Genetic engineering, the core of biotechnology, is simply a way to transfer information.

That's the reason genetic engineering technology has the potential to revolutionize so many fields, ranging from agriculture to medicine to material science. Just as computers manipulate symbolic information that shapes all kinds of calculations, DNA engineering manipulates the hereditary information that shapes life.

DNA -- for deoxyribonucleic acid (the chemical name for the genetic code) -- is found in every living cell. In the form of a double helix, it contains the instructions for the manufacture of the proteins that are the chemical essence of life.

The most common form of genetic engineering involves a bacterium known as E. coli.

Unlike most higher plants and animals, whose genetic sequences are difficult to gain access to, E. coli has its genetic instructions floating through the cell in closed, circular forms called "plasmids." Because of their shape and comparatively simple structure, plasmids have become the vehicle for genetic information transfer. By changing the genetic sequence in the plasmids, scientists can change the type of proteins that E. coli manufactures.

In the 1970s, the key to "editing" -- or altering -- the plasmids turned out to be a set of enzymes. Known as "restriction enzymes," they can target specific points in the plasmids' DNA sequence -- called "genes" -- and snip out the portions scientists wish to remove and replace. There are dozens of restriction enzymes, and when an alteration is needed along a specific point in the genetic code, the appropriate enzyme is used.

By using the enzymes, various sequences of genetic code can be rearranged and "spliced" together. The plasmid then has a new DNA sequence, which instructs it to manufacture the desired engineered protein.

The first commercially successful protein produced as a result of E. Coli engineering was insulin -- the drug used to help treat diabetes. The E. Coli bacteria were turned into little insulin factories.

"We're no longer dependent on the pig population for insulin," says Dr. Howard Schneiderman, Monsanto Corp.'s senior vice president for research and development, referring to the fact that, historically, the insulin used to treat diabetics has come mainly from pigs. Now the bacteria replicate away in large fermentation vats, and eventually are "harvested" and broken open. The insulin protein is separated out and purified from the other proteins.

These "recombinant" DNA techniques are being applied to create a wealth of important pharmaceutical products now being clinically tested for Food and Drug Administration regulatory approval.

They include:

* Human growth hormone -- proteins that are now being studied to treat dwarfism.

* Tissue plasminogen activator -- a blood protein that dissolves clots and is being studied for its value in preventing strokes and heart attacks.

* Factor VIII -- a blood protein that encourages clotting and may be used to help manage hemophilia.

* Interferon -- a drug many scientists believe may be a useful anti-cancer agent but that, until the onset of genetic engineering, was not available in sufficient quantitities for meaningful clinical tests.

Though genetic engineering technology is helping redefine the drug industry, many experts believe its greatest impact will come in agriculture.

Companies such as Biotechnology General in New York are now testing a bovine growth hormone that significantly improves the milk yield from cows. Similarly, other animal growth hormones are expected to improve the meat production from cows, pigs, chickens and other livestock.

The potential of genetic engineering of plants -- which may yield crops that are more resistant to disease while growing taller and using soil nutrients more effectively -- is very great. Monsanto's Schneiderman cautions, however, that scientists currently lack the same understanding of plant genetics that they have of animal cells and bacteria.

But he points out that "every plant is really two creatures -- the plant itself and the bacteria and the fungi that surround it."

These bacteria and fungi can be thought of as "middlemen" and, Schneiderman says, by genetically engineering these simpler organisms, tremendous improvements in frost resistance and insect protection can be made. In many respects, genetically engineering these "middlemen" could substitute for chemical insecticides and herbicides.

"Rachel Carson author of the pro-ecology book "Silent Spring" would love it," Schneiderman says.

There are still technological and regulatory barriers that must be hurdled before most of these types of genetically engineered products come to market.

However, basic research in genetic engineering -- and the rate at which new proteins and "gene expression" techniques are discovered -- will assure that the impact of biotechnology will be sharply felt by the turn of the decade.