An Analysis of the 1995 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
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 1995, Molecular Solutions contacted several of these companies 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 - research budgets up to $15M;
- medium companies - research budgets up to $90M; and
- large companies - research budgets of over $90M.
With the exception of chemical information systems, the survey found that the general trend in this market showed a reduction in head count and spending during the year, relative to 1994. Market segments are summarized below.
Molecular Modeling: Research managers indicated that their budgets would continue to shrink due to industry-wide downsizing, cost containment, and a movement of resources from structure-based drug design to combinatorial chemistry and mass screening. Purchases were limited to "new science" and hardware upgrades. Many organizations stated that they have reduced maintenance payments. In contrast, commercial suppliers stated that their revenues increased in this market segment during 1995. Discussions with research managers point to two factors which contributed to this apparent contradiction: decisions within organizations to change their primary vendor and purchases of new technology.
Structural Biochemistry: As in modeling, spending for 1995 was held flat or slightly decreased relative to 1994. Several managers stated that projects within their organizations have reached a stage where compounds designed by the group show promise in advanced screening.
Chemical Information: The rush to support combinatorial chemistry and mass screening continues. All of the vendors in this market segment have announced products designed for this area. Two have made significant sales.
Startup Pharmaceutical and Biotech Companies
In the 1994 survey, ten companies were included in this category. Two of these companies elected not to participate in the 1995 survey. The trend for this segment however, is one of strong growth. As a group, the eight companies in this category accounted for:
- 8% of the total number of synthetic chemists in the survey (an increase of 3% over 1994 when the loss of two companies is factored into the data);
- 2% of the total number of process research chemists in the survey;
- 4% of the total research budget (a substantial increase relative to 1994);
- 13% of the total number of computational scientists reported (no increase); and
- 13% of the industry-wide budget for computational chemistry (once again, flat relative to 1994).
The average number of computational scientists per company for this segment of the industry increased to 7.6 from 7.0 compared to1994. The average number of synthetic chemists increased from 17 to 21. The budget for computational chemistry groups in this bracket was calculated to be an average of $689K (ca. 8% of the research budget which is flat compared to 1994). Spending for 1996 was projected by the organizations surveyed to remain at 1995 levels or, in some cases, be increased by approximately 5 - 8%. Head count was projected to be flat.
This tier of companies accounted for 14% of all workstations reported in the survey with an average number of 8 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, however, many research managers stated that their companies plan acquisition of these systems (or an increase in their usage) during the next 1-2 years.
The ratio of chemists to computational scientists for this segment of the industry was found to be roughly 2.7:1. 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) decreased during 1995; a majority of the companies reported that scientists were not permitted to engage in basic research.
Given the emphasis on the World-Wide Web during 1995, it was not surprising to find that 75% of the companies in this category permit free access to the Web. The overwhelming browser of choice was Netscape. The use of intranets within these companies was reported to be limited.
Emerging Pharmaceutical and Biotech Companies
The group of companies within this segment decreased by one due to industry consolidation. The trend of down-sizing reflected in the 1994 survey appears to have impacted this segment of the industry hardest. Overall, figures for 1995 when compared to 1994 are modestly lower. As a group, the ten companies in this category accounted for:
- 21% of the total number of synthetic chemists in the survey;
- 22% of the total number of process research chemists in the survey;
- 19% of the total research budget;
- 26% of the total number of computational scientists reported; and
- 38% of the industry-wide budget.
The average number of computational scientists per company for this segment of the industry was calculated to be 12 while the average number of synthetic chemists was reported at 42. The average budget for groups in this bracket was calculated to be $1,590K (3.4% of the research budget, an average decrease of nearly $400K or 14% relative to 1994). Spending for 1996 was projected by the group heads to be flat relative to 1995 levels. Head count was also projected to be flat.
Emerging companies accounted for 26% of all workstations reported in the survey (an average of 13 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 research lab. In most companies, the system of choice for research was found to be the Macintosh. PCs (and PC clones) were found to be favored in business groups and labs where instrument automation was the primary goal. Computational groups reported using an average of 13 programs for molecular modeling and structure determination. Chemical information systems were in full use. In addition, modeling groups stated that they had purchased their own databases for 3D structures from MDL, Daylight, Tripos, and Chemical Design.
The ratio of chemists to computational scientists for this segment of the industry was calculated to be 3.5:1 - reflecting an increase in the number of chemical information specialists at most companies. Molecular modelers for the group reported working on an average of 3 projects at any given period. The ability to work on basic research decreased from 1994. An average of 15% of time (with a range of from 0% to 30%) was allocated for non-project related research within this group of companies.
Seventy percent of companies in this group was found to permit free access to the Web. The overwhelming browser of choice was Netscape. The use of intranets within these companies was reported to be limited, but growing. The primary application cited was the management and dissemination of clinical data.
Established Pharmaceutical and Biotech Companies
The number of companies for this industry segment has increased from eight to eleven. This increase reflects additional participants as well as movement within the categories defined due to mergers. Established organizations accounted for:
- 71% of the total number of synthetic chemists in the survey (compared to 52% for the 1994 survey);
- 76% of the total number of process research chemists in the survey;
- 78% of the total research budget (compared to 76%);
- 61% of the total number of computational scientists (compared to 45% for 1994); and
- 50% of the industry-wide budget for computational chemistry (41% in 1994).
The effects of the recent wave of mergers and acquisitions is reflected by this set of figures. The average number of computational scientists per company for this segment of the industry was calculated to be 25.2 working with an average of 129 synthetic chemists. The combined average budget for computational chemistry groups in this bracket was calculated to be $1,900K, down significantly for the $2,500K average reported in 1994. Spending for 1996 was projected to be flat or slightly increased compared to 1995 levels. Head count was projected to be flat as well.
Large companies accounted for 60% of all workstations reported in the survey. The average number of UNIX systems for the eleven companies was 26. PCs and Macintosh systems were reported to be widely used for chemical databases with an average of 686 systems per company. Several organizations reported using desktop computers for molecular modeling and NMR structure processing. Groups reported using an average of 27 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 15% of their time for basic research.
Trends
Several analyses of the marketplace which encompasses computational chemistry (defined for this report as molecular modeling, structural chemistry, and chemical information) have been published. Molecular Solutions estimated total world-wide expenditures by commercial organizations for computational chemistry in 1995 to be $350M. These funds included purchases of software, dedicated hardware and on-going maintenance for molecular modeling, structural chemistry (NMR and x-ray) and chemical database systems. While some of the vendors recorded increases in sales for the year, the market overall decreased by 15% compared to 1994. Revenues within the industry appear to have been generated by organizations shifting to a new primary supplier, by groups purchasing new technology, and through upgrades to hardware.
During 1994, Molecular Solutions reported that many organizations were reviewing computer architectures within research in an effort to standardize on a limited number of vendors. Several companies reported that Macintosh computers were targeted for removal in favor of IBMs or clones. Answers to questions on the 1995 survey indicate that while some organizations have completed this process, there has been no large scale migration from Macintosh to PC. Further, the impact of Windows95 has been minimal in that every organization contacted stated that Windows 3.X is the PC operating system of choice.
Data in this survey highlights the continued impact of cost containment, restructuring and down-sizing. Several of the companies which participated in the 1994 survey have been closed, consolidated or their research departments have been realigned. The budget and head count reductions reported in this year's survey track well with the estimates provided by research managers in 1994. These individuals feel that spending for 1996 and 1997 will be increase slightly. Molecular Solutions will continue to contact research leaders to assess the trends in this specialized marketplace.
Research Statistics
Averages for Each Group
| Company Type | # Ph.D. Organic/Medicinal | # Ph.D. Process Research | Budget for 1995 ($M) | # of Desktop Computers | Make | Operating System | Anticipate Changing | Do You Have WWW Access | Browser |
|---|---|---|---|---|---|---|---|---|---|
| Established | 129 | 58 | 176.8 | 686 | Mac (Chem), PC | MacOS, Win 3.X | No | Yes | Netscape |
| Emerging | 41.6 | 18 | 46.7 | 250 | Mac (Chem), PC | MacOS, Win 3.X | No | Yes (75%) | Netscape |
| Startup | 20.5 | 2.4 | 11.13 | 25.6 | PC, Mac(25%) | Win 3.X, MacOS | No | Limited | Netscape |
Molecular Modeling
Averages for Each Group
| Company Type | Group Size | Plans for 1996 | Budget (in $T) | Plans for 1996 | Number of WS | Number of Proj | Basic/Applied | Number of Progs | Primary Vendor | Do Chemists Use |
|---|---|---|---|---|---|---|---|---|---|---|
| Established | 8.6 | Flat | 609.1 | Incr | 17.5 | 3.36 | 15/85 | 15.6 | M(64%), T(55%) | No(73%), Yes(27%) |
| Emerging | 4.5 | Flat | 450 | Flat | 9.2 | 3.01 | 15/85 | 7.1 | M(60%), T(50%), C(40%) | No(40%), Yes(60%) |
| Startup | 2.9 | Flat | 240 | Flat | 5.8 | 2.8 | 10/90 | 8 | M(50%), T(50%) | No(75%), Yes(25%) |
Structural Chemistry
Averages for Each Group
| Company Type | Group Size | Plans for 1996 | Budget (in $T) | Plans for 1996 | Number of WS | Number of Proj | Basic/Applied | Number of Progs | Primary Vendor |
|---|---|---|---|---|---|---|---|---|---|
| Established | 9.7 | Flat | 586 | Flat | 9 | 2.5 | 10/90 | 11 | MSI, Academic |
| Emerging | 3.2 | Flat | 560 | Decr | 3.3 | 2 | 0/100 | 7 | MSI, Academic |
| Startup | 3* | Flat | 169 | Flat | 2 | 1.5 | 0/100 | 7 | MSI, Academic |
*Predominantly NMR
Chemical Information
Averages for Each Group
| Company Type | Group Size | Plans for 1996 | Budget (in $T) | Plans for 1996 | Number of Seats | Number of Progs | Primary Vendor | Are 3D-DB in Use |
|---|---|---|---|---|---|---|---|---|
| Established | 7 | Flat | 700 | Incr | 490 | 4 | MDL | Yes |
| Emerging | 4 | Flat | 580 | Flat | 316 | 3 | MDL | Yes |
| Startup | 2 | Incr | 281 | Incr | 48 | 3 | MDL, CDL | Yes |
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