GSK has set up a joint venture with Alphabet subsidiary, Verily. When the annals of this time are written, it may yet prove to be one of the most important corporate deals of the decade. The deal involves bioelectronics, truly wonderful technology that may treat conditions once thought untreatable; this may have profound implications for you, and me.
Loading the dice
Randomness, no one knows what the future may bring, and that includes companies fretting over disruptive technology. GSK, or GlaxoSmithKline, understands this. It also knows that it operates in a sector that is set to get disrupted to a massive extent. In a decade or so from now, the pharmaceutical sector will be unrecognisable from the one we see today. So what does GSK do? It diversifies. In some respects, it is like a venture capital trust. It has cash, a vast distribution network, and in-house expertise. So it buys up companies just as their products start to look interesting, and applies its assets to their products. It also experiments internally.
What GSK understands, and unlike many others, is that technologies from other fields such as computer hardware, software, AI, robotics and new materials, are converging. Nanotechnology is a result of convergence, and so its bioelectronics.
The company has been talking about it for some time, has been investing internally, and also set up its own venture capital firm, Action Potential Venture Capital Fund, the purpose of which is to “To invest in companies that are pioneering bioelectronic medicines.”
Now it has gone one better with its joint venture with Verily, to be called Galvani Bioelectronics. The name comes from Luigi Aloisio Galvani, an 18th-century Italian scientist, physician and philosopher, who was one of the first to explore the field of bioelectricity. According to GSK: “In 1780, he made the pivotal discovery that the muscles of a frog’s legs twitched when he touched the sciatic nerve with two pieces of metal, leading him to propose the theory of bioelectricity.”
GSK will own 55% of the venture, Verily 45%. The business will have up to £540 million invested into it over seven years.
There is no time to lose in this business. Technologies developed for one purpose, such as miniaturisation in computer chips, or search, and big data analysis, are becoming relevant in other fields.
Bioelectronics is a good example. As Julien de Salaberry, an expert in healthcare and technology and the Chief Innovation Officer at Propel Group told me: Bioelectronics is “enabled by multi-disciplinal scientist teams which are driving the tech-tonic transformation ongoing in healthcare. Bioelectronics, aka electroceuticals, is a relatively nascent field of medicine where scientists are hoping to master the possibility of blocking or altering electrical signals passing through nerve fibres in order to control organs in a quest to better treat chronic diseases.”
And as GSK said: Verily has “world-leading technical expertise in the miniaturisation of low power electronics, device development, data analytics and software development for clinical applications.”
As for bioelectronics, this is how GSK explained it: “Bioelectronic medicine is a relatively new scientific field that aims to tackle a wide range of chronic diseases using miniaturised, implantable devices that can modify electrical signals that pass along nerves in the body, including irregular or altered impulses that occur in many illnesses. GSK has been active in this field since 2012 and believes certain chronic conditions such as arthritis, diabetes and asthma could potentially be treated using these devices.”
The real point is that bioelectronics has been made possible by technology in other fields. It is fantastically exciting and GSK is determined not to be caught napping.
Those who follow disruptive technology will be familiar with the story of innovator’s dilemma. It describes how a company dominant in its field can get left behind when new technology, developed and matured outside of the company’s core market, becomes relevant in the core market.
GSK is a pharmaceutical company, that means it is about chemistry. The new age of healthcare may put less reliance on drugs, and more on miniaturisation, of technologies such as gold nanoparticles, that may provide the cure to cancer. The new healthcare era is also about big data, wearable technology providing lots of this data, and AI processing the information. The danger facing the big pharmaceuticals is that they will be left behind, become an irrelevance, in much the same way that Kodak became an irrelevance in the year that more photographs were taken than in any other year in history – up to that point.
GSK is showing once again that is doing all it can to not fall victim to innovators’ dilemma, just at that point when healthcare is set to be transformed.