The stunning revelations of how Olympus Corp. managed to cover up huge investment losses for more than 20 years is making Japanese doctors anxious about whether the scandal will hurt the company’s mainstay gastro-intestinal endoscope business.
“It’s nothing but a humiliation to all medical workers that Olympus took tens of billions of yen they had earned from a near-monopoly endoscope market and paid it to virtually unknown Cayman Islands–based financial advisors,” Yoshiro Kawahara, MD, a director at the Department of Endoscopy of Okayama University Hospital said in a Medical Research Information Center newsletter. “Since they hold a near monopoly position, they rarely offer discounts. The more we use Olympus endotherapy devices for ESD, the poorer we get, and the richer they become!”
Olympus made the first gastro-cameras and endoscopes with fibre-optic image transmission and integrated video systems for use in endoscopy, enabling surgeons to snake through patients’ bodies to search for stomach tumours, perform colonoscopies or assist in gallbladder removal. These innovative devices helped turn the 92-year-old camera and medical equipment maker into the top player in the US$2.5 billion gastro-intestinal endoscopy market, capturing roughly 70% of the global market.
“I use Olympus’s endoscopes almost everyday. The quality of their products is really high, so I want to keep using them,” says a respiratory medicine doctor at a hospital in Tokyo.
“Unlike cameras and voice recorders, endoscopes are not something where we can instantly switch to cheaper versions,” says another doctor from the hospital’s gastro-enterological medicine department. “The Olympus-made device has become part of my own endoscopic practice. I can’t live without it.”
Olympus’s dominance of the endoscopy market is a result of its comprehensive product coverage, ranging from diagnosis through treatment, and including endoscope sterilisers and cleaners, says Kawahara. “Olympus is also good at quickly catching up and creating improved devices whenever rivals release new products such as gastrostomy kits and capsule endoscopy,” Kawahara adds.
Olympus recorded an operating profit of 35.3 billion yen (US$442 million) for the fiscal year ending 31 March 2011. The company’s medical business earned 69.3 billion yen (US$866 million), far outweighing the 15 billion yen (US$188 million) in losses from its older camera division.
But that is cold comfort for Kawahara. “Those involved in endoscopic treatment should have the right to urge the company to reveal the whole truth,” he says.Miki Anzai