Specialist
Former senior executive at Philips RS North America LLC (Philips Respironics)
Agenda
- Trends and developments in the sleep and respiratory market, assessing magnitude of pandemic and semiconductor headwinds
- Recall of Philips (AMS: PHIA) machines and impacts on the market and repair and replacement programme
- Competitive landscape against key competitors such as ResMed (NYSE: RMD)
- D2C opportunities and reimbursement landscape
Questions
1.
We have seen some more recalls from Philips during 2022. Can you give an update on what’s happening in the market and your view on these recalls?
2.
How much will the recalls affect Philips’ other business units? Do you think they will be able to compensate for them?
3.
We have seen various projections hoping that Philips’ repair and replacement programme would finish by the end of 2022, but we’ve now seem some further recalls this year. To what extent could we see these recalls continuing into 2023?
4.
When might Philips be able to work through the various recall programmes across devices and masks? Could it be another six months or one year minimum?
5.
How do you think the consumer is viewing Philips vs other competitors, considering the recalls have now extended into ventilators and masks with the BiPAP [bilevel positive airway pressure] machines? How detrimental could the recalls be for the company’s reputation?
6.
The latest estimates in 2021 said Philips was expecting 90% of its repair and replacement programme to be completed by the end of 2022. Do you see this happening or will we see a significant part of the repair and replacement programme sold in 2023?
7.
Can we expect 100% completion of Philips’ repair and replacement programme in 2023, building on your comments around new devices popping up in the market? Or will the company always be around 98% due to the challenges in identifying the devices?
8.
Philips highlighted that the worse-than-expected supply chain disruptions likely hurt its Q3 2022 sales and profit, announcing a roughly 5% sales decline. How do you see the supply chain issues impacting the company in Q4 2022 and 2023?
9.
Would you say Philips is at a more difficult place with the supply chain issues vs competitors such as ResMed, given the continuous recalls, issues with the CPAP [continuous PAP] machines and masks and the number of machines in the backlog from the repair and replacement programme?
10.
We’ve seen the recall of the Philips Respironics V60 ventilator with an issue surrounding the internal electric circuit. You don’t expect the product to come back. Could you expand on that and your views on this recall?
11.
How do you think the FDA will play a role in Philips’ future launches? Will it scrutinise more, meaning the company will have a harder time getting future products to market vs competitors?
12.
On the competition, Philips has perhaps created a window for new entrants such as ResMed and 3B Medical, now called React Health, to gain a foothold in the market. Do you think the recalls will limit the long-term growth for Philips and ResMed, considering it was more of a duopoly before?
13.
Do you think 3B and ResMed gaining more market share is due to Philips losing some share, rather than them having a differentiating product come to market?
14.
We have seen ResMed introduce some new machines, such as smaller, portable ones that are more accessible for some patients and can be brought on planes. Do you think the company has some innovation edge vs other players?
15.
How does Philips compare to 3B and ResMed on price? As we discussed, the company might come back into the market and take some market share with lower prices.
16.
How should we think about Philips’ pricing and margins evolving, considering the macroeconomic conditions and the continued supply chain issues and delays in the market?
17.
Why do you think Philips changed its CEO and not the CFO, whose contract renewal date is the same and who is equally culpable for the company’s issues?
18.
How much consideration did the Philips board give to the strength of new CEO Roy Jakobs’ relationship with the FDA when appointing him?
19.
You said there is a lot of demand because of the delay in getting CPAP machines due to the supply chain challenges. How should we think about the unmet demand other players can capture in the US market, considering the entrance of players such as ResMed and 3B?
20.
What are the most important KPIs investors should be looking at while analysing the development and resolution of Philips’ recalls?
