Commerce and genetic diagnostics.

The revolution in molecular biology and molecular genetics has begun to reveal the sequence of events that links genes and disease. As a result of activities such as the Human Genome Project, a parallel revolution in technology is bringing nearer to hand the possibility of readily available genetic diagnostics. Genetic testing services have begun to move out of the academic medical centers and into the private enterprise arena. Under these circumstances it is important to understand the factors affecting the availability and application of this powerful predictive tool in a for-profit mode. How does the marketplace encourage or discourage genetic testing? Will the same market influences that generate pharmaceutical sales be operating to "sell" genetic tests? The prospect of routine genetic diagnostics for a wide variety of diseases ranging from rare monogenetic afflictions (for example, Tay-Sachs) to common polygenic diseases (for example, many cancers) have attracted the attention of commercial testing laboratories and venture capitalists. New companies are being formed, usually in conjunction with academic medical/molecular genetic researchers. The power and specificity of DNA diagnostics and the potential for preventive interventions lead to expectations that these tests will be adopted rapidly as standard medical practice. Major diagnostic companies (Abbots, Boehringer Mannheim, Miles, Baxter, Beckman, Becton Dickenson, Ciba-Geigy, Johnson & Johnson, Eastman Kodak, Bio Rad, etc.) are developing a variety of technologies by inhouse invention and through alliances and acquisitions. The increase in research and development activity by these firms is designed to position them competitively for what is expected to be a major diagnostic market potential. In addition to the established major commercial players, hundreds of start-up companies have been formed to exploit various niche diagnostic capabilities generated in academic research laboratories. Specialized DNA applications for forensic purposes, for hereditary, infectious, and metabolic disorders, for histo-compatibility, hormone monitoring, and for cancer diagnostics are some of the genetic diagnostics in various phases of development and various levels of approval by the FDA Typically, after support by venture capitalists or through initial public offerings, start-up companies seek affiliations to meet their development needs and to acquire access to the sales, distribution, and service capabilities that mature corporations have in place. Most initial funds are committed to the research and development and clinical testing that must be carried out before a diagnostic device, kit, probe, or technology can be commercially launched. The role of venture capitalists is often just enough to support a startup so that it can produce enough research to go to the stock market with an initial public offering. Once the initial public offering is successfully concluded, the venture capitalists often depart with the profits made on the sale of the company's enhanced stocks. Depending on the time between the first venture capitalist funding and the initial public offering, the venture capitalist expects at least a 40 percent profit on her investment. Employees and academic researchers associated with the enterprise participate in the stock benefits and are highly motivated to enhance the value of the initial public offering. In many cases, this leads to unwarranted claims and overly optimistic interpretations of data. In most cases, the claims and range of applications for the testing technology are subject to confirmation and, if appropriate, are corrected. Unfortunately, correction by peers does not usually take place before unrealistic expectations are created.[1] The proliferation of start-up companies heavily dependent on the limited number of venture capitalists and the increasing difficulty of floating successful initial public offerings for financing new biotechnologies have contributed to the industry's tendency to exaggerate what it will be able to produce. …