January 24, 2014 2:00 am JST

Olympus to sell low-cost endoscopes in China

YORIHISA OTA, Nikkei staff writer

Doctors practice endoscopy at Olympus' Shanghai training center.

TOKYO -- Olympus plans to release sharply lower-priced gastrointestinal endoscope systems in China within the year, hoping to bring the devices to smaller hospitals and tap into a market with anticipated double-digit annual growth.

   The low-end systems will use LEDs rather than specialized light sources and will only be usable for examination, helping to push the price down to 2.5 million to 3 million yen ($23,647 to $28,376) -- less than one-third the cost of Olympus' standard units. They weigh about half of the existing systems and consume less electricity. Their imaging capabilities are comparable to those of the standard units, aiding in the early detection of ailments such as cancer.

   The Japanese company has already applied to the Chinese government for permission to sell the devices.

   Standard systems cost around 10 million yen. Of the roughly 8,000 Chinese hospitals that perform endoscopy, only about 1,000 have high-end models. By offering more affordable machines, Olympus aims to supply the top 2,000 hospitals and sell 2,000 to 3,000 low-cost units within several years.

   It intends to release them in the Middle East and Latin America in the future as well.

   Chinese medical institutions have significant disparities in equipment. Major urban hospitals are on a par with peers in industrialized countries, but smaller regional hospitals and rural doctors' offices often lack the resources for examination and treatment devices.

   Olympus expects wider adoption of medical equipment in China as the government invests more money in health care. The firm reckons that putting low-cost models on the market will spur demand, potentially leading to sales of higher-end systems as well.

   China's medical-device market reached $15 billion in 2012, and it is expected to grow to $35 billion in 2017, surpassing Japan's and coming in second only to the U.S.

   Olympus's medical business logs sales of 400 billion yen a year, with Japan, the U.S. and Europe accounting for more than 80%. Sales to emerging markets, chiefly China, total about 54 billion yen, but Olympus is targeting annual growth of more than 20% to 100 billion yen in fiscal 2015.

   The company recently set up training facilities in Guangzhou to train doctors in endoscope use, in addition to existing locations in Beijing and Shanghai. It also plans to bring to China the maintenance and repair facilities. These two factors -- robust customer support in training and maintenance -- have been key driving forces that helped Olympus seize a nearly 70% share of the global endoscope market.