Royal Philips

2014 med tech R&D budget: $1.092 billion
Change from 2013 budget ($1.076 billion): 1.5%
Percent of 2014 segment sales ($10.2 billion): 10.7%

Royal Philips ($PHG) is in the midst of transforming itself from a diversified industrial conglomerate into one focused on HealthTech, which is a marriage of its existing healthcare and consumer businesses.

To that end, the company has already done a series of acquisitions and partnerships to flesh out its aims and its future. It's likely to continue to do a slew more, with its strong cash flow and as it accrues cash from divesting other businesses. All of this will need to be supported by a substantial ongoing R&D budget.

The largest acquisition thus far was the $1.2 billion purchase of catheter-based imaging company Volcano. More recently, it made a 5-year, $25 million partnership deal with the Massachusetts Institute of Technology to develop innovative med tech. And it's also done collaborations to create a series of more specific innovations including a wearable COPD diagnostic device, a handheld to test for neuropsychiatric disorders and a brain-wave app to help immobilized patients communicate.

CEO Frans Van Houten expects Philips will be at the forefront of emerging health technology sectors including consumer wellness, diagnostics, at-home healthcare and minimally invasive surgery. The HealthTech focus is being created by combining the company's prior Healthcare and Consumer Lifestyle businesses.

"I see major opportunities in HealthTech, because of profound trends in healthcare: a rapidly increasing demand for integrated systems, driven by pressures on health systems to shift to value-based business models in relation to rising costs of care due to an aging population and the increasing number of chronic diseases," van Houten told Philips shareholders in early May. -- Stacy Lawrence​ (email | Twitter)

For more:
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