Japan's scandal-hit Olympus Corp on Wednesday unveiled three new medical products it hopes will help it out of the crisis left by a huge accounting fraud which erupted last year, threatening to destroy the 92-year-old firm.
Better known for its cameras, the company is pinning its future on medical equipment and in particular diagnostic endoscopes in which it already controls about 70 percent of the global market.
Without growth in our medical business, I do not think there will be a revival for Olympus, Hiroyuki Sasa, the firm's president-nominee and head of Olympus's medical equipment marketing business, said at an event for the product launch.
It has survived has the $1.7 billion fraud case that surfaced last October in one of Japan's worst corporate scandals, partly because its profitable medical business, which accounts for about 40 percent of total sales.
But the company has been unable to shake off criticism of its management, with foreign shareholders pressing their demands for an independent board.
Sasa, also an executive officer, was nominated by Olympus in February to become president and take over from Shuichi Takayama who has been sued by the firm for mismanagement.
Olympus also nominated a new board, including a former banker from its main lender Sumitomo Mitsui Banking as chairman.
But a group of foreign shareholders, who want a board free from the influence of the company's creditors, demanded a more independent chairman.
The proposed Chairman's and certain other proposed board members' close connection with Olympus' main banks gives rise to a potential conflict of interest, the shareholders, including Southeastern Asset Management and Indus Capital, said in an emailed statement.
To accept a bank-led rehabilitation would be a setback, in our view, to the interests of shareholders, as well as to the earnest efforts of the Japanese Financial Services Agency and the Tokyo Stock Exchange to improve corporate governance standards in Japan.
A regulatory filing showed last week that Southeastern had cut its stake in Olympus to 3.95 percent from 5.09 percent.
Foreign shareholders are worried that creditors could push Olympus into a big, dilutive sale of new equity, possibly to another Japanese company eager to gain some exposure to its profitable endoscope business.
Among firms rumored to be interested in making a strategic investment in Olympus are electronics firms Sony Corp and Panasonic Corp and rival endoscope maker Fujifilm Holdings Corp.
The nominees for Olympus's new management team are subject to approval at the firm's April 20 shareholders' meeting.
REBUILDING WITH MEDICAL DEVICES
Olympus launched three new products - a gastrointestinal video endoscopy system, a low-cost endoscopic videoscope system and a blood vessel sealing and tissue cutting device, all aimed at overseas markets.
The release of EVIS EXERA III, the gastrointestinal video endoscopy system for overseas including United States, Europe and Asia but excluding Japan and Britain, came seven years after the previous generation product was launched.
For Britain and Japan, Olympus in 2006 released a similar but separate platform called EVIS LUCERA SPECTRUM and plans to launch a new generation product in the next fiscal year ending March 2013.
Olympus also released a low-cost endoscopic videoscope system, named Axeon, for emerging markets including China and India, as well as an energy-based surgical device, called Thunderbeat, the first product in the world that seals vessels and cuts tissues using both bipolar high frequency and ultrasonic energy.
The firm said aims to sell 5,000 to 7,000 EVIS EXERA III systems, which costs about 10 million yen ($119,600), a year, and 3,000 to 3,500 Axeon systems, which will be under 2.5 million yen.
It declined to reveal its sales target for Thunderbeat, whose system costs about $35,000 and handheld device around $850.
Olympus controls about 13 percent of the global energy-based surgical device market, lagging behind Covidien and Ethicon, a unit of Johnson & Johnson.
Olympus shares, which have lost nearly half their value since the scandal erupted, closed down 2.1 percent at 1,307 yen on Wednesday, against a 0.6 percent fall in the benchmark Nikkei average. ($1 = 83.6250 Japanese yen)
(Additional reporting by Chris Gallagher; Editing by Chris Lewis and Jonathan Thatcher)