Alphabet joins the pharmaceutical industry?
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Alphabet joins the pharmaceutical industry?

Google’s parent company, Alphabet, is joining the pharmaceutical industry – sort of. Recent reports have revealed that the Silicon Valley heavyweight has joined Swiss drug maker Novartis to fund a life sciences venture group, Medicxi. Institutional investors and European taxpayers also have a stake in the business.

This marks a change of course for the technology company. Although it has long shown an interest in healthcare (the investment into Medicxi was made by Alphabet’s own life sciences arm, Verily Life Sciences LLC), the company has previous restrained itself to focus on data and medical technology.

Novartis’ interest in Medicxi is pretty straightforward: supposing the latter makes a breakthrough in the lab, Novartis would be at an advantage in the bidding to partner with it. It would have early access to its discoveries, and the benefit of familiarity.

Alphabet’s interests are less obvious. Is the company planning to extend Calico’s remit into pharmaceuticals? Does it simply want access to European pharmaceutical networks, which have been outperformers over the last few years?

Alphabet and Novartis’ cash will go into Medicxi’s new fund, which is designed to back both private and public firms that have reached mid-stage trials in the attempt to find new medications. The goal behind the fund is to provide for late-stage drug development, allowing firms to remain independent and build on the value of their discoveries rather than selling them on prematurely.

Disclosure

Dominion holds Alphabet and Novartis in its Global Trends Managed Fund. 


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