Sysmex Report 2017

Editorial Policy The Sysmex Report, an integrated report that summarizes financial and nonfinancial informa-tion, is intended to help stakeholders und...

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Sysmex Report 2017

Sysmex Report 2017 For the year ended March 31, 2017 1-5-1 Wakinohama-Kaigandori, Chuo-ku, Kobe 651-0073, Japan Tel +81 (78) 265-0500 Fax +81 (78) 265-0524

www.sysmex.co.jp/en/

This brochure was printed in Japan on FSC R-certified paper using vegetable oil ink.

Aiming to Contribute to the Development of Medical Care and the Health of People throughout the World Since its founding, Sysmex’s business has been focused on the in vitro diagnostics field. We have taken on the challenge of promoting advances in healthcare and aimed to create a fulfilling and healthy society. We endeavor to facilitate testing that aids swifter and more accurate diagnosis, that is conducted nearer to patients and places less of a burden on them, and that contributes to new levels of healthcare. We plan to continue taking on challenges in the healthcare domain by remaining a step ahead of the times and going outside our existing framework.

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Sysmex Report 2017

Contents

Profile

To Our Stakeholders

Business Activities

Enhancing Corporate Value

Based on the “Sysmex Way,” the corporate philosophy for the Sysmex Group, we are working to realize a fulfilling and healthy society.

We aim to achieve sustainable growth by enhancing profitability in our core businesses and investing in our next core businesses.

We are creating frameworks to generate and provide value in response to diverse market needs.

By putting into practice the “Sysmex Way,” the corporate philosophy for the Sysmex Group, we are contributing to society and working to achieve sustainable increases in corporate value.

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Financial and Other Information

76

31 Corporate Philosophy for the Sysmex Group................................. 5 A Sustained Growth Trajectory ...... 7 Business Domains and Market Positioning................................ 9 Our Story of Value Creation ............ 11

Message from the CEO ...................... 13

Framework for Generating Value .... 31

CSR Management.................................. 57

Our Financial Perspective ................. 17

Functional Structure ............................ 33

33

Resolution of Medical Issues through Products and Services ...... 59

Consolidated Financial and Non-Financial Data (10 Years) ........ 77 Management’s Discussion and Analysis....................................................... 79

Financial Highlights ............................. 19

Research and Development

Growth Strategies ................................. 21

Procurement, Manufacturing and Logistics

35

Responsible Provision of Products and Services ......................... 61

Sales and Support Services

37

Environmental Consideration ......... 62

Stock Information ................................. 89

Realization of an Attractive Workplace .................... 63

Corporate Overview............................. 90

External Environment

21

Internal Environment

22

Long-Term Management Targets

23

New Mid-Term Management Plan 24

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Reinforcing Profitability to Achieve Further Growth (Core Businesses)

Overview of Business by Geographic Region ............................... 39 Americas

41

Members of the Managing Board . 71

EMEA

25

Investing in Growth to Reform Our Business Portfolio 27

Corporate Governance ....................... 65

(Europe, the Middle East and Africa)

43

China

45

Asia Pacific

47

Japan

49

Principal Testing Fields and Products ..................................................... 51 User Report .............................................. 53

Messages from Outside Members of the Managing Board... 73 Executive Officers ................................ 75

Consolidated Financial Statements ... 83

Editorial Policy The Sysmex Report, an integrated report that summarizes financial and nonfinancial information, is intended to help stakeholders understand Sysmex’s medium- to long-term value creation. For more detailed information, please visit our website.

Organizations Covered In principle, this report covers the Sysmex Group (including Group companies in Japan and overseas). In this report, “Sysmex” refers to the Sysmex Group as a whole. “Sysmex Corporation” refers to the Company on a stand-alone basis.

Accounting Standards In the fiscal year ended March 31, 2017, we voluntarily adopted the International Financial Reporting Standards (IFRS). In this report, figures presented up to the fiscal year ended March 31, 2015, are in accordance with Japanese GAAP. Figures beginning after the year ended March 31, 2016, are presented in accordance with IFRS.

Cautionary Note Regarding ForwardLooking Statements

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Promoting Reforms to Lead Growth

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Statements in this report pertaining to Sysmex’s future plans, strategies, business performance and other items are based on currently available information and involve certain risks and uncertainties. Actual results may differ materially from those anticipated in these statements.

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Sysmex Report 2017

Profile Corporate Philosophy for the Sysmex Group

Aiming to Support People’s Health, an Ideal We Have Carried Forward Since Our Founding Realizing a healthy society is our ideal. Our corporate culture emphasizes taking on challenges in developing new products and technologies. Furthermore, we have carried forward Sysmex’s values—building trust and confidence among all our stakeholders—since the time of our founding.

1959

Shaping the advancement of healthcare.

We continue to create unique and innovative values, while building trust and confidence.

In 1959, Sysmex Founder Taro Nakatani visited the United States, looking for new business ideas. His attention was drawn to the field of medical electronic devices. Our founder, setting off on his overseas visit

With passion and flexibility, we demonstrate our individual competence and unsurpassed teamwork.

1963 When he returned to Japan, Mr. Nakatani began working with young researchers, conducting studies and engaging in development. In 1963, the Company succeeded in the commercialization of Japan’s first hematology analyzer, the CC-1001.

The CC-1001 automated hematology analyzer

Core Behaviors To Our Customers

1968

We deliver reassurance to our customers, through unmatched quality, advanced technologies, superior support, and actions that consistently reflect the viewpoint of our customers. We constantly look out for our customers’ true needs, and seek to generate new solutions to satisfy those needs.

Established TOA MEDICAL ELECTRONICS CO., LTD. (current Sysmex Corporation) Formulated by Founder Taro Nakatani

Our Fundamental Management Policy Corporate Objective

Fundamental Management Policy (the “Three Aspects of Confidence”)

By selling the products we create, we will satisfy the demands of society at large, contribute to society and make our own lives more fulfilling.

 Total customer confidence in all of our products.  Total confidence in our associates in all our business transactions.  Total confidence of our employees in themselves and all their work.

2007

We honor diversity, respect the individuality of each employee, and provide them with a workplace where they can realize their full potential. We value the spirit of independence and challenge, provide employees with opportunities for self-fulfillment and growth, and reward them for their accomplishments.

To Our Business Partners We deliver commitment to our client companies through broad-ranging partnerships. We strive to be a company that can grow in step with our trade partners, through respect and mutual trust.

To Our Shareholders Our shareholders can rest assured that we will continue to improve the soundness and transparency of our management policies, while promoting information disclosure and close communications. We commit ourselves to a consistent yet innovative style of management, in order to achieve sustainable growth and increased shareholder value.

In line with changes in the global management environment, we redefined

To Society

the perspective carried forward since the time of our founding, formulating an

We carry out our business in strict compliance with laws and regulations, as well as in adherence to high ethical standards. As a responsible member of society, we play an active role in resolving environmental issues and other problems that impact our society today.

expanded corporate philosophy for the Sysmex Group, the “

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To Our Employees

.”

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Profile

Sysmex Report 2017

Target for the fiscal year ending March 31, 2020

A Sustained Growth Trajectory

¥350.0 billion Consolidated sales in the fiscal year ended March 31, 2017

¥249.8 billion

Since our founding, we have sought to foresee future needs and continued taking on challenges in the healthcare domain.

Founding members 1968

Overseas sales

Our first overseas location (Germany) 1972

The world’s first system product in the hematology field 1990

Formulation of the corporate philosophy for the Sysmex Group 2007

Entered the life science field Opening of the Central Research Laboratories (at the time) 2000

Domestic sales

1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

2020

Note: Fiscal years through 1990 ended on February 20. Fiscal years from 1991 ended on March 31 (Japanese GAAP). Figures from 2016 are presented according to IFRS. Figures are presented on a non-consolidated bases through the fiscal year ended March 31, 1993, and on a consolidated basis from the year ended March 31, 1994.

Management Establishment

Changed company name to Sysmex Corporation

Formulated our corporate philosophy

1998

2007 Formulation of the “Sysmex Way” 2008 Renewal of our corporate logo

Created the “Sysmex” brand Strengthened our management structure

1978

Gained the top share of the global market in the hematology field

Listed on the Second Section of the Osaka Securities Exchange in 1995, the Second Section of the Tokyo Stock Exchange in 1996, and the First Sections of the Tokyo and Osaka exchanges in 2000

Established our first overseas location 1972 Germany

Began providing direct sales, service and support overseas for the first time 1991 United Kingdom

2007

Reinforced our global sales network through business alliances

Commenced direct sales in the world’s biggest market

Accelerated the establishment of bases in emerging markets

1995 Entered an alliance with current Siemens Healthcare Diagnostics Inc. in relation to hemostasis products 1998 Entered an alliance with current F. HoffmanLa Roche Ltd. in hematology products

2003 United States

2010 Vietnam, Philippines 2011 Russia 2014 Turkey 2014 Colombia 2015 Ghana ...

Sales and Support Services

Strengthening Our Global Management Structure

Constructing a Sales, Service and Support Network Covering More Than 190 Countries

Establishment of locations in Asia and China Reagent factory in China in 1995 and in Singapore in 1998

R&D and Manufacturing

Developed the world’s first system product in the hematology field 1990

Consolidated sales, development, manufacturing and general affairs divisions

Promoted the expansion of business fields

1973 Established the Kakogawa Factory

1986 Established the Kobe Factory

Entered the life science field 2000 Opened the Central Research Laboratories within the current Technopark

Promoted the expansion of business fields

Reinforced R&D capabilities in reagents

1993 Established the main building of Techno Center

2001 Converted the current Sysmex International Reagents Co., Ltd., to a wholly owned subsidiary

Expanded our technology platform with a view to personalized medicine 2013 Acquired the current Sysmex Partec and Sysmex Inostics as subsidiaries 2016 Converted RIKEN GENESIS to a subsidiary

Proactively Entering New Fields in the Healthcare Domain

Strengthened global-standard R&D capabilities 2008 Established Technopark (expanded Techno Center)

Expanding the Healthcare Business Hematology Urinalysis Hemostasis Immunochemistry Life Science

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Profile

Sysmex Report 2017

Business Domains and Market Positioning

We continue to grow by taking advantage of our strengths in the expanding market for in vitro diagnostics. medicine has begun, such as performing risk diagnosis and

Active in the IVD Domain, Which Is Essential to Healthcare

Sysmex’s Core Testing Fields

monitoring the treatment results of individual patients. Thus, IVD is playing an increasingly important role in healthcare.

Clinical testing, which is used in a variety of scenarios that

Platelets

Market Position

include medical diagnosis and treatment, is essential to

Red blood cells

healthcare. Clinical testing can be broadly divided into two categories: in vitro diagnostics (IVD) that involve the exami-

Sysmex’s business in the IVD domain involves the provi-

Hematology

nation of blood, urine or cell samples taken from the body

sion of instruments, reagents and software around the

Testing that measures and analyzes the number, type and size of red, white and other blood cells

and in vivo diagnostics that involve direct examination using

world, and we rank among the top 10 companies in the

X-rays or electrocardiograms. Sysmex’s primary business is in

world in the IVD domain. In the three fields of hematol-

the IVD domain. In line with progress on genetic analysis and

ogy, hemostasis and urinalysis (sediment), we have the

technologies in recent years, the realization of personalized

leading share of the global market (including through

Diagnosis and Treatment

Recovery

In Vitro Diagnostics

the leading company in the IVD domain.

Hematology* Hemostasis Urinalysis* Immunochemistry Gene testing and others

Fbg

Immunochemistry

The IVD domain is forecast to continue growing to

X-ray/MRI Electrocardiogram measurement Respiratory function testing Electroencephalogram testing and others

[Hemorrhagic diseases (hemophilia, etc.), thrombotic diseases (deep-vein thrombosis, etc.)]

D-Dimer

growth fields, as we are aiming to position ourselves as

In Vivo Diagnostics

Testing to determine the ability of blood to clot when injured and to dissolve clots

Clotting factors

developing our business in immunochemistry and other

Clinical Laboratory Testing

Hemostasis

FDP

alliances). In addition to these three fields, in Asia we are Examination

[Anemia, leukemia, thrombocytopenia, etc.]

White blood cells (neutrophils) White blood cells (lymphocytes)

Platelets

Testing for the status of viruses, hormones and proteins, and to determine causes and types of disease

meet increasing healthcare needs in developed countries and healthcare infrastructure being put in place in emerg-

[Infectious diseases (hepatitis, AIDS), cancer, allergies, etc.] Viruses

ing markets. At the same time, global competition is growing increasingly fierce, with companies from other sectors entering our field. Sysmex is responding to this changing environment by leveraging its unique strengths to maximize

Sysmex business field * Diagnostics used for medical checkups as well

Clinical Chemistry

Proteins

Hormones

Testing to determine the state of metabolism-related organs by studying sugars, lipids, proteins and other components

Lipids

[Diabetes, arteriosclerosis, liver dysfunction, kidney dysfunction, etc.]

Sugars

its corporate value and steadily increase its market position.

 Market Scale and Sysmex’s Business Domains Market Scale

Market Growth ($ million) Rate

Testing field

(Fiscal year ended March 31, 2017)

Production Instruments Reagents

Sales and Service Principal Alliances Area

Hematology

3,100

6%

63.8%





Global

Hemostasis

1,800

5%

16.4%





Global

Urinalysis Of which, sediment urinalysis Immunochemistry

1,000 320

6%

6.4%





Global

Clinical chemistry Others (genes, blood sugar, etc.) IVD market

F. Hoffman-La Roche Siemens Healthcare Diagnostics

Market Share in Hematology Other companies

Proteins

18,000

6%

3.2%





Asia

Lymph nodes

Hematology

EIKEN CHEMICAL

7,400

5%

1.4%





Asia

21,700



8.8%





53,000

6%





— JEOL Furuno Electric

— —

Life Science

Inorganic matter

Sysmex

DNA

Note: Sysmex’s assumptions

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Composition of Sales

Cancer cells

z Gene testing In this testing, we analyze genetic information to study the likelihood that cancer and other diseases will occur, as well as pharmaceutical compatibility and so on. z Lymph node metastasis testing Testing to determine the metastasis of cancer cells to the lymph nodes

Urinalysis Testing for the presence of sugar, protein or blood in the urine, the presence of urinary tract stones, kidney function and signs of diabetes

— —

 Own products  Alliances

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Profile

Sysmex Report 2017

Our Story of Value Creation

In the healthcare domain, we are leveraging our strengths to create new value and contribute to the creation of a fulfilling and healthy society.

Based on the “Sysmex Way,” the corporate philosophy

promoting future-oriented initiatives, such as the realization

for the Sysmex Group, we are leveraging our distinctive

of personalized medicine. By extending healthy lifespans,

strengths and inputs to develop businesses in the IVD

reducing the burden on patients and enhancing the qual-

domain that support healthcare. We facilitate testing

ity of healthcare, we will create value that contributes to

in more than 190 countries around the world and are

the realization of a fulfilling and healthy society.

Corporate philosophy for the Sysmex Group

Sysmex’s Strengths and Inputs

Business Domains

Product Development Capabilities

Essential for Healthcare

Instruments x reagents x software

R&D Capabilities for Creating Unique Value

Social Value Hematology Tests Facilitated by Sysmex

IVD

Technology Platforms P33

Value Creation

More than 50% of the world total

Genes, cells and proteins

Customer Satisfaction in Hematology (United States)

Core Businesses

No. 1 for 11 consecutive years

Instrument Manufacturing

Social Issues and Needs

Manufacturing and Supply Structure to Provide High-Quality Instruments and a Stable Supply of Reagents

Made in Japan

1 share of the ȉ Hematology No.global market

Reagent Production

Nine factories in seven countries Satisfying Regulatory Systems Around the World P35

Quality management system

ȉ Urinalysis

No. 1 share of the global market3

P25

Global Business Development

Sales, Service and Support to Inspire Confidence in Customers P37

More than 4,500 people

ȉ Flow Cytometry (FCM)

Services and Support

ȉ Life Science

Network service SNCS™ 1

ȉ Other New Business Fields

More than 8,000 people

Automating testing for infectious diseases

Future-Oriented Initiatives

Realization of Personalized Medicine Through Liquid Biopsy5,

Realization of less-invasive testing P27

Extending healthy lifespans

Reducing the burden on patients (physically, emotionally, economically)

Enhancing the quality of healthcare

(at locations in more than 40 countries)

Economic Value

Female Employees (Group) P63

More than 40%

ROE 20% or more

A Recurring-Revenue Model that Generates Ongoing Earnings

A Stable Business Model

Total Shareholder Return (past five years)

Reagents and services account for P22

1

Malaria, etc.

Creation of Unique Testing Parameters

Next Core Businesses

Number of Group Employees

Diverse Human Resources Supporting Future Growth

(Productivity, clinical value)

Use of Glycosylation Markers4, etc.

Scientific Seminar Participants (Annually)

P57

Sysmex: 33.3% TOPIX average: 14.5%

more than 65% of sales

Sysmex Network Communication Systems (SNCS): An online support service that connects to the Sysmex Customer Support Center and customers’ instruments via the Internet to provide real-time external quality control and scientific information and monitor instrument conditions. 2 Including our alliance with Siemens

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ȉ Hemostasis

No. 1 share of the global market2

Enhancing the Quality of Testing

ȉ Immunochemistry

More than 190 countries

Realizing a Fulfilling and Healthy Society

3

Sediment urinalysis field Glycosylation marker: A biomarker that targets structural changes in sugar chains present in glycoproteins 5 Liquid biopsy: Similar in performance to a biopsy, which is carried out on a sample taken from tissue such as tumors, but which attempts to reduce the burden on the patient by using blood or body fluid tests. 4

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Sysmex Report 2017

To Our Stakeholders

We aim to achieve sustainable growth by enhancing profitability in our core businesses and investing in our next core businesses.

Hisashi Ietsugu Chairman and CEO

Message from the CEO rate fluctuations than ever before. On a local currency

within the Sysmex Group, shaking us out of the sense that

basis, sales were up in all geographic locations, and busi-

smooth sailing is a matter of course. All our employees are

ness itself has not worsened. Nevertheless, I am extremely

starting to realize how difficult it is to maintain ongoing

The “Sysmex Way,” the corporate philosophy for the

disappointed that our streak of ongoing increases in sales

growth. I believe this awareness is an important part of

Sysmex Group, defines Sysmex’s mission as “shaping the

and profits has come to an end.

arousing the sense of challenge needed to put ourselves

Sysmex’s Mission: “Shaping the Advancement of Healthcare.”

advancement of healthcare.” We are developing our busi-

These operating results have aroused a sense of crisis

back on a growth trajectory.

ness in accordance with this mission. The in vitro diagnostics (IVD) domain has been the mainstay of our business since the time of our establishment. Going forward, we will continue contributing to the realization of a fulfilling and healthy society by taking on challenges in advancing

„ Net Sales

„ Operating Profit/Operating Margin

„ Profit Attributable to Owners of the Parent

Operating profit Operating margin

healthcare.

60.7 252.6

New Challenges for Achieving Sustainable Growth In the fiscal year ended March 31, 2017, our growth was

249.8 (¥ billion)

39.2

40.6 (¥ billion)

51.7 (¥ billion)

221.3 44.4

184.5

26.6

145.5

24.0

32.8

interrupted, following 16 continuous years of expansion

21.8

17.8

20.5

20.7(%)

20.1

14.1

15.0

in sales and 15 straight years of increases in profits. The overriding factor was the impact of exchange rates. With overseas sales accounting for more than 80% of the total, Sysmex is even more exposed to the impact of exchange

13

’13.3

’14.3

’15.3

Japanese GAAP

’16.3 IFRS

’17.3

’13.3

’14.3

’15.3

Japanese GAAP

’16.3 IFRS

’17.3

’13.3

’14.3

’15.3

Japanese GAAP

’16.3

’17.3

IFRS

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To Our Stakeholders

Highlights of the Fiscal Year Ended March 31, 2017: Against a Backdrop of Higher Earnings, Invested in Medium- to Long-Term Growth Looking back on the fiscal year ended March 31, 2017, we achieved steady profitability increases in such fields as hematology and hemostasis. In the hematology field,

Sysmex Report 2017

is spurring advances in personalized medicine and other areas of advanced medical treatment. Given expectations of longer healthy lifespans as societies age, the need to curb medical expenses is growing. On the other hand, economic development in emerging markets and developing countries is driving demand to put healthcare infrastructures in place.

we obtained orders from prominent commercial labs and penetrated the West Coast region of the United States. Business in emerging markets also expanded, boosted by

Aiming to Resolve Medical Issues through Unique Technologies

the launch of a compact model, the XN-L Series, reinforcing our position as the leading company in this field. In

Operating in this environment, Sysmex will take on the

the immunochemistry field, which we are investing in as a

challenges of creating new technologies and addressing

driver of medium-term growth, the number of instruments

unmet medical needs. In these ways, we will contribute to

in operation increased in Japan, China and other parts of

the health of people around the world.

Asia, creating a foundation for growth. One issue we faced during the year was delays in our planned launch of new products in the urinalysis field.

initiatives to realize personalized medicine—diagnosis and

Also, various countries have reinforced their product regu-

treatment tailored to individuals. Also, no specific drugs

latory systems in recent years, which means that approval

exist for the treatment of Alzheimer’s dementia, which is

sometimes takes more time than we expect. We are work-

expected to become an increasingly serious social problem

are still expanding. In particular, needs are increasing in

generating new value and maintain growth. I believe that

ing to increase the speed of new product introductions by

as societies age. However, early detection and appropriate

emerging markets and developing countries, where infra-

companies can meet shareholders’ expectations as a result.

reinforcing our system for smoothly obtaining approvals.

care are thought to improve the situation or delay the on-

structures are being put in place as populations increase,

First, ongoing growth provides the basis for share-

set of the disease. Sysmex is working to develop technolo-

so we anticipate further growth.

On the profit front, I believe that achieving balance is

holder returns through stable dividends. To date, Sysmex

We will invest the profits generated in these core

has raised dividends for 15 consecutive fiscal years. We

Testing plays an important role in such treatment, and

businesses into our next core businesses—our engines

will invest proactively in order to maintain high rates of

numerous themes of this nature remain to be addressed.

for further growth. By accelerating commercialization in

growth, but in the interest of ensuring the important bal-

more important than only striving to bolster profitability.

gies for using blood tests to detect signs of the disease.

While maintaining our operating margin at 20%, we will invest proactively toward the future. Specifically, we will

flow cytometry (FCM), life science and other new busi-

ance between such investment and returning profits to

systems. Also, we will work to recruit and cultivate diverse

creation of new value. Sysmex is developing its business

ness fields, we aim to transform our business portfolio to

shareholders, we will continue targeting a dividend payout

human resources and make our Company an easier place

globally, and we are creating systems to deliver our prod-

achieve sustainable growth.

ratio of 30% going forward.

for employees to work. I believe we need to take balance

ucts not just in specific regions but around the world. At

into account as we endeavor to enhance the quality of our

the same time, it is essential to lower costs. By doing so,

turing in various ways, such as by establishing a base for

Sysmex’s current situation and future direction to

management in these ways.

we can promote the advancement of healthcare by provid-

the development of bio-diagnostic reagents. In addition to

accurately assess the market. Through our investor rela-

ing value to even more people.

reinforcing our IT foundation to optimize operating pro-

tions activities, we engage in dialogue with our sharehold-

cesses, we will step up recruitment and cultivation of

ers and investors. Furthermore, by enhancing corporate

Growing by Reinforcing Profitability in Core Businesses and Investment in Our Next Core Businesses

human resources who are next-generation leaders and

governance and ensuring highly transparent manage-

who have advanced specialties and promoting further

ment, we aim to cultivate trust-based relationships with

diversity to transform ourselves.

our stakeholders.

Our recently formulated new mid-term management

Maximizing Shareholder Returns by Maintaining Sound Growth

September 2017

invest in our R&D, manufacturing, and sales and service

The Environment Surrounding the Healthcare Business The environment in which Sysmex operates is in a state of dynamic flux. On a macro level, we face the ongoing aging of society, population increases in emerging markets and developing countries and outbreaks of infectious disease. On the technical front, the environment is characterized by the use of big data and advances in artificial intelligence (AI) and robotics. These changes in the operating environment are affecting needs in the healthcare market. In developed countries, technological innovation

15

For example, we are strengthening our efforts in blood tests that make it easy to check for genetic changes and

Another important question is how to expand our

plan, which concludes in the fiscal year ending March 31,

To support this expansion, we will reinforce manufac-

In addition, I recognize the importance of clarifying

2020, positions hematology, urinalysis, hemostasis and immunochemistry as core businesses. We aim to augment

The environment in which Sysmex operates is undergo-

sales and profits by pursuing growth in these fields. These

ing sudden and major changes. I think that environmental

Hisashi Ietsugu

core businesses enable Sysmex to leverage its existing

compliance should always be equated with management.

Chairman and CEO

strengths. We see room for growth in these fields, which

Environmental compliance enables a company to continue

16

To Our Stakeholders

Sysmex Report 2017

Our Financial Perspective

We invest proactively and provide appropriate shareholder returns. Generating and Using Funds

Proactive Investments to Augment Corporate Value

„ Research and Development Expenses

15.5 (¥ billion)

In hematology, hemostasis, urinalysis and immunochemis-

growth in our new core businesses. As investments in

try, which we have positioned as core businesses, we aim to

future-oriented reforms, we will concentrate on reinforc-

To achieve further growth, Sysmex is investing toward

further increase profitability and expand operating cash flow.

ing manufacturing and foundation, including IT, and on

accelerated future expansion in FCM, life science and

We will use the cash these businesses generate to

human resource cultivation and management. Regarding

other new business fields. In addition, we invest in R&D to

invest in core businesses. In addition, we will invest proac-

shareholder returns, we intend to maintain stable ongoing

generate highly valuable new testing and diagnostic tech-

tively in R&D, M&A and capital expenditure toward further

dividends and increase ROE.

nologies, in M&A to expand our technology platforms, and

9.2

in capital expenditures for factory expansion to meet our

Operating Cash Flow

Shareholder Returns

global supply responsibilities. As a result, our R&D expenses

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concludes in the fiscal year ending March 31, 2020, we „ Capital Expenditure (Tangible)

R&D to Accelerate Future Growth in FCM, Life Science and Other New Business Fields

11.8 (¥ billion) 8.2

Investing in Reforms

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During the period of the mid-term management plan that

Invest in Growth (Next Core Businesses)

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Capital Expenditure for Factory Expansion to Meet Our Global Supply Responsibilities M&A to Enhance Our Technology Platforms

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Japanese GAAP

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’15.3

’16.3 ’17.3 IFRS

Shareholder Returns Sysmex aims to maintain a proper balance between

„ Dividend and Dividend Payout Ratio

aggressive investment, which is designed to sustain steady

ROE

Dividend (Annual) Dividend payout ratio (Consolidated)

high growth, and returns to our shareholders as our earn-

58 60 (¥)

ing power increases. In terms of returns to shareholders,

ROE was 20.7% in the fiscal year ended March 31, 2017.

we intend to provide a stable dividend on a continuous

Going forward, we plan to augment ROE while maintain-

29.7 30.5 (%)

basis and aim for a consolidated payout ratio of 30%

„ ROE 20.7 (%)

ing a healthy financial balance.

under our basic policy of sharing the successes of our operations in line with business performance.

18.9 12.1

Stable Dividend on a Continuous Basis

Sustained Appropriate Shareholder Returns 3.125

Target Dividend Payout Ratio of 30% 15 Consecutive Years of Dividend Increases

17

’03.3

’10.3

’17.3 ’18.3

Note: Converted to basis following stock split on April 1, 2014

Maintenance of a Sound Financial Base

(Forecast)

Higher Income

’08.3

’10.3

’17.3 Japanese GAAP

IFRS

18

To Our Stakeholders

Sysmex Report 2017

Financial Highlights Total Assets Return on Assets (ROA)

Net Sales

¥249.8 billion

Net Sales

(Down 1.1% year on year)

Euro

Sales were up in all geographic regions on a local

US dollar

249.8 (¥ billion) 1 1 8.8 (¥) 108.4(¥)

currency basis, but down overall due to the impact of

¥279.8 billion 16.3% (Up 6.0% year on year)

Total Assets

279.8 (¥ billion)

(Up 0.8 percentage point year on year)

Total assets increased in line with rises in trade and other

16.3 (%)

ROA

receivables and intangible assets.

yen appreciation. Note: Exchange rates had a negative impact on net sales of ¥26.4 billion.

’08.3 ’09.3 ’10.3

’11.3

’12.3

’13.3

’14.3

’15.3

Japanese GAAP

’16.3 ’17.3

’08.3 ’09.3 ’10.3

’13.3

’14.3

’15.3

’16.3 ’17.3 IFRS

Equity Attributable to Owners of the Parent Return on Equity (ROE)

¥51.7 billion 20.7%

Operating Profit

(Down 3.3 percentage points year on year)

Operating profit declined due to the impact of yen appre-

51.7

(¥ billion)

¥209.4 billion 20.7% (Up 14.6% year on year)

Equity Attributable to Owners of the Parent

209.4 (¥ billion)

(Down 2.4 percentage points year on year)

20.7 (%)

20.7 (%) Although profit rose, ROE decreased in line with increases

Operating Margin

ciation and a worsening cost of sales ratio.

in equity attributable to owners of the parent.

Note: Exchange rates had a negative impact on operating profit of ¥11.1 billion.

(Figures through the fiscal year ended March 31, 2015, are for equity and return on equity.) ’08.3 ’09.3 ’10.3

’11.3

’12.3

’13.3

’14.3

’15.3

Japanese GAAP

’16.3 ’17.3

ROE

’08.3 ’09.3 ’10.3

IFRS

’11.3

’12.3

Japanese GAAP

Profit Attributable to Owners of the Parent Earnings per share (EPS) (Basic)

’13.3

’14.3

’15.3

’16.3 ’17.3 IFRS

Total shareholder return (TSR) (annualized rate)

¥40.6 billion ¥195.31 (Up 3.5% year on year)

’12.3

Japanese GAAP

Operating Profit Operating Margin

(Down 1.1% year on year)

’11.3

IFRS

Profit Attributable to Owners of the Parent

40.6 (¥ billion)

(Up 3.3% year on year)

21.4%

33.3%

(Past 10 years)

(Past 5 years)

195.31 (¥)

EPS

Sysmex

33.3% Sysmex 21.4%

Profit increased, due to a reduction in income tax expens-

Due to dividend rises and increases in the share price,

TOPIX

es stemming from a reversal of deferred tax liabilities in

total shareholder return (past five years) outpaced TOPIX

14.5%

line with a revised tax treaty between Japan and Germany.

by 18.8 percentage points.

(Figures through the fiscal year ended March 31, 2015, are net income.) TOPIX

0.8% ’08.3 ’09.3 ’10.3

’11.3

’12.3

Japanese GAAP

19

’13.3

’14.3

’15.3

’16.3 ’17.3

Past 10 years

Past 5 years

IFRS

20

To Our Stakeholders

Sysmex Report 2017

Growth Strategies

Internal Environment: Characteristics and Strengths That Will Enable Growth

Through further growth, we will contribute to the creation of a fulfilling and healthy society. External Environment: The Expanding Healthcare Market In developed countries, healthcare needs have begun to

individual patients’ characteristics.

change dramatically due to technological innovation and advances in healthcare technologies. With personalized medicine, for example, it is becom-

Meanwhile, emerging markets and developing countries continue to invest in healthcare infrastructure as their economies grow, causing the market to expand.

ing possible to select effective treatment methods based

Various countries are also calling for increases in basic

on individual patient characteristics. Once personalized

healthcare, such as the establishment of medical insur-

medicine is realized and popularized, not only will the

ance systems, hospitals and infrastructure. The market is

quality of patient treatment increase, but it will become

also expected to grow as populations continue to expand.

possible to curb healthcare costs by eliminating the

Sysmex has unique characteristics and strengths that

to realize medium- to long-term growth by leveraging

support sustainable growth. We are rolling out measures

these strengths.

A Business Model That Generates Stable Earnings

Highly Competitive

The healthcare industry tends to be “defensive,” in the

Sysmex enjoys the leading share of the global market in

sense that healthcare demand is unaffected by economic

the hematology, hemostasis and urinalysis (sediment)

performance. Furthermore, IVD requires the use of reagents

fields. With IVD demand increasing, particularly in emerg-

each time a test is performed, and services and support are

ing markets, we expect high levels of growth to continue

needed in order to ensure stable instrument operations.

in each of these fields.

For these reasons, Sysmex can expect stable earnings to continue after an instrument is purchased, as the Company Testing field

continues to provide reagents, services and support.

($ million)

Support Services

In individual disease categories, measures to counter

administration of unnecessary drugs. The role of testing in

infectious disease are becoming an international issue,

healthcare is growing, as testing is required to determine

prompting demand to test for malaria and other diseases.

+

Reagents Total Sales

„ Changing Healthcare Needs Developing Countries

Healthcare Needs

Emerging Markets

Developed Countries

+

Putting in place healthcare infrastructure

Better access to healthcare

Eradication of infectious disease

Curtailing healthcare costs

Composition of Sales (Fiscal year ended March 31, 2017)

3,100

6%

63.8%

Hemostasis

1,800

5%

16.4%

Urinalysis Of which, sediment urinalysis

1,000 320

6%

Immunochemistry

18,000

6%

3.2%

Clinical chemistry

6.4%

7,400

5%

1.4%

Others (genes, blood sugar, etc.)

21,700



8.8%

IVD market

53,000

6%



Note: Sysmex’s assumptions

Year 2

Year 3

No. 1 Share of the Global Market

Year 4 ȉȉȉȉ

(In hemostasis, the figures are the total including Siemens. Urinalysis indicates sediment testing.)

Extending healthy lifespans

Realizing personalized medicine

Market Growth Rate

Hematology

Instruments

Year 1

(medical institutions, medical insurance systems)

Market Scale

A Sales and Support Structure Covering More than 190 Countries

Unique Technological Capabilities

We have created a structure tailored to the character-

enables us to create unique instruments, reagents and

istics of individual regions that delivers products and

software. Another major characteristic is our three differ-

services in more than 190 countries. We leverage this

ent technology platforms: cells, genes, and proteins.

Sysmex has specialists in a variety of fields. This strength

strength to bring newly developed products to the global market quickly. Changes in the External Environment

Economic growth

Rising populations

Outbreaks of infectious disease (malaria, HIV, etc.)

Technological innovation (big data, AI, etc.)

Advances in healthcare technologies (genomic medicine, molecularly targeted drugs, etc.)

Asia Pacific 8.5%

Japan 17.4%

Product Development Capabilities Instruments

China 24.1%

Net Sales by Destination

EMEA* 25.9%

Software

+

(Fiscal year ended March 31, 2017)

Aging societies

Reagents

Americas 24.1%

Technology Platforms Genes

Cells

Proteins

*EMEA: Europe, the Middle East and Africa

21

22

To Our Stakeholders

Sysmex Report 2017

New Mid-Term Management Plan

Long-Term Management Targets

Group Corporate Philosophy

Long-Term Management Targets

A Unique & Global Healthcare Testing Company

(2020)

Sysmex has formulated a mid-term management plan

we are investing aggressively in areas positioned as our

concluding in the fiscal year ending March 31, 2020. We

next core businesses, which will drive Sysmex in the

are working to reinforce profitability in core businesses,

future. Furthermore, we are promoting reforms to ensure

which are central to our current operations. In addition,

sustainable growth from 2020 onward.

„ Mid-Term Management Plan Overview (Announced in May 2017) Net sales Targets for the Fiscal Year Ending March 31, 2020

Operating profit

ROE

Operating cash flow

¥350.0 billion ¥72.0 billion or20 % ¥55.0 billion more

Free cash flow

¥30.0 billion

Assumed exchange rate: 1USD=¥110.0, 1EUR=¥115.0, 1CNY=¥16.0

Mid-Term Management Plan

„ Sales by Business

Long-Term Management Plan Positioning

Undisputed Global Leader in Hematology, Hemostasis and Urinalysis (Including alliances)

We will build the earnings foundation to support further Group growth in the Company’s core businesses.

A Leading Company in the Asian in Vitro Diagnostics (IVD) Market We will leverage our geographic advantage to build a solid position in the Asian market in immunochemistry and other growth fields, as well as hematology.

1

2

Strengthen profitability (core businesses)

In core businesses, we aim to boost profitability in hematology, hemostasis and urinalysis— in which we are highly competitive—and in the immunochemistry field, where growth is expected to accelerate.

Hematology

An Attractive Company Providing Value and Confidence

23

Others

Life science

Core businesses

Hemostasis

Hemostasis

Immunochemistry P25

3

Other new fields P27

Hematology

Promote reforms

We will enhance manufacturing speed and quality, reinforce our IT foundation, strengthen human resource cultivation and management, and invest in other reforms.

Manufacturing

Through optimal teamwork throughout the Group, we aim to be a corporate entity that conducts highly efficient and swift management.

¥249.8 billion

Urinalysis

We aim to become a highly attractive company to diverse stakeholders that offers value and reassurance.

One Sysmex Carrying Out High-Speed Management

Next core businesses

Next core Immunochemistry

Flow cytometry (FCM)

Urinalysis

A Leading Global Player Making a Contribution to Personalized Medicine By augmenting value in testing (diagnostics) based on leading-edge technologies, we will accelerate Group growth and establish our global position.

Invest in growth (next core businesses)

We are creating technologies for testing that will satisfy unmet medical needs and investing in next core businesses that will drive further growth.

A Unique and Competitive Player in the Immunochemistry Field We will harness unique strengths that other companies cannot emulate and drive Group growth over the medium term.

¥350.0 billion

IT foundation

Human resource cultivation and management P30

2017.3

2020.3 (target)

24

To Our Stakeholders

1

Sysmex Report 2017

New Mid-Term Management Plan Reinforcing Profitability to Achieve Further Growth (Core Businesses)

Hematology Field

Hemostasis Field

Sysmex earned the No. 1 share of the global market in the

in June 2017) in emerging markets and other areas where

Based on our global alliance with Siemens Healthcare

hematology field in 2007 by developing high-quality prod-

market growth is anticipated. In response to rising de-

Diagnostics, we have achieved the No. 1 share of the

ucts and offering high levels of productivity, particularly

mand, we are transitioning to local reagent production

global market by taking advantage of each other’s

for IT and system products. We continued to increase our

and reinforcing our ability to provide a stable supply of

strengths. In the future, we plan to accelerate business in

market share even further through sales of the XN Series,

reagents.

this field by introducing fibrin reagents used in testing for

our flagship model, and by providing services and support that achieved high levels of customer satisfaction. Going

„ Sales

¥53.0 billion

¥40.9 billion +¥12.1 billion

clotting abnormalities and thrombosis, thereby increas-

„ Sales

ing profitability.

2017.3

2020.3

forward, we intend to further improve laboratory workflows through the space-saving new XN Series (launched

¥201.0 billion

¥159.4 billion +¥41.6 billion

„ Strengthen Profitability in the Hematology Field High-quality products Service and support that realize high customer satisfaction levels Stable supply of reagents

2017.3

2020.3

Undisputed No. 1 in the United States and other developed countries CS-5100™

CS-2500™/CS-2400™

CS-1600™

Realization of high growth in emerging markets

Immunochemistry Field XN-9100™

Urinalysis Field Sysmex obtained the No. 1 share of the global market

In the immunochemistry field, which represents the larg-

HISCL Series, mainly in Japan and China. By accelerating

est IVD market, we are focusing our activities on Asia. Our

market introductions in other Asian countries, we aim to

approach here is to expand our business by concentrat-

boost the number of instruments in operation further. By

ing on measurement parameters that Sysmex is uniquely

also expanding our reagent portfolio (particularly in the

able to offer. In the past few years, we have seen a steady

hepatic disease domain), we will achieve higher sales and

in the sediment urinalysis field through sales of the UF

increase in the number of instruments in operation,

improve profitability.

Series, which was the first in the world to utilize flow

thanks to the strength of our sales promotions for the

„ Sales

cytometry* in this field. To augment our presence further, in January 2016 we entered a business alliance with

¥16.1 billion

EIKEN CHEMICAL CO., LTD., to expand our portfolio of urine chemistry analyzers and realize increased efficiency

¥28.0 billion

„ Sales

+¥11.9 billion

2017.3

2020.3

¥24.0 billion

through integrated operations in the urinalysis field

¥8.0 billion

including chemistry, sediment and imaging instruments.

+¥16.0 billion

Although it is taking time to acquire regulatory approval, to date we have put a system in place for sales

HISCL™-5000

2017.3

Reagents

2020.3

promotion. Going forward, we will we aim to take the No. „ Expanding Business and Improving Profitability in the Immunochemistry Field

1 share of the market for the entire urinalysis field, including urine chemistry and sedimentation. We are strength-

Japan, China and Asia Regions

ening our activities in this area, including improving the urinalysis work flow to achieve high levels of productivity. * Flow cytometry: Method involving the flow dispersion of minute particles and the use of laser light to optically analyze the minute flows. Used primarily to observe individual cells

Increasing reagent parameters U-WAM™ work area information management system

Validation

25

UD-10™ imaging UF-5000™ UC-3500™ urine unit for formed analyzer of chemistry analyzer elements in urine formed elements (For overseas in urine sale only)

Sediment urinalysis

Urine chemistry

Increase in the number of instruments in routine operation

+

y Augment general-purpose parameters y Expand business in the hepatic disease domain y Increase unique parameters

+

Reduce cost of sales

26

To Our Stakeholders

2

Sysmex Report 2017

New Mid-Term Management Plan Investing in Growth to Reform Our Business Portfolio „ Sales (Next core businesses)

To expand the next core businesses that will serve as the

Interview with the Executive in Charge of Next Core Businesses

engines of future growth, Sysmex is working to augment the life science business, construct platforms for the FCM

¥25.0 billion

business and pursue commercialization in other new fields

Thinking of the lives we help through new testing motivates me. Kaoru Asano

of business.

¥6.3 billion

+¥18.7 billion

2017.3

2020.3

Life Science Business

Member of the Managing Board and Senior Executive Officer Senior Managing Director

Sysmex Group

R&D Strategic Planning, Next-Core Business

Sysmex

Reforming Our Business Portfolio

The Challenge of Commercialization

To continue growing over the medium to long term, we

Creating and commercializing technologies is no easy

have positioned next core businesses as new business

process. However, because Sysmex is Japan’s leading

domains in which we will leverage our unique technolo-

company in the IVD field, we receive numerous offers for

gies, and aim to reform our future business portfolio.

cooperation from research institutions, universities and

Cooperation

pels our R&D forward. Sysmex already provides sales and

To succeed in our next core businesses, it is important to

service in more than 190 countries, and we have built up

adopt a perspective that asks how we can provide value

a global network for obtaining regulatory approval. These

to society. For instance, our current focus is on liquid

factors are extremely important strengths in accelerating

biopsy, which is a tool for contributing to the realization

the global rollout of products we have commercialized.

of personalized medicine. Once this is realized, it will

Sysmex Inostics Lab Assay Business

Customers

Customers

Oxford Gene Technology IVD Business

Cytogenic Testing Business

Customers

Customers

The life science business is a key next core business, in

 IVD (Reagent) Business

which we will engage mainly in gene testing. Gene testing

In the gene analysis we provide as a lab assay service,

become possible to select optimal treatment regimens

The Power to Surmount Issues

involves testing to diagnose gene-related diseases and

ultimately we hope to offer IVD reagents that will allow any

for individual patients, which has the benefit of providing

The power to resolve issues is a strong source of motiva-

drug compatibility. Based on these business characteris-

medical institution to perform such measurements them-

effective treatment. Improving treatment will link to the

tion and passion for our employees, without which it

tics, Sysmex will develop the following three businesses.

selves. Sysmex’s system for the rapid detection of breast

curtailment of healthcare costs, which means making an

would be impossible to achieve our goals.

extremely large contribution to society.

cancer lymph node metastasis, which uses the OSNA™

To maintain high levels of motivation, it is important

 Lab Assay (Contracted Sample Analysis) Business

method that we developed, is already being conducted by

to provide an environment that encourages employees to

State-of-the-art gene analysis requires the use of labora-

many medical institutions through the use of IVD reagents.

address society’s issues, is never-ending. However, this

think for themselves and allows them the freedom to go

tories with special equipment and specialized staff. Our

In this manner, we are moving forward with the develop-

means more than creating technologies. We must steadily

about their business. I think it is also important to rec-

lab assay service provides these to customers. In 2013, we

ment of IVD reagents that can perform the activities cur-

commercialize these individual technologies in order to

ognize how we are helping patients and contributing to

converted Inostics into a subsidiary. This company possesses

rently being done in laboratories, and we aim to provide

bring new testing into the world.

society by commercializing and bringing to the world the

BEAMing technology for detecting minute quantities of

these reagents to medical institutions around the world.

technologies we are promoting.

genes circulating in the blood. In 2016, RIKEN GENESIS

The challenge that we have taken on, of trying to

„ Reducing Physical and Economic Burdens with Liquid Biopsy Conventionally: Tissue Analysis (Biopsy) Direct analysis of the affected specimen

27

Cooperation

Cooperation

RIKEN GENESIS

other companies. This assistance is a major driver that pro-

Contributing to Society

Cooperation

Blood Analysis (Liquid Biopsy) Analysis of disease-derived components in the blood and bodily fluids

Genes Proteins Cells

became a subsidiary, which has genome analysis technology

 Cytogenic Testing Business

that uses next-generation sequencers. These two companies

In 2017, we acquired Oxford Gene Technology (OGT). This

are undertaking leading-edge gene testing for medical and

company conducts business in the area of cytogenic testing,

research institutions. We are also leveraging synergies with

which involves testing cells for chromosomal and genetic

these two companies to develop new gene testing for the

abnormalities. We plan to develop a new business by com-

early detection of cancer, recurrence monitoring and moni-

bining OGT’s technologies with Sysmex’s Flow FISH tech-

toring the effectiveness of anti-cancer agents.

nology and other automated instruments.

28

To Our Stakeholders

Sysmex Report 2017

New Mid-Term Management Plan FCM Business

 Glucose Patch Test

FCM is a technology for flowing minute particles along

We are developing a test (glucose patch test) that enables

channels and optically analyzing the individual particles as

Flow Cytometry (FCM) Field

tection of diabetes, a typical lifestyle disease. We are work-

Sysmex’s hematology and urinalysis analyzers. This FCM technology can be used for clinical FCM (clinical testing to perform detailed analysis in diagnosing leukemia and malignant lymphoma), industry FCM (used in the quality control of food and beverages) and research FCM (analyzing the function of cultured cells and other

the status of postprandial hyperglycemia to be measured without blood sampling. The test is aimed at the early de-

they flow through them. These basic principles are used in

„ Result of Introduction

Clinical FCM

Research and Industry FCM

ing toward the commercialization of this test, which enables

Clinical testing (testing for leukemia, malignant lymphoma, HIV, etc.)

y Research FCM (Analysis of cell function, etc.) y Industry FCM (Quality control of food and beverages, etc.)

the relatively simple determination of postprandial hyper-

Postprandial hyperglycemia monitoring without blood sampling

Reduces burden on patient Lowers number of hours worked by healthcare professionals

glycemia and can help improve lifestyle habits (eating). „ Minimally Invasive Postprandial Glycemia Measurement Service

research applications).

Healthcare institution (health checkups, health check centers)

In these fields, we are combining our own technologies with the FCM technologies possessed by Partec,

Usual tests

which we converted to a subsidiary in 2013. As a result,

Eating

Sample measurement

Risk determination Lifestyle guidance

Improved lifestyle habits

we expect to generate new value in the FCM field.

3

Other New Fields  Ultrahigh-Sensitivity HISCL™

Promoting Reforms to Lead Growth

Based on Sysmex’s HISCL™ immunochemistry analyzer, using the immune complex transfer method* has enabled

Manufacturing

IT Foundation

us to detect minute quantities of proteins circulating in

Going forward, we will enhance manufacturing speed and

To optimize business processes, we will continue investing

the blood—something that was not previously possible.

quality, which will support further growth. For example,

to strengthen our IT foundation. For example, we will use

Going forward, we plan to commercialize this system for

during the period of our current mid-term management

IT to boost productivity by optimizing our supply chain

application in a host of diseases, such as using blood test-

plan we will increase our ability to develop and produce

and engineering chain processes.

ing (liquid biopsy) for Alzheimer’s dementia.

bio-diagnostic reagents, which should lead to growth in

* Immune complex transfer method: A technology for using nonspecific adsorption to greatly reduce background noise

the immunochemistry business. Furthermore, as we take

Human Resource Management

seriously our responsibility to provide products and servic-

Sysmex considers people an important management

es to customers, we intend to strengthen our systems for

resource necessary for sustainable growth, and we invest

maintaining customer trust by providing a stable supply of

in our human resources accordingly. In particular, we are

high-quality products.

stepping up our recruitment and cultivation of human

Ultrahigh-sensitivity HISCL™  Cervical Cancer Screening System

We developed the LC-1000™ exfoliative cell analyzer to increase the efficiency of cervical cancer screening and

As one aspect of these efforts, in 2017 we expanded

other cytological examinations. Using this instrument to

our US reagent factory to 1.8 times its former capacity,

test for abnormalities in a cell’s nucleic DNA volume and

enhancing our ability to provide a stable supply of

in cell morphology makes it possible to detect abnormal

Group growth and highly specialized personnel. To create an organization that makes use of diverse specialized human resources, we are conducting diversity

reagents in the Americas.

cells through cytology. The method currently mainstream

resources who are next-generation leaders that will drive

training targeting people at manager level and above.

in cervical cancer requires using a microscope to test cells taken from the cervix. Using our instrument in combination allows for more efficient testing. US reagent factory LC-1000™ exfoliative cell analyzer

Management training

29

30

Sysmex Report 2017

Business Activities

We are creating frameworks to generate and provide value in response to diverse market needs.

Framework for Generating Value

Customers (Hospitals, Commercial Labs, Research Institutions, etc.)

Sysmex creates its own global systems, ranging from R&D to manufacturing, sales, and services and support. Through these systems, we ascertain customers’ issues and needs, which we quickly incorporate into our R&D. In addition to high-quality instruments, reagents and software that reflect these issues and needs, we provide high-value-added system products and online support. These efforts have earned us a strong reputation with

Customer Input Sales

Customer Input Support

customers around the world.

R&D

Procurement, Manufacturing and Logistics Instruments High-Quality Instrument Manufacturing System (Made in Japan)

Instruments Reagents

Software Manufacturing That Uses IT

Three Technology Platforms

Reagents

Genes Cells Proteins

Global Reagent Production Structure

Global R&D Structure + Open Innovation

Services and Support

Sales Structure Tailored to Regional Characteristics Direct Sales, Indirect Sales

Service Structure to Support Environments That Enable Testing with Peace of Mind

Solution Proposals

Quality Control

Services Using IT

Failure Prediction Training Scientific Support to Expand Clinical Value

Provision of Scientific Information Workflow Improvement Proposals

Contributing to Increases in Healthcare Quality

Production at Nine Factories in Seven Countries

P33

31

Network for Delivering Products in More than 190 Countries

Technological Capabilities for the Internal Development of Instruments, Reagents and Software

Sales

P35

P37

P37

32

Business Activities

Sysmex Report 2017

Research and Development

Sysmex leverages its proprietary technologies to resolve the healthcare issues society faces and contribute to the realization of a healthy society. R&D Vision and Directions

Diverse Human Resources and a Global System

important theme. Genes, proteins and cells in blood and

Three Technology Platforms

bodily fluids contain information about affected parts of Based on the “Sysmex Way,” the corporate philosophy of

Sysmex’s R&D divisions include human resources with

Sysmex’s efforts to improve IVD test quality at the micro-

the body. In recent years, highly sensitive analysis has

the Sysmex Group, our R&D aims to contribute to society

diverse specializations, such as mechanical engineering,

scopic level and combine a wide range of technologies

made it possible to perform tests and obtain results equiv-

through the generation of new diagnostic technologies.

information science, electronic engineering, chemistry,

have led to the establishment of technologies for particle

alent to the information available from resecting tissue

applied physics, biology and other areas. We utilize their

measurement, fluid control and detection.

from the affected parts of a patient’s body. Liquid biopsy is

We are currently undertaking R&D on a variety of themes: extending healthy lifespans by taking on the chal-

strengths to create the products needed for diagnosis,

lenges of unmet medical needs, realizing optimal treat-

spanning instruments, reagents and software.

ment and curtailing healthcare costs through personalized medicine, and contributing to emerging markets and

Centered on Technopark, our R&D hub, we are creating a global structure for generating new value. The struc-

We currently have highly sensitive next-generation

gaining attention for its potential in reducing the physical,

technology platforms for measuring genes, cells and

mental and economic burden on patients, as well as for its

proteins. As we work toward the realization of personal-

benefits in allowing for repeated testing (monitoring). Of Sysmex’s technology platforms, in the gene plat-

ized medicine, in addition to our own technologies we

developing countries through the development of meth-

ture comprises R&D centers in Europe and the United

have been redoubling efforts to expand our technologies

form we are concentrating on the realization of genomic

ods for the early diagnosis of infectious diseases.

States and collaborations with such subsidiaries as RIKEN

through proactive M&A and alliance activities. As one as-

medicine1. In the protein platform, we are working on

GENESIS and Sysmex Inostics.

pect of these efforts, in 2013 we converted German com-

Alzheimer’s testing and other protein detection using

panies Inostics GmbH and Partec GmbH to our subsidiar-

ultrahigh-sensitivity HISCL™. In the cell platform, we are

As a company that has grown on the basis of its technological prowess, we recognize R&D as a source of

In addition to expanding our own technology plat-

growth and, accordingly, invest proactively in this area.

forms, we are pursuing open innovation, collaborating

ies. In 2016, we converted RIKEN GENESIS to a subsidiary,

working to automate FISH testing2 using imaging FCM

Our R&D expenses totaled ¥15.5 billion in the fiscal year

with domestic and overseas research institutions, universi-

followed by Oxford Gene Technology in 2017.

technology and developing technology for the detection

ended March 31, 2017.

ties and medical institutions. Through these activities, we

of circulating tumor cells (CTCs).

acquire new candidates for diagnostic parameters and

1

strive to quickly complete advanced and highly valuable

Future Initiatives

diagnostic techniques and reagents. Sysmex is pursuing R&D toward the realization of liquid

Genomic medicine: The study of individuals’ genome information and the provision of more efficient and effective disease diagnosis, treatment and prognoses based on these results 2 FISH testing: Testing method that uses fluorescent material binding only specific genes to detect target genes within a chromosome

biopsy for personalized medicine, which it considers an

„ Human Resources with Diverse Specialties

„ R&D Expenses/R&D Expenses to Net Sales R&D expenses R&D expenses to net sales

Mechanics Intellectual property 14.6

10.7 9.2 8.3

’08.3

9.6

’09.3

11.2 9.7

’10.3

12.3

11.9

12.1

’11.3

8.8

’12.3

Japanese GAAP

8.3

’13.3

’14.3

6.6

’15.3

Electrics

„ Sysmex’s Technology Platforms

R&D support

13.2

7.2

Optics

15.5 (¥ billion)

15.4

Research and planning 9.9

Liquids

(Fiscal Year Ended March 31, 2017)

6.2 (%)

6.1

’16.3

Breakdown of Specializations among R&D Personnel

’17.3

Software

Technologies gaining traction in personalized medicine (high sensitivity)

Biochemistry

Existing technologies

IFRS

3 4

33

OncoBEAM™, PSS

MI (molecular imaging)-FCM

Digital HISCL™

Clinical PCR3

Clinical FCM

Ultrahigh-sensitivity HISCL™

OSNA™

FCM4

HISCL™ (chemiluminescence)

Genes

Cells

Proteins

PCR: A gene amplification technology for multiplying small quantities of DNA into large amounts FCM: Method involving the flow dispersion of minute particles and the use of laser light to optically analyze the minute flows. Used primarily to observe individual cells

34

Business Activities

Sysmex Report 2017

Procurement, Manufacturing and Logistics

We have created an instrument manufacturing system that pursues high levels of quality and a global reagent production system, enabling us to supply products in more than 190 countries. Another factor underpinning the high quality of our

Realizing High Quality through a Proprietary, Made-in-Japan Instrument Manufacturing System

seven in six other countries. This arrangement enables us

rials and parts from Japanese suppliers who boast some of

to provide a stable supply to meet demand from custom-

the industry’s best technological capabilities.

ers in locations around the world. Developing this global

We are putting in place a framework to accurately ascer-

network of reagent factories has enabled us to reduce

tain demand conditions and always be ready to provide a

distribution costs and delivery lead times.

stable supply of instruments swiftly in response to global

mance, precision testing instruments Sysmex delivers,

they are subjected to our quality control systems, which

and mechanical automation is difficult for many aspects

comply with different countries’ legal requirements, as

of their manufacture. At the same time, we must manufac-

well as an environmental protection system.

tive globally. To manufacture excellent products both accurately and efficiently, we employ information technology (IT),

To meet an increase in global demand for reagents,

For reagents, we are dispersing risk by diversifying

We are expanding the production area of our reagent fac-

our sources of supply for principal ingredients. We are also

have created, Sysmex delivers high-quality, high-value-

tory in the United States to meet growing demand there;

transferring production to local factories, thereby address-

added products around the world.

in July 2017 we increased production capacity to 1.8 times

ing supply stability from various angles.

* Only Sysmex Partec’s instruments are manufactured in Germany.

the factory’s former level.

By ensuring a stable supply of products, we are

In line with our growth strategy, we are moving for-

using an assembly process in which people are supported

A Reagent Production System That Delivers a Stable Supply Globally

by technology. For example, we use a system that provides 3D video

demand fluctuations.

Sysmex has been further expanding its production system.

Through this distinctive “made in Japan*” system we

ture instruments efficiently in order to be cost-competi-

Optimizing Supply Chain Processes to Realize a Stable Supply of Products

products is the quality of our suppliers. We procure mate-

As manufactured products pass through this system,

Extremely high quality is required of the high-perfor-

are used. Sysmex has two reagent factories in Japan and

working to meet our corporate social responsibilities and

ward with the construction of a bio-diagnostic reagent

further increase the trust invested in us by customers

development base in Japan. Through this location, we aim

around the world.

to accelerate reagent development and production and

instructions for manual processes, which has proven highly effective in boosting quality and productivity. We use

While we concentrate instrument manufacturing in Japan,

Smart Pro, our proprietary manufacturing support system,

the reagents that are required for testing are consumed

to centralize information, manage progress on processes

each time a test is conducted, so we have situated our

and perform quality control.

reagent factories near the markets in which the reagents

Instrument Manufacturing

Reagent Production

Made-in-Japan quality

Produced at nine factories in seven countries

Brand power, reliability

Stable supply

Efficient manufacturing that fuses people and technology

Reduced shipping costs and lead times

×

enhance quality in the interest of future growth.

„ Global Supply System Instruments Manufactured in Japan for Delivery around the World Building a Global Production Structure for Reagents

Japan (Ono)

Japan (Seishin)

Germany China (Jinan)

United States

China (Wuxi)

India

Japan (i-Square) Singapore Brazil

Manufacturing that utilizes ICT

35

A production system that realizes stable supply

Instrument factories Reagent factories

36

Business Activities

Sysmex Report 2017

Sales and Support Services

We are putting structures in place to deliver high-quality products, service and support to customers around the world. In developing countries, in addition to conducting

Developing a Sales Structure around the World Tailored to Regional Characteristics In 1972, shortly after the Company’s founding, Sysmex

By fully leveraging our diverse product lineup, services,

control on customer instruments in real time, automati-

sales and providing services via distributors, we deliver

experience and expertise, we offer flexible proposals

cally monitoring their operational status and supporting

products through global funds and engage in other activi-

tailored to laboratory requirements. Providing added value

operational safety. This system uses IT to enable Sysmex

ties aimed at boosting local levels of healthcare.

in these ways has enabled our sales approaches to gain

staff to check the status of customer instruments remote-

traction throughout the world.

ly and perform failure prediction.

opened its first overseas location, in Germany. We have

To ensure the provision of high-quality services, we

developed our operations globally since that time, expand-

Delivering Products and Added Value to Customers

ing our sales network to the point where we now cover more than 190 countries.

are stepping up our training of service engineers and

We provide direct sales, service and support in countries and regions that account for nearly 60% of our sales.

In addition to an extensive sales network, our ability to

Here, Sysmex employees have increasing opportunities to

deliver Sysmex products across a broad area stems from

interact directly with customers to hear their needs and

a diverse product lineup tailored to customer needs in

the issues they face.

hematology and other core businesses.

We also conduct indirect sales, service and support in

Also, we go beyond simply selling products. To improve

some regions, working with alliance partners to overcome

the operational effectiveness of our customers, we also

differences in business practices and other issues. In these

offer testing work flow solutions, providing advice in such

regions, we hold conferences for distributors to enhance

areas as the selection and placement of instruments and

their understanding of Sysmex’s businesses and products.

the operation of laboratories.

„ Customer Assessment in the United States Sysmex Earns Highest Customer Satisfaction Rating for the Past 11 Years for “Overall Service Performance” 5.6

9.5

5.4

9.0

5.2

8.5

5.0

8.0

4.8

7.5

4.6

7.0

4.4

6.5

4.2

Through an Extensive Service Structure, Providing a Testing Environment That Instills Confidence Sysmex products are involved in important decisions in medical settings, so reducing equipment downtime can help to increase customer satisfaction. Since the time of its founding, Sysmex has placed importance on instilling confidence in its customers through the provision of accurate test results. For this reason, we have focused on providing service and support, responding to instrument problems and answering customers’ questions and requests. For instance, our Customer Support Center is available to respond swiftly to telephone inquiries. We have also created a network service called SNCS™ (Sysmex Network Communication Systems) to provide quality 

Sysmex

2008 Competitor 1

Scale of 1 to 6 from 2007 to 2012 Scale of 1 to 10 from 2013 to 2017

2009 Competitor 2

2010

2011

Competitor 3

2012 Competitor 4

Scientific Support That Accurately Demonstrates Product Quality We also concentrate on scientific activities to enable customers to accurately utilize the clinical value Sysmex’s products offer. For example, we provide training to customers who have purchased our products, teaching them how to use our instruments accurately and carefully communicate scientific information. We also explain to physicians how to use Sysmex’s unique measurement parameters in clinical settings. These scientific support activities help customers make the most of our product capabilities. By holding scientific seminars in emerging markets and other locations, we help raise the level of knowledge among healthcare professionals and contribute to increases in the quality of healthcare. 

„ SNCS™ Network Service Q

Customer Support Centers

Quality Control Measurement Data Q Activity Log Data

Customers (Hospitals, Commercial Laboratories)

(Network services) 2013

Industry Avg.

distributors and striving to improve service levels.

8.8

6.0

2007

37

9.29

Service and Support Activities That Support High Levels of Satisfaction with Sysmex Products

2014

2015

2016

2017

Source: IMV ServiceTrak™ 2017 Hematology Q

Online Quality Control Q Failure Prediction Q Web Information Services, etc.

38

Business Activities

Sysmex Report 2017

Overview of Business by Geographic Region

Since opening our first overseas location in the 1970s, we have expanded our business by tailoring operations to regional characteristics. Sysmex opened its first overseas location, in Germany, in 1972. In 1991, we began offering direct sales,

„ Net Sales by Geographic Region

service and support overseas for the first time, in the United Kingdom, and we have developed our opera-

(¥ billion) 350

Americas

tions globally since then. We currently have upwards of 60 Group companies in more than 40 countries, through which we pro-

China

Japanese GAAP

300

AP

Japan

IFRS (¥ billion)

vide high-quality products and stable service and support, tailored to regional characteristics, to customers in more than 190 countries. As a result, our overseas sales ratio for the fiscal year ended March 31, 2017,

EMEA

’08.3

’09.3

’10.3

’11.3

’12.3

’13.3

’14.3

’15.3

’16.3

250

was 82.6%. 200

150

’20.3 ’17.3 (target)

Americas

20.8

23.3

23.4

25.4

26.8

29.7

38.5

47.0

55.9

56.5

80.9

EMEA

39.1

35.3

36.4

35.2

37.0

39.4

53.1

63.2

68.4

64.9

86.5

China

8.1

10.1

11.8

15.0

19.2

24.4

36.2

49.8

65.1

60.3

89.8

AP

5.0

5.3

5.8

7.1

7.8

9.0

14.7

17.8

20.0

21.1

31.1

Japan*

37.5

37.5

38.5

41.7

43.6

42.9

41.7

43.3

43.0

46.9

61.7

Total

110.7

111.8

116.1

124.6

134.7

145.5

184.5

221.3

252.6 249.8

350.0

100

50

„ Net Sales by Destination

Fiscal Year Ended March 31, 2008

Fiscal Year Ended March 31, 2017

0

’08.3 ’09.3 ’10.3 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 ’17.3 ’20.3 (Mid-term plan target) Japanese GAAP

* To ensure high quality, Sysmex manufactures instruments in Japan and exports them to Group companies overseas. In the graph showing sales by geographic region, figures for Japan do not include internal sales of instruments and other products.

IFRS

CAGR (%)

(¥20.9 billion)

18.9%

Americas: 12.5

„ Operating Profit by Geographic Region

24.1% (¥60.1 billion)

(¥ billion)

80

Overseas sales ratio

67.5%

(¥39.2 billion)

(¥8.1 billion) (¥6.4 billion)

35.4%

7.3% 5.9%

EMEA1:

China:

5.7

25.9% (¥64.6 billion)

82.6%

Americas

25.0

2.1

(¥21.2 billion)

40

17.4% (¥43.4 billion)

30

20

1

EMEA: Europe, the Middle East and Africa

2

Asia Pacific

Note: Net sales by destination is defined as the sales amount recorded by Group companies to customers in a particular region. However, net sales by geographical region refers to the sales amount made by a Group company in a particular location.

10

0

’08.3 ’09.3 ’10.3 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 ’17.3 ’20.3 (Mid-term plan target) Japanese GAAP

39

AP

Japan

IFRS

’20.3 ’17.3 (target)

’08.3

’09.3

’10.3

’11.3

’12.3

’13.3

’14.3

’15.3

’16.3

Americas

0.9

1.7

2.7

3.2

2.8

2.1

2.4

2.4

1.9

3.2

5.7

EMEA

4.6

5.1

5.3

4.5

5.3

5.7

8.6

5.1

4.3

4.9

7.3

China

0.8

1.3

2.7

2.4

2.3

2.3

4.1

6.8

5.8

3.5

8.6

AP

0.5

0.6

0.8

0.7

0.3

1.0

1.3

1.2

2.3

1.8

3.5

Japan*

7.8

4.6

2.9

6.8

8.6

11.9

20.1

31.1

43.6

35.6

46.7

Reconciliation

0.1

1.5

1.0

0.5

(0.4)

(1.5)

(3.9)

(2.3)

2.5

2.3

0.2

Total

15.0

15.1

15.7

18.2

19.2

21.8

32.8

44.4

60.7

51.7

72.0

50

32.5%

Japan:

China

(¥ billion)

14.2 8.5%

EMEA

Japanese GAAP

70

60

24.1% (¥60.3 billion)

AP2: (¥35.9 billion)

Overseas sales ratio

Note: Intragroup transaction prices on instruments and other products produced in Japan are revised as necessary. These revisions affect operating profit by geographic region but do not influence total operating profit.

IFRS

40

Business Activities

Sysmex Report 2017

Overview of Business by Geographic Region

Americas We have acquired a high market share in the hematology field in North America. We aim to achieve further growth by establishing bases in Central and South America.

Ralph Taylor CEO, Sysmex America, Inc.

Activities in the Fiscal Year Ended March 31, 2017 „ Sales 80.9 (¥ billion)

55.9

56.5

47.0 38.5 25.4 26.8 20.8 23.3 23.4

’08.3 ’09.3 ’10.3 ’11.3

29.7

’12.3 ’13.3 ’14.3 ’15.3 ’16.3 ’17.3 ’20.3 (Target)

Japanese GAAP

 Sales rose by double digits on a local currency basis, thanks to expansion of the hematology field in the United States. Due to the impact of yen appreciation, however, sales were up only slightly on a yen basis.  Operating profit grew, due to the impact of higher sales, a temporary halt in excise taxes, and a revision in intragroup transaction prices.  Status by Principal Area

1.1%

Central and South America

10.5%

4.9%

Hematology

Canada

90.9%

3.9%

Sales by Business*

• In the United States, sales increased due to favorable results in the hematology field stemming from a strategic focus on the West Coast area and the acquisition of a project from a prominent commercial lab. • Sales in Central and South America were down due to economic stagnation in Brazil, although benefiting from the acquisition of large-scale tenders in Mexico.

Sales by Area

United States

Indirect Sales

Direct Sales

85.6%

23.4%

76.6%

Direct and Indirect Sales

* Includes sales from Japan to IDEXX (for animals)

IFRS

Sophisticated Activity Called for in North American Market The North American market comprises the advanced markets of the United States and Canada; these markets are highly regulated. Healthcare institutions are spread across a vast area, and this market calls for products that provide high levels of productivity and efficiency and capable of delivering clinical value to the end users. Furthermore, the market requires swift and high-quality response, so sophisticated and innovative sales and support services are essential.  High Potential in the Central and South American Market Different from the North American market, the Central and South American market centers on emerging markets and developing countries. At around 600 million people, the population of this huge market is double that of North America. In many cases, customers in this market do not have sufficient budgets to purchase the same state-of-the-art technologies and products as in developed countries, so the market tends to center on the provision of reasonably priced, high-quality products and services. As transport infrastructures are less developed, the market emphasizes structures capable of providing products in a stable manner that offer high levels of reliability.

41

Others

3.1% Hemostasis

Market Characteristics 

Urinalysis

Sysmex’s Strengths

Locations

Regional Management Structure We have in place robust sales, marketing, and service and support structures centered on a regional headquarters. These and highly specialized quality assurance and regulatory affairs departments are Sysmex’s strengths.  Coverage Across the Vast North American Market To respond effectively and promptly across this wide sales area, our services provide virtual instructor-led training, which is revolutionizing the way we provide training to our customers. We also support our customers by providing scientific and clinical seminars. We enjoy high levels of customer satisfaction as a result.  A Sales and Service Network to Support Business in Central and South America Among our strengths in Central and South America are a distributor network based on long-standing trust-based relationships, plus an extensive support structure that provides individual distributors with services and support. We have established our own subsidiaries in key countries such as Brazil and Mexico, where our support structures are made up of highly specialized local staff.  A Structure for Providing a Stable Supply of Reagents To ensure a stable supply of reagents while holding down transportation costs and reducing lead times, we manufacture reagents locally at two factories in the United States and Brazil. This arrangement is a major strength for Sysmex. 

North America

Central and South America

Medium- to Long-Term Growth Strategies Achieving the Group’s Long-Term Management Plan To meet the targets of our long-term management plan, we aim to obtain a No. 1 position in markets we are entering, leveraging innovation and outstanding customer service in the Americas.  Aiming to Be No. 1 in Markets We Are Entering We will reinforce our sales promotion in hematology targeting the hospital and laboratory market. In addition, we will enhance our absolute No. 1 position by entering the market for private medical practitioners. We aim to obtain the No. 1 position in the urinalysis field by offering integrated chemistry and sediment solutions. In the hemostasis field, we intend to achieve an absolute No. 1 position through our alliance with Siemens. We also plan to enter the market for clinical flow cytometry.  Bolstering Our Presence in the Central and South American Market In the Central and South American market, we will augment our presence by establishing our own subsidiaries and enhancing support for distributors, thereby strengthening our sales and service capabilities.  Investing in the Human Resources Who Will Support Sysmex in Its Next Generation We recognize that human resources are a vital management asset in the Americas, and we will proactively invest in them accordingly. We are identifying management candidates through human resource assessments, developing skills and building personnel-friendly working environments as initiatives to cultivate the human resources who will support Sysmex in its next generation. 

42

Business Activities

Sysmex Report 2017

Overview of Business by Geographic Region

EMEA (Europe, the Middle East and Africa) We operate in more than 100 countries in this region, including both developed countries and emerging markets. We are building sales and support service structures tailored to regional characteristics.

Juergen Schulze President and CEO, Sysmex Europe GmbH

Activities in the Fiscal Year Ended March 31, 2017 „ Sales

86.5 (¥ billion) 63.2

68.4

64.9

53.1 39.1

39.4 35.3 36.4 35.2 37.0

’08.3 ’09.3 ’10.3 ’11.3

’12.3 ’13.3 ’14.3 ’15.3 ’16.3 ’17.3 ’20.3 (Target)

Japanese GAAP

IFRS

 On a local currency basis, sales rose due to expanded sales in France, Germany and other developed countries, as well as to increasing sales in Turkey, Russia and other emerging markets. However, sales were down on a yen basis, owing to the impact of yen appreciation.  Operating profit rose because of a revision in intragroup transaction prices and efforts to constrain SG&A expenses.  Status by Principal Area • Sales grew in the five major countries* on increased sales in the urinalysis and hemostasis fields in France, spurred by the start of direct sales, despite the impact of Brexit. • Sales rose in Eastern Europe and Russia, as a growing installed instrument base pushed up reagent sales in the hematology and hemostasis fields in Russia. • In the Middle East and Africa, sales increased due to higher sales of reagents, owing to a higher installed instrument base in the hematology field in Iran and Saudi Arabia.

Others

15.4% Urinalysis

10.1%

A Diverse Region The EMEA region represents a vast market covering more than 100 countries across Western, Central and Eastern Europe, the Middle East and Africa. One major characteristic of this wide area is diversity—in language, culture and climate. The region includes the developed countries of Europe as well as African and other developing countries; response to customers’ needs must be adjusted accordingly.  Sophisticated Requirements from Markets in Developed Countries The region’s developed countries are working to curtail rising healthcare costs, so increasing the efficiency of testing is a key concern. At the same time, demand for high levels of clinical value is increasing, calling for the proposal of sophisticated solutions.  Emphasis on Both High Quality and Price In emerging markets and developing countries, demand for highend products is growing among healthcare institutions targeting the wealthy class. Meanwhile, many customers face budgetary constraints, and their needs center on products that offer high quality but are also inexpensive. English is not the primary language in many parts of the region, making it vital to offer services and support in many regional languages.

43

Five major countries

5.6% Middle East, Africa

44.3%

14.6%

Sales by Business*

Eastern Europe, Russia

8.5%

Sales by Area

Indirect Sales

Direct Sales

32.2%

67.8%

Direct and Indirect Sales

Other parts of Europe * Includes sales from Japan to IDEXX (for animals)

27.0%

* Five major countries: Germany, the United Kingdom, France, Spain and Italy

Market Characteristics 

70.0%

4.5% Hemostasis

Others

Hematology

Sysmex’s Strengths A Sales and Service Structure Encompassing a Diverse Region Sysmex’s first move toward direct sales overseas was in the United Kingdom, and since that time the Company has expanded its direct sales, service and support structures throughout the EMEA region. We also utilize distributors to conduct sales and provide services, tailoring our approach to business practices in individual regions. As a result, today we have in place a structure that encompasses the entire EMEA region.  A Training Structure That Enhances Customer Satisfaction We have a training structure that delivers excellent customer service. The Sysmex Academy is a training facility with seven locations across the EMEA region. In addition to customers and distributors, this institution provides training to enhance the skills of Sysmex employees.  Provision of Solutions to the Customers’ Issues Rather than simply selling products, we strive to propose solutions that address the issues customers face. We analyze the current status of laboratories to identify any issues, and then propose testing work flow improvements that address these issues, thereby optimizing testing. 

Locations

Other parts of Europe

Eastern Europe, Russia Five major countries

Middle East

Medium- to Long-Term Growth Strategies Expanding the Product Portfolio In addition to the mainstay hematology market, we are stepping up our market introduction of new urinalysis products. We are strengthening efforts in the hemostasis field through an alliance with Siemens, and we are working to reform our product portfolio through an enhanced focus on our next core businesses, the flow cytometry and life science businesses.  Reinforcing the Regional Management Structure We will speed up decision-making by augmenting our regional management structure, accelerating business development that is suited to individual areas. Sysmex Europe serves as our regional headquarters, and we will also establish and delegate authority to a number of sub-regional headquarters.  Augmenting Human Resources and Enhancing Motivation As we consider augmenting human resource management and leadership skills as an important priority, we are developing our training programs. We are building an attractive workplace through ongoing activities to promote awareness of the Sysmex Way and measures to enhance employee motivation. 

Africa

44

Business Activities

Sysmex Report 2017

Overview of Business by Geographic Region

China We have led other companies in developing a base of operations in this region. We will shore up our position as the leading company in the IVD domain.

Peng Zuo Hui President and CEO, Sysmex Shanghai Ltd.

Activities in the Fiscal Year Ended March 31, 2017 „ Sales

89.8 (¥ billion) 65.1

60.3

49.8 36.2

8.1

10.1

11.8

15.0

’08.3 ’09.3 ’10.3 ’11.3

19.2

IFRS

A Huge Market with a Population of Around 1.4 Billion People The healthcare market is expanding significantly in China, driven by rapid economic growth. The number of hospitals per person is lower than in Japan, and the creation of healthcare infrastructure is expected to continue increasing. Furthermore, the disparity in healthcare between metropolitan and rural areas is becoming a social issue, and the country is considering the introduction of a health insurance system.  Rising Demand for High-End Products In the IVD domain, rising demand is driving the need for higher levels of efficiency and automation, prompting a switch to highperformance products. Meanwhile, efforts to curtail healthcare costs have emerged in recent years, against a backdrop of economic deceleration. For instance, the government has introduced a classification system aimed at raising the efficiency of healthcare services. Under this system, some patients with mild symptoms or chronic diseases that had previously received care at Level 3 hospitals are being relegated to Level 2 or lower hospitals in an effort to distribute healthcare resources. In addition to an increasing number of Level 2 and lower hospitals, their patient numbers are also growing. As a result, we anticipate an increasing need for high-end products.

45

Japan: Approximately

China:

11 times

Population

Approximately

Approximately

130

1,400

million people

million people

Approximately

2.3 times

8,4392

29,4153

This number is expected to grow.

Definition of “hospital” (Japan and China): Medical institution with 20 or more beds (in-patient facility) 2 Source: Survey of Medical Institution Dynamics, Ministry of Health, Labour and Welfare (March 31, 2017) 3 Source: Statistics by the Ministry of Health, People’s Republic of China (March 31, 2017) 1

2.0%

Direct Sales (Hong Kong) Hematology

Indirect Sales

44.5%

99.0%

Sales by Business

1.0%

Direct and Indirect Sales

Hemostasis

35.0%

Sysmex’s Strengths

„ Comparison of the Japanese and Chinese Markets

Number of hospitals1

Others

6.1%

12.4%

Market Characteristics 

Immunochemistry

Urinalysis

• In the hematology field, reagent sales were up despite lackluster sales of instruments. • In the hemostasis field, reagent sales were favorable driven by growing demand for thrombosis testing. • In the urinalysis field, sales were up slightly due to higher reagent sales. • In the immunochemistry field, sales of reagents grew due to an increase in the operating instrument base.

24.4

’12.3 ’13.3 ’14.3 ’15.3 ’16.3 ’17.3 ’20.3 (Target)

Japanese GAAP

 On a local currency basis, sales were up due to higher reagent sales in each field, despite the impact of distributor inventory adjustments on sales of instruments. However, sales were down on a yen basis, due to the impact of yen appreciation.  The impact of yuan depreciation against the US dollar caused the price of (dollar-denominated) purchases from Japan to rise, prompting a worsening cost of sales ratio and a sharp fall in operating profit.  Status by Principal Field

Robust Business Foundation Focusing on the growing Chinese market, we have taken the lead over our competitors in setting up structures in the country, such as establishing a reagent factory in Jinan in 1995. We have built up a robust business foundation. Currently, we provide products and services throughout China via alliances with more than 200 sales distributors.  Abundant Product Lineup In our core businesses of hematology, urinalysis and hemostasis, we offer a broad-ranging lineup, from compact instruments to automated, high-end instruments. Furthermore, in 2015 we entered the immunochemistry market as part of our initiatives to expand our portfolio.  Excellent Brand Strength In addition to being trusted for product quality, we have been holding scientific seminars in China for more than 20 years. These proactive efforts have helped to raise the quality of testing and build an excellent brand image for the Company. 

Medium- to Long-Term Growth Strategies Aiming to Be a Leading IVD Company In addition to the hematology, hemostasis and urinalysis fields, we are building a robust position in the immunochemistry market, which is growing solidly. Hematology, Hemostasis and Urinalysis Fields • Our products enjoy a high level of competitiveness in the Level 3 hospital market, and we will promote the introduction of products to meet needs in this market, as well as new products. • To address the rapidly growing Level 2 hospital market, we are creating market-specific promotional and product sales schemes. Immunochemistry Field • We are reinforcing our distributor network to increase the number of HISCL™ instruments in routine operation. • We will reinforce our system for obtaining regulatory approval with the aim of increasing the number of reagent parameters. • We will enhance our IT-based service and support to ascertain market needs and further increase customer satisfaction. 

46

Business Activities

Sysmex Report 2017

Overview of Business by Geographic Region

Asia Pacific The Asia Pacific market has a population of around 2.4 billion people. Through scientific awareness activities centered on emerging markets, we are contributing toward increases in the quality of testing.

Frank Buescher CEO, Sysmex Asia Pacific Pte Ltd.

Activities in the Fiscal Year Ended March 31, 2017 „ Sales

31.1(¥ billion)

20.0

21.1

17.8

 Sales were up due to increases in the hematology field and favorable performance in the hemostasis and immunochemistry fields, despite the impact of yen appreciation.  Operating profit fell as a result of the worsening cost of sales ratio, as instruments made up a greater proportion of the sales mix and due to the impact of yen appreciation on currencies in the region.  Status by Principal Area • In Southeast Asia, sales rose due to favorable performance in the hematology field in Vietnam and increased sales of instruments in the hematology and immunochemistry fields in Indonesia stemming from the introduction of national health insurance. • In Oceania, sales increased substantially, thanks to the acquisition of a large-scale project in Australia in the hematology field. • Looking at South Korea and Taiwan, sales decreased in South Korea, owing to the impact of yen appreciation (but rose on a local currency basis).

14.7

5.0

5.3

5.8

7.1

’08.3 ’09.3 ’10.3 ’11.3

7.8

9.0

’12.3 ’13.3 ’14.3 ’15.3 ’16.3 ’17.3 ’20.3 (Target)

Japanese GAAP

Immunochemistry

Others

1.3%

9.2% Urinalysis

Southeast Asia

Indirect Sales

Direct Sales

68.4%

27.5%

41.6%

56.0%

44.0%

Hemostasis

13.7%

Sales by Business

Direct and Indirect Sales

Sales by Area

Oceania

South Asia

13.7%

17.2%

IFRS

Strong Potential due to Economic Growth One third of the world’s population lives in the Asia Pacific region, which is characterized by the scale of its market and its strong potential. Population expansion and economic growth are driving increased demand for healthcare.  Diverse Demand for Healthcare Instruments Market demand varies by country. The Asia Pacific region includes developed countries as well as developing markets, and individual countries’ economic levels significantly affect their investment in healthcare. In Indonesia and other emerging markets, testing volume is increasing, thanks to the establishment of national health insurance systems and healthcare infrastructure development. Here, demand is increasing for relatively inexpensive products that are highly productive. In developing countries, meanwhile, the emphasis on cost overrides productivity. The issue in these markets is to raise the level of knowledge among healthcare professionals.

Sysmex’s Strengths

„ Healthcare Expenditure by Population and GDP Population1

Healthcare Expenditure as a Percentage of GDP2

Approximately 1,340 million people

4.7%

Indonesia

Approximately 260 million people

2.9%

Philippines

Approximately 100 million people

4.7%

Thailand

Approximately 70 million people

4.1%

Japan

Approximately 130 million people

10.2%

India

1 2

47

Taiwan, South Korea, Mongolia

7.4%

Market Characteristics 

Hematology

Source: United Nations, World Population Prospects (2017) Source: World Health Organization (2016)

A Sales, Service and Support Structure Closely Tailored to the Region We are promoting direct sales and services in many countries, so our employees are able to hear customers’ requests directly. This structure enables us to propose appropriate solutions. We also employ local distributors elsewhere, such as in developing countries. Sysmex is promoting sales throughout the AP region through this combination of direct and indirect sales, according to regional characteristics.  Support for Advances in Healthcare Infrastructure Emerging markets and developing countries make up the majority of the AP region, and healthcare infrastructures are underdeveloped in many locations. Making use of scientific seminars and educational materials is a strategy Sysmex has pursued over many years, as we are working to enhance healthcare knowledge across the region. We are also engaging in initiatives in many Asian countries to support quality control and enhance laboratory quality in other ways. Through these activities, we are helping to build up the region’s healthcare infrastructure, as well as reinforce the Sysmex brand. 

Medium- to Long-Term Growth Strategies Reinforcing Our No. 1 Position in Hematology We will provide new clinical value by developing our XN Series. In addition to developed countries and emerging markets, we will propose customer-focused solutions in developing countries, where basic testing is increasing, reinforcing our No. 1 position in hematology.  Enhancing Our Portfolio We will promote the market launch of products in the hemostasis, urinalysis, immunochemistry and clinical chemistry fields. We are making progress in applying for approvals of key parameters in the immunochemistry field, introducing HISCL™ and establishing a unique position in the market. Also, by providing further clinical value, we will reinforce our presence in urinalysis and other fields.  Securing Highly Specialized Human Resources To achieve our strategies, we are working to maintain highly specialized employees throughout the AP region. We strive to improve workplace environments, providing places where employees can work pleasantly and become increasingly engaged. Such efforts have twice earned us awards in Singapore as the “Best Company to Work for in Asia.” 

48

Business Activities

Sysmex Report 2017

Overview of Business by Geographic Region

Japan (including exports to overseas subsidiaries) As a leading company in the IVD domain, we aim to boost overall laboratory sophistication and efficiency, and are working to create new testing parameters.

Iwane Matsui Senior Executive Officer, Sysmex Corporation Deputy head of Global Marketing

Activities in the Fiscal Year Ended March 31, 2017 „ Sales

199.7 (¥ billion) 144.0 140.9 122.9

Intra-Area Transfers (Exports to Group Affiliates, Others)

 In the Japan geographic region, sales were down due to the impact of yen appreciation on exports to Group affiliates (overseas).  Operating profit fell due to a revision in intragroup transaction prices, one-off factors and the effect of yen appreciation on exports to Group affiliates (overseas).  Sales by Principal Field

66.8 69.0 66.4

75.7

82.7

Sales to External Customers (IDEXX and Others)

88.1

Hematology

Direct Sales

26.6%

41.7%

100.0%

Sales by Business

• In Japan, sales increased due to favorable reagent sales in the hematology, urinalysis, immunochemistry and hemostasis fields, plus the impact of converting RIKEN GENESIS to a subsidiary. • Sales of veterinary instruments to IDEXX were up.

103.8

Others*

Immunochemistry

9.4%

Direct and Indirect Sales

Sales to External Customers (Japan)

Urinalysis ’08.3 ’09.3 ’10.3 ’11.3

’12.3 ’13.3 ’14.3 ’15.3 ’16.3

Sales to External Customers ’17.3 ’20.3 (Japan)

5.3%

IFRS

Market Characteristics An Environment Characterized by an Established Healthcare System Due to the national health insurance system, Japan has in place an environment in which all citizens have access to equal healthcare. In addition, the market is characterized by patients having the freedom to choose the medical institution where they receive care.  World’s Lowest Rate of Childbirth and Aging Population an Issue Against the backdrop of this healthcare system, Japanese life expectancy is among the world’s highest. However, because of the low birth rate Japan has a decreasing number of children and the population is aging, so curtailing healthcare costs is becoming an urgent issue. Under these circumstances, the national government has begun promoting the functional specialization of hospitals and regional healthcare alliances.  Demand for Personalized Medicine Given the rising cost of drugs and prevalence of advanced medical care for cancer and other illnesses, demand is growing for personalized medicine that will enable the prediction of medical effects. In addition, requests for lower-impact surgeries are increasing, so the market for medical robots is expected to grow. 

Sales to External Customers (Japan)

17.0%

* “Others” includes clinical laboratory information systems and other items.

(Target)

Japanese GAAP

Hemostasis

Sysmex’s Strengths

54.0 (¥ trillions) 46.9 40.0 28.5

2000.3

31.4

2005.3

35.3

2010.3

2015.3

Extensive Sales, Service and Support Structure We have branches and sales offices throughout Japan, and a sales, service and support structure that is unmatched by our competitors. In each area, people in charge of sales, scientific support and services create value for customers, and we have a strong reputation for the extensive service and support we offer.  Sharing Customer Input with R&D and Manufacturing Divisions Our R&D and manufacturing locations are nearby, facilitating close communication. We have in place a system to share customer input and reflect this information in our business processes.  Providing Added Value in Response to Needs in Medical Settings Through a combination of high-quality instruments, diverse reagents, software that enables integrated control of test information, and services and support, we propose total solutions tailored to diverse needs in healthcare settings. In addition to providing new value from a scientific perspective, we propose testing workflow improvements—a strength that contributes to increases in economic value for medical institutions. 

„ Healthcare Costs in Japan

2021.3 2026.3 (Forecast) (Forecast)

Source: Ministry of Health, Labour and Welfare “Changes in Medical Care Expenditure” (Fiscal 2015) and “Future Projections of Social SecurityRelated Expenses” (Fiscal 2011)

Reasons Healthcare Costs Are Increasing by ¥1 Trillion per Year ȉ'UXJFRVWV (+ increase in high-priced drugs) ȉIncrease in the number of patients with FDQFHUDQGRWKHUGLVHDVHV

Medium- to Long-Term Growth Strategies Establish an Overwhelming No. 1 Position in the IVD Market By reinforcing our core businesses, we intend to further reinforce Sysmex’s position. • Maintain the undisputed No. 1 position in the hematology field. • Increase our presence in the integrated urine chemistry and sedimentation market. • Reinforce the sales promotion of hemostasis fibrin reagents. • Increase reagent sales through activities adopting parameters specialized for immunochemistry, hepatic disease and infectious disease.  Create a New Business Model We will provide new value through our next core business. • Contribute to personalized medicine: Establish our brand in the gene business and the clinical genome market. • Expand regional healthcare systems: Expand regional healthcare by supporting integrated community care making use of ICT. • Propose new value to hospital management: Provide new value through hospital management consulting. 

Precision medicine Growing need for gene testing

49

50

Business Activities

Sysmex Report 2017

Principal Testing Fields and Products

Hematology Core Business

Urinalysis Core Business

Immunochemistry Core Business

Urinalysis can be broadly divided into two types: chem-

Immunochemistry uses antigen–antibody reactions to

or other blood cells to determine whether a more detailed

manufacturers from emerging markets, as well as our con-

istry urinalysis and sediment urinalysis. The first type

test for the presence of HIV and the hepatitis virus, and

examination is necessary. In addition to instruments,

ventional competitors in Europe and the United States.

involves dipping a test paper into urine to determine the

to check for cancer. In addition to reagents to test for

these tests require specific reagents for ongoing use, such

Sysmex is responding by providing an extensive product

presence of sugar, protein or blood. In the second type,

infectious disease and tumor markers, we are augmenting

as for dilution and staining.

portfolio, offering unique clinical value and differentiat-

formed elements, including blood and other cells, are

our lineup of proprietary reagents to test for liver fibrosis

ing itself from competitors with its support services. As

analyzed. We introduced the world’s first urine formed

progression and atopic dermatitis. We are also work-

tion models, used for determining basic parameters, as

a result, in 2007 we acquired the top share of the global

sediment analysis system—the UF Series—that uses flow

ing to develop our business in Asia, including Japan and

well as five-part white blood cell differentiation models.

market in the hematology field, and our share has steadily

cytometry (FCM)*. This series has the leading share of the

China, through sales of the HISCL™ Series fully automated

Numerous reagents are used with these models to deliver

risen since.

global market. Furthermore, we have entered a business

immunochemistry system, which performs highly sensi-

alliance with EIKEN CHEMICAL CO., LTD., to expand our

tive, high-speed (17 minutes) assays on minute sample quantities.

Hematology is a type of screening that counts red, white

Recent years have seen the entry into this business by

Sysmex offers three-part white blood cell differentia-

a high degree of clinical significance. We also offer a wide-

In the field of animal testing, we provide IDEXX

ranging lineup of system products that can be used for

Laboratories, Inc., with hematology analyzers for animals

portfolio of analyzers of urine chemistry, thereby respond-

rapid, high-volume testing in large-scale labs.

on an OEM basis.

ing to diverse urinalysis testing needs.

(Five-part white blood cell differentiation instruments)

XN-Series

XN-L-Series

Reagents UD-10™ XN-9100™

UF-5000™

UC-3500™ (For overseas sale only)

HISCL™-5000

Information Diversity and Function

XN-1000™

Life Science Next Core Business

XN-550™

(Three-part white blood cell differentiation instruments)

Reagents

We provide systems that use the OSNA™ method Sysmex developed to rapidly test for lymph node metastasis. We also offer assay services such as Curebest™ 95GC Breast,

pocH™-80i

Reagents XP-300™

Clinical Chemistry Core Business

a service for research use to determine expression levels

Clinical chemistry involves examining the enzymes, sug-

of 95 cancer-related gene types, making use of BEAMing

ars and proteins in the blood to determine the body’s

technology to detect to a high degree of sensitivity genes

nutritional status, liver and kidney functions, and test for

that are present in minute samples of blood.

conditions such as arteriosclerosis. Sysmex has entered

Efficiency and Handling Capability

alliances with JEOL Ltd. and Furuno Electric Co., Ltd., and is providing sales and support services for their automated clinical chemistry analyzers, leveraging our own network

Hemostasis Core Business Hemostasis involves studying the functions of blood

and providing support services for hemostasis products.

coagulation (stopping bleeding), preventing blood from

This combined business now accounts for the leading

clotting too much within blood vessels, and fibrinolysis,

share of the global market in the hemostasis field.

in China and other parts of Asia. RD-100i™

which dissolves clots. Hemostasis testing is performed to Reagents

diagnose hemorrhagic diseases (such as hemophilia) and

FCM Next Core Business

thrombotic disease, help decide methods of treatment, for

Using flow cytometry (FCM)*, we are developing the clini-

monitoring, and to help diagnose the risk of bleeding or

cal FCM domain (providing detailed analysis of diagnoses

blood clotting prior to surgery.

of leukemia and malignant lymphoma), the industry FCM

In 1995, Sysmex concluded a business alliance with

domain (used in quality control for food and other items)

Siemens Healthcare Diagnostics Inc. (previously, Dade Behring Inc.), forging a synergistic relationship in selling

51

LINOAMP BC™ (reagent)

Reagents CS-5100™

* FCM: Method involving the flow dispersion of rows of minute particles and the use of laser light to optically analyze these minute flows. Used primarily to observe individual cells

and the research FCM domain (R&D applications such as analyzing the function of cultured cells).

52

Business Activities

Sysmex Report 2017

User Report: HISCL™-5000 Fully Automated Immunochemistry Analyzer

HISCL Introduction Helping to Raise Testing Quality and Lower Costs Affiliated Hospital of Jining Medical University

Dr. Dong Haixin

Located in the center of Jining, in Shandong Province, this is a Level 3 general hospital operated under provincial jurisdiction. The hospital has healthcare, education, scientific research and preventive care functions. It is a large-scale facility, with 3,100 beds, conducting around 3 million outpatient examinations each year.

Chief of Clinical Laboratory Center Affiliated Hospital of Jining Medical University

Q. 1

What is the background for introducing the HISCL?

For some time, our hospital’s laboratory center has been using Sysmex’s testing instruments and re-

an even higher reputation for quality within the hos-

information swiftly and accurately for the eight pre-

pital. They are earning high marks with the laboratory

surgery immunochemistry parameters in quick tests

center and top management of the hospital.

conducted prior to surgeries, including emergency, endoscopic, closed and senile osteoporosis surgeries.

you describe a memorable Q. 3 Would episode related to the HISCL?

you have any requests Q. 4 Do for Sysmex? Currently, we are very satisfied with Sysmex’s products and services. In addition to the products, in services

I was most impressed by the words of the person in

and support we are extremely reassured by user-ori-

charge of sales, who said, “If you want to lower costs

ented remote network services, such as the SNCS.

and increase quality, leave it to Sysmex.” And the

As a user of many of your products, our requests

laboratory center realized these results. The labora-

for Sysmex going forward would be that you continue

tory center has a number of immunoassay systems

to provide us with good testing products, bring

from major global companies, but in an overall com-

numerous new immunochemistry test parameters

productivity increases, and this clinched the decision

parison introducing the HISCL has been a major asset

into the market quickly, and continue working to

to introduce the analyzer at our hospital.

in terms of reducing costs and increasing quality.

increase the quality of testing and lower costs.

were some of the benefits of Q. 2 What introducing the HISCL?

Another memory comes to mind with regard to

Also, the HISCL platform involves Sysmex’s pro-

test results. One patient noted that “The results of

prietary test parameters. We would like to collaborate

HCV tests performed at another hospital with a dif-

with Sysmex by conducting clinical evaluations, in the

ferent instrument are different from the results I re-

aim of establishing unique test indicators that offer

agents for hematology, hemostasis and urinalysis

The HISCL offers a much faster measurement time

ceived from your hospital.” However, in the final test

high clinical value even more accurately and quickly.

(sediment), and we are highly satisfied with Sysmex’s

than other companies’ products, handling all

results at a government medical institution, our test

product quality and services. We had been using

parameters in 17 minutes. On average, each day our

results (those of the HISCL) turned out to be correct.

another company’s instruments for measuring immu-

hospital measures some 2,500 infectious disease

Since that incident, Sysmex’s products have gained

nochemistry tests, but in 2015 we decided to switch

parameters. With four instruments, we can handle all

to an analyzer with infectious disease parameters, in

of these in 3.5 hours. In addition, the instruments are

order to increase the laboratory center’s operating

highly sensitive and have a wide measurement range,

Sysmex’s staff all seem to have friendly personali-

efficiency and quality.

which greatly reduces measurement errors, errone-

ties and be professional and enthusiastic about their

ous judgments of gray zone samples and the need to

work. Naturally, we first learned from Sysmex’s sales

a HISCL product briefing in 2015. We were very

remeasure high-value samples. This has resulted in

manager in the immunochemistry field about the

attracted by the HISCL’s characteristics (high sen-

fewer complaints from the clinic. These instruments

HISCL, after which we evaluated and began to use

sitivity, rapid measurement, wide range and minute

have also substantially shortened the amount of time

the product. We were not simply choosing a single

samples), as these were strengths not being offered

required for staff operations and patient medical

brand or a single product. Even more important than

by others, as well as its high productivity. Thereafter,

examinations. Our hospital’s laboratory center has a

the product is the people. We give the people in

we received a proposal from Sysmex and its distribu-

quality policy of “accuracy, high efficiency, safety and

charge of sales at Sysmex high marks for providing

tors, learned about its history of use from key opinion

service” in line with the ISO 15189 quality manage-

specialized services and acting as advisors, proposing

leaders within China, and considered introducing the

ment system, and the HISCL is true to this policy.

optimal solutions based on their understanding of our

analyzer. In December 2015, we held a public ten-

Furthermore, by introducing the HISCL we have been

laboratory center.

der. We received numerous bids from major global

able to resolve the problem of how to report the

companies, but the HISCL ranked highest in terms of

results of urgent immunochemistry test parameters

We first learned fully about the HISCL during

53

in one hour. The instruments provide appropriate test

message would you like to Q. 5 What leave for the person in charge of sales at Sysmex?

54

Sysmex Report 2017

Enhancing Corporate Value

By putting into practice the “Sysmex Way,” the corporate philosophy for the Sysmex Group, we are contributing to society and working to achieve sustainable increases in corporate value.

55

56

Enhancing Corporate Value

Sysmex Report 2017

CSR Management

 Sysmex’s Materiality Items

In the aim of realizing a sustainable society, Sysmex is endeavoring to resolve the issues facing society through its business activities.

Materiality



Indirect economic impact



Local communities



Customer health and safety



Product and service labeling



Procurement practices



Supplier environmental assessment



Supplier assessment for labor practices



Supplier human rights assessment



Supplier assessment for impact on society



Employment



Training and education



Diversity and equal opportunity



Equal compensation for men and women



Products and services



Transport

Environmental consideration through the product lifecycle



Raw materials



Energy

Reduction in environmental burden through activities at business offices



Water



Emission into the atmosphere



Effluents and waste



Governance



Indirect economic impact



Compliance (environment, society, responsibility for products)



Anti-corruption



Anti-competitive behavior

Responsible provision of products and services

and achieving sustainable growth for the Group. We are



Securing of product quality and safety

Sysmex believes its CSR is to build trust and confidence

currently developing a specific action plan based on these



among stakeholders by putting into practice the “Sysmex

identified materiality items and are taking actions accord-

Appropriate disclosure of information regarding products and services.

Way,” the corporate philosophy for the Sysmex Group. We

ingly. Please see Sysmex’s website for more detailed infor-

have set up various committees, headed by executives, to

mation on CSR activities.

„ The Process of Identifying Materiality We analyzed society’s requirements based on international guidelines, such as the GRI Sustainability Reporting Guidelines (G4)*, the United Nations Sustainability Development Goals (SDGs) and ISO 26000, as well as screening content from SRI and other assessment bodies. We compared these requirements against the current state of the Sysmex’s CSR activities, extracting and identifying related aspects. We then conducted an overall assessment of the related aspects identified in STEP 1 along two axes: the degree of importance for stakeholders (size of impact on decision-making by stakeholders) and, from the perspective of risks and opportunities, the degree of importance for Sysmex (size of the Company’s impact on the economy, environment and society). Through this process, we discovered the most important aspects requiring priority initiatives.

STEP 2 Prioritize

STEP 3 Confirm Suitability, Establish Materiality

Provision of a comfortable working environment



Development of human resources



Promotion of diversity

Environmental consideration 



The materiality items organized as a result of STEP 2 were approved at a management meeting chaired by the chairman and CEO.

Governance

* GRI Sustainability Reporting Guidelines (G4): Fourth Edition of the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines.

„ Sysmex’s Materiality Matrix

ȉ Resolution of medical issues through business activities ȉ Improvement in accessibility to medical services by means such as familiarizing products ȉ Securing of product quality and safety ȉ Appropriate disclosure of information regarding products and services ȉ Assessment and management of the supply chain ȉ Provision of a comfortable working environment ȉ Development of human resources ȉ Promotion of diversity ȉ Environmental consideration through the product lifecycle ȉ Reduction in environmental burden through activities at business offices ȉ Corporate governance ȉ Compliance ȉ Risk management

Most important Very important Important

Degree of importance for stakeholders

Important

Assessment and management of the supply chain

Realization of an attractive workplace 

STEP 1 Understand and Organize the Issuesd

Very important

Most important

Degree of importance for the Company

Page Described

P59

Improvement in accessibility to medical services by means such as familiarizing products

In 2017, Sysmex has identified priority issues (mate-



57



Resolution of medical issues through business activities

riality items) with a view to realizing a sustainable society

promote activities according to key CSR-related themes.

SDG Targets

Resolution of medical issues through products and services



Identifying Materiality Items and Developing an Action Plan

G4-Related Perspective



Corporate governance



Compliance



Risk management

P61

P63

P62

P65

External Evaluations Sysmex has earned high third-party praise for its efforts as a sustainable company. For example, we were selected by Corporate Knights for inclusion in the 2017 Global 100 (The 100 Most Sustainable Companies in the World). We were 70th in this ranking, and first in the category of “Health Care Equipment & Supplies.” This was the third time we have been selected for this ranking, and the second consecutive year. We have also been chosen for inclusion in well-known indices of ESG investment, such as the Dow Jones Sustainability World Index and the FTSE4Good Index, as well as other major indices of socially responsible investment (SRI).

58

Enhancing Corporate Value

Sysmex Report 2017

Resolution of Medical Issues through Products and Services

We are contributing toward the resolution of medical issues by leveraging our unique technologies and global network.

healthcare is an issue. Responding to malaria and other

to testing needs, and working to provide accurate test

infectious diseases is also an issue. Recognizing such

data swiftly. In recent years, we have been conducting

issues as common goals for the international commu-

research and development to create advanced, high-value

nity, in September 2015 the United Nations adopted the

testing and diagnosis technologies with a view to realiz-

Sustainable Development Goals (SDGs), which set targets

ing personalized medicine. To boost access to healthcare

related to human health and welfare. Expectations are

in emerging markets and developing countries, we are

Sample Initiative 1: Helping to Prevent and Diagnose Dementia Sysmex strives for innovation in the aim of providing advanced and highly valuable diagnostic technologies. One such example is the diagnosis of Alzheimer’s disease through blood testing, an area in which we are pursuing R&D in collaboration with Eisai Co., Ltd. Worldwide, the number of people with dementia* is forecast to rise from 46.8 million in 2015 to 74.7 million in 2030. The problem is growing increasingly serious as the world’s population ages. Alzheimer’s is one of the most common forms of dementia, but the level of satisfaction with current treatments is low. While diagnosis of Alzheimer’s disease is sometimes made by using tests such as brain imaging and cerebrospinal fluid examinations, various issues exist, such as the high cost of such testing and the physical burden placed on patients. By using blood tests to detect minute protein quantities and their structural abnormalities, which are thought to impact the disease state, Sysmex is striving to develop products that might aid in early diagnosis and treatment.

growing with respect to global companies’ initiatives to

promoting business activities aimed at raising local levels

* Source: World Alzheimer Report 2015, Alzheimer’s Disease International

resolve medical issues.

of healthcare.

Expectations on the Resolution of Medical Issues

Sysmex’s Approach to Resolving Healthcare Issues

In recent years, against the backdrop of aging populations

In line with our mission of “shaping the advancement of

in developed countries, demand has been increasing to

healthcare,” which is defined in the “Sysmex Way,” the

curtail rising medical expenses and extend healthy lifes-

corporate philosophy of the Sysmex Group, we are work-

pans. Meanwhile, in line with economic growth, emerging

ing to create new value. We believe our mission is to

markets are calling for better healthcare. In developing

address the shared desire of people around the world to

countries, where healthcare infrastructure is unable to

remain healthy.

keep pace with population increases, improving access to

We are expanding our product lineup in response

By leveraging our unique technologies and global network spanning more than 190 countries, we are contributing to the resolution of healthcare issues and working to build a sustainable society.

Relation to the SDGs The Sustainable Development Goals (SDGs) adopted by the United Nations consist of 17 goals to be met by 2030. Goal 3, to “Ensure healthy lives and promote well-being for all at all ages,” targets the following objectives.



59

Products Using Unique Technologies to Resolve Healthcare Issues

Reduce maternal mortality



Reduce the mortality of children under five years of age



Eradicate AIDS, tuberculosis, malaria and tackle other communicable diseases



Reduce premature mortality from non-communicable diseases





Ensure access to essential healthcare services, medicines and vaccines Develop the skills of and conduct training for health workers in developing countries



Sample Initiative 2: Supporting the Diagnosis of Infectious Disease Malaria affects some 200 million people around the world, and is said to cause around 600,000 deaths each year. Distinguishing tropical malaria, which can lead to death if the disease becomes serious, from other types of malaria is an extremely important part of diagnosis and treatment. However, current testing methods involve microscopebased examinations, which require skilled and experienced medical professionals. Hence, demand exists for the development of a new technology for distinguishing and diagnosing malaria simply and quickly. Sysmex has developed the XN-30 multiparameter automated hematology analyzer, which utilizes the Company’s existing automated hematology analyzer technology to measure red blood cells infected with malarial plasmodia in approximately one minute. At present, use is limited to research applications, but going forward we anticipate application in a broad range of areas, from basic research to clinics. 

 Realizing Alzheimer’s Disease Testing through Liquid Biopsy

Image-based screening

Blood test

Super-resolution microscope

Spinal fluid test

Ultrahigh-sensitivity HISCL™

Helping to Reduce the Physical, Emotional and Economic Burden on Patients „ Endemic Areas for Malaria Individuals affected: 198 million/year Deaths: 580,000/year

Malaria deaths per 100,000 people (2013) 100 or more

1–9

No malaria transmission

50–99

Fewer than 1

Not applicable

10–49

Estimated malaria deaths equal zero

Source: WHO “World Malaria Report 2014”

XN-30™ multiparameter automated hematology analyzer

60

Enhancing Corporate Value

Sysmex Report 2017

Responsible Provision of Products and Services

Environmental Consideration

As a healthcare company, we strive to increase quality and ensure the stable supply of products and services.

We engage in environmentally considerate business activities and strive to reduce the environmental impact of products when used by customers.

Building Structures to Enhance Quality and Ensure Stable Supply

Formulating and Pursuing Long-Term Environmental Objectives

outlines the Company’s fundamental perspective on selecting business partners and engaging in procurement

emissions from distribution. By providing environmentally considerate products, we are helping to reduce the envi-

transactions. We are building a value chain in accordance Instilling confidence in its customers and business part-

with this policy. In addition, we are working to reinforce

As a company developing its operations globally, Sysmex

ronmental impact of products when used by customers.

ners has been a matter of importance at Sysmex since

our relationships with business partners so that transac-

recognizes increasingly serious environmental issues

For our fully automated analyzers of formed elements in

the time of its founding. Our products are used in clinical

tions are based on their understanding of Sysmex’s busi-

as a topmost priority. Accordingly, we have formulated

urine, launched in 2015, we switched to more environ-

testing, so they play a vital role in protecting people’s lives

ness directions and procurement policy. Also, in the fiscal

long-term environmental objectives in the Sysmex Group

ment-friendly and safer reagents that eliminate the need

and health. Being fully aware of this important responsibil-

year ended March 31, 2017, we conducted CSR surveys

Environmental Action Plan (Sysmex Eco-Vision 2020).

for processing waste liquid with neutralizing agents.

ity, Sysmex has put in place systems to ensure product

of 280 existing business partners to confirm the status of

and service quality, safety, and stable provision.

their CSR activities.

For instance, we have established the Vigilance Division to cultivate the sharing of information with the

As part of our environmental consideration related

investigates and analyzes such information from customers, and feeds their analysis results to relevant customers

If testing is interrupted, physicians may become unable to

while also sharing them with design, manufacturing and

accurately diagnose patients. For this reason, it is essential

other related functions, so that these findings may be ap-

to ensure a stable supply of reagents, which are used each

plied to quality improvement and product development.

time a test is conducted. To prevent reagent supplies from being interrupted even in the event of emergency, we are

environmental impact at business offices, including mea-

to marine transport for overseas exports and optimiz-

sures to reduce greenhouse gas emissions and increase

ing package sizes in order to increase container loading

the recycling rate.

 Long-Term Environmental Objectives of the Sysmex Group Environmental Action Plan (Sysmex Eco-Vision 2020) and Results of the Fiscal Year Ended March 31, 2017 Sysmex Eco-Vision 2020

Environmental consciousness in product life cycle process  Promote eco-friendly products and service models

reinforcing overseas production and dispersing risk by

Reinforcing Supply Chain Management

increasing the number of suppliers of key ingredients. At the same time, we are building a system through which

Delivering high-quality products to customers in a stable

factories can provide supplies to each other in emergen-

manner requires the cooperation of our business part-

cies. We have created an internal BCP manual on product

ners. Sysmex has formulated a Procurement Policy, which

supply and conduct simulation training.

„ Product Quality and Vigilance Control System

Efficacy/safety information

Ministry of Health, Labour and Welfare 3KDUPDFHXWLFDOVDQG0HGLFDO'HYLVHV$JHQF\

Proper testing/diagnosis

Medical technologists and other clinical professionals Gathering of efficacy/safety information

Provision of medical information Gathering of efficacy/ safety information

Sales reps

Instructions/ guidance

Information provision, response Gathering

Reporting Information sharing, cooperation

Vigilance division

Information sharing, cooperation

Provision of information Gathering of efficacy/safety information

Sysmex Group

Gathering

Partners both in Japan and overseas

Overseas Group companies

ȉLiterature both from Japan and overseas ȉ$FDGHPLFLQIRUPDWLRQ ȉResearch information ȉInformation on new development

Fiscal Year Ended March 31, 2017: Results and Key Initiatives (Against Base Year)

Results: • Continued working to reduce electricity use and achieve better compactness in the development of new products • Continued efforts to develop alternatives for animal-derived substances in reagents • By adopting concentrated reagents, decreased reagent switching time and achieved reduction in waste • To reduce waste, increased the number of instrument varieties employing reusable packaging materials

Reduce carbon dioxide emissions Result: 32% reduction (4.937t-CO2/hundred million yen) for logistics by 50% • For exports, promoted shift from air to ocean transport • Optimized product package sizes and conducted loading simulations to increase container loading efficiency

Environmental consciousness at business offices  Reduce greenhouse gas emissions Result: 27% reduction (7.36t-CO2/hundred million yen) at business offices by 50% • Reduced use of electricity by improving production efficiency

Direct reporting

Information provision, response

Customer information



(per unit of nonconsolidated sales) Base year: Fiscal year ended March 31, 2011

Patients

We are also mounting global initiatives to reduce

to products and services, we are transitioning from air

Constructing a Stable Supply System

aim of augmenting product quality and safety. This division

61

efficiency. These efforts have substantially reduced CO2

(per unit of consolidated sales) Base year: Fiscal year ended March 31, 2009

Achieve a recycle rate of 93% or higher at all business offices  Reduce water usage at reagent factories by 10% 

(per unit of amount of production) Base year: Fiscal year ended March 31, 2009

(Sysmex International Reagents) • Reduced CO2 emissions by using solar power (Reagent factory in Germany, i-Square) Result: 91.8% • Reused packaging material on purchased items (Sysmex Wuxi) Result: 18% increase* (25.4m3/thousand boxes) • Reused reverse-osmosis (pure) wastewater through improvement of ultrapure water plant (Sysmex Asia Pacific) • Reused industrial waste water after treatment (Sysmex India) * The volume of water resources used increased in line with factory expansion and production increases. We continue with initiatives to increase the efficiency of manufacturing processes.

Please see our website for medium-term objectives and detailed initiatives for reaching the goals outlined in Sysmex Eco-Vision 2020. http://www.sysmex.co.jp/en/csr/

62

Enhancing Corporate Value

Sysmex Report 2017

Realization of an Attractive Workplace

Sysmex is working to develop diverse human resources and create an attractive and pleasant working environment.

Promoting Diversity

(%) Category

As part of its initiatives respecting diversity, Sysmex aims to create a working environment that makes the most of individual employees’ capabilities without regard to

Percentage of Female Managers (Director Level or Above)

Sysmex Corporation Overall Group

2015.3

2016.3

2017.3

6.5

8.3

8.8

11.6

14.3

16.2

nationality, race, gender, or physical disability. To encourage the employment of women, we have put in place a host of leave systems to support a balance between work and child-rearing, as well as a work-at-home

Realization of an Attractive Workplace

Promoting Global Human Resource Development

Sysmex considers human resources an important man-

system, and opened an in-house daycare center. As a result, the number of female managers at Sysmex Corporation has risen to 8.8% (up 2.3 percentage points over two years). For

agement resource for achieving sustainable growth, and

Throughout the Group, Sysmex has around 8,000

the Group as a whole, this figure has grown to 16.2%, up

invests in the recruitment and cultivation of diverse human

employees, with overseas employees accounting for more

4.6 percentage points over the same period.

resources. Our human resource development system is

than 55% of this total. We are a global company, with

designed to develop skills in an ongoing, planned manner.

Group companies operating in more than 40 countries.

an effort to provide a comfortable working environment

We promote diversity and inclusion, and we have intro-

To promote this globalization and provide opportunities

for people with disabilities. In April 2017, we established

duced various systems aimed at making the workplace more

for growth to employees around the world, in the fiscal

Sysmex Harmony Co., Ltd., as a new company to promote

motivating. We strive to create a working environment that

year ended March 31, 2015, we formulated a global

the employment of people with disabilities and realize an

maximizes the skills of diverse human resources and pro-

human resource development system to facilitate human

inclusive society.

vides individual employees with opportunities for growth.

resource development throughout the Group. In the same

Through these initiatives, in line with the positioning

Sysmex is also introducing barrier-free facilities in

Kids Park, our in-house daycare center

year, Sysmex opened the Global Communication Center Creating a Working Environment That Maximizes Skills (Third-Party Evaluations)

of our long-term management targets, we aim to be “an

in Japan, as a place for human resource development and

attractive company providing value and confidence” to our

exchange. We are promoting initiatives to enhance a sense

employees and other stakeholders.

of unity within the Group, develop next-generation human

To create a working environment amenable to diverse human re-

resources, strengthen networks within the Group and foster

sources, we support work-life balance in regions around the world.

cultural understanding.

Employee satisfaction has risen as a result, and we are highly rated from outside the Company.

Initiatives Targeting Global Human Resource Exchanges



“Great Place to Work” Sysmex Europe (2012, 2014, 2016) Sysmex Brazil (2014)



“Companies That Care Honor Roll,” a ranking of companies that contribute to the welfare of employees, their families and the local community Sysmex America (2009–2017)



A good company to work for, “HR Asia Best Companies to Work for in Asia 2015” Sysmex Asia Pacific (2015, 2016) Sysmex Malaysia (2016)



Nikkei ranking of “Companies that Motivate People” Sysmex Corporation (2016) had an overall ranking of 27th out of 462 companies.



In 2017, we were recognized for excellence in health management in the large company division (White 500). Sysmex Corporation (2017)



We received the top-level (Level 3) “Eruboshi” mark for promotion of women’s participation and advancement in the workplace. Sysmex Corporation (2016)

In 2012, we introduced a Global Exchange Program to promote interaction among human resources throughout the Group. Employees engage in dialogue about the “Sysmex Way,” introduce their regions and visit customers together. These activities help promote mutual understanding and foster a sense of Group unity. In the fiscal year ended March 31, 2017, 20 employees from 11 countries visited Japan as part of this program. Comment from a Participant

Andres Camperos Sysmex Colombia

“Interacting with Sysmex employees from around the world was a great opportunity to deepen my understanding of the Sysmex Way and global business developments.”

63

Sysmex Brazil receives award as a “Great Place to Work”

64

Enhancing Corporate Value

Sysmex Report 2017

Corporate Governance

„ Corporate Governance Structure

By enhancing management soundness and transparency, we aim to maximize the corporate value of the entire Group.

Shareholder’s Meeting

Election/Dismissal

Managing Board Members of the Managing Board (Excluding members of the Audit and Supervisory Committee)

Election/Dismissal

Election/Dismissal

Audit and Supervisory Committee

Auditing/ supervision Members of the Managing Board (Members of the Audit and Supervisory Committee)

Cooperation

Nominating Committee

Management Organization

and enhancing the corporate governance system. We are also strengthening the Managing Board’s audit and supervi-

Sysmex recognizes that reinforcing corporate governance

sory functions by appointing outside members.

is an important management issue. In accordance with the

12 members of the Managing Board (of whom four are

Group, we have adopted a structure designed to augment

outside members). Three members of the Managing

management soundness and transparency, as well as

Board are also members of the Audit and Supervisory

increasing management speed and efficiency. In June

Committee (of members of the Audit and Supervisory

2016, Sysmex transitioned from a company with a Board

Committee, two are outside members of the Managing

of Corporate Auditors to a company with an Audit and

Board). Furthermore, the Company has 18 executive of-

Supervisory Committee. By giving Managing Board voting

ficers (of whom six are also members of the Managing

rights to members of the Managing Board who are mem-

Board). In addition, the Company has introduced an

bers of the Audit and Supervisory Committee, we are rein-

executive officer system to speed up its decision-making

forcing the Managing Board’s audit and supervisory func-

on business execution and respond more swiftly to chang-

tions, increasing management transparency and objectivity,

es in the business environment.

„ Advances in Corporate Governance ’05

’06

’07

’08

’09

’10

’11

’12

’13

’14

’15

’16

2018.3–

’17

From June 2016 Company with an Audit and Supervisory Committee

Company with a Board of Corporate Auditors Management organization Adopting Executive Officer System

Members of the Managing Board

Note: Two years for members of the Audit and Supervisory Committee

Two years

11

10

Business Execution

Nine

Eight

Seven

(Of whom, outside members)

Nine

(One)

Accounting standards

13

From June 2017 12 (one woman)

(Four)

Two (out of four standing corporate auditors)

Japanese GAAP

Risk Management Committee

Global Strategy Committee Steering Committee

Executive Officers

Founding philosophy

IFRS

“Sysmex Way,” the corporate philosophy for the Sysmex Group (Fiscal years to March 31)

65

Compliance Committee

Accounting Auditing

Divisions, Subsidiaries and Affiliates

Organization

Managing Board

Activities

Members

Deliberate important matters related to management

Global Strategy Committee

Meetings in the fiscal year ended March 31, 2017

16 Members of the Managing (rate of attendance: Board 100%) Chairman and CEO and 13 senior executive officers

Deliberate on the Group’s management direction and matters of strategic important Deliberate important matters related to overall Group Chairman and CEO and operations as an advisory body to facilitate decision-making executive officers by the Chairman and CEO Steering Committee (Note) In addition to the above, in April 2017 we began holding meetings of executive officers to resolve Executive officers issues on operationally important projects.

Evaluating the Effectiveness of the Managing Board

15



organizing points at issue, and providing related information necessary to understand the background.

To enhance the effectiveness of the Managing Board,

addressing and deliberating the Managing Board’s agenda

the Company conducted a survey of all members of the

is appropriate, and individual members of the Managing

Managing Board (including members of the Audit and

Board leverage their knowledge and experience to engage

Supervisory Committee) and evaluated the Managing

in deliberation. Proposals have been made with regard to matters

Managing Board on the survey’s results. An overview of

introduced by individual members of the Managing Board

the analysis and evaluation of results follows.

to be deliberated by and reported to the Managing Board,

(Composition) The scale of the Managing Board and ratio

operation of the Managing Board, and necessary materi-

of independent outside members of the Managing Board

als. Regarding these proposals, the Managing Board has

are generally appropriate, both in nature and diversity.

determined that it will respond to operational issues and

(Operation) The provision of information necessary to

continue to discuss medium-to long-term issues.

fully discuss the Managing Board’s agenda is generally apPhilosophy

Accounting Auditors

Chairman and CEO

Board’s effectiveness based on discussions with the

One Corporate auditors (out of three standing (outside) corporate auditors)

Cooperation

(Status of Agenda and Deliberation) The time for One year

Term of office for members of the Managing Board

Internal Audit Office

The management structure currently comprises

“Sysmex Way,” the corporate philosophy for the Sysmex

’04

Compensation Committee

Going forward, the Company’s Managing Board will

propriate. To further improve effectiveness, the Company

be evaluated regularly, in the aim of further enhancing

is working to improve the Managing Board’s opera-

its effectiveness.

tion through the distribution of materials beforehand,

66

Enhancing Corporate Value

Sysmex Report 2017

Corporate Governance

operating performance and responsibility for achievements.

Audit and Supervisory Committee

Compensation for members of the Managing Board (ex-

internal and external. Information received through these

Responding to Japan’s Corporate Governance Code

lines is handled anonymously to protect people consulting

Of the three members of the Audit and Supervisory

cluding members of the Managing Board who are mem-

Committee, two are outside members of the Managing

bers of the Audit and Supervisory Committee) divides

Sysmex complies with each of the principles of Japan’s

Board. Members of the Audit and Supervisory Committee

broadly into fixed and variable portions. Fixed compensa-

Corporate Governance Code, introduced by the Tokyo

third-party evaluations of our systems for promoting

attend meetings of the Managing Board, as well as of

tion is determined on the basis of a member’s position,

Stock Exchange. We publish reports submitted to the

compliance and their operational status. Based on these

the Global Strategy Committee and Steering Committee.

while variable compensation (including stock options)

Tokyo Stock Exchange on our website.

results, in the fiscal year ended March 31, 2017, we im-

In this way, members of the Audit and Supervisory

varies depending on performance. Compensation for

proved and expanded our internal reporting system to

Committee monitor the appropriate execution of duties

Members of the Managing Board (Audit and Supervisory

include key Sysmex Group companies overseas.

by members of the Managing Board. Depending on the

Committee), corporate auditors and outside members

details of Internal Audit Office activities, the Audit and

of the Managing Board comprises only a fixed portion.

Supervisory Committee is in place to provide instruction

Compensation amounts for members of the Managing

Based on our Group philosophy, the “Sysmex Way,” we

to the Internal Audit Office, as necessary.

Board (excluding members of the Managing Board who

define our view of compliance as “conducting business

or providing information from any disadvantage.

Compliance Risk Management

are members of the Audit and Supervisory Committee) are

activities not only in compliance with applicable laws and

To control groupwide risk management activities, Sysmex

with the accounting auditors on the audit plans report

discussed and determined by the Managing Board follow-

regulations, but also based on fairness and high ethical

established a Risk Management Committee, which is

(annual), the audit results reports (annual), and conduct-

ing deliberation by the Compensation Committee.

standards.” In accordance with this definition, we have

chaired by a risk management officer, the Group’s chief

established a Global Compliance Code, in which particu-

executive in charge of risk management. This committee

larly important conformance rules and behavioral guide-

identifies major risks having the potential to significantly

lines for all Group executives and employees to abide by,

impact the Group’s business. The committee also moni-

and conduct training and work to instill this code. The

tors the risk management status of individual divisions

code describes our thoughts on ethics in relation to

and affiliated companies and deliberates countermeasures

research and development, prevention of bribery and

in the event of a crisis with the potential to significantly

adherence to international guidelines such as the

affect Group management.

The Audit and Supervisory Committee works closely

ing internal control audits related to financial reporting by

Fixed compensation

exchanging information and opinions as necessary.

42% Compensation for Members of the Managing Board in the Fiscal Year Ended March 31, 2017

Executive Compensation (Fiscal Year Ended March 31, 2017)

(Excluding Outside Members)

Sysmex determines executive compensation amounts

Universal Declaration on Human Rights, as well as conVariable compensation

and calculation methods by making a clear link between

58%

 Breakdown of Executive Compensation (Fiscal Year Ended March 31, 2017)

Sysmex has established internal reporting systems

to ensure it can fulfill its corporate responsibilities and

in Japan and overseas to resolve any compliance issues

supply products and services in a stable manner in the

quickly. The “Campanula Lines,” our reporting system

event of a disaster. Our BCPs identify products to be given

in Japan, has two lines for consultation and reporting:

provision priority so that our instruments can continue to function in a stable manner at healthcare institutions even in crisis situations. We have also prepared disaster-

Executives Receiving Compensation Total compensation by category (¥ million) Total compensation Basic Retirement Stock options Bonuses (¥ million) compensation benefits

Executive category

Members of the Managing Board (Excluding members of the Audit and Supervisory Committee) (excluding outside members) Members of the Managing Board (Members of the Audit and Supervisory Committee) (excluding outside members) Corporate auditors* (excluding outside corporate auditors) Outside executives

response regulations and manuals, including basic disasNumber of executives

ter-response regulations, putting in place systems that „ The “Campanula Lines” Internal Reporting System

638

260



377



18

18







1

9

9







2

26

26







5

Compliance leaders

on the organizations with which it collaborates on R&D and other testing. We recognize the importance of protecting information such as this, as well as of other impor-

In-house contact

External line (law firm)

Executives Receiving Total Compensation of ¥100 Million or More

Hisashi Ietsugu

Member of the Managing Board

Company category

Submitting company

Amount of compensation by type (¥ million) Basic Retirement Stock options Bonuses compensation benefits

59



tant corporate secrets, and view the leak of such corporate secrets as a significant risk to the Group. Accordingly, we have in place structures to prevent this risk from material-

Reply

Executive category

enable us to respond swiftly in emergencies. Sysmex handles data about its customers, as well as

8

* The Company was a company with corporate auditors through the fiscal year ended March 31, 2016.

Name

Sysmex formulates business continuity plans (BCPs) for its manufacturing, procurement and other functions

serving the global natural environment.

Total Amount of Executive Compensation by Executive Category, Total Amount by Type of Compensation and Number of

67

In the fiscal year ended March 31, 2016, we received

129



Consultation

E-mail, postal mail, telephone

E-mail, Consultation postal mail, telephone

Total compensation (¥ million)

Sysmex Group employees

188

(full-time employees, contract employees, part-time employees, temporary employees)

izing. To clarify our policies on ensuring information safety Reply

and security, in the fiscal year ended March 31, 2017 we formulated consistent global regulations for information security for all Group companies, reinforcing organizational countermeasures to information leaks and cyber threats.

68

Enhancing Corporate Value

Sysmex Report 2017

Corporate Governance

IR Activities to Enhance Corporate Value Sysmex recognizes that investor relations activities are an

Proactive Disclosure Meanwhile, we strive to introduce information about

In addition to financial results briefings and conference

important facet of corporate management, and discloses

our business to individual shareholders and investors in an

calls, in the supplements to its financial results Sysmex

appropriate information in a timely manner. By commu-

easy-to-understand manner via shareholder newsletters,

proactively discloses voluntary information such as oper-

nicating directly with shareholders and investors, we have

our website and various video content.

ating performance by geographic region, type of business

also put in place a system to quickly provide third-party evaluations and requests as feedback to management. At meetings with institutional investors and analysts, we engage proactively on such themes as R&D, sharehold-

At briefings and through shareholder newsletters, we

and product category. At our annual technology pre-

regularly obtain information through questionnaires and

sentations, we explain our R&D successes and Sysmex’s

pass on evaluations from our shareholders and the market

future potential.

to our management.

In the fiscal year ended March 31, 2017, we voluntarily

er returns and capital policies, as well as our management

adopted the International Financial Reporting Standards

strategies, business model and medium-term management

(IFRS). Our aim is to enhance convenience to shareholders

plans. Although headquartered in Kobe, Sysmex visits

and investors by facilitating the international comparison

„ Objectives of Sysmex’s IR Activities

locations including Tokyo, the United States, and European

Company tour for individual shareholders

of financial information.

and Asian countries to conduct IR meetings. In the fiscal year ended March 31, 2017, we conducted 325 meetings.

Obtain evaluations and requests from capital markets

Sysmex also provides opportunities for direct interaction, such as hosting tours of its facilities and business offices in Japan. In the fiscal year ended March 31, 2017,

 Major Awards (IR Activities)

as an initial trial we held an IR Day at our human resource Sponsor

development center. This event enabled us to provide fuller explanations on such topics as Sysmex’s corporate culture, the invisible value generated by our human resources and the business strategy for personalized medicine, which we are focusing on. Also, at our technology presentation we introduced current R&D projects underway at our R&D facilities.

Enhance corporate value through Disseminate dialogue high-quality information in a timely manner

Reflect promptly in management and IR activities

Awards

Institutional Investor

Ranked in five categories by Institutional Investor 2017 in the Japanese healthcare and pharmaceuticals category, including “Best CEOs” and “Best IR Professionals”

Japan Investor Relations Association

20th “IR Grand Prix Award” (only two companies selected out of the 263 participating)

Securities Analysts Association of Japan

Selected for excellence in disclosure at the 2015 Awards for Excellence in Corporate Disclosure, ranking first in the pharmaceuticals category and in excellence in disclosure to individual investors

 Principal IR Events Event

69

Activities

Technology presentations

Explanations from people in charge of R&D divisions about R&D progress In the fiscal year ended March 31, 2017, we introduced actual instruments at Technopark, our R&D hub.

Sysmex IR Day (business office tours)

Every other year In the fiscal year ended March 31, 2017, we provided explanations on the invisible value generated by Sysmex’s corporate culture, and our human resources and our business strategy for personalized medicine.

Overseas facility tours

Every other year Tours of hospitals and other facilities actually using our products and explanations by executives at local subsidiaries about the market and Sysmex’s strengths

Company tours for individual shareholders

Tours of instrument factories and other business offices

Company briefings for individual investors

Company briefings at major cities throughout Japan by top management and people in charge of IR

IR meetings

Participation in conferences hosted by securities companies, visits to institutional investors in the United States and European and Asian countries, and meetings with investors and analysts in Japan and overseas

70

Enhancing Corporate Value

Sysmex Report 2017

Members of the Managing Board

Hisashi Ietsugu

Yukio Nakajima

Kaoru Asano

Junzo Yamamoto

Susumu Nishiura

Masayo Takahashi

Chairman and CEO

Member of the Managing Board and Senior Executive Officer, Senior Managing Director

Member of the Managing Board and Senior Executive Officer, Senior Managing Director

Member of the Managing Board and Senior Executive Officer, Managing Director

Member of the Managing Board (Outside) Independent Director

Member of the Managing Board (Outside), Independent Director

Corporate Business Planning and Administration

R&D Strategic Planning, Next-Core Business

Manufacturing and SCM

Apr. 1973 Joined the Company Jun. 1999 Member of the Managing Board, Executive Vice President of Corporate Business Planning Apr. 2005 Member of the Managing Board and Executive Officer, Vice President of Corporate Business Planning Apr. 2009 Member of the Managing Board and Senior Executive Officer, Managing Director Apr. 2013 Member of the Managing Board and Senior Executive Officer, Senior Managing Director (current)

Aug. 1987 Joined the Company Apr. 2009 Executive Officer, Manager of Central Research Laboratories Apr. 2011 Executive Officer, Executive Vice President of R&D Strategic Planning Apr. 2013 Senior Executive Officer Jun. 2014 Member of the Managing Board and Senior Executive Officer Apr. 2015 Member of the Managing Board and Senior Executive Officer, Managing Director Apr. 2017 Member of the Managing Board and Senior Executive Officer, Senior Managing Director (current)

Mar. 1980 Joined the Company Apr. 2011 Executive Officer, Executive Vice President of Instrument Production Apr. 2015 Senior Executive Officer Apr. 2017 Senior Executive Officer, Managing Director Jun. 2017 Member of the Managing Board and Senior Executive Officer, Managing Director (current)

Apr. 1969 Joined TOA Electric Co., Ltd. (current TOA Corporation) Jun. 1998 Member of the Managing Board Oct. 2004 Member of the Managing Board and Senior Executive Officer, Managing Director Jun. 2008 Member of the Managing Board and Senior Executive Officer, Senior Managing Director Jun. 2010 Retired from TOA Corporation Jun. 2013 Joined the Company, Member of the Managing Board (current)

Oct. 1992 Ph.D. of Medicine and Assistant Professor of Ophthalmology, Kyoto University Hospital Oct. 2001 Associate professor, Team Leader of Retinal Regeneration Project, Translational Research Center, Kyoto University Hospital Apr. 2006 Team Leader, Laboratory for Retinal Regeneration Research, RIKEN Center for Developmental Biology, Japan Nov. 2014 Project Leader, Laboratory for Retinal Regeneration Research, RIKEN Center for Developmental Biology, Japan (current) Jun. 2016 Joined the Company, Member of the Managing Board (current)

Sep. 1986 Joined the Company, Member of the Managing Board Mar. 1990 Member of the Managing Board and Senior Executive Officer, Managing Director Feb. 1996 Member of the Managing Board and Senior Executive Officer, Managing Director (Representative Director) Apr. 1996 Member of the Managing Board and Senior Executive Officer, Senior Managing Director (Representative Director) Jun. 1996 President and CEO Apr. 2013 Chairman and CEO (current)

Reasons for Appointing He was appointed to utilize his abundant experience and deep insight in corporate management for management of the Company.

Reasons for Appointing Holding the positions of Chairman and CEO of the Company, he has managed all of Sysmex and provided strong leadership for many years. He was appointed because he will be essential for increasing the corporate value with his sense of balance, enabling appropriate supervision and decision-making of the entire management based on his insight and abundant experience and achievements as a corporate manager.

Reasons for Appointing He has been involved in planning and administration departments, including Corporate Business Planning, Corporate Business Administration, IR, HR and General Affairs for many years and has contributed to the strengthening of the Company’s management base. He was appointed because his abundant experience and wide-ranging insight will be essential for increasing corporate value.

Kenji Tachibana

Kazuya Obe

Mitsuru Watanabe

Yukitoshi Kamao

Koichi Onishi

Kazuhito Kajiura

Member of the Managing Board and Senior Executive Officer, Senior Managing Director

Member of the Managing Board and Senior Executive Officer, Managing Director

Member of the Managing Board and Senior Executive Officer, Managing Director

Member of the Managing Board (Member of the Audit and Supervisory Committee)

Business Strategy Development, Core Business

Global Marketing

Scientific Affairs, Bio-Diagnostics Reagent Technology

Member of the Managing Board (Outside) (Member of the Audit and Supervisory Committee), Independent Director

Mar. 1980 Joined the Company Apr. 2011 Executive Officer, Executive Vice President of IVD Business Development Apr. 2013 Senior Executive Officer Jun. 2014 Member of the Managing Board and Senior Executive Officer Apr. 2015 Member of the Managing Board and Senior Executive Officer, Managing Director Apr. 2017 Member of the Managing Board and Senior Executive Officer, Senior Managing Director (current)

Apr. 1991 Joined the Company Apr. 1996 President of TOA Medical Electronics (Europe) GmbH (current Sysmex Europe GmbH) Oct. 2002 Chairman of the Board of Sysmex Corporation of America (current Sysmex America, Inc.) Apr. 2005 Executive Officer, Executive Vice Chairman & CEO of Sysmex America, Inc. Jun. 2009 Member of the Managing Board and Executive Officer Apr. 2013 Member of the Managing Board and Senior Executive Officer, Managing Director (current)

Mar. 1980 Joined the Company Apr. 2005 Executive Officer, Executive Vice President of R&D Strategic Planning Jun. 2009 Member of the Managing Board and Executive Officer Apr. 2013 Member of the Managing Board and Senior Executive Officer, Managing Director (current)

Mar. 1978 Joined the Company Apr. 2013 Executive Officer, Executive Vice President of Business Administration Jun. 2016 Member of the Managing Board (Member of the Audit and Supervisory Committee) (current)

Member of the Managing Board (Outside) (Member of the Audit and Supervisory Committee), Independent Director Jul. 1971 Jun. 2002 Apr. 2004 Apr. 2007 Jun. 2010

Sep. 1972 Joined Tohmatsu Awoki & Co. (current Deloitte Touche Tohmatsu LLC) Jun. 1989 Partner, Tohmatsu Awoki & Sanwa (current Deloitte Touche Tohmatsu LLC) Jan. 2013 Retired from Deloitte Touche Tohmatsu LLC Jun. 2016 Joined the Company, Member of the Managing Board (Member of the Audit and Supervisory Committee) (current)

Reasons for Appointing He has been involved in business strategy development and international businesses and has contributed to strategic and global business development. He was appointed because he will be essential for increasing corporate value through the growth of businesses.

71

Reasons for Appointing He has been involved in instrument production and supply chains for many years and has contributed to strengthening the production system. He was appointed because his experience and insight will be essential for increasing corporate value.

Reasons for Appointing He has been involved in international business serving as representatives of several overseas regional headquarters for many years and has contributed to global business development. He was appointed because his abundant experience and wide-ranging insight will be essential for increasing corporate value.

Reasons for Appointing He has been involved in research and technology development for many years and has contributed to business development. He was appointed because leveraging his experience and insight in new R&D will be essential for increasing corporate value.

Reasons for Appointing He has been involved in product and market development for many years and has contributed to business development. He was appointed because his wide-ranging insight will be essential for increasing corporate value.

Reasons for Appointing He was appointed to utilize his experience and specialized expertise related to corporate management, which is necessary to increase the audit and supervisory functions.

Jun. 2010 Jun. 2013 Jun. 2014 Jun. 2016

Joined Kobe Steel, Ltd. Executive Officer Managing Executive Officer Senior Managing Executive Officer Retired from Senior Managing Executive Officer of Kobe Steel, Ltd. President of Nippon Koshuha Steel Co., Ltd. Executive Corporate Adviser Joined the Company, Corporate Auditor Member of the Managing Board (Member of the Audit and Supervisory Committee) (current)

Reasons for Appointing He was appointed to utilize his abundant experience and deep insight into corporate management for audits of the Company.

Reasons for Appointing She was appointed to utilize her abundant experience and deep insight relating to advanced medical research, medical ethics and other fields as a clinician and researcher for management of the Company.

Reasons for Appointing He was appointed to contribute to ensuring the soundness and transparency of the Managing Board, enhancing its audit oversight functions, and other matters, with his professional expertise and experience as a certified public accountant, and his extensive experience in such as leading and auditing global companies.

72

Enhancing Corporate Value

Sysmex Report 2017

Messages from Outside Members of the Managing Board

Susumu Nishiura

Masayo Takahashi

Koichi Onishi

Kazuhito Kajiura

Member of the Managing Board (Outside)

Member of the Managing Board (Outside)

Member of the Managing Board (Outside) (Member of the Audit and Supervisory Committee)

Member of the Managing Board (Outside) (Member of the Audit and Supervisory Committee)

I have the sense that Sysmex’s Managing Board practices

Sysmex’s stance is to achieve advances in healthcare

Last year, Sysmex made the transition to a company with

I conduct my operations based on the spirit of acting in-

corporate governance through free and lively expression

by consistently embracing new technologies, concepts,

an Audit and Supervisory Committee. By giving voting

dependently according to my own beliefs I have cultivated

that takes diverse opinions into consideration. As an out-

methods and systems. This is in line with my own

rights to members of the Audit and Supervisory Board,

in my many years as a certified public accountant. On the

side member of the Managing Board, I consider my roles

approach toward work. Since being appointed as an out-

their voices are reinforced on the Managing Board. The

Managing Board, in addition to participating actively in

to be supervising the execution of business by taking into

side member of the Managing Board last year, I have done

Audit and Supervisory Committee is composed of a good

discussions and enhancing accountability, I express my

account the general shareholders and other stakeholders,

my best to help the Company move forward through its

balance of members with different types of experience. In

opinions from the perspective of the legality and suitabil-

and enhancing corporate value. To ensure even more

execution of business.

my view, this structure enables the committee to audit the

ity of management activities, as well as timely disclosure,

business from a variety of angles and function effectively.

with the aims of increasing management efficiency and

appropriate decisions going forward, I will work to increase

Sysmex contributes to the advancement of healthcare

communications on the Managing Board and clarify the

from a different perspective than has been evident to date

Due to my many years of experience in manufacturing, my

augmenting the monitoring function. By transitioning to

decision-making process.

by companies involved in drug discovery and the develop-

overriding focus on this committee tends toward such ar-

a company with an Audit and Supervisory Committee,

Sysmex has enjoyed substantial growth in its existing

ment of therapies. I see Sysmex’s experience and perfor-

eas as cost control, quality control, health and safety, and

Sysmex has strengthened authorities and the auditing

businesses, and cannot be easily overtaken by competi-

mance from this viewpoint, as well as its forward-looking

environmental disaster prevention. In particular, I consider

function. As an outside member of the Managing Board

tors. Despite this strength, however, I believe that an im-

stance, as major strengths. At the same time, technologi-

operations from the perspective of internal control and

and a member of the Audit and Supervisory Committee,

portant topic for the Company will be the ability to quickly

cal breakthroughs occur swiftly nowadays, and the more

risk management.

I will express my opinions energetically to redouble the

create its next core businesses amid the rapid progress

cutting-edge the technologies, the more important it is

in healthcare technologies. As steppingstones to sustain-

for them to begin contributing to corporate performance

profits. In addition to external factors such as exchange

able growth, Sysmex has defined long-term management

as quickly as possible. To ensure sustainable growth into

rates, I think there were also issues with promoting new

targets and formulated a mid-term management plan.

the future, a company requires a spirit of challenge that

businesses that will serve as new pillars of growth. To

is highly competitive in hematology and other core busi-

In order to reach these goals, I will endeavor to express

enables it to absorb state-of-the-art technologies in new

expand further, in addition to relying on the president’s

nesses. Even so, expanding and strengthening its next core

myself proactively to ensure that the Company responds

fields. I hope that Sysmex will remain consistently proac-

outstanding management sense and leadership, I believe

businesses is a matter of some urgency, due to the chang-

appropriately in reforms to its business portfolio.

tive and continue to grow by leveraging its strengths.

individual employees need to be more aware of the

ing management environment in the healthcare business,

“Sysmex Way” and go about their business with passion

which is characterized by such factors as the pursuit of

advances in the world’s healthcare, I will take advantage

and a strong sense of mission toward achieving goals. For

further advances in healthcare and policies for contain-

of my own long years of experience in medical settings

my part, I will provide the check to ensure against legal

ing healthcare costs. To this end, the Company needs to

and the development of therapies. I also plan to maintain

violations and other negative factors, but in addition I

augment its global communications structure and recruit

my approach of advising management from the objective

consider it necessary for me to audit the Company from

and nurture more global human resources. As an outside

viewpoint of academia and healthcare professionals.

the standpoint of whether the Company is maintaining a

member of the Managing Board, I also would suggest the

proactive stance.

Company pursue further reforms in the acquisition and

To ensure Sysmex is able to continue contributing to

This year, Sysmex experienced a decline in sales and

effectiveness of corporate governance and help realize the “Sysmex Way.” Sysmex has a high percentage of overseas sales and

cultivation of human resources.

73

74

Enhancing Corporate Value

Executive Officers

Financial and Other Information

Back row, from left: Tomokazu Yoshida, Mamoru Kubota, John Kershaw, Hiroshi Nagao, Juergen Schulze, Peng Zuo Hui, Kensuke Iizuka Front row, from left: Keiji Fujimoto, Hiroshi Kanda, Iwane Matsui, Yukio Hamaguchi, Ikuo Otani

Iwane Matsui

Yukio Hamaguchi

Juergen Schulze

Senior Executive Officer

Executive Officer

Executive Officer

Deputy head of Global Marketing

President and CEO, Sysmex International Reagents Co., Ltd.

President and CEO, Sysmex Europe GmbH

Keiji Fujimoto

Mamoru Kubota

Executive Officer

Executive Officer

Regulatory Affairs & Quality Assurance

Executive Vice President of LS Business

Ikuo Otani

Peng Zuo Hui

Executive Officer

Executive Officer

Deputy head of Core Business

President and CEO, Sysmex Shanghai Ltd.

Hiroshi Kanda Senior Executive Officer Deputy head of Core Business Executive Vice President of ICH Business Development

Hiroshi Nagao Executive Officer Executive Vice President of Corporate Business Administration

John Kershaw Executive Officer Chairman, Sysmex America, Inc. Deputy head of Core Business

Tomokazu Yoshida

Contents

Executive Officer

Financial Information

Executive Vice President of Central Research Laboratories MR Business Development

Consolidated Financial and Non-Financial Data (10 Years) ........ 77 Management’s Discussion and Analysis ............................................... 79

Kensuke Iizuka Executive Officer Deputy head of Corporate Business Planning and Administration

Consolidated Statement of Financial Position .................................. 83 Consolidated Statement of Income........................................................ 85 Consolidated Statement of Comprehensive Income ..................... 86 Consolidated Statement of Changes in Equity ................................. 87 Consolidated Statement of Cash Flows................................................ 88

75

76

Financial and Other Information

Sysmex Report 2017

Consolidated Financial and Non-Financial Data (10 Years) Japanese GAAP

(Billions of yen)

Fiscal years ended March 31

2008

2009

2010

2011

2012

2013

2014

2015

2016

For the year:

IFRS

(Billions of yen)

Fiscal years ended March 31

2016

2017

For the year: 110.7

111.8

116.1

124.6

134.7

145.5

184.5

221.3

253.1

15.0

15.1

15.7

18.2

19.2

21.8

32.8

44.4

56.9

Net income attributable to owners of the parent1

9.1

8.0

9.7

11.4

12.0

14.1

20.5

26.6

Capital expenditure

8.2

9.3

4.5

5.8

7.9

8.9

13.3

Depreciation

3.9

7.2

7.0

6.8

7.0

7.9

R&D expenses

9.2

10.7

11.2

12.3

11.9

Net cash provided by (used in) operating activities

11.6

13.1

21.2

18.1

Net cash provided by (used in) investing activities

(12.8)

(13.5)

(6.6)

Net cash provided by (used in) financing activities

(1.3)

0.7

(10.0)

Net sales Operating income

252.6

249.8

Operating profit

60.7

51.7

36.2

Profit attributable to owners of the parent

39.2

40.6

13.9

13.8

Capital expenditure

13.0

11.8

9.9

11.2

12.2

Depreciation and amortization

12.1

12.3

12.1

13.2

14.6

17.7

R&D expenses

15.4

15.5

17.0

25.8

36.5

38.6

39.5

Net cash provided by (used in) operating activities

41.7

32.8

(8.9)

(10.3)

(12.5)

(33.9)

(19.5)

(21.6)

Net cash provided by (used in) investing activities

(23.8)

(19.4)

(3.4)

(3.8)

(3.1)

(2.8)

(7.5)

(8.7)

Net cash provided by (used in) financing activities

(8.7)

(10.8)

At year-end:

Net sales

At year-end:

Total assets Cash and cash equivalents, end of year Total equity Interest-bearing liabilities

109.0

118.5

120.7

130.0

142.2

173.0

210.7

247.9

267.6

9.6

9.4

13.8

18.9

21.8

34.3

36.5

50.2

56.4

79.1

79.8

87.1

94.2

102.5

119.1

146.2

169.5

188.0

1.0

10.3

2.5

1.9

1.0

0.7

1.9

0.7

1.3

Total assets Cash and cash equivalents, end of year Total equity Interest-bearing liabilities

263.9

279.8

56.4

57.9

182.8

210.2

1.3

1.1

(Yen)

Per share data: 1,540.9

1,548.1

1,684.9

910.63

990.5

1,151.3

703.73

812.3

899.5

Equity attributable to owners of the parent (yen)

879.32

1,005.86

Net income (basic) (yen)

178.9

156.7

190.7

111.13

116.8

137.5

99.43

128.4

174.4

Profit attributable to owners of the parent (basic) (yen)

189.08

195.31

Net income (diluted) (yen)

178.3

156.4

190.5

110.93

116.6

137.0

99.13

128.0

173.7

Profit attributable to owners of the parent (diluted) (yen)

188.30

194.74

3

3

Cash dividends applicable to the year

52.00

58.00

27.5

29.7

Equity (yen)

2

Cash dividends applicable to the year (yen) Dividend ratio (%)

12.00

12.50

14.00

15.00

17.00

20.00

27.00

38.00

52.00

26.8

31.9

29.4

27.0

29.1

29.1

27.1

29.6

29.8

Other data:

Dividend ratio (%)

Other data:

Operating margin (%)

13.6

13.5

13.5

14.7

14.3

15.0

17.8

20.1

22.5

Operating margin (%)

24.0

20.7

Overseas sales ratio (%)

67.5

68.0

68.3

69.1

70.5

72.4

78.2

81.7

84.3

Overseas sales ratio (%)

84.2

82.6

Equity ratio (%)

72.2

66.8

71.5

71.9

71.6

68.7

69.2

68.0

69.9

Equity ratio (%)

69.3

74.8

12.2

10.1

11.8

12.7

12.3

12.8

15.6

17.0

20.4

Return on equity (ROE) (%)

23.1

20.7

15.5

16.3

7,446

7,930

Return on equity (ROE) (%) 4

Return on assets (ROA) (%)

Number of employees

8.7

7.0

8.2

9.1

8.8

9.0

10.7

11.6

14.1

3,916

4,148

4,576

4,957

5,521

5,594

6,211

6,742

7,446

(Including part-time and other employees)

5

Return on assets (ROA) (%)

Number of employees (Including part-time and other employees)

Female managers (director level or above) (%)













10.6

11.6

14.3

Female managers (director level or above) (%)

14.3

16.2

Greenhouse gas emissions at business offices per unit of consolidated sales6 (t-CO2/¥100 million)



10.08

10.86

9.53

8.65

8.63

7.98

7.28

7.26

Greenhouse gas emissions at business offices per unit of consolidated sales6 (t-CO2/¥100 million)

7.26

7.36

350

339

360

424

331

295

302

307

317

Patent applications

317

344

215

234

Patent applications 7

Of which, overseas

195

185

206

283

230

195

205

1

5

2

6

Figures shown for fiscal years ended on or before March 31, 2015 are “net income. Dividend (actual) converted to post-split basis. 3 Two-for-one stock split 4 ROA = Net income attributable to owners of the parent/Total assets (Yearly Average)×100

77

(Yen)

Per share data:

217

215

7

Of which, overseas

ROA = Profit attributable to owners of the parent/Total assets (Yearly Average)×100 Main business offices in Japan, instrument factories in Japan, reagent factories in Japan, main overseas locations and overseas reagent factories 7 Figures shown for fiscal years ended on or after March 31, 2012 are including figures of countries to transfer international patent application

78

Financial and Other Information

Sysmex Report 2017

Management’s Discussion and Analysis

Sysmex adopted IFRS from the fiscal year ended March 31, 2017. Our aim is to increase convenience to shareholders and investors in Japan and overseas by enhancing the international comparability of our financial information in capital markets. Figures for the fiscal year ended March 31, 2016 are also disclosed in compliance with IFRS.

Overview Looking at economic conditions during the fiscal year ended March 31, 2017, in the United States, the employment environment was characterized by ongoing improvement, and the economy continued its gradual expansion. The European economy also continued to recover, but due to the UK’s move to exit the European Union, which is beginning in earnest, the outlook remains uncertain. The Chinese economy continued to decelerate gradually, despite the introduction of fiscal policies and monetary easing measures. In the Asia Pacific region, uncertainty continued, centered on ASEAN countries. Overseas economies generally maintained the trend toward modest recovery, despite emerging uncertainties in the economic outlook. . The Japanese economy continued on its path to recovery thanks to improvements in employment and income conditions and an upturn in capital investment. On the healthcare front, developed countries in Europe and the United States are working to curtail medical expenses. In the United States, the Affordable Care Act that was introduced to decrease the number of people without medical insurance is being reviewed. In China, ongoing medical system reforms aim to erase medical service disparities between cities and farming villages, but the country is also

introducing policies to reduce medical expenses. Therefore, although some causes for uncertainty remain, the foundations of healthcare-related demand remain solid. The Japanese government is including the medical and healthcare industry in its growth strategies, which is expected to continue invigorating healthcare-related industries going forward. Under these conditions, within the Sysmex Group a subsidiary, Sysmex Asia Pacific Pte Ltd., established a branch in Myanmar, which is demonstrating remarkable economic growth. By providing more robust support for distributors and customers in Myanmar, we will continue contributing to the development of healthcare in the country. In 2014, Sysmex commenced capital participation in RIKEN GENESIS Co., Ltd., headquartered in Tokyo, engaging in efforts toward the realization of personalized medicine. To reinforce synergies with RIKEN GENESIS, we acquired additional shares in the company and converted it to a subsidiary. Together, Sysmex and RIKEN GENESIS will pursue R&D and business development initiatives to realize personalized medicine through genetic analysis. During the fiscal year the Group recorded consolidated net sales of ¥249.8 billion, down 1.1% year on year. Operating profit declined 14.9%, to ¥51.7 billion, and profit before tax fell 15.3%, to ¥48.9 billion. However, profit attributable to

249.8 (¥ billion)

1

Net sales by destination is defined as the sales amount recorded by Group companies to customers in a particular region. However, net sales by geographical region refers to the sales amount made by a Group company in a particular location. 2 EMEA: Europe, the Middle East and Africa

82.6%

¥206.4 billion

25.9% ’14.3 Japanese GAAP

79

39.2

60.7

17.4%

¥43.4 billion

’15.3

’16.3

’17.3 IFRS

„ R&D Expenses R&D Expenses as a Percentage of Net Sales

14.6

21.8

billion

15.0

17.8

15.5 (¥ billion)

15.4

13.2 12.1 26.6

24.0

32.8

¥249.8

40.6 (¥ billion)

51.7(¥ billion)

Net sales

OVERSEAS

’13.3

„ Profit Attributable to Owners of the Parent

44.4

145.5

R&D expenses To enhance its product portfolio, during the year Sysmex developed new products and pursued R&D centering on clinical testing and the life sciences, fields targeted for future growth. As a result, R&D expenses amounted expanded ¥0.1

R&D Expenses R&D Expenses as a Percentage of Net Sales

JAPAN

24.1%

184.5

Profit Operating profit fell ¥9.0 billion, or 14.9%, to ¥51.7 billion due to the impact of yen appreciation and a worsening cost of sales ratio, and the ratio of operating profit to net sales fell 3.3 percentage points, to 20.7%. Exchange rate fluctuations had a ¥11.1 billion negative impact on operating profit year on year. However, profit attributable to owners of the parent increased ¥1.3 billion, or 3.5%, to ¥40.6 billion, stemming from a reduction in income tax expenses through a reversal of deferred tax liabilities in line with a revised tax treaty between Japan and Germany.

Operating Profit Operating Margin

8.5%

221.3

Cost of Sales and SG&A Expenses Cost of sales rose ¥6.1 billion, or 6.1%, to ¥108.1 billion. The cost of sales ratio accordingly increased 3.0 percentage points, to 43.3%. Selling, general and administrative expenses increased ¥0.8 billion, or 1.1%, to ¥75.4 billion, owing to reinforcement of sales and after-sales service structures. SG&A expenses as a percentage of net sales rose 0.7 percentage point, from 29.5% to 30.2%.

In overseas markets, reagent sales expanded in the hematology, hemostasis and immunochemistry fields thanks to a growing installed instrument base. Consequently, sales were robust in each country on a local currency basis, but the Sysmex Group’s overseas sales decreased 3.0% year on year, to ¥206.4 billion, due mainly to the impact of the yen’s appreciation in foreign exchange markets. The overseas sales ratio declined 1.6 percentage points, to 82.6%. Looking at overseas sales by destination, sales in the Americas amounted to ¥60.1 billion, up 1.6% year on year; in EMEA2 ¥64.6 billion, down 5.3%; in China ¥60.3 billion, down 7.4%; and in Asia-Pacific ¥21.2 billion, up 5.9%. In Japan, sales increased in the hematology, hemostasis and immunochemistry fields. As a result, sales in Japan rose 9.1% year on year, to ¥43.4 billion.

Japan Overseas Americas EMEA China Asia Pacific

252.6

Profits and Losses

Net Sales by Destination1

„ Operating Profit Operating Margin

„ Net Sales by Destination

„ Net Sales

owners of the parent increased 3.5%, to ¥40.6 billion, stemming from a reduction in income tax expenses through a reversal of deferred tax liabilities in line with a revised tax treaty between Japan and Germany. Return on equity (ROE) declined 2.4 percentage points, to 20.7% during the fiscal year under review.

20.7 (%)

20.1

8.3

20.5

7.2

6.6 6.1

14.1

6.2 (%)

24.1% ’13.3

’14.3 Japanese GAAP

’15.3

’16.3

’17.3 IFRS

’13.3

’14.3 Japanese GAAP

’15.3

’16.3

’17.3 IFRS

’13.3

’14.3 Japanese GAAP

’15.3

’16.3

’17.3 IFRS

80

Financial and Other Information

Sysmex Report 2017

Management’s Discussion and Analysis

billion, or 0.9%, to ¥15.5 billion. R&D expenses as a percentage of net sales increased 0.1 percentage points, from 6.1% to 6.2%.

competitive product development and global business strategies, aiming to respond to anticipated changes in the business environment.

Dividend Policy

Liquidity and Sources of Capital

Sysmex aims to maintain a proper balance between aggressive investment, which is designed to sustain steady high growth, and returns to our shareholders as our earning power increases. In terms of returns to shareholders, we intend to provide a stable dividend on a continuous basis and aim for a consolidated payout ratio of 30% under our basic policy of sharing the successes of our operations in line with business performance. As a basic policy, Sysmex pays twice-yearly dividends from retained earnings, an interim dividend and a year-end dividend. The year-end dividend is decided upon approval of the annual shareholders’ meeting, and the interim dividend upon approval by the members of the Managing Board. In accordance with this policy and in light of business performance during the year under review, we announced dividends for the year of ¥58 per share, which includes an interim dividend of ¥28. Consequently, we increased annual dividends by ¥6 per share for the year for the fiscal year ended March 31, 2016. This amounted to the 15th consecutive year of dividend increases and a consolidated payout ratio of 29.7%. Going forward, Sysmex will continue to effectively invest its internal reserves in the implementation of highly

Fund Procurement The Company raises working capital as necessary through short-term bank loans and other means. Consolidated subsidiaries obtain bank loans as needed to secure working capital, but in October 2003, the Company introduced a cash management system to increase efficiency by unifying financing and capital management at affiliates in Japan. For long-term capital requirements such as capital investment, the Company decides the funding method after taking into account the investment recovery period and risk. During the year, the Company financed capital expenditure and R&D activities primarily from cash provided by operating activities.

„ Cash Dividends Applicable to the Year Dividend Ratio

Assets, Liabilities and Equity As of March 31, 2017, total assets amounted to ¥279.8 billion, up ¥15.8 billion from March 31, 2016. As principal factors, trade and other receivables (current assets) rose ¥5.4 billion, intangible assets rose ¥4.5 billion, trade and other receivables (non-current assets) grew ¥2.3 billion, inventories expanded by ¥1.3 billion, and goodwill increased ¥1.3 billion. Meanwhile, total liabilities as of March 31, 2017, were ¥69.5 billion, down ¥11.5 billion from their level on March

„ Total Assets

„ Total equity

31, 2016. Principal reasons were decreases of ¥4.0 billion in advance received, ¥3.8 billion in deferred tax liabilities, and ¥3.5 billion in income taxes payable. Total equity came to ¥210.2 billion, up ¥27.4 billion from March 31, 2016. Among principal reasons, other components of equity decreased ¥3.4 billion, but retained earnings rose ¥29.1 billion. Equity attributable to owners of the parent to total assets as of March 31, 2017, was 74.8%, up 5.5 percentage points from the 69.3% recorded as of March 31, 2016.

Cash Flows from Investing Activities Net cash used in investing activities was ¥19.4 billion (down ¥4.4 billion from the preceding year). Principal uses of cash included purchases of property, plant and equipment of ¥11.6 billion (down ¥2.0 billion), purchases of intangible assets of ¥7.4 billion (down ¥0.9 billion), acquisitions of subsidiaries or other businesses used ¥1.4 billion (up ¥1.0 billion) , and a net decrease in short-term loans receivable, a category that was absent in the preceding year, used ¥1.9 billion.

Cash Flows As of March 31, 2017, cash and cash equivalents amounted to ¥57.9 billion, up ¥1.4 billion from March 31, 2016. Cash flows from various activities during the fiscal year are described in more detail below.

Cash Flows from Financing Activities Net cash used in financing activities was ¥10.8 billion (up ¥2.1 billion). This was mainly due to dividends paid of ¥11.6 billion (up ¥2.0 billion).

Cash Flows from Operating Activities Net cash provided by operating activities was ¥32.8 billion, ¥8.9 billion less than in the preceding fiscal year. As principal factors, profit before tax provided ¥48.9 billion (¥8.8 billion less than in the preceding fiscal year), an increase in inventories used ¥2.1 billion (down ¥4.6 billion), a decrease in trade payables used ¥2.4 billion (increased ¥4.1 billion in the preceding fiscal year), a decrease in advances received used ¥3.6 billion (increased ¥0.6 billion in the preceding fiscal year), and income taxes paid used ¥16.2 billion (down ¥3.3 billion).

Capital Expenditure and Depreciation Capital expenditure (investment in property, plant and equipment, including construction in progress) was down ¥1.2 billion year on year, or 9.2%, to ¥11.8 billion. Major capital expenditures included the expansion of reagent factories to increase reagent production capacity at overseas subsidiaries in line with business expansion in overseas markets, as well as for the acquisition of equipment leased to customers. Depreciation and amortization increased ¥0.2 billion, or 2.2%, to ¥12.3 billion.

„ Cash Flows

„ Capital Expenditure Depreciation and Amortization

Cash Dividends Applicable to the Year Dividend Ratio

Capital expenditure Depreciation and amortization

58 (¥) 263.9

52

279.8 (¥ billion) 210.2 (¥ billion)

247.9 210.7

169.5

38

38.6

Net cash used in financing activities

’14.3

81

12.3 (¥ billion)

13.0 12.1 11.8 (¥ billion)

32.8

Year ended Mar. 31 2015 (Japanese GAAP) Year ended Mar. 31 2016 (IFRS) Year ended Mar. 31 2017 (IFRS)

8.9 7.9

29.7(%)

29.6 27.5

27.1

Japanese GAAP

13.9

9.9

(7.5) (8.7) ’13.3

13.3

41.7

119.1

27 29.1 20

Net cash used in investing activities

11.2

182.8

146.2

173.0

Net cash provided by operating activities

’15.3

’16.3

’17.3 IFRS

’13.3

’14.3 Japanese GAAP

’15.3

’16.3

’17.3 IFRS

’13.3

’14.3 Japanese GAAP

’15.3

’16.3

’17.3 IFRS

(19.5) (19.4) (23.8)

(10.8) (¥ billion) ’13.3

’14.3 Japanese GAAP

’15.3

’16.3

’17.3 IFRS

82

Financial and Other Information

Sysmex Report 2017

Consolidated Statement of Financial Position Sysmex Corporation and its Subsidiaries As of March 31, 2017

Thousands of U.S. Dollars

Millions of Yen March 31, 2017

March 31, 2016

Date of transition to IFRS

March 31, 2017

Assets Current assets Cash and cash equivalents

¥ 57,944

¥ 56,481

¥ 49,613

$ 517,357

Trade and other receivables

63,084

57,652

53,662

563,250

Inventories

36,998

35,604

29,966

330,339

Other short-term financial assets

528

615

298

4,714

Income taxes receivable

457

453

223

4,080

Other current assets

7,303

7,450

6,484

65,205

Total current assets

166,318

158,258

140,248

1,484,982

Non-current assets Property, plant and equipment

60,144

59,282

56,835

537,000

8,308

6,921

7,192

74,179

21,228

16,682

11,598

189,536

552

2,089

1,937

4,929

Trade and other receivables

8,813

6,476

3,901

78,688

Other long-term financial assets

6,107

6,010

6,440

54,527

666

582

960

5,946

Other non-current assets

2,095

1,928

1,717

18,705

Deferred tax assets

5,581

5,684

6,478

49,830

113,499

105,659

97,062

1,013,384

¥279,817

¥263,917

¥237,310

$2,498,366

Goodwill Intangible assets Investments accounted for using the equity method

Asset for retirement benefits

Total non-currents assets Total assets

Thousands of U.S. Dollars

Millions of Yen

Liabilities and equity Liabilities Current liabilities Trade and other payables Other short-term financial liabilities Income taxes payable Provisions Advance received Accrued expenses Accrued bonuses Other current liabilities Total current liabilities Non-current liabilities Long-term financial liabilities Liability for retirement benefits Provisions Other non-current liabilities Deferred tax liabilities Total non-current liabilities Total liabilities Equity Equity attributable to owners of the parent Capital stock Capital surplus Retained earnings Treasury stock Other components of equity Total equity attributable to owners of the parent Non-controlling interests Total equity Total liabilities and equity

Date of transition to IFRS

March 31, 2017

March 31, 2016

¥ 24,376 956 2,915 610 6,418 8,330 6,636 9,708 59,952

¥ 26,824 788 6,511 554 10,431 6,864 6,538 9,383 67,896

¥ 22,776 1,001 9,418 450 10,357 8,137 6,130 9,084 67,355

$ 217,643 8,536 26,027 5,446 57,304 74,375 59,250 86,679 535,286

549 654 2,318 3,527 2,562 9,612 69,564

734 566 2,341 3,192 6,384 13,219 81,116

342 562 2,312 3,094 5,669 11,980 79,336

4,902 5,839 20,696 31,491 22,875 85,821 621,107

11,611 17,303 188,506 (289) (7,725) 209,406 845 210,252 ¥279,817

11,016 16,969 159,375 (285) (4,275) 182,800 0 182,801 ¥263,917

10,483 16,340 130,183 (280) 1,246 157,972 0 157,973 ¥237,310

March 31, 2017

103,670 154,491 1,683,089 (2,580) (68,973) 1,869,696 7,545 1,877,250 $2,498,366

Note: The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥112 to $1, the approximate rate of exchange at March 31, 2017.

83

84

Financial and Other Information

Sysmex Report 2017

Consolidated Statement of Income

Consolidated Statement of Comprehensive Income

Sysmex Corporation and its Subsidiaries For the Year Ended March 31, 2017

Sysmex Corporation and its Subsidiaries For the Year Ended March 31, 2017

Thousands of U.S. Dollars

Millions of Yen 2017

Net sales Cost of sales Gross profit Selling, general and administrative expenses Research and development expenses Other operating income Other operating expenses Operating profit Financial income Financial expenses Share of loss on equity method Foreign exchange loss Profit before tax Income tax expenses Profit Profit attributable to Owners of the parent Non-controlling interests Profit

2016

¥249,899 108,122 141,777 75,401 15,554 1,277 397 51,701 514 372 (677) (2,218) 48,946 8,493 ¥ 40,453

40,636 (182) ¥ 40,453

¥252,622 101,932 150,689 74,571 15,409 610 588 60,729 382 96 (465) (2,741) 57,809 18,530 ¥ 39,278

39,278 (0) ¥ 39,278

Yen

2017

$2,231,241 965,375 1,265,866 673,223 138,875 11,402 3,545 461,616 4,589 3,321 (6,045) (19,804) 437,018 75,830 $ 361,188

362,821 (1,625) $ 361,188

Thousands of U.S. Dollars

Millions of Yen

Profit Other comprehensive income (loss) Items that will not be reclassified subsequently to profit or loss Net gain (loss) on financial assets measured at fair value through other comprehensive income Remeasurements of defined benefit plans Total Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations Share of other comprehensive income of investments accounted for using the equity method Total Total other comprehensive income (loss) Comprehensive income Comprehensive income attributable to Owners of the parent Non-controlling interests Comprehensive income

2017

2016

¥40,453

¥39,278

2017

$361,188

158

(430)

1,411

139 298

(536) (967)

1,241 2,661

(3,606)

(5,091)

(0)

(32,196) (0)

(3,607) (3,309) ¥37,144

(5,091) (6,059) ¥33,219

(32,205) (29,545) $331,643

¥37,327 (182) ¥37,144

¥33,219 (0) ¥33,219

$333,277 (1,625) $331,643

Note: The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥112 to $1, the approximate rate of exchange at March 31, 2017.

U.S. Dollars

Earnings per share Basic Diluted

¥195.31

¥189.08

$1.74

194.74

188.30

1.74

Note: The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥112 to $1, the approximate rate of exchange at March 31, 2017.

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86

Financial and Other Information

Sysmex Report 2017

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Sysmex Corporation and its Subsidiaries For the Year Ended March 31, 2017

Sysmex Corporation and its Subsidiaries For the Year Ended March 31, 2017

Millions of Yen

Capital stock

As of April 1, 2015 ¥10,483 Profit Other comprehensive income (loss) Comprehensive income (loss) Exercise of warrants 533 Share-based payment transaction Cash dividends Purchase of treasury stock Transfer to retained earnings Changes from business combination Equity transactions with non-controlling interests Total transactions with 533 the owners As of March 31, 2016 11,016 Profit Other comprehensive income (loss) Comprehensive income (loss) Exercise of warrants 594 Share-based payment transaction Cash dividends Purchase of treasury stock Transfer to retained earnings Changes from business combination Equity transactions with non-controlling interests Total transactions with 594 the owners As of March 31, 2017 ¥11,611

Capital surplus

Retained earnings

¥16,340 ¥130,183 39,278

Treasury stock

¥(280)

Other components of equity

Noncontrolling interests

Total

316 312

312

312

(9,549) (4)

(9,549) (4)

(8,391)

(9,549) (4) (536)

¥

0 ¥157,973 (0) 39,278 (0) (6,059) (0) 33,219 849

536

628

(10,086)

(4)

536

(8,391)

16,969

159,375 40,636

(285)

(4,275)

182,800 40,636 (3,309) 37,327 928

(3,309) (3,309)

40,636 333 (11,646)

(11,646) (3)

(3) 141

0 (182) (0) (182)

(141)

0 334

0 (11,505)

¥17,303 ¥188,506

182,801 40,453 (3,309) 37,144 928 (11,646) (3)

1,028

(3) ¥(289)

(141)

(10,721)

¥(7,725) ¥209,406

1,028

(0) 1,028

(9,692)

¥ 845 ¥210,252

Thousands of U.S. Dollars Equity attributable to owners of the parent Capital stock

As of March 31, 2016 Profit Other comprehensive income (loss) Comprehensive income (loss) Exercise of warrants Share-based payment transaction Cash dividends Purchase of treasury stock Transfer to retained earnings Changes from business combination Equity transactions with non-controlling interests Total transactions with the owners As of March 31, 2017

$ 98,357

Capital surplus

Retained earnings

$151,509 $1,422,991 362,821

Treasury stock

$(2,545)

362,821 5,304

2,973

Other components of equity

Total

$(38,170) $1,632,143 362,821 (29,545) (29,545) (29,545) 333,277 8,286

(103,982)

(103,982) (27)

(1,259) 9,179

0 5,304 $103,670

2,982

Total equity

$ 0 $1,632,152 (1,625) 361,188 (0) (29,545) (1,625) 331,643 8,286

(103,982) (27)

(27) 1,259

Noncontrolling interests

(102,723)

(27)

$154,491 $1,683,089

$(2,580)

(1,259)

0

(0)

(95,723)

9,179

$(68,973) $1,869,696

2017

Total equity

¥1,246 ¥157,972 39,278 (6,058) (6,058) (6,058) 33,219 849

39,278

Thousands of U.S. Dollars

Millions of Yen

Equity attributable to owners of the parent

9,179

Operating activities Profit before tax Depreciation and amortization Interest and dividend income Interest expenses Share of loss on equity method Increase in trade receivables Increase in inventories (Decrease) increase in trade payables Decrease/increase in consumption taxes receivable/payable Decrease (increase) in asset for retirement benefits (Decrease) increase in advance received Increase in accrued bonuses Other–net Subtotal Interest and dividend received Interest paid Income taxes paid Net cash provided by operating activities

2016

2017

¥ 48,946 12,381 (425) 104 677 (6,368) (2,104) (2,483) 817 117 (3,635) 107 634 48,770 415 (85) (16,268) 32,832

¥57,809 12,110 (335) 46 465 (5,476) (6,775) 4,145 (903) (418) 687 577 (884) 61,047 356 (31) (19,578) 41,794

$ 437,018 110,545 (3,795) 929 6,045 (56,857) (18,786) (22,170) 7,295 1,045 (32,455) 955 5,661 435,446 3,705 (759) (145,250) 293,143

Investing activities Purchase of property, plant and equipment Proceeds from sales of property, plant and equipment Purchase of intangible assets Purchase of investments in equity instruments Acquisitions of subsidiaries or other businesses Net decrease in short-term loans receivable Other–net Net cash used in investing activities

(11,682) 200 (7,424) (632) (1,453) 1,930 (338) (19,400)

(13,685) 107 (8,399) (633) (403) (836) (23,850)

(104,304) 1,786 (66,286) (5,643) (12,973) 17,232 (3,018) (173,214)

Financing activities Exercise of warrants Dividends paid Other–net Net cash used in financing activities

928 (11,646) (148) (10,866)

849 (9,549) (55) (8,755)

8,286 (103,982) (1,321) (97,018)

(1,102) 1,462 56,481 ¥ 57,944

(2,320) 6,868 49,613 ¥56,481

(9,839) 13,054 504,295 $ 517,357

Foreign currency translation adjustments on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year

Note: The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥112 to $1, the approximate rate of exchange at March 31, 2017.

(86,536)

$ 7,545 $1,877,250

Note: The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥112 to $1, the approximate rate of exchange at March 31, 2017.

87

88

Financial and Other Information

Sysmex Report 2017

Stock Information (As of March 31, 2017)

Corporate Overview (As of March 31, 2017)

 Principal Shareholders (Top 10)

„ Stock Price Range

Sysmex Corporation

(Calculated as the closing price on March 31, 2007 = 100)

700

Number of Percentage of shares held shareholding (Thousands) (%)

Shareholders

Sysmex (Figures adjusted for stock split) Tokyo Price Index (TOPIX) close

Japan Trustee Services Bank, Ltd. JPMorgan Chase Bank 380055 The Kobe Yamabuki Foundation

600

500

Nakatani Foundation for Advancement of Measuring Technologies in Biomedical Engineering Nakatani Kosan, Ltd. The Master Trust Bank of Japan, Ltd. Kazuko Ietsugu Taeko Wada Kenji Itani Rusoru, Ltd.

400

300

200

100 0

22,762 16,091 12,000

10.9 7.7 5.8

11,830

5.7

10,457 8,395 6,124 6,124 5,000 4,750

5.0 4.0 2.9 2.9 2.4 2.3

Note: Percentage of shareholding excludes treasury stock (444,556 shares). ’07.3 ’08.3 ’09.3 ’10.3 ’11.3

’12.3 ’13.3 ’14.3 ’15.3 ’16.3 ’17.3

„ Composition of Shareholders Individuals and others 19.30%

Financial institutions 19.85%

„ Cash Dividends per Share and Dividend Ratio (Consolidated) Cash dividends per share (Figures adjusted for stock split) Dividend payout ratio

38

Other Japanese companies 20.01%

27 12

Foreign investors 40.18%

58 (¥)

52

Financial instrument firms 0.66%

12.5 26.8

31.9

14 29.4

’08.3 ’09.3 ’10.3

20

17

15 27.0

’11.3

29.1

’12.3

29.7(%) 29.1

’13.3

27.1

’14.3

29.6

’15.3

27.5

’16.3

Note: Two-for-one stock split conducted in April 2011 and 2014.

„ Distribution of Shares by Number of Shares Held Less than 1,000 shares 1.35%

More than 1,000 shares 1.71%

Number of shares: 2,830,445 (12,231 shareholders)

Number of shares: 3,559,022 (1,841 shareholders)

More than 5,000 shares 1.08% Number of shares: 2,252,024 (323 shareholders)

More than 10,000 shares 5.92%

’17.3

Established

February 20, 1968

Head Office

1-5-1, Wakinohama-Kaigandori, Chuo-ku, Kobe 651-0073, Japan

Inquiries

IR & Corporate Communication Department TEL: +81-78-265-0500

Website

Please see our website for more detailed and the most recent information. Website http://www.sysmex.co.jp/en/ IR information http://www.sysmex.co.jp/en/ir/ Sustainability information http://www.sysmex.co.jp/en/csr/

Number of Employees

7,930 (consolidated basis) (including part-time employees and others)

Fiscal Year

April 1–March 31

Shareholders’ Meeting

June

Number of Shares Authorized 598,688,000 shares Number of Shares Issued

208,631,032 shares

Paid-in Capital

¥11,611.86 million

Stock Listings

Tokyo Stock Exchange, First Section

Ticker Code

6869

Transfer Agent

Mitsubishi UFJ Trust and Banking Corporation

Independent Auditor

Deloitte Touche Tohmatsu LLC

Rating

A+ (Rating and Investment Information, Inc. (R&I))

Major Indexes

Dow Jones Sustainability World Index Dow Jones Sustainability Asia Pacific Index Ethibel Pioneer & Excellence FTSE4Good Index FTSE Blossom Japan Index* JPX-Nikkei Index 400 MSCI Standard Index MSCI ESG Leaders Indexes MSCI SRI Indexes MSCI Japan ESG Select Leaders Index* MSCI Japan Empowering Women Index (WIN)* S&P Japan 500 * Included as of July 2017

Number of shares: 12,349,725 (419 shareholders)

89

More than 500,000 shares 79.33%

More than 100,000 shares 10.61%

Number of shares: 165,510,961 (68 shareholders)

Number of shares: 22,128,855 (102 shareholders)

90