EIZO is a visual technology company that manufactures high-end monitors and display solutions for business, graphics, home entertainment, healthcare, maritime, security/surveillance, ATC and defense/aerospace. Yoshitaka Jitsumori, President and CEO, speaks about the company’s operations in the healthcare sector and in the U.S. market
The global medical imaging market size was valued at $33.7 billion in 2016 and is expected to grow at a CAGR of 5.7% over the forecast period reaching 40 billion in 2021. Major factors driving growth in this industry are the increasing demand for early stage diagnosis of chronic diseases, increasing health awareness and the aging population. What is your personal opinion about the main market trends that are shifting the market requirements in the medical imaging sector?
Personally, I believe it depends on what country you look at. If you take Japan for instance, it is a very mature country in the healthcare sector. EIZO has a big advantage here, as our brand awareness is huge. We have about 70-80% market share, but at the same time the market is quite saturated. So what do we do next? We go abroad. In the past, they used to have the diagnostic rooms and the operating room separated. However, today, we can see that they are combined. Therefore, they need many different kinds of imaging products, different high resolution screens, and also the systems to analyse these images.
There are many different trends today, especially in advanced countries such as Japan, Germany or America. Our culture and policy is to develop the best products in the world, and our employees are proud to produce the best products in the world. We cannot allow the use of cheap labour in order to reduce the costs. We prefer to create an added value, and make our employees proud. That is our policy here at EIZO. Again, it is difficult to make an overall comment about this market because we work country by country.
America is a huge market with large potential, but difficult to tap into because of the high competition, not only for product, but also for price competition. We have to be cautious not to step into price competition, and have to educate and convince the market step by step of our value and advantages on the TCO of our products in order for EIZO to be selected by the market. We are not number 1 in America yet, because our policy is to go step by step, to educate the market with our products, and this is the main reason why we are still number 2 in the US. In other countries such as Norway, Denmark and Germany, as well as Japan, we already have 50-70% market share, and this is why we are now trying to attack the American market.
As you look at each country individually rather than looking at the industry as a whole, what would you say are the strengths and weaknesses of Japan’s medical market?
I don’t think I am the right person to be talking about the medical market in general. However, when we look at the medical imaging market, we can definitely say that Japan is a very mature market. Most hospitals in Japan have high-end image products. Even medical assistants, in addition to doctors, use our high-end, 3-megapixel diagnostic screens, and this is a good thing. The negative aspect could be that hospital investment for new technology may be rather weak. However, a good thing again is that Japan always tries to have the best products available, and that is definitely a good strength.
EIZO Corporation was founded in March 1968 under the name of Nanao Corporation, changing its name to EIZO Corporation in 2013. You then entered the medical imaging market in 2002. Can you take us through the history of EIZO, your personal experience here and the key milestones of the company?
I joined EIZO in 1994. Let me tell you a funny story. One day, I heard that my German colleague in the computer department bought EIZO monitors for the company. It cost 8,000 German marks, whereas the equivalent product from Sony costs 4,000 German Marks. I still remember getting really angry at my colleague and asked him why he had spent so much on these monitors; he explained that he chose EIZO because it is the best product available in Europe. This is the very first time I heard about EIZO, I knew a lot about Sony but knew nothing about EIZO.
Soon after that, I was asked by the founder to join EIZO. The company was facing huge difficulties and it was a very challenging situation. However, I felt it was the right thing for me to do. From the funny story I experienced, I knew that the EIZO product was good.
When I arrived, the company was about to sign a contract with a Singaporean company to manufacture overseas, in order to reduce costs. However, I firmly disagreed and immediately flew to Singapore to cancel the contract. I told my team that from now on, we would shift from Rolls Royce-type products to BMW-type products. My philosophy is that we can’t reduce the cost effectively with cheap labor, but rather with R&D. Thanks to our R&D team, we were able to reduce the production cost, and therefore the market price went down by 30%. Soon we started selling thousands of monitors to financial companies, such as JP Morgan, Morgan Stanley, Goldman Sachs, they all used our monitors and our brand became very popular in the financial market in those years. I believe that it was the turning point where EIZO stopped selling niche products and became a major brand.
In 1997, we started developing our LCD Monitors; it was actually the same year when CRT sales hit a peak. We knew the LCD era would be coming, but at the same time, it was not certain if the LCD business would grow as our main business domain. What I did then was visit all the major financial customers in Europe who were looking for LCD technology and listened to their opinions. They confirmed that they were all seeing great benefits to utilizing LCD technology. I finally made a decision to develop large size LCD monitors, whereas most of the other vendors started from small size LCD panels. It was technically very challenging. However, it was finally very well accepted among major financial customers and we could keep the same market leading position in the LCD era.
Also, around 1997, our shareholders wanted to go public. I knew we had to go public, especially for our employee’s motivation. However, I had to wait until the LCD business grew as our main domain. We finally went public in 2002, starting in the section 2 of the Tokyo Stock Exchange, and then in section 1 in 2003.
As you mentioned, we entered into the medical imaging market with X-ray diagnostic displays for PACS system in 2002. 2007 was a real turning point for EIZO as Siemens A&D came to us and wanted us to take over their medical display business. They were strong on modality display but they could not keep up with the LCD monitors business due to having limited volume. This resulted in them suffering limited buying power and relationship with LCD panel vendors.
Therefore, we took over their business and could extend our coverage not only for PACS displays but also displays for modality systems. We learned a lot from the ex-Siemens team. For example, their practical and logical way of working and they brought a lot of added value to our company. We then diversified in Air traffic control, industrial, maritime, security monitors and other domains. One of our strengths is that we are the only company that manufactures everything by ourselves. Most companies depend on other manufacturers that are often located in China, or in Vietnam. However, we produce everything in our factory, from R&D to the manufacture of all components, which gives us the competitive advantage of handling the full supply chain. Therefore, we are always one step ahead.
Why do clients pick EIZO over its market competitors?
Our business model is one of our main strengths. We always adapt to every market, and every country. We never force the ‘Japanese way,’ we must adapt to every local culture in order to truly make our products universal.
In addition, we always make sure that our products can work well with different types of products such as peripheral equipment and control software to provide a total solution business. For example, take an Operating Room in a hospital for example: there are many different products such as network storage, video switcher, video routing system, that are integrated together with our display products. It is essential that our products work in harmony with all the different technology that surrounds it. Therefore, EIZO is regarded as a one-stop solution provider and we are able to create a strong entry barrier within the market. Also, we always try to strengthen the entry barrier even further by utilizing service organizations, such as pre-staging service and field support.
What is EIZO’s position within the American market for medical imaging?
We are second in the market for medical imaging in the United States, with approximately 20% of market share. It has been growing steadily over the years. Our main competitor who is number 1, has more history than us, and used to have a 70% market share worldwide. Today, we are quite equal in terms of worldwide market shares. They are very good competitors, and also help us to grow and improve. They are very competitive in terms of maintaining high added value and have fantastic brand awareness. We respect them very much. America is such a huge market, and we lack in brand awareness. We are very popular in Wall Street amongst traders, but need to improve in the Medical Imaging market. It is fair to say that our goal is to get to 30 - 35 % of the market share in near future.
Where does the US market stand in EIZO’s future growth strategy? What is EIZO’s strategy to further penetrate the U.S. market?
Today, America is most definitely our priority. It is a market that is very focused on productivity and efficiency. That is why our main objective is to design our products to improve users’ efficiency and contribute to enhancing productivity. Also, this is of course in line with the Japanese trends. Radiology is a huge market, and it’s a market which particularly requires efficiency. In addition, operating rooms are currently booming, and they require constant innovation and technology. Today, we can say we have all kinds of imaging products, and all kinds of systems. In 2015, we established EIZO Medical Solutions in Japan to expand the Medical System Integration Business. The next year we acquired the Panasonic Healthcare division who develop endoscopy displays. One of the most important aspects we aim to achieve here is to constantly innovate this solution business model first in Japan. After this, we then are able to show our global EIZO team with all the added values of our products, in order to introduce them to the international market.
Do you have any other potential plans or M&A activities or strategic alliances with American companies?
We have acquired many companies, but the common factor in all these companies that we have acquired is that they all came to us at their decision. We are very proud to have all these companies under our umbrella, and to support them continuously. I don’t think we will go for M&A aggressively because I think that the most important thing is how we will do after an acquisition. The most important asset is people, and how we can integrate them. I may be too cautious, but I want to make sure that we will bring an added value to the companies we acquire.
As a concluding comment, you have been president since 1994, if we were to sit down with you in 20 years, where would you like to see EIZO Corporation?
Once every year, we have a meeting with all managers from EIZO Corporation. Two years ago, I made a speech where I told all my staff to design for 2025. I can’t do it, because of my age, but I believe we have all the talent within the company to build a bright future all together. We can shape the future, improve continuously, design new technologies and be successful. We have been evolving throughout the years, and I think we are building a bridge towards the future, a bright one I believe.