Yutaro Shintaku, President and CEO
Hiroshi Matsumura, Director and Exec. VP
Shinjiro Sato, President, Cardiac and Vascular Company
Shouji Hatano, President, General Hospital Company
David Perez, President and CEO, Terumo BCT Inc., and President, Blood Management Company
James Rushworth, President and CEO, Terumo Medical Corp.
Richard Cappetta, President and CEO, MicroVention Inc., and Division President, Neurovascular Division, Cardiac and Vascular Company
Mark Sutter, President and CEO, Terumo Cardiovascular Systems Corp., and Division President, CV Systems Division, Cardiac and Vascular Company
NUMBER OF EMPLOYEES: 20,697
GLOBAL HEADQUARTERS: Shibuya, Tokyo, Japan
Since the Pharmaceutical and Medical Device (PMD) Act, enacted in 2014, initiatives to commercialize regenerative medicine products have been briskly pursued by companies and institutions. One such company leading this charge was Terumo Corporation, whose “HeartSheet” was the first regenerative medicine product in Japan to receive rapid approval in September 2015, with specific conditions and time restrictions under the act.
HeartSheet is the end result of the cell sheets Terumo began developing in 2007, as part of its cardiac regenerative therapy R&D. Following successful clinical trials at three Japanese medical institutions from 2012 to 2014 and Terumo’s October 2014 application for approval, HeartSheet was conditionally approved for manufacture and sale in Japan in September 2015. The particular conditions of the approval were as follows:
- 60 HeartSheet cases demonstrating the product and treatment’s efficacy
- Superiority compared to current existing treatment to 120 cases
- An application for official approval within five years
Terumo’s business is organized into three segments: Cardiac and Vascular, General Hospital, and Blood Management. Together, these units generated 525 billion yen ($4.66 billion) in fiscal 2015 net sales (year ended March 31, 2016), which represented a 7.3 percent increase from the previous fiscal year. The company’s “Asia, outside Japan” region demonstrated the largest growth in 2015/16 with sales of 92.5 billion yen, a 21.1 percent rise compared to FY14. Terumo cited Chinese economic trends as the main driver behind this region’s growth. Although the pace of economic growth slowed somewhat during the year, promotion of reforms to the country’s healthcare systems brought about a continued trend upward in healthcare demand. The Americas region also displayed impressive growth of 14.5 percent with sales of 143.5 billion yen, and in the “Other overseas region” (consisting of the overseas Neurovascular intervention business), sales totaled 337.8 billion yen, a 10.3 percent increase from the previous year.
Although the company’s Japanese revenue topped the prior fiscal year with sales of 187.2 billion yen, its growth was somewhat meager with a 2.2 percent rise. Terumo executives explained this in the company’s FY15 annual report, noting “...the [Japanese] government is aiming to moderate national healthcare expenditures to improve the company’s fiscal health.” The European market’s 101.8 billion yen sales represented the only loss by region—revenue dropped 2.7 percent from the prior year.
Terumo’s cardiac and vascular segment (which consists of sub-segments Interventional Systems (TIS), Neurovascular, CV Systems, and Vascular Graft) experienced a steady trend upward in both its TIS and Neurovascular intervention businesses, which resulted in 13.9 percent growth from the previous year, garnering sales of 258.6 billion yen. A large portion of the increase was attributed to the October 2015 launch of the company’s “Ultimaster” drug-eluting stent in Japan, and continued sales from its release in Europe, Central and South America, and Asia during the previous fiscal year.
In August 2015, Terumo received approval for manufacturing and sales of Ultimaster, a drug-eluting coronary stent. It was first released in Europe in May 2014, and launched in Japan in October 2015. Ultimaster’s drug-coating material is a bioresorbable polymer, coated only on the outer surface coming into contact with blood vessel tissues. The stent itself is made of a cobalt chromium alloy designed for easier implantation along vessel curvature.
The General Hospital Company (which consists of divisions General Hospital Products, D&D, and DM and Consumer Healthcare) achieved FY15 sales of 161.4 billion yen. Although sales growth for needleless infusion systems, as well as peritoneal dialysis and diabetes management products occurred in Japan, this segment displayed a marginal decrease in revenue from the 2014 fiscal year. The blood management segment, however, reported an increase of 3.9 percent from FY14 with revenue of
105 billion yen. Japanese sales in this segment decreased as a result of an ongoing decline in blood donations, which impacted demand for related products. Expanded sales of therapeutic apheresis systems and cell processing systems, coupled with growth of products delivered to blood centers in emerging countries, was more than enough to make up for that loss.
An FDA Warning Letter
Just shy of fiscal 2015’s end on St. Patrick’s Day 2016, Terumo received a communication dreaded by all medical device companies—a U.S. Food and Drug Administration (FDA) warning letter. According to the letter, the company’s guiding sheaths for renal, carotid, and peripheral use were adulterated according to the Federal Food, Drug, and Cosmetic Act. The October 2015 inspection of Terumo’s Elkton, Md. facility yielded a number of manufacturing flaws that violate the agency’s Quality System regulation.
Among these violations were failure to maintain and establish procedures to control or dispose of nonconforming products; failure to develop, conduct, control, and monitor production processes to ensure a device conforms to its specifications; failure to establish and maintain procedures to verify device design; and failure to establish and maintain procedures to monitor and control process parameters for validated process to ensure specified requirements continue to be met. Pre-market approval applications for devices related to the violations would not be considered until the issues in the letter were addressed.
When asked what the impact the FDA warning letter might have on Terumo’s business, an executive responded, “We have been manufacturing guiding sheaths at this factory for a long time. We received a finding that some files were old. We have already responded to the FDA, and are working on improvement. The Terumo group is subject to a considerable number of FDA inspections a year and has passed them. We are not anticipating a negative impact on sales and profits at present.”