Philips Medical Systems Progress Report
Philips Medical Systems Progress Report
Philips Medical Systems Progress Report
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<strong>Philips</strong> <strong>Medical</strong> <strong>Systems</strong><br />
<strong>Progress</strong> <strong>Report</strong><br />
Jouko Karvinen<br />
<strong>Philips</strong> <strong>Medical</strong> System<br />
Analyst Meeting, Amsterdam June 9 th 2004
<strong>Philips</strong> <strong>Medical</strong><br />
<strong>Progress</strong> <strong>Report</strong><br />
• Seven consecutive<br />
quarters of improvement<br />
• Building the future – Innovation<br />
• Building the future – Customers<br />
• Where do we go from here<br />
<strong>Medical</strong> <strong>Systems</strong> 2
The path (EBITA)<br />
15%<br />
14%<br />
13%<br />
12%<br />
11%<br />
10%<br />
9%<br />
8%<br />
Q42001<br />
3.5 margin points up in seven quarters<br />
1.7 points to go in 3 quarters<br />
Q1 2002<br />
Q2 2002<br />
Q3 2002<br />
Q4 2002<br />
Q1 2003<br />
Q2 2003<br />
Q3 2003<br />
Q4 2003<br />
Q1 2004<br />
Q2 2004<br />
Q3 2004<br />
Q4 2004<br />
<strong>Medical</strong> <strong>Systems</strong> 3
<strong>Progress</strong> <strong>Report</strong><br />
Year-on-Year<br />
Improvement<br />
Comparable<br />
Growth<br />
EBIT<br />
EBIT margin<br />
Improvement<br />
excl. special and one time items 02/03<br />
2002 to 2003<br />
Achievements<br />
+ 7 %<br />
+19 %<br />
+ 2 pts<br />
Q1 03 to Q1 04<br />
Achievements<br />
+ 4 %<br />
+32 %<br />
+ 2 pts<br />
<strong>Medical</strong> <strong>Systems</strong> 4
Supply Chain Improvements<br />
100%<br />
90%<br />
80%<br />
70%<br />
60%<br />
50%<br />
40%<br />
30%<br />
20%<br />
10%<br />
0%<br />
Equipment Direct Deliveries<br />
as % Sales (world)<br />
26%<br />
32%<br />
59%<br />
80%<br />
2002 2003 FC2004 TARGET<br />
Equipment warehouses in<br />
North America<br />
<strong>Medical</strong> <strong>Systems</strong> 5<br />
30<br />
25<br />
20<br />
15<br />
10<br />
5<br />
0<br />
21<br />
5<br />
2003 FC2004 TARGET<br />
1
Net Capital turnover goes up<br />
6<br />
5<br />
4<br />
3<br />
2<br />
1<br />
0<br />
2,9<br />
Net Capital Turnover<br />
3,7<br />
<strong>Medical</strong> <strong>Systems</strong> 6<br />
3,9<br />
5,0<br />
2002 2003 FC 2004 TARGET<br />
Net Capital = Capital excluding Goodwill
30<br />
25<br />
20<br />
15<br />
10<br />
IT<br />
5<br />
0<br />
24<br />
Number of ERP systems<br />
10<br />
2002 2003 FC2004 Target<br />
9<br />
1<br />
IT spending as % Sales<br />
<strong>Medical</strong> <strong>Systems</strong> 7<br />
8%<br />
6%<br />
4%<br />
2%<br />
0%<br />
4.9%<br />
4.4%<br />
3.0%<br />
2003 FC2004 Target
300<br />
250<br />
200<br />
150<br />
100<br />
Financing<br />
50<br />
0<br />
Total Value of Financed deal in US<br />
(indexed)<br />
100<br />
143<br />
191<br />
30% average<br />
growth<br />
250<br />
2002 2003 FC 2004 Target<br />
• North America reaching industry<br />
levels<br />
– in combination with the<br />
“Diamond Select” trade-in<br />
program<br />
• Europe Finance ventures<br />
agreement signed in May with<br />
Société Générale<br />
– Starting in 6 countries<br />
France, Germany, Italy,<br />
UK, Netherlands, Spain<br />
– EUR 8 mln in deals signed /<br />
funded<br />
• Asia to come next<br />
<strong>Medical</strong> <strong>Systems</strong> 8
Building Integrated Supply Base<br />
160<br />
140<br />
120<br />
100<br />
80<br />
60<br />
40<br />
20<br />
0<br />
No. of Suppliers (80 % of spend)<br />
2003 FC2004 TARGET<br />
Supplier Managed Inventory (%)<br />
<strong>Medical</strong> <strong>Systems</strong> 9<br />
80<br />
70<br />
60<br />
50<br />
40<br />
30<br />
20<br />
10<br />
0<br />
2003 FC2004 TARGET
We drive to gain market share<br />
World by Region<br />
Product<br />
Line<br />
Americas<br />
Europe,<br />
ME &<br />
Africa<br />
Asia Pacific<br />
Total<br />
2003<br />
Trend<br />
6 months<br />
Trend<br />
Sources – NEMA, various European studies and estimates<br />
Global Product Lines<br />
Product<br />
Line<br />
X-ray<br />
CT<br />
MR<br />
NM<br />
US<br />
MIT<br />
Monitoring<br />
Total<br />
2003<br />
Trend<br />
Last 6 months show positive trend<br />
6 months<br />
Trend<br />
<strong>Medical</strong> <strong>Systems</strong> 10
<strong>Philips</strong> <strong>Medical</strong><br />
<strong>Progress</strong> <strong>Report</strong><br />
• Seven consecutive<br />
quarters of improvement<br />
• Building the future – Innovation<br />
• Building the future – Customers<br />
• Where do we go from here<br />
<strong>Medical</strong> <strong>Systems</strong> 11
X-ray – FD20 with large detector<br />
<strong>Medical</strong> <strong>Systems</strong> 12
Cardiovascular X-ray with 250 x finer<br />
details<br />
5 years ago.. Now<br />
<strong>Medical</strong> <strong>Systems</strong> 1322
MR – Achieva 3T<br />
<strong>Medical</strong> <strong>Systems</strong> 14
MR with15 x more specifity and scan<br />
speed<br />
5 years ago.. Now<br />
<strong>Medical</strong> <strong>Systems</strong> 15
CT – Brillance with up to 40 slices<br />
<strong>Medical</strong> <strong>Systems</strong> 16
CT Competitive Race<br />
from Follower to an Industry Leader<br />
40<br />
35<br />
30<br />
25<br />
20<br />
15<br />
10<br />
5<br />
0<br />
CT /No. of Slices/ Launch Year with FDA approval and clinical data<br />
1998 1999 2000 2001 2002 2003 2004<br />
Competition<br />
<strong>Philips</strong> <strong>Medical</strong><br />
Focus now moving to<br />
- clinical benefits<br />
- upgradability<br />
- computer aided<br />
diagnostic tools<br />
<strong>Medical</strong> <strong>Systems</strong> 17
CT with 35 x scan speed, 3X specificity<br />
5 years ago.. Now 3D<br />
<strong>Medical</strong> <strong>Systems</strong> 18
Ultrasound – iU22 with voice control<br />
<strong>Medical</strong> <strong>Systems</strong> 19
Cardiac Ultrasound with 5 x<br />
Improvement in Signal to Noise and<br />
Scan Time<br />
2 years ago.. Now – Live 3D<br />
<strong>Medical</strong> <strong>Systems</strong> 20
Nuclear Medicine PET-CT with 16-slice CT<br />
<strong>Medical</strong> <strong>Systems</strong> 21
<strong>Progress</strong> in Molecular Imaging<br />
From agent discovery ..<br />
to expedite Clinical<br />
Molecular Imaging<br />
…and Animal<br />
Imaging …<br />
... and experimental<br />
Hybrid Imaging …<br />
<strong>Medical</strong> <strong>Systems</strong> 22
Launching a new Molecular Imaging<br />
platform…<br />
• First open PET-CT<br />
• Launching an unique<br />
SPECT-CT<br />
<strong>Medical</strong> <strong>Systems</strong> 23
…To develop new Molecular Imaging agents<br />
with Top Academia and highly innovative start-ups<br />
Stanford<br />
Washington University<br />
Johns Hopkins<br />
NIH/NCI<br />
U of Washington<br />
Sloan Kettering<br />
CV / Oncology / Neuro<br />
CV / Oncology<br />
Oncology / CV / Neuro<br />
Oncology / CV<br />
Oncology / CV<br />
Oncology<br />
MD Anderson Oncology<br />
University of Bordeaux Gene Therapy<br />
Kereos<br />
Theseus<br />
Cytogen<br />
CV / Oncology<br />
Oncology / CV<br />
Image Optimization<br />
<strong>Medical</strong> <strong>Systems</strong> 24
PMS – Renewing Product Portfolio<br />
Total R&D investment, indexed. 2002 = 100<br />
120<br />
100<br />
80<br />
60<br />
40<br />
20<br />
0<br />
2002 2003 2004<br />
Support<br />
Life Cycle<br />
Management<br />
Evolutionary<br />
New Platform<br />
Breakthrough<br />
<strong>Medical</strong> <strong>Systems</strong> 25
PMS – Renewing Product Portfolio<br />
% Revenues based on products < 2 yrs old<br />
40%<br />
45%<br />
63%<br />
<strong>Medical</strong> <strong>Systems</strong> 26<br />
72%<br />
2002 2003 2004 FC Target<br />
From 2002 to 2005<br />
major portfolio<br />
renewal in<br />
Ultrasound, CMS,<br />
CV and GXR.<br />
New product is defined as a product based on a new hardware platform or a product with a<br />
significant increased in functionality, or cost-per-function improvement
More to come …<br />
BiometriX<br />
FD plates<br />
FIMI<br />
Displays<br />
Collimators<br />
Flat<br />
Detectors<br />
Common<br />
HW<br />
Components<br />
LRS<br />
Table Tops<br />
Image Intensifier<br />
/ TV<br />
Generators<br />
Digital Image<br />
Handling<br />
Software<br />
<strong>Medical</strong> <strong>Systems</strong> 27
Improving Customer Support<br />
Bringing Customer Satisfaction<br />
to the next level:<br />
• Increase system uptime<br />
• Reduce service delivery costs<br />
• Platform for future<br />
value-added services<br />
100%<br />
<strong>Medical</strong> <strong>Systems</strong> 28<br />
80%<br />
60%<br />
40%<br />
20%<br />
Roll out of<br />
Remote Services Network<br />
0%<br />
Today FC 2005 Target<br />
% of eligible systems<br />
connected
<strong>Philips</strong> <strong>Medical</strong><br />
<strong>Progress</strong> <strong>Report</strong><br />
• Seven consecutive<br />
quarters of improvement<br />
• Building the future - Innovation<br />
• Building the future – Customers<br />
• Where do we go from here<br />
<strong>Medical</strong> <strong>Systems</strong> 29
North American Market is Segmented<br />
by Size, Profitability, and Market<br />
Influence<br />
Hospitals greater<br />
than 125 beds and<br />
associated Imaging<br />
Centers<br />
Hospitals less than<br />
than 125 beds and<br />
unassociated Imaging<br />
Centers<br />
Strategic Business<br />
Full-line Account Management<br />
Ledford Distribution Channel<br />
Academic <strong>Medical</strong> Centers apx. 75 accounts<br />
• Teaching Hospitals, Research Opportunities<br />
• Reference sites - Early Adopters<br />
Large IDN’S Commercial Customer apx. 350 accounts<br />
• Non Teaching - Integrated Administration<br />
• Early Adopters - Cash Cows of the Industry<br />
Zone and Regional Influence Accounts apx. 50 accounts<br />
• Large Regional Influencers - 1-3 Hospitals<br />
• Early Adopters<br />
New Construction Customers apx. 7B annual<br />
market<br />
• Specialty facilities or replacement,- Willing to work with a single vendor<br />
The Strategic Business segment represents a significant opportunity for <strong>Philips</strong> N.A. to grow<br />
and establish critical relationships in this stable and profitable segment.<br />
<strong>Medical</strong> <strong>Systems</strong> 30
70% of the US top hospitals have<br />
<strong>Philips</strong> in Cardiology<br />
Source: US News and World <strong>Report</strong><br />
<strong>Medical</strong> <strong>Systems</strong> 31
<strong>Philips</strong> <strong>Medical</strong><br />
<strong>Progress</strong> <strong>Report</strong><br />
• Seven consecutive<br />
quarters of improvement<br />
• Building the future – Innovation<br />
• Building the future – Customers<br />
• Where do we go from here<br />
<strong>Medical</strong> <strong>Systems</strong> 32
Our Mission<br />
To help improve people’s lives<br />
by healthcare technology<br />
<strong>Medical</strong> <strong>Systems</strong> 33
Our Vision:<br />
“Healthcare without Boundaries”<br />
Remove barriers to the best care<br />
Not having to:<br />
• see the doctor to be seen<br />
• wait for an ambulance to save a life<br />
• be in the hospital to see the patient<br />
• delay a decision waiting for<br />
information<br />
• wait to be sick to be healed<br />
• compromise Clinical Excellence<br />
to save costs<br />
<strong>Medical</strong> <strong>Systems</strong> 34
Focus on the Care Cycle<br />
Diagnostics<br />
Imaging<br />
Euro 80 billion market<br />
Operating room<br />
Monitoring<br />
Imaging<br />
Diagnostics<br />
Pre-Hospital/<br />
Ambulance<br />
Monitoring<br />
Euro 210 billion market<br />
Information &<br />
Decision support<br />
Treatment<br />
Follow Up<br />
Intensive<br />
Care unit<br />
Monitoring<br />
Home<br />
Monitoring<br />
Step down<br />
facility<br />
Monitoring<br />
Euro 10<br />
billion<br />
market<br />
Market size for medical devices and equipment<br />
<strong>Medical</strong> <strong>Systems</strong> 35
PMS Strategic Priorities<br />
• Secure Previous Investments<br />
• Strengthen Current Portfolio<br />
• Expand the Business<br />
EXPAND<br />
STRENGTHEN<br />
CURRENT PORTFOLIO<br />
SECURE PREVIOUS<br />
INVESTMENTS<br />
<strong>Medical</strong> <strong>Systems</strong> 36
Summary<br />
• Seven consecutive quarters of improvement<br />
– financials, innovation, customer relationships & supply chain<br />
• Will continue on this path to 14 % and beyond<br />
– significant & quantified opportunities still ahead<br />
• Next step expansion is also a path<br />
– stay focused on improving care cycle<br />
– build on existing strengths of <strong>Medical</strong> and <strong>Philips</strong><br />
– differentiate from competition<br />
Deliver on commitment, focused on growth<br />
<strong>Medical</strong> <strong>Systems</strong> 37
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