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The Biotech Industry: 30 Years of Failure, Starting with Genentech

Jan. 09, 2007 10:25 AM ETRoche Holding AG (RHHBY)3 Comments
H.S. Ayoub profile picture
H.S. Ayoub

Biotechnology as a business arguably began with the birth of Genentech (DNA) 30 years ago in 1976. The company had a successful IPO four years later in 1980, which motivated a flurry of other biotech ventures to seek Wall Street’s vast wealth. These companies, which included Genentech, Chiron - now part of Novartis (NVS), Biogen - now Biogen Idec (BIIB), Amgen (AMGN), and Genzyme (GENZ), marked the beginning of a new revolution in medicine.
genentech logo
This first wave of excitement for the biotech industry was full of hope as many argued that traditional pharmaceutical research, relying mostly on chemistry to formulate new drugs, would slowly succumb to the new fields of recombinant technology, molecular cloning, RNA interference, viral vectors, and other cutting edge sciences.

Many believed then, and many still do now, that pharmaceutical giants Pfizer (PFE), Johnson & Johnson (JNJ), Eli Lilly (LLY), Bristol-Myers (BMY), and others, could not possibly keep up with the wholly fragmented, albeit, singularly focused research of the many tiny biotech ventures springing up seemingly over night.

The evidence however points to the contrary; the biotech industry has failed so far.

In his new book, Science Business: the Promise, the Reality, and the Future of Biotech, Harvard business professor Gary P. Pisano provides eye opening proof showcasing how the biotech industry has failed in its attempt to function as a science-based business.

A Losing Industry
Consider the following observation: from the year 1975 through 2004 the biotech industry as a whole has seen an increasing trend in sales, but total operating income before depreciation is essentially zero. In fact, if you remove the top ten companies; Amgen, Genentech, Genzyme, Gilead (GILD), Biogen, Biovail (BVF), Cephalon (CEPH), ImClone (OTC:IMCL), KOS Pharmaceuticals (KOSP), and Chiron, the rest of the

This article was written by

H.S. Ayoub profile picture
Dr. Ayoub received his B.Sc. in Human Biology from the University of Toronto, and his Doctorate of Medical Dentistry from Nova Southeastern University in Fort Lauderdale. Dr. Ayoub had always been a keen observer of future trends, especially in science and medicine. This ability, coupled with his passion for journalism and writing, provided all the motivation necessary to establish the BioHealth Investor. Visit his site: BioHealth Investor (http://biohealthinvestor.com/)

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