Munich, Frankfurt Siemens Healthineers want to accelerate their growth in the coming years. “We are doing pioneering work in the healthcare sector,” said Healthineers boss Bernd Montag on Wednesday at a capital market day and raised the medium-term targets for the coming years.
Montag now wants to usher in the next big step with the “New Ambition” strategy. “It’s about a steadily increasing increase in groundbreaking innovations and accelerated growth,” said Montag.
Specifically, the Healthineers want to increase sales on a comparable basis by six to eight percent per year with future topics such as precision therapy, digitization and the fight against cancer in the financial years 2023 to 2025. Adjusted earnings per share are expected to increase by twelve to 15 percent.
So far, the Healthineers had comparable sales growth of at least five percent per year and growth of around ten percent in adjusted earnings per share per year in the medium-term planning. The second strategic phase “Upgrading” has now been completed a year earlier than planned.
World market for medical technology is growing vigorously
Siemens’ growth plans are in line with the trend in the industry. The market research company Frost & Sullivan predicts that the world market for medical technology will grow by an average of more than six percent per year up to 2025 – calculated conservatively.
In the optimistic scenario, the market could even increase by more than seven percent per year to around 616 billion dollars. Minimally invasive medicine and cardiology are currently among the fastest growing areas, with growth rates of more than ten percent. Orthopedics and imaging procedures also grew strongly this year, with rates of more than eight percent.
The Healthineers have grown by an average of almost six percent a year over the past three years. The company benefited from the pandemic in the 2020/21 financial year (September 30). Sales rose by a comparable 19 percent to 18 billion euros for the first time. The company sold rapid antigen tests for more than one billion euros.
This boom is likely to subside in the next few quarters. But Monday expects that as a lesson from the pandemic, global spending on health will increase. “The health industry is a growth market – especially now,” he said when he first announced the increase in medium-term goals in an interview with Handelsblatt. During the crisis, societies learned that a functioning health system is more than a cost factor.
Business with digital health services is growing
Experts see particular growth opportunities in the field of digital offers. “We expect a high level of dynamism in the market, which will also result in mergers and acquisitions in the coming years,” said Roland Berger consultant Karsten Neumann. According to calculations by the consultants, the market for digital health offers in Europe alone is likely to grow by half to 232 billion euros by 2025.
Siemens Healthineers see good opportunities to particularly benefit from this. The company is traditionally the world market leader in imaging and is currently rolling out the new Atellica diagnostics platform. The start was bumpy. But once the basis is in place with the customer, there will be good sales with the ingredients.
In diagnostic imaging, Siemens has high hopes for newly developed devices: On the one hand, the company has developed the world’s first quantum-counting CT scanner in more than 15 years, which is now approved for clinical use in the USA and Europe.
Compared to conventional computer tomographs, the quantum counting technology offers a higher resolution with a greatly reduced radiation dose. The new devices generate more usable data and, for example, enable the lungs to be scanned at high speed so that the patient no longer has to hold their breath. According to Healthineers, more than 20 systems have already been installed and used in everyday clinical practice.
Whole-body MRI is becoming the hope for sales
Another new introduction is a more cost-effective whole-body MRI scanner, which should enable better access to magnetic resonance tomography worldwide. Calculated over the entire life cycle, the new scanner should be up to 30 percent cheaper than conventional devices. According to Healthineers, 50 percent of the world’s population is excluded from MRI imaging.
The new strategy should focus on combating serious diseases such as cancer and cardiovascular diseases and enabling more efficient processes in the healthcare system, for example through automation. In addition, more people in the world should be given access to affordable, high-quality health care.
Specifically, imaging is expected to grow by five to eight percent annually as part of the new medium-term strategy. The diagnostics division is expected to grow by four to six percent, the Advanced Therapies unit, which includes minimally invasive procedures and imaging-supported operations, by five to eight percent.
CEO Montag has high hopes for US cancer therapy specialist Varian, which the Healthineers acquired for more than $ 16 billion in the largest acquisition in the company’s history. He raised the synergy target from 300 to more than 350 million euros and announced annual sales growth of nine to twelve percent at Varian. The Varian margin is expected to increase to well over 20 percent by 2025.
Corona effects are diminishing
In its new financial framework, Healthineers also plans to spend eight to nine percent of sales on research and development and continue to distribute 50 to 60 percent of net profit.
In the current fiscal year 2021/22, Siemens Healthineers is exceptionally expecting only zero to two percent sales growth on a comparable basis. This puts medical technology at the bottom of the list in the Siemens group, while the other divisions, digital industries, intelligent infrastructure and rail technology, forecast growth of five to eight percent.
However, this is primarily due to the fact that the short-term corona effects are likely to be smaller. If the sales with quick tests are excluded, the company expects an increase in sales of five to seven percent. The sales without the rapid test effect are also the starting point for the promised growth in the next few years.
The new strategy is to be implemented by a newly formed management team. Elisabeth Staudinger, who is responsible for Asia, is promoted to the top management body. Christoph Zindel, on the other hand, will be leaving at the end of March for personal reasons. The 60-year-old is responsible for the ultrasound business, the sale of which has been speculated over and over again.
The Healthineers share was launched on the stock exchange in spring 2018 at an issue price of 28 euros. This year, the price has increased significantly more than the Dax by more than 40 percent to around 60 euros.
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