Annual Report 2019Year Ended March 31, 2019

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

Contents

01

04

Contents

09

Management Message

04

02

A Message from the
President

About NIPRO
Businesses

02

Financial Highlights

03

Medical-Related Business

09

Financial Review

24

Pharmaceutical-Related Business

11

Ten-Year Summary

28

PharmaPackaging Business

13

Consolidated Balance Sheets

30

Consolidated Statements of Income

31

Consolidated Statements ofComprehensive Income

31

Consolidated Statements of
Changes in Net Assets

32

Consolidated Statements of Cash Flows

33

Notes to Consolidated
Financial Statements

34

Corporate Information

52

Management Foundation

A Message from the
CFO

Research and Development Activities

15

Progress of Research and Development

16

Status of Corporate Governance19

Outside Directors’ Messages

21

Board of Directors and Audit &Supervisory Board Members

22

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This report contains forward-looking statements regarding business indices,
strategies and performance representing the expectations and judgments of the
management, based on information available to the Company and publishable at thetime this report was prepared. When reading this report, please understand thatforward-looking statements involve potential risks and uncertainties; actual futurebusiness performance and forecasts may therefore differ materially from thosecontained in these statements, given the possible emergence of new factors orchanges in economic circumstances and/or the business environment.
In this report, fiscal 2019 represents the year ended March 31, 2019.

NIPRO Annual Report 201901

Contents

About NIPRO⦁ Businesses⦁ Financial Highlights

Management
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

About NIPRO

Businesses
We Meet the Needs ofMedical Professionals
and Patients throughOur Three Businesses
Sales ratio by businessPharmaPackaging
Business

Medical-Related
Business

PharmaceuticalRelated BusinessPharmaPackaging
Business

Nipro engages globally in the development,
manufacture, and sale of medical
equipment for injection-infusion anddialysis treatment, and products related
to diabetes and cell cultures, as well as
the sale of artificial organ-related products.

One of the world’s leading CDMO*
companies, Nipro performs contract
manufacturing of orally administered drugs,
injectables, and external preparations
through its Pharmaceutical-Related
business, and supplies products topharmaceutical companies in Japan andaround the world.

Nipro’s PharmaPackaging business, a partof the company since its founding,manufactures and sells glass products
and other comprehensive pharmaceuticalpackaging. Currently, Nipro engages inthis business globally from a base of 14
companies and 14 plants in 8 countries,
focused on Japan, China, Europe, and the U.S.

8%

* Contract Development and Manufacturing Organization

15%
Fiscal 2019

Renal
Products

Injectables

Glass
Converting

Injection
Products

OrallyAdministered
Drugs

Glass Tubing

Infusion
Products

External
Preparations

Device77%

PharmaceuticalRelated BusinessTotal sales

Medical-Related
Business¥426,399 million

NIPRO Annual Report 201902

About NIPRO

Contents

Management
Message⦁ Businesses⦁ Financial Highlights

Review ofOperations

Management
Foundation

Financial/
Data Section

About NIPRO

Financial Highlights
Net sales

Operating income

426,399

million of yen

23,827

Net income attributable to owners of parent

12,136

million of yen

R&D expenses

16,526

million of yen

million of yen

Net sales increased 7.8% from fiscal 2018
due to favorable Medical-Related andPharmaceutical-Related sales.

Operating income decreased 12.0% fromfiscal 2018 due to drug price revisions, andsignificantly increased internal profit
elimination and R&D.

Despite increasing income tax expensedeferred, net income attribute to owners ofparent increased 2.5% due to decreased
extraordinary losses.

R&D expenses increased 2.6% from fiscal
2018 mainly due to the development ofregenerative medicine.

(Millions of yen)

(Millions of yen)

(Millions of yen)

(Millions of yen)

325,084

366,650

359,699395,397426,399

28,77024,20527,08819,71912,47016,572

2015

2016

2017

2018

2019

Capital expenditures

56,276

2015

2016

2017

2018

2019

Total assets / Equity ratio

845,821

Capital expenditures decreased 2.5% fromfiscal 2018 mainly due to investments indomestic and foreign manufacturing facilities.
(Millions of yen)

2015

2016

11,346

11,82912,136

2017

2018

2019

Net assets / Return on equity

Total assets:

million of yen

16,113

16,52620182019

23,827

Total assets increased by ¥19,374 million fromfiscal 2018 and the equity ratio stood at 19.1%.

7.3

2015

10,269

2016

28.0

%

Return on equity increased 0.3 percentage
points from fiscal 2018 due to an increase in
net income attribute to owners of parent.

Total assets (Millions of yen)

Net assets (Millions of yen)

Equity ratio (%)

Return on equity (%)

11,5172017

Cash dividends per share

ROE:
million of yen

8,646

yen

Nipro paid ¥28.0 per share for the year,
including an interim dividend of ¥19.0 per year.

(Yen)

11.8

43,511

2015

49,9102016

53,826

2017

57,718

2018

56,276

2019752,839826,759

845,821695,307

708,883

24.1

23.4

22.1

20.9

19.1

2015

2016

2017

2018

2019

178,810

175,508

176,408

183,485

6.8

7.0

7.3

2017

2018

2019

8.5

2015

2016

171,830

32.5

2015

33.5

2016

29.0

28.5

28.0

2017

2018

2019

NIPRO Annual Report 201903

Contents

About NIPROManagement
Message

Review ofOperations

⦁ A Message from the President
⦁ A Message from the CFOManagement
Foundation

Financial/
Data Section

Management Message

A Message from the President
Successful increase in revenue in all segments and regions
Sales for the fiscal year ended March 2020 increased by 7.8% from the previous
period, to ¥426,399 million. We have achieved an increase in revenue, both in Japanand overseas, in our Medical-Related business, Pharmaceutical-Related business, andPharmaPackaging business. However, we could not achieve the increased rate ofrevenue expected at the beginning of this fiscal year, which has been a concern in thisyear. We aim to further increase the revenue in the next period, as such we will analyze
issues in each business.

“Achieving businessIn terms of the Medical-Related business, sales increased by 9.1% over theprevious period, to ¥327,359 million. Dialyzer, our main product, sold well both inJapan and overseas, and production at present is struggling to keep up with thegoals by further

increasing demands. In North America, sales got on track through the Canadian agent,

accelerating global

contract with a major dialysis provider in the United States. We can thus expect further

sales and production

CardioMed Supplies INC., acquired in 2018; we also renewed the long-term sales”

growth in sales. Since we are in a similar situation in other countries, our Dialyzer has
already demonstrated its high product competitiveness. The only issue is how toincrease global production capacity.

Results
Net sales

Operating income

Total

Total

Total

millionmillionmillion

7.8 % increase

12.0% decrease¥426,399 ¥23,827
Yoshihiko Sano

President & Representative Director

 et income attributable toNowners of parent

from fiscal 2018from fiscal 2018¥12,136
2.5% increase
from fiscal 2018

NIPRO Annual Report 201904

Contents

About NIPROManagement
Message⦁ A Message from the President
⦁ A Message from the CFO

Review ofOperations

Management
Foundation

Financial/
Data Section

Management Message

A Message from the President
Regarding domestic vascular products, which showed good performance in theinsufficient supply of drug substances. On the other hand, syringes and glass tubes

previous period, we integrated the sales organization of GOODMAN CO., LTD., one ofsold well in the United States and Europe, with syringes selling particularly well inour subsidiaries, in 2018, but sales did not increase because it took more time than

Germany, and glass tubes excelling in France. In terms of domestic sales, productivity

expected to reconstruct the sales organization. However, since productwas improved owing to the upgrading of equipment at the Biwako Plant, which

competitiveness has already been recognized in the market, we are expecting asignificantly contributed to the sales of vials, our high-profit products.

significant increase in revenue in the next period. Finally, we will start full-scale entry
into the global market with these products.
As for sales growth, generic drugs in Japan showed the best performance,

Regarding regenerative medicine, STEMIRAC® for Injection, which is used for thetreatment of spinal cord injury and was developed jointly with Sapporo Medical
University, obtained marketing approval (conditional, time-limited approval) in

increasing by 24.1% from the previous period, to ¥79,790 million, despite theDecember 2018, and started distribution in May 2019. This product is manufactured

disadvantage of the NHI drug price revision, which had a major impact of about

using the patient´s bone marrow fluid and peripheral blood, which is tailor-made¥11,000 million. We can sell our generic drugs in alignment with sales oftherapy. We will work toward establishing a profitable business by improving

medical devices, which is a great advantage for sales. Since we need to further

production efficiency, and sequentially expanding medical institutions to which we

improve the profitability of generic drugs, we will also focus on reducing

provide our products.

manufacturing costs in the future.
In terms of the Pharmaceutical-Related business, we were able to increase sales tocontract manufacturing products, as well as the products manufactured at the plant

Issues of the fiscal year ended March 2019;
strengthening the production systemthat was acquired in October 2018, which contributed to the increase in sales.

Regarding Dialyzer, strengthening the production system is the first issue. Plants have

We achieved an extremely large growth rate on a quantity basis.

been constructed in India and China, but the products are mainly manufactured at¥63,482 million. In addition to the growth of existing products, we began shipping new

To meet the rapidly increasing demand for both generic drugs and contract

Odate Plant in Japan. Almost all equipment at Odate Plant is automated, which allows

manufacturing products, we are trying to strengthen the production system byfor the lowest production costs compared to overseas plants. We have spent a great

acquiring two manufacturing plants for pharmaceuticals in Japan. In Vietnam, thedeal of time customizing the equipment with our technology, which is a uniquemanufacturing plant of pharmaceutical products for Japan will begin operation instrength of ours, and other companies cannot easily do the same. We will expand on

August 2019 in cooperation with Mekophar BP. We can expect further cost reductions.

this strength mainly at Odate Plant.

In terms of the PharmaPackaging business, sales increased by 1.0% from theWe will soon begin the full-scale launch of vascular products into the global market.

previous period, to ¥35,526 million. Overseas sales were affected by the production

We expect to realize a full range of highly competitive products in the domestic

adjustment of pharmaceutical companies in China due to the summer heat and an

market. Our current strategy is to deploy those products in the overseas market.

NIPRO Annual Report 201905

Contents

About NIPROManagement
Message⦁ A Message from the President
⦁ A Message from the CFO

Review ofOperations

Management
Foundation

Financial/
Data Section

Management Message

A Message from the President
In this period, we promoted the commercialization and market introduction of theSetting sales goals for the next decade

Makoto Intravascular Imaging System and the Dualpro IVUS + NIRS catheter,

We aim to achieve sales of ¥500 billion for the fiscal year ending March 2021 and ¥1

manufactured by Infraredx, Inc., one of our subsidiaries in the US. This is the only

trillion for the fiscal year ending March 2031. For this purpose, we need to work on thedevice in the world that has obtained FDA approval in the US as a device fordevelopment of safer and more valuable products from the users’ viewpoint bydiagnosing the risk of acute myocardial infarction. We will promote the expansion ofeffectively using our original technologies and management resources for regenerative

our vascular products overseas by proposing innovative diagnostic technologies for

medicine—a new business—in addition to the 3 existing businesses of Medical-Related,clinical settings, and introducing our unique treatment device into the market.

Pharmaceutical-Related, and PharmaPackaging.

™

™

Regarding the organization, we will proceed with the establishment of overseas

To ensure the competitiveness and high quality of our products, the Productmanaging companies. We have already done so in Europe and China, and will establish

Development & Technical Sales Headquarters is striving to review existing products,

one in North America within the next fiscal period. By placing companies responsible

improve quality, and reduce costs as a department with a special mission. At the samefor the product business department under the managing company with head officetime, it is important that this new business captures new medical needs and conducts

functions, we can allow the companies in each region to make more autonomic

R&D for new products. We established the New Business Development Headquarters

decisions while keeping control as a group, which is one advantage of establishing anin 2018, which selects and carries out new business in the company. In this way,overseas managing company. While problems related to intellectual property, finance,

we can support the development of innovation.

and laws and regulations are handled by the managing company, the product value will

These activities work effectively because

be decided by the regional companies. Business operations can thus be tailored to

we have our own “payment-by-results”

local users’ needs.

system. We have a system to measure theRegarding pharmaceuticals, profitability is expected to improve in 2019 since there

contribution of employees for all businesses,

will be no major NHI drug price revision like the one in 2018. Regarding generic drugs,

regardless of their department, whichin addition to the continuous development of new products and sales channels, early

promotes cross-departmental cooperation.

operation of overseas factories will be a major theme in the future. Regarding contract
manufacturing, we will expand our production capacity even further, and will expand
our business as a leading Japanese contract manufacturing company group.

NIPRO Annual Report 201906

Contents

About NIPROManagement
Message⦁ A Message from the President
⦁ A Message from the CFO

Review ofOperations

Management
Foundation

Financial/
Data Section

Management Message

A Message from the President
Creating an employee-friendly environment

To shareholders

Our management focuses on securing human resources with superior retention

Following our basic policy for shareholder returns, we are focusing on increasing

because it takes time to acquire the knowledge necessary for business operations due

dividends by increasing profits. We work hard to develop our company by improving

to the characteristics of the medical industry. Therefore, we are making efforts to

product competitiveness to ensure more dividends to shareholders. In this fiscal year,

promote long-term employment and expand opportunities for women to work actively.

we bought back stock totaling ¥5 billion. If there is an opportunity, we will implement

This prompted us to make the Nipro Health Declaration, and to establish measures toflexible shareholder returns in addition to dividends.

maintain and promote the health of employees, such as smoking cessation programs,

Although trade friction between the US and China increases the sense ofmental health care, work-style reforms, and the promotion of workplace activation.

uncertainty in the world economy, healthcare-related products are less affected by

In addition, we established the “Job Return Program”, which allows retired employees

economic trends than other products because of their clear and strong needs.

to return to work under certain conditions. Also, we are working on creating a more

Therefore, we can expand our sales by continuously improving on our productfamily-friendly environment in several ways, such as opening a new nursery at Odate

competitiveness.

Plant following the NIPRO Life Science Site in Kusatsu City, and increasing thechildcare allowance.

We have established our own dialysis center and training center in Guatemala, anda new dialysis center in Ecuador. We are preparing for large-scale demand in the future

As to our plans to relocate the head office in the future, we have concluded a landby providing high-quality healthcare services in these developing countries. The basesales agreement for Kento Innovation Park in Suita City. We are planning to constructof the pyramid (BOP) layer in the world accounts for approximately 70% of the world’s

an office building with more robust BCP measures so that we can supply necessary

population, primarily in developing countries, and its market size is said to be 5 trillion

products as a medical device manufacturer even in the event of an earthquake ordollars, so the business for the BOP layer has great potential*.

flood. The introduction of the latest office layout is expected to facilitate

We will continue providing the world’s top share of products, one after the other, by

information-sharing among employees. We will make efforts to strengthen thedeveloping products that are truly needed from the users’ viewpoint. We appreciate

functions of the head office, contribute to community healthcare, and improve theour shareholders’ continued support in the future.

workplace environment for employees.
August 2019

Yoshihiko Sano
President & Representative Director* Source: THE NEXT 4 BILLION (2007 World Resource Institute, International Finance Corporation)

NIPRO Annual Report 201907

Contents

About NIPROManagement
Message⦁ A Message from the President
⦁ A Message from the CFO

Review ofOperations

Management
Foundation

Financial/
Data Section

Management Message

A Message from the CFO
Forecast of consolidated performance for the fiscal year ended March 2020

With regard to the next-term forecast of consolidated performance, net sales are
expected to grow by 8.2% from this term to ¥461,500 million. Although the NHI drug
price revision implemented in April 2018 led to a decrease in income and profit by¥15,000 million in medical devices (about ¥4,000 million) and medicines (about¥11,000 million), income rose to ¥31,001 million. Therefore, the expected value for the
next term appears to be sufficiently achieved. Operating profit is expected to increaseby 15.4% from the previous term to ¥27,500 million. The major factors for theincreased operating profit include increased sales volume of high-profit products,
mainly renal products, improved vascular business, and cost reductions thanks toincreased plant operation rate. Ordinary profit is expected to increase by 16.4% fromthe previous term to ¥26,100 million, and net income attributable to owners of parent
is expected to increase by 23.6% from the previous term to ¥15,000 million.
The exchange rates considered for these performance forecasts are ¥110 to thedollar and ¥125 to the euro. The Nipro Group has operations in 56 countries andpresent overseas sales account for 39% of total sales. Therefore, measures to mitigate
the impact of foreign exchange rate fluctuations will be continuously reviewed in
response to foreign exchange risks.
In addition, financial health that supports investments is important for each of thevarious businesses to capture growth opportunities and correspond to the expansionof global demand, especially for the main business of renal products. We haveestablished a regional management company for each major region and will work to
improve the cash conversion cycle by managing closer to the field site. Furthermore,
we are attempting to improve our financial health that enhances the efficiency of fundoperations by introducing cash pooling and to improve our credit rating.

Status of capital investment

The Nipro Group focuses on product and R&D areas that have bright future prospects
and also invests to save labor, streamline work, improve quality, and increase
productivity. The amount of capital investment in the term under review was ¥56,276
million—a 2.5% decrease from the previous term.
In Japan, we invested ¥1,574 million mainly for the enhancement of dialyzer
manufacturing facilities at Odate Plant; ¥1,128 million mainly in the nested syringe
manufacturing facilities and vial molding machines at Biwako Plant; and ¥1,509 million
mainly in Regenerative Medicine R&D Center. Nipro Pharma Corporation also invested¥8,582 million mainly in the pre-filled syringe manufacturing facilities at Odate Plant;¥8,274 million mainly in the new half-kit and new vial manufacturing facilities, andconstruction of the new distribution building at Ise Plant to strengthen the production
capacity of the injection plants. Overseas investments extended to ¥4,814 million in
the expansion of the dialyzer manufacturing line at NIPRO INDIA CORPORATION and¥3,794 million mainly in the construction of a plant at NIPRO VIETNAM COMPANY.
The amount of capital investment for the next fiscal year is budgeted to be ¥26,300
million for Medical-Related business; ¥15,400 million for the Pharmaceutical-Related
business; ¥4,700 million for the PharmaPackaging business; and ¥2,800 million for the
Regenerative medicine business, that is, ¥52,000 million in total.

Dividend policy

Since redistribution of profits is considered as one of the important management
measures, we distribute the proceeds to shareholders. Internal reserve funds will be
used to expand the management foundation, actively invest in capital investments andR&D to develop long-term businesses, ensure stable profits, and realize sustainable
and consistent growth in the future.
In this term, three-fourths of the consolidated current
net profit and one-fourth of the nonconsolidated current
net profit shall be the base profit amount of dividends. The
annual dividend per share shall be ¥28 under the policy toallocate 39% of the profit amount to dividends.
Going forward, we plan to reduce the distribution ratio of
the source of dividends by 1% each fiscal year, while paying
attention to strengthening our financial structure andstabilizing dividends, to around 35% in approximately four
years’ time. Therefore, the annual dividend per share in thenext term is expected to be ¥33.

“We will continue toinvest in growth and achievesustainable growth”

Takehito Yogo
Chief Financial Officer

NIPRO Annual Report 201908

Contents

Management
Message

About NIPRO⦁ Medical-Related Business⦁ Pharmaceutical-Related Business⦁ PharmaPackaging Business

Review ofOperations

Management
Foundation

Financial/
Data Section

Review of Operations

Medical-Related BusinessNet sales

Total¥327,359 million

Financial Results for Fiscal 2019

Strategy and Outlook for Fiscal 2020

Net sales for the fiscal year ended March 31, 2019
increased by 9.1% from the previous term, totaling¥327,359 million, and operating profit increased by 0.5%
from the previous term, totaling ¥36,722 million.
Domestic sales steadily increased in all productcategories. In particular, sales of HDF filters and dialysis
machines grew significantly, followed by SAFETOUCH®
infusion systems for injection and infusion-related products.
Sales of bepotastine besilate (Talion AG) also increased
due to the strengthening of sales promotion activities.
Overseas sales of renal products, such as dialyzers Pointand dialysis machines, also increased.
In Latin America, our own dialysis centers we establishedin Guatemala and Ecuador are operating smoothly and 2
more were established in Ecuador; thus, we currently
operate 6 dialysis centers in Latin America.

Net sales for the next fiscal year are expected to increaseby 7.2% from this term, to ¥350,800 million and operating
profit by 22.3%, to ¥44,900 million.
In addition to promoting renal products centering on
our major product, dialyzers (artificial kidneys), we willstrongly promote the improvement of the product lineup anddevelopment of new sales channels for diabetes-related
products, vascular-related products, and SD (surgicaldevice)-related products to expand our market share.
Overseas, we will make efforts to increase the market
share of renal products, especially dialyzers and dialysis
machines, under the policy of thoroughly understanding
the customer’s perspective, improving customer service
and technology sales, and systematizing sales.
We will also expand our own dialysis center business toother countries and establish dialysis training centersaround the world.
In addition, we plan to establish new sales bases inIndia, China, and other emerging countries and strengthen
cooperation with major dialysis center groups in Europe
and the United States.

Sales distribution ratio by region and productJapan

Overseas

57.2%

42.8%

Net sales

Others

10.1%

3.5%

8.9%

2018

2019

36,722Diabetic
Products

36,522Catheter
Products

30,638

Fiscal 2019

327,359

33.9%(Millions of yen)

300,117

28.6%

Renal
Products

262,198

Nipro Brand
Generic
Drugs

Operating income(Millions of yen)

Injection
Products

10.7%

Infusion
Products

4.3%

2017

2017

2018

2019

POINT

Increase sales volume
of Dialyzers

The sales of dialyzers in this term increased by 5% or morefrom the previous term, exceeding ¥65,000 million.
We estimate that the sales for the next period will further
increase as a result of long-term contracts with major
dialysis providers in North America and market expansion in
emerging countries.
See next page for more information.

NIPRO Annual Report 201909

Contents

About NIPROManagement
Message

Review ofOperations

⦁ Medical-Related Business⦁ Pharmaceutical-Related Business⦁ PharmaPackaging Business

Management
Foundation

Financial/
Data Section

Review of Operations

Medical-Related Business

TOPICS

Expansion of dialysis centers and dialysis training centers

Status of important overseas markets
North America
Expansion of dialyzer sales due to long-term contract withmajor dialysis providers
The number of dialysis patients in North
Estimated sales quantity ofAmerica is increasing and is expected todialyzers in the next term:*reach 534,000 in the next term.
As a result, we expect that the sales of
million dialyzers
our dialyzers will steadily increase, and theannual sales volume will be approximately
9 million dialyzers in the next term.
The sales volume is estimated to grow further, especially as a resultof long-term contracts with major dialysis providers.
Currently, we are focusing on sales expansion through CardioMed
Supplies INC., which we acquired in the previous fiscal year, toward afull-scale entry into the Canadian market.

9* Source: US Nephrology News, Canadian Institute of Health Information

Nipro has established dialysis centers mainly in Latin America to provide high-quality treatment.
We currently have approximately 800 patients in our dialysis centers. We aim to offer high-quality
treatment to 10,000 patients over the next 5 years.
In addition, we are expanding the dialysis training centers to educate high-quality healthcare
professionals, and we target the establishment of one institution per country in the future.
NMC Dialysis Clinic Guatemala (3 Dialysis Centers)

Dialysis training facilities:

23

15

facilities in

NMC Mini iMEP
America

Nipro JMI Dialysis Center Ltd.

countries

Nipro iCEP & 3 Dialysis Centers

NMC Mini iMEP
Colombia

Nipro iMEP Europe

NMC Mini iMEP Brazil
NMC Mini iMEP Mexico
NIA Mini iMEP Malaysia
NMC Mini iMEP Guatemala
NMC Dialysis Clinic Ecuador(3 Dialysis Centers)

NNE Mini iMEP Nigeria
Mediheal Nipro Dialysis Center

Mini iMEP PeruNMI Dialysis Training Center

NMC Mini iMEP Uruguay
As of March 31, 2019

China

India

Expansion of dialyzer market share

Aiming to exceed dialyzers sales volume

The number of dialysis patients in China is increasing every
Estimated sales quantity ofyear, and is expected to reach 639,000* in the next term.
dialyzers in the next term:
Therefore, the sales volume of dialyzers increased byapproximately 7% from the previous term, to roughly 12
million dialyzers
million dialyzers in the term under review. The number ofpatients is expected to increase too, and we therefore aim
to sell 14 million dialyzers in the next term.
Currently, the market share of our dialyzers in China is estimated to be approximately
20%; however, we expect the share to further expand after the next term due to the strong
sales performance of dialyzers manufactured at NIPRO MEDICAL (HEFEI) CO., LTD.

With the growth of the Indian market, the sales volume of
Nipro’s dialyzers is steadily increasing.
The sales volume for this term exceeded 1.6 million dialyzers,
and is expected to exceed 2 million by the next term.
Since the number of dialysis patients is also increasing
due to greater penetration of universal health coverage, themarket is expected to grow steadily in the future.

14* Source: CNRDS (Chinese National Renal Data System)

Estimated sales quantity of
dialyzers in the next term:

2

million dialyzers

NIPRO Annual Report 201910

Contents

About NIPROManagement
Message⦁ Medical-Related Business⦁ Pharmaceutical-Related Business⦁ PharmaPackaging Business

Review ofOperations

Management
Foundation

Financial/
Data Section

Review of Operations

Pharmaceutical-Related BusinessNet sales

Total¥63,482 million

Supply records(May 2019)

Injectables

OrallyAdministered
Drugs

External
Preparations

Ampoules (Glass / Plastics)
Vials (Powder / Liquid /Lyophilized products)

Tablets

Tapes (solvent type)billion tablets

120

580
Poultices33

610

million units

Liquid-liquid dualchamber bags

4

million units

tons

390

million sheets

million sheets(converted to 10g-sheet units)

SyrupsOintments, Creams

460

16.3

thousand bottles

10,662

million capsules

11,428400

Granules, Dry syrups

million units

Operating income(Millions of yen)million sheets

Tapes (hotmelt type)

Dual chamber bags (PLW®)

160

Net sales(Millions of yen)

63,482

CapsulesNet sales for the next fiscal year are expected to increaseby 12.6% to ¥71,500 million.
The contract manufacturing division will establish
production and quality assurance systems that accommodate
pharmaceutical products supplied to advanced overseas
countries, and will further expand the production capacities
of existing plants as well as newly acquired manufacturing
sites. In addition, by maximizing the utilization of ouroverseas manufacturing sites, we will improve stablesupply capacity and cost competitiveness to ensure ourstable supply of pharmaceuticals to worldwide markets.
Also, we will develop and supply pharmaceuticals that arerecognized as safe and convenient by customers incombination with our unique pharmaceutical containersand drug reconstitution and administration devices.
Operating profit is expected to decrease to ¥9,700
million, mainly due to the increase in depreciation costs at
Nipro Pharma Corporation and the Izumi Plant of Zensei
Pharmaceutical Co., Ltd.

60,08014.8

Net sales for the fiscal year ended March 2019 increased by
5.7% from the previous term*, totaling ¥63,482 million.
Our contract manufacturing division worked on a variety ofpharmaceuticals, including antibiotics, steroids andhigh-potency products such as anticancer drugs, withvarious drug formulations of oral, injectable and external
preparations. The division also endeavored to conduct
contract manufacturing services for investigational drugs
as well as contract inspection and packaging services.
In discussions with our customers, we actively allowed them touse our pharmaceutical containers, drug reconstitution
and administration devices and combined medical devices
for which internal development and production systems
are available. Additionally, we made efforts to further
enhance the production system by acquiring two
manufacturing plants for pharmaceuticals. Point
Operating profit decreased from the previous year*,resulting in ¥10,662 million, mainly due to the increasein depreciation costs associated with active investment
in facilities.

62,746

million units

Pre-filled syringes (PFS®)

Strategy and Outlook for Fiscal 2020

12,597700

Financial Results for Fiscal 2019

million tubes(converted to 10g-tube units)

2017

2018

2019

2017

2018

2019

*F
 rom the fiscal year ended March 31, 2019, the Company has conducted areorganization for the purpose of doing synthetic PharmaPackaging business andincreasing synergies with Pharmaceutical-Related business. As a result of thisreorganization, some business divisions included in Pharmaceutical-Related businesswere changed to PharmaPackaging business. The presentations for the prior fiscal
year and 2 years ago are restated.

POINT

Saitama Site,
Nipro Pharma Corporation

In October 2018, we acquired the Kawagoe Plant of Mylan N.V.,
which started operations as Plant No. 4 of Saitama Site, Nipro
Pharma Corporation. In addition, the Kasukabe Plant of Nihon
Generic Co., Ltd. was acquired in March 2019.
See the next page for detailed information.

NIPRO Annual Report 201911

Contents

About NIPROManagement
Message

Review ofOperations

⦁ Medical-Related Business⦁ Pharmaceutical-Related Business⦁ PharmaPackaging Business

Management
Foundation

Financial/
Data Section

Review of Operations

Pharmaceutical-Related Business

TOPICSJAPAN
System enhancement to increase production capacities of manufacturing
sites for oral products
Saitama Site, Nipro Pharma Corporation
In October 2018, Plant No. 4 of Saitama Site, Nipro
Pharma Corporation, commenced operations.
A research institute is available on the same property
and thus, development tasks in parallel to industrialization research can be implemented. The annual
production quantity for the next fiscal year is expected
to be approximately 270 million tablets.
In addition, we acquired the Kasukabe Plant of
Saitama Site, Nipro Pharma Corporation
Nihon Generic Co., Ltd. and started operations inMarch 2019. This plant will be positioned as a
primary plant for oral formulations serving as an equivalent to the Kagamiishi Plant. In the
coming fiscal year, the annual production quantity is expected to reach approximately 300
million tablets, and facilities are currently being introduced in series in order to expand theannual production capacity to 1,400 million tablets by May 2020.

Izumi Plant, Zensei Pharmaceutical Co., Ltd.
The third line with multiple small- to large-sized
microparticle coating machines has been operating
since March 2019. In addition, we have introduced
equipment with industry-first functions jointly
developed with a machine manufacturer, enablingproduction using a method to formulate OD
tablets containing high-content microparticles(SYNBRID®) developed by ourselves.
The annual production capacity is approximately
300 million tablets.

Izumi Plant, Zensei Pharmaceutical Co., Ltd.

System enhancement to increase production capacities of manufacturing
sites for injectable products
Ise Plant, Nipro Pharma Corporation
In March 2019, a liquid filling line for small volume
vials was installed to flexibly accommodate various
types of containers, and facilities are currently being
introduced to accommodate production oflyophilized formulations. Full-scale operation isscheduled to start in March 2021.
Ise Plant

OVERSEAS
Current status of Vietnam businessAt the injectable product plant of Nipro Pharma
Vietnam Co., Ltd., the contract manufacturingservices for vial products newly started in February
2019 are expected to contribute greatly to theincrease in the shipment volume of vial productsin the next term.
In addition, the oral product plant of Mekophar
BP obtained Good Manufacturing Practice (GMP)
certification from the Ministry of Health, Vietnam(MOH) in October 2018. We also made an application
for partial changes to add manufacturing sites for
products supplied to the Japanese market in
April 2019, and will start shipping to Japan from
August 2019.

Nipro Pharma Vietnam

NIPRO Annual Report 201912

Contents

Management
Message

About NIPRO⦁ Medical-Related Business⦁ Pharmaceutical-Related Business⦁ PharmaPackaging Business

Review ofOperations

Management
Foundation

Financial/
Data Section

Review of Operations

PharmaPackaging BusinessNet sales

Total¥35,526 million

Sales ratio by region
Asia

5.6%
China

10.1%

Japan

Strategy and Outlook for Fiscal 2020

Net sales for the fiscal year ended March 2019 increased by
1.0% from the previous term*, totaling ¥35,526, and operating
profit increased by 111.8% from the previous term, totaling¥778 million.
The Medical System Development Department and the
Medical System Sales Department within the Pharmaceutical
Division have been integrated from this term. This has enabled
us to have a system where we can handle a variety of products
from primary containers to medical devices such as drugreconstitution and administration devices and to provide
one-stop solutions. Point
In Japan, a production adjustment by the processing
manufacturer had an impact on thermos bottle glass valve
sales. However, while the global demand for glass tubing
continued to be very strong, stable selling contributed to theincrease in sales.
In China, not only did oral liquid vials sell well but also salesof high-quality ampoules according to new Chinese standard
increased. In Europe, syringe production orders continued to
be strong in Germany and the demand for glass tubing
increased in France. In the United States, sales of vials increased
due to strengthening of technical sales, while for Russia,
the export of vials and ampoules increased steadily. Additionally,
we began to sell products from the new processing plant withthe most advanced equipment in India.

Net sales for the next fiscal year are expected to increaseby 8.7% from this term, to ¥38,600 million and operating
income is expected to increase by 41.4% to ¥1,100 million
from this term.
We will integrate and harmonize manufacturing
technologies in all directions in the regional and productstrategies for products such as glass vials VIALEX® andsterilized glass syringes D2F™, based on conventional
glass manufacturing technologies; we will thereby provide
a more detailed customer correspondence and promote
expansion of our market share. We will also strive toexpand our business under a system that can provide
one-stop solutions.

Net sales

778

35,526367

Europe32.9%

223

Americas

21.3%

2017

Nipro’s superiority

We offer one-stop solutions that provide a wide range ofalternatives from primary containers to administration
devices to meet the broad needs of pharmaceutical companies.
NIPRO(Millions of yen)

35,170Fiscal 2019

POINT

2018

Operating income(Millions of yen)

34,72430.1%

Financial Results for fiscal 2019

2018

2019

2017

2018

2019

*F
 rom the fiscal year ended March 31, 2019, the Company has conducted areorganization for the purpose of doing synthetic PharmaPackaging business andincreasing synergies with Pharmaceutical-Related business. As a result of thisreorganization, some business divisions included in Pharmaceutical-Related businesswere changed to PharmaPackaging business. The presentations for the prior fiscal
year and 2 years ago are restated.

Sales amount¥35.5 billion(Company Total) (¥426.4 billion)

A company

B company

Approx.
¥70.0 billion(¥270.8 billion)

Approx.
¥80.0 billion(¥182.9 billion)

Glass tubing

○

○

×

Glass container

○

○

○

Rubber○××

Devices○×○

NIPRO Annual Report 201913

Contents

About NIPROManagement
Message

Review ofOperations

⦁ Medical-Related Business⦁ Pharmaceutical-Related Business⦁ PharmaPackaging Business

Management
Foundation

Financial/
Data Section

Review of Operations

PharmaPackaging Business

TOPICSA mature market: Sales promotion and development of high-value-added products
Sterilized glass syringe: D2F™
Global development of VIALEX®

A growing market –A change from volume to quality
Initiatives in India

Currently, the worldwide annual demand of pre-fillable
syringes is estimated at 3,500 million. The market isprojecting a continued steady growth in the years to come.
In this context, we manufacture the sterilized glass
syringe D2F™ in the plant in Germany. The production
capacity has been increasing due to the enhancement offacilities. In 2020, we will introduce LInC™ and enter thevaccine market, and we will also sell high-value-added
products to the biopharmaceutical market. LInC™ is a newluer lock integrated cap that accurately links with D2F™
and maintains sealability. As it is compatible with the tub &nest of D2F™, the production cycle time can be reduced.
In Japan, a D2F™ line (BOS type*) was also introduced
in Biwako Plant in March 2019, and it is scheduled to startfull-scale operation from 2021.
As described above, production of D2F™ is advanced inJapan and overseas, and we are currently aiming to sell itin the United States.

India is a genuine hub in the Pharma- Pharma market:
ceutical and Pharma-Packaging
market and continues to grow.
st in the world for generic drugs
Accounting for 20% of worldwide
manufacturing generic medicinal drugs, it is the absolute
number 1 country in the manufacture of generic drugs.
The share of Indian manufactured drugs imported by the US
witnesses further increases. The Indian market serves theentire span, from less regulated to full regulated markets(e.g., domestic to North America). There is a shift from lower
price-orientation towards higher quality-requirements.
In recent years, India has begun to specialize inhigh-value-added products and high-quality products,
accelerating global export of products.
Specifically, there are movements such as responding to
the increasing demand for glass tubing for overseas export,
increasing the export volumes for drugs to the U.S. by Indiandomestic pharmaceutical companies, and increasing thenumber of drugs approved by the F.D.A. in the United States.
We are manufacturing glass tubing and vials/ampoules in
our India plant and are establishing a system to produce andsell high-value-added and high-quality products for India
and for export to the United States.

*B OS (Baked on silicone): The baking process of silicone emulsion onto the innersurface of the syringe inhibits the generation of insoluble particulates on the material
and reduces the influence on the drug.

VIALEX® is a high-value-added product. It is an innersurface improved vial where reactions with drugs areminimized because the inner surface is fire-blasted. Sales
have steadily grown since its launch in the U.S. in 2016.
In 2019, customer evaluations and sales will start in various
countries around the world, and adoption for biologicalpreparations has also started. We are witnessing an
increasing interest in the VIALEX® technology, with more
and more drugs being in stability test using NIPRO’s
VIALEX® vials.

Worldwide customer evaluation and sales release
Start of adoption for biological preparations
Europe8

Japan

America

9

10
2016

2

2019
2016

3

3

2019

2016

4
2019

India
2016
Number ofcompanies
evaluated
VIALEX®:

29
Nipro PharmaPackaging Germany

2

2019
Number ofcompanies
adopted
VIALEX®:

9

An inner surface improved vialwith minimal drug reaction

1

Initiatives in China
Based on “Healthy China 2030,”
Healthcare market size:
China plans to expand thehealthcare market size from¥trillion in 2030
8 trillion RMB (¥140 trillion) in
2020 to 16 trillion yuan (¥270 trillion) in 2030. Measures tohelp realize this are the development of new drugs (biologicalpreparations) and traditional medicine.
Under such circumstances, we will expand sales ofhigh-quality products according to new Chinese standard
and advance market introduction of sterilized syringe D2F™,
VIALEX®, and reconstitution and administration devices for thedevelopment of new drugs (biological preparations). As for
Chinese traditional medicines, we are also expanding thesales of oral liquid vials.

270

NIPRO Annual Report 201914

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

⦁ Research and Development Activities
⦁ Progress of Research and Development
⦁ Status of Corporate Governance⦁ Outside Directors’ Messages
⦁ Board of Directors and Audit & Supervisory
Board Members

Financial/
Data Section

Management Foundation

Research and Development Activities
Contributing to Innovation in Medical Care throughOriginal Technologies and Ideas
Nipro has 7 research and development sites, centered on the Research and Development

4 Sapporo-Shi, Hokkaido
1 2 3
Kusatsu-Shi, Shiga

Institute and Pharmaceutical Research Laboratories in Japan and United States.
We continually address the needs and issues of medical professionals and patients as we

5

6

7

work to develop and provide high-value-added products.

Seto-Shi, Aichi

California, USA

Massachusetts, USA

6 AVANTEC VASCULAR

2 Pharmaceutical Research

CORPORATION

Laboratories

Number of employees

Number of employees

163
1Research and Development
Institute
Number of employees

207

Research theme
⦁ Cellular and regenerative medicine
products
⦁ Orthopedic surgery-related products⦁ Dialysis-related and general medical
devices⦁ Circulatory organ- and interventionrelated products⦁ Artificial organs
⦁ Test and diagnosis-related products
⦁ High-performance medical containers⦁ Medical glass products
Status of industry-academia collaboration
Implementation of research aimed at the joint
development and early realization of new
products, in collaboration with universities andresearch institutions throughout the world.

Research theme
⦁ Injection products⦁ Oral solids
⦁ Medical supplies for external application
⦁ Cancer drugs and biosimilars
⦁ High-performance medical containers

3 Production Technology

CenterNumber of employees

48

Research theme
The establishment of new production
technology and the design development ofequipment to increase production,
which are for the enhancement of productivity.

30
4 Regenerative Medicine

R&D Center

Number of employees

69

Research theme
Manufacturing equipment and consumables
for the realization of regenerative medicine
using autologous bone marrow cells forstrokes and spinal cord injuries.
Status of industry-academia collaboration
Conclusion of collaboration research
agreement concerning strokes and spinal
cord injuries, and license agreement on
regenerative medicine patents with Sapporo
Medical University.

5 Goodman Medical

Innovation

Number of employees

71

Research theme
⦁ Catheters and accessories for cardiac andcirculatory organ inspection and therapy
⦁ Catheters and stents for cerebral bloodvessel therapy
⦁ Vascular access catheters
 tatus of industry-academia collaborationS⦁ Performance of physician-led clinical trials
with the National Cerebral andCardiovascular Center.
⦁ Implementation of research in collaboration
with Hiroshima University.

Research theme
⦁ Hemorrhagic & ischemic stroke
therapies⦁ Vascular retrieval system
⦁ Endovascular/peripheral
embolization
⦁ CTO catheterization technologies
⦁ Specialty coronary catheters
⦁ Vascular access technologies
⦁ Orthopedic & spinal access

7 Infraredx, Inc.
Number of employees

91

Research theme
⦁ IVUS + NIRS Intravascular Imaging
⦁ Thin cap algorithm
⦁ IVUS auto-detection software tatus of industry-academia
S
collaboration
⦁ University of Pennsylvania

NIPRO Annual Report 201915

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

⦁ Research and Development Activities
⦁ Progress of Research and Development
⦁ Status of Corporate Governance⦁ Outside Directors’ Messages
⦁ Board of Directors and Audit & Supervisory
Board Members

Financial/
Data Section

Management Foundation

Progress of Research and Development
1. Medical-Related BusinessNipro conducts research and development (R&D) in the following fields,with our R&D Institute playing a pivotal role.
Expenses related to R&D in this business segment were ¥8,291 million.

Division of Diagnostics and Inspections
Diagnostic
products:

Division of Cell Drugs
Positive results that may lead to new cell drug production have been obtained after thecompletion of an industry-academia-government collaboration research project (for thedevelopment of the cell production / processing system), in which we participated.
In addition, we are aiming at practical application of regenerative medicine using
autologous bone marrow cells for the treatment of cerebral infarction and spinal cord
injury. For early commercialization, we have entered into a license agreement with Sapporo
Medical University, promoting joint research and development mainly at the Regenerative
Medicine R&D Center.
This spring, STEMIRAC® for Injection, a regenerative medicine for spinal cord injury, waslaunched. We will promote our research and development of this product for stable supply
and expansion of indications.

Division of Medical Devices
Anesthetics: New SUREFUSER™ + PCA SET was launched overseas in May 2018. This device isfor the continuous infusion of an anesthetic controlled by a patient according
to the level of pain. It is designed to be easy to grab and fit in a palm, with alarger button as the switch for injection of drug solution. In Latin America andAustralia, SUREFUSER™ Amber Type was launched in September 2018.
This was developed to provide light shielding effects to prevent drugs fromgenerating deposits or deteriorating under ultraviolet rays.
Dialysis:
A blood tubing set with a gamma sterilized needleless access port was
launched in August 2018 for limited use in particular medical institutions.

Inspection
products:

A second-generation diagnostic agent for drug-resistant tuberculosis wasapproved for production and sales in Japan, Indonesia and Vietnam. We arealso preparing to expand the supply network of this diagnostic product tooverseas, which can detect the disease from sputum with few microbialcolonies, mainly to Southeast Asia.
A rheometer that can readily measure subcutaneous peripheral blood flow
was approved for production and sales. The application for approval was
submitted for Multileaf®, which can test different parameters with a dropof blood.

Division of Functional Pharmaceutical Containers
A new half kit was launched in July 2018. This new product was developed to enhance thefunctionality of the old half kit, which has been on the market for more than 20 years.
Compared to the previous one, the new half kit has additional features, such as preventive
mechanisms against tilting vials and leakage due to a repelled needle during vial removal,
as well as enhancements in bottle transparency and thermostability. In line with the productmodification, a new production line, which can produce 20 million kits per year, was built torealize mass production.
The production of Alime Bag™ α was started in December 2018. The production of thisnew product has eliminated anxieties for the production line that is more than 30 years old,while reducing the chances of leakage during needle removal with the use of a rubber
plug, instead of a membrane tube, for enteral infusion set connection. Change in the bagmaterial from ethylene vinyl acetate (EVA) copolymer to polyethylene (PE) has enabled
production in a clean environment with low costs.
A less invasive pharyngeal swab with adjusted handle strength and a device for dose
adjustment for hemophilia drugs were also launched in fiscal 2018.

NIPRO Annual Report 201916

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

⦁ Research and Development Activities
⦁ Progress of Research and Development
⦁ Status of Corporate Governance⦁ Outside Directors’ Messages
⦁ Board of Directors and Audit & Supervisory
Board Members

Financial/
Data Section

Management Foundation

Progress of Research and Development
1. Medical-Related Business
Division of Circulatory and Interventional Products

Division of Artificial Organs

Balloon catheters and drug-coated stents are used for the treatment of coronary arterydiseases, including acute myocardial infarction and coronary occlusion. In this field of
percutaneous coronary intervention (PCI), we have been selling GUIDEPLUS® as a rapid
exchange (RX)-type catheter that penetrates the coronary artery stenosis and guides
deliverability of balloon catheters and drug-coated stents. the treatment of stenosis.
GUIDE PLUS has now been improved to GUIDEPLUS® II ST™, with a larger inner diameter,
which increases the applicability of penetrating devices (e.g., stents and intravascularultrasound [IVUS] catheters) while maintaining the superior deliverability to distal lesions
over competitors’ products, and GUIDEPLUS® II EL™ with an even larger inner diameter, adiameter comparable with the competitors’ products, and enhanced deliverability.
FILTRAP® is a thrombus-trapping catheter that prevents the phenomena called “noflow” or “slow flow” caused by scattered thrombi or debris to peripheral blood vessels in
the treatment of stenosed lesions. For enhanced deliverability to distal lesions and easierremoval of the filter through a stent, FILTRAP® II was developed and is now available inthe market.
In the field of percutaneous peripheral intervention (PPI), Japan’s first tapered balloon
catheter for percutaneous transluminal angioplasty (PTA) was approved. This device hasenhanced applicability to balloon pulmonary angioplasty (BPA) in the treatment of
pulmonary arterial hypertension.
The tapered balloon catheter is scheduled to be launched in fiscal 2019.

Artificial
Organs:

Hemocatharsis:

A one-year clinical trial for an extracorporeal continuous-flow ventricularassisting system for 30-day use was completed in October 2018.
Application for the approval of this system is scheduled for early fiscal 2019.
“The world’s smallest and lightest artificial heart-lung assisting machine (thatis, an ultracompact heart-lung assisting machine)” is currently under development. This product is expected to be used for emergency cares, treatingsuch urgent diseases as myocardial infarctions and acute respiratory failures.
Clinical study of this product is planned to begin by the end of March 2020.
This “ultracompact heart-lung machine” received a “Technology Award” fromthe Japanese Society for Artificial Organs at the Annual Meeting of 2018.
A slow continuous hemodiafiltration system was launched in February 2019.
It is characterized by high antithrombogenicity and human safety, used for
prolonged corporeal circulation to treat acute renal insufficiency.

Division of Surgical Devices
Surgical devices include products used for different types of surgeries, such as orthopedic,
cardiac, and abdominal surgeries. In these fields, we mainly focus on the development of
implantable medical devices. Using our proprietary technology for processing bioabsorbablematerials, we have been developing regenerative medicine products without using cells.
Also, together with our affiliate, NexMed International Co., Ltd., we are developing
orthopedic surgery products for less-invasive surgeries.
We are continuing the joint development of products for endoscopy with Machida
Endoscope Co., Ltd., which has become one of our group companies.

NIPRO Annual Report 201917

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

⦁ Research and Development Activities
⦁ Progress of Research and Development
⦁ Status of Corporate Governance⦁ Outside Directors’ Messages
⦁ Board of Directors and Audit & Supervisory
Board Members

Financial/
Data Section

Management Foundation

Progress of Research and Development

2. Pharmaceutical-Related BusinessNipro is conducting research and development (R&D) in the following
fields, with our Pharmaceutical Research Laboratories playing a pivotal
role. R&D expenditures were ¥8,235 million in fiscal 2019.

External Use Products
Several generic products, such as patches, are under development. Microneedles,
characterized by the novel concept of a “transdermal injection”, are also under development.
New production lines for investigational drugs have already been constructed.

Injectable Drugs
In addition to ordinary vial formulations and bag formulations, we are actively pursuingthe development of kit formulations designed for better operational efficiency inclinical practice.
We are focusing on the development of extended release injections and other productsthat are relatively challenging to develop, such as our dual chamber pre-filled syringe
containing leuprorelin acetate (one-month extended release product) for treating prostatecancer and premenopausal breast cancer, which is already on the market (Original:
LEUPLIN® by Takeda Pharmaceutical Company Limited).
During the fiscal year under review, generic drugs for an infusion bag product, a vial
product, and a pre-filled syringe product were launched.

Biosimilars
While the biosimilar market is rapidly expanding in Japan, NHI (National Health
Insurance) prices for biosimilars are generally high, and thus the need for much lower
NHI prices is increasing, from the viewpoint of healthcare cost reduction.
Based on such circumstances, we have partnered with a biological drug substances
company that can supply us with high quality and price-competitive biosimilars comparable
to that of competitors’ products, and endeavor to develop in-house biosimilars.

OthersOral Drugs
In addition to ordinary oral drugs (e.g., tablets, granules), value-added products are currently
being developed, such as orally disintegrating (OD) tablets or OD film preparations with
reduced bitterness, which can be taken without water.
Meanwhile, in order to enhance improved efficiency in clinical practice, we also provide
technically unique products, such as tablets printed with the name of active ingredients,and more useful packages, such as individual packages and aluminum pillows.
During the fiscal year ended March 2019, 6 compounds in 17 generic products werelaunched, including one OD-film preparation. Furthermore, manufacturing and marketing
approval for 2 compounds in 7 products were obtained.

During the fiscal year ended March 2019, manufacturing and marketing approval for an
inhaler was obtained.

NIPRO Annual Report 201918

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

⦁ Research and Development Activities
⦁ Progress of Research and Development
⦁ Status of Corporate Governance⦁ Outside Directors’ Messages
⦁ Board of Directors and Audit & Supervisory
Board Members

Financial/
Data Section

Management Foundation

Status of Corporate Governance1. Corporate Governance System(1) Corporate Governance System and Reasons for Adoption
Nipro Corporation has an established corporate governance system including organizations
for the Meeting of Shareholders and directors as required under the Companies Act, in
addition to a Board of Directors, Audit & Supervisory Board Members, Audit & Supervisory
Board and an Accounting Auditor. Nipro has also established internal committees such as
the Operational Risk Management Committee. This committee continuously maintains close
coordination with external parties such as the company attorney, to enable effective monitoringand supervision of the efficiency and propriety of operations across the Company as a whole.
(2) Internal Control Systems
Nipro strives to make business units the foundation of its internal control system for the
Nipro Group as a whole. Nipro’s directors and Audit & Supervisory Board Members, as well
as representatives of each of the major companies of the Group, hold a Group management
meeting on a monthly basis. These meetings are used to report on the progress of businessactivities, decide key operating matters, and deliberate on pending matters. To build awarenessof compliance with laws, regulations and corporate ethics among executives and employees,
Nipro has established the “Nipro Code of Practice,” and has thoroughly informed everyonein the company.
(3) Risk Management System
Nipro has established risk management regulations and a system for managing business andother specific risks. Their purpose is to recognize and capture risks that could have a material
impact on business operations, in an appropriate and comprehensive manner. Nipro has alsoestablished an Operational Risk Management Committee to ensure cross-sectional management
across all Group companies. The committee endeavors to further strengthen risk management
systems to prevent, avoid and learn from risks and crises. Nipro has also established aSanction Committee, chaired by the President, which endeavors to ensure sound business
management through the appropriate handling of sanctions. Nipro produced a Disaster
Prevention and Crisis Management Handbook and distributed it to each employee within the
Nipro Group. Nipro keeps employees fully informed about taking calm and appropriate action
when faced with disasters and about reassessing and renewing business continuity plans as
appropriate. In addition, to strengthen our rollout of compliance training and enhance ourrisk management system, Nipro established a Compliance Section within its General Affairs
Department, and is working to ensure awareness of compliance among employees.

(4) Basic Structure of Corporate Governance and Risk Management

Meeting of Shareholders
Election

Accounting
Auditor(Auditors)
Board of Auditors(Directors)
Board of Directors

Committees[Decision-making]Accounting
Audit

Operational
Audit

Supervision of
Directors’
execution of duties

President

Third Party(i.e., lawyer,
accountant)Operational Risk
Management
Committee

Director withresponsibility
for operation
Division General Manager,
Manager, Assistant Manager
Conceptual Diagram of Corporate Governance(5) Business Continuity Planning (BCP)
At workplaces in Japan, we are improving our systems for disaster preparation and smooth
continuity of business in the face of risks such as outbreaks of new types of influenza andlarge-scale natural disasters, including major (around magnitude 6) earthquakes originatingin the Nankai Trough. At overseas workplaces, we are also preparing for risks including war,
civil war, riots, terrorism, anti-Japanese demonstrations, and strikes.
NIPRO Annual Report 201919

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

⦁ Research and Development Activities
⦁ Progress of Research and Development
⦁ Status of Corporate Governance⦁ Outside Directors’ Messages
⦁ Board of Directors and Audit & Supervisory
Board Members

Financial/
Data Section

Management Foundation

Status of Corporate Governance
2. Internal and Statutory Auditing(1) Internal Auditing
Nipro has established the Internal Audit Division, consisting of the Audit Office and the Overseas Audit
Office, and conducts audits of accounting and other operations based on internal audit protocols.
(2) Statutory Auditing
For each statutory audit, Audit & Supervisory Board Members attend key meetings such as
those of the Board of Directors, in accordance with the auditing policy and roles determinedby the Audit & Supervisory Board. Audit & Supervisory Board Members receive performance
reports from directors and employees, and are able to request further explanation whennecessary, and inspect key documents. Audit & Supervisory Board Members also undertake
other auditing duties such as investigating the state of operations and assets in key places ofbusiness. Audit & Supervisory Board meetings are held regularly, or as necessary, in order toexchange views and hold discussions.

3. Outside Directors and Outside Audit & Supervisory Board Members(1) Outside Directors and Outside Audit & Supervisory Board Members
Two of the directors are Outside Directors and two of the three Audit & Supervisory Board
Members are Outside Audit & Supervisory Board Members. The two Outside Directors andone of the Outside Audit & Supervisory Board Members have been designated as independent
directors/Audit & Supervisory Board Members, and the Tokyo Stock Exchange has been
notified of their designation.
(2) Policy and Criteria for Independence from the Filing Company in the Election of Outside
Directors and Outside Audit & Supervisory Board Members
Nipro determines the criteria for the independence of Outside Directors and Outside Audit &Supervisory Board Members as a part of separate corporate governance guidelines taking into
consideration the provisions stipulated under the Financial Instruments and Exchange Act.
In the event that either case does not fall within the scope of this criteria, Outside Directors andOutside Audit & Supervisory Board Members are deemed to be independent from the Company
and that there is no possibility of a conflict of interest with general shareholders.

(4) Mutual Collaboration between Outside Audits and Internal, Statutory and Accounting Audits,and the Relationship between Internal Control Divisions
The Outside Directors attend meetings of the Board of Directors and supervise our management
based on their extensive knowledge and management experience from an independent
standpoint. The Outside Audit & Supervisory Board Members carry out auditing activities
including attending key meetings such as meetings of the Board of Directors in accordancewith the audit policy and roles determined by the Audit & Supervisory Board. They are able toaccess reports via the full-time Audit & Supervisory Board Members or directly from directors
and employees, and inspect key documents. The Outside Audit & Supervisory Board Members
also attend periodic or occasional meetings of the Audit & Supervisory Board to contribute to
discussions and exchange opinions from an objective and independent viewpoint. The Outside
Audit & Supervisory Board Members strive to facilitate a smooth audit service through close
collaboration with employees of the Audit Office, the full-time Audit & Supervisory Board
Members, Audit & Supervisory Board Members of subsidiaries and the accounting auditor.

4. Accounting Audits
Name of Accounting Auditor: Hibiki Audit Corporation
Support Staff for Audits:
Names of Certified Public Accountants conducting the Audit: Certified Public Accountants: 14
Kazuhiro Bando, Miho Ishihara, Takanori Nakasuka
Other Staff: 2
Remuneration paid to Directors and Audit & Supervisory Board Members
Millions of yen
Total amount of
remuneration¥

188

Retirement
benefits

Bonus

¥

388

¥

Number of eligible
corporate officers

48

30

7

7

—

—

1

Outside Directors, Outside Audit &Supervisory Board Members

16

16

—

—

4

Thousands of U.S. dollars
Total amount of
remuneration

Internal Directors(3) Approach to the Election of Outside Directors and Outside Audit & Supervisory Board Members
Close coordination with the Internal Directors and the full-time Audit & Supervisory Board
Members, employees of the Audit Office and assigned staff from the management section of
the head office (as needed) ensures sufficient cover to implement the supervision and theaudit function and role as required by the current corporate governance system.

624

Annualremuneration

Internal Audit & Supervisory Board Members

Internal Directors¥

Total amount of remuneration by typeInternal Audit & Supervisory Board Members
Outside Directors, Outside Audit &Supervisory Board Members

Total amount of remuneration by type
Retirement
benefits

Number of eligible
corporate officers

Annualremuneration

Bonus$ 69,363$ 20,877$ 43,080

799

799

—

—

1

1,798

1,798

—

—

4

$

5,405

NIPRO Annual Report 201930

20

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

⦁ Research and Development Activities
⦁ Progress of Research and Development
⦁ Status of Corporate Governance⦁ Outside Directors’ Messages
⦁ Board of Directors and Audit & Supervisory
Board Members

Financial/
Data Section

Management Foundation

Outside Directors’ Messages
Bringing a clinical-site perspective tomanagement by using my experience ofmanaging a hospital and working as a pharmacist
I have been an external director of this company since 2014.
For many years, I was responsible for purchasing drugs, medical
devices, and medical consumables and for personnel and generalaffairs at the headquarters of a major medical institution. With thisexperience, I am currently working as a consultant in medical
management. My business relationship with NIPRO began when
I was in charge of purchasing medical devices. In comparison to
Yoshiko Tanaka
other companies, NIPRO was characterized by their commitment
Outside Director
to solving users’ needs. After being appointed an external
director, I have been trying to convey my feelings to the
management about matters even outside the drug and healthcare fields.
External directors are required to play supervisory and advisory roles. For this, I need to obtainaccurate information about clinical sites. I actively take part in various meetings besides the boardof directors and visit clinical sites to hear from the persons in charge of the sites and obtain thenecessary information. NIPRO has a culture of openness which enables such exchange.
The board of directors spent too much time on large numbers of business reports, and as aresult we did not have enough time to deliberate important matters. To solve this issue, in January
2019, two external directors submitted an agenda with an improvement plan: to introduce “Mattersto be deliberated” in addition to “Matters to be resolved” and “Matters to be reported.” As a result,
we now have active deliberations on important matters and also freely exchange our opinions onother important subjects such as management risks.
President Sano has the foresight to incorporate such external opinions and make the most ofthem in management over the next 5 or 10 years. NIPRO is currently making advance investments
to expand the business, aiming to become a corporate group with annual sales of 1 trillion yen by
2030. To become a big company, however, both scale and profitability are important. I need toclosely supervise each business and provide appropriate advice when the sales greatly increaseso that a system that generates sufficient profits can be established.
NIPRO is currently opening dialysis facilities and training centers worldwide. It is also
NIPRO’s social mission to build facilities for dialysis treatment and develop local healthcare
professionals primarily in developing countries. I will contribute to the future of healthcare
along with the development of our business.

Contributing to NIPRO’s growth from theperspective of human development
I had worked as a nurse at a major medical institution andbeen involved in hospital management as a director of thenursing department and a deputy director of the hospital.
Currently, as an expert in human resource development, I deliverlectures based on the Fish! Philosophy at various institutions.
My relationship with NIPRO started when I was a head nurse.
A sales representative made a proposal for organizing a workshop
on healthcare and nursing. The workshop was a success, andMinako Oomizu
subsequently it was organized for the entire hospital group.
Outside Director
It particularly impressed me that NIPRO’s sales representatives
did not prioritize the sales activities for their products in thoseworkshops. They stuck to the concept of prioritizing healthcare for patients. This workshop is stillroutinely conducted, and NIPRO’s culture has also been transferred to these institutions.
I advocate use of the Fish! Philosophy to improve performance in clinical settings. The Fish!
Philosophy is a management approach that aims to vitalize the organization by working with 4
ideas: “play,” “make their day,” “be there,” and “choose your attitude.” I introduced thismanagement approach to NIPRO, and even after being appointed as an external director,
I have been promoting this approach at various sites at the request of NIPRO’s departments
and board of directors.
One of the major roles of external directors is to prevent some directors from making
decisions or acting without consulting about an objective decision made outside thecompany. NIPRO’s board of directors used to spend a lot of time on voluminous business
reports, but now, the form of deliberation has been improved and we can deepen discussions
on important issues. There are two female external directors, and both of us have extensive
expertise in the medical field, which helps stimulate discussions.
NIPRO is proceeding with globalization to achieve annual sales of 1 trillion yen by 2030.
In my view, what is important is that “people” make up an organization. The components ofbusiness, such as development and sales, are carried out by people. Therefore, I thinkdevelopment of human resources will become an increasingly important issue in the future.
I would like to be actively involved in overseas business to disseminate human resource
management practices globally.

NIPRO Annual Report 201921

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

⦁ Research and Development Activities
⦁ Progress of Research and Development
⦁ Status of Corporate Governance⦁ Outside Directors’ Messages
⦁ Board of Directors and Audit & Supervisory
Board Members

Financial/
Data Section

Management Foundation

Board of Directors and Audit & Supervisory Board Members
As of August 1, 2019

Minako Oomizu
Outside Director

Kimihito Minoura
Managing Director

Toshiaki Masuda
Managing Director

Yoshiko Tanaka
Outside Director

Kiyotaka Yoshioka
Managing Director

Kazuhiko SanoManaging Director

Yoshihiko Sano

Yasushi Oyama
Managing Director

President & Representative Director

Kenichi Nishida
Managing Director

Kazuo Wakatsuki
Managing Director

Takehito Yogo
Managing Director

Kyoetsu Kobayashi
Managing Director

Tsuyoshi Yamazaki
Managing Director

NIPRO Annual Report 201922

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

⦁ Research and Development Activities
⦁ Progress of Research and Development
⦁ Status of Corporate Governance⦁ Outside Directors’ Messages
⦁ Board of Directors and Audit & Supervisory
Board Members

Financial/
Data Section

Management Foundation

Board of Directors and Audit & Supervisory Board Members
As of August 1, 2019

Yoshihiko Sano

Outside Directors

Managing Directors

President & Representative Director

Kiyotaka Yoshioka

Kimihito Minoura

Yasushi Oyama

Kazuo Wakatsuki

Tsuyoshi Yamazaki

Takehito Yogo

Toshiaki Masuda

Kazuhiko Sano

Domestic Division

Division of Regenerative and Advanced
Therapy; New Business Development
Headquarters

Global Business Division

PharmaPackaging Division

Medical Technology Division for Planning,
Development & Marketing; Research &Development InstituteKyoetsu Kobayashi

Vascular Product Sales & Development
Headquarters; Vascular DivisionCorporate Planning Headquarters(Chief Financial Officer)

Deputy General Manager Global
Production Division; Production Technology
Development Division

Masanobu Iwasa

Hiroshi Sudoh

Goichi Miyazumi

Yozo Sawada

Itsuo Akasaki

Hiroshi Yoshida

Kaname Sadahiro

Intellectual Property Department

Technical Sales Department;
PharmaPackaging Division

Product Planning Headquarters;
Medical Technology Division for Planning,
Development & Marketing

Enzyme Center; Department III;
Research & Development Institute;
Medical Technology Division for Planning,
Development & Marketing

Hideto Nakamura

Hideo Okamoto

Akio Shirasu

Yasushi Kutsukawa

Toyoshi Yoshida

Kouki Hatakeyama

Masayuki Ito

Kenju Fujita

Toshiya Kai

General Affairs / Human Resources
Headquarters

Deputy General Manager Business
Strategy Office; Medical Sales &Marketing Headquarters;
Domestic Division

Surgical Devices Division; Domestic
Product Development & Technical Sales
Headquarters; Medical Technology
Division for Planning, Development &MarketingConstruction & Engineering Headquarters;
Deputy General Manager Global
Production Division; Process Management& Planning Center

Quality Assurance & Regulatory
Compliance Headquarters

Deputy General Manager Business
Strategy Office;Pharmaceutical Sales & Marketing
Headquarters; Domestic Division

Artificial Organs Development Center;Research Management Department;
Medical Technology Division for Planning,
Development & Marketing

Apr. 2008: Director of Nursing Department,
and Vice-Director, Jikei
University Hospital
Apr. 2010: Director, Office of Human
Resources Management and
Education, Wakokai Medical
Association
Jun. 2015: Appointed Director, Nipro
Corporation (to present)

Audit & Supervisory Board Member (Full time)

Mitsutaka Ueda

Business Development Department;
PharmaPackaging DivisionJun. 1997: General Manager, Planningand Management
Department, and General
Manager, Drug Department,
Tokushukai Medical Corporation, Osaka Headquarters

Minako Oomizu

Jun. 2014: Appointed Director, Nipro
Corporation (to present)

Pharmaceutical Development Promotion
Department; Pharmaceutical Division

Directors

Deputy General Manager Medical
Technology Division for Planning,
Development & Marketing

May 1983: General Manager, Drug
Department, Tokushukai
Medical Corporation, Osaka
Headquarters

Jun. 2002: President and Representative
Director, MEDY HOPE
Corporation (to present)

Kenichi Nishida

Global Production Division; Odate Plant

Yoshiko Tanaka

Deputy General Manager Global Business
Division

Global Product Development & Sales
Headquarters; Dialysis & Blood Purification
Product Development & Sales Department;
Medical Technology Division for Planning,
Development & Marketing

Takayuki Nomiya

Audit & Supervisory Board Members (Outside)

Kazumichi Irie
Masayoshi Hasegawa

Quality Assurance Department;
Global Production Division

Pharmaceutical Research Laboratories;
Pharmaceutical Division

NIPRO Annual Report 201923

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Financial Review
Overview

Cost of Sales

During the consolidated fiscal year under review, theThe cost of sales increased 10.2% compared with thesense of uncertainty about the future heightened in theprevious fiscal year to ¥295,767 million (US$2,664.8

global economy due to the impact from US-China trade

million). This increase corresponded to the increase infrictions and movements in the UK’s Brexit negotiations,net sales. The ratio of cost of sales to net sales increased

as countries turned inwards in response to US protectionist

by 1.5 percentage points compared with the previous

policies. Regarding foreign exchange movements, while

fiscal year to 69.3%.

major currencies remained within a relatively small fluctuation(Years ended March 31)

Net sales(Millions of yen)

325,084

366,650

359,699

2016

2017

395,397426,399

As a result, gross profit increased by 2.7% comparedrange throughout the year, some emerging economy

with the previous fiscal year to ¥130,631 million

currencies saw significant falls. Meanwhile, in the Japanese(US$1,176.9 million).

2015

2018

2019

economy, corporate earnings continued to recover steadily.
There was a significant impact in the medical device
and pharmaceutical industries from the 2018 drug price

Selling, General and Administrative Expenses
Selling, general and administrative expenses increased

revisions. Conditions are harsher as drug price revisions

by 6.7% compared with the previous fiscal year tocontinue annually, with more planned in accordance¥106,804 million (US$962.2 million). This is mainly due towith the revision of the consumption tax scheduled for

an increase of depreciation expenses and Expenses for

October of this year. Even under these circumstances,

regenerative products.

Operating income(Millions of yen)

28,77024,205

Operating Income

production costs, and worked to improve businessAs a result of the aforementioned factors, operating income

performance, advancing the development of the products

was down 12.0% compared with the previous fiscal year towhich are more concerned about the users.

¥23,827 million (US$214.6 million). The ratio of operating
income to net sales was down 1.26 percentage points to 5.58%.

23,827

16,572the Nipro Group has made efforts to achieve top market
share in Japan, increase international sales and cut

27,088

2015

2016

2017

2018

2019

Income before income taxes(Millions of yen)

Consolidated Business Results
Relevant quantitative data for the period under review

Other Income (Expenses)

has been converted at the rate of US$1.00 = ¥110.99

We recorded other expenses of ¥2,496 million (US$22.4(the rate of exchange as of March 31, 2019).

million), ¥7,565 million lower compared with other expenses

26,285
19,90818,324in the previous fiscal year. In the period under review,
Net Sales

we recorded ¥1,121 million (US$10.1 million) in exchange

Net sales for the current term were ¥426,399 million

losses, while we reported ¥2,561 million in exchange(US$3,841.7 million). Sales increased 7.8% year on year.

losses in the previous period.

2015

2016

2017

21,23317,0262018

2019

NIPRO Annual Report 201924

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Financial Review
Income before Income Taxes

AmericasAs a result of the factors outlined above, income before

In the Americas, net sales increased by 5.5% compared

income taxes increased by 24.7% compared with thewith the previous fiscal year to ¥59,836 million (US$539.1

previous fiscal year to ¥21,233 million (US$191.3 million).

million) mainly thanks to the increase of sales in the(Years ended March 31)

Net income attributable to owners of parent(Millions of yen)

Medical-Related business.
19,719

Income Taxes
Income taxes, including deferred taxes, increased by

Europe97.9%, compared with the previous fiscal year to ¥9,357

In Europe, net sales increased by 10.0% compared withmillion (US$84.3 million). The effective tax rate was

the previous fiscal year to ¥51,042 billion (US$459.8

44.1%, higher than the rate of 27.8% for the previous

million) mainly thanks to the increase of sales in thefiscal year. This increase is mainly owing to the reduction

Medical-Related business.

12,4702015

2016

11,346

11,82912,136

2017

2018

2019

57,71856,27620182019

826,759

845,821

2018

2019

in loss-making subsidiaries.
Asia
Net Income (Loss) Attributable to Non-controlling Interests

In Asia, net sales increased by 7.9% compared with the

Net income attributable to non-controlling interests

previous fiscal year to ¥54,552 million (US$491.5 million)

amounted to ¥-260 million (US$-2.3 million).

mainly thanks to the increase of sales in the Medical-

Capital expenditures(Millions of yen)

43,511

Related business.

49,91053,826Net Income Attributable to Owners of Parent
Net income attributable to owners of parent increased by

Financial Position

2.5% compared with the previous fiscal year to ¥12,136

Total assets increased ¥19,062 million year on year to

million (US$109.3 million). Basic earnings per share¥845,821 million (US$7,620.6 million). Current assets

increased to ¥73.6 (US$0.7) from ¥71.1 for the previous

increased ¥6,906 million and noncurrent assets

fiscal year. Return on equity increased 0.3 percentage

increased ¥12,156 million. The increase of current assets

points to 7.3% from 7.0% for the previous fiscal year.

was mainly due to increases of ¥8,458 million in trade

2015

2016

2017

Total assets(Millions of yen)notes and accounts receivable and ¥8,707 million in
Net Sales by Geographic Segment

inventories, and the increase of noncurrent assets wasJapanmainly due to an increase of ¥13,007 million in buildings

In Japan, net sales increased by 7.9% compared with theand structures.

previous fiscal year to ¥260,967 million (US$2,351.2

Total liabilities increased ¥30,717 million year on year

million) mainly thanks to the increase of sales in theto ¥673,990 million (US$6,072.5 million). Current liabilities

Medical-Related business.

increased ¥23,091 million and long-term liabilities

695,307

708,883

2015

2016

752,8392017

NIPRO Annual Report 201925

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Financial Review
increased ¥7,625 million. The main reason for the

Staff

increase in current liabilities was an increase of ¥22,458

The total number of employees as of the end of themillion in current portion of long-term debt, and theperiod under review increased by 995 compared with theprimary reason for the increase in long-term liabilities

end of the previous fiscal year, to 29,325. Employees in

was a ¥6,400 million increase in bonds payable.

Japan increased by 454, to 8,275, and the number of(Years ended March 31)

Net assets(Millions of yen)overseas employees increased by 541 to 21,050.

178,810

175,508

176,408

183,485

2015

2016

2017

2018

2019

67.5

71.1

73.6

2017

2018

2019

28.3

29.3

2018

2019

171,830

Total net assets decreased ¥11,655 million year on yearto ¥171,830 million (US$1,548.1 million). Shareholders’

Basic Policy on Distribution of Profit

equity increased by ¥2,327 million and accumulated otherAt Nipro, we have been paying dividends to shareholders

comprehensive income decreased by ¥13,460 million.

by positioning the return of profits as an important

As a result, the equity ratio decreased by 1.8 of amanagement policy. Retained earnings will be actively

percentage point compared with the end of the previous

invested in the research and development division, in

fiscal year, to 19.1%.

addition to the sales division and production division, asa part of efforts to expand the business base and promote

Cash Flowlong-term business development. Through these means,

Net cash provided by operating activities amounted to

we will ensure stable profits and achieve continued growth.

Basic earnings per share
(yen)

116.2

¥41,362 million (US$372.6 million). The major cash

81.0

inflows were income before income taxes and depreciation

Risk Factors

and amortization.

The following are risks that may have an effect on the Nipro

Net cash used in investing activities came to ¥64,712

Group’s operational results and/or financial condition.

million (US$583.0 million). The principal cash outflow was

The items concerned were determined as of March 31, 2019.

2015

2016

purchases of property, plant and equipment.
Net cash provided by financing activities amounted to(1) Risks Related to Product Safety¥12,646 million (US$113.9 million). The main account of

The Nipro Group brings all of its capabilities to bear in

cash inflow was proceeds from long-term loans.

ensuring product safety in the design, development

As a result, cash and cash equivalents stood at¥120,310 million (US$1,083.9 million) as of March 31, 2019.

and manufacturing of medical devices and pharmaceuticalproducts. There are still the risks, however, that accidental

Number of employees(Thousand)

23.2

24.2

24.7

2015

2016

2017

defects or adverse effects could result in damages to athird party and our being sued for liability.

NIPRO Annual Report 201926

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Financial Review
To cover these risks, we therefore maintain general(4) Risks Related to Changes in Sale Prices

liability and product liability insurance. In the unlikely

The products sold by the Nipro Group include someevent of a successful claim in excess of the insurance

that are affected on an irregular two-year basis bycoverage, however, there could be a material adverse

price reductions under the Japanese payment systemeffect on our operational results and/or financial condition.

for medical care, drug prices and reimbursement(Years ended March 31)

Equity ratio
(%)

24.1

prices for medical materials and supplies. Moreover,(2) Risks Related to Supplier Concentration

become pervasive worldwide, resulting in intensified

operations from a large number of suppliers. Some

competition between corporations and leading to

key materials or parts may be obtained only from a single

prices falling to a greater degree than anticipated,

supplier or a limited group of suppliers. If circumstances

there could be a material adverse effect on ourat any of these suppliers make it impossible for us tooperational results and/or financial condition.

acquire a sufficient quantity of materials or parts to meet

20.9

2015

2016

2017

2018

19.1

2019

Return on assets(5) Risks Related to Changes in Prices of Raw Materials

manner, there could be a material adverse effect on

The products manufactured by the Nipro Group include

our operational results and/or financial condition.

some that are made from petrochemical products

(%)

3.5

such as plastics. Should the cost of raw materials(3) Risks Related to Changes in Government

22.1

should measures to hold down medical costs also

The Nipro Group procures materials and parts for its

our production needs in a timely and cost-effective

23.4

3.9
3.4
2.8

2.5

such as petrochemicals rise, there could be a material

Healthcare Policies

adverse effect on our operational results and/or

The business sector to which the Nipro Group belongs

financial condition.

2015

2016

2017

2018

2019

6.8

7.0

7.3

2017

2018

2019

is intimately connected with the healthcare system
and is subject to the regulations laid out by government(6) Risks Related to Overseas Expansion

organizations, including the National Health Insurance

The Nipro Group maintains manufacturing bases andSystem and the Pharmaceutical and Medical Devices

sales offices around the world for the production andAct, formerly known as the Pharmaceutical Affairs

supply of its products. Should there be unexpected

Law. Should circumstances arise in which we wererevisions to legal regulations or political or economic

unable to respond to changes in the environmentchanges in these countries or regions, there could be

brought about by unforeseeable wholesale changes ina material adverse effect on our operational results

government healthcare policies, there could be aand/or financial condition.

material adverse effect on our operational results and/Return on equity
(%)

11.8
8.5

2015

2016

or financial condition.
NIPRO Annual Report 201927

Contents

About NIPROManagement
Message

Review ofOperations

Financial/
Data Section

Management
Foundation

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Ten-Year Summary

Nipro Corporation and its Consolidated Subsidiaries
Years ended March 31
Thousands of
U.S. dollars (Note 1)

Millions of yen

2019

2018

2017

2016

2015

2014

2013

2012

2011

2019

2010

Income Statement Data:

177,830$3,841,783

Medical-Related (*1)

327,359

300,117

262,198

272,168

237,777

221,363

169,971

145,082

132,817

118,517

2,949,451

Pharmaceutical-Related (*1)

63,482

66,846

69,14062,26657,37251,50866,212

59,71538,00534,528571,962

PharmaPackaging (*1)

35,52628,40428,33132,18429,83027,611

4,603

6,954

24,70424,338320,089

Net sales¥

426,399¥395,397¥359,699¥

366,650¥

325,084¥

300,753¥

241,021¥212,013¥

195,943¥

Other (*1)

31

29

29

32

105

271

235

262

417

447

279

Cost of sales

295,767

268,272

244,602250,773

225,525

213,221

175,314149,253

137,768

126,1452,664,814

Selling, general and administrative expenses

106,804

100,036

86,326

91,672

82,98775,242

54,336

46,93540,95033,591

962,289

Operating income

23,82727,08828,77024,205

16,572

12,29011,371

15,825

17,22518,094

214,679

Medical-Related (*2)

36,72236,522

30,63828,204

23,813

20,436

14,287

17,07818,437

19,923

330,865

Pharmaceutical-Related (*2)

10,662

13,104

14,135

12,06010,553

8,013

3,988

4,940

1,658

2,102

96,064

PharmaPackaging (*2)

778

(1,308)(1,313)(1,618)(2,889)(2,183)

601

454

2,701

3,103

7,010

Other (*2)

146

75

(10)

61

131

216

222

230

88

64

1,320

Income before income taxes

21,23317,02618,324

26,285

19,90812,891

18,06011,022

7,432

13,872

191,311Net income attributable to owners of parent

12,136

11,82911,346

19,71912,4702,861

10,232

4,586

2,456

7,253

109,351

Increase in tangible and intangible fixed assets

64,394

61,99058,31057,10147,69835,09337,99739,52523,323

15,209580,185

Depreciation and amortization

35,25232,56531,12830,147

27,66825,151

21,21021,581

21,244

18,421

317,616

R&D expenses

16,526

16,113

11,517

10,269

8,646

7,891

6,464

5,957

4,977

4,846

148,900

383,397$7,620,699

Balance Sheet Data:
Total assets¥

845,821¥826,759¥

752,839¥

708,883¥

695,307¥619,655¥

579,302¥499,687¥

476,510¥

Property, plant and equipment—net

284,483

270,273244,222

223,757

220,195

191,594

174,703

145,679

128,506

124,2092,563,141

Working capital

168,676

184,861

134,983

115,970

71,94545,40574,216

61,346

40,621

41,725

1,519,736

Current liabilities

274,277

251,186

251,792

252,148

278,402250,715

213,758

189,090

176,401

138,204

2,471,195

Long-term liabilities

399,712392,087324,639281,227

238,095

232,979

236,781

196,646

191,071

129,1223,601,340

Common stock

84,39784,39784,39784,39884,39884,39884,39884,39828,663

28,663

760,409

Capital surplus

—

—

—

—

635

689

636

636

29,97329,973—

171,830

183,485

176,408

175,508

178,810

135,961

128,763

113,951

109,038

116,071

1,548,163

Net assets(*1) Effective the fiscal year ended March 31, 2011, the Company has adopted ASBJ Statement No. 17 ”Accounting Standard for Disclosures about Segment of an Enterprise and Related Information” (March 27, 2009) and ASBJ Guidance No. 20 ”Guidance on Accounting Standard forDisclosures about Segment of an Enterprise and Related Information” (March 21, 2008). Net sales and operating income for the period for the fiscal year ended March 31, 2010 have been restated to show what the Group’s result would have been if the new accounting standards
had been applied in that year. Before the fiscal year ended March 31, 2009, net sales and operating income have been stated in compliance with previous accounting rules. In addition, the corporate reorganization was conducted effective on October 1, 2012 in order to enforce
Pharmaceutical-Related business and build a strong cooperative relationship among Medical-Related, Pharmaceutical-Related and Glass-Related businesses. As a result of this reorganization, some business divisions included in Glass-Related business were changed toPharmaceutical-Related business. The segment information is presented as if the aforementioned reorganization had been conducted at the beginning of the financial year 2012, and the presentation for the prior financial years are not restated. Also, effective from the half year
ended September 30, 2014, 13 subsidiaries including Nipro Glass France S.A.S., Nipro Glass Belgium N.V., Nipro Glass Germany AG, Nipro Sterile Glass Germany AG, and Nipro Glass Americas Corporation were reclassified from Medical-Related business to PharmaPackaging
business which was formerly known as Glass-Related business by the corporate reorganization. Segment information after 2014 is based on this reclassification.
		
From the fiscal year ended March 31, 2019, the Company has conducted a reorganization for the purpose of doing synthetic PharmaPackaging business and increasing synergies with Pharmaceutical-Related business. As a result of this reorganization, some businessdivisions included in Pharmaceutical-Related business were changed to PharmaPackaging business. The presentations for prior fiscal years are not restated.
(*2) Operating income at the operating segment level is not adjusted for intra-segment transactions. See Note 13. “Segment Reporting” to the consolidated financial statements.

NIPRO Annual Report 201928

Contents

About NIPROManagement
Message

Review ofOperations

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

Financial/
Data Section

Management
Foundation

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Ten-Year Summary
Nipro Corporation and its Consolidated Subsidiaries
Years ended March 31
U.S. dollars(Note 1)

Yen

2019

2018

2017

2016

2015

2014

2013

2012

2011

2019

2010

Per Share Data:
Basic earnings (*3)

¥

73.6

¥

71.1

¥

67.5

¥

116.2

¥

81.0

¥

18.2

¥

60.0

¥

35.3

¥

19.4

¥

114.4

$

0.66

Diluted earnings (*3)

66.7

64.5

61.3

114.7

—

16.3

54.1

31.0

17.4

114.1

0.60

Cash dividends

28.0

28.5

29.0

33.5

32.5

30.5

27.5

23.5

50.0

53.0

0.25

Equity (*3)

990.1

1,037.2

999.5

977.6

988.8

832.1

703.5

643.9

839.7

1,802.3

8.92

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

63,878,505

63,878,505

29,32528,33024,71524,24323,153

21,826

19,327

14,566

12,0179,939

Equity ratio (*4) (%)

19.1

20.9

22.1

23.4

24.1

20.2

20.7

22.0

22.4

29.8

Return on assets (*4) (%)

2.8

3.4

3.9

3.5

2.5

2.1

2.1

3.2

4.0

5.1

Return on equity (*4) (%)

7.3

7.0

6.8

11.8

8.5

2.3

8.9

4.2

2.2

6.9

Price earnings ratio (*4) (times)

19.3

21.6

23.2

9.2

14.1

51.0

14.0

17.5

42.5

15.8

Number of common shares issued
Number of employees
Selected Data and Ratios:(*3) Effective the fiscal year ended March 31, 2012, the Company has adopted ASBJ Statement No. 2 “Accounting Standard for Earnings per Share” (June 30, 2010), ASBJ Guidance No. 4 “Guidance on Accounting Standard for Earnings per Share” (June 30, 2010) and ASBJ PITF
No. 9 “Practical Solution on Accounting for Earnings per Share” (June 30, 2010). In addition, the Company split one share of common stock into two shares on October 1, 2011 based on a resolution at the board of directors’ meeting held on August 27, 2011. In accordance withthis adoption, equity per share, basic earnings per share and diluted earnings per share are calculated on the assumption that the two-for-one stock split of common stock was conducted at the beginning of the fiscal year ended March 31, 2011. Before the fiscal year ended
March 31, 2010, each amount has been stated in compliance with previous accounting rules.
(*4) Equity ratio is the ratio of the sum of total shareholders’ equity and accumulated other comprehensive income to total assets at the period end. Return on assets is the ratio of operating income for the period to average of total assets during the period. Return on equity is theratio of net income for the period to the average of the sum of total shareholders’ equity and accumulated other comprehensive income during the period. The price earnings ratio is the ratio of the closing price of the Company’s shares listed on the First Section of the Tokyo
Stock Exchange on the last trading day in March of each year to the basic earnings per share.
(*5) Until 2016, yen amounts are rounded to the nearest million yen. Since 2017, yen amounts are rounded down to the nearest million yen.

NIPRO Annual Report 201929

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Consolidated Balance Sheets
Nipro Corporation and its Consolidated Subsidiaries
As of March 31, 2019 and 2018

Thousands of
U.S. dollars (Note 1)

Millions of yen

2019

2019

2018

AssetsTime deposits (over three months)
Trade notes and accounts receivable
Allowance for doubtful receivables
Inventories (Note 3)
Deferred income taxes (Note 4)
Other current assets
Total current assets¥ 135,599
6,341
140,511(1,437)129,218
6,959
18,854
436,047$ 1,083,974
82,2401,342,196(11,250)
1,242,685—
251,084
3,990,931

Machinery and equipment
Construction in progress
Accumulated depreciation
Property, plant and equipment—net¥ 36,480
220,205
338,391
36,638631,715(347,232)
284,483¥ 32,079
207,198
316,947
37,537593,763(323,489)
270,273$

328,686
1,984,008
3,048,847
330,1035,691,645(3,128,504)
2,563,141

Short-term bank loans (Notes 5 and 9)
Current portion of long-term debt (Notes 5 and 9)
Trade notes and accounts payable
Accrued income taxes
Accrued expenses
Commercial paper (Note 9)
Notes and accounts payable for plant and equipment
Other current liabilities

Long-term debt (Notes 5 and 9)
Net defined benefit liability (Note 10)
Deferred income taxes (Note 4)
Other long-term liabilities

Other intangible assets
Total intangible assets

Investment securities (Note 6)
Lease deposits
Deferred income taxes (Note 4)
Other assets
Total investments and other assets
Total
The accompanying notes are an integral part of these statements.

¥ 54,245
64,635
62,105
4,993
29,036
10,00015,246
10,923
251,186$ 502,779
784,700
627,504
36,654282,345—
114,386
122,824
2,471,195¥385,512
5,101
204
8,893
399,712¥380,517
4,530
783
6,255
392,087$3,473,402
45,963
1,842
80,1323,601,340

Total long-term liabilities¥ 84,397¥ 84,397$ 760,409

90,719(10,826)

83,570(6,004)

817,369(97,546)

164,291

161,963

1,480,232(5,173)
(54)
2,625
(199)
(2,802)
10,341
171,830¥845,821

(712)
(69)
11,40436
10,658
10,863
183,485¥826,759(46,616)(491)
23,657(1,795)(25,246)
93,176
1,548,163$7,620,699

Net Assets (Note 12):
Authorized: 400,000,000 shares¥ 19,327
20,07139,398¥ 27,358
18,63545,994$

174,137
180,836
354,974

Issued: 171,459,479 shares
Retained earnings
Less cost of common shares of treasury stock(8,361,856 shares in 2019 and 5,037,124 shares in 2018)
Total shareholders’ equity

Investments and other assets:
Investment in unconsolidated subsidiaries
and an affiliate accounted for by the equity method¥ 55,803
87,09369,646
4,068
31,337—
12,695
13,632274,277

Commitments and contingent liabilities (Note 11)
Common stock

Intangible assets (Note 5):
Goodwill

2019

Long-term liabilities:

Property, plant and equipment (Note 5):
Buildings and structures

2018

Current liabilities:¥ 120,310
9,127
148,970(1,248)137,925—
27,867442,953

Total current liabilities
Land

2019

Liabilities and net assets

Current assets:
Cash and cash equivalents

Thousands of
U.S. dollars (Note 1)

Millions of yen

¥

8,690

52,683
1,687
11,335
4,589
78,986¥ 845,821

¥

4,150

58,794
1,896
3,706
5,896
74,443¥ 826,759$

78,300474,664
15,208102,131
41,346
711,651$ 7,620,699

Unrealized gain (loss) on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Accumulated other comprehensive income
Non-controlling interests
Total net assets
Total
The accompanying notes are an integral part of these statements.

NIPRO Annual Report 201930

Contents

About NIPROManagement
Message

Review ofOperations

Financial/
Data Section

Management
Foundation

Financial/Data Section

Consolidated Statements of Income

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2019 and 2018
Thousands of
U.S. dollars (Note 1)

Millions of yen

Cost of sales
Gross profit

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Consolidated Statements of Comprehensive Income

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2019 and 2018

Net sales⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

2019

2018

2019

¥426,399
295,767
130,631¥395,397
268,272
127,125$3,841,783
2,664,814
1,176,969

Net income

106,804
23,827

Operating income

962,289
214,679

100,036
27,088

Unrealized gain (loss) on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income of entities
accounted for using equity method

Other income (expenses):

2,559(3,347)2,221(3,543)23,063(30,156)

(41)

(718)

(377)

(1,121)
78
147
(915)
46
21,233(2,561)113
736(2,216)(4,093)17,026(10,100)
704
1,327(8,252)
1,298
191,311

Deferred

8,605
751

7,708
(2,980)77,535
6,770

Net income

11,876

12,298107,005(260)¥ 12,136468¥ 11,829(2,346)$ 109,351

Interest and dividend income
Interest expense
Loss on sale and disposal of property, plant andequipment—net
Exchange gain (loss)
Equity in profit (loss) of an affiliated company
Gain (loss) on sale of subsidiaries and affiliates’ stocks
Loss on impairment of fixed assets (Note 17)
Other income (loss)—net
Income before income taxes

2019

2018

2019

¥11,876¥12,298$107,005(4,460)15(8,891)(250)(2,301)
72
2,882
628

(40,190)135(80,106)(2,257)

(127)

(87)

(1,150)¥ (1,838)¥13,492$ (16,564)(1,323)(514)

12,983508(11,928)(4,636)

Other comprehensive income:Deferred gains or losses on hedges

Selling, general and administrative expenses (Notes 15 and 16)

Thousands of
U.S. dollars (Note 1)

Millions of yen

Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests
The accompanying notes are an integral part of these statements.

Income taxes (Note 4):
Current

Net income (loss) attributable to non-controlling interests
Net income attributable to owners of parent

U.S. dollars(Note 1)

Yen

Amounts per common share:
Basic earnings
Diluted earnings
Cash dividends

¥

73.6
66.7
28.0

¥

71.1
64.5
28.5

$

0.7
0.6
0.2

The accompanying notes are an integral part of these statements.

NIPRO Annual Report 201931

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

Financial/
Data Section

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Consolidated Statements of Changes in Net Assets
Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2019 and 2018 consisted of the following:Thousands
Outstanding
number ofshares ofcommon stock

Balance at March 31, 2017

171,459

Millions of yen
Commonstock

Retainedearnings

Treasurystock¥84,397¥78,422¥ (6,243)

11,829Net income attributable to owners of parent

Total
shareholders’equity¥156,577

Unrealized
gain onavailable-forsale securities¥ 1,589

Deferred
gains orlosses onhedges¥(141)

Foreigncurrencytranslation
adjustments

Remeasurementsof defined
benefit plans¥ 8,640¥(582)

Accumulated
other comprehensive
incomeNoncontrollinginterests

Total
net assets¥ 9,504¥10,325¥176,408

11,82911,829(6,498)(1)
240(6,498)(1)
240

Increase (decrease) in retained earnings due to inclusionof new subsidiaries in consolidation(6,498)Cash dividends
Purchase of treasury stock(0)

Disposal of treasury stock

(1)
240

Change in the scope of consolidation(184)

Decrease of retained earnings (Other)(184)

Other net change during the year
Balance at March 31, 2018

171,459¥84,397¥83,570¥ (6,004)

12,136

Net income attributable to owners of parent¥161,963(2,301)¥ (712)72¥ (69)

2,764¥11,404

619
¥ 36

1,153
¥ 10,658

538¥10,863

(184)
1,691
¥183,485

12,136

12,136(4,957)(5,000)178(4,957)(5,000)178

Increase (decrease) in retained earnings due to inclusionof new subsidiaries in consolidation(4,957)

Cash dividends(5,000)178

Purchase of treasury stock
Disposal of treasury stock
Change in the scope of consolidation(29)

Decrease of retained earnings (Other)(29)

Other net change during the year
Balance at March 31, 2019

171,459¥84,397¥90,719¥(10,826)¥164,291

Thousands
Outstanding
number ofshares ofcommon stock

Balance at March 31, 2018

171,459(4,461)¥(5,173)15¥ (54)(8,778)¥ 2,625(236)¥(199)(13,460)¥ (2,802)(522)¥10,341

Accumulated
other comprehensive
incomeNoncontrollinginterests$ 96,033$97,882(29)(13,983)¥171,830

Thousands of U.S. dollars (Note 1)
Commonstock

Retainedearnings$760,409$752,951

Treasury
stock

Total
shareholders’equity$(54,102)$1,459,257

109,351

Net income attributable to owners of parent

Unrealized
gain onavailable-forsale securities$ (6,419)

Deferred
gains orlosses onhedges$(626)

Foreigncurrencytranslation
adjustments$102,748

Remeasurementsof defined
benefit plans

$

331

Total
net assets$1,653,173

109,351

109,351(45,051)
1,607(44,668)(45,051)
1,607
(265)

$(97,546)$1,480,232(44,668)(45,051)
1,607
(265)
(125,985)$1,548,163

Increase (decrease) in retained earnings due to inclusionof new subsidiaries in consolidation(44,668)

Cash dividends
Purchase of treasury stock
Disposal of treasury stock(265)

Decrease of retained earnings (Other)
Other net change during the year
Balance at March 31, 2019

171,459$760,409$817,369(40,197)$(46,616)

135$(491)(79,091)$ 23,657(2,127)$(1,795)(121,280)$ (25,246)(4,705)$93,176

The accompanying notes are an integral part of these statements.

NIPRO Annual Report 201932

Contents

About NIPROManagement
Message

Review ofOperations

Financial/
Data Section

Management
Foundation

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Consolidated Statements of Cash Flows
Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2019 and 2018

Thousands of
U.S. dollars (Note 1)

Millions of yen

2019

2019

2018

2019

Operating activities:
Income before income taxes
Depreciation and amortization
Impairment loss
Amortization of goodwill
Equity in loss of affiliated companies
Allowance for doubtful receivables
Exchange gain
Gain (loss) on sales of available-for-sale securities
State subsidy
Loss on reduction of non-current assets
Gain on bargain purchase
Trade receivables
Inventories
Trade payables
Other current assets
Other current liabilities
Other, net
Accrued income taxes
Net cash provided by operating activities¥ 21,233
35,252
915
3,372
(78)
(699)
1,385
(147)
(1,036)865(317)(12,278)(11,448)
11,814(5,393)
5,544
552(8,175)41,362¥ 17,026
32,565
2,216
3,431
(113)
443
559
(791)
(1,613)1,500—(7,331)(4,902)(3,821)
1,755
6,454
995
(7,329)41,046$ 191,311
317,616
8,252
30,387(704)(6,301)
12,478(1,327)(9,340)7,799(2,860)(110,623)(103,146)
106,447(48,590)
49,955
4,974
8,979
372,664(3,430)
(875)
110

4,957
(549)
4,480

(30,904)(7,887)
999(1,413)(921)(12,738)

Proceeds from investment in unconsolidated subsidiaries
and affiliates

—

384

—

Purchases of investments in consolidated subsidiaries
affecting scope of consolidation—(11,888)

—

2,294

—

20,674(5,126)(55,980)
1,008(1,299)(64,712)—(62,382)
655
1,124(64,140)(46,190)(504,373)
9,082(11,707)(583,046)

Purchases of available-for-sale securities
Proceeds from sales of marketable securities
Purchases of investment in unconsolidated subsidiaries
and affiliates

Proceeds from sale of investments in consolidated
subsidiaries affecting scope of consolidation
Payments for transfer of business
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Other, net
Net cash used in investing activities

2019

2018

Financing activities:

Investing activities:
Deposit (Over three months)

Thousands of
U.S. dollars (Note 1)

Millions of yen

Net increase (decrease) in short-term loans
Net decrease in commercial paper
Proceeds from long-term loans
Repayment of long-term loans
Proceed from issuance of bonds
Repayment of bonds
Proceeds from disposal of treasury stock
Proceeds from sales of treasury stock
Cash dividends paid
Payments from changes in ownership interests in
subsidiaries that do not result in change in scopeof consolidation
Other, net
Net cash provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents of newly consolidated subsidiary,
beginning of period
Cash and cash equivalents, end of period

¥

3,264
(10,000)
88,813(68,368)
9,933(1,215)178(5,000)(4,983)¥

8,825—
135,110(74,903)993(15,160)240(22)(6,505)$29,416(90,098)
800,196(615,984)
89,501(10,946)
1,607(45,051)(44,904)

(114)

(56)

(1,028)136
12,646(1,180)47,341

1,231
113,939(4,659)(15,363)
135,599(695)
23,552
112,046(41,983)(138,425)
1,221,728

74

—

671

¥120,310¥135,599$1,083,974

The accompanying notes are an integral part of these statements.

NIPRO Annual Report 201933

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements
1. Basis of Presenting Consolidated Financial Statements

2. Summary of Significant Accounting Policies

The financial statements of Nipro Corporation (“the Company”) and its consolidated domestic subsidiaries(a) Basis of Consolidation

have been prepared in accordance with the provisions set forth in the Financial Instruments and Exchange

The consolidated financial statements include the accounts of the Company and the significant subsidiaries

Law of Japan and its related accounting regulations, and in conformity with accounting principles generally

and affiliated company accounted for by the equity method.

accepted in Japan, which are different in certain respects as to application and disclosure requirements ofInternational Financial Reporting Standards. Effective from the year ended March 31, 2009, the Company
has adopted the “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries

Investments in unconsolidated subsidiaries are stated at cost and the equity method is not applied for thevaluation of such investments since they are considered immaterial in the aggregate.
All significant intercompany balances and transactions have been eliminated in consolidation. All material

for Consolidated Financial Statements” (PITF No. 18) and as a result, the accounts of consolidated

unrealized profits included in assets resulting from transactions within the Company and its consolidated

overseas subsidiaries are prepared in accordance with either International Financial Reporting Standards

subsidiaries have been eliminated. The difference between the cost of investments in subsidiaries andor generally accepted accounting principles in the United States, with adjustments for the specified four

affiliates and the equity in their net assets at the dates of acquisition is amortized on a straight-line basis

items as applicable.

over five to twenty years.

In preparing the accompanying consolidated financial statements, certain reclassifications have been

All accounts herein have been presented on the basis of the 12 months ended March 31, 2019 formade to the consolidated financial statements issued domestically, in order to present them in a form which

the Company and for consolidated domestic subsidiaries, and December 31, 2018 for all consolidated

is more familiar to readers outside Japan. However, no adjustment has been made which would change theoverseas subsidiaries.

financial position or the results of operations presented in the original financial statements. In addition, theAdjustments have been made for any significant intercompany transactions which took place during

notes to consolidated financial statements include additional information which is not required under

the period between the end of the accounting period of the consolidated overseas subsidiaries and thatgenerally accepted accounting principles and practices in Japan.

of the Company.

The financial statements presented herein are expressed in Japanese yen and, solely for the convenienceof the reader, have been translated into United States dollars at the rate of ¥110.99 = US$1, the approximate(b) Translation of Foreign Currencies

exchange rate on March 31, 2019. These translations should not be construed as representations that theBalance sheets of consolidated overseas subsidiaries are translated into Japanese yen at the current

Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollar

exchange rates as of the balance sheet date except for shareholders’ equity, which is translated at theamounts at that or any other rate.

historical rates. Income statements of consolidated overseas subsidiaries are translated into Japanese yen at

In preparing the accompanying consolidated financial statements and notes, Japanese yen figures lessthan one million yen have been rounded down to the nearest million yen, in accordance with the Financial

the average exchange rates for the period. Resulting translation adjustments are shown as “Foreign currencytranslation adjustments” in the “Accumulated other comprehensive income” section of net assets.

Instruments and Exchange Law and Enforcement Ordinance concerning the Banking Law of Japan, although
the figure of the past fiscal years before fiscal 2016 were rounded in this report.
Therefore, total or subtotal amounts shown in the accompanying consolidated financial statements andnotes thereto are not necessarily equal to sums of individual amounts.

(c) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, readily available deposits and short-term highly liquid
investments with original maturities of three months or less.
(d) Allowance for Doubtful Receivables
An allowance for possible losses from trade notes and accounts receivable, loans and other receivables
is provided based on the actual rate of past bad debts and the uncollectible amounts of certain
individual receivables.
(e) Inventories
Inventories are stated principally at the lower of average cost or net realizable value.

NIPRO Annual Report 201934

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements(f) Property, Plant and Equipment

Accounting Method of Actuarial Gains and Losses and Prior Service Costs

Depreciation of property, plant and equipment of the Company and its consolidated domestic subsidiaries isPrior service costs are amortized on the straight-line basis over a certain period (mainly 5 years) which iscomputed principally by the declining-balance method. The straight-line method is applied to buildings

within the average of the estimated remaining service years of the employees when they occur.

acquired by the domestic companies after April 1, 1998 and buildings and accompanying facilities andActuarial gains and losses are amortized on the straight-line basis over a certain period (mainly 5 years)

structures acquired by the domestic companies after APR 1, 2016, and is principally applied to the property,

which is within the average of the estimated remaining service years of the employees commencing from theplant and equipment of consolidated overseas subsidiaries.

following year in which they arise.

(g) Intangible Assets

which they arise.

Some consolidated subsidiaries amortize its actuarial gains and losses all at once in the fiscal year in
Amortization of intangible assets, including software for the Company’s own use, is computed by thestraight-line method over the estimated useful life of the asset.
Goodwill is amortized on a straight-line basis over the period the Company benefits from its use. If the(k) Derivatives
Derivatives are stated at fair value, with changes in fair value included in net income or loss for the period inamount is not significant, it is expensed when incurred.

which they arise, unless derivatives are used for hedging purposes. Please see (m) Hedge Accounting below.

(h) Investment Securities(l) Leases

Investment securities are classified and accounted for, depending on management’s intent, as follows:

Finance leases, except for certain immaterial leases, are capitalized in the balance sheet. Amortizationi)	held-to-maturity debt securities, which are expected to be held to maturity with the positive intent andability to hold to maturity are stated at amortized cost.
ii)	available-for-sale securities, which are not classified as the aforementioned securities, are stated at fairof finance lease assets is calculated by the straight-line method over the lease period assuming noresidual value.
The Company and its consolidated domestic subsidiaries account for certain finance leases as operating

value. Unrealized gains and losses, net of applicable taxes, are reported as “Accumulated otherleases, which do not transfer ownership to the lessee and existed prior to April 1, 2008. The information ofcomprehensive income” of net assets.

such leases on an “as if capitalized” basis is presented in Note 7. “Leases”.

Non-marketable available-for-sale securities are stated at cost determined by the average method.
For other-than-temporary declines in fair value, investment securities are reduced to net realizable value
by a charge to income.

(m) Hedge Accounting<Method of hedge accounting>
The deferral hedge accounting method is applied in principle. The allocation method is applied to(i) Allowance for Loss on Clearance of Business
The Company has withdrawn from retail business and a provision for anticipated losses of sales of related
fixed assets is provided.
(j) Employees’ Retirement and Severance Benefits
Method of Attributing Expected Benefit to Periods
In calculating retirement benefit obligation, the estimated amount of retirement benefit is attributed to theperiods on the benefit formula basis.

currency swaps and the exceptional accounting method is applied to interest rate swaps when certain
hedging criteria are met.
<Hedge instrument and hedge items>(Hedging instruments)(Hedged items)

Interest rate swap

Interest on short-term and long-term debt

<Hedge policy>
The Company uses interest rate swaps to reduce interest volatility risk.
<Method for assessing hedge effectiveness>
Hedge effectiveness is not assessed when substantial items and conditions of hedging instruments andthe hedged transactions are the same, and is not assessed when cash flow can be completely offset forwhole hedge period.

NIPRO Annual Report 201935

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements(n) Income Taxes
The provision for income taxes is computed based on income for financial statement purposes. The asset
and liability approach is used to recognize deferred tax assets and liabilities for the future tax consequencesof temporary differences between the carrying amounts of assets and liabilities for financial reporting

3. Inventories
Inventories consisted of the following:

purposes and the amounts used for income tax purposes.
(o) Amounts per Common ShareFinished goods and merchandise

Basic earnings per share is computed by dividing net income available to common shareholders by the

Raw materials

weighted-average number of common shares outstanding for the period. Diluted earnings per share reflect
the potential dilution that could occur if securities were exercised or converted into common stock. Diluted
earnings per share of common stock assume full conversion of the outstanding convertible notes and bonds

Thousands of
U.S. dollars (Note 1)

Millions of yen

Work in process
Packing and other
Total

2019

2018

2019

¥ 95,103
25,27812,347
5,195¥137,925¥ 88,710
22,78912,666
5,052¥129,218$ 856,865
227,754
111,252
46,812$1,242,685

at the beginning of the year (or at the time of issuance) with an applicable adjustment for related interest
expense, net of tax, and full exercise of outstanding warrants.
(p) Accounting Standard Issued but not yet Effective
Accounting Standard for Revenue Recognition and Implementation Guidance on Accounting Standard for
Revenue Recognition
This standard and guidance specifies Revenue Recognition comprehensively. To recognize revenue under
this standard and guidance, an entity applies the following five steps:
Step 1:	To identify the contract(s) with a customer
Step 2:	To identify the performance obligations in the contract
Step 3:	To determine the transaction price
Step 4:	To allocate the transaction price to the performance obligations in the contract
Step 5:	To recognize revenue when (or as) the entity satisfies a performance obligation
The Company and its domestic subsidiaries will adopt the guidance effective from the beginning of the
fiscal year ended March 31, 2022. At present, the Company is in the process of evaluating the impact on the
consolidated financial statements of the adoption of Accounting Standard for Revenue Recognition and
Implementation Guidance on Accounting Standard for Revenue Recognition.

NIPRO Annual Report 201936

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements

4. Income Taxes

Millions of yen

2018
Within1 yearOver 1 year
within2 years

Over 2 years
within3 years

Over 3 years
within4 years

Over 4 years
within5 years

Over 5 years

Total

Net Operating Loss
Carry Forwards (*A)

¥ 451

¥ 550

¥ 800

¥1,191¥ 757¥ 7,147¥10,898

Valuation allowance

(306)
144

(334)
216

(402)
398

(704)
486

(525)
231

(5,899)1,247

The Company and its domestic subsidiaries are subject to several taxes based on income which, inaggregate, resulted in a normal statutory tax rate of approximately 30.6% and 30.8% for the years ended
March 31, 2019 and 2018.
The significant components of deferred tax assets and liabilities were as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

Deferred tax assets
Tax loss carryforwards
Intercompany profits
Valuation loss on inventories
Allowance for bonuses to employees
Sales allowance
Loss on impairment of fixed assets
Excess of allowance for doubtful accounts over tax
allowable amounts
Net defined benefit liability
Accrued enterprise taxes
Unrealized loss on available-for-sale securities
Goodwill
Loss on liquidation of business
Other
Gross deferred tax assets
Less: Valuation allowance for the Net Operating Loss Carry
Forwards (*2)
Less: Valuation allowance for the deductible temporary
differences
Total Less: Valuation allowance (*1)
Total deferred tax assets
Deferred tax liabilities
Unrealized gain on available-for-sale securities
Revaluation reserve for land
Revaluation reserve for intangible assets
Revaluation reserve for fixed assets—other
Retained earnings on foreign subsidiaries
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities) (*1)

2019

2018

2019

¥ 10,898
2,037
1,237
1,234
341
395

¥ 8,323
2,242
897
1,197
327
184

$ 98,196
18,355
11,15011,1193,073
3,564

Deferred Tax Asset(8,173)
2,725(*B)

Thousands of U.S. dollars (Note 1)

1,272

1,801

11,464

1,366
426
2,857
54
257
4,045
26,426

1,275
400
787
242
283
3,752
21,716

12,313
3,846
25,746495
2,315
36,452
238,096(8,173)—(73,640)(3,464)—(31,213)(11,637)
14,788(9,086)
12,630(104,853)
133,242

450
783
—
687
551
1,184
3,657
¥ 11,131

350
675
2
1,068
51
599
2,748
¥ 9,881

4,061
7,058
—
6,198
4,966
10,66932,953$ 100,289

2018
Within1 yearOver 1 year
within2 years

Over 2 years
within3 years

Over 3 years
within4 years

Over 4 years
within5 years

Over 5 years

Total

Net Operating Loss
Carry Forwards$ 4,064$ 4,959$ 7,215$10,732$ 6,824$ 64,399$ 98,196

Valuation allowance(2,760)1,303(3,011)
1,948(3,623)
3,592(6,349)4,383(4,737)2,086(53,157)
11,242(73,640)
24,556

Deferred Tax Asset(*A) Each Net Operating Loss Carry Forwards amount is multiplied by Statutory tax rate.
(*B) We recorded ¥2,725 million (US$24,556 thousand) Deferred Tax Asset for ¥10,898 million (US$98,196 thousand) Net Operating
Loss Carry Forwards (multiplied by Statutory tax rate). This Deferred Tax Asset is mainly recognized for the balance of Net
Operating Loss Carry Forwards in PT. NIPRO INDONESIA JAYA (multiplied by Statutory tax rate). We have not recognized
Valuation allowance for this Net Operating Loss Carry Forwards because we assessed this amount is collectable as a resultof tax scheduling.

Reconciliation of the differences between the statutory tax rates and the effective income tax rates was
as follows:
Statutory tax rate
Expenses not deductible for tax purposes
Non-taxable dividend income
Effect of tax rate change
Amortization of goodwill
Tax credits primarily for research and development costs
Valuation allowance
Retained earnings on foreign subsidiaries
Unrealized Gain
Other
Effective income tax rate

2019

2018

30.6%
1.8
(1.2)
—
3.0
(4.3)
3.0
2.4
4.5
4.3
44.1%

30.8%
2.5
(1.3)
2.0
6.3
(7.5)
(9.1)
(0.6)
0.4
4.3
27.8%

(*1) In fiscal year ended in 2018, March, Valuation allowance was increased by ¥2,551 million. The main reason of this increase is that
Valuation allowance for the Net Operating Loss Carry Forwards was increased by ¥3,059 million (US$27,565 thousand) in Goodman
Co., Ltd.
(*2) Balance of the deferred tax assets on the Net Operating Loss Carry Forwards by the expiration year.

NIPRO Annual Report 201937

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements

5. Pledged Assets

The carrying amounts and aggregate fair values of marketable securities for investments as of March 31,
2019 and 2018 were as follows:

The following assets were pledged as collateral:

Millions of yen

Buildings and structures
Land
Other
Total

2019

Thousands of
U.S. dollars (Note 1)

Millions of yen

2019

2018

2019

¥ 8,855
3,137
418¥12,411¥ 9,4223,137
445¥13,005$ 79,788
28,267
3,772$111,828

Cost

Long-term debt
Total

Fair Value

Equity securities
Debt securities and otherTotal¥59,013—¥59,013¥4,163—¥4,163¥12,092—¥12,092¥51,083—¥51,083

Thousands of U.S. dollars (Note 1)

2019
Thousands of
U.S. dollars (Note 1)

Millions of yen

Current portion of long-term debt

Unrealized loss

Available-for-sale securities

The above assets were pledged against the following liabilities:

Short-term bank loans

Unrealized gain

2019

2018

2019

¥1,2201,618
1,563¥4,402¥1,2491,520
3,855¥6,625$10,993
14,584
14,087$39,664

Cost

Unrealized gain

Unrealized loss

Fair Value$531,702—
531,702$37,508—37,508$108,955—
108,955$460,255—
460,255

Available-for-sale securities
Equity securities
Debt securities and other
Total

Millions of yen

2018
Cost

Unrealized gain

Unrealized loss

¥7,206—¥7,206¥8,797—¥8,797

6. Investment Securities

Equity securities
Debt securities and other
Total

Investment securities as of March 31, 2019 and 2018 consisted of the following:Thousands of
U.S. dollars (Note 1)

Millions of yen

2019

2018

2019

Non-current:¥58,268—¥58,268

Investment trust funds and other
Subtotal
Non-marketable securities
Total¥51,083—
51,083
1,599¥52,683¥56,678—
56,6782,116¥58,794$460,255—
460,255
14,409$474,664¥56,678—¥56,678

Proceeds from sales of securities and gross realized gains or losses on those sales for the years ended
March 31, 2019 and 2018 were as follows:

Marketable:
Marketable equity securities

Fair Value

Available-for-sale securities

Thousands of
U.S. dollars (Note 1)

Millions of yen

2019

Proceeds
Gains on sales
Losses on sales

¥110
0
—

2018

¥4,480
736
—

2019

$999
0
—

NIPRO Annual Report 201938

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements

7. Financial Instruments

in foreign currencies, interest rate swaps to hedge against the risk of fluctuations in interest rates associated(1) Circumstances on financial instruments

more information on the use of hedge accounting, including hedging instruments, hedged items, the hedging(a) Policy for financial instruments
The Company and its consolidated subsidiaries manage the temporary surplus funds by deposits with banks
that have a high level of safety. Based on capital investment planning and financing planning, the Company
and its consolidated subsidiaries raise funds for business operation with bank loans, commercial paper,
corporate bonds, and issuing convertible bond-type corporate bonds with warrant of booking new stocks.
The Company and its consolidated subsidiaries enter into derivative transactions for the purpose of
reducing funding costs and hedging their exposures to foreign exchange fluctuations and interest rate
fluctuations, but not for speculative purposes.
(b) Details and risk of financial instruments and its risk management
Receivables such as trade notes and accounts receivable are exposed to customer’s credit risk. Receivables
denominated in foreign currencies are exposed to the market risk of fluctuation in foreign currency
exchange rates.
In order to reduce the customer’s risk, the Company monitors the dues and balances by customer inaccordance with the Company’s credit administration regulations.
Investment securities are exposed to market fluctuation risk, but mainly consist of equity of thecompanies which conduct business with the Company. The Company periodically reviews the market price ofsuch securities.

with loans payable, and currency swaps to hedge against the risk of foreign exchange rate fluctuations. For
policy, and the method for assessment of hedge effectiveness, please refer to “2. Summary of Significant
Accounting Policies” (m) Hedge Accounting.
As the Company manages its exposure to credit risk by limiting its funding to high-credit rating financial
institutions, the Company recognizes that the exposure to credit risk is extremely low.
The Company executes and manages derivative transactions under the corporate derivative management
policy, which prescribes the authority and limitations on derivative transactions.
(c) S upplemental information on fair values of financial instruments
Fair values of financial instruments include values based on market price and reasonably estimated values
when market price is not available. Because variable factors are counted in the estimation, the estimatedvalues may vary by adopting different assumptions.
With respect to the contract amounts related to derivative transactions in Note 8, the amounts do notreflect market risks to derivative transactions.

(2) Fair values of financial instruments
The book values, fair values and the differences between them as of March 31, 2019 and 2018 are as follows­(Financial instruments for which the market value is extremely difficult to determine are not included as
described in remark 2.):

Payables such as trade notes, accounts payable and accounts payable other are due within 1 year.

Millions of yen

2019

Payables denominated in foreign currency are exposed to the risk of fluctuation in foreign currency
exchange rates.
Short-term loans payable are mainly borrowed to raise operating capital and long-terms loans payable aremainly borrowed to make capital expenditures. A part of long-term loans with the floating interest rate has
the risk of interest rate fluctuation, but the Company and its consolidated subsidiaries use interest rate
swaps to solidify the interest rate. For some of the loans denominated in foreign currency, the Company andits consolidated subsidiaries use currency swaps to hedge the currency fluctuation risk.
Bonds and commercial paper are mainly issued to raise the funds for the retirement of bonds.
Lease obligations are mainly for capital expenditures, free from interest-rate risk because the interest rate
is fixed.
Payables, loans and bonds are exposed to liquidity risk, but the Company and its consolidated
subsidiaries manage the risk by establishing cash planning.
Regarding derivatives, the Company enters into forward exchange contracts to hedge against the risk offluctuations in foreign currency exchange rates associated with trade receivables and payables denominatedBook value

Fair value

Cash and cash equivalents, time deposits¥129,438¥129,438

Trade notes and accounts receivable, net of allowance for
doubtful receivables

147,721

147,721

Investment securities
Assets total

51,083¥328,243

51,083¥328,243¥——

Trade notes and accounts payable¥ 69,646¥ 69,646¥—

Short-term bank loans, current portion of long-term debt,
and commercial paper

142,897

142,897—

Other notes and account payable (*1)

31,169360,51225,0006,728¥635,955¥(51)

31,169359,397
27,5376,548¥637,196¥(51)—(1,115)2,537(180)¥ 1,241¥—

Long-term debt
Convertible bondLease obligations (*2)
Liabilities total
Delivatives (*3)

Difference¥——

NIPRO Annual Report 201939

Contents

About NIPROManagement
Message

Review ofOperations

Financial/
Data Section

Management
Foundation

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements
Remark 1

Millions of yen

2018Book value

Fair value

Cash and cash equivalents, time deposits¥141,940¥141,940

Trade notes and accounts receivable, net of allowance for
doubtful receivables

139,073

139,073

Investment securities
Assets total

56,678¥337,692

56,678¥337,692¥——

Trade notes and accounts payable¥ 62,105¥ 62,105¥—

Short-term bank loans, current portion of long-term debt,
and commercial paper

128,881

128,881—

Other notes and account payable (*1)

33,089355,51725,0003,742¥608,335¥(83)

33,089353,642
28,787
3,673¥610,179¥(83)—(1,874)
3,787(69)¥ 1,843¥—

Long-term debt
Convertible bondLease obligations (*2)
Liabilities total
Delivatives (*3)

Difference¥——

Thousands of U.S. dollars (Note 1)

2019Book value

Fair value

Cash and cash equivalents, time deposits$1,166,215$1,166,215

Trade notes and accounts receivable, net of allowance for
doubtful receivables

1,330,946

Investment securities
Assets total

460,255$2,957,416

Trade notes and accounts payable
Short-term bank loans, current portion of long-term debt,
and commercial paper
Other notes and account payable (*1)

280,835
3,248,157
225,245
60,620$5,729,843$(461)

Long-term debt
Convertible bondLease obligations (*2)
Liabilities total
Delivatives (*3)

Difference$—

1,330,946—

460,255$2,957,416$——$ 627,504$ 627,504$—

1,287,479

1,287,479
280,835
3,238,103
248,107
58,997$5,741,028$(461)

Methods used to calculate fair values of financial instruments and the details of securities andDelivatives<Assets>• Cash and cash equivalents, time deposits and trade notes and accounts receivable
Cash and cash equivalents and trade notes and accounts receivable are stated at the relevant book value
because the settlement periods are short and the fair values are almost the same as the book value.
• Investments securities
Equity securities are stated at market value. See Note 6. “Investment securities” for the detailed
information by classification.
<Liabilities>• Trade notes and accounts payable and short-term bank loans and current portion of long-term debt andcommercial paper
Because the settlement periods of the above items are short and their fair values are almost the same astheir book values, the relevant book values are used.
• Other notes and account payable
Because the settlement periods of the above items are short and their fair values are almost the same astheir book values, the relevant book values are used.
• Long-term debt and convertible bond
The fair value of long-term debt is calculated by applying a discount rate to the total of principal andinterest. The discount rate is based on the assumed interest rate if a similar new loan was entered into.
• Lease obligation
The fair value of lease obligations is calculated by applying a discount rate to the total of principal
and interest. The discount rate is based on the assumed interest rate if a current lease transaction
was renewed.
• Delivatives
The fair value information for delivatives is included in Note 8.
Remark 2

Financial instruments for which the fair value is extremely difficult to determine——(10,053)
22,862(1,623)$ 11,185—

Thousands of
U.S. dollars (Note 1)

Millions of yen

2019Unlisted equity securities¥10,281

2018

2019

¥6,258$92,638

Because these items have no market value and are difficult to estimate the future cash flow and it is extremely difficult to determine theirfair values, they are not included in investment securities above.

Remark 3

Planned redemption amounts after the balance sheet date for monetary receivables withmaturity dates are as follows:(*1) This is included in accrued expenses and notes and accounts payable for plant and equipment on the balance sheet.
(*2) This is included in other current liabilities and other long-term liabilities on the balance sheet.
(*3) The amount represents the net amount of assets (liabilities).

Thousands of
U.S. dollars (Note 1)

Millions of yen

Cash and cash equivalents, time deposits
Trade notes and accounts receivable

2019

2018

2019

Within 1 year

Within 1 year

Within 1 year

¥129,438
147,721¥141,940
139,073$1,166,215
1,330,946

NIPRO Annual Report 201940

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements
Remark 4P lanned repayment amounts after the balance sheet date for monetary payables with maturity dates

Planned repayment amounts after the balance sheet date for monetary payables with maturity dates at March 31, 2019 are as follows:
Millions of yen

2019Within 1 year

Short-term bank loans, current portion of long-term debt, and commercial paper
Other notes and account payable
Long-term debt
Convertible bondLease obligations
Total¥142,897
—
—
—
1,693
¥144,591

Over 1 year but
within 2 years¥——
55,79725,0001,231¥82,029

Over 2 years but
within 3 years

Over 3 years but
within 4 years¥——
70,203—
1,031¥71,235¥——
57,897—565¥58,463Over 4 years but
within 5 years

Over 5 years¥——
33,230—1,727¥34,958¥——
143,382—477¥143,860

Thousands of U.S. dollars (Note 1)

2019
Within 1 year

Short-term bank loans, current portion of long-term debt, and commercial paper
Other notes and account payable
Long-term debt
Convertible bondLease obligations
Total$1,287,479———
15,261$1,302,741

Over 1 year but
within 2 years$——
502,727—
11,099$513,826Over 2 years but
within 3 years

Over 3 years but
within 4 years$——
632,525—
9,292$641,817$——
521,649—
5,095$526,745Over 4 years but
within 5 years$——
299,402—
15,567$314,969

Over 5 years$——
1,291,852—
4,304$1,296,156

Millions of yen

2018
Within 1 year

Short-term bank loans, current portion of long-term debt, and commercial paper
Other notes and account payable
Long-term debt
Convertible bondLease obligations
Total¥128,881
—
—
—
1,198
¥130,079

Over 1 year but
within 2 years¥——
76,507—
1,054¥77,561Over 2 years but
within 3 years¥——
46,39425,000721¥72,116

Over 3 years but
within 4 years¥——
64,203—566¥64,770

Over 4 years but
within 5 years¥——
42,557—
115¥42,673

Over 5 years¥——
125,854—85¥125,940

NIPRO Annual Report 201941

Contents

Management
Message

About NIPRO

Review ofOperations

Financial/
Data Section

Management
Foundation

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements

8. Derivatives(b) Interest related
Millions of yen

The Company and its consolidated subsidiaries had the following derivatives contracts outstanding at March

201931, 2019 and 2018.

(1) Derivatives for which hedge accounting has not been applied.
Currency related

Principal Hedge Item

Contract
amountOver 1 year
out-of-contract
amountFair Value

Method of hedge accounting

Type of Derivative

Principle method

Interest rate swap Long-term loans¥ 4,388¥ 3,828¥(54)

Exceptional accounting method
for interest rate swap

Interest rate swap Long-term loans

15,00015,000(*1)

Millions of yen

2019Type of Derivative

Transaction other than market transaction NDF

Contract amountOver 1 year out-ofcontract amount

¥888

¥—

Thousands of U.S. dollars (Note 1)
Fair Value

Thousands of U.S. dollars (Note 1)

2019Type of Derivative

Transaction other than market transaction NDF

Contract amountOver 1 year out-ofcontract amount$8,000

$­­—

2019

¥3
Principal Hedge Item

Contract
amountOver 1 year
out-of-contract
amountFair Value

Method of hedge accounting

Type of Derivative

Principle method

Interest rate swap Long-term loans$ 39,543$ 34,494$(491)

Exceptional accounting method
for interest rate swap

Interest rate swap Long-term loans

135,147

135,147(*1)

Fair Value$29

Millions of yen

2018
Millions of yen

2018Type of Derivative

Transaction other than market transaction NDF

Contract amountOver 1 year out-ofcontract amount

¥621

¥—

Fair value is based on information provided by a financial institution at the end of the fiscal year.

(2) Derivatives for which hedge accounting has been applied.

Fair Value¥(13)

Principal Hedge Item

Contract
amountOver 1 year
out-of-contract
amountFair Value

Method of hedge accounting

Type of Derivative

Principle method

Interest rate swap Long-term loans¥4,960¥4,589¥(69)

Exceptional accounting method
for interest rate swap

Interest rate swap Long-term loans

245

—

(*1)

(*1) The fair value of interest rate swap to which the exceptional accounting method is applied and the fair value of forward foreignexchange contract, etc., to which the allocation method is applied are included in the fair value of long-term loans in Note 9.
“Financial Instruments” because such interest rate swap and forward foreign exchange contract, etc., are accounted for as a single
item with the corresponding long-term loans.

(a) Currency related
N/A in 2019 and 2018

NIPRO Annual Report 201942

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements

9. Short-Term Loans and Long-Term Debt

The aggregate annual maturities of long-term debt outstanding at March 31, 2019 are as follows:
Millions of yen

Short-term loans comprised overdrafts and promissory notes.
The weighted-average interest rates of short-term bank loans for the years ended March 31, 2018 and2017 were 0.8180% and 0.9293%, respectively.
The weighted-average interest rates of commercial paper for the years ended March 31, 2018 and 2017
were 0.0010% and 0.011%, respectively.

Millions of yen

0% unsecured bonds due 2021
0.674% unsecured bonds due 2028

¥

—
3,000
[3,000]25,00010,000

2019

2018

¥

400
3,000
—
25,000—$—27,029[27,029]
225,245
90,0980.021%~0.810% unsecured bonds due from 2017 to 2023(*1) (*2)

2,000

2,800

18,0190.33% unsecured bonds due 2018 (*1) (*3)

[600]
—
—

[800]
15
[15]

[5,405]——432,606

413,937

3,897,710(87,093)¥385,513(64,635)¥380,517(784,700)$3,473,402

Long-term bank loans due through 2077, with weightedaverage interest rate of 0.5992% for the year ended March
31, 2019, and of 0.6433% for the year ended March 31, 2018
Less current portion of long-term debt
Total

2021
Total

Thousands of
U.S. dollars (Note 1)

2019

0.57% unsecured bonds due 202020202022 and thereafterLong-term debt comprised the following:

0.61% unsecured bonds due 2019 (*1)

2019(*1) [] is the amount of the current portion of bonds.
(*2) This is the total amount of the bonds Goodman Co., Ltd. issued.
(*3) This is the total amount of the bonds IMC Co., Ltd. issued.
In March 2014, the Company issued ¥2,000 million (US$18,019 thousand) of 0.61% unsecured bonds due 2019.
In March 2015, the Company issued ¥3,000 million (US$27,029 thousand) of 0.57% unsecured bonds due 2020.
In January 2016, the Company issued ¥25,000 million (US$225.245 thousand) of 0% unsecured bonds due 2021.
In October 2018, the Company issued ¥10,000 million (US$90,098 thousand) of 0.674% unsecured bonds due 2028.
In June 2013, IMC Co., Ltd. issued ¥45 million (US$4,235 thousand) of 0.33% privately placed bonds due 2018.
From May 2012 to February 2018, Goodman Co., Ltd. issued ¥5,300 million (US$49,887 thousand) of 0.021% and 0.81% unsecured
bonds due from 2017 to 2023.

Thousands of
U.S. dollars (Note 1)

2019

2019

¥ 87,093
80,79770,203
234,511¥472,604$ 784,700
727,973
632,525
2,112,904$4,258,103

As is customary in Japan, long-term and short-term bank loans are made under general agreements which provide that additional
securities and guarantees for present and future indebtedness will be given under certain circumstances at the request of the bank.
In addition, the agreements provide that the bank has the right to offset cash deposits against any long-term and short-term bankloan that becomes due, and in case of default and certain other specified events, against all other loans payable to the bank.

10. Accrued Pension and Severance Liabilities
The Company and certain consolidated subsidiaries have defined benefit pension plans and unfunded
retirement benefit plans, and defined contribution pension plan for employees.
Certain consolidated subsidiaries have recorded liabilities for retirement benefit and assets for aretirement benefit based on the simplified method.

(1) Defined Benefit Plans(a) The reconciliation of beginning and ending balances of the benefit obligation (excluding the defined
benefit plans applied based on the simplified method) are as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

Obligation at April 1
Service cost
Interest cost
Actuarial gains and losses
Prior service cost
Benefit payments
Increasing by change from the simplified method tothe principle method
Other (foreign currency translation adjustments, etc.)
Obligation at March 31

2019

2019

2018

¥14,544
1,251
94
291
0
(631)

¥14,184
1,089
94
142
(604)
(520)

$131,047
11,274855
2,626
0(5,687)

—

165

—

(22)
¥15,529(6)¥14,544(200)$139,916

NIPRO Annual Report 201943

Contents

About NIPROManagement
Message

Review ofOperations

Financial/
Data Section

Management
Foundation

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements(b) The reconciliation of beginning and ending balances of the fair value of the plan assets (excluding thedefined benefit plans applied based on the simplified method) is as follows:

liabilities and assets for retirement benefit are as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

Fair value of plan assets at April 1
Expected return on plan assets
Actuarial gains and losses
Company contribution
Benefit payments
Other (foreign currency translation adjustments, etc.)
Fair value of plan assets at March 31(d) The reconciliation of ending balance of the benefit obligation and the fair value of the plan assets, and

2019

2018

¥10,177
162
(126)
740
(430)
(23)
¥10,500¥ 9,595
164
136
694
(364)
(49)
¥10,177

2019$91,697
1,466(1,141)
6,675(3,879)(212)$94,605

Thousands of
U.S. dollars (Note 1)

Millions of yen

Benefit obligation on funded scheme
Plan assets
Benefit obligations on non-funded scheme
Net assets (liabilities) on the consolidated balance sheet
Net defined benefit liability
Net assets (liabilities) on the consolidated balance sheet

2019

2018

¥ 13,786(10,500)
3,286
1,814
5,101
5,101
¥ 5,101¥ 13,090(10,223)
2,867
1,663
4,530
4,530
¥ 4,530

2019$124,216(94,605)
29,611
16,35145,96345,963$ 45,963(*) Including the defined benefit plans applied based on the simplified method(c) T he reconciliation of beginning and ending balances of liabilities for retirement benefit applied basedon the simplified method is as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

2018

2019

¥185
21
(11)
(1)
(98)

¥ 305
37
(13)
(4)
—

$1,674
196
(102)
(10)
(889)

Increasing by change from the simplified method tothe principle method

—

(165)

—

Other (foreign currency translation adjustments, etc.)

(23)
¥ 72

25
¥ 185

(215)
$ 652

2019

Liabilities for retirement benefit at April 1
Retirement benefit cost
Retirement payments
Contribution for the plan
Decreasing by sale of subsidiary shares

Liabilities for retirement benefit at March 31(e) The breakdown of net pension and severance costs is as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial gains and losses
Amortization of past service obligation
Retirement benefit cost based on the simplified method
Other
Total

2019

2018

2019

¥1,251
94
(162)
233
(88)
21
4
¥1,353¥1,089
94
(164)
241
(3)
37
(7)
¥1,286$11,274855(1,466)
2,102
(800)
196
37
$12,198(f) Remeasurements of defined benefit plans (Other Comprehensive Income)The breakdown of the items recorded in adjustments to defined benefit plans is as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

2019

Prior service cost
Actuarial gains and losses
Total

¥

(0)
(371)
¥(371)

2018

¥604
295
¥900

2019

$

(0)
(3,350)$(3,351)

NIPRO Annual Report 201944

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements

11. Commitments and Contingent Liabilities(g) Remeasurements of defined benefit plans (Accumulated Other Comprehensive Income)The breakdown of the items recorded in adjustments to defined benefit plans is as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

Unrecognized prior service cost
Unrecognized actuarial loss
Total

2019

2018

2019

¥ 517
(824)
¥(307)

¥ 606
(541)
¥ 64

$ 4,659(7,427)$(2,767)

The Company and its consolidated subsidiaries had the following commitments and contingent liabilities:
Thousands of
U.S. dollars (Note 1)

Millions of yen

2019

2019

2018

Liabilities for guarantees
Export drafts discounted
Total

¥4
¥4

¥4
¥4

$40
$40

(h) Items concerning the pension assets
1. The breakdown of the pension assets
The ratio of the plan assets are as follows:
Bonds
Equities
General account
Others
Total

2019

2018

41%
23%
30%
6%
100%

39%
23%
32%
6%
100%

(*) Including the defined benefit plans applied based on the simplified method

plan assets, and the current and expected long-term rate of return from the diverse assets composing theplan assets.

(a) Dividends
Under the Corporate Law, companies can pay dividends at any time during the fiscal year in addition to theauditors, and (4) the service period of the directors is prescribed as one year rather than the normal term of
two years by its articles of incorporation, the board of directors may declare dividends (except for dividends
in kind) if the company has prescribed so in its articles of incorporation. The Company’s present system meetsthe first three criteria but the two-year service period of the directors does not meet the fourth criterion.
Interim dividends may also be paid once a year by the resolution of the board of directors if the articles of(i) Calculation basis of actuarial methods

incorporation of the company stipulate so. The Company’s articles of incorporation contain such a

The main calculation basis of actuarial methods at the end of the period is as follows:

Assumed wage increase rateaccounting matters are summarized below:

such as (1) having the board of directors, (2) having independent auditors, (3) having the board of corporate

The long-term expected rate of return is to be determined considering the current and future allocation of

Expected long-term rate of return

The significant provisions in the Corporate Law of Japan (the “Corporate Law”) that influence financial andyear-end dividend upon a resolution at the shareholders’ meeting. For companies that meet certain criteria

2. Setting of the long-term expected rate of return

Discount rate

12. Net Assets

2019

2018

Primarily 0.2%
Primarily 1.5%
Primarily 5.3%

Primarily 0.3%
Primarily 1.5%
Primarily 5.3%

stipulation, and it pays interim dividend semi-annually by the resolution of the Board of Directors.
The Corporate Law provides certain limitations on the amounts available for dividends or the purchase oftreasury stock.

(2) Defined Contribution Retirement Plans
The amounts of necessary contributions to defined contribution retirement plans within the Company andconsolidated subsidiaries were ¥609 million (US$5,488 thousand).

NIPRO Annual Report 201945

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements(b) Increases / Decreases and Transfer of Common Stock, Reserve and Surplus
The Corporate Law requires that an amount equal to 10% of dividends must be appropriated as legal reserve(a component of retained earnings) or as additional paid-in capital (a component of capital surplus)
depending on the equity account charged upon the payment of such dividends until the total of aggregate
amount of legal reserve and additional paid-in capital equals 25% of the common stock.
Under the Corporate Law, the total amount of additional paid-in capital and legal reserve may be reversed
without limitation.
The Corporate Law also provides that common stock, legal reserve, additional paid-in capital, othercapital surplus and retained earnings can be transferred among the accounts under certain conditions by the
resolution of the shareholders’ meeting.
The Company’s legal reserve, which is included in retained earnings, amounted to ¥4,768 million(US$42,959 thousand) as of March 31, 2019, and its additional paid-in capital, which is included in capitalsurplus, amounted to ¥635 million (US$5,723 thousand) as of March 31, 2019.

13. Segment Reporting
1. Outline of Reportable Operating Segments
Applied ASBJ Statement No.17 “The Revised Accounting Standard for Disclosures of Segments of anEnterprise and Related Information”, the reportable operating segments are components of an entity forwhich separate financial information is available and such information is evaluated regularly by the board of
directors in deciding how to allocate management resources and in assessing performance.
The Company currently operates its business on a stand-alone basis with the divisional organization andevaluates the performance of sales and manufacturing of each division regardless of their products.
Accordingly, the Company has three reportable operating business segments according to the divisions(Medical-Related business, Pharmaceutical-Related business and PharmaPackaging business), which are
divided mainly by their products.
*Medical-Related
The domestic division sells injection and infusion products, artificial organ products, highly functional
products, dialysis products, diabetic products and pharmaceuticals such as generic and kit products. In the
Global business division, head office plays the central role, placing overseas sales and manufacturing bases for
medical equipment and sales injection and infusion products, artificial organ products and diabetic products.
*Pharmaceutical-Related
The pharmaceutical division sells pharmaceutical products with containers for combination products(injectable kit products) consigned by other pharmaceutical companies. Domestic subsidiaries sell andmanufacture injectable drugs, oral drugs and combination products.
*PharmaPackaging
The PharmaPackaging division sells glass for vials and ampoules for medical use, glass for thermos bottles,
glass for lighting and containers for combination products (injectable kit products). Overseas subsidiaries
manufacture and sell tube glass and glass mainly for syringes, vials and ampoules for medical use.
From fiscal year ended March 31, 2019, the Company has conducted reorganization for the purpose of
doing synthetic PharmaPackaging business and increasing synergy for Pharmaceutical-Related business.
As a result of this reorganization, some business divisions included in Pharmaceutical-Related businesswere changed to PharmaPackaging business.
The presentation for the prior fiscal year is not restated.

NIPRO Annual Report 201946

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements
Business segment information for the years ended March 31, 2019 and 2018 was as follows:
Millions of yen

2019
Reportable Segment

Other
(*1)

Total

31
1,463
1,494
146
3,815

¥426,399
31,598457,997
48,309679,970¥—(31,598)(31,598)(24,482)
165,850¥426,399—
426,399
23,827
845,821

165
—
¥ 757

31,455
3,372¥ 53,592

3,796—¥ 10,802

35,252
3,372¥ 64,394

Other
(*1)

Total

Adjustment(*2)

Consolidated
financial statements—(284,693)(284,693)(220,581)
1,494,285$3,841,783—
3,841,783
214,679
7,620,699

34,208—97,328317,616
30,387$ 580,185

Medical-Related

Pharmaceutical-Related

PharmaPackaging

Total¥327,359
6,724
334,083
36,722428,943¥ 63,482
18,31181,793
10,662
172,691¥35,526
5,099
40,625778
74,521¥426,368
30,135456,503
48,162
676,155¥

15,931
3,036¥ 25,208

11,6460¥ 21,138

3,712
335¥ 6,488

31,2893,372¥ 52,835

Adjustment(*2)

Consolidated
financial statements

Net sales:
OutsideIntersegment
Total
Operating income (loss)
Identifiable assets
Other items
Depreciation and amortization
Amortization of goodwill
Increase in tangible and intangible fixed assets

Thousands of U.S. dollars (Note 1)

2019
Reportable Segment
Medical-Related

Pharmaceutical-Related

PharmaPackaging

Total$2,949,451
60,5833,010,035
330,865
3,864,701$ 571,962
164,984
736,946
96,064
1,555,917$320,089
45,944
366,033
7,010
671,421$3,841,504
271,511
4,113,016
433,939
6,092,040$

279
13,181
13,461
1,320
34,373$3,841,783
284,693
4,126,477
435,260
6,126,413

143,539
27,360$ 227,119

104,928—$ 190,458

33,448—$ 58,456

281,916
27,360$ 476,034

1,491—$ 6,822

283,408
27,360$ 482,856

Net sales:
OutsideIntersegment
Total
Operating income (loss)
Identifiable assets$

Other items
Depreciation and amortization
Amortization of goodwill
Increase in tangible and intangible fixed assets$

NIPRO Annual Report 201947

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements
Millions of yen

2018
Reportable Segment
Medical-Related

Pharmaceutical-Related

PharmaPackaging¥300,117
1,636
301,753
36,522417,884¥ 66,846
14,78981,636
13,104
166,188¥28,40469
28,473(1,308)67,319¥395,368
16,494
411,863
48,318651,392

14,836
2,738¥ 20,412

11,1464¥ 17,469

3,043
689¥ 9,024

29,0263,431¥ 46,906

Other
(*1)

Total

¥

29
1,180
1,210
75
4,317

¥395,397
17,675413,073
48,394
655,710¥—(17,675)(17,675)(21,306)
171,048¥395,397—
395,397
27,088
826,759

48—¥1,76929,074
3,431¥ 48,675

3,491—¥ 13,314

32,565
3,431¥ 61,990

Total

Adjustment(*2)

Consolidated
financial statements

Net sales:
OutsideIntersegment
Total
Operating income (loss)
Identifiable assets
Other items
Depreciation and amortization
Amortization of goodwill
Increase in tangible and intangible fixed assets(*1) “Other” is the business segment which is not included in the reportable segment and consists of real estate income and sales by headquarters.
(*2) Adjustment is as follows:• Adjustments for operating income ended March 31, 2019 and 2018 include ¥(2,380) million (US$(21,444) thousand) and ¥(704) million of adjustment for unrealized gain and ¥(22,102) million (US$(199,136) thousand) and ¥(20,601) million of corporate cost, respectively.
Corporate cost consists primarily of sales, general and administrative expenses and research and development costs which do not belong to the reportable segment.
• Adjustments for Identifiable assets ended March 31, 2019 and 2018 include ¥(15,637) million (US$(140,894) thousand) and ¥(9,114) million of elimination of inter-segment transaction and ¥181,488 million (US$1,635,180 thousand) and ¥180,162 million of corporate assets,
respectively. Corporate assets consisted primarily of cash and deposits, investment securities, assets for development and assets for management division of head office which do not belong to the reportable segment.
• Adjustments for depreciation and amortization ended March 31, 2019 and 2018 are for corporate assets. Depreciation and amortization and Increase in tangible and intangible fixed assets include long-term prepaid expenses.
• Adjustment for increase in tangible and intangible fixed assets is increase in corporate assets.

NIPRO Annual Report 201948

Contents

Management
Message

About NIPRO

Review ofOperations

Financial/
Data Section

Management
Foundation

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements
Net sales and Property, plant and equipment for each area were as follows:

Loss on impairment of fixed assets and Unamortized balance of goodwill by business segments were as
follows:

Millions of yen

2019Millions of yen
Japan

2019
Reportable Segment
PharmaceuticalRelated

PharmaPackaging

2

¥—

¥913

18,481—845

Medical-Related

Loss on impairment of
fixed assets¥

Unamortized balance of
goodwill

Other

Adjustment
(*3)

915

¥—

¥—

19,327

—

—

Total

¥

Total

¥

Asia

Total

Net sales¥260,967¥59,836¥51,042¥54,552¥426,399

Property, plant andequipment

189,571

10,99821,801

62,110284,483

19,327

Thousands of U.S. dollars (Note 1)

2019

2019
Reportable Segment
Medical-Related

Unamortized balance of
goodwill

Europe915

Thousands of U.S. dollars (Note 1)

Loss on impairment of
fixed assets

Americas$24
166,517

PharmaceuticalRelated

PharmaPackaging$—$8,227

—

7,620

Total

$

8,252
174,137

Other

Adjustment
(*3)

$—

$—

—

—

Japan

Americas

Europe

Asia

Total

Net sales$2,351,272$539,112$459,886$491,512$3,841,783

Property, plant andequipment

1,708,009

99,098

196,426

559,6072,563,141

Total

$

Millions of yen

8,252
174,137(*3) Adjustments for Loss on impairment of fixed assets ended March 31, 2018 is for corporate assets. These assets are not included inany reporting segments.

2018
Japan

Americas

Europe

Asia

Total

Net sales¥241,750¥56,704¥46,389¥50,553¥395,397

Property, plant andequipment

177,250

10,407

21,90960,706

270,273

Millions of yen

2018
Reportable Segment
Medical-Related

PharmaceuticalRelated

PharmaPackaging

Total

Other

Adjustment
(*3)

Total

Loss on impairment of
fixed assets

¥

139

¥—

¥1,968¥ 2,107¥—¥109¥ 2,216

Unamortized balance of
goodwill

26,153—

1,205

27,358——27,358NIPRO Annual Report 201949

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements

14. Selling, General and Administrative Expenses

16. Impairment Loss

Significant components of selling, general and administrative expenses for the years ended March 31, 2019

In the years ended March 31, 2019 and 2018, the Company and its consolidated subsidiaries recorded

and 2018 were as follows:

impairment loss of ¥915 million (US$8,252) and ¥2,216 million, respectively.
Thousands of
U.S. dollars (Note 1)

Millions of yen

Salaries

2019

2018

2019

¥20,115¥20,111$181,236

The following table presents the major impaired assets.
Millions of yen

Purpose of use

15. Research and Development Expenses
Research and development expenses for the years ended March 31, 2019 and 2018 were ¥16,526 million(US$148,900 thousand) and ¥16,113 million, respectively.

Location

Type of assets

Thousands of
U.S. dollars (Note 1)

2019

2019

AmountAmountBusiness use

Anyang Nipro Changda
Pharmaceutical
Packaging Co., Ltd.

Buildings and structures,
Machinery and equipment¥552$4,976

Business use

Jilin Nipro Jiaheng
Pharmaceutical
Packaging Co., Ltd.

Buildings and structures,
Machinery and equipment

335

3,024

The assets for business use are divided into groups on which separate financial information is reported for management accounting
purposes, whereas leased assets and idle assets are categorized individually. Headquarters assets, R&D facilities, dormitories andcompany-offered houses are categorized into assets for common use, since these assets cannot generate identifiable cash flows.
The company recognized the impairment loss, since the economic performance of above-mentioned assets will be worse thanwhat the company originally expected.
The recoverable amounts of those assets are measured by the value in use, and have been impaired to nil carrying value.

Millions of yen

2018
Purpose of use

Location

Type of assets

AmountBusiness use

Nipro PharmaPackaging
France S.A.S.

Goodwill¥810

Business use

Nipro PharmaPackaging
India Private Limited

Construction in progress, Machineryand equipment and others

450

Business use

Nipro Pharma Glass AG

Goodwill

353

Nipro PharmaPackaging Ural LLC

Buildings and structures,Construction in progress and others

261

Business use

NIPRO Annual Report 201950

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements

17. Supplemental Disclosures of Cash Flow Information
Supplemental information related to the Consolidated Statements of Cash Flows was as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

2019

2018

2019

¥3,211
8,175¥3,2997,329$28,935
73,662

Cash paid during the year for:
Interest
Income tax

18. Other
Material Litigation
In February 2018, Trividia Health, Inc. (hereinafter, ‘THI’) filed a request for arbitration at the International
Court of Arbitration of the International Chamber of Commerce, seeking a decision on THI being able to claim
damages due to a loss of product sales if the Company’s purchase volume did not reach the annual minimumpurchase volume in the third to fifth years of the International Distributor Agreement executed between the
Company and THI in October 2015, in which a minimum annual purchase obligation was imposed for eachyear of the 5-year agreement period. In March 2019, THI notified the Company of the termination of theagreement, citing failure to fulfil the third year’s minimum purchase obligation imposed in such agreement.
In addition, in May 2019, THI, attributing the termination of the agreement to the Company’s failure topurchase the minimum purchase obligation for the third year, made an additional claim for damages for
estimated losses due to unfulfillment of the minimum purchase obligation for the third to fifth years of theagreement and abuse of trademark rights held by THI owing to the Company’s violation of the agreement.
The Company considers both claims and requests to have no justifiable reasons and will insist on thelegitimacy of our Company in the arbitration procedure.

NIPRO Annual Report 201951

Contents

About NIPROManagement
Message

Review ofOperations

Financial/Data Section(As of March 31, 2019)

Head Office
3-9-3 Honjo-nishi, Kita-ku, Osaka 531-8510, Japan
Telephone: +81-6-6372-2331
Facsimile: +81-6-6375-0669
http://www.nipro.co.jp/english/

Area

Number of Employees
3,893
25,432
29,325

Stock Listings
Tokyo Stock Exchange, First Section
Ticker Code: 8086
Transfer Agent
Mizuho Trust & Banking Co., Ltd., Head Office
Stock Transfer Agency Dept.
1-2-1, Yaesu, Chuo-ku, Tokyo 103-8670, Japan

⦁ Consolidated Statements of
Changes in Net Assets
⦁ Consolidated Statements of Cash Flows⦁ Notes to Consolidated Financial Statements
⦁ Corporate Information

Number of
Shares Held(in thousands)

Percentage ofTotal Sharesin Issue (%)

20,225
8,565
8,113
4,414
2,714
2,548
2,322
2,246
1,910
1,833
54,895

12.40
5.25
4.97
2.71
1.66
1.56
1.42
1.38
1.17
1.12
33.66

(Yen)

1,800
1,600
1,400
1,200
1,000
800
600

3

12

2017

6

9

12

3

2018

6

9

12

3

2019

Major Group Companies (As of June 30, 2019)

Tokyo Office
4-3-4 Hongo, Bunkyo-ku, Tokyo 113-0033, Japan
Telephone: +81-3-5684-5611
Facsimile: +81-3-5684-5610

400,000,000 shares
171,459,479 shares
163,097,623 shares
56,566

⦁ Financial Review
⦁ Ten-Year Summary
⦁ Consolidated Balance Sheets⦁ Consolidated Statements of Income
⦁ Consolidated Statements ofComprehensive Income

Stock Price Range (Tokyo Stock Exchange)

Nippon Electric Glass Co., Ltd.
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
Resona Bank Limited
Japan Trustee Services Bank, Ltd. (Trust Account 5)
SSBTC CLIENT OMNIBUS ACCOUNT
Japan Post Insurance Co., Ltd.
Japan Trustee Services Bank, Ltd. (Trust Account 9)
Kazumi Sano
JP Morgan Chase Bank 385151
Total

Date of Establishment
July 8, 1954

Common Stock
Authorized
IssuedOutstanding
Number of Shareholders

Financial/
Data Section

Principal Shareholders

Corporate Information

Parent company
Consolidated subsidiaries
Total

Management
Foundation

Country

DomesticJapan

Overseas

Thailand
China

VietnamSingapore
India

BangladeshIndonesia
UAE
BrazilU.S.A.

CanadaBelgium

FranceGermany
Switzerland
RussiaName

Nipro Medical Industries Co., Ltd.
Goodman Co., Ltd.
Nipro Pharma Corporation
Zensei Pharmaceutical Co., Ltd.
Cell Science & Technology Institute, Inc.
NexMed International Co., Ltd.
Nipro (Thailand) Corporation Limited
Nipro Sales (Thailand) Co., Ltd.
Nipro (China) Holdings Co., Ltd.
Nipro (Shanghai) Co., Ltd.
Nipro Trading (Shanghai) Co., Ltd.
Nipro PharmaPackaging (Shanghai) Co., Ltd.
Jilin Nipro Jiaheng Pharmaceutical Packaging Co., Ltd.
Anyang Nipro Changda Pharmaceutical Packaging Co., Ltd.
Chengdu Pingyuan Nipro Pharmaceutical Packaging Co., Ltd.
NIPRO MEDICAL (HEFEI) CO., LTD
NIPRO VIETNAM COMPANY LIMITED
Nipro Pharma Vietnam Co., Ltd.
Nipro Asia Pte Ltd.
NIPRO INDIA CORPORATION PRIVATE LIMITED
Nipro PharmaPackaging India Private Limited
Nipro Medical (India) Pvt. Ltd.
Nipro JMI Co., Ltd.
Nipro JMI Pharma Ltd.
PT. Nipro Indonesia JAYA
Nipro Middle East FZE
Nipro Medical Ltda.
Nipro Medical Corporation
Nipro PharmaPackaging Americas Corporation
Infraredx, Inc.
CardioMed Supplies INC.
Nipro Europe Group Companies N.V.
Nipro Medical Europe N.V.
Nipro PharmaPackaging Belgium N.V.
Nipro PharmaPackaging France S.A.S.
Nipro PharmaPackaging Germany GmbH
Nipro Pharma Glass AG
Nipro PharmaPackaging Ural LLC

Principal business

Manufacturing and marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of pharmaceuticals
Manufacturing and marketing of pharmaceuticals
Development and manufacturing of cell culture media
Development, manufacturing and marketing of orthopedic products
Manufacturing and marketing of medical devices
Marketing of medical devices
Business management
Manufacturing and marketing of medical devices
Marketing of medical devices
Marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of pharmaceuticals
Marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of PharmaPackaging products
Marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of pharmaceuticals
Manufacturing and marketing of medical devices
Marketing of medical devices
Manufacturing and marketing of medical devices
Marketing of medical devices
Manufacturing and marketing of PharmaPackaging products
Development, manufacturing and marketing of medical devices
Manufacturing and marketing of medical devices
Business management
Marketing of medical devices
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Business management
Manufacturing and marketing of PharmaPackaging products

NIPRO Annual Report 201952