The birth of the modern biotechnology industry can be traced to the early 1970s, with the discovery of genetic engineering techniques, such as recombinant DNA methods and hybridoma production. These discoveries were made by biochemists and molecular biologists, many of whom were working at large academic medical centers.

The formation of Genentech is often considered the starting point of the biotechnology industry. Genentech was founded in 1976 by University of California, San Francisco, scientist Herbert W. Boyer and venture capitalist Robert Swanson. In 1978, the company announced that it had successfully cloned a human insulin gene using recombinant DNA technology. This discovery was licensed to Eli Lilly, the largest U.S. producer of insulin, and in 1982 recombinant human insulin was the first recombinant drug to gain Food and Drug Administration (FDA) approval. Human insulin was considered a significant advance in the treatment of diabetes, since a number of diabetics were allergic to traditional insulin extracted from the pancreatic glands of pigs and cows.

Genentech went on to develop and market its own recombinant drugs, the first being recombinant human growth hormone, which was approved in 1986 for use in children with a rare form of dwarfism caused by a lack of sufficient endogenous growth hormone. Prior to the development of Genentech’s human growth hormone, these children were treated with growth hormone obtained from cadaver pituitary glands. Problems with this material included periodic shortages and also, rarely, the development of a lethal neurodegenerative disease called Creutzfeldt-Jakob disease, which came from an undetectable infectious agent found in cadaver pituitary tissue.

Another example of the medical advances and commercial successes that could be obtained from genetic engineering comes from Baxter’s recombinant factor VIII (Recombinate), which was developed by the Genetics Institute, then licensed to and manufactured by Baxter. Factor VIII is a blood coagulation protein missing in hemophilia A, the genetically inherited bleeding disorder that afflicts about 20,000 males in the United States. Prior to the availability of recombinant Factor VIII, the protein was collected from pooled human blood which, prior to the use of the HIV test in 1985, was often contaminated with the AIDS virus. As a result, almost all hemophilia A patients who received Factor VIII from pooled human blood before 1985 were infected with HIV, and many have died of AIDS. Similarly, hemophiliacs had also contracted hepatitis when these viruses contaminated the blood pool. Recombinant human Factor VIII, approved in 1992, eliminated the constant problem of blood contamination and offers lifesaving benefits to hemophilia A patients (Kaufman, 1989).