Urology / Gynecology Business Unit(UGBU) Strategy
Minoru Okabe
Head of Uro/Gyn Business Unit
Olympus Corporation
March 30, 2016

Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators
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Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators
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Positioning of UG Business within Olympus

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Distribution of Sales and Positioning
FY2016 Net Sales (Forecast)

Urology / Gynecology Business Unit (UGBU)*

205.6

Medical Business
FY2016 Net Sales（Forecast）

GI337.4¥615.0 billion* The figure for Surgical Devices net sales (¥205.6 billion) includes
net sales of the Urology / Gynecology Business Unit (UGBU).

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Flexible and rigid endoscopes(ureteroscopes and cystoscopes)

Stone treatment
devices(disposable)

Gynecology field

SurgicalDevices*

Urology fieldET72.0

Benign prostatic hypertrophy and bladdertumor resectoscopes and therapeuticelectrodes (disposable)

Flexible hysteroscopes

Resectoscopes

Colposcopes

Applications and Characteristics of Major Products
FieldUrology
Flexible Ureteroscope
URF-V2

Stone Treatment
Devices(Disposable)

Flexible Cystoscope
CYF-VH

Resectoscope
OES Pro.

TherapeuticElectrodes(Disposable)

Product Flexible ureteroscopes are used fortreating urinary stones.

Feature Olympus flexible ureteroscopes have adominating edge realized by merging GI
endoscope technologies with the small
diameter scope technologies of former
company Gyrus.
 Stone treatment devices (disposable)
are used with ureteroscopes to treatstones.

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 Flexible cystoscopes areused to treat bladdertumors.
 Olympus flexible
cystoscopes have adominating edge realized
by utilizing NBI*
technologies from GI.
*NBI：Narrow Band Imaging

 Resectoscopes are used to treat
benign prostatic hypertrophy andbladder tumors.
 Bipolar TURis electrodes(disposable) boast higher levels of
cutting safety and performance
than monopolar devices thanks tohigh-frequency energy
technologies from GS.

Applications and Characteristics of Major Products
FieldGynecology
Flexible
Hysteroscope
HYF-V

Resectoscope
OES Pro.

TherapeuticElectrodes(Disposable)

ProductFeature7

 Flexible hysteroscopes and resectoscopes are used to observe and treat uterine fibroids andpolyps.
 Substantially equivalent resectoscopes are used in both urologic and gynecologic procedures.
 Olympus flexible endoscopes boast an edge realized through GI endoscope technologies.

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Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators
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Recognition of Current Conditions
 Review of Medium-Term Vision Period (FY2013~)
MeasureBenign prostatic
hypertrophy and bladdertumors• Shift from monopolar toTURis

Urinary stone treatment• Expand disposable device
businessGynecology• Grow business throughexisting product portfolio

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Evaluation◎ Acquired leading share (29%) in principal U.S. market in the field ofbenign prostatic hypertrophy and bladder tumor treatment devices byintroducing bipolar TURis systems that are superior to monopolarsystems△

 Began expanding stone treatment device business by leveraging
strength of flexible ureteroscopes with No. 1 share Faced delays in new product development and therefore will commence
full-fledged participation later△ Achieved performance driven by average annual growth of 20% in
China despite sluggish growth in U.S., Europe and Japan Was unable to sell TURis disposable electrodes in U.S. due to patent
infringement (sales anticipated to commence in 2016)

Recognition of Current Conditions

Further reinforce dominating No. 1 position of flexible cystoscopes by
spreading understanding of benefits of NBI technologies in observing
bladder tumors

Increase sales of disposable electrodes for benign prostatic hypertrophyand bladder tumor treatment by leveraging superiority of TURis
technologies

Commence full-fledged participation in market for disposable urinarystone treatment devices and increase sales

Expand sales of imaging products and disposable therapeutic electrodeproducts related to hysteroscopy

Tasks

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Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators11

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Market Trends
Field

Market Trends(Operating Environment)

Urology Approx. 1.0 million benign prostatic
hypertrophy and bladder tumor resection
procedures conducted annually. There isincreasing cost awareness associated with
outpatient surgical alternatives and preventionof reoccurrence.
 Approx. 1.8 million stone treatment procedures
conducted annually, number of high-efficacy
endoscopic treatments (URS) rising (CAGR of4%)Market Scale(GrowthForecasts)

Share*

 Karl Storz

170〜190billion yen

 Richard Wolf
Approx.30％

Gynecology
12 Shift toward outpatient surgical alternatives
and other minimally invasive therapies

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 Boston Scientific Cook Medical（CAGR：2〜4%）

 CR Bard Reimbursement for bladder tumor (carcinomain situ) observation and treatment using NBI(Japan, FY2017)
 Rising case numbers for diagnosis andtreatment of dysfunctional uterine bleeding andhypermenorrhea

Competitors

20〜30
billion yen（CAGR：2〜4%）

 Karl Storz
Approx.10％

 Richard Wolf
 Johnson & Johnson* Source: Olympus Corporation

Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators13

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Business Strategies

１

Secure dominant share in markets for flexible endoscopes andTURis products that leverage Olympusʼ technological prowess- Maintain competitiveness of flexible scopes by utilizing NBI technology benefits andstrengthening small diameter endoscope technologies- Expand share by bolstering TURis electrode lineup

Urology

２Strengthen urinary tract stone treatment business operations toexpand market share- Strengthen functions (R&D, manufacturing, procurement, and sales) in largest market(U.S.)- Enhance access to GPOs, IDNs, and other group purchasers of consumables in U.S.

Gynecology

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３Efficiently increase market share by leveraging existing products
and technologies- Increase sales of hysteroscopes and therapeutic electrodes (TURis) that utilize
urology field technological prowess

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Priority Measure
Measure１

Leverage competitive flexible ureteroscope products
to expand share

２

Further differentiate cystoscopes by soliciting
benefits of NBI

３

Increase sales by bolstering TURis lineup andleveraging advertising product competitiveness４

Commence full-fledged participation in urinary stonetreatment devices (disposable) market

5

Efficiently expand sales of hysteroscopes andrelated treatment devices

Urology

Gynecology

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P.M.1. Leverage competitive flexible ureteroscope products to expand share Leverage product competitiveness to increase sales of flexibleureteroscopes (URF-V2 and URF-P6)
 Promote spread of flexible ureteroscope procedures by providing
education support
 Differentiate disposable endoscopes by demonstrating superiority ofperformance, system versatility and low costs
Principal Endoscopes Used in Stone Treatment
Flexible ureteroscopes
Rigid cystoscopes

Rigid ureteroscopes

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P.M.2. Further differentiate cystoscopes by soliciting benefits of NBI

 Advance activities for establishing clinical evidence regarding observation andtreatment using NBI
 Step up sales promotion activities for flexible and rigid cystoscopes utilizing clinicalevidenceStandard white light17

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NBI(From CYF-VH catalog)

P.M.3. Increase sales by bolstering TURis lineup and leveraging advertising strengthof Olympus products

 Enhance product competitiveness by bolstering TURis electrode lineup
 Encourage customers to upgrade from monopolar systems or switchfrom using other companiesʼ laser treatment products＜FY2015 Prostate Resection Case Numbers (Japan)＞
■■
■
■
■

Transurethral prostate surgery using electrolyte solution
Other transurethral prostate surgery
Transurethral laser prostate resection using holmium laser
Other transurethral laser prostate resection
Transurethral [microwave] prostate thermotherapy (series of procedures)

Source: MHLW ”Survey of Medical Care Activities in Public Health
Insurance”

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P.M.4. Commence full-fledged participation in urinary stone treatment device(disposable) market
Leverage strengths of flexible ureteroscopes with
No. 1 share to expand stone treatment device market share Enhance initiatives for promoting spread of flexible ureterorenoscopy (FURS)
using flexible ureteroscopes for removing stones● U.S.: Annual growth of 16% in FURS case numbers● China: Approx. 70% of FY2016 flexible ureteroscopes sales from customers newly starting
flexible ureterorenoscopy Utilize flexible ureteroscopes as a foothold for promoting sales of disposablestone treatment devices
 Bolster product portfolio by strengthening R&D, manufacturing, andprocurement functions in largest market (U.S.)
 Accumulate GPO and IDN contract negotiation expertise (expand share in U.S.)

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P.M.5. Efficiently expand sales of hysteroscopes and related treatment devices

 Efficiently expand hysteroscope-related device product portfolio byutilizing urology field technologies and product portfolios
 Focus on sales activities for gynecology products that effectively
utilize highly compatible urology field sales resources Expand sales of therapeutic electrodes (disposable) forresectoscopes (intrauterine tissue resection)

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Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators
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Targets and Indicators

1Net Sales CAGR 8%

FieldUrology

2Gynecology

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Flexible scopes

 Acquire and maintain dominating No. 1 share (more than 60%)

TURis electrodes(disposable)

 CAGR 6%

Stone treatment
devices (disposable)

 Share: 14% (Europe, U.S. and Japan)

TURis electrodes(disposable)

 Share: 8% (U.S.)

No data copy / No data transfer permitted* Source: Olympus CorporationDisclaimer

This presentation is for your general knowledge and background only.
Olympus makes no representations warranties or other expressed orimplied warranties or guarantees regarding the accuracy, reliability orcompleteness of the information. Proper attribution should be provided forany use of the information contained in this presentation. Under nocircumstance shall Olympus or its employees, consultants, agents orrepresentatives be liable for any costs (whether direct, indirect, special,incidental, consequential or otherwise) that may arise from or be incurredin connection with the information provided or any use thereof.

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