With the recent sale of its domestic appliances division to Hillhouse Capital, Dutch multinational giant Philips has completed its remarkable transformation from an electronics giant manufacturing everything from irons and vacuum cleaners to coffee machines, into a company focusing solely on health technology. Back in 2016, Philips sold its lighting division.
The bold strategy is the fulfillment of the vision of CEO Frans van Houten who since taking over at the helm in 2010 decided to steer a course towards healthcare. Van Houten still sees enormous untapped potential in healthcare while the electronics sector it has abandoned has become more and more competitive. The shareholders seem to like van Houten's vision and since he was appointed CEO, Philip's share price has doubled, giving the company a market cap of €42 billion.
In an exclusive interview, van Houten told "Globes," "We are focused on areas in which we can give value in the health sector, which has become our core area."
van Houten said that Philips had kept those electronic products related to healthcare such as mother and child, personal care, and mouth and jaw products. "These are areas very close to healthcare. We will add to our home treatment products more sensors, more elements that create a dialogue between users and their doctor in order to improve use of a device and get health feedback that until today people have not been getting, in situations where you wouldn't really define them as patients."
Philips has extensive healthcare operations in Israel. In addition to its development center in Haifa, which specializes in imaging and processing medical data, Philips is a partner with Teva in the Sanara Ventures incubator for digital health. In 2018, Philips acquired Israeli EPD cardiac imaging and navigation solution developer for $300 million while back in 2010 Philips acquired the CDP medical archiving company for $12 million. Philips also owns Israeli medical imaging company Algotec.
"We very much appreciate the innovation and dedication of Israeli startups in the field of digital health," van Houten said. "The number of major companies is growing and the entire ecosystem is strengthening, also due to Sanara as well as due to other investors. We are tracking many companies in the sector and waiting for opportunities to create additional collaborations."
"We have become stronger through acquisitions and our collaborations in Israel in implementing medical procedures guided by imaging in order to perform operations or surgical actions in a more precise way and to obtain better results and reducing recovery times for the patient. Through the activities of our subsidiary Carestream, we have a major presence in Israel and we have strengthened the field of accurate and personally adapted diagnoses
He continued, "We have strengthened the digital medicine sector with assistance from our acquisitions and collaborations in Israel and through our data division, which also operates in Israel. I think that this is very much the right area for Israel because the time to more is very quick and most of the products don't need large and risky investment in the production system and a large marketing network before proof of concept. It's possible to reach customers worldwide and that's a very successful change for the company in Israel."
"When we talk with hospitals and the health funds, we see more innovation coming from them. There is more cooperation between them and industry. This is probably a process that is right."
Israel considers itself a digital health powerhouse. Does it seem the same way from abroad?
"When we map out Philips' hotspots for this sector worldwide, we mark out Cambridge in the US, which has Harvard and MIT, Eindhoven, which is our headquarters, Bangalore in India, where there are a lot of people and a lot of innovation, and Israel."
How do you see the future of the digital health field?
"The future, which has very much sped up because of Covid, includes more remote patient management, via the cloud, with all the data about the patient connected and shared, in order to speed up and improve decision making. We already see more and more remote medicine, even with the existing remote imaging, or at least interpreted by somebody with an imaging device or through a pathological test. This separation creates infinite possibilities to obtain expert opinion even outside office hours and in distant places."
"Remote medicine is significant not only when the patient is distant from the doctor but also provides possibilities for integrative medical teams, with each person located in a different place. That means that every doctor can reach, with the push of a button, experts in many different sub-sectors from around the world, without being dependent on a particular country or region in which they live."
2020, the year of the Covid pandemic, was not so bad for Philips. Van Houten said, "Use of medical data during the Covid pandemic proved relevant not only for each patient but also for tools to manage hospitals while savings in staff. This approach was very important for hospitals during this period, and we understood that we were on the right path and our market share also rose and it was clear to us that our influence on medicine was bigger."
"Covid-19 influenced us from several directions, like every big company. There were activities that were reduced because of the postponements of elective surgery but we were stronger in intensive care and we sold more ventilators, more monitoring equipment and our activities grew overall." In the first quarter of 2021, Philips revenue grew 9% (excluding activities that were sold) to €3.8 billion from the corresponding quarter of 2020.
One of Philips future directions can be guessed from its recent acquisitions, which included BioTelemetry, which has developed remote cardiac monitoring devices, and Capsule Technology, which has developed data management systems for hospitals.
The areas of endeavor emphasized in the financial report of Philips for the first quarter of 2021 are: catheters for performing minimally imaging guided invasive procedures, an area enriching the medical world by allowing doctors to be assisted by imaging or additional data during surgery without shifting their eyes away from the patient or the main image, and improved systems for 3D imaging. At the same time, Philips is celebrating the success of its new electric shaver, which is considered a health product but for many it is the first thing that comes to mind when thinking about the company.
Published by Globes, Israel business news - en.globes.co.il - on June 3, 2021
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