this is the largest trade show in the world, one of the largest. about 100,000 people attend this show every year. here's some of the programs that we taped while in vegas. and now joining us on "the communicators" is andrew thompson who is president, ceo and co-founder of proteus digital health. mr. thompson, what is proteus digital health? >> guest: proteus is the world's first digital medicine company. so we created a platform that we call a digital health feedback system, and the main components of that platform are an ingestible sensor that turns on when you swallow it and communicates through your body. it sends information to a wearable patch that you wear on your torso and collects information about the medicines you swallow and your physiology, things like your heart rate, your body angle, activity, sleep, temperature, quite a lot of things, actually, what we call a panel of physiological wellness messages, and then it communicates with a cell phone you carry and enables us to take that data to the cloud, process it and send it back to you as an application. >> host: where is this sensor stored in the body? >> guest: so the ingestion sensor or the patch? >> guest: the ingestion sensor. >> guest: it's not stored in the body. let me describe what it is. it's a device that's sense to the computer that's made from ingredients that you find in food. so the world's first food-based computing platform. it's very tiny. it's about the size of a millimeter, about 800 microns. i can show you one. >> host: please do, just go ahead and hold it up in your hand. >> guest: the green thing is sort of a fake pill. >> host: okay. >> guest: the tiny little dot that you can barely see, that's it. that's the whole device. >> host: and that's what someone would swallow? >> guest: when you swallow it, it turns on. now, this is a very interesting piece of technology. there's no battery, there's no radio, this is no antenna. if you ever thought about how you might, for example, power something inside the body, i don't know if you have ever made something called a potato battery, so, it's a device where you put a little bit of copper, a little magnesium in a copper, and you discover to your child's delight that you can light a diode. well, in this case we have of a little bit of copper and magnesium, both essential dietary elements. we have about seven micrograms of copper. you need about 1500 milliyams of cop -- milligrams a day in your diet. so it's a tiny fraction of your rda in the magnesium. when you swallow this device, you become the potato, and you turn it on. so it's powered by you, and it sends a unique identifier through your body that can only be detected by the thing that's on your body, the patch. so the pill is going to say, hello, i'm here, i'm novartis, i'm five milligrams, i'm batch number 12, and i'm pill number two. that's the data we collect. >> host: and how do you get that data into this? >> guest: so it's a digital platform, essentially the way it works is when you swallow it and turn it on, it's going to start to send a signal, and we program it so that on is one and off is zero. if you go on/off 64 times, you've got a 64-bit stream. that's the data stream. >> host: how -- where do you come up with this idea? >> guest: so we're a very lucky companiful we have of a whole team of incredibly smart scientists and development engineers who work with us. most important is our co-founder martha lev lick who is one of the first people in a field of men to develop the canty lever microphone so we have a team led by mark who built this technology, and it's been custom designed to solve one of the most important problems in health care which is how we solve the problem associate with the the massive burden of chronic disease. >> host: and how does this help? >> guest: so let's sort of move away from technology and go to what i call the problem statement that we started with about ten years ago as a company. we don't have a health care system. we have a sick care system. if you get very sick and you go to hospital, we'll fix you. but be you have a chronic disease and you live your life in the commitment, you're on your own -- in the community, you're on your own pretty much. okay? so we need to build the health care system because the disease burden we face today is all about aging, affluence, dementia, depression and diabetes. so if you're going to design a health care system, what's it going to look like? well, point number one, it must connect to the mobile internet. mobile internet is the most important utility on the planet, it's more available than water or electricity. there are nearly six billion people with a mobile phone. point number one, going to connect to the -- [inaudible] point number two, it has to serve the largest group of health care workers in the world, and that's not doctors and nurses. they're outnumbered 10 to 1 by informal family carers, that's you and me caring for our parents, our kids, our brothers and our sisters. so that's the group you have to address, so it's really about consumers. and number three, the number one engagement transaction for consumers with their own health that they do every day that they think and believe and know maybe is going to keep them well is to swallow their daily pill. so if you think about these massive digital transitions that have occurred in financial services, in retail and commerce, the key is to find a transaction that consumers already engage in but it's something they want or need to do. so just like in financial services, you dimmingtize banking by -- digitize banking by having people pay their bills and trade their stocks online. you're going to digitize health care by having people swallow their medicine to see the data show up on their cell phone. >> host: how big is the patch, where does one wear one? >> guest: i'm wearing one right here. it looks like a little band-aid. it has some very nice custom electronics inside it that basically give you medical grade data. >> host: is it a permanent patch or is it -- >> guest: designed to wear it for about a week. it's fully water proof. you can swim in it, shower in it, run a race in it. it's a very nice device designed to fit in with your daily life. and one of in the things i'd share with you is we built a team at proteus that was conscious of building a very desirable product, so we hired a leader from a leading design firm to help us do human-censored design. we don't just focus on wear about, we focus on wantability. >> host: andrew thorpe stomp, what does the word " proteus" mean? >> guest: it means a greek god, and you can go look that up. it also happens to be a name of a submarine in "the incredible voyage," and that's how the name got picked up. >> host: what's your background? >> guest: i'm an engineer. i grew up in england, i went to cambridge university. i came to silicon valley, went to stanford business school and started to become involved in entrepreneur activity in the valley. i've been an entrepreneur for 22, 23 years building technology and health care companyings. >> host: and why the focus on health care? ha what's your interest? >> guest: i'm a purpose-driven human being, and i want to be doing something that can have very important social impact. when i'm building an organization, that's what i want people to focus on. i personally and our company are tremendously focused on the enormous positive social and economic impacts we can bring to solving this huge problem associated with changing the way in which many, many more people can get access to health care. what i say in our company, we have a mission statement l, and our health care -- our statement for the company builds on something said in 1948. he said we want health care for ever. and that was a great idea. and i want something a little bit more ambitious. i want health care for everyone everywhere. and the reason we'll be able to do that is because everyone will have a smartphone. >> host: mr. thompson, you began in silicon valley, you became a venture capitalist at some point, correct? >> guest: that's right, yes. >> host: are there any companies, health care companies or products that you invested in early that are on the market that we might be familiar with? >> guest: yes. one of the very first companies i helped start was acquired by a company now called medtronic which is the world's largest medical device company. this company pioneered minimally-invasive surgical techniques. we replaced open heart, open chest procedures for procedures that went through the arms and the groin, and now it's standard of care. if you had a wide arrhythmia treatment, that was likely done by a product developed by medtronics. >> host: what's the regulatory path like for a product like this? >> guest: so that's a great question and one of the things i want to take the opportunity to say here is how terrifically collaborative the u.s. fda and the european commission have been working with us. what you're holding there is a cleared product by the u.s. fda, it's approved by the ema, so these products are ready to go to market. this isn't some future thing that may happen in a few years' time. it's been tested for thousands of days in hundreds of people. it has an incredibly positive safety profile. it's very, very accurate. if you swallow a digital medicine, our evidence suggests that we will detect it 99.5% of the time and identify it down to the individual pill with 100% accuracy. >> host: where are these manufactured? >> guest: so we have a manufacturerring plant in hayward in california, and it's fully built. we're in the process of of driving automation in that facility, but the goal here is to be able to make billions of these products in that facility. >> host: billions in that one facility? >> guest: that's correct. >> host: and when do you plan on -- you said it's almost ready for market. what would this cost somebody? >> guest: so that's an interesting question and one that i'm going to dance around -- >> host: you're not going to answer. >> guest: well, because the answer is cost is what it costs me to make. how would i sell that to someone? and the answer is there's a lot of different ways to think about the business model that you would deploy here. i'm going to give you, i think, a more general framing idea which is that many people think that pharmaceuticals are very expensive products, and in some cases they are. however, they represent only 10% of the total spend on health care, and the real opportunity here is not to spend more or less on pharmaceuticals, it's to have them do their job which is to keep you out of hospital so we don't spend the other 90%. so the pricing models all have to be built around our ability to save the system money. >> host: do you need medicare and medicaid approval for this product to make it really successful? >> guest: no. i think that, um, it's not the job of medicare or medicaid to approve things, it's their job to pay for things. >> host: right. >> guest: so, look, we have clearances that enable us to go to market. it's our job now to build evidence, particularly medical economic evidence that suggests that the use of these products and services really makes sense. and i'm just going to really emphasize here that the benefits that you get from providing patients and families with digital health feedback go very, very deep. let's just imagine you have a son who's 20 years old who has bipolar disease. if that was the case and he's going to college, you'd be a worried dad. and you'd know that he needs to be on his antipsychotic every day, and you'd probably know that you have to be careful about his sleep patterns because if he's up all night, that's mania, and if he's sleeping all day, that's depression, and you might want to know whether he's talking to his friends. and you could measure that indexing his phone because you can measure talking, texting and moving. if you had an application that enabled you to see, okay, my son is on drugs, he's sleeping okay and he's socializing, you'd be a happy guy. that's nice, but even for your son it's nicer because that gives him back his relationship with your dad because you would stop being the drug police. so these are very powerful systems, and when we do the debrief with patients and their families who have been experiencing our products, then you get very strong emotional responses. so an old lady who's got heart failure will say this makes me feel safe. and if you're a tb patient who would otherwise have to go to a clinic so someone could watch you take your pills, you'd say this gives me dignity. there's a lot of emotional benefit with people taking control of their own health situation being able to appropriately use their medicines and enable them to do the job for which they're designed. the way we talk about this is this is designing a health system powered by you, literally and figuratively, as opposed to being powered by them. >> host: andrew thompson of proteus digital, when you think about the growth in health care technology, what are your general thoughts? >> guest: i think one of the most important lessons we can lesh particularly -- learn particularly at a show like ces is the definition of the word "innovation." what we see is innovation being delivered so that products get better, cheaper and more plentiful every year. in the world of health care, we've built a business model in which innovation is defined as getting better but more expensive and less available every year. that can't stand. and the job of health care innovators going forward is to embrace the idea that the purpose of innovation is to make things better and cheaper and more available for everybody everywhere, not just for rich people. >> host: one of the conversations we have in washington or have been having the last couple of years is about electronic medical records. >> guest: yep. >> host: and privacy issues. >> guest: yep. >> host: what are your thoughts? >> guest: well, it's a good point. it's a very bad place to start in terms of thinking about the digital journey in health care, and you'll notice that there's two big companies that tried to do that, microsoft and google, who haven't necessarily managed to get a lot of traction. now, the problem here is not that that's not a good idea, but let's use an analogy and go back to financial services. i don't think we would have been successful in changing consumer behavior around financial services if we'd digitized their bank statements because people don't look at their bank statement every day, most people don't look at it ever. what we did was to digitize the engagement transactions that people do every day. now, at that point once you turn that digital hinge, you can go a lot of places. so electronic health records will come, but they respect the hinge. they are in the space and will emerge once we've figured out the reasons why people will shift their behavior. by the way, this is a very major trend. it's the shift from the 20th to 21st century. 20th century everything is about buildings, people and products. so you go to a bookstore, you see a -- [inaudible] and you find a book. in the 21st century it's about software, services and mobile platforms. so you go to your tablet, you fiddle with a piece of software, and you download content. there's no building, person or product. it creates a radical shift in availability, price, productivity, all kinds of really good things. those are things we need in health care, and we know it's going to happen. it's only a question of when and what the important engagement transactions will be that cause that shift to occur. >> host: have you addressed private concerns when it comes to this -- >> guest: so privacy's a very big issue. of it's going to be an issue for us for a very long time. but the way that we frame it is to say many people thought that privacy would be a big issue in financial services. i wonder how many people watching this show use a credit card. many people thought that privacy would be a big issue when it came to, for example, certain types of activities on the internet. how many people watching this show use google? so privacy is a very big issue, but what we've learned about privacy is that if you can provide sufficient benefits, then people are willing to make trades or take certain risks. now, as a company we have to be very, very careful about managing, mitigating and reducing those risks. but we know clearly that can be done. >> host: this product, this digital pill, as you say, do you -- would you sell it to the drug companies to insert in their medication? how does that work? >> guest: so i want to step back. we don't have a product that's a digital pill. what we have is the world's first and so far only fda-cleared ingestion center that enables a platform called a digital health feedback system. so one way to think about this is to say a song to apple is a drug to proteus. we are making something into digital content. apple took a library of music, they made it more relevant, much more personal, highly customize bl, much more affordable as well, by the way. so drugs are nice, but they're part of the 21st century because they're a product. what's really important or hoar is what's going to happen in the 21st century which is these things that we swallow will create data, and we'll have analytic, and those analytics will drive services, and that's what will be the product. so it's transformational. and we are delighted to work with pharmaceutical companies, but the whole idea here is to build a very, very different category in the health care industry which is about digital health feedback, the combination of the medicines you use to stay well with your measured behaviors and feedback that can be turned into actionable information, gains and motivation that can keep you well and make you better. >> host: andrew thompson, are there other products coming from proteus? >> guest: so this is a big platform. >> host: first of all, how long have you been working on this sensorsome is. >> guest: so this sensor has taken us, if you look at development time through fda clearance something like eight years. >> host: eight years? another product coming out or a related product? >> guest: so we have a very extends bl platform. so the platform itself now is being turned into a series of products. les a product that's designed, for example, for use by older folks living at home, it's a platform we call helium. that's coming very soon to the market in europe and the u.s. we're working on platforms in mental health, in therapy, so a whole series of new initiatives that will take this technology and build it into specific therapeutic categories. >> host: andrew thompson is the president, ceo and co-founder of proteus digital health. he's been our guest on "the communicators" here in las vegas. and ces international is held every year in las vegas. it's one of the largest trade shows in the world, about 100,000 people attend this every year. it's focused on technology. "the communicators" is here doing interviews and looking at some of the new technology. here's some more of our programming. well, now joining us on "the communicators" is ron andrews who is the president of a group called medical sciences for life technologies. mr. andrews, what is that? >> guest: well, life technologies is one of the world's top life science tool companies and has aggregated over the last ten years companies that do everything from sell biology all the way to genomics. and as a supplier to the research community, academic research as well as pharmaceutical research community, they've had a great prowess and a great run at really helping these researchers do some amazing things in diseases, in the agriculture. my job is to take the expansive portfolio and really aggregate it and focus it towards some of the world's most complex diseases like, obviously, cancer, inherited diseases, neurological disorders like alzheimer's and parkinsons. so my team, we really start with the lens of the patient and look back at the value chain and understand all the components of a person or one of the players in that health care value chain and what they need to help make that patient event, you know, a better outcome. we call it the patient moment. when that patient walks in and meets with their physician, that moment when they find out they've got cancer, all kind of emotions and questions really flow through their mind, and our job is really to make sure that we use all our technology, all our testing technology to map these cappsers and to really -- cancers and to really understand how these cancers are being created within the body. and we transfer that to go right into the physician so they can actually with an ipad work with that patient and coach them through that patient and really give them knowledge that helps them both be real about their disease, but also hope. because most of the cancers that we see today are treatable and, clearly, cancer is becoming more and more a chronic disease. >> host: mr. andrews, you referred to yourself as a supplier to researchers. what does that mean? >> guest: right. well, we make instruments and what we call reagent chemicals that actually get used by researchers to do discovery in cancer, in agriculture. so, for instance, in cancer in a pharmaceutical company they would be looking for a genomic signature, a genetic signature of a patient so that they can see will their drug apply to that patient. so we supply them with instruments and with technology, basically, that helps them do their research and do their discovery. and so, obviously, with that comes a great responsibility as a corporation to be on the cutting edge of technology. and we at life last year at the show it was a great opportunity to introduce a game-changing product called the ion torrent which is a gene chip that will allow us to actually map the genome. and for us in disease, it allows us to take diseases like cancer, pull the dna of those cancer cells out and do a full genomic map of it which really tell us how that cancer's being created in the cell and -- >> host: well, what are we looking at here? >> guest: so this is a microchip. it's a basic technology that has been utilized and configured to create wells. so on this are millions of wells, and in those wells are little beads. and on the beads we have attached antibodies that actually connect to specific piece of the dna code. and so when they connect, it creates a signal, and it reports out an electrical ion comes out, and there's an electrical current that comes out, and we can read it. and it allows us to sequence the human genome with each well. >> host: where is this connected, where is this placed? >> guest: right. so there's an instrument that is actually a little desktop box. you open it up, we put this in there, and then the reaction takes place. all the chemistry is really right here on this chip. and the instrument then reads the chip, reads the readout, reports that out into a very, very sophisticated computer can which has very sophisticated software that allows us to take the terabytes of data that will come off of this and actually make it into some information that means something to a doctor. >> host: where are those manufactured? >> guest: the chips are manufactured, some of the largest chip manufacturers around the world in asia and what we do is we, obviously, bring the chip itself here, and then the final chemistry component is manufactured here in the united states at life technologies. >> ands where are you head quartered? >> guest: we're head quartered in carlsbad, california. $3.8 billion life science -- >> host: public? >> guest: we are a public company. life on nasdaq. of. >> host: ron andrews, being here at ces there's a, seems to be an exponential growth in health technology. >> guest: right. >> host: what's the future hold for technology and health? >> guest: you know, i think we're really at an inflection point, you know? malcolm gladwell calls it the tipping point. we've had all these incremental, amazing changes over the last five years, and now we're really poised to make some great leaps in these complex diseases. our understanding of cancer, for instance, has really the last five years has dwarfed the last 25, and the next ten years will really take us into some amazing advances like the ability to take a tumor biopsy and using these digital chips sequence that, identify the unique signature -- every cancer's you teak to that -- unique to that patient -- and then we'll be able to monitor in the blood that signature. so when we treat the cancer, we'll then be able to come back and look for significant signal changes out of the blood, so a patient today gets treated, they come back, you know, a year later for a pet scan, uh-oh, we've got a met static event and the patient doesn't live. now we'll be able to draw blood once a month and be able to catch them before they reoccur and monitor them using these chip technologies so we can then add the appropriate they are ths and stop the cancer before it starts again. >> host: in your keynote speech here at the ces show, you were quoted as saying we are rapidly making progress to locate the google map of the cell. >> guest: right. >> host: what does that mean? >> guest: well, cancer starts like this. if you can imagine the l.a. highway and a blue print being developed at an ark churl firm and manufacturing being out at laguna beach. he hops on the 5, go over to the 405, hit highway 1 and, of course, if there's l.a. traffic, you don't have to worry about getting cancer because the blue print has to get to manufacturing to get the cancer proteens made. so the google map themself is really being able to look at a google l map and take that example of an l.a. highway system and put it on top of the cell. the dna is in the nucleus. the courier is what we call rna, and it follows protein highway systems to get to a component of the cell which makes these bad proteins. so right after the human genome project, we began to understand the blueprint -- it's difficult to change the blueprint. what welcome do very effectively is monitor these pathways, this highway system because the drug companies are very adept at putting it together, drugs that stop and block a highway system. so if we in diagnostics can present the google map of the cell to you, peter, as a doctor, you can look at that, and you can see what the courier is, and you can get a drug to stop the courier's progress so they never make it to the ribosome, never creates a bad cancer protein. so that's the future of where we're going to go in diagnostics, and that's where diagnostics and they are therapeutics are marrying. it's the ability to look and see where the courier is in the protein highway and then shutting down the communication so that patient never gets that cancer. the cell will be signaling for it, no bad proteins will be produced. >> host: what's the regulatory process like for your product? >> guest: you know, we have a, obviously, we're governed by the fda. when we go to market in a clinical setting. the research market is really an opportunity for us to get in with academic researchers and these amazing minds that have come out of the human genome project really focused on these kinds of diseases. so in that world we're able to supply them technology as a research-only tool, and they're able to use that research-only tool to make the discoveries. once the discovery's made, then life technoloes