The young biotechnology industry has already shown that it can perform miracles of science, creating marvelous synthetic molecules with the potential to attack cancer or stop heart attacks. Now the genetic engineering companies are out to prove that they can work the same magic in the marketplace, turning those wonder drugs into profitmakers. Last week Genentech, an industry leader based in south San Francisco, began selling its first drug product for humans: Protropin, a growth hormone used to treat dwarfism in children. Genentech had previously developed Humulin, a synthetic insulin, but licensed it to an established pharmaceutical company, Eli Lilly, which put the drug on the market. Protropin, which is expected to generate annual sales of $40 million, is the first human drug that a new biotech company has tried to sell on its own. Says Robert Swanson, Genentech's cofounder: "This is the beginning of the coming of age of the biotechnology industry."
For the investors who have sunk $1.5 billion into biotech start-ups, the journey from the laboratory to the marketplace has seemed agonizingly long. The industry was born in the 1970s, when scientists developed techniques for manipulating genes and converting bacterial and animal cells into tiny factories that could mass-produce drugs and other useful chemicals. When the first of the gene-splicing firms, led by Genentech and Cetus of Emeryville, Calif., went public in the early 1980s, Wall Street went wild. Genentech's stock jumped from $35 to $71 the first day. Biotech seemed like the next computer industry, and everyone was looking for the new IBM.
Wall Street, though, soon saw the high hurdles that lay ahead for biotech companies. After a new drug is developed, it must go through five to six years of painstaking tests in animals and human patients before it can win the approval of the Food and Drug Administration. In addition, a new firm faces the formidable tasks of equipping factories to mass-produce new drugs and building a national sales force to distribute them. Uncertain that the new biotech companies were up to the job, investors grew wary. Genentech's stock slipped to a low of about 17 in 1982, and Cetus dropped below 8 that year, from a 1981 high of 23.
Responding to Wall Street's concern, the genetic engineering firms began hiring employees who wore business suits instead of lab smocks. In 1983 Cetus brought in a new president, Robert Fildes, who had been a vice president of operations at Bristol-Myers, a major pharmaceutical company. Fildes quickly recruited a cadre of experienced managers with M.B.A.s, including some of his old colleagues from Bristol-Myers. He also pared back Cetus' rambling research to focus on projects with the most commercial potential. The company is now testing its version of interferon, a promising anticancer agent, and hopes to have the product on the market in two years. But at least five other firms, including Genentech and Geneva-based Biogen, are also in the interferon race.