Issue Date: October 6, 2008
Shimadzu Seeks Bigger U.S. Presence
SHIMADZU'S ANNUAL SALES of scientific instruments of about $1.4 billion make it a force to be reckoned with. Its line of chromatographs alone brings in about $535 million each year. But in the U.S., a marketplace that Shimadzu acknowledges as the largest buyer of scientific instruments, sales of chromatographs are less than $100 million.
Takeshi Kawami, president of Shimadzu Scientific Instruments (SSI), the subsidiary that imports, distributes, and services Shimadzu instruments in North America, says he wants a bigger piece of the U.S. instruments market. He and his sales and marketing group hope to do that by strengthening sales of equipment in the life sciences sector while expanding into the petrochemical and industrial testing markets.
Shimadzu, based in Kyoto, Japan, is best known as a maker of chromatographs, instruments that help scientists separate and analyze complex chemical mixtures. Although scientific instruments make up about 60% of Shimadzu's annual sales of about $2.5 billion, the firm has other high-technology businesses too.
The firm is a specialist in X-ray equipment going back to 1909 when Shimadzu built Japan's first medical X-ray machine. And it has parlayed its X-ray position in medicine with digital radiography and fluoroscopy systems and ultrasound equipment. Shimadzu has been a supplier of aircraft equipment since 1936 and is also a maker of industrial tools, including semiconductor inspection equipment and hydraulic systems.
Shimadzu has slowly and methodically built up its presence in the U.S., Kawami explains. The firm got its start in Japan 133 years ago when it began to manufacture scientific instruments. It developed Japan's first spectrographs in 1934, the country's first electron microscopes in 1947, and its first gas chromatographs in 1957. In 1963, it opened a small distribution office in New York City to sell chromatographs.
What started as a two-person sales office slowly grew into a sales and service network covering not only the U.S. and Canada, but also South American countries north of the equator. Shimadzu formally established SSI in 1975. Kawami says the company decided it "wanted to eliminate the middleman and sell instruments directly to customers." At that time, Shimadzu's share of the gas chromatograph market in Japan exceeded 70%, and the firm saw the U.S. and its large academic, government, and private research enterprise as a tantalizing untapped market for Japanese instruments.
But in a market dominated by well-known American instrument makers, Shimadzu had to fight an uphill battle. Even "20 years ago, it was tough to sell Japanese instruments in the U.S.," Kawami recalls. But persistence, talented personnel, and a reputation for excellence helped the company, he says.
A BIG BOOST to the company's reputation came in 2002 when an engineer at Shimadzu, Koichi Tanaka, shared half of the Nobel Prize in Chemistry with John B. Fenn, a chemistry professor then at Virginia Commonwealth University. Although both were recognized for advances in mass spectrometry, the Nobel award committee cited Tanaka for developing a technique that uses laser desorption to ionize large biological molecules without fragmenting them. An adaptation of Tanaka's original technique, known as matrix-assisted laser desorption ionization, or MALDI, is widely used today to analyze proteins, peptides, oligosaccharides, and large organic molecules.
Even in Japan, Tanaka's prize helped Shimadzu, says Kawami, who has a law degree and held a variety of sales positions in Japan before he became SSI president in April 2007. "Before Tanaka received the Nobel Prize, we sometimes had to explain our business to customers for 10 to 15 minutes. After the prize, most customers knew who we were." That same recognition spilled over into the U.S.
Today, Shimadzu ranks seventh among the world's scientific instrument makers, according to 2007 revenue data reported in Instrumenta, a U.K.-based newsletter that covers the analytical instruments market. And Shimadzu is the only top 10 company that is not based in the U.S. Shimadzu ranks just below Waters and just ahead of Perkin Elmer. Thermo Fisher Scientific, with nearly $8 billion in sales, leads the list, which also includes Danaher, Applied BioSystems, Agilent Technologies, and VWR in second, third, fourth, and fifth places, respectively.
Christopher P. Gaylor, SSI's vice president of sales, says Shimadzu deserves credit for the progress it has made. "We have grown from next to nothing in the U.S. in the 1960s to a 10 to 15% share of market for the instruments we sell," he says.
In addition to chromatographs, those instruments include microchip electrophoresis systems to analyze nucleic acids and a variety of spectrophotometers including ultraviolet-visible, Fourier transform, fluorescence, atomic absorption, and X-ray diffraction instruments. Most of the instruments are made in Kyoto, but some are manufactured in other countries. For instance, the firm manufactures liquid chromatographs and gas chromatograph/mass spectrometers in Portland, Ore.
Important markets for SSI's instruments include drug discovery, environmental monitoring, biofuel analysis, and homeland security. A major drive for SSI is to solidify its relationship with U.S. pharmaceutical and life sciences customers. The firm recently added a new life sciences facility to its Pleasonton, Calif., operations. "Customers there want to see demonstrations of our instruments closer to home," Kawami says. The new facility will save biotech researchers working for institutions in the West the long trip to SSI's other life sciences demonstration facility in Columbia, Md.
Despite its modest U.S. presence, SSI has relationships with several marquee companies and institutions. It has enjoyed a 15-year relationship with drugmaker Bristol-Myers Squibb, which started using Shimadzu instruments in its drug discovery work. Recently, Gaylor says, the two have focused on speeding up sample analysis to get faster and more accurate results than they could get previously.
A few years ago, SSI and the National Institutes of Health undertook a cooperative research and development agreement to improve and automate peptide and protein analysis through high-performance liquid chromatography and electrospray ionization. The work with NIH focused on detecting normal and disease-state biomarkers useful in diagnosing neurological diseases.
THIS PAST JUNE, Shimadzu and the Fred Hutchinson Cancer Research Center, in Seattle, started a collaboration on the detection and analysis of cancer-related proteins and peptides. Shimadzu researchers, including Nobel Laureate Tanaka, are now working with Hutchinson researchers to develop what they say will be "next-generation analytical tools and mass spectrometry platforms" to reach their goal. For Shimadzu, "the hope is others will buy our instruments," Gaylor says.
Terence McMahon, a partner in the process analytical instruments consulting firm PAI Partners, notes that Shimadzu is a force in lab analyzers but not a major supplier of industrial analyzers. However, Shimadzu is a supplier of on-line industrial testing equipment. The firm has a significant business in Japan providing automakers and parts suppliers with testing equipment, and it would like to enlarge its currently small position with U.S. car companies.
Gaylor acknowledges that automakers are hurting at the moment, but he says Shimadzu eventually hopes to make inroads. The firm would like to sell such customers equipment including differential scanning calorimeters to measure the melting temperature, heat of fusion, and glass transition temperature of rubber, plastic, or paint. The firm's scanning electron microscopes might be used for microscale observation of surfaces and elemental analysis.
Shimadzu has even positioned its instruments to evaluate hydrogen-powered fuel cells under development for automotive use. Its FTIR spectrophotometer can be used to analyze polymer defects in solid polymer fuel cells. Additionally, the firm's portable continuous gas analyzer can monitor concentrations of carbon monoxide, carbon dioxide, and methane in fuel-cell-powered vehicles equipped to eke hydrogen out of methane.
Lab-based research instruments helped Shimadzu establish its reputation in the U.S. And they will continue to be the focus of Shimadzu's instrument sales and development effort in the U.S., Kawami notes. But with 40 years of effort and a Nobel Prize under its belt, the firm is likely to have an easier time of it in the future.
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