Terumo, the Japanese medical device manufacturer, is coming off a record-breaking fiscal year. Sales revenue, operating income, and net income all hit unprecedented highs, leading to optimistic projections for FY '24. However, a closer look at the Q4 2024 earnings call transcript reveals a strategic shift that could be a significant gamble for the company.

Newly appointed CEO Hikaru Samejima acknowledges the rapidly changing healthcare landscape and the need for more than just a product-centric approach. He emphasizes a "healthy sense of urgency" and hints at upcoming "moves that will surprise everyone."

Terumo's "Bold Plus Alpha" Strategy

Samejima's plan, dubbed "bold plus alpha," revolves around aggressive mergers and acquisitions (M&A). While the company will continue its steady growth strategy (GS26), Samejima seeks disruptive growth "that cannot be attained in the world envisioned in GS26."

Terumo has a history of strategic M&A, with notable acquisitions like Vascutek, MicroVention, and the Angio-Seal hemostatic device business. However, Samejima suggests even larger acquisitions are on the horizon, stating Terumo is "undaunted" and prepared to consider deals "even larger than Terumo's history."

"This aggressive M&A stance could represent a "trillion yen gamble." While Terumo has a strong financial position, a large-scale acquisition carries inherent risks. The success hinges on finding the *right* target, ensuring seamless integration, and generating substantial growth."

The Stakes: Potential Payoff vs. Downside Risks

Terumo's financial performance in recent years has been strong. The following chart illustrates the growth in revenue and operating income, excluding exchange rate effects, from FY '21 to the projected FY '24.

Revenue and Operating Income Growth

The Years Ahead: A Defining Chapter for Terumo

The success of Terumo's gamble will depend on careful target selection, flawless integration, and leveraging the acquisition to create synergies and accelerate growth. The next few years will be a defining chapter for Terumo, revealing whether this trillion yen gamble leads to a new era of dominance or a period of complex integration and uncertainty.

"**Fun Fact:** Terumo, founded in 1921, began by producing domestically made clinical thermometers, inspired by the founder's experience with inaccurate imported thermometers during a time of widespread influenza outbreaks."