May 14, 2020

Company Name:
Representative:
Contact:

Sawai Pharmaceutical Co., Ltd.
Mitsuo Sawai
President, Representative Director(Code No.: 4555, TSE, 1st Section)
Kenzo Sawai
Director, Senior Managing Executive
Officer, Vice President of Corporate
Strategy Department(TEL: +81-6-6105-5823)

Notice of Commencement of Preparation forTransition to a Holding Company Structure through Sole-Share Transfer
Please be advised that, at the Board of Directors’ meeting held today, Sawai Pharmaceutical Co., Ltd.
(the “Company”) resolved to commence preparation in order to transition the Company to a holding
company structure (the “Transition”), which is aimed to be consummated on around April 1, 2021
(tentative date), as further described below.
The Transition is planned to be consummated subject to obtaining the approval thereof at theextraordinary general meeting of shareholders planned to be held on December 21, 2020. The Company
will announce the relevant details once they are determined.
1.

Background of the Transition
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 suchcircumstances, the national government has been promoting the use of generic drugs in an attempt
to optimize medical services (i.e., reduction of medical expenses) without degrading the qualityof 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 to be essential for medical services.
At the same time, however, the national government’s policy under the “Drastic Reform of Drug
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 have been on themarket for more than 10 years, based on the NHI prices of such generic drugs, as well as to revise
the NHI prices every year. Such policy will consequently encourage restructuring andconsolidation of companies in the pharmaceutical industry. In addition, the national 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 narrow definition, butalso by taking measures for pre-symptomatic disease/prevention, carrying out data health reformor other actions. Therefore, in the future, greater emphasis will be placed on prevention and selfmanagement with respect to chronic diseases, and accordingly people’s understanding about
health and medical care is thought to change drastically. Furthermore, in the process to realize“Society 5.0,” which is the concept of 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 furtherreinforcing existing business conducted mainly in Japan and the United States. To achieve thisgoal, the Company determined that the Transition is the most appropriate measure to take.
2.

Purpose of the Transition
The Company’s group will consummate the Transition for the purposes described below:(1) 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.
(2) Building a System for Promptly Developing New Businesses
With respect to the development of new businesses which should become the core businessesof 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 a holding company
structure rather than developing such new businesses within the generic drug businesscompany. Under a holding company structure, new businesses are less likely to be affectedby the interests of a particular business or division and management decisions are made froman optimal point of view to improve corporate value of the entire group., In addition, theexisting generics drug company can efficiently manage its own business by leaving thedecision making for new businesses to an independent management entity.
(3) 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 to promote
rapid and efficient decision-making. The Company believes that the Transition will further
reinforce its governance system and facilitate rapid and efficient execution of operations.
2(4) Development of Personnel to Manage the Company’s Group
With respect to cultivation of talented personnel, it will be possible to train them in a shortperiod to become the next generation of personnel to manage the Company’s group, byproviding them with not only experience in the existing business or a particular division, butalso with management experience at a business company under the holding company. This
will contribute to continuous improvement of the corporate value of the Company’s group.
3.

Method to Consummate the Transition, Etc.
The Company plans to transition to a holding company structure by establishing a holding
company through a sole-share transfer scheme whereby the Company will be a wholly owned
subsidiary company. While the Company’s ordinary shares will be delisted as a result, theCompany is under the policy to effectively keep the shares listed as, with respect to the ordinary
shares of the holding company which will be issued to the Company’s shareholders, the Company
is planning to apply for technical listing of such shares to the first section of the Tokyo Stock
Exchange, Inc., thereby having such shares continue to be listed on such section.

4.

Schedule of the Transition
July 28, 2020 (tentative date)

Board of Directors’ meeting concerning the Transition

September 30, 2020 (tentative date)

Record date for the extraordinary general meeting ofshareholders concerning the Transition
Extraordinary general meeting of shareholders
concerning the Transition
Consummation of the Transition

December 21, 2020 (tentative date)
April 1, 2021 (tentative date)5.

Future Prospects
The details regarding the Transition are not determined as of this date, and the Company will be
specifically reviewing the same moving forward. The Company will announce the relevant details
once they are determined.
End.

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