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 / Winter 2007 / Issue 49(originally published by Booz & Company)


Best Business Books: Biotech

Worth the Risk?

Denise Caruso
Intervention: Confronting the Real Risks of Genetic Engineering and Life on a Biotech Planet
(Hybrid Vigor Press, 2006)

Gary P. Pisano
Science Business: The Promise, the Reality, and the Future of Biotech
(Harvard Business School Press, 2006) 

Some 30 years into the biotechnology revolution, we are finally beginning to hear sound, careful analyses asking deep questions about the value and implications of this astonishing field. Is it a great way to make money, to extend life, to save the planet? Or is it wildly irresponsible, modern snake oil, the new South Sea bubble? The magical promise of biotech has seemingly kept us from taking these questions seriously, and has left the field open to propagandists on both sides.

In the past year two books, one by Gary P. Pisano, the Harry E. Figgie Jr. Professor of Business Administration and chair of the technology and operations management unit at Harvard Business School, and the other by Denise Caruso, New York Times columnist and founder of the Hybrid Vigor Institute, have addressed these questions from two different perspectives. Yet both argue strongly and effectively that biotech is not worth the risk, at least not in its present form.

In Science Business: The Promise, the Reality, and the Future of Biotech, Pisano asks the question narrowly: Has the biotech revolution in pharmaceuticals given a good return on investment, in terms of either dollars or the availability of wonder drugs? (See “Gary Pisano: The Thought Leader Interview,” by Amy Bernstein, s+b, Summer 2007.) The industry has had some remarkable successes, such as the birth of firms like Amgen, Genentech, Chiron, Biogen, and Genzyme, and such drugs as Herceptin for breast cancer, erythropoeietin for anemia, and beta interferon for multiple sclerosis. It has gloried in decades of fervor stimulated by venture capitalists and members of the press less skeptical than Caruso. But here Pisano turns a powerful analytic lens on the industry and comes up with far less to celebrate. He writes, “The business of science in biotechnology has not yet been profitable, nor has it been particularly productive in terms of turning scientific advances into drugs.” The business and the science of biotech are fundamentally working at cross-purposes. It is an industry in perpetual adolescence. It must mature — outgrowing its awkward structure and precociousness — to begin to realize its potential. Pisano’s conclusions, and how he reaches them, give us the first deep insight into this important industry, and potentially into any industry based on scientific discovery.

In Intervention: Confronting the Real Risks of Genetic Engineering and Life on a Biotech Planet, Caruso takes on biotech’s hazards for society, for our health, and for ecological systems. Sometimes she can sound alarmist — “The sky is falling!” — but this time Chicken Little could be right. Caruso’s well-crafted polemic rests on one scary fact: We know little to nothing about the ultimate safety of many of the transgenic experiments (those that embed genes from one organism in another) in agriculture, animal genetics, drug development, and other fields. The risk assessments and scientific pronouncements on which we base our public policy, our investments, and our sense of security have weak and biased foundations. She too calls for structural changes, advocating risk assessment methods that involve more public discourse and expressed judgments about biotech’s contributions and its potential social costs.

Business and Science at Cross-Purposes
Pisano has studied pharmaceutical biotechnology for years, but what he discovered when he set out to do a deep financial analysis of the industry surprised even him. Biotech’s promise was not only that its approach to discovery would find new drugs faster or bring them to market more quickly, but that it would create a profitable and sustainable economic engine that would broaden the scope and scale of the entire industry. By every sensible measure, the industry has not done that.

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