Olympus — Company History

Letting go of the thermometer to concentrate on the microscope

On 12 October 1919, Yamashita Takeshi (山下長), together with Matsukata Kojiro's trading house Tokiwa Shokai and Suzuki Taichi (鈴木泰一) and others, founded Takachiho Seisakusho K.K. with capital of ¥300,000 at Hatagaya in Shibuya Ward, Tokyo, and began making microscopes at once. Behind it lay the fact that the First World War had cut off the microscopes Japan had been importing from Germany, making a domestic supply base urgent. Takachiho, the name of the company, was a mountain held to be Japan's equivalent of Mount Olympus in Greece, so it was written OLYMPUS in English; combined with Tokyo, where the company stood, it was drawn up into a trade mark shaped from convex and concave lens forms, adopted in November 1920. Terada Wakichi (寺田枠吉), who had experience in making microscopes, was brought in as chief engineer, and in 1920 the company completed the Asahi, a domestically built microscope.

The company had taken up microscope development expecting it to be comparatively straightforward, but ran into technical walls, cut its capital to ¥75,000 and handed the thermometer division over to Jintan as well. In the three years from incorporation, lens development costs came to ¥300,000 in total — the same amount as the capital at founding, spent ahead of any return. In the 1923 sale of the thermometer business, liabilities were transferred along with it to the buyer, the firm that would later become Terumo, in an attempt to repair the finances. In 1928 the shareholder Morishita Jintan demanded a further transfer of assets and a withdrawal from the microscope business, and Yamashita sued in the Tokyo District Court. A settlement was reached in 1929, leaving the company the basis on which to carry on microscopes itself.

In 1928 the company completed a microscope of 1,500× magnification and won the grand prize when it was shown at the Tokyo Exposition for the Promotion of Domestic Industry held to mark the enthronement. From about 1931 it made high-grade objective and eyepiece lenses corrected for chromatic aberration, but none of these were of its own design — they were copies of German products. Its own designs arrived by way of camera lenses. After the Osaka industrial research institute developed a superior glass, the company produced a fast f/1.5 lens in 1936 and received a ¥9,000 prize from the Ministry of Commerce and Industry. In April of that same year, 1936, it began manufacturing cameras, completing the Zuiko 75mm f/4.5 lens and then Japan's first 50mm f/1.5 lens, and put the first Semi-Olympus on the market.

The tilt to military demand, and production moved to Shinshu

In December 1933 the company was registered as a designated plant of the Navy Ministry, which opened a channel for supplying microscopes to naval hospitals. Capital was raised to ¥1m in November 1936 and again to ¥2m in November 1939, and in 1940, along with the completion of an f/3.5 lens, the company put out the Olympus Six. During the war it was pressed to convert to products tied directly to military demand — optical weapons, binoculars and magnetic recorders. The presidency passed from the founder Yamashita Takeshi to Chatani Yasusaburo (茶谷保三郎) in December 1938. In June 1944 Kanda Shokichi (神田正吉), president of Ataka Sangyo, took on the presidency of Olympus concurrently.

In June 1942 the company changed its name to Takachiho Optical Industries. At the request of the Ministry of Munitions as the war intensified, it built the Suwa plant at Okaya in Nagano Prefecture in December 1943 and the Ina plant at Ina in Nagano Prefecture in February 1944, and in the same year was designated a plant under Army and Navy control. In May 1945 the head office and the Hatagaya plant burned down in an air raid, and the head office moved to Tagoto-cho in Shibuya Ward. That fire destroyed all of the data in which the company's technology to date had been concentrated, and the post-war restart had to begin again from the initial designs. The centre of production shifted to the two plants in Shinshu, and there the war ended.

With the end of the war the company began making microscopes at the Ina plant and cameras at the Suwa plant, moving across into peacetime industry. In 1946 it drew up the plan for the Olympus Six, launched the following year in 1947, and completed the f/2.8 lens it had long wanted, retiring the f/4.5. In November 1948 capital was raised to ¥7m, and in January 1949 the name was changed to Olympus Optical Co. In the same year the company moved into volume production of phase-contrast microscopes and finished a prototype gastrocamera for photographing inside the stomach. In May 1949 it listed its shares on the Tokyo Stock Exchange, changing its character from a pre-war supplier of military demand into a post-war optical maker for civilian demand.

The gastrocamera that began with a doctor's request, and the study society placed around it

In 1950 Olympus took up a request from a doctor at the University of Tokyo and began developing the world's first gastrocamera, combining the precision optics built up in microscopes with its small-camera technology to reach a practical instrument. In May 1952 it formally began manufacturing medical equipment. In 1955 it took on the secretariat of the National Gastrocamera Society, running the very forum in which gastroenterologists gathered. That gave the company its own route for feeding clinical requirements back into products, and it became the condition that kept competitors out for decades afterwards.

Monthly output in 1955 ran to $55,556 (¥20m) in microscopes and $233,333 (¥84m) in cameras, with microscopes accounting for 55 per cent of national production. In May of that year the company took part in the management of Takachiho Shokai K.K. to strengthen domestic camera sales, while Olympus Shoji, established in 1954, served as sole domestic agent for cameras. In October 1960 it began manufacturing measuring instruments, and in the same year introduced a divisional structure that reorganised the company internally. Capital was raised in stages — $83,333 (¥30m) in December 1950, $166,667 (¥60m) in April 1952, $277,778 (¥100m) in December of that year, and $611,111 (¥220m) in April 1954.

The decade in which the Pen and the fibrescope grew together

The Pen EE, launched in July 1961, was a popular model carrying an automatic exposure device that made the act of shooting all but fully automatic; cumulative sales of the Pen series passed one million units by August 1963. In 1965 Olympus took the top share of the domestic camera market by units, and within the pen-size class held above 60 per cent. By value, however, it stayed second, because its mainstay was the half-frame Pen. Cumulative sales passed three million units in 1968.

In that same year, 1963, the company used optical fibre of its own development to complete a fibrescope-equipped gastrocamera, which was used for the early detection of stomach cancer and went to export as well. To carry the production it opened the Hachioji works in August 1963, and it widened its sales network abroad with a European subsidiary in May 1964 and an American one in January 1968. As of 1967 capital stood at $3.3M (¥1bn) and employees at 2,650, and within a domestic optical industry producing some $277.8M (¥100bn) a year the company held about 10 per cent. Its share of the domestic microscope market reached 55 per cent.

In a lecture in 1967, president Naito Takatomi (内藤隆福) explained that the First Division handled microscopes, measuring instruments and the gastrocamera while the Second Division handled cameras, and that the two were split roughly 50:50 in sales. Cameras fell away sharply when the economy turned down, whereas microscopes, measuring instruments and gastrocameras were bought mainly out of government budgets — budgets fixed in better times — and so filled the trough when cameras were weak. That was why Olympus could keep paying a 12 per cent dividend in a period when others in the same trade had dropped to none. Over the previous decade cameras had grown 4.5-fold against 10.7-fold for microscopes: unlike cameras, which swung widely from year to year, microscopes grew every year.

The Third Division makes the endoscope an object of investment

In March 1969 Olympus Optical created a Third Division, placing the gastrocamera and endoscope it had begun in 1950 at a doctor's request alongside microscopes and cameras as a third business and an object of investment. President Naito Takatomi set out two fields, medical machinery and information, and a policy of growing new businesses on fibre technology as their common base. Until then the endoscope had remained part of the First Division alongside microscopes and measuring instruments, and had found it hard to receive resources of its own. In May of the same year the company established Olympus Seiki, widening its production base at home. The Third Division bound together two fields — endoscopes as medical equipment and facsimiles as information equipment — and became the investment vehicle for new businesses resting on fibre technology as a shared foundation.

Sales and production sites multiplied one after another in this period: a camera sales company in the United States in March 1977, and in February 1980 a move of the head office to Nishi-Shinjuku in Shinjuku Ward, Tokyo. The Tatsuno works was opened in Kamiina District, Nagano Prefecture in November 1981 and the Utsugi technology development centre at Hachioji, Tokyo in February 1988, and in June 1990 Olympus USA Incorporated was set up to hold the American operations together. In April 1993 the Hachioji plant was relocated and the Hinode plant newly built in Nishitama District, Tokyo. Across these years the relationship with doctors and the technical lead compounded, and by 1993 the company held about 80 per cent of the world market in flexible endoscopes — a position no one could challenge.

Financial engineering starts outside the core business, and the losses swell

The strong yen that followed the Plaza Accord of 1985 hurt the profitability of Olympus, which depended on exports. With improvement in operating profit hard to come by, the executive committee resolved on 20 May 1987 to become more aggressive in managing financial assets. The president at the time was Shimoyama Toshiro (下山敏郎), in the post since 1984, and the practical work under him fell to Kishimoto Masatoshi (岸本正壽), then a general manager, and other senior figures in the funds group of the accounting department. What Olympus took up was the financial engineering fashionable at the time, known as 特金 tokkin specified money trusts and ファントラ fund trusts, and a practice of seeking in the financial markets the returns the core business could not deliver settled into the company. Interviewed in 2011, Shimoyama denied any involvement in financial engineering, saying that Olympus was so cautious a company that it taps the stone bridge over and over and in the end does not cross.

With the collapse in share prices from 1990, the financial engineering came to carry large unrealised losses. At first the company got through on structured notes that booked gains up front and other so-called results-management products — again the fashion of the day. The unrealised losses only widened, however, reaching $827.4M (¥90bn) by about 1996. As they widened, the work of concealment grew more elaborate. Of his state of mind around 1999 and 2000, Kishimoto Masatoshi told prosecutors in later questioning that he had escaped into the thought that he wished the aeroplane he was riding in would simply crash.

The scheme that moved the losses off the books, and the handover between presidents

From about 1998 the company began building the loss-separation scheme that used off-balance-sheet funds. Funds with names such as Central Forest Corp and Quick Progress were set up one after another in tax havens, and bank lending was drawn down in secret so that they could buy up the financial instruments carrying the unrealised losses. The method was to deposit Japanese government bonds with LGT Bank in Liechtenstein and use them as collateral. Once flown off the books, the unrealised losses changed form in the accounts into line items such as securities and deposits. The introduction of fair-value accounting from April 2000 closed off the route of carrying unrealised losses forward indefinitely.

During this period, in 1993, Shimoyama Toshiro moved up to chairman and was succeeded as president by Kishimoto Masatoshi, who shared the secret. Kishimoto became chairman in 2001 and named Kikukawa Tsuyoshi (菊川剛) as his successor. Kikukawa, whose career had been in overseas sales, was long left outside the loss concealment; he is said to have been told the facts only in the latter half of 1999, after returning from the United States to become the managing director responsible for accounting. An internal document titled the 135PB investment report, recording the amount of the off-book losses, was drawn up roughly twice a year, and the addressees on the version dated 12 September 2003 included Kikukawa, then president, the standing statutory auditor who had served as head of the accounting department, and Shimoyama Toshiro and Kishimoto Masatoshi.

Rebuilding the digital camera, and losses cleared inside acquisitions

Kikukawa Tsuyoshi, who became president in 2001, drew up a five-year management basic plan in April 2002 setting out a policy of investing in both imaging and medical. The digital camera business, which had fallen to a loss of $92.2M (¥11bn) the previous year, turned to an operating profit of $87.8M (¥11bn) in the 2002 financial year. The direct cause was the shift of production to China: where 80 per cent had previously been covered by OEM supply from Sanyo Electric, the policy was reversed in the autumn of 2001 and Chinese production, begun at 50,000 units a month, was expanded to 150,000. Inventory was squeezed from $339.2M (¥43bn) to $151.7M (¥19bn) in eighteen months. Separately from product advertising, Kikukawa committed at least $159.6M (¥20bn) over five years to corporate brand investment, and to opposition inside the company he said that anyone who objected should first table a motion to dismiss the president.

In October 2003 the trading name was changed to Olympus Corporation, and in October 2004 the imaging business and the medical field were split off as Olympus Imaging and Olympus Medical Systems. In the digital camera market, growth slowed just as every maker rushed to raise output at once, and the imaging business, left holding large inventories, fell to an operating loss of $217M (¥24bn) in the year to March 2005 and carried out the first voluntary redundancy programme in the company's history. Okubo Masaharu (大久保雅治), who became president of Olympus Imaging in April 2005, reformed the artisan temperament inside the company known as selected parts — picking the individually optimal component down to the last screw — and built a platform standardising 70 per cent of the components across the mju, FE and other series. He set up a product strategy headquarters to centralise decisions on product concepts, and through the supply-chain management office moved to an upstream inventory system in which stock was held in the form of parts.

The operating margin of the imaging business improved from minus 8.6 per cent in the year to March 2005 to a forecast plus 11.5 per cent for the year to March 2008, and a second pillar returned to an earnings structure that had rested on endoscopes alone. Once the medical equipment business could throw off high profits, a route to clearing the off-book losses came into view, and from 2006 the old management began to move to take those losses back onto the books under cover of acquisitions of British competitors and others, seeking to write them off in the guise of goodwill amortisation. In February 2008 the company acquired Gyrus Group PLC of Britain, strengthening the surgical area within the medical field. Consolidated results recovered as well: operating profit for the year to March 2007 was $838.1M (¥99bn) and net profit $405M (¥48bn).

A president's dismissal brings twenty years to light

In April 2011, valued for the skill with which he had pushed rationalisation through in Europe, Michael Woodford was raised from the most junior seat on the board to the presidency. He learned around late July of the outflows of money surrounding past acquisitions, and in October had a report prepared by PricewaterhouseCoopers in Britain. On 11 October, just after his promotion to chief executive with effect from 1 October, he sent the directors a letter enclosing that report and calling for the dismissal of chairman Kikukawa Tsuyoshi and executive vice-president Mori Hisashi (森久志). Only three days later, on 14 October, an extraordinary board meeting dismissed Woodford instead. At a press conference the same day Kikukawa criticised his management as autocratic and high-handed, and as showing no understanding of Japanese corporate culture.

The suspect acquisitions divided into two routes. In the Gyrus deal, on which about $2.1B (¥215bn) was spent, the two firms acting as investment advisers were ultimately paid a combined $687m — roughly 36 per cent of the purchase price. For an acquisition on the scale of ¥200bn the going rate for such a fee is said to be about 0.25 per cent, and the payments took the irregular form of options and warrants. The other route was the acquisition of three dormant domestic venture companies — Altis in medical waste treatment, Humalabo in health-food sales and News Chef in the sale of microwave cookware — on which a total of $710.3M (¥73bn) was spent. The three together had sales of only about $2.9M (¥300m) at the time and were posting losses, yet the valuation report assumed a scenario in which that would rise to $856.5M (¥89bn) by the year to March 2013. Just nine months later, at the year end, the three were forced to write down $594.5M (¥56bn) of goodwill.

On 26 October Kikukawa resigned to take responsibility, and executive vice-president Takayama Shuichi (高山修一) became president. On the night of 7 November, Mori Hisashi confessed to Takayama that the deferral of securities losses had been running since the 1990s, and on the 8th the company officially admitted that it had been putting off the recognition of losses. At their meeting Kikukawa acknowledged his fault, saying he was sorry to have stayed silent until then. The share price, around ¥2,500 until just before the dismissal, plunged to the ¥400s, and after the accounts were restated the equity ratio fell for a time into the 2 per cent range. The third-party committee put the losses that had been flown off the books at $1.5B (¥118bn). The special investigation department of the Tokyo District Public Prosecutors Office launched a compulsory investigation on suspicion of breaching the Financial Instruments and Exchange Act in mid-February 2012, and by the end of March three men — Kikukawa, Mori and former standing statutory auditor Yamada Hideo (山田秀雄) — had been indicted. The limitation period for false statements in securities reports is five years, so Shimoyama Toshiro and Kishimoto Masatoshi, who had left their posts by 2005, fell outside the scope of prosecution.

What the scandal left behind: concentration and withdrawal

In the new management that took office in April 2012, two internal directors came from banking and the number of outside directors rose, leaving only three home-grown directors, among them Sasa Hiroyuki (笹宏行) from the medical business. In September of that year the information and communications business was sold to a company established by Japan Industrial Partners for about $664.2M (¥53bn), and in October the company announced a capital and business alliance with Sony, taking $626.6M (¥50bn) in investment and welcoming Sony as its largest shareholder with an 11 per cent stake. In December a medical joint venture specialising in surgical endoscopes was established. In September 2013 president Sasa said the company was not considering the development of new single-lens reflex models, and development of low-priced compact digital cameras was frozen as well. Five manufacturing sites were consolidated into two, in China and Vietnam, and about 3,400 jobs — 30 per cent of the division's headcount — were cut. In the pursuit of the three former executives, a Tokyo High Court judgment ordering $556.3M (¥59bn) in damages became final in October 2020.

In May 2018 ValueAct Capital of the United States reported a holding of about 5 per cent in Olympus shares. On 11 January 2019 Takeuchi Yasuo (竹内康雄) announced that a proposal to bring ValueAct's Robert Hale onto the board would be put to the June general meeting, together with his own elevation to president in April and a corporate transformation plan, Transform Olympus. As declared, in January 2021 the imaging business was transferred to OM Digital Solutions and sold to a company established by Japan Industrial Partners; in April 2022 the scientific business was split off as Evident and then, in April 2023, sold to a special-purpose company connected with Bain Capital. In July 2024 the orthopaedic business was transferred to Polaris Capital Group as well. Letting go of the cameras and the microscopes it had been founded on, Olympus shifted its whole form to a medical-equipment specialist built around gastrointestinal endoscopes.

Consolidated sales for the year to March 2023 were $6.3B (¥882bn) and operating profit $1.3B (¥187bn), an operating margin above 20 per cent. In 2023 Takeuchi called seniority-based advancement wholly harmful and of no benefit whatever, and rolled out a job-based personnel system across the company. Consolidated sales for the year to March 2024 were $6.1B (¥926bn), and net profit attributable to owners of the parent, including the gain on the sale of the scientific business, was $1.6B (¥243bn). In October 2024 president and chief executive Stefan Kaufmann resigned over suspicion of buying illegal drugs, and chairman Takeuchi took over the chief executive's duties on an interim basis. In June 2025 Bob White, who had built his career at Medtronic and elsewhere, became president and chief executive. In the same June the US Food and Drug Administration recommended an import ban on 58 product lines including laparoscopes, and the share price fell more than 10 per cent the following day. Consolidated sales for the year to March 2026 were $6.4B (¥1.01tn), passing ¥1 trillion for the first time.