Third Quarter Consolidated Financial Results
for the Fiscal Year Ending March 31,
31 2016
1. Overview of consolidated results
2. Highlights of Business Performance
3. Main Product Sales Update
4 Development pipeline
4.
【Reference】
5. Segment information
5
6. Financial summary

February 3, 2016

KYORIN Holdings, Inc.
These forecast performance figures are based on information currently available to theCompany and may include uncertain factors or risk that affect our future performance.
Accordingly, actual business results may materially differ from the forecasted figures dueto various factors in the future.

Outline of Third Quarter Consolidated Financial Results
for the Fiscal Year Ending March 31, 2016
Mar/2016

Dec/2012

Dec/2013

Dec/2014

Dec/2015

YoY change(%)(revised forecast)

YoY change(%)(original forecast)

YoY change(%)

Net Sales

79,22983,43083,602

89,469＋7.0

120,200＋6.3

120,200＋6.3%

Operating Income

13,711

13,503

10,691

14,666＋37.2

19,400＋31.6

16,000＋8.6%

Ordinary Income

14,288

13,961

11,181

14,946＋33.7

19,700＋27.2

16,300

＋5.2%

9 262
9,262

9 272
9,272

9 571
9,571

10 831
10,831＋13 2＋13.2

13 00013,000＋7 8＋7.8

11 50011,500－4.7%
4 7%（¥ million）

Net IncomeMar/2016

Third Quarter Consolidated Financial Results for the Fiscal Year Ending March 31, 2016
【Net Sales】 Overall net sales increased 7.0% year on year to ¥89.4bln. Sales growth was driven by year on year increased of main products such as
Flutiform and received an upfront payment of a license agreement.
【Profit】Gross profit rose 5.4bln yen year on year due to received an upfront payment and slight decrease of the cost ratio.
SG & A expenses increased 1.4bln yen year on year , At the other side, operating income increased 37.2% to ¥14.6bln(+3.9bln yen), net income increased
13 2% to 10
13.2%
10.8bln
8bln year on yearyear.

Consolidated Financial Results for the Fiscal Year Ending March 31, 2016 (forecast)【Net Sales】After taking into account the trend in earnings until the cumulative third quarter of the current fiscal year, the Company has revised down its sales
forecast for the generic drug businessbusiness. However
However, for the new drug businessbusiness, the Company has revised up its sales forecast because it has recorded an upfront
payment revenue resulting from the conclusion of a license agreement. On an overall basis, the Company has retained its original forecast.
【Profit】Owing to the incorporation of upfront payment revenue resulting from the conclusion of a license agreement, the Company has revised up estimatedoperating income to ¥19.4 billion (an increase of ¥3.4 billion), ordinary income to ¥19.7 billion (an increase of ¥3.4 billion), and net income to ¥13.0 billion (anincrease of ¥1.5 billion). Note that, in addition to an extraordinary gain of approximately ¥1.8 billion stemming from the transfer of fixed assets (September 30,2015 press release),release) we have factored in the current estimated amount of costs relating to the transfer of the production functions of the Okaya Plant of Kyorin
Pharmaceutical Co., Ltd. to KYORIN Pharmaceutical Facilities Co., Ltd., which is under consideration at present.

In regard to dividends, the Company will implement a shareholder return targeting a dividend payout ratio of 30%, in accordance with the basic policy.
◇The full year forecast of consolidated results for the year ending March 31, 2016, released on May 13, 2015, has been revised in this document.

1

Highlights of Business Performance（ Units: ¥ billion ）Cost of Sales
Cost of Sales

35.2

34 7
34.7

C t off Sales
CostS l Ratio
R ti

Cost of Sales Ratio

39.3%¾Net Sales increased ¥5.9billion year on year.
・increase of Flutiform,Kipres sales
・an upfront payment of a license agreement¾Cost of sales ratio decreased 2.2%.
・Sales of main product increased
・ an upfront payment of a license agreement

41.5%
Net sales

N t salesNetl■G oss Profit■Grosso t increasedc eased ¥5.4billion
5 b o year
yea oonyear .

R&D

101

R&D

9.6
SG&A

SG&A

(excluding R&D)

38.2

SG&A

SG&A

((excludingl di R&D)

39 6
39.6

29.5

28.6

Operating
IncomeOperating
Oti
IncomeDec/14¾SG&A expenses increased ¥1.4billion year onyear.
・R&D expensespincreased ¥0.5billion
・SG&A(excluding R&D) increased ¥0.9billion■Operating Income increased¥4.0billion year on year.

Dec/152

Consolidated Financial Results
for the Third Quarter ending March 31, 2016
（unit : ¥ billion）
Dec/2014

Dec/2015

change

83.6

89.5

＋5.9

82.6

88.6＋6.0●Overseas

67.6
67.0
0.6

73.7
68.6
5.1＋6.1＋1.6＋4.5◆Generic drugs

11.9

11.4

－0.5

Net Sales (total)

Ethical drugs
Business◆Sales of new
ethical drugs●Japan◆Over-thecounter drugs

3.2

3.4＋0.2

Healthcare(Skin care)Business

1.0

0.9

－0.1

Year on Year
■Net Sales¥89.5bln(+ 5.9)◆Ethical drugs business¥88.6bln(+ 6.0)¥68.6bln(+ 1.6)¥5.1bln(+ 4.5)● Sales of new ethical drugs
Dec/2014⇒Dec/2015

・ Kipres・ Flutiform
・ Uritos
U it・ Mucodyne
・ Pentasa

29.3
2.655
5.5
10.6
13.4

⇒
⇒⇒⇒⇒

32.0
5.2
57
5.7
9.9
12.7

(＋2.7)(＋2.6)(＋0 2)(＋0.2)(－0.7)(－0.7)●Sales of new ethical drugs in Overseas

・ Gatifloxacin 0.3⇒ 0.5 (＋0.2)
・ up front payment of FPR-2 agonists (12/2015)●Sales of Generic drugs¥11.4bln(‐0.5)●Sales of Over-the-counter drugs¥3.4bln(+ 0.2)◆Healthcare (Skin care) Business¥0.9bln(‐0.1)■Operating Income¥14.7bln( + 4.0)・increase of Health insurance pharmacy market’s sales
・decrease of Contract manufacturing’s sales◆Operating Income margin increased 3.6 percentage points to 16.4%
Operating
Income10.7

14.7＋4.0●C t off S●CostSalesl RRatio
ti : 41.5%⇒39.3%
41 5%⇒39 3% decreased
dd 2.22 2 percentage
tpointsi tOrdinary
Income11.2

14.9＋3.7●R&D Ratio : 11.5%⇒11.3% decreased 0.2 percentage points

Net
Income・Sales of main product increased (Flutiform：30days,120 inhalations)・ an up front payment of FPR-2 agonists＊¥9.6bln⇒¥10.1bln（＋¥0.5bln）

9.6

10.8＋1.2

cost of new WATARASE research center , progress of project●SG&A Ratio : 34.2%⇒33.0% decreased 1.2 percentage＊¥28.6bln⇒¥29.5bln（＋¥0.9bln）■Net Income

increase of patent royalty ,sales costs,¥10.8bln(+ 1.2)

3

Main Product Sales Update（ Units: ¥ billion ）Mar/2016((revisedforecast)(originalforecast)

Sep/2014

Sep/2015

Dec/2014

Dec/2015%Change

17.4

18.8

29.3

32.0

+9.2%

74.4%

41.2

43.0

41.80.9

3.0

2.6

5.2

+105.6%

69.9%

3.6

7.5

10.3

34
3.4

37
3.7

55
5.5

57
5.7

+5.0%
5.0%

75.6%

73
7.3

76
7.6

79
7.9

6.2

5.9

10.6

9.9

－6.0%

78.1%

14.0

12.7

11.8

(Ulcerative colitis andCrohn’s disease treatment)

8.6

8.1

13.4

12.7

－5.5%

77.4%

17.2

16.4

17.1

Milton

10
1.0

10
1.0

15
1.5

16
1.6

+5 8%
+5.8%

80 6%
80.6%

20
2.0

20
2.0

20
2.0

Product name

Kipres（LT receptor antagonist）

Flutiform（Combination drug for asthma
treatment）

Sales ofnew
ethicaldrugs(Japan)Mar/2016

Progress tofull term
forecast(%)

Uritos（Kyorin）(Overactive bladder)

Mucodyne（Mucoregulant）

Mar/2015

P tPentasa

Over-thecountertdrugs(Disinfectant)

4Main R&D Activities -1 (Feb 3 , 2016 Release)※Changes from the previous announcement(Nov 6 2015)

Ph III ~ Application submittedStageJapan
PhⅢ(1/2015)

Overseas
PhⅡclinical trial
end
Merck & Co.,

PhⅢ
(4/2015)

Compound/
C dCodeTherapy
py area/Action

OrigingFeatures

Comments
License agreement withMerck & Co., Inc.,(7/2014)

KRP-114V

Overactive bladderMerck &Co.,

KRP-114V is expected to improve urinary
frequency through stimulation of the beta 3
receptor in bladder which improves bladder muscle
relaxation.

KRP-AM1977X(Oral agent）

New quinolone
synthetic antibacterialagent

In-house①Superior ability to combat drug-resistant grampositive bacteria (incl. MRSA)②Outstanding ADME (oral absorption, tissuemigration)③High degree of safety expected since safety
prior to clinical trials
hurdles cleared p※A license agreement for KRP-AB1102F with AstraZeneca was terminated and Kyorin reached the conclusion that the rights should be returned to AstraZeneca.
For details, please refer to the Press Release announced today(February 3).

for reference
Stage
Application submitted by MSD
K.K.

Compound/CodeDesloratadine

Therapy area/Action

Featuresallergic rhinitis, hives, itching resulting from skindiseases (eczema/dermatitis, pruritus cutaneous)second generation histamine
H1-receptor antagonist

Comments
Co-Marketing Agreement for Japan withMSD K.K. affiliate (11/2014)

5Main R&D Activities -2 (Feb 3 , 2016 Release)※Changes from the previous announcement(Nov 6 2015)

POC Project (Ph I ~ Ph II)
StageJapan
PhⅡ(8/2015)

Overseas
PhⅢ
Merz

PhⅡ(6/2014)

PhⅠ,ⅡPhⅠ
Ⅱ（7/2015）(US)
Momotaro-Gene
prostate cancer(5/2014)

Compound/CodeTherapy area/Action

OriginFeatures

Comments
License agreement withMerz (11/2009)
Merz:Ph I clinical trial ofJapanese patients in US
completed (3/2010)

KRP-209

Tinnitus

Merz

KRP-209 (Neramexane) is expected to improve thepatients' annoyance and difficulties in their life caused bytinnitus, mainly through its two pharmacological properties:
1) NMDA antagonistic activity and 2) Nicotinic acetylcholine
antagonistic activity

KRP-AM1977Y(Injection）

New quinolone
synthetic antibacterialagent

In-house①Superior ability to combat drug-resistant grampositive bacteria (incl. MRSA)②Outstanding ADME (oral absorption, tissue migration)③High degree of safety expected since safety
hurdles cleared prior to clinical trials

Ad SGE REIC
Ad-SGE-REIC

malignantlit pleuralllmesothelioma

Okayama
OkUniversity

A gene-therapy
thproductd t usingi a novell ttumor suppressor
gene of reduced expression in immortalized cells/ Dickkopf3 (REIC/Dkk-3), which was discovered by researchers fromOkayama University, as a therapeutic gene.
It is expected to have direct effect on primary tumor lesions
and indirect effect on metastatic tumor lesions as a genetherapy product that simultaneously induces tumor cell
cellselective apoptosis and the activation of antitumor
immunity respectively.

AdoptedAdt d tto Next
N tgeneration Technology
Transfer Program(NexTEP)(6/2014)6

Main R&D Activities -3 (Feb 3 , 2016 Release)※Changes from the previous announcement(Nov 6 2015)

Licensing development（preclinical）
Compound/Code

Licensee /Collaborativeresearch

Therapyarea/Action

KRP-203

Novartis

GVHD

Stage/Overseas
PhⅠ

OriginIn-house

Features
Sphingosine-1-Phosphate Receptor Agonist .
immunomodukatory drug.

Comments
License agreement with Novartis(2/2006)
Novartis has decided to proceed with
development of KRP-203 for GvHD.

※Preclinical-BMS

Nondisclosure

In-house

FPR-2 agonists that mainly inhibit themigration of neutrophils and exhibit antiinflammatory action.

License agreement with BMS(12/2015)

7Reference

8Segment informationfor the Third Quarter Ending March 31, 2016
Sales, Profit or Loss of each report segment（ Units: ¥ billion ）Saleschange Y/YProfitchange Y/Y

Net Sales ((total))

89.5＋5.9

14.7＋4.0

Ethical drugs business88.6＋6.0

14.5＋3.9

73.7＋6.1○Overseas

68.6
5.1＋1.6＋4.5◆◆Genericdrugs

11 4
11.4－0.505◆Over-the-counter drugs

3.4＋0.2

Healthcare(Skincare) business

090.9－0.101

0＋0 1＋0.1－－0.20◆Sales of new ethical drugs○JapanAmount of adjustment(Note ) The Company is applying the Revised Accounting Standard for Disclosures about Segments of an Enterprise and RelatedInformation and the Guidance on the Accounting Standard for Disclosures about Segments of an Enterprise and Related Information.
As a result, the reported segments are the Ethical Drugs Business and the Consumer Healthcare Business.

9Consolidated Financial Results
for the Third Quarter ending March 31, 2016
Interim term

Third quarter

Full term（unit : ¥million）

Progress tofull term
forecast(%)

Mar/2016

Mar/2016

Mar/2015(revisedforecast)(originalforecast)

＋7.0%

74.4%

113,121120,200

120,200＋5,930

＋7.2%

74.7%

111,771

118,500

118,600

73,713＋6,149

＋9.1%

75.4%

92,11197,800

95,70066,986

68,615＋1,629

＋2.4%

74.2%

91,07992,50094,700

594

577

5,098

＋4,521＋785.5%

98.0%

1,032

5,200

1,000

7,790

7,393

11,873

11,435

－438

－3.7%

71.0%

15,477

16,10018,200

1,972

2,160

3,191

3,410

＋219

＋6.9%

74.1%

4,183

4,600

4,500

Consumerhealthcare
business

593

603

972

910

－62－6.4%

56.9%

1,349

1,600

1,600

Operating
Income

4,587

4,099

10,691

14,666＋3,975＋37.2%

75.6%

14,737

19,40016,000Ordinary
Income

4,898
,

4,266
,

11,181,

14,946,＋3,765＋33.7%

75.9%

15,49019,700,16,300

Net
Income

3,495

2,967

9,571

10,831＋1,260＋13.2%

83.3%

12,06413,00011,500

Sep/2014

Sep/2015

Dec/2014

Dec/2015

Change% Y/Y

Sales

51,112

52,386

83,602

89,469＋5,867

Ethical drugs
business

50,51851,78382,62988,559ethical drugs

40,75542,22967,564●Japan40,422

41,634

332◆Genericdrugs◆OTC drugs
and others◆Sales of new●Overseas10