From the series Industry and pharmaceuticals
II
South San Francisco is considered the birthplace
of biotechnology. Here, in 1976, the biochemist Herbert W. Boyer of the University of California, San Francisco (UCSF), and the venture capitalist Robert Swanson founded Genentech, commonly considered the first biotech company in the world. Swanson had studied at MIT (Massachusetts Institute of Technology), then moved to San Francisco and cultivated a passion for molecular biology. Genetic engineering was about to take off in Californian universities, starting with the pioneering DNA manipulation experiments carried out by Boyer in collaboration with Stanley N. Cohen, a geneticist at Stanford University.
At the time, observes Nature, leading scientists proposing involvement with industry was considered heresy
. Swanson and Boyer were pioneers in seeing the connection between basic research and ultimate commercial profitability
, and the possibility of attracting talent to genetic technology, a field which had limited funding. Even leading molecular biologists thought it was neither commercially nor intellectually viable
[D. Goeddel, A. Levinson, Robert A. Swanson (1947–1999)
, Nature, January 20th, 2000].
The dawn of genetic engineering
At the beginning of the 1970s, Paul Berg [1926-2023], a biochemist at Stanford University, had developed the first techniques of recombinant DNA, incorporating parts of the DNA of one species into the genetic makeup of another. Berg and his group succeeded in inserting three genes of a bacterium into the genome of a virus, producing a hybrid, recombinant DNA. Berg would be awarded the Nobel Prize in Chemistry for this research in 1980, sharing it with Walter Gilbert and Frederick Sanger.
Berg invented recombinant DNA technology
[Nature, March 20th, 2023], and the next fundamental step was the creation of the first transgenic organism. Although Boyer and Cohen belonged to two different universities, UCSF and Stanford, they worked in very close collaboration, sharing specimens, tests, and experiments. The two scientists demonstrated that it was possible to insert recombinant DNA in a bacterium in such a way as to have it replicate naturally, i.e., it could be cloned [Science History Institute].
The possibility of genetically modifying living organisms to induce new characteristics in them, which could be used in medicine – and other fields, such as the production of proteins or pharmaceuticals – had become a concrete reality. So had the prospect of commercially exploiting genetic engineering. Swanson and Boyer realised its potential and founded Genentech. A breakthrough came in 1978, when recombinant DNA was successfully inserted into a bacterium (Escherichia coli) which coded for human insulin, as a means of replacing animal-extracted insulin in the treatment of diabetes.
Genentech concluded a joint venture with the pharma company Eli Lilly for the large-scale production of recombinant insulin. In 1982, the American Food and Drug Administration (FDA) licensed Humulin, the first biotech product to enter the market. Genetic engineering emerged as a pharmaceutical production technique distinct from traditional chemical synthesis which, over the following decades, would be increasingly replaced by biotechnology. In 2009, Genentech (which maintains its headquarters in South San Francisco) was taken over by the Swiss multinational Roche for $47 billion.
The birth of the biotechnology industry
1976 is therefore considered the symbolic date of the birth
of bio technology and of the South San Francisco (SSF) biopharma hub.
In reality, Genentech is not the first biotechnology firm. Others preceded it. Cetus was founded in 1971 in Berkeley, a few kilometres from SSF, by a group of scientists from different disciplines, including the physicist Donald A. Glaser [1926–2013], a professor at Berkeley who was awarded the Nobel Prize in Physics in 1960. He left physics in the early 1960s and embraced the study of molecular biology [The Nobel Prize, Biographical
]. The Cetus Corporation's initial activities were in the field of industrial biotechnology, developing microbial processes for the production of chemical raw materials and antibiotic intermediates. Cetus then turned to therapeutic/biomedical applications. In 1979, the company hired the biochemist Kary B. Mullis [1944-2019], who created the PCR (Polymerase Chain Reaction), for which he was awarded the Nobel Prize in Chemistry in 1993 [Nobel Prize Lecture
, December 8th, 1993]. The PCR is a revolutionary technique of in vitro cloning, which allows a fragment of DNA to be amplified millions of times in a few hours, and provides a fundamental tool for a great variety of applications, from medical diagnostics to DNA sequencing.
Cetus was taken over in 1991 by Chiron Corp., another biotech company co-founded in Emeryville in 1981 by Berkeley and UCSF scientists. In 2006, Chiron was in turn taken over by the Swiss multinational Novartis for $9.5 billion [The New York Times, July 27th, 2025].
Even if Genentech was not the first biotech company, SSF remains the cradle of biotechnology
. Some of the first biotech companies have been neglected or long forgotten because of a history which equates biotechnology with the discovery of drugs financed by venture capital
, while Cetus was backed by the funding of such enterprises as Standard Oil, observes Nature [[January 28th, 2020]. Genentech has become a symbolic case of the venture capital plus university science model
, which has been followed by a proliferation of biotech startups/spinoffs based on academia-finance collaboration.
Ideas plus
capital
Biotechnology companies multiplied around this initial nucleus over the following decades. Local press reports that in 1998, SSF was the headquarters of dozens of spinoffs and small companies [SFGATE, December 14th, 1998]. This development was driven by venture capital, proximity to research-intensive universities (fuelled by federal funding), and local investments, mainly in infrastructure. An example of this is the Mission Bay South Redevelopment Plan, adopted in 1998 and updated in the following years [City and County of San Francisco, Mission Bay South Redevelopment Plan
].
Entering into a phase of consolidation, especially since the late 1990s, the life science cluster evolved from a loose group of companies into a network linking biopharmaceutical companies, hospitals, research centres, agencies, and specialised services. The proximity of such major universities as UCSF, UC Berkeley, and Stanford facilitates the transfer of scientific and technological knowledge. A Stanford University paper comments on the spatial concentration of two essential factors of production in the commercial field of biotechnology: ideas and money
[Stanford University, The Spatial Clustering of Science and Capital: Accounting for Biotech Firm-Venture Capital Relationships
, 2001].
This geographical ecosystem extends from South San Francisco to the Bay Area, as far as Silicon Valley, and includes micro-clusters spread around nine counties, spanning a territory about the size of Wales, to which the emerging communities
of Sacramento and Santa Cruz will be added [Bincom California, Life Science in the Bay Area
, 2025]. The SSF-Bay Area cluster hosts about 3,800 local life science units with more than 150,000 direct employees, covering biotech research and biopharma production, research and development carried out in universities and private medical laboratories, the production of medical devices and instruments, and agroindustry.
In 2024, the cluster received $2.15 billion in federal funding for research from the National Institutes of Health (NIH) and the National Science Foundation (NSF); it attracted more than $8 billion in venture capital, excluding investments in merger or takeover transactions [CBRE, April 11th, 2025]. The SSF-Bay Area is the biggest of the three big biopharma hubs in California, 600 km to the south there are the Greater Los Angeles
and San Diego clusters. It is at this scale that European life science clusters must compete.
Funding at risk
Generous federal funding plays an important role in the development of American biotech innovation and, in general, in upholding American scientific and technological primacy, which is being threatened by more than just the Chinese superpower. Right after taking office, the Trump presidency picked a fight with some of the most prestigious American universities, freezing federal subsidies and cancelling research contracts, as well as limiting visas for foreign students and researchers and threatening tax hikes. These punitive
measures have been the subject of legal disputes, or have been downsized following agreements with the government, but in any case, they have led to the cancelling of research projects and the firing of researchers.
However, the clash with the universities – represented mainly as being of an ideological nature – is also part of the policy of drastically reducing public spending on scientific research. Even as it was being announced, it raised alarm in the scientific community (and elsewhere), with some even denouncing a war on science
by the Trump administration. If it were to go ahead, stated Sudip Parikh, the president of the American Association for the Advancement of Science, one of the world's main scientific societies, the consequences for the future of our nation will be catastrophic
. The United States will no longer be in the global race
for leadership in research and development, he added. We will have lost it
[The New York Times, May 2nd, 2025].
The budget for the current financial year foresaw cuts in the funds earmarked for scientific research which The New York Times defined as the largest reduction in federal spending on science since World War II
[January 10th]. Among the hardest hit federal agencies were the NSF, suffering a 57% cut in its budget compared to the year before, and the NIH, with a 39% cut. The latter is the main supporter of research in most universities, and by far the most important funding body for biomedical research in the world [WHO].
According to The Economist, Congress is still defending American science
. It rejected the cuts to the budget with a bipartisan vote, and America's main scientific agencies survived an existential threat
[Senate Committee, January 15th]. The NSF budget was reduced by only 3.8%, to $8.7 billion. The NIH has kept its 27 institutes, which the Trump administration wanted to reduce to eight, and its $49 billion budget – for now. The rearmament race and the wars of the crisis in the world order demand other priorities.