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| Olympus' U.S. headquarters in Center Valley, PA--Courtesy of Olympus |
Olympus and Sony ($SNE) are rolling out a high-definition endoscope, months after Sony--Olympus' largest shareholder--announced that it would sell off half its stake in the company amid growing scrutiny over Olympus' duodenoscope devices.
As Reuters reports, the companies' endoscope is the first major product from a venture formed three years ago, Sony Olympus Medical Solutions. The device allows doctors to see clearer, more instant images of internal organs while adding precision during surgical procedures, Olympus and Sony told the news outlet ahead of an official announcement on Wednesday.
In April, Tokyo-based Sony said it would hand over some if its shares in Olympus to JPMorgan Chase ($JPM) to "strengthen its financial resources and obtain funds for growth-oriented strategic investments," the company said at the time. But Sony emphasized that the companies would still work together after the sale, focusing on its medical business venture to spur innovation.
The launch comes at a pivotal moment for both companies, as Sony looks for new avenues of growth amid slumping TV and smartphone sales, and Olympus tries to snag a bigger piece of the endoscope market despite controversy over one of its products. Olympus holds about 70% of the market for gastrointestinal endoscopes, but trails behind U.S. archrival Stryker ($SYK) and Germany's Karl Storz GmbH in surgical endoscopes, Reuters points out.
And recent fallout over one of its endoscope products has only complicated matters for the company. Earlier this year, the FDA warned that duodenoscope devices--including one made by Olympus--could harbor dangerous bacteria, potentially endangering patients' lives. The news triggered lawsuits from patients who underwent procedures with the devices, who claim that Olympus' duodenoscopes caused them significant harm and that the company promoted its product at the expense of public safety.
Olympus responded to the backlash, issuing updated cleaning instructions for its device earlier this year. But the company is still in hot water with the FDA, which last month sent the company a letter for failing to report problems with devices as they surfaced. Olympus, the largest U.S. maker of the devices, did not report cases for three years of 16 patients contracting certain bacterial infections after undergoing procedures with its scopes, the FDA said in its letter.
News of a launch also comes months after Olympus said it would fork over 11 billion yen ($92 million) to settle two lawsuits stemming from its 2011 accounting scandal. In 2011, the company admitted to concealing $1.7 billion in investment losses dating back to the 1990s, and using overpriced acquisitions to help cover up the losses. The scandal sent share prices down, prompting Sony to snatch up 11.5% of Olympus in 2012, Reuters reports.
- read the Reuters story