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Climate for doing business in India positive: Royal Philips’s Frans van Houten

Frans van Houten, CEO of Dutch healthcare technology firm Royal Philips, is in India to meet government officials, a follow-up to his meeting with PM Narendra Modi in the Netherlands in June. Photo: Priyanka Parashar/MintPremium
Frans van Houten, CEO of Dutch healthcare technology firm Royal Philips, is in India to meet government officials, a follow-up to his meeting with PM Narendra Modi in the Netherlands in June. Photo: Priyanka Parashar/Mint

Royal Philips CEO Frans van Houten says business environment in India has changed for the better in the three years since he visited the country in 2014

New Delhi: Frans van Houten, chief executive officer of Dutch healthcare technology company Royal Philips, last visited India three years ago. He said the country has changed for the better in this period. In New Delhi to meet government officials, Houten said it was a follow-up to his meeting with Prime Minister Narendra Modi in the Netherlands in June. “I met several ministers regarding Philips’ activities in healthcare in India and our contribution to improve the lives of millions of people through health technology," he said. Edited excerpts from an interview:

Did you make any specific promises to the Prime Minister in June?

There were no specific promises but there was a clear understanding how India needs more healthcare given the population and the fact that there are many diseases. Philips has been in India for 87 years. It’s a leader globally in health technology with a keen interest in further improving its presence here. We produce healthcare equipment in Pune and Chennai. We have 3,500 engineers in Bengaluru. We think it is one of our most important locations. What Philips has to offer to India is to further enhance the state of healthcare for the over billion people in this country. That was obviously an interest of the discussion. I gave follow-up of all our plans where Philips has a unique mix of both personal health—supporting people to live a healthy life—as well as professional healthcare that is being delivered in hospitals.

What is your growth outlook for India?

It’s in double digit numbers, so it is really very attractive. We are very optimistic about the opportunities here. Today, we employ about 6,000 people here. There’s an increase of 2,000 over the last few years. And if the conditions are right, I would expect this rate of growth to continue and then we could see another 2,000 jobs being added in the next few years.

Are we talking of growth only in the health tech space?

I am talking about the health space. For us, health is both consumer health and professional healthcare. Sometime last year, we had put lighting in a separate company and gave them their own stock listing. So when I talk numbers here, I am talking health technology only. Lighting is a separately listed company now and Philips has a significant share in that company.

It is our choice to focus on health technology and we have also been acquiring companies. We have done 10 acquisitions over the last three years in order to boost our overall portfolio depth in the healthcare segment.

How much did you invest in these acquisitions?

Billions. It started in March 2015 with a company called Volcano. These companies are in the US, Europe and even Asia.

Are you looking at possible acquisitions in India?

I cannot talk about plans we may have. We look (for acquisitions) globally. We also invest in start-ups, we have a venture fund Philips HealthWorks here in India. It is our platform, an incubator for attractive startups. We support startups in the healthcare space to grow.

Why was there a shift in strategy for Philips from consumer durables to health tech?

It was a decision we took some years ago. So over a period of about six years, we transformed the company from a diversified industrial company with lighting, consumer electronics, healthcare, all the way to being a focused health technology company. So we have shifted completely from what most Indians will remember from the good old days. And the reason why we did this is because we are an innovation company. And innovation companies need to put their focus on unmet needs—needs that have yet not been resolved.

We have chosen to say let’s take one of the global unmet needs --health -- and innovate there. Because we believe that technology in health can make healthcare affordable and accessible. We can get breakthroughs and precision medicine.

It’s a disgrace that pregnant women still die because there is still not enough support. Or that infant mortality is high. By innovating and investing in health technology, we believe that we can really change the future of health. In Bengaluru, we do world-class innovations using artificial intelligence, machine learning, predictive clinical decision support systems, that help doctors all over the world to do better diagnosis and to make better decisions.

How important is India today in your global scheme of things?

From an innovation point of view, it is very important. We have Philips investing €1.7 billion in research and development. And that’s about 15,000 people, of which 3,500 are in India. That’s a very significant part. India is one of our top locations for R&D.

India is also an export country; so we export from our factories in Pune and Chennai. From Pune, we export cardio vascular equipment, X-Ray equipment all over the world to 80 countries. It demonstrates that advanced technology can be made in India. We are half a billion euros in revenue here and this is growing fast.

You said you came here three years ago …what has changed in the country?

We see an acceleration of economic growth, we see that public works are advancing. I see the country in a positive mood and momentum. I see definitely a positive attitude towards industry. For example, after my meeting with Mr Modi, the ambassador came to visit my office. Today’s meetings with ministers were very positive. The whole climate for doing business is positive. I look to the future with a lot of confidence.

How do you see India playing out in this journey of innovation?

That is the interesting dichotomy. India has world-class talent, and that is why we employ 6,000 people here. The other part of the dichotomy is that the healthcare needs are very large. That is the unmet need where we have the ambition to contribute to advance the state of healthcare in India. And we do that in several ways—by developing products, by manufacturing, but also through public private partnerships. We have 36 public private partnerships to upgrade hospitals, to bring more state of the art diagnostic technology.

Did you move away from consumer products as there was too much competition in the segment?

Certain product categories become less attractive for us, because as they become mature, they become low cost and hence there is less to invent. There is less to invent in a television, whereas in heath technology, there is a lot to invent. So we wanted to put our innovative power to work where it really matters.

So you sold the business...

The television and consumer electronics was sold to Taiwanese TPV. They can still use the Philips brand name and they pay us a licence fee for that.

But Philips is remembered for its electric shaver...

That is still part of Philips. I want to clarify. I spoke in the beginning about the marriage between personal health and healthcare. If we can keep you healthy, that is better. If you fall sick, you go to the hospital. Both sides, Philips is present. So personal care starts with good personal hygiene. Also good food so that it doesn’t make you fat. So we have the air fryer if you want to have your samosas without fat. There’s air purifier given the air pollution. They are important for your health. We still have a lot of products some of which we make in our Chennai factory.

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