07.01.06
$7.5 Billion ($74B Total)
Key Executives:
Gerard Kleisterlee, President, CEO and Chairman
Pierre-Jean Sivignon, Executive VP and CFO
Ad Huijser, Executive VP and Chief Technology Officer
Gottfried Dutine, Executive VP
Jouko Karvinen, CEO of Medical Systems
No. of Employees: 164,438
World Headquarters: Amsterdam, The Netherlands
Philips has come a long way since 1918, when it released one of the first X-ray machines. In the last few years since Gerard Kleisterlee took over as CEO, the mega billion-dollar company has been moving away from relying on its electronics area and increasing its presence in healthcare.
In a little over a year the company has spent more than a couple of billion dollars on acquisitions, including Melbourne, FL-based Witt Biomedical, Brisbane, CA-based Stentor, Latham, NY-based Intermagnetics and Lifeline Systems of Framingham, MA.
“We continued to focus our portfolio, exiting low-growth, low-margin activities, reducing our financial holdings and re-allocating resources to businesses that offer better prospects for growth and higher returns,” said Kleisterlee. “For example, we further expanded our presence in healthcare, both through strong organic growth and through the acquisition of the healthcare IT company Stentor.”
But the Amsterdam, Netherlands-based business was severely hurt by the strong dollar as Philips Medical revenues dropped 6% in fiscal 2005. In Euros, the medical division jumped 8% as one of the fastest growing parts of the overall company.
The investment in gobbling up medical systems companies appears to paying off, as first-quarter 2006 revenues rose 6% to $1.8 billion. Computed tomography, ultrasound, X-ray and healthcare IT product lines drove the Medical Systems division.
In addition, the division’s earnings rebounded to $804 million after a drop in 2004 to $48 million as the company suffered from impairment charges in 2004 for losses in the courtroom.
In addition to purchasing companies, Philips was bolstered in 2005 by its growth strategy in Asia, especially in China, with its joint venture with Shenyang, China-based Neusoft Medical Systems. Philips also inked a joint venture with German pharmaceutical company Schering to develop medical equipment for the emerging optical imaging market.
The $280 million purchase of Stentor in August 2005 increased Philips’ capabilities in healthcare IT with Stentor’s PACS (Picture Archiving and Communication Systems).
In the first quarter of 2006, Philips also acquired Witt Biomedical for $165 million and Lifeline Systems for $690 million. The purchase of Witt bolsters the company’s cardio/vascular X-ray business. Witt Biomedical is a supplier of hemodynamic monitoring and clinical reporting systems used in cardiology catheterization laboratories. And Lifeline is a company that provides personal emergency response services and has annual sales of about $150 million.
The most recent acquisition came as recently as last month (June) when Philips Medical Systems bought Latham, NY-based Intermagnetics for $1.3 billion to help its molecular imaging through MRI technology.
“Through this acquisition, we will greatly strengthen the overall performance and innovation capability of our MRI business,” said Jouko Karvinen, member of the Philips Board of Management and CEO of Medical Systems. “In the short term, we expect to gain equipment market share and to grow the installed base by expanding our product offerings with an accelerated innovation rate and a lower cost supply chain. Intermagnetics’ leading positions in the high-growth and high-value markets of RF coils and MRI patient monitoring will enable us to build unique solutions for our customers.”
In 2005, Philips was hurt by the ongoing investigation by the SEC on MedQuist. Philips owns 71% of the Mt. Laurel, NJ-based manufacturer of electronic medical transcription, health information and document management products. The SEC is looking into MedQuist’s billing practices.
The company also made news with its introduction of a home defibrillator, which can be bought on Amazon.com for approximately $1,200. The move is to release user-friendly medical device products that can be used at home by consumers. Another product released last year was Motiva, which allows patients to send medical information to doctors using a box hooked up to their television set. The company also launched the HD11 XE cardiology ultrasound system.
In addition, several products received FDA approval, including the HeartStart FR2+, an automated external defibrillator (AED) that advises the user whether to provide an immediate defibrillation shock or CPR followed by a shock to a victim of sudden cardiac arrest; the HeartStart MRx monitor/defibrillator, improving delivery of CPR by medical responders; and two disposable Sp02 pulse oximetry sensors used for infant and neonatal patients.
Key Executives:
Gerard Kleisterlee, President, CEO and Chairman
Pierre-Jean Sivignon, Executive VP and CFO
Ad Huijser, Executive VP and Chief Technology Officer
Gottfried Dutine, Executive VP
Jouko Karvinen, CEO of Medical Systems
No. of Employees: 164,438
World Headquarters: Amsterdam, The Netherlands
Philips has come a long way since 1918, when it released one of the first X-ray machines. In the last few years since Gerard Kleisterlee took over as CEO, the mega billion-dollar company has been moving away from relying on its electronics area and increasing its presence in healthcare.
In a little over a year the company has spent more than a couple of billion dollars on acquisitions, including Melbourne, FL-based Witt Biomedical, Brisbane, CA-based Stentor, Latham, NY-based Intermagnetics and Lifeline Systems of Framingham, MA.
“We continued to focus our portfolio, exiting low-growth, low-margin activities, reducing our financial holdings and re-allocating resources to businesses that offer better prospects for growth and higher returns,” said Kleisterlee. “For example, we further expanded our presence in healthcare, both through strong organic growth and through the acquisition of the healthcare IT company Stentor.”
But the Amsterdam, Netherlands-based business was severely hurt by the strong dollar as Philips Medical revenues dropped 6% in fiscal 2005. In Euros, the medical division jumped 8% as one of the fastest growing parts of the overall company.
The investment in gobbling up medical systems companies appears to paying off, as first-quarter 2006 revenues rose 6% to $1.8 billion. Computed tomography, ultrasound, X-ray and healthcare IT product lines drove the Medical Systems division.
In addition, the division’s earnings rebounded to $804 million after a drop in 2004 to $48 million as the company suffered from impairment charges in 2004 for losses in the courtroom.
In addition to purchasing companies, Philips was bolstered in 2005 by its growth strategy in Asia, especially in China, with its joint venture with Shenyang, China-based Neusoft Medical Systems. Philips also inked a joint venture with German pharmaceutical company Schering to develop medical equipment for the emerging optical imaging market.
The $280 million purchase of Stentor in August 2005 increased Philips’ capabilities in healthcare IT with Stentor’s PACS (Picture Archiving and Communication Systems).
In the first quarter of 2006, Philips also acquired Witt Biomedical for $165 million and Lifeline Systems for $690 million. The purchase of Witt bolsters the company’s cardio/vascular X-ray business. Witt Biomedical is a supplier of hemodynamic monitoring and clinical reporting systems used in cardiology catheterization laboratories. And Lifeline is a company that provides personal emergency response services and has annual sales of about $150 million.
The most recent acquisition came as recently as last month (June) when Philips Medical Systems bought Latham, NY-based Intermagnetics for $1.3 billion to help its molecular imaging through MRI technology.
“Through this acquisition, we will greatly strengthen the overall performance and innovation capability of our MRI business,” said Jouko Karvinen, member of the Philips Board of Management and CEO of Medical Systems. “In the short term, we expect to gain equipment market share and to grow the installed base by expanding our product offerings with an accelerated innovation rate and a lower cost supply chain. Intermagnetics’ leading positions in the high-growth and high-value markets of RF coils and MRI patient monitoring will enable us to build unique solutions for our customers.”
In 2005, Philips was hurt by the ongoing investigation by the SEC on MedQuist. Philips owns 71% of the Mt. Laurel, NJ-based manufacturer of electronic medical transcription, health information and document management products. The SEC is looking into MedQuist’s billing practices.
The company also made news with its introduction of a home defibrillator, which can be bought on Amazon.com for approximately $1,200. The move is to release user-friendly medical device products that can be used at home by consumers. Another product released last year was Motiva, which allows patients to send medical information to doctors using a box hooked up to their television set. The company also launched the HD11 XE cardiology ultrasound system.
In addition, several products received FDA approval, including the HeartStart FR2+, an automated external defibrillator (AED) that advises the user whether to provide an immediate defibrillation shock or CPR followed by a shock to a victim of sudden cardiac arrest; the HeartStart MRx monitor/defibrillator, improving delivery of CPR by medical responders; and two disposable Sp02 pulse oximetry sensors used for infant and neonatal patients.