Annual Report 2011
For the year ended March 31, 2011

Profile

Shaping the advancement of healthcare.

We continue to create unique and innovative values,
while building trust and conﬁdence.

With passion and ﬂexibility, we demonstrate ourindividual competence and unsurpassed teamwork.

Sysmex Annual Report 2011

ysmex Corporation (“the Company”) is an integrated supplier of the instruments, reagents andsoftware that are essential to testing processes performed during health checkups, treatment andongoing disease management.
Since its establishment in 1968, Sysmex has concentrated on the field of diagnostics, where theCompany has played an integral role in the testing of blood and urine samples. While reinforcing its
research and development capabilities and enhancing its production, Sysmex has expanded into thefields of hemostasis, immunochemistry, clinical chemistry and urinalysis, and has expanded its operations onto a global scale.
The Sysmex Group comprises 48 companies in 29 countries throughout the world, operating in theadvanced countries of Europe and the Americas. In addition, the Group is aggressively building its business in emerging markets, including China, India, Eastern Europe and Russia by creating global networks
for its R&D, production, sales and support functions. Sysmex products are used by medical institutions
in more than 170 of the world’s countries. In the field of hematology, which involves the analysis of red
and white blood cells, the Group holds the top share of the global market.
Sysmex currently seeks to leverage its extensive business infrastructure to achieve further growth by
expanding its business domain beyond diagnosis and treatment to encompass the broader healthcare
field that includes disease prevention and health maintenance. In recent years, the Company has
pioneered testing using leading-edge technologies such as molecular testing of genes and proteins.
Through these vanguard R&D efforts, Sysmex is working to create new diagnostics that will aid in theearly detection of blood and immune diseases, cancer and diabetes, among other diseases, and help toprevent recurrence or worsening, ensuring that patients receive the best care possible.
Convinced that the importance of testing in healthcare will only continue to grow, Sysmex has set its
sights on new testing procedures that lead toward better understanding of the patients’ physical conditions and diseases, and will optimize their treatment. Accordingly, the Company aims to contribute to ahealthy and prosperous society.

Forward-Looking Statements
Statements in this annual report, other than those of historical fact, are forward-looking statements about the future performance of Sysmex that are
based on management’s assumptions and beliefs in light of information currently available, and involve both known and unknown risks and uncertainties. Actual events and results may differ materially from those anticipated in these statements.

ProfileSysmex Annual Report 20111

Contents
11-Year Growth and Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
To Our Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4Q

Q&A Session for Stakeholders . . . . . . . . . . . . . . . . . . .

8QSpecial Feature:

Key Strategies for
Future Growth68Special Feature

Doing Our Best to Communicate with You . . . . . 17

17
Business Activities

23
Functional Structure

35

Q

Sysmex at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Q

Market Overview and Sysmex’s Position. . . . . . . . . . 26

Q

Product Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Q

Sysmex’s Evolving Technologies . . . . . . . . . . . . . . . . . . . . 30

Q

Customer Feedback . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Q

Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Q

Research and Development . . . . . . . . . . . . . . . . . . . . . 38

QIntellectual Property Activities . . . . . . . . . . . . . . . . . . 40

Q

Purchasing, Production and Logistics . . . . . . . . . . . . 43

Q

Sales and After-Sales Support . . . . . . . . . . . . . . . . . . . 46

Q

Corporate
Governance

49
Q

Sysmex Value

An Interview with the President . . . . . . . . . . . . . . . . . 50
Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Internal Control Systems. . . . . . . . . . . . . . . . . . . . . . . . 53
Corporate Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Socially Responsible Activities . . . . . . . . . . . . . . . . . . . . . 58
Developing Human Resources . . . . . . . . . . . . . . . . . . . . . 58
Social Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Environmental Conservation . . . . . . . . . . . . . . . . . . . . . . . 60

57
Financial Section

63
Corporate
Information
Contents

2

Sysmex Annual Report 201190

Investor Relations Activities . . . . . . . . . . . . . . . . . . . . . . . . 61

Q

11-Year Consolidated Financial Data . . . . . . . . . . . . . . . 64

Q

Management’s Discussion and Analysis . . . . . . . . . . . 66

Q

Consolidated Financial Statements . . . . . . . . . . . . . . . . 72

Q

Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . 89

Q

Network

Q

Brief History of the Company . . . . . . . . . . . . . . . . . . . . . . 92

Q

Corporate Overview/Stock Information. . . . . . . . . . . 93.........................................

90

Contents

Sysmex Annual Report 20113

11-Year Growth and Highlights

For the years ended March 31,

2001

2002

2003

2004

2005

2006

2007

For the year:
Net sales¥ 38,817¥ 47,532¥ 57,253¥ 65,970¥ 76,935

Operating income

2,975

3,417

5,299

6,615

9,104

¥ 87,888 ¥ 101,041
10,724

12,715

Net income

1,363

1,308

3,125

3,157

5,731

7,423

9,008

Net increase (decrease) in cash and cash equivalents(2,562)

1,842

1,071

3,465

(3,261)

(499)

3,299

Cash and cash equivalents, end of year

7,338

9,181

10,253

13,71810,4589,416

12,715

Capital expenditure

2,098

2,455

2,317

2,451

2,729

5,638

4,546

Depreciation

2,541

2,810

3,107

3,203

3,296

3,592

3,959

R&D expenditure

3,527

4,130

4,969

5,549

6,509

8,184

9,026

Total assets

55,21966,502

66,44971,983

77,66087,447

101,225

Shareholders’ equity

34,10335,57743,32551,09656,14962,647

71,344

Interest-bearing liabilities

11,02011,606

10,893

4,175

657

695

669

Shareholders’ equity (yen)¥ 1,631.0¥ 1,701.5¥ 1,879.5¥ 2,042.7¥ 2,244.9

Net income (basic) (yen)

65.2

62.6

132.2

132.9

225.1

145.5*

179.6

Net income (diluted) (yen)

60.8

58.4

121.8

123.1

224.0

143.8*

178.0

At year-end:

Per share data:¥ 1,251.8* ¥ 1,411.0

Cash dividends applicable to the year (yen)

22.0

22.0

25.0

30.0

40.0

36.0*

36.0

Dividend ratio (%)

33.7

35.2

18.9

22.6

17.8

17.9

20.0

61.8

53.5

65.2

71.0

72.3

71.6

70.5

Return on equity (ROE) (%)

4.0

3.8

7.9

6.7

10.7

12.5

13.4

Return on assets (ROA) (%)

2.6

2.1

4.7

4.6

7.7

9.0

9.5

Price-earnings ratio (PER) (times)

42.6

35.6

15.9

20.3

27.2

35.3

23.8

*Two-for-one stock split

Other data:
Shareholders’ equity ratio (%)

Price-book value ratio (PBR) (times)
Number of employees

1.7

1.3

1.1

1.3

2.7

4.1

3.0

1,985

2,530

2,639

2,907

3,115

3,334

3,580

Note: Including part-time employees
Notes:
1. U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥83 = U.S. $1, the approximate rate of exchange on March 31, 2011.
2. Per share data: Certain retroactive adjustments of previously reported per share information have been made to conform with the current method from the year ended March 31, 2003.
3. ROA = Net Income/Total Assets (Yearly Average)×100(Years ended March 31)

Net Sales by Geographical Region

Japan

Americas(Including Korea, Taiwan and IDEXX)

5.7%(¥ million)

12.1%
33.5%

(¥ million)

Interarea transfer: exports to group aﬃliates
Sales to customers: including Korea, Taiwan and IDEXX
Operating income
80,00010,00075,73069,090Net Sales

8,000

31,501(¥ million)

Sales

Operating income

30,00066,48364,000¥124,694 million(¥ million)

34,01027,85724,0005,000

23,36823,444

6,816

48,00025,476
4,000

3,248
6,000

18,0004,000

12,000

2,000

6,000

2,775

3,000

4,672
32,00028.3%
8.3%
11-Year Growth and Highlights

4

2,963

20
20.4%
4

Jap
Japan
AmericasAm
EuropeChina
Asia Paciﬁc

16,00037,5890

38,62620092010**

1,789

2,000

1,000

41,720
2011*

0

0

2009

2010

* Changes in intergroup transaction prices and method of accounting for royalty income** Changes in method of accounting for royalty income

Sysmex Annual Report 2011

2011

0

2008

2009

(Millions of yen)(Thousands of
U.S. dollars)

2011

2011

2010

We will seek to anticipate upcoming
market changes as we make a newstart on various themes.

¥ 110,724 ¥ 111,843 ¥ 116,206 ¥ 124,694 $ 1,502,337
15,033

15,134

15,74018,289220,349

9,132

8,014

9,765

11,412

137,494(3,044)

(269)

4,403

5,103

61,482

9,679

9,410

13,813

18,916

227,904

8,244

9,340

4,540

5,840

70,361

3,924

7,189

7,067

6,871

82,783

9,221

10,771

11,23812,380149,157

109,02709,027

118,522
18,522

120,70220,702130,060
30,0601,566,988

78,75379,18386,35893,534

1,126,916

1,081

10,344

2,565

1,971

23,747(Yen)(U.S. dollars)¥ 1,541.0¥ 1,548.2¥ 1,684.9¥ 910.7*$ 10.97

178.9

156.7

190.8

111.2*

1.34

178.3

156.5

190.5

111.0*

1.34

48.0

50.0

56.0

60.0

0.72

26.8

31.9

29.4

27.0

72.2

66.8

71.5

71.9

12.2

10.1

11.8

12.7

8.7

7.0

8.2

9.1

20.1

20.0

28.7

26.5

2.3

2.0

3.3

3.2

3,916

4,148

4,578

4,960

EuropeWorking toward Ongoing Growthand Further Profitability Increases

Sales and Earnings Forecast for the Fiscal Year Ending March 31, 20142014

Net sales¥175.0 billion

Operating income¥26.5 billion

Operating margin

15.1%

Return on equity

13.8%

Free cash flow

¥10.0 billion

Assumed exchange rates: US$1.00 = ¥85; €1.00 = ¥115

China

Asia Paciﬁc(¥ million)(¥ million)(¥ million)(¥ million)(¥ million)(¥ million)

Sales

Operating income

Sales

Operating income

Sales

Operating income

40,00035,38736,446

10000

15,0008000

12,00015,093

5,000

7,500

4,000

6,000

32,00011,843

3,000

4,500

10,111
24,000

5,135

7,109

1,500

35,296

6000

5,304

2,752

9,000

16,000

4000

6,000

5,847

1,200

900

900

746

2,411

4,552

5,388

647
3,000

600

1,000

1,500

300

1,309
8,000

0

2000

2009

2010

2011

0

3,000

0

2009

2010

2011*

0

0

2009

2010

2011*

0

Sysmex Annual Report 2011

11-Year Growth and Highlights

2,000

5

To Our Stakeholders

During the fiscal year ended March 31, 2011, net sales and income reached historic
highs, despite significant yen appreciation. A new mid-term management plan willcommence in the year ending March 31, 2012. The new plan is designed to maintainour high level of growth and further enhance profitability.

During year ended March 31, 2011, net sales grew 7.3%, to¥124,694 million—a historic high—despite the erosion ofrevenues due to the sharp appreciation of the yen against key
currencies. Overseas sales were notably robust, expanding in
all geographic regions except Europe, where the impact of yen
appreciation was particularly significant. Operating income
rose 16.2%, to ¥18,289 million, and net income increased 16.9%,
to ¥11,412 million, as sales growth in the Americas and Japan
pushed up gross profit. Although we had initially forecast
dividends of ¥56 per share for the year under review (comprising an interim dividend of ¥28 and a year-end dividend of¥28), we decided to increase the year-end dividend by ¥4 pershare, raising annual total dividends to ¥60 per share. Thislevel, up ¥4 per share from the previous fiscal year, brings theconsolidated payout ratio to 27.0%, representing the ninth
consecutive year of dividend increase.

Overview of Operations in the Fiscal Year Ended
March 31, 2011
Looking at the world economy during the fiscal year ended
March 31, 2011, the employment situation in Europe and theAmericas showed some signs of recovery, but such factors
as the European debt crisis and deteriorating circumstancesin the Middle East and Africa hampered the global economic
outlook. In Japan, the sharp appreciation of the yen and theGreat East Japan Earthquake clouded the economic horizon.
Meanwhile, emerging market economies, centered on China,
continued to grow, owing to their massive populations andabundant natural resources.
In this operating environment, Sysmex chose to view thehost of changes taking place as opportunities for its R&D,
production, sales and support departments, and mounted its
own initiatives accordingly. In Japan, our ongoing efforts topromote total solutions as well as the acquisition of several
major orders led to solid sales in hematology and other fields.

To Our Stakeholders

6

Sysmex Annual Report 2011

This offset a decrease in sales of our influenza detection kit,

our operating income target in the fiscal year ended March

POCTEM, following the spread of the new influenza virus in

31, 2011, one year earlier than planned. In addition to thethe preceding year. As a result, we posted net sales of ¥38,541

impact of higher sales, we curtailed costs, leading to increased

million, up 4.6% from the previous fiscal year.

profitability and strengthening our management structure.

In overseas markets, we made steady progress in thestrengthening of sales and support structures and the provi-

We expect that these results will be instrumental in our
future success.

sion of solutions. As a result, we achieved double-digit growth
on a local currency basis due to increased sales of instruments

Resolution of a New Mid-Term Management Plan

and diagnostic reagents. Consequently, despite major yen

Based on our long-term management vision, to be “A Uniqueappreciation the Group’s overseas sales were ¥86,153 million,& Global Healthcare Testing Company,” in May 2011 weup 8.6% year on year. The overseas sales ratio was 69.1%, up

announced a new mid-term management plan for the three

0.8 percentage point from the previous fiscal year.

years ending March 31, 2014. The new plan, which is designed
to maintain our high level of Group growth and further

Review of the Previous Mid-Term Management Plan

enhance profitability, defines three core strategies: “leading

Sysmex formulates three-year mid-term management plans

hematology,” “leading in emerging markets” and “innovating

on a rolling two-year schedule. Accordingly, the previous

life science.” The plan also outlines initiatives to meet the key

mid-term management plan, which we announced in May

objectives that we will be focusing on over the next three

2009, was slated to conclude in the fiscal year ending Marchyears. Through these activities, by the final year of the plan—31, 2012. The plan defined three core strategies: “Global Niche

the fiscal year ending March 31, 2014—we expect to achieve

No. 1,” “Focus on Asia” and “Focus on Life Science,” and wenet sales of ¥175.0 billion and operating income of ¥26.5

have worked to accelerate our business development along

billion. Over this three-year period, we also plan to spendthese lines. In line with these strategies, the plan called for net

some ¥45.0 billion in R&D and invest aggressively in M&A insales of ¥127.0 billion and operating income of ¥15.2 billion inorder to expand beyond the limits of organic growth. (Thethe fiscal year ended March 31, 2011, and set targets for theexchange rates used in the new mid-term management planfiscal year ending March 31, 2012, of ¥140.0 billion in net sales

are US$1.00 = ¥85 and €1.00 = ¥115.)and ¥18.5 billion in operating income. (The exchange rates
used in the mid-term management plan were US$1.00 = ¥95

We ask for the ongoing support of our stakeholders as weembark along this path.

and €1.00 = ¥125.)
After formulating the plan, yen appreciation against the

July 2011

euro and the U.S. dollar proved to be substantially higher than
we had expected, creating a difficult operating environment.
We responded by taking up the unique strategies of establishing our operations globally, providing solutions with a broadranging product portfolio and offering efficient after-sales

Hisashi Ietsugu

support. As a result, we succeeded in essentially reaching

President and CEO

To Our Stakeholders

Sysmex Annual Report 20117

Key Strategies for Future Growth
Q&A Session for StakeholdersWe have formulated a new mid-term management plan thatis designed to maintain our high level of growth and further
enhance profitability. By the fiscal year ending March 31, 2014, theplan calls for net sales of ¥175.0 billion, operating income of ¥26.5
billion and ROE of 13.8%.

Key Strategies for Future Growth8

Sysmex Annual Report 2011

Key Strategies for Future Growth9

Sysmex Annual Report 2011

Key Strategies for Future Growth

Q

A

Please outline your long-term management
vision and the new mid-term management
plan through the fiscal year ending March
31, 2014.

this period, we plan to invest approximately ¥45.0 billion in
R&D, and by the final year of the plan, the fiscal year ending
March 31, 2014, we expect to achieve net sales of ¥175.0 billion
and operating income of ¥26.5 billion. We also intend to invest
aggressively in M&A in order to expand beyond the limits of

Our long-term management vision, to be “A Uniqueorganic growth. To this end, we aim to progress steadily in line

& Global Healthcare Testing Company,” remains

with our three new core strategies.

unchanged, and our new positioning is to be theundisputed global leader in hematology, the leading company
in the Asian IVD*1 market and the leading company in*1 Acronym for in-vitro diagnostics.
*2 A contraction of “therapy” and “diagnostics,” theranostics refers to highclinical-value testing that helps realize personalized medicine.

molecular diagnostics “theranostics”*2. We are currently the
global leader in the hematology field, and we aim to establish
ourselves as the undisputed leader in all markets where
we operate, including the United States. Furthermore, as acomprehensive supplier in Asia, in addition to ongoing initiatives in the fields of hematology, hemostasis and urinalysis
we will shore up our base of operations in the areas of clinicalchemistry and immunochemistry. We also plan to accelerate
our creation of unique testing technologies in the area of

Q

A

Would you please explain the three core
strategies you are pursuing under the midterm management plan?
Our core strategies are “leading hematology,” “leading in emerging markets” and “innovating life science.” With regard to the first of these, hematology

molecular diagnostics, centering on cancer. Our long-term

leadership, Sysmex has become the global leader in the fieldmanagement target is to achieve net sales of ¥500 billionof hematology by delivering products with high levels of qual-

or more.

ity and usability, as well as advanced after-sales support, to

Our mid-term management plan sets forth five key objectives that will be our focus over the next three years. During

customers in more than 170 countries throughout the world.
Going forward, we plan to further leverage our collective

Overview of Long-Term Management Targets

Long-Term Management Vision: “A Unique & Global Healthcare Testing Company”
Long-Term Management Targets
PositioningȉUndisputed global leader in hematologyȉLeading company in the Asian IVD market
ȉLeading company in molecular diagnostics “theranostics”*

Financial targetȉNet sales: ¥500 billion or more

* A contraction of “therapy” and “diagnostics,” theranostics refers to high-clinical-value testing that helps realize personalized medicine.

Core Strategies

Leading HematologynnSecure an undisputed leadership position
As an industry frontrunner, provide
products that oﬀer new value and highlevels of usability

Key Strategies
Corporate
for Future
Information
Growth10

Sysmex Annual Report 2011

Leading in Emerging Markets
Establish uniqueness as a comprehensive
IVD suppliern Introduce products and services thatmeet emerging market needs, andreinforce sales and support networks
n Lead diagnostics development inemerging marketsnInnovating Life Science
Create unique testing technologies in thearea of molecular diagnostics, centeringon cancer
n Create new value, such as integrating
personalized medicine with treatment
and diagnosisnstrengths to reinforce our position as the undisputed global
leader. As an industry frontrunner, by applying advanced
technologies and through ongoing R&D initiatives, we aim tocreate new value in the area of blood disorder diagnosis. At
the same time, we will continue to grow through our leadership role in next-generation hematology.
Our second strategy is “leading in emerging markets.”
As the sole global player in the IVD field that is based in

QA

The mid-term management plan defines
five key objectives. Please tell us about
the first, to “accelerate growth in Asia andother emerging markets.”
High levels of growth are forecast for the emerging
markets of China and South and Southeast Asia,
and we will mount initiatives within these markets

Asia, Sysmex aims to be the leading company in this region.

to achieve ongoing growth in our core fields of hematology,

Leveraging the advantages we have cultivated in Asia, wehemostasis and urinalysis. We will also enhance our founda-

aim to become a comprehensive IVD supplier in emerging

tions as a comprehensive supplier and strive to take advan-

markets—which are expected to grow rapidly—by launchingtage of new growth opportunities presented by the expansion

products tailored to meeting market needs and enhancing ourof production and supply systems.

sales and support networks. By reinforcing our advantages

In the hematology field, we will globally launch the newin Asia, we aim to take a leading position in this region’s IVD

XN Series*3, increase our introduction of systems in high-end

market. We will also lead diagnostics development withinmarkets and provide the XS-500i (five-type analyzer*4), whichthese emerging markets.

is tailored to emerging market needs. Reagent sales should

The third strategy is “innovating life science.” In the life sci-increase in line with higher unit sales.

ences, we aim to create unique testing techniques employing

In preparation to enter the field of clinical chemistry, we

new technologies in the area of molecular diagnostics, particu-

will expand our product portfolio of instruments and reagents,

larly for cancer. By combining our own technologies with thosetaking advantage of alliances with JEOL Ltd. and Furuno

from other companies, we engage in initiatives to create new

Electric Co., Ltd. We will also expand our number of clinicalvalue in the life sciences, such as personalized medicine andchemistry reagents tailored to emerging market needs.

integration with treatment and diagnosis. In this manner, we
aim to secure a global position in molecular diagnostics.

Medium- and Long-Term Management Targets
Long-Term Management Target
Mid-Term Management Targets(FY2014)Now (FY2011)

ȉ1HW6DOHV¥500 ELOOLRQRUPRUH

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ȉ52(ɪɫɰȉ)&)gɲɫELOOLRQLife science(Exchange rates: US$1 = ¥85.0, €1 = ¥115.0)(Exchange rates: US$1 = ¥85.7, €1 = ¥113.1)

Leading
Hematology

Leading in
Emerging
Markets

Non-hematology*rkets

ing maEmerg

Innovating
Life Science

Hematology

Mid-Term Management Plan
0DUɫɩɪɫ

0DUɫɩɪɬ

0DUɫɩɪɭ

0DUɫɩ;;* Non-hematology: in-vitro diagnostics excluding hematology but including hemostasis, immunochemistry, urinalysis, clinical chemistry and others.

Sysmex Annual Report 2011

Key Strategies
Corporate
for Future
Information
Growth$SUɫɩɪɪ

11

Key Strategies for Future Growth

We will take advantage of such strengths as our existingsales network and customer base to make an early entry into
the immunology field. We will consider a host of measures
to improve the efficiency of our manufacturing and supply

Q

What about the second key objective,
to “establish an undisputed leadership
position and increase profitability inhematology?”

schemes and propose comprehensive solutions that package

A

together instruments, reagents, after-sales support, IT andposition in this area. The XN Series provides a body fluid

other services for multiple testing fields. This will enable us tomeasurement mode and increases measurement accuracy

tailor our operations to growing market segments, particularly

for low platelet counts, associated with such diseases asin high-growth emerging markets.

thrombocytopenia, to enhance clinical value.

structures. These include expanding existing reagent factories,
building a new instrument factory and in some cases shifting
the manufacture of reagents to local factories.
As part of a new business model, we will employ financing*3 Please see page 32 for details.
*4 Please see page 27 for explanation.

Hematology is a core field of business for theSysmex Group, constituting an important base ofrevenues and profits. By launching a new model, the

XN Series, we plan to further solidify our global leadership

On the usability front, the series embraces the modular
concept. This series allows various combinations of multiple
analyzers, transportation system, smear preparation systemand other instruments. Using the combination of a concentrated reagent and our reagent preparation unit greatly
reduces the changing frequency of a certain reagent. This is a

Key Strategies
Corporate
for Future
Information
Growth12

Sysmex Annual Report 2011

particular boon for commercial labs and university hospitals

testing in hospitals that are currently using manual methods.

that process high volumes of tests each day, because it boosts

In the immunochemistry field, we will increase reagent offer-

operating efficiency and requires less reagent storage space.

ings and promotion of total solutions in Japan. We also aim toThis flexibility also enables the proposal of tailored solutions

make an early entry into the immunochemistry field in Asia by

to meet individual customer needs. To meet increasingly

taking advantage of such strengths as our sales network andsophisticated and diverse testing needs, we will redouble ourcustomer base.

efforts to offer solutions incorporating information and com-

To enhance our non-hematology reagent development

munications technologies and after-sales support, working

capability, we are reinforcing the development and production

proactively to offer new value in a manner befitting aof ingredients using silkworms. In this context, we acquired

global leader.

Research Institute of Biological Science from Katakura

In addition, we will expand our presence in the animalIndustries Co., Ltd. This transfer will enable Sysmex to further

diagnostics market by leveraging our alliance with IDEXX

strengthen our development and production technologies forLaboratories, Inc., a leading provider of diagnostics for pets

diagnostic reagents using gene recombinant protein produced

and other animals. Increasingly, many people treat theirfrom silkworms. We will concentrate on developing suchcompanion animals—the dogs, cats and other animals thatreagents in the non-hematology fields of immunochemistry

live in their homes—with the same importance as other family

and hemostasis, as well as in the life science domain.

members. These indoor pets are being fed improved foods andare given access to modern veterinary healthcare. As a result,they are living longer lives. Like humans, these longer lives*5 Non-hematology fields: in-vitro diagnostics fields excluding hematology
but including hemostasis, immunochemistry, urinalysis, clinical chemistry
and others.

create demand for more and continuing healthcare. Therefore,
the animal healthcare market continues to show strong
growth. By taking advantage of IDEXX’s global network,
Sysmex will accelerate our penetration into this market,
leveraging the expertise cultivated through the developmentof instruments for humans to develop automated hematology
analyzers and reagents for animals.

Q

A

Please describe your third key objective,
to “accelerate growth in non-hematology
fields*5 and lay the foundations for future
expansion.”Q

A

Next, could you please explain the fourth
key objective, to “promote commercialization of the life science business.”
Sysmex will continue introducing its system for
rapid detection of breast cancer lymph nodemetastasis based on the one-step nucleic acidamplification (OSNA) method, which enables automatedexaminations for the first time in Japan. It will be brought toother key markets around the world in addition to Japan andEurope. The RD-100i, our gene amplification detector that
employs the OSNA method, speeds the detection of breast

As our second pillar of business, we will strive tocancer metastases in sentinel lymph nodes. This facilitates

increase our presence and achieve growth in IVD

intra-operative diagnosis, reducing the burden on patients.

categories outside the field of hematology. In

Underscoring the instrument’s efficacy, deployment isproceeding apace in principal markets, including Japan andthrough the introduction of new products. In urinalysis, weEurope, particularly Spain. Furthermore, we have succeeded

are expanding global sales of the world’s first fully automatedin expanding system applicability from breast cancer to colon

integrated urine analyzer, which is equipped with the technol-

cancer, and in December 2010 received manufacturing andogy for urine sediment analysis from Sysmex, as well as

marketing approval from Japan’s Ministry of Health, Labour

technology for urine chemistry from ARKRAY Inc. Integrating

and Welfare. This system allows diagnosis to be performed atthese technologies into one instrument improves operationala high level of precision, but in less time than was required

performance and promotes the standardization of urine

for conventional systems. This contributes to objective andSysmex Annual Report 2011

Key Strategies for Future Growth

the field of hemostasis, we are increasing our market share

13

Key Strategies for Future Growth

Healthcare and the IVD Market

Expanding Healthcare Markets
8 Healthcare markets growing at rapid pace in emerging markets: Expanding healthcare infrastructures, population growth and rising
standards of living
8 In advanced countries, healthcare market growth stable: Graying populations, increasing prevalence of cancer and lifestyle diseases,
use of new technologies

Growing IVD* Market
8 IVD demand in emerging markets increasing in tandem witheconomic growth
8 Increasingly diverse demand for predictive medical impact
screening through preventive medicine, risk prediction andsensitivity screening
8 Breakthroughs involving genetic and molecular diagnostics
technologies spawning new diagnostics markets

Changing Competitive Landscape
8 Companies from other areas entering IVD ﬁeld—use in-house
technologies and leverage M&A and alliance opportunities
8 Companies from emerging markets catching up quickly
8 Industry restructuring, including among top 10 IVD companies(such as Danaher acquisition of Beckman Coulter)*IVD: In-Vitro Diagnostics

Healthcare and IVD markets are forecast to continue growing, and expected to remain attractive

appropriate decisions on post-operative treatment, reduces

unearthing new business opportunities in fields where growth

the burden on pathologists and contributes to the standard-is expected and where synergies are likely. In these ways,

ization of post-operative treatment of colon cancer. The

we will move ahead aggressively with alliances and M&A

Company will continue applying its research and development

activities, thereby pushing ourselves beyond the limitations ofof lymph node metastasis testing to other types of cancer,

organic growth.

including stomach cancer.
We will also take advantage of our proprietary technologies to develop lab assay services*6 and promote other efforts
to commercialize the life science business.
*6 Provision of laboratory testing results as services

Q

A
Key Strategies
Corporate
for Future
Information
Growth14

Please describe the fifth key objective, to“proactively leverage M&A and allianceopportunities to expand your portfolioof businesses and accelerate beyond thelimits of organic growth.”QA

As you move forward with your new midterm management plan, what are yourthoughts on the many changes taking placein Sysmex’s operating environment?
In Europe and the United States, the employment
situation is showing some signs of recovery, butsuch factors as the European debt crisis and dete-riorating circumstances in the Middle East and Africa hamper
the global economic outlook. However, we anticipate robust
ongoing growth in emerging markets, centered on China. In
Japan, the Great East Japan Earthquake clouded the economic

In addition to accelerating growth in the hematol-

horizon.

ogy, non-hematology and life science businesses, weOn the healthcare front, the global healthcare market

plan to mount an aggressive effort to accelerate thepromises ongoing growth, driven by graying populations

Group beyond the limits of organic growth. Specifically, wein advanced countries and efforts in emerging markets toplan to expand our portfolio of businesses by taking advan-

expand their healthcare infrastructures in line with popula-

tage of M&A and alliance opportunities. Therefore, in addition

tion increases and economic development. The industry

to the existing business strategy and business development

also presents new growth opportunities by organizations

department, we have set up a department dedicated to thesethat aggressively leverage advances in genetic/molecular

activities. This department will concentrate its efforts on

diagnostics and communication technologies. At the same

Sysmex Annual Report 2011

time, however, competition is likely to grow fiercer, as players

Moreover, the Sysmex Group has introduced various

from other industries enter the field and the participation by

information systems for communications, support of our corecompanies in emerging markets becomes more conspicuous.

business, and approval procedures, such as the collective

The global healthcare industry is undergoing majordecision-making system, and a significant portion of the busi-changes, prompted by healthcare reforms. In Japan, earnings

ness information is processed through networks. In order toand profits at medical institutions are improving, owing tominimize the possible impact that a disturbance of informa-

the restructuring of public hospitals and revisions in medicaltion systems and network circuits or computer viruses andremuneration. Also, the Japanese government has introduced

unauthorized access to our information systems could havea “health power strategy through ‘life innovation,’ ” whichon our networks, we are tightening internal control by way ofoutlines efforts to turn the medical, nursing care and otherstricter user management and fingerprint verification units forhealth-related fields into growth-driving industries, and tolimited access, as well as back-up of our networks, thoroughpromote development into Asian and other overseas markets.

daily operational management, and security measures includ-

Furthermore, in advanced countries in Europe and North

ing the installation of virus gateways.

America, efforts are underway to reduce healthcare costs andreform medical systems. The U.S. government has passed
a medical reform bill that aims to reduce the number ofpeople without medical insurance, and debate with regard to
implementation continues. Meanwhile in China, the country’s
12th five-year plan (from 2011 to 2015), aims to create a basic
pension plan and build infrastructures that provide uniform
medical services in cities and farming villages throughout thecountry, thereby reducing disparities in healthcare services.
Against this backdrop of developments in the healthcare

QA

Is there any particular concept you favor inbusiness management?

My work philosophy emphasizes the concept of“Where there’s a will, there’s a way.” This is about
not making up one’s mind from the start that things

industry, we are convinced that the growth prospects inhealthcare markets remain attractive.

Q

A

What are some of the major risk factors theSysmex Group faces going forward?

Sysmex sells to overseas customers throughits overseas affiliates and distributors. For thisreason, Sysmex hedges against the risk of currency

fluctuations through exchange contracts and other means.
Nevertheless, the Company’s operating results and financial
position are affected by foreign exchange fluctuations. The
proportion of consolidated net sales contributed by overseas
sales is rising each year, from 68.0% in the fiscal year ended
March 31, 2009, and 68.3% in the fiscal year ended March
31, 2010, to 69.1% in the fiscal year ended March 31, 2011. In
Sysmex’s case, all instruments are manufactured in Japan and
Key Strategies
Corporate
for Future
Information
Growththeir sales accounts for around 30% of our net sales. However,reagents and after-sales services, which account for about 70%
of net sales, are manufactured or provided locally, and thismitigates the effect of unfavorable currency exchange rates.

Sysmex Annual Report 201115

Key Strategies for Future Growth

are impossible, but rather thinking hard about how to go

and enabling employees to maximally demonstrate theirabout accomplishing them. In other words, first set a goal,

abilities is a business manager’s most important work. If

and then consider a route to reach that goal. Provided one

globalization advances further, Sysmex will come to accom-

does that, wisdom and resourcefulness are sure to follow. To

modate even more individuality within its corporate culture.

expand your business, you cannot simply be content with the

I believe that globalization is about accepting diversity. In thecurrent situation. You must always keep a close eye on the

future I want to assemble even more diverse capabilities andchanging times and do your utmost to stay a half-step ahead

use them as a new source of growth for Sysmex.

of those changes.
I also believe that recruiting, retaining and developing human resources is one of the most fundamental ofmanagement tasks. Everyone has strengths and weaknesses.
Maintaining an environment for drawing out the good points

Q

A

What closing message would you like toleave us stakeholders?

To sustain strong growth, Sysmex must strike abalance between investing aggressively and returning profits to shareholders. Our aims are to ensurestable dividends and to provide a 20% target consolidated
payout ratio, given our fundamental policy to base payout
upon results. We also conducted a two-for-one stock split forcommon shares on April 1, 2011. We did this to improve theenvironment for investing in our stock by lowering the unit
investment amount and increasing the liquidity of our stock.
Thanks to the support of our stakeholders, this year
marked the 15th since the initial listing of Sysmex’s shares.
During this period, we have enjoyed the enthusiastic supportof our stakeholders, which has encouraged me personally to
do everything in my power to ensure that our performanceexceeds your expectations. Sysmex has grown steadily
since the listing its shares in 1995. Meanwhile, our operating
environment has undergone major transitions, and the paceof change is expected to increase going forward.
As we face these challenges, we will continue working
to enhance our corporate value while remaining true to our
corporate philosophy, the “Sysmex Way,” upholding our core
behaviors in our communications with stakeholders andfulfilling our social responsibilities as a listed company. I ask
that our shareholders view Sysmex’s quest to reach a newstage of growth from a medium- to long-term perspective andcontinue to support our endeavors.

Key Strategies for Future Growth16

Sysmex Annual Report 2011

Special Feature: Doing Our Best to Communicate with You

Sysmex has grown
dramatically in the
15 years since its IPO.
We have faced many
challenges along theway, and we have met
and communicated withnumerous stakeholders.
This feature summarizes
the challenge of listing
our shares, what it has
involved and its meaning
for Sysmex going forward.

Special Feature

Sysmex Annual Report 201117

Special Feature: Doing Our Best to Communicate with You

During the 15 years since its IPO, Sysmex has grown into a global group, with 48
companies in 29 countries throughout the world, providing products and services tocustomers in more than 170 countries.

S

ysmex listed its shares on the Second Section of the Osaka Securities Exchange in November 1995. At thattime (the fiscal year ended March 31, 1996), the Company had net sales of ¥30.9 billion, operating incomeof ¥3.0 billion, 1,415 employees and a market capitalization of ¥54.7 billion. By comparison, as of the fiscal

year ended March 31, 2011, net sales amounted to ¥124.6 billion, operating income totaled ¥18.2 billion, employees
numbered 4,960, and market capitalization was approximately ¥300.0 billion. In other words, our net sales havequadrupled, operating income has sextupled, our number of employees has more than tripled and our market
capitalization has quintupled.
At the same time, our overseas sales ratio has risen from 47% to 69%. We provide products and services to customers in more than 170 countries throughout the world. To meet the needs of people in each of the regions that
we serve, we have operations at 48 locations in 29 countries. Furthermore, now the number of partners with whom
we have alliances and conduct collaborative R&D is growing each year, and we are expanding our business domains
from the field of hematology to non-hematology and life science fields.
Sysmex’s operating environment also has changed significantly over time, and our base of stakeholders has
become more global. For all of these reasons, our IPO in 1995 marked a major turning point for the Company.

The Changes in 15 Years After Stock Listing
1996

2011

Net Sales¥30.9 billion¥124.6 billion

Operating Income¥3.0 billion¥18.2 billion

Number of
Employees

1,415

4,960

MarketCapitalization¥54.7 billion

Approx. ¥300.0 billion

Years ended March 31

86.2

52.5
26.8

34.2

63.2

74.8

76.0

36.0

35.8

79.4

43.5

22.9
14.5
16.4

16.9
17.1

19.2
16.3

1996
(Billions of yen)
Special Feature

18

Sysmex Annual Report 2011

21.6
16.7

19.1
18.1

2000

19.5
19.3

24.6

30.5

31.8

33.4

2005

35.4

37.9

36.8

38.5

2010
Overseas sales
Sales in Japan

An Unflagging Companywide Resolve as
We Embarked on the New Challenge of Listing
Sysmex has grown steadily since its founding in 1968, but toachieve further expansion we need to enhance the qualityof our operations even further. We believed that satisfying
the initial requirements to list our shares on the securities
exchange was the best path toward this goal, but we also knewthat this required a great deal of resolve from our management
cadre to fulfill post-listing management responsibilities, andwe recognized that preparing for listing would require staunchefforts throughout the Company. The topic was debatedextensively at Board of Directors meetings.

Tokyo Stock Exchange listing ceremony in 1996

Through this discussion, we clarified two major objectives
for listing. The first was to raise funds from diverse sources.

the pre-listing approval stage. Just as we were ready to do

The Company’s mission is to contribute to people’s health.

so, on January 17 an earthquake of magnitude 7.3 struck the

We recognized that to fulfill that mission, we would need toHanshin area, wreaking unprecedented destruction and cut-expand our fields of business and develop on a global scale;ting off access to Kobe Port Island, the artificial island where

expanding our business in an efficient manner would require

our headquarters were located at the time. We hurriedly

funding. The second objective was to increase the sense of

relocated our headquarters function to the Techno Center

trust that the public invested in the Company. Listing would(now, Technopark) in northern Kobe and set up an emergency

oblige us to disclose financial and management information tocountermeasures headquarters. In addition to confirming that

our investors, so in addition to fulfilling our social responsibili-

all employees were safe, we mounted a full-fledged effort toties we could earn a greater degree of trust. We believed that

ensure a stable supply of reagents to our customers in the

we would need to maintain strong ethics and communicate

local healthcare community, since healthcare institutions’with stakeholders, as befits a listed company.

testing procedures require reagents, as well as instruments.

To achieve these goals, we set up a new GP Promotion

Although traffic was paralyzed and the port was blocked, weDepartment to promote our listing. Hisashi Ietsugu, then aconducted dedicated support activities for customers in the

managing director, now our president and CEO, was central to

Hanshin area, centered on our Kobe Branch Office and Osaka

this department, which began drawing up a schedule to pre-Branch Office. As a result, we were able to keep our supply

pare for the listing. First, we set about reforming our personnel

structure operational without inconveniencing our custom-

system, aiming to complete changes in our organizational

ers. We even received a letter of gratitude from the Hyogo

structure within two years. This process involved reworking

Prefecture Association of Medical Technologists thanking us

our internal systems and regulations, and the consecutive

for our efforts.

reforms helped enhance motivation among our employees.

Meanwhile, this situation threw our listing plans into
disarray. Internally, some people thought we should delay, but
numerous others said we should not, expressing comments

Overcoming Unprecedented Disaster to Liston the OSE Second Section—
A Game-Changing Moment for Sysmex

along the lines that, “Our listing will help to reinvigorate theKobe area. The challenge we are taking on is deeply meaningful, and conveys a strong message to people both inside andoutside the Company. By persevering, we can send the mes-

By January 1995, we had our system in order and had preparedsage that Kobe will surely bounce back, and that Sysmex will

the necessary documents; we were finally ready to enter

grow along with the region.” We decided to move ahead.

Special Feature

Sysmex Annual Report 201119

Doing Our Best to Communicate with You

As initially planned, the Company’s shares were listed on

products. Such cooperation probably would not have been

November 15, 1995—an event deserving of commemoration.

possible if we had not been disclosing information on a global

Although we had suffered many setbacks due to the disaster,basis as our listing necessitated.

we had pulled together as a company and enjoyed amazing

Sysmex’s global customer base also expanded. We boosted

support from our stakeholders. Furthermore, the following

our brand recognition by building a direct sales and support

year we listed on the Second Section of the Tokyo Stocknetwork in the United States, the world’s largest market. We

Exchange, and in 2000, we upgraded our listings to theare continuing our efforts to boost our share of this geographi-

First Sections of the Tokyo Stock Exchange and the Osakacally vast market through sales to prominent commercial labs

Securities Exchange.

and integrated health networks (IHNs). In Europe, we combine
the operation of a direct sales structure to strengthen our
response to customers’ needs by proposing solutions with

Broader Stakeholder Base Accompanying
Listing, Building Stronger Bonds of Trustindirect sales conducted in partnership with distributors. Thisapproach has proven effective in meeting our customers’
needs across borders. We are also enhancing recognition of

The IPO coincided with major changes in Sysmex’s stakeholder

the Sysmex brand in the emerging markets of China and thebase. In 1995, we formed a business relationship with Siemens

Asia Pacific region. To meet this diverse range of customer(formerly, Dade International Inc.), to leverage both ourneeds, we are working to provide new value and forge trust-companies’ strengths in the hemostasis field. This alliancebased relationships.

with a leading company in the field propelled us both towardin 2001 Sysmex began conducting annual IR roadshows in

From around that time, Sysmex had gradually begun to be

Europe and later in the United States, with President Ietsugu

recognized as a global player in the arena of in-vitro diagnos-

appearing regularly. This gives us a valuable chance to betics. Furthermore, in 1998 Sysmex entered into a distribution

accountable to overseas shareholders who we otherwise might

agreement in hematology with Roche of Switzerland, one of

not have the opportunity to meet. These ongoing efforts

the world’s leading healthcare companies. This alliance acceler-

have proven fruitful: although our percentage of ownershipated Sysmex’s global expansion in the hematology segment. To

by foreign shareholders was only several percent during thethis day, the two companies maintain an excellent relationshipfirst few years following our listing, it now tops 30%. In Japan,

as long-term global alliance partners who cooperate in the

we also hold Company tours as part of our efforts to enhancemarketing of one another’s products and jointly develop newshareholders’ understanding of our operations.

An increasingly global customer baseSpecial Feature

20

To meet our duty of accountability as a listed company,

the development of a leading global brand in hemostasis.

Sysmex Annual Report 2011

As a global company, Sysmex seeks to contribute toefforts to bolster accountability by disseminating information

the communities in which it conducts business, from its

by segment, including information categorized by geographic

birthplace in Kobe to all other part of the world. We seek toand operating segment. This marks a major improvement from

fulfill our role as a good corporate citizen by responding to

the content and approach of our initial disclosure efforts justthe needs the people who live in these regions. In the United

after listing. These changes reflect the experience we haveStates, our employees have volunteered for a fund-raising

accumulated gradually over 15 years of overall IR activities

campaign organized by the Leukemia & Lymphoma Society,and the input we have received during our interaction witha voluntary health organization dedicated to funding blood

analysts and investors.

cancer research and patient services. This activity earned us

We have established a specialized IR department to maxi-

a ranking on the Companies That Care Honor Roll, which ismize this information, reinforce our investor relations activities

sponsored by the Center for Companies That Care, a U.S. NPO.

and feed this input back to management. Belonging to theThis annual award honors companies with the characteristics

corporate business planning division, the IR department works

of a “Company That Cares,” including social contributions andto disclose information effectively, communicate directly withsustaining a good work environment. Sysmex also opens up

shareholders and other investors and quickly provide manage-

Technopark regularly to the local community, supports local

ment with external feedback on the Company.

universities and maintains strong ties with area businesses.

Sysmex considers IR activities one of the president’s most

Although our operations have grown on a global scale, we

important functions. Analysts and investors take a specialized

remain committed to the local community that has supported

approach, carefully examining our financial data, seeking out

us since the time of our establishment.

new information and conducting their own specialized analyses. Some of the questions they raise can be quite challenging,but they also often provide us with pointers on the status of

Meeting with Analysts and Investors, andIncorporating Their Feedback into Our
Management

our disclosure and our management. When interacting withanalysts and investors, we seek to view the Company from athird-party perspective, not becoming complacent but always
remaining open and aboveboard in our management. This

The listing of its shares has provided the opportunity toapproach to IR—working proactively to be open with our

broaden Sysmex’s world considerably, through interactions

information—has led us to be truly accountable and it haswith analysts and investors. Nowadays, we are proactive in our

become a cornerstone of Sysmex’s growth.

Interacting with shareholders

IR meeting
Special Feature

Sysmex Annual Report 201121

Doing Our Best to Communicate with You

Enhancing Corporate Value throughCommunication with Stakeholders

Sysmex had three objectives in sponsoring the Kobe
Marathon. The first was to take advantage of this opportunity
to contribute to the local community that has provided so

In April 2007, we introduced a new management philosophy,

much support to Sysmex over the years. The second objective

the “Sysmex Way,” to redefine the Company to reflect

was to contribute to the healthcare industry by emphasizingchanges in our core management policy since the time of our

the link between health and sports, encouraging healthestablishment. To create new value, Sysmex aims for ongoing,

improvements. Finally, we wanted to express our thanks toqualitative changes. One aspect of this renovation involves

all the people who supported us since the 1995 earthquake.

communication at a global level, and all employees throughout

The Kobe Marathon seemed an ideal way to draw attention to

the Group participate in our VQ Sessions, which are designed

the Kobe area’s recovery since the 1995 earthquake. We now

to generate new stakeholder value.

believe that these efforts can serve as a call of encouragement

VQ Sessions aim to explore the question of what Sysmex
can do be a company that is attractive to stakeholders, discusssuch ideas and serve as a link to initiatives that will turn suchto the people of the Tohoku and Kanto regions, stricken by theGreat East Japan Earthquake.
The 15 years since our IPO have been a period of dramatic

ideas into practice. The activities aim to encourage each of our

growth for Sysmex, stemming from the support of its stake-employees to give serious thought to this question in relation

holders. One essential reason has been our unwavering stanceto their everyday work activities as well as to new business.

toward certain challenges that we have faced since the time

The myriad of themes that emerge through this process areof our establishment: our organizational culture, customer

debated by other employees throughout the world. Themes

orientation, community appreciation, technical focus andare selected in variety of areas, from environmental preserva-

made-in-Japan quality. Most importantly, broad-based com-tion to social contribution, and ideas derived through thismunication with our stakeholders has proven invigorating andprocess are currently in the implementation stage, involving

encouraged us to maintain a tireless spirit of challenge in our

numerous initiatives throughout the world.

management direction.

Meanwhile, Sysmex is a special sponsor of the first Kobe

We remain ever aware of the vital role that our stakehold-

Marathon, which will take place in November 2011. Thisers play in Sysmex’s ongoing development. Going forward,

marathon is expected to be a major event, attracting some

we will continue striving to enhance corporate value for our

20,000 runners.

myriad stakeholders, never forgetting the spirit of “conversation and appreciation.”

Kobe, Japan
Kobe is well-known as a port city surrounded by nature, especially sea and mountains.
Special Feature

22

Sysmex Annual Report 2011

Business Activities

S

ysmex provides the
instruments andreagents needed forhematology, hemostasis
and other tests to customers around the world.

Business Activities

Sysmex Annual Report 201123

Business Activities
Sysmex at a Glance

Business Segments(¥ million)S

ysmex derives approximately 94% of its revenues from thediagnostics field in the business of testing samples of humanbody fluids, such as blood and urine, with hospital and commercial
laboratories as its principal customers. More specifically, our main
field of business is hematology, which involves measuring the number
and type of red, white and other blood cells. This business accounts foraround 62% of net sales. Hematology uses specific reagents, and thesale of hematology instruments leads to an automatic and sustainablesource of revenue through the sales of reagents. Furthermore, in addition to expanding our IVD* operations in such fields as hemostasis,
immunochemistry, clinical chemistry and urinalysis, we are accelerating commercialization of the life science business.
Sysmex also operates in the IT field, providing testing information
systems to meet demand for network systems to manage medical data.
There are synergies between this business and the field of diagnostics.
Applying the specialized particle analysis technologies it has
cultivated in the diagnostics field, Sysmex is also expanding into otherbusiness categories such as self-medication support.

2007
n Diagnostics

2008

93,581 103,801

2009

2010

2011

106,316 109,384

117,683n Hematology

60,216

68,414

71,21672,326

77,284n Hemostasis

14,145

13,834

13,97014,59915,987n Immunochemistry

3,400

2,866

2,639

2,426

2,677

n Clinical chemistry

2,760

2,667

2,479

3,375

3,242

n Urinalysis

6,295

7,509

8,154

8,233

9,417

n POC testing

3,823

3,995

2,793

3,584

3,671

n Others

2,938

4,513

5,062

4,839

5,402

n IT

4,807

4,399

3,145

2,870

3,071

n Other business

2,652

2,522

2,381

3,951

3,939

* Acronym for in-vitro diagnostics.

Product Segments(¥ million)S

ysmex enjoys a unique revenue structure. On one hand, we
conduct a stock type of business in which we sell the instruments
needed for IVD, offer the specific reagents needed for long-term testing and provide support and maintenance services. Reagents deliver
higher gross profit margins than instruments, while instrument sales
drive increased reagent usage. Therefore, this segment should generate
stable earnings growth.
Sales of reagents and the provision of maintenance and otherservices currently account for approximately 70% of net sales.
Industrywide, sales are trending upward, with instrument sales
focused on the second and fourth quarters of the fiscal year.

2007

2008

2009

2010

2011

n Instruments

37,847

38,95838,20235,971

41,748n Reagents

42,03847,297

48,96653,47255,290

8,127

9,668

9,684

11,50012,14013,027

14,80014,98915,262

15,514

2007

2008

2009

2010

2011

n Japan

37,87335,96135,82838,62638,541n Americas

19,227

20,90823,41423,444

26,535n Europe

31,65839,23535,45436,44635,414n China

6,848

8,128

10,111

11,84315,093n Asia Pacific

5,432

6,492

7,036

5,847

9,111

n Maintenanceservicesn Others

Regional Segments by Destination(¥ million)S

ysmex supplies products and services to customers in more than170 countries. Net sales*1 are well balanced among three key
regions—Japan, Europe and the Americas. We are also accelerating
business development in China, which is experiencing remarkably
strong economic growth, and the Asia Pacific region. We are steadily
increasing our presence in emerging markets*2, which currently
account for 25% of net sales.

Business Activities

24*1 Net sales by destination is defined as the sales amount recorded by Group companies
to customers in a particular region. However, net sales by geographical region refers to
the sales amount made by a Group company in a particular location.
*2 Emerging markets: China, Southeast Asia, South Asia, Latin America, EMEA (East
Europe, Russia, Middle East, Africa)
Advanced countries: Other than those above

Sysmex Annual Report 2011

Sales Composition by Business(¥ million)

124,694

125,000

116,206
110,724
100,000

111,843

101,041n Diagnostics

94.4%

n Hematology

62.0%
12.8%
n Immunochemistry 2.1%
n Clinical chemistry 2.6%
n Urinalysis
7.6%
n POC testing
2.9%
n Others
4.3%
n Hemostasis

75,00050,000n ITn Other businessNet sales¥124,694 million

2.5%
3.2%

(Particle analysis, etc.)
25,000

0

2007

2008

2009

2010

2011

(Years ended March 31)

Sales Composition by Product(¥ million)

124,694

125,000

110,724
100,000

111,843

116,206

101,041n Instruments

75,000n Reagentsn Maintenance

50,000

33.5%
44.3%

services

9.7%

n Others

12.4%

n Japan

30.9%
21.3%
28.4%
12.1%
7.3%

Net sales¥124,694 million

25,000

0

2007

2008

2009

2010

2011

(Years ended March 31)

Sales Composition by Destination(¥ million)

124,694

125,000

110,724
100,000

111,843

116,206

101,041n Americas

75,000n Europen China

50,000n Asia Paciﬁc

Net sales¥124,694 million

25,000

2007

2008

2009

2010

Business Activities

0

2011

(Years ended March 31)

Sysmex Annual Report 201125

Business Activities

Market Overview and Sysmex’s PositionC

linical testing, used in medical diagnosis and treatment or
in monitoring the effects of drug administration, is essential
to the realization of a healthy society. Clinical testing can bebroadly divided into two categories: in-vitro diagnostics (IVD)
that involve the examination of blood, urine or cell samples
taken from the body and in-vivo tests that involve direct examination using X-rays, electrocardiograms (ECGs) or brain waves.

Clinical Laboratory Testing Categories
Examination

Diagnosis and Treatment

RecoveryDiagnostic Support
Monitoring Eﬀects of TherapyS

ysmex employs sales strategies tailored to the characteristicsof the regions and countries where it operates. In Japan,
North America and parts of Europe and the Asia Pacific, we
conduct direct sales, with Sysmex salespeople maintaining
close relationships with customers. In other parts of the world—
particularly in emerging market areas—we have found indirect
sales, which leverages the long experience and expertise of local
distributors, to be an effective approach. In China, for example,
we employ some 120 local distributors. In Latin America andRussia, among other regions, we have alliances in place to takeadvantage of the sales networks operated by leading global
pharmaceutical manufacturers.
Direct sales
Indirect sales

Clinical Laboratory Testing
Sysmex’s Business Domains

In-Vitro Diagnostics

In-Vivo Diagnostics

ȉ+HPDWRORJ\ȉ+HPRVWDVLVȉ8ULQDO\VLVȉ,PPXQRFKHPLVWU\
ȉ&OLQLFDOFKHPLVWU\ȉ;UD\V&7VFDQQLQJȉ(OHFWURFDUGLRJUDPVȉ5HVSLUDWRU\IXQFWLRQWHVWLQJȉ(OHFWURHQFHSKDORJUDPV DQGRWKHUV'LDJQRVWLFVIRUPHGLFDOFKHFNXSVSysmex’s business spans the IVD domain, involving the provision of instruments, reagents and laboratory systems aroundthe globe in such fields as hematology, hemostasis, urinalysis,
immunochemistry and clinical chemistry. At present, the Group’s
conducts sales in various fields in Japan, China and the Asia
Pacific region. In the Americas and Europe, however, we maximize our management resources by strategically concentrating
our sales efforts on fields of particular expertise: hematology,
hemostasis and urinalysis.

Fields of Expansion by Region(As of June 30, 2011)

Japan

China

AP

Americas Europe

Hematology

Yes

Yes

Yes

Yes

Yes

Hemostasis

Yes

Yes

Yes

Yes

Yes

Clinicalchemistry

Yes

Yes

Yes

Urinalysis

Yes

Yes

Yes

Yes

Yes

ImmunochemistryYesS

ysmex currently holds a 10th overall ranking in the IVD market. In hematology, we are the world leader in terms of market share.
However, developed countries’ demographics are changing due to graying populations and falling rates of childbirth, and global
competition is growing ever more fast-paced and intense. Sysmex is responding to these challenges by reinforcing its own sales network
and aggressively leveraging the benefits of alliances with other companies. By strengthening our sales channels and rounding out our
product portfolio, we are steadily enhancing our global presence.

Diagnostics Market and Sysmex’ s Position
Segment

Market size (¥ billion)

IVD total¥3,480

Hematology

200

Hemostasis

100

Immunochemistry960

Clinical chemistry530

IVD total¥3,480 billion

40

Urinalysis(Urine sediment 13)
POC (including SMBG*)

Business Activities

26

Others* Self monitoring of blood glucose

Sysmex Annual Report 2011

570
1,080

Market Share(Sysmex estimates)

Roche
Siemens
AbbottJohnson & Johnson
Beckman Coulter (Danaher)
Becton Dickinson
Alere
Bayer Diabetes
bioMérieux
SysmexOthersProduct Strategies
Diagnostics
Hematology
Hematology tests are a type of screening that counts red, whiteor other blood cells to determine whether a more detailed
examination is necessary. In addition to instruments, these tests
require specific reagents, which constitutes an ongoing demand.
Sysmex estimates that the global hematology market accounts
for annual sales of ¥200 billion. Furthermore, the market isdominated by only three major suppliers: Sysmex, Beckman
Coulter and Abbott. Nevertheless, we became the global leader
in the field of hematology in 2007, and we are steadily expanding our share of the market.
Hematology analyzers typically are identified by the numberof white blood cell types they distinguish: three or five. The total
number of white blood cells in a patient’s blood can indicate
inflammation or an infectious blood disorder. Further diagnosisof three types of blood cell helps to determine whether theorigin of the complaint is bacterial or viral. In addition, three-

type analyzers employ relatively simple testing principles andhave the advantage of being compact and inexpensive to maintain, as they require few reagents. Five-type analyzers, on theother hand, have a higher clinical significance, as they offer the
more accurate and precise measurement of five types of whiteblood cell, enabling various complaints and blood disorders to beanalyzed in more detail. In addition, analysis systems (five-type
instrument transport systems) at large-scale facilities in Japan,
the United States and Europe are realizing efficiency gains
through the use of robotics. Whereas three-type analyzers are
frequently introduced in emerging markets where hematology
analyzers are being used for the first time, many clients in China
and the Asia Pacific region are upgrading from three-type to
five-type analyzers, with a steadily growing number incorporating high-end systems.

XN Series

Specialization

This new model in the hematology field is designed to enhance clinical value. In addition to providing a body fluid measurement mode, the model substantially increases measurement accuracy for low platelet counts. Embracing the modular
concept, this series allows the combination of multiple analyzers, transport system, smear preparation system and other
instruments. This flexibility enables the proposal of tailored solutions to meet individual customer needs.

XN-1000(Single module)

XN-2000(Twin module)

XN-9000(Transport system)

HST
XE-5000
XT-4000i
XS Series
This compact, highly functionalmodel features the same measurement principles, reagentsand operability as models in thehigh-end XE series. This spacesaving unit offers the ability
to analyze five types of whiteblood cell, as well as excellent
measurement data interchangeability.

The XE-5000 is the high-end
model in the XE series, which
This basic, compact modelis shipped with software tois supported by the Sysmex
measure immature cells in the
Network Communication
Systems (SNCS), and features blood as standard instrument
a viewer-friendly screen and and a function to measure
blood cells found in extremely
an easy-to-use operatingsmall quantities in body fluids.
system.

Information Diversity

KX-21

The HST series offers fully automated blood cell counting, including white blood cell differentials, reticulocyte
analysis, preparation of smears and staining. Multiple
system configurations are available to meet the needs ofindividual laboratory requirements.

Reagents

Hematology analyzers require specific reagents.
We also manufacture reagents for other areasof in-vitro diagnostics, including hemostasis,
immunolchemistry, urinalysis and clinicalchemistry.

Featuring compact size and easy operation, thisanalyzer provides valuable blood test data such as
the white blood cell, three-part differential in lessthan one minute.

pocH-100i
Featuring compact size and easy operation, thiscounter allows high-precision measurement results
and makes it possible to perform hematology
simply in diagnostic and therapeutic settings.

Scale of Laboratory

Sysmex Annual Report 2011

Business Activities

Eﬃciency and Handling Capability

27

Business Activities

Diagnostics
Hemostasis
Hemostasis involves testing for two blood functions: coagulation, or clotting; and fibrinolysis, the process by which bloodclots are broken down. By testing specimens of blood plasma,
it is possible to diagnose hemophilia and thrombosis and to
examine hepatic (liver) function. Furthermore, testing blood
beforehand enables healthcare professionals to determine
whether blood is likely to coagulate properly during surgery.
As a rule, hemostasis tests can be performed using generalpurpose reagents, rather than specific reagents. However,analysis data varies slightly depending on the reagents used, andthe need for precise control has caused sales of specific reagentsto represent a high share of the market.
Sysmex estimates that the global hemostasis segment
generates annual sales of ¥100 billion. In 1995, we concluded a
distribution agreement with Siemens (previously, Dade BehringInc.), forging a synergistic relationship that reinforced ourrespective strengths in the hematology segment. As a result, we
now enjoy the leading share of the global market for coagulation
analyzers.

CS-2000i

CA-500 Series

CA-7000

The CS-2000i analyzer employs a fourth method, agglutination, in addition to the three fundamental measurement methods—the coagulation, chromogenic substrate
and turbidimetric immunoassay methods. Integrating
all these testing methods into a single station raises
processing performance.

These compact, fully automated analyzers offer advantages of the CA series such as high precision and easeof use. Operation is simple, making these analyzers
ideal for emergency laboratories and for use at small
and mid-size institutions that test infrequently.

The top of the CA series product line makes possible
ultra-fast throughput of 500 tests/hour possible (forsimultaneous measurement of PT/APTT). The Secure
Reagent System (SRS) allows control of reagent names,
lot numbers, and expiry dates through automatic
barcode reading.

Immunochemistry
Immunochemistry tests are performed on blood serum, thesupernatant fluid isolated after blood separation. Antigenantibody reactions are used to test for the presence of HIV andhepatitis and to look for cancer markers.
Manufacturers of analyzers apply their own measurement
principles, and specific reagents depend on the principles used.
Sysmex estimates annual sales in the global immunochemistry

market at ¥960 billion—making it the largest category in the IVD
field, and the market is expected to expand.
We aim to expand sales in Japan of the HISCL-2000i, a fully
automated immunoassay analyzer that enables highly sensitive,
high-speed assays, as well as our lineup of related reagents, toboost our share of the immunochemistry testing market.

HISCL-2000i
This model applies the chemiluminescence enzyme immunoassay (CLEIA) methodology to produce
a highly sensitive, rapid immunochemistry test system that can be used with reduced specimen
quantities. The model is designed for use by medium-sized hospitals. In a bid to establish our presence in the immunochemistry market, Sysmex released reagents for infectious diseases such as
hepatitis B, hepatitis C and HIV, and those for the detection of thyroid hormone markers. With theaim of expanding our offering of measurement items, our R&D team is working on the developmentof reagents for detection of diseases and coagulation molecular markers. In order to expedite thedevelopment of these reagents, we are also working closely with our partner companies.

Clinical ChemistryBusiness Activities

28

Clinical chemistry involves examining the enzymes, sugars andproteins in blood serum and plasma to determine the nutritional
status, liver and kidney functions, and testing for contraction of
conditions such as hyperlipidemia and arteriosclerosis.
Like hematology, clinical chemistry is commonly performed
around the world not only at times of illness, but also during
routine health checkups. Accordingly, the total number of examinations is extremely high.
Sysmex estimates that the global clinical chemistry market
accounts for sales of ¥530 billion, making it the third-largest
market in the IVD domain, after immunochemistry and POC,
including SMBG. Emerging markets such as China and other Asian

Sysmex Annual Report 2011

countries constitute a huge potential market, as they concentrateon augmenting healthcare infrastructure in tandem with theireconomic expansion. Among other contributors to demand
growth is that as standards of living improve, emerging economies
are likely to experience increases in such diseases as diabetes.
Sysmex has signed agreements withJEOL Ltd. and Furuno Electric Co.,
Ltd., involving automated clinicalchemistry analyzers and is leveraging
its sales network to sell these analyzers and their reagents in China andReagents
other parts of Asia.

Diagnostics
Urinalysis
Urinalysis entails testing for the presence of sugar, protein
or blood in urine and can be broadly divided into two types:
qualitative urinalysis and quantitative urinalysis. The first
type involves dipping a test paper into urine to determine
whether the abovementioned solids are present. In the second,the quantities of these substances are analyzed. Urinalysis
is an important screening tool that typically yields clues fordiagnosing a number of diseases. Sysmex estimates that the
global urinalysis market accounts for sales of ¥40 billion, withquantitative urinalysis making up ¥13 billion. We introduced theworld’s first urine formed sediment analysis system—the UF
series—that uses the flow cytometry method. This series enjoys
an excellent reputation with customers and has the leading

share of the global market for urine sediment analysis. Sysmex,
in cooperation with ARKRAY, Inc., developed the world’s first
fully automated integrated urine analyzer, which performs both
qualitative and quantitative urinalysis. This analyzer went on salein Japan in December 2010, and is gradually being launched into
other markets throughout the world.
UF-1000i
The UF-1000i offers fully automated, highprecision, quantitative analysis of urine
sediment using Sysmex’s proprietary
technology utilizing flow cytometry, further
improving the reliability of urinalysis.

POC Testing
POC is an abbreviation for point-of-care. POC testing can be
carried out on the spot in operating rooms, intensive care units,clinics or at the patient’s bedside, rather than in central laboratories, making possible rapid diagnosis and treatment. Currently,
Sysmex markets rapid detection kits to assist in influenza
diagnoses and easy-to-use devices to measure intravesical urine
volume.
Sysmex is working to increase its sales in this category byextending its business into pet diagnostics. In July 2010, we
formed a business alliance with IDEXX Laboratories, Inc., a leader

in this field. Under this accord, we began providing hematology
analyzers for pets and other animals on an OEM basis and sellingthem via IDEXX Laboratories’ networks.
ProCyte Dx (IDEXX’s brand name)
Incorporating numerous technologies and expertise
cultivated with humans into a compact hematology analyzer
that can be placed on a desktop, the ProCyte Dx features
data accuracy and ease of use, and can conduct tests inaround 2 minutes.

Life Sciences (Other Business)

IT
Laboratory Information Systems
Advances in information technology have generated demandin the healthcare industry for IT-driven medical information
networks. Such networks contribute to effective diagnoses
by collecting and analyzing test data and consolidating thisinformation into a convenient database. Sysmex plans toaccelerate its IT deployment to expand business with hospitals, clinics and remote medical care capabilities.
CNA-Net
CNA-Net is a laboratory-information
system provided by affiliated company
Sysmex CNA. The system consists of
independently operable subsystems forclinical chemistry, hematology, urinalysis and immunology testing. When used
as an independent system, CNA-Net isconfigured to encompass all processes
from examination reception to routine testing and test results reporting.

Sysmex is working to apply its leading-edge expertise toward
to the creation of higher-value-added testing and diagnostic
technologies in new fields such as cancer and diabetes. In
2006, the Sysmex-developed system for rapid detection ofbreast cancer lymph node metastasis based on the OSNA
method* was launched in Europe. This system was coveredby the Japanese national health insurance program two years
later, in 2008, and we are steadily introducing this system
to markets in Europe and Japan. We have also succeeded in
expanding the applicability of this system to colon cancer, andin 2010 we received manufacturing and marketing approval
from Japan’s Ministry of Health, Labour and Welfare.
* Please see pages 33–34 for an explanation of OSNA method technology
and user evaluation.

RD-100i

LYNOAMP BC

Other Business
Self-Medication Support
Peripheral artery monitoring devices that can measure hemoglobin levels without blood sampling are used at fitness centersand various other sites. Sysmex also sells health management
ASTRIM SU

PROWELL
PROWELL is a software package for use with a quick
health-check service offered at healthcare corners indrugstores and other outlets in Japan. The service allows
individuals to perform simple checks on their state ofhealth by entering some basic body measurements andanswering questions on lifestyle and dietary habits.

Sysmex Annual Report 2011

Business Activities

This non-invasive blood vessel monitor measures hemoglobin concentrations and blood-vessel width throughnear-infrared spectroscopic images simply by placing a finger on the detector. There is no need for blood sampling.

support software that supports health check services at drugstoresand in the healthcare sections of other shops.

29

Business Activities

Sysmex’s Evolving Technologies
Depending on blood cell type, anywhere from several thousand to several million
blood cells exist per microliter (0.001 milliter) of blood. Hematology tests are essential
for determining the number of blood cells that are responsible for oxygen transport, or
hemostasis. Sysmex employs two basic technologies—sheath flow DC detection andflow cytometry—to achieve precise measurements at the microliter level.
Basic Principles Underpinning Sysmex’s Hematology:
Sheath Flow DC Detection

B

Detection Chamber

Sheath solution(ﬂowing into thedetection aperture)lood cells can be broadly divided into three categories:
red blood cells, white blood cells and platelets. Platelets

are the smallest in diameter, at around 2 micrometers, while

Detection aperture
Sheath solution(ﬂowing out)

white blood cells are the largest, at around 15 micrometers.
Sheath flow DC detection is the basic method for measuring
the number of blood cells and distinguishing their types bysize. Broadly speaking, the method comprises three processes.

Detection Method
As a constant electric current is passed through a solution, this methodmeasures the changes in electrical resistance that occur when blood cells
pass through detection aperture.

ResistanceV

Three Processes in Counting Red Blood Cells–

DetectionchamberTime+

Platelet Red White
blood blood
cell cell

Accurate Dilution

Accurate dilution*1
Passing cells
one by one
through thedetection
aperture: Red blood cell
: White blood cell
: Platelet*2

Blood must first be diluted a certain amount to allow accurate measurementof the number and size of cells. This process reduces the number of cells pervolume of blood and minimizes errors caused by blood cells piling up on topof each other. Accurate dilution requires meticulous measurement of thequantity of blood and of the solution, or reagent. This process requires microlevel precision in the design of the measuring chamber and uses an apparatus
that minimizes degradation and abrasion.

Individual Passage through the Detection Aperture
Regardless of how accurately it has been diluted, a measured sample (thediluted blood solution) will contain a large number of cells. Lining up the cells
in a row beforehand simplifies the process of counting them, so a stream of
fluid*1 that forms a sheath around the flowing blood cells is generated to alignthe cells. The cells flow along the stream*2 toward the detection aperture,
where cells are counted, and pass through its center.*3 Unidirectional flow
prevents the stream*4 of blood cells from flowing backward through theaperture once they have passed through it.

Stream of ﬂuid
that forms a sheath*3*4

Business Activities

30

Counting cellsby the electric
signals

Sysmex Annual Report 2011

Counting Cells by Electric Signal
Blood cells do not transmit electric current easily, so cells in the test sample
cause resistance in a current applied across the detection aperture throughwhich they must pass. Therefore, blood cells can be counted by measuring
the number of times an electric resistance is generated. Larger blood cells
produce greater resistances, allowing the system to distinguish cells by type.

Capturing More Information: Flow Cytometry

L

Development of Instruments

aboratory tests must be reliable to be useful in diagnosis

Fully AutomatedHematology Analyzers

and treatment, and the medical community needs accessSemi-AutomatedHematology Analyzers

to measurement results that add value. Sysmex is addressing

CC-1001

these needs through a sustained program of technologicalCC-1001

innovation. Accordingly, we are progressing from the present
CC-710method of counting blood cells to using flow cytometry to

CC-1002CC-107

CC-710analyze their internal contents.

1964
1965
1970
1975

CC-108With flow cytometry, the target cells are stained witha special reagent and then irradiated using a laser diode toWorld’s ﬁrst

CC-720 model to include

capture information on cell size and internal structure. Thisa samplermethod enables detection of the five different types*5 of white

CC-800blood cell, as well as of any abnormal cells. Flow cytometry

CC-800CC-700provides clinically important information, as the distributionof the five types of white blood cells differs according to the

E Series
E-5000/E-4000/
E-3000E-2500/
E-2000disease present.
5 Each of the five types of white blood cell—neutrophil, lymphocyte,*

CC-120CC-1101980

CC-700E-5000CC-180CC-170CC-150CC-130CC-780Fully AutomatedHematology Analyzers

monocyte, eosinophil and basophil—has a different shape and function.

1985

NE-8000

M-2000NE Series
NE-8000/NE-7000/
NE-6000

F-800
F-500
F-300

K-10001990

K-1000
NE-1500

K-2000Flow Cytometry
With flow cytometry, the number of red blood cells and platelets
are first shrunk through the action of a surfactant. The target
white blood cells are nucleic-acid stained and irradiated withforward-scattered light, side-scattered light and side-fluorescence using a laser diode. The light signals are then analyzed tocategorize the blood cells.

SE-9000

F-810
F-610
F-310

K-800

SE-9000

K-4500World’ s ﬁrst model to use
a semiconductor laser

F-820
F-520

1995

SF-3000

World’ s highest
processing capacity

KX-21

XE-2100

KX-21NHigh EndXE Series
XE-2100/XE-2100L/
XE-2100D

Captured Information

2000

Lateral ﬂuorescent light intensity

KX-21N

Information on RNA and DNA amounts

pocH-100i

Middle Range
XT Series
XT-2000i/
XT-1800i

Side-scattered light intensity
Information concerning the internal
structure of cells (nucleus shape,presence of cell granules, etc.)

pocH-100i

Low End
XS Series
XS-1000i/
XS-800i

2008

XE-5000

Forward-scattered
light intensity
Information on cell size

XS-1000i

XN Series

Laser irradiation

2007

2009

XT-4000i

2011
Business Activities

XN Series

Sysmex Annual Report 201131

Business Activities

New Technologies Incorporated into Next-Generation
Hematology Systemand other instruments. This flexibility enables the proposalof tailored solutions to meet individual customer needs.
Using the combination of 25x concentrated reagents and theIn May 2011, Sysmex launched its new XN Series of products

RU-20 reagent preparation unit greatly reduces the changing

in the hematology field.

frequency of certain reagents. This is a particular boon for

To enhance customer testing environments, the XN Seriescommercial labs and university hospitals that process highprovides a body fluid measurement mode and increases

volumes of tests each day, by boosting operating efficiency

measurement accuracy for low platelet counts, associated withand requiring less reagent storage space.

such diseases as thrombocytopenia, to enhance clinical value.

Sysmex is currently the global market leader in the

To improve usability, the series embraces the modular

hematology field. By leveraging our strengths going forward,

concept. This series allows the combination of multiple

we aim to secure our position as the undisputed global leader

analyzers, transportation system, smear preparation systemin hematology.

Technologies Incorporated into Our Next-Generation Hematology System

Clinical Value Enhancements
Early Detection

Usability Enhancements

Selection ofTreatment Method

QualityEﬃciency

Environmental
Consideration

1. Increased measurement accuracy using new speciﬁc ﬂuorescent
staining of platelets

1. Modular system control technology

2. Increased measurement accuracy of low white blood cell counts
through more accurate white blood cell measurement technologies

3. Remeasurement automation

3. Enabling of hematopoietic stem cell transplantation through theuse of hematopoietic progenitor cell (HPC) measurement
technology

5. Concentrated reagent/reagent preparation unit standardization

2. Automated precision control function
4. Use of reagent cartridges and automatic reagent recognition
function
6. Remote monitoring of instruments using SNCS

As well as increased clinical value,
aim for innovative usability
enhancements

Ultimate solution

Automated Hematology Analyzer XN Series

Business Activities

32

Operability

XN-1000 (Single module)

Sysmex Annual Report 2011

XN-2000 (Twin module)

XN-9000 (Transport system)

In the life sciences domain, our mainstay system for rapid detection of lymph nodemetastasis based on the one-step nucleic acid amplification (OSNA) method is usedroutinely for diagnosis of breast and colon cancer lymph node diagnosis in hospitals
and other facilities in more than 150 locations throughout the world.

M

Having extended the effective scope of detection toinimizing the extent of dissection in breast cancer

include colon cancer as well as breast cancer, in December

treatment is generally considered desirable in terms of

the patient’s quality of life (QOL). At present, pathology labs

2010 we received manufacturing and marketing approval fromoffer a provisional diagnosis of the sentinel lymph node, where

the Ministry of Health, Labour and Welfare. Under the present

metastasized cancer cells first reach, intra-operatively and thenmethod of diagnosing colon cancer lymph node metastasis,

conduct post-operative confirmatory studies to determine thefollowing an operation a pathologist makes surgical incisions

extent of resection, as well as the post-surgical therapeuticin 12 or more lymph nodes to prepare pathological samples.

principle. Intra-operative diagnosis of cancer metastasis

The pathologist then views these samples under a microscoperequires highly skilled and experienced surgeons. Sysmex’s

to determine whether the cancer has metastasized. Post-

gene amplification detector, the RD-100i, enables the rapid

operative treatment is based on the results of these tests,

and highly precise detection of breast cancer metastases in thebut conducting detailed diagnosis on large numbers of lymph

sentinel lymph node, thus facilitating intra-operative diagnosis,

nodes places a major burden on the pathologist. Applying the

reducing the burden on medical practitioners and improving

OSNA method while conducting diagnosis at a level of preci-

patient QOL. Having confirmed its efficacy, we are now

sion equivalent to that achieved by the recommended method

introducing the system at more than 50 hospitals in Japan andby the Japanese Society for Cancer of the Colon and Rectum.

more than 100 in major European countries, particularly Spain.

This reduces the burden on pathologists and contributes to thestandardization of post-operative treatment of colon cancer.

The OSNA Method
The OSNA method is a rapid gene amplification technique that does not require the purification of genes (mRNA) that have been takenfrom a living organism. The method can be used for time-restricted intra-operative diagnosis of the lymph node, detecting cancer cells witha high degree of accuracy.

OSNA method
7LVVXH
Homogenized buﬀer
New sample
preparation method
RD-100i (analyzer)

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LYNOAMP BC (proprietary reagent)

Sysmex Annual Report 201133

Business Activities

Customer Feedback
We shall describe here how an institution is using OSNA (One Step Nucleic acid
Amplification) for diagnosing lymph node metastasis in breast cancer, together with
the institution’s views about the system and the service they are now able to offer topatients.
Spain (Hospital Lluis Alcanyis)
Dra. Laia Bernet

Q
A

What are the advantages of OSNA for thepathology lab from your point of view?

Q

Can you share with us any situation inwhich OSNA proved to be especially usefulin patient diagnosis?

From my point of view, the main advantage isprobably the standardization of the diagnosis since,
for the first time, all the pathologists working in thisarea will be able to speak the same language. This is probablyA

Yes, I remember a case in which we had diagnoseda carcinoma in situ and because of the extent towhich the tumor had spread and its characteristics,

the biggest advantage. Also the fact that the entire lymph

it had been scheduled for a sentinel lymph node biopsy. In

node can be analyzed and that we can be sure that no tissue isthis case, the OSNA result indicated a micrometastasis, whichlost is very important.

obliged us to re-evaluate the primary tumor. In fact, thetumor resection revealed a small focus of microinfiltration.
Consequently, the diagnosis for the patient changed and soQA

How long does it take you to provide adiagnosis of a sentinel node by OSNA?

did the treatment options.

This question depends a lot on the number of lymph

QA

nodes that we receive in the anatomical pathology
laboratory. We think that we ought not to accept

more than three actual sentinel nodes. On this basis, here at ourlaboratory we work for around 28 or 29 minutes if there is one
single node and 32 or 33 minutes if there are two or three nodes.

Would you recommend using OSNA for
sentinel lymph node analysis?
Of course. I can say that for me OSNA has changed
my life in terms of working on the sentinel lymph
node, since firstly I feel absolutely sure that I am

doing good work. What I mean is, I don’t lose any tissue and I
investigate everything the surgeon gives me. Secondly, I know

Q
A
Business Activities

34

Is this turnaround time acceptable for thesurgeons?

that I am speaking the same language as my pathologist colleagues. This means that we can make comparisons and draw
real conclusions from our work. Not like the way things haveYes. Surgeons feel that half an hour is the minimum

been up to now, where one person measures the micrometas-

time they need to excise the primary tumor. This

tasis using one method, another uses a different one and evenmeans that while we are investigating the lymph

trying to understand each other has been really difficult. Now

node in the laboratory, they are operating on the primary

we all speak the same language and I think that for the firsttumor and these procedures require exactly the same amounttime there will be interesting exchanges between us, and thisof time.

will result in real conclusions that are applicable to the patient.

Sysmex Annual Report 2011

Functional StructureAs a comprehensive
diagnostics supplier,Sysmex has built an integrated business encompassing R&D, production,
sales and after-sales support to provide products
and services to healthcare
facilities around the world.

Functional Structure

Sysmex Annual Report 201135

Functional Structure
Perspective
Throughout its R&D, production, sales and after-sales support processes, Sysmex
works to build customer satisfaction and instill confidence and trust.

O

ur products are the primary source of our strength as

feedback to our R&D divisions quickly enables us to continuously

a company. We develop in-house all the instruments,

augment product performance, operability and functionality, andreagents and software that are needed for in-vitro diagnostics,

develop high-value-added products rapidly and efficiently.
Our delivery network also is extensive. With operations

and have built all operations—from production to sales andafter-sales support—ourselves. Furthermore, delivering customer

Global Supply Chain

Research and Development
Japan<Technopark

Sysmex maintains extensive R&D operations, centeredin Japan and with facilities in Europe and Asia, and theCompany actively collaborates with universities and research
institutions throughout the world. Technopark, our core R&D
facility, is also a symbol of the “Creation of ‘knowledge’ and its
inheritance” concept. Technopark serves as a springboard for
R&D to cultivate new diagnostic technologies and high-valueadded products.

Overseas=R&D Center Europe=Sysmex New Zealand=Diagnostic Reagent Development

Center in China
and others

Production (Instruments)

Production (Reagents)

Japan

Japan

<Kakogawa Factory=Sysmex International Reagents=Sysmex Medica=Sysmex RA
The Kakogawa Factory, which produces all Sysmex instruments
shipped worldwide, provides a stable supply of high-quality
products that meet the strict regulatory requirements for
medical devices around the world. Sysmex products enjoy
an excellent reputation with customers. We have introduced
quality and process management systems to ensure quality inall processes from the testing and assembly of components to
product testing and shipment.

Overseas=Sysmex Reagents America (US)=Sysmex do Brasil Industria e Comercio (Brazil)=Sysmex Europe (Germany)=Jinan Sysmex Medical Electronics (China)=Sysmex Wuxi (China)=Sysmex Asia Paciﬁc (Singapore)=Sysmex India (India)
Sysmex emphasizes local raw material procurement and product manufacturing,as this approach allows stable product supply and competitive pricing. At
present, the Company operates nine reagent factories in seven countries. In
2007, Sysmex completed construction of a reagent plant in the United Statesthat has doubled production capacity in that country. The Company also is
expanding its reagent plant in Jinan, China, to capitalize on rapid market growth
there. Targeted for completion in May 2012, the augmented plant will quintuple
the amount of reagent that Sysmex currently produces in the country.

Functional Structure

36(two factories)

Sysmex Annual Report 2011

at 48 locations in 29 countries, Sysmex provides products andWe currently hold the leading share of the hematology

services to customers in some 170 countries. One of our great-markets in four of the regions in which we operate: Japan,

est strengths is our globally integrated structure spanning theEurope, China and Asia. We also boast the No. 1 overall share

R&D, production, sales and support functions.

of the global market.

Sales and Support
Japan<Solution Center<Seven branches, 12 sales oﬃces<Metropolitan Area Service Center=Sysmex TMC=Sysmex bioMérieux

Americas=Sysmex America (US)=Sysmex Canada (Canada)=Sysmex do Brasil Industria e Comercio

Europe=Sysmex Europe (Germany)=Sysmex France (France)=Sysmex Middle East (U.A.E.)=Sysmex South Africa (South Africa)and others
China=Sysmex Shanghai (Shanghai)=Sysmex Hong Kong (Hong Kong)

Asia Paciﬁc=Sysmex Asia Paciﬁc (Singapore)=Sysmex India (India)

and others

infrastructure in Asia, we formed an aﬃliated company
in rapidly growing Vietnam. Also, we established asales and customer service base in Spain, with the aimof expanding operations in the life science businesssegment. In 2011, we established aﬃliated companies
in the Philippines, which is experiencing ongoing
economic development and expanding its healthcare
infrastructure, and in Russia, one of the BRICs countries.
We also plan to step up sales activities in other regionsthat are expected to experience high levels of market
growth, including Asia, Central and South America,
Eastern Europe and Africa.

Direct sales

Customer needs

Indirect sales(Distributors)

Worldwide customers(Brazil)

In addition to a direct sales and support network,
the use of alliances has enabled Sysmex to build aglobal sales and support system tailored to meet local
characteristics. In 2010, we converted to a wholly
owned subsidiary the German HITADO Group, whichsells and services point of care (POC)* testing products,
marking our full-ﬂedged entry into the POCT market.
To capitalize on the ongoing changes in healthcare* An acronym for point of care, POC refers to testing that can be
performed rapidly in an operating room, intensive care unit,

Sysmex Annual Report 2011

Functional Structure<: Sysmex Corporation=: Aﬃliated companies

37

Functional Structure

Research and Development
Through its focus on improving test quality, Sysmex has established core technologies, developed a range of “industry-first” laboratory test technologies, createdadvanced and highly valuable diagnostic technologies and is actively engaged in life
science R&D.

S

ysmex’s inimitable R&D activities began in 1963 when

In 2008, we completed construction on Technopark, ourit became the first company in Japan to commercialize

core R&D facility, designed to foster synergy by accelerating thehematology analyzers. Since then, the Company has worked

sharing of information and expertise, as well as collaboration.

to improve diagnostic test quality at the microscopic level ofThis integration of the different technologies employed in our

blood cells by establishing core technologies for particle mea-

instruments, reagents and software, coupled with joint R&D ini-

surement or bioassays and developing a range of “industry-

tiatives, enables us to constantly incorporate customer feedback

first” laboratory test technologies.

into our product offerings. This congregation of researchers andSysmex is leveraging the abundant expertise it has culti-

engineers in a host of fields—electrical, mechanical, biological,

vated in the development of products to bring efficiency tochemical and IT, among others—encourages interaction andthe increasingly complicated diagnostic testing environment.

drives the creative fusion that generates new technologies.

Another goal is to contribute to the increased efficiency andSysmex is also working toward the establishment of a global

lower costs not only in the testing laboratory, but also by lever-R&D structure. Centered at Technopark in Japan, our structure

aging networks throughout the entire hospital for customers

is linked with other facilities in Japan and overseas, including theranging from small clinics to large medical institutions.

R&D Center Europe, Sysmex New Zealand and the Diagnostic

Sysmex considers R&D to be one of its most important

Reagent Development Center in China. We are also stepping

functions and the key source of Company growth. Each year,

up collaboration with outside research institutions to promote

we invest approximately 10% of net sales in R&D to keep ourinnovative technological developments that will create newtechnologies at the leading edge.

market opportunities.

Sysmex has extended its business domains beyond

In April 2011, we reorganized our R&D structure to ensure

hematology to cover such laboratory test fields as hemostasis,consistent management across the R&D and intellectual prop-

immunochemistry, clinical chemistry, urinalysis and others. We

erty management functions, reinforcing our ability to develop

are now working to broaden our R&D activities even further tobreakthrough technologies and distinctive products that will

create new diagnostic technologies for disease management

engender new markets.

including hematology, immune diseases, infectious diseases,
cancer and diabetes.

R&D Personnel and Principal Areas of Responsibility(Fiscal year ended March 31, 2011)
Mechanics 6%
Liquids 4%
Staﬀ 29%

Optics 3%
Applied physics 1%
Electrics 7%

Operational
assistance 2%

Software 13%

Surveyanalysis 2%
Functional Structure38

Biochemistry 33%

Sysmex Annual Report 2011

R&D Structure

Product Development Division
Research Division(Search for leading-edge technologies)

Technology Development Division(Develop elemental technologies)ȉ+HPDWRORJ\ȽHOG
ȉ6\VWHPSURGXFWVȉ1RQKHPDWRORJ\ȽHOGV
ȉ/LIHVFLHQFHȽHOG
OthersR&D Strategic Planning Division(Technology strategies, product plans, intellectual property management, etc.)

Management System

R&D Strategic Planning Division

Research Division

Product Development Division

In this division, R&D staff manage andcontrol a host of activities spanningresearch to product development. The
division’s strategic planning function
involves the creation of technology strategies, the optimal allocation of management resources based on these strategies,
and the development of a global R&D
structure.
The division also formulates plans
related to the acquisition of technologies
and our own products, handles technicalinformation pertaining to commercialization and manages intellectual property.
Particularly with regard to intellectual
property, this division communicates withdepartments conducting the relevant
R&D, formulates and implements patentfiling strategies, engages in invention
identification activities and conducts
research into third-party intellectual
property.
Furthermore, the division conducts
liaison activities to foster smooth relations with related institutions in Japanand overseas, as well as handling a broad
range of other activities.

This division works to establish diagnostic
methods for cancer, chronic diseases andother targets. We have formed an organization for drawing up plans for individual
analyses including cell analysis, protein
analysis, genetic analysis and biologicalanalysis. By searching for leading-edge
technologies in each category, the divisionaims to establish new diagnostic concepts,
clinical testing applications and technology platforms.

An integrated organization for developing
instruments and reagents for individual
fields, including hematology, hemostasis,
urinalysis, immunochemistry and life sciences, this division pursues product development primarily on a market-in basis.
Specifically, the division is separated into
a department that specializes in our core
fields of hematology and system products.
The division also allocates resources tostrengthen the Company’s operations
in areas of future growth—hemostasis,
urinalysis, immunochemistry andother non-hematology and life science
categories. This separation is designed toenhance specialization related to testingand diagnostic technologies, as well as toaccelerate product development.

Technology Development DivisionThis division creates systems for carrying
forward and extending the applicationof key technologies used in previous
mechatronics, software, reagents andother products, as well as formulating
the elemental technologies needed infuture product development. It also
conducts a full range of activities ranging
from clinical performance trials to patentacquisition.

Functional Structure

Sysmex Annual Report 2011

39

Functional StructureIntellectual Property Activities
Creating an environment that encourages intellectual creativity and ensuring
a competitive edge to continue stable growthIn line with its expanding business domains and global

In addition to reinforcing the liaison function (supporting

development, Sysmex has established basic principles toidea generation, converting intellectual property into rights

share with employees its fundamental thoughts on intellectualand leveraging these assets), we take a proactive stance on

property activities and do its utmost to strengthen the Group

intellectual property education activities, which are part ofthrough these activities.

our effort to quickly convert research successes into valuable

In accordance with these basic principles, the Company’s

intellectual property. We also have in place a remuneration

basic policy on specific intellectual property activities is tosystem that includes bonuses based on patent performance.

liaise with R&D divisions, uncover latent intellectual property

This system is designed to contribute to the Group’s business

opportunities and survey the intellectual property rights ofand enhance incentives for inventors. Patent remuneration isthird parties.

provided based on rankings in accordance with the magnitude

Patents Held, by Region

Patent Applications
g

Japan

g

Overseas300

Asia Paciﬁc 3%

250

China 5%

Japan 38%

58 38

200
150

431

1,135

100

383

As of March 31, 201150
02002 2003 2004 2005 2006 2007 2008 2009 2010
(Years ended March 31)

2011

225
Europe 34%

Americas 20%

Basic Concept for Intellectual Property Activities
Intellectual Property Activity Objectives

Basic Principles of Intellectual Property Activities
The goal of Sysmex’s intellectual property activities is to secure
flexibility in R&D and business development and contribute to
the management of the Group’s business.

Global in scope

Basic Policy on Intellectual Property

Functional Structure

40

Sysmex ensures global competitive advantage and sustains
stable growth by maintaining an environment that supports
employee intellectual creation activities, by actively securing
and utilizing rights to valuable intellectual property created in
the activities of all Group companies, and by respecting theintellectual property of third parties.

Sysmex Annual Report 2011

Trusted throughout
the Company

Beneﬁcial to
R&D personnel

of the contribution using an original calculation formula based

countries. As we cannot guarantee the diagnostic reliability

on examination of factors including sales of products to whichof these knock-offs, we have cautioned consumers by placing

the invention has been applied and royalty income in accor-

advertisements in local newspapers. We have also mounted

dance with Sysmex’s employee commendation regulations.

extensive efforts to elicit the cooperation of these countries’

Sysmex holds approximately 1,135 patents worldwide,

governments in addressing the problem.

concentrated in Japan, the United States and Europe. We are

As a research-driven company, Sysmex is reinforcing

striving to ensure worldwide flexibility in R&D and operational

its intellectual property management and supporting thedevelopment by also acquiring patent rights in the rapidly

knowledge-building efforts of its employees. We believe thatdeveloping China and Asia Pacific regions.

persevering in these areas will help us sustain our global

In recent years, counterfeit Sysmex reagents have been

competitiveness.

discovered in China, Indonesia, Malaysia, Pakistan and other

Sysmex Receives Fiscal 2011 Intellectual Property Achievement Award from
Ministry of Economy, Trade and Industry Patent Office
Sysmex received a Fiscal 2011 Intellectual Property Achievement Award from the Japan Patent
Office of the Ministry of Economy, Trade and Industry. The award received was the Minister of
Economy, Trade and Industry Award (Enterprises Excelling in Patent Utilization), the highest award
in Japan involving intellectual property. Contributing to this award was our management of intellectual property activities spanning three areas: operations, R&D and intellectual property.
The award also attests to the success of Sysmex’s efforts to enhance internal awareness ofintellectual property and encourage initiatives that benefit researchers, as well as being trusted andglobal in scope.

Receiving the award

Sysmex Receives 2011 “Invention Award” in 2011 National Commendation for Invention

The technology is incorporated into our mainstay fully automated hematology analyzers

Sysmex Annual Report 2011

Functional Structure

Sysmex received the “Invention Award” in the 2011 National Commendation for Invention,sponsored by the Japan Institute of Invention and Innovation for second straight year. This commendation, first issued in 1919, is supported by such organizations as the Ministry of Education,
Culture, Sports, Science and Technology; the Ministry of Economy Trade and Industry, the Japan
Patent Office; and Nippon Keidanren (Japan Business Federation). The award system is designed
to contribute to the advancement of Japanese science and technology and the promotion ofindustry.
The technology for which Sysmex received the award, white blood cell classification andcounting method and associated reagents, is a method that Sysmex developed to classify andcount white blood cells using a solution and a dye compound that enhances the fluorescent intensity of the cells. Simply mixing the reagent with a blood sample facilitates the classification andcounting of five types of normal white blood cell, at the same time classifying and counting to ahigh degree of precision abnormal cells, such as immature white cells. This invention also enables
the automatic counting of immature granulocytes, which previously had been problematic. The
resulting immature granulocyte counts can be used in diagnosing bone marrow convalescence,
serious infection, transplants of cancerous bone marrow and myelogenous leukemia.

41

Functional Structure

g R&D Facilities

Sysmex creates high-value-added diagnostic technologies and develops instruments and reagents mainly at the core Technopark
facility. By enhancing links with research and development centers in Japan and overseas, Sysmex works to develop innovativetechnologies that will create new markets.

Technopark
Based on the concept of the “Creation of ‘Knowledge’ and
Its Inheritance,” Technopark was established as the center of
R&D activities for the Sysmex Group in 2008, the 40th year of
establishment. In addition to having more than half of its area
dedicated to green space, laboratory and office space is locatedon the same floor, providing an optimal R&D environment.

BMA Laboratory

R&D Center Europe

The BMA Laboratory is located within the Business Support
Center for Biomedical Research Activities (BMA), a corefacility in the Kobe Medical Industry
Development Project. The Laboratory
is researching methods to predict anticancer efficacy and developing protein
chips that can simultaneously measureprotein activity and expression.

The R&D Center Europe was opened in 2006 in Germany as
the Company’s first overseas research facility. Sysmex is taking
advantage of this European location tocooperate with research and medical
treatment institutions in the development of new testing technologies
targeting diseases and other problems
that are uncommon in Japan.

Sysmex Asano Laboratory

Sysmex New ZealandSysmex New Zealand is a Sysmex Group company that specializes in information technology. Mainly in Asian markets, thecompany develops laboratory
information systems in local
languages and tailored to otherregional requirements.

The Sysmex Asano Laboratory is a research base founded within
the Kobe Translational Research Informatics Center (TRI) to
pursue joint research with the cell therapy research group of
the Foundation for Biomedical Research and Innovation (FBRI).
Under the direction of Dr. Shigetaka Asano, Professor Emeritus,
University of Tokyo, Sysmex aims to develop new diagnostic
technologies through joint research at the laboratory on theefficacy of cell therapy and improved safety profiles.

Sysmex CNA
Sysmex CNA is the specialist IT company within the Sysmex
Group. Sysmex CNA specializes in medical information
systems over a broad range of fields
and has built up a strong reputation
domestically in the clinical laboratory
test field.

Functional Structure

42

Sysmex Annual Report 2011

Diagnostic Reagent Development Center in China
In December 2009, Sysmex opened the Diagnostic Reagent
Center in China. Located within Sysmex Wuxi Co., Ltd., thiscenter prepares for our entry in the
immunochemistry field in China,
which is enjoying one of the highest
rates of economic growth in Asia.
In China, demand for the early
detection and treatment of hepatitis isstrong, as the country has a high incidence of this disease. We will employ this new development
center to expedite the development of reagents that meet the
specific demands of this growing market. Our first initiative
will be the development of immunochemistry reagents, suchas hepatitis markers and cancer markers.

Purchasing, Production and Logistics
Rigorous quality control and global supply chain management systems allow Sysmex to
swiftly provide a stable supply of products of consistently high quality to customers inmore than 170 countries.

consistent supply of top-quality diagnostic and medical-

Monozukuri Goes Digital, Reducing Work Timetreatment test products is essential to medical care sup-

The Kakogawa Factory uses Smart Pro, a production support

port. Sysmex employs a proprietary, fully automated systemsystem that Sysmex developed in-house, to support factorythat covers all procurement operations, giving the Company aassociates, manage processes and assist quality management.

real-time grasp of raw material and component order, delivery,

We began using 3D CAD design data created at the develop-

and receipt and inspection status. This system allows Sysmex

ment stage to make work processes more visual, helping toto standardize at the R&D stage the selection of suppliers thatshorten the time employees require to commit these processes

can ensure stable delivery of appropriate raw materials andto memory and contributing greatly to their ability to absorb

components, thereby achieving swifter R&D and better cost-

multiple skills. Monitors located alongside workbenches depict

competitiveness. We also aim to quickly launch new products

assembly and other processes in 3D, with an audio explanation

into mass production, transforming the engineering chain,accompanying each process. This arrangement makes work

including raw materials purchasing and through concurrent

processes easier for new associates to understand, and helps

engineering.

to maintain quality and boost productivity.

A

We also use our information technologies to configure

Instruments Offering High “Made in Japan” Quality

networks linking manufacturing facilities to the products

For the manufacture of instruments, we have introduced

themselves. This configuration automates the final productleading-edge production and quality control technologies toadjustment and testing processes, which cuts down signifi-

provide products that are of high quality and offer high added

cantly on time to shipment.

value. For this reason, we manufacture all our instruments at
the Kakogawa Factory. We produce internally those parts thatuse proprietary technologies or for which stable sourcing is
problematic. This reduces the risk of technology outflows andlessens procurement risk, while allowing us to maintain stable
quality. For other parts, however, we maintain cooperative
relationships with parts makers who can meet our stringent
quality requirements, thereby ensuring a stable supply. “Madein Japan” and the Sysmex brand have become bywords for
quality, and our products are recognized worldwide for theirreliability.
Furthermore, as around 80% of the Kakogawa Factory’s
products are shipped overseas, we have structures in place
to ensure that we meet the regulations of each destination
country.

Functional Structure

Sysmex Annual Report 2011

43

Functional Structure

Global Reagent Manufacturing to Ensure Stable
Product Supplies

Improving our Global Supply Chain Management
Systems by Reorganizing Logistics Locations andReconfiguring Supply flow

In its reagent production, Sysmex employs thorough quality
management and makes every effort to provide reagents

For instrument and reagent manufacturing, Sysmex promotes

consistently and stably. Our core production facilities in

upstream purchasing and is strengthening the Company’s

Japan are the Ono Factory and the Seishin Factory of Sysmex

unified development and production structure to enable

International Reagents, an affiliated company. Sysmex has

early-stage mass production. Sysmex Trade Mission (STM), an

substantially cut production lead times, cost of sales andelectronic purchasing system that automates complex order-

inventories at these two plants to increase global cost com-

ing activities, helps reduce procurement costs and strengthen

petitiveness. The Company pursues production that capitalizes

groupwide production management.

on the characteristics of each plant. The Ono Factory is used

For the logistics function that is responsible for delivering

for the mass production of reagents using automated facilities,

final products to customers, Sysmex is improving its global

whereas the Seishin Factory is used for the production of bulk

supply chain management (SCM) system by reorganizing

biological reagents requiring advanced, specialized knowledge.

domestic logistics locations and reconfiguring supply flow

Sysmex is also expanding its overseas production bases tooverseas. In the United States, the Company reorganized its

meet growing overseas demand and improve its ability toreagent supply system, creating a logistics system that encour-compete. The Company currently has nine production facili-ages direct communications with customers. In Europe, theties in seven countries. By introducing at overseas facilities

Company established a European parts center and reworked

the expertise in manufacturing technologies that we haveits system for supplying the parts needed for maintenancecultivated and the quality assurance systems that are in place

services. In the future, the Company will reinforce its IT-basedat our Ono and Seishin factories, we are working to achieve alogistics management system to allow the groupwide sharing

high-quality, efficient production system on a global basis.

of inventory and order information.

Proprietary Production Technologies Turn Employees into Artisansin Short OrderR
Functional Structure44

uby pellets having hairsbreadth openings (25–300 microns) are used in thedetection portions of hematology analyzers. Processing on a micron level
requires extremely sophisticated technology, but we have developed production
techniques and specialized tools to enable employees to handle this task after only alimited training period.

Sysmex Annual Report 2011

g Purchasing Production and Logistics Facilities

Instrument Production
Kakogawa Factory (Japan)
The Kakogawa Factory is a production base for diagnostic
instruments that uses quality control systems to produce highly
reliable instruments based on international and industrywide
quality control standards, and the laws and regulations ofdestination countries. The plant provides the capacity to supply

some 300 products to markets
around the world and employs
flexible production systems.

Reagent Production Facilities in Japan
Ono Factory

Seishin Factory(Sysmex International Reagents)(Sysmex International Reagents)

The Ono Factory is dedicated to the high-volume production of
about 400 reagents, centered on products for the hematology
segment. The production lines are divided into some types
according to capacity, and thefactory seeks to simultaneously
increase quality, reduce costs,
and mass produce by optimizing automated and manual
operations.

The Seishin Factory is mainly responsible for the production of
bulk biological reagents and draws on wide-ranging production
technologies to produce a line of more than 1,000 products
ranging from clinical chemistry to immunochemistry reagents,
hemostasis reagents, andreagents for use as quality
control materials. The factory
has also constructed a flexible
production system to meetrequirements for highly diverse,
low-volume manufacturing.

Overseas Reagent Production Facilities
In order to ensure a timely and stable supply of reagents throughout the global market, Sysmex operates reagent factories in Germany,
the United States, Brazil, China, Singapore and India.

Americas

EuropeSysmex operates two reagent factories in the Americas, which
represent the world’s largest market. Establishing a factory in
Chicago in 1993, the Company doubled its capacity in 2007 tomeet growing demand andenhance cost competitiveness.
Another reagent plant wenton line in Brazil in 2000 inanticipation of future growth in
the region.

In Europe, the location of
Sysmex’s first venture overseas,
we established a regent factoryin Neumünster, Germany, in
1993. To meet rising European
demand for regents, we doubled
the plant’s capacity in 2007.

Asia PacificIn the Asia Pacific region, which is slated for future growth, we
opened the Singapore Factory in 1998. In 2007, we also set up
a reagent factory in India to meet fast-growing demand in thatmarket. This combination allows us to provide a stable supply ofhigh-quality reagents broadly
throughout the Asia Pacificregion.

China

Sysmex Annual Report 2011

Functional Structure

We operate two reagent factories in China, which is enjoying
rapid economic growth. The first of these was established in
Jinan in 1995, followed by a plant in Wuxi in 2003. The Wuxi
Factory was the first operated by a non-Chinese company
to receive local pharmaceutical manufacturing approval. In
addition to hemostasis and clinical chemistry, this will allow
the plant to produce the sophisticated substances needed forbiotechnology applications.
The Wuxi Factory is currently
expanding. An extension thatis slated to commence operations in May 2012 will increaseline capacity to approximately
five times their current level.

45

Functional Structure

Sales and After-Sales Support
Sysmex provides more than just products; we deliver consistently accurate test
results. We offer high added value as a provider of IVD solutions.

W

hen testing is interrupted, whatever the reason, physi-

In line with ongoing medical advances, healthcare is growing

cians become unable to diagnose their patients. This

more sophisticated, and treatment regiments are changing andis why simply providing high-quality products is insufficient.

becoming more diverse. Customers in developed countries are

Rather, we consider the delivery of consistently accurate test

demanding ever more advanced and highly specialized testing,results to be our foremost goal. We address this responsibility bymore efficient testing and even higher healthcare service levels.

providing after-sale services and scientific support, which inspire

Rather than just suggesting that customers buy its products,

the trust and confidence of customers throughout the world.

Sysmex meets these needs with value-added proposals that

Confirming this satisfaction, survey results demonstrate thatspan the entire medical practice. For instance, instead of simply

Sysmex has earned a solid reputation with its customers foraiming to reduce the time from the start of testing to themeeting their expectations for instrument performance, as welldelivery of results, we strive to shorten the lead time between

as for overall service performance.

a patient’s arrival at the reception desk and the delivery of

Customer Assessment in the United States (by IMV ServiceTrak™)• Survey of Customer Satisfaction
A survey of customer satisfaction published in 2011 has shown that Sysmex is ranked No. 1 in the United States for instrument
performance meeting expectations.

Instrument Performance Meets Customer Expectations
SysmexCompetitor 1

Competitor 2Competitor 3

Competitor 4

Industry Avg.

1=Very Poor 2=Poor 3=Fair 4=Good 5=Very Good 6=Excellent

Sysmex Rated Highest for the Past 12 Years
5.34

5.4
5.2

4.94

5.0
4.8
4.6
4.4
4.2
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Overall Service Performance
1=Very Poor 2=Poor 3=Fair 4=Good 5=Very Good 6=Excellent

Industry Avg.

Sysmex Rated Highest

5.06

Sysmex5.27

Competitor 1
Competitor 2Competitor 3
2.0

Functional Structure

46

3.0

4.0

5.0

6.0

Founded in 1977, IMV continues to be a leading supplier of comprehensive clinical diagnostic and medical imaging market research reports
and site-specific databases for the healthcare industry.

Sysmex Annual Report 2011

test results. To this end, to ensure that the lab technician can

the domain of in-vitro diagnostics. We are in the process ofconduct testing efficiently we do not merely engage in theextending to the rest of the world the value-added proposal-

sales of diagnostic instruments and reagents, but provide total

making skills and highly specialized support services we have

solutions that employ information technology to network thecultivated in Japan, as we strive to build sales and support

entire laboratory. This improves healthcare services in a number

service networks that are carefully matched to the needs ofof ways, such as reducing patient waiting time and providing

individual markets.

information on test results to the doctor. At present, we take

In Japan, the Customer Support Center responds tothis overarching approach mainly in our proposals to customers

inquiries around the clock, 365 days a year.* Knowledgeable

in developed countries. In contrast, in emerging markets where

specialists answer questions not only about instruments

healthcare demand is rising in line with economic growth, weand reagents, but also about scientific matters. Sysmex has

concentrate primarily on delivering accurate test results by

established a rapid support system by stepping up cooperation

providing high-quality products without defects, and prompt

between the Customer Support Center and Sysmex offices andafter-sale services. By being flexible in making proposals thatsales offices across Japan.

are tailored to the needs of individual countries, we are building
confidence and instilling confidence among our customers.

Sysmex operates call centers in Japan, the United States,
China, Germany and Singapore, and dispatches service engineers to customer premises as necessary. In the United States,

Delivering Specialized, High-Value-Added Solutions
Cultivated in Japan throughout the World

where customer support functions must cover extensive

Sysmex maintains seven branches and 12 sales offices inengineers allows Sysmex to respond rapidly to customer

Japan, constituting a top-class sales and support network inrequests. In addition, the Company is rolling out on a global

areas, close collaboration between call centers and service

Regional Approaches
We expect our growth to be particularly pronounced in two markets: the United States and China. In the United States, we are nearing
the position of market leader, and in China demand continues to expand at a rapid pace. Here we introduce Sysmex’s strategies.

China

In the United States, the world’s single largest market, theObama administration is working to reduce the number ofuninsured people by 45 million, and people throughout thecountry are espousing the need to contain costs by introducing
sweeping healthcare reforms. In 2003, Sysmex changed its
operating method in the country from a system of selling
products indirectly via distributors to one of providing direct
customer sales and support. As a consequence, we have beenable to increase our market share by delivering proposals thatcompetitors cannot emulate and through highly competitive
product offerings. We have earned strong ratings in the UnitedStates from large commercial laboratories, and integrated
healthcare networks (IHNs), and we are steadily increasing ourshare of the market.

In tandem with its robust economic growth, efforts to enhance
China’s healthcare infrastructure are underway, prompting
double-digit annual growth in the diagnostics market. Sysmex
built a reagent factory in the country early on, in 1995, andhas built up its operations steadily since that time. We havecreated an extensive sales and support network spanning theentire country, at 15 locations and employing some 120 primary
distributors. China’s markets vary significantly by region, withdifferent languages and cultures—even government insurance
reimbursement systems differ. Thanks to its solutions-based
business catering to the specific needs of individual regions,Sysmex’s operations in China are solidly outpacing the market
rate of growth.

Sysmex Annual Report 2011

Functional Structure

Americas47

Functional Structure

scale the Sysmex Network Communication Systems (SNCS),

that are creating ISO management systems. Leveraging thea support service that connects the Customer Support Center

expertise we have gained through ISO 9001 and ISO 14001

and customers’ products via the web for the online provisioncertification, as well as our experience as a manufacturer ofof remote instrument maintenance and quality control. The

medical instruments, we consult with organizations on earning

SNCS is used by many customers and has earned a strong

certification under ISO 9001 and ISO 15189, as well as otherreputation. The Company has launched the SNCS in Japan, thestandards. Our services have been instrumental in helping a

United States, Europe and other advanced countries, as well as

number of customers gain ISO certification.

in Asian and other emerging markets and is steadily expanding

Sysmex sponsors hematology seminars around thethe installed base.

world to provide physicians and laboratory technologists* Service for customers who have maintenance contracts

with information on the latest trends in hematology. The
Company began conducting annual seminars in Japan in 1978

Sponsoring Scientific Seminars for
Advancement of Healthcare

and expanded this program to China in 1998. Sysmex now

To promote higher levels of healthcare service, Sysmex

Indonesia, India and other Asian countries and holds sympo-

provides an ISO support service for healthcare institutions

siums in Europe and Americas.

conducts seminars and other activities periodically in Thailand,

Sysmex Network Communication Systems
SNCS puts the Customer Support Center on line, enabling Sysmex to manage the precision of customer equipment in real time, automatically monitor equipment and provide information over the Web.

Online Quality Control
Precision management data is transmitted automatically over theInternet on a daily basis. The system conducts sample surveys todetermine precision. Customers can browse up-to-the-moment
survey results from anywhere in Japan. Using the system’s listviewing function, customers can see at a glance the status ofequipment at multiple facilities across Group medical institutions.

Sysmex Network Communication Systems
SysmexHospital

Network

Customer Support Center

Automated hematology
analyzer XN-2000 andother Sysmex instruments

Online Support
Analyzers retain a host of data, such as error logs, numberof operations and set values. This information is transmitted
automatically to our server, allowing us to understand the statusof customer equipment and, if conditions warrant, offer advice tominimize potential damage. Remote diagnosis and image-sharing
systems help to accurately pinpoint failure locations so that we
can quickly provide necessary parts, to shorten down time.

Web Information Service
Functional Structure48

We communicate with customers via a specialized e-mail application. Our web information service also offers case studies of
illnesses, literature lists and technical information.

Sysmex Annual Report 2011

1. Online support
2. Online
monitoring
3. Real-time QC
4. Supply support
information

Corporate GovernanceS

ysmex considers
reinforcing corporate
governance one of its mostimportant management
topics. We aim to maximize
the overall corporate valueof the Group through management robustness, bettertransparency and improved
management speed andefficiency.

Corporate Governance

Sysmex Annual Report 201149

Corporate Governance
An Interview with the President
Sysmex has introduced an executive officer system, which is designed to increasedecision-making speed on the execution of operations, reinforce the management
function and respond swiftly to changes in the operating environment.

Sysmex considers reinforcing corporate governance one of its most important management
objectives. We aim to maximize the overall corporate
value of the Group through management robustness,better transparency and improved management
speed and efficiency. As a group, we are committed
to providing customers with high-value-added products and services through operations that comply
with laws, regulations and social mores. Furthermore,
we aim to return profits to our shareholders and thecommunities in which we operate and distributewealth to our employees. This constitutes our definition of corporate social responsibility.

14 executive officers. The Company has adopted the executive
officer system and established the Nominating Committee
and the Compensation Committee to increase the speedof decision-making in the conduct of business and respondquickly to changes in the business environment.

Q
A

What specific initiatives did you undertake in the fiscal year ended March 31,
2011, with regard to making decisions
about business execution?

The Board of Directors consists of eight directors. The
Board meets regularly once a month to deliberate on
important management issues and convenes extraor-Q

dinary meetings as necessary.

Please outline your current management
organization.

A

Sysmex has adopted the corporate auditor system.
The current management organization consists ofeight directors (seven of whom are executive officers),

four corporate auditors (including two external auditors) andCorporate Governance

50

Sysmex Annual Report 2011

The Global Strategic Committee consists of the president
and executive officers. As a rule, this committee meets once amonth to deliberate on the Group’s management direction andimportant strategic issues.
The Steering Committee consists of the president and executive officers. The committee meets once a quarter, in principle,
serving as a consultative body to the president to deliberate onimportant matters concerning the Group’s business.

engaging in appropriate supervision of the execution of busi-

The Group Management Reporting Committee consists

ness as stipulated by law. The Board of Auditors works closelyof the president and executive officers, directors of overseas

with the accounting auditors on the audit plan report (annual)regional headquarters and division managers. The committee

and the audit results reports (annual), exchanging information

meets once a quarter, in principle, reporting important mattersand opinions as necessary, such as when conducting internal

concerning the Group’s operations.

control audits related to financial reporting.

The Operating Committee consists of managers of divi-

The Company has contracted with Deloitte Touchesions. The Committee meets once a month to find solutions toTohmatsu to perform a certified public accountants audit. In

cross-functional problems.

addition to conducting an audit of the entire Sysmex Group,

In the fiscal year ended March 31, 2011, the Board of

the Company maintains an environment that makes it possible

Directors met 17 times, the Global Strategic Committee

to rapidly cope with changes in the accounting system. The

11 times, the Steering Committee 18 times, the Group

Company has contracts in place with several law offices andManagement Reporting Committee four times and themaintains a structure to solicit and obtain advice on important

Operating Committee 12 times to address matters relating tomatters as necessary.

management strategy and important issues facing the Group.

Q

A

Q

Please tell us about your structure for

Please explain the activities performed byexternal auditors.

A

auditing business execution.

External auditors attend meetings of the Board of

The Board of Auditors consists of four corporate

Directors and the Board of Auditors, as well as meet-

auditors, two of whom are external auditors. The

ings of the Steering Committee, as appropriate. They

corporate auditors attend the Board of Directors

also receive reports from standing auditors and deliberate

and Steering Committee meetings and maintain systems forthese reports, participate in audits of the execution of businessappropriately supervising the conduct of business on the partby directors, receive audit plans and audit reports from theof the directors. The corporate auditors also maintain close

accounting auditor and deliberate these reports with thecommunications with the Internal Audit Office, exchanging

accounting auditor. External auditors also receive necessary

information and opinions as necessary, and confirm and evalu-

information by accessing various databases. No specific staff

ate the appropriateness of business execution. The Board ofmembers are assigned to assist these auditors, but the Internal

Auditors will continue to enhance management soundness by

Audit Office, an auditing office, provides support.

Shareholders’ Meeting
Election/Dismissal

Election/Dismissal

Election/Dismissal

Board of Directors (Directors)
Nominating Committee

Accounting Auditors

Board of Auditors(Corporate Auditors)

Compensation Committee
President & CEO

Auditing

Auditing

Global Strategic Committee

Internal Audit Office

Steering Committee

Risk Management Committee
Corporate Governance

Executive Officers
Divisions, Subsidiaries and Affiliates

Sysmex Annual Report 201151

Corporate GovernanceDirectors

Front row, from left: Kenichi Yukimoto, Hisashi Ietsugu, Masayoshi Hayashi
Back row, from left: Kazuya Obe, Yukio Nakajima, Shigenori Ohigashi, Koji Tamura, Mitsuru Watanabe

Hisashi Ietsugu

Yukio Nakajima

President and CEO

Member of the Managing Board and Executive Officer
Managing Director
Corporate Business Planning, Corporate Business Administration,
Human Resources & General Affairs, Corporate Executive Office

Kenichi Yukimoto
Member of the Managing Board and Executive Officer
Senior Managing Director
CSR

Masayoshi Hayashi
Member of the Managing Board and Executive Officer
Senior Managing Director
Business Management (Japan), Sales & Marketing, Scientific Affairs,
Customer Support

Shigenori Ohigashi
Member of the Managing Board and Executive Officer
Managing Director
Quality & Environmental Management, SCM,
Manufacturing Management, Instrument Production
Corporate Governance

52

Sysmex Annual Report 2011

Koji Tamura
Member of the Managing Board and Executive Officer
Managing Director
IVD Business Development, Life Science Business Operations,
New Business Development,

Kazuya Obe
Member of the Managing Board and Executive Officer
International Business Management

Mitsuru Watanabe
Member of the Managing Board and Executive Officer
R&D Strategic Planning, Central Research Laboratories,
Technology Development, Product Development

Internal Control Systems
Systems for Ensuring That the Execution of Duties

select the most important of these risks, clarify the sections
responsible for coping with risks, establish countermeasuresand engage in measures to mitigate risks.

by Directors and Employees Is Compliant with the
Law and the Articles of Incorporation

Systems to Ensure That Directors Execute Their

Sysmex defines compliance as “the conduct of open andDuties Efficiently

aboveboard business activities on the basis of observance

The Company has positioned the Board of Directors as theof laws and regulations and high ethical standards” and will

institution to make important management decisions andmaintain a system to ensure compliance as described below.

supervise the execution of the Company’s business affairs.

The Company is promoting and enhancing Group compli-

The Company has introduced the executive officer system toance, as it believes compliance countermeasures are thebe capable of making swifter operating decisions and respondfirst and most important way to maintain society’s trust andquickly to changes in the business environment.

counter risk. The Company shall implement and strengthenWith respect to the management of business, thecompliance in the corporate group under the control of aCompany shall ensure the efficient execution of businesscompliance officer and compliance committee. The Company

in accordance with the organization regulations, scope ofshall rigorously ensure compliance through education andauthority regulations, and approval procedure. The Company

training for directors and employees, promote the rapid

shall establish mid-term plans and annual management plans,detection and correction of violations of the law or the Articles

periodically confirm the progress made with those plans, andof Incorporation by means of an internal compliance related

take any necessary measures.

reporting system, and conduct audits of the compliancestructure by means of the Internal Audit Office.

Systems for the Retention and Management ofInformation Relating to the Execution of Duties

Systems to Ensure the Appropriateness of Business
Activities in the Corporate GroupThe Company shall ensure compliance in accordance with thecompliance code applied to all the directors and employees

by Directorsof companies in the Group. In conformance with regulations

The Company shall appropriately retain and manage informa-

established with respect to risk management, the Company

tion relating to the execution of duties by directors in accor-

shall maintain groupwide risk management systems based

dance with document management regulations and maintainon those regulations. The Internal Audit Office shall conduct

the information in a state available for inspection as necessary.

groupwide internal audits.

Regulations Concerning the Management of Risk

the Company shall respect the autonomy of the management

and Other Systems

of affiliated companies and ensure the appropriateness of

To maintain a structure concerning risk management, thebusiness activities throughout the corporate group by suchentire Group shall comply with risk management regulations

means as periodic reporting on the details of the businessestablished by the Risk Management Committee for theof affiliated companies and advance discussion concerning

integrated management of risk throughout the Company.

important matters.

With regard to the management of affiliated companies,

The Company shall endeavor to discover foreseeable risks,
Corporate Governance

Sysmex Annual Report 201153

Corporate GovernanceCorporate Auditors
Haruyoshi Kobayashi
Standing Corporate Auditor

Toshiyuki Miyauchi
Standing Corporate Auditor

Hiromu Fujioka
Corporate Auditor

Isamu Inamasu
Corporate Auditor

From left: Hiromu Fujioka, Haruyoshi Kobayashi, Toshiyuki Miyauchi, Isamu Inamasu

Assignment and Independence of Employees to

The corporate auditors shall attend Board of Directors andAssist Corporate Auditors

other important meetings, read important documents such

Although the Company does not assign full-time staff to assist

as approval requests, and request explanations from directors

corporate auditors in the performance of their duties, employ-and employees as necessary.

ees of the Internal Audit Office cooperate with the corporate
auditors to conduct efficient audits at important places of

Basic Policy on and Status of Systems for Excluding

business.

Antisocial Forces

At the request of the corporate auditors, the Company shallSysmex has in place a Compliance Code that applies to allprovide full-time staff to assist the Board of Auditors. In suchexecutives and associates throughout the Sysmex Group. We

case, the directors shall discuss with the corporate auditors inmaintain absolutely no relationships with antisocial forces, andadvance matters such as the transfer of such support staff.

we take a firm stand to thoroughly counter any such forces.

Systems for Reporting to the Corporate Auditors

associates provide a thorough grounding on the exclusion

and Systems for Ensuring Effective and Efficientof antisocial forces. We have an internal reporting system in

Auditing by the Corporate Auditors

place to respond quickly and appropriately to any overtures.

If a director discovers a violation of the law or the Articles

Furthermore, we maintain close relations with specializedof Incorporation or a material fact that poses risk of causing

external institutions to gather information about the activities

significant damage to the Company, the director is responsibleof antisocial forces.

Our education and training programs for executives andfor promptly reporting that fact to the Board of Auditors.

Corporate Governance

54

Sysmex Annual Report 2011

Executive Officers

From left: Kenji Tachibana, Kaoru Asano, Takashi Goda, Michiaki Ishida, Yukio Hamaguchi, Junzo Yamamoto, Iwane Matsui

Michiaki Ishida

Junzo Yamamoto

Executive Officer
SCM, Manufacturing Management, Instrument Production

Executive Officer
Executive Vice President of Instrument Production

Takashi Goda

Kenji Tachibana

Executive Officer
Business Management (Japan), Sales & Marketing

Executive Officer
Executive Vice President of IVD Business Development

Yukio Hamaguchi

Iwane Matsui

Executive Officer
Executive Vice President of Technology Development

Executive Officer
Executive Vice President of Corporate Business Planning

Kaoru Asano
Executive Officer
Executive Vice President of R&D Strategic Planning

Corporate Governance

Sysmex Annual Report 201155

Corporate GovernanceCompliance
Sysmex has established a compliance code to be observed by
all executives and employees of the Sysmex Group in Japan* The campanula is also commonly known as the bellflower for the
shape of its blossoms. Sysmex’s Campanula Lines are so named to
evoke an awareness that all employees have the ability to “ring a bell”
on actions that are or could be considered non-compliant.

and overseas. The Company’s view of compliance is definedas “the conduct of open and aboveboard business activities
on the basis of observance of laws and regulations and highRisk Management

ethical standards.” Various training activities are underway,

Sysmex has raised the bar on risk management by promoting

including groupwide programs on the introduction of the com-these activities from a divisional level to a companywide risk

pliance code, to ensure that all employees have a thoroughmanagement system. In 2007, the Company established a Risk

understanding of the code. The Company has also appointed

Management Committee to steadily address risk responses,

Compliance Training Managers in each Group company.

prioritized according to importance.

In 2007, Sysmex looked to combine its compliance andIn terms of quality, Sysmex is working to improve internalrisk-management systems and began managing compliancequality assurance levels and to further improve its quality

activities on a groupwide basis under the direction of a newly

management system (QMS). Moving toward the establishment

established Risk Management Officer. The Group Complianceof a groupwide QMS, Sysmex is pursuing ISO certification

Sub-committee meets periodically to confirm the implementa-

centered on the Quality Assurance Department. The Company

tion status of the Compliance Promotion Plan and deliberate

has introduced quality training to promote an understanding

the overall direction of the Group’s compliance activities. To

of QMS, build individual employee awareness of these systems

promote and supervise compliance activities, Sysmex has

and ultimately raise quality control levels. Internal quality

established “Campanula Lines*” as points of contact for all

audits, which are conducted by a committee of internal productGroup employees in Japan for advice or questions on any

quality auditors selected by each department, provide periodic

compliance issues. The Campanula Lines are designed to elimi-

checks on the operational status of the QMS.

nate any concerns held by the staff member seeking advice, for

We disclose information in accordance with the timely

example by providing contacts with male or female managers

disclosure regulations that stock exchanges have establishedor external legal consultants.

for this purpose. Managerial divisions create documents on

For product exports, Sysmex has established a Security

decisions that have been made,*1 issues that have arisen,*2 andExport Control Committee to ensure the Company’s tech-earnings reports, as well as liaising with the communications

nologies and products are not used illegally overseas. The

divisions responsible for disseminating this information exter-

Committee conducts ongoing and in-depth investigations

nally. Information on Company decisions and earnings reports

to confirm export destinations or product usage. In 2008,

is disseminated quickly after deliberation by the Steering

the Kobe Customs Office approved Sysmex as a DesignatedCommittee or following decisions by the Board of Directors

Exporter under the Designated Export Declaration System.

or the president. Any issues that arise are reported to theThis system is designed to speed up administrative

president, following deliberation by the Steering Committee,

procedures for products distribution in line with tighter

before being promptly disclosed publicly.

security procedures and greater international distribution of

Sysmex will reinforce its risk and quality management

products. Only exporters with an excellent compliance record

procedures to ensure the ongoing trust of a wide range ofare approved as Designated Exporters. Sysmex markets its

stakeholders.

products around the world and now aims to improve its service
by using the Designated Export Declaration System to achieve*1 Decisions that have been made include decisions on mergers or stock

greater administrative efficiency in export procedures.

swaps as stipulated in the Rules on Timely Disclosure of Corporate
Information from the Tokyo Stock Exchange.
*2 Issues that have arisen include changes in major shareholders or
lawsuit filings as stipulated in the Rules on Timely Disclosure of
Corporate Information from the Tokyo Stock Exchange.

The ultimate goal in the Company’s pursuit of complianceis for every Sysmex employee to be aware of compliance as an
ongoing factor and to be able to apply this understanding in
Corporate Governance56

their work. Sysmex will continue to ensure thorough compliance to remain a Company that stakeholders consider highly
trustworthy.

Sysmex Annual Report 2011

Sysmex ValueFounded in Kobe morethan 40 years ago,
Sysmex is now undergoing a transformation.
The Company is moving
its operations to a newstage, in order to fulfill its
social responsibilities andcontribute to a comfortable and healthy society,thereby enhancing its
corporate value.

Sysmex Value

Sysmex Annual Report 201157

Sysmex Value
Socially Responsible Activities
We aim to instill confidence in stakeholders throughout the world. In accordancewith beliefs firmly held since our founding, as a healthcare specialist we aim for ahealthy and prosperous society.

W

e believe that our corporate responsibility involves

an atmosphere that encourages autonomy and a spirit ofdelivering products that are consistent with the Sysmex

challenge, as well as a system that rewards employees for theirbrand and conducting business activities that contribute to a

successes. In line with these objectives, we put in place a newhealthy and prosperous society. To this end, Sysmex fosters

human resource system in April 2011.

a corporate culture where each employee can feel a sense of

As part of its efforts to develop a positive working

fulfillment in their work and emphasizes excellent communica-

environment, Sysmex introduced flex-time systems to enable

tions with all stakeholders as it conducts its corporate activities.

employees to adjust their work hours for childcare and longterm nursing care responsibilities. In this way, the Company isDeveloping Human Resources

working to improve its systems in support of a better work-lifebalance. In April 2009, we opened Sysmex Kids’ Park, anSysmex fosters a corporate culture where employees
can feel a sense of fulfillment in their work, based on
mutual agreement and common understanding.

internal childcare facility where parents can go about their

Sysmex believes that recruiting, retaining and developing

established a re-employment system for retirees aimed athuman resources is among the most fundamental of manage-

individuals who have passed retirement age but still want toment tasks. The Company strives to create an environment

work and would like to continue to be engaged in fulfillingthat encourages individual employees to develop theirwork at Sysmex. The objective is to provide a working environ-

strengths. Currently, around 50% of Sysmex employees

ment that can utilize the expertise and experience of theseare stationed at companies overseas. As it becomes more

employees. To raise employee skill levels, Sysmex also runs

global, the Company is attracting an even broader range ofcompanywide staff development programs, endorsing meritpeople from different countries and cultures; in short, ourand performance-based systems and with training aimed athuman resources are rapidly growing more diverse. Sysmex

specific employee tiers and global training.

work assured that their children are being nurtured in an
appropriate care-giving environment. In 2006, the Company

supports individual diversity and accordingly works to build

Evolve as an Attractive Company
Evolve into an attractive company by developing human resources and a culture to generate high value
Human resources (enhance individual skills)

System (respect diversity, rules)

GlobalManagement

Understanding

Transparency

Autonomy

Teamwork

Equal opportunity

Training

Foster a positive corporate climate, create original value and oﬀer trust and conﬁdence to stakeholders
Sysmex Value

58

Oﬀer job satisfaction and ideal working conditions

Sysmex Annual Report 2011

Ensure support from diverse stakeholders

Sysmex provides funds to the Kobe University School ofSocial Contributions

Medicine for an endowed course in laboratory medicine.

Sysmex is involved in healthcare, with its headquarters in Kobe but conducting operations and makingsocial contributions on a global scale.

The purpose of the course is to contribute to the advance-

Sysmex contributes to the advancement of medical care andSysmex also participates in the Kobe Medical Industry

supports activities related to science, culture and the environ-

Development Project, which is promoted by the city of Kobe.

ment in a manner befitting a global healthcare company.

These funds were used to open the Sysmex Asano Laboratory

ment of diagnosis and medical care by developing evaluation
methods for new clinical testing in advanced medical fields.

Since 1984, Sysmex has provided assistance for researchin January 2007. Under the direction of Professor Shigetaka

into electronic measuring technology through the Nakatani

Asano, a leading hematology expert, the laboratory aims toFoundation of Electronic Measuring Technology Advancement.

create new diagnostic technologies for effective cell therapy.

The foundation’s goal is to contribute to the development

Sysmex looks to make global contributions to healthcare.

of Japan’s economy and society and to improve the quality

In one such activity, we opened the Sysmex African Serviceof life (QOL) of the Japanese people. The late Taro Nakatani,

Center in Cotonou, Benin, as a technical support base covering

the Company’s founder and first president, established theWestern Africa. As well as acting as a local service center, theNakatani Foundation using funds contributed by himself,

Sysmex African Service Center works to improve skill levels

Sysmex and others. So far, the foundation has provided sup-in developing countries through technology transfers to local

port for 278 research projects.

technicians. The Company also supports improvements in

Helping to Improve the Health of People in Developing Countries
Sysmex has long provided testing instruments to healthcare institutions in developing countries through cooperation with a variety of organization. In Africa, where HIV is particularly
prevalent, we provide instruments that help monitor the health of HIV patients at medical
institutions in Senegal, Kenya, Zambia and other countries. In Asia, we have donated hematology analyzers that aid diagnosis and treatment to a clinic in Indonesia via an NPO that works
to enhance the health of mothers and children. As the supply of electricity is unreliable in thisarea, our analyzers are equipped with solar power packs.

Sysmex Installs Hematology Analyzer at the “Ceiling of the World”

Sysmex Annual Report 2011

Sysmex Value

During the year, Sysmex succeeded in installing a hematology analyzer in the highest location so far: at a hospital in Tibet. Located in southwestern
China, Tibet has an average altitude of more than 4,000 meters, earning it the sobriquet “Ceiling of the World.”
In the past, technical challenges prevented the use of high-end hematology analyzers at very high elevations. This fiscal year, however, we
succeeded in overcoming these hurdles, as the efforts of our development
and service departments combined with our accumulated companywide
expertise enabled us to contribute to healthcare in this region.
We believe that the most important factor in our success was theunwavering resolve of our local employees, who persevered in their belief
that high-quality testing should be available to all people, regardless of
where they live. In this case, the location is such that the personnel who
Handing over the analyzer
provide maintenance services will have to carry oxygen tanks with them as to the hospital director
in Tibet
they work.

59Sysmex Value

medical device maintenance and management skills by provid-

objectives to be achieved by fiscal 2020, under the themes ofing technical assistance to the Japan International Cooperation

global warming countermeasures, effective use of resources

Agency (JICA), which runs programs to provide technical train-

and waste reduction, and effective use of water resources.

ing for researchers from emerging markets. Sysmex officially

These targets call for the Group to conserve energy andregistered as a member of the United Nations Global Compact

resources and reduce waste by promoting eco-friendly service

on February 22, 2011, thereby demonstrating our increasedmodels (such as SNCS, its proprietary network-based support

emphasis on activities pertaining to corporate social respon-

service), developing eco-friendly products and raising thesibility (CSR). The Global Compact was first announced by

efficiency of its business activities.

then Secretary-General Kofi Anan in an address to The World

Sysmex also has acquired certification under the inter-

Economic Forum in January 1999, and was officially launchednational ISO 14001 standard for environmental management

at UN Headquarters in New York in July 2000. By joining thesystems at principal business sites. In addition, we are

Global Compact, business and non-business entities commit

formulating a groupwide system to promote environmental

to upholding 10 principles in the areas of human rights, labor,

activities, including an annual environmental audit.

the environment and anticorruption. As of December 31, 2010,

In product development, we work to make products moresome 8,800 organizations had pledged to uphold the compact,

compact, lightweight and energy-efficient, and to develop

including more than 125 in Japan.

environmentally friendly reagents. We have put in place green

In December 2005, the Company established the Sysmex

procurement standards, which, through the cooperation of

Women’s Track & Field Team, welcoming Athens Olympic

our suppliers we use to promote the sourcing of raw materials

Games gold medalist Mizuki Noguchi. The team supports thein ways that have a low environmental impact. Following

training of young athletes who aim to become world-classthe implementation of the RoHS directive (which restricts

competitors.

the use of certain hazardous substances in electrical andelectronic instruments) by the European Union in 2006,

Environmental Conservation

Sysmex is successively ensuring that its parts and components
covered by the directive come into compliance ahead of the

Our activities aim to fulfill social responsibilities,
becoming an “environmentally advanced company” inthe healthcare sector.

application of the directive to medical devices scheduled for

Sysmex considers its social responsibility toward environ-ensure the rigorous implementation of procedures to meet

mental conservation a management priority. In our efforts to

the RoHS directive requirements. Sysmex has also establishedachieve harmony with the global environment, we work to

in-house standards on environmentally hazardous substances

reduce the environmental impact of each stage of our opera-

for product design and is using these standards in decisions on

tions—from product design, development, procurement andthe inclusion of RoHS-compliant parts.

production to sales, support and product usage. The Company

responsible for product development and procurement toSysmex is working to make products more energy efficient.

reviewed its existing Environmental Policy in May 2009 withIn the past, the drive to increase the functionality and size ofthe aim of prioritizing initiatives to reduce its environmental

hematology analyzers resulted in greater energy consumption,

impact in various phases of the product lifecycle: productbut the Company now focuses on energy-saving designs indesign, production, sales, usage and end-of-life disposal.

its product development to make its products the industry’s

Ramping up its environmental conservation activities evenmost energy-efficient. Moreover, to reduce resource usage thefurther, in 2010, Sysmex established long-term environmental

Company is working to make its products more compact andSysmex Value

60

2012. The Company is running training programs for personnel

Sysmex Annual Report 2011

lightweight, and we have eliminated the use of foamed plastic

Investor Relations Activities

and timber packaging materials, switching instead to materials

other natural spaces that make up more than half its surrounds

We strive to sustain growth and increase corporate
value. Our investor relations activities aim to proactively disclose information to enhance managementsoundness and transparency, communicate ourcorporate directions to shareholders and promote amanagement style that is both steady and innovative.

add to its harmony with neighboring areas. Such environmental

Sysmex recognizes investor relations as an important facet of

considerations have earned Technopark the highest level for

corporate management and is active in its investor relations

the environmental performance of buildings under a Japaneseefforts, in line with its investor relations policy. The investor

standard named CASBEE, for the Comprehensive Assessment

relations department is located within the corporate business

System for Built Environment Efficiency.

planning division, which reports directly to the president. The

that can be recycled.
October 2008 marked the grand opening of Technopark, our
new R&D facility that is designed to fit in with the environment
and the surrounding community. In addition to eco-friendly
materials and an energy-saving design, the greenery, lakes andIn a bid to reduce emissions and use resources effectively,

department is charged with disclosing appropriate information

we have launched zero-emissions initiatives at our factories.

in a timely manner, communicating directly with shareholders

We also promote emissions separation and recovery and otherand other investors, and promptly providing feedback to man-

recycling efforts. For its new product in the hematology field,

agement regarding the Company’s external assessment.

the XN Series, Sysmex has switched the packaging on some of

One focus of the Company’s communications with

its reagents from conventional polyethylene to paper packag-shareholders and other investors is to explain a complex

ing, and introduced concentrated reagents. These moves

business in a straightforward manner. In addition to briefing

substantially reduce the changing frequency, thereby reducing

analysts and institutional investors about operating results, thewaste, making our products more environmentally considerate.

investor relations department provides technical briefings onareas such as the life sciences and hosts tours to research andLong-Term Environmental Objectives (Excerpted)
Item*1Long-Term Environmental Objectives(Year Ending March 31, 2021)

Reduce the power consumption of diagnostic instruments
Global warming by 25% (in comparison with conventional models)countermeasures Reduce greenhouse gas emissions at business offices by
50% (per unit of consolidated sales*2)
Effective use of Reduce materials for containers and packaging forresources and products and packing for transportation by 15%
waste reduction (per unit of Sysmex Corporation’s parent-only sales)
Effective use of Reduce water usage at business offices by 30%
water resources (per unit of consolidated sales)
OthersPromote life cycle assessment*3

Main Measures

Implement eco-friendly designing (save power at the time ofoperation and standby, and achieve miniaturization)
Upgrade to high-efficiency equipment (air conditioners andlighting) at all offices
Reduce the amount of usage of packing materials byintroducing simplified packing, and introducing designing forminiaturization
Improve the efficiency of transportation
Reduce water consumption by installing high-efficiency
equipment (water purifiers, air conditioners) and improving
production processes
Establish life cycle assessment methods
Implement and operate life cycle assessment

Sysmex Annual Report 2011

Sysmex Value*1 Divisions in charge differ by item.
*2 Unit of sales: Value derived by dividing the total target reduction volume by net sales*3 Life cycle assessment: Method of evaluating environmental impact by measuring resource consumption and waste during all product-related processes, including
production, use and disposal

61manufacturing facilities. Overseas, the department holds inves-

To raise the level of the Company’s investor relations

tor relations meetings, attends conferences held by securities

activities further, in addition to proactive external information

firms and seeks opportunities to foster an understanding of

disclosure Sysmex will concentrate on responding to feedback

the Company’s strengths by providing individual explanations

to ensure the results of its investor relations activities areat industry exhibitions or tours of local factories. For individualreflected in its capital policies and management.

investors and other shareholders, the department holds business results briefings in Tokyo and Kobe, prepares shareholder

Position of Sysmex IR Activities

reports, as well as extensive video content on its website, allwith the aim of introducing the Company’s business in an easily
understandable way.
The Company has earned the Japan Investor Relations

Externally
A management strategy tool for reinforcing themanagement base by ensuring appropriate shareprice formationȉ5DLVHFRUSRUDWHYDOXH ZKLFKHTXDOVPDUNHW
capitalization)

Association’s Award for Excellence in Corporate IR. Sysmex'HWHUPLQHFDSLWDOPDUNHWUHVSRQVHVDQGUHTXHVWV

receives high rankings from companies that conduct surveys(such companies as Daiwa Investor Relations and Nikko IR),and the website was designated as an Excellent Corporate
Website. Sysmex’s annual report for the fiscal year ended
March 31, 2010, also earned a Gold in the Health Care
(Equipment & Supplies) segment of the 2009 Vision Awards'LVVHPLQDWHTXDOLW\
information in atimely manner(sponsored by LACP of the United States)—one of the world’s

6ZLIWO\UHȾHFW
PDQDJHPHQWDQG
IR activities

largest annual report competitions. We also placed in theyear’s Nikkei Annual Report Awards, sponsored by Nikkei Inc.
ȉ6XVWDLQDEOHJURZWKDQG
SURȽWDELOLW\LPSURYHPHQWVȉ$SSURSULDWHLQYHVWPHQW IRUIXWXUHJURZWKInternally
A management innovation tool that works byfeeding back external evaluations and requests

Investor Relations Policy
1. IR Goals and Basic Policy
The basic policy of Sysmex in IR activities is to disclose corporate information on performance, financial position, forecasts of the future and management
strategies in a fair, prompt, accurate and easy-to-understand manner, to ensure accountability to shareholders and other investors and gain proper
understanding about management and business activities.

2. Basis of Information Disclosure
Sysmex discloses corporate information in accordance with applicable laws and regulations concerning securities trading and the Rules on Timely
Disclosure of Corporate Information by the Issuer of Listed Securities and the Like (“Timely Disclosure Rules”) established by the Stock Exchange. The
Company also seeks to disclose corporate information not required by the Timely Disclosure Rules fairly and promptly, to help shareholders and otherinvestors better understand the Company.

3. Methods of Information Disclosure
Sysmex releases corporate information required under the Timely Disclosure Rules via TD-net, operated by the Tokyo Stock Exchange. The Company
posts information through TD-net on its website as promptly as possible. The Company also provides corporate information not subject to the Timely
Disclosure Rules on its website.

4. IR Quiet Period

Sysmex Value

62

Sysmex observes a quiet period from the day after the closing date of each quarter until the release of earnings statements. During this period, theCompany will refrain from replying to questions or commenting on earnings projections. However, in the event that results are expected to deviatesignificantly from the projections during the quiet period, the Company will release appropriate information.

Sysmex Annual Report 2011

Financial Section

Contents

Financial Section

11-Year Consolidated Financial Data . . . . . . . . . . . . . . . . . . . . . . 64
Management’s Discussion and Analysis . . . . . . . . . . . . . . . . . . . 66
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . 74
Consolidated Statement of Comprehensive Income . . . . . . . . 74
Consolidated Statements of Changes in Equity . . . . . . . . . . . . 75
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . 76
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . 77
Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Sysmex Annual Report 201163

11-Year Consolidated Financial Data

For the years ended March 31,

2001

2002

2003

2004

¥ 38,817¥ 47,532¥ 57,253¥ 65,970

Operating income

2,975

3,417

5,299

6,615

Net income

1,363

1,308

3,125

3,157

Net increase (decrease) in cash and cash equivalents(2,562)

1,842

1,071

3,465

Cash and cash equivalents, end of year

7,338

9,181

10,253

13,718

Capital expenditure

2,098

2,455

2,317

2,451

Depreciation

2,541

2,810

3,107

3,203

R&D expenditure

3,527

4,130

4,969

5,549

Total assets

55,21966,502

66,44971,983

Shareholders’ equity

34,10335,57743,32551,096

Interest-bearing liabilities

11,02011,606

10,893

4,175

Shareholders’ equity (yen)¥ 1,631.0¥ 1,701.5¥ 1,879.5¥ 2,042.7

Net income (basic) (yen)

65.2

62.6

132.2

132.9

Net income (diluted) (yen)

60.8

58.4

121.8

123.1

Cash dividends applicable to the year (yen)

22.0

22.0

25.0

30.0

Dividend ratio (%)

33.7

35.2

18.9

22.6

Shareholders’ equity ratio (%)

61.8

53.5

65.2

71.0

Return on equity (ROE) (%)

4.0

3.8

7.9

6.7

Return on assets (ROA) (%)

2.6

2.1

4.7

4.6

Price-earnings ratio (PER) (times)

42.6

35.6

15.9

20.3

Price-book value ratio (PBR) (times)

1.7

1.3

1.1

1.3

1,985

2,530

2,639

2,907

For the year:
Net sales

At year-end:

Per share data:*Two-for-one stock split

Other data:

Number of employees
Note: Including part-time employees

Financial Section

64

Notes:
1. U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥83 = U.S. $1, the approximate rate of exchange on March 31, 2011.
2. Per share data: Certain retroactive adjustments of previously reported per share information have been made to conform with the current method from the year ended
March 31, 2003.
3. ROA = Net Income/Total Assets (Yearly Average)×100

Sysmex Annual Report 2011

(Millions of yen)(Thousands of
U.S. dollars)

2005

2006

2007

2008

2009

2010

2011

2011

¥ 76,935¥ 87,888¥ 101,041¥ 110,724¥ 111,843¥ 116,206¥ 124,694$ 1,502,337

9,104

10,724

12,71515,033

15,134

15,74018,289220,349

5,731

7,423

9,008

9,132

8,014

9,765

11,412

137,494(3,261)

(499)

3,299

(3,044)

(269)

4,403

5,103

61,482

10,4589,416

12,715

9,679

9,410

13,813

18,916

227,904

2,729

5,638

4,546

8,244

9,340

4,540

5,840

70,361

3,296

3,592

3,959

3,924

7,189

7,067

6,871

82,783

6,509

8,184

9,026

9,221

10,771

11,23812,380149,157

77,66087,447

101,225

109,027

118,522

120,702130,060

1,566,988

56,14962,647

71,34478,75379,18386,35893,534

1,126,916

657

695

669

1,081

10,344

2,565

1,971

23,747(Yen)(U.S. dollars)¥ 2,244.9¥ 1,251.8*¥ 1,411.0¥ 1,541.0¥ 1,548.2¥ 1,684.9¥ 910.7*$ 10.97225.1

145.5*

179.6

178.9

156.7

190.8

111.2*

1.34

224.0

143.8*

178.0

178.3

156.5

190.5

111.0*

1.34

40.0

36.0*

36.0

48.0

50.0

56.0

60.0

0.72

17.8

17.9

20.0

26.8

31.9

29.4

27.0

72.3

71.6

70.5

72.2

66.8

71.5

71.9

10.7

12.5

13.4

12.2

10.1

11.8

12.7

7.7

9.0

9.5

8.7

7.0

8.2

9.1

27.2

35.3

23.8

20.1

20.0

28.7

26.5

2.7

4.1

3.0

2.3

2.0

3.3

3.2

3,115

3,334

3,580

3,916

4,148

4,587

4,960

Financial Section

Sysmex Annual Report 201165

Management’s Discussion and Analysis

Financial Policy

soundness. The Company holds an A (single A flat) issuer

Sysmex regards increasing its market capitalization to maxi-

rating from Rating & Investment Information, Inc. (R&I), andmize corporate value as an important management objective

reviews and renews this rating each year. Having a high rating

and pays careful attention to stable cash flow generation. We

reduces the cost of raising funds in the capital markets andconsider it important to share this goal with all stakeholders,

helps build trust among our shareholders and with the world

including shareholders, customers, business partners, local

at large. To enhance its rating in upcoming years, Sysmex willcommunities and employees, while sustaining medium- toconstruct a flexible and more robust financial base, paying

long-term growth. To that end, Sysmex has in place measuresattention to expanding business scale while considering theto communicate with stakeholders on the Company’s current

balance between sales and income, and assets, liabilities andsituation and the direction it should pursue. These measuresequity. Specifically, the Company regards net sales, operating

include enhancing timely disclosure, the website, businessincome, operating margin, return on equity (ROE) and freereports, financial data, periodic briefings on business results,

cash flow (FCF) as important management indicators andvisits to institutional investors and briefings for individual

aims to maintain a balance between scale and efficiency byinvestors.

ensuring the optimal combination of sales and income and of

Sustaining medium- to long-term growth requires a levelof R&D expenditure sufficient to prevail in global competition. We must consistently create new technologies andOverview

products and stimulate the growth of our critical mass toDuring the fiscal year ended March 31, 2011, the employment

absorb increases in selling, general and administrative (SG&A)

situation in Europe and the United States showed some signs

expenses. In recent years, our sales growth in overseasof recovery, but such factors as the European debt crisis andmarkets has been striking and ongoing. Sysmex is aggressively

deteriorating circumstances in the Middle East and Africa

making forward-looking investments not only in the hematol-

hamper the global economic outlook. Meanwhile, emerging

ogy and other diagnostic segments, the current key businessmarkets, centered on China, continued to post solid economic

domain, but also in new forms of medical testing in the life

growth. In Japan, the outlook remains clouded in the after-science field.

math of the Great East Japan Earthquake.

Sysmex pays attention not only to business scale, butalso to asset and capital efficiency and liability and capital

Financial Section

66

assets, liabilities and equity.

Sysmex website

Sysmex Annual Report 2011

On the healthcare front, earnings and profits at medical
institutions in Japan are beginning to improve, prompted

Shareholder newsletter

Financial data (English/Japanese)posted in the “IR Library” on the Sysmex
websiteby the restructuring of public hospitals and revisions in

Net Sales by Destination*

medical remuneration. In advanced countries in Europe andIn Japan, our ongoing efforts to promote solutions led to solid

the United States, efforts are underway to lower healthcare

sales in hematology and other fields, as well as the acquisition

costs and reform medical systems. In the United States,of a major order. This offset a decrease in sales of our influ-

implementation has begun on a medical reform bill that aims

enza detection kit, POCTEM, following the spread of the new

to reduce the number of people without medical insurance. In

influenza virus in the preceding term. As a result, we posted

China, medical system reform that is underway aims to build

sales of ¥38,541 million, up 4.6% from the previous fiscal year.

infrastructures that provide uniform medical services in cities

In overseas markets, we made steady progress in theand farming villages throughout the country.
The Sysmex Group agreed to accept a transfer fromstrengthening of sales and support structures and the provision of solutions. As a result, sales moved steadily upward on

Katakura Industries Co., Ltd., of its Research Institute ofa local currency basis due to increased sales of instruments

Biological Science, which employs gene recombinant technol-and diagnostic reagents. Consequently, despite major yen

ogy for producing from silkworms the proteins used in diag-appreciation the Group’s overseas sales were ¥86,153 million,

nostic reagents. We also established an affiliated company toup 8.6% year on year. The overseas sales ratio was 69.1%, up

conduct direct sales and provide support in the Philippines as

0.8 percentage point from the same period of the previous

part of our efforts to reinforce our sales and support network

fiscal year.

in overseas markets.

Breaking down overseas net sales by destination, sales in

As a result, during the year the Group recorded con-Europe fell 3.0%, to ¥35,414 million; sales in the Americas were

solidated net sales of ¥124,694 million, up 7.3%. Operating

up 12.3%, to ¥26,535 million; sales in China were up 27.4%, toincome grew 16.2%, to ¥18,289 million, and net income¥15,093 million; and sales in the Asia Pacific region were up

expanded 16.9%, to ¥11,412 million. Owing to an increase in

23.2%, to ¥9,111 million.

total equity, the equity ratio rose from 71.5% to 71.9%. Returnon assets, or ROA (net income to total assets), improved from
8.2% to 9.1%, and the asset turnover ratio inched up to 0.99,
from 0.97 in the previous term. Return on equity, meanwhile,* Net sales by destination is defined as the sales amount recorded byGroup companies to customers in a particular region. However, net
sales by geographical region refers to the sales amount made by aGroup company in a particular location.

grew from 11.8% to 12.7%.

Net Sales by Destination
Rating Institution

RatingRating & Investment
Information Inc. (R&I)

A

Japan
Overseas
Americas
EuropeChina
Asia Paciﬁc

7.3%
12.1%
2.1%

Rating Information

OVERSEAS

Net sales(As of May 31, 2011)
Rating symbols and definitions:Rating A; The credit quality is high. It is also
accompanied by some excellent factors.

69.1%¥124,694¥86,153 million

JAPAN

30.9%

¥38,541 million

million

21.3%

Sysmex Annual Report 2011

Financial Section

28.4%
4%

67

Management’s Discussion and Analysis

Net Sales by Geographical Region

AmericasJapan

In the United States, sales grew as a result of our focus on

Performance remained robust in the hematology field, our maindeveloping direct sales and support networks, as well as ourbusiness domain, and our perseverance in presenting solutions

success in promoting solutions that meet customer needs,

to customers paid off in the form of large orders. These factors

which earned us orders from integrated health networks

contributed to an 8.0% rise in net sales compared with the(IHNs), the U.S. Veterans Integrated Service Network (VISN)

corresponding period of the preceding fiscal year, to ¥41,720 mil-and prominent commercial labs. Sales also recovered in Latinlion, despite a decline in sales of influenza testing kits, POCTEM,

America, which had been particularly hard hit by the economic

which contributed to performance in the previous year.

recession. As a result, despite the negative effects of yen appreciation, sales in the Americas grew 8.7%, to ¥25,476 million.

Despite the negative effects on income of yen apprecia-

Compensating for the higher cost of sales resulting fromtion, we posted operating income of ¥6,816 million, up 130.0%
from the preceding fiscal year. This rise was the result ofa revision in intragroup transaction prices and an increase inrobust domestic sales and an increase in export sales to

SG&A expenses, the rise in sales prompted a 17.0% increase inGroup companies, including the impact of a revision in intra-

operating income, to ¥3,248 million.

group transaction prices. Also contributing to the increase

Europewas a change in the method of recording royalty income,In addition to enhancing our direct sales and support activities,

including it in net sales rather than in non-operating income.

we enjoyed robust sales centered in the hematology field in the

Net Sales by Geographical Region
Japan
Americas
EuropeChina
Asia Pacific

Sales and Operating Income
by Geographical Region

Sales and Operating Income
by Geographical Region

Japan

AmericasInterarea transfer: exports to Group aﬃliates
Sales to customers: including Korea, Taiwan and IDEXX(¥ million) Operating income
75,73075,00015,00069,09066,88066,48364,928

5.7%

34,01060,000

12.1%

12,0005,000
25,47623,368 23,444

24,0003,248

19,15845,000

9,000
7,432

Net Sales¥124,694 million

7,870

18,000

6,000

12,00039,39637,533 37,589

3,000

6,000

2,000

1,789

4,672

15,000

3,000

2,775

6,816

30,000

28.3
8.3%

4,000

20,84525,532 29,327 31,501 27,857

33.5%
33

Net sales
Operating income(¥ million)
30,00038,626 41,720
2,963

991

1,000

593

20.4%

0

2007 2008 2009 2010** 2011*00

2007 2008 2009

2010

2011

(Years ended March 31)(Years ended March 31)

Sales and Operating Income
by Geographical Region

Sales and Operating Income
by Geographical Region

Sales and Operating Income
by Geographical Region

EuropeChina

Asia Paciﬁc

Net sales
Operating income(¥ million)
39,17540,00010,000(¥ million)
17,5008,000

14,000Net sales
Operating income

35,387 36,446 35,296

32,00031,5855,000(¥ million)
7,500

4,000

6,000

5,304

4,621

16,000

10,111

10,500

5,847

4,000

7,000

2,000

3,500

5,024

3,000

2,752

4,500

6,848

781

Financial Section

68

Sysmex Annual Report 20112007 2008 2009
(Years ended March 31)

2010

2011

0

0

2007 2008 2009
(Years ended March 31)

900
746

3,000

1,000

1,500

600

547
333

824

* Changes in intergroup transaction prices and method of accounting for royalty income** Changes in method of accounting for royalty income

0

900
4,054
647

2,000
1,309

8,000

1,200

5,388

2,411

8,127

4,552

3,547

1,500

15,093

6,000
5,135

Net sales
Operating income
7,109

11,84324,00002010 2011*

0

0

300

2007 2008 2009

(Years ended March 31)

2010 2011*0United Kingdom and France, owing to our efforts to propose

sales of instruments. In the immunochemistry field, reagent

solutions in these markets. Despite this boost, however, sales

sales increased due to an expanded portfolio.
Meanwhile, overseas sales benefited from higher

in Europe were down 3.2% year on year, to ¥35,296 million,

demand, driven by economic expansion in emerging markets.

affected by major appreciation of the yen against the euro.
Yen appreciation also impacted profits. This factor, coupled

Consequently, in China and the Asia Pacific region sales ofwith an increase in SG&A expenses to enhance our sales struc-instruments and diagnostic reagents surged, and we madeture, caused operating income to drop 14.2%, to ¥4,552 million.

steady progress in the strengthening of sales and support

China

structures and the provision of solutions. As a result, sales

In China, sales surged 27.4%, to ¥15,093 million. Behind these

moved steadily upward in each region on a local-currency basis.

solid results were substantially higher sales in the hematology,

Accordingly, net sales expanded 7.3% during the year, to¥124,694 million. Yen appreciation continued throughout thehemostasis and urinalysis fields.

fiscal year, with the average exchange rate against the U.S.

Operating income fell 12.4%, to ¥2,411 million, owing tohigher cost of sales resulting from a revision in intragroupdollar rising ¥7.13, from ¥92.85 to ¥85.72. This shift had a ¥1,973

transaction prices.

million negative impact on sales. Likewise, the yen appreciatedAsia Pacific¥18.04 against the euro, with the average for the year moving

Favorable sales growth continued in India and Indonesia,

from ¥131.15 against the euro to ¥113.11. This yen appreciation in

and a major new order bolstered sales of system products incomparison to the euro had a ¥4,941 million negative effect on

Malaysia. Consequently, sales increased substantially, cen-sales. The overall appreciation of the yen against other curren-

tered on the hematology field. Sales in the region amounted

cies had a negative impact on sales of ¥7,949 million.

to ¥7,109 million, up 21.6%.

Cost of Sales and SG&A Expenses
Cost of sales increased 9.2%, to ¥46,389 million, causing the

Owing to the higher cost of sales resulting from a revision

cost of sales ratio to edge up 0.6 percentage point, to 37.2%.

in intragroup transaction prices and an increase in SG&A

SG&A expenses rose 3.5%, to ¥60,016, stemming from theexpenses from the strengthening of sales and support struc-

Company’s efforts to reinforce its sales structure in Europe, astures, operating income fell 17.0%, to ¥746 million.

well as to higher R&D expenditure. Accordingly, the ratio of SG&A

Profits and Losses

expenses to net sales decreased 1.8 percentage points, to 48.1%.

Net Sales

R&D Expenditure

In Japan, an increase in medical fees prompted a recovery in

To enhance its product portfolio, during the year Sysmex devel-

investment demand. We continued promoting solution-based

oped new products and aggressively pursued R&D in the life

proposals, resulting in large-scale orders, principally for

sciences, a field targeted for future growth. Such moves pushed

hematology analyzers, prompting a substantial increase in

up R&D expenditure 10.2%, to ¥12,380 million. R&D expenditure
as a percentage of net sales rose 0.2 percentage point, to ¥9.9%.

Net Sales

SG&A Expenses
SG&A Ratio(¥ million)
125,000

124,694
110,724 111,843

100,000

116,206(¥ million / %)60,000R&D Expenditure
R&D Expenditure as a Percentage of Net Sales

55,871

SG&A expenses
SG&A ratio
60,016 100
57,986(¥ million / %)12,500R&D expenditure
R&D expenditure as a percentage of net sales
12,380 15
10,77150,294

101,041

48,00044,82880

10,000

60

7,500

9,026

11,238

12

9,221
9.7

9.6

75,00036,000

9.9

8.9

9
8.3

50,00024,00025,00012,0002007 2008 2009
(Years ended March 31)

2010

2011

0

45.4

50.0

2007 2008 2009

49.9

2010

(Years ended March 31)

48.1

2011

40

5,000

6

20

2,500

3

0

0

2007 2008 2009

2010

2011

0

(Years ended March 31)

Sysmex Annual Report 2011

Financial Section

0

44.4

69

Management’s Discussion and Analysis

Incomeresult, the consolidated payout ratio for the year under review

Bolstered by higher sales, operating income surged 16.2% year

was 27.0%.

on year, to ¥18,289 million, and the operating margin rose 1.2

Going forward, Sysmex will continue to effectively invest

percentage points, to 14.7%. The foreign exchange situation,

its internal reserves in the implementation of highly competi-

meanwhile, had a ¥3,899 million negative impact on operatingtive product development and global business strategies,

income, compared with the preceding fiscal year.

aiming to respond to anticipated changes in the business

Net income expanded 16.9%, to ¥11,412 million, after taking
into account the impact of a ¥188 million loss on adjustment forchanges of accounting standard for asset retirement obligations

environment. We will retain this commitment to continue
meeting our shareholders’ expectations.

at the beginning of the fiscal year, and a 13.6% increase in total

Liquidity and Sources of Capitalincome taxes, to ¥6,312 million.

Fund Procurement and Liquidity Management

Dividend Policy

The Company raises working capital as necessary throughAs our earning power increases, we aim to maintain a proper

short-term bank loans and other means. Consolidatedbalance between internal reserves for R&D and capitalsubsidiaries obtain bank loans as needed to secure working

expenditure, which are designed to sustain steady highcapital, but in October 2003, the Company introduced a cash

growth, and returns to our shareholders. In terms of returns

management system to increase efficiency by unifying financ-to shareholders, we intend to provide a stable dividend on a

ing and capital management at affiliates in Japan.

continuous basis and aim for a consolidated payout under our

The Company currently holds an A (single A flat) issuer

basic policy of sharing the successes of our operations in line

rating from Rating & Investment Information, Inc. (R&I) andwith business performance.

reviews and renews this rating each year. Having a high rating

As a basic policy, Sysmex pays twice-yearly dividends

reduces the cost of raising funds in the capital markets andon retained earnings, an interim dividend and a year-end

helps build trust among our stakeholders and with the world

dividend. The year-end dividend is decided upon approval ofat large. To enhance its rating in the upcoming years, Sysmex

the annual shareholders’ meeting, and the interim dividend

will pay close attention to the balance between sales andupon approval by the Board of Directors. In accordance withprofits and assets, liabilities and shareholders’ equity.

this policy and in light of business performance during the

For long-term capital requirements such as capital invest-

year under review, we announced dividends for the year ofment, the Company decides the funding method after taking¥60 per share, which includes an interim dividend of ¥28. As a

into account the investment recovery period and risk. During

Net Income

Operating Income(¥ million)
20,000Cash Dividends Applicable to the Year
Dividend Ratio(¥ million)
12,50011,412

18,28916,00015,033 15,134

15,740

9,765

10,0009,008

Cash dividends applicable to the year
Dividend ratio(¥ / %)
60
60
56
48*

48

9,132
8,014

12,71512,000

7,500

36

50

40
31.9

36

29.4

Financial Section

70

5,000

24

4,000

2,500

12

0

2007

2008 2009(Years ended March 31)

2010

2011

0

2007

2008 2009(Years ended March 31)

2010

2011

0

30
27.0

26.8

8,000

50

20

20.0

10

2007 2008 2009

2010

2011

0

(Years ended March 31)* Including special dividends of ¥8 commemorating
the 40th anniversary of the Company’s founding.

Sysmex Annual Report 2011

the year, the Company financed capital expenditure and R&D

receivable (compared with a ¥2,686 million decrease in theactivities primarily from cash provided by operating activities.

preceding fiscal year) and a ¥1,336 million increase in invento-

Assets, Liabilities and Equity

ries (which were up ¥1,242 million in the preceding term).

As of March 31, 2011, total assets amounted to ¥130,060 mil-Cash Flows from Investing Activities

lion, up ¥9,358 million from the end of the previous fiscal year.

Net cash used in investing activities was ¥8,916 million, ¥2,313

Major factors included a ¥5,103 million rise in cash and cash

million more than in the preceding fiscal year. The main use

equivalents, a ¥1,749 million expansion in receivables, a ¥509

of cash was purchases of property, plant and equipment,

million increase in investments in lease, and ¥2,549 million

which used ¥5,773 million, ¥1,312 million more than in thehigher furniture and fixtures.

previous year. In addition, acquisitions, net of cash acquired,in subsidiaries used ¥1,064 million, ¥709 million more than in

Total liabilities, meanwhile, were up ¥2,261 million, to¥35,827 million. The main contributors to this rise were

the preceding fiscal year.

¥1,195 million higher trade notes and accounts payable, with

Cash Flows from Financing Activities

deferred tax liabilities growing ¥773 million.

Net cash used in financing activities amounted to ¥3,475

Total equity came to ¥94,233 million at year-end, up

million, ¥6,616 million less than was used in these activities in¥7,097 million. The principal reason for this rise was a ¥8,385

the previous year. In this category, a net increase in short-term

million increase in retained earnings. The equity ratio as ofloans payable provided ¥284 million, whereas a net decrease in

March 31, 2011, was 71.9%, up 0.4 percentage point from athese loans used ¥6,142 million in the preceding term.

year earlier.

Capital Expenditure and Depreciation

Cash Flows

Capital expenditure (investment in property, plant and equip-

As of March 31, 2011, cash and cash equivalents amounted toment, including construction in progress) was up 28.6% year on¥18,916 million, up ¥5,103 million from a year earlier. Cash flows

year, to ¥5,840 million. The principal reason for this rise was thefrom various activities are described in more detail below.

acquisition of instruments to lend to customers. Depreciation

Cash Flows from Operating Activities

and amortization decreased 2.3%, to ¥6,871 million.

Net cash provided by operating activities was ¥18,135 million,
down ¥3,095 million. Income before income taxes and minority interests provided ¥17,755 million, ¥2,400 million morethan during the preceding fiscal year. However, uses of cash
included a ¥2,469 million increase in trade notes and accounts

Total Assets
ROA*

Capital Expenditure
Depreciation

Total Equity
Equity Ratio
Total assets
ROA(¥ million / %)150,000

20

Total equity
Equity ratio(¥ million / %)100,000

94,233

120,70216

72,396

101,255

70.5

60,000

12

9.5

9.1

8.7
7.0

8.2

30,0002007 2008 2009

2010

80

8,000

72.2
66.8

71.5

60

60,000

40

4,000

4

20,00020

2,0002011 00

00(March 31)

2010

2011

7,034 6,871
5,840

6,000

40,0002007 2008 2009

8,000
7,189

71.9

8

(March 31)

10,000

9,340

4,546
3,959

6,000

4,540
3,924

4,000

2,000

2007 2008 2009

2010

2011

0

(March 31)* Net Income/Total Assets (Yearly Average)×100

Sysmex Annual Report 2011

Financial Section

0

10,0008,244

79,117 79,851

80,000109,027

90,000100

87,136130,060
118,522

120,000

Capital expenditure
Depreciation(¥ million)

71

Consolidated Financial Statements
Consolidated Balance Sheets
Sysmex Corporation and Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2011

2010

2011

¥ 18,916
213¥ 13,813
157$ 227,904
2,566

2,896
28,994
176
292
(371)
1,763
19,811
4,925
2,317
79,932

3,048
27,245
218
278
(384)
1,254
18,7774,657
1,807
70,87034,892
349,325
2,120
3,518(4,470)21,241
238,687
59,337
27,916
963,036

PROPERTY, PLANT AND EQUIPMENT:Land
Buildings and structures
Machinery and equipment
Furniture and fixtures
Lease assets
Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment

7,893
25,898
6,828
25,3185,451
144
71,532(35,300)
36,232

7,898
25,595
6,094
22,7696,372
274
69,002(32,988)
36,01495,096
312,024
82,265305,036
65,675
1,735
861,831(425,301)
436,530INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 3 and 12)
Investment in associated company
Goodwill
SoftwareDeposits
Investment in real estate (Note 5)
Deferred tax assets (Note 10)
Other assets
Total investments and other assets
TOTAL

2,965
137
1,830
4,585
956
2,106
116
1,201
13,896¥ 130,060

3,151
198
1,742
4,237
1,126
2,103
115
1,146
13,818¥ 120,702

35,723
1,651
22,04855,241
11,51825,373
1,398
14,470167,422$ 1,566,988

March 31, 2011 and 2010ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 12)
Short-term investments (Note 3)
Receivables (Note 12):Trade notes
Trade accounts
Associated company
Other
Allowance for doubtful accounts
Investments in lease (Notes 11 and 12)
Inventories (Note 4)
Deferred tax assets (Note 10)Prepaid expenses and other current assets
Total current assets

See notes to consolidated financial statements.

Financial Section

72

Sysmex Annual Report 2011

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2011

March 31, 2011 and 2010

LIABILITIES AND EQUITYCURRENT LIABILITIES:
Short-term bank loans (Note 6)
Current portion of long-term debt (Note 6)
Current portion of long-term lease obligations (Notes 11 and 12)
Payables (Note 12):Trade notes
Trade accounts
Associated company
Construction and other
Income taxes payable (Note 12)
Accrued expenses
Deferred tax liabilities (Note 10)
Other current liabilities
Total current liabilities
LONG-TERM LIABILITIES:Long-term debt (Note 6)Long-term lease obligations (Notes 11 and 12)
Liability for retirement benefits (Note 7)
Guarantee deposits received
Deferred tax liabilities (Note 10)
Other long-term liabilities
Total long-term liabilities
COMMITMENTS AND CONTINGENT LIABILITIES (Notes 11 and 13)
EQUITY (Notes 8, 9, 15 and 16):
Common stock, authorized, 149,672,000 shares; issued,
51,461,808 shares in 2011 and 51,353,708 shares in 2010
Capital surplus
Stock acquisition rights
Retained earnings
Treasury stock–at cost: 108,308 shares in 2011 and 99,726 shares in 2010
Accumulated other comprehensive income:Unrealized gain on available-for-sale securities
Deferred loss on derivatives under hedge accounting
Foreign currency translation adjustments
Total
Minority interests
Total equity
TOTAL

¥

306
5
594
2,149
9,107
297
2,766
2,729
7,642

2011

2010

¥

11
6
1,223

$

3,687
60
7,157
25,892
109,723
3,578
33,32532,88092,072

5,398
30,993

1,495
8,566
176
2,736
2,447
7,205
4
5,719
29,588

11
551
912
1,028
1,454
878
4,834

4
806
799
1,041
681
647
3,978

133
6,639
10,98812,385
17,518
10,57858,241

9,042
13,981
600
74,662(252)

8,825
13,764666
66,277(205)

108,940
168,446
7,229
899,542(3,036)186(14)(4,071)
94,13499
94,233¥ 130,060

271(14)(2,560)87,024112
87,136¥ 120,702

2,241
(169)
(49,048)
1,134,145
1,192
1,135,337$ 1,566,988

65,036373,410

Financial Section

Sysmex Annual Report 201173

Consolidated Financial Statements

Consolidated Statements of Income
Sysmex Corporation and Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen
Years Ended March 31, 2011 and 2010

NET SALESCOST OF SALES
Gross profit
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Operating income
OTHER INCOME (EXPENSES):Interest and dividend income
Interest expense
Foreign exchange loss–net
Other–net
Other income (expenses)–net
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTSINCOME TAXES (Note 10):
Current
Deferred
Total income taxes
NET INCOME BEFORE MINORITY INTERESTSMINORITY INTERESTS IN NET INCOME
NET INCOME

2011¥ 124,694
46,38978,30560,016
18,2892010¥ 116,206
42,48073,72657,986
15,7402011$ 1,502,337
558,904
943,433
723,084
220,349

181
(97)
(886)
268
(534)
17,755

159
(214)
(253)
(77)
(385)
15,3552,181(1,169)(10,675)
3,230(6,433)
213,916

5,861
451
6,312
11,44331¥ 11,412

5,647
(89)
5,558

70,615
5,434
76,049137,867373$ 137,494

Years Ended March 31, 2011 and 2010

PER SHARE OF COMMON STOCK (Notes 2.x and 15):
Basic net income
Diluted net income
Cash dividends applicable to the year

¥

32
9,765

Yen

¥ 111.17
110.96
60.00

U.S. Dollars¥ 95.38
95.26
56.00

$ 1.341.34
0.72

See notes to consolidated financial statements.

Consolidated Statement of Comprehensive Income
Sysmex Corporation and Subsidiaries

Year Ended March 31, 2011

NET INCOME BEFORE MINORITY INTERESTSOTHER COMPREHENSIVE INCOME (Note 14):
Unrealized loss on available-for-sale securities
Foreign currency translation adjustments
Total other comprehensive income
COMPREHENSIVE INCOME (Note 14)
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO (Note 14):
Owners of the parent
Minority interests
See notes to consolidated financial statements.

Financial Section

74

Sysmex Annual Report 2011

Millions of Yen

Thousands of
U.S. Dollars (Note 1)¥ 11,443$ 137,867(85)(1,509)(1,594)¥ 9,849(1,024)(18,181)(19,205)$ 118,662¥ 9,81534$ 118,253
409

Consolidated Statements of Changes in Equity
Sysmex Corporation and Subsidiaries
Millions of Yen
Number of
Shares ofCommonStockYears Ended March 31, 2011 and 2010 Outstanding

CommonStockCapitalSurplus

BALANCE, APRIL 1, 2009
51,145,527 ¥ 8,685 ¥ 13,624
Net income
Cash dividends,¥51.00 per share
Purchase of treasury stock(1,840)
Disposal of treasury stock95
Exercise of warrants
110,200
140
140
Net change in the year
BALANCE, MARCH 31, 2010 51,253,982
8,825 13,764
Net income
Cash dividends,¥59.00 per share
Purchase of treasury stock(8,810)
Disposal of treasury stock
228
Exercise of warrants
108,100
217
217
Net change in the year
BALANCE, MARCH 31, 2011 51,353,500 ¥ 9,042 ¥ 13,981

Stock
Acquisition
RightsRetained
Earnings

TreasuryStock¥ 578 ¥ 59,121
9,765¥ (196)

Accumulated Other Comprehensive Income
Unrealized Deferred
Gain (Loss)
Loss onForeign
on Available- Derivatives Currency
for-Sale under Hedge Translation
Securities Accounting Adjustments¥ (45)(205)(3,027)(2,609)(9)(2,609)(9)(66)¥ 600 ¥ 74,662¥ (252)(554)(2,560)280(164)87,024
11,412316
271¥ (14)
(14)

(85)
¥ 186

(3,027)(48)
1434(1,511) (1,662)¥ (14) ¥ (4,071) ¥ 94,134(48)
1

Total Equity¥ (90 ¥ 79,851
9,765

(9)

66,277
11,412

Minority
Interests¥ (2,006) ¥ 79,761
9,765(2,609)

88
666

Total

22
112

280
(142)
87,136
11,412(3,027)(48)1434(13) (1,675)¥ (99 ¥ 94,233

Thousands of U.S. Dollars (Note 1)

Year Ended March 31, 2011

BALANCE, MARCH 31, 2010
Net income
Cash dividends, $0.71 per share
Purchase of treasury stock
Disposal of treasury stock
Exercise of warrants
Net change in the year
BALANCE, MARCH 31, 2011

CommonStockCapitalSurplus$ 106,326 $ 165,832

Stock
Acquisition
RightsRetained
Earnings$ 8,024 $ 798,518
137,494(36,470)

TreasuryStock$ (2,470)

Accumulated Other Comprehensive Income
Unrealized Deferred
Gain (Loss)
Loss onForeign
on Available- Derivatives Currency
for-Sale under Hedge Translation
Securities Accounting Adjustments$ 3,265

(578)
12
2,614

2,614

$ 108,940 $ 168,446(795)$ 7,229 $ 899,542$ (3,036)(1,024)$ 2,241

Total$ (169) $ (30,843) $ 1,048,483
137,494(36,470)
(578)
12
5,228
(18,205) (20,0245)$ (169) $ (49,048) $ 1,134,145

Minority
Interests

Total Equity$ 1,349 $ 1,049,832
137,494(36,470)
(578)
12
5,228
(157) (20,181)$ 1,192 $ 1,135,337

See notes to consolidated financial statements.

Financial Section

Sysmex Annual Report 201175

Consolidated Financial Statements

Consolidated Statements of Cash Flows
Sysmex Corporation and Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2011

2010

2011

¥ 17,755¥ 15,355$ 213,916(5,752)
7,548
42
97

(3,839)
7,633
376
160

(69,301)
90,940506
1,169(2,469)(1,336)
1,365
121
764
18,1352,686(94)(2,073)308
718
21,230(29,747)(16,096)
16,446
1,458
9,202
218,493

INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Purchases of software and other assets
Acquisitions, net of cash acquired
Other–net
Net cash used in investing activities(5,773)(2,018)(1,064)(61)(8,916)(4,461)(1,963)(355)
176(6,603)(69,554)(24,313)(12,819)(736)(107,422)

FINANCING ACTIVITIES:
Increase (decrease) in short-term bank loans - net
Repayments of long-term debt
Payments of lease obligations
Exercise of warrants
Dividends paid
Other–net
Net cash used in financing activities284(9)(1,031)371(3,027)(63)(3,475)(6,142)(55)(1,537)256(2,609)(4)(10,091)

3,422
(108)
(12,422)4,470(36,470)(759)(41,867)

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON
CASH AND CASH EQUIVALENTS
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR

(641)
5,103
13,813¥ 18,916

(133)
4,403
9,410
¥ 13,813(7,722)
61,482
166,422$ 227,904

ADDITIONAL CASH FLOW INFORMATION - Interest paid

¥ 91

¥ 211

$ 1,096

Years Ended March 31, 2011 and 2010

OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes - paid
Depreciation and amortization
Write-down of marketable and investment securities
Loss on disposal of property, plant and equipment
Changes in assets and liabilities:(Increase) decrease in notes and accounts receivable
Increase in inventories
Increase (decrease) in notes and accounts payable
Increase in liability for retirement benefits
Other–net
Net cash provided by operating activities

See notes to consolidated financial statements.

Financial Section

76

Sysmex Annual Report 2011

Notes to Consolidated Financial Statements
Sysmex Corporation and Subsidiaries

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated ﬁnancial statements have been prepared inaccordance with the provisions set forth in the Japanese Financial Instruments
and Exchange Act and its related accounting regulations, and in conformity withaccounting principles generally accepted in Japan (“Japanese GAAP”), which are
diﬀerent in certain respects as to application and disclosure requirements ofInternational Financial Reporting Standards.
Under Japanese GAAP, a consolidated statement of comprehensive income
is required from the ﬁscal year ended March 31, 2011 and has been presented
herein. Accordingly, accumulated other comprehensive income is presented in the
consolidated balance sheet and the consolidated statement of changes in equity.
Information with respect to other comprehensive income for the year ended
March 31, 2010 is disclosed in Note 14. In addition, “net income before minority
interests” is disclosed in the consolidated statement of income from the year
ended March 31, 2011.
In preparing these consolidated ﬁnancial statements, certain reclassiﬁcations
and rearrangements have been made to the consolidated ﬁnancial statements
issued domestically in order to present them in a form which is more familiar toreaders outside Japan. In addition, certain reclassiﬁcations have been made in the2010 ﬁnancial statements to conform to the classiﬁcations used in 2011.
The consolidated ﬁnancial statements are stated in Japanese yen, the currencyof the country in which Sysmex Corporation (the “Company”) is incorporated andoperates. The translations of Japanese yen amounts into U.S. dollar amounts areincluded solely for the convenience of readers outside Japan and have been madeat the rate of ¥83 to $1, the approximate rate of exchange at March 31, 2011. Suchtranslations should not be construed as representations that the Japanese yenamounts could be converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation—The consolidated ﬁnancial statements as of March 31, 2011
and 2010 include the accounts of the Company and 47 (43 in 2010) subsidiaries(together, the “Group”).
Under the control or inﬂuence concept, those companies in which theCompany, directly or indirectly, is able to exercise control over operations are
fully consolidated, and those companies over which the Group has the ability to
exercise signiﬁcant inﬂuence are accounted for by the equity method.
Investment in an associated company is accounted for by the equity method.
Goodwill represents the excess of the cost of an acquisition over the fairvalue of the net assets of the acquired subsidiary and associated company at thedate of acquisition, and is carried at cost less accumulated amortization, which is
calculated by the straight-line method over ﬁve years.
All signiﬁcant intercompany balances and transactions have been eliminatedin consolidation. All material unrealized proﬁt included in assets resulting fromtransactions within the Group is eliminated.

b. Uniﬁcation of Accounting Policies Applied to Foreign Subsidiaries
for the Consolidated Financial Statements—In May 2006, the Accountingc. Uniﬁcation of Accounting Policies Applied to Foreign AssociatedCompanies for the Equity Method—In March 2008, the ASBJ issued ASBJ
Statement No. 16, “Accounting Standard for Equity Method of Accounting forInvestments”. The new standard requires adjustments to be made to conformthe associate’s accounting policies for similar transactions and events undersimilar circumstances to those of the parent company when the associate’s
ﬁnancial statements are used in applying the equity method unless it is impracticable to determine adjustments. In addition, ﬁnancial statements prepared byforeign associated companies in accordance with either International Financial
Reporting Standards or the generally accepted accounting principles in the
United States tentatively may be used in applying the equity method if thefollowing items are adjusted so that net income is accounted for in accordancewith Japanese GAAP unless they are not material: 1) amortization of goodwill;
2) scheduled amortization of actuarial gain or loss of pensions that has been
directly recorded in the equity; 3) expensing capitalized development costsof R&D; 4) cancellation of the fair value model accounting for property, plant,
and equipment and investment properties and incorporation of the cost modelaccounting; 5) recording the prior years’ eﬀects of changes in accounting policies in the income statement where retrospective adjustments to the ﬁnancial
statements have been incorporated; and 6) exclusion of minority interests fromnet income, if contained. This standard was applicable to equity method of
accounting for ﬁscal years beginning on or after April 1, 2010.
The Company applied this accounting standard eﬀective April 1, 2010.
d. Business Combination—In October 2003, the Business Accounting
Council (the “BAC”) issued a Statement of Opinion, “Accounting for Business
Combinations”, and in December 2005, the ASBJ issued ASBJ Statement No.
7, “Accounting Standard for Business Divestitures” and ASBJ Guidance No. 10,“Guidance for Accounting Standard for Business Combinations and Business
Divestitures”.
The accounting standard for business combinations allows companies toapply the pooling of interests method of accounting only when certain speciﬁccriteria are met such that the business combination is essentially regarded as auniting-of-interests.
For business combinations that do not meet the uniting-of-interests criteria,
the business combination is considered to be an acquisition and the purchasemethod of accounting is required. This standard also prescribes the accounting
for combinations of entities under common control and for joint ventures.
In December 2008, the ASBJ issued a revised accounting standard forbusiness combinations, ASBJ Statement No. 21, “Accounting Standard forBusiness Combinations”. Major accounting changes under the revised accounting standard are as follows: (1) The revised standard requires accounting forbusiness combinations only by the purchase method. As a result, the pooling ofinterests method of accounting is no longer allowed. (2) The current accounting standard accounts for the research and development costs to be charged
to income as incurred. Under the revised standard, in-process research anddevelopment (IPR&D) acquired in the business combination is capitalized as anintangible asset. (3) The previous accounting standard provided for a bargain
purchase gain (negative goodwill) to be systematically amortized over a period
not exceeding 20 years. Under the revised standard, the acquirer recognizes
the bargain purchase gain in proﬁt or loss immediately on the acquisition dateafter reassessing and conﬁrming that all of the assets acquired and all of theliabilities assumed have been identiﬁed after a review of the procedures used in
the purchase allocation. This standard was applicable to business combinations
undertaken on or after April 1, 2010 with early adoption permitted for ﬁscal
years beginning on or after April 1, 2009.
e. Cash Equivalents—Cash equivalents are short-term investments thatare readily convertible into cash and that are exposed to insigniﬁcant risk ofchanges in value. Cash equivalents include time deposits, commercial paper

Sysmex Annual Report 2011

Financial Section

Standards Board of Japan (the “ASBJ”) issued ASBJ Practical Issues Task
Force (PITF) No. 18, “Practical Solution on Uniﬁcation of Accounting Policies
Applied to Foreign Subsidiaries for the Consolidated Financial Statements”.
PITF No. 18 prescribes: (1) the accounting policies and procedures applied to aparent company and its subsidiaries for similar transactions and events undersimilar circumstances should in principle be uniﬁed for the preparation of
the consolidated ﬁnancial statements, (2) ﬁnancial statements prepared byforeign subsidiaries in accordance with either International Financial ReportingStandards or the generally accepted accounting principles in the United Statesof America tentatively may be used for the consolidation process, (3) however,the following items should be adjusted in the consolidation process so that net
income is accounted for in accordance with Japanese GAAP unless they are notmaterial: 1) amortization of goodwill; 2) scheduled amortization of actuarial gainor loss of pensions that has been directly recorded in the equity; 3) expensing
capitalized development costs of R&D; 4) cancellation of the fair value modelaccounting for property, plant, and equipment and investment properties andincorporation of the cost model accounting; 5) recording the prior years’ eﬀects
of changes in accounting policies in the income statement where retrospective
adjustments to ﬁnancial statements have been incorporated; and 6) exclusion ofminority interests from net income, if contained.

77

Consolidated Financial Statements

Financial Section78

and mutual funds investing in bonds, all of which mature or become due within
three months of the date of acquisition.
f. Marketable and Investment Securities—Marketable and investment
securities are classiﬁed and accounted for, depending on management’s intent,
as follows: i) trading securities, which are held for the purpose of earning capitalgains in the near term are reported at fair value, and the related unrealized gains
and losses are included in earnings, ii) held-to-maturity debt securities, which
are expected to be held to maturity with the positive intent and ability to holdto maturity are reported at amortized cost and iii) available-for-sale securities,
which are not classiﬁed as either of the aforementioned securities, are reported
at fair value, with unrealized gains and losses, net of applicable taxes, reported
in a separate component of equity.
Non-marketable available-for-sale securities are stated at cost determinedby the moving-average method. For other than temporary declines in fair value,
investment securities are reduced to net realizable value by a charge to income.
g. Allowance for Doubtful Accounts—The allowance for doubtful accounts
is stated in amounts considered to be appropriate based on the Group’s pastcredit loss experience and an evaluation of potential losses in the receivables
outstanding.
h. Inventories—Inventories are stated at cost determined by the average cost
method or net selling value for the Company and its domestic subsidiaries, andat the lower of cost, determined by the ﬁrst-in, ﬁrst-out method, or market forforeign subsidiaries.
i. Property, Plant and Equipment—Property, plant and equipment are statedat cost. Depreciation is computed by the straight-line method over the estimateduseful lives of the assets. The range of useful lives is from 31 to 50 years for buildings
and structures, from 5 to 12 years for machinery and equipment, and from 2 to 15
years for furniture and ﬁxtures.
Equipment held for lease is depreciated by the straight-line method over therespective lease periods.
j. Long-lived Assets—The Group reviews its long-lived assets for impairment
whenever events or changes in circumstance indicate the carrying amount ofan asset or asset group may not be recoverable. An impairment loss would berecognized if the carrying amount of an asset or asset group exceeds the sum of
the undiscounted future cash ﬂows expected to result from the continued use
and eventual disposition of the asset or asset group. The impairment loss would
be measured as the amount by which the carrying amount of the asset exceeds
its recoverable amount, which is the higher of the discounted cash ﬂows fromthe continued use and eventual disposition of the asset or the net selling priceat disposition.
k. Software—Software to be sold is amortized at the greater of either the
proportional amount to be amortized in proportion of the actual sales of thesoftware to be made during the current year to the estimated total sales overthe estimated salable years or the amount to be amortized using a straight-line
method over the estimated salable years. The estimated salable years are
principally three years.
Software for internal use is amortized by the straight-line method over theestimated usable years. The estimated usable years are principally ﬁve years.
l. Investment in Real Estate—Investment in real estate mainly consists of a
beneﬁcial interest in a trust. Depreciation of investment in real estate is computed in accordance with property, plant and equipment depreciation policy.
Accumulated depreciation of the investment in real estate were ¥288 million($3,470 thousand) and ¥259 million as of March 31, 2011 and 2010, respectively.
m. Liability for Retirement Beneﬁts—The Company has a non-contributory
funded pension plan covering substantially all of its employees.
The liability for employees’ retirement beneﬁts is accounted for based on
projected beneﬁt obligations and plan assets at the balance sheet date.
Unfunded retirement beneﬁts for the Company and certain subsidiaries’
directors and corporate auditors are provided at the estimated amount which
would be required if such individuals retired at the balance sheet date. However,
the Company abolished its unfunded retirement beneﬁt plan on June 24, 2005.
No additional provisions have been recorded for retirement beneﬁts to be paid

Sysmex Annual Report 2011

to the Company’s directors and corporate auditors since then. The liability fordirector and corporate auditor retirement beneﬁts is the amount provided inproportion to the term that present directors and corporate auditors had beenin place before June 24, 2005.
n. Asset Retirement Obligations—In March 2008, the ASBJ published theaccounting standard for asset retirement obligations, ASBJ Statement No. 18,“Accounting Standard for Asset Retirement Obligations”, and ASBJ Guidance No.
21, “Guidance on Accounting Standard for Asset Retirement Obligations”. Under
this accounting standard, an asset retirement obligation is deﬁned as a legal
obligation imposed either by law or contract that results from the acquisition,
construction, development and the normal operation of a tangible ﬁxed asset
and is associated with the retirement of such tangible ﬁxed asset. The asset
retirement obligation is recognized as the sum of the discounted cash ﬂows
required for the future asset retirement and is recorded in the period in which
the obligation is incurred if a reasonable estimate can be made. If a reasonableestimate of the asset retirement obligation cannot be made in the period theasset retirement obligation is incurred, the liability should be recognized whena reasonable estimate of asset retirement obligation can be made. Upon initialrecognition of a liability for an asset retirement obligation, an asset retirement
cost is capitalized by increasing the carrying amount of the related ﬁxed
asset by the amount of the liability. The asset retirement cost is subsequently
allocated to expense through depreciation over the remaining useful life of
the asset. Over time, the liability is accreted to its present value each period.
Any subsequent revisions to the timing or the amount of the original estimateof undiscounted cash ﬂows are reﬂected as an increase or a decrease in the
carrying amount of the liability and the capitalized amount of the related asset
retirement cost. This standard was eﬀective for ﬁscal years beginning on or after
April 1, 2010.
The Company applied this accounting standard eﬀective April 1, 2010. The
eﬀect of this change was to decrease operating income by ¥25 million ($301
thousand) and income before income taxes and minority interests by ¥213
million ($2,566 thousand).
o. Stock Option—ASBJ Statement No. 8, “Accounting Standard for Stock
Options”, and related guidance are applicable to stock options granted on andafter May 1, 2006.
This standard requires companies to recognize compensation expense for
employee stock options based on the fair value at the date of grant and overthe vesting period as consideration for receiving goods or services. The standard
also requires companies to account for stock options granted to non-employees
based on the fair value of either the stock option or the goods or services
received. In the balance sheet, the stock option is presented as a stock acquisition right as a separate component of equity until exercised.
The Company has applied the accounting standard for stock options tothose granted on and after May 1, 2006.
p. Research and Development—Research and development costs are charged
to income as incurred. Such costs were ¥12,380 million ($149,157 thousand) and¥11,238 million for the years ended March 31, 2011 and 2010, respectively.
q. Leases—In March 2007, the ASBJ issued ASBJ Statement No. 13, “AccountingStandard for Lease Transactions”, which revised the previous accounting standard
for lease transactions issued in June 1993. The revised accounting standard forlease transactions was eﬀective for ﬁscal years beginning on or after April 1, 2008.
(1) Finance Leases as Lessee
Under the previous accounting standard, ﬁnance leases that were deemed
to transfer ownership of the leased property to the lessee were capitalized. However, other ﬁnance leases were permitted to be accounted for
as operating lease transactions if certain “as if capitalized” information
was disclosed in the note to the lessee’s ﬁnancial statements. The revised
accounting standard requires that all ﬁnance lease transactions are capitalized to recognize lease assets and lease obligations in the balance sheet. In
addition, the revised accounting standard permits leases which existed at thetransition date and do not transfer ownership of the leased property to thelessee to continue to be accounted for as operating lease transactions.

The interest rate swaps that qualify for hedge accounting and meet speciﬁcmatching criteria are not remeasured at market value but the diﬀerential paidor received under the swap agreements are recognized and included in interest
expense or income.
x. Per Share Information—Basic net income per share is computed by dividing
net income available to common shareholders by the weighted-average number ofcommon shares outstanding for the period, retroactively adjusted for stock splits.
Diluted net income per share reﬂects the potential dilution that could occur
if securities were exercised or converted into common stock. Diluted net income
per share of common stock assumes full conversion of the outstanding convertible
notes and bonds at the beginning of the year (or at the time of issuance) with anapplicable adjustment for related interest expense, net of tax, and full exercise ofoutstanding warrants.
Cash dividends per share presented in the accompanying consolidated
statements of income are dividends applicable to the respective years including
dividends to be paid after the end of the year.

y. New Accounting Pronouncements—
Accounting Changes and Error Corrections—In December 2009, ASBJ issued
ASBJ Statement No. 24, “Accounting Standard for Accounting Changes and Error
Corrections”, and ASBJ Guidance No. 24, “Guidance on Accounting Standard for
Accounting Changes and Error Corrections”. Accounting treatments under thisstandard and guidance are as follows:(1) Changes in Accounting Policies
When a new accounting policy is applied with revision of accounting standards, the new policy is applied retrospectively unless the revised accounting
standards include speciﬁc transitional provisions. When the revised accounting standards include speciﬁc transitional provisions, an entity shall comply
with the speciﬁc transitional provisions.
(2) Changes in Presentations
When the presentation of ﬁnancial statements is changed, prior periodﬁnancial statements are reclassiﬁed in accordance with the new presentation.
(3) Changes in Accounting Estimates
A change in an accounting estimate is accounted for in the period of thechange if the change aﬀects that period only and is accounted for prospectively if the change aﬀects both the period of the change and future periods.
(4) Corrections of Prior Period Errors
When an error in prior period ﬁnancial statements is discovered, thosestatements are restated.
This accounting standard and the guidance are applicable to accountingchanges and corrections of prior period errors which are made from the beginningof the ﬁscal year that begins on or after April 1, 2011.

3. SHORT-TERM INVESTMENTS AND INVESTMENT SECURITIESShort-term investments and investment securities as of March 31, 2011 and 2010
consisted of the following:Thousands ofMillions of Yen
U.S. Dollars
2011
2010
2011
Current:
Time deposits other than cash
¥ 35
¥ 22
$ 421
equivalents
Investment trust
178
135
2,145
Total
¥ 213
¥ 157
$ 2,566
Non-current:¥ 1,890 ¥ 2,045$ 22,771
Marketable equity securities
Debt securities
500
500
6,024
Investment trust and other
Unquoted equity securities
Total

575
¥ 2,965

1
605¥ 3,151

6,928$ 35,723

Sysmex Annual Report 2011

Financial Section(2) Finance Leases as Lessor
Under the previous accounting standard, ﬁnance leases that were deemed totransfer ownership of the leased property to the lessee were treated as sales.
However, other ﬁnance leases were permitted to be accounted for as operating lease transactions if certain “as if sold” information was disclosed in thenote to the lessor’s ﬁnancial statements. The revised accounting standard
requires that all ﬁnance leases that are deemed to transfer ownership of theleased property to the lessee should be recognized as lease receivables, andall ﬁnance leases that are not deemed to transfer ownership of the leased
property to the lessee are recognized as investments in lease.
The Company applied the revised accounting standard eﬀective April 1, 2008.
r. Bonuses to Directors—Bonuses to directors are accrued at the year end towhich such bonuses are attributable.
s. Construction Contracts—In December 2007, the ASBJ issued ASBJ
Statement No. 15, “Accounting Standard for Construction Contracts”, and
ASBJ Guidance No. 18, “Guidance on Accounting Standard for Construction
Contracts”. Under this new accounting standard, the construction revenue
and construction costs should be recognized by the percentage-of-completion
method, if the outcome of a construction contract can be estimated reliably.
When total construction revenue, total construction costs and the stage ofcompletion of the contract at the balance sheet date can be reliably measured,
the outcome of a construction contract can be estimated reliably. If the outcomeof a construction contract cannot be reliably estimated, the completed-contract
method should be applied. When it is probable that the total construction costs
will exceed total construction revenue, an estimated loss on the contract shouldbe immediately recognized by providing for a loss on construction contracts.
This standard is applicable to construction contracts and software development
contracts and was eﬀective for ﬁscal years beginning on or after April 1, 2009.
The Company applied the accounting standard eﬀective April 1, 2009.
t. Income Taxes—The provision for income taxes is computed based on thepretax income included in the consolidated statements of income. The asset andliability approach is used to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary diﬀerences between the carrying
amounts and the tax bases of assets and liabilities. Deferred taxes are measured
by applying currently enacted tax laws to the temporary diﬀerences.
u. Foreign Currency Transactions—All short-term and long-term monetary
receivables and payables denominated in foreign currencies are translated
into Japanese yen at the exchange rates at the balance sheet date. The foreignexchange gains and losses from translation are recognized in the consolidated
statements of income to the extent that they are not hedged by forward
exchange contracts.
v. Foreign Currency Financial Statements—The balance sheet accounts offoreign subsidiaries are translated into Japanese yen at the current exchange rate
as of the balance sheet date except for equity, which is translated at the historicalrate. Diﬀerences arising from such translation were shown as “Foreign currencytranslation adjustments” under accumulated other comprehensive income in a
separate component of equity.
Revenue and expense accounts of foreign subsidiaries are translated into yen
at the average exchange rate.
w. Derivatives and Hedging Activities—The Group uses foreign exchange forward contracts and interest rate swaps to manage their exposure to ﬂuctuations inforeign exchange and interest rates. The Group does not enter into derivatives for
trading or speculative purposes.
Derivative ﬁnancial instruments and foreign currency transactions areclassiﬁed and accounted for as follows: a) all derivatives are recognized as either
assets or liabilities and measured at fair value, and gains or losses on derivativetransactions are recognized in the statements of income and b) for derivatives
used for hedging purposes, if derivatives qualify for hedge accounting becauseof high correlation and eﬀectiveness between the hedging instruments and thehedged items, gains or losses on derivatives are deferred until maturity of thehedged transactions.

79

Consolidated Financial Statements

The costs and aggregate fair values of investment securities at March 31,
2011 and 2010 were as follows:
Millions of Yen
2011
Unrealized Unrealized
Cost
Fair Value
Gains
LossesAvailable-for-sale:¥ 1,567¥ 324¥ (1) ¥ 1,890
Equity securities

Cost
Available-for-sale:
Equity securities¥ 1,578
Investment trust and other1
Total¥ 1,579

Millions of Yen
2010
Unrealized Unrealized
Fair Value
Gains
Losses¥ 478¥ (11)¥ 478¥ (11)¥ 2,0451¥ 2,046

Thousands of U.S. Dollars
2011
Unrealized Unrealized
Cost
Fair Value
Gains
LossesAvailable-for-sale:
Equity securities$ 18,879$ 3,904$ (12) $ 22,771

4. INVENTORIESInventories at March 31, 2011 and 2010 consisted of the following:Thousands ofMillions of Yen
U.S. Dollars
2011
2010
2011
Finished products¥ 7,415 ¥ 7,397$ 89,337
Merchandise
6,915
6,591
83,313Work in process
1,733
1,265
20,880Raw materials
3,281
3,142
39,530
Supplies
467
382
5,627
Total
¥ 19,811 ¥ 18,777$ 238,687

April 1, 2009

Increase/
Decrease¥ 2,117¥ (14)

Fair Value

March 31, 2010

March 31, 2010

¥ 2,103¥ 3,026

Thousands of U.S. Dollars
Carrying Amount
April 1, 2010

Increase/
Decrease$ 25,337$ 36

Fair Value

March 31, 2011

March 31, 2011

$ 25,373$ 35,554

Notes: 1) The carrying amount recognized in the balance sheet is net of accumulated
depreciation.
2) Increase during the fiscal year ended March 31, 2011 primarily represents theappropriation of trust income to principle of certain properties of ¥17 million ($205
thousand), and decrease primarily represents the recognition of depreciation of¥30 million ($361 thousand).
3) The fair value of land as of March 31, 2011 is measured by the Group in accordancewith its Appraisal Standard which reflects market value. The carrying amount isapplied to fair value of depreciable properties such as buildings.

6. SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans were principally represented by bank overdrafts. Weighted
average per annum interest rates of short-term bank loans at March 31, 2011 and2010 were 1.3% and 12.8%, respectively.
Long-term debt at March 31, 2011 and 2010 consisted of the following:Thousands ofMillions of Yen
U.S. Dollars
2011
2010
2011
Loans from banks, due through2016, with interest ranging
from 0.02% to 0.05% for 2011
(from 2.3% to 3.5% for 2010):
¥ 16
¥ 10
$ 193
Unsecured
Total
16
10
193
Less current portion
(5)
(6)
(60)
Long-term debt, less current portion
¥ 11
¥ 4
$ 133
At March 31, 2011, annual maturities of long-term debt were as follows:
Thousands ofYear Ending March 31
Millions of Yen
U.S. Dollars

5. INVESTMENT PROPERTY

2012

¥ 5

$ 60

In November 2008, the ASBJ issued ASBJ Statement No. 20, “Accounting Standard
for Investment Property and Related Disclosures”, and issued ASBJ Guidance
No. 23, “Guidance on Accounting Standard for Investment Property and Related
Disclosures”. This accounting standard and the guidance are applicable to investment properties and related disclosures at the end of the fiscal years ending on
or after March 31, 2010. The Company applied the new accounting standard andguidance effective March 31, 2010.
The Company owns an investment property in Kobe as a beneficiary of a realestate investment trust. Rental income, net of operating expenses, for this investment property was ¥238 million ($2,867 thousand) for the fiscal year ended March
31, 2011.
The carrying amounts, changes in such balances and market prices of suchproperties are as follows:
Millions of Yen
Carrying Amount
Fair Value

2013

6

73

2014

4

48

2015

1

12

Total

¥ 16

$ 193

April 1, 2010

Increase/
Decrease¥ 2,103
Financial Section

80

Millions of Yen
Carrying Amount

Sysmex Annual Report 2011¥3

March 31, 2011

March 31, 2011

¥ 2,106¥ 2,951

7. RETIREMENT BENEFITSThe Company and its certain subsidiaries have retirement benefit plans for
employees. Under most circumstances, employees terminating their employment
are entitled to retirement benefits determined based on the rate of pay at the timeof termination, years of service and certain other factors. Employees are entitled tolarger payments if the termination is involuntary, as opposed to by retirement at
the mandatory retirement age or by death.
Certain subsidiaries have unfunded lump-sum payment plans and certain
overseas subsidiaries have defined contribution pension plans.
The liability for employees’ retirement benefits at March 31, 2011 and 2010
consisted of the following:Thousands of
U.S. Dollars
2010
2011
¥ 9,094$ 115,325(7,225)(90,964)(1,230)(15,301)¥ 639$ 9,060

Millions of Yen

Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial loss
Net liability

2011¥ 9,572(7,550)(1,270)¥ 752

The components of net periodic retirement benefit costs for the years
ended March 31, 2011 and 2010 are as follows:
Thousands ofMillions of Yen
U.S. Dollars
2011
2010
2011
Service cost
¥ 1,151 ¥ 1,073$ 13,867Interest cost
174
165
2,096
Expected return on plan assets
(215)
(174)
(2,590)Recognized actuarial loss
249
489
3,000
Net periodic retirement benefit costs ¥ 1,359 ¥ 1,553$ 16,373
Assumptions used for the years ended March 31, 2011 and 2010 are set
forth as follows:
2011
2010
2.0%
2.0%
Discount rate
3.0%
3.0%
Expected rate of return on plan assets
5 years
5 years
Recognition period of actuarial gain/loss
In addition, the Company and certain subsidiaries participate in contributory multi-employer pension plans covering substantially all of their employees.
Under these plans, the amount of pension assets and benefit obligations wereapproximately ¥8,224 million ($99,084 thousand) and ¥9,742 million ($117,373
thousand) at March 31, 2010, the most recent valuation date.
The Company also has recorded a liability for an unfunded retirement
benefit plan covering all of its directors and corporate auditors in the amount of¥160 million ($1,928 thousand), and ¥160 million as of March 31, 2011 and 2010,
respectively. Payment of retirement benefits to directors and corporate auditors
is subject to approval at the shareholders’ meeting.

8. EQUITY
Japanese companies are subject to the Companies Act of Japan (the “CompaniesAct”). The significant provisions in the Companies Act that affect financial andaccounting matters are summarized below:(a) Dividends
Under the Companies Act, companies can pay dividends at any time during theﬁscal year in addition to the year-end dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as; (1) having theBoard of Directors, (2) having independent auditors, (3) having the Board of
Corporate Auditors, and (4) the term of service of the directors is prescribed as
one year rather than two years of normal term by its articles of incorporation,
the Board of Directors may declare dividends (except for dividends in kind) at
any time during the ﬁscal year if the company has prescribed so in its articles ofincorporation. However, the Company cannot do so because it does not meet all
the above criteria.
The Companies Act permits companies to distribute dividends-in-kind (non-cash
assets) to shareholders subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution
by the Board of Directors if the articles of incorporation of the company sostipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is deﬁned as
the amount available for distribution to the shareholders, but the amount of net
assets after dividends must be maintained at no less than ¥3 million.

(b) Increases/decreases and transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends must
be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity
account charged upon the payment of such dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of thecommon stock. Under the Companies Act, the total amount of additional paid-in
capital and legal reserve may be reversed without limitation. The Companies Act
also provides that common stock, legal reserve, additional paid-in capital, othercapital surplus and retained earnings can be transferred among the accounts
under certain conditions upon resolution of the shareholders.

(c) Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stockand dispose of such treasury stock by resolution of the Board of Directors. The
amount of treasury stock purchased cannot exceed the amount available for
distribution to the shareholders which is determined by speciﬁc formula.
Under the Companies Act, stock acquisition rights are presented as aseparate component of equity.
The Companies Act also provides that companies can purchase bothtreasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directlyfrom stock acquisition rights.

9. STOCK OPTION
The stock options outstanding as of March 31, 2010 are as follows:
Stock Option

Persons Granted2004 Stock Option

11 directors
170 employees
9 directors of subsidiaries
3 employees of subsidiaries
9 directors
152 employees
18 directors of subsidiaries
42 employees of subsidiaries

2007 Stock Option

Number of
Options Granted(Shares)
1,043,400

Date of
Grant

Exercise
Price

Exercise Period

2004.7.01¥ 1,685($ 20.30)

From July 1, 2006 toJune 30, 2010

733,200

2007.7.30¥ 4,650($ 56.02)

From July 30, 2009 to
July 29, 2015

Financial Section

Sysmex Annual Report 201181

Consolidated Financial Statements

The stock option activity is as follows:
For the year ended March 31, 2010
Non-vested
March 31, 2009 - Outstanding
GrantedCanceled
VestedMarch 31, 2010 - Outstanding
VestedMarch 31, 2009 - Outstanding
VestedExercised
Canceled
March 31, 2010 - Outstanding

For the year ended March 31, 2011Non-vested
March 31, 2010 - Outstanding
GrantedCanceled
VestedMarch 31, 2011 - Outstanding
VestedMarch 31, 2010 - Outstanding
VestedExercised
Canceled
March 31, 2011 - Outstanding
Exercise price
Average stock price at exercise
Fair value price at grant date2004 Stock
Option(Shares)2007 Stock
Option(Shares)709,700(4,000)(705,700)

137,600
705,700(23,800)(4,200)677,700(86,400)
51,2002004 Stock
Option(Shares)2007 Stock
Option(Shares)

51,200677,700¥(44,400)(6,800)¥ 1,685(63,700)(3,500)610,500¥ 4,650¥ 5,420¥

5,420¥ 98,325

10. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national
and local income taxes which, in the aggregate, resulted in a normal eﬀective
statutory tax rate of approximately 40.6% for the years ended March 31, 2011
and 2010. Foreign subsidiaries are subject to income taxes of the countries inwhich they operate.
The tax eﬀects of signiﬁcant temporary diﬀerences and loss carryforwards
which resulted in deferred tax assets and liabilities at March 31, 2011 and 2010
are as follows:

Financial Section
Sysmex Annual Report 2011

Deferred tax assets (Current):
Unrealized intercompany profits
Inventories
Accrued bonuses
Accrued enterprise tax
OtherLess valuation allowance
Total
Deferred tax assets (Non-current):
Depreciation
Liability for retirement benefits
Tax loss carryforwards
SoftwareInvestment securities
Other
Less valuation allowance
Total
Deferred tax liabilities (Current)

2010¥ 1,776
611
1,020
218
1,309
(7)
¥ 4,927¥ 1,908
401
881
188
1,287
(7)
¥ 4,658$ 21,398
7,361
12,2892,627
15,770(84)$ 59,361

¥ 87
277
8
867
249
1,174
(265)
¥ 2,397
¥ 2

¥ 91
242
67
886
245
1,110
(323)
¥ 2,318¥ 5$ 1,048
3,337
97
10,4463,000
14,145(3,193)$ 28,880
$ 24

¥ 131

¥ 189

$ 1,578

457

457

5,506

431

431

5,193

2,035
681
¥ 3,735¥ 3,587

1,661
146¥ 2,884¥ 4,087

24,5188,205$ 45,000$ 43,217

Deferred tax liabilities (Non-current):

The assumptions used to measure fair value of 2007 Stock Option
Estimate method:Black-Scholes option pricing model
Volatility of stock price:26.14%
Estimated remaining
outstanding period:
five years
Estimated dividend:¥ 36 per share
Interest rate with risk free:
1.403%

82

2011

Thousands of
U.S. Dollars
2011

Millions of Yen

Net unrealized gain on
available-for-sale securities
Revaluation of land forconsolidation
Investment loss for subsidiaries
capital reduction bycorporation tax law
Undistributed earnings offoreign subsidiaries
Other
Total
Net deferred tax assets

A reconciliation between the normal eﬀective statutory tax rates and theactual eﬀective tax rates reﬂected in the accompanying consolidated statements
of income for the years ended March 31, 2011 and 2010 is as follows:
2011
2010
Normal effective statutory tax rate
40.6%
40.6%
1.4
1.7
Expenses not deductible for income tax purposes
0.3
0.3
Per capita levy
(4.3)
(1.9)
Foreign tax credit
Tax effect on elimination of dividends from
4.5
3.9
foreign subsidiaries
(3.1)
(4.0)
Research and development tax credit
Tax effect on undistributed earnings of foreign
2.1
4.6
subsidiaries
(7.4)
(9.9)
Different tax rates applied to foreign subsidiaries
(0.4)
(0.2)
Change in valuation allowance
1.9
1.1
Other - net
35.6%
36.2%
Actual effective tax rate
Certain subsidiaries have tax loss carryforwards available to oﬀset futuretaxable income as of March 31, 2011 of approximately ¥19 million ($229 thousand). These tax loss carryforwards, if not utilized, will expire mainly in 2016.

11. LEASES

12. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(Lessee)
Lease obligations under ﬁnance leases at March 31, 2011 consisted of thefollowing:
Millions ofThousands of
Yen
U.S. Dollars

In March 2008, the ASBJ revised ASBJ Statement No. 10, “Accounting Standard
for Financial Instruments”, and issued ASBJ Guidance No. 19, “Guidance on
Accounting Standard for Financial Instruments and Related Disclosures”. Thisaccounting standard and the guidance was applicable to ﬁnancial instruments
and related disclosures at the end of the ﬁscal years ending on or after March
31, 2010. The Group applied the revised accounting standard and the guidance
eﬀective March 31, 2010.
(1) Group policy for ﬁnancial instruments
The Group invests cash surpluses in low risk ﬁnancial assets, mainly
short-term deposits and uses ﬁnancial instruments, mainly short-term bankloans, for funding. Derivatives are used, not for speculative purposes, but tomanage exposure to ﬁnancial risks as described in (2) below.
(2) Nature and extent of risks arising from ﬁnancial instruments
Receivables such as trade notes, trade accounts and lease investment
assets are exposed to customer credit risk. Although receivables in foreign
currencies are exposed to the market risk of ﬂuctuation in foreign currency
exchange rates, the position, net of payables in foreign currencies, is hedgedby using forward foreign currency contracts. Marketable and investment
securities, mainly held-to-maturity securities and listing shares, are exposedto the risk of market price ﬂuctuations.
Payment terms of payables, such as trade notes and trade accounts, aremostly less than six months.
Maturities of ﬁnance lease obligation, which are mainly used for funding ofequipment investment, are less than twelve years after the balance sheet date.
Derivatives mainly include forward foreign currency contracts, which areused to manage exposure to market risks from changes in foreign currency
exchange rates of receivables.
Please see Note 13 for more detail about instruments, hedged items andpolicy for hedge accounting and assessment procedures of hedge eﬀectiveness.
(3) Risk management for ﬁnancial instruments

Lease obligations
Less current portion
Lease obligations, less current portion¥ 1,145$ 13,796(594)(7,157)¥ 551$ 6,639

The future minimum payments required at March 31, 2011 were as follows:
Millions ofThousands ofYear Ending March 31
Yen
U.S. Dollars
2012
¥ 594
$ 7,157
2013
278
3,349
2014
52
627
2015
36
434
2016
25
301
2017 and thereafter
160
1,928
Total
¥ 1,145$ 13,796
The minimum rental commitments under noncancelable operating leases at
March 31, 2011 were as follows:
Millions ofThousands of
Yen
U.S. Dollars
Due within one year

¥ 452

Due after one year

1,834

22,096¥ 2,286$ 27,542(Lessor)The net investment in lease are summarized as follows:
Millions ofYen

Thousands of
U.S. Dollars

Total

Gross lease receivables$ 5,446

2011

2011

¥ 1,888$ 22,747

Estimated residual values

281

3,386

Unearned interest income(406)(4,892)¥ 1,763$ 21,241

Investments in lease, current

Maturities of investment in lease for ﬁnance leases that are not deemed totransfer ownership of the leased property to the lessee are as follows:
Millions ofThousands ofYear Ending March 31
Yen
U.S. Dollars
2012

¥ 493

$ 5,940

2013

486

5,855

2014

447

5,385

2015

307

3,699

2016

136

1,639

2017 and thereafter

19

229

¥ 1,888$ 22,747

Total

Future rental income under operating leases (including imputed interest
income):Millions
Thousands of
U.S. Dollarsof Yen
2011
¥ 94
14
¥ 108

2011
$ 1,132169$ 1,301

Credit risk is the risk of economic loss arising from a counterparty’s failure to
repay or service debt according to the contractual terms. The Group manages
its credit risk from receivables on the basis of internal guidelines, which include
monitoring of payment term and balances of major customers by each businessadministration department to identify the default risk of customers in earlystage. The credit risk regarding subsidiaries is also managed in the same manner.
With respect to held-to-maturity ﬁnancial investment, the Group manages its
exposure to credit risk by prohibiting its funding to high credit rated bonds
in accordance with in its internal guidelines. Credit risk from derivatives isminimized because the group deals only with large ﬁnancial institutions.

Market risk management (foreign exchange risk)
Foreign currency trade receivables are exposed to market risk resulting from ﬂuctuations in foreign currency exchange rates. Such foreign currency exchange risk, whichis recognized with respect to each currency and each month, is hedged principally
by forward foreign currency contracts. Forward foreign currency contracts are used
when foreign currency trade receivables are certainly expected from forecasted
transactions according to conditions in foreign currency exchange ﬂuctuations.
Marketable and investment securities are managed by monitoring market values
and ﬁnancial position of issuers on a regular basis.
Derivative transactions have been approved by a predeﬁned decision makerbased on the internal guidelines which prescribe the authority and the limit andmanaged by regularly conﬁrming the balance of each day by the ﬁnance department.

Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on maturity dates. The Group manages its liquidity risk by holding
adequate volumes of liquid assets in view of business income, expenditure, andequipment investment spending plan along with adequate ﬁnancial planning by
the corporate treasury department. Subsidiaries also report their ﬁnancial plans
to the Group. The ﬁnance department manages the liquidity risk by obtaining
information of cash ﬂows of the whole Group.

Sysmex Annual Report 2011

Financial Section

Due within one year
Due after one year
Total

Credit risk management83Consolidated Financial Statements(4) Fair values of ﬁnancial instruments
Fair values of ﬁnancial instruments are based on quoted price in active
markets. If quoted price is not available, other rational valuation techniques
are used instead. The techniques include some changing factors and the fairvalues may be changed by adopting diﬀerent assumptions. In addition, thecontract amounts of derivatives in Note 13, “DERIVATIVES”, do not directly
indicate the market risk of derivatives.
(a) Fair value of ﬁnancial instruments
The carrying amounts, fair values and unrealized gain/loss as of March 31,
2011 and 2010, are as follows. Note that ﬁnancial instruments whose fairvalue cannot be reliably determined are not included (See (b)).
Millions of Yen
Unrealized
Carrying
March 31, 2011
Fair Value
Gain/Loss
AmountCash and cash equivalents¥ 18,916 ¥ 18,916
Receivables:
2,896
Trade notes
Trade accounts
28,994
Associated company
176
Allowance for doubtful accounts (*1)(371)
Receivables - net
31,69531,691¥ (4)Investments in lease
1,763
1,704
(59)
Investment securities:
500
507
7
Held-to-maturity securities
Available-for-sale securities
1,890
1,890
Total
¥ 54,764 ¥ 54,708¥ (56)
Payables:¥ 2,149 ¥ 2,149
Trade notes
Trade accounts
9,107
9,107
Associated company
297
297
Lease obligations
1,145
1,132
¥ (13)
Income taxes payable
2,729
2,729
Total
¥ 15,427 ¥ 15,414¥ (13)
Derivatives (*2)
¥ (109)¥ (109)March 31, 2010

Financial Section

84

Millions of Yen
Unrealized
Carrying
Fair Value
Gain/Loss
Amount¥ 13,813 ¥ 13,813

Cash and cash equivalents
Receivables:
Trade notes
3,048
Trade accounts
27,245
Associated company
218
Allowance for doubtful accounts (*1)(384)
Receivables - net
30,12730,125Investments in lease
1,254
1,198
Investment securities:
Held-to-maturity securities
500
507
Available-for-sale securities
2,045
2,045
Total
¥ 47,739 ¥ 47,688
Payables:Trade notes¥ 1,495 ¥ 1,495
Trade accounts
8,566
8,566
Associated company
176
176
Lease obligations
2,029
2,057
Income taxes payable
2,447
2,447
Total
¥ 14,713 ¥ 14,741
¥
12 ¥
12
Derivatives (*2)

Sysmex Annual Report 2011

¥ (2)
(56)

March 31, 2011

Thousands of U.S. Dollars
Unrealized
Carrying
Fair Value
Gain/Loss
Amount$ 227,904 $ 227,904

Cash and cash equivalents
Receivables:
34,892
Trade notes
Trade accounts
349,325
Associated company
2,120
Allowance for doubtful accounts (*1)
(4,470)Receivables - net
381,867 381,819
Investments in lease
21,241
20,530Investment securities:
6,024
6,108
Held-to-maturity securities
Available-for-sale securities
22,771
22,771
Total$ 659,807 $ 659,132
Payables:$ 25,892 $ 25,892
Trade notes
Trade accounts
109,723 109,723
Associated company
3,578
3,578
Lease obligations
13,796
13,639
Income taxes payable
32,88032,880Total$ 185,869 $ 185,712
Derivatives (*2)
$ (1,313) $ (1,313)$ (48)(711)
84$ (675)$ (157)$ (157)

Notes: *1. Allowance for doubtful accounts associated with trade accounts receivables
are deducted.
*2. Derivative assets and liabilities are on net basis.

AssetsCash and cash equivalents
The carrying values are adopted for cash and cash equivalents as they
approximate fair value because of their short maturities.
Receivables
The carrying values are adopted for short-term receivables as they approximate fair value.
The fair values of long-term receivables such as installment receivables
measured at the present values discounted by risk-free rates and the future
cash ﬂows including credit risks.
Investments in lease
The fair values of investments in lease are measured at the present values
discounted by the interest rate after consideration of remaining term andcredit risks.
Investment securities
The fair values of equity securities are determined by securities exchange
prices. With respect to other securities, the values which the correspondentﬁnancial institutions present are adopted for the fair values. Please see
Note 3, “SHORT-TERM INVESTMENT AND INVESTMENT SECURITIES”, forsecurities categorized by purposes.

Liabilities7¥ (51)

Payables and income taxes payable
The carrying values are adopted for payables and income taxes payable as
they approximate fair value because of their short maturities.
Lease obligations
The fair values of lease obligations are measured at the present values of
total principle discounted by the interest rate which would be used if a newlease transaction occurred.

¥ 28

Derivatives¥ 28

The information of the fair value for derivatives is included in Note 13,“DERIVATIVES”.

(b) Financial instruments whose fair value cannot be reliably determined
Carrying AmountThousands ofMillions of Yen
U.S. Dollars
Investments in equity
instruments that do nothave a quoted market pricein an active market

2011

2010

2011

¥ 712

¥ 804

$ 8,578

The above ﬁnancial instruments are not included in investment securities because they do not have market values and it is diﬃcult to estimate
the future cash ﬂows.
(5) Maturity analysis for ﬁnancial assets and securities with contractual maturities
Millions of Yen
Due after Due after
Due inOne Year Five Years Due after
March 31, 2011
One Yearthrough through Ten Yearsor Less
Five Years Ten Years
Cash and cash equivalents ¥ 18,916
Receivables:
Trade notes
2,896
Trade accounts
28,586¥ 408
Associated company
176
Investments in lease
342
1,410
¥ 11
Investment securities:
Held-to-maturity securities
500
Total
¥ 11
¥ 50,916¥ 2,318
Thousands of U.S. Dollars
Due after Due after
Due inOne Year Five Years Due after
March 31, 2010
One Yearthrough through Ten Yearsor Less
Five Years Ten Years
Cash and cash equivalents $ 227,904
Receivables:
Trade notes
34,892
Trade accounts
344,410 $ 4,915
Associated company
2,120
Investments in lease
4,120
16,988$ 133
Investment securities:
Held-to-maturity securities
6,024
Total
$ 133
$ 613,446 $ 27,927

Derivative transactions to which hedge accounting is not applied

At March 31, 2011
Foreign currency forward
contracts:
Selling U.S.$
Selling EuroAt March 31, 2010
Foreign currency forward
contracts:
Selling U.S.$
Selling EuroAt March 31, 2011
Foreign currency forward
contracts:
Selling U.S.$
Selling EuroMillions of Yen
Contract
Unrealized
Contract Amount
Fair Value
Gain/Loss
Amount Due after
One Year¥ 2,365
1,738

¥ (4)
(82)

Millions of Yen
Contract
Unrealized
Contract Amount
Fair Value
Gain/Loss
Amount Due after
One Year¥ 1,765
2,144¥ (48)
83¥ (48)
83

Thousands of U.S. Dollars
Contract
Unrealized
Contract Amount
Fair Value
Gain/Loss
Amount Due after
One Year$ 28,494
20,940$ (48)(988)$ (48)(988)

Derivative transactions to which hedge accounting is applied

At March 31, 2011

HedgedItem

Foreign currency forward
contracts:
Selling U.S.$
Receivables
Selling Euro
Receivables(6) Please see Note 11, “LEASES”, for future payments of lease obligations.
At March 31, 2010

13. DERIVATIVES

HedgedItem

Foreign currency forward
contracts:
Selling U.S.$
Receivables
Selling Euro
Receivables

At March 31, 2011

Millions of Yen
Contract
Contract Amount
Fair Value
Amount Due after
One Year

¥ 450
569

¥ (6)
(17)

Millions of Yen
Contract
Contract Amount
Fair Value
Amount Due after
One Year

¥ 454
798

¥ (11)(12)

Thousands of U.S. Dollars
Contract
Hedged Contract Amount
Fair Value
Item
Amount Due after
One Year

Foreign currency forward
contracts:
Selling U.S.$
Receivables
Selling Euro
Receivables$ 5,4226,855$ (72)(205)

Sysmex Annual Report 2011

Financial Section

The Group enters into foreign currency forward contracts and foreign currency
option contracts to hedge foreign exchange risk associated with certain assets
and liabilities denominated in foreign currencies.
The Group also enters into interest rate swap contracts to manage its
interest rate exposures on certain liabilities.
All derivative transactions are entered into to hedge interest and foreign
currency exposures incorporated within the Group’s business. Accordingly,
market risk in these derivatives is basically oﬀset by opposite movements in thevalue of hedged assets or liabilities. The Group does not hold or issue derivatives
for trading purposes.
Because the counterparties to these derivatives are limited to majorinternational ﬁnancial institutions, the Group does not anticipate any losses
arising from credit risk.
Derivative transactions entered into by the Group have been made inaccordance with internal policies which regulate the authorization and credit
limit amount.

¥ (4)
(82)

85

Consolidated Financial Statements

The fair value of derivative transactions is measured at the quoted priceobtained from the ﬁnancial institution.
The contract amounts of derivatives which are shown in the above table do
not represent the amounts exchanged by the parties and do not measure theGroup’s exposure to credit or market risk.

14. COMPREHENSIVE INCOME
Other comprehensive income for the year ended March 31, 2010 consists of thefollowing:
Millions of
Yen
Other comprehensive income:Unrealized gain on available-for-sale securities
Deferred loss on derivatives under hedge accounting
Foreign currency translation adjustments
Total other comprehensive income

¥ 315
(14)
(552)
¥ (251)

Total comprehensive income for the year ended March 31, 2010 comprises
the following:
Millions of
Yen
Total comprehensive income attributable to:
Owners of the parent
Minority interests
Total comprehensive income¥ 9,51234¥ 9,546

15. NET INCOME PER SHARE
Reconciliation of the diﬀerences between basic and diluted net income per share(“EPS”) for the years ended March 31, 2010 and 2009 is as follows:
Millions of Thousands ofYen
Dollars
Yen
U.S. Dollars
Weighted
Net
Average
EPS
IncomeSharesFor the year ended March 31, 2011:
Basic EPS
Net income available to¥ 11,412 102,650,022 ¥ 111.17$ 1.34common shareholders
Effect of Dilutive
Securities
198,728
Stock options
Diluted EPS
Net income for¥ 11,412 102,848,750 ¥ 110.96$ 1.34computation
For the year ended March 31, 2010:
Basic EPS
Net income available to¥ 9,765
102,378,837
common shareholders
Effect of Dilutive
Securities
130,460
Stock options
Diluted EPS
Net income forcomputation¥ 9,765
102,509,297

Financial Section

86

Sysmex Annual Report 2011

¥ 95.38¥ 95.26

16. SUBSEQUENT EVENTS
a. Appropriations of Retained Earnings
The following appropriation of retained earnings at March 31, 2011 was approvedat the shareholders’ general meeting of the Company held on June 24, 2011:
Millions of Thousands of
Yen
U.S. Dollars
Year-end cash dividends, ¥32 ($0.39)¥ 1,643$ 19,795
per shareb. Stock Split
On April 1, 2011, the Company made a two-for-one stock split by way of a free share
distribution based on the resolution of the Board of Directors meeting held on
March 3, 2011.

17. SEGMENT INFORMATION
For the years ended March 31, 2011 and 2010
In March 2008, the ASBJ revised ASBJ Statement No. 17, “Accounting Standard
for Segment Information Disclosures”, and issued ASBJ Guidance No. 20,“Guidance on Accounting Standard for Segment Information Disclosures”.
Under the standard and guidance, an entity is required to report ﬁnancial anddescriptive information about its reportable segments. Reportable segments areoperating segments or aggregations of operating segments that meet speciﬁed
criteria. Operating segments are components of an entity about which separateﬁnancial information is available and such information is evaluated regularly
by the chief operating decision maker in deciding how to allocate resources
and in assessing performance. Generally, segment information is required tobe reported on the same basis as is used internally for evaluating operating
segment performance and deciding how to allocate resources to operating
segments. This accounting standard and the guidance are applicable to segment
information disclosures for the ﬁscal years beginning on or after April 1, 2010.
The segment information for the year ended March 31, 2010 under the revised
accounting standard is also disclosed hereunder as required.
1. Description of reportable segments
The Group’s reportable segments are those for which separate ﬁnancial information is available and regular evaluation by the Company’s management
is being performed in order to decide how resources are allocated among
the Group. The Group mainly produces and sells diagnostic instruments andreagents. The Company plans comprehensive strategies within Japan andconducts business activities there and the 4 regional headquarters locatedin America, Europe, China and Asia Paciﬁc plan comprehensive strategies foreach region and conduct business activities in those regions.
Therefore, the Group consists of the geographical segments based on
production and sales structures, which are “Japan”, “Americas”, “Europe”,“China” and “Asia-Paciﬁc”.
2. Methods of measurement for the amounts of sales, proﬁt (loss), assets,
liabilities and other items for each reportable segment
The accounting policies of each reportable segment are consistent to those
disclosed in Note 2, “Summary of Signiﬁcant Accounting Policies”, and the
proﬁts of the reportable segments are their operating incomes.
Intersegment sales or transfers are determined based on market prices
or costs of goods manufactured.

3. Information about sales, proﬁt (loss), assets, liabilities and other items is as follows:
Millions of Yen

2011
Japan
Sales:
Sales to external customers
Intersegment sales or transfers
Total
Segment profit
Segment assets
Other:
Depreciation
Amortization of goodwill
Investment of associates accounted
for using equity method
Increase in property, plant andequipment and intangible assets

Americas

Reportable Segment
EuropeChina

Asia PacificReconciliations Consolidated

Total¥ 41,720
34,01075,7306,816
83,475¥ 25,476
525,481
3,248
16,568¥ 35,296
282
35,578
4,552
27,510¥ 15,093
7
15,1002,411
8,893¥ 7,109
183
7,292
746
5,397

¥ 124,694
34,487
159,181
17,773
141,843

3,682
173

1,215

2,012
497

152

322
7

7,383
677

137
¥ 03,634¥ 124,694¥ (34,487)(34,487)516(11,783)

124,694
18,289130,060

(512)

6,871
677

137
¥ 01,295¥ 03,099¥ 00,106¥ 0,552137¥ 008,686¥ 00,(828)¥ 007,858

Millions of Yen

2010
Japan
Sales:
Sales to external customers
Intersegment sales or transfers
Total
Segment profit
Segment assets
Other:
Depreciation
Amortization of goodwill
Investment of associates accounted
for using equity method
Increase in property, plant andequipment and intangible assets

Americas

Reportable Segment
EuropeChina

Asia PacificReconciliations Consolidated

Total¥ 38,626
27,857
66,483
2,963
77,834¥ 23,444
7
23,451
2,775
14,930¥ 36,446480
36,926
5,304
25,405¥ 11,843
5
11,8482,752
8,385¥ 5,847
159
6,006
900
4,813

¥ 116,206
28,508144,714
14,694
131,367

3,610
191

1,474

2,062
368

160

229
7

7,535
566

198
¥ 2,966¥ 116,206¥ (28,508)(28,508)
1,046(10,665)

116,206
15,740120,702

(468)

7,067
566

198
¥

871

¥ 3,543

¥

228

¥ 321

¥

198

7,929

¥ (1,425)

¥

6,504

Thousands of U.S. Dollars

2011

Sales:
Sales to external customers
Intersegment sales or transfers
Total
Segment profit
Segment assets
Other:
Depreciation
Amortization of goodwill
Investment of associates accounted
for using equity method
Increase in property, plant andequipment and intangible assets

Japan

Americas

Reportable Segment
EuropeChina$ 502,651
409,759
912,410
82,1201,005,723$ 306,940
60
307,000
39,133
199,614$ 425,253
3,398
428,651
54,843
331,446$ 181,843
84
181,927
29,048107,145

44,361
2,084

14,63924,241
5,989

1,831

1,651
$

43,783

Asia PacificTotal$ 85,650 $ 1,502,337
2,205
415,506
87,855
1,917,843
8,988
214,132
65,024
1,708,952
3,880
84

Reconciliations Consolidated$ 1,502,337$ (415,506)(415,506)
6,217(141,964)

88,952
8,157(6,169)1,651$ 15,603$ 37,337$

1,277$ 6,651 $ 104,651

1,502,337
220,349
1,566,988
82,783
8,157
1,651

$

(9,976) $94,675

Notes: Reconciliations principally consist of intersegment transfers and unallocated corporate assets included under reconciliations for 2011 and 2010 are ¥2,485 million ($29,940 thousand)and ¥2,651 million, respectively which consist primarily of funds such as marketable equity securities.
Financial Section

Sysmex Annual Report 201187

4. Information about products and services
Millions of Yen

2011
Maintenance
Reagent
Service¥ 55,291¥ 12,140

Instrument¥ 41,749

Sales to external customers

OthersTotal¥ 15,514¥ 124,694

Thousands of U.S. Dollars

2011
Maintenance
Service$ 666,157$ 146,265

Instrument

Reagent

Sales to external customers$ 503,000

5. Information about geographical areas(1) Sales
Millions of Yen(2) Property, plant and equipment
Millions of Yen

2011
Japan
¥ 38,541

Americas¥ 21,817

Other¥ 49,243

Total¥ 124,694

Japan¥ 26,423$ 186,915 $ 1,502,337

China$ 181,843

Other¥ 9,809

Total¥ 36,232

Thousands of U.S. Dollars

2011
Americas$ 262,856

Total

2011

China
¥ 15,093

Thousands of U.S. Dollars
Japan$ 464,349

Others

2011

Other
Total
$ 593,289 $ 1,502,337

Japan$ 318,349

Other$ 118,181

Total$ 436,530

Notes: Sales are classiﬁed in countries or regions based on location of customers.

6. Information about major customers
There is no customer who occupies more than 10% of the consolidated sales.
7. Information on the balance of goodwill of reportable segments
Millions of Yen

2011
Japan

Americas¥ 170

Goodwill at March 31, 2011

EuropeChina

Asia Pacific¥ 1,641

Eliminations/
Corporate

¥ 19

Total
¥ 1,830

Thousands of U.S. Dollars

2011
Japan

Americas$ 2,048

Goodwill at March 31, 2011

EuropeChina$ 19,771

Asia Pacific$ 229

Eliminations/
Corporate

Total$ 22,048

For the year ended March 31, 2010
a. Industry Segments
The Group’s main operations are to manufacture and sell laboratory testing instruments and reagents used by clinical laboratories around the world. Under Japanese accounting regulations, the Group is not required to disclose industry segment information because its main industry segment represented more than 90% of its operations.

b. Geographical Segments
The geographical segments of the Group for the year ended March 31, 2010 are summarized as follows:
Millions of Yen

2010
Japan

Financial Section

88

Sales to customers
Interarea transfer
Total sales
Operating expenses
Operating income
Total assets¥ 38,626
27,857
66,48363,520¥ 2,963¥ 77,834

Americas¥ 23,444
7
23,451
20,676¥ 2,775¥ 14,930

EuropeChina¥ 36,446480
36,926
31,622¥ 5,304¥ 25,405¥ 11,843
5
11,848
9,096¥ 2,752¥ 8,385c. Sales to Foreign Customers
Sales to foreign customers for the year ended March 31, 2010 amounted to ¥79,354 million.
Sysmex Annual Report 2011

Asia Pacific¥ 5,847
159
6,006
5,106
¥ 900
¥ 4,813

Eliminations/
Consolidated
Corporate¥ 116,206¥ 116,206
28,508¥ (28,508)
144,714(28,508)
116,206
130,020(29,554)
100,466¥ 14,694¥ 1,046¥ 15,740¥131,367¥ (10,665) ¥ 120,702
Total

Independent Auditors’ Report

Financial Section

Sysmex Annual Report 201189

Corporate Information
Network
Sysmex UK Limited
Sysmex Logistics UK Ltd.
Jinan Sysmex Medical Electronics Co., Ltd.
HYPHEN BioMed, SAS
Sysmex Wuxi Co., Ltd.

Sysmex France S.A.S.
Sysmex Nederland B.V.

Sysmex Infosystems China, Ltd.

Sysmex Belgium N.V.

Sysmex Taiwan Co., Ltd.

Sysmex Belgium IT S.A.
Sysmex Deutschland GmbH
Sysmex Europe GmbH
Sysmex RUS LLC
HITADO GmbH
Sysmex Polska Sp.z o.o.
Sysmex CZ s.r.o.
Sysmex Slovakia s.r.o.
Sysmex Hungaria Kft.

Sysmex America, Inc.

Japan
Sysmex Shanghai Ltd.

Sysmex RA Co., Ltd.
Sysmex CNA Co., Ltd.
Sysmex bioMérieux Co., Ltd.

Sysmex India Pvt. Ltd.

Sysmex Austria GmbH

Sysmex Digitana AG

Sysmex Reagents America, Inc.

Sysmex Philippines Inc.

Sysmex Middle East FZ - LLC
Sysmex Transasia Services Pvt. Ltd.

Sysmex Espana S.L.

Sysmex Canada, Inc.

Sysmex Hong Kong Limited
Sysmex Vietnam Company Limited

Sysmex (Thailand) Co., Ltd.
Sysmex (Malaysia) Sdn Bhd

Sysmex do Brasil
Industria e Comercio Ltda.

PT. Sysmex Indonesia
Sysmex New Zealand Limited

Sysmex Asia Paciﬁc Pte Ltd.

Sysmex Logistics Co., Ltd.
Sysmex South Africa (Pty) Ltd.

Sysmex TMC Co., Ltd.
Sysmex International Reagents Co., Ltd.
(Ono Factory)
Sysmex Medica Co., Ltd.
Sysmex International Reagents Co., Ltd.
(Head Oﬃce/Seishin Factory)
Kakogawa Factory

Sales
Production
R&D
Distribution
Regional headquarters

Technopark

Head Oﬃce

Solution Center

Kansai Area
Domestic Offices

Location

TEL

FAX

Head Office

1-5-1 Wakinohama-Kaigandori, Chuo-ku, Kobe, Hyogo 651-0073, Japan

TEL: (+81) 78-265-0500

FAX: (+81) 78-265-0524

Tokyo Office

1-2-2 Ohsaki, Shinagawa-ku, Tokyo 141-0032

TEL: (+81) 3-5434-8910

FAX: (+81) 3-5434-8555

Technopark

4-4-4 Takatsukadai, Nishi-ku, Kobe 651-2271

TEL: (+81) 78-991-1911

FAX: (+81) 78-991-1917

Solution Center

1-3-2 Murotani, Nishi-ku, Kobe 651-2241

TEL: (+81) 78-992-5860

FAX: (+81) 78-992-5868

Kakogawa Factory

314-2 Kitano, Noguchicho, Kakogawa, Hyogo 675-0011

TEL: (+81) 79-424-1171

FAX: (+81) 79-424-6814

Sendai Branch

4-6-1 Chuo, Aoba-ku, Sendai 980-6024

TEL: (+81) 22-722-1710

FAX: (+81) 22-265-1661

Kita Kanto Branch

4-261-1 Kishiki-cho, Oomiya-ku, Saitama 330-0843

TEL: (+81) 48-600-3888

FAX: (+81) 48-601-2272

Tokyo Branch

1-2-2 Ohsaki, Shinagawa-ku, Tokyo 141-0032

TEL: (+81) 3-5434-8550

FAX: (+81) 3-5434-8551

Nagoya Branch

1-603 Kamiyashiro, Meito-ku, Nagoya 465-0025

TEL: (+81) 52-775-8101

FAX: (+81) 52-775-5217

Osaka Branch

17-1 Enoki-cho, Suita, Osaka 564-0063

TEL: (+81) 6-6337-8300

FAX: (+81) 6-6337-8200

Hiroshima Branch

3-17 Fukuro-machi, Naka-ku, Hiroshima 730-0036

TEL: (+81) 82-248-9070

FAX: (+81) 82-248-9075

Fukuoka Branch

4-9-24 Hakata Eki Minami, Hakata-ku, Fukuoka 812-0016

TEL: (+81) 92-411-4314

FAX: (+81) 92-474-3862

Sapporo Sales Office

4-12 Kita Nanajo Nishi, Kita-ku, Sapporo 060-0807

TEL: (+81) 11-700-1090

FAX: (+81) 11-281-6136

Morioka Sales Office

1-7-25 Chuodori, Morioka City, Iwate 020-0021

TEL: (+81) 19-654-3331

FAX: (+81) 19-623-6429

Nagano Sales Office

2-5-26 Fukashi, Matsumoto City, Nagano 390-0815

TEL: (+81) 263-31-8180

FAX: (+81) 263-31-8191

Niigata Sales Office

1-20-5 Sasaguchi, Chuo-ku, Niigata City, Niigata 950-0911

TEL: (+81) 25-243-6266

FAX: (+81) 25-241-4452

Chiba Sales Office

1-3 Nakase, Mihama-ku, Chiba 261-8501

TEL: (+81) 43-297-2701

FAX: (+81) 43-297-2707

Shizuoka Sales Office

1-11-26 Takamatsu, Suruga-ku, Shizuoka City, Shizuoka 422-8034

TEL: (+81) 54-237-4815

FAX: (+81) 54-237-8148

Kanazawa Sales Office

2-11-1 Ekinishi Honmachi, Kanazawa City, Ishikawa 920-0025

TEL: (+81) 76-221-9363

FAX: (+81) 76-262-5615

Corporate Information

Kyoto Sales Office

3-1 Mibu Kayo Gosho-cho, Nakagyo-ku, Kyoto 604-8811

TEL: (+81) 75-801-3196

FAX: (+81) 75-841-8445

Kobe Sales Office

4-1-2 Kumoidori, Chuo-ku, Kobe 651-0096

TEL: (+81) 78-251-5331

FAX: (+81) 78-251-5505

Takamatsu Sales Office

1-6-6 Bancho, Takamatsu City, Kagawa 760-0017

TEL: (+81) 87-823-5801

FAX: (+81) 87-823-5834

Okayama Sales Office3-10 Togiya-cho, Kita-ku, Okayama 700-0826

TEL: (+81) 86-224-2605

FAX: (+81) 86-222-6814

Kagoshima Sales Office15-9 Kajiyacho, Kagoshima City, Kagoshima 891-0114

TEL: (+81) 99-222-2788

FAX: (+81) 99-267-1338

Metropolitan Area Service Center

2-16-2 Minami-kamata, Ota-ku, Tokyo 144-0035

TEL: (+81) 3-5711-8301

FAX: (+81) 3-5711-8302

90

Sysmex Annual Report 2011

(As of May 31, 2011)
Corporate name

EquityEstablished ownershipby Group

Sysmex Corporation
Sysmex International Reagents Co., Ltd.

1969

100%

LocationTEL

1-5-1 Wakinohama-Kaigandori, Chuo-ku, Kobe, Hyogo 651-0073, Japan

TEL: (+81) 78-265-0500

Head Office/Seishin Factory 4-3-2 Takatsukadai, Nishi-ku, Kobe, Hyogo 651-2271, Japan

TEL: (+81) 78-991-2211

Ono Factory

TEL: (+81) 794-62-7001

17 Takumidai, Ono, Hyogo 675-1322, Japan

Japan
Americas

Sysmex RA Co., Ltd.

1978

100%

1850-3 Hirookanomura, Shiojiri, Nagano 399-0702, Japan

TEL: (+81) 263-54-2251

Sysmex Medica Co., Ltd.

1978

100%

323-3 Miyaoki, Yumesaki-cho, Himeji, Hyogo 671-2121, Japan

TEL: (+81) 79-335-2080

Sysmex TMC Co., Ltd.

1992

100%

1-3-2 Murotani, Nishi-ku, Kobe, Hyogo 651-2241, Japan

TEL: (+81) 78-992-5883

Sysmex CNA Co., Ltd.

1996

100%

2-3-7 Hakata Eki Mae, Hakata-ku, Fukuoka 812-0011, Japan

TEL: (+81) 92-476-1121

Sysmex Logistics Co., Ltd.

1997

100%

17 Takumidai, Ono, Hyogo 675-1322, Japan

TEL: (+81) 794-64-2326

Sysmex bioMérieux Co., Ltd.

2008

34%

1-2-2 Ohsaki, Shinagawa-ku, Tokyo 141-0032, Japan

TEL: (+81) 3-6834-2666

Sysmex America, Inc.

2003

100%

1 Nelson C. White Parkway, Mundelein, IL 60060, U.S.A.

TEL: (+1) 847-996-4500

Sysmex Reagents America, Inc.

1993

100%

2 Nelson C. White Parkway, Mundelein, IL 60060, U.S.A.

TEL: (+1) 847-367-2800

Sysmex Canada, Inc.

2007

100%

5045 Orbitor Drive Building 9, Suite 401 Mississauga, ON L4W 4Y4, Canada

TEL: (+1) 905-366-7900

EuropeSysmex do Brasil Industria e Comercio Ltda.

1998

100%

Rua Joaquim Nabuco, 615-Bairro Cidade Jardim-Sao Jose dos Pinhais-Parana- Brasil-CEP 83040-210

TEL: (+55) 41-2104-1314

Sysmex Europe GmbH

1980

100%

Bornbarch 1, 22848 Norderstedt, Germany

TEL: (+49) 40-527260

Sysmex Deutschland GmbH

1995

100%

Bornbarch 1, 22848 Norderstedt, Germany

TEL: (+49) 40-5341020

HITADO GmbH

2010

100%

Dreihausen 2, D-59519 Moehnesee, Germany

TEL: (+49) 0-2924-9705-0

Sysmex UK Limited

1991

100%

Sysmex House, Garamonde Drive, Wymbush, Milton Keynes, MK8 8 DF, U.K.

TEL: (+44) 870-902-9210

Sysmex Logistics UK Ltd.

2003

100%

Unit 4 IO Centre, Fingle Drive, Stonebridge, Milton Keynes, MK13 0AT, Buckinghamshire, U.K.

TEL: (+44) 870-902-9230

Sysmex France S.A.S.

2000

100%

Paris Nord II, 22, avenue des Nations, B.P. 51414 Villepinte, 95944 ROISSY-CDG Cedex, France

TEL: (+33) 1-48-170190

HYPHEN BioMed, SAS

2010

100%

155 Rue d’Eragny-95000 Neuville sur Oise, France

TEL: (+33) 134-406-510

Sysmex Espana S.L.

2010

100%

Frederic Mompou, 4-B Planta 2 08960. Sant Just Desvern, Espana

TEL: (+34) 934-236-231

Sysmex Belgium IT S.A.

1997

100%

Rue Pres Champs 25B, 4671 Barchon, Belgium

TEL: (+32) 4-387-9393

Sysmex Belgium N.V.

2009

100%

Park Rozendal, Building A Terhulpsesteenweg 6a 1560 Hoeilaart, Belgium

TEL: (+32) 2-769-7474

Sysmex Nederland B.V.

2009

100%

Ecustraat 11, 4879 NP Etten-Leur, The Netherlands

TEL: (+31) 76-508-6000

Sysmex Polska Sp.z o.o.

2005

100%

Kopernik Office Building, Al. Jerozolimskie 176, 02-486 Warszawa, Poland

TEL: (+48) 22-57284-00

Sysmex Digitana AG

2006

80%

Tödistrasse 50, 8810 Horgen, Switzerland

TEL: (+41) 44-718-38-38

Sysmex Austria GmbH

2007

100%

Odoakergasse 34-36 A-1160 Wien, Austria

TEL: (+43) 1-4861631

Sysmex Hungaria Kft.

2007

100%

Forum Offices Obuda Irodahaz 1037 Budapest, 3 kerulet Becsi ut 271, Hungary

TEL: (+36) 1-3143076

Sysmex CZ s.r.o.

2007

100%

Elgartova 683/4 61400 Brno Czech Republic

TEL: (+420) 548-216-855

Sysmex Slovakia s.r.o.

2007

100%

Galvaniho 15/A 821 04 Bratislava, Slovakia

TEL: (+421) 2-6453-2881-2

Sysmex RUS LLC

2011

100%

1 Magistralny tupik, 11, Bld. 1, Office 13 Russia, Moscow 123290

TEL: (+7) 495-7816772

Sysmex Middle East FZ-LLC

2008

100%

Dubai Healthcare City City Pharmacy Building C/P 72 Office 304, P.O. Box 505119, Dubai, U.A.E.

TEL: (+971) 4-4370515

Sysmex South Africa (Pty) Ltd.

2006

100%

Fernridge Office Park, Block 2; 5 Hunter Avenue; Ferndale; Randburg 2194 RSA

TEL: (+27) 11-3299480

Sysmex Shanghai Ltd.

2000

100%

9th Floor, Azia Center, 1233 Lujiazui Ring Road, Shanghai, 200120, China

TEL: (+86) 21-6888-2626

Sysmex Infosystems China, Ltd.

2000

100%

9th Floor, Azia Center, 1233 Lujiazui Ring Road, Shanghai, 200120, China

TEL: (+86) 21-6888-2606

China
Asia Pacific

1995

100%

7493 Airport Road, Yaoqiang Town, Licheng District, Jinan City, Shandong Province, China; PC. 250107 TEL: (+86) 531-8873-4440

Sysmex Hong Kong Limited

1999

100%

Room 1012, 10/ F, Tower 1, Silvercord, 30 Canton Road, Tsimshatsui, Kowloon, Hong Kong

TEL: (+852) 2543-5123

Sysmex Wuxi Co., Ltd.

2003

100%

#8-9, No. 93, Science Technology Stand-up Park, New District, Wuxi, Jiangsu, 214028, China

TEL: (+86) 510-8534-5837

Sysmex Asia Pacific Pte Ltd.

1998

100%

9 Tampines Grande #06-16 to #06-22 528735, Singapore

TEL: (+65) 6221-3629

Sysmex (Malaysia) Sdn Bhd

1998

100%

No. 11A & 15, Jalan PJS 7/12, Bandar Sunway, 46150 Petaling Jaya, Selangor, Malaysia

TEL: (+60) 3-56371788

Sysmex (Thailand) Co., Ltd.

1999

100%

14 Soi Ramkamhaeng 43/1, Ramkamhaeng Road, Wangthonglang, Bangkok 10310, Thailand

TEL: (+66) 2539-1127

Sysmex Vietnam Company Limited

2010

100%

8th floor, 106 Nguyen Van Troi, Phu Nhuan District, Ho Chi Minh City, Vietnam

TEL: (+84) 8-39979400

PT. Sysmex Indnesia

2002

100%

Cyber 2 Tower, 5th Floor, Unit E Jl. HR. Rasuna Said Blok X5 No. 13 Jakarta Selatan 12950, Indonesia TEL: (+62) 21-3002-6688

Sysmex Transasia Services Pvt. Ltd.

2009

51%

308, ASCOT Centre, 3rd Floor, Next to Hotel Le Royal Meridian Sahar Airport Road, Andheri (East) MUMBAI 400 099, India

TEL: (+91) 22-2822-4040

Sysmex India Pvt. Ltd.

1998

100%

308, ASCOT Centre, 3rd Floor, Next to Hotel Le Royal Meridian Sahar Airport Road, Andheri (East) MUMBAI 400 099, India

TEL: (+91) 22-2822-4040

Sysmex Philippines Inc.

2011

100%

30th Floor, MDC 100 Bldg, E. Rodriguez Jr. Ave. cor. Eastwood Ave. Bagumbayan, Quezon City, Philippines TEL: (+632) 374-6883

Sysmex Taiwan Co., Ltd.

2000

100%

1 ST Fl., 11, Lane 6, Sec. 1, Hangchow S. Rd., Taipei, Taiwan R.O.C.

TEL: (+886) 2-2391-9290

Sysmex New Zealand Limited

2001

100%

382-386 Manukau Road, Epsom, Auckland 1344, New Zealand

TEL: (+64) 9-630-3554

Sysmex Annual Report 2011

Corporate Information

Jinan Sysmex Medical Electronics Co., Ltd.

91

Corporate Information

Brief History of the Company
Management

R&D

Production

1963

Corporate Information

92

Marketing

Successfully developed and commercialized Automated Hematology
Analyzer “CC-1001” the first blood cellcounter in Japan.
Feb. 1968 Toa Electric founded Toa Medical
Electronics as the affiliate for salesof its medical electronics devices andinstrument.
May 1973 Established the Kakogawa Factory inJapan.
Oct. 1975 Launch of the first fully automatedhematology analyzer developed inJapan.
Feb. 1978 Launch of the Sysmex brand to markthe 10th anniversary of founding.
May 1978 Started hematology seminar in Japan.
(now held 31 times)
Oct. 1979 Established a US affiliate, now
Sysmex America.
Oct. 1980 Established a European affiliate,
Sysmex Europe.
Oct. 1984 Launch of the automated coagulation analyzer marks entry into thehemostasis segment.
Mar. 1987 Launch of the immunochemistry
analyzer, which utilized an original
immunoassay method, marks entry
into the immunochemistry segment.
Aug. 1990 Launch of an integrated hematology
system that fully automated theentire process from the counting ofblood cells through preparation ofsmear samples.
Feb. 1991 Opened the Ono Factory in Japan andtransferred the reagent production
division.
May 1991 Established the UK affiliate, now
Sysmex UK.
Jul. 1993 Completed the Neumünster Factory, thebase for reagent production in Europe.
Mar. 1995 Signed an agreement with Dade
International, a US-based company(now Siemens) for collaboration inselling coagulation product lines.
Jun. 1995 Established a joint venture, now Jinan
Sysmex Medical Electronics, in China.
Nov. 1995 Listed stock on the Second Section of
the Osaka Securities Exchange.
Nov. 1995 Launch of the world’s first analyzer
of tangible constituents of urinethat fully automated inspections ofurinary sediments.
Jul. 1996 Listed stock on the Second Section of
the Tokyo Stock Exchange.
Oct. 1996 Hisashi Ietsugu becomes president.
Feb. 1998 Established a Singaporean affiliate,
now Sysmex Asia Pacific.
May 1998 Signed a basic agreement with
F. Hoffmann-La Roche of Switzerland
for global collaboration in marketingand joint R&D.
Oct. 1998 Change of company name to Sysmex
Corporation to mark the 30th
anniversary of founding.
Feb. 1999 Launch of the automated hematology
analyzer developed for the 21st century.
Jan. 2000 Founded a Shanghai affiliate, Sysmex
Shanghai.

Sysmex Annual Report 2011

Mar. 2000 Promoted to the First Section of theTokyo Stock Exchange and the Osaka
Securities Exchange.
Mar. 2000 Opened Central ResearchLaboratories in the Techno Center.
Apr. 2002 Consolidated Sysmex International
Reagents as a wholly owned affiliate
through a share exchange.
Apr. 2003 Sysmex and Toshiba announce
development of minimally-invasive
blood glucose self-measurement
technology that does not require
blood sampling.
Jun. 2003 Consolidation of two local affiliates in
the US to establish Sysmex America.
Rebuilding of the sales and support
structure in the US.
Jan. 2004 Release for research purposes of the
GD-100, an instrument incorporating
the independently developed OSNA
method that detects cancer lymph
node metastasis in a short time.
Jan. 2004 Development of the world’s firstmulti-protein analysis chip capable ofsimultaneous measurement of activities
and amounts of up to 20 proteins.
Apr. 2004 Acquired 50.8% of the shares in CNA,
a medical data systems enterprise,and consolidated as an affiliate.
Jun. 2004 Established the R&D bases at
the Business Support Center for
Biomedical Research Activities (BMA)
on Port Island Second Stage, offshore from Kobe.
Dec. 2004 Receipt of the Japan Investor
Relations Association’s IR Award for
Excellence for 2004.
Jan. 2005 Sysmex develops technology todiagnose the risk of post-operative
recurrence of early-stage cancer.
Apr. 2005 Introduction of the executive officer
system as a means of strengthening
corporate governance.
May 2005 Establishment of the Solution Centerin Nishi-ku, Kobe and concentration of
the marketing planning, customer
support and scientific support functions.
Nov. 2005 Stock split.
Jan. 2006 Released the XS Series, the world’s
smallest automated hematology
analyzers, which require only minutequantities of blood.
Apr. 2006 Introduction in Europe of the RD-100i
gene amplification detector for detecting
breast cancer lymph-node metastasis.
Nov. 2006 The Japan Investor Relations
Association awards the Fiscal 2006 IR
Excellence Company Prize to Sysmex.
Apr. 2007 Established a Group Corporate
Philosophy, the “Sysmex Way.”
Apr. 2007 Announced preparations for establishinga business presence in Austria, Slovakia,
Hungary and the Czech Republic.
Jun. 2007 Formed a global partnership with
bioMérieux for urinary screening in
microbiology.
Oct. 2007 Established a Canadian affiliate,
Sysmex Canada.

Dec. 2007 Started supplying hematology
analyzers to animal test laboratories
operated by animal diagnostics major
IDEXX Laboratories.
Jan. 2008 Formed a commercial joint venturewith bioMérieux for the Japanesein-vitro diagnostics market.
Apr. 2008 Started direct sales and support
services in France.
Apr. 2008 Awarded MAFF manufacturing andmarketing approval for a rapid andeasy test kit to detect influenza
infection in chickens.
Jun. 2008 Adoption of Sysmex products asstandard instruments by the
Mongolian Ministry of Health.
Jun. 2008 Acquisition of approval from the
MHLW for manufacture and saleof gene amplification reagent as an
in-vitro diagnostic pharmaceutical.
Jun. 2008 Established the Dubai affiliate
Sysmex Middle East FZ-LLC.
Oct. 2008 Renewed the new corporate logo on
the occasion of the 40th anniversaryof the Company’s establishment.
Oct. 2008 Established Technopark, Sysmex’s
core R&D base; double the size ofprevious Techno Center facilities.
Nov. 2008 First insurance coverage in Japan for
the Sysmex system for rapid detection of breast cancer lymph nodemetastasis.
Dec. 2008 The Indian joint venture Sysmex India
Pvt. Ltd. became a wholly-owned
subsidiary.
Feb. 2009 Launched sales of the XT-4000i,
a new model in its XT series ofhematology analyzers.
Apr. 2009 Established the Netherlands
affiliate Sysmex Nederland B.V.
Apr. 2009 Established the Belgian affiliate
Sysmex Belgium N.V.
Dec. 2009 Opened a reagent development basein China.
Dec. 2009 Realized a full-scale entry into the
POCT market in Germany.
Jan. 2010 Established an overseas affiliate in
Spain to expand life science business.
Mar. 2010 Started joint research with the
National Cancer Center Hospital toverify clinical usefulness of technology
for detecting circulating tumor cells.
Mar. 2010 Established a sales and support
affiliate, Sysmex Vietnam.
July. 2010 Launched joint business with IDEXX,
leader in pet diagnostics.
Sep. 2010 Established the Philippines affiliate
Sysmex Philippines Inc.
Jan. 2011 Established the Russian affiliate
Sysmex RUS LLC.
Apr. 2011 Carried out a two-for-one stock split.
Apr. 2011 Transfer of Katakura Industries Co.,
Ltd. Research Institute of Biological
Science.
May 2011 Launched the XN series of flagshipmodels in the hematology field.

Corporate Overview/Stock Information (As of March 31, 2011)
Sysmex Corporation

Composition of Shareholders

EstablishedFebruary 20, 1968

Number of Employees

4,960 (consolidated basis)

Individuals and others
33.23%

Financial institutions
23.94%

2,067 (non-consolidated basis)

Financial instrument ﬁrms
0.38%

(Including part-time employees)

Fiscal Year

April 1—March 31

Shareholders’ Meeting

In JuneOther Japanese companies
9.63%

Number of Shares Authorized 149,672,000 shares

Foreign investors
32.82%

Number of Shares Issued

51,461,808 shares

Paid-in Capital¥9,041 million

Stock Listings

Tokyo Stock Exchange, First Section
Osaka Securities Exchange, First Section

November 1995: Listed on Osaka Securities Exchange, Second Section
July 1996: Listed on Tokyo Stock Exchange, Second Section
March 2000: Listed on Tokyo Stock Exchange, First Section andOsaka Securities Exchange, First Section
Ticker Code

6869

Transfer Agent

Mitsubishi UFJ Trust and Banking
Corporation

Independent Auditor

Deloitte Touche Tohmatsu

RatingA (Rating and Investment
Information, Inc. (R&I))

Indexes

Distribution of Shares by Number of Shares Held
Less than 1,000 shares 2.58%

More than 1,000 shares 2.98%

Number of shares: 1,325,040(7,043 shareholders)Number of shares: 1,532,711(803 shareholders)More than 500,000 shares 59.69%

More than 5,000 shares 1.69%

Number of shares: 30,718,608(22 shareholders)Number of shares: 869,144(125 shareholders)More than 10,000 shares 11.46%
Number of shares: 5,899,626(176 shareholders)More than 100,000 shares 21.60%
Number of shares: 11,116,679(51 shareholders)

MSCI Standard Index
Russell/Nomura Japan Equity Indexes
FTSE Japan Index

Principal Shareholders

NOMURA400
DSI (Daiwa Stock Indices)
S&P Japan 500

Stock Price Range and Trading Volume
(Yen)
6,000
5,000

Number of Percentage ofshares held(Thousands) shareholding

Shareholders

Common stock price range (¥)

Japan Trustee Services Bank, Ltd.

4,913

9.55

Tadako Nakatani

4,003

7.78

The Master Trust Bank of Japan, Ltd.

2,967

5.77

Nakatani Kosan, Ltd.

2,574

5.00

Tadashi Nakatani

2,495

4.85

GOLDMAN, SACHS & CO. REG. (Standing proxy:Goldman Sachs Japan Co. Ltd.)

1,545

3.00

Kazuko Ietsugu

1,531

2.98

Taeko Wada

1,531

2.98

National Mutual Insurance Federation ofAgricultural Cooperatives(Standing proxy: The Master Trust Bank of Japan, Ltd.)

1,450

2.82

THE CHASE MANHATTAN BANK, N. A. LONDONSECS LENDING OMNIBUS ACCOUNT (Standing proxy:
Mizuho Corporate Bank. Custody & Proxy Dept.)

1,333

2.59

4,000
3,000
Two for one stock split

2,000

(%)

(Yen)
Tokyo Price Index close

80

1,000
0

Cash Dividends per Share and Dividend Ratio (Consolidated)

4/2010 5

6

7

8

9

10

11

12 1/2011 2345(Month)

60

56
48*

45

50
31.9

36
29.4

26.8
20

60

Dividend ratio

60
40(Thousands)
7,500
Monthly trading volume (shares)

Cash dividends per share

27.0

20.0

30
15

6,000

2007

2008

2009

2010

2011

* Including special dividends of ¥8 commemorating the 40th anniversary of theCompany’s founding.

3,000

4/2010 5

6

7

8

9

10

11

12 1/2011 2345(Month)Dividend Policy
Our dividend policy is to attain a balance between investment in sustainable growth
and return to shareholders. In line with this policy, we maintain a payout ratio of 20%
on a consolidated basis.

Sysmex Annual Report 2011

Corporate Information

1,500
0

0

0

4,500

93

Sysmex Corporation
1-5-1 Wakinohama-Kaigandori,Chuo-ku, Kobe 651-0073, Japanwww.sysmex.co.jp
Printed in Japan