Rank: #4 (Last year: #4) €22.36 Billion ($24.96B)
Prior Fiscal: €21.68 Billion
Percentage Change: +3.1%
R&D Expenditure: €1.91B
Best FY24 Quarter: Q4 €6.32B
Latest Quarter: Q2 €5.9B
No. of Employees: 72,000
Global Headquarters: Erlangen, Germany

Meet Gerda, the brave little giraffe.

Gerda likes to zip around the jungle all day. She also likes green Jell-O.

Gerda has a lot of energy. She cannot stay still for very long.

Gerda only slows down when her mother makes Jell-O. Then she’s fixed to her spot.

Even so, only briefly. While waiting for her Jell-O dinner one day, Gerda becomes overexcited and races around the kitchen. She runs into her mother, breaking her pearl necklace.

Gerda’s mother just laughs and smiles. She tells Gerda, “Now please slow down for a while!”

But Gerda still doesn’t slow down.

Not until her tummy starts to hurt. It hurts so much, in fact, it makes Gerda cry.

Gerda’s mother takes the little giraffe to see Dr. Grape (an ape). He tells Gerda about a magical tube that will help him see inside her tummy.

Gerda sees the tube. It shines like metal, like a silver ring.

“Gerda, don’t be afraid!” Dr. Grape says. “Trust me. Soon, you’ll feel better. You’ll see!”

Gerda’s mother reads her a book about the magic tube. It helps ease her concerns about it.

Gerda is ready. With her teddy, she enters the magic tube and stays very still. Sometimes, she holds her breath. Inside the tube, Gerda is as quiet as a mouse as she imagines jungle adventures near her house.

The magic tube wasn’t scary—Dr. Grape was right. It helped him see inside Gerda’s tummy, so bright!

The pictures taken by the magic tube help Dr. Grape find the cause of Gerda’s tummyache. It is her mother’s pearls.

Dr. Grape tells Gerda the pearls will come out on their own when she sits on the toilet inside her home. He gives her a medal for braving the magic tube.

Gerda and her mother return to the jungle; when the pearls come out, she once again tumbles.

Back with her friends, Gerda jumps and runs. The little giraffe is back having fun.

Gerda’s magic tube experience is purely fiction, of course, an attempt by the world’s largest medical imaging manufacturer to allay children’s fears about radiological exams.

About 10% of all radiological tests are administered to children, who are easily unnerved by the unfamiliar environment, noises, and intimidating-looking equipment. Their anxieties, concerns, and inability to lie still for extended periods make children less than ideal imaging patients; young kids who may not fully understand the testing process are often sedated to avoid repeat examinations, which disrupt workflows and inflate wait times.

To help young patients better understand and prepare for radiological exams, Siemens Healthineers designers and researchers worked with various stakeholders—including children aged four to nine—to develop a holistic approach to pediatric radiology preparation that encourages kids to approach the experience with confidence and positivity.

Ergo, Gerda the Brave Giraffe.

Boasting her own Magic Song, Gerda appears in both audiobooks and printed books about the different types of radiological exams—computed tomography (CT), magnetic resonance imaging (MRI), and fluoroscopy.

“When developing our concept, we felt that it was particularly important to get in touch with our target group and all stakeholders—parents, children, radiologists, play therapists, and radiology technologists,” Alexandra Zahn, senior key expert at Siemens Healthineers, said in an online feature about the Gerda book concept. “Children’s needs have to be considered not only during the examination, but instead much earlier. Children are not small adults.”

Indeed, they are not, but children nevertheless are a market force with which to be reckoned. Consider the global pediatric imaging sector, for example: Currently worth more than $9 billion, the market is forecast to grow 7.4% annually over the next five years due to increasing cases of cancer and other chronic diseases in kids and rising demand for imaging technology that can diagnose multiple diseases, according to Grand View data.

Pediatrics’ spectral opposite is impacting imaging market growth as well, namely through diagnostics and treatments for age-related conditions. Other determinants include technological advancements and product innovation, the latter of which played a central role in boosting Siemens Healthineers’ Imaging segment revenue in FY24. The company introduced a half-dozen new products over the course of its financial year (ended Sept. 30, 2024), starting with the Somatom Pro.Pulse system dual-source computed tomography (CT) scanner. Expanding the clinical reach of the Siemens’ dual-source technology, the Somatom Pro.Pulse simplifies scanner operations through its integrated 3D camera and myExam Companion, a tool that creates personalized patient scans. The system uses up to 20% less power than previous dual-source iterations, and offers more accessibility for smaller facilities, rural clinics, and outpatient diagnostic centers. Somatom Pro.Pulse’s improved cooling system and more efficient power consumption also makes it more cost-effective to operate, according to the company.

ANALYST INSIGHTS: “While Siemens is executing well on synergies from its Varian acquisition, the question becomes can Siemens continue to drive aggressive growth in diagnostic imaging and oncology organically or will they need to engage in M&A to strengthen their future growth and market position?”

—Dave Sheppard, co-founder and managing director, MedWorld Advisors

Next up was the Acuson Maple Workhorse Ultrasound system, a portable, battery-powered solution for various use cases and clinical settings. Cleared by the U.S. Food and Drug Administration (FDA) in November 2023, the Acuson Maple supports 15 transducers, provides up to 75 minutes of unplugged (battery-free) scanning time, and has 25 options for improved usability and workflow. Its various AI tools for mitigating repetitive tasks and streamlining radiology productivity include eSie Measure and Auto OB. The former automates cardiac measurements, reduces keystrokes by up to 44%, and shortens routine echocardiography exam time by up to five minutes. Auto OB, meanwhile, automatically calculates a fetus’s age and weight, reducing overall measurement time by up to 24%.

Siemens’ Magnetom Flow tenders some of the same perks as the Acuson Maple—quicker scans and streamlined workflows—but also provides the healthcare industry with an environmentally sustainable MRI alternative. Its DryCool technology reduces the need for liquid helium from a 1,500-liter maximum to 0.7 liters, which helps reduce costs and saves resources, Siemens reports.

Debuting in February 2024, Magnetom Flow is the company’s first 1.5 Tesla platform for MRI with a closed helium circuit and no quench pipe. The system’s improved Eco Gradient Mode automatically switches off energy-intensive components when they are not needed; with Eco Power Mode and its helium-free technology, Magnetom Flow can save users a further 30% in cooling capacity overnight.

In addition to its energy- and cost-saving amenities, the system is equipped with extensive artificial intelligence (AI)-supported image reconstruction. Measurement times can be reduced by up to 50% while image quality is doubled.

“The world’s population is growing and with it the need for MRI exams. However, the simultaneous rise in cost pressure and lack of personnel make it difficult to operate MRI economically,” Siemens Healthineers Magnetic Resonance Head Andreas Schneck said during the Magnetom Flow’s debut at the European Congress of Radiology 2024. “The Magnetom Flow platform provides the answer to the challenges facing healthcare systems. It increases productivity in routine clinical practice due to its high degree of automation and makes a decisive contribution to sustainability with the DryCool technology.”

That contribution is likely to grow thenceforth with a new DryCool technology production facility in North Oxfordshire, England. Construction on the 56,000-square-meter site began last spring and is slated to be completed by 2030; the £250 million carbon-neutral facility will include a research and development hub for designing and manufacturing some of the world’s smallest and most lightweight whole-body scanners (DryCool machines are less than 2 meters tall, weigh 3.7 tons, and comprise a maximum 25-meter overall footprint).

“MRI technology plays a vital role in diagnosing disease, helping patients to get healthy and stay healthy,” Siemens Healthineers CEO Bernd Montag said in a news release. “As a world leader in medical imaging, we are proud to open the next chapter of our history here in Oxford. This factory will be the global centre for our low-helium magnet technology, meaning we consume far less of a scarce natural resource and enable access to MRIs for many more patients.”

Siemens enabled better patient access to intraoperative and ultrasound imaging last spring with the introduction of an automated, self-navigating C-arm system and new cardiology applications for its Acuson Sequoia Ultrasound system.

The C-arm system—Ciartic Move—is equipped with holonomic, omnidirectional wheels that facilitate easy, accurate positioning and precise movements in tight spaces. The system is navigable via remote control to predefined positions (storing up to 12 process-specific 2D or 3D C-arm positions and the associated image parameters), and its active sensing technology ensures collision protection for greater safety. Touch-sense handles on the back and detector improve steering, and its automated adjustments can save time, enhance precision, and potentially reduce imaging duration. In addition, the Ciartic Move can be operated remotely by one person, even from sterile areas.

The Acuson Sequoia’s new AI-powered cardiology tools include AI Measure, which automatically takes the necessary measurements for routine echocardiography exams, and 2D HeartAI, designed to improve exam efficiency and workflow during cardiac strain imaging. The latter solution—either with or without contrast—streamlines the diagnostic capabilities of ejection fraction evaluation and cardiac strain analysis, reducing unnecessary follow-up exams, Siemens said.

Updated software enables clinicians to generate a wall motion scoring report for stress echo, which are used to assess cardiac function at various stress levels, reducing needless follow-up and supporting presurgical cardiac evaluation.

Along with Acuson Sequoia’s new AI-powered cardiology tools is a new Z6T 4D TEE transducer that facilitates biplane imaging, allowing clinicians to view multiple scan planes simultaneously for faster, more accurate diagnoses. A redesigned 5V1 transthoracic transducer addresses the difficulties in imaging patients with high body mass indexes.

“Siemens Healthineers is committed to pioneering ultrasound technology that transforms clinical care and improves patient outcomes,” Daniel Frisch, global head of Radiology Ultrasound at Siemens Healthineers, said upon the new cardiology tools’ release. “Adding these cardiology applications with artificial intelligence-powered features and our new 4D TEE transducer to the Acuson Sequoia will benefit clinicians who need the highest level of performance in nearly every clinical scenario.”

Clinicians can also turn to the Biograph Trinion for those high performance levels. Unveiled last June, the positive emission tomography/computed tomography (PET/CT) scanner is equipped with a new scalable, air-cooled digital detector based on lutetium oxyorthosilicate crystal elements. The detector delivers high spatial resolution and an ultrafast time-of-flight performance of 239 ps for small lesion detectability and effective sensitivity up to 128 cps/kBq, enabling fast scans and low patient radiation doses.

CT technology migrated from Siemens’ SOMATOM go. platform provides fast, low-dose CT scanning with up to 128 slices. The scanner’s single, integrated platform produces consistent PET, CT, and post-processing workflows on one system without the need for a separate CT acquisition system or post-processing solution. The Biograph Trinion workflow is powered by AI, and its myExam Companion intelligent user interface automates tasks and guides users through each exam step.

The air-cooling apparatus is easier to install than the chiller required for a water-cooled PET/CT scanner, and the system’s compact footprint allows it to fit into traditional PET/CT rooms. Unlike traditional PET/CT scanners that necessitate three dedicated rooms for the workstation, scanner, and computer equipment, the Biography Trinion integrates its computer technology inside the system gantry, eliminating the need for an equipment/utility room.

The energy-efficient scanner has a smart power-save mode that deactivates the system overnight and automatically powers it up the next morning without disrupting workflow, for energy savings up to 46%, Siemens noted.

“With the Biograph Trinion, Siemens Healthineers is proud to offer customers a high-performance PET/CT scanner that delivers the precision and speed needed for clinical demands,” James Williams, Ph.D., head of Molecular Imaging at Siemens Healthineers, said in a press release. “This new system is designed to be user- and patient-focused as well as a sustainable investment in terms of reduced installation and operational costs and easy, on-site scalability.”

Such an investment is likely to pay off for Siemens (literally and figuratively) as it strives to help the medical imaging sector become more environmentally sustainable. The milestone would certainly boost the financial health of the company’s Imaging segment, which comprised more than half of Siemens’ total revenue in FY24.

Imaging segment sales climbed 3.6% to €12.3 billion, driven by strong upticks in molecular imaging and MRI. Overall growth was tempered by market weakness in China from that country’s healthcare anti-corruption campaign.

The year-long crackdown on kickbacks and bribes impacted Siemens’ total revenue as well, limiting growth to 3.1% (4.7% on a comparable basis). Fluctuating currency exchange rates also hampered the sales tally (€22.36 billion) by 2 percentage points, according to the company.

Gross profit and net income fared better than total sales: Gross profit jumped 9.8% to €8.47 billion, and net income surged 28.4% to €1.95 billion while diluted EPS mushroomed 29% to €1.73.

“Our innovative strength and our unique portfolio as well as [our] unique set of capabilities has driven continued market share gains for years already and again in 2024,” Montag told analysts during a Q4/full-year 2024 earnings call last November. “We achieved our group outlook despite significant headwinds from China on growth and margins that were much more intense and longer-lasting than we assumed initially. In 2024, we again introduced smart innovations to the market, essentially across the board…”

Almost across the board.

Smart innovations were lacking in the Advanced Therapies segment, but the deficiency did not impact sales. Total proceeds rose 2.7% to €2.07 billion, bolstered by strong performances in the Americas, EMEA, Asia Pacific, and Japan.

The Varian segment tripled Advanced Therapies’ growth, increasing sales 8.6% (9.5% on a comparable basis) to €3.86 billion thanks to higher proceeds from EMEA, the Americas, and Asia-Pacific/Japan.

Also contributing to Varian’s first-place financial finish was the February 2024 FDA 510(k) clearance of the company’s HyperSight imaging solution for its TrueBeam and Edge radiotherapy systems.

Originally launched in 2022 on Varian’s Ethos and Halcyon therapy systems, HyperSight imaging provides clinicians with high-quality images during patients’ daily radiation treatments. It helps improve the ability to target tumor volumes more precisely and spare healthy tissue for patients undergoing radiation therapy.

HyperSight’s addition to Varian’s linear accelerator line enables the company to produce images that deliver the Hounsfield Unit accuracy necessary for treatment planning directly on the acquired conebeam images. Thus, this technology can be used for offline adaptive planning to adjust for anatomical changes to the tumor and surrounding organs without necessitating an additional trip to a separate CT scanner.

Siemens said HyperSight on TrueBeam and Edge acquires images with a 50% faster gantry rotation, significantly reducing acquisition time as opposed to traditional CBCT scans that can take up to 60 seconds depending on the anatomical site being scanned.

“As a Siemens Healthineers company, we are pioneering innovative solutions to advance radiotherapy and connect the power of imaging, both inside and outside the treatment room,” Arthur Kaindl, head of Varian, stated upon the HyperSight’s FDA clearance. “We are excited to expand HyperSight imaging technology to our TrueBeam and Edge platforms and further collaborate with our clinical partners to provide an integrated portfolio that connects the dots along the cancer care continuum.”

As Siemens busied itself connecting those dots, though, it fully disconnected from a once-thriving diagnostics division. Citing a significant drop in molecular testing demand, Siemens closed the Fast Track Diagnostics division last September.

The unit provided polymerase chain reaction testing products mostly to Europe but the market for those assays has shrunk considerably since the pandemic entered an endemic phase. Siemens decided to close the unit after conducting a strategic review of its portfolio and market opportunities, and follows a wider restructuring of its Diagnostics segment, which lost €121 million in COVID-19 antigen test sales in fiscal 2024 compared with the previous year.

That loss, combined with waning rapid antigen test needs, reduced the Diagnostic segment’s FY24 sales total by 2.5%, to €4.42 billion. Excluding rapid antigen tests, revenue was slightly below fiscal 2023’s level on a comparable basis.

Diagnostics’ financial performance was largely unaffected by the assorted product innovations and collaborations the unit publicized during the fiscal year. Leading off was the October 2023 pact Siemens Healthineers formed with the Global Fund to accelerate the adoption of AI in in X-rays for tuberculosis diagnoses.

Less than two months later, the company unveiled the Atellica UAS 60 Analyzer, a compact urine sediment analysis solution that automates a laboratory’s urinalysis workflow with full field-of-view digital imaging, like manual microscopy.

Then, over the course of three consecutive months last spring, Siemens Healthineers announced a sales agreement, introduced new inflammation screening assays, and gained CE mark approval for multiple sclerosis testing.

Siemens’ April 2024 alliance with Japanese firm Sysmex Corporation enabled the two companies to sell their combined range of hemostasis testing systems to U.S. and EU laboratories (under their own brands).

Within seven weeks of the Sysmex collaboration announcement, Siemens introduced four new blood biomarkers to its inflammation testing panel, expanding the capabilities of the IMMULITE 2000/2000 XPi Immunoassay System. And finally, in mid-June, the company received CE mark approval for a blood test that can predict the risk of recurrence among patients with relapsing multiple sclerosis.

€21.68 Billion ($22.94 Billion)
Prior Fiscal: €21.71 Billion
Percentage Change: +7.9%
R&D Expenditure: €1.87B
Best FY23 Quarter: Q4 €6.06B
Latest Quarter: Q2 €5.43B
No. of Employees: 15,000

In May 2023, Siemens Healthineers opened a new Education & Development Center in Erlangen, Germany, where its headquarters resides.

The open-plan building has space for 240 trainees and integrated degree program participants in Erlangen and Forchheim. The new center houses training courses for customers and in-house specialists. Users can also be trained daily on medical devices.

An extension of the company’s existing education and training center, Erlangen is one of its three global training centers and a central location for education in Germany. It has a focus on IT, electronics, and business administration.

Siemens Healthineers said its investment in in-house training is part of its strategy to counteract the shortage of skilled workers. The building’s construction period was three years, with an investment of about €60 million. It has 11,000 square meters of space and has 10 fully functional MRI scanners and two angiography systems. It also houses a latest-generation photon-counting CT and five training rooms for virtual courses with cameras and state-of-the-art transmission technology. The company offers digital training support with VR glasses or simulators.

The training areas on the building’s upper floors include five electrical laboratories, a technical project room, and four additional training rooms.

“We want to continue to be one of the most attractive employers in the region and in Germany,” Elisabeth Staudinger, member of the Managing Board of Siemens Healthineers, said at the official opening. “Lifelong learning for our employees is our focus. That’s why we invest in high-quality training opportunities in an appealing working environment that benefits customers and employees alike. Erlangen and the region is and will remain a global hotspot for innovative medical technology.”

Siemens Healthineers posted €21.68 billion of revenue in its fiscal year 2023 (ended Sept. 30), rising 7.9% over the previous year. The increase was driven by double-digit growth in the Varian and Imaging segments and supported by positive effects from price increases. This was offset by a significant drop in Diagnostics proceeds due to the rapid COVID-19 antigen test business that ended in the fourth quarter.

Adjusted EBIT shrank 16% from the prior year to €3.08 billion in fiscal year 2023. This yielded an adjusted EBIT margin of 14.2%, compared to last year’s 16.8%. This was attributed to clearly lower earnings contributions from rapid COVID-19 antigen tests. Costs for the transformation of the Diagnostics segment also had a negative impact.

The company’s Imaging segment garnered €11.8 billion of revenue in fiscal 2023, rising 8.9% from the prior year. The company reported revenues for the business were sharply higher in the EMEA region, bolstered by continuing EU investment programs and somewhat tempered by the war in Ukraine. The segment’s adjusted EBIT margin was 21.7%, higher than the prior-year level of 20.4%.

Molecular Imaging generated sharp growth according to the company, with Magnetic Resonance showing significant growth. Supply chain stabilization gradually lowered lead times for equipment delivery and installation so orders could be filled to the company’s accustomed extent.

Higher revenues were generated on sales of both equipment and product-related services thanks to the high level of order backlogs in the market resulting from demand catch-up effects and increased investment in diagnostic imaging equipment, in reaction to announced price hikes.

In fiscal 2023 Siemens Healthineers and CommonSpirit Health established Healthcare Technology Management to acquire all the shares in Block Imaging for $171 million. The company provides refurbished medical imaging equipment, service, and parts across all modalities and manufacturers. It allowed Siemens to have sustainable offerings for imaging equipment and to support growing U.S. hospital and other care sites’ demand for multi-vendor imaging parts and imaging equipment services.

In August’s annual European Society of Cardiology (ESC) meeting, the company unveiled Acuson Origin. The dedicated cardiovascular ultrasound has a suite of AI-powered features for measurements, view recognition, and imaging assistance. The system also touts automated contouring and quantification of all four heart chambers without needing an ECG thanks to its 2D and 4D HeartAI features. AI Assist, a new, AI-driven feature specific to transthoracic echocardiography, recognizes cardiac structures the moment the transducer makes contact with the chest wall.

September’s European Society of Breast Imaging congress saw the release of Mammomat B.brilliant, a mammography system with wide-angle tomosynthesis that delivers images in five seconds. Mammomat B.brilliant is the first Siemens Healthineers device with PlatinumTomo, the combination of wide-angle (50-degree) tomosynthesis, a new detector, the new flying focus spot tube, and Premia AI reconstruction. Flying focal spot prevents blurring caused by tube movements during tomosynthesis.

The Somatom Pro.Pulse dual-source CT was revealed in November. Dual-source CT allows for very high temporal resolution, which is important for CT scans of the heart and limiting image artifacts from breathing or the heart’s motion. The CT scanner’s myExam Companion also combines patient data like gender, height, and age, and collects heart rate and breath-hold capabilities. The scanner then optimizes scan parameters and creates a patient-specific protocol.

The Acuson Maple ultrasound was also introduced in November. It’s designed for clinicians needing a workhorse ultrasound to support a variety of use cases. It supports 15 transducers and has 25 advanced features that boost usability and workflow—including an Auto OB feature that leverages machine learning to automatically calculate fetus age and weight. For cardiac imaging, Acuson Maple’s eSie Measure uses machine learning to automatically make cardiac measurements during an echocardiography exam.

Siemens’ Diagnostics business was the only one to post a revenue decline, dropping 9% to €4.52 billion. The EMEA, Americas, and Asia-Pacific Japan regions declined due to the rapid COVID-19 antigen test business, which ended in the company’s Q4 2023. Very strong revenue decline was seen in China because of lockdowns and increased COVID-19 infection rates at the beginning of the fiscal year.

The adjusted EBIT margin of the Diagnostics segment was down 2.6% below the prior-year level of 15.4%, mainly due to the lower earnings contributions from sales of rapid COVID-19 antigen tests.

Siemens began a multi-year agreement valued at more than €200 million with Unilabs in February 2023. Unilabs invested in the company’s technology and acquired over 400 laboratory analyzers to improve its lab infrastructure. In the first years, Siemens will install high- and mid-volume immunoassay and clinical chemistry analyzers like the Atellica Solution and Atellica CI 1900, sample handlers, hemostasis analyzers, and automation solutions.

The Atellica HEMA 570 analyzer and Atellica HEMA 580 analyzer for high-volume hematology testing were launched in May. Both offer integrated automation and intelligence to boost workflow efficiency and produce results faster. They can produce a throughput of up to 120 tests per hour and have advanced data management to mitigate the expertise gap and empower staff of all skill levels during result interpretation.

HEMA 570 measures 43 parameters with an additional 12 on the HEMA 580, including immature red blood cell indicators relevant to certain patient populations, and an optical-based platelet count that reduces analytical interferences found in other detection technologies. Up to six of either analyzer can be integrated together to maximize throughput with intelligent, automated workload balancing and reflexive testing.

The Atellica CI analyzer earned FDA clearance in July. The analyzer enables standalone labs and satellite labs of wider health networks to have the same reagents, consumables, and intelligent software as the flagship Atellica, condensed into a 1.9-square-meter footprint ideal for smaller labs. Random access sampling, micro-volume aspiration, and automatic maintenance and quality control scheduling let labs to deliver more predictable sample turnaround times. Chemistry and immunoassay engines run independently so throughput isn’t compromised if one of the two needs to stop.

December saw the announcement of the Atellica UAS 60 analyzer for urine sediment analysis. It can automate urinalysis workflow with full field-of-view digital imaging that replicates manual microscopy and reduces specimen handling by digitizing urine sediment microscopy for lab professionals to review. It uses neural network-based image post-processing to identify particles and an auto image evaluation module digitally tags urine sediment particles for automatic identification. A live-view mode helps visualize movement and automatic bacterial subcategorization helps identify chronic kidney disease and urinary tract infections.

Siemens’ Varian business generated €3.56 billion in fiscal 2023, rising 13.8% over the prior year. The Americas and EMEA regions showed sharp comparable revenue growth, the China region significant growth, and Asia-Pacific Japan region very strong growth compared to the prior year, the company reported. National investment programs in Spain and Italy helped provoke the growth as well.

Varian’s adjusted EBIT margin of 15.1% was below the prior-year level of 15.9% because of negative currency effects. Earnings contributions from the positive revenue development strengthened the margin and adjusted EBIT rose to €538 million.

The Isolis single-use, disposable cryoprobe was introduced in May. It features a 2.1 mm/14-gauge shaft and sharp probe tip for smooth, accurate placement. It’s also the first cryoprobe that has optional integration with the Siemens Healthineers myNeedle Laser guidance system developed for image-guided interventional procedures. myNeedle Laser guides cryoprobe insertion and trajectory while using imaging to monitor placement progress.

September saw Varian’s acquisition of Aspekt Solutions for $94 million. Aspekt offers medical physics, dosimetry, and strategy consultation services. It was added to Varian’s Advanced Oncology Solutions (AOS) business, providing medical physics staffing (especially in dosimetry) and support services to U.S. hospitals, imaging centers, and private practices. Aspekt’s focus is on diagnosis and treatment of cancer.

The Advanced Therapies business collected €2.02 billion in revenue in the company’s fiscal year 2023, growing 5.2% over the prior year. Siemens Healthineers reported sharp comparable revenue growth in China, very strong growth in EMEA, strong growth in Asia-Pacific Japan, and slight comparable growth in the Americas.

Against this backdrop, Advanced Therapies’ adjusted EBIT margin of 15.4% was above the previous year’s level of 12.5% Positive currency effects contributed to this, with adjusted EBIT rising to €311 million.

€21.71 Billion ($21.13 Billion)
Prior Fiscal: €18.00 Billion
Percentage Change: +20.7%
R&D Expenditure: €1.78B
Best FY22 Quarter: Q4 €6.0B
Latest Quarter: Q2 €5.35B
No. of Employees: 69,500

Medical device companies use several sources for their research and development strategies. Ideas can come from the company’s internal R&D team, an outsourced design partner, or other sources of innovation. Universities are often fertile breeding ground for innovative medical technologies. Siemens Healthineers began or expanded several partnerships with universities in 2022.

Siemens expanded a strategic partnership with Finland’s Oulu University Hospital in April, extending it for the next 10 years. The existing radiotherapy collaboration aimed to jointly expand and modernize the radiology department. The new Value Partnership includes supply, installation, and maintenance of medical imaging technology and software, training, further staff education, a flexible financing concept, and consulting services. Also part of the work’s scope is a joint research approach to develop new solutions and treatment methods.

In June, Siemens and its Varian subsidiary began a five-year alliance with Ohio State University Wexner Medical Center. Siemens will offer its comprehensive technology and services, while the university and medical center will contribute research initiatives from scientists, physicians, and patients. The initiative includes outpatient expansion of The Ohio State University Comprehensive Cancer Center – Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. Outpatient Care West Campus, scheduled to open in 2023, will feature cutting-edge imaging and treatment technology made by Siemens Healthineers, including Varian—including proton therapy (ProBeam 360o), radiosurgery (Edge radiosurgery system), and oncology-focused interventional radiology (Artis Q ceiling). West Campus will build on this technology, including the current treatment planning capabilities (Eclipse), to provide advanced diagnostic and treatment planning tools, including Digital PET (Biograph Vision 600) and dual-source dual-energy CT (Somatom Drive and Somatom Force). The two will also co-develop advanced cardiac imaging methods and vascular robotics using the Corindus CorPath GRX system.

On Halloween, Siemens announced a 10-year Value Partnership agreement with the University of Miami Health System (UHealth). UHealth will receive the latest equipment from Siemens Healthineers and Varian to boost diagnostic and therapeutic treatments. The partnership will also include educational and service offerings, digital health technology, and consulting services. The two aim to develop new clinical and operational strategies, and Siemens technology will be used to train the next generation of physicians.

Siemens Healthineers accrued €21.71 billion ($21.13 billion) in revenue in fiscal year 2022, growing 20.7% in terms of Euros, 0.8% when converted to U.S. dollars. Comparable revenue growth was 3.8% when contribution from rapid COVID-19 antigen tests was excluded. Positive portfolio effects related to the Varian acquisition rose about 9%.

ANALYST INSIGHTS: Since the Varian acquisition, the “Healthineers” have been surprisingly quiet on the M&A front for the past few years. Given they also had some “windfall” COVID diagnostics revenue, it might have been a good use of that cash to inorganically add to their innovation pipeline and key business units. In the meantime, Siemens (with Varian in its camp) is quietly building an effective precision medicine platform that may have surprising upside in the years to come.

—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors

In EMEA, revenue slipped 1.6% on a comparable basis due to lower demand for rapid COVID-19 antigen tests. Germany was hit particularly hard with a 21.1% revenue drop. Americas revenue swelled 12.9% on a comparable basis due to sharp Diagnostics segment growth, with Imaging and Advanced Therapies following suit. U.S. revenue grew 13.2% on a comparable basis thanks to rapid COVID-19 antigen test approved for sale in FY22. The rapid tests were also the main driver of a 7% comparable revenue increase in Asia and Australia.

The company’s Imaging segment proceeds rose 11.8% to €10.98 billion, with both magnetic resonance and computed tomography showing significant growth. Comparable growth was quite strong in the Americas region, strong in the EMEA region, and moderate in the Asia- Australia region.

In February 2022, the company introduced Artis icono bioplane, an angiography system with detectors tailored in size for use in the cath lab. It allows simple C-arm positioning and regulates X-ray exposure to consider contrast-to-noise ratios. Also, it removes the need for exams with a pressure wire to determine stenosis relevance and if a stent must be placed. In addition, the system can perform fusion imaging, overlaying angiography images with live ultrasound images.

Siemens unveiled the Artis icono biplane angiography system in February as well. Simple C-arm positioning and image acquisition from different angles aims to save time and can lower the contrast agent dose. An integrated quantification feature removes the need for a preliminary exam with a pressure wire and “angio-derived vFFR” requires only two images to provide 3D affected vessel visualization. The fusion imaging also facilitates interventions in patients with structural heart disease, e.g., transcatheter aortic valve implantation (TAVI), closure of the left atrial appendage (LAA closure), or transcatheter mitral valve implantation (TMViV).

Artis icono ceiling was revealed in June. The ceiling-mounted angiography system leverages the OPTIQ image chain to optimize image contrast, reduce noise, and provide 3D data at the patient’s head and from the side over a 200-degree angular range. According to Siemens, 3D images can be acquired in two and a half seconds and the vascular tree must only be visualized once for image-guided catheter navigation. Parameters of third-party software can be imported or modified for image post-processing or training.

Shortly thereafter, Healthineers unveiled the Sybia Pro.specta single photon emission SPECT/CT system with CE mark and FDA clearance. Capabilities include a low-dose CT of up to 64 slices for detail and automatic SPECT motion correction for additional image clarity. Its myExam companion removes manual SPECT/CT imaging workflow and guides through steps of the exam’s decision-making. Data-driven motion correction that corrects for movements in a SPECT exam and respiratory motion correction for cardiac examinations is also available. Symbia Pro.specta touts a minimum 30 and maximum 64 CT slices as well.

The Mobilett Impact mobile X-ray system hit the market in July. All of its imaging data is transmitted wirelessly for undisrupted workflow and optimized dose application. Imaging presets and quick image flavor adjustments also support consistent results, according to Siemens.

Also entering the imaging market in July was Siemens’ Deep Resolve deep learning imaging for image reconstruction. Deep Resolve works with the scanner’s raw data to use AI algorithms to improve the image. According to Siemens, Deep Resolve may shorten brain MRI scan times by up to 70% while doubling resolution. Deep Resolve isn’t limited to one region of the body and was trained with thousands of curated data pairs by comparing data with unaccelerated and accelerated scans. Individual noise maps are used for each scan to reduce noise in the same scan time.

Also in July, Siemens Healthineers integrated the capabilities of its bomile 3D imaging system Cios Spine with Intuitive’s Ion endoluminal system for transbronichial biopsy to enable 3D image transfer to update lung cancer lesions’ targeted location. Offering Cone-Beam CT (CBCT) and the dedicated NaviLink 3D interface, Cios Spin communicates with Ion via automated 3D image transfer. This eliminates the need for manual data exchange and can speed up workflows.

At the European Congress of Radiology in July, the company launched Multix Impact E, which, according to Siemens, is its most affordable X-ray system yet. The fixed-floor system has a floor-mounted tube and optional bucky wall, with optional components to tailor the system to providers’ needs. Its full-size digital detector enables excellent image quality at a low dose.

Rounding out July was Siemens’ refreshed Acuson family. Twelve new transducers across four ultrasound systems and expanded AI-powered tools aims to power more efficiency and consistency for clinicians. Acuson Sequoia provides musculoskeletal imaging and 3D/4D obstetrics and innovating in pediatrics, vascular, and breast imaging. A new 3D/4D volume transducer and AutoDoppler reduce carotid scan time and eliminate 25% of keystrokes via automatic steering, positioning color, and pulsed Doppler.

In November the company presented its Magnetom Cima.X2 with 3T field strength and Magnetom Terra.X1 with 7T. The 3T Magnetom Cima.X2 will use the company’s strongest gradient with an amplitude of 200 mT/m and a slew rate of 200 T/m/s. The Magnetom Terra X1 MR imaging system is the successor to Magnetom Terra, the first 7T clinical system. The higher signal at 7T enables very high-resolution imaging, offering reconstruction algorithms developed directly on the scanner for research applications.

The Magnetom Viato.Mobile MRI scanner for mobile use and featuring a 70cm patient bore was also presented in November. Operation and service can be done remotely with a fixed internet or via a 4G connection, meaning the system can be used almost anywhere and that fewer staff are needed on site.

Diagnostics revenue shot up 11.9% to €6.06 billion. Excluding rapid COVID-19 antigen tests, however, revenue fell 1.4%. Demand for these tests provoked “outstanding” revenue growth in the Americas and Asia/Australia regions due to their approval for sale in the U.S. and Japan in FY22. EMEA region revenue in this segment declined due to a lower contribution from the tests. In total, almost €1.55 billion was added to Siemens’ coffers from rapid antigen test sales.

Siemens Healthineers released its CE-marked FTD SARS-CoV-2/FluA/FluB/HRSV assay, a PCR test, and CLINITEST rapid COVID-19 + influenza antigen test in September. The kit combines the company’s FTD SARS-CoV-2 and FTD Flu/HRSV assays. The combination PCR test spots and differentiates between clinically relevant viruses: SARS-CoV-2, influenza A, influenza B, and HRSV A/B. The three-in-one CLINITEST rapid COVID-19 + influenza A/B antigen test offers results in 15 minutes.

Siemens’ Advanced Therapies business accrued €1.92 billion of proceeds in FY22, rising 11.9%, according to the company’s FY22 annual report. Revenue growth was most significant in the EMEA region and strong in the America’s region. Revenue declined slightly on a comparable basis in the Asia/Australia region.

Varian garnered revenue of €3.07 billion, growing a whopping 136.5% over the previous year. According to Siemens, supply chain delays weighed on revenue development—EMEA and Asia/Australia regions reached double-digit growth over the prior year and the Americas region charted a moderate revenue decrease on a comparable basis.

Finishing off the year was a Bloomberg report that claimed both Siemens Healthineers and GE HealthCare were weighing potential acquisition of Medtronic’s patient monitoring and respiratory businesses, which are to be spun off. Bloomberg cited “people familiar with the matter” in its report, but at the time of this report’s writing, no further light has been shed on the potential transaction.

€18.00 Billion ($20.95 Billion)
Prior Fiscal:  €14.46 Billion
Percentage Change: +24%
R&D Expenditure: €1.55B
Best FY21 Quarter: Q4 €5.16B
Latest Quarter: Q2 €5.46B
No. of Employees: 66,100

Consolidation and M&A are nothing new for the medical device industry. They’ve been a constant for “both sides of the table”—OEMs and the supply chain. Even the chaos caused by the pandemic didn’t derail this trend. As a primary example of that, nearing the end of its 2020 fiscal, Siemens Healthineers announced it was acquiring another MPO Top 30 medical device firm—Varian—in a deal reported to be valued at $16.4 billion.

While the transaction was announced in August 2020, the closing did not take place until well into the firm’s 2021 fiscal after getting the green light on several necessary stepping stones, such as antitrust clearance and approval from the Committee on Foreign Investment in the United States. Approval of the deal from the European Commission, however, came with conditions. Primarily, it required Siemens Healthineers maintain the interoperability of imaging and oncology software with third-party offerings going forward.

Finally, on April 15, 2021, it was announced the transaction to acquire Varian was complete. The deal expanded Siemens’ role in the treatment and care of patients with cancer, as well as addressing other conditions. Varian would be incorporated into the organization as a new business segment, which tied into the company’s Strategy 2025 plan.

Strategy 2025, announced in January 2018 (just two months prior to the spinoff of the firm from parent Siemens), centered around five key points:

• • Utilizing its unique position in the in-vivo and in-vitro markets to combine data and knowledge around precision medicine and make it relevant for clinical use

• • Using data and artificial intelligence to integrate existing and innovative technologies for therapy

• • Coordinating and optimizing the patient journey through the healthcare continuum

• • Developing a full range of technical, operational, and clinical service offerings that are more effective and more efficient by using technologies from Siemens Healthineers

• • Continuing to develop and invest in capabilities in artificial intelligence that support the above areas

“With the completion of this transaction, we are now best-positioned to take two leaps together: a leap in cancer care and a leap in our impact on healthcare overall. Together, we are establishing a strong and trusted partner capable of supporting customers and patients along the entire cancer care continuum as well as through all major clinical pathways,” Dr. Bernd Montag, CEO of Siemens Healthineers AG, said in a press announcement of the deal’s conclusion.

ANALYST INSIGHTS: It is with enthusiasm that I note it took until #4 on the list before COVID is mentioned. While not exciting, Siemens remains a solid company that is executing across its portfolio (after integrating the Varian acquisition in 2021). They did receive a nice COVID boost in 2021/2022 due to their COVID diagnostic testing results. It will be interesting to observe how they use that additional cashflow momentum in 2023.

—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors

The two companies had a well-established relationship to diagnose and treat cancer, branded as EnVision. This partnership leveraged innovation from each organization to create a comprehensive digital, diagnostic, and therapeutic ecosystem that included treatment management. Now under one roof, the pairing will use AI-assisted analytics to advance data-driven precision care and optimize cancer diagnosis, care delivery, and post-treatment protocols.

“Through the transformative combination of Varian and Siemens Healthineers, our united company will address the growing need for personalized, data-driven diagnosis and precision cancer care that enables us to fight back against globally increasing cancer rates,” said Chris Toth, CEO of Varian. “By bringing together our unique and highly complementary portfolios and capabilities, we will support oncology clinicians and patients in achieving better outcomes and move even closer to achieving our vision of a world without fear of cancer.”

The newly established division was credited as contributing €1.3 billion to the company’s overall revenue figure of €18 billion for its 2021 fiscal year. While there was no comparison able to be made to the prior period, the company did note that product innovations led to higher customer investment in the U.S. and Western Europe. In addition, other regions were driven by a need to expand access to oncology equipment and services in underserved areas.

The capabilities of Varian joined a firm already showcasing its innovative prowess in addressing other healthcare concerns during the fiscal year. Specifically, the Healthineers diagnostic division was helping in the battle against COVID-19 through a bevy of testing products.

In October 2020, the company gained a CE mark for the release of its CLINITEST rapid antigen test for the detection of COVID-19. It provided a diagnosis within 15 minutes to help reduce the chance of disease spread and speed up the time a person would enter a quarantine period. The test demonstrated 96.72% sensitivity and 99.22% specificity based on a clinical study of 317 subjects.

Then, in January 2021, the organization announced the CLINITEST obtained another CE mark; this time for the ability for it to be used with swabs from the anterior part of the nose, in addition to the nasopharyngeal swab method. In this case, the diagnostic offered 97.3% sensitivity and 100% specificity.

February saw yet another acceptance for the test as it gained “special approval” from the German Federal Office for Drugs and Medical Devices for self-administration by lay persons in the country. In May 2021, the approval was extended to all CE member countries as the CE mark was granted for laypersons age 12 and older to use the test. At the time, Siemens was one of the first to offer an approved home diagnostic test. An emergency use authorization (EUA) from the U.S. FDA wouldn’t be granted for the self-test until the end of the year, after the close of the 2021 fiscal period.

Further supporting the effort to address the coronavirus, Siemens’ SARS-CoV-2 IgG Antibody Test was granted a CE mark in November 2020 and was also submitted to the FDA for an EUA. It measured neutralizing antibodies, which are critical as they defend cells from infection by COVID-19. The test could be used to assess the effectiveness of the eventual vaccines that would be announced and made available a month later.

Further products launched for the coronavirus also included the SARS-CoV-2 Antigen Assay and an AI-based COVID-19 Severity Algorithm. The assay gained CE mark status in February 2021 and was provided as an accurate, high-capacity testing solution to diagnose COVID-19. It enabled testing to be run on automated immunoassay analyzers (the Atellica Solution and ADVIA Centaur systems). The algorithm, on the other hand, was developed to help physicians identify patients at risk of progressing to severe outcomes. By entering a potential patient’s lab values and age, the algorithm generated a COVID-19 clinical severity score, including projected probability of progression to ventilator use, end-stage organ damage, and 30-day in-hospital mortality. The company partnered with the Hospital Universitario of La Paz, Spain, to gather COVID-19 patient data to build the algorithm and later to test the accuracy of the tool via retrospective analysis.

While COVID-related diagnostics generated the most headlines for the firm, they weren’t they only new releases that were announced. In December 2020, the company announced it had gained a CE mark and FDA clearance for its epoc NXS Host mobile computer. The epoc Blood Analysis System is an easy-to-use, hand-held device with intuitive software application to further advance point-of-care testing. The system incorporates caregiver suggestions that enhance performance and streamline the testing workflow for critically ill patients.

Addressing the need to expedite the diagnosis of a heart attack, Siemens’ Atellica VTLi Patient-Side Immunoassay Analyzer obtained a CE mark in April 2021. The analyzer provides lab standard, high-sensitivity cardiac troponin I test results to clinicians in eight minutes using a patient’s fingerstick blood sample. According to the company, the solution represents an industry-first technology, providing results at the patient’s side.

Finally, the organization announced the launch of its Sysmex’s CN-3000 and CN-6000 Hemostasis Systems for mid- and high-volume coagulation testing. A wide array of both routine and specialty coagulation assays from Siemens Healthineers that help identify blood coagulation disorders (such as abnormal blood clotting or bleeding) can be performed on the systems, representing a compact and comprehensive hemostasis testing solution.

Growth of the diagnostic segment year-over-year was the biggest contributing factor to the company’s overall revenue gain in its 2021 fiscal. The unit posted €5.42 billion to the overall figure, representing a 38% rise over 2020’s figure of €3.92 billion. Siemens Healthineers cited the increase in the market for point-of-care and lab tests as a primary reason, specifically those tied to the COVID-19 pandemic.

The largest contributing division, however, to the firm’s almost €18 billion revenue figure was its Imaging unit. The segment saw high, single-digit growth (8%), which brought its sales figure to almost €10 billion (€9.82 billion). According to the firm’s annual report, the increase was mainly due to large, COVID-driven demand for computer tomography systems and the beginning of normalization in all other modalities. The firm also shared a series of newsworthy product announcements centered around these products during the 12-month period.

The firm’s new fluoroscopy system—the Luminos Lotus Max—made its debut at the annual French JFR 2020. The remote-controlled solution offers versatility in clinical examinations, as it combines radiographic and fluoroscopic imaging with orthopedic studies such as long leg or spinal examinations and basic interventions. Since these capabilities are highly integrated, users can quickly switch between the different imaging modalities.

At another European event (virtual 33rd Annual Congress of the European Association of Nuclear Medicine), the company introduced its Biograph Vision Quadra—a CE-marked positron emission tomography/computed tomography scanner—designed for clinical use as well as translational research.

Unveiled at its SHAPE 21 Imaging Press Conference in November 2020, Siemens Healthineers presented Syngo Carbon—a new software environment for enterprise-wide image reading and reporting. The system enables easy access to all relevant data generated in the processes of imaging and reporting. Data from different departments is drawn out from various silos and integrated as part of a unified environment.

At the 2020 Annual Meeting of the Radiological Society of North America, the organization debuted its Cios Flow mobile C-arm, developed to make everyday workflows in imaging for surgical interventions easier and more efficient. Cios Flow can be used by many different medical disciplines in the OR, including orthopedics and trauma surgery, spinal surgery, vascular surgery, as well as pain therapy.

In March 2021, the company introduced new solutions for breast image reading and mammography workflow optimization. Through the Mammovista B.smart and the Teamplay Mammo Dashboard (a tool for dashboard-based visualization of key performance indicators in the breast imaging process), the company is extending its digital offerings for breast care. The Mammovista B.smart user interface was designed to reduce the number of clicks required for specific tasks wherever possible.

Two months later, the firm launched a new CT scanner for fast diagnosis and precise interventions in demanding clinical areas. The Somatom X.ceed has a large bore of 82 centimeters and offers user-friendly tablet operation. It also comes with two “companions” integrated for automated user guidance—myExam Companion guides users through diagnostic procedures, while myNeedle Companion supports targeted needle path planning and laser-guided insertion across multiple modalities.

The company’s AcuNav Volume ICE (intracardiac echocardiography) catheter—a therapy-enabling imaging guide that provides real-time, wide-angle visualization of heart anatomy during structural heart and electrophysiology procedures—received a CE mark in June 2021.

At the close of its 2021 fiscal, Siemens Healthineers made two additional announcements. The first was the launch of its Luminos Impulse, a fluoroscopy system with a new design and features shared by high-end fluoroscopy systems. Highlights of the system include a seamless imaging chain, comprehensive dose optimization, cybersecurity features, and detector-sharing capabilities for radiography.

The second was the 510(k) clearance of the Naeotom Alpha, the world’s first photon-counting CT. The centerpiece of this innovation is the new photon-counting detector, which provides an active detection layer that consists of a cadmium telluride one crystal and offers clear advantages over conventional CT detectors. Traditional CT systems use a two-step process in producing the final image; the photon-counting CT detector performs the action in one step, improving image sharpness and contrast.

Siemens’ final unit, Advanced Therapies, saw a gain of 5% in 2021, finishing with a contribution of €1.72 billion. The growth was attributed primarily to the return of elective surgeries as well as the return of patients.

$16.93 Billion
Prior Fiscal: $16.99 billion
Percentage Change: -.01%
No. of Employees: 54,300

Siemens Healthineers opened its 2020 fiscal (which started Oct. 1, 2019) with the completion of two transactions made during the previous period. Its $1.1 billion acquisition of Corindus Vascular Robotics became official Oct. 25, 2019. At the time, its CorPath was the only FDA-cleared and CE-marked robotic system for endovascular coronary and peripheral vascular interventions, according to the organization.

About a week later, the company also finalized its purchase of ECG Management Consultants, a U.S. healthcare advisory firm. The company noted that deal was part of its implementation of the “Siemens Healthineers Strategy 2025” as it addressed the goal to tap into adjacent growth markets.

The Strategy, announced in 2018, was devised to bolster the firm’s market leadership position by 2025 and beyond. It was intended to take advantage of structural growth opportunities within its core markets—identified as Imaging, Diagnostics, and Advanced Therapies (a category that focuses around the shift to minimally invasive, image-guided surgery). In addition, the plan outlines five items that address future initiatives. They are:

• • Utilizing its position in the in-vivo and in-vitro markets to combine data and knowledge around precision medicine and make it relevant for clinical use

• • Using data and artificial intelligence to integrate existing and innovative technologies for therapy

• • Coordinating and optimizing the patient journey through the healthcare continuum

• • Developing a full range of technical, operational, and clinical service offerings that are more effective and efficient by using technologies from Siemens Healthineers

• • Continuing to develop and invest in capabilities in artificial intelligence that support the above areas

Following those two acquisition closings, some may have expected the company to take time to absorb and integrate the two firms before moving forward with any additional M&A strategy. That couldn’t have been further from Siemens Healthineers’ plans. Instead, the company made a huge splash in August 2020 with the announcement it was going to purchase Varian for $16.4 billion in an all-cash transaction.

ANALYST INSIGHTS: Having now digested the Varian acquisition, it will be interesting to observe Siemen’s next portfolio moves. There are rumors they may divest their Ultrasound business. A year ago, that would have seemed unfathomable. However, with the Varian deal done, they may choose to focus on AI Digital Radiology which is compatible with their cancer initiatives.

—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors

With Varian as a leading firm in cancer care, the deal puts Siemens at the forefront of that clinical area. In its 2019 fiscal, Varian reported revenues of $3.2 billion, attributed primarily to technologies for radiation oncology and related software.

“With this combination of two leading companies, we make two leaps in one step: A leap in the fight against cancer and a leap in our overall impact on healthcare. This moment in the history of our companies means more hope and less uncertainty for patients, an even stronger partner for our customers, and for society more effective and efficient medical care. Together with Varian’s outstanding and passionate employees, we will shape the future of healthcare more than ever before,” said Dr. Bernd Montag, CEO of Siemens Healthineers AG.

The purchase could have been viewed as the inevitable next step for the two firms. They had enjoyed a well-established partnership that focused on “EnVision”—an initiative to shape the future of cancer treatment through the combination of Varian’s therapeutic systems with the imaging technologies of Siemens Healthineers.

The deal, finalized in April 2021, was certainly a high point for what would have been a rather lackluster year otherwise when speaking from a corporate standpoint. Although, given the circumstances surrounding much of the 2020 fiscal, I think most would be pretty pleased with a flat year. And that’s where Siemens Healthineers finished in terms of revenue growth. The company reported 14.46 billion euros in its 2020 fiscal. In comparison, the 2019 fiscal was just a bit higher with 14.52 billion euros in revenue.

Taking a look at the aforementioned three business units of the firm, Imaging is the leading revenue generator for the company. It was responsible for 9.01 billion euros in the latest fiscal year, an increase of 2 percent over 2019’s figure of 8.94 billion euros. The primary driver of growth was computed tomography, as it was used as part of COVID-19’s treatment regimen.

On the other hand, Imaging experienced a decline of 5 percent; revenues shrunk from 4.13 billion euros in 2019 to 3.92 billion euros in 2020. Also affected by the pandemic, the loss was attributed to the reduction in routine testing volumes.

Advanced Therapies enjoyed a modest 1 percent rise in 2020, increasing from 1.61 billion euros to 1.63 billion euros due primarily to a strong increase from the EMEA region. Companywide, however, no region demonstrated significant growth or decline in revenue greater than 3 percent.

As mentioned, the pandemic did result in certain products experiencing extremely high demand. As such, medical device manufacturers not only tried to churn out their existing offerings that were much needed by front-line healthcare professionals, but also launched new technologies to fulfill specific needs of those battling the virus.

One such offering was its molecular Fast Track Diagnostics (FTD) SARS-CoV-2 Assay test kit used to aid in the diagnosis of infection by the SARS-CoV-2 virus. The product gained FDA emergency use authorization like many new devices launched to address needs created by the pandemic.

The organization also produced a laboratory-based total antibody test (i.e., serology test) to detect the presence of SARS-CoV-2 antibodies in blood. The test, which detected both IgM and IgG antibodies, demonstrated specificity and sensitivity of greater than 99 percent. The test was available on the Atellica Solution immunoassay analyzer, which could run up to 440 tests per hour and enabled a result in just 14 minutes.

Besides addressing the immediate needs of the healthcare community attempting to get a handle on the virus, Siemens Healthineers released a good number of notable products during its 2020 fiscal. This ongoing effort enabled the firm to be in a good position for growth once some sense of normalcy returned.

The Somatom On.site enabled a CT scanner to be brought to a patient’s bedside. This is particularly valuable when a CT scan would involve transporting a patient from a location such as the ICU, which could require multiple healthcare workers to ensure a safe trip. When engaged, the patient’s headboard is removed from the bed and the patient remains in place. Positioning aids, such as the integrated shoulder board and head holder, help stabilize the patient during the scan and enable consistent image quality. Upon image capture, the diagnostic data is sent directly to the radiology department’s picture archiving and control system (PACS).

The firm gained a CE mark for its AI-Pathway Companion Prostate Cancer digital companion to support clinical decision-making. The product suite uses artificial intelligence, including natural language processing, to combine data on a patient’s disease and treatment status, which it then presents via an intuitive graphical user interface.

Another software offering, the teamplay digital health platform, helps to support operational efficiency and clinical effectiveness as it facilitates easy access to solutions for operational, clinical, and shared decision support. The vendor-, system-, and device-neutral platform fosters cross-departmental and cross-institutional interoperability. Healthcare professionals benefit from the solution in connecting devices and systems, in aggregating data from various sources, and in providing advanced analytics to gain actionable insights.

Although granted access to the EU market during the 2019 fiscal, the RAPIDPoint 500e Blood Gas Analyzer was cleared by the FDA during the latest fiscal. A device that could be used for COVID-19 patients, the analyzer generates blood gas, electrolyte, metabolite, CO-oximetry, and neonatal bilirubin results, which are used to diagnose and monitor critically ill patients in the ICU, OR, or emergency room. The unit is equipped with Integri-sense Technology—a comprehensive series of automated functional checks designed to deliver accurate test results at the point-of-care—as well as cybersecurity protection.

Ysio X.pree was introduced as “the world’s first intelligent X-ray system with integrated AI for optimizing the daily routine of image acquisition in radiography,” according to the organization. Based on the images from a 3D camera, the AI-based algorithm automatically detects the thorax and thus sets the optimal acquisition area for this—the so-called collimation. The radiation is focused only on the relevant area, and the goal is to acquire an image containing all necessary information with the lowest possible radiation exposure.

Marking the result of a partnership with Bayer, the Imaging System Interface (ISI) for magnetic resonance imaging (MRI) is a joint hardware and software solution. The injector scanner interface synchronizes the MEDRAD MRXperion MR Injection System from Bayer and the Siemens Healthineers MR scanner, thereby overcoming significant challenges posed by the complex process used in conventional contrast-enhanced dynamic MRI.

The ACUSON Redwood is an ultrasound system built on the company’s new platform architecture and offers advanced applications for greater clinical confidence, AI-powered tools for smart workflows, and has shared services cardiology features used by different hospital departments. These capabilities are coupled with a portable and lightweight design.

The Somatom X.cite single-source CT scanner was marketed with the new myExam Companion user guiding system, based on AI. The intelligent user guidance system navigates the user through the workflow using specific questions. myExam Companion makes use of available patient data (sex, height, age), and combines these with additional patient-specific information gathered by asking the user specific questions—for example, about the presence of metal implants or the ability of patients to hold their breath.

Rank: #7 (Last year: #7) $15.88 Billion
Prior Fiscal: $15.56 Billion
Percentage Change: +2.0%
No. of Employees: 52,000

Imagine, if you will, being a doctor. Now picture, instead of clinical images on a 2D monitor while preparing for surgery, you don a mixed-reality headset that superimposes a realistic, 3D overview of the surgical area. Pretty far out, right?

Well, that’s precisely what German medical device maker Siemens Healthineers aims to do by fusing its Cinematic Rendering photorealistic 3D visualization with Microsoft’s HoloLens 2 released last February. Visitors at last year’s  European Congress of Radiology were able to test the headset.

“We firmly believe that a photorealistic representation of clinical images can make communication between physicians and patients easier, and that it can also help with medical training,” Christian Zapf, head of the Syngo Business Line at Siemens Healthineers, told the press.

Clinicians and medical students can use HoloLens 2 with Cinematic Rendering to interact with CT and MR images—enlarge them, zoom in, and rotate them using gestures, speech, or eye gaze. The application can ease the discussion about complex cases with difficult anatomy, for example, in a pediatric or trauma context. It can also bring together multidisciplinary medical teams—Cinematic Rendering can provide realistic and natural visualization of difficult interventional radiology and surgery procedures to help non-radiological physicians understand their patients’ MR or CT images.

Patients can also have a helpful visualization of what’s happening inside their bodies and the nature of their upcoming surgery. Medical students and trainees can benefit from the opportunity to virtually investigate specific anatomical features and clinical conditions, somewhat of a “living anatomy session.”

The German medtech maker put forth a strong showing last year. Fiscal 2019 sales (ended Sept. 30) rose 8 percent, coming to rest at $15.88 billion. Outstanding performance from the Imaging and Advanced Therapies businesses were the main drivers. All major geographical markets were healthy despite then-ongoing Brexit negotiations and U.S. tariff disputes with China. The Advanced Therapies business posted 1.61 billion euros in sales, a 9 percent climb over the prior year supported chiefly by Asia, Australia, and the EMEA region.

Though this segment didn’t put forth any new products last year, Advanced Therapies was heavily bolstered by last October’s $1.1 billion purchase of robotic-assisted vascular intervention firm Corindus Vascular Robotics. Siemens gains FDA-cleared and CE marked robotic systems to precisely control guide catheters, guidewires, and balloon or stent implants using integrated imaging. Corindus’ CorPath systems will be combined with Siemens angiography systems and eventually digitization and artificial intelligence solutions to boost capabilities for image-based minimally invasive procedures.

“We are taking an important step forward in the upgrading phase of our 2025 strategy,” Bernd Montag, Siemens Healthineers CEO, told the press.

Imaging business proceeds shot up 10 percent to reach 8.94 billion euros, with the Molecular Imaging portfolio reporting impressive growth. Sales increased across the globe—particularly in the Americas—but also strongly in the EMEA region, Asia, and Australia.

January saw an FDA nod for the Multix Impact floor-mounted digital radiogaphy system. A touch user interface lets technologists remain at the patient’s side longer and enables continuous monitoring to minimize repeat imaging and avoid excessive radiation dose. Motorization and tracking features also reduce staff members’ exertion.

The Magnetom Lumina 3T also earned FDA clearance in January. Its 70 cm bore and AI-powered technologies can reduce whole spine exam times by 20 percent compared to conventional systems, with some routine musculoskeletal exam times cut in half. An optional in-bore infotainment system (still under development) can also move with the scanner table to create the illusion of an enlarged bore.

The Somatom go.Top Cardiovascular Edition debuted at last March’s Annual Scientific Session & Expo of the American College of Cardiology. The new CT system personalizes dosage in all types of routine cardiovascular imaging via the Care kV feature, which selects optimal kV settings in 10 kV increments. Coronary CT angiography and advanced tests like the HeartFlow FFRCT analysis—which evaluates impact of a blockage on blood flow for treatment selection—can be performed on the 128-slice scanner.

Later in March the FDA greenlighted the Mobilett Elara mobile X-ray system. Features include a virtual workstation to boost workflow, comprehensive IT security, secure hospital network system integration features, and an antimicrobial coating. The system’s 180-degree lateral arm movement also maximizes position options.

Two dedicated radiation planning CT systems were unveiled at last September’s American Society for Radiation Oncology Annual Meeting: the 64-slice Somatom go.Sim and 128-slice Somatom go.Open Pro. Both have an 85 cm bore, tablet-controlled optional patient parking lasers mounted on the gantry, and deep-learning powered autocontouring software. The go.Open Pro system can adapt image acquisition to patient breathing in real time to facilitate use of stereotactic body radiation therapy, which needs high precision to avoid damaging healthy tissue. They earned FDA clearance last December.

The Artis icono family of angiography systems—Artis icono biplane and Artis icono floor—received an FDA OK last September. icono biplane enables a variety of neuroradiology and abdominal imaging procedures through a revolutionary form of cone beam CT that produces fewer artifacts in the basal section of the brain and close to the skull. Ten different time points can be depicted in 60 seconds. The flexible, multi-axis icono floor is suited for vascular, interventional cardiology, surgical, and oncology procedures. According to Siemens, this floor-mounted CT can achieve virtually the same angles as a ceiling-mounted system.

Shortly thereafter, the AI-Rad Companion Chest CT software assistant won an FDA nod. The software helps quickly interpret chest images thanks to automatically highlighted abnormalities and pathological findings, including: automated lesion detection, localization of abnormality localization, and lung lesion measurement; quantification of per-lobe low-attenuation parenchyma; enhanced lung lesion visualization; automated lung lobe segmentation and enhanced low-attenuation parenchyma visualization; segmentation and measurement of maximum thoracic aorta diameters; quantification of the total coronary artery calcium volume; and detection of nine anatomical landmarks identified by American Heart Association guidelines.

The Acuson Redwood ultrasound system hit the market last October. Contrast enhanced ultrasound and shear wave elastography support lesion detection and characterization, and can reduce the need for invasive procedures. Micro-pinless technology and single crystal transducers boost image quality, and coherent image formation technology maintains B-mode performance in complex modes.

The FDA cleared the Somatom X.cite CT scanner with intelligent user interface concept in November. The scanner touts an 82 cm bore and optional Moodlight feature. A new 2D visualization camera allows close patient monitoring while inside the gantry for potentially fewer motion artifacts. The myExam Companion intelligent assistant renders complicated clinical decision making into 20+ user-definable clinical decision trees displayed on the interface.

Siemens unveiled a number of new imaging products at last December’s 105th Scientific Assembly and Annual Meeting of the Radiological Society of North America:

AI-Rad Companion Brain MR for Morphometry Analysis: automatically identifies about 30 brain segments on MRI images, measures their volumes, and compares results to Alzheimer’s Disease Neuroimaging Initiative normative brain morphometry data.

AI-Rad Companion Prostate MR for Biopsy Support: automatically segments prostate and marks outer contour. After suspect areas are marked, images are sent to urology for fusion with ultrasound images during biopsy.

Somatom On.site: head CT scanner for use at the patient’s bedside.

CrewPlace: cloud-based workforce platform optimizes labor force and automates assignment and dispatch of full-time technologists. It also allows on-demand access to Siemens Healthineers-aggregrated labor pool outside of a healthcare organization.

Diagnostics revenue grew 4 percent to 4.13 billion Euros. Robust sales in Asia, Australia, and a moderate rise in the EMEA region were tempered by a small drop in Americas sales.

The Atellica CH Enzymatic Hemoglobin A1c assay became available last May. According to company data, this test to monitor diabetes boosts precision and accuracy over leading alternative methodologies.

“Laboratories are seeking HbA1c assays that can be integrated onto chemistry testing platforms and that provide the accurate and precise results patients deserve,” Siemens Healthineers president of Laboratory Diagnostics Deepak Nath, Ph.D., told the press.

Handheld technology for point-of-care immunoassay testing was added to the Diagnostics portfolio courtesy of last July’s acquisition of Netherlands-based Minicare BV (financial details left undisclosed). Siemens aims to transform in-vitro diagnostic care delivery and experience by further developing Minicare’s technology.

Finally, Siemens strengthened its Enterprise Services business by closing a deal for U.S. healthcare advisory firm ECG Management Consultants in November. ECG’s consulting services include the areas of strategy, finance, operations, and technology to hospitals, ambulatory surgical centers, and healthcare payers.

“…the partnership with ECG will enable us to address the needs of our customers more comprehensively than ever before, helping them to further improve healthcare delivery and provide better care at lower cost,” said Montag.

COVID-19 Consequences

Q2 2020 Revenue: 3.68 Billion Euros
Q2 2019 Revenue:  3.51 Billion Euros
Percentage Change: +4.8%

Although fiscal 2020’s Q2 revenue increased over the prior year (ended Sept. 30), the pandemic negatively impacted comparable growth by about 4 percentage points in total. Imaging and Advanced Therapies achieved growth (5.8 percent and 5.7 percent respectively), though Diagnostics revenue fell a slight 2.2 percent in light of a shrinking number of patients due to the crisis.

On March 11, Siemens Healthineers-backed teleradiology and telemedicine firm USARad launched a screening program that connects radiologists to healthcare workers on the front lines of the outbreak. The company will also provide a network of chest CT-trained imaging experts, along with pulmonologists and infectious disease specialists. Studies have shown the imaging modality plays a key role in identifying the virus, including the ability to spot lung abnormalities.

On April 22, the company announced development of a lab-based test to detect IgM and IgG antibodies for the SARS-CoV-2 virus. Available on the Atellica Solution immunoassay analyzer, it can run up to 440 tests per hour with results in 14 minutes.

The firm’s lab-based SARS-CoV-2 total antibody test recieved FDA EUA on June 1. According to the company, the test demonstrated 100 percent sensitivity and 99.8 percent specificity. The test, which is also CE marked, began shipping the week prior.

AT A GLANCE
$15.58 Billion
Prior Fiscal: $15.9 Billion
Percentage Change: -2%
No. of Employees: 50,000
Global Headquarters: Erlangen, Germany

For years, there has been speculation regarding a number of conglomerates that would see the company spin out its medical device business. Rumors have circulated around Johnson & Johnson, GE Healthcare, Alcon (which was finally launched by parent Novartis in April), among others. In 2018, Siemens took the first steps toward creating a new, independent entity comprised of its Healthineers unit.

On March 16, 2018, shares of Siemens Healthineers (representing a 15 percent stake in the company) debuted on the Frankfurt stock exchange. The shares were issued at a price of 28 euros (which immediately rose 7 percent during trading that same day)—a “discounted price” cited by some market participants as a way for Siemens to promote interest. The asking price was down from the figure initial estimates had it at when the IPO announcement was made in November of the year prior. At that time, speculation put the company’s value at 40 billion euros. Ultimately, however, Healthineers’ equity was valued at 28 billion euros for the IPO debut—still the world’s largest in the healthcare sector to date, according to Siemens Chairman Michael Sen.

“The public listing is the next logical step and the foundation for expanding our strong position as a leading global supplier of healthcare technology,” Sen, who also serves as chairman of the Siemens Healthineers supervisory board, said in a statement.

The sale brought $4.2 billion euros to the coffers of the former parent firm Siemens, which still retained an 85 percent stake. The move, according to management, will enable the standalone healthcare entity to raise its own funds for takeovers and investments.

Undoubtedly, the firm is still evaluating potential prospects for acquisition as it hasn’t made any big splashes in that area since the IPO debut. Prior to that, however, the Healthineers segment of Siemens did conduct some M&A activity. Most notably, at the close of 2017, the unit announced it would be integrating Fast Track Diagnostics (FTD) into the fold. The Luxembourg-based company was a global supplier of diagnostics tests that could distinguish between viral, bacterial, or other infections in one test. FTD’s tests are real-time polymerase chain reaction (PCR) kits, allowing for both singleplex and syndromic testing. The acquisition increases the menu of the Siemens Healthineers’ VERSANT kPCR Molecular System by over 80 assays and syndromic panels.

“Combining FTD’s wide range of assays with the Siemens Healthineers portfolio means great things for all of our customers globally,” explained Bill Carman, CEO of Fast Track Diagnostics. “In merging our efforts, we’re enabling healthcare providers to meet their current challenges and deliver better outcomes for patients.”

While FTD’s 80 employees and sites in Luxembourg, Malta, and India were integrated into the firm, Healthineers retained the company’s name as the brand for the products available worldwide.

Just prior to the FTD announcement, Siemens Healthineers confirmed the closing of an earlier transaction, wrapped up at the end of October 2017. While the financial details were not disclosed, the move resulted in Epocal Inc. being fully incorporated into its new owner.

Epocal’s product line of blood gas offerings were tied to Healthineers’ POC Ecosystem. The resulting solution enables customized testing offerings based on individual facility needs—whether handheld testing, benchtop solutions, or central lab applications—to help improve process efficiency.

Healthineers is hoping the addition of these organizations will help bolster a product catalog that resulted in lower overall sales revenue in the firm’s 2018 fiscal year, which experienced a decrease in review by almost 250 million euros when compared to the prior period. That translated to 13.43 billion euros in the most recent annual report versus the previous 13.68 billion euros. On a comparable basis, however, the company noted an increase of 4 percent.

Siemens Healthineers is comprised of three segments—Imaging, Diagnostics, and Advanced Therapies. At 8.15 billion euros in 2018 fiscal revenue, the Imaging business led the company’s sales, but it was still relatively flat compared to the prior fiscal. According to the company, the magnetic resonance unit demonstrated particularly strong growth, though.

Contributing an amount less than half of the Imaging sales, Diagnostics finished the fiscal period at 3.96 billion euros, a 5 percent decrease versus 2017’s 4.16 billion euros. In its annual report, the company attributes this decrease to negative currency translation effects.

Rounding out the financial story for the company’s business segments, Advanced Therapies posted 1.48 billion euros to the annual total. The segment experienced a 2 percent decrease over prior fiscal, which was just over 1.5 billion euros, but 4 percent comparable growth. The company points to the growing trend toward minimally invasive procedures, which employ many of the firm’s technologies, for the comparable rise.

On the global stage, the company’s sales are grouped into three regions. Its primary market—the Americas—saw a 5 percent decrease overall, dropping from 2017’s 5.57 billion euros to 2018’s 5.29 billion euros.

The United States, which is the area’s largest revenue contributor, declined 4 percent year-over-year to finish at 4.46 billion euros. Next, Europe, the Commonwealth of Independent States, the Middle East, and Africa added 4.41 billion euros, a 2 percent rise over 2017’s 4.34 billion euros. Conversely, while the total was led by Germany’s 856 million euros, that sales total actually represented a decrease of 3 percent. Third was the Asia/Australia region, posting 3.73 billion euros, a slight 1 percent decrease over the previous fiscal year. China, on the other hand, which accounted for the highest revenue in the area, saw sales increase 4 percent to 1.68 billion euros.

In an effort to spur future growth opportunities, the 2018 fiscal period saw several notable product announcements that should help turn around the sluggish “first-year” financials experienced by the newly launched entity.

The company brought its Atellica Solution immunoassay and clinical chemistry analyzers for in-vitro diagnostic testing to market. According to a company statement, early adopters reported their respective workflow and performance studies, each of which validate the solution’s ambitious commitments to transform operational efficiency and enhance clinical performance. Their results exceeded key performance indicators that affect workflow—including turnaround time, throughput, operator hands-on time with system maintenance, and quality control, as well as assay performance.

The firm also launched a new ultrasound solution—the Acuson Sequoia—which addresses the challenges of imaging different sized patients without compromising clarity. Equipped with a Deep Abdominal Transducer, a high-powered architecture, and updates to elastography and contrast-enhanced ultrasound, the Acuson Sequoia produces penetration up to 40 cm.

Further additions to the Siemens Healthineers line of imaging solutions included four new CT systems. The SOMATOM go.All and SOMATOM go.Top expanded the range of clinical applications for the firm’s patient-centric mobile workflow operated via tablet and remote. The 64-slice All can cover scan ranges of up to 100 mm in one second, while the 128-slice Top performs whole-body scans of up to 200 cm with a scan speed of up to 175 mm per second. The addition of these solutions enable users to now employ the SOMATOM go. platform for applications in emergency medicine, interventional radiology, and cardiology, which the company notes as a major growth area for healthcare providers.

The other two introductions were the SOMATOM Edge Plus—a single-source system—and the SOMATOM Force—a new version of the dual-source field system. Both allow users to cover all CT applications, regardless of patient or clinical issue. The precision diagnostic solutions employ integrated FAST (Fully Assisting Scanner Technologies) applications, such as the FAST Integrated Workflow with the new FAST 3D Camera for automatic patient positioning.

Also of note was the company’s announcement of its new tests for diagnosing heart attacks faster. The High-Sensitivity Troponin I assays (TnIH) for the Atellica IM and ADVIA Centaur XP/XPT in-vitro diagnostic analyzers offer the ability to detect lower levels of troponin at significantly improved precision at the 99th percentile, and detect smaller changes in a patient’s troponin level as repeat testing occurs.

In addition to bringing new products to market, Siemens Healthineers found innovative ways to repackage the technologies it already offered by establishing strategic partnerships with medical device firms that provided complementary solutions. In one such arrangement, NuVasive teamed with Siemens Healthineers to form a Spine Precision Partnership. The goal of this initiative is to create solutions that improve operating room workflow efficiency and provide increased precision in the delivery of minimally disruptive spine surgery technologies. The first step involved the integration of NuVasive’s Pulse surgical automation platform with Siemens Healthineers’ Cios Spin mobile 3D imaging for intra-operative quality assurance.

“We at Siemens Healthineers are excited to work with NuVasive to develop intra-operative 3D-imaging and navigation tools for our advanced imaging systems that empower spine surgeons and neurosurgeons to be more precise, faster, and cost efficient in the operating room. Increased workflow efficiency, better image quality, as well as predictable and reproducible results, will transform care delivery and set a new standard in spine surgery,” said Peter Seitz, head of Surgery at Healthineers.

Another cooperative effort paired the company with Hillrom to provide comprehensive diabetes care for primary care facilities. The integrated offering incorporates Siemens Healthineers’ DCA Vantage Analyzer for HbA1c testing and the CLINITEK Status+ Urine Chemistry Analyzer for kidney checks, with Hillrom’s Welch Allyn RetinaVue Network and imaging technology for teleretinal exams. The patient-centered solution from Siemens Healthineers and Hillrom offers physicians more control over patient care by accomplishing proactive testing and treatment during a single visit.

Other medical device manufacturing firms weren’t the only participants in partnerships with Siemens Healthineers, however, during the 2018 fiscal year. The company teamed directly with healthcare providers in South Carolina and Florida to enhance the quality and delivery of care.

At the start of the 2018 calendar year, the organization announced it was embarking on a multi-phase collaboration with Florida Hospital, part of Adventist Health System. The agreement involved the two entities seeking to transform the delivery of healthcare through the development of outcomes-based projects. Specifically, Healthineers would provide its imaging technology innovation and industry expertise to be combined with the healthcare provider’s integrated delivery network along with its ongoing investment in improving the affordability, outcomes, and experience for healthcare customers. According to a company statement, Phase I of the collaboration involved the incorporation of Healthineers’ cardiac computed tomography angiography into the hospital’s clinical protocol with the goal to optimally assess and manage intermediate-risk patients in Celebration Health’s emergency department who present with acute chest pain.

Of the effort, David Pacitti, president of Siemens Healthineers North America, said “We look forward to conducting projects that closely examine the continuum of care and the development of clinical pathways that test and advance the strengths of both parties.”

To that end, in August, the firm announced another collaboration. In this case, the partnership was to capitalize on the coupling of The Medical University of South Carolina’s (MUSC) clinical care, research, and education expertise with Siemens Healthineers’ engineering innovations and workflow-improvement capabilities. Specifically, according to the company’s release, the focus for this venture would be on driving performance excellence at MUSC and generating significant clinical and value-driven innovations in focused target areas including pediatrics, cardiovascular care, radiology, and neurosciences. For example, MUSC and Siemens team members planned to drastically reduce the time it takes for severe stroke patients to receive treatment. Another example involved the incorporation of artificial intelligence—referred to as “digital twin technology”—to enable planning teams to quickly determine the impact of changes that would be costly, if not impossible, to test in the real world, and help them forecast how well possible workflow solutions or health innovations may actually work.

$16.3 Billion ($98B total)
NO. OF EMPLOYEES: 48,000 (372,000 total)

Valued somewhere in the neighborhood of $38 billion, it could be the largest initial public offering (IPO) that Europe has seen in a long time.

German conglomerate company Siemens AG has not been secretive about its plans to spin off its Healthineers business. As far back as November 2016’s earnings call, Siemens CEO Joe Kaeser was teasing investors about faster growth ahead, voicing plans for the healthcare business to be separately listed on the stock market and give Healthineers “even more focus and flexibility in pursuing its growth strategy.” The titillating announcement, however, was somewhat shrouded in mystery as Kaeser offered no other clarifying details about the IPO.

The intent to spin off Healthineers is the latest in Siemens’ “Vision 2020” entrepreneurial plan, which has manifested in a pruning of its core business focus over recent years. Part of the scheme leans on the company’s success from a strong presence in, as Siemens refers to it, the “electrification, automation, and digitalization” value chains it so eagerly pursues.

Though the eager upstart healthcare company is ambitious, Healthineers has needed to exercise some patience before setting out on its own. Siemens declared there would be a delay in Healthineers’ IPO in 2017, predicting it to take place during the first half of 2018. (Editor’s Note: No news in that vein has come to light so far.) This postponement was due, in part, to a controversy about four Siemens gas turbines being illegally moved to Crimea, according to Reuters.

“Everything is not perfect at Siemens,” Kaeser told reporters on an August 2017 conference call. “The Crimea affair has cost us much time and effort. We have to ask ourselves what this means for our future business processes and relationships.”

ANALYST INSIGHTS: Now that Siemens has formally spun-off its medical business as “Siemens Healthineers,” it should give the Siemens leadership team the ability to have more flexibility to be more aggressive and opportunistic relative to strategic acquisitions. It will be interesting to observe as Siemens decides “what they are” and “what they are not.”

—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors

As the global healthcare market continues to shift from Siemens’ core imaging business to molecular diagnosis (a Healthineers business focus) and self-management, Siemens believes it prudent for Healthineers to have its own currency for acquisitions and investments. There was no list of M&A targets as such, however, according to Siemens board member Michael Sen.

“The equity story begins with a highly attractive portfolio, which we already have,” he told Reuters.

That attractive portfolio may find a home in the U.S., according to Sen. Siemens has thus far not disclosed where it intends to list Healthineers, but the company already has a strong presence in the market with Siemens USA and Healthineers North America.

“Most peer group companies…are listed in the U.S.A.,” he told reporters. “One has to ask where will one get the best research and coverage…and sufficient market-making capacity and liquidity.”

Healthineers’ trading debut transpired in Frankfurt, Germany, this past March. The company ended up raising $5.2 billion in its 15 percent stake IPO, according to Bloomberg Business. The minority stake offering represented Germany’s second-largest IPO in almost two decades, trailing RWE AG’s green energy business Innogy SE in 2016. Investors ended up shelling out 28 euros for each of 150 million shares—a price firmly situated in the bottom half of the 26 euro to 31 euro range previously marketed by banks.

The 28 euro price values Healthineers at an estimated 28 billion euros ($35 billion), well down on analysts’ initial expectations of 35-40 billion euros. Investors cited dubious prospects for Healthineers’ diagnostics business (machines for high-throughput blood and urine testing) and increasingly volatile markets as factors responsible for the lower-than-expected valuation.

Despite those ominous portends, the global diagnostic imaging, laboratory diagnostics, software solutions, and clinical consulting services provider achieved fiscal year 2017—ended Sept. 30—sales of $16.3 billion, a moderate 7.2 percent increase over the preceding year. In fiscal 2017, the Healthineers business was organized into six franchises: diagnostic imaging, laboratory diagnostics, advanced therapies, ultrasound, point-of-care diagnostics, and services. The firm’s growth was largely driven by the Latin America and Asia, Australia, and China markets—in fact, China accounted for over half the revenue boost year-over-year on a geographic basis. In contrast, market volume in Europe and the United States remained close to prior year levels.

Healthineers’ diagnostic imaging business led the charge of the company’s profit growth. The diagnostic imaging segment continued to account for the largest share of Healthineers’ overall profit—demand for imaging procedures continued to grow, though the gains were somewhat offset by price pressures on new purchases and increased utilization rates for installed systems.

Apart from increased sales, Healthineers’ diagnostic imaging portfolio was fortified by new offerings in computed tomography (CT), positron emission tomography/computed tomography (PET/CT), magnetic resonance imaging (MRI), digital breast tomosynthesis (DBT), and corresponding accessories and enhancements to these machines.

December 2016 saw FDA 510(k) clearance for the SOMATOM Confidence RT Pro CT scanner with features dedicated to radiation therapy (RT) planning. The CT scanner delivers radiation therapy images that facilitate precise contouring as well as personalized dose calculation. SOMATOM Confidence RT Pro’s DirectDensity algorithm can reconstruct images where values can be interpreted as showing relative electron density at any kV setting. The CT scanner is complemented by the syngo.via RT Image suite, which integrates image assessment, contouring, and patient marking features.

Healthineers won two FDA nods for MRI technologies in February 2017. The MAGNETOM Sempra MRI system arrived first, a 1.5 Tesla, 60 cm MRI system distinguished by low operating costs and a full-coverage service contract to help healthcare institutions operate profitably despite rising cost pressures. MAGNETOM Sempra can be automated to streamline workflow for brain, spine, and large joint procedures, with exams performed in 10 minutes. About a week later, the FDA cleared Healthineers’ Compressed Sensing technology, which uses iterative reconstruction to produce high-quality MR images at a rapid rate (it reduces cardiac cine imaging from the traditional four minutes to 16 seconds) with no diagnostic information loss.

Compressed Sensing technology is able to slash long MRI acquisition times in this way thanks to fewer data points, enabling cardiac patients to access cardiac MRI for the first time.

April 2017 produced two more FDA nods. The unveiling of High Definition Breast Tomosynthesis built on Healthineers’ established DBT platform, then boasting the industry’s widest tomo sweep of 50 degrees and the first technology approved for 3D-only mammograms. It incorporates EMPIRE (Enhanced Multiple Parameter Iterative REconstruction), a combination of iterative and machine learning algorithms that produce a clear, concise 3D reconstruction. It also includes Insight 2D and 3D, the industry’s first synthetic software-generated visualization of tomosynthesis volumes in both 2D and 3D. Five days later, Healthineers won FDA clearance for the SOMATOM go. CT platform, which includes the 32-slice SOMATOM go.Now and the up to 64-slice SOMATOM go.Up CT scanners. Each can be controlled via tablet and remotely to increase patient interaction, and the platform’s single-room concept enables lower installation cost and a smaller, more efficient footprint.

Healthineers ramped it up a bit in June with three new FDA clearances for diagnostic imaging products and accessories. First came the release of syngo.via VB20 for Molecular Imaging (MI), the latest in the company’s intelligent visualization software for multi-modality imaging. syngo.via VB20 for MI touts multi-foci segmentation for PET and single-photon emission computed tomography (SPECT), allowing automatic calculation of the patient’s whole-body tumor burden. A few days later, the Biograph Horizon Flow edition PET/CT system with continuous bed motion scanning capability was cleared. This feature permits personalized exam protocols based on patient anatomy, which can be configured based on the radiology department’s most commonly scanned indications. A few days after that, the MAGNETOM Vida 3T MRI system achieved an FDA nod. MAGNETOM Vida comes equipped with BioMatrix sensing technology, which automatically tracks breathing patterns to formulate an optimal exam strategy and boosts whole spine diffusion imaging by way of individual slice adjustments that mitigate image distortion.

In September, Healthineers launched TrueFusion, a cardiovascular application that integrates advanced ultrasound and angiographic imaging to improve navigation and guidance during structural heart disease interventions. The tool was made available for the ACUSON SC2000 cardiovascular ultrasound system and works to facilitate better communication between echocardiographers and interventionists as well as reduce contrast usage and procedure time as well as patient and clinician X-ray exposure.

Healthineers’ laboratory and point of care (POC) diagnostics businesses were also buttressed by several product debuts throughout the fiscal year, but the POC segment was the forum for most of the company’s merger and acquisition activity.

The company closed its acquisition of Conworx Technology GmBH in late October 2016. The Berlin-based POC device interfaces and data management solutions firm’s claim to fame—its suite of UniPOC and POCcelerator solutions—was deemed an excellent fit to complement Healthineers’ RAPIDComm Data Management System. The Combined Siemens-Conworx suite opened connectivity to over 100 different POC instruments from all major manufacturers. Conworx’s team of 75 employees merged with Healthineers to become Siemens Healthineers Point of Care Informatics, a team of interface development, application development, and data management specialists led by Conworx CEO Roman Rosenkranz.

Last July, the company also entered an agreement to acquire Epocal, a subsidiary of Alere (now owned by Abbott Laboratories). The developer of POC blood diagnostic systems for healthcare enterprises most intriguing product, the handheld, wireless epoc Blood Analysis System, endowed Healthineers with a complete set of blood gas diagnostics offerings ranging from a low-volume, single-use device to a high-volume, multi-use benchtop solution. And although the transaction was subject to the completion of Abbott’s tumultuous Alere acquisition, it closed without any ado last Halloween.

Healthineers’ POC diagnostics business achieved its first 2017 fiscal year FDA clearance in October 2016 with the introduction of the Xprecia Stride portable, handheld coagulation analyzer. Xprecia Stride provides fast and reliable Prothrombin Time International Normalize Ratio (PT/INR) testing at the point of care for management of oral anticoagulation therapy with warfarin. It touts features including an integrated bar-code scanner, hands-free strip disposal, and intuitive navigation, and was the first POC PT/INR device cleared based on new rules for regulation of such technologies developed in March of that year.

A month later, the company launched its Atellica PM 1.0 software to simplify laboratory operations with a customizable process management solution that enables labs to oversee process data for automation systems, IT, and connected instruments. The software’s customizable alerts and exception management procedures allows labs to receive instantaneous alerts for at-risk samples, and assesses key metrics like turnaround times and testing volumes in real time. Atellica won CE mark clearance last September, opening it to global commercial availability.

With an estimated 150 million people chronically infected worldwide, HCV infection is a serious public health issue. To aid in the growing threat, last March, the company’s VERSANT HCV Genotype 2.0 Assay (LiPA) was awarded FDA premarket approval. The assay permits accurate HCV genotype and subtype identification, guiding selection of optimal treatments for Hepatitis C patients. VERSANT HCV’s single-step RT-PCR kit can be used on commonly available thermocyclers to increase lab efficiency as well.

Healthineers’ only advanced therapies product unveiling came with last March’s clearance of ARTIS pheno, a robotic C-arm angiography system for minimally invasive interventional procedures. ARTIS pheno was designed with infection prevention in mind—it comes equipped with an antimicrobial coating on the C-arm surface, the stand, and patient table. ARTIS pheno is mounted on the floor instead of the ceiling, rendering simpler OR installation as well as uninterrupted sterile air flow from the ceiling. The system supports a variety of interventional procedures including stent positioning and transcatheter aortic valve replacement (TAVR).

Healthineers also made a few moves last year to expand its Population Health Management (PHM) portfolio and capabilities. Last April, the company entered negotiations to acquire Medicalis Corporation, a provider of clinical decision support solutions at the point of order entry, imaging workflow management, and referral management. In gaining Medicalis, Healthineers will be able to address the immediate need for consolidating providers to orchestrate and standardize their imaging workflow and to achieve compliance with the Protecting Access to Medicare Act of 2014, which became effective on Jan. 1 of this year. The regulation mandates consultation of appropriate clinical decision support at the point of order for certain advanced imaging tests. Healthineers closed the Medicalis acquisition at the start of last June.

In October 2016, Healthineers began a five year, global strategic alliance with IBM Watson Health that aims to assist healthcare facilities deliver value-based care to patients with complex, chronic, and costly conditions. Healthineers will be able to offer PHM solutions and services from IBM Watson Health, including IBM Watson Care Manager, which integrates disparate clinical and individual data and applies cognitive analysis to elicit insights for nurses and care managers for closer chronic condition monitoring and counseling.

“The adoption of PHM solutions that demonstrate meaningful use of IT applications is expected to accelerate rapidly. Patient care is moving into a broader but coordinated environment where routine, manual tasks are automated by PHM solutions that unify siloed systems, stratify comorbidities, empower patients through engagement, and benchmark outcomes at network, practice, and patient level,” Koustav Chatterjee, Frost & Sullivan Transformational Health Industry Analyst, said at the time of the announcement. “I expect the shift from volume to value-based healthcare delivery will accelerate adoption of PHM technology and service solutions helping providers effectively manage chronic conditions and prevent unnecessary system utilization.”

$15.2 Billion ($89.4B total)
NO. OF EMPLOYEES: 45,000 (351,000 total)

Never has a corporate rebranding invoked such public ridicule and scorn.

Except, perhaps, for SyFy (Polish slang for syphilis), Accenture (a $100 million “nonsense word,” according to Time magazine), and Xfinity (whose meaning remains a mystery).

Certainly, Siemens AG should join the ranks of naming numbskulls, having rechristened its Healthcare division last spring as “Healthineers.” Executives touted the new brand as “unique and bold,” claiming it best describes the Healthcare business and its people as well as emphasizing the division’s “pioneering spirit and engineering expertise.”

“Our new brand is a bold signal for our ambition and expresses our identity as a people company,” Healthineers CEO Bernd Montag said, “45,000 employees worldwide who are passionate about empowering healthcare providers to optimally serve their patients.”

Despite Montag’s best attempt at a positive marketing spin, the new name became an almost instant laughing stock, most likely undermined by a promotional concert featuring a troupe of orange- and blue-clad performers dancing to a Healthineers “theme” song. “We are, we are, we are Healthineers,” the melody’s chorus harmonizes. “One vision one mission one focus one name…oho oho oho oho…We are, we are, we are Healthineers…oho oho oho oho…”

It didn’t take long for the concert video to surface on the Internet. (Go ahead and check it out; we’ll wait. Here’s the link!) Along with an avalanche of mockery:

“Let me try to understand. There was at least a brainstorming session where someone came up with the idea of having dancers (?) wearing giant condoms on stage, jumping and kicking to the sound of an annoying song,” Simone atGeeMail wrote after watching a YouTube video of the rebranding performance. “Other people at the meeting agreed that it was a good idea. Someone in Marketing also thought it was a good idea. The concept traveled up the many Siemens hierarchical levels, getting the green light all the way until a big shot executive signed off on the campaign. Is that what happened? Or someone accidentally replaced the actual campaign with a VHS of the Teletubbies?”

Harsh.

“If Siemens was an anime this would be the final battle music.”

“I’ve always wanted a family of friends, especially ones dressed in bodysocks.”

“OMG! So bad it’s an embarrassment!”

Cruel.

“I’ll bet this was great if you were…trashed on free company alcohol.”

“…I’m a fairly stable person, but I nearly had a panic attack watching that.”

And, the coup de grâce: “H.E.A.—L.T.H.—I.N.E.E.R.—Healthineers (Healthineers) Healthineers (Healthineers)!” (Lampooning the Mickey Mouse Club theme).

MedCityNews writer Neil Versel was particularly brutal, calling Siemens’ rebranding a “train wreck.” “It’s hard to get past the fact that the name Healthineers evokes Disney’s Imagineers or, worse, Mouseketeers,” he scoffed in a May 2016 online story. “Maybe if Siemens hired Justin Timberlake and Britney Spears as spokespeople? (Unfortunately, Annette Funicello died in 2013).”

Comments like Versel’s however, were tempered by a few voices of reason supporting the name change. Reuters Breakingviews columnist Olaf Storbeck was among the minority warning against a rush to judgment, noting the rebranding could actually work in the company’s favor.

“Users of Siemens’ brain-scanners and plasma protein analyzers will care little about the brand name. They will mostly remain unmoved by the sight of people dancing in orange and blue bodysuits at the brand’s official launch,” he wrote the day after the Healthineers’ May 4, 2016, birth. “They are unlikely to hum along to the Healthineers theme song as they slide patients in and out of Siemens’ MRI machines. Staff will notice, but beyond being a little embarrassed, they are unlikely to leave in droves. They may grow to like their new epithet.”

“For investors, the clumsy rebranding is, at the margin, a good thing: it shows a spin-off of Siemens’ prime division may have become more likely. [Healthcare] is meeting Siemens boss Joe Kaeser’s ambitious margin target of 15 percent to 19 percent,” Storbeck continued. “Listing a minority stake in Healthineers—which, like it or not, is hard to ignore—would simplify the overly complex group, which is making everything from high-speed trains to gas turbines and electrical grids. Corporate rebrandings are rarely greeted with delight. As weird as the Healthineers sound, they may help speed up Siemens’ re-engineering.”

It certainly seemed that way at first. Six months after unveiling its new Healthcare brand name, Siemens announced plans to spin off the division to simplify its overall product portfolio. The diversified German industrial group has been whittling down its core business focus in recent years as it gravitates toward the “concrete growth fields” of electrification, automation, and digitalization outlined in its Vision 2020 plan.

In publicizing its Healthineers intentions, however, Siemens was coy about deal timing and structure, noting only that it wanted control of the unit. Months of radio silence followed the initial spinoff announcement, though the reticence may have actually stemmed from executive-level indecision rather than deliberate secrecy. Within five weeks this past spring, Siemens bigwigs vacillated between keeping the division and mulling plans for a spinoff, initial public offering (IPO), or reverse merger with a public company.

Despite the uncertainty, Siemens management is collectively adamant against making a hasty decision about the Healthineers’ future. “Selecting the best opportunity requires the best timing. And from that timing onwards, as soon as we have finally determined the best opportunity for us and for the business [going] forward, we will have a very, very clear and precise understanding of the potential scheduling,” chief financial officer Ralf Thomas told analysts on a second-quarter earnings conference call in May (2017). “We are not in a hurry. We do see opportunities for us, of course, to find the best solution and we will not trade timing for giving up opportunities that would be disappointing…”

Depending on the timing, a Healthineers IPO could be worth 30 billion euros ($33 billion) to 40 billion euros, according to a Bloomberg Intelligence analysis. The move would hasten Siemens’ transformation from a consumer-oriented conglomerate into an industrial holding company targeting such areas as building technologies, energy management, wind power, mobility (passenger and freight transportation), process industries/drives, and financial services.

Besides its obvious fiscal benefits for Siemens AG, a public listing would enable Healthineers to raise its own funds in order to adapt to new trends such as genome analysis, personal health management, and software/services. The division made considerable strides in the latter category in fiscal 2016 (year ended Sept. 30, 2016), releasing a string of digital solutions that included a software package for minimally invasive aortic aneurysm treatment; a cloud-based network for medical expert connectivity; an electronic patient information portal; an radiological imaging archiving system; a cardiovascular imaging and information platform; a picture archiving and communication system; and a 3D routine and advanced reading program.

ANALYST INSIGHTS:In 2016, Siemens rebranded its Healthcare division to be known as Siemens Healthineers. While the name was met with mixed reviews, Siemens Healthineers is in the process of being spun off from Siemens AG. This will allow it to focus on its portfolio of core products and services in diagnostic and therapeutic imaging as well as in laboratory diagnostics and molecular medicine. Look for Siemens to continue its path of acquisitions as well as to form potentially innovative strategic alliances in all areas of healthcare.

—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors  

“The digital enterprise is just at the beginning of being built,” Siemens AG president and CEO Joe Kaeser told analysts during a FY16 earnings conference call last fall. “The main focus areas for investment and growth are software in the different verticals. We’re building on our global position in automation across our domains and enhancing our integrated offerings along what we call the EAD strategy—electrification, automation, digital enterprise. Our focus on digital transformation to drive growth is bearing fruit.”

Quite sweet fruit, actually. Overall company revenue rose 5 percent to 79.6 billion euros ($89.3 billion), with most geographic areas reporting solid gains. More than half (52.5 percent) of Siemens’ total revenue in FY16 was generated in Europe, Africa, the Middle East, and C.I.S. (Commonwealth of Independent States), while 28.5 percent came from the Americas (21 percent from the United States), and 18.9 percent originated in Asia/Australia (8 percent from China).

Eight of Siemen’s nine business units followed the company’s lead and increased profits year-over-year, with Wind Power and Renewables leading the charge via a nearly three-fold increment. Energy Management came in a respectable second with a 57 percent surge in profits, followed by Power and Gas, which recorded a 32.3 percent increase, Mobility (a 15.3 percent rise), and Financial Services (an 8.8 percent jump). Process Industries and Drives was the sole holdout, losing more than half of its profits (58.2 percent) from the previous fiscal year.

Although the division was a sieve for revenue as well—forfeiting 5.4 percent of its FY15 sales—Financial Services was more of an underachiever, having posted a 6.6 percent revenue decline in fiscal 2016. Power and Gas scored the highest growth, expanding proceeds 22.7 percent to 16.4 billion euros due to its Dresser Rand and Rolls-Royce Energy-enhanced turbine, compressor, and valve product portfolio. Wind Power and Renewables and Mobility also recorded decent gains, increasing revenue 5.6 percent and 4.2 percent, respectively.

The Healthineers division had a respectable rookie season, growing orders 4 percent to 13.8 billion euros and proceeds 5 percent to 13.5 billion euros. Profit climbed 6 percent to 2.3 billion euros, driven mainly by diagnostic imaging sales and strong product demand in China and the Americas.

Diagnostic imaging revenue likely benefited in part from FY16’s bevy of new products, including:

• • The ACUSON P500 ultrasound system—FROSK edition, an adaptable, point-of-care portable ultrasound system engineered to scale a wide range of environments and patient types. The product delivers technologies used in Siemens’ most advanced ultrasound equipment to ensure excellent image quality, smart workflow and durability, all in a compact notebook format.

• • The Multitom Rax (Robotic Advanced X-ray), touted as the world’s first Twin Robotic X-ray system, is designed to record 3D natural weight-bearing images. The system features a height-adjustable patient table and two independent, ceiling-mounted robotic arms for the X-ray tube head and the flat-panel detector for almost unlimited positioning freedom.

• • The Biograph Horizon PET/CT System, which enables doctors to visualize small lesions early. The system’s

• • 4 mm LSO crystals scintillate faster and have a higher light output than BGO crystals, resulting in high resolution and better image quality, and enabling time-of-flight acquisition. The product’s capabilities are valuable for many indications, like lung cancer—the most common PET/CT indication, at 29 percent of the total exam mix.

• • The Magnetom Amira MRI Scanner, the first Siemens MRI scanner equipped with “Eco-Power” technology, which monitors and controls magnet-cooling helium. Activated during standby mode, Eco-Power monitors the liquefaction cycle and manages the cooling and helium re-liquefaction process more efficiently, enabling a power saving of up to 30 percent in standby mode.

• • The noninvasive SEEit prostate MRI solution, powered by syngo MR E11 software architecture. SEEit enables users of Siemens’ high-performance Magnetom Aera 1.5 Tesla (1.5T) and Magnetom Skyra 3T MRI systems to perform a routine prostate exam in just 10 minutes without using an endorectal coil, which can cause patient discomfort.

• • Simultaneous Multi-Slice (SMS) MRI, an application that reduces two-dimensional acquisition times by as much as a factor of eight. With SMS, physicians can reduce the length of MRI brain examinations, which can vary significantly, to times compatible with the clinical routine (e.g., up to 68 percent for diffusion tensor imaging, or DTI) and bring clinical relevance to advanced neurological applications. SMS can be used in the treatment of patients who possess limited tolerance for longer scan times, including pediatric or geriatric patients.

• • GOBrain, an MRI application that allows acquisition of clinically essential image orientations and contrasts with a single button-push. The technology is backed by Siemens’ high-channel density coils and the company’s MRI scanning software DotGO.

• • The Somatom Drive CT System, a dual source scanner indicated for a number of clinical disciplines, including pediatrics, cardiology, and oncology. The system allows for high quality imaging at lower doses of contrast and radiation, less follow-up care, and less need for sedation or other preparation. The Somatom Drive system’s Straton MX Sigma X-ray tubes and Sigma generators allow for more precise targeting and enable high-performance imaging using higher energy levels at lower voltages that are tunable. With adjustable voltages, the system may require less contrast and can be tailored to the specific needs of the patient, as well as reduce unnecessary radiation exposure.

$14.5 Billion ($85B total)
NUMBER OF EMPLOYEES: 45,000 (348,000 total)

Earlier this year, Siemens AG President and CEO Joe Kaeser gave investors a sneak peek at life on Planet Earth in the year 2020. Over the next four years, he predicted, the world will become a healthier place, but will barely resemble its current state as it adapts to constant, rapid change and the further convergence of reality and virtual actuality.

The corporate world will be radically different too: It likely will be faster, more aggressive, more far-reaching, and more global than it is today, with digitalization and e-commerce mostly dictating business strategy.

Life at Siemens will have changed as well, but it won’t be too far a cry from Kaeser’s outlook for the company, a perspective he first detailed two years ago in his Vision 2020 plan.

“What will Siemens look like in the year 2020?” Kaeser wondered aloud during a Jan. 26 shareholders’ meeting. “Our company will be as we described it in our Vision 2020.”

Kaeser was quite candid in describing Siemen’s future Vision in 2014, recommending the company focus on the “concrete growth fields” of electrification, automation, and digitalization to better align itself with market trends. He also called for shedding a layer of senior management, bolstering the company’s power generation division with acquisitions, and reducing the number of business segments.

In addition, Kaeser envisioned a separately-managed Healthcare division without its Audiology business (that sector would either be spun off or sold).

“Vision 2020 defines an entrepreneurial concept that will enable our company to consistently occupy attractive growth fields, sustainably strengthen our core business, and outpace our competitors in efficiency and performance,” the plan concludes. “It’s our path to long-term success.”

And it’s a path from which Siemens has seldom strayed over the last two years. After unveiling Vision 2020 in May 2014, Kaeser immediately went to work boosting the company’s presence in the electrification field. First up was the purchase of Rolls-Royce Holding PLC’s energy assets for $1.3 billion, followed by the transfer of  a majority stake in Siemens’ Austrian metals business to Japan’s Mitsubishi Heavy Industries for an undisclosed sum. Then, last summer, came the $7.8 billion acquisition of rotating equipment solutions supplier Dresser-Rand Group Inc., further expanding Siemens’ power generation market footprint.

Kaeser also wasted no time restructuring the company, slashing the number of reportable segments from 16 to nine at the start of FY15: Power and Gas; Wind Power and Renewables; Power Generation Services; Energy Management; Building Technologies; Mobility; Digital Factory; Process Industries and Drives; and Healthcare. The latter division is now managed separately, led by CEO Bernd Montag, former CEO of Healthcare’s Imaging & Therapy Systems business; Executive Management member Michael Reitermann, former CEO of Healthcare’s Diagnostics business; and Chief Financial Officer Thomas Rathmann. The trio assumed their new roles in the first half of 2015.

“…the managers and employees of Healthcare can be quite proud of their work together over the past years,” Kaeser noted in a news release announcing the new regime. “We are now setting up Healthcare as a separately managed business within Siemens in order to pave the way for a successful future in a highly dynamic market and innovation-driven environment.”

The trio oversee a Healthcare division that was reorganized in FY16 into six newly defined business areas: Diagnostic Imaging, Laboratory Diagnostics, Advanced Therapies, Ultrasound, Point of Care Diagnostics, and Services. Missing from the new configuration is the Audiology business, which was sold to EQT and Germany’s Strungmann family for 2.15 billion euros, or $2.69 billion.

The deal gave EQT a majority stake in Siemens Audiology Solutions, a business that generated 693 million euros ($842 million) in revenue and 145 million euros ($176.2 million) in reported EBITDA (earnings before interest, taxes, depreciation, and amortization) in fiscal 2014. Siemens, however, is still vested in the audiology group with 200 million euros ($248 million) in preferred equity and an undisclosed percentage of future sales. Siemens also has secured a seat on the buyer group’s board and is allowing Audiology’s new owners to continue using its hearing aid product brand over the medium term.

“The Siemens audiology business has a very strong heritage for innovative, high quality products, and we have been particularly impressed with the strong track record over the last couple of years,” Marcus Brennecke, partner at EQT Partners, said in announcing the purchase in November 2014.

Siemens’ foray into the audiology market dates back more than a century with the introduction of the first industrially-produced hearing aid—the Esha Phonophor—in 1913. It was the first company to develop hearing devices that synchronize volume, sound, program settings, and directional microphone settings using wireless technology, and the forerunner of a binaural platform that outperforms normal hearing in challenging environments (i.e., cocktail parties, noisy restaurants, wind, driving a car).

Although it was a formidable force in the hearing industry, Siemens’ Audiology Solutions (which included Rexton) had lost market share over the last decade. It fell from a global peak of more than 25 percent to an estimated 17 percent, landing behind rival groups Sonova (Phonak and Unitron), William Demant Holding Group (Oticon, Bernafon, and Sonic), and possibly GN (ReSound, Beltone, and Interton). Mostly dormant in the U.S. market, the business remained on the periphery of consolidations that targeted small, privately owned hearing aid dispensaries. Its most recent purchase, in fact, occurred in 2011, when it spent $129 million for bankrupt hearing aid retailer HearUSA.

“A lot happened in this first year of our new organization. In fiscal 2015, we consolidated our company’s operations. We used the year to further focus our business and to position Siemens along the value chain of electrification, automation and, above all, digitalization,” Kaeser told investors. “Our business portfolio is continuing to develop at a very fast rate. For some within and outside the company, things are moving too fast, while for others, they’re moving too slowly. Yet we have embarked on a clear course.”

A Course with a Clear Vision

To achieve its 2020 digital dreams, Siemens is investing in areas it calls “future-oriented fields.” A particular favorite in recent years has been vertical software—or, computer programs that are specially tailored to the needs of specific industries like automotive, gas and oil, and healthcare. In late January, for instance, the company acquired simulation software provider CD-adapco, gaining ownership of an operating system that simulates and analyzes fluid and gas flows such as airflows along an airplane wing or an automobile body. Data from the software analysis can help optimize design and development, and eliminate the need for extensive testing on full-scale models.

Siemens Healthcare released two of its own vertical software systems in FY15, unveiling a new cloud-based network and an updated version of its oncology diagnostics platform.

The cloud network—aptly dubbed “teamplay”—connects hospital staff and medical experts worldwide, allowing them to exchange data and pool their knowledge. Specifically, the software platform is intended to help radiologists, imaging managers, and referring physicians make timely, well-informed decisions by connecting them in the cloud as a “virtual imaging team” so they can access current data, compare benchmarks, and collaborate more efficiently.

Siemens Healthcare officials claim the teamplay solution can help imaging professionals better assess their performance, since it provides them with a comprehensive overview of data. The network also helps improve an organization’s transparency, as it allows clinicians to compare their numbers to those from other teamplay-linked institutions.

“Siemens Healthcare products are used to diagnose or treat about 200,000 patients around the world every hour. In the process, our customers generate a vast amount of data, but they currently can use only a fraction of the information,” Arthur Kaindl, CEO of Siemens’ SYNGO Business Unit, noted when the healthcare cloud made its debut. “‘Teamplay’ is intended to help them combine this data, analyze it, and exchange it with other experts, forming the basis for prompt and well-informed decision-making.”

An easily-installed DICOM (Digital Imaging and Communications in Medicine) application connects users to the teamplay network, according to Siemens. Because Teamplay runs on tablets, laptops, and desktop PCs, members of the network have flexible access to the information, subject to the appropriate authorization and security measures.

Within hospitals, Teamplay makes it possible to evaluate the extensive amount of information generated by imaging devices—e.g., scanner capacity utilization, examination times or radiation doses—and to compare the numbers against in-house and third-party reference values. This means imaging devices can be analyzed in close to real time and their operation optimized based on the results, even down to individual device level. Such capabilities allow healthcare facilities to operate their devices more efficiently, Siemens claims, and can help them rapidly determine whether there is sufficient computed tomography (CT) capacity available to perform the expected additional number of scans required in some cases.

Five months after debuting its teamplay network, Siemens released the latest version of its syngo.via RT Image Suite, software that helps doctors plan the best course of treatment for cancer patients. Cancer treatment requires comprehensive diagnostics, speed, and optimal information exchange with other clinical disciplines. Treatment planning requires the preparation of imaging procedures for the precise assessment of the position, morphology and metabolism of a tumor, and for radiotherapy planning.

The new version of Siemens’ syngo.via RT Image Suite helps radiotherapy oncologists use imaging information from modalities such as CT, magnetic resonance tomography, or positron emission tomography-CT (PET-CT) to create accurate tumor contours for treatment, with minimal damage to surrounding healthy tissue.

The syngo.via software provides early quantitative feedback about the effectiveness of the treatment, an offline mode for the interdisciplinary information exchange, and support reading and reporting of MRI scan results.

The syngo.MR OncoCare application enables an early, quantitative evaluation of treatment, enabling doctors to select an alternative care method if necessary, saving time and costs. The syngo.MI offline Oncoboard application enables interdisciplinary cancer tumor boards to share syngo.via findings from the various imaging procedures offline on a standard PC. In addition, the syngo.via software can be used by itself or together with other syngo.via-based software.

“Siemens is a traditional company, nearly 170 years old. But it has also long been a software company—in fact, one of the strongest,” Kaeser noted in his speech to shareholders. “We are already generating revenue of 3.7 billion [euros] a year from our digital services and industry-specific software. And the growth rates are in double digits. Siemens is a technology company. Our driver is innovation. Innovation is the basis for our success. That was always true in the past and it is especially true today. That is WHAT we do.”

It is also how the company prospers, and fiscal 2015 (year ended Sept. 30, 2015) was a particularly fruitful one for Siemens. All businesses were profitable, and six of eight increased profits year-over-year, with Wind Power and Renewables leading the charge via a 10-fold increment. Energy Management was a close contender, improving its profit to 570 million euros from a deficit of 86 million euros in FY14. Overall company profit fell 1.2 percent to 7.21 billion euros but sales rose 6 percent to 75.6 billion euros ($85 billion). Roughly half of Siemens’ total revenue in FY15 was generated in Europe, Africa, the Middle East, and CIS (Commonwealth of Independent States), while 29 percent came from the Americas (20 percent from the United States), and 20 percent originated in Asia/Australia (9 percent from China), according to the company’s FY15 annual report.

Healthcare posted some hearty gains, growing total orders and revenue by 10 percent each to 13.3 billion euros and 12.9 billion euros, respectively. Division profit climbed 5.4 percent to 2.18 billion euros, driven mainly by imaging and therapy systems product sales as well as the stronger U.S. dollar.

Imaging systems revenue likely benefited in part from FY15’s bevy of new products, including:

• • The 1.5T Magnetom Amira MRI system, a machine designed to speed up scans (with some able to be performed in as little as 10 minutes) while saving energy when not in use.

• • The Mobilett Mira Max digital mobile X-ray system, featuring a special tube arm that can be rotated 180 degrees, enabling it to be positioned at the patient’s bedside; an integrated detector holder; and PIN code option. The Mobilett Mira Max also offers clinicians nearly unrestricted visibility even when it is being moved.

• • The Symbia Evo Excel SPECT system, a new version of the company’s Symbia E system that combines SPECT image resolution and detector sensitivity with the smallest room size requirement in its class. Symbia Evo Excel gives clinicians the ability to scan a broad range of patients for various applications. Its detector heads rotate into various positions, including caudal/cephalic tilt, providing comprehensive imaging configurations for general purpose, cardiology, oncology, and neurology studies.

• • The Somatom Definition Edge CT, which improves upon the company’s previous version, particularly in dual-energy imaging, where TwinBeam technology provides simultaneous imaging at two different energy levels—a feat never before possible on a single-source CT. The Somatom’s scanner features Siemens’ latest reconstruction algorithm called ADvanced Modeled Iterative REconstruction (ADMIRE), enabling better image quality at the same radiation dose. Moreover, iterative Metal Artifact Reduction (iMAR) more effectively reduces artifacts from fillings and implants that often cause distortions that may result in poor diagnostic image quality.

• • The Acuson P500 ultrasound system, Frosk edition, a device ideally suited for both critical situations and limited (compact) spaces. The product features a highly sensitive touch-screen display with advanced infrared technology for accurate gesturing, according to Siemens. A dual interface control panel offers flexible use of the touch screen or a traditional control panel based on each user’s own scanning preferences.

• • The 7 Tesla scanner Magnetom Terra, the first to be completely designed and manufactured by Siemens. The system contains a 7 Tesla magnet in its core, and is designed to translate MRI research results into clinical application; its Dual Mode functionality allows this switch to occur in less than 10 minutes.

$15.7 Billion ($91.2B total)
NO. OF EMPLOYEES: 48,000 (343,000 total)

Finally, a chance to set the record straight.

“We’ll manage our healthcare business independently within Siemens—as a company within the company,” Siemens President/CEO Joe Kaeser declared in his five-page letter to shareholders within the firm’s 2014 annual report. “Healthcare is not ‘still’ at Siemens or ‘staying’ at Siemens. Healthcare is a part of Siemens.”

A big part of Siemens, actually. The division was one of the multinational conglomerate’s most profitable segments in FY14 (year ended Sept. 30), bowing only to the mighty Power and Gas sector. Kaeser’s steely comments in the annual report obviously were meant to quash rumors that he eventually plans to divest the Healthcare unit or float it on the stock market.

Such conjecture has been swirling since last spring, when Kaeser unveiled a corporate restructuring plan he had been musing about for months. Dubbed Vision 2020, the strategy involves shedding a layer of senior management, acquiring a gas turbine and compressor company to strengthen its power generation division, and spinning off its aid equipment business. Industry analysts believe the restructuring is an attempt to close the profitability gap with longtime rivals like General Electric, with whom it battled for ownership last summer of French energy firm Alstom (GE won, bidding a staggering $17 billion for the company).

The organizational overhaul reduces the number of corporate divisions from 16 to nine and places more emphasis on the company’s digital production, electrification and automation businesses—areas that help industrial companies produce goods more efficiently. The steps, when taken together, are expected to deliver 1 billion euros in productivity gains from the end of fiscal 2016.

To help boost margins in its energy technology and automation divisions, Siemens last summer purchased Rolls-Royce Holding PLC’s energy assets for $1.3 billion (950 million euros), and created a joint venture with Japan’s Mitsubishi Heavy Industries to provide plants, products and services for the iron, steel and aluminum industry.

The crux of Siemens’ makeover, however, lies in digitalization, an area primed for solid growth with the warp-speed progression of the Internet of Things. Kaeser believes the $125 billion data analytics market is key to the company’s long-term fiscal health, as the sector is projected to expand 7 percent to 9 percent over the next few years—well above the 2-3 percent growth predicted for electrification businesses and the 4-6 percent gains forecast for the automation industry.

“We’re positioning Siemens along the electrification value chain. Electrification, automation and digitalization, and the impact of these fields on all parts of our company—that’s what the new Siemens is all about,” Kaeser wrote in the annual report. “For years now, we’ve been focusing on the megatrends of urbanization, demographic change, globalization and climate change. And now a further megatrend has emerged: digitalization, which consists in capturing and analyzing data and then using it to create customer value. We want to play a key role in shaping this digital transformation.”

Kaeser wasted little time casting Siemens into a digital mold, initiating a Digital Factory (DF) division that will offer integrated hardware, software and technology-based services for manufacturers. The new segment is expected to have a 9 billion-euro ($11.5 billion) turnover and will combine factory automation and product life cycle management software, bigwigs said.

With strengths in both industrial production software and hardware, Siemens is well-positioned to link the two to ride the Industry 4.0 wave, a movement designed to digitize and network industrial production. The company’s industrial division alone employs 8,000 software engineers—five times as many as it did a decade ago.

“Vision 2020 is paving the way to the future. The direction is clear…and we have every reason to look to the future with confidence,” Kaeser assured shareholders in his letter. “Vision 2020 defines a clear strategic direction for the ‘new Siemens.’ We’re positioning our company in strategically attractive growth fields and demonstrating a clear focus as we gear our setup to these fields.”

It remains unclear whether Kaeser considers Healthcare to be a part of those growth fields. By removing medtech from Siemens’ core hierarchy and shedding parts of the Healthcare unit, Kaeser could possibly be preparing the company to leave the business altogether.

He’d be well within his rights, of course. Siemens and its rivals (GE, Philips) all have been squeezed by reduced government healthcare spending across Europe in the wake of the Eurozone debt crisis. The companies also have faced a slowdown in equipment spending in the United States—the world’s largest healthcare market—because the Affordable Care Act has mandated new funding priorities, limiting hospital resources for apparatus upgrades.

Last summer, Siemens sold its clinical microbiology business to Danaher Corp. subsidiary Beckman Coulter for an undisclosed price, and its hospital IT venture to North Kansas City, Mo.-based Cerner Corporation for $1.3 billion in cash. Then in November, Kaeser sold its Audiology Solutions business to private equity firm EQT Partners and Santo Holding, the investment arm of Germany’s Strüngmann family, for 2.15 billion euros ($2.68 billion).

Disposing of the microbiology, hospital IT and audiology enterprises allows Siemens to focus primarily on medical imaging and diagnostics in its Healthcare division. Medical imaging, which develops products like computed tomography scanners, magnetic resonance imaging machines and ultrasound technology, is the unit’s most lucrative branch, but has been growing slowly due to weak global demand for healthcare equipment and solutions. J.P. Morgan predicts an anemic 2-3 percent overall gain in the worldwide medical equipment/solutions market this year.

When he unveiled details of the corporate restructuring last May, Kaeser insisted the Healthcare division would remain part of the company, contending an operational separation will give the segment greater freedom of action and perspectives in the future. “This means that regional organization structures can be tailored to the requirements of the healthcare market and do not have to conform to the company’s organizational matrix,” a Siemens news release stated. “This will give Healthcare greater flexibility on the medical technologies market, which is characterized by fundamental changes and paradigm shifts.”

Yet expensive technological shifts in the healthcare sector could prompt Siemens to exit the market while it is still profitable, industry analysts note. Emerging trends that likely will demand substantial investments include a greater focus on data analytics and molecular diagnostics.

Increased global competition and industry consolidation also could drive Siemens to shed its Healthcare division through a spinoff, an initial public offering  (IPO) or an outright sale. A spinoff of Siemens Healthcare by 2016 might create more value for the company than an IPO, though the latter move would generate cash that could be invested in other acquisitions.

On the other hand, Healthcare is one of Siemens’ top-grossing units. Why dump something of value?

“The question mark is the medical technology business,” Christian Stadler, associate professor of strategic management at Warwick Business School in Coventry, England, told The Wall Street Journal last fall.

And it likely will remain a question mark, at least for the time being, as Kaeser monitors its financial performance. Healthcare’s balance sheet has been erratic thus far in FY15; the unit struggled in the first quarter (ended Dec. 31, 2014) but redeemed itself in Q2 (ended March 31), posting a 13 percent growth in revenue and a 14 percent gain in orders (profit, however, fell 2 percent). The gains compensated for the 13 percent decline in profits and 3.1 percent slide in profit margins the previous quarter. Though it was accompanied by a 6 percent spike in revenue (to 2.9 billion euros), the losses triggered a harsh warning from management: “Healthcare needs to step up its efforts to quickly resume its outstanding performance…” a Q1 earnings release stated.

A turnaround may take longer than expected, though. Healthcare growth sputtered and stalled in FY 2014 as volatile foreign currency rates cut into profits in the division’s imaging and therapy systems business units. A strong euro reduced diagnostics revenue 3 percent (3.83 billion euros) and overall Healthcare proceeds 1.7 percent (12.4 billion euros), annual report data show.

Moreover, the division’s profit flatlined at 2.02 billion euros, and orders fell 6.2 percent. Revenue was down worldwide, with Germany and Asia-Australia sustaining the largest losses (2.5 percent and 4 percent respectively). Americas proceeds slipped 1.7 percent to 4.7 billion euros, while Europe-Africa-Middle East sales remained almost identical to their FY13 levels at 4.39 billion euros.

Healthcare’s only beacons in fiscal 2014 were its diagnostics unit, which grew profits 19.1 percent to 417 million euros, and its 4 billion-euro order backlog, of which 3 billion euros worth is expected to be converted into revenue in FY15.

The division’s pecuniary woes, however, had little effect on the company’s overall performance in the last fiscal year. Although revenue fell 2 percent to 71.9 billion euros, Siemens AG posted double-digit increases in total sector profit, adjusted EBITDA, net income and basic earnings per share. Total sector profit swelled 26 percent to 7.33 billion euros, adjusted EBITDA rose 13 percent to 9.13 billion euros, net income ballooned 25 percent to 5.5 billion euros and basic EPS jumped 25 percent to 6.37 euros.

“In fiscal 2014, we worked hard, we were highly focused, and we achieved a great deal. Despite a complex geopolitical situation, our overall results for the year were very good,” Kaeser said in the annual report. “We’re proud of what we achieved so far…nevertheless, our performance could have been even better. A company like Siemens never stands still. This was the case in the past and it will remain so in the future. That’s why we intend to continue developing our portfolio with determination and the utmost prudence in order to strengthen our core businesses in the medium term.”

Healthcare reinforced its foundation with numerous product debuts in fiscal 2014, including the Artis one angiography system, the Unity 3 diagnostic and fitting system, the Prime edition of its Acuson SC2000 ultrasound, and the Somatom Scope, a 16-slice CT scanner containing some advanced features previously available only on more advanced models. The device has two models—the Scope and Scope Power, with the latter having a more powerful X-ray tube, a better generator, and a faster rotation speed.

The scanner uses Siemens’ IRIS (Iterative Reconstruction in Image Space) technology to perform the image reconstruction and reduce noise. Its Adaptive Signal Boost feature improves weak signals during high attenuation, while FAST (Fully Assisting Scanner Technology) and CARE (Combined Applications to Reduce Exposure) software help automate the imaging process and reduce the radiation dose delivered to patients. Additionally, the company’s eCockpit technology helps the scanner live longer by optimizing how various crucial parts are activated.

Siemens added to its Somatom product portfolio with the April 2014 U.S. Food and Drug Administration clearance of its Somatom Force dual source CT scanner. Unveiled at a radiological society conference the previous year, the scanner has the fastest acquisition time of any similar device, allowing chest and abdomen scans in under a second without breath holding and cardiac imaging within a heartbeat. It also features capabilities for low-dose scanning with resolutions previously unavailable, allowing for imaging of patients even with reduced renal function.

The Somatom Force conducts lung scans with up to half the radiation dose of similar systems by using two special spectral filters known as Selective Photon Shields, which optimize the X-ray spectrum to improve the air/soft-tissue contrast.

Siemens premiered two new systems for molecular imaging on the European market in FY14: Symbia Intevo and Biograph mCT Flow. Symbia Intevo is the company’s first xSPECT system, a new modality that integrates the full data sets of both single photon emission computed tomography (SPECT) and CT. The resulting level of detail helps differentiate clinical conditions more precisely, for instance distinguishing degenerative bone loss from malignant disease such as bone cancer. Symbia Intevo also allows easy, accurate and reproducible quantification, making treatment follow-up possible.

Biograph mCT Flow is a positron emission tomography/computed tomography scanner that can record PET data without interruption while the patient passes through the gantry. This eliminates the usual “stop and go” process in which the table has to stop to enable a sequence of images to be recorded. FlowMotion also reduces the CT radiation dose because the scan range can be selected precisely.

$18.42 Billion ($102.6 B total)
No. of Employees: 52,000 (362,000 total)

Healthcare systems—not just in the United States, but globally—are facing unprecedented change. While healthcare is primarily organized within national geographies, the issues impacting the industry are global, according to healthcare markets analysts at professional services firm KPMG. Demographics, fiscal restraint, new technologies and consumer expectations, experts continue to note, are creating challenges and opportunities.

Safety and efficacy are, of course, paramount. Close behind, if not on par these days with the first two axioms, is value.
And though mature systems such as those found in the United States and Western Europe are grappling with the value equation as well, emerging economies have the advantage of getting a head start in streamlining costs against outcomes, by “baking in” the concepts of value-based healthcare as a central organizing feature from day one, according to analysts with the healthcare division of the London, United Kingdom-based Economist Intelligence Unit.

“Value-based health is here to stay,” said Vivek Muthu, M.D., managing director of EIU Healthcare. “Those who ignore or fail to implement a value-based strategy do so at their peril. It requires a refocus, a mind-set shift that begins with an acknowledgement that any action in healthcare must improve outcomes for the individual patient and also for the health system as a whole.”

Companies such Siemens Healthcare aggressively are positioning themselves for this new value shift. The multibillion-dollar, multinational division of Germany-based Siemens AG, includes diagnostic imaging and image-guided therapies, as well as a clinical products division that includes ultrasound and X-ray equipment, providing a mix of high-end solutions and cost-efficient, less complex equipment for emerging economies. The company also includes an in-vitro diagnostics division and a unit providing healthcare information technology (HIT) systems.

To illustrate its “global” healthcare viewpoint, in its annual report for fiscal year 2013 (ended Sept. 30), Siemens highlighted the work of Medanta, a multi-specialty hospital in Gurgaon, India.

In the United States, a coronary artery bypass operation costs about $40,000. In Europe, the figure is around $25,000. At Medanta, the same operation costs less than $4,000.

“We can provide the operation at that price because labor costs in India are lower and because we work much more productively than our colleagues in the West. In India, heart surgeons perform an average of more than 600 operations a year—in some cases, up to six times the number performed by their counterparts in other countries,” said Namrata Gaur, M.D., a cardiothoracic and vascular surgeon. “Our advanced medical technology solutions from Siemens and our optimized IT infrastructure are further key factors.”

Gaur is enthusiastic about her work, but is concerned about the growing number of cardiovascular patients under her care.

“The incidence of coronary artery disease is increasing sharply, and our patients are getting younger all the time,” she explained.
“Not long ago, for example, we operated on a girl of only 14. One contributing factor is a genetic predisposition in the Indian population, and another is the changing lifestyle. In the cities, in particular, there’s more stress, people are smoking more, eating less-healthy foods and paying less attention to their health in general.”

As a result, India will have to expand its capacity for treating cardiovascular disease in the years ahead. Despite growing prosperity, relatively few people can afford health insurance. The challenge is to provide access to high-quality healthcare—regardless of their income and status.

To respond to similar conditions in healthcare markets around the world, Siemens Healthcare’s research and development (R&D) activities most recently have focused on two trends: The world’s population continues to grow steadily and to get older. These trends increase the pressure on healthcare providers to treat more people at increasingly lower costs in order to stabilize rising healthcare spending. To meet these needs, R&D efforts have targeted the development of systems that help physicians diagnose large numbers of patients but also are robust, easy to use, and inexpensive to purchase and maintain. (Incidentally, Siemens Healthcare spent roughly $1.58 billion in R&D in 2013.)

One example is technology that the company claims is the world’s first wireless ultrasound device, Acuson Freestyle The system is designed to make it easier to use advanced ultrasound technology in areas that need to be aseptic, or sterile. Examples include interventional radiology, anesthesiology, intensive care, catheter labs, and emergency care. Ultrasound with wireless transducers also is ideally suited for minimally invasive procedures such as nerve blockades, access to blood vessels, and positioning for therapeutic interventions and biopsies.

Acuson is made at Siemens’ a new manufacturing site in Plymouth Meeting, Pa., just outside Philadelphia. It is a 12,000-square-foot facility opened in 2013 following Siemens’ acquisition of ultrasound company Penrith Corp. in 2012—a move made to expand the company’s ultrasound offering.

“With this new facility, we will be able to offer Siemens customers worldwide a cutting-edge ultrasound system that eliminates the impediment of cables during ultrasound-guided procedures,” said Jeffrey Bundy, Ph.D., CEO, Siemens Ultrasound. “The Acuson Freestyle system’s wireless transducer technology offers greater flexibility and ease in obtaining accurate transducer placement, and simplifies sterilization in interventional settings. The system will enable ultrasound technology to be used more readily in a variety of point-of-care applications, including interventional radiology, critical care, anesthesiology, and emergency care.”

The Philadelphia-area facility will be Siemens’ second ultrasound manufacturing facility in the United States. The other is in Buffalo, Grove, Ill.

Corporate Shuffle
Siemens had an important corporate changing of the guard at the top during FY13.

After parent company Siemens AG issued its second profit warning of the year, CEO Peter Loescher was voted out by the company’s supervisory board on July 31. He was replaced by Joe Kaeser, who had served as the company’s chief financial officer (CFO). There had been rumors in the past of Kaeser eyeing the chief executive role, but the two insist there is no bad blood between them. Late last year, when questioned about the rumors, the CFO said the two complemented each other “like light and dark.” Loescher was named CEO in 2007 and was the first person appointed from outside the company to take on the job. He joined the company from U.S. pharmaceutical company Merck & Co. He was, at the time, hailed as a hero who would lead Siemens out of prominent bribery and price-fixing scandals that had blackened both its image and finances.

Loescher did drag the company out of that mire, but lost credibility after repeated misjudgments around demand in Siemens’ main markets. A company with assets totaling $143 billion, Siemens often is viewed as a bellwether of Germany’s economy, and it has been suffering since German exports fell in late 2009. The company also has been affected by a series of one-time charges related to project delays and other issues.

“Peter Loescher restored Siemens’ high reputation and helped it achieve a series of impressive successes,” said Gerhard Cromme, board chairman. “Under his leadership, Siemens experienced two of the most successful years in its history.”
“Our company is certainly not in crisis, nor is it in need of major restructuring,” Kaeser said. He did allow, however, that Siemens has lost some profit momentum compared with competitors and said he wanted to put the company back on an “even keel.”

Financial Ups & Downs
For fiscal year 2013, Siemens Healthcare recorded flat sales of 13.6 billion euros ($18.4 billion). Profit for the year was up 13 percent in euros, from 1.82 billion to just shy of 2.05 billion ($2.8 billion). Sales in the Americas were 5.63 billion euros ($7.61 billion), down 1 percent compared to 2012. The United States made up 35 percent of Siemens Healthcare’s overall sales for FY13. Sales also fell 1 percent in Europe/Africa/Middle East to 4.54 billion euros ($6.14 billion). Sales grew in Asia/Australia by 3 percent to 3.42 billion euros ($4.62 billion).

“Growth was driven by emerging markets, as these countries continue to expand access to healthcare for a broader population and build up their healthcare infrastructure,” Siemens officials noted. “In contrast, markets in industrialized countries grew only modestly compared to the prior fiscal year as demand was held back by healthcare reforms and budgetary constraints, particularly in Europe. Healthcare IT markets grew faster than the healthcare market as a whole, on particular strength in the United States. On a geographic basis, markets in Asia, Australia grew in the high single digits, including double-digit growth rates in China. Markets in the Americas, including the U.S., grew moderately.”

Profit for the company’s diagnostics business (for which the company breaks out specific figures, but not for other healthcare sectors) came in at 350 million euros ($473 million) compared to 314 million euros in 2012 ($404 million at 2012 rates). Revenue declined 1 percent, from 3.97 billion euros ($5.11 million at 2012’s Sept. 29 conversion rate) to 3.94 billion euros ($5.33 billion).

For Siemens as a whole, sales were down 2 percent to 75.9 billion euros ($102.6 billion). Net income was up 3 percent to 4.41 billion euros ($5.96 billion). Earning per share grew 7 percent to 5.08 euros ($6.87).

Going Forward, More Change
In May this year, during fiscal 2014, Siemens is planning a restructuring that will unleash its healthcare unit as a separate business.

At a recent press conference in Berlin, Germany, Kaeser outlined the plan, which will see the company’s four business sectors—industry, energy, healthcare and infrastructure—eliminated in favor of bundling businesses into nine divisions.

Additionally, Siemens’ hearing aid business also will be spun off and publicly listed. There also are rumors that the company is planning to divest its healthcare IT operations.

“Looking at the longer run, the market technologies of healthcare [are] going to see fundamental changes,” said Kaeser. “For example, cost reimbursement systems—these are increasingly value-based and require new business models.”

Company officials pointed to a number of paradigm shifts in medicine that helped drive the decision to restructure healthcare, including disruptive technological changes such as big data analytics, increasing use of molecular diagnostics and the growth of mobile healthcare.

“To be able to adequately respond to these profound changes and to keep a hand at the helm to be able to react properly, healthcare will be set up as a separate unit within Siemens in the future,” said Kaeser.

With healthcare managed separately, regional organization structure can be tailored to the requirements of the healthcare market and don’t have to conform to Siemens’ organizational matrix, according to the company.

Siemens anticipates that the bundling of divisions and elimination of the sector level will cut costs by reducing bureaucracy.
Increases in productivity are expected to be around 1 billion euros annually, fully effective by the end of fiscal 2016.

Morgan Stanley analyst Ben Uglow said the restructuring shows “healthcare will no longer have the same go-to-market strategy as the rest of Siemens,” while Nicholas Heymann of William Blair noted the move “suggests [the unit will] be either IPO’d, spun out, sold or swapped.”

Last year, a report suggested that Kaeser received proposals from investment banks about an initial public offering or spinoff of the healthcare division.

Siemens said the public listing of its audiology unit will “give the business an opportunity to better leverage its potential,” noting the division’s “technology and … consumer-oriented market access limit synergy potentials with other … businesses.” Siemens executives said that anticipated technological developments at the unit “differ greatly from those of … its healthcare activities … this applies particularly to growth fields like implants and the link to consumer electronics.”

Siemens also announced that second-quarter profit in its healthcare unit jumped 19 percent year-over-year to 531 million euros ($739 million). Meanwhile, revenue fell 1 percent to 3.3 billion euros ($4.6 billion), with orders dropping 4 percent to 3.2 billion euros ($4.5 billion). Siemens said sales and orders came in below prior-year levels due to declines in the Americas region, while orders fell in both Asia and Australia. The company added that sales in its diagnostics unit fell 3 percent to 937 million euros ($1.3 billion), due to lower revenue in the Americas region.

Kaeser said the second quarter showed that the company has “a lot to do” to improve its operating performance. “Nevertheless, we are on course to reach our targets for the fiscal year,” he said.

3. Siemens Healthcare
$17 Billion ($100B total)

KEY EXECUTIVES:
Peter Loscher, President & CEO, Siemens AG
Hermann Requardt, President & CEO, Siemens Healthcare
Michael Sen, CFO, Siemens Healthcare
Gregory Sorensen, M.D., CEO, Siemens Healthcare, United States
Tom Miller, CEO, Customer Solutions, Siemens Healthcare
Michael Reitermann, CEO, Siemens Healthcare, Diagnostics
Bernd Montag, CEO, Siemens Healthcare, Imaging & Therapy Systems
Norbert Gaus, CEO, Siemens Healthcare, Clinical Products
Barbara Kux, Head of Supply Chain Management & Chief Sustainability Officer

NO. OF EMPLOYEES: 51,000 (360,000)

GLOBAL HEADQUARTERS: Munich, Germany

The picture for Siemens’ four Healthcare Sector divisions (Clinical Products, Customer Solutions, Imaging & Therapy Systems, Clinical Products and Diagnostics) was “mixed,” according to company reports.

Strong development in the imaging business contrasted with “operative challenges” in the diagnostics business. Revenue and new orders were slightly above levels for 2010, at $17 billion and roughly $18 billion, respectively. Sector profit doubled to roughly $1.8 billion, thanks in large part to stronger imaging performance. Thirty-six percent of sales came from Europe, C.I.S. (Commonwealth of Independent States comprising countries of the former Soviet Union), Africa and the Middle East; 42 percent from the Americas; and 22 percent from Asia and Australia. By far, the largest single national market for Healthcare is the United States, with 35 percent of external revenue for the Sector during fiscal 2011.

Across all the company’s divisions—from lighting and home appliances to automation and drive technology—Siemens ended fiscal 2011 (Sept. 30, 2011) with record operating results. Total sectors profit climbed by 36 percent (in euros) to $12.4 billion, and income from continuing operations increased by nearly two-thirds to approximately $9.5 billion. Revenue and new orders also increased. Revenue from continuing operations grew 7 percent (in euros) to approximately $100 billion; new orders rose 16 percent to $116 billion.

For Healthcare, there were a number of new technology rollouts for the year.

One of the most significant introductions from Siemens was in the area of medical imaging. According to the company, the Biograph mMR is world’s first whole-body scanner to fully integrate magnetic resonance imaging (MRI) and positron emission tomography (PET) in one system. The systems first received CE Mark in Europe in December 2010 and then got clearance from the U.S. Food and Drug Administration (FDA) in June 2011. While MR provides detailed morphological and functional details in human tissue, PET goes further to investigate the human body at the level of cellular activity and metabolism. The system has the potential to identify neurological, oncological and cardiac conditions of disease and support the planning of appropriate therapies. Because MRI does not emit ionizing radiation, Biograph mMR may provide an added benefit with lower-dose imaging. The Biograph mMR also creates opportunities for research, such as the development of new biomarkers or new therapeutic approaches.

“Biograph mMR is the latest breakthrough innovation of Siemens in the field of diagnostic imaging. It will be a new instrument for driving personalized medicine forward,” said Walter Maerzendorfer, CEO of the Magnetic Resonance business unit at Siemens Healthcare.

Siemens also garnered a number of other important FDA wins in FY11. A few of the standout items are detailed here.

The company’s computed tomography (CT) iterative reconstruction algorithm SAFIRE, which stands for Sinogram Affirmed Iterative Reconstruction, received FDA clearance. The system is made up of image reconstruction software and hardware to allow for a reduction of radiation dose in CT examinations. Additionally, the use of projection raw data during the iterative image improvement process enables a reduction of subtle image artifacts and therefore a further improvement in general image quality. According to Siemens, SAFIRE helps users reduce dose by up to 60 percent compared to previous filtered back projection techniques. The system’s fast reconstruction speed of 20 images per second enables reconstruction of a typical high-resolution thorax examination of 30 centimeters in just 15 seconds.

“From a clinical perspective, SAFIRE helps to significantly reduce radiation exposure across the whole portfolio of clinical applications and continues to demonstrate Siemens’ commitment to deliver the best possible patient care at the lowest possible radiation dose,” said Elliot Fishman, M.D., CT section chief of radiology at Johns Hopkins Medical Institutions in Baltimore, Md., and a member of the SIERRA (Siemens Radiation Reduction Alliance) dose expert panel.

Also 510(k) cleared by the FDA was the Mobilett Mira, the company’s first mobile digital X-ray system with a wireless detector. The Mira’s wireless capability facilitates examinations of patients with limited mobility, and its rotating swivel arm is designed for easier use by clinical staff.

“The process of having an X-ray can be stressful for patients with mobility challenges. The Mobilett Mira addresses that challenge with its ability to move to wherever the patient is most comfortable,” explained Gerhard Schmiedel, vice president, X-ray Products, Siemens Healthcare. “At the same time, the new rotating swivel arm is an important benefit for radiologists and technologists, giving them more flexibility to access patients and capture high-quality images with greater ease.”

Mobile X-ray systems frequently are used when patients cannot be moved to an X-ray room—for example, when they are in the intensive care unit. Until now, a mobile unit’s X-ray detector was connected to the system via a data cable that could lengthen the exam process, cause patient discomfort, and hamper the imaging efforts of clinical staff. With the Mobilett Mira, the advantages of mobile X-ray imaging are combined with the flexibility of a wireless detector.

On the leadership front, Siemens Healthcare appointed Gregory Sorensen, M.D., CEO of Siemens Healthcare in the United States, succeeding Randy Hill, who served as interim CEO. Sorensen also oversees the Canadian activities of Siemens Healthcare. He began in June 2011.

He’s responsible for leading the marketing, sales, service, and support functions for Siemens Healthcare in the United States, based at the company’s headquarters in Malvern, Pa. Sorensen served as Professor of Radiology and Health Sciences & Technology at Harvard Medical School; he was a faculty member of the Harvard-MIT Division of Health Sciences and Technology, and a co-director of the A.A. Martinos Center for Biomedical Imaging at Massachusetts General Hospital. Sorensen is a practicing neuroradiologist and active researcher with significant experience in clinical care, clinical trials, and translational research.

“Dr. Sorensen is well known in the industry for his innovative research on medical imaging and for his expertise in clinical practice. It is a great privilege for me to welcome him to Siemens Healthcare,” said Tom Miller, CEO, Customer Solutions, Siemens Healthcare Sector.

$16.7 Billion ($103B total)
NO. OF EMPLOYEES: 49,000 (405,000)

Timing is everything is how the axiomatic saying goes. Well, the leadership of the Healthcare division of Siemens AG believes it. With the world population expected to grow 32 percent by 2050—close to 9 billion people—the healthcare industry, even considering the regulatory and financial challenges inherent in it, seems like a solid bet. Add to that increasing life expectancy and you’re bordering on a sure thing. They think they’re in the right place at the right time.

“All over the world, healthcare costs are already straining the financial resources of governments and insurance providers. In some industrialized countries, they now consume more than ten percent of gross national product—and the figure is rising,” said Peter Loscher, president and CEO of Siemens. “In the rapidly growing emerging and developing countries, healthcare quality is not improving as rapidly as inhabitants would like. That’s why our challenge now is to boost the efficiency and affordability of medical services while improving the quality of individual patient care.”

Within that challenge lies opportunity—for patients as well as Siemens’ bottom line.

For the company as a whole, it was a record year for profits. Net income for the fiscal year (ended Sept. 30), climbed 63 percent to approximately $5.5 billion on sales of roughly $103 billion. Growth picked up speed once again during the year. While declining in the first two quarters, new orders and revenue rebounded sharply in the second half of the year.

“We completed fiscal 2010 very successfully. Were coming out of the economic downturn with full momentum,” Loscher said. “Our growth is gaining speed. Operationally, we achieved record profit twice in a row. We expect to take this positive momentum into the next fiscal year. We have to keep winning, order by order.”

Loscher said that because his company’s products serve the “entire healthcare continuum from prevention, early detection and diagnosis to treatment and follow-up care” the company’s product lines are better bolstered against shifts that might affect other medtech firms. The company also spent a significant amount on new product research—approximately $1.5 billion in fiscal 2010 on R&D activities.

For fiscal 2010 Siemens’ healthcare unit reported sales of approximately $16.7 billion, an increase of 4 percent (in euros), and a profit of approximately $1 billion, thanks in part to a strong year in its imaging devices business. Profit for the healthcare unit dropped off 48 percent (in euros), which the company attributed to one-time “impairment charges” related to the diagnostics business. This impairment is being made in connection with a reevaluation of medium-term growth prospects and long-term market developments of the laboratory diagnostics business, the company said. Siemens acquired Bayer Diagnostics and Dade Behring in 2006 and 2007, respectively, merging them to create one of the world’s leading providers of laboratory diagnostics. By far, the largest single national market for Siemens Healthcare was the United States, accounting for 36 percent of Siemens Healthcare’s international revenue (42 percent overall for the Americas—approximately $2.1 billion in sales).

The laboratory diagnostics business has been under new management since May 1, 2010, when Michael Reitermann—previously responsible for sales and service for Siemens’ healthcare business in the United States—was appointed CEO of the diagnostics division.

“Our new management team is focusing its strategy on expanding the [diagnostic] division’s power of innovation—one of the traditional strengths of Siemens. This should enable the laboratory diagnostics business to achieve the targeted high level of performance,” said Hermann Requardt, president and CEO, Siemens Healthcare.

In October last year, the company reorganized the way it categorizes its healthcare holding. Following the reorganization, the sector comprises the three divisions: Imaging and Therapy Systems, Clinical Products and Diagnostics.

Notably in 2010, Siemens’ Mammomat Inspiration full-field digital mammography system became available in the United States. According to the company, the device combined digital screening and diagnostic mammography, stereotactic biopsy, and upgrade capability to future technologies all in one system. Siemens conducted customer workshops around the world, in which radiologists, radiology technologists and physicists contributed details and suggestions on their vision for a next generation digital mammography system.

In recognition of its achievement in imaging technology, global consulting company Frost & Sullivan awarded Siemens Healthcare its Award for Technology Leadership in the computed tomography imaging market. The award was based on industry analysis and cited Siemens’ history in dose reduction solutions as well as the company’s ongoing commitment to research and development.

$17.4 Billion ($115 B total)
NO. OF EMPLOYEES: 48,000 (405,000)

In 2008, Siemens unveiled plans to restructure, simplify and reorganize. The company bundled its operations into three sectors (Industry, Energy and Healthcare), and launched a program to reduce its general, sales and administrative costs. So, in a way, 2009 was a “test drive” for the firm’s new, streamlined self.

In fiscal 2009 (ended Sept. 30), the company was able to complete its selling, general and administrative (SG&A) cost-cutting goals for fiscal 2010. SG&A expenses were cut approximately $1.7 billion, officials reported. Layoffs under the SG&A program, which provided for around 12,600 job cuts worldwide, primarily in administrative roles, also were completed in 2009.

Overall, all of Siemens’ divisions reported $115 billion in revenue, a 1 percent decline in euros. (Editor’s note: The following percentage changes are in euros. Currency conversions are based on the exchange rate on the final day of the fiscal year.) Net income was approximately $13.6 billion, a 58 percent drop compared to fiscal 2008, as a result of discontinued operations. Total sector profit for the company’s three reportable sectors increased 13 percent to$10.9 billion.

Siemens’ Healthcare division—made up of three untis: Imaging & IT, Workflow & Solutions, and Diagnostics—earned roughly $17.4 billion in fiscal 2009, a 7 percent increase. Sector profit was $2.1 billion, up 18 percent. According to management, Healthcare’s business activities are “relatively unaffected” by short-term economic trends but management is keeping a close watch on regulatory and policy developments in the United States, particularly healthcare reform. The United States is the largest national market for Siemens Healthcare, responsible for 38 percent of the sector’s revenue.

Within the Healthcare division, Imaging revenue was $11 billion, up 5 percent. Healthcare Workflow & Solutions was $2.2 billion, up 2 percent, and the Diagnostics unit increased sales 10 percent to roughly $5.1 billion. Profits were up in double digits for Imaging & IT ($1.7 billion) and Diagnostics ($493 million), with gains of 29 percent and 36 percent, respectively. Workflow & Solutions took a loss of $77 million.

One way the company planned to become leaner and more efficient in 2009 was through improved supply chain management across all three divisions. The company’s goal was to create a more efficient network and reduce supplier-based risk. One of the key methods for achieving potential savings is to integrate procurement activities across business sectors by bundling and building purchasing volume. A second central component of the initiative was global value sourcing, which entails the development of a competitive global supply network and joint product development and innovations with key suppliers. In addition, Siemens plans to increase the share of sourcing in emerging countries. The last piece of the supply chain puzzle is to increase cooperation with suppliers that offer the most value across the board—not just bottom line but also product innovation. To that end, the company intends to significantly reduce the number of suppliers. In fiscal 2009, Siemens Healthcare sourced about 14 percent of its purchasing volume from low-cost countries. In fiscal 2010, this figure is expected to be 17 percent.

$16.1 Billion ($111.6B total)
NO. OF EMPLOYEES: 49,000 (427,000)

Fiscal year 2008 was a transformational one for Siemens. Not only did the global electronics and electrical engineering firm simplify its management structure, it also bundled its operations into three sectors (Industry, Energy and Healthcare), and launched a program to reduce its general, sales and administrative costs. In addition, Siemens reorganized its worldwide business activities by forming 20 regional clusters.

“In short, in fiscal 2008, we successfully implemented the most extensive company-wide restructuring

Siemens’ Mammomat Inspiration, a mammography platform for screening diagnostics, bio psy and 3D tomosynthesis. Photo courtesy of Siemens.

program ever executed in the history of Siemens,” Peter Löscher, president and CEO, told shareholders in a letter published in the company’s 2008 annual report. “This achievement will enable us to continue meeting our targets for sustainable, profitable growth—even in a difficult economic environment.”

Despite the “difficult” economic environment, Siemens experienced significant growth during fiscal 2008 (ended Sept. 30). Revenue climbed 7 percent to $111.6 billion, while net income totaled $8.5 billion, a 47 percent increase compared with the $5.76 billion the company reported in fiscal 2007.

Total sectors profit—a measure of the combined profit from Siemens’ three sectors—reached $9.42 billion, a miniscule decrease of 0.84 percent compared with the $9.5 billion reported in fiscal 2007 (the decrease becomes slightly more significant—2 percent—when Euros are used instead of U.S. dollars).

Executives noted the decrease was kept to a minimum despite the incurrence of more than $1.4 billion in project charges at the Fossil Power Generation and Mobility divisions, as well as $469 million in costs related to transformation programs in the Healthcare sector and Mobility division.

Siemens’ Healthcare sector posted a profit of $1.76 billion in 2008, a 6.3 percent decrease compared with the $1.88 billion in profit the sector generated in 2007. Company officials attributed the decline to reducing costs and $251 million in transformation expenses associated with refocusing certain business activities within the Imaging & IT and Workflow & Solutions divisions. These costs reduced the Healthcare sector’s profit margin by about 150 basis points.

Revenue in the Healthcare sector totaled $16.1 billion in fiscal 2008, a 14.7 percent increase compared with the $14.059 billion generated in 2007. About half of the revenue—$7 billion—was generated in North and South America, a 7.4 percent jump compared with the $6.533 billion in revenue generated in that region in fiscal 2007. The next largest revenue source generator was Europe, the Commonwealth of Independent States (C.I.S., comprising Russia and 11 former Soviet republics) and Africa. Those regions brought in $6.28 billion in revenue to Siemens, a 22.5 percent increase compared with the $5.132 billion the areas raised in 2007. Siemens made $2.75 billion in revenue in Asia, Australia and the Middle East and $1.41 billion in Germany in 2008.

Revenue fell 2.3 percent in the Imaging & IT division, going from $10.08 billion in fiscal 2007 to $9.841 billion in 2008. The Workflow & Solutions division posted a slight gain of 1.03 percent, as revenue rose to $2.15 billion. But the sector’s most significant increase occurred within the Diagnostics division, where revenue more than doubled, going from $2.21 billion in fiscal 2007 to $4.6 billion in 2008.

Company executives attributed the surge in Diagnostics division revenue, as well as the increase in overall Healthcare sector revenue, to the $7 billion acquisition of Dade Behring Holdings Inc. in the first quarter of fiscal 2008. At the time of its purchase, the Deerfield, Ill.-based Dade Behring had operations in 35 countries and served more than 25,000 customers worldwide. The firm develops clinical lab equipment and integrated solutions for routine chemistry testing, immunodiagnostics (including infectious disease testing), hemostasis testing and microbiology.

Executives with both Siemens Healthcare and Dade Behring said the merger would help both firms become a leading provider of clinical diagnostic products and services. The acquisition was Siemens’ third in 14 months—in May 2006, the company purchased Los Angeles, Calif.-based Diagnostic Products Corp., and in January 2007, it acquired Bayer Diagnostics, a subsidiary of Bayer AG of Germany.

The addition of Dade Behring not only boosted revenue in the Diagnostics division, it pumped up profit as well. Profit more than doubled in fiscal 2008, going from $135.5 million in 2007 to $358.3 million last year. Profit in the other two divisions didn’t fare as well—both fell, with Imaging & IT dropping 14.06 percent to $1.29 billion and Workflow & Solutions plunging 58.9 percent to $95.3 million. Profit in the two latter divisions were affected by transformation costs.

In addition to revamping its businesses into three major divisions, Siemens created a new setup for its regional companies in fiscal 2008. The companies were grouped into 20 “clusters” of countries, which in turn, are organized into three world regions: Europe, C.I.S., and Africa; the Americas; and Asia, Australia and the Middle East. Regional companies in each cluster share support functions and administrative resources so they can better focus on customers, suppliers, media and other stakeholders in their respective countries.

In an effort to stay globally competitive, Siemens increased its research and development (R&D) expenses in 2008. R&D expenses climbed to $5.46 billion, a 12.5 percent jump compared with the $4.85 billion the company spent in 2007.

The average number of employees engaged in R&D rose to 32,200 from 30,900 in 2007. The company’s patent portfolio consisted of more than 55,000 patents worldwide, with researchers submitting about 8,200 inventions in fiscal 2008. Siemens filed 5,000 patent applications last year—the second highest number filed in Germany and the third highest in Europe.

A number of Siemens’ earlier patent applications and research came to fruition in fiscal 2008 in the form of new product releases. Some of the items that hit the market during the last fiscal year include the 1.5 Tesla (T) Magnetom Essenza, a magnetic resonance imaging system that is considerably less expensive than other 1.5T systems. In February 2008, the company announced U.S. Food and Drug Administration approval of its Versant 440 Molecular System, which is used for viral load testing of the human immunodeficiency virus and the hepatitis C virus. The enhanced automation of the Versant 440 provides labs with greater throughput and less hands-on time, which helps maximize productivity.

Siemens ended its fiscal year by breaking ground on a training and service facility in Cary, N.C., and completing the expansion of a manufacturing plant in Walpole, Mass.

The 143,000-square-foot, six-story office building in North Carolina is scheduled to open in early 2010. It will house more than 500 technical and administrative support personnel and include a 600-car parking deck and a separate one-floor cafeteria. Officials said the building will accommodate an additional 300 workers Siemens plans to add to its North Carolina operations over the next five years.

$14 Billion ($103B total)
NO. OF EMPLOYEES: 49,000 (480,000)

According to Siemens, its broad product portfolio provides answers to the “world’s toughest questions confronting industry, energy, the environment and healthcare.”

That may be the case, but judging by the company’s bottom-line growth for fiscal 2007 (ended Sept. 30), Siemens also may have the answer when it comes to financial performance.

Overall company revenue (the company had six main business areas in fiscal 2007: Information and Communications, Automation and Control, Power, Transportation, Medical, and Lighting) increased 9% to $103 billion, while net income increased 21% to $5.6 billion. Though net income expanded, according to company officials, it was hindered by substantial corporate costs associated with ongoing legal trouble. Profit across all geographic areas increased by double digits—led by Europe (excluding Germany), which grew by 34%. Research and development spending also increased—by 9.6%—and the company’s medical division represented 31% of total R&D expenditure, up from 28% in 2006.

For Siemens Medical Solutions—now called Siemens Healthcare as part of a reorganization begun this year—revenue rose 20% to $14 billion, primarily as a result of the acquisitions in in-vitro diagnostics, the company said. The profit picture for the company (which provides diagnostic and therapeutic technologies, including imaging and laboratory diagnostics, therapy and healthcare information technology solutions), while rosy, was impacted by cuts to imaging payments by the US government. Profit for Siemens Healthcare, which has US headquarters in Malvern, PA, increased substantially (34%) to reach $1.9 billion.

In 2007, Siemens created a new Diagnostics division—rolling in recent diagnostics acquisitions—as part of a targeted strategy to create an integrated diagnostics company by combining the entire imaging diagnostics, laboratory diagnostics and clinical IT value chain under one corporate umbrella. During fiscal 2007, Siemens announced a significant addition to its Diagnostics group’s portfolio (the deal closed during the first quarter of fiscal 2008). Dade Behring, Inc., a leading clinical laboratory diagnostics company, was purchased for approximately $7 billion.

“Complementing last year’s acquisitions of Diagnostic Products Corporation and Bayer Diagnostics, this transaction positions Siemens as a leader in the highly attractive and rapidly growing market for laboratory diagnostics,” former President and CEO Erich Reinhardt said at the time. “The implementation of integrated IT and clinical solutions from Siemens will help improve workflow efficiency throughout the healthcare enterprise, from admissions and administration to the laboratory and the radiology department. This will enable our customers to increase the quality of patient care while simultaneously reducing costs.”

In May 2008, Donal Quinn was named the new head of Siemens’ Diagnostics group, succeeding Jim Reid-Anderson, who became the new CEO of Siemens Healthcare that month following the resignation of Reinhardt in the wake of legal problems at the company. Both Reid-Anderson and Quinn had worked at Dade Behring.

Reinhardt resigned his position as board member and CEO of Siemens Healthcare in April this year. His departure is related to what the company called “compliance violations” and “unacceptable behavior” by the former Siemens Medical Solutions group relating to internal controls and the accuracy of documentation. Reinhardt was not accused of any wrongdoing and will continue to serve as a consultant to the company in the short term. Reinhardt took over as head of the Medical Solutions Group in 1994.

The restructuring in the Healthcare division was part of a much broader corporate cleanup. Last year, an internal investigation conducted by a law firm hired by the company revealed evidence of bribery and other corporate improprieties within Siemens, which resulted in a number of resignations and dismissals across multiple business units. Evidence of bribery goes back to the year 2000.

As part of the company’s restructuring,  Siemens brought on board a new CEO, Peter Löscher, who took over last July. He came from pharmaceutical giant Merck & Co., Inc. and is the first CEO in Siemens’ 160-year history to be brought in from outside the company. The board felt an outsider would be better equipped to initiate a thorough cleanup and recast the company’s image.

The company’s businesses were broken down into three broad divisions covering industry, energy and healthcare beginning in January this year. Löscher also put the leaders of those three sectors onto the central managing board in Munich, ending a system in which a leader of a major business had his or her own managing board and reported to Munich headquarters without being based there. Siemens officials say the old way allowed corruption to spread and inhibited accountability.

In October 2007, a German court fined Siemens $306 million in connection with bribery activities in its communications equipment business, which it has sold off or folded into joint ventures over the last two years. In the United States, the Department of Justice and the Securities and Exchange Commission have begun investigations.

For the first six months of 2008 (ended March 31), Siemens Healthcare reported $8.5 billion in revenue (approximately 20% improvement compared with the same period last year) and $1.1 billion in profit (roughly a 6% gain over the first half of FY07). Profit margin was “strongly affected” by integration costs associated with the acquisition of Dade Behring, the company reported. Some of those costs, however, were offset by new orders that rose 10% year-over-year in the second fiscal quarter. Imaging and IT business continued to deliver solid profitability despite increasing challenges in market conditions, officials said.

One way the company hopes to offset any future losses is by cutting jobs. In July, parent company Siemens AG announced it would cut 16,750 jobs, or 4.2% of its global workforce, to streamline operations and save approximately $2 billion in costs. The company plans to consolidate its businesses from 1,800 separate legal entities to fewer than 1,000.

“$10.1 Billion ($107.4B Total)

Key Executives:
Peter Löscher, President and CEO, Siemens AG
Dr. Erich R. Reinhardt, President and CEO, Siemens Medical Solutions
Klaus P. Stegemann, CFO, Medical Solutions Group of Siemens AG
Heinrich Kolem, PhD, President, Siemens Medical Solutions USA
Michael Reitermann, President, Siemens Medical Solutions, Molecular Imaging Division

No. of Employees: 480,000

World Headquarters: Munich, Germany

Siemens Medical Solutions, the healthcare division of multinational industrial giant Siemens AG, is yet another example of growth and expansion in this year’s Top Companies Report—though 2007 brings with it a little shake-up.

For fiscal 2006 (ended Sept. 30), the company reported sales of $107.4 billion, up from $96 billion, a 16% increase. The company maintains that half of its sales growth is organic and not the result of acquisitions. According to recent financial statements, the majority of its business units reported double-digit growth for the fiscal year. Company-wide gross profit was $28.9 billion, up from $27.1 billion. Siemens also expanded its workforce in fiscal 2006 more than 75,000. In addition, the company pumped up its spending on research and development by 16% to $7 billion.

Europe (excluding Germany, which accounts for 19%) made up the largest percentage of the company’s sales, followed close behind by the Americas at 26%. The Asia-Pacific region was the source of 15% of Siemens’ sales success for the year.

In its 2006 annual report, the company’s medical division is called a “top earnings performer.” Siemens Medical Solutions, which employs more than 33,000 people and is headquartered in Malvern, PA and Erlangen, Germany, showed steady results with $10.1 billion in sales in 2006, an 8% increase. Profit increased 9% to $1.3 billion.

By 2050, there will be more people older than 60 than there are younger than 14 worldwide, according to Siemens. It’s based on that kind of statistic that Siemens expects to drive the medical business sector’s continued growth.

“As the world’s population grows and ages, the need for healthcare products, services and solutions will increase. We’re convinced that breakthroughs in the fields of early diagnosis and intervention as well as high-performance IT solutions for optimizing clinical and administrative workflows are the keys to success,” according to the most recent annual report. As a result, Siemens has been structuring itself as a full-service diagnostic, imaging and IT solutions provider. In 2006, much of that structure came in the form of acquisitions.

In June last year, Siemens signed an agreement with Bayer to acquire the chemical and pharmaceutical company’s Diagnostics Division, which the company said would enable it to expand its position in the high-growth molecular diagnostics market. The purchase price for Tarrytown, NY-based Bayer HealthCare Diagnostics, which had sales of $1.78 billion and a double-digit profit margin in fiscal 2005, was roughly $5.2 billion. The deal was completed in January this year. Bayer HealthCare Diagnostics also is a market leader in clinical chemistry with a leading position in near-patient testing, laboratory automation and hematology (blood cell diagnostics), Siemens said.

“Demographic change is greatly increasing global demand for healthcare services and thereby generating excellent growth opportunities for Siemens,” said Klaus Kleinfeld, then president and CEO of Siemens. “The acquisition of Bayer HealthCare Diagnostics is part of our targeted strategy to create the healthcare industry’s first integrated diagnostics company by combining the entire imaging diagnostics, laboratory diagnostics and clinical IT value chain under one roof.”

In July 2006, the company completed the acquisition of Diagnostic Products Corporation (DPC), a Los Angeles, CA-based immunodiagnostics company, for $1.9 billion. DPC develops and manufactures body fluid analyzers and tests, such as those related to cancer and cardiac disease, as well as hormone and allergy conditions. In more than 100 countries, DPC offers comprehensive immunodiagnostic solutions to hospitals, clinics and laboratories across the globe, according to Siemens.

Michael Ziering, CEO of DPC, called Siemens Medical Solutions a “perfect match” for his company in terms of corporate philosophy, business practice and future direction. The two acquisitions make Siemens Medical Solutions the No. 2 provider of immunodiagnostic technology worldwide, the company claimed. Both companies also build on the company’s 2005 purchase of Knoxville, TN-based CTI Molecular Imaging, a provider of molecular in-vivo diagnostics technology.

This year, though the company appears to be on financial track, there’s a changing of the guard at the top. At the beginning of the month, Peter Löscher took over as president and CEO of Siemens, replacing Klaus Kleinfeld, who left the company at the end of June. Kleinfeld, who had been with Siemens two-and-a-half years, chose not to renew his contract, which was up in October. Löscher previously served as president of Global Human Health for pharmaceutical giant Merck in Whitehouse Station, NJ. Prior to joining Merck, Löscher served on the corporate executive council of Siemens rival General Electric. He joins Siemens in the wake of investigations into bribery allegations by authorities in Germany. Kleinfeld has denied any wrongdoing, and no charges have been filed against him.”

$9.2 Billion ($74B Total)
No. of Employees: 439,400

Last year marked a time of transition for German electronics giant Siemens AG, as Klaus Kleinfeld took over for Heinrich von Pierer as CEO of the parent company in January 2005. In the end, the medical products arm of the company fared well amid these changes, seeing its sales rise a steady 6% in 2005 with the help of its molecular imaging field.

Siemens Medical was bolstered in fiscal 2005 with the purchase of Knoxville, TN-based CTI Molecular; the acquisition later pushed the company to form a new molecular imaging division as part of one of the world’s largest medical imaging companies. Before the purchase of CTI Molecular, the current subsidiary of Siemens was the market leader in positron emission technology (PET) products and services.

Along with the vitalized new molecular imaging business, the company’s diagnostics imaging solutions unit was a strong driver for Siemens with the help of new product releases.

Medical Solutions was also strengthened by the purchase of Sensant Corp. of San Leandro, CA for an undisclosed amount in the second half of 2005. The purchase allows Siemens to develop advanced Capacitive Microfabricated Ultrasound Transducer (CMUT) technology, and commercialize next-generation transducers based on this innovative technology.

While revenues were up, profits dropped 8% in 2005 to $1.2 billion. The drop was due to $145 million in gains for portfolio transactions early in fiscal 2004, primarily due to the sale of Medical Solutions LSS (Life-cycle Solution Service) business.

Overall, Siemens AG’s revenues rose 5% to $90.9 billion. (Note: This number doesn’t include the mobile device unit that was sold off in June 2005.)

Strategies employed in 2005 appear to be in use again this year. The medical unit of Siemens continued to buy companies in fiscal 2006 when it bought Los Angeles, CA-based Diagnostic Products Corporation (DPC) for $1.9 billion in April 2006. DPC is a manufacturer of immunodiagnostic kits to diagnose conditions including cancer, heart disease and pregnancy.

Siemens officials said the purchase of DPC complements the imaging and healthcare IT products. “We are impressed by DPC’s track record in developing a globally leading immunodiagnostics business and by the quality of its people. The potential is huge to drive groundbreaking innovations by combining DPC’s in-vitro diagnostics leadership with Siemens’ leading position in medical imaging and healthcare IT solutions,” said Erich R. Reinhardt, CEO of Siemens Medical Solutions. “Together, both companies will be empowered to continue to revolutionize the prevention, diagnosis, treatment and management of disease.”

In the second quarter of 2006, the Medical segment grew 9% to $2.5 billion as the diagnostics imaging solutions segment contributed to sales and an 11% rise in profits to $312 million. Revenues also continued to increase in the Asia-Pacific region.

In 2005 and early 2006, Siemens introduced several new products, including Encompass II release for the ultra-premium Acuson Sequoia ultrasound platform and the Encompass III release on the Acuson Sequoia C512 ultrasound platform, along with the NaviVision, a new system that allows more room for the operating room team.

The company also had several collaborations, including one with Berlin, Germany-based Schering AG to explore the potential of Siemens Dual Source computed tomography (CT) technology implemented with the Somatom Definition in combination with Schering’s CT imaging agent, Ultravist; with Hopkinton, MA-based EMC Corporation to offer the full range of EMC network storage systems for the healthcare market; and combining with BrainLAB of Munich, Germany on a surgical C-arm and an optical 2D/3D navigation unit into a common platform.

The company received FDA 510(k) clearance for the MVision Megavoltage Cone Beam (MVCB) imaging package, which makes it possible for the megavoltage source used for treatment to also create a 3D image of the patient, enabling clinicians to see inside the patient at the most appropriate moment. This past April, the company received PMA approval to market the Mammomat Novation (DR) for use in medical facilities with full field digital mammography system while mobile.

In the second quarter of 2006, Siemens Medical Solutions USA, a subsidiary of Siemens Medical Solutions, was included in an indictment on federal fraud charges relating to a $49 million radiology equipment contract that required minority business participation.

The contract was awarded during the construction of Cook County’s (IL) new Stroger Hospital. According to the US Justice Department, the parties allegedly formed a sham joint venture with a minority business enterprise (MBE) to successfully bid on the public contract in 2000, and the employees allegedly schemed to cover up the initial fraud when the contract was challenged by a competitor in a federal court lawsuit.