Interim Term Financial Results Ended
September 2011

November 9,2011
g Inc.
KYORIN Holdings,President Masahiro Yamashita■Outline of Consolidated Financial Results
for the Interim Term Ended September 2011
■Trends of mainstay products (domestic ・ overseas)

and Status of generic drugs■Consolidated Financial Results Forecast for the YearEnding March 31, 2012 and Dividends■Status of development pipeline◇Progress in first half of fiscal 2011 and initiatives in second half of fiscal 20111

Outline of Consolidated Financial Results
for the Interim Term Ended September 20112

Outline of Consolidated Financial Results for theInterim Term Ended September 2011
（ Units: ¥ billion ）Ch
ChangeSep/10(Actual)

Sep/11(Actual)

ChangeChangeSep/10 vs Sep/11%

N t SalesNet
S l46 746.7

46 4
46.4

△0 3
△0.3

△0 7%
△0.7%

△2 8
△2.8

OperatingI
Income424.2

494.9＋0 7＋0.7＋16.7%△1 2△1.2

Ordinary
Income4.5

5.3＋0.8＋15.7%△1.1

Net Income

3.0

3.4＋0.4＋13.4%△0.6

original forecast
vs Sep/113

Increase/Decrease of Segment Sales(Consolidated)（ Units: ¥ billion ）Sep/11((Actual))

Change

46.7

46.4

45.4

ChangeChange%original forecast
vs Sep/11

△0.3

△0.7%

△2.8

45.2

△0.2

△0.5%

△2.6

39.2

39.1

△0.1

△0.3%

△2.1

Japan37.7

38.1＋0.4＋1.1%△1.8

OOverseas

151.5

10
1.0

△0 5
△0.5

△35 4%△35.4%△0 3△0.3

Generic drugs

4.1

4.1

△0.0

△0.4%

△0.5

Over-the-counter drugs

2.0

2.0

△0.0

△4.4%

△0.0

1.3

1.2

△0.1

△7.6%

△0.2

Net Sales (total)

Ethical drugs
business

Sep/10((Actual))

Sales of newethical drugs

Healthcare BusinessSep/10 vs
Sep/11≪Breakdown of Sales≫
ChangeChangeSep/10 vs
Sep/11

original forecast
vs Sep/11

new ethical drugs(Japan)new ethical drugs(Overseas)

＋0.4

△1.8

Ethical drug sales in Japan declined forecast, reflecting an increase in distribution inventory at theend of the fiscal year
ear ended March in association with
ith the Great East Japan Earthq
Earthquake.
ake

△0.5

△0.3

Gatifloxacin’s sales declined original forecast.

Generic drugs

△0.0

△0.5

Decrease sales of strategic products and supplementary products.

Explanation of Variances

4Breakdown of Gain and Loss（ Units: ¥ billion ）ChangeSep/10(Actual)

Sep/11(Actual)

Net Sales

46.7

46.4

△0.3

△0.7%

△2.8

Cost of Sales

17.1

16.6

△0.5

△2.8%

－

SG&A

25.4

24.9

△0.5

△2.2%

－

R&D Expenses

6.9

6.1

△0.8

△11.7%△0.4

1818.518 8
18.8＋0 3＋0.3＋1.4%－

Operating Income

4.2

4.9＋0.7＋16.7%△1.2

O diOrdinary
IncomeI454.553
5.3＋0 8＋0.8＋15 7%＋15.7%△1 1△1.1

Net Income

3.0

3.4＋0.4＋13.4%△0.6

SG&A Expenses(excluding R&D Expenses)≪Sep/10 vs Sep/11≫

ChangeChangeSep/10 vs Sep/11%

original forecast
vs Sep/11p≪original forecast vs Sep/11≫
Changeoriginal forecast
vs Sep/11

Explanation of Variances

Net Sales

△2 8
△2.8

new ethical drugs(Japan)△1.8、new ethical drugs (Overseas)△0.3、Generic drugs△0.5

Operating
Income△1.2

Save R&D Expense and SG&A Expense to avoid the decrease of Operating
Income.（R&D Expense：vs original forecast △0.4）

5

Highlights of Business Performance（ Units: ¥ billion ）Highlight ①◇ Net Sales decreased ¥0.3
billion year on year.
（reflecting an increase in distribution
inventory at the end of the fiscal year ended
March in association with the Great East
Japan Earthquake. ）.

Cost of Sales

Cost of SalesHighlight
g g ②

16.6

17 1
17.1

◇Cost of Sales declined ¥0.5 bln.
(The Cost of Sales Ratio fell 0.8 points.)
・Increased sales of in-house productswith lower Cost of Sales・a rise in the factory operation ratio
・a decrease of manufacturing cost
◇Gross profit increased (up ¥0.2bln yearon year).

Cost of Sales Ratio

Cost of Sales ratio

35.8%

36.6%

Net sales

Net sales

R&D

46.4

6.9

R&D

6.1

Highlight ③
SG&A(excluding R&D)

SG&A

SG&A

SG&A

25.4

(excluding R&D)

18.8

18.5

24.9

◇SG&A Expenses
Edroppeddd ¥0.5bln¥0 5blyear on year. (Of SG&A Expenses, R&D
Expenses decreased ¥0.8bln.)（Expenses associated with the completionof the R&D of KRP-108 Ph2b were posted
in the previous year ）.
）Operating Income

Operating Income◆Operating Income rose ¥0.7
bln year on year.

Sep/10 (Actual)

Sep/11 (Actual)6

Increase/Decrease of Mainstay Product Sales（ Units: ¥ billion ）ChangeSep/10((Actual))

Sep/11((Actual))

ChangeChangeSep/10pvs Sep/11
p%

original forecast
vs Sep/11

Kipres

14.1

15.7＋1.6＋11.5%△0.5

Mucodyne

94
9.4

91
9.1

△
△0.3

△3.4%

△
△0.6

Pentasa

9.9

9.1

△0.8

△7.3%

△0.6

Uritos

2.4

2.9＋0.5＋21.4%△0.1

Gatifloxacin

1.3

0.8

△0.5

△38.4%△0.3（Over seas)【 ForF referencef】 growthth ratet off sales
l ffor medical
di l iinstitution（tit ti （ calculatedl l t dbbasedd on ddrug price）
i ）Kipres

＋16.8%

Mucodyne＋0.8%

Pentasa△5.3%

Uritos＋26.5%(※ ⓒ 2011 IMS JAPAN K.K., Source : JPM,April 2011－September 2011 Unauthorizedcopying prohibited)7

Trends of mainstay
yp
products (domestic(・overseas))and Status of Generic drugs

8

Kipres 【Bronchial asthma and allergic rhinitis treatment】
Vs original forecast+0.2（ Units: ¥ billion ）■Status in Fiscal 2011

zEstablish position as base drug for treatment of allergic rhinitis
・ Allergic rhinitis: raise awareness as a chronic inflammatory condition
・ Build evidence

zFurther promote prescription for adult and childhood asthma
zIncreased market share for LT antagonists
g31.3% (March 2011 MAT) ⇒ 32.2% (September 2011 MAT)
(Source: IMS JAPAN K.K., JPM, March 2011/September 2011 MAT. Unauthorized copying prohibited)

9

Uritos 【Overactive bladder】
Vs original forecast+0.0（ Units: ¥ billion ）■Status in Fiscal 2011

第２四半期

16

zTap into latent market.
OAB market: ¥60.0 billion (MAT Mar 11)⇒ ¥62.0 billion (MAT Sep 11)
zExpand
Expand Market penetration of OD (orally disintegrating) tablet and promote as
24 OAB treatment (Uritos OD tablet was Launched Apr 2011).
first-choicezExpand Uritos’s share of OAB market.
・Uritos・Imidafenacin

MAT Mar 11
9.3%⇒19.3%⇒

MAT Sep 11
10.1%
20.4%

(Source: IMS JAPAN K.K., JPM, March 2011/September 2011 MAT. Unauthorized copying prohibited)10Mucodyne 【 Mucoregulating drug】
Vs original forecast△0.8（ Units: ¥ billion ）116■Status in Fiscal 2011
第２四半期 zMaximize uptake and prescriptions of new formulation 「DS50％」(Launched May 2010).

9394zIncrease prescriptions for chronic conditions based on EBM.
chronic respiratory disorder , and chronic sinusitis
zExpand Mucodyne ’ss share of market.
47.9%（ MAT Mar 11 ） ⇒ 48.3%（ MAT Sep 11 ）(Source: IMS JAPAN K.K., JPM, March 2011/September 2011 MAT. Unauthorized copying prohibited)

11Pentasa【 Ulcerative colitis and Crohn’s disease treatment 】
Vs original forecast△0.6※Prior to Sep 08, sold jointly with
Nisshin Kyorin Pharmaceutical.

（ Units: ¥ billion ）※※■Status in Fiscal 2011
zEstablish basic prescription for ulcerative colitis.
第２四半期 zExpand market for mesalazine formulations and market share

97・Growth
Growth of around 13% for mesalazine formulations (number of patient increased around 7%)¥26.5billion99（ MAT Sep 10 ） ⇒ ¥30.0billion （ MAT Sep 11 ）・ Pentasa’s share
80.2%（ MAT Sep 10 ） ⇒ 68.2%（ MAT Sep 11 ）(Source: IMS JAPAN K
K.K.,
K JPM
JPM, September 2010/September 2011 MAT.
MAT Unauthorized copying prohibited)zDevelopment of new dosage and dose regimen (once-a-day administration) andnew drug formulation (suppositories).
12Gatifloxacin 【Anti-bacterial eye drops (Overseas)】Vs original forecast＋0.5（ Units: ¥ billion ）■Status in Fiscal 2011
zPromote sales of high concentration formulations of Gatifloxacin(by Allergan).
・ Zymaxid：0.5% launched by Allergan in June 2010
discontinued in March 2011
・ Zymar：0.3%【For reference】
Sales of Zymar and Zymaxid ： first half of 2010 $50MM ⇒ first half of 2011 $49MM

zThere’nozThereno generics sales at the present time of Oct 31 2011(U2011(U.S.).
S)
13

Status of Generic Drugs
Vs original forecast△0.5（ Units: ¥ billion ）■Status in Fiscal 2011
zExpand sales via wholesaler sales route.
zIncrease sales of supplementary products.
・IncreaseIsalesl Edaravoneof
Edf ini hhospital.
it l・Plan to launch 5 supplementary ingredients and 10 supplementary products (November).

z Promote domestic and overseas alliances
・Expand off commissioned manufacturingf・Promote of Co-development
14

Consolidated Financial Results Forecast
for the Year Ending March 31
31, 2012
and Dividends

15

Consolidated Financial Results Forecast
for the Year Endingg March 31,, 2012
Revised forecast

ChangeVS original
forecast

ChangeVS Mar/11actual

106 5106.5

105 1105.1△1 4△1.4＋1 0＋1.0+1 0%
+1.0%

101.3

103.5

102.2

△1.3＋0.9+1.0%

2.8

3.0

2.8

△0.2＋0.0+2.7%

Operating Income

16.4

16.6

14.9

△1.7

△1.5

△9.4%

Ordinary Income

17 1
17.1

17 2
17.2

15 6
15.6

△1.6

△1.5

△8.8%

Net Income

10.9

10.9

10.1

△0.8

△0.8

△7.6%

（ Units: ¥ billion ）Net Sales(total)Ethical drugs
business

Mar/11(Actual)

Mar/12
original forecast

104 1104.1

HealthcareBusinessMar/12≪Vs Mar/11 actual≫≪V Mar/12≪Vs
M /12 original
i i l fforecast≫t≫
ChangeVS originalforecast

Explanation of Variances△1.4Net Sales(total)△0.9

revised sales of Mainstay Productnew ethical drugs (Overseas)＋0.4

revised sales of Gatifloxacin upward△0.5

revised sales of strategic products and supplementary products
downward△0.4

Revised sales of Over-the-counter drugs and Dr.Program
downward.

△1.7

R&D expenses rose ¥ 0.8 bln. (Advancements in development
pipeline)（original forecast：¥13.4bln、revised forecast：¥14.2bln）

etc.

Operating Income【 For reference 】
・Cost of Sales Ratio: down 1 percentage points
・R&D Expenses rose ¥ 1.7 bln（SG&A Expenses Ratio: up 2 percentage points)

new ethical drugs (Japan)

Generic drugs

Change%16

Forecast of Mainstay Product Sales and Generic Drugs（ Units: ¥ billion ）Mar/11

Mar/12
Revised forecast

ChangeChange(Actual)

Mar/12
original forecast

Change%VS original forecast

VS Mar/11 actual

Kipres

34.5

36.5

36.7

＋0.2
0＋2.2+6.5%

Mucodyne

21.3

22.1

21.3

△0.8

＋0.0+0.5%

Pentasa

19.4

19.2

18.6

△0.6

△0.8

△4.0%

Uritos55
5.566
6.666
6.6

△0 0
△0.0＋1 1＋1.1+20 2%+20.2%

Gatifloxacin（Over seas)

2.2

1.2

1.7＋0.5△0.5△22.7%

Generic Drugs

8.9

10.3

9.8

△0.5＋0.9+10.3%

17

Shareholder Returns
Basic Policy
The Company seeks to enhance its management base by balancing investments
for growth and business continuity with shareholder returns. To this end, theCompany aims for a consolidated payout ratio to shareholders of 30%.

Net Income

Net Income (Billions of yen)

FY2011FY2012FY2012(Forecast)(Original forecast)(Revised forecast)

10.9

10.9

10.1

FY2011FY2012FY2012(Forecast)(Original forecast)(Revised forecast)

45.00

45.00

45.00

30.8

30.9

33.3

Dividends

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

18

■ These forecast performance figures are based on information
currently available to the Company and may include uncertain factors
or riski k ththatt affect
ff t our future
f t
performance.
fAccordingly, actual business results may materially differ from theforecasted figures due to various factors in the future.