Rank: #20 (Last year: #19) ¥997.33 Billion ($6.66B)
Prior Fiscal: ¥925.75 Billion
Percentage Change: +7.7%
R&D Expenditure: ¥103.9B
Best FY24 Quarter: Q4 ¥272.1B
Latest Quarter: Q4 ¥272.1B
No. of Employees: 29,297
Global Headquarters: Tokyo, Japan

In October 2024, Olympus faced an unfortunate challenge with its leadership. Stefan Kaufmann, director, representative executive officer, president, and CEO, was alleged to have purchased illegal drugs. As a result of the accusation, the company investigated the matter and fully cooperated with authorities. Following the organization’s investigation, according to Olympus, “the Board of Directors unanimously determined that Mr. Stefan Kaufmann likely engaged in behaviors that were inconsistent with our Global Code of Conduct, our Core Values, and our corporate culture. As a result, Mr. Stefan Kaufmann was asked to offer his resignation, which he did and which was subsequently accepted by the Board of Directors.”

The action comes only 18 months after Kaufmann, a German national, took the role as one of Japan’s few foreign CEOs. He had been with the organization for more than two decades in senior roles and was credited with driving transformational change in the Europe, Middle East, and Africa region.

Taking on the CEO role until a successor could be identified was Yasuo Takeuchi, director, representative executive officer, executive chairperson, and ESG officer of Olympus. In a statement announcing the matter as well as the interim CEO, the company apologized to shareholders, customers, and stakeholders.

In December, an update on the search was provided, announcing the formation of an advisory search committee.

On April 25, almost a month after the start of the company’s new fiscal year, the new Olympus CEO was announced. The Board of Directors had unanimously approved Bob White, former executive vice president and president, Medical Surgical Portfolio, for Medtronic, to take the corner office. The transfer of leadership would officially take place on June 1.

“I am truly honored and grateful for the trust placed in me by the Board of Directors and the Nominating Committee. Olympus is an exceptional company, known for its market-leading solutions, cutting-edge technology, and remarkable people. I’m excited to bring my experience to the table and contribute to the company’s ongoing success and growth. I’ve long admired Olympus for its rich Japanese heritage, outstanding products, and unwavering commitment to serving the needs of both clinicians and patients,” said White.

Prior to the aforementioned role at Medtronic, White had served as senior vice president and president of Medtronic Asia Pacific, during which Japan was under his purview. He also spent time with GE HealthCare, Merge Healthcare, and IBM’s healthcare division.

White wasn’t the only chief title change for Olympus, although it was certainly the most controversial. A more traditional reason resulted in the changeover at another leadership position.

After spending over 20 years with Olympus, André Roggan decided to retire from his role as chief technology officer. His replacement, Syed Naveed, would move into the position at the start of the 2025 fiscal year—April 1. Naveed joined the organization in 2022 as the global head of Single Use Endoscopy. He had previously spent significant time Boston Scientific, where he served in a number of senior management roles, and also worked at Spectra Technologies and BD.

Both individuals would take their leadership roles at an organization that enjoyed a 7.7% gain over the prior year. It fell just shy of ¥1 trillion to finish with ¥997.33 billion. That total would be generated from the firm’s two divisions—Endoscopic Solutions and Therapeutic Solutions.

The former ballooned by 8.4% year-over-year to contribute ¥636.14 billion to the company’s coffers. Several reasons were cited as responsible the gains. Included among them were favorable sales in North America of the gastrointestinal endoscopy system EVIS X1 (GI Endoscopy unit), positive performance of new products related to surgical system integration in North America (Surgical Endoscopy unit), and growth in the medical services field in all regions.

Therapeutic Solutions expanded by 6.9% to finish with ¥360.66 billion in revenue. The good news for this division was credited to several segments. In the GI EndoTherapy business, sales increased in product groups for Endoscopic Retrograde Cholangio Pancreatography, which are used in endoscopic diagnoses and treatment of the pancreatic duct, bile duct, etc. Sales grew for resection electrodes for BPH (Benign Prostatic Hyperplasia) and SOLTIVE SuperPulsed Laser System lithotripsy machines for kidney stones (urology). Respiratory enjoyed increases in sales of therapeutic devices and EBUS scopes (mainly used for endobronchial ultrasound-guided transbronchial needle aspiration).

ANALYST INSIGHTS: While Olympus has had some historical business ethics challenges (surprising for Japanese companies), it seems they have turned the corner to focus on core growth that is ethical and consistent through focus on growth in the U.S.

—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors

Although forecasting didn’t predict the 2025 fiscal year to surpass the ¥1 trillion mark either, it won’t be due to a lack of device innovation. The company noted an array of product announcements during the 12-month period.

A day after the start of the 2024 fiscal year, Olympus gained U.S. FDA 510(k) clearance of its first single-use ureteroscope system—RenaFlex. The device is used to access and visualize the urinary tract to diagnose and treat urinary diseases and disorders, such as kidney stones. The RenaFlex system is intended to visualize organs, cavities, and canals in the urinary tract (urethra, bladder, ureter, calyces, and renal papillae) via transurethral or percutaneous access routes.

A month later, the company made available the DVM-B2 Digital Video Monitor, an all-in-one video processor and monitor designed for use with single-use endoscopes for both bronchoscopy and ENT, including the H-SteriScope Single-use Flexible Bronchoscopes and the E-SteriScope Single-use Flexible Rhinolaryngoscopes. The monitor is manufactured by Hunan Vathin Medical Instruments Co. Ltd. and distributed exclusively by Olympus America. The lightweight and portable 12.1-inch monitor allows for ease of care in critical or emergent situations; it can be attached bedside to an IV pole or mounted on a nearby cart.

Also in May, Olympus launched two bronchoscopes as part of the EVIS X1 Endoscopy System, its line for diagnostic and therapeutic bronchoscopy. Designed with high-definition imaging, the two bronchoscopes offer physicians a slim outer diameter when compared to predecessors, allowing access to more distal airways. Improved suction and flexibility during procedures, combined with the ability to pass a wide array of diagnostic and therapeutic devices through large working channels, provide physicians with options to successfully address the tracheal bronchial tree.

Toward the end of summer, the organization launched two new jaw designs in the POWERSEAL Sealer/Divider family of advanced bipolar surgical energy products: the POWERSEAL Straight Jaw, Double-action (SJDA) and the POWERSEAL Curved Jaw, Single-action (CJSA). The devices had obtained regulatory clearance for sale in the U.S., Puerto Rico, Canada, Australia, the EU, and Thailand at the time of the release. The line was first launched in 2021.

In September, Olympus Latin America launched the EVIS X1 endoscopy system in Brazil. The system includes two compatible gastrointestinal endoscopes: the GIF-1100 gastrointestinal videoscope, indicated for use within the upper digestive tract, and the CF-HQ1100DL/I colonovideoscope, indicated for use within the lower digestive tract. The lightweight ErgoGrip control section of these endoscopes is ergonomically designed to provide a comfortable and stable grip and ease in reaching angulation control knobs and scope switches.

Odin Medical Ltd., an Olympus Corp. company, gained U.S. FDA 510(k) clearance for the first cloud-based artificial intelligence technology designed to assist gastroenterologists in detecting suspected colorectal polyps during colonoscopy procedures. The CADDIE computer-aided detection device works by analyzing colonoscopy video in real-time and using visual markers to alert the endoscopist to the potential presence of polyps. The endoscopist is responsible for reviewing the device’s suspected polyp areas and confirming the presence or absence of a polyp based on their own medical judgement.

September also bore witness to the launch of a new 4K camera head, CH-S700-08-LB, for endoscopic urology and gynecology procedures in Europe. The camera head is compatible with the VISERA ELITE III video system center for surgical endoscopy. It was also planned to have market releases in Japan, Hong Kong, and Singapore following the appropriate regulatory reviews. The technical development of the device was led by Sony Olympus Medical Solutions Corporation, a joint venture between Olympus and Sony Corporation.

Days later, Olympus announced its Aplio i800 diagnostic ultrasound system for Endoscopic Ultrasonography (EUS) had been made available for sale in Europe since July 2024, followed by Japan and Oceania soon after. The processor—manufactured by Canon Medical Systems Corporation and distributed by Olympus—joined a comprehensive product portfolio of Olympus’ Ultrasound Endoscopes and EndoTherapy devices. It was the first output from the business alliance between the two medtech companies, which aims to provide the market with advanced EUS equipment capable of delivering high-quality diagnostic imaging.

Packing as much product news as it could into September, Olympus launched the VISERA S1, the all-in-one imaging platform with stroboscopy, on the final day of the month. The video platform integrates advanced diagnostic capabilities, including NBI (Narrow Band Imaging) technology, and forms part of the expanding Ear, Nose and Throat (ENT) solution from Olympus. The company would first add the product to its European offerings, followed by parts of Asia and Oceania, with other regions added following successful regulatory reviews.

Odin Medical Ltd. generated headlines again in October with a CE mark for its cloud-AI endoscopy medical devices—CADDIE, CADU, and SMARTIBD. The CADDIE is an AI-driven device that assists gastroenterologists in detecting and characterizing suspected colorectal polyps and potential early signs of colorectal cancer. With both cloud-based computer-aided detection (CADe) and diagnosis (CADx) functions, it aids clinicians in analyzing the tissue’s visual characteristics. Another cloud-based AI solution, CADU is intended to aid in analyzing dysplasia in patients with Barrett’s Esophagus during endoscopy procedures, analyzing data in real-time for endoscopists. The SMARTIBD is designed to aid clinicians in analyzing ulcerative colitis during colonoscopy procedures. It processes colonoscopy video frames and provides real-time insights to help characterize tissue.

Nearing the final month of its fiscal year, Olympus Corp. of Asia Pacific Ltd. announced a milestone for its iTind device with expanded availability across major markets in the Asia-Pacific region. Already marketed in the U.S. and Europe, the iTind procedure is a minimally invasive solution for the treatment of benign prostatic hyperplasia, also known as an enlarged prostate.

About a week later, the organization launched the Retentia HemoClip, which provides 360° rotation and an intuitive one-step deployment, in the U.S. The technology offers control over placement with three different sizes: arm lengths of 9 mm, 12 mm, and 16 mm to accommodate a variety of closure applications. Its short tail length helps with visualization of the target site, potentially facilitating the placement of multiple clips compared to long tail lengths. Sheath markings are designed to aid in insertion and extraction. The intuitive handle design enables the clip to be deployed in a single step.

The company highlighted its partnership with software firm Ziosoft at the March SAGES meeting with the display of its joint effort. The co-developed application was launched at the same time. It marks Olympus’ first AI-powered clinical decision tool. The application integrates advanced imaging analytics and machine learning, empowering surgeons to take ownership of their pre-op planning.

The first three applications launched focused on liver, lung, and kidney procedures. Thoracic surgery solution transforms 2D CT/MRI images into precise 3D models, aiding in lung cancer and thoracic procedure planning and reducing invasive approaches. The application for liver surgery helps general and hepatobiliary surgeons visualize liver anatomy, practice ahead, and plan liver-sparing surgeries by visualizing vessels and tumors, helping to improve patient recovery. The urologic surgery solution assists in minimally invasive nephrectomies by accurately assessing the size, location, and shape of tumors, cysts, or other abnormalities.

In addition to its multitude of product announcements, Olympus purchased a distribution business in Chile from Sur Medical SpA that had distributed its products in the country since 2013. According to the company’s statement about the acquisition, “Direct access to Chile’s growing healthcare market will enable a more efficient distribution of Olympus products and services to meet the needs of healthcare providers and their patients.”

Finally, the firm completed its transfer of its orthopedic business, which included the subsidiaries Olympus Terumo Biomaterials Corporation and FH Ortho (originally acquired in 2020). The entities were transferred to Polaris Capital for an undisclosed amount.

¥936.2 Billion ($6.18 Billion)
Prior Fiscal: ¥881.9 Billion
Percentage Change: +6.1%
R&D Expenditure: ¥86.3B
Best FY24 Quarter: Q4 ¥260.5B
Latest Quarter: (FY24) Q4 ¥260.5B
No. of Employees: 28,838

Olympus Corp.’s name game is a quirky, but interesting, tale. Its birth epithet—Takachiho Seisakusho—pays homage to Mount Takachiho, a 5,164-foot-tall mountain on Japan’s southwestern island of Kyushu that is steeped in ancient folklore. Legend has it the sun goddess Amaterasu Omikami sent her grandson, Ninigi-no-Mikoto, to rule Japan’s islands; during his descent to Earth, the young deity plunged his spear into the mountaintop (a bronzed spear monument in an adjacent national park memorializes the divine journey, National Geographic reports). Ninigi-no-Mikoto’s descendants ultimately became royalty, according to myth, with his great-grandson Jimmu serving as Japan’s first emperor.

Takachiho Seisakusho used its given name for nearly three decades before changing it to Takachiho Optical Co. Ltd. in 1942 to reflect the firm’s growing manufacturing diversity (branching out from microscopes and thermometers). Takachiho kept that new moniker for seven years before incorporating the Olympus brand into its title (thus becoming Olympus Optical Co. Ltd.).

Dating back to 1923, the Olympus brand name was inspired by Mount Olympus, mythological home of a dozen Greek gods and goddesses (including the heavenly supreme ruler Zeus). Takachiho named its product brand (and eventually the company) after this mountain due to its mythological parallels with its Japanese counterpart (respective homes of the gods). However, Takachiho also hoped to convey a sense of grandness and unmatched technological prowess with the Olympus brand name.

ANALYST INSIGHTS: “A company worth watching. Olympus’ pivot from its historic markets solely to medtech has been handled well. Their product positioning is in line with the future directions of medtech. It is clear they intend to use their leadership in endoscopy as a basis for offering an extensive line of therapeutic medtech devices.”

—Tony Freeman, president, A. S. Freeman Advisors LLC

“The name ‘Olympus’ was selected as the trademark because Mt. Olympus, like Mt. Takachiho, was the home of gods and goddesses,” the company states on its website. “Olympus was named after this mountain to reflect its strong aspiration to create high quality, world famous products. This trademark is also imbued with the aspiration of Olympus to illuminate the world with its optical devices, just like Takamagahara brought light to the world.”

Having successfully illuminated human interior (and exterior) worlds for decades, Olympus is now turning a metaphorical spotlight on itself in an effort to brighten its fiscal future. Five years ago, the company set its sights on securing a 20% or greater operating margin in FY23 (year ending March 31, 2023). The company achieved that goal (posting a 20% operating margin) and is moving the bar even higher for the next few fiscal years: an earnings per share (EPS) compound annual growth rate (CAGR) of more than 8% through FY26 (year ending March 31, 2026).

“Collectively as an organization, our mission is to grow our impact, drive innovation, and maintain a focus on our ESG priority areas,” Olympus President/CEO Stefan Kaufmann said last spring in announcing the company’s future fiscal intentions. “With our refreshed medical strategy, we have in place the blueprint that sets the direction for how our business will grow over the medium to long term and lead us on the path to a future of growth.”

That path appears a bit bumpy, though. While FY24 sales swelled 6.1% to ¥936.2 billion ($6.2 billion), and basic EPS skyrocketed 76.5% to ¥199.1 (well past the 8% target), Olympus’ operating profit plunged 76.6% to ¥43.6 billion and its operating margin plummeted by 16.5 points, closing the year ended March 31, 2024, at 4.7%, according to the company’s fiscal 2024 financial statement. Adjusted operating profit tumbled 14% to ¥151.1 billion, and adjusted operating margin fell 3.9 points to 16.2%, the data show. Gross profit rose 4.7% to ¥625.1 billion, but gross margin slipped 0.9 points due to some product hiccups.

Those stumbling blocks included recalls of a high-speed insufflator, a small intestine endoscopy device, and lung scopes. Both the insufflator and lung scopes recalls were Class I.

Olympus recalled its High Flow Insufflation Units last fall over their potential to over-inflate air into the body without warning, possibly triggering air embolisms (air bubbles in a vein or artery) or cardiac arrhythmia. Units with the model number UHI-4 were linked to 21 malfunctions, 10 serious injuries, and one death; the recall affected 3,136 devices distributed in the United States over an 11-year period but all affected products remained in circulation.

Olympus’ second recall last fall was more extensive: it affected over 176,000 bronchoscopes (28 models) distributed in the United States since 2001. The company warned the devices—intended for endoscopic diagnosis and treatment within the airways—could catch fire or lead to burns during cauterization procedures. Olympus notified customers about the issue after receiving four reports from affected users, and advised clinicians against performing high-frequency cauterization while supplying oxygen. The warning also urged providers to use the electrosurgical devices only when the electrodes are at a safe distance from the endoscope’s distal end.

The U.S. Food and Drug Administration (FDA) received 192 complaints about the combusting bronchoscopes but no reports of deaths. Like Olympus’ earlier insufflation recall, this event did not remove affected products from the market.

The bronchoscopes recall was unrelated to an earlier field action involving Olympus’ laser-compatible bronchoscopes used in therapeutic procedures. The company initiated the field action in July 2023 after learning of several patient injuries and one death tied to the issue. Olympus did not pull affected devices from the market for this recall, either.

“Fiscal year 2024 provided us with numerous challenges,” Kaufmann said. “In this environment, our organization and people have proven to be resilient, our business model to be robust, and our relationship with our customers to be stable.”

Indeed, Olympus faced numerous challenges in fiscal 2024, but the company encountered its fair share of opportunities as well.

Consistent with its new business strategy (prioritizing patient safety and sustainability, innovation for growth, and productivity), Olympus added new titles and faces to its executive management team: Thirty-one-year sales and marketing veteran Wenlei Yang became the company’s chief Diversity, Equity and Inclusion officer last spring, responsible for driving, overseeing, and implementing DEI initiatives throughout the organization.

FROM THE TOP: “Collectively as an organization, our mission is to grow our impact, drive innovation, and maintain a focus on our ESG priority areas. With our refreshed medical strategy, we have in place the blueprint that sets the direction for how our business will grow over the medium to long term and lead us on the path to a future of growth.”

—Olympus President/CEO Stefan Kaufmann

The bulk of Olympus’ personnel changes occurred eight months later with Gabriela Kaynor’s designation as chief strategy officer (the previous global division head for Therapeutic Solutions); former NIPPON ACCESS Inc. executive Tatsuya Izumi’s appointment as chief financial officer; Boris Shkolnik’s commission as chief quality officer (past global functional head of quality at Olympus); and former corporate officer Seiji Kuramoto’s assignment as Therapeutic Solutions head.

Collaborative opportunities in FY24 arose by means of partnerships and M&A. Within a four-day span last June, the company merged with its subsidiary, Olympus Digital System Design, and commenced a $370 million bid for Korean gastrointestinal stent maker Taewoong Medical Co. Ltd. However, Olympus scrapped the latter deal in March this year after discovering “data integrity issues” with Taewoong’s products.

Six months after that double-deal dynamic, Olympus firmed up partnerships with Sony and Canon Medical Systems. The alliance with Sony actually extended the pair’s 12-year working relationship, as the two first teamed up in 2012 to establish Sony Olympus Medical Solutions. That joint venture combined Olympus’ lens and optical innovations, its brand, and R&D with Sony’s technological prowess, including its digital imaging solutions. The updated collaboration targets next-generation endoscope systems, with Sony supplying the technical expertise for the imaging platform.

Similarly, the Canon Medical System arrangement aims to improve endoscopic ultrasonography (EUS) image quality and expand its reach in European and Japanese markets. Under the agreement, Canon Medical will develop and manufacture diagnostic ultrasound systems for EUS use and Olympus will provide sales and marketing support.

“We have successfully put in place stepping stones for future growth,” Kaufmann told investors on Q4/FY24 earnings call earlier this year. “A solid pipeline of growth drivers in our defined clinical focus areas is in place and we are leveraging our value pools.”

One of the most lucrative stepping stones for Olympus proved to be the May 2023 FDA clearance and subsequent market introduction of the EVIS X1 endoscopy system and two compatible gastrointestinal endoscopes—the GIF-1100 gastrointestinal videoscope, used in the upper digestive tract, and the CF-HQ1100DL/I colonovideoscope, used in the lower digestive tract.

Launched in the United States and China a month apart last fall, EVIS X1 features three new enhancements to help doctors visualize GI bleeds and anatomical structures. The new technologies are enabled by the replacement of the Xenon bulb in the EVIS EXERA III system with five LEDs that can produce other light combinations besides white light. The new technologies include:

• • RDI (Red Dichromatic Imaging) technology designed for optical-digital observation using red dichromatic narrow band light and green illumination light.

• • TXI (Texture and Color Enhancement Imaging) technology to emphasize tonal changes, patterns, and image outlines. It also can correct the brightness of dark areas.

• • BAI-MAC (Brightness Adjustment Imaging with Maintenance of Contrast), which helps maintain an endoscopic image’s bright parts and corrects its dark parts.

EVIS X1 also includes optical digital technology known as narrow band imaging (NBI), which enhances mucosal tissue observation. NBI works by filtering white light into specific light wavelengths that are absorbed by hemoglobin and penetrate on the surface of human tissue. Consequently, capillaries on a mucosal surface appear brown and veins appear cyan (greenish-blue).

“The EVIS X1 endoscopy system is our most advanced system. It introduces several easy-to-use technologies that aim to revolutionize the detection, characterization, confirmation, and treatment of gastrointestinal disorders,” Kaufmann stated during the earnings call. “Since the introduction of EVIS X1 in the U.S. last October, our GI Endoscopy business gained strong momentum and grew 20% year-over-year in North America, after [foreign currency] adjustment. The latest order situation is very favorable, and we expect high growth in fiscal 2025.”

EVIS X1-induced growth wasn’t too shabby in fiscal 2024 though: The system was at least partially responsible for the 6.3% increase in Endoscopic Solutions sales (¥586.6 billion total). Other revenue-generating contributors included robust VISERA ELITE III demand in Europe, Asia, and Oceania; yen depreciation; and healthy medical service contracts sales. Lower surgical endoscopy proceeds in North America and China slightly offset the Endoscopic Solutions segment’s gains.

Despite its solid sales performance, however, Endoscopic Solutions operating profit sank 31.5% to ¥104.6 billion, due to inflation, sales expense increases, and recall-associated costs.

Olympus’ Therapeutic Solutions segment posted a similar FY24 performance record, with overall sales hikes in GI-Endo therapy, urology, respiratory, and other therapeutic products lifting revenue 6% to ¥337.3 billion. But operating profit fell nearly eight-fold, owing to supply chain strengthening measures, Elevate program expenses, and the company’s decision to discontinue manufacturing and selling electromagnetic navigation systems and related products developed by its consolidated subsidiary, Veran Medical Technologies Inc.

Revenue in the Other segment climbed 3.1% to ¥12.2 billion on strong China sales but operating profit was down ¥7.8 billion partially due to an ¥8.6 billion orthopedic surgery business-related loss.

“Fiscal year 2024 provided us with numerous challenges,” Olympus CEO Stefan Kaufmann told analysts during a FY24 earnings call in May. “In this environment, our organization and people have proven to be resilient, our business model to be robust, and our relationship with our customers to be stable. We have successfully put in place stepping stones for future growth. A solid pipeline of growth drivers in our defined clinical focus areas is in place and we are leveraging our value pools. With those and our proven business model, we anticipate a strong recovery and more stable operations overall in fiscal year 2025.”

¥881.92 Billion ($6.65 Billion)
Prior Fiscal: ¥750.12 Billion
Percentage Change: +17.6%
R&D Expenditure: ¥75.1B
Best FY23 Quarter: Q4 ¥202.9B
Latest Quarter: (FY23) Q4 ¥202.9B
No. of Employees: 21,898

Chief executive changes are nothing new to the Top 30, and Olympus followed this trend last year with the October 2022 announcement that director, executive officer, and chief administrative officer Stefan Kaufmann would become director, representative executive officer, president, and CEO of the company effective April 1, 2023.

Kaufmann replaced Yasuo Takeuchi, who had a four-year tenure at the helm of Olympus and led the company’s recent transformation journey to become a leading global medtech company. Takeuchi oversaw transfer of Olympus’ transfer of the imaging and scientific solutions businesses and its renewed focus on medtech.

“It has been a privilege to lead Olympus through a historic moment for the company,” Takeuchi said in a press release. “With the completion of the groundwork of transformation in the first three years since the corporate strategy was announced in 2019, we can now shift to the next phase to accelerate growth and improve performance. I have full confidence that Stefan will continue this momentum.”

Kaufmann is an Olympus veteran with two decades’ experience in senior roles. He most recently served concurrently as the company’s chief administrative officer, chief strategy officer, and chief transformation officer.

“After years of very successful transformation, we see further opportunities to advance our global operations and processes with a strong focus on elevating the standard of care to benefit our customers and patients,” Kaufmann said in the same press release. “Looking three to five years ahead, our key themes will be innovation, research, and development and inorganic growth, competitive performance, talent development, and sustainability.”

Olympus reported ¥881.9 billion ($6.65 billion) in its fiscal year ended March 31, 2023, rising just over 8% from its previous year’s total. The Endoscopic solutions business accrued ¥551.8 billion in its most recent fiscal year, shooting upward 19.6% year over year. According to the company’s financial documents, gastrointestinal (GI) endoscope sales recovered in China from the lockdown, and sales also grew in North America and Europe. EVIS X1 GI series sales were favorable and demand for previous generation upper GI videoscopes and colorectal videoscopes were also firm. Surgical endoscope sales were also strong.

The redesigned Guide Sheath Kit 2 hit the market in April. The Kit facilitates access to lesion in peripheral lung regions via bronchoscopy with radial EBUS (endobronchial ultrasound). It features a braided wire inside the guide sheath for kink resistance and better flexibility. The kit includes 1.5 mm biopsy forceps and a 1.4 mm cytology brush to collect specimen, and clip-type stoppers to simplify ultrasonic probe/endotherapy device setup and positioning before and during a procedure. According to Olympus, the guide sheath can reach bronchi branches beyond the brochoscope’s distal end to advance endoscopic devices further.

September saw release of VISERA ELITE III, a surgical visualization platform for endoscopic procedures. 3D and infrared imaging functions are integrated from the previous-gen VISERA ELITE II and a 4K imaging function from VISERA 4K UHD as well. It also supports fluorescence-guided surgery and the unique NBI observation mode developed by Olympus. Customized profiles can be developed for general surgery, urology, gynecology, ENT surgery, and others. Extended depth of field function permits precise endoscopic observations though continuous broad focus, and continuous auto focus function automatically adjusts focus according to camera head and endoscope movement.

Olympus rolled out the EU-ME3 endoscopic ultrasound processor a month later. Its endoscopic ultrasonography imaging supports diagnosis of lesions in the pancreas, the bile ducts, or lesions located in areas deep in the body not visible with gastrointestinal endoscopes. It also helps visualization of endobronchial ultrasound-guided transbronchial needle aspiration (EBUS-TBNA) for early, minimally invasive diagnosis and lung cancer staging. EU-ME3’s Shear Wave Quantification also provides quantitative info on tumor stiffness and inflammatory lesions.

Therapeutic solutions captured ¥318.2 billion of revenue, growing 15.5% over the prior year. GI-endotherapy witnessed growth mainly in North America and Europe and sales also increased thanks to product groups for endoscopic retrograde cholangio pancreatography. Urology sales were robust in North America and Europe due to steady growth in sales of resection electrodes for benign prostatic hyperplasia and lithotripsy machines for kidney stones. Respiratory products sold well too, mainly in the endobronchial ultrasound-guided transbronchial needle aspiration department.

Olympus earned FDA clearance for the CELERIS single-use sinus debrider last February. CELERIS is used for cutting, coagulating, debriding, and removing thin bone and soft tissue in general ENT and sinus/rhinology procedures—specifically, turbinoplasty, polypectomy, and endoscopic sinus surgery. The 2mm- and 4-mm devices have bipolar capability, and the 4-mm device has a user-bendable tip (up to 60 degrees) to replace multiple blade changes.

The Guardenia contained tissue extraction system for gynecological procedures—manufactured by Advanced Surgical Concepts—reached the market in September. Olympus is the exclusive U.S. distributor of the system, which contains and isolates tissue during or before surgical removal and/or extracorporeal manual morcellation. It’s designed to prevent escape of cells into the abdominal cavity during extracorporeal manual morcellation, and an integrated guard protects against inadvertent damage from surgical instruments around the incision. It can be deployed through a standard 12-mm trocar, under pneumoperitoneum, and with or without vision.

The THUNDERBEAT Open Fine Jaw Type X surgical energy device also launched in September. The hybrid energy device simultaneously delivers ultrasonic and bipolar energy for tissue management—including hemostatic cutting and dissection—in laparoscopic and open surgery. The device is designed for procedures like thyroidectomy or radical neck dissection, which require delicate and fine tissue dissection. A new thermal shield reduces risk of unintended heat damage and a finely curved jaw tip design enabled precise dissection and better visibility.

A few days before the 2022 winter holidays, Olympus began a deal to acquire London-based Odin Vision, a cloud-AI endoscopy company with a portfolio of commercially available computer-aided detection/diagnostic (CAD) solutions and innovation pipeline of cloud-enabled applications. The deal was valued at about $79 million.

Odin Vision’s AI-CAD clinical decision and analytics solutions detect and classify polyps in real-time during the procedure and provide quality measures of the procedure as well as post-procedural analysis. The deal complements Olympus’ Digital Endosuite vision, which envisions use of AI and digital technology to extend endotherapy reach and improve patient care pathways. With Odin’s help, the company aims to establish a platform with a wide range of cloud-connected software solutions built by Olympus and an ecosystem of third-party development partners.

¥749.8 Billion ($6.15 Billion)
Prior Fiscal: ¥634.7 Billion
Percentage Change: +18.1%
R&D Expenditure: ¥85.3B
Best FY22 Quarter: Q4 ¥239.1B
Latest Quarter: Q4 ¥239.1B
No. of Employees: 31,557

In December 2021, several months before the close of the company’s FY22 (which spans from April 1 to March 31), Olympus’ leader—president and CEO Yasuo Takeuchi—offered clarity on the direction of his firm. The goal for Olympus going forward would be to establish a greater focus on gastrointestinal, urological, and respiratory care solutions for chronic diseases. At the same time, investment would be targeted toward investment in “next-generation technologies that will enhance patient care pathways.”

The strategy was outlined as three main principles. First, the company’s product portfolio would be focused on the disease states where maximum impact could be achieved. This centered primarily around the three aforementioned sectors. Second, investment in future innovations will focus on procedural optimization. Specifically, the CEO’s message said the plan will be to “optimize its endoscope line through complementary single-use scopes; integrate computer-assisted diagnosis, cloud, and endoscopy workflow management technologies; and explore endoluminal therapy breakthroughs.” Third, an effort will be put toward enabling Olympus to compete more effectively on a global scale. This relates directly to expanding its R&D network, as well as an active M&A strategy.

To this end, Olympus made a variety of announcements during its FY22 that illustrated these principles and the direction the company was taking moving forward.

Earlier in the year (June 2021), prior to Takeuchi’s announcement regarding the organization’s future direction, it was revealed the firm’s IT Solutions Subsidiary company (Olympus Systems Corporation) would be divested to Accenture Japan Ltd. via a transfer of 100% of the subsidiary’s shares. The move seemed to align with the direction outlined by Takeuchi as IT infrastructure, while a component of the medical solutions the company offers, was not specifically associated with medtech directly. In the news release regarding the deal, it was stated, “…Olympus has completed a comprehensive strategic review, concluding that Olympus Systems Corporation would benefit from optimizing its expertise and obtaining further skills and opportunities under Accenture…”

Then, just days after the close of its 2022 fiscal year, Olympus completed the split of its Scientific Solutions business, home to the Industrial and Life Sciences units. The segment became a wholly-owned subsidiary and was renamed Evident Corporation. The move, which had been announced in June 2021, further reflects the company’s desire to become solely focused on being a major supplier of medical technology solutions.

“Evident, while continuing to provide best-in-class products, will expand its digital and cloud-based solutions to enhance the customer experience and to improve the overall workflow in the research and inspection fields. We will shift from a business model centered on the sale of products, to one focused on solving customer issues and challenges,” explained Yoshitake Saito, president and representative director of Evident. “With this greater management autonomy, we will promote agile product development and open innovation, which we believe will increase the speed of product development.”

Also during the fiscal period, the company continued its expansion strategy through acquisition. In May, it finalized a deal that brought Medi-Tate Ltd. into the fold. The Israeli firm was the manufacturer of iTind, a device that offered the ability for physicians to perform in-office treatment of benign prostatic hyperplasia. It had already earned U.S. FDA de novo authorization as well as a CE mark, and had been distributed by Olympus since November 2018 as a result of the organization’s initial investment.

Perhaps recognizing the need for funding of innovative medical device projects or seeing the value in doing so from its Medi-Tate deal, Olympus established an investment-focused subsidiary—Olympus Innovation Ventures—in November 2021. With the goal of backing innovative technologies that improve clinical outcomes, reduce healthcare costs, and enhance the quality of life of patients, the venture capital fund was further evidence of the company’s laser focus on medtech.

According to Olympus, the stage-agnostic fund would prioritize early- and growth-stage companies around the world. It would also give special attention to technologies that offered solutions in the areas of gastroenterology, respiratory, and urology. The firm had allocated $50 million for “initial commitments and follow-on investments in portfolio companies.” In addition to a financial investment, Olympus stated it would lend its clinical and technical expertise to portfolio companies, as well as help enable access to healthcare professionals and assist in market launch. The Olympus Innovation Ventures fund was said to be managed by Touchdown Ventures.

All of these changes will certainly help to build on a company that already saw great gains during its 2022 fiscal. Its 18.9% company-wide rise over the prior period represented a ¥868.9 billion revenue haul for the firm. Looking into the financial details reveals this growth was driven by substantial gains across every business segment.

In its largest unit (by revenue), Endoscopic Solutions ballooned 17.2% to tally ¥461.5 billion. Gains were a direct result of the recovery from decreased demand during the pandemic for gastrointestinal endoscopes. The same was true of the organization’s surgical endoscopes—the VISERA ELITE II in particular.

Within the Therapeutic Solutions business, the year-over-year rise mirrored that of the entire firm—18.9%. This materialized into a ¥275.6 billion contribution to the company’s coffers. All sub-segments within the unit experienced positive gains as a result of a recovery in procedures, which had diminished during the COVID-19 pandemic.

Within the one non-medtech unit (and now established subsidiary firm), Scientific Solutions enjoyed a 24.2% upsurge to finish the fiscal at ¥119.1 billion. Driven primarily by a progressive recovery from pandemic conditions at research and academia facilities, as well as a continued return of capital investment dollars, the unit established a sound foundation upon which to launch onto its own.

Olympus’ “Others” division conducts R&D and exploratory activities for new businesses, in addition to engaging in R&D, manufacturing, and sales of biomedical materials (such as synthetic bone filler) and orthopedic equipment. Its tally for FY22 was ¥12.6 billion, a fantastic 37.6% increase over FY21. The majority of this gain was generated from FH ORTHO SAS, which became a new subsidiary in November 2020.

Going forward, these units will be run within the U.S. from a new headquarters for the medical business within the country. The Westborough, Mass., location was also named the global headquarters for the firm’s Therapeutic Solutions Division (TSD). The 150,000-square-foot facility will accommodate both the TSD employees as well as those formerly at the Image Stream Medical facility in Littleton, Mass. It will also be used as an R&D hub for Olympus, as well as a Continuum Training and Education Center. The center will enable hands-on learning of the company’s equipment and facilitate virtual capabilities for remote sessions.

“The U.S. market continues to be the largest in the world because of growing demand for minimally invasive treatment and surgery and the need for remote collaboration under COVID-19, so it’s natural that we decided to combine all functions in Massachusetts in one place to facilitate agility and collaboration. This agile and globally-connected way of business will enhance our overall business competitiveness,” explained Nacho Abia, COO.

Speaking of product innovations, the company also provided insight on a number of projects that made headlines during the fiscal period. In September 2021, Olympus launched the first technology from its POWERSEAL family of advanced bipolar surgical energy products. The 5mm Curved Jaw Tissue Sealer and Divider, Double-Action devices provide consistent sealing reliability in an ergonomic, multifunctional design that promotes procedural efficiency. The debut marks a line that augments an extensive and differentiated surgical energy portfolio, which features the THUNDERBEAT hybrid energy devices and SONICBEAT ultrasonic dissectors. According to Olympus, the global market for advanced bipolar surgical energy devices was estimated at more than $1.2 billion at the time of the launch.

A month later at the Japan Society of Digital Pathology Study annual meeting, the results of an ongoing joint research program to create an AI-based pathology diagnostic tool with the potential to streamline pathologists’ workloads were announced. The diagnostic tool achieved 100% sensitivity and 50% or more specificity for all gastric biopsy pathology specimens analyzed. Beginning in 2017, the collaboration was between Olympus, the Kure Medical Center, and the Chugoku Cancer Center. The goal of the program is to deliver AI pathology diagnosis software that can assist pathologists by 2023.

$5.66 Billion ($6.62 Billion)
Prior Fiscal: $5.95 Billion
Percentage Change: -4.7%
No. of Employees: 31,653 (total)

Here’s a random, totally offbeat fact about July 14: It’s National Mac and Cheese Day.

Believe it or not, France shares its most hallowed day (marking the start of the French Revolution) with the classic American dish. Although its true origin is unknown, the delectable marriage of starch and cheese was purportedly President Thomas Jefferson’s favorite meal (he had his own pasta machine and frequently ordered pasta from Europe, according to his estate).

America’s appetite for mac and cheese has grown considerably since Jefferson’s heyday, engendering countless recipes (both retail and “homemade”), thousands of culinary competitions, and dozens of annual festivals (upcoming events are slated in Buffalo, N.Y.; Kansas City; Richmond, Va.; and Winston-Salem, N.C.).

Despite its popularity, however, mac and cheese is not the sole devotee of July 14. The date also is feted by U.S. law enforcement (outlaw Billy the Kid’s death day), elasmobranch fish enthusiasts (Shark Awareness Day), and gastroenterologists (Endoscope Day).

The latter observance was established by the Japanese Foundation for Research and Promotion of Endoscopy to foster the “development and spread of endoscopic medicine.” Naturally, Olympus Corporation—creator of the world’s first practical “gastrocamera” (the endoscope’s forerunner)—has faithfully championed this mission, conducting an annual awareness survey on endoscopic examinations and hosting educational programs for elementary and junior high school students.

The “Endoscope Kids Class” Olympus has held over the last two years aims to help build awareness of the firm’s signature invention, promote scientific thinking, and generate interest in medical manufacturing. Held (quite curiously) months apart from its namesake day (July 14), the class gave elementary and junior high school students the chance to operate an endoscope, locate polyps grasp “lesions” (sponges) in a simulated model.

“At the last of the class, many children cheerfully raised their hands for the staff’s question, ‘Thank you for joining this Endoscope’s Kids Class,’” a brief posting on the company’s website reads. “‘Who thinks [they may] want to become a doctor in the future?’ Olympus will continue to provide children opportunities to think about the importance of health and also to discover future dreams in order to realize our corporate philosophy, ‘Making people’s lives healthier, safer and more fulfilling.’”

That philosophy was rather difficult to fully execute in fiscal 2021 as COVID-19 shut down most of Western civilization and prompted hospitals worldwide to postpone or cancel elective procedures. The subsequent decline in surgeries reduced Olympus’ North American gastrointestinal and surgical endoscope sales by 10 percent last April, and its fiscal first-quarter revenue (ended June 30, 2020) by 28.4 percent.

In addition to impacting sales, the pandemic-induced lockdowns and social distancing measures forced Olympus to modify its manufacturing focus and physician services. The company moved 85 percent of its in-person training online, and offered up free use (for three months) of its cloud-based telecollaboration platform.

MedPresence integrates with any clinical video source to enable instant access to an OR or procedure room from anywhere in the world, according to the company. The platform enables clinicians to interact, communicate, and collaborate on treatment regimens in real-time, thus facilitating improved clinical efficiency and reducing personal contact (and personal protective equipment use).

Unlike standard webcam or PC-based video-sharing technology, MedPresence uses information from various clinical data sources, including the endoscopic medical tower employed during a procedure. Harnessing the real-time endoscopic view from inside a patient, physicians in other locations can access the point-of-care clinician’s perspective.

“Telecollaboration is a recognized tool for reducing exposure to pathogens and can be effective in protecting healthcare staff as well as hospital patients,” Ross “Rusty” Segan, M.D., Olympus Corporation’s global chief medical officer, told the press last April. “Olympus wants to share [the] MedPresence system during this critical time in an effort to reduce risk, conserve resources, and ensure that new approaches to this disease can be made available without barrier. Together, and with the best minds and technology on the task, we will defeat this coronavirus and its tragic effects.”

While victory is still not in sight, the world has made significant strides against SARS-CoV-2, developing rapid diagnostic tests to accurately measure infections and vaccines that protect against more contagious variants. Long-shuttered businesses are reopening, unemployment is falling, and the U.S. economy is quickly recovering.

Olympus is on the mend too, though the pandemic’s financial scars are forever etched in the company’s FY21 results. Total sales slipped 3.3 percent to 730.5 billion yen, operating profit shrunk 11.1 percent to 81.98 billion yen, and basic earnings per share plummeted nearly 75 percent to 10.05 yen, according to financial reports.

A second-half market recovery that triggered solid growth in both the Endoscopic and Therapeutic Solutions divisions limited the company’s full-year sales loss. Third-quarter Endoscopic Solutions Division (ESD) proceeds rose 9.3 percent to 112.4 billion yen, and Q4 revenue surged higher, swelling 11.1 percent to 124.9 billion yen. The Therapeutics Solutions Division (TSD) posted slightly lower growth: third-quarter sales increased 4.5 percent to 55.2 billion yen, and Q4 revenue jumped 8.4 percent to 59.9 billion yen.

The second-half surge in ESD and TSD revenue, however, was an inadequate match for the pecuniary damage inflicted by postponed or cancelled elective surgeries and in-person sales promotion restrictions (e.g., hospital visits, business negotiations). Consequently, FY21 revenue fell in both divisions despite a flurry of new product releases.

Therapeutic Solutions sales contracted 4.6 percent in the 12-month period ended March 30, 2021, to 206 billion yen, and operating profit tumbled 5.9 percent to 24.6 billion yen. A fourth-quarter voluntary recall also hampered revenue in this division, adding about 2 billion to the total shortfall. Olympus recalled roughly 26,000 disposable EndoTherapy devices in January (2021) over a packaging defect that potentially could compromise their sterility. The decision affected 113 models of balloon catheters, forceps, knives, needles, and stents distributed in the United States since early 2019. The company attributed the recall to a defective seal but said the problem did not cause any injuries.

A recall and voluntary duodenoscope replacement initiative also helped dampen FY21 Endoscopy sales. The division incurred a 10.4 billion charge for swapping out fixed cap tipped duodenoscopes with devices containing removable cap tips. Olympus also covered the undisclosed costs of its voluntary recall of 4,150 endoscopes late last summer (2020). Citing potential malfunction or infection risks, the company withdrew from the market roughly 3,900 BF-Q180 bronchoscopes sold in the United States and Europe between April 2005 and March 2019. The scopes were associated with a “higher rate of patient infections” than comparable products, but did not cause any serious health issues, according to Olympus.

The company also recalled about 250 CHF-CB30S choledochofiberscopes, used for biliary tract exams. Sold in the United States, Europe, and Japan between April 1998 and March 2020, the revoked products were flagged for unexpected parts detachment; such a scenario occurred in one case that required surgery to retrieve a tiny rubber part from a patient’s biliary tract, according to The Japan Times.

Between the recalls and COVID-19, the Endoscopic division stood little chance of turning a profit in fiscal 2021. Sales waned 1.5 percent to 419.5 billion yen and operating profit shrunk 4.3 percent to 104.7 billion yen.

Despite the various financial hurdles within its Medical business, Olympus edged closer to metamorphasizing into a global medtech company, a central goal of the firm’s 2019 reorganization plan.

Olympus scored two regulatory consents in the fiscal year and launched more than a dozen new products. U.S. Food and Drug Administration (FDA) decisions bookended the year, with the first—in April 2020—granting de novo classification to the company’s iTind non-surgical device for treating benign postatic hyperplasia. iTind is a flexible, three-strut nitinol device that expands over five days to help reshape the prostate and create channels for urine flow. Originally designed by Israeli medtech manufacturer Medi-Tate, the product won CE Mark approval in 2012. Olympus distributes Medi-Tate’s products in the United States through a strategic investment.

Nearly a year later (mid-March 2021), Olympus received FDA 510(k) clearance for its Narrow Band Imaging (NBI) to asses the neoplastic potential of colorectal polyps. NBI is an optical imaging technology that improves vessel visibility and mucosa surface patterns.

“We are excited about these newly cleared indications for using NBI to support colorectal cancer screening,” Kevin Mancini, vice president for Endoscopy at Olympus America Inc., said upon FDA approval. “NBI is an important tool, available as standard on all Olympus colonoscopes, which can be used by physicians to assist in decision-making with the goal of improving patient care.”

Olympus also helped improve patient care with its plethora of FY21 product releases. The new market entrants included:

• The EVIS X1 endoscopy system. Released in April 2020, the EVIS X1 features extended depth of field, red dichromatic imaging (for enhancing deep blood vessel visibility and GI bleeding sources), texture and color enhancement imaging (for better visibility of potential and extant lesions), and NBI. The EVIS X1 also provides cross-compatibility between two formerly separate systems: EVIS LUCERA ELITE and EVIS EXERA III.
• The TJF-Q190V duodenoscope, approved by the FDA in February 2020. Featuring a sterile, single-use distal endcap (for reducing contamination), the duodenoscope has a distal-end flushing adaptor for cleaning the elevator mechanism. It also comes with a sealed elevator wire channel port and a water-resistant scope connector to reduce fluid ingress risks. In addition, the TJF-Q190V duodenoscope offers an expanded field of view and better handing to execute endoscopic retrograde cholangiopancreatography (ECRP) on severely ill patients.
• The Soltive SuperPulsed Laser System, which enables physicians to deliver quicker and more efficient kidney stone removal and enlarged prostate treatment. Lab testing on synthetic kidney stones has shown the technology can dust stones in half the time it takes other laser systems, while also creating fine dust that is easily removed. In early cases, the laser system showed virtually no retropulsion at select settings and offered precise soft tissue cutting with visibly improved hemostasis capability. The Soltive system has a compact footprint at an eighth of the size of other Holmium YAG systems and requires only a standard 110-volt power outlet. It also generates 50 percent less noise than the Holmium YAG when measured at comparable settings, according to Olympus data on file.
• The HookKnifeJ and TriangleTipKnifeJ, two single-use electrosurgical knives for endoscopic submucosal dissection (ESD). The HookKnifeJ is designed specifically for the esophagus, stomach and colon, while the TriangleTipKnifeJ is for the esophagus and stomach., with a specific indication for Peroral Endoscopic Myotomy. Both knives feature integrated submucosal injection to support efficient, safe and more reliable ESD performance and reduce ESD procedure time.
• The HANAROSTENT Esophagus Through-the-Scope self-expanding metal stent. The newest addition to Olympus’ self-expanding stent portfolio helps to achieve luminal patency in various clinical applications and is designed for use in palliative treatment of esophageal stricture and/or trachea-esophageal fistula caused by malignant tumors. Offered in fully or partially covered options, the HANAROSTENT Esophagus TTS stent is pre-loaded into the delivery system, fitting down the working channel of a standard therapeutic gastroscope. It is then deployed for placement in the esophagus. The hook-and-cross nitinol design, unique to HANAROSTENT products, was built with patient comfort in mind and enables optimal radial and axial force allowing for the flexibility to conform to a patient’s anatomy and precisely target the stricture.
• The EZ Clip endotherapy device, a reloadable and rotatable hemostasis clip designed for bleed control and defect closure during GI endoscopy procedures in which more than one clip is needed. EZ Clip is the first and only reloadable, rotatable hemostasis clip with a simple push-pull action for loading, according to Olympus. The EZ Clip Applicator handle can be reloaded as needed to complete a procedure. EZ Clip offers a variety of clip jaw angle and opening width configurations that address diverse procedural needs, and color-coded cartridges simplify clip selection.
• The ViziShot 2 25 G needle for endobronchial ultrasound transbronchial aspiration (EBUS-TBNA). The ViziShot 2 25 G is the smallest gauge size of the Olympus EBUS-TBNA needle portfolio. Benefits of the smaller lumen and enhanced design features of the 25 G needle include high-quality samples, increased accessibility, improved puncture capabilities, and clear target visualization.
• Two colonoscopes, the PCF-H190T and the PCF-HQ190. The PCF-H190T is a slim, short-bending scope designed for tighter angulation without compromising the passage of treatment accessories. The HD device uses NBI to assist endoscopists using a validated polyp classification system. The PCF-HQ190 features dual-focus technology for increased mucosal visualization; its near-focus mode is associated with a more than 90 percent agreement with pathological analysis in assigning post-polypectomy surveillance following a colonoscopy.
• ENDO-AID, an artificial-intelligence-powered platform for the EVIS X1 endoscope, designed to automatically spot suspicious lesions and polyps during a colonoscopy in real time.
• Two new endoscopic retrograde cholangiopancreatography (ERCP) stone management devices. The StoneMasterV device serves as a two-in-one solution to enhance performance in endoscopic sphincterotomy and endoscopic papillary balloon dilation before retrieving large stones from the bile duct. StoneMasterV includes radiopaque and endoscopic center markers that offer better visualization and controlled positioning within the papilla. VorticCatchV is a single-use nitinol retrieval basket designed for use in ERCP. Available in an eight-wire configuration, VorticCatch features a spiral design that grows tighter at the distal end to better capture a wide range of stones. It features nitinol wire material that enables the basket to flex into bile duct pockets. The soft nature of nitinol wires facilitates the basket to fully open in narrow ducts.
• Olympus Procedure Kits and Hybrid Tubing, two new single-use and single-day devices that reduce the chances for cross-contamination. The kits are designed to aid in surgical procedure setup and execution, and improve procedural efficiency as well as post-procedure pre-cleaning. The combination tubing allows for input of air or CO2 and water through the scope and jet function. The all-in-one design helps decrease procedural setup time and increase efficiencies in the endoscopy suite. Similar to the Procedure Kits, the single-day tubing eliminates the need for the reprocessing of reusable tubing.
• Expanded capabilities for the VISERA ELITE II Surgical Imaging Platform. Launching with the expanded platform was the new rigid 3D ENDOEYE video laparoscope and a dedicated IR Xenon light source. The 3D ENDOEYE video laparoscope gives surgeons even more control than current 3D laparoscopes by providing true horizon orientation. Using a proprietary prism on the scope tip, the ENDOEYE allows surgeons to maintain their visual horizon continuously while rotating the scope, thus improving the overall spatial view of anatomical structures and tissues. In addition to the depth perception of the three-dimensional view, which is especially important in performing complex procedures such as intracorporeal suturing, the ENDOEYE offers consistent image quality and color reproduction and is focus-free and autoclavable. The VISERA ELITE II’s IR Xenon light source helps surgeons see blood vessels, blood flow and tissue perfusion of blood with the use of an injectable, fluorescent compound called ICG (Indocyanine Green), which rapidly binds to plasma proteins and fluoresces in the presence of near infra-red light.
• The SIF-H190 single balloon enteroscope, used for diagnosing and treating diseases of the small intestine such as obscure gastrointestinal bleeding. The SIFH190 improves manoeuvrability of inserted endo-therapeutic instruments by increasing the diameter of the instrument channel from 2.8mm of the conventional scope to 3.2mm. In addition, incorporating technologies such as Passive Bending and High Force Transmission that are equipped with Olympus’ colonoscopes, facilitates smoother passage through acute flexures in the small intestine.

In between its product debuts, Olympus purchased four companies in fiscal 2021: Arc Medical Design Limited, FH ORTHO, Veran Medical Technologies, and Quest Photonic Devices.

With the August 2020 deal for Arc Medical—developer of devices for improving adenoma detection during colonoscopies—Olympus added the Endocuff Vision device and other products, including Endocuff Glide and Enterocuff, to its already diverse portfolio.

The FH ORTHO deal (November 2020), meanwhile, enables Olympus to build on its lineup of minimally invasive solutions for ligament repair, foot and ankle conditions, and trauma surgery. Olympus is already active in orthopedics in Japan, where its joint venture Olympus Terumo Biomaterials distributes products such as bone substitutes and high tibial osteotomy plates and screws. Beyond this, Olympus also has developed the first ultrasound device indicated for arthroscopic surgery, supporting more accurate and safer bone cutting.

The FH ORTHO acquisition will enable Olympus to expand orthopedic product distribution through FH ORTHO’s existing channels, as well as certain FH ORTHO key products in Japan.

The $340 million deal for Veran Medical, on the other hand, enhances Olympus’ respiratory device portfolio, while the $60.7 million purchase of Quest Photonic Devices accomplishes the same task within the surgical endoscopy market. Quest develops advanced fluorescence imaging systems (FIS), which enable more surgical endoscopy capabilities compared to existing technologies. FIS refers to light imaging technologies that use fluorescent dyes to make specific anatomical structures visible. The dyes, combined with specific light wavelengths, allow clinicians to visualize tissues or lesions that are nearly invisible under normal white light.

Prior Fiscal: $5.72 Billion
Percentage Change: +4.0%
No. of Employees: 35,125 (total)

Olympus, which celebrated its 100th anniversary last October, has had its name dragged through the mud over the past few years due to a widely-publicized outbreak of infection from contaminated endoscopes. In December 2018, the company admitted it failed to file the necessary information with the FDA in 2012 and 2013 related to TJF-Q180V duodenoscope adverse event reports involving infections. Olympus also neglected MDR filings for infections in Europe.

Then-Olympus exec Hisao Yabe entered a guilty plea with the U.S. District Court in Newark, N.J., resulting in an $85 million fine to the company, a sum over 2.5 times Olympus’ total profit from sales of the misbranded endoscopes. Yabe also faced a maximum penalty of a year in prison and a $100,000 fine at the time.

However, Olympus’ former top regulatory official evaded the prison term, according to a report from Law360. Judge Stanley Chesler reportedly rejected the government’s request to sentence Yabe to prison for six months. His “personal and professional disgrace” also worked in his favor to dodge prison, Chesler said during sentencing, according to Law360. “You deserve to be professionally disgraced.”

Instead of prison, he was lightly slapped with one year of probation and a $5,000 fine.

ANALYST INSIGHTS: While hit short-term by the slowing of elective procedures, Olympus has the financial fortitude to stick to its market positions and to use the crisis as an opportunity to gain market share as surgeries begin to rebound again globally. With new products in its portfolio and the ability to execute opportunistic M&A, expect Olympus to enter 2021 in a stronger position than it started 2020.

—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors

Yasuo Takeuchi began leading the Japanese conglomerate last April, and ushered it into a reasonably successful fiscal year (ended March 31, 2020). The medical device business—composed of endoscopic and therapeutic products—grew its revenue 4 percent over the previous year. The business was also simplified into global divisions Endoscopic Solutions (based in Japan) and Therapeutic Solutions (based in U.S.).

Olympus’ Endoscopic Solutions business rose a slight 1.6 percent, accruing 425.7 billion yen. Despite the company’s mainstay endoscopy systems reaching the second half of their lifecycles in developed countries, strong sales in China were maintained. Strong sales of Visera Elite II surgical endoscopy systems also boosted the business. Operating profit also grew due to improved cost-effectiveness and reduced expenses.

Topping off the year was January’s release of the Spiration Valve System (SVS) for severe emphysema. The umbrella-shaped endobronchial valve implant improves breathing by redirecting air from diseased lung sections to healthier areas. According to the valve’s Summary of Safety and Effectiveness, SVS therapy can reduce volume in the treated portion, promoting more effective function in the healthy lung areas.

The purported “world’s first endoscope with motorized rotation system” entered Europe and parts of the Asia-Pacific region in March. PowerSpiral’s mounted, foot-switch-operated, motorized, and rotating attachment gently grips the mucosa and pleats (folds) the small intestine for deeper advancement. High-definition images and a 3.2mm working channel also support diagnostic and therapeutic procedures.

CAD Open Platform AI-powered medical image analysis software became available for download in March as well. Users can switch between multiple CAD applications through connection to an Olympus GI endoscope to view computer-aided lesion detection and diagnosis in real time.

The ENF-VH2/V4 video rhino-laryngoscopes launched in September. An ergonomic grip and control allows more linear insertion to reduce friction between the scope and mucosa. The scope’s narrow band imaging provides useful luminosity to highlight tiny vascular and mucosal patterns using wavelengths absorbed by hemoglobin.

Therapeutic Solutions business proceeds remained flat at 216.1 billion yen. Sales of new flexible rhinology/otology and urology endoscopy products, as well as single-use endotherapy devices to diagnose and treat biliary and pancreatic ducts were solid. Earnings from single-use products of the Thunderbeat integrated energy device, and therapeutic devices for EBUS procedures continued to rise.

The ESG-150 Electrosurgery Generator, which supplies high frequency current to power endoscopes, hit the market last May. Its variety of waveforms accommodate monopolar and bipolar devices, delivering the lowest effective adjusted power output for standard gastrointestinal and pulmonary endoscopic procedures.

May also saw the release of Harostent self-expanding colonic (22, 25mm) and duodenal (22mm) metal stents (SEMS). Placed under fluoroscopic and endoscopic guidance, the SEMS’ design minimizes migration risk. An alternative to invasive surgery for colonic and duodenal obstructions, SEMS placement rapidly reverses symptoms like nausea, vomiting, abdominal discomfort, and weight loss. It can also be a bridge to surgery for acute colon obstruction until elective 1-stage surgery can occur.

The SnareMaster Plus hybrid hot/cold snare for polypectomy was added to the EndoTherapy line last September. A hexagonal shape and thin wire allow accurate tissue placement and precise cutting. Its two-in-one hot and cold feature eliminates the need for separate snares. According to data presented at 2015 Digestive Disease Week, cold snaring may also prevent post-polypectomy complications.

Olympus also began a few commercial and distribution deals last year:

• May—became exclusive distributor of Meditech Endoscopy’s Scope Pro-tech endoscopic tip protector
• October—assumed commercial activities for Ethicon’s Versapoint Electrosurgery system to treat intrauterine pathologies
• October—became exclusive distributor of EndoTherapeutics’ eSuction distal cap for retrieval of food bolus impactions, foreign bodies, and excised tissue
• November—became exclusive distributor of Rocamed’s RocaFlow Double Chamber Pump System and Tubing Sets for kidney stone ureteroscopy and trans-urethral resection of the prostate

AT A GLANCE
$5.72 Billion ($7.2B total)
Prior Fiscal: $5.56 Billion
Percentage Change: +3%
No. of Employees: 22,408 (35,933 total)

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.

$5.2 Billion ($6.7B total)
NO. OF EMPLOYEES: 34,687 (total)

It is often said the cover-up is worse than the lie itself.

That may be an extreme read of the 2013 Olympus scope infection outbreak, but given findings that have since emerged, it certainly could apply. In July 2017, only a few months after the close of Olympus’ 2017 fiscal year (which ran April 1, 2016 to March 31, 2017), a jury had ordered the company to pay a Seattle hospital $6.6 million in damages tied to the superbug outbreak linked to the firm’s duodenoscope. The jury also indicated the hospital was to pay $1 million to the deceased patient’s family—Richard Bigler’s widow, Theresa Bigler, and Theresa’s four children. The case was the first to go to trial involving the deadly duodenoscope-related infections. More than 25 lawsuits have been filed against Olympus due to the outbreak.

The jury in the Bigler case also indicated it did not find the scope was unsafe as designed—an important win for Olympus. That finding could be in jeopardy though.

According to a January 2018 report in The Washington Post, King County Superior Court Judge Steve Rosen (located in Seattle) said Olympus failed to properly disclose internal emails relevant to the case. The emails, which originated from as far back as 2008, raised safety concerns about a redesigned medical scope, approximately five years prior to the superbug outbreaks. Judge Rosen ordered a new trial for Theresa Bigler’s case.

While Olympus shared the relevant emails with the plaintiffs, they were not translated from Japanese, as required. Within those emails were possible indications the company was aware of potential design issues, even before the scopes entered the market in 2010.

“Olympus robbed the Bigler family of a full and fair trial. They hid the documents and hid the witnesses,” said the plaintiff’s attorney, David Beninger, whose team found the emails after an Olympus executive mentioned hospital tests during the first trial, in the Post’s report. “The family is grateful they will get another chance to hold Olympus accountable.”

ANALYST INSIGHTS: It is often that Japanese healthcare companies that do well in Japan struggle to perform in the U.S. Olympus is an exception to this rule. With strong North American leadership in place, watch Olympus continue steady growth through focus on execution and bolt-on acquisitions.

—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors

Also according to the Post article, the emails revealed the fact that Olympus gave a prototype version of the scope to several hospitals and doctors in Europe and the United States for a trial run prior to its market launch in 2010. An unidentified nurse at one of the facilities noted a potential issue with cleaning the tip of the reusable scope. The feedback resulted in further messages among Olympus employees, discussing the potential downside of adding a cleaning brush to the product. Ultimately, the brush was not included at launch; rather, following the superbug outbreak, Olympus issued a safety alert that indicated users should employ a cleaning brush.

With translation of all the emails and details still waiting to be uncovered, it is unclear where these superbug cases will end up. But from what’s already been revealed, the outcome doesn’t look good for Olympus.

Of course, these revelations came after the 2016 discovery that the company had decided against issuing a warning to U.S. hospitals in February 2013 about the scope-related infections. According to a Los Angeles Times report, a senior executive at the Olympus headquarters in Tokyo ordered U.S. managers not to inform American hospitals of infections that had occurred in Dutch, French, and other U.S. facilities. An alert was issued to European customers, but the U.S. hospitals were not alerted until the aforementioned announcement in 2015.

“We are very troubled by the now very clear facts that Olympus in Japan knew of the infection problems with their duodenoscopes long before the outbreaks we saw in America, and chose not to warn physicians,” Dr. Andrew Ross, section chief of gastroenterology at Virginia Mason Medical Center, said in the Los Angeles Times report.

Perhaps seeing the writing on the wall, Olympus issued a voluntary recall of its TJF-Q180V duodenoscope models from U.S. hospitals. It performed a redesign and updated cleaning procedures; the new offering was cleared by the FDA in the same month.

“We have made it a top priority to improve the safety of duodenoscopes and help protect patients from bacterial infections associated with these medical devices,” William Maisel, M.D., M.P.H., deputy director for science and chief scientist in the FDA’s Center for Devices and Radiological Health, said in a Jan. 15 FDA news release announcing the clearance. “The Olympus TJF-Q180V’s new design, as well as the new annual inspection program, is intended to reduce the risk of fluid leakage into the elevator channel, which in turn can reduce patient exposure to bacteria and other potential infections.”

Unfortunately, the effort may not have been enough. In March 2017, in another Times report, it was announced that another infection outbreak may be tied to the redesigned scope. Five patients treated with the revised device all tested positive for the same bacteria. According to the newspaper’s report, Lawrence Muscarella, a medical safety expert in Montgomeryville, Pa., said the outbreak raises questions about whether Olympus’ recall and replacement of the mechanism was enough to keep patients safe. It was still uncertain if the hospital followed the updated cleaning procedures.

The entire debacle casts a significant shadow over Olympus, which saw its net sales figure decline in fiscal 2017, and the situation doesn’t appear to be one that will end soon.

The company posted 748 billion yen in its 2017 fiscal year, down 7 percent over 2016’s 805 billion yen. The figure represents the third lowest sales total in the last 10 years, only surpassing 2013 (which was only 4 billion yen less) and 2014. The company’s annual report did note, however, that if the impacts of foreign exchange influences were excluded, net sales would have risen 2 percent. Apparently, the bad press from the duodenoscopes-related infections have not scared off customers.

The overwhelming majority of the 2017 fiscal year sales resulted from Olympus’ Medical Business, which reported 575.3 billion yen (76.9 percent of total company sales). The remaining businesses—Scientific Solutions (products and services supporting scientific research, pathological diagnoses, and inspections of manufacturing and social infrastructure), Imaging (primarily mirrorless cameras), and Others—accounted for the rest of the sales total, posting a combined 172.8 billion yen.

The Medical Business had previously gone through a reorganization that transformed the company’s portfolio within the business from three divisions—Gastrointestinal/Endoscopes, Endotherapy Devices, and Surgical Devices—into five.

Representing Olympus’ core business, the Gastrointestinal and Respiratory Business Unit is credited with more than 70 percent share of the global gastrointestinal endoscope market, substantially leading competitors such as Fujifilm and Hoya. The division contributed 319.7 billion yen to the company’s total sales (55.6 percent). This performance was driven primarily by double digit sales growth of gastrointestinal endoscope products in China and other regions within Asia/Oceania. Additionally, North America produced double digit growth for endotherapy devices—an Olympus division that enjoys approximately 20 percent of the global market share.

The General Surgery Business Unit encompasses the Surgical Imaging (20 to 25 percent global market share) and Surgical Energy Devices (18 to 20 percent share) divisions. In total, the Unit accounts for 14.1 percent of the firm’s sales total, which translated to 81.3 billion yen in FY17. While sales growth in Surgical Imaging was slower than anticipated, the Energy Devices segment experienced double-digit expansion in principal regions during the 2017 fiscal year.

As its name indicates, the Urology/Gynecology Business is broken down into two segments. The Urology portion has a hold of approximately 30 percent of the global market, and Gynecology sees about 10 percent of the world’s share. At 61.8 billion yen, the business represents 10.7 percent of Olympus’ net 2017 sales. Exceeding the company’s own expectations, sales for the business were driven by strong performance in all regions due to demand for bipolar electrodes for benign prostatic hypertrophy and bladder tumor resection.

Reflecting 2.8 percent of the company’s overall net sales in FY17, the Ear, Nose, and Throat Business Unit posted 16.1 billion yen to the firm’s total. Composing the unit is Laryngology, which holds 50 to 60 percent global market share, and Otolaryngology, which enjoys 10 to 15 percent share. Some of the sales can be attributed to the company’s successful efforts in helping move the community from fiberscopes to videoscopes. Further, the introduction of a 4K camera system bolstered revenue from the unit.

Accounting for the remainder of the Medical Business’ 2017 fiscal year revenue is the Medical Services Business Unit. At 91.2 billion yen, the division accounts for 15.8 percent of Olympus’ overall net sales total. Its primary role is to support the other Medical Business units, accomplished through its approximately 200 medical equipment repair and service sites worldwide.

Seeking to strengthen its position in some of its key treatment areas, Olympus also extended strategic partnerships with other medtech providers. First, in April (actually announced on the first day of the 2017 fiscal year), Olympus and Hitachi renewed their alliance involving endoscopic ultrasound. The agreement was originally with Aloka Co. Ltd. before that firm was acquired by Hitachi. The arrangement pairs the endoscopic knowledge of Olympus with the ultrasound technology of Aloka. The firms will coordinate R&D activities to ensure the systems remain compatible and to maintain high endoscopic ultrasound technology standards.

About six weeks later, Olympus offered an update on its subsidiary’s (Olympus Respiratory America) partnership with VIDA Diagnostics Inc., a provider of precision pulmonary imaging. The alliance involves the treatment of acute and chronic conditions of the lung. The agreement will see both firms incorporate precision informatics into their current, as well as future, diagnostic and therapeutic procedural workflows to manage patients with pulmonary diseases.

$5.4 Billion ($7.2B total)
NUMBER OF EMPLOYEES: 33,336 (total)

Still somewhat fresh in the public mind, in October 2011 the U.S. Department of Justice began investigating the Olympus Corporation of the Americas (OCA) Latin American business’ (also known as Olympus Latin America, OLA for short) alleged violations of the U.S. Foreign Corrupt Practices Act. Working with the U.S. government, the company internally investigated facts related to OLA’s financial relationships with healthcare providers at government-owned facilities who could authorize or influence purchase decisions. In March 2016, OLA agreed to pay $22.8 million to resolve accusations of FCPA violation as well as enter into a Deferred Prosecution Agreement (DPA) with compliance obligations.

Additionally (and separately) the U.S. Attorney’s Office for the District of New Jersey investigated the interactions and financial relationships with medical customers and physicians using Olympus products. These concerned activities to induce the purchase of Olympus products between 2006 and 2011, and in the resulting settlement, OCA paid $612 million plus interest to resolve the violations of the U.S. Anti-Kickback Statute and, by extension, the U.S. False Claims Act. OCA also entered a separate DPA, Civil Settlement Agreement, Medicaid State Settlement Agreements, and a Corporate Integrity Agreement requiring certain compliance measures, one example being the appointment of a monitor.

“Olympus leadership acknowledges the company’s responsibility for the past conduct, which does not represent the values of Olympus or its employees,” OCA president and CEO Nacho Abia commented in a company statement. “Olympus is committed to complying with all laws and regulations and to adhering to our own rigorous Code of Conduct which guides our business processes, decisions, and behavior. The company has implemented and will continue to enhance its robust compliance program.”

Abia continued, promising, “Our ability to meet the needs of our customers and their patients is of paramount importance and we can confirm that the previous conduct did not adversely affect patient health or patient care and the investigations and settlements have had no impact on product or service availability. The mission of Olympus is to help people around the world lead safer, healthier, and more fulfilling lives. We remain committed to achieving this mission, both as individuals and as a company, with uncompromised integrity.”

Hopefully that integrity can remain strong for many years to come.

ANALYST INSIGHTS: A market leader in rigid endoscopes primarily used in the outpatient settings, Olympus is seeking new ways to use its minimally invasive imaging muscle to expand its presence in the hospital settings. While relatively small, its recent acquisition of Image Stream Medical demonstrates its commitment to this strategy. Watch for Olympus to continue to use “bolt-on” M&A to enhance its base of core endoscopic products.

—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors

In April 2015, Olympus rearranged its Medical Business’s organizational structure into five units: GI&R (gastrointestinal and respiratory), GS (general surgery), Uro/Gyn (urology/gynecology), ENT (ear, nose, and throat), and MS (medical service). The Medical Business touted FY16 revenues (ended March 31) of 609 billion yen ($5.4 billion), climbing 9.1 percent from the previous year. Olympus’ flagship gastrointestinal endoscope operations continued to produce strong sales in Japan and overseas. Sales increased in both the surgical device and endotherapy device fields as well, thanks to growth investments conducted in strengthening sales forces. Though Olympus has historically shown a fairly even distribution of revenue gains globally, in 2016 the North American market generated 39 percent of the Medical Business’s sales with 239.4 billion yen.

The GI&R division contains Olympus’ endoscopy systems, which make up a share of over 70 percent of the global gastrointestinal endoscope market. Strong sales of the company’s mainstay GI video endoscopy systems (including Evis Exera III and Evis Lucera Elite) fueled this unit’s expansion—in 2016 endoscope product sales amounted to 341.6 billion yen, a 9 percent rise from the previous year. Double-digit growth was achieved in the North American endotherapy device market for the second year in a row, climbing 14 percent from 2015. (In FY15, sales growth in this market rose 13 percent from 2014.)

It’s somewhat surprising that endoscope sales increased despite the widely publicized U.S. outbreak of carbapenem-resistant Enterobacteriaceae (CRE) linked to improper reprocessing of Olympus’ TJF-Q180V duodenoscopes at the beginning of FY16. While the jury’s still out on how much knowledge the company had of the improper reprocessing instructions leading to the outbreak, the company reacted in a timely manner to public concern. Following collaborative investigation with the U.S. Food and Drug Administration (FDA) and, as stated by Olympus, “other competent authorities, relevant medical societies, and our customers,” in January 2016 the company announced FDA 510(k) clearance for TJF-Q180V’s modifications to the device design and labeling. Beginning early February, the company implemented corrective action for the duodenoscopes, replacing the maligned forceps elevator mechanism with a new forceps elevator design. Olympus also supplied updated operation and reprocessing manuals, which include information on use of Acecide-C high-level disinfectant and a new chapter detailing annual inspections by Olympus personnel.

Adding to the endotherapy portfolio, Olympus launched the EZDilate multi-stage endoscopic balloon dilator in November 2015. EZDilate’s design allows efficient navigation through difficult anatomy, easier placement and positioning within the stricture, and an accurate achievement of target diameters for gastroenterologists. Further adding to gains in this business area, in December 2015 Olympus entered into an agreement to distribute fellow Japanese device maker Terumo’s Glidewire endoscopic guidewire in the United States.

The company earned 195 billion yen in sales (nearly a quarter of its total revenue) from its surgical devices business, which is part of the general surgery unit. According to Tomohisa Sakurai, head of this unit, Olympus is actively allocating management resources to this unit in order to grow it into a second core business to match GI endoscopes. He also said the company seeks to establish 4K and 3D surgical endoscopes as the de facto standard.

Olympus began this initiative in October 2015 with the launch of a surgical endoscopy system in Japan and Europe that leveraged 4K technologies (i.e., those with resolution of 3840 x 2160 pixels or more), jointly developed with Sony Corporation in the medical business venture Sony Olympus Medical Solutions Inc. The extremely high-resolution images 4K technologies can enable observation of minute details inside the body and permit identification of small tissue and vessel structures of veins, nerves, and lymph ducts. The system is particularly adept at identifying shades of red, which is crucial during surgery.

During the Society of American Gastrointestinal and Endoscopic Surgeons (SAGES) 2016 Annual meeting in Boston in March 2016, Olympus unveiled the latest addition to the Visera surgical system line with the Visera 4K UHD System. It features a 55-inch operative display with four times the resolution of HD, greatly magnifying anatomical features. The system was created in order to improve the visual elements necessary for laparoscopic and arthroscopic surgery, providing additional light to illuminate bleeding in surgical fields and visualize deep surgical cavities.

“The image is so clear that I was able to see down to the capillary level,” said Dr. Ninh Nguyen, professor and interim chair of the Department of Surgery at the University of California Irvine Medical Center. “[Seeing the capillary level] is important for improved dissection of tissue and evaluating the perfusion of the tissue.”

In order to further grow their surgical business, Olympus also opened a new Surgical Innovation Center in April 2015. The over $37 million, 180,000-square-foot research & development (R&D) and manufacturing facility joins the strong medical device industry in Minnesota, the North American center of the company’s surgical business. This accounted for a sizeable chunk of the $369.5 million Olympus spent on R&D in FY16, most of which has historically been spent on its medical business.

Olympus’ Uro/Gyn business furthered collaboration with Terumo in May 2015, agreeing to distribute Terumo’s Glidewire Urologic Hydrophilic Guidewire. Used during minimally invasive urology procedures like ureteroscopies, percutaneous nephrolithotomy, and lithotripsy, it complements the imaging and therapeutic device solutions of the Urology segment well.

As mentioned earlier, Olympus’ endoscope sales flourished despite CRE creeping into the company’s endoscopic product line. Olympus holds the majority of the endoscope market, and endoscopic surgery has advanced greatly since its introduction about 30 years ago. Endoscopic surgery entails less pain, it’s less invasive, and allows for quicker recovery. As market share leader in this field, Olympus stands to make an impact in replacing open abdominal and chest surgeries with endoscopic surgery by driving technological process in both endoscopes and endotherapy devices.

“As advances in medical equipment make endoscopic surgeries safer and easier to perform, more and more surgeons will switch over from open abdominal and chest surgeries, resulting in growth in the endoscope market,” Dr. Sumio Matsumoto, honorary director of the National Hospital Organization Tokyo Medical Center, commented in the company’s annual report. “My expectations for Olympus are for it to develop equipment that is friendly to both patients and physicians and for it to claim a prominent position on the global stage where it can stand proudly as a Japanese medical equipment manufacturer.”

$4.7 Billion
NUMBER OF EMPLOYEES: 19,465

Olympus has been plagued with scandals for the past few years. In fact, when mentioning the company, the 2011 accounting fraud spectacle is likely still fresh in everyone’s minds. But just when its past sins were beginning to fade from memory, the firm took another misstep in early 2015, with potentially life-threatening consequences.

The outbreak of carbapanem-resistant Enterobacteriae (CRE)—also known as a “superbug”—was first catalogued at Ronald Reagan UCLA Medical Center in late February 2015, where a total of seven patients were infected from October 2014 to January 2015. Two of the patients succumbed to the disease. Shortly thereafter, four patients at Cedars-Sinai Medical Center were infected. After some digging, the culprit was discovered to be a then-new model of Olympus’ TJF-Q180V duodenoscope, used to examine gastrointestinal system ducts through the mouth. Ironically, the superbug outbreak was a result of modifications sealing up the duodenoscope’s elevator channel, intended to make it more impervious to infection.

“The company clearly made these modifications to make the device safer, but it seems to be that it wasn’t safer,” Karen Riley, deputy director of strategy for the U.S. Food and Drug Administration’s (FDA) Office of External Affairs, told CNN. Normally, this would result in a recall of the defective equipment (which it did) but the information that came to light upon investigation of the device resulted in a mountain of lawsuits for Olympus, filed by infected patients and grieving families of those killed by complications from CRE.

The TJF-Q180V duodenoscope first hit the market in 2010. But according to the FDA’s Office of External Affairs, the organization didn’t notice that Olympus hadn’t sought clearance to sell it until late 2013/early 2014. The product was again redesigned in 2014, and the company contributed a safety cleaning protocol—for an older endoscope with a significantly different design, alleged Ronald Reagan Medical Center patient Aaron Young, part of the initially exposed group of patients. He alleged that the older cleaning process did not effectively remove residual body fluids and organic debris. According to the FDA, clearance must be sought if changes to a new model “could significantly affect the safety or effectiveness of the device.”

Olympus clearly was involved in the catastrophe, but the outbreak also provoked a discussion of the FDA’s oversight on endoscope reprocessing strategy. It wasn’t exactly clear why it had taken so long for the FDA to notice that Olympus’ scope wasn’t properly approved. “Why didn’t we notice it? I don’t know,” Riley offered.

Financial Overview

To further fuel its expansion, in fiscal year 2015 (which ended March 31, 2015), Olympus’ Medical Business became organized into five business units: GI (gastrointestinal), GS (general surgery), Uro/Gyn (urology/gynecology), ENT (ear, nose, and throat), and Medical Service. The company believed the structuring would help allocate management resources to fields where sufficient growth had not previously been achieved.

Now that the company had seemingly extricated itself from the legal red tape it had been battling (before the scope superbug scandal hit at the end of the FY15), Olympus’ medical business had once again reached record numbers. Fiscal year 2015 sales grew 13.4 percent to 558.3 billion yen ($4.66 billion). Operating income also increased to a record 124.9 billion yen, which demonstrated 9.7 percent growth from the prior year. By region, North American sales were 207.6 billion yen, which accounted for 37.2 percent of total Medical Business revenue. Japanese sales were 105.9 billion yen (19 percent of total sales), Europe reported 143.4 billion yen (25.7 percent), and Asia and Oceania generated 89.4 billion yen (16 percent).

Olympus’ endoscopes product sales in FY15 amounted to 313.2 billion yen, a 14.3 percent increase from the previous year. As estimated by the company, Olympus is a major market player (in fact, the major player), due to the fact that it is responsible for 70 percent of the global share of the gastrointestinal endoscopes market. Olympus executives determined that strong 2015 sales of the company’s mainstay gastrointestinal video endoscopy systems Evis Exera III and Evis Lucera Elite drew revenue growth in this area.

The company’s surgical and endotherapy device sales totaled 245.1 billion yen in fiscal 2015, another double-digit increase of 12.2 percent. Olympus executives cited that gains were made in the endotherapy device field because of the introduction of the QuickClip Pro clip-fixing device. The Visera Elite surgical video endoscopy system also exhibited favorable sales increases, as well as the company’s 3D laparoscopy surgical system and Thunderbeat energy device.

Olympus’ total research and development expenditures for fiscal 2015 totaled 74.1 billion yen—the company spent 10.9 percent more than the year prior on strategic activities. Olympus’ aggressive R&D strategy in 2015 was the most apparent in expenditures on the Medical Business. The 43.3 billion yen invested accounted for 58 percent of the total R&D money spent; that sum jumped 26 percent from the previous year’s 34.3 billion yen. By investing this significant amount, Olympus intended to flesh out investments in fields peripheral to its Medical Business and target the fields of orthopedics and regenerative medicine as they contribute to minimally invasive therapies.

Olympus’ increased spending on its Medical Business’s R&D over the past few years has certainly made an impact on product development and launches—a number of new products were released in fiscal 2015. The company didn’t waste time getting the products out, either; all of the most noteworthy were launched during the first half of the year, with three in May.

The first product released during fiscal 2015 was easily the most intriguing. In early May 2014, Olympus launched the Endocapsule 10 System, intended for small bowel capsule endoscopy procedures. Featuring Olympus’s advanced lens technology and high-resolution image sensors, it provided vivid imaging for observation of a variety of small bowel abnormalities. The software automatically detects images requiring closer inspection, and a 3D tracking function displays the capsule’s position in the body to check progress as it travels through the intestine.

About a week later, Olympus launched two new endoscopes for periphery and small anatomy bronchoscopy. Powered by the company’s Evis Exera platform, the BF-P190 and BF-XP190 bronchoscopes extend the reach and visualization for peripheral airways and help diagnose respiratory pathologies. Completing the trifecta of May product launches, the company dispatched the first HD single-channel therapeutic gastroscope. GIF-1TH190 offers a narrower insertion tube with a smaller imaging chip design, while the larger working channel permits dilation balloon insertion.

In September 2014, the QuickClip Pro hemostasis clip became commercially available, which provides advanced control for GI (gastrointestinal) endoscopy. Improved rotational control for precise placement and “open and close” capabilities allow easy repositioning. Finally, in December 2014 Olympus’ Narrow Band Imaging (NBI) was awarded FDA clearance for bladder cancer biopsy effective targeting and improved tumor margin visualization.

Scope of the Superbug Damage

Olympus caught a break in fiscal year 2015, with record revenue and several successful new products. The end of the fiscal year, however, brought the fatal infection tied to Olympus’ oversight—one that might also be life-threatening to the company’s business during fiscal 2016. The recall and lawsuits definitely cost Olympus a pretty penny, but that might be nothing compared to the potential integrity hit.

Olympus can’t really afford any more hits to its integrity, after the torrent of lawsuits the company endured in years past. The scope recall by itself wasn’t the main issue; medical products are forcibly removed from the shelves all the time with little or no damage to a company’s reputation. This is provided the company didn’t knowingly sell the product despite potential defects, which an investigation revealed Olympus had. While it’s likely not the result of deliberate action on Olympus’ part (at least, the healthcare community at large certainly hopes so), incompetence can be just as damaging—and in this case, fatal—as unethical behavior.

$4.8 Billion ($6.9B total)
NO. OF EMPLOYEES: 18,345 (30,702 total)

Olympus Corp. Chairman Yasuyuki Kimoto’s job has become considerably more difficult with each passing fiscal year.

When he was hired in April 2012, the company was in chaos, having been shaken to its core by deep-rooted fraud that left the medical equipment/camera maker in need of a capital infusion and at risk of delisting from the Tokyo Stock Exchange. Accused of concealing $1.68 billion in losses over more than a decade through inflated bank deposits and securities holdings, the company had lost both its integrity and professional credibility, as well as public trust.

Kimoto’s first order of business was relatively simple: Restore order. His plan for restoring stability was just as basic, too—cut production/operating costs and grow the company’s medical business through spending on research and development and capital equipment. Under the corporate banner “back to basics,” Kimoto proposed winnowing Olympus’ workforce by 2,700 within two years—equivalent to 7 percent of its global employee base—partly by significantly reducing its manufacturing footprint.

With the blessing of an all-new board (pre-scandal members were fired), Kimoto also revamped the company’s core market sectors into three distinct business units—medical, life science and imaging—and began grooming the medical division for a central role in the company’s long-term success. He set a FY15 sales goal of 570 billion yen, targeting a 25 percent share of the global operating room imaging market through the reinforcement of Olympus’ existing business in gastroenterology endoscopes and a “drastic” expansion of products designed for an aging world population as well as growing demand for minimally invasive surgery and techniques for early disease diagnosis.

Not too intricate a plan.

Kimoto’s relatively simple corporate life was short-lived, however. In his sophomore year at the helm, the former Sumitomo Mitsui Banking Corp. executive faced the more challenging tasks of setting a future course for Olympus’ governance systems, encouraging open communication among employees, and fine-tuning earnings growth plans to accommodate the evolving healthcare and imaging markets.

“We will boldly push forward with aggressive management, paving the road toward meeting the goals of the medium-term vision, and realizing the growth that waits beyond, with strategic measures to overcome the obstacles placed before us,” Olympus President/Representative Director Hiroyuki Sasa said in the company’s FY14 annual report. “Two years ago, Olympus was in a state of crisis on all fronts. The company suffered from issues with its corporate governance systems and its finances and performance were problematic with regard to its low equity ratio, poor balance sheet and lack of profitability. Today, I believe we are receiving fewer complaints with regard to our corporate governance systems…the Medical Business, which has been positioned as a major earnings driver, is making massive contributions to the overall performance of the Group.”

Massive indeed: Medical sales skyrocketed 25 percent to a record 492.3 billion yen ($4.79 billion) in fiscal 2014 (year ended March 31, 2014) and operating income soared 30 percent to 112.7 billion yen ($1.09 billion). Product proceeds achieved double-digit growth, with endoscopes and surgical/endotherapy revenue running about even, posting 25.2 percent and 24 percent increases, respectively, to reach 273.9 billion yen ($2.66 billion) and 218.3 billion yen ($2.12 billion).

Olympus executives attributed the stellar product gains to robust U.S. sales of the Evis Exera III, strong Japanese demand for the Evis Lucera Elite and solid support both domestically and overseas for the Visera Elite surgical platform. The Evis Exera portfolio features better endoscopic visualization through narrow band imaging, dual focus two-stage optical lens technology, and a wider angle field of view, and enhancements such as passive bending, high force transmission and variable stiffness that help improve patient discomfort and operator control during insertion. Likewise, the Visera Elite platform provides for improved surgical scope imaging across multiple specialties through HDTV imaging capability and advanced processing techniques.

Surgical system sales received a boost from a 3-D laparoscopy system launched in Japan, Europe and the United States as well as the Japanese launch of Olympus’ Thunderbeat electrosurgical device in the second half of fiscal 2014. Thunderbeat combines advanced bipolar and ultrasonic energies into a single multi-functional hand instrument that allows surgeons to simultaneously seal and cut vessels up to and including 7 millimeters in size with minimal thermal spread. Additionally, it boasts a fast cutting speed, delivers reliable vessel sealing, and provides high grasping forces at the tip.

Though it’s been well-received in Japan, the Thunderbeat device has yet to be fully accepted in the global market due to several factors, including contract limitations from pre-existing multiyear agreements between hospitals and competitors; physicians’ lack of familiarity with the new technology; and a shortage of compatible disposables to meet all of the needs for surgical applications using energy devices. Olympus executives are hoping to overcome these challenges through training and focusing sales efforts on the most appropriate accounts, customers and procedures. “We are enhancing the specialized sales force formed to approach group purchasing organizations and integrated delivery networks in the United States, one of Thunderbeat’s largest markets,” the FY14 report states.

The Japanese Thunderbeat launch was just one of several product debuts in FY14. Also making their commercial market premiere were the EU-ME2 endoscopic ultrasound center for endoscopic ultrasonography (designed specifically for the digestive and respiratory sectors), the BF-190 bronchoscopes (featuring a rotary function and wider tip angulation to help doctors access previously hard-to-reach areas), a forward-viewing curvilinear ultrasound gastrovideoscope (containing a shorter tip with wider angulation capabilities of 180 degrees up), and the Diego Elite Multibrider, an ENT system that offers both monopolar and bipolar energy blades for hemostasis—as well as traditional standard shaver blades—to providing specialists with an array of surgical options in one device. Applications for the Olympus Diego Elite include sinus surgery, polypectomy, tonsillectomy, adenoidectomy, inferior turbinate reduction, and laryngeal procedures. Olympus claims that procedures powered by the Diego Elite Multidebrider offer significantly shorter surgery times compared to those that use standard blades.

Olympus’ fiscal 2014 medical revenues were divided fairly evenly between Japan, North America and Europe, according to the annual report. North American revenues jumped 27.7 percent to 175.8 billion yen ($1.71 billion), while European proceeds increased 25 percent to 128.6 billion yen ($1.07 billion) and Japanese sales spiked 18.2 percent to 105.8 billion yen ($1.03 billion). Asia/Oceania reported the largest growth, at 28.3 percent.

Despite its success, the company’s Medical business was unable to prevent an overall 4 percent slide in consolidated net sales (to 713.3 billion yen, or $6.93 billion). Executives attributed the dropoff to the “transfer” of its Information & Communication Business to Japan Industrial Partners Inc. in September 2012 for 53 billion yen.

Overall operating income, however, doubled, reaching 73.4 billion yen ($714.3 million) and ordinary income climbed to 50.9 billion yen ($495 million), roughly four times the figure for fiscal 2013. Net income was dragged down by costs associated with the litigation and withdrawal from the biologics business, but it still exceeded the previous year’s level at 13.6 billion yen ($132.2 million).

$4.19 Billion ($7.9 B total)
NO. OF EMPLOYEES: 16,552 (30,697 total)

“Right actions in the future are the best apologies for bad actions in the past.”
— Tryon Edwards

Yasuyuki Kimoto and Hiroyuki Sasa refuse to let the past define them. Having avowed their predecessors’ reprehensible crimes, apologized profusely for the malfeasance, and sought absolution with investors, the Olympus Corporation chieftains now are moving forward with their professional lives by focusing on rebuilding the company.

“My responsibility toward Olympus is to develop an environment that will enable the company to fully leverage its deep-rooted strengths and competitive edge,” Kimoto told shareholders in the multinational’s fiscal 2013 annual report. “Looking ahead, we will remain vigilant as the Olympus Group steadily advances forward, adding to its list of accomplishments and striving to once again be viewed as a trustworthy company by stakeholders and society.”

Regaining public trust won’t be easy, though. The Japanese camera and endoscope maker has yet to really disassociate itself from the 2011 corruption scandal that triggered its downfall. Last summer, a Japanese court imposed suspended sentences on three former executives, including president Tsuyoshi Kikukawa, who admitted hiding $1.7 billion in losses over 20 years. The trio’s longstanding secret was exposed nearly three years ago after former CEO Michael C. Woodford uncovered irregular accounting practices at the Tokyo-based  firm (he was immediately fired for the discovery).

Japanese authorities have chastened the firm with nearly 1 billion yen in fines—700 million yen ($9.9 million U.S.) from a local court last summer, 192 million yen from the country’s Financial Services Agency and 10 million yen from the Tokyo Stock Exchange, which has continued listing the company’s stock.

But Olympus and its British unit (Gyrus Group) still face prosecution in the United Kingdom for misleading auditors in 2009 and 2010. And the company currently is mulling its defense against a civil lawsuit (its 16th) filed this past spring by six Japanese trust banks demanding an additional 28 billion yen in damages.

“Our focus until now has been the correction of problems,” said Kimoto and Sasa, the company’s president and representative director, “but from now on we will also work more actively to show how Olympus has changed…”

And there have been plenty of changes since the scandal broke, the most important of which being the election of new management and a new board as well as the appointment of a chief compliance officer to ensure top-tier executives follow Groupwide governance reforms. Olympus also has instituted a restructuring plan that involves cutting 7 percent of its total workforce and closing 12 of its 30 manufacturing plants by 2015.

The company took some big steps beyond the scandal in FY13, settling Woodford’s multimillion-dollar discrimination/unfair dismissal lawsuit and negotiating a medical device joint venture with Sony. Both firms will sell endoscopes and imaging technologies worldwide, with Sony holding a 51 percent stake in the partnership, appropriately dubbed Sony Olympus Medical Solutions.

“We will channel our imaging technologies, resources and assets into the new venture,” Sony CEO Kazuo Hirai said when the agreement was announced. “By integrating these with Olympus’ wealth of knowledge and expertise in medical technologies and business, I am confident the new company will bring innovation to the medical device industry and achieve great success.”
Olympus also climbed back into the black in fiscal 2013, booking a net profit of 8 billion yen ($85 million) through March 31, 2013, and improving its EBITDA margin to 10.6 percent from 9.5 percent in FY12. The firm’s share price, which plummeted after the initial revelations of fraud, has since recovered to pre-scandal levels.

In addition, Olympus has secured support for its core endoscope business—fending off competition from domestic rivals Fujifilm and Hoya—while seeking extra funds to beef up its balance sheet. The company secured three sets of capital infusions worth 112 billion yen ($1.1 billion U.S.) in total (two of which were led by Sony), while preserving its share of the global flexible endoscope market at roughly 70 percent.

“You have to give a lot of credit to management—this is a company that was seen as a disaster at the time of the scandal,” Claudio Aritomi, a Tokyo-based analyst at New York, N.Y.-based Macquarie Group Limited, recently told the Financial Times. “They managed to get funds because they presented a plan to those people that they thought would work.”

And for the most part, management’s plan has worked. While Olympus’ FY13 total revenues fell 12.3 percent to 743.8 billion yen ($7.89 billion) and operating income slipped 1.2 percent to 35 billion yen ($372.1 million), the company posted solid increases in each of its sales regions (Japan, North America, Europe and Asia/Oceania).

Its Medical business performed particularly well domestically, but relinquished those gains to the strong U.S. dollar. Net sales, for instance, jumped 13 percent in local currency (394.7 billion yen) but declined 2.3 percent to $4.1 billion. Likewise, endoscope proceeds ballooned 14 percent domestically (191.7 billion yen) but slid 0.4 percent to $2.32 billion, though foreign exchange rates worked in the company’s favor in overseas endoscope sales (surging 15.7 percent to 147.9 billion yen and 0.5 percent to $1.8 billion).

Executives attributed the company’s strong endoscope sales (in yen) to new product introductions, including the Evis Exera III gastrointestinal video endoscopy system in Europe and the United States, as well as Evis Lucera Elite in Japan.

The Evis Exera III system works seamlessly with a wide range of endoscopes across specialties to provide easier data management and cost efficiencies. The system is compatible with all Olympus endoscopes used in bronchoscopy, endo-bronchial ultrasound, gastroenterology, laparoscopic and arthroscopic surgery, urology, anesthesiology and ENT (ear, nose, throat). The flexibility of this widespread platform helps facilities reduce their need for multiple video systems, thereby improving asset management by meeting the needs for endoscopic observation and minimally invasive surgery throughout the hospital, the company claims.

Surgical and endotherapy revenue suffered the same fate as its sister product category, rising 11.8 percent in local currency (157.4 billion yen) but falling 2.1 percent to $1.8 billion. Domestic revenue was up in yen (15.1 percent) and dollars (0.5 percent) while overseas proceeds lost 2.7 percent to the U.S. dollar.

The surgical and endotherapy unit also matched its sibling in new product launches, unveiling the Thunderbeat and Visera Elite.
The Thunderbeat combines advanced bipolar and ultrasonic energies into a single, multi-functional hand instrument, allowing surgeons to rapidly and simultaneously seal and cut vessels up to and including 7 millimeters in size with minimal thermal spread.

The Visera Elite platform is equipped with high-definition television imaging capability and advanced image processing to provide the best possible image for surgical equipment across multiple specialties. Its light source filter configuration is optimized to increase the brightness of the narrow band imaging (NBI) light by 1.2 times, enabling surgeons to operate under NBI visualization.

$4.24 Billion ($10.3B total)
NO. OF EMPLOYEES: 39,121(total)

All cultures have words or phrases whose meanings often are lost in translation. For Russians, it’s “toska” (great spiritual anguish or “dull ache of the soul,” according to some interpretations); the Czechs have “litost” (vaguely defined as a state of agony or torment from the realization of one’s own misery) and Germans are blessed with “torschlusspanik” (the literal translation is “gate-closing panic” but its contextual meaning refers to the “fear of diminishing opportunities” with age). In Japan, there’s Wabi Sabi and monozukuri, the latter of which is used to describe technology and processes integrating development, production and procurement, but also includes intangible qualities like craftsmanship and dedication to continuous improvement.

Such ambiguity in denotation have spawned a multitude of meanings for monozukuri, depending on the interpreter. Some scholars believe only those fluent in the Japanese language can truly understand all its nuances.

Yasuyuki Kimoto and Hiroyuki Sasa are well-acquainted with the term, having spent several decades in Japanese business and manufacturing (where the word originated). Perhaps it’s no coincidence, then, that Olympus Corporation’s newest leaders referenced monozukuri on the first page of the company’s FY12 annual report.

“Our mission is to contribute to society and its development through products and solutions,” the leadoff page reads. “Recognizing our technological prowess and getting back to the original spirit of monozukuri (excellence in manufacturing), the entire Olympus Group will work in unison on the genesis of a new Olympus.”

Rediscovering the spirit of monozukuri is just part of Olympus’ multi-faceted plan to reclaim the profits and shareholder trust lost in one of Japan’s largest accounting frauds. The scandal came to light during the third fiscal quarter after CEO Michael Woodford learned of an elaborate cover-up scheme involving offshore money, inflated acquisition payouts and a network of obscure brokers. His source was a magazine exposé that accused Tokyo-based Olympus of spending $773 million between 2006 and 2008 for three companies worth a fraction of their purchased value and had no ties to global firm’s core businesses of cameras and diagnostic endoscopes (one entity manufactures face cream, another made microwave plates and the third was a garbage recycler). “…they were Mickey Mouse companies—comical, farcical,” Woodford said in a December 2012 interview with The Atlantic. “[They] certainly were not worth the incredible amounts paid for them.”

As he dug deeper, Woodford uncovered a massive accounting fraud of nearly $2 billion. When he demanded that management resign and take responsibility for their imprudence, he was fired. A subsequent investigation conducted by Olympus found the massive overpayments for assets and lavish fees—totaling at least $1.7 billion—were a fraudulent attempt by company executives to hide previous bad investments by past Olympus presidents dating to the bubble economy of the 1980s. Within weeks of Woodford’s retaliatory firing, several company leaders had resigned and Olympus stock value plummeted 80 percent.

In their message to shareholders, Kimoto and Sasa apologize for their predecessors’ past sins and outline the company’s redemption plan. The pair, appointed at a heated shareholders’ meeting on April 20, 2012, vow to rigorously focus on Olympus’ core businesses—Medical, Life Science & Industrial, and Imaging—as well as overhaul its corporate governance policy.

“As expressed by the slogan ‘Back to Basics’ under the medium-term vision, Olympus will focus on our core businesses…and implement fundamental reforms that extend to the cost structure and production structure,” Sasa told investors in a joint letter with Kimoto. “These reforms differ essentially from short-term profit improvement measures. We are set to reach the objectives of the medium-term vision, create a new Olympus, and achieve the transformation necessary to become a stronger business with a stronger financial structure.”

Financial fortification certainly will be key to any long-term growth strategy, though Olympus proved its might in FY12 by weathering the scandal and a litany of other challenges (aftereffects of the March 11, 2011, Great East Japan earthquake and Thailand flooding) surprisingly well: Overall sales and gross profit remained flat at $10.3 billion (848 billion yen) and $4.6 billion (383 billion yen), respectively. Medical division sales—which comprise 41 percent of the company’s total revenue—slipped 1.7 percent to $4.24 billion (349.2 billion yen) and operating income tumbled 4.2 percent to $828.8 million (68.2 billion yen) according to the FY12 annual report.

Medical Group President Akihiro Taguchi attributed the relatively solid results in medical division revenue to physician empathy regarding the scandal and robust demand for its products, though both endoscope and surgical/endotherapy revenue remained flat. Endoscope sales totaled $2.3 billion (191.7 billion yen) and surgical/endotherapy proceeds reached $1.9 billion (157.4 billion yen).

$4.2 Billion ($10B total)
NO. OF EMPLOYEES: 40,000 (total)

The year 2011 was a roller coaster of scandal for Tokyo, Japan-based Olympus Corp. In October, British-born Michael Woodford was suddenly ousted as CEO of the company. He had been company president for six months, and two weeks prior had been promoted to CEO, when he exposed “one of the biggest and longest-running loss-hiding arrangements in Japanese corporate history,” according to The Wall Street Journal. Tsuyoshi Kikukawa, the board chairman, who had appointed Woodford to these positions, reassumed the title of CEO and president.

Woodford alleged that his removal was related to several prior acquisitions he had been seeking answers to, particularly the $2.2 billion deal in 2008 to acquire British medical equipment maker Gyrus Group. Eyebrows were raised about the $687 million paid to a middleman as a fee—a sum equal to 31 percent of the purchase price, and which ranks as the highest ever merger-and-acquisition fee. The company initially responded, on Oct. 19 that “major differences had arisen between Mr. Woodford and other management regarding the direction and conduct of the company’s business.”

Other acquisitions brought the company’s accounting and business practices into question. The purchase of three Japanese companies outside the company’s core business were recorded on the books as worth $721 million less than their acquisition value of 12 months earlier. Japanese press speculated on a connection to Yakuza (Japanese organized crime syndicates). Olympus defended itself against allegations of impropriety, citing its audit board’s view that “no dishonesty or illegality is found in the transaction itself, nor any breach of obligation to good management or any systematic errors by the directors recognized.”

On Oct. 26, Tsuyoshi Kikukawa resigned his positions as chairman, president and CEO; he was replaced by Shuichi Takayama. On Nov. 8, the company admitted that its accounting practices had been “inappropriate” and that money had been used to cover losses on investments dating back to the 1990s. The company blamed its shady accounting on former president Tsuyoshi Kikukawa, auditor Hideo Yamada and executive vice president Hisashi Mori.

Medical division sales for fiscal 2011 (ended March 31, 2012) were 4.2 billion, a drop of 1.7 percent (in yen). Operating income dropped 4.9 percent to approximately $828 million. Medical sales comprise 41 percent of the company’s revenue.

According to the company, the sales of disposable guide wires used for endoscope treatment for pancreatic ducts continued to be favorable, particularly in the Japanese market. Sales of endoscopic video systems also grew. There was an overall decline in revenue in the Medical Systems business for the period as a result of the temporary difficulties in the procurement of parts due to the impact of the Japanese earthquake and tsunami in early 2011 and the resulting adjustments made in the production of some products. Unfavorable exchange rates also impacted fiscal results. On a constant currency basis, nets sales and operating income rose 2.8 percent and 4.3 percent, respectively.

For the company overall, net sales for the year were approximately $10 billion a marginal increase of less than a percent. Net loss for the year was $590 million, compared to net income of $46 million for fiscal 2010.

In April last year Luke Calcraft was named as president of the Olympus Corporation of the Americas’ Medical Systems Group. Calcraft reports directly to Haruhito Morishima, group president of the Medical Systems Group for Olympus Corporation in Japan. Calcraft will be based in Center Valley, Pa., the company’s headquarters in the United States. In the 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. In addition, he will be responsible for developing strategic alliances and expanding the company’s business opportunities in both the North and South American continents.

“Luke’s appointment to this new role reflects our ongoing activities to better serve our customers’ needs, in both the medical and surgical areas, through adopting a more global management strategy,” said Morishima. “This approach will ensure that our international operations are consistent but flexible, allowing us to adapt our customer service to meet local needs.”

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, responsible for the medical and microscopy businesses in Europe, Russia, the Middle East and Africa. He previously held positions as national sales manager for EndoTherapy, selling endoscopic devices in the U.K.; head of Corporate Affairs and International Medical Sales and head of Professional Training and International Medical Export Sales. Calcraft also has experience in the U.S. market, having served as chief operating officer of Olympus Surgical & Industrial America, managing Olympus’ Industrial Endoscope and Microscopy businesses in the region.

In July 2011, Olympus acquired venture-backed Spirus Medical Inc., an endoscope insertion device manufacturer based in Stoughton, Mass. The acquisition was implemented through Gyrus ACMI Inc., a consolidated subsidiary of Olympus based in the United States. Spirus makes devices that aid in the insertion and advancement of endoscopes for upper and lower endoscopy. Spirus’ manual rotation devices, developed in 2006, were used in conjunction with a conventional endoscope. Last year, the company succeeded in developing a powered spiral endoscope insertion technology driven by an integral motor incorporated into a propriety endoscope design. The powered technology consists of a rotatable soft spiral incorporated on the insertion tube of endoscopes to facilitate deep insertion of endoscopes within a shorter amount of time, as compared to conventional endoscopes. Olympus plans to develop new endoscopic systems by combining Spirus technology with its own endoscopic system technology. The company will be renamed Olympus Endo Technology America Inc.

Throughout the fiscal year, the company made a number of new product introductions.

In May last year, Olympus received U.S. Food and Drug Administration (FDA) clearance for it ScopeGuide technology, which is designed to assist gastrointestinal physicians, colorectal surgeons and nurses during a colonoscopy to visualize the colonoscope as it travels through the colon. The system uses magnetic endoscopic imaging to produce a three-dimensional view of the scope and its location within the colon in real-time. A number of small electromagnetic transmission coils located within the colonoscope itself generate a weak magnetic field, which is picked up by the ScopeGuide receiver. The received signals allow the ScopeGuide processor to calculate the location and orientation of each transmission coil, which is used to generate the 3-D rendering of the scope, displayed on a screen. A separate handheld 3-D marker helps an assistant to visualize where abdominal pressure will be most effective.

In October, Olympus introduced a new surgical imaging platform, Visera Elite, and a new 5 millimeter high-definition (HD) deflectable videolaparoscope, called the Endoeye Flex 5. The Visera Elite platform is equipped with HDTV imaging capability and advanced image processing to provide the best possible image for Olympus surgical scopes across multiple specialties. The Endoeye Flex 5 offers HD resolution in a 5 millimeter diameter scope. The device uses digital-chip technology to place the camera on the tip of the scope enabling doctors to see fine details during surgical procedures.
Additionally, the scope allows for 100-degree angulation in all directions providing complete visualization of complex anatomical structures, according to the company. The deflectable tip on the Endoeye Flex 5 offers surgeons the flexibility to change the direction of view giving them a new way to observe the anatomy. It also minimizes potential collisions between instruments, which is common when operating in narrow spaces in procedures like single-site surgery, helping to ensure intra-abdominal triangulation. In addition, the Endoeye Flex 5 is autoclavable, which can result in significant reprocessing cost savings for the hospital. The system is designed for a range of bariatric, thoracic, colorectal and other specialties, including the single-site surgery approach. Olympus offers a system solution for single-site surgery, comprising access, visualization and instrumentation. In laparo-endoscopic single-site surgery, the TriPort+ access system is placed into an umbilical incision allowing single-port access for up to four instruments. The Endoeye Flex 5 allows the surgeon to get the desired view and position the scope away from the instruments. After the procedure, the surgeon removes the port, allowing the natural contours of the bellybutton to help hide the small surgical incision. Single-site surgery has the potential to result in improved healing for patients over traditional open surgery.

In December the company introduced a line of EZ Shot 2 single-use aspiration needles for endoscopic ultrasound (EUS) procedures. According to the company, the four needles offer improved puncture capability along with an adjustable sheath designed to help physicians more accurately approach the targeted site. Available in a complete selection of sizes and styles, the surface of the EZ Shot 2 needle is designed with unique echogenic dimples to ensure it is clearly visible while performing endoscopic ultrasound.

March of this year brought FDA clearance of Olympus’ Thunderbeat line of hand instruments and universal surgical platform. According to the company, at the time of its release, Thunderbeat was the only surgical device that combined advanced bipolar and ultrasonic energies into a single multi-functional hand instrument allowing surgeons to simultaneously seal and cut vessels up to and including 7 millimeters in size with minimal thermal spread. Additionally, it is designed for faster cutting speeds, improved vessel sealing, and higher grasping forces at the tip when compared to other energy instruments. In can be used in any procedure in which cutting, vessel sealing and cutting, coagulation, grasping, and dissection is performed.

“Our aim as a leading global healthcare company is to advance medical and surgical techniques and minimally invasive procedures through the development of inspiring technological solutions and innovative products like Thunderbeat that overcome the day-to-day constraints that physicians and surgeons face,” said Calcraft, president of Olympus Corporation of the Americas’ Medical Systems Group. “Olympus is committed to helping physicians and surgeons perform advanced procedures that elevate the standards of patient care and deliver better treatment, while improving outcomes and enhancing quality of life.”

$3.9 Billion ($9.8B total)<
NO. OF EMPLOYEES: 40,000

“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.

“17. Olympus Medical Systems Corp.

$4 Billion ($10.3B total)

KEY EXECUTIVES:
Tsuyoshi Kikukawa, President and Representative Director
Haruhito Morishima, President and Representative Director, Olympus Medical Systems Corp.
Rick Harbuck, Representative Director
Shinichi Nishigaki, Representative Director
Hiroyuki Sasa, Representative Director
Nobuyuki Koga, Representative Director
Akihiro Taguchi, Representative Director
Hisashi Mori, Representative Director
Luke Calcraft, Representative Director

NO. OF EMPLOYEES: 2,791 (35,376)

GLOBAL HEADQUARTERS: Tokyo, Japan.

The best laid schemes of mice and men
Go often askew,
And leave us nothing but grief and pain
For promised joy!— Robert Burns (translated)

Executives at Olympus Medical Systems Corp. certainly can attest to the symbolism behind Burns’ 1785 poem, “To a Mouse, on Turning Her Up in Her Nest.” In fiscal 2009 their “best laid scheme” of implementing the firm’s corporate strategic plan for the next three years was turned upside-down by the devastating financial crisis that circled the globe.

“Due to abrupt changes in the economic environment, we instead promoted countermeasures, including production adjustments,” Tsuyoshi Kikukawa, president of Olympus Corp. (Olympus Medical’s parent company), told shareholders in a letter within the company’s 2009 annual report. “There is little reason for optimism with regard to fiscal 2010…”

While it is impossible right now to determine whether Kikukawa’s dire outlook for 2010 is accurate, the countermeasures he mentioned in his letter to shareholders most likely helped the company stave off more significant losses in fiscal 2009 (year ended March 31, 2009). Overall net sales shrank 13 percent to 980 million yen ($10.3 billion), while operating income fell by more than half to 34.5 million yen ($364 million). The corporation’s net loss came to 114.8 million yen, a figure that executives attributed to the impact of the strong yen, poor economic conditions worldwide, and the amortization of goodwill in new business fields.

The firm’s Medical Systems Business weathered the economic storm much better than its parent company, posting $4 billion in net sales (383.8 million yen), an 8.7 percent increase compared with the $3.3 billion the segment reported in fiscal 2008. Operating income, however, plunged 23.8 percent to $790 million (75 million yen), mostly due to volatile foreign currency exchange rates in North America and Europe. Increased depreciation costs from the November 2007 acquisition of Gyrus Group, a British endoscope manufacturer, also contributed to the decrease in operating income, executives said.

Though endoscopy sales in fiscal 2009 were solid in Japan, Europe, Asia and Latin America, the company’s Medical Systems business still posted a 10.3 percent decline in gastrointestinal endoscope sales to $2.2 billion. The year’s top sellers included the Evis Lucera Spectrum system and the Evis Exera II high-resolution endoscopic system, according to the 2009 annual report. The company added a new endoscopic device to its product lineup late in the fiscal year with the worldwide launch of the Universal Endoscopic Ultrasound Center EU-ME1. According to the company, the EU-ME1 combines electronic and mechanical scanning in a single device, and can be used with seven Olympus ultrasound scopes and 14 ultrasound probes that previously required different processors.

Olympus also debuted its Endo Capsule during the fiscal year in an attempt to strengthen its position in the minimally invasive product market. Olympus’ Endo Capsule is a pill-sized device (measuring 11mm by 26mm) equipped with a tiny camera and lights that enable doctors to take pictures of the small bowel.

Executives did not specify the impact of the Endo Capsule on domestic sales, but said the development of the device has reinvigorated the firm’s focus on minimally invasive products and the creation of software to support medical diagnoses. That focus most likely prompted Olympus Medical to sign a marketing and distribution agreement in May 2008 with Spiration Inc. for the company’s IBV Valve System, a minimally invasive treatment for acute and chronic lung conditions. Olympus has exclusive rights to the product in Europe.

Surgical and endotherapy products experienced the greatest growth in the Medical Systems business, soaring 47.5 perent to $1.8 billion. Executives attributed the growth to robust sales in Japan of the Visera Pro multi-compatible endoscopic video imaging system and greater demand for pancreaticobiliary duct endotherapy devices, including guidewires and catheters that supply nutrition directly to the stomach. Overseas sales of integrated endoscopic surgery systems, biopsy forceps and other sampling products were brisk, particularly in North America.

Research and development expenses in the Medical Systems Business totaled $259 million in fiscal 2009. The investment resulted in several new products, including the BF Type UC260FW Ultrasonic Bronchoscope, Solemio ENDO Ver.3.3 Endoscope, and the X-Suit NIR biliary metallic stent.

Olympus’ Life Sciences Business, which produces biological and industrial microscopes and clinical hemanalysis systems, was hit particularly hard by the recession. The segment experienced a 9.6 percent sales decrease to $1.2 billion and a staggering 32 percent plunge in operating income to $50 million. While mainstay product sales in this division were strong, lower capital investment in manufacturing industries significantly impacted the sales of industrial microscopes. Overall microscope sales fell 14.6 percent to $707 million.

The economy’s rapid deterioration in the second half of the fiscal year helped seal the fate of the company’s diagnostic systems business. Citing a spike in merger and acquisition activity, and increased competition in the market (from both large and small companies), Olympus Medical sold its diagnostic business to Beckman Coulter Inc. for roughly $800 million. “Taking into consideration the rapidly changing dynamics within this global market segment, Olympus determined that the divestment of its diagnostic systems business…is the best strategic option and offers clear benefits going forward over retaining ownership,” a statement from the company read.”

$3.3 Billion ($10.7B total)
NO. OF EMPLOYEES: 36,503 (total)

Fiscal 2008 proved to be a record-setting year for Olympus Group. Besides posting its 14th consecutive increase in annual net sales, the company achieved its 100 billion-yen operating income target ($850.6 million U.S. dollars) one year ahead of schedule.

Olympus executives attributed the achievements to several factors, including a departure from an “endoscope-dependent business operation,” the establishment of a sustainable earnings structure in its Imaging Systems business, the creation of new businesses, the reform of its production structure and the enhancement of corporate brand value. “The efforts that have gone into these measures are steadily bearing fruit,” Tsuyoshi Kikukawa, Olympus president, said in the company’s 2008 annual report.

In fiscal 2008, Olympus enjoyed a bumper crop of financial fruit, as net sales climbed 6.3 percent to $10.7 billion. Operating income totaled $1 billion, a 30.3 percent increase compared with the $823 million the company posted in fiscal 2007. Net income rose to $552 million, a 38.6 percent jump compared with the $398 million Olympus reported in 2007. Kikukawa linked the net sales hike to higher demand for Imaging Systems products and robust sales of endoscope systems, surgical endoscopes and endotherapy devices in Japan and overseas.

The Medical Systems division, which manufactures medical endoscopes, surgical endoscopes, endotherapy products and ultrasound endoscopes, emerged as the top revenue-generating segment in fiscal 2008 (ended March 31, 2008). Net sales totaled $3.3 billion, a 27 percent increase compared with the $2.6 billion in revenue the segment generated in fiscal 2007. Operating income grew 12 percent to $937 million, and sales of gastrointestinal endoscopes increased 11 percent to $2.2 billion.
Executives attributed the revenue increase in Medical Systems revenue to sales of the Evis Exera II high-resolution HDTV endoscope system in the United States, Europe, Oceania (which includes Asia, Australia, India, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwain, Thailand and Vietnam) and Latin America. The system uses high-definition images and specific light spectra to spot hard-to-detect lesions or abnormalities in the colon.

Sales of gastrointestinal endoscopes in Japan were driven by demand for the Evis Lucera Spectrum endoscope system, a device similar to the Evis Exera II that uses a Xenon light source to spot intestinal lesions. Domestic sales also were brisk for the company’s slim, upper gastrointestinal videoscopes that can be inserted through the nasal tract or mouth.

Other products that contributed to the revenue increase in the Medical Systems division included a capsule endoscope for the small bowel (introduced in the United States) and the Single Balloon Enteroscope System (released worldwide), a device that makes it easier for doctors to examine the small bowel.

Sales of minimally invasive products also helped boost earnings in Olympus’ Medical Systems division. Revenue jumped 18.4 percent in fiscal 2008 to $1.1 billion, as demand grew overseas for biopsy forceps, clipping devices for hemostasis, a disposable guide sheath kit used to collect specimens in respiratory organs, and guidewires.

According to Olympus, the Evis Exera II was a favorite among overseas surgeons, and customers in Asia clamored for the company’s Visera Pro system, an integrated system of digital rigid, deflectable tip and flexible videoscopes for use in operating room endosurgery as well as office-based endoscopy procedures. American and European customers continued to favor the high-definition videoscopes for abdominal and chest exams.

In an effort to further blanket the worldwide market with its products, Olympus acquired United Kingdom-based Gyrus Group PLC, a supplier of electrosurgical knives for urological and gynecological use, in November 2007. Haruhito Morishima, president of Olympus Medical Systems Corp., said the $1.9 billion acquisition helps the company reinforce and expand its footprint in the surgical and minimally invasive procedure fields.

“In global terms, Olympus currently boasts a 70 percent share of the gastroentereological endoscopes market,” Morishima said in an interview in the 2008 annual report. “However, we must endeavor to develop the surgical business to contribute more to minimally invasive procedure and to nurture our Medical Systems business. After reviewing our strategy, we came to the conclusion that Gyrus would be an ideal partner in reinforcing Olympus’ surgical business.”

Olympus projects continued growth in endoscope system sales in fiscal 2009, as it works to offer its customers a broader array of products through Gyrus. Based on its bountiful year in fiscal 2008, the company forecast Medical Systems sales to total $4.1 billion and operating income to amount to $1 billion in fiscal 2009. Thanks to the recession though, the company came up short: According to its latest earnings release, Medical Systems sales were flatat $3.94 billion and operating income fell to $771 million.

$2.6 Billion ($8.8B total)

KEY EXECUTIVES:

Tsuyoshi Kikukawa, Representative Director and President
Haruhito Morishima, President, Olympus Medical Systems Corp.
F. Mark Gumz, President, COO and CEO, Olympus Corp. of the
Americas
Rick Harbuck, Group VP, Olympus Corp. of the Americas

NO. OF EMPLOYEES:

35,700

GLOBAL HEADQUARTERS:

Tokyo, Japan

Olympus makes more than the digital camera you took on this summer’s vacation. It also develops a wide range of endoscopes, imaging and surgical products, which helped significantly to boost the company’s overall revenue for fiscal 2007 (ended March 31, 2007).

The year also marked the company’s 13th consecutive year of sales growth. Total sales increased 8% (in yen) to reach $8.8 billion. Even more impressive is operating income that jumped 57.9% ($823 million), while net income surged 67.3% ($398 million). Company management attributed the growth to double-digit expansion in the Medical Systems and Life Sciences businesses, in addition to increased domestic and overseas sales of new digital cameras, endoscopes and therapeutic products. Sales results also were helped by the year-on-year depreciation of the yen against the dollar and the euro.

For the Medical Systems division (which manufactures medical endoscopes, surgical endoscopes, endotherapy products and ultrasound endoscopes), growth was equally impressive, up 17% compared with fiscal 2006 ($2.6 billion). Operating income climbed 14.6% to $732 million. Sales of gastrointestinal endoscopes also rose—22.2%—to $1.78 billion. The company’s line of minimally invasive surgery (MIS) products contributed to a healthier Medical Systems bottom line. MIS product sales increased 7.2% to $816 million, in large part due to sales of a new disposable electrosurgical knife in Japan. International sales of Olympus’ new high-definition videoscopes for the abdomen and chest were “robust,” according to Olympus. Global expansion of markets for endosurgery and endotherapy products also contributed to the sales increase.

A total of 34% of sales came from North America and 31.9% from Europe (both markets grew by double digits), while Japan (22.9% of sales) grew modestly.

“Developing MIS products designed to support early detection and treatment of cancer is a leading priority for the company,” said Tsuyoshi “Tom” Kikukawa, president of Olympus. “We’re also pushing toward increased sales in Asian countries, where the company is expecting growth.”

Olympus already has wrapped up its 2008 fiscal year, and the company’s growth hasn’t slowed any. Net sales increased 6.3% to $9.87 billion. Operating income rose 14.1% to $986 million, while net income increased 21.3% to $507.3 million. Total medical sales increased 13.3% to $3.1 billion. Surgical endoscopes and endotherapy products increased 18.4% to $1 billion. Sales of endoscopes rose 11% to $2.1 billion. The division’s operating income was up, thanks to the sales expansion of medical endoscopes and favorable performance of surgical treatment devices in markets outside of Japan. Helping to fuel an ever-increasing new product pipeline, R&D expenditures for the year jumped 18.7% to $576.9 million.

In management news, F. Mark Gumz, president and chief operating officer of the company’s US operations since January 2000, added CEO to his title in April 2008. At the same time, the company was renamed Olympus Corporation of the Americas (OCA) from Olympus USA. The move was made to “better reflect its regional geographic responsibility for North and South American Olympus operations,” according to a company press release.

Gumz is the highest-ranking official in the Americas and the first American to be appointed CEO of any Olympus entity.  He will retain his positions as president of OCA, Olympus Canada Inc., Olympus Imaging America Inc. and Olympus Medical Equipment Services America Inc.  He also will continue to oversee the operations of Olympus Latin America Inc. He began working for the company in 1977.

So far, for 2008, the company has rolled out some notable products, including the Endo Capsule for the visualization of the small-bowel mucosa—the device received FDA 510(k) clearance in September. It is a small, ingestible pill-like device that allows physicians to better diagnose and treat small-bowel abnormalities. Patients carry Endo Capsule’s data recorder in a lightweight harness that records images but allows for daily activity. Also for fiscal 2008, the company released its Single Balloon Enteroscope system (SBE), another device for the examination and treatment of the small bowel. The SBE reduces average examination time compared with other small bowel enteroscopy procedures, employs the Olympus Evis Exera II platform and offers high-resolution images and improved insertion ability, the company said. The SBE can be used with a broad range of EndoTherapy devices used in tissue sampling, hemostasis and foreign object removal.

$2.4 Billion ($8.6B Total)
No. of Employees: 33,022

For the year ended March 31, 2006, overall net sales for Olympus Corp. exceeded $8.6 billion, up 20.2% from the prior year. FY 2007, which closed at the end of March, didn’t quite measure up to the gains seen in 2006 but did close with an 8.6% gain.

Solid financial growth and a wide array of new product offerings contributed to a steady year for Olympus Medical Systems, which continues to explore new methods on expanding its reach domestically and overseas.

Olympus Medical Systems obtained solid marks with 15.5% growth of $2.35 billion reported in net sales in FY 2006. The bulk of sales came from overseas, with $1.7 billion attributed to international sales and more than $600 million in sales reported domestically. The largest growth between FY 2005 and FY 2006 occurred in Asia (48.9%), with double-digit increases also seen in North America (16.9%), Japan (11.3%), Europe (10%) and other regions (27%).

The company closed its FY 2007, ended March 31, with sustained growth in net sales totaling $2.7 billion, a 17% increase from FY 2006. Once again, the company achieved a double-digit increase (22.2%) overseas, but sales were flat  (2.5% growth) domestically.

The company’s stronghold in the endoscope product line reaped 18.5% growth in FY 2006, reaching $1.5 billion in sales. In FY 2007, sales grew another 22% over the prior year, reaching $1.8 billion. Sales of minimally invasive products, which include surgical endoscopes and endo-therapy devices, grew 10.1% to $806 million in FY 2006 and climbed another 7.2% in FY 2007 to $836 million.

New products continue to fuel the company’s growth. For example, at the end of 2006, Olympus Medical Systems set its sight on accelerating the process of bringing the Olympus 5.5 mm hysteroscopy system to market for Conceptus, Inc.’s Essure, a permanent birth control system, by establishing a strategic alliance.  The Essure is the first hysteroscopy-based sterilization method that has received FDA approval in the United States.

In addition, early 2007 brought the launch of Olympus’s new Endo-Flush Endoscope Flushing Pump EFP250. Released in February, the pump replaces manual flushing by using a syringe with an automatic pump in the cleaning process.

In more recent product news, in June, Olympus Medical Systems added the Single Balloon Enteroscope System to its list of product offerings to support endoscopic diagnosis and the treatment of conditions in the small bowel area. A month earlier, Olympus and VisEn Medical Inc. also announced three new types of VisEn In Vivo Near Infrared Fluorescence Probes. The probes were made available in Japan and four other Asian markets. Parent company Olympus Corp. has pursued overall expansion by opening two new eco-friendly facilities. The Mishima Facility in Sunto-gun, Shizuoka Prefecture, which opened in April 2007 in Japan, now houses development, quality assurance and customer support operations for Olympus Corp.’s diagnostic business, among other uses. (The diagnostic business, which falls into the company’s Life Sciences division and encompasses Olympus’s blood analyzers, had a slower climb in FY 2006, with sales only growing by 8.7% to just under $400 million.)

In addition, KeyMed Ltd., a consolidated subsidiary of the Olympus Corp. that manufactures medical and industrial equipment, established a new plant for its medical devices at Southend-on-Sea in the United Kingdom in May 2007.