Gastrointestinal and Respiratory Business Unit
(GIRBU) Strategy
Katsuyuki Saito
Head of GI 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
3

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Positioning of GIR Business within Olympus

Core business supporting entire Company
Target for maintaining endoscope market share andimproving profitability by increasing overall businessefficiency.
Potential for ET* business growth by leveraging theCompanyʼs strong position as a global endoscopeleader.
* Endotherapy devices

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Sales Distribution and Product Portfolio
FY2016 Net Sales（Forecast）（Billions of yen）

Gastrointestinalendoscopes

GI: Gastrointestinal endoscopes
ET: Endotherapy devices

72.0

Surgical
Devices
205.6¥615.0 billion

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Capsuleendoscopes**

337.4

ET field

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Cleaning, disinfection
and sterilization

IT

GI*

* The figure for GI net sales (¥337.4 billion) includes a
portion of net sales from the Medical Service Business
Unit (MSBU).
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Bronchoscopes

Endoscope fieldET

Medical Business
FY2016 Net Sales（Forecast）

Ultrasoundendoscopes

Endoscopic retrograde
cholangiopancreatography (ERCP)

BiopsyEndoscopic mucosal resection(EMR) and endoscopic submucosal
dissection (ESD)
Hemostasis** Capsule endoscopes do not feature the Olympus logo.

Major Products: (1) Endoscope Field

Products

Gastrointestinal Endoscopes

Bronchoscopes

Gastroscopes, Colonoscopes,
Duodenoscopes, Enteroscopes“EVIS EXERA III” “EVIS LUCERA ELITE”

Bronchoscopes
Ultrasound bronchoscopes

Characteristics

Used for gastrointestinal diagnoses, biopsies, and treatments.
They contribute to early diagnosis by highlighting minutedetails of mucous membrane structures with HD technologies,
Opt-Digital Technology (NBI; narrow band imaging) and easyto-use magnified observation features.

Standard
observation
通常観察

NBI

(magnified)
NBI（拡⼤）Images provided by National Cancer Center Hospital East6

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No data copy / No data transfer permitted*NBI: Narrow Band Imaging

Cleaning, disinfection, andsterilization
Endoscope reprocessors(Disinfectants and cleaningrelated consumables)Used for diagnosis, biopsy andtreatment of the lung.
HD image quality and insertion tube
rotation function of video
bronchoscopes support enhanced
diagnostic and insertion capabilities.
Ultrasound bronchoscope allows
needle biopsy of mediastinal andhilar lymph nodes for lung cancer
staging under real-time ultrasoundimage guidance.

 Used for cleaning and high-level
disinfection of endoscopes after
examinations.
 The reprocessors automaticallyclean and disinfect 1 or 2 scopes
and the compact body saves
space in reprocessing rooms.
 Olympus products employ
person- and eco-friendly
peroxyacetic acid.

Major Products: （２）ET Field
ECRP Products

Products
Characteristics
7

Guidewires, Papillitomes, Basket forceps, etc.

Hemostasis Products

EMR and ESD Products

Clips, etc.

Knives and hemostatic forceps

These items are used with endoscopes for gastrointestinal and bronchial diagnoses, biopsies and treatments.
Our products reduce the burden on HCPs and patients by using precision processing and assembly technologies along with designs thatemphasize safety, reliability and efficiency.



ERCP is performed by inserting ET devices into
bile ducts via the duodenum to remove
gallstones and detect and treat bile ductfunctional abnormalities.



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Our ET lineup includes insertion support
devices (Guidewires) that help ensure safeand efficient catheter insertion into andpassage through bile duct strictures, incision
knives for papilla (Papillotomes), and devices
for accurately and efficiently removing
gallstones (basket forceps).

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

Hemostasis is performed to stop bleeding
after hemorrhagic ulcer or endoscopic
treatments (EMR and ESD).



EMR and ESD entail the resection and removalof early-stage gastrointestinal cancer lesions
using endoscopes.

Olympus boasts a lineup of clips that canstop bleeding more easily and assuredly due
to their rotation and re-clamping features aswell as their improved grip.



ESD is a minimally invasive therapy thatenables the resection of larger lesions byutilizing specialized ET devices.



We have a wide lineup of specialized ET
devices (knives) that can be used for various
ESD procedures.

Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators
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Review of Medium-Term Vision Period (From FY2013) (1)（1）Endoscope field：Implemented all strategic measures set forth inmedium-term vision and achieved targets
Strategies

Measures and Evaluation
 Achieved growth substantially higher than expected (CAGR of 15%)
 Launched new mainstay products (EVIS EXERA III and EVIS LUCERA ELITE)

 Reinforce foundations in
GI business (CAGR of 9%)

and realized early-stage replacement after launch◎ Solicited clinical benefits of magnified and NBI observation and expanded
range of endoscopic early diagnosis procedures
 Conducted effective and efficient cross-selling initiatives employing
peripheral equipment for ultrasound endoscopes and bronchoscopes

 Expand business inemerging markets

 Realized full-fledged spread of gastrointestinal endoscopes in emerging
countries◎  Achieved CAGR of 23% in Asia
 Strengthened training and service systems in China and other parts of Asia

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Review of Medium-Term Vision Period (From FY2013) (2)（2）ET field：Achieved progress generally in line with targets in all regions
Strategies

Measures and Evaluation
 Introduced strategic products (Disposable clips “QuickClip Pro”,

 Expand product lineups

 Increase market share in
North America◎◎

Esophageal dilation balloons “EZDilate” etc.) on global basis anddrove business growth with these products Achieved share growth in North America by strengthening sales
force and launching differentiated products (CAGR of 20%)
 Improved procedure efficiency through continual introduction of Expand EMR and ESD
procedures

new products○  Contributed to activities for spreading procedure usage inEuropean, U.S. and Asian markets

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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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Market Trends
Field

Market Trends(Operating Environment)

GI[Developed countries] Increasing number of endoscopic examinations
due to aging population
 Rise in number of endoscopic examinations due toendorsement of gastric cancer screening (Japan)
 Demands for improved medical care quality, cost
efficiency and patient satisfaction
 Further growth in minimally invasive endoscopic
therapy procedures
 Rising concern over cleaning, disinfection andsterilization, and higher quality expectations[Emerging countries]
 Spread of endoscopic expectations and rise in
expectation numbers due to population growthand economic development
 Institution of more rigorous regulations

Respiratory

 Increase in number of lung cancer incidence Rise in lung cancer definitive diagnosis procedures
due to spread of CT screening Growing need for local biopsies to determine
compatibility with molecular target drugs
 Research on endoscopic treatments for noncancerous diseases

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Market Scale*(Growth Forecasts)

GlobalShare*

Competitors¥350 billion〜
Endoscopes¥370 billion（CAGR：4〜6%）

More
than
70%

 Fujifilm
 HOYA

Products

ET devices¥370 billion〜¥390 billion(CAGR：4〜6%）*Market scale: as of 2015, CAGR growth forecasts: from 2016 to 2020,
Share: as of 2015, source: Olympus

 Boston
Approx.
Scientific Cook
20%
MedicalTodayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators
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Business Strategies
Secure strong market leader position in GI business andimprove profitability through selection and concentration
Expand business in following fields; respiratory, CDS (Cleaning,
Disinfection and Sterilization), Endoscopic Ultrasound (EUS), capsule endoscopy, and IT
Realize business growth in emerging markets
Continually grow share in the U.S. market
Strengthen business excellence in disposable device business
field
Execute growth strategies utilizing strength in endoscopebusiness field
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Priority Measure（ Endoscope field ）MeasureDetails

１

Realize sustainable sales growththrough launch of high-value-added
products① Sustain sales growth through launch of strategic products speciallydesigned for specific procedures② Accelerate sales growth in principal regions through introduction of nextgeneration systems

２

Increase earnings capacity byboosting efficiency of R&D,
manufacturing and sales functions① Reduce manufacturing expenses② Improve efficiency with regard to operating expenses

３

Strengthen respiratory fieldinitiatives① Continue to promote spread and increase of EBUS-TBNA procedures② Expand biopsy needle product lineup①

４

Accelerate strategic initiatives incleaning, disinfection andsterilization field5

Execute strategic initiatives in IT
field

6

Strengthen business foundations
and expand business in emerging
countries

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Maximize sales and profit from further penetration of endoscope
reprocessing machines followed by larger opportunities in disinfectant
chemicalsContinually and proactively respond to changing market needs
Respond to increasing trend toward network integration in hospitalenvironments
Investigate and develop high-value-added services aligned with coming
ICT and IoT era① Reinforce business foundations in China, other parts of Asia and the
Middle East

Priority Measure（ Endoscope field ）MeasureDetails

１

Realize sustainable sales growththrough launch of high-value-added
products① Sustain sales growth through launch of strategic products speciallydesigned for specific procedures② Accelerate sales growth in principal regions through introduction of nextgeneration systems

２

Increase earnings capacity byboosting efficiency of R&D,
manufacturing, and sales functions① Reduce manufacturing expenses② Improve efficiency with regard to operating expenses

３

Strengthen respiratory fieldinitiatives① Continue to promote spread and increase of EBUS-TBNA procedures② Expand biopsy needle product lineup①

４

Accelerate strategic initiatives incleaning, disinfection, andsterilization field5

Execute strategic initiatives in IT
field

6

Strengthen business foundations
and expand business in emerging
countries

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Maximize sales and profit from further penetration of endoscope
reprocessing machines followed by larger opportunities in disinfectant
chemicalsContinually and proactively respond to changing market needs
Respond to increasing trend toward network integration in hospitalenvironments
Investigate and develop high-value-added services aligned with coming
ICT and IoT era① Reinforce business foundations in China, other parts of Asia, andMiddle East

Priority Measure 3. Strengthen Respiratory Field Initiatives
Expansion of Endobronchial Ultrasound guided
Transbronchial Needle Aspiration (EBUS-TBNA)* procedure*EBUS-TBNA is a procedure performed mainly for lung cancer
diagnosis and staging by sampling tissues from mediastinal andhilar lymph nodes[Business Opportunity]• Increase in patients suspected of having lung cancer due tospread of lung CT screening• Growing need for specimen material to determine moleculartargeted drug therapy[Initiatives]
１．Introduction of new ultrasound bronchoscope• Thinner distal end design for wider range of access andimproved access to peripheral bronchial tube.

２．Introduction of new needles• Larger gauge size needle• Improved operation and puncture performance

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NeedlePriority Measure（ Endoscope field ）MeasureDetails

１

Realize sustainable sales growththrough launch of high-value-added
products① Sustain sales growth through launch of strategic products speciallydesigned for specific procedures② Accelerate sales growth in principal regions through introduction of nextgeneration systems

２

Increase earnings capacity byboosting efficiency of R&D,
manufacturing, and sales functions① Reduce manufacturing expenses② Improve efficiency with regard to operating expenses

３

Strengthen respiratory fieldinitiatives① Continue to promote spread and increase of EBUS-TBNA procedures② Expand biopsy needle product lineup①

４

Accelerate strategic initiatives incleaning, disinfection andsterilization field5

Execute strategic initiatives in IT
field

6

Strengthen business foundations
and expand business in emerging
countries

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Maximize sales and profit from further penetration of endoscope
reprocessing machines followed by larger opportunities in disinfectant
chemicalsContinually and proactively respond to changing market needs
Respond to increasing trend toward network integration in hospitalenvironments
Investigate and develop high-value-added services aligned with coming
ICT and IoT era① Reinforce business foundations in China, other parts of Asia, andMiddle East

Priority Measure ４．Accelerate Strategic Initiatives in CDS Field
1. Maximize sales and profit from further penetration ofendoscope reprocessing machines followed by larger
opportunities in disinfectant chemicals• Sustain and expand business foundations in Japanese andEuropean markets• Realize drastic sales growth in U.S. and Chinese markets• Expand markets into emerging countries in Asia, Latin
America and other regions
2. Continually and proactively respond to changing
market needs• Keep accurately capturing changing market needs and promptly
adapting Olympusʼ capability to increase demand for better
quality cleaning, disinfection and sterilization• Provide equipment and services for supporting workflow ofcleaning, disinfection and sterilization in medical institutions• Reinforce activities for exploring and acquiring next-generation
technologies
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Priority Measure（ Endoscope field ）MeasureDetails

１

Realize sustainable sales growththrough launch of high-value-added
products① Sustain sales growth through launch of strategic products speciallydesigned for specific procedures② Accelerate sales growth in principal regions through introduction of nextgeneration systems

２

Increase earnings capacity byboosting efficiency of R&D,
manufacturing, and sales functions① Reduce manufacturing expenses② Improve efficiency with regard to operating expenses

３

Strengthen respiratory fieldinitiatives① Continue to promote spread and increase of EBUS-TBNA procedures② Expand biopsy needle product lineup①

４

Accelerate strategic initiatives incleaning, disinfection, andsterilization field5

Execute strategic initiatives in IT
field

6

Strengthen business foundations
and expand business in emerging
countries

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No data copy / No data transfer permitted②①②

Maximize sales and profit from further penetration of endoscope
reprocessing machines followed by larger opportunities in disinfectant
chemicalsContinually and proactively respond to changing market needs
Respond to increasing trend toward network integration in hospitalenvironments
Investigate and develop high-value-added services aligned with coming
ICT and IoT era① Reinforce business foundations in China, other parts of Asia, andMiddle East

Priority Measure ５．Execute Strategic Initiatives in IT Field
1. Respond to increasing trend toward network
integration in hospital environments<Olympusʼ Business Domain>
Endoscopy systems<Exclusive IT
vendors>• Provide seamless interfaces for connecting endoscope
systems to hospital network systems (HISs and PACSs)⇒Utilize strategic alliance with medical IT vendors to focus Olympusʼ
R&D resources on fields where our competencies are maximized

Propriety IT
systems• Reinforce sales and service infrastructure suitable for
network era
Reprocessors

2. Investigate and develop high-value-added services
aligned with coming ICT and IoT era• Create secondary uses for equipment data collected from
Olympusʼ full range of high-share products that coverentire workflow in endoscopy rooms⇒Develop and provide high-value-added services that only Olympus
can offer

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Hospital network
systems

Priority Measure（ ET field)
Measure7
8-1

Details

Expand product lineup① Focus on expanding product portfolio in ERCP field② Efficiently expand product lineup by collaborating with othercompanies and utilizing external procurement

Strengthen sales and marketing
functions① Enhance sales excellence (improve sales representativeknowledge and skills)② Improve account management

8-2 Reinforce R&D functions
Strengthen manufacturing

8-3 functions① Reinforce activities for collecting information on market needs② Improve development speed and continually launch new
products① Utilize overseas production bases to maintain costcompetitiveness② Acquire manufacturing functions capable of responding to
demand fluctuations

9

Develop “See & Treat”
procedures① Continue generating early diagnosis and minimally invasive
therapy innovation

10

Accumulate GPO and IDN
contract negotiation expertise① Utilize strengths in endoscope business field to propose
comprehensive solutions as “One Olympus”

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Priority Measure（ ET field)
Measure7
8-1

Details

Expand product lineup① Focus on expanding product portfolio in ERCP field② Efficiently expand product lineup by collaborating with othercompanies and utilizing external procurement

Strengthen sales and marketing
functions① Enhance sales excellence (improve sales representativeknowledge and skills)② Improve account management

8-2 Reinforce R&D functions
Strengthen manufacturing

8-3 functions① Reinforce activities for collecting information on market needs② Improve development speed and continually launch new
products① Utilize oversea production bases to maintain costcompetitiveness② Acquire manufacturing functions capable of responding to
demand fluctuations

9

Develop “See & Treat”
procedures① Continue generating early diagnosis and minimally invasive
therapy innovation

10

Accumulate GPO and IDN
contract negotiation expertise① Utilize strengths in endoscope business field to propose
comprehensive solutions as One Olympus

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Priority Measure 7． Expand Product Lineup• Create Industryʼs No. 1 Product Lineup
ERCP

Stricture Treatment

EMR/ESD

Clips

Guidewires

Gastrointestinal
dilation balloons

Hemostatic forceps

Rotatable clip
fixation devices

Papillotomes

Metallic stents

ESD knives

Rotatable clip
fixation devices

Stone retrievers
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Injection needles

Priority Measure（ ET field)
Measure7
8-1

Details

Expand product lineup① Focus on expanding product portfolio in ERCP field② Efficiently expand product lineup by collaborating with othercompanies and utilizing external procurement

Strengthen sales and marketing
functions① Enhance sales excellence (improve sales representativeknowledge and skills)② Improve account management

8-2 Reinforce R&D functions
Strengthen manufacturing

8-3 functions① Reinforce activities for collecting information on market needs② Improve development speed and continually launch new
products① Utilize oversea production bases to maintain costcompetitiveness② Acquire manufacturing functions capable of responding to
demand fluctuations

9

Develop “See & Treat”
procedures① Continue generating early diagnosis and minimally invasive
therapy innovation

10

Accumulate GPO and IDN
contract negotiation expertise① Utilize strengths in endoscope business field to propose
comprehensive solutions as One Olympus

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Priority Measure 9．Develop “See & Treat” Procedures
Innovations in early diagnosis and minimally invasive therapy
Offer solutions for all areas, from diagnosis to endoscopic therapy and general surgery

Detection

Diagnosis

Biopsy /Collection

Endoscopic
therapy

Endoscopic
surgery・Biopsy forceps andneedles・Cytology brushes･Endotherapy
devices・Surgical
endoscopy
systems

General surgery*1・Electronicendoscopy
systems・Magnifying
endoscopes
・Ultrasoundendoscopes*1: Images provided by National Cancer Center Hospital East

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・Therapeuticenergy devices

Todayʼs Agenda

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

GIRBU Net Sales: CAGR of 7%
 Endoscope field: CAGR of 6%
 Achieve sales growth that exceeds market growth rates by expanding
endoscope peripheral business and growth in emerging markets

 ET field: CAGR of 9% Realize sales growth that greatly exceeds market growth rates by taking
advantage of higher disposable device demand accompanying rising casenumbers and expanding share in the U.S. market

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Disclaimer

This presentation is for your general knowledge and background only.
Olympus makes no representations warranties or other expressed or
implied 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 or
representatives 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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