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
Editor’s Note: Due to confusion between Terumo’s annual report and the company’s reported fiscal year, the 2016 annual report was incorrectly used as the basis for last year’s report instead of the 2015 annual report. As such, we are rerunning this report, which now accurately reflects data from the company’s 2016 annual report. We apologize for any confusion.
Since the Pharmaceutical and Medical Device Act (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, 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
ANALYST INSIGHTS: In 2014, Terumo established an innovation entity, leading us to believe that more state-of-the-art products will be released in the near future. In addition, if Terumo’s history is any indication, strategic alliances will be key in getting new products to market.
—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors
Terumo’s business is organized into three segments: Cardiac and Vascular, General Hospital, and Blood Management. Together, these achieved 525 billion yen ($4.66 billion) in fiscal year 2015 (ended Mar 31, 2016) net sales, which represented a 7.3 percent increase from the prior 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 the previous year. 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 explained this, saying “...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 in sales represented the only loss by region—revenue dropped 2.7 percent from the year prior.
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, with 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 to manufacture and sell the 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 was 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 fiscal year 2015 total 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 year prior. The blood management segment, however, reported an increase of 3.9 percent from the previous year 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.
FDA Warning Letter
Just shy of the 2015 fiscal year end on St. Patrick’s Day 2016, Terumo received the dread of all medical device companies—an FDA warning letter. According to the letter, the company’s guiding sheaths for renal, carotid, and peripheral use were adulterated under the Federal Food, Drug, and Cosmetic Act. The October 2015 inspection of the company’s Elkton, Md., facility yielded a number of manufacturing flaws that violate the 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 conformed 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 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.”