Company history

When the First World War cut Japan off from the German optical instruments — microscopes, rangefinders — that its schools, laboratories and army had relied on, Yamashita Takeshi set out to make them at home. In October 1919 he founded Takachiho Seisakusho in the Hatagaya district of Tokyo with capital of ¥300,000, brought in the veteran microscope engineer Terada Wakukichi as chief engineer, and in 1920 completed Japan’s first domestic microscope, the Asahi. But the young firm was running two businesses at once — clinical thermometers and microscopes — and its finances could not carry both.

The choice it made became the company’s founding reflex. In 1923 it sold the thermometer business — to the firm that would become Terumo — and concentrated everything on microscopes. The retreat physically split the head-office plant in two, and relations with a shareholder, Morishita Jintan, soured so far — the shareholder demanded Olympus hand over more assets and quit microscopes altogether — that Yamashita took it to court, settling in 1929 with the microscope business still his own. Fewer than ten years old, the company had already lived through a business exit, a shaken management and a shareholders’ lawsuit; the instinct to narrow onto one field and pour resources into it settled into the base of its culture.

The war then handed it a lasting asset by accident. Registered as a Navy-designated supplier in 1933 and pushed toward military optics — gunsights, binoculars — through the late 1930s, Olympus (renamed Takachiho Optical Industry in 1942) dispersed production to evacuation plants around Suwa and Ina in Nagano. When 1945 air raids burned down the Tokyo headquarters and the Hatagaya plant, those mountain factories became the base for recovery, and the Suwa plant in particular established camera mass-production after the war. Renamed Olympus Optical Industry in 1949 and listed on the Tokyo Stock Exchange the same year, the firm turned from a wartime military supplier into a peacetime civilian optics maker — and the Nagano production footprint it still runs was set by that evacuation.

In 1950, at the request of a doctor at the University of Tokyo, Olympus took on the world’s first gastrocamera — a camera small enough to photograph the inside of the stomach. It was a daring project for the technology of the day, but Olympus combined the precision optics of its microscopes with its small-camera know-how to reach a working instrument. In 1955 it went further and took over the secretariat of the nationwide gastrocamera study group, pulling a community of gastroenterologists inside the company itself. That mutual dependence between Olympus’s engineers and the doctors would become the wellspring of its later dominance — though management then thought of it as a sideline, not a strategy.

The main event, for now, was the consumer camera. The Olympus Pen EE of 1961, whose automatic exposure made picture-taking almost fully hands-off, became a symbol of the camera going mass-market; the Pen series passed a million units by 1963 and made Olympus a household camera name. The same year it completed a fiberscope endoscope, and the OM-1 single-lens reflex followed in 1972. Cameras and endoscopes were growing at once, and inside the company cameras were still the star.

But in 1969 Olympus set up a Third Division and, for the first time, treated endoscopy as an independent business worthy of company-wide investment. President Naito Takafuku named medical equipment and information as priority fields built on a common base of fiber technology, and the R&D push from fiberscopes toward electronic scopes began here. Through the 1980s Olympus took most of the world market in gastrointestinal endoscopes — the payoff of staying close to the doctors’ community while running ahead on the technology.

Beneath the success a fault line was opening. When the 1985 Plaza Accord’s stronger yen hurt export earnings, Olympus decided in 1987 to lean into financial-asset trading — bonds, stock-index futures — seeking in the markets the profit its core business no longer threw off. After the bubble burst the paper losses widened, reaching roughly $725.8M (¥95bn) by around 1998, and each year the reckoning was pushed off the books. The very strength of the growing endoscope business gave management the room to keep the loss hidden, and cost it, again and again, the chance to face the problem.

Under Tsuyoshi Kikukawa, president from 2002, Olympus set a five-year plan to invest hard in both imaging and medical. But digital cameras drew Sony, Panasonic and Canon into a brutal price war, and the imaging segment sank into chronic losses that the healthy medical business quietly covered — deepening the portfolio’s imbalance rather than fixing it.

In 2008 Olympus bought Britain’s Gyrus Group for $2.5B (¥260bn), and buried in the abnormally large advisory fees on that deal was the machinery for finally writing off the old financial losses. The scheme surfaced in July 2011 when the British president, Michael Woodford, went public with his doubts; the Nikkei and the overseas press unwound the whole fraud, and Olympus became the centre of Japan’s corporate-governance debate. The loss-hiding ran to roughly ¥100 billion, and after a board purge and a surcharge order from the securities regulator, the company was left standing at the start line of its rebuild.

The rebuild ran through concentration. Olympus let the activist investor ValueAct Capital deep inside — welcoming an outside shareholder as an agent of oversight and change rather than fending it off — and accelerated its focus on medical. It sold the information and communications business (ITX) for about $664.2M (¥53bn) in 2012, and in 2020 made the decision that mattered most: selling the whole 101-year-old camera business to Japan Industrial Partners and quitting imaging entirely.

President Yasuo Takeuchi framed cutting loose even the cameras that had carried the Olympus name as an unavoidable “selection and concentration,” and in 2023 Olympus sold Evident — the microscope operation that was its very founding trade — to Bain Capital for $3.0B (¥428bn), redefining itself as a pure medical-device maker built around gastrointestinal endoscopes. Under ValueAct it also remade its board, adopting a company-with-committees structure and making English an official working language — an unusual turn into a dedicated medtech company for a Japanese firm.

By the year ended March 2024 the medical business had made Olympus solidly profitable again, and it has since turned to returning the cash it earns and the proceeds of its divestitures to shareholders, through repeated buybacks near ¥100 billion and a raised dividend. The lineage from microscope to gastrocamera to fiberscope to today’s endoscopes shows how a business begun in 1950 at one doctor’s request grew, over seventy years, to define the whole company — and how that single-pillar concentration keeps its own risk permanently in view.