Japanese technology group Olympus is beginning to see the unleashing of “pent-up demand” for tens of millions of surgeries that were cancelled during the coronavirus crisis, a resumption set to help revive the global medical equipment industry.
Hospitals around the world are facing a huge backlog of elective surgeries as people avoided visits to minimise risk of infection and to free up resources to treat Covid-19 patients.
With coronavirus cases now declining in some countries, doctors are cautiously resuming cancer treatments and procedures such as colonoscopies that are critical for early diagnosis.
“You don’t want colon cancer and other related conditions out there undiagnosed,” Ross Segan, Olympus’s chief medical officer, said in an interview. “The market knows that so in places around the world where we’ve gotten a good handle on the rate of Covid, we’re starting to see that [resumed]. There will be pent-up demand that will drive procedure volume.”
For Olympus, the drop in surgeries has hurt its mainstay gastrointestinal and surgical endoscopes business. Sales fell by more than 10 per cent in North America in April and a bigger drop is expected for May, forcing the group to postpone the release of its annual guidance.
But sales in China were up more than 10 per cent in April and remained flat in Europe. Executives expect June to be the earnings bottom for Olympus, which has a 70 per cent share of the $3.5bn global market for gastrointestinal endoscopes.
A study published in the British Journal of Surgery in May estimated that 28m elective surgeries would be cancelled or postponed globally during the peak 12 weeks of a country’s Covid-19 outbreak. Even if surgical volume rose by 20 per cent after the pandemic, the backlog would take about a year to clear, according to the study.
Next in series
The biggest losers Monday, June 22
The other winners Tuesday, June 23
And more to come on the fortunes of e-commerce, gaming, cloud solutions and pharmaceutical industries.
Follow the series by adding this topic to myFT.
The pandemic has struck Olympus at a time when the company has been trying to put behind it a series of bribery and safety scandals that followed a $1.7bn accounting fraud in 2011.
Under chief executive Yasuo Takeuchi Olympus has made a strategic shift to focus on its medical equipment business, agreeing last week to sell its lossmaking camera division to a Japanese investment fund.
Dr Segan joined the group from Johnson & Johnson in November as part of efforts to globalise and diversify its management structure. Its 15-member board now includes three non-Japanese directors including one from US activist hedge fund ValueAct.
“I have not interacted with [ValueAct] personally, but I think that presence has enabled the opportunity for people like me from outside of Japan with global medical technology experience to come in,” Dr Segan said.
Beyond the financial impact of coronavirus, lockdowns and social distancing have also forced Olympus to change how it serves its doctors. It has moved 85 per cent of its face-to-face training to online, and provided technology that allows physicians to virtually consult each other using real-time clinical video and endoscopic images.
Those changes may be here to stay, according to Dr Segan.
“In reality, part of it is accelerated by this because doctors are busy and because of compliance, they can’t travel far,” he said. “But I believe it’s also been accelerated because people want access to training and education anywhere and everywhere.”