February 14, 2024
For Immediate Release
Company name: VITAL KSK HOLDINGS, INC.
Representative:
Taisuke Murai, President & CEO
Company address: 1-1-12, Tsurumaki, Setagaya-ku, Tokyo(Securities Code: 3151, TSE Prime Market)
Contact:
Kenta Sato, Executive Officer, General Manager,Corporate Communications(Tel. +81-22-266-8330)

Notice Regarding Participation in New Business Model Aiming to Eliminate Japan’s Drug Loss
VITAL KSK HOLDINGS, INC. (the “Company”) hereby announces that it recently took an equity stake in LinDo
K.K. (“LinDo”) in collaboration with the following three companies: CareNet, Inc (listed on TSE Prime Market; Code:2150; “CareNet”), Forest Holdings inc. (“Forest HD”) and Medical Incubator Japan K.K. (“MIJ”). Together with
Forest HD, the Company also invested as strategic limited partners in MIJ BG2 Limited Partnership (the “Fund”), a
new fund established by MIJ.
LinDo is a pharmaceutical company (a seed incubator) established with the aim of building a new business model for
eliminating drug loss and developing and selling new drugs for which there is no development plan in Japan, despite
the fact that the drugs have already been developed in Europe and the United States. Meanwhile, the Fund manages atotal of 20 billion yen for the two purposes of equity investment in emerging pharmaceutical companies (EmergingBiopharma(Note 1); “EBP”) in and outside Japan and drug loss elimination in Japan.
In collaboration with LinDo, CareNet, Forest HD, MIJ and the Fund, the Company will, through initiatives to eliminate
drug loss in Japan, contribute to broadening options for therapeutic agents for patients in Japan who have rare or
intractable diseases, etc. in areas including the field of pediatric medicine and are waiting for new therapeutic agents,
their families, and doctors and paramedical personnel in charge of their treatment.
(Note 1) In a report by IQVIA Inc., “Emerging Biopharma” is defined as companies with R&D spending of less than $200 million and annual sales of lessthan $500 million.

1. Investment objective
In April 2023, the Company adopted its Long-term Vision 2035 under the slogan: To transform the future of medicalcare by transcending boundaries and “acting as a bridge” to cutting-edge medicines. Based on this long-term vision,
the Group will expand medical care-related businesses with the aim of developing a sustainable distribution structure
for drugs and medical care-related products through independence and cooperation and contributing to the resolutionof social issues and the extension of healthy life expectancy.
Among its specific initiatives, the Company launched third party logistics (3PL) business for the products ofpharmaceutical manufacturers, has steadily accumulated a track record over the past few years, and plans to expand
this area of business in the future.
Amid these circumstances, the Company strongly agreed with the purpose of establishing LinDo and the Fund andconsequently made an investment. Going forward, the Company and Forest HD intend to engage in import, packaging
for the Japanese market and overall logistics following the launch of therapeutical agent products for rare or intractablediseases, etc. that LinDo will develop and sell in the Japanese market.
12. Overview of business model(1) What is drug loss?
In Europe and the United States, a number of drugs with new mechanisms of action that can be expected to treat root
causes are being developed every year and finding clinical application In Japan, on the other hand, there have been no
new drug applications and approvals with respect to approximately 70%(Note 2) of the drugs that are newly approved inEurope and the United States, and this rate has been trending higher in the past several years. Particularly in the fieldof pediatric medicine in which the number of patients is small, the fact that the Japanese patients who need these drugs
cannot be treated has become a major social problem.
(Note 2) Source: “Drug lag: Status and characteristics of drugs unapproved in Japan,” OPIR News No. 63 (July 2021), Office of Pharmaceutical Industry
Research (OPIR)(2) Main factors for drug loss
In recent years, approximately 70%(Note 3) of the new drugs approved in Europe and the United States have been
discovered by EBPs overseas, significantly exceeding the ratio of new drugs created by major pharmaceuticalcompanies (30%). Drugs that were discovered and developed independently by major drug manufacturers and certain
products that were developed by EBPs and are expected to be successful are eventually developed and sold in Japan
as well. However, many of the drugs newly discovered by EBPs who do not have development and sales functions inJapan have not been developed in Japan. Therefore, facilitating the development of these EBP products in Japan is amajor issue to be addressed to eliminate drug loss.
Many EBPs are startup enterprises with limited financial resources and are operating their development businessthrough repeated rounds of fundraising. With the aim of enhancing corporate value, the funds raised are injected intodevelopment and sales in the European and U.S. markets, where the largest sales and an early market launch of products
are expected. Another area of concern is that the cost of development is higher in Japan than it is in Europe and theUnited States. Moreover, barriers for EBPs who remain reluctant to start development activities in Japan include theirinsufficient understanding of the Japanese market, such as the processes of development, approval and National Health
Insurance (NHI) drug price registration, in addition to language differences.
Factors that are seen as inhibiting EBP products from being introduced in the Japanese market include the standpointof domestic pharmaceutical companies who may be able to support EBPs’ development and sales of products. Thesecompanies see new drug products with smaller sales volumes as being less profitable compared to successful products,
even if they are highly promising and effective for rare or intractable diseases, etc., including those in pediatric
medicine. This makes it difficult to actively promote their development, in addition to the low probability of obtaining
timely access to prospective EBPs based outside Japan.
(Note 3) Source: “Global Trends in R&D Overview through 2021” (February 2022), IQVIA.

(3) Launch of new business model for drug loss elimination
The above five companies, including the Company, have launched a new business model with the aim of eliminating
this drug loss, using the opportunity of the establishment of LinDo, a seed incubator that will develop and sell newdrugs for rare or intractable diseases, etc., the introduction of which to Japan had been difficult, and of the originationof MIJ’s new investment fund (the “Fund”).
In this business model, the search for promising EBPs and stable procurement of clinical development expenses in2

Japan will be conducted through collaboration with the Fund that is the No. 3 Fund of MIJ, a venture capital firm
specializing in therapeutic areas. Moreover, in collaboration with CareNet, which is a shareholder of LinDo, the aim
is to realize a lean development and sales structure that will be highly efficient compared to existing drug
manufacturing business models. Meanwhile, the Company and Forest HD, which are shareholders of LinDo andinvestors in the Fund as limited partners, will be responsible for the supply chain, which enables the building of aframework for speedy development and sales with minimum cost (* Please refer to the following outline drawing of
the business model).
To facilitate the introduction of new drugs for rare or intractable diseases, etc. with relatively small numbers of patients,
the five companies including the Company will take on the challenge of eliminating drug loss with experienced
members, efficient internal organizations and strong networks.
(4) Roles of each player in the business model
The major roles of each player in the business model are as described below.
[1] Search for and introduction of promising EBP seeds
This will be implemented by MIJ, which has extensive experience and strong connections regarding investment inoverseas EBPs. MIJ has unique networks with global ecosystems and a track record in searching for innovative EBPs
around the world, assessing more than 200 cases annually, through its activities of investing in new startup drug
manufacturers using No. 1 and No. 2 Funds.
[2] DLE (Drug-Loss Elimination)(Note 4) using the Fund
Financing LinDo will procure funds for development initiatives for DLE. If the final amount of the Fund’s origination
is in the range of 20 billion yen, which is the Fund’s target amount, investment in 15-20 items is anticipated.
[3] Strategic alliance between shareholders of LinDo and strategic limited partners of the Fund
Based on an alliance between LinDo and four large industry leaders including the Company, the optimal
administrative operation of a series of processes, from clinical development in Japan, through application forapproval, sales, and logistics, to the collection of safety information following market launch, etc. will be realized.
The actual functions and roles to be outsourced by LinDo will be as described below.
 To CareNet Group- Use of database containing 220,000 members who are doctors and specialist physicians- Streamlining of clinical trials through digital transformation (DX) in the medical field (collaboration in theselection of facilities, patients who participate in clinical trials as subjects and CRO(Note 5))- Efficient marketing and sales using DX communication platform and CSO(Note 6) function
 To the Company and Forest HD- Import of products, packaging for the domestic market- Overall logistics following market launch(Note 4) DLE = Drug-Loss Elimination(Note 5) CRO = Contract Research Organization(Note 6) CSO = Contract Sales Organization

3[Outline drawing of business model]

3. Future prospect
Although this business model is completely new in Japan, several EBPs are already showing interest. Currently, LinDoand the Fund are negotiating with these EBPs for their introduction to Japan with the aim of an early launch of theirdevelopment activities. The development of several products per annum is planned to start within the next few years.
Accordingly, the impact of this matter on the Company’s financial results is expected to be minor for the foreseeable
future. The Company expects that it will make a significant contribution to improving its corporate value over themedium to long terms.
[Introduction and contact information of each company]
 CareNet, Inc- Representative:

Katsuhiro Fujii, President & CEO- Address:

Sumitomo Fudosan Chiyoda Fujimi Bldg., 1-8-19, Fujimi Chiyoda-ku Tokyo- Business description: Provision of pharmaceutical marketing support services to pharmaceutical companies, medical
content services to doctors and paramedical personnel, etc.
- Website:

https://www.carenet.co.jp- Contact:

Kanome, Administration Department (Phone: +81-3-5214-5800)

 Forest Holdings, Inc.
- Representative:

Tsuguo Yoshimura, President- Address:

2-3-8 Nishi-omichi, Oita, Oita

- Business description: The Forest Group has been developing a broad range of business mainly in the areas ofmedicine, health and food, including ethical drugs, medical device, materials, diagnostic
pharmaceuticals and other products for medical institutions, non-prescription drugs, consumer
healthcare products, and veterinary products and food.
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- Website:

https://www.forestg.jp/- Contact:

Hirao, Corporate Planning Department (Phone: +81-92-477-5894)

 Medical Incubator Japan K.K.
- Representative:

Jun Katsura, President/CEO- Address:

1-11-28 Akasaka, Minato-ku, Tokyo- Business description: An independently owned investment business company specialized in healthcare and medicalcare operated by investment professionals. MIJ undertakes exciting investment activities bysearching for innovative startups with the aim of bringing hope to patients and profits toinvestors. Its track record in investment includes No. 1 & 2 Funds in Europe and the UnitedStates and life science ventures in Japan.
- Website:

https://www.medicalincubatorjapan.com/- Contact:

Takahashi, Administration Department (Phone: +81-3-6426-5308) LinDo K.K.
- Representative:

Jun Katsura, President/CEO- Address:

1-11-28 Akasaka, Minato-ku, Tokyo- Business description: LinDo started its business with the aim of eliminating drug loss by developing and selling new
drugs for which there is no plan for development and application for approval in Japan, despite
the fact that they have already been developed in Europe and the United States. It will work to
broaden options for therapeutic agents for patients in Japan who have rare or intractablediseases, etc. in areas such as pediatric medicine and are waiting for new therapeutic agents,
their families, and doctors and paramedical personnel in charge of their treatment.
- Website:

https://www.lindosi.com/- Contact:

Takahashi, Administration Department (Phone: +81-3-5545-5272)

 VITAL KSK HOLDINGS, INC.
- Representative:

Taisuke Murai, President & CEO- Address:

1-1-12, Tsurumaki, Setagaya-ku, Tokyo- Business description: An ethical pharmaceuticals wholesaler established in 2009 through the merger of Vital-Net,
which is developing its business in the Tohoku, Niigata, North Kanto and Tokyo Metropolitan
areas, and KSK, which is developing its business in the Kansai Region. The Vital KSK Group
engages in pharmacy operations, the wholesale of medical device, diagnostic pharmaceuticals,materials, etc., wholesale of veterinary products and wholesale of agricultural chemicals andmaterials, etc.
- Website:

https://www.vitalksk.co.jp/english/- Contact:

Sato, Corporate Communication Division (Phone: +81-022-266-8330)
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