Royal Philips Electronics (PHG) and IBA Group have agreed to create patient-centric proton therapy centers. This is very crucial for development of oncology solutions for caregivers, patients and their families who are in stressful situations.
The IBA-Philips proton center concept is the first of its kind, and is being developed for the Middle East market, with plans to expand globally.
IBA develops technologies, pharmaceuticals and tailor-made solutions for healthcare with a focus on cancer diagnosis and therapy.
The restructuring of Philips’s product portfolio to better position itself as a more-focused company in the healthcare, lighting and lifestyle markets is in progress with several focused acquisitions and divestments in the recent past. This bodes well for the company going forward.
The company’s continued ability to increase cash flow by bringing down working capital has helped sustain investments in growth initiatives while maintaining a strong balance sheet.
Working capital parameters expressed in days of sales, inventories and payables continued to improve. There was progress in managing its costs, particularly the structural savings and fixed costs.
Philips may be unable to adapt swiftly to industry or market circumstances, which could have a material impact on its financial condition. Acquisitions could expose the company to integration risks and pose a management challenge.
Philips’ global presence exposes the company to regional and local regulatory rules that may interfere with the realization of business opportunities and investments in the countries where it operates. Philips’ overall performance in the coming years is dependent on realizing its growth ambitions in emerging markets.
Philips’ Healthcare segment is the second largest manufacturer of medical diagnostic equipment, which includes X-ray, ultrasound, magnetic resonance, medical information technology (IT), nuclear medicine, patient monitoring, information management and resuscitation products, as well as a comprehensive range of services. Panasonic Corporation (PC) and Sony Corporation (SNE) are its major competitors.
We currently have an Underperform recommendation on PHG.
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