Jouko Karvinen, chief executive of Philips Medical Systems, said at a recent analyst meeting that they expect profit margins in the Medical Systems division to raise in the second half of the year.

Margins at the unit have lagged those of the company's
main rivals in healthcare and medical technology, which include
Germany's Siemens AG (SI) and U.S.-based General Electric Co. (GE).

According to market research
businesses MedTech Insight and PMS Internal Analysis, the global market
for medical devices and accompanying services was worth $290 billion in

In the first quarter, the EBIT margin at the medical unit declined to
6.7% from 7.8% in the same period a year earlier. The margin was
pressured by a less favorable geographical sales mix, additional
investments in research and development and ongoing charges relating to
the acquisition of U.S. based healthcare IT-company Stentor in mid-2005. Philips expects year-on-year margin improvement at Medical Systems to
result in a higher margin for 2006 compared with the 10.1% of 2005. Nothing like a little pressure to focus the mind:

Chief Executive Gerard Kleisterlee has identified the Medical Systems
unit as the company's main growth driver in the years to come.

In other news, Philips also restated its plans in the area
of consumer health and wellness, which is targeting growth in "remote home
healthcare solutions" specifically. Philips earlier this
year bought Lifeline Systems Inc. for about $690 million. Lifeline is a
company that provides personal emergency response services and has
annual sales of about $150 million.

Philips' consumer health and wellness
business was set up in 2004 to bridge the gap between Philips' consumer
electronics and medical division. For some reason Philips put this new business in a separate division under Domestic
Appliances and Personal Care. The company aims to achieve annual
sales of EUR750 million to EUR1 billion in two to three years for these