Financial Results for Fiscal 2017

May 11 , 2018
KYORIN Holdings, Inc.
P
President
id t Minoru
Mi
H
HogawaOutline of Consolidated Financial Results
・Trends of mainstay products

Consolidated Financial Results and Forecast
St t off development
Statusdlt pipelinei liInitiatives toward realization of
the long-term vision “HOPE 100”・Progress of Medium-Term
Medium Term Business Plan “HOPE
HOPE 100-Stage
100 Stage 22”(Fiscal 2016～2019)2

Outline of Consolidated
Financial Results3Outline of Consolidated Financial Results for Fiscal 2017
（unit : ¥billion）

ChangeFY2016FY2017

ChangeChange(%)

Net Sales

115.4

110.6

－4.8

－4.1

－0.7

Operating
Income

10.4

8.8

－1.6

－15.3

－1.7

Ordinary
Income

10.9

9.3

－1.6

－14.1

－1.6

Net Income

7.3

6.6

－0.7

－10.0

－1.2

(revised
forecast)

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

ChangeFY2016FY2017

ChangeChange
(%)

115.4

110.6

－4.8

－4.1

－0.7

109.6

104.7

ー4.9

ー4.4

－0.６

84 5
84.5

77 0
77.0

ー7.5

ー8.9

－0.2

Japan

83.8

73.7

ー10.1

ー12.0

ー0.5

Overs
eas

0.8

3.3

＋2.5

＋337.0

＋0.3

25.0

27.7

＋2.7

＋10.5

ー0.3

Healthcare Business

5.8

5.9

＋0.1

＋2.2

0

Cost of Sales

50.8

49.1

－1.7

－3.5
35

ー

SG&A

54.1

52.8

Net Sales

Ethical drugs
business

Sales ofnew
ethicaldrugs
Generic drugs

－1.3

－2.5

(revised
forecast)ー（13.6)(14.2)(+0.6)

Operating Income

10 4
10.4

88
8.8

－1
1.6
6

－15
15.3
3

ー1
1.7
7

Ordinary Income

10.9

9.3

－1.6

－14.1

－1.6

7.3

6.6

－0.7

－10.0

－1.2

Net Income(+5.0)(+1.2)・ Extraordinary income ：gain of approximately 600 million yen as a result of transfer of shares of Dr. Program Co., Ltd. Recorded.
・ Extraordinary loss
：Expenses of around 400 million yen related to the settlement of a lawsuit for violation of US antitrust laws inconnection with an out-licensed product (Gatifloxacin eyedrops).
Loss due to debt guarantee regarding a trust-type employee stock ownership incentive plan: About 400 million yen

5Highlights of Business Performance ①（Sales）【 Net Sales ¥－4.8bln】（ Units: ¥ billion ）
120

115.4
5.8

100

80

・The distribution of hand hygiene
products sales start・Growth of RUBYSTA and Milton
・Transfer the stocks of the skincare
business

5.9

25

27.7

0.8

【 Ethical Drugs Sales ¥－4.9bln】

3.3【 Ethical Drugs】

60

40

Healthcare Business ＋0.1bln

110.6【 Ethical Drugs】

109.6
83.8

Generic drugs ＋2.7bln

104.7
73.7

・Increase of MONTELKAST AG sales
・Sales to other companies decreased

Ethi l dl overseas ＋2.5bln＋2 5bln
Ethicaldrug sales
・received lump sum payment of outlicensed productEthical drug sales in Japan－10.1bln

20

・Despite steady growth in Flutiformand Desalex sales

・Decreased by the expiration ofth patentthet t forf KIPRES
KIPRES.

0

17年3⽉期
FY2016

18年3⽉期
FY2017

・Decreased in prescriptions of longlisted drugs.

6

Highlights of Business Performance ②（Income）【Operating Income ¥－1.6bln】（ Units: ¥ billion ）Gross Profit decreased
Net Sales：
decreased ¥4.8bln year on year

100

Cost of sales ratio :Increased 0.2% yyear on yyear
・Decrease of sales of new ethical drugs
・Increase in loss on retirement of
inventories, etc.
・Increased costs due to the impact of
currency fluctuations

－2.9
－2.0

80

＋0.6
60

40

R&D expenses increased

10.4

88
8.8

・Book a lump-sum payment for the contract
for the introduction of KRP-N118 (SK-1404)¥13 6billi （FY2016)
・¥13.6billion（FY2016)⇒¥14.2billion(FY2017)20

SG&A(excluding R&D)
decreased

0・Decrease of Labor costs, general
expenses¥40.5billion(FY2016）⇒¥38 5billion(FY2017)⇒¥38.5billion(FY2017)

Operating Income（FY2016）Gross Profit

R&D

SG&A

Operating Income（FY2017）(excluding R&D)

7

Highlights of Business Performance ③（Changeg : originalg
forecast))（ Units: ¥ billion ）FY2017FY2017(forecast)(actual)ChangeChange(%)

Change(revised
forecast)

111.3

110.6

－4.8

－4.1

－0.7

105.3

104.7

ー4.9

ー4.4

－0.６

77.2

77.0

ー7.5

ー8.9

－0.2

Japan

74.2

73.7

ー10.1

ー12.0

ー0.5

Overs
eas

3.0

3.3

＋2.5

＋337.0

＋0.3

28 0
28.0

27 7
27.7

＋2.7

＋10.5

ー0.3

Healthcare Business

5.9

5.9

＋0.1

＋2.2

0

Cost of Sales

ー

49.1

－1.7

－3.5

ー

SG&A

ー

52.8

Net Sales

Ethical drugs
business

Sales
S
l off
new
ethicaldrugs
G
Generic
i drugs
d

－1.3

－2.5

ー

（13.0)(14.2)(+0.6)

Operating Income

10.5

8.8

－1.6

－15.3

ー1.7

Ordinary Income

10.9

9.3

－1.6

－14.1

－1.6

7.8

6.6

－0.7

－10.0

－1.2

Net Income(+5.0)(+1.2)【Explanation of Variances（Change：revised forecast）】
Net sales: Regarding the new drug launched in Japan, sales of Kipres and products for other companies did not achieve the target, and sales of generic
medicine for other companies did not achieve the target.
R&D cost: Booked a lump-sum payment for the contract of the license-in product: 13.0 billion yen (forecast)→14.2 billion yen ＋1.2 billion yen

8Mainstay Product Sales（ Units: ¥ billion ）ChangeFY2016FY2017

10.1

11.9

＋1.8

＋18.1

ー0.1

Uritos

7.5

7.2

ー0.3

ー3.7

ー0.1

Desalex

1.0

4.9

＋3.9

＋404.8＋1.４

For adult

17.7

8.3

－9.4

ー53.5

ー0.8

For children

14.9

10.5

ー4.4

ー29.5

－0.2

15.5

15.3

－0.2

ー1.4

－0.3

（Mucoregulant）

9.9

8.7

－1.2

－12.1

＋0.3

MONTELUKAST
Tablets“KM”

8.2

11.7

＋3.5

+42.4

＋1.0

Flutiform(Combination drug for asthma treatment)（Overactive bladder)(A ti ll i Agent)(AntiallergicAt)

Kipres（LT receptor antagonist）

Pentasa(Ulcerative colitis and Crohn’s disease
treatment)

Mucodyne

ChangeChange(%)(revised
forecast)

9Trends of mainstay products

10

■Respiratory/Otolaryngology（ Units: ¥ billion ）Kipres 【Bronchial asthma and allergic rhinitis treatment】

Flutiform 【Anti-asthmatic】（ Units: ¥ billion ）

12

40

10
30

8
6

10.1

4
2

11.9

12.3

7.2

15.4

32.7

18.8

20
26.7

28.6

10.5

16/3

17/3

18/3

19/3

0
15/3

16/3

17/3

18/3

forecast

status of FY2017
ICS/LABA market ： expand 1.3%
¥113.6bln（FY2016） ⇒ ¥115.1（FY2017） ※1

13.2
7.2 Children

17.7
17 7
8.3

0
15/3

14.5

44.1

14 9
14.9

10

3.6

41.2

6

Adult

19/3
forecast

status of FY2017
LT antagonists market ： shrink 19.2%¥ 113.2（FY2016） ⇒ ¥91.4（FY2017） ※1

 hshareoff Fultiform
F ltifsales
l9.7%（FY2016） ⇒ 11.4%（FY2017） ※2【price rivision rate ▲5.8％】

effort for FY2018

share of Kipres sales
33.9%（FY2016） ⇒ 24.6%（FY2017） ※2【 price rivision rate ▲10.2%】

Secure the positioning of a first-line
first line drug for the treatment of asthma
・Attract attention to the high clinical impact from a patient with symptoms
・The agent nicely penetrates and reaches theperipheral airways.
※1､2（Source：Copyright 2018 IQVIA. IMS –JPM. Unauthorized copying prohibited ）※1､2（Source：Copyright 2018 IQVIA. IMS –JPM. Unauthorized copying prohibited11

■Respiratory /Otolaryngology（ Units: ¥ billion ）Desalex(Antiallergic Agent)

Nasonex（Spray type allergic rhinitis remedy）

8
Concluded co-promotion contract with MSD (Sep. 2016)6■ Acquire domestic exclusive distribution rights (May.2018）
81
8.1

4
4.9

2
0

1
17/3

18/3

19/3
forecast

statusstatus of FY2017
Antihistamine market：expand 2.7%
¥173.5bln（FY2016） ⇒ ¥178.2（FY2017） ※1

share of Desalex sales
0.5%（FY2016） ⇒ 2.9%（FY2017） ※2【price rivision rate ▲5.6％】※ The prescription restriction lifted in December 2017

[Sales start]
August 2018 (planned)[Sales forecast] Fiscal year ending March 2019:10.1 billion yen●Market scale ： 43 billion yen※
Main products ：NASONEX ,Allermist,Erizas,Flunase, etc※1（Source：Copyright 2018 IQVIA. IMS –JPM. Unauthorized copying prohibited【 Product features】
Efficacy： Steroid nasal spray
Indication ： Allergic rhinitis
Feature： Single daily dose of steroid nasal spray is
exceptionally effective against symptoms ofallergic rhinitis (sneezing, runny nose, nasal
congestion, nasal pruritus)

effort for FY2018● non-drowsy
y and effects and usabilityy● Realization of prescription acquisition rate No.1 inotolaryngology※1､2（Source：Copyright 2018 IQVIA. IMS –JPM. Unauthorized copying prohibited

12

■Urology（ Units: ¥ billion ）
100
80

77

14

（ Units: ¥ billion ）OAB market
81

19

87

90

91

26

30

34

60
40

8
β3
receptoragonistothers

6

4

63

62

61

60

20

57

anticholiner
gic agent

0
14/3

15/3

16/3

17/3

18/3

出典：Copyright © 2018 IQVIA. IMS-JPM 2013/3-2018/3を基に作成 無断転載禁⽌■OAB market expandp¥77.0bln（FY2013） ⇒ ¥91.0（FY2017） ※1●Launch of β3 receptor agonist
・Launch a new drug (KRP-114V) to contribute to the treatmentof patients with an overactive bladder (OAB)
・Establish
Establish the positioning of Uritos

With both drugs, we aim to expand the market
share in the OAB market.
※1､（Source：Copyright 2018 IQVIA. IMS –JPM. Unauthorized copying prohibited

Uritos（Overactive bladder)

7.3

7.5

7.5

7.2

68
6.8

15/3

16/3

17/3

18/3

19/3

2

0
forecast

status of FY2017
OAB market： market：expand 0.8%
¥90.0bln（FY2016） ⇒ ¥91.0（FY2017） ※1

share of Uritos sales
9.2%（FY2016） ⇒ 8.8%（FY2017）注2【 price rivision rate ▲5.9%】

effort for FY2018
Aim to be a firstline drug for OAB patients with nocturia
・Promotion
Promotion of prescription based on extensive evidence※1､2（Source：Copyright 2018 IQVIA. IMS –JPM. Unauthorized copying prohibited13

■Status of Generic Drugs
Kei（ Units: ¥ billion ）
30

27.7

27.4

25.0

25

MONTELUKAST

8.2

20

11.7

9.8

AG

status of FY2017
Turnover increase , MONTELUKAST AG:＋￥3.5bln【 price rivision rate ▲18.0%】
Turnover decrease rate, excluding AG・Increase of Health insurance pharmacy marketʼs sales,
・Decrease of contract manufacturingʼs sales

15

10

15.5

15.5

16.8

16

17.6

Other
GE

effort for FY2018
Actions for an authorized generic drug (AG)・Maintain a high share of Montelukast AG in the GE
market・Consider acquiring new AGs

5

Expand sales of strategic products andSupplementary Items

0
15/3

16/3

17/3

18/3

19/3
forecast

14

Consolidated Financial Results and Forecast

15

Consolidated Financial Results Forecast
for the Year Ending March 31, 2019
（ Units: ¥ billion ）FY2017Y/Y

FY2018（forecast）

ChangeChange(%)

110.6

114.4

＋3.8

+3.4

104.7

108.4

＋3.7

＋3.5

77 0
77.0

80 9
80.9

＋3.9
39

＋5.0
50

Japan

73.7

79.9

＋6.2

＋8.4

Overse
as

33
3.3

10
1.0

ー2.3
2.3

ー70.1
70.1

27.7

27.4

ー0.3

ー0.9

Healthcare Business

5.9

6.0

＋0.1

＋1.1

Operating Income

8.8

8.6

ー0.2

ー2.5

Ordinary Income

9.3

9.2

－0.1

－1.6

Net Income

6.6

6.6

0

＋0.4

Net sales

Ethical drugs
business

Sales ofnew
ethicaldrugs

Generic drugs【for reference: year on year】① Increase sales of our main products Flutiform and Desalex,
Desalex and increase sales of Nasonex.
Nasonex② Reduction of gross operating income: The cost rate is up by about 4 point.
③ Reduction of selling, general and administrative expenses (SGA): R&D cost is reduced (forecast a reduction of 2.6 billion yen
from the previous year, to 11.6 billion yen). The rate of SGA (excluding R&D cost) has declined by about 1% from the previous year.
④ Method of depreciation: Expect a change from the declining-balance method to the straight-line method.

16Forecast of Mainstay Product Sales（ Units: ¥ billion ）FY2017

Flutiform

Y/Y

FY2018（forecast）

Changeg

Change(%)
g ( )

11.9

12.3

＋0.4

＋4.1

Uritos（Kyorin）

72
7.2

68
6.8

－0.4
0.4

－4.7
4.7

Desalex

4.9

8.1

＋3.2

＋65.3

Kipres for adult

83
8.3

60
6.0

－2.3
23

ー26.8
26 8

Kipres for children

10.5

7.2

－3.3

－30.9

P t
Pentasa

15.3

14.5

－0.8

－5.0

Mucodyne

8.7

7.2

－1.5

－16.5

Nasonex

ー

10.1

＋10.1

ー

11 7
11.7

98
9.8

－1.9

－16.4

(Combination drug for asthma treatment)(Overactive bladder)(Antiallergic Agent)（LT receptor antagonist）（LT receptor antagonist）(Ulcerative colitis and Crohnʼsdiseasetreatment)（Mucoregulant）（Spray type allergic rhinitis remedy）

MONTELUKAST Tablets “KM”

17

Shareholder Returns
Basic Policy- While maintaining the sound financial basebase, adopt the capital policy
ensuring both growth investment and stable return to shareholders.
- In shareholders return
return, aim for stable dividends
dividends.
Dividend per share for fiscal 2018 (estimate): ¥58 (Year-end dividend ¥38)
Dividends

Dividend pershare (Yen)Consolidated
payoutratio(%)

FY2016FY2017 ※FY2018（forecast）

¥58

¥58

¥58

（Year-end（Yearend ¥38）（Year-end（Yearend ¥38）（Year-end（Yearend ¥38）

59.3%

65.9%

65.7%

※ The year-end dividend of 38 yen in the fiscal year ending March 2018 will be decided at the Board Meeting scheduled for
May 22.
18

St t off development
Statusdlt pipeline
i li

19

Drug Development Pipeline:
Progress in FY2017, schedule of FY2018
18年度の取り組み
schedule of FY18

17年度の進捗
progress
in FY17

PhⅠ

PhⅡ

PhⅢ

application

Approval/ Launch

KRP-AM1977X

2017/4

FY19 Expected
ReleaseKRP-AM1977Y

preparationpp

KRP-114V

2017/9development code

Ad-SGE-REIC

E d off theEnd
th PhⅠ／PhⅡPhⅡ start

Respiratory

KRP-108P

2017/6

Infections

Urological

KRP 116D
KRP-116D
KRP-N118

PhⅡ start(SK-1404)【 Licensing development】
Compound/CodeFPR2 agonist
i tprogram

FY18 Expected
Release※ For KRP-AM 1977 X, additional nonclinical studies are required and will be carried out.
導出先

BMS

Stage
PhⅠ

FeaturesFPR 2 agonists that mainly inhibit the
FPR-2
migration of neutrophils and exhibit anti-inflammatory action.
Therapy area：Non-disclosure※KRP-203: Because Novartis (licensee) decided to discontinue development of KRP-203 for strategic reasons,kyorin receive thereturn of development rights.

20

Overactive bladder treatment ｢KRP-114V｣
generic name ： Vibegron
Status of develpoment
Preparingpg for Applicationpp
Clinical Phase III study
Study: A double-blind comparative study for verifying the efficacy and safety of the drug in OAB patientsResult: The drug was shown to be superior to a placebo in primary endpoints and all secondary endpoints.

[Primary endpoints] Average frequency of urination per day[Secondary endpoints] Average frequency of urinary urgency per day, etc.
※・Co-Development and Co-Marketing Agreement with Kissei Pharmaceutical Co., Ltd. affiliate (3/2016)

Publication of the results of the study
・Conference
Conference presentation: March 2018 European Association of Urology (EAU)
・Publication of a paper: Specialty urology journal: European Urology (May issue)

Fil an applicationFileli i andd obtainb i approvall soon
21

Therapeutic Agent for Nocturia: KRP-N118

Concluded a licensing agreement with Sanwa Kagaku Kenkyusho Co., Ltd.
（March 2018）[Development status] Phase II clinical study[Mechanism of action]
A vasopressin V2 receptor agonist that promotes the reabsorption of water by thecollecting duct of the kidney to reduce the amount of urine (antidiuretic action).
[Characteristics]
The drug is well absorbed and evidences antidiuretic action promptly after administration.
The drug is eliminated rapidly from the body. It is expected to be a therapeutic agent for
nocturia due to nocturnal polyuria that offers good efficacy and safety.
What is Nocturia?
Nocturia is a disease with symptoms that cause a patient to get up to urinate during the night. It is
the most common of the symptoms related to urination, and about 45 million males and females in their
40s and older have symptoms of nocturia, causing them to get up at least once to urinate during thenight. The frequency increases with advancing age. Nocturia is a disease that causes a high level ofdifficulty in daily life.
life（from the website of The Japanese Urological Association）

22

Expansion of product lineup in the area of urology
Cause of nocturia
Nocturia

Overactive bladder（OAB)
Uritos(anticholinergic agent)

KRP 114V
KRP-114V

Nocturnal
polyuria
KRP-N118(Vasopressin V2
receptor agonist)(β3 receptor agonist)

Interstitial cystitis
KRP-116D is under development

Aim to improve presence in the area of urology（Reference）■Number of OAB patients
104 million (aged 40 years and older)*1■ Number of patients with nocturia
45 million (at least one instance of urination during the night)
85 million (3 or more instances of urination during the night)*2

Source: *1: Clinical guidelines for overactive bladder（ver. 2） *２: Honma et al., Epidemiological study of urination（2003）

23

Progress of Medium-Term Business Plan
“HOPE
O
100-StageS
2-” (Fiscal(
2016～2019))

24

Outline of“HOPE 100-Stage 2-”【Four Priority Strategies】
Business Strategy（S）
Strategy①Strengthening of the Ability to Discover New Drugs②I②Increase
in
i the
th R
Ratio
ti off N
New D
Drugs GGroup
③Promotion of Generic Drugs Business by Making
the Most of Its Characteristics④Strengthening of Low Cost【
【Developmentl
S
Strategies】
i 】

・ Healthcare Business/ Overseas Expansion

Organization Strategy (O)Organization

Performance Targets （P）
Performance

・ Best worthwhileness of work
・ Establishment and operation of the system for
management of human resources

・ Sustainable growth・ Aim to achieve the average annual growth rate of 3% ormore for the consolidated net sales and the consolidated
operating income margin of 15% or more
more.
・ In shareholders return, aim for stable dividends.
25

Priority strategy: Enhance drug discovery capabilities

Efforts on first-in-class drug discovery
Cooperation

ActivX ((USA))

Watarase Research Center

Open innovation

Open innovation

Academia venture
Academia,
ent e

Selection and concentration

PharmaceuticalPhamace ticalcompanies in Japanand overseas

Priority study area

Kinase study

Fibrogenesis study

Drug discovery
outside the company
Theme

Multi-tiered efforts
Novel drug discovery target

Worldwide（world-class drug discovery）
26

Priority strategy: Increase ratio of new drug group

Accelerate regrowth with new drug group and new products
・Maximize the dissemination of Flutiform, Desalex, PENTASA Granules, Uritos and Nasonex.
・Launch and disseminate KRP-114V and KRP-1977X.

Ratio off new
drug group（%）[The ratio of the new drugs group should increase as follows]

Regrowth withnew drug

Ratio of new drugs
g group:gp
At least 50%
KRP-AM1977X

56%

50

41%

40

KRP-114V
FY18 Expected Release
18年度上市を⽬指す

Nasonex

35%

30

29%

DesalexFlutiform
Uritos20

100Pentasa Granule
Kipres for children
Kipres for adultFY2015FY2016FY2017FY2018FY2019Medium-term management plan “HOPE100－Stage 2－” （2016-2019）27

Priority Strategy"Strengthening of Low Cost“

Promotion of low-cost operation■Consolidation of the Groupʼs production functions
Noshiro plant (Akita)

Inami plant (Toyama）

Shiga plant （Shiga）

New production subsidiary: KYORIN Pharmaceutical Facilities Co., Ltd.
Commences full-scale operation on April 1, 2018
Equalization of the utilization rate of each plant, the efficient use of assets,
and the building of the Groupʼs competitive production structure■Improvement of productivity through the betterment of the direct-indirect ratio
Promotion of appropriate number and deployment of employees (review ofexisting operations and structures)

28

Fostering strategy: Diagnostic business
Deployment of diagnostic business using GeneSoC ultrafast gene
quantitative system■Characteristics of GeneSoC ultrafast gene quantitative system
・Rapid detection of genes based on the technology of ultrafast
quantitative PCR* （5-6 minutes）
・High-sensitivity
Hi hiti it detectiond t tiis
i possible
ibl with
ith a tracet
amountt off theth samplelimmediately after infection
・ A compact, desktop PCR device eyeing POCT*GeneSoC
GeneSoC Ultrafast gene quantitative system

Identification of pathogenic bacteria of infection by POCT and
improvement of treatment with the choice of an appropriate antibacterial agent

PCR: Polymerase chain reaction, technology for gene amplification.
POCT: Point of care testing by a health care worker. It refers to tests conducted by a health care worker at an examinee’s side. By taking advantage of the reduced test time and the advantage, thatexaminees feel is closer and more comfortable, POCT contributes to rapid and appropriate diagnosis and care, prevention of disease, promotion of health, and also to the improvement of medical care and patient QOL.

Efforts going forward■ Release of a reagentgfor research using
g GeneSoC ultrafast genegquantitativeqsystemy・February 2019: Exhibition at the 30 th annual meeting of the Japanese Society for ClinicalMicrobiology and launch within the fiscal year
■Development of an extracorporeal (in-vitro) diagnostic agent
・Aim to launch in 2020

Target market●Respiratorypy infections: Cold,, ppneumonia,, influenza ● enteral infection ● sexuallyy transmitted disease,, etc.

Aim to be the next core business29

Important points in facilitating the FY2018
business strategy

Make a change in advance and create a new scenario for growth

Enhancement of
the basis for growth

Improvement of
earning power・Drug discovery of an original new drug
・Drug discovery of a new drug and creation of a market with a new drug・Acceleration of growth of peripheral businesses and improvement of
profitability
fit bilit
・Promotion of low-cost operation30