Ear, Nose and Throat Business Unit
(ENTBU) Strategy
Nobuhiko Washizuka
Deputy Head of ENT Business Unit
Olympus Corporation
March 30, 2016

Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators
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Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators
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Positioning of ENT Business within Olympus

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Distribution of Sales and Positioning
Ear, Nose and Throat Business Unit (ENTBU)*

FY2016 Net Sales (Forecast*)

205.6

GI337.4¥615.0 billion* The figure for Surgical Devices net sales (¥205.6 billion)
includes net sales of the Ear, Nose, and Throat Business
Unit (ENTBU).
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Rhinology field

SurgicalDevices*

Medical Business
FY2016 Net Sales（Forecast）

Flexiblelaryngoscopes

Rigid scopes

Otology field

Laryngology field

ET72.0Vent tubes

Camera heads

Ossicular Chain replacement

DebridersHigh-frequency
ablation systems

Applications and Characteristics of Major Products

Laryngology field

Major Products

Target Diseases and Applications

Flexible Laryngoscopes
e.g.: ENF-VH

Applications: Laryngeal and pharyngeal
diagnosis and treatment

 Olympus scopes help
physicians diagnose Flexible laryngoscopes are inserted via
oropharyngeal,
hypopharyngeal andthe nasal cavity to perform
laryngeal cancer.
examinations in the laryngopharyngeal
region, using NBI* to diagnose
 Transnasal strobe lightmalignant tumors and otherabnormalities.
examinations using flexible
videoscopes are less These scopes can examine vocal cord
painful than oral rigid
scope examinations andmovements in the larynx using strobe
can be conducted withlights. In addition, laser probes or
patients assuming a moreforceps can be inserted via the scope
natural position.
channels to remove polyps orcauterize tumors.
*NBI：Narrow Band Imaging

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Characteristics

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Applications and Characteristics of Major Products
Major Products

4K Camera Heads
and Rigid Scopes

DIEGO ELITE7

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Target Diseases and Applications

Application: Endoscopic sinus surgery(ESS) DIEGO ELITE coupled with direct
visualization is used to debridediseased tissue from the sinuses

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Rhinology (OR)Characteristics

 Olympus 4K systems
provide high-resolution
endoscopic images
displaying a wide spectrumof colors
 DIEGO ELITE employs
proprietary functions suchas declog and highfrequency hemostasis toimprove surgical efficiency
and shorten surgery times

Applications and Characteristics of Major Products
Major Products

High-frequency
ablation systems

Rhinology (Office)Target Diseases and Applications

Applications: Snoring andsleep apnea syndrome RF Ablation is used to create lesions leading
to reduced volume and stiffer tissue.

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Characteristics

 Olympus possesses alineup of various probesthat can be used asnecessary for reachingdifferent surgery target
areas or performing
different procedures.

Applications and Characteristics of Major Products
Major Products

Vent tubes

Target Diseases and Applications

Application: Middle ear infection
 After making an incision in theeardrum, vent tubes are placed todrain effusion.

Ossicular Chain
replacement

Application: Hearing impairment
treatment surgery
 These implants are designed to repair
the ossicular chain in the middle ear.

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Otology
Characteristics

 Olympus provides tubes ofvarying shapes and sizes
to meet the needs of thesurgeon and the patient.
 Special coatings andsurface treatments areapplied to help prevent
blockage within the venttubes.
 Olympus offers various
implants based on the sizeand structure of theauditory ossicles to bereplaced.

Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators10

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Recognition of Current Conditions
 Review of Medium-Term Vision Period (FY2013〜)
Strategy

Globally develop ENT
operations

Imaging devices
Various treatment devices

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Measure Progress and Evaluation◎ Expanded flexible video laryngoscope operations by utilizing NBI
functions that support early diagnosis of oropharyngeal andhypopharyngeal cancer Introduced 4K imaging systems and commenced full-fledged
participation in rhinology OR imaging business○ Expanded ESS operations by launching DIEGO ELITE, new productbased on one-of-a-kind concept that includes declog function forsuction channel and blades equipped with high-frequency
hemostasis function○

 Introduced DIEGO ELITE into Japan in 2015 after release in Europeand U.S. and commenced global sales activities in ESS operations
 Bolstered dedicated ENT sales staff and strengthened sales
functions in Europe and U.S.

Recognition of Current Conditions

 Utilizing 4K systems and DIEGO ELITE to expand
ESS operations
Tasks

 Realizing ongoing growth in flexible scope operations
 Continually reinforcing global sales systems andextending these activities to emerging countries

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Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators13

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Market Trends (Japan, U.S. and Europe)
Field

Market Trends(Operating Environment)

Laryngology
Flexible scopes Improved recognition of NBI benefits
and rising needs for early diagnosis

Rhinology

ESSimagingESSdebriders

Otology
Implants andvent tubes
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Market Scale(GrowthForecasts）

Share*¥15 billion〜50~¥17 billion(CAGR:4~5%)

 Increased needs for high-resolution,
wide-color-spectrum images throughHD and 4K systems
 Sinusitis surgeries and procedures
using debriders commonplace indeveloped countries
 Healthcare economics in US driving
some procedures to alternative siteof care.
 Slight increase in illness casenumbers and procedure numbers

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Competitors Hoya60%¥18 billion〜

Less than¥20 billion

1%

 Karl Storz(CAGR:4~5%)¥22 billion〜¥24 billion(CAGR:4~5%)¥5 billion〜¥7 billion(CAGR:Less than 1％)

10~ Medtronic

15%
40〜

 Medtronic

50％* Source: Olympus Corporation

Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators15

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Business Strategies

Laryngology

１ Expand ENT flexible endoscope operations centered on“videonization”
 Acquire endoscopic sinus surgery (ESS) operations

Rhinology

Overall16

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２

Expand sinus surgery imaging operations centered on 4K systems
Expand sinus surgery product portfolio centered on DIEGO ELITE
Implement measures in preparation for introduction of minimallyinvasive treatments into alternate sites of care

3  Establish global sales systems

No data copy / No data transfer permitted* Source: Olympus Corporation

Expand ENT flexible endoscope operations centered on “videonization”

Differentiate by soliciting benefits of NBI
 Acquire clinical evidence on medical efficacy of NBI
 Possible utility for ensuring surgical margin of surgery forlaryngeal and pharyngeal cancer Possible utility for improving detection ratios of laryngeal andpharyngeal cancer

 Advance activities to achieve insurance
reimbursement listing for NBI

Promote shift from fiberscopes to videoscopes
 Focus on NBI technologies and other high-value-added
product lines that can be differentiated<Ratio of “videonization”>
U.S.: 50% → 60~70%
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Europe: 20% → 50~60%Petr Lukes, M.D., Ph.D.
First Faculty of Medicine, Charles University inPrague and University Hospital MotolAcquire endoscopic sinus surgery (ESS) operations
Expand sinus surgery imaging operations
centered on 4K systems
 Expand ENT OR imaging operations byutilizing 4K systems••

High-resolution images

Simplification of procedures through improved visibility realized by
4K resolution

Natural color reproduction due to wide color spectrum

Ability to select color reproduction settings based on ENT application

HD Image

4K Image* This images are for illustration purposes

Expand sinus surgery product portfolio centered onDIEGO ELITE Expand ESS operations by providing “See (4K) & Treat (DIEGO ELITE)”
solutions that combine tissue declog removal, high-frequency hemostasis, andother differentiated functions, with 4K imaging
 Periodically introduce new products into lineup to optimize ESS systems
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Acquire endoscopic sinus surgery (ESS) operations

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Establish global sales systems
Commence full-fledged development of ESS operationsin Japan and Europe Enhance sales capabilities by assembling dedicated ESS sales forces Proactively introduce successful measures from U.S. market into other markets

Step up development of ENT operations in Asia Pacific Define target countries (China, Australia, Singapore, etc.) andestablish dedicated sales forces Pursue phased expansion of market coverage centered on target countries

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Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators
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Targets and Indicators

1 Net sales CAGR  13%Field

 Maintain dominant No. 1 share by pursuing
Laryngology
Flexible scopes
even higher levels of product and service value

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Rhinology

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ESSimaging

 Start up ESS imaging business and achievemarket share of more than 10%ESSdebriders

 Expand ESS treatment business and achieve market
share of more than 20%

No data copy / No data transfer permitted* Source: Olympus Corporation

Disclaimer

This presentation is for your general knowledge and background only.
Olympus makes no representations warranties or other expressed orimplied warranties or guarantees regarding the accuracy, reliability orcompleteness of the information. Proper attribution should be provided forany use of the information contained in this presentation. Under nocircumstance shall Olympus or its employees, consultants, agents orrepresentatives be liable for any costs (whether direct, indirect, special,incidental, consequential or otherwise) that may arise from or be incurredin connection with the information provided or any use thereof.

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