Agilent Healthcare acquisition turns Philips into world player in medical systems

Amsterdam 01 December 2000Royal Philips Electronics and Agilent Technologies Inc. have closed an agreement, allowing Philips to acquire Agilent Technologies' Healthcare Solutions Group (HSG) for $1.7 billion. This recent transaction was subject to customary regulatory approvals and other closing conditions. In the next several months, it is expected to be finalised. The new contract will enhance Philips' position on the global medical systems' market as a third competitor against Siemens and GE Medical.

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The acquisition of HSG will enable Philips Medical Systems (PMS) to extend its scope considerably and enter into new high-growth segments, including automatic external defibrillators (AEDs) and home care technology, with the aim to provide remote diagnostics. Also, PMS' brand position with leading hospitals and health care institutions worldwide, and particularly in North America, will be strengthened.

HSG's portfolio of over 400 health care products and services is an excellent complement to the PMS product line. With its Hewlett-Packard heritage of innovation, HSG has a strong position in the health care markets which it serves. With sales of over $1.5 billion in fiscal year 1999, HSG's products include patient monitoring, ultrasound imaging, resuscitation, information management, and other services and supplies applied in many health care areas, from hospital and outpatient facilities to emergency rooms, offices of general practitioners, the workplace and the home.

PMS is a leader in diagnostic imaging as well as related services and offers a robust portfolio, including Catherisation Labs, Magnetic Resonance Imaging (MRI), Computed Tomography (CT), X-ray, and ultrasound systems, as well as information technology solutions which address the radiology, general imaging, surgical and cardiovascular markets. PMS' sales in the first nine months of 2000 amounted to euro 2.0 billion. Through this merger, PMS reinforces its commitment to provide the global health care market with a wide array of best-in-class, disease-specific products and services.

Cor Boonstra, president and CEO of Royal Philips Electronics commented: "After the completion of this transaction, we will have invested over $4 billion in our Medical Systems business over the past two years, which gives us a very solid position in this industry. We will be in a good position now to become a strong world player and provide our shareholders with a valuable proposition to generate significant value. PMS intends to integrate its novel acquisitions, including Adac, MedQuist, SHL, and ATL Ultrasound, after their completion in the best interest of its customers and employees, as well as its shareholders."

"In order to meet customer needs in today's health care marketplace, we believed we had to offer a broader range of solutions, and that required substantial investment", stated Ned Barnholt, Agilent's president and CEO. "We realised that we either had to make a commitment to invest heavily in HSG's future or sell the unit to a company with a complementary business and a commitment to invest in the ever continuing success of the businesses. This decision underscores Agilent Technologies' commitment to aggressively manage its business portfolio and focus on the high-growth communications and life sciences markets.

"We regard this agreement as a win for our customers, shareholders, and our employees", added Ned Barnholt. "Philips is a world-class organisation, and the combined companies will offer their customers leadership products and solutions across a larger product spectrum." In particular, Philips aims at enhancing its role in the tele-diagnostic field by transmitting medical data electronically through sensors which are worn by the patient. This solution will enable physicians to take immediate action in case patient results give cause to alarm.

"We have worked with HP/Agilent's Healthcare Solutions Group in various ways for many years, and have come to know it as an excellent, customer-driven company, highly respected for its ability to apply advanced technology to health care problems", stated Hans Barella, president and CEO of Philips Medical Systems. We believe that there is an excellent cultural fit with the people of HSG. By combining the two companies' ranges of products and services, we can offer our customers more disease-specific solutions, helping to improve patient outcome and efficiency."

HSG employs approximately 5000 people and operates in more than 100 countries around the world. Its present manufacturing facilities are in North America, Germany, and China. For the first three quarters of its current financial year ended July 31, 2000, HSG reported net revenues of $1053 million and operating losses of $53 million, including one-time charges associated with the separation of Agilent from Hewlett-Packard Company. Agilent announced a major global restructuring programme in August 2000, which is expected to lead to improved operational performance.

Agilent Technologies Inc. constitutes a diversified technology company with approximately 46.000 employees serving customers in over 120 countries. Agilent Technologies is a global leader in designing and manufacturing test, measurement and monitoring instruments, systems and solutions, and semiconductor and optical components. In the fiscal year 1999, Agilent Technologies had net revenue of more than $8.3 billion. The company serves markets that include communications, electronics, life sciences and health care.

Philips Medical Systems is a leading supplier of diagnostic imaging systems and related services worldwide, represented in more than 100 countries and employing 11.800 people. A worldwide network of research and development, and sales and service organisations backs PMS' products. Philips Medical Systems is part of Philips, one of the world's largest electronics companies. The PMS turnover is bound to practically double in size because of the HGS acquisition. As such, both Philips and Siemens medical divisions each have sales of $4 billion, whereas GE Medical has a turnover of $7 billion.


Leslie Versweyveld

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