Foreign Invasion of the Biochip Market

A market dominated by American companies is about to get a little tighter. A consortium of Japanese companies including Toshiba, and Canon (NYSE: CAJ  ) are planning on jointly developing biochips for research and diagnostic purposes.

The consortium, which will be set up in the middle of next month, will also bring in synthetic fiber maker Toray Industries, medical consulting firm MediBic, and 30 to 40 more companies. The group will be aided in the endeavor by the government-affiliated Kazusa DNA Research Institute.

There wasn't much more information in the announcement about it, but I'd guess it will be years before the consortium could have a marketable product. There's also no word on how the companies will sidestep Affymetrix' (Nasdaq: AFFX  ) and Agilent Technologies' (NYSE: A  ) patents on attaching RNA or DNA molecules to the silicone-based chips. Illumina (Nasdaq: ILMN  ) certainly hasn't been able to get around Affymatrix' patents.

While increased competition is not usually a good thing for companies, it shouldn't be too debilitating for American ones. The biochip market, which has essentially been limited to research laboratories, is expanding greatly.

For instance, chips are being developed for clinical diagnostics to determine the genetic makeup of patients and their tumors. They're also being developed to identify species quickly -- for example, with pests in food products or potential illegal imports. With the expected dramatic increase in the coming years, and the American companies' big head start in it, the biochip market still has a way to go before becoming the next automobile market.

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