“Review: Ashitaka Shipping Delays”“Strengthen Global Operations”
Terumo Corporation
President and CEO
Shinjiro Sato
May 9, 2019

Review: Ashitaka Shipping Delays© Terumo Corporation

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Quickly Normalized, Impact Minimized
Operations: Quick normalization
 Sterilization: Added chambers, utilized other factories to restore during
2018. Currently 30% surplus capacity
 Shipping: All backorders from all regions caused by the shipping delays
resolved in FY18
 Inventory: Steadily optimizing (partially increased buffer)

Business impact: Some temporary impact; mostly recovered Japan: No major fluctuation in market shares Outside Japan: Took measures to keep customers, minimized impact© Terumo Corporation

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Preventive Actions
Ease overconcentration of production in Ashitaka factory, improve production
capacity and efficiency
 Accelerate capacity expansion for access devices (guidewire etc.) at Vietnam factory Optimization among 4 factories (Yamaguchi, Vietnam, Maryland and Clinical Supply) Accelerate automation and slim down product lineup to improve efficiency

Enhance engineering expertise, mutually share them and cooperate Beyond factories, actively pass on the advanced technologies and know‐how

Risk management
 Secure remaining sterilization capacity: Continue with leveraging other factories.
Upgrade Ashitaka’s capability
 Secure proper inventory: Establish inventory strategies considering products andarea differences (minimize impacts from contingency)© Terumo Corporation

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Strengthen Global Operations© Terumo Corporation

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Global Production System (31 factories)
Cardiac & Vascular
General Hospital
Blood Management60%% outside Japan

53%

40%
20%

21%
0%
FY99

FY03FY08© Terumo Corporation

FY13

FY18
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Toward Strengthening Global Operations
Key themes

Key measuresIncrease capacity to meet growth speed

1. Global optimization

Improve quality; cost and efficiency

2. Strengthen organization

Stable supply; enhance SCM, risk mgmt.

3. Collaboration across businessesCompliance to tightened regulations

4. Local production+
Cope with localization

Share, pass on "monozukuri" culture© Terumo Corporation

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(1) Global Optimization: Cardiac & Vascular TIS Case

Mother factory

Ashitaka

ProductsAB

AshitakaCA

DSub mother factory

Satellite factory

ProductsMary‐land

Hanoi

PuertoRico

Yama‐guchi

ABCD© Terumo Corporation

MarylandYamaguchi

BCPuerto
RicoHanoi

BDC

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(2) Strengthen Organization
Cardiac& Vascular
Chief
Existing Quality
OfficerNewGeneral
Hospital

BloodManagement

Quality systems, regulatory,
environmental compliance

Chief
Manufacturing
Officer

Global optimization, capacity expansion
Improve productivity
Stable supply

TIS‐dedicatedNew

ChiefOperations
Officer© Terumo Corporation

Production and supply chain controller
functions, positions are in place
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(3) Collaboration Across Businesses/Companies Cases Flexible sharing of sterilization functionality

MarylandAshitaka

Fujinomiya

Hanoi Sharing of production technology

Terumo BCT (US)Robotic production

Kofu Acquired factory process transfer, integration

Bolton Medical

Stent graft

Hanoi

 Accelerate intra‐area collaboration: Technology, infrastructure, resources, etc.
MarylandTISFujinomiya

CVTIS© Terumo Corporation

PharmaKofu
GeneralHospital
Products
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(4) Local Production: China Case Essen Technology Co., Ltd. acquisition (completed Dec ’18)
 Obtained made‐in‐China DES; biggest market in near future Collaborate with Terumo engineers to improve production andDrug‐eluting stent "Tivoli"

development technologies

 Established peritoneal dialysis partnership with Wego group
 Jointly develop, produce locally for expanding Chinese dialysis market
Wego Terumo(first shipment in Mar ’19)

Dialysis fluid

 Leverage Wego’s strong sales channels in China

 Start manufacturing neurovascular products in FY20
 Manufacture at Terumo Hangzhou factory

HangzhouEmbolic coil fortreating cerebral aneurysms

 Embolic coil for treating cerebral aneurysms with No. 1 market share in China© Terumo Corporation

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Monozukuri Evolution: From Implicit to Explicit; Pass on within The Group Make engineering expertise explicit and share Mutual learning across businesses/companies
 Visualize and analyze craftsmanship by IT
Onsite trainings,
opinion exchanges

 Efficiently enhance monozukuri skills globally

Utilize eye‐trackingtechnology

 Global Manufacturing Management Meeting: Discussion on common issues, solutions
 Manufacturing Innovation Exhibition: Sharing and developing application ofproduction technologies among all the factories

Global Manufacturing Management Meeting

Manufacturing Innovation Exhibition© Terumo Corporation

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Mid‐ to Long Term VisionTrusted in medical settings as a Top Brand
World‐class total Quality(products, supply, services)

Global Corporation with Unique Excellence© Terumo Corporation

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IR Contact
Terumo Corporation
Corporate Communication (IR) Dept.
E‐mail: kouhou_terumo01@terumo.co.jp

Among the information that Terumo discloses, the forward‐looking statements including financial
projections are based upon our assumptions using information available to us at the time and are notintended to be guarantees of future events or performance. Accordingly, it should be noted that actual
results may differ from those forecasts on projections due to various factors. Factors affecting to actual
results include, but are not limited to, changes in economic conditions surrounding Terumo, fluctuationsof foreign exchange rates, and state of competition.
The market share information in this presentation is partly derived from our own independent research.

© Terumo Corporation

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