Dutch electronic equipment manufacturer Philips experienced a second-quarter slump this year, with core earnings dropping to $484 million – a nearly 25% decrease. The initial impact of COVID-19 put sales down by 6%, or about $5.1 billion.
However, it’s not time for investors to panic just yet. While many of their everyday household products, like electric toothbrushes and espresso machines, may have experienced a decline in demand as consumers felt the fallout of a pandemic economy, Philips saw certain corners of their market sharply increase.
Second quarter sales of medical products like ventilators, CT scanners, and monitoring equipment rose by about 27%. This surge in demand actually sent shares up 4.3%, as COVID-19 will likely ensure the strong demand for these items continues throughout the rest of 2020. The company has been ramping up production of medical equipment in anticipation of new waves of COVID-19 infections, which will likely continue to happen until a vaccine becomes widely available. “I think that we should be prepared for the coronavirus to be part of our society for the next two years,” Philips chief executive Frans van Houten said in a statement.
The respiratory care device market is expected to continue booming for the foreseeable future and is anticipated to reach $29.86 billion by 2025. The growth from 2019 to 2020 was to the tune of 261.1%, with North America leading the demand. The confluence of the coronavirus outbreak and an aging population helped push these numbers higher and higher.
Philips isn’t just relying on respirators to carry it through the next few years, though. They also make devices for remote patient monitoring, the need for which has risen as people opt for telehealth and virtual visits over trips to the doctor’s physical office during stay-at-home orders. Philips adopted a strategy to help keep patients at home early on in the pandemic, and has been manufacturing products that utilize internet technologies so patients can remain in close contact with their doctors, no matter the distance. With its wide spectrum of products and a strong foothold in the medical field, Philips has what it takes to remain resilient in uncertain times.