Third Quarter Consolidated Financial Results
for the Fiscal Year Ending March 31
31, 2019
1. Overview of consolidated results
2. Highlights of Business Performance
3. Main Product Sales Update
4 Development pipeline
4.
5. Segment information
6. Financial summary and Forecasts

February 5, 2019

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

Outline of Third Quarter Consolidated Financial Results
for the Fiscal Year Ending March 31, 2019(revised forecast)

YoY change(%)(original forecast)

－1.1
1.1

110,600
0,600

－0.0

114,400,

6,794

－13.0

8,200

－7.1

8,600

8,246

7,124

－13.6

8,600

－8.0

9,200

6,119

5,112

－16.5

6,100

－7.2

6,600

Dec/2015

Dec/2016

Dec/2017

Dec/2018

YoY change(%)

Net Sales

89,46986,83682,92382,017

Operating Income

14,666

7,313

7,805

Ordinary Income

14,946

7,716

Net Income

10,831

4,723（¥ million）

Mar/2019

Mar/2019

Third Quarter Consolidated Financial Results for the Fiscal Year Ending March 31, 2019[NetN SSales]l ] Sales
S l off new ddrugs (i(in JJapan)) were hihigherh thanh theh year-ago levelllb
because revenues ffrom our maini productdFlFlutiform
ifgrew steadily
dil andd sales
l off
the new overactive bladder drug Beova also contributed to growth. Revenues from generic medicine also increased. However, sales of new drugs (overseas)
decreased mainly due to the absence of a lump-sum payment for progress in the development of a license-out product recorded the previous fiscal year, andoverall net sales fell 906 million yen (or 1.1%) year on year, to 82,017 million yen.
[Profit] Gross profit fell 3,648 million yen year on year, reflecting a higher cost of sales ratio as a result of National Health Insurance (NHI) price revision anda decrease
diin llump-sum payments forf progress ini theh ddevelopment
loff lilicense-out products
drecordedd d theh previousi
fifiscall year. M
Meanwhile,hil SG&A expenses
decreased 2,637 million yen year on year (including a reduction of 2,316 million yen in R&D expenses) thanks to cost-cutting initiatives, and operating income
was 6,794 million yen, down 1,011 million yen (or 13.0%) year on year. Profit attributable to owners of parent amounted to 5,112 million yen (down 16.5%
from the year-ago level).

Consolidated Financial Results for the Fiscal Year Ending March 31,
31 2019 (forecast)
The Company revised its consolidated financial results forecast for the fiscal year ending March 31, 2019 announced on May 10, 2018
【Net sales】In light of business results for the first nine months of the current fiscal year and the recall of DESALEX, the Company revised its net salesforecast.
【Profit】The Company revised its profit forecast as shown above, as it expects that gross profit will decrease due to the downward revision of sales but thatSG&A expenses will be less than initially forecast thanks to cost-cutting initiatives implemented since the beginning of this fiscal year.
【Dividend】There is no change to the dividend forecast (end of second quarter: 30 yen per share; annual dividend: 75 yen per share) announced on July 31,
2018.

1

Highlights of Business Performance（ Units: ¥ billion ）Net Sales decreased ¥0.9billion year on year.
Cost of sales ratio increased 3.9%.
・ Drug price revisions
・Decrease
Decrease in lump-sum
lump sum revenue due to out
outlicensed product in the previous year

Cost of Sales

36 4
36.4

Cost of Sales

39.2

Cost of Sales Ratio

43.9%

47.8%

Net sales

82.9

82.0

10.1
(excluding R&D)

R&D

7.7
SG&A

38.7

28.6
Operating
IncomeDec/2017■Gross Profit decreased ¥3.6billion year onyear

Net sales

R&D

SG&A

Cost of sales ratio increased 0.2%.

Cost of Sales Ratio

SG&A(excluding R&D)

28 3
28.3

SG&A

36.1
OperatingIncome

SG&A expenses decreased ¥2.6billion yearon year.
・ Efforts to reduce costs
・ R & D expenses decreased ¥2.4billion
・SG&A(excluding R&D) decreased ¥0.3billion■Operating Income decreased¥1.0billion year on year.

Dec/20182

Consolidated Financial Results
for the Third Quarter ending March 31, 2019
（unit : ¥ billion）
Dec/2017

Dec/2018

Change■Net Sales¥82.0blnYear on Year(－ 0.9)

◆Ethical drugs business¥77.6bln(－ 0.9)¥55 5bln¥55.5bln(＋ 0.7)0 7)¥0.6bln(－ 2.5)● Sales of new ethical drugs
Dec/2017⇒Dec/2018

Net Sales (total)

82.9

82.0－0.9

Ethical drugs
Business

78.5

77.6

－00.9
9

◆Sales of newethical drugs

57.9

56.2－1.7●Japan54.8

55.5

＋0.7

●Sales of new ethical drugs in Overseas

3.1

0.6－2.5●Sales of Generic drugs●Overseas・ Flutiform
・ Uritos
・ Desalex
・ Kipres・ Pentasa
・ Mucodyne
・ Nasonex･ Beova

8.95.62.1
14 2
14.2
12.2
6.6
－－⇒⇒
⇒⇒
⇒
⇒⇒
⇒

9.8
5.1
4.8
10 0
10.0
10.5
5.1
4.1
0.7

(＋0.9)(－0.5)(＋2.7)((－44.2)
2)(－1.7)(－1.5)(＋4.1)(＋0.7)

・ Decrease in lump-sum revenue due to out-licensed product in the previous year

¥21.4bln(+ 0.8)・Increase sales of generic drugs released this fiscal year

◆Generic drugs

HealthcareBusiness

20.6
4.4

21.4
4.4

＋0.80

◆Healthcare Business¥4.4bln(+■Operating Income¥6.8bln(－ 1.0)0)◆Operating Income margin decreased 1.1 percentage points to 8.3%
●Cost of Sales Ratio : 43.9%⇒47.8% increased 3.9 percentage points

Operating
Income

78
7.868
6.8

－1.0
10Ordinary
Income

8.2

7.1

－1.1

Net
Income6.1

・ Drug price revisions
・ Decrease in lump-sum revenue due to out-licensed product in the previous year
・ Decrease in loss on retirement of inventories●R&D Ratio : 12.1%⇒9.4% decreased 2.7 percentage points＊¥10.1bln⇒¥7.7bln（－¥2.4bln）

5.1

－1.0

・Progress of development project (previous year).

●SG&A Ratio : 34.5%⇒34.5% Flat＊¥28.6bln⇒¥28.3bln（－¥0.3bln）■Net Income

・Decrease of Labor costs, Selling costs.

¥5.1bln(－ 1.0)3

Revision of Consolidated Business Results Forecasts
for Fiscal Year Ending March 31, 2019
（unit : ¥ billion）
Mar/2018

Net Sales (total)

Ethical drugs
Business

110.6

Mar/2019

Mar/2019(originalforecast)(revisedforecast)

114.4

110.6

Change－3.8

104.7

108.4

104.6

－3.8

◆Sales of new
ethical drugs

77.0

80.9

77.1

－3.8

○Japan

73.7

79.9

76.1

－3.8

○Overseas

3.3

1.0

1.00

◆Generic drugs

27.7

27.427.40Healthcare
Business

5.9

6.0

6.00

Operating
Income

8.8

8.6

8.2

－0.4

Ordinary
Income

9.3

9.2

8.6

－0.6

Net
Income

6.6

6.6

6.1

－0.5

【Main points of forecast revision】■ The Company revised its business results forecast in light ofbusiness results for the first nine months of the current fiscal year
and the voluntary recall of Desalex Tablets 5mg for the treatmentof allergic diseases (see the news release dated January 7, 2019
for further details).
[N sales][Netl ]For the reason stated above, in the ethical drugs business,revenues from core products such as PENTASA and DESALEX
are now expected to be less than forecast.
[P fit ][Profits]
The Company revised its profit forecasts as shown in the abovetable as it expects that gross profit will decrease due to thedownward revision of sales but that SG&A expenses will be lessthan initially forecast thanks to cost-cutting initiatives
implemented since the beginning of the current fiscal year
year,
The Company is currently consulting MSD K.K., which is theholder of marketing approval for DESALAX, regarding action tobe taken in response to the voluntary recall and suspension ofsales for DESALEX,DESALEX and will promptly disclose any new
information that requires disclosure.

4Main Product Sales Update
Mar/2019

Dec/2018(%)
ChangeMar/2019

ChangeMar/2018(revisedforecast)(originalforecast)

89
8.9

98
9.8

＋0 9＋0.9＋9 8＋9.8

11 9
11.9

12 3
12.3

12 3
12.3

3.5

5.6

5.1

－0.5

－8.7

7.2

6.8

6.8

09
0.9

28
2.8

21
2.1

48
4.8

＋231.5＋2.7
249
4.9

48
4.8

81
8.1

Kipres for adult

3.9

2.9

6.1

4.4

－1.7

－27.0

8.3

6.0

6.0

Kipres for children

5.1

3.3

8.1

5.5

－2.6

－31.4

10.5

7.2

7.2

8.0

7.1

12.2

10.5

－1.7

－13.9

15.3

13.7

14.5

M
Mucodyne
d

3.9

3.1

6.6

5.1

－1.5

－22.0

8.7

7.2

7.2

Nasonex

－

1.3

－

4.1

＋4.1

－－

10.1

10.1

－

－

－

0.7

＋0.7

－

－

0.8

0.8

50
5.0

53
5.3

82
8.2

83
8.3

＋0 1
＋0.1

＋1 3
＋1.3

11 7
11.7

98
9.8

98
9.8

1.1

1.1

1.7

1.7

0＋0.7

2.2

2.3

2.3 5（Units: ¥billion）
Flutiform(Combination drug for asthmatreatment)

Uritos（Kyorin）(Overactive bladder)

Desalex(Antiallergic Agent)

Salesofnew
ethicaldrugs(Japan)（LT receptor antagonist）（LT receptor antagonist）

Pentasa(Ulcerative colitis and Crohnʼsdiseasetreatment)（Mucoregulant）(Spray type allergic rhinitis remedy)

Beova※（selective β3-adrenergic receptor agonist
for the treatment of overactive bladder）

Sep/2017

Sep/2018

Dec/2017

54
5.4

61
6.1

3.6

※ released in November 2018

GenericDDrugs

MONTELUKAST
Tablets “KM”
KM

Over-thecounterdrugs

Milton(Disinfectant)

Main R&D Activities -1 (as of February 5 2019)Ph III ~ Application submitted
Stage※Changes from the previous announcement (Nov 5 2018)

Compound/CodeTherapy area
/ActionApplication(4/2017)

KRPAM1977X(Oral agent）

New quinolone
synthetic
antibacterial
agent

In-house

Preparing forApplication

KRPAM1977Y(Injection）

New quinolone
synthetic
antibacterial
agent

In-house

PhⅢ(3/2017)

KRP-116D

Interstitial
cystitis―

Evaluation committee on unapproved or off-labeled
drugs with high medical needs“Dimethyl sulfoxide(DMSO)”※
Preparing forApplication

KRP-108P

Anti-asthmatic((U.K.))
Vectura

Expand the indication of Flutiform to pediatric patientsJapanOverseas

OriginFeatures

Comments-Superior ability to combat drug-resistant grampositive
iti bbacteriat i (i(incl.
l MRSA)-has a powerful antimicrobial activity against
anaerobic bacteria- Expectation of high clinical effects with excellent
tissue penetration-High degree of safety expected since safety hurdles
cleared prior to clinical trials※ Overactive bladder therapeutic agent "Beova tablets 50mg": released in November 20186Main R&D Activities -2 (as of February 5 2019)
POC Project (Ph I ~ Ph II)
StageJapan

Overseas

Compound/CodeTherapy area/Action※Changes from the previous announcement (Nov 5 2018)

OriginFeatures

CommentsPhⅡ(8/2018)

KRP-N118(SK-1404)

Nocturia Dueto Nocturnal
yPolyuria

SANWA
KAGAKUKENKYUSH
O CO., LTD.

A vasopressin V2 receptor agonist that promotes the reabsorption of waterby the collecting duct of the kidney to reduce the amount of urine(antidiuretic action). With its high efficacy and safety, the drug is expectedt betob a ththerapeuticti agentt ffor nocturia
t i duedtto nocturnal
tl polyuria.
li・License agreement withSANWA KAGAKUKENKYUSHO CO., LTD,(3/2018)

PhⅡ（6/2018）

Ad-SGE-REIC

malignantpleuralmesothelioma

Okayama
UniversityA gene-therapy product using a novel tumor suppressor gene of reduced
expression in immortalized cells/ Dickkopf-3 (REIC/Dkk-3), which wasdiscovered by researchers from Okayama University, as a therapeutic gene.
It is expected
pto have direct effect on pprimaryy tumor lesions and indirect
effect on metastatic tumor lesions as a gene-therapy product thatsimultaneously induces tumor cell-selective apoptosis and the activation ofantitumor immunity respectively.

Adopted to Next
generation Technology
Transfer Program((NexTEP))(6/2014)【US】
Momotaro-Gene
prostatecancer(PhⅠ/Ⅱ)【JP】
Okayama University
liver cancer(PhⅠ/Ⅰb)

Licensing development
Stage/
Overseas
PhⅠ

Compound/
Code
FPR-2 agonist
programLicensee /Collaborative
researchBMSTherapyarea/Action
Nondi ldisclosure

OriginIn-house

Features
FPR-2 agonists that mainly inhibit themigrationi ti off neutrophils
t hil andd exhibit
hibit antitiinflammatory action.

Comments
License agreement with BMS(12/2015)

7

Segment information
for the Third Quarter Ending March 31, 2019
Sales,, Profit or Loss of each report
psegmentg（unit : ¥billion）

Sales

change Y/YProfitchange Y/Y

Net Sales (total)

82.0

－0.9

6.8

－1.0

Ethical drugs business

77.6

－0.9

6.3

－1.0

56.2

－1.7

○
○Overseas

55.5
0.6

＋0.7
－2.5

◆Generic drugs

21.4

＋0.8

4.4

00.20ーー0.30◆Sales of new ethical drugs○JapanHealthcare businessAmount of adjustment

8Consolidated Financial Results
for the Third Quarter ending March 31, 2019Mar/2019

Mar/2019(revisedforecast)(originalforecast)

110,640

110,600

114,400－1.1

104,703

104,600

108,400－1,737－3.0

77,041

77,10080,90055 53555,535＋737＋1 3＋1.3

73 70273,70276 10076,10079 90079,9003,104

629－2,475

－79.7

3,339

1,000

1,000

13 552
13,55220 582
20,58221 436
21,436＋854＋4 1＋4.1

27 662
27,66227 40027,40027 40027,400

2,781

2,779

4,438

4,415

－23

－0.5

5,937

6,000

6,000

Operating Income

1,443

2,852

7,805

6,794

－1,011

－13.0

8,822

8,200

8,600

Ordinary Income

1,693

3,183

8,246

7,124

－1,122

－13.6

9,345

8,600

9,200

Net Income

1,240

2,217

6,119

5,112

－1,007

－16.5

6,574

6,100

6,600

Sep/2017

Sep/2018

Dec/2017

Dec/2018

Change% Y/Y

Mar/2018

Sales

50,75850,36082,92382,017－906－1.1

Ethical drugs
business

47,97747,581

78,48477,601－883

ethical drugs

34,972

34,02857,90256,165●Japanp

34 44934,44933 42433,42454 79854,798523

604

13 00513,005healthcare business（unit : ¥million）◆Sales of new●Overseas◆Genericdrugs

9