Hello, everybody. I am Takeda, the CFO. Thank you very much for participating despite your busy schedule for the meeting for the consolidated financial results for fiscal 2023. Today, I would like to start by giving a review of our consolidated financial results for fiscal 2023 and review the past three years. Next, our CEO, Stefan Kaufmann, will describe our company's strategy, and then I will return to go over our full-year forecast for fiscal 2024. Today's briefing will be focused on continuing operations. Please refer to the appendix section for detailed information about our discontinued operation, so let's start with the consolidated financial results for fiscal 2023 and provide a business review. Please go to page four.
In fiscal 2023, we operated a business under a persistently challenging environment throughout the year with the Shanghai lockdown, the war in Ukraine, supply shortages of semiconductors and other components, and rising raw material costs, all playing out. However, we were committed to overcoming these challenges and called upon the hard work and innovation of our employees to keep delivering our products and services and meet the expectations of patients and healthcare providers. At the same time, we pursued aggressive investments to reinforce our operational infrastructure, which is a necessary step for Olympus to achieve sustainable growth as a medtech company. We maintained a keen awareness of sustained growth and swiftly recognized opportunities while continuing to implement risk mitigation measures, thus achieving the target adjusted operating margin of 20% set out in our corporate strategy. Consolidated revenue amounted to JPY 881.9 billion.
Revenue in the medical business represented record highs for the fourth quarter and the full year, with double-digit growth for 18% year-over-year. Both ESD and TSD achieved double-digit growth. Gross profit was JPY 596.8 billion, with gross margin improving 0.1 points. In addition to the absence of reversal of provisions, totaling approximately JPY 4.2 billion related to the response to the duodenoscope market, and reversal of provisions totaling approximately JPY 2.7 billion related to a voluntary recall of bronchoscopes, both recorded in the previous fiscal year, procurement costs for raw materials, including semiconductors, increased during the fiscal year. However, gross margin improved due mainly to a favorable change in regional sales mix driven by increased sales in China and yen depreciation effects. SG&A expenses were JPY 420.5 billion, with SG&A ratio on par with the previous year.
Amid ongoing inflation, in particular, expenses associated with sales activities and strengthening of our operational infrastructure, such as QA-RA, increased. In other incoming expenses, a gain of JPY 10.3 billion was posted. Despite the absence of reversal of provision of approximately JPY 3 billion related to the indirect taxes of consolidated subsidiary and marginal gain of approximately JPY 2.8 billion on phased acquisition of Medi-Tate in the previous year, other incoming expenses increased due to, in part, a gain of approximately JPY 16.4 billion on the sale of land in Tokyo. Also note, described during the third-quarter results briefing that we have explained the U.S. FDA-related expenses in this term is JPY 1.9 billion. Operating profit was JPY 186.6 billion, up JPY 40.4 billion, or 28% year-over-year. Operating margin improved by 1.7 points to 21.2%.
Note that we achieved the target adjusted operating margin, excluding other income and other expenses of over 20% set out in our corporate strategy in 2019. Profit from continuing operations stood at JPY 138 billion, with EPS of JPY 109, up 26% year-over-year, while total profit, including both continuing operations and discontinued operation, amounted to JPY 146.6 billion, with EPS of JPY 113, up 25%. We plan to issue a year-end dividend of JPY 16 per share for fiscal 2023, the same amount announced in February. Next slide, please. Next, I would like to review the past three years. In January 2019, Olympus announced its corporate transformation plan, Transform Olympus. And in our corporate strategy announced in November 2019, we declared the target of achieving an adjusted operating margin of over 20% on par with the level expected of a global medical technology company in fiscal 2023.
Over the past three years, top management and all the employees have come together to implement all manners of initiatives and drive reforms. As a result, the figure for adjusted operating margin which stood at 9.2% in fiscal 2019 dramatically improved to 20% in fiscal 2023. Over this extremely short space of time, I believe we have greatly transformed and evolved every aspect of the company, including our business structure, organizational and operating models, employee awareness, and corporate culture. However, to achieve sustainable growth, there still remains a myriad of issues that stand in the way of Olympus becoming a world-class medical technology company, one that is accepted by all stakeholders, including patients. Going forward, we will continue with efforts to demonstrate the full potential of Olympus. This is slide six.
Since our corporate strategy was announced in 2019, a host of unexpected situations have developed, from macroeconomic issues to urban lockdowns due to COVID-19. Despite these trying times, the CAGR of consolidated revenue among continuing operations after forex adjustment was 4.6% over the past three years. We have also made tremendous gains in operating profit, doubling over the past three years with an adjusted operating margin of 20% in fiscal 2023, the result of steadily implementing initiatives to reduce costs and improve capital efficiency in addition to revenue growth, so the huge gains in profitability and the implementation of 80 billion JPY in share buybacks were conducted. The adjusted EPS growth rate exceeded 25% that was set out as a reference indicator, was achieved as well.
Meanwhile, we have made investments in R&D, which is vital to continue with sustained growth into the future on a par with industry peers. The revisions to our business portfolio, positioned as one of the key items of our corporate strategy, were completed in full with the decision to transfer the imaging business and scientific solutions division. Going forward, we will redouble our efforts to contribute to the field of medical practice, patients, and all of the society as a company specializing in medical equipment. Now, our CEO, Stefan Kaufmann, will explain about our company's strategy.
Thank you very much, Chikashi, for presenting our fiscal year 2023 results and also highlighting some of the great accomplishments of the last three years under the leadership of my predecessor, Yasuo Takeuchi. I'm Stefan Kaufmann. Thank you so much for joining our IR call, and I'm delighted to share our strategy with you today in my new position as president and CEO. I'm very much looking forward to working with you to ensure our key objectives are met and that we carry on the path of growth and development. This is an exciting time with much to be optimistic about for the future. With this in mind, we are introducing our new strategy today to guide us through the next phase to accelerate growth and to improve performance beyond our new horizon, leading as a global medtech company.
You have seen some of my colleagues already on the screen, but nevertheless, I would like to take a short moment to introduce the new executive officer team because part of our plan includes bringing in a new and dynamic leadership team to develop and implement our core strategy. We have a diverse management suite of professionals who possess decades of industry-leading experience, knowledge, and experience across their respective fields. We are very confident that the new leadership team will be fully devoted to implementing our strategy as they have been closely involved in developing the strategy, and we believe this will make our business a lasting success and a long-term commitment that carries through on our objective of making Olympus a truly global medtech player. As the new CEO, here are the three main priorities relating to patient safety, sustainability, innovation for growth, and productivity.
These priorities are guiding principles for understanding our purpose of making people's lives healthier, safer, and more fulfilling. We are committed to building a robust and durable organization that works with regulators and stakeholders to uphold our corporate framework of integrity and transparency. We want to create a business that leads in healthcare and ESG and one that puts the customer experience at the heart of everything that we do, and to be a company that is high-performing in patient safety, offering quality products across multiple areas that tie into our long-term business priorities. Above all, nothing is more important than patient safety. The three warning letters from the FDA are a strong signal for Olympus to raise its quality management system to a global industry standard. We take this issue extremely serious and are working tirelessly on structural and cultural changes to meet the regulators' expectations.
Employees and systems that will ensure patient safety remain the highest priority for us. In April, I met personally with the FDA leadership. As a result, we have developed an action plan in coordination with the FDA. I plan to work personally and closely with the agency to meet our obligations and to rectify the outstanding issues. This has been a learning curve for our organization and still is, but a challenge we can overcome and also a challenge which provides us with lots of opportunities for the future. As priority number one, we have already started with significant investments and commitments to transform Olympus' quality control processes into a single global system for both quality and quality management. A right-sized quality assurance and regulatory affairs organization will support this effort and ensure processes are adopted consistently and globally across manufacturing, repair, and distribution centers.
In addition, we have established a board committee which ensures we diligently respond to regulators and fulfill our commitments. We will continue to invest in patient safety and our business growth, which are fundamental to our organization's long-term sustainability. Since its inception, Olympus has prided itself on impacting society in line with our shared values. Part of our continued endeavors is realizing sustainable growth and developing a sustainable society. Olympus is committed to being a leader amongst its global medtech peers in environmental, social, and governance matters. We are developing a set of meaningful KPIs to guide and track our actions related to governance and reporting transparency, improve the health and equity of our organization and communities that we serve, and create a responsible supply chain and carbon-neutral footprint. Training is very effective to make a relevant contribution to improving patient care.
In both our developed and emerging markets, we aim to increase our training provided to healthcare professionals by 20% to contribute to diagnosing and curing colorectal cancer. Diversity has proven its relevance as a critical success factor. We also want to diversify our workforce and committees further. Therefore, we aim to have 30% women leaders globally by fiscal year 2028. Starting in Japan, we aim that 100% of our eligible male colleagues take parental leave, a goal we plan to accomplish by fiscal year 2026. I'm sure that we will soon be one of Japan's leading companies in this field. Carbon neutrality has been a high issue on our agenda for several years. We are expanding the goal for carbon-neutral operation sites to net zero GHG emission by 2040. Now, I would like to outline our strategic values that will ensure the long-term sustainable growth of our company.
We are continuously building additional value pools to support long-term sustainable growth. Through this, we have identified four key drivers that will expand our market position in our key segments and ultimately improve patient experiences and outcomes. These four areas are global expansion, M&A, care pathway innovation, and building intelligent endoscopic ecosystems. This growth strategy is expected to contribute to the sustainable growth of the company. In 2019, we revealed our long-term aspiration and have set some targets to help us achieve our goals and objectives and ensure we make good progress. Today, I'm glad to report that over the past three years, we have taken on the transformation and have almost achieved our milestone of exceeding 20% operating margin in fiscal year 2023. From now on, the new stage of Shift to Grow, we will manage both growth and profitability.
Our targets under this approach are to sustain revenue CAGR of around 5% and around 20% operating margin as befits a global medtech company and to deliver EPS CAGR of around 8%. We are on the path to further business growth and global expansion. Before I talk about our growth strategy in more detail, let's start with the market environment. Globally, the shift in demographics and rise in disease incidents are increasing the need for solutions across our targeted disease states. Both patients and healthcare professionals will increasingly demand less invasive procedures with improved detection, staging, and therapeutic interventions. This will drive demand for endoscopic and therapeutic solutions where we have strong service and support, differentiated expertise in endoscopic and minimal invasive approaches, and advanced access visualization, detection, and treatment modalities, which uniquely position us to expand our leadership in endoscopy.
Olympus will continue to focus on disease states and specialties where we can have the greatest impact on elevating the standard of care. We are active in several large fast-growing markets and are clear leaders in gastroenterology, urology, and respiratory, which accounts for a combined market worth of over JPY 1 trillion. These markets continue to evolve and provide tremendous opportunities for our future innovation and growth. Elevating the standard of care has always been a key focus for Olympus. It has been part of our DNA since we introduced our first endoscope over 70 years ago. We have and will continue to develop differentiated solutions along the care pathway. Olympus continues to lead in precision treatment with a comprehensive portfolio of access, therapeutic, and tissue manipulation technologies and advanced visualization with an extensive portfolio of solutions that make the invisible visible.
We also offer a complete set of solutions and services for reprocessing, infection prevention, and repair supported by highly knowledgeable dedicated sales representatives, and now, as a pure-play medtech company for the first time in the more than 100-year history of our company, we are able to fully align our capabilities and focus on further elevating the standard of care in the impactful markets that we serve and where we hold a significant leadership position. Turning to our established market leader business, GI will continue to grow at or above market as we roll out the EVIS X1 endoscopy system around the globe. Our investments in intelligent endoscopy ecosystems will transform the customer experience, fortify our market position, and provide future monetization opportunities for us. Complementary to our core GI portfolio, we have built a broad and differentiated GI endotherapy portfolio of ERCP, ESD, sampling, and hemostasis solutions.
We are also incredibly excited about our recent agreement to acquire Taewoong Medical and their portfolio of gastrointestinal and urological metallic stents as a future growth driver. In urology, our business can be divided into upper tract and lower tract diseases. For the upper urological tract, we hold the number one market position in reusable ureteroscopes, and we will soon be launching a single-use ureteroscope to give clinicians additional options and drive future growth. Olympus was also the first company to launch the new Thulium fiber laser for lithotripsy, and we command the top market share in this category for both the laser systems as well as for the consumable fibers. In the lower urological tract, we have a similarly compelling and market-leading portfolio of solutions for the treatment of bladder cancer and BPH. We expect to see significant growth from our new iTind device.
This is the first and only temporary implant to relieve BPH symptoms as of April 2023. The minimally invasive procedure can be performed in a clinical office setting and provides a solution for patients that do not want a permanent implant. The iTind procedure allows for improved outcomes such as preserving sexual function and continence. The iTind procedure also reduces the need for post-procedure catheter. In respiratory, we are excited about the prospect of elevating the standard of care and enabling early detection of lesions beyond the central lung regions. While it was a challenging year for our respiratory business unit with COVID-related lockdowns and macroeconomic-related supply issues, we are still bullish on the long-term prospects.
We lead market position in pulmonary and EVIS bronchoscopes, and our investments in single-use airway management scopes and the Slim EVIS scope, which are under development, are expected to reinvigorate the growth in this segment. We also continue to recognize the market opportunity for single-use endoscopes. We have five additional single-use scope launches planned between fiscal year 2024 and fiscal year 2026. I expect that single-use scopes will incrementally add approximately JPY 10 billion in revenue by fiscal year 2026. This portfolio will uniquely position Olympus with an optimal range of endoscopes for every patient, procedure, and site of care. We mentioned earlier about our EVIS X1 platform, our most advanced endoscopy system, and we have already seen exciting growth. The EVIS X1 endoscopy system represents a range of new, easy-to-use technologies that revolutionize the way gastrointestinal disorders can be detected, characterized, and treated.
Olympus is a global company with solutions available around the world. As we recently announced, we obtained 510(k) clearance and plan to launch the EVIS X1 endoscopy ecosystem in the U.S. market in the middle of fiscal year 2024. This market accounts for approximately 35% of Olympus' total GI sales. Additionally, pending regulatory approval, we expect to launch EVIS X1 endoscopy system in China in fiscal year 2025, representing another 20% of our GI sales in this field. China remains an important and strategic market. We have a great foundation built in China with a high level of healthcare professionals' engagement. Despite recent COVID-related challenges and the backdrop of updated policies, we are bullish on our long-term prospects in China and will continue to invest in the market.
Some examples of our strategic investments in the market include training and education to improve healthcare access and increase the number of endoscopists. And we have also initiated activities to establish a local manufacturing site to provide made-in-China products for the local market. Next, I will address the third value pool, mergers and acquisition, and their role as a catalyst for expanding our market position. We continue to strengthen our product portfolio capabilities through tuck-in M&As in our priority businesses of GI, GI endotherapy, urology, and respiratory. In existing disease states and attractive high-growth adjacencies, which in turn contribute to improving patient outcomes through comprehensive solutions. As mentioned before, we are very excited about the recent agreement to acquire Taewoong Medical, a Korea-based manufacturer of medical devices such as GI metallic stents. The addition provides for a more comprehensive stent portfolio and access and scale in selected regions.
Moving forward, in addition to our continued focus in organic innovation, we will continue to expand our product and technology strengths through M&A in core or high-growth adjacencies. The care pathway remains an impetus for us to continuously improve and, where possible, expand our solutions to generate better outcomes. Patient and care teams' expectations and needs change and evolve, and so too must Olympus. We are focused and steadfast on elevating the standard of care to improve outcomes, the patient and care team experience along the care pathway journey from early detection, diagnosis, staging, treatment, and ultimately in post-procedure care. Our solutions provide healthcare access to more patients and improve the quality of care and outcomes. Here are a few examples of care pathway enhancements in our three focused therapeutic areas over the past few years.
In each case, we leverage our core strengths to address an unmet need with new solutions, in turn unlocking new value pools for Olympus. It elevates the standard of care and ultimately shapes a better healthcare system. As the medtech leader for endoscopy-enabled care, we are harnessing the opportunities enabled by digital technologies to bring about an intelligent endoscopy ecosystem for the benefit of our customers and patients and to reach the quadruple aim of healthcare. The rise in chronic diseases in our aging populations requires the healthcare community to overcome the challenge of better outcomes for more people with better care team and patient experience at lower total cost. For example, there are markets with a shortage of gastroenterologists who can perform lifesaving but demanding procedures, and those who are able to perform these procedures face increasing cognitive load due to rising procedures and increasing administrative workload.
We believe that there's a huge opportunity for significant progress through intelligent endoscopy enabled by connectivity, AI, and data insight. This can enable wider access and better outcomes while enabling caregivers to focus on the patient. Therefore, we will elevate our unique capabilities from advanced visualization to intelligent cognitive support, from precision treatment to intelligently guided precision treatment, and from value-added solutions to intelligent insights and solutions. Olympus has been a forerunner and leader in endoscopy-enabled care pathways, especially in GI with a 70% market share. With our new elevated capabilities and our strong market position, we will continue to shape a new era of GI endoscopy by developing an intelligent AI-powered endoscopy ecosystem, ushering the next generation of endoscopy solutions. Let me share the blueprint for our upcoming solutions with you on the next slide.
Our intelligent AI-powered endoscopy ecosystem will be based on a new modern software platform that will enable value-adding co-creation between customers, Olympus, and third-party partners. It will enable a transition from a mere hardware sell business model, which depends on longer upgrade cycles, towards a model where continuous software improvement can provide always-on innovation via over-the-air upgrades and on-demand apps on the Olympus platform. As a result, patient and caregivers can benefit through more precise detection, diagnosis, and treatment. Data-driven workflow solutions and commercial models can contribute to efficiency. We also believe that this can contribute to attracting more next-generation healthcare professionals because of easier and more scalable training, as well as reduced mental burden with intelligent cognitive support. As mentioned earlier today, the third pillar of the strategic priorities is productivity, so a strategy to enable investments to secure long-term growth is pivotal to our business.
In addition, innovation is an essential aspect of our business and will help us develop and grow in our key focus areas. To enable innovation, we must continue to work on optimizing our value creation. This can be accomplished by our QA-RA transformation, which will provide us with a consistent, modern, and robust quality system and organization and help us complete our remediation efforts, quicker and higher investments in R&D with the aim of accelerating innovation. We want to create a more robust innovation pipeline, seek more proactively strategic partnerships, and accelerate our time to market. Seizing opportunities through cost improvement, a right-sized organization and site structure, streamlined and digitalized processes, and seeking further efficiencies. Finally, we will continue to improve our global governance and operation and establish and enable a high-performing organization with clearer decision-making processes and a more efficient resource allocation to unlock capital to drive innovation.
The value creation wheel outlines how, as a business, we are looking to bolster our approach to continue to provide outstanding value to all stakeholders across the key areas of patient safety and sustainability, innovation for growth, and productivity. Essentially, we want to maximize our profits by increasing sales and improving COGS and SG&A. We will look to reinvest the revenue generated to create new value and ultimately achieve that level of sustainable growth that we are currently pursuing and that I've mentioned earlier in my presentation. Now, I'd like to guide you through the financials to provide a solid overview of the growth and value we aim to generate in the next three years. As I mentioned earlier, our new strategy will support long-term sustainable growth for Olympus. We expect revenue CAGR to be around 5%, including M&A.
We aim to achieve 5% CAGR for our ESD business, mainly due to increased sales of EVIS X1 and VISERA ELITE III. With TSD, we are aiming for more than 5% CAGR by expanding our product portfolio, including single-use endoscopes and M&A. Earnings per share CAGR is targeted around 8% above revenue growth. With productivity and efficiency improvements to control rising costs and our operating profit margin, we believe to be maintained at around 20%. Our capital allocation policy, last updated in 2021, remains the same. Taking advantage of our robust platform centered on GI endoscopes in the medical business, I believe we can continue to generate stable free cash flow. First, business investment is the top priority in capital allocation. Our shareholders expect Olympus to make business investments to create unique added value and increase shareholder value.
In line with our company's strategy, we will continue to promote business investments and M&A centered on the medical business, especially in our three focus areas that I referenced earlier. In line with good financial management, we will pay dividends stably and aim to increase them gradually. After securing sufficient liquidity on hand for working capital and investments, we will consider and have decided about additional share buybacks of treasury stocks if there are surplus funds. Let me share with you the direction of our business investments and shareholder returns over the next three years. R&D is the most important element of elevating the standard of care and introducing new solutions along the care pathway. We will invest in R&D to create new breakthrough innovations while continuing to control cost increase through prioritization of development themes.
Regarding capital expenditures, we plan to strengthen our manufacturing base, including the establishment of a base in China. The amount of investment over the next three years is expected to be at a similar level as in the past three years. We would like to capture opportunities for M&A, but we don't see the budget as it depends on the opportunity. Our business development team is always searching for opportunities that fit our strategy, and we will continue to work in this area to identify those opportunities as part of our growth plan. In addition to these investments for business growth, strengthening QA-RA is a key management priority over the next three years, and we plan to make extraordinary investments in our QA-RA function. With our sustainable growth strategy, we will continue to create greater value for our shareholders, which will reflect in the dividends.
Dividends have been increased for the past five years straight and are expected to increase by 2 JPY per share for the current fiscal year. We will also consider share buybacks to improve capital efficiency at the right time. Now, I would like to hand over to our CFO, Chikashi Takeda, for the forecast for the fiscal year 2024.
Okay. Thank you, Stefan.
Thank you. This is Takeda speaking again, and I would like to explain the numbers. This is the full year forecast for fiscal 24. As Stefan has just explained, for FY 24, it is going to be the first year of the new strategy. So the policy and the strategy just outlined will be the basis of this outlook. I will start with the FX. 132 JPY to the USD and 144 JPY to the EUR. This is the forecast assumption for FX.
Revenue is expected to achieve JPY 914 billion, up 4% year-on-year. In terms of expenses, to implement comprehensive measures that contribute to patient safety as the number one priority, including expenses for responding to FDA findings, we will see a significant increase in expenses, and we will also prioritize the allocation of resources to R&D, productivity improvements, and we will continue to strengthen and change the operating model, and again, we will continue to allocate our resources that way, and on the other hand, we will continue with the cost reduction initiatives and SG&A rationalization efforts to secure resources. Adjusted operating profit rate would be around 20%, and the actual adjusted operating profit will be JPY 182 billion, up 3% year-on-year. Profit is also expected to reach a record high of JPY 336 billion, in part reflecting gain with transfer of scientific solutions business.
EPS is expected to be JPY 273, up 141% year-on-year. Stable and continuous dividend increase is a basic policy, and based on this forecast, we will be increasing the dividend to JPY 18 per share, up JPY 2 from the previous year, and approximately JPY 100 billion of share buyback is also expected. Next slide. This is the forecast by business segment. Both ESD and TSD are expected to continue to grow, and as a result, the combined revenue for two divisions will be record high. In ESD, we expect to continue to see sales expansion of EVIS X1 in Japan, Europe, and APAC. Also, please note that in the U.S., we received 510(k) clearance from the FDA at the end of April, and we ran displays and demonstrations of EVIS X1 during DDW, Digestive Disease Week, a gastroenterology conference held from May 7th to the 9th.
We are aiming to launch the product in the US in the middle of fiscal 24, unchanged from before. In TSD, on the back of procedural recovery, we project continued growth centered on the three focused areas: GI, urology, and respiratory. And for elimination and corporate, in addition to a gain on the sale of land in Tokyo worth approximately JPY 16.4 billion, recording fiscal 23 no longer applying, we expect increased expenses to implement comprehensive quality control measures. This continued operation is expected to record a gain on transfer, resulting in a significant increase in profit. I would like to again hand over to our CEO, Stefan Kaufmann, for closing remarks.
Thank you very much, Chikashi, for presenting our fiscal year 24 forecast. And I would like to close the presentation part of our IR conference with this slide. Let me once again spell out our aspiration to establish a truly global Medtech company that is committed to improving patient outcomes by elevating the standard of care in targeted disease states. By strengthening this foundation and maintaining growth and profitability, we strive to meet our financial targets through rigorous and thorough financial management, coupled with taking a long-term approach.
This will enable Olympus to be recognized by healthcare professionals, patients, and regulators for the quality, value, and innovation of our people and products. I look forward to working with you all on delivering our ambitious program and value for all of our stakeholders. Thank you very much.
Let's turn to Q&A. Thank you very much. One question. This year's guidance in terms of the elimination is JPY 23.1 billion, including the response to FDA, excuse me. And that's the cost that is allocated. But in the wording that is from the FDA, what's the current status? Please explain. And this JPY 23.1 billion, when you break it down, what will be the elements of this? That's my question.
Thank you very much for the question. And I propose that I take the first part and that I hand over to Chikashi. So the current status of our QA-RA remediation is that we have been in the process of aligning with FDA on a remediation plan, which has already been kicked off, and we have already made significant investments also in the last fiscal year to work on topics like late MDR reporting, like opening and closing of CAPAs, and design validation. So there's a lot of activity already ongoing in the company with good progress.
What I would like to highlight to you is, while you ask that question, is that just doing the remediation of the issues that were outlined in the warning letters is, from my point of view, not sufficient because we cannot only work on the symptoms. We really have to address the root causes, and that's what we plan to do, so next to the remediation efforts, we are at the moment in the process to set up a very holistic QA-RA transformation, which will look at our operating model, at our processes, at our IT systems, but equally also at culture, capabilities, and change management, so this program is almost comparable with what we started 2019 with Transform Olympus and requires, on the one side, huge effort from the company, also resource-wise.
But on the other side, I'm so happy about the program because this will provide us with huge opportunities to really mature our operating model, our processes, and our capabilities to live up to the expectations, not only of the regulators, but to the expectation of a leading global medtech company. So I see this as a great chance, but obviously, this will require a lot of effort and focus from the entire organization. And this is not only a matter of QA-RA. This is a company matter. And I think the second part of the question, I hand over to Chikashi.
Thank you very much for your question. This is Takeda responding. So in terms of the elimination, in terms of what is included and breakdown within what is shown in the numbers there. First of all, the biggest portion of this is that in the previous year was small last year. I said in my presentation that the Hatagaya, this is the land in Tokyo, the gain was JPY 16.4 billion.
That's the difference, and there is some IT cost, the common IT cost, and some FDA-related cost, so this is a kind of a common cost, and that will be the JPY 23.1 billion that is shown here, so when I made a presentation, maybe there were some questions that led to misunderstanding, so this year's outlook within the elimination, I think basically it said that because FDA cost is included in the elimination line, it increased, but the FDA-related cost, it is included here, but most of it is on the business side. Basically, it will be related to the business, so that's where we book these costs.
This is a good opportunity, and I think people are wondering about this, so I would like to respond to it upfront. For March 2024, FDA-related remediation cost within SG&A on a consolidated basis of around JPY 7 billion, with the other cost is about JPY 15 billion is what we are anticipating for this year. That's all. Understood. Thank you very much. This is a follow-up from my side. And on that note, you were referring to the root cause and review the IT systems as well. I think this is related to the midterm business plan. This is a comprehensive countermeasures. In the three years of the midterm plan, what level of cost will this account for? This is my follow-up question.
Thank you very much for the question. Let me, first of all, state that the IT system itself is not the solution to the issue. The solution is to harmonize and standardize the processes globally and then introduce the IT system. So the project is really holistic and big and covers the entire organization. The operating model and the IT part is one piece, an important one, but not the only easy solution to fix the issues we are seeing at the moment.
We have planned in total for the next three years, roughly 60 billion JPY for the QA-RA remediation and for the QA-RA transformation. Part of that is the IT system, but we are not as granular at the moment that we could exactly outline what the specific costs for IT are. Understood.
Thank you very much.
I wonder if Mr. Boisier is online. I have a question about QA-RA. When I read the warning letter, gluing validation was the biggest concern because if that validation is sufficient, there was a potential fault in the washing problem. So I think this was probably based on the infectious disease for the duodenoscope. And I think there are many infections. And how can you apply that to the urology or urethroscope? It doesn't seem to make sense. So my question really is, as far as endoscopy manufacturing process is concerned, do you think FDA has changed its stance or changed its viewpoint recently?
Thank you for your question. And I think when it goes back to the gluing process, we were looking at how do we make sure we validate things because gluing is not something you can inspect. We had many mitigation steps or places in spots that we would pull, we would inspect, we would do things.
That's not acceptable to the FDA. So we are going through and we're reviewing all of our processes. We're reviewing our systems. We're reviewing the capability of the people in the processes to make sure that we're understanding what the requirements are of not only the FDA, but all the competent authorities around the world. So I think we have been working with the FDA very closely. We have been sending in monthly updates. We have been communicating with them. We've gone through our complaint handling processes very, very closely. We're currently next will be going through our CAPA processes and then our process validations. So I think the path that we are on, we will definitely meet the FDA requirements.
I just wanted to confirm. Actually, I guess the better question to ask is, it just seems to me like the FDA has really changed how they look at the process of manufacturing endoscopes. Is that correct? Because if that's true, then yes, this justifies the cost because that's a very dangerous time. I mean, very few people remember what happened to Terumo in 2012 when they went into consent decree. That was the same sort of situation. That's what I wanted to confirm. It looks to me like the FDA is putting a magnifying lens on the endoscope procedures that were in the past, well, less rigorously looked at. Is that correct?
Yes. The FDA changes the interpretation of the regulations. The regulations' words don't change over time usually because they need an act of Congress in the United States to get approval to change those regulations. So what the FDA does is they go out and inspect many, many facilities. They identify best practices, and then they start letting people know that that's the best practice. So we have now in our regulatory group, we have regulatory intelligence. We've also brought in Aaron Dunbar. He used to work for the FDA to run our compliance section. And what we're constantly doing is looking at other people's 483s, other people's warning letters to see when the FDA is changing their interpretation so that we can meet the new interpretations. And we really weren't doing that in the past.
Good to hear. Just the second question is on TSD. I guess this will be if I could ask Gabriela. By the way, welcome to the fiscal presentation. The constant currency growth rate of 5% for 2023 looks well, somewhat conservative, and the reason is because I think the procedures, endoscopic procedures, have been depressed because of the pandemic. I think in the EU and U.S., you have a plasma and Soltive. These are some very good products in the urology space. China obviously has had lockdown impact, and so what I wanted to understand is why is it 5% constant currency growth rate when you have all this to talk about, and on top of that, I think Stefan mentioned iTind, which I think is quite exciting, although your company hasn't really mentioned it much, so if you could just talk about, walk us through why it's 5% constant currency growth rate in TSD and why it's not conservative. That would be great. Thank you.
Thank you very much for the question. So I think first, let me just reiterate that there's a lot of exciting aspects of our business. And as you point out, we are very fortunate to have many product categories in our key areas of focus and growth. And some of these were already mentioned in the overview of our strategy by Stefan, as you mentioned. For our business in general, we've had some setbacks in fiscal year 2023 from a supply perspective. And although we are recovering in some of the areas, we still are anticipating that we will head into this new fiscal year with some challenges across some of our product categories. In the consumable side of the business, this, of course, has a tremendous impact. We are, of course, including some of this impact into our growth.
But as we've maintained steadfast over the last pretty much eight quarters, we have been seeing in our focus areas, as an example, you mentioned already for urology, our Soltive product. This is a product that we've had challenges from a supply chain perspective, but we continue to grow in the markets that we're in. And this year, we're getting into new markets such as Japan for launches for our Soltive product. So we continue in that growth, and that is expected over the trajectory. But in our area of endotherapy, as an example, we have continued to see the growth in the biliary side, very consistent growth. But as we experience, again, some supply setbacks, as well as we're recovering still on some of the procedure basis from our markets in Asia, mainly China and Japan, these are areas that we still have to have in our consideration.
And finally, to just address your question on iTind, this is still an area where we continue to see very favorable results. It is a market development effort as we're continuing to focus very heavily on our reimbursement strategy. But this is absolutely a pillar of growth for TSD in the years to come. But again, it is as planned in our market development effort, and our reimbursement strategy is on plan, but we have to continue to focus on the procedure side. And finally, we have, as I mentioned, on the China side, we are focused on continuing to get back to growth in this region. But again, for TSD, this is the only region in fiscal year 2023 that we didn't experience growth in.
Oh, quite clear. Just one last question, one last follow-up. What's the chance of getting the CPT code coverage for endoscopic submucosal dissection within this medium term? Because it would seem like that would be the biggest growth driver for TSD. Thank you.
So for getting a CPT code or a reimbursement in this particular category is not an easy task. It's something that we continue to look at, and it's not just something that Olympus is looking at, but I think we're looking at as an industry because we know that this is, as we continue to talk about where are the areas where we can really change and elevate the standard of care, this is certainly one of them. So what I can say is that we remain committed as Olympus, but also with a panel of trusted HCPs and the rest of the industry.
It's an area of focus because there is opportunity to change the standard of care. But it is a challenge. So in addition to that, we continue to invest a lot of time and effort globally in the training in this area, which, again, is something where we have a lot of opportunity to do to continue to expand and develop the market in this area. So our efforts, again, are going to be focused on both what is the pathway to getting this into a position of reimbursement. But honestly, in the short and midterm, our focus, again, is on training and market development efforts around this procedure.
Thank you. Thank you very much.
My first question is, Takeda-san has explained about the FDA-related expenses. According to your explanation, FY 2024 March in the next new fiscal year, SG&A is JPY 7 billion. So others are JPY 15 billion. So I think this is JPY 22 billion in total. So year-over-year, if you compare it against the previous year, FY 2023 March to FY 2024 March, how much increase is seen? If possible, can you give it by segment?
Roughly is okay. So how much increase of FDA-related costs is going to be seen for this fiscal year compared to last fiscal year? This can be qualitative, but there's FY 2024. So from this JPY 22 billion towards FY 2025 to FY 2026, is it going to increase further? If you have any guidance on that, please elaborate on that. My second question is.
Stefan, I want to ask you to talk about your OP margin target for the medium-term plan. You're currently targeting about 20% at an operating margin, which is consistent with what you have been looking for in the last couple of years. But it seemed like I would like to hear more about an opportunity above 20% rather than sticking around 20%. So how do you think about the opportunity to your OP margin target from here, or would you like to stick to 20% for future growth, maybe post the next medium-term plan? How should we think about the OP margin target? Thank you.
I would like to ask Chikashi to answer the first question, and then I will come back to your question about our OP margin target.
Thank you.
Thank you very much for your question. So let me be quick. First of all, 2023 March, JPY 1.9 billion in others cost. Basically, the QA-RA remediation under our definition, this is the cost for last year. So this year, in SG&A, JPY 7 billion. Others is JPY 22 billion. SG&A, 7. Others, sorry, excuse me, JPY 15 billion in total, JPY 22 billion. You, Stefan, I think mentioned about the total in three years, so about JPY 60 billion is what we are looking at for the following two years. In the last year, maybe it's going to go down a bit.
That's what we are assuming right now. But that said, as we go along, maybe this will change. However, the current outlook that we have is what I have mentioned. Thank you. Thank you. Year- over- year is about an increase of JPY 20 billion. I understood that. But for ESD and TSD, if you can comment on what area is going to increase more? We cannot speak about the breakdown at this point. This is the overall company-wide expense, and that's what we're looking at. Understood. Thank you. Okay.
Let me answer your question about my view on our operating margin. So first of all, I clearly believe that the potential of Olympus is much, much higher than 20% operating margin mid and long term, very, very clearly. But let me also explain why we decided to set a 20% operating income margin target for the next three years. And this has a couple of reasons. The first one is that over the last three years, we have doubled our operating margin from 9.7% or 9.8%- 20%. We have reduced SG&A from 56%- 47.7%. And that means that the obvious fat and redundancy of the organization is gone. That means when we want to strive for further efficiency gains and productivity gains, we have to look at our operating model, at our processes, and streamline the organization.
And I think this is now a great opportunity for us that we are a medtech company, not a conglomerate anymore, that we can really create an organization which is much more vertical and not so much horizontal as the previous Olympus has been. What we also have to take into consideration is that next to the investments into QA-RA, you have seen that we want to exploit the value pools I have introduced to you. Obviously, to become the leader in intelligent endoscopy system, to grow single use, to build manufacturing in China, these are all topics that require investments from our side.
And we believe that we do aim for productivity gains in the next three years, but the majority of the productivity gains, we really want to either invest into building our global QMS system, or we want to invest into innovation to really strengthen the long-term sustainability of Olympus. So two answers. First one, potential is definitely higher than 20%. Second answer, we believe in the next three years, the priority for us should be really to secure the long-term future of Olympus. And this is the right moment of time to do this, that we are now transformed successfully and that we are now a medtech company, a pure medtech player.
Thank you. Thank you so much.
Slide 45. Slide 45. About the capital efficiency improvement, JPY 100 billion and also share buyback. This is for the three years of the midterm plan. But the additional JPY 100 billion is for this fiscal year. So you have basically spent all of this already. So can we expect more than JPY 100 billion, or is this the end? Has this already been finished in the first year? Can you please explain this for me? Thank you.
And Chikashi, do you want to take the answer?
I have explained the capital allocation policy, and according to the policy, we will continue to execute today and after today. We will continue the capital allocation. That would be the answer. In other words, business investment is first, and then next comes dividend. And then if there is extra capacity, we will do buyback. So this is the rule that we'll be following, adhering to, and we'll make decisions accordingly at every time point. I hope this answers your question.
Some other company estimates the cash and deposit at a certain level, and whatever exceeds that threshold is allocated to share buyback. You have already spent JPY 200 billion. From the external perspective, maybe we cannot expect much more beyond the second year of the midterm plan. Do you have any positive message that will negate that kind of estimation?
Let me try to take that question and give you an answer as precise as possible. First of all, as a company, we have no intention to pool large amounts of cash over the next couple of years. As Chikashi said, our first priority is investment into the business. M&A is an important part. M&A is on the one side strategic, but on the other side, always a little bit opportunistic.
So we cannot plan at the moment what targets we will find in the next two or three years. So we would like to keep a reserve. And you see that the interest rates at the moment are increasing all over the world. So to keep a little bit more cash on hold, I think that's a wise strategy in times of uncertainty that we are facing at the moment. But having said that, the moment we are sure that we have a surplus, we will deeply consider shareholder returns in form of a share buyback, but we cannot make any firm commitment at this moment of time.
Understand. Thank you. That's all.
My question is that FY 2024 ESD's revenue by region growth of sales and TSD's by region sales growth by region. The reason why I ask this is that FY 2023, due to March, we had COVID, a special year. So 5% growth target for the midterm plan, but the growth, maybe you should have a higher growth target for March 2024. So in terms of the sales growth rate of each of the regions for each of the businesses, if you can elaborate on that, I can understand where your focus is. So for these two segments, by region sales growth assumption, please elaborate on that.
I would like to give you a more holistic answer with respect to the 5% CAGR growth rate, and then I would ask Frank and Gabriela to go to the specifics. We believe that the 5% CAGR, despite our very, very strong fourth quarter last year, is a good balance between opportunities we see in the markets, but also risks we do see.
As I said before, I think the macro-political, macro-economic environment is extremely difficult to predict for the next three years. Also, I mean, while semiconductor supply has been stabilized, we still see in many areas supply chain issues. Our company has to focus on the QA-RA transformation, which is the number one priority. After intense discussions, we found that 5% growth rate is a fair balance of setting us an ambitious target, going for the opportunities we see for growth, but at the same time, also being prepared that in one or the other region or with one or the other product, we might see a risk we cannot at the moment plan.
Our strategy in general is that we rather keep the sales on a reasonable level because if you overplan sales, you always run into a risk that your costs are planned accordingly, and then when the sales don't come, you run behind your SG&A and your COGS. That's the reason why we believe 5% is ambitious. That's not a walk in the park, but it also incorporates some of the risks that might face us over the next three years in one or the other market. So this is Frank and Gabriela. Maybe Frank, you start about ESD.
Yes. I hope you can hear me. Thanks for the question. And I think when we look at the EVIS X1 and the capital business and GI in general, it is important to also differentiate to the TSD part where the procedure growth is very important. In our case, we are always feeling headwinds as a premium quality, but also premium price supplier for GI endoscopy, and what we have seen growing over the last year is the pressure on the healthcare providers, so the hospitals are under tremendous cost pressure, which was already there before.
They're also under tremendous pressure in terms of staff shortages and cost increases from staff. In the United States, Germany, healthcare staff is going on strike at them to push more. This normally backfires quite quickly into our upside potentials. The tailwinds which we are expecting are mainly coming from the EVIS X1 launch in America and then the neighboring regions like Canada, Latin America, and Korea in Asia, but as you have already heard, those launches will really happen only in the second half of the year.
So if we go around the globe, because you asked very specifically for regions, I think it's fair to say that we are still expecting Europe and Japan to build on the EVIS X1 success. They were in the range of 4%-7% this year. But in Europe, we also see risks around the NHS UK healthcare system, which was extraordinarily investing over the last two or three years. And the Russian business continues to shrink, and it's very unpredictable, as you can easily imagine. In China, we will not have the EVIS X1 available, so we will have to continue to face the local competition. And as you heard, we do plan local manufacturing, but this will not have any impact, definitely not in this calendar year. So the 6% we saw last year will be something which we are striving to keep. And in Asia-Pacific, we saw nice growth.
In emerging markets, we saw nice growth. But the percentage of the overall weight of these growth numbers do not allow us to be much more optimistic, we feel, than the 5% based on the explanation Stefan just gave. So after careful bottom-up planning, we are trying to find the right balance between realistic but challenging, but not over-optimistic. And that's where we see our 5% for ESD at the moment.
Thank you, Frank. Gabriela, maybe because we're running out of time. Gabriela, thank you, Frank. And Gabriela, maybe because we're running out of time, maybe you can already kind of reflected to some of the topics when you answered another question. Maybe you can keep your answer short.
Yes. Very little else to add. I'll just say for TSD, again, because the question also was around the regional focus, again, we will continue to have strong focus and growth and expectations in the U.S. and EMEA regions, and in China, as I said at the beginning, we have growth expectations for our endotherapy area, but as we continue to face challenges with value- based for both urology and surgical, that's why you see this continued balance for us. Stefan has already addressed again the supply chain concerns as I did at the beginning, so nothing else to add.
Thank you very much. That's all from me, so with this, we would like to end the financial reports and the explanation about the management policy for Olympus. Thank you very much for your participation despite your busy schedule.