Presentation ofMarch 2010 Financial Results
and
d New
N
M
MediumMediumdi-Term
T
Business
B i
Plan
Pl

May 13, 2010
KYORIN Co., Ltd.
Representative Director, President andChief Executive Officer Masahiro Yamashita

Contents■Outline of Consolidated Financial Results for theYear Ended March 31, 2010
■Medium-Term Business Plan (Fiscal 2005～2009）
Summary of Kyorin MIC-09 Plan
■New Medium-Term Business Plan (Fiscal 2010～2015)
Introducing "HOPE 100 －Stage 1－"1Outline of Consolidated Financial Results for theYear Ended March 31, 2010
Units： ¥ billion

FY08

FY09

Net sales

90.9

99.8

＋8.9

9.8% inc.

Operatingincome

9.0

13.3

＋4.3

48.1% inc.

Ordinary
income

9.2

14.2

＋5.0

54.6% inc.

N t iincome
Net

20
2.0

88
8.8

＋6 8
＋6.8

334 3% iinc.
334.3%

Change% Change2

Consolidated Financial Results for the Year Ended
March 31, 2010 (Breakdown of Sales)
Unit: ¥ billion

FY2008FY2009ChangeTotal net sales

90.9

99.8

＋8.9

◆New dr
◆Ne
drugs
gs
○Japan○Overseas

75.7
75
7
71.9
3.8

82.4
82
4
79.8
2.6

＋6.7
＋6
7
＋7.9
▲1.2

◆Generics

6.3

8.6

＋2.3

◆Healthcare

7.7

7.2

▲0.5

1.2

1.6

＋0.4

◆OtherSales of Main Products

Unit: ¥ billion

FY08

FY09

ChangeKi
Kipres

25 2
25.2

29 2
29.2

＋4 0
＋4.0

Mucodyne

20.6

20.9

＋0.3

Pentasa

15.7

19.4

＋3.7

Uritos

20
2.0

37
3.7

＋1 7
＋1.7

Breakdown of Sales【New ethical drugs in Japan】 ＋¥7.9 billion
・Sales of mainstay products progressed favorably【New ethical drugs overseas】 ▲¥1.2 billion
・Sales of Gatifloxacin ophthalmic solution and ActivX decreased【Generic drugs】＋¥2.3 billion

・Sales of products introduced in fiscal 2008 and 2009 and main products increased.
・Change in closing date for KYORIN Rimedio Co., Ltd. (period included in consolidation: 14 months)

3

Consolidated Financial Results for Year Ended
March 31, 2010 (Breakdown of Gain and Loss)
Unit: ¥ billion

FY08

FY09

ChangeNet sales

90.9

99.8

＋8.9

Cost of sales

36.8

37.5

＋0.7

SG&A

45.1

49.0

＋3.9

R&D expenses

10 5
10.5

11 8
11.8

＋1 3
＋1.3

SG&A expenses(excluding R&D expenses)

34.6

37.2

＋2.6

Operating income

90
9.0

13 3
13.3

＋4 3
＋4.3

Ordinary income

9.2

14.2

＋5.0

Net income

2.0

8.8

＋6.8

ChangeUp ¥8.2 billion

Up ¥1.3 billion
R&D
expensesGrossprofitUp ¥2.6 billion

SG&A expenses(excluding
R&D expenses)

p ¥4.3 billion
Up

Operating
IncomeOperating income
increased ¥4.3 billion

Scheduled Annual Dividend： ¥50 (interim ¥10; year-end ¥40)
Breakdown of Gain and Loss

○Operating income increased ¥4.3
¥4 3 billion
・Gross profit increase ¥8.2 billion
Net sales increased by ¥8.9 billion, while cost of sales rose only ¥0.7 billion (due to in-house production of Pentasa
and increased sales of Uritos, which has a low cost of sales, cost of sales ratio improved by 2.9 points to 37.6 %).

・SG&A expenses increased ¥3¥3.9
9 billion
billion, mainly due to the merger with Nisshin Kyorin
Pharmaceutical Co., Ltd.
R&D expenses increased ¥1.3 billion. SG&A expenses(excluding R&D expenses) increased ¥2.6 billion (SG&A ratio(excluding R&D expenses) decreased by 0.8 percentage points)

4

Results of Main Subsidiaries
Unit: ¥ billion

KYORIN
Pharmaceutical

FY08

FY09

FY10 (Forecast)

Net sales

78.0

85.3

87.3

Operating income

8.5

13.1

12.3

N t iincome
Net

40
4.0

95
9.5

84
8.4

Year ended Jan.
2009

Year ended Mar. 2010 ※2

Year ending Mar. 2011
(Forecast)

Net sales

74
7.4

10 1
10.1

89
8.9

Operating income

▲0.4

0.4

0.2

Net income

▲0.6

0.4

0.1

Year ended Mar.
2009※1

Year ended Mar. 2010

Year ending Mar. 2011
(Forecast)

Net sales

4.1

3.3

3.7

Operating income

0.1

▲0.1

0.2

Net income

0.1

▲0.1

0.2

KYORIN Rimedio

Dr. Program※1 Due to a change in the closing date of Dr※1.
Dr. Program Co
Co., Ltd
Ltd., the businessresults for the fiscal year ended March 2009 covered a 14-month period.
※2. Due to a change in the closing date of KYORIN Rimedio, the business results
for the fiscal year ended March 2010 covered a 14-month period.

5Consolidated Financial Results Forecast for theYear Ending March 31, 2011
Unit: ¥ billion
FY09(Actual)FY10(Forecast)

ChangeTotal net sales

99.8

100.3

＋0.5

◆Ethical Drugs Business

91.0

91.9

＋0.9

◆Consumer Healthcare
Business and others

87
8.7

83
8.3

▲0 4
▲0.4

Operating income

13.3

12.7

▲0.6

Ordinary income

14.2

13.4

▲0.8

Net income

8.8

8.5

▲0.3

Forecast of Sales of Main Products
Unit: ¥ billion
FY09((Actual))

FY10((Forecast))

ChangeKipres

29.2

31.4

＋2.2

M
Mucodyne
d

20 9
20.9

21 4
21.4

＋0 5
＋0.5

Pentasa

19.4

20.1

＋0.7

Uritos

3.7

5.1

＋1.4

Breakdown of Sales and Operating Income【【Net
Sales】】◆Ethical drugs business
New ethical drugs in Japan ＋¥2.7 billion ・Growth in main products expected to exceed drug price revisions (6% level)
New ethical drugs overseas ▲¥0.8 billion ・Decrease in sales of Gatifloxacin ophthalmic solution
Generic drugs▲¥1 0 billion ・Impact▲¥1.0
Impact of change in closing date for KYORIN Rimedio (Period incl
included
ded in fiscal
2009 consolidation: 14 months)◆Consumer healthcare business and other businesses
・Impact of change in closing date for Kyobundo Co., Ltd. (Period included in fiscal 2009 consolidation: 13 months)【Operating【pg Income】】
・Work to reduce cost of sales ratio, expect to increase gross profit (cost of sales ratio down by approx. 1 percentage point)
・R&D expenses up ¥1.6 billion from ¥11.8 billion to ¥13.4 billion (KRP-108 development, clinical trials for KRP-209（Neramexane）, etc.)
・SG&A ratio excluding R&D expenses expected to remain relatively flat year on year

6

Summary of Kyorin MIC-09
Medium-Term Business Plan
(Fiscal 2005～2009)7

Kyorin MIC-09 Plan －Overview－
The AimBecome an integrated
integrated, trusted and unique healthcareorganization centered on global drug discovery operations.
Basic Strategy
1. Establish KYORIN as a global drug discovery company①

Establish global drug discovery system (discovery of late-stage
development compounds)②

Actively develop alliances

2. Increase competitiveness to support investments in drug discovery operations①

Strengthen competitiveness of business base in Japan②

Maximize revenues from new drug Uritos③

Promote alliance strategy, including M&A (in(in-licensing,
licensing, collaboration)

3. Develop new business that build on the foundation of the pharmaceuticals
business and contribute to future growth
FC: Franchise customer

8

Major Developments Over the 5-Year Period
Group Developments

FY05

・Toyo Pharma becomes a subsidiary (05.5)
・Dr. Program becomes a subsidiary (05.6)
・Shift to holding company structure (06.3)

Product Developments
・Uritos licensed to LGLS (South Korea) (05.10)
・KRP-203 licensed to Novartis (06.2)

FY06

・Sales of Tequin stopped (06.6)
・RapidRapid Tester in-licensed from Daiichi Chemical Pharma (06.9)(06 9)FY07

・HES business transferred to FK (07.4)
・Uritos launched (07.6)
・Kipres fine granules 4mg launched (07.10)
・MiltonMilt CP launchedlh d (08.1)(08 1)
・Pentasa receives approval for juvenile use (08.2)
・Kipres approved for secondary indication of adult allergic rhinitis (08.1)
・KYORIN Pharmaceutical merges
g with Nisshin KyorinyPharmaceutical (08.10)

FY08・Kipresptablet 5mg
g launched ((08.4))
・KRP-108 in-licensed from SkyPharma (08.4)
・Pentasa tablet 500mg launched (08.10)
・Pentasa tablet receives approval for administration of 4g during periods ofactive UC (08.12)
・Uritos licensed to SPIMACO (13 countries in the Middle East and North
Africa) (09.2)
・ Sales of GATIFLO tablets stopped (08.9)

FY09・Gatifloxacin
Gatifloxacin ophthalmic solution licensed to Senju (China) (09(09.7)
7)
・Uritos licensed to Eisai (China, ASEAN countries, India, Sri Lanka) (09.9)
・KRP-209 in-licensed from Merz (09.11)

9Results and Evaluation

ROE
Consolidated net sales(target)Late-Stage
Late
Stage Compounds(produced in-house)

MIC-09 Target

MIC-09 Outcome(FY08)

MIC-09 Initial(FY03)

7%

8.8%

2.2%

¥100.0 billion¥99.8 billion¥66.3 billion

1 per year

2
(KRP-204 for obesity, KRP104)

Evaluation○ Achieved most p
performance targets,
g , includingg exceedingg targetg ROE○ Challenges remain in terms of establishing a global drug discovery systemand creating new businesses

10

KYORIN Pharmaceutical GroupNew Medium-Term Business Plan

HOPE 100 －Stage 1－(Fiscal 2010～2015)11

Positioning and Composition

Corporate Philosophy
Long-Term Vision HOPE 100 (Fiscal 2010～2023)

New Medium-Term Business Plan
HOPE 100 －Stage 1－ (Fiscal 2010～2015)
事業戦略（S）
事業戦略（） (S)
Business
Strategy
Strategy

組織化戦略（O）
Organization
Strategy (O)Organization

Performance
成果目標（P）
成果目標（
Targets (P)）
Performance

12

KYORIN Pharmaceutical Group
Long-Term VisionCorporate Philosophy

KYORIN's corporate philosophy is to cherish life and benefit society bycontributing to better health

Our Vision for KYORIN As We Reach Our 100th Anniversary【Statement】
The KYORIN Pharmaceutical Group will promote multi-cored businessexpansion and development centering on the Consumer Healthcare
y 2023 be recognizedgboth within and outside the Groupp as aBusiness,, and bycompany that supports sound and healthy lifestyles.

「HOPE 100」
Aim for Health Of People and our Enterprises
13Overview of Long-Term Vision "HOPE 100"

【Five HOPEs】 An International Company that Supports
Healthy Lifestyles Around the World・Be a company that contributes to people's health throughthe Consumer Healthcare Business・Be a company that promotes business expansion overseas

A Company That
S t i Growth
Sustains
Gth・Be a company that maintains
positive business results andpexcellent financial standing

An Innovative Company
The Leading Company for That Customers Trust
Career Fulfillment
・Be a company that is well-regarded
・Be a company
p y employees
p ycan beproud of, have trust in, and makeunited efforts forfor its products and services andpractices excellent Monozukuri
・Be a company with a positive brand
image

A Company That Seeks
to Co-Exist With Society・BeBe a company that works to foster positive
relationships with society
・Be a company that acts with the social good in mind

14

New Medium-Term Business Plan
"HOPE 100 －Stage 1－"

Business Strategy（S）
Strategy

15

Business Strategy (Strategy)

Multi-Core Strategy (MC Strategy)－Diversify
y the Consumer Healthcare Business Centeringg on the Ethical Drugg Business－

Ethical Drug BusinessC
Consumer
H
HealthcarelthB
Businessi

Pharma Complex Model(PC model)d l)Multi-facetedMultifaceted business development

Cultivate existing businesses andcreate new businesses(New drugs, original drugs,
generic drugs)
g
g )
16

Pharma Complex Model （PC Model）

Aim to achieve sustainable growth in the ethical drugs
business through multi-faceted business development
New drugs group：
Maximize uptake of Kipres, Uritos, bring KRP-108 to market, and out-license KRP-104
Original products group：
Use LCM to raise value of focus products (Mucodyne, Pentasa) and extend lifecycle

Generic drugs group：
Expand by strengthening collaboration within the KYORIN Pharmaceutical Group andbyyppromotingg external alliances

LCM： Life Cycle Management

17New Drugs Group: Kipres
・Once-a-day oral administration, little drowsiness・In addition to adult and juvenile asthma, expand prescriptions for added
effectiveness for allergic rhinitis (perennial and seasonal)■ Projected Demand for
Fiscal 2015 (Internal)■Target sales: ¥40.0 billion or higher(¥ billion)

45
40
Asthma喘息

アレ ギ Rhinitis
アレルギｰ性鼻炎
性鼻炎
Allergic(LT（LT拮抗剤）
antagonists)(Latent
market for LT antagonists)（LT拮抗剤の潜在需要）

Over
1,000億円, ¥100.0
億円
billionOverbillion2,000
2,000億円以上, ¥200.0
億円以上
億円以

35
30

Allergic rhinitis¥40.0 billion

Asthma¥29.2 billion¥15.0 billion¥5.0 billion

25
20
15

Approx. 30% share
Approxof LT antagonist market（as of March 31, 2010）

10

¥24.2
billion¥25.0
billion

FY09

FY15 (Forecast)

5
0

18

New Drugs Group: Uritos
・Twice-a-day administration for nocturia; safe, dose adjustment
・Bring OD （orally disintegrating） tablet to market (during fiscal 2010)
・Emergence
Emergence of overactive bladder (OAB) patients■ Projected Demand for Anticholinergic
Agents in Fiscal 2015 (Internal)(¥ billion)

No. patients being treatedwith anticholinergic agents

120

2009

2015

(¥ billion)

1.2 million
people2.4 million
people120
12¥100.0 billion

100

Market total
Imidafenacin

8060■Target sales for Uritos: ¥10.0 billion or higher

10
100

808
606

¥55.0 billion

40

404

20

202

¥10.0
billion¥3.7
billion

0
FY09

FY15

(Forecast)

FY09

FY15 (Forecast)

19

New Drugs Group: KRP-108（Flutiform）
・Development status: Aim to apply in fiscal 2012 and bring to market in fiscal 2014
・Optimal combination of ICS (fluticasone ) and LABA (formoterol )・OptimalOptimal device
Market situation: market for combination
product (ICS/LABA)p() currently
y expandingp
g rapidly
p y(¥ billion) 800
80

700
70
600
60
500
50
400
40
300
30
200
20
100
10
0

2001

2002

2003

吸入ステロイド
Inhaled steroid

2004

2005

2006

2007

長時間作用型β刺激剤
Long-acting β2 agonist

2008

2009

配合剤
Combination productAs a best-in-class combination product,
we expect Flutiform to become a main product20

Target Sales for New Drugs Group(¥ billion)

Total for Kipres, Uritos and KRP-108

60
50
40

¥50.0
billion

30
20

¥32.9
billion

10
0

FY09

FY15 (Forecast)21

Deploying
ep oy g thet e PCC Modelode－Original Drugs Group－

22Original Drugs Group: Mucodyne
・Since the launch of Mucodyne in 1981, we have pursued calculated, ongoing LCM
・In May, we launched a further improved formulation (Mucodyne DS50%) to meet patient needs(convenience, indications, etc.)(¥ billion)

LCM： Life Cycle Management25

Release of DS50%
PEACE Study
Featured in LANCET

20

2001: Launched DS
1994: Launched K10

15

1988: Additional indication for
otitis media with effusion Additionindication for chronic sinusitis

10

1996: Launched 500mg tablet

1987 L
1987:
Launched
h d 5% syrup
Launched fine granules

5

1981: Launched 250 mg tablet
Launched 2% syrup

9
Fiscal Year

Source: KYORIN business results

Original Drugs Group: Mucodyne
・Maximize uptake of new formulation (DS50%) for patients from juveniles to adults
・Increase prescriptions for chronic conditions (PEACE Study, etc.)■Target sales: ¥24.0 billion or higher(¥ billion)30¥24.0 billion
25
DS50%

¥20 9 billion
¥20.9
20

¥3.8 billion

DS33.3%¥11.5 billion
Other formulation

15

10¥17 1 billion¥17.1¥12.5 billion

5
0
FY09

FY15

(Forecast)24Original Products Group: Pentasa【Establish LCM and basic prescription for ulcerative colitis】
・Promote adoption of 500 mg tablet and popularize prescription of 4g for active periods
・Promote simultaneous use of intestinal infusion to induce and maintain remission
・Promote once-a-day administration (during treatment)～Improve compliance and maintenance of remission■ Fiscal 2015 market trends (Internal)
Forecasting growth of over 5%
per year for mesalazine
formulations■Target sales: ¥19.0 billion or higher(¥ billion)
25
20¥19.3 billion¥19 0 billion
¥19.0
billi

15
Intestinal infusion

Increased competition due tointroduction of competingproducts (identicalingredients)

10

500 mg tablet
250 mg tablet

5
0
FY09

FY15

(Forecast)25

Target Sales for Original Products

Total for Mucodyne,yPentasa and Others(¥ billion)

60
50
40
30
20

¥49.5
billion

¥50.0
billi
billion

10
0

FY09

FY15 (Forecast)26

Deploying the PC Model－Generic Drugs
g Group－p27

Generic Drugs GroupStrengthen collaboration within the Group and promote external alliances
・Integrate the KYORIN Rimedio wholesale channels (logistics) into
KYORIN Pharmaceutical・Expand number of items added (more than 40 items/6 years）
・Build an optimal production framework
・ReduceR dcostt off salesl (below(b l
60%)
・Consider working on biosimilar products■T■Targett sales:l
A
Aroundd ¥20.0¥20 0 billion
billi(¥ billion)
25
20
15

¥20.0
¥20
0
billion

10
5¥8.6
billion0

FY09

FY15 (Forecast)28

Diagram of Ethical Drugs Business
Activity Under the PC Model
PC ModelRespiratory

FC(Franchise
Customer)S
Strategy
CommonPlatform

New
Drugs
g
Group

Otolaryngological
Urological
Other

Original
Products
Group

Generic
Drugs
g
Group

Integration of wholesale sales channels
Consider optimization of production framework

Deploy a flexible strategy that can address changes in the environment(including functional reorganization of KYORIN Pharmaceutical and KYORIN Rimedio)
29

Target Sales for Ethical Drug Business (Summary)(¥ billion)¥120.0billion

140
120
100
80
60

¥91.0
billion¥20 0 billion¥20.0¥8.6 billion¥50.0 billion¥49.5 billion

4020¥50.0 billion¥32.9 billion

FY09■Generic drugsggroup■Original drugs
group
Mucodyne
Pentasa, etc.
■New drugs
group
Kipres
UritosKRP-108

FY15 (Forecast)30

Enhancing the Pipeline (New drugs group)

HOPE100－Stage 1－
Fiscal 2010～2015

HOPE100－Stage2－
Fiscal 2016～2019
AS-3201

LCM for existing products(Treatment for complicationsof diabetes)

KRP-108

KRP-209(Asthma treatment)(Tinnitus treatment)

KRP-104

KRP-203(Anti-diabetes agent)(Immunosuppressant)HOPE100－Stage 3－
Fiscal 2020～2023
Global, original
drug discovery

KRP 110
KRP-110(Constipation/intractablepruritus treatment)

Antibacterial agents

Aim to secure in-licensed drugs
g and promotepalliances31

Consumer Healthcare Business32

Consumer Healthcare Business
Adopt a multi-core strategy in the Consumer Healthcare
Business to complementprisks in the ethical drugg business andachieve sustainable growth for the GroupSkincare Business：
Make business profitable and promote growth (including developmentin 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 canbecome the core of the company in the future
Target domains for new businesses
Ethical drug related markets

Consumer market
33

Target Sales for the Consumer Healthcare Business(¥ billion)25¥20.0 billion
20■New Businesses

1510¥8.7 billion■Existing Businesses
・Skincare business・MiltonMilt bbusiness,
i
etc.
t

5
0

FY09

FY15

(Forecast)

34

New Medium-Term Business Plan
"HOPE 100 －Stage 1 －"OrganizationgStrategygy (O)( )Organization

35

Organization Strategy“A business is as good as its people” (the founding spirit of KYORIN)
People-orientedpmanagementg

Be a company where employees at all Group companies can feel fulfilled
Be a company employees can be proud of, have trust in, and make united efforts for・Rebuild human resource management (hiring, training, evaluation, promotion,
assignment, compensation, benefits)・Vitalize communication, etc.

Harness the capabilities of eachand every employee

Work together towarda shared goal

Vitalize people and organizations to work committedly for results
36Onbashira: Raising a Pillar Together

37

New Medium-Term Business Plan
"HOPE 100 －Stage 1－"

Performance Targetsg（（P））

Performance38Performance

Fiscal 2009Management Indicator

Fiscal 2015
Management Indicator

OutcomeConsolidated net sales
Ethical Drugs
g Business
HC Business¥99.8 billion¥91.0 billion¥8.7 billion

Operatingpg income¥13.3 billion

TargetConsolidated net sales
Ethical Drugs Business
HC Business¥140.0 billion¥120.0 billion¥20 0 billion¥20.0

Operating income¥20.0 billion

HC： Healthcare

39

Investment and Shareholder Returns
We aim to achieve a good balance among investment for growth, ongoing
business investment for business continuity, and shareholder returns inorder to strengthen our management base
base.

Payout ratio： target of 30%

Shareholder
株主還元
returns

Investment
成長投資
for growth
Secure in-licensed drugs
Invest in new businesses

Ongoingbusiness
事業継続投資investment
Normalo a capex
capeInternal reserves (funds in on hand for risk management, corporate
pensions, health insurance)40