First Half
Financial Results Briefing for the Fiscal Year Ending
March 2023
November 11, 2022
Japan Medical Dynamic Marketing,INC.
Securities code：7600
Representative Director and President
Masao Okawa
Copyright © Japan Medical Dynamic Marketing, INC. All Rights Reserved.

Notes
The forward-looking statements in this document are based on information
currently available to us and certain assumptions that we consider reasonable, andare not intended as a promise by us that they will be realized. Actual results may
differ materially due to various factors.
Our products
Artificial Hip
Joint

Artificial
Knee Joint

TraumaSpine

-AgendaResults for the First Half of
FYE March 2023

P. 4

2 ．

- Consolidated net sales

P. 4- Consolidated Statement of Income

P. 5

-

1 .

-

Consolidated Net Sales byLocation/Product

P. 6

-

- Sales in Japan - Joint Replacement

P. 7

-

- Sales in Japan – Trauma

P.10- Sales in Japan – Spine

P.11

-

- Sales in U.S.

P.14

- Sales in U.S. - Joint Replacement

P.15

(1)

P.16

(2)

P.17

〃

-

Comparative YoY Analysis of Operating
Profit- Difference in H1 Financial Forecasts

3 ．

Revised Forecast for
FYE March 2023
Revised Full-year Forecast
Consolidated Statement of Income
Revised Full-year Forecast
Consolidated Net Sales by product group
Compared with Previous Full-year Financial
Forecast

P.18
P.18
P.19
P.20

Sales Strategy for the Second Half

P.21

Topics

P.22

Signing of the United Nations
Global Compact (UNGC)
Information Disclosure based on TCFD
(GHG Emissions）
Information Disclosure based on TCFD
(Risks and Opportunities)

P.22
P.23
P.24

(3)

Status of Business in China

P.25

(4)

Status of Business in Australia

P.26

Consolidated net sales(Millions of yen)
10,00022/3 H1 +12.8%

9,980* After the application of revenue
recognition standards

million yen

Double-digit growth for two
consecutive quarters

8,000

Highest first-half
net sales in company history

6,000

4,000

H1 YoY Change

Japan + 6.2%
U.S. + 23.3%

2,000

0
14/3 15/3 16/3 17/3 18/3 19/3 20/3 21/3 22/3 23/3
H1
H1
H1
H1
H1
H1
H1
H1
H1
H1

4

Consolidated Statement of Income
FYE Mar 2023 H1Results(Millions of yen, %)Net sales

Ratio tosales

9,989 100.0

YoY change

FYE Mar 2022 H1
Ratio
to
sales

Amount ofchangeRate ofchangeResults+1,131+12.8

8,858 100.0

3,370
5,691

33.7

+514

+18.0

2,856

32.2

57.0

+748

+15.1

4,943

55.8

Operating profit

927

9.3

- 131

- 12.4

1,058

11.9

Ordinary profit

916

9.2

- 126

- 12.1

1,042

11.8

Net income

721

7.2

- 281

- 28.1

1,003

11.3

Cogs
SG & A* Profit attributable to owners of parent

5Consolidated Net Sales by Location/ProductFYE Mar 2023 H1

YoY change

PercentageAmount ofchange

5,921

59.3

+325

Joint

2,226

22.3

Trauma

1,922

Spine

FYE Mar 2022 H1Results

Percent
age

+5.8

5,596

63.2

+80

+3.7

2,146

24.2

19.2

+150

+8.5

1,772

20.0

1,596
176

16.0
1.8

+138
- 43

+9.5
- 19.6

1,458

16.5

219

2.5

4,184

41.9

+792

+23.3

3,392

38.3

Joints

4,167

41.7

+788

+23.3

3,379

38.1

Spine

17

0.2

+4

+28.7

13

0.2

10,106101.2+1,118

+0.0

8,988

101.5

- 116

- 1.2

-4

- 8.9

- 130

- 1.5

Total

9,989

100.0

+1,131

+12.8

8,858

100.0

Sales of Company
products

8,118

81.3

+967

+13.5

7,151

80.7

*US dollar basis

31,351+570+1.930,781133.47+23.26

Results(Millions of yen, %)Sales in Japan

Other

Sales in U.S.*

Subtotal before
sales deduction
Sales deduction*

3(Thousands of dollars)* Exchange rate (Yen)

Rate ofchange110.21

6

Sales in Japan - Joint Replacement（Millions of yen）
ODEV products
Products of other companies

2,500

Strength from
22/3 H1 +3.7%
THA**Total Hip Arthroplasty

Highlights• Strong growth of Entrada® Hip System• Intellijoint HIP® Navigation system
Synergy from expanded introduction

2,000

1,500

Challenges• Impact from a decline in reimbursement
price for hip joint

1,000

New Products Launched

SecuAlign HTO Plate System*

500(March 2022)*High tibial osteotomy

Promontory Hip Stem

0
14/3
H1

15/3
H1

16/3
H1

17/3
H1

18/3
H1

19/3
H1

20/3
H1

21/3
H1

22/3 23/3
H1
H1(September 2022)7

Growth Factors for Hip Joint Sales in Japan
Surgical navigation system for total hip arthroplasty[Intellijoint HIP® navigation system]
Our
Products

Surgicalnavigation
systemExpansion of sales of artificial hip joint products in Japan

Manufactured by Intellijoint Surgical Inc.
(Canada)[Intellijoint HIP® navigation system] Surgical navigation system for confirming proper placement position of implants, such as the angle of
the acetabular component and the leg length difference of the femoral stem in total hip arthroplasty.
 The use of surgical navigation systems has been credited with improving implant placement accuracy
and reducing operating time.
8New Artificial Hip Joint ProductPromontory Hip Stem
Promontory Hip Stem Launch (September 2022)
 The cross-sectional shape of the stem is rectangular, with strong fixation
expected as the corners of the stem bite into the medullary cavity of thefemur.
 Useful in a wide range of cases, regardless of the shape or bone qualityof the femur.

Promontory Hip Stem In the therapeutic area of total hip arthroplasty for fragile bone hip joint
disease, there are many indications for this product which will lead tothe expansion of our sales of artificial hip prosthesis products in Japan.
9

Sales in Japan - Trauma（Millions of yen）

22/3 H1 +8.5%

ODEV products

2,000

Products of other companies

Femoral Neckfracture fixation system
ODEV productPrima Hip Screw

1,500

&
Other company’s product

ASULOCK

1,000

Double-digit
growth

500

0
14/3
H1

15/3
H1

16/3
H1

17/3
H1

18/3
H1

19/3
H1

20/3
H1

21/3
H1

22/3 23/3
H1
H1

10

Sales in Japan - Spine（Millions of yen）
ODEV products
Products of other companies

1,500

22/3 H1 +9.5%

ODEV product:

Pisces spinal system& Other company's product: BKP(KMC Kyphoplasty system)

1,000

Double-digit growth
New Products Launched

500

Vusion Ti3D ARC cage
(July 2022)

Lynx α plate(August 2022)

0
14/3
H1

15/3
H1

16/3
H1

17/3
H1

18/3
H1

19/3
H1

20/3
H1

21/3
H1

22/3 23/3
H1
H1

11

New Spinal Fixation Devices
Vusion Ti3D ARC Cage
Vusion Ti3D ARC Cage Launch (July 2022)
 Interbody fusion implant used during spinal fusion
 With a porous structure simulating cancellous bone and an optimized
pore size, stable fixation and early bone union between vertebrae canbe expected.
 Vusion Ti3D ARC is indicated for the treatment of a large percentage
of lumbar spine disease cases, which will lead to increased sales ofspinal fusion devices in Japan.

Vusion Ti3D ARC cage

12

New Spinal Fixation Devices
Lynx α Plate
Lynx α Plate Launch (August 2022)
 Intra-spinal fixation device and plate for cervical laminoplasty
 In fixing the vertebral arch with a plate and screws, a locking
screw system and a characteristic plate design (which are notavailable in the conventional metal plate for cervicallaminoplasty) are adopted to provide simple and solid fixation ina technical manner, with the expectation of improving surgicalflow and safety in operation.
 The introduction of the Lynx α plate into the therapeutic area of
cervical laminoplasty will expand indications, leading toincreased sales of spinal fusion devices.

Lynx α plate

Made by ACTYPower

13

Sales in U.S.
(Millions of dollars)
35

22/3 H1 +1.9%$31.3M
Highlights

30• Increase in the number of surgical cases
from new customers added in the prior fiscal
year

25

Challenges

20• Temporary postponement of thecommencement of business withnew customers due to supply chain issues• Retirement of doctors• Shortage of medical staff due to inflation andlabor issues• Intensified competition due to theintroduction of new products by competitors

15
10
5
0
14/3
H1

15/3
H1

16/3
H1

17/3
H1

18/3
H1

19/3
H1

20/3
H1

21/3
H1

22/3 23/3
H1
H1

14

Sales in U.S. – Joint Replacement
Artificial Hip Joint$11.7M
22/3 H1 +4.2%(Millions of dollars)

15

Artificial Knee Joint$18.7M

Growth rate
Hip > Knee

22/3 H1 +0.9%

20

Slower Growth with Knee
15

10

•

Retirement of 3 surgeons withhigh surgical volume in early 2022•

Defection of one large customer tocompetitor offering robotics

New Product Launched

5

Balanced Knee System Uni(January 2022)

019/3 20/3 21/3 22/3 23/3
H1
H1
H1
H1
H1

*Excluding sales of "KASM" to DePuy Synthes

19/3 20/3 21/3 22/3 23/3
H1
H1
H1
H1
H1

15

Comparative YoY Analysis of Operating Profit（Millions of yen）

1,400
1,200

Impact of significant
depreciation of the yen:
• Net sales:+¥729 million• Cost of sales:+¥430 million• SG & A:+¥532 million• Operating profit: -¥233 million

Sales in Japan +¥477 million*
Maintaining growth despite
certain restrictions
on marketing activities due tothe explosion of COVID-19
infections in H1

1,000-12.4%
Cost of sales increased by ¥84
million due to increased sales inJapan and the U.S.*

800
600

Personnel expenses+¥108 million*
Strengthening humanresources andorganizational expertise

1,058

400
200
0

22/3
H1

Other changes +¥108
million*
Sales in Japan -¥138 million*
Decrease in operating profit(-¥138 million) due todecreased reimbursement andother factors

US sales +¥63 million*
Increase in the numberof surgical cases fromnew customers added in
the prior fiscal year

• Commissions +¥43 million• Cargo freight +¥13 million• Travel+¥37 million• Depreciation +¥23 million• R&D+¥6 million• Others-¥15 million* With the effect of foreign exchange rates presented
separately, the above amounts are excluded fromeach change and are not consistent with those shownin the statement of income.
Exchange rate: 110.21 yen/dollar for 22/3 H1
133.47 yen/dollar for 23/3 H1

927

23/3
H1
16

Difference in H1 Financial Forecasts
23/3, H1
（Millions of yen , ％）Net sales
Operating profit
Ordinary profit
Net income*Results

9,989
927
916
721

Change from initial forecast

Ratio tosales

Amount ofchangeRate ofchange23/3, H1
Initialforecast

Ratio to
sales

100.0

- 210

- 2.1

10,200

100.0

9.3

- 172

- 15.7

1,100

10.8

9.2

- 133

- 12.7

1,050

10.3

7.2

+21

+3.1

700

6.9

* Profit attributable to owners of parent

Highlights
 Japan‒ Increase in net sales by expanding sales of focused products
 United States‒ Increase in the number of surgical cases from new customers added in
the prior fiscal‒ Increase in yen-based net sales due to the depreciation of the yen (from128 yen/dollar to 133 yen/dollar)

Challenges
 Japan‒ Increase in cost of sales due to the depreciation of the yen anddeterioration in the cost of sales ratio United States‒ Delayed sales to new customers due to supply chain problems‒ Increase in U.S. expenses due to the depreciation of the yen‒ New products, including hip replacement implants and enabling
technology, introduced by competitors

17

Revised Full-year Forecast
Consolidated Statement of Income
FYE March 2023
（Millions of yen , ％）Net sales

Change from previous year

FYE March 2022

Ratio tosales

Amount of change

21,800 100.0+2,606+13.6

19,193100.0

Forecast

Rate ofchangeResults

Ratio to
sales

7,450
12,35034.2+1,245

+20.1

6,204

32.3

56.7

+2,022+19.6

10,327

53.8

Operating profit

2,000

9.2

- 661

- 24.9

2,661

13.9

Ordinary profit

2,050

9.4

- 541

- 20.9

2,591

13.5

Net income*

1,450

6.7

- 684

- 32.1

2,135

11.1

Cogs
SG & A* Profit attributable to owners of parent

18

Revised Full-year Forecast
Consolidated Net Sales by product group
FYE March 2023

Change from previous year

FYE March 2022

Percentage

Amount ofchangeResults

Percen-tage

13,100

60.1

+691

+5.7

12,409

64.7

Joint

4,920

22.6

+201

+4.3

4,719

24.6

Trauma

4,370

20.0

+255

+6.2

4,115

21.4

Spine

3,440

15.7

+315

+10.1

3,125

16.3

370

1.7

- 78

- 17.4

448

2.3

8,970

41.1

+1,900

+26.9

7,070

36.8

Joints

8,940

41.0

+1,896

+26.9

7,044

36.7

Spine

30

0.1

-4

+15.4

26

0.1

22,070101.2+2,591+13.3

19,479

101.5

- 270

- 1.2

+16

+5.6

- 286

- 1.5

Total

21,800100.0+2,607+13.6

19,193

100.0

Sales of Company
products

17,71081.2+2,269+14.7

15,44180.5

US dollar basis*2

63,572+932+1.5

62,640141.1028.22

Forecast（Millions of yen , ％）Sales in Japan

Other

Sales in U.S.*

1

Subtotal before sales
deduction

Sales deduction*1 Exchange rate (Yen)*2 Thousands of dollars

Rate ofchange(H1 result: 133.47, H2 expectation: 150.00)

112.8819

Compared with Previous Full-year Financial Forecast
FYE March 2023

Change from initial forecast

FYE March 2023

Revised forecast

Ratio tosales

21,800

100.0

- 200

- 0.9

22,000100.0

Operating profit

2,000

9.2

- 800

- 28.6

2,800

10.8

Ordinary profit

2,050

9.4

- 650

- 24.1

2,700

10.3

Net income*

1,450

6.7

- 400

- 21.61,850

6.9（Millions of yen , ％）Net sales

Amount of change

Rate ofchangeInitialforecast

Ratio tosales

* Profit attributable to owners of parent

Positive factors
 Japan‒ In Japan, an increase in ordinary profit, including foreign exchange gains andlosses, due to the depreciation of the yen, and an increase in profit due to therecording of extraordinary income, including ordinary profit and reversal ofprovision for loss on business.

 United States‒ Increase in yen-based net sales due to the depreciation of the yen (from 128
yen/dollar to 150 yen/dollar)

Negative factors
 Japan‒ Increase in cost of goods purchased due to the depreciation of the yen anddeterioration in the cost of sales ratio United States‒ Decrease in U.S. net sales as a result of the delayed acquisition of new
customers due to supply chain issues, the decreased number of cases due tothe shortage of medical staff, and the competition for sales due to theintroduction of new products and technology by competitors.
‒ Decrease in operating profit due to a downward revision of U.S. sales, anincrease in logistics costs due to inflation, and an increase in U.S. expenses
due to the yen depreciation.

20

Sales Strategy for the Second Half
Sales Strategy for the Second Half Strengthen sales of focused products in the Japan
market• Development of sales activities with awareness ofoutcome• Acquisition of new customers• Higher repeat rate of existing customers

 Sales to new customers in the U.S. market• Commencement of business with new customers that
had been postponed due to H1 supply chain issues• Accelerate sales of knee replacement product throughnewly introduced PSI*1• Expansion of the OMG*2 Program• Increase number of regional seminars*1*2

Aiming to increase operating profit by expanding sales

Key Measures to Expand Business Base

“MODE2023” (FYE Mar 2022 to FYE Mar 2024)(1) Expand overseas business‒ Continued double-digit growth in North America(2) Strengthen development and procurement
capabilities• Novelty and competitive advantage- Strengthening procurement and development of high-value-added
products, instruments and services(3) Strengthening human resources and organizational
expertise• Strengthening expertise in non-sales positions‒ Investment in human resources to strengthen strategy
implementation function(4) Promoting digitalization• Leveraging IT and DX‒ Development of high-value-added services for healthcare
professionals, such as preoperative planning and surgical navigation
systems and services. DX to improve internal operational efficiency

Patient Specific Instruments: 3D analysis of knee joint conditions and tailor-made total knee arthroplasty according to the patient's individual shape.
ODEV Meeting and Greeting: ODEV corporate facility tour and introduction to key management aimed at building relationships of trust with doctors

21

Topic (1) Signing of the United Nations
Global Compact (UNGC)
Signing the “United Nations Global Compact (UNGC)” advocated by the United Nations(Registered as a Participating Enterprise on June 23, 2022)[Certificate for Signing the United Nations Global Compact]

United Nations Global Compact Headquarters website(https://www.unglobalcompact.org/)

22

Topic (2) Information Disclosure based on TCFD
(GHG Emissions Reduction)
Recognizing our response to climate change as one of our materiality issues, we will deepen our
understanding of the risks and opportunities related to climate change impacting our business, andwork to reduce scope 1 and 2 greenhouse gas (GHG) emissions.

The Company website(Top > Sustainability > Responses to TCFD Recommendations)(https://www.jmdm.co.jp/en/sustainability-action/tcfd/）

23

Topic (2) Information Disclosure based on TCFD
(Risks and Opportunities)
We consider delays in logistics and lost opportunities due to natural disasters as risks.
In response to these risks, we will promote the decentralized storage of inventory and the use of
distribution center to reduce risks and promote business activities to respond to new opportunities
such as emergency surgery.
Classification
Risk

Timing

ImpactAcute

Risk of distribution delays and lost opportunities due todamage to buildings, equipment, and inventory,
suspension of operations, and supply chain disruptions
caused by natural disasters

Short-term

Large

Products and services

Increase in demand by using product centers as satellites(reducing logistics lead time)

Short-term tolong-term

Small

Resilience

Stabilization of product supply through distributed storageof inventory

Short-term tolong-term

SmallPhysicalContent

Opportunity

Scope: Japan only (The Company on a non-consolidated basis)
Timing: Short-term (within one year), medium-term (from over one year to up to three years), long-term (over three years)
Impact: Small (within ¥50 million), medium (over ¥50 million to up to ¥200 million), large (over ¥200 million)
The Company website(Top > Sustainability > Responses to TCFD Recommendations)(https://www.jmdm.co.jp/en/sustainability-action/tcfd/#portfolio）

24

Topic (3) Status of Business in China
WOMA (Changzhou Waston Ortho Medical Appliance Co., Limited)
Sales
•
•

Certified as a supplier by bidding for the central
government's centralized purchasing tender with BKS
manufactured by ODEV (made in U.S.A.)
Acquisition of two-year sales rights from September 2021

Strengthening Sales System• Contracts completed with 12 agents(as of the end of September 2022)

China Regulatory Approval• Preparations to obtain pharmaceutical approval for WOMAmanufactured (made in China) BKS (2023) are in progress

Project for Manufacturing Medical Instruments in China• Starting trial for the manufacture of medical instruments at
WOMA to reduce global group manufacturing costs

Company Overview
Location

 Changzhou, Jiangsu Province, China

Representative Hu Jinmin

Business profile Import, development, manufacture andsales of artificial joint products

Share capital US$10 million

Investment ratio WASTON: 60%, ODEV: 40%

25

Topic (4) Status of Business in Australia
Business losses related to the fiscal year ended March 2022 have been included, with minimal impact
on the consolidated financial results for the fiscal year ending March 2023.

Ortho Development Pty Ltd.
 Established as a subsidiary of U.S. Ortho Development, in April 2019.
 The Company had planned to expand sales in the Australian market as a strategic
growth area for "expansion of overseas business," but due to COVID-19, it became clearthat it would be difficult to reasonably predict when it would re-enter the Australianmarket, as it would take several more years to obtain regulatory approval.
 The liquidation of the company was resolved on September 22, 2022.

26

Contributing to Medical Care Through the Development and Sale of Advanced
Medical Devices.

Japan Medical Dynamic Marketing,INC.

E-MAILWEB SITE

Investor Relations Office

ir@jmdm.co.jp

https://www.jmdm.co.jp/en/