Our 2017 performance at a glance

Philips Group
Key datain millions of EUR unless otherwise stated
2016 - 2017

2016

2017

Sales

17,422

17,780

Nominal sales growth

4%

2%

Comparable sales growth

5%

4%

Income from operations

1,464

1,517

as a % of sales

8.4%

8.5%

Financial expenses, net

(442)

(137)

Investments in associates

11

(4)

Income taxes

(203)

(349)

Income from continuing operations

831

1,028

Discontinued operations

660

843

Net income

1,491

1,870

Adjusted EBITA

1,921

2,153

as a % of sales

11.0%

12.1%

Net income attributable to shareholders per common share in EUR:

basic

1.58

1.78

diluted

1.56

1.75

Total of net cash provided by operating activities after net capital expenditures

Net cash provided by operating activities

1,170

1,870

Net capital expenditures

(741)

(685)

Free cash flow

429

1,185

Philips Group
Lives improvedin billions (includes Philips Lighting)
2017
Slot 2: lives_improved_bubbles.png
Slot 4: lives_improved_bubbles_book.eps


1.3
by Philips
Health Products
and Solutions
1.9
by Philips
Green Products
1.3
by Philips
Lighting
Total: 2.2 billion (double counts eliminated)
Double counts
Conceptual drawing, areas do not reflect actual proportions
Comparable sales growth by geographic clusterin %
2015 - 2017

2015

2016

2017

Mature geographies

2.7

3.3

1.9

Growth geographies

8.1

8.4

8.0

Philips Group

4.4

4.9

3.9

Philips Group
Income from operations and Adjusted EBITA 1)in millions of EUR unless otherwise stated
2015 - 2017
1)Non-IFRS financial measure. For the definition and reconciliation to the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information
2)Adjusted items include restructuring, acquisition-related and other charges
Philips Group
Total of net cash provided by operating activities and net capital expendituresin millions of EUR
2015 - 2017
Philips Group
Green revenues per segmentin millions of EUR
2015 - 2017
Philips Group
Brand value 1)in billions of USD
2013 - 2017
1)As measured by Interbrand
Philips Group
Research and development expensesin millions of EUR
2015 - 2017
Philips Group
Net operational carbon footprintin kilotonnes CO2-equivalent
2013 - 2017
Philips Group
New patents filedin number of patents
2013 - 2017
1)Includes Philips Lighting

The years 2013, 2014 and 2015 include Philips Lighting

Group
Philips Groupin millions of EUR
2016 - 2017

2016

2017

% change

Sales

17,422

17,780

2%

Green revenues

10,191

10,706

5%

Sales in mature geographies

11,826

11,918

1%

Sales in growth geographies

5,596

5,862

5%

Personal Health
Personal Healthin millions of EUR
2016 - 2017

2016

2017

% change

Sales

7,099

7,310

3%

Green revenues

3,951

4,237

7%

Sales in mature geographies

4,344

4,371

1%

Sales in growth geographies

2,755

2,939

7%

Diagnosis & Treatment
Diagnosis & Treatmentin millions of EUR
2016 - 2017

2016

2017

% change

Sales

6,686

6,891

3%

Green revenues

4,798

5,096

6%

Sales in mature geographies

4,471

4,566

2%

Sales in growth geographies

2,215

2,325

5%

Connected Care & Health Informatics
Connected Care & Health Informaticsin millions of EUR
2016 - 2017

2016

2017

% change

Sales

3,158

3,163

0%

Green revenues

1,442

1,373

5%

Sales in mature geographies

2,689

2,705

1%

Sales in growth geographies

469

458

2%

Management summary

  • Sales rose to EUR 17.8 billion, a nominal increase of 2%, which reflected 3% nominal growth in the Personal Health businesses and Diagnosis & Treatment businesses and flat year-on-year sales in the Connected Care & Health Informatics businesses. On a comparable basis 1) the 4% growth was driven by 6% growth in the Personal Health businesses and 3% growth in the Connected Care & Health Informatics and Diagnosis & Treatment businesses.
  • As of December 31, 2017, Philips’ shareholding in Philips Lighting was decreased to 29.01% of Philips Lighting’s issued share capital. As a result, Philips no longer has control over Philips Lighting and has ceased to consolidate Philips Lighting. With the completion of this transaction, Philips reached an important milestone in pivoting Philips into a focused health technology company. For further information, refer to Philips Lighting sell-down.
  • Net income amounted to EUR 1.9 billion and increased by EUR 379 million compared to 2016, driven by improvements in operational performance, lower net financial expenses and higher discontinued operations results, partly offset by higher restructuring and acquisition-related charges and higher income taxes, which included a tax charge of EUR 171 million due to the US Tax Cuts and Jobs Act. Net income is not allocated to segments as certain income and expense line items are monitored on a centralized basis.
  • Adjusted EBITA 1) totaled EUR 2.2 billion, or 12.1% of sales, an increase of EUR 232 million, or 110 basis points as a % of sales, compared to 2016. The productivity programs delivered annual savings of approximately EUR 483 million, ahead of the targeted savings of EUR 400 million, and included approximately EUR 260 million procurement savings, led by the Design for Excellence (DfX) program, and EUR 223 million savings from other productivity programs.
  • Net cash provided by operating activities amounted to EUR 1.9 billion and increased by EUR 700 million compared to 2016. Free cash flow 1) amounted to EUR 1.2 billion and increased by EUR 756 million compared to 2016. The increase was mainly driven by higher earnings and the dividend related to the retained interest in the combined businesses of Lumileds and Automotive, lower outflows related to pension de-risking settlements, as well as the cash outflows in Q4 2016 of EUR 280 million related to the Masimo agreements. For further information on the Masimo agreements, refer to Provisions.
  • On June 28, 2017, Royal Philips announced a EUR 1.5 billion share buyback program. Philips started the program in the third quarter of 2017 and continues to make progress. As the program was initiated for capital reduction purposes, Philips intends to cancel all of the shares acquired under the program.
  • In line with our mission to improve people’s lives, we have embedded sustainability at the heart of our business processes, and Philips was named industry leader in the Dow Jones Sustainability Index for the 3rd year in a row. In the Carbon Disclosure Project, we achieved the highest score for the 5th year in a row. Green Revenues, including products and solutions sales, increased to 60% of total revenues in 2017.
1)Non-IFRS financial measure. For the definition and reconciliation to the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.

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Message from the CEO

I am pleased with our transformation progress to become a focused leader in health technology and see tremendous further potential to grow Philips’ market positions and expand margins.

Frans van Houten, CEO Royal Philips

Dear Stakeholder,

2017 was a good year of solid progress for Philips, as we continued our transformation to become a focused leader in health technology and delivered on our improvement targets for the year. In line with our commitments we delivered 4% comparable sales growth 1, resulting in a 10-basis-point gain in market share. We also improved operating profitability, with an Adjusted EBITA 1 margin increase of 110 basis points, and generated a strong EUR 1.2 billion free cash flow 1. This underscores our ability to stay the course, in this case against a background of challenging economic circumstances in Europe and considerable uncertainty in the US around healthcare policy.

Our organic growth initiatives are delivering tangible results. Overall we recorded 6% order growth for the year. In Diagnostic Imaging, for instance, we ended the year with high-single-digit order growth and realized market share gains in China and India, driven by the renewal of 60% of our portfolio. We also noted a strong increase in order intake in our Digital Pathology Solutions business, double-digit growth of our Sleep & Respiratory Care devices, and the continued success of our OneBlade hybrid facial hair styler. And we introduced several important innovations, gained traction with our solutions approach – securing multiple long-term strategic partnerships – and continued to invest in quality and talent.

We further strengthened our portfolio through targeted acquisitions, the largest being Spectranetics, a global leader in vascular intervention and lead management solutions. The integration of these acquisitions is on track. Toward the end of the year we deconsolidated Philips Lighting as we reduced our shareholding to below 30%, in line with our stated aim to fully sell down our stake.

2017 saw the completion of the industry reclassification of our stock to Healthcare at all major indices. Our customers and the financial markets appreciate the way we have pivoted and executed on our strategic roadmap. And we increased our brand value to USD 11.5 billion in the 2017 Interbrand ranking.

Continuing to drive our five-year ‘Healthy people, sustainable planet’ program, with its focus on Circular Economy, Access to Care and Climate Action, we improved the lives of 2.2 billion people around the world in 2017, and we again received top rankings from leading indices such as the Dow Jones Sustainability Index and the Carbon Disclosure Project. At the United Nations in September we made an extended commitment to improve the lives of 300 million people in underserved healthcare communities by 2025.

Overall, I am pleased with the progress we made in 2017. Our purpose is very clear. We are here to improve health and healthcare through innovations! We have a vibrant, highly committed workforce, with employee engagement consistently above the high-performing norm and rising from 74% to 76% this year. We have good momentum on our way to position ourselves for a future with higher growth and earnings potential. Clearly, we can still improve operational excellence: making further progress on product performance and our commitment to quality is our highest priority for 2018. However, I am very confident in our ability to capture the opportunities and deal with the challenges ahead, as we work toward our goal of improving the lives of 3 billion people a year by 2025.

Innovating with purpose

In the face of growing and aging populations, the rise of chronic diseases, and global resource constraints, health systems the world over are under enormous strain. Digital technology is transforming the healthcare industry, increasingly shifting value towards software and services. It also has the potential to enable more and more people to actively take ownership of their health and well-being.

For Philips – with leadership positions in both personal health and professional healthcare – we see that innovation can transform the delivery of care across the health continuum, enabling new relationships between care providers and patients/consumers, and driving better patient outcomes, higher productivity and a better user experience for all concerned.

We are driving this transformation in different ways:

  • By offering consumers connected solutions – like our Sonicare DiamondClean Smart oral care and DreamWear sleep therapy solutions – that support superior preventive care and those living with chronic disease respectively.

  • By giving clinicians the solutions they need to perform care with better outcomes and higher productivity, such as our Healthcare Informatics solutions. These support first-time-right diagnosis and increase productivity by integrating radiology, pathology and genomics information at the point of care, with AI-driven clinical decision support.

  • By empowering clinicians to deliver precision treatments supported by ground-breaking innovations for image-guided therapies, including our advanced live image-guidance solutions, hybrid operating rooms and smart devices such as our diagnostic and therapeutic catheters.

  • By enabling the seamless flow of data needed to care for patients in real time wherever they are, by ‘joining up the dots’ from the ICU to the home with our HealthSuite digital platforms and patient monitoring solutions, again supported by powerful algorithms that can predict adverse patient incidents hours in advance.

All of this with the objective of supporting the shift to value-based healthcare, a model that aims to improve patient outcomes while at the same time increasing productivity – that is innovation with purpose. And there’s more to come from our pipeline, thanks to our consistently high levels of investment in R&D, where some 60% of our people are focused on software and data science.

The road forward

Looking ahead, we see significant opportunities to further increase the value we deliver – by boosting growth in our existing core business, growing in adjacencies, and driving customer and operational excellence. We know that our strategy has traction, so now it is execution that matters most.

Boosting growth in core business

One of the ways we will capture new growth in our core business is by continuing to leverage products and solutions that have worked well in mature markets and bringing them to growth geographies where we have a strong footprint and brand recognition – as we have done with our Sonicare power toothbrushes in China.

In addition, we are increasingly partnering with hospital customers in new business models, engaging in long-term strategic partnerships to innovate value-added, integrated solutions that deliver better outcomes and higher productivity.

We now have over 110 of these long-term partnerships, up from 60-plus in 2016, and the number continues to rise. The combination of compelling solutions and consultative partnership contracts drives above-average growth rates and a higher proportion of recurring revenues.

Growing in adjacencies

We have completed two substantial M&A transactions over the last few years, Volcano and Spectranetics. These were targeted to meet our strategic objectives, to complement our leadership in cardiovascular interventions with smart devices, so that we can support complete vascular procedures. Volcano has worked out very well, having risen to double-digit growth and much improved profitability since we integrated the business; and we have similar expectations of Spectranetics, as we leverage our post-merger integration capabilities to unlock maximum value.

Another route to growth in adjacencies is through organic growth and investments in R&D. To extend our strong portfolio in patient monitoring, for example, we have invested in medical-grade wearables so that patients don’t need to be wired up but can be continuously measured, wherever they are. We continue to invest in Digital Pathology, as we believe the digitization of tissue slides is going to completely transform the clinical practice of pathology. We are pleased we are now able to market our IntelliSite Pathology Solution for primary diagnostic use in the USA, and we have since seen a sharp increase in order growth.

At the same time, we do not need to do everything ourselves. In 2017, for example, we entered into a partnership with B. Braun to innovate and accelerate growth in ultrasound-guided regional anesthesia and vascular access. And we have a host of other value-adding alliances where we have decided we can better expand our capabilities through partnering, rather than going it alone.

Continuing the digital transformation of Philips is absolutely fundamental to our future. We continue to invest in our secure HealthSuite digital eco-system platform – to enable digital health propositions that connect consumers and doctors to Philips through the cloud, enabling new business models and unlocking new revenue streams. We currently have over 30 cloud-connected propositions in the market.

Today, we sell a large proportion of our Personal Health products through online channels, aided by digital marketing. And now we are transferring that marketing capability to our health systems channels, so that we become more effective at reaching healthcare professionals. We are also connecting our back-office systems to our customers to enable new recurring revenue streams and enhanced customer loyalty in Software as a Service and Product as a Service business models.

Driving customer and operational excellence

To ensure that our solutions are truly customer-centric, we use ‘design thinking’ and our proven ‘Co-create’ methodology, whereby we come together with healthcare professionals to explore how our combined knowledge, resources and shared vision could improve the delivery of care.

In our drive for operational excellence we continue with disciplined implementation of the Philips Business System and Lean principles. The adoption of Hoshin methodology to plan and drive execution has yielded significant gains across the group. Our productivity measures will add up to over EUR 1.2 billion over the three-year period 2017-2019, having delivered around EUR 480 million in 2017.

We continue to drive quality and regulatory performance improvement throughout the company. Nevertheless, we did not fully deliver to our 2017 plan as we continue to address two significant regulatory challenges that arose from years ago. We must continue our improvement journey forcefully.

Building on the strong 6% order growth for the full year 2017, consistent execution on these value drivers will enable us to deliver, in 2018, on our medium-term targets of 4-6% comparable sales growth 1 and an average annual improvement in Adjusted EBITA 1 margin of 100 basis points.

In conclusion

We have made strong progress in our transformation to become a focused leader in health technology. Going forward, we are committed to single-mindedly improve performance and attain higher levels of growth. To this end we are continuing to strengthen our culture – putting our customers first, acting with quality and integrity, teaming up to win, taking ownership to deliver fast, and learning, improving and inspiring each other, every step of the way.

I am confident that, by doing so, we will be able to expand our strong positions across the health continuum, extend our solutions capability to address our customers’ unmet needs, and deliver the full benefits of data-enabled connected care.

It only remains for me to thank our customers, shareholders and other stakeholders for the support they continue to give us. And to thank our Philips people around the world for their tremendous engagement and efforts over the past year.

Frans van Houten
Chief Executive Officer

1)Non-IFRS financial measure. For the definition and reconciliation to the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information

Addressing healthcare challenges through innovation

The stories below are just a few examples of how our long-term strategic partnerships and innovative solutions are helping healthcare providers address the ‘quadruple aim’: enhancing the patient experience, improving population health, reducing costs, and improving the work life of healthcare professionals. At the same time, our connected consumer products are helping people the world over to take better care of their health.

This photo shows someone using Philips IntelliSpace Guardian Early Warning Score

Early Warning Score reduces incidence of serious events in general ward

Ysbyty Gwynedd, General Hospital in Bangor, Wales

Philips General Ward Solutions help us to deliver timely care that is matched to patient needs

Dr Chris Subbe
Consultant in Acute, Respiratory and Intensive Care Medicine, Ysbyty Gwynedd, The General Hospital in Bangor

Our solution

The implementation of Philips General Ward Solution included the MP55C spot-check patient monitor with IntelliSpace Guardian Early Warning Score. This solution enabled nurses at Ysbyty Gwynedd Hospital to quickly identify deteriorating patients and make sure they got the right care.

35%reduction in serious events


40%decrease in intensive care mortality


86%reduction in cardiac arrest

This photo shows Emory Healthcare, Georgia, USA

Expanding access to critical care services

Emory Healthcare, Georgia, USA

These independent findings verify that our innovative approach improves patient outcomes.

Dr. Timothy Buchman
Director Critical Care Center, Emory Healthcare

Our solution

Emory and Philips together implemented an eICU program that allowed for better clinical and financial outcomes – enabling patients to receive more consistent care in the hospital, allowing them to recover in the home setting more often.

Savings of an estimated $4.6M over 15 months


2.1%decrease in 60-day inpatient readmission


4.9%increase in discharges to home healthcare


6.9%decline in discharges to long-term care hospitals

This photo shows Nyeri County Referral Hospital, Nyeri, Kenya, Africa


Transforming critical care

Nyeri County Referral Hospital, Nyeri, Kenya

This collaboration is bringing world-class and sustainable care to where it’s needed most: the heart of Kenyan communities.

Dr. Silas Njoroge
Medical Superintendent, Nyeri County Referral Hospital

Our solution

Philips adopted the Managed Equipment Services (MES) approach, where Philips took full responsibility for the renovation of Nyeri County Hospital’s intensive care unit, helping to improve care, save vital resources and enhance the working experience of its staff.

Kenya icon clinical care
Improved county clinical care

Kenya operating costs
Reduced operating costs

Kenya clinical workflow
Improved workflow

Kenya expand
A proven approach to expand to other African countries
This photo shows someone using the Philips Azurion image-guided therapy platform

Philips Azurion

Philips Azurion

This innovative image-guided therapy platform has been developed together with leading hospitals and allows clinicians to:

  • Maintain high standards of quality
  • Improve efficiency and productivity in your lab
  • Move quickly and confidently through cases

High productivity combined with low cost of ownership

Flexible financing, advanced service and support help clinicians maintain peak performance and deliver cost-efficient care.

Discover more on the website

Workflow study results in a leading interventional department 1


17% reduction in procedure time


29% reduction in staff movement


25% reduction in planned cases finished late


The ability to treat one more patient per day

This photo shows someone using a Philips DiamondClean Smart toothbrush and app

Philips Sonicare DiamondClean Smart connected toothbrush

Philips Sonicare DiamondClean Smart connected toothbrush

With high-performance brush heads, smart sensor technology and a dedicated smartphone app, this connected care platform provides real-time feedback and coaching to help consumers optimize their brushing routine and so improve their oral health.

Partnering with dental professionals

Philips works closely with dental professionals and has conducted clinical studies at more than 50 universities and research centers worldwide to support evidence-based dentistry. Recent articles in a Special Issue of The Journal of Clinical Dentistry 1confirm the effectiveness of plaque removal and the reduction of gum inflammation with use of Philips’ oral care products.

Up to 10x more plaque removal 2


Up to 7x healthier gums in just 2 weeks 2


Users are confident they are achieving100% coverage 100% of the time 3

This photo shows someone using Philips EPIQ HeartModel A.I.

Philips EPIQ HeartModelA.I.

Philips EPIQ HeartModelA.I.

Operational benefit

HeartModelA.I. is a 3D tool that can provide robust, reproducible ejection fraction (EF) in just seconds.

Financial benefit

We recognize challenges in using 3D in transthoracic echocardiography. With One-button simplicity, Philips HeartModelA.I. helps overcome that barrier, bringing robust 3D quantification to everyday clinical practice.

Our solution

This validated application is intuitively designed to easily and reproducibly deliver confidence in cardiac quantification. Both LV quantification and simultaneous LA volumes are provided by this tool.

Discover more on the website

LA volume is shown to be an indicator of cardiovascular outcomes


82%reduction in exam time using HeartModelA.I. 1


Examreproduced in seconds


Efficient measurement of cardiac function

Making the world healthier and more sustainable

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Compare our key data from the last five years

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The years 2013, 2014, 2015 and 2016 include Philips Lighting

Creating value for our stakeholders

We apply six different forms of capital in our processes, to deliver a range of outcomes

Click on the panels below to view our latest facts and figures

Capital input

The capitals (resources and relationships) that Philips draws upon for its business activities

Human

We employ diverse and talented people and give them the skills and training they need to ensure their effectiveness and their personal development and employability.

  • Employees 73,951, 120 nationalities, 36% female
  • Philips University 1,200 new courses, 830,000 hours, 570,000 training completions
  • 27,997 employees in growth geographies
  • New Inclusion & Diversity programs

Intellectual

We apply our innovation and design expertise to create new products and solutions that meet local customer needs.

  • Invested in R&D EUR 1.76 billion (Green Innovation EUR 233 million)
  • Employees in R&D 9,787 across the globe including growth markets

Financial

We raise the funds we need from shareholders and other capital providers. We allocate this capital to the businesses and markets we think offer the best prospects for growth and returns.

  • Net debt EUR 2.8 billion
  • Equity EUR 12.0 billion
  • Market capitalization EUR 29.2 billion

Manufacturing

We apply Lean techniques to our manufacturing processes to produce high-quality products. We manage our supply chain in a responsible way.

  • Manufacturing sites 38, cost of materials used EUR 4.9 billion
  • Total assets EUR 25.3 billion
  • Capital expenditure EUR 420 million

Natural

We are a responsible company and aim to minimize the environmental impact of our supply chain, our operations, and also our products and solutions.

  • Energy used in manufacturing 3,072 terajoules
  • Water used 888,000 m3
  • Recycled plastics in our products 1,850 tonnes

Social

We contribute to our customers and society through our products and solutions, our tax payments, the products and services we buy, and our investments in local communities.

  • Philips Foundation
  • Stakeholder engagement
  • New volunteering policy

Capabilities, Assets and Positions

Our unique strengths

We strengthen and leverage our core Capabilities, Assets and Positions as they create differential value: deep customer insight, technology innovation, our brand, global footprint, and our people.

Strategy

Where we invest

We manage our portfolio with clearly defined strategies and allocate resources to maximize value creation.

Excellence

How we operate

We are a learning organization that applies common operating principles and practices to deliver to our customers with excellence.

Path to Value

What we deliver

We define and execute business plans that deliver sustainable results along a credible Path to Value.

The ‘creating value for our stakeholders’ diagram, based on the International Integrated Reporting Council framework, shows how – with the Philips Business System at the heart of our endeavors – we use six different forms of capital to drive value in the short, medium and long term.

Value outcomes

The result of the application of the capitals to Philips’ business activities and processes as shaped by the Philips Business System

Human

We employ diverse and talented people and give them the skills and training they need to ensure their effectiveness and their personal development and employability.

  • Employee Engagement Index 76% positive
  • Sales per employee EUR 240,429
  • Employee benefit expenses EUR 5,824 million

Intellectual

We apply our innovation and design expertise to create new products and solutions that meet local customer needs.

  • New patent filings 1,200
  • IP Royalties Adjusted EBITA EUR 225 million
  • 165 design awards

Financial

We raise the funds we need from shareholders and other capital providers. We allocate this capital to the businesses and markets we think offer the best prospects for growth and returns.

  • Comparable sales growth 4%
  • Adjusted EBITA1) as a % of sales 12.1%
  • Net cash provided by operating activities EUR 1,870 million
  • Net capital expenditures EUR 685 million
  • Dividend EUR 742 million
  • Corporate taxes paid EUR 349 million
  • 60% Green Revenues

Manufacturing

We apply Lean techniques to our manufacturing processes to produce high-quality products. We manage our supply chain in a responsible way.

  • EUR 17.8 billion products and solutions sold, with 2.2 billion Lives improved

Natural

We are a responsible company and aim to minimize the environmental impact of our supply chain, our operations, and also our products and solutions.

  • 11% revenues from circular propositions
  • Net CO2 emissions 627 kilotonnes
  • 245,000 tonnes (estimated) products put on the market
  • 24.6 kilotonnes waste, of which 80% recycled
  • Environmental impact Philips’ operations EUR 200 million

Social

We contribute to our customers and society through our products and solutions, our tax payments, the products and services we buy, and our investments in local communities.

  • Brand value USD 11.5 billion
  • Partnerships with UNICEF, Red Cross and Ashoka

Our strategic focus

_95R2202
This photo shows someone wearing a Philips DreamWear mask
Philips Lifeline medical alert pendant
This photo shows an example of connected care in the home setting

All around the world, resource constraints are driving a shift to value-based healthcare – a system that aims to increase access to care and improve patient outcomes while also raising cost productivity. At the same time, aging populations and the rise of chronic diseases like heart disease and respiratory conditions are driving up demand for healthcare.

In parallel, a growing focus on healthy living and prevention means more and more people are looking for new ways to proactively monitor and manage their health, also in home and community settings. And the digitalization of healthcare has reached the point where value is shifting from stand-alone products to solutions combining systems, smart devices, software and services, which deliver greater benefits to customers.

Philips sees significant value in more integrated forms of healthcare, unlocking the power of data and artificial intelligence at the point of care, while at the same time optimizing care delivery across the health continuum. This includes putting increased emphasis on both primary and secondary prevention and population health management programs.

At Philips, we are striving to make the world healthier and more sustainable through innovation, with the goal of improving the lives of 3 billion people a year by 2025.

In today’s increasingly connected world, the convergence of Philips’ consumer technologies that facilitate healthy living, medical technologies that help clinicians to deliver better diagnosis and treatment, and cloud-based technologies that support data sharing and analysis, will be a key enabler of more effective, lower-cost integrated health solutions.

This photo shows someone using a Philips DiamondClean Smart toothbrush and appThis photo shows someone using a Philips Volcano deviceThis photo shows someone using the Philips Azurion image-guided therapy platform

We like to visualize healthcare as a continuum since it suggests the notion of continuous care. And it becomes very compelling when one thinks of this continuum as being connected.

This visual shows Philips' view of the health continuum
Healthy living
Prevention
Diagnosis
Treatment
Home care
Connected care and health informatics

By addressing healthcare as a ‘connected whole’ in this way, we can unlock gains and efficiencies and drive innovations that help deliver on the ‘quadruple aim’: enhancing the patient experience, improving health outcomes, lowering the cost of care, and improving the work life of care providers.

With our global reach, deep insights and leading innovations, we are uniquely positioned in ‘the last yard’ to consumers and care providers, delivering:

  • connected products and services supporting the health and well-being of people
  • integrated modalities and clinical informatics to deliver definitive diagnosis
  • real-time guidance and smart devices for minimally invasive interventions
  • connected therapeutic products and services for chronic care patients.

Underpinning these solutions, and spanning the health continuum, our connected care and health informatics solutions enable us to:

  • connect patients and providers for more effective, coordinated, personalized care
  • manage population health, leveraging real-time patient data and clinical analytics.

We are focusing on end-to-end pathways – at present primarily cardiology, oncology, respiratory care, and pregnancy and parenting – where we believe our integral approach can add even greater value for our customers.

More and more, we are teaming up with hospital and health systems to understand their needs, provide integrated solutions, and engage in multi-year cooperation to drive improvements in terms of patient outcomes, quality of care delivery and cost productivity.

This visual represents the Cardiology health space
Cardiology
This visual represents the Oncology health space
Oncology
This visual represents the Respiratory care health space
Respiratory care
This visual represents the Pregnancy and parenting health space
Fertility, pregnancy and parenting
Philips teaming up with hospital and health systems

In this context, we are pioneering new business models that fit our customers’ needs better. These include Technology Managed Services, as well as Software as a Service and Product as a Service models. We have also started to take co-accountability for our customers’ patient outcomes and productivity.

As we embark on the next phase of our health technology journey, the drivers below are designed to help deliver higher levels of customer value and quality, boost growth, deliver winning solutions, and improve our results:

This visual shows Philips' strategic roadmap
This visual shows Philips' strategic roadmap
Focus on
Driven by
Resulting in
Growth in core businesses
  • Capture geographic growth opportunities
  • Pivot to consultative customer partnerships and business models
  • Drive innovative value-added, integrated solutions
Growth in adjacencies
  • Portfolio extensions through M&A, organic investments and partnerships
Customer and operational excellence
  • Continue to lead the digital transformation
  • Improve customer experience, quality systems, operational excellence and productivity
Revenue growth

Margin expansion

Increased cash generation

Improved return on invested capital
Increased shareholder value

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