July 28, 2020

Company Name:
Representative:

Contact:

Sawai Pharmaceutical Co., Ltd.
Kenzo Sawai
President, Representative Director(Code No.: 4555, TSE, 1st Section)
Yasushi Kora
General Manager, Public Relations &Investor Relations Office(TEL: +81-6-6105-5823)

Notice of Transition to a Holding Company Structure through Sole-Share Transfer
and Establishment of the Record Date for Convocation of an Extraordinary General
Meeting of Shareholders
Please be advised that, at the Board of Directors’ meeting held today, Sawai Pharmaceutical Co.,
Ltd. (the “Company”) resolved to incorporate, as of April 1, 2021 (tentative date), a holding
company (wholly owning parent company) called SAWAI GROUP HOLDINGS Co., Ltd. (the“Holding Company”) through sole-share transfer by the Company (the “Share Transfer”), bytaking the prescribed procedures, including adopting a resolution for approving the same at theextraordinary general meeting of shareholders planned to be held on December 21, 2020 (the“Extraordinary General Meeting”), as well as to establish the record date for convocation of theExtraordinary General Meeting, as further described below.
Please note that since the Share Transfer is implemented through sole-share transfer by the Company,
which is a listed company, disclosure of the matters and particulars is partially omitted.
I. Transition to a Holding Company Structure through the Share Transfer
1.

Outline of the Share Transfer(1) Background of the Share Transfer
In Japan, because of the rapid acceleration of the declining birthrate and aging of the
population, and the increase of national medical expenditure resulting therefrom, the financial
condition of the national health insurance system has become increasingly severe year by year.
Under such circumstances, the national government has been promoting the use of genericdrugs in an attempt to optimize medical services (i.e., reduction of medical expenses) without
degrading the quality of medical care. Consequently, the national government’s goal, namely,
to increase the quantity share of generic drugs to 80% or more, will possibly be achievedduring the current fiscal year, and the Company believes that generic drugs will continue tobe essential for medical services.
At the same time, however, the national government’s policy under the “Drastic Reform ofDrug Pricing System” is to implement measures to gradually reduce the National Health
Insurance (NHI) prices of original drugs (long-term listed drugs) for which generic drugs havebeen on the market for more than 10 years, based on the NHI prices of such generic drugs, aswell as to revise the NHI prices every year. Such policy will consequently encourage
restructuring and consolidation of companies in the pharmaceutical industry. In addition, thenational government presented a general concept for the “Plan for Extension of Healthy Life
Expectancy” and “Medical/Welfare Service Reform Plan” to ensure “realization of society
where everyone can live active and healthy lives for longer years” as a future vision for 2040,
and thereby aims to realize a society of healthy longevity not only through medical services
under

a

narrowdefinition,

but

also

by

takingmeasuresforpre-symptomatic

disease/prevention, carrying out data health reform or other actions. Therefore, in the future,
greater emphasis will be placed on prevention and self-management with respect to chronic
diseases, and accordingly people’s understanding about health and medical care is thought tochange drastically. Furthermore, in the process to realize “Society 5.0,” which is the conceptof the future society advocated by the national government, the market structure will undergo
rapid change in various fields, which is expected to stimulate conversion of business models
in many industries.
To ensure the continuous growth of the Company’s group, under this vision of the future, it isessential to build new businesses which quickly respond to the needs of the time, while further
reinforcing existing business conducted mainly in Japan and the United States. To achieve
this goal, the Company determined that the transition to a holding company structure is themost appropriate measure to take.
(2) Purpose of the Transition to a Holding Company Structure
The Company’s group will consummate the transition to a holding company structure for the
purposes described below:(i) Acceleration of Strategic Alliance
The Company announced it would “build an intra-industry network through potential
strategic alliances” in its current Medium-Term Business Plan (M1 TRUST 2021). The
Company will be able to flexibly and promptly realize strategic alliances, including M&A,
through the transition to a holding company structure.
(ii) Building a System for Promptly Developing New Businesses
With respect to the development of new businesses which should become the corebusinesses of the Company along with the generic drug business, the Company believes
that it is possible to develop such new businesses more swiftly and efficiently under a2holding company structure rather than developing such new businesses within the genericdrug business company. Under a holding company structure, new businesses are lesslikely to be affected by the interests of a particular business or division and management
decisions are made from an optimal point of view to improve corporate value of the entire
group. In addition, the existing generics drug company can efficiently manage its own
business by leaving the decision making for new businesses to an independent
management entity.
(iii) Separation of the Management/Supervision of the Group from Execution of Operations
The Company’s group has been employing the executive officer system to separate
management’s decision-making function from its operation-executing function topromote rapid and efficient decision-making. The Company believes that the transition
to a holding company structure will further reinforce its governance system and facilitate
rapid and efficient execution of operations.
(iv) Development of Personnel to Manage the Company’s Group
With respect to cultivation of talented personnel, it will be possible to train them in ashort period to become the next generation of personnel to manage the Company’s group,
by providing them with not only experience in the existing business or a particulardivision, but also with management experience at a business co mpany under the holding
company. This will contribute to continuous improvement of the corporate value of theCompany’s group.
(3) Steps to Consummate the Transition to a Holding Company Structure
The Company plans to consummate the transition to a holding company structure in two steps
as described below.
[Step 1: Incorporation of the Holding Company through Sole-Share Transfer]
By incorporating the Holding Company as of April 1, 2021 through the Share Transfer, theCompany will become a wholly owned subsidiary of the Holding Company.

SAWAI GROUP HOLDINGS Co., Ltd.
(Holding Company)

Sawai Pharmaceutical Co., Ltd.

Medisa Shinyaku
Inc.

Kaken Shoyaku
Co., Ltd.

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Sawai America
Holdings Inc.

[Step 2: Structure after Incorporation of the Holding Company]
The Company plans to conduct a reorganization such that the Company’s subsidiarycompanies will be subsidiary companies of the Holding Company. The Company will
announce the particulars and the time of such reorganization once they are determined.
SAWAI GROUP HOLDINGS Co., Ltd.

(Holding Company)

Sawai PharmaceuticalCo., Ltd.

2.

Medisa Shinyaku
Inc.

Kaken Shoyaku
Co., Ltd.

Sawai America
Holdings Inc.

Summary of the Share Transfer(1) Schedule of the Share Transfer
July 28, 2020
September 15, 2020
September 30, 2020
December 21, 2020 (tentative date)
March 30, 2021 (tentative date)
April 1, 2021 (tentative date)
April 1, 2021 (tentative date)

Board of Directors’ meeting for approval of the sharetransfer plan
Public notice of the record date for the Extraordinary
General Meeting
Record date for the Extraordinary General Meeting
Extraordinary General Meeting for approval of theshare transfer plan
Date of delisting of the shares of the Company
Date of registration of incorporation of the Holding
Company (effective date)
Date of listing of the shares of the Holding Company

Note: The above schedule may be changed if the necessity for such change arises in theprocedures for the Share Transfer or for any other reason.
(2) Method of the Share Transfer
The Share Transfer will be implemented through sole-share transfer by the Company, whereby
the Company will be a subsidiary company resulting from the Share Transfer, and the Holding
Company will be the wholly owning parent company incorporated in the Share Transfer.
(3) Particulars of the Allotment Relating to the Share Transfer (Share Transfer Ratio)
SAWAI GROUP HOLDINGS Co., Ltd.
Sawai Pharmaceutical Co., Ltd.
(wholly owning parent company:
Company(wholly owned subsidiary
Holding Company)
company: Company)
Share Transfer Ratio
11(i) Share transfer ratio
Shares of the of the Holding Company will be allotted and delivered to those who areshareholders of the Company as of the point in time immediately preceding theacquisition of all of the issued and outstanding shares of the Company by the Holding
4Company through the Share Transfer (the “Base Time”), at the ratio of one (1) share ofcommon stock of the Holding Company per one (1) share of the common stock of theCompany held by such shareholders.
(ii) Number of shares constituting one unit of shares
The Holding Company will adopt the share unit system, under which one hundred (100)shares shall constitute one unit of shares.
(iii) Basis of calculation of the share transfer ratio
The Share Transfer is a scheme to incorporate a wholly owning parent company throughsole-share transfer by the Company, and there is no difference between the shareholder
composition of the Company at the time of the Share Transfer and that of the Holding
Company upon implementation of the Share Transfer. Based on such circumstances, byplacing the highest priority on avoiding causing any disadvantage to the shareholders,one (1) share of common stock of the Holding Company will be allotted per one (1) shareof common stock of the Company held by the shareholders.
(iv) Results of valuation by a third party institution, and the method and grounds thereof
As described in (iii) above, since the Share Transfer is implemented through sole-sharetransfer by the Company, valuation of its shares by a third party valuation institution was
not conducted.
(v) The number of new shares to be delivered through the Share Transfer (tentative number)
43,782,739 shares of common stock
The number of the new shares stated above is based on the total number of the issued andoutstanding shares of the Company as of March 31, 2020, i.e., 44,082,388 shares. If thetotal number of issued and outstanding shares of the Company varies before the Share
Transfer takes effect, the above number of the new shares to be delivered by the Holding
Company will vary. With respect to the treasury shares held by the Company as of theBase Time, the same number of shares of common stock of the Holding Company will beallotted and delivered therefor. However, the Company is planning to cancel such treasury
shares before the Share Transfer takes effect, to the extent that such cancellation ispractically possible. Therefore, in the above calculation, 299,649 treasury shares held by
the Company as of March 31, 2020 are excluded from the shares subject to the deliveryof new shares. In addition, if the number of treasury shares of the Company varies fromthat as of March 31, 2020 prior to the Base Time due to exercise by any shareholder of
the Company of the appraisal right, or any other similar event, the number of new shares
to be delivered by the Holding Company may vary.
(4) Handling of Stock Acquisition Rights and Bonds with a Stock Acquisition Right upon the
Share Transfer
To each holder of stock acquisition rights issued by the Company, stock acquisition rights ofthe Holding Company under terms and conditions equivalent to those of the stock acquisitionrights of the Company will be delivered and allotted in exchange therefor, in the same number5as the stock acquisition rights of the Company held by such holder. The Company has notissued any bonds with a stock acquisition right, and therefore, there are no relevant bonds
with a stock acquisition right.
(5) Matters Concerning the Application for Listing of the Holding Company
The Company is planning to apply for new listing (by way of technical listing) of the sharesof common stock of the newly incorporated Holding Company to the first section of the Tokyo
Stock Exchange, and the scheduled date of such listing is April 1, 2021. In addition, since theCompany will be a wholly owned subsidiary company of the Holding Company as a result of
the Share Transfer, the Company will be delisted on March 30, 2021, prior to the listing of
the Holding Company. The date of delisting may change since it is decided in accordance withthe rules of the Tokyo Stock Exchange.
3.

General Information of the Subject Company of the Share Transfer(As of March 31, 2020)

(1)
(2)
(3)

Name
Location
Title and Name of theRepresentative(4)

Businesses

(5)
(6)
(7)

Stated Capital
Date of Incorporation
Number of Issued andOutstanding SharesFiscal Year End
Number of Employees
Major Business
Customers
Major Business Banks

(8)
(9)
(10)
(11)
(12)

Major Shareholders andShareholding Ratios (asof March 31, 2020)

Sawai Pharmaceutical Co., Ltd.
5-2-30, Miyahara, Yodogawa-ku, Osaka
Kenzo Sawai, President, Representative Director (as of June30, 2020)
1. Manufacture and sale, and export and import, ofpharmaceutical products;
2. Manufacture and sale of auxiliary medical items;
3. Manufacture and sale of food;
4. Manufacture and sale of cosmetics;
5. Sale of industrial chemicals (including poisonous anddeleterious substances) and measuring instruments;
6. Opening of drug stores and publishing business;
7. Sale and purchase, leasing, and management of realestate; and8. Any and all businesses relating to any of the foregoing.
41,199 million yen
July 1, 1948
44,082,388 shares
March 31 of every year
3,066
MEDICEO Corporation, Alfresa Corporation
Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd.,and Mizuho Bank, Ltd.
The Master Trust Bank of Japan, Ltd. (trust
6.35%
account)
Japan Trustee Services Bank, Ltd. (trust account)
5.62%
Japan Trustee Services Bank, Ltd. (trust account 9)
3.40%
Sawaken Co., Ltd.
2.27%
Mitsuo Sawai
2.17%
Kenzo Sawai
1.95%
Japan Trustee Services Bank, Ltd. (trust account 5)
1.91%
BNP
PARIBAS
SECURITIESSERVICES
1.58%
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LUXEMBOURG/JASDEC SECURITIES/UCITSASSETS
THE BANK OF NEW YORK MELLON 140042
1.57%
JP MORGAN CHASE BANK 385151
1.57%(13) Operating Results and Financial State of the Last Three Fiscal Years
FY ended in Mar.
FY ended in Mar.
FY ended in Mar.
Fiscal Year2018 (consolidated) 2019 (consolidated) 2020 (consolidated)
Total equity
202,441
223,204
233,686
Total assets
358,453
372,889
384,814
Equity attributable to owners
4,143.15
4,551.50
4,796.40of the parent per share (yen)Net sales
168,068
184,341
182,537
Operating income
22,20925,79826,793
Profit before tax
20,251
25,666
26,497
Profit attributable to owners
14,017
19,376
19,279of the parent company
Basic earnings per share
360.49442.62440.37(yen)
Dividends per share (yen)130.00135.00130.00(Millions of yen; except for the items otherwise specified)Note: With respect to the shares held by Kenzo Sawai described in the above item (12) (Major
Shareholders and Shareholding Ratios), a trust agreement for the purpose of the management
thereof is executed. The name of the holder of such shares in the shareholder register is “SMBC
Trust Bank, Ltd. as a trustee of regulated securities in Trust.”
4.

General Information of the Company Newly Incorporated through the Share Transfer (Holding
Company) (tentative)

(1)
(2)
(3)

Name
Location
Title and Name of theRepresentative

SAWAI GROUP HOLDINGS Co., Ltd.
5-2-30, Miyahara, Yodogawa-ku, Osaka
To be determined
To hold shares or equity in domestic and/or overseas
companies engaging in any business relating to medical
and healthcare services, including manufacture and saleof pharmaceutical products and/or medical equipment,
as well as various businesses incidental or relating to thesame, and thereby manage business activities of suchcompanies and provide management support or
guidance to such companies;
2. To perform, on commission, the operations of any
companies in which the Holding Company holds sharesor equity, such as management affairs, planning/public
relations activities or the like, in whole or in part; and3. To carry out any and all lawful businesses incidental or
relating to any of the foregoing.
10 billion yen
April 1, 2021
March 31 of every year
Director: Mitsuo Sawai
Director: Kenzo Sawai
Director: Kazuhiko Sueyoshi
Director: Toru Terashima
1.

(4)

Businesses

(5)
(6)
(7)
(8)

Stated Capital
Date of Incorporation
Fiscal Year End
Directors and Audit &Supervisory Board
Members7

Director: Masatoshi Ohara
Director: Nowomi Todo
Audit & Supervisory Board Member: Tadao Tsubokura
Audit & Supervisory Board Member: Takanobu Tomohiro
Audit & Supervisory Board Member: Junichi Hirano
Substitute Audit & Supervisory Board Member: Satoshi
Soumi
Substitute Audit & Supervisory Board Member: Yoshitsugu
Nishimura(9)
Net Assets
To be determined(10) Total Assets
To be determinedNote:
The particulars of the above items (3) (Title and Name of the Representative), (9) (Net
Assets) and (10) (Total Assets) will be announced once they are determined.
5.

Outline of Accounting Treatment
As the Share Transfer falls under a “transaction under common control” in terms of businessaccounting, it has no effect on profit and loss. Also, no goodwill will be generated through the
Share Transfer.

6.

Future Prospects
The Company will become a wholly owned subsidiary company of the Holding Company
through the Share Transfer. Accordingly, the business results of the Company will be reflectedin the consolidated business results of its wholly owning parent comp any, i.e., the Holding
Company. The effect caused by the Share Transfer to the business results will be minor.

II. Record Date for Convocation of the Extraordinary General Meeting
1.

Record Date and Other Matters Relating to the Extraordinary General Meeting
The Company sets September 30, 2020 as the record date for determining the shareholders
entitled to exercise their votes at the Extraordinary General Meeting planned to be held on
December 21, 2020. Shareholders entered or recorded in the last shareholder register as of
September 30, 2020 shall be the shareholders entitled to exercise their votes at theExtraordinary General Meeting.
(1) Record Date:

September 30, 2020 (Wed)(2) Date of Public Notice:

September 15, 2020 (Tue)(3) Method of Public Notice: By electronic means (to be posted on the Company’s website)
https://www.sawai.co.jp/company/ir/2.

Matters to Be Resolved and Other Related Matters
The details of the Extraordinary General Meeting, such as matters to be resolved, shall beannounced promptly once they are determined.

8Additional Information and Where to Find It
Sawai Pharmaceutical Co., Ltd. (the “Company”) may file a registration statement on Form F-4(“Form F-4”) with the U.S. Securities and Exchange Commission (the “SEC”) in connection withthe sole-share transfer (the “Share Transfer”) that is expected to be conducted as part of theTransition. The Form F-4 (if filed) will contain a prospectus and other documents. If a Form F -4
is filed and declared effective, the prospectus contained in the Form F -4 will be mailed to U.S.
shareholders of the Company prior to the shareholders’ meeting of the Company at which the
Share Transfer will be voted upon. The Form F-4 and prospectus (if a Form F-4 is filed) willcontain important information about the Company, the Share Transfer and related matters. U.S.
shareholders to whom the prospectus is distributed are urged to read the Form F -4, the prospectus
and other documents that may be filed with the SEC in connection with the Share Transfer
carefully before they make any decision at the shareholders’ meeting with respect to the Share
Transfer. Any documents filed with the SEC in connection with the Share Transfer will be madeavailable when filed, free of charge, on the SEC’s web site at www.sec.gov. In addition, uponrequest, the documents can be distributed for free of charge. To make a request, please refer to thecontact below.
Sawai Pharmaceutical Co., Ltd.
5-2-30 Miyahara
Yodogawa-ku, Osaka 532-0003
Japan
Telephone: +81-6-6105-5823 (IR Direct)
Attention: Mr. Yasushi Koura, Head of Public Relations & Investor Relations Division
Forward-Looking Statements
This material contains forward-looking statements that reflect the plans and expectations of theCompany (including its consolidated subsidiaries). These forward-looking statements are notguarantees of future performance and involve known and unknown risks, uncertainties and otherfactors that may cause the Company’s actual results, performance, achievements or financial
position to be materially different from any future results, performance, achievements or financial
position expressed or implied by these forward-looking statements.
These factors include, but are not limited to:(i)changes in, or failure to comply with, laws and regulations relating to the Compan y’s
business activities;(ii)

cancellations or other changes regarding regulatory approvals or permissions required
for the Company to operate as a pharmaceutical company;
9

(iii) changes in government policies concerning drug prices or public spending onpharmaceutical products;(iv) claims or other legal proceedings being brought against the Company for any a lleged
intellectual property infringement;(v)

the effects of competition;(vi) incidents leading to product recalls by, or product liability claims, against the Company;(vii) natural disasters, industrial accidents, epidemics or other catastrophic events;(viii) additional risks faced by the Company as a result of operating internationally;(ix) risks relating to its recent acquisition of Upsher-Smith Laboratories, LLC, including therisk of impairment losses;(x)

data breaches or other disruption or harm to the information technology systems of theCompany or its third-party service providers;(xi) changes in the economic and financial conditions that affect the pharmaceuticalindustry, the Company, the Company’s business partners or suppliers; and(xii) the outcome of any ongoing or future litigation or legal proceedings, including
governmental investigations, against the Company or any of its subsidiaries.
Investors are advised to consult any further disclosures by the Company (or the post -transactiongroup) in its subsequent domestic filings in Japan and filings with the SEC.
End.

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