Olympus 2014 Annual Report Download - page 18

Priority Measures Based on Growth Strategies
Further Strengthen the Surgical
Device Field
1. Develop the Energy Device Business
Crucial to strengthening the surgical device fi eld is growing
the energy device business into a core pillar of operations.
Based on this recognition, we have continued to bolster
sales of the strategic product THUNDERBEAT since its
launch, and we are expanding our sales force to ensure
higher sales into the future. In addition, we are enhancing
the specialized sales force formed to approach group
purchasing organizations (GPOs) and integrated delivery
networks (IDNs) in the United States, one of THUNDER-
BEAT’s largest markets. We are also promoting sales by
stepping up training initiatives and we will target further
sales growth by bolstering our lineup of products that
employ THUNDERBEAT’s cutting-edge technologies.
2. Advance Strategies in All Areas of the Surgical Device Field
In strengthening the surgical device fi eld, it will be important
to boost sales of surgical endoscopes that utilize the Compa-
ny’s strength in imaging technologies. Another crucial
measure will be expanding operations in the urology and
ENT areas, where we gained a solid sales network through
the acquisition of Gyrus Group PLC. Accordingly, we will
bolster specialized sales forces geared toward both tasks.
In addition, we will work to increase worldwide sales of
DIEGO ELITE(*), a differentiated product developed using
proprietary technologies for paranasal sinus surgical
devices, an area that is primarily dominated by overseas
manufacturers.
Medium-term vision goal: Average growth of 14% a year
Furthermore, we aim to develop new businesses in
areas peripheral to the surgical device fi elds, and we will
conduct R&D expenditures to this end.
Expand Sales in Emerging Markets
Emerging countries are experiencing population aging in a
similar fashion to developed countries, and healthcare costs
are shooting upward. For this reason, it is incredibly impor-
tant to make the development of new endoscopists. To
meet this need, Olympus established a training center in
Guangzhou during 2013. Adding to existing Chinese training
centers situated in Shanghai and Beijing, this center is our
largest in Asia. The Company is now amply equipped to
respond to the projected growth in training and after-sales
service demand in the Chinese market. Going forward, we
plan to develop training centers in other parts of Asia with
the aim of growing our business by spreading knowledge
regarding early diagnosis, minimally invasive treatment, and
other procedures using endoscopes.
Challenges and Business Strategies
Now is the ideal timing for conducting the investments that
will enable us to achieve the goals defi ned for fi scal 2017,
the fi nal year of the medium-term vision, and drive our
growth thereafter. For this reason, we have earmarked
approximately ¥18 billion for strategic investments to be
instituted in fi scal 2015. These investments are separate
from those described in the medium-term vision, and their
primary goal is to strengthen the surgical device fi eld,
which has been positioned as a future growth driver.
Of this amount, ¥12 billion will be allocated to expand-
ing sales forces and conducting sales promotions to
enhance selling capabilities. The remaining ¥6 billion will be
devoted to R&D expenditures geared toward expanding
the scope of our business. All investments are slated for
completion in fi scal 2015.
Breakdown of Strategic Investments Targeting Long-Term Growth
Area Details Amount
Personnel expenses
Increase number of staff by approximately 1,000 people, centered on
sales personnel (primarily in North America and Asia, where growth in
surgical device market is expected)
Approx. ¥9 billion
Sales promotion expenses
Aggressively conduct sales promotions in North America, Asia, and
other key markets (including sales training expenses and costs related
to sample-use medical equipment)
Approx. ¥3 billion
R&D expenditures
Undertake upfront investment for future business growth and expan-
sion (including ENT and gynecology areas and development of other
advanced technologies)
Approx. ¥6 billion
Total Approx. ¥18 billion
Medium-term vision goal: Average growth of 23% a year
TOPICS
Reorganization and Enhancement
of Global Manufacturing Network
to Strengthen Production Capabilities
Amid rising global demand for medical equipment, Olympus
has been reorganizing and enhancing its global manufacturing
network to raise production capacity and production effi ciency.
As one facet of these efforts, our fi ve surgical device manu-
facturing sites in the United States were consolidated into
three during 2014. At the same time, we are relocating former
Gyrus Group PLC. plants to integrate previously dispersed
functions and improve production effi ciency. The new manu-
facturing plant to be completed in Brooklyn Park, in the U.S.
state of Minnesota, during fi scal 2015 will contribute to in-
creases in both production capacity and production effi ciency
for energy devices, which are expected to see growing demand.
By strengthening manufacturing systems in conjunction with
sales efforts, we aim to expand the surgical device fi eld.
In Japan, where we manufacture our gastrointestinal
endoscopes, we plan to invest a total of approximately ¥20
billion in three plants, situated in Aizu, Shirakawa, and Aomori,
for the construction of new facilities, which are slated for
completion during 2015
to 2016. These
investments are
anticipated to result
in a 30% increase in
production capacity
coupled with a 50%
improvement in
production effi ciency.
In Asia, we are
consolidating manufacturing functions into our Vietnam plant,
particularly those related to endotherapy products that need to
be mass-produced. This move will free up our Aomori plant to
focus on manufacturing endotherapy devices that require
highly precise technologies and are therefore not suited to
automated production.
Similar manufacturing network reforms are being
implemented in Europe, and the Group is progressively
developing the foundations that will enable product creation
to be conducted while fully leveraging the capabilities of its
manufacturing infrastructure around the world.
Review of Business Segments
33
OLYMPUS Annual Report 2014
32 OLYMPUS Annual Report 2014
Training and service center in Guangzhou
New Brooklyn Park plant, Minnesota
(artist rendition)
THUNDERBEAT
DIEGO ELITE
* DIEGO ELITE has been launched in Europe and
the Americas and will be introduced into Japan
after obtaining regulatory approval.