An Overview of Biotechnology and the Biotech Industry

Scientist looking through microscope
••• Hero Images / Getty Images

Biotechnology, as described by dictionary references such as Merriam-Webster, focuses on the manipulation of living organisms to create commercial products—but that is a broad way of regarding this fast-growing science. By such definitions, centuries of agriculture and animal breeding would qualify as types of biotechnology. Modern understanding and usage of this science, also known as biotech, has been refined to create novel drugs and pest-resistant crops.

Such innovations developed thanks to the genetic engineering technology that started with Stanely Cohen and Herbert Boyer’s demonstration of DNA cloning in their Stanford lab in 1973. Now biotechnology is intrinsic to many aspects of daily life.

The Technology

Since the first DNA cloning experiments, genetic engineering techniques have developed to create engineered biological molecules, genetically designed microorganisms and cells, ways to find new genes and figure out how they work, and transgenic animals and plants. In the midst of this bioengineering revolution, commercial applications exploded. An industry developed around techniques such as gene cloning, directed mutagenesis, DNA sequencing, RNA interference, biomolecule labeling and detection, and nucleic acid amplification.

The Biotech Markets: Medical and Agricultural

The biotech industry is largely divided into the medical and agricultural markets. Although enterprising biotechnology is also applied to other areas, such as the industrial production of chemicals and bioremediation, the use in these areas is still specialized and limited.

On the other hand, the medical and agricultural industries have undergone biotech revolutions. This has included new—and at times controversial—research efforts, development programs, and business strategies to discover, alter, or produce novel biomolecules and organisms through bioengineering.

Biotech Startup Revolution

Biotechnology introduced a whole new approach to drug development that did not easily integrate into the chemically focused approach most of the established pharmaceutical companies used. This shift precipitated a rash of startup companies, starting with the founding of Cetus (now part of Novartis Diagnostics) and Genentech in the mid-1970s.

Since there was an established venture capital community for the high-tech industry in Silicon Valley, many of the early biotechnology companies also clustered in the San Francisco Bay Area. Over the years, countless startup companies have been founded to pursue this market. Innovation hubs developed in the U.S. in such cities as Seattle, San Diego, North Carolina's Research Triangle Park, Boston, and Philadelphia. International biotech hubs include cities such as Berlin, Heidelberg, and Munich in Germany; Oxford and Cambridge in the U.K.; and the Medicon Valley in eastern Denmark and southern Sweden.

Designing New Drugs Faster

Medical biotech, with revenues exceeding $150 billion annually, receives the bulk of biotech investment and research dollars. This part of biotech gravitates around the drug discovery pipeline, which starts with basic research to identify genes or proteins associated with particular diseases that could be used as drug targets and diagnostic markers.

Once a new gene or protein target is found, thousands of chemicals are screened to find potential drugs that affect the target. The chemicals that look like they might work as drugs (sometimes known as "hits") then need to be optimized, checked for toxic side effects, and tested in clinical trials.

Medical Biotech Companies

Biotech has been instrumental in the initial drug discovery and screening stages. Most major pharmaceutical companies have active target-discovery research programs heavily reliant on biotechnology. Smaller upstart companies such as Exelixis, BioMarin Pharmaceuticals, and Cephalon (acquired by Teva Pharmaceutical) focused on drug discovery and development by often using unique proprietary techniques. In addition to direct drug development, companies such as Abbott Diagnostics and Becton, Dickinson and Company (BD) look for ways to use new disease-related genes to create new clinical diagnostics.

A lot of these tests identify the most responsive patients for new drugs coming onto the market. Also, supporting research for new drugs is a long list of research and lab supply companies that provide basic kits, reagents, and equipment. For example, companies such as Thermo-Fisher, Promega, and a host of others provide lab tools and equipment for bioscience research. Companies such as Molecular Devices and DiscoveRx provide specially engineered cells and detection systems for screening potential new drugs.

Agricultural Biotechnology: Better Food

The same biotechnology used for drug development can also improve agricultural and food products. However, unlike with pharmaceuticals, genetic engineering did not generate a rash of new ag-biotech startups. The difference may be that, despite the technological leap forward, biotech did not fundamentally change the nature of the agricultural industry. Manipulating crops and livestock to optimize genetics to enhance utility and improve yields has been going on for thousands of years. In a way, bioengineering just provides a convenient new method.

Established agricultural companies, such as Dow and Monsanto (which was acquired by Bayer), simply integrated biotech into their R&D programs.

Plant and Animal GMOs

Most of the focus on ag-biotech is on crop improvement, which, as a business, has been quite successful. Since the first genetically modified corn was introduced in 1994, transgenic crop staples such as wheat, soybean, and tomatoes have become the norm. Now, more than 90 percent of U.S.-grown corn, soybeans, and cotton are bioengineered. Although lagging behind bioengineered plants, use of biotechnology for farm animal improvement is also pretty prevalent.

Remember Dolly, the first cloned sheep? That was in 1996. Now animal cloning is common, and it's clear that transgenic farm animals are on the immediate horizon, based on headlines highlighting recent developments on the Federation of Animal Societies' website. Although genetically modified organisms (GMOs) have generated a lot of controversy in recent years, ag-biotech has become pretty well established. According to the latest available briefings from the International Service for the Acquisition of Agri-biotech Applications, plantings of genetically modified crops reached 189.8 million hectares in 2017, up from 185.1 million hectares in 2016.