Press Release

ASKA Pharmaceutical Holdings Takes Action to Implement Management
That is Conscious of Cost of Capital and Share PriceTOKYO, November 10, 2023 – ASKA Pharmaceutical Holdings Co., Ltd. (Head Office: Minatoku, Tokyo/ President, Representative Director: Takashi Yamaguchi) is pleased to update you on
its assessment of the current status of its efforts to enhance capital profitability and its measuresto achieve management that is aware of the cost of capital and share price, as well as its
discussions on policies and initiatives to improve its performance.
1.

Assessment of Current Status
Based on its corporate philosophy: “Contribute toward the improvement of people's healthand progress in society through the development of innovative products,” the Company aims
to become a “total healthcare company with a strong foundation as a specialty pharmacompany” under the Medium-Term Management Plan 2025, a five-year plan starting in 2021.
Although the core domestic pharmaceutical business continues to face challenging
conditions, including the impact of the NHI drug price revisions every year, its ROE has
increased to the 8% level for three consecutive fiscal years of profit growth, exceeding thetarget of 8% set in Medium-Term Management Plan 2025. On the other hand, the P/B ratio(hereinafter “PBR”) has been less than 1x since FY2018.
The reason for the PBR of less than 1x is that the feasibility of the growth strategy was not
fully understood, the external communication was not sufficient, and the Company did notdisclose specific cash allocation. The Company did not provide a clear direction for thegrowth strategy and shareholder returns. In addition, the Company assesses that one of thefactors is that the market has not yet sufficiently evaluated the Company's earning power in
its core business.
Five-Year Financial Indicators
FY2018FY2019FY2020

FY2021

FY2022

Net sales (Millions of yen)

46,70652,542

55,18156,60760,461

Operating profit (Millions of yen)

1,782

1,507

3,609

4,795

5,108

Profit attributable to owners of parent

1,744

649

2,713

4,290

4,238

ROE (%)

4.1

1.5

6.3

8.8

8.2

PBR (Multiple)

0.76

0.72

0.97

0.73

0.65

Share price at fiscal year-end (Yen)

1,146

1,098

1,471

1,263

1,189(Millions of yen)

2.

Policies for improvement
To improve market valuation, the Company will continue to strengthen IR activities tocommunicate its growth strategy by holding financial results briefings and pipeline briefings.
In addition, in order to enhance the feasibility of the growth strategy and meet theexpectations of its shareholders, it will consider optimal cash allocation and take action toimplement management that is conscious of the cost of capital and its share price. The
Company will continue to reduce cross-shareholdings as a percentage of net assets to lessthan 20% by the end of March 2024.
3.

Details of Initiatives1)

Growth strategy

In the pharmaceuticals business, the Company is further strengthening its position as aleading company in the field of obstetrics and gynecology while expanding its business into
the companion animal field in the animal health business. As an R&D-oriented company, theCompany aims to strengthen its drug discovery research activities. It plans to invest the cash
generated from its business activities into the pharmaceutical business to grow as a total
healthcare company and to expand the Company's reach further. The investments will
include new businesses such as overseas development as well as Femtech, which isestimated to have a significant impact on the economy as a whole, contributing
approximately 2 trillion yen by 2025. Moreover, the Company strives to strengthen its
management base by investing in human capital and updating and expanding production
facilities.
2)

Strengthen shareholder returns

The Company recognizes that returning profits to shareholders is an essential management
issue. The Company plans to raise the annual dividend from 20 yen per share to 40 yen per
share in FY2023, taking into account its strong business performance and the extraordinary
income from the sale of cross-shareholdings. From FY2024, the Company will shift to a
performance-linked profit-sharing method, indicating a consolidated dividend payout ratio of30%. The minimum dividend per share will be set at 30 yen per share, and the Company will
maintain stable dividends while linking profit distribution to business performance. Regarding
the purchase of treasury shares, the Company will consider flexibly implementing share
repurchases at appropriate times, taking into consideration investment in growth, dividendlevels, cash reserves, and share price levels.
3)

Strengthen IR activities

The Company is committed to creating more opportunities for investors to gain a deeper
understanding of its growth strategy. This includes strengthening briefings for both individual
and institutional investors, maintaining constructive dialogue with shareholders and investors(IR meetings), and providing new opportunities for dialogue, such as small meetings andpipeline briefings. Furthermore, in order to raise public awareness about the Company, it will
focus on enhancing its sustainability activities and various information disclosures as well as
expanding information available on its website.
Media Contacts
ASKA Pharmaceutical Holdings Co., Ltd.
Corporate Planning Department
Tel: +81-3-5484-8366
Email: kouhou@aska-pharma.co.jp

About Action to Implement
Management That Is Conscious of
Cost of Capital and Share Price

Business Environment and the Company’s Direction

Business Environment under Headwinds
The business environment remains challenging due to policies to curb
healthcare costs, such as annual NHI drug price revisions, drug quality/supply issues, increasing difficulty in drug discovery, changing
international circumstances, including the Russian-Ukrainian crisis,
global supply chain disruptions, and rising costs associated with soaring
energy, raw materials, wages, and other costs.
Despite facing an uncertain future and challenges ahead,
we aim for growth by capitalizing on external changes.

PBR and ROE
PBR

PBR (multiple)

1.40

1.21

1.20
1.00
0.80
0.60
0.40

0.87
1.5

0.95

1.05

7.8

3.4
1.9

ROE

ROE（％）

8.8

1.14
5.8

8.2

6.3
4.1
0.76

0.72
1.5

0.97

0.73

0.65

FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022

10.0
9.0
8.0
7.06.0
5.0
4.0
3.0
2.0
1.0
0.0

In the light of PBR being below 1x, we assessed the current situation and discussed
improvement policies and detailed initiatives at the board meeting several times.
* PBRs for FY2013-FY2022 are calculated based on the year-end share price.
PBRs and ROEs up to FY2020 are those of ASKA Pharmaceutical Co., Ltd.
PBRs and ROEs after FY2021 are those of ASKA Pharmaceutical Holdings Co., Ltd.

Assessment of Current Status and Policy for Improvement
Assessment of Current Status
 The Company's ROE has increased to the 8% level for three consecutive fiscal years of profit growth andhas exceed the 8% target for FY2025, the final year of the Medium-Term Management Plan.
 On the other hand, PBR has been below 1x since FY2018. We assess that the feasibility of the growthstrategy was not fully understood, the external communication was not sufficient, and the Company did notdisclose specific cash allocation. This was due to the Company's lack of clear direction for growth strategy
and shareholder returns.

Policy for Improvement
To improve market valuation, we will continue to strengthen IR activities to communicate our growth strategy byholding financial results briefings and pipeline briefings. Moreover, we will consider optimal cash allocation andtake action to implement management that is conscious of the cost of capital and our share price to enhance
the feasibility of the growth strategy and meet the expectations of our shareholders. We will continue to reducecross-shareholdings as a percentage of net assets to less than 20% by the end of March 2024.

Details of Initiatives 1) Growth Strategy
Toward Total Healthcare Company

Implementation ofGrowth Strategy Pharmaceutical businessLeading Company
in Ob/Gyn field
Overseas
New Businesses
Development
such as Femtech

Female healthcare

Endocrine hormone
Endogenoushormone microanalysis(Non-invasive testing)Groupstrengths

Animal health

Further strengthening ourposition as a leading company
in the Ob/Gyn field Establish new businesses
In the peripheral area ofpharmaceutical, such asFemtech, as a total healthcarecompany Overseas development

With a focus on the growing
Southeast Asian market

Details of Initiatives 1) Growth Strategy
Cash allocation for future growth

FY2020-2022

FY2023-2025

Source of funds(Historical breakdown)

Growth investment
Strengthen management
base6.7 billion

OperatingCF
Debt repayment
12.7 billion
OthersSale of
Increase in cash on handtangible
10.2 billion
assets10.3 billion*Dividend + Share buyback

Reference
March 2023

Pharmaceuticalbusiness

Operating CF*
20 billion

4.5 billion

Shareholder return*
1.6 billion

Cash Equivalents 17.5 billion
Interest-bearing debt 12.6 billion

Investment direction

Cash from sale ofcross-shareholdings
3 billion

Growthinvestment

New field

Objectives

Distribution

Expand pipeline by strengthening R&D and BD
Femtech, CVC, Digital Health
Testing, Animal Health (CA)Overseasdevelopment

Establish business in Southeast Asia

M&AAcquisition of competencies necessary for growth

15 billion＋X

Renewal and expansion of production facilities
Strengthen management baseDigital transformation

3-4 billion

Investment in human capitalFundraising (+X)

Shareholder return*Assumed operating profit + depreciation+Research and development expenses (except tangible assets)

Dividends, share buybacks

Maintain Equity ratio of over 50%

3-4 billion

Details of Initiatives 2) Strengthen Shareholder Returns
 Revised Shareholder Return Policy We plan to increase the annual dividend
payment to 40 yen per share, considering
the solid performance and theextraordinary income from sale ofinvestment securities in FY2023.
 Starting from FY2024, we will maintainstable profit distribution by indicating a
consolidated dividend payout ratio of
30% as performance-linked profit
distribution, with a minimum annual
dividend per share of 30 yen.

 Consideration of Share Repurchase We will consider flexible measures,
taking into account growth investment,
dividend level, cash on hand and shareprice level, and other factors.

Dividends per share (Yen)Dividend payout ratio (%)

404574.0%

4080%

70%

3560%
30

55.7%

50%

252015141414105013.3%

16.5%

14171416*

162040%

30%

20%

22.7%
14.6%
5.3%

10.7% 9.1%

18.1% 10%FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2023

Previous Revised*The interim dividend for FY2021 was paid from other capital surplus and is excluded from the dividend payout ratio.

0%Details of Initiatives 3) Strengthen IR Activities
 Strengthen financial results briefings for individual/institutional investors Continue constructive dialogue with shareholders and investors (IR meetings)
 Create new opportunities for dialogue, such as small meetings and pipeline briefings
 Report to the Board of Directors on opinions obtained at IR meetings, etc., as appropriate,and conduct reviews
 Enhance information disclosure by expanding our website information and availability inEnglish
IR meetings with analysts
and institutional investors:
78 times; total of 98
participants
Financial results briefing
for institutional investors(Webcasts in May and November)IR seminars for individual investors(Held in February and August 2023)

IR meetings(Actual in FY2022)