Financial Results for Fiscal 2018

May 14 , 2019
KYORIN Holdings, Inc.
President Minoru Hogawa

Outline of Consolidated Financial Results
・Trends of mainstay products

Consolidated Financial Results and Forecast
Status of development pipelineInitiatives toward realization of
the long-term vision “HOPE 100”・Progress of Medium-Term Business Plan “HOPE 100-Stage 2-”(Fiscal 2016～2019)2

Outline of Consolidated
Financial Results3Outline of Consolidated Financial Results for Fiscal 2018

（unit : ¥billion）

ChangeChange(revised
forecast)(original
forecast)

FY2017FY2018 Change

Change(%)

Net Sales

110.6

113.6

＋3.0

＋2.7

＋3.0

－0.8

Operating
Income

8.8

9.0

＋0.2

＋1.7

＋0.8

＋0.4

Ordinary
Income

9.3

9.4

＋0.1

＋1.0

＋0.8

＋0.2

Net Income

6.6

6.9

＋0.3

＋4.5

＋0.8

＋0.3

4

Breakdown of Gain and Loss
（unit : ¥billion）

ChangeChange(revised
forecast)(original
forecast)

FY2017FY2018ChangeChange
(%)

110.6

113.6

＋3.0

＋2.7

＋3.0

－0.8

104.7

107.9

＋3.2

＋3.0

＋3.3

－0.5

77.0

78.5

＋1.5

＋1.9

＋1.4

－2.4

Japa
n

73.7

77.7

＋4.0

＋5.4

＋1.6

－2.2

Overs
eas

3.3

0.8

－2.5

－75.1

－0.2

－0.2

27.7

29.3

＋1.6

＋6.0

＋1.9

＋1.9

Healthcare Business

5.9

5.8

－0.1

－3.0

－0.2

－0.2

Cost of Sales

49.1

56.2

+7.1

＋14.6

－

－

52.8
(14.2)

48.4（10.8)

－4.4

－8.2

－

－

Operating Income

8.8

9.0

＋0.2

＋1.7

+0.8

＋0.4

Ordinary Income

9.3

9.4

＋0.1

＋1.0

＋0.8

＋0.2

Net Income

6.6

6.9

＋0.3

＋4.5

＋0.8

＋0.3

Net Sales

Ethical drugs
business

Sales ofnew
ethicaldrugs

Generic drugs

SG&A

5

Highlights of Business Performance ①（Sales）（ Units: ¥ billion ）120【 Net Sales ¥＋3.0bln】

113.6【 Ethical Drugs Sales ¥＋3.2bln】

110.6
5.9

5.8

Ethical drug sales in Japan＋4.0bln

29.3

・Despite steady growth in Flutiform
sales
・The release of Beova and transfer of thesale of Nasonex contributed.
※Impact of drug price revisions(approximately 7%)

100

27.7
80

【 Ethical Drugs】

60

40

0.8

3.3

【 Ethical Drugs】

104.7
73.7

Ethical drug sales overseas －2.5bln

107.9
77.7

20

・Decrease in lump-sum revenue due toout-licensed product in the previous
year

Generic drugs ＋1.6bln
・Increase in sales of generic drugs released
in fiscal 2018

Healthcare Business －0.1bln
・Growth of RUBYSTA
・Sales of Milton and other products declined.

0

17年3月期
FY2017

18年3月期
FY20186

Highlights of Business Performance ②（Income）【Operating Income ¥＋0.2bln】（ Units: ¥ billion ）Gross Profit decreased
Net Sales：
Increased ¥3.0bln year on year10

Cost of sales ratio :decreased 5.1% year on year

－0.9
8

－4.2
6

・ Impact of drug price revisions (approximately 7%)
・ Increase in sales of generic drugs
・ Decrease in lump-sum revenue due to outlicensed product in the previous year

－3.4

R&D expenses decreased

8.8

9.0

4

2

¥14.2bln（FY2017）⇒¥10.8bln（FY2018）
・Decrease in lump-sum contractual payments
paid in conjunction with the introduction of
KRP-N118
・Decrease due to the progress in thedevelopment project (fiscal year ended March
31, 2018)

SG&A(excluding R&D)
decreased
0
Operating Income（FY2017）Gross Profit

R&D

Operating Income
SG&A(excluding R&D) （FY2018）

・Decrease of Labor costs, Selling costs¥38.5bln（FY2017）⇒¥37.6bln（FY2018）7

Highlights of Business Performance ③（Change : forecast)
Change(%)

ChangeChange(revised
forecast)(original
forecast)

FY2017FY2018Change

110.6

113.6

＋3.0

＋2.7

＋3.0

－0.8

104.7

107.9

＋3.2

＋3.0

＋3.3

－0.5

77.0

78.5

＋1.5

＋1.9

＋1.4

－2.4

Japan

73.7

77.7

＋4.0

＋5.4

＋1.6

－2.2

Overs
eas

3.3

0.8

－2.5

－75.1

－0.2

－0.2

27.7

29.3

＋1.6

＋6.0

＋1.9

＋1.9

Healthcare Business

5.9

5.8

－0.1

－3.0

－0.2

－0.2

Cost of Sales

49.1

56.2

+7.1

＋14.6

－

－

52.8
(14.2)

48.4（10.8)

－4.4

－8.2

－

－

Operating Income

8.8

9.0

＋0.2

＋1.7

+0.8

＋0.4

Ordinary Income

9.3

9.4

＋0.1

＋1.0

＋0.8

＋0.2

Net Income

6.6

6.9

＋0.3

＋4.5

＋0.8

＋0.3

（ Units: ¥ billion ）Net Sales

Ethical drugs
businessSalesof new
ethicaldrugs

Generic drugs

SG&A【Explanation of Variances（Change：revised forecast）】
Net sales: (New drugs in Japan) Sales of Fultiform were strong and sales of Nasonex surpassed expectations.
(Generic drugs) Sales of the MONTELUKAST AG exceeded expectations.
Operating Income: Sales were better than expected due to increased revenues.

8

Mainstay Product Sales（ Units: ¥ billion ）Flutiform(Anti-asthmatic)

Desalex(allergic rhinitis)

Kipresfor adult（LT receptor antagonist）

for children
Nasonex（Spray type allergic rhinitis
remedy）

Uritos（Kyorin）(Overactive bladder)

Beova(Overactive bladder)

Pentasa(Ulcerative colitis andCrohn’s disease treatment)

Mucodyne（Mucoregulant）

MONTELUKAST
Tablets“KM”

ChangeChangeFY2016FY2017

Change

11.9
4.9

13.1
3.7

＋1.2

＋9.8

＋0.8

＋0.8

－1.2

－24.1

－1.1

－4.4

8.3
10.5

6.2
7.6

－2.1

－24.6

＋0.2

＋0.2

－2.9

－27.4

＋0.4

＋0.4

－

12.8

＋12.8

－

＋2.7

＋2.7

7.2
－
15.3

6.6
0.7
13.5

－0.6

－8.6

－0.2

－0.2

＋0.7

－

－0.1

－0.1

－1.8

－11.4

－0.2

－1.0

8.7

6.8

－1.9

－22.1

－0.4

－0.4

11.7

11.9

＋0.2

+1.3

＋2.1

＋2.1

Change(%)(revised
forecast)(original
forecast)

9Trends of mainstay products

10

■Respiratory
Flutiform 【Anti-asthmatic】（ Units: ¥ billion ）14
status of FY2018
12◆ ICS/LABA market ： expand 4.6%
¥115.1bln（FY2017） ⇒ ¥120.3（FY2018） ※1

10

share of Fultiform sales
11.4%（FY2017） ⇒ 12.2%（FY2018）※2

8
6

11.9

13.1

14.0

◆Aim to establish a first-line drug position in terms of asthma
treatments.
・Attract attention to the high clinical impact from a patient with symptoms
・The agent nicely penetrates and reaches theperipheral airways.
・Feature the advantages of aerosol-based treatment.
- People with a weak inspiratory capacity can inhale easily.

10.1
4

Effort for FY2019

7.2

2※1､2（Source：Copyright 2019 IQVIA. IMS –JPM. Unauthorized copying prohibited ）

0
16/3

17/3

18/3

19/3

20/3
forecast

11

■Otolaryngology（ Units: ¥ billion ）Nasonex（Spray type allergic rhinitis remedy）

Desalex(Antiallergic Agent)（ Units: ¥ billion ）

8

12
10

6

8
4

8.0
4.9

2
0

12.8

4

3.7

6.2

2

1.0
17/3

6

0
18/3

19/3

20/3

19/3

20/3

forecast

status of FY2018
Antihistamine market：shrink 9.1%
¥178.2bln（FY2017） ⇒ ¥162.1（FY2018） ※1

share of Desalex sales
1.5%（2017.1-12） ⇒ 5.3%（2018.1-12） ※2

forecast■ Acquire domestic exclusive distribution rights (May.2018）[Sales start]
August 2018
[Sales] ¥10.1bln（Forecast）⇒¥12.8bln（FY2018）

 Actual sales in the third quarter ended March 31, 2019:
4.8 billion yen●Market scale ： 46 billion yen
Main products ：NASONEX ,Allermist,Erizas,Flunase, etc※Supply of the drug is suspended due to the voluntary recall,effective from January 1, 2019.
We will make an announcement as soon as a decision is reachedregarding resuming the supply.

effort for FY2019

effort for FY2019● non-drowsy and effects and usability※◆Promote sales with a focus on authorized generic drugs (AG)◆ Increase the market share by expanding sales with bothdrugs at otolaryngologists.

● Realization of prescription acquisition rate No.1 inotolaryngology※1､2（Source：Copyright 2019 IQVIA. IMS –JPM. Unauthorized copying prohibited※1（Source：Copyright 2019 IQVIA. IMS –JPM. Unauthorized copying prohibited

12

■Urology（ Units: ¥ billion ）
100
80

80.6

18.7

（ Units: ¥ billion ）OAB market
86.9

25.3

90.2

30.4

90.9

34.1

91.3

38.3

60

8
β3
receptoragonistothers

4

61.7

59.9

56.9

20

53.0

anticholiner
gic agent

0.7

2.5

6.6

6.0

Beova

6

40

61.9

Uritos / Beova

7.5

7.5

7.2

2

Uritos

0

0
15/3

16/3

17/3

18/3

19/3

16/3

17/3

18/3

19/3

20/3
forecast※（Source：Copyright 2019 IQVIA. IMS –JPM. Unauthorized copying prohibitedstatus of FY2018

Beova : Direction of the initiatives

OAB market： expand[Popularize the drug to make sure it is chosen as afirst-line medicine for OAB treatment.]¥80.6bln（FY2016） ⇒ ¥91.3（FY2018） ※1

share of Uritos sales
8.8%（FY2017） ⇒ 8.3%（FY2018）※2

share of Beova sales
0.6%（FY2018）※3

effort for FY2018
・Succeeded in acceptable product positioning for Uritos(OAB patients with nocturia)
・Offer a new treatment option by promoting Beova※1,2,3（Source：Copyright 2019 IQVIA. IMS –JPM. Unauthorized copying prohibited)◆ The drug can be prescribed regardless of differences in
OAB symptoms, gender, age and patient background.
◆ Emphasize quick and superior effects as well as safety.
◆ Increase the number of medical organizations that use
the drug for prescriptions and the number of treatmentswith the drug, with an eye on removing the limit on
prescription periods (December).
(Reference information)
Development status overseas: Phase III of Urovant was completed (March 2019).

With both drugs, we aim to expand the market share in the OAB market.

13

■Status of Generic Drugs
Kei（ Units: ¥ billion ）
35

32.2

30

27.7

29.3
MONTELUKAST

25.0

11.6

25

8.2

20

11.7

AG

status of FY2018
Turnover increase , MONTELUKAST AG:＋￥0.2bln
・Maintain the market share of more than 50% in the GE
market.

11.9

Sales of generic drugs except AG (authorized
generic) drugs expanded.
・Generic drugs released in FY2018 contributed to sales growth.

15effort for FY2019

10

15.5

16.8

16.0

17.4

20.6

5

Other
GE

Actions for an authorized generic drug (AG)・Aim to achieve a large market share of more than 50% for
MONTELUKAST AG in the GE market
・Consider acquiring new AGs （Nasonex）

Expand sales of strategic products andSupplementary Items

0
16/3

17/3

18/3

19/3

20/3
forecast

14

Consolidated Financial Results and Forecast

15

Consolidated Financial Results Forecast
for the Year Ending March 31, 2020
（ Units: ¥ billion ）FY2018FY2019（forecast）

Y/Y
ChangeChange(%)

113.6

114.1

＋0.5

+0.4

107.9

108.0

＋0.1

＋0.1

78.5

75.8

－2.7

－3.4

Japan

77.7

74.4

－3.3

－4.2

Overse
as

0.8

1.3

＋0.5

＋56.6

29.3

32.2

＋2.9

＋9.8

5.8

6.1

+0.3

＋5.9

Operating Income

9.0

9.1

+0.1

＋1.4

Ordinary Income

9.4

9.6

+0.2

＋1.7

Net Income

6.9

7.1

＋0.2

＋3.4

Net sales

Ethical drugs
business

Sales ofnew
ethicaldrugs

Generic drugs
Healthcare Business【for reference: year on year】
Net Sales: [decrease] Impact of drug price revision and release of Nasonex[increase] Growth in revenues from Flutiform and Beova, launch of new product KRP-AM1977X, and release of Nasonex AG
Gross Profit: The cost of sales ratio declined 1 percentage point from the previous year.
SG&A: R&D expenses remained flat (expected to be 10,900 million yen, or up 100 million from the previous year). The selling expenses andgeneral administration expenses ratio (excluding R&D expenses) increased by almost 1 percentage point year on year.

16Forecast of Mainstay Product Sales（ Units: ¥ billion ）FY2018Y/Y

FY2019（forecast）

ChangeChange(%)

13.1

14.0

＋0.9

＋7.6

3.7

8.0

＋4.3

＋115.1

6.2
7.6

4.5
6.1

－1.7

－26.5

－1.5

－19.2

12.8

6.2

－6.6

－51.1

6.6

6.0

－0.6

－8.0

0.7

2.5

＋1.8

＋242.6

Pentasa

13.5

12.0

－1.5

－11.4

Mucodyne

6.8

6.0

－0.8

－10.2

－0.3

－2.1

Flutiform(Anti-asthmatic)

Desalex(allergic rhinitis)

Kipresfor adult（LT receptor antagonist）

for children

Nasonex（Spray type allergic rhinitis remedy）

Uritos（Kyorin）(Overactive bladder)

Beova(Overactive bladder)(Ulcerative colitis and Crohn’s disease treatment)（Mucoregulant）.

MONTELUKAST Tablets “KM”

11.9

11.6

17

Status of development pipeline18

Drug Development Pipeline:
Progress in FY2018
progress in FY18
development code

Ad-SGE-REIC

PhⅠ

PhⅡ

PhⅢ

application

2017/6

Preparation

Approval/

LaunchEnd of the PhⅠ／PhⅡPhⅡStart 2018/6

Respiratory

KRP-108P
KRP-AM1977X

2017/4

KRP-AM1977Y

Preparation

Infections

KRP-116D
Urological2017/3

KRP-N118

PhⅡStart2018/8(SK-1404)【 Licensing development】
開発コード

FPR2 agonist
program
KRP-203

導出先

開発段階

特徴

BMS

PhⅠ

FPR-2 agonists that mainly inhibit the
migration of neutrophils and exhibit anti-inflammatory action.
Therapy area：Non-disclosure

Implementing
licensing activities

PhⅠ

Sphingosine-1-Phosphate Receptor Agonist
Therapy area：GvHD

Because Novartis (licensee) decided to discontinue development of KRP-203 for strategic reasons,
Kyorin receive the return of development rights.

19

Drug Development Pipeline:
Progress in FY2019
progress in FY19
development code

Ad-SGE-REIC

PhⅠ

PhⅡ

PhⅢ

application

Approval/

2017/6

Preparation

Expecting tocreate an
Application
in FY19

End of the PhⅠ／PhⅡPhⅡStart 2018/6

Respiratory

KRP-108P
KRP-AM1977X
KRP-AM1977Y

Preparation

KRP-116D

2017/3

KRP-N118※ MK-7264, a drug for chronic coughing: MSD is working on Phase III development. Concluded a memorandum of
understanding for sales collaboration（2019/5）.

【 Licensing development】
FPR2 agonist
program
KRP-203

Preparation

Expecting tocreate an
Application
in FY19
Expecting tocreate an
Application
in FY19

PhⅡStart2018/8(SK-1404)

開発コード

FY19
Expected
Release2017/4

Infections

UrologicalLaunch

導出先

開発段階

特徴

BMS

PhⅠ

FPR-2 agonists that mainly inhibit the
migration of neutrophils and exhibit anti-inflammatory action.
Therapy area：Non-disclosure

Implementing
licensing activities

PhⅠ

Sphingosine-1-Phosphate Receptor Agonist
Therapy area：GvHD

Because Novartis (licensee) decided to discontinue development of KRP-203 for strategic reasons,
Kyorin receive the return of development rights.

20

KRP-108P, a fixed-dose combination for asthma:
Additional indications for Flutiform for children
Status of Development
 Phase III clinical trial: Completed◆ Application in preparation

Study: Open-label, active-controlled, cross-over study in children with bronchial asthma
Disease: Bronchial asthma in children (patients with bronchial asthma aged ≥ 5, < 16 years)
Target sample size: 70 patients
Dosage and administration: Two inhalations (puffs) of Fultiform (50/5 μg), twice daily[Primary endpoint] mPEF: Change from baseline (mean mPEF values in seven days prior tovisit for treatment period-1)

試験結果
Study
Results
In the Phase III clinical study, non-inferiority of Fultiform to the control (a fixed-dose combinationof fluticasone and salmeterol) was validated.
No safety issue was confirmed in a long-term study (open-label, uncontrolled) concurrentlyconducted in children with bronchial asthma.
21

KRP-116D, a treatment for interstitial cystitis(active ingredient: dimethylsulfoxide)
Status of Development

 Phase III clinical trial: Completed◆ Application in preparation*Under development as unapproved or off-labeled drugs with high medical needs
Study: A multicenter, randomized, double-blinded, placebo-controlled, parallel-group study
Disease: Interstitial cystitis
Target sample size: 90 patients
Dosage and administration: Instillation of 50 mL of KRP-116D into the bladder every two weeks[Primary endpoint] Efficacy; Interstitial Cystitis Symptom Index (ICSI)
Note: Designation as an orphan drug

試験結果
Study
Results
The superiority and safety of KRP-116D to placebo was confirmed in the Phase III clinicalstudy. (Superiority of KRP-116D to placebo was demonstrated for the first time in the world.)

22

Progress of Medium-Term Business Plan
“HOPE 100-Stage 2-” (Fiscal 2016～2019)23

Outline of“HOPE 100-Stage 2-”【Four Priority Strategies】

Business Strategy（S）
Strategy①Strengthening of the Ability to Discover New Drugs②Increase in the Ratio of New Drugs Group③Promotion of Generic Drugs Business by Making
the Most of Its Characteristics④Strengthening of Low Cost

【Development Strategies】

・ Healthcare Business/ Overseas Expansion

Organization Strategy (O)Organization

Performance Targets （P）
Performance

・ Best worthwhileness of work
・ Establishment and operation of the system for
management of human resources

・ Sustainable growth・ Aim to achieve the average annual growth rate of 3% ormore for the consolidated net sales and the consolidated
operating income margin of 15% or more.
・ In shareholders return, aim for stable dividends.
24

Priority strategy: Enhance drug discovery capabilities

Efforts on first-in-class drug discovery
Building a system for the creation of
innovative new drugs
Joint Studies•Kyoto University
Department of Drug Discovery for
Lung Diseases•Institute of Microbial Chemistry
Search in antibacterial drug field• Hebrew University
Development of drugs for respiratory
diseasesStrengthening the function ofplanning drug generation
Restructuring organization

Move on with oligonucleotide
therapeutics as a new modality

Priority strategy: Increase ratio of new drug group

Accelerate regrowth with new drug group and new products
・Maximize the dissemination of Flutiform, Desalex, and Beova.
・Launch and disseminate KRP-1977X.
Ratio of new
drug group（%）[The ratio of the new drugs group should increase as follows]
56%

Ratio of new drugs group:
At least 50%

Regrowth withnew drug

50・Delay in the progress of KRP-AM1977X
・Decrease in sales due to the temporary
suspension of the supply of Desalex

45%

41%

40

KRPAM1977X

35%

Beova （2018/11）
Nasonex（2018/8）

29%

30

DesalexFlutiform

Uritos0

Pentasa Granule
FY2015FY2016FY2017FY2018

Medium-term management plan “HOPE100－Stage 2－” （2016-2019）

FY201926

Priority strategy: Increase ratio of new drug groupMarket creation through the launch of new ethical drugs
Medium-term management plan “HOPE100－Stage 2－” （2016-2019）

Launch four new products during the stage 2 period and popularize them and Flutiform as much as possible

FY2016～

Flutiform

Current State
Marketshare7%(FY2015)～FY2023

ICS/LABA：¥120bln
Top Market

39%

Marketshare12%
注1 (FY2018)～FY2019

share

Flutiform
注2

Aim to launch pediatric drugs(application will begin in 2019)

Quantity-based
market share of
ICS/LABA combination
drug market: 30%

The limits on prescription periods
were removed (December 2019)

Percentage ofpatients that takeprescriptions: 30%
or higher

Aim to get the highest prescription
acquisition rate in theotolaryngology area after the
resumption of supply

Top share in the
Antihistamine
market12%

OAB：¥90bln

Beova

Top Market

Launch40%(2018/11)

share
Beova

Vision1%
注2

Antihistamine：¥160bln

Desalex20%
3%

Launch(2016/11)

Top Market
share
Desalex

注2

KRPAM1977X
KRPAM1977Y

Application
9%

Preparing
application

注2

Top Market

Antibacterial agent

share(oral)：¥110bln(Injection)：¥110bln

・ KRP-AM1977X Aim to launch(2019)・ KRP-AM1977Y Aim to launch(application will begin in 2019)

OAB market: Anticholinergic agents and β3 adrenoceptor agonists
Antibacterial agent market: includes all systemic antibacterial agents and children in all markets.

Highest percentageof respiratory
and otolaryngology
patients that takeprescriptions※1､2（Source：Copyright 2019 IQVIA. IMS –JPM. Unauthorized copying prohibited ）27

Priority Strategy“Promotion of Generic Drugs Business by Making the Most of Its Characteristics“AG strategy andStrengthening of ability to perform business AG strategy

Montelukast AG

Maintain the quantity-based shareof more than 50% in the GE market

Mometasone AG

Aim to launch (FY2019)

Consider acquiring new AGs■Strengthening of ability of KYORIN Rimedio Co., Ltd. to perform businessStrengthening the competitiveness of products developed in-house
Establishment of Takaoka
Pharmaceutical Technology
Innovation Center(opened in July 2017)
AG： Authorized Generic

Aim to establish an organizational
system under which eight
ingredients are launched on anannual basis
28

Priority Strategy"Strengthening of Low Cost“

Consolidation of the Group’s production functions
Change of the cost structure by ensuring optimization within the GroupKYORIN Pharmaceutical Facilities Co., Ltd
Commences full-scale operation on April 1, 2018
Noshiro plant (Akita)

Inami plant (Toyama）

Shiga plant （Shiga）

Control outsourcing expenses by equalizing the manufacturing capabilities of each factory
Facilitate efficient operation through the flexible transfer of employees among factories.
Use existing facilities more effectively and reduce capital expenditure for building new facilities

Reduction of approximately 300 million yen in the first fiscal year (FY2018)

Expected effects of reorganization: total cost reduction of
approximately 1,000 million yen by 2023.
29

Fostering strategy:

Diagnostic business
Aim to be the next core businessCharacteristics
・Rapid detection of genes based on the technology ofultrafast quantitative PCR* （5-15 minutes）
・ High-sensitivity detection is possible with a trace amountof the sample immediately after infection
・ A compact, desktop PCR device eyeing POCT*
Identification of pathogenic bacteria of infection by
POCT and improvement of treatment with the choiceof an appropriate antibacterial agent

Up to 4 Detection Units can be added
and the simultaneous test of multiple
samples is possible※1 PCR (Polymerase Chain Reaction): A technique of selectively amplifying DNA arrangements.
※2 POCT (Point of Care Testing): Testing carried out by a healthcare worker at a patient’s bedside.

[GeneSoC®] ultrafast gene quantitative system●A measurement chip and a reagent for research: to be released in the second half of FY2019.
● Extracorporeal diagnostic agent: Aim to release a drug in 2021.
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Performance

Continuous Growth
Medium-term management plan “HOPE100－Stage 2－” （2016-2019）＜Target value＞＜FY2019（Forecast）＞

Factor■the new drug business (in Japan)

the averageannual growthrate ：3% or more

・Delay in the progress of KRP-AM1977X
・Decrease in sales due to the temporary
suspension of the supply of Desalex■the business of drug discovery(overseas development)

the averageannual growthrate ： －1.1%

・Lower-than-expected income from royalties.

the consolidated
operating income
margin ：15% or more

(Discontinuation of the development of KRP-203 on the partof the licensee.)【Changes in systems and business circumstances】■Dramatic reform of the NHI drug price scheme
・Review of the Price Maintenance Premium・Frequent drug prices revisions

the consolidated
operating income
margin ：8%

For continuous growth（Refinement of pharmaceutical Business）＜Drug Discovery＞■Initiatives for first-in-class
New drug discovery
・Establishment of system forcontinual generation of
innovative new drugs＜New Drug Business＞■ Increase in the Ratio of
New Drugs Group・Make the four new drugs (including
those developed in-house)
the driving force＜ Generic Drugs Business ＞■Promotion of Generic Drugs
Business by Making the Mostof Its Characteristics
・promotion of AG strategy＜ New businesses ＞■ Development of thediagnostic business andestablishment of a foundation

31

Shareholder Returns
Basic Policy
・While maintaining the sound financial base, we aim to improve the capitalefficiency through growth investment and returns to shareholders.
・We will maintain stable dividends taking DOE (Dividend on Equity ratio) into
account.
Dividend per share for fiscal 2018 (estimate): ¥75 (including interim dividend of ¥30)

Dividends

Dividend pershare (Yen)Consolidated
payoutratio(%)

FY2016FY2017FY2018※FY2019（forecast）

¥58

¥58

¥75

（Year-end¥38）（Year-end¥38）（Year-end¥45）¥75（Year-end
¥45）

59.3%

65.9%

72.6%

61.4%

※The year-end dividend of 45 yen in the fiscal year ending March 2019 will be decided at in the Board Meeting Scheduled for
May 22.

32

Important points in facilitating the FY2019
business strategy

Develop growth potential
andfollow a growth path33