Saving
Your
HealthIntegrated Report 2023
EIKEN CHEMICAL Integrated Report 2023
FY ended Mar. 31, 2023

Saving Your Health
Doing whatever we canGood fortune so natural that we almost overlook it.
Our health.
All over the world, this good fortune is under threat from a variety of issues.
Developing countries in which lives that could be saved are lost due to delays inrolling out medical infrastructure.
Developed countries in which rising medical expenses put public finances undercontinuous pressure.
As we move into the future, “the maintenance of health” will not be a simple matter.
In a time of such limited visibility into what lies ahead, what can we do to help?
As a global clinical diagnostics company we will reach for the possibilities that await
us, racing into the future without pausing in our diligent research, without shrinking
from difficulties, and without abandoning our quest.
We do this for those, somewhere in the world, who need us.

EIKEN CHEMICAL Integrated Report 2023

2

Tests cannot cure disease.
However, they can protect lifeand preserve smiling faces
Since the foundation in 1939, 84 years have passed.
As a pioneering clinical diagnostics company, we have not wavered in our
determination to contribute to people’s health and medical treatment since
we first entered the field of public health.
Globally, cancer deprives nearly 10 million people of their lives every year.
Eiken Chemical has the top share in fecal immunochemical test (FIT) reagents forthe early detection of colorectal cancer both in Japan and overseas.
Colorectal cancer screening programs have been introduced in many countries,
and we continue to move forward with our mission of minimizing the number of
those suffering from this disease and the number of sorrowing families.
Examinations cannot cure disease.
Nevertheless, by enabling early detection, broadening possibilities for treatment,
and contributing to options tailored for each individual, it can reduce suffering.
Through our technology, we hope to save the lives and keep smiles on the facesof as many people as possible.
That is our prayer.

Number of opportunities provided for early detection of colorectal cancer*Number of times our colorectal cancer screening test has been provided (April 2022-March 2023),
inferred from cumulative sales

90,491,380
90 491 380
EIKEN CHEMICAL Integrated Report 2023

3

We will never stop walking into the future
for as long as there are lives to save
Science and technology have advanced to the point where our day-to-day
lives are supported by AI, and the entire world is connected by the internet.
Even so, humankind is still afraid of the unknown.
Novel coronavirus disease assailed the world with shocking speed.
Instability with no end in sight, and the despair of losing loved ones.
When the world gripped by a sense of helplessness, we fought alongside
medical professionals without giving up.
The genetic testing “LAMP” developed by Eiken Chemical produces results
more simply and in a shorter time, and having been adopted by many
medical sites it contributes to preventing the spread of infectious diseases.
Leveraging the LAMP method, we confront infectious diseases that are
rampant in developing countries with the goal of saving the many lives that,even at this instant, are on the verge of being lost.
There is no end to the fight against infectious disease, for as long as there
are lives for our research and technology to save somewhere in the world.

Number of people who could be saved by our products from infectious disease in 2030

*LAMP products materiality KPI population of countries in which deployed

2,700,000,000
2700 000 000

peopleEIKEN CHEMICAL Integrated Report 2023

4

At a Glance
The Eiken Group in FY ended Mar. 31, 2023

Net sales

Net profit

R&D expenses

43,271 million yen 4,065 million yen

ROE5,736 million yen 12.1%(full-time employees + temporary employees)

Number of employees

Number of
R&D personnel

Overseas sales
as share of total

Number of countries
in which products deployed

1,106

191

20.6%

49

CO₂ emissions(Scope 1 + 2)

Water volume consumed(all production sites)

4,614t-CO₂ 73,100 m³

Change in major financial indicators over time
Net sales(million yen)
45,00042,996

Operating profit
43,27142,00039,000(million yen)(million yen)

10,00010,000
7,457

6,612

6,218
6,000

36,000

4,000

4,000

33,000

2,000

2,000

FY endedMar. 31, 2021

FY endedMar. 31, 2022

FY endedMar. 31, 2023

(%)
16

8,000

6,000

30,000

ROE
14.3

8,387
8,000

38,667

Net profit

0

FY endedMar. 31, 2021

FY endedMar. 31, 2022

FY endedMar. 31, 2023

0

5,044

12
5,736

12.9

12.1

8
4

FY endedMar. 31, 2021

FY endedMar. 31, 2022

FY endedMar. 31, 2023

0

FY endedMar. 31, 2021

FY endedMar. 31, 2022

FY endedMar. 31, 2023

EIKEN CHEMICAL Integrated Report 2023

5

Putting Management Philosophy into PracticeFIT

For the Protection of People’s Health

Colorectal cancer is a common disease with an incidence rate of approximately 20% worldwide*1. On the other hand, it progresses relatively slowly and, if detected early, acomplete recovery can be realistically hoped for. This is exactly why colorectal cancer screening that leads to early detection has such social significance.
Eiken Chemical launched fecal immunochemical test (FIT) reagents in 1987, and introduced the world’s first fully-automated fecal occult blood analyzer in 1989. This simple
and inexpensive test scratches the surface of the stool to obtain a sample, and a research*2 reports that repeated testing reduces the risk of colorectal cancer mortality by 60%,
which provides scientific evidence of its effectiveness. FIT also appears*3 in guidelines for colorectal cancer screening published by various countries, and our products have been
adopted for colorectal cancer screening programs in 44 countries around the world.
We have maintained a high market share because we entered the market early, and because we routinely develop products tailored to the needs of users based on the data wehave accumulated.

FIT Screening Protocol

ExamineenotifiedDiagnosis andtreatment

StoolsampleSampleprovidedExamination conductedby examining body

Number of countries
in which deployed

44

Colonoscopy

Domestic
share

67%

*4

Result sent
If result is
positive

Structural factor of the FIT market expansion• Accelerating the spread of FIT, a non-contact screening, becauseof the COVID-19 pandemic• Lack of testing capacity with shortage of endoscopists
FIT utilization for endoscopy triage•R ecognition expansion of cost effective of FIT (listed in nationalguidelines, paper publication)
Acceleration of switching from chemical to immunochemical
procedures
Increase in the number of patients by lowering the age for
consultation (US, UK, etc.)

Strategy• Improvement of screening uptake rates, dissemination of
medical examinations
Improvement of access to screening
Development of next generation FIT• I mproved inspection accuracy
Increased value added
Development of highly accurate medical laboratory
technology

Outcomes• Reduced risk of death from colorectal cancer• Reduction of medical cost burden through early detection• Improvement of quality of life
• Extension of healthy life expectancy•W inning screening contracts in new countries and facilities• Dissemination of medical examinations in developing countries*1 World Health Organization (WHO) website*2 Colorectal Cancer Guidelines Based on Effectiveness Assessments (FY2004 Ministry of Health, Labour and Welfare Cancer Grant, “Research on Establishing Appropriate Methods for Cancer Screening and Evaluating Their Effectiveness”)*3 Guidelines, etc. of various countries https://www.eiken.co.jp/en/publication/fit/*4 FUJI KEIZAIEIKEN CHEMICAL

Integrated Report 2023

6

Putting Management Philosophy into Practice

LAMP

Preparing for the Next Pandemic

SARS (Severe Acute Respiratory Syndrome) in 2003, H1N1 influenza in 2009, and the novel coronavirus (COVID-19) pandemic in 2020. In accordance with its mission ofprotecting the health of people worldwide, Eiken Chemical has provided test reagents for a variety of infectious diseases as they have appeared, and has worked alongside
medical professionals to do everything it can to bring such phenomena to a resolution. The rapid and simply implemented LAMP method that it developed in-house in 1999 has
contributed to the fight against these diseases. By leveraging the special features of this method, we help combat tuberculosis and malaria, which are two of the world’s “bigthree” infectious diseases.
There are global concerns that, due to the impact of climate change, the number of zoonotic diseases will increase and the area over which they are prevalent will change, so
preparing for the next pandemic is a pressing issue. As a pioneering clinical diagnostics company, going forward we will put in place structures within the Company to enable us
to help prevent the spread of these new infectious diseases at an early stage.

Special features of the LAMP method

Flow of genetic testing using the LAMP method

Rapid

Obtain sample

Process sample

Genetic testing
using LAMP method

PreciseResults

SimpleLAMP (Loop-mediated Isothermal Amplification)
is a genetic amplification method developed
in-house by Eiken Chemical. Because nucleic acids
are amplified isothermally, genes are detected
rapidly. This technology has been well-received allover the world, and in addition to its use in clinicaldiagnosis for tuberculosis, malaria, and neglected
tropical diseases (NTDs), we sell various types ofreagent and test equipment into a wide rangeof fields, including food hygiene, environmental,
livestock, and plants.

Results confirmed within one hour

Structural factor of the LAMP market expansion• Population of countries in which tuberculosis is prevalent: 3.7 billion• Increase in number of malaria sufferers: 30 million (2020-2021)• Promotion/continuation of malaria eradication activities• Population at risk of infection from NTDs: 1.7 billion• Existence of “compounds” where medical care systems are not well developed• Recommended by WHO• Global rise in awareness of genetic testing as a result of the COVID-19 pandemic

Strategy• Assist in eradication of tuberculosis, malaria, NTDs
Advocate/educate for wider use of diagnostic reagents indeveloping countries
Enhance efficiency to reduce prices and speed up production•R espond to various infectious diseases
Develop test reagents for new infectious diseases early on
Build structures for monitoring spread of infectious diseases
Strengthen systems for joint development with externalorganizations

Outcomes• Reduction in infectious disease patients• Extension/maintenance of public health• Prevention of pandemics before they occur• Enhanced access to medical treatment• Enhanced health at the global level• Contribution to universal health coverage• Help achieve 100 Days Mission*

Strengthen internal development structure*The 100 Days Mission is an international initiative that aims at practical implementation of medical countermeasures (MCM) such as the rapid approval of diagnostic agents, safe and effective vaccines, and therapeutics within 100 days of the announcement by the
WHO of a public health emergency of international concern in relation to new infectious diseases. The goal of the 100 Days Mission is to not only develop and obtain approval for diagnostic agents, vaccines, and therapeutics within 100 days, but also to guarantee
access to MCM for all, including low-income countries, and to aim for equitable supply around the world.

EIKEN CHEMICAL Integrated Report 2023

7

Table of contents

Section01

Value Creation Story

Section02

SectionOur Strategy

03

Corporate Governance

Section04

Our Profile

02

Introduction

18

Long-Term Vision & Medium-Term Management Plan

47

Basic Policy on Corporate Governance58

Eiken Chemical’s Businesses05

At a Glance20

Sustainability

48

59

Main Products and Services

06

Putting Management Philosophy
into Practice21

Business Environment and Strategy

Approach to Composition of Board of
Directors/Diversity of Skills

Financial Highlights

Interview with Director

49

61

Non-Financial Highlights

25

Medium-Term Management Plan
Key Field 1 Cancer

Evaluation of the Effectiveness of
the Board of Directors

60

22

50

Executive Remuneration

62

26

Medium-Term Management Plan
Key Field 2 Infectious Diseases

51

Compliance/Risk Management

External Evaluation/
Stock Information, Etc.

53

Executives (Directors, Executive Officers)

27

Medium-Term Management Plan
Key Field 3 Healthcare

54

Message from Outside Directors

28

Growth Strategy 1: Global Strategy

30

Growth Strategy 2: Research & Development

34

Growth Strategy 3: IT/Digital Strategy

36

Pursuing Quality

37

Growth Strategy 4: Business Activities in Harmony
with the Global Environment

39

Growth Strategy 5: Human Capital Strategy

43

Value Chain Management

44

Growth Strategy 6: Financial Strategy

08

Table of Contents/Editorial Policy, Etc.

09

Management Philosophy/EIKEN WAY

10Value Provided to Stakeholders

11

Message from CEO

15

Eiken Chemical’s Value Creation Process

16Management Resources (Capital)

Editorial Policy

Disclaimer Regarding Forward-Looking Statements

Period of the Report

The Eiken Group has prepared the Integrated Report as a tool for communicating withstakeholders.
During the course of editing this Report, the editors referred to documents such as the
IIRC’s “International Integrated Reporting Framework” and the Ministry of Economy,
Trade and Industry’s “Guidance for Collaborative Value Creation.” It is hoped that it will
facilitate understanding of what kind of value Eiken Chemical has provided in the past,
and what kind of value it seeks to provide in the future.

Forward-looking statements, etc. contained in this Report represent the
judgments of the Company based on information available at the time it was
published, and actual performance going forward may differ from forecasts
for a variety of reasons.

FY2022 (April 1, 2022-March 31, 2023)*Includes reports on some events occurring on or after
April 1, 2023

Scope of the Report
EIKEN CHEMICAL CO., LTD. and its Group companies

EIKEN CHEMICAL Integrated Report 2023

8

EIKEN WAY

Our Management Philosophy

Protect the health of the publicthrough health care services.
Based on this management philosophy,
we contribute to society through the provision of products andservices that protect the health and lives of people around the world.

Our Management Vision

Eiken Group is dedicated to leveraging
expertise as a medical testing pioneer in order
to increase corporate value by protecting
the health of the public with products andservices that customers can trust.

Our Motto

We EIKEN provide trustworthy quality,and develop with technology.

Customers(people to be tested)
We provide products and services
enabling anyone to be tested
with confidence anywhere, and at
any time.

Shareholders and Investors
We strengthen risk managementand ESG efforts and will aim to
improve our corporate value.
We make disclosures and willcommunicate responsibly.

Customers(medical workers who perform testing)Management
Philosophy
Management
VisionMotto

Suppliers/
Supply destinations/
Partners

Employees
We create a working environmentthat respects the diversity of
employees and demonstrates
their individuality and abilities.
We provide our employees with aplace for them to be creative andthat will challenge them.

We create and dependably supply
outstanding products and services
that earn customer trust.

Society

Together, we aim to improve ourcorporate value by providing
products and services that protect
people’s health.

We respect human rights andconduct our business withintegrity and responsibility basedon high ethical standards. We
are committed to preserving the
global environment.

EIKEN CHEMICAL Integrated Report 2023

9

INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Value Provided to Stakeholders
Stakeholder

Customers(people to be tested)

Customers(medical workers who perform testing)

Suppliers/
Supply destinations/
Partners

Society

Employees

Shareholders and Investors

Value provided

Our activities• Reduction in mortality rates due to early detection of cancer•E xtensions in healthy life expectancy•R eduction in psychological burden due to shorter
examination time• Improvement of screening uptake rates through cancer screening educational activities• Contribution to early detection by improving the accuracy and speed of testing• Pursuit of convenience through enhanced usability• Streamlining of examination structures and enhanced
productivity•R eductions in examination room space due to compact
equipment capable of multiple tests•P rovision of academic information• Increasing test accuracy and speed through research & development• Providing accuracy management services for all testing systems• Providing various types of product• Participating in academic conferences and hold study meetings for the provision ofacademic information• Stable supply that meets demand•C oexistence and mutual prosperity based on impartial andfair dealings• Provision of eco-friendly products• Provision of energy-saving equipment• Maintaining structures for supplying products• Engaging in fair and free competition and execute appropriate transactions• Conducting due diligence in the value chain based on CSR self-assessment• Development of eco-friendly products• Development of energy-saving equipment• Eradication of infectious diseases•R eduction of medical cost burden•M aintenance and enhancement of public health•M easures to address climate change•C onservation of biodiversity• Providing high-quality medical information through the Modern Media academic journal• Preventing spread of infectious diseases and control high medical expenses throughearly detection• Reduction of greenhouse gas emissions by improving production efficiency and making
use of natural energy• Utilizing sustainable resources and develop eco-friendly products• Mitigation of environmental impact by reducing waste• Sense of satisfaction and rewarding work•P hysical and mental health/safety• Maintaining fair personnel evaluation and compensation structure• Providing venues for creativity and the acceptance of challenges• Implementation of monitoring and improvement activities based on questionnaire
surveys of employee satisfaction• Providing a safe and comfortable working environment• Improvements in financial/non-financial indicators over thelong term derived from continuous value creation• Driving long-term enhancements in corporate value by strengthening ESG initiatives• Disclosure of information in a timely, appropriate, and responsible manner• Maximization of returns through improvements in ROE• Communication with investors (financial results briefings, one-on-one meetings, etc.)

EIKEN CHEMICAL Integrated Report 2023

10

INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Message from CEO

Eiken Chemical has never refused
the challenge of new issues in
the field of medicine
Focusing on the future, my mission
is to build the foundations of anorganization that will drive the further
evolution of our corporate culture
Tsugunori Notomi

President & CEO

1

Eiken Chemical has consistently taken on
the challenge of confronting the issues facedby the medical industry

3Management strategy for responding to changes in the environment
The management framework “EIKEN ROAD MAP 2030”
and Medium-Term Management Plan

2

The role Eiken Chemical should play andthe issues it should resolve

4

Working to build the foundations of the Eiken Chemical of the future

EIKEN CHEMICAL Integrated Report 2023

11

INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Message from CEO

We have never wavered in our obedience to the precepts of the management philosophy
Our history of taking on challenges has resulted in a stronger business and organization1

 iken Chemical has consistently takenEon the challenge of confronting theissues faced by the medical industry

The history of Eiken Chemical is a history ofnever refusing to accept the challenge of newissues in the field of medicine.
The Company launched its business with the
manufacture and sale of medical products andnutritional food that used livestock organs
as its raw ingredients 84 years ago. Having
come through the chaotic period of the war
and the years that followed, we leveraged
the technology and know-how that we had
accumulated, and found our way to the saleand manufacture of culture media used for
growing microorganisms and biological tissue.
The culture media for testing bacteria that welaunched in 1950, at a time when infectious
diseases such as dysentery and typhoid wereprevalent, made a significant contribution to
the prevention of epidemics and to the spread

Powdered agar for thedetection of bacteria
SS Agar “Eiken”
1950Detects salmonella anddysentery bacteria.
This product was thecatalyst for our entry
into the clinical testing
industry.

and development of public health in Japan at
the time. Up until that point the preparationof prescriptions for culture media had been
the work of physicians, but through repeateddiscussions with doctors we achieved the firstcommercialization of the product in Japan,
freeing medical professionals from an onerous
and time-consuming task.
Seizing the opportunity conferred by thissuccess, we launched a series of products that
fulfilled valuable roles in laboratory testing.
In 1958 we launched reagents for testing
sensitivity to bacterial drugs, and in 1963 welaunched Japan’s first urinalysis test strips.
These were followed in 1975 by the release of
antigen testing reagents using radioisotopes,
such as those related to radioimmunoassays,
and in 1987 by the launch of low osmoticpressure contrast media for pharmaceuticals
used in internal examinations. Because theuse of vascular contrast media involves theintroduction of reagents into the body,in vivo diagnostic
contrast media
Hexabrix 320
1987-2005
This marked our entry
into the field of internal
diagnostic medicine,which required a level ofmanagement equivalent
to that of therapeutic
agents.

this had a significantly higher risk thanthe products used for laboratory testingthat we had developed hitherto, but weresolutely took on this challenge. It is throughcontinuously taking on such challenges
that Eiken Chemical followed the route to
becoming the comprehensive manufacturerof clinical diagnostics and devices that it istoday.
Our management philosophy includes thewords “Protect the health of the publicthrough health care services,” and over the 84
years since the foundation, we have not once
wavered from obedience to this idea. I feelthat our employees hold the management
philosophy close to their hearts and have astrong sense of their mission as they take onsuch challenges, and that this has led to anemphasis on quality and a keen awarenessof ethics, enabling us to foster a culture of
rigorous examination right from the startwhen conducting clinical evaluations.
Even today, the Company continues to takeon these challenges. The development ofreagents and devices to further expand
the fecal occult blood testing system that iscurrently our main product, of test reagentsand devices using the LAMP* method, andof testing systems that address the demandfor personalized medicine, are all clear
expressions of the approach of tackling the
problems faced by the field of medicine with
an awareness of our mission, which has been
passed down unbroken from generation
to generation since the founding of theCompany.

*An abbreviation of Loop-mediated Isothermal Amplification.
A quick, simple, and accurate genetic amplification method developed in-house by the Company.

Real-time turbidimeter
for LAMP
LoopampEXIA
2009-

Fully-automatedfecal occult blood
analyzer
OC-SENSOR Ceres
2022-

Currently available
detection device thatuses the LAMP method.

Currently available
fecal occult blood
analyzer.

EIKEN CHEMICAL Integrated Report 2023

12

INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Message from CEO

We will respond to changes in the business environment
in which medical professionals operate
We will address the needs of clinics, remote medicine, andmedicine in isolated locations, as well as those of major hospitals

2

The role Eiken Chemical should play
and the issues it should resolve

The environment in which medical
professionals operate is undergoingsignificant change. In Japan in particular, theacceleration of the declining birthrate and theaging of society are leading to considerable
changes in what is being required from healthcare. In order to respond to new medical
needs, medical institutions are increasingly
turning to division of roles and collaboration.
It used to be that a patient could go to any
hospital and expect to receive a certain levelof medical service, but we are shifting towards
a division of labor under which day-to-day
issues are the responsibility of primary caredoctors, and specialist treatments are theresponsibility of major or specialist hospitals.
Previously our business had, if anything,
been focused on providing test equipment
and reagents to the kind of major hospitals
that operate a testing department. Basedon the progressive shift to division of labor
between medical institutions, I think we needto concentrate even more on the business ofproviding reagents that even a primary caredoctor in a clinic can easily use, in addition to
the business of supplying to major hospitals.

Also, during the recent COVID-19 pandemic
there was an acceleration of the need forremote treatment, and there has been rapid
progress in deregulation. In addition, there
is demand for clinical diagnostics that can beused on site, such as when a doctor visits apatient in an isolated location. Going forward
we will forge ahead with developmentthat will actively address the need for suchdiagnostics.
On the other hand, we will also expand our
lineup of products and services for major
hospitals. As the digital transformationof medical institutions proceeds, we are
beginning to see such institutions requirethat the devices and reagents that we provide
can be connected to their systems. We do
not maintain an internal device development
function and so the development itself is
outsourced to medical device manufacturers,
but we are nurturing internal humanresources who have the understanding andknow-how to engage with the design as
deeply as the responsible persons at the
medical device manufacturers. This point is
extraordinarily important, and we intend toconcentrate on this going forward in order tonurture human resources who can deal withthe shift to AI.

3 anagement strategy for respondingM
to changes in the environment
The management framework “EIKENROAD MAP 2030” and Medium-Term
Management Plan

It was in order to respond effectively tochanges in the business environment that
we announced the management framework“EIKEN ROAD MAP 2030” in April 2022.
Under this framework, while retaining thecurrent business areas as the core operations,
we designated three key business fields toaddress. These are contribution to cancer
prevention and treatment, contribution toeradication and control of infectious diseases,
and provision of products and services
useful for health care. In the field of cancer,
we intend to expand products and services

that are more directly related to treatment,
whereas in the area of infectious diseases
we are seeking to establish simpler test
technology, while in healthcare we plan toexpand products and services that address
remote treatment and testing at home.
We will also take steps to reform thecorporate culture. In order for the Company
to inspire innovation in medical processes
going forward that builds the future of
testing, we aim to energize the skillset of eachand every employee so that all employees
can broaden their domain of activity, and to
give rise to fresh possibilities by gathering
those individuals with their capabilities andtaking them beyond their respective domains
to take on challenges as a team. This is theidea incorporated into the slogan “Beyond
the Field – Team × Challenge –.” In terms

EIKEN CHEMICAL Integrated Report 2023

13

INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Message from CEOof initiatives to help achieve a sustainable
society, we have identified 11 materialities(key issues), and have included these in ouraction plan.
The Medium-Term Management Plan that
concludes in FY ending Mar. 31, 2025 is
the first such plan aimed at achieving the
EIKEN ROAD MAP 2030. Specifically, we
have designated and are implementing key

measures for each of the three key businessfields in order to address the accelerating
paradigm shift in healthcare. Furthermore,with the objective of establishing amanagement platform for sustainablegrowth, we are promoting human capital,
structural reform, IT, financial, and governancestrategies.

The management framework “EIKEN ROAD MAP 2030”

Beyond the Field – Team × Challenge –Business strategy

Management strategy

01

02

03

04

05

Contribution tocancer prevention
and treatment

Contribution
to eradicationand control of
infectious diseases

Provision of
products andservices useful for
health careBusiness activities
in harmony
with the global
environment

A vibrant
corporation
making use of
employee’s talentManagement
Philosophy

Business
Environment

Sustainability
Management

My mission as President is to build the foundations ofan organization of the future that will resolve medical issues globally4 orking to build the foundations ofW
the Eiken Chemical of the future

Eiken Chemical has improved the quality ofits business activities over time in accordancewith its corporate culture of taking onchallenges, and by transitioning to become
a company with nominating and othercommittees it has also concentrated onenhancing the governance system under its
philosophy EIKEN WAY. It is through such
efforts that today we have grown to become
a company that is trusted by a variety of
stakeholders, including investors, but there
is still a mountain of issues that needs tobe resolved in preparation for realizing themanagement philosophy and achieving
continuous growth going forward. In addition
to expanding sales of our fecal occult blood
testing system, mainly in developed countries,
the Company is also working in cooperation
with various NGOs, governments, andhealth authorities to establish and promote
more widespread use of our genetic testing
systems, with the objective of eradicating
infectious diseases such as tuberculosis andmalaria in developing countries. However,rather than resting on our laurels, we intend
to contribute to the realization of universal
health coverage (UHC) by promoting the
spread of fecal occult blood testing indeveloping as well as other countries, withthe goal of ensuring that not a single person
is left behind for medical treatment, andworking on initiatives to achieve further
improvements.
As for the reform of the corporate culturethat is currently underway, I consider this tobe my most important mission as President.
In this era of uncertainty, we must respondwith flexibility at all times, rather thansticking stubbornly to the plan as it was
first drawn up. To fulfill my responsibilities
as President, I will move steadily forward to
lay the foundations of the organization bystreamlining management systems, building
horizontal links between compartmentalizedorganizations, strengthening team activities,
establishing a workplace environment thatenables those in charge of development
to focus solely on development, and otherinitiatives. In order to achieve sustainablegrowth, we will strive for a proper balance
between making distinctive contributions
to medical care based on our management
philosophy, promoting globalization andgenerating a certain level of profits, andreturning those profits to stakeholders.
I encourage you to expect great things ofEiken Chemical as we take up the challengesof the future.

EIKEN CHEMICAL Integrated Report 2023

14

INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Eiken Chemical’s Value Creation Process
As a pioneer in testing, since the foundation we have provided products and services that are trusted by our customers. While valuing those things that are possible
only because we are a comprehensive manufacturer, we will continue to protect people’s health as we prepare for 2030 and the future that lies beyond.

Contribution to cancer prevention and treatment
Contribution to eradication and control of infectious diseases
Provision of products and services useful for health care

Human Capital
Strategy

Busi

Structural Reform

IT Strategy

Financial Strategy

Medium-Term
ManagementPlanness Model

Sales
Marketing

OutputManufacturing

Inp uts

Research &Development

EIKEN WAY

Contribution to cancer prevention and treatment

Build the future of testingfor the health ofpeople worldwide anda sustainable society
Redress global disparities in health care

Contribution to eradication and control of infectious diseases
Provision of products and services useful for health care

Establish simpler test technology for infectious diseases

Business activities in harmony with the global environment(types of capital)
P16

Our goals for the future

EIKEN Vision
2030

P19

P16

Comprehensive
manufacturer ofclinical diagnostics

Governance

A vibrant corporation making use of employee’s talent
Procurement

P18

Materialities
P20

Contributing tohealth and qualityof life for people
around the world

Business activities
in harmony
with the global
environment

A vibrant
corporation
making use of
employee’s talent

Enhanced personal care, such as
remote clinical system and at-home self-testing
Improve quality of life by enhancing personal care
Reduce workloads on the medical front line andcontrol medical expenses through enhanced testing
Achieve carbon neutrality

An organizationalbase that supports
sustainable growth

EIKEN CHEMICAL Integrated Report 2023

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Management Resources (Capital)
The six types of capital are the driving force behind value creation, and are the indicators we use for EIKEN VISION 2030 and creating the future beyond that.
FY ended Mar. 31, 2023

Financial Capital

Human CapitalIntellectual CapitalSocial Capital

Manufacturing
CapitalNature Capital

An organizational base that
supports sustainable growth

Growth driver for
the Group as a whole

Research and development thatbuilds the future of testing

Partnerships rooted in
the management philosophy

Stable supply ofhigh-quality products

Mitigating environmental
impacts as “the last generation”

I np u t
Total assets:¥66,275 million
 et assets:N¥49,535 million

 umber of employeesN(full-time employees +temporary employees):
1,106P roportion of R&D employees:
17.3%

 ystematic HR development
S
program

Consolidated R&D network

 &D expenses:
R¥4,065 million

EIKEN WAY
 umber of surveys implemented:
N10 umber of inquiries received:N
1,044

Manufacturing locations:3 nergy consumed:
E
133,345 GJ

Capital expenditures:¥3,792 million

Water volume consumed:
73,100 m3U se of Tochigi Furusato Electricity:
6,774 MWh (55.8% of total) umber of IR events held:N
102

Personnel evaluation program
aimed at talent acquisition

Cooperation on information
with WHO and otherinternational organizations
 onduct of due diligence inCvalue chain
Partnerships with a variety of
external research institutions

O ut pu t
R
 OE:
12.1%
Operating cash flow:¥7,575 million

Total actual work hours per
full-time employee per year:
1,875 umber of patents held:N836

 umber of countries inNwhich products deployed:49

Number of products:
1,836

C O2 emissions per employee:
4.17 t mployee satisfaction score:E
58.4

 etworks with hospitalsNand clinics

Water volume consumed per
employee:
66 m3

Percentage of managerial
positions held by women:
13.8%

A ppropriate relationships withshareholders and investors

Solar power generated:
97,624 kWh (0.8% of total)

Market share in fecal occult
blood reagents:
67% (Japan)
EIKEN CHEMICAL Integrated Report 2023

16

02

Our Strategy

Beyond the Field – Team × Challenge –Under this slogan, we aim to achieve three objectives: To energize
the skillset of each and every employee so that all employees canbroaden their domain of activity; to give rise to fresh possibilities
by gathering those individuals with their enhanced capabilities
and taking them beyond their respective domains to take onchallenges as a team; and to step beyond existing businessdomains to inspire innovation in medical processes, therebybuilding the future of testing.

INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Long-Term Vision & Medium-Term Management Plan

EIKEN

EIKEN ROAD MAP 2030

Vision2 0 3 0Beyondthe Field

CancerInfectious diseases

Healthcare

Focus on establishing simpler test

Expand products and services that address

to treatment

technology

remote treatment and testing at home

Beyond the Field – Team × Challenge –01

FY2024FY2027Companion diagnostic system

Testing for cancer invarious organs withthe same testing system

CancerBusinessstrategy

02

Infectious
diseasesbusiness environment, the Eiken Group formulated
the EIKEN Vision 2030 and the management

03

Healthcare

04

Environment

05

Human
resources

framework “EIKEN ROAD MAP 2030,” andannounced them on April 28, 2022.
Our slogan for achieving the vision is “Beyond theFY2030Comprehensive cancer risk
screening test using humangenome analysis, miRNA, etc.

Colorectal cancer screening by mailperspective as well as respond to changes in the

Field – Team × Challenge –.”the EIKEN ROAD MAP 2030 specifies cancer, infectious diseases,
and healthcare as three key business fields going forward.

Challenges in areas more directly related– Team × Challenge –In order to incorporate a sustainability management

While retaining the current business areas as the core operations,

Expanded line up of
infection-control products

Strengthen measuresagainst antimicrobial
resistance (AMR)

Malaria/NTDs genetic testing system

Portable genetic
testing device

Early detection of
cognitive function decline

VisionContribution tocancer prevention
and treatment
Contribution toeradicationand control of
infectious diseases

Cognitive function
detection system

Provision of products
and services usefulfor health care

Remote clinical system/
at-home self-testing

Health care using
mobile device

Development ofenvironmentally-friendly products
CO₂ reduction on Scope 1 and 2

CO₂ reduction
including Scope 3

CO₂ 30% reduction(compared to FY2018)

Business activities inharmony with theglobal environment

Maintenance ofhuman resources management

Sharing of humanresources insideand outside EIKENWork at any timeand any place

A vibrant corporation
making use of
employee’s talentManagement
strategy

EIKEN CHEMICAL Integrated Report 2023

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Long-Term Vision & Medium-Term Management Plan

Medium-Term Management Plan
This is the first plan in the EIKEN ROAD MAP 2030, and constitutes a three-year growth strategy.
Toward EIKEN VISION 2030, we have set out key fields and key measures (see P25-27 for details) as part of our response to the accelerating paradigm shift in healthcare. In order to promote thestrengthening of the management platform for sustainable growth, we are promoting management focused on human resources, enhancing our employees’ sense of satisfaction and rewarding work,and establishing environments in which innovation can flourish.

Business strategy and key measures

Strengthening the management platform

We have formulated key measures for each of business strategies 01 to 03, and are working to build a base that will
enable us to achieve the long-term vision.

FY2022

CancerContribution tocancer prevention
and treatment

FY2023

FY2024Contribution toeradication and control
of infectious diseases

The Group is shifting to a wage system that focuses on job responsibilities
and expertise and an evaluation system that brings out teamwork andchallenges employees to pursue employee satisfaction and meaningful work.

StructuralreformBased on a common understanding that our business field is the global
market, the Group is optimizing business processes and overhauling its
systems with a view to speeding up decision-making.

IT strategy

The Group is actively introducing AI and robots, advancing DX in products
and services and a wide range of business processes.

Financialstrategy

By setting targets for cash conversion cycles, the Group is improving funding
efficiency for business investment and diversifying its fundraising.

Contribution to personalized medicine
Launch of the companion diagnostic system

Spread of adoption of cancer screening and development of oncogene screening technologies
Improvement of uptake rates for colorectal cancer screening and development of tests for cancer
genes in stoolGlobal deployment of gastric cancer risk assessment test (ABC risk classification)

Eradication of tuberculosis, malaria, and neglected tropical diseases (NTDs)

Infectious
diseases

Human capital
strategy pread of use of diagnostic drugs in developing countries, monitoring and rapid response toS
threatening infectious diseases

Response to a wide variety of infectious diseases
 eployment of highly sensitive immunochromatography systems
DEnhancement of infectious-disease items
Drug sensitivity testing systems for large hospitals

Support for remote treatment

Healthcare

Provision of products
and services usefulfor health care pread and expansion of screening by mail, spread of endoscopic triage testingS
Provision of systems for receiving health checkups online

Response to inflammatory bowel disease (IBD: from monitoring to screening)

GovernanceDeployment of tests for calprotectin in stool

Prevention of dementia
Spread of screening tests for cognitive function

Financial targets
During the three years to FY2024, we are seeking to achieve
steady growth in existing businesses, while putting in place
an organizational base for establishing new businesses.
On the other hand, in our long-term plans we have set
challenging targets that assume M&A deals and thegrowth of new businesses. We aim to achieve these targets
by improving efficiency through DX, expanding areas
peripheral to the core businesses, and rapidly developing
new products and services.

FY2024GrowthProfitability
Capital efficiency

FY2030¥Overseas sales asshare of total

25.8%

40% or greater

Operating profit
margin14.4%

20% or greater

9.2%

15% or greater

ROE

Overall image of EIKEN ROAD MAP 2030

43.5bn ¥75.0bn

Net sales

The Group is strengthening its measures on ESG, with the aim of ensuringsound management that improves long-term corporate value. In addition,
the Group is advancing proactive IR and PR with high transparency, forexample through the publication of integrated reports.

Expansion of new businesses

New Medium-Term
Management Plan

M&A

Creation of
new businesses

Application of core technologies leading to
expansion into peripheral businesses

Sales
targets

Growth inexisting businesses

Implementation of key
measures
Expanding sales into
overseas markets

Creation of value added

Product development

Strengthening of alliances

Opening of new markets

Fiscal year

“EIKEN ROAD MAP 2030 New Medium-Term Management Plan (FY ended Mar. 31, 2023 to FY ending Mar. 31, 2025)” https://www.eiken.co.jp/uploads/Medium-Term_managemetplan_FY2022-2024.pdf
EIKEN CHEMICAL Integrated Report 2023

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Sustainability
The Eiken Group has identified 11 materialities, and in addition to “Environment,” “Society,” and “Governance,” has created the category of “Medical” as a company that protects the health of people
around the world, expressed in four categories. The Group is raising awareness of these materialities internally, incorporating them into its business strategy and drafting targets and key performanceindicators (KPIs) for each issue. In so doing, the Group is focusing its combined efforts on these materialities and contributing through various initiatives to the achievement of the SDGs.

Sustainability advancement system
The Eiken Group has established a Sustainability
Committee, composed of the President & CEO
as Committee chair and the Executive Officers as
members.
In principle, the Sustainability Committee meets twice ayear, deliberating and reporting on important mattersrelated to sustainability. Supervision of matters thus
deliberated is achieved through reports to the Board of
Directors, and items are put on Management Meeting
agenda as required.
The mid-term and annual targets that are approvedby the Sustainability Committee are sent for execution
to related committees and divisions, where they aredeveloped in detail and related activities are advanced.

Materialities
Board of Directors
Supervises

Materialities (key issues)
Contributing to Healthand Quality of Life for
People Around the World

Reports to

President & CEO
Directs and supervises

Responds and reports to

MedicalPresident & CEO

Business Activities in
Harmony with the Global
Environment

Members Executive Officers
Develops/
deploys measures

Directs

Contributing to a
Recycling-Oriented
Society
A Vibrant Corporation
Making Use of Employee’s
Talent

01

STEP

02

STEP

03

Extracting social issues

ISO26000

The Group refers to international standards suchas ISO 26000 and Global Reporting Initiative (GRI)
standards, as well as SDGs, key ESG issues andglobal trends, to extract socially important issues.

Issue

GRI standards
SDGs and ESG issues
Other evaluating bodies

Issue
Issue

Issue

Respecting Human
Rights and Diversity

Employee Engagementand HR Development

SocialIssue
Boosting Health andEnsuring Safety andHygieneIssue

An Organizational BaseThat Supports Sustainable
GrowthImportanceto society
Importance toshareholders
and Investors
Importance to the business of the Eiken GroupKPIs (excerpt)
Number of countries in which
products are deployed
Number of countries in whichcolorectal cancer screening
tests are deployed
Rate of implementationof surveys on responsible
procurement
Rate of implementation of due
diligence on human rights

Global solutions to healthcare issues
Development of advanced technologies
and advancement of innovation

Reduction of CO2 emissions at worksites(Scope 1 and 2)
Reduction in CO2 emissions in supply
chains (Scope 3)
Reduction of water volume consumed
Reduction of waste

Governance

Identification of Materialities
Discussion by the Board of Directors following deliberation by the Management Meeting

Establishing Risk
Management

Rate of adoption of ecofriendly packaging

Promotion of diversity and inclusion

Percentage of managerial
positions held by women
Creating fulfilling and supportive
Percentage of employees who
workplaces and achieving work-life balance are disabled
Eradication of harassment

Development of global personnel

Advancement of health improvement
programs and safety-and-hygiene activities

Achieving Sound andPromoting diversity among executives
Transparent Governance
Rigorous Complianceand ThoroughCorruption Prevention

Rates of reductions in CO2emissions, water use, andwaste volume

Reduction of packaging and use ofsustainable materials

Development of R&D personnel

Preparation of proposed materialities
Drawing on the extracted social issues, theGroup prepares proposed materialities, taking
into consideration stakeholders’ concerns, theirrelations to the corporate philosophy, impact on
operations and other factors. The proposals also
reflect comments from third parties.

Responding to Climate
ChangeEnvironment

Related committees and divisions

Identifying materialities
STEP

Solutions to Medical
IssuesMeasures
Supply of products to developing
countries that have not yet adopted them

Proactive measures on quality
Pursuing Quality andEstablishing Sustainable Strengthening of supply-chain
Supply Chainsmanagement

Sustainability Committee
Chair

Improving Access to
Healthcare

Training and monitoring based oncompliance programs
Thorough prevention of corruption
Continuous improvement of business
continuity management
Strengthening of information security
management

Rate of uptake of harassment
prevention training
Rate of uptake of child-rearing
leave
Total actual work hours
Female Directors as share of
Directors/Female Executive
Officers as share of Executive
Officers
Foreign-national Directors as
share of Directors/
Foreign-national Executive
Officers as share of Executive
Officers
Training attendance rate

“Materialities and KPIs” (as of July 20, 2023) https://www.eiken.co.jp/uploads/Materialities%20and%20KPIs_230720.pdf
EIKEN CHEMICAL Integrated Report 2023

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Business Environment and Strategy
Social trends

Changes in demographic structure

Widening disparities

Trends accelerating at a global level

Impact on our business

EIKEN ROAD MAP
2030

Materialities

Growing demand for early detection to control medical expenses

Change in needs from early detection to risk prevention

01

M

Changes in needs caused by shortage of medical professionals

Rising demand for simple and accurate testing system

01

M

Global population growth

Address measures to control infectious diseases indeveloping countries

02

M

Decline of working-age population in Japan

Intensifying competition for talent acquisition

05

S

Acceleration of the declining birthrate and aging population indeveloped countries

Increasing need for health management for senior citizens

03

M

Widening disparities in income, medical treatment, and education

Pursue lower prices, enhanced usability

01

02

Products and services optimized for the individual

Shift from standard treatment to personalized medicine

01

02

Heightened health awareness

Address self-medication

03

M

Proactive use of personal data

Address personal health03

M

Increasing need for control of medical expenses

M

S
M

Changes in lifestyles

Digital shift

Heightened awareness of sustainability

Spread of technologies such as AI

Use of testing systems
Improve productivity and quality

Blending of the real and the virtual

Accelerate spread of remote treatment and health careusing mobile devices

Introduction of carbon taxes and emissions trading system being
considered

Reduction of CO2 emissions

Environmental regulations related to plastic

Coming to light of human rights problems

EIKEN ROAD MAP 2030: 01 Cancer, 02 Infectious disease, 03 Healthcare, 04 Environment, 05 Human resources

Reduction of plastic usage

Delays in global expansion
Sustainability of supply chain

01

M

S

03

M

04

E

05

M

S

G

Materialities: M Medical, E Environment, S Social, G Governance
EIKEN CHEMICAL Integrated Report 2023

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Interview
with Director

We will enhance corporate value by resolutely
taking on challenges in our key businessfields, improving capital efficiency, andimplementing appropriate capital policies.

Hajime Watari
Senior Vice President andExecutive Officer
General Manager, Business
Management Division

Management framework andMedium-Term Management Plan
for achieving EIKEN Vision 2030

 edium-Term Management Plan
M
progress and key business fieldinitiatives

Having set out a vision for the future towhich we aspire in EIKEN Vision 2030, theEiken Group is moving to execute initiatives
aligned with the management framework“EIKEN ROAD MAP 2030,” under which thefinal milestone is 2030. This management
framework sets out contribution to cancer
prevention and treatment, contribution toeradication and control of infectious diseases,
and provision of products and services usefulfor health care as the three key business fields,
in addition to which it incorporates the goalsof business activities in harmony with theglobal environment, and a vibrant corporation
making use of employee’s talent from thesustainability management perspective.
The three-year Medium-Term Management
Plan that we began in FY ended Mar. 31,
2023 represents the first step towards
implementing this management framework,and this fiscal year is the second year of theplan.

As for results in the first year of the MediumTerm Management Plan, all three areas ofbusiness made steady progress towards
the milestone of 2027 in accordance with
their respective strategies. With regard
to management strategy with a focus onsustainability management, on the other
hand, although we made steady progress interms of establishing systems, there are still
operational issues that we need to resolve,
albeit only a few.
 ontribution to cancer prevention
Cand treatment
In the area of cancer, our initiative forlaunching a companion diagnostic system torespond to the accelerating trend towards
personalized medicine is proceedingaccording to plan, and we are making
satisfactory progress in the development oftechnology for oncogene screening. With
regard to improvements in uptake rates

EIKEN CHEMICAL Integrated Report 2023

22

INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Interview
with Director

for colorectal cancer screening, during the
COVID-19 pandemic we captured new
demand in overseas markets, driven by suchfactors as the use of fecal occult blood tests
for pre-examination triage due to the desire
to eliminate infection risks arising from direct
use of endoscopes in examinations, which
led to more widespread adoption of remote
screening (screening by mail). In Japan, we
continue to discuss similar use of tests withmedical organizations, related corporations,and other entities.
 ontribution to eradication andCcontrol of infectious diseases
We are also planning to promote measures
to help eradicate neglected tropical diseases(NTDs) in addition to tuberculosis and malaria,
which are two of the world’s “big three”
infectious diseases. Due to the prolonged
nature of COVID-19 pandemic, it is taking
time to accumulate clinical evaluations at
local sites. Due in part to having concentrated
management resources on the stable supplyof test reagents related to COVID-19, with the
COVID-19 pandemic drawing to a conclusion
I expect improvements in the form of an
expanded product lineup.
As for initiatives aimed at the eradicationof NTDs, we are making steady progress invarious countries.
 rovision of products and services usefulPfor health care
In health care, we are addressing thetrend of remote treatment using mobile
devices, responding to the rising numberof people affected by inflammatory bowel

disease, and promoting projects related tothe prevention of dementia. The market is
gradually becoming more accepting of theeffectiveness of our proposals related to theprevention of dementia as we accumulate
data from dementia risk testing and present
them in academic journals. With regard toaddressing the matter of remote treatment,
we are currently at the stage of verifying
and selecting a range of applications, but asa small startup and also as a business thatgenerates synergies with existing operations,
we will accelerate this initiative going
forward.

 estructuring the businessR
portfolio and strengthening
the financial position
In accordance with the EIKEN ROAD MAP
2030, we are taking steps to restructure
our business portfolio and strengthen our
financial and capital strategy.
Restructuring the business portfolio
In order to provide fine-grained solutions tocustomers, the Eiken Group offers a lineup
of 1,836 products. While we believe thateach of these is important and valuable, we
intend to steadily accelerate improvements
in profitability by taking a more nuanced
approach to committing management
resources, having first ordered the businessportfolio in order of priority and inverse priority
using a ranking that also takes into account
ROIC. This will facilitate decisions about
concentration of investments and commitmentof management resources going forward.

EIKEN CHEMICAL Integrated Report 2023

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Interview
with Director

We will work on the rebuilding of the businessduring FY ending Mar. 31, 2024, and hope forthis to be reflected in the next Medium-Term
Management Plan.

maintenance of a sound financial basewith the expansion of the business, we will
promote an agile and flexible approach tostrategic investments. Specifically, in addition
to implementing cumulative strategic
investments of ¥28.4 billion over the three
years of the Medium-Term Management
Plan, we will work to convey a more tangible
sense of shareholder returns by paying stabledividends informed by our policy of a dividend
payout ratio of 30% or greater.

Improvements in capital efficiency
In preparation for improving capital efficiency,
we are moving forward with measures
to shorten the cash conversion cycle.
Specifically, we will promote shortening of theaccounts receivable turnover period, and, bystrengthening our inventory management,of the inventory turnover period. In researchand development, our objective is to launch
products as planned and secure sales andprofits by improving the accuracy of ourdevelopment schedule.

Seeking to achieve financial targets
Under the EIKEN ROAD MAP 2030, we aretargeting net sales of ¥75.0 billion or greaterin FY ending Mar. 31, 2031. In order to achievethis, it is essential not only that we expand
existing businesses but also that we acquire

Financial and capital strategy
While seeking a balance between thetechnology and grow new businesses. By
proactively expanding the overseas businessfor creating and developing new businesses
that pivot on our three key business fields, weseek to achieve an overseas sales as share of
total 40% or greater. We are also aiming for
ROE of 15% or greater. Going forward we will
also consider expanding the business throughthe use of M&A to achieve growth, but we will
not necessarily rely only on our own funds forfinancing, and we intend to emphasize capitalefficiency when procuring funding.

Further enhancements incorporate value
To achieve sustainable improvements incorporate value we will continue to instill the
management philosophy in employees, forge
ahead with the introduction of sustainability

management, and embody the management
philosophy of “Protect the health of the publicthrough health care services” in order tocontribute to the health of people around theworld and help achieve a sustainable society.
In accordance with our “Team × Challenge”
slogan, we will pursue job satisfaction andrewarding work for employees by leveraging
the compensation system and a comfortableworking environment, doing everything we
can to create innovation through humancapital -focused management.
Going forward, the Eiken Group will
resolutely take on challenges in its key
business fields, improve capital efficiency andstrengthen capital policies in order to deliver
enhancements in corporate value. I lookforward to sharing our future achievementswith you all.

Financial targets(billion yen)

■ Net sales ■ Overseas sales

Operating profit margin

80.0

(%)

ROE
¥

75.0bn30
25

FY ending Mar. 31, 2025

60.0
20

43.5bnNet sales

¥

15

40.0

Growth50.0

FY ended Mar. 31, 2023

FY ending Mar. 31, 2025

FY ending Mar. 31, 2031

0¥75.0bnOverseas sales as share of total

25.8%

40% or greater

Profitability

Operating profit margin

14.4%

20% or greater

Capital efficiency

ROE

9.2%

15% or greater

10
20.0

43.5bn¥FY ending Mar. 31, 2031

EIKEN CHEMICAL Integrated Report 2023

24

Cancer

INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Medium-Term Management Plan Key Field 1

CancerStrongPoint

Spread of adoption of cancer
screening and developmentof oncogene screening
technologies/Contribution
to personalized medicine

Detection technology
Dominant market share in Japan and overseas
Accumulated know-how

Weak
Point

Information technology

In the field of cancer, we have until now focused on the test business (prevention andearly detection), and we built a screening program for colorectal cancer in particularthat could be used globally, with the resulting early detection contributing to
reductions in mortality rate and control of medical expenses. On the other hand, cancer
treatment involves significant medical expenses, and it is important to choose the mostappropriate method of treatment. Rather than limiting ourselves to prevention andearly detection of cancer, we are aiming to address such treatment issues by developing
a comprehensive testing system that selects therapeutic agents and makes decisions
regarding the effects of treatment in order to further reduce cancer mortality rates.

Incidence rate ofcolorectal cancer globally

19.5%

*1

(2020)

P ! ck Up
Improving colorectal cancer screening uptake rates and accuracy
Colorectal cancer is a common disease with an incidence rate of approximately 20% worldwide. On the other hand, it
progresses relatively slowly, and if it is detected early, a high percentage of patients may be expected to make a complete

Improvement of rates of uptake of colorectal cancer screening
Expand methods

Screening in areas with limited access to health care

Improvement of access to screening

Development of next generation FIT
Adaptable totransport conditions
in various countries

recovery. This is exactly why colorectal cancer screening that leads to early detection has such social significance.
However, even in Japan where colorectal cancer screening is spread, uptake rates are 49.1% for men and 42.8% forwomen*2, both of which are low. With the goal of facilitating screening for as many people as possible in order toreduce the mortality risk of colorectal cancer, the Eiken Group is aiming to improve access to testing by achieving further

Screening by mailOnline screening

improvements in the stability of sample preservation solutions that are suitable for use in screening by mail or online

Development of application Development of sampling
to recommend colorectal
buffer to stabilize
cancer screening by mailsubstances in stool

Reliable colorectal
cancer screening

screening.
Globally, it is forecast that a shortage of colonoscopists will lead to a lack of testing capacity, and it is believed that the key
issue is developing and making available a triage test that fits between colorectal cancer screening using fecal occult bloodand detailed screening conducted by colonoscopy. With the aim of developing such a triage test, the Eiken Group is working
to improve screening accuracy, detect cancer at earlier stages, and increase accuracy. As well as increasing the value added

Improved accuracy of colorectal cancer screening
Increased burden on patients and healthcare providers

Increased value added

Capacity shortage of endoscope in Europe

Development of highly accurate medical laboratory technology

by screening, we are working on developing highly accurate medical laboratory technology that will allow us to create tests

Narrowing down
the endoscopy
target persons

that narrow down candidates for endoscopies and that put less of a burden on the patient.
Leveraging our accumulated know-how and our high market share in Japan and overseas, we are working on a new
evolution of screening for colorectal cancer.

Cancer detection atearlier stages

Increased accuracy

miRNA
DNA methylation

Enterobacterial flora

Develop tests to
reduce patients’physical burden*1 WHO website *2 Estimate based on “Comprehensive Survey of Living Conditions, 2022”

EIKEN CHEMICAL Integrated Report 2023

25

Infection

INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Medium-Term Management Plan Key Field 2

Infectious Diseases
Expansion of products tocontrol infectious diseases/
genetic testing system fortuberculosis, malaria, and NTDs

StrongPoint

Robust design
partnerships

Weak
Point

Quality of evidence
Usability

In the field of infectious diseases, as well as expanding our product lineup we willroll out genetic testing systems globally for tuberculosis, malaria and others. By
developing a rapid and accurate infectious disease diagnosis system in future thatcan be easily used by anybody, anywhere, we hope to contribute to easier access to
medical treatment.

Estimated number of people
affected by tuberculosis

Proportion of
global population

23% (1/4)*(approximately 1.7 billion people)

P ! ck Up
Not a single person left behind: Project for Spreading and Promoting Tuberculosis Diagnoses
Every year, around 10 million people are affected by tuberculosis
globally, and approximately 1.5 million people lose their lives. Eiken
Chemical has developed the TB-LAMP tuberculosis testing system,
which is simple, quick, and accurate. Not only can it be stored at room
temperature, but it can also be powered by solar panels or othersources of electricity, so it is suitable for use in developing countries
lacking electricity infrastructure or for treatment in underpopulatedareas. So far it has been used in the field in seven countries,

Interview
Dr. Patrick Lungu
Dr, MD, PhD
National Tuberculosis Program(NTP) Manager (as of 2022)

The project in Zambia has proven to be a good solution
to the expansion of TB diagnostic services that the TB

including Cameroon and Zambia. We calculate that by switching

program has embarked on. The TB-LAMP has been thefrom traditional testing methods to TB-LAMP in countries in which

ideal equipment for facilities in rural areas where there is no

tuberculosis is prevalent, approximately 120,000 tuberculosis patients

electricity since the equipment can run with solar panels.

have been discovered, of whom around 30,000 were patients who

Also, the TB-LAMP testing has contributed to the increase

had previously tested negative using traditional testing methods.
Through appropriate diagnosis and initiation of treatment, we
expect to reduce the numbers of people affected by or dying fromtuberculosis, and as a result hasten the eradication of this disease.
In Zambia in particular, we are implementing a project that aims tobuild an examination structure.

in access to molecular testing and the TB notifications
as it has been placed in sites which were using smear
microscopy.
National TB Program looks forward to receiving moreequipment and reagents as the TB-LAMP Project expands.

‘TB-LAMP’ tuberculosis test kit
TB-LAMP is a simple and rapid test for tuberculosis infection that uses a uniquenucleic acid amplification method, the LAMP (Loop-mediated Isothermal
Amplification) method, with a one-step
detection process. In addition, up to 14
samples can be tested one time (up to
70 samples per day), which is expected
to improve processing capacity.
TB-LAMP has been endorsed in the
WHO POLICY GUIDANCE since 2016.

Results in FY2022
In 2022, TB-LAMP was adopted in both the National Strategic Plan 2022-2026 for TB
issued by Zambia Ministry of Health and the Tuberculosis Laboratory Guidelines by
the Chest Disease Laboratory (CDL).
In order to further encourage the spread of Japanese medical technology in Zambia,
which is one of the signatories to the MOU of the Africa Health and Wellbeing
Initiative, Eiken will continue to strengthen cooperation with the Global Fund andother stakeholders.

*Website of the Japan Anti-Tuberculosis Association

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Healthcare

INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Medium-Term Management Plan Key Field 3

Healthcare

StrongPoint

Industry name recognition

Weak
Point

Information technology

Peak ages for IBD onset
Men

In the field of healthcare, we will work to extend healthy life expectancy by providing
support for inflammatory bowel disease, which requires continuous monitoring of
the patient’s condition, strive for more widespread screening of cognitive function,and broaden the domain of remote clinical system and at-home self-testing whiledeveloping healthcare using mobile devices. Ultimately our objective is to develop
a monitoring system that is so closely integrated into the life of the patient that itprovides notification of their health condition without their even being aware of it.

Support for remote treatment/
support for inflammatory
bowel disease (IBD)/
prevention of dementia

20-24

Female25-29*1

Global IBD patients

5 million*2

P ! ck Up
Early detection of inflammatory bowel disease (IBD)
Despite increases in the number of IBD patients, current examination methods are limited to endoscopies conducted at
hospitals, which is putting a significant burden on both the examinee and the hospital. Because the peak onset age for IBD iswhen a person is in their 20s, the increased burden on examinees results in a loss of labor productivity.

Social significanceIn many cases the degree of inflammation caused by IBD is mild, and it had been thought that using fecal matter for tests was

1. Assists in IBD diagnosis

not feasible. However, research by Jeremy A. Tibble et al.*3 demonstrated that diagnosis can be achieved by observing the level

2. Assists in establishing clinical condition of ulcerative colitis

of calprotectin in the stool, and this approach was approved for insurance in Japan in 2017.

3. Reduces physical, mental, and economic burden on examinee

Because IBD examinations can be conducted using a stool sampling bottle and a device in the same way as for FIT, the Company
is striving to leverage the know-how it has cultivated to promote the spread of calprotectin testing, raising the quality of life for
IBD patients, and contributing to improved labor productivity in society as a whole.

Be fo reA f te r

IBD suspected

IBD suspected*1 Japan Intractable Diseases Information Center*2 Nikkei Biotechnology & BusinessExamination
using endoscope

Fecal matter test

IBD diagnosed

IBD diagnosed

Regular endoscopies

Regular fecal matter tests

Our advantage
One major advantage is we can apply thesame platform as for FIT, which is used
globally for colorectal cancer screening.
I t is precisely because we have a highmarket share in fecal occult blood
testing that we can roll this out to abroader user base.

*3 J eremy A Tibble et al.
Use of surrogate markers of inflammation and Rome criteria to distinguish organic from nonorganic intestinal disease
Gastroenterology. 2002 Aug;123(2):450-60.

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INDEX

Growth Strategy 1

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Global Strategy

Aiming to achieve health and welfare for all people by 2030
Improved access to medical treatment is considered a global necessity. Access may be unavailable for a variety of reasons at the national, regional, or individual level, which can include medical
infrastructure issues as well as physical/economic problems. In order to support health for all people, the Eiken Group has drawn up strategies tailored to the needs of each country and region.

Developed countries
China
Market environment• Establishing medical
infrastructure•R eform of pharmaceuticalregulation•P revalence of tuberculosis

Market environment
Key products• Spread of non-contact screening• L isting in guidelines of various countries• FIT• TB-LAMP• Calprotectin

Sales strategy• Winning screening contracts in new states and regions•C ooperation with KOLs, Ministry of Health•W inning tenders continuously•S preading use of screening by mailSales strategy• Promotion of tuberculosis testing to general hospitals• Compliance with laws and regulations

Developing countries
Market environment

Key products• Fragile medical infrastructure• TB-LAMP•P revalence of infectious
diseases• Malaria-LAMP• NTDs

Sales strategy• Use robust design•C ooperate with international funds•A dvocate for effectiveness of LAMP at WHO andhealth ministries in various countries*KOLs (Key Opinion Leaders): individuals with the ability to influence sales promotion• FIT• Calprotectin•D evelopment of climate change-related laws

• Increasing FIT sales through cooperation with KOLs*• Increasing sales of TB-LAMP to eradicate tuberculosis• Response to policies favoring domesticallymanufactured products

Key products• Expansion of eligibility(lower age at which eligible for screening)•A doption of thorough environmentally-friendly approachJapan

Provide Japanese technology to the world,and global trends to Japan
We have expanded the successful approach used in Japan for our
FIT-related technology to other developed countries. Screening by
mail using FIT is beginning to spread in Europe and the U.S. Goingforward we will also roll out this mechanism for screening by mail inJapan. Originally, genetic testing reagents for tuberculosis, malaria
and other diseases were designed with a focus on the countries
eligible for the rollout of such products, but such robust design
technology is now considered a requirement globally, and we areaiming to develop this technology for other products.

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INDEX
Growth Strategy 1

Value Creation Story

Our Strategy

Our Profile

Global Strategy

The Eiken Group has promoted the shift from chemical to immunochemical procedures for colorectal cancer
screening, and has grown its sales by successfully campaigning for the adoption of FIT in various countries.
Going forward, we will improve profitability not only by campaigning for FIT adoption by new customers but
also by improving uptake rates and developing triage testing. We are also making efforts to roll out otherproducts, such as urinalysis testing and genetic testing, with the aim of raising the overseas sales as share of
total to 40%.

Overseas sales as share of total
numerical target for FY2030(billion yen)

Corporate Governance■ Overseas sales

40%

Overseas sales as share of total(%)

Materialities and KPIs

Improving access to healthcare
For large numbers of people around the world, access to healthcare is infeasible for physical or
economic reasons, or due to social customs. According to surveys by the WHO and World Bank, half
the global population is unable to access high-quality basic services for the protection of health*1.
The Eiken Group contributes to global access to healthcare by developing and rolling out products

30.0

30

tailored to the needs of each country and region.

25.0

25

In developing countries, we work mainly on improving social access. By providing reagents that can

20.0

20

be stored at room temperature, and devices that can be powered by solar panels or batteries, we will

15.0

15

expand genetic testing so that it can be used even in regions without medical infrastructure.

10.0

10

In developed countries, we concentrate mainly on improving physical access. With the risk of cancer

5.0

5rising as the population ages, we are taking steps to promote the spread of colorectal cancer

00screening by mail, an approach that takes into account the increasing difficulty of visiting hospital

FY endedMar. 31, 2005

FY endedMar. 31, 2010

FY endedMar. 31, 2015

FY endedMar. 31, 2020

FY endingMar. 31, 2031

as an outpatient. We are also focusing on promoting the spread of colorectal cancer screening inemerging countries, and not only in developed countries.

Global strategy issues and responses
Organization

Research & development

The Sales Promotion, Sales Management, and otherdivisions are active in various regions with the aim of
improving the efficiency with which we open up markets.
In addition, we have established a sales office dedicatedto China, that gathers and analyzes information on
trends in the Chinese market, and undertakes planning,drafts proposals, and makes promotion for our Chinese
businesses, including our local subsidiary (EIKEN CHINA
CO., LTD.).

We have developed genetic testing reagents that canbe stored at room temperature rather than requiring
chilled storage as was previously the case, and have also
developed devices whose measurements can be poweredby solar panels. In addition to significantly reducing theenvironmental impact associated with transportation andmeasurement, by expanding genetic testing to areas where
infectious diseases are prevalent and that do not havemedical infrastructure, we are contributing to improving
access to medical treatment globally.
To address shortages of endoscopists and increases inmedical expenses, we aim to develop new reagents thatcombine FIT and genetic testing. We will further improvethe cost-performance of FIT, and do everything we can toenhance health and control medical expenses.

HR management
No special abilities needed to become a person who can
actively participate at the global level. We will take onchallenges by finding the courage to take that first step.

Environmental friendlinessWe are planning targets for reducing CO2 emissions,
including those related to transportation and other processes.
By avoiding the use of plastics that cannot be recycled, we
help to conserve the global environment.

Sales network
Working in cooperation with our agents in each country,
we will grow the market by winning tenders. In the field of
urinalysis testing, we cooperate with Sysmex Corporation
for sales in overseas markets.

Laws and regulations
Laws and regulations regarding quality and environmental
friendliness vary from country to country. Development isconducted in compliance with such laws.

FY2022 actual

FY2024 target

FY2030 target

Number of developing countries in which products are deployed

7

8

15

Number of countries in which colorectal cancer screening tests are deployed

44

47

59

*1 2017 UHC Global Monitoring Report

Materialities and KPIs

Development of global personnel
For the Eiken Group, the “ideal employee” and “global personnel” are one and the same thing. In
order to nurture personnel, we provide linguistic training, and training to enable individuals to
express their views logically and clearly. We also strive to enhance the skills of every individual byimplementing training to facilitate understanding of their own culture and that of other countries,
and to help them become aware of unconscious bias.

Rate of uptake of EGP among young employees*2 (%)

FY2022 actual

FY2024 target

FY2030 target

19.4

25.0

30.0

*2: EGP (Eiken Global Program): a program that seeks to strengthen linguistic abilities using a variety of study formats,including group training, online training, and smartphone apps

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Growth Strategy 2

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Research & Development

Research and development goals

Eiken Chemical’s technology

Contributing to health and quality of life for people around the world
Under the EIKEN ROAD MAP 2030, we aim to create innovation that makes a contribution to cancer
prevention and treatment, a contribution to eradication and control of infectious diseases, and enables
provision of products and services useful for health care, leading to reductions in cancer mortality rates,
measures to counter the threat of infectious diseases, and an extension of healthy life expectancy.
For that reason, rather than being contented with the technology we have now, we are working on
research and development that incorporates cutting-edge technology. Our materiality KPIs include
proprietary research, joint research, and the number of patent applications submitted, and we will
manage progress in order to achieve further leaps forward.

Hitherto, the Company had excelled in the development of products aimed at large hospitals andexamination centers. However, the environment in which medical professionals operate is changing
on a daily basis, and although medicine is becoming increasingly sophisticated and personalized, theaging of society and changes in lifestyles are making it increasingly difficult for people to visit hospitals
as outpatients. In order to ensure that those who struggle to visit hospital as an outpatient are not left
behind, it is essential that mechanisms and products are developed to enable testing at home.
Accordingly, we are working on the development of companion diagnostic systems making use of NGS*1
and on the development of liquid biopsy technology, in order to address the increasing sophisticationand personalization of medicine. Moreover, by introducing sensors, digital, and other new technologies
and combining them with existing technologies, we aim to develop products that can also address new
examination needs.

R &D structure
Our R&D structure consists of the Fundamental Research Division, Product Design Division, and the

New technology

CancerUsability design technology

Materials Development and Process Design Division. Each division leverages the know-how, intellectual
property, technology, and brands that the Company has accumulated, while incorporating new

Remote diagnostics

knowledge as they devote themselves to research and development and design. Each of them also seeks

Technology for extracting/
amplifying/detecting nucleic acid

Latex reagent formulation
technology

destinations outside the Company.

LZ products

Raw ingredient development/
process design

BLEIA products

Intangible assets
Health checkup app

Knowledge

Know-how

BrandsTechnologies

Intellectual
property

Culture medium products

Antibody creation/
modification technology

Screening by mail

Product design

Forecasting prevalenceof infectious disease

LAMP products

Fecal occult blood

collaborations between industry, government, and academia, and individuals are actively seconded to

Fundamental research

Infectious Diseases

Companion diagnostics

Core
Bacterial culture technology
technologies

Immunochromatography
reagent formulation technology
Immunochromatography
products

Dry chemistry technology
Uropaper products

Testing at home

Universities

Research
institutions

Other
companies

OTC

Self-examination
Health management services using data analysis

Open innovation

Remote maintenanceSensitivity testing products

Health careCore technologies

Usability design technology

New technology

In addition to improving profitability byrefining existing technologies, we will
combine them with new technologies
to open the way to the development of
new products.

In addition to leveraging the know-how
we have cultivated since the foundation,
we aim to use it as the base for SOP*2
that leads to the next generation,
enabling us to maintain and expand ourmarket share.

Through open innovation we seek toacquire NGS, sensor, digital, and othertechnologies in order to raise the levelof research and development andenhance our expertise.

*1 NGS: Next Generation Sequencing*2 SOP: Standard Operating Procedures

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Growth Strategy 2

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Research & Development

Intellectual property policy

Initiatives for the creation of intellectual property

The Company has set out its intellectual property policy as follows, based on which it will strive to achieve

In order to invent things with value to society, the Company is implementing the following initiatives.

sustainable growth and contribute to society.

1. Protecting and utilizing intellectual
property rights

2. Continuous management and renewalof intellectual property rights

By implementing appropriate protection of its own
intellectual property rights, the Company seeks
to grow the business and contribute to society.
Intellectual property rights acquired by the Company
are used to the fullest possible extent in its businessactivities in order to maintain and enhance its
competitive advantages.

By continuously managing and renewing theintellectual property rights it has acquired to maximize
their value, the Company works to increase the valueof the business. The Company will also implement
timely reviews of its intellectual property rights in
response to changes in technologies and markets, andconsider the optimal policy for their protection.

3. Appropriate acquisition of
intellectual property rights

4. Sharing and collaboration withregard to intellectual property rights

Through the appropriate acquisition of intellectual
property rights necessary for its business, theCompany seeks the stable expansion of its businessactivities. In addition, so as to ensure that the
intellectual property rights it acquires do not
infringe the rights of others, it undertakes full legal
investigations and conducts appropriate proceduresin relation to such acquisitions.

The Company builds cooperative relationships
with other companies, and engages in technology
development based on sharing and collaboration
with regard to intellectual property rights. It also
complies with laws, regulations, and treaties bothin Japan and overseas, and contributes to thedevelopment of society by conducting fair andtransparent transactions.

Intellectual Property Management
Fundamental
Research Laboratory
Search for seeds

Biochemical ResearchLaboratory
Considercommercialization

Bonus system,
support for acquiring qualifications

The Company implements intellectual property
training for employees in the Research &Development Division. Regular liaison meetings
are also held between the Intellectual Property
Division and the Research & Development
Division to share information on patents insideand outside the Company.

The Company has established a bonus systemfor employees who create intellectual property.
A system has also been put in place forsubsidizing those wishing to acquire
qualifications, such as patent attorney, or
certified specialist of intellectual property
management.

Information on patents held (as of March 2023)
The Company has applied for a total of 836 patents. Applications have been made in more than 30
regions, including Japan, North America, and Europe.

Fecal occult Equipment
blood
5%

6%

Transfer ofmanagement to factory

Factory
Production

8%

9%

1.5%

Genetics

21%

Microbiology

Market1.3%

Africa25.4%

Compositionof patents(by technology field)

Other

17%

• Feedback from customers • Changes in environment

Immunology

Middle East

0.3%

Europe9%Consider improvements

South America

25%

Dry chemistry

Biochemistry

Applied Technology
Research Laboratory

Commercialization

Intellectual property education

North America

27.5%

Compositionof patents(by country,
excluding Japan)
Asia/
Oceania

44.0%

Product launched

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Growth Strategy 2

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Research & Development

Efficient Research & Development

Development of R&D personnel

Opening of new research building whose concept is “Mugen”

Idea generation activities

In October 2022, a new research building was completed

The Eiken Group emphasizes activities to generate ideas with the goal of nurturing R&D

and began operations at the Nogi Division in Tochigi
Prefecture. In combination with the existing researchpersonnel. These activities began in 2019, and are intended to stimulate and enhance the skillsof each individual researcher by confronting them with technology outside their own field ofbuilding, this has been named the Research Laboratories,

specialization, as well as by leveraging their own experience of planning and drafting proposals.

and marks a new beginning for the facility. With thelaboratories acting as the main location for the Company’s

All researchers expressing an interest in these activities may participate. We will use these
activities to open the way to further growth for the Company.

research and development, the intention is that it will
create basic technology to enable business strategy to be

Outcomes

implemented, develop high value-added products, andestablish production technology focused on quality and cost.
Obtained CASBEE S ranking for buildings (new construction)
Obtained CASBEE-Smart Wellness Office S ranking

For the researcher

For the company• Networking/exchange of information between divisions• Improved knowledge, skills• Experience in planning/drafting proposals• Experience in taking feasibility into account• New businesses• I mproved operational
efficiency

Idea generation activities
The new research building is intended to not only bring together multiple research laboratories
in one place but also to improve intellectual productivity by energizing communication, and isdesigned to provide support for innovation that can respond flexibly to the changing times.
The “Mugen” concept incorporates the idea of enabling researchers to engage in lively
discussions to realize their dreams, and is also a play on the Japanese word “mugen,” meaning“infinite.” By linking the three spaces that support research and development, which are“research space” (laboratories), “knowledge space” (lounges), and “co-creation space” (meetingrooms), the building embodies a place for triggering breakthroughs and realizing dreams.
We used a sustainability bond to cover construction costs, and the building has obtained an S
ranking under CASBEE certification. We hope that making such environmental friendliness afamiliar part of daily life will open the way to development of environmentally-friendly products.

STE P 1

STE P 2

STE P 3

STE P 4

Researchers
declare themes

Members selecta theme and sign
up for a teamFormation ofcross-departmental
teams/research

Announcementof research results
and progress

Researchers sign up for desired team and engage in activities over several years. A team in which
many are interested can draw members from a variety of divisions. By consolidating research
locations, we have energized networking and the exchange of information both within andbetween teams, and streamlined operational coordination between different divisions. For
operations, it provides an opportunity to touch equipment with which they are not normally
involved, leading to a broadening of knowledge and field of view for all concerned.

Participant in idea generation activities

Research space

Knowledge space

Co-creation space“Research space,” the design ofwhich is based on analysis ofresearcher behavioral patterns“Knowledge space,” an airy lounge
where researchers from a variety
of fields can come together“Co-creation space,” which can beaccessed from both the research
space and the knowledge space

Feedback

We are moving forward based on information and opinions frommembers with a variety of specialist knowledge, so I am participatingwith a sense of expectation that we might make an engineering
breakthrough. When a member comes up with some good data weshare their pleasure, and I have a genuine feeling of personal growththrough involvement in these team activities.
K.H., R&D Division

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Growth Strategy 2

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Research & Development

Research & Development Topics

Development of companion diagnostic system
Eiken Chemical has until now focused on the test business for the prevention and early detection of disease, and we built a screening program for colorectal cancer in particular that could be used globally, with the resulting early
detection of cancer contributing to reductions in mortality rate and control of medical expenses. On the other hand, cancer treatment involves significant medical expenses, and in order to control these it is important to establish
an environment in which the most appropriate treatment can be selected at an early stage. Moreover, the time spent waiting to learn the results of cancer screening imposes a significant psychological burden, and can lead to
impaired mental health. In order to address such medical issues, going forward we will develop a comprehensive genetics mutation testing system (companion diagnostic system).

Comprehensive genetics mutation testing system(Mutation Investigator using the Next-era Sequencer: MINtS)

MINtS is a system that with just one test can detect mutations and fusions in multiple genes
related to cancer at once, and provide the information required to select a therapeutic agent.
Among its special features are the ability to mitigate the psychological burden on patients by

Pretreatment(nucleic acid extraction)

Base sequence
determination

Library setting

Analysis

Specimencollection

Therapeutic
agent selection

producing a test result quickly, high sensitivity that reduces the size of the required sample,
and the ability to handle not only therapeutic agents that have already been approved but
therapeutic agents that are likely to be developed in future. In this way we seek to further

Value provided

reduce cancer mortality rates and to mitigate the psychological burden on patients.
FeatureDevelopment• Detect multiple cancer gene mutations anddrug selection at once in lung cancer•C ytopathological specimens are available to thetesting (short time to report results)•H igh sensitivity (No need for many specimens)• Addition of target genes supporting newmolecular targeted drugs•E xpanded applications for many other cancers•S upporting lipid biopsy

Significance of commissioned
inspection business

Maintain the physical and mental health
Mitigate economic and psychological burden

Maintain and grow working age population
Control medical expenses

Market environment

With the aim of safely establishing

The global market for companion diagnostic drugs is expected to growthe MINtS system, we have launched

as a result of heightened interest in personalized medicine, and of joint

a commissioned inspection businessdevelopment of drugs and diagnostic technology. The increase in side effects

and opened a new “EIKEN Clinicalcaused by lack of effectiveness of anti-cancer drugs is also supporting demand.

Laboratory.” This laboratory will be theOn the other hand, significant growth is likely to be suppressed by the rising

focus of our efforts to move ahead withcost of drug development and associated clinical trials, and repayment

our unique oncogene screening.

problems in many countries.

We hope to make this place theFor lung cancer in particular, there are reports that patients who underwent

foundation for expanding into new

testing using companion diagnostic drugs as part of the initial stage of treatment

biomarkers going forward.

had higher survival rates than those who did not, and these are expected to

Deployment plan
We are already implementing advanced
Average annual growth rate
for the global companion
diagnostic drug market

3.5%

*1

(2023-2028)

medical care centered on NEJSG*2
participating facilities (20 facilities)
Going forward, we will expand sales toother NEJSG participating facilities (about
200 facilities), in the form of contract andconcentrated testing at the EIKEN ClinicalLaboratory.
*2 NEJSG: Authorized Specified Non-Profit
Organization North East Japan Study Groupaccount for a material share of the market during the forecast period.
*1 Companion Diagnostics Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)
Mordor Intelligence Pvt Ltd (2023)

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Growth Strategy 3

globally and grow the business, it is important to promote
exhaustive improvements in efficiency, make good use ofresources and maximize the results. Digital transformation(DX) is one of the means by which we will accomplish this.
By streamlining operations to optimize resources andallocating the time thus freed up to creative challenges,
we aim to achieve the objectives of Team × Challenge. On
the other hand, this will also lead to improved work-lifebalance and will help make a vibrant corporation.
We are also implementing training to impart basic DX
skills to all employees, and high-level skills to selected
employees in order to raise the level of ability throughout
the company and enhance expertise.

Corporate Governance

Policy/DX objectives

Improve operational efficiency
through DX = free up time/labor

Develop/acquire DX personnel

DX drives improvements in operational
efficiency and creation of new business
Products and services• Promoting spread of screening using app• Adapting to remote screening/at-homeself-testing• Health management services using data
analysis• Remote maintenance/failure prediction
for medical devices

Improved
profitability

Our Strategy

Our Profile

IT/DigitalStrategy

We recognize that in order to exert our competitiveness

Creation of
new business

Value Creation Story

Research & development

Take on creative challenges

Achieve objectives ofTeam × Challenge

Improve work-life balance

Achieve a vibrant corporation
making use of employee’s talent

Respond to needs ofdigital shift in key areas

Contribute to cancer,
infectious diseases and health care

Development of DX personnel• Promotion of data- and AI-driven
research• Automation of experimental
processes using robots• Molecular design using AI

Developmentof DX personnel

Manufacturing

Fasterdevelopment

EIKEN Vision 2030

Internal disseminationof DX practices

General operations

Selected employees

Programming, etc.

All employees

Basic business tools

Taking on
challenges,
review
resources• Centralized monitoring of manufacturing
facilities• Enhancing accuracy of demand
forecasting/production planning• Standardizing tasks using MES/LIMS,
improve processes through data analysis• Automation of manufacturing processes• Achieving improvements in operational
efficiency and life style reforms throughintroduction of AI/RPA

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Growth Strategy 3

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

IT/Digital Strategy

C lose up

Manufacturing

Feed back results of data analysis with the objective of improving profitability
We seek to eradicate human errors and achieve productivity improvements through the promotion of digitalization. In addition to these objectives, theProducts and services

Research & development

Creation of new business

Faster development

Manufacturing

Research & Development

Improved profitability

Taking on challenges,
review resource

introduction of Manufacturing Execution Systems (MES) to manage manufacturing processes and provide support to workers, and of Laboratory Information
Management Systems (LIMS) for the overall management of quality tests for pharmaceutical products will reduce the use of paper resources and thus also
contribute to achieving the SDGs. Because this also conserves data integrity for machine inspection and calibration, it further improves reliability in relation toquality tests. For the future we are focused on the automation of manufacturing processes.
Using the time freed up by efficiency improvements for data analysis, we aim to enhance the accuracy of demand forecasting and production planning, reduce
waste, and improve profitability.

Promote digitalization throughout the cycle,
from demand/supply planning to sales

Aim for efficiency/accuracy improvements throughdigitalization, leading to improved profitability

Ste p 2
Demand/supply planning,
demandforecasting
Sales/
shipments

Forecasting/planning based ondata analysis

Production
planning
Step 3
Continuous improvements
throughout the cycle

Factory
shipment/
inspection

S te p 1

Guidance inmanufacturing
Manufacturingexecution

Improved
profitability

Enhanced
forecasting
accuracy

Improve
operational
efficiency

Expected outcomes
S te p 3

Continuous improvements

S te p 2

Data analysis

S te p 1

System introduction

Enhanced
productivity/
corporate value
Achieve/maintainstable supply

Improvements infunding efficiency/
cash conversion cycle
due to inventory
optimization

Create added
value

Introduction of
MES/LIMS, etc.

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Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Pursuing Quality
The Eiken Group operates a quality management system, guided by its quality policy. From research and development through manufacturing and sales to after-production/after-sales follow-up, theGroup strictly complies with related laws and ordinances, public guidelines and in-house regulations, ensuring customers of a steady supply of high-quality, effective and safe products and services.

Quality policy

Proactive activities on quality

1. Satisfy the demands of our customers and the requirements of the related laws and regulations, steadily
providing the products, the technology, and the information that gives top priority to quality and safety.
2. In order to ensure implementation of the quality policy, establish quality objectives in each department andensure that these objectives are accomplished. Moreover, Eiken Chemical periodically revises and upgrades
these quality objectives.
3. C reate and employ a quality management system, continuously improve the efficiency of the system bymanagement reviews, becoming a company that is competitively strong.

Guided by the motto “We Eiken provide trustworthy quality, and develop with technology,” the Eiken
Group conducts its business activities in accordance with its quality policy.
To establish Eiken Quality and build customer satisfaction into products and services through theefforts of all employees, the Eiken Group conducts “proactive activities” on quality assurance, regularly
conducting initiatives and campaigns to raise awareness of quality matters in-house.
Through these activities, we are building a culture that places top priority on quality and fostering that
culture Company-wide.

Themes addressed in FY2022

Quality management
Eiken Chemical operates a quality management system, centered on the Reliability Assurance Division

1. Visualization

and under the supervision of the President & CEO.

2. Data integrity

President & CEO: formulates quality policy
Each division: sets quality targets based on management policy and quality policy. Management reviews areheld periodically to support and improve quality systems.

What are proactive activities?
“Proactive activities” are measures taken to prevent

3. M
 atters raised in internal quality audits
4. M
 atters raised in audits by third parties(certification bodies)or improve situations that could become problems.
Through such activities we seek to raise awarenessof quality among all employees, and to establish“Eiken Quality.”

The following certifications have been acquired:• International standard ISO9001• International standard ISO13485• International standard MDSAP (Medical Device Single Audit Program)Quality support on the medical front lines
At Eiken Chemical, the Eiken Quality Control Service (EQCS), an

EQCS-Net:
Comprehensive System
for External Precision
Management Services

external precision management service for fecal immunochemical test,
was launched in 1995. This system is now being used in numerous
facilities and has expanded to additional fields such as urinalysis tests
and immunological tests as well. EQCS-Net is a comprehensive system
for these multiple external precision management services.

In order to test microbiological content of foods and the production‘Eiken’ Food
Microbiological
Testing Precision
Management Survey

environment and scientifically manage food quality, objective
evaluation of the ability (competency) of the testing room is essential.
Eiken Chemical implements food microbiological testing precision
management surveys as part of its external precision management
services to provide these evaluations to all of our clients.

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INDEX

Growth Strategy 4

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Business Activities in Harmony with the Global Environment

As climate disasters grow more intense and frequent, the world’s attitude to global warming is changing, as the Paris Agreement and other landmark events testify. In view of these trends, the Eiken Groupset “Business activities in harmony with the global environment” as one of the materialities in the EIKEN Vision 2030 announced in FY2022. We aim to help achieve a carbon-free, recycling-oriented society,and will promote initiatives to minimize the environmental impact of our business activities. In preparation for achieving carbon neutrality in 2050, we will work on a variety of measures.

Utilization of renewable energy (hydroelectric power generation, solar panels)
As one of the initiatives that the Eiken Group is taking to help achieve carbon neutrality by 2050, it ispromoting the use of renewable energy for electricity, which accounts for approximately 70% of CO2
emissions generated by business activities.
In March 2022, the Nogi Division began using “Tochigi Furusato Electricity,” which is power generated
solely from water without emitting CO₂ during power generation, and the Nasu Division followedin March 2023. “Tochigi Furusato Electricity” is a locally produced and consumed renewable energy
provided by Tochigi Prefectural Government and Tokyo Electric Power. A portion of the electricity charges
are used for environmental conservation
projects in Tochigi Prefecture, and weare working to achieve both community
partnerships and global environmental
conservation.
We have also begun installing solar panels
and introducing electric vehicles.

Water security
The Eiken Group manages the volumes of water it consumes and wastewater it generates in operationsat its main research and production sites (Nogi Division, Nasu Division and EIKEN CHINA CO., LTD.). We
conserve water to reduce water consumption and make effective use of our limited water resources. It
also conducts meticulous wastewater management and measures to eliminate leakage, to ensure that it
does not pollute the water supply or groundwater.

Biodiversity and ecosystem restoration
In addition to contributing to local communities by participating in environmental events and otherinitiatives aimed at conserving native species (including endangered species), we seek to raise awarenessof biodiversity and ecosystem restoration as a social issue. In FY2022, we participated in activities for theremoval of non-native plant species from the Watarase Yusui Water Park, which are recognized under theRamsar Convention, and the Company has been certified as an Oyama City (Tochigi Prefecture) Watarase
Reservoir Wetland Conservation Support Group.

Environmental education/ecological proposals
Eiken Chemical strives to improve environmental awareness year-round. Every June at Eiken Chemical isEnvironmental Month, when all employees take part in a wide range of training programs, tailored toeach management level. These training programs provide opportunities for employees to consider what
they as individuals can do for the environment. Activities include seminars elucidating environmental
policy or striking aspects of the environment, presentations on the Company’s degree of achievementof environmental targets, and discussions of topics such as the current state of climate change andthe Sustainable Development Goals (SDGs). We engage in other initiatives to raise awareness ofenvironmental preservation as required, using internal newsletters and so on.

 onservation of resources,C
reduction of waste
To reduce its burden on the Earth’s
environment, the Eiken Group reduces thevolume of waste it generates to the furthest
extent possible, pursues 3R (Reduce, Reuse,
Recycle) and reduces final disposal volume(waste that cannot be recycled).

P !c k U p
We change the shockabsorbing material
used when dispatchingproducts to an
environmentally friendly
alternative. We cut theamount of plastic usedby reducing the thickness of the films, and reduced
CO2 emissions from incineration by 23%.

Materialities and KPIs

Responding toclimate change

Contributing to a
recycling-oriented
society

FY2022 actual

FY2024 target

FY2030 target

Reduction in CO2 emissions frombusiness locations (Scope 1 + 2)

Emissions: 4,614t-CO₂

Vs. FY2018-14%

Vs. FY2018(-35.6% vs FY2018)

Reduction in CO2 emissions fromsupply chain (Scope 3)

Emissions:
84,205t-CO₂

To be set in FY2023

To be set in FY2023-35%

Vs. FY2018

Vs. FY2018

Vs. FY2018

Vs. FY2018

Vs. FY2021

Vs. FY2021

Reduction of water volume
consumed
Reduction of waste
Rate of environmentally friendly
packaging material usage(achieved ahead of schedule)

+14%
0%

-30%
-5%

20%

-30%

-35%
-15%
30%

Responding to Climate Change:

https://www.eiken.co.jp/en/sustainability/environment/weather/
Contributing to a Recycling-Oriented Society:https://www.eiken.co.jp/en/sustainability/environment/circular_society/

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INDEX
Growth Strategy 4

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Business Activities in Harmony with the Global Environment

TCFD
Response to the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD)
In February 2023, the Eiken Group announced its endorsement of the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).
The Eiken Group recognizes the risk climate change poses for financial markets. In addition to reinforcing its current battery of measures to tackle climate change, the Group is advancing disclosure in accordance with the TCFD
recommendations.

D isclosure based on TCFD recommendations

M ain impacts of climate change on the Eiken Group and associatedcountermeasures• Targets and action plans have been formulated by the Sustainability Committee
chaired by the President & CEO, with the Board of Directors receiving reports andproviding supervision.

Governance

Main impacts of risks and opportunities

Degree of financial impact
under each scenario
4°C urden of additional costs caused byB
introduction of carbon taxes

Intermediate−•P romotion of energy-saving activities•E xpanded introduction of renewable energy•C ontinuous monitoring of Scopes 1 and 2
and emission reduction efforts

Environmental regulations on plastic

Intermediate−•C ontinuous surveying and response totrends in environmental regulations•P roduct development in view of market andindustry trends

Loss of sales opportunities fromsupply-chain disruption caused bydisaster damage

Intermediate

Major• Results of initiatives are reflected in performance-based remuneration of Executive
Officers.
• The Environmental Management Committee implements continuous
improvements as an environmental management system.

Transitionalrisks• The Eiken Group has examined the risks and opportunities associated with climatechange from a wide range of perspectives, to identify those risks and opportunities

Strategythat it deems most important.
• Scenario analyses of the financial impact on the Group have been conducted, split
into the 2°C-or-less scenario and the 4°C scenario
Physical risks• An exhaustive assessment of risks, including climate change, is conducted once a
year within the framework of the Company’s overall risk management.

Risk management• Based on the TCFD recommendations, each related committee conducts
assessments of risk and opportunities, and for each important risk and opportunity
opportunities.
Opportunities
reduction in CO2 emissions (Scope 1 + 2) versus FY2018 levels by 2030 has been set.

Targets and indices• Scope 3 has been calculated since FY2020, and we will set a target going forward*Results are disclosed in the ESG data pack(https://www.eiken.co.jp/en/sustainability/esg_data/)

We first conducted scenario analyses in FY2022 using IEA (International Energy Agency) WEO 2022 Net Zero by 2050
and the IEA’s ETP2020 as references, among others. For the details of degree of impact and the results of the analysis
for each scenario, please refer to the Company’s website.

Loss of sales opportunities fromreduced rates of operation at
production facilities as well as
disruption of parts supplies resulting
from the spread of infectious diseases

Minor

Minor

• Strengthening of disaster-preparedness
measures at offices and suppliers• Preparation and continuous improvementof business continuity plans

Increased sales and contributions to•C ontinuous monitoring of trends insociety derived from early response toinfectious diseases and development andIntermediate Intermediatechanges in disease trends caused byprovision of diagnostics
climate change

identified, implements countermeasures to mitigate risk and to create business• With the goal of achieving carbon neutrality by 2050, the target of a 30%

Countermeasure

2°C-or-lessI ncrease in sales opportunities fromdevelopment of quality-first products
in response to climate change,
including products more resistant toexternal temperatures, etc.

• Evaluation of environmental impact of
products
Intermediate Intermediate • Development of products with reduced
environmental impact in the preservationand storage phases of the product cycle*Definitions of financial impact: Minor: Less than ¥100 million; Intermediate: ¥100 million or more but less than ¥2.5 billion; Major: ¥2.5
billion or more

For details, please see the Company’s website.

https://www.eiken.co.jp/en/sustainability/environment/weather/

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INDEX

Growth Strategy 5

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Human Capital Strategy

Basic approach to human capital strategy

Human capital strategy roadmap

Based on the management philosophy, we contribute to society through the provision of products andNot only will the Company commit the profits or funds generated by contributing to the health of people

services that protect the health and lives of people around the world. Our most important assets in thisaround the world into growth areas, but under the slogan of “Team × Challenge” it will also raise theregard are our employees, our “human capital.”

wages of employees and promote the development of their skills and abilities, invest continuously in

We believe that it is employees that will create the future of the Eiken Group, and that broadening

human capital by expanding opportunities for active participation by personnel, and continue to pursue

the possibilities for employees will lead to growth for the company and contributions to society. In

job satisfaction and rewarding work for employees.

accordance with this policy, as well as aspiring to be a vibrant corporation making use of employee’s

In addition to these initiatives, by maintaining the work environment, and by providing appropriate

talent, respecting all kinds of diversity, and nurturing an organizational culture that respects andremuneration and assessments, we will encourage employees to spontaneously take on challenges,

embraces diversity, the Eiken Group gives full consideration to employee safety and health, createscreate original ideas, and enhance team performance, with a focus on the sustained implementation ofenvironments in which employees can concentrate on high-value-added work so that all employees can

the management philosophy and the maximization of added value.

experience success, and develops human resources who creates new innovations.

Implementation of management philosophy

Protect the health of the public through health care services.

Job satisfaction/rewarding work

Growth of the Company– Team × Challenge –Management philosophy/Management vision/Motto

EIKEN WAY
Customers

Customers(people to be tested)(medical workers who perform testing)

We provide products
and services enablinganyone to be tested withconfidence anywhere,
and at any time.

We create anddependably supply
outstanding products
and services that earncustomer trust.

Suppliers/Supply
destinations/Partners
Together, we aim to
improve our corporate
value by providing
products and services
that protect people’s
health.

FY2024Society

Employees

We respect human rights
and conduct our businesswith integrity andresponsibility based onhigh ethical standards.
We are committed topreserving the global
environment.

We create a working
environment that respects
the diversity of employees
and demonstrates theirindividuality and abilities.
We provide our employeeswith a place for them tobe creative and that will
challenge them.

• Provide flexible work styles and the workplaces thattake employee life events into account•R evise the system for employing older people

Shareholders
and Investors
We strengthen risk
management and
ESG efforts and will
aim to improve ourcorporate value. We
make disclosures andwill communicate
responsibly.

FY2023

Recruitment and HR
development/evaluation

Organization/culture

Working environment

Individuals and teams growby willingness to challengethemselves and growA dynamic company that nurturesand utilizes people

Promotion of active participationby all employees with respect fordiversity and humanity

Introduce a new personnel system that
increases employee willingness to takeon challenges and expand investment in
human capital• Raise wages to levels linked to roles and responsibilities•M ulti-track career design based on expertise and duties•C ompensation system linked to roles and competencies
based on job-based compensation• E valuation system that encourages teamwork and challenges

Growth in human capital

Human resources management policy

Expand opportunities for active
participation by all employees

FY2022

Establish human resources management
policy and redefine ideal employee• Recognize human capital strategy issues and design a
new personnel system

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INDEX
Growth Strategy 5

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Human Capital Strategy

Human capital management that supports the business foundation 1

Recruitment and HR development/evaluation

Individual × Team = Growth of the Company
We believe that the combined power of diverse individuals provides the driving force for the creation of new value, and we are working to retain and develop human resources from a variety of backgrounds. Based on the ideathat individuals and teams grow by willingness to challenge themselves and grow, we are working to put in place an environment that develops the abilities of the individual, and provides opportunities to tackle challenging
targets as a team. By fairly evaluating and dealing with the outcomes generated by employees, we maximize job satisfaction and rewarding work for employees, and open the way to the growth of the Company.

In order to open the way to improved employee engagement, theCompany recruits new graduates by job type based on their backgrounddetails such as experience as a student and areas of expertise. We
also support diverse career designs by allowing employees to transfer
between different job types after joining the Company based on theirown wishes and aptitude for the duties.
We also strengthened recruitment of the specialized talents necessary
to achieve the EIKEN ROAD MAP 2030. As a result, the proportion of
mid-career hires in FY2022 rose to 53% of the total hires. Going forward
we will continue to work on attracting specialized talents with the aimof further promoting businesses in key fields.

Recruitment

In order to remain a company that contributes to society in a business environment undergoing significant change, we have redefined ourideal employee based on our existing human resource requirements model, and are implementing a HR development program to support new
employees until they become leaders who actively participate at the global level.

Human resource requirements model
Challenge

GlobalTeam

Skill Development Vision (the ideal employee)
1
An independentand starting spirit

2
A globalmindset3
Deployment ofspecialized skills

4
Leadership for
innovation

TOPICS
The new human resource requirements model has
these three enhancements.
Challenge

The challenge of transformation

GlobalActing from a global perspective

Team

Individual growth and display of teamwork

This ideal employee is used in combination with the
Skill Development Vision as a base for the roles andduties of employees.

For details of the training program, please see the Company’s website.

https://www.eiken.co.jp/en/sustainability/social/engagement/

HR
Development

Evaluation
systemThe Company has introduced a competency evaluation
system and a target management system.
Competency evaluation system:
We have set evaluation criteria based on the Eiken Group’s
ideal employee, and are strengthening courses of actionthat encourage teams to take on challenges.
Target management system:
In FY2023 we introduced a revamped evaluation systemthat encourages teamwork and taking on challenges.
1 Strengthening the link between the Medium-Term
Management Plan and performance targets
2 Ensuring incentives for spontaneous action
3 Encouraging opportunities for growth and active
participation by young employees
4 Introduction of “calibration meetings”* as a mechanism
to enhance the reasonableness and persuasiveness ofthe setting and evaluation of targets*Meetings at the departmental level for the third-party verification of targets
set by superiors and their subordinates, and of evaluation by superiors

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Growth Strategy 5

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Human Capital Strategy

Human capital management that supports the business foundation 2

Organization/culture

Respect for diversity
The Company has designated “a vibrant corporation making use of employee’s talent” as one of the pillars for achieving the EIKEN ROAD MAP 2030. The Eiken Group respects diversity across many dimensions, including age,gender, nationality, experience, customs and presence or otherwise of disability, and seeks to be a company that transcends borders and enables active participation by all employees.

Active roles for employees with disabilities

Diversity & inclusion
Diversity includes a variety of factors, but the Company is first

Eiken Chemical employs disabled persons at aof all promoting active participation by women as a priority.

level higher than the legally mandated rate of

We are nurturing an organizational culture that accepts andemployment. The Company opened “Eiken Farms”

embraces diversity, and making continuous efforts to ensure

in Mobara, Chiba Prefecture and in Katsushika-that both employees and the Company can create newku, Tokyo in 2018 and 2022 respectively, andinnovations together.

is actively working on new initiatives for theemployment of people with disabilities, such as byproviding fresh vegetables harvested from theselocations to employees as part of their benefits.

For more details of our approach to respecting diversity, please see the Company’s website.

https://www.eiken.co.jp/en/sustainability/social/diversity/

Materialities and KPIs
Rate of employment ofpeople with disabilities

Materialities and KPIs
Career progression regardless of gender

Percentage of managerial positions held by women*
FY2022 actual

FY2024 target

FY2030 target

13.8%

20%

30%

FY2022 actual

FY2024 target

FY2030 target

2.6%

2.6%

3.0%

Proportion of women to men
Women

3 :7

Men

*Proportion of women in roles at section chief level or higher

Eradication of harassment
In order to maintain pleasant workplace environments free from harassment, the Eiken Group provides
education and training on harassment. The Group also monitors performance through fact-finding

TOPICS

surveys and contact points for whistleblower reports, to prevent harassment and resolve harassment
issues early when they arise.

Holding of career workshops for female employees
The Company has held workshops for all those wishing to think about their career going
forward, regardless of age, gender, job type, and background. This workshop was intended as an
initiative to provide a place for a wide range of employees from different departments to mingle,
and to gain an understanding of each other’s work styles hitherto, with the aim of enhancing
motivation both now and in the future. This provides an opportunity for participants to gain
insights into what their next steps should be, by openly discussing anxieties and worries among
others of the same generation.

Materialities and KPIs
Rate of uptake of harassment
prevention training

FY2022 actual

FY2024 target

FY2030 target

100%

100%

100%

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INDEX
Growth Strategy 5

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Human Capital Strategy

Human capital management that supports the business foundation 3

Working environment

Creating rewarding workplaces
If employees are not in good spirits then the company cannot develop. In order to realize our management philosophy of continuing to protect the health of people around the world, it is essential to maximize the performanceof the employees who are some of our precious assets. By fostering a culture in which both employees and the company can grow together and that consistently provides venues for creativity and the acceptance of challenges, weseek to nurture personnel who can create new innovations.

Promoting diverse work styles

Boosting health and ensuring safety and hygiene ybrid work styles that combineH
office attendance with working fromWe have introduced a variety ofsystems to permit increasingly diverse

Super flex
systemhome

work styles, enabling employees to romotion of a super flex system
P
without core hours (possible fromcontinue to enjoy their respective

as little as three working hours aday) and vacation systems to suit

lifestyles and to work in a way thatsuits them, leaving them free toindividual lifestyles

We have built a structure and established various systems to promote healthand productivity management in order to ensure that every employee canwork every day in good health and in good spirits. In acknowledgment ofWork fromhome
systemdisplay their abilities to the full.

these initiatives, the Company has been recognized as a Certified Health& Productivity Management Outstanding Organization (Large Enterprise
Category) for four consecutive years since 2020.
A safety and health committee has also been established for each location, which not only works
to maintain the workplace environment and prevent industrial accidents from occurring, but also

Materialities and KPIs

implements periodic training in preparation for emergency situations such as natural disasters.

Total actual work hours per full-time employee per year*

Rate of uptake of annual paid leave per full-time employee

FY2022 actual

FY2024 target

FY2030 target

FY2022 actual

FY2024 target

FY2030 target

1,875h1,870h

1,635h

62.1%

65.0%

100%

*Scheduled working hours + non-scheduled working hours − amount of annual paid leave and other leave takenB alancing childcare/nursing care with work

Materialities and KPIs
Rate of uptake of periodic health checks

Number of industrial accidents (including those while commuting)

FY2022 actual

FY2024 target

FY2030 target

FY2022 actual

FY2024 target

FY2030 target

99.8%

100%

100%

3

0

0

Implementing employee engagement surveys

Some of our employees belong to families in which childcare or nursing careare required. For employees who are pregnant, caring for infants after birth,

The Company monitors employee engagement by implementing an employee satisfaction survey

or providing nursing care to parents, we offer support for balancing such

every year. The results are analyzed based on rank, gender, department, and other attributes to derive

responsibilities with work to enable employees to display their abilities with peace

a numerical “satisfaction score.” This satisfaction score is used as an indicator for engagement to verifyof mind, regardless of gender.

whether the Company’s initiatives have been effective or not, and to implement improvements.

Materialities and KPIs
Rate of uptake of childcare leave (women)

Rate of uptake of childcare leave (men)*

FY2022 actual

FY2024 target

FY2030 target

FY2022 actual

FY2024 target

FY2030 target

100%

100%

100%

176.9%

100%

100%*Denominator: number of male employees whose spouses gave birth during the fiscal year
Numerator: number of male employees taking childcare leave or using the Company’s own system of leave for the purposeof childcare during the fiscal year (includes employees who take childcare leave in the following fiscal year due to the timingwith which their spouse gave birth, so in some cases the rate of uptake may exceed 100%)SurveyAnalysis

Verification/
improvement

Annual monitoring of
employee engagement

Analysis based on rank,
gender, department, andother attributes

Satisfaction score used asindicator to verify initiatives,
leading to improvements

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Value Chain Management
Basic policy

Process for implementing questionnaire surveys

In order to help realize a sustainable society through environmental, social, governance (ESG) initiatives,
we believe it is important for companies throughout the value chain to fulfill their corporate social

Distribution of
CSR questionnaire

Self-assessment

Response to
CSR questionnaire

Aggregation/
analysis

EIKEN

Customer

Customer

EIKEN

Request forcorrective measures

responsibility (CSR). Accordingly, the Company set out supplier sustainability, human rights, andanti-bribery policies in April 2022, through the practice of which it aims to address the demands andexpectations of society in cooperation with partner companies (suppliers and buyers).

Initiatives for enhancing cooperation and mutual prosperity in the supply chain
In addition to seeking to enhance cooperation and mutual prosperity

Scope of questionnairewith its business partners, the Company formulated and announced
a Partnership Building Declaration in March 2023, the objective of

Category

which is to facilitate contributions by the supply chain as a whole toSuppliers*2

Corrective measures
Buyers*3

Corporate Governancethe sustainable growth of society.

By implementing such questionnaires at least
once every three years for major business
partners, we will identify improvements andHuman rights

With the understanding of our suppliers, we are working together on

EIKEN
Only in cases that affect
EIKEN’s materialities

other changes in our initiatives.

initiatives to address human rights and labor, safety and health awareness, ethics, consciousness of theLabor

If as a result of the self-assessment by

global environment, and other issues.

Environment

questionnaire we discover areas in which abusiness partner’s initiatives are inadequate,

Fair corporate activities

Strengthening CSR in the value chain

we will expect them to undertake improvement

Quality and safety

In order to resolve various social issues and continue to address the diverse demands of stakeholders,
it is essential not only that the Company implement stand-alone initiatives but also that it obtains the

Supply chain

cooperation of its business partners in the value chain.

Local communities

Accordingly, with the goal of helping to achieve a sustainable value chain the Company has since 2022
provided opportunities for self-assessment and corrective activities among its major business partners*1
by conducting questionnaires on the status of their implementation of general CSR activities, including

activities that mitigate risks and take into accountthe impact on society and the environment. In

Information security

cases where the response to questions related
to materialities identified by the Company is“We have no initiatives related to the topic” or*2 Global Compact Network Japan’s CSR/Sustainable
Procurement Self-assessment Tool Set is used
*3 Excerpts of the above-mentioned assessment tool are usedsuch matters as quality, human rights, the environment, and compliance. In accordance with the“We have no mechanism for checking results
or corrective actions,” we will request in writingthat corrective measures are taken to achieve
improvements before the next survey.

Guidelines on Respecting Human Rights in Responsible Supply Chains, we are also working on humanrights due diligence.
*1 Business partners who account for a designated proportion of total transaction value (70% for buyers, 90% for suppliers)

Materialities and KPIs
FY2022 actual

Questionnaire conductedamong major business
partners in the upper 50%
by transaction value

Response rate

100%

Rate of implementation of CSR procurement surveys*

Number of companies for whichcorrective measures requested
based on questionnaire results:

2

Rate of implementation of human rights due diligence*

FY2022 actual

FY2024 target

FY2030 target

FY2022 actual

FY2024 target

FY2030 target

100%

100%

100%

100%

100%

100%

*Rate of implementation (response rate) for those major business partners in the upper 50% by transaction value for FY2022,
in the upper 90% for FY2024, and in 100% in FY2030

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Growth Strategy 6

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Financial Strategy

Aiming to enhance shareholder value

FY2022 Results

FY2030 Targets

ROE

12.1%

15% or more

Operatingprofit margin

17.2%

20% or more

In accordance with the Medium-Term Management Plan that was formulated under the management
framework “EIKEN ROAD MAP 2030,” the Eiken Group is rolling out key measures focused on the key
business fields of “Contribution to cancer prevention and treatment,” “Contribution to the eradicationand control of infectious diseases,” and “Provision of products and services useful for health care,” and is
striving to achieve sustainable growth and steady improvements in profitability for the Group as a whole.
In terms of management indicators oriented towards improvements in corporate value, we recognizethat investors pay attention to ROE as an indicator for the measurement of management efficiency,
and we also consider this an important indicator. We will aim for even greater ROE over the medium tolong term, working to make further strategic investments in growth businesses and to make even more

Future targets

effective use of assets.
In terms of improving the capital efficiency of business investments and procuring funds, we will shorten

CCC

the cash conversion cycle (CCC) by promoting inventory management, and are considering the use ofsustainability bonds and commitment lines.

1
Achieving an appropriate
capital structure

Shareholder value
improvements

50 days1

While maintaining a balance with the growth strategy, we will use financial leverage andrebuild our shareholder return policy in order to optimize the cost of procuring funds.
By rebuilding our shareholder return policy and making use of suitable measures such as
dividend policy and acquisitions of treasury shares, we will realize appropriate returns toshareholders.

2

CCC is a financial indicator that shows the number of days required to recover tradereceivables after paying trade payables.
Currently the CCC is 120 days, but we aim to reach a level of 50 days, starting withappropriate inventory management. Beyond that, we intend to improve trade receivables
and payables turnover cycles by adjusting the terms of our transactions and other methods.

3

As a comprehensive manufacturer of diagnostics we handle a diverse range of products.
While valuing those things we can do precisely because we are a comprehensive
manufacturer, we will strengthen our structure for thinking about investments in the businessportfolio so that it takes into account the profitability of various product lines, investment
efficiency, and market position. We believe that this lead to more nuanced investment
decisions, and enable us to forge ahead with profitability improvements.

ROE improvements
More efficient financial
leverage120 days

2
Shorter CCC
Maximization ofoperating cash flows

3
More efficient investment
Strengthening management

EIKEN CHEMICAL Integrated Report 2023

44

INDEX
Growth Strategy 6

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Financial Strategy

Cash flow strategy

Investing cash flows(Nuanced strategic investments in growth areas in proportion
to asset efficiency, and major capital investments)

In order to achieve a balance between thestrengthening of its financial position andOperating cash flow
generation

growth, the Eiken Group has hitherto followeda policy of primarily strategic investment within
the limits of its generated cash flows, mainly

Financing cash flows(Profit growth in existing businesses)

operating cash flows, and of stable returns to

Maximization of
corporate value(Stable dividends, consolidated payout ratio of 30% or more, additional
returns to shareholders, consideration of optimal capital structure)shareholders.

Investment strategy

Returns to shareholders

While seeking a balance between the maintenance of a sound financial base and the expansion of

The Company considers profit ret urn for all shareholders to be one of the most important management

the business, we will promote an agile and flexible approach to investments. In terms of strategic

issues. Taking into consideration the internal reserves necessary for strengthening financial constitution

investments, we have earmarked a cumulative figure of ¥28.4 billion for the three years from FY2022 toand carrying out progress business expansion, the fundamental policy implemented by the Company

FY2024, which will be allocated to the research and development that is the foundation for growth, andis providing a stable dividend from surplus twice a year as interim and term-end dividends. Moreto the growth drivers of human capital and various infrastructure facilities. In addition, we have not set a

specifically, the goal is continuing allotment with dividend ratios of 30% of more on a consolidated basis.

specific figure for M&A, and this will be treated separately.
■ Annual dividend per share

Strategic
investments
OperatingCash flow

Research anddevelopment
40%

Testing reagent development
Equipment development
Regulatory approval

Capitalinvestment
30%

R&D facilities
Production/manufacturing facilities
IT infrastructure facilities

Promotion of GX/DX
10%Life style reforms
20%

Returns toshareholders

Dividend
payout ratio
At least 30%

Borrowings, etc.

M&A

Achieving work-life balance
HR development

28.4

¥

Cumulative total
FY2022-FY2024

Dividend payout ratio

(yen)

(%)

60

60

50

50

40

40

30

30

20

20

10

10

billion0

FY endedMar. 31, 2016

FY endedMar. 31, 2017

FY endedMar. 31, 2018

FY endedMar. 31, 2019

FY endedMar. 31, 2020

FY endedMar. 31, 2021

FY endedMar. 31, 2022

FY endedMar. 31, 2023

0*The Company conducted a two-for-one share split of its common shares with an effective date of April 1, 2018.
The annual dividend per share before FY ended Mar. 31, 2018 is calculated based on the number of shares after the share split.

EIKEN CHEMICAL Integrated Report 2023

45

03

Corporate
Governance

As a company that protects the health of people around the world,the Eiken Group practices compliance activities to achieve harmony
between fair and appropriate management on the one hand andthe demands of society on the other. By accurately recognizing,assessing and coping with the risks that can impede theenforcement of management philosophy or the improvement in
the corporate value, the Eiken Group fulfills the social responsibility
as a company, and implement strengthening and improvement of
its corporate governance system.

INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Basic Policy on Corporate Governance
Eiken Chemical recognizes that enhancing corporate governance with a strong focus on theshareholders’ perspective is one of its most important management issues, for the purposes

Corporate governance structure (as of June 30, 2023)
General Meeting of
Shareholdersof enhancing management soundness, speed and transparency and improving corporate
value, and carries out activities to these ends. For this reason, the Company is organized as a

= InsideElection/
Dismissal= Outside“company with nominating and other committees,” maintaining separation of the executive
and supervisory functions of management. Important matters related to basic management

Supervisory function

policy are decided through the deliberations of the Board of Directors, while execution ofbusiness is conducted swiftly and smoothly based on in-house rules and regulations andthrough an appropriate chain of instruction and command.

2

Board of Directors
Executive: 2

Non-executive: 6

Nominating
Committee

1Compensation
Committee

1

Audit
Committee

1

Election/
Dismissal

Accounting
Auditor

Audit

Roles

Number of meetings(FY ended Mar. 31, 2023)

Delegates occupational authority within the scope of laws andBoard ofDirectors

ReportExecutive function

regulations to the Executive Officers, and focuses on making decisions
on important matters related to basic management policies such as

Sustainability
Committee

Meeting of Shareholders, in light of the standards for nomination andDetermines policies for the determination of individual compensation
for Directors and Executive Officers, as well as individual

9compensation.

Determines matters related to basic policies and implementation plans

Audit
Committee

for audits and the content and other matters related to proposals forthe election and dismissal of the Accounting Auditor and the nonreappointment of the Accounting Auditor to be submitted to theGeneral Meeting of Shareholders.

Executive Officers

Audit

3
Whistleblower
contact

Risk Management &Compliance Committee

ReportStakeholders

7

dismissal of Directors.

Compensation
Committee

Joint Audit
Meeting

Business Divisions

Determines the content and other matters related to proposals forthe election and dismissal of Directors to be submitted to the General

Internal Audit
Department

Management
MeetingCEO15

the medium-term management plan and management policies, andsupervising the status of business execution.

Nominating
Committee

Supervision
Election/
Dismissal

7

Point 1
Transparency ofmanagement

Point 2
Independence ofBoard of Directors

Point 3
Effectiveness of
audit

Transitioned to a company
structure with committees(now referred to as company withnominating and other committees)in 2005

Outside Directors have accounted
for the majority of the Board
since 2015

• Holds joint audit meetings between
the Audit Committee, Internal
Audit Department, and various
other departments• Five of the eight Directors are
independent Outside Directors• Three committees have been
established• Chaired by a Director not serving
concurrently as an Executive
Officer• The Audit Committee holds
periodic reviews with the
Accounting Auditor• The three committees are chairedby Outside Directors• Separation of supervision andexecution• The three committee chairpersons
are Outside Directors• Evaluations of effectiveness are
conducted

EIKEN CHEMICAL Integrated Report 2023

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Approach to Composition of Board of Directors/Diversity of Skills
Materialities and KPIs

The composition of the Board of Directors of Eiken Chemical is well balanced in terms ofknowledge, skills and experience in global business and sustainability, as required to achieve
the Company’s management policy and management plans based on the management
vision. Its members were selected with an emphasis on diversity, including diversity ofgender, nationality, professional background and age. Nominees for Inside Director arechosen for their ability to fulfill the roles of deciding important matters of corporate
management and supervision of Executive Officers in the execution of their duties.
Outside Directors are nominated for highly specialized knowledge, skills and abundance ofexperience that cannot be obtained from Inside Directors alone. Each Director is expected toleverage his or her capabilities born of experience to maximum effect to decide importantmatters of basic management policy and supervise the execution of duties.
The Board of Directors appoints Executive Officers in consideration of executive-officer
selection criteria, following consultation with the Nominating Committee regarding eachcandidate.

Promoting executive diversity
Directors

Executive Officers

Female Directors as share of Directors

Female Executive Officers as share of Executive Officers

End of June
2023

FY2024target

FY2030targetEnd of June
2023

FY2024target

FY2030target

12.5%

20%

30%

-%

-%

30%

Foreign-national Directors as share of Directors

Foreign-national Executive Officers as share of Executive Officers

End of June
2023

FY2024target

FY2030targetEnd of June
2023

FY2024target

FY2030target

-%

-%

20%

-%

-%

20%

F or details of the standards for nomination of Directors, the standards for the independence of Outside
Directors, and the reasons for nominating each candidate, please refer to the Annual Securities Report.

https://www.eiken.co.jp/uploads/85th_AnnualSecuritiesReport.pdf
Committee affiliation
Nominating
Committee

Chairman and Director

Morifumi Wada

Director, President & CEO

Tsugunori Notomi

Director, Senior Vice President
and Executive Officer

Hajime Watari

Independent Outside Director

Yukiya Hakozaki

Independent Outside Director

Kiyoshi Ishii

Independent Outside Director

Kiyomi Nakamura

Independent Outside Director

Akira Fujiyoshi

Independent Outside Director

Naoki Matsutake

Compensation
Committee

Composition of the Board of Directors

Skill matrix
Audit
Committee

Corporate
management

Globalbusiness

Technology/
Innovation

Production/
SCM

Finance/
Accounting

Law/Riskmanagement

OutsideDirector ratio

Non-executive
Director ratio(5 of 8)(6 of 8)

62.5%

75.0%

Change in Outside Director Ratio over Time
Chairperson
Chairperson
Chairperson*1 The skill matrix indicates the specialization, experience, etc. expected of each Director.
*2 In addition to providing specialization, experience and so forth, all Directors are expected to manage with focus on sustainability.
*3 Morifumi Wada does not serve concurrently as Executive Officer.

62.5%

62.5%

2018

2023

42.9%

2013

*Each data point represents the status at the conclusion of the General
Meeting of Shareholders for each year.

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Evaluation of the Effectiveness of the Board of Directors
With the aim of obtaining objective confirmation that the Board of Directors is functioning
appropriately and being managed effectively, as well as bringing about improvements as
required in issues raised, the Company has conducted an analysis and evaluation of theeffectiveness of the Board of Directors, an overview of which is presented here.

Step 1

SurveyQuestionnaire distributed to all Directors

Evaluation method

Step 4

All Directors are requested to fill in the questionnaire by using their name and commenting freely.

Improvements

Initiatives/policies executed inaccordance with decisions

M ain questionnaire items

Step 2Analysis/evaluation

Questionnaire responses summarized

Step 3

Discussion

Initiative/policies deliberated anddiscussed based on results of evaluation(1) Composition of Board of Directors (2) Management of Board of Directors(3) Status of monitoring/supervision, etc. of Board of Directors

Overview of FY ended Mar. 31, 2023 evaluation of effectiveness

Issues outstanding and future initiatives

The following findings show that the Board of Directors is functioning appropriately and is fully effective.
(1) The proportions of Inside and Outside Directors on the Board of Directors as it is currently constituted areappropriate, and there is a good balance of experience and knowledge.

In order to increase the effectiveness of discussions, we will provide opportunities to provide information and todeliberate agenda items hitherto insufficient, such as information related to production and research sites to which
visits have not been possible as a result of COVID-19, and sustainability management initiatives.

(2) Improvements are being made to materials for the Board of Directors and to the content of explanations
provided, both of which were raised as issues.
(3) Standardized information on business execution is now provided sufficiently.

Corporate governance initiatives undertaken in the past

2001-2005

2006-20102011-20152016-2020

2021-

2001

2007

2015

2016

2021

 omplete revision to the Business CodeCof Conduct
2002
Launch of the whistleblower system
2003
Compliance Committee established2005
 ransitioned to a company structureTwith committees (now referred to ascompany with nominating and othercommittees) eginning of performance-based pay
B(stock options)2009
EIKEN WAY establishedBasic policy on corporate governance tandards for the Independence ofS
Outside Directors

EIKEN ROAD MAP 2009 established utside Directors account for majority
Oof Board of Directors

 isk Management & ComplianceR
Committee establishedTraining/facilities inspections provided
to Outside Directors

 valuations of the effectiveness of theE
Board of Directors begin
2018
Standards for Nomination of Directors

Director skill matrix presented
2022
EIKEN ROAD MAP 2030 formulated
Sustainability Committee establishedGlobal Code of Conduct established2019
EIKEN ROAD MAP 2019 established2020
I nitiation of discussions between
Outside Directors and Executive Officers

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Executive Remuneration
Basic policy

Specific policies

Eiken Chemical is organized as a company with nominating and other committees. The Company

Remuneration for Directors and Executive Officers up to FY2022 consisted of fixed pay, performance-

determines remuneration for Directors and Executive Officers on an individual basis in accordance withbased pay, and share-based remuneration stock options. In FY2023 the Company will introduce

the resolutions of the Compensation Committee, a majority of whose members are Outside Directors. To“remuneration through transfer-restricted shares” instead of the previous stock options with the

incentivize executives to bolster the Company’s business results and contribute to shareholder value, theobjective of aligning the perspectives of Directors (excluding Outside Directors) and Executive Officers

criteria for determining remuneration are decided in consideration of each executive’s responsibilities

with those of shareholders over the long term, and thus raising the awareness of sustainable increases inbased on factors such as rank and executive duties, the Company’s business results, the management

shareholder value and corporate value.

environment and industry norms.

The specific details are as follows. For Outside Directors, whose position is independent of business

The amount of remuneration, etc. paid to executives of the Company in FY2022 was fully discussed andperformance, pay is not lined to performance and consists of fixed pay only.

decided at a meeting of the Compensation Committee held on June 17, 2022.

Compensation structure (FY2023 onward)
Those eligible
Type

Fixed

Outside Directors

Directors other than
Outside Directors

Executive Officers

Fixed pay

Performancebased pay

No

Remuneration
through transferrestricted shares

No

No

Payment
methodReflects assessmentof individual

Overview

Cash• F ixed consideration for duties performed•A certain amount paid monthly in accordance with the rank and details of theduties of each Director or Executive Officer

No

Cash

• I ncentive to achieve sustainable improvements
in business results•E ncourages specific initiatives aimed atrebuilding the business foundation andachieving sustainability targets•T otal amount decided through an evaluation of the extent to which targets forconsolidated net sales and operating profit have been achieved for the fiscal year
in question, of the extent of year-on-year improvement, and of ROE, which is afocus management indicator for the Company•E xecutive Officers are assessed on the extent to which they achieve individual
targets set for their areas of responsibility, with additional evaluation criteria that
include the extent to which they achieve strategic targets for sustainable growththat cannot be measured in terms of financial performance figures

Yes

Shares• Clarification of the link between remuneration,and business results and shareholder value• Improvements in corporate value, sharing of therisk/returns experienced by shareholders• Common shares allotted in accordance with the rank of the individual and detailsof their duties

No

Variable

Evaluation indicators for performance-based pay
Evaluation indicator

PurposeTotal amount of remuneration, etc. for FY2022 (based on the compensation structure before changes)

FY2021

FY2022

Targets

Results

Targets

Results

Consolidated net sales(Million yen)

40,40042,99640,00043,271

Consolidated operating profit(Million yen)

6,370

8,387

4,540

7,457

ROE (%)

11.5

14.3

7.8

12.1

Executive category

Total remuneration(Million yen)Amount by type of remuneration (Million yen)Fixed pay

Performance-based pay

Stock options

Of which non-monetary
remuneration, etc.

Number of
executives ofeach type

Directors(excluding Outside Directors)

26

26

–

–

–

3

Executive Officers

308

115

129

63

63

11

Outside Directors

54

54

–

–

–

6

*1 For the three Executive Officers serving concurrently as Directors, the remuneration amount was categorized into remuneration as Director and remuneration as
Executive Officer, before being included in the respective amounts for remuneration.
*2 The amount paid to Executive Officers does not include the portion of employee salary paid to those who work concurrently as employees.
*3 The total amount of non-monetary remuneration for Executive Officers includes ¥63 million in expenses for share-based remuneration stock options.

EIKEN CHEMICAL Integrated Report 2023

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Compliance/Risk Management
Compliance/risk management structure

Basic approach to compliance

The Eiken Group has established a Compliance Policy, Risk Management Policy, and a Eiken GroupDue to our involvement with life and the provision of products and services for protecting the health

Global Code of Conduct as a code of behavior based on social norms. A Risk Management & Complianceof people all over the world, the Eiken Group strives to achieve fair and appropriate management andCommittee with members drawn from Executive Officers has been set up, underneath which has been

maintain harmony with societal demands through the implementation of compliance activities.

established at each division a Risk Management & Compliance Promotion Committee which promotes

Materialities and KPIs

compliance activities as well as identifying and managing risks.
The Eiken Group has also set up contact points for whistleblower reports to respond to reports from
employees and offer advice. In addition, external reports and requests for advice can be sent via the“Contact us” section of the Company’s website.

Rate of uptake ofcompliance training

Number of serious
compliance infringements

FY2022 actual

FY2022 actual

100%

0

Rate of implementation of anticorruption
due diligence at business partners*
FY2022 actual

FY2024 target

FY2030 target

100%

100%

100%

*Among business partners who account for a designated proportion of total transaction value (70% for buyers, 90% forsuppliers), the rate of implementation (response rate) is the upper 50% by transaction value for FY2022, the upper 90% for
FY2024, and 100% in FY2030

EIKEN CHEMICAL CO., LTD.
Board of Directors
President & CEO
Risk Management & Compliance Committee

Emergency Headquarters

Main initiatives for compliance activities (FY2022 actual)

Secretariat of the Committee
Nasu Division

Nogi Division

Headquarters

Risk Management &Compliance Promotion
Committee

Risk Management &Compliance Promotion
Committee

Risk Management &Compliance Promotion
Committee

Month
Details
implemented

May
July

Employees

Whistleblower contact
Compliance program

EIKEN CHINA CO., LTD.
Board of Directors
President
Risk Management &Compliance Committee

Scope

Education and training

Whistleblower contact

GeneralGlobal Code of Conduct (human rights)

All employees

Whistleblower system

All employees

Pharmaceutical regulations (compliance with laws
and regulations/domestic applications, etc.)

All employees/
Relevant departments

Augustknowledge of overseas legal systems/contracts

Relevant departments

October

Fair competition rules

Relevant departments

November

Act against Delay in Payment of Subcontract
Proceeds, etc. to Subcontractors

Relevant departments

DecemberHarassment prevention

All employees

January

Information management

All employees

As required

Training for newly joined employees/mid-career hires

Newly joined employees

April-June

Regular checking of regulations

Department responsible

Monthly

Issuing of “Compliance Newsletter”

April

Issuing of materials, etc. to explain compliance policy

AugustEmployee satisfaction surveys

All employees

NovemberCompliance awareness surveys

All employees

Other
Raising awareness/disseminating

For details of other policies related to compliance, please see the Company’s website.

https://www.eiken.co.jp/en/sustainability/governance/compliance/

Monitoring/surveying

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Compliance/Risk Management
Basic approach to risk management
Materialities and KPIs

By accurately recognizing, assessing and coping with the risks that can impede the enforcement ofmanagement philosophy or the improvement in the corporate value, the Eiken Group fulfills thesocial responsibility as a company, and implement strengthening and improvement of its corporate
governance system.

For details of other policies related to risk management, please see the Company’s website.

Number of BCP (Business Continuity Plan) training sessions

Number of information security management training sessions

FY2022 actual*

FY2024 target

FY2030 target

FY2022 actual*

FY2024 target

FY2030 target

1

1

2

5

3

4

*Division power failure response training

https://www.eiken.co.jp/en/sustainability/governance/risk_management/*Information management training sessions, 2 targetedemail attack training sessions, and 2 safety confirmation
system training sessions

Main business risks that could affect financial position or operating results
Item

Hypothetical risks

Response

Overseas operations• Delays in regulatory approval or delays, interruptions, or suspensions of colorectal
cancer screening programs caused by changes in the economy and businessconditions of countries or regions, pandemics, geopolitical risks, and other factors•D elays in recovering investments in EIKEN CHINA CO., LTD., which is theoverseas consolidated subsidiary of the Company, due to changes in the market
environment and delays in the progress of the business, etc.

In addition to gathering and analyzing information about the global market (primarily through the Overseas
Planning and Sales Office) in order to plan, draft proposals, and promote business in such a way as to reflect
the trends in various countries, the Eiken Group works to strengthen its global expansion through suchmeasures as selection of appropriate sales agents. EIKEN CHINA CO., LTD. plays the central role in the Chinese
business, and with support from Eiken’s Chinese Business Division it works to plan, draft proposals for, andpromote the business in order to improve operating results.

New businesses, products,
and technologies• Delays in recovering investments and loss of opportunities for commercialization
caused by delays or interruptions to research and development•W eak sales resulting from mismatches, etc. caused by changing market trends

The Eiken Group seeks to strengthen its planning and development of new businesses, products, andtechnologies based on medical needs and from a medium- to long-term perspective. To this end it hasestablished strategies to address changes in the business environment in the EIKEN ROAD MAP 2030 and theMedium-Term Management Plan, and is strategically promoting new products and technologies, the progressof which is managed by the Management Meeting, the Board of Directors, and other entities.

Medical systems
and pharmaceuticalregulations, etc.

• Impact on product prices and on the ways in which products are used, causedby changes in the medical systems and pharmaceutical regulations in various
countries

The Eiken Group sells its products in accordance with the pharmaceutical regulations, etc. of each country
or region, makes efforts to quickly identify trends in the respective medical systems and pharmaceuticalregulations, and seeks to respond appropriately and in a timely manner.

Stable supply of products• Damage to the plants or facilities of the Eiken Group or its suppliers caused bynatural disasters such as a large-scale earthquake, wind or water damage, or
major accidents such as fire
• L ong-term suspension of operations caused by pandemics or geopolitical risks

In addition to securing safe inventories of products in order to avoid such risks, the Eiken Group takes othermeasures such as procuring from multiple sources, in addition to which it has drawn up business continuity
plans and works continuously to improve its ability to respond to such situations. The Company has also
obtained certification as an Organization Contributing to National Resilience (Resilience Certification) from the
Cabinet Secretariat National Resilience Promotion Office.

• Delays in responding to information technology innovation•S ystem failures/communication failures caused by accidents, etc.
• F ailures or information leaks, etc. caused by computer viruses

The Eiken Group has introduced various IT systems to enhance operational efficiency, and is working to
improve its business processes. In addition to putting appropriate cyber security countermeasures in place, it
has introduced measures to prevent leaks of information caused by carelessness through the implementationof a variety of educational and training programs, such as drills for responding to targeted email attacks.

IT systems

EIKEN CHEMICAL Integrated Report 2023

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Executives (Directors, Executive Officers) (As of June 27, 2023)
Director

Executive Officer
President & CEO

Tsugunori Notomi
Member of
the Audit Committee

Member of the Compensation Committee,
Member of the Nominating Committee

Outside Independent Member of the Compensation Committee,
Member of the Nominating Committee

Morifumi Wada

Tsugunori Notomi

Hajime Watari

Yukiya Hakozaki

Chairman and Director

Director, President & CEO

Director, Senior Vice President and Executive Officer

Director

1978 Joined the Company
2006 E xecutive Officer of the Company
2007 G eneral Manager, Nogi Plant, and General
Manager, Togane Plant,
Production Division of the Company
2011 Vice President and Executive Officer of the Company
Director of the Company
2012 General Manager, Sales Division of the Company
2014 President and CEO of the Company
2021 Chairman and CEO of the Company
2022 Chairman and Director of the Company (to present)
2023 Outside Director of ORGANO CORPORATION(to present)

1981 Joined the Company
2009 G eneral Manager, Biochemical ResearchLaboratory, R&D Division of the Company
Executive Officer of the Company
2018 General Manager, R&D Division of the Company
Director of the Company (to present)
Vice President and Executive Officer of the Company
2020 General Manager, R&D Division, and General
Manager, Production Division of the Company
Senior Vice President and Executive Officer of
the Company
2021 President & CEO of the Company (to present)

1985 Joined the Company
2013 G eneral Manager, Strategic Planning & Business
Development Department, Corporate Strategy
Office of the Company
2014 G eneral Manager, Overseas Sales Office, Sales
Division of the Company
2015 E xecutive Officer of the Company
2016 G eneral Manager, Global Sales & Business
Development Division of the Company
2020 G eneral Manager, Business Management Division,and General Manager, Global Business Divisionof the Company
Director of the Company (to present)
Vice President and Executive Officer of the Company
2021 Senior Vice President and Executive Officer of theCompany (to present)
2022 General Manager, Business Management Divisionof the Company (to present)

1983 Japan Self Defense Forces Fuji Hospital
1987 M edical Director Gastroenterological Medicine,Japan Self Defense Forces Central Hospital
1997 S ection Chief, Research and Examination
Department, General Manager, Endoscope Office,Japan Self Defense Forces Central Hospital
2000 D irector, First Section, Department of Internal Medicine
and Chief of Health Care Center, JSDF Hanshin Hospital
2004 Medical officer, Overseeing and Directing
Department, JGSDF Western Army
2006 Head, Internal Medicine, First Section, Self Defense
Forces Central Hospital (Medical treatment secretary)2014 R etired
President, Genkikai-Yokohama Hospital (Medical
Corporation)2015 Outside Director of the Company (to present)2017 Visiting Professor, Tokyo Metropolitan University(to present)
2021 Advisor, Medical corporation Reiju medock
General Examination Clinic

Senior Vice President and Executive Officer

Hajime Watari
General Manager, Business Management Division

Vice President and Executive Officer

Naomichi Harada
General Manager, Sales Division

Hidetoshi Kanda
General Manager, R&D Division and General Manager,
Fundamental Research Laboratory, R&D Division

Executive Officer

Shinya Sadamoto
General Manager, President’s OfficeMichitoshi Doi
General Manager, Production Division and General
Manager, Production Management OfficeOutside Independent

Chairperson of the Nominating Committee,
Member of the Compensation Committee

Outside Independent

Chairperson of
the Audit Committee

Outside Independent

Chairperson of the Compensation Committee,
Member of the Audit Committee

Outside Independent

Member of
the Audit Committee

Kiyoshi Ishii

Kiyomi Nakamura

Akira Fujiyoshi

Naoki Matsutake

Director

Director

Director

Director

1977 Joined Ishikawajima-Harima Heavy Industries Co.,
Ltd. (currently IHI Corporation)2005 A ssociate Director, Division Director, Defense
System Business Division, Aero Engine & SpaceBusiness Headquarters, Ishikawajima-Harima
Heavy Industries, Co., Ltd.
2007 E xecutive Officer, Vice President, Aero Engine& Space Business Headquarters, and Division
Director, Defense System Business Division,
Ishikawajima-Harima Heavy Industries Co., Ltd.
2008 S enior Managing Director, Ai Eichi Ai AEROSPACE
Co., Ltd. (currently IHI AEROSPACE Co., Ltd.)
President, Ai Eichi Ai AEROSPACE Co., Ltd.
2012 Chairman, IHI AEROSPACE Co., Ltd. (part-time)
President, and Chief Executive Officer, MEISEIELECTRIC CO., LTD.
2019 Outside Director of the Company (to present)
2020 Outside Director, Kyowa Seiki Co., Ltd. (to present)

1998 Registered as attorney-at-law
Joined Takao Ono Law Office (currently ONO
SOGO LEGAL PROFESSION CORPORATION)
2008 Partner, Akitoshi Ishimoto Law Office2019 Outside Director of the Company (to present)
2020 Outside Director, Nippon Beet Sugar
Manufacturing Co., Ltd. (to present)
2022 Partner, HORIZON LAW OFFICE (to present)

1976 Joined Eisai Co., Ltd. (R&D)
1988 S econded to Eisai America, Inc., U.S. subsidiaryof Eisai Co., Ltd.
1997 Seconded to Eisai Research Institute of Boston Inc.,
U.S. subsidiary of Eisai Co., Ltd.
2000 General Manager, Planning Group, Research andDevelopment Planning Department of Eisai Co., Ltd.
2003 G eneral Manager, IR Group, Public Relations
Department of Eisai Co., Ltd.
2006 C orporate Officer in charge of Corporate
Communications and IR of Eisai Co., Ltd.
2009 D irector, Member of the Audit Committee of
Eisai Co., Ltd.
2014 A dviser of Eisai Co., Ltd.
2017 Independent Director, SEMBA CORPORATION
2019 E xternal Auditor & Supervisor, Heartseed Inc.
(to present)
2020 O utside Director of the Company (to present)

1987 Registered as Certified Public Accountant
1993 R epresentative Director, Kazu Corporation Co.,
Ltd. (to present)
2003 C orporate Auditor, BP Castrol K.K.
2016 O utside Director (Audit and Supervisory
Committee Member), BP Castrol K.K. (to present)
2023 Outside Director of the Company (to present)

Tetsuya Takahashi
General Manager, Sales Promotion Office, Sales Division

Yasuyoshi Mori
General Manager, Overseas Planning and Sales Office andGeneral Manager, Chinese Business Division, Sales Division

Yuji Segawa
General Manager, Marketing Office, Sales Division

Hiroyasu Furuhashi
General Manager, Nogi Plant, Production Division andGeneral Manager, Quality Assurance Office

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Messages from Outside Directors

Chairperson of
the Nominating Committee

Roles and views of the committee

The Nominating Committee consists of two Outside Directors

fully into account, and by creating a skill matrix so that the Boardand one Inside Director, for a total of three members, withof Directors can perform its supervisory function with access to

Outside Director Kiyoshi Ishii serving as Chairperson. The

diverse perspectives. With regard to the election or dismissal

Nominating Committee determines the content of proposals forof the Chief Executive Officer, candidates are considered in

the election and dismissal of Directors to be submitted to theadvance by the Nominating Committee, and the results are

General Meeting of Shareholders, based on the Standards forput on the agenda of the Board of Directors. The provision ofNomination of Directors.

supervision and advice in selecting and developing a successor

Outside Directors who are independent from business execution

to the Chief Executive Officer has also been designated as

account for the majority of all Directors, and it is important toan important mission of the Nominating Committee going

continue selecting appropriate Outside Directors going forward.

forward. Through the activities described above, the Nominating

When selecting candidates for Outside Director, we consider

Committee will strive to enhance corporate governance, which iswhich individuals to select to ensure that the composition of

the foundation of the sustainable growth of the Company.

Directors is balanced by taking neutrality and independence

Activities and outcomes in FY2022, and prospects and aspirations going forward

As we work to achieve the EIKENROAD MAP 2030, we are making
every effort to enhance corporate
governance, which is thefoundation of sustainable growth.
Kiyoshi Ishii
Chairperson of the Nominating Committee

The Nominating Committee met seven times in FY2022, and theWith the objective of achieving further growth, the Company

main outcomes of its activities were as follows.

announced the EIKEN ROAD MAP 2030 in April 2022. Ultimately,

The committee simulated the future appointment andit is people who will turn this plan into reality. We recognize

retirement of Outside Directors, and based on the results, thethat the most important element in achieving growth is thecommittee partially revised the internal rules regarding thenurturing not only of a future Chief Executive Officer but also

retirement age and term of office of Outside Directors, fromof a top management team that can drive this plan forward.

the viewpoint of continuity of the Board of Directors andHowever, due to the Company’s past recruitment practices the

securing human resources. After confirming that there are nocomposition by age is skewed, and I believe it will be important

issues with the independence and neutrality of the candidate

to discover personnel for management from among the mid-for new Outside Director and four candidates for reelection aslevel and younger employee groups, which are relatively large.

Outside Directors for FY ending Mar. 31, 2024, and that they

Also, as we have been focusing on nurturing highly specialized

are well-balanced in terms of the skill matrix, the committee

talents, I feel that there continue to be few educational

decided eight candidates for the Board of Directors, including

opportunities for management personnel. Taking these issues

the reelection of three Inside Directors. In addition to putting a

into account, the Nominating Committee will actively supervise

candidate for Chief Executive Officer on the agenda of the Boardand offer advice on the development of the top managementof Directors, we exchanged opinions with the Board of Directors

team through the use of educational activities, systematicand the Chief Executive Officer regarding the selection androtation, and other measures.

training of successor candidates for Chief Executive Officer.

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Messages from Outside Directors

Chairperson of
the Audit Committee

Roles and views of the committee

The Audit Committee consists of three Outside Directors

internal control systems of each company and responds to(one of which is a holder of a Certified Public Accountant

related issues as appropriate. Members of the Audit Committee

qualification) and one Inside Director, for a total of four

attend important meetings such as those of the Board ofmembers. The committee determines matters related to basic

Directors in order to maintain an understanding of the state ofpolicy and execution plans for audits, as well as the content ofbusiness execution, and express their opinions as necessary. In

proposals and other matters related to the election or dismissal

addition, at Joint Audit Meetings (held four times in FY2022),of the Accounting Auditor, or the non-reappointment of theit received reports from various departments to ensure the

Accounting Auditor, for submission to the General Meeting

effectiveness of auditing. In order to assist in the duties of theof Shareholders. In order to ensure the proper conduct of the

Audit Committee, the Audit Committee Secretariat has been

operations by the Eiken Group, which is formed of the Company

established, the work of which is performed by three individuals

and its subsidiary, the Audit Committee also supervises thefrom the Internal Audit Department.

Activities and outcomes in FY2022, and prospects and aspirations going forward

In order to enhance corporate
value and justify the trust ofsociety, we will forge ahead withaudits to achieve even morerobust governance.
Kiyomi Nakamura
Chairperson of the Audit Committee

The Audit Committee met seven times in FY2022. We confirmed

Going forward, the Audit Committee will continue to workthat governance and risk management are functioning properly

in cooperation with the Internal Audit Department and theby receiving regular reports from the Business Management

Accounting Auditor to further increase the effectiveness ofDivision, Production Division, quality control departments, andaudits and to improve the audit system, thus justifying theother departments in accordance with the Joint Audit Meeting

trust placed in us by society, and enhancing corporate value.

Rules, as well as through quarterly opinion exchanges with

Committee members will also continue to attend important

the Chief Executive Officer and information exchange with themeetings and express opinions as required, in order to maintainAccounting Auditor.

their understanding of the status of business execution, as well

In addition to verifying the economic rationale for importantas ensuring the effectiveness of audits by receiving reports

investment projects with the Internal Audit Department,from various divisions at Joint Audit Meetings, and continuing

which serves as the secretariat to the Audit Committee, we

to forge ahead with audits to achieve even more robust

audited the development and operation of internal control

governance.

systems, and conducted business audits. The Audit Committee

In order to advocate more vigorous governance as the Eiken

also investigated and analyzed risks surrounding the businessGroup seeks to move forward with global management,

environment, shared information with executive departments

we believe we should strengthen the system from a global

and the Board of Directors, and endeavored to strengthen

perspective, conducting audits that involve closer cooperation

governance by confirming a system to respond immediately toand enhanced information sharing between the Audit

the emergence of risks.

Committee and overseas divisions.

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Messages from Outside Directors

Chairperson of
the Compensation Committee

The committee will continuously workon improvements aimed at achieving
the management framework“EIKEN ROAD MAP 2030” and theMedium-Term Management Plan.
Akira Fujiyoshi
Chairperson of the Compensation Committee

Roles and views of the committee

The Compensation Committee consists of two Outside Directors

the human resources that will be the driving force to overcome

and one Inside Director, for a total of three members, withthese challenges and achieve continuous growth are becoming

an Outside Director serving as Chairperson. The committee

increasingly important. The committee recognizes that there isdetermines policies for remuneration of Directors and Executive

a constant need to develop candidates for the next generation

Officers, as well as individual remuneration.

of Executive Officers and to make the executive remuneration

The committee decides Executive Officer remuneration, withstructure attractive among competitive human resources

the focus to incentivize them to bolster the Company’s businessmarket.

results and further improvement to shareholder value, in

From FY2023 onward, the committee will make continuous

consideration of each executive’s level and responsibilities, theimprovements in remuneration structure to make it more

Company’s business results, the management environment

competitive and to encourage Executives’ proactive efforts

and social standards. The current renumeration structure forin changing Company’s business by fair evaluation of their

Executive Officers consists of fixed pay, performance-based pay,achievements. The Company has been engaging withand stock options, while Outside Directors receive only fixed pay.

sustainability management more closely since FY2021. We will

The business environment in which the Company operates

also consider appropriately reflecting in remuneration the results

has become increasingly difficult due to the transformationof activities aimed at achieving sustainability managementof social activities resulting from the spread of COVID-19, andtargets.

Activities and outcomes in FY2022, and prospects and aspirations going forward

In FY2022, the Compensation Committee met nine times andsingle fiscal year, but should be objectives for the realization

focused on two key themes.

of the management framework “EIKEN ROAD MAP 2030”
and the achievement of the Medium-Term Management Plan.

a Changing from stock options to restricted stock

Therefore, the committee decided to clarify medium- and long-

The committee has been continuously investigating better

term objectives, predominantly focused on necessary reform inremuneration structures for aligning Executive Officers’

operation, that should be addressed by Executive Officers. With

perspective with that of shareholders on raising share price andregard to evaluations, the committee has put in place a process

corporate value other than under the stock option plan, and has

for determining performance-based pay, whereby evaluations

resolved to replace the stock options with restricted stock. The

by the Board of Directors will be conducted in addition to self-change is in effect from FY2023.

assessments by Executive Officers. The final assessment is madeby the Compensation Committee. The revisions are intendedb I mprovements to setting objectives of Executive Officers
and evaluation process
The committee believe that the objectives set by the Executive

to raise the motivation of Executive Officers to work towardmedium- to long-term reforms and to provide rewards based on
the results of their efforts.

Officers should not be limited to those to be achieved in a

EIKEN CHEMICAL Integrated Report 2023

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04

Our Profile

Eiken Chemical was founded in 1939, and it has contributed to
public health and the control of communicable diseases in Japanever since through the development of bacteria examination
reagents (culture media) for infectious diseases. In various
fields such as urinalysis, clinical chemistry, immunological,
serological, and genetic examinations, it has developed theclinical examination reagents, medical equipment, and systems
needed for medical care in each successive era, contributing to theadvancement of medical care and improvement of people’s health.

INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Eiken Chemical’s Businesses
Overview of business

Clinical diagnostics market

Manufacture and sale of pharmaceuticals, reagents, and medical, physical, and chemicalmachinery and equipment, as well as the import and export for sale of the same. Our
products are a familiar part of life for everybody from babies to senior citizens.

Domestic market¥

729.3 billion

Annual growth2(FY2021; source:of%forecast

survey by the Japan Associationof Clinical Reagents Industries)

Business domains
Clinical diagnostics

Global market

Clinical diagnostics are a kind of test used in diagnosis, treatment, and screening of disease, and can be
categorized into laboratory tests and physiological function tests. As a comprehensive manufacturer ofclinical diagnostics, Eiken Chemical responds to the needs of the most advanced medicine through theresearch and development, manufacturing and sales of products and services that cover a wide range of98.2 billion

Annual growth ofUS$(FY2021)(Report Code: MD3609)

3

approx. %forecast(average 2021-2026)

laboratory tests.

The size of the clinical diagnostics market wasapproximately ¥729.3 billion in FY2021. In order
to control medical expenses, governments arestrengthening their promotion of preventive healthcare, such as by increasing the rate of uptake forSpecific Health Checkups and cancer screening,
and the volume of clinical diagnostics is projected
to increase going forward. Over the medium term,
the market is forecast to trend gently upwards at anannual rate of about 2%.
The size of the global market for clinical diagnostics
was approximately US$98.2 billion in FY2021.
The market itself is enormous, at more than ten
times the size of that of Japan, and is expected to
grow at an annual rate of more than 3% due toincreases in medical examinations driven by the
aging populations in advanced countries, and theeconomic growth and expansion of medical demandin developing countries.

Clinical diagnostics

Business model
Laboratory tests

Physiological function tests

Tests that use a specimen extracted
from the human body

Tests that inspect
the human body directly

Comprehensive manufacturer of clinical diagnostics
Eiken Chemical

Equipment suppliers

General tests urine/feces etc.
Blood tests

Electrocardiogram tests
etc.

Electroencephalograms tests

Ultrasound tests

Clinicaldiagnostics
field

Medicalwholesalers/
overseas agents

Blood pressure tests etc.
Raw ingredientsuppliers

Testing of food and environment
for environmental inspection to measure contamination of work environments, and sells testing tools

Hospital/clinic screening centers

Food/environmental
testing field

Eiken Chemical manufactures and sells reagents of microbiological tests for food poisoning bacteria andand devices.

Test centers

Reagent suppliers

Patients/others
receiving screening

Wholesalersof physical/
chemical-related
products
Food/pharmaceuticalcompanies, etc.

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Main Products and Services
As a comprehensive manufacturer of clinical diagnostics, the Eiken Group offers a broad lineup of products and services.

Microbiological reagents

Medical devices

10.1%

Test reagents that are useful in the diagnosis andtreatment of microorganism infections, such as
cultures for bacteria testing, rapid test reagents, andreagents for drug sensitivity testing.

Microbiologicalreagents

9.1%

Urinalysis test strips

9.6%

Molecular test (LAMP)

17.0%

Sales
composition
immunochemical
by product type Fecal
tests reagents(FY ended Mar. 31, 2023)

Equipment/
culture mediums
related to foodand environment

5.0%

Clinical chemistry
test reagents

1.4%

Immunological andserological reagents

25.9%

Fecal immunochemical
tests reagents
Test reagents used to detect occult blood in feces forcolorectal cancer screening (primary testing).

Clinical chemistry
test reagents
Test reagents for automated analyzers used tomeasure biological components in blood serum andurine, primarily for test items that are of interest for
their association with lifestyle-related diseases.

Urinalysis test strips
Test reagents such as urine analysis test strips for
detecting various items in urine, such as urobilinogen,occult blood, protein, and glucose.

Immunological andserological reagents
Measurement of infectious diseases, rheumatism,
hormones, and tumor markers. Test reagents forneonatal metabolic disorders, gastric cancer risk
assessment test (ABC risk classification), and others.

Equipment/culture
mediums related tofood and environment
Reagents of microbiological tests for food poisoning
bacteria and for environmental inspection to measurecontamination of work environments, as well as tools
and devices for such tests.

22.0%

Molecular test (LAMP)
Genetic testing products using Eiken Chemical’s
unique LAMP method technology to test for infectious
diseases such as COVID-19 and tuberculosis. We arerolling it out into a wide range of fields, including foodand environment.

Medical devices
Various types of automated analyzers that use our
in-house reagents for a variety of tests.

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INDEX

Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Financial Highlights
FY ended Mar. 31, 2018

FY ended Mar. 31, 2019

FY ended Mar. 31, 2020

FY ended Mar. 31, 2021

FY ended Mar. 31, 2022

FY ended Mar. 31, 2023

Net sales

Million yenof which overseas sales

Million yen

5,405

6,070

7,040

6,895

8,868

8,797

Gross profit

Million yen

14,701

15,692

16,22918,52920,56420,506

Operating profit

Million yen

3,478

4,611

4,622

6,612

8,387

7,457

Ordinary profit

Million yen

3,549

4,681

4,723

6,808

8,508

7,568

Net profit attributable to owners of parent

Million yen

2,608

3,447

3,538

5,044

6,218

5,736

Total assets

Million yen

45,16547,27950,322

55,68562,512

66,275

Net assets

Million yen

32,47835,01437,303

41,67245,80349,535

EBITDA (operating profit + depreciation and amortization)

Million yen

5,138

6,205

6,249

8,323

10,445

9,582

Research and development expenses

Million yen

3,238

2,904

3,333

3,086

3,408

4,065

Capital investment

Million yen

1,102

1,685

2,985

2,876

4,347

3,792

Depreciation

Million yen

1,660

1,594

1,627

1,711

2,058

2,125

Net cash (cash and deposits + short-term securities - interest-bearing debt)

Million yen

8,597

6,356

8,893

8,071

11,93014,062

Cash flows from operating activities

Million yen

4,091

3,318

5,460

5,451

7,769

7,575

Cash flows from investing activities

Million yen(3,250)(4,435)(3,711)(2,193)(5,044)(316)

Cash flows from financing activities

Million yen(1,175)(1,083)(1,220)(1,275)

1,200(2,095)

Cash and cash equivalents at end of period

Million yen

6,651

4,448

4,981

6,968

10,90016,064

Operating profit to net sales ratio

%

9.9

12.9

12.6

17.1

19.5

17.2

Return on Equity (ROE)

%

8.3

10.3

9.9

12.9

14.3

12.1

Return on Assets (ROA)

%

5.8

7.5

7.3

9.5

10.5

8.9

Equity ratio

%

71.2

73.5

73.5

74.3

72.8

74.2

Earnings per share (EPS)

Yen*71.21

93.63

95.95

136.65168.28155.17

Book value per share (BPS)

Yen*877.35

942.37

1,002.86

1,120.36

1,230.55

1,327.47

Dividend payout ratio (consolidated)

%

35.1

32.0

31.3

30.0

30.3

32.9

Dividend per share

Yen*25.00

30.00

30.00

41.00

51.00

51.00

Total number of issued shares at end of period

Shares43,541,438

43,541,438

43,541,438

43,541,438

43,541,438

43,541,438

Number of treasury shares at end of period

Shares6,902,222

6,659,650

6,659,760

6,611,071

6,576,861

6,512,625

Market capitalization

Billion yen

116.6

113.4

85.8

94.1

75.1

68.0

Number of employees at end of period(full-time employees + temporary employees on a consolidated basis)

Persons

1,016

1,040

1,053

1,087

1,105

1,106

34,99135,761

36,58538,66742,99643,271*The Company conducted a two-for-one share split of its common shares with an effective date of April 1, 2018.
Figures for EPS, BPS, and dividend per share for FY ended Mar. 31, 2018 are calculated based on the assumption that the share split was conducted on April 1, 2017.

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Value Creation Story

Our Strategy

Corporate Governance

Our Profile

Non-Financial Highlights
FY ended Mar. 31, 2018

Greenhouse gas (GHG) emissions

FY ended Mar. 31, 2023

2,120

1,989

1,934

2,070

2,016

1,945

t-CO₂

5,252

5,181

4,884

5,038

5,304

2,669

t-CO₂

–

–

–

86,485

105,334

84,205

Renewable energy used

4

MWh

70

76

70

61

62

6,871

Water volume consumed

2

1,000 m3

88.1

83.9

81.0

78.1

80.7

73.1

Total waste generated

3 *2

517

3

Number of ecological proposals

3

4

t

426

384

438

429

464

t

251

215

233

223

233

247

%

58.9

50.6

60.7

59.4

58.8

54.7

Proposals

366

445

454

318

291

518

Average age(Overall)Years

43 years 0 months

42 years 7 months

42 years 6 months

42 years 4 months

42 years 3 months

42 years 5 months

Average age

(Men)

Years

44 years 0 months

43 years 5 months

43 years 2 months

42 years 10 months

42 years 7 months

42 years 5 months(Women)Years

40 years 7 months

40 years 5 months

41 years 0 months

41 years 1 months

41 years 5 months

42 years 4 months

Average years of service

(Men)

Years

16 years 11 months

16 years 2 months

14 years 11 months

16 years 2 months

15 years 7 months

15 years 7 months

Years(Women)GovernanceFY ended Mar. 31, 2022

t-CO₂

Recycling ratio (including recovered energy)

4

FY ended Mar. 31, 2021

Scope 2

Material recycled

Society

FY ended Mar. 31, 2020

Scope 1
Scope 3 *1
Environment

FY ended Mar. 31, 20191

16 years 0 months

16 years 1 month

16 years 6 months

16 years 9 months

16 years 10 months

17 years 7 months

Women as share of all employees

%

27.3

29.0

29.4

29.7

30.3

29.2

Percentage of managerial positions held by women(as of April each year) *3

%

10.7

12.2

14.6

16.9

16.2

13.8

Female Directors as share of Directors

%

0.0

11.0

11.0

11.0

11.0

13.0

Women as share of all hires

%

29.2

35.6

20.0

27.5

29.3

17.5

Percentage of returning to work after childcare leave

%

100

100

100

100

100

100

Employee turnover *4

%

0.9

0.9

2.0

1.7

2.0

2.7

Average non-scheduled working hours per full-time employee per month Hours

–

14.1

15.8

16.2

15.3

14.8

Rate of uptake of EIKEN GLOBAL PROGRAM among employees *5

%

–

–

–

16.5

14.0

19.4

Employee satisfaction score

–

–

–

–

–

–

58.4

Rate of uptake of antibribery training

%

–

–

–

–

96.8

100.0

Number of serious noncompliance incidents *6

Cases

0

0

0

0

0

0

Scope 1 GHG emissions: GHG emitted directly from company facilities, plants, and vehicles
Scope 2 GHG emissions: GHG emitted indirectly by the company as a result of energy usage
Scope 3 GHG emissions: GHG emitted by the entire cluster of companies involved in a product or service (supply chain)<Applicable scope>
1 Eiken Group: EIKEN CHEMICAL CO., LTD., EIKEN CHINA CO., LTD.
2 Eiken Group (production sites)
3 Eiken Group (headquarters/production sites/research facilities)
4 EIKEN CHEMICAL CO., LTD. only

*1 The Company calculates items within the scope in accordance with Scope 3 items based on the GHG protocol*2 Total waste generated = general waste + industrial waste + recycled waste (including recovered energy)*3 Managerial position: a post of section chief or higher*4 Numerator = number of full-time employees leaving between April 1 of each year and March 31 of the following year
Denominator = calculated as number of full-time employees on April 1 each year
*5 Rate of uptake of EIKEN GLOBAL PROGRAM = number of those attending training each fiscal year ÷ number of employees for each fiscal year
*6 The total of material infringements of a country’s competition laws, material infringements of the laws and regulations related to corruption,and material infringements in socioeconomic areas other than these

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Value Creation Story

Our Strategy

Corporate Governance

Our Profile

External Evaluation/Stock Information, Etc.
External evaluation

Company profile

Inclusion in ESG indicesCompany name

EIKEN CHEMICAL CO., LTD.

Head office location

4-19-9 Taito, Taito-ku, Tokyo,
110-8408 Japan

Representative

Tsugunori Notomi, President & CEO

FoundedFebruary 20, 1939

Share capital

6,897,730,000 yen(as of March 31, 2023)

 SG-related third-party evaluations/E
certifications/awards

Non-consolidated: 1,047;
Consolidated 1,106(as of March 31, 2023)

Listed stock exchangeTokyo Stock Exchange
Prime Market

Securities code4549

Year-end

March 31Annual General Meeting of Shareholders

June(full-time employees + temporary employees)

Shares information (as of March 31, 2023)
Total number of shares authorized to be issued 123,900,000 shares
Total number of issued shares(including treasury shares)

43,541,438 shares

Number of shares per unit

100 shares

Number of shareholders

8,892

Shareholder nameDistribution of shares by type of holder
Treasury shares

Financial institutions

Individual/other

Financial instruments
business operators

15.10%

26.58%

16.19%

Major shareholders

Initiatives endorsed or signed

Number of employees

Number of shares held Shareholding ratio(shares)
(%)

1.58%

Foreigncorporations, etc.

30.57%The Master Trust Bank of Japan, Ltd.
(Trust account)

5,139,500

13.88

Custody Bank of Japan, Ltd. (Trust account)

2,891,100

7.81

JPMorgan Chase Bank 385632

2,771,167

7.48

Change in share price

Otsuka Pharmaceutical Co., Ltd.

2,000,000

5.40

(yen)

NORTHERN TRUST CO. (AVFC) RE THE
HIGHCLERE INTERNATIONAL INVESTORSSMALLER COMPANIES FUND

1,303,200

3.52

The Dai-ichi Life Insurance Company, Limited

1,100,000

2.97

GOVERNMENT OF NORWAY

840,800

2.27

Nippon Life Insurance Company

799,200

2.16

VICTORY TRIVALENT INTERNATIONALSMALL-CAP FUND

627,700

1.70

1,000

STATE STREET BANK AND TRUSTCOMPANY 505001

625,928

1.69

500

3,000

*The Company owns 6,512,625 treasury shares, but these are not included in theabove list of the ten largest major shareholders.

Other domestic
orporations

Eiken Chemical

9.98%

TOPIX

2,500
2,000
1,500

0

FY3/13 FY3/14 FY3/15 FY3/16 FY3/17 FY3/18 FY3/19 FY3/20 FY3/21 FY3/22 FY3/23

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