Large biotech companies have many drugs under evaluation in the clinic and a lot more in research and development. But how these initially start-ups were established?
I'm excited to introduce "How Was It Established?", a series where I explore the inspiring stories behind establishment of biotech companies—how groundbreaking ideas turned into real companies, the challenges they overcame, and the creative strategies that led to their success.
From Science to Start-Up
In the early 1970s, genetic engineering was still a new and experimental field. Scientists had recently discovered that DNA could be cut and spliced using restriction enzymes, but the idea of using this technology to manufacture proteins for medical use was largely theoretical. Herbert Boyer, a molecular biologist at the University of California, San Francisco, was one of the pioneers of recombinant DNA technology. Around the same time, Robert Swanson, a venture capitalist with a background in chemistry, was looking for emerging scientific breakthroughs with commercial potential.
Swanson, convinced that genetic engineering could lead to revolutionary medical treatments, reached out to Boyer. The two met in 1976 for a 10-minute conversation that stretched into hours. Swanson proposed starting a company that would use recombinant DNA technology to produce human proteins in bacteria—a radical idea at the time. Though initially skeptical, Boyer agreed to partner with Swanson, and with just $500 in seed funding, Genentech was born. They envisioned a future where genetic engineering could provide affordable, large-scale production of vital medicines..
The Burst
Genentech’s first major challenge was to prove that recombinant DNA technology could produce human proteins in bacteria. Their initial project focused on synthetic human insulin, a critical treatment for diabetes that, at the time, was sourced from pig and cow pancreases. By 1978, Genentech, with only twelve employees, successfully inserted the human insulin gene into bacteria, allowing them to produce insulin at an industrial scale. Their success was partly brought from their resilience as is obvious in Swanson’s quote: “I don’t want to hear that word, impossible...tell me what you need to get it done”. This achievement demonstrated that biotech could compete with—and even surpass—traditional pharmaceutical methods. In 1982, Eli Lilly & Co. partnered with Genentech to mass-produce the first synthetic human insulin, named Humulin.
Following insulin’s success, Genentech moved quickly to develop other recombinant proteins. In 1982, human insulin (Humulin) became the first genetically engineered drug approved by the FDA, solidifying Genentech’s credibility. The company continued to expand, pioneering the production of human growth hormone, interferon, and monoclonal antibodies, laying the foundation for modern biotech-driven medicine. Genentech’s success also attracted industry-wide attention, proving that venture-backed biotech companies could thrive.
Challenges and Turning Points
Despite its success, Genentech faced numerous challenges. Public fear over genetic engineering led to regulatory scrutiny, and concerns about safety prompted extensive oversight. In its early years, the company also struggled with securing funding, convincing investors that biotech was a viable industry. Additionally, patent battles with competitors and ethical debates over genetic manipulation presented ongoing obstacles.
A major turning point came in 1990, when Roche acquired a majority stake in Genentech, providing the financial stability needed for long-term research and product development. While this acquisition helped Genentech scale, it also raised concerns about maintaining the company’s innovative culture under corporate ownership. However, Genentech managed to retain its independence in research, continuing to develop groundbreaking treatments such as Herceptin for breast cancer and Avastin for colorectal cancer.
Takeaways
1. Interdisciplinary Collaboration Drives Innovation: Genentech’s success stemmed from the partnership of a scientist (Boyer) and a businessman (Swanson).
2. Small Investments Can Make Big Changes: Launching a start-up doesn’t always require massive capital. Even a modest investment—like Genentech’s initial $500—can lay the foundation for groundbreaking advancements.
3. Proof of Concept is Crucial: The first big success (synthetic insulin) proved that biotechnology could produce real-world medical solutions, paving the way for future investments and developments.
4. Funding Science Requires Visionary Investors: Biotech innovations need long-term investment, and without early financial support, ideas may never leave the lab.
5. Regulatory Challenges Are Part of Innovation: New scientific fields often face skepticism and legal hurdles. Successfully navigating these is key to bringing new technologies to market. Only 4 years after the first demonstration to produce human insulin in bacteria, Humulin was ready to be used for patients.
References
1. Hughes, S. S. (2001). Genentech: The Beginnings of Biotech. University of Chicago Press.
2. Hall, S. S. (1987). Invisible Frontiers: The Race to Synthesize a Human Gene. Oxford University Press.
3. Genentech. (2021). Our History: The Story of Biotechnology. https://www.gene.com
4. Riggs A. D. (2021). Endocrine reviews, 42(3), 374–380.