annual report 2016 technology and quality section - … penpol private ltd. ... trade and industry...

Annual Report 2016

R&D and Production

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Global R&D System

Utilization of Intellectual Propertyin Each Business Segment

Patents/ Measures against Counterfeit Products

Global Production System

Quality Management in the Factory

Technology and Quality Section

In fiscal 2014, Terumo adopted business-led management organized around three core companies. Under our business-led management, we pursue R&D for the Terumo Group along two vectors: Company R&D and Corporate R&D. Company R&D develops product pipelines consistent with strategies where the businesses in the three-company management structure oversee everything from product development to production and sales. Led

by the R&D Headquarters, Corporate R&D develops next-generation products for existing businesses and conducts projects to create new businesses. While these two R&D groups pursue separate paths, they also collaborate on joint projects to create new value. Overall management of company and corporate R&D efforts for the entire Terumo Group is headed by the Chief Technology Officer (CTO).

Global R&D System

Overseeing Terumo Group R&D—The CTOIn July 2015, Terumo moved to strengthen its global headquarters functions by creating six CXO positions to oversee critical functions of the entire Terumo Group. One of these positions is the Chief Technology Officer, or CTO. The CTO leads Corporate R&D, promotes R&D collaboration across the Terumo Group, and strengthens internal development capabilities. The CTO launches projects spanning company and business boundaries, and directs R&D aimed at creating new businesses. The CTO also identifies and analyzes trends shaping the future of medicine, sharing findings with the Group management and proposing growth strategies.

In addition, the CTO works with the CTO Team to promote strategic R&D efforts involving various Terumo businesses and build a human network among R&D staff with diverse skills and knowledge. Through these efforts the CTO seeks to maximize the R&D capabilities of the entire Terumo Group.

Hiroaki Kasukawa

Chief Technology Officer (CTO)General Manager, R&D Headquarters

Global R&D System

1Terumo Corporation Annual Report 2016 Technology and Quality Section

•TIS Division•Neurovascular Division•CV Systems Division•Vascular Graft Division

Cardiac and VascularCompany

•General Hospital ProductsDivision

•D&D Division•DM and ConsumerHealthcare Division

General HospitalCompany

Blood ManagementCompany

CompanyR&D

CorporateR&D

Cooperate with and Support Company R&D

R&D Headquarters

Chief Technology Officer (CTO)

R&D System Based on Globalized Business-led Management

Vascutek Ltd.

MicroVention, Inc.

Terumo BCT, Inc.

Terumo CardiovascularSystems Corporation

TERUMOTerumo Europe NV

R&D Headquarters

Ashitaka Factory

Fujinomiya Factory

Kofu Factory

Terumo Clinical Supply Co., Ltd.

Terumo Medical Corporation

Terumo MedicalInnovation, Inc.

Terumo Penpol Private Ltd.

The Terumo Group’s R&D Bases (As of June 30, 2016)


As populations age globally, needs are increasing not only for disease treatment, but also health maintenance and preventive medicine. In addition, the growing use of IT in medicine has given rise to strong expectations for the development of individualized medicine—medicine optimized to individual patients—and remote/residential medical care. The evolution of the environment and needs of medicine have expanded the role of R&D

beyond developing new technologies and products, to also include careful observation of medical settings to accurately identify needs with great social or economic significance, and creation of valuable solutions to address them. By increasing the speed and accuracy of the needs-identification and solution-development cycles, we strive to provide medical settings with innovations of value faster and in greater numbers.

Terumo’s R&D Objective: Create New Value

Bringing new value to medical settings requires the ability to discern critical unmet needs through communication with patients and medical professionals. Once unmet needs have been identified, it is paramount to flexibly combine internal and external technologies and expertise through open innovation. Terumo works to develop R&D personnel who can lead open innovation, and proactively incorporates new perspectives and approaches. As one example of this, we have adopted the practical development approach of the Biodesign Program at Stanford University in the United States. Under this approach, we observe medical settings directly to identify needs and select the most beneficial needs for medical settings. To meet the needs, we next develop product

Strengthening Internal Development

concepts from feasibility and market perspectives, and aim for commercialization. The advantage of this method is to be able to pursue both the results of human resource development and product development. Terumo’s internal development activities also take place in other ways: Two examples are our participation in the SIDO Next Innovator program sponsored by the Japanese Ministry of Economy, Trade and Industry and our overseas study program to help associates learn about cutting-edge technologies.

Through these initiatives, we strive to develop new perspectives and ways of thinking, acquire knowledge, and build the human networks required to pursue innovations demanded by the global healthcare market.


As medical technology advances and IT evolves, the practice of medicine is undergoing drastic change. With aging populations across the globe and changing lifestyles amid economic growth in emerging nations, it is necessary to provide medical services that are recognized as socially and economically valuable, based on a comprehensive consideration of disease prevention, prediction of the onset of disease, diagnosis and treatment, and post-treatment quality of life (QOL).

The aim of R&D at Terumo is to contribute to medical settings globally by producing innovations of value in the ways mentioned above, and to thereby support sustainable growth of the Terumo Group. In the area of cardiovascular disease prevention and treatment, for which the rate of incidence is growing, the Cardiac and Vascular Company is applying its wealth of experience and expertise in development of interventional therapy and cardiovascular

Searching for Growth Opportunities

surgery products to consider new initiatives in areas surrounding the cardiovascular disease.

Another key area of R&D activities is the commercialization of regenerative medicine. Drawing on the technology accumulated in developing HeartSheet autologous skeletal myoblast sheets—the world’s first cellular and tissue-based product for treating severe heart failure—we will consider the potential of regenerative medicine to treat heart failure from a broad perspective.

We are additionally looking beyond the treatment of disease, focusing also on postoperative care that addresses issues including postoperative complications and pain management, in order to further medicine that improves patient QOL. Other areas we are studying include the development of new products and services that apply analysis of the data from medical IT-based examinations, disease onset prediction, and prevention activities.


Essential technologies commonly required for the development and manufacture of medical devices are improved and enhanced on a daily basis and shared throughout the Terumo Group. One example is technology that augments biocompatibility. Medical devices are used for diagnostic and treatment purposes by accessing the patient’s body in many different ways. Some medical devices make contact with the surface of the patient’s body, while others are inserted within the body or implanted in the body for extended periods of time. For this reason, a key priority is how to access the patient’s body safely while minimizing any undesirable physical burden on the patient. One factor that distinguishes an outstanding medical device is enhanced biocompatibility, achieved by developing materials that inhibit allergic reactions, blood clotting or other responses, and making structural enhancements.

Furthermore, materials used in medical devices

must offer various characteristics, such as light resistance, deformity resistance, sterilization resistance, and pharmacological compatibility, according to the application. Terumo’s wealth of experience and technology in the materials field is put to good use in the entire process from the development and selection of appropriate materials, to processing and forming into shapes that reflect user-friendliness and other considerations

In processing, molding, sterilization, and other production operations on these materials, Terumo applies an efficient, rigorous quality assurance system based on technologies and expertise (production technology) developed through many years of proven experience. In addition, each Terumo factory amasses production technologies related to the products it manufactures, while taking part in a cross-factory system to assist with production at other factories. This ensures a high-quality production system at all factories.

Upgrading, Improving, and Sharing Fundamental Technologies


PostmarketSurveillance

Sales

Applicationfor

ApprovalClinical Trial

SafetyEvaluation

PatentApplication

andResearch

Development

Basic Flow Chart from Development to SalesMedical devices represent the integration of an extremely diverse range of elemental technologies from a host of scientific disciplines, including physiology, biochemistry, pharmacology, cell technology, polymer technology, material processing technology, and electronics. Because of their use within the human body, regulatory authorities in Japan and elsewhere have set the bar for safety exceptionally high for approving the manufacture and sale of these devices.

The Terumo Group has a variety of elemental technologies, and most of its associates possess a high level of expertise. However, to stay ahead in a medical devices industry made fiercely competitive by new entrants from outside industries, and deliver new products to society at a rapid, steady pace, the Company must have an organization framework capable of applying existing in-house elemental technologies and outside technologies in product development, controlling the flow linking every stage from product development to sales, and dealing with the very rigorous approvals process specific to medical devices.

To achieve this, Terumo’s R&D Headquarters is strengthening its project management function to expedite the process from research through to commercialization. The two-pronged structure consists of groups responsible for seeking out new medical needs and underdeveloped technologies to draw out new value, and those charged with developing these into products for mass production. The bases underpinning this structure are located in the R&D Headquarters and key Terumo factories. This configuration establishes an environment in which the entire process from initial R&D stages for new products to mass production stages can occur unimpeded.

As part of this structure, Terumo’s own evaluation center has the capacity to evaluate devices along physical, chemical and biological dimensions. The evaluation center can gather the experimental data the R&D Headquarters and each factory need for R&D activities, enabling non-clinical studies, which precede clinical trials, to be performed in-house. This capacity has the added merit of enabling Terumo to acquire expertise in performing safety evaluations responding to a diverse range of technologies.

In addition, numerous departments are functionally linked from the early stages of development, allowing for efficient conversion of R&D activities into viable products. These departments include those that coordinate clinical trials, those responsible for submitting applications in compliance with foreign and domestic regulatory

Organizational Capabilities: The Link in Translating Technologies into Products

affairs laws and negotiating with approval bodies, those that research and oversee post-market product effectiveness and safety matters, and an intellectual property department charged with the research and protection of intellectual property rights. In recent years, Terumo has promoted strategic collaboration with overseas subsidiaries, leveraging its competitive edge in having multiple development bases overseas to swiftly incorporate technology and develop new products. For example, Terumo has conducted clinical trials based on European Union regulations, under which trials can be implemented more speedily than in Japan. It has also performed simultaneous, multinational clinical trials in close collaboration with subsidiaries. These trials are aimed at obtaining early approval by sharing data obtained by the approval bodies of each country.

Terumo has honed this organizational framework—one that can smoothly support processes from product development through to sales—in the course of business activities over its long history as a medical device company, and as a result of such initiatives as proactive M&As and business alliances with other leading companies around the world in recent years. As such, this framework makes up a vital part of the intellectual assets that support Terumo’s strengths.


High-growthHigh-margin

Stable-growthHigh-margin

Upgraded/improved

performance

Short-life-cycle

Long-life-cycle

Innovation

Advanced

Platform

Terumo currently operates in three core business segments while exploring new fields that are expected to drive future business. Each business segment has unique characteristics based on differences in products, intended users, and other attributes. Terumo plans and promotes optimal business development initiatives for each business segment by combining proper materials, production technologies, and regulatory affairs strategies.

The product management of each of the companies overseeing the three core business segments is comprised of two components—advanced products and platform products. Advanced products are innovative, high-growth/high-margin, and short-life-cycle. Platform products are stable-growth/high-margin, long-life-cycle products offering upgraded and improved performance. In managing products, stable earnings of platform products are invested in advanced products, and then the brand image and technologies of advanced products feed back into platform products.

The Cardiac and Vascular Company is a good example of a business where Terumo combines two elemental technologies—coating and metal alloy/metal processing. For example, we have incorporated superelastic metal alloy technology into our guide wires for angiography, and laser processing technology into PTCA (Percutaneous Transluminal Coronary Angioplasty) balloon catheters. In addition, application of our hydrophilic coating (M Coat) to both of these products plays a key role in achieving improved accessibility to deep blood vessels. We have

Basic Policy

Cardiac and Vascular Company

also combined these elemental technologies with precision processing and microfabrication to achieve high flexibility in our stents.

Terumo’s long-term goal is to become a company with a global presence. To realize this goal, we are applying technologies nurtured in the cardiac and vascular field to enhance product pipelines in medical imaging, peripheral intervention, and neurovascular intervention, where the our elemental technologies, precision processing, and miniaturization technologies have also been put to good use.

Utilization of Intellectual Property in Each Business Segment


Glidesheath Slender TRI introducer sheath

TR Band radial hemostasis device

Expanded stent

Ultimaster drug-eluting coronary stent

TRI (Transradial Intervention) is an interventional procedure in which a catheter is inserted into the radial artery in the wrist. Compared to the conventional approach of inserting the catheter into the femoral artery in the groin, TRI results in fewer complications and shorter hospitalization, for greater patient QOL (quality of life) and lower medical cost efficiency.

The Glidesheath Slender TRI introducer sheath developed by Terumo enables the performance of TRI on elderly and female patients, who in the past were viewed as unsuited for TRI due to the slenderness of their arteries. It does this by employing a reduced external diameter, while maintaining an internal diameter large enough to allow the passage of a traditional catheter. In addition, the Glidesheath Slender TRI introducer sheath also lowers the risk of damage to the internal arterial wall and reduces hemostasis time.

The TR Band radial hemostasis device uses two compression balloons to precisely apply pressure on the radial artery, enhancing hemostasis at the access site, with reduced impact on surrounding blood vessels and nerves.

Glidesheath Slender® TRI Introducer Sheath and TR Band® Radial Hemostasis DeviceContribute to reducing patient burden in interventional therapy

Ultimaster® Drug-Eluting Coronary StentAim to lower the rate of stent thrombosis and reduce stress on the vessel wall

Our Ultimaster drug-eluting coronary stent employs bioresorbable polymer as its drug coating material. In addition, polymer and drug are applied only to the surface coming into contact with vessel tissues. These features are expected to reduce the rate of very late stent thrombosis. With its unique stent design featuring a cobalt chromium alloy, the Ultimaster stent enables physicians to navigate the stent in tortuous anatomy and facilitate its placement in a manner that can conform to vessel curvature and further reduce stress on the vessel wall for improvement of prognosis.


CAPIOX SP-200 device for operating a centrifugal pump for ECLS system

Hollow fiber (Photo) / Cross-section (Rendering)

Latest CAPIOX FX oxygenator

CAPIOX® SP-200 Device for Operating a Centrifugal Pump for Extracorporeal Life Support System (ECLS)Larger display and improved operability along with enhanced functionality for patient safety

CAPIOX® Hollow-Fiber OxygenatorTo reduce patient stress during cardiovascular surgery

The CAPIOX SP-200, a device for operating a centrifugal pump for ECLS* system, offers improved operability and features for better patient care. It has a larger display panel for easier viewing of its information output, is 40% lighter than previous models for greater mobility in emergency situations, and eliminates the need for a dedicated flow sensor connector. It also now features a patient history function for better monitoring of changes in flow volume, pressure, and other aspects of circulatory conditions.

* Extracorporeal life support system (ECLS): The ECLS is used to provide temporary circulatory support for emergency cardiopulmonary resuscitation and cases of severe heart failure. Using components including a centrifugal pump, heart-lung machine, outflow and return cannulas, and drive unit, among others, this device supports the body’s circulatory system with substitute heart and lung functionality.

Terumo developed the world’s first microporous polypropylene hollow fiber oxygenator, which we introduced to the market in 1982. With its stable gas exchange performance and compact structure, this product is now used throughout the world. By developing what has become the global standard for oxygenators, Terumo has made a significant contribution to the development of cardiovascular surgery. In recognition of this contribution and our technology for stably producing high-quality hollow fiber membranes, Terumo was named a recipient of the 62nd Okochi Memorial Prize* by the Okochi Memorial Foundation in 2015.

* Established to commemorate the achievements of Dr. Masatoshi Okochi in the field of engineering, the Okochi Memorial Prize is a long-established, highly esteemed award presented in recognition of significant contributions to academic and industrial development in the fields of production engineering, production technology R&D, and advanced production methodologies in Japan.


Immucise intradermal injection device

General Hospital Company

The General Hospital Company provides medical devices and systems used for treatment at hospital bedsides and in the home. Terumo adopts technology that is responsive to the different ways medical devices are used. We offer value-added medical devices leveraging our

The epidermis and dermis - intradermal layers - are rich in immune cells. In recent years, it has been found that intradermal injections, compared to subcutaneous and intramuscular injections, produce immunological effect rapidly and require less amount of vaccine than subcutaneous or muscular injections to acquire the same level of effect. However, because the intradermal layers in which injections must be made are only about 2 mm thick, the effectiveness of intradermal injections is affected by the skill of the physician administering the injection. Terumo embarked on the development of the Immucise intradermal injection device to enable simpler, more reliable administration of intradermal injections. In 2010, we entered into a partnership with Daiichi Sankyo Co., Ltd. to jointly research a seasonal influenza vaccine for intradermal administration. During development of Immucise, Terumo has adopted the method of a vertical press injection to enable simple and certain injection of the needle. Terumo also pursues optimal combination of syringe structure for

Immucise® Intradermal Injection DeviceMaking difficult intradermal injections simpler and more certain

stretching the skin taut in order to insert the needle easily and needle shape for reaching the ideal depth in the upper layer of skin. In September 2015, Terumo received approval for the manufacture and sale of Immucise intradermal injection needle in Japan. Looking to the future, it is expected that this device could be used to administer other types of vaccines, as well. Terumo also looks to expand the use of Immucise into markets outside Japan.

strength in pharmaceutical technologies; medical devices that emphasize safety for both patients and medical professionals, ease of use, and medical cost efficiency; and medical devices specifically for home health management and preventive medicine.


SURPLUG AD series closed infusion system

NANOPASS 34 needle for pen-injector

The new SURPLUG AD series was launched in 2014 to meet the various needs of hospital departments. It employs a new structure to eliminate residual volume in the injection connector, enabling more accurate administration. In addition, an ISO male luer connector can be connected to the SURPLUG AD connector directly, without dedicated connection adapters, allowing easy and swift administration. The SURPLUG AD series is the world’s first closed infusion system to offer no residual volume and a direct connection. Simply designed and easy to use, it contributes to safer drug administration. In addition, simplified device management translates into economic benefits for medical institutions. Terumo will continue to enhance safety and efficiency in medical settings by providing infusion systems.

SURPLUG® AD Series Closed Infusion SystemFor greater safety and efficiency in medical settings where infusions are administered

NANOPASS® 34 Needle for Pen-injectorTo ease the pain of insulin injections

Terumo, long a top manufacturer of needles, uses its proprietary technologies and its ability to identify needs from the user’s perspective to develop products that are indispensable for improving patient quality of life. For example, to reduce the pain of insulin injections, we developed the NANOPASS 34 pen needle. With a diameter of only 0.18 mm, this is the world’s thinnest pen needle, and we are now distributing it in Japan, China, Italy, Germany, and other countries, as well. The NANOPASS 34 employs a proprietary asymmetric edge for smoother needle insertion. In addition, with its double-taper structure, in which both the external and internal diameters of the needle decline as the tip is approached, the design of the NANOPASS 34 lessens resistance as the needle enters the skin. Smooth entry is also promoted by the gentle angle of the needle’s taper, which acts to evenly distribute resistant force on the needle and ease penetration.

In 2014, cumulative sales of the NANOPASS 34 and its earlier version, the NANOPASS 33, surpassed one billion units.


Prefillable syringe (for pharmaceutical companies to fill and market as a finished product)

NICOPELIQ peritoneal dialysate

Prefillable syringes (for pharmaceutical companies to fill and market as a finished product) have come into wide use in recent years. Antibodies and other types of biopharmaceuticals, however, are generally unstable, and the silicone oil used as a lubricant on traditional glass syringes is known to have potential negative impacts on the effectiveness and safety of these drugs. Applying its plastic syringe manufacturing technologies created over many years and its proprietary i-coating technology, Terumo developed the silicone-oil-free PLAJEX plastic prefillable syringe, and is selling it to both Japanese and overseas pharmaceutical companies. Through the development of this syringe designed to meet the needs

After commencing sales of peritoneal dialysate and its system in 1987, we began to develop products aimed at delivering comfort to patients in home care settings. Among the results of that initiative is NICOPELIQ, the world’s first neutralized peritoneal dialysate containing icodextrin. NICOPELIQ, launched in 2014, is a peritoneal dialysate that uses icodextrin as an osmotic agent and is mixed and neutralized by use of a two-chamber system, applying technology we developed for our infusion products. It is expected to mitigate impact on the peritoneal function, which is believed to be one of the factors peritoneal dialysis is discontinued.

PLAJEX® Plastic Prefillable Syringe (for pharmaceutical companies to fill and market as a finished product)Development of a high-value-added syringe designed to meet the needs of a variety of drug types

NICOPELIQ® Peritoneal Dialysate Containing IcodextrinWorld’s first neutralized peritoneal dialysate for reducing impact on the peritoneal function

In the field of abdominal surgery, Terumo has worked to develop a sprayable adhesion barrier gel to reduce post-surgical adhesion. A post-surgical adhesion forms as part of the healing process for tissues damaged as a result of surgery. “Adhesion” refers to the connection of organs and other tissues that are not normally connected. Adhesions form after 50-90% of abdominal surgeries - involving the peritoneal cavity, pelvic cavity, and other parts of the body - regardless of the surgical technique used. They are also a cause of intestinal obstructions, infertility, chronic pelvic

pain, and other post-surgical complications. Seeking to reduce post-surgical adhesion, Terumo developed Japan’s first sprayable adhesion barrier gel and in June 2016 received approval for the manufacture and sale of it in Japan. Because this product is sprayable, it is easily applied to the relevant tissues in abdominal cavity regardless of whether the surgery is open or laparoscopic. Terumo aims to promote greater use of AdSpray to reduce adhesions after abdominal surgery.

Development of AdSpray®, Japan’s First Sprayable Adhesion Barrier GelAim to reduce the risk of post-surgical complications

of a variety of drug types, Terumo is promoting the use of prefilled syringes, a safer injection alternative.


TACSI Automated Centrifuge and Separator Integration System

Spectra Optia Apheresis System

Terumo’s blood management products, centered on blood bags, are used around the world. Because blood collection methods and formulation methods for collected blood samples differ in each country and region, Terumo has teamed up with regional optimal partner companies to

Blood Management Company

In developed countries, for many years, blood transfusion therapy in recent years has come to be dominated by the use of blood component preparations, rather than whole blood from donors. In order to efficiently separate the blood components patients require from whole blood, Terumo and Andreas Hettich GmbH & Co. KG (“Hettich”), a well-established German manufacturer of centrifuge equipment, jointly developed the automated blood component processing system, TACSI. This system combines Terumo’s proprietary blood bag technology and Hettich’s centrifuge equipment, the system automates the process of extracting necessary components from blood, the raw material. TACSI has improved the precision of the whole blood platelet component production process and dramatically increased work efficiency, while contributing to safety advancements in blood transfusions through the homogenization and enhanced quality of the platelet concentrates produced with system.

develop and supply products optimized for each market. In addition, in the field of therapeutic apheresis, which has been the focus of attention in recent years, we are developing and providing products that apply the blood component separation technologies we have developed to date.

TACSI® Automated Centrifuge and Separator Integration SystemImproving the efficiency of blood component processing, and contributing to greater homogeneity and quality in blood components

Spectra Optia® Apheresis SystemHelping to make apheresis therapy a new option for treating intractable diseases

Therapeutic apheresis (plasma exchange) has gathered attention in recent years as a new treatment alternative for patients with autoimmune, inflammatory, viral, and other intractable diseases. In therapeutic plasma exchange, plasma which contains pathogenic substances is separated from the patient’s blood and replaced with donated plasma from healthy donors, or other replacement fluids, for improving patient condition. Terumo develops and offers the Spectra Optia system, which applies centrifugal separation technology to efficiently remove plasma containing pathogenic substances.


Quantum Cell Expansion System

Regenerative medicine and cell therapy, which are expected to become significant medical fields in the future, require the ability to consistently culture massive numbers of high-quality cells. The traditional flask-based culturing process requires significant investments in labor and in facilities where extremely high levels of quality and safety can be maintained. Terumo has sought to simplify the cell culturing process by developing the Quantum System — an automated cell culture platform. This system automates everything from preparation of the cells to be cultured, to the addition of reagents, provision of cell culturing medium, and harvest of cultured cells, increasing efficiency and lowering costs, while greatly increasing reproducibility and scalability of the cell culturing process. Controlling temperature and gases during the cell culturing process, the Quantum System is functionally closed, greatly reducing the risk of contamination and mistakes that can occur in a labor-intensive process, and enabling the culturing of large volumes of cells in an extremely small footprint of only 0.3 square meters. The Quantum system’s 3D, functionally closed bioreactor* contains about 11,500 hollow fibers with a surface area of 2.1 square meters. The large surface

Quantum™ Cell Expansion SystemHelping to improve the reproducibility and scalability of cell culture processes

area is designed to maximize adherent cell expansion in a minimal amount of space. The Quantum system has the highest cell culture surface area-to-volume ratio of any closed, automated cell expansion system on the market.

* A “bioreactor,” in general terms, is a device in which a chemical process is carried out which involves organisms or biochemically active substances derived from such organisms. When used for cell culturing, a bioreactor is a platform that manages biochemical reactions by controlling factors such as vessel temperature, pH, concentrations, pressure, mixing speed, flow rate, and ventilation.


Prepared cell sheet

Recognizing its growth potential, Terumo is pursuing initiatives in the field of regenerative medicine. We have developed HeartSheet, the world’s first cellular and tissue-based product for the treatment of severe chronic heart failure, and are now considering a broad array of regenerative medicine possibilities for applying the underlying technologies in the treatment of heart failure.

Regenerative Medicine

On September 18, 2015, Terumo’s HeartSheet autologous skeletal myoblast sheets became the first cellular and tissue-based product to be approved* for manufacture and sale in Japan. Autologous skeletal myoblast sheets are made of expanded skeletal myoblasts found in muscle tissue taken from the patient’s thigh. When transplanted to the surface of the heart, the sheets are expected to improve the patient’s heart condition significantly and are seen as a new option in treating patients with severe heart failure due to chronic ischemic heart disease. Terumo embarked on development of cell sheets in 2007, and it has been promoting joint research with Professor Yoshiki Sawa of Osaka University. In 2012, a clinical trial with seven cases was commenced at three medical institutions in Japan. The trial was completed in 2014, and in October of that year we filed an application to Japan’s Ministry of Health, Labour and Welfare for approval to manufacture and sell HeartSheet in Japan. With approval granted, we embarked on sales in the latter part of May 2016. And in the same month, we

* Approval is conditional and time-limited.

participated in the Japanese government’s public relations display at the Ise-Shima Summit, contributing a cell sheet display promoting Japan’s advanced achievements in regenerative medical technology.

Development work continues with the goals of furthering the application of regenerative medicine and contributing to greater quality of life for patients.

HeartSheet® Autologous Skeletal Myoblast SheetsDeveloped in Japan—The world’s first cellular and tissue-based product for the treatment of severe chronic heart failure


Basic Stance on Intellectual Property Strategy

Conducting IP Development Activities across Divisional Boundaries

Fostering Awareness of Intellectual Property

Terumo believes that it is critical for a manufacturer to manage innovative ideas—as patents and other forms of intellectual property, and activities that strategically use intellectual property—and convert them into profit. In pursuing global intellectual property development activities, the Terumo Group places emphasis on fostering a culture of innovation and increasing its stock of intellectual properties.

At Terumo, engineers and intellectual property staff work closely together from the initial stages of development. Invention and the creation of new technologies are pursued based on a comparison of Terumo inventions with the patents and products of competitors, and consideration of both the direction that should be taken in development activities and the type of intellectual property portfolio that should be built. Terumo has created an environment

Terumo believes that raising associates’ awareness of intellectual property and stimulating their interest in this topic are vital to enlarging its valuable intellectual property portfolio. Based on this belief, Terumo internally disseminates news on intellectual property rights in various countries around the world in a timely manner. Every year,

The Terumo Group formulates and promotes global intellectual property strategies that are closely coordinated with both R&D and business strategies. This ensures that innovative ideas generated through global R&D activities, including overseas sites, provide a base of intellectual property that contributes to the profits of the Terumo Group’s global business operations.

in which intellectual property staff can casually consult with engineers to promote efficient intellectual property development.

Terumo’s Intellectual Property Department works to strengthen patent application activities and intellectual property rights in countries and regions where an enhanced intellectual property portfolio is necessary to the growth of the Terumo Group through invention.

Terumo also conducts a wide range of training programs organized by the Intellectual Property Department. These programs range from basic courses to specialized practical skills training and are structured to match the development levels of participants.

Patents/Measures against Counterfeit Products


General HospitalBlood Management

New Field

35%

Cardiac and Vascular

31%

31%3%

General Hospital

New Field

20%

Cardiac and Vascular

36%

36%

Blood Management

8%

Percentage Breakdown of Patent Filings in FY2015 by Business Segment

Percentage Breakdown of Patents Held by Business Segment as of March 31, 2016

For the fiscal year ended March 31, 2016, Terumo filed 455 patent applications in a first country, with 65% related to areas of existing business and 35% in new areas unconnected to current operations. This illustrates that Terumo is committed to improving its existing products while also investing actively in future business expansion into new areas.

As of March 31, 2016, Terumo held approximately 3,800 patents globally. Some 80% of these patents are related to existing businesses. However, our product management approach includes the application of new advanced product technologies to earlier basic products, so even inventions patented as technologies in new fields also contribute to existing businesses.

Number of Patent Filings by Business Segment

Number of Patents Held by Business Segment

Patent Portfolio

Strengthening Measures against Counterfeit Products

As these activities make clear, Terumo must constantly safeguard and strengthen its brand image as it expands its businesses globally. Counterfeit products tarnish the Terumo brand and could negatively impact users who

trust it. As a manufacturer, Terumo has an obligation to take firm measures against counterfeit products. This includes identifying such products at an early stage through global surveys.


Terumo Group Production Bases (As of June 30, 2016)

Europe: 5U.K.: 3Belgium: 2

Americas: 8U.S.: 7Costa Rica: 1Japan 7

Outside Japan 18

25 bases

Japan:

7Vietnam: 2Philippines: 1China: 1India: 1

5Asia andOthers:

With its businesses globalizing at an accelerating rate, Terumo is strengthening its global production system in order to stably and rapidly supply high-quality products to medical settings throughout the world. Our principal Japanese factories constantly accumulate expertise, hone their advanced production technologies, which comprise the core of manufacturing capabilities, and transfer this manufacturing expertise to factories outside Japan. Terumo currently has seven factories in Japan, including the Fujinomiya and Ashitaka Factories in Shizuoka Prefecture, the Kofu Factory in Yamanashi Prefecture, and facilities at Terumo Yamaguchi Corporation and Terumo Yamaguchi D&D Corporation, which began commercial production in January 2016, and others.

Outside of Japan, Asia serves as the center of the Terumo Group’s production activities. Factories in the Philippines, Vietnam, and other locations stably provide customers with high-quality products, and receive

technology transfers from factories in Japan. By expanding production at these Asian factories, we also strengthen our cost competitiveness to support global growth. In July 2014, we opened our second Vietnamese factory outside of Ho Chi Minh City, and we are now in the process of transferring production of blood bags and automated blood collection disposable kits to that facility.

Outside of Asia, MicroVention, Inc., a U.S. subsidiary, established a factory in Costa Rica in 2013. That facility is now engaged in stable, high-volume production of increasingly in-demand coils and stents for treating cerebral aneurysms.

Moving forward, we will continue to hone the advanced production technology that drives our competitiveness, constantly working to further strengthen cost competitiveness as we build a production system capable of adapting to changes in business conditions and demand.

Maintaining High Quality and Stable Production for a Global Market

Global Production System


Strict quality control at a factory

Quality-awareness training for associates

Building a Quality Management System Compliant with International Standards

Establishment of a Quality Policy Emphasizing a Customer Perspective

Since we established a quality management system in response to European medical device directives in 1995, we have blended our international-standard system into an advanced quality assurance system based on the pharmaceutical GMP (Good Manufacturing Practice)*1 standard. We are now stepping up efforts to make our quality management system more robust, to meet ever-stricter global requirements.

Terumo is certified for ISO 13485*2, the international quality standard for medical devices and equipment, at all of its production sites in and outside of Japan. We also keep up to date with developments regarding Japan’s PMD Act (the Act on Securing Quality, Efficacy and Safety of Pharmaceuticals, Medical Devices, Regenerative and Cellular Therapy Products, Gene Therapy Products, and Cosmetics) and regulatory trends and requirements for medical devices and pharmaceutical products outside of Japan, including the EU Medical Device Directives, US FDA regulations—which have been strengthened in recent years—and emerging country regulations, which are tightening in response to accelerating global harmonization. We strive to continually improve our quality management system in anticipation of new trends and requirements. Furthermore, for ongoing maintenance and improvement of our quality system, we disseminate information on new standards and regulations and conduct education and training every year to elevate the quality awareness of associates.

Our top management has established the Quality Policy, from which we develop, operate, and effectively maintain our quality management system. Each division also sets quality objectives based on the Quality Policy. The Quality Policy devised by top management is incorporated into individual associates' objectives. The customer perspective, which appears at the top of our Quality Policy, forms the basis of our quality assurance.

*1 Good Manufacturing Practice: Manufacturing and quality assurance guidelines for pharmaceuticals.

*2 ISO 13485: An international standard for the establishment of quality management systems for the medical device industry.

Quality Policy

In order to deliver safety and reliability to healthcare fields, we shall

• pursue products valuable for our customers;

• understand our own roles in the quality system and practice them, and

• always review and improve our ways of doing business.

Terumo Corporation

Quality Management in the Factory


Terumo receives increasingly strict external audits

Leaders of quality divisions brought together to discuss global issues

Respect for Bioethics

Strict Quality Control at All Facilities, Inside and Outside of Japan

Internal and External Audits to Evaluate Quality Management Effectiveness

In developing and evaluating medical devices and pharmaceuticals, Terumo’s first concern is the dignity of life. In doing business, we comply with all relevant laws and ordinances, follow social norms, and give equal weight to science and ethics, as we have outlined in company rules.

Regarding the use of animals for R&D and product evaluations, the head of our animal experimentation group established the Institutional Animal Care and Use Committee (IACUC). This will enable us to supplement the 3R principles*, clearly specified in a 2005 revision of a Japanese law, with a fourth “R” standing for responsibility. The IACUC undertakes employee education initiatives, examines experimentation plans, confirms that

Responding to group-wide risk management and quality assurance expectations that have risen with globalization, we introduced a CQO structure* in 2015 and have enhanced monitoring at all of our production sites. In addition, to achieve shorter response times and stronger collaboration, we bring the leaders of quality divisions in Japan and abroad together to discuss common issues and share knowledge and experience. With overseas factories now playing greater roles, we are sharing with overseas associates the quality improvement know-how developed in Japan and having

is a trademark of TERUMO CORPORATION.TERUMO, M Coat, Ultimaster, Glidesheath Slender, TR Band, CAPIOX, Immucise, SURPLUG, NANOPASS, PLAJEX, i-coating, NICOPELIQ, Adspray, TACSI, and HeartSheet are registered trademarks of Terumo Corporation.Spectra Optia is a registered trademark of Terumo BCT, Inc.Quantum is a trademark of Terumo BCT, Inc.

To maintain and improve quality, we conduct internal audits to objectively evaluate whether our quality management system is being appropriately implemented and followed. The audits are conducted by associates who have been trained within the company to perform internal audits. The results are reported to our top management, who mandate measures by which we continually improve our quality management system. In addition, we undergo several external audits, by governmental authorities, certification bodies, and other organizations, each year to verify our compliance with Japan’s PMD Act (the Act on

experiments were properly carried out and finished, and performs inspections to determine whether animals are being properly cared for to ensure responsibility in the use of animals in experimentation.

An evaluation performed by the Japan Health Sciences Foundation confirmed that our organizational approach to animal testing is in compliance with the basic guidelines for animal experimentation under the jurisdiction of the Japanese Ministry of Health, Labour and Welfare.

* 3R principles: First proposed by W. M. S. Russel and R. L. Burch in 1959, the three Rs—Replacement (switching to research approaches that do not use animals), Reduction (use of fewer animals), and Refinement (reduction of the pain felt by animals) —are principles for the ethical use of animals in experimentation. In Japan, the 3Rs were codified in the 2005 revision of the Act on Welfare and Management of Animals.

associates in Japan learn about systematic approaches and standardization from colleagues at overseas factories.

Securing Quality, Efficacy and Safety of Pharmaceuticals, Medical Devices, Regenerative and Cellular Therapy Products, Gene Therapy Products, and Cosmetics); U.S. regulations, and those of Europe and other countries; and the requirements of corporate customers.

*The CQO structure is a quality management system led by a Chief Quality Officer.


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