FY2023
ESG Meeting
October 3rd, 2023
NIPPON SHINYAKU CO., LTD.

Today's Agenda

1. Nippon Shinyaku's Value Creation and Promoting
Sustainability
2. Initiatives for Materiality
3. Exchange of views

2

Nippon Shinyaku’s Value Creation andPromoting Sustainability

Business philosophy
Helping People Lead Healthier, Happier Lives
1919

1940

2016

2020

In an era when new drugs
originating in Japan werelimited, Nippon Shinyaku
was established as an
R&D-oriented company
and started thePharmaceutical business.

In 1940, Nippon Shinyaku
succeeded in
manufacturing Santonin in
Japan, a varmcide forroudworms, which
contributed greatly to the
reduction of Japan’sroundworm infection rate
and to the growth of ourbusiness performance.

Uptravi for PAH *, launchedin 2016, is now sold in over
70 countries and has
become a blockbuster
product with sales inexcess of $1 billion a year.

We launched Viltepso, thefirst nucleic acid drug
manufactured in Japan for
DMD** , in May 2020. Then,
we also started to sell it in
the United States in August2020.

As an R&D-oriented Pharmaceutical company, we will contribute to society by creating innovative
new drugs for patients suffering from illnesses and delivering them from Japan to the world.
*PAH : Pulmonary arterial hypertension **DMD : Duchenne muscular dystrophy

4Our corporate vision
Nippon Shinyaku's Vision
A company with a meaningful existence in the global healthcare field
Corporate Philosophy

Belief for realizing our visionHelping People Lead Healthier, Happier Lives

Management Policy

Basic Policy for realizing our vision

・Customers: Supply Unique and High-quality Products
・Society: Earn the Trust of Society
・Employees: Develop Each Employee

Guidelines for Action

Formulated in March, 2023
Sustainability Policy

Guided by its Corporate Philosophy “Helping People Lead Healthier,Happier Lives,” the Nippon Shinyaku Group strives to ensuresustainable growth as a “company with a meaningful existence inhealthcare.” Recognizing responses to environmental and social
issues as material in its management, the Group aims to realize asustainable society (omitted below)

Guidelines for realizing our vision

・Challenge
・Speed・Investigation
・SmileManagement plan

Policy to clarify the stance ofpromoting sustainability management

Material issues for growing
sustainably with society

Scenario for realizing our vision

Sixth Five-Year Medium-Term Management Plan (FY2019-FY2023)

In March, 2023
Revision of Materiality

・Realizing a healthy future by creating innovation
・Developing diverse human resources and realizing employee
well-being
・Resolving social issues and coexisting with the community
・Strengthening efforts to protect the global environment
・Strengthening governanceWe aim to realize our vision “A company with a meaningful existence in the global healthcare field”
through providing new and unique products by pursuing originality. And now, we developed
Sustainability Policy to achieve our vision.
5

Revision of Sustainability Policy and materiality
In April 2021:
Identified 19 items as materiality

In January 2022:
Building sustainability promotion system
Board ofDirectors

19 items ofValue Creation
Environment
Society
Governance: 5 items: 4 items: 5 items: 5 items

・Analyzing risks and opportunities
・Listing issues

Sustainability
Committee

・Assessing the importance of issues
・Formulating promotion plans and execution

Operating
Departments

Revised materiality
In March 2023:•
The basic CSR Policy established in 2010 was
revised and became the “Nippon Shinyaku
Sustainability Policy”.
•
We revised materiality and identified 5 items
as issues of materiality① Realizing a healthy future by creating innovation② Developing diverse human resources and realizing employee
well-being③ Resolving social issues and coexisting with community④ Strengthening efforts to protect the global environment⑤ Strengthening governanceWe revised materiality considering shifts in the external conditions and the comprehensibility.
And, we promote sustainability through the promoting plan.
6

Nippon Shinyaku Sustainability Policy<Sustainability Policy>
Guided by its Corporate Philosophy “Helping People Lead Healthier, Happier Lives,” the Nippon Shinyaku Group
strives to ensure sustainable growth as a “company with a meaningful existence in healthcare.” Recognizing
responses to environmental and social issues as material in its management, the Group aims to realize asustainable society. To fulfill this aim, the Group conducts educational and awareness-raising activities intended forall employees to further develop consciousness of sustainability among them.
•
•
•
•
•

We will contribute to a healthier future for people around the world by creating innovations.
We will work to protect, preserve, and improve the global environment through our environmentally friendly
business activities centered around combatting climate change.
We will make an active commitment to communicating with society and local communities and nurturingchildren as future leaders.
We will enhance our governance and ensure the transparency and objectivity of our management to remain fully
accountable to all our stakeholders.
With full respect for the human rights of all people, we will promote diversity, equity, and inclusion and work toachieve well-being for all.

<Materiality>

7

Value Creation Process

We will create social value by providing highly unique pharmaceutical drugs in areas and fields withunmet treatment needs globally based on our fundamental technologies.
8Materiality and Nippon Shinyaku's growth
Realizing a healthy future by creating innovation
・Contributing to people‘s health through the creation of products and services with unique characteristics
・Maintaining a safe and high-quality supply of products ・Promoting DX・Strengthening patient support and advocacy activities based on Patient Centricity

Developing diverse humanresources and realizing
employee well-being

Unique products are produced
by a variety of talents• Creating an environment
where each person can growand play an active role
• Promoting Diversity, Equity &Inclusion• Achieving well-being

Resolving social issues andcoexisting with the community

Development of the sciencefield itself is required to produce
innovative new drugs• Contributing to field beyond
the provision of medicines• Improving medical access• Respecting human rights• Contributing to regions andcultures• Contributing to the future ofchildren

Strengthening efforts to protect
the global environment

We recognize our responsibility
toward the environment andwork to reduce theenvironmental impact• Climate change
countermeasures• Promoting resource
circulation• Conserving biodiversity• Contributing to food waste
reduction

Outputs
Launching New productImprove revenue

Outcomes
Providinga healthy future

Strengthening governanceWe can continue business activities even if various risks occur, as long as we ensure transparency inmanagement including our group companies.
・Promoting integrity
・ Strengthening risk management
・Appropriate information disclosure

Under robust governance, we promote business activities with consideration to human resources,
social and environment. This will lead to the realization of a healthier future by creating innovation.

9

Our initiatives for materiality and sustainable growth
We aim to expand revenue in the future
to 300 billion yen, and from there to
500 billion yen.

Revenue （FY2022）

144.175 billion yen
Operating Profit（FY2022）

30.049 billion yen

Net Sales/Revenue

Operating income

We aim to create sustainable value through promoting our initiatives
to solve our issues of materiality.
10

Our Initiatives for Materiality

Nippon Shinyaku Group’s Issues of Materiality

12Realizing a healthy future by creating
innovation•••

We will promote drug discovery using nucleic acid drugs, new modalities andmethods as well as small molecule drugs and R&D from the perspective ofPatient Centricity. In the end, we will contribute to the health of people withcreation of our products and services with unique characteristic.
We will develop the quality assurance system and supply chain so that we
supply safe and high-quality drugs globally.
Our digital vision is that we aim to fill the world with smiles by utilizing digitaltechnology and data and creating highly original products and services in thehealthcare sector. Based on this concept, we will promote DX.

13

Realizing a healthy future by creating
innovation
Contributing to people‘s health through the creation of products and services with unique characteristics
Main Activities

FY2022 Activities

Issues and FY2023 Strategies

 Promoting drug discovery utilizing
nucleic acid medicines, new modalities,
and new targets and methods
 Promoting drug discovery research andclinical trials based on Patient Centricity

 Enhanced technologies related to small molecules and nucleic
acids and introduced date-driven drug discovery
 Ventured into new drug discovery modalities, including genetherapy Established a drug discovery center in Boston, the heart of the
drug discovery ecosystem
 Strengthened human resource development initiatives in eachdepartment

 Diversifying in-house drug discovery by increasing access to theworld’s most advanced drug discovery innovations and increasing
opportunities for partnering Planning and implementing IP strategies that support drug
discovery utilizing a wider range of new modalities

Perspectives of Patient Centricity
We consider what we can do for patients and pursue what they want the most.
A project team consisting of members from various divisions was organizedin FY 2023 to lay the foundation for Patient Centricity activities.

Established “Innovation
Research Partnering” in the U.S.
as a base for new drug discovery

Providing opportunities to study
abroad for employees as a humanresources development program

14

Realizing a healthy future by creating
innovation
Initiatives based on the concept of Patient Centricity••

Based on the concept of Patient Centricity, we communicate with patients and theirfamilies directly. Since last year, we have held the e-sports competition for children
with handicap and in-house and public lectures to listen to the voice of the patients’families.
We will conduct activities along with the patients and their families with raisingawareness of Patient Centricity among employees. And, we will contribute to solve thesocial issues through promoting sustainability by every employee.
15Developing diverse human resources and realizing
employee well-being••

Based on the idea that unique products are the product of unique people, we
respects diversity in terms of sex, age, nationality, and beliefs, and provides
opportunities for individuals to take on challenges and grow in a positive
manner.
In order to create innovation and achieve sustainable growth, we are working topromote well-being and create an organizational climate in which employeeswith diverse values can thrive.

16

Developing diverse human resources and realizing
employee well-being
Creating an environment where each person can grow and play an active role
Main Activities






Fostering autonomous humanresources and global leaders who are
motivated to grow
Building a flexible and resilientorganization that can respond tochangePromoting diverse work styles tailoredto each individual
Realizing a workplace that is
comfortable and rewarding where
psychological safety is ensured

FY2022 Activities












Instilled the NS Mind
Create the NS Mind
Looked into NS Academy system
Revised the Next-Generation Leader Challenge program into
HONKI Juku
Established new programs to foster practical business skills
and a global mindset
Created new job descriptions
Evaluated the expertise needed for work tasks andexpanded the professional system to provide
appropriate employee treatment
Introduced a second job system
Promoted 1-on-1 meetings
Made a portion of childcare leave paid

With the desire to give one’s all, it is necessary for eachand every employee to experience even greater growth andleverage their unique individuality and strengths in theirwork with each other. It is also essential for the entire
company to come together as one team to maximize
performance. In order to convey this idea to our employees
in concrete terms, we created the NS Mind, a list ofprinciples which demonstrates the conduct, attitude, andawareness all employees should set as a goal.

Issues and FY2023 Strategies

 Increase the number of NS Academy participants Promoting the human resources who have taken part in the NextGeneration Leader Challenge Program and HONKI Juku to
middle management, executive, department manager, and otherleadership positions
 Increasing the number of PROGOS English speaking test-takers
 Increasing the number of participants in global mindset training Increasing the number of human resources able to flourish inglobal fields
 Implementing cross-departmental discussions on psychologicalsafety Introduction engagement surveys
 Expanding the number of departments utilizing the flextime
system17

Developing diverse human resources and realizing
employee well-being
Creating an environment where each person can grow and play an active role
[NS Academy]
Toward realizing self-directed careerdevelopment and placing of the rightemployee in the right position, we launched
the NS academy.

Four Themes of Human
Resource Development

Realizing employee
treatment in line withroles, duties, andaccomplishments

•
•
•
•

Job descriptions
Reforming wage
systemReducing numberof years forpromotions
Revising
evaluation system

Realizing self-directed
career development
and the placing of theright employee in theright position

•
•
•
•
•

Competency
surveys
NS Academy
Expanding theprofessional
systemWork experiencein otherdepartments
Second job system

Realizing a highly
psychologically safeorganization

•
•
•
•

1-on-1 meetings
Engagement
surveysInternal praiseapplication
Leadershipassessments

Realizing flexible work
styles••••Telecommuting
Flextime
Staggered working
hours
Supporting worklife balance

Three types of human resources
essential for its sustainable growth

Programs for each type spanning four categories

18

Developing diverse human resources and realizing
employee well-being
Promoting diversity, equity & inclusion
Main Activities

FY2022 Activities

 Fostering a culture that recognizes
individuals regardless of factors such asage, gender, values, or Disability

 Conducted project activities by the Personnel Department andemployees recruited from throughout the Company with the goalof employing people with disabilities and expanding their job
opportunities
 In order to instill DE&I throughout the Company- Held panel discussions with employees with disabilities and theCollaboration Department- Simulated experience of people with developmental disabilities
using VR
- Conducted Universal Manners (Level 3) training Conducted training on unconscious bias

Issue and FY2023 Strategies

 Promoting awareness of the importance of DE&I tohuman resources who have little experiencecollaborating in their own jobs or workplaces- Publicizing the Collaboration Department- Increasing the number of participants in Universal
Manners training

19

Resolving social issues and coexisting with thecommunity

•

•

•
•

We believe that not only research and development of drugs, also the development of thescientific field itself is indispensable to produce innovative drugs. Therefore, we will
present scientific knowledge in papers and academic societies and support medical andscientific study by the public research grant system.
We will implement a Viltepso Managed Access Program for DMD and improve medical
access.
As a signatory to the United Nations Global Compact, we support the ten principles in thefour area of responsibility. We will implement due diligence and internally education toprevent and mitigate adverse impacts associated business activities.
We believe that contributing to local communities, culture, and the future of children is an
essential aspect of fulfilling our corporate social responsibility, and we will strive to solve
social issues.
20Resolving social issues and coexisting with thecommunity
Contributing to the healthcare field beyond the provision of medicines
Main Activities

FY2022 Activities

 Disseminating scientific findings throughacademic papers and conferences forthe development of the scientific field Enhancing the public research grantsystem to support medical and scientificresearchIssue and FY2023 Strategies

 Contributed to the development of related science fields bypresenting scientific findings through academic papers orconferences Protected and utilized scientific findings (inventions) throughintellectual property
 FY2022 public research grants: 10

 Publishing scientific findings through academic papers andconferences Continuing to protect and utilize scientific findings (inventions)through intellectual property
 Raising awareness of and increasing participation in publicresearch grants and social contribution activities<Public Research Grants System>
To contribute to the development of science in the
medicine and pharmacy related with our business,
we support research by young researchers.
Offer details

A fundamental research in the therapeutic field written below
by a researcher under the age of 40

Urology•

Hematopoietic
organ tumor

InheritedmusculardisordersPulmonary
hypertension•

Genitourinay
CancerOther deseases（BPH, urinary
dysfunction,
kidney stone,
sexualdysfunction）

For the 20 research themes that are notrelated to our developing and selling
products in the field of “hematopoietic
organ tumor”, “inherited musculardisorder”, “pulmonary hypertension” and“urology”, we give financial support up to 3
million yen per theme every year.
We began to recruit themes for FY 2024.

21

Resolving social issues and coexisting with thecommunity
Contributing to the future of children
Main Activities

FY2022 Activities

Issue and FY2023 Strategies

 Providing educational and mental wellbeing support for children throughactivities such as sports and reading
opportunities Conducting dietary education activities
for children in order to foster an interestin food The Nippon Shinyaku Sparkling Future Mobile Library:
participated in 27 events/Total number of picture book lending
5,140 books
 Created booklets for the lower grades of elementary school toraise awareness about the importance of protein intake andreducing food loss and distributed them in public facilities in
Kyoto
 Provided on-site classes at several elementary schools and otherfacilities in Kyoto

 Launching WINZONE Junior Protein, the first product related tofood education activities
 Promoting activities centered on WINZONE Junior Protein forjunior high school students to raise awareness about eating
breakfast, such as on-site classes and sponsoring events
organized by local governments

Baseball clinics organized by the Nippon
Shinyaku baseball team••

The Nippon Shinyaku Sparkling Future
Mobile Library

The Nippon Shinyaku
Children's Literary Awards

On-site classes and dietaryeducation activities

We will give various types of support leading to healthier, happier lives of children not limited toproviding drugs for Intractable and rare disease.
Working with local governments and educational institutions, we will provide on-site classes atseveral elementary schools and other facilities and food education activities to solve problems
that children lack of interest in healthy food these days.
22

Strengthening efforts to protect the global
environment

When we seek growth, it should be growth in harmony with the natural environment. That is
why we strive to protect, sustain, and improve the environment through eco-consideratebusiness activities. The specific targets for realizing this policy is Nippon Shinyaku Voluntary
Environmental Targets.
23

Strengthening efforts to protect the global
environment
Climate change countermeasures
FY2022 Annual power consumption

Greenhouse gas emission reduction target

Renewable energy

14,000Base year(20% reduction compared to 2013)

12,00010,000Other

12.6% reduction compared to 2020

8,000

Green procurement

42% reduction compared to 2020

6,000
4,000

Photovoltaic power

2,000
0
2013

2020

2022

2030

2050

Introduction of renewableenergy (FY2023)

Hybrid vehicles in the commercial vehicle
End of March 2020

End of March 2023
192cars ,27%

529cars ,73%

Hybrid vehicle

110cars ,18%

Gas-powered vehicle

501cars ,82%

We set a new target this year with2020 as a base year for reducing
greenhouse gas emissions in orderto achieve carbon neutrality by
2050.
24

Strengthening efforts to protect the global
environment• The Yamashina Botanical Research Institute conserves approximately 3,000 varieties ofplants, including 160 species that are the botanical origins of herbal medicines recorded in
the Japanese Pharmacopoeia, the plants regulated by CITES such as Welwitschia mirabilis
and the plants on the Japanese Red List of the Ministry of the Environment. From theperspective of biodiversity, we value research on cultivation.
• We participate in the local activities aimed at the preservation of rare plants native to Kyoto.
For example, we are active in the protection and propagation of futaba aoi (Asarum
caulescens) and kikutani-giku (Chrysanthemum seticuspe).
25

Strengthening governance• Considering with providing our drugs to various countries where we have notlaunched, we will promote integrity with further ensuring compliance andstrengthening governance including subsidiaries outside of Japan.
• We will strengthen risk management and disclose appropriate information
more actively to expand our business globally.

26

Strengthening governance
Promoting integrity
Main Activities

FY2022 Activities

 Strengthening governance including at
Group companies

 Enhanced items disclosed in the Corporate Governance Report Implemented company-wide activities to raise awareness aboutcompliance

Issues and FY2023 Strategies

 Further strengthening governance Further ensuring compliance

We will increase the ration of external directors and female directors, andenhance the effectiveness of the Board of Directors to discuss global
business more deeply from a broad perspective.
27

Strengthening governance
Promoting integrity
Main Activities

 Enhancing compliance Promoting fair and transparent business

FY2022 Activities

 Implemented compliance training and awarenessraising
initiatives for all employees

Issues and FY2023 Strategies

 Continue compliance training and awareness-raising activities forall employees

We have developed our governance system along with the globalization of business throughpreventing the occurrence of compliance incidents.

28

Strengthening governance
Strengthening risk management
Main Activities

 Understanding critical risks andstrengthening the management andresponse system for each risk

FY2022 Activities

Issues and FY2023 Strategies

 Identified critical risks and countermeasures Requested the departments responsible for each risk to prepare
an action plan, and compiled them Conducted risk management self-checks and training Studied risk management operation methods based on risk
management under the new risk classification
 Established and operated a zero trust network
 Strengthened information security literacy of employees Enhanced NS-CSIRT* activities through information sharing,
drills, etc.

 Smoothly transitioning to and stably operating risk management
activities based on the new risk classification
 Continuously formulating action plans for critical risks
 Strengthening information security education for Group
companies
 Enhancing IT-BCP* NS-CSIRT:NS-Computer Security Incident Response TeamTo prevent the occurrence ofincidents, we identify highly criticalrisks including ESG risks and set
action plans for the year,
strengthening preventative
measures.

29

Initiatives to promote sustainability internally
Toward more active sustainable promotion, we conduct educational andawareness-raising activities for each employee according Nippon Shinyaku
Sustainability Policy.

•••

Donated sales by holding Lemonade Standfor the support group of pediatric cancer
Donated food collected from employees as afood drive and the amount was 109.2kg
Conducted various events such as internal
volunteers, lectures, trials of parasports

30

Initiatives to promote sustainability internally

•
•
•
•

As a internal awareness-raising activity, we launched a project of Patient Centricity.
Purple day (March 26th）is a global grassroots event to increase worldwide awareness of epilepsy.
On that day, we promoted understanding of the disease by wearing purple clothes.
As events of Purple day in 2023, we exhibited the Nippon Shinyaku Sparkling Future Mobile Library
in Osaka and illuminated Kyoto Tower in purple. Through those events, we promoted to raiseawareness of this disease.
We bought charity merchandise produced by the patient organization and a fashion brand.

31

Safe Harbor Statement• Materials and information provided during this presentation may contain so-called “forward-looking
statements.” These statements are based on current expectations, forecasts and assumptions thatare subject to risks and uncertainties which could cause actual outcomes and results to differ materiallyfrom these statements.
• Risks and uncertainties include general industry and market conditions, and general domestic andinternational economic conditions such as interest rate and currency exchange fluctuations. Risks anduncertainties particularly apply with respect to product-related forward-looking statements. Product risks
and uncertainties include, but are not limited to, technological advances and patents attained bycompetitors; challenges inherent in new product development, including completion or failure of clinical
trials; claims and concerns about product safety and efficacy; regulatory agency’s examination, obtaining
regulatory approvals; domestic and foreign social security reforms; trends toward healthcare cost
containment; and governmental laws and regulations affecting domestic and foreign operations.

• Also, for products that are approved, there are manufacturing and marketing risks and uncertainties, which
include, but are not limited to, inability to build production capacity to meet demand, unavailability of raw
materials, and competition with others.
• The Company disclaims any intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
• This English presentation was translated from the original Japanese version.
In the event of any inconsistency between the statements in the two versions, the statements in theJapanese version shall prevail.

Nippon Shinyaku Co., Ltd.
ESG Briefing
October 3, 2023

Presentation
Nakai: I am Toru Nakai, President of Nippon Shinyaku Co., Ltd. Thank you for joining us for our ESG meeting
today. I appreciate it very much.
This will be our first ESG meeting. Until now, we have had opportunities to explain our approach to businessperformance at financial results briefings and other occasions. Today, I will explain how we integrate theconcept of sustainability into this process.
Since this will be a valuable opportunity to talk directly with analysts and investors, we accept your comments
and opinions after the presentation.

Based on our corporate philosophy of “Helping People Lead Healthier, Happier Lives,” we aspire to be acompany trusted by society through the creation of distinctive drugs that are necessary for patients and theirfamilies suffering from illnesses.
Hisomu Ichinose, the founder of Nippon Shinyaku, established our company in 1919 as an R&D-oriented
company with the desire to provide pure and good new medicines by Japanese people at a time when Japanrelied on imported medicines from overseas. The Company’s early growth was achieved with Santonin, which
was successfully produced domestically in 1940. We have continued to focus on R&D, following the founder’svision. As a result, we have created innovative new drugs, such as Uptravi, a blockbuster pulmonary
hypertension treatment, and Viltepso, the first nucleic acid medicine produced in Japan for the treatment of

DMD, for patients around the world who are suffering from illnesses. Even if the number of patients is small,it has led to the global delivery of our products. We believe that working toward the realization of ourcorporate philosophy is the greatest contribution we can make to society.

We aim to be a company with a meaningful existence in the global healthcare field, which is based on ourmanagement philosophy, by providing indispensable drugs to society in disease areas with unmet treatment
needs based on our fundamental technologies of our small molecule and nucleic acid drugs. In order toachieve this vision, we believe that the concept of sustainability will become even more important. We
improved our existing basic CSR Policy and formulated the Sustainability Policy in March 2023.
We also revised the identified items of materiality in 2021. I will explain how we will integrate this concept ofsustainability to achieve our vision today. I will now focus on our pharmaceutical business today.

First, I will explain the history of the development of the Sustainability Policy and the materiality review.
In 2010, we formulated our basic CSR Policy, which expresses the Company’s commitment to fulfilling its social
responsibilities through sincere and fair business activities. In our sixth mid-term management plan, startingin FY2019, we have been promoting “Enhancing Corporate Value by Strengthening ESG Management
Initiatives,” one of our six initiatives.
We determined our mission that we should fulfill for society and our stakeholders in April 2021 and identified
19 items as materiality that we consider important for solving social issues and creating value. In January 2022,
we established the Sustainability Committee, chaired by the President and Representative Director, toformulate plans for promoting sustainability, examine materiality, check the progress of targets and initiatives
for materiality, and report and make proposals to the Board of Directors.
As the importance of the concept of sustainability grows worldwide, the Sustainability Promotion Committee
raised the need to revise the existing basic CSR Policy in order to clearly state the Company’s approach tosustainability: “What are the social issues that need to be solved?” and “How to solve the recognized social
issues?“ The committee also discussed the need to revise the existing CSR Basic Policy. We also received
comments from investors and other stakeholders that with 19 materiality items, it is difficult to understandwhat issues are really important.
We proceeded to discuss the revision of the basic CSR Policy and materiality in FY2022. In addition to
discussions at the Sustainability Committee, which internal directors are the main members, discussions anddeliberations were held at the Board of Directors meeting, which includes outside directors and auditors. We
first started from an analysis of risks and opportunities based on international guidelines and changes in theexternal and internal environment, then identified issues. The issues were mapped on two axes of impact andpriority on stakeholders and our business operations, and those of high importance were re-identified asmateriality. Finally, in March 2023, the Board of Directors discussed and approved the revision of materiality
from the basic CSR Policy to the Nippon Shinyaku Sustainability Policy.

At the time we identified materiality in 2021, we had not clearly indicated how materiality would be related
to the company-wide management approach, such as corporate philosophy and management policy. In therevised Sustainability Policy, we have clearly stated the idea that the realization of our Corporate Philosophy,
Management Policy, and Nippon Shinyaku’s vision, and our response to social issues such as environmental
problems, in other words, materiality, are integrated. However, since such a new idea is not easily infusedthroughout the Company simply by posting a policy, we have also clearly stated that we will conduct education
and awareness-raising activities to raise each employee’s awareness of sustainability.
The five items of materiality we revised are: realizing a healthy future through innovation, developing diverse
human resources and realizing employee well-being, resolving social issues and coexisting with communities,
strengthening efforts to protect the global environment, and strengthening governance.

I will explain Nippon Shinyaku’s value creation process.
Our business model is based on the capital we have accumulated, including financial, human, intellectual,social, relational, manufacturing, and natural capital. We will promote to continuously providing the world
with valuable drugs in areas and fields with unmet treatment needs. We are expanding our pipeline throughthree R&D approaches: in-house drug discovery, in-licensing, and PLCM, based on the fundamental
technologies of small molecules, nucleic acids, and new modalities.
As an output, we will realize one of the three commitments: Continue to launch at least one new product on
an average with special characteristics per year. We believe that we can deliver value through this output asan outcome to various stakeholders, including shareholders, employees, business partners, local communities,
customers such as patients and medical professionals, and the environment. We aim to grow sustainably
through a circular process in which that value is reallocated as new capital and used to create new value.
The next slide explains how we believe that materiality is involved in the sustainable rotation of this businessmodel.

Edamitsu will explain the details of each materiality initiative later, so I will now explain how we believemateriality initiatives are linked to the growth of Nippon Shinyaku.
We are committed to developing valuable medicines in areas and fields with unmet treatment needs,
supplying them to the world as outputs, and contributing to the future health of patients as outcomes.
The materiality that refers to this process is “realizing a healthy future by creating innovation,” which directly
describes the activities of our pharmaceuticals and functional foods businesses. To do this sustainably, we
believe that four items of materiality are essential.
We believe that unique products are produced by a variety of talents. In order to achieve this, it is necessary
to create an environment in which human resources with diverse backgrounds and ideas can grow and play
an active role. Therefore, we have set “developing diverse human resources and realizing employee wellbeing” as our materiality.
We also believe that we need to work on resolving social issues and coexisting with the community. Innovative
medicines are not based solely on our own R&D of pharmaceuticals, but are always based on developmentsin the science field. We will also engage in activities for the development of society, such as publishingscientific findings in papers and conferences, and supporting medical and scientific research.
Furthermore, we will promote “strengthening efforts to protect the global environment.” We are aware that
our own business activities produce an environmental impact. We believe it is essential to face thisenvironmental burden and work to reduce it.

We believe that these items of materiality need to be addressed under solid governance. Our company aims
to supply pharmaceuticals to patients globally. I was stationed in the US and was involved in the establishmentof a sales structure at our US subsidiary, but as we consider expanding this to China and other regions in the
future, it will become increasingly important to strengthen our governance globally, including at our overseas
subsidiaries. Providing information on pharmaceutical products is particularly necessary to comply with thelaws, regulations, and business practices of each country, so the perspective of promoting integrity isextremely important.
As we expand our business globally, there are also more risks to deal with than in the past when we wereoperating mainly in Japan. We need to strengthen our risk management in order to continue our businessactivities in a sustainable manner. As our business activities expand, the importance of transparently
explaining our activities to our stakeholders will increase.
As mentioned, we believe that firmly addressing the materiality of human resources, society, and theenvironment under a strong governance structure will be the foundation for creating innovation, bringing
new products to market, and realizing a healthy future. We have re-identified these five as key issues andmateriality

We intend to become a company with revenue of JPY300 billion, and from there to JPY500 billion in the future
by promoting materiality initiatives and continuing to create value in a sustainable manner.
As an overall picture of sustainable value creation, I have only given an overview of materiality. Edamitsu will
introduce each materiality and the details of the initiatives.

Edamitsu: I am Edamitsu, Director, Business Management & Sustainability Division.
I will explain our approach to materiality.

These are the lists of the 19 items of materiality that has been reviewed and reorganized into five items ofmateriality, activities, etc. In recent years, amid the importance of sustainability increasing worldwide, theenvironment in which we operate has also changed significantly. We have conducted a review based oninternational guidelines and the risks and opportunities for changes in the external and internal environment.
With the exception of the environment item, no targets or KPIs are listed for the materiality reviewed thistime, but we are currently reviewing them and plan to disclose them with the announcement of the seventh
medium-term management plan, which is scheduled to be disclosed in the next fiscal year.

I will explain the first materiality: Realizing a healthy future through by creating innovation.
We will contribute to people’s health through the creation of unique products and services by promoting drug
discovery utilizing nucleic acid drugs, new modalities, and new methods as well as small molecule drugs.
We will also continue to improve our reliability assurance and supply chain so that we can supply safe andhigh-quality pharmaceutical products domestically and internationally.
At the same time, we will work to strengthen our patient support and advocacy activities based on patient
centricity.
We will also promote DX by defining our digital vision as the creation of highly unique products and services
in the healthcare field and the creation of a world full of smiles by using digital technology and data.
As a result, we hope to enable us to realize a healthy future.

Regarding our contribution to people’s health through the creation of distinctive products and services, weare pursuing R&D based on three approaches: in-house drug discovery, in-licensing, and PLCM based on our
fundamental technologies. With a perspective of patient centricity, we consider what we can do for patientsand pursue what they want the most, we hope to realize a healthy future for patients and those who supportthem.
To realize this perspective, it is necessary to acquire not only existing fundamental technologies but also newtechnologies, such as new drug discovery modalities, and develop them into strengths. In January 2023, weestablished a new drug discovery center in Boston, USA, the heart of the global drug discovery ecosystem. We
aim to increase access to the world’s most advanced drug discovery technologies, etc. We provide
opportunities to study abroad for employees to raise the level of our researchers to acquire expertise in newtechnologies, such as cutting-edge genome editing technology.

We launched the Patient Centricity Project this fiscal year and have been working to create more
opportunities for the voices of patients. Patient centricity means always placing the patient at the center ofhealthcare, focusing on the patient, and ultimately respecting the patient’s decision to the fullest extent
possible. We will continue to listen to the voices of patients through e-sports competitions for children withhandicapped, and in-house and open seminars to listen to the voices of patients’ families so that we canconduct activities to be as close to them as possible.

I will explain the second materiality: Developing diverse human resources and realizing employee well-being.
Based on the idea that unique products are the product of unique people, we respect diversity in terms ofgender, age, nationality, and values, and provide opportunities for individuals to take on challenges and growin a positive manner. By doing so, we have been working to foster an organizational culture that allows
employees with diverse values to thrive and achieve well-being to generate innovation and achievesustainable growth.

Regarding creating an environment where each person can grow and play an active role, we believe that theserious mind is the most powerful management resource of all to inspire action to create unique products.
With our serious mind, it is necessary for each employee to grow more than ever to work together, making
the most of their individuality and strengths, and to maximize the performance of the entire company as one
team. To convey this idea concretely, we have created the NS Mind, which shows the attitude and awarenessthat all employees are striving for. We aim to help employees and the company grow together and create abetter organization together through NS Mind.
In order for all NS Mind employees to become serious and maximize their performance, we have divided theobjects of seriousness into three categories: myself, others, and society, and also established seven items.
Based on the NS Mind, we aim to create products with characteristics that only Nippon Shinyaku can create,
and a future that only Nippon Shinyaku can create.

We are working on the following four themes for human resource development: Realizing employees
treatment in line with roles, duties, and accomplishments, realizing self-directed career development and theplacing of the right employee in the right position, realizing a highly psychologically safe organization, andrealizing flexible work styles. We will continue to create systems and an environment in which employees canplay an active role regardless of gender, nationality, age, or other personal background.
The NS Academy, a human resources development program, was launched to realize independent careerdevelopment. Nippon Shinyaku defines the three human resources indispensable for its sustainable growth
as change, global, and professional; and has established programs in the four categories of career, basic, skill
up, and challenge, for each. We allow employees to choose this program on their own and advance theircareers.

With regard to promotion of diversity, equity, and inclusion, we aim to foster our corporate culture thatrecognizes individuals regardless of age, gender, values, disabilities, etc.
Since Nippon Shinyaku set a goal of increasing the ratio of female in executive positions to at least 15% startingfrom FY2019, the ratio has been rising and the number of female executives and female managers has been
increasing every year. We introduced a dual system in FY2007 that allows people with disabilities to learn
while working with regard to the employment of people with disabilities, based on the principles of diversity,
equity, and inclusion. We also have been focusing on expanding job opportunities in cooperation with labortransition support offices and government agencies.

In the third materiality, solving social issues and coexisting with communities, we believe it is necessary to
respond to a wide range of social demands and grow sustainably together with society.
We are engaged in the pharmaceuticals and functional foods businesses. In order to deliver innovative
products that lead to people’s health, it is essential to develop not only pharmaceutical R&D but also thescience field itself, and we focus on presenting scientific findings in papers and conferences and supporting
medical and scientific research.
We are also working to improve access to healthcare by implementing a Viltepso Managed Access Programfor DMD, which is an intractable and rare disease, in countries where it is not yet approved. We recognizethat respect for human rights is also an important issue. We are a signatory to the United Nations Global
Compact and support its 10 principles in the four areas including the protection of human rights. We conduct
human rights due diligence and internal training to prevent and mitigate adverse impacts on human rights
associated with our business activities. We also believe that contributing to local communities, culture, andthe future of children is an essential aspect in solving social issues.

As a contribution to the healthcare field beyond the provision of pharmaceuticals, we offer public research
grants. In FY2023, we have decided to support a total of 20 research projects in the fields of hematopoietic
organ tumor, inherited muscular disorders, pulmonary hypertension, and urology with a maximum of JPY3
million per project for research themes not related to our developed or marketed products. Applications for
FY2024 are also being accepted starting in October.

In order to contribute to the future of children, we are conducting various activities that go beyond theprovision of therapeutic drugs in order to realize our corporate philosophy of happier lives. We interact withlocal communities by serving as coaches in children’s baseball practices by offering practical baseballinstruction by our company’s baseball team, and also hold exercise classes to improve physical fitness.The
Nippon Shinyaku Sparkling Future Mobile Library is regularly exhibited at events and children’s centers in andaround Kyoto City.
In 2009, we established the Nippon Shinyaku Children’s Literature Awards with the hope that each child, whobears the future, will have dreams and hopes and grow up healthy. In the functional foods business, we also
work with local governments and educational institutions to provide on-site classes and nutrition education
activities to help solve problems related to children’s food. We promote initiatives that lead to the enrichmentof children’s lives.

I will explain the fourth materiality: strengthening efforts to protect the global environment.
Nippon Shinyaku is aware of its responsibility for the environmental impact of its own operations and has
established the Basic Environmental Policy to reduce environmental impact in all areas of our businessactivities. As a company that contributes to helping people lead healthier, happier lives, we conduct ourbusiness activities in consideration of the global environment and work to protect, maintain, and improve theenvironment in order to realize a sustainable society. Specific goals to realize this policy are our Environmental
Targets Plan. The Environmental Targets Plan is revised every three years and we set the targets shown on
the slide as our seventh voluntary environmental target in FY2023. We set goals for proper management andreduction of greenhouse gases, water usage, waste, and chemical substances.

We will explain the details of our specific environmental initiatives. Global warming countermeasures havebeen positioned as the most important item that Nippon Shinyaku must address, and we have set a goal toachieve carbon neutrality by 2050. The sixth Nippon Shinyaku Voluntary Environmental Targets was to reducegreenhouse gas emissions by 25% from the FY2013 level in FY2030, but the seventh Nippon Shinyaku
Voluntary Environmental Targets is more stringent with a 42% reduction target from the FY2020 level.
In the current fiscal year, the switch to electricity derived from renewable energy sources will beapproximately 50%. Our goal was also to convert all of the company-owned cars to hybrid cars within four
years from FY2020, except in areas with heavy snowfall. As of the end of March 2023, 82% of company-ownedcars were replaced by hybrid cars. We are promoting information disclosure in line with the framework of the
TCFD recommendations regarding climate change.

In terms of biodiversity conservation, over 3,000 plant species are conserved at our Yamashina BotanicalMuseum, including 160 species of plants listed in the Japanese Pharmacopoeia as the base plants of herbal
medicines, as well as 480 species of rare plants, including plants regulated by the Washington Convention
such as welwitschia and aloe, and those listed on the Japanese Red List of plants by the Ministry of theEnvironment. We are working on the ex situ conservation of these plants. In its hometown of Kyoto, the Groupis also involved in the conservation and propagation of plants related to Kyoto’s culture, such as futaba aoi
and kikutani-giku. In June 2021, the G7 2030 Nature Pact pledged “30 by 30” to conserve at least 30% ofJapan’s land area as a natural environment area by 2030. In line with this idea, we have conducted a botanicalsurvey of the Daigoji Temple forest in the southern part of Kyoto City, a cultural heritage site, we haveidentified 157 species of higher plants in 78 families and are cooperating in their conservation.

Regarding the fifth materiality, strengthening governance, strong governance is necessary for our business toremain stable and continue to grow.
In aiming to provide pharmaceutical products to patients globally more than ever before, it is necessary to
promote integrity by strengthening governance, including overseas subsidiaries, and ensuring compliance. As
we expand our business globally, we will strengthen risk management and disclose appropriate information
more actively.

Regarding the strengthening governance including group companies, we are working to raise awareness of
integrity and promote diversity in order to expand our global business. To incorporate diverse perspectives
into the Board of Directors, in 2017, Director Sakurai became the Company’s first female director and was
appointed as an outside director, bringing perspectives based on her expertise as an attorney to the Board of
Directors. As female directors, Kobayashi, External Director; and Kimura, Director, Resource Procurement,
Production & Assurance in charge of supply chain and reliability assurance joined in FY2021. Both haveextensive experience in global business and are simultaneously strengthening their functions for globalization.
In the current fiscal year, Nishi was newly appointed as a female external director to strengthen the R&D
aspect of the Company based on her experience as a physician and pharmacist. We are increasing the ratio ofoutside directors and female directors and building a system that enables in-depth discussion of global
business from a broad range of perspectives.

Next, I will explain our compliance and risk management systems.
The Nippon Shinyaku Group has in place Compliance Operating Rules, with the director in charge of CSR andadministration acting as the compliance officer and a department dedicated to overseeing complianceinitiatives. In addition, a Compliance Council has been established to provide support and advice to enhanceand strengthen the compliance system. In each department, the director who serves as its head is responsiblefor its compliance initiatives, which are carried out by the managers therein. The compliance management
department plans and formulates group-wide compliance initiatives based on advice from the ComplianceCouncil. Initiatives are then implemented to spread and raise compliance awareness among all employees.
The Group also conducts a compliance awareness survey of all group employees, including those overseas,
every year and shares the survey results within the Group. The Group works to prevent the realization ofcompliance risks using the survey results, for example, by providing special training for departments whosescores in the survey are relatively low. We are also promoting compliance promotion activities that can
respond to the globalization of our business.

The Nippon Shinyaku Group aims to achieve sound growth and enhance corporate value through thereinforcement of its risk management system and ongoing risk management activities. The Group identified
various possible risks under the basic risk management basic rules. Each of these risks is managed by therelevant department to prevent their realization and countermeasures to be adopted in the event of theirrealization. We select highly important risks every year and formulate action plans for the year to strengthen
preventive measures. The results of these efforts and important risk themes for the following year arereported and discussed at the Risk & Compliance Committee. The Board of Directors receives reports on thecontents and supervises the implementation and effectiveness of risk management.

Finally, I will explain our initiatives to promote sustainability internally.
The Nippon Shinyaku Group conducts awareness-raising activities for each employee according to the Nippon
Shinyaku Sustainability Policy.
Since SDGs Week is held at the end of September every year to coincide with the United Nations General
Assembly session, we have set SDGs Week in September every year since 2021 and have held various eventswith employee participation. This year, we donated sales by holding lemonade stand for the support group ofpediatric cancer. We also continued our food drive from last year and donated a lot of food again this year as
well. We also promote other volunteer activities in which employees can participate, such as delivering picture
books to children overseas.

As employees of a pharmaceutical company, we have started activities to raise employee awareness so that
we can be as close as possible to patients’ feelings. Purple Day is a global grassroots event to increase
worldwide awareness of epilepsy. On that day in March, employees wore purple items, which is the symboliccolor. We illuminated Kyoto Tower in purple to raise awareness both inside and outside the Company.
We bought charity merchandise produced by the patient organization and a fashion brand.
We believe that through these various activities, our employees will become aware of the connection
between materiality and sustainability. By making it their own business, our employees will grow as individuals,
which will in turn lead to the growth of the Company.
This concludes our explanation of our approach to materiality.

FY 2023 ESG Meeting Q&A (Summary)

Held on October 3, 2023
NO

Questions

Answers

1

The operating profit for The Sixth Mid-term Management Plan target is expected to fail to achieve. What requests

As for the Seventh Mid-term Management Plan, an in-house project team was established in July and it is currently

and opinions do you give at the Board of Directors as an outside director regarding the next Mid-term

under discussion. I request the project team to share the details of discussions such as how they are thinking about what

Management Plan?

the ideal company should be and what KPIs should be established to realize the ideal company, and we as outside
directors would like to commit to the discussions. In addition, we, outside directors, have stated in particular that it isessential to globalize in order to further change gears and move on a growth path amid the harsh changes in pricerevision by MHLW and intensified competition, and that globalization requires securing diverse human resources,
learning about the world, and improving and expanding internal control system such as compliance and risk
management for overseas subsidiaries. I think that they are formulating the next Mid-term Management plan with thesepoints in mind. The details is going to be discussed.

2

If the current Mid-term Management Plan targets are not achieved, the next Mid-term Management Plan targets

President Nakai has clearly stated that they aim to expand revenue to 300 billion yen in the future, and from there towill tend to be low enough to be achieved. Are you, outside directors, making comments to prevent planning low

500 billion yen, and from the company's efforts I believe they will not establish the next Mid-term Management Plan

targets?

with low targets achieving easily. Furthermore, I see the company's directors are taking a proactive stance. As an outside
director, I would like to continue to provide support and opinions.

3

In recent years, stock price has declined significantly since the peak. What do you advise and request to sluggish

Although we have not discussed sluggish stock price at the Board of directors, outside directors discuss whether thestock price as an outside director at the Board of Directors?

current stock price is appropriate for their performance and if the it is too low. Nippon Shinyaku faces a number ofissues, such as countermeasure against gene therapy and the speed of drug discovery and development. Some people
may be concerned about the future growth of Nippon Shinyaku. They regard the speed of drug discovery anddevelopment as their important issue and they are promoting various initiatives such as venture-like initiatives and theestablishment of IRP in the U.S. We have started to instill NS Mind and to create a new awareness and system leading
to research and development, but we think it is still at the incipient stage. It is probably that they will consider theSeventh Mid-term Management plan including those points of view but I would like to keep a close watch on thesepoints and express my opinions on it as an outside director.

1

4What is President Nakai's view based on the opinions of Ms.Sakurai?

In the pharmaceuticals business, which is the company's core business, to sustain growth with accelerating its pace, we
are keenly aware of the need to promote global R&D speedily and taking an action for achieving that.
Regarding the stock price, we have been constantly discussing with the director in charge and the Corporate Planning
Division whether we should respond flexibly when stock price becomes much lower than the price we believe areappropriate due to external factors. We will respond accordingly.

5

6

How do you evaluate the impact quantitatively on the outcomes of the value creation process? Recently,

We have not set KPIs including materiality yet except for the environmental factors. We would like to disclose in thequantitation of outcomes, such as impact investment, has been required. I would like to hear your opinion for this.

next Mid-term Management Plan.

How do you enhance your presence in the food business in terms of increasing your presence in the healthcare

We believe that the pharmaceutical business is a business that engages in health after becoming ill. On the other hand,field?

the functional food business is considered to be a business that contributes to health from the pre-disease stage, such asprotein preparations and preservatives. We have a lineup of protein products, such as milk protein and soy protein. As
a company with a high market share in the preservatives business, we have been recognized and appreciated bycustomers. In this way, we believe that customers recognize the meaningful existence for our functional food company,
and we will maintain and develop our functional food business on an ongoing basis.

7

I think there may be differences in materiality between pharmaceuticals and functional food, so I would like to

We will take it into consideration.

ask you to review them in the next Mid-term Management Plan. This will lead to how you perceive the positioningof the functional food business.
8

I would like the board of directors to conduct comprehensive discussion of the change in corporate value. Even

Thank you for your valuable comment.

if there were discussions on the operational side, I feel that outside directors may not be fulfilling their
responsibility as representatives of minority shareholders unless sensitivity increase in the situation where thestock prices are underperforming. Therefore, I would like you, outside directors, to further discuss this.
9

Please tell us about Nippon Shinyaku's focus and superiority over other companies in the activities introduced

The most important materiality is "Realizing a healthy future by creating innovation" We see creating of the new drug

today. What is important for a pharmaceutical company is often important for other pharmaceutical companies,

using core technologies such as small molecules and nucleic acid pharmaceuticals and delivering of these drugs to

and I think there is no problem with the similarity in the story. I would like to hear your own ideas and initiatives.

patients continuously as our strength points, and we are focusing on this. Our explanation may be similar to that of2

other pharmaceutical companies, but we believe that core technologies, particularly nucleic acid pharmaceuticals, arestrengths that other companies do not have. We believe that active development in the field of diseases where othercompanies find difficult to enter and delivering of pharmaceutical products globally will provide unique perspective
and lead to differentiation to other companies. We would like to continue to focus our energies on doing our corebusiness.
10

In the annual report, there is a description of the need for “human resources with an edge” in the "Dialogue with

Nippon Shinyaku’s employee is highly regarded as a "good people" both inside and outside the company, and employee

Outside Directors," and the company is recruiting mid-career employees. Please tell us in which areas there is asatisfaction is high overall. However, in order to link it to contributions to society and achieve sustained growth globally,

shortage of human resources if there are discussions of it at the Board of Directors.

we are discussing the need for not only "good people" but also " human resources of a different nature." and " humanresources with an edge ". In particular, I think that one of the fields where they are needed is the R&D field because theviewpoints, originality, and a spirit of serious challenge that does not fear failure are necessary. For expanding ourbusiness globally, it is necessary to employ human resources who are highly specialized from outside the company inaddition to training appropriate human resources internally.

11

Gene therapies have a major impact on corporate value and stock prices. I have the impression that Nippon

Having worked for more than two years since becoming president, we have already shorten the decision-making process

Shinyaku has been promoting R&D diligently, but I think it's also effective to Pursue R&D more aggressively.

in order to shorten the time required to move to the next phase like from P1 to P2. We have identified the issues of time-

Are there any initiatives to accelerate R&D that you are considering?

consuming negotiations with regulatory authorities such as FDA and has taken steps to negotiate more effectively. In
addition, we will announce in the 7th Mid-term Management Plan what we will do to speed up the process.

12

Recently, it has become increasingly common to see the mid-term management plan without numerical targets

As you pointed out, we believe that in the next Mid-term Management Plan we should show how we can overcome theand we, investors, cannot see what the company’s purpose is and communicate about it effectively. I think thepatent cliff of Uptravi and growth continuously.

numerical targets will be important in the next Mid-term Management Plan when the cliff for Uptravi is going to
be coming. Are you going to show numerical targets in the plan?
13

Nippon Shinyaku's IR is conducted by the Corporate Planning Department. There are no mid-tier or higher

We recognized this as an issue in the discussions on the Seventh Mid-term Management Plan. I don't know if we canpharmaceutical companies that do not have specialized IR departments. Global IR is needed, and foreign investors

deal with it immediately, but I would like to show how it will be done in the future.

appear to be struggling to gather data of Nippon Shinyaku. Is there a plan to establish a department dedicated toIR?

3