Royal Philips bets big on medical systems unit business

One of the world's biggest electronics companies Royal Philips Electronics of the Netherlands is shifting focus away from electronics owing to intense competition and commoditisation of electronic products.

While the company will continue to focus on certain high-end electronic equipments, future growth for the 30 billion euro company will be driven mainly by medical technologies.

The company is repositioning itself from an electronics-maker to a healthcare, lifestyle and technology company, said Gerard Kleisterlee, president and chief executive officer, Royal Philips Electronics in a breakfast meeting here on Tuesday.

Over the past five years the company has spent about 5 billion euros on acquiring companies engaged in various facets of medical technologies.

The company continues to look for alliances and inorganic growth opportunities to strengthen its position in the medical technologies. Currently, Philips is Number 2 in medical diagnostic imaging worldwide. It is No.2 in medical diagnostic imaging worldwide.

Philips medical technologies segment has been growing at about 7 per cent on a compounded annual basis and contributed over 20 per cent to total sales.

Currently, it is the second largest business for the company. "Medical systems have been the fastest growing segment for the company and we expect similar growth in future too. We would like to growth by leading the market through innovations and better technology," said Kleisterlee.

Besides, the Asia Pacific region mainly driven by faster economic growth in China and India will be a key growth engine for the company. "Faster economic growth and demographic changes will mean more demand for healthcare in Asia," said Andreas Wente, chief executive officer, Philips Medical Systems, Asian Pacific. "In about 5 years or so we would not like to be seen as consumer electronics company," he added.

Philips has been facing tough times with LG and Samsung sweeping the lower end of the market with rock bottom prices. Philips would, however, continue to maintain its presence in the high-end electronics segment.

At present, Philips is active in over 60 businesses, and with more than 115,000 registered patents, Philips is the global market leader for lighting, electric shavers and DVD recorders. It employs about 1,60,000 people in over 60 countries. Booster shot

The company is repositioning itself from an electronics-maker to a healthcare technology company

The company has spent about 5 billion euros on acquiring medical technologies based companies

The Asia Pacific region mainly driven by faster economic growth in China and India will be a key growth engine for the company

(The author was in Chicago on a tour sponsored by Philips)