General Electric Co. has been ramping up its activity in the state’s health care and life sciences sectors for several years. The rise of two health care-focused executives on GE’s new leadership team could turbocharge its business in the booming fields.
Monday’s announcement that the company’s health care chief John Flannery was promoted to chief executive of GE, and the promotion of life sciences boss Kieran Murphy to head its health care operation, was cheered by those involved in Massachusetts’ medical, life sciences, and technology businesses.
Industry leaders said it would likely hasten GE’s move to integrate health data with its medical devices and — more important to local entrepreneurs — boost the company’s support of medical technology and health data startups.
“This is a signal that they’re very serious about enhancing their medical technology business,” said Tom Sommer, president of the Massachusetts Medical Device Industry Council, known as MassMEDIC, a business group representing more than 300 companies. “GE will now have a front-row seat in scouting the next generation of medical technology companies.”
Even before Monday’s announcement, MassMEDIC had scheduled a networking reception next week to showcase efforts by GE Ventures, the company’s venture-capital arm, to finance startups. The event is expected to draw hardware and software entrepreneurs involved in the digitization of medical gear, where GE and other companies add features to traditional medical imaging and diagnostic equipment to store, analyze, and transport patient data.
“The market is changing so much,” said Maria Shepherd, president of Medi-Vantage LLC, a medical technology consulting and strategy firm in Lincoln. “It’s all about improving clinical outcomes and reducing costs. Having [GE] here in Boston makes them local, so they’ll get to know the local entrepreneurs.”
But industry veteran Jonathan Fleming, chief executive of Cambridge drug developer Q-State Biosciences Inc., sounded a note of caution. GE’s health care business faces many obstacles, he said, including moves by health insurers to reduce payments for overused imaging tests.
“GE is going to be continually challenged in growing its health care business,” Fleming warned.
Flannery, who is set to assume the top job at GE in August, has led GE Healthcare since 2014. It’s a sprawling business with about 55,000 employees and $18 billion in annual revenue. The division sells critical equipment and technology used by hospitals around the world — including MRI and ultrasound machines, ventilators, patient monitors, blood pressure cuffs, and incubators for newborns. It also makes equipment for research labs.
Christopher Anderson, president of the Mass High Technology Council, said Flannery “has all of the global experience and is totally focused on innovative tech.”
“He’ll be able to fit right into a number of other successful tech [companies] who have their headquarters in Massachusetts and fit into the global market,” he said.
GE has prioritized recruiting in the region, targeting software developers and other digital talent as it seeks to modernize its traditional heavy-machinery businesses with new software and technology, a transformation to what it calls the Industrial Internet.
The corporation has also become an investor in the Boston area’s startup scene. GE Ventures owns parts of companies including Catalant, Desktop Metal, Tamr, and Rethink Robotics.
Jeff Bussgang, a general partner at Boston-based venture capital firm Flybridge Capital Partners, said Flannery’s background could be a particular asset given Boston is a center of medical and biotech research.
“I assume he is equally committed to Boston and the fact that he’s a health care executive, which is in our region’s wheelhouse, strikes me as a very good thing,” Bussgang said.
The company has been pushing to expand in health care technology, in part by teaming up with Boston-based hospitals to develop new software programs. Last month, GE and Partners HealthCare — the parent company of Massachusetts General and Brigham and Women’s hospitals — launched a 10-year initiative on artificial intelligence.
GE and Partners plan to build software targeting several aspects of medical care, starting with programs that can help doctors read medical images more accurately. They want to develop an open platform that can house hundreds of different applications. Flannery told reporters in May that he considers “data and analytics and machine learning” the future of health care.
The company is also developing software with experts at Boston Children’s Hospital.
Though GE’s health care business is headquartered in Chicago, Flannery is a familiar name in Boston’s medical and tech industries.
“John has been highly engaged in getting to know the Boston health care community and the opportunities and challenges that exist within the industry,” Brigham and Women’s president Dr. Betsy Nabel said in a statement.
Children’s Hospital chief executive Sandra Fenwick said Flannery’s background in digital health and life sciences will serve him well.
“Our collaboration with GE Healthcare, established under John Flannery’s leadership, continues to make progress,” Fenwick said in a statement. “His elevation to CEO should keep our work moving forward.”
GE’s decision last year to move its headquarters to Boston, plus the promotion of its top health care executive, means the company likely wants to stay focused on health care, said Jonathan P. Gertler, a life sciences industry consultant.
“I can’t imagine they’ve appointed the person who ran GE Healthcare to the top position in order to take their eye off health care,” said Gertler, chief executive of Back Bay Life Science Advisors.
Massachusetts has welcomed the growth of GE’s presence in health care here. A year ago, Governor Charlie Baker and other state officials joined Murphy, then president of the GE Healthcare Life Sciences business unit, for the opening of a new $27 million, 210,000-square-foot site in Marlborough as North American headquarters for the life sciences business.
That part of the company markets products such as bioreactors used for drug manufacturing and contrast agents for medical imaging, and is the fastest-growing part of the GE Healthcare division, which Murphy will now head. It is leading the company’s push into “precision medicine,” enabling the small-scale production of personalized treatments for genetic diseases.
Like Flannery, Murphy is already well known to many locally. Some say the pair, with Flannery’s background in finance and Murphy’s in science, has complementary skill sets.
“These are people with vision,” said Lexington health care consultant Harry Glorikian, a former entrepreneur in residence at GE Ventures who knows both executives. “Both of them have a positive disposition toward looking at new ideas and supporting them. This bodes well for the health care and life sciences side of the business. And I think they’re going to take a major role in Massachusetts.”
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Promotion of health care execs could lift GE’s efforts in life sciences and health data