Siemens Healthineers Plans to Streamline Product Offerings

Company will sunset legacy systems as part of effort to cut $314 million in costs by 2025

DURING A 15-MONTH STRETCH FROM 2006-2007, Siemens Healthineers spent $14 billion to acquire three competing companies and their various technologies. 

Today, Siemens is preparing to sunset as many as half of its legacy instruments and assays, which is likely the endgame of its purchasing spree long ago. As a result, clinical laboratory and pathologist customers of Siemens Healthineers’ in vitro diagnostics (IVD) services can expect a more integrated product suite centering on the company’s Atellica brand. 

The move was announced during the company’s Q4 earnings call in November. Information provided by Siemens indicated that while diagnostics sales revenue had increased in 2022 over 2021, COVID- 19 test revenues overcompensated for higher logistics and supply chain costs. 

These and other factors provided the impetus for pulling the trigger on the company’s decision to sunset a number of lab analyzers and related products. It is part of a plan to cut €300 million (US $314 million) in costs by 2025. 

However, it was also clear that Siemens’ sunsetting activities had been in consideration for some time. “Growing Atellica will help us improve our competitiveness in the market,” Kimberly Nissen, Public Relations Manager at Siemens, told The Dark Report. “Given the considerable headwinds that are impacting our business and industry—including logistical constraints, component shortages, lockdowns, and global inflation—the timing is right to move forward with our transformation.” 

Siemens Healthineers is optimistic about the future sales potential of Atellica analyzers. A delay in the launch of the company’s Atellica CI 1900 system during the pandemic put expected revenues from that product on hold. CI 1900, which will automate sample preparation and workflows in lower-to-mid-volume laboratories, is expected to be available in 2023. 

“We will undertake significant measures to reduce complexity by reducing the number of our platforms by more than 50% over time following the CI 1900 platform launch,” CEO Bernd Montag noted during the earnings call. “Our portfolio complexity has been a particular burden in the current challenging … supply chain environment.” 

Shuttering Legacy Products 

Nissen said that streamlining the company’s product suite would make for a stronger offering by Siemens Healthineers. “Some of our legacy platforms are the result of several acquisitions and have been on the market since as early as 1989,” she noted. “Unifying our portfolio under the Atellica family is a necessary step to strengthen our product offerings.” 

Nissen did not provide more details about what specific products would be discontinued. 

Starting in 2006, Siemens Healthineers—then known as Siemens AG—spent billions to acquire three companies’ instruments and assays. Those acquisitions included: 

  • Diagnostics Products Corporation for $1.86 billion in 2006. 
  • Bayer Diagnostics for $5.21 billion in 2006. 
  • Dade Behring for $7 billion in 2007. 

The Dark Report noted in 2007 that the Dade Behring acquisition would likely increase the consolidation of the IVD market, which did happen and, in fact, has continued to occur through 2022. (See TDR, “Siemens Acquires Dade, Builds IVD Powerhouse,” Aug. 6, 2007.) 

The acquisitions also vaulted Siemens up the ranks of the top IVD companies in the world. Most recently, The Dark Report ranked Siemens No. 6 on that list. (See TDR, “2021 Rankings of the World’s Top 12 IVD Companies,” Aug. 29, 2022.) 

But the acquisitions of three different IVD companies also created a mishmash of different technologies under the Siemens Healthineers umbrella. It was challenging to market the different brands, and as Montag noted, supply chain problems since the pandemic have made it increasingly difficult to secure the various materials and components needed for each product suite. 

Reuters: Layoffs Possible 

In addition to product sunsetting, Siemens said it will take other steps to reach $314 million in cost savings within three years. 

“We will streamline our supply chain and service setup and run a leaner and more clinically focused R&D operation,” Montag said during the earnings call. “Overall, we will create a much leaner organization and footprint with a significant reduction in its internal complexity in the coming years.” 

Reuters reported on Nov. 9 that in practical terms, those decisions will translate into less staff and buildings.

“Sources from within the company said the plan involves cutting jobs and abandoning certain locations,” Reuters wrote. 

Clinical laboratories currently using those legacy products that Siemens Healthineers plans to sunset may want to inquire with their Siemens sales reps about future plans for those instruments. Sunsetting often involves complex transitions to new products, or a loss of software updates and component maintenance if an organization decides to keep the legacy instrument. 

Siemens Healthineers Imaging Revenue 

ASIDE FROM IN VITRO DIAGNOSTICS (IVD), a large part of Siemens Healthineers revenue comes from medical imaging and radiology equipment. 

It is interesting to note that imaging brings in almost double the revenue of IVD, which has beenIVD Update consistent for at least the last five years. Siemens earned €21.7 billion (US $22.7 billion) for fiscal year 2022, which ended on Sept. 30. Figures provided by Siemens as part of year-end reporting show this breakdown of revenues from IVD and medical imaging: 

    • €11 billion for imaging (US $11.5 billion). 
    • €6.1 billion for IVD (US $6.4 billion). 

Looking at those figures as percentages, imaging makes up approximately 51% of Siemens Healthineers revenue, while IVD encompasses 28%. Back in fiscal year 2017, imaging made up 59% of revenue and IVD comprised 31%. 

Siemens Healthineers also markets advanced therapies via medical devices, which is a relatively small part of its revenue. However, a big difference maker in the percentages from 2017 to 2022 was the acquisition of Varian, a cancer treatment software company, in 2020. In fiscal year 2022, Varian made up 14% of Siemens’ earnings. 

Siemens competes with GE Healthcare and Phillips in the radiology space.

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