Financial Results for FY2017(Apr. 1 to Mar. 31)

Code 4555, First Section of the TSE
May. 15, 2018

Overview of the Financial Results for FY 2017
 Sales in the Japanese market fell short of our target, due to growth in the genericmarket slowing more than expected, but sales at US subsidiary Upsher-Smith
Laboratories (USL) exceeded our target
 Overall, sales were generally in line with our forecast
 Core Operating Income rose due to USL's results exceeding the target, but
Operating Income fell short of the forecast by 6.3% due to factors including animpairment loss
（Unit: Millions of yen）

FY 2017

Year on Year

Sale and Profit by Region

FY 2016

JapanUSMil. yen

Growth(%)

FY 2017
Forecasts

Net Sales

132,392

168,068

134,720

33,34735,67626.9%

168,800

Core Operating Income

23,55831,11824,349

6,730

7,560

32.1%

30,50022,943

22,20921,903

303

-733

-3.2%

23,700

Profit before tax

22,757

20,251――-2,505-11.0%

23,300

Profit attributable toowners of the parent

17,96914,017――-3,952-22.0%

12,800Operating Income*1 Financial Results for FY2017 (IFRS): Financial Results for 12 months of Japan operations + 10 months of US operations (June 2017 to March 2018)

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1Analysis of Factors Causing Changes in Operating Income(Unit：Billion. Yen)

＋7.0

22.9

-0.5

+0.6

-1.5

-1.3

22.1

Japan

FY2016
Operating income-5.1

Decrease in Gross Decrease in SG & A Increase in R and D US Operation
profitexpenses
expenses
income (Excluding
Amortization ofgoodwill)

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USAmortization andimpairment ofintangible assetsM&A-relatedexpenses

FY2017
Operating income

2

FY2017 Earnings Forecasts(Adjusted from Full basis to Core basis)（Unit: Millions of yen）

IFRS

FY2017 ActualFull basis

Mil. yen(1) Cost-of-sales increase due toCore basis

inventory step-up

Net Sales

168,068―

168,068

Cost of Sales
Gross Profit-98,628
69,440-1,6091,609-97,019
71,049(2) Amortization of intangible assets

SG&A Expenses-32,7313,484-29,247>3.5 billion yen> 1.6 billion yen(3.2 billion yen for USL)

Amortization of intangibleassets

3,484-3,4840R&D Expenses
Other income( expenses)-14,533
33

3,849
-33

-10,6840

Operating Income

22,2098,909

31,118

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Impairment loss etc.> 3.8 billion yen

3PPA Relating
Pre – PPA
(Difference between acquisition
price and net assets = Goodwill)

Goodwill$ 918.4 Million

Post-PPA(increase in asset valuations)（Impact on accounting P/L）

Inventory $3.7 Million

Factors behind post-acquisition (Years 1 & 2)
cost-of-sales increase
Year 1 estimated impact 1.6 billion yen

Intangible assets$477.0 Million

Amortized over 10 years
Year 1 estimated impact
3.2 billion yen

Property, plant and equipment $32.9Million

Year 1 estimated impact 0.2 billion yen

Other $16.4 Million

Goodwill$355.0 Million
Total $918.4 Million
PPA前（1Q時点）

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PPA後4

FY2018 Earnings Forecasts
In the domestic market, while selling unit prices have fallen due to the impact of drug
price revision, we forecast a certain level of continued growth in sales volume due tomeasures by the government to promote the use of generic pharmaceuticals
Although competition remains fierce in the US market, we forecast increased revenue
and profit for USL due to its first full-year (12-month) contribution to consolidated
earnings and the launch of new products（ Unit: Millions of yen）

FY2018 Forecast

IFRS
Net Sales
Gross Profit
Core Operating Income

Operating Income
Profit before tax
Net profit

Sale and Profit by Region

172,500
69,60029,70024,00023,70017,400JapanUS136,600
49,30022,40021,300――35,90020,300
7,300
2,700
―
―

FY2017
Actual168,068
69,44031,11822,20920,251
14,017- Assumed exchange rate: 105.0 yen/dollar
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5

Dividends of surplus
 Year-end dividends are 65 yen as initially forecast
The annual dividends are 130

Resolved amountPrevious dividend forecast（announced May 15,2017）

Actual dividends of theprevious fiscal year
(ended March 31,2017)

Record date

March 31,2018

Same as left

March 31,2017

Dividend pershare

65.00 Yen

65.00 Yen

65.00 Yen

Total amount ofdividends

2,845 million yen―

2,396million yen

Effective dateJune 27, 2018―June 28, 2017

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9Sales per Medical Institution Types (Japan)(non-consolidated)

Although growth in adoption amounts was somewhat weak for both hospitals andpharmacies, the adoption amount increased overall
The Track Record of SAWAI's Products Delivered to Medical Institutions
by Distribution Companies（ Unit： Number of Medical Institution）
Institution Typea) Nationwide
Total Numbe r

FY2016
Full Year Result
Numbe r ofCustomers

Sales ShareFY2017Full Year Result

Year on Year
Changes inb) Number ofCustomers

CoverageRate (b/a)

Sales ShareSales Growth

Number ofCustomers

Hospital

8,433

7,961

12.8%

8,007

(94.9%)

12.7%

46

6.6%

DPC Hospital

1,667

1,647

7.9%

1,652

(99.1%)

7.8%

5

5.3%

Clinic105,616

35,682

10.4%

36,501(34.6%)

10.0%

819

3.2%

Pharmacy

87,70757,064

75.5%

57,706(65.8%)

75.3%

642

7.2%

Dispensing Pharmacy

60,77056,671

75.0%

57,367(94.4%)

75.0%

696

7.3%

Drug Stores, etc.

26,937

393

0.5%

339

(1.3%)

0.4%

-54

-7.5%

Others

--

1.3%

-

1.9%

-

45.2%

Total201,756

100,707100.0%

1,507

7.2%

100.0% 102,214(50.7%)

DPC: Diagnosis Procedure Combination, means fixed payment system for inpatients

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7

Sales by Listed Year of Drugs (Japan)
 Sales of products listed since FY2014 steadily growUnit: Millions of yen

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（Unit: Millions of yen, %）FY2016FY2017

Y on Y(%)

Mil. yenMil. yen

GrowthListed in FY2017-3,356-Listed in FY2016

579

1,104

90.8%

Listed in FY2015

5,165

5,949

15.2%

Listed in FY2014

3,846

4,209

9.4%

Listed in FY2013

5,477

5,681

3.7%

Listed in FY2012

3,972

4,165

4.9%

Listed in FY2011

9,175

9,162

-0.1%

Listed in FY2010

5,225

5,252

0.5%

Listed in FY2009

22,17522,313

0.6%

Listed in FY2008

7,642

7,788

1.9%

Existing Drugs andTransferred Drugs, etc.

69,16965,736

-5.0%

Total

132,428

134,720

1.7%

8

Sales by Distribution Channels
 Sales through wholesalers expanded, with nationwide distribution network inthe area of pharmacy and hospital markets.
（Unit：Millions of yen）

Wholesalers

Agencies

Marketing Alliances

Others160,000
140,000

123,492

120,000
100,000

43,63180,00020,000+1,051（+2.4％）

44,683-8（-0.0％）

44,674＋5,752（+ 7.5％）82,043( 33.7%)(33.2%)(35.3%)

60,00040,000134,720

132,428

69,329+6,961（+10.0％）76,290(56.1%)(57.6%)( 60.9%)FY2015FY2016FY2017

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9

Comparison of Sales Volume (Japan)
 Cardiovascular and central nervous system drugs have steadily
increased
Volume Composition

Therapeutic Category

FY2016FY2017

Y on Y(volume)Y on Y(value)(Note)

Other metabolic drugs
Respiratory organ agents
Antibiotics drugs
Antiallergic drugs
Antineoplastic agents
Others

26.8%
23.3%
12.1%
7.8%
6.9%
6.6%
2.9%
2.5%
0.2%
10.9%

28.1%
22.5%
12.4%
7.8%
6.7%
6.1%
2.7%
2.6%
0.2%
10.9%

8.1%
-0.4%
5.8%
3.4%
0.4%
-3.9%
-5.5%
9.0%
24.6%
3.1%

7.8%
-0.3%
7.8%
4.7%
7.6%
2.5%
-5.0%
8.9%
11.4%
5.8%Total

100.0%

100.0%

3.3%

4.9%

Cardiovascular drugs
Gastro-intestinal drugs
Central nervous system drugs
Blood/body fluid pharmaceutical products

Note: The contracted sales of the Kashima factory are excluded from the calculation.
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10

Sales breakdown by Therapeutic category (US) The breakdown of sales in North America, totaling 33.3 billion yen, is shown
below.
 Cardiovascular agents and central nervous system drugs account for 82.1% of
total sales.
Hormone preparations(includingantihormonepreparations), 3.9%

Vitamin preparations,
1.8%

Others, 4.3%

Agents for urogenitalorgans and the anus,
8.7%
Cardiovascular agents,
46.5%

Central nervous
system drugs, 35.6%

Exchange rates: 111 yen/dollar
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11

New Products (Planned)
 The following products are planned to be listed in June
Major Products®

Brand Drugs

ILUAMIX Combination
Tablets

AIMIX

BEPOTASTINE BESILATETablets

TALION Tablets

LAMOTRIGINE Tablets

Lamictal Tablets

®

®

®

NALFURAFINE®
REMITCH TabletsHYDROCHLORIDE Tablets
LANTHANUM CARBONATE®
Fosrenol Granules
Granules
OSELTAMIVIR Capsules
OSELTAMIVIR DS

Therapeutic Category
Long-acting ARB / Long-acting
Ca antagonists
Selective histamine H1receptor
antagonists / Allergic disease
treatment
Antiepileptic therapeutic
agents / Bipolar disorder
treatment
Oral pruritus improving agents
Hyperphosphatemia treatment
agents®

TAMIFLU Capsule®

TAMIFLU Dry Syrup

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Anti-influenza virus agents
12Disclaimer• The plans, forecasts, strategy and other information regarding the Sawai Group contained in thispresentation are based on the Company’s assumptions and judgments using information available
at the time of publication. Therefor, due to potential risks and uncertainties, there is no guarantee
as to accuracy of this information.
• Potential risks and uncertainties may include, but are not limited to, the economic environment forprescription drugs, which is the main operating domain of the Sawai Group, market competition andservices offered by the Group.

Contact Information

Sawai Pharmaceutical Co., Ltd.
Corporate Strategy Department
PR & IR GroupE-mail ： ir@sawai.co.jp
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