UNITED STATES
                        SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC  20549

                                    FORM 10-Q

(Mark One)

X      Quarterly report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934. For the quarterly period ended March 31, 1998.

       Transition report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934. For the transition period from   to   .


                               Commission File Number
                                       1-9813

                                   GENENTECH, INC.
               (Exact name of registrant as specified in its charter)

           Delaware                                         94-2347624
(State or other jurisdiction of                          (I.R.S. employer
incorporation or organization)                        identification number)

                 1 DNA Way, South San Francisco, California  94080
                (Address of principal executive offices and zip code)

                                    (650) 225-1000
                 (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.  Yes  X     No

Indicate the number of shares outstanding of each of the issuer's classes of 
common stock, as of the latest practicable date.

Class                                           Number of Shares Outstanding
-----                                           ----------------------------
Common Stock $.02 par value                     76,621,009
(Common Stock)                                  Outstanding at March 31, 1998

Callable Putable Common Stock $.02 par value    48,539,376
(Special Common Stock)                          Outstanding at March 31, 1998




                                   GENENTECH, INC.
                                        INDEX


PART I.     FINANCIAL INFORMATION                                    PAGE NO.

Condensed Consolidated Statements of Income -
for the three months ended March 31, 1998 and 1997                        3

Condensed Consolidated Statements of Cash Flows -
for the three months ended March 31, 1998 and 1997                        4

Condensed Consolidated Balance Sheets -
March 31, 1998 and December 31, 1997                                      5

Notes to Condensed Consolidated Financial Statements                    6-9

Independent Accountants' Review Report                                   10

Financial Review                                                      11-19

PART II.     OTHER INFORMATION                                           20

SIGNATURES                                                               21






































                                       2
<TABLE>
<CAPTION>
PART I.  FINANCIAL INFORMATION


                                  GENENTECH, INC.
                    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                       (thousands, except per share amounts)
                                    (unaudited)


                                                                   Three Months
                                                                  Ended March 31,
                                                              ----------------------
                                                                 1998        1997
                                                              ----------  ----------
<S>                                                           <C>         <C>
Revenues:
  Product sales (including amounts from related parties:
    1998-$6,607; 1997-$4,494)                                 $  164,719  $  154,213
  Royalties (including amounts from related parties:
    1998-$7,129; 1997-$6,798)                                     64,493      65,312
  Contract and other (including amounts from 
    related parties: 1998-$7,798; 1997-$15,706)                   14,865      21,409
  Interest                                                        20,623      16,351
                                                              ----------  ----------
     Total revenues                                              264,700     257,285

Costs and expenses:
  Cost of sales (including amounts from related parties:
    1998-$6,025; 1997-$3,899)                                     33,621      27,685
  Research and development (including contract
    related: 1998-$9,062; 1997-$15,706)                           98,202     122,743
  Marketing, general and administrative                           74,950      61,981
  Interest                                                           959         988
                                                              ----------  ----------
    Total costs and expenses                                     207,732     213,397

Income before taxes                                               56,968      43,888

Income tax provision                                              15,951      12,289
                                                              ----------  ----------
Net income                                                    $   41,017  $   31,599
                                                              ==========  ==========
Earnings per share:
  Basic                                                       $     0.33  $     0.26
                                                              ==========  ==========
  Diluted                                                     $     0.32  $     0.25
                                                              ==========  ==========
Weighted average shares used to
  compute diluted earnings per share                             128,807     125,258
                                                              ==========  ==========

<FN>
              See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>





                                       3
<TABLE>
<CAPTION>
                                   GENENTECH, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (thousands)
                                     (unaudited)


                                                                   Three Months
                                                                  Ended March 31,
                                                              ----------------------
                                                                 1998        1997
                                                              ----------  ----------
<S>                                                           <C>         <C>
Cash flows from operating activities:
  Net income                                                  $  41,017   $  31,599
  Adjustments to reconcile net income to net cash 
   provided by (used in) operating activities:
   Depreciation and amortization                                 17,936      16,481
   Deferred income taxes                                          4,386      (2,583)
   Gain on sales of securities available-for-sale                (5,835)     (1,992)
   Loss on sales of securities available-for-sale                   376         997
   Write down of securities available-for-sale                    2,555           -
   Loss on fixed asset dispositions                                   -          31
  Changes in assets and liabilities:
     Investments in trading securities                           25,290     (97,585)
     Receivables and other current assets                        15,071     (11,850)
     Inventories                                                 (1,685)     (1,724)
     Accounts payable, other current liabilities 
       and other long-term liabilities                          (30,252)      6,170
                                                              ----------  ----------
  Net cash provided by (used in) operating activities            68,859     (60,456)

Cash flows from investing activities:
  Purchases of securities held-to-maturity                     (128,731)   (138,090)
  Proceeds from maturities of securities held-to-maturity       102,874     185,096
  Purchases of securities available-for-sale                   (177,731)   (136,994)
  Proceeds from sales of securities available-for-sale           96,636     114,885
  Capital expenditures                                          (21,002)    (45,711)
  Change in other assets                                          1,336      (3,435)
                                                              ----------  ----------
  Net cash used in investing activities                        (126,618)    (24,249)

Cash flows from financing activities:
  Stock issuances                                                34,578      27,258
                                                              ----------  ----------
  Net cash provided by financing activities                      34,578      27,258
                                                              ----------  ----------
Net decrease in cash and cash equivalents                       (23,181)    (57,447)
  Cash and cash equivalents at beginning of period              244,469     207,264
                                                              ----------  ----------
  Cash and cash equivalents at end of period                  $ 221,288   $ 149,817
                                                              ==========  ==========

<FN>
              See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>




                                       4
<TABLE>
<CAPTION>
                                   GENENTECH, INC.
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                                     (thousands)
                                     (unaudited)

                                                        March 31,      December 31,
                                                          1998             1997
                                                      ------------     ------------
<S>                                                   <C>              <C>
ASSETS
Current assets:
  Cash and cash equivalents                           $  221,288       $  244,469
  Short-term investments                                 663,793          588,853
  Accounts receivable, net (including amounts
    from related party: 1998-$34,620; 
    1997-$44,386)                                        175,285          189,245
  Inventories                                            117,711          116,026
  Prepaid expenses and other current assets               54,214           55,325
                                                      ------------     ------------
     Total current assets                              1,232,291        1,193,918

Long-term marketable securities                          487,867          453,188
Property, plant and equipment, less accumulated
  depreciation (1998-$392,034; 1997-$376,091)            688,363          683,304
Other assets                                             165,000          177,202
                                                      ------------     ------------
Total assets                                          $2,573,521       $2,507,612
                                                      ============     ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                    $   41,621       $   48,992
  Income taxes payable                                    55,091           40,293
  Accrued liabilities - related party                     12,017           15,427
  Other accrued liabilities                              164,645          184,845
                                                      ------------     ------------
     Total current liabilities                           273,374          289,557

Long-term debt                                           150,000          150,000
Other long-term liabilities                               38,229           36,830
                                                      ------------     ------------
     Total liabilities                                   461,603          476,387

Commitments and contingencies
Stockholders' equity:
  Preferred stock                                              -                -
  Special Common Stock                                       971              952
  Common Stock                                             1,532            1,532
  Additional paid-in capital                           1,498,327        1,463,768
  Retained earnings                                      552,159          511,141
  Net unrealized gain on securities
     available-for-sale                                   58,929           53,832
                                                      ------------     ------------
     Total stockholders' equity                        2,111,918        2,031,225
                                                      ------------     ------------
Total liabilities and stockholders' equity            $2,573,521       $2,507,612
                                                      ============     ============
<FN>
            See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
                                       5
                                GENENTECH, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)


Note 1.     Statement of Accounting Presentation

In the opinion of Genentech, Inc. (the Company), the accompanying unaudited 
condensed consolidated financial statements have been prepared in accordance 
with generally accepted accounting principles for interim financial 
information and with the instructions to Form 10-Q and Article 10 of 
Regulation S-X.  Accordingly, they do not include all of the information and 
footnotes required by generally accepted accounting principles for complete 
financial statements.  In the opinion of management, all adjustments 
(consisting only of adjustments of a normal recurring nature) considered 
necessary for a fair presentation have been included.  Operating results for 
the three-month periods ended March 31, 1998 and 1997 are not necessarily 
indicative of the results that may be expected for the year ending December 
31, 1998.  The condensed consolidated balance sheet as of December 31, 1997 
has been derived from the audited financial statements as of that date.  For 
further information, refer to the consolidated financial statements and 
notes thereto included in the Company's Annual Report to Stockholders for 
the year ended December 31, 1997.

The preparation of financial statements in conformity with generally 
accepted accounting principles requires management to make estimates and 
assumptions that affect the amounts reported in the financial statements and 
accompanying notes. Actual results could differ from those estimates.


Note 2.     New Accounting Standards

The Company adopted Statement of Financial Accounting Standards (FAS) No. 
128, "Earnings Per Share" for the year ended December 31, 1997.  All 
earnings per share (EPS) and share amounts for all periods presented have 
been restated to comply with FAS 128.  The following is a reconciliation of 
the numerator and denominators of the basic and diluted EPS computations for 
the quarter ended March 31, 1998 and 1997 (in thousands).

                                                1998         1997
                                            -----------------------
Numerator:
 Net income - numerator for 
  basic and diluted EPS:                    $  41,017     $  31,599
                                            ---------     ---------
Denominator:
 Denominator for basic EPS--
  weighted-average shares                     124,758       121,969

 Effect of dilutive securities:
  Stock options                                 4,049         3,289
                                            ---------     ---------
 Denominator for diluted EPS
 --adjusted weighted-average 
   shares and assumed conversions             128,807       125,258
                                            =========     =========

Options to purchase 2,850,050 shares of Special Common Stock at $67.31 per 
share and 28,200 shares of Special Common Stock at $55.38 per share were 
outstanding in the first quarter of 1998 and the comparable period in 1997,


                                       6
respectively, but were not included in the computation of diluted EPS 
because the options were anti-dilutive.

In the first quarter of 1998 and the comparable period in 1997, the Company 
had convertible subordinated debentures that were convertible to 1,013,514 
shares of Special Common Stock, but were not included in the computation of 
diluted EPS because they were anti-dilutive.

The Financial Accounting Standards Board issued FAS 130, "Reporting 
Comprehensive Income," and FAS 131, "Disclosures about Segments of an 
Enterprise and Related Information," in June 1997, which require additional 
disclosures to be adopted on December 31, 1998.  Under FAS 130, the Company 
is required to display comprehensive income and its components as part of 
the Company's full set of financial statements.  Comprehensive income is 
comprised of net income and other comprehensive income.  The measurement and 
presentation of net income will not change.  Other comprehensive income 
includes certain changes in equity of the Company that are excluded from net 
income.  Specifically, FAS 130 requires unrealized holding gains and losses 
on the Company's available-for-sale securities, which are currently reported 
separately in stockholders' equity, to be included in other comprehensive 
income.  During the first quarter of 1998 and the comparable period in 1997, 
total comprehensive income amounted to $46.1 million and $25.7 million, 
respectively.

FAS 131 requires that the Company report financial and descriptive 
information about its reportable operating segments.  The Company is 
evaluating the impact on its disclosures, if any.


Note 3.     Relationship with Roche Holdings, Inc.

On October 25, 1995, the Company and Roche Holdings, Inc. (Roche) entered into 
a new agreement (the Agreement) to extend until June 30, 1999, Roche's option 
to cause the Company to redeem (call) the outstanding Special Common Stock of 
the Company at predetermined prices.  Should the call be exercised, Roche will 
concurrently purchase from the Company a like number of shares of Common Stock 
for a price equal to the Company's cost to redeem the Special Common Stock.  
During the quarter beginning April 1, 1998, the call price is $76.50 per share 
and increases by $1.50 per share each quarter through the end of the option 
period on June 30, 1999, on which date the price will be $82.50 per share.  If 
Roche does not cause the redemption as of June 30, 1999, the Company's 
stockholders will have the option (the put) to cause the Company to redeem 
none, some or all of their shares of Special Common Stock at $60.00 per share 
(and Roche will concurrently provide the necessary redemption funds to the 
Company by purchasing a like number of shares of Common Stock at $60.00 per 
share) within thirty business days commencing July 1, 1999.  Roche Holding 
Ltd, a Swiss corporation, has guaranteed Roche's obligation under the put.

In the event of the put, wherein sufficient shares of the Company's Special 
Common Stock are tendered to result in Roche owning at least 85% of the 
total outstanding shares of the Company's outstanding equity, the Company 
has in place an Incentive Units Program (the Program) that would result in 
amounts becoming payable to eligible employees if specified performance 
benchmarks are achieved by the Company during the term of the Program.  
These amounts would vary depending on which benchmarks are achieved.  At 
March 31, 1998, no such amounts were payable under the Program.

In conjunction with the Agreement and revisions agreed upon in principle in 
the second quarter of 1997, F. Hoffmann-La Roche Ltd (HLR) was granted an 
option for ten years for licenses to use and sell certain of the Company's


                                       7
products in non-U.S. markets (the License Agreement).  Under the License 
Agreement, HLR may exercise its option to license any such future product of 
the Company either when the Company determines to move such product into 
development or at the end of Phase II clinical trials.  The License 
Agreement provides that the Company and HLR will share the U.S. and European 
development costs regardless of the location or purpose of studies.

Under the Agreement, independent of its right to cause the Company to redeem 
the Special Common Stock, Roche may increase its ownership of the Company up 
to 79.9% by making purchases on the open market.  Roche held approximately 
66.4% of the outstanding common equity of the Company as of March 31, 1998.

Contract revenue for the reimbursement of ongoing development expenses for 
nerve growth factor (NGF), for which HLR exercised its development option 
under the License Agreement in 1996, was $4.5 million for the first quarter 
of 1998.


Note 4.     Legal Proceedings

The Company is a party to various legal proceedings, including patent 
infringement cases involving human growth hormone products and Activase, 
registered trademark, product liability cases involving Protropin, 
registered trademark, and other matters.  In addition, in July 1997, an 
action was filed in the U.S. District Court for the Northern District of 
California alleging that the Company's manufacture, use and sale of its 
Nutropin, registered trademark, human growth hormone products infringed a 
patent (the Goodman Patent) owned by the Regents of the University of 
California (UC).  This action is substantially the same as a previous action 
filed in 1990 against the Company by UC alleging that the Company's 
manufacture, use and sale of its Protropin human growth hormone products 
infringed the Goodman Patent, and the new action has been consolidated with 
that prior case.  The case is expected to commence trial on June 29, 1998.  
In October 1997, the Company was named, along with several other 
pharmaceutical companies, in a lawsuit brought by Novo Nordisk A/S (Novo) in 
the U.S. District Court for the District of New Jersey alleging infringement 
of a patent held by Novo relating to the Company's manufacture, use and sale 
of its Nutropin human growth hormone products.  Novo seeks to permanently 
enjoin the Company from the alleged patent infringement and also seeks 
compensatory and enhanced damages from the Company.  In addition, in 1995 
the Company received and responded to grand jury document subpoenas from the 
U.S. District Court for the Northern District of California for documents 
relating to the Company's past clinical, sales and marketing activities 
associated with human growth hormone.  In February 1997 and February 1998, 
the Company received grand jury document subpoenas from the same court 
related to the same subject matter.  The government is investigating this 
matter, and the Company believes that it is a subject of that investigation.

Based upon the nature of the claims made and the investigations completed to 
date by the Company and its counsel, the Company believes the outcome of 
these actions will not have a material adverse effect on the financial 
position, results of operations or cash flows of the Company.  However, were 
an unfavorable ruling to occur in any quarterly period, there exists the 
possibility of a material impact on the net income of that period.  








                                       8
Note 5.     Inventories

Inventories are summarized below:

                                          March 31,       December 31,
                                            1998              1997
                                        ------------      ------------
                                                  (thousands)

         Raw materials and supplies      $  17,576         $  17,544
         Work in process                    87,333            84,831
         Finished goods                     12,802            13,651
                                         ---------         ---------
                Total                    $ 117,711         $ 116,026
                                         =========         =========















































                                       9
                   INDEPENDENT ACCOUNTANTS' REVIEW REPORT



The Board of Directors and Stockholders
Genentech, Inc.


We have reviewed the accompanying condensed consolidated balance sheet of 
Genentech, Inc. as of March 31, 1998, and the related condensed consolidated 
statements of income and cash flows for the three-month periods ended March 
31, 1998 and 1997.  These financial statements are the responsibility of the 
Company's management.

We conducted our reviews in accordance with standards established by the 
American Institute of Certified Public Accountants.  A review of interim 
financial information consists principally of applying analytical procedures 
to financial data, and making inquiries of persons responsible for financial 
and accounting matters.  It is substantially less in scope than an audit 
conducted in accordance with generally accepted auditing standards, which 
will be performed for the full year with the objective of expressing an 
opinion regarding the financial statements taken as a whole.  Accordingly, 
we do not express such opinion.

Based on our reviews, we are not aware of any material modifications that 
should be made to the accompanying condensed consolidated financial 
statements referred to above for them to be in conformity with generally 
accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing 
standards, the consolidated balance sheet of Genentech, Inc. as of December 
31, 1997, and the related consolidated statements of income, stockholders' 
equity, and cash flows for the year then ended (not presented herein) and in 
our report dated January 20, 1998, we expressed an unqualified opinion on 
those consolidated financial statements.  In our opinion, the information 
set forth in the accompanying condensed consolidated balance sheet as of 
December 31, 1997, is fairly stated, in all material respects, in relation 
to the consolidated balance sheet from which it has been derived.





                                             ERNST & YOUNG LLP

San Jose, California 
April 9, 1998















                                      10
                              GENENTECH, INC.
                             FINANCIAL REVIEW


RELATIONSHIP WITH ROCHE HOLDINGS, INC.

On October 25, 1995, Genentech, Inc. (the Company) and Roche Holdings, Inc.  
(Roche) entered into a new agreement (the Agreement) to extend until June 
30, 1999, Roche's option to cause the Company to redeem (call) the 
outstanding callable putable common stock (Special Common Stock) of the 
Company at predetermined prices.  Should the call be exercised, Roche will 
concurrently purchase from the Company a like number of shares of the 
Company's common stock (the Common Stock) for a price equal to the Company's 
cost to redeem the Special Common Stock.  If Roche does not cause the 
redemption as of June 30, 1999, the Company's stockholders will have the 
option to cause the Company to redeem none, some or all of their shares of 
Special Common Stock at $60.00 per share (and Roche will concurrently 
provide the necessary redemption funds to the Company by purchasing a like 
number of shares of Common Stock at $60.00 per share) within thirty business 
days commencing July 1, 1999.

In conjunction with the Agreement and revisions agreed upon in principle in 
the second quarter of 1997, F. Hoffmann-La Roche Ltd (HLR) was granted an 
option for ten years for licenses to use and sell certain of the Company's 
products in non-U.S. markets (the License Agreement).  The License Agreement 
provides that the Company and HLR will share the U.S. and European 
development costs regardless of the location or purpose of studies.  Under 
the License Agreement, HLR may exercise its option to license any such 
future products of the Company either when the Company determines to move 
such product into development or at the end of Phase II clinical trials.  
See the Relationship with Roche Holdings, Inc. note in the Notes to 
Condensed Consolidated Financial Statements for further information.

As a result of the License Agreement, contract revenue in the quarter ended 
March 31, 1998, totaled $4.5 million for the reimbursement of ongoing 
development expenses related to nerve growth factor (NGF), for which HLR 
exercised its development option under the License Agreement in 1996.

RESULTS OF OPERATIONS
(dollars in millions, except per share amounts)

                                           Three Months Ended
                                                March 31,
                                           ------------------
REVENUES                                     1998       1997     % Change
---------                                  -------    -------    --------

Revenues                                   $ 264.7    $ 257.3        3 %
                                           =======    =======    ========

PRODUCT SALES
-----------------------------------
Activase                                   $  55.7    $  75.0      (26)%
Protropin, Nutropin and Nutropin AQ           50.9       55.9       (9)
Pulmozyme                                     19.5       22.3      (13)
Rituxan                                       37.7        -          -
Actimmune                                      0.9        1.0      (10)
                                           -------    -------    --------
Total product sales                        $ 164.7    $ 154.2        7 %
                                           =======    =======    ========


                                      11
Net sales of Activase, registered trademark, (Alteplase, recombinant), a 
tissue plasminogen activator (t-PA), decreased 26% in the first quarter of 
1998 from the comparable period in 1997.  This decrease was primarily due to 
a decline in market share as a result of competition from Centocor, Inc.'s 
(Centocor) Retavase, registered trademark.  The decrease also resulted, to a 
lesser extent, from a decline in the size of the thrombolytic market due to 
increasing use of mechanical reperfusion and from a decrease in the 
available commercial market due to patients receiving therapy through two 
large ongoing Phase III clinical trials.

In March 1998, the Company received two new patents related to variant forms 
of t-PA.  Based on these patents, the Company filed an infringement action 
against Centocor in the Northern District of California which alleges that 
Centocor's sale, offer for sale, use and importation of Retavase (Reteplase, 
recombinant), a t-PA, in the U.S. infringes these two new patents of the 
Company.  The Company is seeking a permanent injunction and damages.

Net sales of the Company's three growth hormone products - Protropin, 
registered trademark, (somatrem for injection), Nutropin, registered 
trademark, [somatropin (rDNA origin) for injection] and Nutropin AQ, 
trademark, [somatropin (rDNA origin) injection] - decreased 9% in the first 
quarter of 1998 from the comparable period in 1997.  This decrease primarily 
reflects fluctuations in distributor ordering patterns.

Net sales of Pulmozyme, registered trademark, (dornase alfa) decreased 13% 
in the first quarter of 1998 from the comparable period in 1997 due 
primarily to fluctuations in ordering patterns.  In February 1998, the 
Company received approval from the U.S. Food and Drug Administration (FDA) 
for a label extension for Pulmozyme.  With this revised labeling, Pulmozyme 
may now also be used to treat very young children with cystic fibrosis, ages 
three months to four years, adding to the product's previous approvals for 
patients five years of age and older.

Rituxan, trademark, (Rituximab) was approved by the FDA in November 1997 for 
the treatment of patients with relapsed or refractory low-grade or 
follicular, CD20-positive B-cell non-Hodgkin's lymphoma, a cancer of the 
immune system.  Net sales of Rituxan were $37.7 million in the first quarter 
of 1998, however, not enough time has passed for these figures to be 
indicative of the future trend of Rituxan sales.  Rituxan was co-developed 
by the Company and IDEC Pharmaceuticals Corporation (IDEC), from whom the 
Company licenses Rituxan.  During the first quarter of 1998, the Company 
received FDA approval for the large-scale (12,000-liter) manufacture of 
Rituxan.  The Rituxan that the Company manufactures will supplement the 
Rituxan manufactured by IDEC.

                                    Three Months Ended
                                         March 31,
ROYALTIES, CONTRACT AND             ------------------
  OTHER, AND INTEREST INCOME          1998       1997     % Change
----------------------------        -------    -------    --------
Royalties                            $64.5      $65.3        (1)%
Contract and other                    14.9       21.4       (30)
Interest income                       20.6       16.4        26

Royalty income in the first quarter of 1998 was equivalent to the comparable 
period in 1997.  Although royalty income in the first quarter of 1998 was 
higher than the comparable period of last year due to higher licensee sales, 
this increase was offset by the reversal of reserves against certain royalty 
revenues in the first quarter of 1997.



                                      12
Contract and other revenue decreased 30% in the first quarter of 1998 from 
the comparable period in 1997 primarily as a result of fluctuations in 
contract revenues from HLR.  Two projects, Rituxan and IGF-I, for which HLR 
exercised its development option in 1996, have been winding down.  Rituxan 
was commercialized in the fourth quarter of 1997 and IGF-I in Type I and II 
diabetes mellitus was discontinued in September 1997.

Interest income increased 26% in the first quarter of 1998 from the 
comparable period in 1997 due to a higher portfolio balance and an increase 
in the average yield on the portfolio.  The total investment portfolio, 
consisting of cash and cash equivalents, and short- and long-term marketable 
securities, increased to $1,372.9 million as of March 31, 1998 from $1,166.1 
million as of March 31, 1997 and from $1,286.5 million as of December 31, 
1997.

                                    Three Months Ended
                                         March 31,
                                    ------------------
COSTS AND EXPENSES                    1998       1997     % Change
--------------------------          -------    -------    --------

Cost of sales                       $ 33.6     $ 27.7        21 %
Research and development              98.2      122.7       (20)
Marketing, general and 
  administrative                      74.9       62.0        21
Interest expense                       1.0        1.0         -
                                    -------    -------    --------
  Total costs and expenses          $207.7     $213.4        (3)%
                                    =======    =======    ========

Cost of sales as a percent of product sales increased 21% in the first 
quarter of 1998 from the comparable period in 1997 primarily as a result of 
a product mix shift, including the introduction of Rituxan.

Research and development (R&D) expenses decreased 20% in the first quarter 
of 1998 from the comparable period in 1997.  The decrease was largely due to 
the completion, discontinuation and wind-down of large-scale clinical 
trials.  For the first quarter of 1998, the Company invested approximately 
37% of revenues into R&D compared to 48% in the comparable period in 1997.  
This percentage decrease reflects the Company's goal to decrease R&D 
spending as a percent of revenues as products progress through late-stage 
clinical trials and revenues increase.

Marketing, general and administrative (MG&A) expenses increased 21% in the 
first quarter of 1998 from the comparable period in 1997 due to higher 
marketing and sales (M&S) expenses related to the introduction of Rituxan 
and the resultant profit sharing with IDEC and as a result of competitive 
conditions in the thrombolytic market.

                                    Three Months Ended
                                         March 31,
                                    ------------------
INCOME TAXES                          1998       1997     % Change
-------------                       -------    -------    --------

Income taxes                         $16.0      $12.3        30%

The Company's effective income tax rate for the first quarter of 1998 and 
the comparable period in 1997 was 28%. The effective tax rate in each period 
was less than the U.S. statutory rate of 35% primarily due to research and 
development tax credits.

                                      13
                                    Three Months Ended
                                         March 31,
                                    ------------------
NET INCOME                            1998       1997     % Change
-------------------                 -------    -------    --------

Net income                          $ 41.0     $ 31.6        30%
Earnings per share:
  Basic                             $ 0.33     $ 0.26
  Diluted                           $ 0.32     $ 0.25

The 30% increase in net income in the first quarter of 1998 from the 
comparable period in 1997 was driven primarily by sales of Rituxan, higher 
interest income and lower R&D; partially offset by a decrease in sales of 
other products, lower contract and other revenue, higher M&S expenses and 
higher cost of sales.

LIQUIDITY AND CAPITAL
  RESOURCES                         March 31, 1998        December 31, 1997
---------------------------      -------------------     -------------------

Cash and cash equivalents,            $ 1,372.9               $ 1,286.5
  short-term investments
  and long-term marketable
  securities

Working capital                           958.9                   904.4

Cash generated from operations, maturities of investments and stock 
issuances were used to make investments in marketable securities and capital 
additions.

Cash and cash equivalents at March 31, 1998, were lower by $23.2 million 
compared to December 31, 1997 and working capital increased by $54.5 million 
in the first quarter of 1998.

Capital expenditures totaled $21.0 million in the first quarter of 1998 
compared to $45.7 million in the comparable period in 1997.  The decrease in 
the first quarter of 1998 was due to higher construction activity in the 
comparable period in 1997 related to improvements to existing manufacturing 
and office facilities.


FORWARD-LOOKING STATEMENTS

The following section contains forward-looking statements that are based on 
the Company's current expectations.  Because the Company's actual results 
may differ materially from these and any other forward-looking statements 
made by or on behalf of the Company, this section also includes a discussion 
of important factors that could affect the Company's actual future results, 
including its product sales, royalties, contract revenues, expenses and net 
income.

Product Sales:  The Company's product sales may vary from period to period 
for several reasons including, but not limited to:  the overall competitive 
environment for the Company's products, the amount of sales to customers in 
the U.S., the amount and timing of the Company's sales to HLR, the timing 
and volume of bulk shipments to licensees, the availability of third-party 
reimbursements for the cost of therapy, the effectiveness and safety of the 
products, the rate of adoption and use of the Company's products for


                                      14
approved indications and additional indications, and the potential 
introduction of new products and additional indications for existing 
products in 1998 and beyond.

Competition:  The Company faces growing competition in two of its 
therapeutic markets.  Activase lost market share and could lose additional 
market share in the thrombolytic market to Centocor's Retavase and such 
adverse effect on sales could be material.  Retavase received FDA approval 
in October 1996 for the treatment of acute myocardial infarction (AMI).  In 
addition, there is an increasing use of angioplasty in lieu of thrombolytic 
therapy for the treatment of AMI, which is expected to continue.  In the 
growth hormone market, the Company continues to face increased competition 
from five other companies with growth hormone products.  Three of these 
competitors have also received approval to market their existing human 
growth hormone products for additional indications.  The Company expects 
that such competition could have an adverse effect on its sales of 
Protropin, Nutropin and Nutropin AQ and such effect could be material.

Other competitive factors affecting the Company's product sales include, but 
are not limited to:  the timing of FDA approval, if any, of additional 
competitive products, pricing decisions made by the Company, the degree of 
patent protection afforded to particular products, the outcome of litigation 
involving the Company's patents and patents of competing companies for 
products and processes related to production and formulation of those 
products, the increasing use and development of alternate therapies, and the 
rate of market penetration by competing products.

Royalty and Contract Revenues:  Royalty and contract revenues in future 
periods could vary significantly from 1997 levels.  Major factors affecting 
these revenues include, but are not limited to:  HLR's decisions to exercise 
or not to exercise its option to develop and sell the Company's future 
products in non-U.S. markets and the timing and amount of related 
development cost reimbursements, if any; variations in HLR's sales and other 
licensees' sales of licensed products; the expiration of royalties from 
Lilly beginning in August 1998, which contribute substantially to current 
royalty revenues; fluctuations in foreign currency exchange rates; the 
initiation of other new contractual arrangements with other companies; the 
timing of non-U.S. approvals, if any, for products licensed to HLR; whether 
and when contract benchmarks are achieved; and the conclusion of existing 
arrangements with other companies and HLR.

R&D:  The Company intends to continue to develop new products and is 
committed to aggressive R&D investment.  Successful pharmaceutical product 
development is highly uncertain and is dependent on numerous factors, many 
of which are beyond the Company's control. Products that appear promising in 
the early phases of development may fail to reach the market for numerous 
reasons: they may be found to be ineffective or to have harmful side effects 
in preclinical or clinical testing; they may fail to receive necessary 
regulatory approvals; they may turn out to be uneconomical because of 
manufacturing costs or other factors; or they may be precluded from 
commercialization by the proprietary rights of others or by competing 
products or technologies for the same indication.  Success in preclinical 
and early clinical trials does not ensure that large scale clinical trials 
will be successful.  Clinical results are frequently susceptible to varying 
interpretations that may delay, limit or prevent regulatory approvals.  The 
length of time necessary to complete clinical trials and to submit an 
application for marketing approval for a final decision by a regulatory 
authority varies significantly and may be difficult to predict.

The Company currently has several products in late-stage clinical testing 
and anticipates that its R&D expenses will continue at a high percentage of 


                                      15
revenues over the short-term though they are expected to decline in 1998 
from 1997 levels.  Over the long-term, however, as revenues increase, R&D as 
a percent of revenues should decrease to the 20% to 25% range.  Factors 
affecting the Company's R&D expenses include, but are not limited to:  the 
outcome of clinical trials currently being conducted, the number of products 
entering into development from late-stage research, in-licensing activities, 
including the timing and amount of related development funding or milestone 
payments, and future levels of revenues.

In December 1997, the Company and Alteon Inc. (Alteon) entered into a 
collaborative agreement to develop and market pimagedine, an advanced 
glycosylation end-product formation inhibitor.  Based on the recommendations 
of an External Safety Monitoring Committee, with which the FDA and the 
Company concurred, in the first quarter of 1998, Alteon discontinued a Phase 
III clinical trial of pimagedine in Type 2 diabetics with progressive kidney 
disease and is continuing a Phase III trial of pimagedine in Type 1 
diabetics with progressive kidney disease.  A third Phase III trial in 
diabetic patients with end-stage renal disease is ongoing.

Income Tax Provision:  The Company expects its effective tax rate to be 
approximately 28% in 1998 and continue at or near 35% for the next several 
years dependent upon several factors.  These factors include, but are not 
limited to, changes in tax laws and rates, future levels of R&D spending, 
the outcome of clinical trials of certain development products, the 
Company's success in commercializing such products, and potential 
competition regarding the products.

Uncertainties Surrounding Proprietary Rights:  The patent positions of 
pharmaceutical and biotechnology companies can be highly uncertain and 
involve complex legal and factual questions.  Accordingly, the breadth of 
claims allowed in such companies' patents cannot be predicted. Patent 
disputes are frequent and can preclude commercialization of products.  The 
Company has in the past been, is currently, and may in the future be 
involved in material patent litigation.  Such litigation is costly in its 
own right and could subject the Company to significant liabilities to third-
parties and, if decided adversely, the Company may need to obtain third-
party licenses at a material cost or cease using the technology or product 
in dispute.  The presence of patents or other proprietary rights belonging 
to other parties may lead to the termination of R&D of a particular product.  
The Company believes it has strong patent protection or the potential for 
strong patent protection for a number of its products that generate sales 
and royalty revenue or that the Company is developing; however, the courts 
will determine the ultimate strength of patent protection of the Company's 
products and those on which the Company earns royalties.

Year 2000:  Some of the Company's older computer software programs were 
written using two digit fields rather than four digit fields to define the 
applicable year (i.e., "98" in the computer code refers to the year "1998").  
As a result, time-sensitive functions of those software programs may 
misinterpret dates after January 1, 2000, to refer to the twentieth century 
rather than the twenty-first century (i.e., "02" could be interpreted as 
"1902" rather than "2002").  This could cause system failures or 
miscalculations resulting in inaccuracies in computer output or disruptions 
of operations, including, among other things, inaccurate processing of 
financial information and/or temporary inabilities to process transactions, 
manufacture products, or engage in similar normal business activities.

The Company has developed plans to address the potential exposures related 
to the impact on its computer systems for the Year 2000 and beyond.  An 
assessment of key financial, informational and operational systems to 
determine if they are Year 2000 compliant has been completed.  Detailed


                                      16
plans and timelines for implementation and testing of modifications and 
corrections to these key computer systems have been or are in process of 
being developed to address computer system problems as required by December 
31, 1999.  The Company believes that with these detailed plans and completed 
modifications, the Year 2000 issue will not pose significant operational 
problems for its computer systems.  However, if such modifications and 
conversions are not made, or are not completed in a timely fashion, the Year 
2000 issue could have a material impact on the operations of the Company.

In addition to risks associated with the Company's own computer systems, the 
Company has relationships with, and is to varying degrees dependent upon, a 
large number of third parties that provide information, goods and services 
to the Company.  These include financial institutions, suppliers, vendors, 
research partners and governmental entities.  If large numbers of these 
third parties experience failures in their computer systems due to Year 2000 
non-compliance, it could affect the Company's ability to process 
transactions, manufacture products, or engage in similar normal business 
activities.  While some of these risks are outside the control of the 
Company, the Company has instituted a program to identify key third parties, 
update contracts and address any non-compliance issues.

The total cost of the Year 2000 systems assessments and conversions is 
funded through operating cash flows and the Company is expensing these 
costs.  The financial impact of making the required systems changes cannot 
be known precisely at this time, but is not expected to be material to the 
Company's financial position, results of operations or cash flows.

Liquidity:  The Company believes that its cash, cash equivalents and short-
term investments, together with funds provided by operations and leasing 
arrangements, will be sufficient to meet its foreseeable operating cash 
requirements.  In addition, the Company believes it could access additional 
funds from the capital and debt markets.  Factors affecting the Company's 
cash position include, but are not limited to, future levels of the 
Company's product sales, royalty and contract revenues, expenses, in-
licensing activities, including the timing and amount of related development 
funding or milestone payments, and capital expenditures.

Roche Holdings, Inc.:  At March 31, 1998, Roche held approximately 66.4% of 
the Company's outstanding common equity.  The Company expects to continue to 
have material transactions with Roche, including royalty and contract 
revenues, product sales and joint product development costs.

Market Risk:  The Company is exposed to market risk, including changes to 
interest rates, foreign currency exchange rates and equity investment 
prices.  To reduce the volatility related to these exposures, the Company 
enters into various derivative transactions pursuant to the Company's 
investment and risk management policies and procedures in areas such as 
hedging and counterparty exposure practices.  The Company does not use 
derivatives for speculative purposes.

The Company maintains risk management control systems to monitor the risks 
associated with interest rates, foreign currency exchange rates and equity 
investment price changes, and its derivative and financial instrument 
positions.  The risk management control systems use analytical techniques, 
including sensitivity analysis, and market values. Though the Company 
intends for its risk management control systems to be comprehensive, there 
are inherent risks which may only be partially offset by the Company's 
hedging programs should there be unfavorable movements in interest rates, 
foreign currency exchange rates or equity investment prices.



                                      17
     Interest Rates -  The Company's interest income is sensitive to changes 
in the general level of U.S. interest rates.  In this regard, changes in 
U.S. interest rates affect the interest earned on the Company's cash 
equivalents, short-term investments, convertible equity loans, preferred 
stock investments and long-term investments. To mitigate the impact of 
fluctuations in U.S. interest rates, the Company may enter into swap 
transactions, which involve the receipt of fixed rate interest and the 
payment of floating rate interest without the exchange of the underlying 
principal.  By investing the Company's cash in an amount equal to the 
notional amount of the swap contract, with a maturity date equal to the 
maturity date of the floating rate obligation, the Company hedges itself 
from any potential earnings impact due to changes in interest rates.

     Foreign Currency Exchange Rates -  The Company receives royalty 
revenues from licensees selling products in countries throughout the world.  
As a result, the Company's financial results could be significantly affected 
by factors such as changes in foreign currency exchange rates or weak 
economic conditions in the foreign markets in which the Company's licensed 
products are sold.  The Company is exposed to changes in exchange rates in 
Europe, Asia and Canada.  The Company's exposure to foreign exchange rates 
primarily exists with the German Mark.  When the U.S. dollar strengthens 
against the currencies in these countries, the U.S. dollar value of non-U.S. 
dollar-based revenue decreases; when the U.S. dollar weakens, the U.S. 
dollar value of the non-U.S. dollar-based revenues increases.  Accordingly, 
changes in exchange rates, and in particular a strengthening of the U.S. 
dollar, may adversely affect the Company's royalty revenues as expressed in 
U.S. dollars.  In addition, as part of its overall investment strategy, the 
Company has three portfolios that are managed by external money managers.  
These portfolios consist primarily of non-dollar denominated investments.  
As a result, the Company is exposed to changes in the exchanges rates of the 
countries in which these non-dollar denominated investments are made. 

To mitigate this risk, the Company hedges certain of its anticipated 
revenues by purchasing option contracts with expiration dates and amounts of 
currency that are based on 25% to 90% of probable future revenues so that 
the potential adverse impact of movements in currency exchange rates on the 
non-dollar denominated revenues will be at least partly offset by an 
associated increase in the value of the option.  The duration of these 
options is generally one to four years.  The Company may also enter into 
foreign currency forward contracts (forward contracts) to lock in the dollar 
value of a portion of these anticipated revenues.  The duration of these 
forward contracts is generally less than one year.  Also, to hedge the non-
dollar denominated investments in the externally managed portfolios, the 
external money managers also enter into forward contracts.

     Equity Investment Securities -  As part of its strategic alliance 
efforts, the Company invests in equity securities of biotechnology companies 
that are subject to fluctuations from market value changes in stock prices.  
To mitigate this risk, certain equity securities are hedged with costless 
collars.  A costless collar is a purchased put option and a written call 
option in which the cost of the purchased put and the proceeds of the 
written call offset each other; therefore, there is no initial cost or cash 
outflow for these instruments at the time of purchase.  The purchased put 
protects the Company from a decline in the market value of the security 
below a certain minimum level (the put "strike" level); while the call 
effectively limits the Company's potential to benefit from an increase in 
the market value of the security above a certain maximum level (the call 
"strike" level).  In addition, as part of its strategic alliance efforts, 
the Company has made interest bearing loans that are convertible into 
equity.


                                      18
Credit Risk of Counterparties:  The Company could be exposed to losses 
related to the above financial instruments should one of its counterparties 
default.  This risk is mitigated through credit monitoring procedures.

Legal Proceedings:  The Company is a party to various legal proceedings, 
including patent infringement cases and various cases involving product 
liability and other matters. See the Legal Proceedings note in the Notes to 
Condensed Consolidated Financial Statements for further information.






















































                                      19
                                 GENENTECH, INC.
                           PART II.  OTHER INFORMATION


ITEM 1.     LEGAL PROCEEDINGS

Previously reported.

See Item 3 of the Company's report on Form 10-K for the period ended 
December 31, 1997.

See also Note 4 "Legal Proceedings" in Part I "Notes to Condensed 
Consolidated Financial Statements."



ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            (a)  Exhibits

                 15.1   Letter re:   Unaudited Interim Financial Information

                 27.1   Financial Data Schedule


            (b)  Reports on Form 8-K

                 There were no reports on Form 8-K filed during the quarter 
                 ended March 31, 1998.



ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


The Company's market risk disclosures set forth in the 1997 Annual Report to 
Stockholders have not changed significantly.

























                                      20
                                GENENTECH, INC.
                                  SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has duly caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.


   Date:  May 11, 1998                           GENENTECH, INC.



   /S/ARTHUR D. LEVINSON                         /S/LOUIS J. LAVIGNE, JR.
   -------------------------------------         ----------------------------
   Arthur D. Levinson, Ph.D.                     Louis J. Lavigne, Jr.
   President and Chief Executive Officer         Executive Vice President and
                                                 Chief Financial Officer



                                                 /S/JOHN M. WHITING
                                                 ----------------------------
                                                 John M. Whiting
                                                 Controller and
                                                 Chief Accounting Officer




































                                      21