Philips Takes a Strategic Leap: 'Production-Innovation Dual Drive' Powers Comprehensive Localization Advancement

Philips’ “localization” strategy, which began a decade ago, has now become “deeply rooted and flourishing.”

According to Chen Shengyu, Senior Vice President of Philips Greater China and General Manager of the Precision Diagnosis Business Group, nearly 100% of the Precision Diagnosis product portfolio will be manufactured in China by the end of this year.

VCBeat breaks down Chen Shengyu’s information into four aspects.

1. Full-line Coverage: Taking ultrasound products as an example, Philips emphasizes comprehensive portfolio coverage and plans to expand its lineup of China-made ultrasound products over the next 1–3 years, gradually achieving 100% local production for its ultrasound offerings, including the entire EPIQ series of premium ultrasound systems.

2. Pioneering Technological Breakthroughs: The Ingenia Elition 3.0T Gold MRI, a representative of ultra-high-end magnetic resonance systems, will achieve local production in China within this year. The cryogen-free Ingenia Ambition MRI features magnet technology that represents the most advanced MRI technology globally today, and this product has already achieved local production in China. In addition, Philips’ next-generation photon-counting CT, the Spectral CT One, will also achieve local production in China by the end of this year.

3. Independently Developed Domestically: The 1.5T Prodiva MRI and the Incisive Aurora CT, which supported Leishenshan Hospital, are prime examples of Philips’ independently developed and manufactured products in China. Among them, the Prodiva not only serves the domestic market but has also been sold to 57 countries worldwide, bringing Chinese strength to the global stage.

4. Ecosystem Collaboration: Strategically invested in Sino United to build a comprehensive "end-to-end" value chain covering R&D, manufacturing, market access, sales, and services; focused on the clinical needs of local customers to collaboratively create distinctive localized solutions in the field of nuclear medicine.

If the “localization” of the past is regarded as localization in its primary stage, then Philips’ moves this year will signify a comprehensive advancement of its China production strategy, with its Chinese manufacturing bases—the core of this transformation—shifting from being “production-driven” to being driven by both “production and innovation.”

The ultimate beneficiaries of this transformation will be the end patients and physicians, with the impact originating from medical device manufacturers and cascading down to every individual at the terminal level.

Intellectual property, as a driver of corporate innovation, is typically handled with caution by multinational corporations. This means that when using imported products, we can only experience the final outcomes, making it difficult to identify flaws underlying those results.

Over the more than three decades since entering the Chinese market, Philips has frequently encountered the aforementioned challenges in its operations. In other words, relying solely on imported equipment to support domestic hospitals fails to fully align with their actual needs.

“Many imaging devices have clinical workflows initially designed for Western hospitals, which align with the characteristics of Western healthcare institutions but may not be suitable for Chinese hospitals,” said Chen Shengyu. “Chinese hospitals handle a very high patient volume. While radiology departments abroad scan at most 10–20 patients per day, this figure can reach 200–300 in China.”

“Conventional cardiac MRI scans typically take more than half an hour, and in many cities, patients must wait days for their MRI appointments. To address this need, our Chinese MRI team has developed coronary artery MRI technology that enables rapid cardiac scanning, producing images in under ten minutes.”

The disparity in patient volume is merely one of many differences between the Chinese and Western medical systems. If these distinct characteristics—such as the profile of Chinese patients and hospital workflow processes—are not differentiated, and if these factors are not re-engineered from the initial design stage, mere incremental modifications to equipment followed by registration with the National Medical Products Administration (NMPA) for certification will not only result in delayed product launches but also lead to the awkward scenario of “market misfit.” This is the so-called “launch time lag” problem frequently criticized within the industry regarding high-end imaging equipment.

Addressing this issue, Chen Shengyu stated, “In the past, multinational corporations’ product line planning was predominantly driven by their global headquarters. However, under Philips’ current organizational structure, each business group has a dedicated ‘China Business Team’ focused on the needs of the Chinese market. This team plans products and solutions from the source based on the actual demands of local customers in China, while also accelerating the simultaneous launch of the latest global products in the Chinese market, thereby achieving an ‘in China, for China’ product roadmap in an end-to-end manner.”

To accomplish such a massive “localization” project, it requires not only meticulous planning but also substantial investment.

Today, Philips has established three innovation centers in China. The innovation center in Suzhou focuses on precision diagnosis and interventional treatment systems; the one in Shenzhen serves the Healthy Living and Connected Care businesses, primarily developing localized products such as patient monitors and oral healthcare products; while the Shanghai innovation center specializes in software development, supporting all business units and serving as an essential component in digitally integrating various elements across solutions.

Leveraging the capabilities of its Innovation Center, Philips will continue to strengthen its local innovation capabilities, significantly accelerate the pace of local innovation, and enhance innovation output. Over the next one to three years, Philips will further enrich its “locally produced” product portfolio, covering all business sectors and the full product line, including high-end products.

At that time, Philips' innovative products will have three sources:

I. Independently developed and manufactured in China, serving the global market:
For instance, the Incisive Aurora CT, which provided immediate support to Leishenshan Hospital under the motto “China Speed, Mission Accomplished,” was independently developed and manufactured by Philips’ Suzhou Medical Imaging Base at the Shenyang Product Innovation Center. It features AI-enabled operation, low-dose scanning, high-definition imaging, a robust hardware platform, and a high-capacity X-ray tube. Furthermore, through collaboration with local ecosystem partners, Philips integrated the “Digital Heart” AI algorithm for cardiac CTA scanning into this CT system, achieving seamless workflow integration. This enables fully automated structured coronary reporting within one minute, delivering precise anatomical information on coronary arteries and cardiac structures.

II. “China-made” products developed and manufactured by leveraging global resources, tailored specifically for Chinese doctors and patients:

For example, the “Yue Xiang Series” ultrasound products launched by Philips in the first quarter, the domestically produced Ingenia Ambition MRI system that disruptively achieves “zero consumption” of liquid helium, and the Hao Ke Spectral CT, which is about to hit the market and is expected to complete registration for its domestically produced version within this year, are all typical examples of joint R&D and manufacturing by Philips China and its global teams. In the field of interventional therapy, the Azurion 3M15, Philips’ latest generation digital flat-panel angiography system, will also complete local certification and roll off the production line at the Suzhou factory this year.

III. Collaborate with partners in the local ecosystem:

Collaborations with domestic enterprises are often employed to achieve “targeted breakthroughs,” such as the upgraded integrated solution “Shenfei Cloud 5.0” developed in partnership with Shenzhou Medical, and the AI-assisted diagnostic ecosystem established through cooperation with Chinese artificial intelligence companies.

Leveraging abundant local resources for R&D, manufacturing, and production, along with the support of its three innovation centers, Philips has established a systematic presence in China. By transitioning from basic to advanced localization, Philips China will truly achieve “local for local” and further expand into “local for global,” serving the world with Chinese innovation and Chinese manufacturing.

In recent years, policy support and the rise of innovative domestic companies have compelled multinational corporations to adopt local production strategies in response. However, for Philips, which has been pursuing localization in China for nearly a decade, this shift has been a natural progression.

However, we must also recognize that in a serious discipline such as medicine, whether equipment is domestically produced may not be the key factor in physicians’ decision-making. More importantly, physicians should use appropriate devices and deliver suitable treatments with the patient at the center of all decisions.

Therefore, Philips’ long-term commitment to the Chinese market—centered on local innovation, local manufacturing, local ecosystems, and localized products and solutions—is particularly significant.

After all, the collective efforts of researchers are always directed toward advancing healthcare standards, and Philips, with its comprehensive “localization” strategy, is likewise progressing along this path.