Scientific Solutions Business Strategy
Toshihiko Okubo
Division Manager
Scientific Solutions Business Strategy Division
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
3

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Business Direction of Scientific Solutions BusinessWe contribute to the health and safety of society
by offering optimal solutions based on innovative products
and inspiring support that matches the evolving needs oflife science and industrial professionals and exceeds theirexpectations.

Inspection
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Analysis

MeasuringSales Distribution and Positioning
FY2016 Net Sales (Forecast)80

FY2016 Net Sales(Forecast)

615

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Industrial field¥816 billion

15Life science field

106

ResearchSample preparation
Pathological
Cell culture
examinations
processes

Education

Biologicalmicroscopes
MicroinspectionsIndustrial
microscopes

Internal
inspections

Industrial
endoscopes

Nondestructive
inspections

Material
analysis

Nondestructive
testing equipment

X-ray
fluorescence(XRF)
analyzers

Birth of Existing Product Segments

Life science field

Biological microscopes

Industrial field
Industrial
microscopes

Businesses continued since founding

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Industrial
endoscopes

Businessestablishedbybranchingout from
medicalendoscopes

Nondestructive
testingequipment

X-ray
fluorescence(XRF)
analyzers

Businesses acquired

Distribution of Sales in Scientific Solutions BusinessLife science field

Industrial field
Industrial
microscopes

Biologicalmicroscopes

Industrial
endoscopes

42%
58%

Nondestructive
testingequipment
X-ray
fluorescence(XRF)
analyzers

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JapanAsia

27%

16%
32%

25%
Europe,Middle East, andAfrica* Based on forecast figure for FY2016 net sales

AmericasTodayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators
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Customer Segments and Scientific Solutions Business
Product segment

Customersegment
LS Research

Biologicalmicroscopes

Wetlab

ApplicationLife science field research

Sample preparation and cell
culture processes

Clinical

Education



Pathological examination

Medical and biology education
institutions

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Customer Segments and Scientific Solutions Business
Product segment

Industrial
microscopes

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Industrial
endoscopes

No data copy / No data transfer permitted

Nondestructive
testingequipment

X-ray
fluorescence(XRF)
analyzers

Customersegment

Application

Infrastructure
Maintenance Aircraft and high-speed rail
 Power generation equipment andpetrochemical plants
 General structures

Manufacturing Integrated manufacturing process
quality management
 Defect analysis
 Material research

Environment &NaturalResource Resource inspection and mining
 Metal and material analysis
 Environmental pollution
assessments

Recognition of Current Conditions
 Review of Medium-Term Vision Period (FY2013~)
FY2013（Billions of yen）

TargetActualTarget*

FY2016
ActualForecast

97.0

85.5

108.0

103.9

106.0

Operating income

5.5

3.5

8.0

6.8

8.0

Operating margin

6%

4%

7%

7%

8%

Net sales

MeasureEvaluationAggressively expand
product portfolio
Reform earnings structures
Acquire shares in emerging
markets
Strengthen customer
contacts
11FY2015

2016/3/30

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 Introduced new digital industrial microscopes, ultracompact
videoscopes, guided wave technologies for realizing more-efficient
nondestructive testing, automated cell counters for cell culture, etc.

○

 Successfully improved operating margin by withdrawing from andliquidating unprofitable businesses, rationalizing domestic and overseas
production bases, reorganizing sales organizations, and improving asset
efficiency through structural reforms○ Constructed sales systems in Indian subsidiary Launched affordable models of industrial endoscopes, XRF analyzers,
ultrasonic nondestructive testing facilities, etc.

△

 Shifted from product segment based system for business activities tocustomer segment based system, defined 7 priority customer segments,and made progress in constructing systems for strategies* Targets are figures set when announcing the medium-term vision in June 2012.

Recognition of Current Conditions

12Conglomeration of individually optimized,
product-segment-specific organizations

Strategies and resource allocation throughCompanywide optimization

 Differing target applications andcustomers
 Maturing technologies and markets forcertain product segments
 Inefficiency born out of redundantfunctions and processes

 Improved development and sales
efficiency from clarified target customer
segments
 Solutions provided from customer
perspective Global optimization pursued throughcomplete overhaul of function andregional frameworks
 Investments focused on growth fields

2016/3/30

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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
Field

Market Scale*(GrowthForecasts)

Share*Competitors

LSResearch Growing needs in areas ranging fromobservation to analysis in drug discovery
and regenerative medicine markets
 Market heavily influenced by government
budget trends¥80.0~¥100.0billion（CAGR:1-2%)

Approx.
25%

 Zeiss（Germany）
 Leica （Germany）
 Nikon（Japan）

Wetlab Future cell culture support industry market
growth projected in drug discovery andregenerative medicine fields (long term)¥6.0~¥8.0billion（CAGR:6-7%)

Approx.
35%

 Zeiss（Germany）
 Leica （Germany）
 Nikon（Japan）

Customersegment

Life science(Cell cultures)14

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Market Trends(Operating Environment)

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

Market Trends
Field

Customersegment

Market Trends(Operating Environment) Dominating top share held by Olympus due
to establishment of anatomic pathology
workflow in microscope fieldClinicalLife science（Pathologicalexamination）

Education152016/3/30

 Expanding range of examination methods
stemming from introduction of newtechnologies into overall examination
market in conjunction with population
aging and advances in cancer treatments

 Growing possibilities for education systems
using digital imaging at medical education
facilities

No data copy / No data transfer permitted

Market Scale*(GrowthForecasts)

Share*Competitors¥20.0~¥30.0
billion(CAGR:3-4%)

Approx.
60%

 Zeiss（Germany）
 Leica （Germany）
 Nikon（Japan）

Approx.
35%

¥8.0~¥10.0
billion(CAGR:1-2%)* Source: Olympus CorporationZeiss（Germany）
Leica （Germany）
Nikon（Japan）
Motic（China）

Market Trends
FieldCustomer
segment

Market Trends(Operating Environment)

Infrastructure
Maintenance Infrastructure aging expected indeveloped countries and new
infrastructure construction anticipated inemerging countries
 Ongoing growth in aircraft and highspeed rail demand Severe lack of inspection technicians

Industrial

Manufacturing

Environment &Natural
Resource16

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 Long-term growth in automotive,
aviation, electricity, and other markets
 Advances in process efficiency
improvements as illustrated by Industry
4.0, etc.
 Rising need anticipated for energy andmaterials in emerging countries and forenergy, materials, and recycling indeveloped countries Growing expectations for food andenvironmental safety

No data copy / No data transfer permitted

Market Scale*(GrowthForecasts)¥70.0~¥90.0billion(CAGR:7-8%)¥100.0~¥120.0 billion(CAGR:4-5%)¥7.0~¥9.0billion(CAGR:4-5%)

Share*

Approx.
35%

Approx.
25%

Approx.
25%* Source: Olympus Corporation

Competitors GE（U.S.）

GE（U.S.）
Zeiss（Germany）
Leica（Germany）
Nikon（Japan）
KEYENCE（Japan）

 ThermoFisher（U.S.）

Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators
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Business Strengths (SWOT Analysis)

 Superior technological prowess and quality for
optical, imaging, ultrasound, and XRF
 Top-class market for all product segments
 Global sales, marketing, and service networks

強みＳ Ｗ

 Technological maturity of certain
products
 Increased manufacturing and sales costs
for certain products
 Lost opportunities and low efficiencydue to product segment based business
operation

弱みＯ Ｔ Long-term demand growth for social
infrastructure construction in emerging countries
and aging social infrastructure maintenance indeveloped countries
 Continuous growth in demand in aviation,
automotive, and other manufacturing industries
 New needs arising from regularization ofregenerative medicine

機会18

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脅威 Emergence of alternative technologies
 Economic slowdown in emerging
countries
 Ups and downs for specific customersegments

Basic Policies
Realize continuing organic growth and keep operating margin
consistently above 10% through initiatives tailored to customer
segments
Actively expand portfolios targeting customer segments fromwhich particular growth can be anticipated in consideration ofCompany strengths and market growth potential (add on tonumerical targets described later on)
Expand development of solutions for drug discovery andregenerative medicine markets in pursuit of long-term growth19

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Market and Solution Portfolio Expansion Remote Examinationand Labor-Efficient
Monitoring

Scope of16CSP
Target Expansion ofDrug Discovery
and Industrial
Cell Culture
SupportInfrastructure
Maintenance

Manufacturing

Markets
Education

Current
ProductSegments
Current
ProductSegments

LS Research
Drug Discovery
SupportClinical(PathologicalExamination)

Wetlab(CellCulture
Support)Environment &Natural Resource

5 years20

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Long term

Advancement of Customer Segment Oriented Strategies
Field

Market Trends(OperatingEnvironment)

LSResearch Growing needs
in areas ranging
fromobservation toanalysis in drug
discovery andregenerative
medicine
markets

 3D and macro
observation
technologies Contacts withresearchers Future cellculture support
industry market
growthprojected indrug discovery
andregenerative
medicine fields

 Contacts withcell culturemarket

Life science

Customersegment

2016/3/30

Strategy

 Focus on cerebral nerves, cancer,
and stem cell markets and optimize
product lineups
 Provide drug discovery workflow
solutions

この他、各BUによって様々なKPIのご設定があろうかと思います。
内容に応じて、⾃由に表現いただければと思います。
 Global sales andWetlab

21Olympusʼ Strengths

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service networks
 High performanceand reliability

 Expand solutions for cell culturemarket
 Conduct R&D targeting regenerative
medicine support industry

Regenerative Medicine Support Industry Initiatives
Provide solutions for all cell culture processes that adapt core
image acquisition, analysis, and data management technologies
2019-2020
Expand solutions(5th year)

2016-2018
Solidify foundations
Bolster lineup ofregenerative medicine
research products

Developoperations inindustry market

Current solutions(General cell culture)

New solutions(Regenerative medicine research)

Inverted Microscope
CKX53Cell Counter Model R122

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Respond to establishmentof regenerative medicine
industry

Advancement of Customer Segment Oriented Strategies
FieldCustomer
segment

Olympusʼ Strengths

 Top share held by Olympus
due to establishment ofanatomic pathology
workflow utilizing
microscopes
 Expanding range of
examination methods
stemming fromintroduction of newtechnologies into overall
examination market in
conjunction withpopulation aging andadvances in cancer
treatments

 Largemicroscopemarket shareand contacts
withpathologists

 Growing possibilities foreducation systems using
digital imaging at medical
education facilities Contacts withmedical andbiologyeducation
institutions

Life science

この他、各BUによって様々なKPIのご設定があろうかと思います。
 Global sales andClinicalservice networks
内容に応じて、⾃由に表現いただければと思います。

Education

23

Market Trends(Operating Environment)

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 High performanceand reliability

Strategy

 Improve diagnosis
support technologies
 Provide pathologicalexamination workflowsolutions

 Offer digital educationsolutions

Advancement of Customer Segment Oriented Strategies
Market Trends(Operating Environment)

Infrastructure
Maintenance Infrastructure aging expected
in developed countries and new
infrastructure construction
anticipated in emerging
countries Ongoing growth in aircraft
and high-speed rail demand Severe lack of inspection
technicians Contacts withmajor
customers

 Long-term growth inautomotive, aviation, electricity,and other markets
 Advances in process efficiency
improvements as illustrated byIndustry 4.0, etc.

 High-speed,
highly reliableinspection
technologies
 Integration
capabilities

Field

Customersegment

Strategy Expandsolutions for
improvinginspection
quality Provide
automation
solutions

Industrial

この他、各BUによって様々なKPIのご設定があろうかと思います。
内容に応じて、⾃由に表現いただければと思います。

Manufacturing

Environment &Natural
Resource

24

Olympusʼ Strengths

2016/3/30

 Rising need anticipated forenergy and materials inemerging countries and forenergy, materials, and recycling
in developed countries Growing expectations for foodand environmental safety

No data copy / No data transfer permitted

 Element andmaterial
analysistechnologies

 Global
sales andservice
networks
 Highperforma
nce andreliability

 Expandproductivity
improvement
solutions Expand scopeof analysis
technology
applications
 Explore
emerging
markets

 Optimize
customersegmentandindustry
specific
sales
systems

Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators
25

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Targets and Indicators (FY2021)
Net sales: ¥130.0 billion(Billions of yen)

Operating income: ¥13.0 billion（Operating margin: 10%）

Net sales
売上⾼

Operating
営業利益income

1,500
150

利益率
Profitmargin
Operating
営業利益率
margin

15%

130.0
106.0

100
1,000

 Structural reforms for improving
profitability already implemented
 Organic growth to be realized throughselective reinforcement of existing
businesses (green portion of graph toright) Product and technology portfolio
expansion targeting additional sales
growth26

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10%

85.5

10%

8%

50
500

005%

4%

3.5

8.0

13.00%

2013年3⽉期
FY20132016年3⽉期
FY20162021年3⽉期
FY2021（Forecast）（Target）