NOVARTIS, a Swiss pharmaceuticals giant, is involved in two deals at the moment. Its $50 billion takeover of Alcon, an American eye-care firm, unveiled early this month, has been hogging the headlines. But its decision on January 12th to spend $24m to secure exclusive licences and options on drug-delivery technologies developed by Proteus Biomedical, a Californian start-up, may be just as important in the long run.

It makes Novartis the biggest pharmaceuticals firm to embrace “smart-pill” technology.

Despite its trifling size, the deal hints at a promising new strategy for a troubled industry. Patents on many lucrative drugs are on the verge of expiry. Most firms have not come up with enough treatments to replace them. In an effort to diversify and stabilise their revenue, some drugmakers are beginning to sell ancillary services tied to their wares. Proteus’s technology, which enables pills to relay data about a patient back to doctors after they have been swallowed, is a prime example.

When one of Proteus’s pills is taken, stomach fluids activate the edible communications device it contains, which sends wireless signals through the body to another chip worn as a skin patch or embedded just under the skin. That, in turn, can upload data to a smart-phone or send it to a doctor via the internet. Thus it is easy to make sure a patient is taking his pills at the right time, to spot adverse reactions with other drugs and so on.

“This technology has tremendous utility,” declares Trevor Mundel of Novartis. Various studies have estimated that a third to half of prescription drugs are not taken as prescribed—or at all. This leads to poor health: one study estimates needless hospitalisations as a result of such failings cost $100 billion a year in America alone.

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