Terumo Corp

Thank you for joining today's real big starting our financial announcements.

So I'd like to first ask CFO Kagemoto-san to talk. Then next I'd like to hand it over to CEO Kagemoto. to talk about the direction and the core businesses for TIS. So, followed by that, we'll do the question and answer. And we will take 16 minutes for the combined presentation and the Q&A. We have simultaneous translation in Japanese and English. You can see what both of them And please use the audio button at the bottom to change the language. By the way, the screen will only present it with the Japanese version of the slide. English version can be downloaded. We'll let you know if there's a technical problem on the streaming. 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 result 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 result. Hagimoto-san, 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 quarters. This is our highlights. We continue to benefit from favorable business environment. Our revenue for the first half reached a record high of $534.9 billion. In particular, demand is not very much strong, resulting in an 8% decrease in revenue on a local currency basis, or in profit adjusted by 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, In writing recommendations, we have revised all full-year guidance announcements in May. We have upwardly revised revenue and adjusted revenue profit, reflecting the strong fundamentals and changes in foreign exchange assumptions, particularly in depreciation. On the other hand, we have incorporated temporary costs related to the strategy in issues such as accretion-related expense. and continuous portfolio reviews into operating profit of what i will explain the details later next slide Moving on to our P&L performance, revenue was driven by CNV and TBCT companies. Despite negative currencies' impacts, revenue for the first half reached a record 534.9 billion yen. Operating profit and adjusted operating profit both grew faster than revenue, reaching record highs of 101.0 billion yen and 114.4 billion yen respectively. From the second quarter, charity impacts began to materialize, but profit growth was achieved mainly through price measures and appropriate cost management. 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 continued demand expansion contributed to growth to profit growth gp increments increment by sales increase led by overseas tis especially in north america and by plasma business under global black solution gross margin price pricing measures in the cmd contributed significantly to traffic growth though positive effects were partially offset by Kyiv's inflation and mixed effects. S&J increased, with business expansion remaining within expected levels. And 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 slide. Let me now explain results by companies. Please note that the 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 centred in North America, TIS and New World Bank growth, while CardioVascular also achieved high single-digit growth in local currency, driving overall company performance. Although Eltech 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. Urban profit improved by 2.27%. Pricing measures, profitability improvement measures, and unprofitable regions have contributed. FX stock impact was negative, resulting in a slight decrease in margin compared to the first quarter, but fundamentally remained solid. Next slide, please. Next is the TMCS, the medical care solution company. Revenue for the first half increased driven by growth in pharmaceuticals. This growth reflects the impact of the retirement shift in certain areas of the domestic CDMO business being recorded in the second quarter, along with the continued strong performance of projects overseas. Ashfall 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. Traffic growth was supported by recovering pharmaceuticals. Continuing to TBCT, the blood and cell technology company. When it grew significantly in plasma innovation and the global blood solutions, RECA deployment to existing customers were completed in the first quarter and operational optimization will continue. Co-businesses are 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 shaking devices. Profit increased, led by input profitability from higher sales. Next slide, please. And this is our revenue by region. In America, demand and expansion continued with double-digit growth in local currency. All companies showed strong growth, with TIS-funded pharmaceuticals and global blood solutions serving as key drivers of global revenue. In Europe, stable growth in TIS and euro and strong performance of pledge-extra pharmaceutical segment growth. In Japan, pharmaceuticals contributed to higher revenue. Supported by the recognition of delivery timing adjustments in CBMO during the second quarter, Neuro sustained its double-digit growth trend in CNV. In China, Neuro maintained strong growth, supported by the successful expansion of sales channels under DBP, resulting in higher revenue. In Asia, C&D achieved revenue growth while hospital care pharmaceuticals and global black solution posted declines in the first half due to delay in tender timing. Now, recording 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 fundamental remains strong. Thanks to continued robust demands and the successful implementation of Proactive pricing measures. We expect profit increase of 10 billion yen compared to the figures announced in May. This effectively offset the anticipated 10 billion yen 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 expected increase of 10 billion yen in AOP for existing businesses. Separately, we have factored into public costs related to strategy research available for the growth, including acquisition, and continued portfolio optimization into this year's guidance. Based on the assumptions outlined 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 have been revised upward. and both revenue and profit were adjusted. Here are the details by company. CNV and TBCT reflect strong performance with upward revisions for both revenue and profit. For CNV, continued robust demand in North America and pricing measure will remain key drivers in the second half. DBCT continues to be driven primarily by product renovation. However, due to higher-than-expected collection efficiency with RICA, turnover of disposable products industry can have expected defaults slightly below plan. Accordingly, production adjustments are scheduled for the second half, so the efficiency improvements support a solid foundation for long-term growth. Conversely, TMSC has been revised downward in profit, mainly due to aggregation-related expenses. We have also included organox performance from November onward, with cumulative 5-month revenue projected at 9 billion yen and adjusted operating profit at 1.3 billion yen. Let us now explain the revision of adjusted operating profit. Overall, we have revised the initial guidance from 214.0 billion yen to 221.5 billion yen. strong fundamentals and effective cost control have offset the 10 billion negative impact on cash in addition we have reflected the positive impact of favorable exchange rates compared to the initial guidance we have also incorporated strategy investments including the capital expenditure for the lever crossing plans 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. The adjustment items have increased by 20 billion yen from the initial guidance of 20 billion yen to 40 billion yen, with two main components accounting for the increase. The first is acquisition-related expenses, including costs associated with the organized acquisition and amortization of acquired intangible assets, totaling at approximately 39 billion yen. The second is costs related to portfolio review, primarily expenses Arising from that vision of the exclusive distribution agreement related to TIS business also totaling around $900 a year, we continue to conduct strategy business reviews to support further growth. The above costs were not included last year due to the ongoing discussions to the initial requirements, but the efforts toward portfolio optimization will remain priority going forward. Lastly, as we have consistently continued, we are on track to deliver the three financial goals outlined in GS26 with three new goals, operating profit, percent, and capital efficiency. Although acquisition-related and one-time expenses will be incurred this fiscal year, doubling profit per cent for FY25 per cent, excluding these costs based on our existing business is 18.6 per cent. Our business fundamentals will solve it, and this momentum will remain unchanged will continue to make proactive investments to drive future growth, ensuring the achievement of GS26 and further enhancement of Korea Valley. This concludes my remarks. Thank you very much for your attention.

I'd now like to hand over to CEO Mr. Samejima. Hello, I'm CEO Samejima, and today I would like to talk about the strengths and future outlook of Teramo'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 therapeutic segment, products such as therapeutic lesion access, namely PTC-A guide wires 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 number one 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 US, and Terima 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 manoeuvrability 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's unique strength. The second is consistent, large-scale, multi-product 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 Teramo 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 TIAS business and the foundation of Teramo'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 Teramo 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 Teramo 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, Teramo 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 Teramo 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 US and China and it is expected to reach 1.3 billion US dollars by 2031 this growth is supported by accumulated evidence that using imaging improves outcomes in interventional procedures in the US imaging guiding PCI has recently achieved the highest recommendation level which is class 1 evidence level A at 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 US 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. Teramo's strengths 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 Teramo 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, Teramo 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's 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, Teramo takes on the challenge with DSS. With the launch of DSS in Japan and the US, imaging sales are expected to grow to more than three times 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 US to establish meaningful evidence of DSS's clinical significance. In the US, meanwhile, as a new market entrant, we will take a phased approach to market introduction. By combining TerraMOS' 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 US. Beyond Japan and the US, demand for imaging is expected to rise globally and teramo imaging holds significant potential for rapid growth through further geographic expansion the tis business has long been a core driver of teramos 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 Terima'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 29th. 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. Excuse me. So the market expansion, specifically the increase in liver transplant procedures enabled by the adoption of NMP technology combined with Metro'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 surgeries, 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 100 billion yen 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 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. Teramo 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 Terima'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 Terima 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 Teramo's platform, its growth and next-generation device development opportunities will expand dramatically. Terimo 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.

You are taking questions in hybrid style.

Raise your hand if you are in this room and have questions. And raise your hand to the icon. if you want to ask questions remotely. If you decide not to ask questions, you can just put the raise hand functions cancelled. Please make sure you only ask two questions, and we will start from the self-signed analysts first, taking questions. In order to argue more, Mr. Sano and Mr. Sano will help Mr. Sano from the corporate strategy to be answering questions. I'd like to first invite Mr. Kotani from Mizuho to ask the first question. Yes, this is Kotani speaking from Mizuho Securities. So let me just ask a few questions about since this opportunity, innovation. First question about ESF. I think it's about 10 billion yen. Japan but it's going to go up to 30 billion yen 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 AIC-HM guideline has been revised in 2025 class A in 2025 in Europe the class adjustment change was held back in 2024 IBM The OCT is like a slightly higher, but both of them are going to be guided to be used in both. But my question is, for IBIS 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 shown. J-code or maybe new code or national coverage determination? Maybe, maybe not to that extent. But you'll, I guess, take a new Medicare code. How am I assuming how this is going to progress? Well, I was OTC. I don't think none of the competitors have that product. I just want to clarify if that's the... So that's my first question. That's right. As you pointed out, existing IBUS or ODI, OTC, the price point is higher than that. That would 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 a big barrier and tricky part. So I think going back to slide 10, if you want to clarify, you will do the OTC by making sure that you are going to clarify all of this, which is written here. My second question is about the organics. So 120, I was quite surprised by the number. NMP today is becoming widely adopted. I guess that numbers, quite high driving, big contribution to this target. But my question is, 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 are changing in Japan. It doesn't change much in the U.S. How are you going to address that? Downstage of cancer is another one. Microfacets of your product is that perfect like a match like that are you going to be running trial to that because so let me just ask a question about the growth after plateauing in several years potentially and in september will be licensed uh in uh florida state uh or obp uh investigation will start uh there is there's an article written about that uh is there any impact from that or expected impact coming from that Well, that's right. For liver implant, MHP 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 then... And also somebody who cannot be registered for the implant, but somebody who is having damaged liver. Because by doing so, somebody with the chronic patients, that can be addressed with the pipeline to help somebody with the poor perfuming levers. And the supply was bottlenecked in the past. So the registration as a recipient requires very high, strict demands. So even if your liver is damaged quite heavily, you couldn't 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. And the HIS investigation, Florida states any impact, should we expect an impact coming next year? Well, there was some impact more in the short term, but a liver implant will be saving patients' lives. That value is absolutely strong. That hasn't changed. So this impact only remains to be short-term. Mr. Long-term organ implant is actually a very strong driver in the long run. Thank you very much.

Thank you very much for your question. So I'd now from Citigroup, Mr. Yamaguchi from Citigroup Securities, please. Hello, this is Yamaguchi. Can you hear me? Yes, we can hear you. Thank you. 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. 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 for TLAs, the high quality that we have, we are, and today, I mean, MSK was given today as one example today, but, you know, there are, argyd wire and micro catheters are used in many other domains and the perception of that is getting wider and wider so I think you know 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 would be one factor in that. Thank you. 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. So 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, you know... And it is the same for the... While maintaining the relationship with them and maintaining our preferential position, it's a 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. So 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, you know, 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 set-in-stone guidance in terms of amounts. 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. Thank you very much. That's all from me.

I'd like to ask Nomura Securities, Nomura-san, please.

I hope you can hear me. Yes, I can hear you. Thank you. About 5 billion yen for Leverkusen, is this a one-time or should we expect that to come again? What's happening in Leverkusen? What kind of cost are we should be expecting from that? I will take this question. So Leverkusen, 5 billion yen in second half, that we are expecting that to be posted in second half in a projection for Leverkusen. Now this is 3 billion euro. So the transaction was 10 billion yen in euro assets. The 70 billion yen, the depreciation of those assets is 1 billion yen. and we have a lot of great talents in the company. We have a retirement talent cost of 180 million, and maintenance of equipment, some of the costs are BMI related, in all 3 billion euro, 5 billion Japanese yen, should be posted on second half. The impact of the cost after that, PMI cost is partially, so it's not going to be doubling, not simply as that, but we are going to be expecting some depreciation and talent costs in the next financial year as well. Thank you very much. My second question is about organics. driving expected to drive the high growth but the supply donor side makes sense in terms of representation but centers how many capacity how many headcounts in terms of doctors how those are centers can retain recruit more people so how's the demand side how the full capacity how long will it take to keep that full capacity that that you're expecting Well, to that question, so the medical practitioners capacity is your question. How much do we do? We don't have a quantified assessment. We haven't done that yet. But what we can do is after adoption of NMP, everything before that, but it's a very emergent practices. They're registered, you have to try to implement within several years. Daytime, they are busy with the others. 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 giving more leeway for medical practitioners. So right now, we believe that lack of resources 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 getting back to your question. Well, it's been already several years since NMP's start charge, right? So I thought, you know, maybe the initial impact is going to be cooled down. That was my concern, that this is going to be reduced quickly. Thank you.

Thank you very much, UBS Securities. Yoshihara-san, please, for the next question. This is Yoshihara from UBS Securities. Thank you very much for today. So for Organox... the i 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 intangible asset amortization i would understand So this, it says provisional in brackets for the amortization of intangible assets. So I just wanted confirmation on where possible of what is meant by provisional here. And, you know, hypothetically, it seems that there's in such a large difference in between the revenues for the organox, there was a... minus including the disposable of intangible assets. So I just want to know if my presumption is correct regarding these organox. Thank you very much. So 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 for 1 billion yen in the first half, which is a temporary. And for the depreciation, the amortization of intangible assets, this will come in these, it says provisional, tentative in brackets. In the first half, we think it would be 4 million yen. In the second half, sorry. And this is for next year. These will fully come online. and the well the good 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 another announcement once these are no longer professional but set in stone So for Organox margins from now into next year, will they not differ so much? For the core business, what will those look like? Well, regarding the business for Organox, we intend to expand it in future going forward. So in line with that business expansion, I think incomes, revenues will definitely expand in line with that. Understood. Thank you. My second question is regarding Rika. I think in Fujimoto-san's presentation, Hagimoto-san's presentation at the beginning, I might not have understood this correctly, but it's... disposables were 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 almost the recap 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 incoming period will Will that have any impact on your profit in the upcoming quarters? Could you let me know regarding that? 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 RICA is definitely on the up, as per the figures provided. And looking ahead now, I think, well, it's slightly ironic, but the RICA is... The plasma demand is definitely increasing, but our disposable sets are, 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. So just to confirm that, is that for the production? 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. Thank you very much. That's all.

Thank you very much.

I'd like to ask Tony Ren from Macquarie to security to ask that question. Tony?

Hi, Tony Ren from Macquarie. Can you hear me? Yes, we can hear you. Okay, yeah, perfect. Yeah, thank you for taking my questions. 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 Luwakusen losses. How long do you think it will take for you to stop the losses at that factory? to turn it around.

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 semi-annual basis. This cost we do not predict 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 in 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 mid-term projections, it is going to become improvement of the contract situation. We will be able to utilize the manufacturing plants. Therefore, contribution on a profit basis should be in the midterm of the next midterm strategy period.

Receiving a regulatory clearance typically takes about two years or so, right? You probably also need to do some fixing up at the factory. So we are probably looking at at least three years from now.

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 termo-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.

Okay, very good. My second question is about also in your CDMO business, your Lakembi auto injector. The CDMO revenue related to the Lakembi auto injector, do you book it in Japan or do you book it in other geographic regions?

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

Okay, very good. Thank you very much.

Thank you.

Thank you very much.

So I think JP Morgan Securities, Saito-san, please. Hello, this is JP Morgan Securities, Saito. Can you hear me okay? yes we hear you clearly thank you well in the second quarter looking at the effect of the tariffs and i think could you just still delve a bit more into the three months in the second quarter so i will respond to your question regarding that so the effects of the tariffs um in the three months in the second quarter i think it would be 2.5 billion yen in impact but the prices were we had strong price effects as with the first quarter And we made 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. Thank you. Well, from the next period, next year onwards, some price rising effects will come into play. Is that correct? 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. Understood. I understood well. Thank you very much. So just a very precise point. But for SG&As, I'd just like to ask for sales general administrative expenses. I believe that you shifted offices to a new office this year. Your headquarters changed. Next year onwards, will that... um will that be will that play out this year or will that continue to have an impact into next year well for sg and a's i think it has been managed within the um trend of net sales or net revenues and so there is a very very small diminutive impact but um it will however be well controlled uh within the scope of revenues so our second my second question is regarding the plasma innovation business i think the second quarter, recur 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? Yes. Well, yes, we are already in the full peak of that, so we have at full tilt in the second quarter. You are correct in your assumption. Thank you very much. That is all from me.

Thank you very much.

We are getting close to time to finish. I'd like to make sure if there were anybody else physically here in this room or somebody who wants to say any other questions. With that, it seems like there was no more questions today. I'd like to finish the Q&A session here. So with that, we'd like to close Telmo Incorporated March 2026 in the third quarter financial presentation. We're closing the session. Thank you very much for your time today.