$3.25 Billion (Health Care)
Total: $85.41 Billion
No. of Employees: 295,941 (total)

For an “unsinkable giant,” the H.I.J.M.S. Hitachi was listing quite precariously.

The year was 2008, and the Great Recession’s enormous swells threatened to capsize the electronics and engineering behemoth as it navigated its way through stormy seas. Though it never completely toppled over, the mothership sustained considerable damage in the storm, losing an estimated 800 billion yen ($8 billion) and up to 7,000 crew.

To stay afloat, Hitachi needed a reboot—a complete transformation from the unfocused, ill-disciplined, bloated conglomerate it had become. The company’s too-large, too-convoluted capital structure sorely needed a diet, and its too carefree, too partial management sorely needed a major mindset adjustment.

“Many companies want to change, but every company needs a moment that makes it happen,” Masanao Sato, a veteran of Hitachi’s investor relations division, told the Financial Times last fall. “We had that moment after the collapse of Lehman Brothers.”

That moment—the proverbial match that ignited a global financial conflagration—set the stage for Hitachi’s rebirth. In that moment, the company embarked on an agonizing, decade-long metamorphosis that reduced the number of subsidiaries more than five-fold (from 22 to four) and created a governing body of independent directors (previously, just four of Hitachi’s 13-member board were nominally independent).

Hitachi’s restructuring (code name: Smart Transformation Project) was skippered by President Hiroaki Nakanishi, a 40-year company veteran who reimagined the company as an IT and infrastructure specialist. He quickly began pruning the Hitachi subsidiary tree, divesting the firm’s small and medium-sized display business, selling its hard disc drive branch HGST to Western Digital, and reducing its stake in Renesas Electronics Corporation.

The tree trimming continued with Toshiaki Higashihara’s 2014 ascension to the presidency and 2016 promotion as CEO. Under his stewardship, Hitachi unloaded its printer offshoot to Ricoh Company Ltd., sold its precision small motor business to Nidec Corporation, and withdrew from the consumer PC market. Higashihara also launched Hitachi’s 2018 Mid-term Management Plan, a strategic roadmap for achieving double-digit profit margins by the title date.

“Having witnessed the company’s struggles, I learned the importance of simultaneously implementing ‘peacetime structural reforms’ and a ‘sustainable growth strategy,’” Higashihara explained in Hitachi’s 2019 integrated report. “So the question is how best to create a growth strategy. Faced with truly dire conditions, we decided to ‘return to our roots.’ Hitachi’s strengths lie in its ability to combine OT [operational technologies], IT [information technologies], and its products to create new value and provide solutions that meet the needs of its customers and society. I believe the creation of an organization that makes full use of this strength allows us to contribute to the resolution of various social issues, which in turn, contributes to sustainable growth at Hitachi.”

Although Higashihara’s vision is a noble one, it has yet to produce the desired results. Total revenue in fiscal 2018 (ended March 31, 2019) rose just 1.2 percent to 9.48 trillion yen, and adjusted operating income fell short of the Management Plan’s 8 percent target, increasing 5.6 percent to 754.9 billion yen. Net income attributable to Hitachi stockholders plummeted 38.7 percent to 222.5 billion yen, and EBIT sank 20.2 percent 513.9 billion yen.

Back to the drawing board.

Healthcare sales totaled 360 billion yen in FY18. Comprising diagnostics and treatment systems, and housed within Hitachi’s Smart Life sector, Healthcare represents a promising opportunity to create the sustainable growth Higashihara was aiming for in the 2018 Mid-term Management Plan. In the 2019 integrated report, the company outlined its intention to bolster healthcare sales by developing solutions that combine artificial intelligence with Hitachi’s measurement and analysis technologies.

“Many hidden and unmet needs exist within the healthcare business field, and high rates of growth are expected to continue in the future,” the report states. “The strength of the Hitachi Group in this field lies in its measurement and analysis technologies, which originated from research and development concerning electron microscopes that was continuously conducted from 1942, when the Group’s Central Research Laboratory was initially established. Hitachi’s top priority in the healthcare business is to minimize the invasiveness…of diagnosis and treatment. In the medical treatment field, we are focusing on cancer treatment solutions using less invasive radiation.”

Pursuant to this focus, Hitachi acquired Mitsubishi Electric’s particle therapy system business in December 2017, gaining access to its purchase target’s proton, carbon, and hybrid proton-carbon system technologies as well as its operational expertise. The company integrated the Mitsubishi operation into its own particle therapy division in June 2018.

Word of the amalgamation must have traveled quickly, as Hitachi received its first real field test for its newly expanded particle therapy business in September 2018. The order came from Tokushukai Medical Group for installation of a compact proton therapy system at Shonan Kamakura Advanced Medical Center, a facility being built near Shonan Kamakura General Hospital.

Particle therapy is considered one of the more effective cancer treatments due to its faster recovery time and fewer resulting side effects compared to conventional therapies. There currently are 70 particle therapy facilities operating worldwide.

Increased global demand for proton therapy with minimal footprints prompted Hitachi to develop a single-room proton therapy system (a.k.a., Single Room Solution). The innovation features an optimized system configuration that reduces its overall footprint to 70 percent of conventional solutions; this feature makes urban installations easier, shortens lead times, and helps lower system costs, according to the company.

Hitachi’s Single Room Solution also contains spot scanning technology for certain forms of cancer treatment and a full rotating gantry with cone beam computed tomography for precise patient positioning.

Six months after the Tokushukai Medical Group order came in, Hitachi installed automated cell mass culture equipment for pluripotent stem cell manufacturing. The equipment installation occurred in early March 2019 at the Sumitomo Dainippon Manufacturing Plant for Regenerative Medicine & Cell Therapy (SMaRT) of Sumitomo Dainippon Pharma Co. Ltd.

The equipment is the first in Japan with the necessary functions to comply with the Japanese GCTP (Good Gene, Cellular, and Tissue-Based Products Manufacturing Practice) and it can be used to automatically culture a mass of iPS cells for clinical use.