Financial Results for Fiscal 2015
and
New Medium-Term Business Plan

May 13 , 2016
KYORIN Holdings, Inc.
President Minoru Hogawa

Outline of Consolidated Financial Results
Consolidated Financial Results and Forecast

Status of development pipelineInitiatives toward realization of the long-term vision “HOPE 100”・Medium-Term Business Plan
HOPE 100 －Stage 1－ (Fiscal 2010～2015)
・New Medium-Term Business Plan
HOPE 100 －Stage 2－ (Fiscal 2016～2019)1

Outline of Consolidated Financial Results2Outline of Consolidated Financial Results for Fiscal 2015
（unit : ¥billion）

ChangeChange(original
forecast)(revised
forecast)

FY2014FY2015

ChangeChange(%)

Net Sales

113.1

119.5

＋6.4

＋5.6

－0.7

－0.7

Operating
Income

14.7

19.6

＋4.9

＋33.2

＋3.6

＋0.2

Ordinary
Income

15.5

20.0

＋4.5

＋29.1

＋3.7

＋0.3

Net
Income

12.1

13.6

＋1.5

＋13.1

＋2.1

＋0.6

Record-high net sales and income (operating income, ordinary income and net income)3

Segment Sales（unit : ¥billion）

FY2014FY2015

ChangeChange(%)

Change(original
forecast)

113.1

119.5

＋6.4

＋5.6

－0.7

111.8

118.2

＋6.4

＋5.8

－0.4

92.1

98.3

＋6.2

＋6.7

＋2.6

Japan

91.1

92.7

＋1.6

＋1.8

－2.0

Overseas

1.0

5.6

＋4.6

＋441.3＋4.6

Generic drugs

15.5

15.5

0

－0.1

－2.7

Over-the-counter drugs

4.2

4.5

＋0.3

＋7.3

0

1.3

1.2

－0.1

－7.8

－0.4

Net Sales

Ethicaldrugs
business

Sales of new
ethical drugs

Healthcare Businesschange(y/y)

Explanation of Varianceschange(original forecast)

Explanation of Variances

New ethical drugs(Japan)＋1.6

・Increase of Kipres, Fultiform
・Decrease of Mucodyne, Pentasa－2.0

・Increase of Kipres, Mucodyne
・Decrease of Fultiform, Pentasa

New ethical drugs(overseas)＋4.6

・increase of up front payment of FPR-2 agonists＋4.6

・up front payment of FPR-2 agonists

・Contract manufacturing’s sales decreased
・Health insurance pharmacy market’s sales increased－2.7

・Contract manufacturing’s sales and Health insurance
pharmacy market’s sales decreased

Generic drugs

04Breakdown of Gain and Loss
ChangeFY2014FY2015

ChangeChange(%)

Net Sales

113.1

119.5

＋6.4

＋5.6

－0.7

Cost of Sales

46.6

47.4

＋0.8

＋1.6

－

SG&A

51.8

52.5

＋0.7

＋1.4

－

R&D expenses

13.5

13.0

－0.5

－3.7

－0.4

SG&A expenses

38.3

39.5

＋1.2

＋3.1

－

Operating Income

14.7

19.6

＋4.9

＋33.2

＋3.6

Ordinary Income

15.5

20.0

＋4.5

＋29.1

＋3.7

Net Income

12.1

13.6

＋1.5

＋13.1

＋2.1

（unit : ¥billion）

change(y/y)

Explanation of Varianceschange(original
forecast)・increase of Kipres,Fultiform, up front payment
・cost of sales ratio decreased 1.6%

Operating
Income＋4.9

Explanation of VariancesIncrease of gross profit
・up front payment

gross profit ： increased ¥5.6bln

R&D expense ： decreased ¥0.5bln
・increase cost of new WATARASE research center・decrease of KRP-114V costs(original
forecast)＋3.6

Decrease of R&D expense ¥0.4bln
・decrease of KRP-114V cost due to co-development

SG&A (exclude R&D) expense： increased ¥1.2bln
・increase of patent royalty ,sales and general costs

・extraordinary income(1.9 billion yen) : 1.8 billion yen for the transfer of the land and building of the former Tokyo Branch building
・extraordinary losses (3.1 billion yen ): 2.7 billion yen for Okaya Plant closure.

5

Highlights of Business Performance（ Units: ¥ billion ）Net Sales increased ¥6.4billion year on year
・increase of Flutiform,Kipres sales
・an upfront payment of a license agreement

Cost of Sales

Cost of Sales

47.4

46.6

Cost of sales ratio decreased 1.6%

Cost of Sales Ratio
Cost of Sales Ratio

41.2%■Gross Profit increased ¥5.6billion
year on year

39.6%
Net sales

Net sales

R&D
R&D

13.0

13.5
SG&A
(excluding R&D)

SG&A

51.8

SG&A
(excluding R&D)

SG&A

52.5

39.5

38.3

Operating Income

SG&A expenses increased ¥0.7billion
year on year
・R&D expenses decreased ¥0.5billion
・SG&A(excluding R&D) increased ¥1.2billion■Operating Income increased ¥4.9billion
year on year

Operating Income

FY2014FY2015
6

Mainstay Product Sales（unit : ¥billion）

FY2014FY2015

ChangeChange(%)

Change(original
forecast)

Kipres

41.2

44.1

＋2.9

＋6.9

＋2.3

Flutiform

3.6

7.2

＋3.6

＋99.8

－3.1

Uritos

7.3

7.5

＋0.2

＋2.8

－0.4

Mucodyne

14.0

13.0

－1.0

－7.3

＋1.2

Pentasa

17.2

16.1

－1.1

－6.1

－1.0
7

Shareholder Returns
Basic Policy(for Medium-Term Business Plan HOPE 100 －Stage 1－)
The Company seeks to enhance its management base by balancing investments for
growth and business continuity with shareholder returns. To this end, the Company aims
for a consolidated payout ratio to shareholders of 30%.

Net Income

Net Income

FY2015(forecast)

FY2015(actual)¥11.5bln¥13.6bln

FY2015(forecast)

FY2015(actual)¥52.00（interim ¥20.00）¥58.00（interim ¥20.00）

33.8％

31.8％

Dividends

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

8

Trends of mainstay products

9

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

status of FY2015
LT antagonists market ： expand 4.8%

40

¥ 126.2（FY2014） ⇒ ¥132.2（FY2015） ※1

share of Kipres sales
37.6%（FY2014） ⇒ 38.6%（FY2015） ※2

30

effort for FY2016
20

34.5

36.8

39.6

40.2

41.2

Launch of an authorized generic drugfor KIPRES

44.1

33.3

・Upon expiry of the patent, generic drugs are
expected to be released.
price rivision rate ▲8.3％

10※1,2 （ Source：Copyright 2016 IMS JAPAN IMS –JPM. Unauthorized copying prohibited ）

0
FY10

FY11

FY12

FY13

FY14

FY15

FY16
(forecast)

10

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

14

status of FY2015
ICS/LABA market ： expand 11.4%

12¥97.1bln（FY2014） ⇒ ¥108.2（FY2015） ※1

share of Fultiform sales

10

3.8%（FY2014） ⇒ 7.4%（FY2015） ※2

8

12.9

6

Promote prescription to asthma
patient with inadequate control

4

7.2

2
0

effort for FY2016
Expand the share in new clients andclients with high demand

・Promotion of the advanced convenient pMDI device
・Information provision leading to improvement of adherence
in taking medicine

3.6

pMDI：pressurized metered-dose inhaler

price rivision rate ▲8.3％

0.6
FY13

FY14

FY15

FY16
(forecast)※1､2（Source：Copyright 2016 IMS JAPAN IMS –JPM. Unauthorized copying prohibited ）11Antiallergic Agent「 Desloratadine」
MSD Submits New Drug Application(October 2015)
Aiming application and commercialization in FY2016【 Details of application】【 Antihistamine market】（unit : ¥billion）

2500
250

Features： second generation histamine H1-receptor antagonist
Compound： Desloratadine
Therapy area/Action： allergic rhinitis, hives, itching resulting
from skin diseases (eczema/dermatitis, pruritus cutaneous)

2000
200

150
1500

Generic
drugs

1000
100

Long listeddrugs

Dosage and administration： Once dailyMarketing method ： Co-Marketing for Japan with MSD K.K.

【Features】

500
50

New drugs

・High affinity for a histamine receptor and low central nerve transition
・New 2nd-generation antihistamine drug with balanced efficacy and safety

0

2010年
FY2010

2011年
FY2011

2012年
FY2012

2013年
FY2013 2014年
FY201412

■Generic drugs group

Status of Generic Drugs（unit : ¥billion）

status of FY2015

25

Increase of Health insurance pharmacy
market’s sales（＋7%）

20・launched 7 components ,15products in FY2015

Decrease of Contract manufacturing’s saleseffort for FY201615

Actions for Montelukast AG

21.5

10

15.5
5

8.9

8.7

10.1

15.5

・Upon listing of the drug price in Japan (expected in June),release is scheduled as soon as the sales system is prepared.
・Aim to acquire the share of not less than 50% of the genericdrugs market.

Expand sales of strategic products andSupplementary Items

12【2016 June supplementary Item】 Olanzapine etc.

promotion of collaborative development

0
FY10

FY11

FY12

FY13

FY14

FY15

FY16
(forecast)13Forecast of Mainstay Product Sales（unit : ¥billion）

FY2015FY2016
Forecast

ChangeChange(%)

Kipres

44.1

33.3

－10.8

－24.3

Flutiform

7.2

12.9

＋5.7

＋78.4

Uritos

7.5

7.8

＋0.3

＋5.0

Mucodyne

13.0

10.8

－2.2

－16.7

Pentasa

16.1

15.8

－0.3

－1.7

Desloratadine

－

1.9

＋1.9

－

Generic drugs

15.5

21.5

＋6.0

＋39.0
14

Consolidated Financial Results and Forecast

15

Consolidated Financial Results Forecast
for the Year Ending March 31, 2017
（unit : ¥billion）

Y/Y

FY2015FY2016
forecast

ChangeChange(%)

119.5

120.0

＋0.5

＋0.4

114.0

114.0

0

＋0.0

98.5

92.4

－6.1

－6.2

Japan

92.9

88.5

－4.4

－4.8

Overseas

5.6

3.8

－1.8

－32.0

15.5

21.5

＋6.0

＋39.0

5.5

6.0

＋0.5

＋8.9

Operating Income

19.6

14.5

－5.1

－26.2

Ordinary Income

20.0

14.9

－5.1

－25.5

Net Income

13.6

10.7

－2.9

－21.5

Net sales

Ethical drugs
business ※Sales of new
ethical drugs

Generic drugs
Healthcare Business ※※The details of the Sales Segment have been changed from the year ending March 31, 2017.
Following the change, the Pharmaceutical Business comprises New Drugs and Generic Drugs, while the Health Care Business comprises Skincare, Environmental Hygiene and Over
the Counter Drugs and Others.

【for reference: year on year】①Cost of sales ratio : increase 3% points , SG&A ratio(include R&D expense): increased1% points②forcast for R&D expense in FY2107 : ¥13.5bln

16

Status of development pipeline17Drug Development Pipeline:
Progress in FY2015, schedule of FY2016
Product &development code

PhⅠ

PhⅡ

PhⅢ

Approval/
Launchapplication

Eklira Genuair
Respiratory

Ad-SGE-REIC

15/5 launch
15/7 PhⅠ／PhⅡ

Kipres OD
Infections

Otolaryngolo
gical15/12 launch

KRP-AM1977X

15/4 PhⅢ

KRP-AM1977Y

16/3 PhⅢ

KRP-209

15/8 PhⅡ

Desloratadine

15/10（ Co-Marketing Agreement for Japan with MSD K.K. affiliate.
Urological

IBD

application(MSD)）

launchKRP-114V
Pentasa Granules
KRP-203

15/12 launch

Novartis has decided to proceed with
development of KRP-203 for GvHD.

discontinued of IBD※FPR-2 agonists ： License agreement with BMS (12/2015)※KRP-AB1102F ： A license agreement for KRP-AB1102F with AstraZeneca was terminated and Kyorin reached the conclusionthat the rights should be returned to AstraZeneca.(2/2016).
progress in FY15

schedule of FY16

18

＜ FPR2 （ Formyl peptide receptor ） agonist program ＞
Mode of action： G protein-coupled receptor. FPR-2 agonists mainly inhibit the migration of neutrophils

and exhibit anti-inflammatory action.
 Business partner ：BMS(License agreement executed on December 2015)
Kyorin Pharmaceutical grants Bristol-Myers Squibb exclusive worldwide license to develop, manufacture and commercialize
products within the program. Bristol-Myers Squibb is committed to the development of Kyorin’s promising novel
therapeutics against this target for undisclosed indications so as to rapidly introduce the same to the global markets.

Terms of Agreement：・ Received an upfront payment of US$35 million of a license agreement.
・ Kyorin Pharmaceutical will be also eligible to receive up to US$370 million in development
and regulatory milestones, along with royalties on net sales and sales based milestones.

＜KRP-203＞
 Mode of action : Sphingosine-1-Phosphate Receptor Agonist≪「KRP-203」について≫
 Business partner : Novartis (License agreement executed on February 2006)
Based on the data in the various clinical trials conducted worldwide, the competing products and the priorities inour pipeline, we decided to focus on the development in GvHD indication.

State of clinical trials:
Currently Phase I trial is under way directed at patients undergoing stem cell transplant for hematological malignancies.
Based on the assumption that the number of participants is thirty in total, safety, efficacy and pharmacokinetics of KRP-203 areevaluated.

19

Medium-Term Business Plan
HOPE 100 －Stage 1－ (Fiscal 2010～2015)20

Structure of Management Planning１）Corporate Philosoph
Kyorin continues to fulfill its mission of cherishing life, and benefiting society
by contributing to better health.
２）Corporate Message
Your Health is Kyorin‘s Mission.

Corporate
Philosoph
Corporate
Message
Long-Term Vision－HOPE１００－

Medium-Term Business Plan

３） Long-Term Vision－HOPE１００－
Aim for Health Of People and our Enterprises

The future of the Group looking forward to 2023, the 100th
anniversary of the founding of Kyorin＜statement＞
The Kyorin Group willpromote diversified buisiness expansion and the developmentof the consumer healthcare business,and by 2023,will be recognized within andoutside the Group as a company that supports sound and healthy lifestyles.

-Stage1-Stage2-Stage32010～2015 2016～2019 2020～2023

４）Medium-Term Business Plan

21

Review of the Medium-Term Business Plan "HOPE 100 Stage 1""Stage 1" Statement

Improvement of the ability to realize reorganization and establish the system forpromotion of individual businesses toward achievement of the long-term vision[Business Strategies]
Establishment and promotion of new ethical drug business model concurrently offering a variety of medical drugs (PC model: Pharma Complex Model)- Consolidation of the inquiry, research, study and development and utilization of collective strength by opening the WATARASE Research Center (in July2015)
- Release of new products: Flutiform (November 2013), Eklira (May 2015)- License: license of FPR2 agonist program to BMS (December 2015); as for KRP-203 (Novartis), concentration on development at GvHD (November 2015)- License: Aclidinium (February 2011), KRP-114V (July 2014), Desloratadine (November 2014)- Transfer of the production functions of the Okaya Plant to KYORIN Pharmaceutical Facilities Co., Ltd. (Okaya Plant scheduled to be closed in September
2016)- Maximization of spread of the mainstay products by deeply developing the franchise customer (FC) strategies- Growth of Kipres and Uritos- Growth of the generic drugs business through increase of contract manufacturing's sales by promotion of joint development on its own initiative and healthinsurance pharmacy market's sales expansion

Attempt on business diversification through development and reorganization of the healthcare business and creation of new businesses- Entry into the environmental hygiene business (April 2011), release of Rubysta (July 2012)[Organization Strategies]

Creation of a corporation which gives the group companies' employees the best worthwhileness of work
[Performance Goals]

Ensuring sound management and meeting the expectations of stakeholders- Well-balanced implementation of investment for growth, investment for business continuation and return to shareholders- Payment of dividends at the payout ratio of about 30%

22

The results of the Medium-Term Business Plan "HOPE 100 Stage 1"（unit : ¥billion）
FY2015

FY2009Actualforecast

ActualChange

99.8

140.0

119.5

－20.5

Ethical Drugs business

91.0

120.0

114.0

－6.0

Sales of new Drugs

32.9

50.0

58.9

＋8.9

Sales of Original Drugs

49.5

50.0

39.6

－10.4

Sales of Generic Drugs

8.6

20.0

15.5

－4.5

Consumer Healthcare
Business ※1

8.7

20.0

5.5

－14.5

Operating Income

13.3

20.0

19.6

－0.4

Sales

※1 the Health Care Business comprises Skincare, Environmental Hygiene and Over the Counter Drugs and Others.

＜Dividends ＞
FY2010
Dividend per share (Yen)Consolidated payout ratio(%)

ＦＹ2011FY2012FY2013

FY2014FY2015¥45.00¥45.00¥50.00¥52.00¥52.00¥58.00（interim¥10.00）（interim¥10.00）（interim¥10.00）（interim¥10.00）（interim¥20.00）（interim¥20.00）

30.8%

36.4%

30.1%

32.3%

32.2%

31.8％

23

New Medium-Term Business Plan
HOPE 100 －Stage 2－ (Fiscal 2016～2019)24

Environmental Paradigm Shift and Necessity of Change■Coming of the age with the ratio of generic drugs being 80%■Possibility of drug price revisions for three consecutive years■The Company Group will face the patent cliff for Kipres.
Substantial change not experienced before will draw near at a very high speed.

To overcome these obstacles, commit to “Change” for new
growth, rather than taking the same course as the past.

Change×25

Outline of the Medium-Term Business Plan "HOPE 100 Stage 2""Stage 2" Statement

Commit to change (reform and renovation) toward realization of thelong-term vision and maintain sustainable growth

Strategy

Performance
Organization
26

Strategy

Priority Strategy (1)"Strengthening of the Ability to Discover New Drugs"

Initiatives for first-in-class new drug discovery■Establishment of the system for continual generation of innovative new drugs- Discovery of novel targets for new drug discovery in the FC (franchise customer) field *- Creation of first-in-class new drugs by utilizing the existing platform for new drug discovery based on low
molecular (kinase, receptor) and the new technologies (peptides, gene therapy, etc.)- Aim to form a tie-up with global partners early to accelerate global offering and development of original
new drugs*FC (franchise customer) field: respiratory, otorhinology, urology

27

Strategy

Priority Strategy (2)"Increase in the Ratio of New Drugs Group"

Substantial increase in the ratio of new drugs group by
maximizing spread of new drugs group- The ratio shall be raised to "50% or more" for fiscal 2019 by strengthening the actions for new
drugs group.

■Overcome the factors for revenue decrease by growth of new drugs group- Aim for maximization of products spread by launch of four products (Desloratadine,
KRP-AM1977X/Y, KRP-114V) together with Fultiform■Restructuring of the sales structure- Engage in restructuring of area management based on the FC strategy

28

Aim the launch of 4 products in "Stage 2"
FY2016
Expected Release

FY2018
Expected Release【 Antiallergic Agent】

desloratadine

FY2018
Expected Release【 New quinolone synthetic
antibacterial agent】【 Overactive bladda】「KRP‐AM1977X」
lascufloxacin「KRP‐114V」
vibegron

Oral agent

desloratadine

FY2019
Expected Release【 New quinolone synthetic
antibacterial agent】「KRP‐AM1977Y」
lascufloxacin
Injection

lascufloxacin

vibegronsecond generation histamine H1receptor antagonist

New quinolone synthetic antibacterial
agent

・High affinity for a histamine receptor
and low central nerve transition.
・New 2nd-generation antihistamine drugwith balanced efficacy and safety-Superior ability to combat drug-resistantgram-positive bacteria (incl. MRSA)-has a powerful antimicrobial activity against
anaerobic bacteria- Expectation of high clinical effects withexcellent tissue penetration- Expectation of high compliance in taking
medicine with less side effects than theconventional drugs for overactive bladder-High degree of safety expected since safety
hurdles cleared prior to clinical trials- β 3 agonist including this agonist may
constitute the first-line drug for treatment ofoveractive bladder.

Antihistamine market¥ 180 billion※Co-Marketing Agreement for Japan withMSD K.K. affiliate (11/2014)

Antibacterial agent market
Oral agent
Injection¥ 190 billion

Towardnew growth¥ 130 billion

Selective β 3 Adrenergic Receptor
Agonist- Less drug interaction as β 3 receptor
agonistOAB market¥ 80 billion※ Co-Development and Co-Marketing Agreementwith Kissei Pharmaceutical Co., Ltd. affiliate . (3/2016)29

Strategy"Promotion of Generic Drugs
Business by Making the Most of Its Characteristics"
Priority Strategy (3)Directly engage in development, production and sales and takeadvantage of the handling of new drugs within the Group for flexible
business operations■Active involvement in authorized generics (AG)- Aim to secure high share of Montelukast AG in the generic drugs market.
- Consider acquisition of new AGs following Montelukast AG■Strengthening of the ability of KYORIN Rimedio Co., Ltd. to performbusiness- Strengthening of the health insurance pharmacy market's sales capability- Strengthening of the pharmaceutical development capability- Strengthening of the production system

30

Strategy

Priority Strategy (4)"Strengthening of Low Cost"

Change of the cost structure by ensuring optimization
within the Group■Overall optimization through cooperation in production within the Group- Production at an appropriate place beyond the boundaries of new drugs group, original products
group and generic products group (beyond the boundaries of companies)- Leveling of the rate of plant operation and efficient use of assets

グループ生産拠点
グループ生産拠点
Group production bases
KYORIN Pharmaceutical
Okaya Plant（ Akita Pref.）

KYORIN Pharmaceutical

Noshiro Plant（ Akita Pref.）New drugs、original drugs、generic drugs
KYORIN Rimedio

Inami Plant(Toyama Pref.)All the production functions to betransferred, scheduled to be closed(in September 2016)

KYORIN Pharmaceutical
Facilities（ Shiga Pref. ）31

Strategy

Development Strategy■Overseas Expansion- Through partnering, promote global expansion with innovative new drugs which thecompany
creates by itself (early license in Europe and the US) to secure overseas sales.
- Through collaboration with other companies, establish the foundation for future direct
expansion into Asia and other regions (in medical drugs and healthcare businesses).

■Healthcare Business- Establish the core business by ensuring growth of the environmental hygiene businessand strengthening the link with the existing businesses.

32Organization

Aim for a cooperation where the employees can feel thebest worthwhileness of work.
■Establishment and operation of the system for management of
human resources- Establish and operate the new system for management of human resources
based on the principle of mutual cooperation and coexistence between employees
and the company for a long term.

■Strengthening of human resources development- Take actions to strengthen the management capability**Management in a broad sense: actions to bring out the best in theemployees through work33Performance

Realization of Sustainable Growth■Target Figures- Aim to achieve the average annual growth rate of 3% or more for the consolidated net
sales and the consolidated operating income margin of 15% or more.

■Capital Policy- While maintaining the sound financial base, adopt the capital policy ensuring both growthinvestment and stable return to shareholders.
- In shareholders return, aim for stable dividends.
Dividend per share for fiscal 2016 (estimate): ¥58 (including interim dividend of ¥20)

34

■ These forecast performance figures are based on information currently
available to the Company and may include uncertain factors or risk that
affect our future performance.
Accordingly, actual business results may materially differ from theforecasted figures due to various factors in the future.

35

Reference36【reference】
1. P&L Summary
2. BS Summary
3. Financial summary
4. KYORIN Pharmaceutical result
5. Segment information
6. Consolidated Financial Results and full year forecast
7. Main Product Sales Update
8. R&D Expenses, Capex & Depreciation
9. Main R&D Activities

P.38～39
P.40
P.41
P.42～45
P.46
P.47
P.48
P.49
P.50～52

P&L Summary: Consolidated Results – (1)（ Units: ¥ million ）FY2014FY2015■SalesActual% Sales

Actual% Sales% Change

ChangeSales

113,121100.0%

119,483

100.0%＋5.6＋6,362■Ethical Drugs
business

111,771

98.8%

118,238

99.0%

＋5.8

＋6,467◆Sales of new
Ethical Drugs

92,111

81.4%

98,282

82.3%

＋6.7

＋6,171○Japan91,07980.5%

92,695

77.6%

＋1.8

＋1,616○Overseas

1,032

0.9%

5,586

4.7%

＋441.3＋4,554

15,47713.7%

15,465

12.9%

－0.1

－12

◆Generic Drugs■Consumer
Healthcare
Business

3.7%

4,490

3.8%

＋7.3

＋307

（＋6,362）

119,483（＋1,616）

92,695FY14・Kipres・ Uritos
・ Mucodine

4,183change●Ethical drug sales in Japan・ Flutiform◆Over-thecounter Drugs
and Others＜ Breakdown ＞

41.2
3.6
7.3
14.0
17.2

・ Pentasa

⇒
⇒
⇒
⇒
⇒

FY15

（¥:billion）

44.1
7.2
7.5
13.0
16.1

(＋2.9)(＋3.6)(＋0.2)(－1.0)(－1.1)● Ethical drug sales overseas
・ Gatifloxacin

5,586
0.6
⇒

（＋4,554 ）(＋0.2)
0.8

・ Received an up front payment of FPR-2 agonists● Generic Drugs
1,349

1.2%

<Subsidiaries and Equity-method Affiliates>
Consolidated subsidiaries (8) ：KYORIN Pharmaceutical Co., Ltd.
Kyorin USA, Inc.
Kyorin Europe GmbH
ActivX Biosciences, Inc.
KYORIN Rimedio Co., Ltd.
Dr. Program Co., Ltd.
KYORIN Medical Supply Co., Ltd.
KYORIN Pharmaceutical Facilities Co., Ltd
Equity-Method Affiliates： Nippon Rika Co., Ltd.

1,244

1.0%

－7.8

－105

15,465（－12）

・increase of Health insurance pharmacy market’s sales
・decrease of Contract manufacturing’s sales●Over-the-counter Drugs and Others
4,490（ ＋307 ）● Consumer Healthcare Business
1,244（－105）

38

P&L Summary: Consolidated Results – (2)（ Units: ¥ million ）FY2014＜ Breakdown ＞

FY2015◆Cost of Sales Ratio : －1.6 percentage points(41.2 ％→39.6％)

Actual% Sales

Actual% Sales% Change

ChangeSales

113,121100.0%

119,483

100.0%＋5.6%＋6,362・ up front payment of FPR-2 agonists

Cost of Sales

46,59841.2%

47,360

39.6%

＋1.6%

＋762

◆R&D Ratio : －1.0 percentage points

Gross Profit

66,522

58.8%

72,122

60.4%

＋8.4%

＋5,600

SG&A(Incl. R&D expenses)

51,78545.8%

52,486

43.9%

＋1.4%

＋701

(13,514)11.9%(13,019)

10.9%

－3.7%

－495
＋4,899Operating
Income14,73713.0%

19,636

16.4%＋33.2%

0.7%
0.0%

531
172

0.4%
0.1%

－30.9

－237

Non-Operating Expenses

768
16＋975.0%＋156

Ordinary Income

15,49013.7%

19,995

16.7%＋29.1%＋4,505Extraordinary Profits
Extraordinary Losses

4,505
2,434

4.0%
2.2%

1,940
3,120

1.6%
2.6%

－56.9%－2,565＋28.2%＋686

17,561

15.5%

18,815

15.7%

＋7.1%

＋1,254

4,712

4.2%

5,191

4.3%

＋10.2%

＋479

785

0.7%

－15

－0.0%

－

－800

12,064

10.7%

13,63911.4%＋13.1%＋1,575

Non-Operating Income

Income before
income taxes
Corporate, inhabitantsand enterprise taxes

Tax adjustments
Net Income(11.9％→10.9％)＊ ¥13.5bln→¥13.0bln(decrease ¥0.5bln)
・increase of new WATARASE research cente costs,
・decrease of KRP-114V costs.

◆SG&A (exclude R&D) Expenses : －0.8 percentage points(33.8%→33.0％)＊¥38.3bln→¥39.5bln (＋¥1.2bln)increase of patent royalty ,sales costs.

■Operating Income¥19,636(＋¥4,899)＊Operating Income margin increased 3.4percentage
points to 16.4%■Net Income■Dividend per share＊Consolidated payout ratio¥13,639(＋¥1,575)¥58.0031.8%

39

BS Summary: Consolidated Results（ Units: ¥ million ）FY2014FY2015

Actual%totalCurrent Assets

129,064

70.4%

Cash, deposits
Mk securities
Inventory
Other

30,65247,007
17,86725,9297,607

Fixed Assets

54,318

Tangible assets
Intangible assets
Investments

19,374
1,184
33,760Notes and accounts receivable―

Actual138,483
45,712
48,296
5,989
27,665
10,81829.6%

59,342―

22,7881,201
35,353% total

70.0%

―

30.0%

change＜ Breakdown ＞＋9,419■ Current Asset ： ＋9,419―

・ Cash, deposits（＋15,060）
・ Notes and accounts receivable （＋1,289）
・ Mk securities（－11,878）
・ Inventory（＋1,736）＋5,024■ Fixed Assets ： ＋5,024――

・ Tangible Assets
・ Intangible Assets
・ Investments（ ＋3,414）（＋17）（ ＋1,593）

Total Assets

183,383

100.0%

197,825100.0%＋14,442

Current Liabilities

27,77315.1%

28,052

14.2%

＋279

Notes payable
Other

11,25916,513―

11,792
16,259――Non-Current Liabilities

7,009

3.8%

12,723

6.4%＋5,714・ Notes Payable
・ Other

Total Liabilities

34,78219.0%

40,77620.6%＋5,994■ Non-Current Liabilities ： ＋5,714

Owner’s Equity

140,518

76.6%

149,808

75.7%＋9,290

8,082

4.4%

7,241

3.7%

－841

7,798
168
115

―

10,372160－3,292――Other Comprehensive
IncomeUnrealized holding gain (loss) on securities

Foreign currency translation adjustments

Total Equity

148,600

81.0%

157,049

79.4%＋8,449Total Liabilities and Equity

183,383

100.0%

197,825100.0%＋14,442■ Current Liabi： ＋279
（
（

＋533）
－254）

40

Financial summary (Consolidated)（¥ million）

FY2011FY2012FY2013

FY2014FY2015FY2016(forecast)

Sales(Exports)

103,232(2,015)

107,031(2,400)111,400(1,849)113,121(1,032)

119,483(5,586)

120,000(3,800)

Cost of Sales（cost of Sales Ratio ）（％）

36,926(35.8%)

40,133(37.5%)

43,047(38.6%)

46,598(41.2%)

47,360(39.6%)―

SG&A
Ratio to Sales (%)

51,842(50.2%)

48,949(45.7%)

50,744(45.6%)

51,785(45.8%)

52,486(43.9%)―

R&D Expenses
Ratio to Sales (%)

13,964(13.5%)

11,059(10.3%)

11,359(10.2%)

13,514(11.9%)

13,019(10.9%)

13,500(11.3%)

Operating Income
Ratio to Sales (%)

14,464(14.0%)

17,948(16.8%)

17,607(15.8%)

14,737(13.0%)

19,636(16.4%)

14,500(12.1%)

Ordinary Income
Ratio to Sales (%)

15,275(14.8%)

18,676(17.4%)

18,281(16.4%)

15,490(13.7%)

19,995(16.7%)

14,900(12.4%)Net Income
Ratio to Sales (%)

9,231(8.9%)

12,422(11.6%)

12,025(10.8%)

12,064(10.7%)

13,639(11.4%)

10,700(8.9%)EPS (¥)¥123.54¥166.25¥160.95¥161.63¥184.28¥145.23

Capital

700

700

700

700

700

―

Assets145,673

154,968

169,378

183,383

197,825―

shareholder's equity

117,931

126,985

135,273

140,518

149,808―

Total Equity

118,201

129,099

137,821

148,600

157,049―

BPS (¥)¥1,581.94¥1,727.86¥1,844.61¥2,009.45¥2,131.67―

ROE (%)

8.0%

10.0%

9.0%

8.4%

8.9%

―

Equity Ratio (%)

81.1%

83.3%

81.4%

81.0%

79.4%

―

Employees

2,297

2,444

2,452

2,445

2,420

―

Capital Expenditure

1,952

6,576

6,500

2,655

7,218

4,700

Depreciation Expense

2,363

2,738

3,153

3,053

3,730

3,900

41

P&L summary : KYORIN pharmaceutical(Non-consolidated)-(1)（ Units: ¥ million ）＜ Breakdown ＞
changeFY2014Sales

FY2015■Sales●Ethical drug sales in Japan

Actual% Sales

Actual% Sales%
ChangeChange98,452100.0%

106,390

100.0%＋8.1%＋7,938■Ethical Drugs
business

98,452◆Sales of new
Ethical Drugs

88,85290.2%

95,824

90.1%

＋7.8%

＋6,97288,012

89.4%

90,480

85.0%

＋2.8%

＋2,468○Japan○Overseas◆Generic Drugs◆Over-thecounter Drugs
and Others

106,390

100.0%＋8.1%＋7,938FY14・ Flutiform
・ Uritos
・ Mucodine

840

6,404

0.9%

6.5%

5,343

6,878

5.0%

6.5%

＋536.1%＋7.4%＋4,503＋474（＋2,468）

90,480・Kipres100.0%（＋7,938）

106,390・ Pentasa

41.2
3.6
7.3
14.0
17.2

⇒
⇒
⇒
⇒
⇒

FY15

（¥:billion）

44.1
7.2
7.5
13.0
16.1

(＋2.9)(＋3.6)(＋0.2)(－1.0)(－1.1)● Ethical drug sales overseas
・ Gatifloxacin

5,343
0.6
⇒

（＋4,503）(＋0.2)
0.8● Generic Drugs

6,878（＋474）＊increase of Kyorin Rimedio product sales●Over-the-counter Drugs and Others

3,195

3.2%

3,686

3.5%

＋15.4%＋491
・ Milton・ Rubysta

3,686
2.0
⇒
0.5
⇒

（ ＋ 491 ）(＋0.1)
2.1(＋0.3)
0.8

42

P&L summary : KYORIN pharmaceutical(Non-consolidated)-(2)（ Units: ¥ million ）FY2014
Actual

FY2015% Sales

Actual% Sales%
ChangeChangeSales

98,452100.0%

106,390

100.0%＋8.1%＋7,938

Cost of Sales

38,951

39.6%

40,798

38.3%

＋4.7%

＋1,847Gross Profit

59,501

60.4%

65,591

61.7%＋10.2%＋6,090

SG&A(R&D Expenses)

47,349(12,843)48.1%(13.0%)

48,129(12,421)45.2%(11.7%)

＋1.7%
－3.3%

＋780
－422

Operating Income

12,151

12.3%

17,461

16.4%＋43.7%＋5,310

964
0

1.0%
0.0%

652
127

0.6%
0.1%

－32.4%
－

－312
＋127

Ordinary Income

13,115

13.3%

17,98516.9%＋37.1%＋4,870Extraordinary Profits
Extraordinary Losses

4,505
2,405

4.6%
2.4%

1,828
3,037

1.7%
2.9%

－59.4%＋26.3%－2,677＋632

Income before
Income taxes

15,21515.5%

16,776

15.8%＋10.3%＋1,561

3,998

4.1%

4,600

4.3%

＋15.1%

＋602

804

0.8%

62

0.1%

－92.3%－742

10,412

10.6%

12,113

11.4%＋16.3%＋1,701

Non-Operating Income
Non-operating Expenses

Corporate, inhabitantsand enterprise taxes

Tax adjustments
Net Income＜ Breakdown ＞◆ Cost of Sales Ratio ： －1.3percentage points(39.6％→38.3％)
・ up front payment of FPR-2 agonists◆ R&D Ratio ： ： －1.3 percentage points(13.0％→11.7％)＊¥12.8bln→¥12.4bln（－¥0.4bln）
・increase of new WATARASE research cente costs,
・decrease of KRP-114V costs.

◆ SG&A (exclude R&D) Expenses ：－1.4 percentage Points(35.0％→33.6％)■ Operating Income

17,461(＋5,310)＊Operating Income margin increased 4.1percentage
points to 16.4%■ Net Income 12,113 ( ＋1,701)

43

BS Summary: KYORIN Pharmaceutical(Non-consolidated)（ Units: ¥ million ）FY2014
ActualCurrent Assets

97,822

Cash, deposits
Accounts receivable
Mk securities
InventoryOther

FY2015% totalActual% total66.1%

change＜ Breakdown ＞＋5,037

68.4%

102,859

14,58743,22012,804
21,763
5,447―

22,32644,374
5,905
21,774
8,477――

Fixed Assets

45,145

31.6%

52,77833.9%＋7,633■ Fixed Assets ＋7,633

Tangible assets
Intangible assets
Investments

12,324376
32,444―

14,866486
37,424――・ Tangible Assets
・ Intangible Assets
・ Investments

Total Assets

142,967

100.0%

155,637

100.0%＋12,670

Current Liabilities

20,958

14.7%

20,102

12.9%

－856

Notes Payable
Other

8,323
12,635―

7,673
12,428――

Non-Current
Liabilities

3,762

2.6%

7,925

5.1%

＋4,163

Total Liabilities

24,72017.3%

28,02718.0%＋3,307

Owner’s Equity

110,534

77.3%

117,300

75.4%＋6,766

Valuation andtranslation
adjustments

7,712

5.4%

10,3096.6%＋2,597

Total Equity

118,246

82.7%

127,61082.0%＋9,364

Total Liabilities andEquity142,967

100.0%

155,637

100.0%＋12,670■ Current Assets ： ＋5,037
・ Cash, deposits
・ Accounts receivable
・ Mk securities
・ Inventory（＋7,739）（＋1,154）（－6,899）（ ＋11）（＋2,542）（ ＋110）（＋4,980）■ Current Liabilities ： －856
・ Notes Payable（ －650）■ Non-Current Liabilities ： ＋4,163

44

Financial Summary: KYORIN Pharmaceutical(Non-consolidated)（¥ million）

FY2011FY2012FY2013

FY2014FY2015FY2016(forecast)

Sales(Exports)

93,697(1,904)

95,894(2,277)

97,662(1,650)98,452(840)

106,390(5,343)

106,400(3,600)

Cost of Sales（cost of sales ratio ）％32,046(34.2%)

33,868(35.3%)

35,119(36.0%)

38,951(39.6%)

40,798(38.3%)―

SG&A
Ratio to Sales (%)

47,679(50.9%)

44,898(46.8%)

47,175(48.3%)

47,349(48.1%)

48,129(45.2%)―

R&D Expenses
Ratio to Sales (%)

13,472(14.4%)

10,733(11.2%)

11,064(11.3%)

12,843(13.0%)

12,421(11.7%)

12,900(12.1%)

Operating Income
Ratio to Sales (%)

13,971(14.9%)

17,127(17.9%)

15,368(15.7%)

12,151(12.3%)

17,461(16.4%)

11,700(11.0%)

Ordinary Income
Ratio to Sales (%)

15,126(16.1%)

18,209(19.0%)

16,230(16.6%)

13,115(13.3%)

17,985(16.9%)

12,200(11.5%)Net Income
Ratio to Sales (%)

9,274(9.9%)

11,931(12.4%)

10,823(11.1%)

10,412(10.6%)

12,113(11.4%)

8,900(8.4%)EPS (¥)¥124.88¥160.66¥145.74¥140.20¥163.11―

Capital

4,317

4,317

4,317

4,317

4,317

―

Assets121,985

121,881130,997

142,967

155,637―

shareholder's equity

101,652

100,586

106,211

110,534

117,300―

Total Equity

102,177

102,844

109,606

118,246

127,610―

BPS (¥)¥1,375.79¥1,384.77¥1,475.82¥1,592.16¥1718.23―

ROE (%)

9.4%

11.6%

10.2%

9.1%

9.9%

―

Equity Ratio (%)

83.8%

84.4%

83.7%

82.7%

82.0%

―

Employees

1,798

1,797

1,780

1,771

1,731

―

Capital Expenditure

1,425

1,507

4,763

1,125

5,059

1,800

Depreciation Expense

1,790

1,743

1,743

1,667

2,241

2,300

45

Segment information
Sales, Profit or Loss of each report segment（ Units: ¥ billion ）SaleschangeProfitChangeNet Sales (total)

119.5

＋6.4

19.6

＋4.9

Ethical drugs business

118.2

＋6.4

19.5

＋4.9

98.3

＋6.2

○Overseas

92.7
5.6

＋1.6
＋4.6

◆Generic drugs

15.5

0

◆Over-the-counter drugs

4.5

＋0.3

Healthcare(Skincare) business

1.2

－0.1

－0.1

－0.1

－

0.2

0

◆Sales of new ethical drugs○JapanAmount of adjustment－(Note ) The Company is applying the Revised Accounting Standard for Disclosures about Segments of an Enterprise andRelated Information and the Guidance on the Accounting Standard for Disclosures about Segments of an Enterprise andRelated Information. As a result, the reported segments are the Ethical Drugs Business and the Consumer Healthcare Business.

46

Consolidated Financial Results and full year forecast（ Units: ¥ million ）Year on year

FY2015FY2016(forecast)changechange（%）

Sales

119,483

120,000

＋517

＋0.4

■Ethical Drugs business

113,970

114,000＋30＋0.0◆Sales of new Ethical Drugs

98,506

92,400－6,105－6.2

92,92088,500－4,419

－4.8

5,586

3,800

－1,786－32.0

15,46521,500＋6,035

＋39.0

5,512

6,000

＋488

＋8.9

Operating Income

19,636

14,500－5,136－26.2

Ordinary Income

19,995

14,900－5,095－25.5

Net Income

13,63910,700－2,939－21.6○Japan○Overseas◆Sales of Generic drugs■Consumer Healthcare
Business※The details of the Sales Segment have been changed from the year ending March 31, 2017.
Following the change, the Pharmaceutical Business comprises New Drugs and Generic Drugs, while the Health Care Business comprises Skincare, Environmental
Hygiene and Over the Counter Drugs and Others.

47

Main Product Sales Update（ Units: ¥ billion ）Kipres（LT receptor antagonist）

Flutiform(Anti-asthmatic)

Sales of new
ethical drugs(Japan)Uritos（Kyorin）(Overactive bladder)

Mucodyne（Mucoregulant）

Pentasa(Ulcerative colitis andCrohn’s disease treatment)

Desloratadine(INN)(allergic rhinitis)

Over-thecounter drugs

Milton(Disinfectant)

FY2011FY2012FY2013

FY2014

36.8

39.6

40.2

41.2

―

―

0.6

6.3

7.5

21.5

FY2015FY2016

Change(%)(forecast)

44.1

＋6.9

33.3

3.6

7.2

＋99.8

12.9

8.1

7.3

7.5

＋2.8

7.8

19.1

18.4

14.0

13.0

－7.3

10.8

18.0

17.6

18.6

17.2

16.1

－6.1

15.8

―

―

―

―

―

―

1.9

1.9

2.0

2.1

2.0

2.1

＋5.2

2.1

actual48

R&D Expenses, Capex & Depreciation（ Units: ¥ million ）FY2011FY2012FY2013

FY2014FY2015
actualChangeFY2016（forecast）

13,964

11,05911,35913,51413,019－3.7%

13,500Capital expenditure

1,952

6,576

6,500

2,655

7,218 ＋171.8%

4,700

Depreciation
expense

2,363

2,738

3,153

3,053

3,730

＋22.1%

3,900

R&D expenses<Capital expenditure (Actual/Forecast)>（ Units: ¥ billion ）FY2014FY2015FY2016（forecast）

Plant facilities

1.5

2.4

2.6

Equipment for control, sales activities

0.3

0.4

0.5

Equipment for research

0.8

4.4

1.6
49

Main R&D Activities -1 (May 12 , 2016 Release)※Changes from the previous announcement(Feb 3 2016)Ph III ~ Application submitted
Stage
Japan

Overseas

PhⅢ(1/2015)

PhⅡclinical trial
end
Merck & Co.,

Compound/
Code

Therapy area/Action

OriginFeatures

Comments

KRP-114V

Overactive bladder

Merck &Co.,

KRP-114V is expected to improve urinary
frequency through stimulation of the beta 3
receptor in bladder which improves bladdermuscle relaxation.

PhⅢ(4/2015)

KRP-AM1977X(Oral agent）

New quinolone
synthetic antibacterial
agent

In-house※PhⅢ(3/2016)

KRP-AM1977Y(Injection）

New quinolone
synthetic antibacterial
agent

In-house①Superior ability to combat drug-resistant grampositive bacteria (incl. MRSA)②Outstanding ADME (oral absorption, tissue
migration)③High degree of safety expected since safety
hurdles cleared prior to clinical trials

License agreement withMerck & Co., Inc.,(7/2014)※ Co-Development and
Co-Marketing Agreementwith Kissei PharmaceuticalCo., Ltd. affiliate . (3/2016)

for reference
Stage
Application submitted by MSD
K.K. (10/2016)

Compound/
Code
Desloratadine

Therapy area/Action

Featuresallergic rhinitis, hives, itching resulting from skindiseases (eczema/dermatitis, pruritus cutaneous)second generation histamine
H1-receptor antagonist

Comments
Co-Marketing Agreement for Japan withMSD K.K. affiliate (11/2014)50

Main R&D Activities -2 (May 12 , 2016 Release)
POC Project (Ph I ~ Ph II)
Stage
Japan

Overseas

Compound/
Code

Therapy area/Action

OriginFeatures

Comments

PhⅡ(8/2015)

PhⅢ
Merz

KRP-209

Tinnitus

Merz

KRP-209 (Neramexane) is expected to improve thepatients' annoyance and difficulties in their life caused bytinnitus, mainly through its two pharmacological properties:
1) NMDA antagonistic activity and 2) Nicotinic acetylcholine
antagonistic activity

License agreement with
Merz (11/2009)
Merz:Ph I clinical trial ofJapanese patients in US
completed (3/2010)

PhⅠ,Ⅱ（7/2015）(US)
Momotaro-Gene
prostate cancer(5/2014)

Ad-SGE-REIC

malignant pleural
mesothelioma

Okayama
University

A gene-therapy product using a novel tumor suppressor
gene of reduced expression in immortalized cells/ Dickkopf3 (REIC/Dkk-3), which was discovered by researchers from
Okayama University, as a therapeutic gene.
It is expected to have direct effect on primary tumor lesions
and indirect effect on metastatic tumor lesions as a genetherapy product that simultaneously induces tumor cellselective apoptosis and the activation of antitumor
immunity respectively.

Adopted to Next
generation Technology
Transfer Program(NexTEP)(6/2014)51

Main R&D Activities -3 (May 12 , 2016 Release)
Licensing development（preclinical）
Compound/Code

Licensee /Collaborative
research

Therapyarea/Action

KRP-203

Novartis

GVHD

Stage/
Overseas
PhⅠ

OriginIn-house

Features
Sphingosine-1-Phosphate Receptor Agonist .
immunomodukatory drug.

Comments
License agreement with Novartis(2/2006)
Novartis has decided to proceed with
development of KRP-203 for GvHD.

Preclinical-

BMS

Nondisclosure

In-house

FPR-2 agonists that mainly inhibit the
migration of neutrophils and exhibit antiinflammatory action.

License agreement with BMS(12/2015)52