Olympus 2014 Annual Report Download - page 13

Special Feature: Reliable Growth in Global Markets
Americas
Q
Q
Q
Olympus provides technologies that support early diagnosis methods as well
as minimally invasive treatment therapies, which we believe are compatible
with the goals of the U.S. Affordable Care Act. In order to realize further growth
going forward, we will accelerate initiatives geared toward capturing the
business opportunities being created as a result of this act.
Nacho Abia
Division Manager of Medical
Business Div. of Americas,
Medical Business Group
(President of Olympus Corporation
of the Americas)
What is your view of the business environment in the North American
market? Also, would you please discuss the past year’s results?
What initiatives and policies will you focus on over the next year?
Finally, would you please discuss your medium-to-long-term business growth strategies?
A
A
AThe implementation of the Patient Protection and
Affordable Care Act—or ObamaCare—is rapidly chang-
ing the Medical Business environment in the United
States. The triple aim of healthcare reform is to reduce
overall costs, improve patient outcomes, and enhance
the patient healthcare experience. Olympus is ideally
suited to help healthcare facilities meet these goals by
delivering minimally invasive technologies aimed at early
detection, diagnosis, and treatment of disease. Moving
forward, we will continually strive to address pressure to
reduce costs where possible while demonstrating the
signifi cant clinical and economic advantages of our
solutions to healthcare provider networks. We will also
need to further invest in strengthening our strategies
for healthcare network management.
As Olympus has worked to adjust to this chang-
ing environment, we have seen our U.S. Medical
Business outpace the medical device industry. We
posted record sales in the fi scal year ended March
31, 2014(*1), with a 6% growth rate and a signifi cant
sales backlog to carry over into the current fi scal year.
Our core Gastroenterology (GI), Urology, and ENT
markets showed especially strong growth. Driven by
our high-margin leasing business and strict discount
controls, we saw our gross margins improve while
Operating Expenses (OPEX) also grew due to sales
team expansions in our GI Accessories (EndoTherapy)
and Corporate Accounts groups(*2). After the launch
ofa new sales strategy along with a signifi cant mate-
rial investment last year, our GI Accessories are now
experiencing quarterly growth rates between 15%
and18%.
What is the status of the new gastrointestinal
endoscopes and surgical endoscopes?
Launches of our EVIS EXERA III endoscopy platform
and VISERA ELITE surgical platform have done
remarkably well and have led to record sales of proces-
sors. With the rapid adoption of the CV-190 processor,
we anticipate signifi cant future growth in EVIS EXERA
190 endoscope sales for GI. Likewise, the ability to
connect and convert 2D systems into 3D imaging
systems using our surgical platform has proven to be
very appealing for surgical customers. We also have a
sizable share of the ENT market for fl exible nasopha-
ryngoscopy and sinus surgery, and we are the
dominant provider in the U.S. EndoUrology arena.
What is the status of the new electrosurgical device
THUNDERBEAT?
Our innovative THUNDERBEAT electrosurgical device
is unique to the industry and performs exceptionally
well in almost every aspect of surgery, including
grasping, dissecting, cutting, and sealing. Despite its
high-performance capabilities, some of the constraints
to the device’s widespread adoption have been contract
limitations due to preexisting, multiyear agreements
between hospital networks 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.
With this in mind, we have revised our THUNDER-
BEAT strategy to direct our sales resources to the most
appropriate accounts, customers, and procedures.
Moving forward, we are
also working to incorporate
training as a major part of
our Olympus strategy.
At Olympus, the Surgical fi eld is divided into Surgical
Endoscopy (SE), Urology / Gynecology (Uro / Gyn), ENT,
and Energy. Over the next year, each of these sectors
will be a primary area of focus for Olympus, and we will
work hard to build on our existing strengths. One of
those strengths is our ability to negotiate across our
entire Surgical portfolio, allowing preferential pricing
for customers using multiple Olympus products. We
also have strong competitive strengths in each sector.
For SE, Olympus is uniquely positioned to offer world-
class 3D visualization at a fraction of the cost of robotics
while providing a common platform for 2D / 3D imaging
and GI endoscopy. In Uro / Gyn, we are gaining compet-
itive ground with our stone management devices and
are investing in additional sales people and products.
For ENT, the additions of our DIEGO ELITE platform
and high-quality video endoscopes have greatly
improved our product portfolio and market positioning.
Finally, in the Energy market, we have made signifi cant
investments in our Corporate Accounts groups and
remain competitive in the OR (operating room). In
addition, we will continue investing in additional sales
staff and clinical specialists, and we will make surgeon
training an ongoing priority. We are working diligently
to take advantage of the opportunities offered by our
contract with Premier and are in negotiations with a
number of other group purchasing organizations
(GPOs) to secure their Energy contracts.
It is well-known that the U.S. has an aging population
and is experiencing increasing levels of chronic
disease, including obesity, back pain, and diabetes.
It is also generally agreed that ObamaCare initiatives
should result in a larger percentage of the U.S. popu-
lation being covered by insurance. Those two factors
make it reasonable to assume that demand for
Olympus medical and surgical products will continue
to increase for the foreseeable future.
What are the growth strategies for surgical
and endotherapy devices?
We have several strategies to grow our Surgical and
EndoTherapy devices. First, we will work to improve
market access through GPO and Integrated Delivery
Network (IDN) contracts. We will leverage the diversity of
our GI and Surgical portfolios to drive additional sales
volume and invest in dedicated sales resources to protect
our existing market share and increase device consump-
tion. Finally, we will work to provide solutions that offer
improved patient outcomes and/or reduce costs.
What are the future initiatives in Central
and South America?
We are optimistic about our expansion plans for Latin
America. We recently established a new Latin American
Division (LAD) headquartered in Miami and are invest-
ing in resources to support our South American
business. The expansion of LAD will allow us to
develop specialized products and services for the
region as we work to address each country’s specifi c
regulatory and compliance requirements and focus on
improving our customer service and our training
program for healthcare providers. In Brazil and Mexico,
our two largest markets, we have direct sales subsid-
iaries working to identify business opportunities.
A recent update to our pricing strategy in Brazil
resulted in signifi cant growth in our GI business, and
we will continue to refi ne our strategies in Latin America
as we learn how to best engage those markets.
Q1 Q2 Q3 Q4
0
5
10
15
20
25
1
7
19
12
EndoTherapy Quarterly Growth
(%)
*1. Figures for United States only (Canada and South America excluded)
*2. Specialized sales forces for approaching group purchasing organizations
(GPOs), integrated delivery networks (IDNs), other major hospital networks,
and U.S. veterans’ hospitals
2013/3 2014/3 Growth rate
1
2
3
23
OLYMPUS Annual Report 2014
22 OLYMPUS Annual Report 2014