KYORIN Pharmaceutical Co., Ltd.
Integrated Report

2023

KYORIN Pharmaceutical Co., Ltd.
6, Kanda Surugadai 4-chome, Chiyoda-ku, Tokyo 101-8311 Japan
Phone: +81-3-3525-4700 Fax: +81-3-3525-4780
https://www.kyorin-pharm.co.jp/en/Corporate Philosophy of the Kyorin GroupCONTENTS
To Our Stakeholders .........................................................................................................2

Kyorin continues to fulﬁll its mission of

Kyorin Group’s 100-Year History ...................................................................................4
Overview of the Kyorin Group .........................................................................................6

cherishing life and beneﬁting society bycontributing to better health.

Message from the President ...........................................................................................8
Value Creation Process ..................................................................................................16
Overview of the Long-Term Vision “Vision 110”........................................................18
Overview of the Medium-Term Business Plan “Vision 110 –Stage1–” .................19
Materiality .........................................................................................................................22
Message from Executive in Charge of Finance ..........................................................24
The Kyorin Group’s Business Development
New Drugs Business: Drug Discovery and Development ....................................26
New Drugs Business: In-Licensing ..........................................................................28

Corporate Message

New Drugs Business: Marketing ..............................................................................30
New Drugs Business and Generic Drugs Business: Manufacturing ..................32

Your Health is Kyorin’s Mission

Generic Drugs Business: Generic Drugs .................................................................34
Reliability Assurance ..................................................................................................36
100th Anniversary of Our Founding.............................................................................38
Our Challenges.................................................................................................................40
Addressing Sustainability Issues .................................................................................42
Sustainability in Business Activities/Gaining Social Trust......................................45
Fair and Honest Business Activities ............................................................................48
Enhancing Human Capital..............................................................................................50
Initiatives for Health Management ...............................................................................53
Living in Harmony with Society ....................................................................................54
In Harmony with the Environment ...............................................................................56
Corporate Governance....................................................................................................60
Ten-Year Consolidated Financial Highlights ..............................................................66

Editorial Policy
This report is being published as an Integrated Report, comprehensively including non-ﬁnancial information such as
management strategies, business overviews, and accounts of sustainability activities in addition to the information
included in the previously issued annual reports.
We hope that this report will deepen the understanding of shareholders, investors, and a wide range of otherstakeholders about the Kyorin Group’s activities.
Please visit our corporate website for more detailed information.
[Detailed information]
Information for shareholders and investors:
https://www.kyorin-pharm.co.jp/en/ir/
Information on corporate governance:
https://www.kyorin-pharm.co.jp/en/company/governance.shtml
Information on sustainability:
https://www.kyorin-pharm.co.jp/en/sustainability/

Performance Highlights .................................................................................................68
Directors, Corporate Auditors, and Corporate Officers ...........................................72
Financial Analysis ...........................................................................................................74
Consolidated Financial Statements .............................................................................78
Notes to Consolidated Financial Statements .............................................................83
Independent Auditor’s Report .................................................................................... 102
Corporate Overview and Stock Information ............................................................ 108

Origin of the Name “Kyorin”

Scope of coverage
Period covered: Fiscal 2022 (April 2022–March 2023) *Some ﬁscal 2023 activities are reported.
Organizations covered: KYORIN Pharmaceutical Co., Ltd. and its Group companies

The name Kyorin originated from two Chinese

Reference guidelines, etc.
• The IFRS Foundation’s international integrated reporting framework• Global Reporting Initiative’s (GRI) sustainability reporting standards• ISO 26000 guidance on social responsibility• Ministry of Economy, Trade and Industry’s Guidance for Collaborative Value Creation 2.0• Ministry of the Environment’s Environmental Reporting Guidelines 2018, etc.

folklore, and embodies the Kyorin Group’s aspirations

Disclaimer
This report contains performance forecasts, goals and plans, and other forward-looking statements related to the Group.
These statements draw on the judgment of the Group's assumptions and outlooks based on the information and forecasts
available at the time of preparation of this material, and contain known and unknown risks and uncertainties. Therefore,
due to various factors that may occur, the actual performance, progress/success/failure of developments, and otherinsights may differ signiﬁcantly from the description. It also contains information about medicines (including those underdevelopment), but the description is not for the purpose of advertising or medical advice.

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

characters that represent a truly virtuous way ofpracticing medicine. It is derived from Chinese

to continuously contribute to people’s better health inany day and age.

Kyorin Legend
Long ago, a Chinese physician named Dong Feng treated the sick free of charge, and asked those who recoveredfrom serious illness to plant ﬁve apricot tree saplings and those cured of minor illness to plant one. As time wentby, a thick forest of apricot trees was formed in the area. (A story that comes from a Chinese legend named
Shinsen-den.) “Kyorin” is a compound of “kyo,” the Chinese word for “apricot,” and “rin,” the Chinese word for“woods.” Praising the virtue of Dong Feng, the characters were transported from China to Japan as those
representing medicine and medical treatment in general.

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

1

To Our Stakeholders

Pursuing a new long-term vision based on a new business structure,for growth as a company and for a sustainable society,to fulfill our social mission of contributing to better health

We would like to thank all our stakeholders for your continued support andunderstanding.
To strengthen our business promotion functions and increase management
efficiency, and with ﬁscal 2023 marking the 100th anniversary of our founding,we have transformed our business structure from a pure holding company
structure to a business holding company structure and changed our trade nameto “KYORIN Pharmaceutical Co., Ltd.”Management of the Kyorin Group is currently being greatly affected by
drastic changes in our external operating environment. At the same time, a lookat our internal environment shows that we are creating new drugs that are
expected to become growth drivers, and we believe we have entered a period of
growth. Against this backdrop, we concluded the HOPE100 long-term vision one
year ahead of schedule and launched the new long-term vision “Vision 110” andthe medium-term business plan “Vision 110 –Stage1–” in April 2023.
Going forward, we will vigorously pursue the long-term vision “Vision 110,”based on our corporate philosophy, and work earnestly to achieve both
corporate growth and a sustainable society.
We ask for the continued understanding and support of all our stakeholders.

August 2023

The Kyorin Group marked the 100th anniversary of our founding on June 16, 2023.
We would like to express our sincere gratitude to the stakeholders who have supported us during that

Minoru Hogawa
Representative Director, Chairman

Yutaka Ogihara

time. Over the next 100 years, we will aim to make even greater strides.

Representative Director,
President and Chief Executive Officer

2

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

3

1960

Kyorin Group’s
100-Year History

1970

1980

1990

2000
2000
Transferred listing to First
Section of the Tokyo Stock
Exchange.

1992
KYORIN Pharmaceutical Co., Ltd. andKyorin Yakuhin Co., Ltd. were merged.

Management-related events
1931
Kyorin Chemical
Laboratory wasestablished.

1940
Kyorin Chemical Laboratory was
renamed KYORIN PharmaceuticalCo., Ltd.

1967
The Nogi Plant was
opened.

Strategy/
Concept

1962
Kyorin Chemical
Laboratory was opened.

1947
The Okaya Plant was
opened.

With the aim of contributing to people’s

Takaoka Pharmaceutical Technology Innovation Center was established.
2018
KYORIN Pharmaceutical Group Facilities
Co., Ltd. commenced operations.

2010–2022
HOPE100

Aiming to be an original and significant
healthcare-contributing force

Aiming to be recognized both within and outside as acompany that supports sound and healthy lifestyles

KYORIN Pharmaceutical has long pursued basic

health, KYORIN Pharmaceutical was

research in infectious diseases. One infectious

established as Toyo Shinyaku Sha in 1923

disease treatment we developed was a newand began manufacturing and sellingquinolone agent that led to the production of theinjection-type medicines. During the 1960s,

world’s first oral new quinolone synthetic

we built a structure for the research andantibacterial agent, Norfloxacin (Baccidal). Thisdevelopment of new drugs, and since then,preparation was licensed to Merck & Co. (U.S.A.) in

we have continued to contribute to people’s

1980 and was sold in around 140 countries. This

health through the research and development,

was followed by the development of Fleroxacin

manufacture, and sales of original, new(Megalocin) and Gatifloxacin (Gatiflo) and the2019
GeneSoC waslaunched.

1989
Ketas was launched.

continue to grow as a company that makes a

Fleroxacin was licensed toF. Hoffmann-La Roche.

wide-ranging contribution to people’s health.

1998
Milton was launched.

1996
Pentasa was launched.

2012
Rubysta waslaunched.

Gatifloxacin was
licensed to BristolMyers Squibb.

2020
Lasvic Tablets waswere launced.

Fiscal 2023 net
sales (forecast)¥116.2 billion
1,000

2001
Kipres waslaunched.

1980
Norfloxacin was licensed to
Merck & Co.
1984
Baccidal was
launched.

1971
Cholexamin was
launched.

2013
Flutiform waslaunched.

2002
Gatiflo was launched.

1981
Mucodyne waslaunched.

Deamelin-S waslaunched.

2022
Lyfnua waslaunched.

2016
Desalex was
launched.

1986
Aplace was launched.

1965
KYORIN AP-2 waslaunched.

2021
Lasvic IV drip infusion kit
was launched.

2018
Beova waslaunched.

and Lasvic IV drip infusion kits).

of the Group’s founding in 2023 and will

2023–
Vision 110

2007
Uritos was launched.

current sale of Lascufloxacin (as Lasvic Tablets

medicines. We marked the 100th anniversary

Product history

2017
KYORIN Pharmaceutical Co., Ltd. carried out an absorption-type mergerof jTAS (entry to diagnosis business).

1995–2009
MIC plan

Founding–1994
Building a corporate foundation with research anddevelopment, manufacturing, and sales functions

Merger by absorption of
KYORIN PharmaceuticalCo., Ltd., shift tobusiness holding
company structure, andchange of trade nameto KYORIN
Pharmaceutical Co.,
Ltd.

2015
WATARASE Research Center
was established.

2006
Shifted to pure holding
company structure.

1999
Listed on Second
Section of the Tokyo
Stock Exchange.

1977
Central ResearchLaboratories were opened.

2023
100th anniversary

2012
KYORIN Pharmaceutical Group
Facilities Co., Ltd. was established.

2005
Toyo Pharma Co., Ltd. (present KYORIN
Rimedio Co., Ltd.) was acquired, andgeneric drugs business entered.

1998
Milton was acquired.

2022
Transferred to Prime
Market of the Tokyo Stock
Exchange.

Trade name changed to KYORIN Holdings, Inc.

2004
ActivX Biosciences, Inc. became
a wholly owned subsidiary(dissolved in March 2023).

1996
Nisshin KYORIN PharmaceuticalCo., Ltd. was established.

2023

2010
Net sales reached ¥100 billion.

2002
Kyorin Europe GmbH wasestablished (dissolved in
March 2023).

1995
The Noshiro Plant
was opened.

2020

2008
Nisshin Kyorin Pharmaceutical Co., Ltd. merged into
KYORIN Pharmaceutical Co., Ltd.

2001
Kyorin USA, Inc. was established(dissolved in March 2020).

Kyorin Yakuhin Co., Ltd. wasorganized.

1923
Toyo Shinyaku Sha
was founded.

2010

1993
Megalocin was launched.
500

1961
Behyd waslaunched.
0

1923

4

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

1960

1970

1980

1990

2000

2010

2020

2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

5

Overview of the Kyorin GroupThe Kyorin Group, which comprises the business holding

Primary Examples of New Drugs

company KYORIN Pharmaceutical Co., Ltd. and subsidiaries
KYORIN Rimedio Co., Ltd. and KYORIN Pharmaceutical Group

Beova

LyfnuaDesalex

Therapeutic agent for
overactive bladder
General name: Vibegron
Released: 2018

Cough treatment
General name: Gefapixant citrate
Released: 2022

Antiallergic agent
General name: Desloratadine
Released: 2016

Facilities Co., Ltd., is engaged in a pharmaceutical products
business primarily consisting of ethical drug products. The
new drugs business creates original, new drugs anddevelops, manufactures, and sells other pharmaceutical

Concluded agreement with MSD K.K. forexclusive distribution rights in Japan

Co-development and co-marketing with
Kissei Pharmaceutical Co., Ltd.

products, and also sells products related to environmental
hygiene and the diagnosis of infectious disease, as wellother products including general pharmaceuticals. The
generic drugs business develops, manufactures, and sells

Overactive bladder treatment market: ¥89 billion
Market share in ﬁscal 2022: 16.7%*

Estimated number of patients (estimate based on morbidity rate)
Number of refractory cough patients: approx. 2.5 million, including
0.4–0.5 million with refractory chronic cough*Antihistamine market: ¥122 billion
Market share in ﬁscal 2022: 8.1%

proprietary generic drugs and, working with the new drugs
business, strives to provide a stable supply of high-quality,

Net sales (Billions of yen)

Net sales (KYORIN Pharmaceutical sales portion)

Net sales (Billions of yen)

12.9

(Billions of yen)highly reliable products.

7.1
5.7

8.6

7.3

3.7

4.3

Net sales breakdown (fiscal 2022)

8.5

0.2

2.6

0.7

2018

2019

2020

2021

2022

2022

(FY)

(FY)

2018

2019

2020

2021

2022

(FY)

Generic drugs

33.7%
Net sales¥113.27
billionNew drugs(overseas)

LasvicFlutiform

New quinolone synthetic
antibacterial agent
General name: Lascuﬂoxacin
Released: 2020 (tablet)
2021 (IV drip infusion kit)

Combination drug for asthma
treatment
General name: Fluticasone/
Formoterol
Released: 2013

New drugs, etc.
(Japan)

0.3%

66.0%

Operating profit¥5,123 million

Oral antibacterial agent market: ¥60.5 billion
Market share in ﬁscal 2022: 4.0%*

Net sales (Billions of yen)
2.5
1.1

ICS/LABA combination drug market: ¥85.6 billion
Market share in ﬁscal 2022: 16.0%
Net sales (Billions of yen)
14.6
13.1

1.8

Generic Drugs*

Net sales (Billions of yen)

12.6

12.0

32.2

0.8
3.6

38.2

Imidafenacin AG

0.7
4.7

Mometasone AG

2.8

0.7
3.8

11.9

11.5

10.8

17.4

16.7

16.8

18.2

19.5 Other generics

2018

2019

2020

2021

2022

29.3
13.3

31.0

34.8

0.9

12.2

13.3 Montelukast AG

Profit attributable to owners of parent¥4,723 million

2019

2020

2021

2022

(FY)

2018

2019

2020

2021

2022

(FY)

* Source: Copyright© 2023 IQVIA. Kyorin’s own analysis based on JPM March 2023
MAT. Unauthorized copying prohibited.

(FY)

AG: Authorized generic

Total assets

Environmental hygiene products

General medical devices, pharmaceuticals for in vitro diagnostics, etc.

¥176,045 million
MiltonNet assets¥125,461 million

Disinfectant for baby bottles
and bottle nipples
Hand disinfectant
Disinfectant spray

Basic earnings per share¥82.44

GeneSoC
Research-use devices
Research-use reagents
General medical devices
Pharmaceuticals for in vitro diagnostics

Rubysta
Multipurpose disinfectant
cleaner

6

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

7

Message from the President

One hundred years after our founding, the Kyorin Group’s
unchanging mission is to “contribute to better health”
The Kyorin Group marked the 100th anniversary of our founding in June 2023. Hiroshi
Ogihara, Kyorin’s founder and my grandfather, decided to go into business to help many sickpeople at the same time by manufacturing and selling medicines. He founded Toyo Shinyaku

Yutaka OgiharaSha, the predecessor of KYORIN Pharmaceutical Co., Ltd., in Omori-ku, Tokyo (part of today’s

Representative Director,

Ota-ku, Tokyo), in 1923. That was the beginning of the Kyorin Group. Established as Tokyo

President and Chief Executive Officer

was recovering from the Great Kanto Earthquake, the company has continued through the
Taisho, Showa, Heisei, and Reiwa periods, though that path has by no means been smooth.
We therefore made steady progress one step at a time through the efforts of mypredecessors and approached our 100th anniversary with deep emotion. I would like toexpress our sincere gratitude to everyone who has assisted and supported the Kyorin Groupto date.
The idea of wanting “to contribute to better health” goes back to the time of the Kyorin
Group’s founding and continues today in our corporate philosophy of “fulﬁlling our mission ofcherishing life and beneﬁting society by contributing to better health” and our corporate
message of “Your Health is Kyorin’s Mission.”
The slogan for our 100th anniversary is “Wishing you good health for the next 100
years.” That time frame, which is neither a goal nor a checkpoint, instead expresses a newstarting line and incorporates our strong desire to contribute anew to people’s health for the
next 100 years. The Group’s senior management, myself included, will use this opportunity towork even harder toward the Kyorin Group’s continuous growth and development as weenter this next stage.

Pursuing new challenges based on
the long-term vision “Vision 110,”we will build a foundation for continuous growth
8

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

9

Message from the President

Transforming the Group’s structure and formulating a new long-

Long-term vision

term vision and a new medium-term business plan in ﬁscal 2023
In ﬁscal 2023, the 100th anniversary of our founding, and as a response to the drastic changes the
Kyorin Group is currently experiencing, we have transformed the Group’s structure with the aims of

Vision for 110th anniversary

strengthening our business promotion functions and increasing management efficiency. Speciﬁcally,
we have absorbed our main operating company, KYORIN Pharmaceutical Co., Ltd., into KYORIN

Our goal

Holdings, Inc., shifting from a pure holding company structure to a business holding company

A company that contributes broadly to people’s health by comprehensively developing

structure, and changed our trade name to “KYORIN Pharmaceutical Co., Ltd.”

healthcare-related businesses, with a core focus on the new drugs business, which
continuously provides high-value new drugs that meet medical needs

Over the past few years, our external operating environment has seen a further strengtheningof measures to hold down expenses for medical treatment and medicines, including through annual
NHI drug price revisions (mid-year revisions). Also, the spread of coronavirus infections

proﬁt before deduction of R&D expenses of at least 20% of net sales,” we reached 14.2%. We take these

unexpectedly caused people to refrain from seeking medical treatment, making the environment

results very seriously and will aim for continuous growth under the new long-term vision.

even more challenging. At the same time, despite this external environment, we believe our internal
environment has entered a period of growth, with new drugs expected to drive growth in place andnew businesses including diagnostics being on track.
Against this backdrop, we formulated the new long-term vision “Vision 110” and the new medium-

Proactively pursuing the medium-term business plan
“Vision 110 –Stage1–”

term business plan “Vision 110 –Stage1–” and began operating under them in April 2023.
The long-term vision “Vision 110” sets out our blueprint for the next 10 years, through the 110th

Review of the medium-term business plan “HOPE100 –Stage 3–”anniversary of our founding. In addition to incorporating the concept and DNA of creating high-value
new drugs to contribute to people’s health, which we have achieved since our founding, the new

The medium-term business plan “HOPE100 –Stage 3–,” which concluded in ﬁscal 2022, set targets tolong-term vision clariﬁes the issues we have faced to date and draws a new corporate image.
The new vision sets a goal of being “a company that contributes broadly to people’s health by

be achieved through ﬁve business strategies and an organizational strategy. A review of these
initiatives shows that in one of the business strategies, “shift to business based on the proposal ofsolutions and accelerate the growth of the new drugs group,” we set a target of having new drugs
account for at least 50% of net sales, and during the period covered by the plan, we launched asuccession of new drugs including the Lasvic IV drip infusion kit, Zymso, and Lyfnua. However, becauseof factors including a market contraction caused by the COVID-19 pandemic, we were unable toachieve sizeable growth in main products, and the ratio of new drugs in ﬁscal 2022 fell short of ourcomprehensively developing healthcare-related businesses, with a core focus on the new drugs
business, which continuously provides high-value new drugs that meet medical needs” and divides
the period covered into three segments (Stage 1: ﬁscal 2023–25; Stage 2: ﬁscal 2026–29; Stage 3:
ﬁscal 2030–32). The statement for the medium-term business plan “Vision 110 –Stage1–” is“transforming to a business structure to realize Vision 110.” Against the backdrop of an extremely
challenging business environment, this is the objective we deﬁnitely want to achieve.
We will pursue the following ﬁve initiatives under Stage 1.

target, at 42.0%. For “enhancing the pipeline to support medium-term growth,” we concluded four inlicensing contracts, but our current development pipeline cannot be considered sufficient. To“strengthen drug discovery capability to realize the creation of innovative new drugs,” our proprietary

1

Strengthening drug discovery capability to create high-value new drugs that meet
medical needs

KRP-A218 began clinical trials in the United Kingdom in ﬁscal 2021. At the same time, after outlicensing the agonist FPR2 to Bristol-Myers Squibb Company of the United States, we were expecting it
to become a major out-licensed product, but unfortunately the development right was returned as partof BMS’s development strategy. For “improving cost competitiveness,” we have developed andlaunched an annual average of six ingredients as generics newly added to the drug price list, as
planned. To “expand overseas revenue,” we successfully concluded ﬁve out-licensing agreements
including those for Vibegron and Lascuﬂoxacin. Regarding our target of a “compound annual growthrate (CAGR) for net sales of at least 5%,” we ﬁnished the plan with a rate of 1%, and for “operating

We will pursue innovation in drug discovery under a new drugs discovery strategy. For this, we haverenovated our organizational structure to pursue new initiatives by establishing a new Innovation
Research Laboratory to strengthen the functions of our disease research and drug discovery
technologies, and a new Research Planning Department to formulate overall drug discovery themes
and expand cooperation with external organizations. In addition to strengthening basic technology,
we will pursue new, high-value themes and the creation of high-value new drugs drugs that address
medical needs. Regarding drug discovery technologies, in addition to small molecule drug discovery,
we will use nucleic acid drug discovery and new external technologies. In disease research, we will
focus on the ﬁelds of ﬁbrosis, immune and inﬂammatory disorders, and other diseases.

10

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

11

5

Building a sustainable corporate foundation

We will promote cost optimization Groupwide in response to changes in the business environment.
To bolster human capital, we will revise our human resources system, introduce measures toenhance career fulﬁllment, and work on human resources development, while promoting healthmanagement and striving to maintain and improve employees’ health. In areas including theenvironment, compliance, and governance, we will pursue measures appropriate for a TSE Prime
Market-listed company. For reducing CO2 emissions, for example, we have set a clear target to beachieved by ﬁscal 2030. We will steadily pursue these initiatives to build a sustainable corporatebase that addresses social issues and the needs of the times.

Performance target for ﬁscal 2025

2

Expanding development pipeline through in-licensing

We have set the following numerical performance targets for growth potential and proﬁtability.

At least 2.0%

Expansion of the development pipeline is an urgent issue for the Kyorin Group. We have established• Growth potential: Net sales CAGR

a new Business Development Headquarters to signiﬁcantly strengthen our acquisition of in-licensed• Proﬁtability: Operating proﬁt before deduction of R&D expenses

products and accelerate our evaluation and acquisition of in-licensed products. In addition to
expanding our modalities and disease areas for in-licensing and proactively developing a wide range
of in-licensing activities, we will step up investment and hiring with a target of acquiring at least six
in-licensing products during Stage 1. In addition, in the ﬁeld of otolaryngology, we are moving
forward with development of the KRP-DT123 tinnitus treatment and steadily pursuing DTx (digital
therapeutics) development.

3

Maximizing the ratio of new drugs(operating proﬁt + R&D expenses) At least 16.0%
Our basic capital policy is to improve capital efficiency through investment for growth andshareholder returns, while maintaining a sound ﬁnancial base with an ongoing awareness of thecost of capital and return on capital.
For returns to shareholders, we will maintain a stable dividend, taking into consideration thedividend on equity (DOE) ratio.

Aiming for growth by implementing new measures in ﬁscal 2023,

Growth in new drugs is the driver of higher sales and proﬁt, and we aim to accelerate as much as

the ﬁrst year under the new medium-term business plan “Vision

possible the growth of new drugs and maximize their market penetration. We envision the combined

110 –Stage1–”

sales of ﬁve new drug products growing to roughly ¥20 billion by ﬁscal 2025 and will work toaccelerate their market penetration for rapid growth. At the same time, we will continuously

Fiscal 2023 is important as the ﬁrst year under the new medium-term business plan. Ourstrengthen our quality and supply chain management to offer a stable supply of high-quality

management policy is the “reform of business structure and growth from new initiatives.” In addition

pharmaceuticals. In addition, as we handle new modalities, we will build quality control structuresto accelerating growth driven by new drugs, we will address the urgent issue of expanding theand supply chains as appropriate to deal with them.

development pipeline. I believe the Kyorin Group exists to create high-value new drugs that address
medical needs and to contribute to better health. While continuously pursuing the challenge of drug

Promoting healthcare-related businesses that have synergies with the new
drugs businessdiscovery and innovation is important from a long-term perspective, signiﬁcant time and costs are

For the continuous growth of the generic drugs business, we are increasing our development

have a sufficient development pipeline going forward with proprietary drugs alone. Therefore, until

capabilities for generics newly added to the drug price list and accelerating growth with a focus on

we have a full lineup of in-house products, we will proactively pursue a wide range of in-licensing

additional listings. Also, we intend to strengthen Groupwide production capacity and offer stable

activities while investing and increasing personnel to signiﬁcantly strengthen in-licensing

supplies when the Takaoka Plant, currently under construction, commences full-capacity operations,capabilities, with a primary focus on expanding the development pipeline. At the same time, now

while lowering production costs. In the infection-related business, we will promote popularization ofthat we have a full lineup of new drugs to drive growth, we will strive to accelerate growth and raisethe diagnostics business and the Rubysta and Milton product lines. We also intend to strengthen our

proﬁtability while continuing to improve cost competitiveness, as we step up measures to build areliability assurance system to support comprehensive business development.

solid corporate base with a sense of speed.

4

12

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

required for the results of drug discovery to materialize. We also recognize that it will be difficult to

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

13

Message from the President

Fiscal 2023 management policy

Reform of business structure and growth from new initiatives
Reform drug discovery systems

Expand development pipeline

Maximize the expansion of sales
growth in new drugs

Improve cost competitiveness

Proactively addressing sustainability issues through our businessactivities
Reﬂecting our founder’s idea that “a business is as good as its people” and believing that
employee growth is the driving force that supports the strengthening of our business, we are
Acting on our corporate philosophy, the Kyorin Group is proactively addressing sustainability issues (forworking to enhance our human capital. We also consider it important for all employees to respect
the continuous development of both the Company and society) through business activities based on our
the human rights of all people and to act with high ethical consideration. We therefore maintain
Corporate Charter, an approach that we believe will lead to enhanced corporate value over the medium
workplace environments where the diversity, character, and individual characteristics of all
to long term. Therefore, under our long-term vision and medium-term business plan, our businessemployees are respected, where their health is taken into consideration, and where they can work
development includes strengthening our ﬁnancial base, effectively using human capital and othercomfortably and safely. Enhancing human capital means prioritizing employees and invigorating
resources, and enhancing corporate governance.
people and organizations. We recognize this as an important issue for producing results by excuting
The Company’s Board of Directors has six members, including three outside directors, and inour business strategy. The Kyorin Group is working to optimize operations with a basic policy forprinciple meets monthly to pass resolutions on legally required matters, formulate and decide
human resources management that views employees and the Company as partners who continue toimportant management issues and strategies, and oversee operational execution. Calls to
fulﬁll the responsibilities expected of each other over the long term and achieve mutual beneﬁts
strengthen the business management structure have been growing recently. As a means to enhance(with employees contributing to the Company, and the Company enriching employees’ lives andcorporate governance, in ﬁscal 2023, we designated chief X officers (CxOs) from among directors
contributing to their self-fulﬁllment). To promote work-style reforms and the active participation ofand corporate officers in key operational areas to confer with the Management Committee on
female employees, we have set a target of having women hold 15% of management positions byimportant matters related to the Company’s and Group companies’ operational execution.
2030 and are implementing plans to have male employees use at least 50% of their authorized
For matters related to sustainability, we have identiﬁed 10 important issues to be addressed as
childcare leave by ﬁscal 2025.
materiality through our medium- to long-term business activities from the perspectives of “value
creation (issues directly connected to our business activities)” and “a foundation to support value creation(issues related to the foundation of our business activities).” We will focus on addressing these issues

Valuing our founding spirit as we strive to enhance medium- tounder the long-term vision “Vision 110” and the medium-term business plan “Vision 110 –Stage1–.”long-term corporate value

Environmental consideration in our business activities, including responses to climate change,
is a particularly important materiality, and following our basic policy on sustainability, we carry out

The Company policy and Company motto of the Kyorin Group spell out our founding spirit, Honryo,business activities with constant awareness of their effect on the global environment and thewhich covers the Company’s mission and purpose, employees’ mental attitudes, and standards ofenvironments of local communities. We have established an Environmental Committee, chaired byconduct. With ﬁscal 2023 being the 100th anniversary of our founding, we are returning to our origin

the corporate officer in charge of General Affairs, to implement and promote environmental

with a new starting point for the next 100 years by instilling our Honryo founding spirit internallymeasures including ones addressing climate change, as a structure to examine environmental

and as the basis of our business activities. The Kyorin Group places the highest priority on “health,”measures. The committee identiﬁes and evaluates risks and opportunities related to climate change

an important theme for all people. Going forward, we will aim to be a company that contributes toand comprehensively considers how to respond, with initiatives addressing climate-related issues

people’s health, while making every effort to achieve the long-term vision “Vision 110” withpart of the management strategy. Speciﬁcally, we have set a target of reducing CO2 emissions 46%

unshakeable conviction as we strive to enhance corporate value over the medium to long term.

from the ﬁscal 2015 level by ﬁscal 2030, as we pursue the challenge of achieving carbon neutrality

I ask for the continued support of all our stakeholders.

by 2050.

14

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

15

Value Creation Process

Following our corporate philosophy that states “Kyorin continues to fulfill its mission of cherishing life and benefiting society by

developing health-related businesses to realize corporate growth and address social issues, while also striving to create value

contributing to better health,” the Kyorin Group is carrying out business activities aligned with our newly formulated long-termby sharing the successes of those efforts with all stakeholders. Through this ongoing value creation process, we aim to achieve

vision, medium-term business plan, and designated materialities (important issues). With a new drugs business thata sustainable society and enhance corporate value.

continuously provides high-value new drugs to meet diverse medical needs as our core business, we are comprehensively

External
environment

Corporate Philosophy

Kyorin continues to fulfill its mission of cherishinglife and benefiting society by contributing to better health.

Patients and medical
professionals

Social environment• Decreasing birthrate
and aging population• Growing geopoliticalrisks• Calls for companies toaddress sustainabilityrelated issues• Cultivation of the next
generation• Progress in work-stylereforms
Medical environment• Promotion of measures
to curtail medical careand pharmaceuticalcosts amid tight publicfinances for medicalcare• Advances toward
individualized medicalcare and fields ofspecialization• Increasing needs fordiagnostics andprevention in addition
to treatment• Changes in ways
information should be
provided to medical
facilities• Digital transformation(DX) in medical care
Pharmaceuticalenvironment• Increasing
sophistication anddifficulty of drug
discovery• Diversification andincreased complexityof drug discovery
modalities• Increasing desire forassurance ofpharmaceuticalmanufacturers’
reliability• Increasing calls forstable supply ofpharmaceuticals

Long-Term Vision “Vision 110”Invested capital

Human capital• Employees who will
drive growth• Comfortable working
systems andenvironments, respectfor human rights

Products and services

Medium-Term Business Plan “Vision 110 –Stage1–” (2023–2025)
Business strategies
Performance
1. Strengthening drug discovery capability to create high-value new drugs that meet medical needs

targets

2. Expansion of development pipeline through in-licensing• Technologies,
expertise, andorganization for new
drug discovery

3. Maximization of the ratio of new drugs

Social and related
capital• Various partnerships• Relationships of trustwith stakeholders(Operating profit + R&D expenses)

Financial capital• Solid financial base

Capital policy and shareholder returns

Generic drugs

Business activities• Meet medical needs throughthe creation and sale of new
drugs (enhance quality of life,
meet unmet medical needs)• Promote activities based on the
proposal of solutions to help
resolve issues at medical facilities• Provide stable supply ofhigh-quality pharmaceuticals
through compliance with
relevant laws and risk
management• Provide, collect, and transmit
information to promote
appropriate use ofpharmaceutical products• Contribute to communitybased healthcare

Suppliers

Pharmaceutical businessNew drugs
Generic drugs

Value chain
P.26
P.34

Drug discovery

P.26

In-licensing

P.28

Reliability assurance

Development

P.36

P.26

Human resources

Manufacturing

MarketingP.30

Corporate governance

P.60

P.32

P.50

Research-use devices/
general medical devices
Pharmaceuticals for invitro diagnostics

Kyorin’s strengths (top section) and weaknesses (bottom section)• Research capabilities and use of open innovation for fibrosis and immunity and inflammatory disorders• Strong presence in designated fields (respiratory, otolaryngology, and urology)• Development capabilities in designated fields (knowledge, expertise and experience, personal connections and networks)• Manufacturing structure able to address diverse needs• Insufficient experience and inadequate R&D pipeline in new modalities• Need to strengthen corporate foundation (enhancement, training, effective use of human• Limited investment in R&D

capital, and cost optimization)

Environmental
capital• Resources used, basedon environmental
management system

New drugs

Net sales CAGR

5. Building a sustainable corporate foundation

Manufacturing
capital• Production structurethat provides a stablesupply of high-quality
products

Numerical targets (consolidated basis)
Operating profit before deduction of R&D expenses

4. Promoting healthcare-related businesses that have synergies with the new drugs businessIntellectual capitalSocial value
provided by Kyorin

P.22

Value creation
Materiality directly connected tobusiness activities
1. Create high-value new products thatmeet medical needs
2. Maximize value of products
3. Provide a stable supply of highquality pharmaceutical products

P.42

Addressing sustainability issues
Foundation to support value creation
Materiality related to foundation of business activities
4. Enhance human capital
5. Promote work-style reforms that respect diverse values
6. Promote health management
7. Perform environmentally friendly business activities
8. Ensure thorough compliance
9. Strengthen corporate governance
10. Strengthen relationships with stakeholders• Sustainability in business activities

P.45• Fair and honest business activities

P.48• Enhancing human capital• Promote environmental
conservation initiatives toreduce environmental impact• Create a vibrant society bycontributing to local
communities and promoting
public awareness of health• Address employee welfare
and work-style reforms toprovide comfortableworkplaces• Provide opportunities fortraining and education• Create workplaceenvironments for career
fulfillment

P.50

Shareholders• Living in harmony with society• In harmony with the environment• Corporate governanceSociety

Employees

Kyorin’s sustainability
Materiality

Environmental
hygiene products• Coordinate with suppliers andshare information to create
stable supply structure• Procure responsibly• Ensure fair and free competition

P.60

P.54
P.56

• Disclose information promptly
and appropriately• Provide stable shareholder
returns• Engage in constructive dialogue

Reinvest to enhance corporate value

16

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

17

Overview of the Long-Term Vision “Vision 110”

Overview of the Medium-Term Business Plan “Vision 110 –Stage1–”

The Kyorin Group formulated the long-term vision “Vision 110” with a view 10 years into the future, when we will mark the

Medium-term business plan

110th anniversary of our founding. We will pursue business strategies toward attaining our goal of being “a company that
contributes broadly to people’s health by comprehensively developing healthcare-related businesses, with a core focus on theTransforming the business structure to realize Vision 110

new drugs business, which continuously provides high-value new drugs that meet medical needs.”

Long-term vision

The Statement for the Vision 110 –Stage1– is “transforming the business structure to realize
Vision 110.” We will pursue the following five business strategies to reach our performancetargets and improve support and evaluations from stakeholders.
1 Strengthening drug discovery capability to create high-value new drugs that meet medical needs

Vision for 110th anniversary

2 Expansion of development pipeline through in-licensing
3 Maximization of the ratio of new drugs

Our goal

4 Promoting healthcare-related businesses that have synergies with the new drugs business

A company that contributes broadly to people’s health by comprehensively developing

5 Building a sustainable corporate foundation

healthcare-related businesses, with a core focus on the new drugs business, which
continuously provides high-value new drugs that meet medical needs
Strategic image of medium-termbusiness planTerm
10 years: Fiscal 2023–2032

Drug discovery
Reorganization

Medium-term business plan

Stage1
Fiscal 2023–2025

Stage2
Fiscal 2026–2029

Stage3Fiscal 2030–2032

In-licensing
New drugs
business

The period covered by the long-term vision “Vision 110” is divided into

Stage 2–3

Strengthen the drug discovery capability to create high-value new drugs
that meet medical needs
Pursue drug innovation through new drug discovery strategies
Creation of new drugs from long-term perspective
Expansion of development pipeline through in-licensing
Significantly strengthen in-licensing capability
Promote DTx development

Investment of resources Enhancement of development pipeline

Marketing, SCM,
Reliability
assurance

three stages, and we are working to achieve the targets of those stages.

Stage 1 (Fiscal 2023–2025)

Maximization of the ratio of new drugs
Maximize the expansion of new drugs
Ensure the stable supply of high-quality drugs

Driving force of revenue Maximization of profitability

Healthcarerelated
business

18

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

Generic drugs
business

Achieve sustainable growth in the generic drugs business
Strengthen production capacity for pharmaceuticals and reduce
manufacturing costs

Other business

Promote infectious disease-related business

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

19

Overview of the Medium-Term Business Plan “Vision 110 –Stage1–”

Performance targets for ﬁscal 2025
Performance targets (consolidated basis)
Growthpotential

Net sales CAGR

Operating proﬁt before
deduction of R&D expenses
Proﬁtability(operating proﬁt + R&D
expenses)

4

Achieve sustainable growth in the generic drugs business

Capital policy and shareholder returns

At least

2%

Enhance the capability of generic drugs development and accelerate growth businessOur capital policy is to improve capital efficiency

Strive to ensure stable supply by enhancement of manufacturing and SCM structure

through investment for growth and shareholder returns,

Develop low-cost system throughout business environment

while maintaining a sound ﬁnancial base. Regarding
At least

shareholder returns, we will continue stable dividends,

16%

taking into account the dividend on equity (DOE) ratio.

Promoting healthcare-related businesses that have synergies with the new drugs business

Strengthen production capacity for pharmaceutical products and reduce
manufacturing costs
Maximize manufacturing capability by ensuring reliable operation at Takaoka Plant and optimizing each plant
Improve reliability and maintain stable manufacturing by raising the level of GMP*2
Cost reduction by improvement activities

1

Strengthening drug discovery capability to create high-value new drugs that meet medical needs

Promote infectious disease-related business
Develop diagnostics business for future with enhancement in IVD*3 area

Pursue drug innovation through new drug discovery strategies

Spread Rubysta and Milton brands

In addition to drug discovery targeting diseases with low drug effectiveness, use new technologies to create drugs

Strengthen reliability assurance structure to support comprehensive
business development

for existing treatments that have issues
Integrate drug discovery technologies and disease research to create high-value, new drugs
Regarding drug discovery technologies, use nucleic acid drug discovery and new external technologies in addition

Strengthen pharmaceutical-related legal and regulatory compliance structure

to small molecule drug discovery

Quickly and accurately address environmental changes involving reliability assurance

Regarding disease research, focus on lung fibrosis, immune and inflammatory disorders, and other diseases

2

Expanding development pipeline through in-licensing

Significant strengthening of in-licensing capabilities
Expand the scope of modalities and therapeutic areas for potential in-licensing, engage in wide-ranging
in-licensing activities
Increase investment in capital and human resources

DTx development
Steadily pursue development of medical-use apps in field of otolaryngology

5

Building a sustainable corporate foundation

Improve cost competitiveness
Cost optimization throughout business environment

Enhance human capital
Human resources development for people leading Vision 110
Revision of human resources system to improve career fulfillment
Promote work-style reforms to meet diverse values
Promote initiatives for health management and work to maintain and promote employee health3

Maximizing the ratio of new drugs

Respond to environmental issues, compliance, governance, etc.
Set target of cutting CO2 emissions by 2030 and commit proactively to reach it

Maximization of new drug penetration

Abide by all laws, regulations, codes of conduct, and the spirit thereof and act with high ethical standards

Increase impact of detailed information through in-person meetings, accelerate growth of new drugs tofor thorough compliancemaximum extent possible

Strengthen corporate governanceStable supply of high-quality pharmaceutical products

Appropriate actions to stakeholders

Strengthen procurement and management of products, raw materials, etc. (supply chain management)
Strengthen quality management in accordance with GQP*1
Build quality control structures and supply chains for new modalities as appropriate*1 GQP: Good Quality Practice*2 GMP: Good Manufacturing Practice*3 IVD: Pharmaceuticals for In Vitro Diagnostics

20

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

21

Materiality

Under the new long-term vision “Vision 110 (fiscal 2023–32)” to realize our corporate philosophy, the Kyorin Group aims to be “aProcess for designating materiality

company that contributes broadly to people’s health by comprehensively developing healthcare-related businesses, with a core

Materiality is designated by the following process, based on the Kyorin Group’s forward-looking environmental outlook andfocus on the new drugs business, which continuously provides high-value new drugs that meet medical needs.” To achieve thisanalysis and referral to various principles and guidelines.

goal, we need to create both social value and economic value, and consider it important to grow as a company and also
contribute to realizing a sustainable society. We have formulated a basic policy for addressing sustainability issues, have

These issues are continuously reviewed in light of environmental changes, the Kyorin Group’s business activities, anddemands of society.

designated materialities (important issues), and will appropriately address them.

Basic policy on sustainability

Designation of materiality

As per our corporate philosophy, the Kyorin Group is

Using a matrix with one axis representing social importanceproactively addressing sustainability issues for society’s

and the other axis standing for importance to the Group, we

continuous development through business activities based

have designated 10 items as materiality from among theon our Corporate Charter, as we work to enhance corporate

various issues related to sustainability. We will place a priority

value over the medium to long term.

on addressing these issues from the perspective of “value
creation (issues directly connected to business activities)” and1. Identification of issues

2. Narrowing down of issues

3. Assignment of priority

4. Designation of materiality

Issues are identiﬁed based on various
principles and guidelines (including ISO
26000, the UN’s Sustainable
Development Goals, and the materiality
map for the healthcare industry
formulated by the Sustainability
Accounting Standards Board).

Identiﬁed issues are narrowed downin light of the Group’s corporate
philosophy, long-term vision, etc.

Issues of particularly high priority are
identiﬁed using a matrix with twoaxes—importance to society andimportance to the Group.

Issues identiﬁed as important formateriality are deliberated by theManagement Committee and resolved by
the Board of Directors.

Materiality

the perspective of a “base to support value creation (issues

Materiality

KPI

Related SDGs

related to a base for business activities)” as we work to achieve
Creating high-value products that meet • Clinical development milestones

the goals of the long-term vision “Vision 110.”

Corporate philosophy

Vision 110

Social importanceLong-term vision

Value creation

Designation of important issues referencing social concerns

medical needs
Maximizing value of products

Providing a stable supply of highquality pharmaceutical products

Materiality

Enhancing human capital• Number of stockouts• Number of product recalls• On-track progress at Takaoka Plant (qualitative)• Appropriate operation and improvement of

Vision 110 –Stage1–

Importance to the Kyorin Group• Creating high-value products that meet medical needs• Maximizing value of products• Providing a stable supply of high-quality pharmaceutical products• Enhancing human capital• Ensuring thorough compliance• Promoting work-style reforms that respect
diverse values• Strengthening corporate governance

Promoting work-style reforms that
respect diverse values

Base to support value creation

Policies and plans for each ﬁscal year

• Percentage of management positions ﬁlled

Corporate philosophy

Incorporation into
strategies (MTP)

Medium-term business planby women• Percentage of male employees taking
childcare leave• Percentage of employees with disabilities

Promoting health management

Carrying out environmentally friendly
business activities

Ensuring thorough compliance

Strengthening corporate governance• Percentage of employees undergoing healthexaminations and stress checks• Percentage reduction of CO2 emissions• Number of signiﬁcant compliance violations• Appropriate response to Corporate Governance
Code (qualitative)• Strengthening relationships with stakeholders• Promoting health management• Carrying out environmentally friendly businessactivities

22• Sales of main products

human resources system (qualitative)(Important issues)Base to support value
creation materiality• Ratio of new drugs• Main scores from job satisfaction surveys

Materialities

Value creationmateriality• Number of in-licensed products

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

Strengthening relationships withstakeholders• Stronger engagement with investors (qualitative)

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

23

Message from Executive in Charge of Financecosts for new in-licensed products, R&D expenses could besigniﬁcantly higher depending on in-licensed items. We areManaging with a constant awareness of the cost ofcapital and return on capital, while working to increasee

we make investments for growth, we will procure funds

ﬁnancial base, and to continuously enhance both corporate

externally as needed to seize medium- to long-term growthvalue and shareholder value.

opportunities when they arise.

ﬁnancial strategy under the medium-term business plan

Stock Exchange is requesting that companies with a price-“Vision 110 –Stage1–”: (1) increase capital efficiency

book value ratio (PBR) of less than 1x carry out

through investment for growth and shareholder returns,

management with an awareness of the cost of capital andwith a constant awareness of the cost of capital and return

return on capital. The Kyorin Group’s return on equity (ROE)on capital, while maintaining a sound ﬁnancial base; and (2)for ﬁscal 2022 was 3.8%, which I do not view as sufficient.

maintain a stable dividend, taking into account the dividend

Under the medium-term business plan, we will strive for aon equity (DOE) ratio. The medium-term business plan also

continuously higher return on capital by maximizing thesets numerical targets for growth and proﬁtability at aratio of new drugs and improving our cost competitiveness.
ROE(%)

signiﬁcantly affected by factors like the expiry of patents.

4.0

5.0

8,000

a balance between ﬁnancial soundness and investment for
growth. For ﬁscal 2022, the dividend per share was ¥52, anddeemed to contribute to the Group’s sustainable growth and

75

71.3

3.2

3.8

2.0

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

3/2024(compared with the balance sheet amount as of April 1,

achieving our targets for growth and proﬁtability in this2022). We will continue to appropriately reduce our crossenvironment. In terms of maximizing the ratio of newshareholdings from the standpoint of capital efficiency.

drugs, we expect sales to grow in ﬁscal 2023 with new
drugs that are expected to drive growth in place andmarkets for main products that had contracted during theof ﬁve new drugs to boost net sales roughly ¥20 billion by

Consolidated cash ﬂows

ﬁscal 2025, the ﬁnal year of the medium-term business
Cash ﬂow from operating activities
Cash ﬂow from investing activities
Cash ﬂow from ﬁnancing activities

7,739

6,000

proactively to strengthen our drug discovery capabilities,

results forecast for ﬁscal 2023 does not include acquisition

plan, and are aiming for a new drugs ratio of at least 50%.
To enhance our cost competitiveness, all divisions
Groupwide are implementing thorough cost reductions as
we work to decrease the consolidated ratio of SG&A to net

5,189

sales (excluding R&D expenses).
Recognizing the importance of proactively investing for

2,008

growth while maintaining a sound ﬁnancial base andmanaging with a constant awareness of the cost of capital0

and return on capital, we aim to achieve the medium-term

expand our development pipeline through in-licensing, andin the development pipeline through ﬁscal 2022. Since our24

3/2023

cost competitiveness are of the greatest importance for

3/2019 3/2020 3/2021 3/2022 3/2023

which in part reﬂects a falloff in the wake of advances made3/2019 3/2020 3/2021 3/2022 3/2023

3/2022shareholdings by two, in the amount of ¥1,897 million

business plan to continuously enhance both corporate value-2,000-4,000-4,259-6,000and shareholder value.

-2,560-2,9432023, a ¥1.3 billion decrease from the previous year’s level,0

3/2021that maximizing the new drugs ratio and enhancing our

6,346

We are forecasting R&D expenses of ¥9.6 billion in ﬁscal

25

0

reduced the number of issuers in which we hold cross

8,000

increase production capacity through capital expenditures.

50

2,000

the Kyorin Group’s net sales and proﬁt levels. We believe

2,000

72.4

3,624

through dialogue with the issuer. During ﬁscal 2023, we

Regarding investment for growth, we are working

74.6

5,900

COVID-19 pandemic to recover. We are planning for sales

(%)

71.7

5,252
4,307

we intend to reduce those shareholdings as appropriate,

Shareholders’ equity ratio

71.3

6,000

(forecast)

4,000

100

3/2024

shareholdings is determined to have diminished, however,(Millions of yen)0

3/2023

preserve transactional and business relationships that are

March 31, 2023, the Kyorin Group’s total shareholders’equity ratio was a healthy 71.3%, and we will proactively

3/20224,000

the DOE ratio was 2.4%.

5.0

Therefore, I believe that maintaining a solid ﬁnancial base isessential for the Company’s continued existence. As of(Millions of yen)annual NHI drug price revisions, are signiﬁcantly affecting

4.8

3/2021

Capital expenditures

dividend level, taking DOE into consideration and preserving

Drastic changes in the external environment, including

8.0
6.0

0

enhance corporate value. If the signiﬁcance of thesecompound annual growth rate of at least 2% for net sales

company carries signiﬁcant risks, and business results are

3,000changing operating environment, we will maintain a stable

We maintain cross shareholdings to develop and

For the cost of capital and return on capital, the Tokyo

9,600(forecast)

Regarding shareholder returns, despite a drasticallyproactively for the future while maintaining a soundrequired for new drug development at a pharmaceutical

8,897

billion for research equipment.

invest for growth while maintaining this sound position. As

Two fundamental ways of thinking underpin our

10,903

9,703

6,000

¥0.5 billion for administrative and sales equipment and ¥0.4

As the Kyorin Group’s CFO, I believe my role is to invest

Regarding the ﬁnancial base, the large investment

9,000

costs. Other planned capital expenditures break down as

Corporate Officer CStO & C
CFO
FOO
Director of Corporate Planning, in charge of Productodu
d ctStrategy and Finance & Accounting
nttin
n
ing

(operating proﬁt + R&D expenses) of at least 16%.

2023, which includes ¥5.0 billion planned for new facilities,

maintain stable production, and reduce manufacturing

Yasuji Kurose
ros
ose
e

and operating proﬁt before deduction of R&D expenses

also forecasting capital expenditures of ¥5.9 billion in ﬁscal

will work continuously to maximize production capacity,

growth and shareholder returns(Millions of yen)

12,000including construction expenses for the Takaoka Plant. We

capital efficiency through proactive investment for

R&D expenses-5,117-3,363-4,112-4,918-6,275-8,0003/20203/2021

3/2022

3/2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

25

discovery research and are working to create and promote

The Kyorin Group’s Business Development

Expand development pipeline through in-licensing
and formulate development and medical strategies
to maximize value

new drug discovery programs by advancing diseaseresearch in these areas.
Drug discovery has become increasingly sophisticated andNew Drugs Businesschallenging in recent years due to the emergence of various

Drug Discovery andDevelopment

modalities for diverse medical needs. In this environment,

We will strengthen cooperation with relevant departments
to speed up evaluation and acquisition of candidates forStrengthen collaboration with externalorganizations and establish research projects

in-licensing. For development candidates, we will formulate

the Group urgently needs to pursue drug discovery

In research on ﬁbrosis, we collaborated with the Department

highly distinctive development strategies while being

programs that will progress to the clinical stage. Under theof Drug Discovery for Lung Diseases at the Kyoto University

always attentive to novel clinical evaluation methods andmedium-term business plan “Vision 110 –Stage1–,” we will

Graduate School of Medicine to build a unique pulmonary

therapeutic strategies. Regarding the licensing agreement

use a new drug discovery strategy to take on the challengeﬁbrosis model and launch a new research project focusing

concluded in January 2020 with U.S.-based aTyr Pharma,

Changing environment (internal and external)• Increasing sophistication and difficulty of drug discovery• Diversification and complexity of drug discovery modalities and basic
technologies• Evolution and proliferation of digital technologies• Expansion of the healthcare field with the entry of companies fromdifferent industries• Growing concern about social security costs and moves to curb themof drug discovery innovation, with the aim of “strengthening

on triggers of ﬁbrosis. We are also collaborating with

Inc. for KRP-R120: efzoﬁtimod (genetic recombination), a

drug discovery capability to create high-value new drugs

academia to strengthen our target veriﬁcation technology.

fusion protein formulation, we started Phase III multiregionalthat meet medical needs.” By combining promising drug

In other areas, we are exploring opportunities for joint

clinical trials in September 2022. Those trials are

discovery targets identiﬁed from disease research with theresearch with domestic companies, international

progressing well.

latest drug discovery technologies, we will create new drugs

companies, and academia. In drug discovery technology,

In November 2022, we concluded an agreement with

with clinical signiﬁcance. In addition to small molecule drug

meanwhile, we will build a foundation in nucleic acid drug

SUSMED, Inc. for the joint development and marketing ofOpportunities• Development of basic research technologies to increase drug discovery
research opportunities• Acceleration of research through activation of open innovation• Use of big data and AI to streamline R&D• Increase in new treatment options thanks to digital technologies• Increasing importance of drugs with superior medical economy

discovery, which is our specialty, we will actively utilize

discovery and utilize external technologies, in addition to

KRP-DT123, a therapeutic application in the ﬁeld of

nucleic acid drug discovery and new external technologies

reinforcing our capabilities in small molecule drug

otolaryngology, a priority area for Kyorin. In this ﬁeld,

as new modalities to create new drugs with higher value.

discovery, one of our strengths. By incorporating not only

we contribute to medical care by providing patients new

For this, we will incorporate superior external technologies

our own technologies and ideas but also superior external

treatment options based on approaches different fromwith our own technologies and ideas. We will also improve

technologies, we will create new drugs with higher value.

pharmaceuticals. We plan to start speciﬁc clinical research

Risks• Increased use of AI in drug discovery making small molecule drug
discovery more efficient (through major cost reductions and shorter
development periods), which could weaken our drug discovery advantage• Megapharmaceutical manufacturers deploying digital technology toincrease speed of development• Further rise in development costs due to stricter clinical trials and stricter
approval of new drugs• Market contraction due to reform of drug pricing system and its impact on
business viability

the expertise of our researchers and broaden theirusing KRP-DT123 to treat tinnitus in ﬁscal 2023.

Pursuing value creation, we will select and focus onperspectives through collaboration with external

research projects while formulating and verifying exit

organizations. In these and other ways, we will work to

strategies. In the initial exploratory research stage, our drug

in-licensed products, we expect to diversify modalities anddevelop human resources who will play key roles in

discovery activities emphasize target therapeutic proﬁlespursue global development. To address them, we will develop

realizing the long-term vision “Vision 110.”(TTPs) and scientiﬁc approaches to them. After optimization

our own strategies and strengthen our regulatory function.

In ﬁscal 2023, we will strive to initiate and promote
high-value research projects and strengthen our drug

As we expand our development pipeline, including for

research into leading compounds, we base our decisions onwhether to move forward on target product proﬁles (TPPs).

discovery technologies. At the same time, we will promote
multiple development projects based on our development

Medium-term business plan

strategy to maximize value and achieve new milestones.

Development of new research themes

Strengthen basic technology

New targets

Small molecule drugs:
Continuous technological enhancement

Vision 110 –Stage1– initiatives
Business strategy
Strengthening drug discovery capability to create high-value new
drugs that meet medical needs
Pursue drug innovation through new drug discovery strategies• Engage in drug discovery using novel technologies for existing treatmentsthat have issues, in addition to drug discovery for diseases where drug
contribution is low• Combine drug discovery technologies and disease research to create newhigh-value drugs• Drug discovery technologies: Deploy nucleic acid drug discovery and new
external technologies, in addition to small molecule drug discovery• Disease research: Focus on ﬁbrosis, immune and inﬂammatory disorders,and other diseases

Initiatives under the medium-termbusiness plan

Known targets:
Creating value through technological innovation

Pursue drug discovery innovation through new drug
discovery strategies
New drug discovery strategies

Focus areas• Fibrosis • Immune/inflammatory disorders • Others

Drug discovery capability to create high-value new drugs that meet medical needs

creation of new drugs is difficult. To address this issue, weneed to pursue drug discovery programs and formulate exit
strategies for progressing to clinical trials, and we havestrengthened our organizational functions to this end.

Development pipeline

By combining drug discovery technologies and diseasechallenge of “drug discovery innovation” to create new

Co
Corporate
Officer CSO
Se
Senior Director ofDi
Discovery Research HQs
In charge of IntellectualPr
Property

value. In the past, we focused on diseases where drugon drug discovery for those diseases. Under Vision 110–Stage1–, however, we will work on drug discovery that

Stage
Ph3

Target disease

Mechanism

Remarks

Interstitial lung disease(pulmonary sarcoidosis)
Rhinovirus infection that risks
becoming severe

Neuropilin-2 (NRP2) receptor
agonistOrigin: aTyr Pharma

KRP-A218

Ph1

PI4KB inhibitor

Origin: In-house

KRP-114VP

Ph1

Overactive bladder

β3 adrenergic agonist

Origin: Merck
Additional pediatric indicationfor Beova®

AKP-009

Ph2a (conducted by ASKA
Pharmaceutical)

Benign prostatic hyperplasia

Novel androgen receptor
modulator

Origin: ASKA Pharmaceutical

Code

Stage

Target disease

Remarks

KRP-DT123

Speciﬁc clinical research to be
conducted

Tinnitus

Therapeutic application (joint development with SUSMED)

creates clinical signiﬁcance by deploying new technologies
for existing treatments that have issues.
disorders, and other diseases as our focus areas for drug

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

Code
KRP-R120contribution is low (unmet medical needs) and concentrated

We have identiﬁed ﬁbrosis, immune and inﬂammatory

26

New technology (Open innovation)

In the Group’s core business of new drugs, the continuous

research (drug discovery targets), we will take on the

Junichi Ishiyama
Ju

Nucleic acid medicines:
Establishment of basic technology

DTx

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

27

The Kyorin Group’s Business Development

New Drugs Business

In-Licensing
Changing environment (internal and external)• Growing needs for diagnosis and prevention in addition to treatment• Advances in digital transformation in medicine• Increasing sophistication and difficulty of drug discovery• Diversiﬁcation and complexity of drug discovery modalities• Depleted development pipeline• Strong ﬁnancial baseOpportunities• Expansion of technological innovation through open innovation• Increase in opportunities to collaborate with partners from different
industries• Signiﬁcant increase in capital and personnel• Portfolio of therapeutic drugs and products related to diagnosis andprevention• Growing value of innovative new drugs for rare and intractable diseases
Risks• Surging investments in in-licensing contracts• Earlier-than-normal recruitment by megapharmaceutical manufacturers• Lack of human resources with multiple perspectives

Medium-term business plan

To rebuild the foundation of our core new drugs business

Expand in-licensing target modalities and disease ﬁelds

Ltd. for the joint development and sales of AKP-009, aand put it on a growth trajectory, we must urgently expand

To broaden our development pipeline, we need to expand

benign prostatic hyperplasia treatment, and in April 2021,

our development pipeline. In ﬁscal 2023, our newly

target modalities and disease ﬁelds and pursue in-licensing

we signed an agreement with MSD K.K. for the exclusive

established Business Development Headquarters will work

initiatives in a wide range of areas. In addition to small

distribution rights in Japan for Lyfnua (launched in April

with the Licensing Department and the Alliance Department

molecule drug discovery, where we have been actively2022), a treatment for intractable chronic cough. Regarding

to swiftly introduce a development pipeline. By stabilizing

engaged, we will work to quickly secure development

the licensing agreement concluded in January 2020 with

our existing alliances and creating new businesses, we willcandidates that will enable us to demonstrate our strengths

U.S.-based aTyr Pharma, Inc. for KRP-R120 (interstitial lunggenerate stable earnings and create new businessin new modalities and disease ﬁelds outside the franchisedisease treatment), we decided to conduct multiregional

opportunities, thereby fostering the sustainable growthcustomer (FC) ﬁeld (respiratory, otolaryngology, andclinical trials with aTyr Pharma and started Phase 3 clinicalof our new drugs business.

urology), as well as in-licensed products with viable

trials in Japan in September 2022. In June 2022, we signed

commercial prospects.

an agreement with CellGenTech, Inc. for the joint development

Under Vision 110 –Stage1–, we have set a guideline forof a genetically modiﬁed human adipocyte as an in-licensed

expected sales based on our business strategy “expanding
the development pipeline through in-licensing” while being

Promote DTx development

product in its early-stage development phase for theconscious of medium- to long-term proﬁts. Our aim is to

Amid advances in recent years in digital transformation (DX)treatment of Fabry disease.

secure six or more in-licensed items. We recognize that thein the medical ﬁeld, we have also taken on the challenge ofefforts of the Business Development Headquarters will be

engaging in R&D on digital therapeutics (DTx). In November

truly appreciated only when in-licensed products are2022, we concluded an agreement with SUSMED, Inc. toPromote global out-licensing activities to increase
overseas earnings

commercialized and generate proﬁts, and will continue

conduct joint R&D and sales related to DTx as software for

Under our medium-term business plan, we will continue

working proactively to achieve those goals.

medical devices. In collaboration with relevant departments,

to aggressively pursue out-licensing activities with global

In ﬁscal 2023, we will acquire at least one in-licensed

the Business Development Headquarters will steadily

companies to maximize the value of drugs discovered in-product in the late-stage development phase and at least

develop a therapeutic application in the ﬁeld of otolaryngology

house. We have already made good progress under the

one in-licensed product in the early-stage development(target disease: tinnitus). It will also gather information on

previous medium-term business plan. In October 2020, forphase. Those acquisitions will enable us to expand ourthe development of new therapeutic applications in a wide

example, we concluded an agreement for the transfer ofdevelopment pipeline, which is our most important priority.

range of ﬁelds.

intellectual property rights for the immunomodulator

Vision 110 –Stage1– initiatives
Business strategy
Expanding development pipeline through in-licensing
Significantly strengthen our ability to acquire in-licensed products• Expand modalities and disease areas targeted for in-licensing and pursue
wide-ranging in-licensing activities• Increase in-licensing investments and boost investments in organizational
reforms and human resources
Promote development of digital therapeutics (DTx)• Develop a therapeutic application in the ﬁeld of otolaryngology

KRP-203 to Ireland-based Priothera Limited. In March 2021,

Initiatives under the medium-termbusiness plan

Pursue proactive partnering activities

we signed a licensing agreement with Eisai Co., Ltd. for

Under the medium-term business plan “Vision 110

the development and sales in four ASEAN countries of

Search and evaluate through organizational reforms
and deployment of personnel–Stage1–,” KYORIN Pharmaceutical’s Alliance Department

the overactive bladder treatment Vibegron (sales nameand Licensing Department will work closely with otherin Japan: Beova). In March 2023, we signed a licensing

To achieve the objectives of Stage 1, we must work closely

relevant departments to pursue proactive partneringagreement with Sumitomo Pharma Co., Ltd. for thewith relevant departments to promote speedy and accurate

activities. In line with the business strategy of the medium-development, manufacture, and sales of Vibegron in Taiwan

evaluations since we are always searching and evaluatingterm business plan, we have expanded our development

and elsewhere. Going forward, we will continue to actively

aspects of multiple projects in progress. With this in mind,

pipeline in various ways. In September 2020, for example,

pursue worldwide partnering activities to expand ourwe established the Licensing Department (licensing

we concluded an agreement with ASKA Pharmaceutical Co.,

product pipeline, which will support medium-term growthand bolster overseas earnings.

activities) and the Alliance Department (contract negotiations
and management of alliances) under the Business Development
Headquarters and will provide personnel for those entities
to the maximum extent possible. To strengthen theheadquarters function, we will step up collaboration within

Partnering with companies in Japan and overseas
LG Chem (Korea)
Jeil (Korea)

Handok (Korea)

AbbVie (U.S.A.)
Merck & Co. (U.S.A.)
aTyr (U.S.A.)
ORGANON (U.S.A.)

the headquarters and develop human resources. At thesame time, we will activate our organization to enable onestop in-licensing services, ranging from exploration to

Takaaki KajiTa

evaluation, negotiation of terms and conditions, andCo
Corporate
Officer CBDO
Se
Senior Director of Business
De
Development HQs

conclusion of contracts. By building a system of

R-Pharm (Russia)
Priothera (Ireland)

Vectura (U.K.)
Covis Pharma (Switzerland)
Ferring Pharmaceuticals (Switzerland)collaboration with relevant departments to allow speedy
responses, we will work Companywide to achieve our

SPIMACO (Saudi Arabia)
Faes Farma (Spain)

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

Kaken Pharmaceutical
Ono Pharmaceutical
Sumitomo Pharma

ASKA Pharmaceutical
MSD

ORGANON

CellGenTech
SUSMED

performance targets.

28

Kissei Pharmaceutical
Sato Pharmaceutical
Eisai

Shinlin Sinseng (Taiwan)
Synmosa (Taiwan)

Out-licensed
Senju Pharmaceutical

In-licensed

In- and out-licensed

Joint R&D

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

29

The Kyorin Group’s Business Development

New Drugs Business

Marketing
Changing environment (internal and external)• Government measures to curb medical and drug costs in response totightened healthcare funding• Growing need for diagnosis and prevention in addition to treatment• Changes in the way information is provided to the medical field(introduction of guidelines, etc.)• Advances in DX in medical care (treatment)
Opportunities• Expanded lineup of patented new drugs (Beova, Lasvic, Lyfnua, Desalex,Flutiform, etc.)• Increased demand for testing due to spread of COVID-19• Expectations for development of new testing methods throughtechnological innovation• Growing demand for high-quality products
Risks• Increasing restrictions on medical representative (MR) visits and use of
appointment-only systems, making it difficult to meet with physicians andexchange information• Accelerating decline in sales of long-listed products due to overhaul of the
drug pricing system• Structural changes in the domestic ethical drugs market

In the pharmaceutical market, we see the emergence of an

Provide information through digital channels

April 2022, we launched Lyfnua, the world’s ﬁrst drug forinnovation-friendly environment conducive to the creation

With the COVID-19 pandemic having partially restricted

treating chronic cough. Going forward, we will work toof pioneering new drugs. However, conditions are changing

MRs’ visits to medical institutions and in-person meetings

establish a solid market position by promoting understanding

dramatically as the government actively introduces

with medical practitioners, we have made progressof the product’s features, especially among respiratory

measures to control drug costs and reduce the nation’s

digitalizing our activities to provide pharmaceuticalspecialists. In ﬁscal 2023, we will also exploit the removal of

ﬁnancial burden. In this environment, the Group considers

information. The Kyorin Group considers two-way

restrictions on the prescription period to achieve market

growth through the proliferation of new drugs an important

communication with medical practitioners important for

penetration as soon as possible. Meanwhile, the market for

issue and has set “maximizing the ratio of new drugs” as a

MRs to fulﬁll their original role: “To achieve appropriate use

Lasvic shrank due to the promotion of its appropriate use

business strategy under Vision 110 –Stage1–. For this, weof pharmaceuticals and contribute to medical care byagainst antimicrobial resistance (AMR), as well as rigorous

will adopt an activity model that delivers results by increasing

providing, collecting, and conveying pharmaceuticalmeasures to prevent infectious diseases. We expect thethe impact of medical details based on visits to medical

information.” With this in mind, we visit medical institutions

market to recover to some degree as the COVID-19 pandemic

institutions for in-person meetings with physicians, thenfor in-person meetings with physicians, then deploy digitalsubsides. Looking ahead, we will emphasize the features of

deployment of digital channels to provide information.

channels to increase the impact of the information we

Lasvic and grow it into the top-selling product in the oral

Through solution-based marketing activities, meanwhile,gather, thus enhancing our marketing capabilities. We will

antibacterial agent market. As for Desalex, we increased

we will help resolve issues and meet the diverse needs andcontinue to analyze market data amassed internally tosales and market share through focused efforts on

circumstances of medical practitioners and patients.

grasp the needs of medical practitioners as we engage inotolaryngology and internal medicine. Since it is a drug thathigh-quality information-provision activities.

is both effective and easy to use, we will continue targeting

In ﬁscal 2023, the ﬁrst year of our medium-term

Desalex to be the No. 1 prescription in the ﬁeld of

business plan, we aim to accelerate the proliferation of new
drugs (ﬁve mainstay products, etc.) launched under theEnter a growth trajectory for new drugs

otolaryngology. For Flutiform, we will emphasize its

previous plan and thus enter a growth trajectory.

To enter a growth trajectory, we need to focus on

usefulness as an aerosol formulation to increase its share

proliferating new drugs to accelerate our growth. We

on a volume basis (in the low single-digit range).

Initiatives under the medium-termbusiness plan

have set the ratio of new drugs (sales of new drugs as apercentage of total ethical drug sales) as a performance

Establish a presence in designated ﬁelds

Promote solution-based marketing activities

indicator (target value of 50% or more) and are working toAdhering to an FC strategy that concentrates resources in

Given restrictions on meetings with medical practitioners,

maximize proliferation to this end. In ﬁscal 2023, we will

designated ﬁelds centering on respiratory, otolaryngology,

we believe it is important to visit medical institutions directly

aim to increase the ratio of new drugs by ceaselessly

and urology, we aim to establish a presence in those ﬁelds

to provide detailed information that leaves an impact. This

promoting prescriptions for Lasvic, Lyfnua, Desalex, andby having roughly 650 MRs provide and collect information

Business strategy
Maximizing the ratio of new drugs

is done through in-person meetings where we provide

Flutiform, as well as Beova, an overactive bladder (OAB)on the appropriate use of pharmaceuticals and convey thatvarious kinds of pharmaceutical information and obtaintreatment whose shipment limits were ended in ﬁscal 2022.

information to medical practitioners. For marketing, weEmphasize proliferation of new drugs• Promote in-person meetings with physicians to increase the impact of
medical details and accelerate the growth of new drugs

orders for prescriptions. To this end, we provide all MRs

We apologize for the inconvenience caused to medical

have adopted a “team structure,” with teams based inwith training in detail skills that will help them offer

practitioners by the limitations we placed on shipments ofsecondary medical districts (where multiple MRs are

solutions and improve their abilities. Starting with the

Beova. The situation was caused by a greater-than-expected

responsible for a designated area), using an area

patient, we formulate hypothetical scenarios to gain an

increase in prescriptions after the prescription period limit

management strategy in which teams cultivate their own

understanding of the patient’s current needs, then draw up

was lifted. We subsequently made a concerted effort toareas. Going forward, we will work to create a frameworka plan and propose a suitable drug formulation from ourincrease production capacity and ended the limitations infor teams to assist each other and achieve their targets byrange of products. In infectious diseases, we will continue toAugust 2022. With a steady increase in new prescriptions, we

reﬁning our activities to address increasingly diverse

introduce Milton and Rubysta for infection control (prevention)

are aiming for the top share of the OAB market. Meanwhile, in

medical needs swiftly and systematically.

Medium-term business plan

Vision 110 –Stage1– initiatives

at medical institutions, GeneSoC for identiﬁcation (diagnosis)

Noriaki Tamuraof pathogenic microorganisms, and Lasvic for appropriate

Corporate Officer CCO
Senior Director of Sales &Marketing HQs
In charge of Information
System Management andIn Vitro Diagnostics
Businessuse (treatment) of antimicrobials. We will also engage insolution-based marketing activities to provide comprehensive
information. In respiratory and otolaryngology diseases, we
are working to enhance our product lineup, which includes
Lyfnua (chronic cough treatment), Lasvic (new quinolone
antibacterial agent), Desalex (antiallergic agent), andFlutiform (combination drug for asthma treatment). We will
also propose prescriptions for each disease and provide
information that helps resolve issues and meet the needs of

Product

States aimed forGoal at FY2025

Beova®

First-line treatment for OAB

Lasvic®

First-choice antibacterial agent for elderly or patientswith underlying disease in respiratory infection

Lyfnua®

Only treatment for chronic cough• FY2025
approx. 10,000 of GP
approx. 2,000 of HP

Desalex®

Effective and easy-to-use drug

• Sales of 10 billion yen in FY2025

Fultiform®

Aerosol for patients with weak inspiration• 50% patient share• 40% share in new quinolone market in FY2025 fortablets/iv• Sustainable growth on volume basis to FY2025 with
CAGR of low single digit %medical practitioners, while promoting the expanded use of
our products.

30

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

31

The Kyorin Group’s Business Development

New Drugs Business andGeneric Drugs BusinessWe have a manufacturing structure that ensures stable

Supply chain management (SCM)

supplies of highly reliable products underscored by a

Increase production efficiency to improve costcompetitivenesscommitment to low-cost operations. For this, we draw on

We are working to establish a manufacturing structure thata system to ensure stable product supplies. We centrally

our three production facilities to achieve overall optimization

ensures stable supplies of new and generic drugs and low-manage and visualize suppliers’ inventory information andof all manufactured products and appropriate capital

cost production. During the production process, we utilize

the supply plans for all regions around the world to address

investment. As a result, we reached our cost reduction

various practices to improve manufacturing quality,

demand forecasts for each product. This setup enables us totargets and increased production volume at each plant.

including enhancing production techniques and acquiringglobally manage every stage, from the manufacture of

However, business conditions are changing dramatically,

new technologies. Going forward, we will strive to improvepharmaceutical ingredients to the supply of products. Looking

characterized by stricter quality requirements, risingproduction efficiency by appropriately deploying resources

ahead, we will strive to build an even stronger supply chain to

Opportunities• Growing need for subcontracted manufacturing for foreign companies
entering the Japanese market• Response to demand by growth of generic products• Increased requests for stable supply of high-quality products

manufacturing costs, and more sophisticated manufacturing

and improving processes to ensure low-cost operations andﬂexibly address changing business conditions.

technologies. In response, we must take new measures toincreases in production volume. In these ways, we will

Our pharmaceutical supply chain, which encompasses amaintain a stable supply of high-quality products. Under thesolidify our structure to improve cost competitiveness.

wide variety of items including raw materials, intermediates,

Risks• Annual drug price revisions that translate to higher cost of sales ratio• Higher raw material prices due to increasing crude oil prices and logistics costs• Delays and suspension of manufacturing activities and raw materials
procurement due to pandemics, natural disasters, unstable social
situations, etc.

our business strategies is to “strengthen production capacity

Overall optimization of our manufacturing system

suppliers in Japan and overseas. To continue providing stablefor drugs and reduce manufacturing costs.” By strengthening

Aiming to maximize our manufacturing capacity, we aresupplies without interruption in the procurement chain, weManufacturing
Changing environment (internal and external)• Increasing demand for pharmaceutical companies to ensure reliability• Rising manufacturing costs• Changes in manufacturing technologies

medium-term business plan “Vision 110 –Stage1–,” one of1

Business strategy
Strengthening production capacity for drugs and reduce
manufacturing costs• Maximize production capacity through reliable operation of Takaoka Plant
and overall optimization of other plants• Improve reliability and maintain stable production by raising the GMP level• Reduce costs through continuous improvement activities

and pharmaceutical ingredients, is supported by numerous

our product supply capacity and raising the GMP* level, we

pursuing an optimal combination of manufacturing items

consider it imperative to strengthen relationships with

aim to achieve low-cost production and a stable supply ofand sites by taking advantage of the characteristics of eachindividual suppliers by working closely and sharing

high-quality products, increase subcontracted manufacturingof our three plants. The Noshiro Plant produces not only

information with them. Several challenges have emerged incontracts from outside the Kyorin Group, and establish a

new drugs, mainly tablets and capsules, but also generics

the past few years, including geopolitical risks, exchange ratecompetitive manufacturing structure.

in large volumes. The Shiga Plant actively engages inﬂuctuations, rising raw material prices due to rising energy

subcontracted manufacturing. It has a high ratio ofcosts and semiconductor shortages, and a logistics problem

manufacturing subcontracted from outside the Group,in 2024. Nevertheless, the Kyorin Group will continuously

including the manufacture of pharmaceutical products

strive to ensure stable product supplies by reducing various

Establish a new manufacturing structure by
constructing the Takaoka Plant

to be sold in Japan by foreign pharmaceutical companies.

risks through production planning and inventory coordination

The Inami Plant mainly handles generic drugs but alsowith internal manufacturers and external subcontracted

In line with the increase in our pharmaceutical manufacturing

manufactures solid formulations taken internally andmanufacturers, while developing multiple and alternative

volume, we need to strengthen our production and supply

eyedrops. All three plants are working to raise GMP levels

suppliers and improving logistics efficiency.

capacity. With this in mind, we are building a new plant inand maintain and improve quality-control systems, while*1 GMP: Initialism for good manufacturing practice, a standard for the manufacture,
management, and quality control of pharmaceutical products*2 PIC/S: Pharmaceutical Inspection Co-operation Scheme

Medium-term business plan

Vision 110 –Stage1– initiatives

In light of changing business conditions, we have established

Initiatives under the medium-termbusiness plan

2

Takaoka City, Toyama Prefecture. The new facility will

establishing PIC/S* GMP compliance and building a supply

increase the production of tablets (oral solid formulations)system for both domestic and overseas markets. We will

and further raise the GMP level. It will also streamline

continue making aggressive capital investments, including

various processes and improve manufacturing efficiency,

those at the Takaoka Plant, to further improve productivity

thus assuring stable supplies and low-cost manufacturing.

and ensure reliability.

In addition, it will reduce our environmental impact byactively utilizing renewable energy sources. The new plantis scheduled to start operations in April 2024, enabling us toquickly realize stable supplies and lower costs through afour-plant system.

Improve reliability and maintain product quality
Michiro Onota
Mic

In recent years, quality requirements for products have

Exe
Executive
Director, CMO
Representative Director,
Rep
President of KYORIN
Pre
Pharmaceutical GroupPha
Facilities Co., Ltd.
Fac

become more stringent. In response, we are working tomaintain quality through various approaches, including

Noshiro Plant

Location: Noshiro, Akita

Shiga Plant

Location: Koka, Shiga

Inami Plant

Location: Nanto, Toyama

cross-facility reciprocal audits of GMPs, reinforcementof data integrity (framework ensuring data is complete,consistent, and accurate), regular training and testing of
employees, and the use of video to teach standardized

Plant certiﬁcations

Plant certiﬁcations

Plant certiﬁcations

Environmental management system: ISO 14001
Occupational health and safety management
system: ISO 45001

Environmental management system: ISO 14001
Occupational health and safety management
system: ISO 45001

Environmental management system: ISO 14001
Occupational health and safety management
system: ISO 45001

operations. In these ways, we are working relentlessly
to provide products that earn the conﬁdence of medical
practitioners and patients.

32

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

33

The Kyorin Group’s Business Development

Generic Drugs BusinessGoing forward, we will leverage this strength whilechallenges not only in small molecule compounds but

improving efficiency by reforming our sales structure,also in new areas, such as highly pharmacologically active

increasing sales, and improving cost competitivenessdrugs, anticancer drugs, and formulations in niche areas.

through a strategy of selection and concentration.

We will work to further broaden our product lineup to offer
attractive generics.

Deploying its unique strengths, KYORIN Rimedio aims to be

Generic Drugs

a company with a strong business presence and employees

Address authorized generics

who play active roles and take pride in their work. Business

The Kyorin Group has achieved a certain degree of market

conditions for our company remain challenging, evidenced

recognition for selling both original drugs and authorized

by annual drug price revisions, widespread supply concerns

generics that meet the diverse needs of medical

Takaoka Plant
Provide high-quality products that meet market
demandtriggered by quality problems at some companies, andpractitioners and patients. We currently sell Montelukast

Construction of the Takaoka Plant is one of the Kyorin Group’s

rising costs due to high prices and soaring energy costs.

Tablets “KM” (our authorized generic version of Kipres),most important projects. Scheduled to start operations in

To ensure stable supplies, we are strengthening our productMometasone Nasal 50μg “KYORIN” (our authorized generic

April 2024, the plant will be the Group’s main facility forsupply capacity, mainly through the transfer of manufacturingversion of Nasonex), and Imidafenacin Tablets “KYORIN” OD

manufacturing generics. We regard this as a priority project

Opportunities• Increased demand for generic drugs due to promotion of measures tocontain drug costs• Patent expiries of major original drugs• Increasing demand for high-quality products

and the commissioning of the Takaoka Plant, which istablets 0.1mg (our authorized generic version of Uritos). All

directly related to the growth of the generic drugs businesscurrently under construction. To address future changes inthree products have gained a share of 50% or higher in theirhandled by KYORIN Rimedio. Quality problems with ethicalthis environment, we will take on the challenge of enteringrespective generic markets.

drugs, such as contamination by foreign substances, have led

Risks• Reduced incentives to promote use of generic drugs• Weaker proﬁtability due to annual drug price revisions• Soaring prices of raw materials and energy

Technology Innovation Center, and further reinforce ourChanging environment (internal and external)• Government measures to curb medical and drug costs in response to tighthealthcare ﬁnances• Growing demand for pharmaceutical companies to ensure reliability

Medium-term business plan

Vision 110 –Stage1– initiatives
Business strategy
Achieving sustainable growth of the generic drugs business• Maintain strong capability to develop new generic products and leveragesuch products to accelerate growth• Strengthen production and procurement systems, including those outside
the Group, to ensure stable supplies• Build a low-cost structure resilient to changing business conditions

to shortages in the supply of generics and become a social

new ﬁelds, spearheaded by the Takaoka Pharmaceutical

Takaoka Pharmaceutical Technology Innovation Center
Strengthen in-house capability to develop new
generic products robustly

problem. By commissioning the Takaoka Plant, we aim toInitiatives under the medium-termbusiness plan

The Takaoka Pharmaceutical Technology Innovation Center

The Takaoka Plant will have an annual production

was established in July 2017 to strengthen our capability tocapacity of roughly 2 billion tablets (solid formulations taken

Maintain and strengthen our capability to create newgenerics and accelerate growthdevelop new generic products, the foundation of our genericinternally), which is more than twice that of the Inami Plant,

drugs business. The facility has all the capabilities needed

which primarily manufactures generic drugs. Going forward,

To provide generic drugs that can be used safely, KYORIN

to obtain patent application data, ranging from patent

we will further expand our manufacturing system by swiftly

Rimedio manufactures pharmaceuticals and provides

searches and planning strategies for development items

engaging in full-scale production and increasing overall

packaging from the perspectives of medical practitioners

to evaluations of pharmaceutical ingredients, formulation

production volumes, including those at existing plants.

and patients, ensuring that products are easy to use indesign, and quality evaluation, as well as conduct clinicalmedical institutions and meet the needs of patients taking

trials and measure drug concentrations. To further improvedrugs. To address changing business conditions, we will

the quality of these capabilities and accelerate drugenhance our in-house development capabilities bydevelopment, we promote open innovation through joint

strengthening our expertise, human resources, anddevelopment with other companies and the use of Toyamaorganizational functions, with a view toward taking on

Prefecture’s industry-academia-government collaboration

challenges in new ﬁelds. In addition to small molecule

system. At the same time, we work to revitalize

compounds, these include highly pharmacologically active

communication through organizational restructuring thatdrugs, anticancer drugs, and formulations in niche areas.

includes assigning researchers with different specialties

Going forward, we will advance our business to becometo the same department.

development capabilities.

strengthen our generic manufacturing capacity and build
a production system that reliably meets market demand.

a high-proﬁle generic drugs company. In ﬁscal 2022, we

Raise GMP levels to increase reliability

launched eight new products with four ingredients.

The Takaoka Plant will raise the GMP level. With this inmind, we will further strengthen and solidify compliance

Strengthen production and procurement systems toensure stable supplies

with laws and regulations related to manufacturing and

Quality problems at some companies have sparked

ensure stable supplies of safe and reliable products.

quality control, as well as our quality control structure, toThinking of the environment, we have designed thewidespread concern about supply stability and are yet to34

be resolved. In response, the entire Group is working toplant to signiﬁcantly reduce CO2 emissions compared with

Hiroshi Hashizume
Hiro

optimize production and ordering plans. We will strive tothose at existing production facilities. We will also reduce

Corp
Corporate
Officer
Repr
Representative Director
and President of KYORIN
Rime
Rimedio Co., Ltd.

increase product procurement volumes, including using

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

external resources, to ensure stable supplies.

the environmental impact by actively using clean energy

Aspirations for Vision 110 –Stage1–

sources like liqueﬁed natural gas (LNG) and renewable energy

We will enhance the quality of our drug development

like hydroelectric power. In addition, we will strive to achieve

Establish a low-cost structure resilient to changing
business conditions

and accelerate its process by increasing the expertise

stable supplies and low-cost production by saving labor inof researchers and activating communication among thevarious operations and by improving manufacturing efficiency.

KYORIN Rimedio has always been strong on the sales side

center’s staff to strengthen our human resources andthanks to its multifaceted, well-balanced sales channels.

organizational functions. We will consider taking on

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

35

The Kyorin Group’s Business Development

Reliability Assurance

Regulations and society’s demands for product reliability
KYORIN Pharmaceutical’s Quality Policy

have become even more severe in recent years, requiring
companies to further enhance their quality and safety“Kyorin continues to fulfill its mission of cherishing life and benefiting society by contributing to better health.” Following thisassurance systems. Meanwhile, the Kyorin Group is

corporate philosophy, we provide high-quality products that are trusted by patients and medical practitioners.

making progress in the diagnostics business, therapeutic
applications, and new businesses, in addition to
Changing environment (internal and external)• Growing calls for pharmaceutical companies to ensure reliability• Diversiﬁcation and increasing complexity of drug discovery modalities
Opportunities• Growing demand to supply high-quality products• Establishment of quality and safety management systems in newmodalities
Risks• Tighter regulations at home and abroad• Quality issues in domestic and international supply chains

pharmaceuticals. Amid drastically changing conditions
both internally and externally, we will respond ﬂexibly andswiftly to realize the long-term vision “Vision 110.” Abiding
by laws and regulations, we will provide high-quality
products, earn greater trust by ensuring effectiveness andVision 110 –Stage1– initiatives

Reliability assurance system
To ensure the stable supply of high-quality products, theGood Vigilance Practice (GVP) standards forpharmaceuticals. In the diagnostics business, we haveestablished a system that conforms to the Quality

Business strategy
Strengthening reliability assurance system to support comprehensive
business development• Strengthen our legal compliance system for pharmaceutical matters• Promote prompt and reliable responses to changes in the environment
surrounding reliability assuranceinternal standards.
• We practice quality risk management based on scientific knowledge to ensure product reliability.
• We strive to raise employee awareness of quality and foster a quality-driven culture with ongoing education.
• We work closely with subcontracted manufacturers and suppliers to ensure stable supplies of high-quality products.
• We listen and respond sincerely to patients, medical practitioners, and others and actively strive to improve product quality.

safety, and contribute broadly to people’s health.

Group complies with the Good Quality Practice (GQP) andMedium-term business plan

• We engage in appropriate quality-related activities in compliance with relevant laws, regulatory requirements, andManagement System (QMS) standard for manufacturing andmanaging medical devices and in vitro diagnostics andquality control. Our Quality Assurance & Reliability Division,
which plays a central role in this process, is independent of

For in vitro diagnostics and medical devices (diagnostics

products and information that patients and medical
practitioners can use with conﬁdence. In addition, we
promote proper use of our products and assure theirreliability by faithfully and promptly responding to aftersales inquiries from patients and medical practitioners
about products’ efficacy, safety, and quality.

QMS standards across all stages, from design and

The Kyorin Group has a quality policy for both ensuring
product quality and providing stable supplies. We arestrengthening operation of our manufacturing centersthrough management of quality risk based on scientiﬁc
evidence.
For pharmaceuticals, we have established a system tosupply high-quality products based on GMP standards incooperation with Group plants and other facilities from the

Katsuhiro HamadaKatdevelopment stage. We have also set up a distribution system

Cor
Corporate
Officer
Sen
Senior Director of Quality
Ass
Assurance & Reliability
HQs

that conforms to Good Distribution Practice (GDP) standards
for pharmaceutical products. After launches, we conduct
quality assurance in compliance with GQP standards toPatients and medical practitioners

development to sales. To maintain product quality andensure integrity during the distribution process, we haveestablished a GDP-compliant distribution system. Under
this system, which includes on-site inspections, we conﬁrm
that quality control is performed properly at storage anddistribution companies.

Safety management
Drugs can be effective for treating patients (beneﬁts) but

Information onside effects

Information on
product quality

Person responsible for safety
management ofpharmaceuticals, etc.
(Pharmacovigilance
Department: GVP, GPSP)

Person responsible for quality
assurance of pharmaceuticals,
etc.
(Quality Assurance Department:
GMP, GQP)

Person responsible for supervising manufacture andsales of pharmaceuticals, etc.

can also have adverse side effects (risks). Therefore, during
the development phase, we collect and manage safety
information on investigational new drugs and appropriately

In vitro diagnostics/medical devices

monitor and evaluate changes in the safety proﬁle of thosedrugs. After a product is launched, moreover, side effects
unforeseen during the development phase may become

Quality assurance

Pharmaceuticals

products by practicing quality assurance in compliance with

the R&D, manufacturing, and sales divisions. It engages in
uniﬁed product reliability assurance initiatives to provide

Manufacturing and Sales Structurebusiness), we are committed to providing high-quality

apparent. For this reason, it is important to collect andanalyze a wide range of information about beneﬁts andrisks after a product is launched and to quickly provide
appropriate information to the medical community, with thebalance taken into account. The Kyorin Group formulates
risk management plans and collects and manages safety
information by individual product. We also conduct drug-

Medical practitioners and users
Safety information
Person responsible formanaging safety of medical
devices, etc.
(Pharmacovigilance
Department: GVP)Information on product quality
Person responsible fordomestic quality business(Quality Assurance
Department: QMS)

Person responsible for supervising
manufacture and sales of medical devices,
etc.

Managers

Supervisors

monitoring activities for pharmaceuticals and medical
devices in compliance with GVP standards to ensure theirsafety and proper use. In addition, we conduct postlaunch
investigations to collect and evaluate information on thesafety and efficacy of pharmaceuticals in compliance with
Good Post-marketing Study Practice (GPSP) standards.

ensure the quality and stable supply of products, fromdevelopment and manufacture to distribution.

36

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

37

100th Anniversary of Our Founding

100th-anniversary events

Marked the 100th anniversary of our founding

In April, we launched a special anniversary website and,A History Walking Relay to the Future event was held for

The Kyorin Group marked the 100th anniversary of its founding on June 16, 2023. With thein June, released the commemorative 100th Anniversary

all employees to participate in a journey and recall

concept “thanks for the past and taking a leap forward in the future with health as the core,”

History video, which looks back on our 100 years ofmemories from the time of our founding through 2023.

history. These presentations are sending our message to

The event aimed to have every employee walk 6,000 steps

people inside and outside the Group.

in one day, for a combined target of 391 million steps. (Inhttps://www.kyorin-pharm.co.jp/100th/ (Japanese only)

Japanese, “3” and “9” are pronounced san and kyu, andwe held various events and an advertising campaign to express our gratitude to all
stakeholders and to look ahead to advances over the next 100 years.

“1 million” is written as 100 man, for Thank You 100 years.)

Logo
The “100” logo is designed with a right-side upward
inclination to express the sense of further growth. The
addition on the final “0” is a new leaf to symbolize healthand future growth. The logo also suggests ripe apricots. The
color gradation symbolizes time flowing toward the future
and the continuation of growth.

SloganOur slogan, “Wishing you good health for the next 100

Anniversary ceremonies and receptions were held foryears,” expresses the idea that the 100th anniversary is

employees on July 14. The events were dispersed acrossneither a goal nor a checkpoint but a new starting line. The

five locations nationwide and held as in-person

slogan incorporates the message that we will further

gatherings, which were difficult to arrange during thecontribute to people’s health.

COVID-19 pandemic. The ceremonies looked back at 100
years of history and shared memories, pledging to make aleap forward over the next 100 years.

Newspaper advertisement
We placed newspaper advertisements on June
16, the anniversary of our founding. Beneath a
picture of sequoia trees, which are the largest
terrestrial organisms and grow for more than
2,000 years, the message expresses theGroup’s concept of contributing to people’s
health while continuing to grow.

38

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

39

S PECI A L FE AT UR E
Our Challenges
Since our founding, the Kyorin Group has
maintained the concept of “contributing
to better health.” All employees areboldly taking on the challenge with anawareness of and the desire to be partTakashi Nanba

Sawa Kasakado

Licensing
Business Development HQs
KYORIN Pharmaceutical Co., Ltd.

Quality Control Department
Inami Plant
KYORIN Pharmaceutical Group Facilities Co., Ltd.

Licensing activities that broaden perspectives, pursue

Ensuring pharmaceutical products that give peace of mindof the effort, aiming to achieve thechallenges, and evolve

The Quality Control Department performs the tests and inspections needed

long-term vision “Vision 110” that looks

Licensing plays the important role of expanding the development pipeline

to manufacture pharmaceutical products. In addition to the products

through in-licensing. To fully carry out this role, we need to swiftly andthemselves, the work covers many types of raw materials and packaging.

appropriately evaluate asset values by responding to changes in and the

Because the pharmaceutical industry environment is changing by the day,diversification of business partners, modalities, and the development

it is important to continue pursuing even higher GMP levels by meeting theenvironment. We also need to promote internal and external agreements andlatest regulatory requirements. Under the long-term vision “Vision 110,” asdecision making through appropriate proposals and negotiations to

the department responsible for quality, we will strengthen the quality

continuously pursue the challenge of creating new business opportunities.

control foundation to optimize our structure for compiling data, creating

We will fulfill our role by working as a team to broaden perspectives andmanuals, and operating testing equipment, to ensure that each individual

strengthen our ability to gather information, while sharing viewpoints based

test is accurate. We also emphasize training younger staff members to

on a variety of evidence from stakeholders’ different perspectives, making

establish a superior quality control structure and quality culture.

toward our 110th anniversary.

Realizing
Vision 110 throughthe ideas ofindividual
employees

evaluations and proposals from in-depth examinations, and repeatedly
revising and developing them as appropriate.

Yuuki Andou
Human Resources
KYORIN Pharmaceutical Co., Ltd.

Shingo Matsushima
Innovation Research Laboratory
WATARASE Research Center
KYORIN Pharmaceutical Co., Ltd.

Interacting with “people” to enhance human capital
Human Resources, where I work, is responsible for energizing

Aiming to spur innovation that has value

people and organizations through activities including the hiring,for patients

Masashi Seto

The Innovation Research Laboratory, which was newly
established to verify and create research targets directly

Eri Miyamoto

linked to drug discovery, is working to strengthen basic

Chiba Sales Office II
Shutoken Branch
KYORIN Pharmaceutical Co., Ltd.

drug discovery technologies and quickly identify valuable

human resources, to achieve our management strategies. We
emphasize the spirit in the phrase “a business is as good as its
people,” thinking that is unchanged since our founding, andcontinuously interact with “people” while rebuilding systems toGaining trust by ensuring quality and a stable supply of

conform to the times. As a project leader, I am working to

generic drugs

enhance human capital by implementing a human resources

Aiming to be an MR who contributes to patients’ healthIn addition to gaining the trust of patients and medical practitioners bysystem oriented toward employees’ “autonomy” and “growth.”

research and basic technologies developed to date while

MRs provide information to medical practitioners that contributes

providing safe and reliable pharmaceutical products, the Quality

We are also promoting work-style reforms by creating systems

proactively accessing new external technologies andto the appropriate use of pharmaceutical products. In carrying out

Assurance Department plays the important role of overseeingthat allow all employees to pursue career paths that personallypromising drug targets to spur innovation. All members

our activities, MRs think about individual patients going about their

manufacturing sites to prevent problems and ensure stable supplies. The

suit them and making every effort to maximize employees’ job

are contributing to discovering new, high-value drugs thatdaily lives with good health and smiles on their faces, sharepharmaceutical industry is facing problems in terms of quality andsatisfaction and performance.

meet medical needs, aiming to become a company thatproblems that arise with medical practitioners, and propose

supply interruptions, and we are the department making improvements

contributes widely to people’s health.

solutions using appropriate prescriptions of Kyorin’s products.

to prevent these problems. We perform our jobs with a sense of

When one MR receives useful information, the MR shares it withresponsibility, making it a point to exchange views internally on rules,

the team and uses feedback from team members to provide

regulations, and other issues daily. Through these ongoing efforts, we are

medical practitioners information that addresses patients’ needs.

working to instill a strong awareness of quality and strengthen ourWorking as a team, we MRs are engaged in activities that enable

reliability assurance system to support the pharmaceutical business.

drug discovery themes. As various changes in the externalbusiness environment raise the level of difficulty in drug
discovery, we are building on our proprietary pathological

40

Manager, Quality Assurance Department
Quality Assurance Office
KYORIN Rimedio Co., Ltd.

training, assigning, evaluation, compensation, and treatment of

us to contribute to the health of as many patients as possible.
KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

41

Addressing Sustainability Issues

Engaging in dialogue with stakeholders and providing value

Under the newly formulated long-term vision “Vision 110,” the Kyorin Group has determinedthat working to resolve sustainability issues (for the continuous development of society andWe believe that activities to create both social value and economic value are needed to achieve the long-term vision “Vision

the Company) through business activities based on our Corporate Charter will lead to the110” and that dialogue (engagement) with all stakeholders involved in the process to realize that vision is essential. All

medium- to long-term enhancement of corporate value.

Group employees are working as one to meet the requests and expectations of all stakeholders through various activities

To achieve the objectives of the long-term vision, we will strive to carry out fair andincluding dialogue.

honest business activities in compliance with laws and regulations including the Act on
Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical
Devices (the “Act on Pharmaceuticals and Medical Devices”), while respecting the human

Stakeholders

rights of all people. We will also seek to create workplace environments comfortable for
employees and take environmental considerations into account in our business activities.

Yasuyuki Shimokawa

We will carry out our social mission of contributing to better health by developing andCorporate Officer CHROIn charge of Human
Resources, General Affairs,
and Legal and Corporate
Complianceproviding useful and safe products and services, while contributing to economic
development and realizing a dynamic society through activities as a good corporate citizen.
As we pursue these objectives, we will need the cooperation, collaboration, andpartnership of all our stakeholders. We will work to deepen our relationships with

Patients and theirfamilies

stakeholders and gain their trust and empathy by providing value in various ways including
dialogue (engagement).

Medical professionals

Corporate Charter
1

Contribute to sustainable economic growth and to
the resolution of social issues
Patients andtheir families

Rigorous and scientiﬁc research and development
3 Promotion of appropriate use of drugs
4 Relationships of trust with medical professionals,
patients, etc.
Fair business practices
6 Thorough information management
7 Fair information disclosure and constructive
dialogue with stakeholders

Employees

Medicalprofessionals

Local
communities

5

Corporatephilosophy

Work-style reforms and improvement of work
environments

9

Initiatives to tackle environmental issues
10 Co-exist with society and contribute to society’s
development

Main venues for dialogue and frequency• Provide information related to drug safety
and effectiveness• Support patients’ groups• Provide a stable supply of products, etc.

• Drug Information Center (FY2022 inquiries:
approx. 23,500)• Websites for promoting awareness of
diseases (as needed)• Communication with MRs, Medical Affairs• Provide information related to the appropriate Department, and clinical research
associates (as needed)
use of ethical drugs• Provide a stable supply and ensure quality of • Release of medical information on
websites, at academic conferences, etc.,
investigational new drugs and products
for medical professionals (as needed)

Relationships with stakeholders

2

8

Stakeholders’ requests and our response(value provided)

Suppliersand business
partners

Shareholders
and investors

11 Comprehensive crisis management
12 Respect for human rights

Pharmaceuticalwholesalers andsuppliers• Websites (intranet) for employees(as needed)• Individual meetings (twice annually)• Internal training (as needed)• Internal whistleblowing system, structure• Employee surveys (awareness surveys)• Create value in cooperation with Group
companies• Activities by MRs and distributor sales staff(as needed)• Brieﬁngs, etc. (as needed)• Create successful research outcomes andJoint research partners innovation• Create new value through integration withand joint development
Group capabilities
partners• Develop medical applications from cuttingedge research results• Daily operations (as needed)

Employees

13 Stringent implementation by Company officers of

Shareholders andinvestors• Provide timely and appropriate informationand have communication• Provide beneﬁts from continuous
enhancement of corporate value• Pay a stable dividend• General shareholders’ meeting (annually)• Results brieﬁngs (twice annually), press
conferences (as needed)• IR activities (IR staff: 20 to 30 times
annually), management meetings (several
times annually)

Local communities• Carry out activities that contribute to society,make donations• Protect the environment• Create employment• Cleanup activities (twice annually)• Seasonal events (twice annually)• Facility tours (2 to 5 times annually)

their responsibilities and the charter

SDGs (Sustainable Development Goals)• Provide opportunities and venues for selffulﬁllment and personal development• Create comfortable workplace environments
and provide job satisfaction• Compensate appropriately

The SDGs are a series of international goals targeted for achievement by 2030
adopted at the 2015 United Nations Summit. The Kyorin Group has
incorporated these goals into its business practices and efforts to co-exist
with society, and works to contribute to the realization of a sustainable society.

42

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

43

Addressing Sustainability Issues

Sustainability in Business Activities/Gaining Social Trust

Drug discovery and clinical development to create
new drugs with high value

Sustainability issues and initiatives
Following our corporate philosophy, the Kyorin Group addresses sustainability issues proactively. In accordance with our

Research (Drug discovery)

Clinical development

Corporate Charter, which was formulated based on corporate ethics and the compliance at the root of all our corporate• Ethical considerations for human
drug research• Ethical considerations for the use ofanimals in experiments• Biotechnology and countermeasuresagainst biohazards• Use of genetic resources• Handling of intellectual property• Respect for subjects’ human rights,
security of personal information, andmaintenance of trust during clinical
trials• Disclosure of information related toclinical trials and trial results• Increased access to investigational
new drugs

activities, we will contribute to realizing a sustainable society by fulﬁlling our social responsibilities through our activities,
with the new drugs business as our core.

Sustainability issues and initiatives

Sustainability in Business Activities/Gaining Social Trust
We believe that contributing to society through our business activities leads to fulﬁlling
our social responsibility. In addition to traditional areas ranging from research anddevelopment to product sales, stable supplies, and quality management (reliability
assurance), we aim to contribute to people’s health by providing appropriate
information and promoting proper use of pharmaceuticals.

Fair and Honest Business Activities
We strive to maintain high ethical standards, conduct business lawfully and fairly,comply with codes of conduct, and prevent legal violations. We have also created astructure to appropriately manage business-related risks.

Enhancing Human CapitalReﬂecting our founder’s idea that a business is as good as its people and believing thathuman resources growth is the driving force that underpins strengthening the business,
we are working to enhance our human capital. The Group is managed to enable all
employees to respect the human rights of all people and act with high ethicalstandards.

Living in Harmony with Society
Acting as a good corporate citizen, we contribute to creating a vibrant society anddeveloping local economies through activities in which employees participate and by
making donations.

In Harmony with the Environment
We are working to preserve a sustainable environment through measures including
preventing environmental pollution, reducing our environmental burden, and promoting
the effective use of resources.

Corporate Governance
Bolstering corporate governance is regarded as an important management issue tocontinuously enhance corporate value. Our initiatives include expediting decision
making, strengthening appropriate management oversight functions, and maintaining
transparency in corporate activities based on corporate ethics.

44

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

Correlation with SDGs

Ethical considerations for human drug research
The Company conducts research on humans, obtains
human-derived test materials and information, and carriesout research using those materials with the consent ofparticipants through appropriate responses in accordancewith the Declaration of Helsinki* and the relevant laws,
regulations, and guidelines of each country. Researchers
also undergo ethical education and training related tobioethics, genome research, and clinical research, and theCompany strives to respect the human rights and protect
the personal information of the people who cooperate inthis research. Also, in line with the Ethical Guidelines for
Medical and Biological Research Involving Human Subjects,
the Company has created a Research Ethics Investigation
Committee, which includes outside experts, to impartiallyand fairly inspect the ethicality and scientiﬁc validity of
research plans.
* The Declaration of Helsinki is a set of ethical principles regarding human experimentationthat governs doctors and other professionals involved in medical research.

Ethical considerations for the use of animals in experiments
Animal experiments are essential in the research anddevelopment of drugs to promote human health. The
Company has an internal committee that inspects all
experiments from the perspective of the 3R principles—
reﬁnement (reduction of animal distress), replacement(substitution of animal experiments with alternatives), andreduction (decrease in the number of laboratory animals
used)—based on the Act on Welfare and Management of
Animals (animal welfare legislation) and the “Basic Policies
for the Conduct of Animal Experimentation in the Institutions
under the Ministry of Health, Labour and Welfare” to ensurethat animal experiments are carried out appropriatelyfrom a scientiﬁc perspective that considers the animals’
welfare. Regular independent inspections are also done
to conﬁrm that the conditions related to the raising oflaboratory animals and animal experiments are in regulatorycompliance. Surveys are conducted and certiﬁcation is
obtained from the Japan Pharmaceutical Information
Center’s Center for Accreditation of Animal Experimentation
Institutions, a third-party organization, based on guidancefrom the Ministry of Health, Labour and Welfare.

Handling of intellectual property
The protection of intellectual property is important for
maintaining competitiveness while meeting unmet medical
needs, and the Company has formulated internal guidelines
for handling intellectual property. In our core areas forresearch and development, we are working proactively
to protect intellectual property and concentrating ourinvestment in acquisition of intellectual property rights tocreate an intellectual property portfolio that contributes
to business continuity. The Company is also putting effort
into intellectual property landscape activities based on an
analysis of patent information, to share intellectual property
information with research divisions and contribute tobuilding a future research and development pipeline.
Respect for subjects’ human rights, security of personal
information, and maintenance of trust during clinical trials
The Company carries out clinical trials in line with the
Declaration of Helsinki and relevant laws and regulations
governing clinical trials of pharmaceuticals, including
good clinical practice (GCP), with full consideration given
to protecting the human rights and personal informationof trial subjects, to conﬁrm that candidate substances
for new drugs are effective and safe. Clinical trial plans
are approved after inspection for ethicality and scientiﬁcvalidity by internal and external committees. Moreover,clinical trials are carried out after the subjects are fully
informed about items including the objectives of clinical
trials and their methods, anticipated merits and demerits,
and compensation in the event of damage to their health.
Conﬁrmation that subjects understand the details and havegiven their consent to participate is required. In addition,
employees involved in clinical trials receive educationand training, and clinical trial institutions are monitored
to ensure that the clinical trials are appropriately carriedout in compliance with GCP. The Company also strives
to manage clinical trial data properly to ensure that the
subjects’ privacy is protected. In addition, it regularly
conﬁrms that clinical trials done externally are carried out
in conformity with the same standards.
Disclosure of information related to clinical trials andtrial results
The Company is working to improve transparency bydisclosing clinical trial plans and results. Plans for clinical
trials led by the Company are posted on a clinical trial
database available to the general public. Going forward, theCompany will promote the creation of an environment for
appropriate access to clinical trial data by researchers andothers who might use that data, disclosing information to
maximize the value of clinical trial data and playing a rolein the advancement of science and promotion of innovation.
Information disclosure methods are currently being

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

45

Sustainability in Business Activities/Gaining Social Trust

reviewed, and the policy for the disclosure of clinical trial
data will be released when it is ﬁnalized.

Stable supply of high-quality drugs (supply chain,quality assurance, product information)
Technological development andmanufacturing• Stable supply and quality
management• Quality assurance• Stable supply• Prevention of medical malpractice andimprovement of drug discrimination• Relations with local communities

Procurement (SCM)• Initiatives to ensure sustainableprocurement• On-site supplier investigations

Stable supply and quality management
The Company contributes to medical care by providing
customers a stable supply of high-quality products thatcomply with laws, regulatory requirements, and internal
guidelines. By closely cooperating with Group company
KYORIN Pharmaceutical Group Facilities and othermanufacturing locations, we work to continuously improve
good manufacturing practices (GMPs) for pharmaceuticals
and other products while observing good distribution
practices (GDPs) for pharmaceuticals, as we strive to provide
a stable supply of high-quality pharmaceutical products.
Quality assurance
The Company believes that it must continuously provide
products and information widely trusted by society. That
is its highest priority. The Company is focused on centrally
monitoring all operations related to reliability assurance,from development to sales, complying with relevant laws
and regulations, and maximizing the continuation of trust.
The Quality Assurance & Reliability HQs, which plays acentral role in this effort, is independent from researchand development, manufacturing, and sales divisions, andworks to provide products and information that can be usedby patients and medical professionals with peace of mind.
At the development stage, the quality of investigational
new drugs is assured based on standards related totheir manufacturing management and quality control(investigational new drug GMPs). After sales (after
manufacture and sales), we strive to maintain the quality of
products by guaranteeing quality in accordance with goodquality practices (GQPs) for pharmaceuticals and otherproducts including conﬁrmation that each product is madewith appropriate equipment according to a designatedprocedure manual. Quality inquiries from patients andmedical professionals after sales are acknowledged andanswered sincerely and swiftly.

46

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

Stable supply
With the increase in global products and diversiﬁcationof modalities, supply chains are becoming increasingly
complex. Given these changes, the Company has built
a structure for stable supplies that makes it possible tovisualize and centrally manage demand forecasts, inventory
information, and supply plans for all regions around theworld. This structure enables global management from the
manufacture of pharmaceutical ingredients to the supplyingof products. We are also aiming to build an even more
resilient supply chain to respond ﬂexibly to recent changes
in business conditions.
The pharmaceutical supply chain, which encompasses awide variety of items including raw materials, intermediates,and pharmaceutical ingredients, is supported by numerous
suppliers in Japan and overseas. To continue to provide
stable supplies without interruption in the procurement
chain, the Company considers it imperative to strengthen
relationships with individual suppliers by working closely
together and sharing information. As another risk hedge,
it is striving to secure multiple alternative suppliers in
addition to existing suppliers and various types of alternativetransport routes. Stable supplies are also being strengthened
with the promotion of compliance in logistics, including
imports and exports. To achieve even more stable supplies,
appropriate warehousing standards and procurement plans
are formulated for individual products. For products that
ﬂuctuate because of seasonal factors or sudden popularity,
the Company strives to carry out ﬂexible procurement while
monitoring changes daily in close cooperation with internalmarketing divisions. With the appearance in recent years ofgeopolitical risk, exchange rate ﬂuctuations, high costs for
raw materials for reasons including higher energy prices
and shortages of semiconductors, and the “2024 problem”
in logistics (a projected shortage of drivers in Japan as aresult of new overtime regulations taking effect), the Kyorin
Group is working continuously to mitigate these various risks
and maintain stable supplies through initiatives including
coordinating production plans and inventories with internaland external subcontractors, diversifying and cultivating
alternative suppliers, and making logistics more efficient.
Initiatives to ensure sustainable procurement
The Company considers it important to fulﬁll its social
responsibility by striving to provide stable supplies of
products through optimal supply chain management
and asks suppliers for cooperation based on their own
social responsibility. The Company carries out sustainableprocurement with a strong sense of ethics, in compliancewith both the letter and the spirit of laws, regulations, andinternational rules in Japan and overseas, while promoting
environmental awareness including reducing the use ofchemical substances and waste.

On-site supplier investigations
When selecting a new supplier, we begin transactions only
after conﬁrming through an on-site investigation that the
supplier has measures in place for legal and regulatorycompliance, labor safety, and environmental protection.
We regularly visit suppliers with whom we have business
relationships to continuously maintain and enhance productquality and stable supplies. We also carry out risk evaluations
in areas like work environments (including measures
to prevent employees from being exposed to chemical
substances), measures to reduce waste, and measures tolessen the environmental impact of wastewater and exhaustemissions from manufacturing activities. When on-site
investigations identify items needing correction, we propose
improvements, request an improvement plan, and follow up
on the improvement status.

Providing product information and building
relationships of trust with patients and medical
professionals
Provision of product information• Promotion of the appropriate use ofdrugs• Responding to drug inquiries

Initiatives for patients and medical
professionals• Public website for medical
professionals and patients• Providing information about disease• Supporting the Department of Drug
Discovery Medicine• Supporting the Medical Education
Project

Promotion of the appropriate use of drugs
Mistakes in the use of drugs can damage a patient’s health,while side effects can also occur even when drugs areused correctly. In those cases, the Company’s medical
representatives (MRs) work to accurately and swiftly
provide information on appropriate product usage to allow
medical professionals to use drugs more effectively andsafely. We also collect information from medical facilities
that use our proprietary products about the products’
effectiveness and safety, and pass on the results of theanalysis and evaluation of that information to medical
professionals. Given the Company’s MRs’ mission ofcontributing to better health, MRs act with a strong senseof ethics and work in strict compliance with relevant laws
and regulations, guidelines, industry rules, and internal
guidelines, including our Corporate Charter.
Responding to drug inquiries
The Company feels a responsibility to provide highly reliabledrug information that is both fair and impartial in response
to inquiries from patients and medical professionals. By
fulﬁlling this responsibility, the Company promotes theappropriate use of products that are safe and effective.
With this understanding, it established the Drug Information

Center to answer various inquiries.
We are continuously working to improve our responseto pharmaceutical product-related inquiries by using
objective, accurate, and the most up-to-date data to provide
consistent, appropriate, and correct information. These
efforts allow the Company to answer inquiries concisely,
swiftly, and accurately, and are also useful for analyzing theneeds of patients and medical professionals and managing
product life cycles. The Company uses a global medical
information system to provide high-quality responses toinquiries from patients and medical professionals.
Number of inquiries: Approximately 23,500 (ﬁscal 2022)
Public website for medical professionals and patients
We strive to meet the information needs of medical
professionals by posting product-related information, thelatest academic information, and other information usefulin daily medical care on Kyorin Medical Bridge and otherwebsites for medical professionals. We also strive to increase
patient adherence to guidelines by providing information on
how to take medicine properly, information about disease,and other information on websites for patients.
Providing information about disease
We assist medical professionals in creating disease
information tools for informed consent from patients, withthe aims of helping patients correctly understand disease
and improving their quality of life (QOL).
Supporting the Department of Drug Discovery Medicine
We helped establish and support the Department of Drug
Discovery Medicine at the Kyoto University Graduate Schoolof Medicine to cultivate innovative human resources forJapan’s drug discovery in the post-genome era throughcooperation between industry and academia.
Supporting the Medical Education Project
We contribute to the improvement of quality in medicalcare by creating educational opportunities for medical
professionals and improving their knowledge and skills
through support for the Medical Education Project,planned and managed by the Japanese Society of
Otorhinolaryngology—Head and Neck Surgery, Inc.

Reliability assurance initiatives
We have established a detailed reliability assurance system
for the products we handle and aim to gain the trust of wide
segments of society by ensuring compliance with relevantlaws and regulations, assuring reliability, guaranteeing
quality, and pursuing safety management.

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

47

Fair and Honest Business Activities

The Kyorin Group abides by all laws, regulations, codes of conduct, and the spirit thereof, and acts with high ethicalBusiness risks

standards, as well as promotes activities to appropriately manage internal and external risk pertaining to the business withThe Kyorin Group carries out its business in compliancewith the Act on Pharmaceuticals and Medical Devices andother relevant laws and regulations of Japan and othercountries. However, we recognize the following risks with thepossibility of substantial impacts on our operating resultsa view toward the ongoing enhancement of corporate value. Each Group company has a Compliance Committee and a Risk
Management Committee, which work to propose various policies and raise awareness, promote compliance and risk
management, and prevent legal and regulatory violations.

Compliance
Basic policy
An enterprise is required to promote the realization of asustainable society through the creation of added value
and employment that are useful to society and throughautonomous and responsible actions based on fair and freecompetition. Following our corporate philosophy, the Kyorin
Group conducts its activities in Japan and overseas basedon a high standard of corporate ethics, in compliance withboth the letter and the spirit of relevant laws, regulations,and international rules.
Corporate Charter and Compliance Guidelines
To ensure that the Kyorin Group’s activities are based ona high standard of corporate ethics, we formulated the
KYORIN Pharmaceutical Corporate Charter and Compliance
Guidelines in August 2006. These were revised in April
2019 to reﬂect our commitment to a sustainable society
and again in April 2023 to reﬂect the Group’s restructuring
and changes in the business environment including legal
revisions and social developments. In addition, we haveestablished a system to promote compliance, including theCompliance Committee, which meets once a month.
Education and training
Internal training is held to ensure an understanding of andfamiliarity with Kyorin’s corporate philosophy and compliance.
(1) Focusing on departments responsible for complianceand each division’s compliance promotion managers,
Companywide level-speciﬁc training (newly hired
employees, newly appointed managers, etc.) andfunctional training are held to teach corporate ethics
and compliance, and efforts are made to ensure thatan understanding and consideration of compliance arereﬂected in the work performed by directors, corporate
auditors and officers, and employees.
(2) We have designated June and November as twice-yearly“compliance enforcement months” and are working
to ensure that compliance is thoroughly understoodand practiced through initiatives designated for eachdepartment and employee.
Internal whistleblowing system
The Kyorin Group has established a “Corporate Ethics
Hotline” to accept inquiries, consultations, and reports
regarding corporate ethics and responses to laws and48

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

regulations, etc. The Group also accepts whistleblower
reports of suspected injustice or non-compliance via
internal and external points of contact. We strictly maintainthe conﬁdentiality of whistleblowers, respect their privacy,
and ensure that they are not disadvantaged.
Whistleblowing reports: eight (ﬁscal 2022)

Initiatives related to transparency in relationships
with medical institutions and other parties
The mission of a pharmaceutical company is to contribute to
the health and welfare of people around the world throughongoing research and the development of high-value new
drugs that address medical needs and by providing stablesupplies of those drugs. To fulﬁll this mission, partnerships
with pharmaceutical companies, research laboratories,
and medical institutions including universities and others
are essential, and we are required to properly manage ourrelationships where there is a potential conﬂict of interest
with pharmaceutical companies.
Against this backdrop, the Kyorin Group has
established the Guidelines for Transparency ofRelationships between Corporate Activities and Medical
Institutions, etc., and the Guidelines on Collaboration with
Patient Groups and Transparency of Their Activities. In
accordance with these guidelines, we disclose information
about funding to medical institutions, patient groups, andothers on our website.

Risk management
The Kyorin Group companies have established the Risk
Management Committee, which is held once a month todevelop a management system that seeks to prevent theoccurrence of risks and handle any risks that arise. The
details of these meetings are regularly reported to theManagement Committee. The Risk Management Committee
oversees risk management initiatives across the entire
Group, while also promoting activities to be implemented
as necessary at respective divisions to build a structure
to identify potential risks, reduce risks, and prevent risk
events from occurring, and to minimize the damage fromrisk events that do occur unavoidably. If a problem arises,
it will be reported to the corporate officer in charge in atimely manner. In the event of a natural disaster or otherrisk that could signiﬁcantly impact business, a Contingency
Measures Headquarters, headed by the president, will beestablished to manage the crisis.

and ﬁnancial position from factors including major revisions
to relevant laws and regulations, medical system reforms,
drastic changes in market conditions, and large-scale natural
disasters. We are addressing these risks organizationallyand systematically. However, the risks and uncertainties that
could affect the Group are not limited to these.

Main responses

Potential risks

Risks related to research and development
Efficient research and development through the identiﬁcation ofpriority research areas
Collaboration with domestic and international pharmaceuticalcompanies, academia, and venture companies (open innovation) in
addition to proprietary drug discovery

Delay or discontinuation of development due to unforeseen side
effects or failure to achieve expected effects of development
candidates

Risks related to medical system reforms
Maximizing the spread of new drugs
Transformation of cost structures through consolidation of Group
production functions and overall optimization

Unforeseen implementation of reforms to the NHI drug pricing
system and medical insurance systems

Risks related to stable supplies
Securing speciﬁc amounts of products and raw materials
Securing important raw materials from multiple sources

Delays or stoppages in manufacturing activities or procurement
Product recalls due to quality problems, etc.

Risks related to alliances
Improving relationships with business partners based on theirsales strategies and R&D trends

Impact on business results, etc., due to dissolving alliances

Risks related to IT security and information management
Introducing security software and implementing regular backups
Thoroughly familiarizing employees with various information
management regulations and providing ongoing education

Business interruptions and information leaks due to inadequate
systems, computer viruses, cyberattacks, etc.

Risks related to competition with other pharmaceutical products
Establishment of a strong presence in speciﬁc ﬁelds, particularly
respiratory, otolaryngology, and urology
Developing business utilizing the Group’s unique characteristics,
including the launch of authorized generics

Competition with other companies’ products
Intensifying entry of generic drugs

Risks related to intellectual property rights
Strict management of intellectual property rights
Ongoing monitoring to check for infringements by third parties

Business discontinuation or dispute arising from infringement on
intellectual property rights by third parties or the Group’s
infringement on intellectual property rights of other companies

Risks related to litigation
Response based on advice of experts, etc.

Litigation related to intellectual property rights, product liability(Product Liability Act), environmental protection, labor, etc.

Risks related to the occurrence of side effects
Providing and collecting information that contributes to using
pharmaceutical products properly

Restriction of use or discontinuation of sales due to unexpectedside effects after a market launch

Risks related to environmental issues
Compliance with relevant laws and regulations and creation of highvoluntary standards
Integration of the environmental management system and theoccupational health and safety management system to promote
environmental, health, and safety (EHS) activities throughout the Group
Establishment of Environmental Committee to conduct businessactivities that take into account environmental impact at Group level

Violations of related laws and regulations due to accidents, etc.
Introduction of environmental taxes, changes in procurement oroperating costs, etc., associated with transition to a decarbonizedsociety
Changes at business locations and in procurement, operations, etc.,
due to damage from irregular weather or changes in weather
patterns

Risks related to large-scale disasters, etc.
Preparation of response manuals and implementation of drills to
prepare for large-scale disasters, etc.
Stable supply system through maintenance of speciﬁc amounts ofproduct inventories, etc.

Closure of factories, cessation of operations, etc., at manufacturingsubsidiaries or suppliers

Risks related to ﬂuctuations in ﬁnancial markets
Risk-hedging measures, diversiﬁed investment, etc.

Losses from import/export transactions, valuation losses onpension assets, retirement beneﬁt obligations, equity holdings, etc.

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

49

Enhancing Human Capital
Legal standards

Basic stance

Respect for human rights

Employees
Contribute to achieving the Company’s(organization’s) goals and objectives throughautonomy, growth, and performance of their duties

Perform tasks and carry out duties proactively and withinitiative
Take initiative to maintain and enhance their own humanity
and ability to carry out their duties

CompanyLong-term employment

Emphasis on contribution to
fulfillment of duties

Comprehensive treatment

Employees are considered assets (drivers of growth)of the Company, which respects their individuality
and supports their growth.

Each employee is assigned duties that conform to ability andwork style.
Each employee’s contribution is comprehensively understood,and employees are evaluated and treated fairly and consistently.

Self-reliance and cooperation

The Company provides a comfortable and rewarding work
environment that fosters a “desire to work” among employees.

StartsFinishes
End April after
2 years old 3 years old elementary elementary
1st birthday
schoolschoolNursing time—30
minutes each,
twice a day
MRs may use company (marketing) vehicles to drop off and pick up child at nursery, day care, etc.
Maternity leave
before birth—6
weeks before due
dateMaternity leave
after birth—canbe taken for 8
weeks after birthChildcare leave—can be taken until child is 18 months old or
until the end of April after child’s 1st birthday

Special vacation of 2 days
for spouse

Permission granted for
up to 2nd birthday if
unable to enter
nursery, day care, etc.

Leave for care of children (5 days per year for one child up to 6th grade, 10 days for 2 children, half-day units)
Hourly based paid leave*

Childbirth and childcare
support money

Nursing careFinancial subsidies for the use of nurseries and preschools
Matriculation support money

Job return system: Preferential rehiring of employees who have resigned for pregnancy, childbirth, child-rearing, nursing care, etc.*

Expanded nursing care leave and breaks (186 days vs. legally stipulated 93 days)

Support system for remote nursing care

Nursing care seminars* Hourly based paid leave and the job return system are also available for nursing care support

employees take childcare leave (by ﬁscal 2025).
Percentage of employees
taking childcare leave

Women: 107.4%
Men:
32.3%

(consolidated basis, fiscal 2022)
Note: Calculated as number of employees taking childcare leave (including employees andemployees whose spouses gave birth in ﬁscal 2021 and previous years) divided bynumber of employees and employees whose spouses gave birth in ﬁscal 2022

Promoting the use of paid leave
The Kyorin Group proactively encourages the taking of
paid leave, going beyond our legal obligations for paid
leave under the Act on the Arrangement of Related Acts
to Promote Work Style Reform (which requires companies
to allow employees entitled to at least 10 days of annual
paid leave to take ﬁve days, with the timing selected by
the employee). We regularly promote taking vacation andconsecutive days off to enable employees to maintain agood work-life balance to maximize their capabilities.
Percentage of allotted paid
leave taken(consolidated basis, fiscal 2022)

Cooperate with co-workers for the success of the organization

12 months old 18 months old

Limit on after-hours work

Other

“Partners for mutual benefits over the long term”
By continuously fulfilling the responsibilities expected of each other over the long term, the Company and its employees are partners who
realize mutual benefits (with employees contributing to the Company’s development, and the Company enriching employees’ lives andcontributing to their self-fulfillment).

8 weeks after
birth

Exemption from late-night work

Financial support, etc.

As we enhance human capital, we recognize that to achieve
our business strategies it is important to place importanceon employees and energize people and organizations.
The Kyorin Group’s basic policy underlying our humanresources management system views the Company and its
employees as partners who, by continuously fulﬁlling the

Support for employees’ childcare and nursing care
We have in place a system for employees who need toprovide childcare or nursing care. In recognition of these
efforts, in 2021, we received Kurumin
Certiﬁcation as a “company that
supports child rearing” under the Act on
Advancement of Measures to Support
Raising Next-Generation Children. We arealso aiming to have at least 50% of maleChildbirth

Exemption from after-hours and holiday work

Leave, time off

Human resources management

Promoting work-style reforms with respect for diverse values
In accordance with the Act on the Arrangement of Related
Acts to Promote Work Style Reform, we are making efforts torectify long working hours and accommodate diverse work
styles. As part of these efforts, we seek to create workplaceenvironments that make it easy to balance work and family
life by supporting employees throughout their various life
stages including times they need to provide childcare or
nursing care, while creating environments that provide
employees with full lives backed by a healthy family life.

6 weeks before
birth

Shortened work hours for childbirth and child-rearing—Up to 2 hours per day (in 30-minute units) until the child starts elementary schoolChild-rearing

The Kyorin Group is managed with respect for the humanrights of all people, and our Compliance Guidelines clearlystate, “Along with understanding international norms
regarding universally recognized human rights, we will
respect the values and character of each individual,
and will not engage in any form of discrimination in any
situation, regarding each individual as being equal with allothers, regardless of position or function.” The Company
also respects the individuality of each employee and has
formulated guidelines to prevent harassment, to create
a comfortable workplace environment where employees
feel at ease. These guidelines cover sexual and power
harassment, as well as harassment related to pregnancy,
childbirth, and childcare and nursing care leave.

PregnancyWork

Reﬂecting our founder’s idea that “a business is as good as
its people” and believing that human resources growth isthe driving force that underpins strengthening the business,
we are working to enhance our human capital. We believe
it is important for employees to respect the human rights
of all people and to act with high ethical standards. We are
therefore working to create workplace environments where
each employee’s diversity, character, and individuality are
respected, where employees’ health is taken into account,
and where employees can work comfortably and safely.

responsibilities expected of each other over the long term,
realize mutual beneﬁts (with employees contributing to
the Company’s development, and the Company enriching
employees’ lives and contributing to their self-fulﬁllment).
We are creating frameworks (systems, standards,
guidelines, etc.) for hiring, position assignments, growth(training), evaluations, transfers, compensation, welfare, andother beneﬁts, and promoting their appropriate operation
based on this policy.
In the Survey on Employee Satisfaction carried out
annually at each Group company, we aim for higher scoresin major areas while incorporating the opinions of thehuman resources management system that surface in thesurvey to review and improve the system.

Kyorin’s own standards or additional provisions

74.2%

Job return system
The Company has created a job return system that provides
opportunities for employees who still have a strong desire
to work and are seen as vital by their colleagues to comeback to their jobs. This system covers employees who
have left the Company due to various major life events
such as marriage, the job transfer of a partner, pregnancy,
childbirth, child-rearing, nursing care, volunteer activities,
and overseas study.
Mid-career hiring
In addition to hiring new graduates, we hire mid-career
people with advanced skills and extensive experience tocreate more diverse and ﬂexible work styles. We work toeliminate concerns about things like unequal opportunities
for promotion and strive to assign the right person to theright position.
Percentage of full-time employees
who are mid-career hires

42%(consolidated basis, fiscal 2022)

Percentage of managers
who are mid-career hires

26.1%(consolidated basis, fiscal 2022)

50

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

51

Enhancing Human Capital

Initiatives for Health Management

Initiatives on disability hiring
As one of its social responsibilities, the Company strives
to provide suitable work environments for employeeswith disabilities to enable them to give full play to theirabilities and live independent lives like able-bodied people.
We also endeavor to create work spaces that are easy for
employees with disabilities to operate in, such as by using
apps for employees with impaired hearing.
Percentage of employeeswith disabilities

2.43%(KYORIN Pharmaceutical, fiscal 2022)

Human resources development
The Company supports the growth of its employees
by creating structured and systematic educational
programs that provide opportunities for both solo learning(autonomous improvement of one’s personality andabilities) and joint learning (mutual growth and support).
The structure and mechanisms for solo learning include
correspondence courses, referrals for business magazine
subscriptions, support for language learning, individual
overseas study, support for the acquisition of qualiﬁcations,and subsidized external seminars. In joint learning, weoffer 12 different types of tiered programs ranging fromnew employee training to training for managers. Functional
training is provided by each department to give employees
the knowledge and skills required in their roles.
Amount spent on training
per employee

Mental health
The Company provides mental health education for
managers and employees. Our manager training
includes prevention and early detection of mental illness
by encouraging managers to pay attention to theirsubordinates and promoting understanding of the speciﬁc
symptoms of mental disorders. We also encourage
employees to gain knowledge about maintaining mental
health via our intranet and other means, and have created asystem for employees and their families to feel free to ask
for help. When a mental health issue arises, the employee’s
department, industrial psychiatrists, public health nurses,
and Human Resources work together to help the employee
recover, return to work, and prevent a relapse.
Percentage of employees taking leave
for mental health
Percentage of those returning to work

0.75%

* Health Management® is a registered trademark of the nonproﬁt organization
Kenkokeiei.

52.9%

Health Management Promotion Structure(consolidated basis, fiscal 2022)

Promoting women’s active participation
Through initiatives related to promoting women’s active
participation, we are creating workplace environments inwhich female employees can fully use their capabilities
and play active roles. Our goal is to have women ﬁll 15% ofmanagement positions by 2030.
Percentage of women in
management positions

8.5%(consolidated basis, fiscal 2022)¥60,000

Pay difference between maleand female employees(KYORIN Pharmaceutical, fiscal 2022)(KYORIN Pharmaceutical, fiscal 2022)

The Kyorin Group believes that the health of each employee,both mental and physical, is essential for realizing ourcorporate philosophy and achieving our long-term vision,and on June 16, 2020, we formulated the Kyorin Group
Health Declaration to promote Health Management.®*
We aim to create workplace environments in which all
employees are motivated to promote their own health andapproach their work enthusiastically. In recognition of these
efforts, the Company has been
designated as one of the Certiﬁed
Health & Productivity Management
Outstanding Organizations(large corporate sector) for ﬁve
consecutive years, since 2019.

All employees: 68.4%
Full-time employees: 72.4%
Part-time and contract
employees: 46.7%

The top officer of this structure is the president of KYORIN
Pharmaceutical Co., Ltd., and the promotion officer is the
CHRO of KYORIN Pharmaceutical Co., Ltd. When sharing
information with Group companies, we have a system
in which industrial physicians, public health nurses, the
KYORIN Health Insurance Association, and the secretariat
work together to formulate health promotion measures andcoordinate with health committees at individual companies
to implement these measures. In response to healthchallenges linked to solutions to business challenges, we
assess the expected beneﬁts of these measures, as wellas the connections between speciﬁc activities involvedin maintaining and promoting health, and support healthmanagement based on a health management strategy map.
The Kyorin Group Health Management Promotion Structure
Health Management Top Officer (President of KYORIN Pharmaceutical Co., Ltd.)Management Committee

Solo learning

Joint learning (tiered programs)

Correspondence courses
Referrals for businessSupport for individual
overseas study
Support for acquisition

52

Program for middle managers
Program for new managers
Program for second-year managers

For general employees

learning

For managers

Support for language

Program for new directors

Core skills program 2

Core skills program 1

Group companies
KYORIN Pharmaceutical Co., Ltd.
KYORIN Rimedio Co., Ltd.
KYORIN Pharmaceutical Group Facilities Co., Ltd.

Third-year employee program

Major initiatives
Second-year employee programof qualiﬁcations

Program for ﬁrst-year managers

Subsidized external

Program for preappointment

New graduate and career

seminars

managers

guidance program

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

Secretariat
Corporate Planning, Human Resources, and General Affairs of
KYORIN Pharmaceutical Co., Ltd.

Core skills program 3

Program for experienced directors

magazine subscriptions

Industrial physicians and public health nurses

KYORIN Health Insurance
Association

Health Management Promotion Officer(CHRO of KYORIN Pharmaceutical Co., Ltd.)

Overall structure of solo learning/joint learning

1. We will coordinate with health insurance associations tofurther implement health promotion measures.
2. We will achieve a 100% health examination participation
rate and help employees maintain and improve their health.
3. We will implement measures aimed at improving

employee lifestyle habits (smoking, alcohol consumption,
exercise, sleep, and diet).
4. We will implement measures that cover everythingfrom the prevention, early detection, and early response
to mental health issues to the support of employees
returning to work and the prevention of relapses.
5. We will conduct presenteeism* studies and verify theeffectiveness of our health promotion measures.
* Working while sick. The state of being present at work but not performing as
expected because of impaired mental or physical abilities due to illness, etc.

Lifestyle habit improvements
We have set numerical targets for 2025, using 2019 as ourreference year, and are currently implementing improvements.
2019 results2020(reference year) results

2021
results2022
results2025
targets

Percentage of employees who
do not smoke

80.6% 81.3% 82.3% 82.5%

85%

Percentage of employees who
drink appropriate amounts ofalcohol*

73.4% 74.6% 73.6% 70.1%

80%

Percentage of employees whowalk or engage in equivalent
physical activities for one houror more per day

45.0% 44.8% 44.0% 44.8%

55%

Percentage of employees who
get sufficient sleep

64.8% 72.8% 69.1% 67.2%

75%* Percentage of male employees who drink less than 40 g of alcohol per day andfemale employees who drink less than 20 g of alcohol per day

The Kyorin Group Health Declaration(Established on June 16, 2020)—Your Health is Kyorin’s Mission—
The Kyorin Group views the health of its employees
as a vital management issue, and is committed as anorganization to promoting the health management of eachand every employee.
1. To ensure that our employees and their families can live
active lives, we pursue the maintenance of their soundphysical and mental health by working hand in hand witha health insurance association.
2. We proactively support our employees’ efforts tomaintain and improve their health and to further theirhealth awareness.
3. We implement measures to maintain and improve our
employees’ health and create safe and comfortable work
environments as we aim to build business operations
that allow us to fulﬁll our social mission of contributing tobetter health.
We strive to maintain and improve the health of ouremployees and their family members, to create a healthy
and lively workplace culture where our employees canlive up to their full potential, and to further increase theirmotivation and work satisfaction.

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

53

Living in Harmony with Society

Basic stance

Milton brand official account

The Kyorin Group’s Charter of Corporate Conduct calls for it to “actively co-exist with society as a good corporate citizen

In July 2022, we launched an official Instagram account for the Milton brand toand to contribute to society’s development.” As a manufacturer of new drugs, we aim to contribute to society by developing

provide product information and also to distribute useful information to people

and supplying useful pharmaceuticals (products and services including clearly superior drugs). We also engage inraising children or about to have children with online seminars like Mini-Classroom

educational activities to support the health of young people. A healthy next generation will be able to power the creation

for Parents at Home through a tie-up with Benesse’s Tamahiyo service.

and sustainable development of the highly livable and vibrant local communities that form the basis of our business

Milton brand official account: https://www.instagram.com/milton_official.jp/

activities. We pursue social contribution activities that are in keeping with our mission of being a company that supports
sound and healthy lifestyles in a wide variety of ways.

Contributing to local communities

Note: Due to the COVID-19 pandemic, the methods used to conduct some activities were changed, and some activities were cancelled.

Sponsoring sports events
We support the Shimotsuke Soccer Workshop in Nogi sports event, which was held

Classroom visit

Health education activities

in ﬁscal 2022 for the 22nd time, to provide local children an opportunity to think

Classroom visits

about and experience their own health management and improve their skills. Led

One activity that embodies the Kyorin Group’s corporate philosophy and contributes

by former J-League player and current sports journalist Tetsuo Nakanishi, theto society is to visit elementary and junior high school classrooms nationwide,ﬁscal 2022 event was held outdoors for the ﬁrst time in three years, and many

which we have done since ﬁscal 2017, to teach and demonstrate to the children

children showed impressive strength and stamina in their playing. Donations wererepresenting the next generation the correct ways of taking medicine and washingalso collected at the event to support the local community, and soccer balls were

their hands. In response to the COVID-19 pandemic, online classroom visits were

donated to the town of Nogi in Tochigi Prefecture.

Shimotsuke Soccer Workshop

added in ﬁscal 2021.
Local cleanup activities
Work experience programs

As a responsible member of the local community, the Group actively participates

Each Group business facility offers internships and provides workplace tours andin cleanups of local districts, including the areas around its business facilities.

hands-on workshops for junior and senior high school students.

• Group companies (head offices, branches, plants, research centers): Cleanup
activities around business facilities

Teach Me—Doctors Explain the Great
Adventure for the Karada-no-Himitsu

Supporting a hands-on science event for children• Noshiro Plant: Clearing away fallen leaves around government buildings, cleanup

The Kyorin Group has supported the “Kyorin Group Presents the Great Adventure foractivities in Nakashima Park at Noshiro Port, and cleanup activities at the Kaneyu,

the Karada-no-Himitsu (the Body’s Secrets)” program since 2016, with the idea ofa former Japanese-style restaurant

supporting healthy lives for children, who will lead the next generation. Suspended• Inami Plant: Cleanup activities at Zuisenji Temple

in 2020 to prevent the spread of COVID-19, this event was restarted in 2023 on an• Shiga Plant: Participation in “Sunﬂower Project” and the “Make Lake Biwa

even larger scale as the Ultimate Great Adventure for the Karada-no-Himitsu. Also,

Beautiful” environmental conservation activities

Soccer ball donation ceremony

in ﬁscal 2018, we launched the event-linked website Teach Me—Doctors Explain the
Great Adventure for the Karada-no-Himitsu, which provides videos for children fromDonations to areas affected by natural disasters

kindergarten through lower elementary school ages describing the body’s workings

As useful support for those affected by disasters, the Group provided relief goods.

and explaining diseases to deepen their interest and motivate them to learn more.

• Support for those affected by heavy rains in the Hokuriku region in August 2022:

URL: https://www.kyorin-pharm.co.jp/karada/ (Japanese only)

Cleanup at Zuisenji Temple

Environmental hygiene supplies (Rubysta)• Support for those affected by heavy rains in Aomori Prefecture in August 2022:

Course for the general public

Environmental hygiene supplies (Rubysta, Milton)

In June 2023, we held a course for the general public on concerns about prolonged
Course for the general public

coughing and how to deal with it to help the general public better understand theFirst-aid and lifesaving courses for employees

disease.

Group employees including roughly 650 Kyorin medical representatives received
training on the need for ﬁrst aid, CPR, the use of AEDs, and ways to stop bleeding.

Websites for patients with ulcerative colitis and Crohn’s disease
We have set up the websites “Guide to Ulcerative Colitis and Crohn’s Disease” andWebsite for patients with ulcerative colitis
and Crohn’s disease“Intractable Disease Subsidy System for Patients with Ulcerative Colitis or Crohn’s
Disease,” which provide useful information on the diseases and subsidy programsfor patients and their families.

54

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

55

In Harmony with the Environment

Basic stance
The Kyorin Group’s Charter of Corporate Conduct details ourunderstanding that “the tackling of environmental issues isa mission for all humankind and an imperative componentof the very existence of corporations to which it remains
voluntarily committed.” Business activities that take into
account climate change and other environmental
considerations are one example of our materiality.
Following our basic policy on sustainability, the Group
promotes reduced use of environmentally harmful materials
and the effective use of the world’s limited resources
through energy and resource conservation, waste reduction,and enhanced chemical substance management in all ourbusiness activities. By setting and constantly reviewing
objectives and targets for these initiatives, we arevoluntarily and proactively committed to protecting theenvironment and preventing pollution.

Environmental management structure
The Group has established an Environmental Committee,
chaired by the corporate officer in charge of General Affairs,
to implement and promote environmental measures,
including ones addressing climate change, as a structure
to consider environmental measures at the Group level.
Led by General Affairs, the committee, which comprises
directors, corporate auditors, and corporate officers for
management strategies and the plants and research
centers doing business related to the environment in local
communities, considers and reviews responses toenvironmental issues (vision, targets, road maps, etc.). In
coordination with environmental, health, and safety (EHS)
activities, the committee identiﬁes and evaluates risks andopportunities related to climate change andcomprehensively compiles additional measures that it

Oversight

Board of Directors
ReportDecision making

proposes to the Management Committee, with the resulting
decisions reported to the Board of Directors.

2°C Scenario
Transition Risks
Segment

We are promoting the effective use of the world’s limited
resources and have set targets to protect the environment
under the important themes of preventing global warming,
protecting resources, and living in harmony with the naturalenvironment. All Group plants have obtained ISO 14001
certiﬁcation, an international standard for environmental
management systems. We will maintain and continue thesemeasures going forward.
Regarding climate change, we will promote thereduction of CO2 emissions for preventing global warming.
We also evaluate and address climate change risks andearnings opportunities by referencing the framework of the
Task Force on Climate-related Financial Disclosures (TCFD)
and are promoting expanded disclosure related to theeffects of climate change on our businesses.

Policies, laws andregulations

MarketEvaluation

Analysis of risks and earnings opportunities related
to climate change
The effects on the Kyorin Group’s business andmanagement from global warming and climate change
themselves, as well as changes to the businessenvironment from long-term policy related to climatechange, are broken down as physical risks and earnings
opportunities caused by climate change and transition risks
to a decarbonized society, and undergo a scenario analysis.
The scenario analysis is carried out by referencing
documents and materials including the Intergovernmental
Panel on Climate Change’s (the IPCC’s) Fifth Assessment
Report’s RCP 2.6 (2˚C scenario) and RCP 8.5 (4˚C scenario).

Centrally managing and promoting environment and occupational health and safety,
working to create comfortable workplace environments that reduce the environmental
burden and are in harmony with the environment

Management Committee

Person responsible for EHS activities:
Corporate Officer in charge of General Affairs of
KYORIN Pharmaceutical

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

Installation of equipment
and machinery• The replacement of existing equipment with newmodels that can operate with renewable energy as aresult of newly enacted laws and regulations could
increase costs.

• Systematically upgrade equipment to energy-saving
models and machinery

EHS Group Director
EHS Group Secretariat

KYORIN Rimedio
EHS Manager• Increasing the percentage of electric power generated• Secure electric power generated from renewablefrom renewable energy sources could raise the cost ofenergy sources
Changes in procurement/ electric power procurement.
• Install highly efficient machinery• Responses to transition risks by suppliers andoperational costs• Cooperate with suppliers, logistics subcontractors, andlogistics subcontractors could increase manufacturingothers to reduce logistics costs
and logistics costs.

Assessment frominvestors• Delays in the Company’s introduction of climatechange countermeasures could erode investor
confidence and negatively affect the share price.
• Insufficient disclosure of information could reduceshare price.

• Disclose timely and appropriate information including
status of climate change countermeasures• Participate in external surveys

Event

Risks

Response policy• Localized heavy rains, large typhoons, etc., could
cause flooding, halt operations, and necessitate• Consider and implement equipment plans that
repair expenses at research, manufacturing, andenvision water damage, etc.
logistics centers.
• Carry out drills that envision emergencies• In addition to Group facilities, supply chain disruptions • Appropriately manage inventories• Secure multiple suppliers of materials(affecting materials procurement and shipment
logistics) could occur.

Acute risk

Chronic risk

• Several research and manufacturing centers are locatednear rivers, and sea levels are rising due to higher
temperatures. Flood susceptibility countermeasures in • Consider and implement equipment plans that
Changes in location ofenvision water damage, etc.
response to changes in climate patterns and reviews ofcenters, procurement, and• Appropriately manage inventories
locations could increase costs.
operations from changes• Responses to physical risks by suppliers and logistics • Consider optimizing locations from a businessin climate patterns, higher
subcontractors could lead to higher market prices and continuity planning (BCP) perspective
temperatures, rising sea• Secure multiple suppliers of materials
increase manufacturing and logistics costs.
levels, etc.
• Improve energy efficiency• Air-conditioning temperature management in
manufacturing, warehousing, and logistics in response
to higher temperatures could increase costs.

Earnings Opportunities
Segment

KYORIN Pharmaceutical
EHS Manager

56• The introduction of an environmental (carbon) tax ongreenhouse gas emissions related to research,
manufacturing, and marketing could increase costs.

Direct damage fromunusual weather(typhoons, heavy rains,etc.)

EHS activities

Environmental Committee
Members
Chair: Corporate Officer in charge of General Affairs of
KYORIN Pharmaceutical
Members:
President of KYORIN Pharmaceutical Group Facilities
Senior Director of WATARASE Research Center, KYORIN Pharmaceutical
Director of Corporate Planning, KYORIN Pharmaceutical
Director of General Affairs, KYORIN Pharmaceutical (secretariat)<Role>
Consider responses to environmental issues related to climate change

Introduction of anenvironmental(carbon) tax

Segment

Coordination

Consideration

Response policy• Further promote activities to reduce CO2 emissions• Shift to electric power generated from renewableenergy sources• Reduce number of vehicles for sales force and switch
to hybrid vehicles and electric vehicles• Efficiently use the EHS management system

Physical Risks* EHS: Environment, Health, and Safety

Proposal

Risks

4°C Scenario

EHS* activities

Instructions

Event

Promoting environmental management

Operation andmanagement of
EHS activities
Groupwide

KYORIN Pharmaceutical
Group Facilities
EHS Manager

Market changes

Event

Earnings opportunity• Increases in infectious disease from risingtemperatures could increase the Company’s business
opportunities.
Changes in disease trends• Demand and scope of appropriate use of our products
for the prevention, diagnosis, and treatment of
infectious disease could increase and expand.

Response policy• Shift to business based on the proposal of solutions• Establish presence in franchise customer fields• Proactively invest in pipeline expansion

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

57

In Harmony with the Environment

Moving toward carbon neutrality

Speciﬁc initiatives

Building Mechanical and Electrical Engineers’ carbon-

Vision: The tackling of environmental issues is a mission for all humankind. We are voluntarily pursuing the challenge of “carbon
neutrality by 2050” as an imperative component for the very existence of corporations.

Introducing low-emission cars to reduce CO2 emissions

neutral category for construction equipment that

The Kyorin Group is reducing the number of vehicles used

contributes to achieving a low-carbon society. In addition,by its sales force and proactively introducing low-emission

the Kanto Bureau of Economy, Trade and Industry conducted

cars, hybrid cars, and other environmentally friendly

a document-based, on-site study of the center’s energy

vehicles to prevent global warming. As of March 2023, allconservation activities related to this system as well as its

861 vehicles used by the sales force met the standard forenergy-saving promotion system, human resourceshaving low emission, and of these, 389 are hybrid vehicles,development and education, and initiatives, and awarded it

which were introduced in 2004. In addition, these vehicles

the Kanto Bureau of Economy, Trade and Industry Director’s

adhere to the Ministry of the Environment’s “Eco-Driving”

Award in the 2020 Awards for Excellence in Energy

guidelines regarding their impact on the environment andManagement. During ﬁscal 2022, this system reduced

traffic safety.

electric power consumption 69,158 kWh and CO2 emissions

2030 target: Reduce CO2 emissions 46% in ﬁscal 2030 vs. ﬁscal 2015

KYORIN Group material ﬂow (ﬁscal 2022)
Raw materials

Materials

Energy

Water

371 t
(PRTR substances: 13.2 t)

Total: 2,229 tMaterials: 2,174 t
Paper usage: 55 t

Total heat: 484,566 GJ

Total: 236 thousand m3(crude oil equivalent: 12,502 ㎘)
Electricity: 31,811
thousand kWh
Heavy oil: 1,140 ㎘
Kerosene: 2,326 ㎘
Gasoline: 1,083 ㎘

Drinking water:
176 thousand m3
Groundwater:
60 thousand m3

roughly 32 tons compared with conventional heat pumps
Development of
new drugs

INPUT
Manufacturing

Sales

for air conditioning and heating, for approximately 33% inManagement

energy savings.

OUTPUT
CO2 emissions

Waste

Sewer water

Packaging recycled

42,764 t
Scope 1: 12,893 t
Scope 2: 13,834 t
Scope 3: 16,037 t

Generated: 538 t
Recycled: 314 t

107 thousand m3

Total: 761 t

Landfilled: 42 t

* A Renewable Energy Heat Pump (ReHP) is a highly efficient heat pump that uses
renewable energy, and the ReHP installed at two adjacent buildings (CS and LAB1)
at the WATARASE Research Center uses geothermal heat and unused waste heatfrom a water chiller as a heat source, and circulates heated water in a single loop,
which is used by air-conditioning and water-heating equipment, to increaseenergy efficiency.
Low-emission car

Reducing the environmental burden through solar power
generation

CO2 emissions (Scope 1, 2, and 3)
The Kyorin Group strives to expand the scope of coverage to calculate CO2 emissions throughout its supply chains.

Scope 3
Other indirect emissions
Purchased products and services
6,731 tScope 1
Direct emissions from the use offuel in-house and industrial
processes
Direct emissions
12,893 t

Capital goods
4,082 tFuel- and energy-related activities
not included in Scope 1 or 2
2,170 tBusiness travel
457 t

Scope 3
Other indirect emissions

58

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

Waste materials from businesses
286 t

In a move to lessen its environmental burden through the

The head office (Ochanomizu sola city) has reduced its CO2

use of Company-owned land, in ﬁscal 2013, the Company

emissions with the change in September 2021 to renewableinstalled a facility for generating solar power, one form ofenergy sources for all its electric power consumption.

renewable energy, in the town of Nogi in Tochigi Prefecture,

In May 2017, the ReHP* technology installed at theand installed the second facility in ﬁscal 2017.

WATARASE Research Center was awarded an honorable
mention in the Kanto chapter of the Japanese Association of

Disposal of products sold464 t

Scope 2
Indirect emissions associatedwith use of purchased electricity
and heat
Indirect emissions from energy sources
13,834 t

Employee commuting
943 t

Scope 3
Other indirect emissions

Environmentally friendly head office and R&D center

WATARASE Research CenterTransport, delivery
904 t

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

59

Corporate Governance

The Group will work to improve sustainable corporate value to gain the conﬁdence and meet the expectations of all stakeholders.

Corporate governance system

As part of these efforts, the Group considers strengthening and enhancing corporate governance an important management issue.

Basic policy on corporate governance

Board of Directors

the Board of Directors. As of June 30, 2023, the Company

The Company’s Board of Directors comprises six directors,

had 13 corporate officers.

including three outside directors. The Board of Directors

The most important management goal for the Company isin important meetings, including those of the Board ofusually meets once a month, resolving legal matters,

Board of Corporate Auditors

to continue raising shareholder value. To achieve this goal

Directors and the Management Committee, corporate

formulating and deciding important management policies

Following the Companies Act of Japan, the Company is arequires fostering a management environment that enables

auditors implement comprehensive audits by checking

and strategies, and overseeing business execution, etc.

company with a board of corporate auditors, which

us to build trust with the general public. Therefore, having

documents and other materials relating to important

Chairperson: Yutaka Ogihara, Representative Director,

comprises two statutory corporate auditors and three

given better corporate governance a high priority, we seek
to ensure prompt decision making, strong monitoring of thedecisions and by inspecting Group companies.
In addition, in recognition of our corporate social

President and Chief Executive Officer

outside corporate auditors. The Board of Corporate Auditors

Executive Directors: Minoru Hogawa, Michiro Onota

has established a system to ensure that the outside
corporate auditors exercise authority for audits, etc., fromappropriateness of management, and ethical andresponsibility (CSR), we appoint compliance and risk

Outside Directors: Noriyuki Shikanai, Ken Shigematsu,

transparent corporate activities. To ensure transparency

management promotion officers for every Kyorin Group

Hiromi Watanabe

and fair disclosure, we release appropriate informationcompany. We have established a Groupwide compliance andwithout delay for the beneﬁt of shareholders and investors.

risk management system administered by the ComplianceBusiness execution system (Management Committee)

Senior Corporate Auditor: Kenji Akutsu

In the future, we intend to actively increase our disclosure

Committee and Risk Management Committee. We haveTo oversee business execution, we established a Management

Outside Corporate Auditors: Takao Yamaguchi, Yukio

of information and expand our communications with all

established guidelines for each Group company and set up

Committee comprising internal directors and chief X officers

Ikemura, Kensuke Morita

a system for employees to report and seek advice about(CxOs) that discusses and decides key operational matterspossible irregularities. As well as the above measures, weabout the Company and Group companies.

Committee on Remuneration and Nominations (voluntary)

further strengthen supervision of the business execution ofhave created management guidelines for affiliatedChairperson: Yutaka Ogihara, Representative Director,

For the remuneration and nomination of directors anddirectors and to further enhance the transparency andcompanies and built a system of governance while securing

stakeholders.
The Company has appointed three outside directors to

an independent and objective standpoint.
Chairperson: Tomiharu Matsumoto, Senior Corporate Auditor

President and Chief Executive Officer

corporate auditors (including succession planning), thetheir autonomy. Under this system, we receive regular

Executive Directors: Minoru Hogawa, Michiro Onota

Company has established a Committee on Remuneration

business reports from these companies and meet with theirChief X Officers (CxOs): Yasuyuki Shimokawa, Yasuji

and Nominations (voluntary), the majority of whose

auditors based on the Companies Act of Japan. The Board ofmanagement before deciding important issues. The Internal

Kurose, Takaaki Kaji, Noriaki

members are independent outside directors detached from

Corporate Auditors, including three outside corporate

Audit Office conducts audits of each Group company based

Tamura, Junichi Ishiyama

management, thereby maintaining independence andauditors, endeavors to fully demonstrate its auditing andon internal audit guidelines. Following the results of thesesupervising functions and to ensure the transparency of theaudits, the heads of departments that oversee theIn addition to the representative directors and thedecisions made by the Board of Directors. At the same time,

operations of Group companies issue instructions orinternal directors, who are engaged in ordinary businesscorporate auditors carry out a diverse range of activities inwarnings and provide appropriate guidance.

execution, we actively delegate authority to the corporate

fairness of management.
The Company is a company with a board of corporate

fulﬁlling their auditing function. In addition to participating

objectivity from the functions of the Board of Directors
regarding remuneration and nominations.
Chairperson: Yutaka Ogihara, Representative Director,
President and Chief Executive Officer

officers responsible for speciﬁc areas appointed as

Senior Corporate Auditor: Tomiharu Matsumotonecessary, thus establishing a framework that allows

Outside Directors: Noriyuki Shikanai, Ken Shigematsu,
Hiromi Watanabe

prompt decision making and clariﬁcation of responsibility ofCorporate governance structurebusiness execution under the guidance and supervision of
Corporate governance system (As of June 30, 2023)

General Shareholders’ Meeting
Appointment/dismissal

Appointment/dismissal

Key items

Appointment/dismissal

Organizational design

Cooperation

Board of Corporate Auditors
Corporate Auditors
AuditsAudits

Accounting
Auditing Firm
(Independent
Auditor)Board of Directors
Directors

Committee on Remuneration
and Nominations (voluntary)

Selection/dismissal
Cooperation
Cooperation

Representative Director, President andChief Executive Officer

Accounting Audits

Internal Audit Office

Management Committee

Cooperation

Internal Audits

60

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

Corporate Officers
Administrative and Business
Departments

Compliance Committee
Monitoring

Risk Management
Committee

Description

Company with a board of corporate auditors

Number of directors (including outside directors)

6 (3)Number of corporate auditors (including outside corporate auditors)

5 (3)Number of the Board of Directors’ meetings (held during ﬁscal 2022)(Average attendance rate of outside directors)(Average attendance rate of outside corporate auditors)

13(100%)(97%)

Number of the Board of Corporate Auditors’ meetings (held duringﬁscal 2022)(Average attendance rate of outside corporate auditors)

13

Term of office of directors

1 yearAdoption of the corporate officer system

Yes

Voluntary committee of the Board of Directors

Committee on Remuneration and Nominations (voluntary)

Accounting auditing ﬁrm

Ernst & Young ShinNihon LLC(97%)

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

61

Corporate GovernanceOutside directors and outside corporate auditors

Internal audits and audits conducted by corporate auditors

The Company has three outside directors and three outside

considerable knowledge of corporate legal affairs, ﬁnance,

Internal audits are conducted by the Internal Audit Office,

Board of Directors and the Management Committee,

corporate auditors.

or accounting, and perform a monitoring function with wide-

which is staffed by six employees who report directly tocorporate auditors implement comprehensive audits by

ranging insight.

the president and is independent from other sections.

checking documents and other materials relating todirectors at Board of Directors’ meetings, etc., and have

We seek independent and objective advice from outside

Takao Yamaguchi has considerable knowledge of

Following yearly auditing plans, the Internal Audit Officeimportant decisions and by inspecting each department,

established a highly effective management supervisionﬁnance and accounting as a certiﬁed public accountant andregularly assesses and evaluates the effectiveness andoffice, and Group company.

system that maintains a distance from business execution.

a certiﬁed tax accountant.

efficiency of the legal compliance and internal control

To ensure that audits are conducted effectively, theNoriyuki Shikanai uses his advanced expertise andYukio Ikemura has considerable knowledge of corporate

systems in the Company and Group companies. After an

Company’s accounting auditing ﬁrm explains the content ofabundant experience as an attorney to provide advice onmanagement gained from his many years of experience asaudit, the office communicates any problems or areas thatthe accounting audits to the corporate auditors, exchanges

corporate management, mainly from a legal perspective.

an officer and employee in various industries.

need improvement directly to the president and makes

information with them, and also cooperates with the audit

appropriate recommendations.

divisions to ensure appropriate communication and effective

Ken Shigematsu uses his abundant corporate

Kensuke Morita, an attorney, is well versed in corporate

experience and wide-ranging insight to provide advice on

legal affairs and has considerable knowledge of legal matters.

Another function of the office is to evaluate the Kyorin

The Company has established criteria for determining

Group’s internal controls over ﬁnancial reporting. The office

Under our adopted system, if executives or regular

the independence of outside directors and outside corporate

evaluates the development and operation of these internal

employees discover that an executive officer or employee is

auditors, and selects candidates on the premise that they

controls according to a predetermined scope for evaluation

acting in contravention of laws, regulations, or thea physician to provide advice from the perspective of

have sufficient independence to perform their duties as

and makes a report for the president.

Company’s Articles of Incorporation, they immediately notify

promoting women’s participation in the workplace, anoutside officers independent of the Company’s

aspect of diversity.

management in response to changes in the social
environment.
Hiromi Watanabe uses her wide-ranging insight as

Corporate auditors conduct audits in line with an

performance of audits.

the corporate auditors. We are working to establish an

management. All outside directors and outside corporate

auditing policy and plan set by the Board of Corporate

environment conducive to more efficient audits by corporate

Three outside corporate auditors are neutrally

auditors fulﬁll the requirements of independence criteria

Auditors at the beginning of each ﬁscal year. In addition toauditors by coordinating closely with executives and regular

positioned and uncompromised by relationships withstipulated by the Company and have been reported as

participating in important meetings, including those of theemployees and by fostering deeper understanding of audits.

management or parties with special interests. All have

independent officers to the Tokyo Stock Exchange, Inc.
Skills matrix of the Company’s directors and corporate auditors

Compensation of directors and corporate auditors

The Company’s Board of Directors consists of diverse

accordance with the Company’s medium- to long-term

individuals with various skills (knowledge, experience, etc.)

management direction and business strategy. The skills

The Kyorin Group’s basic policy is to provide compensation

calculated in accordance with relevant decision-making

to ensure that the Board of Directors appropriately performs

possessed by individual directors and corporate auditorsthat contributes to the enhancement of the Kyorin Group’s

policies, within the limits of the compensation approved at theits decision-making and management supervision functions

are as follows.

corporate value through sustainable and stable growth.

General Shareholders’ Meeting. The amounts are determined

and maintains a more transparent governance structure inSpeciﬁcally, our compensation consists of two types: basic

by the representative director, president and chief executive

compensation, which is paid in cash, and stock options,

officer, who is delegated that authority by the Board ofwhich are paid in shares of the Company.

Directors, after the objectivity and transparency of the decision-

However, to ensure that outside directors are able to fully

making process have been conﬁrmed by examining whether

exercise their management oversight function, their compensation

any arbitrary decisions were made as well as the statisticalis limited to basic compensation, which is not linked to annual

data used as a reference, by the voluntary Committee on

performance and does not include stock options.

Remuneration and Nominations, the majority of whose

The amounts of basic compensation and stock options are

members are independent outside directors.

Name

Director or corporate auditor

Directors(Excluding outside directors)
Corporate auditors(Excluding outside corporate auditors)
Outside directors or corporate auditors

181

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

173

8

Number of applicabledirectors and corporate
auditors (People)

—

3

49

49

—

8

Finance &accounting

Legal

Academic
experts

Major qualiﬁcations,etc.

MichiroOnota
Noriyuki
Shikanai

OutsideIndependent

Ken
Shigematsu

OutsideIndependent

Hiromi
WatanabeOutsideIndependent

Medical Doctor

Takao
Yamaguchi

OutsideIndependent

Certiﬁed Public
Accountant

Yukio
IkemuraOutsideIndependent

KensukeMoritaOutsideIndependent

Attorney

Tomiharu
MatsumotoKenji
Akutsu6

33

Healthcare
business

YutakaOgiharaDirectors

33* Includes one director and one corporate auditor who retired on June 24, 2022.

62

Total paid by type of compensation(Millions of yen)
Basic
Stock
compensation
options

Corporate
management

MinoruHogawaTotal compensation paid to each director or corporate auditor, total paid by type of compensation, and number
of applicable directors and corporate auditors (Fiscal 2022)
Total
compensation
paid(Millions of yen)

Attributes

Corporate
auditors

Attorney

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

63

Corporate Governance

Messages from Outside Directors

画像調整中
画像調
画像
画
像調
像
調整
調整
整中
中

Messages from Outside Directors

As an outside director, I am engaged in management supervision from the perspective

The Japanese government has set a target for companies listed on the Tokyo Stockof shareholders, focusing on Kyorin’s corporate governance and compliance. I also offer

Exchange’s Prime Market of “raising the percentage of female officers from 11.4% as ofopinions to enhance corporate value from a social perspective, including views on initiatives

2022 to at least 30% by 2030.” The intention is not only to shine a light on minorities but also

to address the UN’s Sustainable Development Goals.

to use the ideas, sensitivities, and special characteristics of women to create boards that

The COVID-19 pandemic has caused the general public to pay closer attention to theaddress gender issues and other aspects of diversity. Nevertheless, Japan ranked 125th ofapproval system for ethical drugs. Against this backdrop, we are constantly discussing how

146 countries in the World Economic Forum’s Global Gender Gap Report 2023 and 123rd in

the Company’s business activities can contribute to society. Today, the ways people interact

the Economic Participation and Opportunity category, in part because of the small number

with each other in their social lives and in corporate activities are changing greatly, whileof women in management positions.

at the same time companies cannot ignore the development of generative AI for the next

Even if companies establish internal programs for workers to support childcare andgeneration. I believe that proactively introducing generative AI can increase a company’s

nursing care, it will still be difficult for employees to continue their careers if thoseNoriyuki Shikanai

management efficiency for growth as a company that can contribute even more to society.

Hiromi Watanabe

programs are not fully utilized. On the 100th anniversary of Kyorin’s founding, the internal

Outside Director/

As an attorney, I have been in a position to offer objective advice to a wide range of companies

Outside Director/

Project for Women’s Active Participation, which looks 10 years into the future, wasIndependent Officer

and will proactively offer advice and recommendations to Kyorin’s management, referencing

Independent Officer

launched. The project is collecting and sharing a wide range of information and has begun

my experience with the management of other companies.

proposing policies to train newly hired employees, conﬁrm career plans, and support thereturn to work and continuation of careers. These issues concern not only women but also
the work styles of male employees of all ages. We recognize that these are urgent issues
for the Company as a whole. As a female independent outside director, I will make every

The long-term vision “Vision 110,” formulated on the 100th anniversary of Kyorin’s founding,effort to support participation by women with a view toward the Company’s future from a

includes a major transformation and a major challenge. The transformation is from a

medium- to long-term perspective.

pure holding company structure to a business holding company structure with KYORIN

As a medical doctor, I offer advice on a range of issues in the belief that one of my

Pharmaceutical as the core company, for a management structure more closely aligned with

important roles is to represent the positions of medical workplaces and the actual

the Group’s businesses. In addition, the designation of chief X officers with clear authority

perspectives of patients.

and responsibilities in key operational areas has created a business management structurethat can function with greater mobility than in the past. The challenge lies in the Company’s
future business direction. In research and development, we are shifting investment to humancapital and the development pipeline to achieve our targeted portfolio, while on the
manufacturing side, construction of the Takaoka Plant is on track to begin operations, which

Ken Shigematsu

will create a production structure that dramatically improves productivity and advances

Outside Director/

toward decarbonization.

Independent Officer

The Board of Directors is discussing issues to continuously enhance corporate value
over a medium-term time frame while closely following today’s business developments.
The Committee on Remuneration and Nominations (voluntary) makes its decisions based
not only on business results but also by fully evaluating processes and effectively makes
impartial and exacting decisions. As an independent outside director, I supervise
management objectively while offering advice as necessary on areas including management
strategy, capital policies, and compliance.
I ask for the continued support of shareholders.

64

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

65

Ten-Year Consolidated Financial Highlights(Fiscal years ended March 31/As of March 31)

Millions of yen
2

3/20193/20203/2021

3/2022*3

3/20233/20143/20153/20163/20173/2018*111,400

113,121

119,483

115,373

110,640

113,620

109,983

102,904

105,534

113,270

New drugs, etc. (Japan)*1

97,562

96,612

98,43089,584

79,63983,456

77,53569,73569,72574,770

New drugs (Overseas)

1,849

1,032

5,586

764

3,339

830

1,490

996

1,033

308

Generic drugs

11,987

15,477

15,46525,024

27,662

29,33430,95732,172

34,77538,190Operating proﬁt

17,607

14,737

19,636

10,413

8,822

8,972

7,503

5,786

5,007

5,123

Proﬁt attributable to owners of parent

12,025

12,064

13,639

7,305

6,574

6,869

6,149

6,130

3,932

4,723

Net cash provided by operating activities

19,293

6,391

11,137

16,386

10,456

340

7,739

5,189

6,346

2,008

Net cash provided by (used in)investing activities(2,477)(1,364)650(13,142)(6,038)14,939(2,943)(4,259)(2,560)(6,275)

Net cash used in ﬁnancing activities(3,704)(5,233)(2,245)(5,721)(3,735)(27,315)(5,117)(4,918)(4,112)(3,363)

Free cash ﬂow

16,816

5,027

11,787

3,244

4,418

15,279

4,796

930

3,786

(4,267)

R&D expenses

11,35913,51413,01913,56914,243

10,79010,987

9,703

8,897

10,903

Capital expenditures

6,500

2,655

7,218

3,051

2,885

2,306

3,590

4,307

3,624

5,252

Depreciation and amortization

3,153

3,053

3,730

3,619

3,644

2,940

3,221

3,564

3,714

3,840

Total assets

169,378

183,383

197,825

192,668

196,736

173,034

171,160

167,126

171,924

176,045

Total net assets

137,821

148,600

157,049

157,837

163,297

123,395

122,710

124,661

124,507

125,461

Net assets (Yen)

1,844.61

2,009.45

2,131.67

2,146.83

2,214.13

2,154.05

2,142.07

2,175.52

2,172.83

2,189.40

Basic proﬁt (Yen)

160.95161.63184.28

99.45

89.28

104.68107.35106.99

68.62

82.44

Cash dividends (Yen)

52.00

52.00

58.00

58.00

58.00

75.00

75.00

75.00

52.00

52.00

Operating proﬁt margin (%)

15.8

13.0

16.4

9.0

8.0

7.9

6.8

5.6

4.7

4.5

Proﬁt attributable to owners of parent /Net sales ratio (%)

10.8

10.7

11.4

6.3

5.9

6.0

5.6

6.0

3.7

4.2

R&D expenses / Net sales ratio (%)

10.2

11.9

10.9

11.8

12.9

9.5

10.0

9.4

8.4

9.6

Total shareholders’ equity ratio (%)

81.4

81.0

79.4

81.9

83.0

71.3

71.7

74.6

72.4

71.3

ROE (%)

9.0

8.4

8.9

4.6

4.1

4.8

5.0

5.0

3.2

3.8

Consolidated payout ratio (%)

32.3

32.2

31.8

59.3

65.9

72.6

70.9

71.1

76.9

64.0

PER (times)

12.25

17.78

11.63

23.64

22.39

20.64

20.48

18.02

25.90

20.67

2,452

2,445

2,420

2,382

2,348

2,297

2,271

2,243

2,222

2,138

Net sales

Per Share Information

Key Performance Indicators

Non-Financial Information
Number of employees*1 From the beginning of ﬁscal 2020 (ended March 31, 2021), reportable segments have been aggregated into a single segment. In conjunction with this, net sales categories
have been changed and the previous new drugs (Japan) and healthcare businesses have been combined into new drugs, etc. (Japan).
*2 Figures shown are adjusted to retroactively apply certain revisions to accounting standards related to tax-effect accounting.
*3 From the beginning of ﬁscal 2021, the “Accounting Standards for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc., have been applied.

66

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

67

Performance Highlights

Financial Information
Net sales(Millions of yen)

120,000

90,000(Millions of yen)

113,620 109,983
113,270
102,904 105,534
Generic drugs
29,33430,95738,19032,172 34,775
830
1,490
308
996
1,033
New drugs

16,000

5.6

12,0004.7

8,972

69,73530,00069,7258

300,000

200,000

4.5

5,123

20,00071.3
Total assets

173,034

171,160(%)

R&D expenses/
Net sales ratio

10.0

9.5

123,395

122,710

124,661

124,507

8.4

9R&D expenses

10,79010,903

10,987
9,703

10,000125,461

12

9.6

9.4

60

176,045

171,924

167,126

6

8,897

30

100,000

3

5,000

0

0

0

90

2

4,000

New drugs,
etc. (Japan)

72.4(Millions of yen)

Total net assets

Operating proﬁt

5,007

74.6

71.7

(%)

15,000474,770Total shareholders’equity ratio

R&D expenses, R&D expenses/Net sales ratio

6

Operating proﬁt
margin

7,503
5,786

77,535(Millions of yen)

71.3

8,000

60,000

(%)

7.9
6.8

(Overseas)

83,456

Total assets, Total net assets, Total
shareholders’ equity ratio

Operating proﬁt, Operating proﬁt margin

0

3/2019 3/2020 3/2021 3/2022 3/2023

Although affected by drug price revisions and the COVID-19

Gross proﬁt increased ¥726 million over that of the previous

Total assets increased ¥4,121 million compared to those at

The expense level for research and development varies

pandemic, sales of new drugs, etc. (Japan) surpassed thoseﬁscal year due to sales expansion, but selling, general andthe end of the previous ﬁscal year. Total net assets roseaccording to factors such as the progress of the developmentof the previous ﬁscal year due to growth in sales of main

administrative expenses increased ¥610 million (including¥953 million due to an increase in retained earnings, despite

stage (phase of clinical trial). In ﬁscal 2022, R&D expenses

products such as Beova and Desalex. Sales of generic drugs

increased R&D expenses of ¥2,005 million), resulting in an

a decrease in valuation difference on available-for-saleincreased ¥2,005 million over those of the previous ﬁscal

also rose. The result was an overall sales increase of ¥7,735

operating proﬁt of ¥5,123 million, an increase of ¥115 million.

securities and other factors. As a result, the total shareholders'year. We will invest in research and development to create

equity ratio decreased 1.1 percentage points year on year, to 71.3%.

high-value new drugs that meet medical needs and expand

million over those of the previous ﬁscal year.

3/2019 3/2020 3/2021 3/2022 3/2023

0

0

0

3/2019 3/2020 3/2021 3/2022 3/2023

3/2019 3/2020 3/2021 3/2022 3/2023

our development pipeline to improve corporate value.

Non-Financial Information
Cash dividends per share,
Consolidated payout ratio

Proﬁt attributable to owners of parent, ROE(Millions of yen)(%)

6

12,000

4.8

5.0

ROE

72.6

6,130

71.1

Consolidated
payout ratio(%)(Persons)

80

4,000

75

60

3,932

Cash dividends
per share

52

52

2,271

0
3/2019 3/2020 3/2021 3/2022 3/2023

0

20

30

0

0
3/2019 3/2020 3/2021 3/2022 3/2023

26.1

2,243

2,222

2,000

26.8

(%)

30

5

1,000

Number of
employees

6.1

6.6

7.6

3/2019 3/2020 3/2021 3/2022 3/2023

3.4

2
10

4.1

0

3.9

3.7

3

2,138

8.5

3.8

3.1

20

Percentage offemale managers

2
Proﬁt attributableto owners ofparent

25.7

(%)

4

2,297
40

25.4

Employee turnover rate

3,000

75

3.2

Percentage offemale employees

24.5
60

75

4

4,723
3,000

70.9

90

3.8
6,149

120

76.9

64.0

9,000

6,000

(Yen)

5.0

6,869

Number of employees, Percentage of female
employees, Percentage of female managers

100

3/2019 3/2020 3/2021 3/2022 3/2023

Proﬁt ﬁgures surpassed those of the previous ﬁscal year,

Regarding returns to shareholders, we aim to pay stable

As of March 31, 2023, the entire Group had 2,138

As of April 1, the percentage of employees who left for personaland ROE was 3.8%. The Company aims to increase proﬁt

dividends based on DOE. From ﬁscal 2021, we have lowered

employees, of whom 26.8% were female, and female

reasons during ﬁscal 2022 was 3.9% for the entire Group.

and improve ROE by maximizing the ratio of new drugs andthe level of DOE and set the annual dividend at ¥52

managers made up 8.5% of all managers. We are working

through cost competitiveness.

(including a year-end dividend of ¥32), taking into accountto create an environment in which female employees canchanges in the business environment and the growing

demonstrate their talents and use them to the fullest.

demand for funds for growth investment.

68

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

69

Performance Highlights

Non-Financial Information
Employment rate of persons with disabilities

Usage rate of annual paid leave

(%)

(%)

3

80

2.26

2.43
2.25

2.31

2.33

Severity of work accidents

Waste volume in relation to sales(t/100 millions of yen)

74.2
60.9

0.8

66.4

64.6

0.67

0.32

58.4

60

0.4

0.3

0.66

0.66

0.65

0.6

2

0.48

0.28
40

0.2

20

0.1

0.4

1

0.10

0.10

Entire manufacturing

0.06

0.06
0.001
0

0

3/2019 3/2020 3/2021 3/2022 3/2023

0.0
3/2019 3/2020 3/2021 3/2022 3/2023

0.02
0.003 0.003

0.03
0.02

0.08 industry
0.06 Chemical industry
0.0001 KYORIN Pharmaceutical

0.2

03/2019 3/2020 3/2021 3/2022 3/2023

3/2019 3/2020 3/2021 3/2022 3/2023

As of March 31, 2023, the employment rate of persons with

The usage rate of annual paid leave during ﬁscal 2022 was

Due to our efforts to prevent work accidents, the severity

We are promoting the 3Rs of reducing, reusing, anddisabilities was 2.33% for the Group as a whole. We are

74.2% for the entire Group. We regularly promote taking

rate, which indicates the degree of severity of work

recycling waste, as part of efforts to realize a recycling-working to create a comfortable work environment that allows

paid leave to enable employees to maintain a good work-life

accidents, is below the levels of the entire manufacturing

oriented society.

people with disabilities to fully demonstrate their talents.

balance to maximize their capabilities.

industry and the chemical industry.
Magnitude of accidents: Number of lost work days (excluding accidents while
commuting)/Total work hours x 1,000

Usage rate of childcare leave

CO2 emissions from the head office, branches,factories, and research laboratories

Rate of work accidents

(%)

150

1.5

1.31
110.3
100

96.4

Women

103.8

1.20

107.4

Men

32.3

0

70

1.6

0.5

40,000400

1.25
28,823

0.94

1.16

0.93

27,477

27,04125,25624,23520,000200

KYORIN
Pharmaceutical

0.46

0.44
0.21

0

303

300

234

240

77

83

250
140

79

236
60
Total groundwater

0.47
10,0006.3

3/2019 3/2020 3/2021 3/2022 3/2023(Thousand m3)

Chemical industry

1.07

50

(t)

30,000

0.90

1.2

1.21

1.0

84.4

0.0

1.20

Entire manufacturingindustry

Volume of water used

100

0.23

157

163

171

176
Total drinking water0
3/2019 3/2020 3/2021 3/2022 3/2023

157

0
3/2019 3/2020 3/2021 3/2022 3/2023

3/2019 3/2020 3/2021 3/2022 3/2023

The childcare leave usage rate for the entire Group in ﬁscal

To improve the levels of health and safety, we are working

We have set a target to reduce CO2 emissions 6% (1.5% per

To effectively utilize our precious water resources, we are2022 was 107.4% for women and 32.3% for men. The

to achieve zero work accidents, promote employee health,year on average) from the ﬁscal 2019 level by ﬁscal 2023

implementing measures such as reducing water usage,

denominator is the number of employees who gave birth toand create comfortable work environments. The rate ofand achieved the target with 24,235 tons emitted in ﬁscal

thereby lowering our environmental impact.

a child or whose spouses gave birth during the ﬁscal year.

work accidents, which represents the frequency of2022. Currently, we have set a new target of a 46% reduction

The numerator is the number of employees who took

occupational accidents, is below the level of the entire

from the ﬁscal 2015 level by ﬁscal 2030 and are working onchildcare leave (including those who had given birth or

manufacturing industry and that of the chemical industry.

various measures.

whose spouses had given birth in the previous ﬁscal year).

Frequency of accidents: Number of deaths and injuries due to work accidents(excluding accidents while commuting)/Total work hours x
1,000,000

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

71

Directors, Corporate Auditors, and Corporate Officers(As of June 23, 2023)

Executive Directors
Minoru Hogawa

Yutaka Ogihara

Representative Director, Chairman

Representative Director, President and Chief
Executive Officer, in charge of Auditing

December 1976 Joined Kyorin Yakuhin Co., Ltd.
June 2004
Corporate Officer, General Manager of Management
Planning Department of KYORIN Pharmaceutical Co., Ltd.
June 2005
Executive Director, Senior Executive Officer,
Management Strategy Office of KYORIN PharmaceuticalCo., Ltd.
January 2006 Executive Director, Management Strategy Office,General Manager of Management Planning Department,in charge of Accounting of the Company
April 2010
Executive Director, Senior Executive Officer, General Manager
of Management Planning Department, in charge of Finance& Accounting Department of the Company
June 2010
Senior Executive Director, General Manager ofManagement Planning Department, in charge ofFinance & Accounting Department of the Company
June 2012
Senior Managing Director, General Manager ofManagement Planning Department, in charge ofFinance & Accounting Department of the Company
June 2015
Representative Director, President and Chief Executive
Officer, in charge of Auditing Office of the Company
June 2017
Representative Director, President and Chief Executive
Officer of KYORIN Pharmaceutical Co., Ltd.
June 2019
Representative Director, Chairman of the Company(current)
June 2019
Representative Director, Chairman of KYORIN
Pharmaceutical Co., Ltd.

April 1990
June 2011

June 2015
June 2016
June 2016
April 2019

June 2019
June 2019
April 2023

Joined KYORIN Pharmaceutical Co., Ltd.
Executive Director, President’s Office, in charge ofCorporate Communication Department and Information
System Management Department of the Company
Executive Director, President’s Office of the Company
Senior Executive Director, President’s Office of theCompany
Senior Executive Director of KYORIN PharmaceuticalCo., Ltd.
Senior Executive Director, Management Strategy
Office, in charge of Information System Management
Department of the Company
Representative Director, President and Chief Executive
Officer, in charge of Auditing Office of the Company
Executive Director of KYORIN Pharmaceutical Co., Ltd.
Representative Director, President and Chief Executive
Officer in charge of Auditing of the Company (current)

Senior Corporate Auditors

Corporate Officers

Tomiharu Matsumoto
Kenji Akutsu

Yasuyuki Shimokawa

Tokutaro Yasue

Corporate Officer CHROIn charge of Human Resources, General Affairs, and Legal & ComplianceCorporate Officer
Senior Director of WATARASE Research Center
Director of CMC Research Laboratory

Yasuji Kurose
Outside Corporate Auditors/
Independent Officers

Corporate Officer CStO & CFO
Director of Corporate Planning, in charge of Product Strategy and Finance & Accounting

Takaaki Kaji
Corporate Officer CBDO
Senior Director of Business Development HQs

Takao Yamaguchi
Yukio Ikemura
Kensuke Morita

Noriaki Tamura
Corporate Officer CCO
Senior Director of Sales & Marketing HQs, in charge of Information System Management and In
Vitro Diagnostics Business

Makoto Yanai
Corporate Officer
Deputy Senior Director of Business Development HQs

Katsuhiro Hamada
Corporate Officer
Senior Director of Quality Assurance & Reliability HQs

Yoshinobu Hashimoto
Corporate Officer
Senior Director of Corporate Planning and Promotion Compliance of KYORIN Rimedio Co., Ltd.

Junichi Ishiyama

Kiyoo Uehara

Corporate Officer CSO
Senior Director of Discovery Research HQs, in charge of Intellectual Property

Corporate Officer
Director of General Affairs

Kei Takahashi
Senior Corporate Officer
Senior Director of SCM HQs

Hiroshi Hashizume
Corporate Officer
Representative Director and President of KYORIN Rimedio Co., Ltd.

Michiro Onota

Noriyuki Shikanai

Executive Director, CMO, in charge of SCM and
Quality Assurance & Reliability
Representative Director, President of KYORIN
Pharmaceutical Group Facilities Co., Ltd.

Outside Director/Independent Officer

Tetsuo Tatsumi

October 1971
April 1974
March 1977

Corporate Officer
Director of Tokyo Branch

April 1985
April 2015
April 2015
June 2017
April 2018
June 2018
June 2019
June 2021
April 2023

Joined KYORIN Pharmaceutical Co., Ltd.
Representative Director, President and Chief Executive
Officer of KYORIN Rimedio Co., Ltd.
Corporate Officer of the Company
Executive Director of the Company
Representative Director, President of KYORIN
Pharmaceutical Group Facilities Co., Ltd. (current)
Executive Director of KYORIN Pharmaceutical Co., Ltd.
Executive Director, in charge of Generic Drugs Businessof the Company
Executive Director, in charge of Quality Assurance &Reliability of the Company
Executive Director, CMO, in charge of SCM and Quality
Assurance & Reliability of the Company (current)

October 2002
October 2010
April 2012
June 2013

Passed the National Bar Examination
Registered with Daini Tokyo Bar Association
Established Shikanai Law Office (currently Kyobashi
Law Office) (current)
Councilor of Keio University (current)
Trustee of Keio University (current)
Auditor of J. F. Oberlin University
Outside Director of the Company (current)

Major activities of outside directors and outside corporate auditors (Fiscal 2022)
Position

Ken Shigematsu

Hiromi Watanabe

Outside Director/Independent Officer

Outside Director/Independent Officer

April 1971
March 1999

April 1972

May 2002
March 2004
March 2005
April 2008

April 2009
April 2010

October 2011
October 2015
June 2017

Joined Internal Medicine Department of Tokyo Women’s
Medical University Hospital
April 1998
Assistant Professor of Internal Medicine, School of Nursingof Tokyo Women’s Medical University
April 2007
Professor and Dean of Medical Science, College of Nursingof Shukutoku University
April 2010
Member of the Board of Daijo Shukutoku Gakuen
April 2011
Professor of Medical Science, College of Nursing andNutrition of Shukutoku University
November 2014 President of Tokyo Branch of Japan Medical Women’s
Association (current)
April 2016
Professor of Graduate School of Nursing Division of Nursingof Shukutoku University
April 2018
Neurology Department of Yokufukai Hospital of Total
Health and Medical Care Center for Seniors (social welfare
corporation) (current)
June 2018
Member of the Board of 3.11 Fund for Children with Thyroid
Cancer (NPO) (current)
June 2019
Outside Director of the Company (current)
April 2021
Member of the Board of Daijo Shukutoku Gakuen (current)
October 2021 Deputy Director of Shimotakaido Station Clinic ENT Plus+(current)* The KYORIN Pharmaceutical Co., Ltd. listed in the career summary of each officer refers to the former KYORIN Pharmaceutical Co., Ltd., which merged with the Company on
April 1, 2023.

72

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

OutsideCorporate
Auditors

Major activities

Attendance at meetings

Utilizing his high degree of specialization and abundant experience as an
attorney, he makes suggestions and offers appropriate advice on corporate
management, mainly from a legal perspective, and fully performs his role
mainly in deciding important management matters of the Company andGroup companies and supervising business execution.

Attended 13 out of 13 Boardof Directors’ meetings

Utilizing his abundant experience and wide-ranging insight in corporate
management, he makes suggestions and offers appropriate advice on
Kenmanagement in response to changes in the social environment and fully
Shigematsu
performs his role mainly in deciding important management matters of theCompany and Group companies and supervising business execution.

Attended 13 out of 13 Boardof Directors’ meetings

Noriyuki
Shikanai

OutsideDirectors

Joined Mitsukoshi, Ltd.
Executive Officer, General Manager of Product Planning
Division, Sales Headquarters of Mitsukoshi, Ltd.
Director, Executive Officer, Deputy General Manager ofSales Headquarters of Mitsukoshi, Ltd.
Director, Managing Executive Officer, General Manager
of Merchandising Headquarters of Mitsukoshi, Ltd.
Director, Managing Executive Officer, Store Manager of
Mitsukoshi Ginza of Mitsukoshi, Ltd.
Managing Executive Officer of Isetan Mitsukoshi
Holdings Ltd.
Director of Mitsukoshi, Ltd.
Director, Senior Managing Executive Officer, Special
Appointive Officer of Mitsukoshi, Ltd.
Senior Managing Executive Officer of Isetan Mitsukoshi
Holdings Ltd.
Representative Director, President and Chief Executive
Officer of Nagoya Mitsukoshi Ltd.
Representative Director, President and Chief Executive
Officer of Endo Manufacturing Co., Ltd.
Representative Director, President and Chief Executive
Officer of MFSJ Co., Ltd.
Outside Director of the Company (current)

Name

Hiromi
Watanabe

Utilizing her wide-ranging insight in a medical setting as a physician, she
makes suggestions and offers appropriate advice from the perspective ofpromoting women’s participation in the workplace, which is one aspect ofdiversity, and fully performs her role mainly in deciding importantmanagement matters of the Company and Group companies and supervisingbusiness execution.

Attended 13 out of 13 Boardof Directors’ meetings

Takao
Yamaguchi

He makes comments as necessary based mainly on his specialist
understanding of ﬁnance and accounting as a certiﬁed public accountant anda certiﬁed tax accountant.

Attended 13 out of 13 Boardof Directors’ meetings and 13
out of 13 Board of Corporate
Auditors’ meetings

Yukio
IkemuraHe contributes appropriately to ensure accurate decision making by the
Board of Directors. In addition, at meetings of the Board of Corporate Auditors,
he offers suitable comments based on his experience and insight.

Attended 9 out of 9 Board of
Directors’ meetings* and 10
out of 10 Board of Corporate
Auditors’ meetings*

KensukeMoritaHe makes comments as necessary based mainly on his specialist
understanding as an attorney.

Attended 8 out of 9 Board of
Directors’ meetings* and 9out of 10 Board of Corporate
Auditors’ meetings** Results after assuming office in June 2022

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

73

Financial Analysis

damaged by a ﬁre at the Nishinihon delivery center, ¥401

The Japanese ethical drugs industry maintained a low

million in income of compensation for damages, and ¥685

single-digit growth rate in the domestic ethical drugs

million in gain on sale of investment securities, althoughmarket during ﬁscal 2022 due to the ongoing promotion of

extraordinary loss of ¥716 million was also recorded in theﬁscal 2022 totaled ¥18,816 million, a ¥7,472 million

reform our drug discovery systems, expand themeasures to curtail drug costs, such as the drug pricedissolution of ActivX Biosciences, Inc., a subsidiary of thedecrease from that of the previous ﬁscal year-end.

development pipeline, maximize the expansion of sales

revisions implemented in April 2022 in line with the NHI

former KYORIN Pharmaceutical Co., Ltd.

Financing activities used net cash of ¥3,363 million,
primarily ¥3,015 million paid as cash dividends.
As a result, cash and cash equivalents at the end ofof Vision 110, is growth by “reform of business structureand growth from new initiatives.” We will actively work to

growth in new drugs, and improve cost competitiveness,

Outlook for Fiscal 2024

thereby achieving growth in the Group’s business

Assets, Liabilities, and Net Assets

The external environment surrounding the ethical drugs

performance.

In this operating environment, the Kyorin Group set a

As of March 31, 2023, current assets rose ¥2,654 million,

business included some unexpected events such as

management policy of “realization of a growth trend throughwith increases in accounts receivable and raw materials

further promotion of measures to curtail medical expenses(Japan) during the next consolidated ﬁscal year due tothe pursuit of originality” under the HOPE100 –Stage 3–

and supplies, despite a decrease in cash and deposits. Fixedand drug costs including annual NHI drug price revisions

expected sales growth for new drugs such as our core

medium-term business plan (ﬁscal 2020–2023), with theassets rose ¥1,467 million, with increases in property, plant(midyear revisions) and the reluctance of patients to visit

products Beova, an overactive bladder therapeutic agent,

aim of achieving the Group’s HOPE100 long-term vision.

and equipment and intangible assets, despite a decrease in

medical institutions due to the COVID-19 pandemic. Theseand Lyfnua, a chronic cough treatment, despite the impact

The main points of this strategy with relation to increasing

investment securities. As a result, total assets rose ¥4,121

events have signiﬁcantly affected management of theof the drug price revisions in April 2023 (the 7% range forthe speed of business are (1) accelerate the growth of themillion from those of the previous ﬁscal year-end, toKyorin Group. On the other hand, we believe our internal

KYORIN Pharmaceutical Co., Ltd.). For generic drugs, we

new drugs group, (2) enhance the pipeline, and (3) increase¥176,045 million.

environment has entered a period of growth with theforecast a decrease in sales of authorized generics,

Total liabilities rose ¥3,167 million from those of thelaunch of new drugs expected to become growth drivers

although we anticipate an increase in sales of our main

previous ﬁscal year-end, to ¥50,584 million, due to increases

and new businesses, such as the diagnostics business,

products, products newly listed in June 2023, and those toConsolidated Operating Results

in notes and accounts payable and in income taxes payable

being on track.

be listed in December 2023. As a result, we forecast ¥79,100

For consolidated net sales for ﬁscal 2022, sales of new

despite a decrease in other current liabilities.

drug price system reform, while the number of medical
consultations by patients impacted by COVID-19 normalized.

the speed of drug discovery.

drugs, etc. (Japan) exceeded those of the previous ﬁscal

Net assets rose ¥953 million from those of the previous

We forecast increased net sales of new drugs, etc.

Under these circumstances, for ﬁscal 2023, the 100th

million in net sales of new drugs, etc. (Japan), ¥400 million

anniversary of our founding, we have renovated the Groupin net sales of new drugs (overseas), ¥36,600 million in net

year due to the growth of new drugs, driven by vigorousﬁscal year-end, to ¥125,461 million, due to an increase instructure. At the same time, after concluding the HOPE100

sales of generic drugs, and consolidated net sales ofefforts to promote awareness of our products, despite theretained earnings.

long-term vision (ﬁscal 2010–2023) one year ahead of¥116,200 million.

impact of drug price revisions (the 8% range

As a result, equity ratio at the ﬁscal year-end wasschedule, we decided to formulate and launch the new long-

Regarding proﬁt, we forecast an increase in gross proﬁt

for former KYORIN Pharmaceutical Co., Ltd.) and COVID-19.

71.3%, a 1.1 percentage-point decrease from that of theterm vision “Vision 110” (ﬁscal 2023–2032) and the newdue to increased revenue and a lower cost of sales ratio

Sales of generic drugs also rose, and overall net sales

previous ﬁscal year-end.

medium-term business plan “Vision 110 –Stage1–” (ﬁscal

resulting from a rise in the ratio of new drugs, despite the2023–2025). The new medium-term business plan reads

effect of drug price revisions. On the other hand, despite an

totaled ¥113,270 million, a year-on-year increase of ¥7,735
million (7.3%), reaching the Group’s consolidated

Cash Flows“transforming to a business structure to realize Vision 110.”expected rise in SG&A expenses (with year-on-year R&D

performance target.

Operating activities generated net cash of ¥2,008 million,

For this, the Group will promote ﬁve business strategies to

expenses decreasing ¥1,300 million), we forecast operating

primarily ¥6,906 million in profit before income taxes,

reach performance targets and improve support andproﬁt of ¥6,000 million and proﬁt attributable to owners ofa result of drug price revisions, etc., gross proﬁt rose ¥726

¥3,840 million in depreciation and amortization, a ¥5,621

evaluations from stakeholders.

parent of ¥4,900 million due to an increase in gross proﬁt.

million year on year due to increased sales. Furthermore,

million increase in notes and accounts receivable, a

SG&A expenses excluding R&D expenses fell ¥1,395 million¥5,809 million increase in inventories, a ¥2,866 million

year on year (with R&D expenses rising ¥2,005 million), due

increase in notes and accounts payable, ¥3,050 million into the absence of an upfront payment recorded the previous

proceeds from insurance income, and ¥2,065 million inyear for an agreement related to the introduction of a productincome taxes paid.

Regarding proﬁt, despite the cost of sales ratio rising as

and cost reduction measures. Operating proﬁt rose ¥115

74

The management policy for ﬁscal 2023, the ﬁrst year

Industry Trends in Japan

Investing activities used net cash of ¥6,275 million,

million year on year (2.3%), to ¥5,123 million. Proﬁt attributableprimarily ¥6,330 million in purchase of property, plant andto owners of parent rose ¥791 million year on year (20.1%),

equipment, ¥3,075 million in purchase of intangible assets,to ¥4,723 million, due to extraordinary income of ¥881

and ¥3,193 million in proceeds from the sale andmillion in gain on insurance related to storage products

redemption of investment securities.

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

75

Business Risks

occur, our business performance and ﬁnancial condition

6. Risks Associated with Competition from Other Drugs

10. Risks Associated with Environmental Issues

The Group promotes its operations within the framework

could be materially affected.

In the new drugs business, the Group has been concentrating

The Group strives to not only comply with relevant laws andof pharmaceutical administration, in compliance with legal

its management resources in the speciﬁc ﬁelds ofregulations but also to achieve even higher voluntary

regulations regarding pharmaceutical research and3. Risks Associated with Stable Supply

respiratory, otolaryngology, and urology, and working tostandards in terms of the environment, health, and safety.

development, production, and distribution in Japan, such

The supply of certain products and raw materials to theenhance its presence there by giving priority to activities

It also promotes Groupwide EHS activities that integrate theas the Pharmaceutical and Medical Device Act, as well asGroup depends on having speciﬁc business partners. The

that provide information to doctors specializing in theseenvironmental management system and the industrial

various regulatory frameworks of other countries.

Group has secured a certain amount of products and raw

ﬁelds. In addition, in the generic drugs business, the Groupsafety and hygiene management system. In particular, theHowever, we are aware of the existence of risks that could

materials to ensure a stable supply of its products, andhas been engaged in business development that makes theGroup views climate change countermeasures as one of its

materially affect our business performance and ﬁnancial

has been striving to secure multiple suppliers of its

most of its characteristics by proactively pursuing thecritical issues. As a result, it has established the Environmental

condition, due to various factors including substantial

essential raw materials. However, should manufacturingmarket launch of authorized generics. However, should

Committee to consider the impact of Groupwide businesschanges in relevant laws, healthcare system reforms,

activities or procurement be delayed or terminated due tocompetition from peer products in these ﬁelds intensify andactivities on the environment. However, should a violation

drastic changes in the market environment, and large-

unforeseeable circumstances, the stable supply of ourthe entry of generic drugs after the patent expiry of theof relevant laws or regulations occur due to unexpectedscale natural disasters.

products could be adversely affected. Furthermore, while

original drugs increase, our business performance andaccidents or other events in business operations, ourAmong such risks, those that could materially affectour pharmaceutical products are manufactured withinﬁnancial condition could be materially affected.

business performance and ﬁnancial condition could be

the decisions of investors are described below. Although thevarious regulatory frameworks, should quality-related orGroup has taken organizational and systematic measuresother problems occur and recalling our products become

7. Risks Associated with Intellectual Property Rights

to minimize risk, the outline does not include every risk ornecessary, our business performance and ﬁnancial

The Group strictly manages its intellectual property rights

11. Risks Associated with Large-Scale Disasters

variable that could affect its business.

condition could be materially affected.

and continuously pays close attention to any infringements

The Group prepares various manuals and conducts drills

The forward-looking statements contained thereinby third parties. However, should a third party infringe on

to prepare for large-scale and other disasters. However,

4. Risks Associated with Alliances

our intellectual property rights or should the Group’s

should natural disasters beyond our expectations such as

The Group promotes strategic alliances to make efficientbusiness activities infringe on the intellectual property

earthquakes or typhoons, accidents such as ﬁres, or

1. Risks Associated with R&D

use of external capital. Through tie-up agreements withrights of another company, the Group could encounter

pandemics such as inﬂuenza or COVID-19 occur, these

Ethical drug development requires substantial R&D

other pharmaceutical companies inside and outside Japan,

legal disputes and business discontinuation, and our

events could result in the closure of plants and theinvestment over lengthy periods, and the success rate forthe subsidiary allocates sales rights for some of its products

business performance and ﬁnancial condition could besuspension of operations at KYORIN Pharmaceutical Group

bringing a drug development candidate to market as aand collaborates in sales, R&D, and other activities. In

materially affected.

Facilities Co., Ltd., the Company’s production subsidiary, thepharmaceutical product is low. The Company has clariﬁed

addition, the Group strives to maintain and develop ongoingits priority research areas and has been making efforts toalliance relationships, enhancing these relationships in light

8. Risks Associated with Lawsuits

secured a certain amount of inventory to ensure a stable

expand its pipeline through R&D based on open innovationof the sales strategies and R&D trends of the tie-up

The Group, on the advice of experts, manages the litigation

supply, should such plant closings or suspensions extend

with domestic and overseas pharmaceutical companies,

partners. However, should these alliance relationships berisks that occur in its business activities both in Japan andfor a lengthy period, our business performance and ﬁnancial

academic institutions, and venture start-ups, in addition to

ended, our business performance and ﬁnancial condition

overseas, including those associated with intellectual

condition could be materially affected.

engaging in proprietary drug discovery at the WATARASE

could be materially affected.

property rights such as patents, violations of the Productrepresent the Group’s judgment as of March 31, 2023.

Research Center. However, should development be delayedor terminated due to the emergence of unforeseeable side
effects, a failure to achieve intended clinical results, or other76

materially affected.

5. Risks Associated with IT Security and Information
Management

reasons, our business performance and ﬁnancial condition

Given that numerous IT systems are utilized in businesscould be materially affected.

operations, the Group strives to establish IT security

Group’s suppliers, or other locations. While the Group has

Liability Act, environmental protection issues, and labor

12. Risks Associated with Volatility in the Financial Markets

disputes. However, should such lawsuits be brought against

The Group’s business performance and ﬁnancial condition

the Group, our business performance and ﬁnancial condition

could be materially affected during import and export

could be materially affected.

transactions due to ﬂuctuations in exchange rates. In
addition, should ﬂuctuations occur in the amounts ofmeasures and a framework for information management

9. Risks Associated with Side Effects

pension assets, retirement beneﬁt obligations, the2. Risks Associated with Healthcare System Reforms

by implementing security software and periodic data

Clinical trials in the development phase of ethical drugs arevaluation of shares held, etc., due to ﬂuctuations inJapan’s healthcare system, including NHI drug prices, isbackups, and establishing various information management

conducted on only a limited number of subjects. Therefore,

exchange rates, in interest rate levels, or on the stock

being revised. In terms of sales, the Group is working torules and thoroughly communicating them to our employees.

should unforeseeable side effects occur after the launch of

market, our business performance and ﬁnancial condition

increase the ratio of new pharmaceuticals by maximizing

However, should unforeseeable business disruptions ora drug, its usage could be restricted or, in some cases, its

could be materially affected.

their availability, while in terms of production, it is engaged

leakages of information occur due to factors such as

sale could be discontinued, and our business performancein initiatives including reforms of the cost structure throughsystem faults, computer viruses, or cyberattacks, andand ﬁnancial condition could be materially affected.

a consolidation of its production functions and Groupwide

society’s trust in the Group become seriously weakened,

optimization. However, should greater-than-expected NHI

our business performance and ﬁnancial condition could be

drug price revisions be made or changes to the NHI system

materially affected.

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

77

Consolidated Balance Sheet
KYORIN Pharmaceutical Co., Ltd. and Consolidated Subsidiaries
As of March 31

2023

Millions of yen

Thousands of U.S. dollars(Note 3)

2022

2023

Millions of yen

Thousands of U.S. dollars(Note 3)

2023

2022

2023

Notes and accounts payable (Note 11)¥ 13,762¥ 10,896$ 103,055

Short-term bank loans (Notes 6 and 11)

10,30010,30077,130

134

147

1,003

Accrued income taxes (Note 13)

2,027

530

15,179Accrued bonuses to employees

2,182

2,295

16,340

Other

6,576

8,011

49,24434,98332,182

261,966

10,636

10,836

79,647

207

341

1,550

—

175

—

466

343

3,490

3,721

2,885

27,864

568

652

4,253

15,60015,234

116,819

700

700

5,242

Capital surplus

4,752

4,752

35,585Retained earnings

134,396

132,710

1,006,410(17,666)(17,671)(132,290)

122,182

120,491

914,947

5,695

6,268

42,646

340

110

2,546

Retirement beneﬁts liability adjustments(2,756)(2,362)(20,638)

Total accumulated other comprehensive income

3,278

4,016

24,547

Total net assets

125,461

124,507939,501

Total liabilities and net assets¥176,045¥171,924$1,318,294

AssetsLiabilities and net assets

Current assets:

Current liabilities:

Cash and cash in banks (Notes 4 and 11)¥ 19,394¥ 26,994$ 145,230

Notes receivable (Note 11)

1,816

1,521

13,599Accounts receivable (Note 11)45,47540,154

340,535

Contract assets

9

—

67

Short-term investments (Notes 5 and 11)

—

500

—

Lease obligations (Note 6)

Inventories:

Total current liabilities

Merchandise and ﬁnished goods

19,074

19,038142,834

Work in process

9,079

7,742

67,987

Raw materials and supplies

19,872

15,437

148,809

4,349

5,029

32,567

(41)

(39)

(307)

119,030

116,376

891,343

Other

Long-term liabilities:
Long-term debt (Notes 6 and 11)
Lease obligations (Note 6)
Deferred tax liabilities (Note 13)

Less allowance for doubtful accounts

Provision for stock-based payments
Total current assets

Liability for retirement beneﬁts (Note 12)
Other

Property, plant and equipment:

Total long-term liabilities

Land

2,830

2,872

21,192

Buildings and structures

33,95033,791

254,231

Machinery and vehicle

26,341

25,940197,252

757

840

5,669

Construction in progress

4,760

1,326

35,645

Other

9,213

9,855

68,991(52,019)(50,293)(389,539)

25,83424,334

193,455

Leased assets

Net assets:
Shareholders’ equity (Note 7):
Common stock, no par value:
Authorized–297,000,000 shares in 2023 and 2022
Issued–64,607,936 shares in 2023 and 2022

Less accumulated depreciation and impairment loss
Property, plant and equipment, net

Treasury stock, at cost:
7,304,066 shares in 2023
7,306,000 shares in 2022

Investments and other assets:
Investment securities (Notes 5 and 11)

22,97925,703172,076—

0—

Deferred tax assets (Note 13)

1,316

783

9,855

Other

6,913

4,764

51,767

(29)

(38)

(217)

31,17931,213

233,481¥176,045¥171,924$1,318,294

Long-term loans

Total shareholders’ equity
Accumulated other comprehensive income:Unrealized holding gain on other securities
Translation adjustments

Less allowance for doubtful accounts
Total investments and other assets
Total assets

See notes to consolidated ﬁnancial statements.

78

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

79

Consolidated Statement of Income

Consolidated Statement of Changes in Net Assets

KYORIN Pharmaceutical Co., Ltd. and Consolidated Subsidiaries
For the year ended March 31, 2023

KYORIN Pharmaceutical Co., Ltd. and Consolidated Subsidiaries
For the year ended March 31, 2023

Net sales
Cost of sales
Gross proﬁt
Selling, general and administrative expenses (Note 8)
Operating proﬁt
Other income (expenses):
Interest and dividend income
Interest expense
Equity in (losses) gains of affiliates
Foreign exchange gain
Loss on sales and retirement of property, plant andequipment, net (Note 9)
Gain on sales of investment securities (Note 5)
Loss on devaluation of investment securities (Note 5)
Gain on insurance
Compensation income for damages
Impairment loss (Note 10)
Loss on liquidation of subsidiaries and associates
Subsidy income
Other, net
Other income, net
Proﬁt before income taxes
Income taxes (Note 13):
Current
Deferred
Total income taxes
Proﬁt
Proﬁt attributable to shareholders of KYORIN Pharmaceutical Co., Ltd.

Millions of yen

Thousands of U.S. dollars(Note 3)

2023

2022

2023

¥113,270
63,10250,16745,043
5,123¥105,534
56,09349,44144,433
5,007$848,210
472,533
375,670
337,300
38,363

465
(66)
(0)
78

411
(66)
25
98

3,482
(494)
(0)
584

(15)

(32)

(112)

683
(9)
881
401
(257)
(605)
34
194
1,783
6,906

—
(320)
—
—
—
—
36
56
209
5,216

5,115
(67)
6,597
3,003
(1,925)(4,530)255
1,453
13,352
51,715

¥

2,462
(279)
2,182
4,723
4,723

¥

1,630
(346)
1,284
3,932
3,932

18,436(2,089)16,34035,368$ 35,368

Millions of yen
Shareholders’ equity

Number ofshares issued(Commonstock)

Balance as of April 1, 2021

Commonstock

Capitalsurplus

Total
Unrealized
Retirement
Total
accumulated
Treasury
holding gain Translation
beneﬁts
shareholders’
otherstock, at cost(loss) on other adjustments
liability
equitycomprehensive
securities
adjustments
incomeRetainedearnings

64,607,936¥700¥4,752¥132,557

Cash dividends

—

—

—

(3,779)—Proﬁt attributable toshareholders of KYORIN
Pharmaceutical Co., Ltd.

—

—

—

3,932

Purchase of treasury stock

—

—

—

—

Other changes

—

—

—

—

Net changes during the year

—

—

—

152

64,607,936

700

4,752

132,710

Cash dividends

—

—

—

Proﬁt attributable toshareholders of KYORIN
Pharmaceutical Co., Ltd.

——

Change in scope of
consolidation—

Purchase of treasury stock
Disposals of treasury stock
Other changes

Balance as of April 1, 2022

Accumulated other comprehensive income¥6,639¥(40)¥(2,275)¥4,322¥124,661(3,779)

—

—

—

—

(3,779)

—

3,932

—

—

—

—

3,932

(0)

(0)

—

—

—

—

(0)

—

—

(371)

151

(86)

(306)

(306)

(0)

152

(371)

151

(86)

(306)

(154)

(17,671)

120,491

6,268

110

(2,362)

4,016

124,507(3,023)—(3,023)

—

—

—

—

(3,023)

—

4,723

—

4,723

—

—

—

—

4,723

—

—

(13)

—

(13)

—

—

—

—

(13)

—

—

—

—

(0)

(0)

—

—

—

—

(0)

—

—

—

—

4

4

—

—

—

—

4

—

—

—

—

—

—

(572)

229

(394)

(737)

(737)

—

1,686

4

1,690

(572)

229

(394)

(737)

953

¥(17,666) ¥122,182¥5,695¥340¥(2,756)

Net changes during the year——

Balance as of March 31, 2023

64,607,936¥700¥4,752 ¥134,396¥(17,671) ¥120,339

Total net
assets¥3,278 ¥125,461

See notes to consolidated ﬁnancial statements.
Thousands of U.S. dollars (Note 3)
Shareholders’ equity

Number ofshares issued(Commonstock)

Consolidated Statement of Comprehensive Income
KYORIN Pharmaceutical Co., Ltd. and Consolidated Subsidiaries
For the year ended March 31, 2023

Balance as of April 1, 2022
Millions of yen

Proﬁt
Other comprehensive income (loss) (Note 14):
Unrealized holding loss on other securities
Translation adjustments
Retirement beneﬁts liability adjustments
Share of other comprehensive income of affiliates
accounted for using equity method
Total other comprehensive loss
Comprehensive income
Total comprehensive income attributable to:Shareholders of KYORIN Pharmaceutical Co., Ltd.
Non-controlling interests

Thousands of U.S. dollars(Note 3)

2023

2022

2023

¥4,723¥3,932$35,368

(578)
229
(394)

(393)
151
(86)

(4,328)
1,715(2,950)

5

21

37

(737)
¥3,986(306)¥3,625(5,519)$29,849¥3,986—¥3,625—$29,849—

Commonstock

Capitalsurplus

Accumulated other comprehensive income

Total
Unrealized
Retirement
Total
accumulated
Treasury
holding gain Translation
beneﬁts
shareholders’
otherstock, at cost(loss) on other adjustments
liability
equitycomprehensive
securities
adjustments
incomeRetainedearnings$35,585 $ 993,785$(132,327) $902,284

Total net
assets64,607,936$5,242$46,937$ 824$(17,688)$30,073$932,357

Cash dividends

—

—

—

(22,637)—(22,637)

—

—

—

—

(22,637)

Proﬁt attributable toshareholders of KYORIN
Pharmaceutical Co., Ltd.

—

—

—

35,368—35,368————35,368Change in scope of
consolidation

—

—

—

(97)

—

(97)

—

—

—

—

(97)

Purchase of treasury stock

—

—

—

—

(0)

(0)

—

—

—

—

(0)

Disposals of treasury stock

—

—

—

—

30

30

—

—

—

—

30

Other changes

—

—

—

—

—

—

(4,283)

1,715(2,950)(5,519)(5,519)Net changes during the year

—

—

—

12,62530

12,655(4,283)

1,715(2,950)(5,519)7,136

Balance as of March 31, 2023

64,607,936$5,242$(132,290) $914,947$42,646$2,546$(20,638)$35,585 $1,006,410$24,547 $939,501

See notes to consolidated ﬁnancial statements.

See notes to consolidated ﬁnancial statements.

80

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

81

Consolidated Statement of Cash Flows

Notes to Consolidated Financial Statements

KYORIN Pharmaceutical Co., Ltd. and Consolidated Subsidiaries
For the year ended March 31, 2023

KYORIN Pharmaceutical Co., Ltd. and Consolidated Subsidiaries
For the year ended March 31, 2023

Millions of yen

2023
Operating activities
Proﬁt before income taxes
Depreciation and amortization
Impairment loss
Decrease in allowance for doubtful accounts(Decrease) increase in accrued bonuses to employees
Increase in provision for stock-based payments
Decrease in asset for retirement beneﬁts
Increase in liability for retirement beneﬁts
Equity in losses (gains) of affiliates
Interest and dividend income
Interest expense
Loss on sales and retirement of property, plant andequipment, net(Gain) loss on sales of investment securities, net
Loss on devaluation of investment securities
Gain on insurance
Proceeds from compensation for damages
Loss on liquidation of subsidiaries and associates
Increase in notes and accounts receivable
Increase in inventories
Increase in notes and accounts payable
Increase (decrease) in consumption taxes payable
Other, net
SubtotalInterest and dividend received
Interest paid
Proceeds from insurance income
Compensation received for damage
Income taxes paid
Net cash provided by operating activities
Investing activities
Payments for time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales and redemption of investment securities
Other, net
Net cash used in investing activities
Financing activities
Repayments of lease obligations
Repayments of long-term debt
Net increase in treasury stock
Cash dividends
Net cash used in ﬁnancing activities
Effects of exchange rate changes on cash and cash equivalents
Decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Decrease in cash and cash equivalents resulting fromexclusion of subsidiaries from consolidation
Cash and cash equivalents at end of year (Note 4)
See notes to consolidated ﬁnancial statements.

82

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

2022

Thousands of U.S. dollars(Note 3)2023

¥ 6,906
3,840
257
(6)
(121)
122
201
66
0
(465)
66

¥ 5,216
3,714
—
(3)
83
343
127
48
(25)
(411)
66

$ 51,715
28,755
1,925
(45)
(906)
914
1,505
494
0
(3,482)
494

15

32

112

(683)
9
(881)
(401)
605
(5,621)(5,809)
2,866
219
(973)
216
473
(66)
3,050
401
(2,065)
2,008

0
320
—
—
—
(1,226)(3,633)3,910(35)(1,287)
7,240
420
(66)
—
—
(1,248)
6,346(5,115)67(6,597)(3,003)4,530(42,092)(43,500)
21,462
1,640(7,286)
1,617
3,542
(494)
22,840
3,003(15,464)
15,037(622)
810(6,330)100(3,075)
(100)
3,193
(251)
(6,275)(622)
946(2,444)0(246)(3,407)3,400(185)(2,560)(4,658)
6,066(47,402)749(23,027)(749)
23,910(1,880)(46,990)

(147)
(200)
(0)
(3,015)(3,363)241(7,388)26,289

(143)
(200)
(0)
(3,767)(4,112)
139(186)
26,476(1,101)(1,498)(0)(22,578)(25,183)
1,805(55,324)
196,862

(84)

—

(629)

¥18,816¥26,289$140,902

1. Basis of Presentation of Consolidated Financial Statements
The accompanying consolidated ﬁnancial statements ofconsolidated ﬁnancial statements to conform to the 2023

KYORIN Pharmaceutical Co., Ltd. (the “Company”) andpresentation. These reclassiﬁcations have no effect on

consolidated subsidiaries (the “Group”) are prepared inconsolidated proﬁt and net assets. Amounts of less thanaccordance with accounting principles generally accepted

one million yen have been rounded down to the nearest

in Japan (“Japanese GAAP”), which are different in certain

million yen, and amounts less than one thousand U.S.

respects as to the application and disclosure requirements

dollars have been rounded down to the nearest thousandof International Financial Reporting Standards, and are

U.S. dollars, in the presentation of the accompanying

compiled from the consolidated ﬁnancial statements

consolidated ﬁnancial statements. As a result, the totals in

prepared by the Company as required by the Financial

yen and U.S. dollars do not necessarily agree with the sum

Instruments and Exchange Act of Japan.

of the individual amounts.

Certain reclassiﬁcations have been made in the 2022

2. Summary of Signiﬁcant Accounting Policies(a) Basis of Consolidation and Accounting for Investments in
Unconsolidated Subsidiaries and Affiliates

December 31 were also used for preparing the consolidated
ﬁnancial statements. However, due to the resolution for

The accompanying consolidated ﬁnancial statements

dissolution in March 2023, Kyorin Europe GmbH was in the

include the accounts of the Company and signiﬁcant

process of liquidation as of the consolidated balance sheet

companies controlled directly or indirectly by the Company.

date. To reﬂect the ﬁnancial position and operating results

Companies over which the Company exercises signiﬁcant

after the resolution for dissolution, the 15 months frominﬂuence in terms of their operating and ﬁnancial policies

December 31, 2021 to March 31, 2023 were included in theare included in the consolidated ﬁnancial statements on an

scope of consolidation for the year ended March 31, 2023.

equity basis. As of March 31, 2023, the numbers ofconsolidated subsidiaries and affiliates accounted for by(b) Foreign Currency Translation

the equity method were four and one (ﬁve and one in 2022),

The revenue and expense accounts of foreign consolidated

respectively. As of March 31, 2023, the number ofsubsidiaries are translated into yen at the average rates of

unconsolidated subsidiaries was two. The Company

exchange in effect during the year. The balance sheet

deconsolidated Kyorin USA, Inc. and Kyorin Europe GmbH,accounts, except for the components of net assets, arewhich resolved to dissolve in March 2020 and March 2023,

translated into yen at the exchange rates in effect at therespectively, and became unconsolidated subsidiaries

balance sheet date. The components of net assets arebecause they have insigniﬁcant effects on the consolidated

translated at their historical exchange rates. Differences

ﬁnancial statements of the Company. Both companies werearising from the translation are presented as translationin the process of liquidation as of the consolidated balanceadjustments, which appear as a component of net assets insheet date. All signiﬁcant inter-company balances andthe accompanying consolidated balance sheet.

transactions are eliminated in consolidation.
Investments in subsidiaries and affiliates, which are not(c) Cash and Cash Equivalents

consolidated or accounted for by the equity method, are

Cash and cash equivalents consist of cash on hand, deposit

carried at cost or less. Where there has been a signiﬁcantwith banks withdrawable on demand, and short-term

decline in the value of such investments, the Company has

investments that are readily convertible into cash andwritten down the investments.
Among the consolidated subsidiaries, ActivX
Biosciences, Inc. closes its account books at December 31

subject to an insigniﬁcant risk of any changes in their value
and were purchased with original maturities of threemonths or less.

for ﬁnancial reporting purposes. Its ﬁnancial statements areused for preparing the consolidated ﬁnancial statements,(d) Short-Term Investments and Investment Securities

and necessary adjustments are made to the consolidated

Securities other than equity securities issued byﬁnancial statements for any signiﬁcant transactions

subsidiaries and an affiliate are classiﬁed into otherbetween its balance sheet date (December 31) and the

securities. Securities other than equity securities, etc.

consolidated balance sheet date (March 31). Previously, thewithout market prices that are classiﬁed as other securities

ﬁnancial statements of Kyorin Europe GmbH as ofare carried at fair value with changes in unrealized gain or

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

83

Notes to Consolidated Financial Statements

loss, net of the applicable income taxes, and directly

service of employees in the year such cost occurs (10 years).

accordance with provisions regarding variable considerations.

time, such as an expected contract period, in accordance

included in net assets. Equity securities, etc. without market

Actuarial gain or loss is amortized from the year

Royalty income and service revenue include upfront

prices that are classiﬁed as other securities are stated atfollowing the year in which such gain or loss is recognized

payments, development milestone income, sales milestonesatisfaction of performance obligations determined for eachcost. Cost of securities sold is determined by the moving

primarily by the straight-line method over the average

income, and royalty income based on licensing agreements

contract. Income related to sales royalties where theaverage method.

remaining years of service of employees in the year such(granting or transferring rights to research and develop,

consideration received for licensing of intellectual property

gain or loss occurs (10 years).

manufacture, and sell pharmaceuticals and other products

is based on net sales or usage is recognized as sales

to third parties based on patents and know-how), as well as

revenue when customers’ sales revenue, etc., is generated,or performance obligations are satisﬁed, whichever is later.

(e) Inventories

Unrecognized actuarial loss and unrecognized priorwith the method of measuring progress regarding

Merchandise and ﬁnished goods, work in process, raw

service costs are, after adjusting for tax effects, recorded asservice revenue from evaluations of research andmaterials, and some supplies (samples) are mainly statedretirement beneﬁts liability adjustments under accumulated

development and royalty income from the licensing of suchat cost determined by the gross average method. Inventories

other comprehensive income in net assets.

evaluation technologies. With respect to income such as

obligations generally within one year after satisfying the

upfront payments, development milestone income, andperformance obligations in accordance with payment termswith lower proﬁtability are written down to their net realizable

The Group receives considerations for performancevalue. Supplies except for samples are stated by the last(k) Appropriation of Retained Earnings

sales milestone income based on licensing agreements, if

prescribed separately, and such considerations do notpurchase price method.

Appropriation of retained earnings with respect to a given

performance obligations are satisﬁed at a point in time, thecontain a signiﬁcant ﬁnancing component.

ﬁnancial period is made by resolution of the Board ofincome is recognized as sales revenue when development(f) Depreciation and Amortization (Except for Leased Assets)

Directors’ meeting for dividends and resolution of theand sales rights are granted, or when the contractually(n) Signiﬁcant Accounting Estimates

Depreciation of property, plant and equipment is calculated

ordinary general shareholders’ meeting for otherspeciﬁed milestones are achieved. If performance

Recoverability of deferred tax assets

by the straight-line method based on the estimated usefulappropriations (see Note 7).

obligations are satisﬁed over time, the consideration is(1) The amounts of deferred tax assets and liabilities

lives of the respective assets. The useful lives of property,
plant and equipment are summarized as follows:(l) Application of the Group Tax Sharing System

Buildings and structures

4 to 50 years

The Company and its domestic consolidated subsidiaries

Machinery and vehicle

4 to 17 years

have applied the group tax sharing system.

Intangible assets are amortized by the straight-line
method over their estimated useful lives. Computer(m) Signiﬁcant Revenue and Expense Recognition Standards

software for internal use is capitalized and amortized by the

The Group earns revenue from sales of pharmaceuticals

straight-line method over the useful life of three to ﬁve

and other products, as well as royalty income and service

years.

revenue based on contracts, etc., that allow third parties torecorded as a contract liability. Upfront payments andrecorded for the years ended March 31, 2023 and 2022

milestone income are recognized as sales revenue overwere as follows:

Deferred tax assets
Deferred tax liabilities(Deferred tax assets before offsetting against deferred tax liabilities)

Millions of yen

Thousands of
U.S. dollars

2022
¥ 783
175
4,628

2023
$ 9,855—
36,6712023¥1,316—
4,897

research and develop, manufacture, sell, and use the(g) Leases

Group’s products and technologies. The Group recognizes(2) With respect to deductible temporary differences,(o) Changes in Accounting Policies

Leased assets are depreciated over the lease term by therevenue as the amount it expects to receive in exchange forrecoverability of deferred tax assets is judged using taxable

Application of the Implementation Guidance on Accounting

straight-line method with no residual value. All ﬁnanceits goods or services when customers obtain control of theincome based on future proﬁtability, tax planning, etc.

Standard for Fair Value Measurement

leases are accounted for in the same manner as sales

goods or services that are promised to be transferred.

The Group has applied the “Implementation Guidance on

business plans that incorporate market prices (distribution

Accounting Standard for Fair Value Measurement”

products is recognized when performance obligations are

prices), etc. The market growth rate trends due to(Accounting Standards Board of Japan (“ASBJ”) Guidance(h) Research and Development Expenses

satisﬁed by transferring control of pharmaceuticals andimplementation of annual drug price revisions implemented

No. 31, issued on June 17, 2021; hereinafter the “Fair Value

Research and development expenses are expensed as incurred.

other products to customers. For sales of pharmaceuticals

in line with basic policies of the NHI drug pricing system

Measurement Guidance”), from the beginning of the year

transactions.

Revenue from sales of pharmaceuticals and otherand other products in Japan, the Group recognizes revenue

reforms and further promotion of measures to curtail

ended March 31, 2023 and prospectively apply new(i) Income Taxes

at the time of shipment in accordance with Paragraph 98

medical expenses and drug costs, and cost increases in raw

accounting policies stipulated by the Fair Value

Deferred tax assets and liabilities are determined on theof the Implementation Guidance on Accounting Standard

materials, energy, etc. affected the Group’s businessMeasurement Guidance in accordance with the transitional

basis of differences between ﬁnancial reporting and the tax

for Revenue Recognition, because the period from the time

activities. Such effects have been incorporated into thetreatment provided in Paragraph 27-2 of the Fair Valuebases of the assets and liabilities and are measured usingof shipment to the time when control of the pharmaceuticals

business plans, which are the basis for estimating future

Measurement Guidance. The application of thethe effective tax rates and enacted laws that will be in effectand other products is transferred to customers is a normal period.

taxable income, in light of external information, etc.

implementation guidance has no effect on the consolidated

available at the end of the year ended March 31, 2023.

ﬁnancial statements.

when the differences are expected to reverse.

Transaction prices are calculated based on
considerations promised in contracts with customers, less

The timing of when taxable income incurs and its
amount may be affected by changes in the external(p) Accounting Standard Issued but Not Yet Effective

The retirement beneﬁt obligation is calculated by allocating

For considerations for sales incentives, etc., paid toenvironment surrounding the ethical drugs business, which• “Accounting Standard for Current Income Taxes” (ASBJ

the estimated retirement beneﬁt amount to the period of

distributors, the Group reduces certain sales incentives, etc.,

is the core of the Group. If the actual timing and amount ofStatement No. 27, revised on October 28, 2022)

service on the beneﬁt formula basis.

from transaction prices.

taxable income are different from estimates, deferred tax• “Accounting Standard for Presentation of(j) Accounting Method for Retirement Beneﬁts

Prior service cost is amortized as incurred by thestraight-line method over the average remaining years of84

Taxable income is estimated mainly on the basis of

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

sales rebates, etc.

In addition, for sales with expected reruns of products, theGroup does not recognize revenue at the time of sales, inassets recorded in the consolidated ﬁnancial statements forComprehensive Income” (ASBJ Statement No. 25,

the year ended March 31, 2023 may be reversed.

revised on October 28, 2022)

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

85

Notes to Consolidated Financial Statements• “Guidance on Accounting Standard for Tax Effectand their personal contribution and delivers or pays the(2) Company shares remaining in trust

2022, the carrying amounts of the treasury shares were

Accounting” (ASBJ Guidance No. 28, revised on

Company’s shares and cash to employees who attain rights

Treasury shares remaining in the Trust are presented as¥208 million ($1,558 thousand) and ¥208 million,

October 28, 2022)

to receive such delivery or payment under certain

treasury stock in net assets with carrying value in the Trust

respectively, and the total numbers of treasury shares wereconditions. The Trust acquires the Company’s shares to be(excluding ancillary expenses). As of March 31, 2023 and91 thousand shares and 92 thousand shares, respectively.

(1) Overview

delivered including future delivery portion using the

In February 2018, ASBJ issued ASBJ Statement No. 28,

entrusted money, and separately manages it as trust assets.

“Partial Amendments to Accounting Standard for Tax EffectIntroduction of the ESOP Plan is expected to contribute

3. U.S. Dollar Amounts
The translation of yen amounts into U.S. dollar amounts istranslation should not be construed as a representation that

Accounting,” etc. (hereinafter, “ASBJ Statement No. 28, etc.”),to employees’ work motivation by increasing interest inincluded solely for convenience, as a matter of arithmetic

yen have been, could have been, or could in the future be,which completed the transfer of implementation guidance

improvement of business performance and the Company’s

computation only, at the rate of ¥133.54 = U.S.$1.00, theconverted into U.S. dollars at the above or any other rate.

on tax effect accounting from the Japanese Institute ofshare price. In addition, various stakeholders including

approximate rate of exchange on March 31, 2023. The

Certiﬁed Public Accountants to ASBJ. However, in the course

shareholders are expected to receive shared beneﬁts fromof the deliberations, the following two issues were to be

improvement in the Company’s corporate value.

4. Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2023 and 2022 for the consolidated statements of cash ﬂows consisted of the following:

discussed again after the release of ASBJ Statement No. 28,
etc., and they were discussed and released:(2) Company shares remaining in trust• The classiﬁcation of tax expense (taxation on other

Treasury shares remaining in the Trust are presented ascomprehensive income)treasury stock in net assets with carrying value in the Trust• Tax effect on sales of equity securities issued by(excluding ancillary expenses). As of March 31, 2023 andsubsidiaries, etc. (equity securities issued by subsidiaries

2022, the carrying amounts of the treasury shares wereor affiliates) when the group taxation regime is applied¥1,621 million ($12,139 thousand) and ¥1,624 million,

2023¥19,394(578)¥18,816

Cash and cash in banks
Time deposits with a maturity over three months
Cash and cash equivalents

Millions of yen

Thousands of
U.S. dollars

2022¥26,994(704)¥26,2892023$145,230(4,328)$140,902

respectively, and the total numbers of treasury shares were
(2) Date of application

743 thousand shares and 745 thousand shares, respectively.

From the beginning of the ﬁscal year ending March 31, 2025
Performance-Linked Stock Compensation Plan
(3) Effect of application

At the 58th Ordinary General Meeting of Shareholders, held

The effect of applying the “Accounting Standard for Current

on June 24, 2016, the Company resolved to introduce a

Income Taxes,” etc. on the consolidated ﬁnancial statements

performance-linked stock compensation plan (hereinafter,

is currently unknown.

the “Plan”) for directors (excluding outside directors) of
KYORIN Holdings and KYORIN Pharmaceutical (hereinafter,(q) Additional Information
Employee Stock Delivery Trust (the “J-ESOP”)

5. Short-Term Investments and Investment Securities
Information regarding marketable securities classiﬁed as other securities as of March 31, 2023 and 2022 is as follows:“Group Directors”).

Marketable other securities
Millions of yen

2023
Carrying
value

Unrealized
gain (loss)

Acquisition
cost

Carrying
value

Unrealized
gain (loss)¥8,518¥16,560¥8,041$63,786$124,008$60,214

Government bonds

—

—

—

—

—

—

Corporate bonds

—

—

—

—

—

—

Other bonds

—

—

—

—

—

—

Subtotal

8,518

16,5608,041

63,786124,008

60,214

13

11

(1)

97

82

(7)

5,000

4,981

(18)

37,44237,300

(135)

—

—

—

—

—

—

Securities whose carrying
value exceeds their acquisition
cost:

The Company accounts for the Plan in line with the

Equity securities

guidelines set out in the “Practical Solution on Transactions

Debt securities:

2016, the Company resolved that KYORIN Pharmaceuticalof Delivering the Company’s Own Stock to Employees etc.

Co., Ltd. (“KYORIN Pharmaceutical”), which was a subsidiarythrough Trusts” (PITF No. 30, March 26, 2015).

the Employee Stock Delivery Trust (the “J-ESOP,” hereinafter,(1) Outline of transactions

the “ESOP Plan”) under which the Company’s shares are

The Plan is a stock-based compensation arrangement

delivered to employees of KYORIN Pharmaceutical.

whereby the Company’s shares are acquired through a trust

The Company accounts for the Plan in line with thewith funds contributed by the Company, and the Company’s

guidelines set out in “Practical Solution on Transactions ofshares and the amount of cash equivalent to the Company’s

Delivering the Company’s Own Stock to Employees etc.

shares at their fair value (hereinafter, the “Company’s

through Trusts” (PITF No. 30, March 26, 2015).

Shares, etc.”) are paid to eligible Group Directors on thebasis of the stock beneﬁt rules for directors prescribed by(1) Outline of transactions

the Company’s and its subsidiary.

Under the ESOP Plan, the Company’s shares are delivered

The Company adopts a Board Beneﬁt Trust system

to eligible employees of KYORIN Pharmaceutical who satisfy

when introducing the Plan. In principle, Group Directors willcertain requirements, on the basis of the share delivery

receive the Company’s Shares, etc., on a certain date duringrules prescribed by KYORIN Pharmaceutical in advance.

the trust period set out by the stock beneﬁt rules for

KYORIN Pharmaceutical awards its employees a set

2023

Acquisition
cost

At a meeting of the Board of Directors held on February 23,of the Company, introduced an incentive plan referred to as

Thousands of U.S. dollars

Securities whose carrying
value does not exceed theiracquisition cost:
Equity securities
Debt securities:
Government bonds
Corporate bonds
Other bonds

—

—

—

—

—

—

Subtotal

5,013

4,993

(19)

37,53937,390(142)¥13,531¥21,553¥8,021$101,325$161,397$60,064

Total

directors or upon their retirement, whichever is earlier.

number of points on the bases of business performance

86

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

87

Notes to Consolidated Financial Statements

Millions of yen

2022
Unrealized
gain (loss)

Acquisition
cost

Carrying value¥ 8,521¥17,549¥9,027

Government bonds

—

—

—

Corporate bonds

—

—

—

Other bonds

—

—

—

Subtotal

8,521

17,5499,027

The average interest rates applicable to short-term bank loans outstanding as of March 31, 2023 and 2022 are 0.3% and0.3%, respectively.
Long-term debt and lease obligations as of March 31, 2023 and 2022 consisted of the following:

Securities whose carrying value exceeds their acquisition cost:
Equity securities
Debt securities:

Long-term debt due through 2027 at average interest rate of 0.3% and0.3% in 2023 and 2022, respectively
Lease obligations due through 2030 in 2023 and 2022
Current portion of long-term debt and lease obligations due within
one year
Total

Millions of yen

Thousands of
U.S. dollars

2023

2022

2023

¥10,836¥11,036$81,144

341

489

2,554

(334)

(348)

(2,501)¥10,843¥11,177$81,197

Millions of yen

Thousands of
U.S. dollars

The annual maturities of long-term debt and lease obligations are summarized as follows:Year ending March 31,

Securities whose carrying value does not exceed their acquisition cost:
Equity securities

2,012

1,875

(136)

5,400

5,386

(13)

Corporate bonds

—

—

—

Other bonds

—

—

—

Subtotal

7,412

7,261

(150)

Debt securities:
Government bonds

Total¥15,933¥24,811¥8,877

2024
2025

¥

334
10,285$ 2,501
77,018

2026
2027

229
197

1,715
1,475

2028

85

637

7. Shareholders’ Equity
Japanese companies are subject to the Companies Act ofmust be maintained at no less than ¥3 million.

Japan (the “Companies Act”). The signiﬁcant provisions in
Unlisted securities and other non-marketable securities
are not included in the above schedules. The amounts of

the Companies Act that affect ﬁnancial and accounting

Sales amounts of securities classiﬁed as othersecurities and the related aggregate gain and loss for thethese securities were ¥709 million ($5,309 thousand) andyears ended March 31, 2023 and 2022 are summarized as¥673 million as of March 31, 2023 and 2022, respectively.

follows:
2023¥2,689685
1Proceeds from sales
Gains on sales
Losses on sales
In the years ended March 31, 2023 and 2022,
impairment loss on securities of ¥9 million ($67 thousand)Millions of yen

Thousands of
U.S. dollars

2022
¥—
—
—

2023
$20,1365,130
7

recognized, respectively.
The impairment loss was recognized for the amountmatters are summarized below:

Reserve, and Surplus
The Companies Act requires that an amount equal to 10% of(a) Dividends

dividends be appropriated as a legal reserve (a component ofUnder the Companies Act, companies can pay dividends atretained earnings) or as additional paid-in capital (aany time during the ﬁscal year in addition to the year-end

component of capital surplus) depending on the equity

dividend upon resolution at the shareholders’ meeting. The

account charged upon the payment of such dividends until

board of directors may declare dividends (except for

the total aggregate amount of legal reserve and additional

dividends-in-kind) if the company has prescribed so in its

paid-in capital equals 25% of the common stock. Under thearticles of incorporation for companies that meet certain

Companies Act, the total amount of additional paid-in capitalcriteria such as:

and legal reserve may be reversed without limitation. The(1) having a board of directors,

Companies Act also provides that common stock, legal(¥9 million ($67 thousand) of unlisted securities classiﬁed

deemed necessary, taking into consideration the(2) having independent auditors,

reserve, additional paid-in capital, other capital surplus andas other securities that are not measured at fair value) andrecoverability of the actual value of the equity securities and(3) having a board of corporate auditors, andretained earnings can be transferred among the accounts¥320 million (¥320 million of unlisted securities classiﬁed

other factors.

(4) the term of service of the directors is prescribed asunder certain conditions upon resolution by the shareholders.

as other securities that are not measured at fair value) were

one year rather than the two-year of normal term by
its articles of incorporation.

6. Short-Term Bank Loans, Long-Term Debt, and Lease Obligations

The Companies Act permits companies to distribute(c) Treasury Stock and Stock Option
The Companies Act also provides for companies to purchase

Short-term bank loans and the current portion of long-term debt and lease obligations as of March 31, 2023 and 2022

dividends-in-kind (non-cash assets) to shareholders subject

treasury stock and dispose of such treasury stock byconsisted of the following:

to a certain limitation and additional requirements.

resolution of the board of directors. The amount of treasury

Short-term bank loans
Current portion of long-term debt
Current portion of lease obligations

Total

88

(b) Increases/Decreases and Transfer of Common Stock,

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

2023
¥10,100
200
134¥10,434

Millions of yen

Thousands of
U.S. dollars

2022¥10,100
200
147¥10,4472023$75,633
1,498
1,003$78,134

Semiannual interim dividends may also be paid once a

stock purchased cannot exceed the amount available foryear upon resolution by the board of directors if the articles

distribution to shareholders, which is determined by aof incorporation of the company so stipulate. The Companies

speciﬁc formula. Under the Companies Act, stock acquisition

Act also provides certain limitations on the amounts available

rights, which were previously presented as a liability, arefor dividends and the purchase of treasury stock. The

now presented as a separate component of net assets. The

limitation is deﬁned as the amount available for distribution

Companies Act also provides that companies can purchaseto shareholders, but the amount of net assets after dividends

both treasury stock acquisition rights and treasury stock.

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

89

Notes to Consolidated Financial Statements

Such treasury stock acquisition rights are presented as astock acquisition rights.

separate component of net assets or deducted directly from

Company and its consolidated subsidiaries, in accordance

are mainly due within six months. Certain operatingwith internal rules, keep track of adverse ﬁnancial

payables are denominated in foreign currencies.

conditions of customers in the early stage to mitigate bad
debt by monitoring the major customers’ credit conditions

8. Research and Development Expenses

Bank loans and debts are mainly used for the operating
fund and fund for capital investments.

Research and development expenses included in general

2023 and 2022 were ¥10,903 million ($81,646 thousand)periodically and managing the due date and balance per

Operating payables and loans and debts are exposed toand administrative expenses for the years ended March 31,

and ¥8,897 million, respectively.

customer. The Company and its consolidated subsidiaries

liquidity risk. The Company and its consolidated subsidiaries

mitigate foreign currency risk by utilizing foreign currency

manage the risk by preparing and updating the cash
management plan periodically.

9. Gain or Loss on Sales and Retirement of Property, Plant and Equipment, Net

deposits for operating receivables denominated in foreign

Signiﬁcant components of the gain or loss on sales and retirement of property, plant and equipment, net for the years ended

currencies and settling payables denominated in the same

March 31, 2023 and 2022 are as follows:

currencies through the deposits.
Millions of yen

Short-term investments and investment securities mainly

2022

2023

consist of highly rated bond securities and equity securities ofAs the calculation of fair values of ﬁnancial instruments

companies with business relationships and are exposed toincludes variable factors, those values may vary if different

market risk and credit risk of issuers. The Company and its

assumptions are applied.

2023
Gain:
Buildings and structures
Machinery and vehicles
Other
Loss:
Buildings and structures
Machinery and vehicles
Other
Total

¥ 0
0
10
¥ 10

¥ —
—
0
¥ 0

$

0
0
75
$ 75

¥(13)
(5)
(6)
¥(25)
¥(15)

¥(11)
(2)
(18)
¥(32)
¥(32)

$ (97)(37)(45)$(187)$(112)

10. Impairment Loss
For the year ended March 31, 2023, the Group recognized an impairment loss on the following assets:
Location
KYORIN Pharmaceutical Group Facilities Co., Ltd.
Noshiro-shi, Akita Prefecture
ActivX Biosciences, Inc.
U.S.A.

(c) Supplemental Information on Fair Value of Financial

Thousands of
U.S. dollars

Use

Type of assets

Dormitory

Buildings and structures, land

Assets for business use

Buildings and structures, other

At KYORIN Pharmaceutical Group Facilities Co., Ltd., a

Biosciences, Inc., a consolidated subsidiary of the Company,

consolidated subsidiary of the Company, a dormitory that has

the carrying amount was written down to its recoverable

been idle was written down to its recoverable amount, andamount, and the amount of decrease was recorded in otherthe amount of decrease was recorded in other expenses as

expenses as an impairment loss of ¥110 million ($824

an impairment loss of ¥147 million ($1,101 thousand). The

thousand). The impairment loss consists of ¥23 million

impairment loss consists of ¥104 million ($779 thousand) of($172 thousand) of buildings and structures and ¥87 million

buildings and structures and ¥42 million ($315 thousand) of($651 thousand) of other. The recoverable amount of theland. The recoverable amount of the assets is calculated

assets is measured based on net realizable value. The net

based on the appraisal value by a real estate appraiser.

realizable value is calculated based on the estimatedconsolidated subsidiaries regularly review the fair value andissuers’ ﬁnancial condition to mitigate the risks.

Instruments

Carrying values, fair values, and their differences ofﬁnancial instruments as of March 31, 2023 and 2022 areOperating payables such as notes and accounts payableas follows:

Millions of yen

Thousands of U.S. dollars

2023

2023

Carrying
value

Fair value

Difference

Carrying
value

Fair value

Difference

Notes receivable¥ 1,816¥ 1,816¥—$ 13,599$ 13,599$ —Accounts receivable

45,47545,475—

340,535

340,535—

Short-term investments andinvestment securities

21,553

21,553—

161,397

161,397—¥68,845¥68,845¥—$515,538$515,538$ —Notes and accounts payable¥13,762¥13,762¥—$103,055$103,055$ —Short-term bank loans

10,30010,300—77,13077,130—Long-term debt

10,636

10,634(2)

79,647

79,632(15)

Total liabilities¥34,699¥34,697¥(2)$259,840$259,825$(15)

Total assets

Millions of yen

2022
Carrying
value

Fair value

Difference

Notes receivable¥ 1,521¥ 1,521¥̶

Accounts receivable

40,15440,154̶

Short-term investments and investment securities

24,811

24,811

̶¥66,487¥66,487¥̶Notes and accounts payable¥10,896¥10,896¥̶

The Company and its consolidated subsidiaries mainly

Short-term bank loans

10,30010,300̶

operate funds by highly secured ﬁnancial instruments such

Long-term debt

10,836

10,834(2)

Total liabilities¥32,033¥32,030¥(2)

Due to the decision on the policy to dissolve ActivX

amount of sale.

Total assets

11. Financial Instruments(a) Investment Policy of Financial Instruments

as deposits and highly rated bonds, ensuring security and90

derivatives are used.
(b) Details of Financial Instruments, Associated Risks, andRisk Management

liquidity. The Company and its consolidated subsidiaries use

Operating receivables such as notes and accounts

bank loans as the prime source of ﬁnancing, and noreceivable are exposed to credit risk of customers. The

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

91

Notes to Consolidated Financial Statements“Cash and cash in banks” are omitted because their

Scheduled repayments of corporate bonds, long-term debt, lease obligations and other interest-bearing liabilities afterrecorded in the consolidated balance sheet are unlisted

carrying value is deemed as the fair value since they are

securities and others of ¥1,425 million ($10,671 thousand) andscheduled to be settled in a short time.

¥1,392 million as of March 31, 2023 and 2022, respectively.

Equity securities, etc. without market prices are notincluded in “Short-term investments and investment
securities” in the above tables. These ﬁnancial instruments

the consolidated balance sheet date as of March 31, 2023 and 2022 are as follows:

The redemption schedule for monetary receivables andMillions of yen

2023

securities with maturities subsequent to March 31, 2023 is
as follows:
Due in one
year or lessMillions of yen

Due after one Due after twoyear through years throughthree years
two years

2023
Due in one
year or less
Cash and cash in banks¥19,394

Due after one Due after ﬁve
year through years throughten years
ﬁve years¥

Short-term bank loans
Due after ten
years

—

¥—

¥—

Notes receivable

1,816

—

—

—

Accounts receivable

45,475———¥10,100¥

Due after
three years
through fouryears

Due after
four years
through ﬁveyears

Due after
ﬁve years

¥—

¥—

—

¥ —

¥ —

Long-term debt

200

10,200

200

173

61

—

Lease obligations

134

85

29

23

23

44

Guarantee deposits received

172

—

—

—

—

—

¥10,606¥10,285

¥229

¥197

¥85

¥44

Total

Short-term investments and investment securities:

Thousands of U.S. dollars

Other securities with maturities:

2023

Government bonds

—

5,000

—

—

Other

—

—

—

—

¥66,686¥5,000

¥—

¥—

Total

Thousands of U.S. dollars

2023
Due in one
year or less
Cash and cash in banks$145,230

Due after one Due after ﬁve
year through years throughten years
ﬁve years$

Due after ten
years

—

$—

$—

Notes receivable

13,599———Accounts receivable

340,535———

Due in one
year or less
Short-term bank loans$75,633

—

$ —

$ —

1,498

1,295

457

—

Lease obligations

1,003

637

217

172

172

329

Other
Total

—

1,288

—

—

—

—

—

$77,018$1,715$1,475

$637

$329

2022

—

—

—

—

—

Short-term bank loans$499,371$37,442$—$—Millions of yen

2022
Due after one Due after ﬁve
Due in one
year through years throughyear or lessten years
ﬁve years
Cash and cash in banks¥26,994¥

Due after ten
years

—

¥—

¥—

Notes receivable

1,521

—

—

—

Accounts receivable

40,154———

Short-term investments and investment securities:
Other securities with maturities:
Government bonds
Other
Total

92

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

500

4,900

—

—

—

—

—

—

¥69,170¥4,900¥—¥—$$79,422

Due in one
year or less
37,442—Millions of yen

Other securities with maturities:—$

Due after
ﬁve years

76,382Total—

Due after
four years
through ﬁve
years

1,498

Guarantee deposits received$

Due after
three years
through fouryears

Long-term debt

Short-term investments and investment securities:
Government bonds

Due after one Due after twoyear through years throughthree years
two years

Due after
three years
through fouryears

Due after
four years
through ﬁveyears

Due after
ﬁve years

—

¥ —

¥ —

¥ —

Due after one Due after twoyear through years throughtwo years
three years¥10,100¥ —Long-term debt

200

200

10,200

200

173

61

Lease obligations

147

134

85

29

23

67

Guarantee deposits received

182

—

—

—

–

—

¥10,630¥334¥10,285

¥229

¥197

¥129

Total

¥

Fair value information by level within the fair value hierarchy
The fair value of ﬁnancial instruments is classiﬁed into the following three levels according to the observability and materialityof inputs used to measure fair value.
Level 1 fair value:

Fair value measured using observable inputs, i.e., quoted prices in active markets for assets or
liabilities that are the subject to the measurement

Level 2 fair value:

Fair value measured using observable inputs other than Level 1 inputs

Level 3 fair value:

Fair value measured using unobservable inputs

If multiple inputs that are signiﬁcant to the fair value measurement are used, the fair value measurement is categorized
in its entirety in the level of the lowest level input that is signiﬁcant to the entire measurement.

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

93

Notes to Consolidated Financial Statements

Financial instruments recorded in the consolidated balance sheet at fair value as of March 31, 2023 and 2022 are as follows:

Level 1
Short-term investments andinvestment securities
Total assets

Level 2

Level 3

Millions of yen

Thousands of U.S. dollars

2023

2023

Fair value

Fair value

Total

Level 1

Level 2

Level 3

Total

¥21,553¥—¥—¥21,553$161,397$—$—$161,397¥21,553¥—¥—¥21,553$161,397$—$—$161,397

Notes and accounts receivable

Notes and accounts payable and Short-term bank loans

The carrying value is deemed as the fair value since they

The carrying value is deemed as the fair value since theseare scheduled to be settled in a short time. Their fair value

are scheduled to be settled in a short period of time. Theiris classiﬁed as Level 2.

fair value is classiﬁed as Level 2.

Short-term investments and Investment securities

Long-term debt

The fair value of equity securities is based on the price on

The fair value of long-term debt is determined bystock exchanges and that of bonds is based on the price on

discounting the amount of the total principal and interest atbond markets or the price presented by the counterparty

the interest rate assumed in case new, similar loans are

ﬁnancial institutions. Their fair value is classiﬁed as Level 1.

borrowed. Their fair value is classiﬁed as Level 2.

Millions of yen

2022
Fair value
Short-term investments and investment securities
Total assets

Level 1

Level 2

Level 3

Total

¥24,811¥—¥—¥24,811¥24,811¥—¥—¥24,811

12. Retirement Beneﬁt Plans
The Group has deﬁned beneﬁt pension plans, deﬁned contribution pension plans, and annuity in advance retirement severance plans.
Certain domestic consolidated subsidiaries apply a simpliﬁed method in calculating the retirement beneﬁt obligation.
Deﬁned beneﬁt plans(1) The changes in the retirement beneﬁt obligation for the years ended March 31, 2023 and 2022 are as follows:

Financial instruments other than those recorded in the consolidated balance sheet at fair value as of March 31, 2023 and2022 are as follows:
Millions of yen

Thousands of U.S. dollars

2023

2023

Fair value
Notes receivable
Accounts receivable
Total assets

Fair value

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total¥—

¥ 1,816¥—¥ 1,816$—$ 13,599$—$ 13,599—

45,475—45,475—

340,535—

340,535¥—¥47,291¥—¥47,291$—

354,134$—$354,134

Notes and accounts payable¥—¥13,762¥—¥13,762$—$103,055$—$103,055

Short-term bank loans—

10,300—10,300—77,130—77,130Long-term debt—

10,634—

10,634—

79,632—

79,632

Total liabilities¥—¥34,697¥—¥34,697$—$259,825$—$259,825
Millions of yen

Retirement beneﬁt obligation at the beginning of the year
Service cost
Interest cost
Actuarial gain or loss
Retirement beneﬁts paid
Retirement beneﬁt obligation at the end of the year2023
¥35,174
1,095
175
(494)
(1,441)¥34,510

Millions of yen

Thousands of
U.S. dollars

2022¥35,673
1,121
178
(114)
(1,683)¥35,1742023$263,397
8,200
1,310
(3,699)(10,791)$258,424

Millions of yen

Thousands of
U.S. dollars

2022¥33,181
663
(707)
915
(1,683)¥32,3692023$242,392
4,845(11,907)
6,672(10,791)$231,212(2) The changes in plan assets for the years ended March 31, 2023 and 2022 are as follows:

Plan assets at the beginning of the year
Expected return on plan assets
Actuarial gain or loss
Contributions paid by the employer
Retirement beneﬁts paid
Plan assets at the end of the year2023
¥32,369647(1,590)891(1,441)¥30,8762022
Fair value
Level 1

Level 2

Level 3

Total

Notes receivable

¥—

1,521

¥—

1,521

Accounts receivable—

40,154—40,154¥—

41,676¥—

41,676

Notes and accounts payable¥—

10,896¥—

10,896

Short-term bank loans—

10,300—10,300Long-term debt—

10,834—

10,834

Total liabilities¥—

32,030¥—32,030Total assets(3) The changes in liability (asset) for retirement beneﬁts for consolidated subsidiaries applying the simpliﬁed method for theyears ended March 31, 2023 and 2022 are as follows:

Liability for retirement beneﬁts at the beginning of the year
Retirement beneﬁts costs
Contributions to the plans
Liability for retirement beneﬁts at the end of the year

2023
¥79
76
(67)
¥88

Millions of yen

Thousands of
U.S. dollars

2022
¥ 92
97
(110)
¥ 79

2023
$592
569
(502)
$659

The description of valuation techniques and inputs used in the fair value measurements is as follows:

94

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

95

Notes to Consolidated Financial Statements(4) The reconciliation between the liabilities recorded in the consolidated balance sheet and the balances of deﬁned beneﬁt

In determining the long-term expected rate of return on plan assets, the Company and its consolidated subsidiaries consider

obligations and plan assets as of March 31, 2023 and 2022 are as follows:

the current and projected asset allocations, as well as current and future long-term rates of return for various categories ofMillions of yen

Thousands of
U.S. dollars

Unfunded retirement beneﬁt obligation
Net liability for retirement beneﬁts

2023¥35,118(31,403)
3,715
6¥ 3,7212022¥35,755(32,875)
2,879
5¥ 2,8852023$262,977(235,158)
27,81945$ 27,864

Liability for retirement beneﬁts
Net liability for retirement beneﬁts¥ 3,721¥ 3,721¥ 2,885¥ 2,885$ 27,864$ 27,864

Funded deﬁned beneﬁt obligation
Plan assets

plan assets.
(9) Actuarial assumptions
2023
Mainly 0.5%
2.0%

Discount rate
Expected rate of return on plan assets

2022
0.5%
2.0%

Deﬁned contribution plans
The Company and its consolidated subsidiaries contributed ¥283 million ($2,119 thousand) and ¥295 million to the deﬁned
contribution plans for the years ended March 31, 2023 and 2022, respectively.

The above table includes deﬁned beneﬁt plans applying the simpliﬁed method.

13. Income Taxes(5) The components of retirement beneﬁts costs for the years ended March 31, 2023 and 2022 are as follows:

Service costs
Interest costs
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service costs
Retirement beneﬁts costs based on the simpliﬁed method
Retirement beneﬁts costs

2023¥1,095
175
(647)
554
(26)
76
¥1,227

Millions of yen

Thousands of
U.S. dollars

2022¥1,121
178
(663)
493
(25)
97
¥1,2022023$ 8,200
1,310(4,845)
4,149
(195)
569
$ 9,188(6) Prior service costs and actuarial gain or loss included in other comprehensive income (before tax effect) for the years
ended March 31, 2023 and 2022 are as follows:

Prior service costs
Actuarial gain or loss
Total

2023
¥ 26
541
¥568

Millions of yen

Thousands of
U.S. dollars

2022
¥ 25
98
¥124

2023
$ 195
4,051
$4,253(7) Unrecognized prior service costs and unrecognized actuarial loss included in accumulated other comprehensive income(before tax effect) as of March 31, 2023 and 2022 are as follows:

Unrecognized prior service costs
Unrecognized actuarial loss
Balance at the end of the year

2023
¥2
3,970
¥3,973

Millions of yen

Thousands of
U.S. dollars

2022
(23)
3,428
¥3,4052023$1529,729$29,751

Signiﬁcant components of deferred tax assets and liabilities as of March 31, 2023 and 2022 are as follows:

2023

2022

2023

¥ 1,316
668
23
78
345
245
51
1,093
1,328
5,151
(253)
4,897

¥ 1,124
685
23
28
246
245
38
816
1,481
4,691
(62)
4,628

$ 9,855
5,002
172
584
2,583
1,835
382
8,185
9,945
38,573(1,895)36,671

Deferred tax liabilities:
Reserve for reduction entry of property, plant and equipment
Unrealized holding gain on other securities
Prepaid pension cost
Other
Total deferred tax liabilities
Net deferred tax assets(887)(2,473)(170)(49)(3,580)¥ 1,316(953)(2,728)(232)(105)(4,020)¥ 608(6,642)(18,519)(1,273)(367)(26,808)$ 9,855

Taxes on income consist of corporate, inhabitants’ and enterprise taxes. A reconciliation of the statutory tax rate to theeffective tax rate for the years ended March 31, 2023 and 2022 are as follows:2023*

The breakdown of plan assets is as follows:

96

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

Thousands of
U.S. dollars

Deferred tax assets:
Liability for retirement beneﬁts
Accrued bonuses to employees
Allowance for doubtful accounts
Accrued enterprise tax
Loss on retirement of inventories
Loss on devaluation of investment securities
Loss on retirement of property, plant and equipment
Amortization of deferred assets
Other
Subtotal
Valuation allowance
Total deferred tax assets(8) Plan assets

Domestic equity securities
Foreign debt securities
Foreign equity securities
General accountShort-term assets
Other
Total

Millions of yen

2023
4.0%
36.3
5.9
28.7
1.3
23.8
100.0%

2022
3.7%
46.9
4.5
19.0
3.1
22.8
100.0%

Statutory tax rate
Entertainment expenses and others that are not tax deductible permanently
Inhabitants’ per capita taxes
Tax credits for research and development expenses
Valuation allowance
Dividends income that is not taxable permanently
Other
Effective tax rate

2022
30.6%
0.6
2.0
(7.1)
0.0
(1.1)
(0.4)
24.6%

*Notes are omitted because the difference between the statutory tax rate and the effective tax rate is less than 5.0% of the statutory tax rate.

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

97

Notes to Consolidated Financial Statements

Accounting treatment of corporate and local income taxes

accounting treatment of corporate and local income taxes

expected contract term of more than one year. In

consideration arising from contracts with customers thator tax effect accounting related to these taxes

or tax effect accounting related to these taxes andaddition, there are no signiﬁcant amounts ofare not included in the transaction price.

From the year ended March 31, 2023, the Company anddisclosure in accordance with the “Practical Solution on theits domestic consolidated subsidiaries have applied the

Accounting and Disclosure Under the Group Tax Sharing

16. Segment Informationgroup tax sharing system. In addition, the Company and its

System” (PITF No. 42, August 12, 2021).

Segment information is omitted for the years ended

the years ended March 31, 2023 and 2022, since domestic

March 31, 2023 and 2022, since the Group operates in asales were more than 90% of net sales on the consolidated

single segment.

statement of income.

Reclassiﬁcation adjustments and income tax effects on other comprehensive income (loss) for the years ended March 31,(Related Information)(2) Property, plant and equipment

2023 and 2022 are as follows:

domestic consolidated subsidiaries have performed

14. Comprehensive Income

2023
Unrealized holding gain (loss) on other securities:
Loss arising during the year
Reclassiﬁcation adjustments
Before income tax effects
Deferred tax
Unrealized holding loss on other securities
Translation adjustments:
Adjustments arising during the year
Retirement beneﬁts liability adjustments:
Loss arising during the year
Reclassiﬁcation adjustments
Before income tax effects
Deferred tax
Retirement beneﬁts liability adjustments
Share of other comprehensive income of affiliates accounted for using
equity method:Gain arising during the year
Total other comprehensive loss(a) Information by Product and Service

Information about property, plant and equipment by

Millions of yen

Thousands of
U.S. dollars

Information by product and service is omitted for the years

geographical area is omitted for the years ended March 31,

2022

2023

ended March 31, 2023 and 2022, since the Group operates

2023 and 2022, since property, plant and equipment inin a single segment.

Japan constituted more than 90% of property, plant and¥ (149)
(683)
(833)
255
(578)

¥(888)
320
(568)
174
(393)

$(1,116)(5,115)(6,238)
1,910(4,328)

229

151

1,715

(1,095)
527
(568)
174
(394)

(592)
468
(124)
38
(86)

(8,200)3,946(4,253)
1,303(2,950)5¥ (737)21¥(306)

37$(5,519)

equipment on the consolidated balance sheet.
(b) Information by Geographical Area
(1) Sales
Information about sales by geographical area is omitted for(c) Information by Major Customer for the Years Ended March
31, 2023 and 2022
Millions of yen

2023
Name of customer

Sales amount

Related segments

Alfresa Holdings Corporation¥19,517̶

MEDIPAL HOLDINGS CORPORATION

18,194̶SUZUKEN CO., LTD.

16,801̶Toho Pharmaceutical Co., Ltd.

13,089̶
Thousands of U.S. dollars

2023
Sales amount

Related segments

15. Revenue Recognition

Alfresa Holdings Corporation

Name of customer$146,151

̶Information on the disaggregation of revenue from contracts with customers for the years ended March 31, 2023 and 2022 is

MEDIPAL HOLDINGS CORPORATION

136,244̶

as follows:

SUZUKEN CO., LTD.

125,812̶Toho Pharmaceutical Co., Ltd.

98,016

̶Sales of pharmaceuticals and other products
Royalty income and service revenue
Revenue from contracts with customers
Net sales to external customers
Useful information in understanding revenue fromcontracts with customers is as disclosed in “Notes to2023¥108,526
4,743¥113,270¥113,270

Millions of yen

Thousands of
U.S. dollars

2022¥101,147
4,387¥105,534¥105,534

2023$812,685
35,517$848,210$848,210

March 31, 2023, which is expected to be recognized fromthe year ending March 31, 2024 onward, is as follows:

Consolidated Financial Statements, 2. Summary of
Signiﬁcant Accounting Policies, (m) Significant Revenue andExpense Recognition Standards.”

Millions of yen

2022
Name of customer

Sales amount

Related segments

Alfresa Holdings Corporation¥18,603—

MEDIPAL HOLDINGS CORPORATION

17,464—SUZUKEN CO., LTD.

16,523—

Toho Pharmaceutical Co., Ltd.

11,863—(1) The Group has no balances of contract liabilities. In
addition, there is no revenue recognized in the year

As the Group operates in a single segment, information about related segments is omitted.

Information regarding the relationship between theended March 31, 2023 from performance obligations

satisfaction of performance obligations under contracts

that were satisﬁed (or partially satisﬁed) in previous(d) Information about Amortization and Unamortized Balance of Goodwill by Reportable Segmentwith customers and cash ﬂows arising from such contracts,ﬁscal years.

There was no unamortized balance of goodwill as of March 31, 2023 and 2022.

as well as the amount and timing of revenue from contracts
with customers that existed at the end of the year ended

98

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

(2) The Group has no signiﬁcant transactions with an initially

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

99

Notes to Consolidated Financial Statements

17. Amounts per Shareand Accounting Standard for Business Divestitures” (ASBJ

Amounts per share for the years ended March 31, 2023 and 2022 are as follows:

Guidance No. 10, revised on January 16, 2019). This has no

Basic proﬁt
Cash dividends
Net assets

2023¥ 82.4452.00
2,189.40

Yen

U.S. dollars

2022¥ 68.6252.00
2,172.83

2023$ 0.62
0.39
16.40(2) Scheduled date of relocation
May 2024

effect on the consolidated ﬁnancial statements.
(3) Purpose of relocation
Relocation of Head Office

To promote ﬂexible working style in light of internal

At the meeting of the Board of Directors held on April 26,

and external changes in environment, and to achieve2023, the Company resolved to relocate its head office andmore efficient management.

entered into a lease agreement on May 11, 2023 to move
Basic proﬁt per share was computed on the basis of thetreasury shares excluded from the calculation of theinto the building where the head office to be relocated.

proﬁt attributable to common shareholders of KYORIN

average number of shares during the ﬁscal year, which is

Pharmaceutical Co., Ltd. and the weighted average number

used to calculate the amount of proﬁt per share.

of shares of common stock outstanding during the year.

Furthermore, these treasury shares are included in the

Diluted proﬁt per share is omitted because no potentiallynumber of treasury shares excluded from the total number

1-3-7 Otemachi, Chiyoda-ku, Tokyo (8th to 10th ﬂoors,

dilutive shares were outstanding during the years endedof issued shares at the end of the ﬁscal year, which is used

NIKKEI building)March 31, 2023 and 2022.

to calculate net assets per share.

Cash dividends per share represent the cash dividends
applicable to the year.
basis of the net assets attributable to common shareholders

the years ended March 31, 2023 and 2022, respectively.

The treasury shares remaining in trust and recorded astreasury stock in shareholders’ equity are included in the(1) Location of new head office

office is under close examination.

ﬁscal year that were excluded from the calculation of theamount of proﬁt per share were 836,270 and 837,508 forshares of common stock outstanding at the year-end.

March 31, 2024
Expenses arising from the relocation of the head

The average numbers of treasury shares during the

The amount per share of net assets is computed on theof KYORIN Pharmaceutical Co., Ltd. and the number of

Outline of relocation of head office is as follows:(4) Effects on business results for the ﬁscal year ending

The numbers of these treasury shares at the end of theﬁscal year that were excluded from the calculation of net
assets per share were 835,443 and 837,508 as of March 31,
2023 and 2022, respectively.

18. Signiﬁcant Subsequent Event
Absorption-Type Merger of a Consolidated Subsidiary(4) Legal form of business combination

At the meeting of the Board of Directors held on May 11,

An absorption-type merger, with the Company as the2022, the Company resolved to conduct an absorption-typesurviving company and KYORIN Pharmaceutical Co.,merger (hereinafter, the “Merger”) with the Company as theLtd. being dissolved

surviving company and KYORIN Pharmaceutical Co., Ltd.,
which was its wholly owned subsidiary, as the resolving(5) Name of company after the combinationcompany by absorption with the effective date of April 1,

KYORIN Pharmaceutical Co., Ltd.

2023, and entered into the merger agreement on May 11,

The trade name was changed from KYORIN Holdings,

2022. The merger was effective as of April 1, 2023.

Inc. to KYORIN Pharmaceutical Co., Ltd. on April 1, 2023.

Outline of the business combination is as follows:(6) Other matters concerning the outline of thetransaction(1) Name of company to be acquired and its businessIn view of rapid changes in the business environment

Name of company to be acquired: KYORIN

surrounding the Group and the situation of thePharmaceutical Co., Ltd.

Company, the Company has decided to conduct theBusiness: Manufacture, sales, and purchases ofMerger in order to improve its business promotion

pharmaceuticals and other products

function and management efficiency.

(2) Date of execution of merger agreement
May 11, 2022

With respect to accounting treatments, the Company
accounts for the transaction as a transaction undercommon control, in accordance with the “Accounting(3) Date of business combination
April 1, 2023

Standard for Business Combinations” (ASBJ Statement No.
21, revised on January 16, 2019) and the “Implementation
Guidance on Accounting Standard for Business Combinations

100

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

101

Independent Auditor’s Report

102

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

103

Independent Auditor’s Report

104

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

105

Independent Auditor’s Report

This page intentionally blank

106

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

107

Corporate Overview and Stock Information(As of March 31, 2023)

Group Companies

KYORIN Pharmaceutical Co., Ltd.
Head Office

6, Kanda Surugadai 4-chome, Chiyoda-ku, Tokyo 101-8311
Phone: +81-3-3525-4700

Main business

Manufacture, sales, and procurement of pharmaceuticals

Establishment

1958

KYORIN Rimedio Co., Ltd.

Group Facilities Co., Ltd.

Common Stock ¥700 million
Outstanding
Shares64,607,936

Shareholders

13,888

Listing

Tokyo Stock Exchange (Securities code: 4569)
Mizuho Trust & Banking Co., Ltd.

Transfer Agent 1-3-3, Marunouchi, Chiyoda-ku, Tokyo 100-8241

Major Shareholders
Treasury stock

Percentage of shares held

Shareholders

Custody Bank of Japan, Ltd. (Trust Account)

5.29%

Kyorin Group Stock Ownership Association

3.83%

Individuals
and others

Banrina Co., Ltd.

3.35%

29.8%

Archans Co., Ltd.

3.35%

Yutaka Ogihara

3.22%

Mariko Ogihara

3.02%

KAKEN PHARMACEUTICAL CO., LTD.

2.75%

Akira Ogihara

2.74%

Percentage of ownership: 100%

Head office: 287-1, Shimocho Moroe-cho, Kanazawa-shi, Ishikawa 920-0017

Head office: 6, Kanda Surugadai 4-chome, Chiyoda-ku, Tokyo 101-8311

Operations: Manufacture, sales, and procurement of pharmaceuticals

Operations: Manufacturing and testing of pharmaceuticals

As the Kyorin Group subsidiary responsible for the generic

KYORIN Pharmaceutical Group Facilities was created throughthe merger of KYORIN Pharmaceutical Co., Ltd.’s Noshiro Plant,

reliable drug manufacturer.” To contribute to the health of

KYORIN Rimedio’s Manufacturing Division, and the former

19.3%

patients, and recognizing critical social issues in reducing

KYORIN Pharmaceutical Facilities (Koka City, Shiga Prefecture),

healthcare costs and helping maintain the social security

and commenced operations on April 1, 2018. By consolidating

Financial
instruments
firms

infrastructure, KYORIN Rimedio will continue to ensure a stable

the Group’s manufacturing functions, the company provides a

supply of high-quality products and information, as it works tostable supply of high-quality, low-cost pharmaceuticals, and0.8%

deliver products that provide ease of use and peace of mind.

aims to be a pharmaceutical manufacturing subcontractor that

10.0%

8.32%

Capital: ¥350 million

Percentage of ownership: 100%

drugs business, KYORIN Rimedio aims to become “a highly

The Master Trust Bank of Japan, Ltd. (Trust Account) 11.23%
Mykam Co., Ltd.

Capital: ¥1,200 million

Financial institutions

Phone: +81-3-6627-8000

Major

KYORIN Pharmaceutical

Number ofshareholders
13,888is relied upon by other companies both inside and outside the
Kyorin Group.

Foreigncorporations

Other
corporations

17.6%

22.5%

Equity-Method Affiliate
Capital: ¥411 million
Percentage of ownership: 29.9%

Nippon Rika Co., Ltd.
Website Information

Head office: 2-2, Nihonbashi Honcho 4-chome, Chuo-ku, Tokyo 103-0023
Operations: Production and sales of pharmaceuticals, reagents, intermediates,and other products

https://www.kyorin-pharm.co.jp/en/
Please visit the Kyorin Group website for the latest information about the Group and earnings-related material.
2 Investor Relations
1 About Kyorin• President’s Message• Corporate Philosophy, LongTerm Vision, Medium-TermBusiness Plan

Medium-Term Business Plan, Financial
and Performance Results, IR Library,
Shareholder Information, etc.

Contact point for inquiries about this report

Public Relations & IR Group, Corporate Planning+81-3-3525-4707• Value Creation Process• History of the Kyorin Group• Business Overview of the Kyorin
Group• Corporate Proﬁle• Corporate Governance• Corporate Brand

108

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

3 Sustainability

KYORIN Pharmaceutical Co., Ltd. I Integrated Report 2023

109