From smart toothbrushes to cancer, Philips bets big on software
Frans van Houten, chief executive (CEO) of Philips, speaks during the presentation of the 2013 full-year results in Amsterdam, Netherlands, January 28, 2014. REUTERS/Toussaint Kluiters/United Photos/File Photo
Get Alerts PHG Hot Sheet
Join SI Premium – FREE
By Ben Hirschler
LONDON (Reuters) - These days the average researcher at Philips (NYSE: PHG) is more likely to be a software developer than an product engineer, reflecting a transformation at the former Dutch conglomerate that its chief executive says will gather pace.
"It's a huge shift," Frans van Houten told Reuters, noting that around 60 percent of the healthcare technology company's R&D staff are now focused on software.
"It could rise further. It will not go to 100 percent, because we will still make products, but you could easily see that the value-add comes more out of software than hardware."
Philips has repositioned itself as a health business after spinning off lighting, which has freed up capacity for acquisitions such as last year's $1.2 billion purchase of blood vessel imaging firm Volcano.
"M&A will play a more active role," van Houten said during a visit to London, highlighting informatics, diagnostics, patient monitoring and homecare as areas for potential deals.
Philips is betting on a new era of connected healthcare as smart connected devices in hospitals and at home feed data to doctors, insurers and drugmakers.
It is not alone in targeting this convergence of health and technology, with traditional medtech groups like Medtronic (NYSE: MDT) striving to integrate disease care and newcomers, such as Google parent Alphabet (NASDAQ: GOOGL), also investing heavily.
But van Houten believes Philips' existing standing with consumers can give it an edge.
"Having a consumer brand helps us a lot. We will see more ambulatory care and there will be a lot of new ways to deliver healthcare ... and that means consumerism is going to play a bigger role."
The humble toothbrush may be a start. Philips already sells connected ones designed to encourage correct brushing in children and adults. In future, its toothbrushes could include a sensor to measure disease biomarkers in saliva.
At the other end of the spectrum, the group is developing integrated solutions for cancer, such as a single workstation combining genomics, pathology and radiology that can give medics a complete picture of tumors.
Philips' full reinvention still has a little way to run.
A sale of lighting components business Lumileds to Chinese buyers was blocked earlier this year by the United States on security grounds, although van Houten said he still hoped to clinch a deal before the end of the year.
It also retains 71 percent of Philips Lighting
(Additional reporting by Toby Sterling in Amsterdam; Editing by Alexander Smith)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Google parent Alphabet announces first-ever dividend, shares soar
- Northern Gaza still heading toward famine, says deputy WFP chief
- Carrier AirAsia discloses new listing plans under $1.4 billion units merger
Create E-mail Alert Related Categories
ReutersSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!