Genetic engineering is the transfer of DNA from one organism to another using biotechnology. The organism receiving the DNA is said to be genetically modified (GM).
Organisms are genetically modified in order to give them a combination of genes (genotype) that will result in them having desirable physical characteristics (phenotype). Often the desirable characteristic is simply the ability to produce large quantities of a useful protein.
Bacterial cells can be genetically modified so that they have the gene for producing human insulin. As these modified bacteria grow, they produce human insulin. This protein can be purified and supplied to diabetics.
The process of genetically engineering bacterial cells is shown in the diagram below.