Nippon Shinyaku Today

A New Way of LifeIn Pursuit of Originality

ESG as the Foundation for Growth

Corporate Data

Financial/Capital Strategy
6th Five-Year Medium-term Management Plan numerical targets for FY2023 (Consolidated)

Nippon Shinyaku will strategicallyinvest in the expansion of its
development pipeline and global
business development
Takanori Edamitsu
Director, Business Management & Sustainability

FY2018 results

FY2022 results

FY2023 forecast

6th Five-Year Medium-termManagement Plan targets

Net sales/Revenue¥114.7 billion¥144.1 billion¥145.0 billion¥150.0 billion

Pharmaceuticals¥100.2 billion¥121.9 billion¥123.5 billion¥133.0 billion

Functional Food

¥14.4 billion¥22.1 billion¥21.5 billion¥17.0 billion

Operating income / Operating profit¥20.6 billion¥30.0 billion¥32.0 billion¥40.0 billion

Net income attributable to owners of parent /Profit attributable to owners of parent¥16.3 billion¥22.8 billion¥25.0 billion¥30.0 billion

EPS

¥242

¥338

¥371

¥445

ROE

12.5%

12.1%

—

10% or more during term of
6th Planlaunch of Viltepso in the U.S. due to the impact of the COVID-

one guiding factor in investment decisions. We have also set

19 pandemic, the forecast for FY2023 falls short of these

ROE as an indicator for capital efficiency, and a medium-quantitative targets.

term target of 10% or more ROE during the period of theAlthough we must accept harsh evaluations for the fact that

We will achieve long-term growth by making strategic investments to maximize the value of our development
pipeline and product portfolio, thereby honoring the trust of our customers, society, and other stakeholders.

Progress and results of the 6thMedium-term Management Planthe development of some products, we believe that the R&D investments

establishment of our own marketing system in the U.S. and theIn R&D, we are making strategic investments to maximize theincrease in the pipeline of products developed in-house arevalue of our development pipeline and product portfolio incommendable achievements.

order to launch an average of at least one new product perbusiness, revenue increased 31.8% year on year due to growth inyear through R&D promotion of in-house products andsales of protein preparations and other products. On the otherin-licensing, as well as distribution partnerships. We are also

hand, regarding profit, operating profit decreased 8.8% year onyear and profit attributable to owners of parent decreased 8.7%

Management policy andinvestment Strategy

conducting R&D to help DMD patients with other types ofgenetic mutations that are hard to treat with Viltepso, which

In FY2022, although the impact of COVID-19 pandemic

year on year due to a reactionary decline following the lump-

gradually subsided, higher energy resource and raw material

sum revenue from the priority review voucher in the previous

prices due to the prolonged crisis in Ukraine, as well as thefiscal year. However, we recognize that revenue and profit also

depreciated yen and price hikes, had a significant impact on

increased, excluding the reactionary decline following the lump-

Our Company’s management policy indicates that it willpriority on R&D investment, planning to invest ¥120 billion,

our corporate activities. In this external environment, despite

sum revenue recorded in the previous period.

“Supply Unique and High-quality Products” and “Earn thewhich is now expected to total approximately ¥110 billion over

the revision of drug prices by the MHLW and the reactionary* Priority review voucher: A system under which a pharmaceutical company that has obtained
approval for a new drug for an eligible rare disease is granted priority review rights (for threemonths) when applying for approval of its own new drug in another therapeutic area. Therights can also be transferred (sold) to a third party.

Trust of Society.” In businesses that deal withthe five years after adjusting for the FY2023 outlook.

decline from the loss of sales revenue of the priority review
voucher* designated by the U.S. Food and Drug Administration
sales of Viltepso, a treatment for Duchenne muscular dystrophy(DMD) and Uptravi, a treatment for pulmonary arterial

from internal funds. During the period of the 6th Five-Year
Medium-term Management Plan, we placed the highest

pharmaceuticals and functional food, stable supply is
extremely important in gaining the trust of stakeholders Forecast for the Final Year of the 6th Five-Year

Medium-term Management Planorder to ensure a stable supply amidst the current

R&D investments(billion yen)

30

26.3

circumstances of a volatile external environment, our policy

hypertension and chronic thromboembolic pulmonary

Nippon Shinyaku has set quantitative targets for the final year

is to aggressively make necessary investments while

hypertension, royalty income from overseas sales of Uptravi, andof the 6th Medium-term Management Plan (FY2023) of ¥150

maintaining a solid working capital position. Since we havesales growth in the Functional Food business. In thebillion in sales, ¥40 billion in operating income, ¥445 in EPS,

no interest-bearing debt, i.e., enjoy a so-called a debt-free

Pharmaceuticals business, revenue increased 1.1% year on year

and 10% or more in ROE throughout the period of the plan.

status, we use our weighted average cost of capital (WACC)

due to growth in sales of Viltepso and Uptravi, as well as royalty

However, due to negative factors such as the impact of the off-

based on our own analysis of the yield expected byincome from overseas sales of Uptravi. In the Functional Foodyear drug price revision by the MHLW and the delay in theshareholders from the Company as the hurdle rate, which isNIPPON SHINYAKU CO., LTD.

was launched in 2020. The funds for R&D are being allocatedincluding medical professionals, patients, and society. In(FDA), revenue increased 4.9% year on year due to increased28

6th Five-Year Medium-term Management Plan.

we fell short of our targets and that we are behind schedule in24.1

22.8
20

16.7

16.1

13.9

100

2018

2019

2020
JGAAP

2021

2022

2021

(FY)

IFRS

Integrated Report 202329

Nippon Shinyaku Today

A New Way of LifeIn Pursuit of Originality

ESG as the Foundation for Growth

Corporate Data

Financial/Capital Strategy

Shareholders’ return policy Capital investment

Capital investments are made, with an awareness of cost ofTotal Shareholders’ Return (TSR)   Nippon Shinyaku      TOPIX

800

capital and other factors, to expand and streamline production

700

facilities and to strengthen R&D capabilities, using our own

 Increasing shareholder value

funds. In December 2023, the ¥5.6-billion construction of aThe Nippon Shinyaku logic tree is a graphical representation ofnucleic acid drugs API purification plant at the Odawara Central

the connection between related indicators to show how theFactory is scheduled to be completed. Capital investment over

Nippon Shinyaku Group’s management issues and strategies

the period covered by the 6th Five-Year Medium-term Businesswill lead to increased shareholder value, for the purpose of300

Plan is expected to total approximately ¥23 billion.

increasing said value. From a financial perspective, some of the200

factors that increase shareholder value are dividend growth100 Human capital investment

and stock price rise, which are generally considered to be0Nippon Shinyaku believes that human resources are theverifiable using long-term TSR. In addition, stock price isdriving force behind sustainable growth, and has adopted thesometimes calculated as a multiple of EPS, and EPS growth ismanagement policy of “Develop Each Employee.” Based on the

directly related to stock price growth.

600
500
400

2013/3

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/32022/32023/3

Stock price performance
Three years

One yearidea that unique products are the product of unique people,

Following its basic policy of maximizing corporate value,

we are committed to investing in human resources with a

Nippon Shinyaku will strengthen its R&D structure and expand

Nippon Shinyaku

respect for diversity. In FY2022, we invested ¥0.14 billion inits development pipeline. Furthermore, we will makeTOPIXhuman resource development, and we expect to invest ¥0.16

investments and return profits to shareholders in order to build

billion in FY2023. Although the results of our human resource

an organizational structure that can withstand intensifying

development efforts will not be immediately reflected in ourcompetition and adapt to global business development, whilebusiness performance, we believe that they will lead tobeing conscious of our capital structure and cost of capital.

Five years

Ten years

Cumulative

Annualized rate

Cumulative

Annualized rate

Cumulative

Annualized rate

-28.6%-27.4%-10.1%-11.4%

5.8%

53.4%

15.3%

31.8%

-2.4%

385.4%

17.1%

5.7%

142.1%

9.2%• Total shareholder’s return (TSR) is the total return on investment that takes into consideration capital gains and dividends.
• Nippon Shinyaku calculates TSR using cumulative dividends and change in stock price, and for the TOPIX, the dividend-included stock price index is used (calculated by Nippon Shinyaku using
Bloomberg data, etc.)• Figures in the graph assume the closing price on March 31, 2013, is 100, and the TSR-based market value is indexed to that (held through March 31, 2023).
• The return is the percent change of the initial investment generally used when calculating return on investment.

sustainable growth in the future.

Logic tree

6th Medium-termManagement Plan targets

Management issuesGrowthpotential ddressing areas andA
diseases on which othercompanies are not focusingNet sales : ¥150 billion

Global expansion

Main reference indicatorsConsolidated revenue growthOverseas revenueR&D to sales ratioLicensing revenueOverseas sales ratioPipeline enhancement

EPS growthEarning
potential

Increase inshareholdervalue

Dividend
growth +Stock priceincrease

Reasonable
shareholder
return policyP roviding new medicinesand value using
fundamental technologies

Operating income : ¥40 billion

Doubling sales and profitS table and sustainabledividend growth Sustainable dividend growth

FY2023, we plan to increase this by ¥6 to ¥120 per share. WeOver the past 10 years, Nippon Shinyaku’s TSR has

have increased dividends for 11 consecutive years sinceoutperformed the Tokyo Stock Price Index. We review ourFY2012, and we intend to achieve sustainable dividend

shareholder return policy each time we formulate our Medium-growth in the future.

term Management Plan, and we will work to grow EPS toincrease shareholder value over the medium to long term withfinancial perspective but also from a non-financial perspective,

TSR in mind to grow dividends and to increase the stock price.

we strive to gain the trust of the market and optimize our cost

We have set a dividend payout ratio of around 35% on aperiod of the 6th Five-Year Medium-term Management Plan,and in FY2022 we paid a dividend of ¥114 per share. In

Cash dividends: ¥120/share ontinuous dividend
CgrowthCost of capital managementEfficient investment

P romoting ESGmanagement

Market trust




30

NIPPON SHINYAKU CO., LTD.

Reducing business risks

ROE: 10% or morevolume, will expire. In the area of intractable and rare diseases,
the shift to generic drugs tends to be gradual, but is also

Payout ratioCapital investment

ROIC managementIn-licensing

Strengthening governanceOptimizing human capital



99

110

114110

(%)

80

86

90

60

70
60

28.9

34.3

32.2

32.2

33.7

29.7

40

30

20

00

affected by price revisions by the MHLW. Therefore, we hope toovercome this patent cliff and achieve an increase in revenue
and profit by expanding the market for Viltepso andsequentially launching other products. We will consider asset
allocation in the discussions about the formulation of the 7thMedium-term Management Plan and will indicate it at the timeof the announcement.

Board effectivenessI mproving employee
engagement

During the period of the next 7th Medium-termManagement Plan, the patent for Uptravi, which has large sales

Dividend per share / Payout ratio(yen)Optimalcapital
structureof capital.

consolidated basis as a performance-linked dividend for the120

Optimizationof cost ofcapitalIn addition, by promoting ESG management not only from a2018

2019

2020
JGAAP

2021

2022

2021

(FY)

IFRS

Integrated Report 2023

31