[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2011: Reference

Financial Results for the Fiscal Year Ended March 31, 2011:

Reference

Analysis of Business Performance<1> Overview of the Fiscal Year Ended March 31, 2011[1] Overview of Business Results
The global economy has shown moderate growth this fiscal year, driven by economic
expansion in China and other emerging countries. In Japan, the ongoing appreciationof the yen impacted the performance of export-based companies, and off the Pacific
Ocean Earthquake on March 11, 2011, badly affected the economy.
The Terumo Group or the group of companies around Terumo Corporation
experienced earthquake damage to some sales branches in the Tohoku region, but
factories in Japan didn’t experience much damage. On the other hand, the East
Shizuoka Earthquake of March 15, 2011, caused damage to some factories, but wewere able to resume operations at all factories by March 19. Damage to material
manufacturers and planned power-outages temporarily reduced operation rates offactories, but by introducing in-house power generators, procurement of alternative
materials and working shifts at nighttime and holidays, we recovered operations to alevel nearly equivalent to that prior to the earthquake. It should be noted, however, thatthe supply of I.V. solutions and some other general hospital products were impacted,
which caused a shortage in supply.
Looking at the environment surrounding the healthcare market, we see drasticchanges.
In Japan, the government’s new growth strategy positioned medical and nursing careas a strategic industry. Medical equipment & device manufacturers are now expected
to assume a role to industrialization of healthcare through Japan-made innovations.
Furthermore, due to the aging of society, needs for chronic care have been increasing,and the markets for products and services for elderly citizens have been expanding.
Going forward, new entries into the market by companies from other industries are
expected to further spur the invigoration of the market. Outside of Japan, medical
infrastructures have been improving, driven by economic development in emerging
countries, and demand for a wide range of medical equipment & device from basic
medicine to advanced medical care has been drastically increasing. In developed
countries, while a reduction of medical expenses has been promoted, needs for
improvement of QOL (quality of life) of patients and the healthcare economics havebecome clearer.
In this drastically changing global market, new opportunities for growth to takeadvantage of the strengths of the Terumo Group have become conspicuous.
As a result, the Terumo Group has come up with new growth strategies, targeting therealization of drastic growth. Under the new management system, we herald the target-1-

[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2011: Referenceof “becoming a company with a global presence by exceeding net sales of one trillion
yen within ten years,” and seek growth opportunities through addressing challenges ofhealthcare needs, accompanied by global market expansion. We have also been
accelerating business expansion in emerging countries. In particular, we have taken
stronger strategic steps in China, India, and Brazil.
As part of such growth strategies, we announced the acquisition of CaridianBCT of
the U.S., a global leader in the field of blood transfusion businesses in Mach 2011.
This is the largest acquisition in the history of Terumo and enabled us to become theleader in the industry in the global market and have a new pillar for growth withprospective continuous double-digit growth. From the next fiscal year onwards, wewill integrate our Blood Transfusion Business with CaridianBCT to establish
TERUMO BCT for further global business expansion. Through the integration of thetwo companies with reciprocal characteristics, we will establish a “Blood ManagementBusiness” and seek to provide new value to customers.
As a result, our performance in the consolidated period of this fiscal year is asfollows:< Net Sales >Net sales increased by 1.9% in Japan and by 15.6% outside of Japan on a constantcurrency basis, but affected by the appreciation of the yen, total net sales increased to328.2 billion yen or 3.9% when compared with the previous year.
Geographic segments(Unit: millions of yen)Area

FYE Mar. 2010

Changes %FYE Mar. 2011
Changes%Results(Constant currency basis)

Results

173,910

177,132

1.9％

1.9％

Europe56,59056,630

0.1％

15.4％

Americas53,77656,977

6.0％

14.8％

Asia and others

31,73135,55112.0％

17.5％

Total of Overseas

142,098

149,158

5.0％

15.6％

JapanIn Japan, we focused on the chronic care market, increasing the sales of semi-solid
nutritious foods, etc. and, steadily expanding the sales of interventional systems inspite of the reduction in drug & reimbursement prices. Consequently, net sales in Japan
were 177.1 billion yen.
Outside of Japan, sales increased in all regions including Europe, North & Latin
America, as well as Asia and others and enjoyed a high growth rate of 15.6% on aconstant currency basis. Especially, interventional systems showed a growth rate as-2-[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2011: Referencehigh as 17.6% on a constant currency basis, driving sales in all regions. After taking
the effect of the appreciation of the yen, net sales outside of Japan were 149.2 billion
yen or a 5.0% increase from last year.
<Gross Profit>
Though we saw such negative factors as reduced drug & reimbursement prices and theeffect of the appreciation of the yen, thanks to our efforts for cost improvements likeshifting to highly profitable products and cost reductions, gross profit was 170.8
billion yen or a 2.7% increase from last year.
<Operating Income>We continued to efficiently operate general administrative expenses in general, but due
to R&D expenses and other proactive growth investments, operating income reduced
by 1.1% to 62.6 billion yen.
<Ordinary Income>Ordinary income was substantially affected by the foreign exchange loss due to yen
appreciation and resulted in 56.9 billion yen or a 10.5% decrease from last year.
<Net Income>As we reported an extraordinary loss, including the money paid to settle the issue with
our U.S. affiliate and under the agreement with the FDA (Food and DrugAdministration), disposal cost of inventories damaged in off the Pacific Ocean
Earthquake and the cost of restoring damaged equipment, net income dropped by
20.6% from last year to 32.3 billion yen.
Please also note that we unified the accounting period of five subsidiaries in Asia
whose fiscal year finished in December. For this reason, financial reports werereported for the period between January 1, 2010 and March 31, 2011, resulting inincreases of 1.9 billion yen for net sales, 1 billion yen for operating income, 0.9 billion
yen for ordinary income and 0.7 billion yen for net income, respectively.

-3-[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2011: Reference

Next, net sales results by business segments are as follows:Business Segments(Unit: millions of yen)FYE Mar. 2010

FYE Mar. 2011

Results

Results

Business Segments

Changes %Changes% (Constantcurrency basis)

Net Sales

149,545

152,945

2.3

4.0(Japan)

119,083

122,964

3.3

3.3(Overseas)

30,461

29,981(1.6)

7.0Net Sales

136,074

144,415

6.1

14.4(Japan)39,46040,0601.5

1.5(Overseas)

96,614

104,355

8.0

19.6

Net Sales

23,947

24,603

2.7

8.3(Japan)

9,650

10,4177.9

7.9(Overseas)

14,29614,186(0.8)

8.6

Net Sales

6,442

4,326(32.8)(32.5)(Japan)

5,715

3,690

(35.4)(35.4)(Overseas)

726635(12.5)(9.1)

General HospitalBusiness

Cardiac & VascularBusiness

Blood Transfusion
Business

Consumer Healthcare
Business(Note): For comparison to the previous year, the adjustments of accounting period of
this period are excluded in this table.
<General Hospital Business>
In Japan, our major line of products such as semi-solid nutritious foods and I.V. lines
steadily sold in the chronic care market, and new blood glucose monitors and otherproducts enjoyed increasing sales.
Outside of Japan, I.V. lines and other products sold well in Latin America, increasing
sales.
As a result, net sales Increased by 2.3% compared with the previous year to 152.9
billion yen.
<Cardiac & Vascular Business>
In Japan, we saw steady sales growth of “ViewIT,” an intravascular ultrasoundimaging catheter used for treating Angina Pectoris and “VisiGlide,” guidewire forendoscope jointly developed with Olympus.
Outside of Japan, our drug-eluting coronary artery stent, “Nobori” enjoyed positive
sales in Europe, Latin America, Asia and other regions, while in North and Latin
America, thanks to the permeation of TRI (interventional system technique toapproach the coronary artery through blood vessels on the wrist), interventional
systems saw steady sales.
On a constant currency basis, we saw a high growth rate of 17.6% compared with the-4-[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2011: Reference

previous year.
As a result, net sales were 144.4 billion yen, marking a 6.1% increase from last year.
<Blood Transfusion Business>
In Japan, sales of blood bags and aphaeresis system products were steady anddisplayed an increase.
Outside of Japan, “TACSI,” our automated centrifuge & separator integration systemsteadily increased sales in Europe.
Consequently, net sales were 24.6 billon yen, or a 2.7% increase from last year.
<Consumer Healthcare Business>
In Japan, the Consumer Healthcare Business experienced the impact in reaction to theH1N1 influenza pandemic of the previous year. Though we introduced new activity
monitors and upper arm blood pressure monitors to the market, under harsh businessconditions, performance was not remarkable. Net sales consequently dropped by
32.8% on a constant currency basis and were 4.3 billion yen.
[2] Research & Development
We launched new products such as a guidewire for endoscope jointly developed with
Olympus, “VisiGlide,” a coil for cerebrovascular embolism, “V-Trak HydroCoil
embolic system” and a home oxygen therapy system with built-in battery, “02 GreenKoharu 3SP.”
In addition, the Ministry of Health, Labor and Welfare of Japan approved our left
ventricular assist device, “DuraHeart” in December 2010, that is already on sale inEurope, and our drug-eluting coronary artery stent, “Nobori” in March 2011, both for
manufacture and sales, respectively.
In order to meet needs in different countries driven by the improvement of medical
infrastructures in mainly emerging countries, the Research & Development Division
has strengthened partnership with overseas developing divisions and departments.
[3] Capital Expenditure
To increase production of the interventional system product line whose sales has been
globally expanding, we increased production lines at the Ashitaka Factory. To respondto a production increase of I.V. solutions, we built a new building at the Fujinomiya
Factory and completed it in November 2010. Outside of Japan, we started to fullytransfer production to our Vietnam Factory, which was completed in 2008. In addition,
we made capital expenditure for enhancement and improvement to strengthen quality,
production efficiency, and product competitiveness. Consequently, capital expenditure
for the year was 19.3 billion yen.

-5-[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2011: Reference<2> Forecast for the Fiscal Year Ending March 31, 2012
In Japan, affected by the earthquake, we anticipate a decrease to some degree in sales
and profits of some General Hospital products such as I.V. solutions, but we will doour best for the quickest possible recovery. We are also concerned about the possible
restriction of power usage in the summer and winter. To secure a stable supply ofproducts, we will maintain a high operation rate of factories through improving inhouse power generation systems, leveling of power consumption through the night andholiday operations and other energy-saving means. Outside of Japan, to respond toexpanding emerging markets, we will strengthen functions of local affiliates withreorganization and restructuring in Asia and China. In addition, we will also reorganize
outside of Japan production systems, including a full-scale production transfer to theVietnam Factory.
In the General Hospital Business, as one of the medium and long-term growthstrategies, we herald “Drug & Device” to target adding new value through combiningdrugs with medical devices, as bio-medicine is in progress around the world. To fully
develop and apply business models established in Japan to the world, we will promotea proactive business expansion.
In the Cardiac & Vascular Business, we will globally improve the product range andlineup for TRI (interventional system technique to approach the coronary artery
through blood vessels on the wrist) to improve the healthcare economics, and seek toincrease sales by introducing “Nobori,” our drug-eluting coronary artery stent, toJapan.
In the Blood Transfusion Business, we will promote integration with CaridianBCT
and, as TERUMO BCT, further promote sales expansion through a wide product range
to meet every need from emerging to developed countries and a global sales system.
In the Consumer Healthcare Business, we will promote sales expansion in activity
monitors and upper arm blood pressure monitors and continue to release new products
in terms of convenience usage and design.
The Terumo Group further considers recovery from the earthquake as an opportunity
for growth, and in the Mid-term Plan, we will take concrete measures to respond torisks and strengthen our corporate culture.

-6-[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2011: Reference

Forecast for the fiscal year ending March 31, 2012
(Full year)(Unit: millions of yen)FYE Mar. 2011
Results

FYE Mar. 2012
Forecast

Net Sales

328,214332,000

3,785

1.2

Operating Income

62,60665,0002,393

3.8

Operating Income rates

19.1%

Changes

Changes (%)

19.6%

Ordinary Income

56,90363,000

6,096

10.7

Net Income

32,33840,000

7,661

23.7

*Excluding forecasts of CaridianBCT and Harvest.
*Including the impact of unified depreciation method into Straight-line Method.

This English translation has been prepared for general reference purposes. The Company is not responsible for any
consequence resulting from the use of the English translation in place of the original Japanese text. In any legal
matter, readers should refer to and rely upon the original Japanese text of the tanshin (Financial Results) dated asof May 11, 2011-7-