Philips shifts R&D approach to be ‘closer to the market’

The impending reorganisation at medical technology company Philips, with the loss of an additional 6,000 jobs, will have a major impact on the company’s centralised research and development unit, or NatLab, chief executive Roy Jakobs has said.

The company, which posted a loss of over €1.5 billion last year, is slashing €400 million from the ‘corporate research’ budget, it emerged at the presentation of the company’s new strategy on Monday.

Broad research into technological advances is no longer a priority, given Philips is now focusing on medical innovation with high added value for patients

Last year, some 30% of Philips’ R&D budget was reserved for the NatLab but that is now being cut to 10% as spending is spread among the different corporate divisions to be ‘closer to the market’, Jakobs said.

Total spending on R&D is also going down from €1.9 billion to €1.7 billion.

‘This is the death of the NatLab,’ Philips’ historian Marcel Metze told the Financieele Dagblad. ‘Marketeers have gotten hold of the research budget.’

In total, 1,100 jobs will go in the Netherlands in the new reorganisation, of which 400 will be at the NatLab, the FD said.

Hans Wijers, from the FNV trade union federation, described the job losses as ‘dramatic’ but said he is cautiously optimistic about the decision to decentralise R&D to the different corporate units.

The Eindhoven operation, known officially as the Natuurkundig Laboratorium, was set up by company founders Frits and Anton Philips in 1914 and was responsible for hundreds of patents, including that of the compact disc and micro chip technology.