Annual Report 2022
Year Ended March 31, 2022

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section01

Contents
01

Contents

21

Management Foundation
21 Sustainability of Nipro

02 About NIPRO
02 Businesses
03 Financial Highlights

04

25 Human Resources Strategy
28 Research and Development Activities
31 Intellectual Property Investment
33 Status of Corporate GovernanceManagement Message

36 Outside Directors’ Messages

04 President’s Message

38	Board of Directors and Audit & Supervisory

07 A Message from the CFO

08 Review of Operations
08 Medical-Related Business
10 Pharmaceutical-Related Business
12 PharmaPackaging Business

14

23 Environment

Outline of the Medium-Term Management Plan
14	Aiming to Achieve Consolidated Sales of ¥1
Trillion in the FYE 2031.3
16 Approaches to SDGs

Board Members

40 Financial/Data Section
40 Financial Review
45 Ten-Year Summary
47 Consolidated Balance Sheets

Social Bond Reporting
17 Investment Status of Social Bonds

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website48 Consolidated Statements of Income48	Consolidated Statements ofComprehensive Income49	Consolidated Statements of Changes
in Net Assets
50 Consolidated Statements of Cash Flows
51 Notes to Consolidated Financial Statements

17

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71 Corporate Information

Disclaimer
This report contains forward-looking statements regarding
business indices, strategies, and performance representing the
expectations and judgments of the management, based on
information available to the Company and publishable at the time
this report was prepared. When reading this report, please
understand that forward-looking statements involve potential
risks and uncertainties; actual future business performance andforecasts may therefore differ materially from those contained inthese statements, given the possible emergence of new factors orchanges in economic circumstances and/or the business environment.
In this report, fiscal 2022 represents the year ended March 31, 2022.

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section02● Businesses● Financial Highlights

About NIPRO

Businesses
We Meet the Needs ofMedical Professionals andPatients through Our Three Businesses
Sales ratio by business9%

PharmaPackaging
Business

76%

Medical-Related
Business

Hospital Products

Vascular Products

Injectables

Orally Administered
Drugs

External Preparations

Glass Converting

Glass Tubing

DevicesNipro engages globally in the development,
manufacture, and sale of medical equipment for
injection-infusion and dialysis treatment, andproducts related to diabetes and cell cultures, aswell as the sale of artificial organ-related products.

Medical-Related
Business

PharmaceuticalRelated Business
Fiscal 2022

Renal Products

One of the world’s leading CDMO* companies,
Nipro performs contract manufacturing of orally
administered drugs, injectables, and external
preparations through its Pharmaceutical-Related
business, and supplies products to pharmaceuticalcompanies in Japan and around the world.
* Contract Development and Manufacturing Organization

15%

Pharmaceutical-Related BusinessNet sales¥494,789

millionPharmaPackaging
Business
Nipro’s PharmaPackaging business, a part of thecompany since its founding, manufactures andsells glass products and other comprehensive
pharmaceutical packaging. Currently, Nipro engages
in this business globally from a base of 11 companies
and 14 plants in 8 countries, focused on Japan,
China, Europe, and the U.S.

Management
Message

About NIPRO

Contents

Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
Reporting

NIPRO Annual Report 2022

Financial/Data
SectionManagement
Foundation

03● Businesses● Financial Highlights

About NIPRO

Financial Highlights
Net sales¥494,789

Net income attributable toowners of the parent

Operating income¥23,882

million¥13,455

millionR&D expenses¥18,734

millionmillionNet Sales increased by 8.6% year-on-year
due to increased sales of anti-infection
products and recovery of demand following
the COVID-19 pandemic.

Operating profit decreased by 13.6% year-onyear due to an increase in expenses such as
personnel, transportation, and sales promotion.

Net income attributable to owners of theparent decreased by 5.3% year-on-year due toa significant decrease in the corporate income
taxes adjustment in the previous period.

R&D expenses increased by 0.4% year-onyear due to an increase in the cost ofdevelopment of oral drugs in thepharmaceutical-related business.

(Millions of yen)

(Millions of yen)

(Millions of yen)

(Millions of yen)

395,397455,559
426,399 442,516

494,789

27,08823,827

26,42011,82927,627

14,20912,136

13,455

16,113

16,52620182019

18,204

18,652

18,734

2020

2021

2022

23,882-12,281

2018

2019

2020

2021

2022

Capital investment¥46,560

2020

2022

2021

57,865¥930,321

Total
assets:million(Millions of yen)

56,2762019

Total assets/Equity ratio

Capital investment decreased by 10.4%
year-on-year due to a delay in the constructionof a new line for dialyzers in the medicalrelated business.

57,7182018

51,982

46,560826,759 845,821 831,865 854,396

million930,321

ROE:

7.8

19.1

17.9

2020

2021

2022

18.8

Cash dividends per share

¥27.0

%

ROE was 7.8% due to a decrease in the net
income attributable to owners of the parent.

183,485 171,830

19.9

We distributed an interim dividend of ¥14.50
per share and a term-end dividend of ¥12.50
per share, resulting in an annual dividend of¥27.0 per share.
(Yen)

Net Assets (Millions of yen)
ROE (%)

7.0
20.9

2019

Net assets/Return on equity

Total assets increased by 8.9% year-on-yearwith an equity ratio of 19.9%.

Total assets (Millions of yen)
Equity ratio (%)

2018

199,867
161,237 174,053

7.3

28.5

28.0

28.0

27.0

7.8

9.2

13.5

-7.9
2018

2019

2020

2021

2022

2018

2019

2020

2021

2022

2018

2019

2020

2021

2022

2018

2019

2020

2021

2022

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section04● President’s Message● A Message from the CFOManagement Message

President’s Message
We strive to improve corporate
value in the long term by providing
products that are truly needed bypatients from the user’s viewpoint
Yoshihiko Sano

Results
Net sales

Total¥494,789 million

8.6% increase from fiscal 2021

President and Representative Director

Operating income
Performance in the fiscal year ended March 2022

Secured a certain level of sales despite
the impact of the external environment
Regarding the performance in the fiscal year ended March
2022, revenue was 494,789 million yen—an 8.6% increaseyear-on-year; operating income was 23,882 million yen—a
13.6% decrease year-on-year; and the net income attributable
to the parent company’s owners in this period was 13,455
million yen—a 5.3% decrease year-on-year.
Regarding revenue, although usual medical activities
decreased at first during the COVID-19 pandemic, they
showed signs of recovery from the third quarter; thus, thesales of surgery-related products and clinical departmentrelated products increased. Regarding products for COVID-19

measures, the sales of injection-related products such as
injection needles and syringes for vaccination and vials for
vaccines showed good sales records. Additionally, the salesof Ionless hypochlorous acid water “CL Fine” that can remove
indoor airborne microbes and viruses also increased.
Regarding profits, operating income decreased due tothe soaring cost of marine transport and increased expenses
for sales promotion and personnel, while exchange rates
dramatically varied, leading to the depreciation of yen at theend of this period and resulting in a foreign exchange profit.
Thus, ordinary income was 27,583 million yen—a 5.0%
increase from the previous period. However, since the tax
burden was reduced due to the start of consolidated tax
payment of the U.S. subsidiary in the previous period, the tax
burden relatively increased in this period, and the net income
attributable to the parent company’s owners decreased fromthe previous year.

Total¥23,882 million

13.6% decrease from fiscal 2021
Net income attributable toowners of the parent

Total¥13,455 million

5.3% decrease from fiscal 2021

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

Financial/Data
Section

NIPRO Annual Report 202205

● President’s Message● A Message from the CFOManagement Message

President’s Message

Reinforcing overseas deployment ofcore product
The sales of dialyzers, a core product, increased by 1.6%
from the previous period to 22,050 million yen in Japan andby 10.0% from the previous period to 54,530 million yen
overseas. Overseas revenue did not reach the originallyplanned figure because of the delay in the construction of
the production line at the Indian Plant due to the COVID-19
pandemic. The global dialyzer market is expected to growat the rate of approximately 7% per year in the future.
We will meet this increasing demand by reinforcing
production facilities at the same or faster pace.
As another initiative related to dialysis, we haveaccelerated the expansion of our own dialysis center
business, making efforts to disseminate our services in
China and Asian countries in this period in addition to Southand Central America, which have been our focus so far. The
business has grown to the extent that we had 146 dialysis
centers in 10 countries as of the end of March 2022. We willcontinuously contribute to community healthcare byproviding high-quality treatment mainly in emerging
countries and establish our sales network through our
product competitiveness globally.
Now, we are cultivating vascular-related products as thesecond core product after the dialyzer. Since we havesecured a certain market share in Japan, we are currently
working on reinforcing sales overseas; for example, we haveproceeded with the regulatory registration of various new
products, including the scoring balloon, and also launched
NIRS-IVUS, a product using the original technology of Nipro
Group, in the U.S. and Europe. We are planning to launch the
product in the Asia-Pacific region and India in the future.
Regarding the organization’s reinforcement, we haveestablished a sales division in our overseas subsidiaries toestablish a direct sales system. We will complete theestablishment in the U.S., Europe, and South and Central
America in this period and proceed with the establishment
in other regions sequentially. We will deploy sales activities
to better understand regional needs in addition to thecurrent sales network of agents.

Forecast and strategy for the fiscal year ending March 2023

Preparing for an emergency and aiming
for a stable supply of products
The number of people infected with the new variants of
COVID-19 has been increasing, and the Russia–Ukraine
conflict is becoming serious. Thus, we expect the period
ending March 2023 to be unpredictable. Under thesecircumstances, it is difficult to perform the businessactivities conducted in times of peace, and a management
method during “emergencies” is necessary. In particular,
stable supply is necessary for the medical industry morethan other industries. We will proceed with measures
such as establishing our production plants in two or
more footings within two or more countries instead ofconcentrating them in only one site, promoting fully
automated production and inspection for core products,
and attempting to establish a strong cooperation withthe manufacturers of raw materials. Regarding suchcooperation, we started the construction of an integrated
production plant of cellulose triacetate (CTA) dialyzer
with Toyobo Co., Ltd. in November 2021, which isscheduled to begin operations in July 2024. The CTA
dialyzer is superior to conventional dialyzers in terms ofremoving substances and biocompatibility and could be
used for more patients in the future.

Toward the achievement oflong-term goals
We aim to become a corporate group with sales of 1 trillion
yen in the fiscal year ending March 2031. To achieve this goal,
we must maintain our annual growth rate of sales at 8–9% orhigher over the next 9 years. For this purpose, we will continue
to expand the sales of dialyzers, our core product, and aim toachieve the top market share in the world. Regarding
production, new lines are being constructed at the Indian
Plant and Hefei Plant in China, which are scheduled to begin
operations in December 2022. We will also establish a sales
network for vascular products around the world by making themost of product competitiveness and aim to achieve the top
market share. In addition, we will develop various applicationsof regenerative medicine-related products and deploy them
globally. We will promote sales by systemizing both tangible
and intangible aspects, such as providing devices andinformation required for each treatment in addition to theprevious sales of products. This includes screening oftreatments and decisions regarding treatment methods by

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section06● President’s Message● A Message from the CFOManagement Message

President’s Message

artificial intelligence. In addition, as measures against
infectious diseases, including COVID-19, we will expand thelineup of products against infections, further promote theintroduction of a holding system for organizations, andreinforce cross-organizational cooperation vertically andhorizontally. Particularly, for horizontal connection, we haveestablished a committee for each theme, such as the Plant
Manager Committee, Logistics Committee, and Purchasing
Committee, and established a system in which information
can be efficiently shared.
Regarding profitability, the operating profit margin is set
at 9.0% or more as a profitability index. To achieve this goal, it
is important for each employee to be aware of the costs fortheir own activities; thus, we are adopting the payment-byresults system, through which we attempt to reduce extra
expenses and increase employees’ motivation by rewarding
initiatives that produce profits. We will improve the individual
result calculation system and extend the compensation
system to the entire group in the future.

Initiatives for sustainability

Responding to the demands of society
as a global company
It is important for a company to address sustainability—of
the environment and society—to achieve long-term growth.
Regarding the environment, we established theSustainability Committee in this period and formulated a newgoal, namely “aiming to reduce greenhouse gas emissions
by 37.8% compared with 2021 by 2030 and net zero by 2045.”
To achieve these goals, we are working to reduce theenvironmental load by installing solar panels in plants aroundthe world, increasing the proportion of renewable energy use
and also recycling waste materials and waste liquids from the
manufacturing process into electricity generation and hot water.
Regarding society, we will work on creating a workplaceenvironment where employees can work comfortably.
Currently, we have a daycare center for children in three
offices in Japan. We will further improve the system toachieve work–life balance, such as through a short-timework system for childcare and an increase of child benefits.
Regarding recruitment, we proactively employ capable
human resources through mid-career recruitment and alsoestablished the Job Return Program for retirees, whichmakes it easier for people who left the company to return.

To shareholders

The role of the board of directors of
Nipro is to ensure the user’s viewpointAt the shareholders’ meeting held in June 2022, thenumber of outside directors was increased by 4 to 6, andthe outside ratio was set at one-third of the entire boardof directors. The composition of Nipro’s board of directors
is characterized by two aspects. One is to have a leader
who can approach the entire business in the role ofinternal director in each business and make efforts for
optimal management; if each general manager of thebusiness division thought only about the scope of theirown responsibility, there would be no horizontal
management. The other is that outside directors have richon-site experience with responsibility in the field of
medical care and welfare where our business is involved.
Compared to the general requirements for the board of

directors, I think that these policies, the reduction ofinternal directors and the diverse skills of outside
directors, are a unique aspect of Nipro. In other words,
Nipro’s board of directors focuses solely on “ensuring theuser’s viewpoint,” and we emphasize that the requirementsfor outside directors to realize this are not theoretical“skills” but practical “on-site experience.”

We will meet people’s medical needs
and create long-term value
What Nipro finds most important is assuming the user’s
viewpoint and providing products that are always neededby patients, as described in the above policy of the boardof directors. The management philosophy of Nipro—
contributing to the health of people around the world—
remains unchanged even in times when the world is rapidlychanging, such as during the COVID-19 pandemic and theaggravation of the situation in Ukraine. We aim to have thehighest competitiveness and market share for each productglobally, and we will create long-term value by meeting the
medical needs of people around the world. We would
appreciate the continued support of our shareholders.

September 2022

President and Representative Director

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

Financial/Data
Section

NIPRO Annual Report 2022

07

● President’s Message● A Message from the CFOManagement Message

A Message from the CFO
We will proceed with
our initiatives toachieve our
medium-termbusiness plan goals
Takehito Yogo

Managing Director,
General Manager of
the Corporate Planning Division

Progress of the medium-termbusiness plan
We have defined KPIs from the perspectives of “growth,”“profitability,” “financial soundness,” “asset efficiency,” and“investment efficiency” in the medium-term business plan
ending in March 2025.
First, regarding “growth,” we aim to achieve a compound
annual growth rate of sales of 7.0% or more. Since growth in
the previous period slowed due to COVID-19, the compound
annual growth rate of sales from the fiscal year ended March
2021 to 2022 was 5.7%; however, in the single year ended
March 2022, we achieved an 8.6% growth. Having recoveredfrom the COVID-19 pandemic, we have a good chance ofachieving our goals.
Regarding “profitability,” we aim to achieve a 9.0% ormore of operating profit margin. In this period, the operating
profit margin was 4.8% because of the increase in costs
due to the soaring prices of raw materials and transportation.
Similarly, in the year ending March 2023, the operating

profit margin is expected to be 5.1%—slightly more than
this period due to the soaring prices of raw materials andtransportation globally.
Regarding “financial soundness,” we set our net interestbearing debt/EBITDA goal at 4.0–4.9 times. The net interestbearing debt/EBITDA increased to 6.7 times in this period due
to a decrease in operating income, license acquisition in our
generic drug business, and an increase in net interest-bearing
debt because of the construction of a new building at Ise
Plant, Nipro Pharma Corporation. For the fiscal year ending
March 2023, we plan to promote strategies for profit expansion
and improvement in the financial structure and thus reduce
the net interest-bearing debt/EBITDA to 6.5 times.
Regarding “asset efficiency,” we aim to achieve a returnon equity (ROE) at 14.0% or more. In this period, the ROE was
7.8%—a decrease of 1.4 points from the previous period due
to a decrease in profit attributable to the parent company’sowners and an increase in equity capital due to foreignexchange adjustment resulting from the depreciation of yen.
For the fiscal year ending March 2023, the net income
attributable to the parent company’s owners in this period is
expected to increase due to an increase in revenue andreduction of various expenses; therefore, the ROE is
expected to be 7.9%.
Regarding “investment efficiency,” we aim to restore
the profitability of free cash flow. In this period, operating
cash flow exceeded the forecast at the beginning of theperiod due to an increase in net income before taxes.
However, free cash flow showed a loss of 10,200 million yen
because of a significant increase in new investment
expenditures. For the fiscal year ending March 2023, free
cash flow is expected to be in the black of 12,400 million
yen because operating cash flow will be improved with anincrease of profits and investment cash flow will be
improved by selling some real estate.

Status of capital investment
The capital investment amount* for this period was 46,560
million yen—a decrease of 10.4% from the previous period.
The major reasons for the decrease in capital investment
are the delay in the construction of a new line of dialyzers
at the Indian Plant and glass tubing facilities at the French
Plant due to the COVID-19 pandemic.
The capital investment amount for the fiscal year ending
March 2023 is planned to be 63,220 million yen—a 35.8%
increase from this period. In the medical-related business,
the new lines for dialyzers will be added to the Hefei Plant in
China and the Vietnam Plant, and the dialysis center will
be acquired. Additionally, in the pharmaceutical-related
business, we plan to construct the Omi Plant. Regarding thePharmaPackaging business, we aim to reinforce facilities atplants in France and Germany.
* The capital investment amount is based on acceptance inspection.

Dividend policy
We use the total amount of 75% of consolidated net incomeand 25% of non-consolidated net income in this period as aprofit amount, the base for dividends. Based on this policy,
an interim dividend of 14.50 yen and a year-end dividend of
12.50 yen were paid in this period.
Regarding the dividend for the fiscal year ending March
2023, we will continue to strengthen our financial structure
and return profits in consideration of stable dividends while
retaining the previous dividend policy. The annual dividend
is planned to be 31 yen per share.

Management
Message

About NIPRO

Contents

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

Financial/Data
Section

NIPRO Annual Report 2022

08

● Medical-Related Business● Pharmaceutical-Related Business● PharmaPackaging Business

Review of Operations

Medical-Related Business
Overview of fiscal year ended March 2022

Net sales

Total¥373,481

million

Sales ratio by region
Japan

Overseas

46.7%

Surgicalproducts

1.0%

Diabetic
products

2.4%

Inspection
products

2.9%

53.3%

Others9.1%
Nipro Brand
generic
products

25.5%

Net sales

Renalproducts

Fiscal 2022

Vascularproducts

8.6%

Domestic sales of injection needles, including vaccine
syringes, infusion-related products, and catheters have beenstrong. Medications including dexmedetomidine, leuprorelin,
and authorized generic bepotastine POINT have seen a steadyincrease in market share, besides new products showing
strong growth and sales. In addition, orders for substitution
products grew due to industry wide supply constraints which
led to an increase in total sales volumes.
International sales of competitor brands of butterfly andinsulin needles also showed steady growth. Nipro dialyzers,
our core product had increased sales in China, with strong
sales also in Central and South America. These increases canbe attributed to the establishment of dialysis centers in Central
and South America. Countries in the Western hemisphere andAsia showed an increase in syringe sales that can be attributed
to the demand for vaccines and treatments by medical
institutions returning.
In summary, sales in this segment were 373,481 million
yen, an 8.6% increase from the previous term, and operating
profits were 39,241 million yen, a 0.9% increase from theprevious term.

35.6%(Millions of yen)

335,767 343,824

373,481

Operating income (Millions of yen)
36,24938,87939,241

Forecast and strategy for fiscal year
ending March 2023
Regarding the results of the fiscal year ending March 2023, we
expect that sales will increase by 9.6% to 409,500 million yen
and operating profit will increase by 3.7% to 40,700 million yen.
In addition to dialyzer products and sales in medical
devices, domestic sales of infusion-related products, catheters,and ventricular assist devices/artificial lungs are expected toincrease by 10,640 million yen during this period. While the
NHI drug price revision will impact sales, drug product sales
are still projected to increase by 8,780 million yen during thisperiod due to an increase in the market share of new products.
International sales are expected to increase by 7,470
million yen due to the increase in dialysis centers in North,Central and South America, and an increase in syringe sales.
We expect an increase in Asia of 4,340 million yen due tohigher volume sales of syringes for vaccines and infusionrelated products, and an expansion of the sales network due
to the establishment of regional bases. In China, sales are
expected to increase by 4,900 million yen as a result of
increased sales of dialyzers and dialysis machines.
While total sales are expected to grow, the profit margin
is expected to be 9.9%, which is a slight decrease of 0.6
points over the entire segment. This projected decrease canbe attributed to continued increases in transportation costs
and raw materials.

POINT
Bepotastine (Talion AG) obtained about 73% of the market
share in Japan. (about 100 characters)

Injection
products

10.7%

Infusion Products

4.2%

2020

2021

2022

2020

2021

2022

Bepotastine, our core drug product, is highly received by themarket as a reliable authorized generic (AG) medication. As aresult, we have achieved approximately 73% of the domestic
market share this term, a 12% increase from the previous termwith additional future growth expected.

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section09● Medical-Related Business● Pharmaceutical-Related Business● PharmaPackaging Business

Review of Operations

Medical-Related Business

International business

TOPICSStrengthen the sales system of vascular products

Domestic businessStarted the sale of dry clinical chemistry analyzer, “CareFast Pro®”In May 2022, we launched the CareFast Pro®, a dry clinical chemistry analyzer, which instantly
measures blood glucose levels. Core Features of this product include:
1. Rapid measurement with a small sample volume (0.5 μL, approximately 6 s).
The minimal amount of blood required reduces pain during the specimen collection.
2. Ability to measure whole blood including neonatal blood.
	The device can measure arterial blood, venous blood, and capillary whole blood(including neonatal blood), which allows it to be used in various departments within a
hospital. Those departments include but are not limited to; intensive care unit (ICU),
neonatal intensive care unit (NICU), dialysis room, emergency room, and burn units.
3. Communication of results to an electronic medical record by various methods.
	Communication of results to an electronic medical record can be achieved by responding
to a wired LAN (cradle), wireless LAN, Bluetooth® wireless communication, and NFC.
These three features enable not only aneasy measurement of blood glucose but also awide range of ways to communicate results
based on the needs of the end user including
the operation of precision management software
using Nipro HN LINE® and cooperation withvarious electronic medical record systems.

Operation image of CareFast Pro®

Expansion of our sales network in the Asia-Pacific region
We are also expanding our sales network in the
Asia-Pacific region to strengthen our sales base
there. In July 2021, we launched a sales company
in Vietnam and strengthened our direct sales
system under Nipro Asia, which supervises theentire Asian region, more specifically Singapore,excluding India and China. We are also planningto establish a distributor in the Philippines
by 2022.

Myanmar

Pakistan

VietnamBangladesh(10 offices)

Philippines
Established in
2022

Thailand
Malaysia
Singapore

Asia regional HQ
Nipro Asia Pte Ltd.

Australia(2 offices)

19 sales offices in 9 countries, 447staffs(as of the end of March 2022)

Simplemeasurement
Operation ofquality control
softwareWe will strengthen and expand our direct sales, in addition to existing sales throughdistributors, to deploy vascular products overseas. We have established a sales department
in our overseas subsidiaries and are currently conducting sales activities using resources
such as local organizations and logistics.
On a regional level, we established sales departments in North America and Central andSouth America in 2021 to increase regional coverage. In addition, we established a sales
department in local distributors in Europe, India, and the Asia-Pacific regions in 2022, where
we are focused on sales activities using existing sales through distributors and direct sales,
as well as the launch of new products. China has a policy to build a more efficient sales andregulatory system by integrating existing local subsidiaries.

Cooperation
with electronic
medical records

Expansion of our own dialysis center
We have expanded the market of our own dialysis centers since their initiation in 2016 in China
and Asian countries and the Central and South American markets which continue to see
growth. We will remain focused on contributing to community healthcare by providing highquality treatment options, particularly in emerging countries.

About NIPRO

Contents

Management
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

Financial/Data
Section

NIPRO Annual Report 2022

10

● Medical-Related Business● Pharmaceutical-Related Business● PharmaPackaging Business

Review of Operations

Pharmaceutical-Related Business
Overview of fiscal year ended March 2022

Net sales

Total¥74,386

million

Supply records
Injectables(December 2021)

Orally Administered
Drugs

External
Preparations

Ampoules (glass/plastics)
Vials (powder/liquid/lyophilized products)

14.8 billion tablets

120 million sheets

Pre-filled syringes (PFS®)

CapsulesTapes (hotmelt type)740 million units
160 million units

Dual chamber bags (PLW®)

Tablets

Tapes (solvent type)

400 million capsules 580 million sheets
Granules, dry syrups

Net sales
70,357(Millions of yen)

72,38874,386

Operating income (Millions of yen)

610 tons

390 million sheets

Liquid-liquid dualchamber bags

SyrupsOintments, creams

10,6089,826Strengthening of quality control system:
Nipro Pharma Corporation Saitama Plant

2022

We plan to establish a quality control (QC) Center at the
Nipro Pharma Saitama Plant to enhance testing functions
and personnel development in association with the increasein production quantity and items. The construction started
in June 2022 and is scheduled to be completed in June
2023. The operations are scheduled to start theimplementation of tests of the Saitama Kasukabe area in
July of the same year.

(converted to 10g-sheet units)

460 thousand bottles 16.3 million tubes(converted to 10g-tube units)

2020

2021

2022

2020

For the fiscal year ending March 2023, we expect the net sales
to increase 6.2% year on year to 79 billion yen and operating
profit to increase 0.8% to 9,9 billion yen.
Despite the impact of the discontinuation of someproducts, sales of generic drugs are expected to increaseslightly due to the production of newly launched products andthe order of anticancer drugs increasing during the previous
and current fiscal year. The sales of innovated/long-listed
products are expected to increase by 3,280 million yen as aresult of the start of contract manufacturing new formulations.
Nipro JMI Pharma forecasts is expected to increase in sales
revenue by 540 million yen on year by continuously focusing
on the expansion of the sales channels.
Operating profit is expected to increase by 80 million yen on
year, as results of efforts to reduce costs by improving production
efficiency, in spite of an increase in transportation and utility
costs due to the recent soaring prices of crude oil and rise in
manufacturing costs in association with the strengthening of thequality assurance system.
In addition, we will invest in facilities to continue quality
control POINT , and strengthen our stable supply of products, andquality assurance system.

POINT

13,196

Poultices

33 million units
4 million units

In the contract manufacturing business for generic drugs,
orders for antibiotics were sluggish due to a decrease insurgical treatments associate with the COVID-19 pandemic.
On the other hand, with respect to innovated/long-listed
products, the contract manufacturing of new products,
mainly COVID-19 vaccines and other injectable products,
contributed to expand the sales. Nipro JMI Pharma,
commenced under the supervision of pharmaceutical-related
business in this fiscal year, increased sales by strengthening
sales structures and expansion of its sales channels.
The profits were affected by the decrease in the sales of
the above antibiotics, the damage to the Nipro Pharma
Kagamiishi Plant caused by the Fukushima earthquake
occurred in February 2021, and the decline in the capacity
utilization rate due to some technical transfers activities for
new products in Nipro Pharma Vietnam.
As a result, sales in this segment increased 2.8% year on
year to 74,386 million yen and operating profits decreased
7.4% to 9,826 million yen.

Forecast and strategy for fiscal year
ending March 2023

2021

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● Medical-Related Business● Pharmaceutical-Related Business● PharmaPackaging Business

Review of Operations

Pharmaceutical-Related Business

TOPICS

Efforts to strengthen quality andproduction systems
Strengthening of production system at injectable drug plants
Nipro Pharma Corporation Ise Plant
A new pre-fillable syringe line is being installed at the Nipro Pharma Ise Plant. It was completed
in November 2021, and production is scheduled to start in February 2023, that will enable us
to expand the production capacity and implement BCP measures.
We plan to introduce two lines of the syringes including (1) 1–3 mL of volume, and (2)5 mL/10 mL of volume. The production capacity is 59 million syringes/year for line (1) and55 million syringes/year for line (2), we plant to commence production in February 2023.

Nipro Pharma Corporation Omi Plant (New Plant Project)
We will construct an injectable drugs
manufacturing plant in Shiga Prefecture.
The construction started in May 2022 and isscheduled to be completed in January
2024. The manufacturing will be started
technical transferred activities from April
2024, and the products will be released in
the beginning of 2025. Doublechamberbag
of antibiotic drugs will be manufactured at
this plant and we expected to produce 10
million bags per year.
Conceptional drawing of Omi Plant

Strengthening of production increase system at the oral drug plant

New building for pre-fillable syringe line under construction

Zensei Yakuhin Kogyo Co., Ltd.
A new building is under construction at the
Kishiwada Plant, which will be equipped tohandle various functions from development
to production of investigational products aswell as commercial products. The constructionis scheduled to be completed in October
2022, and the operation is scheduled to startin April 2023 after validation of equipment
implemented. With the addition of the newbuilding, the plant is expected to produce 3
billion tablets per year in the entire plant. We
will enhance test areas and introduce
automated rack process in the warehouse,and establish a production system that cancope with highly active drug products.

Image of a test area in the new building11About NIPRO

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NIPRO Annual Report 2022

12

● Medical-Related Business● Pharmaceutical-Related Business● PharmaPackaging Business

Review of Operations

PharmaPackaging BusinessNet sales

Total¥46,361

Overview of fiscal year ended March 2022

Forecast and strategy for fiscal year
ending March 2023

Domestic sales remained strong especially for products
related to medical devices such as infusion systems, andglass products such as tubing glass and vials.
In overseas, vials remained the main drive for sales in theU.S, Europe, and Chinese markets due to the increase of
demand for higher quality drugs. In addition, COVID-19
vaccine demand has boosted our sales further. Usage ofsterilized glass syringes for bio-pharmaceutical has also
increased significantly this year.
We achieved good result with effective manufacturing
operation this year, resulting in sales of 46,361 million yen,and operating profit of 2,889 million yen, 19.9% and 45%
increase respectively from previous year.

For the fiscal year ending March 2023, we predict an increasein net sales by 10.4% to 51,200 million yen and operating
profit by 14.6% to 3,300 million yen.
Compared to the previous year, we expect steadyincrease in sales of vials for COVID-19 vaccine mainly in
China and sterilized glass syringes for bio-pharmaceutical in
Europe region.
In case of operating profit, slight increase in manufacturingcosts due to expansion of syringes line in Germany, new setup
of vial lines and new furnace in France, higher packaging
materials and energy cost by inflation effect may be expected.
However we will strive to control the overall expenses andmaintain the level of operating profit. POINT

million

Sales ratio by region
India

Japan

2.7%

24.8%

China

15.3%

POINT
Net sales

(Millions of yen)

EuropeFiscal 2022

36.8%

Operating income (Millions of yen)
2,889

46,361
36,21738,655
1,992

America

20.4%

675

2020

2021

2022

2020

2021

2022

Market environment and growth strategy
The demand on premium pharmaceutical packaging forhigher quality drugs (such as bio-pharmaceuticals, etc)
continues to increase in developed countries, at the sametime, in developing countries, the demand for pharmaceuticalcontainers is expected to grow align with rising middleincome earners.
COVID-19 situation restrained further the policy forspendings on medical expenses. Furthermore, instability of
economic environment by Ukraine situation and priceinflation are considered to be the major risk factors in thefiscal year ending March 2022.

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13

● Medical-Related Business● Pharmaceutical-Related Business● PharmaPackaging Business

Review of Operations

PharmaPackaging Business
Establishment of stable supply system

TOPICS

Expansion of D2FTM line in the German plant
The demand for primary glass packaging containers has significantly grown particularly oursterilized syringes D2F TM. The products are used as containers for high quality drugs suchas bio-pharmaceuticals, vaccines, and anti-cancer drugs due to its simple and safe
administration.
We are expanding the syringe production lines in Germany plant to supply around 500
million syringes per year, and ensure top-class position in the global market for sterilized
glass syringes.

Expansion of product portfolio and market coverage
New launch of single-use bag related products in Japan
Single-use bags provide production efficiency and ensure
the safety of bio-pharmaceuticals. Domestic pharmaceuticalcompanies have been sourcing this material mainly fromoverseas supplier. However to mitigate the supply chain
risks under COVID-19 pandemic, we developed the
products domestically which shorten the supply lead timeand launched the products from the beginning of 2022.

Single-use bag

Promotion of LInCTM in Europe
LInCTM is a system consists of Luer Lock integrated caps (adapter, rigid cap, and integrated
closure) for our sterilized glass syringes. This product guarantees the sealing performance ofsyringes, ensures the stability of the drugs, and improve theoperation for users. We will further support the needs ofpharmaceutical companies for "Ready to Use" products
especially in the European market where high-value products
LInC™
are required.

Expansion and new installation of furnace
Increasing demand of glass containers for drugs around the world leads to the increasingneed for the tubing glass (raw materials). In respond to that issue, we are expanding thetube drawing line at Millville Plant in the U.S, and constructing a new furnace at Aumale
Plant in France. The operation is scheduled to begin in 2022, and the manufacturing capacityof glass tubing is expected to increase by 1.4 times from its original capacity. Establishingconsistent manufacturing processes enables us to strengthen sales of NSV-51 Nipro brandtubing glass, and also contributes to a stable supply of vials and pre-fillable syringes.

Reducing manufacturing cost
We continuously emphasize on automation of manufacturing processes, rationalization of
manufacturing plants and product portfolios, and restructuring of supply chains from theperspective of geopolitical risks and high inflation in raw material, energy, and freight costs.
Through these efforts, we hope to reduce costs, eventually earning higher operating profit
and maximizing free cash flow.

Full-scale production of VIALEXTM
Nipro brand vials known as VialexTM ensures minimal extractable from glassand suitable for bio-pharmaceuticals. Currently new projects are underprogress mainly in Europe, the U.S., and India. In respond to the increase of
demand, the production system for VialexTM is being reinforced in Japan, theU.S. and Germany. We plan to supply up to 30 million pieces in 2022 and will
be able to support needs for wide range of sizes in the future.
Vialex™

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Social Bond
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NIPRO Annual Report 2022

Financial/Data
SectionManagement
Foundation

14● Aiming to Achieve Consolidated Sales of ¥1 Trillion in the FYE 2031.3●A pproaches to SDGs

Outline of the Medium-Term Management Plan

Aiming to Achieve Consolidated Sales of ¥1 Trillion in the FYE 2031.3
Management Policy
Keeping up with the turbulent times, we will continue to respond to user needs, aim to become theworld's top manufacturer in terms of product competitiveness and market share, and promote local
production for local consumption globally.

Priority Tasks
1

Protecting a corporate culture that provides opportunities to motivated people2Making decisions from the end-user's perspective is our top priority

3

Upholding the Sanpoyoshi (Win-Win-Win for users, society, and the company) principle

45

 haring information about each step of the Plan-Do-Check-Act (PDCA) process with all employeesSso that they can manage the PDCA cycle with a sense of ownership ecoming a company wherein the organization managers recognize the gap between theory andBreality and can lead their staff to understand it

Enhancements
 hallenge of becoming the No. 1 manufacturer contributing to regional healthcareCin the Japanese market
	Providing comprehensive medical infrastructure that connects patients, their families, hospitals,
and pharmacies, as well as offering medical equipment and pharmaceuticals that meet medical
needs in the marketplace
1

2 Top share in the global market for dialyzers
	Expanding the company's direct sales network and training centers, and accelerating the operationof our own dialysis centers in emerging countries

 eployment of vascular products to the global market and entering new areasDin the domestic market
	Establishing a sales network for existing products in the U.S. market with a view to expand globally, andaiming for a full range of products in the domestic market in the cerebrovascular and arrhythmia fields
3 eployment of the drug contract manufacturing business to overseas markets
D	Promote out-licensing of our GE products in the Chinese market and expand business in the U.S. market
4

Development of high-value-added products and reduction of manufacturing costs in the
PharmaPackaging business	
Develop high-quality products for biopharmaceuticals and reduce manufacturing costs byautomating the manufacturing process
56

 nhancement of cellular medicine businessE
Promote manufacturing automation and expand business into the European and American markets

 evelopment of seeds of new businessesD	
Business expansion into surgical products, electromagnetic wave therapy products, active
pharmaceutical ingredients (APIs), and pharmaceuticals in new fields
7

KPIs for FYE 2025.3
Average annual growth of 7.0+%

Net sales

Operating income Average annual growth of 7.0+%

9.0+%

Operating margin ratio

Net Sales/Operating Margin Ratio
Net sales (Left)

CAGR
7.0+%

2,000

(Times)Net Debt/EBITDA ratio less than X 5

6,000

7.5

4,500

6.0

5.0

3,000

4.0

2.5

1,500

2.0
0

2019 2020 2021 2022 2023

(Plan)(Forecast)

EPS*

¥200 or higher

ROE

14.0+%EPS/ROE

8.0

0

2025

(Forecast)

EPS (Left)(100 M Yen)

10.0

0

0

2019 2020 2021 2022 2023

Net Debt/EBITDA (Right)

Net Debt (Left)
(%)

4,000

Less than X 5

Net Debt/EBITDA ratio

Net Debt, Net Debt/EBITDA

Operating margin ratio
at 9.0+% level

6,000

Maintain around ¥450,000 MA iming for a level of ¥100,000+
M or higher

EBITDA

Operating margin ratio (Right)(100 M Yen)
8,000

Net Debt*

2025(Plan)

Shareholder return (dividend payout ratio*)

35.0% (FYE 2023.3)
Maintain 35.0 % (FYE 2024.3 -)Annual Dividend/Dividend Payout Ratio

ROE (Right)

Annual Dividend (Left)

Dividend Payout Ratio (Right)

(Yen)

(%)

(Yen)

300

24.0

80

16.0

60

100

8.0

40

30

0

0

20

15

-8.0

0

ROE at 14.0+%

200

-100

2019 2020 2021 2022 2023

(Forecast)* EPS: Earnings per share

2025(Plan)(%)

Maintain 35.0% payout
ratio from FYE 2024.3

60
45

0

2019 2020 2021 2022 2023

(Forecast)

2025(Plan)* Source of dividends shall be sum of 75.0% of consolidated
profits and 25.0% of non-consolidated profits.

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NIPRO Annual Report 2022

15

● Aiming to Achieve Consolidated Sales of ¥1 Trillion in the FYE 2031.3●A pproaches to SDGs

Outline of the Medium-Term Management Plan

Aiming to Achieve Consolidated Sales of ¥1 Trillion in the FYE 2031.3
Capital Investment Policy

Policy on Organization, HR Development, and IT Systems

Objectives■ Expansion of the structure for increasing production of medical devices and pharmaceuticals■ In cellular medicine business, promote manufacturing automation and expand business into

the European and American markets■ Incubate new business seeds of surgical products, electromagnetic wave therapy products,

APIs, pharmaceuticals in new fields, etc.

Overseas holdings structure⦁E stablish holdings in Europe, China, and the U.S. to realize business management by regional
headquarters, and matrix management aimed at rapid business decision-making by each
operating company
⦁C entralize compliance, financial, and tax management
⦁m prove knowledge accumulation and efficiency by consolidating indirect divisions
⦁N ew business incubation

Investment status

Renewal ofexisting facilities(Millions of yen)

2021

2022

2023
(Forecast)

2021-2025(Plan)

Medical equipment(dialyzers, catheters, etc.)

21,11632,27130,220160,000

Pharmaceuticals

20,61023,11918,25090,000

PharmaPackaging

Human resources development
⦁N urturing training in the medical field to foster a sense of value that enables us to always think
and act from the user's viewpoint.
⦁ Introduction of the FISH philosophy, which aims to revitalize the workplace and encourage
employees to thrive in their work, and promote employee motivation
⦁F ollow-up training for younger employees, training for different levels of qualifications, andother necessary training for each stage of employment

5,371

9,278

12,30030,000

Sapporo Plant andCellular medicine
manufacturing facilities

21,3243,322

950

30,000

Incubation ofbusiness seeds

2,159

5,685

1,500

10,000⦁F ocus on the development of global human resources through selective language training,in-house language classes, and a self-development support system for languages(Millions of yen)⦁A
 im to create a workplace where each employee can maximize their abilities regardless ofrace, nationality, gender, or age; conduct seminars to promote women's activities; andorganize exchange meetings to build networks among international employees

Production Technology Center,laboratories, etc.

5-year guidelines for FYE 2025.3
2021

2022

2023(Forecast)

2021-2025(Plan)

EBITDA

70,25470,04870,961Aiming for
400,000–450,000

Capital investment*

51,982

46,56063,220300,000–350,000 range

Free cash flows

21,021-10,219

12,415Return to profit* Amount of capital investment based on acceptance inspection

⦁E stablish a company-wide education and training system to raise compliance awareness⦁C onsidering the physical and mental health of each employee, the "Nipro Health Declaration"
was issued in September 2018, and anti-smoking measures, mental health measures, workstyle reforms, and workplace revitalization activities have been promoted
IT systems
⦁R eview system functions to support management efficiently and expeditiously⦁E nhance security against cyber-attacks, such as unauthorized remittance, information leaks
by targeted attacks, and ransomware⦁D evelop an information infrastructure realizing a work style not confined by time and place,
improving labor productivity and employee satisfaction

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NIPRO Annual Report 2022

16

● Aiming to Achieve Consolidated Sales of ¥1 Trillion in the FYE 2031.3●A pproaches to SDGs

Outline of the Medium-Term Management Plan

Approaches to SDGs
Social issues that we aim to solve through our business

Providing treatment to patientsin remote areas with limited access• In emerging countries, such as in Latin America, dialysis clinics have been set up in suburban areas to provide dialysis treatment topatients living in remote areas, where it is more convenient for them to receive dialysis treatment.
• In Southeast Asia and Africa, dialysis clinics have been set up in urban areas to provide patients with high-quality treatment.

Preventing medical accidents at
medical institutions• The company sells safety products to prevent medical accidents while using medical equipment.
• They include winged needles that prevent needlestick accidents, colored syringes that can be distinguished by color to prevent
mix-ups, and pre-fillable syringes and kit preparations that reduce the risk of foreign matter contamination, bacterial contamination,and needlestick accidents.

Providing safe and secure
medicines for all• The company promotes products that can be used without difficulty, regardless of age or disability.
• A range of products are offered that enable those with visual difficulties to identify tablets, to write down medication instructions andmedication dates, and to prepare PTP sheets for patients with reduced dexterity.

Dealing with new infections• The company sells products that are in high demand worldwide when new infectious diseases, such as COVID-19, become rampant.
• Surgical masks, medical rubber gloves, tubes and other consumables, blood collection tubes, and disinfectants are stocked.

Stable supply of antimicrobial agentsthat are in short supply• We continue to manufacture and market antimicrobials, although they are unprofitable and there are concerns about the supply of APIs.
• As a precaution against the future supply of APIs, we are developing some of them in-house.

Providing a medical environment forpatients who live in remote ordifficult to access locations• The company sells a cloud-based monitoring system (Nipro Heart Line™) that uses ICT to provide real-time information on patients,
even in remote locations.
• The system enables patients with chronic diseases to receive regular and continuous medical care, sharing vital information in realtime, and sending alerts when abnormal values are detected to remotely check the patient's condition.

Enhancing the labor productivity ofhealthcare professionals• The company sells the HN LINE™, which solves business problems by linking medical device information with electronic medical
records.
• The company hopes to support the reduction of labor, efficiency of nursing operations in hospitals, and work-style reforms ofhealthcare professionals.

Minimizing the environmental
impact of waste• The heat generated when industrial waste in the manufacturing process is burned in incinerators is reused to generate electricity andhot water, and the company also emphasizes reducing the volume of industrial waste.
• We promote a paperless office by digitizing internal documents and eliminating meeting materials to reduce the use of paper andother materials.

Promoting efficient use of natural
resources• To reduce the global environmental impact, the company promotes the introduction of solar power generation at its plants as part ofenergy conservation efforts.
• At Nipro Thailand, a solar power generation system was introduced in 2018 and the electricity generated is used for medical device
manufacturing.

Providing rewarding work
opportunities for all• Training for women in supervisory positions and above is conducted so that they can build a career design with strategies for theirwork and lives.
• For international students who have received job offers to seamlessly join the company, exchange meetings are held for the purposeof networking with senior international employees prior to joining.

Related SDG

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NIPRO Annual Report 2022

Financial/Data
Section17● Investment Status of Social Bonds

Social Bond Reporting

Investment Status of Social Bonds
Overview of social bonds

Funding appropriation status

Our business contributes to improving the health and quality of life of people around the world
through the stable supply of medical devices, pharmaceuticals, and other essential social initiatives.
We believe that these efforts contribute to solving social issues as social projects.
We have established the International Capital Markets Association (ICMA) in order to raise funds
for these initiatives as social bonds. We have established a Social Bond Framework and a Social
Finance Framework* in accordance with the ICMA Social Bond Principles.
Based on this framework, we issue two types of social bonds: (1) Social Hybrid Bonds and (2)Social CBs to finance projects that contribute to solving social issues.

The status of appropriation of funds is as follows.
(1) Social Hybrid Bond funds have been fully allocated, and (2) Social CB funds are scheduled
to be fully allocated during the fiscal year ending March 31, 2023.
* Please refer to the Annual Report 2021

(1) Social Hybrid Bonds
Use of funds

The Bonds are considered a type of hybrid
finance with both "equity" and "debt"
characteristics. The Bonds are a type of hybrid
finance that combines the characteristics ofboth "equity" and "debt. The issuance of theBonds allows us to actively invest in projects
that contribute to society while maintaining
financial security.

Corporatebond name

Nipro Corporation
1st Series Deferral of interest payment
Unsecured Bonds with Early Redemption(with subordination clause)“Social Bonds”

Issue amount ¥30,000 million(2) Social CBs

Our corporate bonds are positioned as“convertible bonds” (CB) which the bondholders
can convert into our shares at a predetermined
price. By setting the conversion value higher
than the stock price at the time of issuance, theissue of corporate bonds is expected to beeffective in protecting the interests of existing
shareholders and maintaining financial safety.
Thus, we will realize proactive investment inprojects with high social contribution.

Corporatebond name

Nipro Corporation
Euro-yen denominated convertible bondwith a maturity in 2026
(social convertible bonds)“Social CB”

Issue amount ¥30,000 million

Refinancing(appropriated)

8,620

Pharmaceutical-Related Business

4,340
2,040

Medical-Related Business (Japan)

9,114

Medical-Related Business (Global)

5,339

Pharmaceutical-Related Business

15,8693,950

Total new investment

34,272

Total

49,272(2) Social CBs
Use of funds

Project type

Amount(million yen)

PeriodDetails

Medical-Related
Business (Japan)

30,3002023/3

Construction of Plant No. 7 associatedwith increased production of PES/FB
dialyzers in Odate Plant

Period5 years

Interest rate

0%

Payment date September 28, 2020

New
investment(unallocated)

Conversion
value¥1,430Total

Investment in manufacturing facilitiesof medical devices

Medical-Related Business (Total)

PharmaPackaging Business

1.6%

Use of
funds

3,330

15,000New investment(appropriated)

35 years

Payment date September 27, 2021

5,290

Medical-Related Business (Global)

PharmaPackaging Business

Interest rate

Investment in manufacturing facilitiesof medical devices, pharmaceuticals,
and pharmaceutical packaging

Medical-Related Business (Japan)

Total refinancing

PeriodUse offunds

Amount(million yen)

Project type*T he company has obtained a "second opinion" from Rating and Investment Information, Inc. as a third-party evaluation.

(1) Social Hybrid Bonds

for details on the status of appropriation of (1) Social Hybrid Bonds.

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18

● Investment Status of Social Bonds

Social Bond Reporting

Investment Status of Social Bonds
Progress of each project

Medical-Related Business(Japan)Related SDGs

Main businesses
We develop, manufacture, and market medical devices, and generic and cellular pharmaceuticals
in Japan.
Our main medical device products are dialysis products; however, we also provide products
for treating various diseases and products with safety measures. Further, we have a wide rangeof our own branded generic drugs, including oral, injectable, and topical products. We offer
universally designed products, such as orally disintegrating tablets that can be swallowed
without water, tablets that can be distinguished by fingertips, and packaging that includes asection for medication instructions and the date of administration. For cellular medicines, we
provide autologous marrow mesenchymal stem cells for the treatment of spinal cord injury.
Target social issues
⦁H elp life support, health improvement, and quality of life for patients requiring dialysis
⦁P revent medical accidents such as needlesticks, foreign substances/bacterial contamination,and reduction of the burden on healthcare workers
⦁R educe obstacles in medication for patients with manual or visual impairments⦁P rovide an ICT-based medical care system to patients who are unable to visit hospitals due todisasters or remote location

Approach to social issues (Output indicators)
The funds raised were used as capital investment to meet market needs in manufacturing
medical devices, pharmaceuticals, and cellular medicines. Please note that there is a time lag
before the invested facilities become operational and the manufacturing capacity increases.
Percentage increase in
the quantity of medical
devices manufactured*1

Due to a temporary suspension of operations at overseas plants that manufacture
products for sale in Japan because of COVID-19, the domestic production of
medical devices declined 92% year on year.

Percentage increase in thequantity of in-house brandgenerics manufactured*2

Production increased 118% year on year due to higher overall market demand owing
to quality issues at other companies.

Manufacturing capacity ofcellular medicines

The cellular medicines production capacity increased to 250 in FY2021, which issignificant, as the Sapporo CPF started operation in late 2021.

Outcome of improvement of issues (Outcome indicators)
Percentage increase in
the quantity of medical
devices sold*1

In medical devices, sales of catheter and infusion products increased due torecovery in the number of surgeries as the impact of COVID-19 subsided.
Simultaneously, special demand continued to rise, including sales of vaccine
syringes to the government, resulting in a 107% year-on-year increase in sales.

Percentage increase in
the quantity of in-housebrand generics sold*2

Sales increased 107% year on year due to higher overall market demand owing toquality issues at other companies.

Quantity of cellular
medicines sold

Sales of cellular medicines totaled 18 because of the limited acceptance of theseproducts by hospitals due to the impact of COVID-19.

⦁ Improve the health and life of patients with spinal cord injuries*1	Percentage increase in the quantity of medical devices manufactured and sold was calculated by selecting the main
products, dialyzers, blood circuits, dialysis needles (AVF), winged needles (PSV), and syringes. In order to align the different
unit bases, the quantity was calculated as a weighted average of unit price and compared to the previous year.
*2	Percentage increase in the quantity of in-house brand generics manufactured and sold was calculated as a weighted
average of unit price to align the different units of oral, injectable, and topical formulations compared to the previous year.

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Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

Financial/Data
Section

NIPRO Annual Report 2022

19

● Investment Status of Social Bonds

Social Bond Reporting

Investment Status of Social Bonds

Medical-Related Business(Global)Related SDGs

Main businesses
We develop, manufacture, and sell medical devices overseas. In addition, we sell pharmaceuticalproducts, and also open and operate dialysis centers and training centers. Our main medical
device products are dialysis products; however, we also provide products for treating various
diseases and products with safety measures. Pharmaceuticals provide dialysis solutions usedin dialysis treatment. Dialysis centers are specialized clinics that provide dialysis treatment topatients. Training centers are training facilities for healthcare professionals in dialysis treatment
techniques and provide an improved on-site medical environment by incorporating feedback
and requests obtained during the training into product and technology improvements.

Approach to social issues (Output indicators)
The funds raised were used for capital investment to meet the market needs in the manufacturingof medical devices. Please note that there is a time lag before the invested facilities become
operational and the manufacturing capacity increases.
Percentage increase in thequantity of medical
devices manufactured*3

Overseas manufacturing output for medical devices declined 94% year on year,
partly due to the suspension of operations at the plants in Thailand and Vietnam
because of COVID-19.

Dialysis Center patient
capacity*4

The number of dialysis centers increased 123% year on year due to aggressive
negotiations for acquisition, especially in emerging countries.

Number of training centers

During the period under review, one more center was added in Canada, bringing thetotal number of training centers to 26 worldwide.

Target social issues
⦁H elp life support, health improvement, and quality of life for patients requiring dialysis
⦁P revent medical accidents such as needlesticks, foreign substances/bacterial contamination,and reduction of the burden on healthcare workers
 rovide medical facilities to patients living in remote regions far from urban areas in emerging
⦁P
countries⦁P rovide advanced medical care to patients living in urban areas in developing countries
⦁P rovide therapeutic equipment, examination products, and infection control products thatcan prevent the spread of infectious diseases

Outcome of improvement of issues (Outcome indicators)
Percentage increase in
the quantity of medical
devices sold*3

For medical devices, the sale of syringes increased due to the demand for vaccines.
The sale of dialysis-related products, including dialyzers, remained steady, resulting
in a 105% increase in overseas sales year on year.

Number of patientstreated at Dialysis
Centers*4

The number of patients treated at the dialysis centers increased by 133%, in linewith the increase in the number of openings.

Number of Training
Center users

A total of 37,836 healthcare professionals have received training at 26 training
centers worldwide.

*3	Percentage increase in the quantity of medical devices manufactured and sold was calculated by selecting the main
products, dialyzers, blood circuits, dialysis needles (AVF), winged needles (PSV), and syringes. In order to align the different
unit bases, the quantity was calculated as a weighted average of unit price and compared to the previous year.
*4	Number of dialysis centers and patients treated at dialysis centers was calculated as the percentage yearly increase.

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section20● Investment Status of Social Bonds

Social Bond Reporting

Investment Status of Social Bonds

Pharmaceutical-Related Business

Related SDGs

PharmaPackaging Business

Related SDGs

Main businesses
We are a contract manufacturer of ethical drugs licensed by domestic and overseas
pharmaceutical companies. We have manufacturing facilities in Japan, the U.S., and Europethat are GMP-compliant in each of the three regions. The company can manufacture a wide
range of products, including injectable, oral, and external dosage forms, from small-lot study
drugs to mass production after launch. We also develop formulations, such as orally
disintegrating tablets, as well as slow-release and transdermal-absorption formulations.
We can manufacture pre-filled syringes and double-chamber bags, which are combination
products with medical containers. We also handle contracted inspection and packaging
processes for products licensed overseas, where pharmaceutical companies sell pharmaceuticalproducts formulated overseas after inspection and packaging in Japan.

Main businesses
We develop, manufacture, and sell pharmaceutical packaging containers and glass tubing, theraw material for pharmaceutical packaging containers.
For pharmaceutical packaging containers, we provide molded components such as vials,
syringes, rubber stoppers, and devices used to administer pharmaceuticals. Packaging
containers can be customized to meet the quality requirements of products ranging fromgeneral pharmaceutical products to biopharmaceuticals and nucleic acid drugs. The raw
material, glass tubing, is a glass material that meets the standards for primary pharmaceuticalglass containers specified in the Japanese, U.S., and European Pharmacopoeias. We sell glass
tubing to Japan as an agency of Nippon Electric Glass Co., Ltd. We manufacture our own glass
tubing in the United States, France, India, and China and sell it worldwide.

Target social issues
⦁C ontribute to a stable supply of pharmaceuticals by supporting a wide range of dosage forms
and production scales

Target social issues
⦁P rovide essential products for pharmaceutical manufacturing, contributing to a stable supplyof pharmaceuticals and labor saving in the formulation process

⦁C ontribute to healthcare cost reduction by reducing manufacturing costs through a collective
contract of manufacturing pharmaceuticals for many companies

⦁R educe the burden on healthcare professionals by developing products that meet the needsof the medical field

Approach to social issues (Output indicators)
The procured funds were used as capital investment in the contract manufacturing ofpharmaceutical products to meet the market needs. Please note that there is a time lag before
the invested facilities become operational and the manufacturing capacity increases.
Percentage increase in thequantity of contract drugs
manufactured*5

Production increased 103% year on year due to new contracts for manufacturing
new coronavirus vaccines.

Outcome of improvement of issues (Outcome indicators)
Percentage increase in
the quantity of contract
drugs shipped*5

Meanwhile, sales results declined 94% year on year due to inventory adjustments bycustomers affected by COVID-19.

*5	Percentage increase in the quantity of contract drugs manufactured and shipped was calculated as a weighted average ofunit price to align the different units of oral, injectable, and topical formulations compared to the previous year.

⦁C ontribute to the reduction of medical accidents such as mix-ups and contamination offoreign substances by creating kits of pharmaceutical products
Approach to social issues (Output indicators)
The procured funds were used as capital investment to meet the market needs of manufacturing
pharmaceutical packaging containers. Please note that there is a time lag before the invested
facilities become operational and the manufacturing capacity increases.
Percentage increase in thequantity of products
manufactured*6

The manufacturing performance of pharmaceutical packaging products increased
138% year on year due to the increased demand for various vaccine-related
products because of the impact of COVID-19 and the acquisition of a new Croatiancompany.

Outcome of improvement of issues (Outcome indicators)
Percentage increase in thequantity of products sold*6

As mentioned earlier, the increased demand for vaccine-related products and theacquisition of a Croatian company led to a 116% year-on-year increase in sales.

*6	Percentage increase in the quantity of products manufactured and sold was calculated as a weighted average of unit priceto align the different units of ampoules, vials, and syringes, which are the main products, compared to the previous year.

Contents

Management
Message

About NIPRO

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

Management Foundation

NIPRO Annual Report 2022

Financial/Data
Section21● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board Members

Sustainability of Nipro
Basic attitude
Nipro Group is working to promote sustainability management to resolve various social issues
through business.

Extract ESG issues

Construct thesupervising system
for the board of
directors

Sustainability promotion system
The Sustainability Committee is divided into the Environment Committee, Social Committee,
and Governance Committee. They manage and promote the ESG initiatives in each businessdivision (all group companies).
The status of management and promotion is put on the agenda of the board of directors
every quarter or so. Accordingly, the strategy is discussed, guidance is provided, and KPI
setting and its progress are deliberated upon. The contents are relayed to the business division
through each committee.
Sustainability promotion system

Official supervisor of climate change-related issues among the board of directors

President (CEO)Deliberation matters are put on theagenda and deliberated upon

Sustainability of
Nipro
Reform thecompany-wide
policyBoard ofdirectors

Appointment

Top supervisor of sustainability (CSO)

Establish theexecutive
committee

Reporting the deliberation matters

Appointment

Sustainability Committee

Secretariat: Sustainability promotion dept., Human resources dept. Governance control dept.

Set mid- and long-term goals

Information disclosure

Environmental
Committee

Social Committee

Each business division

Increase corporate value

GovernanceCommittee

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

Financial/Data
Section● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

Management Foundation

NIPRO Annual Report 2022

22

● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board Members

Sustainability of Nipro

Cases of sustainability-related initiatives
Case 1CO2-free electricity at Kondo Plant

At the Kondo Plant belonging to Nipro Medical Industries Ltd. (Japan), private power generation
has been in operation using solar panels since FY2016. Furthermore, all electricity used in theplant has been renewable energy-based since April 2021. This is the first plant where 100%
renewable energy-based electricity generation was achieved among all business offices andproduction bases of the Nipro Group.

City for processing and distributing wood biomass using waste wood. Nipro Pharma thus
contributes to building a sustainable and communal society by participating in the project.

G HG emission reduction effect:
Down 8,324 t-CO2

	
(LNG conversion from the result as ofend- March, 2022)

GHG emission reduction effect:
Down 4,068 t-CO2

Biomass boiler at Odate Plant(As of end-March, 2022)

Case 3

Kondo Plant

Case 2Introduction of biomass boiler throughpublic-private collaboration

At the Odate Plant belonging to Nipro Pharma (Japan), a biomass boiler has been in
operation since FY2011. Accordingly, power is generated by a turbine using biomass
instead of fossil fuels. The steam produced by the biomass boiler is distributed to theplant 24 hours a day and 80% of it is used for air-conditioning in the plant (using steam
to heat the air cooled for humidity adjustment). It is also used to produce water forsterilization of products and manufacturing processes, leading to the reduction of GHG
emissions. This project is a public-private collaboration between Nipro Pharma and Odate

Opening of dialysis centers in emerging countries

We have opened dialysis clinics in suburban
areas for patients who live far from thecity, particularly in South and Central
America and emerging countries, so that
dialysis therapy is conveniently provided
to everyone. We have also opened dialysis
centers in cities in Southeast Asia andAfrica to provide high-quality treatment.
We aim to keep introducing our dialysis
centers in emerging countries, providing
high-quality products and treatment
environments, thus contributing tocommunity medicine.

Dialysis center opened in Thailand

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Management Foundation

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

23● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board Members

Environment
Information disclosure based on TCFD
Nipro Group recognizes that climate change is a significant issue that greatly affects business
continuity. Nipro Group agrees with the suggestion of the Task Force on Climate-related
Financial Disclosures (TCFD) and will expand information disclosure following the framework
proposed by TCFD.
Governance
In Nipro Group, the President serves as a supervising officer of climate change issues. Our CFO
was designated as chairman of “the Environment Committee” by the President and manages
and supervises the initiatives for climate change issues at Nipro Group.
In the Environment Committee, the persons in charge of climate change issues in eachbusiness division serve as committee members who identify the impact of climate change on
Nipro Group and examine the policy initiatives and specific measures. The measures examinedby the committee are put on the agenda of the board of directors through the chairman of thecommittee and deliberated as a significant management issue of Nipro Group.
Nipro Group makes a quick decision on the management related to climate change
issues by introducing the aforementioned committee system and improves the system towork on the measures.
Strategy
The impact of climate change on Nipro Group is divided into the following two types: one isrelated to the “transfer” caused by political impact generated in the course of societal
change toward carbon neutrality and establishment of new technologies as well as thechange in market needs; the other is related to “physical change” such as frequent abnormal
weather caused by increasing global warming, occurrence of subsequent disasters, andhigher average temperatures. Nipro Group, a comprehensive medical manufacturer, analyzes
these impacts from the perspective of each business division, identifies risks andopportunities, and incorporates them into the business strategy. The following page
describes a part of our strategy.

Risk management
Nipro Group formulates the Rules for Controlling Management Risk, accurately grasps the
management risk that can greatly impact business including climate-related risks, andendeavors to conduct the appropriate corporate management. Whenever the assumed risk
exceeds a certain amount, it is put on the agenda of the board of directors and the
management makes a quick decision regarding risk management.
Index and goals
Nipro Group decided the volume of greenhouse gas emissions (unit: t-CO2) as an index forthe evaluation and management of risks related to climate change. Furthermore, to promote
the reduction of greenhouse gas emissions, Nipro Group aims for Net Zero in Scope 1/2 by2045. As an interim goal, Nipro Group aims for a reduction of 37.8% in Scope 1/2 by 2030
compared to 2021.
Volume of greenhouse gas emissions (t-CO2)
Approx. 600,000 t-CO2

Reduce by 37.8% by 2030
(from 2021)

2021(reference year)

2030

2045
Net ZeroAbout NIPRO

Contents

Management
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Management
Foundation

Social Bond
Reporting● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

Management Foundation

NIPRO Annual Report 2022

Financial/Data
Section24● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board Members

Environment

Results of scenario analysis
Risk
Category

Risk items

Impact on business

Degree ofimpactPeriodIncrease in carbon price

Increase in the costs of energy and raw materials at plants andbusiness offices due to introduction and reinforcement ofcarbon tax.

Major

Mid-term

Transfer risk
(1.5⁰C scenario) Change in customer
behavior due toincreasing environmental
awareness

Physical risk
(4⁰C scenario)

Decrease in sales due to loss of sales opportunities anddecreasing demands. As the demand for environmentallyfriendly products increases, it is difficult to switch toalternative materials.

Measures
Implementing energy-saving measures and promoting renewableenergy usage to reduce GHG emission volume at production bases
where a large volume of GHG is emitted through operations.

Moderate

We are reducing GHG emissions by making existing products smaller
and lighter and production processes more efficient. We have
simplified packaging while securing quality and changed theLong-term
packaging material to low-carbon materials for some products.
We will further develop products using environmentally friendly
materials and use low-carbon materials for product packaging.
Formulating, maintaining, and managing BCP assuming abnormal
weather. Constructing the production bases and implementing
Long-term measures for disasters after considering the system for various
disaster risks (having private power generation facility, stockpilingenergy and food, having a sufficient stock of raw materials).

Occurrence of disasterdue to abnormal weather

Decrease in supplied quantity due to the damage caused bydisasters to production facilities, logistical problems caused bydisasters, and stagnating supply of materials when abnormal
weather increasingly causes the occurrence of disasters.

Major

Opportunity items

Impact on business

Degree ofimpactOpportunity
Category

PeriodMeasures

Mid-term

Reviewing the logistics route and transport fees in Japan andoverseas, placing logistics bases at appropriate locations, andmaintaining the appropriate amount of stock. The appropriate amountof stock contributes to reducing the expenses for storage andtransport and amount of disposal.

Efficiencyof materials

Leading to cost reduction by strengthening control of theReducing indirect
amount of materials and logistics processes andexpenses through efficient
opportunities to implement efficient transportation andlogistic processes
improvement in quality.

Products andservices

Increase in opportunities to provide products that respond to
Increase in supply volume greater interest and demand for infection prevention among
consumers. This demand has arisen after the outbreak of new
to respond to theinfections or long-term disease trends associated with climate
demands of consumers
change.

Great

To fulfill the responsibility of supplying products to clinical settings
during the expansion of demand for the related products, establishinga system for quickly increasing production volume, and supplying
Long-term
products to respond to the globally expanding demands bydetermining the level of stock of products that is decided to benecessarily higher than that for other products.

Products andservices

Increase in demand of
products to respond to
greater environmental
awareness

Minor

Long-term

Leading to an increase in the sales of home care products,
which is motivated by greater demand for home care productsthat do not emit GHG associated with transport.

Moderate

Promoting research and development while gathering information on
customers’ demands.

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Management
Foundation

Social Bond
Reporting● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

Management Foundation

NIPRO Annual Report 2022

Financial/Data
Section25● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board Members

Human Resources Strategy

Class
H

Newly appointed
supervisor
training

Supervisor
Examination

Class
Management
M

Newly appointed
manager training
Senior manager training

Self-development
Opening correspondence training course

Employee training by specialty

MR training

Examination

New employee training by specialty

Newly appointed
associatesupervisor
training

Associatesupervisor

Caregiving training

Class
F

Abilitydevelopmenttraining

English training for selected employees

Examination

Female career training

GeneralCareertraining

Senior employee career training

Class
C

Common training for
managerial staff< By internal trainers >

Class
B

2nd year trainingNew
graduate
class

Training for upgrading

Class
A

New employee training

Group common training
for each stratum

Manufacturing
Distribution
Sales
Technical
ClericalSpecial duty

Training byspecialty(provided in eachbusiness division)Company-wide common training (group common training)< External training or internal training (external instructor) >Training by Stratum for Young Employees and Employees Promoted to Official Positions
The Nipro Group provides young employees with unique training, including numerous programs
in which participants communicate with their colleagues. This stimulates their motivation,
increases their knowledge, and deepens their communication with their colleagues, leading to
a decrease in the turnover rate. We also provide training for each managerial position in theirfirst year or at an early stage of their appointment, which helps them master the purpose of
their positions and enhances their engagement with the company.

Education and Training System Diagram

Follow-up training

Cultivating Language Skills and Supporting Self-Development Learning
To boldly target the global market of eight billion people in this era of no borders, wemust learn languages other than Japanese. Therefore, we provide language training
programs, mainly English, to select employees, and have created opportunities toenhance language skills.
The Nipro Group actively improves group training based on the belief that people only
grow through communication. Thus, we are attempting to deepen communication skills, andare also providing online training to complement group training. Furthermore, employees canfreely apply à la carte for self-development learning on a topic that meets their needs.
In addition to language training, PC and other skill development courses are available
throughout the year. Therefore, motivated employees can raise their competence levels by
voluntarily attending these courses for which the company pays the fees.

As these training courses are centrally organized in the Nipro Group, both Nipro
employees and employees of group companies can participate. Sharing the values of groupcompanies with various backgrounds not only helps Nipro but also increases the brandvalue of the entire group.

Pre-employment training

Promoting Transparent Appointment of Positions and Personnel Exchanges in the GroupThe Nipro Group promotes personnel regardless of seniority under the company policy of“willingness” to earn ¥1 trillion of sales for the fiscal year ending March 2031. Through complete
reform of the personnel system and clear criteria for promotion, treatment of personnel has
become more transparent, which is effective in increasing employee motivation. Employees
can also apply for in-house staff positions to facilitate career development within the Nipro
Group. In the future, we aim to remove barriers to personnel changes and realize the allocationof the right employees in the right positions, beyond the framework of the company byintegrating this personnel system within the Group.

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Management Foundation

Management
Foundation

Social Bond
Reporting

NIPRO Annual Report 2022

Financial/Data
Section● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

26● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board Members

Human Resources Strategy

Promoting the FISH Philosophy
The Nipro Group promotes the FISH philosophy as a guide for employee conduct. The FISH
philosophy has four basic principles: “choose your attitude”, “enjoy your work”, “pay attention”,
and “delight people”. Being aware of these concepts enhances motivation to work and createsa vibrant and comfortable workplace environmentthat allows people to connect with their surroundings.
The FISH philosophy has been promoted across the
Nipro Group; as in-house events, “the FISH Festival
and FISH Award” were organized to introduce andcommend the practice of the FISH philosophy in eachbusiness office and plant. Through these efforts, we
attempt to promote the FISH philosophy, improve
communication between employees, and enhance the
FISH Award (August 2021)
workplace environment.
Maintaining Workforce by Increasing the Retirement Age
The decrease in the working population due to a declining birth rate and an aging population
is an unavoidable issue in Japan. Nipro has decided to increase the retirement age to 65 years
from October 1, 2022, to retain the workforce and strengthen senior employee engagement.
Therefore, we guarantee the employment of senior employees by extending the mandatory
retirement age to prevent early retirement, support transmission of knowledge and technology,
and contribute to the development of the Nipro Group.
Flexible Work Style — Flextime System and Telecommuting System
We introduced a flextime system for some jobs to create a work style free from fixed work
hours and to contribute to the maintenance of mental and physical health. Additionally,
considering the COVID-19 pandemic as an opportunity, we introduced a telecommuting system
to create a work style free from fixed spaces and to improve labor productivity while also
improving mental health. However, we believe innovation can only be produced through faceto-face communication. Thus, we have set a maximum frequency limit for telecommuting andrequire employees to work at the office two days a week.

PICK UP

Supporting Employees with Children

At the Nipro Group, we provide particularly generous support for employees who return to workfrom childcare leave. We support balance between work and childcare by allowing employees towork fewer hours until their children reach the 6th grade of elementary school; this prevents
employees from resigning. We also established our corporate daycare facilities in Akita, Mie, andShiga to contribute to early reinstatement of employees. We encourage male employees to takechildcare leave, and the number of employees taking advantage of this policy has been
increasing. Additionally, we have also established paternity leave and nursing care leave policies
for male employees. Thus, we are making great efforts to support childcare.

Odate city, Akita(Nipro Odate Plant / Odate Plant,
Nipro Pharma Corporation)

Matsusaka city, Mie(Ise Plant, Nipro Pharma
Corporation)

Kusatsu city, Shiga(Nipro Life Science Site)

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Management Foundation

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities27● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board Members

Human Resources Strategy

Supporting Caregivers
As family sizes decrease, employees playing a major role in nursing care is becoming an
unavoidable issue. The Nipro Group has a system that is significantly better than thelegal system with respect to the period of long-term absence from work for nursing care.
This system also makes it possible for employees to work fewer hours. In this way, we
prevent employees from resigning because of nursing care responsibilities.
Job Return Program
We introduced a system that allows employees who have left the company for unavoidable
reasons, such as transfer of a spouse, childcare, and nursing care, to re-join the company after
their affairs are resolved so that they can make the most of the know-how they gained at Nipro.
This system allows employees to dedicate themselves to issues at home with peace of mind;
after their issues are resolved, they can re-join the company. Thus, we contribute to workfamily balance.
Promoting Health Management
Nipro Group promotes health management in line with our management philosophy of
supporting the health of people around the world and contributing to society. As a company
that supports healthcare, improves productivity, and contributes to society through sustainablegrowth, our health management policies aim to promote the health of employees. Our HealthManagement Promotion Committee, led by the Director of the Human Resources Division, wasorganized to achieve these objectives. Members are selected from each business division to
discuss various issues. We implement measures targeting priority issues in particular, including
smoking, mental health, and promotion of workplace activities, such as holding seminars andintroducing health apps to enhance employees’ health literacy. We also try to improve daily
support through initiatives such as a system that enables employees to obtain healthconsultations with industrial healthcare workers, including an industrial doctor at each base.

Promotion System

President

Health Management Manager(Director of the Human
Resources Division)

Cooperation

Department that supervises
health management promotion(Secretariat: Human
Resources Department)

Cooperation
Health Management
Promotion Committee

Employees, etc.

Industrial doctor

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Management
Foundation

Social Bond
Reporting● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

Management Foundation

NIPRO Annual Report 2022

Financial/Data
Section28● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board Members

Research and Development Activities
4

Contributing to Innovation in Medical Care through Original Technologies and Ideas
Nipro has seven research and development sites, centered on the Research and Development Institute andPharmaceutical Research Laboratories in Japan and the United States. We continually address the needs andissues of medical professionals and patients as we work to develop and provide high-value-added products.

1

2

Sapporo-Shi, Hokkaido

3
2

Kusatsu-Shi, Shiga

Kasukabe-shi, Saitama
Kawagoe-shi, Saitama
5 Seto-Shi, Aichi

2

1

Research andDevelopment Institute

Pharmaceutical
Research Laboratories

Research themes⦁	Cellular and regenerative medicine
products
⦁ Orthopedic surgery-related products⦁	Dialysis-related and general
medical devices⦁	Circulatory organ- andintervention-related products⦁ Artificial organs
⦁ Test and diagnosis-related products
⦁ High-performance medical containers⦁ Medical glass products

Status of industry-academia
collaboration
Implementation of research aimed at thejoint development and early realizationof new products, in collaboration with
universities and research institutions
throughout the world.

7

Massachusetts, USA

AVANTEC VASCULARCORPORATION

Number of employees

Number of employees

175

37

Research themes

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

⦁ Vascular retrieval system⦁ Neurovascular/peripheral coils
⦁ Peripheral Atherectomy
⦁ Specialty coronary/peripheral DES

Number of employees

235

6

6

California, USA3

Production Technology
CenterNumber of employees

59
Research themes
The establishment of new production
technology and the design anddevelopment of equipment to increase
production, in order to enhance productivity.

4

Regenerative
Medicine R&D Center

5

Goodman Medical
Innovation Center

Number of employees

Number of employees

32

54

Research themes

Research themes

Number of employees

Manufacture of investigational new drug
and development of equipment andconsumables for the realization ofregenerative medicine using autologous
bone marrow cells for strokes, spinal
cord injuries and other diseases.

⦁	Catheters and accessories for cardiac
and circulatory organ inspection andtherapy⦁	Catheters and stents for cerebral bloodvessel therapy
⦁ Vascular access catheters

64

Status of industry-academia
collaboration

Status of industry-academia
collaboration

Conclusion of collaboration research
agreement concerning strokes, spinal
cord injuries and other diseases, andlicense agreement on regenerative
medicine patents with Sapporo Medical
University.

⦁	In December 2021, started a companyled clinical trial in collaboration with
National Cerebral and CardiovascularCenter.
⦁	Implementation of research incollaboration with Hiroshima University

7

Infraredx, Inc.

Research themes
⦁ NIRS+IVUS intravascular imaging
⦁ AI detection and prediction algorithms
⦁ Optical physiological measurements
⦁ Plaque characterization algorithms
⦁ Optical detection algorithms

Status of industry-academia
collaboration
⦁ Boston University
⦁ Imperial College London
⦁ Queen Mary University of London
⦁ University of Tokyo

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Management Foundation

Social Bond
ReportingManagement
Foundation

Financial/Data
Section● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

NIPRO Annual Report 2022

29

● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board Members

Research and Development Activities

In our group, we play a core role in promoting research and development activities of medical devices
and drugs at Nipro Life Science Site in Minami Kusatsu, Shiga Prefecture.
Regarding the medical-related business, the Pharmaceutical Affairs Law was revised in 2014, andthe software alone is regulated as a program medical device, which has intensified the competition in
the development of program medical devices. In particular, many imaging devices and behavior change
apps for treatment have been approved, and a nicotine dependence app was covered by healthinsurance for the first time as a therapeutic app. We established the Medical Device Digital Transformation(MDx) laboratory in August 2021 and have been developing a new business area of programmed medical
devices aiming to support treatment, diagnosis, health promotion, etc.
Furthermore, we have established the Division of Medical Device Development and Technology
Sales where the domestic and overseas organizations are integrated for the purpose of unifying
equipment parts in Japan and overseas, thus reducing development costs.
AI research on dialysis devices has been activated. The data have been collected in collaborative
research with Tohoku University, and development is being conducted while aiming at a prediction
accuracy of 90% or higher. In addition, we perform AI analysis using ECG transmitter COCORON®, havebeen participating in the research to prevent blood pressure decrease, and are progressing thedevelopment in cooperation with the projects in Europe and Japan.
We will continue to make efforts to improve the QOL (quality of life) of healthcare professionals andcreate and grow new medical products.
In the pharmaceutical-related business, we are developing high-quality generic drugs for various
therapeutic areas and dosage forms of branded drugs to reduce drug costs and improve the quality of
medical care. We are also focusing on the development of value-added products, such as easy-to-takeorally disintegrating tablets from the perspective of patients and easy-to-handle kit drug products fromthe perspective of healthcare professionals in medical practice.
The total research and development expenses for the current consolidated fiscal year are ¥18,734 million.
The research and development activities by segment are as follows:

1. Medical-related business
Our Research and Development Institute and Enzyme Center are mainly engaged in
the following research and development activities:

Division of Medical Devices
We have marketed implantable CV port kit “R3 Port.” By changing the shape of the inside of the port to an
R-shape, to prevent retention of drugs, infusion for a long time in the body can be achieved without the
obstruction of the flow path. Further, the pressurized drug infuser Surefuser was updated, which is now
easier to carry and slim and whose tube can be wound around the main unit. Surefuser A 130 mL was also
put on the market. This product stands by itself so that drugs can be easily filled in the product.

As a product for COVID-19 measures, we have marketed LUFKATM, a 100% domestically produced,
sophisticated respirator mask for the prevention of infections. This product was jointly developed by four
companies, including the National Cerebral and Cardiovascular Center.
Additionally, we have marketed a double-tube structure deep-freeze blood collection vessel that is notdamaged under the environment at -80 degrees in special tests such as HBV, HCV, and HIV, along with the
NOHCS disposable saliva ejector for gentle oral care with a soft resin tip.

Division of Circulatory and Interventional Products
To maintain the top share of the support catheter for coronary artery “GUIDEPLUS II,” we have added types
that no other companies supplied and marketed a product compatible with 5 fr size. We will expand the useof the product for balloon lock and the two-wire technique.
In addition, as an approach to a new vascular field, we have marketed an aspiration catheter for neuro
endovascular treatment. It is used to remove blood clots from the cerebral blood vessels in patients withacute ischemic stroke, through a technique called “ADAPT.” A blood clot is sucked to the tip of the catheterand removed. We improved the deliverability to blood vessels by introducing a 13-step stiffness variation
to our aspiration catheter. The increased suction pressure of the suction device improved the ability toremove blood clots.

Division of Artificial Organs
We have marketed an extracorporeal ventricular assist device in which a centrifugal blood pump with a noncontact bearing using hydrodynamic bearing technology is used for 30 days. We have also marketed a femoral
venous and arterial cannula that is inserted and placed in a blood vessel for extracorporeal circulation, whereina step at the tip of insertion into the blood vessel is reduced to achieve rapid insertion. In addition, we havemarketed a small, lightweight heater unit used with ECMO equipment for warming.
As a dialysis-related product, we have marketed the hemostatic adhesive tape “Nobleed®” (overseas
brand name “HemoquicTM”), in which cationic cellulose is added to shorten the time of hemostasis after thecompletion of dialysis. Furthermore, we have marketed 1% chlorhexidine gluconate ethanol solution disinfectant
cloth, which complies with the guideline on dialysis operation and infection prevention (ethanol containing
more than 0.5% chlorhexidine gluconate), and 1% chlorhexidine gluconate aqueous solution disinfectant cloth,
which can be used for patients in whom alcohol is contraindicated, and also for medical devices.
We have also marketed a dialysis needle with an automatic air vent check valve in Japan and overseas. It
is a cannula needle with a hemostasis valve equipped with an automatic air removal mechanism (our only
automatic air removal mechanism), where blood is automatically filled in the cannula as soon as the innerneedle is removed.

Division of Diagnostic and Test Agents
Regarding diagnostics, our COVID-19 antibody test kit is on the market. We have also marketed a laser
blood flow meter for foot care in diabetic patients.

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Management
Foundation

Social Bond
Reporting

Financial/Data
Section● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

Management Foundation

NIPRO Annual Report 202230

● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board Members

Research and Development Activities
Division of Enzymes
Regarding enzyme products, three types of enzymes were added for diagnostic agents with characteristics of
excellent thermal stability and preservability.

Division of Pharmaceutical Packaging
We have marketed a subcutaneous administration set for pharmaceuticals whose shape was improved tominimize the residual liquid volume of each component. Moreover, we have marketed Two Tock for DMSO, atransfusion tool, used for DMSO drug reconstruction in the manufacturing process of STEMIRAC® for Injection,
as well as a bag for biopharmaceuticals such as cell culture, reconstruction of drugs, and storage of drug
solutions in response to the request from various pharmaceutical manufacturers.

Division of Cell Therapy
As a fertility treatment product, MightyWell®, a dish for freezing and thawing operations for eggs/embryos, wason the market. We have expanded the product lineup by marketing a short type for the plastic Pasteur pipetteused for the microscopic operation of eggs and sperm in addition to the long type.

Division of Medical Training
Although on-site training was canceled or postponed due to the COVID-19 pandemic, we created a program
for web training and have provided various training programs. After things returned to normal, we have been
providing both on-site and online training programs.
As an overseas training facility, a theater room capable of accommodating 100 people was newly built.
Various training sessions have been organized, and hands-on seminars using arm simulators were held for
healthcare workers who perform dialysis. In addition, the related academic society certified the granting ofpoints to the participants.
The research and development expense for this project is ¥8,577 million.

2. Pharmaceutical-related business
Our Pharmaceutical Research Laboratories are taking the initiative and conducting
the following research and development activities:

Injectable Drugs
In addition to common vial and bag drug products, we have been actively developing a kit drug product aiming
to improve usability in medical practice. We have already marketed a dual-chamber pre-fillable syringe forleuprorelin acetate (a one-month drug product) (brand-name drug: Leuplin, Takeda Pharmaceutical Company)

used for the treatment of prostate cancer and premenopausal breast cancer. We are currently developing
products focusing on the areas with high development difficulty, such as an extended-release injection.
In this fiscal year, we launched two ingredients and three types of generic drugs of vial products.
We also obtained marketing approval for one ingredient and one product of a pre-fillable syringe preparation.

Oral Drugs
In addition to general oral drugs (tablets, granules, etc.), we are developing extended-release drug productsthat face difficulty in development. Furthermore, to improve usability in medical practice, we provide productswith ingenuity by printing ingredient names on tablets and following special packaging specifications such asindividual packages and aluminum pillow packages.
In this fiscal year, we launched five ingredients and 12 types of generic drugs. We also obtained marketing
approval for three ingredients and five products.

External Use Products
Several generic drugs are under development, including patches.
We are now working on the development of a micro-needle drug product, a transdermal absorption drugwith a new concept of “an injectable drug to be applied to the skin,” and newly launching a production line forinvestigational products.
In this fiscal year, we launched one ingredient and one generic eye drop product. As a product for measuresagainst COVID-19, we are also developing disinfectants for environmental hygiene.

Biosimilars
Although the biopharmaceuticals market is rapidly expanding in Japan, they are mostly expensive. The needfor biosimilar generics with low prices is increasing from the perspective of reducing medical expenses. Thus,
we aim to developing products in cooperation with a company that provides bio-drug substances withequivalent quality to the original drug but at lower prices.

OthersWe have obtained approval for the manufacture and distribution of “LYMPACK® TA5” which is dialysate
concentrate powder for hemodialysis. This product is designed for the calcium (Ca2+) concentration to be anintermediate value of the existing product when prepared as a dialysate. It is also designed to have higher
concentrations of magnesium (Mg2+) and glucose (C6H12O6), and lower concentrations of acetic acid (CH3COO-)
than when using existing formulations. We hope that this product will offer a new therapeutic option for dialysis
patients in their daily treatment.
The research and development expense for this project is ¥10,157 million.

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

Management Foundation

NIPRO Annual Report 2022

Financial/Data
Section31● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board MembersIntellectual Property Investment
Introduction
We regard intellectual properties and intangible assets as important management resources
and work on “intellectual property management” every day through the practice of thisintellectual property philosophy: respecting the intellectual properties of others, not releasing
products that violate the intellectual properties of others, and making efforts to develop
products based on original intellectual properties.
The Business Planning, Research and Development, and Intellectual Property divisions,employing the spirit of “ONE NIPRO”, are involved in all business processes, from management
and business planning and research and development to production and sales activities.
They aim to earn ¥1 trillion in consolidated sales for March 2031 by focusing on “the user’s
viewpoint/patient’s viewpoint” and “the contribution to management (business)”, while
integrating each department’s strategy.

Management/
businessplanning

Outline of intellectual property audit system (linked to development phase)
R&D expenses
Businessplanning(start)Business Planning Division/
Research andDevelopment Division/

Production andsales activities

ONE NIPRO* The intellectual property audit system is a voluntary system that establishes multiple checkpoints in the processes ofbusiness planning and research and development; the three divisions (Business Planning, Research and Development, andIntellectual Property) check their own intellectual property clearance.
• If an issue is identified during an audit (at a checkpoint), the project cannot proceed, and the issue has to be resolved
through changes (the project can proceed only if there are no issues or if the issue can be resolved).
• If this issue cannot be resolved, the project will be discontinued. In this operation, an intellectual property audit contributes
to shortening the development period and controlling costs.

At present, in addition to the major domestic group companies, the intellectual property
audit system has been introduced to overseas subsidiaries while considering the situations of
the countries and companies. The Group is working together to “practice intellectual property
management”, focusing on “the user’s viewpoint/patient’s viewpoint” and “the contribution to
management (business)”.

User’s viewpoint/patient’s viewpointand contribution to
management(business)

Intellectual Property
Division

In intellectual property management, a dedicated system assigns the Intellectual Property
Division staff members for each planning and development project. The Business Planning,
Research and Development, and Intellectual Property divisions work together to plan andimplement strategies for the discovery of inventions, the application, acquisition, and exerciseof rights, the invalidation of rights of other companies, and the protection of know-how frombusiness planning to commercialization to post-marketing activities.
The intellectual property audit system* has been introduced (as an internal system) toensure our intellectual property philosophy (respect for the intellectual properties of others).

Intellectual
propertyaudit
1

PassedR&D expenses

Development
phaseIntellectual
property
audit

1

n

Discontinuation of development

Research anddevelopment

PassedDevelopment
phasenManufacturing

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

Financial/Data
Section● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

Management Foundation

NIPRO Annual Report 2022

32

● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board MembersIntellectual Property Investment

Brand Protection Activities: Protection of Trademarks and Domain Names
To ensure reassurance and safety to customers around the world, we globally registered many
trademarks, including “NIPRO” (filing applications/licensing in more than 100 countries andregions in the world).
We also globally monitor the registration and use of confusing trademarks and domainnames including “NIPRO” by third parties. Additionally, we take legal measures such assuspending the use of trademarks and domain names employed for illegal acts to protect
customers’ and brands’ confidence and trust.

Protection of trademark
and domain nameEncouragement of Creative Activities such as Inventions:
Proposal of Inventions and Reward Systems
To encourage creative activities, such as inventions that can act as a bridge to the next
generation of management (business), our employee invention system has the following
characteristics:• In addition to the extraction (discovery) of intellectual property and intangible assets,
including inventions, employees can actively conduct creative activities and propose
results to the company.
• If an employee files an application for an invention and the rights are acquired (in the caseof know-how, certification of know-how) and the degree of the invention’s contribution to
management (business) is high, a monetary incentive will be paid to the inventor, etc., in
accordance with the integrated rules of the Group.
Employee Invention System

Employees

Asia
EuropeAfrica• Extraction of intellectual properties
and intangible assets (discovery)• Proactive creative activities

Our Group

United States

Increasing motivation

Human Capital Development: Training on Intellectual Properties
We provide intellectual property training to the Business Planning, Research and Development,
and Production divisions, according to the level required by each occupational function toensure that each employee is motivated to participate in “intellectual property management”
based on our intellectual property philosophy.

Payment of reward to inventors, etc.,
according to the degree ofcontribution of inventions, etc., tomanagement (business)

Energizing R&D

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Management Foundation

Management
Foundation

Social Bond
Reporting

NIPRO Annual Report 2022

Financial/Data
Section● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

33● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board Members

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

(4) Basic Structure of Corporate Governance and Risk Management
Meeting of Shareholders
Election

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

Accounting
Audit

Operational
Audit

Supervision of Directors’
execution of duties

Committees[Decision-making]President

Third Party(i.e., lawyer,
accountant)

Director withresponsibility for operation
Division General Manager,
Operating Officer,Manager, Assistant Manager

Operational Risk
Management
Committee

Employees, etc.
Conceptual diagram of corporate governance(5) Business Continuity Planning (BCP)
At workplaces in Japan, we are improving our systems for disaster preparation and smooth
continuity of business in the face of risks such as outbreaks of new types of influenza andlarge-scale natural disasters, including major (around magnitude 6) earthquakes originating in
the Nankai Trough. At overseas workplaces, we are also preparing for risks including war, civil
war, riots, terrorism, anti-Japanese demonstrations, and strikes.

2. Internal and Statutory Auditing(1) Internal Auditing
Nipro has established the Internal Audit Division, consisting of the Audit Office and theOverseas Audit Office, and conducts audits of accounting and other operations based oninternal audit protocols.

Contents

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Review ofOperations

Outline of theMedium-Term
Management Plan

Management Foundation

Management
Foundation

Social Bond
Reporting

NIPRO Annual Report 2022

Financial/Data
Section● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

34● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board Members

Status of Corporate Governance(2) Statutory Auditing
For each statutory audit, Audit & Supervisory Board Members attend key meetings such as
those of the Board of Directors, in accordance with the auditing policy and roles determined by
the Audit & Supervisory Board. Audit & Supervisory Board Members receive performance
reports from directors and employees, and are able to request further explanation whennecessary, and inspect key documents. Audit & Supervisory Board Members also undertake
other auditing duties such as investigating the state of operations and assets in key places ofbusiness. Audit & Supervisory board meetings are held regularly, or as necessary, in order toexchange views and hold discussions.

3. Outside Directors and Outside
Audit & Supervisory Board Members(1) Outside Directors and Outside Audit & Supervisory Board Members
Six of the directors are Outside Directors and two of the three Audit & Supervisory Board
Members are Outside Audit & Supervisory Board Members. The six Outside Directors and oneof the Outside Audit & Supervisory Board Members have been designated as independent
directors/Audit & Supervisory Board Members, and the Tokyo Stock Exchange has been notifiedof their designation.
(2)	Policy and Criteria for Independence from the Filing Company in the Election of Outside
Directors and Outside Audit & Supervisory Board Members
Nipro determines the criteria for the independence of Outside Directors and Outside Audit &Supervisory Board Members as a part of separate corporate governance guidelines taking into
consideration the provisions stipulated under the Financial Instruments and Exchange Act.
In the event that either case does not fall within the scope of this criteria, Outside Directors andOutside Audit & Supervisory Board Members are deemed to be independent from the Company
and that there is no possibility of a conflict of interest with general shareholders.
(3) Approach to the Election of Outside Directors and Outside Audit & Supervisory Board Members
Close coordination with the Internal Directors and the full-time Audit & Supervisory Board
Members, employees of the Audit Office and assigned staff from the management section of
the head office (as needed) ensures sufficient cover to implement the supervision and the audit
function and role as required by the current corporate governance system.

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

4. Accounting Audits
Name of Accounting Auditor: Hibiki Audit Corporation
Support Staff for Audits:
Names of Certified Public Accountants conducting the Audit: Certified Public Accountants: 16
Kazuhiro Bando, Takanori Nakasuka, Haruhito Urabe
Other Staff: 2
Remuneration Paid to Directors and Audit & Supervisory Board Members
Millions of yen

Total amount of
remuneration

Internal Directors

Basic
remuneration

Bonus

Non-monetarycompensation, etc.

Number of
eligible
corporate
officers

Total amount of remuneration by type

¥ 576

¥ 236

340

—

26

Internal Audit & Supervisory
Board Members

7

7

—

—

1

Outside Directors, Outside Audit &Supervisory Board Members

16

16

—

—

5

Thousands of U.S. dollars

Total amount of
remuneration

Internal Directors
Internal Audit & Supervisory
Board Members
Outside Directors, Outside Audit &Supervisory Board Members

Total amount of remuneration by type

Number of
eligible
corporate
officers

BasicremunerationBonus$ 4,706$ 1,928

2,778

—

26

57

57

—

—

1

131

131

—

—

5

Non-monetarycompensation, etc.

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Management
Foundation

Social Bond
Reporting● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

Management Foundation

NIPRO Annual Report 2022

Financial/Data
Section35● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board Members

Status of Corporate Governance

5. Skill Matrix
Knowledge, experience, abilities, etc., possessed by the directors and auditors of the Company
Name

Position

Corporate
Management

Financial
Accounting

Legal, Ethical,
CrisisManagement

ESG(Sustainability)

Production/
quality

R&D/Technology Sales/marketing1

Yoshihiko Sano

Director○

2

Kiyotaka Yoshioka

Director○

3

Toshiaki Masuda

Director

4

Kyoetsu Kobayashi

Director

5

Kimihito Minoura

Director

6

Tsuyoshi Yamazaki

Director

GlobalIT/Digital

HR Development

○

○
○

○
○

○

○
○

○

7

Kazuhiko Sano

Director

8

Kenichi Nishida

Director

○

9

○

○
○

Yasushi Oyama

Director

10 Takehito Yogo

Director

11 Hideto Nakamura

Director○○

12 Toyoshi Yoshida

Director○

13 Yoshiko Tanaka

Outside Director○

14 Yoshiko Shimamori

Outside Director

15 Toshiaki Hattori

Outside Director (New)

○

○

○
○

16 Katsunobu Hashimoto Outside Director (New)○17 Hidehiko Kawazu

Outside Director (New)○

18 Kiyomi Aoyama

Outside Director (New)

19 Takayuki Nomiya

Auditor20 Kazumichi Irie

Outside Auditor

21 Masayoshi Hasegawa

Outside Auditor

○
○
○
○

○

*A
 lthough the three areas of knowledge, experience, and abilities of the directors and corporate auditors are listed, they do not represent all of the knowledge, experience, and abilities possessed by the directors and corporate auditors.
*○
 indicates areas in which directors and corporate auditors have in-depth knowledge, experience, and abilities; whereas indicates areas in which directors and corporate auditors have the most in-depth knowledge, experience, and abilities. The Company's
main business is the manufacture and sale of medical devices, pharmaceuticals, glass products, etc., and the Company aims to proactively expand its business in markets around the world. Therefore, the Company needs a management team that is both
appropriately sized to accommodate its expanding business scale and diverse in terms of gender, internationality, work experience, age, and other factors. The Company recognizes that the sustainable growth of the Company and the enhancement of its
corporate value can be achieved when these management members are in charge of business execution (directors) and have the roles and responsibilities to promote the businesses under their control. Therefore, the Board of Directors determines whether aperson is qualified to serve as a director or auditor of the Company based on her or his knowledge, experience, and abilities in management, financial accounting, legal affairs, research and development, and human resources development. In addition,
Independent outside directors shall include those who have corporate management experience at other companies and are capable of providing accurate proposals and advice to management from a broad perspective.

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

Financial/Data
Section● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

Management Foundation

NIPRO Annual Report 2022

36

● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board Members

Outside Directors’ Messages
The challenge is to develop
young human resources whowill lead the future
Yoshiko Tanaka
Outside Director

I expect that Nipro will develop a
product such as a machine thatcan contribute to the safetyof patients by itself
Yoshiko Shimamori
Outside Director

I will support the soundmanagement of the Nipro Group
based on a hands-on approach
Toshiaki Hattori
Outside Director

I have been an outside director of Nipro for eight years, during which I have seen the governance of Nipro
steadily evolve, through active deliberations of the board of directors. In 2022, with the transition to the prime
market, the number of outside directors was increased to six, one-third of all directors. I believe that this will
enable discussions from a wider variety of perspectives than before.
The Nipro Group aims to become a group company with sales of 1 trillion yen in the fiscal year ending March
2031. To achieve this goal, it is important to develop young human resources who will lead the future and transfer
authority. Meanwhile, there is a tendency to increase the amount of net interest-bearing debt. It is necessary to
clarify the investment criteria and conduct reliable risk management.
The business of the Nipro Group already covers a broad area. However, in the future, it is desirable to enter
business areas such as health food, cosmetics, and supplements as a company contributing to health in addition
to the business focusing on medical administration. I expect that Nipro will herald a new phase of growth by using
the technical and development capabilities, the strength of the Nipro Group.

I have been attending the meetings of the board of directors over the past year as an outside director of Nipro.
I observe that Nipro covers a broad range of businesses, and directors are accurately grasping the needs of the fieldand discussing ways to address them. One of my roles was participation in the research ethics review committee
5-6 times a year. When samples were collected in research activities of the company, I audited whether humanrights were violated or the health of patients was endangered. I actively asked questions and gave my opinions tothe committee, which I think clarified issues and eventually led to the safety of patients.
In the future, I expect the Nipro Group to manufacture devices that can contribute to the safety of patients
without requiring the mindful awareness of healthcare professionals. For example, I hope Nipro will build productswith a fail-safe function that automatically stops a device when a hazard is detected or products that automaticallyrecord the results of diagnosis in the electronic medical record.
For a company’s long-term survival, it is also necessary to consider sustainability, such as the environment.
I hope the entire company will work together to achieve the environmental goals that were newly set for this fiscal
year, “37.8% reduction in CO2 emissions (compared to 2021) and net zero in 2045.”
I used to work as a site manager at a bank. My next role was that of a general manager of a listed company’s
general affairs and accounting division where I was engaged in direct negotiations with various customers andreformed the organizational and personnel systems. In both duties, what was important was to listen to theopinions of people on-site, a useful tip that I will adopt as an external director of Nipro.
Observing from the outside, the strength of the Nipro Group is the ambitious attitude of actively expanding
the business and having global production footings to create better products to meet the needs of customers.
I also believe that Nipro has excellent human resources and R&D capabilities necessary to expand thesebusinesses. However, as the ratio of debt capital in finance is increasing, I feel that we need to carefully balance
future business expansion and investment.
In addition, for a company to achieve long-term development, not only keeping track of profits but also
having the perspective of fairness is important. As an outside director, I will always pay close attention to ensurethat the Nipro Group does not deviate from sound management.

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

Financial/Data
Section● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

Management Foundation

NIPRO Annual Report 2022

37

● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board Members

Outside Directors’ Messages

I aim to contribute to theestablishment of human resource
strategies at Nipro by making
the most of my abundant experience
Katsunobu Hashimoto
Outside Director

NIPRO’s mission is to meetthe medical needs of people ona global scale by motivating eachand every employee
Hidehiko Kawazu
Outside Director

I expect that Nipro will contribute to
the benefit of not only the company
but also the entire society bymarketing excellent Nipro products,
including anti-infection products
Kiyomi Aoyama
Outside Director

As an outside director of Nipro, my expertise can support the progress of healthcare professionals. I have been
involved in the development of clinical engineers for approximately 40 years. In recent years, I have been conducting
educational activities in Asia. Therefore, I believe that my experience can be beneficial for Nipro’s human resource
and international strategies.
The strength of the Nipro group lies in its diversified business portfolio, which includes pharmaceuticals andglassware in addition to the core offering of medical devices. I believe that systematizing these products andselling them as a package has the potential to lead to significant sales growth in the future. Regarding organizational
matters, I intend to promote women’s active participation. Women constitute approximately 60% of the students at
the university department where I work. As the number of excellent female clinical engineers is expected to increasein the future, it is desirable to actively hire women as managers to enhance the services for Nipro’s consumers in
the future.
Nipro has been expanding dialysis centers around the world. To support the globalization of this business, I intend
to use my extensive knowledge and experience in international education and human resource development.
I have worked mainly in the field of welfare administration, focusing on how I could support people or how I could learn
through supporting them. If a social incident makes the headlines, I consider what administrative measures we canformulate and implement. As an outside director of Nipro, I will use this same concept of solving issues, with humanbeings being the main focus.
The strength of the Nipro Group is that the scope of business is clear: a general medical device manufacturer. Each
employee has a vision they can incorporate into their code of conduct, including the corporate slogan “Willingness.”
Another strength is that they strictly work from the user’s viewpoint, President Yoshihiko Sano’s idea, and strive to meetthe medical needs of people on a global scale by providing products that are truly necessary for patients.
Meanwhile, the use of human resources and the activation of the organization are immediate future issues to beconsidered. In particular, regarding the organization, it is important to build not only horizontal relationships withother departments and vertical relationships within the same department but also oblique relationships that connect
with people at different levels in other departments. I believe these relationships will produce ideas that go beyond
areas and positions and lead to new business development.
I have worked in the field of public health, particularly in the execution and management of duties at public healthcenters. I began my career as a physician. However, I wanted to contribute more to people‘s health. I had been
engaged in medical care in an administrative role, such as prevention and treatment of infections and prevention andearly discovery and treatment of diseases.
The strength of the Nipro Group is that it provides a number of excellent products that meet the expectations of
medical practice, such as dialysis machines. The other strengths include the following: promoting local production
for local consumption through the global network; integrating and distributing a wide range of businesses, including
medical devices, pharmaceuticals, PharmaPackaging, and regenerative medicine; and establishing medical training
facilities to improve the skills of all healthcare professionals and market its own products at the same time.
I have found that the challenge of the Nipro Group is not adopting the right approach for market expansion of our
products to relevant organizations. For example, our infection control product “CL Fine” could be easily marketed to
medical institutions and public health centers by classifying it as “quasi drugs” instead of “miscellaneous goods” under
the Pharmaceutical and Medical Device Act. Let’s achieve our management philosophy, “Create and innovate thebusiness and contribute to society,” by further expanding the excellent products of the Nipro Group to the world!

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Management
Foundation

Social Bond
Reporting● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

Management Foundation

NIPRO Annual Report 2022

Financial/Data
Section38● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board Members

Board of Directors and Audit & Supervisory Board Members
As of June 28, 2022

President &Representative Director

Yoshihiko SanoManaging Directors

Kiyotaka Yoshioka
Domestic Division, Business Strategy Office
Headquarters

Toshiaki Masuda
Medical Technology Division for Planning,
Development & Marketing; Research &Development Center

Kyoetsu Kobayashi
Global Production Division

Directors

Kimihito Minoura
Division of Regenerative and Advanced
Therapy; New Business Development
Headquarters

Tsuyoshi Yamazaki
Global Business Division; PharmaPackaging
Division

Kazuhiko Sano
Construction & Engineering Headquarters;
Production Technology Development Division;
Production Technology Center

Kenichi Nishida
General Manager of Research Planning Officeof Pharmaceutical Research Laboratories

Yasushi Oyama
Vascular Division; Vascular Product Sales
and Development Headquarters

Takehito Yogo
Corporate Planning Headquarters(Chief Financial Officer)

Hideto Nakamura
General Affairs/Human Resources
Headquarters; Governance Supervise Divisionof the Company

Toyoshi Yoshida
Quality Assurance & Regulatory
Compliance Headquarters

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Management
Foundation

Social Bond
Reporting

Financial/Data
Section● Sustainability of Nipro●E nvironment●H uman Resources Strategy●R esearch and Development Activities

Management Foundation

NIPRO Annual Report 2022

39

● Intellectual Property Investment●S tatus of Corporate Governance●O utside Directors’ Messages●B oard of Directors and Audit & Supervisory Board Members

Board of Directors and Audit & Supervisory Board Members
As of June 28, 2022

Audit & Supervisory
Board Member (Full-time)

Outside Directors
Yoshiko Tanaka
May. 1983 :	General Manager, Drug
Department, Tokushukai Medical
Corporation, Osaka Headquarters
Jun. 1997 :	General Manager, Planning andManagement Department, andGeneral Manager, Drug
Department, Tokushukai Medical
Corporation, Osaka Headquarters
Apr. 2002 :	Part-time Lecturer of Kobe
Pharmaceutical University
Jun. 2002 :	President and Representative
Director, MEDY HOPE Corporation(to present)
Jun. 2014 :	Appointed Director, Nipro
Corporation (to present)
Jul. 2014 :	Council member of Kobe
Pharmaceutical University

Yoshiko Shimamori
Apr. 1990 :	Manager of Nursing Division of
Preparatory Office for Toho
University Sakura Medical Center
Aug. 1990 :	Manager of Nursing Division ofTokyo Saiseikai Mukojima Hospital
Jun. 1999 :	Executive Officer of JapaneseNursing Association
Apr. 2002 :	Manager of Nursing Division andAssistant to Director of Kyoto
University Hospital
Apr. 2007 :	Professor of Keio University Facultyof Nursing And Medical Care
Jun. 2010 :	President of Tokyo Nursing
Association
Jul. 2016 :	Professor of Institute for
Biomedical Sciences of Iwate
Medical University
Apr. 2017 :	Professor and Dean of School of
Nursing of Iwate Medical University
Apr. 2021 :	Professor Emeritus and Council
member of Iwate Medical University
Jun. 2021 :	Appointed Director, Nipro
Corporation (to present)

Toshiaki Hattori
Jan. 2000 :	Branch Manager of Kori Branch,Daiwa Bank Ltd. (currently Resona
Bank, Ltd.)Mar. 2002 :	General Manager of Taisho Branch,Resona Bank Ltd.
Jun. 2004 :	General Manager of General Affairs
Department, Administration
Division, Toami Corporation General
Jun. 2006 :	Director and General Manager ofGeneral Affairs Department,
Administration Division of the same
company
Jun. 2008 :	Managing Director, General
Manager of Administration Division
and General Manager of General
Affairs Department of the same
company
Jun. 2012 :	Managing Director, General
Manager of Administration Division
and General Manager of General
Affairs Department and General
Manager of Accounting
Department of the same company
Jun. 2020 :	Retired from Managing Director of
the same company
Jun. 2022 :	Appointed Director, Nipro
Corporation (to present)

Katsunobu HashimotoJan. 1981 :	Secretary-general of Osaka Collegeof Medical Technology (to present)
May. 1991 :	Executive Director of Educational
Corporation Osaka Jikei College
Apr. 2011 :	Secretary-general of Jikei
Graduate University of Health Care
Sciences (currently Jikei University
of Health Care Sciences) (to present)
Apr. 2015 :	President of Izumo Medical
Nursing College (to present)
Apr. 2018 :	President of Osaka Medical WelfareCollege (to present)
Apr. 2020 :	President of Osaka Medical
Nursing College (to present)
Apr. 2022 :	President of Osaka HighTechnology College (to present)			President of Osaka Health andWelfare College (to present)
Jun. 2022 :	Appointed Director, Nipro
Corporation (to present)

Hidehiko Kawazu
Jun. 1987 :	Manager of Division of Welfare for
the Mentally Retarded, Tokyo
Metropolitan Government Bureauof Social Welfare and Public Health(Manager of Head Office)Jul. 1989 :	Manager of Division of Children,
Tokyo Metropolitan Government
Bureau of Social Welfare andPublic Health (General Manager)
Jul. 1991 :	Deputy Branch Chief of Northern
Branch No. 2 Of Tokyo
Metropolitan Government Bureauof Waterworks (General Manager)
Aug. 1994 :	Councilor of General Affairs
Department, Tokyo Metropolitan
Government Bureau of Social
Welfare and Public Health (General
Manager of Head Office)Jun. 1995 :	General Manager of Division ofChildren and Family, Tokyo
Metropolitan Government Bureauof Social Welfare and Public HealthJul. 1997 :	General Manager of Division ofCommunity Welfare Promotion,
Tokyo Metropolitan Government
Bureau of Social Welfare andPublic Health
Apr. 1999 :	General Manager of Division of
Living Environment, Tokyo
Metropolitan Government Bureau
of Health
Apr. 2001 :	General Manager of Division ofFood and Drug Safety, Tokyo
Metropolitan Government Bureau
of Health
Apr. 2002 :	Professor, Faculty of Education,
Tamagawa University (Head of
Department of Infant Development)
Apr. 2008 :	Dean, Faculty of Education,
Tamagawa University
Jun. 2018 :	Chief Director, Social Corporation
Yuai Gakuen (to present)
Jun. 2022 :	Appointed Director, Nipro
Corporation (to present)

Kiyomi Aoyama
Apr. 1990 :	Manager of Division of Maternaland Child Health, Tokyo
Metropolitan Government Bureauof Social Welfare and Public Health
Apr. 1992 :	Councilor of Public Health Centerof Nihonbashi, Chuo Ward
(Prevention Section Manager Work
Handler)
Apr. 1998 :	Director of Shinagawa Ward Public
Health Center
Apr. 2002 :	Director and General Manager of
Nakano Ward Public Health Center
Apr. 2007 :	Director of Minato Ward Public
Health Center
May. 2010 :	Full-time contract doctor,
Occupational Health Association(currently Japan Medical Checkup
Foundation) (to present)
Jun. 2022 :	Appointed Director, Nipro
Corporation (to present)

Takayuki Nomiya

Audit & Supervisory
Board Members (Outside)
Kazumichi Irie
Masayoshi Hasegawa

Contents

About NIPROManagement
Message

Review ofOperations

Financial/Data Section

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income40● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Financial Review
Overview
In the consolidated fiscal year under review, the economy picked up due tothe active movement toward normalization of economic activities despite thecontinuing impact of the spread of new coronavirus infection, which led to arecovery in demand for some department-related products that had been
restrained due to postponement of surgeries and other reasons, and to
steady sales of hospital-related products and our core products, such as
dialyzers and dialysis machines, especially in overseas markets. Sales of
hospital-related products and dialysis-related products such as dialyzers
and dialysis machines, our mainstay products, remained steady, especially inoverseas markets. As a result, consolidated net sales increased.
On the other hand, operating income decreased due to soaring prices ofmaterials and energy accompanying the rise in crude oil prices and continued
high transportation costs.
Consolidated Business Results
Relevant quantitative data for the period under review has been converted at
the rate of US$1.00 = ¥122.39 (the rate of exchange as of March 31, 2022).
Net Sales
Sales for the current term were ¥494,789 million (US$4,042.7 million). Sales
increased 8.6% YoY.
Cost of Sales
Cost of sales increased 9.1% from the previous period to ¥345,519 million.
This increase was mainly due to higher sales and material costs. The gross profit
margin decreased 0.3 percentage points from the previous period to 30.2%.
As a result, gross profit increased 7.5% from the previous period to¥149,269 million.

Selling, General and Administrative Expense
Selling, general and administrative expenses increased by 12.7% comparedwith the previous fiscal year to ¥125,386 million (US$ 1024.4 million).
This was mainly due to an increase in labor and transportation costs.
Operating Income
As a result of the aforementioned factors, operating income was down by
13.6% compared with the previous fiscal year to ¥23,882 million (US$195.1
million). The ratio of operating income to net sales decreased by 1.3%
percentage to 4.8%.
Other Income (Expenses)
Other expenses came to ¥462 million (US$3.7 million), which is ¥7,725
million lower compared with other expenses in the previous fiscal year. One
major factor for the current fiscal year was a ¥3,976 million increase inforeign exchange gains.
Income before Income Taxes
As a result of the factors outlined above, income before income taxes was¥23,243 million (US$189.9 million), compared to ¥17,519 million in the previous
fiscal year.
Income Taxes
Income tax including deferred taxes increased by 229.6% compared with theprevious fiscal year to ¥8,177 million (US$66.8 million).
Net Income (Loss) Attributable to Non-controlling Interests
Net income attributable to non-controlling interests amounted to ¥1,611 million(US$13.1 million).

(Years ended March 31)

Net sales

395,397

2018(Millions of yen)

426,399 442,516

455,559

2019

2021

2020

Operating income
27,0882018

23,827

2019

Income before
income taxes
17,0262022(Millions of yen)

26,420 27,627

2020

494,7892021

23,8822022(Millions of yen)

23,243

21,233

17,519-10,158

2018

2019

2020

2021

2022

Contents

About NIPROManagement
Message

Review ofOperations

Financial/Data Section

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income41● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Financial Review

Net Income Attributable to Owners of the Parent
Net income attributable to owners of the parent was ¥13,455 million(US$109.9 million), compared to net income attributable to owners of parentof ¥14,209 million in the previous fiscal year. Basic earnings per sharedecreased to ¥82.50 (US$-0.7) from ¥87.12 in the previous fiscal year.
Return on equity decreased to 7.8% from 9.2% for the previous fiscal year.
Net Sales by Geographic Segment
Japan
In Japan, net sales increased by 3.5% compared with the previous fiscal yearto ¥280,094 million (US$2,288.5 million) mainly thanks to the increase ofsales in the Medical-Related business.
Americas
In Americas, net sales increased by 9.3% compared with the previous fiscal
year to ¥78.242 million (US$639.2 million) mainly thanks to the increase ofsales in the Medical-Related business.
EuropeIn Europe, net sales increased by 15.7% compared with the previous fiscal
year to ¥60,386 million (US$493.3 million).

Financial Position
Total assets increased ¥75,924 million YoY to ¥930,321 million (US$7,601.2
million). Current assets increased ¥16,090 million and noncurrent assets
increased ¥59,833 million. The increase of current assets was due to anincrease of ¥5,807 million in raw materials and supplies and the increaseof noncurrent assets was due to an increase of ¥28,082 million inconstruction in progress.
Total liabilities increased ¥50,110 million YoY to ¥730,453 million(US$5,968.2 million). Current liabilities increased ¥40,491 million andnoncurrent liabilities increased ¥9,618 million. The main reason for theincrease in current liabilities was an increase of ¥16,687 million in short-termloans payable and the reason for the increase in noncurrent liabilities wasa ¥30,270 million increase in convertible type bonds with shareacquisition rights.
Total net assets increased ¥25,814 million YoY to ¥199,867 million(US$1,633 million). Shareholders' equity increased by ¥7,335 million andaccumulated other comprehensive income increased by ¥168,77 million.
As a result, the equity ratio increased by 1.1 percentage point comparedwith the end of the previous fiscal year, to 19.9%.

(Years ended March 31)

Net income attributable toowners of the parent (Millions of yen)

11,829-12,281

2018

2019

2020

Capital investment
57,718 56,276 57,865

2018

Asia
In Asia, sales increased 24.1% year on year to ¥76,075 million (US$621.5
million) due to increased sales in the medical-related business.

14,209 13,455

12,13620192020

Total assets

2021(Millions of yen)

51,9822021

2019

46,5602022(Millions of yen)

826,759 845,821 831,865 854,396

2018

2022

2020

2021

930,3212022

Contents

About NIPROManagement
Message

Review ofOperations

Financial/Data Section

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income42● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Financial Review

Cash Flow
Net cash provided by operating activities amounted to ¥68,214 million(US$557.3 million). The major cash inflows were depreciation and amortization.
Net cash used in investing activities came to ¥78,434 million (US$640.9
million). The principal cash outflow was purchase of property, plant andequipment. Net cash obtained by financing activities amounted to ¥10,397
million (US$84.1 million). The main account of cash inflow was proceeds fromlong-term loans payable. As a result, cash and cash equivalents stood at¥90,072 million (US$735.9 million) as of March 31, 2022.
Staff
The total number of employees as of the end of the period under review was
36,259. Employees in Japan were 39,351 and the number of overseas
employees was 39,351.
Basic Policy on Distribution of Profit
At Nipro, we have been paying dividends to shareholders by positioning thereturn of profits as an important management policy. Retained earnings will
be actively invested in the research and development division, in addition to
the sales division and production division, as a part of efforts to expand thebusiness base and promote long-term business development. Through thesemeans, we will ensure stable profits and achieve continued growth.

Risk Factors
The following are risks that may have an effect on the Nipro Group's
operational results and/or financial condition. The items concerned were
determined as of March 31, 2021.
(1)	Risks Related to Product Safety	Nipro Group brings all of its capabilities to bear in ensuring productsafety in the design, development, and manufacturing of medical devices
and pharmaceutical products. There are still risks, however, that
accidental defects or adverse effects could result in damages to a third
party and our being sued for liability.
		
To cover these risks, we therefore maintain general liability andproduct liability insurance. In the unlikely event of a successful claim inexcess of the insurance coverage, however, there could be a material
adverse effect on our operational results and/or financial condition.
(2)	Risks Related to Supplier Concentration
	Nipro Group procures materials and parts for its operations from a large
number of suppliers. Some key materials or parts may be obtained only
from a single supplier or a limited group of suppliers. If circumstances at
any of these suppliers make it impossible for us to acquire a sufficientquantity of materials or parts to meet our production needs in a timely
and cost-effective manner, there could be a material adverse effect on
our operational results and/or financial condition.

(Years ended March 31)

Net assets
183,485

2018(Millions of yen)

171,830 161,237 174,053

2019

2020

2021

Basic earnings per share
71.1

199,867

2022

(yen)

87.1

82.5

2021

2022

73.6

-75.3

2018

2019

2020

Number of employees

28.3

29.3

2018

2019

32.8

2020

(Thousand)

35.3

36.3

2021

2022

Contents

About NIPROManagement
Message

Review ofOperations

Financial/Data Section

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income43● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Financial Review(3)	Risks Related to Changes in Government Healthcare Policies
	The business sector to which Nipro Group belongs is intimately connectedwith the healthcare system and is subject to the regulations laid out by
government organizations, including the National Health Insurance
System and the Pharmaceutical and Medical Devices Act, formerly known
as the Pharmaceutical Affairs Law. Should circumstances arise in which
we were unable to respond to changes in the environment brought about
by unforeseeable wholesale changes in government healthcare policies,
there could be a material adverse effect on our operational results and/or financial condition.
(4) Risks Related to Changes in Sale Prices
	The products sold by Nipro Group include some that are affected on an
irregular two-year basis by price reductions under the Japanese payment
system for medical care, drug prices, and reimbursement prices for
medical materials and supplies. Moreover, should measures to hold down
medical costs also become pervasive worldwide, resulting in intensifiedcompetition between corporations and leading to prices falling to agreater degree than anticipated, there could be a material adverse effecton our operational results and/or financial condition.
(5) Risks Related to Changes in Prices of Raw Materials	
The products manufactured by Nipro Group include some that are
made from petrochemical products such as plastics. Should the cost of
raw materials such as petrochemicals rise, there could be a material
adverse effect on our operational results and/or financial condition.

(6) Risks Related to Overseas Expansion
	Nipro Group maintains manufacturing bases and sales offices around theworld for the production and supply of its products. Should there be
unexpected revisions to legal regulations or political or economicchanges in these countries or regions, there could be a material adverse
effect on our operational results and/or financial condition.
(7) Risks Related to Intellectual Property
	
Nipro Group owns numerous patents and trademarks, and maintains
various proprietary rights for the products it manufactures. Additionally, wetake all possible measures to avoid infringing the patents and proprietary
rights of any third party, and to avoid breaching any license agreements wehave concluded concerning technologies. Nevertheless, if an unanticipatedclaim for damages were to be made by a third party and the defense of thegroup were to be rejected, there could be a material adverse effect on its
operational results and/or financial condition.
(8) Risks Related to Environmental Regulations
	Nipro Group believes it has taken adequate precautions to comply withapplicable regulations in the course of its business activities. Should ouractivities cause an unforeseen environmental problem, however, with aclaim for damages made against us, there could be a material adverse
effect on our operational results and/or financial condition.
(9) Risks Related to Exchange Rate Fluctuations
	Nipro Group, including its overseas subsidiaries, carries out its foreign
currency transactions primarily in US dollars and euros, but calculates
financial statements for its overseas subsidiaries using Japanese yen forthe purpose of producing consolidated financial statements. Fluctuations
in exchange rates may therefore have a material adverse effect on ouroperational results and/or financial condition.

(Years ended March 31)

Equity ratio

20.9

2018

(%)

19.1

17.9

18.8

19.9

2019

2020

2021

2022

Return on assets

1.5

(%)

1.7

1.5

2.7

-1.5

2018

2019

2020

2021

2022

Return on equity
7.0

(%)

9.2

7.3

7.8

-7.9

2018

2019

2020

2021

2022

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Financial/Data Section

Social Bond
ReportingManagement
Foundation

Financial/Data
Section● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

NIPRO Annual Report 2022

44
● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Financial Review(10) Risks Related to Investment Value	Nipro Group’s assets include investments in stocks and other securities. These investments
have been made for purposes such as building good business relationships with the issuersof such securities, or for gathering useful information for the development of new products or
new business opportunities. Should the value of these investments decline significantly owing
to fluctuations in the stock market, circumstances at an issuer, or a change in the accounting
methods used to deal with these investments, there could be a material adverse effect on ouroperational results and/or financial condition.
(11) Risks Related to Controls on Personal Information
	Nipro Group has established strict precautions to protect the confidentiality of personal
information in our possession. However, if due to unforeseen events or an accident thispersonal information is leaked outside the group, causing a loss of trust or customers, there
could be a material adverse effect on our operational results and/or financial condition.
(12) Risks Related to Fundraising	Nipro Group relies on debt finance in the form of loans from financial institutions or issuanceof corporate bonds and commercial paper, etc., to raise business and investment funds. If
due to turmoil in financial markets there is a reduction in lending from financial institutions ora significant downgrade of our credit rating by credit rating agencies, we may not be able toraise the necessary funds when we need them on acceptable terms. At the same time, we may
incur restrictions on our fundraising capabilities or see an increase in the cost of fundraising.
Any of these occurrences could have a material adverse effect on our operational results and/or financial condition.

(13) Risks Related to M&A and Business Alliances	
Nipro Group conducts M&A activities and enters into business alliances to reinforce its
business base. Prior to concluding these deals, we carry out a thorough investigation of thetarget company. However, should any problems arise such as the discovery of unrecognizedliabilities or should the development of the acquired business not proceed as planned, there
could be a material adverse effect on our operational results and/or financial condition.
(14) Other Risks
	Fires, earthquakes, acts of terrorism, wars, epidemics, or other unforeseen man-made or
natural disasters affecting areas or facilities where Nipro Group conducts its businessactivities may cause a delay or interruption in production, sales, distribution, or provision ofservices. Should such a delay or interruption be extended, there could be a material adverse
effect on our operational results and/or financial condition.
(15)	Risks Related to Coronavirus Spread	An abnormal situation such as the spread of a novel coronavirus infection or a natural
disaster could occur on a scale beyond our expectations. Should such an event occur,
production bases could close, logistics could be interrupted, and business operations withmajor customers could become difficult, which will affect our financial condition andbusiness results. Hygiene management, telecommuting (remote work), staggered working
hours, and web meetings as measures to prevent the spread of a novel coronavirus infection
may have to be implemented. Nipro Group will also make every effort to introduce thewearing of masks at meetings.

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
Reporting

NIPRO Annual Report 2022

Financial/Data
SectionManagement
Foundation

45● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

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

Millions of yen

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2022

Income Statement Data:
Net sales

241,020$4,042,729

Medical-Related (*1)¥

373,481343,824

335,767

327,359

300,117

262,198

272,167

237,777

221,363

169,971

3,051,571

Pharmaceutical-Related (*1)

74,386

72,38870,35763,482

66,846

69,14062,26657,37251,50866,212607,786

PharmaPackaging (*1)

46,361

38,65536,21735,52628,40428,33132,18429,83027,611

4,603

378,801

Other (*1)

559

691

174

31

29

29

32

104

271

235

4,569

Cost of sales

345,519

316,718

308,304

295,767

268,272

244,602250,773

225,525

213,220

175,3142,823,105

Selling, general and administrative expenses

125,386

111,212

107,791

106,804

100,036

86,326

91,671

82,98775,242

54,336

1,024,486

Operating income

23,882

27,627

26,42023,82727,08828,77024,204

16,571

12,28911,370

195,136

Medical-Related (*2)

39,241

38,87936,24936,72236,522

30,63828,204

23,813

20,436

14,287

320,628

Pharmaceutical-Related (*2)

9,826

10,60813,196

10,662

13,104

14,135

12,06010,553

8,013

3,988

80,284

PharmaPackaging (*2)

2,889

1,992

675

778

(1,308)(1,313)(1,618)(2,889)(2,183)601

23,606

101

376

176

146

75

(10)

61

131

216

222

829

Income before income taxes

23,243

17,519(10,158)

21,23317,02618,324

26,284

19,90812,891

18,058

189,914

Net income attributable to owners of the parent

13,455

14,209(12,281)

12,136

11,82911,346

19,71812,4702,861

10,231

109,936

Increase in tangible and intangible fixed assets

96,79378,86164,67064,394

61,99058,31057,10147,69835,09337,997

790,857

Depreciation and amortization

43,31339,84938,68235,25232,56531,12830,147

27,66725,151

21,209353,896

R&D expenses

18,734

18,652

18,204

16,526

16,113

11,517

10,269

8,645

7,891

6,464

153,075

Other (*2)

494,789¥455,559¥442,516¥

426,399¥395,397¥359,699¥

366,650¥

325,084¥

300,753¥

Balance Sheet Data:
Total assets

579,302$7,601,286

Property, plant and equipment—net

377,752

335,906

307,551

284,483

270,273244,222

223,756

220,195

191,593

174,7033,086,462

Working capital

125,466

149,866

143,626

168,675

184,861

134,983

115,970

71,94545,40574,216

1,025,130

Current liabilities

311,993271,501

289,404

274,277

251,186

251,792

252,147

278,402250,714

213,758

2,549,175

Long-term liabilities

418,460

408,841

381,223

399,712392,087324,639281,227

238,095

232,979

236,781

3,419,072

Common stock

84,39784,39784,39784,39784,39784,39784,39784,39784,39784,397

689,581

Capital surplus

—

4

5

—

—

—

—

635

688

636

—

199,867

174,053

161,237

171,830

183,485

176,408

175,507

178,810

135,960

128,763

1,633,038

Net assets¥

930,321¥854,396¥

831,865¥

845,821¥826,447¥

752,839¥

708,882¥

695,306¥

619,654¥(*1) Effective the fiscal year ended March 31, 2011, the Company has adopted ASBJ Statement No. 17 “Accounting Standard for Disclosures about Segment of an Enterprise and Related Information” (March 27, 2009) and ASBJ Guidance No. 20 “Guidance on Accounting Standard forDisclosures about Segment of an Enterprise and Related Information” (March 21, 2008). Net sales and operating income for the period for the fiscal year ended March 31, 2010 have been restated to show what the Group’s results would have been if the new accounting standards
had been applied in that year. Before the fiscal year ended March 31, 2009, net sales and operating income have been stated in compliance with previous accounting rules. In addition, the corporate reorganization was conducted effective on October 1, 2012 in order to enforce
the Pharmaceutical-Related business and build a strong cooperative relationship among the Medical-Related, Pharmaceutical-Related and the Glass-Related businesses. As a result of this reorganization, some business divisions included in the Glass-Related business were changed
to the Pharmaceutical-Related business. The segment information is presented as if the aforementioned reorganization had been conducted at the beginning of the financial year 2012, and the presentations for the prior financial years are not restated. Also, effective on the halfyear ended September 30, 2014, 13 subsidiaries including Nipro Glass France S.A.S., Nipro Glass Belgium N.V., Nipro Glass Germany AG, Nipro Sterile Glass Germany AG, and Nipro Glass Americas Corporation were reclassified from the Medical-Related Business to
the PharmaPackaging-related Bussiness, which was formerly known as the Glass-Related Business, by the corporate reorganization. Segment information after 2014 is based on this reclassification.
		
From the fiscal year ended March 31, 2019, the Company has conducted reorganization for the purpose of doing the synthetic PharmaPackaging business and increasing synergies for the Pharmaceutical-Related business. As a result of this reorganization, some businessdivisions included in the Pharmaceutical-Related business were changed to the PharmaPackaging business. Effective the fiscal year ended March 31, 2022, Nipro JMI Pharma Ltd. was reclassified from the Medical-Related Business to the Pharmaceutical-related Business.
The presentations for prior fiscal years are not restated.
(*2) Operating income at the operating segment level is not adjusted for intra-segment transactions. See Note 14. “Segment Reporting” in the Consolidated Financial Statements.

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
Reporting

NIPRO Annual Report 2022

Financial/Data
SectionManagement
Foundation46● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

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

Yen

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2022

Per Share Data:
Basic earnings(75.3) ¥73.6

Diluted earnings

77.4

—

—

66.7

64.5

61.3

114.7

—

16.3

54.1

0.63

Cash dividends

27.0

28.0

13.5

28.0

28.5

29.0

33.5

32.5

30.5

27.5

0.22

1,135.7

987.3

912.2

990.1

1,037.2

999.5

977.6

988.8

832.1

703.5

9.28

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

36,25935,25132,78629,32528,33027,41524,24323,153

21,826

19,327

Equity ratio (*3) (%)

19.9

18.8

17.9

19.1

20.9

22.1

23.4

24.1

20.2

20.7

—

Return on assets (*3) (%)

1.5

1.7

(1.5)

1.5

1.5

1.6

2.8

1.9

0.5

1.9

—

Return on equity (*3) (%)

7.8

9.2

(7.9)

7.3

7.0

6.8

11.8

8.5

2.3

8.9

—

Price earnings ratio (*3) (times)

12.4

15.3

—

19.3

21.6

23.2

9.2

14.1

50.9

13.9

—

EquityNumber of common shares issued
Number of employees

¥

82.5

¥

87.1

¥

¥

71.1

¥

67.5

¥

116.2

¥

81.0

¥

18.2

¥

60.0

$

0.67

Selected Data and Ratios:(*3) Equity ratio is the ratio of the sum of the total shareholders’ equity and accumulated other comprehensive income to total assets at the period end. Return on assets is the ratio of net income attributable to owners of the parent for the period to average of total assets during theperiod. Return on equity is the ratio of net income for the period to average of the sum of total shareholders’ equity and accumulated other comprehensive income during the period. The price earnings ratio is the ratio of the closing price of the Company’s shares listed on the First
Section (Now Prime Market) of the Tokyo Stock Exchange on the last trading day in March of each year to the basic earnings per share.
(*4) Until fiscal 2016, yen amounts are rounded to the nearest million yen. Since fiscal 2017, yen amounts are rounded down to the nearest million yen.
(*5) The Group formally adopted the Accounting Standards for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020; hereinafter “Revenue Recognition Standard”) on April 1, 2021, the start of the current fiscal year. Revenue is recognized when control is transferred to thecustomer, i.e., when delivery is completed.

Contents

About NIPROManagement
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
Reporting

NIPRO Annual Report 2022

Financial/Data
SectionManagement
Foundation

47● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Consolidated Balance Sheets
Nipro Corporation and its Consolidated Subsidiaries
As of March 31, 2022 and 2021
Thousands of
U.S. dollars (Note 1)

Millions of yen

2022

2021

2022

Assets¥ 85,821

Time deposits (over three months)

5,271

Trade notes and accounts receivable
Allowance for doubtful receivables$

Short-term bank loans (Notes 5 and 9)¥ 77,830¥ 49,536$ 635,920

4,452

43,068Current portion of long-term debt (Notes 5 and 9)

75,04486,050613,162

140,285

140,521

1,146,217

Trade notes and accounts payable

73,544

67,219600,906(1,821)(1,182)(14,880)

Accrued income taxes

4,839

2,413

39,538176,145

164,221

1,439,215

Accrued expenses

40,72035,791

332,714

Notes and accounts payable for plant and equipment

25,37812,599207,357

130

1,327

1,069

Other current liabilities

14,503

16,564

118,506

Total current liabilities

311,993271,5012,549,175

376,584¥370,190$3,076,922

5,927

5,846

48,433

617

215

5,043

Other long-term liabilities

35,33032,588288,673

Total long-term liabilities

418,460

408,8413,419,072¥ 84,397¥ 84,397$ 689,581

27,506

27,534

224,745

Total current assets

437,459

421,368

3,574,305

Property, plant and equipment (Note 5):¥ 51,776¥ 52,100

Buildings and structures

264,032

247,4132,157,304

Machinery and equipment

441,142

403,998

3,604,403

Construction in progress

70,281

42,199574,245827,233

745,712

6,758,997

Accumulated depreciation(449,481)(409,806)(3,672,535)

377,752

335,906

3,086,462

Property, plant and equipment—net$

423,044

Provision for loss on disasterLong-term liabilities:
Long-term debt (Notes 5 and 9)
Net defined benefit liability (Note 10)
Deferred income taxes (Note 4)

Commitments and contingent liabilities (Note 11)
Net Assets (Note 12):
Common stock
Authorized: 400,000,000 shares

Intangible assets (Note 5):
Goodwill

2022

735,938

Other current assets

Land

2021

Current liabilities:¥ 90,071

Inventories (Note 3)

2022
Liabilities and net assets

Current assets:
Cash and cash equivalents

Thousands of
U.S. dollars (Note 1)

Millions of yen¥ 15,060¥ 13,565$

123,053

Other intangible assets

17,74916,238145,026

Total intangible assets

32,81029,803

268,079

Issued: 171,459,479 shares
Capital surplus

—

4

—

Retained earnings

94,66787,326

773,486

Less cost of common shares of treasury stock(10,748)(10,748)(87,822)

168,316

160,980

1,375,244

Unrealized gain (loss) on available-for-sale securities

9,789

9,080

79,989Deferred gains or losses on hedges

(108)

(34)

(889)

278,033

Foreign currency translation adjustments

6,885(9,321)

56,260Remeasurements of defined benefit plans

356

319

2,910

16,922

45

138,270(8,362,702 shares in 2022 and 8,362,394 shares in 2021)
Total shareholder’s equity

Investments and other assets:
Investments in unconsolidated subsidiaries
and affiliates accounted for by the equity method
Investment securities (Note 6)¥ 11,057¥ 15,743

34,02831,463$90,346

Lease deposits

3,330

2,593

27,214

Deferred income taxes (Note 4)

12,393

12,077

101,258

Other assets

21,4895,439

175,585

82,29967,318672,438¥ 930,321¥ 854,396$ 7,601,286

Total investments and other assets
Total
The accompanying notes are an integral part of these statements.

Accumulated other comprehensive income
Non-controlling interests
Total net assets
Total
The accompanying notes are an integral part of these statements.

14,62813,027

119,522

199,867

174,053

1,633,038¥930,321¥854,396$7,601,286

Contents

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Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
ReportingConsolidated Statements of Income

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2022 and 2021

Thousands of
U.S. dollars (Note 1)

Millions of yen

2022

2021

2022

¥494,789¥455,559$4,042,729

Cost of sales

345,519

316,718

2,823,105

Gross profit

149,269

138,840

1,219,623

2021

2022

¥15,038$123,099

Unrealized gain (loss) on available-for-sale securities

709

8,348

5,794

Deferred gains or losses on hedges

(141)

35

(1,154)

Other comprehensive income:

111,2121,024,486

Foreign currency translation adjustment

15,770(9,039)128,854

27,627

195,136

Remeasurements of defined benefit plans

49

890

400

Share of other comprehensive income of entities
accounted for using equity method

533

(436)

4,359

¥31,987¥14,837$261,355

Owners of parent

30,036

13,814245,412

Non-controlling interests

1,951

1,022

15,943

Interest and dividend income

1,916

2,004

15,655Interest expense(4,135)(4,003)(33,791)

Loss on sale and disposal of property, plant andequipment—net

(221)

(985)

(1,813)

Exchange gain (loss)

4,833

857

39,489Equity in profit (loss) of an affiliated company

(918)

(546)

(7,507)

Gain (loss) on sales of available-for-sale securities

109

1,761

891

(2,514)(1,437)(20,541)

Loss on disaster(174)(1,921)(1,427)

Other income (loss)—net

468(5,838)

3,824

23,243

17,519189,914

Loss on impairment of fixed assets (Note 17)

Income (loss) before income taxes
Income taxes (Note 4):
Current

7,868

6,237

64,292

Deferred308(3,756)

2,522

15,06615,038123,099

Net income (loss)
Net income (loss) attributable to non-controlling interests

1,611

828

13,163¥ 13,455¥ 14,209$ 109,936
U.S. dollars(Note 1)

Yen

Amounts per common share:
¥

82.5

¥

87.1

$

0.7

Diluted earnings

77.4

—

0.6

Cash dividends

27.0

28.0

0.2

The accompanying notes are an integral part of these statements.

2022¥15,066

Net income

23,882Other income (expenses):

Basic earnings

Thousands of
U.S. dollars (Note 1)

Millions of yen

125,386

Operating income

Net income attributable to owners of the parent● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Consolidated Statements of Comprehensive Income

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2022 and 2021

Selling, general and administrative expenses (Notes 15 and 16)48● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section

Net sales (Note 18)

NIPRO Annual Report 2022

Financial/Data
SectionManagement
Foundation

Comprehensive income
Comprehensive income attributable to:

The accompanying notes are an integral part of these statements.

Contents

About NIPROManagement
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Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
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NIPRO Annual Report 2022

Financial/Data
SectionManagement
Foundation

49● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Consolidated Statements of Changes in Net Assets
Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2022 and 2021 consisted of the following:Thousands
Outstanding
number ofshares ofcommon stock

171,459

Balance at March 31, 2020

Millions of yen
Commonstock¥84,397

Capitalsurplus¥5

Net income attributable to owners of the parent
Change in the scope of consolidation
Cash dividends

Retainedearnings

Treasurystock¥74,768¥(10,827)¥148,344¥ 731

Deferred
gains orlosses onhedges¥ (69)

Foreigncurrencytranslation
adjustments¥

341

Remeasurementsof defined
benefit plans

Accumulated
othercomprehensive
income¥(563)¥

440

Noncontrollinginterests

Total
net assets¥12,452¥161,237

14,20914,209

147

147

147

(1,718)(1,718)(1,718)Purchase of treasury stock
Disposal of treasury stock

Unrealized
gain onavailable-for-salesecurities

Total
shareholders’equity14,209

(698)

(698)

(698)

—

(79)

776

697

697

¥4

¥87,326¥(10,748)¥160,980

Decrease of retained earnings (Other)
Other net change during the year
171,459

Balance at March 31, 2021

¥84,397

Net income attributable to owners of the parent
Change in the scope of consolidation
Cash dividends

35¥ (34)(9,662)¥ (9,321)

883
¥ 319

¥

(395)
45

574
¥13,027

179¥174,053

13,455

13,455

(125)

(125)

(125)

(5,238)(5,238)(5,238)Purchase of treasury stock
Disposal of treasury stock

8,348¥9,080(4)

013,455

0

0

0

0

(4)

(4)

Change in the scope of consolidation
Decrease of retained earnings (Other)

(750)

(750)

Other net change during the year
171,459

Balance at March 31, 2022

¥84,397¥—¥94,667¥(10,748)¥168,316

Retainedearnings

Treasury
stock

Total
shareholders’equity$713,513$(87,819)$1,315,309

Thousands
Outstanding
number ofshares ofcommon stock

Balance at March 31, 2021

171,459(750)
709¥9,789(74)¥(108)

16,206¥ 6,88536¥ 356

16,877¥16,922

1,601¥14,628

18,478¥199,867

Accumulated
othercomprehensive
incomeNoncontrollinginterests

Total
net assets$$106,441$1,422,121

Thousands of U.S. dollars (Note 1)
Commonstock$689,581

Capitalsurplus$ 34

Net income attributable to owners of the parent

Unrealized
gain onavailable-for-salesecurities$74,193

Deferred
gains orlosses onhedges$(278)

Foreigncurrencytranslation
adjustments$ (76,158)

Remeasurementsof defined
benefit plans$2,614

370

109,936

109,936

Change in the scope of consolidation(1,028)(1,028)(1,028)Cash dividends(42,800)(42,800)(42,800)

Purchase of treasury stock
Disposal of treasury stock(34)

Decrease of retained earnings (Other)

0

(3)

(3)

(3)

0

(34)

(34)

(6,135)(6,135)

Other net change during the year
Balance at March 31, 2022
The accompanying notes are an integral part of these statements.

171,459$689,581$ —$773,486

109,936$(87,822)$1,375,244

5,796$79,989(610)$(889)

132,418$ 56,260

295$2,910137,900$138,270

13,081$119,522(6,135)150,982$1,633,038

Contents

About NIPROManagement
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
Reporting

NIPRO Annual Report 2022

Financial/Data
SectionManagement
Foundation

50● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Consolidated Statements of Cash Flows
Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2022 and 2021
Thousands of
U.S. dollars (Note 1)

Millions of yen

2022

2021

2022

Operating activities:
Net income

Thousands of
U.S. dollars (Note 1)

Millions of yen

2022

2021

2022

Investing activities:¥ (61,137)¥(48,642)$(499,526)

Adjustment to reconcile net income to net cash

¥13,455¥ 14,209$ 109,935

Proceeds from sales of property, plant and equipment

Purchases of property, plant and equipment

4,278

735

34,953

Provided by operating activities:

Purchases of available-for-sale securities

(253)

(100)

(2,067)

Depreciation and amortization

43,31339,849353,893

Proceeds from sales of available-for-sale securities

262

7,629

2,140

Amortization of goodwill

2,851

2,778

23,294Purchases of investment in unconsolidated subsidiaries(192)(1,936)(1,568)Loss on impairment of fixed assets

2,514

1,437

20,540

918

547

7,500

Proceeds from investment in unconsolidated subsidiaries
and affiliates

2,845

—

23,245Purchases of investments in consolidated subsidiaries
affecting scope of consolidation(5,187)(1,508)(42,380)

Equity in loss (profit) of an affiliated company
Allowance for doubtful receivables

804

3,275

6,569

Loss on sales of available-for-sale securities(107)(1,441)(874)

Provision for deferred taxes

308(3,756)

2,516

Exchange loss

(3,545)

1,544(28,964)

Loss on devaluation of marketable securities

41

80

334

Loss on sales and disposal of property, plant andequipment—net

221

986

1,805

State subsidy(150)(1,003)(1,225)

Loss on reduction of non-current assets

194

806

1,585

2,432

4,321

19,870

Other, net
Changes in operating assets and liabilities:
Trade receivables

6,659

10,52854,408Inventories(7,935)(12,851)(64,833)

Other current assets

4,774(5,395)39,006

Lease deposits

(621)

(469)

(5,073)

Trade payables

704

(568)

5,752

Accured income taxes

2,310

(177)

18,874

Other, net(930)

11,393(7,598)

Total adjustments

54,75951,884447,413

Net cash provided by operating activities

68,21466,093557,347

Payments for transfer of business

(24)

(868)

(196)

Deposits (Over three months)

(335)

1,224

(2,737)

Other, net(18,690)(1,606)(152,709)(78,434)(45,071)(640,853)

Net increase (decrease) in short-term loans

26,860(21,698)

219,462

Proceeds from long-term loans

61,47047,080502,246

Repayment of long-term loans(100,836)(65,399)(823,890)

Net cash used in investing activities
Financing activities:

Proceeds from issuance of bonds

35,24549,272287,972

Repayment of bonds(1,600)(26,600)(13,072)

Proceeds from issuance of common stock

8

—

65

Proceeds from disposal of treasury stock

0

698

0

Proceeds from sales of treasury stock

(2)

(699)

(16)

Cash dividends paid

(5,293)(1,744)(43,246)

Payments from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation(1,012)—(8,268)Other, net(4,542)(2,972)(37,109)

10,297(22,062)

84,132

Effect of exchange rates on cash and cash equivalents

4,161(4,477)33,997

Net increase (decrease) in cash and cash equivalents

4,239(5,518)34,635

Cash and cash equivalents, beginning of period

85,821

90,154

701,209

9

1,186

73

¥ 90,071¥ 85,821$ 735,934

Net cash provided by financing activities

Cash and cash equivalents of newly consolidated
subsidiary, beginning of period
Cash and cash equivalents at end of period
The accompanying notes are an integral part of these statements.

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Financial/Data Section

Social Bond
ReportingManagement
Foundation

Financial/Data
Section● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

NIPRO Annual Report 2022

51
● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

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

2. Summary of Significant Accounting Policies

The financial statements of Nipro Corporation (“the Company”) and its consolidated domestic
subsidiaries have been prepared in accordance with the provisions set forth in the Financial Instruments
and Exchange Law of Japan and its related accounting regulations, and in conformity with accounting
principles generally accepted in Japan, which are different in certain respects as to application anddisclosure requirements of International Financial Reporting Standards. Effective from the year ended
March 31, 2009, the Company has adopted the “Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial Statements” (PITF No. 18) and as a result, theaccounts of consolidated overseas subsidiaries are prepared in accordance with either International
Financial Reporting Standards or generally accepted accounting principles in the United States, withadjustments for the specified four items as applicable.
In preparing the accompanying consolidated financial statements, certain reclassifications havebeen made to the consolidated financial statements issued domestically, in order to present them in aform which is more familiar to readers outside Japan. However, no adjustment has been made which
would change the financial position or the results of operations presented in the original financial
statements. In addition, the notes to consolidated financial statements include additional information
which is not required under generally accepted accounting principles and practices in Japan.
The financial statements presented herein are expressed in Japanese yen and, solely for theconvenience of the reader, have been translated into United States dollars at the rate of ¥122.39 =US$1, the approximate exchange rate on March 31, 2022. These translations should not be construed
as representations that the Japanese yen amounts have been, could have been, or could in the future
be, converted into U.S. dollar amounts at that or any other rate.
In preparing the accompanying consolidated financial statements and notes, Japanese yen figuresof less than one million yen have been rounded down to the nearest million yen, in accordance with
the Financial Instruments and Exchange Law and Enforcement Ordinance concerning the Banking Law
of Japan.
Therefore, total or subtotal amounts shown in the accompanying consolidated financial statements
and notes thereto are not necessarily equal to sums of individual amounts.

(a) Basis of Consolidation
The consolidated financial statements include the accounts of the Company and the significant
subsidiaries and affiliated company accounted for by the equity method.
Investments in unconsolidated subsidiaries are stated at cost and the equity method is not applied
for the valuation of such investments since they are considered immaterial in the aggregate.
All significant intercompany balances and transactions have been eliminated in consolidation. All
material unrealized profits included in assets resulting from transactions within the Company and its
consolidated subsidiaries have been eliminated. The difference between the cost of investments in
subsidiaries and affiliates and the equity in their net assets at the dates of acquisition is amortized on astraight-line basis over five to 20 years.
All accounts herein have been presented on the basis of the 12 months ended March 31, 2022 for theCompany and for consolidated domestic subsidiaries, and December 31, 2021 for all consolidated
overseas subsidiaries.
Adjustments have been made for any significant intercompany transactions which took place during
the period between the end of the accounting period of the consolidated overseas subsidiaries and thatof the Company.
(b) Translation of Foreign Currencies
Balance sheets of consolidated overseas subsidiaries are translated into Japanese yen at the current
exchange rates as of the balance sheet date except for shareholders’ equity, which is translated at thehistorical rates. Income statements of consolidated overseas subsidiaries are translated into Japanese
yen at the average exchange rates for the period. Resulting translation adjustments are shown as“Foreign currency translation adjustments” in the “Accumulated other comprehensive income” sectionof net assets.
(c) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, readily available deposits and short-term highly liquid
investments with original maturities of three months or less.
(d) Allowance for Doubtful Receivables
An allowance for possible losses from trade notes and accounts receivable, loans and other receivables
is provided based on the actual rate of past bad debts and the uncollectible amounts of certain
individual receivables.

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Financial/Data Section

Social Bond
ReportingManagement
Foundation

Financial/Data
Section● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

NIPRO Annual Report 2022

52
● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements(e) Inventories
Inventories are stated principally at the lower of average cost or net realizable value.
(f) Property, Plant and Equipment
Depreciation of property, plant and equipment of the Company and its consolidated domestic
subsidiaries is computed principally by the declining-balance method. The straight-line method isapplied to buildings acquired by the domestic companies after April 1, 1998 and buildings andaccompanying facilities and structures acquired by the domestic companies after April 1, 2016, and isprincipally applied to the property, plant and equipment of consolidated overseas subsidiaries.
(g) Intangible Assets
Amortization of intangible assets, including software for the Company’s own use, is computed by thestraight-line method over the estimated useful life of the asset.
Goodwill is amortized on a straight-line basis over the period the Company benefits from its use.
If the amount is not significant, it is expensed when incurred.
(h) Investment Securities
Available-for sale securities, which are not classified either trading securities or held-to-maturity debt
securities, are stated at fail value. Unrealized gains and losses, net of applicable taxes, are reported as“Accumulated other comprehensive income” of net assets.
Non-marketable available-for-sale securities are stated at cost determined by the average method.
For other-than-temporary declines in fair value, investment securities are reduced to net realizablevalue by a charge to income.
(i) Employees’ Retirement and Severance Benefits
Method of Attributing Expected Benefit to Periods
In calculating retirement benefit obligation, the estimated amount of retirement benefit is attributed tothe periods on the benefit formula basis.
Accounting Method of Actuarial Gains and Losses and Prior Service Costs
Prior service costs are amortized on a straight-line basis over a certain period (mainly 5 years) which iswithin the average of the estimated remaining service years of the employees when they occur.
Actuarial gains and losses are amortized on a straight-line basis over a certain period (mainly 5
years) which is within the average of the estimated remaining service years of the employees
commencing from the following year in which they arise.
Some consolidated subsidiaries amortize their actuarial gains and losses all at once in the fiscal year
in which they arise.

(j) Derivatives
Derivatives are stated at fair value, with changes in fair value included in net income or loss for theperiod in which they arise, unless derivatives are used for hedging purposes. Please see (l) Hedge
Accounting below.
(k) Leases
Finance leases, except for certain immaterial leases, are capitalized in the balance sheet. Amortizationof finance lease assets is calculated by the straight-line method over the lease period assuming noresidual value.
The Company and its consolidated domestic subsidiaries account for certain finance leases as
operating leases, which do not transfer ownership to the lessee.
(l) Hedge Accounting<Method of hedge accounting>
The deferral hedge accounting method is applied in principle. The allocation method is applied tocurrency swaps and the exceptional accounting method is applied to interest rate swaps whencertain hedging criteria are met.
<Hedge instrument and hedge items>(Hedging instruments) (Hedged items)
Interest rate swap
Interest on short-term and long-term debt
<Hedge policy>
The Company uses interest rate swaps to reduce interest volatility risk.
<Method for assessing hedge effectiveness>
Hedge effectiveness is not assessed when substantial items and conditions of hedging instruments
and the hedged transactions are the same, and is not assessed when cash flow can be completely
offset for a whole hedge period.
(m) Income Taxes
The provision for income taxes is computed based on income for financial statement purposes.
The asset and liability approach is used to recognize deferred tax assets and liabilities for the future
tax consequences of temporary differences between the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used for income tax purposes.

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
Reporting

NIPRO Annual Report 2022

Financial/Data
SectionManagement
Foundation

53● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements(n) Amounts per Common Share
Basic earnings per share are computed by dividing net income available to common shareholders by theweighted average number of common shares outstanding for the period. Diluted earnings per sharereflect the potential dilution that could occur if securities were exercised or converted into common
stock. Diluted earnings per share of common stock assume full conversion of the outstanding convertible
notes and bonds at the beginning of the year (or at time of issuance) with an applicable adjustment for
related interest expense, net of tax, and full exercise of outstanding warrants.
(o) Revenue Recognition
Revenue is recognized upon delivery of products sold. The customer acquires ownership and control ofthe products upon delivery. The Group has fulfilled its performance obligation at this time.
Other Revenue Sources• As an agent
When the Company acts as an agent, revenue is recognized on a net basis.
• Repurchase agreements	Liability is recognized for the amount of the remaining inventory of the goods to be supplied tothe buyer.
Revenue is the contract price less returns, discounts, and rebates.
Accounts receivable are all current. All are collected within a year from the delivery date.
(p) Change in Accounting Policies
1. Formal Implementation of Accounting Standards for Revenue Recognition
The Group formally adopted the Accounting Standards for Revenue Recognition (ASBJ Statement No.
29, March 31, 2020; hereinafter “Revenue Recognition Standard”) on April 1, 2021, the start of thecurrent fiscal year. Revenue is recognized when control is transferred to the customer, i.e., when delivery
is completed.
This gave rise to the following changes:•	When the Company acts as an agent, revenue is recognized on a net basis. This is when the Company
arranges for the goods and/or services to be provided by another party.
•	Repurchase agreements liability is recognized for the amount of the remaining inventory of the goods
to be supplied to the buyer.
• Revenue is the contract price less returns, discounts, and rebates.

In accordance with the transitional treatment prescribed in the proviso of Paragraph 84 of the
Accounting Standard for Revenue Recognition, the cumulative effect of retrospective application of the
new accounting policy prior to the beginning of the current fiscal year is added to or deducted fromretained earnings at the beginning of the current fiscal year, and the new accounting policy is applied
from such beginning balance. The new accounting policy is applied from the balance at the beginningof the current fiscal year. However, the new accounting policy was not applied retrospectively tocontracts for which almost all revenue amounts were recognized in accordance with the previous
treatment prior to the beginning of the current fiscal year by applying the method prescribed in
Paragraph 86 of the Accounting Standard for Revenue Recognition.
As a result, net sales decreased by ¥2,185 million (US$18 million), cost of sales decreased by ¥2,071
million (US$17 million), and operating income, ordinary income, and income before income taxes eachdecreased by ¥114 million (US$0.9 million) during the current fiscal year.
The beginning balance of retained earnings is ¥125 million (US$1 million) lower than the previous
year. This is the cumulative effect of the change in revenue recognition policy.
In accordance with the transitional treatment stipulated in Paragraph 89-3 of the AccountingStandard for Revenue Recognition, notes related to revenue recognition for the previous fiscal year are
not presented.
2. Application of Accounting Standard for Fair Value Measurement
Effective April 1, 2021, the Group has applied the “Accounting Standard for Fair Value Measurement”(ASBJ Statement No. 30, July 4, 2019). The Group has applied new accounting policy prospectively inaccordance with the transitional treatment prescribed in Paragraph 19 of the Accounting Standard for
Fair Value Measurement and Paragraph 44-2 of “Accounting Standard for Financial Instruments” (ASBJ
Statement No. 10, July 4, 2019). There is no impact on the consolidated financial statements.

3. Inventories
Inventories consisted of the following:Thousands of
U.S. dollars (Note 1)

Millions of yen

2022

2021

2022

¥118,315¥113,109$ 966,710

Raw materials

35,962

31,066

293,838

Work in process

15,028

14,117

122,793

Packing and other

6,838

5,927

55,873¥176,145¥164,221$1,439,215

Finished goods and merchandise

Total

Contents

About NIPROManagement
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
Reporting

NIPRO Annual Report 2022

Financial/Data
SectionManagement
Foundation

54● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements
4. Income Taxes

Reconciliation of the differences between the statutory tax rates and the effective income tax rates wereas follows:

The Company and its domestic subsidiaries are subject to several taxes based on income which, inaggregate, resulted in a normal statutory tax rate of approximately 30.6% for the years ended March 31,
2022 and 2021.
The significant components of deferred tax assets and liabilities were as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

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

2022

2021

2022

¥ 24,021
3,113
1,847
1,365
427
2,082

¥ 25,516
2,170
1,720
1,325
400
997

$ 196,273
25,43615,097
11,1583,489
17,012

2,257

2,030

18,443

1,464
415
602
1,856
66
5,904

1,599
316
599
—
98
5,609

11,967
3,392
4,922
15,171
542
48,24345,42542,383371,150(19,211)(18,249)(156,971)(5,788)(4,614)(47,292)(24,999)(22,864)(204,263)

20,425

19,519166,886

4,369
783
534
774
2,187

4,051
783
460
611
1,749

35,697
6,400
4,369
6,327
17,875

8,649¥ 11,775

7,656¥ 11,862

70,671$ 96,215(*1) In the fiscal year ended March 31, 2022, Valuation allowance was increased by ¥2,135 million. The main reason for this increase is that
Valuation allowance for the Net Operating Loss Carry Forwards was increased by ¥1,255 million in Nipro Medical Corporation.

Statutory tax rate

2022

2021

30.6%

30.6%

Expenses not deductible for tax purposes

1.0

1.4

Non-taxable dividend income

(0.2)

(0.3)

Effect of tax rate change

0.7

0.9

Amortization of goodwill

3.2

4.9

Tax credits primarily for research and development costs

(4.3)

(6.0)

Valuation allowance

9.2

(8.8)

Retained earnings on foreign subsidiaries

0.7

0.2

Unrealized gain

(0.7)

(6.0)

Other
Effective income tax rate

(5.0)

(2.7)

35.2%

14.2%

Millions of yen

2022
Within1 yearOver 1 year
within2 years

Over 2 years
within3 years

Over 3 years
within4 years

Over 4 years
within5 years

Over 5 years

Total

Net Operating Loss
Carry Forwards (*A)

¥ 555

¥ 398

¥ 629

¥1,136¥ 1,391¥ 19,911¥ 24,021

Valuation allowance

(393)

(351)

(568)

(788)

(1,151)(15,958)(19,211)

Deferred Tax Assets

161

47

60

348

239

3,952

4,810 (*B)

Millions of yen

2021
Within1 yearOver 1 year
within2 years

Over 2 years
within3 years

Over 3 years
within4 years

Over 4 years
within5 years

Over 5 years

Total

Net Operating Loss
Carry Forwards (*A)

¥ 383

¥ 864

¥ 997

¥ 472

¥1,062¥ 21,736¥ 25,516

Valuation allowance

(281)

(408)

(549)

(337)

(939)

(15,733)(18,249)

Deferred Tax Assets

101

456

447

134

123

6,003

7,266 (*B)

Contents

Management
Message

About NIPRO

Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section55● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements
6. Investment Securities

Thousands of U.S. dollars (Note 1)

2022
Within1 yearOver 1 year
within2 years

Over 2 years
within3 years

Over 3 years
within4 years

Over 4 years
within5 years

Over 5 years

Total

Net Operating Loss
Carry Forwards$ 4,534$ 3,255$ 5,140$ 9,288$11,366$ 162,688$ 196,273

Valuation allowance(3,217)(2,869)(4,641)(6,439)(9,412)(130,391)(156,971)

Deferred Tax Assets

1,317

385

498

2,848

1,954

32,29639,301(*A) Each Net Operating Loss Carry Forwards amount is multiplied by Statutory tax rate.
(*B) Deferred Tax Assets for Net Operating Loss Carry Forwards (multiplied by Statutory tax rate) for the years ended March 31, 2022 and2021 were ¥24,021 million (US$196,273 thousand) and ¥25,516 million, respectively. Those Deferred Tax Assets were mainly
recognized for the balance of Net Operating Loss Carry Forwards (multiplied by Statutory tax rate) in Nipro Medical Corporation andNipro India Corporation Pvt. Ltd. As a result of tax scheduling, Valuation allowance for those Net Operating Loss Carry Forwards was
not recognized due to assumption that this amount is collectable.

5. Pledged Assets

2022

2021

2022

Buildings and structures¥1,975¥1,571$16,137

Land

2,929

2,907

23,939

Other

532

663

4,354

¥6,636¥5,142$54,2232021¥31,466¥30,504———

31,46630,504

257,1022022

Marketable:
Marketable equity securities
Investment trust funds and other
Subtotal
Non-marketable securities
Total$257,102

2,561

958

20,930¥34,028¥31,463$278,033

Millions of yen

2022
Cost

Unrealized gain

Unrealized loss

Fair Value¥17,397¥14,517

¥448

—

—

—

—

¥17,397¥14,517¥448¥31,466

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

The above assets were pledged against the following liabilities:¥31,466

Thousands of U.S. dollars (Note 1)

2022

Thousands of
U.S. dollars (Note 1)

Millions of yen

2022

2021

2022

¥ 768

¥1,625$ 6,281

515

519

4,209

Long-term debt

4,793

6,281

39,162

Total¥6,077¥8,425$49,654

Current portion of long-term debt

2022
Non-current:

Thousands of
U.S. dollars (Note 1)

Millions of yen

Short-term bank loans

Thousands of
U.S. dollars (Note 1)

Millions of yen

The carrying amounts and aggregate fair values of marketable securities for investments as of March
31, 2022 and 2021 were as follows:

The following assets were pledged as collateral:

Total

Investment securities as of March 31, 2022 and 2021 consisted of the following:

Cost

Unrealized gain

Unrealized loss

Fair Value$142,152$118,619$3,668————$142,152$118,619$3,668$257,103

Available-for-sale securities
Equity securities
Debt securities and otherTotal$257,103

Millions of yen

2021
Cost

Unrealized gain

Unrealized loss

Fair Value¥17,410¥13,274

¥180

—

—

—

—

¥17,410¥13,274¥180¥30,504

Available-for-sale securities
Equity securities
Debt securities and otherTotal¥30,504

Contents

About NIPROManagement
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
ReportingManagement
Foundation

Financial/Data
Section● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section

NIPRO Annual Report 2022

56
● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements
Proceeds from sales of securities and gross realized gains or losses on those sales for the years ended
March 31, 2022 and 2021 were as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

2022

2021

2022

¥262

¥7,629$2,147

Gains on sales

13

1,761

111

Losses on sales

1

320

9

Proceeds

No impairment loss was applied to securities in the fiscal year ended March 31, 2022.
In the case that fair value for the marketable equity security fell by over 50% from the acquisition
cost, the stock impairment is applied unless there is a reasonable disproval, and the asset is treatedas an impairment. In the case that fair value for the marketable equity security fell by 30% to 50%,
impairment is applied except when it is expected to recover.

7. Financial Instruments(1) Circumstances on financial instruments(a) Policy for financial instruments
The Company and its consolidated subsidiaries manage the temporary surplus funds by deposits withbanks that have a high level of safety. Based on capital investment planning and financing planning, theCompany and its consolidated subsidiaries raise funds for business operation with bank loans,commercial paper, corporate bonds, and issuing convertible bonds with stock acquisition rights.
The Company and its consolidated subsidiaries enter into derivative transactions for the purpose of
reducing funding costs and hedging their exposures to foreign exchange fluctuations and interest rate
fluctuations, but not for speculative purposes.

(b) Details and risk of financial instruments and its risk management
Receivables such as trade notes and accounts receivable are exposed to customer’s credit risk.
Receivables denominated in foreign currencies are exposed to the market risk of fluctuation in foreign
currency exchange rates.
In order to reduce the customer’s risk, the Company monitors the dues and balances by customer inaccordance with the Company’s credit administration regulations.
Investment securities are exposed to market fluctuation risk, but mainly consist of equity of thecompanies which conduct business with the Company. The Company periodically reviews the market
price of such securities.
Payables such as trade notes, accounts payable, and accounts payable other are due within 1 year.
Payables denominated in foreign currency are exposed to the risk of fluctuation in foreign currency
exchange rates.
Short-term loans payable are mainly borrowed to raise operating capital and long-term loans payable
are mainly borrowed to make capital expenditures. A part of long-term loans with a floating interest rate
has the risk of interest rate fluctuation, but the Company and its consolidated subsidiaries use interest
rate swaps to solidify the interest rate. For some of the loans denominated in foreign currency, theCompany and its consolidated subsidiaries use currency swaps to hedge the currency fluctuation risk.
Bonds and commercial paper are mainly issued to raise the funds for the retirement of bonds.
Lease obligations are mainly for capital expenditures, free from interest-rate risk because the interest
rate is fixed.
Payables, loans, and bonds are exposed to liquidity risk, but the Company and its consolidated
subsidiaries manage the risk by establishing cash planning.
Regarding derivatives, the Company enters into forward exchange contracts to hedge against therisk of fluctuations in foreign currency exchange rates associated with trade receivables and payables
denominated in foreign currencies, interest rate swaps to hedge against the risk of fluctuations ininterest rates associated with loans payable, and currency swaps to hedge against the risk of foreignexchange rate fluctuations. For more information on the use of hedge accounting, including hedging
instruments, hedged items, the hedging policy, and the method for assessment of hedge effectiveness,please refer to “2. Summary of Significant Accounting Policies” (m) Hedge Accounting.
As the Company manages its exposure to credit risk by limiting its funding to high-credit rating
financial institutions, the Company recognizes that the exposure to credit risk is extremely low.
The Company executes and manages derivative transactions under the corporate derivative
management policy, which prescribes the authority and limitations on derivative transactions.

Contents

About NIPROManagement
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
Reporting

NIPRO Annual Report 2022

Financial/Data
SectionManagement
Foundation

57● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements(c) S upplemental information on fair values of financial instruments
Fair values of financial instruments include values based on market price and reasonably estimatedvalues when market price is not available. Because variable factors are counted in the estimation, theestimated values may vary by adopting different assumptions.
With respect to the contract amounts related to derivative transactions in Note 8, the amounts do notreflect market risks to derivative transactions.

(2) Fair values of financial instruments
The book values, fair values and the differences between them as of March 31, 2022 and 2021 were as
follows (Financial instruments for which the market value is extremely difficult to determine are notincluded as described in remark 2.):Millions of yen

Book value

Fair value¥ 95,342¥ 95,342

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

138,464

138,464

Difference¥——

31,466

31,466¥265,273¥265,273¥—

Trade notes and accounts payable¥ 73,544¥ 73,544¥—

Short-term bank loans, current portion of long-term debt,
and current portion of convertible bonds

152,875

152,875—

Other notes and accounts payable (*1)

35,21535,215—Long-term debt

346,314343,681(2,632)

Convertible bonds

30,27030,645375

29,511

27,142(2,369)¥667,732¥663,105¥(4,627)

Derivatives (*3)

¥

¥

¥

(167)

(167)

Cash and cash equivalents, time deposits¥ 90,274¥ 90,274

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

139,338

139,338—

Difference¥——

30,50430,504

Assets total¥260,117¥260,117¥—

Trade notes and accounts payable¥ 67,219¥ 67,219¥—

Short-term bank loans, current portion of long-term debt,
and current portion of convertible bonds

135,587

135,587

Investment securities——

Other notes and accounts payable (*1)

33,25433,254—Long-term debt

370,190369,732

(458)

—

—

—

32,06029,516(2,543)Liabilities total¥638,311¥635,309¥(3,001)

Derivatives (*3)

¥

¥

¥

1,527

—

Liabilities total

Lease obligations (*2)

Fair value

Lease obligations (*2)

Assets total

Investment securities

2021
Book value

Convertible bonds

2022
Cash and cash equivalents, time deposits

Millions of yen

1,527

—

Thousands of U.S. dollars (Note 1)

2022
Book value

Fair value

Cash and cash equivalents, time deposits$ 779,006$ 779,006

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

1,131,337

1,131,337

Difference$——

257,102257,102

Assets total$2,167,447$2,167,447$—

Trade notes and accounts payable$ 600,906$ 600,906$—

Short-term bank loans, current portion of long-term debt,
and current portion of convertible bonds

1,249,082

1,249,082

Investment securities——

287,734

287,734—

Long-term debt

2,829,598

2,808,088(21,509)

Convertible bonds

247,324

250,388

3

Lease obligations (*2)

241,129

221,769(19,359)

Liabilities total$5,455,775$5,417,970$(37,805)

Derivatives (*3)

$

$

$

Other notes and accounts payable (*1)

(1,367)(1,367)—(*1) Other notes and accounts payable are included in accrued expenses and notes and accounts payable for plant and equipment in the
consolidated balance sheet.
(*2) Lease obligations are included in other current liabilities and other long-term liabilities in the consolidated balance sheet.
(*3) The amount represents the net amount of assets (liabilities).

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
Reporting

NIPRO Annual Report 2022

Financial/Data
SectionManagement
Foundation

58● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements
Remark 1

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

Remark 2

Financial instruments for which the fair value is difficult to determine
Thousands of
U.S. dollars (Note 1)

Millions of yen

Unlisted equity securities

2022

2021

2022

¥12,981¥16,694$106,067

They are not included in investment securities because there were no guoted market prices available and it is extremely difficult todetermine the fair value as of March 31, 2022 and 2021.

Remark 3

Planned redemption amounts after the balance sheet date for monetary receivables
with maturity dates
Planned redemption amounts after the balance sheet date for monetary receivables with maturity dates
at March 31, 2022 and 2021 were as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

2022

2021

2022

Within 1 year

Within 1 year

Within 1 year

Cash and cash equivalents, time deposits¥ 95,342¥ 90,274$ 779,006

Trade notes and accounts receivable

140,285

139,338

1,146,217

Contents

Management
Message

About NIPRO

Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section59● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements
Remark 4P lanned repayment amounts after the balance sheet date for monetary payables withmaturity dates
Planned repayment amounts after the balance sheet date for monetary payables with maturity dates at
March 31, 2022 and 2021 were as follows:
Millions of yen

2022
Within 1 year

Short-term bank loans,current portion of long-term
debt, and current portion of
convertible bonds¥152,875

Over 1 year
andwithin 2 years¥—

Over 2 years
andwithin 3 years¥

Over 3 years
andwithin 4 years

—

¥

—

Over 4 years
andwithin 5 years¥—

Over 5 years¥—

Long-term debt—

56,001

72,502

94,66240,287

Convertible bonds

—

—

—

—

30,000—

Lease obligations

3,885

3,375

2,693

2,123

1,310

16,123¥156,760¥59,377¥75,195¥96,785¥71,597¥98,984

Total

82,861(3) Breakdown of fair values of financial instruments by level
The fair values of financial instruments are classified into the following three levels based on theobservability and materiality of the inputs used to calculate fair value.
Level 1:	Fair value calculated based on quoted market prices for assets or liabilities for which suchfair value in available in active markets among the inputs used in the calculation of observablefair value.
Level 2:	Fair value calculated using inputs other than Level 1 inputs to the calculation of observablefair value.
Level 3:	Fair value calculated using inputs that are unobservable.
When multiple inputs that have a significant effect on the calculation of fair value are used, fair value
is classified into the level with the lowest priority in the calculation of fair value among the levels towhich each of those inputs belongs.
(a) Financial instruments measured at fair value on the consolidated balance sheet
Millions of yen

2022

Thousands of U.S. dollars (Note 1)

Fair value

2022
Within 1 year

Short-term bank loans,current portion of long-term
debt, and current portion of
convertible bonds$1,249,082

Over 1 year
andwithin 2 years

Over 2 years
andwithin 3 years

Over 3 years
andwithin 4 years

Over 4 years
andwithin 5 years

Over 5 years

$

$

$

$

$

—

—

—

—

—

Long-term debt—

457,565

592,386

773,448

329,169

677,027

Convertible bonds

—

—

—

—

245,118—

Lease obligations

31,747

27,58222,004

17,351

10,707

131,736$1,280,830$485,147$614,391$790,799$584,995$808,763

Over 4 years
andwithin 5 years

Over 5 years

Total

Millions of yen

2021
Within 1 year

Short-term bank loans,current portion of long-term
debt, and current portion of
convertible bonds¥135,587

Over 1 year
andwithin 2 years¥—

Over 2 years
andwithin 3 years¥—

Over 3 years
andwithin 4 years

¥

—

¥

—

¥

—

Long-term debt—

67,52649,97966,87538,340Convertible bonds

—

—

—

—

—

—

Lease obligations

4,865

3,216

2,807

2,377

1,827

16,695¥140,452¥70,743¥52,787¥69,253¥40,168¥164,432

Total

147,467

Level 1

Level 2

Level 3

Total

Stocks¥31,466¥—¥—¥31,466

Total assets¥31,466¥—¥—¥31,466¥—¥ (79)

¥—

¥

—

(9)

—

(9)

—

(78)

—

(78)

—

¥(167)¥—

Investment securities
Other securities

Derivatives transactions
Currency-relatedInterest-relatedInterest rate and currency related
Total liabilities

¥

¥

(79)

(167)

Contents

About NIPROManagement
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
ReportingManagement
Foundation

Financial/Data
Section● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section

NIPRO Annual Report 2022

60
● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements

Thousands of U.S. dollars (Note 1)

2022
Fair value
Level 1

Level 2

Level 3

Total

Investment securities
Other securities
Stocks$257,096$—$—$257,096

Total assets$257,096$—$—$257,096$—$ (645)

$—

$

—

(74)

—

(74)

—

(637)

—

(637)

—

$(1,364)$—$ (1,364)

Derivatives transactions
Currency-relatedInterest-relatedInterest rate and currency related
Total liabilities

$

(645)

(b) Financial instruments other than those measured at fair value on the consolidated balance sheet
Millions of yen

2022
Fair value
Level 1

Level 2

Bonds¥—

Convertible bonds with stock acquisition rights
Long-term debt

Level 3

Total

¥ 77,424¥—¥ 77,424—

30,645—30,645—266,257—

266,257

Lease obligations (non-current)—

23,256—23,256

Total liabilities¥—¥397,583¥—¥397,583

Thousands of U.S. dollars (Note 1)

2022
Fair value
Level 1

Bonds

Level 2$—

$ 632,601

Level 3Total$—

$ 632,601

Convertible bonds with stock acquisition rights—

250,388—

250,388

Long-term debt—

2,175,480—

2,175,480

Lease obligations (non-current)—

190,016—

190,016

Total liabilities$—$3,248,493$—$3,248,493(*) Explanation of valuation techniques used and inputs related to the calculation of fair value• Investment securities
	The fair value of listed stocks is estimated using quoted market prices. Since listed stocks are tradedin active markets, their fair value is classified as Level 1.
• Derivative transactions
	Fair value is calculated based on prices, etc., provided by financial institutions with which the Company
has transactions, and is classified as Level 2.
		 The fair value of interest rate swaps that qualify for special treatment is included in the fair value ofthe relevant long-term borrowings because they are accounted for as an integral part of long-termborrowings that are hedged.
• Bonds and long-term loans payable	The fair value of bonds payable and long-term loans payable is calculated based on the present valueof the total principal and interest discounted using an appropriate index such as the yield on
government bonds plus an interest rate that takes credit risk into account, and is classified as Level 2.
• Convertible bond-type bonds with subscription rights to shares	The fair value of convertible bond with stock acquisition rights is calculated based on the price, etc.
provided by the financial institutions with which the Company has transactions and is classified as
Level 2.
• Lease obligations (non-current)	The fair value of lease obligations is calculated based on the present value of the principal and interest
discounted at an interest rate that takes into account the remaining period of the obligation and credit
risk, and is classified as Level 2.

Contents

About NIPROManagement
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
ReportingManagement
Foundation● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section

NIPRO Annual Report 2022

Financial/Data
Section61● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements
8. Derivatives(2) Derivatives for which hedge accounting has been applied(a) Currency-related

The Company and its consolidated subsidiaries held the following derivatives contracts outstanding at
March 31, 2022 and 2021.

Millions of yen

2022
Method of hedge accounting(1) Derivatives for which hedge accounting has not been applied

Principle method

Currency-related

Type of derivative

Currency swap

Contract
amountPrincipal hedge item

Over 1 year
out-of-contract
amount¥505

Long-term loans

Fair value

¥—

¥(87)

Fair value is based on information provided by a financial institution at the end of the fiscal year.
Millions of yen
Thousands of U.S. dollars (Note 1)

2022
Type of derivative

Transaction other thanmarket transaction

Non-deliverable forward

Contract amount¥ 575

Over 1 year out-ofcontract amount

¥—

2022

Fair value¥(3)

Foreign currency forward contracts

5,027

—

5

Currency swap

1,035

—

6

Method of hedge accounting

Principle method

Type of derivative

Currency swap

Contract
amountPrincipal hedge item

Over 1 year
out-of-contract
amount$4,131Long-term loans

Fair value$—$(713)(b) Interest-related
Millions of yen

Millions of yen

2021
Type of derivative

Transaction other thanmarket transaction

Contract amountOver 1 year out-ofcontract amount2022
Fair value

Contract
amountNon-deliverable forward¥1,500¥—¥1,539Foreign currency forward contracts

3,473

—

76

Principle method

Interest rate swap Long-term loans¥ 1,071

0

Exceptional accounting method
for interest rate swap

Interest rate swap Long-term loans

15,000Currency swap

186—

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

Method of hedge accounting

Type of derivative

Principal hedge item

Transaction other thanmarket transaction

Over 1 year out-ofcontract amount

Fair value

495

¥(9)

15,000

(*1)

2021

2022
Contract amount¥Millions of yen

Thousands of U.S. dollars (Note 1)

Type of derivative

Over 1 year
out-of-contract
amountFair value

Non-deliverable forward$ 4,698$—$(29)

Foreign currency forward contracts

41,080—43

Currency swap

8,457

—

51

Method of hedge accounting

Type of derivative

Principal hedge item

Contract
amountOver 1 year
out-of-contract
amountFair value

Principle method

Interest rate swap Long-term loans¥ 4,234¥ 1,602¥(87)

Exceptional accounting method
for interest rate swap

Interest rate swap Long-term loans

15,00015,000(*1)(*1) The fair value of the interest rate swap to which the exceptional accounting method is applied and the fair value of forward foreignexchange contracts, etc., to which the allocation method is applied are included in the fair value of long-term loans in Note 9.
“Financial Instruments” because such interest rate swaps and forward foreign exchange contract, etc., are accounted for as a single
item with the corresponding long-term loans.
Thousands of U.S. dollars (Note 1)

2022
Method of hedge accounting

Type of derivative

Contract
amountPrincipal hedge item

Principle method

Interest rate swap Long-term loans

Exceptional accounting method
for interest rate swap

Interest rate swap Long-term loans

$

8,756
122,559Over 1 year
out-of-contract
amount$Fair value

4,052

$(74)

122,559(*1)

Contents

About NIPROManagement
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section62● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements
9. Short-Term Loans and Long-Term Debt

10. Accrued Pension and Severance Liabilities

Short-term loans comprised overdrafts and promissory notes.
The weighted-average interest rates of short-term bank loans for the years ended March 31, 2022
and 2021 were 0.7823% and 0.8510%, respectively.
Long-term debt comprised the following:

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

Thousands of
U.S. dollars (Note 1)

Millions of yen

2022
0.25% unsecured bonds due 2025

¥

3,000

2021
¥

2022

3,000

$

24,5110% convertible bonds due 2026

30,270—247,324

1.6% unsecured bonds with subordinated specials due 2025

50,00050,000408,530

0.674% unsecured bonds due 2028

10,00010,00081,706

0.44% unsecured bonds due 2029

10,00010,00081,7060.014%~0.025% unsecured bonds due from 2023 to 2027 (*1)

7,900

4,500

64,547Long-term bank loans due through 2034, with weightedaverage interest rate of 0.4831% for the year ended March
31, 2022, and 0.5694% for the year ended March 31, 2021

340,459

378,741

2,781,759

Total¥451,629¥456,241$3,690,084(*1) This is the total amount of the bonds Goodman Co., Ltd. issued.
In March 2020, the Company issued ¥3,000 million (US$24,511 thousand) of 0.25% unsecured bonds due 2025.
In October 2018, the Company issued ¥10,000 million (US$81,706 thousand) of 0.674% unsecured bonds due 2028.
In October 2019, the Company issued ¥10,000 million (US$81,706 thousand) of 0.44% unsecured bonds due 2029.
In September 2020, the Company issued ¥50,000 million (US$408,530 thousand) of 1.6% unsecured bonds due 2025.
In September 2021, the Company issued ¥30,270 million (US$247,324 thousand) of 0% convertible bonds due 2026.
From February 2017 to February 2022, Goodman Co., Ltd. issued ¥7,900 million (US$64,547 thousand) of 0.014% and 0.120%
unsecured bonds due from 2023 to 2025.

The aggregate annual maturities of long-term debt outstanding at March 31, 2022 were as follows:(1) Defined Benefit Plans(a) The reconciliation of beginning and ending balances of the benefit obligation (excluding thedefined benefit plans applied based on the simplified method) is as follows:

2022

2021

2022

Obligation at April 1¥17,684¥16,961$144,494

Service cost

1,539

1,460

12,581

Interest cost

85

74

695

(270)

(184)

(2,208)Actuarial gains and losses
Prior service cost

(64)

—

(526)

Benefit payments

(887)

(600)

(7,251)Other (foreign currency translation adjustments, etc.)
Obligation at March 31

(26)

4,464

¥17,684$152,249

Thousands of
U.S. dollars (Note 1)

Millions of yen

Millions of yen

2022

2022

Fair value of plan assets at April 1

2022¥ 72,844$ 595,187

2023

54,001

441,2242024

67,802

Total

546¥18,633(b) The reconciliation of beginning and ending balances of the fair value of the plan assets(excluding the defined benefit plans applied based on the simplified method) is as follows:

Thousands of
U.S. dollars (Note 1)

2025 and thereafterThousands of
U.S. dollars (Note 1)

Millions of yen

2022

2021

2022

¥11,950¥10,624$ 97,641

Expected return on plan assets

186

163

1,525

Actuarial gains and losses

(107)

742

(877)

553,985

Company contribution

835

842

6,823

82,949677,746

Benefit payments

(609)

(428)

(4,982)¥277,598$2,268,143

Other (foreign currency translation adjustments, etc.)

471

6

3,853

¥12,726¥11,950$103,982

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

Fair value of plan assets at March 31

Contents

About NIPROManagement
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section63● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements(c) T he reconciliation of beginning and ending balances of liabilities for retirement benefit
calculated by the simplified method is as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

2022(f) Remeasurements of defined benefit plans (Other Comprehensive Income)The breakdown of the items recorded in adjustments to defined benefit plans is as follows:

2021

2022

2022

¥108

¥ 83

$887

Retirement benefit cost

1

15

Retirement payments(1)

Decrease due to charge in measurement of retirement
benefit obligations from the simplified method tothe principle method
Other (foreign currency translation adjustments, etc.)

Liabilities for retirement benefit at April 1

Liabilities for retirement benefit at March 31

Thousands of
U.S. dollars (Note 1)

Millions of yen

2021

2022

¥64

11

Actuarial gains and losses

17

1,281

141

(1)

(13)

Total

¥81

¥1,281

$667

(76)

—

—

(11)

10

(95)

¥ 20

¥108

$166

¥

(0)

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

Millions of yen

2022(d) The reconciliation of ending balance of the benefit obligation and the fair value of the plan
assets, and liabilities and assets for retirement benefit are as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

2022

2021

2022

Benefit obligation on funded scheme¥ 16,054¥ 15,180$ 131,175

Plan assets(12,726)(11,950)(103,982)

3,328

3,230

27,193

Benefit obligations on unfunded scheme

2,599

2,616

21,240Net liabilities in the consolidated balance sheet

5,927

5,846

48,433Net defined benefit liability

5,927

5,846

48,433¥ 5,927¥ 5,846$ 48,433

Net liabilities in the consolidated balance sheet(*) Including the defined benefit plans applied based on the simplified method(e) The breakdown of net pension and severance costs is as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

Service cost
Interest cost
Expected return on plan assets$526

Prior service cost

2022

2021

2022

¥1,539

¥1,460$12,581

85

74

695

(186)

(163)

(1,525)

Amortization of actuarial gains and losses

(37)

474

(302)

Amortization of prior service cost

(221)

(144)

(1,807)Retirement benefit cost calculated by the simplified method

1

15

11

Other

43

10

352

Total

¥1,224¥1,727$10,006

2021

2022

$ 693

Unrecognized prior service cost

¥ 84

¥228

Unrecognized actuarial loss

457

218

3,737

Total

¥542

¥447

$4,430(h) Items concerning plan assets
1. The breakdown of plan assets
Plan assets as of March 31, 2022 and 2021 consist of the following:
2022

2021

Bonds

44%

44%

Equities

20

17

Short-term funds

2—

General account24

32

Others

10

7

Total

100%

100%

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

Contents

About NIPROManagement
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
ReportingManagement
Foundation

Financial/Data
Section● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section

NIPRO Annual Report 202264
● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements
2. Method of determining the expected rate of return on plan assets
The long-term expected rate of return is determined considering the current and future allocation ofplan assets, and the current and expected long-term rate of return from the diverse assets composing
the plan assets.
(i) Basis of actuarial calculation
The assumptions used in actuarial calculations for the years ended March 31, 2022 and 2021 are as
follows:
2022

2021

Discount rate

Primarily 0.6%

Primarily 0.4%

Expected long-term rate of returnPrimarily 1.5%

Primarily 1.5%

Expected rate of salary increase

Primarily 6.7%

Primarily 6.7%

(2) Defined Contribution Retirement Plans
The amounts of necessary contributions to defined contribution retirement plans within the Company
and consolidated subsidiaries were ¥715 million (US$5,842 thousand) and ¥608 million for the years
ended March 2021 and 2020, respectively.

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

Millions of yen

2022

2021

2022

$40

Export drafts discounted¥4¥Notes receivable endorsed

—

380

—

¥4

¥388

$40

Total

8

12. Net Assets
The significant provisions in the Corporate Law of Japan (the “Corporate Law”) that influence financial
and accounting matters are summarized below:(a) Dividends
Under the Corporate Law, companies can pay dividends at any time during the fiscal year in addition to
the year-end dividend upon a resolution at the shareholders’ meeting. For companies that meet certain
criteria such as (1) having a board of directors, (2) having independent auditors, (3) having a board ofcorporate auditors, and (4) the service period of the directors is prescribed as one year rather than thenormal term of two years by its articles of incorporation, the board of directors may declare dividends(except for dividends in kind) if the company has prescribed so in its articles of incorporation. The
Company’s present system meets the first three criteria but the two-year service period of the directors
does not meet the fourth criterion.
Interim dividends may also be paid once a year by the resolution of the board of directors if thearticles of incorporation of the company stipulate so. The Company’s articles of incorporation containsuch a stipulation, and it pays interim dividends semi-annually by the resolution of the board of directors.
The Corporate Law provides certain limitations on the amounts available for dividends or thepurchase of treasury stock.
(b) Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Corporate Law requires that an amount equal to 10% of dividends must be appropriated as a legal
reserve (a component of retained earnings) or as additional paid-in capital (a component of capitalsurplus) depending on the equity account charged upon the payment of such dividends until the totalof aggregate amount of the legal reserve and additional paid-in capital equals 25% of the common stock.
Under the Corporate Law, the total amount of additional paid-in capital and legal reserve may bereversed without limitation.
The Corporate Law also provides that common stock, legal reserve, additional paid-in capital, othercapital surplus and retained earnings can be transferred among the accounts under certain conditions
by the resolution of the shareholders’ meeting.
The Company’s legal reserve, which is included in retained earnings, amounted to ¥5,830 million(US$47,640 thousand) as of March 31,2022, and its additional paid-in capital, which is included incapital surplus, amounted to ¥635 million (US$5,190 thousand) as of March 31, 2022.

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
ReportingManagement
Foundation

Financial/Data
Section● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section

NIPRO Annual Report 2022

65
● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements
13. Business Combination

14. Segment Information

Transaction under common control

1. Outline of Reportable Operating Segments
In accordance with ASBJ Statement No. 17 “The Revised Accounting Standard for Disclosures of
Segments of an Enterprise and Related Information”, the reportable operating segments are components
of an entity for which separate financial information is available and such information is evaluatedregularly by the board of directors in deciding how to allocate management resources and in assessing
performance.
The Company currently operates its business on a stand-alone basis with the divisional organizationand evaluates the performance of sales and manufacturing of each division regardless of their products.
Accordingly, the Company has three reportable operating business segments according to the divisions(Medical-Related business, Pharmaceutical-Related business and Pharma Packaging business), which
are divided mainly by their products.

(1) Outline of the business combination
1) Company name and business line at the time of the business combination
Name of the company: Nipro Corporation
Business line: Manufacturing and marketing of medical equipment, pharmaceuticals, pharmaceuticalpackaging.
Name of the company: Nipro Holding Americas, Inc.
Business line: Supervision of new investments and fund management of U.S. subsidiaries, etc.
2) Date of the business combination
January 1, 2022
3) Legal form of the business combination
	In-kind investment of our subsidiary shares to Nipro Holding Americas,Inc.
	Distribution in kind of our subsidiary shares under NIPRO MEDICAL CORPORATION to Nipro Holding
Americas,Inc.
4) Outline and purpose of the transaction	
We made an in-kind contribution of shares of our consolidated subsidiary to Nipro Holding
Americas,Inc. for the purpose of business development in line with local conditions, prompt decision
making, and strengthening of management control.
	The target company is NIPRO MEDICAL CORPORATION.
(2) Implemented accounting treatment
This merger was processed as a transaction under common control, based on the “Accounting Standard
for Business Combinations” (ASBJ Statement No. 21, January 16, 2019) and the “Guidance on AccountingStandard for Business Combinations and Accounting Standard for Business Divestitures” (ASBJ
Guidance No. 10, January 16, 2019).

*Medical-Related
The domestic division sells injection and infusion products, artificial organ products, highly functional
products, dialysis products, diabetic products and pharmaceuticals such as generic and kit products. In
the Global business division, the head office plays the central role, placing overseas sales andmanufacturing bases for medical equipment and sales injection and infusion products, artificial organ
products, and diabetic products.
*Pharmaceutical-Related
The pharmaceutical division sells pharmaceutical products with containers for combination products(injectable kit products) consigned by other pharmaceutical companies. Domestic manufacture and sell
injectable drugs, oral drugs and combination products.
*PharmaPackaging
The PharmaPackaging division sells glass for vials and ampoules for medical use, glass for thermos
bottles, glass for lighting and containers for combination products (injectable kit products). Overseas
subsidiaries manufacture and sell tube glass and glass mainly for syringes, vials and ampoules for
medical use.
From fiscal year ended March 31, 2022, Nipro JMI Pharma Ltd., which was formerly categorized underthe medical-related segment, has been categorized under the pharmaceutical-related segment as aresult of the revision of the Nipro Group organizational structure.
The presentation for the prior fiscal year is restated in accordance with the change above.

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
Reporting

NIPRO Annual Report 2022

Financial/Data
SectionManagement
Foundation

66● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements
Business segment information for the years ended March 31, 2022 and 2021 was as follows:
Millions of yen

2022
Reportable segment

Other
(*1)

Medical-Related

Pharmaceutical-Related

PharmaPackaging

Total¥373,481¥ 74,386¥46,361¥494,230

6,367

20,5886,130

33,087¥379,849¥ 94,975¥52,492¥527,317¥

Operating income (loss)¥ 39,241¥

9,826¥ 2,889¥ 51,956¥

Identifiable assets

541,948

203,745

83,255

828,949

Depreciation and amortization

20,117

13,397

4,822

38,337

Amortization of goodwill

2,554

31

266

2,851

Increase in tangible and intangible fixed assets

56,822

23,362

9,319

89,504

Total

Adjustment(*2)

Consolidated
financial statements

Net sales:
OutsideIntersegment
Total

¥

559

¥494,789

2,095

35,183¥(35,183)—¥494,789—

2,655¥529,972¥(35,183)¥494,789101¥ 52,058¥(28,175)¥ 23,882

158,355

987,304(56,983)

930,321299

38,636

4,676

43,313

—

2,851

—

2,851

281

89,786

7,006

96,793

Other items

Thousands of U.S. dollars (Note 1)

2022
Reportable segment

Other
(*1)

Medical-Related

Pharmaceutical-Related

PharmaPackaging

Total$3,051,571$ 607,786$378,801$4,038,160

52,030168,219

50,093

270,343$3,103,602$ 776,006$428,895$4,308,503$

Operating income (loss)$ 320,628$

80,284$ 23,606$ 424,519$

Identifiable assets

4,428,045

1,664,724

680,248

6,773,017

Depreciation and amortization

164,369

109,468

39,399313,237

Amortization of goodwill

20,867

254

2,177

23,294

Increase in tangible and intangible fixed assets

464,273

190,889

76,144

731,307

Total

Adjustment(*2)

Consolidated
financial statements

Net sales:
OutsideIntersegment
Total

$

4,569

$4,042,729

17,124287,467$(287,467)—$4,042,729—

21,693$4,330,196$(287,467)$4,042,729

829$ 425,348$(230,212)$ 195,136

1,293,856

8,066,874(465,587)

7,601,286

2,447

315,684

38,211

353,896—

23,294—23,294

2,303

733,61057,246

790,857

Other items

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
Reporting

NIPRO Annual Report 2022

Financial/Data
SectionManagement
Foundation

67● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements

Millions of yen

2021
Reportable segment
PharmaPackaging

Total

Other
(*1)

Total

Adjustment(*2)

Consolidated
financial statements

Medical-Related

Pharmaceutical-Related¥343,824¥ 72,388¥38,655¥454,867

691¥455,559

6,117

18,4836,151

30,753

1,656

32,409(32,409)—¥349,942¥ 90,871¥44,807¥485,621¥ 2,347¥487,968¥(32,409)¥455,559

Operating income (loss)¥ 38,879¥ 10,608¥ 1,992¥ 51,480¥

376¥ 51,856¥(24,229)¥ 27,627

Identifiable assets

481,459

187,787

68,127

737,374

56,214

793,588

60,807854,396
39,849Net sales:
OutsideIntersegment
Total

¥

¥

—

¥455,559

Other items
Depreciation and amortization

18,231

12,237

4,244

34,713279

34,993

4,855

Amortization of goodwill

2,423

30

324

2,777

—

2,777

—

2,777

Increase in tangible and intangible fixed assets

47,93820,8945,450

74,283

127

74,411

4,449

78,861(*1) “Other” is the business segment which is not included in a reportable segment and consists of real estate income and sales by headquarters.
(*2) Adjustment is as follows:• Adjustments for operating income ended March 31, 2022 and 2021 include ¥(2,173) million (US$(17,754) thousand) and ¥371 million of adjustment for unrealized gain and ¥(26,002) million (US$(212,451) thousand) and ¥(24,601) million of corporate cost, respectively. Corporate
cost consists primarily of sales, general and administrative expenses and research and development costs which do not belong to a reportable segment.
• Adjustments for Identifiable assets ended March 31, 2022 and 2021 include ¥(157,649) million (US$(1,288,087) thousand) and ¥(53,589) million of elimination of inter-segment transactions and ¥100,666 million (US$822,501 thousand) and ¥114,397 million of corporate assets,
respectively. Corporate assets consisted primarily of cash and deposits, investment securities, assets for development, and assets for the management division of head office which do not belong to a reportable segment.
• Adjustments for depreciation and amortization ended March 31, 2022 and 2021 are for corporate assets. Depreciation and amortization and Increase in tangible and intangible fixed assets include long-term prepaid expenses.
• Adjustment for increase in tangible and intangible fixed assets is increase in corporate assets.

Contents

Management
Message

About NIPRO

Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section68● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements
Loss on impairment of fixed assets and Unamortized balance of goodwill by reportable segments wereas follows:

Net sales and Property, plant and equipment by geographical areas were as follows:
Millions of yen

2022

Millions of yen
Japan

2022
Reportable segment
Medical-Related

PharmaceuticalRelated

PharmaPackaging

Loss on impairment of
fixed assets¥ 1,335¥—¥—

Unamortized balance of
goodwill

13,223

32

1,804

Other

Adjustment

Total¥ 1,335¥1,178¥—¥ 2,514

15,060——15,060

Total

Thousands of U.S. dollars (Note 1)

2022

Americas

Europe

Asia

Total

Net sales¥280,094¥78,242¥60,376¥76,075¥494,789

Property, plant andequipment

250,123

22,29429,29476,039377,752

Thousands of U.S. dollars (Note 1)

2022
Japan

Americas

Europe

Asia

Total

Net sales$2,288,544$639,285$493,316$621,583$4,042,729

Property, plant andequipment

2,043,662

182,157

239,355

621,287

3,086,462

Reportable segment

Loss on impairment of
fixed assets
Unamortized balance of
goodwill

Medical-Related

PharmaceuticalRelated$ 10,910$ —PharmaPackaging

$

—

Total

$ 10,910

Other

Adjustment

Total
Millions of yen$9,624$—2021$ 20,541
Japan

108,046264

14,742

123,053——

123,053

Americas

EuropeAsia

Net sales¥270,543¥71,572¥52,167¥61,275¥455,559

Total

Property, plant andequipment

232,738

18,042

23,876

61,249335,706

Millions of yen

2021

15. Selling, General and Administrative Expenses

Reportable segment
Medical-Related

PharmaceuticalRelated

PharmaPackaging

Total

Other

Adjustment

Total

Loss on impairment of
fixed assets

¥

234

¥—

¥1,202¥ 1,437¥—¥—¥ 1,437

Unamortized balance of
goodwill

13,34561

158

13,565——

13,565Significant components of selling, general and administrative expenses for the years ended March 31,
2022 and 2021 were as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

Salaries

2022

2021

2022

¥23,038¥20,396$188,239

Contents

About NIPROManagement
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section69● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements
16. Research and Development Expenses

18. Revenue Recognition Breakdown

Research and development expenses for the years ended March 31, 2022 and 2021 were ¥18,734
million (US$153,075 thousand) and ¥18,652 million, respectively.

(1) Revenue from contracts with customers
Sales by product17. Impairment Loss

Millions of yen

2022

For the years ended March 31, 2022 and 2021, the Company and its consolidated subsidiaries recorded
impairment loss of ¥2,514 million (US$20,541 thousand) and ¥1,437 million, respectively.
The following table presents the major impaired assets.
Millions of yen

Purpose of use

Business use

Location

Nipro Medical Corporation

Type of asset

2022

2022

AmountAmount¥491

Intangible assets

Thousands of
U.S. dollars (Note 1)

Millions of yen

2021
Business use

Location

Jilin Nipro Jiaheng
Pharmaceutical Packaging Co., Ltd.

Type of asset

Buildings and structures, Machineryand equipment

Medical-Related

PharmaceuticalRelated

Amount¥1,202

Subtotal

Others(*1)

Total¥278,092—¥ 3,065¥281,158¥ —¥281,158

Medical products

95,31674,386438

170,141—

170,141

Pharmaceutical Packaging Products

29—

42,73942,769—42,769Others

43

—

117

160

113

274

Others

—

—

—

—

445

445

¥373,481¥74,386¥46,361¥494,230¥559¥494,789

Others(*1)

Total

Sales to external customers¥

PharmaPackaging

Medical devices$4,014

The assets for business use are divided into groups on which separate financial information is reported for management accounting
purposes, whereas leased assets and idle assets are categorized individually. Headquarters assets, R&D facilities, dormitories, andcompany-offered houses are categorized into assets for common use, since these assets cannot generate identifiable cash flows.
The company recognized the impairment loss, since the economic performance of above-mentioned assets will be worse than what
the company originally expected.
The recoverable amount of an asset group is measured by its net selling price or its value in use. In the case that the recoverable
amount is net realizable value, it shall be based on appraisal value. Whether the recoverable amount is the value in use, it is calculated bydiscounting future cash flow by approximately 5%.

Purpose of use

Reportable segments

Thousands of U.S. dollars (Note 1)

2022
Reportable segments
Medical-Related

PharmaceuticalRelated

Subtotal

Medical devices$2,272,179—$ 25,043$2,297,230—$2,297,230

Medical products

778,789

607,778

3,579

1,390,154—

1,390,154

Pharmaceutical Packaging Products

237—

349,203349,448—

349,448

Others

351

—

956

1,307

923

2,239

Others

—

—

—

—

3,636

3,636

$3,051,565$607,778$378,797$4,038,157$4,567$4,042,724

Sales to external customers(*1) Other income refers to income from rentals, etc.

$

PharmaPackaging$

Contents

Management
Message

About NIPRO

Outline of theMedium-Term
Management Plan

Review ofOperations

Social Bond
ReportingManagement
Foundation

NIPRO Annual Report 2022

Financial/Data
Section70● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Notes to Consolidated Financial Statements(3) Outstanding balance of Accounts Receivable and Contract Liabilities

Sales by region
Millions of yen

Millions of yen

2022
Reportable segments
PharmaPackaging

Subtotal

Others(*1)

Total¥11,482¥279,535¥113¥279,649

Accounts Receivable

Medical-Related

PharmaceuticalRelatedJapan¥198,985¥69,067

America

69,14325

9,073

78,242—

78,242Europe43,046316

17,01460,376—60,376

Asia

62,305

4,977

8,791

76,075—76,075

—

—

—

—

445

445

¥373,481¥74,386¥46,361¥494,230¥559¥494,789

OthersSales to external customers

2022
Reportable segments
Medical-Related

PharmaceuticalRelated

PharmaPackaging

Subtotal

Others(*1)

Total$1,625,827$564,319$ 93,815$2,283,969$ 923$2,284,901

America

564,940

204

74,132

639,284—

639,284

Europe351,7122,582

139,015493,308—

493,308

Asia

509,069

40,66571,828621,579—

621,579

—

—

—

—

3,636

3,636

$3,051,565$607,778$378,797$4,038,157$4,567$4,042,724

Others¥140,521¥140,285——

Customer Advances

3,074

2,115

Deferred Revenues

263

284

Contract Liabilities

Thousands of U.S. dollars (Note 1)

Accounts Receivable

Sales to external customers

Ending Balance(March 31, 2022)

Beginning Balance(April 1, 2021)

Ending Balance(March 31, 2022)$1,148,141$1,146,213——

Customer Advances

25,116

17,281

Deferred Revenues

2,149

2,320

Contract Liabilities

Thousands of U.S. dollars (Note 1)

Japan

Beginning Balance(April 1, 2021)(*1) Contract liabilities consist mainly of received from customers advance payments for medical supplies and equipment. They also
include unearned income for maintenance service contracts.
(*2) The beginning balance of contract liabilities is not significant in relation to total revenues.

(4) Unfulfilled performance obligation
The Group does not have any significant outstanding performance obligations which exceed one year.
Most contracts are within one year.

(*1) Other income refers to income from rentals, etc.

(2) Foundational information to understand revenue from contracts with customers
Foundational information to understand revenue from contracts with customers is described in “2.
Summary of Significant Accounting Policies (o) Revenue Recognition.

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

Millions of yen

2022

2021

2022

Interest¥3,981¥3,871$32,529

Income tax

5,326

4,207

43,520Cash paid during the year for:

Contents

About NIPROManagement
Message

Review ofOperations

Outline of theMedium-Term
Management Plan

Social Bond
Reporting71● Financial Review● Ten-Year Summary● Consolidated Balance Sheets● Consolidated Statements of Income

Financial/Data Section

Corporate Information

Principal Shareholders(As of March 31, 2022)

Head Office
3-9-3 Honjo-nishi, Kita-ku, Osaka 531-8510, Japan
Telephone: +81-6-6372-2331
Facsimile: +81-6-6375-0669
https://www.nipro.co.jp/en/
Tokyo Office
4-3-4 Hongo, Bunkyo-ku, Tokyo 113-0033, Japan
Telephone: +81-3-5684-5611
Facsimile: +81-3-5684-5610● Consolidated Statements of Comprehensive Income● Consolidated Statements of Changes in Net Assets● Consolidated Statements of Cash Flows● Notes to Consolidated Financial Statements● Corporate Information

Stock Price Range (Tokyo Stock Exchange)

Number ofPercentage ofShares Held Total Shares in(in thousands)
Issue (%)
The Master Trust Bank of Japan, Ltd. (Trust Account)
20,18012.33
Nippon Electric Glass Co., Ltd.
17,135
10.47
Custody Bank of Japan, Ltd. (Trust Account)
9,888
6.04
JP Morgan Chase Bank 385632
4,170
2.55
Resona Bank Limited
3,129
1.91
NIPRO CORPORATION Employee Stock Ownership Association
2,379
1.45
Kazumi Sano
1,910
1.17
STATE STREET BANK WEST CLIENT-TREATY 505234
1,712
1.05
JP Morgan Chase Bank 385781
1,546
0.94
STATE STREET BANK WEST CLIENT-TREATY 505223
1,048
0.64
Total
63,101
38.55

Date of Establishment
July 8, 1954

(Yen)

1,800
1,600
1,400
1,200
1,000
800
12

3

2020

6

9

12

3

6

9

12

2021

Major Group Companies (As of March 31, 2022)
Area

Number of Employees
Parent company

4,252

Consolidated subsidiaries

32,007

Total

36,259Common Stock
Authorized...............................400,000,000 shares
Issued......................................171,459,479 shares
Outstanding............................163,096,777 shares
Number of Shareholders.................. 76,211
Stock Listings
Tokyo Stock Exchange, Prime Market (as of April 22, 2022)
Ticker Code: 8086
Transfer Agent
Mizuho Trust & Banking Co., Ltd., Head Office
Stock Transfer Agency Dept.
1-2-1, Yaesu, Chuo-ku, Tokyo 103-8670, JapanNIPRO Annual Report 2022

Financial/Data
SectionManagement
Foundation

Country

DomesticJapan

Overseas

Thailand
China

VietnamSingapore
India

BangladeshIndonesia
UAE
BrazilU.S.A.

CanadaBelgium

FranceGermany
RussiaName
Nipro Medical Industries Co., Ltd.
Goodman Co., Ltd.
Nipro Pharma Corporation
Zensei Pharmaceutical Industries Co., Ltd.
Cell Science & Technology Institute, Inc.
NexMed International Co., Ltd.
Nipro (Thailand) Corporation Limited
Nipro Sales (Thailand) Co., Ltd.
Nipro (China) Holdings Co.,Ltd
Nipro (Shanghai) Co., Ltd.
Nipro Trading (Shanghai) Co., Ltd.
Nipro PharmaPackaging (Shanghai) Co., Ltd.
Jilin Nipro Jiaheng Pharmaceutical Packaging Co., Ltd.
Chengdu Pingyuan Nipro Pharmaceutical Packaging Co., Ltd.
Nipro Medical (Hefei) Co., Ltd.
Nipro Vietnam Company LIMITED
Nipro Pharma Vietnam Co., Ltd.
Nipro Asia Pte Ltd.
Nipro India Corporation Private Limited
Nipro PharmaPackaging India Private Limited
Nipro Medical (India) Pvt. Ltd.
Nipro JMI Co., Ltd.
Nipro JMI Pharma Ltd.
PT. Nipro Indonesia JAYA
Nipro Middle East FZE
Nipro Medical Ltda.
Nipro Holding Americas, Inc
Nipro Medical Corporation
Nipro PharmaPackaging Americas Corporation
Infraredex, Inc.
CardioMed Supplies INC.
Nipro Europe Group Companies N.V.
Nipro PharmaPackaging International N.V.
Nipro Medical Europe N.V.
Nipro PharmaPackaging France S.A.S.
Nipro PharmaPackaging Germany GmbH
Nipro PharmaPackaging Ural LLC

Principal business
Manufacturing and marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of pharmaceuticals
Manufacturing and marketing of pharmaceuticals
Development and manufacturing of cell culture media
Development, manufacturing and marketing of orthopedic products
Manufacturing and marketing of medical devices
Marketing of medical devices
Business management
Manufacturing and marketing of medical devices
Marketing of medical devices
Marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of pharmaceuticals
Marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of PharmaPackaging products
Marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of pharmaceuticals
Manufacturing and marketing of medical devices
Marketing of medical devices
Manufacturing and marketing of medical devices
General management of the subsidiaryMarketing of medical devices
Manufacturing and marketing of PharmaPackaging products
Development, Manufacturing and marketing of medical devices
Manufacturing and marketing of medical devices
General management of the subsidiary
General management of the subsidiaryMarketing of medical devices
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products

32022