Olympus Corp.

Overview Key strengths Key risks Solid in niche areas of the global medical device market through differentiated core endoscope products Substantial reliance on endoscope-related businesses, which account for about 80% of EBITDA Likely maintenance of a 70% share of the global gastrointestinal endoscope market thanks in part to close ties with health care professionals Product lineup in mainstay therapeutic solutions business continuing to lag those of major overseas peers Continued market expansion for its focused endoscopic and therapeutic solutions amid a global push toward early diagnosis and minimally invasive therapies Significant time and cost required to enhance the overall quality assurance and regulatory affairs (QARA) structure to a level that global regulators deem sufficient Likelihood of debt to EBITDA remaining

...A rise in QARA-related costs will lower Olympus' profitability over the next one to two years, in our view. S&P Global Ratings believes new endoscopes launched in the U.S. and China this fall will help improve the ability to generate earnings. Meanwhile, in response to warning letters the U.S. Food and Drug Administration (FDA) issued regarding quality control at the company's...

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