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Case Study 5-2
IHP 600-Q4476
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The biotechnology industry has attracted over $100 billion dollars of venture capital
every decade solely due to a ton of experiments involving the alterations of DNA molecules
(Pisano,2006). During the 1970’s venture capital wasn’t as big as it is today, and infact attracted
around $10 to $20 million dollars annually (Hardymon F & Nicholas T, 2012). Similarly, in the
1970’s the case study by Hardymon and Nicholas, Kleiner- Perkins and Genentech: When
Venture Capital Met Science, venture capitalist Robert Swanson and biochemist Herbert Boyer
found a way to experiment on recombinant DNA research by getting funded through a private
sector instead by the government (Hardymon F & Nicholas T, 2012). Eventually when
Genentech was created, Swanson and Boyer were able to avoid political issues like ethical
concerns and federal regulations by getting funded by Kleiner-Perkins (Hardymon F & Nicholas
T, 2012). The safety of experimenting with gene technology concerned many scientists because
“of the use of viral genes in recombinant DNA experiments and the susceptibility of laboratory
workers and the environment more generally to biohazards” (Hardymon F & Nicholas T, 2012).
“The congressional hearings of the Recombinant DNA Research Act of 1977 revealed that
although the National Institute of Health (NIH) had already established guidelines and
regulations for recombinant DNA research, they were not mandatory unless they were funded by
the government” (U.S. Congress, 1977).
Another issue that Swanson and Boyer were facing was money. Swanson estimated the
startup cost to be around $500,000 and funding in the biotechnology world were limited.
Swanson and Boyer tried to get Kleiner-Perkins to invest just that amount but were only able to
receive $100,000 which encouraged both Swanson and Boyer to negotiate other contracts
(Hardymon F & Nicholas T, 2012). University of California San Francisco involved co-owning
patents as well as property rights positions. Eventually the financial outcome favored Genentech
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by growing it into a multi-billion-dollar company which also led to more partnerships and
financial relationships (Hardymon F & Nicholas T, 2012). b
On August 21, 1978, Genentech developed the first genetically engineered human
insulin, Humulin. The key issues in this study included difficulty pitching a new idea, funding,
investments in plants, and scientists as well as regulations. Despite the issues that arose,
Swanson and Boyer were very strategic when it came to a simple solution, collaborations. They
were able to develop and commercialize Humulin despite it being a start-up by collaboration
with Eli Lilly. University of California San Francisco and Stanford Research Institute were also
important collaborations there were made with Genentech. This collaboration allowed the
organizations to identify differentiated sources of knowledge.
Alternative solutions like addressing ethics in drug development help questioning the
morality of genetically engineered medicines. Paying close attention to experimental methods of
reporting as well as incorporating a careful design in drug development would help researchers
explore more natural resources. This would not only help the moral aspect of drug production
but would also allow the company to encourage other companies to do the same. Educating the
general population on advantages of gene regeneration and how it can be beneficial would help
tackle some of the issues people may have in regard to the morality. Another alternative solution
would be to seek government funding instead of just from private sectors. This would provide
companies with all the funding they would need in order to conduct the experiment. Companies
would no longer need to compromise their research or development strategies.
The effectiveness that Genentech was capable of approaching is highlighted in their
results. They were the first company to develop the first genetically engineered human insulin.
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This impacted many people not just in the United States, but also internationally because now
diabetic patients would have access to human insulin therapies! The synthetic human insulin
produced by Genentech helped change many biotechnology companies and opened many more
doors in pharmaceuticals.
References:
Pisano, G. P. (2006, October). Can science be a business? lessons from Biotech. Retrieved June
29, 2016, from http://sciencepolicy.colorado.edu/stu dents/envs_5100/Pisano.pdf
Hardymon, F., & Nicholas, T. (2012, October 27). Kleiner-Perkins and Genentech: when
venture capital met science. President and Fellows of Harvard College.
U.S. Congress. (1977, March). Recombinant DNA research act of 1977: hearings before the
Subcommittee on Health and the Environment of the Committee on I. 480. Washington: U.S.
Government Printing Office.
