Alphabet’s (GOOGL - Free Report) healthcare division Verily has put a pause to its Smart Lens program in a bid to allocated resources more efficiently. Notably, this major project of Verily was being developed in collaboration with Novartis’ eye-care division, Alcon since 2014.
Notably, the project was related to the creation of a glucose-measuring contact lens for diabetic patients. This would enable the patients in managing their disease more efficiently, in turn inventing a non-invasive diabetes monitoring technology.
However, the amalgamation of technology and live science in this project witnessed limitations due to correlation discrepancies between tear glucose and blood glucose concentrations.
Consequently, Verily along with Alcon halted the project recently. Although the move does not bode well for the company’s heavy investments in the project under review, it provides the scope of diversifying resources to other valuable projects.
Shift in Focus
With the latest move, Verily’s focus on other eye-related technology deepens. The company has decided to concentrate more on the proper development of the other two 'Smart Lens' projects.
While one is related to the creation of contact lens for the people with presbyopia, the other one is the development of intraocular lens that would improve the eye sight post cataract surgery.
We believe this shift in focus is likely to help the company in achieving optimal usage of its wealth, skill and expertise.
Additionally, Alphabet will be able to reap benefits from the rapidly growing market for contact lens globally. The market is reportedly expected to witness a CAGR of 7.8% between 2018 and 2024 to reach $18 billion by 2024.
Further, the company will be able to bolster footprint in the intraocular lens space which as per a report from MarketsandMarkets is projected to hit $4.56 billion by 2022 at a CAGR of 5.4% between 2017 and 2022.
Coming to the price performance, shares of Alphabet have returned 1.5% on a year-to-date basis against the industry’s decline of 22.5%.
We notice that Alphabet is not the only tech company which is trying to expand presence in the vast healthcare sector. Another tech giant, Apple (AAPL - Free Report) is also aggressively pursuing development of non-invasive techniques for diabetes management.
The iPhone maker has a secret team comprising biomedical engineers who are engaged in developing sensors that would assist in monitoring blood sugar levels.
Alphabet’s recent move might seem to be in the wrong direction in the light of Apple’s robust efforts. However, Verily has announced that it is continuously working on the development of non-intrusive glucose-measuring devices.
The company is currently working with Dexcom (DXCM - Free Report) on the creation of a miniaturized glucose monitor. Further, Verily has formed a joint venture with Sanofi (SNY - Free Report) called Onduo and intends to help people living with Type 2 diabetes by integrating devices, software, medicine and professional care all together.
All these strong endeavors are likely to aid Alphabet’s competitive position in the diabetes management space.
Currently, Alphabet carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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