Philips : our transformation over the last 5 years to become a Health focused company

January 15, 2018

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Strategy 

 

Guided by their passion to improve people’s lives, Philips has been a leader in building and shaping markets with meaningful innovations for the last 125 years. With the world facing the challenge of tackling climate change and energy constraints, as well as providing effective and affordable healthcare to a growing global population, Philips see compelling opportunities in the health technology and lighting markets.

 

Determined to win in both, Philips recently separated out their Lighting activities as a stand-alone company.

 

This created more focus, giving Lighting the opportunity to grow and capture the vast opportunities in energy-efficient, digital lighting products, systems and services.

 

Philips then enhanced their efforts to expand their core business to address the opportunities available in the health technology market outlined as 4 main themes -

 

a) Global resource constraints on health systems are driving a shift to value-based healthcare to reduce cost, increase access and improve outcomes. 

b) Aging populations across the globe and the rise of chronic conditions are driving a shift of care to lower-cost settings and the home.

c) More and more people are looking for new ways to proactively monitor and manage their health.

d) The digitalisation of healthcare is shifting value from devices to software and services.

 

Five years ago Philips believed these challenges could only be met through new, more integrated forms of care delivery across the health continuum, with a shift away from today’s focus on acute care and late-stage interventions.

 

The convergence of Philips’ consumer technologies that facilitate healthy living, medical technologies that help clinicians to deliver better diagnosis and treatment, and cloud-based technologies that enable data sharing and analysis were identified as the key enablers of more effective, lower-cost integrated health solutions. 

 

Philips built their strategy around their core strengths of professional healthcare and consumer health and well-being.

 

 

Focus

 

Philips focused on 5 priority areas to expand their integrated solutions capabilities -

 

1) Personal health

2) Definitive diagnosis,

3) Minimally invasive guided therapy

4) Population health management

5) Connected care delivery

 

Within 4 broad specialties -

 

1) Cardiology

2) Oncology

3) Respiratory care

4) Fertility, pregnancy and parenting 

 

In the last 5 years the company have successfully teamed up with hospital and health systems to understand their needs, provide integrated solutions, and engage in multi-year cooperation to drive improvements in terms of patient outcomes, quality of care delivery and cost productivity.

 

Looking forward into the next 5 years, Philips will drive the benefits of scale further in their current businesses while delivering additional growth from continuing investments in innovation.

 

They will also invest in their Philips HealthSuite digital platform to establish themselves as a leading cloud solution to connect consumers, patients and providers.

 

Transformation, Mergers & Acquisitions 

 

“Philips has made a very massive transformation over the last five years and we have pivoted to be a focused health company,” Chief Executive Officer Frans van Houten said in an interview on Bloomberg TV recently. “we are not distracted by other performing businesses in other sectors.”

 

Philips has made a series of acquisitions in recent months that have focused the 126-year-old Dutch company on health technologies including software and services. In the process, the company has moved away from its historic roots in manufacturing light bulbs, TVs and CD players.

 

 

Is the Strategy working? What are the latest results?

 

https://www.philips.com/static/qr/2017/q3/philips-third-quarter-results-2017-presentation.pdf

 

Philips had a “particularly strong Q3 17,” in China, both at the consumer and hospital businesses, the CEO said, adding that he expects growth at private hospitals to offset any risk of governments giving preference to domestic suppliers. Sales of toothbrushes are also increasing.

 

“The penetration of oral care of electric toothbrushes in China is still below 4 percent,” he said. “If you compare that to Western Europe or the United States where it is about 30 percent, it just underlines what positive journey is possible in the years ahead.”

 

The Dutch company kept its outlook to raise profitability to the average industry standard for health care-equipment peers, including GE and Siemens AG, over the next three to four years. Even though organic revenue growth has not topped 4 percent since the beginning of this year, Philips kept its outlook for a 4 to 6 percent revenue growth in 2017.

 

 

 

 

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