Dive Brief:
- Global tech giant Google on Monday announced that it would be taking part in a major restructuring through the formation of a new umbrella firm called Alphabet.
- Google CEO Larry Page (who will become the CEO of the new company) explained in a blog post that Google would be just one (although by far the largest) in a collection of companies operating under Alphabet. Other companies will focus on more experimental and fledgling endeavors such as self-driving cars, medical devices, life science research, and more.
- Page specifically referenced Google's healthcare and life sciences ambitions in his announcement. Calico, the relatively new life sciences arm that's focused on fighting aging-related diseases (and has already partnered with major biopharma players like AbbVie), will be one of the companies under the new conglomerate. Other companies will include Google Ventures, Google X, and Google Capital.
Dive Insight:
"Alphabet is mostly a collection of companies," wrote Page on the company's official blog. "The largest of which, of course, is Google. This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead. What do we mean by far afield? Good examples are our health efforts: Life Sciences (that works on the glucose-sensing contact lens), and Calico (focused on longevity)."
For industry observers and investors, this reorganization translates into greater clarity surrounding where, exactly, Google is putting its money and provide more transparency surrounding ongoing projects.
"There’s been a lot of speculation about how much money they put into these other ventures," explained BGC financial analyst Colin Gillis to Bloomberg. "That will come to an end. This also gives them the structure to add in another business line if they were to acquire something. The mechanism is in place."
Google has several exciting projects underway through Calico. For instance, last year, the division struck a $1.5 billion R&D pact with pharma giant AbbVie to fight age-related diseases and a development deal with the University of Texas Southwestern Medical Center for investigational ALS- and Parkinson's-fighting compounds.
The efforts are part of Google's relatively new focus on healthcare. In 2014, a full third of the VC money invested by Google Ventures went into healthcare and life sciences startups—an almost 10% increase since 2012 and 2013.
Alphabet will announce its first financial report as a holding company after Q4 2015. In the meantime, those who have been yearning for more details about the progress that divisions like Calico and Google X labs have made will be getting their wish.