Philips 2009 Annual Report Download - page 86

Total sales by business 2009
as a %
Customer Services
26
Clinical Care
15
Healthcare Informatics and Patient Monitoring
13
Home Healthcare
Solutions
14
Imaging Systems
32
In 2009 we continued to improve the efficiency and
effectiveness of our organization, not only in response to
the current economic climate but, even more importantly,
to further strengthen our position for the future. We
aggressively managed costs and reorganized our business,
both to meet customer and market demands, as well as to
enable profitable growth. In addition, we continue to drive
the pace of operational improvement. Our Quote to Cash
program has driven fundamental changes within our
organization, focusing on process standardization and
simplification. A direct result of those efforts was the
formation of a centralized Commercial Operations
organization – with the primary goal of making it easier for
our customers to do business with us.
Products and services are sold to healthcare providers
around the world, including academic, enterprise and
stand-alone institutions, clinics, physicians, home
healthcare agencies and consumer retailers. Marketing,
sales and service channels are mainly direct.
The United States is the largest healthcare market,
currently representing close to 50% of the global market,
followed by Japan and Germany. Approximately 19% of
our annual sales are generated in emerging markets, and
we expect these to continue to grow faster than the
markets in Western Europe and North America.
Philips Healthcare employs approximately 34,000
employees worldwide.
With regard to sourcing, please refer to the section
Supply management under section 4.1.14, Performance by
key function, of this Annual Report.
5.2.5 Progress against targets
The Annual Report 2008 set out a number of key targets
for Philips Healthcare in 2009. The advances made in
addressing these are outlined below.
Improve margins through acceleration of
operational improvements
The fast-changing healthcare market accelerated a need to
aggressively adjust our cost structure to become much
more competitive in all markets. We succeeded in
structurally reducing our fixed and discretionary costs. A
new approach to optimizing our investments in innovation
also lowered our costs. At the same time we introduced a
sector-wide program to structurally improve our
operational excellence. This program covers five specific
areas – quote to cash, supply base optimization, integrated
customer services, pricing and post-merger integration.
Grow faster than our market in key market
segments
We continue to invest in critical capabilities to strengthen
our commercial organization in key markets. We are
improving the quality of our channels by focusing on
strategically valuable target segments, which include
imaging, clinical decision support and home
healthcare. Philips continues to make key strategic
investments in emerging technologies in these areas,
either through organic growth or acquisitions, aiming to
better serve our customers’ needs, improve clinical
outcomes, reduce healthcare costs and create new
revenue opportunities. For example, our acquisition of
Traxtal in 2009 provides foundational device navigation
technology allowing Philips to further support minimally-
invasive surgical procedures by expanding our presence in
the rapidly growing image-guided intervention and
therapy market.
Philips is also leveraging its product and services portfolio
in innovative ways to create integrated solutions for
customers. We offer innovative financing and business
modeling solutions to our customers to simplify and ease
purchasing decisions. Additionally, we continue to expand
our presence in market-leading Ambient Experience and
healing environment solutions, a further contributor to
the continued growth of our highly profitable Customer
Services business.
We have introduced new low and mid-range products,
boosting growth in these market segments in both mature
and emerging markets. We received certification in China
for one such product, the latest addition to the HD family
of ultrasound systems, which deliver high-quality imaging
in an affordable package. In addition, we are making
significant strategic investments in our industrial footprint
in emerging markets in order to drive growth by better
serving local customers and to reduce our overall cost
position.
5 Our sector performance 5.2.4 - 5.2.5
86 Philips Annual Report 2009