Are we getting this yet?
If there is one thing we have learned about this wacky world of ours is change comes slowly and typically only happens when it must happen. We are living through several examples of this as we speak. Johnson and Johnson (NYSE: JNJ) is desperately trying to sell their diabetes device franchise, and after the news earlier this week they may as well through in Invokana. JNJ is not making this change because business is great so they can get top dollar, they missed that opportunity years ago. They are selling because the business does continue to throw off cash, LifeScan anyway, but the future looks bleak. In simply terms change has been forced upon them.
Lilly (NYSE: LLY) is a company that is currently benefiting from change that was forced upon them. Although you wouldn’t know it today it wasn’t that long ago that Lilly was on the verge of becoming a second, even third tier player in diabetes. Life back then was not blissful as they were getting killed by Novo Nordisk (NYSE: NVO) and believe it or not Sanofi (NYSE: SNY). To their credit management recognized the need for change and today Lilly sits atop the diabetes drug world.
In a strange twist of irony, it is now Novo and Sanofi who must change and like Lilly this changed has been forced upon them. The task however has just become even more difficult now that our friends in the Valley have entered the sandbox. Last week during the annual wacky dance we noted that Apple ASKED to meet with Lilly, Novo and Sanofi. LET ME REPEAT THAT APPLE ASKED, IT WAS NOT THE OTHER WAY AROUND.
Today it was reported that Google, Apple’s neighbors and arch rival, has also entered the drug business. Per a report by Bloomberg Alphabet (Google’s owner) has formed a partnership with Novartis, institutional investors and European taxpayers. Called Medicxi this life-sciences venture group, has raised $300 million for a fund focused on companies with drugs showing promise later in the trial process. It should be noted that Verily, Google’s life sciences unit, already has a relationship with Novartis for the way cool whiz bang contact lenses that measure glucose.
While I cannot speak for everyone else I see a pattern developing here. Google and Apple are making the deep dive into the diabetes pool, this dive is well beyond way cool whiz bang toys and everyone thinks the companies who attended the wacky dance are still running the diabetes show, NOT. What Google, Apple and Amazon (let’s not forget Alexa) see that others don’t is that patients are CONSUMERS of healthcare.
These tech titans also have another major advantage which should be obvious but seems to get lost in our wacky world. And this advantage has nothing to do with having gobs of money, although as Momma Kliff used to say; “Money isn’t everything but it sure as hell doesn’t hurt to have more than less.” What these tech titans bring is a completely new perspective a much-needed fresh look. Let’s be honest we call them the old guard for good reason but the fact remains Lilly and Novo don’t think like Google, Apple or Amazon.
The reality is these tech titans need the old guard and the old guard most definitely needs them. This really should be a match made in heaven. Now that Apple and Google have jumped into the drug side maybe this fresh set of eyes combined with solid science will bring better drugs to the patients who need them. Yet, that is just the beginning as the new and better drugs won’t do anything if patients don’t take them or can’t afford them.
With each that passing day, it is becoming clearer and clearer that the epicenter of diabetes is now Silicon Valley and Seattle, ok that might not be technically an epicenter but hey you get the point. It is also true that the newbies need the old guard. As Momma Kliff used to say; “Fresh ideas are one thing, fresh ideas combined with historical perspective and experience has the potential to be transformational.” And that’s exactly what Google, Apple and Amazon are going to do, these tech titans will forever change our wacky world. It’s about damn time!!!!!