Google's Calico in $500M Joint Venture with AbbVie - Analyst Blog


Calico, Google's ( GOOGL ) year-old health startup is collaborating with biotechnology drugmaker, AbbVie ( ABBV ), a spin-off from Abbott Laboratories ( ABT ), for a joint venture to formulate treatments for cancer and Alzheimer's. The project will be worth $500 million.

Google Inc. and AbbVie Inc. are to invest $250 million each. Besides this, another $1 billion may be invested in the project, if required. The entire expenses along with the profits earned by the venture will be shared by both the companies.

During the first five years of the collaboration, Calico will be looking after research and initial development, which will include construction of a world-class facility in the San Francisco Bay Area. In the second phase, AbbVie will be given the choice to take up management and marketing of projects that are ready.

AbbVie will use its pharmaceutical prowess to support Calico in scientific as well as clinical development and will use its commercial competence to make sure that these therapies are brought to the market.

Since Calico is headed by Arthur Levinson, chairman of Apple Inc. ( AAPL ), there are speculations that Google's the entry into healthcare could include a new wearable Apple device.

Such alliances are not uncommon. Intel ( INTC ) and GE together formed Care Innovations in 2011. The joint venture focuses on technology solutions to connect people to their care teams and the ability to live without being dependant on anyone.

Google currently holds a Zacks Rank #3 (Hold). 

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ABBV , GOOGL , INTC , AAPL , ABT

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