Cluster Intersections: Bay Area Bioinformatics

Cluster Intersections and the Evolution of the Bay Area Bioinformatics Cluster

The recent establishment California-based bioinformatics industry clusters is a logical consequence of the intersection of existing local Biotechnology, Information Technology and Venture Capital clusters. The very definition of Bioinformatics: "the science of managing and analyzing biological data using advanced computing techniques, 1" helps to illustrate the nature of this intersection. Research and development for Biotech companies generates volumes of biological data and IT companies provide tools that assist in processing this data. It seems only natural that in light of this mutual dependency and given the proximity of existing IT and Biotech clusters a new, specialized Bioinformatics cluster would emerge.

In his article, "Clusters and the New Economics of Competition," Porter describes the benefits created by the "direction and pace of innovation 2" sustained by local competitors in their existing products and technologies. For example, given the already lengthy process of bringing a new pharmaceutical to market, Biotech companies must have realized early on that their ability to stay abreast of competitors was highly dependent

on the speed at which they could process massive amounts of genetic information to find therapeutic candidates. Clearly, the incorporation of cutting edge information technologies into Biotech research and development processes was itself a critical innovation, but it was also critical to future innovations within the Biotech industry. Porter would probably argue that the competitive pressures of clustered Biotech firms fostered more urgent and rapid incorporation of advanced computing into genetic research. The proximity of the knowledge and resources in the IT cluster made it easier to both conceive of these innovations and to access the resources that enabled them. Conversely, innovations in the field of Information Technology were stimulated in response to the both the needs of the Biotech cluster, and the urgent clamoring of IT competitors to capitalize on a new market.

Porter asserts that "vibrant" clusters not only stimulate innovation in established companies but that new businesses and new innovations take shape in response to the competitive environment. Start-up firms have a unique opportunity to observe the incumbents in the cluster and conceive of ways to improve existing products or develop complementary offerings. New firms benefit from an existing local customer base but also may be able to more readily recognize and capitalize on a niche market in the midst of many established competitors 3. The Bioinformatics industry appears to have emerged in a similar manner, filling the gap between the IT and Biotech clusters.

An additional catalyst to the Bioinformatics industry in the Bay Area must have been the intersection of a third cluster: Venture Capital. It is not surprising that a rash of Bioinformatics start-ups came to the surface just as the first draft of the human genome was completed. Increased interest in Biotechnology resulting from the genome project happened to coincide with the failure of many venture funded dot-coms which in turn spurred a hopeful interest in Bioinformatics 4. Clearly, the data processing demands implied by genomes consisting of 3 billion nucleotides each would constitute an urgent need for advanced computing techniques. The proximity of Venture Capital groups must have provided uniquely favorable funding opportunities for burgeoning Bioinformatics innovators.

Public and private educational institutions in the Bay Area also have had much to do with the formation industry clusters as well as research and innovation that contribute to both new and existing industries. Proximity to a variety of Universities providing strong programs in Computer Science and Medicine has contributed to the emergence of IT and Biotech clusters. Conversely, local businesses contribute to these schools, providing grants and scholarships to stimulate innovations from research and cultivate an appropriately skilled workforce.

Porter identifies access to a specially skilled workforce as a primary advantage to firms in a cluster 5. Costs associated with hiring and training employees are diminished in an environment that is already rich with individuals who possess the required skill sets. This