Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2011:
Reference
Analysis of Business Performance<1> Overview of the First Quarter of the Fiscal Year Ending March 31, 2011[1] Overview of Business Results
The global economy during the first quarter (from April 1, 2010 to June 30, 2010)
remained uncertain because, though China and other emerging countries haveexperienced continued economic growth, due to the financial crisis in Europe,
triggered by Greece, apprehension about the impact on the real economy and renewed
concern of financial systems persisted. Under such unstable economic conditions,foreign exchange, especially the euro, drastically fluctuated, having a substantial
impact on our corporate performance.
When looking at the healthcare market, we can see that healthcare around the world is
now in a great period of transition. In emerging countries such as China, India, Asiancountries, and Brazil, the improvement of healthcare infrastructures has been
drastically taking place, resulting in a sharp increase of demand for healthcare services
from fundamental to advanced medicine. In advanced countries in Europe and the US,
increases in medical costs and expenses have become a big challenge, and many
healthcare system reforms have been conducted to secure funding for medical services
and a reduction of medical costs. In Japan, the government continues to employ
policies for medical cost reduction, and in the revision of remuneration for medical
treatment in Japan in April 2010, the medical fee including doctor’s procedure fees
was increased. Thanks to this, expectations were raised for the elimination of problems
such as the rejection of acceptances of emergency patients and improvement ofworking conditions of medical practitioners, making it a year of great change for thehealthcare market.
Under these drastically changing conditions, TERUMO Group paid attention to themarket changes and developed unique products and services to contribute to the“health economics” to improve the quality of healthcare and promote its efficiency. InJapan, we promptly responded to market changes driven by the revised remuneration
for medical treatment and reorganized our sales organization. We shifted more humanresources to the chronic care phase market where an increase in the number of serious
cases is projected. Also, we newly assigned dedicated staff to the diabetes business towhich can be expected to that the competition will intensify by the market expanded.
Also, taking advantage of our general training facility for medical practitioners,“Terumo Medical Pranex” we have continuously addressed strengthening medical-1-

[Terumo Corporation] Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2011: Reference

safety.
Outside of Japan, we have developed interventional systems and other products andservices that can contribute to better healthcare efficiency in individual regions, while
promoting the spread of TRI (interventional procedure to approach coronary arteries
from blood vessels in the wrist) that further improves the health economics as well as
sales expansion of products suitable for TRI. We have also addressed strengthening
production capacities, especially in Asia, and the reorganization of production
structure toward cost reduction on a global scale.
Our performance in this first quarter is as follows:< Net Sales >In Japan, there was impact due to the revision of the drug & device reimbursement andnet sales were 42.5 billion yen or a 0.6% decrease when compared with the same
period in the previous year. On the other hand, performance outside of Japan weregenerally good, showing double-digit growth on a local currency basis in every region.
Sales in Europe continuously grew strongly. Also, sales grew in North & Latin
America as well as Asian countries including China and India. Total sales outside ofJapan resulted in the growth of 19.8% on a local currency basis. Though there was animpact due to foreign exchange, net sales in total in Japan and outside of Japan were
81.2 billion yen or a 4.9% increase.
Geographic segments(Unit: millions of yen)Area

Q1 Mar. 2010

Changes %Q1 Mar. 2011
Changes%Results(Local currency basis)

Results

Japan

42,82042,544(0.6%)(0.6%)

Europe13,478

13,956

3.5%

16.8%

Americas12,995

14,763

13.6%

20.2%

Asia and others

8,173

9,968

22.0%

23.8%

34,647

38,689

11.7%

19.8%

77,467

81,234

4.9%

8.5%

Total of
Outside of Japan
Total<Gross Profit>
Though we have seen improvements by the shift to highly profitable products and cost
reductions, the revision of the drug & device reimbursement, the appreciation of theyen and other negative factors forced the gross profit rate to drop by 1.5 points or
52.1%. Gross profit increased by 1.9% to 42.3 billion yen, thanks to the increased-2-[Terumo Corporation] Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2011: Reference

volume of sales and other factors.
<Operating Income>We have continued to use general and administrative expenses efficiently, but as we
actively invested in growth, development costs and SG&A expenses increased by 5.3%,and operating income decreased by 3.2% to 15.9 billion yen.
<Ordinary Income>
Drastically affected by foreign exchange losses, we saw a 25.9% drop, and ordinary
income decreased to 12.6 billion yen.
<Net Income>Net Income decreased by 18.7% and was 8.8 billion yen.
Next, net sales results by business segments are as follows:Business Segments(Unit: millions of yen)
Q1 Mar. 2010
Results

Changes%

Changes %(Localcurrency basis)

Q1 Mar. 2011

Business Segments
Results

Net Sales

36,59837,077

1.3%

2.6%(Japan)29,33929,7501.4%

1.4%(Outside of Japan)

7,259

7,3260.9%

7.5%

Net Sales

33,32136,447

9.4%

15.6%

(Japan)

9,537

9,562

0.3%

0.3%

(Outside of Japan)

23,783

26,884

13.0%

21.8%

Net Sales

5,708

6,443

12.9%

17.4%

(Japan)

2,181

2,588

18.6%

18.6%

(Outside of Japan)

3,526

3,854

9.3%

16.7%

Net Sales

1,893

802

(57.6%)(57.6%)(Japan)

1,763

641

(63.7%)(63.7%)

130

161

24.3%

24.4%

General HospitalBusiness

Cardiac & VascularBusiness

Blood Transfusion
Business

Consumer Healthcare
Business(Outside of Japan)(Note): The amounts of the same period in the previous year in this table are
rearranged to compare with the results of this period.
<General Hospital Business>
In Japan, infusion products with improved added value that lead to the prevention of
medical accidents and reduced contamination risk, infusion pumps and syringe pumps
steadily increased sales.
Outside of Japan, diabetes care products enjoyed favorable sales in Europe, Asia and-3-

[Terumo Corporation] Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2011: Reference

other areas.
Consequently, net sales of the general hospital business increased by 1.3% whencompared with the same period in the previous year or were 37.1 billion yen.
<Cardiac & Vascular Business>
In Japan, intravascular ultrasound imaging catheters used in the treatment of Angina
Pectoris, “ViewIT,” and PTCA balloon catheters, “Tazuna,” enjoyed good sales, and a
new product jointly developed with Olympus, “VisiGlide,” continuously increased
sales ever since being launched.
Outside of Japan, due to worsening medical finance affected by the economic crisis,
temporary suspensions of large-scale investments in medical equipment havecontinued, but we saw signs of recovery in some areas. In relation to interventional
systems, drug-eluting coronary artery stent, “Nobori” enjoyed positive sales in Europe,Asia and other regions, while cerebral aneurysm treatment coils were popular, showing
a high level of sales growth or double-digit increase in every region including Europe,
North and Latin America and Asia.
As a result, net sales in the cardiac and vascular business increased by 9.4% whencompared with the same period in the previous year or were 36.4 billion yen.
<Blood Transfusion Business>
In Japan, sales of blood bags and aphaeresis system enjoyed good sales.
Outside of Japan, blood bags and other devices sold well in Russia, Eastern Europe,and the Middle East where the economic slump continued. Our automated centrifuge& separator integration system that contributes to the improvement of operational
efficiency at blood centers, “TACSI,” steadily increased its sales coverage area,
contributing to an increase in sales.
Net sales of the blood transfusion business were 6.4 billion yen, representing a 12.9%
increase from the previous year.
<Consumer Healthcare Business>
Last fiscal year in Japan, there was an increase in demand for digital thermometers dueto the outbreak of the H1N1 influenza, but this period affected by its rebound, net sales
in consumer healthcare business reduced by 57.6% and were 0.8 billion yen.

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