GE's Focus on Health

Growing General Electric Co's healthcare operation outside the US will be a focus of the unit's new chief, who has replaced Joseph Hogan – the latter named the new CEO of Swiss engineering group ABB.

"Everyone talks about the US industry. I'm just as interested to see where we can take this in China, India, Russia and all of those markets," says John Dineen, who recently took the helm of the GE's $17bn healthcare arm. "That's a great growth opportunity."

Dineen notes that in his last posting, as head of the transportation arm of the second-largest US company by market capitalisation, he had grown the backlog of orders from 10% outside North America to 50%.

Today, about half of GE Healthcare's revenue comes from outside the US.

GE's UK-based healthcare arm makes high-tech imaging devices like X-ray and CT-scan machines which doctors use to peer inside patients' bodies without cutting them open. One of its challenges in growing its presence in emerging markets is coming up with lower-cost versions of these devices.

ACTIVE ACQUIRER

The healthcare unit has been active on the acquisition trail under Hogan's leadership, most recently buying British laboratory equipment maker Whatman Plc for $718m to boost its presence in the life sciences market.

It also engineered 2007's ultimately unsuccessful $8bn bid for GE to buy the medical diagnostics subsidiaries of Abbott Laboratories.

Dineen says GE Healthcare will remain interested in acquisitions but declines to discuss specific plans in his first day on the job. "It's a tool that is always available to us in a company like GE," he says. "There's a lot of technology in this industry, a lot of emerging technology…Our eyes are going to continue to be open to opportunities."

For much of this decade, GE has held up its healthcare unit as the sort of fast-growing, high-tech business that exemplified what the US conglomerate wanted to be. But that has been altered over the past 18 months, as changes in medical reimbursement practices and operational difficulties at one of its factories caused the unit to report declining profit in 2007 and the first quarter of 2008, though it bounced back with 8% second-quarter profit growth.

In May 2008, GE CEO Jeff Immelt – who headed the healthcare arm before taking on the top job in 2001 – gave a nod to investor frustrations about the unit when he pointed out that the two other businesses he had worked in prior to taking the helm, plastics and the appliances arm, had since been sold or put up for sale.

"That's a great motivator for our healthcare team, to see plastics and appliances on this list," Immelt said, drawing investor chuckles as he showed a list of businesses GE had exited or would be exiting.

Dineen, however, says he is comfortable with the unit's current prospects. "Over the long run this is one of the most successful businesses in GE," he says. "There may be some short-term bumps but we expect this to be a great part of the industry."