Google (NASDAQ:GOOG) (NASDAQ:GOOGL) recently unveiled one of its most ambitious healthcare projects ever -- a "smart pill" which scans for cancer cells and other health problems. The pill is loaded with nanoparticles, which are roughly 1/2,000th the size of a red blood cell, which capture and transmit biometric data to an external wearable device via Bluetooth. The pill can be "programmed" with specific functions, such as binding to cancer cells or detecting renal disease with sodium-detecting nanoparticles.

Source: Wikimedia Commons.

In a recent interview at BackChannel, Andrew Conrad, the head of the program, revealed that Google had hired over 100 people to work on the project, and was currently collaborating with researchers at MIT and Stanford. Conrad stated that the ultimate goal was to make medicine preventative rather than reactive, noting that certain cancers have a "ninety percent success rate" at stage one, while that rate plunges to 5% to 10% at stage four. He also believes that the pill is only a few years, not decades, away from becoming a reality.

While Google's pill is a fascinating piece of medical technology, investors are probably wondering just how it fits into the tech giant's long-term plans, and if the technology is really as revolutionary as the company makes it out to be.

How smart pills fit into Google's other healthcare efforts
Google has invested heavily in healthcare over the past two years.

It launched Calico, a biotech subsidiary focused on treating age-related diseases, last year. This September, Calico signed a deal with AbbVie (NYSE:ABBV), worth up to $1.5 billion, to co-develop new drugs.

Back in January, Google revealed its smart contact lens, which could detect glucose levels through tears. Glucose meter manufacturer DexCom dismissed the lens as a "science project", but Novartis' (NYSE:NVS) Alcon stepped up and licensed the technology in July. That same month, Google unveiled Baseline, a genetic database which gathers anonymous genetic data from volunteers. The system is intended to become a "genetic library" which identifies biomarkers for certain diseases.

All those efforts initially felt fragmented, but with smart pills, Google's vision for the future of healthcare is gradually taking shape. Smart pills, like smart contacts, communicate wirelessly with mobile devices. Both smart pills and Baseline are intended to detect diseases before they progress. Last but not least, Calico and AbbVie could eventually use that collected data to develop cutting-edge drugs for cancer and other age-related diseases.

Of course, none of these efforts are generating revenue for Google yet. But ten years from now, Google's healthcare arm could become a major pillar of growth alongside search and ad revenues.

Not the first smart pill
Google's experimental smart pills are impressive, but the tech giant isn't the first to develop them.

Back in 2012, the FDA approved Proteus Digital Health's smart pill delivery system, which is powered by stomach fluid and transmits biometric data to a companion smartphone app. The companion wearable patch was approved two years earlier. Although Proteus' device lacks cancer-detecting nanoparticles, it can be used to deliver regular drugs, then log the time of ingestion, physical activity levels, and sleep patterns to the cloud. Proteus has raised nearly $400 million over seven rounds of financing from investors like Novartis, Oracle (NYSE:ORCL), and Kaiser Permanente.

Proteus' smart pill, patch, and app. Source: Company website.

Novartis' interest in both Google's contact lens and Proteus' smart pill highlights its growing interest in the global mobile health industry, which Grand View Research projects will grow from $1.95 billion in 2012 to $49 billion by 2020. Oracle's interest in Proteus indicates that smart pills could relay data to Oracle's clinical trial products, which synchronize collected data to its Oracle Health Sciences Cloud.

Therefore, Google's smart pill is grounded in existing technologies, although it certainly leapfrogs over Proteus' technology into uncharted territory.

The challenges ahead
As Google expands its healthcare efforts, it will have to answer critical questions about privacy.

A recent survey from Survata showed that people trusted the NSA more than Google with their private data. On a scale of 1 to 10 (with 10 being the least trustworthy), Google had a score of 7.39, compared to the NSA's score of 7.06.

The reason is simple -- despite its altruistic claims, Google is still a publicly traded company with a bottom line to protect. Since accumulated user data has always been Google's greatest asset, it's easy to suspect the company of tapping health-related data for targeted ads. For example, a diabetes patient might start seeing ads for glucose test strips. To address those fears, Conrad told the AP that Google had "no interest" in either commercializing the data or the technology, insisting that it would be licensed to partners instead.

In conclusion, Google's smart pills are clearly more revolutionary than ridiculous. However, I believe that public distrust of Google could hamper its efforts, and that it will have to tread lightly to win over potential healthcare partners.