Book Review: Genentech and the Rise of Biotech Business

Overview of Hughes's Genentech

In Genentech, Sally Smith Hughes examines the remarkable rise of the Genentech company, an industry pioneer in the field of genetic engineering. The basic premise of Hughes's book is that Genentech radically transformed biotechnology and made a broader impact beyond the medical technology and science sectors. Themes Hughes addresses include the business practices and processes needed to start a radical, innovative firm — particularly one with a business model based on science. Another major theme is intellectual property, a central concern for the pharmaceutical industry, which eventually became heavily and inextricably entrenched in genetic science. Hughes also covers ethics, especially the conflicts of interest that can arise between the altruistic aims of academia and applied science and the commercial goals of a profit-driven enterprise.

Hughes offers an overview and history of the firm, which was created in 1976 by Herbert Boyer and Robert Swanson. The partnership between Boyer and Swanson is one of the main reasons for Genentech's success. Boyer was the intellectual force behind the business as a microbiology professor at the University of California. His research provided the intellectual property underpinning the Genentech business model, and Boyer remained cognizant of the commercial potential of that research. Swanson's input as a venture capitalist was critical for bringing Boyer's ideas to market and for devising creative methods of marketing experimental, advanced scientific practices. The story of Genentech thus encapsulates all the book's main themes: the importance of intellectual property, the means by which science and medicine become big business, and the ethical implications of fusing humanitarian research with profit-driven enterprise.

Business Processes and the Challenge of Launching a Biotech Startup

The business processes sections of Genentech are of particular interest to the case study analyst or business student who wishes to gain insight into the perseverance, patience, and persistence needed to launch a risky business venture. Hughes addresses the importance of taking risks in business and being willing to endure many years of funding shortfalls and debt before receiving even a modicum of profit. With Swanson's help, Boyer was able to pitch his research concepts and his vision for genetic engineering technologies. As business-minded as it can be, the pharmaceutical industry did not immediately respond, and it took years before Boyer and Swanson gained traction.

To succeed, Boyer and Swanson had to overcome innumerable hurdles, not least of which was the regulatory environment governing biotechnology. Hughes also shows how public perceptions about genetic engineering needed to change, which required deft marketing in an era before social media. Had Boyer and Swanson had access to social media when launching Genentech, they would likely have been better equipped to rebrand genetic engineering and drive inbound demand for their product. Dealing with government regulations and federal restrictions proved an even bigger challenge for the fledgling firm.

Another major challenge the venture faced was navigating the legal and moral ambiguities of their project. Although Boyer believed in his business and in its potential to save lives and improve quality of life, there was no legal precedent for what they were proposing. As Hughes puts it in the prologue, Boyer and Swanson had to "run the gauntlet of legal unknowns in patenting living things" (Hughes 3). The three "living things" for which Boyer first received patents included human growth hormone, insulin, and interferon. Receiving patents on living things was challenging enough, but Boyer also had to weave marketing methods into his pitch to both the government and to potential investors — all the while maintaining his legitimacy within the scientific community. Hughes shows what a deft balance this required: remaining firmly established as a man of science while also acting as an astute businessman. For instance, Boyer had to position interferon as a sort of "miracle drug," even though doing so conflicted with the basic principles of science, which avoids making outlandish and generalized claims (Hughes 4).

Most importantly regarding business practices, Hughes shows how Boyer used a creative process to achieve the Genentech goals by divorcing his work from the university sector. While perhaps not the first instance of academia and science fusing with big business, it was a remarkable shift to move from a university-funded research environment to one funded by corporate, private-sector interests. It was this fusion of business and academia that Boyer transformed into what Hughes describes as nothing short of a revolution, establishing the precedent that "molecular biology was becoming practical, profitable, and controversial in a manner never before experienced" (Hughes 4).

Their risks and hard work paid off. Shortly after shifting their corporate structure and business practices, Boyer and Swanson witnessed a startlingly high IPO that produced the "largest gain in stock market history" (Hughes 4). Some of those gains were speculative and artificial, but they demonstrated how hungry investors were for new ideas and for the potential that genetic engineering seemed to offer a stagnant pharmaceutical industry. Prior to Genentech, celebrated biologists such as Watson and Crick had remained firmly attached to their identity as pure scientists, unwilling to align with corporate interests. The concept of pure science divorced from business created challenges for Boyer and Swanson, who had forged a new identity — what Hughes calls the "entrepreneurial biologist" (5). Doing so unleashed a torrent of ethical questions and legal conundrums that transformed the business landscape and the practice of science itself.

Intellectual Property and the Conflict Between Secrecy and Scientific Openness

Hughes positions much of the intellectual property discussion from a business perspective. By publishing the results of their research in scientific journals, the Genentech company risked divulging its secrets to potential competitors. Protecting intellectual property therefore conflicted with the need to at least appear to retain scientific integrity. As Hughes points out, it was Swanson who was most averse to publishing in peer-reviewed journals: "his instinct was to keep experimental findings secret to protect the company's intellectual property," which "dismayed" the scientists (np). Even when peer-reviewed journals are accessible only through fee-per-access scholarly databases closed to the general public, the guiding principle of science remains openness and transparency of methods and findings.

Business, by contrast, depends on secrecy and the protection of intellectual property. Establishing a business whose core product is science creates a conundrum that Swanson and Boyer had to resolve effectively if theirs was to be a successful endeavor. Boyer was the one who found the middle path, according to Hughes, encouraging the scientists employed by Genentech to publish their findings. Whether Boyer genuinely believed this was good marketing practice or sincerely embraced scientific openness remains unknown. Either way, the methods Boyer and Swanson used to blend science with business transformed biotech. Hughes shows how the Genentech model spilled over into other industries that rely on scientific research for product development — a legacy that continues to shape how corporations engage with academic knowledge.

Conclusion: Genentech's Legacy for Business and Science

Genentech offers much food for thought and is equally applicable to business students and students of science. In addition to the discussion of business processes and practices, business and science ethics, and intellectual property dilemmas, Hughes shows how potentially risky companies are formed through perseverance and how corporate structure and culture shape business practices. Hughes also addresses the potential for business, academia, and science to find points of convergence that benefit all three. Growing the economy and creating multiple revenue streams does not necessarily have to come at the expense of diluting science or academic inquiry.

Moreover, Hughes discusses the different methods and roles of risk management in science versus business. In science, risk is managed through carefully considered procedures and the ethical guidelines of academic or scientific councils; in business, risk frameworks are comparatively looser. In both cases, foresight and strategic planning are required to mitigate risk and ensure success. The success of Hughes's book lies in its cogent analysis of one of the twentieth century's most important and innovative biotechnology firms — one whose influence on the relationship between science and commerce continues to be felt across medicine, law, and academic research today.

Works Cited

Hughes, Sally Smith. Genentech. Chicago: University of Chicago Press, 2011.

MacGilliravy, M. H., Baptista, J., and Johanson, A. "Outcome of a four-year randomized study of daily versus three times weekly somatropin treatment in prepubertal naive growth hormone-deficient children. Genentech Study Group." The Journal of Clinical Endocrinology & Metabolism, Volume 81, Issue 5, 1 May 1996, Pages 1806–1809. https://doi.org/10.1210/jcem.81.5.8626839

Mauras, Nelly, Attie, Kenneth M., Reiter, Edward O., et al. "High Dose Recombinant Human Growth Hormone (GH) Treatment of GH-Deficient Patients in Puberty Increases Near-Final Height: A Randomized, Multicenter Trial." The Journal of Clinical Endocrinology and Metabolism, Vol. 85, Issue 10, 1 Oct. 2000, pp. 3653–3660.

Ratner, Mark. "Genentech Discloses Safety Concerns Over Avastin." Nature Biotechnology, Vol. 22, No. 1198, 2004, pp. 1004–1198. doi:10.1038/nbt1004-1198