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Stocks C / Celera


Subject:  Re: CRA News from Washington Post Date:  3/7/2000  12:01 PM
Author:  mcraney Number:  6510 of 36502

There is another perspective.

By insisting on proprietary rights over its key loci, CRA limits the number of companies who can effectively research products based on a particular locus. Let's remember -- there are 10 million loci on the genome, and no single biotech company has the size and/or capability to work on more than a couple of them in a given decade [understanding that all loci are not important for disease research].

I think CRA's view is incredibly shortsighted. Let's take two examples.

First, Subway. They grew to the second largest fast food chain NOT by demanding large franchise fees (or expensive buildouts) but by making the franchise available to just about everybody. The founder realized that over the long term, having 14,000 outlets paying him an 8% royalty a month was a whole lot better than having 2,000 outlets coughing up $50K for a franchise fee. So, he forewent the Mercedes and the mansion for a decade, and is now reaping the benefits.

CRA could have agreed to licence all loci for free, but requested a reasonable royalty for all products based on a given license. This would have expanded the potential profit base, as any qualified molecular biologist/biochem team could have gotten into the game. Play for free, pay if you win, rather than pay to play, regardless of outcome.

Second, the strategy reeks of Apple Computer vs. IBM in the early 80's. Proprietary technology vs. open
technology. You know the story.

Finally, unless CRA thinks they can handle [and hire] for the kind of personnel growth they would require to actually research and produce based on the majority of their own patents (CRA has 350 employees = Merck has 57,500, for example) they can't do this alone. They need partners.

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