Is Google Stock Becoming a Healthcare Stock?

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While it’s not exactly been a secret that Google (GOOG) has been dabbling in the healthcare arena for a while, you might not have noticed that by early 2014, Google stock had unofficially become something of a healthcare stock too. That’s when the web-search giant unveiled a contact lens capable of monitoring glucose levels for diabetes patients.

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Any lingering doubts about whether GOOG was taking its health initiatives seriously were quelled in July when Novartis (NVS) partnered up with Google to further develop the contact lens. Throw in the fact that it teamed with AbbVie (ABBV) in September to broadly find ways to extend human life, and the case becomes even more convincing.

And if that wasn’t enough to convince you that Google stock is morphing into a healthcare stock, perhaps the search giant’s most recent medical endeavor will convince you: Google is officially wading into the field of cancer diagnosis.

Yes, you read that right. While it sounds like something straight out of science fiction, Google recently reported it plans on using nanoparticles injected into the human body to find cancer and other diseases.

Now knee-deep into healthcare waters, the big question GOOG shareholders are asking is: What’s really at stake here?

Google’s Nanoparticle Mission

The nanoparticle initiative falls under the umbrella of the Google X division … an arm devoted to turning even the wildest of ideas into a reality, regardless of the time needed or the effort required to make it happen. Google’s drone-delivery project, the aforementioned contact lens/sensor, and the self-driving car are all Google X projects. The use of nanoparticles, however, is the company’s first venture into the human bloodstream.

The particles — introduced via a pill — would only be about 0.1% of the size of a blood cell, which effectively means they’ll be able to travel anywhere in the body they’d need to go. Some of the illnesses GOOG believes it will be able to identify with the magnetic particles are cancer and arterial plaque, although if the technology is capable of doing that, it may well be able to spot a variety of conditions by the time it would be approved for human use.

To be clear, the technology thus far is only intended to spot and diagnose cancer and other illnesses … not treat them. Nevertheless, spotting an illness early is half the battle in treating it, and the leap from a diagnostic tool to a treatment tool may not be as great as the leap being made to develop the diagnostic nanoparticle to begin with.

Why Owners of Google Stock Should Care

Although the commercialization of the technology is still years down the road, it’s not too soon to start the discussion of the kind of impact the nanoparticle platform could have on Google stock.

For perspective, Google is projected to generate $66.5 billion in revenue this year. It would take a big chunk of change to move the dial for a behemoth that big. Then again, the diagnostic market is enormous.

The estimates vary somewhat, but the one that suggests the cancer/tumor profiling market could be worth $35 billion by 2018 seems sound enough. Other sources say the next-generation cancer diagnostics market alone will be worth $10.6 billion by 2019.

Other diagnostics markets include heart disease, brain disorders, autoimmune conditions and more. The only limit to how Google’s nanoparticles could be used to spot and diagnose disease is the imagination and ingenuity of the folks working at Google X. The total opportunity at hand may well approach (if not exceed) $100 billion in the longer-term.

GOOG clearly won’t capture all of that opportunity itself, of course. But, even a small fraction of this multibillion-dollar opportunity would be fruitful for anyone who owns Google stock once the dream becomes reality.

Bottom Line

Just so there’s no confusion, Google stock is never going to become a “pure-play” healthcare stock … not even close. Its other healthcare initiatives like glucose-detecting contact lenses and GOOG’s efforts to pharmacologically extend human life, as impressive as they may be, simply won’t overtake Google’s search business.

That said, don’t be surprised if healthcare eventually makes up 25% or so of the company’s revenue, and perhaps even more if it can turn the nanoparticle diagnostic platform into a treatment technology. The cancer treatment market alone could soon be worth in the neighborhood of $100 billion, after all.

Even a small fraction of that market would be worth chasing, and Google’s no longshot in that race.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2014/10/google-stock-goog-healthcare-stock/.

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