closer ties (either organizationally or functionally) between chemical information groups (corporate databases), molecular modeling groups (molecular descriptors) and mathematical support groups (statistical methods for data analysis).

Another aspect of the economy drive is the cost of supporting multiple hardware platforms. Many organizations are reviewing computer architectures within research in an effort to standardize on a limited number of vendors. Thus, several companies reported that Macintosh computers are being removed in favor of IBMs or clones. Research computing groups also report a rapid migration from VAX systems to UNIX systems. The result of this shift will be an impact on software vendor revenues. Larger portions of the budgets controlled by computational groups will be spent on hardware upgrades rather than on software purchases.

An ancillary area of interest highlighted by this survey is desktop modeling. Several vendors have attempted to exploit this potential market with limited success. New products from all of the vendors will once again target medicinal chemists. To date however, this group has shown little interest in using molecular modeling as a part of their research.

New computer systems technology (e.g., client-server based architectures) combined with changing approaches to research (molecular diversity, combinatorial libraries, rapid screening, etc.) are encouraging companies to re-examine their chemical information systems. The result of this change in direction will be the steady shifting of funding from structure-based drug design groups to diversity-based screening and analysis groups. The availability of database systems and analysis tools from multiple vendors (Chemical Design, Daylight, MDL and Tripos) will also force changes in the way these systems are purchased and supported.



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