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TR: Perhaps that “sucking sound” you mentioned represents the fact that investors have finally understood why biotech is not like electronics: You don’t have to do a clinical trial (which adds years to the development process) for a chip. Is the risk in biotech simply much higher than it is for, say, a hard drive?

SHARP: The risk is higher, but the payoff is higher. Still, if you look post-World War II, there have been very few large pharmaceutical companies established. Syntex, which developed the birth control pill, was one of the few to emerge in that period. The most prominent biotech company now is Amgen, which has a market value, I think, in the $30 billion range. Biogen is number two. Genentech is no longer free-standing by any definition, and Chiron is nearly owned by Novartis. You can look at how small that list is and say, “It’s really hard to get there!”

TR: There’s a sense that people are creating a startup these days based not on the hope that they’ll ultimately make products and become a fully integrated company, but that they’ll have a successful business plan and an I.P.O. and then essentially cash out.

SHARP: Well, that’s been the basic business concept for the last 10 years. It may not be explicitly stated that way, but companies develop a technology and then license it to multiple large corporate partners, relinquishing a lot of control and a lot of the rights in the process. They all, by and large, have plans that say, “We will retain a part of this technology and develop our own products.” But if you look at how these companies allocate their resources, the major manpower thrust goes toward those corporate relationships, and maintaining those relationships.

TR: If you look back now to the mid-1970s, what challenge did you most underestimate in starting a biotech company?

SHARP: Business acumen-knowing exactly where this technology fit into developing pharmaceuticals and how one needed to invest to make that happen.

What did we underestimate in terms of technology? Well, the first set of products we put on the list were interferons. And we underestimated how difficult it was going to be to find and prove the efficacy of these proteins. The interferons were wonder drugs, but were available in such minute amounts you couldn’t test them! So a lot of the data was really untrustworthy. It took a long time in the clinic to find out how to use them, and they’re still being developed. We originally thought interferon would be a drug for cancer, and it turned out to be a drug for multiple sclerosis. It’s amazing! It’s amazing how difficult it is to find drug opportunities.

TR: On the plane up, the person sitting next to me was reading Golf Digest, and there was an ad in it for SmithKline Beecham’s new Lyme disease vaccine. I feel reasonably confident saying this is probably the first time a vaccine ad has appeared in a golf magazine. But it raises a larger question about whether companies choose to develop a product to address a market or what you might call a social need-do you work on a vaccine for malaria, which causes a million fatalities a year in mostly indigent populations, or do you work on a vaccine for Lyme disease, which accounts for about 16,000 well-to-do new cases a year?

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