20. Olympus MedicalSystems
$3.9 Billion ($9.8B total)
Tsuyoshi Kikukawa, Chairman & CEO, Olympus Corp.
Michael C. Woodford, President & Chief Operating Officer, Olympus Corp.
Luke Calcraft, President, Olympus Medical Systems Corp.
Haruhito Morishima, Group President, Olympus MedicalSystems Corp.
NO. OF EMPLOYEES: 40,000
GLOBAL HEADQUARTERS: Tokyo, Japan.
“Advancing to the next stage of globalization.” That’s the goal of Olympus’ management for the decade. The company, which has had a tough couple of years financially due to the global recession, is looking to broader global markets to help bolster its bottom line. “We need to expand in emerging markets, to be more flexible and lean,” wrote Tsuyoshi Kikukawa, president of Olympus, in a note to shareholders.
The company has initiated a five-year plan to jumpstart sales and take advantage of opportunities internationally. One of the primary parts of the plan is to expand in the China/Asia market (broken down into China, Southeast Asia and India) by working to increase sales and market share in regions to levels comparable to the company’s penetration in North America and Europe—its two primary markets outside of Japan. According to company officials, the next pat of the plan will be “flexible” global production on those regions. Olympus executives hope that by fiscal 2015, these and other growth initiatives would have increased sales by 1.5 trillion yen, or more than $16 billion by recent rates of exchange—a bold plan, indeed.
In the meantime, Olympus spent the 2010 fiscal year (ended March 31, 2011) trying to jumpstart sales. For the year, the company reported $9.8 billion in sales, a decrease of almost 10 percent (in yen) compared with fiscal 2009. The good news is that net income increased to $530 million, up from a net loss last year of approximately $1.2 billion (based on exchange rates at the end of the company’s 2009 fiscal year). Though the company was back in the black, Kikukawa said that it would be “some time before a full-scale economic recovery kicks in.”
Olympus Medical Systems Corp.—based in Center Valley, Pa.—generated approximately $3.9 billion in sales, which were relatively flat on a dollar basis compared with last year, though a 8.6 percent drop on the year in yen. Operating income also notched down a little—0.2 percent to $833 million. Much of the sales difficulty of the medical division was caused by the appreciation of the yen’s value, according to the company.
Sales of gastrointestinal endoscopes decreased 9.8 percent to $2.1 billion. Despite sales growth in the Chinese market and steady sales in Japan, currency translation and a sluggish economy doomed one of the medical division’s biggest sellers. Surgical and endotherapy device sales also were off, dropping 7 percent to almost $1.8 billion.
Despite sluggish sales, Olympus Medical Systems continues to eye expansion through acquisition. In June 2010, the company purchased Redmond, Wash.-based Spiration Inc., a company specializing in the development of minimally invasive devices for the treatment of acute and chronic conditions of the lungs.After the sale, Spiration began a new corporate life as Olympus Respiratory America. Terms of the deal were not disclosed.
The acquisition is really the culmination of a relationship that’s been growing between the two companies since 2008, when Olympus obtained rights to be the exclusive distributor of Spiration’s lung valve—IBV Valve System—in Europe and Japan. Olympus has a lot of interest in lung diseases, as the world’s leading maker of endobronchial ultrasound technologies to help physicians look inside the lungs, as well as flexible bronchoscopes to help perform minimally invasive lung procedures. The system was approved by the U.S. Food and Drug Administration under a humanitarian device exemption.
“Spiration possesses a high level of technological capability and deep insights into the respiratory field. Their products are also an ideal complement to the Olympus portfolio of bronchoscopes and equipment. We will take advantage of the synergies of the two companies in our development of next-generation endoscopic respiratory products that better help physicians diagnose, treat and observe conditions of the airways and lungs,” said Haruhito Morishima, group president of Olympus Medical.
Part of the company’s growth goals also come from organic new product development. In April 2010, at the beginning of the new fiscal year, Olympus Medical Systems Corporation and Siemens Healthcare announced a collaborative development of an advanced magnetically guided capsule endoscope system for intragastric observation. The technology is intended to allow stomach examinations to be performed easily and comfortably by having the patient simply swallow an endoscope in the form of a capsule. The patient would then lie down in a magnetic guidance system. The physician, using a joystick, would then navigate the capsule to the areas of interest and the capsule would provide real-time high-resolution images on a display in the examination room. The joint venture comes 60 years after Olympus developed the first gastrocamera.
Traditionally, capsule endoscopes are moved only by peristaltic motion in the gastrointestinal tract. This often makes it difficult to guide the capsule to a specific location, and examinations are therefore limited to confined areas of the gastrointestinal tract, such as the small intestine. There are many medical cases that involve the gastrointestinal tract beyond the small intestine, and capsules designed for use in the small intestine cannot be used for thorough examinations of large internal cavity.
Both companies are jointly developing the capsule endoscopy unit, the magnet guidance system, and the image processing and guidance information systems.
The company kicked off its 2011 fiscal year with a change in management. Luke Calcraft was named the first president of Olympus Medical Systems Group. Calcraft reports to Morishima, group president of the Medical Systems Group for Olympus Corporation in Japan. Calcraft is based in Center Valley, PA, the company’s headquarters in the Americas. In this newly created position, Calcraft will oversee all medical and surgical business lines including ear, nose and throat; gastroenterology; general surgery; gynecology; urology; respiratory; and service.Calcraft, a 21-year veteran of Olympus, most recently served as the managing director of Olympus Europa’s Medical Systems and Micro-Imaging Solutions Group.