<PAGE>

                                 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, 1999.

       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)

             One DNA Way, South San Francisco, California 94080-4990
              (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, 1999

Callable Putable Common Stock $.02 par value    51,346,989
(Special Common Stock)                          Outstanding at March 31, 1999















<PAGE>

                                   GENENTECH, INC.
                                        INDEX

<TABLE>
<CAPTION>
PART I.     FINANCIAL INFORMATION                                    PAGE NO.
<S>                                                                  <C>
Condensed Consolidated Statements of Income -
for the three months ended March 31, 1999 and 1998                        3 

Condensed Consolidated Statements of Cash Flows -
for the three months ended March 31, 1999 and 1998                        4 

Condensed Consolidated Balance Sheets -
March 31, 1999 and December 31, 1998                                      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 

</TABLE>


































                                    Page 2
<PAGE>

PART I.  FINANCIAL INFORMATION


                                  GENENTECH, INC.
                    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                       (thousands, except per share amounts)
                                    (unaudited)
<TABLE>
<CAPTION>
                                                                  Three Months
                                                                 Ended March 31,
                                                              --------------------
                                                                 1999       1998
                                                              ---------  ---------
<S>                                                           <C>        <C>
Revenues:
  Product sales (including amounts from related parties:
    1999-$13,624; 1998-$6,607)                                $ 234,069  $ 164,719
  Royalties (including amounts from related parties:
    1999-$11,241; 1998-$7,129)                                   46,618     64,493
  Contract and other (including amounts from 
    related parties: 1999-$4,269; 1998-$7,798)                   19,266     14,865
  Interest                                                       22,399     20,623
                                                              ---------  ---------
     Total revenues                                             322,352    264,700

Costs and expenses:
  Cost of sales (including amounts from related parties:
    1999-$10,786; 1998-$6,025)                                   45,723     33,621
  Research and development (including contract
    related: 1999-$7,860; 1998-$8,562)                           90,740     98,202
  Marketing, general and administrative                          97,201     74,950
  Legal settlement                                               50,000          -
  Interest                                                        1,363        959
                                                              ---------  ---------
    Total costs and expenses                                    285,027    207,732

Income before taxes                                              37,325     56,968

Income tax provision                                             22,910     15,951
                                                              ---------  ---------
Net income                                                    $  14,415  $  41,017
                                                              =========  =========
Earnings per share:
  Basic                                                       $    0.11  $    0.33
                                                              =========  =========
  Diluted                                                     $    0.11  $    0.32
                                                              =========  =========
Weighted average shares used to
  compute diluted earnings per share                            132,522    128,807
                                                              =========  =========
</TABLE>

              See Notes to Condensed Consolidated Financial Statements.







                                    Page 3
<PAGE>

                                   GENENTECH, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (thousands)
                                     (unaudited)
<TABLE>
<CAPTION>
                                                                  Three Months
                                                                 Ended March 31,
                                                              ---------------------
                                                                 1999        1998
                                                              ---------   ---------
<S>                                                           <C>         <C>
Cash flows from operating activities:
  Net income                                                  $  14,415   $  41,017
  Adjustments to reconcile net income to net 
   cash provided by operating activities:
   Depreciation and amortization                                 21,912      17,936
   Deferred income taxes                                           (924)      4,386
   Gain on sales of securities available-for-sale               (12,259)     (5,835)
   Loss on sales of securities available-for-sale                    30         376
   Write-down of securities available-for-sale                      914       2,555
   Write down of nonmarketable securities                           432           -
  Changes in assets and liabilities:
     Investments in trading securities                           (2,772)     25,290
     Receivables and other current assets                       (10,503)     15,071
     Inventories                                                  1,914      (1,685)
     Accounts payable, other current liabilities 
       and other long-term liabilities                           40,466     (30,252)
                                                              ---------   ---------
  Net cash provided by operating activities                      53,625      68,859

Cash flows from investing activities:
  Purchases of securities held-to-maturity                     (126,981)   (128,731)
  Proceeds from maturities of securities held-to-maturity       112,357     102,874
  Purchases of securities available-for-sale                   (220,652)   (177,731)
  Proceeds from sales of securities available-for-sale          113,533      96,636
  Purchases of non-marketable equity securities                  (2,317)          -
  Capital expenditures                                          (18,209)    (21,002)
  Change in other assets                                        (14,148)      1,336
                                                              ---------   ---------
  Net cash used in investing activities                        (156,417)   (126,618)

Cash flows from financing activities:
  Stock issuances                                                35,190      34,578
                                                              ---------   ---------
  Net cash provided by financing activities                      35,190      34,578
                                                              ---------   ---------
Net decrease in cash and cash equivalents                       (67,602)    (23,181)
  Cash and cash equivalents at beginning of period              281,162     244,469
                                                              ---------   ---------
  Cash and cash equivalents at end of period                  $ 213,560   $ 221,288
                                                              =========   ========= 

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






                                    Page 4
<PAGE>

                                   GENENTECH, INC.
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                                     (thousands)
                                     (unaudited)
<TABLE>
<CAPTION>
                                                       March 31,      December 31,
                                                         1999             1998
                                                     ------------     ------------
<S>                                                  <C>              <C>
ASSETS
Current assets:
  Cash and cash equivalents                           $  213,560       $  281,162
  Short-term investments                                 681,410          606,544
  Accounts receivable, net (including amounts
    from related party: 1999-$32,522; 
    1998-$22,850)                                        168,816          149,741
  Inventories                                            146,712          148,626
  Prepaid expenses and other current assets               51,940           55,885
                                                     ------------     ------------
     Total current assets                              1,262,438        1,241,958

Long-term marketable securities                          767,450          716,888
Property, plant and equipment, less accumulated
  depreciation (1999-$464,749; 1998-$445,215)            698,887          700,249
Other assets                                             197,333          196,307
                                                     ------------     ------------
Total assets                                          $2,926,108       $2,855,402
                                                     ============     ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                    $   31,576       $   40,895
  Accrued liabilities - related party                     12,778           10,945
  Other accrued liabilities                              275,422          239,487
                                                     ------------     ------------
     Total current liabilities                           319,776          291,327

Long-term debt                                           149,990          149,990
Other long-term liabilities                               66,638           70,240
                                                     ------------     ------------
     Total liabilities                                   536,404          511,557

Commitments and contingencies
Stockholders' equity:
  Preferred stock                                              -                -
  Special Common Stock                                     1,027            1,010
  Common Stock                                             1,532            1,532
  Additional paid-in capital                           1,630,326        1,588,990
  Retained earnings                                      707,465          693,050
  Accumulated other comprehensive income                  49,354           59,263
                                                     ------------     ------------
     Total stockholders' equity                        2,389,704        2,343,845
                                                     ------------     ------------
Total liabilities and stockholders' equity            $2,926,108       $2,855,402
                                                     ============     ============
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.



                                    Page 5

<PAGE>

                                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, 1999 and 1998 are not necessarily 
indicative of the results that may be expected for the year ending December 
31, 1999.  The condensed consolidated balance sheet as of December 31, 1998 
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, 1998.

     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

In June 1998, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards (FAS) 133, "Accounting for Derivative 
Instruments and Hedging Activities," effective beginning in the first quarter 
of 2000.  FAS 133 establishes accounting and reporting standards for 
derivative instruments, including certain derivative instruments embedded in 
other contracts, and for hedging activities.  It requires companies to 
recognize all derivatives as either assets or liabilities on the balance 
sheet and measure those instruments at fair value.  Gains or losses resulting 
from changes in the values of those derivatives would be accounted for 
depending on the use of the derivative and whether it qualifies for hedge 
accounting under FAS 133.  The Company is currently evaluating the impact of 
FAS 133 on its financial position and results of operations.


Note 3.     Earnings Per Share

The following is a reconciliation of the numerator and denominators of the 
basic and diluted earnings per share (EPS) computations for the quarter ended 
March 31, 1999 and 1998 (in thousands).

                                                1999         1998
                                            -----------------------
Numerator:
 Net income - numerator for 
  basic and diluted EPS:                    $  14,415     $  41,017
                                            ---------     ---------
Denominator:
 Denominator for basic EPS--
  weighted-average shares                     127,704       124,758


                                    Page 6
<PAGE>

 Effect of dilutive securities:
  Stock options                                 4,818         4,049
                                            ---------     ---------
 Denominator for diluted EPS
 --adjusted weighted-average 
   shares and assumed conversions             132,522       128,807
                                            =========     =========

     In the first quarter of 1999, all options outstanding were dilutive.  In 
the first quarter of 1998, options to purchase 2,850,050 shares of Special 
Common Stock at $67.31 per share were outstanding, but were not included in 
the computation of diluted EPS.  These options' exercise price was greater 
than the average market price of the Special Common Stock and therefore, the 
effect would be anti-dilutive.

     The Company had convertible subordinated debentures that were 
convertible to 1,013,447 shares of Special Common Stock in the first quarter 
of 1999 and had convertible subordinated debentures that were convertible to 
1,013,514 shares of Special Common Stock in the comparable period in 1998, 
but were not included in the computation of diluted EPS because they were 
anti-dilutive.


Note 4.     Comprehensive Income

The Company adopted FAS 130, "Reporting Comprehensive Income," in 1998.  
Comprehensive income is comprised of net income and other comprehensive 
income.  The Company's other comprehensive income includes unrealized holding 
gains and losses on its available-for-sale securities, which were reported 
separately in stockholders' equity, and included in accumulated other 
comprehensive income.  Comprehensive income was $4.5 million for the quarter 
ended March 31, 1999 and $46.1 million for the comparable period in 1998.


Note 5.     Relationship with Roche Holdings, Inc.

On June 30, 1999, Roche Holdings, Inc.'s (Roche) option to cause the Company 
to redeem (call) the outstanding Callable Putable Common Stock (Special 
Common Stock) of the Company at $82.50 will expire.  This arrangement was the 
result of the October 1995 agreement (the Agreement) between the Company and 
Roche.  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.  If Roche does not cause 
the redemption as of June 30, 1999, for thirty business days commencing July 
1, 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).  Roche Holding Ltd, a Swiss corporation, 
has guaranteed Roche's obligation under the put.

     In the event that sufficient shares of the Company's Special Common 
Stock are tendered pursuant to the put 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.  In event of the put, at March 31, 1999, $14.7 million is 
contingently payable under the Program.




                                    Page 7
<PAGE>

     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 64.9% of the outstanding common equity of the Company as of 
March 31, 1999.

     In conjunction with the Agreement, the Company and F. Hoffmann-La Roche 
Ltd (HLR) entered into an agreement (the License Agreement), pursuant to 
which 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.  In the second quarter 
of 1997 and the second and fourth quarters of 1998, the Company and HLR 
agreed in principle to changes to the License Agreement.  As so revised, 
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. 
Also, as part of this Agreement, the Company receives royalties on sales of 
certain of its products in Canada, on sales of Pulmozyme, registered 
trademark, outside of the U.S. and on sales of rituximab outside of the U.S., 
excluding Japan.

     Contract revenue from HLR for the reimbursement of ongoing development 
expenses was $4.3 million for the first quarter of 1999 and $7.8 million for 
the comparable period in 1998.

     In addition, on July 6, 1998, the Company entered into an agreement 
with HLR to provide HLR exclusive marketing rights outside of the U.S. for 
Herceptin, registered trademark, (trastuzumab).  Under the agreement, HLR 
paid $40.0 million and has agreed to pay cash milestones tied to future 
product development activities, to contribute equally with the Company up to 
a maximum of $40.0 million on global development costs and to make royalty 
payments on product sales.  As of March 31, 1999, no additional amounts have 
been paid.


Note 6.     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 and other matters.

     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, registered trademark, 
human growth hormone products infringed the Goodman Patent.  The 1997 case 
has been stayed pending the conclusion of the 1990 case, which is now in 
trial.  UC has publicly stated that it is seeking $400 million in damages 
from the Company pursuant to the 1990 case.

     In the 1990 case, UC contends that the Protropin production plasmid, 
developed and used by the Company, infringes the claims of the Goodman Patent 
under the doctrine of equivalents.  UC contends that UC human growth hormone 
cDNA brought to Genentech by an ex-employee of UC, Peter Seeburg, was used in 
the construction of the Company's Protropin production plasmid, and that such 
use, if it occurred, constitutes some evidence of infringement under the 



                                    Page 8
<PAGE>

doctrine of equivalents.  The Company vigorously and emphatically denies that 
the UC human growth hormone cDNA brought to Genentech by Mr. Seeburg was used 
in the construction of Genentech's human growth hormone production plasmid.  
Rather, the Company's records demonstrate that the plasmid was developed 
internally by Dr. David Goeddel without any use of the UC cDNA.  In addition, 
the Company believes the evidence in the case strongly supports its position 
that there is no infringement of the Goodman Patent under the doctrine of 
equivalents.  The Company also believes that UC committed fraud upon the U.S. 
Patent and Trademark Office in obtaining the Goodman Patent when it was 
originally issued to UC in 1982, and that the Goodman Patent is therefore 
invalid because of UC's inequitable conduct.

     Based upon the nature of the claims made and the information available 
to date to the Company and its counsel through investigations and otherwise, 
the Company believes the outcome of these actions is not likely to 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.  

     The Company has entered into a settlement agreement with the U.S. 
Department of Justice and the U.S. Attorney for the Northern District of 
California concerning an investigation, ongoing since 1995, into the 
Company's past promotional practices with respect to human growth hormone.  
As part of the settlement agreement, the Company will pay a criminal fine and 
restitution in the amount of $50 million and will plead guilty to a felony of 
promoting Protropin for medical uses for which it was not approved.  The 
Company recorded a $50 million charge in the first quarter of 1999 related to 
the settlement.


Note 7.     Inventories

Inventories are summarized below:

                                          March 31,       December 31,
                                            1999              1998
                                        ------------      ------------
                                                  (thousands)

         Raw materials and supplies      $  21,700         $  21,414
         Work in process                   102,520           106,383
         Finished goods                     22,492            20,829
                                         ---------         ---------
                Total                    $ 146,712         $ 148,626
                                         =========         =========

















                                    Page 9
<PAGE>

                   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, 1999, and the related condensed consolidated 
statements of income and cash flows for the three-month periods ended March 
31, 1999 and 1998.  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 an 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, 1998, 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, 1999, 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, 1998, 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, 1999
















                                   Page 10
<PAGE>

                              GENENTECH, INC.
                             FINANCIAL REVIEW


RELATIONSHIP WITH ROCHE HOLDINGS, INC.

On June 30, 1999, Roche Holdings, Inc.'s (Roche) option to cause Genentech, 
Inc. (the Company) to redeem (call) the outstanding Callable Putable Common 
Stock (Special Common Stock) of the Company at $82.50 will expire.  This 
arrangement was the result of the October 1995 agreement (the Agreement) 
between the Company and Roche.  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.  If Roche does not cause the redemption as of June 30, 1999, for 
thirty business days commencing July 1, 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).

     In conjunction with the Agreement, the Company and F. Hoffmann-La Roche 
Ltd (HLR) entered into an agreement (the License Agreement), pursuant to 
which 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.  In the second quarter 
of 1997 and the second and fourth quarters of 1998, the Company and HLR 
agreed in principle to changes to the License Agreement.  As so revised, 
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. 
Also, as part of this Agreement, the Company receives royalties on sales of 
certain of its products in Canada, on sales of Pulmozyme, registered 
trademark, outside of the U.S. and on sales of rituximab outside of the U.S., 
excluding Japan.

     Contract revenue from HLR for the reimbursement of ongoing development 
expenses was $4.3 million for the first quarter of 1999 and $7.8 million for 
the comparable period in 1998.

     In addition, on July 6, 1998, the Company entered into an agreement with 
HLR to provide HLR exclusive marketing rights outside of the U.S. for 
Herceptin, registered trademark, (trastuzumab).  Under the agreement, HLR 
paid $40.0 million and has agreed to pay cash milestones tied to future 
product development activities, to contribute equally with the Company up to 
a maximum of $40.0 million on global development costs and to make royalty 
payments on product sales.  As of March 31, 1999, no additional amounts have 
been paid.

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

                                           Three Months Ended
                                                March 31,
                                           ------------------
REVENUES                                     1999       1998     % Change
---------                                  -------    -------    --------
Revenues                                   $ 322.4    $ 264.7        22%
                                           =======    =======    ========




                                   Page 11
<PAGE>

PRODUCT SALES
-----------------------------------
Herceptin                                  $  39.9    $   -           -%
Rituxan                                       57.1       37.7        51
Activase                                      52.0       55.7        (7)
Protropin, Nutropin and Nutropin AQ           56.2       50.9        10
Pulmozyme                                     28.2       19.5        45
Actimmune                                      0.7        0.9       (22)
                                           -------    -------    --------
Total product sales                        $ 234.1    $ 164.7        42%
                                           =======    =======    ========

Sales of Herceptin, indicated for the treatment of certain patients with 
metastatic breast cancer, in the first quarter of 1999 were $39.9 million.  
The Company recorded $30.5 million of initial sales of Herceptin in the 
fourth quarter of 1998.  While the Company is encouraged by these sales 
figures, not enough time has passed for these figures to be indicative of 
future sales.  An increase of physician acceptance of Herceptin, as an 
important therapy for women with metastatic breast cancer who have tumors 
that overexpress the human epidermal growth factor receptor (HER2) protein, 
has contributed to a positive sales trend and successful initial penetration 
into the breast cancer market.

Sales of Rituxan, registered trademark, (Rituximab), indicated for the 
treatment of patients with relapsed or refractory low-grade or follicular, 
CD20-positive, B-cell non-Hodgkin's lymphoma,(B-cell NHL), a cancer of the 
immune system, increased 51% in the first quarter of 1999 from the comparable 
period in 1998.  This sales increase is primarily due to increased market 
penetration for the treatment of B-cell NHL.  Rituxan was co-developed by the 
Company and IDEC Pharmaceuticals Corporation (IDEC), from whom the Company 
licenses Rituxan.

Net sales of Activase, registered trademark, (Alteplase, recombinant), a 
tissue plasminogen activator (t-PA), decreased 7% in the first quarter of 
1999 from the comparable period in 1998.  The decrease is due to a continued 
decline in the overall size of the thrombolytic therapy market due to 
mechanical reperfusion and continued competition from Centocor, Inc.'s 
(Centocor) Retavase, registered trademark.

     In February 1999, the Company received a new patent related to variant 
forms of t-PA.  Based on this patent, the Company filed a second infringement 
suit against Centocor, Inc. in the U.S. District Court for the Northern 
District of California which alleges that Centocor's sale, offer for sale, 
and use and importation of Retavase, a t-PA product, in the U.S. infringes 
this new patent of the Company.  Last year, the Company brought suit against 
Centocor in the same court above alleging infringement of two related 
Genentech patents.  The suits have been consolidated and are pending.

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, 
registered trademark, [somatropin (rDNA origin) injection], a liquid 
formulation of Nutropin - increased 10% in the first quarter of 1999 from the 
comparable period in 1998.  This increase primarily reflects fluctuations in 
distributor ordering patterns.

Net sales of Pulmozyme (dornase alfa) increased 45% in the first quarter of 
1999 from the comparable period in 1998 primarily due to increased sales to 
Roche and increased market penetration for the treatment of cystic fibrosis.




                                   Page 12
<PAGE>

                                    Three Months Ended
                                         March 31,
ROYALTIES, CONTRACT AND             ------------------
  OTHER, AND INTEREST INCOME          1999       1998     % Change
----------------------------        -------    -------    --------
Royalties                            $46.6      $64.5        (28)%
Contract and other                    19.3       14.9         30
Interest income                       22.4       20.6          9

Royalty income decreased by 28% in the first quarter of 1999 from the 
comparable period in 1998.  The decrease primarily relates to the expiration 
of royalties from Eli Lilly and Company in August 1998.

Contract and other revenue increased 30% in the first quarter of 1999 from 
the comparable period in 1998 primarily due to higher gains on the sale of 
biotechnology equity securities and higher revenues from strategic alliances, 
partly offset by lower contract revenues from Roche.

Interest income increased 9% in the first quarter of 1999 from the comparable 
period in 1998 due to a higher portfolio balance.  The total investment 
portfolio, consisting of cash and cash equivalents, and short- and long-term 
marketable securities, increased to $1,662.4 million as of March 31, 1999 
from $1,372.9 million as of March 31, 1998 and from $1,604.6 million as of 
December 31, 1998.

                                    Three Months Ended
                                         March 31,
                                    ------------------
COSTS AND EXPENSES                    1999       1998     % Change
--------------------------          -------    -------    --------
Cost of sales                       $ 45.7     $ 33.6         36%
Research and development              90.7       98.2         (8)
Marketing, general and 
  administrative                      97.2       74.9         30
Legal settlement                      50.0        -            -
Interest expense                       1.4        1.0         40
                                    -------    -------    --------
  Total costs and expenses          $285.0     $207.7         37%
                                    =======    =======    ========

Cost of sales as a percent of product sales was 20% in the first quarter of 
1999 and 1998.

Research and development (R&D) expenses decreased 8% in the first quarter of 
1999 from the comparable period in 1998.  For the first quarter of 1999, the 
Company invested approximately 28% of revenues into R&D compared to 37% in 
the comparable period in 1998.  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 30% in the 
first quarter of 1999 from the comparable period in 1998 due to higher 
marketing and sales (M&S) expenses in support of oncology products and higher 
profit sharing with IDEC related to higher sales of Rituxan.

                                    Three Months Ended
                                         March 31,
                                    ------------------
INCOME TAXES                          1999       1998     % Change
-------------                       -------    -------    --------
Income taxes                         $22.9      $16.0         43%


                                   Page 13
<PAGE>

The Company's effective income tax rate for the first quarter of 1999 was 61% 
compared to 28% in the first quarter of 1998.  The 61% tax rate in the first 
quarter of 1999 reflects the nature of the $50 million legal settlement 
expense as well as an increase in the income tax rate due to reduced benefits 
from both R&D tax credits and realization of foreign losses.  Excluding the 
legal settlement expense, the Company's effective tax rate would have been 
33%.

                                          Three Months Ended
                                               March 31,
                                          ------------------
NET INCOME                                  1999       1998     % Change
-------------------                       -------    -------    --------
Net income                                $ 14.4     $ 41.0       (65)%
Earnings per share:
  Basic                                   $ 0.11     $ 0.33
  Diluted                                 $ 0.11     $ 0.32

The 65% decrease in net income in the first quarter of 1999 from the 
comparable period in 1998 was due to the legal settlement as discussed in 
note 6 of the Notes to the Condensed Consolidated Financial Statements.  
Exclusive of the legal settlement, net income in the first quarter of 1999 
would have been $58.5 million, an increase of 43% over the first quarter of 
1998.  This increase was driven by higher product sales, primarily related to 
new sales of Herceptin and higher sales of Rituxan.  This increase was partly 
offset by lower royalties and higher M&S expenses and cost of sales.

LIQUIDITY AND CAPITAL
  RESOURCES                         March 31, 1999        December 31, 1998
---------------------------      -------------------     -------------------
Cash and cash equivalents,            $ 1,662.4               $ 1,604.6
  short-term investments
  and long-term marketable
  securities

Working capital                           942.7                   950.6

     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, short-term investments and long-term marketable 
securities at March 31, 1999, increased by $57.8 million compared to December 
31, 1998 and working capital decreased by $7.9 million in the first quarter 
of 1999.

Capital expenditures totaled $18.2 million in the first quarter of 1999 
compared to $21.0 million in the comparable period in 1998.  The decrease in 
the first quarter of 1999 was primarily due to a decrease in construction 
activity related to existing manufacturing facilities, partly offset by an 
increase in equipment purchases.


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.

                                   Page 14
<PAGE>

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 approved 
indications and additional indications; and the potential introduction of new 
products and additional indications for existing products in 1999 and beyond.

Competition:  The Company faces growing competition in two of its therapeutic 
markets and expects new competition in a third.  First, Activase lost market 
share and could lose additional market share in the thrombolytic market to 
Centocor's Retavase and the resulting 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 mechanical reperfusion in lieu of thrombolytic therapy for the 
treatment of AMI, which is expected to continue.  Second, in the growth 
hormone market, the Company continues to face increased competition from five 
other companies with growth hormone products, although one company has been 
preliminarily enjoined from selling its product.  As a result of this 
competition, the Company has experienced a loss in new patient market share.  
Four 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.  Third, in the B-cell NHL market, Coulter Pharmaceuticals Inc. has 
recently filed for approval with the FDA with respect to an antibody product 
for a similar indication for which Rituxan is approved.  Genentech is aware 
of other potentially competitive biologic therapies in development.

     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 1998 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; 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 and 
other licensees; whether and when contract benchmarks are achieved; and the 
conclusion of existing arrangements with other companies and HLR.

     During the quarter, the Company entered into an agreement with Schwarz 
Pharma AG for the development and distribution of Nutropin AQ and the 
sustained-release Nutropin Depot, trademark, [somatropin (rDNA origin for 
depot suspension] for the treatment of certain pediatric and adult growth 
disorders in Europe and certain other countries outside of the U.S., Canada 
and Japan.  Under the terms of the agreement, the Company will receive an 
upfront payment and additional benchmark payments upon Schwarz Pharma's 
achievements of development milestones.  In addition, Schwarz Pharma will 
contribute to future development of these products.  As of March 31, 1999, no 


                                   Page 15
<PAGE>

amounts have been received.  The Company and partner Alkermes, Inc. will 
manufacture the products for sale by Schwarz Pharma.  The Company and 
Alkermes are currently preparing U.S. regulatory filings seeking marketing 
approval for Nutropin Depot.

R&D:  The Company is committed to aggressive R&D investment to discover and 
develop new products.  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 revenues over the short-term.  Over the long-term, as 
revenues increase, R&D as a percent of revenues is expected to decrease.

     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.  Factors affecting the Company's R&D expenses include, but are 
not limited to:  the number of and the outcome of clinical trials currently 
being conducted by the Company and/or its collaborators; 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.

Income Tax Provision:  The Company expects its effective tax rate to be 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, 
interpretation of existing tax laws, 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.





                                   Page 16
<PAGE>

Year 2000:  The Company uses and relies on a wide variety of information 
technologies, computer systems and scientific and manufacturing equipment 
containing computer related components (such as programmable logic 
controllers and other embedded systems).  Some of the Company's older 
computer software programs and equipment are unable to distinguish between 
the year 1900 and the year 2000. As a result, time-sensitive functions of 
those software programs and equipment may misinterpret dates after January 1, 
2000, to refer to the twentieth century rather than the twenty-first century. 
This could cause system or equipment shutdowns, 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 a Year 2000 Project (Y2K Project) in place to address 
the potential exposures related to the impact on its computer systems and 
scientific and manufacturing equipment containing computer related components 
for the Year 2000 and beyond.  Approximately half of the Company's Year 2000 
(Y2K) scheduled work is complete.  The remaining work is scheduled to be 
completed by the end of the third quarter of 1999.  The Y2K Project phases 
include:  (1) inventorying and prioritizing business critical systems; (2) 
Y2K compliance analysis; (3) remediation activities including repairing or 
replacing identified systems; (4) testing; and (5) developing contingency 
plans.

     An inventory of business critical financial, informational and 
operational systems, including manufacturing control systems, has been 
essentially completed.  Compliance analysis is approximately 85% complete for 
these systems.  Remediation activities vary by department, however, on the 
average, remediation activities are approximately 60% complete.  Testing of 
the Company's information technology infrastructure is 80% complete.  Testing 
of business critical application programs began in the third quarter of 1998, 
and is scheduled to be complete by the third quarter of 1999.  Contingency 
planning for business critical processes, which will include provisions such 
as identifying alternative sources for materials and services and if 
necessary reverting to non-computerized systems for processing information, 
was initiated in March 1999 and these plans are scheduled for completion in 
September 1999.  The Company believes that with the completed modifications, 
the Y2K issue will not pose significant operational problems for its computer 
systems and equipment.  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, the precise degree 
of which cannot be known at this time. 

     In addition to risks associated with the Company's own computer systems 
and equipment, 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, governmental entities and customers.  
If significant numbers of these third parties experience failures in their 
computer systems or equipment due to Year 2000 noncompliance, 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 programs, 
including internal records review and use of external questionnaires, to 
identify key third parties, assess their level of Year 2000 compliance, 
update contracts and address any noncompliance 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 
as they are incurred.  The Company has created a mechanism to trace costs 


                                   Page 17
<PAGE>

directly related to the Year 2000 issue and has budgeted funds to address the 
issues of assessment and conversion.  The financial impact of making the 
required systems changes cannot be known precisely at this time, but it is 
currently expected to be less than $10.0 million.  The actual financial 
impact could, however, exceed this estimate.

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, 1999, Roche held approximately 64.9% 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.  See also 
Relationship with Roche Holdings, Inc. note in Notes to Condensed 
Consolidated Financial Statements for a discussion of the terms of the put 
and call pursuant to the Agreement.

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 relating to these exposures, the Company enters into 
various derivative investment 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.

     Interest Rates -  The Company's interest income is sensitive to changes 
in the general level of interest rates, primarily 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 preferred 
stock investments, convertible loans 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



                                   Page 18
<PAGE>

are sold.  The Company is exposed to changes in exchange rates in Europe, 
Asia (primarily Japan) and Canada.  The Company's exposure to foreign 
exchange rates primarily exists with the Euro.  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 a portion of its portfolio primarily in nondollar 
denominated investments.  As a result, the Company is exposed to changes in 
the exchange rates of the countries in which these nondollar 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 currently based on 25% to 90% of probable future revenues 
so that the potential adverse impact of movements in currency exchange rates 
on the nondollar denominated revenues will be at least partly offset by an 
associated increase in the value of the option.  Currently, the duration of 
these options is generally one to three 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 
nondollar denominated investments in the portfolio, the Company also enters 
into forward contracts.

     Equity Investment Securities -  As part of its strategic alliance 
efforts, the Company invests in equity instruments 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 
holds dividend bearing convertible preferred stock and has made interest 
bearing loans that are convertible into the equity securities of the debtor.

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.

New Accounting Standard:  In June 1998, the Financial Accounting Standards 
Board issued Statement of Financial Accounting Standards (FAS) 133, 
"Accounting for Derivative Instruments and Hedging Activities," effective 
beginning in the first quarter of 2000.  FAS 133 establishes accounting and 
reporting standards for derivative instruments, including certain derivative 
instruments embedded in other contracts, and for hedging activities.  Based 
on the requirements of FAS 133, there may be changes to the balance sheet and 
reported assets and liabilities.  The Company is currently evaluating the 
impact of FAS 133 on its financial position and results of operations.

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


                                   Page 19
<PAGE>

                                 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, 1998.

See also Note 6 "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, 1999.



ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


The Company's market risk disclosures set forth in the 1998 Annual Report to 
Stockholders have not changed significantly.



























                                   Page 20
<PAGE>

                                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, 1999                           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





































                                   Page 21