Risk of supply disruptions due to supplier contract and manufacturing plant issues

「Delivery delays continued for certain components of the externally manufactured artificial knee revision product Balanced Knee System – Revision. The resulting constraints on product supply led to a decline in cases won, and sales decreased year on year.」

「In the US total knee arthroplasty market, delivery delays continued for some components of the externally manufactured revision knee product Balanced Knee System - Revision, constraining product supply. The number of cases won declined, resulting in lower revenue for total knee arthroplasty (TKA).」

「Ongoing delivery delays occurred for some components manufactured under contract externally. The number of cases won declined for products whose supply remained constrained, including Balanced Knee System - Revision, resulting in a slight decrease in revenue for total total knee arthroplasty (TKA).」

「The Group is taking measures to diversify component suppliers and increase the proportion of in-house manufacturing because problems at suppliers of components for ODEV's in-house manufacturing, or delays or suspensions in the procurement, logistics or other handling of products sourced from other companies, may affect profit or loss and financial condition.」

「The cost of sales ratio was 35.9% (33.7% in the same quarter of the previous year), due in part to the expanded use of external vendors to avoid supply chain problems, higher procurement costs resulting from inflation, the weaker yen and the impact of reimbursement price reductions in Japan.」

「In the United States, the supply chain issues that arose in the first half showed signs of improvement compared with the same quarter of the previous year. The Group gradually resumed supplying products to new customers whose supply had been suspended and expanded its customer base, while increasing the number of cases secured through various sales expansion initiatives for existing customers. As a result, sales to external customers in the United States increased 4.3% year on year in U.S. dollar terms and, after translation into yen, increased 26.8% to ¥6,644 million due to the weaker yen.」

「In the osteosynthesis products field, domestic revenue in Japan increased 14.3% year on year to ¥867 million, as the supply system for ASULOCK recovered.」

「Shipment restrictions on ASULOCK have been gradually lifted since July 2020. Although supply remains subject to some constraints relative to demand from medical institutions, it is showing signs of recovery.」

「Shipment restrictions on ASULOCK have been gradually lifted since July, and the supply-demand gap is showing signs of recovery.」

「ASULOCK remained in short supply as supply failed to keep pace with demand, and shipments to medical institutions continued to be restricted. As a result, domestic revenue fell 14.7% year on year to ¥758 million. The inventory shortage is expected to be resolved in the second half of the current fiscal year.」

「In the osteosynthesis materials field, sales of ASULOCK were unable to meet expanding demand because the inventory shortage caused by insufficient manufacturing capacity at the manufacturer was not resolved. Domestic revenue nevertheless increased 4.5% from the previous consolidated fiscal year to ¥3,760 million.」

「In the osteosynthesis materials field, sales of OM Femoral Nail System III remained steady despite an inventory shortage, and domestic revenue increased 10.2% year on year to ¥2,828 million.」

「If procurement is delayed or suspended due to the termination of contracts with companies other than ODEV or problems at suppliers' manufacturing plants, this may affect profit or loss and financial condition.」

「If procurement is delayed or suspended due to the termination of contracts with companies other than ODEV or problems at suppliers' manufacturing plants, this may affect profit or loss and financial condition.」