Hello everyone, and thank you for joining Terumo Corporation's technology briefing today. The briefing is scheduled to begin at 1:00. Before we get started, I would like to share a few housekeeping notes. For global technology, the technology development, and for the development we share globally, this is an internal exchange event. From 2016, we are having this, and this celebrates our 10th anniversary of the global technology event. We are utilizing this opportunity to share on Terumo's competitive advantage for analysts and investors, including the technology and also our development. That's why we are hosting this session today. This is the program for today's session, and CEO Samejima is going to share the source of the competitive advantage, and the innovation director, Osada, is going to share the Monozukuri excellence.
Following that session, we are going to have question and answers, so please feel free to ask any questions. Through this event, Zoom simultaneous interpretation is utilized, so you can hear either English or Japanese as needed. We can just select the button and switch to convert between Japanese and English, and the presentation slides can be found on our website. Now, the first presenter is our CEO, Mr. Samejima. Samejima-san, please come up on the stage.
Again, everyone, thank you very much for joining our Terumo's technology and R&D briefing today. First, I'd like to explain the purpose of today's briefing. At our IR Day in June, we discussed where to play. We explained the business areas and growth markets where Terumo intends to compete and grow in the future. Today's technology and R&D briefing focuses on how to win. Specifically, we will discuss the sources of Terumo's competitive advantage and the capabilities that support our sustainable growth. Why are Terumo's strengths difficult for competitors to replace? How have these strengths enabled us to sustain both growth and profitability over many years? Today, we will answer these questions by sharing the unique capabilities and business systems that underpin our competitive advantage together with specific product examples.
We hope today's session will deepen your understanding of the competitive advantages that drive Terumo's growth and provide useful context as you review our next five-year growth strategy, GS 31, which will be announced in December. In today's rapidly changing business environment, accelerating innovation is essential for sustainable growth. At Terumo, R&D and manufacturing are integrated within the same sites around the world, including Japan. This enables close collaboration and rapid decision-making at the operational level. In addition, in 2024, we established the role of directors in charge of innovation. This role oversees not only R&D, but also regulatory affairs, clinical development, intellectual property, DX, and external investments. By combining integrated R&D and manufacturing at the site level with end-to-end innovation management at the corporate level, we accelerate the cross-functional collaboration that drives our competitive advantage.
Today, Mr. Osada and I will explain the competitive advantage that this organization enables us to create. Terumo's competitive advantages vary by product and technology. However, when we look at the foundation of those advantages, they can be traced back to the two core capabilities. These are Monozukuri excellence and execution excellence. By combining these two capabilities, Terumo creates competitive advantages that are difficult for others to replicate. Let me first explain Monozukuri excellence. It consists of our development technologies, including metal fabrication, plastic molding, and coating technology. It also includes our manufacturing technologies, which enable us to reproduce these capabilities consistently at scale. In addition, we are leveraging AI to further enhance these technologies across functions. Execution excellence is our ability to translate technology into value for healthcare professional and patients.
It consists of four elements: clinical needs translation, knowledge accumulation and deployment, external technology integration, and regulatory and compliance expertise. The combination of Monozukuri excellence and execution excellence may sound straightforward in theory. In reality, however, it requires continuous trial and error. In healthcare, customer requirements often involve difficult trade-offs. Improving one product performance attribute can mean compromising another. At Terumo, engineers from different disciplines work together to overcome these trade-offs. By integrating their expertise, they continue to create solutions that others find difficult to achieve. Today, through four representative product examples, we will show how Terumo transforms clinical needs into products and scales them through manufacturing.
Our first example is guidewires and introducer sheath. Guidewires are designed to meet two conflicting requirements. They must be soft and smooth enough to navigate blood vessels safely. At the same time, they must be stiff enough to accurately transmit the physician's movements from the proximal end to the tip. To overcome this trade-off, Terumo combined multiple technologies. We use an ultra-fine metal core to provide torque transmission. We then apply a soft polymer layer for flexibility. In addition, we add the hydrophilic coating to reduce friction when the device comes into contact with blood. This is a clear example of how Terumo overcame a critical trade-off through the close integration of its metal fabrication, plastic molding, and coating technologies. In vascular procedures, device product performance can directly affect patient outcomes. Physicians therefore expect every guidewire to perform the same way every time.
At Terumo, consistency is a fundamental quality requirement. Through advanced manufacturing technologies, we are able to deliver the same user experience even in large-scale productions. Guidewires have been part of our portfolio for more than 40 years. During that time, we have continuously improved the product by identifying changes in clinical needs and translating them into specific product requirements. As a result, guidewires have become a trusted tool for physicians, helping standardize procedures and enabling Terumo to maintain the world's number one market share. Building on this vascular access platform, we have expanded into balloon catheters, stents, and other vascular devices, while also creating a foundation for next-generation products and broader endovascular applications.
If you have an opportunity to visit the exhibition area, I encourage you to take a look not only at our guidewires but also at our production sheath and introducer sheaths, which demonstrate the unique capabilities of our plastic molding technologies. Our next example is the Dual Sensor System or DSS. Here again, we face a significant challenge. Physicians wanted to visualize the overall vessel structure with the IVUS and at the same time obtain high-resolution surface imaging images of the OFDI. However, physicians did not want a larger catheter. Even with two imaging modalities, the catheter profile had to remain unchanged. To meet user requirements, our development and manufacturing teams worked together to integrate two imaging modalities into a single catheter profile. As a result, DSS delivers both IVUS and OFDI capabilities without increasing catheter size. DSS also demonstrates our ability to leverage accumulated expertise.
Building on decades of experience in both IVUS and OFDI, we applied that knowledge to the design of DSS. We are using our leadership position in IVUS in Japan to drive adoption of this new technology. We expect imaging revenue to more than triple by FY 2031 through expansion in the U.S. and India. Looking ahead, we are also exploring AI-enabled features, including automated detection of vessels, plaque, and stents. If you visit the exhibition area, I encourage you to take a close look at the catheter itself. It is a good example of how much functionality our engineers were able to fit it into such a limited space. WEB is the next one. I'm sorry. Woven EndoBridge. Here, the trade-off is the smooth and expanded, and under X-ray, it is clearly observed. The nitinol provides excellent elasticity, but it is not visible under X-ray.
Platinum offers high visibility but lacks the elasticity required for device deployment. To overcome this trade-off, Terumo developed a dual-core wire that combines both materials and applied its proprietary braiding technology to create the WEB structure. WEB also demonstrates our ability to integrate external technologies rather than limiting this acquired wire technology to WEB alone. We have applied it across other Terumo products to strengthen product competitiveness. This approach expands our Neuro portfolio and supports further growth of the business. If you visit the exhibition area, you will be able to see the structure of this ultra-fine dual-core wire and how the technology has been applied across our product portfolio. Our final example is PLAJEX. For prefillable syringes used with biologics and other advanced therapies, pharmaceutical companies often have demanding requirements. One challenge is needle design. Biologics are highly viscous, so a larger needle improves injectability.
At the same time, patients prefer a thinner needle to reduce pain. To overcome this trade-off, Terumo developed a tapered needle that is wider at the base and gradually narrows towards the tip. We also faced another challenge. The syringe must move smoothly, but silicone oil, which is commonly used as a lubricant, can affect sensitive biologics. To address this, Terumo combined its proprietary silicone oil-free i-coating technology with adhesive-free polymer design. This is a good example of how we integrate multiple technologies to overcome complex trade-offs. PLAJEX also highlight another aspect of execution excellence, regulatory and compliance expertise. Leveraging our expertise, experience in both pharmaceuticals and medical devices, we support pharmaceutical partners in navigating complex regulatory requirements around the world. This capability helps accelerate the launch of advanced therapies, strengthen long-term customer relations, and capture growth in high-value production markets.
We are able to have the long-term established partnerships with pharma companies and also the growth. If you visit the exhibition area, you will see an enlarged model of the tapered needle. I encourage you to take a closer look at how its design improves patient comfort while maintaining performance. These four examples demonstrate how different combinations of Monozukuri excellence and execution excellence create competitive advantages. There is no single formula. By combining these capabilities in different ways, we can address diverse customer needs and create unique value across a wide range of markets. Just as importantly, the knowledge, manufacturing expertise, regulatory experience, and customer relationships gained from one product are carried forward to the next. This creates a cycle of continuous learning and innovation. As a result, we continue to deliver products of choice, maintain strong market positions and profitability, and reinvest those returns into future innovation.
This virtuous cycle is a key driver of Terumo's sustainable growth. So far, I have discussed the source of Terumo's competitive advantage. Mr. Osada will focus on Monozukuri excellence and explain how these capabilities are developed and sustained across the company.
Good afternoon, ladies and gentlemen. I'm Toshihiko Osada, Director and Group Senior Managing Executive Officer in charge of innovation. Building on Mr. Samejima's discussion, I'd like to explain the Monozukuri excellence that supports Terumo's sustainable growth and competitive advantage. Monozukuri excellence is built on the three pillars. The first is development technology. This is our ability to translate the product requirements into design solutions by integrating core technologies such as metal fabrication, plastic molding, and coating technologies. The second is manufacturing technology. This enables us to reproduce the required performance and quality consistently across our global production network. The third is AI. We're using AI across both development and manufacturing to accelerate innovation and improve productivity. Our true strength lies not in just any single technology, but in the real-time integration of these three capabilities. This close collaboration creates advantages that are difficult to competitors to replicate.
Let me now begin with development technology and explain how Terumo combines its proprietary technologies and continues to differentiate itself through innovation. The first capability I'd like to discuss is metal fabrication, one of Terumo's core technologies. Terumo has developed a broad range of metal fabrication capabilities, including ultra-fine processing, precision stamping, rolling, and dissimilar metal joining. By integrating these technologies with plastic molding and coating technologies, we create a wide variety of products from guidewires, stents, and coils to drug delivery devices such as the NanoPass and the PLAJEX. The value of these capabilities lies not only in precision processing. Because these technologies are developed in-house, we can optimize the interfaces between different materials and components as part of a single design process. This allows us to translate the physician's sense of touch into productive performance.
For example, it enables the precise control required to navigate tortuous vessels and accurately deliver catheter movement from the physician's hand to the device tip. This superior handling performance is one reason physicians continue to choose our products. It has also supported our leading position and premium value in the access business over many years. In our drug delivery devices, our metal fabrication technologies create clear productive benefits, including reduced pain, lower injection resistance, and minimized dead volume. If you visit the exhibition area, I hope you'll see the NanoPass, which showcases the capabilities of our metal fabrication technologies. Now I'd like to discuss plastic molding, another core development technology. Terumo has a broad range of plastic molding capabilities, including extrusion, injection molding, blow molding, and multilayer molding.
And what differentiates Terumo is not only these molding technologies themselves, but also our ability to integrate material selection, product design, tooling, manufacturing, and coating technologies within a single development process. We begin with materials selection. Because many of our products come into direct contact with the human body, material choice requires deep expertise in biocompatibility. Terumo has accumulated extensive knowledge, proprietary data, and in-house evaluation capabilities over many years, and we are increasingly leveraging AI to further strengthen this process. We also apply decades of design expertise to optimize product geometry, refining designs through extensive prototyping and testing. On the manufacturing side, we have developed in-house capabilities ranging from mold fabrication to process optimization and maintenance. This enables us to deliver performance that goes beyond measurable specifications. For example, our introducer sheaths minimize the transition between the sheath and the dilator to improve deliverability.
Our catheter molding technologies achieve wall thickness tolerances as tight as ±5 microns, maximizing the internal lumen without increasing the outer diameter. We also manufacture highly specialized porous membranes for oxygenators using proprietary molding technologies developed in-house. By integrating development and manufacturing in this way, we are able to deliver high performance, reliability, and consistent quality at scale. If you visit the exhibition area, I hope you will have the opportunity to see a cross-section of one of these oxygenators' membranes, which is normally not visible from outside. The third pillar is coating technology. Since the invention of the M Coat in 1984, Terumo has developed a range of proprietary surface technologies, including the M Coat for lubricity, X Coating for anti-thrombogenicity, and i-coating for silicone oil-free applications. The performance of the coating depends on many factors, including the base material, surface treatment, coating formulation, manufacturing conditions, and device design.
For this reason, Terumo has built an integrated platform that optimizes development, manufacturing, and coating processes together. In our industry, coating development is often outsourced. By keeping these capabilities in-house, we can optimize performance, quality, and manufacturability at the same time, while significantly accelerating development speed. This allows us to continuously enhance existing products and rapidly implement new technologies. We have also expanded our coating development capabilities in the United States, further strengthening our global innovation network. This integrated approach enables the superior lubricity that differentiates many of our guidewires and catheter products. PLAJEX is another example. For our proprietary i-coating technology and a patent portfolio of more than 20 patents, we help pharmaceutical customers address challenges associated with sensitive biologics. This creates significant barriers to entry and supports long-term relationships with leading pharmaceutical companies.
If you visit the exhibition area, I hope you will be able to experience firsthand how coating technologies enhance device performance. So far, I have focused on development technologies. However, even the best design has little value if product performance cannot be reproduced consistently at scale. This is where manufacturing technology plays a critical role. Its purpose is to translate the product requirements into equipment, process control, inspection methods, and manufacturing standards, enabling consistent quality across production lots and manufacturing sites. Terumo's true strength goes beyond simply meeting specifications. It lies in the culture of continued improvement and a commitment to delivering the same performance, safety, and user experience every time, everywhere. A good example is Runthrough, our flagship guidewire. The total length of the Runthrough guidewires sold worldwide is equivalent to more than 1.3 times the circumference of the Earth.
Yet we continue to provide the same level of quality and performance across every product. This is possible because manufacturing engineers participate from the earliest stages of product development and work closely with R&D teams to design scalable production processes. Even after commercialization, we continuously collect the quality data, improve our process, and share those learnings across our global manufacturing network. By combining consistent quality with efficient production, we strengthen product competitiveness, improve profitability, and ensure stable supply. For physicians, confidence that a device will perform exactly as expected every time is critical. I hope you will see the capabilities at the exhibition area. Finally, I would like to discuss how we are using AI to further strengthen Monozukuri excellence. We do not view AI as a standalone tool. We see it as a driver that enhances both development technology and manufacturing technology.
Today, generative AI and data analytics are being integrated across R&D, quality assurance, and manufacturing processes. The results are already significant. For example, AI has reduced the time required for risk identification and analysis from several months to approximately two weeks. We have also developed an AI-based toxicology reporting capability, reducing a process that previously took about one month to roughly 10- minutes. Our goal is not simply to automate routine tasks. By allowing AI to handle activities such as searching, documenting, and summarizing information, we enable our researchers and engineers to focus on high-value work, including data interpretation, clinical judgment, and decision-making. As a result, we expect to accelerate time to market while improving both productivity and the probability of success across our R&D activities. If you visit the exhibition area, I hope you will be able to see demonstrations of the AI applications behind these results.
In summary, Monozukuri excellence at Terumo is built on the integration of three capabilities: advanced development technologies, manufacturing technologies that ensure consistent quality at scale, and AI that further accelerates and enhances these processes. By combining Monozukuri excellence with execution excellence, we create diverse sources of competitive advantage while continuously feeding knowledge and experience from one product back into the next. This cycle is supported by the close integration of development and manufacturing, a culture of continuous improvement, and a strong commitment to advancing our processes and equipment. These capabilities enable us to translate complex clinical needs into innovative products quickly and reliably. As a result, we continue to deliver innovations that earn the trust of healthcare professionals and patients around the world. We believe that this will continue to drive sustainable growth and long-term value creation. Thank you very much for your attention.
We will now begin the Q&A session. Today's event is being held in a hybrid format. If you are joining us in person and would like to ask a question, please raise your hand. A staff member will bring you a microphone. Please state your name and affiliation before asking your question, and thank you for speaking into the microphone. If you are joining via the Zoom webinar, please use the raise hand function. If you wish to withdraw your question, please click the raise hand button again to cancel the raise hand. To allow as many participants as possible to ask questions, we kindly ask that you limit yourself to no more than two questions.
We are now ready to begin the Q&A session. Mr. Samejima, Mr. Osada are here. We are joined by Mr. Shinji Omori, Chief Technology Officer, and Mr. Takeshi Hagimoto, Chief Financial Officer. We will now open the floor for questions. Please raise your hand if you have a question. Now, the person in the very front line on this side, please wait for the microphone.
Thank you very much for the presentation. I'm Hayashiro, [uncertain] Insurance. I have two questions. The first question is about AI utilization. You have very good manufacturing excellence, and for the development of manufacturing, how are you leveraging AI, or how are you going to utilize that as the differentiation factor? It's what I'm interested in. Generative AI is what you are using, that's what you explained. There is maybe the reporting or risk analysis and risk evaluation, the ways maybe other competitors are also using for AI. That's what I was imagining. If it's wrong, I would like you to tell me I'm not right. For maybe something that other companies cannot mimic for Monozukuri and for the development, utilizing AI, how are you generating the differentiation factors? That's my question.
Yes. Thank you very much for the question. I'm going to answer that question. First of all, others, what extent they are specifically using AI for the development is what I'm not sure. Maybe that could be applicable for them as well. Generative AI is used in the development process in our company. As an example, for the new areas to explore new technologies, we use the system called Pixis internally, and the literature and the patents and clinical data, market data, setup data, all those data is captured in generative AI and try to see what is the hot area at this moment, and what are the discussions held in each area, and what are the new findings in which area.
Those are what generative AI is always searching for, and we can see that as a dashboard with the color coding and what are the areas we should focus on, or what are the technologies we should focus on. That's what we are trying to identify, utilize, and verify utilizing generative AI. This is uniquely developed internally, therefore, this is Terumo's own technology and AI. Also, about the material, which is very important in our business. Raw material search. While other companies may be probably using it, for the material informatics is what we try to utilize, and the data we already obtained, including literature and technical papers, are all captured in that AI and to seek for the new material. Moreover, as a medical device, toxicity is very important, critical. That means we cannot use any material.
That's why, as I explained, AI toxicologist, this is also the unique tool. We have to make sure that we can secure the safety. That's how we try to look at the toxicity in the materials we are using. Therefore, AI itself are not utilized on our products, but during the development process, we are utilizing AI.
Yes. Thank you very much. My second question is for the success stories, and you try to return for the future development and manufacturing. As a good example, WEB is through the M&A you obtained, and as a Monozukuri, maybe you had several breakthroughs to develop that. So, I think this is a very good success story. Maybe similar examples as maybe the Arsenal Medical device you just announced recently, or last year you also announced the OrganOx acquisition. For those areas, maybe you can repeat or you can have the same success in the future, and then your company valuation is even higher. In terms of the Monozukuri excellence, so Arsenal Medical's products, the OrganOx products, and you may have some barriers and try to have some breakthroughs for those barriers. If you are working on development for those areas, we try to hear about it.
Yes, thank you very much. As you mentioned, WEB came from the Sequent Medical, but before that, it was we acquired MicroVention. So Southern California MicroVention Company and Sequent Medical, and the assets are utilized in various product lines. Some are already developed as a product, what is TIS, and even though this is a newer technology, it is applied for the TIS products. So that's what we utilize. As I mentioned earlier, for the very fine-tuned braiding technology, and compared with the conventional thermal, it's even thinner, and the wires, Sequent Medical can braid. That braiding technology is actually trying to be used for other than WEB products. That is the micro rolling out, the MicroVention technology in Southern California. As for the OrganOx, organ transplantation areas.
Currently, OrganOx technology is what we try to add the thermal technology to develop next-generation device. The next organ technology, we are not sure. We cannot open it, how we are going to develop it. But at Shonan Center, OT researchers are working together to develop the next-generation model or other than the organ transplantation technology, maybe we can utilize for other technology. Soon, we are hoping to share that information with you. About the question, it may be slightly different, but recently we announced Oxford University's joint research. Actually, that is related to organ transplantation for the perfusion technology. That's what Oxford University is going to lead, and we are going to support them. The worldly, very renowned high technology and their level is obtained by Oxford, and their great researchers are going to have the perfusion research.
Therefore, the OrganOx technological insight and knowledge could be obtained. That's what we also expect.
Thank you very much. Thank you. That's all for what I have.
Thank you very much. The top row, the gentleman. Yes, thank you. You have the microphone.
My name is Yamaguchi. I am with the Citi. Thank you very much. I almost said Terumo. That was a mistake. Let me ask you two questions about the know-how and the engineering technology. Many manufacturing companies have the top-notch engineers, and they are retiring one after another. Did you experience the same problem? With the use of the AI, are you trying to maintain such engineering notch?
Yes. We are having the top-notch engineers coming to the retirement age and retiring. That cannot be avoided. But we have the development and the manufacturing with excellent expertise. We are fully aware of that. We have a great thing. So people in technology, they have to experience the field, manufacturing field. Of course, it will take time. The new hires, they are young, and they cannot get to the top expertise tomorrow. So they have to go see the field and learn that over time and continue that through the next generation. So in this particular industry, the acquisitions may be a way to compete with others. But as a Japanese company, the acquisition alone is not the strategy. If we only rely on the acquisitions, we would not be enough to compete in the next century to come.
Even with AI, people-to-people transfer of know-how and engineering expertise needs to be maintained, people to people. That needs to be continued, not just in Japan, but around the globe. Well, actually, GenAI is used for that purpose, too. In the manufacturing side, we have great engineers, say, their eyesight, how they move, what they look at, and how they think. Those things are fed into the GenAI so that they can be vocalized and become transmittable. So the young engineers look at the senior engineers. They see and learn, not like that alone, but it is verbalized through GenAI. A combination and alignment have been very important. I understand the leapfrog between some of the difficult things for you to achieve, I guess.
How do you go about that? You have the innovation office, and you want to have the leapfrog type of innovation. How do you go about that?
Well, the big themes, we do not have many of them. We are fully aware of that. In this particular industry, especially in recent years, one technology creating one big product, it is not coming easily. So we are trying to work on the resource allocation. We have more than 300 development themes, and some are big and some are minute. So, at the same, throughout the corporation, we are trying to realize the seeds of the development themes. So as the resources we are currently spending on the small themes, we want to select and prioritize the themes. For the TIS, the new theme committee has been launched.
Conventionally, developers were the center of the effort, but we're involving developers as well as the business developers and their corporate venture capital members in the clinical development. The global marketing people are also on board, as well as the top management like we are. So, we're uniting our efforts to develop new promising seeds. Competitors are also trying hard in conjunction with the startups. We have the Terumo Ventures. In the summer of 2024, we launched that. Through Terumo Ventures and through some venture capitals, we've been investing in some startups, so that we can find more of the big themes. We're doing many things.
Okay, thank you very much.
Now let's continue to the next person. The person who's sitting behind there.
Yes. Thank you very much. I'm Mori from Nomura Securities. I have only one question. You have global on the manufacturing side. Then I think you're creating in the local side, and you sell in the local side. So it's not just you have the standardized and advanced countries such as Europe and Japan where you can manufacture your products. From design phase, are you already expect to do manufacturing overseas? As an example of guidewire, there's a core and with the plastic coating. Maybe on the creativity of the designs, what I would like to ask you about.
Yes, as you pointed out, we have global sites for the manufacturing and development. So we are not developing just the ones that are only manufactured in Japan, but there are two areas. A very sensitive process is required for some of the products. For those products, as the example of catheter, mother plant, which is Ashitaka plant, its factory is the main manufacturing. Also, knockdown is another process. So core part is manufactured at Ashitaka, and for the latter part, it's now manufactured in overseas manufacturing site. However, if the product itself is not so complex and it's a standardized product, from the development and the design, global site can manufacture the product. So that's how we design the products for. All the products can be manufactured at any site globally is not the case.
However, we try to manufacture the product that are sold worldwide. That is what we try to be able to manufacture in each site. It will take some time to make it happen, though.
For the next 100 years, as you mentioned, think about 100 years later, and the actual demographic will be different. What you can manufacture will be different. When you think about next 100 years, what are the initiatives that you are going to manufacture? Instead of on the shortage of the human resources, how are you going to address it?
Okay, so it's a difficult question to answer. For the next 100 years, what we have to think in the first place is rather than the production strategy on the rather medical devices, is how it is positioned in the industry or how, what are the disease that maintains, and what are the cases that healthcare won't be involved for, and also less invasive or the imaging and diagnosis will be transformed in the next 100 years during that time. What will be remained in that business and what won't be stayed? We have to transform ourselves to address new areas where there may be some areas that even if we address or we try, we may not be able to contribute to the society. That's what we are thinking for the next 100 years.
The production strategy for the next 100 years is something we do not think about this moment. Thank you.
Thank you.
Thank you. The next question. Yes. You have the microphone, sir.
Thank you very much. Kotani, Mizuho Securities. Thank you very much for the presentation. Back in 2021, I have seen the medical device companies in the U.S., they outsource. You see now they do not manufacture a lot of things. It has been a little shock. [uncertain] Medical, [uncertain] Medical. Perhaps you do not see much activity of theirs in the U.S., but they outsource. The coating , [uncertain] perhaps it's gone. So many medical device companies tend to outsource. So, the manufacturing technology, producing large quantities of the same things may be a hurdle or not. I do not quite understand it. Do you have any specific examples? The guidewire may be an example, M Coat, that back in 1985, it came into play, and that is lubrication.
I understand you and a particular company worked together to develop that. Perhaps the relationship is gone. But I do not hear much about using that technology and it take the market share. So, any similar examples like that? You have the great manufacturing technologies, but any examples you still see the manufacturing technologies being a barrier?
For example, M Coat. The M Coat related sales revenue is JPY 300 billion- JPY 400 billion per year. M Coat brings in how much incremental sales revenue. We ar e aware. For example, Yamaguchi plant, when we established the Yamaguchi plant, Ashitaka, the M Coat process was not easily transferred to Ashitaka. So, the same people, same recipe, in the same way, totally a rather different result. Some environmental conditions affect, let us say, humidity and the materials used. So, everything having the perfect match, we can produce the M Coat that we think we want. So, transferring the production site was such a tough thing, and the competitors cannot replicate that, I guess. We learned it the hard way. If we try to stay manufacturing in Japan, cost may be an issue. We cannot win the global competition.
So, there is the U.S., there is a partial transfer of the coating development team in the U.S., X Coat, i-coating. That is key, the coating. We are trying to ensure we have the in-house end-to-end coating technology development to deployment. When it comes to guidewires, they are not expensive stuff compared against therapeutic devices. But we do so much on the coating, and we are trying to expend so much efforts. Does it pay? Perhaps you think about that. Maybe it does not pay. We have a question as well. They acquired the company. Among our acquirees, some of them have coating outsourced, and we are trying to get some of the coating processes back to in-house. The high-quality, large-scale manufacturing should stay one of our expertise down the road, I think.
Regarding the guidewire, there is one other important perspective. In my presentation part, I talked about the ultra-fine metal fabrication, the process, or coated with resin in order to make it flexible. There is additional coating to make it lubricated. The section, the cross-section, if you have the guidewire cross-section, the true circle is what you see. The true core of the coating, you see the fine wire. But a competitor's guidewire, the cross-section, they are not a true circle, and the wire is not centered completely. That is what you often see. That is the level of the perfection of the finish, and the experts can see that immediately. Competitors are not trying so hard to follow us. Not recently, but many competitors tried to follow us up until 20 years, and competitors have been giving up on following us, catching up with us.
Okay, I see. So they are so different. Regarding automated production, I believe your competitors are trying to automate their processes so hard, and I think you are pretty good at automation. For example, sheath. The sheath is not expensive, and it consists of 20 parts and components. It used to be manually assembled, and the price is low, and it does not pay, and it is fully automated. In the next mid-term plan, perhaps you want to address guidewire in terms of the automation of the manufacturing process. I wonder how much has been automated, say- If you express your effort in terms of the growth and marginal rate, explaining the current situation of automation, full automation, it is nice to hear. Regarding the manufacturing process, what product is, how much fully automated?
I am sorry, I cannot give you the hard figure. Hard to explain, but I visit the production floor. I see many efforts worked on and many things are being automated. For example, let us say one tube. Grabbing a tube, what requires human fingers. But the tube is vibrated with a blow of air, and the arm just picks up one of so many things. Usually, the delicate human fingers alone will be able to do that, but now it is automated. So, the percentage of automation, I am not sure if we can express that in terms of numbers. Let us consider by the GS31 announcement. It is not a simple replacement but based on the tons of efforts by the top-notch engineers and through many different efforts, automation gets done. Automation is being done. There is room for more, I believe.
Okay.
I'm sorry, I can't give you the quantitative answer.
Well, thank you very much anyway.
Continue for the UBS, Yoshihara-s an, who's joining online.
Yoshihara from UBS. [uncertain] . Thank you very much for giving me the opportunity to ask a question. About CDMO business. Overseas investors are not able to manufacture with another company, and it takes too long to receive acceptance of the competitors of those companies. You are now rolling out outside of Japan for this CDMO business, but I was wondering if there's a risk about it. That is a question I'm often asked by investors. Differentiation was also presented, but for those questions, if you can have some additional comment, that would appreciate it.
Thank you. Yes. I'm going to answer then. Samejima speaking. One of the characteristics about CDMO is that we are a device company. However, for a long time, we are selling the drugs as well. Device and drug, both are what we understand very well, and it's very rare to find that kind of company worldwide. Therefore, pharma companies try to propose the deals and projects, and we understand the characteristics of those drugs and what are the device that improve the value of that. We have the proposal, a capability for those device, and also, we process it and make it as a device, and we apply the drugs, and as a combination drug, we just complete it. That's not what we can do.
Because of the understanding of those drugs, what are the regulatory strategies we can take, can be also communicated with at the high level with those pharma partners, therefore, the challenges in regulatory and also minimize those hurdles. That's the area we are able to contribute as well.
Yes. Thank you very much. Second question. In China or other emerging countries, I believe you have competitors. Competitive advantage you have, I know. I think I already received several answers. However, especially for those emerging countries, competitors, we try to hear your unique characteristics. Maybe you can leverage AI, so maybe the development speed of those competitors may accelerate. The game may be changed in the future. That's why I'm asking this question.
Yes, China and other emerging countries, competitors are a threat as well. But as we consistently explained today, large volume with the consistent quality, that kind of manufacturing technology cannot be achieved just in a short term or overnight. Therefore, our current competitive advantage is what we try to maintain and also expand it. Yes, we are utilizing the generative AI in the market, but consistent manufacturing and also pursue the cost is how we are going to keep our competitive advantage. For the emerging companies or countries, we are checking frequently. This is a competition among companies, so we need to improve our level as well.
Yes. Let me add that looking at each product, the performance is now, the gap is becoming smaller. That's what we really feel. Meanwhile, in terms of the cost, especially in Chinese manufacturers, they manufacture at a very low cost and sell at a lower price. Therefore, on the pricing-sensitive facilities, may use those products. That is actually the case we see nowadays. Therefore, other than product performance, such as training service or building the evidence for the clinical data and other Terumo's comprehensive capability, is what maybe we can then offer the value as Terumo to our past clients, customers, or hospitals so that we can avoid that gap to be filled.
Yes. Thank you very much.
Well, it is time to close, but let's see if there is one last question. Any other question? Yes.
I'm with JP Morgan. My name is Saito. Thank you very much. I'd like to ask about the AI utilization. In the development, AI is being actively used. By region, say, in terms of the regulatory response, any differences in the AI utilization, ease of utilization, the methods of utilization, any differences by region?
Thank you very much for the question. The answer is no. No regional differences in terms of regulatory affairs and AI-based higher efficiency improvement is expected from now on as well. We've already started a documentation efficiency improvement, and the documentation to be processed with high accuracy and in short time. The data sharing has not been complete across regions. In terms of the clinical development and the regional regulatory responses, we're trying to facilitate the region-to-region collaboration in terms of documentation utilization in the higher speed, in the higher accuracy. Of course, even GenAI cannot achieve 100% accuracy, but we are hoping to hit 95% and 98%, and we've been working on a system. We're implementing that.
Okay. Thank you very much.
Let me ask you another question. It is a short question. Cyberattacks have been affecting overseas manufacturing companies. What about you? What do you do in response, say, in the past one, two years? Do you have a plan to do anything differently in conjunction with the cyberattacks?
Well, let me respond to that question. Thank you for your question. Of course, when it comes to cybersecurity, we consider it a serious risk. All of the top management, we agree that we need to actively respond and prevent it. Since last year, the security responses, disparate responses across regions have been put together. The three regions, the three main regions have been put together. The same operation, the same system, so to speak. The details are not complete in terms of regional differences. But throughout the Terumo group, we are trying to enhance our cyberattack resilience.
Okay. Thank you very much.
Now, we have reached the time, so we are closing the Q&A session. We have finished the online streaming for this technology session. Thank you very much for those who joined.