Rank: #19 (Last year: #19)
$5.72 Billion ($7.2B total)
Prior Fiscal: $5.56 Billion
Percentage Change: +3%
No. of Employees: 22,408 (35,933 total)
Global Headquarters: Shinjuku-ku, Tokyo, Japan
Yasuo Takeuchi, Director, Representative Executive Officer, President, and CEO
Akihiro Taguchi, COO
Haruo Ogawa, Chief Technology Officer
Yasushi Sakai, CFO
Nacho Abia, President and CEO, Olympus Corporation of the Americas
Katsuyuki Saito, Head of Gastrointestinal and Respiratory Business Unit
Tomohisa Sakurai, Head of General Surgery Business Unit
Minoru Okabe, Head of Urology/Gynecology Business Unit
Georg Schloer, Head of Ear, Nose, and Throat Business Unit
Yoshihito Shimizu, Head of Medical Service Business Unit
Olympus closed out the 2018 calendar year on what it must hope is ultimately a high note. That is, in December, the company agreed to pay $85 million—an $80 million fine and forfeiture of $5 million—to resolve charges associated with the U.S. Department of Justice (DOJ) investigation regarding the firm’s TJF-Q180V duodenoscopes. A hefty price to pay for certain, however, it’s likely the company is hoping the agreement marked the end to a saga that began with its disclosure of the DOJ investigation in May 2015.
Under the plea agreement Olympus Medical Systems Corporation, a subsidiary of Olympus Corporation, made with the DOJ, the firm acknowledged it failed to submit two required supplemental Medical Device Reports (MDR) and one initial MDR to the U.S. FDA for events in Europe between August 2012 and October 2014. As a result, the organization agreed to plead guilty to three criminal misdemeanors—distributing misbranded medical devices in interstate commerce. In addition, according to a statement issued by Olympus, the company agreed to “undertake new steps to enhance its regulatory affairs processes and procedures, and to regularly make certain certifications that the company is meeting the expectations of the settlement.”
“Olympus deeply regrets its failure to file and supplement the MDRs identified in the plea agreement and accepts full responsibility for these failures,” said Hiroyuki Sasa, the firm’s president and representative director at the time of the company’s statement regarding the plea.
About the same time as the announcement of the plea agreement, the FDA’s Jeff Shuren issued a statement regarding the contamination issue with duodenoscopes. In the statement, Shuren explained the agency ordered all manufacturers of the scopes to conduct two postmarket surveillance studies to determine whether healthcare facilities were able to properly clean and disinfect the devices. The three manufacturers identified by the agency—Olympus, Fujifilm, and Pentax—were to perform “one [study] to sample and culture reprocessed duodenoscopes that are in clinical use to characterize contamination rates and to learn more about issues that contribute to contamination (the sampling studies), and one to assess how effectively the trained hospital staff follow the manufacturer reprocessing instructions (the human factors studies).”
Although the agency issued Warning Letters to all three companies in March 2018 for failing to comply with the requirements of federal law (per the surveillance studies order), the December statement said the manufacturers were collecting the required data and had provided preliminary study results.
By hopefully leaving the duodenscopes issue in the past, the firm can focus more closely on determining how to ensure sales continue to improve as they have in recent years. In January 2019, the company announced its “Transform Olympus” plan to become a leading global player in the medical field. To lead this initiative, the company announced its CFO, Yasuo Takeuchi, would replace Sasa as president while also taking the title of CEO. The change was made effective April 1, which also marked the start of the company’s 2020 fiscal year.
“We will now take the next major step to launch a comprehensive plan to further transform our operations, together with clear objectives, accountability, and a responsible time frame,” Takeuchi said in a company announcement regarding the changes. “As we near our 100-year anniversary as a leading company in Japan, this new plan better supports and harmonizes our global operations as a global medtech company.”
Its plan to establish itself as a leading, worldwide player in the medical device space has already somewhat been in place internally. The company’s sales are already overwhelmingly generated from that aspect of the business, with the Medical segment accounting for almost 80 percent of the company’s total in fiscal 2019.
ANALYST INSIGHTS: After a rough couple of years of internal focus and reflection (due to internal performance issues in its core markets), Olympus is re-organizing its businesses to focus on inorganic growth. Expect to see more aggressive M&A activities from Olympus in the coming year.
—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors
Overall, Olympus experienced another modest increase in its sales total at the close of its most recent fiscal year (which ended March 31, 2019). The 793.9 billion yen in sales was up 0.9 percent over the firm’s fiscal 2018 total of 786.5 billion yen. While the company has not breached the 800 billion yen mark since fiscal 2016, projections issued by Olympus show the firm is expecting to reach that milestone after the close of its 2020 fiscal year.
The Medical segment, which is comprised of five business units—Gastrointestinal and Respiratory; General Surgery; Urology/Gynecology; Ear, Nose, and Throat; and Medical Service—saw low single digit growth. The overall segment rose 2.9 percent over the prior year, going from reporting revenue of 616.3 billion yen in fiscal 2018 to 634.3 billion yen in the 2019 statement.
Those figures dwarf Olympus’ other two businesses. Scientific Solutions, which offers products and services for supporting scientific research, pathological diagnoses, and inspections of manufacturing and social infrastructure, posted a 4.2 percent increase with revenue going from 100 billion yen in fiscal 2018 to 104.2 billion yen at the close of fiscal 2019. The Imaging business, however, faced significant losses of 19.3 percent between the two fiscal periods. Providing primarily mirrorless cameras and other products, the segment decreased from 2018’s 60.3 billion yen to 2019’s 48.7 billion yen.
Perhaps getting a jump on the “Transform Olympus” plan, in April the organization announced it agreed to acquire lithotripsy system design and production technology from Cybersonics Inc. The dual action lithotripsy system ShockPulse-SE and CyberWand, previously manufactured by Cybersonics, became a part of Olympus’ urology competence. Specifically, both systems were transitioned to be serviced and manufactured by Olympus’ subsidiary, Olympus Surgical Technologies America, which specializes in research, development, and manufacturing of medical devices in North America.
The company also shared several notable product proclamations during its latest fiscal year. Just before the close of that period, it announced it would launch its small intestine endoscopy system—the PowerSpiral—in Europe and parts of Asia. According to the firm’s statement, the system uses a motorized rotating attachment that mounts on the scope and gently grips onto the mucosa to help the endoscope advance deep into the small intestine.
In March 2019, Olympus announced it had developed an open platform for AI-assisted endoscopic examinations. The system connects to one of the firm’s gastrointestinal endoscopes to enable computer-aided detection/diagnosis during examinations of areas such as the stomach, colon, and esophagus to be viewed on-screen in real time. In addition, when fitted to an Olympus gastrointestinal endoscope system trolley, it can be used with other systems.
About a year earlier, the organization introduced its EasySuite 4K, which is described by the firm as the next-generation integrated operating room solution for hospitals. Specifically, the system enables surgical and interventional clinicians to connect with the native and uncompressed visual insights derived from legacy, HD, and ultra-high definition medical sources to streamline pre-, intra-, and post-operative clinician workflows. The solution’s vendor-neutral architecture and enterprise services are supported by enterprise-grade security features, future-proofing surgical suites with the flexibility to integrate new 4K medical devices and support next-generation technologies seamlessly, according to the company.