Thank you very much for taking the time to attend Terumo's Financial Results Presentation for the Fourth Quarter of 2025. So today, Mr. Hagimoto, Terumo's CFO, will be beginning today's explanation, followed by CEO and Representative, Mr. Samejima, will be discussing CDMO and G26 plan, after which we will have time for questions and answers. It's an hour allocated overall. We have simultaneous interpreting available. So please do make use of either English or Japanese on the Zoom function. The material shared will be Japanese only today. If you require reference to English material, please refer to our homepage. If there are any problems with the transmission, we will inform you by e-mail. And before we begin today's session, I would just like to give the disclosure. The explanation that is about to be given is based on current predictions and forecasts. This include some element of risk and uncertainty. So please do understand in advance that there may be some discrepancies with the actual results to the forecast. Thank you. Now I would like to hand over to Mr. Hagimoto for today's financial results meeting, Mr. Hagimoto-san, please.

I'm CFO, Hagimoto. Thank you for your time to listen to our financial results meeting. First, I'd like to provide an overview of the end of year financial results for the fiscal year ending March 31, 2025. First of all, as was announced in the press release as of April this year, we changed the business names and disclosed segments. So please do note that today's explanation uses these changed names and segments. Continuing on. Now here are the highlights of the financial results. In fiscal '24, sales revenue surpassed JPY 1 trillion for the first time. Revenue growth was 12% over the previous year due to continued demand growth globally, especially in the U.S. as well as the trend toward a weaker yen. The operating profit -- in addition to this 12% revenue growth, operating profit recorded a one-time expense of JPY 24.2 billion, but achieved a record high profit for the fourth consecutive year due to growth exceeding that amount. Net income and free cash flow also reached record highs, respectively. Now for the '25 guidance, we expect continued growth on a global basis with revenue growth of plus 7% on a local currency basis. Operating profit is expected to increase by plus 32% on a local currency basis due to business expansion and the absence of one-time expenses in the previous year. Next slide, please. These are the P&L results. As mentioned at the beginning of this report, sales revenue reached a record high of JPY 1,036.2 billion for the full year due to increased demand amid a generally favorable business environment. Operating profit and adjusted operating profit also reached record highs of JPY 157.7 billion and JPY 203.4 billion, respectively, for pricing measures, improved manufacturing costs and expense controls. In particular, in addition to an increase in the amounts of profit, adjusted operating profit, as a percentage of sales, showed a significant 2.6 point improvement. Free cash flow also increased significantly from the previous fiscal year due to the expansion of operating cash flow. And for the first time, the company was able to generate cash at a scale exceeding JPY 100 billion. Next slide, please. The following are highlights of profit changes in the fourth quarter compared to the same period of the previous year. First of all, the increase in gross profit due to higher sales was mainly driven by Blood Solutions in BCT. The negative gross margin effect was due to the loss on write-down of old products in preparation for the expansion of new products. General and administrative expenses, meanwhile, increased due to additional provision for bonuses, which were added as a result of higher-than-expected sales as well as one-time litigation expenses. Next slide, please. Turning now to an analysis of profit changes for the full year. Overall, the increase in sales was largely due to continued demand growth. In addition to Blood Solutions, the cardiovascular company, led by TIS, was a key driver of this continued demand growth. The gross margin effect increased significantly due to the effect of profit improvement measures and easing inflation as well as an improved mix due to the resolution of supply issues in the last fiscal year and the expiry of one-time expenses. Turning to price. Price declines due to the China value-based purchasing were offset by the effect of price increases in Japan and overseas. The reimbursement rate revision is also having a positive effect. Under increased general and administrative expenses, we have improved the ratio of general and administrative expenses to sales for the full year and a breakdown of the impact of exchange rate shows that both flow and stock contribute to increased profits. Next slide, please. I'd now like to explain the breakdown of one-time expense in JPY 24.2 billion recorded for the full year of '24. This year, looking ahead to the final year of GS26, we conducted an aggressive business review, resolving to do what we can do now and specifically, portfolio optimization and restructuring, which are positioned as investments for the future were the main elements of this aggressive business. Regarding the TIS impairment charge recorded in the fourth quarter, the discontinuation of the project to develop a large diameter hemostatic device and the termination of sales of radiation emitting beads were decided strategically based on profitability and the balance with other products. And so we will continue to operate and rebuild our production facilities in China. But the -- but that -- we will continue to look closely at the impairment charge recorded in the fourth quarter and the restructuring of the European TIS business. This was also a reallocation of resources to further improve the profitability of the TIS business. We closed some plants as we optimized production items with consideration for profitability. And again, in the European TIS business, at the same time, we are preparing to reuse resources in business areas that we'll focus on more going forward. We will report back to you at the appropriate time on our specific resource reutilization policy. One-time expenses amounted to JPY 24.2 billion. But from a cash flow perspective, a cash decrease occurred only in restructuring. So as per the chart, it was only in restructuring where a cash decrease occurred. Next slide, please. Now turning to our free cash flow results. This increased JPY 63.5 billion over the same period last year, reaching a record high. And the increase in profits due to business scale expansion contributed to a significant improvement in free cash flow. Next slide, please. Next, turning to revenue by region. Steady progress was made in all regions, particularly in the Americas and Europe. In the Americas, all companies posted double-digit growth, even in the local currency terms, the highest growth rate among all regions. In China meanwhile, TIS rebounded from price declines due to the value-based purchasing with increased volumes, while Neuro grows substantially due to increased demand. Next slide, please. Now turning to business perform by company separately. First is the cardiovascular company. Sales revenue grew by 8% on a local currency basis and was strong globally, especially in the U.S. In terms of growth rate by business segment, Neuro and Aortic led the way. Profits also increased significantly due to increased revenues and various other measures. Next slide, please. Turning next is TMCS, Terumo Medical Care Solutions. Revenue was driven by the effects of domestic prices measures -- pricing measures in hospital care and strong performance of PLAJEX overseas in pharmaceuticals. Profits increased due to the effects of pricing measures as well as control of general and administrative expenses. Next slide, please. Lastly is TBCT, Terumo Blood and Cell Technology. The plasma innovations business included in the Blood Solutions made a large contribution to revenues. As of today, Rika has been installed in approximately 90% of plasma collection centers. And profit has increased significantly due to higher sales in core businesses and improved profitability at Rika. Next slide, please. Now I'd like to turn to guidance for fiscal 2025. Revenue growth of plus 7% on a local currency basis is expected with continued company-wide growth centered on Blood and Cell Technologies. Operating profit is expected to grow by 32%, significantly outpacing sales growth, which is due in part to the absence of one-time expenses from the previous year. We aim to improve the operating margin by 3.3 percentage points to 18.5% by continuing to focus on company-wide profit improvement measures and cost control, while ensuring the growth of high profit growth drivers in each company. So that's -- we aim to bring the operating margin of 3.3 percentage points to 18.5%. We will continue to do our efforts to improve capital efficiency. Furthermore, the impact of the U.S. reciprocal tariffs, which is highly uncertain, has not been fully incorporated into this guidance, but we will explain the impact of these reciprocal tariffs separately. Next slide, please. Here, we have factors for affecting profit in our guidance for fiscal '25. Increased gross profit from higher sales is expected to be driven by higher sales in all companies, led by Blood and Cell Technologies. The gross margin effect in the previous year was significantly higher due to easing inflation and the removal of the onetime impairment charge the year before last, but is expected to return to normalized speed in the current fiscal year. The effects of continued profit improvement measures are expected to be partially offset by worsening inflation. And the fact that depreciation on the new Kofu building, which is scheduled for completion this year, that depreciation will begin prior to the accrual of sales revenue, and that will also be detrimental to the current year's mix. Under price meanwhile, we will continue our domestic and international pricing measures. We've also factored in price declines due to China's VBP. General and administrative expenses are expected to grow at a healthy rate in line with business expansion. Next slide, please. I'll now turn to an outlook on the impact of the U.S. reciprocal tariffs. A simple calculation on the impact of tariffs announced at this stage indicates that the maximum impact for the current fiscal year is approximately JPY 17 billion. This estimate is based on the assumption that most of our sales to the U.S. other than those produced in the Americas are imported from Japan and that less than 5% of our sales in China are imported from North America. So those are the assumptions for this estimate of approximately JPY 17 billion. And since we already have inventory on site, we assume that the economic impact will be felt from the second quarter onwards. But however, since this situation remains slightly fluid, we have not factored it into our fiscal '25 guidance, but we will closely monitor the trend and minimize the impact by passing on price increases. So the situation does remain fluid, but we will closely monitor this trend and minimize the impact. So the next slide, please. This is now GS26, has 2 years left to go. Here, I'll just explain some of our key measures and product and regional development strategies for 2025 and beyond. So the Cardiac and Vascular Company will continue to expand its therapeutic business and promote radial procedures. Therapeutic devices were strategically put more focus in both segments. Medical Care Solutions will expand its preoperative solutions with smart pumps with digital IC tag reading capabilities. We will also promote overseas expansion by matching our strengths with regional needs. Meanwhile, in Blood and Cell Technology, we launched Reveos last year, an automated blood product system using automated whole blood processing in the last U.S. fiscal year. So this fiscal year, we will accelerate our global expansion. And at the same time, we will be expanding our software and service businesses to ensure competitive advantage and differentiation. Next slide, please. This is my last slide. So our dividend policy remains unchanged with stable dividend increases going forward. The annual dividend for '24 is expected to be JPY 26 per share with a payout ratio of 33% for fiscal '24. For fiscal '25, we expect to increase the dividend by JPY 4 to JPY 30 per share for a payout ratio of 31%. We will continue to give priority to investment in growth, and we will consider targeting a total return of 50% depending on the state of acquisitions and other capital needs during the GS26 period. So over the next 2 years, we will continue to give priority to investment in growth. That concludes my explanation. Thank you very much for your time. Moving on now, I would like to hand over to Terumo CEO, Mr. Samejima. Mr. Samejima, the floor is yours.

I am Samejima, Terumo's CEO, and this year sees us into the final 2-year sprint to the end of GS26, Terumo's 5-year growth strategy. So GS26 has 3 main financial goals. And I believe that while there have been some fluctuations, we have generally made good progress in terms of sales, profits and capital efficiency. The 15.2% operating margin includes restructuring charges, which are positioned as investments for the future. And impairment costs are also a result of aggressive portfolio optimization. So including -- excluding these onetime expenses, operating margin for '24 was 17.5%. Our business fundamentals remain strong, and we will continue to build on this momentum to produce steady results for '26. As you can see immediately after the GS26 announcement, profit margin plummeted in responses to rapid changes in the external environment, including the COVID-19 pandemic inflation and exchange rate instability. Since then, however, the company has forged ahead with the pricing measure, cost reduction measures and product mix improvements to improve profit margin. Our 17.5% profit margin for FY '24, excluding onetime costs, shows the strength of the current business. Heading into FY '26, we will further accelerate our efforts in plasma innovation and expanding our CDMO business as well as profit improvement measures. From this point on, I will look back on the results of the past 3 years, both company-wide and by company. Focuses on the company-wide sales and profit target is as I explained earlier. In the past fiscal year, our innovation strategy, which is essential for future growth took off in a big way. First, we took the inventory of all the hundreds of R&D teams underway. First, globally, we reviewed resource allocations based on the comprehensive assessment of scale of development, time line and categorization of all integration to align management strategy with the innovation strategy. This visualization has enabled us to draw a more concrete strategy, concrete picture of our growth strategy, which is itself is a major achievement. We also established D-TECT, a U.S.-based for corporate R&D. In the U.S., the largest market for medical devices and center of innovation, we will push ahead with exploring new technology and creating cutting-edge products. In corporate venture capital, we have completed a full additional commitments and are steadily expanding the scope of our investments. Next, in the Cardiac and Vascular Company, both sales and profit targets are solid, and we are already seeing the achievement of GS26 targets. In the treatment business, we -- new products have launched as planned, mainly in the Neurovascular and Aortic areas as initially envisioned, driving the expansion of the treatment business. We aim to gain further market share with these product lines. Transfer of production to Costa Rica has also progressed smoothly. Although the large-scale transfer is already done, going forward, we will continue to transfer production while carefully choosing target products. Smart factories reforms are also underway at the Ashitaka plant in Japan. Uptake of radial access has been generally very favorable, especially in the coronary and cerebrovascular fields. Next is TMCS, Medical Care Solutions. Challenges in the external environment, such as inflation and the weak yen, had the most pronounced negative effect on TMCS. However, by taking prompt actions, we have achieved a V-shaped recovery in profitability. We are one step away from the GS26 target, but we expect to turn around both sales and profits with the launch of combination product for Alzheimer's disease. We also worked to provide solutions that go beyond providing value at the individual product levels, including contribution to minimally invasive surgery in the area of women's health care and supporting operational efficiency in medical field through the use of digital technology. We also actively moved ahead with portfolio reviews. While withdrawing from certain businesses or product each year, we have entered into capital partnership with new external partners and began joint development of product officially in medical settings. Lastly is TBCT, Blood and Cell technology. While sales growth has already met the GS26 target, profit margin continued to need to catch up. The main reason for this being that the start of the plasma innovation business rollout of Rika was pushed back by the COVID-19 pandemic. The weak yen has also negatively affected TBCT's profit margin. As you can see, when based on actual value, excluding exchange rate effects, the profit margin is quite close to 20%. Although the development of Rika has been delayed somewhat from the original plan, we plan to revamp by acquiring new customers. After CSL, we signed an exclusive agreement with Join Parachute. In terms of optimizing product sites, we have successfully curbed logistics costs by opening sites in Costa Rica and China and by restructuring logistics. As a future area of focus, Terumo will differentiate itself through software solution that help customers improve their operating efficiency. Turning to the regional development of our businesses. We have also established an important foothold for future expansion in emerging markets, especially in Africa. GS26 is a 5-year growth strategy that keeps the subsequent 10 years in mind. Even as we keep the goal of GS26 in mind, FY '26 is just a checkpoint for us. And looking even further ahead, our goals are even higher. We have set forth the 3Ds, Delivery, Digital and Deviceuticals as our vision for the mid- to long- term. From device solutions, this is a statement of Terumo's determination to provide not only products and services, but also bringing innovative and comprehensive solution to medical issues. Today, I'd like to reiterate the strength and the further prospect of Deviceuticals, also known as Terumo's CDO businesses to you. Generally speaking, CDMOs for pharmaceutical products are based on divisions of labor by processes. Despite the fact that drug substance and device manufacturing processes as well as the combination of this into formulation and fillings are essentially linked to a series of processes. Pharmaceutical companies are required to sign individual contract with companies responsible for each processes. And the reality is that there are inevitably limits to cooperation across the fragmented processes. Here, Terumo can come in as a one-stop shop CDMO solution. In order to develop devices that combine the right material technology with the right drugs, Terumo usually initiate alliances with pharmaceutical companies earlier in the drug development process. This is a unique position in the CDMO market. So what is the Terumo CDMO's great strength? It is the capability to develop innovative drug delivery devices. As you all know, Terumo has more than a century, a 100-year long history as a medical device manufacturer. We take pride in our knowledge of devices, including development, manufacturing and quality control. Terumo also has more than 50 years of experiences in handling pharmaceutical products, having launched its first pharmaceutical product in 1969. The development of innovative administration devices suited to drug character made possible precisely because of Terumo's expertise in both medical devices and pharmaceuticals. That is the wellspring of Terumo's competitive advantage. By combining one-stop services with Terumo's development capabilities, Terumo CDMO has created a very unique differentiated business model that's without rival in the industry. Terumo CDMO is not something that you can create overnight. Even if a company were to acquire the individual basic technologies that Terumo prides itself on, such as plastic modeling and aseptic filling technology, it will be impossible for them to replicate our CDMO. As you can see, Terumo's CDMO business is built on a combination of technologies we have developed over many years. The goal of Terumo CDMO is the creation of new value sought by participants and medical communities. As health care needs and trends change, our CDMO is working with a sense of mission towards its goal of contribution to the development of drug administration methods and ultimately maximizing the value of pharmaceutical to support, for example, the uptake of home care and consistency with chronic diseases. One example of the embodiment of the Deviceuticals in the CDMO business is the on-body injector. This is one of the solutions Terumo has arrived at in solving issues such as the burden places upon patients having to go through the hospital process for the drug administration when they are feeling unwell and the shortages of health care professional. While it was also an option to provide only a partial solution to these major challenges, our solution created new comprehensive value proposition, reliable, automated drug administration in home care setting. This on-body injector is truly a feature technology. The primary device, especially shaped [indiscernible] is incorporated into this drive unit, a precision instrument, which utilizes technology cultivated through our pump equipment, while the needle itself is based on new technology developed for [indiscernible]. The CDMO market is very attractive with high growth potential among the injectable drug, which account for a large proportion of pharmaceutical, self-administering drug in particular, growing twice as fast as in-hospital administration drug. The key to self-administration drug lies in how innovative administration devices can be created. And this is precisely Terumo's area of expertise. Since the official launch of the CDMO business in FY '17, Terumo has achieved market-beating business growth. we are now preparing to make further strides as we move towards 2030. The CDMO market is attractive, but there's also a lot of competition. Terumo's winning edge is one-stop service and development capability. I think I've already gone long enough about this topic. There's also planned expansion of production capability. Terumo Yamaguchi has expanded its production line over the last 2-year period starting from 2021. A new building at the Kofu Plant, as Hagimoto-san has earlier said, is scheduled for completion in September of this year. Production capacity has expanded to appropriately 2.5x bigger compared with the FY '15 levels as of FY '24, and we will be expanding to more than 4x compared to FY '15 level by 2030. JPY 100 billion in revenue is already in sight at last. But to Terumo, this is only a stepping stone along the way. I hope you will have a chance to read the press release concerning the acquisition of European base for the CDMO business announced today. Terumo has fully launched its entry into the global CDMO market. Europe, with its concentration of world-class pharmaceutical company, is one of the most important market for pharmaceutical. Terumo Europe in Belgium already plays a major role as a device development and manufacturing center. And together with the newly-acquired drug filling plant in Germany, we will establish a strong footprint in Europe. Terumo began its overseas approach about 2 years ago as we look to expand our CDMO business globally. We saw a tremendous response, positive response during the direct talks with a number of company customers. In fact, we were able to sign our first contract with our overseas pharmaceutical company last year. We are confident in our one-stop CDMO model and our development capabilities. We are confident enough to compete in Europe. We have now simultaneously acquired cutting-edge assets and excellent professional human talent all at the same time compared to stepping up our own business organically by ourselves, we have saved a lot of time by having this transaction. Given the instances where we have we received a positive feedback, but have not been able to agree contracts due to geographical business, establishing this base in Europe is a very important first step. Beginning from Europe and Japan, we are already looking to the U.S. and Asia markets as well as next regions and steps. As long as we are Terumo, we will continue to pursue not only the expansion of our locations and businesses, but also further technologically innovate. Terumo is dramatically taking on challenges becoming leading CDMO company. Thank you very much. We would like to take questions.

Today, it's a hybrid event. [Operator Instructions] But we want to take as many people to ask questions. We'd like to limit only two questions per person. Miyoshi-san from IR is also joining compared with the CEO and CFO. We can now start taking the questions. So Yamaguchi-san from Citi Securities, please.

My first question is about onetime cost, JPY 12.9 billion. At the beginning, it was -- if I remember, if I'm not mistaken, JPY 8.9 billion. But onetime costs have expanded quite big because you tried to cover a lot of things all at once. But I guess for this kind of thing, do you think you've already blended everything, like everything. Do you not expect something like that to happen again? Anything is like that this is much bigger than previously. So what drove that change?

So I will reply to your question. Thank you very much. So regarding the JPY 8.4 billion was the amount reported previously. But within that, GS26, as we move towards the first year, we wanted to remove any negative influence as soon as possible as we get towards the last year of GS26. And this time, we had many -- we had a considerable review of our portfolio. So many -- we had a pretty comprehensive review of our calculation. So as we move towards the end of GS26 and further on beyond that and implement some strategic investment beyond GS26, we will continue to thoroughly look back on past investments. So I think this kind -- it is not the case that there will be several similar developments as this, but we will be -- reflect carefully on strategic investment from the past when preparing decisions for our future strategic investment. Thank you very much. That's all from me.

So is that correct to say that in some sense, you tried to revise as much as possible at this juncture and to restructure and reallocate the strategic investment?

Yes, you're -- that is correct.

My second question is regarding the CDMO. Thank you very much for explaining the CDMO. I think in particular, this time in China, Wuxi, the filling factory, you bought this new factory in Europe for filling in China and in Belgium. So I think Asia and America were both referred to in your presentation, but these bases overseas, you will increase M&A through these and increase the global footprint. Is that really the -- was that why you have really spread out into Europe? Is that the first step of a major rollout into other global basis to increase the footprint?

Yes. Basically, CDMO will go into full tilt from now. We will go into full overseas -- in a full tilt fashion from now on, and we would need -- there are -- we have spoken to several pharmaceutical manufacturers within Japan, but we would like to have capacity near to the market as possible. That is one keen index. So first of all, in Europe, where it's a very important market for us to get our footprint there to establish that footprint. In future -- in terms of what kind of negotiations we have with which pharmaceutical makers in future, that will implement where our next global footprint expands.

What about the sort of concrete pipeline for that? If you could have any -- if you've decided about that, how that pipeline will work? I mean the pipeline, I understand is increased. Is that true?

Well, pharmaceutical manufacturers, that also concerns them as well. So it's hard for me to be more specific about the pipeline. But we are in discussions with multiple pharmaceutical manufacturers at the moment. So that's what I can say at this point.

Very good. Moving on. So I'd now like to take our next question, please, Macquarie Capital. Tony Ren, please.

Can you guys hear me?

Yes, we can hear you. We are trying to answer in English this time.

Sure. So my first time asking questions live. I want to go back to the acquisition of the WuXi Biologics factory in Germany again. I happened to cover WuXi Biologics. And I recall right around 2020, they bought 2 factories from Bayer in Germany. One is about filling. It's a filling facility. And you guys did mention in your press release today about vial products there. So I just want to see if that's the one you bought. I also recall they bought another one from Bayer that was making, if I recall, recombinant factor VIII that was in quite serious decline. It was a drug substance factory that was making recombinant Factor VIII. So I just want to hear a little bit from you guys on that. You guys obviously have the LEQEMBI -- your partner, Eisai, has LEQEMBI approved in Europe in April. I want to see if you would use the filling facility there to fill LEQEMBI. My second question is about tariff impact. You guys guided about, in my calculation, roughly 8% impact on your operating profit margin. Yesterday, your peer, Olympus also guided roughly about 3%. So yours is a little bit higher. I just want to see what was going into your calculation.

Well, let me take on the first question. Well, I mean, I'm very impressed with your good memory. I'm not really sure if I'm allowed to disclose fully in detail about the asset we bought. But yes, it's one of these 2 assets you've just mentioned. The second question, probably I'll turn it over to Jin.

So thank you for the question. In regards to the tariffs impact that we have calculated, the chart that we are showing is just a rough calculations of how we've derived to that impact. So obviously, depending on how much inventory is already in the U.S. market, that will have a dependency on how much the impact will be on the overall operating profit situation. So what we have factored in is all the known aspects that we are aware of as of today and sort of did a straightforward calculation of the maximized impact. But obviously, what we will do is to make sure that we can pass on the price increases where kind of feasible to the market, we will also look into a supply chain situation to see if there are any steps that we can take to avoid any kind of tariffs going into -- landing into the U.S. market. So all of these situations, we will need to consider. But right now, I think it would be fair to say that we've done a maximized calculation of how much the impact would be or could be is probably the correct way to phrase it. So I hope that answers your question.

Yes. If I may, just a couple of quick follow-up. So on the Wuxi German factories, you guys obviously mentioned the vial products in your press release. So I assume it is fill/finish. So I just want to confirm that. And also, you mentioned trying to pass the cost tariff impact on to your customers. Just want to confirm that you can actually do that because most of the companies, at least the drug companies and including Olympus, yesterday, they said that they do not think they can pass on the cost. So I just want to hear a little bit from you, a little bit more clarification on that.

A – Unidentified Company Representative: Okay, Tony. So let me follow up on the WuXi side. So yes, indeed, in our press release, we did mention that we did purchase the DP side of the factories. So one of them of WuXi, which is in Germany. So just for your clarification, yes, that is correct.

And then regarding the tariffs.

So in terms of the cost sort of the increase or passing on the pricing to the market. Obviously, we do have contracts, long-term contracts that has been signed. So it's not that we will be able to immediately pass on the impact to the market. But depending on the business situation, depending on where our competitors are kind of situated, we do believe that there is an effort that we should be taking to make sure that we can pass on the market. So the intention is that we will try to pass on whatever impact is into the market as much as possible. But that will depend on timing or that will depend on the business situation if we can actually pass on the full impact towards the market.

So I'd like to move to Morgan Stanley, MUFG. Hayashi-san, please.

This is Hayashi, participating remotely from Morgan Stanley Securities. Can you hear me?

Hayashi-san, nice to speak to you.

So I have 2 questions. The first is looking at yesterday, the first quarter that finished yesterday, Terumo BCT, the effects of the FX on last year, it was 27% up in terms of the FX. I think this is probably the Global Blood Solutions Company that has -- I think sales are very much up in the GBS. But in terms of these -- are these the regular blood is that where exactly is growing? Is it due to Rika? Is the Rika-related earnings weighing on this? Could you just give us a little more color about GBS and the growth there?

Well, I think as was anticipated in the fourth quarter, we saw an expansion in net sales as was expected. But I think about half of that -- the impact, about half of that is due to Rika compared to last year. It has gone on a very favorable trajectory. But the other half of that of the positive impact, I think, is probably the -- what we consider to be the core blood and cell innovation business. So I think about half Rika and half non-Rika would be contributing to this, to the increased incomes.

So for this TBCT, it looks like there's a 15% -- the plan looks for a 15% in revenues? And is this, again, half due to Rika and half due to core product, would you say that split will continue?

Well, yes, I think in the fourth quarter, in the -- if we compare to the fourth quarter of the last year, Rika had just been launched at that stage. And so I think a year on, it won't be half of the impact, I don't think.

Understood. And the second question here is today that you released the WuXi -- purchase of the WuXi factory in Germany. I think this is a plant that has vial production. And I feel there may be some -- already some sales accrual in place. I just wanted to ask about the current state of revenue accrual. And how much do you see that revenue increasing in the future? I think for Terumo, you have the technology and the know-how that will be transplanted into Germany. That will take time for that to come online. And for the CDMO business as well, it will take time to really establish relationships with customers as you explained, which is how I appraise the situation as well. But for the -- from this plant, the accrual of revenue from anything emanating from this plant, how long will it take 4 or 5 years, will it take for revenue to start accruing? Or do you see it happening expediting over 1 or 2 years? I'd like to hear more about this prospects for revenue accrual for this factory you purchased in Germany?

Thank you very much for your question. Well, in terms of the net sales and specific forecast, I'd like to -- I won't discuss specific forecast, but in terms of the prospect for growth from now on in terms of the time span, I think for us, as soon as -- really as soon as possible, we would like to enter multiple new contracts and to start contributing to revenues. That is our primary aim. And that is why we will be implementing injecting extremely. We can acquire extremely talented personnel from this factory. That was one of the main reasons for acquiring this factory.

Okay. So from the know-how -- in transferring know-how from Japan over to Germany, is that 1 or 2 years? Or is that something that takes much longer? Is it actually pretty simple to transplant that know-how from Japan to...

Well, without being too objective about this, we will be sending over human resources from Japan and be looking for a synergy with the local technologies, and we're aiming for a very smooth entry into Germany.

Moving on to the next question, UBS Securities Yoshihara-san please.

This is Yoshihara, from UBS Securities. One question is regarding the tariffs going back. Sorry to go back to the tariffs again. But I was late at the beginning of this explanation, so I might have missed your explanation regarding this. But the premise of this are the -- for example, if Japan might be 10%, or I think in the U.S., the Rika -- I believe you're producing Rika equipment in the U.S.A. What about if you are putting parts in from China into the U.S.A.? How will that affect the tariffs? And if that did, in fact, transpire, then I think there would be some overall -- could you just give me a big picture on the tariffs between the U.S. and China?

Hagimoto will...

I will explain that. I think what we are anticipating at the moment is in importing into Northern Europe. Most of that is from Japan. So first of all, I think it was 10%, but from April onwards, that from Japan to Europe, we are expecting to go up to about 20%. But from importing into America from China, we don't believe it's such a large amount for us. So the impact will be limited. Meanwhile, from the U.S. to China, I think that 10% is the base figure at the moment. And I think it may go up to 100-something percent, 90 days or some -- retaliatory tariffs will come into effect 90 days from now. So that would be 120%. So those are the general calculations we have made for the current period. And regarding parts, I think from China, as I explained just now, we are partially -- we are not exporting significantly from China to the United States.

I have additional follow-up question on tariffs. You talked about the transfer the prices or the impact to market. So JPY 114 billion, like how much do you think pass it on to the market? Nobody knows what final tariffs are going to be. You may do a proper calculation. It may change tomorrow. But when we cover, when we project your performance as well, what would be your goal or what the kind of a target that you want to achieve at?

Now let's say, the revenue with the existing contract is something different, right? If you look at that, the renegotiation because how it happened, it's going to be very difficult of the existing contracts have been signed already.

Can we -- how much can we pass it on, on FY '25?

That requires a little more work on our end. So I would say I cannot give you a specific number at this point in time. But our intention, since you asked, is to weather management of business portfolio and how the situation may develop. But we want to pass on as much as possible running different programs by us.

Okay. That's fair enough. Second question is, I just wanted to hear the updates about M&A. So WuXi transaction update. I think that was a very nice transaction. But in the past, you have IV -- CIV device. you had M&A strategy that you previously have discussed. Can you share your perspective about any changes or approach or philosophy? Or are you looking at over the -- it's been 1 year since then from last year. Do you have any updates on those potential M&As?

Thank you. Over the last 1 year, since you asked, R&D -- M&A was the core of our strategy. In that sense, cardiovascular or CDMO, other potential companies, other targets, as I've been saying in different occasions. That particular framework has not been changed, okay? So now as we have announced a press release today, we are always having multiple different candidates in our list and validating, which one makes more sense. This is a continuous basis. We are continuing. No change in that sense from the past to now.

So IV -- maybe you cannot probably disclose that. So putting that aside, but you have -- there's no change in business plan, I guess. Is that for IV?

There are multiple different devices for venous blood, intravenous injection, right? So we are currently planning to launch a new product about that device and how can we strengthen that as a franchise to make sure we are expanding intravenous business as a whole.

So next, I'd like to ask Kohtani-san from Mizuho Securities to ask.

Yes, my name is Motoya Kohtani from Mizuho Securities. Since Presidents are here, I just wanted to ask, TMCS, I was looking at this slide talking about the future rollout of products and now CDMO factories, you just bought this company. So rather than classify, like, you are interested in more plastic products, that's the strength that you want to demonstrate, and that's why you want to drive more growth. But you couldn't really go overseas because it's made in Japan, right? Supply was the difficulties. I think that was the nuances that you have presented in the past. But I just wanted to clarify my understanding correct. And now in Europe, so filter injection needle with filter, right, for pharmas. But a particular matter is a huge problem right now. Your technology can be a great differentiation. By doing this transaction, you were earlier talking about how shipping from Japan to the global, it was difficult. But now can we expect we are going to be having a huge step. Plastics is very well known, right? Can I assume it's going to be much easier to expand globally?

Well, thank you for your question. As you have implied and you have suggested, we are core strength, which is projects, and polymer injectable. That's the world in which we want to spread globally. That's the access core of how we would like to approach. In Terumo Europe, we have made track records. But with this transaction, we will be able to roll out more technology from Japan and having an established footprint in Europe, and that's what we're going to take.

And second and last question is on costs. I think it was about JPY 7 billion. I would like to try to break down the cost. COGS movement, I think it was the COGS percentage revenue. So it is like inflation impact. Depletion is accounted for with the market pass. Can you break them down JPY 7 billion -- can you break down with more details inside of that JPY 70 billion -- within the JPY 17 billion or JPY 7.0 billion?

So price is about JPY 6.15 trillion is coming from price. VBP minus impact is something that we have accounted for. But for other businesses, the price increases, price policy, price initiatives are just that. And also the official regulated price changes is working positively for us as well. And inflation, labor cost increase actually incorporate with these impacts. And so those are the negative impacts. And we are also running -- for those negative impacts, we will be offsetting them with the cost reduction initiatives across the company.

Can I just ask one? JPY 6.5 billion is inclusive of VBP?

So VBP -- inclusive of VBP, yes, as a whole. So negative VBP is included in that. VBP negative was JPY 4 billion, but it's now smaller, a bit smaller this year. This year is about the same. We're assuming it to be about the same.

So you are assuming to roll them out to other provinces. Is that correct?

That's right. Does anyone else have a question? Please raise your hand if you do. Anyone in the room who may have question? So Kohtani-san from Mizuho Securities. It's your turn next.

Sorry, me again. Since giving opportunity, I'm looking at Slide 8 about blood stoppage device. This is like you don't have access. [indiscernible] is dominating, right? This market does nominate by them. So I was just surprised that you have to cancel this project, but you're running multiple different projects of such, right? So the large diameter blood -- is there any other project that can potentially contribute to revenue?

Let me just take that. Yes, I cannot give you the details of the pipeline. Let me just refrain from that. But I was impressed that you just have an eye to it. But for access products, for Terumo, we want to maintain and strengthen #1 strategy position, very important for strategy for the closure devices, right? So blood closure device is something that we would like to make a very big commitment.

Our -- your own product or other somebody else's products?

So it's a partnership with the third party. This one that you were mentioning is the project we are going to be working with another company.

I'd like to ask Mori-san from Nomura Securities to go next.

Yes, this is Mori speaking. I just went outside of the room for time being. I apologize if it's already been asked as a question. I have my first question is about WuXi. WuXi bought in 2020. And that was like when the COVID was happening. Vial demand was going up. That's where they captured, but that demand came out shortly after that. Vial suppliers, I was listening to those different companies, but vials demand was quite weak. But WuXi, you buy -- this is -- so what are the reasons why they decided to give that business away? And how would you turn that business around?

Thank you for the question. We actually briefly talked in other persons -- in other questions. Now the biggest reason for buying this asset is PLAJEX as a key polymer injectable, right? That's our strength. We want to roll that out in overseas, particularly in Europe. So vial line is, yes, available in that facility, but that's not really the core, our traditional approach as we've been doing with Japanese pharmas, PLAJEX. Again, PLAJEX, polymer injects is -- that is the leverage that we want to demonstrate with this acquisition.

Okay. My second question, a year ago, Samejima-san, you talked about transformation of business portfolio. You want to focus more on [indiscernible]. That was the journey for the last 1 year. Can you look back for 1 year? Do you think you have -- your output is as expected? Or how would you perform -- score yourself for the last year?

Thank you. So self scoring for myself, right but that's questionable. But we've been having many intensive discussions. And we have one concrete result this time, but there are other opportunities. Some of them are going positive, some are maybe negative, but we have many other opportunities. So at a high level, we are making very good progress in our internal discussions as we have committed 1 year ago.

Thank you very much. We are just about to finish. We would like to, therefore, close Q&A session for today. We could not take all the questions. Please contact the IR person for your additional questions. With that, we would like to close the financial announcement for Terumo March 2025. Thank you very much for your attendance.