Financial Results for Fiscal 2013

May 12 , 2014g Inc.
KYORIN Holdings,
President Masahiro YamashitaOutline of Consolidated Financial Results
Trends of mainstay products
Status of development pipeline
Consolidated
Consolidated Financial Results Forecast and Dividends

1

O tli off Consolidated
OutlineClid t d Fi
Financial
i l ResultsRlt2

Outline of Consolidated Financial Results for Fiscal 2013

（unit : ¥billion）

Change(%)

Change(forecast)

FY2012FY2013

ChangeNet Sales

107.0

111.4

＋4.4

＋4.1

－1.2

Operating
Income

17.9

17.6

－0.3

－1.9

－0.6

OrdinaryOdi
Income

18.7

18.3

－0.4

－2.1

－0.5

Net Income

12 4
12.4

12 0
12.0

－0.4
0

－3.2
32

－0.4
0

3

Segment Sales（unit : ¥billion）

Change((forecast))

FY2012FY2013

107.0

111.4

＋4.4

＋4.1

－1.2

105.2

109.7

＋4.5

＋4.3

－1.2

90.7

93.5

＋2.8

＋3.1

－1.6

Japan

88.3

91.7

＋3.4

＋3.8

－1.1

Overseas

24
2.4

18
1.8

－0
0.6
6

－22
22.9
9

－0
0.5
5

Generic drugs

10.1

12.0

＋1.9

＋18.7

＋0.6

Over-the-counter drugs

4.4

4.2

－0.2

－4.7

－0.1

1.9

1.7

－0.2

－7.8

0.0

Net Sales

Ethicaldrugs
business

Change(%)

ChangeSales ofnew
ethicaldrugs

Healthcare Business

Explanation of Variances

new ethical drugs(Japan)•Increased year on year due to Flutiform, fall below forecast (Fultiform , Mucodyne)•increase of royalty (licensing out product)•influence of KYORIN Pharmaceutical Facilities sales (full year)

new ethical drugs(overseas)•sales of Gatifloxacin decreased effect of ggeneric product was launched in USA（sales of Allergan：FY12 $80MM→FY13 $61MM）•expenses associated with the income due to transfer of Pekiron assets were posted in the previous year.

Generic drugs•increase of Health insurance pharmacy market’s sales and contract manufacturing’s sales

4Breakdown of Gain and Loss
（unit : ¥billion）

FY2012FY2013

ChangeChange(%)

Change(forecast)

107.0

111.4

＋4.4

＋4.1

－1.2

Cost of Sales

40.1

43.0

＋2.9

＋7.3

－

SG&A

48.9

50.7

＋1.8

＋3.7

－

R&D expenses

11.1

11.4

＋0.3

＋2.7

－0.4

SG&A expenses

37.9

39.4

＋1.5

＋4.0

－

Operating Income

17.9

17.6

－0.3

－1.9

－0.6

Ordinary Income

18.7

18.3

－0.4

－2.1

－0.5

Net Income

12.4

12.0

－0.4

－3.2

－0.4

Net Sales

Explanation of Variances

year on year

¾gross profit ： increased ¥1.5bln（increase of sales ¥4.4bln , cost of sales ratio increased 1.1%))【reason for increase of cost of sales ratio】increase of generic drugs and KYORIN pharmaceutical Facilities sales¾SG&A expenses ： Increased ¥1.8bln【reason for increase】R&D expense increased ¥0.3bln (progress of KRP-209 Ph2a) ,SG&A (exclude R&D) expense increased ¥1.5bln (increase of sales expenses , patent royalty etc.)

compared tobudget¾gross profit ： fall below forecast(sales fall below forecast , increase of cost of sales ratio)【reason for increase of cost of sales ratio】effect of exchange rate , low operating rate of facilities¾SG&A Expenses ： fall below forecast【reason for increase】R&D expense decreased ¥0.4bln, reduced SG&A (exclude R&D) expense

5Highlights of Business Performance（ Units: ¥ billion ）Hi hli ht ①
Highlight◇ Net Sales increased ¥4.4billion

Cost of Sales

Cost of Sales

・increase of Japan new ethical drugs andgeneric drugs sales
・effect of KYORIN pharmaceutical Facilities sales
・sales of royalty (licensing out product)

43.0

40.1
Cost of Sales Ratio

Cost of Sales Ratio

37.5%

38.6%

Net sales

Net sales

R&D

Highlight ②◇ Cost of Sales ratio increased 1.1
percentage points (＋¥2.9bln)

R&D◇Gross Profit increased ¥1.5billion

11.4

11.1
SG&A
(excluding R&D)

SG&A

SG&A

SG&A

48.9

(excluding R&D)

50.7

Highlight ③◇SG&A expenses increased ¥1.8billion
・R&D expenses increased ¥0.3billion
・SG&A(excluding R&D) increased ¥1.5billion

39.4

37.9
Operatingpg Income

Operating Income

Operating Income decreased ¥0.3billion

FY2012FY20136

Mainstay Product Sales（unit : ¥billion）
Change(%)

Change(forecast)

FY2012FY2013

ChangeKipres

39 6
39.6

40 2
40.2

＋0 6
＋0.6

＋1 5
＋1.5

－0.1
01

Mucodyne

19.1

18.4

－0.7

－4.0

－0.4

Pentasa

17.6

18.6

＋1.0

＋5.3

＋0.1

U it
Uritos

75
7.5

81
8.1

＋0 6
＋0.6

＋7 9
＋7.9

＋0 1
＋0.1

Flutiform

－

0.6

＋0.6

―

－0.4

7

T
Trendsd off mainstay
i t products
d t8

Business Strategy (Strategy)

Multi-Core Strategy (MC Strategy)－Diversify
Di ersif the Cons
Consumermer Healthcare B
Businesssiness Centering on the Ethical Dr
DruggB
Business－siness

Ethical Drugg Business

Consumer Healthcare BusinessPharma Complex Model(PC model)
Multi-faceted business development

Cultivate existing businesses andcreate new businesses((New drugs,
g originalgdrugs,ggeneric drugs)

Fiscal 2015 : Sales ¥140.0bln Operatingpg income ¥20.0bln【sales breakdown】Ethical drugs ¥120.0bln (new drugs ¥50.0bln, original drugs ¥50.0bln, generic drugs ¥20.0bln)
Consumer Healthcare business ¥20.0bln

9Ethical Drug Business（unit : ¥billion）
105.5
96.9

96.7

100.8

91.0

105.9

Pharma Complex Model （PC Model）■New drugs group

・Maximize uptake of Kipres, Uritos, Flutiform
・Enhance the Development Pipeline (KRP-AB1102)■ Original products group・Use LCM to raise value of focus products (Mucodyne,
Pentasa) and extend lifecycle■ Generic drugs group・Promote domestic and overseas alliances to enhance
product lineup and lower costs
・Leverage stronger ties within the KYORIN Group to promotea more distinctive generics business・promotion of collaborative development
LCM： Life Cycle Management■New drugs group Kipres, Uritos, Flutiform■Original products group■Generic drugs group

Mucodyne, Pentasa

10■New drugs group
Flutiform [Anti-asthmatic]¾status of FY2013

FY2013 sales ： ¥0.6bln

Flutiform 50 Aerosol - 56 inhalations
Flutiform 125 Aerosol - 56 inhalations

Flutiform 50 Aerosol - 120 inhalations
Flutiform 125 Aerosol - 120 inhalations

approval

September 2013

September 2013

launchNovember 2013

December 2014
(scheduled date)¾ ff¾effortffor FY2014

FY2014 sales ： ¥2.8bln

Aim for dramatic market penetration after the lifting ofprescription limitations
・launch of a longer-term prescription formulation
Flutiform 50 Aerosol - 120 inhalations , Flutiform 125 Aerosol - 120 inhalations

・Further promote prescription to partly controlled asthma patients※Even if it has taken controller, 60 to 80% of the patients (treatment steps2~4) are Partly Controlled・appeall advantagesdt
off pMDIMDI deviced i11■New drugs group
Kipres 【Bronchial asthma and allergic rhinitis treatment】（unit : ¥billion）

status of FY2013
LT antagonists market ： expand 2%¥125.1bln（FY2012） ⇒ ¥127.4（FY2013） ※1

share of Kipres sales
34.9%（FY2012） ⇒ 36.0%（FY2013） ※2

effort for FY2014
Establish position as base drug fortreatment of allergic rhinitis(perennial
andd seasonal)l) andd growth
h ini newprescriptions
Further promote prescription¾price rivision rate ▲7.4％※1,2 （ Source：Copyright 2014 IMS JAPAN IMS –JPM. Unauthorized copying prohibited ）12

■New drugs group
Uritos 【Overactive bladder】（unit : ¥billion）

status of FY2013
OAB market ： expand 11%¥70.4bln（FY2012） ⇒ ¥77.9bln（FY2013） ※1

share of Uritos sales
11 4%（FY2012） ⇒ 10.9%（FY2013）※
11.4%（FY2012）
10 9%（FY2013）※2

effort for FY2014
UncoveringU
i potential
t ti l markets
k t
FY14 : potential patient 9.2million people／consultation rate 30%

zPervading usability
prescriptions based on EBM (OAB patient with BPH ※3)¾price rivision rate ▲0.4％※1,2 （ Source：Copyright 2014 IMS JAPAN IMS –JPM. Unauthorized copying prohibited ）※3 benign prostatic hypertrophy

13■Original products group
Mucodyne 【 Mucoregulating drug】（unit : ¥billion）

statusstatus of FY2013
zexpectorant market ： 3% reduction¥44.9bln（FY2012） ⇒ ¥43.5bln（FY2013） ※1

zsharehoff Mucodyne
M
d
sales
l
46.9.%（FY2012） ⇒ 46.2%（FY2013） ※2
share of generic (Carbocisteine)
6 3%（FY2012） ⇒ 7.4%（FY2013）
6.3%（FY2012）
7 4%（FY2013） ※3

effort for FY2014
Maximize uptake and prescriptions of「DS50％」
・prescriptions for upper airway

Increase prescriptions based on EBM・ bronchial asthma , chronic bronchitis
chronic sinus infection etc.
¾price rivision rate ▲6.9％※1,2,3 （Source：Copyright 2014 IMS JAPAN IMS –JPM. Unauthorized copying prohibited）

14

■Original products group
Pentasa 【 Ulcerative colitis and Crohn’s disease treatment 】（unit : ¥billion）

 t t off FY2013
statusmarket（Mesalazine etc.）： expand 12％¥33.8bln（FY2012） ⇒ ¥37.9bln（FY2013） ※1

share of Pentasa sales
56.8%（ FY2012 ） ⇒ 52.7%（ FY2013 ） ※2

effort for FY2014
zmarket penetration of suppositories
FY2013 ¥1.2bln¥1 2bln , FY2014(forecast) ¥1.5
¥1 5

zprescription for ulcerative colitis active period
・active period : prescription of 4g twice a day・remission period : prescription of 2g once a day¾price rivision rate ▲7.5％※1,2（Source：Copyright 2014 IMS JAPAN IMS –JPM. Unauthorized copying prohibited）

15

■Generic drugs group

Status of Generic Drugs
g
Sales （unit : ¥billion）

status of FY2013
zsales ： ¥12.4bln（＋¥2.0bln）
・expand of stragetic products and supplementary Item
・increase of contract manufacturing sales

zoperating income ： ¥1.0bln（＋0.6bln）
・R&D expense reduced by collaborative development

 ff t ffor FY2014
effort¾promotion of collaborative development
zsalesOperating income（unit : ¥billion）

・ increase of stragetic products and Supplementary Item
【stragetic product】 Donepezil , Pitavastatin Ca【supplementary Item】 Valsartan , Losarhyd combination tablet

zoperatingpg income
・ promotion of collaborative development
reducing R&D expense by collaborative development
accelerate contract manufacturing

16Consumer Healthcare Business（skin care ＋ otc drugs and others）（unit : ¥billion）

effort for Medium-Term Business Plan
"HOPE 100 －Stage 1－"■Skincare Business
Make business profitable and promote growth(including development in Asian market)■Milton Business,, etc.
Leverage the Milton brand to develop new
businesses■New Business Creation
Realize our corporate philosophy and create
new businesses that can become the core of
the company in the future (Environmental
H iHygieneB
Business
i
etc.)
t )

17

Environmental Hygiene businesspromote spread of Disinfectant 「Milton」 and Multi-purpose disinfectant cleaner「RUBYSTA」
zDisinfectant 「Milton」
・Strengthen promotion targeting maternity hospitals(increase new adoptions and gain understanding in mothers’ classes)
p how the pproduct is used in medical institutions and facilitate adoption
pas the・Graspin-hospital standard (double retailing with Rubysta).
・FY2014 sales forecast ： ¥2.0bln （FY2013 ： ¥2.1bln）

zMulti-purpose disinfectant cleaner「RUBYSTA」
・Aim at expanding use through introduction and standardization at hospitals while
focusing on Category1,2 facilities eligible for NHI points for measures against infections.
・changing to self-manufacture
・FY2014
FY2014 sales forecast ： ¥0.7bln¥0 7bln （FY2013 ： ¥0.2bln）¥0 2bln）

zfuture effort
・expandexpand product lineup‐ kit product for helping prevent infection （July 2013 launched）
・ product of Multi-purpose disinfectant cleaner「RUBYSTA」 for vomit （Dec 2013 launched ）
‐kit
・
・

18

St t off development
Statusdlt pipeline
i li

19

Drug Development Pipeline: Progress in FY2013
Solid development in all areas of the R&D pipeline
Product &development code

PhⅠ

PhⅡ

PhⅢ

application
li tiApproval/
LaunchNov launch

Fultiform
Respiratory(56inhalations)

KRP-AB1102

Mar application

KRP-AB1102F

Sep PhⅢ

KRP-EPA605

Oct PhⅠ

Urological

Aim to in-license products and collaborative development

Otolaryngological

Kipres Bronchial asthma(1～below the age of 15)

Apr PhⅢ

KRP-209
KRP-AM1977X

Sep PhⅡ

Infections

KRP-AM1977Y
Pentasa(UC) suppository

IBD

Jun launch

KRP-203
progress in FY13

20

Drug Development Pipeline: schedule of FY2014
Aim for an early advance to the next stage in “Respiratory” and “ Infections”
Product &development code

PhⅠ

PhⅡ

PhⅢ

applicationli tiFlutiform

Approval/
LaunchNov launch(120 iinhalations)h l i)Respiratory

KRP-AB1102

Approval

KRP-AB1102F
KRP-EPA605
Urological

Aim to in-license products and collaborative development

Otolaryngological

Kipres Bronchial asthma(1～below the age of 15)

KRP-209
Infections

KRP-AM1977X
KRP-AM1977Y

IBD

PhⅢ
PhⅡ

KRP-203schedule of FY1421

COPD treatment agent : KRP-AB1102■KRP-AB1102
Action ： Long-acting muscarine M3 antagonist (LAMA)
Active ingredient ： Aclidinium Bromide
Formulation ： Dry Powder Inhaler
Target disease ： COPD
Dosage regimen ： Inhaled by twice-a-day dosing
Origin ： Almirall,S.A(spain)¾ Features•Fewer sistemic side effects•Twice-daily dosage improves symptoms and respiratory function
throughout a day•Short
Sh t period
i d reaching
hi maximumieffectff t•Easy-to-use inhaler device

Dry powder inhaler ： Genuair
Reference■KRP AB1102F■KRP-AB1102F
Fixed dose combination of LAMA
and LABA (Long Acting
Muscarinic Antagonist)•LAMA : Aclidinium Bromide•LABA : Formoterol

22

Tinnitus treatment agent : KRP-209[Outline of clinical study]・Phase II clinical study (double-blind(double blind study)
・Subjects: Patients with subjective tinnitus Sample size: Approx. 400 patients・Frequency of administration: Twice daily
・Endpoints: THI-12* etc. (changes from baseline at each assessment time point)※ THI : Tinnitus handicap inventory[Study result]Significant improvements from previous values were recognized in all endpoints.
However, no significant difference from the placebo group was observed.

[Future action]
A decision on future action will be made by the end of the second quarter of the fiscal
year ending in March 2015.
23

Consolidated Financial Results Forecast
and Dividends

24Consolidated Financial Results Forecast
for the Year Ending March 31, 2015
（unit : ¥billion）

FY2013

FY2014 forecast

ChangeChange(%)

111.4

112.2

＋0.8

＋0.7

109.7

110.5

＋0.8

＋0.7

1.7

1.7

0.0

－1.3

Operating Income

17.6

15.8

－1.8

－10.3

Ordinary Income

18.3

16.3

－2.0

－10.8

Net Income

12.0

11.3

－0.7

－6.0

Net Sales

Ethical drugs business
Healthcare(skincare)Business

new ethical drugs (Japan)
Net
sales

new ethical drugs (Overseas)
Generic drugsgOver-the-counter drugs

FY2014
Forecastchange

110.5

＋0.8

92.1

＋0.4

•drug price revisions (in the 6%range for KYORIN Pharmaceutical).
•increase of Flutiform

1.0

－0.8

•decrease of Gatifloxacin （sales of Allergan：FY13 $61MM→FY14 $23MM）

12.7

＋0.7

•increase of Health insurance p
pharmacyy market’s sales and contract manufacturing’s
g sales

4.6＋0.4•Increase of Rubysta

Explanation of Variances¾gross profit•decrease year on year, effect of cost of sales ratio( increase approximately 1% year on year)【reason for increase of cost of sales ratio】 drug price revisions , decrease of Gatifloxacin,
Gatifloxacin increase of generic productOperating Income

15.8

－1.8

¾R&D expense ： ¥12.5bln (+¥1.1bln year on year) progress of pipeline(KRP-AB1102F, KRP-AM1977X etc.)¾SG&A Expenses (excluding R&D Expenses)•R&D ratio decrease approximately 1% year on year25Forecast of Mainstay Product Sales（unit : ¥billion）

FY2013

FY2014
Forecast

ChangeChange(%)

Kipres

40 2
40.2

40 3
40.3

＋0 1
＋0.1

＋0 4
＋0.4

Mucodyne

18.4

16.0

－2.4

－12.7

Pentasa

18.6

17.5

－1.1

－5.8

Uritos

8.1

8.2

＋0.1

＋2.1

Fl tifFlutiform

06
0.6

28
2.8

＋2 2
＋2.2

＋390 3＋390.326

Shareholder Returns
Basic Policy
The Company
p y seeks to enhance its managementgbase byy balancing
g investments for
growth and business continuity with shareholder returns. To this end, the Company
aims for a consolidated payout ratio to shareholders of 30%.

Net Income

Net Income

FY2013(forecast)

FY2013

FY2014(forecast)¥12.4bln¥12.0bln¥11.3bln

FY2013(forecast)

FY2013

FY2014(forecast)¥52.00（interim ¥10.00）¥52.00（interim ¥10.00）¥52.00（interim ¥20.00）

31.2％

32.3％

34.4％

Dividends

Dividend per share(Yen)
Consolidated
payout ratio(%)

27