First Quarter Consolidated Financial Resultsg March 31,, 2019
for the Fiscal Year Ending
1. Overview of consolidated results
2 Highlights of Business Performance2.
3. Main Product Sales Update
4. Changes in Capital Policy and Shareholder Return Policy
5 Financial summary
5.
6. Development pipeline【Reference】
7. Segment information
July 31, 2018

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 due
to various factors in the future.

Outline of First Quarter Consolidated Financial Results
for the Fiscal Year Ending March 31, 2019
Units:millions of yen

Firstquarter
Jun / 2015

Firstquarter
Jun / 2016

Firstquarter
Jun / 2017

Firstquarter
Jun / 2018

YoYchange(%)

Net sales

26 567
26,56727 707
27,70726 45826,45825 131
25,131-5.0％
5 0％

Operating income

2,173

3,244

2,595

1,178

Ordinary income

2,316

3,485

2,805

Net income

1,757

2,580

2,393

Interim term
Sep / 2018
(forecast)

YoYchange(%)

Year ending
Mar / 2019
(forecast)

YoYchange(%)

50 20050,200-1.1%
1 1%

114 400
114,400

+3.4%
3 4%

-54.6％

1,900+31.6%

8,600

-2.5%

1,455

-48.1％

2,200+29.9%

9,200

-1.6%

979

-59.1％

1,500+20.9%

6,600

+0.4%

First Quarter Consolidated Financial Results for the Fiscal Year Ending March 31, 2019
[Net sales] While sales of our main products Flutiform and Desalex grew, sales of new drugs in Japan remained lower than
the year-ago level because of the effect of the drug price system reforms. Meanwhile, sales of generic drugs increased, butoverall sales in the Ethical Drugs Business declined. As a result, overall net sales stood at 25,131 million yen (down 5.0% yearon year).
year)[Profit] Gross profit declined 1,545 million yen year on year due to the fall in sales of new drugs in Japan and a rise in thecost of sales ratio following the drug price system reforms. SG&A expenses decreased 129 million yen from a year ago (ofwhich R&D expenses declined 33 million yen) thanks to our efforts to reduce costs, but operating income was 1,178 million
yen (down 54.6% year on year), and profit attributable to owners of parent was 979 million yen (down 59.1% year on year).

Consolidated Financial Results for the Fiscal Year Ending March 31, 2019(forecast)

Dividends (forecast）

The results forecasts for the first half and the full year announced on May 10, 2018 remain unchanged as of this moment.
((Progressogcomparedo pa d with the forecast
o a foro the first half:a net sales:
a50.1%;
50 %; opoperatinga g income:o62.0%)
6 0%)
We revised the dividend forecast for the fiscal year ended March 2007, which was announced on May 10, 18, to July 31, 18.
Original forecast ￥58/ share (￥38 at the end of the term) ⇒ revised forecast ￥75/ share (￥45 at the end of the term)
1

Highlights of Business Performance（ Units: ¥ billion）

30
Highlight

25

cost ofSales ratio

45.0%

Cost ofsales

11.9

15

105

12 1
12.1

Sales

26.5

25.1

2.5

95
9.5

SG&A

Gross Profit decreased ¥1.6bln

R&D

2.5

12.0

SG&A
(excludingR&D)

Operatingincome

9.4

2.60Jun / 2017

Cost of sales ratio increased 3.2%.

Sales

R&D

SG&A(excludingR&D)

・ Decreased in sales of drugs due to drug pricerevisions.
・Sales of generic drugs increased.
・ decrease in loss on retirement of inventories.

48.2%

Cost ofsales

20

Net Sales decreased ¥1.4bln

cost ofSales ratio

SG&A

SG&A expenses decreased ¥0.2bln
・R&D expense is flat.
・SG&A(excluding R&D) decreased ¥0.１bln

11.8
Operatingincome

Operating Income decreased ¥1.4bln

1.2

Jun / 20182

Consolidated Financial Results
for the first Quarter endingg March 31,, 2019（¥ billion）
Net Sales

Jun/2017

Jun/2018

Change26.5

25.1－1.4

Ethical drugs
Business

25.1

23.7－1.4◆Sales of new
ethical drugs

18.2

16.2－2.0●Japan18.0

16.1

－1.9

02
0.2

0.1

0.1－0.1●Overseas◆Generic drugs

HealthcareBusiness
Operating
Income

6.9
1.3
2.6

7.5
1.4
1.2＋0.6＋0.1－1.4

Ordinary
Income28
2.8

15
1.5－1.3
13

Net Income

2.4

1.0－1.4■ Net Sales￥25.1binYear onYear(－1.4)◆ Ethical drugs business￥23.7bin(－1.4)● Sales of new ethical drugs￥16.1bin(－1.9)

17.6（1Q）

18.6（1Q）

⇒⇒⇒⇒⇒
⇒

2.8
3.0
1.9
1.7
05
0.5
15
1.5
5.2
3.3
4.0
3.5
2.1
1.7
※Launch(11/2016)● Sales of new ethical drugs in Overseas ¥0.1bin
・ Flutiform
・ Uritos
・ Desalex
Dl ※・ Kipres・ Pentasa
・ Mucodyne¥7.5bin●Sales of Generic drugs
・Increase of MONTELKAST AG sales(＋0.2)(－0.2)(＋1 0)(＋1.0)(－1.9)(－0.5)（－0.4)( －0.1)( ＋0.6)

Contract manufacturingʼs sales decreased◆ Healthcare Business¥1.4bin( ＋0.1)■ Operating Income¥1.2bin( 1 4)(－1.4)◆Operating Income margin decreased 5.1 percentage points to 4.7%
●Cost of Sales Ratio : increased 3.2 percentage points (45.0%⇒48.2%)
・Drug price revision ・Sales of generic drugs increased●R&D Ratio : increased 0.4 percentage points (9.4%⇒9.8%)
flat ・¥2.5bln⇒¥2.5bln●SG&A Ratio (excluding R&D expenses) : increased 1.5 percentage points
・¥9.5bln⇒¥9.4bln ¥－0.1bln(35.8%⇒37.3%)
・Decrease of labor costs
costs.

■Net Income¥1.0bin(－1.4)
3

Main Product Sales Update
Interim term

（ Units: ¥ billion ）First quarter（April 1 to June 30）

Full term

Product nameMar/2019(forecast)Jun/2017

Jun/2018

YoY change(%)

Progress toInterim term
forecast(%)

5.4

5.7 11.9 12.3

2.8

3.0

＋9.4%

52.5%

24.4%

36
3.6

3.4

7.2

68
6.8

1.9

1.7

－8.8%

50.1%

24.7%

0.9

3.0

4.9

8.1

0.5

1.5

＋230.8%

48.6%

18.4%

3.9

2.9

8.3

6.0

2.0

1.6

－23.1%

53.7%

25.9%

5.1

2.9 10.5

7.2

3.1

1.7

－45.7%57.6%

23.5%

8.0

7.3 15.3 14.5

4.0

3.5－12.4%

47.2%

24.0%

（Mucoregulant）

3.9

3.2

8.7

7.2

2.1

1.7

－22.5%

51.4%

22.8%

MONTELUKAST Tablets
“KM”

5.0

4.8 11.7

9.8

2.7

3.3

＋21.9%

68.1%

33.6%

Milton

1.1

1.1

2.3

0.5

0.6

＋3.7%

47.6%

24.3%

Sep/2017

Flutiform(Combination drug for asthma
treatment)

Uritos（Kyorin）(Overactive bladder)

Desalex

Sales ofnew
ethicaldrugs(Japan)(Antiallergic Agent)

Kipres（LT receptor antagonist）

For children

Pentasa(Ulcerative colitis andCrohn’s diseasetreatment)

Mucodyne

Genericdrugs

Over-thecounterdrugs(Disinfectant)

Sep/2018(forecast)

Mar/2018

2.2

Progress toFull term
forecast(%)

4

Changes in Capital Policy andShareholder Return Policy

5Changes in Capital Policy
Before the change
・While maintaining the sound financial base, we adopt the capital policy ensuring both growthinvestment and stable return to shareholders.
As for the return to shareholders, we aim for “stable dividends” on a basis of the present dividend standard.

Reason of the Changes in Capital Policy◇Considering the perspective of the recovery of the corporate earnings caused by theimplementation of our key strategies.
◇ Taking into consideration the current capital market conditions and the financial situation of theCompany, we decided to change the policy from capital accumulation to capital efficiency
improvement◇We aim to continue this new shareholder return policy unless there is a special change in thebusiness environment.

Changes in Capital Policy and Shareholder Return Policy
Basic idea
■Please note that there is no change in our business strategy towards the realization of the medium-termbusiness plan “HOPE100-Stage 2-”, and we will continue to make our best efforts to achieve our target
figures in that business plan by investing for continuous growth.
■ We aim to further improve the shareholder's value and increase efficiency of capital tostrengthen the return to shareholdersby strengthening shareholder return taking DOE(shareholders' equity dividend rate) into account6

Shareholder Returns
Basic Policy(After the change)
・WhileWhil maintainingi t i itheth soundd financial
fi
i l base,bwe aim
i tto iimprove ththe capitalit lefficiency through growth investment and returns to shareholders.
・We will maintain stable dividends taking DOE (Dividend on Equity ratio) intoaccount.

Dividends

Dividend pershare (Yen)Consolidated
payout ratio(%)

FY2017FY2018（（orginali l forecast）
ft）

FY2018（（revisei fforecast）
t）

¥58

¥58

¥75

（Yea end ¥38）
（Year-end（Yea end ¥38）
（Year-end（Yea end ¥45）
（Year-end

65 9%
65.9%

65 ７％
65.７％

84 9％
84.9％

※ We revised the dividend forecast for the ﬁscal year ended March 2007, which was announced on May 10, 18, to July 31, 18.

7

Financial summary

8Consolidated Financial Results
for the first Quarter ending March 31, 2019
Interim term
(Units: ¥million)

First quarter （April 1 to June 30）

Full term

Progressto interim
term forecast(%)

Progress tofull term
forecast(%)

Jun/2017

Jun/2018

ChangeYoYchange(%)

110,640 114,400

26,45825,131-1,327

-5.0%

50.1%

22.0%

47,400104,703 108,400

25,112

23,735-1,377

-5.5%

50.1%

21.9%

34,972

34,10077,04180,90018,242

16,204-2,038-11.2%

47.5%

20.0%

34,44933,60073,702

79,90017,99916,057-1,942-10.8%

47.8%

20.1%

523

500

3,339

1,000

242

146

-96

-39.7%

29.2%

14.6%

◆Generic
drugs

13,005

13,20027,662

27,400

6,870

7,531

＋661

＋9.6%

57.1%

27.5%

Healthcare
business

2 781
2,781

2,800

5 937
5,937

6 000
6,000

1 346
1,346

1,396

＋50

＋3 7%
＋3.7%

49 9%
49.9%

23 3%
23.3%

Operatingincome

1,443

1,900

8,822

8,600

2,595

1,178

-1,417-54.6%

62.0%

13.7%

Ordinary income

1 693
1,693

2 200
2,200

9 345
9,345

9 200
9,200

2 805
2,805

1 455
1,455

-1,3501 350-48 1%-48.1%

66 1%
66.1%

15 8%
15.8%

Net income

1,240

1,500

6,574

6,600

2,393

979

-1,414-59.1%

65.3%

14.8%

Sep/2017

Sep/2018
S/2018(forecast)

Mar/2018

Sales

50,75850,200

Ethical drugs
business

47,977

ethical drugsg●Japan◆Sales of new●Overseas

Mar/2017
M/2017(forecast)9

Main R&D Activities -1 (as of July 31 2018)
Ph III ~ Application submittedStageJapan

Overseas

Application(9/2017)PhⅢ:
UROVANT

Compound/CodeTherapy area/Action

OriginFeatures

KRP-114V

Overactivebladder

Merck & Co.,

-Expectation of high compliance in taking medicine
withith lless side
id effects
ff t ththan th
the conventional
tilddrugs ffor
overactive bladder-- Less drug interaction as β3 receptor agonist - β3
agonist including this agonist may constitute the firstline drug for treatment of overactive bladder

Application(4/2017)

KRPAM1977X(Oral agent）

New quinolone
synthetic
antibacterial
agent

In-house

PhⅢ(3/2016)

KRPAM1977Y(Injection）

New quinolone
synthetic
antibacterial
agent

In-house-Superior ability to combat drug-resistant grampositive bacteria (incl(incl. MRSA)-has a powerful antimicrobial activity against
anaerobic bacteria- Expectation of high clinical effects with excellent
tissue penetration-High degree of safety expected since safety hurdles
cleared prior to clinical trials

PhⅢ(3/2017)

KRP-116D

Interstitialcystitis―

Evaluation committee on unapproved or off-labeled
drugs with high medical needs“Dimethyl sulfoxide(DMSO)”

PhⅢ(6/2017)

KRP-108P

Anti-asthmatic(U.K.)
Vectura

Expand the indication of Flutiform to pediatric patients

Comments
・License agreement with Merck & Co., Inc.,(7/2014)
・Co-Development
Co Development and Co
Co-Marketing
Marketing Agreement withKissei Pharmaceutical Co., Ltd. affiliate (3/2016)･License agreement with Merck & Co., Inc., for Asia
(4/2017)10Main R&D Activities -2 (as of July 31 2018)
POC Project (Ph I ~ Ph II)
StageJapan

Overseas

Compound/
Code

Therapy area/Action※Changes from the previous announcement (May 10 2018)

OriginFeatures

Comments

PhⅡ

KRP-N118(SK-1404)

Nocturia Dueto Nocturnal
PolyuriaySANWAKAGAKUKENKYUSH
O CO., LTD.

A vasopressin V2 receptor agonist that promotes the reabsorption of waterby the collecting duct of the kidney to reduce the amount of urine(antidiuretic action). With its high efficacy and safety, the drug is expectedt betob a ththerapeuticti agentt ffor nocturia
t i duedtto nocturnal
tl polyuria.
li・License agreement withSANWA KAGAKUKENKYUSHO CO., LTD,
(3/2018)※PhⅡ（6/2018）

Ad-SGE-REIC

malignantpleuralmesothelioma

Okayama
UniversityA gene-therapy product using a novel tumor suppressor gene of reduced
expression in immortalized cells/ Dickkopf-3 (REIC/Dkk-3), which wasdiscovered by researchers from Okayama University, as a therapeutic gene.
It is expectedpto have direct effect on pprimaryy tumor lesions and indirect
effect on metastatic tumor lesions as a gene-therapy product thatsimultaneously induces tumor cell-selective apoptosis and the activation ofantitumor immunity respectively.

Adopted to Next
generation Technology
Transfer Program((NexTEP))(6/2014)【US】
Momotaro-Gene
prostatecancer(PhⅠ/Ⅱ)【JP】
Okayama University
liver cancer(PhⅠ/Ⅰb)

Licensing development
Stage/OverseasPhⅠ

Compound/
Code
FPR-2 agonist
programLicensee /Collaborative
researchBMSTherapyarea/Action
Nondisclosure

OriginIn-house

Features
FPR-2 agonists that mainly inhibit themigration of neutrophils and exhibit antii flinflammatorytaction.
tiComments
License agreement with BMS(12/2015)

11Reference

12Segment information
for the first Quarter Ending March 31, 2019
Sales, Profit or Loss of each report segment(Units:¥ billion)

Sales

Year on Year

ProfitYear on Year

25.1

－1.4
1.4

1.2

－1.4
1.4

23.7

－1.4

1.1

－1.4

16 2
16.2

－2.0
20

●Overseas16.1
0.1－1.9－0.1◆Generic drugs

7.5＋0.6

Healthcare business1.4＋0.1

00－－0.10

total
Ethical drugs business◆Sales of new ethical drugs●JapanAmount of adjustment

13