Securities code: 2395

Shareholders’ Newsletter 2023.4.1

2023.9.30

We make strategic
investments, aiming forsustainable growth.
Ryoichi Nagata
Representative Chairman,
President & CEO

Summary of Financial Results

First half

Revenue

Full year

Operating profit(Million yen)

30,36835,000(Forecast)

30,000(Million yen)

6,000

5,245

25,0905,020(Forecast)

4,195

25,00020,00015,11014,561

15,00010,000

7,003

6,389

17,748
7,961

10,3483,000

11,884

2,529

2,228

2,313

1,969

2,349

1,161

1,078

5,000
2020/302021/32022 /3

2023/32024/3

Ordinary profit

02020/32021/32022 /3(Million yen)

9,194

10,000

7,180

7,127

8,000

6,060

(Forecast)

7,078
5,928
3,121

0

3,756

3,645

2020/3

3,661 3,503

4,000

2021/3877
2022 /3

2023/32024/30

4,419

2020/3

4,780(Forecast)

2,966

2,550

2,529
1,305

1,258

2024/3

Profit attributable to owners of parent(Million yen)

5,000

2023/31,1392021/32022 /3

2023/32024/3

Key points of financial results
In the first six months of the fiscal year ending March 31, 2024,
our mainstay CRO business was the driving force behind thesteady growth of revenue and profit. Record high revenue andoperating profit were achieved for the second and the fifth
consecutive term, respectively. Ordinary profit decreased by¥2,170 million year on year and, unfortunately, a record highhas not been achieved here for the sixth consecutive term.
This was not due to a decline in the earning power of our main
business, but it is attributed to a decrease in foreign exchange
gains. Foreign exchange gains, which are recorded under nonoperating income, amounted to 2.58 billion yen in the first halfof the previous fiscal year. In the first six months under review,
foreign exchange gains of ¥240 million were posted, downby ¥2,340 million. This is the factor for the decline in profit.
Excluding the impact of foreign exchange, ordinary profit
increased by 5.1% year on year. Another factor that contributed
to ordinary profit is the share of profit of entities accounted forusing equity method from PPD-SNBL K.K. (hereinafter, PPDSNBL), which is engaged in clinical business. This increasedby ¥240 million from the same period last year, amounting to¥1,230 million, which is a record high.

Could you explain the financial results
for the first half of the fiscal Yearending March 31, 2024?
A

Both revenue and profit exceeded thecompany’s projections, with our mainstay CRO
business being the driving force behind this.

In the first six months, ordinary profit decreased by ¥2,170 million
year on year (down 36.6%). This is due to the generation of asmuch as ¥2,580 million in foreign exchange gains, exceeding
operating profit, in the first half of the previous fiscal year. That
unexpected exchange rate significantly increased our ordinary
profit. Without the impact of such a significant foreign exchange
rate, ordinary profit increased by ¥170 million (up 5.1%) year
on year. Both revenue and profit remained above the revisedearnings forecasts for the first six months, which we announced
on August 2. We, therefore, plan to pay an interim dividend of¥20 per share as we planned initially. Orders received in the
nonclinical business in the first half stood at ¥12,650 million, downby 5.4% year on year. At present, however, inquiries, which are aleading indicator of contracts received, have picked up. Inquiries
from overseas customers began to increase in October. I want toemphasize the strong performance of the clinical business of PPDSNBL, a joint venture with PPD International Holdings, LLC, which
is a major international clinical CRO based in the United States.
Our share of profit of entities accounted for using equity methodfrom PPD-SNBL increased by ¥240 million year on year, to ¥1,230
million, a record-high first-half value. With the clinical business as
the addition to the nonclinical business that is an existing profit
engine, our CRO business now has a business model that ourcompetitors cannot imitate.

Could you explain the forecasts forthe second half of the fiscal year
ending March 31, 2024 and thefuture direction of the Company?
A

For sustainable growth, we will invest
intensively in human resources, facilities, andthe breeding of laboratory NHPs in Japan.

Concerning our mainstay CRO business, we regard our current
business environment as a good opportunity for further
growth, and we are investing intensively in three initiatives, theenhancement of human resources, facility enhancement, andthe establishment of a system for breeding laboratory NHPs
in Japan. Regarding human resources, we recruited 149 new
employees in April 2023 (compared to 40 in April last year). In
terms of facilities, contract research facility expansion work isunderway with a new eight-story office and research building
being constructed on the premises of the Kagoshima Head
Office scheduled to be completed around the end of May 2024.
Nonclinical studies conducted using laboratory NHPs are essential
for the safety study of new modalities in drug discovery. We aremaking strategic large-scale investments in Japan and overseas
to establish a stable framework for breeding and supplying
laboratory NHPs. We will continue to focus on these strategic

initiatives in the second half of the fiscal year.
The accrual of US$ 11 million (¥1,590 million) as temporary
expenses associated with the acquisition of Satsuma
Pharmaceuticals, Inc. in the United States, which will be posted
in the second half, is the main reason for the lower profit forecastin the current fiscal year. The results of the US FDA review of
STS101, an intranasal drug for migraines for which we submitted
a New Drug Application in March 2023, are expected to beannounced in the middle of January 2024. We have received
very positive feedback from our consultations with the FDA. If theapproval is given, we will take quick actions to market the drug in
the United States.

Could you explain your initiatives for
SDGs/ESG toward the enhancement ofcorporate value?
A

We have received Platinum Eruboshi
certification in recognition of our initiativeon promoting the active participation andempowerment of women in the workplace.

We published our Integrated Report 2023 on November 1, 2023.
In the integrated report, we explained our 2028Vision,“Promoting people’s happiness hand in hand with our stakeholders”
as our image of what we want to be in FY2028. Regarding ourhuman capital management initiatives, I have been managing the
SNBL Group with the belief that a core element of business is to“develop people’s potential.” We believe that human capital isan important strategic core that enables us to build a competitiveedge and differentiate ourselves from other companies, and we
also see it as a source of the enhancement of our corporate value.
Therefore, we invest a lot of time in our employee education
program, Nagata-juku.
The greatest topic for the current fiscal year is that we received
Platinum Eruboshi certification on October 11, 2023. In the
Eruboshi certification program, the Minister of Health, Labourand Welfare recognizes excellent companies promoting initiatives
for women’s participation and advancement in the workplace.
Previously, three stars was the highest rating, but in June 2020, a
certification program granting the even higher rating of Platinum
Eruboshi was launched. While there are slightly more than 3,800
listed companies in Japan, the certification’s criteria are high. We
are the seventh listed company to receive the certification and thefirst among healthcare-related companies.
We would like to ask our shareholders for their continued
support as they watch over our growth.

Our Core Base for Bioanalysis Operations

Pharmacokinetics andBioanalysis Center?

What are bioanalysis operations?

Our mainstay business is the provision of support forpharmaceutical development, that is, confirming the safety
and efficacy of drug development candidates provided
by pharmaceutical companies and other customers.
When a drug (test article) is administered into the body,
it is eliminated from the body through the processes ofabsorption, distribution, and metabolism. In order toanalyze how much of the administered drug reaches thetissues in each of these processes, we administer the drug
to experimental animals, collect bioanalytical samples suchas plasma, and measure and analyze the concentration of
the drug in the samples for nonclinical projects.

The concentration analysis performed for drugs(test article) and biomarkers*1 is called bioanalysis. In
the pharmaceutical industry, progress is being made in
the development of new modalities in drug discovery,
including nucleic acid medicine, antibody-drug conjugate(ADC), and gene therapy in addition to antibody drugs,*2
and the demand for measurement systems and accurate
measurements for these drugs has been growing.
*1 B
 iomarker: A biological marker for checking change in the condition and reaction to atreatment by examining biological samples that are contained in the blood, urine, etc.
*2 Antibody drugs: Antibody drugs are pharmaceutical drugs that use antibodies. They
produce effects by specifically binding to antigens that are targets on cell surface. They
are expected to have high therapeutic effects and reduce side effects.

P harmaceutical development process and scope of
bioanalysis operations
Basic
research
Search andidentification oftarget molecules

Pharmaceuticaldevelopment

Selection andoptimization of
drug candidates

Nonclinicalstudies

Clinical trials(I to III)Operational flow of bioanalysis

Market launch andpopularization
New drug
application

Sales

After-sales
services

Determinationof the methodof analysis/
measurement

Collection of
bioanalyticalsamples

Analysis

Reporting(results)

Bioanalysis operations

Pharmacokinetics and Bioanalysis Center in Wakayama

High-sensitivity mass spectrometer

SNBL’s Pharmacokinetics and Bioanalysis Center
Our core base for bioanalysis operations is the Pharmacokinetics
and Bioanalysis Center. We established this facility in the Kainan
Intelligent Park in Kainan City, Wakayama, in August 1998. Thisfacility has received the highest evaluation in all pharmaceutical
GLP compliance inspections.*3 It is equipped with more than 40
liquid chromatograph-mass spectrometers (LC-MS/MS), which
are mainstay analytical equipment. This is the largest numberof liquid chromatograph-mass spectrometers at any CRO in
Japan. The facility also has multiple liquid chromatographmass spectrometers that are the latest model featuringhigh sensitivity. The Drug Safety Research Laboratories in

Kagoshima also have functions for bioanalysis operations, butthey mainly conduct ligand binding assay (LBA), the analysis
of macromolecular drugs including antibody drugs. We areresponding to the growing customer demand for various
bioanalysis operations through cooperation between the
Pharmacokinetics and Bioanalysis Center in Wakayama andthe Drug Safety Research Laboratories in Kagoshima. The
development of new modalities in drug discovery is believed
to have begun in earnest, and this is an area where market
expansion is expected in the future.

*3 P harmaceutical GLP compliance inspections: GLP (Good Laboratory Practice) is a set of standards for good laboratories. These standards apply to facilities that conduct the safety studies required
for applications for marketing authorization of pharmaceuticals and medical devices. Pharmaceutical GLP compliance inspections are conducted to check that the GLP standards, which arenecessary for conducting nonclinical studies related to the safety of drugs, are fulfilled in the operations.

Good news: we have received Platinum Eruboshi certification!

SNBL’s initiatives for promoting theactive participation and empowermentof women in the workplace

What is Eruboshi
certification?
In thisprogram:

h
le i
s!

What is Platinum Eruboshi?

Introduced in June 2020, Platinum Eruboshi certification is granted by the
Minister of Health, Labour and Welfare to Eruboshi-certified companies
laswhich implement outstanding initiatives in terms of:m tinum Erubo roenp l a y ac t i v e
The achievement of action plans
The status of implementation of initiatives related to the promotion of the active
participation and empowerment of women in the workplace.
PoW

The Eruboshi certification
program is based on the Act
on the Promotion of Women’s
Active Engagement inProfessional Life, which cameinto force on April 1, 2016.

?

As of October 31, 2023, there are 44 Platinum
Eruboshi certified companies, and 7 of them
are listed companies. SNBL is the first
listed company in the healthcare field toreceive the certification.

h
le i
s!

?

P
o
W

In October 2023, SNBL became the seventh listedcompany and the first one in the healthcare field toreceive Platinum Eruboshi certification.

lasm tinum Erubo roene
p l a y ac t i v

Reasons why SNBL was selected as a Platinum Eruboshi-certified company
We made company-wide efforts to achieve 100% of eligible male employees taking paternity leave and achieved this goal.
The criteria for promotion to each position are available for anyone to see, so all employees, regardless of their life stage,
can have a fair chance. With initiatives including the above, we achieved 24.4% ratio of women in management positions.
We were recognized for this and other achievements.

Initiatives for promoting the active participation and empowerment of women in
the workplace.
SNBL’s initiatives for promoting active participation and empowerment of women started from a company-wide questionnaire
survey on women’s workstyles that we conducted in 2007. We analyzed the results and began to improve our workplace
proactively to enable women to work comfortably through initiatives, such as the establishment of a childcare facility attached to
the workplace. Subsequently, female members were selected from each department across the organization to form the Working
Nadeshiko Committee. This committee was established as a mechanism for collecting opinions from offices to identify the things
that are needed to enable women to fully demonstrate their capabilities in the workplace, as well as things that employees havenoticed in their everyday work regarding improvements that can be made and changes they desire. The committee has continued
to meet for 30 minutes every week.
Initiatives of the Working Nadeshiko Committee
Conducting a regular company-wide questionnaire
survey across departments and business locations
and considering the introduction of specificinitiatives based on the results of the survey

Holding luncheon seminars themed on childcare, careers, and othertopics, thus providing opportunities to build internal networks andfacilitating the formation of various communities beyond the boundaries
between departments, job categories, and positions

The Committee’s achievements
Since the establishment of the Working Nadeshiko Committee in 2014, more than 50 improvements have been made to date and thepercentage of women who leave the company because of marriage or childbirth improved from 38.5% (FY2008/3) to 1.5% (FY2021/3).

mbers of the Working Nadeshiko Committee
Interviews with me
Many of the company’s employees are women. They return to work actively
after giving birth and while they are raising their children. We offer reduced
working hours to enable women to care for their children after returning to work,
not to mention maternity leave and childcare leave. Women choose the work
hours that are appropriate for their family. Many female employees who sharethe same experience are with us, so I think we have a working environment thatallows us to utilize the programs without hesitation. In addition, telework is alsoavailable for employees who have difficulty coming to work due to nursing or
caregiving needs. We can choose the workstyle that is appropriate
for us, so I think the environment is also good for women who
aim to develop their careers. (Kitamura)

The Committee always has a friendly atmosphere,
allowing us to exchange opinions freely. Even if it is an
issue at a different location, I feel a sense of unity because
I can share my own opinions, saying, “I know about thisservice,” or “This is how we solved the problem at thislocation.” Last year, we created a form for employees
to share their troubles. This has enabled us to solve
more issues speedily. We hope to continue creating anenvironment where more employees canfully demonstrate their capabilities andwork with peace of mind. (Oinishi)

Framework for IR activities at SNBL

News From IR &Corporate Communication

All stakeholders
includingshareholders
and investors

Securities analysts
Media

Representative Chairman,
President & CEO
Officer in charge of IR &Corporate Communications
Three members of the IR & Corporate
Communications Division
IR and ESG

I am Toshiyuki Iwata, Division Head of the IR & Corporate Communication Division. Time
goes by so quickly, and we are in the middle of FY2023. During the first six months ofthe current consolidated fiscal year, we had 168 meetings with institutional investors(compared to 162 meetings in the same period of the previous fiscal year). In May, we held
a company information session in Kagoshima City, for individual investors with the President& CEO participating in the event as a speaker, creating an opportunity for direct, two-way
communication between shareholders and investors and top management. March 2024
will be the 20th anniversary of our listing. All of us team members will continue working
together cheerfully, happily, and with a smile, aiming to enhance the opportunities forconstructive dialogue with the market. The following topics are discussed in this issue:
Members of the IR & Corporate Communications Division

1

Continued Selection for Inclusion in the
JPX-Nikkei Mid and Small Cap Index

2

In August, SNBL was again selected to be a constituent of the JPX-Nikkei
Mid and Small Cap Index which is calculated jointly by JPX Market Innovation& Research, Inc. and Nikkei Inc. This index applies the concept of the JPXNikkei Index 400, whose constituents are “highly appealing to shareholders
as investment destinations,” to companies with small and medium market
capitalization. It is comprised of companies which aim to improve theircorporate value sustainably and manage business with awareness of theirshareholders. Its constituents are selected from among the common stocks
whose main market is the Tokyo Stock Exchange Prime Market, Standard
Market or Growth Market. They are the top 200 stocks determined using
criteria that combine quantitative factors (3-year average ROE and 3-year
cumulative operating profit) and qualitative factors (selection of independent
outside directors, female officers, the disclosure of financial information andcorporate governance reports in English, etc.). As a constituent of this index,
we will continue to promote management with an awareness of the efficientuse of capital as well as an awareness of the market and investors.

3

SNBL’s Shareholder
Return Policy

We regard stable profit-sharing with investors
as one of our important management policies.
Our basic policy is to set a target consolidated
payout ratio of 30% to 40%, taking into accountfactors such as basic earning power and cash
flows. In FY2023/3, partly reflecting record-highrevenue, operating profit and ordinary profit, we
paid an interim dividend of 20 yen for the firsttime. Combined with the year-end dividend of
30 yen, we paid a record-high annual dividend of
50 yen per share. In the fiscal year ending March
31, 2024, we expect to pay an annual dividendof 50 yen per share (including an interim
dividend of 20 yen) again in comprehensive
consideration of our performance trends,
financial condition, the future expansion of ourbusiness, and other factors, as well as the returnof profits to our shareholders.

Level of Disclosure
That Is By Far theHighest in Industry

We aim to improve the level of our financial results
disclosures every quarter. After the establishmentof the IR & Corporate Communications Division,
the first thing we did was the quarterly disclosureof orders received and backlogs, which are leading
indicators in our mainstay nonclinical business. In thenext quarter, we disclosed the breakdown of orders
received, by dividing them into orders received inJapan and ones received overseas. In the following
quarter, we disclosed the breakdown of orders
received overseas by dividing them into ones in
Europe and the United States and ones received in
Asia. In the third quarter of FY2022, we disclosed thenumber of cancellations, which had been taboo in
the industry. We see our IR level as by far the highest
in the CRO industry, and overseas investors are also
surprised at the high level of our disclosures.

Changes in dividends and dividend payout ratio(Yen)

Year-end
dividend

(%)

60

43.6%

50

Interimdividend
Dividend
payout ratio

30

yen

40

22.7%

30

40

yen

8.2 %

20

yen

10

30

20

20

yen

20
yen

5 yen
FY2020/3

FY2021/3

FY2022/3

FY2023/3

FY2024/3

Dividends per
share

5 yen
/share20 yen/share40 yen/share50 yen/share50 yen/shareTotal dividend
amount (million yen)
Dividend
payout ratio
Payout ratio

208

832

1,665

2,081

2,081

8.2%

22.7%

23.4%

34.3%

43.6%

7.3%

28.8%

34.3%

39.0%

34.2%

(excluding the impact offoreign exchange gains andlosses, extraordinary income
and losses, and Satsuma)

40(forecast)

23.4%

20

0

34.3 %

30
yen

50

10

0

Share Status (As of September 30, 2023)

Board of Directors (As of September 30, 2023)

Total Number of Shares Issued
41,632,400 shares (including 469 treasury shares)
Number of Shareholders
14,839 people (up 4,630 people from the end of the previous fiscal year)

Major Shareholders (Top 10 shareholders)Number of Shares Held(thousand shares)

Shareholding
Ratio (%)

Nagata and Company Co., Ltd.

14,74035.41

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

3,232

7.76

Takahisa Nagata

2,030

4.88

Medipolis Medical Research Institute

1,474

3.54

Custody Bank of Japan, Ltd.
(Trust Account)

1,417

3.41

Ikue Nagata

1,024

2.46

Ichiro Nagata

1,024

2.46

Rie Umehara

1,024

2.46

The KAGOSHIMA BANK, LTD.

1,000

2.40

428

1.03

Name

STATE STREET BANK AND TRUSTCLIENT OMNIBUS ACCOUNT OM02
505002Distribution of Shares by ShareholderF inancial
institutions

14.81%

Representative Chairman, President, CEO,and CHO

Ryoichi Nagata

Senior Executive Vice PresidentGroup Financial Management and Global
Business Management

Ken Takanashi

Executive Vice President
General Manager of CRO Business andHospitality Business

Ichiro Nagata

Executive Managing Director
President of Nonclinical Company in chargeof Global Business Development

Hideshi Tsusaki

Independent External Director (Part-Time)

Shinichi Fukumoto

Independent External Director (Part-Time)

Takashi Yamashita

Independent External Director (Part-Time)

Tsuyoshi Hanada

Independent External Director (Part-Time)

Keiko Toya

Basic Stock Information (As of September 30, 2023)
Fiscal Year

From April 1 to March 31 of thefollowing year

Annual Shareholders
Meeting

End of June every year

Record Date

March 31

Record Date for Distribution March 31 (September 30 if interimof Dividends of Surplus
dividends are paid)I ndividuals
and othersS ecurities
companies

Listed Exchange

TSE Prime Market (Code: 2395)

35.10%

3.00%

Number of Shares per Unit

100 shares

Administrator of
Shareholders’ Register

Stock Transfer Agency Department,
Mizuho Trust & Banking Co., Ltd.

F oreign
companies, etc.

7.38%

O
 therJapanesecompanies

39.71%

1-3-3 Chiyoda-ku, Tokyo 100-8241
Toll free number: 0120-288-324(9:00-17:00 excluding Saturdays,
Sundays and holidays)

65th Anniversary Ceremony
On Saturday, August 19, approximately 400 people participated in the ceremony for the 65th anniversary of our founding that we held at
SHIROYAMA HOTEL Kagoshima. After an opening address by President Nagata and congratulatory words from the guests, the event was
divided into three parts. In part 1, Professor Kent E. Calder, international political scientist and Director of Edwin O. Reischauer Center for East
Asian Studies, and Prof. Yoshinori Hara, professor at Kyoto University’s Graduate School of Management, on the topic of “Japan’s International
Position and Necessary Strategies for Future Development,” with President Nagata serving as the MC. Part 2 featured a musical ensemble
with Vice President Ichiro Nagata playing the piano and a string quartet from theKagoshima Symphony Orchestra. Part 3 was a concert performed by Lin Yu Chun, aTaiwanese singer famous for his heavenly voice. Vice President Ichiro Nagata began
playing the piano at the age of three, and while a student at Juntendo University
School of Medicine, he participated in the Chopin International Piano Competitionin Asia several times, winning awards at the Asian competition. Even after not having
performed for some time, his performance was brilliant and greatly applauded.

Shin Nippon Biomedical Laboratories, Ltd.
Kagoshima Head Office: 2438 Miyanouracho, Kagoshima-shi, Kagoshima
Tokyo Head Office: St. Luke’s Tower 28th floor, 8-1 Akashicho, Chuo-ku, Tokyo
https://www.snbl.co.jp