Word: genentech
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Skeptics have wondered whether genetically engineered drugs might become the synfuels of the 1980s, crippled by uneconomical costs and uncertain usefulness. Now there is early evidence that the skeptics may be wrong. Genentech, an industry leader, licensed for sale a gene-spliced substance that has just become the first such medicine ever approved for human use by the U.S. Food and Drug Administration. Says Dr. John Potts, professor at Harvard Medical School and chief of medical services at Massachusetts General Hospital: "This is really a landmark because it is the first practical development of a useful medicine by new techniques...
...What Genentech has done is to develop the first insulin drug that is made with a synthetic duplicate of human genes. Called Humulin, it differs from insulin products now on the market, all of which are made from cells extracted from animals, particularly cattle. Humulin can be used to treat the approximately 8% of the world's 70 million diabetics (including 10.3 million in the U.S.) who are allergic to the animal product and have previously had to seek more complex treatments with other drugs like steroids...
...about what customers would buy them. Says Cetus Corp. Vice President William Amon: "There are far more technical opportunities than there are sensible market opportunities." Other new ventures ran into quality control problems when they mass produced drugs that were being made only in a laboratory test tube. Notes Genentech President Robert Swanson: "A number of companies have severely underestimated the enormous effort and specialized skills required to take a technical breakthrough and put it in a bottle ready for market...
Like many new fields in the early stages of development, there are now simply too many firms trying to capture the same market. These include new, well-financed companies like Genentech and Cetus, big drug companies like Merck and Eli Lilly, plus a host of smaller, undercapitalized firms. Observes Jonathan Ziegler, vice president of Sutro & Co., the San Francisco brokerage house: "There is duplication of effort on a grand scale in this industry. Probably 150 of the 200 companies are working on the same five products...
...payoffs fading, venture-capital firms that have been the Daddy Warbucks of the industry are tightening their purse strings. They are now slow to provide more money to companies for research. Says Brooke Byers, a partner in the San Francisco firm of Kleiner, Perkins, Caufield & Byers, which helped start Genentech: "It's no longer promise but products that companies are to be judged on." Some experts believe that 90% of the new firms may run out of money years before their products are ready for market...