Philips aims 4-fold increase in output of ventilators

By BLOOMBERG

AMSTERDAM • Royal Philips NV is ramping up production of ventilators to double output within the next eight weeks and is targeting a four-fold increase by the third quarter to meet demand from hospitals overwhelmed by patients suffering from severe forms of Covid-19.

The most needed products are vital sign monitors, portable ventilators and medical equipment to treat a range of respiratory conditions, the Dutch company said in a statement late on Sunday.

It’s hiring more employees, adding lines and increasing shifts to ensure manufacturing continues around the clock.

The health-tech company sees demand outstripping capacity for these types of equipment, although it said the overall impact of the pandemic will be negative on results through the first half of the year.

With countries in desperate need of ventilators, it’s making choices: It favours places where hospitals are confronted with many coronavirus patients — so-called category 3 and 4 regions — over countries that are pro-actively building up stocks in case Covid-19 escalates, CEO Frans van Houten said in a phone interview.

It first delivered to China, then Italy, and now Switzerland, France, Spain and New York, while increasing production “to try to keep pace with the development of the outbreak”, he said.

Van Houten stressed it might be most productive to work with companies that already have experience with medical equipment and their supply chains. The issue of the machines’ components is crucial.

In some countries there is an issue of labour: Many factories are shut, with countries in lockdown, employees ordered to stay home and transport halted.

He stressed that carmakers were not the only option.

“We will look at all proposals,” Van Houten said. “But we ourselves think that we can greatly expand our own production lines, and we are also working with so-called contract manufacturers, because they are specialised in doing production for others.”

Philips manufactures globally with final assembly sites in North America, Europe and Asia, and a network of certified materials and component suppliers. Its factories in China are running above 80% capacity again, it recently said. — Bloomberg