(3) KIRIN GROUP MAJOR RISKS

Below is a list of key matters presenting risk to the Kirin Group strategies, businesses, and other activities, which could significantly impact investor
assessment of the Group. These major risks are listed in categories of “Risks in each business domain” and “Risks common to each businessdomain.” Please note that matters determined to present potential risk in the future are based on the judgment of the Company as of the end of thisfiscal year unless otherwise stated.

1) Risks in each business domain
Businessarea

Assumed risks

Major impacts in the event of risk occurrence• Risks related to responses to businessenvironment changes• Risks related to hikes in raw materials and fuelprices• Risks related to failure of new businesses

Food &
Beverages

Businessarea

Pharmaceuticals• Sales targets fall short due to changes in the market environment andpreferences, fluctuations in product prices, actions of competitors orother factors.
• An increase in procurement costs due to hikes in raw materials and fuelprices affects manufacturing costs.
• New businesses fail to penetrate the market, resulting in a downturn insales and profits and a delay in business plans.
Main countermeasures, awareness of risk situation, and other considerations
The Food & Beverages domain, as Kirin Group’s main business domain, is expected to be seriously affected by a risk, if it isactualized. For existing businesses in the Food & Beverages domain, we have implemented measures against risks based on theknowledge we have amassed on changes in business environments. Further, while, in new businesses, we are working to reducerisk by assuming the possibility of facing new risks that differ from those we have faced in the past and implementing
countermeasures. Moreover, we consider the potential direct impact of hikes in raw materials and fuel prices attributable togeopolitical risks on our revenue and the impact of the success or failure of the expansion of high value-added products on our
medium- to long-term business plans as the Group’s major risks. We will continue to closely monitor the situation and takeappropriate risk control measures.
(Specific countermeasures are stated in “MANAGEMENT POLICY, BUSINESS ENVIRONMENT, AND FUTURE
CHALLENGES.”)
Assumed risks

Major impacts in the event of risk occurrence• Risk associated with maximizing the value of
global strategic products• Risk related to product quality and stablesupply• Risk related to research and development• Risk related to government measures to reduce
medical costs• The market penetration is not successful because of the expansion of thebusiness area being slowed by delays in launch preparation and otherfactors, or difficulty in connecting with potential patients.
• Stable product supply is impeded by a sharp increase in demand or atight supply and demand balance that raises concerns about productsafety or quality.
• Growth potential and profitability in the future decline due to delayedenhancement of the pipeline• Product prices are reduced due to pressure to lower medical costs inJapan and overseas and the ongoing shift to generic drugs is accelerated.

Main countermeasures, awareness of risk situation, and other considerations
In the Pharmaceuticals domain, to maximize the value of global strategic products, we are implementing initiatives to spur market
uptake and expanding business reach, centered on the United States and Europe. We believe it is also important that we strengthen
our foundations such as a product quality assurance system and a stable production and supply system. More specifically, we
have worked to secure product quality through monitoring by the Global Quality Assurance Committee and implementing
products quality audits by an independent team specialized in audit within the Group and contractors. Also, we are expanding its
network of contractors, investing in Group plants, visualizing a demand and supply plan, rolling out digital technology to enhance
manufacturing operational efficiency. Japan and other countries are under growing pressure to curb medical costs. We closely
monitor healthcare policy trends in each country and are strategically exploring ways to evaluate the value of pharmaceuticalproducts from various perspectives to ensure that we deliver life-changing pharmaceutical products to patients. We are also
assessing how the pricing of products put on the market impacts our business to earn reasonable revenues and continue to create
innovative pharmaceutical products in compliance with rules and regulations in each country.
(Further details are stated in the Annual Securities Report of Kyowa Kirin Co., Ltd.)-1-

Business
area

HealthScience

Assumed risks

Major impacts in the event of risk occurrence• Risk of not being able to provide
differentiated products and services related tosocial issues• Risk of delayed response to changes in theexternal environment, such as the competitive
landscape• Risk of lack of human resources andorganizational capabilities to conduct business• Risks associated with product quality
assurance, safety, or stockouts• The sales plan falls short due to the inability to formulate an effective
business model.
• A value-creating and highly profitable business model cannot beestablished due to inability to develop synergies within the Group.
• Product shortages occur due to production not proceeding according to
the production plan.
• Brands and reputations are damaged by quality problems, insufficientevidences, inappropriate information dissemination, and other factors.

Main countermeasures, awareness of risk situation, and other considerations
In the Health Science domain, we are working to build a business foundation for the future by placing the highest priority on thegrowth of Blackmores, a newly acquired company, and the creation of synergies within the Group. Particularly in the immunology
domain that involves Foods with Function Claims (FFCs), we are working to early produce positive outcomes and establish abusiness model by establishing immune care habits in the daily lives of our customers, expanding their recognition of LC-Plasma,raising their awareness of its function, and revitalizing the market including licensing out. In promoting business in domains
other than the existing domains, we will enhance our organizational capability and strengthen governance from a risk
management viewpoint to ensure prompt and bold decision-making and also to enable timely and appropriate risk control.
(Specific countermeasures are stated in “MANAGEMENT POLICY, BUSINESS ENVIRONMENT, AND FUTURE
CHALLENGES.”)2) Risks common to each business domain
Item

Assumed risks

Major impacts in the event of risk occurrence• Risk of inability to adequately secure human• Organizational capabilities with competitive advantage are not achieved
resources to advance Group management andand management strategies are not promoted.
• Stagnant transition to an assumed system results in a decline inwith a high level of expertise necessary fororganizational capabilities, causing adverse effect in accomplishingbusiness activities
management strategies.
• Risk of inability to obtain understanding of thehuman resources management system fromSecuring andemployees
training ofMain countermeasures, awareness of risk situation, and other considerations
human
The
Kirin
Group
sees
human
resources as a source of value creation. To acquire and nurture the human resources required forresources
executing our management strategies, we will strive to build a human resources management system that places greater emphasis
on professional expertise centered on function. In addition, we aim to nurture a corporate culture that attracts human resources
with diverse values and expertise, embraces diversity, and transforms differences into strengths. Based on the recognition thatdiverse human resources and a corporate culture that encourages employees to take on new challenges constitute the foundation
for companies, we will strengthen the linkage between our management strategies and human resources strategies from a
medium- to long-term perspective and will strive to achieve the Group’s sustainable growth and improve its corporate value.
Item

Information
technology

Assumed risks

Major impacts in the event of risk occurrence• Risk that the Group will be inferior tocompetitors due to lack of progress in digitaltransformation (DX) initiatives• Risk of falling behind in acquiring andtraining of DX experts• Increased costs prevent the development and offering of products thatmeet customer needs, resulting in limited sales and profits.
• A shortage of employees required to promote DX results in a failure toincrease organizational capability, delaying the achievement of positive
outcomes of efficiency improvement and value creation.

Main countermeasures, awareness of risk situation, and other considerations
With the promotion of DX, the Kirin Group has been working to create new value by transforming business processes throughthe use of digital technology and data, improving the efficiency of existing operations, and promoting the use of the technology
even in the processes for ensuring customer understanding and product and service development. We will strive to enhance ourorganizational structure and strengthen organizational capabilities to realize autonomous DX promotion in each Group company
and division, by promoting internal human resource development through our unique programs and by securing specialized
human resources necessary for DX promotion from outside. We will continue to utilize and promote digital technology in all
domains throughout the Group, leading to the creation of innovation.

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Item

Quality

Item

Assumed risks

Major impacts in the event of risk occurrence• Risk of unexpected quality issues beyond the• Product discontinuation, recall, or compensation claims lead toscope of quality assurance measuresincurrence of high costs or restriction on business activities.
• Risk of receiving orders for improvement or• A loss of trust of customers erodes our brand value.
administrative guidance from authorities
concerned as a consequence of the use of
inappropriate statements
Main countermeasures, awareness of risk situation, and other considerations
Based on a “customer-first and quality-focused” approach, which forms the starting point of our business, we have declared in
the Kirin Group’s Quality Policy and Standards of Conduct that providing safe and reliable products and services to our customers
is our top priority. In December 2023, the Principles of the Kirin Group’s Global Quality Management were revised in line withthe expansion of the Group’s business domains. By reflecting them in the quality management system retained by each Group
company in the Food & Beverages, Health Science, and Pharmaceuticals domains, we are continuously improving our quality
assurance systems and operations to provide products and services of reliable quality. In terms of labeling and advertisements,
we have established the Guidelines of Product Labeling, a more concrete version of the Marketing Communication Policy
established in 2022, to create them according to high ethical standards while paying due consideration to changes in social
conditions. We will continue our efforts to foster an organizational culture that values “customer-first and quality-focused” acrossthe Group.
Assumed risks

Major impacts in the event of risk occurrence• Risk of the Kirin Group’s businesses,• Our corporate brand image is undermined or we are forced to scale down
including those in each process of its value
or withdraw from business.
• We may have to pay fines or face litigation in cases we have violated
chain and those engaged by its businesslaws and regulations, or we are subject to other economic penalties.
partners, adversely affecting human rights
either directly or indirectly
Main countermeasures, awareness of risk situation, and other considerations
Based on the recognition that respect for human rights is the foundation of all business activities, the Kirin Group formulated the
Human rights Kirin Group Human Rights Policy in 2018, which complies with the United Nations Guiding Principles on Business and Human
Rights. In 2023, the Group revised the policy in line with international human rights norms. In addition to prohibiting slave labor,
forced labor, and child labor, including human trafficking, as well as all forms of discrimination based on race, color, ethnicity,
nationality, social status, family origin, gender, disability status, health status, religion, ideology and creed, sexual orientationand gender identity, and differences in job type and employment status as before, the revised version is more specific, including
a clear statement of the key human rights issues assumed for each type of stakeholder. We are committed to respecting humanrights and making a positive impact on society by seeking understanding of this policy from all employees of Group companies
in Japan and overseas as well as from various business partners involved in the value chain.
Item

Assumed risks

Major impacts in the event of risk occurrence• Physical risks of climate change• Transition risks to a decarbonized society• Risks of a delay in the development oftechnologies, etc., which could impede or
delay the solution of environmental issues

Environment• Procurement costs increase due to decreased yields of agricultural raw
materials caused by global warming, droughts and floods, or operations
are suspended due to droughts and floods.
• Fuel costs and agricultural product costs increase due to carbon taxes.
• Inability to adequately respond to society’s expectations results in a
decline in corporate value.
Main countermeasures, awareness of risk situation, and other considerations
The Kirin Group has formulated the Kirin Group’s Environmental Vision 2050, a long-term strategy for comprehensively
addressing various environmental issues, and is working to achieve its goal. For physical risks such as decreased yields ofagricultural raw materials, transition risks such as carbon pricing, and impacts on assets resulting from climate change, we assess
financial impacts and resilience of our strategies through scenario analysis based on the TCFD recommendations to makenecessary revisions to our policies and strategies and deepen our efforts. As for the issue of plastic containers, we have initiateda joint project with outside partners to study and achieve the practical use of technologies for recycling PET materials throughchemical recycling, aiming to increase the recycled plastic ratio in Japan to 50% by 2027 (Kirin Group Plastic Policy). The Kirin
Group will solve interrelated environmental issues on biological resources, water resources, containers and packaging, andclimate change in an integrated manner, so we can pass a sustainable global environment on to the next generation.
(Specific countermeasures are stated in “APPROACHES TO AND INITIATIVES FOR SUSTAINABILITY.”)

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Item

Assumed risks

Major impacts in the event of risk occurrence• Risk of globally strengthening restrictions on• Alcohol consumption reduces.
sales and advertisements of alcoholic• Corporate brand value declines.
beverages
Main countermeasures, awareness of risk situation, and other considerations
AdverseRegarding the adverse effect of harmful alcohol consumption, the WHO is discussing future global regulations on the sale andeffect ofmarketing of alcohol. In order to fulfill its social responsibility as an alcoholic beverage producer and vendor, the Kirin Group is
alcoholmaking progress in its efforts to eradicate harmful alcohol consumption in all countries where the Group operates its alcoholic
consumption beverages business. In developing the alcoholic beverages business, we comply with laws and regulations, the Kirin Group Global
Marketing Code for Responsible Drinking and strict voluntary standards, and promote activities in cooperation with IARD andother industry groups in Japan and overseas. We have also developed non-alcoholic and low-alcoholic beverages and haveworked to spread knowledge and raise awareness of appropriate ways of drinking alcoholic beverages. We will continue to makesteady progress in our efforts to eradicate harmful alcohol consumption in line with changes in social conditions.
Item

Assumed risks

Major impacts in the event of risk occurrence• Risk of supply chain disruption caused bylarge-scale natural disasters such as
earthquakes and typhoons, infectious diseases,
or impacts of geopolitical risks• Business sites are closed or business activities are reduced or suspended.
• Delays in distribution or stockouts occur due to procurement, production,and logistics capabilities being unable to meet demand due to regional
conflicts or terrorism, or a sharp rise in sales volume during peak
periods.
Main countermeasures, awareness of risk situation, and other considerations
Supply chain In the supply chain, in addition to the effects of disasters and accidents, there are concerns about the emergence of the 2024
logistics problem and future driver shortages in Japan, and the disruption of supply chains due to terrorism or political unrest
overseas. In each business, we are working to reduce risks by improving the accuracy of supply and demand forecasts,
strengthening logistics capacity, and considering alternative strategies. To respond to disasters and accidents, the Kirin Grouphas formulated a business continuity plan (BCP) with an all-hazard approach that focuses on management resources as the starting
point to develop countermeasures. We have provided a BCP drill to multiple Group companies to check whether logistics
operations function properly. Through these ongoing efforts, we will continue to strengthen our ability to respond to criticalevents and improve our resilience.
Item

Assumed risks

Major impacts in the event of risk occurrence• Market and exchange rate fluctuation risks• Geopolitical and disaster risks• Human rights and environmental risks in the
supply chain• Greater than expected procurement costs suppress profits from business
operations.
• Inability to secure raw materials required or delay in their delivery
affects our manufacturing plans, leading to supply and demand
adjustment and its prolongation.
• We face difficulty in procuring raw materials, leading to negative
consequences such as a decline in corporate image and consumer
boycott.
Main countermeasures, awareness of risk situation, and other considerations
Procurement
To address market and exchange rate fluctuation risks, we are reducing and stabilizing costs through long-term contracts andcurrency hedging. To address geopolitical and disaster risks, we are diversifying suppliers and raising raw material inventory
levels. In addition, recognizing responses to risks associated with human rights and the environment in our supply chain as oneof our key management issues, we have been making efforts to establish a robust corporate structure and strengthen ourorganizational capabilities so that we can live up to growing expectations. To this end, we revised the Kirin Group Sustainable
Supplier Code and implemented due diligence in 2023. We have provided suppliers with an explanation of the Kirin Group
Sustainable Supplier Code, requesting them to submit written consent to the code, and regularly confirming their status ofcompliance. Moreover, with a hotline and grievance mechanism for suppliers to report issues in place, we have been promoting
sustainable procurement, by building close ties with suppliers.
Item

Assumed risks

Major impacts in the event of risk occurrence• Risk of a cyber-attack, information security
incident, or information leak

Information
security• A leak of personal information or important trade secrets results in a lossof customer trust and incurrence of claims for damage compensation.
• A cyber-attack causes business operations to be suspended or to bedelayed due to the extended time required for recovery.
Main countermeasures, awareness of risk situation, and other considerations
The Kirin Group has established the KIRIN-CSIRT (Computer Security Incident Response Team) to respond to the threat ofcyber-attacks that are becoming more serious and is working on information security measures, which is one of the Group’s
major risks. We are working to strengthen countermeasures against cyber-attack threats such as virus infection and unauthorizedaccess from the outside by establishing a security response system within the Group and implementing human, physical, andtechnical measures. We are also taking measures including risk transfer, for example, by taking out cyber insurance on a global
basis to reduce the economic impact of cyber-attacks. We believe that these measures have reduced the risk to below a certain
level. We will also continue to take measures against unknown cyber threats while gathering a wide range of information.
(The details of our initiatives are described in the Information Security Report.)

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Item

Assumed risks

Major impacts in the event of risk occurrence• Risk of behavior that is illegal or counter to• Legal punishment, litigation, or social sanctions lead to a loss ofsocial norms
customer trust.
Main countermeasures, awareness of risk situation, and other considerations
The Kirin Group defines compliance as “fulfilling both legal and ethical responsibilities that society expects from us, not tomention adhering to laws, internal and external regulations and rules.” We regularly hold training on compliance related matters,such as human rights, prevention of harassment and acts of corruption (including bribery), and responsible drinking, thereby
Compliance facilitating the understanding and raising awareness of related rules. We also conduct an employee compliance awareness survey
each year, which helps identify potential risks. Depending on the feedback from respondents, we verify the feedback andimplement necessary measures, seeking to reduce risks. We also have put in place a whistleblowing system so that we can early
detect potential risk events. This system includes a reporting desk in each Group company, direct lines to officers in charge ofcompliance or Audit & Supervisory Board Members, and global hotlines available to employees of overseas Group companies.
We will continue to raise employees’ awareness of compliance so that we can nurture a strong sense of ethics as expected bysociety, as well as complying with relevant laws and regulations.
Item

Assumed risks

Major impacts in the event of risk occurrence• Risk of fluctuations of value in Japanese yen• Exchange rate fluctuations cause a change in the yen-translated value ofdue to exchange rate volatility
financial statements denominated in local currencies and in the cost of
procuring raw materials through foreign currency denominated• Risk of inability to raise necessary funds due
transactions.
to changes in financial markets/rating, or risk
• Restrictions on fund procurement lead to a shortage of working capitalof fluctuations in financing costand borrowings at high interest rates increase finance costs.
• Risk of greater than expected tax expenses due• Additional tax burdens will worsen business performance and social
to changes in taxation system in eachcredibility.
jurisdiction or a disagreement with tax
Finance andauthorities in filing tax returns
taxes
Main countermeasures, awareness of risk situation, and other considerations
Although the impact of changing market environments and exchange rates cannot be fully eliminated, the Kirin Group has
managed to lower the probability that such changes significantly impact its operating results and financial position by using
derivatives and other hedging instruments. Specifically, we have reduced the potential impact of these changes on risks associatedwith funds by diversifying the sources of funding and improving capital efficiency by centrally controlling the Group’s cash
position. We have also lowered the probability of significant tax risks by thoroughly fulfilling our tax payment obligations incompliance with the applicable taxation system.
We are exposed to a variety of risks other than the above, including reputational risks, geopolitical risks, risks associated with business investments,
and risks associated with a revision to laws and regulations. By recognizing these risks, we will strive to prevent and promptly address them.

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