Terumo Corporation
Aug 11, 2020
Q&A Session at the Financial Results Briefing
for the First Quarter of the Fiscal Year Ending March 31, 2021
Outlined below are the principal Q&As from the financial results briefing on August 6, 2020.
Certain details have been expanded or modified to provide readers with deeper understanding ofTerumo Corporation’s performance and activities.
Q1: How was the impact from the COVID-19 pandemic on Cardiac and Vascular Company
and General Hospital Company compared with your expectations?
A1: The sales performance for Cardiac and Vascular Company actually bottomed out in April,followed by progress in the restart of procedures in clinical settings in May and June. Most
procedures restarted in the first quarter were for easing the backlog. Meanwhile, we hear from thefrontline that procedures for cases, which have been newly diagnosed after the COVID-19
pandemic, are coming in, although the situation still remains unpredictable. As a result, Cardiacand Vascular Company slightly outperformed our expectations. General Hospital Company also
performed well above expectations on special demand for thermometers and hand sanitizer due tothe COVID-19 pandemic.
Q2: In “Adjusted Operating Profit Variance Analysis,” how much was the effect ofincreased inventory level out of the 2.8 billion JPY decline in “Gross margin”?
A2: Compared to if the inventory level was not raised, we believe there was positive effect of morethan 1 billion JPY. Since we will adjust production volume to optimize the inventory level as
demand recovers going forward, we expect recoil for this, which is one of the factors why weanticipate moderate improvement in profitability in the annual guidance for FY2020.
Q3: In “Adjusted Operating Profit Variance Analysis,” which company was impacted themost by COVID-19 out of the 9.1 billion JPY decline in “G/P decrement by salesdecrease”? Within that company, which business was impacted the most?
A3: Cardiac and Vascular Company experienced the greatest impact. Within Cardiac and VascularCompany, TIS business was impacted the most, followed by Neurovascular business.
Q4: What are the recent trends in revenue of TIS business in Cardiac and VascularCompany and declining number of procedures? Is there a region with unique trends?
A4: Due to the COVID-19 impact, TIS business saw revenue decline around 30 to 40% in April, but
this improved to decline of around 10% in June and this trend is continuing in July. However,1

The information contained in this report does not constitute an inducement to engage in any investment activity related to Terumo. The opinions and projections contained inthis report are based on our assessments when the material was being prepared. The accuracy of this information cannot be guaranteed and the information may be subject tochange without notice. Please be advised that Terumo or any party providing this information will not accept any liability for any damages that result from the use of thisinformation.

Terumo Corporation
Aug 11, 2020
compared to the number of procedures, we believe the revenue trend has been somewhatstronger. We will closely monitor this revenue trend in the first quarter as a potential risk, basedon whether this is the result of pre-consumption over demand or not.
When viewed by region, revenue trends in Europe and Americas do not vary much from theoverall revenue trend, while recovery in China seems to have been early. Especially, revenue foraccess devices has recovered to the level down by just single digit percentage year on year(including FX impact), therefore we believe it’s close to positive growth over the previous fiscalyear.
Q5: How is the situation of revenue recovery in China? In addition, Neurovascular businessin China is being negatively impacted by the timing issue in orders from distributors.
What is the background behind this?
A5: Excluding the negative impact from the timing issue in orders from distributors, revenue in
China was down 9% year on year. This confirms that China has recovered earlier than any otherregion overseas.
The reason for the negative impact from the timing issue in orders from distributors is rebuildingof the supply chain in process in Neurovascular business. We are moving ahead with thisimprovement in order to modernize our distribution system based on our deeper commitment
toward China market for this business. Due to many uncertain elements in this fiscal year, such as
the timing issue in orders placed and inventory adjustments following this rebuilding, in addition
to the COVID-19 impact, we believe the revenue of this business in China could become
unstable. Regarding the rebuilding of supply chain, we are trying to stabilize it within this fiscalyear.
Q6: In Neurovascular business, global revenue appears to be down significantly by 37.2%
year on year. Is this also the result due to rebuilding of the supply chain in China? Whatis your outlook for the second quarter and beyond?
A6: The business has been greatly impacted by rebuilding of the supply chain in China. Excluding
this impact, revenue is down 21% year on year, which is close to the 23% year-on-year decline
in the entire revenue for Cardiac and Vascular Company.
In terms of urgent procedures, SOFIA, the aspiration catheter, which enjoyed strong revenue
prior to the COVID-19 pandemic, is mostly used in treatments for acute ischemic stroke, so it
has not been largely impacted by COVID-19. On the other hand, WEB, intrasaccular aneurysm
treatment device, is used for the treatment of cerebral aneurysms, so its revenue was cut in half
temporarily, but the momentum has been in recovering since June. As such, we expect the2The information contained in this report does not constitute an inducement to engage in any investment activity related to Terumo. The opinions and projections contained inthis report are based on our assessments when the material was being prepared. The accuracy of this information cannot be guaranteed and the information may be subject tochange without notice. Please be advised that Terumo or any party providing this information will not accept any liability for any damages that result from the use of thisinformation.

Terumo Corporation
Aug 11, 2020
overall Neurovascular business to head toward strong recovery.
Q7: How should we view your approach to the annual guidance for FY2020 compared to thescenario indicated at the time of financial announcement for the FY2019 in May?
A7: At least we believe this is not the worst scenario. However, it is also not the optimistic scenario.
Therefore, it should be viewed as more of a median.
Q8: The gap between operating profit and adjusted operating profit in the annual guidance
for FY2020 is higher than that of last year. Why?
A8: This is because of increase in adjustments due to milestone payments, which will will occur inthe second quarter and later. The milestone payments are to Medeon Biodesign, Inc. in Taiwan,
from which we acquired assets for large bore vascular closure devices in FY2018.
Q9: The overall adjusted operating profit forecast looks low, considering the recovery inrevenue of Cardiac and Vascular Company this fiscal year. Why?
A9: Although there is recovery, in the full-year estimate, the revenue for Cardiac and VascularCompany is decreased year on year. The Impact will remain on deteriorating product mix
because of the high margin in Cardiac and Vascular Company. We believe there is some time lagfor the profit to return to the level close to that of before COVID-19.
Q10: In the annual guidance for FY2020 of Blood and Cell Technologies Company, firstquarter revenue result is up 7% year on year excluding FX impact, and yet the outlook
for this fiscal year is for growth of just 2% year on year. What’s the reason for this flat
forecast?
A10: The first quarter saw strong revenue and we observed pre-consumption of demand in blood
center solutions, therefore we expect the recoil in second quarter and beyond, and the full year
result to be flat growth.

3The information contained in this report does not constitute an inducement to engage in any investment activity related to Terumo. The opinions and projections contained inthis report are based on our assessments when the material was being prepared. The accuracy of this information cannot be guaranteed and the information may be subject tochange without notice. Please be advised that Terumo or any party providing this information will not accept any liability for any damages that result from the use of thisinformation.