As Australia and other countries seek to establish biotechnology industries, it is timely to review successes and failures in this field. One of the most notable stories is the development of penicillin, as a wartime project, to which Australians made major contributions. Australians during and immediately after the war contributed much to the scientific identification and purification of penicillin, and to the industrial scaling up in its production at the Commonwealth Serum Laboratories in Melbourne. This was a classic instance of war accelerating innovations in public administration. Yet the nascent antibiotic industry was never allowed to gain international competitiveness, and was allowed to run down and eventually disappeared by the end of the 1970s. This article is concerned to tease out the puzzle posed by this contrast in aspirations, between the highest levels of scientific and technical achievement in bringing penicillin into widespread use (Australia being the first country in the world to provide penicillin to the civilian population in 1944) and shockingly poor performance in sustaining and developing a national antibiotics industry. As the stirrings of a biotechnology industry may be observed in the first decade of the twenty‐first century, it would be unfortunate to ignore the lessons of this earlier experience at the birth of the biotechnology era.