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Although our earnings structure is still dependent on med-
ical endoscopes, we are beginning to see digital cameras grow into
a strong earnings pillar. In my second term as president, I believe
our reforms have gradually taken shape through our Internal
Company System and measures based on the concept of “Creative
Destruction and Innovation.” The impact of these reforms is
clearly seen in the drastic improvement in earnings, and I strong-
ly believe that this is a signal of our continued strength to follow.
Q2: The digital camera market is an intensely competitive market
comprised of many manufacturers fighting tooth and nail. How did
you rebuild the digital camera business after it reported losses of
approximately ¥11.0 billion in fiscal 2002?
Our digital camera business had a problem with its prof-
it structure. We had to lower the production cost.
We solved this problem by strengthening our pro-
duction structure in China and shifting a major portion of our
digital camera production to China. Full-scale production of dig-
ital cameras began in October  at a new production line at
our two plants in Guangdong. In this one move, almost all inter-
nal production that had been done in Japan was shifted to China,
except for very high-end models. We were able to significantly
reduce production costs by having our facilities in Japan concen-
trate on development and other high value-added functions, and
by basing high-quality, low-cost manufacturing plants in China.
Through these measures, O lympus strengthened its internal sup-
ply structure and its internal production ratio improved to % as
a result. In the fiscal year under review, the Imaging Systems
Group turned an operating profit.
Olympus has also seen substantial benefits from the April
 integration of domestic marketing and sales functions from
its subsidiary Olympus ProMarketing, Inc. into the Imaging
Systems Group. We are now able to directly reflect user and retail-
er opinions in the development and manufacturing processes,
which has led to the creation of several hit products.
In April , Olympus absorbed Olympus
ProMarketing, Inc. in a merger. As a result, the Company
expects to realize benefits in its Medical Systems Group, Life
Science Group and Industrial Systems G roup similar to those
achieved in the Imaging Systems Group.
Q3: The Medical Systems Group is an exceptionally stable earn-
ings foundation. What is your vision for this product group going
forward?
Even though our endoscopes command an % share of
the world market, we are not satisfied. Only our gas-
troenterological endoscopes enjoy a dominant market
share, and our world shares of the markets for surgical endoscopes
and endo-therapy devices (treatment equipment) are about %
to %. The market scale for either of these products rivals that
of gastroenterological endoscopes. Leveraging our strengths in
gastroenterological endoscopes, we believe we have considerable
potential to expand the business.
OLYMPUS 2003
O P E R A T I N G I N C O M E
O F I M A G I N G S YS T E M S
GR O U P
The Imaging Systems
Group rebounded
from an operating
loss in fiscal  to
post operating
income of ¥.bil-
lion.
¥18 .2 billion
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