Google ups the ante in the race for AI dominance with 2 new products – here’s what investors should know

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Google’s parent company Alphabet (GOOG 1.61%) (GOOGL 1.60%) is no stranger to artificial intelligence (AI). The tech giant made it a focal point years ago, using AI to improve everything from its searches to its offerings to potential advertisers. And just last week, Alphabet wowed investors with its latest AI updates at its annual developer conference.

But the company didn’t stop there. Indeed, Alphabet’s announcement at another conference yesterday could mark a major step into a billion-dollar, high-growth part of the AI ​​market. I’m talking about healthcare artificial intelligence. Alphabet’s Google Cloud has announced two new solutions that could be game-changing for biotech and pharmaceutical companies. Here’s what investors need to know.

The key to drug discovery

Google Cloud said its Target and Lead Identification Suite and Multiomics Suite are now both available worldwide. The first product helps scientists predict the structure of a protein. This is the key to drug discovery. Once researchers understand the structure of a particular protein, they can understand its role in disease. And that makes it easier to develop treatments that target this protein.

The Multiomics suite deals with genomics, so it could be particularly useful for companies working on personalized medicine or for researchers hoping to make new genome-based discoveries. The suite accelerates data discovery and analysis. For example, researchers can streamline data sharing and turn raw sequencing data into insights.

The Target and Multiomics suites are game-changing for businesses because they address two major healthcare challenges: the time it takes to bring a product to market and the cost of that lengthy process. Getting a drug from the drawing board to market can take up to 15 years. And that development process could cost $1 billion or more, according to the British Journal of Pharmacology.

These AI tools could clearly speed up the process and, as a result, reduce costs related to drug development. Colossal Biosciences has already started using the Multiomics Suite and has seen a 52% cost reduction. And the company said it reduced the time to complete a whole genome sequence analysis by 88 percent.

Making a difference in healthcare

These two things can make a huge difference to biotech and pharmaceutical companies. For example, they can determine if a company gets to market first with a product. Or they can determine whether a company can afford to develop a particular candidate.

Ultimately, these tools can help reduce drug candidate failures along the development path. That’s because, from their earliest days in the lab, researchers will have more robust data, the data they need to select the best molecules to treat a particular disease.

As mentioned, Colossal is already using the new Google Cloud products. And so is big pharmaceutical company Pfizer, which is a key customer for a couple of reasons. First, Pfizer is a major pharmaceutical player, with a market value of over $200 billion. Second, Pfizer is working aggressively to bring new drugs to market as old blockbusters face loss of exclusivity and as sales of the coronavirus vaccine decline. If Google Cloud helps Pfizer score a win by accelerating the development of its drugs, these AI platforms could really take off.

It’s important to remember that AI in healthcare is not a niche market. It may actually be where AI makes one of its biggest marks. Commercially, it can reduce costs and time to market. And on the patient side, it can lead to life-saving products. With a compound annual growth rate of 37 percent, the global AI healthcare market is projected to reach $188 billion by 2030, data from Statista shows.

What does this mean for Alphabet?

The company has bet on artificial intelligence in all its activities. And these new developments in healthcare AI could be one of Alphabet’s most significant AI leaps.

While Google’s ad revenue growth has slowed, Google Cloud’s revenue is on the rise. The company’s revenue increased 28% in the recent quarter. Amazon’s Amazon Web Services (AWS) remains the market leader by far. But a focus on healthcare AI could be the key to fueling Google Cloud’s growth in the future.

AWS recently said that customers are holding back spending in the current market environment. But, looking at Google Cloud’s new AI platforms, we could imagine that healthcare customers could ramp up their spending. They need to develop new products to grow, and if AI can help them get there faster and cheaper, it’s a worthwhile investment.

This may not happen immediately. As drugmakers begin to learn about the benefits of using the tools, however, Google Cloud could see more and more of them knocking on the door. Of course, Google Cloud isn’t the only game in town. AWS is also advancing in AI-powered healthcare. But in this early stage of AI, there is room for more than one company to excel.

All of which means that Alphabet and its investors have a big reason to cheer about the company’s latest move into the world of AI.

Suzanne Frey, an executive at Alphabet, is a member of the board of directors of The Motley Fool. John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, serves on the board of directors of The Motley Fool. Adria Cimino has positions at Amazon.com. The Motley Fool has positions in and recommends Alphabet, Amazon.com and Pfizer. The Motley Fool has a disclosure policy.

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