Olympus is back in India

Olympus is back in India

Late yesterday (June 12), Olympus, a global leader in medical technology, announced a strategic move - plans to establish a research and development (R&D) and offshore Development center (ODC) in Hyderabad, India.

This is Olympus' first R&D center investment in India. It aims to leverage India's rich technical talent and resources to further consolidate its leading position in the global medical technology field and inject new impetus into the development of local medical technology.

In addition, Olympus will work with AIG Hospital in Hyderabad on a joint research project. It aims to leverage the clinical expertise and insights of AIG Hospitals to drive the development of innovative healthcare solutions to better meet the changing needs of patients around the world.

Olympus currently has research and development centers in Japan, China, the United States and Europe, and the ODC in Hyderabad will be an important part of its global research and development network. Olympus is also planning to set up an in-house research and development center in India in the next few years.

Hyderabad is the capital of India's Telangana state, and in 2017 the Telangana state government set up India's largest medical device industrial park near it. In recent years, with an abundance of technical talent, the region is rapidly becoming a hub for research and development and offshore centers for global pharmaceutical and medical technology companies, and is also known as the "Silicon Valley of India."

Currently, well-known companies such as Novartis, Bristol-Myers Squibb, Bayer and Medtronic have established centers in Hyderabad and are actively recruiting talent to support their global R&D and business operations.

10 years of cooperation to deepen the construction of "special" research centers

The investment decision follows a strategic agreement between Olympus and HCLTech to expand its innovation activities globally. HCLTech and Olympus have a decade-long partnership in core engineering and R&D, covering product engineering, software engineering, product maintenance, risk and regulatory services.

As one of the world's largest technology companies, HCLTech's team consists of more than 200,000 employees in 60 countries, with more than 210 delivery centers worldwide, providing industry-leading capabilities around digitization, engineering, cloud and artificial intelligence to more than 10,000 customers, and a broad portfolio of technology services and products. Was named Chief Engineering Services Provider at Everest Group's 2023 PEAK Matrix Supplier of the Year Awards.

Headquartered in Noida, India, HCLTech has been supporting Olympus through its global delivery centers in India and Vietnam.

HCLTech will leverage its global leadership in engineering and R&D services and artificial intelligence (AI) -based solutions to deliver speed and scale to Olympus' global product development journey.

> Open a product innovation center

In addition, as part of the partnership, HCLTech will establish a dedicated product innovation center in Hyderabad, India, to serve Olympus' operations in the United States, Europe, the Middle East and Africa. The center is expected to begin operations in July 2024.

Olympus announced the investment at the BioAsia (2024) conference, attended by Mr. D. Sridhar Babu, Minister of Industry and Commerce, Government of Telangana, Mr. Komatireddy Venkat Reddy, Minister of Construction, And Mr. Syed Naveed, Senior Vice President of Global Research and Development at Olympus.

02. Olympus' global layout

Since the establishment of Olympus Medical Systems India Limited (OMSI) in 2009, Olympus has continued to expand its presence in India and now has branches in eight major cities in the country, including Mumbai, Lucknow, Chennai, Kolkata, Hyderabad, Cochin, Bangalore and Ahmedabad.

OMSI manufactures medical devices, including endoscopes, therapeutic instruments, imaging systems and surgical instruments, which are widely used in the global medical market. By establishing an R&D center and an offshore development center in India, Olympus further demonstrates its long-term commitment to the Indian market and its determination to provide higher quality and more innovative medical solutions to patients worldwide.

> Olympus China Layout

It can be found that Olympus has been continuously laying out its global footprint in recent years, expanding its influence in the field of medical technology through strategic investments and cooperation in different countries and regions. In 2023, Olympus set up a production and research base for medical device products in China for the first time to promote localized production and technological innovation.

It is reported that the initial total investment of the project is about 60 million US dollars (equivalent to about 414 million yuan), the future will continue to strengthen the expansion of manufacturing and research and development functions, and become a comprehensive global strategic base for Olympus manufacturing, research and development, purchasing and marketing and solutions.

This is the first time Olympus has produced a core product outside of Japan, marking a solid step along the path of Olympus' "China strategy" and will further expand Olympus' industrial layout in China to meet the promising demand for medical devices in China.

In fact, as early as the end of 2019, Olympus announced its strategic planning layout in the medical device field - a complete transformation into a global medical technology company, with a focus on the gastrointestinal, urology and respiratory care areas, while increasing investment in endoscopy-related equipment, especially disposable endoscopes.

Then, with a series of acquisitions and spin-offs, Olympus became the dominant endoscope company, with a global market share of more than 70%. Among them, the soft mirror dominates the world, and the hard mirror and gastroenteroscopy diagnosis and treatment supplies are located in the first echelon of the world.

> 3-year goal achieved

In early 2019, Olympus announced a new business strategy: it will focus more on the medical business in order to achieve the goal of achieving an operating margin of more than 20% by 2023. Developing a medical-centric business portfolio, primarily by focusing its efforts; Strengthen the overwhelming position of the endoscope business, achieve an average annual growth rate of 6% in the endoscope business in three years, and achieve double-digit growth in the Chinese market.

From the financial report, Olympus 2020 to 2023 fiscal year, the company's medical business revenue increased year by year, respectively: 628.2 billion, 737.1 billion, 881.9 billion yen (about 6.32 billion US dollars, 45.1 billion yuan), the average annual growth rate (CAGR) of 18.48%.

Net profit for the same period is as follows: 2020 (51.7 billion yen), 2021 (115.7 billion yen), 2022 (143.4 billion yen), 2023 (143.4 billion yen).

Among them, the 2023 fiscal year (as of March 31, 2023) the company's business growth was the most rapid, an increase of 18%, and net profit increased 24%. The company said in the financial report that the growth of the year was due to the depreciation of the yen in the exchange rate, which led to the improvement of earnings, and on the other hand, it was helped by the growth of endoscope sales in the Chinese market.

03. India's medical device market is booming

As the largest country in the subcontinent, India is second only to China in terms of population. In recent years, with the rapid development of India's national economy, the medical needs of the Indian people have surged, which also makes India's medical device market contains huge business opportunities.

However, unike the local pharmaceutical industry, which has been booming for years, there is still a huge gap between the demand and supply of medical devices in India, and the import level has reached 75%. This has led to many capital giants and medical equipment giants have also begun to continue to layout in the Indian market, in addition to GE medical, Medtronic, Philips, Stryker, Omron and other international medical equipment giants have also landed here. GE Healthcare has also invested nearly 1 billion euros in the construction of new plants in the past two years.

GE Healthcare

In March 2022, GE Healthcare India announced plans to invest Rs 1 billion ($12.8 million) to build a new manufacturing facility in Bangalore, India. The 35,000 square foot facility operates 24/7 and is used to manufacture CT machines, cathlab devices, ultrasound scanners, patient monitoring solutions, ECG machines and ventilators. It is equipped with an automated tester to evaluate the performance of medical devices. The plant currently employs 35 people in its workshop and is expected to increase to 100 in the next 2 to 3 years.

Philips

Philips has been operating in India for a long time and started its expansion in the industrial and commercial sector in India in 2008 after acquiring Alpha X-ray Technologies and Meditronics as part of its imaging business. In line with its strategy to expand the company's presence in India, Philips Medical has started operations at its first imaging systems manufacturing plant in the country. The Philips development and manufacturing center is located in Chakan, near Pune, 200 km east of Mumbai, and the facility focuses on diagnostic and interventional imaging solutions, initially developed for the Indian market and then for the global market.

In May 2022, Philips India also announced the acquisition of 10 acres of land to further invest in India, namely the establishment of a new research and development (R&D) center to expand Pune's innovation capabilities and further invest in India.

Medtronic

In May 2023, Medtronic announced plans to invest Rs 30 billion (about $350 million, about 2.486 billion yuan) to expand its Engineering and Innovation Center (MEIC) in Hyderabad, in the south-central Indian state of Telangana.

In March this year, Medtronic expanded the Hyderabad MEIC. It aims to strengthen its global R&D capabilities while fostering local innovation in India's fast-growing healthcare technology sector. The newly expanded MEIC is now Medtronic's largest research and development center outside the United States, covering more than 250,000 square feet. It has state-of-the-art LABS focused on digital therapy and innovation, connected care, platforms and technologies.

The center currently employs more than 900 engineers and is expected to grow its workforce to 1,500, making a significant contribution to Medtronic's global product development program.

Omron

In June 2023, Omron announced that it would invest 1.28 billion Indian rupees (about 113 million yuan) in Tamil Nadu, southern India, to set up its first medical equipment factory in the region. Located in the Mahindra Industrial Park in Chennai, the capital of Tamil Nadu, the plant is planned to cover 6.02 acres and is expected to be operational by March 2025, focusing on the supply of blood pressure monitors for the Indian domestic market. With the support of the new plant, Omron will aim to reach sales of about 5 million units in the Indian market by 2030

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The Indian medical device market is estimated to be about $3 billion in 2009 and will reach $11 billion in 2020. The Indian government released the National Medical Device Policy in April 2023, aiming to grow the industry to $50 billion in the next five years. Building and expanding in India at this time is undoubtedly a successful investment.

Reflected in the stock price, as of the close of June 13, Olympus stock price rose 0.11% to 2,673 yen/share. The total market value is 3.1 trillion yen (about 143.5 billion yuan). With the completion of the future R&D center in India, Olympus' "endoscope empire" will be further expanded. In this regard, the equipment home will continue to pay attention.