GE Healthcare Accelerates Digital Transformation with Deep Integration of Technology and Medical Innovation

From May 14 to 17, at the 81st China International Medical Equipment Fair (Spring) (CMEF) held in Shanghai, Blue Whale Finance and Economics reporters learned that GE Healthcare launched a total of 21 technological innovations and digital achievements, covering intelligent medical imaging equipment, digital applications and services, high-end hybrid operating rooms, smart intensive care, and mobile diagnostics.

Chen Jinlei, Vice President of GE Healthcare China, stated that the products showcased this time primarily focus on two areas: innovation in intelligent imaging technology and digital healthcare innovation. Notably, targeting the three key digital output domains of continuous clinical diagnosis, asset operation management, and hospital capacity building, GE Healthcare launched its latest APM Asset Cloud Manager, cloud-based ECG solutions, cloud-based imaging solutions, and cardiac MRI solutions integrated with AI-assisted capabilities at this CMEF.

Currently, new-generation information technologies represented by artificial intelligence, cloud computing, and big data are developing rapidly. With the continuous advancement of science and technology and the deep integration of healthcare with high-tech innovations, it has become an inevitable trend for technology to empower healthcare.

China’s healthcare services are entering a new phase of transition from “informatization” to “intelligentization.” Leveraging digital technologies to empower the development of smart hospitals, thereby enhancing the quality and efficiency of medical services and improving patient diagnosis and treatment outcomes, has become a key focus for numerous medical equipment suppliers. For the “Big Three” in the medical imaging sector—GE Healthcare, Philips, and Siemens (collectively known as GPS)—this area represents a critical battleground for competition.

In fact, as the global healthcare system undergoes revolutionary evolution, GE Healthcare is also accelerating its own digital transformation. The full-speed digitalization strategy has become one of GE Healthcare's three key strategic priorities.

In the view of Dai Ying, Chief Innovation Officer of GE Healthcare China, digitalization is essentially intelligence; previously, digitalization referred to informatization. “The current concept of digitalization embodies intelligence, integrating ‘informatization + data + artificial intelligence,’” Dai Ying revealed to reporters from Lanjing Industrial Economics. It is worth noting that behind this substantial investment, GE Healthcare’s digital products have already begun to generate significant revenue. Data shows that in 2018, GE Healthcare achieved global revenue of $19.8 billion, with $1.1 billion coming from digital products.

In addition, GE Healthcare’s comprehensive localization strategy goes hand in hand with its full-speed digitalization strategy. Chen Jinlei told Blue Whale Finance and Economics reporters, “In China, GE Healthcare has always adhered to the business development strategy of ‘three major markets and four pillars,’ committed to continuously deepening the localization strategy centered on products, channels, services, and supply chain, so as to meet the growing demands of high-end, primary care, and non-public healthcare markets, thereby reducing healthcare costs, increasing access to medical services, and improving healthcare quality.”

As an important component of the GE Group, GE Healthcare was planned to be spun off by the group in June 2018. On June 26, Kieran Murphy, CEO of GE Healthcare, announced via an internal email that the company planned to spin off its healthcare business into an independent medical company.

With the spin-off of GE Healthcare, this signifies that GPS, the representatives of high-end medical devices, have all completed their business focus and streamlining. A reporter from Blue Whale Finance observed that GE Healthcare was the last among GPS to undergo a spin-off. Siemens officially spun off its healthcare business in 2015 to establish an independent company—Siemens Healthineers—and raised $5.2 billion through an IPO in 2018, setting the record for the largest IPO in Europe in recent years; additionally, Philips listed its lighting business separately in 2016, becoming a company focused on healthcare operations.

Following GE's announcement that its healthcare business would be spun off from its core operations, reports emerged sequentially regarding GE Healthcare's confidential IPO application. In December 2018, media outlets reported that GE had secretly filed for an initial public offering (IPO) for its healthcare subsidiary, advancing plans to divest its second-most profitable business unit.

To reduce its leverage ratio and strengthen its balance sheet, GE (NYSE: GE) announced on February 25, 2019, that it would sell its biopharmaceutical business to Danaher Corporation (NYSE: DHR) for a total consideration of $21.4 billion, comprising $21 billion in cash paid by Danaher and the assumption of certain pension liabilities. The transaction is expected to close in the fourth quarter of 2019, subject to regulatory approvals and customary closing conditions.

Notably, Larry Culp, GE’s newly appointed CEO, pointed out that upon completion of the transaction, GE would cease further expansion of its investment in the healthcare business. Meanwhile, the plan for its healthcare division to conduct an initial public offering (IPO) within 2019 would also be affected.