[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2012: Reference

Financial Results for the Fiscal Year Ended March 31, 2012:

Reference

Analysis of Business Performance<1> Overview of the Fiscal Year Ended March 31, 2012[1] Overview of Business Results
In developed countries, fiscal resources for medical services have become tight due tothe concerns about U.S. economy and reduced government spending with the credit
crisis in Europe. The promotion of efficiency of national medical costs is now animmediate political issue, further increasing expectations for excellent products withmedical cost efficiency that can improve the total profitability of medical services. At
the same time, looking at emerging countries, such as in China, thanks to theimprovement of its government-driven medical system, medical standards have
improved, and the medical divide between cities and country areas has been corrected,
while society is rapidly aging, which has resulted in drastic expansion of the medical
device market. In Latin America, in particular Brazil, and Asian countries, again themedical device market has continued to develop, due to the increased medical demandin the growing middle income class. This means that in the global medical device
market, new opportunities for growth where Terumo Group can take advantage of ourstrength have been expanding.
Launching the target of GP1 “1 trillion Global Presence”, “becoming a company witha global presence within ten years”, our group kicked off a three-year mid-term
management plan, “GP1: Change and Growth 2013”, starting in the fiscal year ended
March 2012. The major initiatives of this fiscal year are as follows:●As countermeasures against disasters based on the experience of the Great East
Japan Earthquake, we continuously addressed the challenge of strengthening BCP(Business Continuity Plan) such as installing in-house power generators, duplexing
customer service centers in East and west Japan, securing an additional data center,
expanding domestic and overseas production capacities and diversifying raw materials
procurement.
●All activities for quality management system improvement at the Ann Arbor factoryof Terumo Cardiovascular Systems Corporation (TCVS) have made progress asplanned, and we expect it to be completed by the spring of 2013.
●In relation to the integration with CaridianBCT that we acquired in April 2011, wecompleted the integration of sales bases by the end of this fiscal year, and we are now-1-

[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2012: Reference

ready to promote business as “Terumo BCT”.
●We launched drug-eluting coronary stent, the first made-in-Japan, “Nobori”, in May
2011. The product acquired a high market share in Japan close to 30% in the first fiscal
year of sales.
●In the Drug & Device (D&D) business where values are added by combining
pharmaceutical products with medical devices, we reached an agreement with Daiichi
Sankyo Company Ltd. to co-develop a new vaccine for the prevention of infectious
diseases utilizing Terumo's intradermal injection device.
●As strategies for emerging countries, we established holding companies in China
and Asia to strengthen local business foundations and dynamically implement regionalstrategies. We also formed a strategic business alliance with Weigao, a leading medical
device provider in China, in peritoneal dialysis (PD) business in China.
●In the field of Research and Development, we started the world's first clinical study
in Japan of a cardiac regeneration therapy using cell sheets. In cardiovascular field, we
gained the cell therapy technologies by acquiring Harvest Technologies in U.S. andinnovative large diameter sheath technology by acquiring Onset Medical in U.S..
As a result, our performance in this fiscal year is as follows:(Unit: millions of yen)FYE Mar. 2011

Changes %FYE Mar. 2012
Changes %Results(Constant currency basis)

Results

Net Sales

328,214386,686

17.8

21.8

Gross Profit

170,798

204,639

19.8

24.9

Operating Income

62,606

63,0490.7

7.3

Ordinary Income56,903

59,1644.0－

Net Income

32,33824,167(25.3)－(Note) The results of BCT and Harvest are included.

(Unit: millions of yen)FYE Mar. 2011

Changes %FYE Mar. 2012
Changes %Results(Constant currency basis)

Results

Net Sales

328,214339,793

3.5

6.3

Gross Profit

170,798

175,503

2.8

6.4

Operating Income

62,60664,1972.5

7.9

Ordinary Income

56,90360,572

6.4－

Net Income

32,33827,369(15.4)－(Note) The results of BCT and Harvest are excluded.

-2-

[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2012: Reference< Net Sales >Net sales were 386.7 billion yen or a 17.8% increase compared with the last fiscal year.
Sales of the existing business excluding CaridianBCT and Harvest Technologies whoseacquisition we completed this fiscal year (“existing businesses”) were 339.8 billion
yen or a 3.5% increase compared with the last fiscal year.
Geographic segments(Unit: millions of yen)Area

FYE Mar. 2011

Changes %FYE Mar. 2012
Changes %Results(Constant currency basis)

Results

Japan

177,132

188,498

6.4

6.4

Europe56,63057,526

1.6

5.7Americas

56,97753,937(5.3)

2.6

Asia and others

35,551

39,83912.1

18.2

Total of Outside of Japan

149,158

151,304

1.4

7.5(Note) The results of BCT and Harvest and the accounting period adjustment of overseas subsidiaries
are excluded.

In Japan, drug-eluting coronary stent, “Nobori”, continued to increase its market share,driving domestic sales. I.V. solution and other general hospital products affected by theearthquake showed signs of recovery, and the net sales in Japan thus increased by 6.4%
to 188.5 billion yen compared with the last fiscal year.
Outside of Japan, sales of interventional systems products were favorable. Especiallyin emerging countries like China and Latin America, we achieved growth of more than
30% on a constant currency basis compared with the last fiscal year, pushing up total
sales. However, outside of Japan net sales saw a 1.4% increase compared with the last
fiscal year or 151.3 billion yen, due to the effect of the appreciation of the yen.
<Gross Profit>
Gross profit was 204.6 billion yen or a 19.8% increase compared with the last fiscalyear. With existing businesses, in spite of the effect of the appreciation of the yen, theamount increased to 175.5 billion yen or 2.8% increase compared with the last fiscal
year, thanks to the shift to highly profitable products and the effect of increased
production.
<Operating Income>Though affected by new goodwill depreciation due to acquisitions, operating income
increased by 0.7% compared with the last fiscal year and was 63 billion yen. With
existing businesses, with the increase of gross profit and efficient operation of SG&A
expenses, the amount increased to 64.2 billion yen or a 2.5% increase compared with-3-

[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2012: Reference

the last fiscal year.
<Ordinary Income>Ordinary income was affected by the appreciation of the yen and interest payments due
to loans for acquisitions and issuance of corporate bonds, but increased by 4.0%
compared with the last fiscal year to 59.2 billion yen. The same impact was imposed
upon existing businesses, which still increased by 6.4% compared with the last fiscal
year to 60.6 billion yen.
<Net Income>Net income decreased by 25.3% compared with the last fiscal year to 24.2 billion yen,affected by the tax burden from goodwill depreciation and loss on revaluation of
investment securities and so on. For existing businesses, net income decreased by
15.4% compared with the last fiscal year to 27.4 billion yen.
Next, net sales results by business segments are as follows:Business Segments(Unit: millions of yen)FYE Mar. 2011

FYE Mar. 2012

ChangesResults

Results%

Business Segments

Changes %(Constantcurrency basis)

Net Sales

152,805

149,518

(2.2)

(1.2)

(Japan)122,960

120,218

(2.2)

(2.2)

(Overseas)29,844

29,299(1.8)

3.2

Net Sales

144,598

158,8079.8

14.4(Japan)40,05853,04332.4

32.4(Overseas)

104,540

105,763

1.2

7.5

Net Sales

24,54926,7158.8

12.7(Japan)10,417

11,2257.8

7.8(Overseas)

14,132

15,4899.6

16.3

Net Sales

4,337

4,761

9.8

10.5

(Japan)

3,696

4,010

8.5

8.5

(Overseas)

641

751

17.1

21.7

General HospitalBusiness

Cardiac & VascularBusiness

Blood Management
Business

Consumer Healthcare
Business(Note) The results of BCT and Harvest and the accounting period adjustment of overseas subsidiariesare excluded.

<General Hospital Business>
In Japan, I.V. solutions and some other products whose sales had temporarily dropped
in the first half, affected by the earthquake, showed signs of steady recovery in thesecond half, while semi-solid nutritious foods for the chronic care market and-4-

[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2012: Reference

commissioned business of Drug & Device (D&D) has seen steady growth. However,compared with the last fiscal year, domestic sales decreased.
Outside of Japan, sales were steady in Asia and Latin America, increasing sales on aconstant currency basis but were badly affected by the appreciation of the yen.
Consequently, net sales of the General Hospital Business dropped by 2.2% comparedwith the last fiscal year to 149.5 billion yen.
<Cardiac & Vascular Business>
In Japan, sales of “Nobori”, our drug-eluting coronary stent, enjoyed favorable sales,
while intravascular ultrasound imaging catheter, “ViewIT”, achieved a large increasein sales.
Outside of Japan, “Nobori” increased sales in Europe, Asia and Latin America, whileinterventional systems showed favorable growth in sales, driven by the increasing
popularity of TRI (interventional treatment of approaching the coronary artery fromthe blood vessels of the wrist) in North & Latin America.
Consequently, net sales of the Cardiac & Vascular Business increased by 9.8%
compared with the last fiscal year to 158.8 billion yen, though they were affected by
the appreciation of the yen.
<Blood Management Business>
In Japan, sales of blood bags affected by the earthquake in the first half recovered, andincreased sales compared with the last fiscal year.
Outside of Japan, “TACSI”, our automated blood component processing device,enjoyed favorable sales in Europe, pushing up the total business, and as a result, net
sales of the Blood Management Business increased by 8.8% compared with the last
fiscal year to 26.7 billion yen. The growth of CaridianBCT was driven by good sales oftherapeutic apheresis products.
<Consumer Healthcare Business>Though there was a slowdown in consumption due to the earthquake in Japan, net
sales were 4.8 billion yen, representing a 9.8% increase compared with the last fiscalyear.
[2]Research and Development
We launched products such as a drug-eluting coronary stent, “Nobori”, Low-profile
Visualized Intraluminal Support device, “LVIS”, portable HPN infusion pump, “CaftyPump S”, and basal body thermometer, “WOMAN ﾟ C”. In Japan, we also started
clinical study of intravenous acetaminophen injections in April 2011 and a cardiac
regeneration therapy using cell sheets in February 2012.
In order to meet the needs of different countries, with the improvement of medical-5-

[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2012: Reference

infrastructure especially in emerging countries, the Research and Development
division strengthened partnerships with development divisions outside of Japan.
[3] Capital Expenditure
To increase production of interventional systems products whose sales have been
expanding globally, we added a production line to the Ashitaka Factory. We also added
another production line to the new building of the Fujinomiya Factory for increased
production of I.V. solutions. To strengthen the business continuity plan (BCP), we
newly installed in-house generators at the Ashitaka and Kofu Factories.
Outside of Japan, we started to officially transfer the production of interventional
systems products to the factory in Vietnam. We also made capital expenditures forenhancement and improvement of quality, production efficiency, and productcompetitiveness.
As a result, the capital expenditure for this fiscal year was 26.6 billion yen.
<2> Forecast for the Fiscal Year Ending March 31, 2013
Due to the revision of drug & reimbursement price as well as investments in quality
management system improvements at Terumo Cardiovascular Systems (TCVS), a
certain level of impact upon sales and profit is anticipated. Under such conditions, wewill maintain investment for future growth on R&D activities and post marketingstudies, and we expect that the next fiscal year will see an increase in sales but adecrease in profits. By strengthening sales promotion activities and launching new
products, however, we will work hard to absorb the impact of these factors.
In developed countries in Europe and U.S., we target expanding sales of minimallyinvasive treatment products with high medical cost efficiency, while we will strengthen
our local business foundation in emerging countries, based on our holding companies
in China and Asia to respond to expanding markets. We will also promote thereorganization of our global production system including the transfer of production tofactories in the Philippines and Vietnam.
In the General Hospital Business, we will continue to accelerate our initiatives in thefield of Drug & Device (D&D) where values are added through the combination ofpharmaceutical products and medical device, including global strategic partnerships,
seeking aggressive business expansion. In the field of medical device, we strive toexpand sales of products added with functions to prevent infection and medicalaccidents, including the introduction of new products.
In the Cardiac & Vascular Business, we are globally seeking further sales expansion of
our drug-eluting coronary stent, “Nobori”. In U.S., we are targeting increasing sales ofproducts related to TRI (interventional treatment of approaching the coronary arteryfrom the blood vessels of the wrist) that has drastically gained popularity. In Europe,
we plan to launch our new product, “OFDI”, intravascular optical frequency domain-6-

[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2012: Referenceimaging system in the next fiscal year. In China, Asia, Latin America, and otheremerging countries where the number of cases are expected to steadily grow, we seek
to expand sales of total interventional systems. We will also expand and enhance therange and lineup of interventional products for neurovascular and peripheral vascular.
For the Blood Managements business, as Terumo BCT, we seek to further increase
sales with a wide ranging product lineup supporting both whole blood collection andblood component collection, and globally developed sales network for cover fromemerging to developed countries. Through these activities, we will realize anticipatedperformance in the next fiscal year and sustainable profit growth in the future.
Forecast for the fiscal year ending March 31, 2013
(Full year)

Net Sales
Operating Income
Operating Income Rates
Ordinary Income
Net Income(Unit: millions of yen)Previous Forecast

Revised Forecast

386,686
63,04916.3%
59,164
24,167410,000
60,00014.6%
58,00034,000Changes

23,313(3,049)－(1,164)
9,832

Changes (%)
year on year

6.0
(4.8)
－(2.0)
40.7

This English translation has been prepared for general reference purposes. The Company is not responsible for any
consequence resulting from the use of the English translation in place of the original Japanese text. In any legalmatter, readers should refer to and rely upon the original Japanese text of the tanshin (Financial Results) dated asof May 10, 2012-7-