¹ See Piore, Michael J. and Sabel, Charles F., The Second Industrial Divide: Possibilities for Prosperity (New York, 1984)Google Scholar; McCraw, Thomas K., ed, America versus Japan (Boston, 1986)Google Scholar; Tedlow, Richard S., New and Improved: The Story of Mass Marketing in America (New York, 1990)Google Scholar; Morone, Joseph, “Winning in High-Tech Markets: The Role of General Management (Boston, 1993)Google Scholar; Lazonick, William, Competitive Advantage on the Shop Floor (Cambridge, Mass., 1990)Google Scholar; Nelson, Richard R., ed., National Innovation Systems: A Comparative Analysis (New York, 1993)Google Scholar; Glasmeier, Amy, “Technological Discontinuities and Flexible Production Networks: The Case of Switzerland and the World Watch Industry,” Research Policy 20 (Oct. 1991): 469–85CrossRefGoogle Scholar; Graham, Margaret B. W., RCA and the VideoDisc: The Business of Research (New York, 1986)Google Scholar; Rosenbloom, Richard S. and Cusumano, Michael A., “Technological Pioneering and Competitive Advantage: The Birth of the VCR Industry,” California Management Review 29 (Summer 1987): 51–76CrossRefGoogle Scholar; Richard S. Rosenbloom, Donald N. Sull, and Richard S. Tedlow, “Managerial Commitments and Technological Change in the US Tire Industry,” Harvard Business School Working Paper (1997); Henderson, Rebecca and Clark, Kim B., “Architectural Innovation: The Reconfiguration of Existing Product Technologies and the Failure of Established Firms,” Administrative Science Quarterly 35 (1990): 9–30CrossRefGoogle Scholar; Henderson, Rebecca, “Underinvestment and Incompetence as Responses to Radical Innovation: Evidence from the Photolithographic Alignment Equipment Industry,” Rand Journal of Economics 24 (Summer 1993): 248–70CrossRefGoogle Scholar; Teece, David and Pisano, Gary, “The Dynamic Capabilities of Firms: An Introduction,” Industrial and Corporate Change 3:3 (1994): 537–56CrossRefGoogle Scholar, this entire issue of the journal deals with organizational capabilities in different contexts. For guides to the economics literature on transitions, see Zucker, Lynne G., Darby, Michael R., and Brewer, Marilynn B., “Intellectual Human Capital and the Birth of U.S. Biotechnology Enterprises,” American Economic Review 88:1 (1998): 290–306Google Scholar; and Zucker, Lynne G. and Darby, Michael R., “Present at the Biotechnological Revolution: Transformation of Technological Identity for a Large Pharmaceutical Firm,” Research Policy 26 (1997): 429–46CrossRefGoogle Scholar

² Krimsky, Sheldon, Biotechnics & Society: The Rise of Industrial Genetics (New York, 1991), 1–13Google Scholar, provides a useful set of definitions and a brief historical sketch of the major developments in molecular genetics (in the 1950s and 1960s) that led (in the 1970s and 1980s) to a new form of biotechnology—one that manipulated the genes that govern the internal functions of the cell. See also Judson, Horace Freeland, The Eighth Day of Creation: Makers of the Revolution in Biology (New York, 1979)Google Scholar. Teitelman, Robert, Gene Dreams: Wall Street, Academia, and the Rise of Biotechnology (New York, 1989), esp. 4–10Google Scholar, views the phenomenon from its Wall Street connections. For a longer historical perspective, see Bud, Robert, The Uses of Life: A History of Biotechnology (Cambridge, U.K., 1993)Google Scholar, which deals with the past century.

³ For an excellent discussion of this latter transition, see Gambardella, Alfonso, Science and Innovation: The US Pharmaceutical Industry during the 1980s (Cambridge, U.K., 1995), esp. 23–32CrossRefGoogle Scholar. See also Henderson, Rebecca, “The Evolution of Integrative Capability: Innovation in Cardiovascular Drug Discovery,” Industrial and Corporate Change 3:3 (1994): 607–30CrossRefGoogle Scholar.

⁴ For a discussion of these networks, see Galambos, Louis, with Sewell, Jane Eliot, Networks of Innovation: Vaccine Development at Merck, Sharp & Dohme, and Mulford, 1895–1995 (New York, 1995)Google Scholar. See also Galambos, Louis and Sturchio, Jeffrey L., “The Pharmaceutical Industry in the Twentieth Century: A Reappraisal of the Sources of Innovation,” History and Technology 13 (1996): 83–100CrossRefGoogle Scholar. Volume 20 (Oct. 1991), of Research Policy is devoted entirely to “Networks of Innovators,” by which the editors and authors mean the type of contractual relationships that accompanied the transition to biotechnology. For an excellent overview, see Chris DeBresson and Fernand Amesse, “Networks of Innovators: A Review and Introduction to the Issue,” 363–79. For a general historical evaluation and taxonomy of strategic alliances, see Mowery, David C. and Teece, David J., “Strategic Alliances and Industrial Research,” in Engines of Innovation: U.S. Industrial Research at the End of an Era, eds. Rosenbloom, Richard S. and Spencer, William J. (Boston, 1996), 111–29Google Scholar.

⁵ Chandler, Alfred D. Jr., Scale and Scope: The Dynamics of Industrial Capitalism (Cambridge, Mass., 1990)Google Scholar; Williamson, Oliver E., The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting (New York, 1985)Google Scholar; for an update on transactions cost analysis, see the same author's “Hierarchies, Markets and Power in the Economy: An Economic Perspective,” Industrial and Corporate Change 4:1 (1995): 21–49CrossRefGoogle Scholar.

⁶ These issues are discussed, with various conclusions, in the following sources: Alfonso Gambardella, Science and Innovation, 61–81; Arora, Ashish and Gambardella, Alfonso, “The Changing Technology of Technological Change: General and Abstract Knowledge and the Division of Innovative Labour,” Research Policy 23 (1994): 523–32CrossRefGoogle Scholar; Pisano, Gary P., Shan, Weijian, and Teece, David J., “Joint Ventures and Collaboration in the Biotechnology Industry,” in International Collaborative Ventures in U.S. Manufacturing, ed. Mowery, David C. (Cambridge, Mass., 1988), 183–222Google Scholar. See also Holmstrom, Bengt, “Agency Costs and Innovation,” Journal of Economic Behavior and Organization 12 (1989): 305–27CrossRefGoogle Scholar. For an excellent quantitative map of the trends, see Joseph A. DiMasi, Elaine M. Healy, and Louis Lasagna, “Trends in the Introduction of New Drugs by Pharmaceutical Firms” (mss. courtesy of the authors).

⁷ For an important exception to the rule about the analysis of large-firm responses, see Zucker, Lynne G. and Darby, Michael R., “Present at the Biotechnological Revolution,” Research Policy 26 (1997): 429–46CrossRefGoogle Scholar. We provide a description and analysis of what Zucker and Darby refer to as the “generalizability of the transformation experience” (440).

⁸ By blocking the normal function of a particular enzyme, the scientists could prevent a specific biochemical sequence from taking place. This sequence might deal with such biological mechanisms as the human body's production of cholesterol or the process by which a virus multiplies.

⁹ Tagamet blocked the acid-secreting cells that were triggered by histamine (the H2 receptor). On Tagamet, see Molinder, Herdis K. M., “The Development of Cimetidine: 1964–1976: A Human Story,” Journal of Clinical Gastroentrology 19:3 (1994): 248–54CrossRefGoogle ScholarPubMed. See also the commentary in Arthur M. Louis, “SmithKline Finds Rich Is Better,” Fortune, 30 June 1980, 63–66. Showing the type of restraint one expects in popular articles, Louis concluded: “With Tagamet, SmithKline has become the most glamorous drug company of them all.”

¹⁰ The first Merck product was Vasotec, see Merck World 7 (Mar. 1986): 4–8Google Scholar; the second, was Mevacor, see Merck World 8 (Oct. 1987): 1–13Google Scholar. See also Lynn, Matthew, Merck v Glaxo: The Billion Dollar Battle (London, 1991), 191–94Google Scholar.

¹¹ IMS International, The Pharmaceutical Market World Review 1989 (1990), lists the 75 leading products in Table 85. See also IMS AG (U.K. Branch), The Pharmaceutical Market World Review 1990 (1991), Table 85.

¹² The companies which were continuing to develop new antibiotics were using the same style of research and development that had yielded penicillin, streptomycin, and tetracycline in the 1940s and 1950s. The firms screened tens of thousands of samples (of soil, for instance) to discover evidence of anti-microbial activity. Then, they attempted to isolate and analyze the active chemical so that they could use it as the basis for a new therapy; usually, this followed further chemical modification to improve its bioavailability and mitigate its sideeffects.

¹³ Chandler, Scale and Scope, provides the best historical treatment of the role of economies of scale and scope in the industries of the United States, Great Britain, and Germany from the late nineteenth century to the early 1960s. See Scherer, F. M. and Ross, David, Industrial Market Structure and Economic Performance (Boston, 1990)Google Scholar, for an analysis of the evidence from the vantage point of industrial organization theory.

¹⁴ Financial Times, 23 July 1992, 21–23; 27 Oct. 1992, 20; 23 Mar. 1994, I–VIII; Spiegel, Francis H. Jr., , “Strategic Alliances, With Care and Creativity,” Financial Executive 9 (Mar./Apr. 1993): 28–31Google Scholar; Wall Street Journal, 7 Mar. 1996, 1, 12; Sharp, M. L., “Pharmaceuticals and Biotechnology: Perspectives for the European Industry,” in Technology and the Future of Europe: Global Competition and the Environment in the 1990s, eds. Freeman, Christopher, Sharp, Margaret, and Walker, William (London, 1991)Google Scholar; Natasha Alperowicz, “Transforming Hoechst,” Chemical Week, 22 May 1996, 22–26. Hoechst had acquired Marion Merell Dow. Oswald, Sharon L. and Boulton, William R., “Obtaining Industry Control: The Case of the Pharmaceutical Distribution Industry,” California Management Review 38 (Fall 1995): 140–42CrossRefGoogle Scholar. Consolidation was taking place at all levels of the industry. Between 1963 and 1993, the number of wholesalers fell from four thousand to seventy-four. Ibid., 146–47.

¹⁵ The last two structural cases involved IBM and AT&T. The Department of Justice (DOJ) abandoned the IBM case, and in 1982, DOJ settled with AT&T when the company signed the agreement that broke up the Bell System. Between 1982 and 1998, there were no major structural cases; the Clinton Administration seems now to have changed that policy by bringing suit against Microsoft.

¹⁶ Orsenigo, Luigi, The Emergence of Biotechnology: Institutions and Markets in Industrial Innovation (New York, 1989), esp. 72–98Google Scholar. On the unusual case of Genetics Institute and Harvard University, see Bio/Technology (Dec. 1983): 84–85; and Kenney, , Biotechnology: The University-Industrial Complex (New Haven, 1986), 78–83CrossRefGoogle Scholar.

¹⁷ See Noble, David F., Forces of Production: A Social History of Industrial Automation (New York, 1984)Google Scholar, for some interesting exceptions to the norm.

¹⁸ This was particularly true during the early phase of development, from 1971 through 1980. Dibner, Mark D., “Commercial Biotech's Founding Fathers,” Bio/Technology 5 (June 1987): 571–72Google Scholar; Kenney, Biotechnology, 28–72, 90–106.

¹⁹ See Figure 2.1 for the “Aggregate Growth of New Biotechnology Enterprises, 1973–1987,” in Krimsky, Biotechnics & Society, 31. There were biotech companies—for example, Cetus (1971)—established before scientists developed (1973) the new technique for cutting, splicing, and reproducing DNA by using plasmids.

²⁰ Cohen, Stanley N., “The Manipulation of Genes,” Scientific American 233:1 (1975): 24–33CrossRefGoogle ScholarPubMed. On the mounting public and professional fear, see ibid., 32–33; Bud, The Uses of Life, 174–77; Hall, Stephen, Invisible Frontiers: The Race to Synthesize a Human Gene (Redmond, 1987), 41–68Google Scholar; and Bio/Technology (Oct. 1983): 644. The latter publication reported that as late as 1983 “nearly two-thirds of the American people appear to believe society should exercise caution in proceeding with genetic engineering….” Wright, Susan, Molecular Politics: Developing American and British Regulatory Policy for Genetic Engineering, 1972–1982 (Chicago, 1994)Google Scholar, provides an excellent comparative history of the rise and fall of concern about and controls on genetic engineering.

The public concern and the policy issues did not go unnoticed in commercial circles, see Wall Street Journal, 13 Aug. 1974; 28 Feb. 1975; 21 Mar. 1975; 28 Sept. 1976; 1 Oct. 1976; and 13 July 1984; Business Week, 9 Aug. 1976, 66–67; and The Economist, 25 Jan. 1975, 25; 8 Nov. 1975, 18; 10 July 1976, 79; and 28 Aug. 1976, 13.

²¹ Business Week, 12 Dec. 1977, 128, 132. McKelvey, Maureen D., Evolutionary Innovations: The Business of Biotechnology (Oxford, 1996), esp. 91Google Scholar and following, provides an insightful description and analysis of Genentech and its links with the Swedish firm Kabi and with Eli Lilly.

²² On Genentech, see Teitelman, Robert, Gene Dreams: Wall Street, Acodemia, and the Rise of Biotechnology (New York, 1989)Google Scholar. See also Teitelman's, Profits of Science: The American Marriage of Business and Technology (New York, 1994)Google Scholar. As late as 1979, there had still been concern about the nature of the controls the federal government might impose on rDNA research; see Business Week, 24 Sept. 1979, 64, 68. The election results in 1980 appear, however, to have erased those fears in the United States.

²³ On Silicon Valley, see Saxenian, Anna Lee, Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (Cambridge, Mass., 1994), 11–27Google Scholar. On biotech scientific developments, see, Anderson, W. French and Diacumakos, Elaine G., “Genetic Engineering in Mammalian Cells,” Scientific American 245 (July 1981): 106–21CrossRefGoogle ScholarPubMed. On urban financial support, see James R. Murray et al., “The Chicago Model for Developing Biotechnology Enterprise,” Bio/Technology (July 1983): 407–10. See also the review of state, regional, and national programs in the supplement to Bio/Technology (Dec. 1983); and the information on the U.S. Small Business Innovation Research Program in Bio/Technology (Jan. 1984): 22. For a later, more reserved evaluation, see Mark Ratner, “Regional Development: The Role and Effectiveness of Governmental Agencies,” Bio/Technology (July 1989): 671–72, 678–81.

²⁴ Zucker, Lynne G. et al. , “Intellectual Human Capital and the Birth of U.S. Biotechnology Enterprises,” American Economic Review 88:1 (1998): 290–306Google Scholar. R&D limited partnerships—in which investors bought a stake in a specific research project—became popular in the United States in the 1980s, just as biotech venture funds did in Britain. Direct government financing was substantially more important in Europe than in the United States. Bio/Technology (Sept. 1983): 546–48, 552, 554–59.

²⁵ Monoclonal antibodies are homogeneous, biological molecules produced from a single cell line; they recognize and react against a specific chemical structure; their specificity and relative ease of manufacture made them promising candidates as therapeutic agents against a variety of diseases. Cambrosio, Alberto and Keating, Peter, Exquisite Specificity: The Monoclonal Antibody Revolution (New York, 1995)Google Scholar; Business Week, 18 May 1981, 147–48, 150, 154, 156. Bio/Technology (Apr. 1983): 197–98; (June 1983): 313–14; (Sept. 1983): 534, 536; and (Nov. 1983): 736. See also Roland Carlsson and Cristina Glad, “Monoclonal Antibodies into the 90s: The All-Purpose Tool,” Bio/Technology (June 1989): 567–68, 570–73.

²⁶ Kenney, Biotechnology, 134, 156.

²⁷ Business Week, 18 Sept. 1978, reported Genentech's success in producing insulin in bacteria by means of rDNA. By 1982, Genentech's R&D expenditures were thus only 111 percent of its operating revenues—a low figure for the biotech companies. U.S. Office of Technology Assessment [herafter OTA], Commercial Biotechnology (1984), 271. Arthur Klausner, “And Then There Were Two,” Bio/Technology (July 1985): 605–12, offers a comparative analysis of Genentech and Cetus. See Werth, Barry, The Billion-Dollar Molecule; One Company's Quest for the Perfect Drug (New York, 1994)Google Scholar, for an exciting blow-by-blow account of Vertex Pharmaceuticals, a biotech closer than Genentech to the norm.

²⁸ The government as well as the business press added to the hype. See, for instance, Business Week, 22 Oct. 1979, 160, 164, 168, 172. A scientist with the OTA suggested modestly that biotech opened up “the possibility of building a sustainable future based on renewable resources.” See also Business Week, 30 June 1980, 48–9; 28 July 1980, 71.

As the 1980s boom got underway, the percentage of company founders coming from industry, as opposed to academia, steadily increased. Mark D. Dibner, “Commercial Biotech's Founding Fathers,” Bio/Technology (June 1987): 571–72.

²⁹ See, for instance, Gene Bylinsky, “DNA Can Build Companies, Too,” Fortune, 16 June 1980, 144–146, 149, 152–53. This article focused on the startup firm Biogen (organized in 1978) and its production of interferon. “Looking further ahead,” the author commented, “the possibilities seem almost boundless.” See also Gene Bylinsky, “Future Drugs That Will Be Lifesavers for the Industry Too,” Fortune, Dec. 1976, 162. On interferon, see Rubin, Suzie, “Biotechnology and the Pharmaceutical Industry,” Cancer Investigation 11:4 (1993): 451–57CrossRefGoogle ScholarPubMed.

While commercial outcomes were disappointing, the science/technology was progressing rapidly. For advances in sequencing DNA, for example, see Maxam, Allan M. and Gilbert, Walter, “A New Method of Sequencing DNA,” Proceedings of the National Academy of Science 74:2 (1977): 560–64CrossRefGoogle ScholarPubMed; and Sanger, F., Nicklen, S., and Coulson, A.R., “DNA Sequencing with Chain-Terminating Inhibitors,” Proceedings of the National Academy of Science 74:12 (1977): 5463–67.CrossRefGoogle ScholarPubMed Also, the polymerase chain reaction (PCR) provided biotech companies with the ability to make quickly and efficiently an almost unlimited number of copies of a particular DNA molecule. Dr. Kary B. Mullis discovered this process while working at Cetus Corporation in the mid-1980s. Kary B. Mullis, “The Unusual Origin of the Polymerase Chain Reaction,” Scientific American (Apr. 1990): 56–65; and Rabinow, Paul, Making PCR: A Story of Biotechnology (Chicago, 1996)Google Scholar.

³⁰ Compare Arthur Klausner, “Public Markets Favor Biotech Offerings,” Bio/Technology (June 1987): 548, with Klausner, “Stock Crash Could Squeeze Biotech Firms,” Bio/Technology (Dec. 1987): 1253–54. See also Lee Rauch, “Surviving the Funding Gap,” Bio/Technology (May 1989): 435–36, 440.

³¹ See Gambardella, Science and Innovation, esp. 61–81, 146–58, on microbial biochemistry and enzyme inhibition. We have drawn heavily upon this excellent study, even though our approach is somewhat different than Gambardella's. First, we distinguish between the transition to biochemistry/enzymology and the partially overlapping transition to molecular genetics/rDNA, whereas Gambardella describes these two developments as part of a single transformation in the industry. Second, we distinguish between the strategic alliances and the move into biotech, although we realize that these two phenomena had some similar outcomes. Third, we give less emphasis than Gambardella does to the relationships between firms and universities; these links were common elements in each of the industry's prior transitions, and we are trying to isolate what was particular to the most recent shift into biotech.

See also Pisano et al., “Joint Ventures and Collaboration,” 183–222. Despite the title of the book, the authors of this essay deal with collaboration as such, whether international or not. The authors conclude (193) that “The competitive advantage of NBFs [New Biotech Firms] is concentrated in product R&D. For established firms, in general, it lies in downstream activities (manufacturing, marketing) where they have many years of experience.” Pisano et al. analyze the collaborations from the perspective of appropriability and transfer costs.

See Kenney, Biotechnology, esp. 190–216, for a description that emphasizes the large chemical companies rather than pharmaceutical firms. Kenney, whose book is substantially less analytical than Gambardella's volume, observes (190) that “the large, relatively ponderous corporate bureaucracies (with a few exceptions) have had difficulty responding quickly to biotechnology's potential.” Sapienza, Alice M., “Technology Transfer: An Assessment of the Major Institutional Vehicles for Diffusion of U.S. Biotechnology,” Technovation 9 (1989): 463–78CrossRefGoogle Scholar, concludes that: “Pharmaceutical investment in biotechnology was prompted by declining technological performance.” The author comments on the “bureaucratic stolidity” of the large companies.

³² See the sources cited in n. 17 for background on the political and social uncertainties of the mid-1970s. It was unclear at that time whether companies could patent genetic innovations and it seemed possible that the federal government would introduce stringent, perhaps stifling, regulations on industrial uses of rDNA.

³³ On these aspects of innovation, see Galambos, Networks of Innovation, esp. 53–77.

³⁴ The best treatment of the “transition costs” (although they do not use this expression) is in Williams, Michael et al. , “Biotechnology in the Drug Discovery Process: Strategic and Management Issues,” Medicinal Research Reviews 13:4 (1993)CrossRefGoogle ScholarPubMed, which discusses Upjohn (426–31) and Berlex Laboratories (the U.S. subsidiary of Schering AG; 431–35). For some of Merck's transition costs see Zucker, Lynne G. and Darby, Michael R., “Present at the Biotechnological Revolution,” Research Policy 26 (1997): 429–46CrossRefGoogle Scholar; see also Galambos, Networks of Innovation, 197–205; and Orsenigo, The Emergence of Biotechnology, esp. 99–165.

³⁵ The best study is McKelvey, Evolutionary Innovations. Also see Business Week, 18 Sept. 1978, 31; 29 Oct. 1979, 134–45. In 1980, Lilly announced that it had committed $40 million to build new facilities for the production of human insulin using recombinant technology. Ibid., 4 Aug. 1980, 22. Later, Lilly acquired Hybritech. Wall Street Journal, 18 Dec. 1985, 43.

³⁶ Wall Street Journal, 19 Dec. 1984, 33. For the impact of the competition in Europe, see Wall Street Journal, 8 Mar. 1985, 35.

³⁷ On Chiron, see Arthur Klausner, “Chiron: Looking Good,” Bio/Technology (Feb. 1987): 121–22, 124, 126–27.

³⁸ Galambos, Networks of Innovation, 172–73, 181–205. While Chiron held the patent and Merck licensed the vaccine, Merck's Virus and Cell Biology team devoted many months of research to the improvements needed after receiving the vectors from Chiron. Interview, Edward M. Scolnick, 17 July 1995. Hilleman, M. R., Weibel, R. E., and Scolnick, E. M., “Recombinant Yeast Human Hepatitis B Vaccine,” Journal of the Hong Kong Medical Association 37:2 (1985): 75–85Google Scholar.

³⁹ The antigen-antibody response is a basic function of the human immune system. Antigens are substances not normally present in the body that stimulate an immune response. In this case, the antigen was being “expressed” in (that is, being produced by) the cellular machinery of the microbe E. coli.

⁴⁰ Bio/Technology (Feb. 1987): 103–04. Wall Street Journal, 11 Mar. 1985, 22. Arthur M. Louis, “SmithKline Finds Rich is Better,” Fortune, 30 June 1980, 63–66; this article, which was on Tagamet, did not mention biotech. At this time, other pharmaceutical firms were collaborating with biotechs in an effort to develop competing hepatitis B vaccines.

⁴¹ The Belgian government approved Engerix-B, SmithKline's new vaccine, in 1986. By the time the U.S. FDA approved the vaccine in 1989, SmithKline had merged with a British pharmaceutical company and become SmithKline Beecham. Under a 1988 licensing agreement, SmithKline paid Biogen royalties from the sales of the new vaccine. See Nature, 11 Dec. 1986, 506; Journal of the American Medical Association (hereafter JAMA) 261:22 (1989): 3278–81CrossRefGoogle Scholar; Dibner, Mark D., Biotechnology Guide U.S.A.: Companies, Data and Analysis (New York, 1988), 302Google Scholar. SmithKline continued its work on vaccines, in conjunction with Cetus. Orsenigo, Luigi, The Emergence of Biotechnology: Institutions and Markets in Industrial Innovation (London, 1989), 135Google Scholar.

⁴² Wall Street Journal, 24 Mar. 1995, B2; Dibner, Biotechnology Guide, 301–02.

⁴³ For an excellent discussion of Upjohn's entrance into biotechnology, see Williams et al., “Biotechnology in the Drug Discovery Process,” 426–31. See also Bio/Technology (Dec. 1983): 837. Dibner, Biotechnology Guide, 302. Squibb Corporation bought an equity interest in Cetus Corporation and launched a major joint venture in 1987. Bio/Technology (Aug. 1987): 752. For a good review of the collaborations in 1988–89, see Mark Ratner, “Dealing with Large Companies,” Bio/Technology (Oct. 1989): 1013–14, 1018–19. For the collaborations as of 1992, see The Boston Consulting Group, “The Contribution of Pharmaceutical Companies,” 111. The financial problems of the biotechs gave the large pharmaceutical companies an advantage in establishing collaborative and/or equity relationships at this time. When asked what the key business issues of the next decade would be, 36 percent of the biotechs identified financial questions. G. Steven Burrill, “The Promise of the Next Decade,” Bio/Technology (Oct. 1989): 1023.

⁴⁴ OTA, New Developments in Biotechnology: U.S. Investment in Biotechnology (1988), 3–4. On the resistance in Europe to biotechnology, see Marlis Buchmann, “The Impact of Resistance to Biotechnology in Switzerland: A Sociological View of the Recent Referendum,” Robert Bud, “In the Engine of Industry: Regulators of Biotechnology, 1970–86,” and Jasanoff, Sheila, “Product, Process, or Programme: Three Cultures and the Regulation of Biotechnology,” in Resistance to New Technology: Nuclear Power, Information Technology, and Biotechnology, ed. Bauer, Martin (Cambridge, U.K., 1995), 207–23, 293–309, and 311–31CrossRefGoogle Scholar respectively.

⁴⁵ John Gurnsey, “Biotechnology in Europe,” Bio/Technology (Sept. 1983): 561–64. The lack of venture capital in the early 1980s made the biotech startups dependent upon corporate support, government subsidies, or the U.S. financial markets. See also Susan Wright, “Molecular Politics in a Global Economy,” and Gottweis, Herbert, “The Political Economy of British Biotechnology,” in Private Science: Biotechnology and the Rise of the Molecular Sciences, ed. Thackray, Arnold (Philadelphia, 1998), 80–104 and 105–30Google Scholar respectively. Michael Stone, “European Community Approves Second Stage of Biotech Program,” Bio/Technology (Dec. 1983): 825–26; Stephanie Yanchinsk, “Biotechnology Taking Root in West Germany,” in ibid., (Apr. 1984): 291–92; and Longman, Roger, “Germany's Biotech Boomlet,” Start-Up (Windhover Information, Inc., Feb. 1998): 12–25Google Scholar. Longman noted that there were still “cultural and managerial obstacles” to the biotechs. On developments in France, see Bio/Technology (May 1983): 291–92, and (Apr. 1984): 145; on Holland, see Douglas McCormick, “Holland is Busy in Biotechnology,” ibid., (Sept. 1987): 911–13; on Sweden, see McKelvey, Evolutionary Innovations; Sapienza, Alice M., “R&D Collaboration as a Global Competitive Tactic—Biotechnology and the Ethical Pharmaceutical Industry,” R&D Management 19:4 (1989): 285–95Google Scholar.

It was not easy to close the gap: see Richard L. Hudson, “With a Small Budget, Britain's Celltech Fights to Stay in the Biotechnology Race,” Wall Street Journal, 19 Aug. 1985, 19. See also Bernard Dixon, “More Collaborations in British Biotech,” Bio/Technology (Feb. 1987): 112. On European startups, see ibid., (Nov. 1987): 1108. A number of American biotechs moved into this gap, establishing operations in Europe. See Nigel Webb, “Taking American Biotechnology Across the Atlantic,” ibid., (Mar. 1987): 222, 224, 226, 228; and Stephen M. Edgington, “Germany: A Dominant Force by the Year 2000?” ibid., (Aug. 1995): 752–54, 756. Other articles in the same issue consider developments in France (757–9), where there were still serious problems; in the Balkans (760–61), where the development was fragile; and in Scandinavia (763–64), where the outlook was promising. For recent developments, see David Firn, “Continental growth pushes European biotech towards the 21^stcentury,” Pharmaceutical Business News, 11 May 1998, 18–20.

⁴⁶ Schering-Plough was also working with Genex on other products. Dibner, Biotecnology Guide, 302. On Biogen, see Fisher, Lawrence M., “The Rocky Road From Startup to Bigtime Player,” Strategy & Business (Booz, Allen & Hamilton), Third Quarter, 1997Google Scholar. Gene Bylinsky, “DNA Can Build Companies, Too,” Fortune, 16 June 1980, 144–46, 149, 152–53; and Tabitha M. Powledge, “Biogen in Transition: From Research Specialist to Manufacturer,” Bio/Technology (July 1983): 398–405. For a table of equity investments in biotechs, 1976–80, see Wright, Molecular Politics, 88–90. See also Business Week, 22 Oct. 1979, 160; Bio/Technology (Dec. 1983): 840; Dibner, Biotechnology Guide, 300–2, lists equity relationships as of 1987. For a thorough review of the continuing importance of these links between biotechs and their pharmaceutical partners, see Longman, Roger and Roche, Kevin, “Biotech Deals by the Numbers,” In Vivo: The Business and Medicine Report 15:8 (1997): 16–20Google Scholar.

⁴⁷ Arthur Klausner, “And Then There Were Two,” Bio/Technology (July 1985): 605–12; Gambardella, Science and Innovation, Table 3.3. The race ended in a de facto tie. See Wall Street Journal, 24 Feb. 1984, 20; 17 May 1985, 6; 3 June 1985, 6; and 24 July 1985, 16.

⁴⁸ On the development of the various agreements, see Gambardella, Science and Innovation, Table 3.3. Wall Street Journal, 18 Jan. 1984, 34; and Gene Bylinsky, “Science Scores a Cancer Breakthrough,” Fortune, 25 Nov. 1985, 16–21.

⁴⁹ Gambardella, Science-and Innovation, 104. See also Wall Street Journal, 5 Mar. 1984, 56, on Hoffmann-La Roche. Boehringer Ingelheim International G.m.b.H. had purchased 4.9 percent of Genentech's shares in 1985 (Wall Street Journal, 1 Mar. 1985, 8), and by that time was already marketing Genentech's gamma interferon and its tissue-type plasminogen activator. By 1985, when Genentech had the second largest rDNA manufacturing facility in the world, it was threatening to become the first biotech to succeed in becoming a fully integrated pharmaceutical producer. Eli Lilly's dedicated insulin plant was the world's largest rDNA production facility. Bio/Technology (July 1985): 606.

⁵⁰ OTA, Biotechnology in a Global Economy (1991), 89. In 1987, Biogen sold its entire Geneva, Switzerland, research operation, including the contracts with the scientific staff, to Glaxo. Bio/Technology (Sept. 1987): 864. On the European industry's responses to biotech, see Margaret Sharp, “Pharmaceuticals and Biotechnology,” in ibid., esp. 222–25.

⁵¹ See, for instance, OTA, New Developments in Biotechnology, 4, U.S. Investment in Biotechnology (1988), 91–2, Table 5–6. Arthur Klausner, “Today's Trends: Doing Business with Japan,” Bio/Technology (Oct. 1987): 1019–20, 1024, 1026; in the same issue see Mark D. Dibner, “An Analysis of Partnerships,” 1029, 1031–32. One of the exceptions was the joint venture between Amgen and the Kirin Brewery Co. of Japan. Wall Street Journal, 14 May 1984, 16.

⁵² Mark D. Dibner, “Biotechnology in Pharmaceuticals: The Japanese Challenge,” Science, 20 Sep. 1985, 1230–35. See also Christopher G. Edwards et al., “Japan Taps Into New Biotech,” Bio/Technology (Apr. 1984): 307–21. The trade in biotechnology was substantial enough to support brokers who arranged transactions between U.S. universities and Japanese firms. See Bio/Technology (Feb. 1984): 115–16. Because of the widespread concern in the 1970s and 1980s about U.S. industrial competitiveness and the rise of Japanese industry and finance, many of the reports and articles were framed in terms of “The Japanese Challenge.” See, for instance, Business Week, 4 Aug. 1980, 30–31. OTA, Commercial Biotechnology: An International Analysis (1984), 7–8: “Japan is likely to be the leading competitor of the United States,” the OTA concluded. By 1991, however, the OTA decided: “The efforts of MITI to promote biotechnology as a key technology … clearly has [sic] been less successful than many anticipated.” See OTA, Biotechnology in a Global Economy, Summary (1991), 18. Bullock, William O. and Dibner, Mark D., “The Changing Dynamics of Strategic Alliances between US Biotechnology Firms and Japanese Corporations and Universities,” Trends in Biotechnology 12 (1994): 397–400CrossRefGoogle ScholarPubMed, describes the trend in Japan toward developing in-house capabilities.

⁵³ Business Week, 24 Nov. 1980, 86–9, 92, 96, 98. Hounshell, David A. and Smith, John Kenly Jr., Science and Corporate Strategy: DuPont R&D, 1902–1980 (New York, 1988), 589–90Google Scholar.

⁵⁴ For DuPont, this was a return to the strategy the firm had implemented with great success in the 1920s. Fearful that the government would prosecute the firm for violating the antitrust laws, DuPont's leaders had abandoned this strategy in the 1930s. Ibid., 119–221. On the acquisition, see Business Week, 18 May 1981, 150.

⁵⁵ Dibner, Biotechnology Guide, 300–01.

⁵⁶ Merck & Co., Inc., Annual Reports, 1989–1992; Koberstein, Wayne, “Joseph Mollica,” Pharmaceutical Executive 11 (May 1991): 24–32Google Scholar. Recently, DuPont purchased Merck's half of the joint venture.

⁵⁷ The Swiss firm Ciba-Geigy adopted the Roche strategy in 1994, acquiring Chiron for $2.1 billion. Wall Street Journal, 9 Dec. 1994, 2. Bio/Technology (Feb. 1996): 135. The Ciba-Geigy-Chiron relationship began with a series of joint ventures, and the Swiss firm also established biotech research programs in Basle and in North Carolina at the Research Triangle Park. Bio/Technology (Feb. 1987): 122, 124; (June 1987): 530. The acquisitions continued. American Home Products bought 60 percent of Genetics Institute, Inc. In 1991, Sandoz (Switzerland) bought 60 percent of Systemix, a cell-therapy firm, and four years later, Sandoz acquired Genetic Therapy Inc., for $295 million. See Business Week (2 Mar. 1992): 69, 73. Bio/Technology (Sept. 1995): 945–47. The financial problems of the biotech firms once again created conditions that favored large pharmaceutical companies seeking alliances of various sorts. See Business Week, 26 Apr. 1993, 86; and Investors Business Daily, 2 Dec. 1993. On Schering AG's acquisition of Codon and Triton Biosciences through its U.S. subsidiary (Berlex Laboratories), see Williams, et al. , “Biotechnology in the Drug Discovery Process,” Medicinal Research Reviews 13:4 (1993): 431–35CrossRefGoogle ScholarPubMed.

⁵⁸ The distinction between proteins and small molecule drugs was important. The former could only be given to patients by injection; the latter could in most cases be taken orally. For patients as well as the pharmaceutical firms, this was a significant difference.

⁵⁹ For an exploration of these issues, see Arora, Ashish, “Evaluating technological information and utilizing it,” Journal of Economic Behavior and Organization 24 (1994): 91–114CrossRefGoogle Scholar. It was also necessary for pharmaceutical companies to have substantial capabilities in order to sift out the many proposals for collaboration that they received from biotechs. Chemical Marketing Reporter, 8 Apr. 1996, 18. By 1996, Merck was receiving about four to five hundred such proposals every year; Eli Lilly received about two thousand a year (of which twenty resulted in collaboration). For a thorough analysis of the impact of these changes on process development in pharmaceuticals, see Pisano, Gary P., The Development Factory: Unlocking the Potential of Process Innovation (Boston, 1997)Google Scholar.

⁶⁰ “More Deals than Ever,” Scrip Magazine (Jan. 1996): 44–46, lists the mergers, acquisitions, alliances and collaborations for 1995. See also Longman and Roche, “Biotech Deals by the Numbers.”

⁶¹ George, K. H., “US Biotechnology United,” Trends in Biotechnology 6 (1993): 221–22Google Scholar. There had been a distinct upward trend in the number of licensing agreements and acquisitions in the late 1980s and early 1990s. By 1992, there were 215 alliances between biotechs and pharmaceutical companies. ibid., 220–21. The Boston Consulting Group, Inc., “The Contribution of Pharmaceutical Companies: What's at Stake for America” (Sept. 1993): 110.

⁶² This was true despite the increased spending on R&D by pharmaceutical companies. Hospitals & Health Networks, 20 Mar. 1996, 12. For a list of “Products in the U.S. Pipeline” in 1991, see Bio/Technology (Oct. 1991): 947–49. For a similar list as of the end of 1992, see John P. Santell, “Projecting Future Drug Expenditures—1994,” American Journal of Hospital Pharmacy, 15 Jan. 1994, 183. For a list of the top ten biotech drugs as of 1995 (in U.S. sales), see Bio/Technology (July 1995): 649. See also Pharmaceutical Research and Manufacturers of America, “1996 Survey: 284 Biotechnology Products in Testing,” and “Approved Biotechnology Drugs and Vaccines"; Drews, J., “Intent and Coincidence in Pharmaceutical Discovery,” Arzneimittel-forschung/Drug Research 45:8 (1995): 934–39Google ScholarPubMed.

⁶³ Saracevic, Tefko and Kesselman, Martin, “Trends in Biotechnology Information and Networks: Implications for Policy,” in Biotechnology: R&D Trends, ed. Tzotzos, George T. (New York, 1993), 135–44Google Scholar. Diane Gershon, “The Boom in Bioinformaties,” Nature, 18 May 1995, 262. Also, Bains, W., “Bioinformaties in Europe—The Federation Strikes Back,” Trends in Biotechnology 6 (1993): 217CrossRefGoogle Scholar.

By the mid-1990s, the new technologies of combinatorial chemistry and high throughput screening were also changing the information landscape in drug discovery. Combinatorial chemistry enabled researchers “to make a large number of chemical variants all at 1 time, to test them for bioactivity (binding with a specific target or other functional property), and to isolate and identify the most promising compounds for further development.” Donald F. Phillips, “Making New Drugs via Combinatorial Chemistry,” JAMA, 6 June 1996, 1624–26. Also, Robert F. Service, “Combinatorial Chemistry Hits the Drug Market,” Science, 31 May 1996, 1266–68; Persidis, Aris, “Enabling Technologies and the Business of Science,” Bio/Technology 13 (Nov. 1995): 1172, 1174–76Google Scholar; Longman, Roger, “Combinatorial Chemistry's Challenge,” Start-Up 2:5 (1997): 28–34Google Scholar; and Kenneth G. Krul, “The Commercialization of High-Throughput Screening Technology,” Spectrum, Pharmaceutical Industry Dynamics, 20 Mar. 1997, 1–16.

On genomics—which included gene therapy and diagnostics—see, for instance, Science, 22 Oct. 1993, 502–04. Bio/Technology 13 (June 1995): 534–35Google Scholar. Williamson, Alan R., Elliston, Keith O., and Sturchio, Jeffrey L., “The Merck Gene Index, A Public Resources for Genomics Research,” The Journal of NIH Research 7 (Aug. 1995): 61–63Google Scholar. Eisenberg, Rebecca S., “Intellectual Property at the Public-Private Divide: The Case of Large-Scale cDNA Sequencing,” The University of Chicago Law School Roundtable 3:2 (1996): 557–73Google Scholar. On the business developments flowing out of DNA sequencing, see John Carey et al., “The Gene Kings,” Business Week, 8 May 1995, 72–78. Wall Street Journal, 28 Sept. 1994, Bl; 10 July 1995, B8. Merck World (Feb. 1996).

⁶⁴ On the continued merger movement, see Tarabusi, Claudio Casadio and Vickery, Graham, “Globalization in the Pharmaceutical Industry, Part II,” in International Journal of Health Services 28:2 (1998): 281–303CrossRefGoogle Scholar; Karen J. Partridge and Michael A. M. Partridge, “The Year of the Megadeal: Analysis of 1994 Changes of Ownership and Alliances,” Spectrum (1995); see also in the same issue Hemant K. Shah, “Horizontal Integration: Three Major Pharmaceutical Companies Pursue Comparable Business Strategies.” One of the recent structural changes involved the merger of diversified companies, followed by the spinning off of the pharmaceutical business line. See Hassan Fattah, “A Shrinking Drugs Galaxy,” Chemical Week, 10 Apr. 1996, 31–32. On Schering-Plough's approach to alliances, see Financial Times, 23 Mar. 1994, VI–VII.

⁶⁵ Economic conditions in the biotech industry during the 1990s continued to favor the large pharmaceutical firms seeking collaborative research or marketing agreements. Elisabeth Hefti, “Pharmaceutical Investment in Biotechnology: Trends, Issues, and Strategies,” Spectrum, 30 Mar. 1995, 3–5. Scrip, 30 Sept. 1992, had reported on the “growing uncertainty” in biotech financial markets. By that date, total product sales had reached nearly $6 billion, but a survey of 1,231 companies indicated that on balance they had lost $3.4 billion in the previous year. Chemical & Engineering News, 5 Oct. 1992, 48.

⁶⁶ On combinatorial chemistry and genomics, see note 63 above. On recent developments in genomics involving the effort to sequence the entire human genome, see Eliot Marshall and Elizabeth Pennisi, “Hubris and the Human Genome,” Science, 15 May 1998, 994–95.

⁶⁷ See also Vivian Lee, “Lessons from the Latest Biotech Product Failures,” Spectrum Express, 3 May 1997, 1–14. The author nevertheless estimated that “more than 100 new biopharmaceutical products will reach the market over the next several years.”

⁶⁸ For different interpretations, see Martin Kenney, “Biotechnology and the Creation of a New Economic Space,” in Private Science, ed. Thackray, 131–43; and William F. Hamilton, Joaquim Vila, and Mark D. Dibner, “Patterns of Strategic Choice in Emerging Firms: Positioning for Innovation in Biotechnology,” California Management Review (Spring 1990): 73–86. See Fairtlough, Gerard, “A Marriage of Large and Small: R & D for Healthcare Products,” Business Strategy Review 7:2 (1996): 14–22CrossRefGoogle Scholar, for an optimistic projection of smallfirm potential.

⁶⁹ Another indicator of the change that was taking place was provided by the number of new patents issued in biotechnology. As early as 1986, large pharmaceutical companies were acquiring more such patents than were small biotech businesses. Bio/Technology 5 (Mar. 1987): 204CrossRefGoogle Scholar. In 1992, the list of firms receiving U.S. patents was headed by Merck, followed by Abbott Laboratories, and Boehringer Mannheim. Chemical Week (10 Feb. 1993). While this was happening, new biotech company foundings dropped off and then increased sharply in the 1990s. Dibner, Mark D., “Tracking Trends in U.S. Biotechnology,” Bio/Technology 9 (Dec. 1991): 1337CrossRefGoogle ScholarPubMed. Elizabeth Hefti, “Pharmaceutical Investment in Biotechnology: Trends, Issues, and Strategies,” Spectrum, 30 Mar. 1995, 3–5.

⁷⁰ West, Michael L. and Fairlie, David P., “Targeting HIV-1 Protease: A Test of Drug Design Methodologies,” TiPS 16 (Feb. 1995): 67–74Google ScholarPubMed. Agouron, a biotech, has developed a fourth protease inhibitor that the FDA licensed for marketing in the United States in 1997. Agouron's experience typifies the type of cooperative innovation process that has become common in this industry. In bringing Viracept (nelflnavir) to market, Agouron received substantial financial support from Japan Tobacco and regulatory and marketing support from Roche.

⁷¹ Jonathan Greer, John W. Erickson, John J. Baldwin, and Michael D. Varney, “Application of the Three-Dimensional Structures of Protein Target Molecules in Structure-Based Drug Design,” Journal of Medicinal Chemistry, 15 Apr. 1994, 1035–54. Roberts, Noel A. and Redshaw, Sally, “Discovery and Development of the HIV Proteinase Inhibitor Ro 31–8959,” in The Search for Antiviral Drugs, eds. Merluzzi, Vincent J. and Adams, Julian (Boston, 1993), 129–51CrossRefGoogle Scholar. Shapiro, Bennett M., “Biotechnology and Drug Discovery at Merck,” address to the World Chemical Congress (San Diego, Calif, Sept. 1992)Google Scholar. For a somewhat different interpretation of the relationship between biotechnology and the other biomedical sciences, see Pisano, The Development Factory, 69.

⁷² Bio/Technology 5 (July 1987): 658Google Scholar; and (Nov. 1987): 1118. Karzon, David T., Bolognesi, Dani P., and Koff, Wayne C., “Development of a vaccine for the prevention of AIDS, a critical appraisal,” Vaccine 10:14 (1992): 1039–52CrossRefGoogle ScholarPubMed. Emini, Emilio A. et al. , “Antibody-Mediated In Vitro Neutralization of Human Immunodeficiency Virus Type 1 Abolishes Infectivity for Chimpanzees,” Journal of Virology 64 (Aug. 1990): 3674–78Google ScholarPubMed; Emilio A. Emini et al., “Prevention of HIV-1 Infection in Chimpanzees by GP120 V3 Domain-Specific Monoclonal Antibody,” Nature, 20 Feb. 1992, 728–30; Jon Cohen, “Are researchers racing toward success, or crawling?” Science, 2 Sept. 1994, 1373.

⁷³ Jon Cohen, “Protease Inhibitors: A Tale of Two Companies,” Science, 28 June 1996, 1882–83; Charles C. J. Carpenter et al., “Antiretroviral Therapy for HIV Infection in 1996,” JAMA, 10 July 1996, 146–54; in the same issue see also Anthony S. Fauci, “AIDS in 1996,” 155–56. Part of the information about Merck is drawn from a study in progress (by Louis Galambos and Jane Eliot Sewell) of the research that led to the development of Crixivan. By 1996, the world market for HIV therapies had reached $1.5 billion. Michael A. M. Partridge, “Combination Therapy Drives HIV Market Expansion,” Spectrum, 5 Dec. 1997, 1–16. The U.S. FDA approved Agouron's Viracept, a nonpeptide protease inhibitor, in Mar. 1997.

⁷⁴ Our conclusions on this point support and elaborate those advanced in Zucker, Lynne G. and Darby, Michael R., “Present at the Biotechnological Revolution,” Research Policy 26 (1997): 441–443CrossRefGoogle Scholar.

⁷⁵ In a more formal analysis, this figure would be reduced by the revenue lost when large pharmaceutical firms shifted resources from the pre-biotech drugs in their pipelines. The companies would also have incurred more risk, esp. in the mid-1970s. See also Gosse, Marilyn E. and Manocchi, Michael, “The First Biopharmaceuticals Approved in the United States: 1980–1994,” Drug Information Journal 30 (1996), 991–1001CrossRefGoogle Scholar; and New Biotechnology Drugs in Development: 1998 Survey (Washington, D.C., 1998)Google Scholar, lists the fifty-four drugs and vaccines cleared for U.S. marketing by the FDA through 1997.

⁷⁶ On this point, see Henderson, Rebecca and Cockburn, Iain, “Scale, Scope, and Spillovers: The Determinants of Research Productivity in Drug Discovery,” Rand Journal of Economics 27 (Spring 1996): 32–59CrossRefGoogle ScholarPubMed.

⁷⁷ By 1995, Nature Biotechnology estimated that pharmaceutical companies were spending about $3.5 billion to acquire biotechs, approximately $1.6 billion for R&D or licensing agreements with biotechs, and from $1.2 to $7.5 billion on in-house biotech R&D. Davidson, Sylvia, “Hidden Biotechnology Worth over $7.5 Billion a Year,” Nature Biotechnology 14 (May 1996): 564CrossRefGoogle Scholar.

⁷⁸ Elizabeth Hefti, “Pharmaceutical Investment in Biotechnology: Trends, Issues, and Strategies,” Spectrum, 30 Mar. 1995, 3–5. On the hard times, see: Scrip, 28 Sept. 1993, 17; Sapienza, Alice M., “The Dilemma of Biotechnology,” Drug Development Research 29 (1993): 171–78CrossRefGoogle Scholar; and Marion Leopold, “The Commercialization of Biotechnology: The Shifting Frontier,” in Biotechnology: R&D Trends, ed. Tzotzos, 214–31. The U.S. market for biotech stocks did not begin to recover until 1995–1996. Fortune, 1 Apr. 1996, 40. See also Ann M. Thayer, “Market, Investor Attitudes Challenge Developers of Biopharmaceuticals,” Chemical & Engineering News, 12 Aug. 1996, 13–21.

⁷⁹ On some of the problems pharmaceutical firms were having, see Thomas M. Burton, “Bad Chemistry, Populism, Profit Slide Forced Bryson Out as CEO of Eli Lilly,” Wall Street Journal, 28 June 1993. Lilly sold Hybritech at a great loss in 1995. Wall Street Journal, 2 Oct. 1995, B4. But soon, Lilly was back in the hunt, spending nearly $45 million under an agreement with Millennium Pharmaceuticals. Bio/Technology 13 (Nov. 1995): 1149Google Scholar. Clifford J. Levy, “Drug Maker Reshuffles at the Top,” New York Times, 22 Sept. 1993, observed (quoting an analyst) in regard to Marion Merrell Dow: “Anything that could go wrong has continued to go wrong for this company.” On Warner-Lambert, see Business Week, 9 Dec. 1991, 91, 94. On Upjohn, see Wall Street Journal, 29 Dec. 1994.

⁸⁰ The president of Hoffmann-La Roche International R&D, Jürgen Drews, M.D., recently predicted that the top fifty pharmaceutical companies would generate fewer “interesting compounds” than they needed in order to sustain their growth. The compound gap, Drews says, will have to be filled by the biotech firms. The Impact of Cost Containment on Pharmaceutical Research and Development (Surrey, U.K., Centre for Medicines Research, Tenth CMR Annual Lecture, June 1995)Google Scholar. See also Drews, Jürgen and Ryser, Stefan, “Innovation Deficit in the Pharmaceutical Industy,” Drug Information Journal 30 (1996): 97–108CrossRefGoogle Scholar.