Alphabet Inc: Google Diversifies Into Health With ‘Smart Lenses’ Patent


Alphabet Inc (GOOG, GOOGL) subsidiary Google has a pet project you might not have heard of — smart contact lenses.

Alphabet Inc: Google Diversifies Into Health With 'Smart Lenses' Patent

Google corporate name change to Alphabet was intended to allow the company to diversify without diluting its core brand.

As Alphabet, CEO Larry Page continues to strengthen its other businesses, including a deep dive into health care. That’s where these so-called “smart lenses” come in, as a new patent shows that the ocular device is a huge focus for the company.

The patent covers an artificial lens that will be implanted directly into a user’s eye. The lens includes tiny processors, sensors and a communication device. While this seems like something out a science fiction movie, it is reality and exactly how far technology has taken us. It should come as no surprise that a tech leader like Google wants to take its expertise and get involved in the growth of advanced medicine.

What Are Google Smart Lenses?

The official patent describes Google’s sci-fi contact lenses as “an intra-ocular device includ[ing] an electronic lens that can be controlled to control the overall optical power of the device”. The patent was granted in late April after being filed in 2014. The invention and patent are credited to Andrew Jason Conrad, the head of Google’s biotech startup, Verily Life Sciences.

Google is putting time and effort into smart lenses for several reasons, including fighting a vision problem. These lenses could help accommodate vision correction in people with presbyopia, which is an age related form of long sightedness. In 2014, Google announced a partnership with Novartis AG (ADR) (NVS) to develop contact lens technology. Novartis hoped at the time to have a product based on the technology on the market within five years. Human tests for this technology are expected to start in 2016 and Novartis’s calendar remains on track for its five-year plan.

One of the main technology pieces in this partnership is utilizing smart lenses contacts to help diabetics track their blood glucose levels. With a growing population of diabetic patients and Novartis being one of the leading diabetes drug companies, Google could benefit greatly with a great product and partner here.

Google’s Other Health Care Initiatives

Back in April, Google announced first-quarter earnings. In the quarter, revenue increased 17% to $20.3 billion. Google was responsible for $20.1 billion of Alphabet Inc’s total. Google’s “other” segment produced revenue of $0.2 billion, which is a small fraction for the company, but continues to show strong growth. In the last full fiscal year, the other segment represented only $0.4 billion of total revenue.

If Google’s health care initiatives can catch fire, then its “other” segment can become a real thing for investors to cheer on.

Along with smart lenses, Google is also investing heavily in health care technology to fight aging and age-related diseases. Google’s Calico unit has a partnership with AbbVie Inc (ABBV) to invest in anti-aging. The company’s announced a deal in 2014 with Google and Abbvie each initially investing $250 million to fund the partnership and up to $1.5 billion in total investments. Calico is being led by former Genentech CEO Arthur Levinson.

Google has additional medical partnerships of note that could boost the spotlight for the company’s other businesses segment: Diabetes partnerships were formed with both Novartis and Sanofi SA (ADR) (SNY); Google is working with Biogen Inc (BIIB) on several drugs; and Google forged an alliance with Johnson & Johnson (JNJ) for medical robots.

But Google isn’t alone in wanting to diversify into health; more specifically, in wanting to inject foreign materials into your eyes.

Other rivals in the smart lenses race include Sony Corp (ADR) (SNE) and Samsung Electronic KRW5000 (SSNLF). Sony’s latest patents involve smart lenses that capture images. A rival smart lens from Samsung calls for a device that is controlled by blinking.

Bottom Line for GOOG Stock

For a company with a $476 billion market capitalization, the big question is what the opportunity here is for Google.

Diabetes continues to be one of the leading causes of death in the United States. A survey in 2015 found that 50% of U.S. adults were diabetic or pre-diabetic. More than 71,000 die from diabetes-related causes annually.

The glucose monitoring device and diabetes monitoring market hit $10 billion for the first time in 2015. With its partnership with Novartis and the glucose monitoring smart lenses, Google taps into this blockbuster market.

Other uses for the lens could be highlighted in the future by the technology giant as well. With the continued focus on these new growth segments, Google stock is well positioned to reward patient long-term shareholders.

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

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