Risk Management

Threats and opportunities

Threats and opportunities

<Threats> Decline in sales opportunities due to deteriorating economic conditions
The Sysmex Group operates primarily in the healthcare sector, which is relatively stable. However, if a global economic downturn causes governments to tighten their healthcare finances or medical institutions to reduce their budgets, capital investment could decline, affecting our operating results and financial position.
In addition, rapid inflation, surging energy prices, and export/import regulations—including tariffs—have led to sharp changes in the economic environment. These factors may significantly increase costs related to raw materials and cross-border trade, potentially impacting our business performance. 

<Opportunities> Increased investment in healthcare infrastructure due to favorable economic conditions
When the global economy is strong, increased investment in medical infrastructure and other factors may provide additional sales opportunities for the Sysmex Group’s products. 
In particular, in emerging markets that are slated for population and economic growth, the need for improved medical standards is increasing, and further market expansion can be expected. 

Responses

Amid rising uncertainty, the Sysmex Group will continue to gather information globally and in a timely manner on changes in market conditions across countries and regions, and respond accordingly. We are also working to standardize and streamline testing by providing solutions that help medical institutions improve profitability through the use of robotics, AI, and other technologies. Furthermore, in emerging markets where economic and population growth is expected to spur investment in medical infrastructure, we are contributing to Universal Health Coverage* by developing and introducing products that meet a wide variety of market needs and improving access to and quality of healthcare. In particular, we have positioned India, which has high growth potential, as one of our key markets, and we are accelerating the development and launch of our products to expand our market share in the country. The entire Group will continue working to create further added value.

•  A condition in which all people have access to affordable and proper services to improve their health, prevent or treat illnesses, and recover

Responses

The Group hedges its foreign currency-denominated receivables and payables, including foreign currency-denominated trade receivables, loans to affiliated companies, and borrowings, mainly by entering into forward exchange rate contracts. 
We are also taking measures to mitigate the impact of currency fluctuations by globally diversifying our production sites, particularly for diagnostic reagents.

Threats and Opportunities

<Threats> Loss of social trust due to compliance violations

The Sysmex Group operates globally, and the applicable laws and regulations are diverse and wide-ranging. Any legal violations or misconduct may result not only in the loss of social trust but also in potential litigation or liability. Furthermore, significant and unforeseen changes in regulations or delays or deficiencies in responding to their application could affect our business activities.
Beyond legal compliance, deviations from social norms or unethical behavior may also compromise the sense of trust and security among internal and external stakeholders.

<Opportunities> Strengthening stakeholder trust through compliance adherence

Responses

Threats and opportunities

 <Threats> Loss of public trust due to inadequate response to human rights
Respect for human rights is one of the most important elements of our corporate activities, and we are undertaking a number of measures in this regard in various countries. If the Sysmex Group’s efforts to respect human rights are inadequate or tardy, and human rights violations such as discrimination based on race, gender, or other factors, or if forced labor or child labor occur, we could experience a deterioration of trust among our business partners, investors, and other stakeholders. 

<Opportunities> Improving reliability through appropriate human rights measures
Promoting fair and sustainable corporate management and responding appropriately to human rights, such as by fostering DE&I* that creates and embraces a comfortable working environment for diverse human resources, and eliminating discrimination in the supply chain, may lead to increased reliability among stakeholders and ultimately to the creation of competitive advantage.

• Diversity, equity, and inclusion

Responses

The Sysmex Group has announced a global compliance code that outlines its commitment to respecting human rights and eliminating discrimination, and is committed to creating a corporate management and work environment that respects the human rights of all stakeholders. In addition, our human rights policy stipulates the implementation of human rights due diligence and promotes efforts to prevent and mitigate negative impacts on human rights, not only within the Group but also with external partners involved in the supply chain. We have established preventive frameworks to ensure that our business activities do not contribute to or become complicit in human rights violations, including the prohibition of forced labor and child labor, and the elimination of discrimination based on gender, disability, race, beliefs, and other attributes. 
In addition, we operate internal reporting channels both in Japan and overseas to receive human rights–related consultations and reports from stakeholders—both inside and outside the Company—on issues such as discrimination and harassment. Information received through these channels is handled appropriately, and measures are in place to protect whistleblowers from any disadvantage. We have also established systems to implement necessary corrective and remedial actions. Furthermore, we provide training to prevent harassment and disseminate accurate labor-related information to prevent human rights infringements.

Threats and opportunities

<Threats> Decline in competitive advantage due to delayed response to technological innovation
In recent years, technological innovation has accelerated the emergence of new technologies—including AI and robotics—in the healthcare field, presenting the potential for significant changes to existing business models. Operating in this environment, delays by the Sysmex Group’s in responding to this situation may reduce its competitive advantage.

<Opportunities> Enhanced added value through innovation
The creation and active use of innovative technologies will facilitate further innovation and the provision of high-value-added products and services that improve the efficiency of healthcare, including laboratory operations.
In addition, we have the potential to expand sales opportunities by adapting quickly to changes in business models that accompany the spread of innovative technologies.

Responses

Guided by the Group’s corporate philosophy, the “Sysmex Way,” and our “Shared Values,” the Sysmex Group is committed to creating innovation through various technological developments and providing products and services that help address social challenges. The Group continues to invest aggressively in the development of new technologies and is committed to open innovation that effectively creates new clinical value by integrating the Group’s technologies with those of universities, research institutions, and other companies. We have established R&D sites around the world to facilitate these activities and are working to contribute not only to the conventional in vitro diagnostics but also to personalized medicine and preventive medicine.
We are engaged in research and development that contributes to the early detection of disease and enhances the value of diagnostics in treatment. This includes the sale of a reagent that enables testing for the accumulation of Aβ in the brain—a substance associated with Alzheimer’s disease. In addition, our subsidiary, Sysmex Astrego AB, was awarded the prestigious “Longitude Prize on AMR,” the largest science award in the UK, in recognition of its contribution to addressing antimicrobial resistance (AMR), a global health challenge, through the development of a system for the rapid detection of antimicrobial susceptibility. We have launched sales of this system in Europe.
We will continue to contribute to extending healthy life expectancies and aim for sustainable growth by working to solve medical issues through the creation of new technologies and innovations.

Threats and opportunities

<Threats> Impact on business due to inadequate environmental response or natural disasters
The sustainability of the global environment has become an urgent issue, and environmental regulations are being tightened in Europe, the United States, and other countries. Violations of or delays in responding to regulatory or other requirements by the Sysmex Group may result in penalties, bidding restrictions, or other actions.
In addition, natural disasters caused by climate change may affect the supply of products to customers around the world and the safety of our employees.

<Opportunities> Improving reliability and competitive advantage by addressing environmental issues
By obtaining information on environmental laws and regulations in each country as appropriate, and by proactively responding to such laws and regulations, we can improve the reliability of our products among stakeholders and expand sales opportunities.
In addition, providing added value on the eco-social front, such as environmentally friendly product development and production activities, and establishing a competitive advantage in this area, may contribute to business growth.

Responses

The Sysmex Group has established an Environmental Management Committee as an organization to promote environmental management. The Group is committed to the realization of a circular-oriented society and aims to provide sustainable value to the environment and society both by resolving social issues and by achieving business growth through the Group’s products and services.
We have formulated the Sysmex Eco-Vision 2033 and are working to reduce environmental impact through environmentally conscious products and services that consider CO₂ emissions, water usage, and biodiversity. Initiatives include the industry’s first adoption of horizontally recycled containers¹, promotion of concentrated reagents, implementation of dry ice–free transport, and development of products using non-animal-derived raw materials. We also support the recommendations of the TCFD² and are committed to enhancing our disclosures based on its framework. Furthermore, we have set a goal to achieve carbon neutrality by 2040³ and have obtained certification from the Science Based Targets initiative (SBTi)⁴, accelerating our efforts to address environmental challenges. 

• 1 A recycling method in which used products are processed into raw materials to manufacture the same type of product again

• 2 Task Force on Climate-related Financial Disclosures 
• 3 Carbon neutral: Targeting Scope 1 and Scope 2
• 4 Science Based Targets initiative (An international initiative that addresses environmental crises based on climate science)

Threats and opportunities

<Threats> Decreased sales opportunities due to inadequate or delayed response to healthcare system reforms
The marketing of the Sysmex Group’s instruments and reagent products generally requires regulatory approval, but the requirements for obtaining such approval are becoming increasingly complex and sophisticated in each country. This trend may increase the cost of compliance, and delays in responding to such requirements may result in lost opportunities to acquire markets, including an impact on new product launches.
In addition, if individual countries review their insurance coverage systems or reduce health insurance compensation, sales opportunities for the Group’s products could decrease.

<Opportunities> Improved competitive advantage through rapid response to regulations and needs
In the healthcare industry, compliance with increasingly strict regulatory requirements, including the IVDR* in Europe, may create barriers for new entrants and reinforce the Sysmex Group’s competitive advantage. In addition, we could see an increase in sales opportunities if the budgets of medical institutions grow due to improved healthcare finances in various countries. Furthermore, demand is expected to grow due to the expansion of healthcare systems in emerging markets and increased investment in medical infrastructure.

• In Vitro Diagnostic Medical Devices Regulation

Responses

We strive to remain abreast of the latest regulatory information by participating in industry associations in various countries, and we work to obtain and maintain regulatory approvals in a timely and accurate manner by utilizing the Sysmex Group’s global network. We are promoting the development of new diagnostic technologies that contribute to personalized healthcare, based on an accurate understanding of increasingly diverse and sophisticated needs amid changing environments in various countries and regions. Leveraging our comprehensive strengths across IVD instruments, diagnostic reagents, IT, and service and support, we are committed to addressing healthcare challenges such as improving medical workflows, enabling earlier disease detection, and expanding access to healthcare in emerging markets. Going forward, we will continue to closely monitor regulatory reforms and local requirements in each country to ensure the stable delivery of our products to customers worldwide.

Threats and opportunities

<Threats> Impact on business due to infringement or violation of intellectual property rights
The Sysmex Group applies for patents, trademarks, and design rights on a global basis, but such rights may not be granted in some or any countries. Furthermore, if counterfeit products that infringe on the intellectual property rights of the Sysmex Group are distributed, the reliability of test results may not be ensured, and medical institutions and patients may be affected.
In addition, disputes over intellectual property rights may arise, such as lawsuits for infringement of intellectual property rights of third parties or demands for payment of royalties, despite the legitimacy of the Sysmex Group claims.

<Opportunities> Provide unique products and services by acquiring intellectual property rights
The appropriate protection of the intellectual property rights held by the Sysmex Group should strengthen its independence and competitiveness and enhance its brand image.
The Sysmex Group also has the potential to further accelerate innovation through the appropriate use of third-party licenses as well as intellectual property rights owned by the Sysmex Group.

Responses

The Sysmex Group has established a basic policy on intellectual property activities under which we respect the intellectual property rights of both our company and third parties. We actively seek to secure rights for valuable intellectual property created through all our business activities and respond appropriately to third-party intellectual property rights, with the aim of establishing a globally competitive advantage. Through internal training, employees are made aware of the importance of respecting the intellectual property rights of the Sysmex Group and third parties in the conduct of business. Furthermore, we have established an award system to motivate employees to acquire intellectual property rights.
As part of our efforts to address infringements of the Sysmex Group’s intellectual property rights, we are securing intellectual property rights globally and taking firm action to eliminate counterfeit products, thereby ensuring that customers can use our products with confidence. To protect key brands, we are actively securing trademark rights worldwide—including in emerging markets and developing countries. In particular, we have filed trademark applications for our corporate logo in 195 countries and regions. As a result, approximately 81% of our total intellectual property rights are now held outside Japan.

Threats and opportunities

<Threats> Impact on product supply due to interruptions or delays in procurement or production
The Sysmex Group supplies IVD instruments and reagents, which are essential for medical institutions to perform daily testing, to customers all over the world. Although we make every effort to ensure an uninterrupted supply of products to our customers, stable product supply may be disrupted in the event of difficulties in procuring parts or raw materials, owing to sudden changes in market conditions or the suspension of suppliers’ operations, or in the event of a major natural disaster, fire, or other serious accident or pandemic at supply chain locations including production plants and warehouses, or if distribution routes are blocked due to interstate conflict or trade friction.

<Opportunities> Provide peace of mind and improve reliability through efforts to ensure a stable supply of products and services
In the event of a natural disaster, serious accident, or other contingency, our ability to provide a stable supply of products necessary for testing and avoid interruptions in medical operations, and the establishment of a system to prepare for such contingencies may help us earn trust in our ability to continue supplying products in emergencies and further enhance our brand image.

Responses

The Sysmex Group is committed to the stable supply of products and services on a global basis, in line with its social mission of supporting medical care by providing accurate test results and ensuring confidence through the delivery of high-quality products around the world. In addition to securing inventories of parts and raw materials and purchasing from multiple suppliers, we are working to enhance prevention and recovery measures to address large-scale disasters such as earthquakes, windstorms, and floods at our factories and warehouses. Reagents account for 61.7% of the Sysmex Group’s sales (fiscal year ended March 31, 2025). For reagents, we secure inventory quantities that take into consideration the period required to ensure business continuity. In addition, we produce reagents at multiple locations. In particular, we have established a mutual supply network among major bases to ensure a stable supply of reagents in our mainstay hematology field. 
In addition, the Sysmex Group as a whole has a business continuity plan in place, and through daily training we prepare to restore operations quickly in the event of an emergency so that medical institutions can continue their testing operations.
Furthermore, we have established procurement policies and guidelines with the aim of building a company that grows together with its business partners. We will continue strengthening our efforts to ensure that customers can use our products with confidence. 

Threats and opportunities

<Threats> Reduced reliability due to poor quality of products and services
The products the Group manufactures and procures must be high-quality and safe. If the products we manufacture or procure are found to be of poor quality, this could result in delays or errors in testing at medical institutions, which could affect customers and patients. This could reduce trust in our products and of the Sysmex Group as a whole, and may also affect operating results.

<Opportunities> Improvement of reliability and competitive advantage through quality improvement
By further improving quality through the development and operation of a quality control system that complies with the laws and regulations of each country and international standards, we have the potential to win the trust of customers and expand sales opportunities.
Since our founding, the corporate philosophy of the Sysmex Group, has called on us to instill confidence in our customers through reliable quality. The brand image we have built up to date could help to maintain and enhance our corporate value and competitive advantage.

Responses

The Sysmex Group is committed to group-wide management to maintain quality in compliance with the laws and regulations of each country and international standards. We have established a quality policy to monitor and improve the quality and safety of our products and services. In addition, all of our production bases have acquired ISO 9001 or ISO 13485 certification, the international standards for quality management systems. Furthermore, we collect and analyze information on product reliability and safety from a wide range of domestic and overseas sources, and utilize this information to improve product quality.
We have also established a new QARA Committee to promote quality assurance and regulatory compliance on a global scale. Going forward, we will further strengthen these efforts to help improve the quality of healthcare worldwide and deliver peace of mind to our customers through the high-quality products and services of the Sysmex Group. 

Threats and opportunities

<Threats> Impact on customers and business due to cyber-attacks

The Sysmex Group’s products are equipped with network-based service capabilities. In the unlikely event that the Group’s products are compromised by cyberattacks targeting medical institutions, testing operations could be suspended, and third parties could gain unauthorized access to personal information.
Within the Company, we are also implementing various information systems to improve operational efficiency, with much of our business-related information now managed and operated via networks. In the event of system outages or leaks of confidential information due to failures in these systems or networks or cyberattacks, or in the event of the provision of false information or infringement of third-party rights due to the misuse of generative AI and other technologies that the Sysmex Group has been promoting in recent years, the efficiency and reliability of its operations may be impaired.

<Opportunities> Improved reliability of products and services by strengthening security support
By enhancing the security of our products and services, we can further enhance the trust customers place in our products and provide our customers with network-based services that they can use with confidence.
In addition, through the promotion of DX, including security enhancement, and the appropriate use of generative AI, we can expect to further improve business efficiency and productivity by strengthening information collaboration within the Group while managing information appropriately.

Responses

The Sysmex Group is promoting cybersecurity measures for its products and services, led by the Product Cybersecurity Committee, in order to reliably ensure confidence among customers and patients. In line with these efforts, we have established a Product Security Policy and set up a PSIRT¹ to design and manufacture products in accordance with the security policy and to manage after-sales vulnerabilities in cooperation with product security managers in each region.
Furthermore, we recognize that protecting the information assets of our customers and business partners is a testament to trust and quality. To that end, we have established an Information Security Policy and, under the leadership of the Information Security Committee, are working to maintain and enhance the confidentiality, integrity, and availability of information assets. In addition, to minimize the operational impact of information system or network line failures, computer viruses, or external intrusions into information systems, we are working to tighten information management by introducing mechanisms to detect unauthorized communications and isolate malware, conducting 24-hour monitoring, establishing a CSIRT², and developing security measures such as joining external organizations to quickly obtain information in case of emergencies or major incidents, as well as developing systems related to business continuity.
In addition, we are promoting efforts to inform employees of the rules for the use of AI technologies in general, taking security into consideration, and to accelerate innovation through proactive use of AI technologies.

• 1 Product Security Incident Response Team
• 2 Computer Security Incident Response Team

Threats and opportunities

<Threats> Delays in achieving strategic objectives due to insufficient return on investment
The Sysmex Group is working to expand its R&D, production, and other bases. At the same time, the Group aims to accelerate growth through proactive investment in IT infrastructure and leading-edge technologies, as well as through acquisitions and capital tie-ups. Amid these initiatives, changes in the business environment or exposure to unpredictable risks could prevent the full realization of the expected impacts and affect the achievement of our strategic goals.

<Opportunities> Accelerate business by maximizing investment effectiveness
Making proactive investments based on our management strategy from a long-term and global perspective, and generating greater-than-anticipated synergies, may enable us to accelerate the pace of achieving our strategic objectives.

Responses

•  Post-merger integration