Philips 2004 Annual Report Download - page 11

Growth through a focus on healthcare
Our determination to build a strong Medical Systems division is
just one reflection of the increasing importance of healthcare as a
driver of growth and expansion at Philips.
In 2004 we set up a new business unit, Consumer Health &
Wellness, to focus our efforts on the potentially enormous market
for personal healthcare and health monitoring. This emerging
market is a natural consequence of the ageing of the population in
many societies and the growing trend for medical treatment to
move from hospitals into the home. We have already made several
initial steps towards this consumer market. In 2004 our
easy-to-use HeartStart defibrillator received FDA approval for
over-the-counter sale to consumers, jumpstarting sales in the
fourth quarter. We also started pilots for remote health
monitoring with several partners. And our Lighting division is
exploiting the potential of UV lighting in the quest for clean
drinking water, while our Semiconductors division is researching
solutions for on-chip testing of blood samples.
Growth in Asia on target
We continue to expand our presence in Asia Pacific, in line with
our plans to achieve one third of our total sales in this region by
2008. In 2004, Medical Systems set up a manufacturing and R&D
venture with Neusoft Group Ltd. of China (Philips-Neusoft
Medical Systems). We expect that this venture will not only allow
us to quickly expand our presence in the large Chinese medical
systems market, but will also enable us to add economy and
mid-range products to our portfolio, for which there is great
demand in China and many other developing markets in Asia,
South America and Eastern Europe.
In China, Philips is already one of the largest multinationals in the
country, with 20,000 employees and 15 R&D centers. Our plans to
grow still further in China are on track. We are a market leader in
domestic appliances and lighting, and we hold top 3 market
positions in medical systems and semiconductors. In other parts of
Asia too, especially in the dynamic ASEAN region and India, we are
rapidly expanding our presence, building upon our long history in
the region, the strength of our brand and the appeal of our
products and technology solutions.
The way forward
As we have progressed, we have clearly defined and refined our
strategy, which is to focus on increasing profitability through
re-allocation of resources towards opportunities offering higher
rates of return, primarily in our Medical Systems, Lighting and
Domestic Appliances and Personal Care (DAP) businesses – areas
that have demonstrated a strong return on investment. Other
strategic priorities include reducing the volatility of earnings by
changing to an asset-light business model for Semiconductors and
Consumer Electronics. The pursuit of operational excellence and
ongoing business transformation will drive productivity
improvements. We will continue to leverage our brand and core
competencies while building partnerships with key customers,
both in the business-to-business and business-to-consumer
markets.
10 Philips Annual Report 2004
Message from the President