Hitachi eyes investing in more biotech startups

JAPAN'S Hitachi Ltd plans to increase the amount of money it invests in start-up companies involved in bioinformatics and biotechnology as it attempts to strengthen that sector of its business.

Hitachi, which is Japan's largest electronics maker, plans to spend around 1.5 billion yen (US$11.3 million) over the next three years investing in such ventures, Masao Kato, president of the company's corporate venture capital office, told IDG News Service.

Kato said he is planning to spend around 10 per cent of his 2002 budget on biotechnology and bioinformatics-related investments, a figure that will rise to 15 per cent in 2003 and 20 per cent in 2004.

Unlike traditional venture capitalists, which look at a start-up's potential for making money, Kato said Hitachi was also looking for companies with strategic technologies that Hitachi needs. The executive said he was getting regular reports on start-up companies in the US but was looking to increase Hitachi's involvement with Japanese companies too.

"Right now the US is most interesting, but I am starting to look at Japan," Kato said. "I didn't know very much about (Japan's biotech sector) so I started making contacts with the government and academics."

The investments Kato makes will build upon work that Hitachi has already embarked upon in the field.

"One of the unique things about Hitachi is that we have a lot of technology related to bio," said Shojiro Asai, general manager of Hitachi's corporate technology office. "We have the information technology, such as servers, storage, knowledge analysis and information retrieval tools. On top of that we have instrumentation, and have developed a very powerful DNA analyser and our own laboratories."

Hitachi made headlines in April 2001 when, together with Oracle, it announced plans to work with US company Myriad Genetics on a US$185 million project that has as its goal the mapping of the human proteome (the list of proteins found in human genes) within three years. Hitachi is contributing the electronics and computer processing technology to the venture, and Myriad plans to market its database once the research is complete.

Additionally, Hitachi's instrumentation group has also formed an alliance with Applied Biosystems, under which Hitachi designs and develops DNA sequencers. Each company owns key patents relating to DNA sequencing technology.

In addition, the company has established its own life sciences unit, currently consisting of 120 people, that provides an outsourcing service to companies that need laboratory work and data analysis done.

Started in October 1999, most of the group's clients are in the food, chemical and pharmaceutical industries, said Hiroya Taguchi, president and chief executive officer of the division. "We have 90 scientists working in our group," he said, emphasizing the contrast between other units of Hitachi where administrative and support staff make up a large number of the positions. "Of those, a third have doctorates and a quarter were recruited from outside Hitachi."