Materiality and KPIs

Identifying Materiality
Materiality and KPIs

Identifying Materiality

In June 2021, we identified the materialities (important issues) shown as below.

Materiality Identification Process

STEP.01 Identifying Social Issues
Identified social issues by referring to evaluation items in international sustainability guidelines (GRI, SASB, SDGs).
Created a comprehensive long list of social issues and organized the items to create a short list of social issues (27 items).

STEP.02 Prioritizing Social Issues
Evaluated and prioritized individual social issues by using the two axes of "importance to the company" and "importance to stakeholders.”
Created a matrix and selected candidates for the materiality that should be prioritized and initiated by the company.

STEP.03 Validation
Confirmed the validity of the selected candidates of materiality through discussions by the Operating Officers, also Board Directors.

STEP.04 Identifying materiality
Organized the identified materiality into the following two categories.

“Issues to be Resolved Through the Business”
“Issues to be Addressed to Strengthen the Business Foundation”

Starting from the identified materiality, we will promote sustainability-related initiatives through setting KPIs and targets, developing a roadmap, implementing initiatives, monitoring progress, and disclosing information of the results.

Identified Materialities

Issues to be Resolved through Business

Area	Materiality	Major Themes
Philosophy Realizing a Healthy Society	Solve medical issues through innovative medical devices	・Improve technology for in-house products ・Introduce medical devices with high clinical value

Issues to be Addressed to Strengthen the Business Foundation

Area	Materialit	Major Themes
Environmental Consideration for the Global Environment	Reduce environmental impact	・Use resources effectively ・Reduce greenhouse gases ・Reduce waste / Process waste properly
Social Creating a Rewarding Workplace Supply of Safe and Reliable Products	Create a workplace where employees can work with comfort	・Create a comfortable work environment ・Respect human diversity ・Respect human rights
	Develop human resources and provide opportunities for them to play an active role	・Support employees to achieve specialized skills and personal goals ・Strengthen education and training
	Secure product quality and stable supply	・Strengthen the quality control system ・Secure stable supply of products
Governance Acts as a Responsible Company	Strengthen corporate governance	・Strengthen auditing and supervisory functions ・Execute management decisions and operations with objectivity and transparency ・Strengthen risk management initiatives
Governance Acts as a Responsible Company	Promote compliance	・Ensure fairness and transparency in corporate activities

Solve medical issues through innovative medical devices

Our mission is "Contributing to a healthier society through cutting-edge medical technologies," and the continuous delivery of innovative medical devices to medical professionals forms the foundation of our value creation.

We will secure our technological competitive advantage by developing new proprietary technologies through focused investment in R&D and patenting the results. We would like to meet the needs of medical professionals by introducing overseas advanced medical devices in Japan,applying our proprietary technologies to the development of products in other fields besides cardiovascular diseases.

Improve technology for in-house products

KPIs	Major Medium-Term Targets (to be achieved by FY3/2025)	FY3/2023 Results	FY3/2024 Results
R&D expense	Bring about increases in R&D expenses	R&D expenses (non-consolidated) of 2,316 million yen (year-on-year increase of 7.3%)	(Non-consolidated) R&D expenses 2,358 million yen, up 1.8% YoY
Number of patent applications	Number of patent applications: 100 (total for FY3/2023-FY3/2025)	34 patents (non-consolidated)	41 patents (Cumulative total of 75 cases from FY3/2023 to FY3/2024)
Exploring new areas of business from Intellectual Property	Planning and implementation of measures	ー	Continued implementation

≫ Research and Development

Introduce medical devices with high clinical value

KPIs	Major Medium-Term Targets (to be achieved by FY3/2025)	FY3/2023 Results	FY3/2024 Results
Introduction of user-friendly products Application and Expansion of proprietary technologies to other fields	・Identify needs of the medical field and develop products that meet those needs ・Explore highly novel products	ー	Continued implementation

≫ Research and Development

Reduce environmental impact

The impact of environmental problems on sustainability, such as an increase in natural disasters due to global warming and marine pollution caused by plastic waste, has become a major social issue.

We are actively working to reduce our environmental impact over the medium to long term by establishing policies and systems for environmental preservation. We will contribute to the preservation of the global environment by reducing CO2 emissions and improving the industrial waste recycling rate through our business activities.

Use resources efficiently

KPIs	Major Medium-Term Targets (to be achieved by FY3/2025)	FY3/2023 Results	FY3/2024 Results
Establishment of an environmental policy and promotion system	・Establish an environmental promotion system	Formulation of Environmental Conservation Policy	Establishment of Green Procurement Standards

≫ Environmental Management
≫ Harmony with Nature

Reduce greenhouse gases

KPIs	Major Medium-Term Targets (to be achieved by FY3/2025)	FY3/2023 Results	FY3/2024 Results
CO2 emissions	・Reduce CO₂ emissions by 50% by FY3/2031 (compared to FY3/2021 levels)	・Scope 1 & 2 Emissions (consolidated): 6,612 t (year-on-year decrease of 1.6%)	(Consolidated) Scope1 and 2 emissions 5,866 tons, down 11.3% YoY

≫ Climate Change Response

Reduce waste / Process waste properly

KPIs	Major Medium-Term Targets (to be achieved by FY3/2025)	FY3/2023 Results	FY3/2024 Results
Industrial waste recycling rate	・Achieve 90% industrial waste recycling rate	96% (non-consolidated)	(Non-consolidated / R&D & Manufacturing Headquarters) 97%

≫ Creating a Circular Economy

Create a workplace where employees can work with comfort

Employees are an important management resource supporting our business activities, and an environment in which all employees can work while making the most of their diversity is important for the sustainable growth of the company.

We are committed to creating an environment where each employee can work with vitality and enthusiasm by improving work-life balance and promoting understanding of diversity. In addition, we will formulate policies to respect the human rights of all stakeholders involved in our business and promote educational activities.

Create a comfortable work environment

KPIs	Major Medium-Term Targets (to be achieved by FY3/2025)	FY3/2023 Results	FY3/2024 Results
Assessment on the current status and implementation of measures to improve work-life balance	Monitor and improve of actual working hours	Grasped the actual working hours per person per year (1941.7 hrs.) (non-consolidated)	Grasping the actual working hours per person per year（1828.6h）

≫ Employee Health and Safety

Respect human diversity

KPIs	Major Medium-Term Targets (to be achieved by FY3/2025)	FY3/2023 Results	FY3/2024 Results
Ratio of female managers	・Achieve a female manager ratio 15% by FY3/2031 ・Increase ratio of female employees ・Study and implement measures to support women	2.6% (non-consolidated)	(Consolidated）4.5%　（Non-consolidated）3.6%

≫ Ensuring Diversity

Respect human rights

KPIs	Major Medium-Term Targets (to be achieved by FY3/2025)	FY3/2023 Results	FY3/2024 Results
Reinforcement on efforts to reduce human rights risks	・Conduct risk assessments on human rights	Formulation of human rights policy	Training on human rights risks Implementation of human rights due diligence

≫ Respect for Human Rights

Develop human resources and provide opportunities for them to play an active role

Employees are important management resources that create the company's competitive advantage, and their growth through new challenges will enhance the company's corporate value over the long term.

We will continue to actively invest in human resources by establishing policies and systems for human resource development. By implementing measures to improve employee satisfaction and providing training opportunities that promote growth, we will continue to create an environment in which each employee can work with a sense of fulfillment.

Support employees to achieve specialized skills and personal goals

KPIs	Major Medium-Term Targets (to be achieved by FY3/2025)	FY3/2023 Results	FY3/2024 Results
Formulation of human resources policy and establishment of human resources development promotion system	Formulate a human resources policy and promote human resources development	Establishment of human resources development promotion system	Establishment of human resources development promotion system
Improvement of employee satisfaction	Improve employee satisfaction	・Conducted employee satisfaction surveys ・Analyzed survey results and formulated measures to improve employee satisfaction	Analysis of survey results Formulation and implementation of action plans

≫ Human Resource Investment

Strengthen education and training

KPIs	Major Medium-Term Targets (to be achieved by FY3/2025)	FY3/2023 Results	FY3/2024 Results
Education and training expenses per employee	Increase education and training expenses per employee by 5% year-on-year	Education and training expenses per employee (non-consolidated): 97,142 yen (year-on-year increase of 39.8%)	(Non-consolidated) 79,108 yen, down 18.6% YoY

≫ Human Resource Investment

Secure product quality and stable supply

The medical devices we handle include many products that may affect the lives of patients.Therefore, ensuring the reliability of their quality is an important management issue. We will promote efforts to continuously improve the quality of our products by complying with not only Japanese domestic standards but also global regulatory requirements.

The medical devices we handle include one-of-a-kind products, and it is our social mission to continue to provide a stable supply of products to the medical field. We will strengthen our product supply chain system by promoting supplier risk management and the duplication of production lines.

Strengthen the quality control system

KPI	Major Medium-Term Targets (to be achieved by FY3/2025)	FY3/2023 Results	FY3/2024 Results
Compliance with global regulatory requirements (Acquire MDSAP certificate)	・Obtain MDSAP* certificate ・Improve our surveillance evaluation	Completion of MDSAP application	Acquisition of MDSAP certification
Maintain and improve the quality of our in-house products	Analyze complaint reports and conduct surveys for doctors	ー	Questionnaire survey for physicians 1 item

^*Medical Device Single Audit Program
MDSAP is a program that verifies the conformity and adequacy of a manufacturer's QMS to the regulatory requirements of regulatory authorities in five countries (the United States, Australia, Brazil, Canada, and Japan) in a single survey by an accredited survey organization.

≫ Product Quality Management and Stable Supply

Secure stable supply of products

KPI	Major Medium-Term Targets (to be achieved by FY3/2025)	FY3/2023 Results	FY3/2024 Results
Promotion of production line duplication	・Promote the use of multiple production lines ・Promote multifunctional workforce	Commenced production line duplication work for multiple items	Continuation of double-tracking of core in-house products
Diversification and internalization of outsourcing of critical components and subcontracted processing	Increase coverage of multiple production lines and in-house production by 5% (compared to FY3/2024 Results)	ー	Selection of important components Considering the priority of double-track members

≫ Product Quality Management and Stable Supply

Strengthen corporate governance

In order to achieve sustainable growth in the midst of a drastically changing external environment, it is necessary to establish a corporate governance system that increases management transparency and ensures prompt decision-making and its execution and supervision. We aim to enhance our corporate value by steadily promoting compliance with the Corporate Governance Code.

In recent years, the diversification of risks surrounding companies has made risk management more important than ever. We will strive to reduce risks by reassessing and deciding on measures to address company-wide risks and by strengthening information security measures.

Strengthen auditing and supervisory functions
Execute management decision and operation with objectivity and transparency

KPI	Major Medium-Term Targets (to be achieved by FY3/2025)	FY3/2023 Results	FY3/2024 Results
Implementation of measures to comply with the Corporate Governance Code	Comply with the Corporate Governance Code	• Appointment of one additional outside director to the Nomination and Remuneration Advisory Committee	Revision of Composition and Calculation Methods of Executive Compensation Disclosure of "Measures for Realizing Management Aware of Capital Cost and Stock Price" Publication of Integrated Report

≫ Corporate Governance
≫ Directors

Strengthen risk management initiatives

KPI	Major Medium-Term Targets (to be achieved by FY3/2025)	FY3/2023 Results	FY3/2024 Results
Promotion of risk management	Reassess company-wide risks, determine countermeasures, verify and implement reviews continuously	・BCP development at all sites ・Creation of company-wide risk list	BCP briefing for all employees Review of Company-Wide Risk Assessment
Reinforcement on information security measures	Create and implement a five-year roadmap based on the results of company-wide risk analysis	Conducted training for all employees (2 times)	Training for employees (2 times) Implementation of vulnerability diagnosis and preparation of a two-year roadmap based on the results of the diagnosis

≫ Risk Management
≫ Information Security

Promote compliance

As a company that handles medical devices that can affect the lives of patients, we recognize that each of our employees is required to not only comply with laws and regulations, but also to have a higher sense of ethics in their actions.

We believe that practicing compliance means meeting the expectations of all stakeholders involved in our business, and we aim to be a company that continues to be trusted by society through compliance awareness activities.

Ensure fairness and transparency in corporate activities

KPI	Major Medium-Term Targets (to be achieved by FY3/2025)	FY3/2023 Results	FY3/2024 Results
Strengthening of the compliance system	Implement various training programs and raise awareness of compliance	Conducted various training programs designed for employees as well as job-specific training programs	Conducting various training programs for all employees and job-specific Strengthening the scholarship donation screening system
Promotion of efforts to improve understanding of the whistleblower system	・Establish a whistleblower system that complies with the　Whistleblower Protection Act ・Ensure that the whistleblower system is known throughout the　Company to promote its appropriate use	・Established a whistleblower system that complies　with the Whistleblower Protection Act ・Conducted whistleblower system-related training　programs and awareness surveys for employees	Conducting a survey on the level of awareness and understanding of the whistle-blowing system Briefings on the whistle-blowing system for subsidiaries (Malaysia, South Korea)