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Chain Reaction

Inexpensive DNA replication could unleash a new wave of innovation.

Radio. The transistor. Public-key encryption. There are a few key technologies upon which whole industries rest. In the case of molecular biology, there is polymerase chain reaction, or PCR. The patent for PCR is not only the most lucrative one in the history of biotechnology, itís also the most controversial. The process enables DNA to be replicated easily and is used in everything from paternity tests to hereditary disease detection. Yet the patent, owned by F. Hoffmann-La Roche, Basel, Switzerland, is troublesome because of the high licensing fees the firm charges for a technology considered fundamental.

But the core patents on PCR expire in March 2005 in the United States, and a year later in Europe. This raises the question of how the biotechnology industry will respond once the pivotal-yet-pricey technology enters the public domain. Many geneticists and industry executives expect a cascade of innovation as PCR cost drops and use soars.

“It will, in fact, become very cheap to do PCR,” says Michael Finney, the cofounder and chief scientific officer of MJResearch, a manufacturer and supplier of thermal cyclers, sequencers, and reagents based on PCR (which is in litigation with Roche over alleged patent infringement). Lower costs should open up several possibilities. First, researchers will be able to work on a far larger scale than before; scientists wanting to study the spread of a bacterium, for instance, will be able to analyze millions of samples, rather than the few thousand that their budget may limit them to today. Second, there will be innovations in the PCR enzyme market. Current licensing agreements with Roche reduce the incentive to innovate, as they include a standard grant-back provision under which a company that invents a new polymerase enzyme useful for PCR is obligated to license it to Roche. Third, the market for diagnostic tests is expected to grow as PCR becomes more economically competitive with alternative technologies. Todayís licensing regime imposes stiff royalties—approximately 15% of what a patient pays for the test—that will disappear once the patent expires. And with PCR in wider use, there will be greater opportunities for a researcher to stumble upon an improvement.