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Earlier this month, Google underwent a restructuring, creating a holding company named Alphabet, within which Google is but one component. We learned last week that one of the spines, perhaps the second most important one, of this umbrella will be life sciences. Google co-founder Sergey Brin announced on his blog on August 20 that "the life sciences team is now ready to graduate from our X lab and become a standalone Alphabet company, with Andy Conrad as CEO."

Norbert Sparrow

August 22, 2015

5 Min Read
Google's Alphabet starts with letter 'L,' for life sciences

Earlier this month, Google underwent a restructuring, creating a holding company named Alphabet, within which Google is but one component. We learned last week that one of the spines, perhaps the second most important one, of this umbrella will be life sciences. Google co-founder Sergey Brin announced on his blog on August 20 that "the life sciences team is now ready to graduate from our X lab and become a standalone Alphabet company, with Andy Conrad as CEO."

Andy Conrad

Andy Conrad, CEO of Alphabet's life sciences company.

Citing the glucose-sensing contact lens that Google developed and that was licensed to Novartis' Alcon eye-care division in July 2014, Brin writes: "While I am delighted at the progress that project has made, I could not have imagined the potential of the initiative it has grown into—a life sciences team with the mission to develop new technologies to make healthcare more proactive. The efforts it has spawned include a nanodiagnostics platform, a cardiac and activity monitor, and the Baseline Study."

When Google first unveiled its nano diagnostics platform last fall, the vision was for nanotechnology-enabled detection of cancer and other diseases, writes FierceMedicalDevices. "It would involve a swarm of nanoparticles, less than one-thousandth of the width of a red blood cell, which could each fasten onto a cell, protein or other molecule in the body," it noted.

The Baseline Study, which has been called a "moonshot" by the Wall Street Journal, involves collecting comprehensive genetic and molecular information from an initial pool of a couple hundred people, ultimately many more, to seek biomarkers for a range of diseases.

The most recent project is a cardiac and activity monitor that, Conrad told Bloomberg, ultimately would be "a medical device that's prescribed to patients or used for clinical trials." Sensors in the wearable device could measure electrical pulses of the heart and skin temperature, says Google, and detect changes in mobility, which could help in the study of Parkinson's, for example.

Conrad, who heads the newly formed life sciences company, joined Google X in early 2013 from LabCorp, where he had been CSO, writes FierceMedicalDevices. In 1991, he co-founded the National Genetics Institute, which became one of the world's largest genetics labs. It was acquired by LabCorp in 2000. Conrad is also a member of the recently formed Precision Medicine Initiative Working Group of the Advisory Committee to the National Institutes of Health Director, adds the media outlet.

Brin adds in his blog post that the multidisciplinary team includes software engineers, oncologists and optics experts. With Conrad as CEO, "the reporting structure will be different, [but the life science team's] goal remains the same," writes Brin. "They'll continue to work with other life sciences companies to move new technologies from early stage R&D to clinical testing and, hopefully, transform the way we detect, prevent and manage disease."

A noble ambition in keeping with Google's world view, certainly, but is the restructuring a smart move on the whole? Not at all, writes London Business School professor Julian Birkinshaw in Forbes, who predicts that it "will end in tears."

"What will be the consequence when Alphabet announces its first set of financial results, with this new-found transparency?" asks Birkinshaw. "We already know that more than 90% of Google's revenues come from paid search and advertising. What we don't know—but will shortly discover—is how much money Google is pouring into its non-core businesses and just how unprofitable those businesses are."

Bill George, Senior Fellow at Harvard Business School and former Chairman and CEO of Medtronic, offers a different perspective at cnbc.com.

"With nearly $70 billion in annual revenue, a market capitalization of more than $450 billion, and a stock trading at 31 times its price/earnings ratio, it will take very large bets on major breakthroughs to sustain Google's growth. Those bets don't turn into winners without enormous investment and the willingness to take big risks," writes George. "Meanwhile, Google's investors are clamoring for greater transparency, which can lead to pressure to cut back on uncertain investments or create premature visibility. Google's leaders have the wisdom to know that size and creativity are inversely correlated, as witnessed so vividly in the demise of Hewlett-Packard's innovation machine. Thus, they are breaking the company into a collection of innovative organizations—some very large, some small—that provides their leaders the freedom to innovate without near-term financial constraints," writes George.

To pundits such as Birkinshaw, who claim that increased transparency will have an adverse effect on Google's "unprofitable experiments," George counters that all research projects are losers until they succeed in the marketplace. Critics are giving short shrift to the innovation-centric leadership of Google co-founders Brin and Larry Page, writes George, who adds that he won't be surprised to see activist investors call for "breaking up Alphabet in a few years into cash-generating Google and growth-generating Alphabet. [The critics'] inability to understand the integration of these two differentiated strategies for long-term shareholder value creation—the strategy we followed at Medtronic—never ceases to amaze me," writes George.

What do you think: is Google's restructuring a brilliant business strategy or will it all end in tears? Let us know by taking our poll; instant survey results will display once you cast your vote.

About the Author(s)

Norbert Sparrow

Editor in chief of PlasticsToday since 2015, Norbert Sparrow has more than 30 years of editorial experience in business-to-business media. He studied journalism at the Centre Universitaire d'Etudes du Journalisme in Strasbourg, France, where he earned a master's degree.

www.linkedin.com/in/norbertsparrow

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