GE, Intel invest big in home health care market, challenge Philips
Philips Respironics, the Murrysville-based home of Royal Philips Electronics Home Healthcare Solutions business, soon will face a new, formidable competitor.
Demand for these products by 2012 will grow to more than $10.1 billion and $13.1 billion by 2017, according to The Freedonia Group Inc., a Cleveland-based consulting firm.
The GE-Intel partnership will expand development programs in home health and independent living technologies to include fall prevention, medication compliance, sleep apnea, cardiovascular disease, diabetes and personal wellness monitoring. General Electric in October acquired Vital Signs Inc., a provider of sleep apnea management equipment.
"We think this partnership offers the potential to lower costs by keeping people out of hospitals while giving health professionals the data they need to deliver the best possible care," said GE CEO Jeff Immelt.
Equipment to treat sleep apnea has been a Philips Respironics' mainstay since its founding more than three decades ago by Gerald McGinnis. Philips in 2007 acquired the independent Respironics Inc. for about $5 billion.
Philips Respironics in 2008 had revenue related to sleep and home monitoring products totaling nearly $1.3 billion of its $1.7 billion in total revenue. Home Healthcare CEO Don Spence has projected his unit will experience double-digit growth annually over the next five years.
"I think the partnership has a lot of potential, but Philips, with Respironics, is more established in a number of areas like sleep apnea products," said Bill Martineau, an analyst with The Freedonia Group.
The home health care market is forecast to outpace growth in the hospital business, making it a priority for Philips Electronics and GE. Aging populations will boost medical costs and force governments to move more care into homes, experts said.
"Is there enough business out there for GE and Intel• Certainly, the market is increasing in areas like caring for sleep apnea and diabetes due to the increase in obesity," said Kathy Seeman, executive director of the Pittsburgh office of SeniorBridge, a company that provides in-home care management.
General Electric is the world's largest imaging equipment manufacturer, but sales of such equipment to hospitals have been hurt since 2007 by federal budget cuts that reduced reimbursement for imaging procedures and demand.
The home health care industry is extremely fragmented. The Freedonia Group estimates that nearly 500 companies compete in the home medical equipment market in the United States alone, with a majority specializing in one or two product lines.
The top U.S. competitors, based on 2007 sales, included Philips Respironics, Baxter International, Invacare, Fresenius Medical Care, Cardinal Health, Hospira, Johnson & Johnson, and ResMed. Combined, the eight companies controlled about half domestic demand, or about $3.8 billion.
"The Philips buyout was a good deal for Respironics, as the company can benefit from Philips' global reach, allowing Respironics to sell its products aboard and generate additional growth," said Peter Olofsen, an analyst in Amsterdam who follows Philips for Kepler Capital Markets.
"Respironics is an important business because of its high growth and high margins," Olofsen said. "As growth continues, Respironics will only become more relevant."
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Founder of Z&M Cycle Sales in Hempfield killed in Florida motorcycle crash
- New Florence man charged with killing police officer
- State Supreme Court: Highmark Medicare Advantage members to retain in-network access to UPMC
- Cheyney University’s accreditation in jeopardy because of financial woes
- Baseball America names Pirates as organization of the year
- Lane restrictions announced for portion of Route 28
- Steelers stalled by Seahawks, on outside of AFC wild-card picture
- Steelers players say they support Tomlin’s attempts at deception
- Pedestrian struck on East Crawford Avenue in Connellsville
- Penguins centermen enjoying better faceoff success rate this season
- Regoli won’t seek recount in Westmoreland County judge election