Financial Results for the Fiscal Year Ended March 31, 2010:

Reference

Analysis of Business Performance<1> Overview of the Fiscal Year Ended March 31, 2010[1] Overview of Business Results
As illustrated by the economic expansion in China and other emerging countries andthe improvement of business sentiment in the US, the global economy started torecover from the worst period since the Lehman shock. However, there are still manyreasons for uneasiness such as gaps in the progress of recovery among regions, anduncertainty about medium and long-term economic trends persist. In Japan, departurefrom an export-dependent economic structure is a major challenge for a fully-fledged
economic recovery.
Under such conditions, drastic ongoing structural changes can be seen on a global
scale around healthcare markets. In the US, the healthcare reform law was enacted toreduce uninsured people and future burdens of government. In Europe, efforts tofurther reduce medical costs are in place. At the same time, in China, a national project
mainly focusing on improving the nation-wide healthcare infrastructure including
inland regions has been launched, with competition becoming harsher due to theemergence of local manufacturers and entry to the market by manufacturers from theUS and Europe.
In Japan, while medical cost reduction policies have been continuously carried out,
many issues have been highlighted such as patients being passed from hospital tohospital due to the lack of the capacity, harsh working conditions of medical
practitioners and emergency response issues about the H1N1 pandemic. On the other
hand, while discussions to improve the medical infrastructure have been taking place,
the government’s new growth strategy has launched industrialization of medical careand nursing services, presenting prospective factors for future growth.
Under such market conditions, our Group has undertaken a three-year mid-term plan,“Phoenix 2010: Challenge for Dramatic Leap” with three focus strategies of the“Reorganizing Internal Companies to Enhance Business Portfolio”, “PromotingGlobalization” and “Tackling the Challenge of Creating Innovation” since April 2008.
In this fiscal year ended March 2010 that is the second year of the mid-term plan, wedeveloped products and services that contribute to the “healthcare economy” toenhance the quality of medical care and promote efficiency both in Japan and outsideof Japan.
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[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2010: Reference

As a result, our consolidated financial results for the fiscal year ended March 2010 areas follows:< Net Sales >Net sales showed a 7.3% growth in Japan and a 10.5% growth outside of Japan on a
local currency basis, but impacted by foreign exchange, net sales in total were 316.0
billion yen or a 4.4% increase when compared with the previous year.
Geographic segments(Unit: millions of yen)Area

FYE Mar. 2009

FYE Mar. 2010

Results

Results

Changes %Changes%(Local currencybasis)Japan

162,049

173,910

7.3%

7.3%

Europe55,96256,590

1.1%

11.6%

Americas53,77053,7760.0%

8.5%

Asia and others

30,96431,731

2.5%

12.2%

140,697

142,098

1.0%

10.5%

302,746

316,009

4.4%

8.8%

Total of
Outside of Japan
Total

In Japan, sales of prefilled syringes and interventional products increased steadily, anddue to the impact of the H1N1 pandemic, sales of digital thermometers grew strongly.
Vascular grafts also contributed to the sales growth due to the switch from agency
business to consignment sales. Consequently, Japan net sales were 173.9 billion yen.
Outside of Japan, we increased sales in all regions including Europe, North & Latin
America, Asia and other area, mainly interventional products, achieving a high growthrate of 10.5% on a local currency basis. Especially in China, we enjoyed growth
exceeding 30% on a local currency basis, which served as the driving force for sales in
Asia and other regions. Ultimately, affected by foreign exchange, net sales outside ofJapan were 142.1 billion yen or a 1% increase from the previous year.
<Gross Profit>
Though there were such negative factors on profit as the inclusion of retirement benefit
expenses and increased depreciation expenses with the completion of the new building
at the Ashitaka Factory in addition to the impact of foreign exchange, gross profit was166.4 billion yen or a 5.1% increase from the previous year, thanks to increased-2-[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2010: Reference

production, shift to highly profitable products and cost reductions, etc.
<Operating Income>
While we proactively invested in R&D and made other investments for growth, we
exercised the corporate-wide efficiency promotion initiatives to control SG&A
expenses. Operating income was 63.3 billion yen or a 17.1% increase compared withthe previous year.
<Ordinary Income>
Because of reduction of foreign exchange loss and other factors, ordinary income
showed a 21.0% increase from last year, resulting in 63.6 billion yen.
<Net Income>Net income was 40.7 billion yen or a 10.4% increase compared with the previous year.
Next, net sales results by business segments are as follows:Business Segments(Unit: millions of yen)FYE Mar. 2009
Results

Changes%

Changes %(Localcurrency basis)

FYE Mar. 2010

Business Segments
Results

Net Sales

146,496

149,788

2.2%

4.2%

(Japan)114,676

119,326

4.1%

4.1%

(Outside of Japan)

31,82030,461(4.3%)

4.9%

Net Sales

127,034

135,831

6.9%

14.1%

(Japan)33,66339,217

16.5%

16.5%

(Outside of Japan)

93,37096,614

3.5%

13.2%

Net Sales

23,871

23,9470.3%

5.9%(Japan)

9,003

9,650

7.2%

7.2%

(Outside of Japan)

14,86814,296(3.8%)

5.1%

Net Sales

5,344

6,442

20.5%

22.1%

(Japan)

4,706

5,715

21.5%

21.5%

637

726

13.9%

26.7%

General Hospital
Products

Cardiac & Vascular
Products

Blood Transfusion
Products

Consumer Healthcare
Products(Outside of Japan)<General Hospital Products>
In Japan, such products as prefilled syringes jointly developed with Kyowa Hakko
Kirin Co., Ltd. and other infusion products with improved added value for medical
accident prevention and infection risk reduction increased sales steadily.
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Outside of Japan, infusion pumps, syringe pumps and other products increased sales,
but impacted by foreign exchange, sales in total decreased.
Consequently, net sales of general hospital products were 149.8 billion yen or a 2.2%
increase from the previous year.
<Cardiac & Vascular Products>
In Japan, new products such as intra-vascular ultrasound catheter used in the treatmentof Angina Pectoris, “ViewIT”, and a PTCA balloon catheter, “Tazuna”, enjoyedfavorable sales, increasing total sales of interventional products, while vascular grafts
contributed to a high level of sales growth due to the switch from agency business toconsignment sales.
Outside of Japan, the postponement of purchase of large medical equipment athospitals still continued in some areas due to unfavorable medical fiscal conditions
caused by the economic crisis. However, sales of mainly interventional products
increased, enjoying double digit growth rates across all regions including Europe,
North & Latin America, Asia and other regions on a local currency basis. In Europe,Asia, and other areas, the drug-eluting stent, “Nobori”, increased sales, while in North& Latin America, coils for cerebral aneurysms treatments enjoyed good sales.
As a result, net sales of cardiac & vascular products increased by 6.9% from last year
and were 135.8 billion yen.
<Blood Transfusion Products>
In Japan, blood bags and aphaeresis system products enjoyed good sales, contributing
to a sales increase.
Outside of Japan, sales of blood bags increased in emerging countries such as Asia andLatin America, but impacted by foreign exchange, net sales decreased.
As a result, net sales of blood transfusion products increased to 23.9 billion yen or a
0.3% increase from the previous year.
<Consumer Healthcare Products>
In Japan, We continuously launched new products such as new digital blood pressure
monitor and demand for digital thermometers increased due to the H1N1 pandemic.
Sales increased significantly.

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[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2010: Reference

As a result, net sales of consumer healthcare products increased by 20.5% or to 6.4
billion yen.
[2] Research and Development
In Japan, we launched new products such as blood glucose monitors, PTCA balloon
catheters and syringes for influenza vaccines. Also, a prefilled syringe jointly
developed with and sold by Kyowa Hakko Kirin Co., Ltd. was launched, and we havemade an entry into the pain relief market for patients of cancer.
We made an application for approval to manufacture in Japan left ventricular assist
system already sold in Europe and simultaneously started clinical trials of peripheral
stent, “Misago,” in Japan and the US, preparing for the further acceleration of global
development of highly value-added products.
In addition, we launched the new R&D Headquarters by integrating the R&D Centerwith the Product Development department at all domestic factories for managing R&D
activities, aiming to create synergies and promote efficiency. We started the promotionof fully-fledged partnerships with the Product Development departments outside ofJapan.
[3] Capital Expenditure
In order to enable production increase of interventional products whose sales havebeen increasing globally, we constructed a new building at Ashitaka Factory andcompleted it in January 2010. In order to respond to increased production of I.V.
solutions, we started to build a new building at the Fujinomiya Factory. Outside ofJapan, we continued to increase the utilization of the Vietnam Factory, which wascompleted in 2008. In addition, we invested in further improvement of quality andproduction efficiency as well as a strengthening of our products’ competitive edge.
This year’s capital expenditure was thus 20.9 billion yen.

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[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2010: Reference<2> Forecast for the fiscal year ending March 31, 2011
In Japan, impacted by the revision of the medical fee reimbursement in April 2010,
National Health Insurance drug and device reimbursement prices were reduced,resulting in very harsh business conditions. On the other hand, medical fees such as
physicians technical fees was revised upwards compared with the previous revision,and the mechanism to promote more efficient healthcare was strengthened by clearly
defining acute and chronic phase hospital functions.
Globally, diverse factors such as the enactment of the medical reform law in the US,
efforts to reduce medical costs in European countries, and market expansion/harsher
competition in China and other emerging countries are expected to result in and appear
as large-scale structural changes.
Taking such changes in conditions as opportunities for growth, Terumo Group further
promotes development of proprietary products and services that contribute to theimprovement of the “healthcare economics” to a greater extent as required in theglobal healthcare market.
In Japan, in response to market changes, we proactively reorganized our sales force.
We shifted sales representatives to the chronic care market where an increase ofpatients with advanced diseases is expected. For the Diabetes Care Business whereregional cooperation is importance, we assigned sales representatives dedicatedfull-time to this business. Utilizing our training center for medical practitioners,“Terumo Medical Pranex,” we will contribute to the improvement of medical safety
and further promote development of products with strong needs in the field.
Outside of Japan, we will expand our product lineup by adding blood glucose monitors
in China that is a future huge market and at the same time, build an infrastructure toshift from the conventional export-based operations to locally self-sufficient business
in which development, production, and sales will be carried out locally. To strengthen
the global sales network, we will open offices in Turkey and Columbia. In relation tomanufacturing, we will expand production capability mainly in Asia and begin torestructure the manufacturing organization for cost reductions at global level.
In the General Hospital Business, we continue to promote one of the key strategies ofour mid-term business plan, “Fusion between Drugs and Devices.” In order to support
the diabetes care market that is expected to grow further, our Diabetes Care Business isindependently operated as an internal company, attempting to aggressively expand-6-

[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2010: Reference

business including global development.
In the Cardiac & Vascular Business, we continue to launch new interventional systemproducts for treatment and globally extend our product lineup suitable for TRI(Trans-Radial Coronary Intervention; an interventional system to approach coronary
artery from vessels at the wrist) that further enhances the healthcare economy, enabling
operations without hospitalization.
In the Blood Transfusion Business, we will expand the sales areas of “TACSI,” ourAutomated Centrifuge & Separator Integration that contributes to promote operational
efficiency at blood centers and promote blood bags in Asia and Latin America.
The consumer healthcare business continues to launch new products with excellent
usability and design.
As the result of implementation the above, we will absorb the impact of drug anddevice reimbursement and foreign exchange aiming to increase sales and profits.
Forecast(Unit: millions of yen)FYE Mar. 2010

FYE Mar. 2011

ChangeChangeResults

Forecast%

Net Sales

316,009

333,000

16,9905.4%(Japan)173,910

180,000

6,089

3.5%

(Outside of Japan)

142,098

153,000

10,901

7.7%

Operating Income

63,282

65,200

1,917

3.0%

Operating Income (%)

20.0%

19.6%

Ordinary Income

63,61165,000

1,388

2.2%

Net Income

40,721

41,500778

1.9%-7-