Research and Markets: Philips Healthcare Market Intelligence Report

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Headquartered in Best, the Netherlands, and Andover, Massachusetts, the US, Philips Healthcare is part of the multinational electronics giant, Royal Philips Electronics Group. At the beginning of 2008, Philips had realigned its business activities into three separate 'sectors' - Healthcare, Lighting and Consumer Lifestyle - each of which was made responsible for the management of its businesses worldwide. Philips Healthcare was formed through the combination of the former Medical Systems and Home Healthcare Solutions divisions, the latter of which had been hived off from Philips' Innovation and Emerging Businesses unit.

Bolstered by the product lines and research activities of smaller rival companies that have been acquired in recent years, Philips Healthcare offers a broad portfolio of medical systems. Its product line includes X-ray, ultrasound, magnetic resonance, computed tomography, nuclear medicine and PET imaging technologies, as well as radiation oncology systems, patient monitoring, information management and resuscitation products. Philips Healthcare also offers a wide range of services to support its businesses. Philips Healthcare is a leader in many of the markets in which it participates and, in the financial year ended 31st December 2008, had sales of more than EUR7.6 billion (approximately US$11.1 billion).

Central to Philips Healthcare's strategy is the aim of achieving a leading position in the high-growth sector of home healthcare. Given the unsustainably high healthcare costs in many markets and increased emphasis on both efficiency and patient comfort, there is a growing shift towards diagnosing, treating and monitoring patients in their homes, rather than in hospitals. Demand for home healthcare is also growing due to the increasing number of elderly people and the rising incidence of chronic diseases.

Consequently, Philips has adopted an aggressive merger and acquisition policy with regards to the home healthcare market. Key purchases have included Lifeline Systems, Health Watch and Raytel Cardiac Services. Its most important acquisition made to date in connection with this strategy was the 2008 purchase of US-based Respironics, for a total consideration of US$5.1 billion. At the time of the transaction, Respironics was the global leader in the treatment of obstructive sleep apnoea (OSA), a sleep disorder characterised by the repeated cessation of breathing during sleep. The purchase also gave Philips access to a substantial non-invasive ventilation solutions business, and this is being augmented with further strategic acquisitions. Most importantly, however, is that Philips is no longer heavily reliant on its imaging systems business (affected by softening demand in the key North American market, increased competition and customers' reluctance to invest in new equipment during the current recession).

At the same time, Philips has also been expanding its healthcare informatics business. In the hospital market, Philips strengthened its global leadership in critical care with the purchase of VISICU, which provides advanced IT solutions for monitoring patients in the intensive care unit. This purchase complemented the earlier acquisitions of Emergin (a provider of alarm management and event notification software and solutions) and Ximis (a provider of a web-based RIS solution). Philips went on to buy Ireland-based TOMCAT Systems (a provider of cardiovascular information systems). Philips aims to expand the use of information technology in healthcare to improve patient outcomes and help hospitals work more efficiently.

Emerging markets are also of growing importance to Philips Healthcare, where investment in healthcare aimed at low-income demographic groups is now being prioritised by both state and private healthcare institutions. Here, Philips is establishing or ramping-up its manufacturing presence in low-cost economies and has spent the last 18 months buying strategic operations in India, China and Brazil that have come with existing diagnostic imaging, patient monitoring and critical care product lines. Philips believes that emerging healthcare markets, such as Latin America (which it claims is growing at twice the rate of developed markets), represent a real growth opportunity for its Healthcare business.

Although further acquisitions may yet be announced, Philips is now focusing on growing its business organically and integrating these acquired companies and product lines into its portfolio.

Companies Mentioned:

- ADAC Laboratories

- Agilent Technologies' Healthcare Solutions Group

- Amirsys

- Analogic

- Anesthesia Recording

- Ascent Profit

- Aspect Medical Systems

- ATL Ultrasound2

- Atos Origin

- BG Medicine

- Bioscan

- BrainLAB

- Capital Health

- CardioDynamics

- CardioLogica

- Civco Medical Instruments (Roper Industries)

- Cozart

- Dixtal Biomedica e Tecnologia

- Dubai Health Authority

- EDDA Technology

- Emergin

- EP MedSystems

- Epic Systems

- Fukuda Denshi

- GeneGo

- HealthCare Products Group

- HealthTrust Purchasing Group

- Heartstream

- Inova Health System

- Intermagnetics General

- ISG Technologies

- Kaiser Permanente

- Kereos

- Laerdal

- LiDCO

- LifeGuard Medical Solutions

- Marconi Medical Systems

- Masimo

- MedAssets

- Medcare

- Medical Center of Central Georgia

- MedQuist

- Nellcor

- Oridion Medical

- Philips Hearing Implants7

- Philips HeartCare Telemedicine

- Philips Neusoft Medical Systems Co Ltd

- Pie Medical

- Premier

- Pulsion Medical Systems

- Raytel Cardiac Services

- Research Corporation Technologies

- Respironics

- Richardson Electronics Medical Glassware Business

- Royal Belfast Hospitals, UK

- Sectra

- Shenzhen Goldway Industrial

- SHL Telemedicine

- Skytron

- Speech Processing Telephony and Voice Control Business Units

- Stentor

- Stereotaxis

- Sun MicroSystems

- Telzuit Medical Technologies

- TOMCAT Systems

- Traxtal

- Trixell

- UK National Health Service National Programme for IT

- University Health Network

- Visicu

- VMI-Sistemas Medicos

- Volcano Corporation

- Witt Biomedical

- Ximis

- Zymed

For more information visit http://www.researchandmarkets.com/research/6958fc/philips_healthcare

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