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manufacturing, we combine materials processing and coating technologies to ensure product performance is consistently reproduced as designed, enabling high producibility and globally consistent supply. In this way, our core technologies are the source of competitiveness for each business and also enable new value creation by combining technologies to meet clinical needs.

Importantly, these technologies have not only supported our growth to date, but will also serve as drivers of future growth. Today, each company of business represent key products and initiatives built on these technologies. We hope this session will deepen your understanding of Terumo's growth.

Thank you very much. Next, Mr. Hirose, President of Cardiac & Vascular Company will give his presentation. Mr. Hirose, the floor is yours.

Good afternoon, everyone. My name is Hirose from the Cardiac and Vascular Company. Today, I would like to focus on the TIS business where we are planning to launch multiple new products this fiscal year and explain the clinical and business value that each of these products will deliver.

First, let me fully look back at the overall performance of C&V Company. Supported by solid underlying demand, we have maintained strong business momentum and achieved high single-digit revenue growth, in line with the targets set under GS26. At the same time, we have significantly improved AOP margin. In addition to the growth of a high-margin business, we have implemented operational improvements across our manufacturing sites and executed strategic pricing initiatives.

Through these efforts, we have steadily enhanced our earnings capability even in a volatile environment. TIS represents approximately 70% of C&V Company revenue and service as a core business. At the same time, it remains a key focus area with significant growth opportunities ahead, driven by continued portfolio expansion.

Today, I will walk you through a new product lineup that would underpin this future growth. TIS business is built on a unique business model that leverages our strong foundation in access products to expand into advanced therapeutic devices. In fiscal year '26, we plan to launch 3 new products across both the access and therapeutic domains.

In the therapeutic area, the first product is DSS. This is an innovative device that will serve as our entry point into the North American imaging market, integrating 2 sensors, IVUS and OFDI into single catheter. The second product is Kanshas.

To further accelerate the radio and peripheral interventions or R2P, we have developed a long shaft drug-coated balloon or DCB. Finally, in the access domain that supports these therapeutic solutions, we have launched a new hemostatic device TR. This product is designed to address the rapidly growing distal radio approach and will further strengthen the -- our #1 position in the access market.

In the following slides, I will provide more details on these products. First, let me walk you through the market environment for Imaging. The global imaging market continues to expand not only in the U.S., but also in emerging markets such as China and India, and is expected to reach $1.3 billion in 2031.

This growth is underpinned by increasing clinical evidence, demonstrating that the use of imaging improves outcomes in interventional procedures. In fact, in the U.S. last year, imaging-guided PCI received the highest level of recommendation, Class 1 with Level A evidence in major clinical guidelines.

In addition, the rapid adoption of devices such as atherectomy and IVL has further reinforced the importance of imaging, particularly for the accurate assessment of calcified lesions. The penetration of imaging and PCI procedures in North America is projected to increase to 56% by 2031 with rapidly expanding imaging market, we are launching a dual-sensor system DSS at exactly the same right time.

DSS is an innovative system that intimates 2 sensors, IVUS and OFDI into a single catheter enabling the simultaneous acquisition and the visualization of 2 types of imaging. This capability supports optimal treatment planning and decision-making across a wide range of cases, thereby contributing to further improvements in procedural outcomes.

The ability to assess lesions using both imaging modalities in parallel provides a higher level of diagnostic confidence, which represents a key value proposition of the DSS. Large DSS, we expect our imaging business to grow more than 3 fold by 2031. In terms of geographic rollout, we plan to launch in North America in the first half of this year, followed by Japan in the second half.

We also intend to enter the Indian market. And by expanding into these high-growth emerging markets, we aim to further strengthen our global position. DSS catheter DualView is a highly differentiated product realized through the integration of a deep expertise in imaging catheters and advanced manufacturing capabilities.

While maintaining the same size as imaging catheters widely used in the market today, DualView successfully incorporated 2 sensors, IVUS and OFDI and is designed to be scalable for mass production. As a result, DSS can be seamlessly adopted in existing imaging workflows without requiring changes to procedure processes or device configurations.

This high level of compatibility and ease of use ensures excellent clinical practicality, which we believe will strongly support the smooth adoption and rapid penetration of DSS in clinical settings. Looking ahead, we will further enhance our software capabilities by integrating AI technologies.

Specifically, AI will enable faster and more accurate analysis in the areas that have traditionally relied on visual assessment by clinicians. This includes recommendations for optimal stent size and placement, quantitative evaluation of classified plaque and post-stent deployment assessment. By incorporating these capabilities, we aim to improve both the quality and efficiency of clinical decision-making, thereby providing stronger support for the realization of optimal treatment strategies.

Next, I move on to Kanshas. First, let me explain the status of the radial approach, which we have set as a KPI and GS26 supported by benefits such as improved patient quality of life and better health care economics, the adoption of the radio approach has steadily expanded across most disease areas and progress has exceeded the targets set under GS26.

On the other hand, in the peripheral domain, the radial approach ratio remains below our GS26 target level. This is due to device-related limitations as well as the emergence of new treatment trends driven by the growing adoption of atherectomy devices in recent years.

Turning to the peripheral market in Japan. Our efforts to promote the radial approach supported by a comprehensive RTP portfolio, including the Misago stent have contributed to increasing radio penetration to 20% in the iliac segment. In contrast, in the SFA segment, where the number of cases is larger, the radial approach adoption rate remains low at around 2%. In this segment, treatment with DCBs has become the standard of care, supported by accumulated clinical evidence.

In fact, the CFPs are used in a stand-alone therapy in approximately 70% of SFA cases. Going forward, by expanding the adoption of transradial approach in this SFA segment, we aim to increase the radial penetration rate around 20%. To address this unmet need, we have developed Kanshas as a DCB specifically designed for transradial SFA treatment and launch it in Japan.

Kanshas features a long shot with an effective length of 200 centimeters enabling reliable device delivery to the lesion site via the radial approach thereby making SFA access feasible. In addition, our proprietary coating technology in minimize its drug loss during delivery, while ensuring efficient drug transfer to the vessel wall upon reaching the target lesion, representing a highly differentiated product design.

With these features Kanshas is currently the only DCB with reimbursement approved for radial use and we expect it to play a key role in driving further adoption of the radial approach in the referral interventions. At the core of this innovation is our proprietary coating technology, no one has Unicoat. A key feature of Unicoat is the ability to achieve a high-level balance between 2 inherently conflicting requirements, minimizing drug loss in balloon delivery while ensuring efficient drug transfer to the vessel wall upon reaching the target lesion.

This enables maximization of the therapeutic efficacy while also contributing to a reduction in the risk of distal embolization in the peripheral arteries. These characteristics represent a critical source of Kanshas competitive edge. This advanced capability has been made possible by the expertise we have accumulated over time, not only in capital design, but also in drug handling, supported by the extensive trial and error in the developing of coating technologies.

Finally, I will explain to your digital which we have launched as part of our efforts to further strengthen our Access business foundation. Our Access business is built on a comprehensive portfolio that uniquely enables both the reduction of complications and the improvement of in-hospital procedural efficiency. This has allowed us to establish a stronger global leadership position.

I've represented as an example is our hemostasis device TR band, which has achieved a dominant global share of over 60% and built a strong brand presence. Looking back at the history of intervention treatment access initially began with the femoral approach. This was later followed by the widespread adoption of the radial approach as a less-invasive puncture site, which has now become the global standard.

Today, this evolution is entering its next phase with the rapid adoption of the distal radial approach DRA as most advanced access site. Within the broader trend towards minimally invasive procedures, DRA represents the leading edge of this evolution. While the conventional radial approach involves puncturing on the side of the wrist, the DRA accesses a more distal side on the dorso side of the hand. This approach has been gaining attention due to several benefits that contribute to reducing patient burden, including greater flexibility in patient arms positioning during procedures short our hemostasis time and ability for patients to use their hands right after the procedure.

In addition, DRA is associated with a relatively lower risk of radial artery occlusion. As a result, the number of DRA procedure is expected to continue growing at an annual rate of 10%. We aim to leverage the strong brand equity of TR brand and extend our leadership into the DRA segment with the global of establishing a #1 position in this growing market.

Finally, I will explain TR band distal, which we have launched as part of our efforts to see hemostasis standard in DRA, These dedicated devices specifically designed for the disarray approach while inheriting the highly reliable hemostasis mechanism of the conventional TR band. It delivers enhanced visibility, improved wear in corporates of pressure adjustment, achieving a high level of performance. With this new product, we further expand our hemostasis device portfolio and strengthen our ability to provide a comprehensive solution covering the entire procedure from access to hemostasis.

Through these efforts, we will continue to lead the advancement of safer and less invasive catheter-based treatments. As I have line today, the TIS will continue to drive stable and sustainable growth beyond GS26 through the creation of a new market in Imaging DSS, the further acceleration of the radial approach with Kanshas and the strengthening of our leadership position in the access domain with Tr brand distal.

We are well positioned to drive the growth, not only for the CV company, but for the Terumo Group as a whole. This concludes my presentation. And today, we are also joined by Dr. Akasaka, a leading authority in imaging in one of our medical advisers. I'd like to invite Dr. Akasaka to share his view on the strength of Terumo's imaging technologies and clinical value of DSS. Dr. Akasaka, the floor is yours.

My name is Akasaka, you're medical adviser and please allow me to remain seated while I talk. As Hirose-san mentioned, dura sensor image was approved this year and will be launched in Japan. As was explained, in any domain for therapies, guidelines must be adhered to that is recommended. And according to health care guidelines, whether it is in the cardiovascular region, in 2024 in 2025, in United States and Japan, a little earlier, intravascular imaging must be used in order to improve the outcome that was recommended by the guidelines.

And the active use was recommended Class A or evidence level, the highest evidence level was recommended. And this use was recommended at the highest level. And that involves 2 approaches. IVUS is one and also near infrared OFDI, Those are the 2 types of sensors being recommended to use. However, there was a limited restriction -- usage restriction. So either one was -- has been used. However, according to clinicians, about 40% or 50% of doctors said that they prefer to use 2 imaging sensors in order to -- for the betterment of the outcome or treatment.

However, because of the reimbursement limitation that we have been unable to use both. But thanks to Terumo technologies, these 2 sensors are now being available in one go. For -- and that improves the level of treatment that we can provide. The intra IVUS has a well penetration. Therefore, it guarantees a wider areas. But the OFDI 50-micrometer high resolution is conferred. By combining these 2, the precision medicine or precise procedure can be provided and that is a great advantage.

And globally, this is a Class 1 recommendation and will be launched in Western markets. Therefore, usage will improve significantly. That is my hope. And that concludes my comment. Thank you.

Now we will begin the Q&A session. Today's event is being rolled in a hybrid format. [Operator Instructions]

So from moderator 3 rows down. Yoshihara-san, I will give you the microphone.

This is Yoshihara from UBS Securities. First, regarding imaging, you are going to launch fully in U.S. this year. And you have 2 types of imaging is the first in the world. If other competitors have imaging products, too. So what is our key differentiation factor? Could you elaborate on your uniqueness?

And looking at your competitors, the AI-based diagnostic support is something that your competitors are focusing on. You are still in the R&D phase, but you think that among this competitive environment, you believe that you can have success in this area. What kind of image do you have at this point regarding the use of AI. That's my second question.

Regarding our competitors, how are we going to win over them? I believe is your question. So as for our competitors, IVUS and OFDI thinking about this, spectral wave has been purchased by Philips, and that is the only company that has both. So Abotoni has one modality. So dual sensor uniquely sizing the fact that 2 sensors can be incorporated into 1 catheter, the size of IVUS and this can be mass produced. This technology is something that we pride ourselves in.

This is the manufacturing capability of Japan that enables this, and that is the key selling point. Regarding AI, of course, a company is looking into the possibility of using AI and we are doing the development of the second version. This R&D is ongoing in a steady manner. And the timing of the launch remains to be determined. But itself will be launched in the first half of this year in the United States.

I think -- my second question. I saw the product that you introduced today in the room next to this, and it looks very competitive. I have high hopes for it. And apologies for this type of question that I'm about to ask. But the product that I saw is an extension of your existing products in my view. In terms of challenging into new business domains, there are acquisitions in the U.S. going on. and operation is something that the Chinese companies are also looking into.

And so what do you think about your challenge going forward in this environment?

So regarding the details, since it involves external stakeholders, I cannot disclose fully. But we are looking into the areas of our existing business so that we can utilize the current sales force, but at the same time, utilizing new type of technology. That is the way forward for us.

So we are doing the internal development of the technology, but also looking into possible external partnerships, such as start-ups and other type of new emerging companies, including the possibility of acquisition. And such that you have mentioned is something that we are currently looking to -- that concludes my answer. Thank you very much.

Now we'd like to -- take a question from the second person in the second row Yamaguchi-san.

This is Yamaguchi speaking from Citibank. Dual Sensor or DualView, regarding that product, you have actually simultaneously installed 2 different sensors, and that was for the first time in the world. But cost-wise and technology-wise as well as unparalleled differentiating factor, there are many strengths. I believe. But how long did it take for you to redevelop this? And this is an unparalleled product that can be only achievable by Terumo and what is the differentiating factor here? Could you once again reiterate this?

For the details, TIS Global Marketing, Imaging Group Product Manager, Mason I'd like Maakan to respond to your question.

This is Matsuzaki speaking. I'm responsible for the Imaging business. Thank you for the question. Regarding the dual sensor system, there are 3 different components. It compares as one console and that project the imaging and also the capital as well as the motor drive unit. And the most significant challenge was faced by the capital part, because traditionally, we were in the imaging business IVUS and OFDI knowledge has been accumulated. Thanks to this technological accumulation, this evolution was achieved at stake as well as Terumo's scale for technology. This allowed us to combine that development by combining these 2 different sensors.

And regarding the console in the United States, this is currently being developed and produced in the United States, TC-based or tissue-based it is. So ME device or the imaging experience was accumulated in this particular well, have been very limited at this particular site, but the Japan provided enough support by dispatching engineers and we were able to overcome these challenges and to enable the development of this product.

So by combining these 2 sensors, which is better? Or well, that's a usual pattern. But both centers can exert their full strength. Is that right?

Well, thank you for the question. So in terms of the characteristics of these 2 sensors, well, speaking of -- but well, there are the pros and cons with these 2 sensors and complementary with one another, we make sure that it is combined, those are combined complementary to one another. In the case of IVUS, intravascular penetration so that it reaches to the deeper side of the wall, but the imaging quality is rough compared to OFDI. But in the case of OFDI, then it gives us a clear picture if you are closer to the vision, but it is in the deeper side of the begin. The inner infrared cannot reach that far. So by combining these 2 types of sensors, both pros and cons are being canceled out so that only the strength can remain for both sides. Thank you for the question.

Next, thank you for waiting this person at the front row, please Kohtani-san from Mizuho Securities.

So I would like to ask a question about the DSS. So regarding penetration, first, you are thinking about the Japanese market and the European market, perhaps, although you need approval. So first -- but I think IVUS has been used in the pre stage. And then in the post stage, the stent is to remain and that will be done by OFDI. So that is something that you are looking into, I believe. But if you look at Europe and the United States, IVUS I'm not so familiar with it. But IPL requirement will be something that you will use in order to gain share commercially.

Maybe your regional strategies differ from region to region, but I would like some insight. So how are you going to spread this product going forward is my question.

Thank you for your very sharp question. So when it comes to go-to-market strategy, Japan, U.S. and Europe are all different. In Japan, in the pre-stage, it is being used. And regarding Europe and United States, probably Matsuzaki can answer that. Yes, regarding Japan and the U.S., the 2 markets are different. For the U.S., we are in the initial penetration stage, we are launching the first time.

So we have specific targets and some facilities that use imaging, Metro, for example, those are the targets. And imaging IVUS OCT, if it is already being used, then those physicians will be targeted and the dual sensor, the value of it can be understood better by these doctors. That is the starting point.

Just to confirm. In Japan and Europe, IVL requirement, IVUS and OCT, they have different scores. But in the U.S., is that the same?

Yes. When you say scores, this is scores, right? IVUS and OFDI has separate rating systems. If you use IVUS, you need to use IVAS grade system or OFDI then OFDI grade system. And once you see an introduction of the dual sensor tool, then new grading system will be needed. So the experts will come up with the new data and have a new grading system for more accurate treatment that is to be expected.

Okay Second question, regarding Kanshas. I'm -- I have high hopes for DRI DCB. But is it not penetrating so well because of the device selection region preparation, you need to use scoring balloon and the device limitation?, The risk level might be a hurdle that you need to overcome? Or maybe the clinical trials are not showing the results that you expected in the cohort testing. So I just want to know what are some of the bars that you need to overcome or pass in order to further penetrate the product into the market.

Thank you for your question. Regarding your point, exactly now where you're coming from. So Eyong, whether we are going to develop this in-house or not is something that we need to think about. It is still under consideration. So in order to expand in an exclusive manner, what kind of solution would be suitable is something that we are still considering. So what you just pointed out is a challenge for us in terms of the launch this time around. So we will make sure that we keep thinking. Okay. Thank you.

Well, when it comes to treatment, as explained, Iliac from the stent will be used for treatment. That is the standard. For Emerald, DCB is the main tool. So from Mario to DCB, the length was not enough until now. However, 20% to 40% of the patients, they have both Emerald and femoral. Clearly, it's more like 50%. So from radial, you need a stent and femoral DCB. These are 2 treatments that are necessary, which will be a lot of burden for the patients.

But if Kanshas is launched, then from the radial, you can treat all at once. So radial treatment, the percentage of it will increase. Thank you for the additional explanation.

In the interest of time, We'd like to take 1 more question.

This is Takemoto speaking from Nikko Securities. Regarding DRA, the mid- to long-term opportunity, I'd like to ask. So about the hemostasis device you just announced, but with this DRA adoption, sees as well as introducer related products will be too large for the DLA approach. So in the next midterm management plan base, are you going to update that to what extent are you going to update your access device for the next midterm management plan phase. Not just for DRA, but access products must become more minimally invasive, and that is an ongoing effort.

And this is not definite yet, of course, but -- the grade cylinder, the current existing 1 can be made more minimally invasive. And that is ongoing. That is approachable through DRA applicable for DRA. My second question pertains to DRA competition landscape. So in the case of a number of cases, China is rising. And when we talk with Chinese players, they sometimes specializing DRA for their product development. And spec-wise, the coating excels terms the quoting performance, but the sizing for the in our diameter and exterior or outer diameter, they are very competitive. So are you going to be able to remain competitive in this DRA arena because you are about to update your products in the RA arena with the limited number of cases in Japan.

Thank you very much for the question. Well, of course, for the emerging markets. In terms of their manufacturing, Japanese manufacturing excels at design, for example, that the discrepancy between seas and radiator, we need to minimize those difference. And the quality must be sustained. We may -- we call it a homogeneity or consistency across the older access devices because access products cannot cause any quality issues set that joint ment aside, Access products cannot cause any quality-related issues in patients, and we are very careful not to do so in our production and design or R&D activities. So the design is meticulously planned, calculated and the consistent quality is maintained.

That is in the essence of manufacturing, that is a tradition of Japanese manufacturing sector, and we'd like to maximize our strengths in doing so.

Time had to conclude the session. the QA session. Those of you who have questions, we'd like to take them during the group Q&A session towards end. And next, I would like to invite Mr. Sakaguchi, the President of the Medical Care Solutions Company.

Good afternoon, everyone. I am Sakaguchi, President of the Terumo Medical Care Solutions Company, or TMCS. Today, I will present our growth strategy looking ahead to the next midterm management plan for TMCS. In particular, I will focus on our key growth driver, the Pharmaceutical Solutions business, our PS business with a specific emphasis on CDMO.

Let me begin with an overview of TMCS overall performance trends. Over the past 5 years, TMCS has achieved approximately 5% CAGR growth. In particular, the PS business has been strategically positioned as a key growth driver for TMCS and has delivered a strong growth with the CAGR of approximately 13%. Looking ahead, AMCS will continue to position the PS business as the core of its growth strategy, driving sustainable and robust growth.

For FY '26, we are targeting year-on-year growth of plus 8% in revenue and plus 29% in adjusted operating profit. The primary driver of growth in FY '26 will be the expansion of our global CDMO business. In addition to continued growth in existing commercialized CDMO products, we will steadily advance the development of new projects. At the same time, we will continue to make strategic investments to expand production capacity in order to support future growth.

Across TMCS as a whole, we will also consistently implement global pricing strategies to balance growth and profitability. I would now like to move on and focus on CDMO. Let me begin by discussing the global market trends. First, as a key underlying trend, the share of biologics within the overall pharmaceutical market has been increasing rapidly. In fact, biologics are growing at more than 3x the rate of small molecule drugs. Another notable trend is the shift in administration methods.

administered for relations are expanding at approximately twice the rate of traditional hospital-based administration. This is driven by several structural change. This include the aging population and the increasing prevalence of chronic diseases as well as a shift in care savings from hospital stone-based care.

At the same time, from a patient-centric perspective, this growing demand for more convenient and safer methods of drug administration. In addition, increasing pressure to accelerate time to market, rising cost constraints and the need to adverse regulatory requirements and geopolitical risks are making the business environment more complex year-by-year. Against this spectrum, what has become increasingly important, it's not only how to develop and manage drugs, but also how they are delivered to patients.

As a result, the all expected of CDMOs is evolving significantly. From traditional manufacturing outsourcing, CDMOs are increasingly becoming integrated partners that combine drug container and design, thereby enhancing development efficiency and improving the profitability of successful commercializing. And this structure shifted strongly driving the growth of CDMO market.

I will now walk you through Terumo's CDMO journey to date. Terumo has steadily developed its CDMO business over time, building on its technology and expertise in both medical devices and pharmaceuticals. In 1999, Terumo launched the polymer-based prefilled syringes in Japan under the Terumo brand. This lay the foundation for the CDMO business, establishing core capabilities in primary container technology and prefilled syringe manufacturing.

In 2009, we entered the CDMO business in earnest with the launch of our first CDMO product in Japan. In 2018, through collaboration with Japanese pharmaceutical companies, we successfully launched CDMO products for the global market, steadily expanding our global footprint. In 2020, we further strengthened our mass production capabilities by launching new CDMO products and expanding production capacity.

Entering the 2020s, the business reached a major inflection point. In addition to the construction of our new facility in, which you're here today, we acquired the Lubes side in Germany 2025 establishing our first CDMO production base outside Japan. Through these initiatives, Terumo's CDMO business has steadily grown, supported by the technology and trust we have built through commercial scale manufacturing.

Today, we have entered a new phase of accelerating growth as a global CDMO. And next, I will explain Terumo's CDMO's key strength, in particular, the advantage of being a CDMO backed by a medical device manufacturer. The foundation of our competitiveness lies in the integration of expertise in both medical deposits and pharmiticals, as a medical device manufacturer, Terumo has built a strong track record in device design from development through to the mass production and quality management.

At the same time, we have more than 50 years of experience in pharmaceutical development and manufacturing, with deep expertise, spanning manufacturing processes, quality standards and regulatory requirements. By combining this strength, we are able to develop primary packaging technologies tailored to biopharmaceuticals as well as the product designs, optimize for specific drag characteristics.

In essence, the ability to design drugs and devices as an integrated solution is the foundation of Terumo CDMO development capabilities. A defining feature of the capability is our end-to-end in-house integration from primary packaging to final packaging. We are able to connect the entire process under a single design philosophy covering primary container development and manufacturing, aseptic filling, device assembly and final packaging.

This integrated approach minimizes handovers between processes, enabling faster response in the vented issues, clear accountability and improved schedule reliability from development through to commercialization. Importantly, only a very limited number of companies worldwide can offer this level of end-to-end integration.

In, this is not mere manufacturing capability. Rather, it is an execution model that enhances the certainty of bringing products from development to market and this itself is a core element of Terumo's competitive strength.

Next, I will explain Terumo CDMO's business model. In a typical CDMO model. responsibilities are divided across different process stages, requiring pharmaceutical companies to manage multiple partners. As a result, coordination across processes increases and the overall complexity and risk tend to rise as development progresses.

In contrast, Terumo adapts a one-stop model covering the entire value chain from development through to commercialization, excluding drug substance manufacturing. Importantly, we engaged with pharmaceutical companies as a partner from the early stages of product development. This allows us to minimize rework in later stages, significantly improving overall development efficiency and increasing the probability of a successful commercialization. Terumo is not merely a contract manufacturer. We designed drugs and devices as an integrated solution optimizing not only the product itself, but also how it is delivered to patients. This is Terumo's unique business model, one that clearly differentiates us from other CDMOs.

Next, I will discuss the key growth drivers for FY '26. At the core is LEQEMBI and IQLIK, a collaborative product with Eisai. LEQEMBI, IQLIK is a subcutaneous formulation, which we believe has the potential to fundamentally transform the method of administration in the treatment of Alzheimer's disease.

As the adoption of the subcutaneous formulation progresses, we expect a significant improvement in patient access, which in turn is likely to contribute to market expansion. With regard to development and regulatory progress, we understand that it is a base steadily in line with Eisai disclosures. Looking ahead, as the global rollout, particularly in the U.S. accelerates, Terumo is steadily establishing a robust and reliable supply system to meet growing demand.

While we expect the full revenue contribution to materialize mainly from FY '26 onwards, we position this product as a highly important driver of mid- to long-term growth. Next, I will explain the value created by the LEQEMBI IQLIK. As a subcutaneous formulation, this product enables administration at home while significantly reducing administration time from approximately 1 hour within about 15 seconds.

This represents a major transformation, not only by substantially reducing the burden on patients, but also by directly elevated workload on HCPs. The transformation is underpinned by Terumo Technologies. First, technology serves as a primary container that maintains the quality of biopharmaceuticals.

In addition, it incorporates needle technologies that enable patients to administer even highly viscous formulations with ease as well as auto-injector technologies that support at home administration. This way, Terumo's value lies not merely enabling the shift to subcutaneous administration. But in translating this innovation into a form that can be widely adopted in will what clinical settings.

In other words, Terumo plays is a critical role in transformed therapies into solutions that can be effectively delivered and used in practice. Next I will explain the acquisition of the and this progress to date. As background, Europe, especially the region around Germany is home to a large concentration of global pharmaceutical companies and demand for local manufacturing capabilities has been increasing.

In addition, the plant offers advanced equipment and highly skilled personnel, which led us to conclude that the production system could be established within a relatively short time frame. Based on these considerations, we decided to acquire this site. Currently, we are steadily establishing our operational structure while advancing the installation of prefilled syringe lines compatible with projects.

Preparations are progressing as the plan toward the start of operations in 2027. We are also seeing strong market interest with a steady increase in global inquiries. Importantly, the site is not simply an expansion of product capacity serves as a strategic platform to accelerate our development as a global CDMO.

Next, I will discuss capacity and growth headroom in our CDMO business. To date, we have steadily expanded our production platform, not only by increasing capacity at the Yamaguchi of facilities in Japan, but also through the acquisition of the site. As a result, our production capacity has grown to more than 4x the level of fiscal year '17.

Equally important is a headroom for future expansion. At each of our sites, Kofu, Yamaguchi and Lavakusun, we have already secured space to accommodate additional capital investments. Going forward, we will execute the necessary investments at the appropriate timing in line with the growth of the CDMO business, enabling us to respond flexibly to increasing demand.

From a mid- to long-term perspective, in addition to Japan and Europe, we are also considering further global expansion of our manufacturing footprint, including the establishment of regionally integrated supply systems. In this way, we have already secured a certain level of production capacity while maintaining sufficient headroom to support further growth.

Finally, let me summarize. Against the backdrop of structural growth drivers such as the expansion of the biopharmaceutical market and the shift in administration methods, Terumo's CDMO business is entering a phase of significant opportunity. With this environment, we have steadily strengthened our competitiveness by leveraging our integrated development capabilities that combine drugs and devices together with our end-to-end execution model.

Furthermore, with the establishment of our manufacturing footprint in Japan and Europe, we are accelerating our expansion as a global CDMO. While we already have clear visibility towards achieving JPY 100 billion in revenue, we view this as only a milestone longer growth journey. Looking ahead, we will continue to strengthen our global supply capabilities, including the potential establishment of a manufacturing presence in the U.S. to support further long-term growth.

With a clear ambition to become a leading company in the CDMO business, we are committed to delivering sustained and disciplined growth going forward. This concludes my presentation. Thank you for your attention.

We now take questions. If you have a question, please raise your hand. Starting from Mori-san in the row front row.

I am Mori from Nomura Securities. The first question about injector. IQLIK, I understand is from Vizamed. And but still still, you have injector technology at Terumo. So IQLIK may be different. But from the next model onward, are you going to have your own injectors essential. So can you talk about this space?

Yes. Thank you for your question. Yes, exactly. At the practice side, we have auto-injector made to each needs. It's -- we have a variety of objectives. We may have our own development. If there's something better aside, we will procure them. So we will make options accordingly and make decisions accordingly.

So can I understand that you do have the technology to make that, yes, the development is underway. The second question. CDMO sites, you mentioned that after your acquisition of the Leverkusen, you mentioned that there's a need for the local production. But things are changing. And I think many companies prefer the production in the United States. So are you going to impair and write it off, rather, are you going to start the U.S. right way, that could be a change in strategy how are you going to prioritize U.S. market?

Yes, understanding is that both in Europe and the United States, I believe there are needs. So for each local needs, we will need to respond to the respective needs.

Next question. Second row from the front. Hayashi-san please.

Hayashi from Morgan Stanley. I'm limited to 2 questions. So my first would be this. Regarding Leverkusen in Europe, and projects production will start in 2027. Maybe I had been mistaken, but you had some deals with European pharmaceutical manufacturer first and then the project starts running and then the sales contribution from Leverkusen will start to kick in. That was the order in which I did [Audio Gap]

to develop. So I just want to know if you can walk us through how you were able to come up with this product.

You know a lot about the company on these products. Thank you. , this is anti-cancer drug, and this is going to be injected right after their treatment so that the metabolism can be improved. When we saw that product, we looked into the patient's pain points. And even after the treatment with the drug, they still have to go to a hospital. How could Terumo alleviate there burden, we can come up with a smaller needle and we can attach it to the abdominal part and we can have an automated system like issuing injection, for example. So we wanted to come up with something that is less of a pain to the patients, and that resulted in the body part for. And going forward, the pharmaceutical manufacturers would come up with their own drugs, and we will be the ones who would develop a better way of delivery. That is our role. We have been accumulating technology and that can be fully utilized in our ongoing CDMO business.

This is a follow-up question. So utilizing the existing technology, are you thinking of transferring that technology to a new product as it is?

Well, not really. Not as is, but it's a pump and it's a container. And something that can be used for administration after a period of time. Those may have a certain need. So we will make sure that we develop as needed.

We have however, the time is up. So we would like to conclude the Q&A session. Any questions that we were unable to take will be addressed during the final overall Q&A. From hereon, we would like to take a break of a little less than 10 minutes. We will resume at 1:20 JST. And those who are present here, you can take a look at the products in the neighboring rooms.

[Break]

We'd like to resume the session. Next, we'd like to invite TBCT Company presentation. Unfortunately, Company President was unable to attend today, but we'd like to hear the company overview and strategy in Africa. Therefore, we'd like to invite the presenters Morimoto-san as well as Eyong-san on stage. Morimoto-san, the floor is yours.

Good afternoon, everyone. My name is Morimoto, General Manager for Japan at TBCT. Terumo Blood and Cell Technologies. It is a pleasure to speak with you today. TBCT is a cornerstone of the Terumo Group. Our work is built on a fundamental belief, blood and cells have the potential to do far more for patients than they do today.

This conviction drives our innovation and transformation, transforms our relationships with customers from simple transactions into deep and strategic partnerships worldwide. We'd like to present 2 things with you today. I will begin by walking you through our company's overall performance and our key growth drivers. Then I'd like to pass the baton to Eyong Ebai-san, the General Manager for our African region. We will share one of our most important long-term growth opportunities in the African region.

Here's the overall performance of our company. TBCT has delivered a robust top line growth throughout the GS26 period. By scaling Reveos, transitioning to VBP or value-based pricing, and penetrating the plasma market and expansion into the markets outside the U.S., we have consistently grown our top line. We are demonstrating a relentless commitment to margin expansion through operational excellence and portfolio optimization.

For FY '26, we will further accelerate our shift towards high-growth investments. We aim for a 6% revenue increase and AOP margin of 16%, by continuing growing core businesses and implementing improving profitability of the plasma innovation business and by accelerating regional expansion.

We are building a high-performance foundation for growth that will extend beyond the GS26 cycle. Now I'd like to step back here and show you the full picture of what Terumo TBCT actually does. Our competitive edge lies in our ability to integrate solutions worldwide across 2 distinct segments. First, in global blood Global Blood Solutions, we set the global standard for blood collection and processing.

We aim to grow either plasma market as well. In global therapy innovations, we power therapeutic apheresis and the development and manufacturing of cell and gene therapies. We also provide software for these devices. Cross segment is beta solutions, which is our analytics and consulting offering.

So we provide customers' decision-making support and this is an integrated infrastructure in our proposal to customers. We serve a wide-ranging customers, including blood centers and CDMOs. Although those customers are distinct, we are uniquely positioned to connect the entire chain. We collect blood and cells and we provided the technology that supports a safe and reliable supply, and we enable scalable precise blood and cell therapies.

Very few companies span that whole continuum the way we do. At the lower indicates, please look at the market growth. Our core businesses serving blood centers and hospitals sit on stable mid-single-digit growth while biotech and CDMO fields grow at 17% to 20% growth.

And these aren't just 3 separate businesses. They are on connected system following a single drop of blood from donor to patient. And this continuum and consistency is what shapes our future. I will explain in more detail next.

Blood and cells are starting material for many advanced therapies in modern medicine without a reliable way to collect, process and deliver them health care system cannot function. We built the infrastructure that makes that possible anywhere in the world. This continuum of care by collecting and processing and treating. It is one integrated system that follows a single drop of blood from donors arm to a patient bedside. This continuum is rare and a key differentiator, and we do it with automation solution proposal and scaling. We secure our stable world blood supply by automating donor collection and ensuring component quality.

We make every drop count through process automation replacing manual lab steps. And in the therapeutic area, our apheresis system is adopted and more than 80% in 80% of stem cell collection and next-generation cell and gene therapies. We extend this continuum by understanding where each market sits on. For example, resource constrained markets like Africa, where access to safe blood remains to be a significant issue. That is why we expand into new geographies. And expanding access means increasing the patients we serve.

Our footprint is global, but our value or our impact is local. Now I'd like to pass the baton to Eyong Ebai-san to walk you through our business strategy in Africa, a key pillar of our mid- to long-term regional expansion.

Thank you, Moto-san. Hello, everybody. My name is Eyong Ebai, and I'm the General Manager for Africa region at Rumo VCT. It's a pleasure to be here with you today. I have the privilege of leading our work across one of the most dynamic growth regions in the world. And I'd like to show you why we believe Africa represents a real durable opportunity for this company.

Let me start with the picture of the continent itself. Africa is the fastest-growing continent in terms of population. It represents 20% of the world's population today that will rise to 25% by 2050. And the population is young with a median age of 19.

That really matters because a young growing population means decades of rising health care demand ahead of us and not a onetime bump. I want to make one connection explicit for this audience. While Japan's population is aging and contracting, Africa's working age population will grow by over 700 million people by 2050.

And that can create decades of structural demand for health care products across the entire Terumo Group portfolio. So Africa is not a side bet. It's a long-term demographic complement to our home markets. The African blood collection market growth is outpacing global markets, and that demand is structural, driven by population and need, not by a cycle.

At the same time, African governments are open and eager to collaborate actively looking for partners to fill capacity gaps in the health care infrastructure, workforce and technology. That's a rare combination, a large fast-growing market where the customer generally wants the partnership. Now this is not a single market.

With 54 countries and 6 regional economic communities, it's many markets at once, and that's exactly why localization and hub model matters, which I'll come back to later. So the opportunity is real. It's durable and so is the need. And on the next slide, I will show you exactly where unmet need lies. Across Africa, preventable deaths from childbirth, trauma and sickle cell disease share one common dependency, which is timely, reliable access to blood. Sickle cell disease is one of the clearest unmet needs.

85% of all sickle cell patients are born in Africa. Imagine 300,000 newborns every year. As sickle cell obstructs blood flow, these children are at risk of silent stroke and the disease accounts for an estimated 2% to 5% of all deaths in Africa from children. Those who survive often face long-term physical and cognitive impairment. The same urgency applies for maternal hemorrhage and trauma.

Every 2 minutes, a woman dies from preventable causes related to pregnancy and childbirth. In trauma care, several survival often comes down to whether blood is available in the first hour. And the structural imbalance is stark. Africa represents 20% of the world's population today, but accounts for only 4% of its blood supply.

The need isn't only for more blood, it's for better blood processing. By separating whole blood into components such as red cells, platelets and plasma, a unit of whole blood can meet the needs of more than one patient. On average, only about 60% of whole blood collected is separated into components and very often done in a suboptimal way. So the core challenge is not demand, it's access and infrastructure.

Blood systems remain largely manual, fragmented and constrained. That's both a public health gap and a significant untapped economic opportunity, and I'll show you next how we're addressing this. So how do we turn opportunity into reality?

The answer is the Imara framework. Imara is the Swahili word for strong or firm, and it reflects what this framework is designed to do, build strong sustainable health systems and firm lasting partnerships across sickle cell disease care. We created the Amara because no single stakeholder can solve this problem alone. It mobilizes all the stakeholders, governments, NGOs, local health systems and funding partners around one shared road map for managing sickle cell disease across the continent.

The framework works across 4 levels: primary interventions focusing on awareness, screening and early linkage to care. secondary interventions covering routine care, diagnostics and blood management and tertiary interventions handle specialized and complex care. And cutting across all of them is the work of monitoring, financing and program management that keeps execution on track.

By convening multiple players, including public-private partnerships, MOUs with governments and support such as from the development banks, Ministries of Health, NGO and METI in Japan, Imara can unlock third-party and public funding to enhance sickle cell disease care across Africa, leveraging our technology. So we are not financing this expansion alone. The framework gives us both the funding base and the market access that the combination is what makes this opportunity real and derisked.

You just saw the opportunity addressed by the IAA framework. blood availability directly translates into ability to deliver therapies. That's the gap our technology closes through 2 market strategies. First, expanding Revios adoption. Revios is a blood center in a box. It automatically separates 4 whole blood units into red cells, platelets and plasma in a single cycle. It does this more efficiently, more consistency with less waste.

It's a proven model in the developed markets now scalable in Africa, a large underpenetrated market growing at 10.6% CAGR a year. Second, elevating sickle cell as a public health priority. Here, our strategy puts Terumo BCT across the entire sickle cell journey from diagnostics to treatment. Today, the pathway is broken.

Testing often isn't available, so patients are diagnosed late or never and an undiagnosed patient never enters the treatment funnel. We address both these ends. On testing, our investment in Healthcare gives us access to Gazelle, a portable testing platform that can detect sickle cells in low-resource settings with no specialized lab equipment required.

On treatment, our Spectra Optia automates red blood cell exchange, a therapy that rapidly removes sickle cells and replaces them with healthy donor cells. It is a guideline recommended therapy to control life-threatening complications such as stroke and recurrent pain crises. The key point, diagnosis isn't a separate business. It feeds treatment.

As screening expands the diagnosed population, it directly drives red blood cell exchange demand, growing at 4.7% CAGR per year. We're not selling one product here. We're building a position across a whole ecosystem. And the prize is sizable. The addressable market for blood infrastructure is set to grow from roughly $700 million today to about $1 billion by fiscal year '31.

And within that expanded market, we expect our Africa revenue to grow significantly faster at about 14% per year as we capture share across both strategies. A strategy only works if you can execute it and execution in Africa means being local.

We've built our presence across 4 regional clusters: Francophone Africa, Anglophone West Africa, Southern Africa and East Africa with Kenya serving as our hub. We're establishing a training center in Nairobi to accelerate local talent development, building technical and clinical expertise because sustainable growth depends on local capability, not just imported equipment.

We currently have 31 distributors covering 40 countries, more than 20 countries with good potential for generating revenue and over 10 countries with a strong established government relationships. So this is not a standing start. We've grown steadily since fiscal year '18 at about 6% a year, and we expect that to accelerate roughly by 14% CAGR through to fiscal year '31. The acceleration is not a hope. It's the result of repeatable execution model meeting structural and long-term demand.

That's what makes Africa a durable growth engine, disciplined execution that combines real patient impact with sustainable shareholder value. And ultimately, all of this infrastructure exists for one reason, the patient.

Let me close with them. To sum it all up, a health -- as health care continues to evolve, so will we, but we will always remain focused on patients and their unmet need. -- by unlocking the potential of blood and cells, we can help patients experience an array of conditions because blood delivers life-saving therapies. Modified cells can cure diseases and improve quality of life. Treated cells can offer alternative treatment options for patients. process blood can treat diverse illnesses. And that's why we will continue innovating, automating, expanding across -- expanding access and building for the future in every corner of the world. We are glad to have this time with you, and I look forward to your questions. Thank you

Question is from Yoshihara-san.

This is Yoshihara speaking from UBS Securities. On this occasion, to educate myself in Africa about Africa I'd like to raise questions. Well, first, of course, Africa poses a significant growth potential. In terms of its population of demographics, characteristics. But in terms business, what is the competitive landscape? And also yes, that is my first question about the competitive landscape and also -- what is your strength, the most strength that differentiates you? So this is a very basic question that I'd like to ask. In terms of your business in Africa and also, if possible, about the African region. Why was it important for you? Is it an indicator for the next midterm management plan that you are about to announce., if you could expound on this matter?

Well, to address the first Africa-related questions, I'd like to address Eyong-san Onsan to answer your questions.

Thank you, Tim. So from a competition perspective, the continent is very diverse and competition is extremely fragmented. And you have mature markets such as South Africa, Algeria and you have extremely underdeveloped markets. So the biggest competition we see is fragmentation and misalignment with regards to the need to execute programs in a holistic way. And that's why I talk about the Amara framework. -- the Amara framework is a comprehensive program that delivers funding product solutions training as one program versus a fragmented approach, which is currently happening on the continent. Secondly, I would say that the biggest competition actually is funding. And that's the reason why we've invested heavily in government affairs and market access because there's a need for us to work with governments to increase the amount of budgets that are allocated to health care. And then once those budgets are with the health care apartments, increase the amount of budget that's available to blood services.

And you see that a lot in what we're doing currently with our government affairs and our market access policy. And one good example is in where we now have reimbursement for sickle cell patients from the National Health Insurance scheme that will give patients with sickle cell, 3 cycles of red blood cell exchange per year. So that's the type of example that we'll be looking at doing across the rest of the continent.

And in regards to strengths, I think it's clear what I presented is that we have localized. We have built a hub in Kenya, which is Visa free for other African countries, so they can come and be trained and have access to training on a regular basis. It gives us an opportunity to engage with our customers within our environment, and it also allows us to build up technical expertise to ensure that our machines that are deployed across the continent. We have engineers on the continent that can ensure that they stay working. So being local, being on the ground and moving now into the regions of Africa because Africa is a very huge continent is one of our -- is a clear differentiator and one of our strengths.

Regarding Africa. Going forward, as Les explained right now, the economies are expected to grow further. On the other hand, in terms of their health care development, it will happen in phases. So at the initial phase of economic development, the very basic health care will advance. For the blood, blood is the essential part of the health care business. And in the case of Terumo for example, the cardiovascular region, advanced specialists must be trained and capital lab and operation rooms must be constructed or are very expensive tools must be purchased. So there are many different elements. So economically, it will happen in the later stage of economic development in those advanced health care segment. So that is the characteristic. So for the time being, termed Africa, provide an opportunity for us to provide a very basic elements like the blood TBCT business that can provide the solutions for the entire ecosystem. So TBCT is the leading edge in terms of further advancing our business in Africa for the entire group. But what does the TIS do? We are trying to train a specialists by partnership by providing partnership and training programs to the local with local institutions or for example, the procedural level is elevated for the local African specialists. But in terms of market expansion, it will happen at a later stage. GS31 will address -- of course, I focus on the Africa, but the TBCT will be the leading edge for the entire group. Thank you for the question.

And I'd like to ask a follow-up question about the funding. In other areas, U.S. funding slows down -- is slowing down. That is what we hear. But in relationship to Terumo's business, you have cited an example in Kenya. Do you experience the same sort of funding from the U.S.? And how do you overcome the situation?

May I? Okay. Thank you very much for the question. Well, for the time being, as Eyong-san Iona mentioned currently, the METI is funding our initiatives in Africa, Reveos is being introduced under funding. So by collaborating with the Japanese government, we are making inroads in or expanding in our footprint in Africa. And for other regions, in terms of our -- well, our competitors are also investing in Africa, we hear. But under the leadership of the Japanese government, in order to create health care markets in Japan and the government is investing. So we'd like to gain this momentum so that we can establish our footprint in Africa. In terms of the size of our business, it's not sizable yet. But TIS local training program for the specialists in Africa, that is under the leadership of program, we are partly funded by Rika.

Next, Kohtani-san please.

Kohtani from Mizuho Securities. I don't know whether it is appropriate as a question. Without is concerned. In case of CSL share price, I have feel some concern. And the plasma itself currently, well, it used to be a growth driver as people thought about inventory adjustment and other matters take place. So just like to know is that with the growth of Africa, company via some other products be, but can I understand that the market growth of Rika still remains at a single digit, higher single digit. And if you look at adoption by other companies, there has been some delay. But do you still maintain the same guidance in terms of the growth of the Rika market? Or do you think that the market is more difficult than you anticipated?

With regards to Rika, let me respond to the question. As we mentioned, CSL and now Rika is mostly like one-on-one. In case depending on CSL, this will also impact the performance of Rika. That's the current situation.

So from our perspective, it's not just the CSL alone, but we should also think of how we can promote this to other companies, and that is the challenge that we are taking up. Overall, with regards to the market growth, we don't know the separate product individual growth, the market growth itself, we expect the growth of the market. That is still our understanding. So it's not that this is just a single CSL source. But when it comes to plasma treatment, we still want to continue this challenge and take up this challenge.

The clinical apheresis, when you look at what it's being used for, so you got TTP, you've got, you got myasthenia gravis, but it just all pales compared to the actual volume that sickle cell disease is. And obviously, it's a very endemic disease in Africa. I've always thought that you needed data, I guess. I think there was an ARCA trial that was supposed to proceed to provide data to show that the red blood cell exchange is pretty obviously better than what exists. But I guess from your point of view, it's not really data then. It's really more funding. I guess the clinical outcome superiority is probably -- I'm trying to understand how it's understood in Africa. The debate over the clinical usefulness is pretty much -- is it already settled and it's really just funding and insurance and all of that. That's really, is that how we should understand? Is there a possibility that you could get, like, say, Bill Gates Foundation, WHO, those sort of guys involved because that obviously would help with the penetration.

Yes. Thank you very much for the question. And you're absolutely right. I think on the question of data, there is data to support red blood cell exchange in the treatment of sickle cell disease in reducing the crisis. And you see data coming out of the U.K. There's some data coming out of France. We are also investing heavily in locally generated data on the continent. We've invested in medical affairs within Africa, and health economics in Africa, and we're currently engaging with a number of sites to get local data, but if you look at the policy documents that have been released in the last few years, just this year alone, WHO has released a document related to sickle cell disease. Africa CDC are about to release a continental plant for the treatment of sickle cell disease on the continent. And all of them are supporting the use of red blood cell exchange as one of the treatment options. Asia guidelines also are referenced at red blood cell as a treatment option for sickle cell disease. So I think from a policy government guideline perspective, I think it's very clear that red blood cell exchange plays a significant role in the treatment of sickle cell disease. So on the comment around reimbursement, that is a challenge. This is a marketplace that we have to build, which is why we, as I say, we've heavily invested in government affairs because we need to work with the Ministries of Health, Finance across Africa to ensure that they have the right health insurance schemes that cover patients that require red blood cell exchange.

And you're seeing that with the country-level guidelines as well. So once the guidelines come, the funding typically follows. So I can look at Ghana, Tanzania, Uganda, Ethiopia, there are all countries that have recently come out with guidelines that red blood set exchange should be available for their citizens, and it's for us now to work with them over the coming few months to ensure that, that converts into funding of their health insurance schemes, which ultimately will fund red blood cell exchange, which will ultimately turn into a growth driver and a revenue driver for Terumo.

The time has come to end the Q&A session for this particular session. And those of you who have questions, we'd like to take them during the group QA session towards the end. Next, Mr. Craig Marshall, former CEO of Organ Technologies and currently an adviser to the business, will give a presentation. Although Mr. Iwata, assumes the role of CEO in June, on June 1. Today's presentation will be delivered by Mr. Marshall, who has led the growth of the Organ Technologies business to date. Craig? The floor is yours.

Hello, everyone. I'm Craig Marshall. Thank you for joining us today. Having traveled from Oxford in the U.K., I'm very pleased to be here with you as I share some insights to give you a deeper understanding of organ transplantation and our work in this area. To begin, let me briefly walk you through our recent performance. Terumo Organ Technologies, formerly is forecasting to continue to experience high levels of top line growth. Year-on-year growth is forecast to be 40%. And in the current fiscal year, taking revenues from JPY 18.1 billion in the prior year to JPY 25.5 billion in the current year.

Adjusted operating profit margins are expected to remain at 20%. The growth drivers underpinning high level of revenue growth are continued increase in market penetration in addition to an underlying increase in the volume of transplants. In the longer term, the launch of the next generation of devices are expected to support revenue growth in the existing and in the new territories. It's very important to understand the underlying demand for organ transplantation globally far exceeds the current supply. This indicates that the organ transplant market is still far from saturated.

We can be confident that any increase in the supply of organs will be absorbed by this underlying demand. There are 2 issues which have historically very much limited the supply of donor organs, which were considered to be viable for transplant purposes. Both issues are linked to the traditional method of deploying an ice box to preserve the organs. The primary issue is the lack of oxygen received by the donor organ, which, in turn, reduces the time window to transplant the organ.

The second and associated issue is the inability to assess the viability of the donor organ prior to a decision to transplant or to discard. When we look at the quadruple aim of health care through the lens of traditional organ storage using an ice box, we see in each quadrant how limited this approach really is. From the patient perspective, their experience is compromised, owing to the relatively long recovery times in hospital.

From the perspective of the wider population of patients, there is a very high risk of no transplant and, therefore, a lack of hope in the system. And from the perspective of the health care professionals, the traditional approach results in a very poor work-life balance, driven by the underlying urgency associated with each and every transplant. And finally, from a cost perspective, there is an unnecessary high burden linked to complications and readmissions for many of these patients.

However, Organ Technologies addresses the challenges of traditional organ preservation head on by providing the donor organ with the supply of oxygenated blood via its proprietary technology, automated normothermic perfusion. This means that donor organ is literally brought to life, and this safely extends the preservation period to at least 12 hours.

The approach informed by human physiology gives rise to a number of logistical benefits. -- such as the potential elimination of nighttime surgery. Furthermore, consequences of normal thermic perfusion is the opportunity to reliably assess the viability of the donor organ with confidence. This typically results in an increase in the proportion of organs that can be transplanted in the range of 10% to 30%.

The 3 pillars which describe automated normothermic perfusion are. Firstly, the extended preservation period. Secondly, the increase in the number of transplants. And thirdly, the superior outcomes for these transplanted patients. The full impact of automated machine perfusion is best appreciated when viewed through the lens of the quadruple aim of health care. For patients, there is a reduced length of stay and a reduced rate of complications.

For the wider patient population, there is significantly increased hope of a transplant and a reduced time waiting for the transplant to happen. -- for the health care professionals, they are able to radically improve their work life balance and enjoy a far more sustainable and rewarding career with significantly reduced risk of burnout.

And finally, the overall costs associated with the transplant program are reduced owing to the reduced rate of complications and staff burnout. This highlights the many ways that organ technologies contribute to society through health care, which, of course, the group mission, which is, of course, the group mission for the Terumo Group.

There are a number of key differentiators of normal thermic perfusion product, metra. For example, it is thanks to the integration of the Terumo CDI blood gas analyzer that metra is an automated and intuitive platform. It allows organ technology staff to train its customers, empowering them to redefine the organ transplant program at their hospital. Following the acquisition of OrgaNox in 2025 by the Terumo Group, we are now beginning to realize a number of key synergies following the integration activities.

These synergies are now being realized across several functions, such as R&D, manufacturing, logistics, regulatory affairs, quality IT and last but not least, sales and marketing. So when we look to the future, Organ Technologies is working on a very exciting pipeline of future products, which harness these synergies linked to the acquisition by the Terumo Group in 2025.

The next generation of devices will not only be more compact later, but will benefit from having a platform architecture and cloud connectivity, which will drive productivity to unprecedented levels for our customers. The first of the new generation of perfusion products will replace the current metra, therefore, serving the liver transplant market.

The second of the new generation of perfusion products will target the kidney transplantation market. The future kidney perfusion program builds on the positive first-in-human experiences namely the 36 subject study, which was published in 2025. At the recent IT international liver transplant society meeting in Geneva in May this year. We hosted a tech suite, allowing established customers from Europe and North America to see the new design of the liver the fusion device.

The feedback was very positive, indeed, confirming all the major opportunities to improve the current product have been addressed in the new generation of device. Thank you. This concludes my presentation, and I would welcome any questions you may have.

Now we will go into the Q&A session.

Sorry, in Japanese, this is Tokumoto from Nikko. So you are talking about new generation technology. So this blood gas center is now incorporated. This is a huge factor. So the pump also is going to be used in the design. Your own pump can be used. And so what would be the cost to capture difference when we enter into this new generation product?

So there's going to be a favorable -- it's going to be more of a tailwind than a headwind when we are now part of the Terumo Group for sure, having internal transfer prices rather than an external price. Final cost position has not been determined yet.

I have a question regarding this new technology of normal thermic machine by fusion, but your competitors are targeting other organs. And you are talking about the liver, kidney -- and then for expanding modalities is something that you are thinking about. So are you going -- in terms of technology, what are the new advancements we can see down the road?

Beyond liver and kidney, the next mostly is organ, which would be of interest in terms of the volume of organs that are transplanted is the heart. And the opportunity is being explored to understand how we could address unmet needs in cardiac transplantation. So in addition to normal thermic machine perfusion, there's -- obviously, there's an alternative in the form of hope.

The limitations of that approach are very much around the duration period and the inability to assess the viability of those organs -- if we think about the U.S. market today, the only AMP product is the Vitasmart from Bridge to life. I would highlight that, that is not a transportable product either. So I think it's hard to compare the limitations of an AMP product with the NMP platform we've developed in Organ Technologies, but it's certainly fair to say it's significantly better than an ice box, but it's a long way short of normal thermic machine perfusion in terms of the proposition, it presents to clinicians.

Before joining the Terumo Group, Organox had a relationship with Terumo prior to the acquisition, but why did you choose to become part of Terumo? What was the rationale behind the motivation?

I'd say the motivation was at 2 levels. From an engineering perspective, the Organox business and the Board were hugely impressed by the depth of manufacturing across the group, the degree of vertical integration, the obsession with quality, and the depth of understanding and the proximity to customers. So having this staying within health care for more than 100 years deeply impressed the, shareholders and Board.

Secondly, I would say that our values were strongly aligned as a British business established by essentially a doctor, we felt we had an awful lot of DNA in common when we got to know each other during the due diligence process. And I think both of those factors were material in this acquisition from my perspective.

Next, Yoshihara-san please.

And I got kind of your -- I would like to check your competitiveness versus TransMedics in the U.S. market. It might be a little bit very specific things, but I understand that the business model is different. As a result, your product has a very high cost competitiveness in U.S. market. But on the other hand, as far as I understand, because of the business model difference between you and competitor, some doctors is arguing that maybe graft survival rate could be higher at the competitor versus yours, simply because the time the liver organ put on the pump is maybe quick competitor, but it's maybe rate timing with all the docs or sorry, -- you the limit company, I'm sorry. But -- so then how you overcome this gap? I'm a little bit worried that now I think you are expanding the market -- but in the future, more data is available. If doctor noticed that the graft survival rate is lower at, that might be disadvantage. So that's my question.

Actually, the 2 questions I'd like to address there. One really is about the difference in our business model. And actually, we've now closed that gap. So we're now able to fly the metro. So we can offer our customers the same model operating model as TransMedics do. And in fact, although it's currently embargoed because it's not yet been published. But by the time of the American Transplant Congress later this month, we will be revealing favorable results from our post approval study. which address that second point of graft survival. So it's -- you're forgiven for thinking that, but the latest data will address any concerns in that area.

Just a quick follow-up. You mean that you are going to do the similar business model?

We already do off a flight SP-16 Without owning aircraft, right? Without the expense of owning the aircraft, we operate with partners, so procurement partners and flight partners. So our customers pay directly those partners, but they can experience the same model as the TransMedics model, where they're paying a one price for a very that treatment. So yes, but we are -- we've qualified the metra for flight now.

But you don't do it by yourself.

We don't fly the planes. We don't own the planes, but we enable, we facilitate those conversations with our qualified and certified partners.

Just -- so I'm trying to figure out the difference between OCS other competition versus metra? Obviously, price business model, as you have said, but how important is the automation of the medication because when we go out into the future, if you really want to pay an arm and a leg for your competition, you could keep doing so. But not everyone can pay for the full service and you want to probably run the system you're on your own in the future, in which case automation becomes important. Is that how we should think about it? Or how should we think about sort of the automation as a competitive advantage?

So I would like to -- thank you for the question. I would like to just highlight the dependency in a very positive way on the CDI platform that we're measuring continuously the blood gases. So we've heard today of just about how important blood is in so many applications. And here, we have another one. We're providing oxygenated blood at the right level of oxygenation, not too much, not too little. And we can only guarantee that by constantly measuring the partial pressure of oxygen in the blood. And that's thanks to the CDI, which remains unique in the marketplace. And thanks to that, our customers, we can interest this sophisticated device into the hands of our customers after 2 days of training, and they for themselves can after these organs. And that empowers them, gives them agency in this space in a way that our competitors cannot afford to do the same.

So last question is about the metra. I guess you showed some slide on -- the final slide was on how the new customers are very happy with it. What exactly was the -- were the customers happy with? Is it the size of the machine? Or is it something else that you improved. If you could give us?

A combination, size is the most obvious difference. And the way we've achieved that reduction in size is by having a a version of the replacement to the CDI 550, the CDI 1 view as a dedicated piece of electronics for this application. So we actually predates the acquisition, but we've been working as a development partner on this for some years now. And that will be at the heart of our new generation of normothermia perfusion devices. And by taking really the active ingredient of the CDI and embedding that in the platform, we have been able to reduce the size by not having a second screen, for example.

So the conclusion is it does sound like automation is very important.

Automation has been and will remain so in the future. Thank you. Yes. a very much improved user interface and connectivity to the cloud. So those are other aspects, different battery technology, I could go on. But there's a number of different technologies which we are bringing into the clinic with this new generation.

We're looking forward to the full review.

Thank you.

So Mori-san, please

This is Mari speaking, Nomura Securities. About one thing on batteries. So you said that you are trying to minimize the size of the battery, you in order to perform the battery for 24/7 and how minimize the size? What is the smallest size of battery that you should achieve?

The battery has moved to lithium-ion. So it's inherently -- it's like a laptop battery. It's a much smaller compact affair than we've had in the past.

We take one more question.

t's a simple one question. Regenerative medicine, the regenerative medicine, so to speak, in the long run, could this be a threat to you? Because when I asked this question to Ran to TransMedics, the answer was, well, having said that, you have a transportation issue, a logistic issue. So the equipment will be very important. That was the comment I received from TransMedics. So what is your view?

I don't fully understand the question. I'm so sorry. Yes. I would argue, particularly now that Organ Technologies is a member of the Terumo Group that the advent of regenerative medicine is a much bigger opportunity than it is a threat. If we look about what's really state-of-the-art in -- with our associates in VCT and imagining some of the cell and gene therapy, what do you need for that? You need an oxygenated blood slide. You need multi-day perfusion. We've not talked about what we're doing outside of transplantation here today. But I think it's fair to say, and just to assure you all, we have experience of 5-day perfusions routinely. And that is a wonderful basis from which we can imagine combining some of the unbreaking cell and gene therapies into a future normal thermic platform. So I think it's far more of an opportunity than it is a threat.

We have reached the end of this session. So we would like to close the Q&A session for the Organ Technologies. We will now move on to the overall Q&A session covering all present.

This is Saito from JPMorgan Securities. I have a question regarding the German side for the CDMO business. As you stated, you are going to cater to the needs of both European and American markets. But our drugs are typically liquid drugs. So when it comes to U.S. made limited drugs, are you thinking about relining that to Germany and filling them there?

Thank you for your question. Yes, that is what we have in mind. In Japan and in Europe and the U.S., you can visit, you can have it frozen. But I think it is a liquid type, it would be easier for all pharmaceutical companies. Therefore, we are thinking in that direction.

Okay. The second question -- so regarding the German side, your strategy. So are you -- so you're having big projects and mid- to small-size projects. What is the expected ratio of the project size in terms of strategy? Where I'm coming from is this -- so what kind of candidate -- candidate drugs you have? And if your expectation changes, how flexible will you be to change your production is. That's what I am trying to get at.

We hope that we can have larger projects, obviously, as a majority, but depending on timing, we have multiple production lines to be installed in the German site. And depending on the line terroristic we can cater different needs. So not just the big projects, but we can do smaller projects. dependent upon the acquisition of the business.

And also, our strength of Terumo in the CDMO business should be showcased. So those are some of the stat decisions. When it comes to large-scale projects, -- maybe you have changes in the drug midway. And if it's a pharmaceutical CDMO or you might have a situation in which you cannot fully utilize your tank. But on the other hand, if it's a device CDMO or how much flexibility would you be able to have physically depending on the change in drug. So basically speaking, it's not the size of the tank, but rather the orders coming in from the pharmaceutical companies will determine the filling capacity of ours.

We have certain tanks, and it's not that we need to all have them full. Depending on the number of orders and the number of units, we will make sure that we can adjust our production level. So that means that you are going towards the larger scale projects. That's your strategy, and that's going to be the best case scenario for you. Yes, that's going to be most advantageous for us. So we will aim for that.

Any other questions from the floor? Yes .

I'm not sure where you are willing to answer, but I'd like to ask this question of -- what was the, biggest for you to have this out day to day? And you are about to make announcement in December for the GS31. But at this point in time, -- can you give us some indication about the next midterm management plan. The next midterm management plan, the previous one and the current one, the entire management team was involved in the formulation of the current MTP, but, this is going to be your -- the first entity under your leadership, and we have high hopes for that. Could you please comment?

Thank you very much for the question. Well, thank you very much once again. And we invited you on this occasion because that we wanted to demonstrate our strong fundamentals. But no matter how hard we try to penetrate our message very by showing our performance and indicators. It is not compelling enough -- convincing enough. So we wanted to have the presence of each company to deliver our technology and strategy to be in place. And for you to see it firsthand. Terumo has a 105-year history, and we have accumulated our alignment technology by combining multiple different factors and technologies in order to best fit the medical needs. We provide solutions and products, and we wanted to have demonstrate this. showcase this you firsthand, to convince that the Terumo has a strong core fundamentals and is willing and capable of achieving strong growth in the future. And that's why we have convened this IR Day today. And regarding GS31. It is to be finalized, and we are in a preparation base yet. But since I came on board, noncontinual growth will be the big theme inorganic growth that is. So we have presented today is the current state of affairs for each business portfolio and what is to be implemented going forward.

But the new portfolio, which is the Organ portfolio, OT business, but we would like to explore some other business opportunities. And from a high level, we'd like to present the GS31 in December.

I heard and presentations today, and we understand that your strength comes from the fact that each one of you is working hard to solve the patient needs at clinical practice setting. We can understand that fully. And through the presentations, you talk about consistency end-to-end. So from the very beginning of the and management going into the delivery. You have an end function. And I understand that this is your -- one of your core strengths and you utilize for your next midterm plan. You have various technologies, various elements that can be combined to be developed. But from the point of view of per time schedule. Sometimes it may take too long, sometimes you may miss an opportunity because of the delay. How can you enhance these elements and accelerate your development pace sometimes, I would understand that you have to revisit your current project and to further evolve your development for,what is your view?

Yes, exactly. That is the very point of my forecast since me assuming this position, we have managing directors san into innovation. And -- we had people in charge of corporate R&D, people in charge of IT, people in charge of clinical practice and people in charge of regulatory affairs, but all these people, they need for innovation and also takes kind of innovation.

So it's not just the internal development, but for external technology acquisition, single person can make decisions altogether comprehensively. In the past, we had R&D team for each business unit and a cross-functional communication was not very strong, but under his leadership. Each President, each R&D, each company, people can work together to look at the know-hows and foundation, which serves us the core. We have more communication to make use of this and one of our core technologies, which are introduced in my presentation at the very beginning, we have according technology. In Southern California, we have a satellite office, which is the new corporate R&D. And by this year, we will be able to hire local academia connection and local engineer, exchanges, with and further accelerated technology. So we need to have innovation generated in a timely manner. And this is one of our top priorities.

So each decision has to be made quickly promptly. And you mentioned that you really -- when we talk to the people on the side, you have various gates, of course, for safety and quality that may be needed. But if you have to go through many gates, how can you change the decision-making possibility?

Yes. for medical devices and also pharmaceuticals, the quality management system is a system where we need to comply with all the requirements. And what I often say is that, of course, quality is the basis of what Terumo strength has been supported, but in details, sometimes they even over that we raised the bar in terms of the reference and the standards too high, so to speak, sometimes internally. And I have that experience when I was heading the company unit. So by reviewing this revisit them, QNS, of course, is very important. We have to be sufficient and well prepared for this. But it shouldn't be an extreme burden. And in the Southern California, in order to promote development there at the different QMS, we will be able to have fast development. We want to establish such a technology capability at Terumo Group.

We should be looking forward to the next set our rich pipeline.

Yes, we'd like to do our best so that we can introduce which pipeline

Next, Hayashi, please.

This is Hayashi from Morgan Stanley Securities. Today. This one, cardiovascular company. If I did not miss it in the slides, imaging equipment, the future growth, you are expecting that to happen in the U.S. first, and then you are expecting China to grow too. However, when it comes to your sales, Japan, U.S., India were the top 3. So what is your outlook on China? What kind of stance are you going to take? Do you have any challenges that you are foreseeing in terms of selling imaging equipment in China?

So we have the product and marketing manager for Jing Matsuzaki. So he will take that question.

Yes. As you pointed out, when it comes to global markets, China is going to be a growing market in our outlook. Looking at the current market situation, I think it is steadily growing. So we would want to get into the market, and we are considering ways in which we can make the entry.

So you have a Chinese subsidiary, but is it difficult to do just to your subsidiary? Do you need a local partner?

Well, regarding our portfolio goal, so we have the dual system and IVUS system. So we have 2 portfolios, and we will make sure that we will optimize our product lineup to the market.

Next question is

This is Ray speaking. I'd like to ask a simple question. During the presentation of 4 companies, One is this Center, Reveos and Kanshas, CDMO. Revenue-wise, what is the priority in terms of these 4 different companies? In terms of the size of the revenue, what is the order for these 4 companies from.

Well, thank you very much for the question. Regarding DSS and Kanshas, these have a very significant growth potential. So reviews will be the top one in terms of the revenue contribution. That is the most top element. In terms of the size of revenue, Reveos is going to be -- remain the top -- and as we introduced today, in terms of the growth potential, each 1 of these 4, during the GS31 period, they will be the growth drivers. And that is a level that we'd like to achieve. And that's why we introduced with the sense of hope.

And for the Orion transplant, I'd like to address this question of Craig on if I may, what is the downside risk for this organ transplant business? What will be the downside risks?

I'm struggling to think of a downside risk for our high-growth business unit. I guess a downside risk could be something which is currently unforeseen deep in the supply chain that could trip us up. But we've got real resilience now. It's got -- it's better than ever before. But when Organox was a small company, those sorts of risks kept me awake at night. But that's one of the things that we've now been able to very much address as part of the Terumo Group by building in dual sourcing and much better resilience levels. But for any medtech company, -- it's something that happens in the sterilization plant, which is supplying a supplier who supplies you. That's the kind of thing that can happen. And we just have to remain paranoid in our supplier audits and our quality assurance procedures that we are on the front foot with all of those risks. But I wouldn't single out anything, but just what comes with the territory of operating in a highly regulated market like this, where we are dependent on third parties ultimately for our suppliers.

There were several questions asked in that area. From a pipeline perspective, I think you have much foreseeability and much ahead in the future. And in that sense, -- in this area, I understand that the demand is increasing. But is it better than you have expected in terms of your pipeline? coming out, but we can't see the numbers be very clear about the pipeline. Can you give us some indications?

Thank you for the question. LEQEMBI can be following LEQEMBI Mediaeval products, and it is under development. It is odd the core development stage. In that sense, in a continued manner, we will be launching various products. But in principle, these are the projects of the pharmaceutical companies. So we cannot make a disclosure as to what they are, but there are several co-development projects underway. This may be often asked questions. Is any related to?

Well, project -- so I have a question about related. It's not very clear at this point on that. that clearly included, No? Right. It's not clear to indicate. About DSS, this has been often explained, and the potential market and the potential growth well explained and your target market and the target share haven't been clearly mentioned. But if you look at this product profile and based on your past performance and track record, excluding the market access, what is -- how much do you think we can again, can you give us some potential?

Thank you for the question. DSS, without the DSS at the moment in Japanese market, we have the leading position. And with DSS, we will have some increment. And in addition, the existing products are replaced. So putting them together, we will have further stronger, even stronger acquisition than now. What about U.S. Well, U.S. you could speak on that, please?

Yes for U.S., we follow up in the U.S. market, we have unique technology, but the competitors are already in the market. So after launch, it's difficult to say this by 2 digit is what we want to aim at. And it may take time, but with the center system in a clinical setting, we can cover almost all case loads. So we do want to aim for 2-digit.

Next, Kohtani-san, please.

Sorry for asking so many questions. My final 2 questions. So what request may be. So a number of launches. If you can disclose that this is a diagnostic business solution. And it's hard to go and look at the individual labels. And it's hard to really grasp the growth. There are so many projects, and you're focusing generic products right now. And I know that there are some that you cannot disclose, but it would be nice if you can disclose further. This is a request.

Well, we will try. How should I say it? And how far can I go Projects for we can say it's not 1 million level or single million level, but it's 10 million of level. Is that what you're looking for? Why are the supplier is not willing to disclose such information? Well, there are several explanations. For example, cybersecurity is one. There are many factors. So the pharmaceutical companies do not want to make clear what they are asking to whom. Easai was okay to disclose this information. And it's dependent upon the pharmaceutical companies. But if you can just discuss the project -- number of projects for TMCS, that would be helpful.

Undiscussed I can't think of anything bigger than defatting of the liver, reconditioning because if you have fatty liver, if you try to use it for transplant, you're going to get reperfusion fusion injury. I think that's pretty well known. So -- and I'm assuming that a lot of liver you find tends to be fatty liver. So there has been some early studies done taking a fatty liver, injecting drugs, maybe filtering, slim it down so that you can transplant. This will open up a vast opportunity, I would think. Where is Terumo in the sort of development or possibly usage clinical usage of fading and reconditioning in general. That's my final question.

We're about halfway through a study that's not yet published, where we've been doing exactly that.

Would we get the name of the study or when this will be announced?

I'll provide it later for you yes.

Is it within a couple of years or is it further out?

It's within that sort of time frame, yes.

I come to conclude this overall Q&A session. Those of you who still have questions, please contact the IR department individually. Now to close the session, we'd like to invite our CFO, Hagimoto-san, for closing remarks. Hagimoto-san, the floor is yours.

This is Hagimoto speaking. Terumo CFO. Today, we have introduced growth initiatives and products driven by our core technologies. To reiterate, Terumo's growth is based on a scalable and repeat growth model centered on core technologies, which continues to generate new growth drivers.

In the next MTP, mid-term management plan. We are making steady progress in both growth and profitability, and we'll continue disciplined investment by allocating resources focused on these growth areas. I'll outline our IR-related activities for this fiscal year. We will continue to hold quarterly earnings call as usual. And this will be continued to give you an update on our performance. As for the events, In addition to today's IR Day, we are planning to have a technology focus briefing. Well, today, we focus on business as well as the strategies. But and technologies, but we are planning to have a technology focused briefing at a later date in shown up at projects.

And in December, the GS31 announcement will take place. And the technology-focused briefing will be in October. Through these activities, we aim to provide not only performance updates but also deeper insights into our growth drivers and technological foundation as to why these are contributing to Terumo's growth. We will continue to engage in the dialogue with you to enhance your understanding.

So through these initiatives, we'd like to contribute for the betterment of your understanding. And today is the first step. We have convened this IR Day event and thank you very much once again for your participation out of your busy schedule. And that concludes our IR Day event. Thank you very much.

And this concludes IR Day presentation and broadcast. Thank you to everyone who joined us online.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[Interpreted] Hello, everyone. Thank you for joining Terumo Corporation's Financial Results Briefing for the fiscal year ended March 2026 out of your busy schedules today.

[Interpreted] Today's proceeding is the following. First, Mr. Hagimoto Group Executive Officer and CFO, will provide an overview of the financial results; nextly, Mr. Samejima, Chief Executive Officer; and Mr. Carsten Schroeder, President of Neuro business, who is turning online will make a presentation, GS26 final year and beyond and Terumo Neuro growth road map.

[Interpreted] Finally, we have time set aside for questions and answers. We are planning a total of 60 minutes. This webinar is available both in Japanese and English using Zoom's simultaneous interpretation function. Please use the audio switch button at the bottom of the screen as required. Please note that the materials showed on the screen will be displayed in the same language as the speaker. Materials in Japanese or English only can be viewed on our website. Should any technical issues arise with the streaming, we will notify you by email. Prior to the start of the briefing, we advise you of the following disclaimer.

[Interpreted] Today's presentation may include forward-looking statements based on our current projections, which are all subject to risks and uncertainties. Actual results may differ from these projections. We thank you for your understanding in advance.

[Interpreted] Now Mr. Hagimoto will explain the financial results summary. Mr. Hagimoto please go ahead.

[Interpreted] I'm Jin Hagimoto CFO of Terumo. First, I will walk you through an overview of our financial results for the fiscal year ended March 2026.

[Interpreted] Let me begin with the key highlights. In FY '25, revenue reached JPY 1.1 trillion, marking our fifth consecutive year of record high sales. supported by a favorable business environment, demand expansion in North America led overall growth, resulting in 9% year-on-year growth on a local currency basis. On the profit side, although we recorded the impact of U.S. tariffs and onetime expenses related to acquisitions and business restructuring, we achieved record high profits in line with revenue growth.

[Interpreted] For the FY 2026 guidance, we aim to deliver record highs for the sixth consecutive year in revenue, operating profit and profit for the year driven by strong organic growth as well as contributions from OrganOx acquired last year. Please note that as April this year, the business segment of OrganOx has been named Terumo Organ Technologies.

[Interpreted] Next slide, please. Moving on to our P&L performance. As mentioned earlier, revenue continued to grow globally, led by North America, reaching a record JPY 1.1 trillion for the full year. Operating profit and adjusted operating profit also reached record highs at JPY 176.3 billion and JPY 219.4 billion, respectively. In the second half, the impact of U.S. tariffs became more pronounced and geopolitical uncertainty in the Middle East persisted. Despite these challenges, we successfully maintained the profit margins at a level comparable to the previous year through pricing measures and cost control. Looking at Q4 specifically, margins temporarily declined due to tariff impacts and the recognition of onetime expenses. I will explain the details on the next slide.

[Interpreted] The next slide, please. Here, I would like to explain the onetime expenses and adjustment items recorded in FY '25 as well as our outlook for FY '26. As previously disclosed, during fiscal year 2024 and 2025, we conducted ongoing reviews of underperforming businesses and projects to assess whether investments or delivering returns consistent with the original impact. As a result, in FY '25, we recorded JPY 48.8 billion in onetime expenses mainly related to new acquisitions and business portfolio optimization alongside recurring amortization from past acquisitions.

[Interpreted] Additionally, we recognized JPY 5.5 billion in litigation-related expenses in Q4, which were not included in our Q3 assumptions. This relates to a class action lawsuit involving our blood and cell technologies company. They were recorded as onetime expenses to mitigate uncertainty and potential future costs associated with prolonged litigation. This does not represent any admission of legal liability or wrongdoing nor does it affect our business operations or mid- to long-term strategy. While FY '25 saw a concentration of acquisition-related and other onetime expenses, we view these as strategic investments for future growth. As a result, we are entering FY '26 with a much cleaner cost base, which we believe positions us to further accelerate growth. In FY '26, the absence of these onetime expenses is expected to contribute more than JPY 10 billion to profit growth.

[Interpreted] Next slide, please. Now I will explain the year-on-year profit variance for Q4. There are 2 key factors. First, gross margin and pricing. From Q3 onwards, tariff impacts became more significant, resulting in a JPY 5 billion negative impact in Q4. Pricing had a positive effect of JPY 3.1 billion. However, impairment losses of JPY 2.2 billion related to the termination of certain projects led to a negative impact of JPY 4.5 billion. These impairment losses are included under restructuring expenses in the previous slide. Second, R&D expenses increased due to impairment of capitalized R&D assets in Q4. Both factors are temporary and will not have a continuing impact in FY '26 or beyond.

[Interpreted] Moving on to the full year profit variance analysis. Overall, continued demand growth and higher sales volumes were the primary drivers of profit growth. The gross profit increment by sales increase was driven mainly by overseas TIS primarily in North America as well as Global Blood Solutions led by the Plasma business. With regard to the gross margin pricing, pricing measures, especially in C&V contributed positively. However, these gains were offset by the full year impact of tariffs and impairment losses associated with discontinued projects. SG&A increased in line with business expansion and remain broadly within our expectations.

[Interpreted] I will now explain performance by company, starting with C&V, the Cardiac and Vascular Company. Revenue increased by 7% on a local currency basis, with strong performance continuing globally particularly TIS in North America and the Neuro business. In North America, all TIS product categories performed well with volume growth contributing more significantly than pricing. The Neuro business continued to deliver strong growth, especially in China and Japan. The profit margin in FY '25 was 24%. Q4 margin temporarily declined to 19% and mainly due to impairment losses related to a change in development locations for new products in TIS as well as negative impact from foreign exchange on a stock basis. In FY '26, we expect margins to improve as these temporary factors subside.

[Interpreted] Next slide, please. Next is TMCS, the medical care solutions company. Growth in Pharmaceutical Solutions drove both revenue and profit growth for the company overall. This was led by the domestic CDMO business as well as the strong performance of projects overseas. In Hospital Care Solutions, despite the impact of a business transfer in Q1 of the previous year, and a supply issue with a certain product, the supply issue has since been resolved and growth in Asia contributed to higher sales. Profit increased due to the effects of pricing measures and disciplined cost control.

[Interpreted] Although the Leverkusen Plant consolidated from Q3 had a negative profit impact of JPY 3.7 billion. It is excluded here to clearly illustrate the performance of existing businesses. Regarding the Leverkusen Plant, we continue to see strong interest, particularly from European U.S. pharmaceutical companies, and we are making steady progress towards securing new projects.

[Interpreted] Next slide, please. Next, TBCT, The Blood and Cell Technologies Company. Revenue increased driven by expanded deployment of Reveos and automated whole blood processing system as well as growth in plasma innovations with global blood solutions. Global Therapy Innovation also performed well, particularly in North America. Profit increased due to strong core businesses, including revenues and improved profitability of expanded sales of Rika. In the second half, we implemented production adjustments related to Rika. However, those remain within our expectations, and the impact on profit margins was limited. In FY '26 as well, production adjustments may be made depending on circumstances, but at this stage, we expect the impact on business performance to be minimal.

[Interpreted] We will explain the performance of thermal organ technologies. Since Q3, we have included this business in our consolidated results. In Q4, revenue was JPY 5.1 billion, and adjusted operating profit was JPY 1.1 billion. To illustrate the growth trend, we also disclosed the full year FY '25 performance on a year-on-year basis. Revenue increased by 48% on a local currency basis. The profit margin reached 21%, reflecting that a high-margin business model has already been established. The organ preservation market utilizing NMP is expected to continue expanding supported by the increase in liver transplant procedures and the expansion of our customer base, we aim to achieve growth exceeding that of the market.

[Interpreted] Let me move on to revenue by region. In the Americas, demand continued to expand with all companies delivering strong growth. TIS Pharmaceutical Solutions and Global Blood Solutions were a key driver. In Europe, TIS and euro remained stable growth contributors, while Pharmaceutical Solutions grew supported by strong project sales. In Japan, the C&V or business performed well, contributing to higher Pharmaceutical Solutions revenue, Neuro and C&V continued double-digit growth. In China, growth was driven primarily by neuro, supported by expanded market access resulting from VBP. In Asia, strong TIS performance-led C&V growth with TBCT also delivering double-digit growth.

[Interpreted] Next slide, please. Now let me explain our FY '26 guidance. First, I would like to explain the key assumptions underlying our FY '26 guidance. The first assumption reflects the recent surge in crude oil prices stemming from the situation in the Middle East. Based on the information currently available, we have incorporated the impact of higher raw material and related costs into our guidance. At this stage, thanks to the collaboration of our suppliers, there have been no issues affecting production or supply.

[Interpreted] The second assumption concerns U.S. tariffs. We have assumed a tariff rate of 10% through July. And while conditions thereafter remain uncertain, we have incorporated a rate of 15% into our guidance based on our prior circumstances. Under these circumstances, for FY '26, we expect revenue to grow by 8% on a local currency basis. Our operating profit is projected to increase by 20% year-over-year, significantly outpacing revenue growth. mainly due to the absence of onetime expenses recorded in the previous fiscal year. FY '26 marks the final year of our 5-year growth strategy, GS26. We expect to achieve record high revenue and profits, and we are on track to meet the financial targets set under GS26.

[Interpreted] This slide presents our guidance by company. We aim to achieve high single-digit revenue growth across all companies by steadily expanding high-margin growth drivers in each company while advancing operational improvements and the introduction of new products, we expect profit growth to exceed revenue growth in all cases. In addition, the inclusion of thermal organ technologies is expected to become one of the key drivers of overall group growth. Alongside its strong revenue growth, we expect profits of JPY 5.1 billion, making this business a contributor in terms of both growth potential and profitability.

[Interpreted] This slide explains the year-on-year profit variance in FY '26 guidance. The GP increment by sales increase is the primary factor behind profit growth, reflecting continued growth across businesses, such as TIS and neuro as well as the full year contribution from Terumo Organ Technologies. With regard to the gross margin, we expect a negative impact of JPY 4.5 billion due to the impact of tariffs throughout the year.

[Interpreted] In addition, higher raw material costs are expected to have a negative impact of JPY 2.5 billion. On the other hand, we expect a positive impact of JPY 10 billion from pricing measures as well as JPY 7.5 billion from the absence of onetime expenses recorded in the previous fiscal year and cost reduction effects associated with business restructuring. SG&A are expected to increase at a healthy level in line with business expansion. Next slide, please.

[Interpreted] This slide outlines our product expected to drive further growth as well as our key regional expansion initiatives. From FY '26 onwards, we will continue to create growth opportunities by allocating resources to growth areas and expanding sales of new products. In C&V, we will continue to focus on growth segments with large market opportunities in the therapeutic area to drive business expansion. In the access area, we will promote the adoption of radio procedures and together with the expansion of the therapeutic area and for further growth. In TMCS as we will further advance the creation of new value by leveraging devices, pharmaceuticals and digital solutions and expand the provision of a wide range of solutions, including medical management.

[Interpreted] In addition, we aim to expense the CDMO and PLAJEX businesses while accelerating overseas expansion by matching our strength with region specific needs. In TBCT the rollout of Reveos is accelerating, and we will continue to expand into new regions. At the same time, by expanding software and service offerings, including the use of AI and enhancing infrastructure through automation, we will secure competitive advantages and achieve further customer acquisition.

[Interpreted] Next slide, please. Finally, let me touch on shareholder returns. For FY '25, we expect an annual dividend of JPY 30 per share. with a payout ratio of 33%. For FY '26, we plan to increase the dividend by JPY 6, bringing it to JPY 36 per share with a payout ratio of 32%. We continue to prioritize growth investments while we remain committed to stable and progressive dividend increases going forward.

[Interpreted] This concludes my presentation. Thank you very much for your attention.

[Interpreted] Next, CEO, Samejima, and President Schroeder will present. President Samejima, please go ahead.

[Interpreted] I am Hikaru Samejima, CEO of Terumo Corporation. Thank you very much for coming. I would like to share our perspective on the final year of GS26 and our strategic direction beyond that. We will explain the strength and future outlook of Terumo Neuro, which continues to drive strong growth for C&V as well as the company overall.

[Interpreted] Let me begin with our progress this fiscal year towards the key financial targets of GS26. Regarding the revenue growth, GS26 defined a target range of high single-digit growth. This year as well, driven primarily by organic growth, we are steadily expanding the top line as planned and expect revenue growth to come in within our target range. As for the operating profit through continued progress in pricing measures and optimization of our cost structure, we expect to reach a level of 20% or more in FY '26.

[Interpreted] In addition, while continuing to invest for growth, we plan to maintain ROIC at a level of 10% or higher. This demonstrates that we are steadily achieving both profitability and capital efficiency. In this way, in FY '26, the final year of GS26 we expect to reach the target ranges initially set for all 3 key financial indicators, revenue growth, operating profit and ROIC.

[Interpreted] Next, I will outline the key growth drivers supporting our performance this fiscal year. Let me start with C&V. Business fundamentals remain strong, particularly in the endovascular segment. Along with continued pricing measures, mainly in North America, core products such as Ultimaster Nagomi and WEB are expected to drive revenue growth this year.

[Interpreted] Turning to the global TMCS business continues to expand with new product launches. PLAJEX centered products are the main growth drivers, while ongoing pricing measures are improving profitability of TMCS as well. As for TBCT revenue growth driven by the plasma business continues and core products such as Reveos provide stable support. Finally, Terumo Organ Technologies. As NMP adoption expands in the liver transplant market grows, we are gaining market shares through Metro. As shown, this year's performance is supported by steady plant-based growth across multiple businesses, underpinning our ability to achieve the GS26 financial targets.

[Interpreted] With that, I will now hand over to Carsten Schroeder, President of Terumo Neuro, who will outline the strong growth outlook for Terumo Neuro this fiscal year.

Thank you, Hikaru. I'm Carsten Schroeder, President and CEO of Terumo Neuro . I will walk you through today the growth of Terumo Neuro to date, our key strengths and successes and our strategy for the future. The neurovascular business provides endovascular treatment solutions for both ischemic stroke, which is a blocked artery and Hemorrhagic stroke, which is a leaking artery in the brain. Terumo entered this space first, through the acquisition of MicroVention initially focused on coil-based therapies for hemorrhagic stroke.

Since then, the business has expanded organically into a full-scale class-leading neurovascular portfolio addressing both Ischemic and Hemorrhagic stroke. Following this, the acquisition of Sequent Medical added the inrasaccular web embolization device, creating a new treatment category where we continue to hold global leadership. The business has consistently delivered above market double-digit growth driven by leadership in key platforms, including the WEB intrasaccular device for Hemorrhagic stroke and SOFIA catheters for Ischemic stroke.

Our core strength lies in our ability to continuously innovate, expand and iterate our product portfolio while building a robust clinical evidence to support long-term adoption. Combined with strong commercial and operational capabilities, this allows us to successfully deliver our solutions on a global basis. Under the Terumo Neuro brand, we are focused on sustaining category leadership in core therapies, while selectively expanding into adjacent markets to deliver on our vision to restore brain health globally.

Hemorrhagic stroke is fundamentally a leak or weakening in the blood part in the brain leading to a bubble or aneurysm. The portfolio to treat this disease state could involve placing a stent in the artery or filling the aneurysm with numerous calls or putting a single device like the one pictured on the left, which is called the WEB inrasaccular device.

The Ischemic stroke on the right is a blockage in the artery that can be removed with a stent retriever over suctioning out through an aspiration catheter or both. To get to the brain from either the growing in the lag or the risks, you can deliver therapies and devices and that requires catheters and guidewires under therapeutic lesion access.

The neurovascular business has grown to become complete and class-leading since the acquisition of MicroVention in 2006 with coils as the foundation for the portfolio. Growth has been driven primarily by organic innovation, complemented by the acquisition of Sequent Medical in 2016, which created a new category of intrasaccular devices. In 2024, my convention was rebranded as Terumo Neuro reflecting our ambition to further expand the business and advance our vision to preserve and restore brain health.

Terumo euro has consistently delivered double-digit and above-market revenue growth. This consistent growth has been achieved with market-leading brands such as WEB for Hemorrhagic and SOFIA for Ischemic stroke, sustained leadership in therapy lesion access and continued overall portfolio expansion. We finished fiscal year '25 with $710 million in sales, primarily coming from therapeutics. Here are the highlights of the growth strategy of Terumo Neuro. We will continue to deliver above market growth of 3 strategic pillars.

First, we plan to grow its current business by producing new products in hemorrhagic and Ischemic and generate clinical evidence. The second pillar, we plan to expand production capacity and improve gross margins. Beyond these 2, the growth drivers of the existing core business, we will expand into adjacent markets using our core portfolio and clinical capabilities to drive new indications and commercial expansion.

One of our key strengths lies in our ability to integrate technologies and continuously iterate on them over time. While some companies also offer both core an intrasaccular devices, Terumo's differentiation lies in how deeply and consistently we integrate and evolve these technologies over multiple generations. By combining our core expertise with the WEB platform, we have established a new standard of care in specific aneurysm segments and achieved strong #1 positions.

Since the acquisition of Sequent Medical, we have successfully advanced WEB from Generation 1 to the [ co ] Generation 6, supported by accumulated clinical evidence and procedural expertise with Generation 7 already in the pipeline. This long-term disciplined approach to technology integration is what enables Terumo to deliver sustainable above-market growth. Another key strength of Terumo Neuro is our leadership in clinical evidence generation and neurovascular devices. We are conducting large-scale post-approval studies across key products with global patient enrollment underway in the United States, Europe, Japan, China and beyond.

Taking comprehensive long-term approach, we have built a broad body of clinical data across geographies, studies, publications and device platforms. This depth of evidence supports regulatory approval and market access while strengthening physician confidence and establishing our technologies as standard of care. The intrasaccular market created by Terumo Neuro is growing at an annual rate of over 10%. Terumo Neuro established this market with a WEB embolization device, the first-in-class technology refined over more than 15 years with over tens of thousands of patients treated globally.

Looking ahead, we aim to maintain category leadership in intrasaccular therapy through continued product development. We will also expand clinical indications including [ upteenarism ] in North America and Asia, while further strengthening clinical evidence generation through global studies. Terumo Neuro is also known for its class-leading SOFIA catheter brand in Ischemic stroke treatment. Aspiration catheters today are used in 90% of the cases with 6 French size catheters being the majority used. A new category of larger-sized catheters called SuperBore has recently emerged. Terumo Neuro has category leadership in the 6 French aspiration catheter market with a SOFIA flow with extensive clinical literature supporting its use.

We plan to further develop its leadership in the emerging SuperBore category with the introduction of the SOFIA 88. Terumo Neuro has a significant portion of its manufacturing operations in Costa Rica, benefiting from strong government support an attractive talent pool in a well-developed ecosystem around medical device technology. We aim to execute our long-term manufacturing strategy by improving cost of goods sold through increased automation, leveraging capabilities from the Terumo Interventional Systems business.

In parallel, we are expanding production capacity for key products while maintaining the high quality of our product offerings. We also see attractive growth opportunities as we expand into adjacent neurovascular markets. The neurovascular market continues to grow at around 6% annually. At the same time, new treatment areas such as Chronic Subdural Hematoma are emerging attracting increasing clinical interest and innovation. We approach these opportunities with deliberate focus. Rather than broader expansion, we selectively develop offerings by our existing technologies and clinical expertise can be most effectively leveraged Chronic Subdural Hematoma is a clear example of how expanding clinical indications allow us to expand our portfolio and capture incremental growth while maintaining strategic discipline.

This summarizes our view on the future of Terumo Neuro. Our ambition is to further drive growth in the neovascular business while contributing to company-wide growth by developing class-leading and commercially scalable solution in our core therapies. Our pipeline includes both trip improvement in intra secular devices and new product offerings. Supported by continued expansion of clinical evidence. At the same time, we are improving operational efficiency to ensure these innovations can be scaled effectively and selectively expanding in adjacent markets through indication expansion. Through this focused and disciplined approach, Terumo Neuro aims to preserve and restore brand health while delivering sustainable long-term growth. It has been a pleasure to speak with you today, and I look forward to the Q&A session. Thank you.

[Interpreted] Finally, I would like to share our direction towards GS26, which we plan to announce this December. Through GS26, Terumo has built a solid foundation in revenue growth, profitability and ROIC. Under GS31, building on this foundation, we intend to go beyond simply expanding sales or growing profits by further accelerating innovation. We aim to create new value for patients.

[Interpreted] Looking ahead, the needs of patients and health care professionals will continue to become more advanced and more diverse. Leveraging our strength in technological innovation, clinically driven product development and global business execution, Terumo will continue to pursue value creation that enhances the quality of health care itself. Through these efforts, we aim to achieve sustainable revenue growth and profit expansion while becoming a global top-tier medtech company. Beyond FY '26, Terumo will continue striving for even higher levels of growth and performance, transforming the future of health care with innovation as our core driving force. Thank you very much for your attention. We will now move on to the Q&A session.

[Interpreted] This meeting is a hybrid meeting. For those of you in the room, please raise your hand if you have any questions. [Operator Instructions]

[Interpreted] The Q&A session will be joined by Samejima, Schroeder, Haki Hagimoto, Head of the Management and Administration Division. We would like to open the floor for questions.

[Interpreted] From Mizuho, we would like to take a question from Kohtani-san.

[Interpreted] I am from Mizuho. My first question is related to cost on Page 16 for next year. Gross margin is plus JPY 4.1 billion, but raw material cost is also going up, transportation cost is also going up as well. How come this is positive? I just cannot understand why because it's so far off from my assumption. So could you please explain I think this has to do with Rika and Transmedics. And if possible, please share numbers.

[Interpreted] Thank you very much for your question. As was explained earlier, this year, we have onetime expenses in the U.S. for production. That is included in this year, JPY 2.5 billion. but this will go away. And also restructuring costs and overseas plant restructuring expenses will actually be positive this fiscal year. So gross margin is based on those factors. So onetime expenses will disappear this fiscal year.

[Interpreted] Understood. Next question. I would like to ask in English, if possible.

Can you hear me? Yes. Great. So I don't get a chance to pick your brain too much. So it's going to be a somewhat comprehensive question, but bear with me. So in terms of Terumo Neuro, I got 3 concerns. One, WEB device. You will have new entrants enter the market within the next 2 years. I think you have seen the announcement from [indiscernible] Medical with [ Acintra ]. I think they disclosed clinical trial results in March.

Galaxy Medical SEAL, they filed PMA. So you're going to see new entrants. Can you defend your market share in the intrasaccular device. The second point is the aspiration catheter. You have a ton of competition in the SuperBore space. I thought SOFIA 88 was great with the Super Bowl, but you've got [indiscernible] 92, you have Route 92 Medical, imperative care, rapid pulse, a lot of competition in the SuperBore space. The somewhat annoying thing is that they're all doing clinical trials, locking up hospitals. disrupting sales. How do you push back with the SOFIA?

Finally, CSDH. This is a new topic for most Japanese analysts. The middle meningeal artery embolization space is obviously a very interesting space. Some people say that it is greater than stroke or aneurysm in terms of its potential market. However, we have seen [ Squid from Bult ], OrganOx Medtronic and [ TruFil ] from J&J have already entered the space with indications in MMAE for CSDH.

I understand you're trying to expand this indication with Phil. And yes, Phil does have some advantage, I think, in the ease of preparation, the ability to reach distilleries, but is that enough to crack this market when you're going to be probably a fourth, fifth or sixth entering the market?

Yes. Okay. So that's the -- there's 3 questions, rolled into one. So let me talk about the intrasaccular segment first. As you saw on the slide earlier, we are on Generation 7 with our WEB device, and we continue to have new sizes, we continue to have a small delivery system with the 7s system. We continue to expand our clinical indications and roll out on a global basis. We already have competition in certain geographies, and we believe that we can maintain a leading market share through continued iteration of this device and continued expansion of the clinical indications around the key markets in the world.

As far as aspiration catheter is concerned, you are right. The 88 large segments is primarily driven by U.S.-based companies. We have our digital access catheter, this and we will be conducting the necessary work to get to an aspiration indication and to create the SOFIA flow. Flow is our name for the SOFIA catheter, which has an aspiration indication, which is particular to the U.S. market. And we are also working on additional sizes and lengths for the SOFIA catheter portfolio.

So again, it's a question of iteration in completing our leading portfolio over time. Chronic Subdural Hematoma is indeed a new phenomenon, essentially by embolizing the MMAE, but you need 2 things to do it. You need a catheter and you need a liquid embolic. We have a leading catheter with our headway dual, which is the most used catheter in this particular segment, and we are leveraging the strength of the catheter over into the liquid embolic. And we will be investing money also to do a necessary clinical trial for fill in the United States.

[Interpreted] Next, we have a question from Yoshihara from UBS.

[Interpreted] This is Yoshida from UBS Securities. C&V, if we look at C&V only, and the actual track record and the plan, especially profit margin is going to improve significantly, that is your assumption. Therefore, maybe 24 will become 27, 3-point improved. This is adjusted operating margin. One-off expenses and organic, what are your expectations and the lending result. I think the lending result was slightly less than the company forecast, but can this all be explained by one-off factors.

[Interpreted] Thank you very much for your explanation C&V profit margin. 2 points or so from this year to next fiscal year, there will be an improvement. That is because, as I mentioned earlier, in Americas, there was cancellation of production PLAJEX. And 1 point is one-off factor involved. [Interpreted] And in overseas plants, there are a reduction in force in C&V. This fiscal year, this is going to be positive, which means more than JPY 2 billion positive in this fiscal year. And finally, foreign exchange. This fiscal year, the stock impact of foreign exchange in Cardio and Vascular there was some impact which will improve profit margin next fiscal year.

[Interpreted] Especially North America and Terumo Neuro, where profitability is high, they will be growing a lot and contributing significantly as well. That is also a factor.

[Interpreted] Just to make sure I want to confirm that is FX. Stock, JPY 4.7 billion company-wide C&V only, how much?

[Interpreted] Most of you are coming from C&V.

[Interpreted] I see. And then my second question to you is Rika business. As Hagimoto at the beginning, there is going to be a risk of adjustment. I understood. And in CSL's financial results, supply and demand being not good we here and CSL in itself seems to be losing share from competition or losing share to competition.

[Interpreted] How is this factored in into this fiscal year's plan? There can be some adjustment but will not affect profit, you said what? What is the logic for us the CSL sales? And for Rika, this is almost all the sales of Rika. And as of now, from CSL, we are receiving orders and looking at the orders from CSL now the order level is within what we expected.

[Interpreted] There can be some ups and downs in the order level that we experienced in the past years, but that impact the total of DCT is going to be very small. We expect with CSL, we are confirming circumstances on an ongoing basis as necessary. And as a result, what we thought would affect our results are all affected and all factored in into our expectation.

[Interpreted] And moving on Mori-san of Nomura Securities, please.

[Interpreted] This is Mori from Nomura Securities. My first question is Slide 15. Leverkusen Plant included and without Leverkusen Plant, you have the disclosure. And if we execute, then the labor cut impact is going to be bigger than fiscal year. Why is Leverkusen impact is going to be greater? And when will this situation start improving? Can you explain further about Leverkusen?

[Interpreted] And this is about Leverkusen this fiscal year, we are booking costs for segment, no correction that is last fiscal year. Last fiscal year, cost for Leverkusen Plant was booked last fiscal year and this fiscal year will be booked for the full year.

[Interpreted] And finally, Leverkusen and investments will reach a full flat stage. That is the background. And here, while you're planning to injection, you are going to convert the plant into? And how much have you progressed? And have you received clearance?

[Interpreted] From multiple pharma companies, we have signed NDAs, and we will conduct promotions and development going forward. We are moving ahead. And if I may add, clean room construction is progressing as planned.

[Interpreted] I see. My second question is about OrganOx. Currently, crude prices are high and inflation is ongoing, which means organ transplant costs must be going up. As operating profit margin, can you maintain 20%, you expect to maintain 20% because the top line will not affect profit margin. What is going to be the impact on profitability to OrganOx coming from inflation and higher crude prices?

[Interpreted] Crude, Japanese plants and agent plants will be impacted a lot from crude. Therefore, -- but for OrganOx business, we do not expect a big impact. with sales increasing, as you said, PLAJEX going to expand. This is the structure of the business. And if I may add, the transportation itself is not included in our business model. The transportation part can be mostly be ignored. People in transportation can pass on cost to pricing, but you are in [ machine ] business. You don't receive as much cost pressure.

[Interpreted] You are not receiving cost pressure that much. More than 90% of the business is in U.S., the middle east circumstance is not as much impactful compared to the Far East or Japan.

[Interpreted] Moving on to Citigroup, [ Yamaguchi-san ], please.

[Interpreted] Can you hear me now? I have just unmute a bit. I have 2 brief questions. The first is, in the next midterm plan. The growth, the CAGR, I think you said is going to go up. And there are more business segments now. [Interpreted] And when you aim for the next midterm period, you will achieve this growth level. And then, is there going to be further growth after the near-term results?

[Interpreted] We want to aim for higher goals compared to the current GS26. And upon this direction, we want to get into December.

[Interpreted] I see the raw material cost increase impact is going to be JPY 2.5 billion. But what is the impact coming from the Middle East? Are there any comments inside this?

[Interpreted] The JPY 2.5 billion is raw material cost increase. That is coming from the Middle East. Middle East circumstances resulting in raw material cost increases. In this fiscal year, earnings forecast. And as you are very well aware, tariff impact, tariffs, maybe you can get the tariff paid back to you. Maybe you can get payment returns. Yes, there are many uncertainties as of this point. Therefore, as of this point, and still there is the 10% tariff applied at the -- up to the end of July. This is the assumption up to the end of July.

[Interpreted] So far, it used to be 15%, and there is still a possibility that tariffs may go back up to 15%. And repayment back of tariff, there are such movements emerging, we are aware in the U.S. And there is still time available for appeal, but we have not factored this possibility in our forecast.

[Interpreted] Then SMBC Nikko Securities, [ Tooman ], please.

[Interpreted] This is [ Dokumuto ] from Nikko Securities. I have 2 questions for you. The first is guidance. TMCS, Leverkusen, excluding Leverkusen, you are going to increase a lot of profits. But this profit margin improvement and profit increase between CDMO versus Japanese existing business. Can you give me the split what is going to be the profit margin improvement between CDMO and existing Japanese business? Can you keep me the breakdown?

[Interpreted] Thank you very much for pointing out. Last fiscal year, FY '25. In [indiscernible], there were out of stocks. But this year, this is going to recover. In addition, in MCS Japan and global, there will be price pass-ons pass-throughs taking place this fiscal year. In addition, CDMO business is good to expand. These are the factors and contributors for profit margin improvement in FY 2026, which means in the whole of TCMS, there will be improvements.

[Interpreted] Yes. And secondly, I want to ask about Neuro strategy. First of all, brain aneurysm in the next 5 years as there was also a question earlier, the competition will start catching up in the next 5-year time period. Amongst this background, how are you going to innovate? What are the innovations are you going to come up with? There can be more pro diverters and mesh and there can be more improvements, but Stryker is also catching up with similar innovations. So brain aneurysm versus Stryker, what is your strategy? And also the aspiration brain stroke may be may be more vulnerable compared to stat and having Stent Retriever having the combination business, you may not have this in your pipeline. So I would like to hear about your big strategy.

Yes. Thank you very much for the question. Let me talk about Hemorrhagic stroke first. you have multiple ways to treat aneurysms. [ Ruptures are unrated ]. You have coils, you have flow diverters, you have intracycle devices. You have stent-assistid colleagues. Terumo Neuro has the most complete portfolio. We are the only company with coils who has Class 1A evidence of randomized clinical trials with our hydro coils, we are the market leader in intrasaccular. And we are also very strong in stent assisted calling and flow diverters.

And we have a pipeline projects to continue to iterate on all 4 categories. That's the -- that is for Hemorrhagic stroke. As far as ischemic stroke is concerned, SOFIA is the class leader in this segment. And we are expanding the segment also by adding new sizes to this portfolio over the next couple of years. and we do have a combination in each of the major geographies, Europe, United States, China and Japan. We also have a Stent Retriever available and we offer the combination, the technique of Stent Retriever plus aspiration catheter.

[Interpreted] Thank you very much. I have a related question for diverter, I think Fred has strong pipeline. In China, Chinese companies, including MicroPort, they are selling their version of the product. However, application expansion is still under preparation. When you think about the next 5 years for aneurysm and for stroke, how big do you think that the Chinese companies will be in the future? How big of a threat are they going to be?

We should not underestimate the Chinese companies. There are a lot of Chinese companies now in China in Neurovascular as they are in peripheral or in cardiology. And the -- obviously, they would like to expand internationally, meaning moving out of China. And some of these Chinese companies also have highly differentiated products. So I would not only see them as a competitive threat I would also see them as a source of new product innovation.

[Interpreted] We have received some comments from you competition is becoming more intensified for neuro, Terumo Neuro competitive advantage and improving its competitiveness is something that we need to think about and tuck-in type M&A is something that we might consider in the future.

[Interpreted] Next, we have Tony Ren from Macquarie Capital.

Tony Ren from Macquarie. I have 2 as well. The first 1 is I would like to ask you about the TMCS, particularly the pharmaceutical solutions. On Page 9, you said in Japan, the CDMO business did very well. Could you help me understand what proportion comes from [indiscernible] . Recently, there is a delay of FDA's approval of the [indiscernible] auto injector. In an induction therapy. I would like to get some sense how does it affect your Japan CDMO business? So that's my first one.

My second question is, again, going back to RikaRica, it -- I think as the other analyst mentioned, we are really seeing a very unusual situation of oversupply. I my experience, this type of oversupply last a few years. I would like to see how you have incorporated that into your near-term or midterm plan. Possibly, it will be something in the growth strategy 31. But I just wanted to see whether you have incorporated that into your medium-term planning, probably at least 5 years.

Thank you very much for the question. So the first question relating to LEQEMBI. The impact that is included in FY '25 last fiscal year's results is not large at this moment. We anticipate the majority of the activity sales to be conducted from FY '26 onwards.

Based on the delayed situation, from our point of view, we are preparing based on [ Eisai's ] kind of purchase order that has been put in place, and we do not see a notable difference from what we have anticipated in the early years. So I think it's fair to say that there may be some differences in what the [ Eisai ] sales situation may be. Despite that situation, what we are as a provider are still at a very steady growth that we are foreseeing for FY '26.

Based on the second question, for Rika devices, of course, we are still anticipating what the future structure within GS31 would look like for Rika at this moment. But for this fiscal year, FY '26, I think it's fair to say that we have incorporated any kind of demand changes that CSL have put forward to us. And based on those numbers, we do not foresee a significant difference from what we've anticipated in the planning phases for FY '26. So again, what we would consider for FY -- the next 5-year plan, GS31, is something that we would like to clarify and announce at December when we announce the overall GS31 plans.

[Interpreted] Next, from Morgan Stanley. Securities, Hayashi-san, please go ahead.

[Interpreted]Hello. I am Hayashi from Morgan Stanley. Can you hear me?

[Interpreted] Yes, we can.

[Interpreted] I have 1 question. Maybe it was already covered earlier. This fiscal year FY '26, your sales plan -- if you exclude ForEx, growth rate is also disclosed by segment. Thermal Medical Solutions is 8% growth for sales. This company, I think, in the past was only able to grow by mid-single digit or low single-digit percentage. But this time around, you're expecting 8% growth. So what's different now? Could you please share with us your thoughts? Which business is growing. I guess it CDMO, but -- please confirm whether my thinking is correct. 8% growth is relatively high. So could you please tell us why?

[Interpreted] Yes. There are 3 factors. First of all, in FY '25, there was a shortage. And second is global pricing pass-through. And that will be added on to the sales value and pharmaceutical business we are receiving orders from pharma companies, and they will promote sales growth. So that means that these are contents you have covered from the past.

[Interpreted] We are receiving many more hands up, but this is now time to finish. This is time to finish the meeting. We will close the questions-and-answer session. For the questions we were not able to take today, please contact our IR department individually.

[Interpreted] With this, we conclude Terumo Corporation's financial results presentation for the year ending March 2026. Thank you very much for your participation.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

So hello, everybody, and thank you very much today for attending Terumo's financial results for the third quarter of the fiscal year ending March 31, 2026. Today, before proceeding, I would just like to give an overview. And Mr. Hagimoto-san, CFO of Terumo will give an explanation followed by time for question and answer, making a total of 45 minutes for today. For this webinar, there is simultaneous interpreting available via the Zoom where you may listen to English or Japanese in either direction. Please do use the globe button at the bottom to choose English or Japanese.

The materials displayed on screen will be English only. If you require English disclosure materials, please refer to Terumo's web page. If there are any problems during the -- we will let you know by e-mail if there are any problems with connection throughout. Also, there is just one disclaimer before beginning. All of the explanation that we are about to give is based on current results. And all of these -- they are based on assumptions using information available to us at the time. Accordingly, it should be noted that actual results may differ from those forecasts or projections due to various factors.

So with that, I would like to hand over to CFO, Mr. Hagimoto, for an overview of the financial results. Thank you.

Hello. This is Hagimoto, CFO of Terumo. Let me walk you through the highlights of our financial results. Thank you very much for your participation today. So this is the highlights of our financial results for the third quarter of the fiscal year ending March '26. First of all, the highlights, strong earnings results exceeding guidance. So for revenue with the highest ever results, both for the quarter and the third quarter year-to-date. We had strong sales led by North America with 9% growth excluding the FX impact. In particular -- revenue reached record highs, both for the quarter, in particular, demand growth in North America remained strong, resulting in a year-on-year increase of 9%, excluding FX impact.

With regard to profits, operating profit -- adjusted operating profit and profit for the year all reached record highs on a Q3 year-to-year basis. Although we recorded certain onetime expenses from the first half of the fiscal year, our globally implemented pricing measures and appropriate cost control enabled us to deliver results that exceeded the pace assumed in our '25 guidance -- fiscal '25 guidance. Please note that the start from -- started from this quarter, the consolidated results with the Leverkusen plant and OrganOx, both of which were acquisitions announced earlier this fiscal year.

Next slide, please. So moving on to our P&L performance. Revenue reached a record high of JPY 831.6 billion on a Q3 year-to-date basis. The expansion of global demand continued with the Cardiac and Vascular Company and the Blood and Cell Technologies company serving as the main drivers. Operating profit and adjusted operating profit also achieved growth exceeding that of revenue, reaching record highs of JPY 144.9 billion and JPY 173.5 billion, respectively. While the tariff impact began to materialize partway through the second quarter and continued to affect results in the third quarter as anticipated, we were able to offset these impacts through ongoing pricing measures and disciplined cost control, resulting in progress that exceeded our performance forecast. On a stand-alone Q3 basis, the operating profit margin declined. This was mainly due to the recognition of onetime expenses in the second half of the year, as explained during our second quarter earnings announcement.

Next slide, please. So this is the year-on-year OP variance analysis for quarter 3. I will explain the Q3 year-to-date results on the next page. However, there are 2 major movements to highlight for Q3. The first is the impact of tariffs. In this chart, the tariff impact is included within gross margin and pricing. And as a breakdown of the gross margin effect, the tariff impact amounted to a negative JPY 4.2 billion. At the same time, pricing measures contributed a positive JPY 3.5 billion, partially offsetting the negative impact from tariffs.

The second point is the recognition of profit and loss from newly acquired businesses. The Leverkusen plant recorded a loss of JPY 1.6 billion, while OrganOx contributed a profit of JPY 0.5 billion. Regarding the Leverkusen plant, we will take a disciplined and cautious approach to capital expenditures for production line preparations and proceed step-by-step as the certainty of customer contracts increases.

Next, this slide shows the quarter 3 year-to-date OP variance analysis. Overall revenue growth driven by the continued expansion of demand made a significant contribution. The GP increment by sales increase was driven primarily by overseas TIS, mainly in North America as well as Global Blood Solutions, particularly in the plasma business. With regard to the gross margin pricing measures in the Cardiac and Vascular Company made a significant positive contribution to profit. However, as the impact of tariffs became more pronounced, this positive effect was partially offset. So while the negative effect from tariffs increased in quarter 3, on a year-to-date basis, the positive effect from pricing more than offset the tariff impact.

SG&A has increased due to business expansion and remained largely in line with our assumptions. R&D expenses decreased slightly year-on-year. This was due not only to the impact of impairment losses on capitalized R&D recorded last year, but also to a review of R&D priorities and a disciplined focus on selective themes. Going forward, we will continue to invest in priority areas. As for foreign exchange, the impact was negative both on a flow and stock basis compared with the previous year. Next slide, please.

I will now explain the performance by company. First, let me start with C&V, the Cardiac and Vascular Company. Revenue increased 8% on a local currency basis with strong performance continuing globally, particularly in North America. By business segment, growth was driven by TIS and Terumo Neuro contributing to revenue growth for the company overall. TIS was primarily driven by North America with solid performance continuing across all product categories. Volume growth contributed more significantly than pricing measures. In Terumo Neuro, strong growth continued in both China and Japan. The profit margin improved to 26%, supported by various initiatives, including pricing measures, profitability improvement and a review of unprofitable regions. However, due to negative impact from foreign exchange on a stock basis, the profit margin for Q3 on a 3-month basis declined year-on-year. Next slide.

Pharmaceutical Solutions drove both revenue and profit growth for the company overall. This was led by domestic CDMO business as well as the strong performance of projects overseas. On the other hand, revenue declined in the Hospital Care Solutions and Life Care Solutions businesses. In Hospital Care, revenue decreased due to the impact of the business transfer in Q1 of the previous year as well as supply issue affecting the product. This supply issue has now been resolved, and the business is on the recovery trend. In addition, pricing measures implemented since April are progressing steadily.

With regards to profit, earnings increased supported by the efficiencies of pricing measure and disciplined cost control. Regarding the acquisition of the Leverkusen plant announcement in May last year, this has been included in our consolidated results starting from Q3.

On this page, figures and presented -- figures are presented excluding the acquisition impact to illustrate trends in the existing businesses. Performance, including the Leverkusen plant is shown in the bottom right of the slide. As mentioned briefly in the profit variance analysis section, the P&L impact related to this acquisition in Q3 has no impact on revenue, while the impact on profit was negative JPY 1.6 billion. We are currently working on production line start-up and production transfer. Since the acquisition was announced, we have received a significant number of inquiries from pharmaceutical companies overseas, particularly in Europe and the United States and are actually promoting the business to secure new projects. Next slide, please.

Revenue increased significantly driven by strong growth in plasma innovations within Global Blood Solution. As the rollout of the Rika to existing consumers has already been completed, our focus in the plasma businesses will shift toward acquiring new customers going forward. In addition, our core business constituted to perform well, supported by the successful award of a tender for the [indiscernible] for whole blood collection system in Asia during Q3.

The Global Therapy Innovations revenue increased as demand for cell collection -- associated with cell and gene therapy expanded, particularly in North America. Profit increased driven by improved profitability resulting from expanded sales of Rika as well as ongoing disciplined cost control. We have implemented production at -- adjustment related to Rika from Q3. However, due to efficient operation in production lines, the impact has been smaller than initially anticipated and profit margin has improved. Looking ahead to the next year, production adjustment may be implemented as needed, but we expect the impact in our P&L to be limited. Next slide.

Following the completion of its acquisition as a wholly owned subsidiary on October 29, 2025, OrganOx has been included in our consolidated results starting from this Q3 earnings announcement. Results from November and December are consolidated with Q3 revenue of JPY 2.9 billion and adjusted operating profit of JPY 0.5 billion. This illustrates the growth trend, we are also disclosing Q3 year-to-date performance on a year-on-year basis. Revenue increased by 50% year-on-year and the profit margin improved significantly from 13% to 21%. This was driven by increase in number of liver transplant procedures as well as expansion of OrganOx consumer base.

Looking ahead, the market for organ preservation using normothermic medicine perfusion (sic) [ normothermic machine perfusion ] or NMP is expected to continue expanding. Next slide, please.

In the Americas, demand continued to expand, and we achieved double-digit growth on local currency basis. All companies delivered strong growth with TIS, Pharmaceutical Solutions and Global Blood Solutions serving as key drivers to leading global revenue growth. In Europe, TIS and Terumo Neuro continued to deliver stable growth. In addition, strong performance of projects that drove a significant increase in revenue in the Pharmaceutical Solutions business.

In Japan, the CDMO business performed well with Pharmaceutical Solutions contributing to revenue growth. With C&V, Terumo Neuro continued to achieve double-digit growth. In China, revenue increased as Terumo Neuro continued to grow, supported by expanded market access resulting from VBP in Asia strong performance of TIS revenue growth and C&V. Next slide.

With less than 2 months remaining until March, the full year outlook for the fiscal year is now coming into view. What I would like to reiterate is that our business based on our existing operation is steadily progressing towards the achievement of GS26 in the next fiscal year, supported by strength of our underlying fundamentals. In the current fiscal year, we are -- we recorded acquisition-related costs and other onetime expenses. The main item of onetime expenses that can be reasonably anticipated at this point are outlined on the Page 18 of this presentation. These initiatives reflect our commitment to improving profitability as we work toward achieving GS26.

And the structural reform, we believe are necessary. These measures include initiatives to optimize our workforce overseas, which are expected to result in annualized cost savings of approximately JPY 3 billion from the next fiscal year. We position all of these costs as strategic investment aimed at supporting future growth. We continuously review our business portfolio and conduct strategy reviews to drive growth. While the business environment is constantly evolving, we will actively manage these changes to achieve final year of '26. That concludes my presentation. Thank you very much for your attention.

[Operator Instructions] Otaka-san will be joining from the head of the management as a part of the management team joined with Hagimoto. Kohtani-san from Mizuho, you will be the first person to ask.

So this is from Mizuho. Can you hear me okay? Yes. So on 18 -- Page 18, you were talking about the amortization. This is JPY 2.6 billion. And I think at the beginning of the period, it was JPY 4 billion. And if I look at the related costs in quarter 3, I think you said these were supposed to amortize in the first part of the fiscal year. So that amount seems to have -- has been brought ahead to the fourth quarter for the amortization fees. And so it looks to me for next year, I think the goodwill for next year also taken into consideration. So I'm just looking has the evaluation of inventories changed and the goodwill costs seem to be -- over the long period, seem to be slightly down from what was originally planned. But it seems to me that those costs seem to have swelled slightly.

Kohtani-san, thank you very much for your question. So as your understanding is correct, this is pre-PPA, and we -- these were -- these amortization costs for the current fiscal year are JPY 4 billion, and they had been shared provisionally tentatively. But for the final amortization and depreciation expenses, we used an external organization to reevaluate these and the result of that external evaluation was that the -- we had previously expected them, so they are below our initial expectations. And it says at the bottom of here, the inventory step-up of inventories. This was when we made the purchase, these were reevaluated. The costs were reevaluated under the IFRS rules. So the inventory period had -- they've been distributed across the inventory period. So there's no impact on cash flow. But on the PL, they have to be recorded on the -- so they are JPY 4 billion and JPY 7 billion for next year. But for -- they will not, however, be from...

Okay. So for these -- in these 2 years, these fees will occur. But after that, there will be very lower good rent -- goodwill fees. So it will be in the black in terms -- we will be getting closer to being in the black in terms of amortization?

Yes. We had expected it to be JPY 9 billion, but it was actually JPY 65 billion in terms of those amortization fees that came with the purchase of OrganOx, but we expect that to be lower than previously predicted.

And secondly, a final question. The -- I just wanted to ask about the -- at the Rika -- share of Rika, I think, probably will be about JPY 50 billion of total revenues. And I think there are some supply chain issues. But if we look at this now, I think it will be about JPY 30 billion, JPY 40 billion in terms of the portion of revenue. So is this the effect of deploying Rika later has had some effect, I think. So could you give me this JPY 50 billion that you had previously predicted for Rika? Why is that late? Why is that late to come online? So also I think MAYUMI a [ completer ] product is also late in deployment. So could you just let me know on that front?

So for Rika, the revenues for Rika we haven't disclosed those at present. But when it comes to the -- there was some late deployment -- there wasn't any late deployment of Rika. So as I explained last time, it has been extremely efficiently utilized. And so the -- is lower than our initial assumption for the portion of net sales. But there is no particular -- no, there is no delay in the deployment of Rika. And we are currently improving the product and deploying promotions to increase customer inquiries -- acquire customer take-up. So there's nothing particular to add regarding Rika, but it is proceeding on plan steadily. So the -- and comparatively, it is not a particularly large-scale customer in question where we are expanding our promotions. And so we are looking forward to further development. And so this is one pillar of our growth pillars -- one of our main growth pillars and the development is proceeding as planned. Thank you very much.

The next question will be Tokumoto-san from SMBC Nikko Securities.

Yes. This is Toto speaking. I hope you can hear me.

Yes, we do.

Okay. My first question goes back to Slide 12 about your projection beyond -- on and beyond next financial year. And there are some -- you are also reducing some costs, also saving some labor cost, personnel costs. But can you just once again share any projects that you are planning to implement for the next financial year? I mean, passing the prices over to customers, you talked about that will be implemented, but inflation is not going away. I think -- can you talk about is this becoming more difficult. You also talked about profit improvements overseas. But can you share any other projects locally or in any regions that you can share?

Well, thank you very much for your question. Let me pick up your question about price point and our programs overseas. And my colleague, Hagimoto-san,CFO, may jump in if necessary, but let me just start off. First on pricing point. We are just passing the prices based on the inflation based on our terms in agreements. And we will continue to do that as we've been doing already and go beyond next financial year. We are also getting some impact from customs and we are actually putting surcharge as the -- to absorb the impact of the tariffs. So we will continue to work on those price initiatives beyond next financial year.

And you also asked me about the restructuring in overseas. We have in Q4, P18, Slide 18, as it shows on the QA, we are planning to have JPY 1 billion in onetime costs for project reduction severance of the people. This is onetime cost in FY '26, and we are expecting the positive impact to continue beyond FY '26.

Let me just add one comment. We -- within FY '25, we are running several different projects, and we will also have some positive impacts from pricing initiatives. We, of course, are managing that. But the price programs, I cannot share -- disclose any specific numbers, but market is going inflation and we are increasing prices based on, if not higher than inflation. So we will be passing the prices because we are delivering added values. And as a company, we are just looking at having more values added so that we can increase the prices faster than the inflation. We'll continue to do that.

And on the other hand, there are kind of reduction negatives like restructuring projects. These are the initiatives that we are running for this year as well as last year as onetime costs. And but our programs in FY '26, the very final year of GS26, we are making sure there's not going to be negative ripple effect at the end of the year in FY '25 and '26. So all those negatives that we need to deal with, we need to consume, including the onetime negative cost, we wanted to have them just done it and done it all at once.

Okay. I just want to clarify about restructuring, JPY 5 billion in overseas. And this is some number that we didn't see in Q4, but you just added as you have made the decision to implement.

Well, I've been -- we've been talking all through about necessity to go through the restructuring, but we have more precise numbers. So we decided to post it here.

Okay. Understood. So I think Germany, Leverkusen, you also mentioned about that. But can you just share about what kind of approaches you are getting? There's going to be some time before the production lines go up running. But after negotiation, what will be the timing in which you will be starting to recognize revenue from that plan? I think that's one of the assessment points for assessing value for your stock. So can you talk a little more about the recognition of Leverkusen plant?

Well, we do have signed an NDA with them. We are being discussing with multiple different potential customers. For PS business, as you can see on this slide, in this financial year, we are just a mid-digit growth. This growth is substantially very good. And we are getting good reputation for stable supply reliability. And for revenue, is that going to be profitable? We would like to share those perspective and deliver those targets in the next midterm plans.

Next, Citigroup, Yamaguchi-san from Citigroup Securities.

Yes. Can you hear me? This is Yamaguchi from Citigroup. Well, for quarter 3, if we look at quarter 3 alone, the gross profit ratio seems slightly down. But the product mix, is the tariffs the biggest impact on this on the product mix or...

Yes. So on the right-hand side, are you referring to gross profit? Well, OrganOx, the purchase of OrganOx has also had an impact. But the weakening yen in quarter 3 has also had an impact as well -- so the -- it's one -- this has affected the gross profit rate by 1 point, I believe. But the tariffs, I think these 3 impacts have been impacting the gross profit ratio.

Also -- sorry, the CFO was just talking about these one-off costs. So the next he says OrganOx. You've already explained that. But apart from other for these one-off costs, these -- in next year, do you think there will be any other significant one-off costs or one-off losses?

Yes, I think your understanding is largely correct. Of course, in the -- included the balance sheet, we -- having made all the necessary investments, we believe that this is what we can expect to harvest. But we do want to improve profitability. Initiatives for improving profitability will be implemented in this period. So for '26 financial '26 as the final year of GS26, we hope to end in a clean manner. That's all from me. Thank you.

Next question is Yoshihara-san from UBS Securities.

It's Yoshihara from UBS Securities. I do want to ask a question about Rika. And in the second half, you are planning to do production adjustment, but the impact was not that big, if I understood correctly. But your customers, if we are hearing your customers' comment, market was soft, market share also shifted quite a bit. It seems like you are also getting some headwinds and production also, you mentioned about production may be adjusted next year. But I know this will be very difficult for you to make a comment about your customer, but can you share a little more details about this Rika business and how you see it's going to go? And also, you talked about the acquisition of new customers and when this business has just started. You were looking into potentially a very big customers who are not your customer back then. But you also talked about having approach -- approaching to small to midsized customers. Has something that changed in terms of the target customer base? Can you talk about that, please?

Well, thank you very much for your question. So CSL or any other competitors may make some comments, but we will refrain from making any comments about what's represented by the competitors. But we are just competing -- making some progress so we can compete with CSL. And in next financial year, we are expecting to see -- we are not expecting a shrinking revenue from innovation. So we are expecting very stable revenue source.

And your question about expansion of customer base, I'm sorry, maybe this was not clear in our explanations. But our approach to big potential customers, nothing has changed. So it will be incremental on top of it to expand our opportunities working with small to medium-sized customers as well on top.

My second question is not directly related maybe to your financial performances, but your fundamental, I think, is quite doing well. But you are also having some challenging time over the last 1 year. Can you share examples of contentious discussions you may be having within that top management team. If there's none, that's also fine. But are you also looking into -- because there could be an option for you to buy back some of your shares back. Can you just talk about that as an option?

Well, thank you for your question. I will refrain from any comment about share buyback in this meeting. But we are not happy with the stock price of today. That's how we see it also. And how we, including OrganOx, right, or -- so we want to send the message that people will hopefully be understanding that we are making investment for the better future. So we will continue to run those programs in the future as well. And we -- the share prices are decided with many different factors. There is no single answer, no solution, one bullet to increase the share prices. But I think we can maybe send our message more clearly, loudly so that we get to have a chance to explain why and what we are doing. And so this is actually a big topic within our top management meeting because we are -- we will be performing well. We will be hitting the target in GS26, but we also need a good job communicating with the people in the marketplace.

Next, Morgan Stanley MUFG Securities, Hayashi-san, please.

This is Morgan Stanley, Hayashi. Can you hear me okay?

Yes, we can hear you fine.

So my first question is regarding TBCT. And I believe that from your data, I have calculated that in the third quarter, the net sales apart from FX impact are about 20% up in terms of revenues. And I think with the Rika production adjustment with that in mind, in quarter 3 that has been taken into account. But your production lines is what I'm talking about are able to absorb that negative impact or able to manage that negative impact you were saying. So I just would like to hear some more details about what kind of response, what kind of effect that's had on how are you going to absorb that drop in. I think that you have already taken into account the production adjustments. But the Leverkusen plant I think revenues could go up possibly. Could you give me some color on that, please?

First of all -- so thanks. In terms of net sales versus revenues, first of all. The Rika has contributed significantly to the increase in revenues. But for the other elements, for other products, those are also having favorable sales. Particularly in Asia, we have secured a tender in Asia, which has contributed greatly to increased profits, increased revenues. And the effect of those increased revenues and the production adjustment in terms of yield and improving production -- yield and production, I think, will bear out positively in our operating profit from now.

But I think in November, in your explanation in November, you were saying that the quality was too high and there were -- on the business side, you were talking more about the business side -- it's -- I feel it's slightly different -- there's a bit of a disparity with what you explained in November. What in November, what were you predicting? And this time now, why is the minus lower? Is it to do with Rika?

Yes. So let me add into that. So regarding the -- you're referring to the consumables for the Rika business. Well, the net sales and the forecasts, those come down, then the inventory level, I think, will -- we don't need to create that beyond need. So we would do some production adjustment. However, of course, for the actual distribution of the accumulation of inventories, that does bring down profits. But in terms of activities to increase productivity, then the production cost, if we're able to bring that down. So that's why we didn't have such a big minus in our revenues this time, that would be...

Right. So the net sales for Rika has gone to plan, but the margin has the -- any negative impact on the margin has been brought down to a minimum. Is that correct?

Yes. Well, what fluctuates is the -- if we look at the PSI, then these -- to keep the stock at a certain level, we have adjusted production. So overall, the structural impact is -- has been absorbed as offset by our higher production efficiency and production adjustment.

Understood. Okay. My second question is to do with OrganOx. And I think there are 3 companies involved in OrganOx. In the third quarter, then the JPY 2.9 billion sales, that is -- is that in line with your initial predictions, forecast? I think for the full year, JPY 9 billion a year is what you were predicting. And in quarter 4, I think that has I think -- are you on target in terms of the pace for OrganOx's results?

Yes. Well, thank you. In November and December, those 2 months have passed. Compared to the previous year, it is a very high level of growth on a year-on-year basis. But in the -- what we were initially expecting in quarter 3, we have gone perhaps beyond that slightly. But sorry, it's gone down compared to our prediction due to a slowdown in donors, available donors. But the demand remains extremely strong for OrganOx. So I think it is -- the growth trend is on target, and it was a slight depression in quarter 3 due to a lack of donors.

So in quarter 4, it will go back to the original trajectory. Is that what you're expecting?

Yes, that is our prediction. It will return to the expected trajectory for quarter 4.

The next question is Tony Ren from Macquarie.

Can you guys hear me?

Yes, we can hear you well.

Okay. Perfect. So my question is also about OrganOx on Slide #10. So based on the data on this slide, I calculated that the revenue increased about 46%, but the adjusted operating profit increased about 136%, so more than doubled. Did you do any cost improvement over there? Did you try to reduce any cost in manufacturing, SG&A or R&D-related expenses there?

So thank you very much for your question. So this is a result of the sort of OrganOx organic growth. So we did not do any specific approaches at this point in time. This was all activities that was already planned by OrganOx prior to our acquisition. So what we do believe is that, as we mentioned earlier, OrganOx's business structure is a very highly profitable structure. And as the revenue grows, there is room for profit improvement. What we want to also materialize is that the overall capabilities that Terumo as a group has by combining those kind of skill sets or the manufacturing capabilities of OrganOx, some of the technologies that we have with Terumo, we do hope that we can also accelerate this kind of growth in the profitability.

Okay. So it is a matter of growing the revenue base and therefore, able to cover the fixed cost.

Yes, exactly.

Okay. Perfect. Yes. My second one, very quickly, I just want to go back to the CSL, your customer CSL situation, right? I mean, obviously, we know that they had a lot of changes this week. Are you foreseeing any future impact because of the changes at your largest blood plasma customer in the U.S.?

So obviously, we cannot comment on CSL's specific situation. But from our point of view, we do believe that the demand for Rika and the disposables that sort of our revenue stream is not significantly impacted. So our understanding is that we will continue to provide the Rika disposables to CSL. There may be some discussions about the volume in the future. But at this point in time, we do not see significant changes in our projections.

Nomura Securities, Mori-san, please.

This is Mori from Nomura Securities. Can you hear me? Well, there are 2 questions I'd like to confirm. First is regarding the Rika. So the profitability of this compared and the growth trajectory, I would like to know whether that will change or not. But -- so this is regarding the -- there is no change to our projections and our initial projections have not been changed for Rika's growth trajectory. Secondly, in your explanation, you talked about achieving GS26. You made several references to that. But what items need to be achieved for GS26 to be achieved? What are the criteria for achievement in order to fulfill GS26?

Thank you very much for the question. So we have our financial objectives, 3 financial objectives. These are since these were announced in December 2021, which would get double-digit growth for revenues in the late double digits. Secondly, would be the profitability rate, 20% of operating profit ratio of which. And the third is ROIC, 10% ROIC. That is the -- excluding the impact of M&A. But I think for ROIC of 10%, we want to achieve that as another key pillar. And so it's not that if one of those is okay. All 3 of these financial objectives needs to be achieved for us to deem that GS26 has been achieved.

Right. So within segments and the profits within each separate segment, if you want to -- GS26 needs to be achieved across segments. Is that correct?

Yes. Depending on the business segment, then there are some variations, but we have all company financial targets as overall, which need to be achieved for us to declare GS26 to be achieved.

Next question goes to Saito-san from JPMorgan Securities.

I am sorry about that. My name is Saito from JPMorgan Securities. I hope you can hear me.

Yes, I do.

Sorry about that. So just wanted to talk about the slide, you analyze the operating profit ups and downs. I wanted to ask some detailed questions on the price and the expected price revenue. You talked about custom tariffs and prices in details. But the other things -- the other include the impact from inflation that you discussed back in Q2. You talked about some COGS impact, negative impact because of inflation. So I would say majority of the impact was coming from M&A transaction. Just wanted to see if there are all those details included in this analysis.

Well, thank you for the question. Depreciation -- COGS from depreciation and M&A is adjusted values. So that's JPY 591 million and JPY 439 million actually includes M&A adjustments. So that's not counted in that JPY 103 million, which is about the impact from revenue increase. Revenue increase is also getting impact on tariffs, inflation, product mix are all encompassed within that JPY 103 million.

Okay. You also mentioned about product mix. Is there any specific business that you saw quite a big change in product mix, especially for Life Care and Pharmaceutical Solutions, the factories are using -- you are using Japanese factories. Are the margin structures changed or not changed? Can you just add a little more comment about those?

On your question about Life Care, there is not much of a big change on profitability structure. For Pharmaceutical, the revenue is growing. And as it goes up, we can just absorb fixed cost as a leverage. And so that would be the part in which we are seeing the positive impact. Well, the other -- this might be way too much in details. But on -- the plasma business is expected to grow. Then the revenue, if you look at JPY 103 million, the impact will count on driving that JPY 103 million up higher. So if you look at the business structure as a whole, that mix impact will be negative. So there's that kind of structural details.

So we will end Q&A there as that is the end of the allotted time. That marks the end of today's presentation. Thank you very much for your participation. Here, we close the event.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good evening. Thank you for joining us. I'm Naoko Saito from JPMorgan. Welcome to JPMorgan Healthcare Conference, Terumo's presentation. Again, it's my pleasure to be introducing Terumo. From the company, we have CEO, Hikaru Samejima for the presentation. And after that, we'll have a Q&A session. With that, I will pass on to Mr. Samejima. Thank you.

Well, thank you for the kind introduction. So good afternoon, everyone, and thank you for joining us today. I'm Hikaru Samejima, CEO of Terumo, a medtech company from Japan. And it's my great honor to have this first opportunity making a presentation at the JPMorgan Healthcare Conference. This is our forward-looking kind of statement.

So can you imagine how crucial the very first step of a medical procedure can be. It can make all the difference in the patient's journey to recovery. One indispensable device in vascular access is the guidewire you see here. At first glance, it may look like a simple commoditized product, but it is far from that. By consistently delivering reliable quality and seamless procedures, this guidewire has become the gold standard in vascular access. Since its introduction in 40 years ago, this wire has been used in the largest number of procedures and saving lives of most patients around the world.

Quality is essential for medical devices, which use daily in the medical settings. And we, Terumo, can ensure this through our robust operations and advanced technology. For health care professionals who face countless patients every day, dependable devices give them a confidence to start their procedures. And for patients and their families suffering from illness, treatment with trusted devices brings reassurance. We, Terumo, are committed guided by our mission, contributing to society through health care.

Today, we have $7 billion sales worldwide with 3 business segments: Cardiac and Vascular, C&V Company. This company manufactures and sells catheters, artificial vessels or grafts or a vascular therapeutic devices.

Terumo Medical Care Solutions, TMCS, company supplies fundamental medical devices such as infusion pumps and syringes necessary for hospitals and including clinics. This company also includes our CDMO business, which actually provides the drug administration devices designed to kind of maximize the drug value.

Terumo Blood and Cell Technologies, TBCT company, again, that supplies products and services such as blood collection and the apheresis system for the blood treatment and a cell therapy community. We have grown into a global medtech company, delivering products to over 160 countries and regions and driving innovation through our R&D centers in Japan and across the globe.

Let me highlight our strong track record of growth. You can see how we've consistently expanded our revenue year after year. This growth has been powered by 2 engines: first, robust organic growth; and second, strategic acquisitions. And these acquisitions didn't simply add scale, but they actually became a true growth driver by creating synergy with our existing businesses.

Regarding profitability, we've delivered significant AOP margin expansion over the last 3 years, and we are on track to hit that 20% this fiscal year. This is a result of our disciplined approach with robust revenue growth, the successful price adjustment and operational excellence. We've also transformed that streamlined our portfolio by divesting businesses outside of our core strength. This is a strong foundation for our continued growth to -- and create a long-term value for our shareholders.

So let me briefly walk you through what you can expect from Terumo in 2026. So our fiscal year '25 is progressing as planned with a revenue growth of 8% and a robust operating profit expansion of 24% growth. And this strong foundation sets the stage for FY '26 from April this year. In FY '26, key theme is to that we achieve our kind of a growth strategy '26 financial target of operating profit margin of 20%. And we expect high single-digit kind of revenue growth to continue. And importantly, we are projected to hit 20% OP margin this next fiscal year before adjustments. And this is supported by the strong double-digit growth of profitability growth. So this will mark a significant milestone for Terumo.

Our core strength actually lies in developing and maintaining the category-leading products. As I mentioned earlier, we are the market leader in vascular access devices. Beyond that, in each business category, we take pride in offering some category-leading products and then -- and to serve the broad spectrum of medical settings.

Now let's look at what drives growth in core businesses. Let me first begin with the Cardio and Vascular Company. This company has a unique portfolio. So the revenue from vascular access-related products account for more than 70%. And these products are essential for vascular interventions, and we have successfully transformed these devices, often seen as commodities into high-value offerings. With a strong presence in the vascular in access segment, our business will continue to grow as the vascular intervention market expands.

Our technology enables very seamless procedures. At the same time, our large-scale multiproduct manufacturing ensure price competitiveness and a reliable quality. This gives physicians confidence in Terumo products.

Beyond supplying products, we also provide comprehensive solutions for the medical challenges. We pioneered the radial access. And this kind of the technology ensures the safer procedures, less complications and a shorter hemostasis time than the conventional femoral approach, which actually use the kind of lower-limit outcome.

So the -- we -- I'm sorry, the patients and health care professionals and hospitals and even society can benefit from the kind of reduced clinical burden. Today, radial approach are widely accepted, and this becomes the kind of gold standard in the vascular intervention. 20 years ago, there are less than 20% of our percutaneous coronary interventions, PCI, used the radial artery. But today, around 80% of the cases are done through radial. Even in the United States, one is considered unlikely to adopt this approach, but now these radial procedures accounts for 60% of total PCI. So this is a prime example how we solve health care challenges at the same time, reinforcing our leadership position in the competitive marketplace.

We also actually try to focus on accelerating the field of therapeutic area. Two key innovations representing this effort. The first, the dual sensor system, DSS, for intravascular imaging. This system features a catheter equipped with both IVUS and OFDI sensors, enabling simultaneous acquisition of both images. By combining the strength of IVUS and OFDI, this gives you a better and accurate view on intravascular conditions, which enables physicians in achieving to optimal the treatment strategies.

Second, the WEB system for neurovascular interventions. This is an innovative device for treating cerebral aneurysms. This is a truly innovative product and setting a new target, new standard for the treatment. And then ever since its launch that they have replaced the conventional coil market and then experienced a remarkable growth. And we can expect a strong double-digit growth of this kind of the product to continue driven by market share expansion and geographical reach.

Moving on to TMCS Medical Care Solutions. One of the focus of this company is CDMO business. Unlike CDMOs that focus on drug substances, our strength actually centers on developing the drug administration devices. The defining feature of our model is its one-stop shopping solution, which actually covers everything from device development and manufacturing to fill and finish. To develop these devices, we typically form alliances with pharmaceutical companies in the early stage of drug development. And this early engagement gives us a very unique positioning in the CDMO market.

We also have the capability to develop very unique innovative administration devices. Our expertise spans device development, manufacturing and quality control backed by our strong track record as a device manufacturer.

We also have over 50 years of experience handling pharmaceuticals. This unique combination, device know-how and pharmaceutical kind of expertise gives us a very unique position and gives us strong competitive advantage.

By combining one-stop -- kind of service, one-stop shop service and world-class development capabilities, we have established a very unique and differentiated business model unrivaled in the industry.

CDMO market is highly attractive with a robust growth potential. Among injectable drugs, which make up a large portion of pharmaceutical these days, self-administered drugs are growing twice as fast as in-hospital drugs. And the success of this segment depends on developing creative and innovative devices. And then this is exactly where our kind of strength lies.

Since launching our CDMO, we've grown the market business significantly over years. But now we are prepared for the next big leap, aiming to reach $1 billion in 2030. To achieve this goal, we keep expanding our capacity to even accelerate this positive momentum further.

And I'm proud to share a major milestone today. We have just begun shipping our auto-injectors for Eisai's anti-Alzheimer's disease drug. And this achievement underscores our commitment to innovation and leadership in the CDMO market.

Let's move on to TBCT blood and technology companies. Currently, we are focusing on the source plasma collection business. Our plasma collection system, Rika is a growth driver for TBCT and providing a kind of a more efficient and comfortable plasma collection experience through the advanced technologies.

This business has seen the rapid growth in the U.S. market. And we partner with CSL, an industry leader, and then all their kind of plasma collection centers have now adopted machines. So revenue from those collection centers are expected to continue. There is no doubt and alongside the expansion of a plasma-derived therapy market. Beyond CSL, we actively are seeking the additional customers, additional partnerships and are confident that our technology and operational strength would attract some more customers.

Our aspiration is very clear to be one of the kind of leading kind of medtech company in the world. We do have kind of a robust sustainable kind of portfolio to grow, but we don't stop there. We actively seek external opportunities. And we are not just thinking about the next few years, but we have a long-term vision to even create greater value and to achieve our aspiration.

When it comes to M&A, we are very disciplined. And then we have 5 criteria that guide every decision. First, technological excellence that solutions that truly contributing to society and health care. And two, competitive advantage. So unique strengths that sets the target apart. And third, synergy, the ability to create value alongside with our existing businesses. And fourth, an attractive financial profile. And last but not least, cultural fit, shared dedication and commitment to the health care community. These principles ensure that every acquisition strengthens Terumo and supports our mission. And OrganOx meets those 5 criteria perfectly. And so -- and then -- which is a truly rare case, and we are very proud of that.

OrganOx is revolutionizing health care through its advanced perfusion technology. And that company is boldly tackling its mission to maximize the supply of kind of donor organs and -- which is an invaluable kind of medical resource and to try to save as many kind of patient saves as possible.

By enabling the collection of those organs from the circulatory guest donors and also increasing the number of usable organs and improving the quality of life for professional, [ seminal ] health care professionals, OrganOx is providing a true benefit to the entire health care ecosystem. As this technology gains widespread adoption in the liver transplant market, the company is experiencing very rapid growth. After establishing normothermic machine perfusion, NMP as a standard in the liver preservation, OrganOx plans to expand into the kidney domain.

Significant number of those recovered kidneys are still discard today, and then NMP-based functional assessment has the possibility to make many of those organs viable for organ transplantation. In fact, OrganOx has a huge opportunity through perfusion technology even going beyond transplantation. The extracorporeal liver cross-circulation system or ELC is one example. This treatment temporarily replaces liver function such as detoxification and metabolic regulation and by putting and circulating the patient blood in the auxiliary liver outside the body. This is a truly breakthrough for those kind of acute liver failure patients to provide their life support and treatment.

The potential market is significant. The U.S. alone, more than 33,000 patients annually with -- kind of enter hospitals with acute liver failure or acute and chronic liver failure with a survival rate of less than 50%. This is a huge unmet need that OrganOx positions us to address it.

The opportunity doesn't stop there. Their technology can help pharmaceutical companies to develop new drugs by kind of enabling the human liver perfusion with the clinical trials, the pharmaceutical companies may accelerate and boost the success rate of new drug development, which is actually a critical challenge in the industry. So OrganOx is not just saving lives today, but it's about shaping the future for the liver care and innovation. This is why we are so excited about OrganOx, and this acquisition perfectly illustrates how Terumo combines innovation and the strategic vision to sustain long-term growth.

The heart of everything I've shared today is our unwavering commitment to patients. We listen sincerely to their needs, deepen our understanding of their hopes and aspirations and uncover what truly benefits them. Together with health care professionals and partners, we pursue innovation and solutions and new ways to advance patient care. Keeping patients' thoughts and feelings at the center, we will continue to expand our activities and embrace new challenges. I invite you to look forward to the new value we create.

So as I wrap up, I would like to leave you with the long-term outlook. Beyond Growth Strategy '26, our focus is accelerating innovation and sustaining strong growth momentum to become a global top-tier medtech leader. This evolution will be driven by 3 clear pillars: One is maintaining robust sales growth; and two, the margin expansion that outpaces the revenue and then we're reinforcing our leadership position in the -- through R&D and M&A.

Powered by innovation, we will deliver new value to patient care worldwide and transform the future of health care. And we really look forward to walking this path together with you. That concludes my presentation. Thank you for your attention.

Thank you so much for the great presentation, Samejima-san. So let me open up the Q&A session. From Terumo, CEO, Mr. Samejima; CFO, Mr. Hagimoto will provide the answers. Does anyone have any questions? Please raise your hand.

So let's start with my first question. Terumo has been actively reviewing and reshuffling its portfolio, including low-profit businesses. I think this has contributed to your margin expansion. What are your main criteria when deciding to review or exit the business?

Okay. Well, so first, we definitely look at the kind of financial performance over years. And if they are not growing or they are not contributing to the kind of profitability, yes, that's one of the kind of angles that we look at. But not only financial kind of evaluation, we also investigate whether we are the best owner or not. If there is someone who could possibly do better than us, then that's another criteria that we screen out those kind of, well, let's see, nonperforming kind of businesses.

So actually, Terumo has a strong track record of successfully expanding businesses acquired through M&A. So -- and you mentioned that you have 5 criteria for making an acquisition. So what do you focus on after the acquisition? So why is your track record so great?

Okay. Well, let's -- thank you for the compliment. Again, we are very proud of the very successful tracking record of the cross-border M&As, including MicroVention and the Vascutek and BCT and so forth.

Well, usually, the way we do kind of post-merger integration is while we respect their culture of what they do business with because the reason why kind of we acquired those companies are they already established a strong kind of financial kind of a record, and then they have established a good culture and everything. So we try to kind of respect what they do. But at the same time, we try to influence them and by introducing some of the ways that we do business with. But again, it's not the one way. It's always tried to have a mutual communication so that we try to kind of maximize the value that both organizations have. So that's probably the synergy we can create.

And so it's not too over kind of controlling or maybe too centralized. But while giving a reasonable autonomy to them, but at the same time, we try to kind of have a close communication with each other to create their mutual kind of synergy opportunities. That's probably the kind of recipe over the PMI process.

Great. So regarding the newly acquired OrganOx liver transplant business, I think your strength compared to the U.S. competitor is your lower price. And on the other hand, the competitor is strong in logistics services. So I imagine hospitals will choose between OrganOx and the competitor depending on transport distance and hospital budget and staff availability. OrganOx, so sales grew 60% Y-o-Y in 2025. So what kind of growth rate do you expect over the medium term? And it was a large acquisition. And how do you view the risk of future impairment?

Okay. Well, before touching kind of a comparison with OrganOx with their competitor, well, NMP alone has a truly breakthrough technology, truly kind of transform the organ transplantation completely compared to the conventional way of doing it. So the market has a huge potential to grow. So we are very confident that OrganOx can maintain a very robust high double-digit kind of growth in coming years. So there's no -- meaning that I don't see any risk of impairment at all with that business.

Does anyone have any questions?

Microphone, right? Yes, because it's...

[indiscernible] for OrganOx you just mentioned. You see the market is burden enough. You don't need to necessarily to compete for market share, let's say, local, U.S. [indiscernible]. So why do you think the market is being given limited supply for organs, especially for liver and [indiscernible] OrganOx [indiscernible]?

Okay. Well, yes, the conventional way -- I mean, the supply side has been always a bottleneck. But again, this NMP system technology actually unlocks that bottleneck. And because they can use those kind of organs from a circulatory guest kind of donors. And also because of their kind of real-time automated kind of perfusion technology can maintain the kind of liver function as healthy as possible so that the kind of a discarded -- the ratio of those livers are actually reduced. So supply side, not perfectly, but they can kind of relax that bottleneck significantly. So that's why we see the huge potential in the liver transplant market.

Two from me. I'm going to do my best sell-side impression here. The first is after the acquisition of OrganOx, has Terumo made any internal investments or adjustments to the product itself, including commercial reach that would kind of accelerate the growth profile from 60% year-over-year? And then the follow-up to that is, are there any expectations to branch out into heart, liver -- sorry, heart, lung, kidney or any other organs?

Okay. Yes. So OrganOx is a highly effective organization in their commercial effort. And then -- okay. Yes. So again, their call points are kind of transplant surgeons, which are not our kind of existing kind of a customer base. So we haven't done any significant investment in their commercial effort. But again, we try to help from the kind of product development kind of wise and some other kind of categories. We've done the kind of thorough kind of a PMI process, I mean, ongoing at the moment.

The second question is that -- yes, that's right. Yes. They do have a kind of plan going into the kidney domain, in 2030. So the liver plus kidney and some other applications utilizing their perfusion technology.

I would have a question regarding your blood business. You mentioned you expect to grow in the plasma collection. And what about the whole blood in particular, your Reveos machine, this new technology, what do you expect in the future for that? And how disruptive you think this technology is also in the global whole blood market?

Right. So this plasma collection system, Rika, is very, very kind of efficient collecting kind of plasma, very high yield. So that's one of the technological advantage that we have. And then based upon that, we are very confident that we probably have additional customers. And we actually did have the contract with a smaller kind of player, Join Parachute kind of last year. So I mean, again, they actually appreciate our technological kind of advance so that utilizing that, we are very confident that we can make additional kind of customers in the future.

I'd like to ask a little bit about your regional strategy. So even before OrganOx, you've made some of your most seminal acquisitions in the U.S., whether it's BCT or some of the others. And I think a lot of people here in the room know how incredibly competitive medical medtech is here in the U.S. So maybe talk about how you sought to differentiate yourselves as a Japanese company over the years in the U.S. and what your prospects are going forward?

Yes. Okay. Well, the first and foremost, United States remains as the most strategically important market for Terumo. And then our kind of core strength kind of resides in those kind of fundamental devices such as vascular kind of access devices like guidewires and introducer sheath, et cetera, which are now very core focus of their kind of larger competitors.

And again, looking forward, talking about next maybe 5-year growth strategy, we may have to kind of reinforce our kind of therapeutic side of the business more, although we do have a strong franchise of a neurovascular space, leveraging the kind of MicroVention -- ex MicroVention, now Terumo neuros kind of the organization capabilities. Maybe in the next few years, we probably make some effort to reinforce the therapeutic side of the business more.

Well, based in Japan, I mean, Japan market is a little bit of a tough situation at the moment. As you probably know, the reimbursement price keeps coming down. But again, if you do business only with acute kind of care settings under the control of kind of a reimbursement kind of a system, yes, you may have a little difficult time. But again, leveraging kind of our good access to the in-hospital, outside of hospital communities, we start looking at the outside of the reimbursement price system, what kind of a service and solutions we can provide to the entire health care system of Japan.

And then China and India, those 2 emerging countries, we probably keep focusing on as the total number of population, and medical access is widely spreading. So those 2 countries also have a kind of large kind of potential toward the future.

Sorry for another question. Have you guys evaluated any impacts from potential ACA enhanced subsidy loss or Medicaid redeterminations in '27?

Well, yes, we are aware of that, and we haven't done a thorough analysis of that. So again, knowing that some of the cases are shifting from the kind of acute care settings to kind of an ACA and some other things. But overall, knowing that our technological advantage and the consistent quality that has been replicated and accepted by the marketplace so well that we are very confident that we can maintain kind of the momentum going forward, at least for the foreseeable future.

Thank you for the great question. So from me, regarding CDMO businesses for your fiscal year 2030 CDMO business sales target of JPY 100 billion will most of the projects come from domestic pharmaceutical companies? How much are you factoring in sales from overseas pharmaceutical companies? And also since you are still in a phase of increasing CapEx and depreciation, so what's your outlook for OP margin?

Okay. Okay. Thanks. So I cannot give you the exact kind of a ratio between the domestic versus international. But I would say still in 2030 -- our fiscal year 2030, the majority of revenue probably will come from the domestic business. But again, the next few years, we try to leverage the capacity we just acquired from WuXi Biologics and try to get the contract or 2 at least the next 12 months or maybe even less so that revenue from this facility will contribute to our kind of the financials.

Profitability-wise, perhaps next few years is the kind of, I would say, the harvest period so that we can leverage the capacity, not only WuXi kind of facility, but we do have actually another new facility being built in Japan in the full operation mode in 2027. So next few years, we try to fill those capacity that we have. I mean after that, of course, depending upon how successful our business will grow, we may have another look at another opportunities.

So how is your sales activity going in terms of winning projects, CDMO projects from pharmaceutical companies? So it's just taking a bit more time to win projects?

Okay. So our unique value proposition is our capabilities of developing innovative kind of administration devices, not just that, but we can do manufacturing and fill and finish and so one-stop kind of service and particularly based upon our polymer injectable technology, which is a very unique kind of the player in the market.

As far as I'm concerned, there is no other company who can provide the same level of service. That's the reason why we are so well kind of appreciated by the Japanese pharma companies up until today. And then the same sales pitch is applying to the non-Japanese pharma companies, and we actually have been contacted by multiple European-based pharma companies as of today.

So the last question for me. So you are planning for an adjusted OP margin of 20% in fiscal year 2025. And over the medium to longer term, how high do you aim to raise your adjusted OP margin?

Okay. So I don't want to keep my CFO being bored. So let me hand over to him.

So thank you for the question. So what we are targeting right now is the 20% adjusted operating profit for this fiscal year. What we aim to do in the midterm is also be able to compete with the Western medtech company. So in the next kind of revision that we make for midterm, I do hope to be able to say that we will be trying to going head-to-head with the Western competitors in this area. So that's sort of our statement for today.

Thank you very much. Does anyone have any other questions? So from me, your -- I'd like to know your very aggressive OrganOx business target in longer term. So could you explain more detailed point?

Okay. Well, so we are very confident that the OrganOx kind of revenue can reach Japanese terms, that $100 billion -- let's see, let's say, $100 billion, right, within 10 years, there's no doubt.

Thank you. So that concludes this session. Thank you so much for joining this session today. Thank you.

[Interpreted] Thank you for joining today's. We will be starting our financial announcement. So I'd like to first ask CFO, Hagimoto-san to talk. Then next, I'd like to hand it over to CEO to talk about the direction and the core businesses for TIS. So followed by that, we will move to the question and answer. And we will take 60 minutes for the combined presentation and the Q&A. We have simultaneous translation in Japanese and English. You can see both of them. [Operator Instructions]

We'd like to ask you some asks before we start. We will be talking about the projection of the future businesses, all of which comes with uncertainties or risks. Please the actual results may be different from our projections that we'll be presenting today.

With that, I'd like to ask Hagimoto to be talking about our financial results. Hagimoto, would you please go first?

Yes. I'm Hagimoto, the CFO. Let me walk you through the highlights of our financial results for the second quarter of the fiscal year ending March 2026. I'd like to talk about our second quarter. This is our highlights. We continue to benefit from favorable business environment. Our revenue for the first half reached a record high of JPY 534.9 billion. In particular, demand in North America remains strong, resulting in an 8% decrease in revenue on a local currency basis. Operating profit, adjusted operating profit and profit for the period, all reached record highs for the first half. In addition to increased revenue, profits are growing at a pace that exceeds revenue growth; driven by global pricing measure and appropriate cost control.

In light of the current business, we have revised our full year guidance announcement in May. We have upwardly revised revenue and adjusted operating profit, reflecting the strong fundamentals and changes in foreign exchange assumptions due to yen depreciation. On the other hand, we have incorporated temporary costs related to the strategic initiatives such as acquisition-related expense and continuous portfolio reviews into our operating profit. I will explain the details later. Next slide.

Moving on to our P&L performance. Revenue was driven by C&V and TBCT companies. Despite negative currencies impact, revenue for the first half reached a record JPY 534.9 billion. Operating profit and adjusted operating profit both grew faster than revenue, reaching record highs of JPY 1.0 billion and JPY 114.4 billion, respectively. From the second quarter, tariff impacts began to materialize, but profit growth was achieved mainly through pricing measures and appropriate cost management. Next slide, please.

Since the year-on-year OP variance analysis for the second quarter reflect the same trend as the first half, we will provide further details on the next slide. OP variance analysis for the first half is this. Overall increased sales driven by a continued demand expansion contributed to profit growth. G/P improvement -- increment by sales increase led by overseas TIS, especially in North America and by plasma business and Global Blood Solutions gross margin price. Pricing measures in the C&V contributed significantly to profit growth, though positive effects were partially offset by tariff inflation and mix effects.

SG&A increased by business expansion, remaining within expected levels. Research and development decreased slightly year-on-year, partially due to last year's impairment losses on capitalized R&D. Foreign exchange impact negative both on flow and stock basis compared to the previous year. Next slide, please.

Let me now explain results by companies. Please note that revenue by region slide, which was previously shown earlier is now placed and comes after the revenue by company slides. First, the Cardiac and Vascular Company. Revenue grew by 8% on local currency basis with strong global performance centered in North America. TIS and Neuro grows, while Cardiovascular also achieved high single-digit growth in local currency, driving overall company performance. Although Aortic experienced supply issues with surgical vascular products during the first quarter, revenue rose due to recovery trends from the second quarter and strong progress in expanding sales of hybrid products.

Operating profit improved by 2 percentage points to 27%. Pricing measures, profitability improvement measure and a review on how profitable regions have contributed. FX stock impact was negative, resulting in a slight decrease in margin compared to the first quarter, but fundamentals remain solid. Next slide, please.

Next is our TMCS Medical Care Solutions Company. Revenue for the first half increased, driven by growth in Pharmaceuticals. This growth reflects the impact of delivery timing shift in certain areas of the domestic CDMO business being recovered in the second quarter, along with continued strong performance of projects overseas. Hospital Care saw a temporary revenue decline due to last year's business transfer and ongoing supply issues for some products. Pricing measures started in April are progressing very well. Profit growth was supported by recovery in Pharmaceuticals. Next slide, please.

Continuing to TBCT, the Blood and Cell Technologies Company. Revenue grew significantly in Plasma Innovation and Global Blood Solutions. Rika deployment to existing customers were completed in the first quarter and operational optimization will continue. Core business is progressing as expected. In Global Therapy Innovations, revenue increased due to growing demand for cell collection in cell and gene therapy, especially in the U.S. along with replacement demand for certain devices. Profit increased, led by improved profitability from higher sales of Rika. Next slide, please.

And this is our revenue by region. In the Americas, demand expansion continued with double-digit growth in local currency. All companies showed strong growth with TIS and Pharmaceuticals and Global Blood Solutions serving as key drivers of global revenue. In Europe, stable growth in TIS and Neuro, and strong performance of PLAJEX drove Pharmaceuticals segment growth. In Japan, Pharmaceuticals contributed to higher revenue, supported by the recognition of delivery timing adjustments in CDMO during the second quarter. Neuro sustained its double-digit growth trend in C&V. In China, Neuro maintained strong growth, supported by the successful expansion of sales channels under VBP, resulting in higher revenue. In Asia, C&V achieved revenue growth, while Hospital Care, Pharmaceuticals and Global Blood Solutions posted declines in the first half due to delay in tender timing. Next slide, please.

Now regarding our guidance revision. To begin, we will explain the assumptions underlying the revision of our guidance focusing on two major points. First, regarding the fundamentals of our existing businesses. As we shared in the first half results earlier, the second quarter remained strong. Thanks to continued robust demand and the successful implementation of proactive pricing measures. We expect profit increase of JPY 10 billion compared to the figures announced in May. This effectively offset the anticipated JPY 10 billion negative impact from tariffs for the current fiscal year.

In addition, we have reflected changes in foreign exchange assumptions due to the continued depreciation of the yen, resulting in an increase of -- expected increase of JPY 10 billion in AOP for existing businesses. Separately, we have factored in temporary costs related to the [indiscernible] further growth, including acquisition and continued portfolio optimization into this year's guidance. Next slide, please.

Further details on division. Based on the assumptions earlier, we have revised our full year guidance announced in May by upwardly adjusting revenue and adjusted operating profit and downwardly adjusted operating profit. The guidance excluding the impact of the acquisitions announced this year is also presented at the slide. On this basis, both revenue and profit for the full year are revised upwards. And both revenue and the profit were adjusted. Here is the details why company, C&V and TBCT reflects strong performance with upwards revision of both revenue and profit. Of course, C&V continued robust demand in North America and pricing measure will remain key drivers in the second half.

TBCT continues to be driven primarily by plasma innovation. However, due to higher-than-expected collection efficiency with Rika, turnover of disposable products in the second half is expected to fall slightly below plan. Accordingly, production adjustments are scheduled for the second half, while the efficiency improvement supports our solid foundation for long-term growth. Conversely, TMCS has been revised downward in profit mainly due to acquisition-related expenses. We have also included OrganOx performance from November onward with cumulative 5 month revenue projected at JPY 9 billion and adjusted operating profit at JPY 1.3 billion. Next slide, please.

Let us now explain the revision of adjusted operating profit. Overall, we have revised the initial guidance from JPY 240.0 billion to JPY 221.5 billion. Strong fundamentals and effective cost control have offset the JPY 10 billion negative impact from tariffs. In addition, we have reflected the positive impact of favorable exchange rate compared to the initial guidance. We have also incorporated as well the investments, including the capital expenditure for the Leverkusen Plant as well as the contribution from OrganOx acquisition. Details of the adjustment items that account for the difference from the operating profit will be presented on the next slide. Adjustment items have increased by JPY 20 billion from the initial guidance of JPY 20 billion to JPY 40 billion, with two main components accounting for the increase.

The first is acquisition-related expenses, including costs associated with the OrganOx acquisition and amortization of acquired intangible assets totaling approximately JPY 9 billion. The second is costs related to portfolio review, clearly all of the expenses arising from the revision of exclusive distribution agreement relative to TIS business also totaling about JPY 9 billion. We continue to conduct strategy business reviews to support further growth. The other costs were not included last year due to the ongoing discussions and initial requirements, but the efforts to portfolio optimization will remain our priority going forward. Next slide.

Lastly, as we have consistently continued, we are on track to deliver the three financial goals outlined in GS26 revenue growth, operating profit percent and capital efficiency. Although acquisition-related and onetime expenses will be incurred this fiscal year, the operating profit percent for FY 25, excluding these costs based on our existing business is 18.6%. Our business fundamentals is solid, and this momentum will remain unchanged next year. We will continue to make proactive investments to drive future growth, ensuring the achievement of GS26 and further enhancement of core value.

This concludes my remarks. Thank you very much for your attention.

[Interpreted] I'd now like to hand over to CEO, Mr. Samejima.

[Interpreted] Hello. I'm CEO, Samejima. And today, I would like to talk about the strength and future outlook of Terumo's core business, the TIS division, which continues to drive robust growth and lead the company this fiscal year. And in particular, I would like to focus on our imaging strategy. And finally, I'll provide an update on the acquisition of OrganOx.

Despite the impact of PCI market maturity, the TIS division continues to deliver high single-digit growth. This growth is underpinned by the stable performance of Access products, which account for half of our revenue. And in the Therapeutics segment, products such as Therapeutic Lesion Access, namely PTCA guidewires and microcatheters are contributing to this momentum. And as you can see, Access and TLA, these fundamental device groups, make up more than 80% of our sales. And this is a key differentiator from our competitors, enables us to maintain a unique position and achieve sustainable growth.

Here are the highlights of the TIS growth strategy on this slide. In the Access market, we will continue to strengthen the #1 position that we have built and maintain mid-single-digit growth. And as the second pillar, TLA products will achieve high single-digit growth by expanding market share in addition to overall market growth. And beyond these existing drivers, I would like to highlight Imaging as the third growth area. Imaging usage has been increasing in recent years in Europe and the U.S., and Terumo will deliver double-digit growth by introducing a unique new product, the Dual Sensor System.

So first, let me reiterate the strengths of the TIS division that are common to both Access and TLA products. The first is our core technology, advanced manufacturing capabilities. Our hydrophilic coating, which enables smooth maneuverability inside blood vessels is one of the technologies that physicians have trusted for many years. In addition, the precise engineering of each component ensures ease of use and reliable device control, supporting seamless procedural flow.

Interventional procedures are largely invisible to the naked eye, and the subtle tactile differences that only the physician can sense are the true source of TIS' unique strength. The second is consistent large-scale multiproduct manufacturing. Our scale advantage creates a barrier to entry that competitors cannot easily overcome, delivering price competitiveness. Furthermore, by producing high-quality products with uniformity and minimal variation, we provide physicians with the confidence that using Terumo products will deliver a familiar feel in daily clinical practice. Beyond simply supplying products, we have pioneered the radial approach and promoted its value.

Through a comprehensive product lineup that enables same-day discharge and appropriate use training, we support safer and more efficient hospital operations. By delivering our unique technologies and operational expertise as part of our solution platform to clinical settings, we transform what are generally considered commodity products into high-value offerings.

This is exactly the fundamental strength of the TIS business and the foundation of Terumo's leadership. The Access and TLA demands present significant potential for future growth. For Access products, the main intervention market is expected to continue growing at mid-single digit, and Terumo aims to solidify its presence through the further adoption of the radial approach. Moreover, Access devices are widely used beyond the main segment. The trust earned through high-quality devices developed for the intervention market has made Terumo a preferred brand. And as the number of cases in these domains increases, there are opportunities to use Access products, which will expand even further.

In the TLA product group, which is essential for delivering stents and coils to the lesion site for treatment, Terumo has now established itself as category leader. By steadily increasing the market share of wires and microcatheters across various treatment areas, we have achieved a growth rate that exceeds overall market growth. These products, which are used routinely in large volumes, clearly showcase the strengths of the TIS business that I have been emphasizing.

The growth potential of TLA products is my next point. The key lies in expanding the product lineup and broadening both business domains as well as geographic reach. Through continuous innovation, we respond to evolving treatment trends and develop products that meet clinical needs, supporting daily procedures and therapies. We also accelerate growth by quickly capturing market opportunities beyond existing areas. In recent years, catheters have been increasingly used in MSK embolization, which is a treatment for chronic pain such as joint pain. And this market is expanding very rapidly. The future market size is estimated to exceed $500 million, and Terumo has already secured a significant share with microcatheters, positioning us for continued growth. From a regional perspective, introducing products into Asia and Latin America offers even further opportunities to achieve growth.

Now let's move on to the third growth driver, the Imaging segment. The global imaging market is expanding, driven mainly by the U.S. and China, and it is expected to reach USD 1.3 billion by 2031. This growth is supported by accumulated evidence that using imaging improves outcomes in interventional procedures. In the U.S., imaging guiding PCI has recently achieved the highest recommendation level, which is Class I, evidence Level A, and major medical societies this year. And furthermore, the increasing adoption of atherectomy and IVL devices has reinforced the need for imaging assessment of calcified lesions.

The penetration rate of imaging in PCI in the U.S. is projected to rise to 56% by 2031, making imaging a high potential area that is now the tipping point for significant growth. Terumo has been competing to lead the Imaging segment for the long term. In Japan, imaging is used in more than 95% of PCI cases and Terumo holds an overwhelming market leadership with a share exceeding 50% in this home Japan market. Terumo's strength in Imaging lie in three key areas. The first is superior catheter deliverability. Secondly, clear high-resolution images. And thirdly, simple, speedy operability. As the global market expands, the fact that Terumo imaging is the top choice in Japan, the country which is most experienced with imaging, represents an immense value.

Currently, two modalities are available for imaging: IVUS, which uses ultrasound; and OCT/OFDI, which uses near infrared light. IVUS excels at assessing the overall condition of the vessel and is suitable for cases with large vessel diameters, but it is less effective for examining microstructures. But on the other hand, OCT or OFDI offers high-resolution imaging, making it ideal for evaluating stents and microstructures, and is particularly effective for calcified and bifurcation lesions. However, it has limitations in visualizing the entire vessel and requires a blood flush using contrast agents.

In clinical practice due to cost constraints, in most cases, only one modality can be used, leaving physicians unable to view both images even when they want to. To address this challenge, Terumo has developed the Dual Sensor Systems or DSS. This innovative system features a catheter equipped with both IVUS and OFDI sensors, enabling simultaneous acquisition and output of two images. By leveraging the strengths of both IVUS and OFDI, DSS allows for a more accurate depiction of intravascular conditions. Its value lies in supporting the realization of the optimal treatment strategy for any case.

This is DSS' highest value. And with DSS, the step of deciding which modality to use disappears. Physicians can compare both images side by side to make the best treatment decisions possible. And at a time when Imaging market is poised for significant expansion, Terumo takes on the challenge with DSS. With the launch of DSS in Japan and the U.S., Imaging sales are expected to grow to more than 3x their current size by 2031. In Japan, we will leverage our established market position and begin introducing DSS at facilities with high appetite for this technology. By pricing DSS above the current standard of IVUS to reflect its added value, we can drive growth. At the same time, we aim to quickly accumulate clinical data in the U.S. to establish meaningful evidence of DSS' clinical significance.

In the U.S., meanwhile, as a new market entrant, we will take a phased approach to market introduction. By combining Terumo's proven imaging strength track record with the unique value of dual technology, we will steadily build a loyal customer base. Additionally, we are preparing to integrate AI technology to enhance software capabilities and tailor solutions to meet the precise needs of users in the U.S. Beyond Japan and the U.S., demand for imaging is expected to rise globally and Terumo Imaging holds significant potential for rapid growth through further geographic expansion.

The TIS business has long been a core driver of Terumo's growth, and that role will remain unchanged. We see further growth opportunities in Access and TLA, where we already have established strong positions. On top of this solid foundation, the launch of DSS will bring a new level of evolution to the business. Of course, we are also looking ahead to expanding into therapeutic product areas, including strengthening our pipeline through M&A. And by adding DSS to our portfolio, we will create synergies with therapeutic products and further enhance Terumo's presence in endovascular treatment.

Finally, an update on the acquisition of OrganOx, which was announced in August this year. And as stated in our recent press release, we successfully completed the acquisition of OrganOx on October 29. First of all, regarding our recent performance for calendar year 2025, revenue is expected to reach up to $120 million, which represents approximately 70% growth over last year. This reflects continued strong demand driving high growth. So the market expansion, specifically the increase in liver transplant procedures enabled by the adoption of NMP technology, combined with metra's rising market share quarter-after-quarter, underscores the strong momentum. And these results validate the high expectations for organ perfusion technology in metra's proprietary innovations.

Since NMP was approved in 2021, the use of cardiac death donors has rapidly increased, driving a rise in liver transplant procedures, a trend that will continue this year. NMP also enables planned transplant surgery, significantly improving quality of life for medical terms. Looking ahead, transplant numbers will keep growing. And as NMP becomes the standard method for liver preservation, it means more precious organs can reach patients on waiting lists. The growth potential for metra is enormous, as discussed previously, and OrganOx is to reach a scale of around JPY 100 billion in revenue over the next 10 years. Moreover, as transplant volumes increase, more potential patients will be added to waiting lists. This represents a major step toward turning hope into reality for all of those suffering from liver disease.

In the NMP market, metra also holds a strong competitive advantage. As mentioned in our previous briefing, real-time monitoring enables quantitative assessment of organ function, improving utilization rates of donated livers. Additionally, the ability to preserve organs with a simple operation is a major differentiator, and its automated control function reduces the burden on clinical staff. This automation also allows flexible transport options, enabling customized services tailored to each case. By selecting the optimal service for each case, preservation and transport can be achieved with minimal resources, delivering significant cost benefits. Even when offering a full package service that includes transport, OrganOx maintains its price competitiveness, which has steadily driven market share growth.

So finally, let's look at -- let's talk about synergies. metra supports the preservation of liver function by perfusing the organ with an oxygenated, temperature-controlled perfusate containing blood delivered through a centrifugal pump with precise flow control. Terumo has long supplied all these key components, the centrifugal pump, oxygenator, heat exchanger and reservoir under the CAPIOX brand. And in addition, anticoagulants and other drugs are administered via syringe pumps, which are also one of Terumo's strengths within its TMCS infusion management business.

When you break down metra's structure, it becomes clear that it is built on perfusion technology that Terumo has cultivated for many years. By combining the technologies of both companies, we can unlock the potential for next-generation perfusion solutions that are even more innovative and competitive while also improving profitability through cost synergies from component integration. OrganOx is highly innovative and poised for growth. But by leveraging Terumo's platform, its growth and next-generation device development opportunities will expand dramatically. Terumo is adding a new frontier in perfusion to its portfolio and is thoroughly committed to becoming a global top-tier company.

Thank you for your attention.

[Interpreted] [Operator Instructions] Together with Hagimoto-san, I must tell you Otaka-san from Corporate strategy to be answering question. I'd like to first direct Kohtani-san from Mizuho to ask first question.

[Interpreted] Yes. This is Kohtani speaking from Mizuho Securities. So let me just ask few questions since this opportunity in a vision. First question about DSS. I think it's about JPY 10 billion, mostly in Japan, but it's going to go up to JPY 30 billion. And I was quite surprised because this was much bigger than what I was expected. As you said, there was a good reason for that ASC, LTM guideline has been revised in 2025, Class A in 2025. In Europe, the class adjustment change was held back in 2024. The IVUS and the OCT is slightly higher, but both of them are going to be guided to be used in both.

But my question is for IVUS and OCT, you can just do it because it's already been approved. It's already been -- reimbursement is already taken care of in the U.S. But this is one single catheter. So new code or maybe new code or national coverage determination, maybe not to that extent. But you, I guess, take new Medicare code. How am I assuming how this is going to progress? Or IVUS/OTC, I don't think none of the competitors have that product. I just want to clarify if that's -- so that's my first question.

[Interpreted] That's right. That as you pointed out, existing IVUS or ODI, OTC, the price point is higher than that. That will be our pricing strategy, premium price. But with that, you'll be launching both in Japan and the U.S. in the near future. And one sensor with the two devices, there's nothing like that. I mean who has the manufacturing capability to produce that, it's very rare to find a company who has that capability. It goes back to a high quality, the manufacturing process. This is going to be big barrier entry to that. So I think going back to Slide 10, I want to clarify. You will do the OTC by making sure that you are going to clarify all of it which is written here.

[Interpreted] My second question about the OrganOx. So 120, I was quite surprised by number. NMP today is becoming widely adopted. I guess that number is quite high driving big contribution to this target. But my question, for the next several years, NMP will keep becoming bigger. But after that several years, the growth will become saturated. What are the things that you are doing to prepare for that time in liver cancers, for example? Implant standards have changed in Japan, doesn't change much in the U.S. How are you going to address that? Downstage of a cancer is another one. Microcatheter of your product has a perfect match. Are you going to be running trial to that?

So let me just ask a question about the growth after plateauing in several years potentially. And in September, OPP licensed in Florida state where OPP investigation will start there. There is an article written about that. Is there any impact from that or expected impact coming from that?

[Interpreted] Well, that's right for liver implant. NMP will be driving, especially for the donor whose heart stopped working. That will be the growth driver for the next several years like you have implied, and that's exactly right. So after that, I talked about it last time, then we are going to plan to get into the other organs and also somebody who cannot be registered for the implant, but somebody who is having damaged liver. Because by doing so, somebody with the patients that can be addressed with the pipeline to help somebody with the proper fragmented livers. And the supply was a bottleneck in the past.

So the registration as a recipient requires very high demand. So even as your liver is damaged quite heavily, you couldn't go -- become registered as a recipient. Those number of population will go up. So that will also drive the market growth. By combining these three, we are quite confident OrganOx is expected to grow in the long run to come.

[Interpreted] And HIS investigation, Florida state any impact? Should we expect an impact coming next year?

[Interpreted] Well, there was some impact more in the short term, but liver implant will be saving patient life. That value is absolutely strong. That hasn't changed. So this impact only range to be short term. Mid to long term, organ implant is actually a very strong growth driver in a long run.

[Interpreted] Mr. Yamaguchi from Citigroup Securities.

[Interpreted] Hello, this is Yamaguchi. Can you hear me?

[Interpreted] Yes, we can hear you.

[Interpreted] Well, in your explanation, you were looking at Imaging, the MSK. I think that was one thing you mentioned, MSK. And I'd just like to ask you for your current initiatives around that. And you put some mention about what are your expectations in this for going to market.

[Interpreted] I will respond to your question. Yes. Well, when -- currently, we are -- whether we are proactively approaching this at the moment, we're not so aggressive. But on the other hand, the Access or TLAs, the high quality that we have, we are -- and today, I mean, MSK was given today as one example today, but there are guidewire and microcatheters are used in many other domains, and the perception of that is getting wider and wider. So I think rather than us aggressively going to market here as with our catheter intervention, it's different to that. It's a departure from that, but it's starting to take off. And our fundamental Access and our TLA, which will continue to grow in the mid- to double-digit growth, I think, will be one factor in that.

[Interpreted] Well, one thing within the financial results, you mentioned that the revision of TIS. I think from last year, that's been in motion since last year. So overall, I mean, it came up several times throughout the presentation. But -- so have you gone over the mountain already for TIS or what is in terms of the financial results? Could you just give -- I felt that it featured quite prominently in the results.

[Interpreted] Thank you. I will just -- these were a one-off expense that I -- so I will respond to your question. Whether -- I think Hagimoto will address the future prospects of that from now on. So let me just explain, first of all, the slide that I'm showing you here. As you can see on this slide, for TIS, the portfolio change in the middle was Orchestra Bio. We have also put a press release about this, but we have this exclusive distribution agreement with them. And we decided to review the exclusive distribution agreement with them. And so there had been some, and it is the same for the -- while maintaining the relationship with them and maintaining the preferential position. It's a JPY 30 million fund in terms of -- and in terms of the market cap, that's been taken into account as well. But we have put that in for our guidance for the end of the full period.

So let me give you a bigger picture view of this. On this occasion, regarding operating income, we gave some guidance regarding operating income, and we made some adjustments to that based on the information we currently have. And there may be some structural reforms going ahead and several other -- some lawsuits that are in process. So it's hard to give an absolutely setting stone guidance in terms of amounts. But the portfolio review that we are aggressively promoting at the moment, that will continue. But for the current fiscal year, these are accurate guidance as provided in these results. So I would hope that you would take those as face value.

[Interpreted] I'd like to ask Nomura Securities, please.

[Interpreted] This is Mori speaking from Nomura Securities. I hope you can hear me.

[Interpreted] Yes. We hear you.

[Interpreted] About JPY 5 billion for Leverkusen. Is this a onetime? Or should we expect that to come again? What's happening in Leverkusen? What kind of cost we should be expecting from that?

[Interpreted] I will take this question. So Leverkusen, JPY 5 billion in the second half, that we are expecting that to be posted in the second half. And our projection for now, this is a JPY 3 billion growth. So that transaction was JPY 10 billion assets. The JPY 70 billion -- the depreciation of those assets is JPY 1 billion. And we have a lot of great talent in the company. We have retainment talent costs, JPY 800 million. And maintenance of equipment, some of the costs are PMI-related in all EUR 3 billion, JPY 5 billion to be posted on second half. The impact of the cost after that PMI cost is up partially, so it's not going to be doubling as not simply as that. But we are going to be expecting some depreciation talent costs in the next financial year as well.

[Interpreted] My second question is about OrganOx driving -- expected to drive the high growth, but the supply do not make sense in terms of the presentation. But centers, how many capacity, how many headcounts in terms of doctors? How those centers can we recruit more people? So how is the demand side? How long it will take to keep that full capacity that you're expecting?

[Interpreted] Well, to that question, so the medical practitioners capacity is your question, how much do we do. We don't have a quantified assessments, we haven't done that yet. But what we can do is after adoption of NMP, everything before that, was very emerging practices like the -- registered, you have to do the implement -- within several years, the daytime, they are busy with the other, and the hospital needs to call up the doctors in the middle of the night. But now they can do it for 24 hours. They can do the plans. So it will be given more leeway for medical practitioners. So right now, we believe that lack of resource is not going to be a problem. But we will check the data, and we will get back to you after checking some of the clarifications and get back to your question.

[Interpreted] Well, it's been already several years since NMP started. So I thought maybe the initial impact is going to be go down. That was my concern that this is going to be reduced quickly.

[Interpreted] UBS Securities, Yoshihara-san, please for the next question.

[Interpreted] This is Yoshihara here from UBS Securities. Thank you very much for today. So for OrganOx, I would like to ask about the amortization. I think it was on Page 16 of the presentation, and it says provisional at the moment. But if I -- the amount of this is core intangible asset amortization, I would understand. So this is provisional in brackets for the amortization of intangible assets. So I just wanted confirmation on where possible of what is meant by provisional there. And hypothetically, it seems that there's such a large difference in between the revenues for the OrganOx, there was a minus including this disposal of intangible assets. So I just want to know if my presumption is correct regarding the organOx.

[Interpreted] Thank you very much. I will respond to your question. So for the OrganOx costs here, there are two types here. One is the PMI-related costs which are JPY 4 billion -- sorry, JPY 1 billion in the first half, which is a temporary. And for the depreciation and the amortization of intangible assets, this will come in the -- it says provisional a tentative in brackets. In the first half, we think it would be JPY 4 million -- in the second half, sorry. And this is -- for next year, these will fully come online. And well, the goodwill and the intangible assets and so on. The impact of these, I think, will be limited. And so the outlook for the second half. Once these are fully established and set in stone, I will then make another announcement once these are no longer provisional, but set in stone.

[Interpreted] So for OrganOx margins from now into next year, will they not differ so much for the core business? What will those look like?

[Interpreted] Well, regarding the business for OrganOx, we intend to expand it in future going forward. So in line with our business expansion, I think incomes, revenues will definitely expand in line with that.

[Interpreted] Understood. My second question is regarding Rika. I think in Hagimoto-san's presentation at the beginning, I might not have understood this correctly, but it's disposables where the demand was lower than expected. Is that correct? And so I wondered if the production amount was slightly down. Is that correct? So as a result of that, from the second half onwards, the Rika business, as you start to monetize that more, I believe that there may be some time lag due to that lack in demand for disposables. And from the next period, in coming period, will that have any impact on your profit in the next -- in the upcoming quarters. Could you let me know regarding that?

[Interpreted] Thank you very much for your question. Well, for the TBCT domain profit, I think the operating profit ratio is improving. So the monetization of Rika is definitely on the up as per the figures provided. And looking ahead now, I think -- well, it's slightly ironic, but the Rika is -- the plasma demand is definitely increasing. But our disposable sets compared to expectations, the demand is going slightly down, ironically, when the demand for plasma is going up. So I think in the second half, the production adjustments would be made under our current plan. So in the second half, yes, to an extent, the income, the revenue from disposables may be slightly lower than 50%. There is certainly that possibility.

[Interpreted] So just to confirm that, is that for the production?

[Interpreted] So plasma demand itself will grow from now on, definitely. So we will implement production adjustments. And from next year, we expect it to improve to its current levels after the production adjustments.

[Interpreted] I'd like to ask Tony Ren from Macquarie to ask a question. Tony?

[Interpreted] Tony Ren from Macquarie. Just a couple of quick ones from me. So first of all, actually, both of them are related to TMCS business. So the first one is about the German Leverkusen losses. How long do you think it will take for you to stop the losses at that factory to turn it around?

[Interpreted] So thank you for the question. So in terms of the running costs, as Otaka has mentioned, we are looking at somewhat of a $30 million on a semiannual basis. This cost, we do not project will be going down anytime soon. So the overall profitability when that will be coming will depend on how soon, how fast we can get the contract from the pharmaceutical companies. So currently, many of the major pharmaceutical companies, we are in discussions. And based on the input from all the teams of pharmaceutical and our organization, they are mentioning that there is a strong interest from the major pharmaceutical companies to be able to utilize the location within the European region.

So at this point in time, our outlook for the profitability contribution is not within the GS26 period. We do foresee that within the next midterm projections, it is going to become improvement of the contract situation. We will be able to utilize the manufacturing plants. Therefore, contribution profit basis should be in the midterm of the next midterm strategy period.

[Interpreted] Receiving our regulatory clearance typically takes about 2 years or so, right? You probably also need to do some fixing up at the factory. So we are probably looking at, at least, 3 years from now?

[Interpreted] Yes. So the overall facility itself is, of course, we have done our due diligence and have determined that it is a high-quality manufacturing facility already. So there are some investments that we will need to make to bring it up to sort of a thermo standard level of the quality, but we do not see any kind of issues in getting the regulatory approval. So as you mentioned, there are going to be some lead time required to get the regulatory approvals. But whether we can get the approvals, we feel very strongly that there is no obstacle in getting the approvals for that location.

[Interpreted] Very good. My second question is about the -- also in your CDMO business, your LEQEMBI autoinjector. The CDMO revenue related to the LEQEMBI autoinjector. Do you book it in Japan? Or do you book it in other geographic regions?

[Interpreted] So based on our contract with Eisai, we do have the shipment in the Japan area. So we will consider the revenue within the Japan region.

[Interpreted] So I think JPMorgan Securities, Saito-san please.

[Interpreted] Hello. This is JPMorgan Securities, Saito. Well, in the second quarter, looking at the effect of the tariffs. And I think could you just delve a bit more into the 3 months in the second quarter?

[Interpreted] So I will respond to your question regarding that. So the effects of the tariffs in the 3 months in the second quarter, I think it would have been JPY 2.5 billion in impact, but the prices were -- we had strong price effects as with the first quarter. And we made JPY 4 billion in profit, which was way beyond the impact of the customs. And in terms of inflation, there were some effects from inflation and tariffs impact, but we rebounded from that and have surpassed the negative effects of the tariffs and the inflation.

[Interpreted] Thank you. Well, from the next period, next year onwards, some price rising effects will come into play. Is that correct?

[Interpreted] Well, I think it tends to our pricing strategy in terms of the customs and so on. When we do recontracting, we will aim to have some price rising. And from next year onwards, we hope that those -- at the time of contracting, price rises will continue to come into effect.

[Interpreted] I understood well. So just a very precise point. But for SG&A, I'd just like to ask for sales, general and administrative expenses, I believe that you shifted offices to a new office this year, your headquarter is changed. And next year onwards, will that play out this year, or will that continue to have an impact into next year?

[Interpreted] Well, for SG&A, I think it has been managed within the trend of net sales or net revenues. And so there is very, very small diminutive impact. But it will, however, be well controlled within the scope of revenues.

[Interpreted] So my second question is regarding the Plasma Innovation business. I think the second quarter, Rika devices were at full pace. And the net sales from facilities, the volume of disposables reached a peak in the second quarter, I understand. Could you just -- I think in the lower half, I believe the production is going to go down, but have we already reached the peak of full production in the second quarter for Plasma Innovation devices?

[Interpreted] Yes. Well, yes, we are already in the full peak of that. So we have a full tilt in the second quarter. You are correct in your assumption.

[Interpreted] Thank you very much. We are getting close to time to finish. I'd like to make sure if there are anybody else physically here in this room or somebody will see any other questions. Well, it seems like there was no more questions today. We'd like to finish Q&A session here.

So with that, we'd like to close our Terumo Inc., March 2026 in the third quarter financial presentation. We'll be closing the session. Thank you very much for your time today.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Ladies and gentlemen, thank you very much for joining us for the explanatory meeting about the acquisition despite the short notice, despite your busy schedule. I would like to now officially open the explanatory meeting about the OrganOx acquisition where 4 of us, Mr. Hikaru Samejima, CEO; Mr. Jin Hagimoto, Group Executive Officer, CFO; and Mr. Kenichi Hata, Group Executive Officer and General Manager of Strategic Planning Department; and myself, Otaka, General Manager of the Corporate Planning Department.

Well, first of all, the overview of the acquisition will be presented by Mr. Samejima to be followed by about 1-hour Q&A. This is the hybrid meeting. We have analysts on site and investors are participating online. And for the online participants, I hope you can use the Zoom simultaneous interpretation function, Japanese, English, the choice is available. [Operator Instructions] And the screen will be projecting the Japanese language and the presentation materials in both languages are put on our website.

So now Mr. Samejima will present you the outline of the acquisition.

Good day, everyone. I'm Samejima, CEO of Terumo. Thank you very much for joining us today on such short notice despite the hot weather. Thank you very much. And I'm so glad that you're here in our new office. So on August 23, Terumo Corporation signed an agreement to acquire OrganOx headquartered in Oxford, U.K. And today, I'd like to explain the background and the future outlook of this acquisition. Terumo makes its entry into organ transplantation through acquisition of OrganOx, an innovative specialist, which develops and manufactures devices for preserving a transplant organ.

Let me first give you the overview. This acquisition involves the purchase of 100% of OrganOx outstanding shares for a total cash consideration of $1.5 billion. The fund will be sourced from cash on hand and borrowings. The agreement was signed on August 23, 2025, and we aim to complete the closing within this fiscal year. Back in 2008, OrganOx spun off the University of Oxford and has been globally deploying its metra device for preserving transplanted livers. So this is a spinout from the university. So 2 members of the commercial core team are on the Oxford academia. So there is so much involvement on their part about academic and professional perspective. So they are indeed a community to help as many patients as possible. So that's the fundamental spirit.

And the company has been globally deploying its metra device for preserving transplanted livers. It got CE marking in 2016 as the first normothermic perfusion device, and it was also FDA approved in 2021, and it was launched in the U.S. in 2022 with its 199 employees, the company's calendar 2024 sales revenue was $71 million, and this acquisition is expected to be the biggest ever for a spin-out from the University of Oxford.

In 2017, Terumo began supplying CDI sensors for metra deeping -- and deepened our insight into OrganOx and its technology. With Terumo Ventures' recent investment in this particular year, we have been building relationship with the company. And regarding the significance of this acquisition, this acquisition is strategic and essential for the Terumo Group. Entering the organ preservation, a new growth domain, we can chart a growth trajectory beyond the extensions of our existing businesses. It is a key step to achieving the bold growth beyond GS26 that I have been advocating for as CEO.

Terumo time-honored tech and expertise and OrganOx's innovative devices and know-how put together should globally increase transplant opportunities and globally contribute to address the serious unmet need shortages of transplant organs. We also expect entering the high-growth organ transplantation market and acquiring a highly profitable business model to elevate Terumo's corporate value significantly. And I'm confident that this deal will contribute to maximizing Terumo Group value with synergies with our existing business for creation of new solutions. So this acquisition is essential to unlock Terumo's future and open doors to our next growth stage.

The following slides provide you more details on these points. Organ transplantation for end-stage organ failures is extremely effective and its global demand is rapidly increasing. The global number of organ transplants exceed 150,000 per year, but supply falls short of demand and many patients die while on the waiting list. 470,000 patients are registered on the waiting list, but some patients aren't listed because of the supply shortages, some patients with deteriorating conditions go off the list and pass away. And so the number of waiting patients is estimated to be potentially 10x the number of actual transplantations. So with rapidly increasing demand, continued high growth of the market is expected.

And here is the organ type breakdown. So this acquisition marks our entry into the liver transplantation where one of the biggest unmet needs exists. The challenges of transplant liver shortages are twofold, few donors and low utilization rate of donated livers. In particular, DCD or a Donation after Circulatory Death makes things difficult. Livers are vulnerable to ischemia. Transplantation rate is high for brain-dead donors with intact blood circulation, but the rate is extremely low as the post circulatory death donors, which are far more numerous, that constraints the overall donor pool. Livers may only be preserved for short time, limiting transport distances often requiring emergency surgeries, lowering health care providers' QOL. And not a few potentially transplantable livers end up not being transplanted for safety concerns because it's difficult to quantitatively assess organ function.

OrganOx's technology directly addresses the challenges in the liver transportation by helping to both increase the number of available donors and improve the utilization rate of donated livers. The preservation method used in OrganOx metra device known as NMP differs from conventional techniques that rely on cooling to minimize damage. Instead, NMP circulates oxygen and nutrient-rich preservation fluid through the organ at near body temperature, enabling significantly longer preservation time. While traditional method allows for only a few hours of liver preservation, metra has received regulatory approval for up to 12 hours in the U.S. and up to 24 hours in Europe. This extended preservation window enables the use of donors from distant locations and allows for planned non-emerging surgeries.

In addition, metra's real-time monitoring and automated control systems ensure stable management of the organs condition during preservation. This not only improves transplant outcomes by using organ with preserved functionality, but also enables more accurate assessments of organ vitality potentiality, allowing for the use of organs that would otherwise have been discarded.

In addition to expanding our business through existing liver preservation devices, we also anticipate growth through development of new solutions. One such initiative is the development of a compact version of our current product known as metra L. By making the device smaller and easier to transport, we aim to increase its adoption across a wider range of clinical settings. Furthermore, we are planning to expand beyond liver transplantation into kidney transplantation. Kidneys represent a large segment of the organ transplant market and transplant from donors after cardiac death are more common.

However, major challenges remain. The high discard rate of recovered kidney is a real problem. By leveraging metra's real-time monitoring and automated control capabilities, we aim to reduce the discard rate of transplantable kidneys and make more effective use of these valuable medicine -- medical resources. We were targeting practical implementation around 2030 and preparations are already underway to accelerate the growth of existing metra business.

OrganOx has achieved rapid growth by offering innovative solutions to address the clinical unmet need of organ shortages. Since the launch of metra in the U.S. market in 2022, the company has expanded presence swiftly, surpassing JPY 10 billion in annual revenue last year. With the continued expansion of the market driven by NMP technology, OrganOx is now on growth trajectory that we realistically envisioned annual sales reaching JPY 100 billion within the next decade. From a profitability stand standpoint, the company achieved positive adjusted EBITDA just 1 year after the U.S. launch, which is very rare for any start-up companies.

Let me talk about the financial impact. Excluding amortization of intangible assets and onetime expenses, the acquisition is expected to contribute positively to adjusted operating profit. Following the closing, we plan to disclose further details regarding goodwill and intangible fixed assets. In terms of earnings per share, the acquisition is also expected to have a positive impact starting next fiscal year once special factors related to the transaction are excluded. The funds for the acquisition will be sourced from cash on hand and asset financing.

Beyond the growth driven by OrganOx's proprietary technology, we believe that creating synergies with the Terumo Group will generate even greater value for both companies. As many of you know, the Terumo Group possesses a broad product portfolio and advanced technological capabilities, enabling us to create powerful synergies across multiple domains. OrganOx's perfusion technology enables the recreation of physiological environment for organs such as the liver, even outside the human body. This approach closely resembles Terumo's perfusion technology, which supports organ function by circulating, oxygenating, regulating the temperature of blood outside the body. By combining these 2 technology, it is possible to build a more advanced in vitro circulation environment.

Beyond the TCB domain, combining the Terumo Group's unique technology and expertise with OrganOx products enables the development of innovative solution with the potential to transform the future of transplant medicine. To fully leverage this broad integration, the business will initially operate flexibly and dynamically as a new unit will [ report ] directly me as the CEO rather than being placed under an existing company division. OrganOx will serve as a strategic platform to accelerate Terumo's entry into organ transplantation. In addition to perfusion technology, this access to clinical call points and R&D network will enhance our existing operations and drive new growth through the complementary technologies and products.

As mentioned at the onset, the purpose of this acquisition is to achieve leapfrog growth for us. The integration with OrganOx will bring high-growth business domain to Terumo, where synergies with our broad portfolio of existing products and technology will continue to expand the scope of future solution offering. Most importantly, OrganOx technologies and products are clearly helping to solve major challenges in organ transplantation challenges that align perfectly with Terumo's strategic direction, delivering donated organs as precious medical resources in optimal condition to patient is a direct embodiment of Terumo's promise and a steadfast commitment to those we serve. The acquisition represent a bold challenge to contribute to the future of medicine, leveraging the technologies and expertise Terumo has cultivated over the years. We are confident that entering the organ transplantation field will allow us to build an even more advanced and impactful portfolio.

That concludes my slide presentation, but I'd like to make a few comments before I finish. I, see, ever since I became CEO last year, I have made a criteria -- there are a few criteria that are important for identifying targeting companies or scanning of the target companies. Is this target company really be able to give a groundbreaking technology to contribute medicine for the health of patients? The other one is like a differentiation, uniqueness, something it's very difficult for competitors to copy. Do they have that technology or business model? Number three, do we have synergy, leveraging synergy with Terumo? Number four, of course, financial growth potential and profitability. Number five is how close our cultures are.

But I would say it's very rare to find 5 boxes being checked. And I actually told to you, it's very difficult to find all the conditions being met as a top management. In this transaction, it's very rare. We found a very important treasury, very excited because it checks all the boxes. If looking back a few years from today, we are confident that we will be uploaded with this transaction. Thank you very much.

With that, we'd like to get into question and answer. I'd like to first ask sell-side analysts to raise questions. And we would also extend time to give sometime to ask questions for people who are joining us remotely. [Operator Instructions]

Yamaguchi-san, please, you are the first.

I'm with Citi. My name is Yamaguchi. Let me ask you a couple of questions. Well, you mentioned JPY 100 billion approximately. And let's say, regional expansion, the organ category expansion and the size of the device is pretty important. I heard about that some time ago. So to what extent would you expand when you have JPY 100 billion in scope? Or is that 2030x? What is the premise necessary for achieving that?

Well, regarding the specific breakdown, I'm not quite ready to address. But in terms of regions, currently, U.S. has been the central market. Of course, we're thinking -- we should be thinking about expanding into other markets. And as I mentioned in the presentation, the kidney -- entry into kidney, we're targeting to enter into that around 2030. And of course, the existing version upgrading maybe one way, but this is a new area and many players are trying to enter into. So we want to maintain a differentiation. So upgrading, therefore, will be necessary, I think.

Well, when would you launch the small devices that said?

Well, not quite next year, but certainly sometime before 2030.

Okay. Let me ask you another question. You have existing competitors addressing this kind of device. U.S. has certain companies with the devices and they have infrastructure and you're making a new entry to make big change. Is that the kind of a business that you're trying to address? Maybe you have already launched that kind of endeavor. So what could be the biggest factor to take the shares?

Well, technology for organ transplantation exists in large numbers, but the normothermic technology is few, not so many players and real-time monitoring and automated control. The OrganOx has a special algorithm so that the organs will be maintained at the optimal condition when they are transported. So that's the great value of the company. So in 2022, the -- following U.S. launch, the growth is pretty big and the organ transplantation center, medical doctors, surgeons really highly rate OrganOx devices because of that.

Mr. Barker, please.

Steve Barker from Jefferies Securities. So let's say last year's revenue was about doubled, but this year, how fast the growth is expected to grow the top line? What do you say?

Well, the growth percentage for this year, I mean, it goes back to Samejima-san's comment. We would hit JPY 100 billion or higher, hit JPY 100 billion in 10 years. So in terms of CAGR, it's going to be more than 10%. Of course, the growth rate will be faster in earlier years. And -- but we can share that with more details, including the timing of it after the closure.

And just -- just happened just the other day. So this was not being -- the air freight was not being used in the past. But after the regulated, it becomes more convenient. Do you think that will accelerate the growth?

Well, in the U.S., organ transplant, mode of transportation, majority of them are tracked. Land transportation is, it takes up about 70%. Airfreight is about 30% in the U.S. So now it's -- it can be carried in the airplane. It's not going to be double, right? But it will be nonneglectable incremental growth is coming from the airplane mode of transportation.

Next question, please, Mr. [ Otake ].

My name is [indiscernible] at Mitake. So I need to pick 1 question. So let me ask you about the differentiation. Obviously, liver, their products, they were earlier in the U.S. And this is the European company. You have a greater share in Europe. But for the CDI 50 -- 500, that has been used in the bypass surgeries and the CDI sensor is installed. So you have been on your watch for a long time. So you have your strength.

And the real-time monitoring, say the portal, the artery and the pressure and the circulation, you have been watching that and the competitors have been doing that. And the CO2, O2 and the bile acid, glucose, what about their productions, you have been watching that. And to what extent is that strength? Is that -- am I right, you only have 3 buttons or so, a stop, start, stop and just one more. So is this strength about the real-time monitoring delivered function is well assessed and the operation is easy? So are these strength?

Well, 2 more things for differentiation, I believe. The automated control, so it doesn't require the human involvement. And one more thing, the other company, should I say that? Well, it's actually a different business model, I have to say. So it's basically about the air transportation and ours has a flexibility. So cost is different. And the cost difference is pretty big, I believe.

I see. So let me ask you another thing, the cost. According to the materials, I saw the cost is less than 50%, maybe 40%, if I remember right. Well, that's too much. Okay. So National OCS program, they have a huge program, your competitor. And so harvesting to transplantation end-to-end is their business model. So your business model is about the device and the disposable and the transportation is in-house?

No. On the partnership.

Okay. So the price-wise, you have the price advantage?

Well, the cost is almost half. So these 2 are the advantages. The real-time monitoring is possible, easy to use and the low price. These are the differentiating positives, right. Asset-light, SG&A light, that's the kind of the business model we're looking at.

Next question, please. Yes, Saito-san.

My name is Saito from JPMorgan Securities. So the numbers of the cases of transplants and that forecast of the volume is my question. Numbers of transplant cases, is that growing? If it's growing, what drives that growth? Can you just give me a little more context why it's growing -- the market is growing?

Well, just as OrganOx or other companies have been over the last several years is adopting, introducing very new technologies. So the traditional way was simply putting to that ice box, right? But it's very difficult, right? The preservation time is shorter. You don't have much control of the state of the organs. But now preservation time is much longer. Therefore, it can drive the numbers of cases for transplant for sure.

And -- I'm sorry, talking about the time for preservation, but that's one, right? But -- so what is about the total addressable market size because including opportunity loss, right? Because it's less leakages happening for organizations.

Well, I earlier talked about supply is where the bottleneck is happening. Supply is now becoming bigger because of technology innovations. Then the registered patients, the supply is the bottleneck today, right? So some patients who are so -- the symptom being very gotten worse, they should be receiving transplant, but they will not be having access to because supply was the bottleneck.

That means like we have more supply. All the patients otherwise not be able to receive transplant will be able to receive transplant. That's how the market is growing.

So in terms of percentage, it's so 10% or more. Is that how the market -- you expect the market to grow 10% or plus?

You're asking me about market. 2-digit growth.

Next question, please. Yoshihara-san, please.

UBS Securities, my name is Yoshihara. I understand you're heading for closing and intangible assets are yet to be disclosed. The ROIC is difficult to calculate, but I'm trying to get a general image.

So maybe some of the factors reduce the ROIC. Well, I may be wrong about the calculation, but you need to enhance the top line 50%. Otherwise, it doesn't pay in 5 years to come.

Well, can you make comments about that wherever possible? And another question. I'm not familiar with the technology of this company, but let's say, any businesses of yours -- does the company's technology have any synergies with your existing businesses? Can you tell us about the synergy?

Okay. Regarding ROIC, let me respond to your question. Well, you're right in part. Well, the ultimate numbers will be disclosed post the closing. But when we are in the early phase, it's going to be negatively kicking in immediately after closing it. But to what extent we have positive contributions, that's an important factor.

So as of now, as we think about the business model, we are thinking about -- towards the end of the last year of the midterm plan, it should be generating a positive contributions. Well, of course, it's purely based on the current rough estimate. And of course, we will certainly have more specific detailed numbers down the road.

Okay. So in 6, 7 years, it turns positive?

Well, a bit more than 6 or 7 years, but certainly less than 10 years, it should be positive.

Okay. So contribution to ROIC, you mean just the acquired business alone, not including any peripheral things?

Well, we've been looking at the company stand-alone in our analysis. Well, stand-alone, ROIC is already positive, and the business is asset-light. So if we look at the business per se, ROIC is already positive. However, the current acquisition involves assets, intangible assets and other things. So if you consider all of them, it may take 6, 7 or a bit more years before the Terumo Group as a whole has to see the integration.

Regarding the synergy, let me respond. Well, there should be some synergy. So in the presentation and in response to the question, we touched upon the automated control. So our components can be used and the controls can use our components. So their technology, our components, put them together, maybe we can do something more as a general image. And as I mentioned, this is the Oxford span technology. So Terumo Venture is also -- used to also pay attention to other technologies as well. So unique technologies other than this one can be put together.

Okay. Let me ask you another question. But this acquisition, I believe, is a very good acquisition, but let me ask this question. Is this the end -- the investors may have the feedback. The Terumo's -- the catheter business is the core business. I believe that's the investors' understanding. And after the release, the stock price slightly decreased. So unexpectedly, the price stock price made a different move?

Well, last year, April 1, I took office as the CEO. So in this industry, in terms of the growth strategy, the M&A is essential. No M&A, no discontinuous or leapfrog the growth. So this May, the drug filling factory was acquired. And this time, we're acquiring this. And of course, this is not the end of the story. Any good deals come across -- we come across, of course, we should certainly happy -- we should be happily considering that.

Mori-san, you are next.

My name is Mori from Nomura Securities. What I got confused a bit is, is this truly essential? Do they really have to have in terms of organ transplant? Today, ice box, right, cheap, established, very simple and easy. But with the perfusion, then marginal organs, organs otherwise being discarded can be saved. That makes sense, right?

But what about your technology or future development? Can you make the perfusion approach that essential? I think that's the key question. How do you see that pathway? Are you confident you can do that?

Well, metra currently using one of the many components, which is CDI. We are the supplier of the hardware. But other components in the mid- to long run, we can replace them to Terumo products, that's like one aspect of it. And -- but this -- now is before -- if this system essential or not, if you wear the shoes of patients, for kidney, except dialysis, there is no alternative. Many patients don't have no alternative approaches with many different diseases, including -- but those are the patients, without anything -- any intervention, they could lose their life.

With this innovative approach, we could have a new matching. Otherwise, not much of both, organs, kidney. We can expand the numbers of match. And that will be a key step for medicine and the ambient temperature mechanical perfusion is getting a lot of attention, and these companies have been growing very fast over the last 3 years in the U.S. So I would say we are confident this is a system technology that are essential. And we have -- and by combining our core technologies, we can give more value to the sales front -- to the patients. I have no doubt about that.

Now second question, if you think about receiving side of that technology, I'd think about costs and cost. And how much do you want to invest for cost for patients to decide whether they want to go for organ transplant option or not. Is that insurance have to cover that? They -- like their philosophy, their -- but many different factors. I guess your approach is you want to have marginal organs being saved up and -- but in the next 3 years, before going to the marginal, so you want to match patients otherwise being not matched. That might be giving a high growth because that might be easier to be matched.

But you need to, in the future, expand the market. But then there are law regulation and philosophy, religious belief. How can you expand the market, build more potential patients? I think this is going to be an important challenge for you in the years' time. But can you make me more confident that you can really build more potential market?

No. Well, first, reality today is supply is very small versus demand. So we will develop the low-hanging group. And so -- but it's not low-hanging group is going to be dry up in several years because with this technology, many more lives of the patients are going to be safe. Like I said, there are a lot of patients who needs to be registered, but couldn't get the organs because they can't be on the list, because the problem supply. Numbers of the transplant is 150,000 today, but there are patients who dropped off from the list, 10x bigger than who are receiving the organs. So we can expect very fast growth for the time being for some times to come. I'm very confident about that.

May I also add a comment on this topic? During the due diligence process that we have done, supply will -- we looked at the potential of supply catching up to the demand. But innovation is catching up very fast. We look at different announcements from the medical conferences. So the original source of [ cancer ] has been treated. It's staying at liver, but then it can be metasized to other areas. This technology can be very useful for that kind of patient.

So I think the demand is also going to be expanding once this technology gets established and we have it for sure. And is this a sense do we have to have this? And it's more than patients, right? QOL for medical practitioners are very important. In a real world, 6 hours or 7 hours is the preservation time. All the matching is taking place in the evening to night. That means they have to work, do the surgery in the middle of the night. But by stretching to 12 hours, you can do it from the morning time to evening time, the regular working hours. QOL for medical practitioner doctors are going to be improved. This is also a very important driver. I just wanted to add that comment.

Yes. Ueda-san, please.

I'm with Goldman Sachs. My name is Ueda. Let me first ask you a question about this very timing -- acquisition at this very timing. Why is that? Well, according to the presentation, you touched upon the innovative aspect and the need. It's been there for quite some time. And I understand the company has been doing business with Terumo for quite some time. So through Terumo Ventures, there was some investment and things rapidly developed into this acquisition. So what is the very significance of your involvement?

Thank you for the question. Well, we started out with 2017, PCV -- DCD, the business has been doing business about CDI sensors. And during that time, we only had a vague understanding that, that kind of business existed. But just this spring, Terumo Ventures was making investments. And naturally, we took a very -- a good look at this company. It was necessary. And so we rapidly deepened our understanding into the company. And then we found it a very nice acquisition candidate. That's why.

Okay. And let me ask you a follow-on question. Your involvement in Terumo's entry and then what things the OrganOx could not single handily do, what kind of things are made possible?

Well, it may not necessarily relate to this very timing, but one of the main components has been sourced from Terumo. And regarding other components in the mid- to long term, such other components could be replaced to Terumo components. And there may be other synergies, for example, post organ transplantation, patients need to be taken care of. For example, apheresis. It's important to put the patients on apheresis. And Terumo BCT is not all into that, but Terumo and this company together may produce more business to Terumo BCT as well.

Okay. And regarding the future business market size, you talked about the organ breakdown of the transplantation and the kidney is pretty big, I understand. So in terms of the number of the transplants, liver and kidney involve different business models? Or are they as big as each other?

Well, value-based, there's not much difference between the liver and the kidney. And as was presented, liver is vulnerable to ischemia, kidney -- excuse me, the vulnerability to ischemia is so different between the 2 organs. So in terms of value, according to our calculation, there's not much difference between the 2 organs. So liver will soon be bigger in a few years. The kidney transplantation count is much more, but the value-based liver should be growing more. So basically, we try to deploy the business in conjunction with the liver. And the health care providers QOL is very big.

So in terms of the sequence, first, liver, then kidney. Okay.

Tokunaga-san, you're next.

My name is Tokunaga from Morgan Stanley. Now looking at the pipeline, metra L and metra K, so how long -- or how much additional investment are required before the launch? And give me about how much will require and how soon they are coming launched?

I'm not disclosing the amount of investment, but the timing has been covered in the presentation. K is 2030, L is slightly earlier than that.

Okay. Understood. And distribution channel, would you make -- need to additional make investment or your current distribution channel network or OrganOx distribution channel will suffice it, do you think?

Well, sales efficiency -- distribution efficiency is very high in this. So with the revenue side, they are also profitable, right, with the revenue side today. So because there are -- the U.S. is the center of the demand. They have about 150 transplant centers. There were some major big centers, top 50, I would say, transplant centers. 70% of all the transplant cases are covered by 70% of the centers.

We are almost, not perfectly, but very close to 100% coverage. Once we establish that, we can just use that for kidney transplant. So to leverage is going to be becoming more favorable. So do we need to have -- we don't really need to double resource -- sales resources if really that's your question. And also this automated process. So it's very nonhuman nonintensive.

Kohtani-san, please.

Kohtani with Mizuho Securities. Let me ask you a few more questions. Austrian metra-related paper. I've been looking at the paper. DCD, the death by cardiac death is increasing in terms of percentages. And the post DCD organs are difficult to use. I understand there may be elder citizens, but with the spread of this kind of device, the use of DCD organs will increase. To what extent? Do you have some numbers? Can you share some such numbers?

Well, it's not about the DCD percentages, but the supply growth, but that's the important thing. And post the brain death, I believe you mentioned 20% -- so DCD will more contribute to the transplant, the sales-wise at 20% and the 2-digit growth will be enhanced -- contributing to our top line growth. So most of the volume and zone of the market may be contributed by the DCD.

Okay. Let me also ask you about the primary endpoint. You haven't produced the papers, but the pivotal study, the primary endpoint was not achieved. And the cannulation and the suturing needed additional training. So is that tough to use? And looking at the competitors, the product study achieved the primary endpoints. So here's the difference. So I believe -- could such differences be potential differences?

Well, certainly, the products are approved. So the primary endpoint wise, the approval was based on the positive increase of the number of transplants. So DPD-based (sic) [ DCD-based ], [ CS ] patients was what it was compared against. So we were slightly disadvantaged. But the number of the transplants certainly increased, hence, approval.

And there's one more thing, closed system versus open system. So closed from the external air, so OrganOx, the 3 connections, no thrombus because of nonexposure to the air. But indeed, it took some time before the surgeon got used to that. But the learning curve is certainly improving. So it shouldn't kick in as the disadvantage. And the market share is increasing.

We can now start taking those of you who are remotely accessing. I'd like to now give a chance to Tokumoto-san from Nikko Securities to ask first online question.

Yes, my name is Tokumoto from Nikko Securities. Can you hear me?

Yes, we hear you.

Okay. I just missed the section when you were talking about profitability economics model. Can you just repeat about projection of EBITDA margin because I couldn't hear that part. Transmedic, like competitors, like they have their EBITDA is about margin is 13%. So this target company, do you -- are you confident the margin can be higher than that? And competitor over the last few years, they are making profit, but the gross margin is struggling. So can you talk a little more about how confident are you how this can make sustainable, profitable business.

So I will pick up. My name is Hagimoto. I'd like to take that question. Now as has said, EBITDA is a little shy of 20%. So that's where it's trending at right now. But if I talk about the future prospect, like I said earlier, so once the top line grows, SG&A especially like the investment for distribution channel, incremental distribution channel, its investment will be very light, very light. Therefore, there's a scale benefit once the top line really grow. So that's actually a great model, I'd like to point out.

As a model, like the hardware sales disposable sales, right? So the turnover of disposable, once the top line grow, then this can give benefit on the COGS percentage. Of course, we can also bring more efficiency by mass production, volume production. So from today's EBITDA, once our top line will grow, we don't think the efficiency of profitability will not go down. That's how we see it today.

Okay. Understood. Related to that question, I'd like to ask you about the mid- to long-term strategy, JPY 100 billion in top line is the growth ambition, I think you are looking at. But I'm sorry for your competitors again and again. But -- and I know they are not really the same business. But looking at their competitors' actions, they were trying to get insurance coverage in other companies -- countries, and they were trying to go fast on capital expenditure in trying to get more business.

So I guess this business growing to JPY 30 billion would be quite easy from today's stance. But if you want to grow the scale faster than the competitors or go bigger, then capital investment or the cost expense investment is going to be quite sizable. But do you think asset-light able to go that change or not?

And I'm sorry for asking one more question. When you are rolling out to kidney, I'm sure competitors are looking into that opportunity. But at 2030, that means that competitors are going to be launching kidney first before you guys. Is that -- I'm sorry, I'm randomly talking a few questions.

Your question about manufacturing is more in years. So we will look at the -- we will first make sure business is growing, right? We will keep an eye on before deciding where to make a capital investment on. So we will look at -- we will work closely with the top management of OrganOx to discuss where and how we are going to be making a big capital investment for capacity -- building capacity.

Now Terumo, one of the benefit that Terumo can provide is that we already have in different market in different region. We have close to 30 factories. If we can use those facilities, then that's a synergy that we could demonstrate and enjoy, and we will take that as an option. And if necessary, manufacturing engineering is something we can learn each other, jointly work together with -- so CDI might be the only one component that we have started out with. But like Samejima-san has said, we can go whether synergies or manufacturing joint work is where we can demonstrate more opportunities in production manufacturing.

Can you talk about kidney?

No, I cannot make a comment that can make or break about our technology road map. But you might think competitors may come launching kidney solution before us, but there's not much of difference though. That's all I can say. Once we are ready to tell you more about it, I can come back to this point.

Macquarie Capital, [ Toni-san ], please.

Could you hear me?

Yes, we can hear you.

Okay. Perfect. So just 2 questions from me. So one -- the first one is about the synergies again. Listening to your presentation and reading your slides, I think it appears to me that most of the synergy appears to be in the Terumo Blood and Cell Technologies and possibly with the Terumo Medical Care systems. Just want to understand whether there will be -- whether you see any synergies with the C&V business as well? And whether the synergies would be on the revenue side or the cost side? So that's my first question.

And the second one, I know it's not related to the OrganOx acquisition, but I'm getting a lot of client inquiries about the Eisai's LEQEMBI auto-injector. The PDUFA date is only 2 business days away. I'm just wondering if you have anything that you can comment on that U.S. FDA PDUFA date?

Okay. Let me answer to your question. Well, I mean, yes, definitely, there is a synergy with the C&V company as well because we've been supplying kind of key component of the metra system for a long time. And I mean we found that there are other components possibly replaced by our own products in the mid and long term. So there is a synergy with TCV , Terumo Cardiovascular systems business. So that's synergy in C&V side. Well, your second question is, I would say, I'm sorry, but it's relevant of this kind of the session. So I would just preserve that kind of answer to you.

Yes. Understood. In terms of synergy, do you see them coming from the cost side or revenue side?

Yes. Well, they're both. Well, I would say both because, for example, the kind of post-procedural care, patient care includes apheresis. I mean that's a critical kind of post-procedure care for the recipient. And then BCT obviously has a very limited market presence in that particular segment. So I would say that there is a possibility for a BCT perspective to find a new business opportunity in that segment. So that's kind of top line-wise.

And bottom line-wise, of course, as Jin Hagimoto mentioned earlier that we do have a strong operational footprint on a global scale. So in the long term, of course, we need to discuss with the management of OrganOx. But from operation, including manufacturing, we do have a possibility to pursue some cost synergy opportunities as well.

Barker-san, go ahead.

Stephen Barker from Jefferies Securities. I want to talk about economic model. Transmedics, looking at the economic model, services is actually a big contributor to that profitability. But in organics, hardware has software and there are some -- does it also have a service revenue? And for hardware, and is this hardware being sold to hospitals? Or is this business model slightly different from that?

Disposable, generally speaking, very close similar to Rika.

What about services?

Services, well, they have an end-to-end business model. So the model approach is slightly different. Services, we are not expecting many revenue from services.

Any other questions? Watanabe-san, please.

BofA Securities. My name is Watanabe. And regarding the management, I understand that the founder has been with Oxford. So it's going to be your subsidiary. And what kind of management will be installed from Terumo? What kind of monitoring of the company? Do you have some inputs to provide?

Well, CEO, I mean, is a separate person than 2 founders. And currently, regarding the key management personnel, they're going to stay with OrganOx is being confirmed. And on top of that, from the governance perspective, the Board members and the local presence of Terumo personnel, we're considering that so that periodically, they and we can conduct business discussions and also have business discussions with them. So we're trying to structure the business.

I'd like to let [ Yoshima-san ] who are coming online from [ Nochu ] Value Investment.

Yes. Let me ask you 1 question. Now transmission cost is quite substantial. And -- but there maybe did you have any other potential candidate buyers? That's -- the other one is like Terumo Ventures had made this investment. It was quite quick, very fast before you make that acquisition investment. But back when the Terumo Ventures was investing, right? So in 2020, I think you established Terumo Ventures. Do you think Terumo Ventures' presence was a very important point in coming to deciding this acquisition. So that's my question. So my first question is very sensitive.

So we've been refraining from answering first question. To your second question, so the project deals of Terumo Ventures making investment, and that was being proposed to top management, and that helped our understanding about this business. Speed, I've been saying this many times. We are not going to be -- with courage very fast, we'll decide if there's a great deal out there. And then this great opportunity came to us.

Any other questions? Yes, please.

My name is Yamaguchi, Citi. Saving the cardiac arrest is important that you mentioned. So let me ask you a question. In the U.S., where do people have a cardiac arrest? Accident or in hospitals, where do they get cardiac arrest? And when that happens, what is the best way? Who does what? Well, currently, are they taken by ambulance or what is the optimal place to install the device, to be installed in the ambulance or to be installed in the hospitals? Where is the best place?

Well, in terms of transportation means, there are 2 where the donors are emergent, they code it down and they transport if it's a short distance. And NMP can be in the hospital back to base. That is where it can be pursued. So the organ functions may be picked up with a better perfusion and implanted.

So that's the particular characteristics of the organized device, but that's about the short distance. So if it's a long distance, the organ needs to be maintaining the device and transportation to maintain the function. So it depends. So I can't tell too much about the competitors, but the competitors address the DCD. The organs are put on the NPT -- the device.

So in the case of OrganOx, there's a flexibility with a lower cost. Flexibility, therefore, low cost. So we can further check the response and respond. Well, U.S. is pretty much advanced. For example, who are listed as donors, there is a good database. So the traffic accidents or gunshot death, then they come in quickly. So there is the organ harvesting organization, so they get immediate notice. So information on supply, U.S. is pretty much advanced.

Any other questions? Yes, please go ahead, Yoshihara-san.

Sorry, I apologize, I should have known this better. One additional question. Hospitals in the U.S., are they very careful managing their cost right now? Do you have any qualifiable information?

Well, insurance, most of the insurance are private, right? And so the cost -- if the procurement cost is cheaper, then it helps hostile economics. So cost difference is very like important, which is advantage for this technology. So their attention to economics is very important. That's one of the advantage makes more favorable to OrganOx's technology.

Any other questions? Saito-san, please.

Let me ask a couple of questions. Well, regarding this business, is there a lot of seasonality? I'm under impression that there is a seasonality based on the competitive business. Your business has been pretty stable across all seasons. And in the few years to come, I understand that this business is expected to be pretty profitable. So I just wonder if this particular business may go up and down depending on the season?

Well, this is early on. And in the most recent 2 years, the 20% growth has been achieved, 20% and then 20%. So seasonality, positive or negative, we don't know as of now.

Any other question, please? Yes, Kato-san.

Yes. My name is Kato from Daiwa Securities. And at the end of presentation, CEO, you talked about your confidence that people will look back and approve this. So can you talk about where you are -- what makes you so confident about it with specific examples?

Well, in the process of selecting target companies, high criterias perfectly been met. I've been in this industry for many years. I've been more than hundreds of the target potential companies, very rare to find they have all the check box being checked. That makes me -- that is the biggest reason why I'm so excited about it.

Yamakita-san, please.

I'm with Jefferies Securities. Let me ask you 1 confirmatory question regarding transplantation that's around the clock and it takes long hours, so much burden on the health care providers and the number of the surgeries increase. And what about the surgeons capacity? Any concerns that there aren't enough surgeons?

Well, thank you very much. And based on the NMP numbers, it can start at 6:00 a.m to 3:00 p.m., but that's a typical day. But if more time is necessary, it may exceed the surgeons capacity. We need to further watch out for that.

Any other question? Yes, Kohtani-san.

Kohtani from Mizuho Securities. And so I guess the [ Chapion ] data showed 3 days or 10 days where there's a few cases have preserved. And in the -- do you want to stretch the preservation time as long as that? Maybe too premature. I mean 12 hours, 12 hours can help QOL business practitioners. Can you -- I mean -- yes, we can maybe come back to that in the future. But 12 hours is regulated time in the U.S., it can go up to 24 hours eventually. Are you going to be submitting for that?

But 12 hours itself is very valuable, but we will make it to 24 hours eventually, but it doesn't really make any big difference even at 12 hours.

I'd like to ask just 1 last question. You look at many potential targets, [ Sequent ], MicroVention, [ T-SEAL ], you have been observing that. Compared with all those transactions versus this one, how excited are you in comparison?

Let me just -- I'm not going to give ranking, but the levels of excitement is very high for sure.

Any other questions? If none, well, thank you very much. This officially concludes our explanatory briefing. Thank you very much for your participation despite your busy schedule.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good afternoon, everyone. Thank you very much for joining us at FY '25, the period ending March 31, earning call for Terumo. Thank you very much for your time.

Today, we will talk about the overview of the financial from CFO Hagimoto, and we will have a Q&A session after the presentation. We are planning to finish it in about 45 minutes.

In webinar, we have simultaneous translation services available. You can listen in either Japanese or English, whichever you want. [Operator Instructions]. The shared slides are only in Japanese. English version is also available for documentation on our website. If we have a problem in streaming, we will let you know with an e-mail.

And before our presentation today, I'd like to just have some information or there's a disclaimer. These are the forecasting projections of the future and some of the comments will be projection comes with risks or uncertainties for the future projection. The actual result could be not exact aligned with our forecast or projection.

With that, I'd like to invite Hagimoto-san to do the presentation of our financial announcement.

Yes. I am -- good day. I'm Hagimoto, CFO. Thank you for joining our earnings call today.

Let me walk you through. Today, with Hagimoto, me, Otaka, who is responsible for -- is for the IR will be joining us from April. We have a IR office and FP&A and also policies are set up by financial team.

We actually have this new teams being set up for the business management. Miyoshi is responsible for CMV which is pushing forward more technologies. Otaka-san and I will be responsible for communicating about the financial results. Thank you in advance for your support.

With that, I'd like to make presentations on the financial results for FY '25 Q1. This is the highlight of quarter. First quarter highlight. We continue to benefit from favorable business environment, achieving record-high quarterly revenue of JPY 260 billion for Q1.

In particular, demand in the U.S. remained strong. Total revenue grew by 6% excluding foreign exchange effect, we are progressing well against our full year guidance, which we announced in May. Operating profit -- adjusted operating profit and profit for the year all reached record high for a single quarter.

In addition to increase in revenue, profits are also growing at a pace that exceeds revenue growth due to pricing measures and appropriate cost control being implemented globally, and we are steadily improving profitability toward our operating profit target GS26.

Next slide, please. This is P&L and our free cash flow results. Revenue was driven by CMD and TBCT companies. Despite negative currency impact, we achieved JPY 260 billion in revenue, surpassing last year's Q1, which are temporary demand strikes.

Operating -- and for operating profit, too, grew significantly faster than revenue, reaching a record JPY 55.9 billion. This was supported by improved gross margin from pricing strategies, effective cost management as well as favorable currency and onetime gains.

And free cash flow was JPY 10.5 billion, a decrease of JPY 4.2 billion year-on-year. This was mainly due to an increase in inventories as a result of business expansion and impact from tariffs, but we will continue to maximize free cash flow through appropriate inventory management.

Next slide, please. And this is about operating profit variance analysis and GP increment by sales increase was led by TIS and Global Blood Solutions, progressing as planned against full year targets.

Gross margin price is the next point. C&V pricing strategy contributed a lot to profit increase, especially price increases in the U.S. and delayed VBP in China exceeded our expectations. Profitability improvement measures also steadily delivering results.

SG&A expenses have increased as expected, along with business expansion. R&D expenses are flat -- it was flat year-on-year due to timing differences with no change to full year forecast. Foreign exchange impact were negative on a flow basis, but positive on stock basis contributing to profit growth.

Next slide, please. This is revenue by revenue -- revenue by region. In the Americas, double-digit growth in local currency with all companies contributing strongly driving global sales.

So the -- was very -- driven the global sales very much. In Europe, strong performance of PLAJEX drove Pharmaceutical segment's growth. TBCT saw a temporary revenue decline due to delayed order in some regions with recovery, although expected going forward.

In Japan, C&V, especially neuro achieved double-digit growth, driving the entire performance. TMCS, on the other hand, experienced temporary revenue decline due to certain business transfer and supply chain.

In China, Neuro saw significant growth, thanks to the successful expansion of sales channel through VBP. TIS partially offset VBP-driven price decline with volume increases. Asia, C&V achieved revenue growth. Pharmaceuticals and Global Blood Solutions saw temporary decline due to delay in some bidding time lines.

Next slide, please. I will now explain results by the company. First is the cardiovascular company. Revenue grew 7% on a local currency basis, driven by stronger performance in the U.S. TIS and Neuro led the growth. Aortic segment saw a temporary decline due to supply issues, with its surgical graft product line, but it is now resolved.

On the other hand, hybrid products expanded steadily, improving profitability. Operating margin improved by 5 points to 29%. Various initiatives, such as the pricing strategies, the profitability improvement measures and the review of unprofitable regions have contributed. ForEx was positive on the stock, resulting in higher-than-expected profit growth.

Next slide, please. TMCS Medical Care Solutions, revenue declined temporarily due to business divestitures in the hospital care and the supply issues for some products. Pricing strategies since April are progressing well. In Pharmaceuticals, domestic CDMO deliveries were delayed, causing a Q1 sales decline, while projects performed strongly overseas, resulting in revenue growth.

Profits benefited from the pricing measures and the foreign exchange rates with increase in the profits on an actual exchange rate basis. However, lower sales and production delays in pharmaceuticals were negative factors. Profit decreased on a local currency basis.

Sales and profits were affected by onetime factors, but we expect to achieve the planned increase in the sales and profits for the full fiscal year.

Next slide, please. TBCT, Blood and Cell Technologies. Revenue grew significantly in the plasma innovation under the Global Blood Solutions. Rika deployment to existing customers is complete with further revenue growth expected as operations optimize. Core business is progressing as expected.

Global Therapy Innovation saw increased demand for cell collection in cell and gene therapy, especially in the U.S., along with the replacement demand for certain devices. The profit increase led by improved profitability from higher sales in all of Rika.

Next slide, please. Last slide, I will now give an outlook for this fiscal year, regarding the tariff impacts. And the estimated full year impact is around JPY 10 billion, revised down from the previous estimate of JPY 17 billion due to changes in the tariff rates, mainly on imports from Japan. The impact included in Q1 is extremely limited, thanks to local inventory and most of the impact is expected to materialize in the second half of the fiscal year.

On the other hand, our fundamentals remain solid. And even excluding ForEx effects, Q1 results exceeded the plan that forms the basis of our full year forecast. Demand is expanding, especially in the U.S. and China, and it is expected to continue Company-wide pricing measures are having a greater-than-expected effect, and we plan to pass on the tariff impact to prices to mitigate that impact.

And of course, the situations may not allow us to pass the entire amount during this fiscal year, but we mitigate the tariff impact as much as possible. Considering our strong fundamentals, we maintain guidance for the current fiscal year and work to achieve it. Thank you very much for your attention.

[Operator Instructions]. Together with Hagimoto-san, Otaka-san will also join in Q&A.

Good afternoon, everyone. My name is Otaka, who will be leading the Corporate Strategy and Planning section. Very nice to meet you.

With that, we'd like to start taking your question. We would like to go to SMBC. Tokumoto-san from SMBC Nikko Securities. Please ago ahead and ask.

Yes. This is Tokumoto. So it was -- the actual was quite strong. But I'd like to talk about SG&A and the gross margin. There were some maybe special events that -- because gross margin was 56%, which was quite a good positive. But compared with your expectation, conventionally, how much is the variance from the expectation?

And SG&A is slightly smaller than last year. Maybe there's a timing issue on R&D. But in the Q1, I mean, cost control was quite strongly being implemented. Isn't there any risk? Or do you think there is a risk, no risk for SG&A going up in Q2? Can you talk about SG&A gross margin in the first quarter?

Thank you very much for your question. Let me talk about gross margin. 53.3% versus last year -- last year, this quarter is 56%. Fundamental was performing quite well. That was one driver. And the VC score continues that gave us more productivity gain efficiency. That was the reason.

But the other one is foreign exchange. As we have highlighted in one of the slides, we have a stock of the internal inventory that actually drove -- contributed for about JPY 2 billion or so. So that is also have some impact to our gross margin.

So that is the -- compared with the unit projection at the beginning of the year, we believe this was -- had some upside from our expectation, but it's quite strong in Q1. But to your question, Q2 or in second half, there are going to be some impacts from tariffs as we may expect.

SG&A, to the other question. This one is talking about variable cost. And this is growing together in line -- in tandem with the top line sales. But the SG&A is being controlled throughout the year through and through and especially in the upcoming quarters, we are not expecting surprising big substantial increase in SG&A. So we don't expect that.

Okay. Understood. I have a second question in your projection going forward. You mentioned about the impact potentially from tariffs. The impact was minimized than previously been expected, right? And C&V, you are planning to have a price transfer -- passing the prices over to customers. GPU and looking at the group procurement, there were some price changes in the last year, too.

And so those additional incremental initiative for prices, why are you confident this is going to go well? In a quarter basis, how much is going to be really being delivered? I mean, the price -- passing prices from the U.S. tariff. Can you talk about your perspective on that?

Yes, last time, we talked about JPY 17.5 billion, but it came down to JPY 10 billion. We adjusted that. Do you know why, right? Tariffs from Japan in the last time, the first 90 days is like 10%; after that, 25%, that was the assumption which we have calculated with. But now it is up to 15% from Japan and that drove down to JPY 10 billion in terms of impact on tariffs.

And you also asked about that JPY 10 billion, how is that going to impact throughout the year? Now we do have inventories in the U.S. footprint. We do still have some inventories, right? In the first half in terms of inventories, so the impact from the tariff will be limited. A JPY 2 billion in Q2, JPY 4 billion each for Q3 and Q4, that's our assumption.

In total, that will be impact of JPY 10 billion throughout the full year. But let me also talk about price as you asked, especially for C&V, Cardiovascular segment, we -- from last year -- by the way, this is not only limited to tariffs. The team has been passing the increase -- increased the increases from last year and some of which was implemented in the quarter 1, and there's going to be some renewable contract in which will be asking for increasing prices as the timing of renewal comes.

So at this point in time, it's not necessarily -- it's a completely new contract agreeing because of tariff? No, it's not. Because C&V has been doing that in their normal operations. I think I just wanted to highlight that because it's important.

Let me also talk about the other companies as well. We are -- like want to maximize passing that tariff back to the price points as long as they make sense. So the situation of the category or they're looking at the competitors' moves are going to be assessed while deciding on price increase.

Thank you very much. I'd like to ask Macquarie Capital, Tony Ren, could you ask your question, please?

Can you hear me?

Yes. We can hear you well.

Okay. Perfect. Yes. So the first question is on the LEQEMBI auto-injector pen. So a couple days ago, your customer mentioned this product being prepared for launch. We believe the U.S. FDA should approve the LEQEMBI auto-injector by the end of this month, right? Could you give us some color about what preparation you are making for this pen? On Slide #8, you mentioned there is a temporary delay in some products. I just want to make sure that -- I just want to understand whether that's LEQEMBI.

Yes. So thank you very much for your question. So what we are doing for the preparation on our side is really to make sure that we can provide as a supplier for the materials and the CDMO business. It's more about making sure we can ramp up the production, make sure that all the logistics arrangements are put in place. And those are sort of the key activities that we are taking for the launch of LEQEMBI.

In terms of the delayed products, it's not the LEQEMBI product that you've mentioned. It's really more about the other products that we have been shifting that did shift from a calendar point of view when we compare it to a year-on-year basis.

Okay. Very good. Another question is that relates to Slide #7, the Cardio and Vascular business. You -- so on this slide, you had volume growth as well as price increases for Terumo intervention systems which is the biggest growth driver. You had both volume growth as well as price increases. Could you help me understand what are the relative contribution from volume versus price?

So I think it's the impact of the price is quite smaller -- excuse me, it's the other way around. So what we are considering is that the -- about 2/3 of the impact of the growth is coming from the volume increase, 1/3 is the result of the pricing increase that we have seen is sort of the rough differentiation of the price and the volume increase.

Do you think such price increase will be sustainable?

So we've actually had this built into our contract. So the price increase compared to the last fiscal year is we would assume is already kind of quite positive that we can achieve this. The volume is where we would probably see some ups and downs going forward. But like I've mentioned before, we do feel that the increase in -- especially in the TIS business in the U.S. is going to be very strong.

Okay. This would be my last one. So just below the TIS, right, you see Terumo Neuro. So in China, the sales channel expanded with VBP, resulting in a significant increase, right? So typically, in China, when you have VBP, the sales declines dramatically. So can you explain what happened here?

So in terms of the neuro products in China, when VBP was introduced for this area, we actually had a lower market share compared to the current situation. So what took place is that since VBP also determines not just price but also the volume commitment, we were able to take advantage of that volume commitment and increase our prices in China for the neuro products.

Thank you very much for the questions. Let's move on to Citigroup, Mr. Yamaguchi, please.

This is Yamaguchi from Citi. Can you hear me?

Yes. I can hear you very well. Please go ahead.

You talked about Rika in your presentation, all of which was being delivered to the hospitals. Consumables are all being -- started to be delivered if I understood. And it helped the profitability. But other businesses are also doing well. So it's kind of not clear in terms of Rika, how much contribution is done for the profit? Can you talk a little more about what was the upside on profitability from Rika was? How much is coming from Rika?

Well, thank you very much. As you have pointed out, yes, all the centers -- we delivered to all the centers. The revenue and the volumes are overall going up and the production volumes are also started to increase. So the efficiency for production, and the yields are all getting better. Therefore, that's what driving our profitability. So for TBCT business, so it's making a good contribution to the TBCT business as a whole.

Yes. But from the outside in, it's not clear, but you guys can see it from inside, right? Can you share how much is that contribution?

Well, there is no number that I can disclose to you. But of course, internally, Rika versus other businesses are just managed and tracked separately. But Rika's contribution is for sure, making a good contribution to the profit.

And you talked about -- the other question is you talked about prices a few times. So in the past, you've done it in the hospital business, and that was a clear win. And now C&V is doing that. So what is the -- from outside in, can you talk about that so that we can also understand when the pricing impact is happening?

Can I clarify your question? So how much pricing is...

Yes, from -- so from when to when? In hospital, I think the impact was started. There is a clear distinction between first half impact and second half impact. Can you just do something similar for C&V?

Okay. For C&V, our initial plan -- we have this initial plan for price impact. Yes, I would say the result is bigger than that coming also from North America and VBP has been delayed. That's also a positive. In Q1 for C&V, about JPY 2 billion was the impact primarily driven from upside, better than expectation was JPY 2 billion from price in Q1.

But VBP is going to be expanding the scope as we predict. And in North America, some of the prices went up in Q4 last year. So JPY 2 billion as an impact will gradually taper down, gradually. So that's like how we see it.

Last year in Q4, the price started to went up in Q4. So Q1 year-on-year, there's going to be some upside year-on-year. And VBP, China delay is working for positive right now.

Thank you very much. I'd like to now ask Kohtani-san from Mizuho Securities to ask your question, please.

My name is Kohtani from Mizuho. Can you hear me? I would appreciate for a little more of the quantitation Page 5, GP up because of the sales revenue up, but the sales, let's say, the JPY 8 billion may be a reasonable amount, but it appears to be a bit small. You included Rika, so consumables sales is putting up. And you used to be the total GP and the total sales, what about the gross margin? Can you give us a bit more of the breakdown?

Okay. Thank you very much. Well, the sales increase has been up and the gross margin has been up. Last year, there was a temporary factor kicking in namely. Before VBP introduction, people rushed by and C&V was pretty good in situation. So last year, Q1, excluding ForEx, 10% growth was achieved. That was good.

So that was a bit temporary. And compared against that, the current Q1 appears to be less strong in terms of a simple calculation. But in terms of what we're shooting for this year, if you look at the gross margin and the business growth, we are pretty much in line with the plan. It's progressing well.

And JPY 4.2 billion, the gross margin. Price-wise, the impact has been JPY 4 billion. And the remainder is from the remaining factors. So Q1, JPY 2 billion was expected, but, as I explained, that North America price up has been producing more effect and VBP has been delayed. So these 2 have been positive.

Hence, JPY 2 billion more than we expected. And regarded the gross margin at price, the productivity has been up and VC score has been producing a positive effect. So these are the additional positive factors. And if you look at the plasma innovation, Rika, the more sales we achieved. There's been mixed effects. That's why you see slight negative factors -- negative numbers. So they're kind of offsetting each other.

Anyway, if you look the VBP, the impact was expected to be about JPY 4 billion. But for Q1, there is a little or the impact due to VBP was minimal?

VBP is spreading. So last year, second half, it started the expansion. And that's why we see slight negative numbers. But the JPY 4 billion -- out of the JPY 4 billion in Q1, there's been a minimal impact, but it's expanding.

Okay. Let me ask you another question. I hate to ask you questions, but the Olympus, there is so much attention going to Olympus. And MicroVention Costa Rica, September 2022, you received the FDA warning letter. Well, it's been quite a while, but catheter washing and the supplier, the components, let's say, the supplier corrective action reports need to be produced, and that was delayed, I suppose.

So that's a detailed report, if I understood right. And MicroVention Costa Rica last year had another inspection. So it's been quite a while and 483 is yet to come. And then am I right to understand that the warning letter is getting into the past, you have been resolving the situation, the problem?

Yes, right. Well, last year, there was the follow-on inspection, and we had no additional request from the authorities. So when it comes to the additional request, we don't quite expect any.

Thank you very much. So let's move on to the next, Morgan Stanley, and Mr. Hayashi, your question, please.

My name is Hayashi from Morgan Stanley Securities. I hope you can hear me.

Yes, I do.

So I'm supposed to ask only 2 questions, right? So first question, at this point in time, so March 2026, your projection, you didn't make any changes of the final year's annual project forecast. Can you give me a little more nuances why you didn't change revise it for the full year?

Now you talked about tariffs. You could potentially project less of the profitability because of the potential impact from tariffs. But in Q1, the impact -- positive impact price was bigger than expected. So even if there might be some impact from tariffs, price can go up, give more upside. Therefore, is that the reason why you didn't change the forecast for full year? That was my personal like perception of you.

But is that the reason -- if you can imagine, is this wrong to imagine that that's the reason for not changing it?

Well, the impact for the tariff is going to be JPY 10 billion. That's a negative impact for JPY 10 billion. That's like our current projection. But as you said, there's an upside for Q1. And if you look at that as Otaka-san, my colleague had said, just this North American price impact will continue at least for Q3.

If you think about it through and through, so JPY 10 billion if it's upside. Advances only about JPY 10 billion, then we should be able to offset that. And for that, we will also pass down those impact -- tariff impact to the price as much as possible.

So there might be some negative impact, but the Q1 has upside, and we also can expect more upside for pricing. Therefore, we don't necessarily have to change the full year forecast. Therefore, we stay put this time.

Okay. Makes sense. My second question is in first quarter, there is expenses of the organization restructuring, if I understand correctly. But operating profit, when you put the plan for operating profit, there's an adjusted operating profit and the regular operating profit. Adjustment was starting out to be 0 at the very beginning, but there is an organizational change cost from Q1.

And also, there is a guarantee from the pharmas kind of offsetting it. But organizational restructuring cost for Q2 and moving forward, do you think that will continue to recur in about the same size? And clinical medical production completed in third quarter. I mean, in third quarter, are you expecting special loss, onetime loss? Are you expecting any of the special loss, expecting that or not?

Well, thank you for your question. Reorganization costs, look, we are always looking at the businesses and the need to be flexible. We need to account for potential change of reorganization cost. But is this -- that impact is most of them or majority of it is coming from Quirem as you pointed out.

So we are not expecting this to be continued, at least not in that side -- not at that size. So reorganization expenses were only happening, and it will close in Q2, end of Q2. Well, what we are expecting is majority will be complete by the end of Q1, majority.

Thank you very much. I'd like to now turn to Yoshihara-san from UBS Securities for your question.

My name is Yoshihara, UBS Securities. Let me ask you the first question. Is C&V, the profitability rate, this slide is AOP. Well, it really it can be either after or before the adjustment. And you were talking about the positive impact due to ForEx. And if I remember -- if I understood it correctly, even with that, I think the number has been higher than the past numbers.

And I wonder if that kind of a high level will be sustainable. And before the tariff kick in, so much was produced. And the profitability rate has been very high, and this situation may not continue on in Q2 and forward. And tariff will kick in a lot in the second half of the year, but excluding such impact, the Q1 margin at this kind of a high level would be sustainable or not?

Thank you very much for your question. Regarding C&V, AOP 24 and plus 5, there's been a 5-point up. And as you mentioned, the ForEx has been favorable centering around the stock. So 2.2 point impact has been there so far. And excluding the kind of positive impact, it is still positive -- and it's partly because of the price up and the profitability management and production efficiency improvement.

So these have been producing positive results. And regarding sustainable or not? Well, Q1 tariff impact has been almost 0. So Q2 and the second half, the tariff impact should begin. So throughout the year, 25% is our forecast, and we consider it should be achievable.

Okay. Let me confirm something. Tariff impact, you forecast the tariff impact and Ashitaka has been producing lots of products, and it's been profitable because of that?

No, it is not priced in.

Okay. Here's the second question. TIS, Interventional Systems, the U.S. has been performing very nicely. And last year Q3 2025, well, there was some production trouble last year. So that was at a high level. And as of May, you didn't say there should be huge growth, but the numbers that you are showing now are better than that. So what's going on? What kind of a background? For example, you have been trying to increase the market share or the market as a whole has been performing well? Of course, the unit price may be a factor, but -- and then, of course, the volume increase may be another factor. So can you give us the kind of a breakdown?

Thank you very much for your question. Well, as I went through during the presentation, price has been one factor, and the increased volume has been another contributing to increased sales and the profit. And if you look at the access profits in the oncology, in peripheral, in many areas, the sales revenue has been up.

And the number of the cases covered are almost as high as pre-COVID-19. So number of patients has been up and the volume has been up, contributing to the great results. Also, you're not increasing the market share. Well, the products have been very powerful. So in North America, the marketed -- our products are highly rated, I put it that way. So of course, the market share has been seeing some contribution from those factors.

Thank you very much. So let's now move on to Macquarie Capital, Mr. Tony Ren, your question, please.

Yes, maybe just a quick follow-up question on Slide #15 here. You have -- on Slide #15, you have -- the second last row, you have lost compensation from a pharmaceutical company, JPY 3.2 billion. Just wanted to get some color on that one. Is that related to the German plan that you acquired from WuXi? Or is that related to the biosimilar product?

So thank you for your question. So this is not related to any of the newly acquired WuXi plant. This actually relates to the impact that we booked in Q4 when we canceled the project for some of the activities with the pharmaceutical companies. So this is -- we've continued the negotiations with the pharmaceutical companies. So there is some compensation for the write-off or the impairment that we have booked in Q4.

So it's relatively more of a relationship towards the Q4 activity in last year that has -- we've been come to an agreement with the pharmaceutical company in this quarter.

So you will pay the -- so you will pay them JPY 3.2 billion?

No, it's the other way around. So we booked the impairments in Q4 last year. So they are compensating for that impact that we booked in Q4.

Thank you very much. Is there any other questions? Seems like there is no question. We'd like to close our Q&A and this closes FY 2026 financial -- first quarter for 2026 period will be over right now. Thank you very much for your attendance.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]