The new league of imaging companies remaking the market

Since becoming a pure-play health tech group Philips has been buying like crazy. Might Siemens Healthineers and GE Healthcare join in?

With Siemens Healthineers already managed independently of its former parent, and GE Healthcare soon to be split off from General Electric, a new class of imaging specialists is emerging. The theory is that they will be nimbler than the huge beasts of which they were previously part, quicker to react to the market and freer to cut deals.

“We have had a level of freedom to have partnerships, but we’ll have even greater flexibility,” says Al Lojewski, cardiovascular ultrasound general manager at GE Healthcare. Philipp Fischer, head of cardiology at Healthineers, hints that more deals might be on the cards, but claims: “Nobody kept us away from thinking about acquisitions in the past.”

As the first big group with a significant presence in imaging to shift its focus solely to medtech, Philips has set a precedent for deal making. The Dutch company sold off its various consumer electronics units over the course of several years, and by the end of 2016 was almost entirely medtech (The omens look good for a medtech-only Philips, October 25, 2016). Since then it has been acquiring other groups at a furious pace.

Philips acquisitions, 2017-18
Date Target Technology
Jul 2018 EPD Solutions Cardiac imaging and navigation system to guide procedures for cardiac arrhythmias 
Jun 2018 Remote Diagnostic Technologies Monitoring, cardiac therapy and data management
May 2018 Nightbalance Technology to treat positional obstructive sleep apnea and positional snoring
Dec 2017 Vitalhealth Population health management technology
Dec 2017 Forcare Open standards-based interoperability software 
Nov 2017 Analytical Informatics Web-based software to enhance clinical and operational performance of imaging departments
Aug 2017 Respiratory Technologies Airway clearance technology for patients with chronic respiratory conditions
Aug 2017 Spectranetics Vascular intervention and lead management
Jul 2017 Tomtec Imaging Systems Intelligent image analysis software, especially for diagnostic ultrasound
Jul 2017 Health & Parenting Healthcare and family-related mobile apps for expectant and new parents
Jun 2017 Cardioprolific Catheter-based thrombectomy for peripheral vascular disease
Jun 2017 Electrical Geodesics Non-invasive technologies used to monitor and interpret brain activity
Mar 2017 Australian Pharmacy Sleep Services Sleep testing 
Source: EvaluateMedTech, company communications.

“We did a lot of acquisitions last year, I think 14,” Jan Kimpen, chief medical officer at Philips, told Vantage at last weekend's European Society of Cardiology meeting in Munich. Most of these were smaller tuck-in deals, the notable exception being the $2.1bn takeover of Spectranetics, and not all are strictly imaging. Even so, this could provide a model for Healthineers and GE Healthcare. 

Pulling in partners

So far Healthineers has not been in a hurry. It floated in March, and since then has done just one deal, and that was an alliance rather than an acquisition. Still, analysts from Berenberg wrote this week that the company was well positioned for future M&A, “which could add both strategically and financially”.

Mr Fischer told Vantage that the IPO did not prompt a change in Healthineers’ business development plans. That point arrived three years earlier, when the unit rebranded as Healthineers and set out a new corporate strategy.

“There was a rationale reaching back many years for why the healthcare business should be managed differently and independently within Siemens,” he said. “That already started within Siemens, and the IPO was more of a consequence.”

Still, the group’s shareholders – led by Siemens AG, which owns around 85% of Healthineers – will want to see the company put its cash to good use, and buying in technologies to add to the Healthineers line-up is an obvious way to do this.

“With the IPO there is always this question of ‘what is this company doing with the money it earns, if it doesn’t have to deliver all of it to the Siemens mother?’” says Mr Fischer. He adds that the possibility of Healthineers doing acquisitions in future “is on the table”.

Recently, though, the company has been more interested in partnering deals, and Mr Fischer says it will definitely do more. The group has particular priorities in the cardiovascular arena: coronary artery disease, structural heart disease, arrhythmias and heart failure. These are the segments in which it sees the highest growth and greatest innovation, he said.

“When you go for these four biggest markets, it is a total illusion if you think that as a single company you can be innovative in all four. It is just a natural thing that we pull in partners.”

On the lookout

GE Healthcare seems to have come to the same conclusion, and has several partners. One of these concerns the buzz phrase artificial intelligence, signing up Nvidia, a group whose deep learning tech has previously been used in computer games. GE has been incorporating Nvidia’s software into several products, such as its most advanced – and expensive – cardiovascular ultrasound platform, the Vivid E95. 

Artificial intelligence is beginning to be a major focus for the company, since it has the potential to save doctors’ time, for instance by automatically labelling images. “We really see [AI] as a fundamental investment area for ultrasound, and for GE Healthcare too,” says GE's Mr Lojewski. 

The company is agnostic regarding where its AI advances might come from; it is keen to partner with technology specialists, but is also forming alliances with academic institutions and developing AI technology internally. 

Here it certainly is following in the footsteps of Philips, which has made much of its AI efforts (Philips uses its intelligence for outcomes-based incomes, April 25, 2018). 

“If you ask 10 people [about AI] all 10 of them have a different perspective on it,” says Philips’s Mr Kimpen. “It will change the world, though.”

Philips will continue its spending spree, he says, and artificial – or to use  Philips’s term, adaptive – intelligence will be one of the priorities. “We are still on the lookout. Which pieces are we missing?” 

Via different means, and for different reasons, these three groups find themselves forging similar paths. 

“To me it appears almost impossible to manage a healthcare business along with trains and turbines,” says Healthineers' Mr Fischer. “If you want to be professional you have to focus. GE will also go the same way, and Philips. There’s certainly a new league of medtech players – with GE being the last one to join that league.”

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