'One to Watch' InforMax Takes Its Bioinformatics Software to the Enterprise

By Justin Hibbard
Red Herring magazine
From the September 1999 issue

Pharmaceutical research is changing in ways likely to make a few software companies very rich. Traditionally, scientists have discovered drugs through a lengthy process of elimination. But in the past decade, they've streamlined the procedure by using bioinformatics software, which analyzes data about the human genome—our genetic blueprint. The results help researchers pinpoint the genetic causes of a disease, which reduces the time it takes to find drugs to treat it. As the amount of genomic data grows, drug companies will invest in ever more sophisticated tools.

That's good news for companies like InforMax. Since 1990, the year it was founded, it has already put its bioinformatics software on 10,000 PCs and Macs in more than 40 countries. Merck, the largest U.S. drug maker, recently bought a worldwide license for InforMax's desktop suite. For its next act, InforMax is entering the enterprise software market. It plans to boost sales of a client/server software package it introduced last year and sell contracts to install and customize the product. "We are not just developers of software," says Alex Titomirov, the company's CEO. "We are seeking collaborations with our clients."

By offering enterprise software and services as well as a desktop suite, InforMax is double-dipping into the bioinformatics market, which will grow from $290 million last year to $1.2 billion in 2005, according to Front Line, a management consulting firm. InforMax's revenues last year were $5 million, and the company is on track for $10 million this year; it has been profitable since 1996. In June InforMax accepted $4 million from FBR Technology Venture Partners, a subsidiary of the investment bank Friedman, Billings, Ramsey. The expansion funding is the first venture capital that InforMax has taken—its only previous outside capital was $175,000 raised from friends.

Bioinformatics companies equip drug researchers with data-management and analysis tools. Biotech companies are putting human genome information to use. New opportunities for biotech firms when the human genome is mapped.

Several well-funded competitors, including Pangea Systems, the Oxford Molecular Group, and NetGenics, have already made headway in the enterprise software market. But the bioinformatics field is so new that most of the market is still up for grabs; Front Line expects the market to grow at annual rates ranging from 20 to 30 percent through 2005. InforMax is likely to carve out a healthy slice of the expanding pie by converting many of its 800-plus desktop software customers to enterprise accounts. (Only Oxford rivals InforMax in desktop software.) It's a Trojan horse strategy that's worked before.