How Genentech Created the Biotech Industry
When Genentech started in the mid-1970s, nobody thought academic biology could become a successful business. Molecular biology was new, and most drug development happened inside large pharmaceutical companies. But within ten years, Genentech changed everything about how drugs are discovered, financed, and sold—inventing the modern biotech industry in the process.
Sally Smith Hughes's book Genentech: The Beginnings of Biotech tells this story as a mix of science, business deals, and Wall Street speculation.
The Scientific Foundation
The story begins with the Cohen-Boyer experiments in the early 1970s. Scientists learned to cut and splice DNA to make bacteria produce human proteins. This was revolutionary but controversial—people worried about safety and whether you could patent living organisms.
Genentech's founders were Herbert Boyer, a biology professor at UCSF, and Robert Swanson, a young venture capitalist. Together they created a new type of scientist: the "entrepreneurial biologist" who worked across academia, startups, and investment. This hybrid role became standard in biotech.
Proving It Could Work
Genentech stood out because it actually delivered results. The human insulin project was the crucial test. Producing a human hormone in bacteria wasn't just scientifically impressive—it proved that recombinant DNA could make real medicines, not just research papers.
Hughes describes the daily challenges: failed experiments, optimization problems, and competition with other labs. Lab decisions were always connected to business needs. Scientists had to think about licensing deals and investor expectations when choosing which proteins to work on and when to publish results.
The Partnership Model
Instead of trying to become a full pharmaceutical company, Genentech focused on early research and proof-of-concept. Then it licensed products like insulin and growth hormone to established drug companies that already knew how to handle regulations, manufacturing, and distribution.
Genentech's first approved product was Protropin (somatrem), a recombinant human growth hormone for children with growth hormone deficiency, approved by the FDA on October 18, 1985, marking the first biotech-manufactured drug. While they developed insulin (Humulin) with Eli Lilly in 1982, which was the first recombinant DNA drug on the market, Protropin was Genentech's first marketed medicine.
These partnerships were complicated. Hughes details negotiations over money, milestones, and patents, showing how Genentech balanced academic values with the demands of investors and corporate partners. This approach—small biotech firms working with Big Pharma—became the industry standard.
The Game-Changing IPO
Genentech's 1980 stock market debut was a turning point. Investors bought shares based on future potential, not current profits. The stock soared on its first day, proving that biotech could be a new type of investment.
Going public changed Genentech. The company now faced investor expectations, valuation pressure, and more scrutiny of research decisions. Scientific priorities increasingly had to align with Wall Street narratives—a tension that still defines biotech today.
The Template for Biotech
Genentech established a pattern that the entire industry still follows:
Start with cutting-edge academic science
Patent aggressively
Get venture capital funding
Partner with big pharmaceutical companies
Go public early
In less than a decade, Genentech made university-industry collaboration normal and changed what it meant to be a biologist.
Why This Still Matters
Hughes's book is more than company history. It explains why biotech works the way it does today—why startups raise money before making profits, why IPOs happen early, why partnerships drive drug development, and why lab work and business deals are inseparable.
For anyone interested in biotechnology, venture capital, or how science becomes commercial, Genentech's story remains the origin story that shapes the present.