Terumo Report 2021

Terumo Report 2021

Group Mission

Contributing to Society through Healthcare

We contribute to society by providing valued products and services in the healthcare market and by responding to the needs of patients and healthcare professionals.

Core Values

Respect - Appreciative of others

We show respect and appreciation toward associates, customers, and business partners.

We value individuality and diverse cultures, and listen widely and carefully to different opinions and the voice of society.

Integrity - Guided by our mission

As associates of Terumo Group, responsible for life and health, we always act with sincerity and a sense of mission. Through our daily efforts, we build trust among all stakeholders.

Care - Empathetic to patients

We are mindful that everything we do ultimately connects us to patients.

We strive to understand healthcare providers deeply and work together with them to give patients a better future.

Quality - Committed to excellence

To ensure safety and reliability in healthcare, we view each issue from a "gemba" perspective in order to find the optimal solution. As well as product quality, we pursue excellence in all we do, from product supply to customer care.

Creativity - Striving for innovation

We promote a mindset that embraces challenge for the future, and work with curiosity and passion.

We respond to the needs of "gemba" by delivering products and services that create meaningful value in a timely manner.

In 2021, Terumo marked its 100th anniversary.

100 years have passed since Terumo's foundation.

Its debut product, the domestically produced safe, high-quality thermometer, was launched on the market in the hope of delivering it to as many people as possible.

Under the Group Mission: Contributing to Society through Healthcare, we have since continually supported the medical arena worldwide with our innovative developments and quality, while working side by side with medical professionals active at the most critical point of human life.

Now, 100 years later, by coincidence, the world is facing once again a new and major challenge.

With our mission in mind, Terumo will, without resting on its laurels, continue to challenge the limits of medicine for further improvement of the medical care of tomorrow, through our passionate commitment for another 100 years.

"Stride Ahead" encompasses our belief that big steps forward will lead to a better future for medicine.

We are Terumo.

Terumo Report 2021

1

Contents

100th Anniversary and History of Value Creation

Group Mission / Core Values

4 Message from the President and CEO

10 100 Years of Terumo -History of Value Creation-

Strategy

16 Message from the CAFO

1. Financial and Non-financial Highlights

1. At a Glance

1. Strategies by Company
   22 Cardiac and Vascular Company
   26 General Hospital Company
   30 Blood and Cell Technologies Company

1. R&D and Intellectual Property

1. Digital Transformation (DX)

Foundation Supporting Value Creation

40 Sustainability

1. Human Resource Strategy

1. Environment

1. Corporate Governance
   48 Dialogue between Independent Directors
   52 Directors, Audit and Supervisory Committee Members, and Executive Officers

1. Risk Management System

Data Section

1. Ten-YearFinancial Summary

1. Financial Review

1. Consolidated Financial Statements

1. Corporate Information

Editorial Policy

Terumo prepares communication tools to provide stakeholders with straightforward reporting on the business activities it is pursuing in fulfillment of its Group mission-"Contributing to Society through Healthcare"-and to promote communication with society. Terumo Reports provide brief summaries of financial and non-financial information, including business strengths and key initiatives performance reports, corporate governance structure, and environmental and social efforts, from a mid- to long-term perspective. Sustainability Reports provide wide-ranging information on initiatives that contribute to both the development of a sustainable society and the sustainable growth of the Terumo Group, together with relevant data.

Information Disclosure System

Business/financial information		Non-financial information
Terumo		Report
Investor relations website		Sustainability Report*1
	https://www.terumo.com/sustainability/reports/
https://www.terumo.com/investors/
• Financial results and presentation materials
• Mid- to Long-term Growth Strategy		Sustainability website
• Information relating to the General Meeting of Shareholders		https://www.terumo.com/sustainability/index.html
• Stock information, etc.		• Overview of sustainability activities
		• GRI Standards Index Etc.
Terumo Corporation Consolidated Financial Statements		Sustainability Communication Book*2
and notes		https://www.terumo.com/sustainability/reports/
https://www.terumo.com/investors/library/annual-reports/
		Corporate Governance Report
		https://www.terumo.com/about/governance/

*1 For fiscal 2020, this report was issued under the name Sustainability Data Book 2020.

*2 Scheduled to be issued in December 2021. For fiscal 2020, it was published under the name Shared Value Book 2020.

Coverage

Report coverage includes, in principle, those elements of the global Terumo Group falling within the scope of consolidated earnings statements. When the scope differs from that described above, notification will be provided.

Covered Period

The covered period is fiscal 2020 (April 1, 2020-March 31, 2021), but some activities conducted in and after April 2021 are also included.

Adoption of International Financial Reporting Standards

Beginning with its financial results announcement for fiscal 2017, the Company has adopted International Financial Reporting Standards (IFRS) with the goal of making its financial information more easily comparable to that of companies around the world and to improve management accuracy and strengthen corporate governance through the global application of uniform rules.

Cautionary Statement Regarding Forward-looking Statements

Forward-looking statements in this report, including financial projections, are based upon assumptions using information available at the time and are not intended to be a guarantee of future events or performance. Accordingly, it should be noted that actual results may differ from forecasts and projections due to various factors. Factors affecting actual results include, but are not limited to, changes in the economic conditions surrounding Terumo, fluctuations in foreign exchange rates, and the state of competition. Information on market share in this report is partly derived from our own independent research. Information about products (including products currently in development) included in this report is not intended to constitute advertising or medical advice.

In fiscal 2020, the name of the Blood Management Company was changed to the Blood and Cell Technologies Company. This change is purely a change in name and does not impact segment information. Accordingly, the new name is also used for references pertaining to fiscal 2019 and earlier.

2

Terumo Report 2021

Terumo Report 2021

3

Shinjiro Sato

President and CEO

100th Anniversary and History of Value Creation	Strategy	Foundation Supporting Value Creation	Data Section

Message from the President and CEO

Looking ahead to our next 100 years,

we will provide solutions for new healthcare issues in the 21st century and help drive therapeutic innovations

Q The COVID-19 pandemic had an enormous impact in fiscal 2020. What is your review of the past fiscal year?

Once the global spread of the novel coronavirus disease (COVID-19) became clear, Terumo quickly shifted to its crisis management system. At the same time, we set out Terumo Key Policies Regarding COVID-19, and while protecting the lives and health of our associates, focused as much as possible on providing a stable supply of products. We also mobilized the collective strength of the Terumo Group in an effort to actively contribute to the prevention and treatment of this virus. I think the fact that all of our associates confronted COVID-19 through their work to embody our Group mission of Contributing to Society through Healthcare offered an excellent opportunity to return to Terumo's founding origins.

In actively contributing to the prevention and treatment of COVID-19, a great deal of attention was drawn not only to thermometers, but also to hand sanitizer, ultraviolet irradiation robots, extracorporeal membrane oxygenation systems-seen as the last resort for seriously ill patients-and syringes used to administer vaccines. Overseas, a major role was played by Trima Accel, the Blood and Cell Technologies Company's component collection system used in collecting convalescent plasma containing viral antibodies in the blood. This was based on the principle of serum therapy invented by Dr. Shibasaburo Kitasato, one of Terumo's founders, and made us strongly aware of the tradition of infection control.

In terms of performance, we were affected by a drop in demand caused by the COVID-19 pandemic, primarily in the first half of the fiscal year, including the postponement of elective procedures and limited examinations. Globally, however, demand showed signs of recovery from the second half of the year on. For the full fiscal year, we were able to minimize any negative financial impact, in part thanks to a well-balanced business portfolio.

Terumo Key Policies Regarding COVID-19

1. To protect the health and safety of all Terumo associates with utmost priority
2. To maintain a stable supply of products to continuously meet global healthcare needs
3. To actively engage in and contribute to the prevention and treatment of the disease, by maximizing the Terumo Group's expertise and technologies

Terumo Report 2021

5

Foundation Supporting Value Creation

Message from the President and CEO

One key priority for Terumo in fiscal 2020 was our forward-looking initiatives to evolve our business model. In COVID-19 care, the Cardiac and Vascular Company saw renewed attention given to transradial intervention (TRI)*1, a technique Terumo has focused on developing for approaching affected areas through a

blood vessel in the wrist and a means of reducing length of hospitalization associated with treatment. This is because TRI generally allows for early post-surgical ambulation, and is thus expected to shorten hospital stays. In the post-COVID era, the push for medical cost efficiency improvements is likely to further strengthen. Popularizing the widespread use*2 of TRI not only for ischemic heart disease, but also for peripheral artery disease and other systemic vascular treatment, is an approach that will differentiate us from major competitors, one that we will strategically enhance going forward.

The General Hospital Company has launched an Infection Control Initiative*3 as a strategy for offering new value in infection control for medical institutions. Going forward, many medical institutions are likely to begin ramping up infection control measures in light of potential pandemic threats. Terumo, with its wide selection of products and overall strengths, will be called on to provide comprehensive solutions in the area of infection control going beyond providing products. To remain a company that is truly needed by the healthcare field, we will utilize the expertise and networks we have cultivated to date, providing a wide variety of insights and services as we advance our customer-oriented solution business.

In April, 2021, the Blood and Cell Technologies Company announced a collaboration with CSL Plasma of the U.S. in the area of plasma collection. Working together, the two companies will bring new technology to the field of plasma collection systems and will push to accelerate innovation. Terumo is taking on the challenge of entering this new market in plasma collection with the goal of achieving even better treatment.

The environment surrounding healthcare is undergoing major changes, with an increase in global policies to limit healthcare costs as well as growing public demand for better quality of life for patients against the backdrop of an aging society. The recent COVID-19 pandemic will only accelerate these changes. To ensure we can continue to respond to major changes in societal needs, we at Terumo will continue to contribute to society through healthcare while evolving our business model.

*1 See P. 14 for more information on TRI

*2 See P. 25 for more information on the spread of TRI in vascular treatment *3 See P. 29 for more information on the Infection Control Initiative

100th Anniversary and History of Value Creation	Strategy	Foundation Supporting Value Creation	Data Section

Q	Fiscal 2021 is the final year of your current Mid- to Long-term Strategy.
Looking back, how do you view the current strategy thus far? Can you
	tell us about your initiatives for fiscal 2021?
	Our current Mid- to Long-term Strategy, launched as a five-year plan in fiscal 2017, is aimed at achieving
	profitable and sustainable growth as a global corporation with unique excellence. It sets forth financial
	targets that include high-single-digit growth in revenue and growth in adjusted operating income
	exceeding that level, and we have made progress toward achieving growth in each of our three compa-
	nies. Unfortunately, due to shipment delays-primarily in intervention products in 2018-and the impact
	of the recent COVID-19 crisis, it seems unlikely we will meet all of these financial targets. Still, the
	fundamentals of the three companies are solid on a positive growth track, and their potential for
	growth is increasing.
	Our strategy centers around three pillars: Win in selected strategic markets; offer comprehensive
	value in Japan; and accelerate innovation. We have not only seen sustained growth in overseas markets,
	primarily around the Cardiac and Vascular Company, but also in domestic markets, where our
	cross-business "SCRUM" project was also successful. By exercising the Group's collective strengths we
	are seeing our growth potential beginning to return, with fiscal 2020 domestic revenue exceeding ¥200.0
	billion for the first time despite the COVID-19 pandemic. In promoting innovation, we are actively invest-
	ing in the development of future healthcare, which will have a significant social impact, through both
	onsite development and open innovation.
	While we must assume that fiscal 2021 will be another year of living with COVID-19, our resistance to
	the pandemic and the resilience of our operations are much higher than before COVID-19. In financial
	terms, we are targeting strong post-COVID growth as we continue to appropriately manage our financial
	position. The basic policies we have set for fiscal 2021 include: demonstrate our comprehensive strengths
	and brand power; strengthen and optimize global organization and operational capabilities; promote
	digitalization and business model transformation; invigorate human resource management; and reinvent
	core technologies that constitute Terumo's strength. Of these, strengthening and optimizing global organi-
	zation and operational capabilities will be an increasingly important issue as we work toward ongoing
	growth for the Group as a whole. In fiscal 2021, we will launch full-scale global reforms of our profit
	structure, and plan to reflect those reforms in our next Mid- to Long-term Strategy.

Medium- to Long-term Vision

Being a Global Corporation

with Unique Excellence

Earn the trust of medical settings globally as a top brand

Ensure world-class trust with Total Quality (quality of products, supply, and services)

Management Indicators under Mid- to

Long-term Strategy

Growth	Achieve revenue growth that outpaces market growth
(high-single-digit revenue growth)
	Realize profit*1 growth that outpaces
Profitability
revenue growth
Efficiency	Maintain an adjusted ROE*2 of 10% or more

Assumed exchange rate: USD=¥105, EUR=¥115

*1 Operating profit excluding amortization of intangible assets and one-time profits and expenses derived from acquisitions

*2 ROE excluding exchange differences on translation of foreign operations pertaining to assets associated with acquisitions included in total net assets

6

Terumo Report 2021

Terumo Report 2021

7