Philips raises financial projections for the year despite double-digit drop in demand for connected care products
After the coronavirus pandemic skyrocketed sales of connected medical devices in early 2020, there was nowhere to go but declining. Fortunately for Philips, its diagnostic and treatment technologies provided enough parachute to slow this free fall and produce higher than expected overall growth.
In the first quarter of 2021, the Dutch multinational reported a 27% drop in orders for its connected care business. This sharp drop was to be expected, CEO Frans van Houten said in a declaration, after the segment saw orders for patient monitors and hospital ventilators jump 80% in the same three months of last year.
Even without the onset of a global pandemic, the connected care business nonetheless recorded a modest 7% increase in sales, driven by double-digit growth in clinical patient monitoring devices and software. Those sales totaled about $ 1.4 billion, up from about $ 1.34 billion in the first quarter of 2020.
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Despite the slowdown, Philips saw a 9% year-over-year increase in overall sales growth from 2021, largely driven by an 11% increase in orders for its diagnostics and diagnostic products. treatment, which include ultrasound and image-guided therapy technologies. . These technologies brought in more than $ 2.24 billion in sales for the period, an increase of 9% from consumption in the previous year.
The company’s personal health sector, meanwhile, saw sales growth of 17% year-over-year. This segment, which includes razors, skin care products and oral health electronics, generated approximately $ 886 million in sales for the quarter.
However, Philips has also made a provision of 250 million euros (US $ 301 million) to address potential risks identified in some of its respiratory care devices, including older models of its CPAP devices.
The company said the sound deadening foam used in its first-generation DreamStation product line could degrade under special circumstances, such as under high heat or humidity or with the use of certain cleaning products. Philips said that while the new DreamStation 2 is not affected by the issue, this provision would help cover the costs of planned repairs for devices currently in use.
Nonetheless, due to this growth in the first quarter and Philips’ expectation that demand for its diagnostic, treatment and personal health products will increase as the year progresses, van Houten said the company has increased. its annual projections.
“We now expect to generate low to mid single-digit comparable sales growth for the group in 2021,” he said, instead of the weak single-digit sales growth the company had previously forecast for the year.
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The expected growth will build on several important steps taken by Philips to extend its reach in the first quarter. Most recently, the company received FDA clearance for its SmartCT software, which adds 3D imaging capabilities to the recently revamped Azurion image-guided therapy platform.
Philips has also partnered with Orbita, which develops conversational artificial intelligence software, to add HIPAA-compliant virtual assistants to Philips telehealth products.
“Our growth momentum is driven by our portfolio of innovative solutions, for example in the areas of precision diagnostics, image-guided therapy and telehealth,” said van Houten. “Additionally, we continued to add long-term strategic partnerships with hospitals on the back of the more than 50 new partnerships we signed in 2020. This illustrates our ability to meet the needs of today’s hospital leaders. , across the world, as they plan for the future. “