Start It Up

While biotech companies are now plentiful, Genentech was the first to commercialize recombinant DNA–based research. Istockphoto.

While biotech companies are now plentiful, Genentech was the first to commercialize recombinant DNA–based research. (Istockphoto)

Sally Smith Hughes. Genentech: The Beginnings of Biotech. Chicago: University of Chicago Press, 2011. 232 pp. $25.00.

Over the past 20 years Sally Smith Hughes has done a great service to science studies by conducting in-depth oral-history interviews with prominent scientists, venture capitalists, corporate leaders, and attorneys in the history and business of early biotechnology. She drew on her unprecedented access to corporate records and a large number of actors and their oral histories to write Genentech, the first comprehensive account of the creation and early development of the Genentech Corporation. As the first major recombinant DNA–based biotech company, Genentech spawned the biotech industry through a relentless industrialization of genetic engineering. Hughes’s book is a story of scientific creativity, individual entrepreneurialism, and private capital told primarily from the perspective of the early participants in and promoters of biotechnology.

Genentech was established in the spring of 1976 by Herbert Boyer, a University of California, San Francisco (UCSF), scientist, and Robert Swanson, an unemployed venture capitalist. It was the first major commercial initiative in genetic engineering. On paper, Genentech was initially a company whose research in the field of recombinant-DNA technology was contracted to Boyer’s laboratory at UCSF. Within a few years its scientists achieved what initially seemed impossible: the manufacture of medically useful molecules, notably insulin and human growth hormones, on a large scale through genetic engineering. Scientists at Genentech were the first to demonstrate that a major animal-derived drug like insulin could be mass-produced through the cloning and expressing of medically significant genes in bacteria, thereby pioneering the commercialization of molecular biology. By the time Genentech’s initial public stock offering awed Wall Street in late 1980, Boyer’s initial investment of $500 was worth about $37 million. Right after this IPO, as Hughes vividly tells us, Boyer “rushed out to purchase a Porsche Targa, [and] Swanson [became] ‘the first boy millionaire of biotech’” (p. 158).

Hughes’s book focuses on those five years of Genentech’s remarkable ascendancy. She claims there was nothing inevitable about its technological and commercial success when “it struck [Boyer and colleague Stanley Cohen] that they might have between them the makings of a method for joining and cloning DNA molecules” (p. 12). Genentech’s road to business success, as she painstakingly shows, had been fraught with scientific and regulatory uncertainties along with financial risk and moral and cultural ambiguities. Relentless focus and drive often pushed the early entrepreneurial scientists and business leaders at Genentech to come dangerously close to transgressing shifting regulatory,

legal, and ethical boundaries. Examples include the use of a cloning vector whose safety had not been certified by federal biosafety regulation; tough-minded financial deals and zealous pursuit of intellectual property rights; and a “midnight raid” on an academic laboratory that led to a bitter legal fight between Genentech and UCSF. While some promoters of biotechnology praised Genentech’s entrepreneurial and experimental culture as striving for innovative science, some scientists lamented that the company had become “macho city,” with an intense and competitive culture, as “biomania” swept Wall Street and academia in the early 1980s (p. 135).

More consequently, Hughes notes, Genentech played a catalytic role in the emergence of a new industry of biotechnology through its institutional, organizational, and scientific innovations. Here she treats the early history of Genentech as an exemplar business-history case. She investigates how Genentech led the way “in financing and industrializing a basic-science procedure, organizing a new kind of business and legal structure around it, and winning scientific, corporate, and public investment” (p. 165). Through her analysis of Genentech’s insulin research, for example, she shows how Genentech tried to establish itself as an autonomous, research-based company while forging a strategic partnership with a major pharmaceutical company, Eli Lilly, for large-scale manufacturing and marketing. In addition, Genentech’s corporate leaders and attorneys tried to maneuver changing federal regulatory and academic patent policies to its advantage and so increase the financial worth of their intellectual property. The Genentech model of the business of biotech, with its organizational alliance with big pharmaceutical companies and focus on intellectual property rights, became the dominant model for the next generation of biotech entrepreneurs. Genentech provides detailed, engaging, and intimate glimpses into the biotech industry’s birth and growth, as well as how it shifted the relationship between science, academia, and private enterprise.

Doogab Yi is a Haas Fellow at CHF. His interests include the history of biomedical research and biotechnology.