Terumo Corp
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Terumo Corp
Earnings Call Analysis
Q2-2025 Analysis
Terumo Corp
In the first half of the fiscal year ending March 31, 2025, Terumo achieved impressive financial results, with net sales hitting a record high of JPY 508.7 billion, marking a 15% year-over-year growth. This growth was driven by robust demand across all sectors of the company, along with favorable foreign exchange conditions. Operating income and adjusted operating income also reached record levels, at JPY 87.7 billion and JPY 104.0 billion respectively, benefiting from improved profit margins through effective cost control.
Due to the strong performance in the first half, Terumo revised its full-year forecast upwards, anticipating record highs in both sales and profits. Specifically, the adjusted operating income forecast was increased from JPY 185 billion to JPY 200 billion, reflecting favorable foreign exchange rates and steady business operations. This upward revision indicates a solid outlook for the remainder of the fiscal year.
The company's profits have significantly outpaced sales growth, attributed mainly to successful cost control initiatives. Increased gross profit was largely driven by the TIS (Terumo Interventional Systems) and blood center business. Moreover, the measures applied in the previous fiscal year to adjust pricing have also begun to take effect, further enhancing profitability.
Terumo's sales performance varied by region, with all major markets—including the U.S. and Europe—showing strong, double-digit growth. The U.S. stood out as the largest growth market, while Japan saw substantial gains in Medical Care Solutions due to effective pricing strategies. However, sales in China from TIS were impacted by centralized purchasing reforms, though offset by growth in Europe, particularly in therapeutic apheresis.
CEO Hikaru Samejima emphasized the importance of innovation as a cornerstone of Terumo's strategic vision. This year, the company appointed a Director of Innovation to spearhead efforts across R&D, clinical development, and related areas. The aim is to build an optimal portfolio while integrating internal and external development to respond to complex medical challenges. With several hundred development projects ongoing, Terumo is focused on maximizing its research capabilities.
Despite its positive performance, Terumo recognizes challenges ahead, including rising raw material and transportation costs. Management noted the need for continued vigilance in monitoring macroeconomic conditions, suggesting that while they anticipate strong fundamentals, external factors may present obstacles. The company is also planning to enhance cash flow management, with free cash flow reaching a record high of JPY 44.6 billion in the first half.
Terumo is positioning itself to enter the venous intervention market, targeting significant health issues such as venous thromboembolism, which presents a robust opportunity. This strategy aligns with the overarching goal of developing innovative solutions for unaddressed medical needs. The company is also exploring potential acquisitions and partnerships to support this initiative.
Overall, Terumo's robust performance, strategic focus on innovation, and upward revisions to its forecasts paint a promising picture for investors. However, staying alert to external challenges will be crucial as the company navigates the remainder of the fiscal year.
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Hello, everyone. Thank you very much for participating Terumo's on the earnings call for the second quarter of fiscal year ending March 31 2025. Thank you. So we are going to start with the financial results overview by CFO, Hagimoto. Then followed by the President, CEO, Samejima is going to explain the innovation strategy, looking at beyond GS26, then we are going to have a question-and-answer. In total, we are going to spend next 60 minutes. This revenue, we are utilizing simultaneous interpretation function in Zoom. So you ask questions either in Japanese or English. So please utilize the language button as needed. Then only the Japanese presentation will be shared on the screen. For the English material, you can check from the -- our website. So if we have any issues for the streaming, we are going to inform you via e-mail, and we'll try to tell you in advance that the presentation we are going to do now is based on the current forecast and thoughts are the -- forecast we probably will share. This has risks as well as uncertainty. So please, I -- try to understand that there are some different results. compared against the current forecast.
Now Hagimoto is going to explain the financial results. Hagimoto.
Yes. Thank you very much for participating in our earnings call today. I'm CFO. I'm Hagimoto. I will give an overview of the financial results for the first half of the fiscal year ending March 31, 2025. And there are the highlights of this final segment in the first half of the year. we were able to achieve record half year high in all OES net sales operating income, adjusted operating income and net income. Revenue growth was 15% against the previous year as a result of continued demand in all companies and the contribution of foreign exchange efforts. Profit grew faster than sales growth due in part of ongoing cost control efforts.
Free cash flow has also been added to the disclosure in this report, and it has reached a record half year high. Taking into account the strong performance in first -- the first half of the year, we have also revised our full year forecast upward. As a result, we expect to achieve record highs in sales in profit, and we believe that we are making steady progress towards achieving the financial targets of GS6. Next slide, please. These are our P&L results.
All companies saw double-digit revenue growth, which reached a record high of JPY 508.7 billion. In addition to continued demand amid a generally favorable business environment. The effect of the pricing measures also contributed. More details will be provided later in the region and company pages. Operating income and adjusted operating income also grew significantly faster than sales growth reaching record highs of JPY 87.7 billion and JPY 104.0 billion, respectively. This was due to improved profit margins achieved through appropriate cost control relative to sales growth. We will continue to closely monitor changes in the macro environment, such as increased raw material prices and transportation costs as we recognize that the situation remains unpredictable. Next slide, please.
This is an analysis of changes in profit in the second quarter compared to the same period of the previous year. First, increased gross profit from higher sales was driven by TIS and blood center business. The gross margin effect benefited from the effects of easing inflation and cost reduction measures, such as streaming production. Turning to price.
The effects of the revised pricing measures which were expanded in the previous fiscal year in dividend is evident. The price revision was implemented in Japan. In the second half of last year, and has contributed to the increase in profit after the first half of this fiscal year. The increased SG&A and R&D expenses are due to business expansion and are generally as planned. Foreign exchange effects were plus JPY 2.2 billion for flow and plus JPY 3.0 billion for stock. Next slide, please.
The following is an analysis of changes in profit for the first half of the fiscal year. Overall, the increase in sales was largely due to continued demand. The trend is almost the same, as I explained earlier, as a factor influence in Q2. But the cardiovascular company, especially TIS, has been making a large contribution to sales. Foreign exchange effects consisted of plus JPY 6.0 billion inflow and plus JPY 5.5 billion in stock. Next slide, please.
This shows revenue by region. Steady progress is being made in all regions, particularly in the U.S. and Europe. In the U.S., all companies posted double-digit growth even on a local currency basis, with the largest growth rate of all regions. In cardiovascular, TIS, which had been experiencing supply issues with some products in the same period of the previous year. So a recovery in sales and euro sales were slow. In Blood and Cell Technologies, growth was driven by the black center business. In Japan, Medical Care Solutions grew substantially. This was due to the effect of pricing measures implemented in hospital care solutions and solid progress in pharmaceutical solutions.
In Europe, cardiovascular grew by double digits on a local currency basis. At TMCS pharmaceutical solutions performed well. And in Blood and Cell Technologies, therapeutic apheresis performed well. In China, TIS sales declined due to the effects of centralized purchasing, but this was offset by strong growth in euro. In emerging markets such as Asia and the Middle East, the blood center business which performed well in the same period of the previous year. So a decline in sales. While cardiovascular cells were driven by cardiology and medical care solutions by double-digit growth in Pharmaceutical Solutions, even on a local currency basis. Next slide, please. I don't now review our business performance by company.
First is the cardiovascular company. Sales revenue grew by 8% on a local currency basis and was strong globally especially in Europe and the U.S. In terms of growth by division, Neurovascular and Vascular led the way. Neurovascular was driven by continued strong demand, especially in the U.S. and China, which saw double-digit growth. Profits increased significantly due to higher revenues the effects of profit improvement measures and steadily progress in controlling SG&A expenses. Next slide, please.
This is TMCS. Medical Care Solutions. Revenue was driven by hospital care solutions and pharmaceutical solutions. In hospital care, the effect of pricing measures and the strong sales of infusion sets contributed. The price revision in Japan implemented last year, together with increased demand in the U.S. were the main contributing factors. In Pharmaceuticals, the CDMO business is making good progress. Overseas, PLAJEX performed well in Europe, the U.S. and Asia. These increases in sales and the effects of pricing measures resulted in increased income. Next slide, please.
This is TBCT Terumo Blood and Cell Technologies. Revenue was driven by the blood center business and therapeutic apheresis. In the blood center business, sales of whole blood collection systems and blood component collection related products were strong in Europe and the U.S. Rika is also developing well. Therapeutic apheresis sales were strong, mainly in the U.S. and Europe due to growing demand for cell collection for cell and gene therapies. Profits were boosted by higher sales in core business and the improved profitability accompanying the rollout of Rika. Next slide, please.
The above is an explanation of sales and revenues. As I mentioned at the beginning of this report, we also intend to strengthen our cash flow management from this fiscal year. This is our free cash flow. This increased by JPY 44.6 billion from the same period last year, also reaching a record half year high. In addition to the increase in profits, operating cash flow have increased significantly despite the increased scale of business due to successful working capital management. And timing. There was also a reduction in capital investment due to differences in the timing compared to the previous year, which contributed to improved free cash flow. Next slide, please.
I'd now like to look at forecasted earnings. We have revised our full year forecast upwards to reflect the strong performance seen in the first half of the year. As a result, we expect to record highs in sales and profit. Each company is making upward revisions to both sales and profit. Next slide, please.
We have revised our adjusted operating income forecast upward from JPY 185 billion at the beginning of the year to JPY 200 billion. This revision takes into account the favorable foreign exchange rate compared to that assumed at the start of the year as well as steady business operations and business expansion. The [ bell ] of adjustment is being increased by JPY 8.7 billion. This was a provision for restructuring expenses to improve efficiency in the cardiovascular company, but there are still ongoing aspects of subsequent reform. So I would like to refrain from explaining further details at this time. We must continue to monitor changes in the business environment closely and promptly [indiscernible] corrective measures if required. Nonetheless, we recognize that business fundamentals have been stable since the first quarter, and we will continue management efforts to reach our financial target of [ 90.8% ] adjusted operating income this year as well as the target set out in GS26.
That's all from me. Thank you for your time.
Thank you very much. Next, you'll here from our CEO, Mr. Samejima.
Hello, thank you very much for coming. This is Samejima, Terumo's CEO. At the FY '23 Q4 financial results meeting on May 14, we talked about our big vision, the future of Terumo, our vision and the path to it. Today, I would like to break this down a bit more and focus on one of its key components of our innovation strategy. Terumo's ultimate goal is to provide innovative and comprehensive solutions to medical issues. I believe innovation to be essential to achieving this goal. Terumo associates value the pursuit of innovation, and this has formed the foundation of our efforts to solve medical issues to date. However, in order to rapidly respond to increasingly diverse and complex medical issues and needs, we must further energize innovation. Strong will and commitment from management is essential to achieving this. This includes organizational reforms forms geared toward creating innovation, company culture and leadership [ in ] the creation and promotion of innovation strategies.
This year, we have created a new position, the Director of Innovation, and this is an expression of my commitment to innovation. All related departments, including R&D, [indiscernible] property, clinical development, promotional [indiscernible], medical training facility and [ venture ] investments are now overseen by Osada, our Director of Innovation. This will make it possible to encourage innovation in a more organic way. In parallel with promotion of our net mid- to long-term innovation strategy. Our current 5-year management strategy, GS26 defined sales growth drivers up to FY '26. This year marks the midpoint of GS26.
As you can see, all Terumo's companies are making steady progress toward achieving their goals. I'm proud that this has been the result of our accumulated technological capabilities in research and development, but this is not the end. With its solid management foundation and robust technology, Terumo will achieve even greater results by linking its innovation and management strategies. We are also emphasizing research development in line with management strategies and the optimal allocation of valuable management resources. For example, we are currently running several hundred development themes globally across a wide range of domains, development time lines, project sizes and sales areas. During this fiscal year, will visualize the entire R&D picture, construct an optimal portfolio and expand our pipeline for top line growth.
In terms of the way we think about innovation, Terumo no longer has barriers such as that between internal and external development. we will combine internal development with external partnerships and acquisitions to leverage all available resources to nurture innovation. To us, innovation not only means developing devices in existing markets, but also creating new markets, value and solutions with new ideas. This is our main pipeline but we will continue to adopt flexible and bold ideas to determine the potential of new technologies and take on challenges in adjacent fields and areas where synergies can be expected.
As one example of our taking on challenge of new deals, I would like to introduce you to our innovation with venous products. Terumo is undertaking development to make a full scale into the venous intervention. Venous [ serumble embolism ] is a serious life-threatening disease and is the third leading cause of cardiovascular disease related death in the United States, the largest market for this product. With a wide range of risk factors, this disease has a large potential patient population and the number of patients is increasing at the rate of approximately 10% per year.
Looking at the market for venous serumble emblembolism interventions, it is easy to see that the market is growing steadily as populations age and lifestyle deteriorate. Our values, which are also at the core of our business strategy is the venous field are unwavering. We will provide end-to-end solutions from access to core to achieve minimally invasive vascular treatment and improve patient's quality of life. In the access fee, we have only gained a high market share with our existing products, and we'll use this as a springboard to launch innovative new therapeutic device products for from [ bectomi ] and stems.
Arteries and veins actually differ considerably in their characteristics. For example, vessel elasticity size and hardness of clubs and also the size of the device. There remain many unmet needs in the venous field, which is a late comer market compared to the arterial field. Terumo will meet these unmet needs, not by developing from scraps but instead by develping technologies originally developed for arteries, and we believe this is our strength. Even in access field, we have many people saying we want a dedicated venous products. We still need it. I believe that this is an unmet need that can only be met by Terumo, which already has unrivaled product strength in the access market. And we are in the process of developing a product that will make people say, of course, that's a terrible product.
Here are a few specific examples of venous R&D that is already underway. Each of the products for arteries listed on the left has its own base technology. By evolving these, we will fill unmet needs specific to venus applications and in seldoing, creating great innovative range specific devices. Unmet by Terumo renowned coating, tube forming and metal fabrication technologies. These will enhance features such as transit flexibility violation, adherence and aspiration efficiency, which are essential for venous treatments. Next are our sales forecasts for our venous pipeline and venous business.
Focusing on therapeutic devices that have a large market size and high-growth potential. Taking into consideration the short to mid- to long-term time frame, we are promoting development spending access to [ cruiser ]. Although I have introduced our internal development for venous, we are simultaneously using external investment to strengthen innovation for venous treatments. In August of this year, Terumo created a corporate venture capital firm or CVC called Terumo Ventures.
The presence of start-ups in the medical device industry cannot be overlooked. In the past, we have made venture investments through the participation [ and ] funds managed by venture capital firms. Now in answer to the question of what changes with CVC, the answer is ownership. With the launch of our CDC, we have also clarified its role to give it greater independence. The role of Terumo CDC is to stimulate innovation through venture investment. The scale of investment is expected to be USD 75 million over the next 5 years. With the sense of mission, Terumo Ventures will accelerate the speed at which we acquire new technologies and build our M&A pipeline, we've already received many inquiries from many venture companies.
The pie chart on the left shows a breakdown by a field of more than 500 deals in the venture investment market over the past 6 months. From such a diverse range of projects, Terumo is narrowing down its investment targets and carefully selecting areas consistent with its business strategy. The table on the right shows our venture investment portfolio. arrows indicate progression of growth stage since our initial investment. We have already exited some investments and recovered our investment. Others have been terminated as external investments and transfer to internal development. we are creating an optimal portfolio that is well balanced and unbiased in terms of area and growth stage.
Finally, I would like to give an example of Terumo's thinking on the use of digital technology, taking external investment in the field of digital diagnostics at the bottom of the portfolio as an example. One of the optimal health care solution offered by Terumo is minimally invasive vascular treatment. With an 2 possibilities beyond that, we are focusing on the field of vascular diagnostics utilizing AI and other digital technologies. While diagnostic imaging usually involves visual interpretation, analysis of diagnostic images using digital technology enables objective quantification of risk something that has historically been difficult to achieve. This will also allow for more accurate determination of treatment urgency and necessity.
When I think about just what an optimal health care solution is. I came to the conclusion of realization that if advanced diagnostic technology can show that there is no need for treatment isn't that most minimally invasive health care solution. However, the number of acutely ill patients requiring treatment continues to increase due to global population growth, aging and deteriorating lifestyles. And we will continue to deliver minimally invasive vascular treatment that is less burdensome, providing both its one form of Terumo's vision for optimal health care solutions utilizing digital technology.
The pursuit of innovation has been and will continue to be one of Terumo's core values and taking on the challenge of entire entering new fields such as venous treatment is also expression of [indiscernible] mindset. What Terumo must do for health care and patients around the world is to provide innovative health care solutions. There must be something that only we can do. we will provide a new value in health care using gold and flexible ideas that are close to patients and medical settings and deliver a great deal of [indiscernible] reaching new frontiers for health care through innovation. I am very much excited about potential. Thank you very much for your time.
[Operator Instructions] So we have Hagimoto, Samejima, and Miyoshi and Osada, who is Innovation Director, also responding to the questions today. Kohtani from Mizuho Securities.
I'm Kohtani from Mizuho Securities. I have 2 questions. And the first question is about Slide 13. For the adjusted operating income approach revision. Against the forecast, you are -- this is incremental numbers. So that means the total gross margin I think it was JPY 7 billion in the beginning. Now you added JPY 4 billion. So [ JPY 11 billion ], [ JPY 1.1 billion ] this moment, [ JPY 11 billion ] at this moment, and the drug price changes, remain in the same. Yes. Yes, your understanding is correct. If that is the case, and the price impact of the price increase is already finished for the first half. In the second half, you already increased the price. So that will you view not going to expect the additional other impact for the second half. And I feel that the raw material price increase and the transportation cost increase will be appearing for the second half. So could you explain that? This is the first question.
Yes. Thank you very much for the question. As we asked now for pricing for the second half actually, we increased the price, the second half in the last year. So that impact, we do not have a significant impact for this fiscal year. However, for the PPP impact, will continue for the second half. Therefore, overall, the optimum price is what we would try and customers to understand. So we are going to have the price increase globally at -- in the possible areas. But our assumption, we do not see that as the numbers -- the second one about the cost and the cost ratio we will continue to work on improvement for the productivity, such as Vietnam or Costa Rica, where we are going to transfer some of the manufacturing site. So that's the area we can expect to have the improvement for the cost. So other than the price and the raw material cost, we try to deliver impact.
What you mentioned the [ Visa's ] square. So [ Visa's ] square impact is also directed here. So JPY 3 billion, that's what we expected for this area, but is it even higher?
Yes, as you pointed out, at this moment, around JPY 3 billion is what we assume from the beginning of this fiscal year. However, what is increasing certain difficult for us identified, but for what we are working on [ Visa's ] square which includes transferring the production side. And it is as planned. It's slightly higher, but it is almost as planned.
I have a question to Samejima for the beyond [ 26 ]. Thank you very much for sharing the Slide 6 because last time for the GS26, you did not have anything what you shared for the I was trying to think what you mean, but it really helped me to understand it. But I have 2 -- 10 questions actually, but I have to summarize in 1 question. So for GS26, which one is the most exciting product. What Japan are you really excited about? And for the venous device, they do not have any objections, but it's slightly different from [indiscernible]. However, you can try the expertise in the other, so I can understand you added the business. But Penumbra and [ Inari ], there are so many companies they are already playing in venous market. So your companies you're going to have the competitive advantage for all the product in this portfolio? Is my understanding correct? or you are going to have the entire portfolio or lineup for that portfolio. That's why you are able to explore the market. So these are the 2 points. So beyond GS26, which is the most exciting product for you and also the strategy for the banks or venous.
Yes. So I try to respond first. And if there's any comments from additional comments from Osada is also going to add the comments Yes. Well, beyond [ 26 ] we talk about the scale -- then again, Alzheimer, it's a fairly major areas for the drug [indiscernible] Rika is going to expand the customer base. So in this area, as a platform, how much we can achieve Yes, we have counterpart for this area, so I cannot say anything indefinite, but considering the growth driver, those are the ones we are really focusing on.
Yes. I'm Osada speaking. And in addition to that, the biggest impact is also in the GS26 area. So Terumo neuro and Terumo artery. Those -- the new products, those 2 companies are going to launch. So that sales contribution is quite significant. Well, venous -- as you mentioned [indiscernible], there are other companies who also are playing in this market. One product on 2 products are not the only products we are going to play as a part of our strategy, we are going to have the extensive pipeline so that BBT and PE, those types of tumors, we try to enter. In addition to that, for a few years ago, we've been developing on that product. And so one of the factors we build up the confidence is that we have -- we are very strong in access products for a long time. And that is the need we still see in the market.
So the access products for the veins is what we are going to add so that we can have the full lineup to enter that market. Access and therapeutic devices could be combined in an effective manner. So that is the solution we can provide. So in that way, of our capabilities and expertise, we nurtured in theater could be utilized. So that's the confidence we have at this moment. So entering that market, we are slightly behind against the competitors, but we are still confident that we can win. So we are preparing for the final preparation. Launch timing, it will be in GS26 maybe. Well we cannot say in the specific date.
From SMBC Nikko Securities Tokumoto, please.
Yes. This is Tokumoto from Nikko Securities. Do you hear me?
Yes, we hear you.
My first question. So on Page 13 of the financial results cardiovascular business-related details. You said that you will refrain from explaining that. So maybe if you could add some information as to what type of one business? Is it one-off cost? Or when you have production operation improvement, it's more of a continuous change so that you will have this type of topic that would keep coming up for a better profit for revenue.
So Hagimoto I think, will answer the question.
So of course, regarding the actual details, I would like to refrain from mentioning that. But regarding this -- whether this one-off, based on what we understand, we actually allocated for reserves. So in terms of what kind of structure [ reports ] we have from now on, these items, et cetera, may change slightly, but it's not that this will continue forever. So based on this provisional accrual, what level of profits or minuses will we see. That's the type of viewpoint I would like to have.
And this was not in the plan at the beginning of this fiscal year, correct?
Correct. We did not put this originally. Yes.
My second question regarding the venous discussion. I very much see it as a new challenge for you. So there's this artery access and you will be able to transfer some of the technology, and that's understandable. Now when you are moving on with the internal development, I wonder what kind of resources you lack so that you would like to acquire. You talked about you will work on internally and externally and may have necessary requirement. So if you look at the wine business and what you are lacking, what are the type of issues or challenges do you see.
Thank you very much for your question. Osada, can you answer.
Yes, the area that we are going into, what's missing or lacking we really don't have that as an item, but I would say speed because it's mostly internally developed. Rather than just internally developing and waiting until it's done, even if it's a competing technology, we may take something in, including start-up. And by doing so, if you can get speed as a trade-off, then we even accept the idea of utilizing external resources, but we are also looking at external resources. And it's possible that an externally developed product to replace this internally developed product and we would like to speed up for entire process. So I don't believe a product-wise, we are lacking something. But we are -- this is a late coming thing. So I believe we still have a room to improve our speed.
UBS Securities, Yoshihara, please?
I'm Yoshihara from UBS Securities. First question is about GP changes, gross profit change. And we already explained that compared with the first quarter and second quarter, it seems like you improved significantly GP. For the second quarter, you -- it's close to 55%. So you have a very good GP or could you explain the factor for this? Maybe the unachieved on the inventory may be having the positive impact for the second quarter, but if there are any other factors could you explain?
Yes. Yoshihara, thank you very much. So for GP improvement in the second quarter, could you Yes. Thank you very much for the question. As for GP, overall, the product mix has been improved. So that is one of the main factors. Compact with first quarter, TIS business, which has a quite high GP ratio business. And it's improving. So that's why the entire overall ratio is improved.
An additional question for the second half and on -- and should we assume this situation continues? Or when we look at the second quarter, I think the GP for these 3 months may be too good.
Well, yes. So for the third quarter and fourth quarter, as a business fundamentals, we will be able to maintain the strong fundamentals. However, as I mentioned in the beginning, the inflation it's slightly separate. However, we still have the impact of the inbound rate cost because of the war situation, which is slightly increasing. Therefore, I cannot definitely say that the second quarter situation will be continued. So we are not looking at this optimistic manner.
Okay. My second question is about innovation ideas, concept. If my understanding is right, U.S. big players, medical device players, if you are going to compete against them. So if you are successful, you will have the high returns. But today, we have inflation that you are trying to avoid high-risk development such as U.S. companies are doing. But [indiscernible] Jason's comment, I think the idea -- a mindset has been changing. So depending on the situation, you will launch something that I'm precedented and you will be the top player in the business. So that is something maybe we can expect for the midterm. Therefore, I would try to hear your innovation definition.
Yes. Thank you very much, Yoshihara. So Samejima is going to answer.
Yes. Innovation is a big word. So there are a lot of interpretations for that work. In general, this active technology is something everyone assumes. However, maybe use accurately or more accurate or more [indiscernible] somewhat safe, safe. So those incremental value is what we are going to offer, and we believe those are part of innovation. And in the medical field, those are highly evaluated actually. So through Terumo ventures, new innovation is what we will seek for. However, just like before, incremental innovation is what we will place in [indiscernible] in the same manner. So we will focus on these 2 areas. That means including acquisition, you are also thinking about the innovation. So maybe continues, you will have completely new areas for your companies may not be the case, you will consider the acquisition. Yes, basically existing fairly closely related to that existing business or maybe other enhancing the existing business. Those are the areas we are going to think about acquisitions.
From Morgan Stanley MUFG Securities, Hayashi.
Yes, this is Hayashi. Do you hear me?
Yes, Haya, we hear you.
My first question this fiscal year's guidance correction and the second point is innovation and [indiscernible]. Going back to the first one. So our net sales guidance has been price upward and the new excluded currencies impact and then the CMV company number has been directed. And also TBCT, you also excluded currency. So based on the first half good progress, you didn't change the full year numbers, I'm assuming. But in terms on to take a viewpoint, what product segment numbers are going up so that you clear numbers up. Would you be able to provide [indiscernible].
Okay. So let me add some information. You are correct. CNB and TBCT increased ratio have been higher than others. Starting from the first half, VA and neuro areas are progressing quite well. And based on that, we believe that trend will continue, hence, the upward revision. And also TVCT-wise, our core business has been very solid in the first half. So cardiovascular and TBCT became the main ones to drive the top line revision? May I ask you about the background of that solid situation. So for neurovascular [ NTA ], we have more patients or cases coming back in Europe [indiscernible] And also the key core business wise Europe and Americas have very blood-related areas business going solid. So those are the drivers.
My second point, I would like to ask about [indiscernible] innovation. So you announced the start of CVC back in August when it comes to this kind of venture investment or operation of -- it may require different types of skills or capabilities of your existing employee capabilities. And I believe that's the type of team that you need to form -- so when it comes to CVC or venture investment, when you manage those things, do you mostly consider moving people from your current pool -- or do you hire from external pool and try to form the team. So I was hoping to ask about that. And also when you form a team is mostly Americans, I mean if you have specific commerciality profile, for example, of the team, please provide.
Thank you for the question. Osada, please, go ahead.
Yes. Thank you very much for your question. So this is the as of now answer. We are actually forming the team with existing employees. Of course, these are not lay people, starting from 8, 9 years ago, we've been sending people to venture capital in the states and they actually work their full time. So those people actually accumulated experiences. And we actually currently have 2 members that are working in the venture capitals in the state. So people with knowledge and insights are now in the CVC team. And unlike regular venture capitals, our ultimate goal is to make this into a business. So of course, it does not -- it should not give financial deficit, but this is not a capital gain. So among these members, we have certain members who have judging eyes for technologies.
Of course, we've had a successful and not so successful investment. But we have more discerning eyes overall as a team. So we have people with financial background. We -- people who have actual venture capital experiences and we now have the technologically discerning people plus people who used to work on business development in our business department. So although they are internal members, their specific subject matter type of capabilities are quite high.
Citigroup Securities, Yamaguchi.
Do you hear me?
Yes, we can hear you.
I'm Yamaguchi from Citigroup. My first question -- you already mentioned for record rollout. At the last time, 100 centers was explained, but at this moment, how many centers are you planning? And you are going to complete in 2025? So for the -- if you have any quantitative follow-up, that's what I'd like to share. This is the first question.
Okay. So I will answer that then. At this moment, 150 centers are what we reached a rollout at this moment, as we mentioned from the beginning, in FY '25, from spring to summer, we are going to complete the full rollout and then we are making a very good progress for that plan.
Okay. My second question is about BT or venous business or in the intervention market and you have the [indiscernible] I cannot read the units of major -- but what is the market size? And I think you had the bar chart for that business, Slide 10. And what is the major unit of major I think it will be easier to understand if you can explain from the top-down perspective.
You have questions about the market. Market size and business side that you expect from your business. For the market side, roughly [ 18 million -- 800 million ]. So that's what you can probably expect. And for the expected sales -- we cannot disclose the numbers at this moment, but launching these new products enable us to enter this market with more product. That's what we try to show in the [indiscernible].
But you are aiming to achieve the top player in this market as you are going to enter this market.
Yes. Osada will give additional comments.
Yes, of course. As I mentioned earlier, for the business market and the clinical use site users are not satisfied with the currently available products. Therefore, we are trying to make sure to respond to their needs. That's what we can do with. So as a top player, we are going to enter the venous market.
From Nomura securities, Mori.
This is Mori from Nomura Securities, do you hear me.
Yes, we hear you.
First question. So if you compare different quarters, you sometimes see cardiovascular sales going down. So July, June, September, the reason of that decline, of course, there's currency, I believe, but if there are any other reasons.
You're talking about cardiovascular, may I clarify?
Yes.
For example, [ 156 billion ]. And also I see this decline to [ 984 ], so I'm comparing basically April, June and July, September terms. I interpret that as you're asking the current one. I mean except for that currency impact, we are basically growing solidly. So month wise [indiscernible] 6, something went up or from something came down. Well, in China, maybe impact was there. I mean, [indiscernible] that was a primary impact. So there was the agency impact as we also said, but we didn't have that in the latest quarter. So cardiovascular wise, there was a currency impact and primary impact hence the numbers. So if that's the case, if -- so rather than thinking about this quarter starting April, you should think about the quarter starting in July and then see the next 2 quarters. right. We will not have the primary driver in quarter 2.
Okay. My second question for [ Life Care ] in GS 26 -- so diabetes and Alzheimer's projects, I think, are somewhat struggling areas. For diabetes, in GS26, you are talking about growth, but [ Dexcom ] alliance has ended and is [indiscernible] pump is struggling, if that's the case, then how you are going to -- or are you going to somehow rework on these diabetes.
So Samejima.
As you rightly pointed out, [ Dexcom ] CGM alliance has ended. So as for the diabetes business, we are actually reverifying the diabetes business. So we are quite in the middle about. But this is a very important business area. And in Japan, especially we have a very high presence. So we are -- we would like to start revive our business. So in Japan, the BGM, I think, is kept because of the medical reimbursement benefit. But going towards the future, how many remaining years do you think BGM has to survive. We don't expect a specific number of years. But as you pointed out, we are definitely slowly shifting to CGM. And -- in addition to domestic one in emerging countries, what type of growth strategy we can draw with BGM. So that's also part of our verification.
So your competitors working on BGM in emerging countries, they were not very successful. So I don't think it's a very easy way. But would you still like to do medical care solutions in emerging countries? That is also part of what we are verifying currently.
Now BofA Securities, Watanabe.
Yes, I am Watanabe speaking and congratulations [indiscernible] So I have 2 questions. The first one is related to numbers. I may have heard, but first half landing adjusted operating profit. When you compare that with the internal goal, how much higher? How much you exceed from the internal [indiscernible]? Are there anything you can share specifically.
Yes. Hagimoto is going to answer.
Yes, thank you very much. Well, for this one initially, we assumed ALP as an annual [ this growth ] number. That was a bad before assuming so the ratio almost the same for the first half. So compared with that number, and maybe the improvement is that ratio, we can bring from that number. That means the higher portion of the first half that's actually nominal and then that is also reflected to the second half -- excluding the foreign exchange. Yes. For the actual result for the first half is the main factors for the upward revision for the second half. For the second half, we expect that this trend will continue. But as I mentioned earlier, we still have the freight cost issues and BP and certain BBP directions. Therefore, not exactly on the numbers of the second first half is reflected to the second half.
Okay. For the second question is related to Samejima's presentation. You had the innovation pipeline expansion drawings in Slide 6. I have a conceptual question on this. you expect the bins business today. But there are so many products, several hundreds of projects and try to visualize and try to improve it and venous is a very exciting arena. But maybe just not at -- that means Terumo, venus is the last one for term, I think you will come up with more areas you are going to enter. And based on my -- that I understand, I have a question, maybe 3 months ago, not only the innovative products, but maybe improving the hospital operations. That's what term was also thinking. I think that's what you explained for creating the new areas I'm not quite sure what this implies in the future visualized portfolio for the future. what are the things you are going to stop? And what are the things you are going to keep -- and the venous fine, that could be 1 of the 5 that you are going to launch in the future. But actually, venous is the main areas as a part of your strategy. So consenting the future potential is what I would try to understand better. then maybe [indiscernible]. additional comments.
Yes, we have several hundreds of projects, and we are visualizing all those projects. That's what I explained. And we tried to -- we are in the process of listing up everything. And maybe we have to think about the priority -- and also we have to think about the allocation of the resources and we have to select and stop. So that's what we are going to work on as a next step. In addition to business I cannot say what will be added to Venous, but when we think about the beyond GS26, what are the areas we can find opportunity where we discuss with me and Osada and have a different discussion.
Yes. If I'm going to add. Venous is just one of many potentials. For R&D visualization and labor asked to Actually, that's being said, now we are reaching JPY 1 trillion. So looking beyond JPY 1 trillion and the R&D need to contribute. So in order to do so, we should focus on something that has a major impact. So even though we are going to invest for R&D, we have the small scale to large scale. So the expenses for the investment for the R&D will be allocated for the major areas, the bigger business in order to achieve it. or we are trying to visualize all the R&D projects that are ongoing in the company. And now we are almost completing that review. Therefore, that how we are going to invest where we are going to invest for the R&D will be different. So that's what I would like you to understand.
Then in the future, I'm looking forward to hear the update in the future. But after your review, then maybe you will come up with the new arena that you are going to enter. So that will probably be presented in the future. That may I assume that. Is that right?
Yes. You are right. So we are going to update in the future.
Now I guess we can get questions from one more person. From JPMorgan Securities, Saito.
This is Saito from JPMorgan Securities. Regarding [indiscernible], profitability is going up I saw in the presentation, if possible. Can you talk about some quantitatives as to actual or outlook? Maybe you can give me specific numbers or specific timing, whatever you could disclose.
Saito, thank you very much. I apologize, but I cannot give you specific numbers. But as we've been saying, the -- as the rollout completes, we will see our shift to more positives. And what we are improving means that we are doing rollouts well so that the disposable is cycling greatly, and that's actually working quite well on our revenue. So if we could see that, that would be good.
So it's time to finish the Q&A session. The questions that we could not answer today. please talk to our IR person. With this, I would like to finish the 2025 Q2 financial results explanation meeting. Thank you very much for your participation, and have a great day.