BOX B Birth of the Biotechnology Industry

The birth of the modern biotechnology industry can be traced to the early 1970s, with the discovery of genetic engineering techniques, such as recombinant DNA methods and hybridoma production. These discoveries were made by biochemists and molecular biologists, many of whom were working at large academic medical centers.

The formation of Genentech is often considered the starting point of the biotechnology industry. Genentech was founded in 1976 by University of California, San Francisco, scientist Herbert W. Boyer and venture capitalist Robert Swanson. In 1978, the company announced that it had successfully cloned a human insulin gene using recombinant DNA technology. This discovery was licensed to Eli Lilly, the largest U.S. producer of insulin, and in 1982 recombinant human insulin was the first recombinant drug to gain Food and Drug Administration (FDA) approval. Human insulin was considered a significant advance in the treatment of diabetes, since a number of diabetics were allergic to traditional insulin extracted from the pancreatic glands of pigs and cows.

Genentech went on to develop and market its own recombinant drugs, the first being recombinant human growth hormone, which was approved in 1986 for use in children with a rare form of dwarfism caused by a lack of sufficient endogenous growth hormone. Prior to the development of Genentech's human growth hormone, these children were treated with growth hormone obtained from cadaver pituitary glands. Problems with this material included periodic shortages and also, rarely, the development of a lethal neurodegenerative disease called Creutzfeldt-Jakob disease, which came from an undetectable infectious agent found in cadaver pituitary tissue.

Another example of the medical advances and commercial successes that could be obtained from genetic engineering comes from Baxter's recombinant factor VIII (Recombinate), which was developed by the Genetics Institute, then licensed to and manufactured by Baxter. Factor VIII is a blood coagulation protein missing in hemophilia A, the genetically inherited bleeding disorder that afflicts about 20,000 males in the United States. Prior to the availability of recombinant Factor VIII, the protein was collected from pooled human blood which, prior to the use of the HIV test in 1985, was often contaminated with the AIDS virus. As a result, almost all hemophilia A patients who received Factor VIII from pooled human blood before 1985 were infected with HIV, and many have died of AIDS. Similarly, hemophiliacs had also contracted hepatitis when these viruses contaminated the blood pool. Recombinant human Factor VIII, approved in 1992, eliminated the constant problem of blood contamination and offers lifesaving benefits to hemophilia A patients (Kaufman, 1989).

Recombinant insulin, growth hormone, and Factor VIII typify the advantages that can be achieved with biotechnology. These products proved to be significantly better than previous medical treatment options, and many of the new biotechnology therapies were the first treatments available for a given disease. The drugs were patentable and could command premium pricing, which helped to offset the high development and manufacturing costs and the relatively small market for the diseases treated with recombinant proteins (Thackray, 1998).

Today genomics companies are often divided into large-scale sequencers, positional cloners, and those that do functional genomics. Large-scale sequencers, such as Human Genome Sciences, Inc., develop research databases of genes, gene fragments, or gene expression patterns, which enable drug discovery. Celera Genomics entered this field as it began its human genome sequencing.

Positional cloning companies study the genomes of individuals from families that have specific diseases and try to determine which genes cause the disease. From this information, disease genes can be identified, and tests to detect them can be developed. Companies such as Myriad Pharmaceuticals and Millennium Pharmaceuticals perform this kind of work.

Functional genomics companies conduct research to identify the function of genes. For example, they compare the genes in humans to those in other species, which is valuable because genes often perform the same function regardless of the species, a phenomenon called homology, and it is usually easier to assess gene function in smaller organisms. “Tool” companies, like Affymetrix, develop “array technologies” that can analyze rapidly which genes are expressed in a given tissue or cell. By comparing differences in gene expression between diseased and healthy tissue, this technology is used to discover genetic changes leading to disease.

Notwithstanding the early successes of Celera, Millennium, and Affymetrix, current business models in the biotechnology industry have shifted dramatically from the halcyon days of the genomics company bubble (1999-2000). Today, it is generally believed that long-term value creation in biotechnology can come only from the sale of pharmaceutical products. Most of the so-called platform companies of the late 1990s have disappeared or migrated to drug discovery. The prescient (not to mention lucky) few, such as Perlagen, have evolved into product companies with varying degrees of reliance on their original platform technologies.

From: 2, Genomics, Proteomics, and the Changing Research Environment

Cover of Reaping the Benefits of Genomic and Proteomic Research
Reaping the Benefits of Genomic and Proteomic Research: Intellectual Property Rights, Innovation, and Public Health.
National Research Council (US) Committee on Intellectual Property Rights in Genomic and Protein Research and Innovation; Merrill SA, Mazza AM, editors.
Washington (DC): National Academies Press (US); 2006.
Copyright © 2006, National Academy of Sciences.

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