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Early this year G. Kirk Raab, the second in command at Abbott Laboratories, a large drug company, left to become president of Genentech. To prepare for the introduction of Protropin, Raab helped build a national marketing organization, which includes 15 hospital-based sales representatives with an average of 15 years' experience. Now Raab is working on plans to sell interferon and TPA (tissue plasminogen activator), a drug that dissolves blood clots and thus may help prevent heart attacks.
The biotech companies' new emphasis on marketing has revived Wall Street's enthusiasm for their stocks. Genentech has risen from 34 to 49 since January, while Cetus has gone from less than 9 to nearly 16. Says Peter Drake, a biotechnology expert at the Kidder Peabody investment firm: "From an investor's standpoint, the industry is at a breakout point in 1985."
The coming of age of biotechnology has not escaped the notice of established corporations. Companies with large investments in genetic research range from chemical firms like Du Pont and Monsanto to oil giants, including Exxon and Chevron. The most active players are the pharmaceutical houses, which have been feverishly striking alliances with the biotech companies. A recent licensing agreement allows Johnson & Johnson to sell products developed by Amgen of Thousand Oaks, Calif.
Some drug companies have decided that the best way to join the business is to swallow biotech firms whole. Eli Lilly announced in September that it would pay $300 million for San Diego-based Hybritech, one of the leaders in the development of monoclonal antibodies, which are proteins that could potentially help diagnose and conquer diseases like cancer. Last week Bristol-Myers said it would buy Seattle's Genetic Systems, another specialist in monoclonal antibodies, for $260 million.
Many experts think that takeovers will benefit the development of biotechnology. Most of the 200 or so small, research-oriented companies in the industry may need the resources and expertise of a large corporation to bring their discoveries quickly and successfully to market. The question remains whether or not biotech innovation will continue to flourish under the banner of the FORTUNE 500. Hybritech President David Hale, for one, thinks that it will. Says he: "We will continue to operate independently, and we feel that the company can still foster its entrepreneurial atmosphere as a subsidiary of Lilly."
Despite the talk of takeovers, the industry's current leaders seem determined to remain independent. Says Cetus' Fildes: "I can't predict the future, but I can tell you that Cetus is definitely not interested in being acquired by a large drug company. We think we have the products, the financing and the experienced people to build a very successful business on our own." Echoes Swanson of Genentech: "I believe we are well on our way to building a major, profitable pharmaceutical company." But Genentech, Cetus and the other pioneers of the brave new world of biotech still have a long way to go. --By Charles P. Alexander. Reported by Cristina Garcia/San Francisco