BUSINESS

[New Samsung] Samsung Electronics ventures into health care

By Song Su-hyun

Tech giant’s medical device business set for restructuring toward digital health care

  • Published : Nov 9, 2017 - 16:02
  • Updated : Nov 9, 2017 - 20:39

This is the third installment of a series of articles delving into new technologies Samsung Electronics is betting on for its new source of growth. -- Ed.

Digital health care is possibly a new sector where Samsung could find a sea of new business opportunities in a world with tech-savvy, and aging, populations.

Moving beyond providing electronic parts and devices, Samsung Electronics -- with a younger generation leading it -- is now looking at the digital health care market, with expectations of new growth as well as challenges.

One step Samsung may take toward the new business is to combine its technological capabilities that sprawl across different divisions and focus them in an independent entity.

Restructuring moves are underway at the electronics unit’s medical devices business within the consumer electronics division, according to Samsung insiders. 

A user works out with the Samsung Gear Sport through a fitness program connected to a TV. (Samsung Electronics)

Currently, Samsung Electronics’ consumer electronics division includes the digital medical device business under the leadership of CEO Jun Dong-soo of Samsung Medison, a separate affiliate specializing in large medical equipment, such as ultrasound diagnostic apparatuses.

A possible scenario for upcoming organizational and business restructuring across major Samsung affiliates is to incorporate the smaller device unit in the consumer electronics division into Samsung Medison.

“The incorporation is being seriously considered by physically moving the workforce to Pangyo next year, around April or May,” said an official at Samsung Medison.

Samsung Medison is currently located in Daechi-dong, southern Seoul, but is planning to relocate to Pangyo, Gyeonggi Province, to fill empty offices of the current Samsung C&T building there after C&T’s construction division moves into Samsung Engineering’s building in Sangil-dong, southwestern Seoul.

“Digital health is on the list of Samsung’s new sources of growth, but hasn’t yet been discussed as a major future business as much as artificial intelligence or the Internet of Things,” said an official at Samsung Electronics. “But the long-term direction is that Samsung hopes to develop current wearable products as professional medical devices that can conduct medical checkups more sophisticatedly than now.”

Samsung Electronics’ mobile communications division has introduced a series of smart watches -- Galaxy Gear -- and fitness bands -- Gear Fit Pro -- with enhanced sports functions and roles as a personal trainer for users.

One of the long-term growth plans of Samsung is to combine its current manufacturing capabilities for wearables with advanced digital health care platforms, according to the tech titan’s Chief Strategy Officer Sohn Young-kwon, who is based in Silicon Valley.

At an annual Samsung CEO Summit last month, Sohn unveiled 11 health care-related startups and businesses in which the Samsung Strategy Innovation Center had made investments.

“If people can collect data related to their health prior to any abnormal signs to their physical conditions, this will help prevent diseases far better,” Sohn said. “Combining data with biotechnology will create new business opportunities.”

However, the challenges of providing health care services through wearable devices still remain.

Current wearable health devices do not strongly appeal to consumers as they only provide limited fitness services such as heart rate monitoring and pace counters due to regulations.

Under medical and privacy protection laws, there are restrictions on the management of health care by nonmedical organizations. Tech firms are not able to collect and manage sensitive health-related information and cannot provide remote medical examinations by professionals.

“To revise such medical laws, medical organizations should be at the forefront. But they have no motivation to take such action now because remote examinations would only reduce their number of patients and profits,” said Shin Jae-wook, a researcher at LG Economic Research Institute.

Lim Jong-in, a professor at the graduate school of information security at Korea University, said that unless Korea follows the concept of “negative regulation,” which permits everything except for anything banned, it would be hard to see the creation of new convergence services here.

Korea now follows “positive regulation,” laying out what it permits and banning anything not covered.

“In Korea, there should always be legal grounds when you create a new service. That conservative approach has made new technologies, such as fitness services for wearable devices, financial technology services and genome editing, struggle for years,” Lim said.

In 2014, Samsung applied an oxygen saturation sensor to the Galaxy Note 4, which could be helpful for asthmatic patients, smokers or users with sensitive skin. But the sensor was not active for several months in Korea as its legality was not settled.

By Song Su-hyun (song@heraldcorp.com) and Shin Ji-hye (shinjh@heraldcorp.com)