Genentech - History of Business in the U.S.Identification: American biotechnology corporation
Date: Founded on April 7, 1976
Significance: The advent of recombinant deoxyribonucleic acid (DNA) technology created unprecedented opportunities to develop and market a new type of medicine. Genentech was the first company to take this promising but untried technology into the business world and thus started the multibillion-dollar biotechnology industry.
In 1973, Herbert Boyer and Stanley Cohen pioneered recombinant DNA technology when they spliced frog genes into a bacterium. In 1976, venture capitalist Robert A. Swanson met with Boyer for a ten-minute meeting that stretched into three hours. Swanson’s infectious enthusiasm for recombinant DNA technology captivated Boyer, who left academia to cofound Genentech with Swanson.
Genentech used genetically engineered microorganisms to synthesize a new category of drugs. Its scientists succeeded in producing somatostatin, a human protein, in a microorganism in 1977 and in cloning human insulin and human growth hormone in 1978 and 1979, respectively. Genentech went public in 1980, and its stock rocketed from$35 to $88 a share in less than an hour, which constitutes one of the largest stock run-ups ever.
In 1982, Genentech licensed the right to market human insulin, the first drug made by recombinant DNA technology, to Eli Lilly, and in 1985, Genentech received Food and Drug Administration (FDA) approval to market its first product, Protropin (somatrem, a polypeptide hormone), for children with growth hormone deficiency. In the following years, it has created other products using DNA recombinant technology to treat diseases and conditions, including cancer, rheumatoid arthritis, stroke, heart attack, cystic fibrosis, allergic asthma, plaque psoriasis, and macular degeneration.
In 2007, Genentech’s netincomewas $2.8 billion, a 31 percent increase fromthe previous year, and its total operating revenue was $11.7 billion, a 26 percent increase from the previous year. Its diluted earnings per share were $2.79, a 31 percent increase from2006.
Michael A. Buratovich
See also: Genetic engineering; Health care industry; Industrial research; Patent law; pharmaceutical industry.