SAMSUNG SEEKS TO EXPAND IN MEDICAL EQUIPMENT FIELD

SAMSUNG SEEKS TO EXPAND IN MEDICAL EQUIPMENT FIELD

Samsung Electronics Co., whose empire ranges from memory chips to televisions, is in talks to buy makers of MRI scanners and X-ray machines to challenge General Electric Co. and Siemens AG in medical equipment.

Samsung is in contact with some companies, Senior Vice President Jo Jae Moon, who leads a team of medical-equipment developers, said in an interview in Seoul on July 15, without elaborating on the potential targets. The company has said it plans to spend 1.2 trillion won ($1.1billion) in the medical- equipment business by 2020.

Any purchases would build on Chairman Lee Kun Hee’s plans to build the medical-equipment operations into one that generates 10 trillion won in annual sales. Lee is counting on demand for health-care gear to spur sales of scanners as the proportion of elderly residents in markets from the U.S. to Europe and Japan climb to records each year.

Samsung fell 2.3 percent to 813,000 won at the 3:00 p.m. close of trading in Seoul, while the benchmark Kospi index lost 0.7 percent.
Value Added Technologies Co., which supplies parts for X-ray machines, jumped 8.3 percent to 10,500 won, the biggest daily gain since Feb.
24. Medical-gear maker Vieworks Co. surged 15 percent to 16,250 won, the most since April, 2009.

No. 1 Target

The maker of Galaxy phones and tablet computers, with a plan to invest
23.3 trillion won in new businesses by 2020, made its biggest acquisitions in the health-care industry last year when it bought a controlling 43.5 percent stake in diagnostic ultrasound devices maker Medison Co., as well as 100 percent of Prosonic from Consus Asset Management Co. for 331.3 billion won. Samsung increased its stake in Medison to 65.8 percent in April.

They have a lot of companies on their list, and they have been contacting most of them. Samsung prefers to acquire small companies overseas with niche technology. They stated they will continue to meet them and negotiate, adding that they have a target to be the No. 1 across ultrasound devices, X-rays and MRIs.

Samsung is making a push into an industry led by General Electric, which had $16.9 billion of revenue from health care last year, a growth of 5.6 percent.
Siemens had 12.3 billion euros ($17.4 billion) in revenue from medical solutions, a 3.4 percent increase.

Aging Population

Royal Philips Electronics NV grew its medical systems business 10 percent to 8.6 billion euros. By comparison, 24.3 percent of Samsung’s revenue last year was from semiconductors and 26.6 percent from telecommunications equipment. The company’s total revenue is expected to grow 7.9 percent to 167 trillion won this year.

Samsung is expanding into health care as its overall revenue grows at the slowest pace in five years and as populations worldwide get older.
The number of people aged 65 and above will account for 8.3 percent of the world’s population by 2014, compared with 7.9 percent this year. Japan may be the oldest society, with the portion of elderly projected to account for 25 percent of the population in three years.

Medison

Besides takeovers, Samsung will also invest to boost hiring as well as research and development at its own medical-equipment business, where the number of staff grew from less than 10 people in 2009 to more than 200 now, Jo said.

Medison aims to increase sales by more than fivefold to $1.6 billion by 2020 from last year, he said. The company had a 5 percent share in the global market for diagnostic ultrasound devices last year and targets to increase that to 24 percent within a decade, Jo said.

The company may roll out its first products with the new Medison brand in the second half. Closely-held Medison, which currently has more than 1,000 employees globally with 12 overseas branches, may set up a research base in Seattle. The company will also seek more patents.

Medison was set up in 1985 and went bankrupt in 2002 because of excessive expansion. The company was taken over by Consus in 2006.