Healthcare Home Based Businesses

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					Philips Home Healthcare Backgrounder

The healthcare market has grown faster than GDP in the Western world for the past three
decades, and at high rates in emerging markets such as China and India, with research
showing that this pattern is expected to continue. Rising healthcare costs present a major
challenge to society, and at Philips we are looking to address these spiralling costs
through continued innovation. One of the key pillars of our strategy is developing home
healthcare solutions, which will not only help to reduce the burden on health systems, but
also help to provide a more comforting and therapeutic environment for care of patients.

 At Philips we put the patient and the care provider at the center of healthcare. In order
to simplify healthcare for our customers and the patients they serve, innovation at Philips
is driven by gaining insight into the needs of the people who use our products. Within
healthcare, this human insight combined with a solid clinical understanding is how we
create integrated offerings across the cycle of care that truly supports clinical excellence
and delivering better patient outcomes at overall lower costs.

As specialists in the fields of cardiology, oncology, critical care and women’s health, we
focus on the fundamental health problems like congestive heart failure, lung and breast
cancers and coronary artery disease for which patients seek treatment. Whether it is in the
hospital or in the home, we seek to improve patient outcomes throughout the entire cycle
of care – from prevention and screening to diagnosis, treatment, monitoring and

Philips Heritage
Philips’ medical activities date back to 1918, when it first introduced a medical X-ray
tube, and 1895, after it bought CHF Muller of Hamburg, which manufactured the first
commercial X-ray tube. By 1933, the company was manufacturing medical X-ray
equipment in Europe and the United States.

Philips Today

Philips is now among the top three in the Medical Systems market alongside General
Electric (GE) and Siemens. Its current activities can be divided in three businesses:
Imaging systems (with total sales of EUR 2.7 billion in 2006), Information, Ultrasound
and Monitoring Solutions (with total sales of EUR 2.2 billion in 2006) Customer Services
(with total sales of EUR 1.8 billion in 2006) and the fast growing Home Healthcare
business, that was established at the end of 2004 and today consists of the combined
businesses of US based companies Lifeline (acquired in 2006), Healthwatch and Raytel
(both acquired in 2007).

Philips has completed a number of acquisitions that have helped to better position the
Company to deliver value to care givers and the patients they serve.
Through these acquisitions, Philips has also been able to expand in the key North
American market, which now accounts for approximately 50 percent of the division’s
sales (Europe and Africa: 29 percent, Asia: 17 percent, Latin America: 4 percent). Philips
has also been able to round out its diagnostic imaging business with patient monitoring,
resuscitation and patient information management products.

Philips healthcare - selected data

2006 financial figures:

      Sales: EUR 6,7 billion
      IFO: EUR 795 million (11.8 percent of sales)
      Employees: 33,000
      Headquarters: Andover, Mass., USA and Best, the Netherlands

 Sales & service operations: In more than 63 countries with more than 6,000 service

Development and manufacturing sites:
The Netherlands: Best and Heerlen. Germany: Hamburg and Böblingen. Finland:
Helsinki. Israel: Haifa. USA: Bothell and Seattle, Washington; Reedsville and
Philadelphia, Pennsylvania; Andover, Massachusetts;
and Oxnard, California; Cleveland, Ohio; Chicago, Illinois; Madison, Wisconsin.

R&D: At 22 Philips sites and over 40 medical and technical institutions.

Home Healthcare - Market trends and consumerization of healthcare

Advancements in technology and medicine are not only enabling people to grow older,
they are enabling people to grow older healthier. The ageing of the population — older
people represent approximately 15% of the population in the developed world today, with
this figure set to double over the next 25 years — provides strong underlying market
growth for home healthcare solutions.

Older people are also becoming increasingly active in managing their own health and
wellness. Looking forward, seniors of the future will be empowered, technologically
savvy healthcare consumers playing an active role in the management of their healthcare.
They will increasingly want and expect their doctor's care at home and on the go.

Cost and quality coupled with the ever larger aging population are fundamental issues
and will certainly determine how healthcare is managed in the future. These societal
trends are already leading to a ‘’consumerization’’ of healthcare in which individuals take
health management into their own hands and where quality of healthcare is associated
with personal choice. Current estimates put the global value of the home healthcare
market at US$140 bn (including labor intensive services).
Philips’ position in Home Healthcare

A core part of Philips’ healthcare strategy is to take a leadership position in the high
growth sector of home healthcare. At Philips we believe that empowered consumers
make smarter healthcare decisions and we provide products and services that improve the
quality of life for at-risk seniors, people with chronic illnesses and their caregivers, by
enabling independent living at home. Our heritage in understanding how consumers
think is combined with our deep clinical knowledge to put us in a unique position to help
address the modern day challenges of healthcare systems in groundbreaking ways.

 Philips has made a number of successful acquisitions in the area of Home Healthcare. In
January 2006, Philips announced the acquisition of Lifeline Systems, the North American
market leader for medical alert services. Its 1,100 employees work closely with
community hospitals, homecare agencies, and referral networks to provide emergency
medical alert services and social support to the at-risk elderly to enhance their
independence and quality of life.

Health Watch and Raytel Cardiac Services were added earlier this year. With the
purchase of Health Watch Holdings, Inc., Lifeline now monitors over 700,000
subscribers. The Senior Living division, which serves the independent and assisted living
market, now services nearly 150,000 residents in senior living facilities. The acquisition
of Raytel, a provider of pacemaker, implanted defibrillator, holter, event monitoring and
anticoagulation monitoring, complements Philips’ portfolio of home healthcare solutions.

Philips Home Healthcare Solutions already offers a range of products that enable the
treatment and monitoring of patients in the surroundings of their personal living space
rather than in a hospital environment. Today, Philips Home Healthcare Solutions
supports almost one million at-risk seniors who are isolated, lonely, at risk, either in their
own homes or in assisted living facilities through the U.S. and Canada.

Philips’ in-hospital business

Philips is a global leader in professional products and services in the hospital, offering a
robust portfolio of medical systems in four key areas:

   1. Imaging Systems – This business consists of X-ray machines, CT, MR,
      Ultrasound and nuclear medicine imaging equipment, used to create images of
      various parts of the body in varied detail for radiologists and cardiologists.
   2. Ultrasound and Monitoring Solutions – This includes Ultrasound imaging, patient
      monitoring systems and cardiac systems.
   3. Information – This includes healthcare informatics and document services.

Customer Services – This includes consultancy, clinical services, education, equipment
financing, asset management and equipment maintenance and repair.

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