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    Top30

    4. Siemens Healthineers

    ...

    4. Siemens Healthineers
    Related CONTENT
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    07.26.17
    $15.2 Billion ($89.4B total)

    KEY EXECUTIVES:
    Joe Kaeser, President and CEO, Siemens AG
    Dr. Ralf P. Thomas, CFO
    Klaus P. Stegemann, CFO, Siemens Corporation, and Cluster CFO, Siemens North America
    Heribert Stumpf, CFO, Siemens USA
    Dr. Bernd Montag, CEO, Siemens Healthineers
    David Pacitti, President, Siemens Medical Solutions USA Inc., and Head of Siemens Healthineers North America
    August Calhoun, Ph.D., VP of North American Services, Siemens Healthineers
    David N. Fisher, Head of Global Policy and Development
    Richard Frank, M.D., Ph.D., Chief Medical Officer, Siemens Healthineers North America

    NO. OF EMPLOYEES: 45,000 (351,000 total)

    GLOBAL HEADQUARTERS: Munich, Germany

    Never has a corporate rebranding invoked such public ridicule and scorn. 

    Except, perhaps, for SyFy (Polish slang for syphilis), Accenture (a $100 million “nonsense word,” according to Time magazine), and Xfinity (whose meaning remains a mystery).
    Certainly, Siemens AG should join the ranks of naming numbskulls, having rechristened its Healthcare division last spring as “Healthineers.” Executives touted the new brand as “unique and bold,” claiming it best describes the Healthcare business and its people as well as emphasizing the division’s “pioneering spirit and engineering expertise.”

    “Our new brand is a bold signal for our ambition and expresses our identity as a people company,” Healthineers CEO Bernd Montag said, “45,000 employees worldwide who are passionate about empowering healthcare providers to optimally serve their patients.”

    Despite Montag’s best attempt at a positive marketing spin, the new name became an almost instant laughing stock, most likely undermined by a promotional concert featuring a troupe of orange- and blue-clad performers dancing to a Healthineers “theme” song. “We are, we are, we are Healthineers,” the melody’s chorus harmonizes. “One vision one mission one focus one name...oho oho oho oho...We are, we are, we are Healthineers...oho oho oho oho...”

    It didn’t take long for the concert video to surface on the Internet. (Go ahead and check it out; we'll wait. Here's the link!) Along with an avalanche of mockery: 

    “Let me try to understand. There was at least a brainstorming session where someone came up with the idea of having dancers (?) wearing giant condoms on stage, jumping and kicking to the sound of an annoying song,” Simone atGeeMail wrote after watching a YouTube video of the rebranding performance. “Other people at the meeting agreed that it was a good idea. Someone in Marketing also thought it was a good idea. The concept traveled up the many Siemens hierarchical levels, getting the green light all the way until a big shot executive signed off on the campaign. Is that what happened? Or someone accidentally replaced the actual campaign with a VHS of the Teletubbies?”
    Harsh.

    “If Siemens was an anime this would be the final battle music.”

    “I’ve always wanted a family of friends, especially ones dressed in bodysocks.”

    “OMG! So bad it’s an embarrassment!”

    Cruel.

    “I’ll bet this was great if you were...trashed on free company alcohol.”

    “...I’m a fairly stable person, but I nearly had a panic attack watching that.”

    And, the coup de grâce: “H.E.A.—L.T.H.—I.N.E.E.R.—Healthineers (Healthineers) Healthineers (Healthineers)!” (Lampooning the Mickey Mouse Club theme).

    MedCityNews writer Neil Versel was particularly brutal, calling Siemens’ rebranding a “train wreck.” “It’s hard to get past the fact that the name Healthineers evokes Disney’s Imagineers or, worse, Mouseketeers,” he scoffed in a May 2016 online story. “Maybe if Siemens hired Justin Timberlake and Britney Spears as spokespeople? (Unfortunately, Annette Funicello died in 2013).”

    Comments like Versel’s however, were tempered by a few voices of reason supporting the name change. Reuters Breakingviews columnist Olaf Storbeck was among the minority warning against a rush to judgment, noting the rebranding could actually work in the company’s favor.

    “Users of Siemens’ brain-scanners and plasma protein analyzers will care little about the brand name. They will mostly remain unmoved by the sight of people dancing in orange and blue bodysuits at the brand’s official launch,” he wrote the day after the Healthineers’ May 4, 2016, birth. “They are unlikely to hum along to the Healthineers theme song as they slide patients in and out of Siemens’ MRI machines. Staff will notice, but beyond being a little embarrassed, they are unlikely to leave in droves. They may grow to like their new epithet.”

    “For investors, the clumsy rebranding is, at the margin, a good thing: it shows a spin-off of Siemens’ prime division may have become more likely. [Healthcare] is meeting Siemens boss Joe Kaeser’s ambitious margin target of 15 percent to 19 percent,” Storbeck continued. “Listing a minority stake in Healthineers—which, like it or not, is hard to ignore—would simplify the overly complex group, which is making everything from high-speed trains to gas turbines and electrical grids. Corporate rebrandings are rarely greeted with delight. As weird as the Healthineers sound, they may help speed up Siemens’ re-engineering.”

    It certainly seemed that way at first. Six months after unveiling its new Healthcare brand name, Siemens announced plans to spin off the division to simplify its overall product portfolio. The diversified German industrial group has been whittling down its core business focus in recent years as it gravitates toward the “concrete growth fields” of electrification, automation, and digitalization outlined in its Vision 2020 plan.

    In publicizing its Healthineers intentions, however, Siemens was coy about deal timing and structure, noting only that it wanted control of the unit. Months of radio silence followed the initial spinoff announcement, though the reticence may have actually stemmed from executive-level indecision rather than deliberate secrecy. Within five weeks this past spring, Siemens bigwigs vacillated between keeping the division and mulling plans for a spinoff, initial public offering (IPO), or reverse merger with a public company.

    Despite the uncertainty, Siemens management is collectively adamant against making a hasty decision about the Healthineers’ future. “Selecting the best opportunity requires the best timing. And from that timing onwards, as soon as we have finally determined the best opportunity for us and for the business [going] forward, we will have a very, very clear and precise understanding of the potential scheduling,” chief financial officer Ralf Thomas told analysts on a second-quarter earnings conference call in May (2017). “We are not in a hurry. We do see opportunities for us, of course, to find the best solution and we will not trade timing for giving up opportunities that would be disappointing...”

    Depending on the timing, a Healthineers IPO could be worth 30 billion euros ($33 billion) to 40 billion euros, according to a Bloomberg Intelligence analysis. The move would hasten Siemens’ transformation from a consumer-oriented conglomerate into an industrial holding company targeting such areas as building technologies, energy management, wind power, mobility (passenger and freight transportation), process industries/drives, and financial services.

    Besides its obvious fiscal benefits for Siemens AG, a public listing would enable Healthineers to raise its own funds in order to adapt to new trends such as genome analysis, personal health management, and software/services. The division made considerable strides in the latter category in fiscal 2016 (year ended Sept. 30, 2016), releasing a string of digital solutions that included a software package for minimally invasive aortic aneurysm treatment; a cloud-based network for medical expert connectivity; an electronic patient information portal; an radiological imaging archiving system; a cardiovascular imaging and information platform; a picture archiving and communication system; and a 3D routine and advanced reading program.


    ANALYST INSIGHTS:In 2016, Siemens rebranded its Healthcare division to be known as Siemens Healthineers. While the name was met with mixed reviews, Siemens Healthineers is in the process of being spun off from Siemens AG. This will allow it to focus on its portfolio of core products and services in diagnostic and therapeutic imaging as well as in laboratory diagnostics and molecular medicine. Look for Siemens to continue its path of acquisitions as well as to form potentially innovative strategic alliances in all areas of healthcare.

    —Dave Sheppard, Co-Founder and Principal, MedWorld Advisors  



    “The digital enterprise is just at the beginning of being built,” Siemens AG president and CEO Joe Kaeser told analysts during a FY16 earnings conference call last fall. “The main focus areas for investment and growth are software in the different verticals. We’re building on our global position in automation across our domains and enhancing our integrated offerings along what we call the EAD strategy—electrification, automation, digital enterprise. Our focus on digital transformation to drive growth is bearing fruit.”

    Quite sweet fruit, actually. Overall company revenue rose 5 percent to 79.6 billion euros ($89.3 billion), with most geographic areas reporting solid gains. More than half (52.5 percent) of Siemens’ total revenue in FY16 was generated in Europe, Africa, the Middle East, and C.I.S. (Commonwealth of Independent States), while 28.5 percent came from the Americas (21 percent from the United States), and 18.9 percent originated in Asia/Australia (8 percent from China).

    Eight of Siemen’s nine business units followed the company’s lead and increased profits year-over-year, with Wind Power and Renewables leading the charge via a nearly three-fold increment. Energy Management came in a respectable second with a 57 percent surge in profits, followed by Power and Gas, which recorded a 32.3 percent increase, Mobility (a 15.3 percent rise), and Financial Services (an 8.8 percent jump). Process Industries and Drives was the sole holdout, losing more than half of its profits (58.2 percent) from the previous fiscal year.

    Although the division was a sieve for revenue as well—forfeiting 5.4 percent of its FY15 sales—Financial Services was more of an underachiever, having posted a 6.6 percent revenue decline in fiscal 2016. Power and Gas scored the highest growth, expanding proceeds 22.7 percent to 16.4 billion euros due to its Dresser Rand and Rolls-Royce Energy-enhanced turbine, compressor, and valve product portfolio. Wind Power and Renewables and Mobility also recorded decent gains, increasing revenue 5.6 percent and 4.2 percent, respectively.

    The Healthineers division had a respectable rookie season, growing orders 4 percent to 13.8 billion euros and proceeds 5 percent to 13.5 billion euros. Profit climbed 6 percent to 2.3 billion euros, driven mainly by diagnostic imaging sales and strong product demand in China and the Americas.

    Diagnostic imaging revenue likely benefited in part from FY16’s bevy of new products, including:

    • The ACUSON P500 ultrasound system—FROSK edition, an adaptable, point-of-care portable ultrasound system engineered to scale a wide range of environments and patient types. The product delivers technologies used in Siemens’ most advanced ultrasound equipment to ensure excellent image quality, smart workflow and durability, all in a compact notebook format.
    • The Multitom Rax (Robotic Advanced X-ray), touted as the world’s first Twin Robotic X-ray system, is designed to record 3D natural weight-bearing images. The system features a height-adjustable patient table and two independent, ceiling-mounted robotic arms for the X-ray tube head and the flat-panel detector for almost unlimited positioning freedom.
    • The Biograph Horizon PET/CT System, which enables doctors to visualize small lesions early. The system’s
    • 4 mm LSO crystals scintillate faster and have a higher light output than BGO crystals, resulting in high resolution and better image quality, and enabling time-of-flight acquisition. The product’s capabilities are valuable for many indications, like lung cancer—the most common PET/CT indication, at 29 percent of the total exam mix.
    • The Magnetom Amira MRI Scanner, the first Siemens MRI scanner equipped with “Eco-Power” technology, which monitors and controls magnet-cooling helium. Activated during standby mode, Eco-Power monitors the liquefaction cycle and manages the cooling and helium re-liquefaction process more efficiently, enabling a power saving of up to 30 percent in standby mode.
    • The noninvasive SEEit prostate MRI solution, powered by syngo MR E11 software architecture. SEEit enables users of Siemens’ high-performance Magnetom Aera 1.5 Tesla (1.5T) and Magnetom Skyra 3T MRI systems to perform a routine prostate exam in just 10 minutes without using an endorectal coil, which can cause patient discomfort.
    • Simultaneous Multi-Slice (SMS) MRI, an application that reduces two-dimensional acquisition times by as much as a factor of eight. With SMS, physicians can reduce the length of MRI brain examinations, which can vary significantly, to times compatible with the clinical routine (e.g., up to 68 percent for diffusion tensor imaging, or DTI) and bring clinical relevance to advanced neurological applications. SMS can be used in the treatment of patients who possess limited tolerance for longer scan times, including pediatric or geriatric patients.
    • GOBrain, an MRI application that allows acquisition of clinically essential image orientations and contrasts with a single button-push. The technology is backed by Siemens’ high-channel density coils and the company’s MRI scanning software DotGO.
    • The Somatom Drive CT System, a dual source scanner indicated for a number of clinical disciplines, including pediatrics, cardiology, and oncology. The system allows for high quality imaging at lower doses of contrast and radiation, less follow-up care, and less need for sedation or other preparation. The Somatom Drive system’s Straton MX Sigma X-ray tubes and Sigma generators allow for more precise targeting and enable high-performance imaging using higher energy levels at lower voltages that are tunable. With adjustable voltages, the system may require less contrast and can be tailored to the specific needs of the patient, as well as reduce unnecessary radiation exposure.
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