Production & Operation Strategy to lead the successof GS26
Realize 1 trillion yen in sales, Earnings Improvement and a New Business
Model Simultaneously

November 10, 2022

Shinjiro Sato

President and CEO
Terumo Corporation

Safe Harbor for Forward-Looking Statements and Use ofDocument
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 not intended to be guarantees
of future events or performance. Accordingly, it should be noted that actual
results may differ from those forecasts or projections due to various factors.
Factors affecting to actual results include, but are not limited to, changes in
economic conditions surrounding Terumo, fluctuations of foreign exchange
rates, and state of competition. Information about products (including products
currently in development) which is included in this material is not intended toconstitute an advertisement or medical advice.

©TERUMO CORPORATION

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Production Strategy Transition
Globalization of strategy with the changes of the era
Operation bydomestic factories
Ashitaka
Factory
Kofu
Factory
Fujinomiya
Factory

Optimize Low-cost
production in Asia

Expansion of operationof EU/US subsidiaries

Hangzhou
Factory

TCVS（US）

Changchun

MV（US）

Factory(Closed)

Philippines
Factory
TerumoPenpolVietnam
Factory

BCT（US）
TA（EU/US）

34 factories operating among the group-wide©TERUMO CORPORATION

3 / 13Create business and regional diversity than ever before in GS26
Crucial issue to strengthen operation both volume and quality

TMCS

Potential of growth ineach company

Increase sales overseas
Growth led by businessmodel change

Reference; GS26 presentation©TERUMO CORPORATION

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Improvement GP with saving COGS in GS26
＜Breakdown＞

Production＋1.0%

 Quality + Production Efficiency
 Saving cost ofReference; GS26 presentation

Procurement/Production/Logistics

 Promoting Automation/Saving resource/DX
 Group-wide synergy of productiontechnology©TERUMO CORPORATION

5 / 13Issues and Solutions to lead the success of GS26
１ Focus market: United States/Increase Supply
Strategic production sites in the US market
National strategy, US competition, ecosystem, talent, track record

Shift to Costa Rica

２ Strategic market: China/Local Production Capacity
Major focus market along with US in GS26
TMCS earnings measures vs. FX fluctuations & geopolitical risks

Production Platform
For increasing Local
production

３ Optimizing Global Production led by Mother Factory
Source of C&V TIS value; Terumo’s bread and butter
Ashitaka smart factory initiative

Reforming Operation forGroup optimization

４ New Growth Driver/Expansion of B2B
Changing business model

Reasonable investment

Coolaboration with Pharma companies©TERUMO CORPORATION

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Costa Rica: N. American strategic production site

１

All US competition are there
Medtronic, Boston Scientific, Abbott, Edwards,
Merit Medical, Philips, Smith & Nephew, etc.

Costa Rica advantages
National strategy (Tax benefits: Free Zone)
Ecosystem of approx. 90 firms, including sterilizers
MedTech is now biggest export
Population: 5M

Educational standards, excellent talent (over halfwomen)

Sustainability management
Domestic power supply from renewable energy: 98%©TERUMO CORPORATION

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Terumo History, Future Moves

１

MicroVention came first, other Terumo companies followed
First entry into Costa Rica

TBCTMicroVention
3rd Factory

TCV

MicroVention
2nd Factory
MicroVention
1st Factory

2011

2019

Local no. of associates©TERUMO CORPORATIONTransfusion, infusion,
Oxygenator blood circuit
collection systems
Blood treatment system kits

Neurovasculartreatment devices
2022

1900

2023＋8 / 13700＋500

Total >3,000

Profitability Improvement by Consolidation in Costa Rica
3 Business total 5B Yen~/Year in the last year of GS26 (FY26)
MicroVention

TBCTTCVS

 Consolidate labor Produce existingproducts with stablequality
 Produce stents foroutside US Transition laborintensive products
from Lakewood
 Eliminate Lakewood
complexity

 Expand production
capacity Access new markets
 Raise grossprofitability floor Rationalize supplychainTo show the size of impact relatively©TERUMO CORPORATION

9 / 13１China production strategy: Rebuilding

２

Buy China, VBP era regional strategy
Sustanable growth in the giant market
Medical device market exceeded 100 billion USD(2020)
Per-capita GDP increase, healthcare expenditure
growth potential high

ESSEN（Beijing）
Acquired in 2018
No. of Associates：180

TMPH（Hangzhou）
Establishment：1995
No. of Associates：2,546

BeijingHangzhouStrategy transition, pivot
Before: Import sales model
Future: Selective localization promotion

Local production, development
To ensure supply capability for VBP expansion
Production platform that includes development role
©TERUMO CORPORATION

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Reforming TIS Operation

３Optimizing Global Production & Operation
Expansion capacity

Integrating Group wide factories
Transfer of capacity
FactoryA

Ashitaka

Ashi-taka Volume Expansion & Speed
requiredOnly choice to spread Ashitaka’scapacity©TERUMO CORPORATION

Regional Supply

Global Supply

Mother Factory
StableSupplyProfitability
Improvement
11 / 13・・C工場 ・ Optimizing Global Production forPreventing overconcentration
 Structure BCM scheme Automation Factory
 RFID utilization in SCM<DX>

Business Model Change ~CAPEX for B2B~

４

Pharmaceutical Solutions
SalesCAPEX

Growth with Exceeding CAGR15%
Profitability of TMCS total improvement(15%)

Plasma Innovation
Entered the market as $800M/CAGR8～10％
Model case of project type of business©TERUMO CORPORATION

Profitability of TMCS total improvement(〜20％)

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Key Success Factors to Achieve GS26
Stable Global Supply

Strengthen production capacity both Global & Regional

Earnings improvement

Operations transformation to raise gross profitability

Environmental impact reduction

Site location with decarbonizing perspective, promotion ofrenewable energy

SCM advancement
Sophisticating Risk Management

Product consolidation/elimination, Safe stock of parts, BCM,Resilience

US, China market expansion
Business Model Change©TERUMO CORPORATION

Costa Rica production expansion/China local production
CAPEX for CDMO and Plasma Innovation

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