KYORIN Holdings, Inc.

Progress toward achieving
our long-term vision

5, Kanda Surugadai 2-chome, Chiyoda-ku, Tokyo
101-8311, JAPANCorporate Communication
TEL+81-3-3293-3414
E-mail http://www.kyorin-gr.co.jp/contact/
URL
http://www.kyorin-gr.co.jp/

ANNUAL REPORT 2010
Year ended March 31, 2010
This report was printed on FSC-approved paper using vegetable oil ink.
Printed in JapanKYORIN Holdings, Inc.

KYORIN Holdings, Inc.

Corporate Information

Profile(As of July 2010)

On July 1, 2010, KYORIN Co., Ltd. changed its name to KYORIN Holdings, Inc.
Under its corporate philosophy of cherishing life and benefiting society by contributing to

Head Ofﬁce
5, Kanda Surugadai 2-chome, Chiyoda-ku, Tokyo 101-8311
Phone: +81-3-3293-3451
	URL: http://www.kyorin-gr.co.jp/en/
KYORIN Holdings, Inc.

better health, the Kyorin Group has established a new long-term vision titled HOPE 100,

(Trading name changed from July 1, 2010)

the final year of which will coincide with the company’s 100th anniversary in 2023.
By promoting the faster development of superior new drugs, and diversifying its businesses to respond to expanding healthcare needs, the Kyorin Group will work to realize itsrole as a unique and valuable integrated healthcare organization, and to further enhance its­corporate value.

Holding Company Structure

Establishment

1958

Common Stock¥700 million

Outstanding Shares

74,947,628

Shareholders

3,934

KYORIN Holdings, Inc. serves as the umbrella organization for the entire Kyorin Group, andby taking on the management strategy function and ensuring efficient allocation and use ofmanagement resources, works to ensure that the Group achieves its comprehensive poten-

Major Shareholders		

		
		
		

tial, and to improve consolidated business results.

Group Structural Diagram
KYORIN Holdings, Inc.

KYORIN PharmaceuticalCo., Ltd.
Drug discovery,­pharmaceutical business

KYORIN Rimedio Co., Ltd.
Generic drug business

Dr. Program Co., Ltd.
Consumer healthcare
business

Kyobundo Co., Ltd.
Sales promotion, and­advertising planning andproduction

	Minoru Ogihara
Hiroko Ogihara
	Apricot Co., Ltd.
Yoshiko Ogihara
The Master Trust Bank of Japan, Ltd. (Trust Account)
	Mykam Co., Ltd.
Japan Trustee Services Bank, Ltd. (Trust Account)
Keiko Sakurai
Yutaka Ogihara
	Mariko Ogihara
Listing

Transfer Agent	Mizuho Trust & Banking Co., Ltd.,
2-1, Yaesu 1-chome, Chuo-ku, Tokyo 103-0028
Phone: +81-3-3278-8111

Contents
Consolidated Financial Highlights

01

Research and Development

18

To Our Stakeholders

02

Products Under Development

19

FeatureCorporate Social Responsibility

20

New Medium-Term Business Plan
HOPE 100 Stage 1
04

Corporate Governance22

Directors, Auditors and Corporate Officers

25

Consolidated Financial Summary

10

Organization Chart/Major Subsidiaries

At a Glance

12

and Affiliates

26

Segment Overview

14

Corporate Information27    Ethical Drug Business14    Generic Drug Business16    Consumer Healthcare Business

17

Disclaimer Regarding Forward-Looking Statements

Tokyo Stock Exchange, First Section

Statements made in this annual report with respect to KYORIN Holdings, Inc.’s forecasts, plans, strategies and other statements otherthan those of historical facts are forward-looking statements about the future performance of the Company and its consolidated subsidiaries and are based on management’s rational assumptions and beliefs in light of information currently available. As a consequence,
readers should understand that, for a variety of reasons, actual results could differ materially from projections presented in this report.
Key factors that could impact our results include, but are not limited to, economic conditions, social trends, competition from rival
companies, laws and regulations, uncertainties in drug development and exchange rate fluctuations.

Percentage
of totalsharesoutstanding

8.17%
6.86%
6.67%
3.90%
3.70%
3.66%
3.20%
2.48%
2.48%
2.35%

27

KYORIN Holdings, Inc.

Consolidated Financial Highlights
KYORIN Holdings, Inc. (formerly KYORIN Co., Ltd.) and Consolidated Subsidiaries(as of the end of the fiscal year ended March 31, 2010)
Millions of yen

Net sales
Operating income
Net income
R&D expenses

FY2008FY2009Change (%)

90,8898,952
2,037
10,531

99,764
13,261
8,848
11,807

9.8
48.1
334.3
12.1
Change (Points)

ROE (%)ROA (%)

2.1

8.8

6.7

1.6

6.8

5.2
Change (Yen)

Net income per share (yen)Dividend per share (yen)27.24

118.37

91.13

13.00

50.00

37.00

Please see the consolidated financial summary on pages 10 and 11 for more detailed information.

HOPE 100 Stage 1
HOPE 100 Stage 1 is the new medium-term business plan, positioned as the firststep in realizing the long-term vision of HOPE 100, and covering a six-year span
between fiscal 2010 and fiscal 2015.

Business Strategy

S trategy

The Kyorin Group will continue to make steady progress
towards becoming a company that supports healthy lifestyles,
as set forth in its long-term vision, diversifying its consumer
healthcare business centered on its pharmaceutical business.

Organizational Strategy

O rganization

The Kyorin Group seeks to become a company in which employees can feel a sense of pride and trust in the company and its
organizations, and in which all Group employees are united intheir work—in short, a leading company for job fulfillment.

Performance Targets

P erformance

The Company will aim to achieve average annual growth inconsolidated sales of 5% or more, with an operating income
margin of approximately 15%.

HOPE 100
Aim for Health Of People and our Enterprises
HOPE 100 is a long-term vision looking forward to 2023, the 100th anniversary of the founding of subsidiary KYORIN­Pharmaceutical Co., Ltd. It encompasses our powerful goal of supporting healthy lifestyles through our business in the treatment
and prevention of disease and the maintenance and promotion of good health, while achieving sound, sustainable growth.

p06

p09

p09

01

02

Annual Report 2010

To Our Stakeholders

Representative Director, President and Chief Executive Officer
Masahiro Yamashita

Kyorin continues to fulfill its missionof cherishing life, and benefiting society
by contributing to better health.
In the five years through fiscal 2009, the Kyorin Group has focused on becoming an integrated,
trusted, and unique healthcare organization centered on global drug discovery operations under our
medium-term business plan, Kyorin MIC-09*1. Highlights of these efforts include, in fiscal 2005,
adding as subsidiaries the generic drug manufacturer Toyo Pharma (now KYORIN Rimedio) and skincare-focused cosmetics manufacturer Dr. Program, along with the merger in fiscal 2008 of our joint
venture with Nisshin Seifun Group Inc., Nisshin Kyorin Pharmaceutical Co., Ltd., with KYORIN
Major Developments Over the 5-Year Period
Group Developments
FY05

Product Developments· Toyo Pharma becomes a subsidiary (05.5) · Uritos licensed to LGLS (South Korea) (05.10)· Dr. Program becomes a subsidiary (05.6) · KRP-203 licensed to Novartis (Switzerland) (06.2)· Shift to holding company structure (06.3)

FY06· Sales of Tequin stopped (06.6)· Rapid Tester in-licensed from Daiichi Chemical Pharma (06.9)

FY07· HES business*2 transferred to Fresenius Kabi (07.4)· Uritos launched (07.6)· Kipres fine granules 4mg launched (07.10)· Milton CP launched (08.1)· Kipres approved for secondary indication of adult allergic rhinitis (08.1)· Pentasa received approval for juvenile use (08.2)· KYORIN Pharmaceutical merges with
Nisshin Kyorin Pharmaceutical (08.10)

FY08· Kipres tablet 5mg launched (08.4)· KRP-108 in-licensed from SkyePharma (U.K.) (08.4)· Sales of GATIFLO tablets stopped (08.9)· Pentasa tablet 500mg launched (08.10)· Uritos licensed to SPIMACO (13 countries in the Middle East and North
Africa) (09.2)

FY09· Gatifloxacin ophthalmic solution licensed to Senju (China) (09.7)· Uritos licensed to Eisai (China, ASEAN countries, India, Sri Lanka) (09.9)· KRP-209 in-licensed from Merz (Germany) (09.11)*1 The medium-term business plan for fiscal 2005–2009 focused on the keywords marketing, innovation, and challenge.
*2 Business relating to Hespander and Salinhes, plasma substitutes and extracorporeal circulation flow improvers

KYORIN Holdings, Inc.

­ harmaceutical Co., Ltd. That same year, we also started independent manufacturing and marketingPof Pentasa, a treatment for ulcerative colitis and Crohn’s disease. We also launched Uritos, a therapeutic agent for overactive bladder in fiscal 2007, and made strategic marketing efforts aimed atenhancing the value and widespread use of mainstay products, including Kipres, Mucodyne andPentasa, through product lifecycle management (additional formulations and indications, andchanges in use and dosage). We licensed our own drug KRP-203 to Novartis in fiscal 2005 and in
fiscal 2008 we in-licensed KRP-108 from SkyePharma, along with KRP-209 from Merz in fiscal 2009. As
a result, fiscal 2009 consolidated sales reached ¥99.8 billion (a 1.5-fold increase over five years), with
net income of ¥8.8 billion, both record results. ROE (Return on Equity) also exceeded our goal for the
final year of the plan, at 8.8%.
The Kyorin Group continues to face an increasingly harsh business environment. To continue torealize the goals of our corporate philosophy and achieve sustainable growth in fiscal 2010 andbeyond, we have established HOPE 100, a new long-term vision for the period through 2023, which
will mark the 100th anniversary of KYORIN Pharmaceutical, our core subsidiary, as well as a new
medium-term business plan, HOPE 100 Stage 1 (for fiscal 2010–2015), designed to reach the objectives of that vision. By building a diverse healthcare portfolio centered on our pharmaceutical business, we aim to meet the various health needs of consumers, distribute risk, and evolve into a
company that supports healthy lifestyles.
In our pharmaceutical business, we will work to build and promote the multi-faceted businessmodel we call our Pharma Complex Model. Under this model, we classify ethical drugs into new
drugs, original drugs, and generic drugs, and by making aggressive use of our alliances with subsidiaries KYORIN Pharmaceutical and KYORIN Rimedio, and with institutions both at home andabroad, will work to efficiently and effectively promote the business. We will also push ahead toreform our new drug development and licensing process, both to expand the pipelines that are
the source of our growth, and to support creation of new, world-class drugs that can be licensed
out. In the consumer healthcare business, we will focus on making our skincare business profitableand growing it, promoting brand strategies for Milton and working to develop new businesses. We
will also take on the challenge of expansion overseas, centered on countries in Asia. With a decline
in drug prices in the 6% range in fiscal 2010, our forecast is for consolidated sales of ¥100.3 billion,
with net income of ¥8.5 billion, but by the last year of HOPE 100 Stage 1, in fiscal 2015, we aim toachieve consolidated sales of ¥140.0 billion and operating income of ¥20.0 billion.
Under HOPE 100 Stage 1, the Kyorin Group will work to strengthen its management base throughbalanced implementation of investments for growth, investments for business continuity, andshareholder returns. Our dividend policy targets a consolidated payout ratio to shareholders of
30%, and based on this, we plan to distribute a dividend of ¥35 per share for fiscal 2010 (of which¥10 will be an interim dividend).
On July 1, 2010, the Company changed its name from KYORIN Co., Ltd. to KYORIN Holdings, Inc.,but that has not changed our strong desire to realize our corporate mission of cherishing life, andbenefiting society by contributing to better health. All of our employees remain sincerely committed to working together toward this goal.
I look forward to the continued support of all of our stakeholders.
Your Health is Kyorin’s Mission.
July 2010
Masahiro Yamashita
Representative Director, President and Chief Executive Officer

03

04

Annual Report 2010

FeatureNew Medium-Term Business Plan

HOPE 100 Stage 1
Aiming to Realize Our Corporate Philosophy Under theLong-Term Vision of HOPE 100
The Kyorin Group will promote diversified business expansion and development of theconsumer healthcare business while retaining the pharmaceutical business at its core, andby 2023 be recognized both within and outside the Group as a company that supports
sound and healthy lifestyles.

Overview of HOPE 100 Stage 1
As the first step in achieving the Kyorin Group’s long-term vision, HOPE 100 Stage 1 aims
to bolster the forward momentum of its businesses by reorganizing them and building aframework for promoting each business.
HOPE 100 Stage 1 is an important first step to achieving the goal, stated in the HOPE 100 long-term vision, of our
becoming a company which supports healthy lifestyles. In promoting HOPE 100 Stage 1, the Company will work todiversify its consumer healthcare business, while retaining the pharmaceutical business at its core. This term “diversify”
encompasses our strong desire to ensure that each business within the Kyorin Group grows to become a core driver of
future growth.
In addition, evolving into a company which supports healthy lifestyles, and contributes to individual health, requiresthat the Kyorin Group itself achieves sound growth. This includes not only financial good health, but also efforts tobuild a solid management platform to ensure that it remains healthy in terms of corporate governance, compliance,and corporate social responsibility.

Structure of HOPE 100 Stage 1

S

HOPE 100 Stage 1, the Kyorin Group’s new

Business Strategy
Strategy

medium-term business plan, comprises threeelements: Strategy, Organization, and Perfor-

P

Performance Targets
PerformanceO

mance. By working to steadily implement each ofthese components, we aim to enhance corporate

Organization Strategy
Organization

value even further.

HOPE 100 Stage 1 Performance Target
Breakdownof sales

FY2009(Results)

FY2009(Results)

FY2015(Target)Pharmaceutical¥91.0 billion
business

Net sales¥99.8 billion¥140.0billionConsumerhealthcare
business

Operating¥13.3 billion
income¥20.0
billion¥8.7 billion

Breakdown of target sales
Pharmaceutical¥120.0 billion
business
Consumer ­healthcare ¥20.0 billion
business

Long-term growth (envisaged)

2009

2010

2011

2012

Stage 1

2013

2014

2015

KYORIN Holdings, Inc.

05

The Kyorin Group Product Portfolio
The Kyorin Group is working to build a solid business foundation where our pharmaceutical and consumer healthcare
business complement one another. This will help them in addressing the business risks inherent in today’s changing
market conditions.

Business Portfolio Growth (Envisaged)
Growth potential(Billions of yen)

Generic Drugs
Group
200
Generic Drugs
Group
86
Original Products
Group
500

Pharmaceutical

Original Products
Group
495

New Drugs
Group

Consumerhealthcare

New Drugs
Group

329

500

Consumerhealthcare
business200
87

FY2010Timeline

FY2015

Pharmaceuticalbusiness

2016

2017

Stage 2

2018

2019

2020

2021

2022

Stage 32023 (FY)06

Annual Report 2010

The Kyorin Group aims for stable, sustainable growth. To realize our future corporate
vision, we must expand our pharmaceutical business, while building the core of the consumer healthcare business which complements it. To expand its pharmaceutical business,
the Kyorin Group will work toward ­corporate growth by promoting a multifunctional
growth strategy which calls for the diversified expansion of its healthcare business.

S O P ” Behind HOPE 100 Stage 1
The “     HOPE 100 Stage 1, The Kyorin Group’s new medium-term business plan, can be understood in terms of three elements: Business strategy; organization, which drives the execution of that strategy; and performance targets.

S trategy Overview of Business Strategy
Business Strategy

To become a company that supports healthy lifestyles, as stated in the long-term vision, the Company will build adiverse business portfolio centered on the core pharmaceutical business, and contribute to the health of individuals through the consumer healthcare business.

Overview of the Multi-core Strategy
To strengthen its pharmaceutical business through multi-faceted expansion, and diversify business risk, the­Company will aim for diverse expansion and growth in its consumer healthcare business.

Multi-core Strategy (MC Strategy)—Diversify the Consumer Healthcare Business Centering on the Ethical Drug Business—

Pharmaceutical Business

Consumer Healthcare BusinessPharma Complex Model (PC model)
Cultivate existing businesses andcreate new businesses

Multi-faceted business development(New drugs, original drugs, generic drugs)

Overview of the Pharma Complex (PC) Model
In order to respond to changes in business conditions, including trends in pharmaceutical administration policies,
the Kyorin Group will work toward a multi-faceted expansion of its pharmaceutical business, aiming for sustainable growth. To do this, under the PC model the Company classifies ethical drugs into new drugs (drugs alreadylaunched or slated for development, which are protected by patents and exclusivity), original drugs, and genericdrugs, enabling us to adopt a flexible strategy in responding to changing conditions.

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

Franchise
Customer(FC) Strategy

Otolaryngological
Urological

New DrugsGroup

Original Drugs
Group

Generic Drugs
Group

Other

Common Platform

Integration of wholesale sales channels
Consider optimization of total production system

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

Pharmaceutical Business
Based on the concept of the PC model for multi-faceted expansion of its pharmaceutical business, the Company
classifies ethical drugs into three categories: new drugs, original drugs, and generic drugs. By coordinating the production activities, and a portion of the sales activities of subsidiaries KYORIN Pharmaceutical and KYORIN Rimedio on
a common platform, and promoting alliances with companies outside the Group, the Company will aim to achievesustainable growth by responding to the dramatic changes anticipated in its business environment and pursuing
effective and efficient operations. The sales target in the pharmaceutical business for fiscal 2015 is based on developing our primary products including bronchial asthma and allergic rhinitis treatment Kipres and overactive bladder(OAB) treatment Uritos. We aim for total sales in the ethical drug business of ¥120.0 billion in fiscal 2015.

New Drugs
Drugs already launched or slated for development which are protected by patents and exclusivity.

Key points• Promote and maximize value of Kipres and Uritos• Launch of KRP-108 and out-licensing of KRP-104

KipresThe key attributes of Kipres, which has driven the growth of the Kyorin Group, include once-a-day oral administration,

Target net sales(Billions of yen)

40.0

and the absence of drowsiness. It has contributed to the treatment not only of adult and childhood asthma, but withan added indication also helps to treat both seasonal and perennial allergic rhinitis (in adults only).

29.2

The Kyorin Group predicts demand for Kipres in 2015 will reach ¥100 billion for asthma (LT antagonists), and over¥200 billion for allergic rhinitis (latent market for LT antagonists).
By tapping into latent demand among allergic rhinitis patients, we expect fiscal 2015 target sales to reach ¥40.0
billion as of the end of fiscal 2009, the Group’s share of the LT antagonists market was approximately 30%.

Uritos

2009

Results

2015 (FY)

TargetKey attributes of Uritos include its effectiveness against nocturnal symptoms of OAB, dose adjustment capabilities andTarget net sales

twice-a-day administration. We plan to market an orally disintegrating (OD) tablet in fiscal 2010, and to bring to light(Billions of yen)

10.0

new treatment needs for OAB patients through educational activities.
The Kyorin Group expects the number of patients being administered anticholinergic agents to increase from 1.2
million in fiscal 2009 to 2.4 million by fiscal 2015. Based on this predicted demand, the Group has set a sales target for
Uritos in fiscal 2015 of ¥10.0 billion or more.

KRP-108
In development of KRP-108, the Company aims to apply in fiscal 2012, and bring the product to market in fiscal 2014.
Characteristics of KRP-108 include its combination of ICS (fluticasone) and LABA (formoterol), and the selection of an
optimal delivery device.
The market for inhaled asthma therapies reached ¥70.0 billion in fiscal 2009, and the market for combination ICS/LABA products is expanding rapidly.

3.7

2009

Results

2015 (FY)

Target07

08

Annual Report 2010

Original Drugs
For original drugs the Company uses life cycle management (LCM) to improve value and extend life cycles of the drugs.

Key points• The Kyorin Group works to improve the product value and extend the life cycle of key­products such as Mucodyne and Pentasa

Mucodyne

Target net sales

We have implemented calculated, ongoing life cycle management of Mucodyne since its launch in 1981. In May of2010, we launched Mucodyne DS50% as a new formulation based on patient needs for convenience and on indica-(Billions of yen)

20.9

24.0

tions. With the new Mucodyne DS50% formulation, we aim to expand uptake among patients from juveniles to adults.
By providing information based on evidence, we also aim to increase prescription for use in patients with chronic
respiratory disorder.
In sales targets for Mucodyne we aim to increase sales from ¥20.9 billion in fiscal 2009 to ¥24.0 billion by fiscal 2015.
2009

Pentasa

Results

With Pentasa, we aim to establish both life cycle management, and a standard prescription for its use in treating ulcerative colitis. We will work to promote adoption of the 500 mg tablet, and popularize prescription of a 4 g dose for use
in the active stage of ulcerative colitis, while also promoting simultaneous use of intestinal infusion to induce andmaintain remission. We will also implement clinical trials of the new once-a-day dosage and administration for ulcer-

2015 (FY)

TargetTarget net sales(Billions of yen)

19.4

19.0

ative colitis during remission, with the goal of improving compliance and maintenance of remission.
The Kyorin Group forecasts market growth in mesalazine formulations of over 5% per year until fiscal 2015, but wealso expect increased competition due to the introduction of competing products (using identical ingredients). In viewof this situation we have set our fiscal 2015 target sales for Pentasa at ¥19.0 billion or more, with sales of original drugs
2009overall targeted to reach ¥50.0 billion (stable growth).

Results

Generic Drugs
Generic Drug GroupKey points• Stronger ties within the Kyorin Group• Promote external alliances

In generic drugs, the Kyorin Group will work to strengthen collaboration within the Group, and move to aggressively
promote external alliances. Specific initiatives will include integrating KYORIN Rimedio’s wholesale channels (logistics)
into KYORIN Pharmaceutical, and building an optimal production framework in and outside of the Group. We are also
looking into work on biosimilar products. In addition, we are examining options for expanding the number of supplementary items added (more than forty items in six years) and we aim to reduce the cost of sales to below 60%.
As a result, in our sales targets for generic drugs, we aim to grow sales from ¥8.6 billion in fiscal 2009, to ¥20.0
billion by fiscal 2015.

Consumer Healthcare Business
To respond to diverse health needs and supplement the growth of the pharmaceutical business, the Kyorin Group willgrow the skincare business and bring it into profitability, and deploy its strategy for the Milton brand of baby bottle
disinfectants. We will also work to create new businesses in healthcare-related fields which have the potential for future
growth and synergies with our pharmaceutical business.

Key points• Expand and promote the skincare business• Leverage Milton brand of baby bottle disinfectant• Develop and operate new businesses
In our consumer healthcare business we are promoting growth in the skincare business, and business operations
leveraging the Milton brand. We will also work to create new businesses in healthcare related fields and consumer
markets that have potential synergies with our pharmaceutical business, further promoting our business diversification
strategy. Through these measures, we aim to achieve more than two-fold growth in sales in the consumer healthcare
business in fiscal 2015 compared with fiscal 2009, to ¥20.0 billion, on the creation of a balance between existing andnew businesses.

2015 (FY)

TargetKYORIN Holdings, Inc.

Organizational Strategy

Organization

Overview of Organizational Strategy
To execute the business strategy outlined above, the Kyorin Group must energize all of
its people and organizations. We will work to become a leading company for job fulfillment, one in which employees can feel a sense of pride and trust in the company andits organizations, and in which all Group employees are united in their work.
In the formulation of its long-term vision and medium-term business plan, the Kyorin
Group has reaffirmed the importance of its founding spirit, that “A business is as goodas its people,” and has decided to adopt people-oriented management. It is valuing
our employees, and energizing our people and our organizations, that will drive theexecution of our business strategy, and we recognize these as the most critical issues inachieving results. To accomplish this, under HOPE 100, we will strive to become a leading company for job fulfillment, one in which employees can feel a sense of pride andtrust in the company and its organizations, and in which all Group employees are united
in their work. The first steps towards realizing this goal under HOPE 100 Stage 1 will
include efforts to rebuild our human resources management in every Group company(hiring, training, evaluation, promotion, assignment, compensation, and benefits), andto revitalize communications.

P erformance
Performance Targets

Balance Between Investment andShareholder Returns

Shareholder returns

Investment for growth

Performance Targets
FY2015 (Target)

Consolidated net sales
Pharmaceutical business
Consumer healthcare business
Consolidated operating income¥140.0 billion¥120.0 billion¥20.0 billion¥20.0 billion

Under HOPE 100 Stage 1, in addition to quantitative performance targets, the Kyorin
Group also aims to contribute to stakeholders. We have recognized that to achievesound, sustained growth we need to strengthen our management base by balancing
investments for growth, investments for business continuity, and shareholder returns.
We therefore plan to make aggressive investments for growth, acquire new business

Investment for business continuity

and products to reinforce the research and development pipeline in our core pharmaceutical business and proactively make strategic investments in new consumer healthcare
operations. In deciding dividends we target a consolidated payout ratio of 30%.

09

10

Annual Report 2010

Consolidated Financial Summary
KYORIN Holdings, Inc. (formerly KYORIN Co., Ltd.) and Consolidated Subsidiaries(as of the end of the fiscal year ended March 31, 2010)

Millions of yen

FY2005

FY2006

FY2007

FY2008FY2009Net sales

74,05477,093

81,07090,88999,764

Operating income

8,989

8,413

6,251

8,952

13,261

12.1

10.9

7.7

9.8

13.3

5,228

4,842

2,189

2,037

8,848

7.1

6.3

2.7

2.2

8.9

Net cash provided by operating activities

10,548

5,005

4,444

4,575

12,027

Net cash used in investing activities(7,085)(3,140)(6,144)(4,229)

412

3,463

1,865

(1,700)346

12,43910,107

8,609

10,826

10,531

11,807

13.6

11.2

13.4

11.6

11.8

Capital expenditure

4,605

2,954

1,952

1,612

1,291

Depreciation expense

3,646

4,544

4,536

3,799

2,810

ROE (%)

5.6

5.0

2.2

2.1

8.8

ROA (%)

4.5

4.0

1.8

1.6

6.8

Total assets

121,044

124,039

122,398

124,552

137,190

Total shareholders’ equity

94,752

98,17897,18496,501

104,911

78.2

79.2

79.4

77.5

76.5

Results of Operations

Operating income/Net sales ratio (%)
Net income
Net income/Net sales ratio (%)

Free cash flow
R&D expenses
R&D expenses/Net sales ratio (%)

Financial Position at Year End

Total shareholders’ equity ratio (%)

Yen

Per Share Data
Net income per share

69.74

64.97

29.26

27.24

118.37

Dividend per share

20.00

30.00

22.50

13.00

50.00

28.7

46.2

76.9

47.7

42.2

Dividend payout ratio (%)

The figures for the fiscal year ended March 2006 are the consolidated figures for KYORIN Pharmaceutical Co., Ltd. The figures from the fiscal years ended March 2007 andonward are the consolidated figures for the former KYORIN Co., Ltd.

KYORIN Holdings, Inc.

Sales of key products among the Group’s ethical drugs in the Japan segment were strong,

Net sales

and with the addition of generic drug sales, net sales reached ¥99,764 million (up 9.8%
over the previous fiscal year), the highest net sales on record.
Sales and general administrative expenses increased in the integration with Nisshin Kyorin

Operating income

Pharmaceutical Co., Ltd., but the increase in sales and improvements to sales cost ratios
brought a significant increase in gross profit, with operating income reaching a record¥13,261 million, an increase of 48.1% over the previous fiscal year.
With net income of ¥8,848 million (up 334.3% from the previous fiscal year), and a signifi-

Net income

cant reduction in extraordinary losses compared to the previous fiscal year, the Group
posted record profits.
With significant growth on the profit side, ROE rose to 8.8% (6.7 points above the previ-ROE

ous fiscal year).

Net sales

Operating income

Net income(Millions of yen)

(Millions of yen)

(Millions of yen)

120,000

15,00013,261

99,76490,88990,00074,05477,093

10,000

8,848

8,000

81,07010,000

8,989

8,952

8,413

60,000

6,000

5,228

4,842

6,251
4,000
5,000

2,189 2,037

30,00002,0002005 2006 2007 2008 2009 (FY)02005 2006 2007 2008 2009 (FY)02005 2006 2007 2008 2009 (FY)ROE

Total shareholders’ equity ratio

Net income per share/
Dividend payout ratio

(%)

(%)

(Yen)

10.0

8.8

80.0
79.2

(%)

150

79.4

90.0
76.9
118.37

79.0

8.0

6.0

5.6

78.0

5.0

100

78.3
77.5

76.5

0

47.7
42.2

77.0

4.0

2.0

60.0
46.2
69.74
64.97

2.2

2.1

2005 2006 2007 2008 2009 (FY)

50

76.0

75.0

2005 2006 2007 2008 2009 (FY)

0

28.7

30.0
29.26 27.24

2005 2006 2007 2008 2009 (FY) 0

Net income per share (Left scale)
Dividend payout ratio (Right scale)

11

12

Annual Report 2010

At a Glance

Sales composition ratio

Ethical Drug BusinessNet sales(Millions of yen)

100,000
82,39575,69080,00064,280 62,950

67,63060,00082.6%
40,00020,00002005 2006 2007 2008 2009 (FY)

Ethical drug sales in Japan

Ethical drug sales in Japan

Ethical drug sales overseas

Ethical drug sales overseas

Generic Drug Business

10,000

8,642

8,000
6,264

5,734
5,088

6,000

8.7%

3,488
4,000
2,000
0

Consumer Healthcare Business2005 2006 2007 2008 2009 (FY)

9,000
7,273 7,296

6,000

7.2%

7,157

5,035

3,000

0

Other Businesses

7,725

2005 2006 2007 2008 2009 (FY)

2,000
1,569
1,500

1.5%

1,248

1,133

1,208
1,054

1,000

500

0

2005 2006 2007 2008 2009 (FY)KYORIN Holdings, Inc.

Outline of operations
Led by core company KYORIN Pharmaceutical Co., Ltd., the Kyorin Group is focusing sales
activities in respiratory medicine, otolaryngology, and urology on advancement of its franchise customer strategy, as well as strengthening relationships with physicians and othermedical professionals to enhance our domestic marketing platform.
Key products include Kipres, for treating bronchial asthma and allergic rhinitis; Mucodyne, a mucoregulant; Pentasa, for treating ulcerative colitis and Crohn’s disease; andUritos, for treating overactive bladder.
In research and development, the Kyorin Group has established a trilateral drug discovery network encompassing KYORIN Pharmaceutical Co., Ltd. (Japan), ActivX Biosciences,Inc. (United States), and Kyorin-Scotland Research Laboratories (Europe), promoting theefficient development of attractive new products.

This business is led primarily by KYORIN Rimedio Co., Ltd., which focuses on the manufacture and sale of generic drugs.
We see considerable growth potential for generic drugs in Japan’s ethical drug market,
and their importance is growing as Japan’s Ministry of Health, Labour and Welfare continues to promote the use of generic drugs as a means of curbing domestic healthcare costs.
To capitalize on this opportunity, we are 1) strengthening sales capabilities by increasing thenumber of medical representatives and securing buyers; 2) lowering cost of sales ratios byincreasing production rates; and 3) working to expand our product lineup by promoting
more efficient, effective research and development.
In the consumer healthcare business, we are putting all our effort into expanding sales ofMilton, a baby bottle disinfectant highly regarded by obstetricians and midwives. We arealso working to strengthen sales of our core products—Switch OTC drugs. These are nonprescription drugs which incorporate proven ingredients from existing ethical drugs.
Dr. Program Co., Ltd., which develops and sells cosmetics using drug formulation technology, is rolling out skincare products targeting women over 40. The Kyorin Group is also
working to enhance its lineup of high value-added products and to expand its base of
repeat customers, rather than simply increase customer numbers, while also focusing onstrengthening its operating base through collaboration between Group companies.
Other businesses include Kyobundo Co., Ltd., which is responsible for planning and production of promotional materials and advertising, and sales of medical promotional tools andpackaging materials to third parties including KYORIN Pharmaceutical and KYORIN Remedio.
Within the Kyorin Group, Kyobundo is also responsible for working to enhance sharedservices, and for the creation of new businesses within the healthcare field.

13

14

Annual Report 2010

Segment Overview
Ethical Drug Business

Strengths and Characteristics
The ethical drug business is driven primarily by KYORIN Pharmaceutical, which uses its franchise customer strategy infocusing on respiratory medicine, otolaryngology, and urology. By concentrating resources on these key fields, and pursuing customer-centric, rather than product-centric sales activities, we seek to improve the accuracy of our customer targeting, consistently provide finely-tuned customer service, and strengthen the competitiveness of our domestic business base.
In research and development, we focus on developing new drugs, leveraging the highly creative drug discovery capabilities for which we have received global recognition.

Industry Trends
While the domestic pharmaceutical industry is seeing the establishment of a new policy regarding premiums for promoting new drug creation and the elimination of off-label drug use, which in real terms will help maintain new drug prices,additional reductions to the price of longstanding items on the NHI drug price list, and further measures to promote theuse of generic drugs, represent major changes in the business environment.

Consolidated Operating Results for Fiscal 2009
In the midst of these conditions, in our domestic ethical drug business we continued to push ahead with our franchisecustomer strategy, while taking advantage of the strengths of our team-based sales system to expand market sharethrough sales activities. As a result, segment sales rose ¥7,831 million, to ¥79,766 million, up 10.9%.
Sales of our principle products showed steady growth. Sales of Kipres, a treatment for bronchial asthma and allergic
rhinitis, rose ¥4,001 million year on year, to ¥29,160 million, an increase of 15.9% due to growth in prescriptions for (adult)
allergic rhinitis, and further market penetration of Kipres 4 mg fine granules (juvenile). Pentasa, a treatment for ulcerative
colitis and Crohn’s disease, saw sales increase ¥3,745 million to ¥19,421 million, up 23.6%, with the transfer of sales fromthe merger of Nisshin Kyorin Pharmaceutical with KYORIN ­Pharmaceutical on October 1, 2008, and increased market
penetration of Pentasa 500 mg tablets with the approval of an additional indication and dosage for active-stage ulcerative
colitis. Sales of Uritos, a treatment for overactive bladder, increased ¥1,740 million over the previous year to ¥3,703 million, up 85.0%. Sales of Mucodyne, a mucoregulant also showed stable growth, increasing by ¥300 million over the previous year to ¥20,940 million, up 1.5%. In other products, sales of Ketas, a treatment for bronchial asthma andcerebrovascular disorders, declined compared to the previous year’s results.
In licensing activities, in July 2009 we signed an agreement with Senju Pharmaceutical Co., Ltd., granting them an
exclusive license to market our Gatifloxacin ophthalmic solution in China, and in September of that year, we also signed
an agreement with Eisai Co., Ltd. for exclusive development and marketing of Uritos tablets in China, India, Sri Lanka, and
ASEAN countries. Overseas sales of ethical drugs fell by ¥1,126 million, due to a drop in sales of ­Gatifloxacin, ending theyear at ¥2,629 million, a year-on-year decrease of 30.0%.
On the production front, we worked to develop efficient, high-quality production and stable supply systems at threeKYORIN Holdings, Inc.

plants, including KYORIN Pharmaceutical’s Noshiro Plant in Akita Prefecture and the Okaya Plant in Nagano ­Prefecture, as
well as KYORIN Rimedio’s Inami Plant in Toyama Prefecture.

Major Domestic and Overseas Alliances
Eisai

Yungin (Korea)

Senju Pharmaceutical

Taisho Pharma

Dainippon­Sumitomo Pharma

Meiji Seika
KaishaNovartis (Switzerland)
Kaken

Chugai Pharmaceutical

Han-Dok (Korea)

Banyu Pharmaceutical

KYORIN
Pharmaceutical

Merck & Co. (U.S.)

LG Life Sciences (Korea)
Sato Pharma

Sekisui Medical
Ono Pharma
Chong Kun Dang (Korea)
Shinlin Sinseng (Taiwan)
SkyePharma(U.K.)
Ferring(Switzerland)

Nichi-Iko
Pharmaceutical
MediciNova(U.S.)*SPIMACO: Saudi Pharmaceutical Industries & Medical Appliances Corporation

KYORIN Pharmaceutical Co., Ltd.
http://www.kyorin-pharm.co.jp/en/
As the core of the Kyorin Group, KYORIN Pharmaceutical focuses on the drug
discovery business, working to fulfill its mission as a drug manufacturer throughthe creation of innovative new drugs, and strengthening its competitiveness in thepharmaceutical industry through the rapid expansion of business. We must securea firm position amid the dramatic changes taking place in the pharmaceuticalindustry in Japan and overseas. We will therefore continue to pursue our businessinitiatives with the goal of becoming a unique and valuable company that contributes to healthy lifestyles.
Areas of Businessl Drug discovery researchl Research and developmentl Manufacturingl Sales

SPIMACO* (Saudi Arabia)

Allergan(U.S.)

Nisshin Pharma
Galderma15

16Annual Report 2010

Generic Drug Business

Strengths and Characteristics
The Kyorin Group’s generic drug business is a secondary business to the ethical drugs business, and is expected to play amajor role in the future. It is centered around KYORIN Rimedio Co., Ltd., which provides highly reliable generic drug
products to complement the Group’s core new drug business. By integrating its wholesale channels with those of KYORIN
Pharmaceutical Co., Ltd., the company is working to make effective, efficient use of a broad wholesale network as part ofits sales efforts.

Industry Trends
Aimed at containing health care costs, measures to promote the use of generic drugs have brought rapid growth toJapan’s generic drug market. The government has announced a numeric goal calling for generic drugs to represent agreater than 30% share in volume by fiscal 2012, and the market is expected to expand further going forward. As thegovernment continues to promote measures to contain healthcare costs, generic drug manufacturers will be expected toplay a larger role in providing a stable supply of high-quality drugs, and to contribute to reigning in the cost of healthcare.

Consolidated Operating Results for Fiscal 2009
Sales in the generic drug business in the fiscal year ended March 2010, increased with expanded sales of both mainstay
and new products, and the effects of a change in KYORIN Rimedio’s fiscal closing from January 31 to March 31, resulting
in a transitional consolidated fiscal period of 14 months. Sales were up ¥2,377 million from the previous period, at ¥8,642
million, an increase of 38.0%. With toll manufacturing of mainstay products for KYORIN Pharmaceutical, and an increasein sales of its own mainstay and supplementary products, KYORIN Rimedio was able to raise plant utilization rates, thus
reducing its cost ratios. In addition, it successfully moved into profitability on efforts to break away from price-cutting
wars, and worked to strengthen its profit structure.

KYORIN Rimedio Co., Ltd.
http://www.kyorin-rmd.co.jp/(Japanese Only)

As the generic drug business subsidiary of the Kyorin Group, KYORIN Rimedio Co.,
Ltd. aims to become a highly reliable generic drug manufacturer. It will strive toimprove product quality and win the trust of healthcare professionals, and to provide products that patients can use with confidence. To contribute to better patient
health and play a critical social role in containing healthcare costs and helping tomaintain Japan’s social security infrastructure, KYORIN Rimedio will continue toensure a stable supply of quality products and information, and to deliver distinctive, reliable generic drug products to the market as a generic drug company.
Areas of Businessl Research and developmentl Manufacturingl SalesKYORIN Holdings, Inc.

Consumer Healthcare Business

Strengths and Characteristics
Starting with our Milton brand of baby bottle disinfectant, we will develop a consumer healthcare business that takes abroader approach to health issues, focusing on prevention, maintenance and improvement.
Milton is easy to use and effective against spore-forming bacteria, which are generally difficult to disinfect using heat.
For this reason, the product is highly regarded not only by consumers, but also by obstetricians and midwives.
Dr. Program Co., Ltd., which develops and sells skincare products, has advanced technology which uses nanocapsules,
also utilized in drug applications, in formulating highly concentrated beauty ingredients.

Industry Trends
With a change in disease structure brought on by the aging population and an increase in sufferers of lifestyle-relateddiseases, curbs on healthcare costs, and a stronger awareness of health issues, peoples’ health needs are shifting awayfrom treatment and towards prevention. Healthcare needs are expected to grow even further going forward.

Consolidated Operating Results for Fiscal 2009
In the consumer healthcare segment in fiscal 2009, sales were down ¥568 million year-on-year, to ¥7,157 million, a drop of 7.4%.
Sales of Milton were up slightly year on year. At the same time, however, Dr. Program, which pursued initiatives to reform its
business structure to improve profitability, saw its sales drop by ¥751 million, a decline of 19.5% from the previous period, partly
due to the effects of changing its fiscal year end in the previous period.
*Due to a change in the settlement date for Dr. Program, figures for the year ending March 31, 2009, reflect 14 months of sales.

Dr. Program Co., Ltd.
http://www.drprogram.co.jp/(Japanese Only)

Dr. Program has gained the support and trust of its customers, and grown its business since it was established, based on providing highly safe and effective cosmetics. In this business, we manufacture products based on nanocapsule technology–adrug formulation concept that we have cultivated through research into new beauty
enhancing compounds and development of technologies for penetration of compounds. Going forward, the company will continue to listen closely to its customers,
working to create completely new value in the market and contributing to thebeauty and good health of women everywhere.
Areas of businessl Development and sales of skincare products

17

18

Annual Report 2010

Research and Development
The Kyorin Group’s research and development activities are pursued through a trilateral drug discovery network
encompassing KYORIN Pharmaceutical Co., Ltd. in Japan, ActivX Biosciences, Inc. in the United States, andKyorin-Scotland Research Laboratories in Europe. Taking advantage of the close ties between divisions, which
work to verify the synthesis, pharmacology, ADME ­(Absorption, Distribution, Metabolism, Excretion), and safetyof new drugs, we work to promote the efficient development of attractive new products.
In particular, we have focused management resources on development of our proprietary drugs in the key
areas of infectious, immunological/allergic, and metabolic diseases.
In development in Japan, in December of 2009 we began Phase III clinical trials of a new, once-a-day
dosage for Pentasa, a treatment for ulcerative colitis and Crohn’s disease. Also in December of 2009, we
received approval to change the daily maximum dosage (change in administration and dosage) of imidafenacin, a treatment for overactive bladder, and in the same month, we filed a new application for an oral disintegrating tablet. In January of 2010, we received approval for the manufacture and sale of mucoregulant
Mucodyne DS50%, with sales commencing in May of the same year. Additionally, in March 2010 we completed
Phase IIb clinical trials of KRP-104, an anti-diabetes agent.
Overseas, Phase IIb clinical trials of the KRP-104 anti-diabetes agent began in November of 2009. On ­November
5, 2009, we signed a license agreement with Merz Pharmaceuticals of ­Germany for KRP-209 ­(Neramexane), a tinnitus
treatment, giving us exclusive license in Japan for the development, manufacture, and sale of this drug.
Research and development expenses in the period were ¥11,807 million, a year-on-year increase of 12.1%.

Focus on Timelines in Research and Development
Under the new HOPE 100 Stage 1 medium-term business plan, we will pursue initiatives to be implemented as
research and development activities with close attention to the plan’s timeline, from T1 through T3, based on thestage at which results of the initiatives are realized. Under the new medium-term business plan, development ofproprietary drugs is focused on the key areas of respiratory, urologic and infectious disease and others. As wemove forward we will work to rebuild our drug discovery network. Under our medium-term business plan will aim
to introduce the bronchial asthma treatment KRP-108 within fiscal 2014, and out-license KRP-104, our anti-diabetes
agent. At the same time, we will work actively on the lifecycle management (LCM) of our pharmaceuticals.

T1: Today—For Results in Stage 1
T2: Tomorrow—For Results in Stage 2
T3: The day after tomorrow—For Results in Stage 3

T1• Product under development to be brought to market quickly: KRP-108• Out-licensing of product under development: KRP-104• LCM* (Uritos OD tablets)

Ethical Drug Business

Original drugs group• LCM* (Mucodyne DS50%, new applications/dosage for Pentasa)*LCM: Life Cycle Management

New drugs group• Aim for early application and approval of newly developed products and enhance andT2••strengthen the pipeline
Promote development of KRP-209, KRP-203, AS-3201, KRP-110, and antibacterial agents

 ecure licensed-in drugs (Franchise customer domain: respiratory medicine, otolarynS
gology and urology)

New drugs group

T3• Strengthen drug discovery capabilities: Create new global pharmaceuticals•

 ake action for fundamental reform of drug discovery system to strengthen proprietary drugTdevelopment.

KYORIN Holdings, Inc.

Products Under Development(As of May 11, 2010)

Ph II~Application
Compound/Code

Therapy area/Action

OriginFeatures

Comments

Stage
Pre-clinical

Pentasa
Tablets

Ulcerative colitis

AS-3201
Tablets

Diabetic
neuropathy

KRP-104

KRP-108

FerringPharmaceuticals
Dainippon
Sumitomo

Anti-diabetes
agent

Ph III

Application

12/2009

Overseas

A DPP inhibitor to reduce blood
glucose through suppression of thedegradation of insulin-releasing
hormone. Diabetic therapy withfewer side effects than existingtreatments is expected.

SkyePharma

Ph II

Domestic

colitis in the remission phase(once a day)
Aldose reductase inhibitor to
reduce the sorbitol accumulation in
the cell, and improve diabetic
neuropathy

In-house

Anti-asthmatic

New dosage regimen for ulcerative

Ph I

An ICS/LABA combination product,
which offers better compliance andconvenience to the patients.

 o-development withC
Dainippon Sumitomo• PhII b (9/2007)•

 verseas PhIIb (11/2009)O(Domestic PhIIb completed (3/2010))

Domestic

3/2005

Overseas*•

License agreement with
SkyePharma (4/2008)(Domestic Ph II­completed (4/2010))•

Domestic

2/2008Overseas9/2007

Domestic

8/2008Overseas***Eisai :Describe the latest changes**United States: Abbott, Europe: Mundipharma
Other Comments• Orally Disintegrating Tablet of Immidafenasin (INN), a Drug for Overactive Bladder: Application (12/2009)• Mucoregulating drug “Mucodyne DS50%”: Approval (1/2010) Launch in the market (5/2010)

POC Project (Pre-clinical~Ph I)
Compound/Code

Therapy area/Action

OriginFeatures

Comments

Stage
Pre-clinical

KRP-203

KRP-110

Transplantation
In-house
and autoimmune
diseases treatment

Opioid-induced
constipation andIntractablepruritus

In-house

An immunosuppressant with anovel mechanism called an
S1P-agonist. It may have a better
safety profile than previous ones aswell as an excellent effect underconcomitant use with other typesof immunomodulator.

•

L icense agreementwith Novartis (2/2006)

A highly selective μ-opioidreceptor
antagonist. It is expected to block
constipation induced by opioidanalgesics without interrupting theanalgesic effect of opioids. It is orally
effective in various itching models,
indicating potential of a novelanti-itch drug for intractable pruritus.

Ph I

Ph II

Domestic

In preparation

Overseas7/2007

Ph III

Application

Domestic

Overseas

In preparation

1. Amorolfine HCl nail lacquer and KRP-105 have been deleted from the list of products under development since both products were discontinued from the standpoint of our R&D strategy.
2. T he standard on information disclosure has been changed and the products, which have been selected enter the clinical stage, will be disclosed. Therefore, KRP-107 and KRP-109 have been deleted from this list, while
the development of KRP-107 and KRP-109 will be continued.

In Licensing (Fiscal 2009)
Compound/Code

Therapy area/Action

OriginFeatures

Comments

Stage
Pre-clinical

KRP-209

Tinnitus

Merz

KRP-209 (Neramexane) is expected
to improve the patients’ annoyanceand difficulties in their life causedby tinnitus mainly through its two
pharmacological properties:
1)NMDA antagonistic activity and2)Nicotinic acetylcholine antagonistic activity

L icense agreementwith Merz (11/2009)(Ph I clinical trial in Japan(single dose PK) in US
completed by Merz
(3/2010))

Ph I

Ph II

Ph III

Application•

Domestic

In preparation

Overseas******Merz

Licensing Development
Compound/CodeLicensee·
Collaborativeresearch

Therapy area/Action

OriginL icensed from Allergan (Cross license of
gatifloxacin ophthalmic solution)• License-out to Senju (5/2004)

Alphagan/AlphaganP

Senju
Pharmaceutical

Glaucoma

Allergan (US)

•

Ketas

MediciNova (US)Multiple sclerosis
treatment

In-house•

KCA-757

KRP-203

MediciNova (US)Novartis(Switzerland)

Anti-bronchialasthma andInterstitialcystitis
agentTransplantation
and autoimmune
diseasestreatment****Anti-bronchial Asthma *****Interstitial cystitis

In-house

In-house

Stage

Comments

 YORIN grants MediciNova an exclusive license
Kin all countries worldwide except for Japan, China,
South Korea and Taiwan to develop, manufactureand sell the compound and products for themultiple sclerosis indication.(10/2004)• 
R esult of PhII was reported in April 2008.
 YORIN grants MediciNova an exclusive license
Kin all countries worldwide except for Japan, China,
South Korea and Taiwan to develop, manufactureand sell the compound and products• Interstitial cystitis: Result of Ph II/III was reported in
January 2007 and development ceased• 
Bronchial asthma: Clinical trial oversea wasdiscontinued.
••

 n immunosuppressant with a novel mechanismAcalled an S1P-agonist. It may have a better safety
profile than previous ones as well as an excellent
effect under concomitant use with other types of
immunosuppressants.

Pre-clinical

Ph I

Ph II

Domestic

Ph III
7/2007

Overseas
Domestic

Overseas8/2005

Domestic

11/2006****

Overseas5/2005*****

Domestic
Overseas7/2007

Application

19

20

Annual Report 2010

Corporate Social Responsibility
The starting points of the Kyorin Group’s corporate social responsibility (CSR) endeavors are to cherish lifeand benefit society by contributing to better health, together with Kyorin’s corporate branding aimed atmaking that philosophy a reality. For sustainable growth, Kyorin has made a commitment to all stakeholders to help bring about a happy society and will continue to work to realize that goal by providing trusted
products and services, and by fulfilling its corporate social responsibility in the areas of environmental andindustrial safety and hygiene and through activities that contribute to health and society.

Ongoing Environmental Initiatives
The main subsidiary of the Kyorin Group, KYORIN

Measures Relating to Industrial Safety andHygiene­Pharmaceutical, is implementing the following activities

In 2004, KYORIN Pharmaceutical obtained occupationalon an ongoing basis.

health and safety management system certification

1. Preventing global warming(OHSAS 18001) for all production and research divisions,• Reduce the amount of fuel used by installing cogenera-

and in 2005, consolidated its ISO 14001 and OHSAS

tion systems and using smaller boilers• Reduce power consumption by controlling air-­

18001 measures. The Rimedio Center of KYORIN­Rimedio obtained ISO 14001 certification in 2008 andconditioning settings to 27 °C in summer and 21 °C

OHSAS 18001 certification in 2009.

in winter

1. Rate and severity of work accidents• Use eco-cars and hybrid vehicles to improve fuel efficiency and reduce exhaust emissions

As a result of measures implemented to prevent work
accidents, the frequency and severity of such accidents

2. Reducing waste volume

are much lower than the industry average. There have

• Reduce waste emissions and promote recycling towards

been no fatal accidents since the start of operations.

achieving zero final landfill

2. Vehicle accidents

3. Managing chemical substances

Despite setting a target of a year-on-year reduction of• Manage substances covered by the Pollutant Release

30% in the number of vehicular accidents per branch, inand Transfer Register (PRTR) law, and evaluate methods

fiscal 2009 there were 182 accidents, more than thefor reducing amounts used and the use of alternatives

previous year. Kyorin views this matter very seriously, and

4. Preventing atmospheric pollution

as such, is implementing various accident-­prevention• Measure and control the amounts of soot and smoke,measures. For fiscal 2010, the Company has set per store

nitrogen oxides (NOx) and sulfur oxides (SOx) emitted

targets intended to hold accidents on a Company-wideby boilers and generatorsbasis to no more than 108.

5. Preventing water pollution• Process wastewater, including by primary processing

Corporate Social Responsibility

plants, and management of pH, biochemical oxygen

In recognition of the importance of its corporate social

demand (BOD) and suspended solids (SS) levels

responsibility, the Kyorin Group is enhancing its corpo-

6. Preventing deforestation

rate ethical standards and putting in place a system of• Recycle paper, use recycled paper and promote acompliance in line with the approach set out below.

paperless office environment
7. Preventing destruction of the ozone layer

Compliance Measures• Swiftly replace equipment that uses specified

Basic policy

chlorofluorocarbons

An enterprise should pursue profits through fair competi-

8. Preventing ground subsidencetion as an economic entity, and at the same time should• Check for ground subsidence and improve utilization of

be a force for the greater good of society.

piped water

Based on its corporate philosophy to cherish life and9. Preventing contamination of soil and surface water

benefit society by contributing to better health, the• Locate tanks above ground, install oil barriers andKyorin Group will conduct its activities in every country

implement emergency response training

based on a high standard of corporate ethics, respecting

10. Noise reduction

human rights and observing all laws, as well as standards• Take steps to measure and manage noise levelsof conduct and the spirit thereof.

11. Preventing foul odors

Measures• Install draft chambers and use scrubbers to remove odors

To ensure the Group’s activities are based on a highstandard of corporate ethics, the Company has drawn up

KYORIN Holdings, Inc.

the Kyorin Corporate Charter and the Kyorin Compliance

Local cleanup activities

Guidelines, and instituted a Compliance Committee.

For several years, the Okaya Plant has been a “foster
parent” responsible for beautifying a section of the shore

1. The Kyorin Corporate Charter was developed toof Lake Suwa as part of the Lake Suwa Adoption Program.

specify matters of corporate ethics and compliance in

Employees also help to keep the lakeside park clean.

accordance with our corporate philosophy, and serves

Employees of the Noshiro Plant participate in voluntary

as the starting point for our corporate activities.

activities to maintain the “Kaze-no-Matsubara,” a pine

2. The Kyorin Compliance Guidelines complement theforest and recreational area that acts as a barrier protect-

Kyorin Corporate Charter by clarifying the standards to

ing the locality from winds.

be followed for sound and proper business activities.

In our head office, employees participate on a volun-

3. In March 2006, the Compliance Committee was estab-tary basis in cleanup campaigns carried out twice a year

lished to provide overall supervision of corporateby the local Chiyoda City authorities.

ethics and compliance systems. Each company has aDistribution of Doctor Salon booklets

compliance promotion manager who is responsible forRadio Nikkei broadcasts Doctor Salon, a program aimed

the understanding and instilling of corporate ethics

at physicians. These broadcasts have been compiled intoand compliance.

booklets, which KYORIN Pharmaceutical’s medical repre-

Education and training

sentatives distribute during their monthly calls on doc-

In-house training courses are conducted to promote under-

tors. A wide range of diseases is covered, providing

standing of and instill corporate ethics and compliance.

timely coverage of current topics, making the booklets

1. Compliance managers organize education and train-very popular with primary care physicians.

ing courses on corporate ethics and compliance, which

Supporting sporting eventsare conducted at each level of the organization on a

The Kyorin Group supports sporting events that help tocompany-wide basis, and run instructional activities forpromote health. Starting in the fiscal year under review,company officers and employees.

the Group has also become a co-sponsor of the Giants

2. Details relating to corporate ethics and compliance

Academy, where members of the Yomiuri Giants baseball

are incorporated into job function-specific training

club provide year-round baseball instruction to children.

conducted by each division to promote understanding

We also co-sponsor the Giants’ Cup.

and instill a sense of ethics and awareness of compliance among employees.

Employee Voluntary Community/
Health Activities (Kyorin Smile Program)

Risk Management Measures

The Kyorin Group launched its corporate branding

The passing of the Corporation Law in May 2006 made it

program in March 2006. To help achieve a happy society,necessary to set up an internal control system. Kyorin

the aim of the corporate branding program is to change

established a Risk Management Committee in order tothe awareness and actions of each and every employee

prevent risks from materializing and deal with any risks

by promoting the Kyorin Smile Program, a set ofthat do materialize. Also, a risk management promotion

employee initiatives for making a contribution to society

manager has been appointed at each company to raise

and people’s health. The activities in this programawareness relating to risk management.

include giving blood, local beautification schemes andmonetary donations.

Local Community Activities

In fiscal 2009, the Kyorin Group donated a total of

Cherry blossom viewing party¥191,790 contributed by employees to Unicef. ThisThe Kyorin Discovery Research Laboratories hold anmoney is being used for funding a sanitation improve-annual party for viewing the blossoms on cherry trees

ment project in Burkina Faso in West Africa. The Group

that are more than 40 years old. As usual, this year’s party

also collected 2.3 kilograms of used stamps, which were

had many participants. The occasion was also used as an

donated to the Japanese Organization for International

opportunity to explain Kyorin’s environmental and occu-

Cooperation in Family Planning (JOICFP). The stamps

pational safety activities.

will be used to help fund White Ribbon Campaign activi-

Summer evening parties

ties aimed at protecting the lives of mothers and babies

Each year, the KYORIN Pharmaceutical Development

throughout the world.

Research Laboratories and various plants hold summer
evening parties to which local residents are invited. Theseare popular events that provide an opportunity to further
promote understanding of the Company’s activities.

21

22

Annual Report 2010

Corporate Governance
Basic Management Policies
As a group our corporate philosophy is to cherish life and contribute to society by contributing to better health. To
realize this philosophy we will pursue diverse expansion and development of our consumer healthcare business under
our long-term vision HOPE 100 (Aim for Health Of People and our Enterprise), aiming to be a group that supports
sound and healthy lifestyles.

Basic Policy on Corporate GovernanceThe key management goal for KYORIN Holdings, Inc. is to continue raising shareholder value. To achieve this goal requires fostering amanagement environment that enables us to build trust with stakeholders and the general public. Therefore, having given better corporate
governance a high priority, we seek to ensure prompt decision-making, strong monitoring of the appropriateness of management, andethical and transparent corporate activities. To ensure transparency and fair disclosure, we release appropriate information without delay
for the benefit of shareholders and investors. Within our website, we have created an investor information section on which we list businessperformance data, information presented at meetings, our securities report, news releases and other corporate information, enabling
anybody to access information about Kyorin at any time. In the future, we intend to actively increase our disclosure of information, andexpand and improve our communications with all stakeholders.
We are an audit- and committee-based company under Japanese law. The Board of Auditors endeavors to fully demonstrate its auditing and supervising functions and ensure the transparency of the decisions being made by the Board of Directors. ­Corporate auditors
conduct audits in line with an auditing policy and plan set by the Board of Auditors at the beginning of each fiscal year. ­Corporate auditors
carry out a diverse range of activities in fulfilling their auditing function. In addition to participating in important meetings, including thoseof the Board of Directors and the Management Committee, corporate auditors implement comprehensive audits by checking documents
and other materials relating to key decisions and inspecting departments, facilities and Group companies.
In recognition of our corporate social responsibility, for every Kyorin Group company we appoint compliance and risk management officers. In addition, we have established a groupwide compliance and risk management system that is administered by the Compliance­Committee and Risk Management Committee. We are establishing guidelines for each affiliated company based on the Kyorin C­ ompliance
Guidelines and will set up a system for employees to report and seek advice about possible irregularities. In addition to the above measures,
we will create management guidelines for affiliated companies and build a system of support that respects their autonomy. Under this system,
we will receive regular business reports from these companies and hold meetings with their management before deciding important issues.
The Internal Audit Office conducts audits of affiliated companies based on internal audit guidelines. Based on the results of these audits,
departments that oversee the operations of the affiliated companies issue instructions or warnings and provide appropriate guidance.

Management Organization and Internal Control System
1. Management Organization
To clarify the roles of directors, who are responsible for making business decisions and supervising business execution, and executive
officers, who are responsible for business execution, Kyorin has established an executive officer system. The Board of Directors usually
meets once a month, deciding important operational matters after debating the issues as well as supervising each director’s duties. To
oversee business execution, we established a Management Committee, comprising the president and directors, which discusses key
operational matters concerning the Group.

Corporate Governance and Management Structure (As of June 24, 2010)
Ordinary General Shareholders’ Meeting
Appointment/
dismissal

Reports

Accounting
Auditing Firm
(Independent
Auditor)Appointment/dismissal

AuditsBoard ofAuditors(5 members)

Board ofDirectors(7 members)

Exchangeofopinions

AuditsAppointment/dismissal

Cooperation

Internal
Audit Office(6 members)

Representative Director

AuditsSupervision

Management
Committee

AuditsAffiliated Companies
Guidance

Executive Officers/
Departments

OutsideLegal
CounselKYORIN Holdings, Inc.

We also utilize a corporate auditor system with two statutory corporate auditors and three outside corporate auditors. By capitalizing
on such auditing and supervisory functions, we are building a system that facilitates highly transparent decision-making.

2. Basic Philosophy and Status of Internal Control System
Kyorin is building an internal control system in accordance with the following basic policy: In keeping with our corporate philosophy of“cherish life and benefit society by contributing to better health,” we undertake our activities in Japan and overseas guided by a highstandard of corporate ethics as we respect human rights and comply with the letter and spirit of all laws and codes of conduct.
1 We established the Compliance Committee, which is chaired by a director in charge and includes the participation of the Director of theInternal Audit Office who serves as a member of the committee. Thoroughgoing guidance is provided to executives and regular
employees via training programs, while the Corporate Ethics Hotline has been set up for consultations and reporting matters concerning internal violations.
2 We are building and operating a structure for reducing and preventing risks. As part of this structure, we established the Risk
­Management Committee, chaired by a director in charge, with the General Affairs Department responsible for overseeing the committee. For risks concerning compliance, the environment and accidents, we also formulated the Risk Management ­Guidelines and the
Corporate Ethics and Compliance Guidelines as part of a quick-response structure. Additionally, to handle crisis management when
dealing with any contingencies, we have set up the Contingency Measures Headquarters under the leadership of the president.
3 In accordance with the Documentation Management Guidelines and other internal regulations, we carry out the appropriate preparation,
preservation and management of information regarding directors’ decisions, their execution of other duties and reports concerning directors.
4 To ensure that auditors effectively perform audits, the accounting auditing firm explains the details of the accounting audit to the auditors and exchanges various information while cooperating with the Internal Audit Office in ensuring appropriate communication andeffective auditing.
5 Along with establishing compliance committees and risk management committees at each Kyorin Group company, the ­Compliance­Committee and Risk Management Committee oversee and promote compliance and risk management for the entire Group. In addition,
we have built a structure for consultation and reporting that covers the whole Group.
We will create management guidelines for affiliated companies and build a system of support that respects their autonomy. Under
this system, we will receive regular business reports from these companies and hold meetings with their management before deciding
important issues.
The Internal Audit Office performs audits of affiliated companies based on internal audit guidelines. Depending on the results ofthese audits, departments that oversee the operations of the affiliated companies issue instructions or recommendations and provide
appropriate guidance. Moreover, we are also building a structure that enables managers to prepare reliable internal control reports forfinancial reporting. Under this structure, the Internal Audit Office also evaluates and reports on internal controls related to financial
reporting based on the newly established Standards and Practice Standards for ­Management Assessment and Audit Concerning Internal
Control Over Financial Reporting.
6 Basic rationale on the elimination of anti-social forces and the establishment of related measures
Giving consideration to our corporate philosophy, we formulated the Kyorin Corporate Charter to ensure a high standard of corporate
ethics and thoroughgoing compliance. This charter clearly states that we will “stand firmly against any anti-social forces or groups thatpose a threat to the order and safety of society.”
The Company will eliminate any relationships with and strongly confront anti-social forces or groups. As an internal structure foroverall monitoring of our corporate ethics and our compliance structure, we established the Compliance Committee, with the director in
charge of the committee also handling overall coordination. As the department in charge of compliance, the General Affairs Department is working to strengthen and promote a wider permeation of corporate ethics and compliance through education and othermeasures in collaboration with relevant departments.
We have also established standard measures to prepare for any possible undue demands from anti-social forces. To this end, we
have built a structure that includes designating a “person responsible for prevention of undue claims” at our Head Office and all branch
offices to respond to encounters with any anti-social forces or groups. We also maintain close communications with police departmentswith relevant jurisdictions, special crime prevention units and legal advisers to ascertain the latest trends and gather other information
on anti-social forces or groups as well as for guidance, consultation and assistance. Also, we have prepared Responding to Telephone
Calls and Visits to the Company During the Initial Phase of Claim-related Problems as a manual, to ensure that employees make appropriate initial responses. In this manner, we have established a structure for properly responding to any demands from anti-social groups.

3. Audit Organization
1 Internal Auditors
Internal audits are conducted by the Internal Audit Office, which is staffed by six employees, reports directly to the president and is independent from other sections. Based on yearly auditing plans, the Internal Audit Office regularly assesses and evaluates the effectiveness andefficiency of the legal compliance and internal control systems in every section of the parent and Group companies. After an audit, the officecommunicates any problems or areas that need improvement directly to the president and makes the appropriate recommendations.
2 Corporate Auditors
Corporate auditors conduct audits in line with an auditing policy and plan set by the Board of Auditors at the beginning of each fiscal year.
In addition to participating in important meetings, including those of the Board of Directors and the Management Committee, corporate
auditors implement comprehensive audits by checking documents and other materials relating to key decisions and inspecting departments, facilities and Group companies.

23

24

Annual Report 2010

3 Status of initiatives for strengthening the functions of corporate auditors
Kyorin has three outside auditors who are neutrally positioned and not compromised by relationships with management or parties having a
special interest. These outside auditors all have a considerable level of knowledge of corporate legal matters, and matters of finance andaccounting. We utilize their specialist understanding and wide-ranging knowledge and experience to strengthen and enhance our auditing
functions. In terms of independence of outside auditors, we do not consider auditors from major shareholding companies and key trading
partners to be truly independent. To ensure that execution of duties by directors is legal, transparent, and fair, we believe that outside
auditors who have a high level of neutrality that is not compromised by a relationship with management or parties having a special interest,and for whom there is no risk of forming a contradiction of interest with general shareholders, are the most independent.
Under our adopted system, if someone discovers that an executive officer or employee is acting in contravention of either laws andregulations, or the Company’s Articles of Incorporation, they immediately notify the corporate auditors. We are working to establish anenvironment conducive to more efficient audits by corporate auditors by coordinating closely with executives and regular employees andby fostering deeper understanding of audits.
Furthermore, we assign auditing staff to assist the duties of the corporate auditors as necessary, and these human resources are carefully checked by directors and auditors to ensure that they are independent.
Among the corporate auditors, Seiyu Miyashita has experience as a director and head of accounting of KYORIN Pharmaceutical Co.,
Ltd. while Masaji Obata has extensive knowledge of company law as a lawyer. They each therefore have considerable knowledge concerning finance and accounting.
4 Independent Auditors
In accordance with the Corporation Law and the Financial Instruments and Exchange Law, we receive annual audits by Ernst & Young ShinNihon
LCC. We benefit from its valuable advice as an accounting auditing firm, as well as from its services as an auditor of our financial accounts.
The following certified public accountants performed the audit of KYORIN Holdings, Inc.
(Names of certified public accountants)
Mari Sono, designated limited liability partner and engagement partner
Yasuharu Nakajima, designated limited liability partner and engagement partner
A further 11 certified public accountants and 17 assistant accountants assisted with the audit.
The Board of Auditors provides a forum for close, regular exchange of information with the Internal Audit Office and the accounting
auditing firm, thereby enhancing the auditing system.

4. Overview of Personnel, Capital and Trading Relationships Between the Company and the Outside Directors and Outside Auditors
None to report.

5. Compensation of Directors and Corporate Auditors
In fiscal 2009, ended March 31, 2010, compensation paid to directors and corporate auditors was ¥338 million: ¥309 million to 11 directors(excluding outside directors), and ¥29 million to 2 corporate auditors (excluding outside auditors).
There were no payments to directors corresponding to employee salaries.
Remuneration for outside directors totaled ¥15 million for 3 directors.

6. Number of Directors
The number of directors is limited to 15 as set out in the Company’s Articles of Incorporation.

7. Conditions for Resolution on Appointments of Directors and Corporate Auditors
The Company’s Articles of Incorporation stipulate that a resolution to appoint a director or corporate auditor must be by majority vote ofattending shareholders holding at least one-third of the voting rights of shareholders who are eligible to exercise voting rights.

8. Ordinary General Shareholders’ Meeting Matters That May Be Resolved by the Board of Directors
1 Acquisition of treasury stock
Pursuant to the provisions of Article 165, paragraph 2 of the Corporation Law of Japan, the Company’s Articles of Incorporation stipulatethat the Company may acquire treasury stock by resolution of the Board of Directors. The aim is to allow management to exercise capital
policies as deemed appropriate in response to changes in the operating environment, by allowing the Company to acquire treasury stock
through market transactions, etc.
2 Decision-making body for cash dividends from retained earnings
Pursuant to Article 459, paragraph 1 of the Corporation Law of Japan, and except where otherwise specified in a separate applicablelegal or regulatory provision, the Company’s Articles of Incorporation stipulate that cash dividends are to be decided by resolution of theBoard of D
­ irectors, and not the ordinary general shareholders’ meeting. The aim is to allow management to exercise capital policy as
deemed appropriate.

9. Requirements for Special Resolution by the Ordinary General Shareholders’ Meeting
Pursuant to Article 309, paragraph 2 of the Corporation Law of Japan, the Company’s Articles of Incorporation stipulate that special resolutions by the ordinary general shareholders’ meeting must be passed by at least a two-thirds majority vote of attending shareholders holding at least one-third of the voting rights of shareholders eligible to exercise voting rights. The aim is to lower the required quorum for a
special resolution of the ordinary general shareholders’ meeting to facilitate operation of the meeting.

KYORIN Holdings, Inc.

Directors, Auditors and Corporate Officers(As of June 24, 2010)

Representative Director, President
and Chief Executive Officer

Masahiro Yamashita

Executive Director

Senior Executive Director

Senior Executive Director

Senior Executive Director

Keiji Hirai

Minoru Hogawa

Takashi Matsuda

Toyozo Goho

KYORIN Pharmaceutical Co., Ltd.
Representative Director, President andChief Executive Officer

Management Planning
Finance & Accounting

KYORIN Rimedio Co., Ltd.
Representative Director, President
and Chief Executive Officer

Corporate Communication
Information System Management

Executive Director

Executive Director

Tomiharu Matsumoto Mitsutomo Miyashita
General Affairs & Human Resources
LegalIntellectual Property

Senior Corporate
Auditors

Corporate Auditors

Senior Executive Officers

Masaji Obata
Junji Honda
Yasuyuki Hirota

Takayoshi Ishizaki
Yoh ItoSatoru Kanai

Seiyu Miyashita
Shigeru Abe

Corporate Officers

Haruki Watanabe
Takashi Nishino

25

26

Annual Report 2010

Organization Chart(As of April 1, 2010)

General Shareholders’ Meeting

Board of Corporate Auditors

Board of Directors

Management Planning

Representative Director, President
and Chief Executive Officer

Corporate Communication

Management Meeting

Finance & Accounting
General Affairs & Human Resources
Legal
Information System Management
Intellectual Property(Trading name changed from July 1, 2010)

Auditing

Major Subsidiaries and Affiliates(As of July 2010)

Consolidated
Subsidiaries

KYORIN Pharmaceutical Co., Ltd.
Capital:¥4,317 million
Percentage of ownership: 100%
Head ofﬁce:
5, Kanda Surugadai 2-chome, Chiyoda-ku, Tokyo 101-8311
Operations:	Manufacture and sales of prescription medicines and quasi-drugs, diagnostics, and industrial
chemicals
Kyobundo Co., Ltd.
Capital:¥12 million
Percentage of ownership: 100%
Head ofﬁce:	Kyorin Nishi-Shinjuku Building, 25-13, Nishi-Shinjuku 6-chome, Shinjuku-ku, Tokyo 160-0023
Operations:	Sales promotion, advertising planning and production
KYORIN Rimedio Co., Ltd.
Capital:¥1,200 million
Percentage of ownership: 100%
Head ofﬁce:	287-1, Shimocho Moroe-cho, Kanazawa City, Ishikawa Prefecture 920-0017
Operations: 	Manufacture and sales of prescription medicines and quasi-drugs, diagnostics, and industrial
chemicalsDr. Program Co., Ltd.
Capital:¥251 million
Percentage of ownership: 100%
Head ofﬁce:
3rd Floor, 4-40, Minami-Aoyama 5-chome, Minato-ku, Tokyo 107-0062
Operations:
Sales and purchase of skincare products

KYORIN Pharmaceutical
Subsidiaries

ActivX Biosciences, Inc.
Capital:
US$1
Percentage of ownership: 100%
Head ofﬁce:
11025 N. Torrey Pines Rd. La Jolla, California 92037, United States
Operations:
Discovery and evaluation of candidate compounds
Kyorin USA, Inc.
Capital:
US$500,000
Percentage of ownership: 100%
Head ofﬁce:
500 Frank W. Burr Boulevard, Teaneck, New Jersey 07666, United States
Operations:	Research and analysis of other companies’ technologies and collection of information
concerning clinical trials
Kyorin Europe GmbH
Capital:50,000 EURO
Percentage of ownership: 100%
Head ofﬁce:
Kaiserstrasse 8, 60311 Frankfurt am Main, Germany
Operations:	Research and analysis of other companies’ technologies and collection of information
concerning clinical trials

Equity-Method Afﬁliates

Nippon Rika Co., Ltd.
Capital:¥411 million
Percentage of ownership: 29.2%
Head ofﬁce:
2-2, Nihonbashi Honcho 4-chome, Chuo-ku, Tokyo 103-0023
Operations:	Production and sales of pharmaceuticals, reagents, intermediates and other products

KYORIN Holdings, Inc.

Corporate Information

Profile(As of July 2010)

On July 1, 2010, KYORIN Co., Ltd. changed its name to KYORIN Holdings, Inc.
Under its corporate philosophy of cherishing life and benefiting society by contributing to

Head Ofﬁce
5, Kanda Surugadai 2-chome, Chiyoda-ku, Tokyo 101-8311
Phone: +81-3-3293-3451
	URL: http://www.kyorin-gr.co.jp/en/
KYORIN Holdings, Inc.

better health, the Kyorin Group has established a new long-term vision titled HOPE 100,

(Trading name changed from July 1, 2010)

the final year of which will coincide with the company’s 100th anniversary in 2023.
By promoting the faster development of superior new drugs, and diversifying its businesses to respond to expanding healthcare needs, the Kyorin Group will work to realize itsrole as a unique and valuable integrated healthcare organization, and to further enhance its­corporate value.

Holding Company Structure

Establishment

1958

Common Stock¥700 million

Outstanding Shares

74,947,628

Shareholders

3,934

KYORIN Holdings, Inc. serves as the umbrella organization for the entire Kyorin Group, andby taking on the management strategy function and ensuring efficient allocation and use ofmanagement resources, works to ensure that the Group achieves its comprehensive poten-

Major Shareholders		

		
		
		

tial, and to improve consolidated business results.

Group Structural Diagram
KYORIN Holdings, Inc.

KYORIN PharmaceuticalCo., Ltd.
Drug discovery,­pharmaceutical business

KYORIN Rimedio Co., Ltd.
Generic drug business

Dr. Program Co., Ltd.
Consumer healthcare
business

Kyobundo Co., Ltd.
Sales promotion, and­advertising planning andproduction

	Minoru Ogihara
Hiroko Ogihara
	Apricot Co., Ltd.
Yoshiko Ogihara
The Master Trust Bank of Japan, Ltd. (Trust Account)
	Mykam Co., Ltd.
Japan Trustee Services Bank, Ltd. (Trust Account)
Keiko Sakurai
Yutaka Ogihara
	Mariko Ogihara
Listing

Transfer Agent	Mizuho Trust & Banking Co., Ltd.,
2-1, Yaesu 1-chome, Chuo-ku, Tokyo 103-0028
Phone: +81-3-3278-8111

Contents
Consolidated Financial Highlights

01

Research and Development

18

To Our Stakeholders

02

Products Under Development

19

FeatureCorporate Social Responsibility

20

New Medium-Term Business Plan
HOPE 100 Stage 1
04

Corporate Governance22

Directors, Auditors and Corporate Officers

25

Consolidated Financial Summary

10

Organization Chart/Major Subsidiaries

At a Glance

12

and Affiliates

26

Segment Overview

14

Corporate Information27    Ethical Drug Business14    Generic Drug Business16    Consumer Healthcare Business

17

Disclaimer Regarding Forward-Looking Statements

Tokyo Stock Exchange, First Section

Statements made in this annual report with respect to KYORIN Holdings, Inc.’s forecasts, plans, strategies and other statements otherthan those of historical facts are forward-looking statements about the future performance of the Company and its consolidated subsidiaries and are based on management’s rational assumptions and beliefs in light of information currently available. As a consequence,
readers should understand that, for a variety of reasons, actual results could differ materially from projections presented in this report.
Key factors that could impact our results include, but are not limited to, economic conditions, social trends, competition from rival
companies, laws and regulations, uncertainties in drug development and exchange rate fluctuations.

Percentage
of totalsharesoutstanding

8.17%
6.86%
6.67%
3.90%
3.70%
3.66%
3.20%
2.48%
2.48%
2.35%

27

KYORIN Holdings, Inc.

Progress toward achieving
our long-term vision

5, Kanda Surugadai 2-chome, Chiyoda-ku, Tokyo
101-8311, JAPANCorporate Communication
TEL+81-3-3293-3414
E-mail http://www.kyorin-gr.co.jp/contact/
URL
http://www.kyorin-gr.co.jp/

ANNUAL REPORT 2010
Year ended March 31, 2010
This report was printed on FSC-approved paper using vegetable oil ink.
Printed in JapanKYORIN Holdings, Inc.