Medtronic executive Dr. Stephen Oesterle thinks Google will be a force to be reckoned with in the medical technology space in coming years.
This morning Oesterle's challenge to the medical device industry, issued at a meeting of the Massachusetts Medical Device Industry Council, was a sobering one.
"Our arch-competitor in 20 years will not be Boston Scientific (NYSE:BSX) or St. Jude Medical (NYSE:STJ) or Covidien (NYSE:COV) or HeartWare (NSDQ:HTWR). It will be Google (NSDQ:GOOG). I am certain of it," Oesterle told the audience at MassMEDIC's annual conference today in Boston.
Oesterle, Medtronic's senior vice president for medicine and technology, travels a quarter-million miles a year scouting new technologies, potential partnerships and other unique opportunities for Minnesota's medtech Goliath. He also has access to an R&D budget that would make many of his colleagues jealous, but that's nothing compared to what Google is spending, Oesterle said.
"We spend $1.5 billion a year on R&D at Medtronic – and it's mostly D," he said. "Google is spending $8 billion a year on R&D and, as far as I can tell, it's mostly R."
Oesterle pointed to Google's recently revealed "smart" contact lens project as evidence of the Palo Alto-based tech behemoth's interest in medtech.
Google's lens, still in early development, features microchips and glucose sensors "so small they look like bits of glitter" and a transmitting antenna thinner than a human hair. The prototype, which has undergone some preliminary testing for comfort, functionality and reliability, can read glucose levels once per second.
Oesterle spoke of Google's ability to develop the electronic components for the lens from scratch, building new chips and sensors and transmitters small enough to sit on the eye. Google, he said, is free to attack areas of innovation without the shackles of the status quo.
"These guys have too much money, too much imagination. They're not constrained by business as usual," Oesterle said. "Medtronic is a 65-year-old company. Name me another 65-year-old company that grows bottom line by double digits after 65 years. It's a rare company that can do that, and we're a rare company at Medtronic, but we're constrained by a legacy. We're in our 7th decade of doing things the way we like to do things. ... I'm not apologizing for it, I'm just pointing it out."
It's no surprise that technology companies in the consumer sector are looking at the healthcare arena, he added.
"It's where the money is," Oesterle said. "We're spending 18% of the GDP on healthcare. Why wouldn't they think that's where they want to be? We spend more on healthcare than we do on manufacturing in the U.S., so everybody thinks it's their destiny."