Financial Results for
the First Quarter of FY2017(Apr. 1 to Jun. 30)

Code 4555, First Section of the TSE
Aug. 14, 2017

Overview of the Financial Results
for the 1Q of FY2017
 Net sales growth stalled at 2.1% year-on-year due to lackluster growth of thegeneric pharmaceutical products market and a large decrease in contractedsales
 Operating income excluding M&A-related expenses increased 13.7% year-onyear（Unit: Millions of yen）

FY2016
1Q
Millions of yen

FY2017
1Q/Sales (%)

Millions of yen

Year on Year
/Sales (%)

Mil. yenGrowth(%)

Net Sales

32,948100.0%

33,646100.0%

6972.1%

Operating Income

5,891

17.9%

5,376

16.0%

-514

-8.7%

Operating Income(excluding extraordinary factors)※

5,891

17.9%

6,696

19.9%

805

13.7%

Ordinary Income

5,914

17.9%

6,109

18.2%

195

3.3%

profit attributable to owners ofparent

4,357

13.2%

4,656

13.8%

299

6.9%

※ Extraordinary factors: expenses related to the acquisition of the US firm Upsher-Smith Laboratories, LLC (USL)
Copyright © 2017 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

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

+0.4

-0.3

＋0.7

-1.3

5.8
5.3

FY 2016 1Q
operating income

Net sales
increase

Improvement inVariablecost, Increase in FixedExpenses etc.

Copyright © 2017 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

Decrease in SG&A

Various costs related tothe acquisition

FY 2017 1Q
operating income

2Sales per Medical Institution Types(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 Number

FY20161Q

FY2017
1Q

Number ofCustome rs

Sales ShareYear on Year
Changes inb) Number ofCustomers

Coverage
Rate (b/a)

Sales Share

Sales Growth

Number ofCustomers

Hospital

8,477

7,698

12.8%

7,804

(92.1%)

13.1%

106

8.9%

DPC Hospital

1,667

1,643

7.9%

1,644

(98.6%)

8.0%

1

7.0%

Clinic105,433

28,57010.3%

29,624(28.1%)

10.0%

1,054

3.2%

Pharmacy

87,97455,16575.8%

55,836(63.5%)

75.2%

671

5.3%

Dispensing Pharmacy

60,50954,85475.2%

55,560(91.8%)

74.7%

706

5.3%

Drug Stores, etc.

27,465

311

0.5%

276

(1.0%)

0.6%

-35

7.8%

Others

--

1.1%

-

1.7%

-

46.9%

Total

201,884

91,433100.0%

100.0%

1,831

6.1%

93,264(46.2%)

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

Copyright © 2017 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

3

Sales by Listed Year of Drugs
 Sales of products listed since FY2014 steadily grow Sales of new products in FY2017 are in line with expectations
Unit: Millions of yen

Copyright © 2017 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

（Unit: Millions of yen, %）FY20161Q

FY2017
1Q

Y on Y(%)

Mil. yenMil. yen

GrowthListed in FY2017

-560

-

Listed in FY2016

90243

168.5%

Listed in FY2015

1,152

1,479

28.4%

Listed in FY2014

942

1,059

12.4%

Listed in FY2013

1,374

1,447

5.3%

Listed in FY2012

998

1,050

5.2%

Listed in FY2011

2,334

2,353

0.8%

Listed in FY2010

1,312

1,310-0.1%

Listed in FY2009

5,560

5,709

2.7%

Listed in FY2008

1,917

1,932

0.8%

Existing Drugs andTransferred Drugs, etc.

17,264

16,499

-4.4%

Total

32,94833,646

2.1%

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

Wholesalers

Agencies

Marketing Alliances

40,00030,00029,38625,00020,000

10,484(35.7%)

15,00010,0005,000

33,64632,94835,000

Others

16,571＋583（＋5.6％）＋2,605（+ 15.7％）

11,067( 33.6%)+140（+1.3％）

11,208( 33.3%)+1,491（+7.8％）

19,177(56.4%)(58.2%)FY20151Q

FY2016
1Q

20,669(61.4%)

0Copyright © 2016 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

FY20171Q

5Comparison of Sales Volume
 Cardiovascular and central nervous system drugs have steadily
increased
Volume Composition

Therapeutic Category

FY20161Q

FY2017
1Q

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%
12.0%
8.1%
7.2%
6.5%
2.8%
2.2%
0.2%
10.9%

27.8%
23.3%
12.3%
7.8%
6.7%
5.7%
2.7%
2.4%
0.2%
11.1%

5.2%
1.7%
3.4%
-2.8%
-5.2%
-10.8%
-3.1%
8.5%
16.2%
3.1%

6.3%
-0.5%
6.4%
0.3%
5.8%
-3.4%
-0.3%
11.4%
11.7%
7.4%

Total

100.0%

100.0%

1.4%

4.1%

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.
Copyright © 2017 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

6

FY2017 Earnings Forecasts(IFRS)The initial earnings forecast is unchanged because the first quarter financial results
are progressing nearly as plannedFull-year earnings forecasts based on the impact of the acquisition of the US firm
Upsher-Smith Laboratories, LLC (USL) are planned to be announced as soon as adecision is made regarding accounting treatment such as PPA（Unit: Millions of yen）

（JGAAP）

FY2016
Full Year Results
Mil. yen

Net Sales
Cost of Sales
Gross Profit
SG&A Expenses(excluding R&D)
R&D Expenses―
Operating Income
Ordinary Income
Profit before tax
Net Income（IFRS）

Mil. yen/S ales (%)

132,428 100.0%
80,308 60.6%
52,119 39.4%
21,277

16.1%

10,2077.7%

FY2016
Full Year Results

Net Sales
Cost of Sales
Gross Profit
SG&A Expenses(excluding R&D)
R&D Expenses/S ales (%)

15,914

15.6%
15.5%

Operating Income
Finance income (costs)

15.0%

Profit before tax

12.0%

Profit for the year
attributable to owners ofthe parent

Mil. yen/S ales (%)

YoY

132,392 100.0%
80,497 60.8%
51,895 39.2%

142,000 100.0%
85,300 60.1%
56,700 39.9%

7.3%

21,11916.0%

23,900

16.8%

13.2%

7,211

5.4%

5.8%

15.1%

22,987 17.4%-186 ―
22,801 17.2%

8,300
-300
24,200-400
23,800

17.0%
16.8%

4.4%

13.6%

18,200

12.8%

1.2%

Other income( expenses)

20,633
20,557
19,870FY2017Full Year Results

17,984

6.0%
9.3%

― ―
5.3%

― ―

※1 Of R&D expenses, 2.8 billion yen in FY2016 and 2.0 billion yen in FY2017 are expected to be recorded as intangible fixed assets.
※2 This forecast factor in various costs related to the acquisition of Upsher-Smith Laboratories, Inc.(about 1,800 million yen),
but does not factor in any of the impact on consolidated results for sales and earnings.

Copyright © 2017 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

7

FY2017 Earnings Forecasts(JGAAP) Progress made according to Japanese GAAP towards the earnings forecastsfor FY2017 (ending March 31, 2018) is as follows（Unit: Millions of yen）

FY2016
1Q
Mil. yen

FY2017Full Year Forecast/S ales (%)

Mil. yen/S ales (%)

Rate ofAchievementNet Sales

33,646100.0%

142,000

100.0%

23.7%

Operating Income

5,376

16.0%

22,500

15.8%

23.9%

Operating Income

6,696

19.9%

24,300

17.1%

27.6%

Ordinary Income

6,109

18.2%

22,300

15.7%

27.4%

profit attributable to owners ofparent

4,656

13.8%

16,700

11.8%

27.9%

(excluding extraordinary factors)※※ Extraordinary factors: expenses related to the acquisition of the US firm Upsher-Smith Laboratories, LLC (USL)
Copyright © 2017 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

8

Member of the Board of USL
Member of the Board of USL is as follows

Name
Kenzo Sawai
Masahiro Sasaki

Title

Title (Sawai Pharmaceutical)

Director, Senior Managing Executive Officer, General Manager,
常に堅実なパイプラインをChairman
Corporate Strategy Department
維持しつつ、競合優位性をExecutive Officer, In charge of Overseas Operations, Corporate
確保した希少領域を狙う
Vice Chairman
Strategy Department

Rusty Field

President & CEO―Kazuhiko Sueyoshi

Executive Administration

Executive Officer, General Manager, Controller Department

Executive R&D

Corporate Officers, Deputy Vice President of Reserchi &Development Division and Director,
Analytical Chemistry Department

Shoji Yokota

Copyright © 2017 Sawai Pharmaceutical Co.,Ltd. All Rights Reserved.

9Value Creation Vision for Sawai and USL
Collaboration
Sawai Group to become

Collaboration Visionwith USL“a globally recognized generic pharmaceutical company”
USLSawai

Aim for niche markets that create aStrategy

Realize synergistic profit byintroducing Sawai products andtechnologies in the US market

常に堅実なパイプラインをcompetitive advantage while maintaining a
維持しつつ、競合優位性をsteady pipeline
確保した希少領域を狙う

Enhance IP Strategy
In the US

Expand US productline-up

Ensure a stable supply
capacity in the US for
accelerated growth

Utilize US sales channel
for Sawai’s productsEnhance company brandequity

Initiatives

Improve operational efficiency using

Maximize the benefit of collaboration

both companies’ strengths(cost optimization)

Copyright © 2017 Sawai Pharmaceutical Co.,Ltd. All Rights Reserved.

10Consolidated Financial Highlights-1

FY20161Q

FY2017
YoY（ %）
1Q

Key Income S tatements Data

Net Sales
Cost of Sales
Gross Profit
SG&A Expenses
Operating Income
Ordinary Income
profit attributable to ownersof parent

Net Assets
Capital Adequacy Ratio(%)（Unit： Millions of Yen）

FY2017 Forecast（IFRS）
Full Year YoY（%）

Key Income Statements Data

32,94819,32013,628
7,737
5,891
5,914

33,646
19,884
13,762
8,385
5,376
6,109

2.1
2.9
1.0
8.4
-8.7
3.3

4,357

4,656

6.9

Key Balance Sheets Data
Total Assets

FY

221,538 ※ 1
137,600 ※ 162.0 ※ 1

354,923 140,076 -22.6
39.4

Net Sales
Cost of Sales
Gross Profit
SG&A Expenses (※2)
Operating Income
Profit before tax

Profit for the year
attributable to owners ofthe parent
Key Balance S heets Data

Total Assets
Net Assets
Capital Adequacy Ratio(%)

142,000
85,30056,70023,90024,20023,800-18,200--※1 Comparison with 4Q of FY2016※2 Excluding R&D

Copyright © 2017 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

11

Consolidated Financial Highlights-2（Unit： Millions of Yen）

FY20161Q

FY2017
YoY（ %）
1Q

Profitability & Efficiency Indication

Gross Profit Ratio
SG&A Expenses Ratio
Operating Income Ratio
Ordinary Income Ratio
Return on Sales

Diluted Net Income per Share
Shareholders' Equity
Dividend (interim)

YoY（ %）

Prof itability & Ef f iciency Indication

41.4
23.5
17.9
17.9
13.2

40.9
24.9
16.0
18.2
13.8

-0.5
1.4
-1.9
0.2
0.6

Amounts Per Common ShareNet Income per ShareFY2017 Forecast（IFRS）
Full Year
Gross Profit Ratio
Operating Income Ratio

39.9
16.8
17.0

-

Return on Sales

12.8-493.65
130-

SG&A Expenses Ratio ※2Amounts Per Common Share118.19118.133,722.90 ※1-

126.31
126.233,789.15
-

6.9
6.9
1.8
-

Net Income per Share
Diluted Net Income per Share

Shareholders' Equity
Dividend (interim)※1 Comparison with 4Q of FY2016※2 Excluding R&D

Copyright © 2017 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

12

Consolidated Financial Date-1（Unit： Person， Millions of Yen）

Personnel Information
Number of Employees
Manufacturing Division
R&D Division
Administration Div. & Business Di

FY2016
1QComp.(%)
727 (45.1 )
220 (13.6 )665 (41.3 )

(MRs)

502

Total

1,612

Contingent employees (excluded)

1,095

Personnel Costs

Total

1Q
4,969

FY2017
1Q
Comp.(%)
1,773 (66.5 )
246 (9.2 )649 (24.3 )
498(100.0 )Sales(%)(15.1 )

Copyright © 2017 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

2,668
417

1Q
5,528

(100.0 )-Sales(%)(16.4 )

Year on Year
1Q
RC(%)
1,046( 143.9 )26( 11.8 )-16(-2.4 )-4(-0.8 )1,056(65.5 )-678( -61.9 )1QRC(%)
559(11.2 )13

Consolidated Financial Date-2（Unit： Millions of Yen）

Selling, General and
Administrative Expenses
R&D Expenses
Year on Year changes (%)
Advertisement Expenses
Year on Year changes (%)

Capital Expenditure &Depreciation and Amortization
Capital Expenditure

FY2016
1Q/Sales(%)
2,582 (7.8 )67.7()
599 (1.8 )()-5.4

FY2017
1Q/Sales(%)
2,150 (6.4 )-16.7()
342 (1.0 )()-42.8

FY2017 Forecast
Full Year/Sales(%)
8,300 (5.8 )‐()
1,500 (1.1 )
()
-27.7

FY2016FY2017FY2017 Forecast

1Q1Q

Full Year

3,219

2,626

15,700

1,450
328
216
1,994

1,860
322
135
2,318

7,800
1,400
600
9,800

Depreciation and Amortization
Manufacturing Division
R&D Division
Administration Div. & Business Div.

Total

※ We expect to record 2,000 million yen of the R＆D costs to intangible fixed assets.

Copyright © 2017 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

14Disclaimer• The plans, forecasts, strategies 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 the 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
Copyright © 2017 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

15