The Motley Fool Million Dollar Portfolio by David & Tom Gardner

Author:David & Tom Gardner [David & Gardner, Tom]
Language: eng
Format: epub
Tags: investing
Published: 2011-02-11T18:58:41.667000+00:00

RIS K TAKE R S AN D RULE B RE AKE R S

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structures. That a newcomer could catch up seemed far- fetched.

The pharmaceutical R&D pro

cess for a single drug can take

more than a de cade from the lab bench to the pharmacy shelf, and building an or ga ni za tion that thrives under such constraints requires not only a lot of capital, but patient capital. Add to that the need for a global apparatus to distribute and sell drugs around the world—it just wasn’t something a start- up could reasonably hope to accomplish.

In the midst of that environment, a company called Amgen started exploring the commercial possibilities raised by new ge-ne tic engineering technologies. In 1973, for the fi rst time scientists spliced instructions for making a protein into an unrelated host organism. Microscopic cells grown in a vat could become factories for a new kind of medicine: biologic drugs.

It wasn’t that Amgen was a stealth or ga ni za tion or that it was working with arcane knowledge. The recombinant DNA technology around which the company was built was the subject of a National Medal of Science. The successful insertion of frog DNA into a bacterial cell in 1973 by Stanley Cohen and Herbert Boyer—one of Amgen’s found ers—is often cited as the most signifi cant discovery ever to be overlooked by the Nobel Prize committee. But even though anyone involved in biological R&D must have been aware of the discovery, it didn’t seem like a commercial, competitive threat to pharmaceutical business- as- usual.

Amgen itself struggled with the possibilities raised by new ge ne tic engineering technologies. In its 1983 IPO prospectus, the company outlined the handful of projects it was working on. One was indigo dye. Another was chicken growth hormone. The entrenched pharmaceutical industry wasn’t exactly shaking in its boots.

Yet just two years later, in 1985, another biotech company called Genentech launched a human growth hormone to treat a hereditary condition in children. Four years after that, Amgen launched Epogen, a red blood cell booster that, in a slightly different form, is still the company’s chief source of revenue today.

Still the drug companies paid little notice.

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