Operating Risks

The performance of the Group could be severely affected by a variety of factors which could arise in the future. The following is a list of the main potential risk factors the Group has identified related to business expansion. Recognizing the possibility of these risks occurring, the Group is working to prevent them and respond if they occur.

Impact of Changes in the Clinical Diagnostics Market

In Japan, health care system reforms are being implemented as the low birthrate and aging population trends continue, and medical spending continues to be reduced. In addition, the clinical diagnostics market is subject to the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices and other related laws. In the future, if handling measures for pricing competitiveness to meet the reduction in medical spending or changes in related legislation are delayed, this could affect financial circumstances and management results.

Effects of Research and Development Activities

The Group makes efforts to carry out rapid and efficient research and development to create new products and make improvements to existing ones. However, development in the clinical diagnostics industry is fiercely competitive as technological innovation progresses, and interruptions or delays in research and development could affect financial circumstances and management results.

Effects of Quality Problems

The Group carries out strict quality control based on a quality management system (ISO13485) to ensure consistent products. However, if a serious product quality problem were to occur, this could affect financial circumstances and management results.

Effects of Information Systems

The Group has introduced various IT systems and is making efforts to optimize operation efficiency. However, if adapting to information technology innovations is delayed, a natural disaster or other factor causes system failure or connection failure, or damages or information leakage occur as a result of a computer virus, this could affect financial circumstances and management results.

Effects of Business Interruptions due to Natural Disasters, Accidents, and Other Incidents

If a natural disaster such as an earthquake or an accident such as a fire occurs at any of the Group’s factories or suppliers, causing interruption or restriction of business activities which inhibits product supply, this could affect financial circumstances and management results.

Effects of Overseas Business Expansion

The Group is actively promoting global expansion of sales activities, increasing the ratio of net sales accounted for by overseas business. In foreign countries and areas, a variety of risks exist such as exchange rate fluctuations and changes in the legislation, political situation, and the economy, and if any of these occur, this could affect financial circumstances and management results.