Over recent years Philips has been evolving into a digital health and well-being company, transforming into a focused global healthtech leader, offering a broad portfolio of solutions.
Philips is a multinational originally founded in Eindhoven, but nowadays has their head office in Amsterdam. They have a strong global footprint of approx. 80.000 people in over a 100 countries. Over the past few years, Philips has been structuring financing solutions using extensively the export credit insurance product for various healthcare transactions in several countries worldwide.
“At Philips, we are striving to make the world healthier and more sustainable through innovation, with the goal of improving the lives of 3 billion people a year by 2030.”
Keshava Lal, global head for project development and structured finance at Philips Capital explains: “Philips is empowering people to live healthier lives across what we call the health continuum: from Healthy Living to Disease Prevention, Diagnosis, Treatment and Home Care. That also explains our product portfolio across personal health and health systems businesses. By addressing healthcare as a ‘connected whole’ in this way, we can unlock gains and efficiencies and drive innovations that help deliver on the ‘quadruple aim’: enhancing the patient experience, improving health outcomes, lowering the cost of care, and improving the work life of care providers.”
At Philips, customer is at the heart of innovation, and business is focused on serving customer needs. Their healthcare portfolio comprises of Diagnosis & Treatment, which includes among others diagnostic imaging (MRI and CT-scanners),ultrasounds Digital & computational pathology, Interventional imaging, devices & services. And next to that they have strong offering on Connected Care, which includes patient monitoring, clinical informatics, emergency care, sleep & respiratory care and more.
Lal: “Within myteam of project development & structured finance we try to develop financing structures and ensure our customers benefit from them worldwide. What we see more and more is that financing of projects plays a critical role and will do so even more in future to ensure that strong healthcare infrastructure is available to more & more people across the globe.
We work with partners like Atradius DSB & other financiers around the globe to jointly develop financing solutions that work best for our customer’s specific needs. Sometimes these are complex and challenging structuring transactions that cannot be funded by local banks due to longer repayment tenors, or the local funding is not attractive enough for hospitals because of high interest rates prevailing in region.
In such cases, together with Atradius DSB we often are able to bring a better solution to our customer. And I would like to thank the Atradius DSB team for the wonderful support we have been getting over the years. It is much appreciated throughout the organization on some great financing structuring we have jointly executed in past few years.”
Large scale export projects are always challenging due to several complexities that can arise during the end to end journey. Philips manages and overcomes these by keeping a close check on sales process, having a sound financing solution, strong logistics and supply chain. Also, a new buyer in a new country, this can possibly add to the complexity of a transaction even further specially from financing side
Lal: “Specifically for the financing side in export transactions, credit worthiness of buyer is key, which is also linked to a sound business model of the hospital. Further to that ensuring proper CDD (customer due-diligence) and KYC (know your customer) documentation to the satisfaction of financing entity requires us to adapt for each deal and get closer to the customer to establish that strong partnership . Other macroeconomics aspects like the recent turmoil in Turkey and Argentina, or the USD pricing volatility have contributed to difficulties in structuring solutions “
Philips has a strong sales team with global coverage along with a deep network of dealer & distributors.. They also have a powerful presence in many global healthcare conferences, meetings & events.
Lal: “We have a healthy mix of public and private customers across different geographies. In some countries we see high private players presence in the sector while in others government is at the forefront of driving healthcare initiatives. We see a growth in public private partnership (PPP), where Governments have been creating a healthy environment and welcoming private hospitals to partner and ensure accelerating accessibility of healthcare to people. PPPs bring together the strengths of public and private entities, which is exciting to see. These are interesting times and we see healthcare going through a big transformation."
The number of transactions that Philips is insuring via Atradius DSB has been growing over the last few years, with export countries varying from Ecuador to Vietnam. The total insured portfolio is almost Euro 70 million. Nevertheless, not all transactions are insured. Lal explains why: “We have a wide network of financing partners. Sometimes a local financial partner makes more sense for local sales and sometimes export from the Netherlands is not an option if there is not enough Dutch content within the deal mix. Next to that, we have different possibilities for financing options via Philips Capital. For example, working capital funding, the use of letter of credit, leasing solutions and several other possibilities. Depending up on which structure suits best to our customers needs, we go for that one.
Another important factor is the country we are looking at. For us the experience of partnering with ADSB for our transactions in Africa, Asia Pacific, Latin America is priceless in terms of their knowledge of the market, which we then bring in as a value addition to our customers for their benefit by ensuring they can have access to hard currency if they wish."
Philips invests a lot on the employees in terms of their training and development. We at Philips Capital take lead in ensuring not just the staff within the Philips Capital department, but also the sales teams in different markets are well versed on how and when they can benefit from Atradius DSB products.
Lal: “These trainings have been very critical for our success with Atradius DSB. If you as an exporter want to benefit from ADSB products, then my recommendation will be you (and your sales team) have to identify the key financing challenges in your transaction that needs to be addressed, like the country risk of your buyer, importance of access to hard currency, longer payment terms requirements, Dutch content in your exports etc. The next step would be to reach out to Atradius DSB and discuss a transaction. They can give input and guidance on export markets, they will share past experiences and can suggest probable solutions. There is more than enough knowledge in the industry to leverage and avoid re-inventing the wheel. Make use of the experts at an Export Credit Agency like ADSB to give you a head start so you can grow your business safely and profitably.”