Executive Summary : Philips Medical System
The case talks about the Healthcare arm of Philips called Philips Medical System (henceforth PMS) and looks at the growth strategy and the performance of PMS in 2005. The case also talks about its competitors: GE Healthcare (henceforth GEH) and Siemens Medical Systems (SMS) and their growth strategy and performance in 2005. The case starts with highlighting the importance of Diagnostic imaging and related businesses and mentioned subsequently that while Imaging contributes just 30 Billion dollars in 2005, however, it contributes a significant portion (47% of total revenue for PMS, 55% of total revenue for SMS) of their revenue in the same year. These three companies (PMS, GEH and SMS) are remarkable in the sense that they were previously the top electronic companies and had little to do with Health Care. However, with time they created their own Healthcare business and these three together dominated the Healthcare market just like they dominated the Electronic industry. These three contributed 50 - 60% of the Healthcare market. One of the most notable features is that all the three companies’ main growth strategy was geared towards acquisition. In this context, it is interesting to note that Philips abandoned its country specific strategy and under their new CEO Boonstra embarked on several acquisitions from 1998 – 2001. These acquisitions made PMS very strong in the medical business and gave it the required competitive advantage. Not all acquisitions were free of hassles; PMS had to face problems after acquiring companies like MedQuist and had to pay huge impairment charge in 2004. Inspite of this, PMS continued their acquisition spree and acquired notable companies like TOMCAT, VISICU, and STENTOR etc. from 2005 to 2008. Post 2005, most of the Philips acquisitions was geared towards Healthcare IT sector (refer to the below annexes). All this acquisitions gave significant competitive advantage to PMS...
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