Research teams at Harvard University, the University of California at San Francisco (UCSF), and the City of Hope National Medical Center all played key roles in the development of the techniques, substances, and concepts utilized. However, Genentech, a small start-up biotechnology firm with no income and limited resources, was the organization first able to synthesize and patent human insulin, resulting in a royalty agreement with Eli Lilly. This paper contends that Genentech's commercial success can be understood through contrasting and comparing its goals with those of university departments, such as Harvard or UCSF.
While many authors have characterized the insulin research as a "race"—where researchers are solely focused on appropriating the commercial benefits of gene expression2—a great deal of insight is gained by analyzing the heterogeneity of these groups, the different strategies they pursued, and the divergence of their goals. Further, the insulin research, which resulted in the first significant commercial application of recombinant deoxyribonucleic acid (rDNA), conditioned the future organization of university-industry interaction. Genentech's success, often cited as a catalyst to investment in biotechnology, had the additional consequence of providing a framework for complementary university-industry interaction.
The insulin research was effective in demonstrating the relative strengths and weaknesses of firms and universities. In a nutshell, firms face strong incentives to produce products or processes in a minimum-cost manner. To achieve this goal, small start-up firms attempt to focus their efforts on a small number of projects. If these projects are unsuccessful, the firm will go bankrupt. Conversely, successful projects result in financial benefits to the scientists and investors in the corporation. In contrast, the mission of a university department or researcher is not so neatly characterized. At the very least, senior university researchers attempt to achieve three distinct goals: the training of graduate students and postdoctoral fellows, the resolution and explication of discipline-specific research inquiries, and the production of information that will be appropriable by the lab and the university. These three goals compete for priority. In other words, university researchers face trade-offs between devoting resources towards a project with potential commercial applications and devoting those resources towards the training of students and the development of experiments that will answer general scientific questions. Commercial firms do not face these trade-offs. This straightforward difference sheds light on the particular pattern of research relationships observed within this case study and, more consequentially, helps explain the success or failure of these research relationships.
The paper is organized as follows. The first three sections summarize the