[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2014: Reference

Financial Results for the Fiscal Year Ended March 31, 2014: Reference

Analysis of Business Performance
1. Overview of Financial Results for the Fiscal Year Ended March 31, 2014
(1) Overview of Consolidated Business Results
During the fiscal year under review, conditions were generally severe in the global healthcare market as pressure
mounted in developed countries to control healthcare costs. Nevertheless, in the United States, individualenrollment in the government’s new private healthcare coverage began in January 2014 in accordance with theAffordable Care Act, and the government reached its target of registering 7 million people. This is expected to behighly beneficial for the medical devices industry as the number of people using healthcare services increases in thefuture.

In Japan, a revised version of the Pharmaceutical Affairs Law was enacted in November 2013. Designed to promote
greater utilization of medical devices, the revised law broadens the range of devices subject to certification by
third-party organizations in the private sector, and sets forth measures for speeding up review and approval processof medical devices. Meanwhile, the Japanese government has been taking steps to set up a Japanese version of theU.S. National Institutes of Health (NIH) as one of its specific growth strategies. Conditions for facilitating thissystem moved forward with the Cabinet’s approval of a bill for “Healthcare and Medical Strategy Promotion”, aswell as a bill for establishing “Japan Medical Research and Development Agency”.

Under these circumstances, Terumo is presently carrying out its mid-term management plan with the goal ofbecoming a company with a global presence. Amidst favorable exchange rates, the Company achieved increases insales and profit compared to the previous year. Major achievements in each business segment were as follows.
●In the General Hospital Business, Terumo launched the first intravenous injectable acetaminophen antipyretic
analgesic in Japan, as it worked to expand business in the fields of cancer treatment and post-surgery pain
management. In the diabetes management market, Terumo recorded strong sales of blood glucose monitoring
systems and NANOPASS 34, which, as the world’s thinnest insulin pen needle, is specially designed tominimize pain.

●In the Cardiac & Vascular Business, sales of Misago stent for treating peripheral artery disease contributed
significantly to Terumo’s performance in Japan’s peripheral disease market. In the neurovascular intervention
market, Terumo steadily expanded business as it commenced worldwide sales of new products including flow
diverting stents and occlusion balloons. Meanwhile, sales of products related to transradial coronary
intervention (TRI), an interventional treatment for approaching the coronary artery from the blood vessels in thewrist, continued to grow, particularly in North America.

●In the Blood Management Business, while market conditions were difficult in Europe and the United States-1-[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2014: Reference

owing to a patient blood management program and other factors, Terumo commenced sales of new automatedblood component processing systems in Europe, and recorded robust sales of whole blood collection related
products in Japan. Meanwhile, double-digit sales growth continued in emerging countries in Eastern Europe,Asia, and Central and South America, particularly for automated blood component collection systems.
Owing to the above initiatives in the fiscal year under review, Terumo’s consolidated financial results are asfollows.

Net sales
Compared to the previous fiscal year, net sales increased 16.2% to 467.4 billion yen.

Of this amount, net sales in Japan came to 189.0 billion yen, up 1.7% year on year, reflecting ongoing sales growthof blood glucose monitoring systems in the General Hospital Business segment, as well as improved results for theMisago peripheral artery stent and a new percutaneous transluminal coronary angioplasty (PTCA) dilation catheterin the Cardiac & Vascular Business segment, and increased sales of automated blood component collection systems
and blood bags in the Blood Management Business segment. Outside Japan, net sales jumped 28.6% to 278.3
billion yen year on year, driven by increased sales of automated blood component collection systems and businessexpansion in emerging countries for the Blood Management Business segment, as well as a strong performance by
the Interventional Systems business, particularly in the Americas.
Gross profit
Gross profit totaled 242.0 billion yen, an increase of 17.7% compared to the previous fiscal year. Improved profits
due to the depreciating yen and expanded lineups of highly profitable products in the Cardiac & Vascular Businessand Blood Management Business offset the delay of new products expansion in the General Hospital Business,yielding the overall growth.
Operating income
Operating income jumped 22.7% year on year to 65.3 billion yen. Despite increases in R&D expenses and selling,
general and administrative expenses, which include investments intended to foster business growth, operating
income grew as a result of the increase in gross profit on the back of sales growth and the benefits of thedepreciating yen.
Ordinary income
Ordinary income totaled 63.8 billion yen, up 24.2% compared to the previous fiscal year. Favorable exchange rates
resulting from the depreciating yen contributed to the increase.
Net income
Net income decreased 27.5% year on year to 34.1 billion yen. The decrease was mainly due to impairment loss on
noncurrent assets resulting from non-profitable business facilities, despite extraordinary income of 6.0 billion yen-2-[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2014: Reference

from a settlement received.

Net sales results by business segment are as follows.
Sales and expenses related to home oxygen system business and home infusion pump business sold off inprevious fiscal year and next generation implantable left ventricular assist system entered in strategic
alliance in this fiscal year are allocated to “Adjustments.”

General Hospital Business
In Japan, although a delay in new products expansion related to infusion systems had a negative impact on sales
and profits, sales of prefilled syringes and products related to blood glucose monitoring systems continued to grow,driving up overall sales by 1.3% year on year. Outside Japan, sales expanded in all countries in Asia. As a result ofthese factors, net sales in the General Hospital Business segment rose 5.9% compared to the previous fiscal year,amounting to 164.1 billion yen.
Cardiac & Vascular Business
In Japan, Terumo boosted sales by expanding its product range in each therapeutic field, including its
Interventional Systems product lineup of Misago stents for treating peripheral artery disease, and the Hiryu Plus ofPTCA dilation catheters. Outside Japan, the Interventional Systems business continued to generate strong results as
the adoption of TRI grew in popularity in North America. In the Neurovascular Business, sales of new products
including stents expanded globally. As a result of these factors, net sales in the Cardiac & Vascular Businesssegment amounted to 210.6 billion yen, up 24.1% compared to the previous fiscal year.

Blood Management Business
While competition intensified in Japan, sales of whole blood collection related products and automated blood
component collection systems increased, driving up overall sales by 7.3% year on year. Outside Japan, although apatient blood management program negatively impacted demand in Europe and the United States, sales of new
automated blood component processing systems expanded in Europe, and sales of automated blood component
collection systems continued to grow in emerging countries. Owing to these factors, net sales in the BloodManagement Business segment rose 24.1% year on year to 92.7 billion yen.

(2) Research and Development
In the Cardiac & Vascular Business, Terumo commenced sales of the Glidesheath Slender sheath for TRI in theUnited States, along with flow diverting stents and occlusion balloon for the neurovascular intervention markets inJapan and Europe. The Company also gained CE mark certification for its Ultimaster drug-eluting stent in February
2014, and will begin sales in Europe from June 2014.

With the aim of expanding a future product pipeline, Terumo secured exclusive acquisition rights from Arterial-3-

[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2014: Reference

Remodeling Technologies S.A., a French company developing bioresorbable scaffold, and has concluded anagreement to pursue joint development and a series of investments. Terumo is also investing in Emergent MedicalPartners II L.P., a U.S. venture capital fund, in an effort to gain the latest technological expertise. The Company hastransferred a development project to an incubator center, and has started initiatives for achieving rapid
commercialization.
(3) Capital Expenditure
Terumo expanded production lines at its Ashitaka Factory in Japan for the purpose of boosting production of its
lineup of interventional systems products, for which sales continue to increase globally. The Company also
expanded production lines of prefilled syringes at its Fujinomiya Factory, and invested in its Kofu Factory toincrease production of blood glucose monitoring related products. In addition, Terumo is planning to bring its newYamaguchi Factory on line, and invested in the building structure and production facilities for this purpose.

Outside Japan, Terumo undertook capital investments for its factory in the Philippines in order to boost productionof needles. It also invested in expanding and transferring production of its interventional system line of products to
its factory in Vietnam, and began construction of a factory that will produce blood management related products inthe southern part of Vietnam. In addition, the Company undertook capital expenditures for improvements andupgrades in order to improve quality, productivity, and product competitiveness.

As a result of these initiatives, capital expenditures amounted to 46.6 billion yen in the fiscal year under review.

2. Outlook for the Fiscal Year Ending March 31, 2015
Aiming to accelerate initiatives designed to accomplish its mid-term management plan, Terumo will reorganize its
organization from a matrix management structure to operate business, functions, and region, to globally aligned“company-led management”. This shift is intended to speed up decision-making by designating authority andclarifying accountabilities in connection with profits in each business, and to enhance the corporate functions ofheadquarters so that it can better support each business and create portfolio strategies based on a group-wideperspective.

In the General Hospital Business, Terumo intends to closely manage profits while stepping up marketing of
high-value-added products that help prevent medical errors and improve efficiency at hospitals and clinics. Theseproducts include the SURPLUG AD needleless system as well as infusion pumps and syringe pumps equipped with
IT functions. In addition, Terumo plans to expand its Drug and Device (D&D) Business as a growth area bycontinuing to boost its market share of proprietary products in Japan and more quickly forming globally strategic
business alliances.

In the Cardiac & Vascular Business, Terumo will carefully manage growing profits, and reduce production cost bymaking use of production plants outside Japan, particularly in Asia. In the Interventional Systems business, the-4-

[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2014: Reference

Company will begin selling its new Ultimaster drug-eluting stent in Europe and Asia in June 2014. Terumo will
step up the pace of its global development of a full lineup of new products for the peripheral market, such as PTA
balloon catheters and intervention wires, while continue launching non-coil products in the neurovascularintervention market. In the Cardiovascular Business, Terumo will work to steadily improve quality systems at
Terumo Cardiovascular Systems Corporation in the United States in preparation for re-inspections by the U.S. Foodand Drug Administration in fiscal 2014.

In the Blood Management Business, Terumo faces challenging market conditions as a result of a patient blood
management program in developed countries, among other factors. Nevertheless, the Company will expandbusiness of automated blood component collection system in emerging countries and enhance products for thetherapeutic apheresis market while setting up production facilities in Asia, in an effort to continue ensuring stable
growth and steady profit.
By means of these initiatives, Terumo is aiming to realize its financial targets for the fiscal year underway andachieve continuous growth in profits going forward.

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