HEALTH .. Lights, Sound...Health!
How Philips, best
known as a home electronics behemoth and a giant in lighting, is transforming
into a health tech trailblazer
In February 2015, a seemingly dormant Philips erupted into
action. The Dutch conglomerate snapped up American medical device maker
Volcano for $1.2 billion.
Philips chief executive Frans van Houten then hinted where it
was headed. “In an ageing world with more chronic disease, health and
healthcare are enormous opportunities that we want to focus on,“ he reportedly
said after the acquisition of Volcano, which makes equipment that allows
doctors treating heart diseases to see inside patients' veins and measure
blood flow.
Back in India, Philips silently rolled out Project Vijay in
October of the same year, a pilot project for the delivery of home healthcare.
A year later, it formed Philips Home Care Services (PHCS), a wholly owned arm
of Philips India.
Project Vijay, recalls Asik Das, general manager (marketing),
Philips Home Care Services, emboldened the company to go full throttle. The
pilot, till August 2016, for operating the home healthcare business by using
technology as a means for providing remote care for patients, came up with
interesting findings: a 27% reduction in the cost of care, 32% decline in acute
and long-term costs, and 45% drop in hospitalisation.
“Philips aspires to take high-quality home care to over 1 lakh
people in India by 2020,“ says Das, adding that PHCS has grown 10 times over
the last 10 months and spread to six cities. “We have tied up with more than
100 physicians, and plan to become a leader in the respiratory home healthcare
space,“ he says, adding that Philips maintains a team of nurses, paramedics,
respiratory therapists and other trained personnel, who are monitored remotely
by doctors.
Veena Sharma in Delhi is one of the 2,000 patients that the
Philips healthcare arm has reached out to in a year since its launch. Sharma
met with a road accident last month and sustained serious head injury. After
being operated upon at one of the private hospitals in Delhi, doctors advised
her for a longer stay in an ICU. The patient's family, after consultation with
the doctor, opted for PHCS that put together an ICU-like set up at her home.
“Home care is better as recovery happens in the home environment and the risk
of contracting ICU-borne infections is minimal,“ says Sharma.
While patients like Sharma might validate Philips' move to enter
the home care segment, it's the gloomy chronic disease map of India that makes
the segment so attractive for private healthcare players. Chronic obstructive
pulmonary disease is one of the top three non-communicable diseases in India,
with approximately 3 million patients. According to a WHO report, lung disease
accounts for 11% of total deaths in India. While healthcare in India is
expected to become an over $200 billion opportunity by 2020, demand for quality
non-hospital healthcare delivery in India is set to grow from $6.6 billion in
2015 to $21 billion in 2020.
Health is Wealth
No wonder Van Houten was pleased to announce the transformation
of Philips “into a focused leader in health technology, delivering innovation
to help people manage their health“ in its 2016 annual report. Philips'
transformation from being a trusted electronics brand into a healthcare
services company is not an aberration, reckon branding ex perts. Some of the
biggest global brands have changed course.
Take Nokia, which was once a Finnish paper mill, rubber, and
cable works firm, and transformed itself into a mobile phone company. IBM too
transformed from selling only hardware into a software giant providing
consulting services, says Miniya Chatterji, CEO of Sustain Labs Paris, a
sustainability incubator.
Philips was the world's biggest supplier of radios in 1930s,
invented the audio cassette in 1963, rolled out the first VCR in 1972, launched
the CD in 1983 and was one of the biggest manufacturers of television sets in
the last decade. The consumer electronics saga ended in January 2013 when
Philips sold its audio and video business to Japan's Funai Electric. “This
completes the repositioning away from consumer electronics,“ Van Houten said
then.
Three years later, the global CEO pronounced a new beginning.
“We have transformed Philips into a focused leader in health technology,
delivering innovation to help people manage their health,“ Van Houten said in
the annual report of the company last year, alluding to the lighting business
being hived off. In May last year, the company offered 25% of the lighting
division in an IPO, and reportedly said that it would trim down its remaining
holding to focus more on its healthcare business. The transformation in India,
says Chatterji, mirrors the wider global strategy to move out of the less
profitable consumer electronics and into the fast-growing healthcare markets.
What gives Philips an edge in India, apart from being a technology leader, is
the trust the brand enjoys in India, familiarity of the company with the
domestic market and the dominant position in the medical equipment category.
“People can entrust the lives of their dear ones with a trusted
brand,“ says Chatterji. While the opportunity is massive in India, the
challenges are daunting too. Philips will need to invest in building a digital
infrastructure, which is the biggest obstacle towards providing healthcare for
all, she adds.
The threat to Philips might also come from a thriving bunch of
healthcare startups in the country. Healthcare startups raised $113.45 million
across 73 funding deals in 2016, says a report by News Corp VCCEdge in
September last year. The leading segments to attract funding in the healthcare
sector were healthcare facilities ($110.9 million), biotech ($98.67 million)
and healthcare services ($73.51 million), the report added.
The real challenge might come from deeply funded ones like
Portea and Practo, the services of which significantly overlap with Philips
Home Care. For instance, Portea, founded in 2013, has raised $46.5 million so
far, claims to de liver over 1.2 lakh home visits a month across 16 cities and
a customer base of over 1 million. Por tea has taken the inorganic route to expand
its services by buying out medical equipment maker Health Mantra, speciality
pharma Medybiz and surgery discovery platform PSTakeCare.
Meena Ganesh, MD of Portea, doesn't see Philips as a threat. The
availability of devices and service offerings developed specifically for home
healthcare is a welcome sign, and shows the market is evolving and attracting
the right investment and attention, she says, adding that being an early
entrant gives the startup an edge. “We have leveraged the learnings to serve
patients better by offering a 360-degree, comprehensive care,“ she says,
listing a wide range of services offered by Portea for post-operative care such
as doctors, nurses, nursing attendants, diagnostics, pharma and medical
equipment support.
While conceding that the market size is huge, Ganesh points out
the biggest challenge for all players: high-quality manpower. Ensuring an adequate supply of skilled manpower, their training and ability to provide
service on a consistent basis is a big challenge.
The stakes for Philips India, say experts, are particularly high
as it has seen a lacklustre performance from its other verticals over the last
few years. The personal health business, the company disclosed in its annual
report of 2016-17, declined by 20.3% over the previous fiscal.Though sales of
mixers and irons too dipped, leading to an overall decline of 14.3% in domestic
appliances, the air purifier category grew by over 63%. But personal care
products reported sluggish growth. Continued festival discounting, the report
added, lowered the confidence of traditional and modern retailers. The entry of
low-cost players too dented the performance, resulting in a 34.7% decline.
Home care might turn out to be a bright spot. “With 1 in 5
people set to be over 50 by 2050 in India, the opportu nity is massive,“ says
Das, who is aware of chal lenges as well. Lack of awareness, he lets on,
largely restricts the service to metros and tier-1 cities. This makes people
equate a specialised home healthcare company with services pro vided by
agencies. Other challenges, he says, are equally formidable. Take, for
instance, hospi talisations. Unattended problems can lead to hospitalisations
and re-admissions, both of which are highly prevalent in the home health care patient
community, signifying the failure of monitoring practices.
“Finding and building a pool of skilled workforce is also a
hindrance,“ says Das, adding that there are few training institutions for
skilled healthcare workforce, and companies have to hire and then train people.
Das, however, is optimistic about the future. The company, he
says, is open to acquire startups that will strengthen its healthcare
business.Healthcare is changing at an unprecedented level with the transition
to value-based healthcare, healthcare institutions needing to integrate
solutions, and individuals taking charge of their personal health journey.
“Philips is uniquely positioned to help transform care delivery,“ he claims.
Rajiv Singh
Oct 01 2017 :
The Economic Times (Mumbai)
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