[Terumo Corporation] Financial Results for the First Quarter of Fiscal Year Ending March 31, 2014: Reference

Financial Results for the First Quarter of Fiscal Year Ending March 31, 2014: Reference

Analysis of Business Performance
1. Overview of Financial Results for the First Quarter(1) Overview of Consolidated Business Results
In the first quarter of the current fiscal year (from April 1 to June 30, 2013), there werea number of positive developments in the Japanese healthcare market. In June, thegovernment approved growth strategies that promote regulatory reforms and private
sector investment, with the goal of expanding the market scale of healthcare-relatedindustries from the current level of 12 trillion yen to 16 trillion yen by 2020. Specificmeasures include a Japanese version of the U.S. National Institutes of Health, thestrengthening of the Pharmaceuticals and Medical Devices Agency, and plans tointernationalize the Japanese Medical Services.
Under these circumstances in the healthcare market, growth opportunities for theTerumo Group to capitalize its strength are increasing.
The Terumo Group has been benefiting from a depreciating yen and considerable sales
growth outside Japan. In the Group’s Cardiac & Vascular Business segment, sales ofMisago, a stent for treating peripheral artery disease, grew steadily in Japan, and theinterventional systems business posted strong results in and outside Japan. Likewise,
sales in the Blood Management Business segment were robust both in and outside Japan.
In the General Hospital Business segment, however, sales decreased year on year
mainly because of a sell-off of home therapy businesses in the previous fiscal year.
The Terumo Group is presently carrying out its four year mid-term management plan,
which started from this quarter, with the goal of becoming a company with a globalpresence. The Group’s main achievements under the plan in the first quarter of thecurrent fiscal year are as follows:● In the Cardiac & Vascular Business segment, Terumo launched new products,including a flow diverting stent and an occlusion balloon, in the European andJapanese neurovascular and peripheral markets. In April, Terumo concluded anagreement with Kaneka Corporation to jointly develop percutaneous transluminal
angioplasty (PTA) balloon catheters for treating peripheral artery disease. Theagreement is not limited to the joint development of a single product, but also coversan array of PTA balloon catheters for various therapeutic applications and various-1-

[Terumo Corporation] Financial Results for the First Quarter of Fiscal Year Ending March 31, 2014: Reference

lesions. From here on, products will be developed by both companies, thenmanufactured by Kaneka Corporation and marketed globally by Terumo. In June,
Terumo established a strategic alliance with Thoratec Corporation, a U.S.-based firm,with the goal of quickly commercializing DuraHeart II, a next-generation left
ventricular assist system. Through this alliance, Thoratec Corporation will continue
product development and manufacturing as well as clinical trials and marketing in theAmericas and Europe, while Terumo will conduct clinical trials and marketing inJapan.
● In the Blood Management Business segment, in May Terumo commenced sales ofautomated blood component processing systems in Europe, namely Reveos andTACSI WB system. These products are systems for automated whole bloodprocessing, and are expected to increase throughput and product quality consistency.
● In the General Hospital Business segment, Terumo launched smart pumps equippedwith IT functions in Japan as a means to improve the safety of drug administration.
As a result of the above initiatives in the first quarter of the current fiscal year, Terumo’s
consolidated business results are as follows:

Net sales
Net sales increased year on year 15.9% to 111.1 billion yen. Of this amount, net sales inJapan edged up year on year 0.4% to 45.7 billion yen, mainly on the back of strong
results in the Cardiac & Vascular Business and Blood Management Business segments.
Outside Japan, net sales rose 29.9% year on year to 65.4 billion yen, primarily due tofavorable results in the Interventional Systems Business and the positive influence ofthe depreciating yen.
Gross profit
Gross profit amounted to 57.0 billion yen, up 10.3% year on year. Although results wereaffected by inventory re-evaluation and device tax in the U.S., favorable exchange rates
and a successful shift to highly profitably products were positive factors.
Operating income
Operating income amounted to 13.3 billion yen, down 13.9% year on year. Although-2-[Terumo Corporation] Financial Results for the First Quarter of Fiscal Year Ending March 31, 2014: Reference

exchange rates were favorable owing to the depreciation of the yen, research anddevelopment expenses as well as selling, general and administrative expenses increased.
Ordinary income
Ordinary income also slightly decreased, by 0.3% year on year, to 12.9 billion yen. Thiswas despite favorable exchange rates resulting from the depreciating yen.
Net income
Net income totaled 9.0 billion yen, an increase of 9.8% year on year.
Net sales results by business segment are as follows.

General Hospital Business
In Japan, Terumo’s commissioned business services in the Drug and Device (D&D)
business and diabetes treatment business performed strongly. Nevertheless, owing to thesell-off of home therapy businesses in the previous fiscal year, sales decreased year onyear. Outside Japan, however, sales were up year on year in Asia and the Americas,
despite a decrease in sales on a local currency basis in Europe and China.
As a result of these factors, net sales in the General Hospital Business segment totaled
39.4 billion yen, up 3.3% year on year.
Cardiac & Vascular Business
In Japan, sales of peripheral artery stent Misago, launched in the previous fiscal year,grew steadily. Meanwhile, the interventional systems business performed strongly
outside Japan, especially in Europe and the U.S.
As a result of the above, net sales in the Cardiac & Vascular Business segment
amounted to 50.1 billion yen, an increase of 22.1% year on year.
Blood Management Business
Sales in Japan increased year on year on the back of strong sales of automated blood
component collection systems. Outside Japan, sales of therapeutic apheresis systems
continued to grow steadily.

-3-

[Terumo Corporation] Financial Results for the First Quarter of Fiscal Year Ending March 31, 2014: Reference

Owing to these factors, net sales in the Blood Management Business segment jumped
29.4% year on year to 21.5 billion yen.
(2) Overview of Consolidated Balance Sheets
Assets
As of June 30, 2013, total assets amounted to 795.2 billion yen, up 24.2 billion yen
compared to March 31, 2013. Of this amount, current assets totaled 292.4 billion yen,
an increase of 5.5 billion yen, primarily due to exchange rate changes increasing thevalue of inventories. Noncurrent assets increased 18.6 billion yen to 502.4 billion yen,mainly owing to the effect of exchange rates and increased investments intended tofoster business growth. Property, plant and equipment was up 4.4 billion yen as a resultof investment in the Yamaguchi Factory and other factors. Meanwhile, intangible assets
increased 10.6 billion yen and investments and other assets were up 3.6 billion yen.
Total Liabilities
Total liabilities increased 0.5 billion yen to 333.7 billion yen. Of this amount, current
liabilities totaled 112.6 billion yen, a decrease of 3.2 billion yen, mainly due to a
reduction in the provision for bonuses due to summer bonus payments. Noncurrent
liabilities amounted to 221.0 billion yen, up 3.7 billion yen, primarily due to an increasein long-term debt resulting from the impact of exchange rates.
Net Assets
Net assets amounted to 461.6 billion yen, an increase of 23.7 billion yen. Consequently,
the shareholders’ equity ratio was 58.0%, up 1.3 percentage points compared to March31, 2013.
(3) Forecast of Consolidated Results for the Fiscal Year Ending March 31, 2014
Terumo’s operating environment continues to be uncertain due to fluctuations inexchange rates, changing conditions surrounding the medical device market, and otherfactors. Although the Company made no revisions to its consolidated financial forecasts
for the current fiscal year.
Amidst challenging business conditions, the Terumo Group is working to achieve its
targets by launching high-value-added products that improve medical cost efficiency, as
well as implementing measures to reduce manufacturing costs, and strictly andefficiently managing selling, general and administrative expenses.
-4-

[Terumo Corporation] Financial Results for the First Quarter of Fiscal Year Ending March 31, 2014: ReferenceThis 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 theoriginal Japanese text. In any legal matter, readers should refer to and rely upon the original Japanese
text of the tanshin (Financial Results) dated as of August 1, 2013.

-5-