One of the nation's largest drug companies expects that "marketable" and life-saving applications of the new genetic engineering will be developed "in less than five years," one of the firm's top research officials told the Senate science subcommittee yesterday.

Dr. Joseph E. Grady, head of infectious disease research for the Upjohn Co., said the first commercial products of "recombinant DNA" technology - joining the genetic material of different organisms - could include artificially made human insulin, human growth hormones and disease-fighting antibodies.

Also, he said, Upjohn hopes to identify the genes that make some soil organisms produce natural antibiotics and modify or replace those genes with others to speed up commerical antibiotic production.

The subcommittee ended three days of hearings on possible ways to regulate the new biological technology, which some critics fear might spawn dangerous organisms that unexpectedly spread epidemics.

Such a speedy timetable for commercial application of the controversial DNA-joining technology is possible if work continues merely "at the present rate," Grady said. But he also pointed out that getting federal approval to market new products could add years to his estimate. The fact that some scientists and environmentalusts fear the technology might add to those years.

Nonetheless, the Upjohn scientist's estimate of when one of biology's hottest discoveries will be put into practice is one of the earliest yet stated.

Before the same subcommittee hearing, Dr. Ronald Cape, president of the cetus Corp. of Berkeley, estimated that insulin production by the recombinant method "is at least 10 years away. Commercial rewards are not around the corner," and will require much cost and "drugery" by industry, he said.

But Cape, a PhD in biology, also predicted that "scientific breakthrough in this field will occur far more quickly than many people think. The pace is relentless. It will continue somewhere in the world regardless of legislation or controls. We are convinced there will be many exciting scientific developments in 1978, 1979 and throughout the 1980s."

Dr. John Adams, scientific vice president of the Pharmaceutical Manufacturers Association, called commercial applications "five to 10 years away."

But Upjohn, as Grady testified, began its recombinant DNA research at its Kalamazoo, Mich., laboratories two years ago, making it one of the ploneers in this new field.

Just since last May, scientists using the new method have reproduced an animal insulin gene and made an artificial, reproducible version of a brain hormone that helps govern the body's pituitary gland.

This very pace alarmed witnesses for environmental and other groups who want Congress to act quickly on legislation to regulate the new research to insure public safety. Bills to do so bogged down in both houses in this session, partly because several scientists who originally urged regulation arrived at the view that the research as presently done is almost surely safe.

But yesterday, Dr. Arthur Schwartz, a University of Michigan mathematician, said any new technology "has a significant probability of going awry," and "with hundreds of scientists doing DNA research "there will be "thousands of incidents per year" in which carelessness or the unexpected could cause trouble.