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Royal Philips to Focus on Medical Systems Unit Business
Dec 2, 2005
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Royal Philips Electronics of the Netherlands is shifting focus away from electronics owing to intense competition and commoditization of electronic products. While the company will continue to focus on certain high-end electronic equipments, future growth for the 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 CEO, Royal Philips Electronics.

Over the past 5 years the company has spent about 5 billion euros (approx. U.S. $5.9 billion) 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 two in medical diagnostic imaging worldwide.

Philips medical technologies segment has been growing at about 7 percent on a compounded annual basis and contributed over 20 percent 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 grow 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, CEO, 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 reportedly the global market leader for lighting, electric shavers and DVD recorders. It employs about 1,60,000 people in over 60 countries. (Business Standard)

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