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Alphabet invests billions in healthcare development



The strength and inertia of the American health care system is protected from disruption by drug manufacturers, pharmacies, insurers, hospitals and other market participants. The size and bulkiness determine the increased interest of large technology companies in the healthcare industry. Few other industries offer a potential market motivating trillion-dollar tech titans.


5 US tech giants have already spent billions of dollars


In January 2022, we wrote what major US technology companies are investing in. Some of their early investments in healthcare are starting to pay off. Amazon operates an online pharmacy and its telemedicine services cover most of the US. Apple smartwatches are constantly being updated with new medical features, the latest being medication tracking. Meta phased out its own smartwatches in early 2022 but offers fitness classes through its Oculus virtual reality glasses. Microsoft expands its list of health-related cloud computing offerings


Alphabet, the parent company of Google , has the most ambitious healthcare ambitions. Between 2019 and 2021, venture capital firms Google Ventures, Gradient Ventures and CapitalG's private equity arm closed about 100 deals - 25% of Alphabet's total life sciences and healthcare deals.


Alphabet is ranked fifth in the Nature Index (measures the impact of scientific papers in the natural sciences). Alphabet is only behind four giant drug makers and 20 places ahead of Microsoft, the only other tech giant in this ranking. The company hired former health regulators to help it navigate the US health bureaucracy.


Alphabet's approach to innovation - investing a lot of money in a lot of projects - has worked well in businesses other than the mainstream search engine. This has led to the emergence of smart products that make people's digital lives easier:

  • Gmail and Google Docs

  • Android mobile operating system

  • Google maps.


Alphabet's current activity in healthcare


Alphabet has been in the healthcare industry since 2008. Then Google introduced a service for collecting a user's medical records in one place. In 2012, this project was curtailed. In 2018, it reappeared under the name Google Health - however, it was folded again in 2021. Alphabet's current healthcare activities can be divided into four categories:

  • wearable devices,

  • medical records,

  • health related artificial intelligence,

  • extension of human life.


Wearable devices

Google entered the wearables business in 2019 and bought Fitbit for $2.1 billion. The company's popular fitness tracker counts steps and other activities on about 100 million wrists. The tracker has a new feature - tracking heart rate to prevent stroke and heart failure. The US Food and Drug Administration (FDA) has approved the use of the new Fitbit sensor.


Google is also trying to boost the healthcare potential of its other devices. Former official Bakul Patel will help with this by creating a regulatory classification of “software as a medical device” at the FDA.


The FDA approval of the Fitbit sensor should make it easier to get similar approval for other medical gadgets:

  • Google's Pixel Watch - uses many of Fitbit's technologies and should go on sale in the fall of 2022;

  • cameras on Pixel phones - used to detect breathing and heart rate by tracking the subtle color difference between blood and fresh oxygen;

  • smart thermostat Nest from Google - listens to snoring and evaluates sleep.


Google intends to make not just fun gadgets, but devices that can really affect medical practice. That is why the company decided to obtain regulatory approvals.


medical records


Google plans to return to maintaining medical records. A new initiative called Care Studio is aimed more at doctors than at patients. Google's efforts in this area have been thwarted in part by hospitals' slowness in digitizing patient information.


"That problem has gone, but another has emerged," says Karen DeSalvo, Google's head of health, the inability of records from different providers to communicate with each other.


Dr. DeSalvo was responsible for coordinating US health information technology. While Care Studio performs the functions of converting, storing and searching for data.


Artificial intelligence


Alphabet's healthcare AI projects are starting to pay off. Since 2016, DeepMind (bought by Google in 2014) has been using data from the UK National Health Service (NHS) to create diagnostic tools and help detect retinal diseases. In 2021, its groundbreaking AlphaFold software learned how to predict the structure of proteins, which is responsible for many characteristics of complex molecules. Subsidiary Isomorphic Labs will use AlphaFold-based machine learning to make drug discovery faster and cheaper.


Extension of human life


The most unusual part of Alphabet's portfolio of healthcare projects is an attempt to slow down the aging process or stop it altogether. The idea is that:

  • aging should be seen as a condition that can be controlled and treated,

  • aging is a problem that can be solved with the right technology.


To do this, one of Alphabet's life science subsidiaries, Calico, studies age-related diseases. In 2021, Calico's $2.5 billion partnership with major pharmaceutical company AbbVie was extended through 2030. Another subsidiary, Verily, is working with French cosmetics giant L'Oréal to study the effects of aging on skin biology to create skin care products.


But obstacles remain...


NHS data has proven difficult for DeepMind - the company has discontinued a doctor's assistant called Streams. Given the company's advances in machine learning, it may only be a matter of time before something like Streams revives.


Competition authorities are increasingly wary of anti-competitive transactions. In Europe, antitrust authorities banned Fitbit:

  • give preference to their own phones and the Google operating system,

  • use user data to sell ads.


Governments are worried about breaches of medical privacy. In May 2022, the plaintiffs filed a class action lawsuit against DeepMind for misusing NHS patient data. Google to buy cybersecurity company for $5.4 billion to protect personal data


Good ideas ≠ Good business


The markets for wearable devices and electronic health records are highly competitive. Google's reputation didn't help Care Studio become an overnight success. Only about 200 doctors use medical records.


In addition to solving the problems of aging, Verily also offers various diagnostic tools. During the pandemic, the company signed $50 million contracts for COVID-19 testing. A tidy sum, but it's small compared to Alphabet's total annual revenue of almost $260 billion.


DeepMind made a profit for the first time in 2020. So far, she's giving away her flagship health product, AlphaFold, for free. Calico is a few years away from generating real revenues, not to mention profits.


The challenge for Alphabet over the next decade is to prove that experimentation and ambitious projects transform the company and people's health.




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