|Biotechnology and the Future of World Agriculture (GRAIN, 1991)|
'We biotechnologists got our message out to the world about fifteen years ago and we said, "There is a revolution coming. "' (P.S. Carlson of Crop Genetics Int'l, 1988) (1)
'The trouble with revolutions is that they get in the hands of the wrong people.' (Raymond Chandler, novelist, 1943) (2)
'The dream is dead.' In these four words The Economist summarized a feeling that many observers of the biotech industry had when the Swiss Pharmaceutical giant Hoffmann-La Roche took over biotechnology's shining star: Genentech. (3) The dream was about entrepreneurial success in biotechnology: university professors with sharp brains and commercial minds setting up small biotech companies that could grow into multimillion dollar empires. The parallel with the computer industry, where such companies as Apple, starting from scratch, are now challenging IBM and others, was often drawn. The dream was also about a highly diverse biotechnology sector with hundreds of independent small biotechnology companies competing shoulder to shoulder with large transnational corporations, thus guaranteeing a highly dynamic interaction responding to the real needs of the marketplace.
If any company stood a chance in following the 'Apple example', it was San Francisco's Genentech. Founded as one of the first 'biotech start-up' companies in 1976, it has, indeed, been a rising star. Putting biotechnology to use in human health care, the company seemed well on its way to making the dream come true: total sales went up from $90 million to $400 million between 1985 and 1989, while net profits grew from $5.6 million to $44 million over the same period. (4) Among the 'new biotechnology firms' (NBFs) it became unquestionably the most successful. While most of the other NBFs are deep in the red as promising R&D does not automatically translate to marketable products, Genentech already had two genetically engineered 'blockbuster' drugs (t-PA and hGH) on the market bringing in $318 million in 1989.5 Even those analysts who predicted a total shakeout in the biotech industry, usually pointed to Genentech as one of the few companies likely to make it on its own feet.
That was not to be. The bid of Hoffmann-La Roche amounted to a staggering $2.1 billion for 60% of the company's shares, an offer that could not be refused. Additionally, this sturdy pharmaceutical giant from Switzerland has the right to buy the remaining 40% at an already agreed price. Many industry representatives expect that the Genentech buy-out will trigger-offa whole series of further acquisitions of the NBFs working on genetically engineered health-care products. In fact, in terms of who controls the research, the question of whether such an acquisition wave will materialize or not is of limited importance. The terms of the research for both subsidiaries and NBFs are set mostly by the multinationals. This is why The Economist describes NBFs es 'research boutiques working on behalf of traditional pharmaceutical companies.' (6)