Microsoft has been angling toward the life sciences software market for years, and yesterday it made a significant play in the sector by scooping up an industry pioneer just a few miles away.
The Redmond, WA-based software company said yesterday it is acquiring the assets of Rosetta Biosoftware, a Seattle-based division of Merck that has been marked for downsizing since back in October.
So what did Microsoft get for the undisclosed amount it paid? A pioneering computational biology operation that’s been around more than 10 years; a profitable cash stream; an existing customer base of almost 100 names from academia and major drugmakers; and partnerships with major genetic instrument companies like Santa Clara, CA-based Affymetrix and San Diego-based Illumina. Then there is a talent pool of 53 experienced employees that it will get to interview and choose from. Microsoft isn’t saying how many people it plans to retain, but it will move the Rosetta operation from Seattle’s South Lake Union to the main campus in Redmond.
Microsoft has had its eye on Rosetta for years, and knew what it was getting, says Jim Karkanias, senior director of Microsoft’s Health Solutions Group. Karkanias was at Merck when the pharmaceutical giant purchased Rosetta Inpharmatics, the parent operation of Biosoftware, back in 2001, and he said he has seen it grow in value ever since. Microsoft thought about whether to try to build its own software to get in the same game, but it’s easier said than done. It probably would have taken Microsoft at least three years on its own, Karkanias says.
“Rosetta really pioneered its way in this space,” Karkanias says. “I’ve been following them for years, and I was at Merck when it made the acquisition and really started to understand Rosetta value proposition. It’s only increased over time.”
Now Karkanias will be in charge of the remnants of Rosetta Biosoftware as it is integrated into Microsoft’s beefed-up Amalga Life Sciences by early 2010. This means it will get product lines by the names of Rosetta Resolver, Rosetta Elucidator, and Syllego. Getting this stuff integrated will be no small feat, and an easy one to botch. These are highly technical products
