Cypex Ltd was launched in September as the result of a five-year project by Dundee University's biomedical research centre. Its work should mean safer drugs reaching patients more quickly.
Co-directors Mike Pritchard and Michael Voice are optimistic about securing a worldwide market for their products.
"Drugs companies need to predict how fast and how well people can metabolise a drug in order to avoid unwanted side-effects," says Dr Pritchard.
"The human liver is the major organ responsible for breaking down drugs. We can produce parallels of a few of the thousands of human liver proteins, a bit like a simulated mini-liver, on which drugs can be tested."
Cypex has signed its first major contract with a multinational drugs company and expects more shortly. The deal is not for a specific sum of money, but covers the supply of Cypex products.
But the company's first product should be available by the end of the year, a process that could take many other biotech companies five to ten years.
"Cypex is unusual in that we have a product to sell immediately. This means we should be generating
income within a short time to fund further research and development," says Dr Pritchard.
"If everything goes according to plan, we should pay our debts in around two and a half years and everything after that should be profit."
The company had little difficulty in raising an initial Pounds 500,000. Sources included Scottish Enterprise and Scottish Enterprise Tayside, an anonymous business angel, the Bank of Scotland and the Scottish Executive.
Dundee University is seen as a centre of excellence in biomedical and life sciences and the hub of a biotechnology cluster. "For its size, Dundee has a relatively large pool of highly qualified, well-trained research scientists, eminently suited for work in the biotech industry."
The company hopes to recruit locally when it expands from its current five full-time employees and will maintain close links with the university.
Cypex grew out of a Dundee Link programme led by Roland Wolf and Brian Burchell, in partnership with the pharmaceutical industry, and with the two professors as consultants. Cypex will pay Dundee royalties on sales.