Philips 2007 Annual Report Download - page 39

Philips Annual Report 2007 45
In 2007, Philips’ invested EUR 1.6 billion, or 6.1% of sales,
in research and development, slightly less than in 2006.
Higher investments in Medical Systems, Lighting, DAP and
Innovation & Emerging Businesses were more than offset
by lower expenditures in CE, largely due to the
divestment of Mobile Phones.
Research and development expenditures per sector 2)3)
in millions of euros
20051) 20061) 2007
Medical Systems 517 566 584
DAP 139 168 171
Consumer Electronics 419 385 311
Lighting 212 269 282
I&EB 587 577 598
Inter-sector eliminations (281) (306) (317)
Philips Group 1,593 1,659 1,629
1) Restated to present the MedQuist business as a discontinued operation
2) Includes the write-off of acquired in-process research and development of
EUR 13 million in 2007 (2006: EUR 33 million, 2005: EUR 6 million)
3) Total R&D expenditures include costs related to external contract research,
accounting for 2%, 3% and 5% of the Company’s R&D expenditures for the
years 2005, 2006 and 2007, respectively.
Medical Systems’ increase in R&D investment was
primarily related to the acquisition of Intermagnetics
at the end of 2006. DAP’s expenditures on research
and development were on par with 2006, including
investments in the new Arcitec shaver and the FlexCare
toothbrush, both launched in the second half of 2007.
CE reduced its R&D expenditures, primarily due to
the divestment of the Mobile Phones business. Lighting’s
research and development costs increased slightly compared
to 2006, primarily due to acquisitions. Research and
development expenditures at Innovation & Emerging
Businesses increased year-on-year, primarily due to
higher R&D investments in the Healthcare and Lifestyle
Incubators within Corporate Technologies.
In 2007, investments in innovative technologies increased,
especially in energy-efcient and solid-state lighting
solutions as well as in the areas of healthcare and wellness.
Philips’ strong innovation pipeline contributed
signicantly to the Company’s sales growth in 2007,
as 56% of Group sales came from newly introduced
products, mainly driven by above-average contributions
from CE and Medical Systems. Philips aims to maintain its
new-product-to-sales ratio above 50%, while at the same
time focusing on the protability of new products.
At the Izmir Sirinyer Hippodrome in Turkey, a new lighting
installation featuring state-of-the-art Philips ArenaVision
oodlights has been commissioned to allow night-time racing
for the very rst time.
98 Risk management 112 Our leadership 116 Report of the Supervisory Board 126 Financial Statements