OLYMPUS Investor Day 2018

Business Reforms andInnovation Technologies

Haruo Ogawa
Chief Technology Officer andHead of R&D GroupOlympus Corporation
September 5, 2018

Disclaimers
The financial forecasts and other material in this document are based on judgements and assumptions

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derived from currently available information. Actual results may differ significantly from targets, being
subject to change due to factors such as the uncertainties implicit in these judgements and assumptions anddue to future changes in business operations and circumstances inside and outside the company.
Furthermore, this information is subject to change without notice. Accordingly, use of this information and

this document should be at the discretion of the user and done with reference to information obtained byother means.
This document contains information about products that have not yet been approved in some countries

including Japan (including products under development). This information is not intended for promotional or
medical advice use. Rather, it is provided to give examples of technology development by Olympus and noguarantees are made about the future sale of such products.
Olympus accepts no responsibility for any losses that arise from use of the information in this document.

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Agenda■Progress of Business Process Reengineering (BPR)■Innovation activities to react our risks■OLYMPUS X (Cross) Innovation3

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1. Progress of BPR： R&D Productivity Improvement
Choosing development themes based on ROI etc. ／Proper resource allocation

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Determine
R&D budgets
in top-downmanner

2Stringently manage
conditions forselecting R&D
themes based onstage-gate process3

Optimize R&D
expenditures
for eachtheme

totalROI

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Evaluatepriority ofeach theme1. Progress of BPR： R&D Productivity Improvement
Faster development through revision andenhancement of development process[Current R&D process]R&D project

Business plan
Product roadmap

Planning

Design

R&D

Planning process

Design process

Functional verification
process

Manufacturing Registration
Volume production
verification process

ProductRegistration
process

Productlaunch

SupportDevelopment rework occurs due to inadequate process and resource management[New R&D process]
Planningprocess

R&D project5

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Business plan
Product roadmapDesignprocess

Functionalverification
process

Productlaunch
Volume production
verification process

Productcertification
process

SupportStronger management of development (enhancement and standardization of development process, stronger PMO)

Enhancements
to concurrent
development
practices

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R&D
Manufacturing
Quality, regulation, product registration

Faster

1. Progress of BPR: Surgical Energy Devices Examples of New ProductDevelopment
Two practices from the imaging business to be usedin the development of disposable therapy devices
Reusable products

Disposable products

Q: Quality

Emphasis on quality to withstandrepeated useEmphasis on durability and suitability
for reprocessing

Ensure quality appropriate to single-use
product
Ensure safe disposal as medical waste

C: Cost,manufacturing
practice

Emphasis on added value and skills(craftsmanship)

Emphasis on cost, use of automatic
assembly for volume production

D: Delivery

Emphasis on quality, establishment ofShort delivery times, time-criticalproduct platforms for medium and long product developmentterm

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１. Progress of BPR: Surgical Energy Devices– Examples of New Product Development
Two practices from the imaging business to be used in the development of disposable therapy devices
Reusable products

Disposable products

Q: Quality

Emphasis on quality to withstand repeated use
Emphasis on durability and suitability forThis is how we doreprocessing
it hereC: Cost,manufacturing
on added value and skills(ImagingbusinessEmphasisdeveloper)
practice(craftsmanship)
D: Delivery(1) Initiatives for improving design efficiency[1] Improve design infrastructure[2] Adopt design quality delivery (DQD)[3] Improve how drawings are annotated[4] Greater transparency in drawing schedulemanagement

 30% shorter lead time7

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I’ll look into it straight away
Emphasis(Therapyon cost, use deviceof automatic
assembly fordeveloper)
volume production

Emphasis on quality, establishment of productplatforms for medium and long term

Target 1: Reduce time and cost to
produce final prototype

Ensure quality appropriate to single-use productEnsure safe disposal as medical waste

Short delivery times, time-critical productdevelopment

Target 2: Eliminate rework by reviewing
product standards of final prototype(2) Initiatives for eliminating rework in review[5] Adopt interim characteristics charts[6] Start using problem reports

 40% reduction in prototype cost

２. Innovation activities to react our risks
Establishing a Technology Innovation Officeunder the direct jurisdiction of the CTO(The organization consists mainly of several “Fellows”
under the new HR system.)
Extraction ofinnovation technologies

Risk analysis

Extraction ofchallenges and solutions

Promotion ofopen innovations andacademic-industrial alliance8

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Provision of opinions
to the top management２. Innovation activities to react our risks
Policy Maker

Concrete Efforts
１）environmental analyses：
PEST／ 5P analyze
２）Extract innovation tech.
３）Risk analysis４）Extract our Challenges /prioritize５）Establish Strategic Option６）Establish Action Items
７）CXO level decision８）Call for alliance or open innovation9

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Payer
ProviderPhysician Staff
Patient/People
Politics

TechnologyEconomics

SocietyANSERS BEYOND SIGHT

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The Goals for “Making people’s lives healthier, safer and more fulfilling”

Pick up the “GOOD HEALTH AND WELL-BEING” and“SUSTAINABLE CITIES AND COMMUNITIES”
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Three Frameworks[1] Future of medical testing toprotect way of life
- Intelligent Sensing[2] Future of surgery- Information Rich
[3] Future of endoscopic examination- Workflow

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Targeted innovation

Future of Surgery
Kazuhiro Gono, Chief Fellow
Technology Innovation OfficeOlympus Corporation13

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No data copy / No data transfer permittedFuture of Surgery

Medicalservices

Quantity

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Kazuhiro Gono, Chief Fellow

Medicalservices

ValueFuture of Surgery

SafetyEfficiency

Value

Shorten
hospitalstays
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Reducecomplications

Avoid
repeatsurgery

Kazuhiro Gono, Chief Fellow

Future of Surgery

Kazuhiro Gono, Chief Fellow

Surgery Innovation 1

Making laparoscopy less invasive thanOpen surgery

Open surgery
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LaparoscopyFuture of Surgery

Kazuhiro Gono, Chief Fellow

Surgery Innovation 2

Advances in devices
Imaging

Surgical imaging

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Surgery

Surgical energy devices

Future of Surgery

Kazuhiro Gono, Chief Fellow

Surgery Innovation 3

Integration and robotics
Productivity

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Precision

Future of Surgery

Kazuhiro Gono, Chief Fellow

Surgery Innovation 4

Connectivity and information support
Information RichAI
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IoTTetsuo Nonami, Chief Fellow

Targeted innovation

Future ofEndoscopic
Examination

Tetsuo Nonami, Chief Fellow
Technology Innovation OfficeOlympus Corporation21

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Number of Cancer Cases in Japan

Tetsuo Nonami, Chief Fellow

Projected cancer cases up to 2029
(gastrointestinal)

Eesophagal

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StomachNo data copy / No data transfer permitted

Colon

RectalLiver

Gallbladder/bile duct

SpleenSource: Cancer information service, reported cases and statistics (1975–2010)
cancer_incidence (1975-2012), 2010–2029 cancer_prediction (2010-2029)

Numbers of Endoscopic Examinations and Procedures

Tetsuo Nonami, Chief Fellow

Number of gastrointestinal endoscopic examinations inJapan (conducted under health insurance)

Upper body examinations (corrected)
Lower body examinations (corrected)

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Prepared from Ministry of Health, Labour and Welfare statistics on
medical care activities in public health insurance for 2004 to 2015

Numbers of Endoscopic Examinations and Procedures

Tetsuo Nonami, Chief Fellow

No. of surgical treatments for gastrointestinal
malignancies
CAGR

Skilledendoscopists arein demand24

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Prepared from Ministry of Health, Labour and Welfare statistics on medical care activities inpublic health insurance for 2004 to 2015

Technologies Used in Endoscopes
Higher image definition
Wide angle

Enlargement

Advances inendoscopy
NBI
Images provided by
Dr. Yasushi Sano ofSano Hospital
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Variable
stiffness

Passivebending

Tetsuo Nonami, Chief FellowPrecautions to Minimize Infection Risk when
Using Duodenoscopes

Tetsuo Nonami, Chief FellowThe FDA has issued safety communications about the risk ofmultidrug-resistant bacteria transmission via endoscopes.
In Japan, the Ministry of Health, Labor and Welfare
has issued a notice based on the cases in the USA.
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Endoscope :Today and Challenge

Tetsuo Nonami, Chief Fellow

・As the population ages, the number of endoscopic examination/
treatment is growing.
・Global cost pressure: Efficient endoscopic exam is required.
・Demand of skilled endoscope physician is growing.
・High demand of reaction for infection risk via the endoscope.

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No data copy / No data transfer permittedFuture workflow in endoscope examination

Tetsuo Nonami, Chief Fellow

ICT

Ease the burden of preparation

Even with residual remaining, MD expect high exam performance

ICTAI

High Quality Wash /Sanitation process by ICT

Insertion Navigation

By providing the evaluation process or easy sanitation forreuse device, the device can be used safely.

Self reporting

Endoscopy
Intelligent System

Even an inexperienced doctor, who caninsert colonoscopy easily and deeply withtechnical assistance.

AIAI diagnose assistance

Even an inexperienced doctor is expected to havehigh exam performance

The doctor can reduce the burden ofwork other than examination,such as report writingAIICT29

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Robotics
Advanced Therapy

Implement various advanced treatments with a minimally invasive approach