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Urology / Gynecology Business Unit (UGBU) Strategy

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Urology / Gynecology Business Unit (UGBU) Strategy Urology / Gynecology Business Unit (UGBU) Strategy Minoru Okabe Head of Uro/Gyn Business Unit Olympus Corporation March 30, 2016 Todayʼs Agenda 1.Business Overview 2.Recognition of Current Conditions 3.Market Trends 4.Business Strategies 5.Targets and Indicators 2 2016/3/30 No data copy / No data transfer permitted Todayʼs Agenda 1.Business Overview 2.Recognition of Current Conditions 3.Market Trends 4.Business Strategies 5.Targets and Indicators 3 2016/3/30 No data copy / No data transfer permitted Positioning of UG Business within Olympus 4 2016/3/30 No data copy / No data transfer permitted Distribution of Sales and Positioning FY2016 Net Sales (Forecast) Urology / Gynecology Business Unit (UGBU)* ET 72.0 Surgical Flexible and rigid endoscopes Benign prostatic hypertrophy and bladder Medical Business Devices* GI (ureteroscopes and cystoscopes) tumor resectoscopes and therapeutic FY2016 Net Sales electrodes (disposable) 337.4 205.6 （Forecast） ¥615.0 billion Urology field Flexible hysteroscopes * The figure for Surgical Devices net sales (¥205.6 billion) includes Stone treatment Gynecology field net sales of the Urology / Gynecology Business Unit (UGBU). devices (disposable) Resectoscopes Colposcopes 5 2016/3/30 No data copy / No data transfer permitted Applications and Characteristics of Major Products Field Urology Flexible Ureteroscope Stone Treatment Therapeutic Flexible Cystoscope Resectoscope URF-V2 Devices Electrodes (Disposable) CYF-VH OES Pro. (Disposable) Product Flexible ureteroscopes are used for Flexible cystoscopes are Resectoscopes are used to treat treating urinary stones. used to treat bladder benign prostatic hypertrophy and Feature Olympus flexible ureteroscopes have a tumors. bladder tumors. dominating edge realized by merging GI Olympus flexible Bipolar TURis electrodes endoscope technologies with the small cystoscopes have a (disposable) boast higher levels of diameter scope technologies of former dominating edge realized cutting safety and performance company Gyrus. by utilizing NBI* than monopolar devices thanks to Stone treatment devices (disposable) technologies from GI. high-frequency energy are used with ureteroscopes to treat *NBI：Narrow Band Imaging technologies from GS. stones. 6 2016/3/30 No data copy / No data transfer permitted Applications and Characteristics of Major Products Field Gynecology Flexible Therapeutic Resectoscope Electrodes Hysteroscope OES Pro. HYF-V (Disposable) Product Flexible hysteroscopes and resectoscopes are used to observe and treat uterine fibroids and Feature polyps. Substantially equivalent resectoscopes are used in both urologic and gynecologic procedures. Olympus flexible endoscopes boast an edge realized through GI endoscope technologies. 7 2016/3/30 No data copy / No data transfer permitted Todayʼs Agenda 1.Business Overview 2.Recognition of Current Conditions 3.Market Trends 4.Business Strategies 5.Targets and Indicators 8 2016/3/30 No data copy / No data transfer permitted Recognition of Current Conditions Review of Medium-Term Vision Period (FY2013~) Measure Evaluation Benign prostatic Acquired leading share (29%) in principal U.S. market in the field of hypertrophy and bladder tumors benign prostatic hypertrophy and bladder tumor treatment devices by ◎ introducing bipolar TURis systems that are superior to monopolar • Shift from monopolar to systems TURis Began expanding stone treatment device business by leveraging Urinary stone treatment strength of flexible ureteroscopes with No. 1 share • Expand disposable device △ business Faced delays in new product development and therefore will commence full-fledged participation later Achieved performance driven by average annual growth of 20% in Gynecology China despite sluggish growth in U.S., Europe and Japan • Grow business through △ existing product portfolio Was unable to sell TURis disposable electrodes in U.S. due to patent infringement (sales anticipated to commence in 2016) 9 2016/3/30 No data copy / No data transfer permitted Recognition of Current Conditions Further reinforce dominating No. 1 position of flexible cystoscopes by spreading understanding of benefits of NBI technologies in observing bladder tumors Increase sales of disposable electrodes for benign prostatic hypertrophy and bladder tumor treatment by leveraging superiority of TURis Tasks technologies Commence full-fledged participation in market for disposable urinary stone treatment devices and increase sales Expand sales of imaging products and disposable therapeutic electrode products related to hysteroscopy 10 2016/3/30 No data copy / No data transfer permitted Todayʼs Agenda 1.Business Overview 2.Recognition of Current Conditions 3.Market Trends 4.Business Strategies 5.Targets and Indicators 11 2016/3/30 No data copy / No data transfer permitted Market Trends Field Market Scale Market Trends (Growth Share* Competitors (Operating Environment) Forecasts) Approx. 1.0 million benign prostatic hypertrophy and bladder tumor resection procedures conducted annually. There is increasing cost awareness associated with Karl Storz Urology outpatient surgical alternatives and prevention of reoccurrence. 170〜190 Richard Wolf Approx. 1.8 million stone treatment procedures billion yen Approx.30％ Boston Scientific conducted annually, number of high-efficacy endoscopic treatments (URS) rising (CAGR of Cook Medical 4%) （CAGR：2〜4%） Reimbursement for bladder tumor (carcinoma CR Bard in situ) observation and treatment using NBI (Japan, FY2017) Gynecology Rising case numbers for diagnosis and treatment of dysfunctional uterine bleeding and 20〜30 Karl Storz hypermenorrhea billion yen Approx.10％ Richard Wolf Shift toward outpatient surgical alternatives and other minimally invasive therapies （CAGR：2〜4%） Johnson & Johnson 12 2016/3/30 No data copy / No data transfer permitted * Source: Olympus Corporation Todayʼs Agenda 1.Business Overview 2.Recognition of Current Conditions 3.Market Trends 4.Business Strategies 5.Targets and Indicators 13 2016/3/30 No data copy / No data transfer permitted Business Strategies Secure dominant share in markets for flexible endoscopes and TURis products that leverage Olympusʼ technological prowess １ - Maintain competitiveness of flexible scopes by utilizing NBI technology benefits and strengthening small diameter endoscope technologies - Expand share by bolstering TURis electrode lineup Urology Strengthen urinary tract stone treatment business operations to expand market share ２ - Strengthen functions (R&D, manufacturing, procurement, and sales) in largest market (U.S.) - Enhance access to GPOs, IDNs, and other group purchasers of consumables in U.S. Efficiently increase market share by leveraging existing products and technologies Gynecology ３ - Increase sales of hysteroscopes and therapeutic electrodes (TURis) that utilize urology field technological prowess 14 2016/3/30 No data copy / No data transfer permitted Priority Measure Measure Leverage competitive flexible ureteroscope products １ to expand share Further differentiate cystoscopes by soliciting ２ benefits of NBI Urology Increase sales by bolstering TURis lineup and ３ leveraging advertising product competitiveness Commence full-fledged participation in urinary stone ４ treatment devices (disposable) market Efficiently expand sales of hysteroscopes and Gynecology 5 related treatment devices No data copy / No data transfer permitted 15 2016/3/30 P.M.1. Leverage competitive flexible ureteroscope products to expand share Leverage product competitiveness to increase sales of flexible ureteroscopes (URF-V2 and URF-P6) Promote spread of flexible ureteroscope procedures by providing education support Differentiate disposable endoscopes by demonstrating superiority of performance, system versatility and low costs Principal Endoscopes Used in Stone Treatment Flexible ureteroscopes Rigid cystoscopes Rigid ureteroscopes 16 2016/3/30 No data copy / No data transfer permitted P. M . 2 . Further differentiate cystoscopes by soliciting benefits of NBI Advance activities for establishing clinical evidence regarding observation and treatment using NBI Step up sales promotion activities for flexible and rigid cystoscopes utilizing clinical evidence Standard white light NBI (From CYF-VH catalog) 17 2016/3/30 No data copy / No data transfer permitted P.M.3. Increase sales by bolstering TURis lineup and leveraging advertising strength of Olympus products Enhance product competitiveness by bolstering TURis electrode lineup Encourage customers to upgrade from monopolar systems or switch from using other companiesʼ laser treatment products ＜FY2015 Prostate Resection Case Numbers (Japan)＞ ■ Transurethral prostate surgery using electrolyte solution ■ Other transurethral prostate surgery ■ Transurethral laser prostate resection using holmium laser ■ Other transurethral laser prostate resection ■ Transurethral [microwave] prostate thermotherapy (series of procedures) Source: MHLW ”Survey of Medical Care Activities in Public Health Insurance” 18 2016/3/30 No data copy / No data transfer permitted P.M.4. Commence full-fledged participation in urinary stone treatment device (disposable) market Leverage strengths of flexible ureteroscopes with No. 1 share to expand stone treatment device market share Enhance initiatives for promoting spread of flexible ureterorenoscopy (FURS) using flexible ureteroscopes for removing stones ● U.S.: Annual growth of 16% in FURS case numbers ● China: Approx. 70% of FY2016 flexible ureteroscopes sales from customers newly starting
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