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Philips Grows Health Care Business as Aging Population Doubles

by Lynn Shapiro, Writer | June 19, 2009
A reinvigorated
health care strategy
Philips is dedicated to pursuing its leadership role in health care as the aging population is expected to double from 500 million people today to 1 billion people in 2015, Gerard Kleisterlee, Philips president and CEO, told the JP Morgan 7th Annual Pan European Capital Goods CEO Conference in Surrey, UK, earlier this month.

In anticipation of this trend, Philips has tripled health care sales to approximately $11 billion this year (7.9 billion euros) from $3.46 billion (2.5 billion euros) in 1999, Mr. Kleisterlee said.

Key business lines in Philips' health care portfolio include its automated external defibrillators; personal emergency response systems that slash mortality rates as well as length of stay in intensive care units; and imaging systems, such as cardiology x-rays to name a few.

Emerging markets are key to generating earnings since developing countries will comprise 99 percent of the world's population growth, Kleisterlee told investment bankers.

To this end, Philips last year acquired such businesses as India-based Meditronics, a leading manufacturer of x-ray systems; and a plant in Guandong, China that makes nebulizer compressor systems. The nebulizer business in China has synergies with Philips' acquisition of Medel SpA's aerosol therapy business in Italy. Philips acquired both the Italian and Chinese businesses in December 2008.

Kleisterlee said the company is expected to save about $83.5 million (60 million euros) in health care in the second half of this year, having improved operating margins and lowered fixed costs by taking deficiencies out of its structures.

Source: Philips