Interim Term Financial Results Ended
September 2017

November 7 , 2017g Inc.
KYORIN Holdings,
President Minoru Hogawa

Outline of Consolidated Financial Results
・TrendsT
d off mainstay
i t products
d tConsolidated Financial Results and Forecast
Status of Development Pipeline
Topic・In
In Vitro Diagnostics business etc.

1

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

Outline of Consolidated Financial Results for theInterim Term Ended September 2017
（unit : ¥billion）

S /16
Sep/16

S /17
Sep/17

ChangeChange(%)

Change(original
forecast)

N tS
Net
Sales
l

54 6
54.6

50 8
50.8

－3.8
38

－7.1
71

－3.8
38

Operating
Income

3
3.7

1.4

－2.3

－60.6

－3.9

Ordinary Income

3.9

1.7

－2.2

－56.8

－3.9

Net Income

2.7

1.2

－1.5

－53.8

－3.3

※The results forecasts for the fiscal year ending March 31, 2018 announced on May 11, 2017 are revised.
3

Segment Sales and Breakdown of Gain and Loss
（unit : ¥billion）

Sep/16

Sep/17

ChangeChange(%)

Change(original
forecast)

54.6

50.8

－3.8

－7.1

－3.8

51 9
51.9

48 0
48.0

－3
3.9
9

－7
7.6
6

－3
3.9
9

41.6

35.0

－6.6

－16.0

－3.3

41.3

34.4

－6.9

－16.5

－1.3

0.3

0.5

＋0.2

＋52.5

－2.1

10.3

13.0

＋2.7

＋26.0

ー0.5

2.7

2.8

＋.0.1

＋3.3

＋0.1

Cost of Sales

23.8

23.1

－0.7

－2.9

－

SG&A

27.1

26.2

－0.9

－3.5

－

Operating Income

3.7

1.4

－2.3

－60.6

－3.9

Ordinary Income

3.9

1.7

－2.2

－56.8

－3.9

Net Income

2.7

1.2

－1.5

－53.8

－3.3

Net Sales

Ethical drugs
business

Sales ofnew
ethical
d
drugs

Japan
Overseas

Generic
drugs

Healthcare Business4

Highlights of Business Performance:①Net sales【 Net Sales －3.8】（Units: ¥billion）

Healthcare Business ＋0.1

54.6

・The
The distribution
di t ib tion of handh nd hygiene
h giene products
p od tsales start・Growth of RUBYSTA and Milton
・Transfer the stocks of the skincare business

50.8【 Ethical
Ethi l drugs
db ibusiness－3.9】
3 9】
Generic drugs ＋2.7
・Increase
Increase of MONTELKAST AG sales
・Sales to other companies decreased

Ethical drugs
business

51 9
51.9

Ethical drugs
business

48.0

New ethical drugs(overseas)
＋0 2
＋0.2
・Increase of Gatifloxacin sales

New ethical drugs(Japan)－6.9
・Despite steady growth in Flutiform and
Desalex sales
・Decreased
Decreased by the expiration of the patentfor KIPRES.
・Decreased in prescriptions of long-listed
drugs.

5

Highlights of Business Performance : ②Operating Income（Units: ¥billion）【Operating Income
Income－2.3】
2.3】
Gross Profit decreased
Net Sales decreased ¥3.8billion year
on y
year.
Cost of sales ratio increased 2.0%.
・Decrease of sales of new ethical drugs
・Increase of sales of Generic drugs
・Increase in loss on retirement of
inventories, etc.

－3.2

3.7

R&D expenses is flat year on
year
・R&D expenses is flat year on year

＋0.8
＋0.1

7.3（Sep/2016）⇒7.2（Sep/2017）

1.4
14

SG&
SG&A (e(excludec ude R&D)Expenses& ) pe ses
decreased
・Decrease of Labor costs, general expenses

Operating
IncomeSep/2016

Gross Profit

R&D
expenses

SG&A
Operating(exclude R&D)
IncomeExpenses

19 8（Sep/2016）⇒19 0（Sep/2017）19.8（Sep/2016）⇒19.0（Sep/2017）

Sep/2017
6

Highlights of Business Performance：③Change (original forecast)
Sep/16（unit : ¥billion）

Sep/17

ChangeChange(%)

Change(original forecast)

54.6

50.8

－3.8

－7.1

－3.8

51.9

48.0

－3.9

－7.6

－3.9

41.6

35.0

－6.6

－16.0

－3.3

Japan

41 3
41.3

34 4
34.4

－6
6.9
9

－16
16.5
5

－1
1.3
3

Overse
as

0.3

0.5

＋0.2

＋52.5

－2.1

10.3

13.0

＋2.7

＋26.0

ー0.5

2.7

2.8

＋.0.1

＋3.3

＋0.1

Cost of Sales

23.8

23.1

－0.7

－2.9

－

SG&A

27.1

26.2

－0.9

－3.5

－

Operating Income

3.7

1.4

－2.3

－60.6

－3.9

Ordinary Income

3.9

1.7

－2.2

－56.8

－3.9

N t IIncome
Net

27
2.7

12
1.2

－1.5
15

－53.8
53 8

－3.3
33

Net Sales

Ethical drugs
gbusiness

Sales of new
ethical drugs

Generic drugs

Healthcare Business■Causes of non-attainment of initial forecasts for net sales and profits announced May 11, 2017
Sales

：New ethical drugs(Japan)
New ethical drugs(Overseas)

・Kipres sales fell short of expectations
・Income
Income relating to out-licensed
out licensed products fell short of forecast in the first half (progress during thecurrent fiscal year is expected)
Generic drugs
・Sales to other companies decreased
Cost of sales：Increase in loss on retirement of inventories, etc.
Extraordinary loss：Expenses of around 400 million yen related to the settlement of a lawsuit for violation of US antitrust laws in connection with an out-licensed
product (Gatifloxacin eyedrops)7

Main Product Sales Update（unit : ¥billion）

Change(Original
forecast)

Sep/16

Sep/17

Flutiform

4.5

5.4

＋0.9

＋19.6

0

Uritos（Kyorin）

3.8

3.6

ー0.2

－4.3

－0.2

－

09
0.9

＋0 9
＋0.9

－

0

11.5

3.9

－7.6

－66.2

－0.8

Kipres for children

6.3

5.1

－1.2

－18.8

－0.4

Pentasa

79
7.9

80
8.0

＋0 1
＋0.1

＋1 2
＋1.2

＋0 1
＋0.1

Mucodyne

4.4

3.9

－0.5

－10.9

＋0.2

MONTELUKAST Tablets “KM”

1.8

5.0

＋3.2

＋177.8＋0.4(Combination drug for asthma treatment)(Overactive bladder)

Desalex(Antiallergic Agent)

Kipres for adult（LT receptor antagonist）（LT receptor antagonist）(Ulcerative colitis and Crohnʼsdiseasetreatment)（Mucoregulant）

ChangeChange(%)

8Trends of mainstay products and Generic drugs

9■New drugs group
Flutiform 【Anti-asthmatic】
Sales （unit : ¥billion）

12.0■ Status in first half 2017

10.1
7.2

ICS/LABA market ： expand 2%
2nd6.6 half（Forecast）¥54.3bln（FY16 first half） ⇒ ¥55.2bln（FY17 first half） ※1

shareshare of Flutiform sales
9.3%（FY16 first half ） ⇒ 11.0%（FY17 first half ） ※2

■ effort for FY2017
Aim to promote understanding of product characteristics

3.6
54
5.4

1st
h lf
half

・ Spraying speed slowly
・The agent nicely penetrates and reaches the peripheral
airways.
Expand the indication of Flutiform to pediatric patients（ＰhⅢ：Jun/2017）※1,2 （ Copyright © 2017 QuintilesIMS. IMS-JPM. Unauthorized copying prohibited ）10■New drugs group
Desalex（ Antiallergic Agent）
 Launch : Nov. 2016
 FY2017 first half sales :¥0.9 billion(forecast :¥0.9 billion )FY2017 Sales (forecast)：¥3.5 billion(FY2016 sales :¥1.0 billion )Promoted co-promotion with Kaken Pharmaceutical Co., Ltd. in dermatology area

Improve the visibility of the product:
Spread the understanding on its effects and usability
・Has a high affinity for histamine H1 receptors and reliably exhibits an effect・Half-life is long, and a single daily dose suppresses symptoms for a long time・Fit patients’ lifestyles because it is non-drowsy and unaffected by foodIncrease prescriptions

Aim for dramatic market penetration after the lifting ofprescription limitations(The prescription restriction will be lifted in December 2017)11

■New drugs group
Kipres 【Bronchial asthma and allergic rhinitis treatment】■Kipres for adult Sales（unit : ¥billion）
25.0

25.6

26.7

28.7

■ Status
St t ini firstfi t hhalf
lf 201717.7

LT antagonists market ： shrink 23％¥56.1bln（FY16 first half） ⇒ ¥43.0bln（FY17 first half） ※1

91
9.1

98
9.8

5.1

（forecast）

3.9（ Actual ）

2nd
half

share off Kipres sales

1st
half

About GE of Pediatric Dosage Form・ GE was released in June 2017
・ GE share is within the assumed range■ Effort for FY2017■Kipres for children Sales （unit : ¥billion）
14.6

14.6

14.5

15.4

38.2%（FY16 first half ） ⇒ 26.5%（FY17 first half ） ※2

Continuously provide accurate information to
doctors prescribing the drug

14.9
10.7

11.1

5.6

2nd
half

5.1

1st
half

（forecast）（ Actual ）Promote it with drugs such as Flutiform and 17.7
Desalex in the category of asthma and rhinitis※1,2 （ Copyright © 2017 QuintilesIMS. IMS-JPM. Unauthorized copying prohibited ）12

■Status of Generic Drugs■Generic drugs Sales（（unit : ¥billion）

25 0
25.0
10.1

12.0

28.0 28.5
15

15.5 15.5（forecast）

13（actual）

Status in first half 2017
2nd
half

1st
half

■Sales of Montelukast AG in sales of generic drugs（unit : ¥billion）

5.7（forecast）

5（actual）（Compared to forecasts +¥400 million）

2017 June supplementary Item
= Aripiprazole Telmisartan etc
etc.
 Takaoka Drug Discovery Laboratory
July of 2017 Start of operations

Effort for FY2017
Actions for an authorized generic drug (AG)10.7 10.3
8.2

Sales of Montelukast AG：¥5billion

2nd
half

1st
half

・・Maintain a high share of Montelukast AG in the GE market
・Consider acquiring new AGs
Mometasone AG approvalExpand sales of strategic products andSupplementary Items
・2017 Deceｍber supplementary Item
=Rosuvastatin Olmesartan

13Consolidated Financial Results
Forecast and Dividends

14Consolidated Financial Results Forecast
for the Year Ending March 31, 2018
※The results forecasts for the fiscal year ending March 31, 2018 announced on May 11, 2017 are revised.

FY2016Y/Y

FY2017（unit : ¥billion）

FY2017

Versus the（revised forecast)

ChangeChange(%)(original forecast)revised forecast

115.4

111.3

－4.1

－3.5

113.4

－2.1

109.6

105.3

－4.3

－3.9

107.4

－2.1

84.5

77.2

－7.3
7.3

－8.7
8.7

78.9

－1.7

Japan

83.8

74.2

－9.6

－11.4

75.5

－1.3

Overseas

0.8

3.0

＋2.2

＋292.7

3.3

－0.3

25.0

28.0

＋3.0

＋11.9

28.5

－0.5

Healthcare Business

5.8

5.9

＋0.1

＋1.6

5.9

0

Operating Income

10.4

10.5

＋0.1

+0.8

12.1

－1.6

Ordinary Income

10 9
10.9

10.9

0

＋0 2
＋0.2

12.6

－1.7
1.7

Net Income

7.3

7.8

＋0.5

＋6.8

9.7

－1.9

Net sales

Ethical drugs
business

Sales ofnew
ethicaldrugs

Generic drugsg■ Main factors behind revision of forecast
Net sales ： New ethical drugs (Japan)･SalesSales forecast for core products（KIPRES
products（KIPRES, etc.）wereetc ）were lowered .
New ethical drugs(Overseas) ・Income relating to out-licensed products (FPR2 agonist）is expected in thesecond half of the current fiscal year .
Generic drugs
・Forecast for sales to other companies was lowered.
Operatung income ：〔Cost of sales〕 Loss on retirement of inventories, etc. was revised (reduction expected in the second half)〔〔R&D〕& 〕 400
00 milliono higherg e thana initiallya ya
anticipatedc pa ed (original(o g a forecast
o ecas ¥12.6
6bbilliono →revised
e sed forecast
o ecas ¥13.0
30bbillion）
o ）■Main factors in year-on-year change(i) No change in cost of sales ratio year on year;(ii) Decrease in R&D expenses (expected to fall 600 million yen year on year to 13,000 million yen);(iii) Reduction in SG&A
expenses (decrease in SG&A ratio (excluding R&D expenses) of around 0.5% );(iv) gain of approximately 600 million yen as a result of transfer of shares of Dr. Program Co., Ltd.
recorded under extraordinary income and class action settlement expenses of approximately 400 million yen relating to Gatifloxacin eye drops recorded under extraordinary loss.

15

Forecast of Mainstay Product Sales※The results forecasts for the fiscal year ending March 31, 2018 announced on May 11, 2017 are revised.
Y/Y

FY2017（unit : ¥billion）

FY2017

Versus therevised forecast

FY2016（revised（
forecast）

ChangeChange(%)((originali i l
forecast)

10 1
10.1

12.0

＋1.9

＋19.9

12.0

―

Uritos（Kyorin）

7.5

7.3

－0.2

－1.8

7.6

－0.3

D
Desalex
l

1.0

3.5

＋2.5

＋262.3

3.5―

Kipres for adult

17.7

9.1

－8.6

－48.9

9.8

－0.7

Kipres for children

14.9

10.7

－4.2

－27.8

11.1

－0.4

Pentasa

15 5
15.5

15 6
15.6

＋0 1
＋0.1

＋1 0
＋1.0

15 6
15.6

0

Mucodyne

9.9

8.4

－1.5

－14.4

8.3

＋0.1

MONTELUKAST Tablets “KM”

8.2

10.7

＋2.5

＋30.4

10.3

＋0.4

Flutiform(Combination drug for asthma
treatment)(Overactive bladder)(Antiallergic Agent)（LT receptor antagonist）（LT receptor antagonist）(Ulcerative(Ulticolitisliti andd Crohnʼs
C h ʼ
diseasetreatment)（Mucoregulant）

Change16

Shareholder Returns
Basic Policy-While maintaining
g the sound financial base, adopt the capital policyy ensuring
g both
growth investment and stable return to shareholders.
- In shareholders return, aim for stable dividends.
Dividend per share for fiscal 2017 (estimate): ¥58 (including Year-end dividend of ¥38)

Dividends

Dividend pershare (Yen)Consolidated
payout ratio(%)

FY15

FY16

FY17（forecast）¥58.00¥58.00¥58.00（Year-end ¥38.00）（Year-end ¥38.00）（Year-end ¥38.00）

31.8%

59.3%

55.6%

17

St t off development
Statusdlt pipeline
i li

18

Drug Development Pipeline
The previous announcement（2017/5/12）
PhⅠ

Product & development code

Ad-SGE-REIC

Respiratory

PhⅡ

PhⅢ

2017/4

KRP-AM1977Y

2016/3

KRP-209

Otolaryngolo
gicalApproval/ Launch

2015/7

KRP-AM1977X

Infections

application

2015/8Desalexl

Urological

KRP-114V

End of the Ph3

KRP-116D
KRP
116D

17年3⽉PhⅢ開始

Preparing forApplication【 Licensing development】
開発コード

導出先

開発段階

特徴

FPR2 agonist program

BMS

Preclinical

FPR-2 agonists that mainly inhibit the
migration of neutrophils and exhibit anti-inflammatory action.
Therapy area：Non-disclosure

KRP-203

Novartis

PhⅠ

Sphingosine-1-Phosphate Receptor Agonist .
Therapy area：GvHD

19

Drug Development Pipeline
schedule of FY17

PhⅠ

Product & development code

Ad-SGE-REIC

Respiratory

PhⅡ

PhⅢ

2017/6

KRP-AM1977X

2017/4

KRP-AM1977Y

2016/3

KRP-114V
KRP
114V

UrologicalApproval/ Launch

15/7

KRP-108P

Infections

application

2017/9KRP-116D

2017/3※For KRP-AM1977X additional nonclinical studies are required and will be carried out.
※KRP 209 W therefore※KRP-209:We
th f
decidedd id d tto didiscontinue
ti
th
the d
development.
lt【 Licensing development】
開発コード

導出先

開発段階

特徴

FPR2 agonist program

BMS

Preclinical

FPR-2 agonists that mainly inhibit the
migration of neutrophils and exhibit anti-inflammatory action.
Therapy area：Non-disclosure

KRP-203
KRP
203

Novartis

PhⅠ

Sphingosine-1-Phosphate Receptor Agonist .
Therapy area：GvHD
G HD

20

Overactive bladder treatment ｢KRP-114V｣
Generic name ： Vibegron【Positioning】
β3 agonists, the class to which this product belongs, may be widely prescribed together with
anticholinergic drugs in the treatment of overactive bladder.
【 Features 】- Expectation of high compliance in taking medicine with less side effects than theconventional drugs for overactive bladder- Reduction of drug interaction as a β 3 receptor agonist is expected※C D※Co-Development
l
t and
dC
Co-MarketingM k ti A
Agreementt with
ith Kissei
Ki
i Ph
Pharmaceuticalti l C
Co., Ltd
Ltd. affiliate
ffili t . (3/2016)

Status of develpoment
Application（2017/9）（20 /9）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.

Maximization of efforts for early acquisition of marketing approvaland market introduction
21

Antibacterial agent｢KRP-AM1977X｣「KRP-AM1977Y」
Generic name : Lascufloxacin （LSFX ）【 Features 】
・Has a powerful antimicrobial activity compared with other same-class drugs against causative
organisms of respiratory and otorhinolaryngological infections, including anaerobic bacteria.
・showed a penetration into the excellent lung・High safety (abnormal blood glucose level, photosensitivity, digestive symptom, etc.) is expected.
Status of development
development：KRP-AM1977XKRP AM1977X (Oral agent)Application(announced in April 2017)◆High levels of efficacy and safety in the treatment of
respiratory and otorhinolaryngological infections have beenverified and outstanding clinical effectiveness is expected.

Status of development
development：KRP-AM1977YKRP AM1977Y (Injection)
Clinical trials:Ph3 Results (announced in November 2017)◆In a phase III clinical study, efficacy and safety in the treatmentof community-acquired pneumonia, secondary infection ofchronic respiratory disease, aspiration pneumonia, lungsuppuration and lung abscess were verified.

As a result of talks with the Pharmaceuticals andMedical Devices Agency (PMDA), a decision tocarry out non-clinical studies was made((announcedd in
i JulyJ l 2017).
2017)

22

Tinnitus treatment agent : KRP-209＜Tinnitus treatment agent : KRP
KRP-209＞209＞■ Status
St t off ddevelopmentlt ： DiscontinuedDiti
d developmentdlt
We couldW
ld nott confirm
fitheth expectedt d efficacy
ffi
ffrom ththe results
lt off theth POC studyt d(Phase II clinical study) involving a specific patient group with tinnitus, which
was conducted again starting from August 2015. We therefore decided to
discontinue the development.

23

TOPIC ①

In Vitro Diagnostics business

24

Diagnosis business taking advantage of GeneSoC, an ultra-high-speed
device for determining the number of gene copies■Environmental change surrounding infectious diseases
・Promotion of appropriate use of antimicrobial drugs (antibacterial agents, antiviral agents, etc.)
・Increasing needs of diagnostic methods capable of identifying causative organisms in a quick, accurate, and convenientmanner in clinical practice■Product features of GeneSoC, an ultra-high-speed device for determining

the number of gene copies

Rapid gene detection based on ultrafast quantitative PCR * technology (5 to 6 minutes)
・Rapid・ Highly sensitive detection can be achieved with a trace amount of sample
just after infection
・Downsized desktop PCR device in consideration of POCT *PCR ：Polymerase chain reaction. A technique to amplify genes.
POCT：Testing conducted by healthcare professionals beside the subject. With advantages that the testing time can be shortened and the subject can find the testing familiar,

GeneSoC, an ultra-high-speed device fordetermining the number of gene copies

it contributes to prompt and appropriate medical care, nursing, and disease prevention as well as health promotion, resulting in improvement in the quality of medical care and the quality of life of the subject.

To identify bacteria causing infectious diseases through POCT and
improve treatment by selecting an appropriate antibacterial drug

■Our group's efforts in the field of infectious diseases
Diagnosis■GeneSoC

Prevention

Treatment

Environmental hygiene

Ethical drugs■Rubysta,y, Milton,,products for hand hygiene■KRP-AM1977X/Y,/ ,Baccidal tablet

In addition to prevention and treatment, we aim to enter the diagnosis-related
business to increase our presence in the field of infectious disease

25

TOPIC ②

Consolidation of Group Production Functions

26

Consolidation of Group Production Functions
At the leveling of capacity utilization and the efficient use of assets, and thebuilding of a competitive Group production structure for consistently providing
high-quality
highquality products at low cost.
cost
KYORIN Pharmaceutical

KYORIN Rimedio

KYORIN Pharmaceutical Facilities

Noshiro Plant(Akita Pref.)Inami Plant(Toyama Pref.)（ Shiga Pref.）Establishment of a new manufacturing Subsidiary（October/2017）
The plans to consolidate production functions in April 2018.
【Profile of new manufacturing subsidiary】
・Name：KYORIN
Name：KYORIN Pharmaceutical Group Facilities Co
Co., LtdLtd.
・Head office ： 6,Kanda Surugadai 4-Chome Chiyoda-ku,Tokyo・Establishment date : October 2,201727