After several trips to Eli Lilly Co.'s Indianapolis
headquarters last year, Seragen Chairman George Masters suspected
a deal was near. "Lilly sent a corporate jet to pick me up and
take me back," he remembered. "All the other times I was flying
He was right. Soon after that plane trip, the Hopkinton-based
biotechnology company entered into a $62.5 million partnership
agreement with the big drug maker.
In both style and substance, the July pact might be indicative
of biotechnology's future. Once envisioned as big drug companies,
today's biotechnology companies are more likely to become the
research and development arms of more traditional drug
That prospect has implications not only for the companies
themselves, but for the role biotechnology has been expected to
play in the area's economy.
Observers say the promise of biotechnology _ using genetic
engineering techniques to develop treatments that strike at the
roots of everything from hay fever to cancer _ is as bright as
ever. But increasingly, biotechnology is being viewed, not as a
self-contained industry, but as a way of developing drugs.
Genzyme Corp., now operating a new drug factory towering in
Boston, might be the most visible of the area's biotech
companies. Mark Skaletsky's shop may turn out to be more
The co-founder and president of GelTex Pharmaceuticals Inc. of
Waltham, Mass., said of his company's future: "We expect to be
small _ no more than 30 to 35 people, that's it _ and focus on
research and product development and let others do our
manufacturing, clinical trials and toxicology testing. Our
overall strategy is to take our products far enough into
development to create value without building a huge
infrastructure. We let our partners sell them."
At present, 149 companies along the Boston-Worcester corridor
employ about 16,000 people in the biotechnology industry. With
some notable exceptions _ Genzyme, Genetics Institute Inc. and
Biogen Inc., all in Cambridge, Mass. _ most of the companies and
their employees are focused on research.
They are also focused on raising money.
Able to expect little or no revenue from sales, biotechnology
companies have depended on outsiders to finance expensive drug
development. But venture capitalists are increasingly wary. And
Wall Street, feeling burned by the highprofile failure of some
biotech drugs, are turning to other investment options.
At the same time, the world's large, traditional
pharmaceutical companies find it is getting harder to create
effective new chemistry-based drugs. With facilities to make
drugs and the sales network to sell them, they've gone looking
for new products beyond their own in-house laboratories.
The result has been a new kinship between the old and the new
Seragen was just one of 29 outside development deals Eli Lilly
obtained last year _ triple the activity of two years ago and 10
times more than in 1992. Not all of the deals were with biotech
companies, but many were.
Among many other deals, ImmuLogic Pharmaceuticals Inc. of
Waltham, Mass., has received more than $65 million in product
development and equity funds from Marion Merrell Dow for a
proposed family of allergy vaccines. The partnership recently
announced plans to jointly build a bio-manufacturing facility in
Midland, Mich., that will be operated by Dow Chemical Co.
"Our major value added is. . .the technology in the form of a
product," said Malcolm Gefter, ImmuLogic founder and chairman.
"The opportunity to manufacture and sell is not really a very
highly valued opportunity compared to the risks that go along to
building a manufacturing plant, adding a sales force and
Others companies, such as AutoImmune Inc. of Lexington, have
gone a step further. …