Philips 2010 Annual Report Download - page 85

6 Sector performance 6.1.3 - 6.1.4
Annual Report 2010 85
The United States is the largest healthcare market,
currently representing close to 43% of the global market,
followed by Japan and Germany. Approximately 20% 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 35,500
employees worldwide. With regard to sourcing, please
refer to sub-section 5.3.3, Supply management, of this
Annual Report.
6.1.4 Progress against targets
The Annual Report 2009 set out a number of key targets
for Philips Healthcare in 2010. The advances made in
addressing these are outlined below.
Drive performance
•Continue to drive operational excellence and improve
margins: We are building on successful initiatives to
structurally reduce our overall cost structure and
improve our organizational effectiveness. We are
improving our margins through better product
reliability, improved pricing initiatives, optimization of
low-cost country sourcing, and increases in our service
productivity and operational efficiency.
In 2010 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 continued to manage costs and reorganize
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.
•Drive emerging market growth: We continue to make key
acquisitions to meet the diverse and growing needs of
the different markets around the world. For example,
our acquisition of Shanghai Apex Electronics in 2010
provides high-quality value ultrasound transducers,
enabling Philips to further support the use of
ultrasound, a widely used diagnostic procedure that
provides a critical yet affordable and mobile modality
for early diagnosis and real-time imaging. The
acquisition marks another step in Philips’ expanding
presence in emerging markets, complementing the
acquisition of healthcare informatics company Tecso
Informatica in Brazil and the expansion of our clinical
informatics portfolio with the acquisition of Wheb
Sistemas, a leading Brazilian provider of clinical
information systems.
•Continue to pursue integration of our recent acquisitions: In
2010 we successfully completed steps to integrate
prior-year acquisitions including InnerCool Therapies
Inc., a pioneer in the field of therapeutic hypothermia,
and Traxtal, a medical technology innovator in image-
guided procedures. This included the launch of the
Philips InnerCool RTx Endovascular System to help
enhance patient care by managing therapeutic
hypothermia.
Accelerate change
Our organic growth will be driven by continued expansion
into emerging markets, more significant development of
mid- and low-end products for customers around the
world, increased brand preference, ongoing enhancement
of our customer experience, and optimization of our care
cycle approach.
•Drive transformational activities to improve the customer
experience: We are leveraging our product and services
portfolio in innovative ways. We offer innovative
financing and business modeling solutions to our
customers to simplify and ease purchasing decisions.
Additionally, we recently added consulting offerings, a
further contributor to the continued growth of our
Customer Services business. We have also introduced
new low- and mid-range products, boosting growth in
these market segments in both mature and emerging
markets.
•Organize around customers and markets to bring decision-
making closer to the customer: We have improved
operational excellence and increased our customer
focus by aligning our sales and services organizations to
better serve our customers and markets in which they
operate. Creating smaller, more empowered teams of
sales and services professionals will help us to react
faster to customers’ requirements and offer better,
broader solutions to the marketplace.
•Accelerate introductions of low- and mid-end products as a
platform for new growth opportunities: As part of our
efforts to better serve our customers in key markets,
we are looking for ways to improve how we design,
develop and deliver products. We have partnered with
Electron, a leading Russian medical equipment
manufacturer, to develop and produce innovative
imaging products for the Russian market. The
partnership will initially focus on the development of
CT scanners, with potential opportunities for future
expansion with other healthcare products such as
magnetic resonance, X-ray and ultrasound systems. In