Profit Defense Battle! GPS Medical Giants Release FY2021 Financial Results and Product Portfolio

GE Healthcare, Philips Healthcare, and Siemens Healthineers, collectively known as GPS, are the three giants in the medical equipment field. What new changes have occurred in their fiscal year 2021 performance rankings?

Siemens Healthineers

In fiscal year 2021, Siemens Healthineers achieved total revenue of 18 billion euros, representing a year-on-year increase of 24%. The change in performance was mainly driven by growth in the new diagnostics business and the acquisition of Varian (the fiscal year 2021 period was from October 1, 2020 to September 30, 2021). Adjusted earnings before interest and taxes amounted to 3.1 billion euros. CEO of Siemens Healthineers, Bernd Montag, stated that Siemens Healthineers will strengthen R&D, further expand its global market presence, and raise its performance expectations for fiscal year 2022, with anticipated overall annual revenue growth between 3% and 5%.

Main Business:

Imaging business revenue reached 9.821 billion euros, increasing by 8% year-on-year. It accounts for 54.6% of the total revenue and remains Siemens Healthineers' largest business. The CT pipeline showed significant growth, still benefiting from COVID-19 testing.

Diagnostic business revenue reached 5.418 billion euros, with a growth rate of 38%, ranking first among the three major businesses and making it the second-largest business for Siemens Healthineers. The primary driver was high demand for rapid antigen testing for COVID-19 in Europe, the Middle East, and Africa, contributing approximately 1.08 billion euros in revenue. Excluding revenue from rapid antigen testing for COVID-19, diagnostic business revenue grew by 15%.

Clinical treatment business revenue reached 1.716 billion euros, a year-on-year increase of 5%. Revenue growth in Asia and Australia was particularly significant.

Varian's business revenue was approximately 1.3 billion euros (calculated from the completion of the acquisition on April 15, 2021, to September 30, 2021), of which the revenue from the Americas was 588 million euros, accounting for almost half; the revenue from Europe, the Middle East, and Africa was 347 million euros; and the revenue from the Asia-Pacific region was 365 million euros.

Regional Business Situation:

Revenue in Europe, Middle East and Africa reached 6.775 billion euros, increasing by 43% year-on-year. Revenue in the Americas was 6.407 billion euros, growing by 13% year-on-year. Revenue in the Asia-Pacific region amounted to 4.815 billion euros, up by 20% year-on-year. Notably, revenue in China hit 2.354 billion euros, surging by 24% year-on-year, accounting for nearly 50% of the Asia-Pacific region’s revenue, making it the fastest-growing region globally outside Germany.

Business Changes:

On April 15, 2021, Siemens Healthineers announced the completion of the acquisition of Varian, with a total acquisition price of approximately 16.4 billion US dollars (nearly 110 billion Chinese yuan). Varian is the world's largest X-ray digital imaging company and a leading manufacturer of products such as linear accelerators. Varian holds a strong position in the radiotherapy market, with over 8,000 radiotherapy systems installed globally, capturing more than 50% of the global radiotherapy market share. In fiscal year 2021, Siemens Healthineers’ R&D expenditure increased by 15% (including 130 million US dollars from Varian).

The significant increase in R&D expenses is also related to the Corindus vascular intervention robot. In July 2021, the latest generation of Corindus' CorPath GRX Coronary Interventional Surgical Control System entered the NMPA "Special Approval Channel for Innovative Medical Devices," making the company the first foreign medical device enterprise to pass the special review application for innovative medical devices.

In addition, starting from fiscal year 2022 (November 2021), Siemens Healthineers has entered the third phase of its "2025 Strategy," named "New Ambition," ahead of schedule. Comprehensive cancer care, cardiovascular and neurology diagnostics and treatment, remote care, and digitalization will become the company's key focus areas.

GE Healthcare

In 2021, GE Healthcare achieved revenue of $17.7 billion, a year-on-year decrease of 1.58%; profit was $2.97 billion, a year-on-year decrease of 3.07%. The change in performance was mainly due to the divestiture of GE BioPharma in 2020, as well as supply chain issues and inflation. The company expects that the impacts from the supply chain and GE BioPharma will last until at most the first half of 2022.

Main Business:

Healthcare Systems (abbreviated as HCS, including imaging, ultrasound, Life Care Solutions, enterprise software and solutions) generated revenue of $15.7 billion, up 2% year-over-year, accounting for 89% of GE Healthcare's total revenue.

Pharmaceutical Diagnostics (shortened as PDx, including contrast agents and nuclear tracers) generated $2 billion in revenue, up 13% year-over-year, accounting for 11% of GE Healthcare's total revenue.

GE stated that currently, both HCS and PDx demands have recovered to or exceeded pre-pandemic levels. Similar to many industries, the company's supply chain is experiencing inflation, with delays in key materials required for product procurement, such as electronics and resins, which has postponed the company’s ability to convert RPO into revenue. To address recent volatility and cost pressures, the company will continue to implement structural cost reductions and cash optimization initiatives to invest in growth and R&D.

Business Changes:

In November 2021, GE Healthcare announced that GE Aerospace, GE Healthcare, and the business focusing on energy transition formed by the merger of "GE Renewable Energy, GE Power, and GE Digital" will become three independent global leading investment-grade listed companies. GE plans to spin off GE Healthcare tax-free in early 2023. This will be a company with precision healthcare as its core business, and GE is expected to retain 19.9% of the shares; GE Renewable Energy and GE Power will be spun off tax-free in early 2024.

In the fourth quarter of 2021, GE Healthcare acquired BK Medical, the leader in surgical ultrasound imaging and guidance, for $1.5 billion in cash.

Management Changes:

Peter Arduini, former President and Chief Operating Officer of Integra Lifesciences, succeeded Kieran Murphy as President and Chief Executive Officer of GE Healthcare on January 1, 2022.

According to reports, Peter Arduini worked at GE Healthcare for 15 years, holding various leadership roles in the United States and globally, including General Manager of the Global Imaging Business, Healthcare Business, and Head of U.S. Sales. He then joined Integra LifeSciences as President and CEO. After Arduini took office, he implemented significant reforms at Integra LifeSciences. Through multiple acquisitions, he diversified the company's portfolio and increased its market value fivefold.

Philips Healthcare

Philips' total revenue in 2021 was 17.156 billion euros, a year-on-year decrease of 1%. The revenue of the medical business (considering only Diagnosis & Treatment and Connected Care businesses) was 13.23 billion euros, a year-on-year decrease of 4%, mainly affected by supply chain challenges, delays in hospital equipment installation caused by the COVID-19 pandemic, and the ventilator recall incident. The group's net profit for the whole year was 3.323 billion euros, compared to 1.195 billion euros last year, a year-on-year increase of 178%, mainly due to the gains from the divestment of the home appliances business.

Main Business:

Diagnostic and treatment business revenue reached 8.635 billion euros, a year-on-year increase of 6%. Image-guided therapy achieved double-digit growth, while diagnostic imaging and medical ultrasound saw mid-single-digit growth. The business's overall revenue was driven by double-digit growth in North America, high single-digit growth in Western Europe, double-digit growth in Latin America and India, and mid-single-digit growth in China.

Connected Care business revenue was 4.593 billion euros, a year-on-year decrease of 18%. The Sleep and Respiratory Care business saw a decline in orders due to the easing of the COVID-19 pandemic, and the recall of ventilators also impacted revenue.

Business Changes:

In 2021, Philips continued its acquisition spree. In January, it acquired Capsule for $635 million. This acquisition expanded Philips' portfolio to include patient monitoring, therapy, telehealth, informatics, and interactive solutions, aligning with Philips' digital care transformation strategy.

In February, it acquired BioTelemetry for $2.8 billion, expanding into wearable cardiac monitors as well as AI-based data analysis and remote services. In November, it acquired Cardiologs to complement its existing cardiac monitoring and diagnostic products, adding ECG analysis and reporting services.

(Original text has been abridged)