Interim Term Financial Results Ended
September 2013

November 6 , 2013
g Inc.
KYORIN Holdings,
President Masahiro YamashitaOutline of Consolidated Financial Results for the Interim Term Ended
September 2013
Trends of mainstay products and Status of generic drugs
Status of development pipeline
Environmental Hygiene businessConsolidated Financial Results Forecast for the Year Ending March 31 2014and Dividends1Outline of Consolidated Financial Results
for the Interim Term Ended September 20132

Outline of Consolidated Financial Results for theInterim Term Ended September 2013
（unit : ¥100mil）% Y/YChange

＋29

＋6.0

−6

62

−1

−0.9

−5

66

65

−1

−1.2

−5

43

44

＋1

＋2 4
＋2.4

−2
2

Sep/12

Sep/13

Net Sales

480

509

Operating
Income63

OrdinaryOdi
IncomeNet Income

Change(actual)(forecast)3

Segment Sales (Consolidated)（unit : ¥100mil）% Y/YChangeSep/13

480

509

＋29

＋6.0

−6

470

500

＋30

＋6.4

−8

397

429

＋32

＋8.0

−6

Japan

387

417

＋30

＋7.9

−6

Overseas

10

12

＋2

＋13 5
＋13.5

＋1

Generic drugs

51

52

＋1

＋2.5

＋1

Over-the-counter
drugs
g

23

20

−3

−12.9

−2

9

8

−1

−11.9

＋1

Net Sales

Ethicaldrugs
business

ChangeSep/12

Sales ofnew
ethicaldrugs

Healthcare Business((actual))((forecast))

Explanation of Variances
new ethical drugs(Japan)•influence of KYORIN Pharmaceutical Facilities sales (6 months)•increase of main product (Kipres, Pentasa etc.) . Fall below forecast(mainly Kipres)•increase of royalty (licensing out product)

new ethical drugs(overseas)

sales of Gatifloxacin increased effect of exchange rate （sales of Allergan：FY12 2Q $44MM→FY13 2Q $35MM）

Generic drugs

increase of health insurance pharmacy market’s sales

Over-the-counter drugs

otc and sales others decreased

Healthcare Businesssales decreased because of concentration of distribution route to mail order system

4Breakdown of Gain and Loss
（unit : ¥100mil）

Change% Y/YChangeSep/12p

Sep/13p

Net Sales

480

509

＋29

＋6.0

−6

Cost of Sales

181

191

＋10

＋5.5

−

SG&A

236

255

＋19

＋8.3

−

R&D expenses

49

61

＋12

＋25.1

＋4

SG&A expenses

187

194

＋7

＋3 9
＋3.9

−

Operating Income

63

62

−1

−0.9

−5

Ordinaryy Income

66

65

−1
1

−1.2
1.2

−5
5

Net Income

43

44

＋1

＋2.4

−2

(actual)(forecast)

E lExplanationti off Variances
V i¾gross profit•Increased ¥1.9bln（increase of sales , cost of sales ratio remained almost the same y/y).
•Fall below forecast(mainly Kipres)Ope at g
Operating
Income¾R&D expenses•progress of the pipeline(KRP-209 Ph2a) (y/y +¥1.2bln、forecast＋¥0.4bln）¾SG&A Expenses (excluding R&D Expenses)•Increased ＋0.7bln , Fall below forecast (reduction of cost)5

Highlights of Business Performance（Units: ¥100mil）
Highlight ①◇ Net Sales increased ¥2.9billion year
on year・increase of Japan new ethical drugs
sales
・effect of KYORIN pharmaceutical
Facilities sales

Cost of Sales
Cost of Sales

191

181

Highlight ②

Cost of Sales Ratio

Net sales

Cost of Sales Ratio

35.8%

Net sales

R&D(excluding R&D)

R&D

◇Gross Profit increased ¥1.9billion
year on year

61

49
SG&A

◇Cost of Sales ratio remained almost
the same level as the previous year.

37.7%

Highlight ③
SG&A

SG&A

SG&A

236

(excluding R&D)

187

255

・R&D expenses increased ¥1.2billion（progress of the pipeline）

194
Operating
IncomeOperating
Income◇SG&A expensespincreased ¥1.9billion
year on year.

・SG&A(excluding R&D) increased¥0 7billion¥0.7billion◆Operating Income decreased¥0.1 billion year on year.

Sep/12

Sep/136

Mainstay Product Sales（unit : ¥100mil）

Sep/12

Sep/13

163
83
90
36

171
82
94
37

9

10

Kipres
Mucodyne
P tPentasa
UritosGatifloxacin（Over seas)

Ch
Change% Y/Y

Ch
Change

＋8
8

＋5.0
50

−6
6

−1

−0.6

＋2

＋4

＋4 8
＋4.8

＋1

＋1

＋2.8

−2

＋1

＋14.1

＋1

(actual)(forecast)【 For reference 】
Year on year rate of sales for medical institution（ calculated based on drug price）

Kipres＋8.5%(※ copyright 2013 IMS JAPAN K.K., Source : IMS−JPM Unauthorized copying prohibited)7

Trends of mainstay products andStatus of generic drugs

8

Kipres 【Bronchial asthma and allergic rhinitis treatment】（unit : ¥100mil）

396
345

403

initiatives in FY2013

408

368

LT antagonists market ： expand 5%¥54.8bln（FY12 first half） ⇒ ¥57.5bln（FY13 first half） ※1

292

2nd
half

share of Kipres sales
34 5%（FY12 fifirstt half
34.5%（FY12h lf ） ⇒ 35.7%（FY13
35 7%（FY13 fifirstt half
h lf ） ※2【for reference】 increase decrease rate of Kipres sales y/y・sales of Kipres
・sales of Kipres(for medical institution)

1st
half
(actual)(forecast)：＋5.0%：＋8.5% ※3

Establish position as base drug fortreatment of allergic rhinitis(perennial andseasonal) and growth in new prescriptions
Further promote prescription
・asthma with rhinitis
・viral-induced asthma

FY09

FY10

FY11

FY12

FY13

FY13

(revised)(original)※1,2,3（Source：Copyright 2013 IMS JAPAN IMS –JPM.
JPM. Unauthorized copying prohibited ）9

Uritos 【Overactive bladder】（unit : ¥100mil）

initiatives in FY2013

84
75

80
OAB market ： expand 9%¥33.5bln（FY12 first half ） ⇒ ¥36.6bln（FY13 first half ） ※1

63

2nd
half

55

share of Uritos sales
11 6%（FY12 first half ） ⇒ 11.0%（FY12
11.6%（FY12
11 0%（FY12 first half ） ※2

Uncovering potential markets･FY11 : potential patient 9million people ／ consultation rate 28%
・FY12 : potential patient 9.1million people ／ consultation rate 29%37

Enlargement of Quantity

1st
half
(actual)

FY09

FY10

FY11

FY12

・Easy to use for OAB patient・Good balance of efficacy and safety
・Flexible dosage※1,2 （Source：Copyright 2013 IMS JAPAN IMS –JPM. Unauthorized copying prohibited ）(forecast)

FY13

FY13

(revised)(original)10

Mucodyne 【 Mucoregulating drug】（unit : ¥100mil）

initiatives in FY2013
209

213

215
191

188

share of Mucodyne sales in expectorant market

187

45.8%（FY12 first half ） ⇒ 45.8%（FY13 first half ） ※1
・share of generic (Carbocisteine)
5.9%（FY12 first half ） ⇒ 6.8%（FY13 first half ） ※2

2nd
half

Maximize uptake and prescriptions of new
formulation 「DS50％」
・growth in new prescriptions for childhood inflammation of theupper airway and geriatric respiratory disorderIncrease prescriptions for chronic conditions
based on EBM
bronchial asthma , chronic bronchitis , chronic sinusitis(actual)

FY09

FY10

FY11

FY12

1st
(forecast) half

FY13

FY13

(revised)(original)※1,2, （Source：Copyrightpy g 2013 IMS JAPAN IMS –JPM. Unauthorized copying
py g pprohibited）

11

Pentasa【 Ulcerative colitis and Crohn’s disease treatment 】（unit : ¥100mil）

initiatives in FY2013
194

194

180

176

185

market（Mesalazine etc.）： expand 11％

186¥16.7bln（FY12 first half ） ⇒ ¥18.6bln（FY13 first half ） ※1

share of Pentasa sales
58.1%（FY12 first half ） ⇒ 53.9%（FY13 first half ） ※2

2nd
half

Establish basic prescription for ulcerative
colitis.
・active p
period : pprescription
pof 4g
g twice a dayy・remission period : prescription of 2g once a day

new drug formulation : suppositories
1st
h lf
half
(actual)

FY09

FY10

FY11

FY12

(forecast)

FY13

FY13

(revised)(original)・sales : 9/2013 actual ¥0.5bln , 3/2014 forecast ¥1.2bln・launch : 6/2013※1,2 （ Source：Copyright 2013 IMS JAPAN IMS –JPM. Unauthorized copying prohibited ）12

Status of Generic Drugs
sales（unit : ¥100mil）
118
101

103

96

initiatives in FY2013

115

104

¾Promotion of Domestic and overseas alliances
2nd
half

1st
half

・Promote in-house development and contracting work

¾Strengthen alliances with sales initiatives of
KYORIN Pharmaceutical and KYORIN Rimedio

Net sales
・increase of stragetic products
Amlodipine , Donepezil etc.

FY09

FY10

FY11

FY12

FY13

FY13

(revised)(original)・Market Large-scale Supplementary Items andReach Objectives

operating Income（unit : ¥100mil）【previous Supplementary Items(4 components , 8 items)】
fexofenadine , Risedronic acid etc.
【coming Supplementary Items(4 components , 7 items)】
Pitavastatin Ca , Valaciclovir etc.

8

4

4

4

Operating income
・reducereduce cost of sales

4

3

Aim for lower purchase prices for key ingredients
2nd
half

FY09

FY10

FY11

FY12

FY13

FY13

(revised)(original)

1st
half

・promotion of collaborative development
cost reduction by co-developing and promote contracting
work

13

St t off development
Statusdlt pipeline
i li

14

Drug Development Pipeline: Progress in FY2013
Product &development code

PhⅠ

PhⅡ

PhⅢ

application

Approval/
Launchapproval Sep/13

Fultiform(KRP-108)

launch Nov/13
Respiratory

KRP-AB1102
KRP-AB1102F

Urological

Otolaryngological

KRP-EPA605

PhⅢ Aug/13
PhⅠOct/13

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

PhⅢApr/13

KRP-209
KRP-AM1977XPhⅡ Sep/13

Infections

KRP-AM1977Y
Pentasa(UC) suppository

IBD

launch Jun/13

KRP-203
progress in FY13 first halfschedule of FY13 second half15

Flutiform : a combination drug for asthma¾Approved on September 2013 (the drug price in Japan is due to list on November)
In oversea markets : launched in 12 European countries by Mundi pharma.

¾【Asthma Prevention and Management Guideline 2012,Japan】(Japanese Society of Allergology)
Step 2

Step 3

Step 4

Basic treatmentCON
NTROLLEROPTIONSO

Step 1
Inhaled glucocorticosteroids

Inhaled glucocorticosteroids

Inhaled glucocorticosteroids

Inhaled glucocorticosteroids

long-acting β2-agonist

long-acting β2-agonist

long-acting β2-agonist

leukotriene recepter
antagonist
sustained-release theophylline

leukotriene recepter
antagonist
sustained-release theophylline

leukotriene recepter
antagonist
sustained-release theophylline

leukotriene recepter
antagonist
sustained-release theophylline
Anti-IgE treatment
oral glucocorticosteroid

Add
-on

anti-allergic

anti-allergic

anti-allergic

anti-allergic(Asthma Prevention and Management Guideline 2012,Japan(JGL),P130,modification

About 2.8
2 8 million patients

About 2.8 million patients

Even if it has taken controller, 60 to 80% of the patients (treatment steps2~4) are Partly Controlled
In (changes in temperature) some risk factors
The proportion of patients asthma symptoms /exacerbations occurred

None
13.8%

N = 537

Any
86.2%

Source：Kazuoakiyama

Survey of adult asthma
patients with 2-4 treatment
step（ Study was confined topatients has continued
taking controller drugs havea regular examination）

Allergology & Immunology, 19, 1120-1127 (2012)

About Partly Controlled（ One or more features of Following items ）• Nocturnal/Daytime symptoms ： More than once/week•Need for reliever/ rescue treatment ： More than once/week•Limitations of activities ： Any•Lung function (PEF or FEV1) ： < 80% predicted or personal best (if known)•circadian change of PEF ： < 20%•Exacerbations ： One or more/year16Flutiform : a combination drug for asthma¾About Flutiform :ICS:a substance thatexerts a potent antiinflammatory effect

LABA:a substance that
rapidly dilates the bronchi

fluticasone
propionate

formoterol
fumarate

1. Materializes ideal combination of potent ICS and rapid, long-lasting LABA.
(Best Combination)
2. offers convenience and better compliance of the patients.
3. easy to use : MDI d
3
devicei offers
ff
severall advantagesdsuch
h as reproducible
d ibl
doses per actuation and suitability to patients with lowered respiratory effort.

Flutiform¾Enlightenment of proper inhalation technique:
1. Provide inhalation guidance thoroughly (doctor , pharmacist , health-care provider)
2. enrich Informed consent tool

Understanding of product profile／Appropriate inhalation
R li thRealizethe effectff t

Ai ffor earlyAiml spreadd iin ththe market
k t
17

KRP-EPA605 : Status of Development
KRP-EPA605 ((for the treatment of overactive bladder))・prostaglandin EP1 receptor antagonist
・different mechanism of action from existing therapies(β3 agonists
and anticholinergic drugs)

Status of Development
・Phase I (Oct(Oct. 2013)
・Co-development with KISSEI PHAMRACEUTICAL

aim to early approval of this drug
18about new Development Research Laboratories

location ： 1848, Nogi, Nogi-machi, Shimotsuga-gun, Tochigi
commencement of construction ： Jan / 2014
completion of construction ： Aug / 2015
commence operations ： Oct / 201519

Environmental Hygiene business

20

Environmental Hygiene businessexisting product ： preserve and expand Disinfectant 「Milton」(unit : ¥100mil)

sales

FY08

FY09

FY10

FY11

FY12

18

19

19

19

20

(forecast)

FY13(1st half)

20

10

FY13

new pproduct ： ppromote spreadpof Multi-purposep pdisinfectant cleaner「RUBYSTA」」
Aim at expanding use through introduction and standardization at hospitals while focusing
on Category-1 facilities eligible for NHI points for measures against infections.
(forecast of FY13 ： ¥0.3bln)(Note) Category-1 facilities eligible for NHI points for measures against infections: Those facilities that satisfy the requirements, such as the appointment of afull-time HAI manager and the setup of a department involved in the prevention of infections.

expand product lineup①kit p①
product for helping
p gp
prevent infection
zkit product for helping prevent from pandemic infection such as new strain of influenza etc.
(「Dupont™ Tyvek®」 protective suit is manufactured by Dupont USA)zlaunch : Jul / 2013
※Medical institutions, as designated public corporations, shall prepare a manual for※f medical care
continuation and also stockpile protective kits and other items individually according to the MHLW
guidelines.

② kit productd t off M
Multi-purpose
lti
di i f t t cleaner「RUBYSTA」
disinfectant
l「RUBYSTA」 forf vomitit
zreduce a risk of infection(norovirus) from vomit and to cleanup
zpreparing for launch21Consolidated Financial Results Forecastf thfor
the YearY
Ending
E di MarchMh 31 2014 andd
Dividends

22

Consolidated Financial Results Forecast
for the Year Ending March 31, 2014
（unit : ¥100mil）
Mar/14

Mar/13

Revised forecast

Change% Change

Changefrom original forecast

1,070

1,126

＋56

＋5.2

−4
4

1,052

1,109

＋57

＋5.5

−4

19

17

−2

−9.0

0

Operating Income

179

182

＋3

＋1.4

−4

Ordinary Income

187

188

＋1

＋0.7

−4

Net Income

124

124

0

−0.2

−3

Net Sales

Ethical drugs business
Healthcare(skincare)Business

Net
sales

change(y/y)

change(forecast)

＋56

−4

new ethical drugs(Japan)＋45−7•influence of KYORIN Pharmaceutical Facilities sales•increase of main product (Kipres, Pentasa etc.) . Fall below forecast(mainly Kipres)•increase of royalty (licensing out product)

new ethical drugs(Overseas)−1＋2

Expenses associated with the income due to transfer of Pekiron assets were posted in theprevious year.

G
Generic
i d
drugs

＋13

＋3

sales
l iincreasedd att KYORIN Rimedio
Ri diOver-the-counter drugs−1−3

otc and sales others decreased

Skin care business−20Operating Income＋3−4Explanation of Variances

Kyorin group will try to
improve new records forsales and earnings【for reference】•Cost of sales ratio :a slight increase year on year
•SG&A ratio(include R&D expense) :remain mostlyy level yyear on yyear•R&D expense ¥11.8bln(＋0.7bln)

sales decreased because of concentration of distribution route to mail order system¾gross profit•increase year on year,
year effect of sales increase•decreased against original forecast , influence of downward sales and rise of cost of sales
ratio(mainly new product and exchange rate)¾SG&A Expenses (excluding R&D Expenses)•Increase year on year(R&D,SG&A)•Fall below original forecast (reduced R&D expense ¥−0.3bln)

23

Forecast of Mainstay Product Sales and Generic Drugs（unit : ¥100mil）

Mar/13

Mar/14
Revised forecast

Change% Change

Changefrom original
forecast

Kipres
p

396

403

＋7

＋1.8

−5

Mucodyne

191

188

−3

−1.6

＋1

Pentasa

176

185

＋9

＋5.1

−1

Uritos

75

80

＋5

＋7 2
＋7.2

−4

Gatifloxacin

16

18

＋2

＋11.8

＋2

101

114

＋13

＋13.3

＋3

（Over seas)
Generic Drugsg24

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
FY12
Net Income¥12.4bln

FY13
FY13( i i l forecast)(originalf) ((revisedi d forecast)ft)¥12.7bln¥12.4bln

Dividends
FY12
Dividend per share (Yen)Consolidated payout ratio(%)

FY13
FY13
( i i l forecast)(originalf) ((revisedi d forecast)f)¥50.00（interim ¥10.00）¥52.00(interim ¥10.00)¥52.00(interim ¥10.00)

30.1％

30.6%

31.2%
25

■ These forecast performance figures are based on information currently
available to the Company and may include uncertain factors or risk that
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.

26