Philips Targeting Medical Device Company Acquisitions

By Jof Enriquez,
Follow me on Twitter @jofenriq

Royal Philips NV is reportedly planning to acquire more medical device companies as it attempts to add heft to its newly-created HealthTech business.

Philips is targeting smaller acquisitions, as well as multi-billion-euro deals, over the next six to 12 months, according to sources cited by Bloomberg. In particular, Philips is said to be on the lookout for device companies engaged in the areas of radiotherapy, imaging, and home care, both in the United States and in Europe, where Philips is based.

Although Bloomberg's sources say no specific companies are being targeted by Philips at this time, the report identifies two possible acquisition targets: Sweden-based Elekta AB and U.S.-based Varian Medical Systems. Elekta makes radiosurgery and radiotherapy solutions for oncology and brain disorder patients. Varian markets radiosurgery, proton therapy, and associated imaging software solutions.

“Elekta would be a really good fit for Philips and the two companies know each other well as they already have a project in common,” Johan Unnerus, an analyst at Swedbank AB in Stockholm, told Bloomberg.

In 2012, Philips and Elekta co-founded a research consortium that is developing a new device that integrates a linear accelerator and a 1.5 Tesla MRI system for more precise cancer treatments.

Neither Philips nor other parties mentioned in the report gave formal comments to the news outlet.

Increased M&A activity could bolster Philips' newly-established HealthTech division, which combined its healthcare and consumer lifestyle portfolios after the company split into two last year. The other division, Lighting, could be sold through an initial public offering (IPO) in 2016, and proceeds from that sale could fund future transactions for the HealthTech business.

In line with its strategic pivot into healthcare, Philips last year purchased catheter-based imaging company Volcano Corporation for $1.2 billion in cash, and formed a joint venture with Salesforce.com to build a cloud-based platform for medical devices and equipment.

Aside from partnering with established players, Philips is also on the lookout for new technologies that it could bring to market quicker.

"Now that we have focused on health tech, the research is collaborative and concentrates on healthy living through home healthcare products – the whole health tech continuum," said Ken Berta, Philips Group Innovation’s ‎head of commercial operations in North America, in a recent Q&A with Med Device Online.

His proclamation echoes a previous statement from the company, which declares that the HealthTech business will “capitalize on the convergence of professional health care and consumer end-markets across the health continuum, from healthy living and prevention, to diagnosis, treatment, recovery and home care."