Big Bets in Healthcare: Where Google, Johnson & Johnson, and Abbott Are Placing Their Chips
The healthcare industry is undergoing rapid development and change, but which types of companies will reap the greatest benefits and emerge as dominant winners amidst this transformation? Three authors from The Motley Fool analyzed the healthcare investments of Abbott Laboratories, Alphabet (Google’s parent company), Johnson & Johnson, and Veeva Systems, a global leader in cloud-based software applications for the life sciences industry. They concluded that these major corporations are making bold bets on the following areas, which they believe represent the future of healthcare.
Motley Fool author George Budwell comments on the collaboration between Abbott and Google’s Alphabet: If anything can be called a “moonshot” project, the research into age-related diseases conducted through the partnership between Abbott and Google’s parent company, Alphabet, certainly ranks among them. As early as 2014, Abbott signed an agreement with Calico, Alphabet’s life sciences subsidiary backed by a $1.5 billion R&D fund, becoming Google’s pharmaceutical advisory partner. At its core, this unique collaboration represents a joint effort by a pharmaceutical giant and a tech titan to invest heavily in tackling diseases highly correlated with aging, such as cancer and Alzheimer’s disease.
Beyond announcing plans to use mole rats in experiments to investigate the molecular and genetic underpinnings of longevity, the two companies have yet to disclose further details about their collaboration. However, Abbott has already invested more than $5 million in this high-risk research—a strong signal that Abbott and Google are serious about developing game-changing novel therapies to capture new markets in the pharmaceutical industry, even if the likelihood of failure is considerable.
Calico’s Mole Rat Trials (Source: Vice)
Due to a lack of clinical practice, Abbott and Alphabet’s collaborative research on anti-aging remains in the conceptual stage. Yet one day, when they truly achieve their ambition of understanding the mechanisms of human aging at the molecular level, the conclusions drawn from this “Mission: Impossible” could become the guiding principle for a new generation of pharmaceuticals.
Keith Speights, a contributor to The Motley Fool, commented on Verb Surgical, the surgical robotics company established through a partnership between Google’s Alphabet and Johnson & Johnson: “Science fiction is becoming reality. Robotics has transformed nearly every aspect of life, while also reducing risks in the healthcare industry. This is one of the key reasons why Verb Surgical is so appealing.”
In 2015, Google’s Alphabet and Johnson & Johnson jointly established Verb, with the goal of creating an entirely new surgical robot system using big data and machine learning. The basic concept is to enable the surgical robot to “learn” from a video library of hundreds of surgeries, thereby simulating the optimal “incision points” to assist surgeons in making surgical decisions. The system will be smaller in scale than the currently well-known da Vinci Surgical System and more affordable in price.
(Source:LinkedIn）
Verb Surgical does not need to start from scratch in its research and development, as medical device giant Johnson & Johnson already has a foundational model for a surgical robot, and Google Alphabet’s machine learning technology is sufficiently advanced to develop the aforementioned software for assisting surgical decision-making.
If Verb Surgical successfully develops a robot capable of intelligently providing surgical recommendations—a likely outcome—it would signify that future surgical medicine will advance by leaps and bounds due to intelligent technology.
Brian Stoffel, an author at The Motley Fool, comments on Veeva Systems, a software giant in the life sciences industry: On the surface, the field of medical data may not appear as bold or novel as the two aforementioned areas, but it is precisely the incremental accumulation of data that holds the key to uncovering disruptive solutions, which will have a significant impact in the coming decades. Peter Gassner, a former executive at salesforce.com, recognized that pharmaceutical companies have unique cloud technology needs and that no one-size-fits-all model exists. This insight led him to found Veeva and develop its customer relationship management software system, Veeva CRM. Since the company’s inception in 2007, this system has remained Veeva’s core long-term business.
However, over the past two years, a new large-scale product—Veeva Vault—has begun to enter the mainstream market. This application enables all employees across a pharmaceutical company to input data through a single portal, capturing information spanning from the product concept phase and clinical trial phase to the commercialization and sales phase, while also allowing senior management to exercise appropriate oversight.
This product has achieved remarkable success. In the just-concluded fourth quarter of 2016, sales of the Vault product surpassed those of the CRM product. Moreover, thanks to its exceptionally high customer satisfaction ratings, Veeva Vault is set to expand beyond the life sciences sector this year and begin serving other industries.
Veeva’s competitiveness lies in its ability to deeply integrate into enterprises’ standard operating procedures, thereby fostering high user stickiness; meanwhile, the accumulation of extensive industry data raises the switching costs for customers. Veeva Systems’ software suite serves as a prime example of how data holds the lifeblood of the healthcare industry.