Healthcare, Next Multi-Billion Dollar Biz For Google
Healthcare is turning out to be one of the most focused areas of Google. In the past year alone, the company debuted a plan to map all the biomarkers in the human body along with a couple of healthcare initiatives by not only expanding its health search feature to include about 900 different medical conditions. Last month alone, the tech major launched a life sciences company to develop new healthcare technology, as Google’s co-founder (and Alphabet chief) Sergey Brin said in a blog post. The challenge however was that of those inventions are ready for prime time and often left analysts and investors wary.
While these initiatives are only nascent, investment bank Cowen and Co. believes Google’s efforts — which include inventions like its smart contact lens and miniature diabetes monitor, as well as its venture investments — could create its next multi-billion dollar business.
A report published in Re/Code notes that the bank in its research note wrote that Google’s moves “represent significant unlocked value” that will start becoming clearer as the company separates the finances of Google and Alphabet in the fourth quarter.
“A closer look at Google’s vast health care efforts reveals that the company is targeting very large markets with an expansive list of projects that with even minor success could justify the company’s recent investments,” said the report.
Cowen cites three major trends in the sector that play to Google’s strengths include the digitization of health data, a shift toward paying for care based on value, and genome sequencing. Google’s cloud computing expertise positions it well in the first trend, while it has, through the two Alphabet companies, Calico and Life Sciences has already bagged some deals in this space.
According to the report, Google Ventures currently backs 14 life sciences companies, including two — Flatiron Health and One Medical Group — with valuations over $1 billion. Another, Spruce Health, operates in telemedicine around dermatology, a market Cowen estimates at $5.7 billion.
John Blackledge, a Cowen analyst believes that shifting from Google to Alphabet could catalyze a new wave of product development. “Alphabet will have a strong health care focus from the very beginning,” he says.
In his blog post too, Page mentioned Calico, the biotech company, headed by the former CEO of Genentech , is researching the biology of aging and has already committed hundreds of millions of dollars to a new research facility. Life Sciences, the other wing of Google is working with Novartis to develop smart contact lenses to monitor bodily functions, such as blood sugar levels, via miniscule sensors.
Finaly, many of Google X ventures are especially ambitious, like its self-driving cars or balloons designed to deliver Internet around the world. Recently, however Google X just poached a well-regarded cardiologist from Harvard to head up its Baseline Study into the human body.
An WSJ report mentioned that more than one-third of Google’s venture capital last year went to healthcare and life-sciences companies, reflecting a 9% increase from the prior two years. Flatiron CEO Nat Turner told WSJ last year, “Google Ventures invested more than $100 million in Flatiron, a startup that analyzes cancer data. The company plans to continue that investment path in the coming years,” said Bill Maris, head of Google Ventures to WSJ.
Experts believe, healthcare is considered to be one of the only industries that haven’t been disrupted too much, Google has a huge scope to explore in this area.
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