Olympus 2014 Annual Report Download - page 7

Interview with the President
Looking at efforts in our core businesses, I can proudly say
that progress in the Medical Business is in line with plans.
However, the same cannot be said of the Imaging Business
and the Scientifi c Solutions Business.
In the Imaging Business, we are faced with a need to
achieve a stable position of profi tability. We are accelerating
our shift toward high-margin mirrorless cameras to accom-
plish this objective. From a long-term perspective, we see
that the risk of the market for digital single-lens refl ex camera
maturing and contracting further will increase. This fact must
be considered in future business initiatives. The Scientifi c
Solutions Business, meanwhile, is facing harsh macro-
e conomic conditions. In this diffi cult environment, we are
introducing new strategic products in both the life science
and industrial fi elds while also advancing structural produc-
tion reforms in the pursuit of higher profi tability. However, the
business is deviating from our expectations in terms of profi t-
ability, and we therefore must quickly revise our strategies to
correct this situation. While I mentioned that the Medical
Business is progressing according to plan, I was referring to
its impressive performance, which set new records for both
net sales and operating income. Looking closely at the busi-
ness itself, we will see some divergence from our plans. New
gastrointestinal and surgical endoscope products were intro-
duced, and these products can be said to be generating
results. The energy device business, however, has failed to
live up to expectations. The strong overall performance in the
Medical Business was a result of other areas compensating
for the lackluster performance in the energy device business.
This, of course, is an issue needing to be addressed.
As all businesses are diverging from our plans, it is
imperative that we act to return them to the proper course.
Aiming to ensure the goals of the medium-term vision are
met, we will conduct strategic investment in the Medical
Business from a long-term perspective while working to
strengthen the foundations of the Scientifi c Solutions
Business and the Imaging Business.
Groupwide cost structures is also an area needing
prompt attention. For this reason, we are reviewing the
current business units and will undertake a Groupwide
reorganization. Through these efforts, we hope to boost
cost-competitiveness by strengthening head offi ce functions,
eliminating redundant functions throughout the Group, and
realizing more effi cient usage of management resources.
Would you please provide details regarding the Group’s strategic investments in the Medical Business?
The strategic investments are geared toward reinforcing the operating foundations of the Medical
Business to achieve the goals of the medium-term vision and continue growing thereafter. We will invest
approximately ¥18 billion in fi scal 2015 to strengthen sales forces and advance R&D ventures while
reducing manufacturing costs.
We have earmarked ¥18 billion for strategic investments.
Of this amount, ¥12 billion will be allocated to expanding
sales forces and conducting sales promotions in the surgi-
cal device fi eld, which has been positioned as a future
growth driver. These sales-oriented investments are
designed to ensure that we achieve the targets set for
fi scal 2017. The remaining ¥6 billion will be used for upfront
investment in R&D ventures for realizing future growth
following the completion of the medium-term vision.
For more information, please refer to the Medical Business section of Review
of Business Segments beginning on page 30.
In regard to expanding sales forces, we plan to intro-
duce an additional 1,000 people into our staff during fi scal
2015. However, we do not believe that sales will grow natu-
rally if we simply increase staff numbers. We are fully aware
of the importance of technologies, and we realize that prod-
ucts lacking in quality will not sell. Up to now, we have
developed our business centered on gastrointestinal endo-
scopes, so expanding our sales force for surgical devices
and endotherapy products is currently a major priority.
To compete effectively in markets in the United States and
Europe, we will need to foster specialized sales forces that
have been endowed with the techniques and other in-depth
knowledge necessary to properly explain the advantages of
Olympus surgical devices and how they are used. Accord-
ingly, we will hire new sales personnel in phases and work
toexpand sales while training these new personnel. I am
confi dent that this course of action will lead to the accom-
plishment of the medium-term vision’s goals.
At the same time, we must advance research and
development to create the products that will be needed
for long-term future growth. For this reason, we will actively
conduct R&D investments in growing areas, such as ENT
and gynecology, as well as in robotics and other advanced
technologies.
We hope to transform Olympus into a world-leading
medical equipment manufacturer over the medium-to-long
term. However, undergoing this transformation will require
that we make these strategic investments now, and this will
be a top priority in fi scal 2015.
Q
A
4
Olympus has a dominating share of the gastrointestinal endoscope market. As for the surgical device
market, competition from European and U.S. manufacturers is fi erce, making for a diffi cult operating
environment. How will Olympus differentiate itself in this environment?
Compared with the gastrointestinal endoscope market, where we have a dominant position, we will face
diffi culty in the surgical device market. However, Olympus possesses technologies for the development
and manufacture of devices that meet needs spanning from those for early diagnoses to those for
minimally invasive treatments, and these capabilities will be a power tool in this market.
Efforts aimed at limiting medical costs have become an
urgent priority around the world. Olympus is in a prime
position to support such efforts. Our success in the surgi-
cal device market will be determined by our how we utilize
this position. Success will also depend on our ability to
provide the devices needed for new minimally invasive
treatment methods and to propose the techniques and
training that will allow these methods to be employed.
In the surgical device fi eld, the 3D laparoscopy surgical
system we introduced in 2013 has been performing better
than expected, despite being more expensive than conven-
tional 2D systems. This strong performance is because the
depth of information provided by the 3D system is crucial in
operating the laparoscope and to the safety of surgical
procedures. I believe that this is how we should differenti-
ate Olympus from competitors.
Q
A
5
It would appear Olympus has been quite triumphant over the past two years. Conversely, what issues do
you believe remain to be faced?
We are faced with pressing issues to be addressed by management in all three core businesses.
Fiscal2015 has been deemed to be a crucial year for implementing measures to resolve these
issues and for setting the course for long-term growth on our quest to maximize shareholder value.
Specifi cally, we will advance fi ve initiatives to address pressing management issues during fi scal 2015.
Q
A
3
Issues in Core Businesses
Medical Business Conduct strategic investment targeting long-term growth to further strengthen the surgical device fi eld
Scientifi c Solutions Business Revise basic strategies to move away from strategies based on product lineups to pursue those oriented toward customer groups
Imaging Business Expand mirrorless camera operations by leveraging the OM-D series and pursue risk minimization by developing BtoB operations
in consideration of risks in the mirrorless camera market
Initiatives to Support Core Businesses
Cost structures Examine possible integration of business units to accelerate the optimization of Group organizations and the rationalization of
indirect departments
Risk management Secure a stable fi nancial base in preparation for securities litigation risks
11
OLYMPUS Annual Report 2014
10 OLYMPUS Annual Report 2014