This is Kitabatake speaking. I will now explain the results of the 3rd quarter of the fiscal year
endingd Marchh 2017.

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Please open to page two of the materials. This is a broad overview of the 3rd quarter results.
As in the first and second quarters, we saw increased revenue and operating income whenexcluding FX effects. Year‐on‐year, sales increased 4%, while gross profit grew 6%. Operating
income grew 4%. Similar to the first half, the Cardiac and Vascular Company’s continued double‐
digit growth outside Japan was the main driver of these numbers. Despite experiencing more
yen appreciation than the previous year, we see our core businesses growing well.
Items listed after operating income involve some fluctuations, which I will explain in detail on
the next slide.

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Within extraordinary gains and losses, FX loss improved 2.9 billion yen in the third quarter due toyen depreciation.
dAn extraordinary loss was the termination of our co‐development with ART company, in which
we had purchased exclusive acquisition rights and investment securities, by writing off thoseassets, we realized a 7 billion yen extraordinary loss.
We had been co‐developing
co developing a bioresorbable drug
drug‐eluting
eluting stent with ARTART. I will explain thematter in further detail in a later slide.
In the previous year, we realized a 4.4‐billion‐yen extraordinary gain through the sale of land in
Hatagaya, so with just that and the ART asset write‐off, we see a negative swing of 12 billion yen.
When factoring other effects in with these, we saw a year‐on‐year net income decrease of 27%.
However, due to other factors I will later explain, we will not alter our net income guidance atthis timetime.

3The next slide shows our operating income variance analysis. In it we are displaying the operating income
calculated before FX negative effect and acquisition‐relatedacquisition related costs.
costs As I mentioned earlier
earlier, our operating
income grew 4% when excluding FX effects. When excluding acquisition costs as well, it improves further
to 7% year‐on‐year.
The reason for showing operating income before and after acquisition costs is that we have three majoracquisitions in FY2016. The Sequent Medical deal was completed and affected those numbers somewhat
in the third quarter, and we have two further acquisitions which will affect the fourth quarter results moresignificantly. The next quarter’s results will therefore be displayed in a similar way.
The operating income trend remains the same as previous quarters, but I will discuss a few changes. First,
improvement by cost reduction: A reduction in costs for the TCVS quality system improvement projectcontinued, as did savings due to suspension of the medical device tax in US. Another factor was
Ultimaster, which, as we have previously announced, began to be sold in Japan in the third quarter of last
fiscal year. Its effects were no longer present this year, bringing down third‐quarter year‐on‐year results.
The downward factor marked as “SG&A increase due to sales force expansion in the US TIS andneurovascular divisions” appears to have gotten smaller compared to previously; however, we haveremoved
d ffrom thish item acquisition‐relatedl d costs in orderd to show
h themhseparately,l andd thish hash resultedl din the category only appearing to have small increase.
In FX, we saw a large increase in negative impact from 4.1 billion yen in the previous quarter to 8 billion
yen in the third quarter. A view of the FX fluctuations of the third quarter shows yen depreciation in thelast half, but the overall trend is for yen appreciation; therefore, we see a stronger negative effect.
Further, yen depreciation in the last half affected inventory valuation, resulting in a double downward FXeffect.

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Looking at sales by region, we see that sales increased outside Japan when excluding FX. InJapan, we hadh d a slightl h decrease.
dThish was ddue to theh previous fiscal
fl year’s’ third‐quarterh dUltimaster launch boost not being present this fiscal year.

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Next is sales by business segment. There was little change from last time, so I will move to thenext topic.

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The next slide begins company results, first with Cardiac and Vascular. The company saw themost negative effects
ffoff FX, butb theh TIS andd neurovascularl outsided Japan continued
d to grow indouble digits, driving the company to solid continued growth when excluding FX. In businessprofit, highly profitable access and coronary therapeutic devices were drivers, while the Misago
recall and Sequent Medical acquisition costs combined for 2.5 billion yen in negative impact.

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The next slide shows General Hospital results. Sales were more or less flat when excluding FX,
b thisbut
h doesdnot mean there
hwas no growth.
h As we havehpreviously
l explained,ld theh company hashbeen reducing low‐profitability accounts in the EU and Latin America, and ended distribution ofcontrast agents in Japan, resulting in reduction in sales, but those losses were made up for withgrowth in other areas.
In business profit, the numbers show that the company has in this fiscal year entered into atrend of improvement, although slight.

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In Blood Management, one of the most important issues has been how to make up for thereduction
din businessb
profitability
f b l resulting
lfromfprice declines
d lmainlyl in US. Looking
k at theh fiscal
flyear’s quarterly results, we see that business profitability has improved steadily over the year,
from 12% in the first quarter to 14% in the second, and then 15% in the third.

9The next slide discusses major topics from the third quarter, but I will move to the next item.

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Slide 11 shows the launch status of our FY2016 new product pipeline. Some items are now
expected
d to launchlh in FY2017, butb most are on schedule.
h d l Theh few
f thath willll launchlh next fiscal
fl yearare not drastically late, but rather experiencing slight delays.
This includes radioembolization beads in oncology and the distal protection device inneurovascular, which are actually quite close to being on time. The blood glucose meter for theChina market is simply awaiting regulatory approval. The intradermal injection device was notready for this year’s flu season, but will be available for the next. On the next slide I would like topin greatergdetail the new IVUS system,y, which we have not emphasizedpmuch previously.
pyexplain

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We just launched the new IVUS system this fiscal year, and it includes three main improvements
ffromtheh previous version. Theh ffirst is that,h as you can see on theh lleft
f off theh slide,l d theh image
resolution has improved greatly. While it may not be readily apparent, we are told by physiciansthat the resolution improvement has given the product much higher ability to show calcification
on blood vessel walls. The weight of the instrument also decreased four times, making it mucheasier to move. The image processing also drastically improved, going from previously
processing images in a matter of minutes, now to seconds. The new IVUS system therefore
features not just incremental improvements, but instead leaps and bounds beyond the previouspproduct.
We of course intend to pursue the top market share in Japan with the new IVUS system, and we
also expect to see sales synergy with it and Ultimaster. As you know, Japan sales of Ultimasterbegan with its launch in the third quarter of the previous fiscal year, with sales going very well at
the time. Then competitor’s new product was launched, then other factors led to it coming backdown since that initial third quarter on the market. Toward restoring market share, we launchedg of last yyear,, and the 2.25 millimeter diameter in Februaryy
the 4 millimeter diameter in August
this fiscal year in order to expand our product portfolio. By adding to these efforts the new IVUS
system, we hope to create a synergy that simultaneously bolsters the Ultimaster share.

12Now, regarding the acquisition of the vascular closure device business from St. Jude Medical and Abbott Laboratories. We finallycompleted the purchase process on January 20th. Since the closing took longer than expected, we were unable to speak much on thed l bdeal,
but now thath iit isi closed
l d I wouldld likelik to offer
ff some more ddetails.
ilThere are three main points: First is the purchase price. Second is the strategic meaning and importance of the purchase. Third is theexpected contribution to sales and income.
On the first point, the purchase price was 1.12 billion dollars, as we have already announced. That amounts to an eight‐times EBITDA
multiple. We feel like this is a very reasonable price. Regarding the strategic meaning of the purchase; as we have long emphasized,
we have pursued and seek to maintain a number‐one position in the access devices of intervention market. There are three areas in
the access device market: First is the entry site access stage, which is performed using sheath products. Next is access to lesions, forexample access to the heart when the lesion is located there. Guidewires are included in this space. Following these are vascularclosure devices, which are used to close blood vessels following intervention procedures.
Terumo has the number one global share in the first two areas,
areas entry site access and lesion access.
access In entry site closure,closure there are
two approaches used. First is transradial intervention, or TRI, where Terumo is already quite strong and has the number one share.
The other approach, known as transfemoral, is an area where Terumo previously lacked any product. However, the femoral closure
device has the largest market. That meant that despite our focus on access, we were not in the largest vascular closure market
segment. This purchase not only places us in the femoral closure market, but gives us an immediate number one share. Thatcements our number one position in the overall access market, and fulfills an important strategic goal. We hope to now furtherexpand our sales in access devices as a result.
The third point is earnings contribution realized from the purchase. The estimated annual sales are over 250 million dollars, as you
see here. In operating margin, we anticipate 30‐40% when excluding one‐time costs and goodwill amortization. These numbers also
include the other asset obtained in the purchase, the Abbott Vado steerable sheath. Since that product is still in the development
stage and not yet on the market, its development costs are a downward factor on margin. However, we believe the purchase willcontribute this level of margin even with those costs included.
For FY2016 and part of FY2017, the one‐time costs of this purchase will negatively affect profit. There are three aspects to this: Firstis professional fees for the deal, including legal fees and financial advisory fees. Second is step‐up inventory. This refers to the priceof product inventory included in the purchase; the valuation of such inventory is commensurate with the purchase price, meaningthat in this case the inventory cost is very high, having a negative effect on margin while that initial inventory remains in stock. We
initially expected the purchase to finalize earlier and for the inventory to therefore be sold off during FY16, but a small amount now
looks to remain into the beginning of FY2017.
Regarding goodwill amortization; we have already announced our transition next fiscal year to the IFRS accounting system, and thatwill eliminate the need to amortize goodwill thereafter. That is how we arrive at the margins you see here, with one‐time costs andgoodwill amortization no longer in effect after the beginning of FY2018.

13Next, regarding the Bolton Medical acquisition. We are still in the process of finalizing thepurchase,
handdhhope to ddo so within
h thish ffiscall year.
We receive two important benefits from this purchase: First is that we acquire a TAA stent graft
product. Second is that we acquire a product already in the US market, and with a sales force
there, too.
Since the deal is still in processprocess, we are unable to discuss here about the purchase priceprice, but I
would like to address its strategic importance.
In the cardiovascular market one trend for surgical approach is toward reduction in invasiveness.
This does not mean simply replacing surgery with intervention, however. It is instead a movetoward incorporating various means to reduce invasiveness in procedures that straddle the twoapproaches.
In the cardiovascular business, Terumo already has both segments, the surgery and intervention,and our growth strategy, which we recently announced as 5‐year mid‐ to long‐term growthstrategy, includes having products in the space between them as well, so in that way the Bolton
acquisition fits that strategy.

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The next slide is about the end of ART co‐development project that I already mentioned when
explaining
lextraordinary
dgains andd llosses. We hhadd to thish point b
been working
k to ddevelopl a stent
using the bioresorbable stent technology of ART and the coating technology of Terumo.
However, we learned that the technological hurdles to this development were more significant
than we initially anticipated, and we were not getting the results we desired.
We now see the bioresorbable stent requiring a longer period of time to become a mainstream
in the market, so we have decided to end the co‐development project with ART, and inconjunction
ji withi h thath we ddepreciatedi d theh associatedi d assets, whichhi h we previously
i l h
had
d on thehbooks.
Regarding our strategy for DES, there is no change to the strategy that we explained in theDecember 2016 mid‐to‐long‐term growth strategy announcement. We will pursue
improvements to Ultimaster, along with development of the next generation of metal drug‐
eluting stent and hybrid stents, while still internally developing BRS technology over a longer
periodi d andd ending
di at thishi timeitheh co‐development
d lwithi h ART.
ART15

Today both Terumo and Olympus issued a press release announcing the unwinding of our cross‐shareholding.
h h ldWe signed a business alliance contract with Olympus in 2001; since then we cooperated on joint
businesses, and we further strengthened that relationship by entering into a capital alliance in2005. In addition to our joint ventures, we also collaborated on developing endoscopic
guidewires and started a variety of projects. With this strong business alliance, both firms felt
there was no longer a need to maintain a deep capital alliance.
In addition, the recent corporate governance code has placed a greater focus on more effective
utilization of assets, providing another impetus to end cross‐shareholdings in general. It isimportant to note, though, that we will continue to collaborate closely in business alliance.
The dissolution of cross‐shareholdings will include our scheduled sale of Olympus stock by theend of the fourth quarter of FY2016
FY2016, which will have the effect of creating an extraordinary gain
during this fiscal year. The cross‐holdings will also drop below 1% of total stock, from theprevious level of around 4%, meaning a virtual ending of it. Terumo intends to handle theOlympus sale of Terumo stock by executing a share buyback not to exceed 50 billion yen. This
will be in keeping with our previous share buybacks executed in 2014 and 2015 upon thedissolution of other cross‐shareholding arrangements.

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Now, the final slide. This concerns a revision to our FY2016 guidance.
Business performance remains unchanged from previous guidance as we have more or less seen
the expected FX rates. However, the costs of our three large acquisitions in this fiscal year haveincreased significantly. The costs of the Sequent Medical purchase have been successfully
absorbed through operating income growth, but costs from the subsequent two acquisitions of
the closure device and then Bolton Medical are expected to total around 4 billion yen.
We will therefore revise the operating income guidance downward by that 4‐billion‐yen amount.
In other words, when excluding these acquisition costs, our performance is expected to be thesame as previously forecast.
Regarding net income, the aforementioned extraordinary loss relating to depreciation of ART
assets will be a negative factor, while the sale of Olympus stock will be a positive factor, with thetwo factors largely offsetting to leave net income unchanged at 47
47.5
5 billion yen in this revision
revision.
Thank you for your attention.

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