Tech giant Canon Inc. is gearing up to make Cleveland the home of a U.S.-based medical imaging unit that would significantly expand the company’s research and development efforts in the country.
Canon plans a big investment — on the order of $300 million over the next few years — to establish what will be known as Canon Healthcare USA Inc. The unit will launch in January with about 20 employees but is projected to grow to 200 or more over the next four to five years, according to the man tapped as chairman of Canon Healthcare USA, Hiroyuki Fujita, Ph.D., the founder and CEO of Mayfield Village-based Quality Electrodynamics. (Canon in 2019 bought Quality Electrodynamics, known as QED, which develops and manufactures coils that go inside magnetic resonance imaging machines.) Leading Canon Healthcare USA as president will be Hisashi Tachizaki, who will report to Toshio Takiguchi, president and CEO of Canon Medical Systems Corp.
Fujita said in a Zoom interview on Monday, Dec. 5, that Canon Healthcare USA will start with employees based at QED’s operations on Beta Drive in Mayfield Village but eventually will require its own building. He said in the interview, “We have several sites under consideration” and mentioned two specifically: an expansion of the QED headquarters, already home to about 170 employees; and Opportunity Corridor, a burgeoning development site in Cleveland that offers quick access to the city’s largest health care institutions, the Cleveland Clinic and University Hospitals.
Other potential sites are in the mix, Fujita said, adding, “There are some sites that have been reaching out to us.” He did not, however, identify other sites. Fujita said Canon Healthcare USA would consider both new construction and renovation of an existing facility, though it likely would own, rather than lease, its space.
Fujita said the company has been working with JobsOhio, the state’s private nonprofit economic development corporation, in the search process. “The support we are getting from JobsOhio has been excellent,” he said, adding that Canon Healthcare USA hopes to identify a site in the first quarter of 2023.
Matt Englehart, a JobsOhio spokesman, said the nonprofit does not disclose whether it’s in project discussions with companies.
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Marie Zickefoose, a city of Cleveland spokeswoman, said in a statement that the city “is continually working to bring innovative businesses and quality jobs to the city and to the Opportunity Corridor. We are pleased to be on the list of locations under consideration by Canon Healthcare USA.”
Mayfield Village Mayor Brenda Bodnar wrote in an email, “Under the leadership of Dr. Fujita, QED has been an innovative industry leader in medical imaging equipment, and we are proud that QED has chosen Mayfield Village as its home. We are excited about the prospect of expanding QED’s headquarters to include the operations of Canon Healthcare USA.”
John Marquart, the village’s economic development manager, said “there’s nothing firm” regarding an expansion of QED in Mayfield Village. He added, though, that village officials have “stayed in pretty constant contact with the company (QED)” over the years and “We stand ready to help” aid an expansion project if necessary.
He pointed out that Mayfield Village voters in May approved a zoning overlay that gives property owners on Beta Drive greater flexibility to manage their properties by, for instance, reducing setbacks and increasing building height.
Canon Inc. on Thursday morning, Dec. 8, responded to a third email request from Crain’s to interview a corporate executive about the plans for Canon Healthcare USA. The company requested written questions, and as of 9 a.m., responses had not been received.
But company executives did discuss the new unit at the end of November at the Radiological Society of North America (RSNA) conference in Chicago, according to accounts in trade publications AppliedRadiology, Fierce Biotech and Radiology Business. The discussions at the conference followed a Nov. 27 news release from Canon Inc. describing, in general terms, the launch of the new unit.
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AppliedRadiology, for instance, reported that Canon through the new unit “aims to double its share of the U.S. market for diagnostic imaging equipment” and “sees the U.S. medical imaging market as a key to the company’s growth.”
Canon will transfer assets from other businesses, including QED, to the new subsidiary. By placing QED under the umbrella of Canon Healthcare USA, Canon Inc. said in the Nov. 27 release, it “will aim to increase coordination between its system and component businesses.”
AppliedRadiology noted that “some of Canon’s sales and service operations currently based in California also will be transferred to the new business, improving integration between operations and marketing.” Also helping the growth prospects for Canon Healthcare USA here: Canon in the Nov. 27 release said the new subsidiary will assume an unspecified chunk of product sales and service operations from Canon Medical Systems USA, the U.S. subsidiary of Canon Medical Systems Corp.
Fujita said Cleveland is an attractive market to Canon because it’s a “key hub” in the U.S. healthcare industry; it’s close to the heart of the hospital market on the East Coast and the Midwest; and its history and future positioning as a home for smart manufacturing means it has many executives and other personnel with skills and experience in imaging-based manufacturing and development.
The subsidiary’s launch will come under what Canon calls Phase VI of its Excellent Global Corporation Plan. That plan is designed to help Canon improve its competitiveness in areas of the medical industry that include CT, MRI and diagnostic ultrasound systems; X-ray tubes and detectors; health care IT; and in vitro diagnostics.
Fierce Biotech reported that the planned launch of Canon Healthcare USA “comes amid a period of solid growth for Canon not only in its medical device segments but also in its overall U.S. presence.” It noted that Canon “tallied up nearly 26% year-over-year growth in its sales in the Americas for the first nine months of the year,” reaching around $6.5 billion. Meanwhile, its imaging and medical divisions brought in a combined $6.7 billion for the period, marking a 12% increase compared with the first nine months of last year.
Reporter Michelle Jarboe contributed to this article.
This story first appeared in Crain’s Cleveland Business.
