In the first week of April 2014, Salesforce.com (NYSE:CRM) announced the launch of its new business strategy to individualize offerings to customers across industry verticals, in a bid to further accelerate top line growth. The ‘New Industries Strategy’ is designed to help businesses derive greater value from their customer relationship management (CRM) suites by deploying specific Salesforce CRM solutions. During the announcement, the company announced that it expects significant demand for such customized solutions from six industry groups globally – financial services/insurance, healthcare/life sciences, retail/consumer products, communications/media, public sector and automotive/manufacturing.
Below, we take a quick look at the recent alliance between Salesforce and medical device and technology giant, Philips. We have a $47 price estimate for Salesforce that stands at a 17% discount to its current market price of $57.
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Healthcare Solutions Alliance With Philips Marks Entry Into Telemedicine
Recently, Salesforce announced a strategic alliance with Dutch-based technology solutions company, Royal Philips, to deliver an open, cloud-based healthcare platform . Through the combined alliance, Salesforce expects to leverage Philips’ strong footprint in medical technology, clinical applications and clinical informatics and provide a platform for patient relationship management, allowing caregivers to collaborate closely with their patients. Data from medical devices developed by Philips are collected and analyzed an a Salesforce platform to enhance clinical decision making by professionals.
With this alliance, we believe Salesforce intends to strengthen its presence in the global telemedicine solutions industry. Telemedicine is the use of telecommunication and information technologies to provide clinical health care solutions from a distance. Globally, the market for telemedicine solutions is expected to grow by more than a factor of 10, as medical providers increasingly employ remote communications and monitoring technology, to reduce costs and improve the quality of care, according to IHS Technology (NYSE: IHS). Global revenues from these remote telemedicine devices and services is expected to increase from approximately $440 million in 2013 to more than $4.5 billion by 2018. 
The alliance with Philips might actually be Salesforce’s first venture into the high growth telemedicine industry. The growing telemedicine market should drive the need for robust back-end data management software solutions, wherein Salesforce specializes. In the future, Salesforce could rope in other alliances with medical device manufacturers such as General Electric and Siemens to build a strong healthcare specific CRM offering.Notes:
- Philips and Salesforce.com Announce a Strategic Alliance to Deliver Cloud-Based Healthcare Information Technology, Salesforce Newsroom, June 26, 2014 [↩]
- Global Telehealth Market Set to Expand Tenfold by 2018, IHS Pressroom, January 17, 2014 [↩]