Financial Results for
the Third Quarter of FY2017(Apr. 1 to Dec. 31)

Code 4555, First Section of the TSE
Feb. 13, 2018

Overview of the Financial Results
the Third Quarter of FY2017
 With the Japanese generic market as a whole growing at a slower pace and salesof contract manufacturing down from the prior year, sales in Japan grew just
1.6%
 Overall sales grew 15.0% thanks to the inclusion of the June to September salesof US-based Upsher - Smith Laboratories (USL) Operating income excluding M&A related expenses of 1.4 billion yen rose14.5%（Unit: Millions of yen）

FY2017 3Q
FY2016
3Q

Year on Year

Sale and Profit by Region
JapanNorth America

Mil. yenGrowth(%)

Net Sales

101,375

116,539

102,999

13,53915,16415.0%

Operating Income

17,897

19,095

18,686

409

1,197

6.7%

(excluding extraordinary factors)※

17,897

20,49918,686

1,813

2,601

14.5%

Ordinary Income

17,86919,665―

―

1,796

10.1%

profit attributable to owners ofparent

13,69014,044―

―

353

2.6%

Operating Income*1. A goodwill amortization expense of 2.1 billion yen associated with the USL acquisition was recorded in the North America segment*2. Extraordinary factors: expenses related to the acquisition of the US firm Upsher-Smith Laboratories, LLC (USL)

Copyright © 2018 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

1Analysis of Factors Causing Changes in Operating Income
+3.9

-2.1

(Unit：Billion. Yen)

-1.4

19.0
+0.9

-0.1

17.8

FY2016 3Q
Operatingincome

Net sales
increase

Improvement North America Amortization of M&A-related
inVariable cost, Operation
goodwill
expenses
Increase in Fixed
incomeExpenses etc.
(ExcludingAmortization ofgoodwill)

Copyright © 2018 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

FY2017 3Q
Operatingincome2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 Number

FY20163Q

FY2017
3Q

Numbe r ofCustomers

Sales ShareYear on Year
Changes inb) Numbe r ofCustomers

CoverageRate (b/a)

Sales Share

Sales Growth

Number ofCustomers

Hospital

8,457

7,903

13.0%

7,960

(94.1%)

13.0%

57

8.4%

DPC Hospital

1,667

1,646

8.0%

1,652

(99.1%)

8.0%

6

7.0%

Clinic105,42934,083

10.3%

34,927(33.1%)

10.0%

844

3.9%

Pharmacy

87,581

56,53475.4%

57,219(65.3%)

75.1%

685

7.6%

Dispensing Pharmacy

60,68756,16874.9%

56,895(93.8%)

74.7%

727

7.7%

Drug Stores, etc.

26,894

366

0.6%

324

(1.2%)

0.4%-42-2.6%

Others

--

1.3%

-

1.9%

-

47.5%

Total

201,467

98,520100.0%

1,586

7.9%

100.0% 100,106(49.7%)

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

Copyright © 2018 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

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

Copyright © 2018 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

（Unit: Millions of yen, %）FY20163Q

FY2017
3Q

Y on Y(%)

Mil. yenMil. yen

GrowthListed in FY2017-2,138-

Listed in FY2016

392

828

111.1%

Listed in FY2015

3,858

4,641

20.3%

Listed in FY2014

2,893

3,238

11.9%

Listed in FY2013

4,109

4,383

6.7%

Listed in FY2012

2,999

3,202

6.8%

Listed in FY2011

6,974

7,148

2.5%

Listed in FY2010

3,977

4,001

0.6%

Listed in FY2009

16,78017,237

2.7%

Listed in FY2008

5,756

5,952

3.4%

Existing Drugs andTransferred Drugs, etc.

53,63350,226

-6.4%

Total

101,375

102,999

1.6%

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

Therapeutic Category

FY20163Q

FY2017
3Q

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%
7.9%
7.1%
6.5%
2.9%
2.1%
0.2%
11.1%

28.1%
22.9%
12.4%
7.9%
6.8%
5.8%
2.7%
2.2%
0.2%
11.0%

7.8%
1.1%
5.6%
3.5%
-1.8%
-8.9%
-5.5%
8.8%
16.1%
3.3%

8.8%
0.8%
8.3%
5.4%
7.2%
-1.5%
-4.6%
10.6%
12.4%
8.3%

Total

100.0%

100.0%

3.0%

5.7%

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 © 2018 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

5

Sales breakdown by Therapeutic category (North America)
 The breakdown of sales in North America, totaling 13.5 billion yen, is shown
below.
 Cardiovascular agents and central nervous system drugs account for 80.9% oftotal sales.
HormoneVitaminpreparations
preparations,(includingOthers, 3.5%
1.8%
antihormone
preparations), 4.3%
Agents forurogenital organs
and the anus, 9.6%

Cardiovascularagents, 42.1%

Central nervous
system drugs, 38.7%
Exchange rates: 111 yen/dollar
Copyright © 2017 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

6

North America Business Pipeline
 4 launches in FY 2017
 7 to 8 launches are anticipated in FY 2018
Pipeline Launches

Product launched since June 2017
7 to 8► Exemestane Tablets, 25 mg► KLOR-CON® Powder (PotassiumChloride) for oral solution, 20 mEq► Bumetanide Tablets, USP, 0.5 mg,1 mg, and 2 mg

4

FY2017FY2018

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7

FY2017 Earnings Forecasts (IFRS)Net sales and operating income are trending largely as expected
However, we have revised our net profit forecast due to a reversal of deferred tax
assets resulting from factors including reform of the US tax system, which took effectfrom January this yearWe are not planning to change the year-end dividend as a result of this revision（Unit: Millions of yen）

FY2017

IFRS

InitialForecasts

Revised
Forecasts

Sale and Profit by Region
JapanNorth America

168,800
68,100Core Operating Income
30,50023,700Operating Income
23,300
Profit before tax
17,300Net profit

168,800
68,10030,50023,70023,30012,800137,100
52,80024,70024,000――31,70015,300
5,800
-300
―
―

Net Sales
Gross Profit

Change±0±0±0±0±0-4,500* With the adoption of IFRS, we have introduced “Core Operating Income” as an indicator of recurring
profitability, and we regard this as a key indicator of business performance that excludes non-recurring
factors from operating income
Assumed Exchange Rates:1USD ￥110.0
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8

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

Wholesalers

Agencies

Marketing Alliances

Others120,000

100,000

80,00032,88460,00020,000+1,057（+3.2％）(35.6 %)

＋373

33,941

52,691（+1.1％）

34,315(33.3 %)

( 33.5%)+5,178（+9.8％）

40,000102,999

101,375

92,377＋5,171

57,870(57.0 %)

(57.１%)FY20153Q

FY20163Q（+8.9％）

63,041(61.2 %)0Copyright © 2017 Sawai Pharmaceutical Co., Ltd. All Rights Reserved.

FY20173Q

9Consolidated Financial Highlights-1

FY20163Q

FY2017/Sales（ % ）3Q/Sales（%）

YoY（ %）Key Income S tatements Data

Net Sales
Cost of Sales
Gross Profit
SG&A Expenses
Operating Income

F
FY2017 Forecast（IFRS）*2
Y
Full YearKey Income Statements Data

101,375
60,92340,451
22,553
17,897

100.0
60.1
39.9
22.2
17.7

116,539
67,16449,37530,27919,095

100.0
57.6
42.4
26.0
16.4

15.0
10.222.1
34.3
6.7

Net Sales
Cost of Sales
Gross Profit
SG&A Expenses
Operating Income
Core Operating Income

Ordinary Income
Net Profit

17,86913,69017.6
13.5

19,665
14,044

16.9
12.1

10.1
2.6

Profit before tax
Net Profit
EBITDA *1

FY2017 Forecast（JGAAP） * 3
Full YearKey Income Statements Data

168,800
100,700
68,10029,10023,70030,50023,30012,80041,200Net Sales
Cost of Sales
Gross Profit
SG&A Expenses
Operating Income
Ordinary Income
Net Profit

160,400
96,10064,30043,60020,70020,80011,800*1. Core operating income + amortization and depreciation expenses included in core operating income + impairment charges*2. FY2017 forecast (IFRS): earnings forecasts for 12 months of Japan operations + 10 months of North America operations (June 2017 to March 2018)*3. FY2017 forecast (JGAAP): earnings forecasts for 12 months of Japan operations + 7 months of North America operations (June 2017 to December 2017)

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10

Consolidated Financial Highlights-2
Sales and Operating Income by AreaJapan
FY2017FY2016
3Q

3Q/Sales（%）

YoY（ %）Key Income Statements Data

Net Sales
Cost of Sales
Gross Profit
SG&A Expenses
Operating Income

Key Income Statements Data

101,375
60,92340,451
22,553
17,897

102,999
61,707
41,292
22,606
18,686

100.0
59.9
40.1
21.9
18.1 -1.6
1.3
2.1
0.2

North America
FY2017FY2016
3Q

3Q/Sales（%）

YoY（ %）Key Income Statements Data

Net Sales
Cost of Sales
Gross Profit
SG&A Expenses
Operating Income

F
FY2017 Forecast（ IFRS）
Y
Full Year
137,100
84,300Gross Profit
52,800
SG&A Expenses
19,800Operating Income
24,000Core Operating Income
24,700EBIDA
34,600Net Sales

Cost of SalesF
FY2017 Forecast（ IFRS）
Y
Full YearKey Income Statements Data-13,539
5,456
8,082
7,673
409

100.0
40.3
59.7
56.7
3.0-Net Sales
Cost of Sales
Gross Profit
SG&A Expenses
Operating Income
Core Operating Income
EBIDA

31,70016,40015,3009,300-300
5,800
6,600

*1. Core operating income + amortization and depreciation expenses included in core operating income + impairment charges

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11

Consolidated Financial Highlights-2

FY2016
3Q
Key Balance Sheets Data
Total Assets
Net Assets
Capital Adequacy Ratio(%)

221,538 *2
137,600 *2
62.0 *2
FY20163Q

FY20173Q
353,891
180,697
50.9
FY2017
3Q

YoY（ %）

Amounts Per Common S hare

Net Income per Share
Diluted Net Income per Share

Shareholders' Equity
Dividend (interim)

FY2017 Forecast（IFRS）
Full Year
Amounts Per Common Share371.35371.133,722.90
65.0*

377.01376.764118.96
65.0

1.5
1.5
-

Net Income per Share
Diluted Net Income per Share

Shareholders' Equity
Dividend (interim)

343.59130.0*. Comparison with 4Q of FY2016

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12

Consolidated Financial Date
（Unit： Millions of Yen）

Selling General and
Administrative Expenses

YoY（ %）

Total

7,092
7,092

7.0
7.0

27.8
27.8

Total

1,385

1.4

-5.2

North America

AdvertisemetExpenses

Capital Expenditure &Depreciation and Amortization
CapitalExpenditure

DepreciationandAmortization

FY2017 3Q/Sales（ % ）Japan
R&D Expenses

FY2016 3Q

YoY（ %）

7,265
1,175
8,441

7.1
8.7
7.2

2.4
19.0

995

0.9

-28.2

6,094
133
6,228

Full Year
15,700879
16,579

4,604

5,654

7,800

980

1,085

1,400

693

537600

378

800
0

Total

Administration Div.
& Business Div.

-Total7,6566,279※ We expect to record 2,000 million yen of the R＆D costs to intangible fixed assets.

R&D Division
Administration Div. & Business Div.
(MRs)
North AmericaTotal

FY2016Comp.(%)
3Q
1,553
228662496
2,443

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63.6
9.3
27.1

100.0

0.9

FY2017 Forecast（ IFRS）

9,99209,992

Japan
Manufacturing
DivisionR&D Division

Number of EmployeesJapan
Manufacturing Division

1,500

FY2017 3Q

North America

Personnel Information/Sales （ % ）Full Year
8,300
6.1
3,400
10.7
11,7006.9

FY2016 3QJapanNorth America

FY2017 Forecast（ IFRS）/Sales（ % ）FY2017Comp.(%)
3Q
1,780
248
646
481
607
3,281

54.3
7.5
19.7
18.5
100.0

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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
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14