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"It's a huge shift," Frans van Houten told Reuters, noting that
around 60 percent of the healthcare technology company's R&D
staff are now focused on software.
"It could rise further. It will not go to 100 percent, because
we will still make products, but you could easily see that the
value-add comes more out of software than hardware."
Philips has repositioned itself as a health business after
spinning off lighting, which has freed up capacity for
acquisitions such as last year's $1.2 billion purchase of blood
vessel imaging firm Volcano.
"M&A will play a more active role," van Houten said during a
visit to London, highlighting informatics, diagnostics, patient
monitoring and homecare as areas for potential deals.
Philips is betting on a new era of connected healthcare as smart
connected devices in hospitals and at home feed data to doctors,
insurers and drugmakers.
It is not alone in targeting this convergence of health and
technology, with traditional medtech groups like Medtronic <MDT.N>
striving to integrate disease care and newcomers, such as Google
parent Alphabet <GOOGL.O>, also investing heavily.
But van Houten believes Philips' existing standing with
consumers can give it an edge.
"Having a consumer brand helps us a lot. We will see more
ambulatory care and there will be a lot of new ways to deliver
healthcare ... and that means consumerism is going to play a
bigger role."
The humble toothbrush may be a start. Philips already sells
connected ones designed to encourage correct brushing in
children and adults. In future, its toothbrushes could include a
sensor to measure disease biomarkers in saliva.
At the other end of the spectrum, the group is developing
integrated solutions for cancer, such as a single workstation
combining genomics, pathology and radiology that can give medics
a complete picture of tumors.
Philips' full reinvention still has a little way to run.
A sale of lighting components business Lumileds to Chinese
buyers was blocked earlier this year by the United States on
security grounds, although van Houten said he still hoped to
clinch a deal before the end of the year.
It also retains 71 percent of Philips Lighting <LIGHT.AS>, which
van Houten said could take a few years to unwind.
(Additional reporting by Toby Sterling in Amsterdam; Editing by
Alexander Smith)
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