Annual Report 2017
Year Ended March 31, 2017

NIPRO Annual Report 2017
Message fromTop Management

About NIPRO
Contents

Businesses

Regions

01

Contents

Message from the CFO

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Key Financial Indicators

Contents

About NIPRO

01 About Nipro

19 Research and Development Activities

01 Contents
02 Businesses
03 Regions
04 Key Financial Indicators

19 Outline
20 Progress

23 Corporate Governance and Compliance

05 Message from Top Management

06 Business Results for Fiscal 2017
and Assessment
07 Major Initiatives
08 Forecast for Fiscal 2018 andthe Outlook for the Future
09 CSR Activities and Return toShareholders

For HealthierLife around
the World

10 Message from the CFO
11 Review of Operations

12 Feature
13 Medical-Related Business
15 Pharmaceutical-Related Business
17 PharmaPackaging Business

Disclaimer

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24 Status of Corporate Governance
26 Board of Directors and Audit & Supervisory Board Members

27 Financial/Data Section

28 Financial Review
32 Ten-Year Summary
34 Consolidated Balance Sheets
35 Consolidated Statements of Income
35 Consolidated Statements of Comprehensive Income
36 Consolidated Statements of Changes in Net Assets
37 Consolidated Statements of Cash Flows
38 Notes to Consolidated Financial Statements
57 Report of Independent Auditors
58 Corporate Information

This report contains forward-looking statements regarding business indices, strategies and performance
representing the expectations and judgments of the management, based on information available to
the Company and publishable at the time this report was prepared. When reading this report, please
understand that forward-looking statements involve potential risks and uncertainties; actual futurebusiness performance and forecasts may therefore differ materially from those contained in thesestatements, given the possible emergence of new factors or changes in economic circumstances and/or
the business environment.
In this report, fiscal 2017 represents the year ended March 31,2017.

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NIPRO Annual Report 2017
Message fromTop Management

About NIPRO
Contents

Businesses

Regions

Message from the CFO

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Key Financial Indicators

Medical-Related BusinessBusinesses

We Meet the Needs ofMedical Professionals
and Patients throughOur Three Businesses

Nipro engages globally in thedevelopment, manufacture, and saleof medical equipment for
injection-transfusion and dialysis
treatment, and products related todiabetes and cell cultures, as well as
the sale of artificial organ-related
products and generic drugs.

Renal Products

Sales ratio by businessPharmaPackaging
Business

8%

Medical-Related
Business

73%

Total sales¥359,699
millionFiscal 2017

Pharmaceutical-Related Business

19%

02

Contents

Injection Products

Circulatory Organ-related
Products

Pharmaceutical-Related BusinessOne of the world’s leading CDMO*
companies, Nipro performs contract
manufacturing of orally administereddrugs, injectables, and external
preparations through its
Pharmaceutical-Related Business, andsupplies products to 91
pharmaceutical companies in Japanand around the world.
* Contract Development and Manufacturing Organization

Injectables

Orally Administered Drugs

External Preparations

Glass Tubing

Other Industrial Parts

PharmaPackaging BusinessNipro’s PharmaPackaging Business,a part of the company since its
founding, manufactures and sells glass
products and other comprehensive
pharmaceutical packaging.
Currently, Nipro engages in thisbusiness globally from a base of 15
companies and 16 plants in 8
countries, focused on Japan, China,
Europe, and the U.S.

Glass Molding

NIPRO Annual Report 2017

Contents

Message fromTop Management

About NIPRO
Contents

Businesses

Regions

Message from the CFO

Research andDevelopment Activities

Review of Operations

Corporate Governanceand Compliance

03
Financial/Data Section

Key Financial Indicators

Regions

Number of sites by business

We Manufacture andSell Value-Added Products
That Meet Local Needs
Worldwide

Japan

Sales
Research &Development

Japan

11%

62%
Total sales¥359,699

6
38
3

8
3
2

1
1
1

Number ofsites by business

Sales ratio by region

Asia

Production

Number of
employees

Americas

Production
Sales

Number of
employees

5

-

3

37

-

1

Number ofsites by business

EuropeProduction
Sales

7,200

1,870
Number of
employees

3

-

6

26

-

4

1,417

millionNumber ofsites by business

Fiscal 2017

Asia

Production
Sales

Europe12%

Americas15%

Number of
employees

7

1

6

74

1

8

Medical-Related Business

16,928

Pharmaceutical-Related BusinessPharmaPackaging BusinessNIPRO Annual Report 2017
Message fromTop Management

About NIPRO
Contents

Businesses

Regions

04

Contents

Message from the CFO

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Key Financial Indicators

Key Financial Indicators

Net sales

Operating income(Millions of yen)

(Millions of yen)

Net income attributableto owners of parent

Return on equity

Compared to the previous
fiscal year

Compared to the previous
fiscal year(%)

(Millions of yen)

Net sales
Net sales declined slightly due to appreciation of the yen
and the sale of a subsidiary.
Operating income
A decline in the cost of sales boosted operating income.

Compared to the previous
fiscal year

1.9%
366,650

359,699

Compared to the previous
fiscal year

18.9%
24,20528,77042.5%5points

19,71911.8

6.8

11,346

Net income attributable to owners of parent
Net income attributable to owners of parent declined fromthe previous fiscal year, which had recorded extraordinary
income from the sale of a subsidiary in the previous fiscal year.
2016

2017

2016

2017

2016

2017

2016

2017

Nipro Corporation and its Consolidated Subsidiaries
Years ended March 31, 2016, 2017

R&D expenses

Capital expenditures

Total assets(Millions of yen)

(Millions of yen)

(Millions of yen)Compared to the previous
fiscal year

Compared to the previous
fiscal year

Compared to the previous
fiscal year

Compared to the previous
fiscal year

(Millions of yen)

12.1%
10,2692016

11,517

2017

7.8 %

Net assets

6.2 %

0.5%

49,91053,826

708,883

752,839

175,508

176,408

2016

2017

2016

2017

2016

2017

NIPRO Annual Report 2017
About NIPRO

05

Contents

Message fromTop Management

Message from the CFO

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

05 Message fromTop Management
06 Business Results for Fiscal 2017 andAssessment
07 Major Initiatives
08 Forecast for Fiscal 2018 and the
Outlook for the Future
09 CSR Activities and Return toShareholders

10 Message fromthe CFONIPRO Annual Report 2017
About NIPRO

Contents

Message fromTop Management

Business Results for Fiscal 2017 and Assessment

Message from the CFO

Major initiatives

Review of Operations

Research andDevelopment Activities

Forecast for Fiscal 2018 and the Outlook for the Future

Corporate Governanceand Compliance

06
Financial/Data Section

CSR Activities and Return to Shareholders

Business Results for Fiscal 2017 and Assessment

Q.

A.

Yoshihiko Sano

President & Representative Director

How was the fiscal year ended
March 2017 for the Nipro Group?

It was a year in which the synergies
among our three businesses firstbecame apparent.

Total sales and income declined from the previous fiscal
year, due primarily to the effect of exchange rates andloss of sales of the US subsidiary that we sold at the endof the previous fiscal year. Effective net sales with those
impacts excluded, were about 107% those of the previous
fiscal year.
Nipro’s strength lies in expanding our three businessesof Medical Devices, Pharmaceuticals, and PharmaPackaging,and in providing products and technologies that meetthe needs of patients and medical professionals acrossa wide range of fields.
We have over 20,000 products and are expandingthat number by 7-8% every year. Our improvement ofResults

an environment that yields synergies among our threebusinesses is another major factor behind our growth of
the business for the year.
Those synergies were particularly evident in thearea of generic drugs. We are seeing the effects of sales
activities that take advantage of an environment for working
together with a marketing team handling medical devices
that have earned strong trust in the medical field.
Our injection solutions, developed over many years,
and our pre-filled syringe products have developed into
highly competitive products. The pre-filled products are
made with medical product-use manufacturing technology
for rubber stoppers
usable with glass
containers. Demand isstrong for pre-filled
syringes filled with injection
solution, and we expect
further growth.

Medium- to long-term targets

Net sales¥ 359,699 million 1.9%
decrease from fiscal 2016

Operating income¥ 28,770 million

Fiscal 2021 net sales

18.9%

increase from fiscal 2016

Net income attributable to owners of parent¥ 11,346 million 42.5%
decrease from fiscal 2016

Fiscal 2031 net sales¥500billion¥1 trillion

NIPRO Annual Report 2017
About NIPRO

07

Contents

Message fromTop Management

Business Results for Fiscal 2017 and Assessment

Message from the CFO

Major initiatives

Research andDevelopment Activities

Review of Operations

Forecast for Fiscal 2018 and the Outlook for the Future

Corporate Governanceand Compliance

Financial/Data Section

CSR Activities and Return to Shareholders

Major Initiatives

Q.

A.

Among recent initiatives, what is
Nipro focusing on?

We are working to stabilize quality
and improve our technologies bystrengthening our production structure.

For a manufacturer to grow, creating products that are
valuable and competitive for users is of utmost
importance. The fundamentals of this are the realizationof product development that meets users’ needs,
stabilization of production quality, and reduction of costs.
In the medium to long term, increasing quality throughconstant technological improvement is indispensable.
One initiative we have been putting effort into
for the past few years to strengthen our production
structure has been creating mechanisms to share
information on strengths and weaknesses in eachplant and incorporating positive initiatives into each.
In all of our businesses, we regularly convene Plant
Manager Committees that bring plant managers together

from around the world to exchange information.
Through the Plant Manager Committees, we havestrengthened our production structure, with results seen
in four consecutive years of gross profit ratio growthstarting with fiscal 2014. It is important that we continue
improving our technologies through such steady initiatives,
and that we connect improvements to sales and income.

Q.

A.

What initiatives did Nipro emphasize
this past fiscal year?

We worked to incorporate users’ needs
and strengthen technical sales toenhance product competitiveness.

Grasping users’ situations and needs, and strengthening
technical sales that lead to product development, productexplanations, and technical service from the standpoint of users’
needs, are important for improving product competitiveness.
Nipro established the iMEP* dedicated training facility
for medical professionals in Japan in 2014, and has

P O I N T
A Business Strategy that Incorporates Local Users’ Needs
in the North American Market
In the North American market, we opened an office in 2014 and launched full-scale sales of dialyzers and otherNipro-branded products. We also began collaboration with a major dialysis clinic group in the region during the
fiscal year in review, and have secured a nearly 10% share of the dialyzer market in North America.
In fiscal 2018, we plan to open a site in Canada as well. Looking ahead, we plan to enhance our share in
North America for all renal products by constructing a sales structure matched to the North American market.
We are also strengthening our production structure to meet expanding sales needs.

leveraged iMEP to improve our products and strengthen
our development and technical sales capabilities. Our sales
teams have enhanced their ability to propose products froman understanding of medical professionals and their needs,
an achievement that is now reflected in our sales.
In April 2015, we established the Vascular Division as
a dedicated organization handling vascular products. In thefiscal year in review, we moved forward with productdevelopment, preparation for approvals, and the construction ofa sales network as a foothold for global rollout.
For products like vascular products, it is necessary to workwith the medical societies of each country to understand what
products are needed locally, and then create the structures thatcan develop, manufacture, and supply those products. We are
growing our sales of vascular products in Japan because we built
such a structure. Overseas, too, we will have dedicated teams
undertake local market surveys and build relationships withphysicians, and connect these efforts to the expansion of sales.
* iMEP : institute for MEdical PracticeSales of nipro north america division(Nipro-branded products only)(Millions of dollars)
120
100
80
60
40
20
0

2011

Expanded U.S. logistics sites tothree locations in April 2016110%
Established North American officein March 2014

134%
2012

2013

166%
143%

2014

2015

2016

2017

NIPRO Annual Report 2017
About NIPRO

08

Contents

Message fromTop Management

Business Results for Fiscal 2017 and Assessment

Message from the CFO

Major initiatives

Review of Operations

Forecast for Fiscal 2018 and the Outlook for the Future

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

CSR Activities and Return to Shareholders

Forecast for Fiscal 2018 and the Outlook for the Future

Q.

A.

What will Nipro be focusing onin the coming fiscal year?

We aim to achieve profitability at allof our overseas plants.

For the Nipro Group to grow and expand, further enhancing thecompetitiveness of our products and making all of our overseas
plants profitable is one of the most important issues we face.
Accordingly, while thoroughly undertaking cost reductions
and the elimination of defects, we will establish a Product
Planning & Development Department in each plant and will
create systems that enable the planning, development, andproduction of products that meet users’ needs. In the future,drawing on the idea of local production and consumption,
we hope to make every plant capable of taking on a rolesimilar to that of a mother plant in planning, developing, andproducing products demanded by people in that country.
Moreover, having established iMEP in Japan and affirming
the importance of technical sales, we will expand iMEP

worldwide, beginning with a site scheduled to open in Belgium.
Responding to the medical needs of the world is
Nipro’s mission. As one such initiative, we will create
dialysis clinics and training facilities in every region of theworld, contributing to the spread of Japan’s world-classdialysis treatment. Moreover, we will make efforts indiagnostic-related development as an approach to not
only treating illness but also promoting health.
To fulfill our manufacturer’s responsibility of prohibiting
the unintended use of products, we will enhance technicalservice that extends to final usage and will improve our
traceability system.

Q.

What are the prospects and initiatives
for achieving Nipro’s medium- tolong-term goals for fiscal 2021?

A.

We will accelerate the development of
new products and new technologies.

Toward our goal of¥500,000 million in Nipro
Group consolidated net
sales in fiscal 2021, we will
accelerate the developmentof new products andtechnologies, continuing
to expand businesses that contribute to society.
Our sales activities in generic drugs, an area of ongoing
effort, are expected to contribute greatly to achieving this goal.
Approval applications will be made in autumn of thenext fiscal year for cellular pharmaceuticals in theregenerative medicine field, with sales to launch around
June 2018. As we plan future manufacturing capability tomeet the needs of about 10,000 patients we intend tomove quickly in establishing the production technology. In
the field of regenerative medicine, we hope to systemize
technology for culture media, packaging, and testing
devices, displaying the power of Nipro's “Business Trinity.”

OutlookNet sales¥ 392,500 million 9.1

1¥ 31,500 million 10.8

2

¥ 18,000 million 9.5

3%increase from fiscal 2017

Operating income%
increase from fiscal 2017

Despite this, we plan to increase net sales from the previous fiscal year by raising the productivity of existing plants.

we expect increases in research and development expenses, as well as expenses associated with
2. Althoughexpanding the scope of sales and establishing new subsidiaries, we plan to increase operating income fromthe previous fiscal year.

Net income attributable to owners of parent%
increase from fiscal 2017

the manufacturing front, initial launch inefficiencies are expected with the start of operations at new plants,
1. On
including the Vietnam Plant in the pharmaceutical business and the Yamanashi Plant in the vascular business.

of Tanabe Seiyaku Hanbai Co. Ltd., with which we concluded a stock acquisition agreement
3. Earnings
effective March 28, are not included in this consolidated earnings forecast.

NIPRO Annual Report 2017
About NIPRO

09

Contents

Message fromTop Management

Business Results for Fiscal 2017 and Assessment

Message from the CFO

Major initiatives

Review of Operations

Forecast for Fiscal 2018 and the Outlook for the Future

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

CSR Activities and Return to Shareholders

CSR Activities and Return to Shareholders

Q.

A.

What are key initiatives in
Nipro’s CSR activities?

To realize our corporate philosophy,
we are working to create workplaces
where employees will continue working.

Our commitment to being “a corporation that is trusted bypatients, customers, and many others” requires long-term
accumulation of technology. We believe that product planning,development, manufacturing, and sales, must be performed
with an understanding of the historical development oftreatment, and that creating an environment in which
employees will remain working is important for this.
In Japan in particular, there is attention on support for
long-term employment of women. We hope to increase
the number of childcare centers within Nipro. We are also
striving to create workplaces where employees canthemselves find enjoyment in work and remain working
for a long time.

P O I N T
In April 2017, We Openeda New Workplace Childcare Center toIncrease Employees’ Satisfaction
Nipro launched operation of a childcare center attached to ourLife Science Site(Kusatsu-Shi,Shiga), which houses laboratories
and training facilities. We are working to help employees
balance work with childcare, and to improve our workplaceenvironments to facilitate work.

Nipro has expanded into 55 countries and has about
27,400 employees, of which about 74% are overseas
employees. As a company expanding business globally,
Nipro has a social mission of providing places where people
in every country can work. We will fulfill that mission as we
expand our sites around the globe and co-exist with local
communities and people.
Nipro must play an important role in making contributions
to society and communities of which it is a member, throughactivities such as support for disaster-stricken areas, clean-up
campaigns, and environmental conservation projects.
Nipro is committed to actively undertaking such activities.

Q.

A.

Do you have any message for
Nipro’s investors?

Nipro will work to secure stable profitsand continual growth into the future.

that constitutes Nipro’s strength, we will work to securestable profits and continual growth into the future, andto ensure that we meet our medium- to long-term goals.
Moreover, while further displaying synergies among
our three businesses, we aim to develop as a global
company in order to provide products and technologies
that meet the needs of patients and medical professionals
in Japan and around the world.
With regard to profit sharing, one of our key management
policies, we will emphasize a balance among investments tomeet users’ needs, such as manufacturing equipment andR&D expenses; thereturn of profits toshareholders; andthe enhancementof the company’ssound financial
footing.

By making efforts to enhance the broad range of products

P O I N T
Creating Workplaces that Facilitate Work for Every Employee
Under the “Fish! Philosophy”
The “Fish! Philosophy” is a human resources management
technique born in a US West Coast fish market.
Nipro, too, is undertaking the invigoration of
workplaces under four principles of conduct: playing atwork, making others happy, being present, and choosing
one’s attitude.

NIPRO Annual Report 2017
About NIPRO

10

Contents

Message fromTop Management

Message from the CFO

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Message from the CFO

Maintaining a Balance
between Investment for
Future Growth Fields
and Returns to Shareholders

Takehito Yogo
CFO

Regarding Capital Investment
In all of our businesses in Japan and overseas, Nipro isactively making capital investments in preparation for futurebusiness expansion.
Capital expenditures in fiscal 2017 totaled ¥53,826
million, an 7.8% increase from the previous year.

In Japan, we made investments in dialyzer manufacturing
equipment at the Odate Plant, and invested to meet increasing
demand of dialysis fluid and ampoule formulations at the Nipro
Pharma Corporation Ise Plant and Kagamiishi Plant. We acquired
land for a new Goodman plant for vascular business, undertook
new plant construction at Nipro Medical Industries, carriedout construction of Regenerative Medicine R&D Center anda new plant for the Cell Science & Technology Institute related
to our regenerative medicine business.
Overseas, we invested to meet increasing market
demand at Nipro (Thailand) Corporation and installed syringe
production equipment at Nipro PharmaPackaging Germany.
In fiscal 2018, we plan to increase capital expenditures
by 5.5% to ¥56,800 million. In Japan, we will makeenhancements to our Research and Development
Center and Regenerative Medicine R&D Center whilefurther strengthening plants’ production equipment.
Overseas, we will increase investments in production
equipment, especially for dialyzers in China and India.
Such capital expenditures will remain necessary in Japan,
primarily in new and existing business domains, as well as
overseas to meet growing demand under expanding medical
infrastructures as emerging countries develop economically.
Nipro uses gross profit ratio as an indicator of efficientmanagement of invested capital, and will undertake
investments that enable continuous improvements in thisratio. Our aim is a balance between corporate growth andenhanced profitability, as well as a resulting improvement in
our financial balance.

Currency Fluctuation Effects and Countermeasures
Nipro has expanded into 55 countries in which it conducts
business. Our overseas sales have grown year by year and now
account for 38.5% of our total sales.
Nipro’s head office estimates that a ¥1 change in thedollar/yen exchange rate will have an impact of about ¥176
million on gross profit. During the fiscal year, we carried out
active hedges against exchange rate risk, including theconclusion of forward exchange contracts at the head officeand some subsidiaries. Through such measures, in fiscal 2017
we were able to constrain the negative impacts that occurredin some markets due to exchange rate movements.
In the medium to long term, we believe it will be possible tomitigate the effects of exchange rate fluctuations following the startof operation of the production plants that we are constructing
under the concept of local production and consumption.

Nipro’s Policy on Returns to Shareholders
The return of profits to shareholders is a key priority for Nipro.
At the same time, internal reserves are also needed for thecapital investments and R&D that are essential to further
growth. As such, we believe a balance between the two is
important. Nipro currently sets the total amount of 1/3 ofconsolidated net profit and 2/3 of non-consolidated net profit
as the foundation for dividends, with a policy of allocating
40% of this as dividends.
For fiscal 2017, Nipro paid a dividend of ¥29.0 per
share. For fiscal 2018, a dividend of ¥37.5 per share is planned.

NIPRO Annual Report 2017
About NIPRO

Contents

Message fromTop Management

Message from the CFO

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

11
Financial/Data Section

11 Review of Operations
12
13
15
17

FeatureMedical-Related BusinessPharmaceutical-Related BusinessPharmaPackaging Business

19 Research andDevelopment Activities
19 Outline
20 ProgressNIPRO Annual Report 2017
About NIPRO
Feature12

Contents

Message fromTop Management

Medical-Related BusinessMessage from the CFO

Pharmaceutical-Related Business

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

PharmaPackaging BusinessFeatureNipro is Strengthening Its Bases for Future Growth
1: Surgical Products

2: Regenerative and Cellular Medicine

Nipro is aiming to nurture surgery-related medical devices as another source of revenue following dialysis-related products,

Nipro is actively undertaking initiatives in regenerative

general disposables, and cardiovascular medicine related-products. The first step in this was the establishment of an SD (Surgical

medicine and other cutting-edge areas of medicine,

Devices) Division in the organizational restructuring we undertook in April 2015. Then, in fiscal 2017, we further strengthened

working to create a future pillar for our business.

our activities in the field by acquiring NexMed International Co., Ltd., and made a capital alliance with the Transonic Group.
December 2016
January 2017

Completion of the Regenerative Medicine R&D Center

Acquisition of NexMed International Co., Ltd., a company focused on implant products for orthopedics

Nipro has constructed the Regenerative Medicine R&D Center in
Sapporo. At the Center, we will advance joint research with
Sapporo Medical University to develop and produce therapeutic
agents that use stem cells to mitigate the aftereffects of cerebral
infarction or spinal cord injury.

Through the acquisition of
NexMed International Co., Ltd.,
we anticipate the use of
NexMed’s business base as aplatform, and the creation ofsynergies by introducing new
product lines to Nipro.

Company Information
Established: 2011
Country: Japan
Number of employees: 52
Nipro’s investment ratio: 85%

NEX-D2GlobalForm

Regenerative Medicine
R&D Center

Multi-Fix

January 2017
Cell Science & Technology
Institute, Inc.

Capital and business alliance with the Transonic Group, a developer, manufacturer,
and seller of blood flow measurement devices
Transonic Group is a leading global manufacturer of ultrasonicblood flow meters. Nipro has sold the company’s HD02
Hemodialysis Monitor in Japan for many years.
Nipro and the Transonic Group have entered into a capitalalliance through which both companies will complement eachother’s expertise. Nipro will conduct comprehensive sales inJapan of Transonic products
in areas extending beyond
dialysis, including
surgery-related products.

Company Information
December 2016

Established: 1983
Country: U.S.

Completion of a new plant at our subsidiary,
the Cell Science & Technology Institute, Inc.

* Transonic Japan Inc. wasestablished in Japan in 2010.

HD03 Hemodialysis
Monitor(succession machineof HDO2)

AureFloTM
Surgical Flowmeters

The institute has constructed
a new plant to boost our
production of cell culture medium
in preparation for the expansionof the regenerative medicine andbio pharmaceuticals markets.

NIPRO Annual Report 2017
Message fromTop Management

About NIPRO
Feature13

Contents

Medical-Related BusinessMessage from the CFO

Pharmaceutical-Related BusinessResearch andDevelopment Activities

Review of Operations

Corporate Governanceand Compliance

Financial/Data Section

PharmaPackaging Business

Medical-Related Business
Financial Results for Fiscal 2017

Strategy and Outlook for Fiscal 2018

Net sales for the fiscal year ended March 31, 2017

For the coming fiscal year, we expect net sales to increase

decreased 3.7% to ¥262,198 million.

10.8% from the fiscal year in review to ¥297,700 million.

Sales in Japan remained strong in all product areas,
although healthcare reimbursement pricing reforms

markets by energetically promoting new sales channel

occurred in April 2016. In particular, in the area ofdevelopment and the expansion of our product lineups

renal products, sales of dialyzers grew significantly. In

in the areas of diabetes products, vascular products, andthe area of cardio vascular surgery products, sales ofgeneric drugs, as well as renal products. We will also be

implantable auxiliary artificial hearts grew, while in themaking efforts in the area of orthopedics.

area of vascular products, sales of drug-eluting balloon

Total¥262,198

Overseas sales declined from the previous
million

Sales ratio by region and productOverseas
Others54.5 %

6.0 %Infusion
Products

fiscal year. This was due to a decline in sales withother emerging markets, where further market

the strengthening of the yen, as well as the sale ofexpansion is forecast.

Japan

45.5%
Net sales (Millions of yen)

Fiscal 2017

Renal
Products

47.2%

237,777

272,167

262,198

Operating income(Millions of yen)

23,81328,20430,638

13.1%

Injection
Products

16.2%

2015

2016

2017

2015

2016

P O I N T
Welcoming a Domestic Generic Drug
Manufacturer as a Subsidiary
In March 2017, we entered into a share transfer agreement
to acquire all of the outstanding shares of Tanabe Seiyaku
Hanbai Co., Ltd.
We will connect this business to the enhancement of the
products our Group handles and to the expansion of our sales
channels under the new company name Nipro ES Pharma.

6.9 %Catheter
Products

bases and expand sales channels in India, China, andour consolidated subsidiary Nipro Diagnostics, Inc.

10.6%

Diabetic
Products

We aim to capture the world’s leading share in
renal products, while also planning to establish newcatheters grew.

Net sales

We intend to expand our share in our products’

2017

NIPRO Annual Report 2017
About NIPRO
Feature14

Contents

Message fromTop Management

Medical-Related BusinessMessage from the CFO

Pharmaceutical-Related Business

Medical-Related Business

TOPICS

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

PharmaPackaging Business

We Moved Ahead with Opening Sites in Every Indian State to
Enhance our Market Presence through Service Provision Close to Communities.
With a population nearing 1.3 billion, India has an

The Nipro Group across India

estimated 150,000 dialysis patients who undergo 1 million

We Strengthened our Overseas Sales
Structure and Expanded the Production
Capacity of New Overseas Plants to
Meet the World’s Needs.

dialysis treatments every month. As dialysis facilities are
inadequate at present, the Indian government has
indicated a policy of opening treatment facilities. At thesame time, advanced medical treatment is becoming
more widely available under economic development.

Beginning with the establishment of a sales base in Thailand

Against this background, we increased and expanded

in 1988, we have built a medical device sales network that

our sales and manufacturing sites in fiscal 2017.

can deliver Nipro’s products to every corner of the globe. As
we have top share for both dialyzers and hemodiafilters in
the domestic Japanese market today, we will continue tostrengthen this direct sales structure throughout the world.
In fiscal 2017, we established new sites in Austria,
Ethiopia, Vietnam, China, and India. As a result, we now have
175 sales offices in 55 countries for medical related business.
Also, we obtained approval to establish a new plant for
medical business in Vietnam in March 2017, and are proceedingwith the expansion of production in our overseas plants in India,
China, Indonesia and Bangladesh. As a result, we now have
21 plants in 11 countries for medical related business.
In addition, we are going to provide education on theproper use of our products and create relationships that bring
us closer to the demands of customers worldwide byestablishing Nipro Dialysis Centers and iMEP.

Target value
Fiscal 2021 net sales

Medical device manufacturing sites
Nipro India Corporation Private Limited¥10 billion

Medical device sales sites
Nipro Medical (India) Pvt. Ltd.

Nipro Dialysis Center

May-August 2016

March 2017

Establishment of sales sites with warehouses in eight major cities

Opening of the Nipro Dialysis Center,a site for treatment and training

With new sites bringing our structure to a total of 16 sites, we haveconstructed a speedier product provision system from which toincrease customer satisfaction and expand sales.

September 2016
Expansion of our dialyzer manufacturing line
In order to meet expanding sales of
dialyzers, our medical device
manufacturing subsidiary Nipro India
Corporation Private Limited began
expanding its manufacturing lines.

This site will provide, and serve as a showcase for, quality dialysis
treatment. Also, facilities of training for dialysis technicians andnurses are next door, contributing to producing dialysis technicians
and developing dialysis treatments.

NIPRO Annual Report 2017
Message fromTop Management

About NIPRO
Feature15

Contents

Medical-Related BusinessMessage from the CFO

Pharmaceutical-Related BusinessResearch andDevelopment Activities

Review of Operations

Corporate Governanceand Compliance

Financial/Data Section

PharmaPackaging BusinessPharmaceutical-Related Business
Financial Results for Fiscal 2017

suitable to every pharmaceutical product, through developmentby our company or jointly with pharmaceutical manufacturers.

Net sales for the fiscal year ended March 31, 2017 increased
11.0% to ¥69,140 million, continuing strong performance

Strategy and Outlook for Fiscal 2018from the previous fiscal year.
Our contract manufacturing division worked to provide
a wide range of diverse and attentive services including contract
manufacturing of orally administered drugs, injectables, andNet sales
Total¥69,140

Orally Administered Drugs

Injectables

External Preparations

716

697

products

91

86

customers

24

customers

27

54

56

42

44

2016

2017

preparations, beginning with formulation design; contract

markets, and will further enhance its production capabilities,

development that draws on our strengths in development

achieve early operational launches of production sites overseas,and supply of vials, syringes, bags, and other packaging andand enable the supply of pharmaceuticals to the world withcontainers for injectables in particular; and life cycle

more stable supply capabilities and cost competitiveness.

74

274

279

and administration devices, we will draw on synergies among our

We continued robust performance in pharmaceuticaldivisions to develop and provide value-added pharmaceuticals

containers, pharmaceutical preparations, and administration

unique to Nipro, with the safety and convenience needed

devices by providing administration systems and containers

for medical practitioners and patients in mind.

Net sales (Millions of yen)
57,372

2016

In pharmaceutical containers, pharmaceutical preparations,products

70353

Our contract manufacturing division has improved its
production and quality assurance systems to adapt to overseas

value and differentiation.

Supply records

2.8% from the fiscal year in review to ¥71,100 million.

external preparations; contract development of various

management support that aims to deliver further additional

millionFor the coming fiscal year, we expect net sales to increase

62,266

69,140Operating income(Millions of yen)

10,553363

12,06014,135

2015

2016

2017

2015

Creation of Safe and Easy-to-Use
The
Products: Universal PTP ®
location of
We are undertaking the creation of
products with pharmaceutical users
in mind, including tablets with raised
portions to allow even the elderly
and persons with visual impairments
to identify tablets by touch.

2017*The figures in this graph were calculated in May 2016 and May 2017.
*The number of customers does not include overlap among the three categories.

P O I N T

2016

2017

tablets is noted
in BrailleConfirm numberof tablets per
day witha memoUniversal PTP GenePack®

NIPRO Annual Report 2017
About NIPRO
Feature16

Contents

Message fromTop Management

Medical-Related BusinessMessage from the CFO

Pharmaceutical-Related BusinessResearch andDevelopment Activities

Review of Operations

Leveraging the features of two neighboring plants fora high-quality, low-cost stable supply system

TOPICS

Financial/Data Section

PharmaPackaging Business

Zensei Pharmaceutical Co., Ltd.

Pharmaceutical-Related BusinessCorporate Governanceand Compliance

Izumi Plant

We Expanded Production Capacity
at our Sites in Japan.

We Will Supply Price-Competitive
Pharmaceuticals to Asian Markets
through the Acquisition of Shares in a
Vietnamese Pharmaceutical Company.
Since the autumn of 2013, Nipro Pharma Corporation, ourpharmaceutical product manufacturing subsidiary, has provided
pharmaceutical product technology to Mekophar Chemical

In Japan’s pharmaceutical products market, generic drugs are

Pharmaceutical Joint-Stock Company, a pharmaceuticalexpanding rapidly under aggressive promotion policies by the

product manufacturing and sales company in Vietnam.

government.* At the same time, foreign pharmaceuticalcompanies are bringing new pharmaceutical products tomarket at an unprecedented pace. To respond appropriately to

Nipro Pharma Corporation acquired shares of the

Features: Achieving high-quality and low-cost manufacturing through the introductionof 24-hour, automated, unattended facilities and ultra-fast tableting machines

Vietnamese company in November 2016, and plans to further

Kishiwada Plant

strengthen its collaboration with the company.
At present, we are providing full support for a plant

this environment and meet production needs, we are carryingout capital investment at our domestic sites.

construction project being undertaken by a subsidiary of* Increase the share of generic drugs to 80% or more (by volume) of
all pharmaceutical products by September 2020.

Mekophar. We plan to use the new plant for the low-cost
production of self-branded generic drugs.

Nipro Pharma Corporation Ise Plant

Production sites
in Vietnam

Construction of a new building specialized for pharmaceuticalproduct inspection and packaging
Features: Capability of small-lot to large-lot manufacturing

Production capacity forthe two sites combined:

7.5

billion or more tablets/year (planned)

New plant of Mekophar
Chemical Pharmaceutical
Joint-Stock Company

Start of operation: July 2017
Features:•Support for foreign-affiliated firms to enter the Japanese market•Japanese market-oriented packaging for products that are introduced from overseas•Detailed accommodation of special packaging•Accommodation of small scale production of products, including investigational drugs
for clinical studies, etc.

Conceptual design of completed plant
Start of production after Phase 1 construction:
fiscal 2019
Production capacity after Phase 1 construction:
Orally administered drugs: 500 million tablets/year

Nipro Pharma Vietnam Co., Ltd.
Manufacturing capacity

Glass Ampoules: 39 million units/year
Vials (Lyophilized Products): 20 million units/year

NIPRO Annual Report 2017
Message fromTop Management

About NIPRO
Feature17

Contents

Medical-Related BusinessMessage from the CFO

Pharmaceutical-Related BusinessResearch andDevelopment Activities

Review of Operations

Corporate Governanceand Compliance

Financial/Data Section

PharmaPackaging BusinessPharmaPackaging Business
Financial Results for Fiscal 2017

unchanged from the previous fiscal year, due to active sales
expansion of high value-added products.

Net sales for the fiscal year ended March 31, 2017
decreased 12.0% to ¥28,331 million with an effect from

Strategy and Outlook for Fiscal 2018exchange rate conversion of ¥2,900 million.

Net sales
Total¥28,331

14.6%

India

technical sales through means including participation in

At our Biwako Plant in Japan, we completed the rubber

academic meetings with an eye toward new demand. In

stopper building that is scheduled to begin operation in

addition, in Japan and overseas, the Business promoted

October 2017. By enabling the manufacture of medical

new product and technology developments matched torubber stoppers in addition to vials and syringes, thefilling processes and injectable formulations that demandplant will function as a comprehensive supply base fora high level of stability in quality.

medical and pharmaceutical packaging materials, andwill carry out development and supply of high-value
added products that meet users’ needs.

sales in collaboration with the pharmaceutical division.

Overseas, we will expand our share by moving forward with

Overseas, excluding the effects of exchange rate

development and market entry for advanced products that meet

conversion under the higher yen, net sales were almost

the needs of medical professionals and patients worldwide.

29,830Fiscal 201742.1%

8.3% from the fiscal year in review to ¥30,700 million.

Net sales (Millions of yen)

4.7%
EuropePharmaPackaging Business expanded its academic andpre-fillable syringe manufacturing, through means including

Japan

13.1%

For the coming fiscal year, we expect net sales to increase

In Japan, sales grew steadily in the area of vial andmillion

Sales ratio by region
China

In addition to sales of existing products, the32,18428,331

Operating income(Millions of yen)

2015

Americas

25.5%

2016

-1,618
2015

2016

2017

- 2,8892017-1,313P O I N T
The Medical Rubber Stopper Building
at the Biwako Plant
Constructed in response to
growing sales of medical rubber
stoppers in the domestic market,
this is the second rubber stopper
production site in Japan after the
Odate Plant.

NIPRO Annual Report 2017
About NIPRO
Feature18

Contents

Message fromTop Management

Medical-Related BusinessMessage from the CFO

Pharmaceutical-Related BusinessPharmaPackaging Business

TOPICS
Nipro is Actively Developing Containersthat Leverage Cutting-Edge Technology.

Research andDevelopment Activities

Review of Operations

Corporate Governanceand Compliance

Financial/Data Section

PharmaPackaging Business

VIALEXTM

Pre-fillable syringes

Premium Technology for Surface Control

Novel technologies taking quality to the next level

With patient safety at heart and the passion for continuous

With soaring scrutiny from regulators on drug delivery

innovation and enhancement of primary packaging

systems’ safety and effectiveness, addressing syringematerial, Nipro’s R&D team in Japan developed and Nipro’s

high-end industry requirements has become increasingly

Engineering team perfected the VIALEXTM Technology.

challenging.
Since 2006, nearly 50 medications have experienced

Amid the growing need for bio pharmaceuticals in recent

glass breakage or particulate issues serious enough foryears, medical fields face problems with denaturation of

FDA recalls, impacting over 100 million units of medication.

drugs and adhesion of drugs to containers.

Our response was to investigate how this could be

Nipro’s PharmaPackaging Business Division is committed

improved. With an implementation of laser-based glass

to product planning and development from the perspective

cutting technology on syringe manufacturing lines, weof users. The division is engaged in product development

substantially lowered the glass particle generation duringthat meets the demands and solves the problems of users,

the cutting process.

collaborating with the Medical-Related Business, thePharmaceutical-Related Business, and research institutes
while building partnerships with users.

CPhI 2016 awards

INDUSTRY STANDARD VIAL

VIALEXTM

CPhI is an established pharmaceutical event with over 26
years’ experience of bringing together the movers andshakers in pharma.

PROVEN TECHNOLOGY
Successfully passed over 100 challenging tests

Last year we submitted 2 candidates for 2 different
categories : 1 for VIALEXTM and 1 for the Laser-BasedFeatures:
Unparalleled surface quality

Effects:
Limited pH shift & reduction of extractable

Cutting”. And with both topics we made it to the shortlist

Easy replacement

Unprecedented hydrolytic resistanceof finalists. We got a lot of additional “free” publicity by

Unique Compliance

Increased surface durability

means of organizer of all CPhI tradeshows.

NIPRO Annual Report 2017
About NIPRO
OutlineMessage fromTop Management

Message from the CFO

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Progress

Research and Development Activities

Contributing to Innovation in
Medical Care through Original
Technologies and Ideas

Research theme

1

Research andDevelopment
CenterPharmaceutical
Research Center

Artificial organs
Test and diagnosis-related products
Injection products
Oral solids
Medical supplies for external application
Cancer drugs and biosimilars
High-performance medical containers

Production
Technology
CenterProduction technology and equipment designfor the enhancement of productivity.

Regenerative
Medicine R&D
CenterManufacturing equipment and consumables
for the realization of regenerative medicine
using autologous bone marrow cells for
cerebral infarctions and spinal cord injuries.

Conclusion of agreement on joint
research into cerebral infarctions
and spinal cord injuries, andagreement on licensing ofregenerative medicine patents,
with Sapporo Medical University.

GoodmanMedicalInnovation

Catheters and accessories for cardiac andcirculatory organ inspection and therapy
Catheters for cerebral blood vessel therapy
Vascular access catheters

Performance of physician-led
clinical trials with the National
Cerebral and CardiovascularCenter.

the Research and Development Center and Pharmaceutical
Research Center in Japan. We continually address the needs
and issues of medical professionals and patients as we work2

to develop and provide high value-added products.

3

4

2

3 Kusatsu-Shi, Shiga

5

4 Sapporo-Shi, Hokkaido

5 Seto-Shi, Aichi

Status of industry-academia
collaboration

Products of cellular and regenerative medicine
Dialysis-related and general medical devices
Circulatory organ- andintervention-related products
Artificial organs
Test and diagnosis-related products
High-performance medical containers
Medical glass products

Nipro has five research and development sites, centered on

1

19

Contents

Implementation of research
aimed at the joint development
and early realization of new
products, in collaboration with
universities and research
institutions in Japan.

Number of employees

173

160

43

34

70

NIPRO Annual Report 2017
About NIPRO
Outline20

Contents

Message fromTop Management

Message from the CFO

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Progress

Progress of Research and Development

1. Medical-Related BusinessNipro conducts research and development (R&D)
in the following fields, with the Research andDevelopment Center playing a pivotal role.
Expenses related to R&D in this business segment
were ¥5,969 million (US$53 million).

Division of Cell Drugs
Nipro has been developing automated cell culture systems
for cell drugs (regenerative medicine products) and IPS/ES

specifically used with the Nipro CARRICA™ Pump in thecase of high-calorie and other types of infusions. Recently

Division of Functional PharmaceuticalContainers

we incorporated SAFETOUCH® Needleless Connectors and
SAFETOUCH® Needleless Stopcocks in the Nipro CP Chamber

In January 2017, we started sales of pre-filled syringes

Set. We have launched a new product lineup with polypropylene

with a safety mechanism. The safety mechanism

terminal connectors that will prevent solvent cracks.

between the pre-filled syringe and a transfer needle isAlso, in order to create products from medical experts’

aimed to prevent the medical error of injecting solution

needs, Nipro and nursing departments in university hospitals

without dissolving the powdered formulation in the vial.

have collaborated to develop and launch caps for drain tubes.

It also reduces needle-stick accidents and the possibility

These caps can be attached to the drain tubes of aspiratorsof contamination during the preparation of medical

to prevent leakage.

solutions.

As for dialysis products, we have completed regulatory

The medical device notification for our dual

cells through ongoing research projects with industry,

procedures for SEALTOUCH® Cannula and have started

chamber pre-filled syringe (D-PFS) needle protector isacademia, and government in the field of stem cell therapy.

preparing for product launch. This device has a hemostatic

scheduled to be completed in April 2017. In May 2017,

valve incorporated in a SAFETOUCH® Cannula, a transfusion

we plan to begin manufacturing pre-filled syringes

agreement with Sapporo Medical University with theneedle with a mechanism to prevent erroneous piercing. The

incorporating needle guards for the prevention of

objective of making autologous bone marrow cells into

hemostatic valve of this device works automatically whenerroneous piercing after use. This needle guard covers

pharmaceutical products for practical use in thethe needle is detached from a blood circuit for thethe metal needles of pre-filled syringes, including thoseregenerative treatment of cerebral infarction and spinal

temporary interruption of dialysis.

filled with leuprorelin, which is used for the treatment

Regarding cell drugs, Nipro has entered into a licensing

cord injuries. In February 2016, this was designated as a
“SAKIGAKE (forerunner) Designation System” by Japan’sof prostatic cancer and endometriosis.

Division of Diagnostic and Testing Products

Ministry of Health, Labour and Welfare (MHLW).

Division of Medical Devices

Also, we have completed prototyping a new-type
half kit and have been preparing for mass production.

Nipro acquired CE marking for “Genoscholar® NTM+MDR-

This new-type half kit includes a mechanism to prevent

TB II”, which can detect tuberculosis, drug resistance, andangled insertion into vials and a mechanism to prevent

nontuberculous mycobacteriosis at the same time.

spillage due to needle return when withdrawing from

As for infusion products, we have been selling a Nipro CP

Additionally, our Enzyme Center developed andthe vial. Moreover, the kit’s bottle has improved its

Chamber Set with a filter to remove bacteria, particles, airlaunched a measuring reagent for 3-indoxylsulfuric acidtransparency and heat resistance. We plan to start

bubbles and other impurities. This filtration device is(a uremic toxin). This enzymatic reagent is for research use.

replacing products from fiscal 2018.

NIPRO Annual Report 2017
About NIPRO
Outline21

Contents

Message fromTop Management

Message from the CFO

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Progress

Progress of Research and Development
1. Medical-Related Business

Division of Circulatory andInterventional Products
From 2016, the intended use of our drug eluting balloon

stenosed arteries.
In the field of percutaneous peripheral intervention

to a blood circuit tube.

(PPI), we have applied for manufacturing and marketing

We acquired another manufacturing and marketing

approval of our guiding sheath, named “CROSSROAD®”,approval for a hydrodynamically levitated centrifugal pump

and will acquire the approval soon. This device is mainly

and its driving unit for uses including cardiac surgery. We

intended for peripheral intervention treatments using a

are currently preparing to launch the product in the near

contralateral approach across the common iliac artery.

future. Also we are promoting development to expand ourcatheter for PCI was expanded to include small vessel
disease (SVD).

without any specialized parts, and by simply attaching it

product lineup.

Division of Surgical Devices

For such drug-coated therapeutic devices, retention

In the field of hemocatharsis, we have developed adialysis powder formulation dissolver with a lower priceof the drug until it reaches the lesion is very important.

Surgery-related products, particularly in-vivo implantable

than existing devices to meet local needs in the Indian market.

Insufficient retention causes problems such as flaking

medical devices used in orthopedic, cardiac, abdominal andThis newly developed device is in preparation for sales.

and detachment of the drug when going through theother areas of surgery, are being developed. Our proprietarystenosed or flexed blood vessels. In 2015, we started

technologies of fabricating bioabsorbable materials are usedsales of a penetration catheter called “GUIDEPLUS®” forin the development of nerve regeneration assisting tubes,

coronary arteries to prevent these problems.

Division of Pain Treatment Devices

auxiliary materials for pericardium regeneration and otherAs a new business since 2015, we have been conductingThis rapid exchange (RX) type catheter helps treatment

regenerative medicine products without using cells. In fiscal

R&D on magnetic and electric treatment devices that takedevices to cross lesions and its higher delivery performance

2017, we acquired manufacturing and marketing approval

into account human biological rhythms. These devices are

to distal lesions than competitors is highly evaluated infor a nerve regeneration assisting tube and sales were

aimed at treating chronic pains, mood disorders, dementia,

the market. Since 2016, we have been selling new-typestarted. We have been developing products related toand other afflictions. At the same time, we are proceeding

GUIDEPLUS® with higher durability and reliability owing

orthopedics and other minimally invasive surgeries that willwith development of brain function monitors to evaluate

to its improved connection structures.

become mainstream in the future.

the effectiveness of treatment. We have finished theRegarding thrombus capturing catheters, we havestarted the sale of “FILTRAP® LP”, which has improved

improvement of the prototypes of these monitors andDivision of Artificial Organs

operability in i) delivery to distal lesions and ii) retrievalof filters through stents. This product prevents “no-flow”

In November 2016, we acquired manufacturing andor “slow-flow” by preventing blood clots or debris

marketing approval of a pulse oximeter. This revolutionary

scattering to peripheral arteries during the treatment ofdevice can measure hematocrit and oxygen saturation

have been advancing initial product development.

NIPRO Annual Report 2017
About NIPRO
Outline22

Contents

Message fromTop Management

Message from the CFO

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Progress

Progress of Research and Development

2. Pharmaceutical-Related
Business
The following research and development
activities are carried out with the Pharmaceutical
Research Center playing a pivotal role. Researchand development expenses for this businesssegment in the fiscal year were ¥5,548 million(US$49 million).

of 6 active ingredients and 11 products to market,

active pharmaceutical ingredients that excel in both priceincluding Montelukast tablets and Olanzapine tablets/OD

and quality.

tablets/fine granules.

generic drugs that emphasize safety in medical

External Use Products
In the next fiscal year, we plan to manufacture and sell a
Lidocaine hydrochloride poultice, which is our firstwork on the development of adhesive skin tapes that are
hypoallergenic, thin, and lightweight, with excellent
tackiness and stretch properties, with out-licensing

In addition to our normal vial formulations, bag
formulations, and other products, we have actively

overseas, as well, in consideration.
We are also developing microneedles, an “Injection

pursued the development of formulations for injection

Patch,” as a cutting edge percutaneous absorption

kits with improved usability in medical practice.

formulation, along with installing a new investigational
drug manufacturing line planned to begin operation in

Oral Drugs

the next fiscal year.

In addition to the development of general orally

Biosimilars

administered drugs, we are conducting thedevelopment of value-added formulations. Moreover,

Biological drugs, for which the market is rapidly

we are enhancing our innovative product lineup, such

expanding, are generally high-priced, so from theas by printing the name of active ingredients onstandpoint of reducing medical treatment expenses, thetablets for better identification of drugs in medical

need for biosimilars continues to grow. Accordingly, we

practice.

are aiming to formulate stable and consistent biosimilar

During the fiscal year in review, we brought a totaltreatment, and will actively undertake developmentthat contributes to mitigating the rising cost of medical

generic drug out-licensed overseas. We will continue toInjectable Drugs

We will continue to provide high-quality, low-cost

products by partnering with companies that produce bio

expenses.

NIPRO Annual Report 2017
About NIPRO

Contents

Message fromTop Management

Message from the CFO

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

23
Financial/Data Section

23 Corporate
Governance andCompliance
24 Status of Corporate Governance
26 Board of Directors and Audit &Supervisory Board Members

NIPRO Annual Report 2017
About NIPRO
Status of Corporate Governance24

Contents

Message fromTop Management

Message from the CFO

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Board of Directors and Audit & Supervisory Board Members

Status of Corporate Governance1. Corporate Governance System(4) Basic Structure of Corporate Governance and Risk Management(1) Corporate Governance System and Reasons for Adoption
Nipro Corporation has an established corporate governance system including organizations for
the Meeting of Shareholders and directors as required under the Companies Act, in addition toa Board of Directors, Audit & Supervisory Board Members, Audit & Supervisory Board and an
Accounting Auditor. Nipro has also established internal committees such as the Operational Risk
Management Committee. This committee continuously maintains close coordination withexternal parties such as the company attorney, to enable effective monitoring and supervision of
the efficiency and propriety of operations across the Company as a whole.

(2) Internal Control Systems
Nipro strives to make business units the foundation of its internal control system for the Nipro Group
as a whole. Nipro’s directors and Audit & Supervisory Board Members, as well as representatives ofeach of the major companies of the Group, hold a Group management meeting on a monthly basis.
These meetings are used to report on the progress of business activities, decide key operating matters,
and deliberate on pending matters. To build awareness of compliance with laws, regulations and corporate
ethics among executives and employees, Nipro has established the “Nipro Code of Practice,”and has
thoroughly informed everyone in the company.

Meeting of Shareholders
Election

Accounting
Auditor

Audit & Supervisory
Board Members
Audit & Supervisory Board(Directors)
Board of Directors[Decision-making]Accounting
Audit

Supervision of
Directors’
execution of duties

Operational
Audit

President(3) Risk Management System
Nipro has established risk management regulations and a system for managing business and otherspecific risks. Their purpose is to recognize and capture risks that could have a material impact on
business operations, in an appropriate and comprehensive manner. Nipro has also established an
Operational Risk Management Committee to ensure cross-sectional management across all Group
companies. The committee endeavors to further strengthen risk management systems to prevent, avoid
and learn from risks and crises. Nipro has also established a Sanction Committee, chaired by the
President, which endeavors to ensure sound business management through the appropriate handlingof sanctions. Nipro produced a Disaster Prevention and Crisis Management Handbook and distributed it
to each employee within the Nipro Group. Nipro tries hard to keep employees fully informed about
taking calm and appropriate action when faced with disasters and about reassessing and renewing
business continuity plans as appropriate. In addition, to strengthen our rollout of compliance training
and enhance our risk management system, in April 2017 Nipro established a Compliance Section
within its General Affairs Department, and is working to ensure awareness of compliance among
employees.

Committees

Third Party(i.e., lawyer,
accountant)

Director withresponsibility
for operation

Operational
Risk
Management
Committee

Division General Manager,
Manager, Assistant Manager
Conceptual Diagram of Corporate Governance(5) Business Continuity Planning (BCP)
At workplaces in Japan, we are improving our systems for disaster preparation and smooth
continuity of business in the face of risks such as outbreaks of new types of influenza andlarge-scale natural disasters, including major (around magnitude 6) earthquakes originating in the
Nankai Trough. At overseas workplaces, we are also preparing for risks including war, civil war,riots, terrorism, anti-Japanese demonstrations, and strikes.

NIPRO Annual Report 2017
About NIPRO
Status of Corporate Governance25

Contents

Message fromTop Management

Message from the CFO

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Board of Directors and Audit & Supervisory Board Members

Status of Corporate Governance
2. Internal and Statutory Auditing(4) Mutual Collaboration between Outside Audits and Internal, Statutory andAccounting Audits, and the Relationship between Internal Control Divisions(1) Internal Auditing

The Outside directors attend meetings of the Board of Directors and supervise our management based on
their extensive knowledge and management experience from an independent standpoint. The Outside
Audit & Supervisory Board Members carry out auditing activities including attending key meetings suchas meetings of the Board of Directors in accordance with the audit policy and roles determined by the
Audit & Supervisory Board. They are able to access reports via the full-time Audit & Supervisory Board
Members or directly from directors and employees, and inspect key documents. The Outside Audit &Supervisory Board Members also attend periodic or occasional meetings of the Audit & Supervisory
Board to contribute to discussions and exchange opinions from an objective and independent
viewpoint. The Outside Audit & Supervisory Board Members strive to facilitate a smooth audit service
through close collaboration with employees of the Audit Office, the full-time Audit & Supervisory
Board Members, Audit & Supervisory Board Members of subsidiaries and the accounting auditor.

Nipro has established the Internal Audit Division, consisting of the Audit Office and the Overseas Audit
Office, and conducts audits of accounting and other operations based on internal audit protocols.

(2) Statutory Auditing
For each statutory audit, Audit & Supervisory Board Members attend key meetings such as those of
the Board of Directors, in accordance with the auditing policy and roles determined by the Audit &Supervisory Board. Audit & Supervisory Board Members receive performance reports from directors
and employees, and are able to request further explanation when necessary, and inspect key
documents. Audit & Supervisory Board Members also undertake other auditing duties such as
investigating the state of operations and assets in key places of business. Audit & Supervisory Board
are held regularly, or as necessary, in order to exchange views and hold discussions.

3. Outside Directors and Outside Audit & Supervisory Board Members(1) Outside Directors and Outside Audit & Supervisory Board Members
Two of the directors are Outside directors and two of the three Audit & Supervisory Board Members
are Outside Audit & Supervisory Board Members. The two Outside directors and one of the Outside
Audit & Supervisory Board Members have been designated as independent directors/ Audit &Supervisory Board Members, and the Tokyo Stock Exchange has been notified of their designation.

4. Accounting Audits
Name of Accounting Auditor: Hibiki Audit Corporation
Names of Certified Public Accountants conducting the Audit:
Kazuhiro Bando (Representative Partner and Executive)
Takashi Kinoshita (Representative Partner and Executive)
Miho Ishihara (Executive)

Remuneration paid to Directors and Audit & Supervisory Board Members(2) Policy and Criteria for Independence from the Filing Company in the Election of
Outside Directors and Outside Audit & Supervisory Board Members
Nipro determines the criteria for the independence of Outside directors and Outside Audit &Supervisory Board Members as a part of separate corporate governance guidelines taking into
consideration the provisions stipulated under the Financial Instruments and Exchange Act. In theevent that either case does not fall within the scope of this criteria, Outside directors and Outside
Audit & Supervisory Board Members are deemed to be independent from the Company and that
there is no possibility of a conflict of interest with general shareholders.

Millions of yen
Total amount of
remuneration

Internal Directors
Internal Audit & Supervisory Board Members
Outside Directors, Outside Audit &Supervisory Board Members¥

524

Total amount of remuneration by type
Annualremuneration

¥

134

¥

Bonus

Retirement
benefits

343¥

Number of
eligible
corporate
officers

46

28

7

7

–

–

1

13

13

–

–

4

Thousands of U.S. dollars
Total amount of
remuneration(3) Approach to the Election of Outside Directors and Outside Audit & Supervisory Board Members
Close coordination with the Internal directors and the full-time Audit & Supervisory Board Members,
employees of the Audit Office and assigned staff from the management section of the head office(as needed) ensures sufficient cover to implement the supervision and the audit function and role as
required by the current corporate governance system.

Support Staff for Audits:
Certified Public Accountants: 12
Other staff: 2

Internal Directors
Internal Audit & Supervisory Board Members
Outside Directors, Outside Audit &Supervisory Board Members

Retirement
benefits

Number of
eligible
corporate
officers

Total amount of remuneration by type
Annualremuneration

Bonus$ 4,676$ 1,197$ 3,061

$ 417

28

64

64

–

–

1

123

123

–

–

4

NIPRO Annual Report 2017
About NIPRO
Status of Corporate Governance26

Contents

Message fromTop Management

Message from the CFO

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Board of Directors and Audit & Supervisory Board Members

Board of Directors and Audit & Supervisory Board Members

As of March 31,2017

Directors

Akihiko Yamabe

Yasushi Kutsukawa

Hiroshi Sudoh

Accounting Division ; Corporate Planning
Headquarters

Medical Sales & Marketing Headquaters ;Domestic Division

Mitsutaka Ueda

Masayuki Ito

Deputy General Manager Product Planning
Headquarters ; Medical Technology Division for
Planning, Development & Marketing

Deputy General Manager Medical Technology
Division for Planning, Development & Marketing

Surgical Devices Division ; Domestic Product Sales
and Development Headquaters ; Medical Technology
Division for Planning, Development & Marketing

Tsuyoshi Yamazaki
PharmaPackaging Division

Hideo Okamoto
Front row, from left: Kiyotaka Yoshioka, Makoto Sato, Yoshihiko Sano,
Kazuo Wakatsuki
Back row, from left: Minako Oomizu, Yoshiko Tanaka, Kyoetsu Kobayashi,
Toshiaki Masuda

President & Representative Director

Yoshihiko Sano

Deputy General Manager Global Production
Division ; Director Process Management &Planning Center

Masanobu Iwasa
Medical System Development Department ;Pharmaceutical Division

Yozo Sawada
Intellectual Property Department

Kimihito Minoura

Managing Directors

Product Planning Headquarters ; Medical Technology
Division for Planning, Development & Marketing

Makoto Sato

Hideto Nakamura

Pharmaceutical Division

Kazuo Wakatsuki
Global Business Division

Kiyotaka Yoshioka
Domestic Division

Toshiaki Masuda
Medical Technology Division for Planning, Development & Marketing ;Research & Development Center

Kyoetsu Kobayashi
Global Production Division ; Odate Plant

Itsuo Akasaki

Kenichi Nishida
Pharmaceutical Development Promotion
Department ; Pharmaceutical Division

Kazuhiko Sano

Toyoshi Yoshida

Deputy General Manager Global Production
Division ; Production Technology Center

Akio Shirasu
Global Product Solutions Department ;Medical Technology Division for Planning,
Development & Marketing

Hiroshi Yoshida
Enzyme Center ; Department III, Research &Development Center ; Medical Technology Division
for Planning, Development & Marketing

Quality Assurance & Regulatory Compliance Division

Kouki Hatakeyama
Quality Assurance Department ; Global Production
Division

Yasushi Oyama
Vascular Division

Kenju Fujita
Pharmaceutical Sales & Marketing Headquarters ;Domestic Division

Takehito Yogo
Corporate Planning Headquarters

Outside Directors

Yoshiko Tanaka

Minako Oomizu

May 1983: General Manager, Drug Department, Tokushukai
Medical Corporation Osaka Headquarters

Apr. 2008: Director of Nursing Department,
and Vice-Director, Jikei University Hospital

Jun. 1997: General Manager, Planning and Management
Department, and General Manager, Drug
Department, Tokushukai Medical Corporation
Osaka Headquarters

Apr. 2010: Director, Office of Human Resources Managementand Education, Wakokai Medical Association

Jun. 2014: Appointed Director, Nipro Corporation (to present)

Pharmaceutical Research Laboratories ;Pharmaceutical Division

Medical System Sales Department ;Pharmaceutical Division

General Affairs / Human Resources Headquarters

Jun. 2002: President and Representative Director, MEDYHOPE Corporation (to present)

Takeo Kikuchi

Jun. 2015: Appointed Director, Nipro Corporation(to present)

Audit & Supervisory Board Member(Full time)

Takayuki Nomiya
Audit & Supervisory Board Members

Kazumichi Irie
Masayoshi Hasegawa

NIPRO Annual Report 2017
About NIPRO

27

Contents

Message fromTop Management

Message from the CFO

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

27 Financial/
Data Section
28
32
34
35
35
36
37
38
57
58

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements ofComprehensive Income
Consolidated Statements of
Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Auditors
Corporate Information

Until 2016, yen amounts are rounded to the nearest million yen.
Since 2017, yen amounts are rounded down to the nearest million yen.

NIPRO Annual Report 2017
Message fromTop Management

About NIPRO
Financial Review

28

Contents

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Research andDevelopment Activities

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Financial Review
Overview

the previous fiscal year to 68.0%.
As a result, gross profit decreased by 0.7% compared with the previous fiscal year to ¥115,097 million(US$1,025.9 million).

The global economy during the current consolidated financial year saw a continuation of the gradualeconomic recovery in the United States and Europe, while China also showed some signs of improvement.
As for the Japanese economy, corporate earnings and personal consumption also remained steady,underpinned by yen depreciation following the US Presidential election. However, the sense of uncertainty
about the new US administration and the trend of anti-globalization which has manifested in the wakeof Brexit have resulted in a growing sense of uncertainty about the future. Even under these circumstances,
the Nipro Group has made efforts to increase sales and cut production costs, and worked to improvebusiness performance with the goal of realizing user wishes as soon as possible.

Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased by 5.8% compared with the previous fiscal yearto ¥86,326 million(US$769.4 million).
Operating Income
As a result of the aforementioned factors, operating income increased by 18.9% compared with theprevious fiscal year to ¥28,770 million(US$256.4 million). The ratio of operating income to net sales
increased by 1.4 percentage points to 8.0%.

Consolidated Business Results
Relevant quantitative data for the period under review has been converted at the rate of US$1.00 =¥112.19 (the rate of exchange as of March 31, 2017).

Other Income (Expenses)
We recorded other expenses of ¥10,446 million (US$93.1 million), while we had other income of ¥2,080
million in the previous fiscal year including the gain on sale of subsidiaries and affiliates’ stock of ¥15,674
million. In the period under review, we recorded ¥2,273 million (US$20.2 million) in foreign exchange
losses, while we reported ¥7,182 million in foreign exchange losses in the previous period.

Net Sales
Sales for the current term were 359,699 million yen (US$3,206.1 million). Sales were down 1.9% YoY
due to 14,862 million yen from the sale of subsidiary Nipro Diagnostics, Inc. at the end of the previous
year being included in the previous year’s sales, and due to further yen appreciation this year.
Cost of Sales
The cost of sales decreased 2.4% compared with the previous fiscal year to ¥244,602 million (US$2,180.2
million). This is thanks to the sale of Nipro Diagnostics, Inc., and the continuous improvement of profitability
in our plants. The ratio of cost of sales to net sales decreased by 0.4 percentage points compared with

Income before Income Taxes
As a result of the factors outlined above, income before income taxes decreased by 30.3% comparedwith the previous fiscal year to ¥18,324 million(US$163.3 million).

(Years ended March 31)

Net sales (Millions of yen)

300,753

Operating income (Millions of yen)
325,084

366,650

28,770359,699

2015

2016

2017

11,371

12,290

2013

2014

2015

19,90818,06016,572

2014

26,28524,205241,0212013

Income before income taxes (Millions of yen)

18,324

12,891

2016

2017

2013

2014

2015

2016

2017

NIPRO Annual Report 2017
Message fromTop Management

About NIPRO
Financial Review

29

Contents

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Research andDevelopment Activities

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Income Taxes
Income taxes, including deferred taxes decreased by 1.3%, compared with the previous fiscal year to¥6,720 million(US$59.9 million). The effective tax rate was 36.7%, higher than the rate of 25.9% for theprevious fiscal year.

Corporate Governanceand Compliance

Report of Independent Auditors

Corporate Information

Americas
In the Americas, net sales decreased by 26.5% compared with the previous fiscal year to ¥53,239 million(US$474.5 million) due to the sale of subsidiary Nipro Diagnostics, Inc. at the end of the previous year.
EuropeIn Europe, net sales decreased by 7.7% compared with the previous fiscal year to ¥42,579 million(US$379.5 million) due to the appreciation of the yen.

Net Income (Loss) Attributable to Non-controlling Interests
Net income attributable to non-controlling interests amounted to ¥258 million(US$2.2 million).
Net Income Attributable to owners of Parent
Net income attributable to owners of parent decreased by 42.5% compared with the previous fiscal yearto ¥11,346 million(US$101.1 million).
Net income per share decreased to ¥67.5 (US$0.6) from ¥116.2 for the previous fiscal year. Returnon equity decreased 5.0 percentage points to 6.8% from 11.8% for the previous fiscal year because of
the lower net income.
In the previous period, we recorded a gain on sales of shares of subsidiaries and associates and again on investments in capital of subsidiaries and associates totaling ¥15,674 million in connection with
Nipro Diagnostics, Inc. and Shanghai Nissho Vacuum Flask Refill Co., Ltd.

Asia
In Asia, net sales decreased by 4.6% compared with the previous fiscal year to ¥42,548 million(US$379.2 million) due to the appreciation of the yen.

Financial Position
Total assets increased 43,956 million yen YoY to 752,839 million yen (US$6,710.3 million). Current
assets increased 18,657 million yen and noncurrent assets increased 25,299 million yen. The increase ofcurrent assets was due to an increase of 9,558 million yen in Finished goods and merchandise, and theincrease of noncurrent assets was due to an increase of 8,151 million yen in investment securities.
Total liabilities increased 43,056 million yen YoY to 576,431 million yen (US$5,137.9 million).
Current liabilities decreased 356 million yen and long-term liabilities increased 43,412 million yen. The
main reason for the decrease in current liabilities was a decrease of 7,460 million yen in Notes andaccounts payable for plant and equipment, and the primary reason for the increase in noncurrent
liabilities was a 43,120 million yen increase in long-term debt.
Total net assets increased 900 million yen YoY to 176,408 million yen. Shareholders’ equity increased

Net Sales by Geographic Segment
Japan
In Japan, net sales increased by 8.8% compared with the previous fiscal year to ¥221,331 million(US$1,972.8 million) mainly thanks to the increase of sales in the Medical-Related business.

(Years ended March 31)

Net income attributable to owners of parent (Millions of yen)

Capital expenditures (Millions of yen)

19,719Total assets (Millions of yen)
57,101

58,31047,69812,470

10,232

11,34637,9972017

2013

579,302619,655

695,307

708,883

752,839

2015

2016

2017

35,093

2,861
2013

2014

2015

2016

2014

2015

2016

2017

2013

2014

NIPRO Annual Report 2017
Message fromTop Management

About NIPRO
Financial Review

30

Contents

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Research andDevelopment Activities

Review of Operations

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

by 586 million yen and accumulated other comprehensive income decreased by 503 million yen.
As a result, the equity ratio decreased by 1.3 of a percentage point compared with the end of theprevious fiscal year, to 22.1%.

Corporate Governanceand Compliance

Report of Independent Auditors

Corporate Information

promote long-term business development. Through these means, we will ensure stable profits and achieve
continued growth.

Risk Factors
Cash Flow

The following are risks that may have an effect on the Nipro Group’s operational results and/or financial
condition. The items concerned were determined as of March 31, 2017.

Net cash provided by operating activities amounted to ¥33,472 million(US$298.3 million). The major cash
inflows were net income and depreciation and amortization.
Net cash used in investing activities came to ¥66,351 million(US$591.4 million). The principal cash
outflow was purchase of property, plant and equipment.
Net cash obtained by financing activities amounted to ¥36,483 million(US$325.1 million). The main
account of cash inflow was proceeds from long-term loans payable.
As a result, cash and cash equivalents stood at ¥112,046 million(US$998.7 million) as of March 31,
2017.

(1) Risks Related to Product Safety
The Nipro Group brings all of its capabilities to bear in ensuring product safety in the design, development
and manufacturing of medical devices and pharmaceutical products. There are still risks, however, suchas accidental defects or adverse effects that could result in damages to a third party and our being sued
for liability.
To cover these risks, we therefore maintain general liability and product liability insurance. In theunlikely event of a successful claim in excess of the insurance coverage, however, there could be amaterial adverse effect on our operational results and/or financial condition.

Staff
The total number of employees as of the end of the period under review increased by 3,172 comparedwith the end of the previous fiscal year, to 27,415. Employees in Japan increased by 187, to 7,200, andthe number of overseas employees increased by 2,985, to 20,215.

(2) Risks Related to Supplier Concentration
The Nipro Group procures materials and parts for its operations from a large number of suppliers. Somekey materials or parts may be obtained only from a single supplier or a limited group of suppliers. If
circumstances at any of these suppliers make it impossible for us to acquire a sufficient quantity ofmaterials or parts to meet our production needs in a timely and cost-effective manner, there could be amaterial adverse effect on our operational results and/or financial condition.

Basic Policy on Distribution of Profit
At Nipro, we have been paying dividends to shareholders by positioning the return of profits as an importantmanagement policy. Retained earnings will be actively invested in the research and development division, in
addition to the sales division and production division, as a part of efforts to expand the business base and(Years ended March 31)

Net assets (Millions of yen)

Basic earnings per share (yen)178,810

128,763

175,508

176,408

Number of employees (Thousand)
116.2

135,961

19.3

81.0

21.8

23.2

24.2

24.7

2016

2017

67.5

60.0
18.2
2013

2014

2015

2016

2017

2013

2014

2015

2016

2017

2013

2014

2015

NIPRO Annual Report 2017
Message fromTop Management

About NIPRO
Financial Review

31

Contents

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Research andDevelopment Activities

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements(3) Risks Related to Changes in Government Healthcare Policies
The business sector to which the Nipro Group belongs is intimately connected with the healthcare system
and is subject to the regulations laid out by government organizations, including the National Health
Insurance System and the Pharmaceutical Affairs Law. Should circumstances arise in which we are unable
to respond to changes in the environment brought about by unforeseeable wholesale changes ingovernment healthcare policies, there could be a material adverse effect on our operational results
and/or financial condition.

Corporate Governanceand Compliance

Report of Independent Auditors

Corporate Informationand supply of its products. Should there be unexpected revisions to legal regulations or political or
economic changes in these countries or regions, there could be a material adverse effect on ouroperational results and/or financial condition.

(4) Risks Related to Changes in Sale Prices
The products sold by the Nipro Group include some that are affected on an irregular two-year basis byprice reductions under the Japanese payment system for medical care, drug prices and reimbursement
prices for medical materials and supplies. Moreover, should measures to hold down medical costs also
become pervasive worldwide, resulting in intensified competition between corporations and leading toprices falling to a greater degree than anticipated, there could be a material adverse effect on ouroperational results and/or financial condition.
(5) Risks Related to Changes in Prices of Raw Materials
The products manufactured by the Nipro Group include some that are made from petrochemical
products such as plastics. Should the cost of raw materials such as petrochemicals rise, there could be amaterial adverse effect on our operational results and/or financial condition.
(6) Risks Related to Overseas Expansion
The Nipro Group maintains manufacturing bases and sales offices around the world for the production(Years ended March 31)

Equity ratio (%)

20.7

Return on assets (%)

20.2

24.1

23.4

Return on equity (%)

22.1

3.5
2.1

2.1

3.9

11.8
8.9

2.5

8.5

6.8

2.3
2013

2014

2015

2016

2017

2013

2014

2015

2016

2017

2013

2014

2015

2016

2017

NIPRO Annual Report 2017
About NIPRO
Financial Review

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Ten-Year Summary

32

Contents

Research andDevelopment Activities

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Nipro Corporation and its Consolidated Subsidiaries
Years ended March 31
Thousands of
U.S. dollars(Note 1)Millions of yen

2008

2017

175,945 ¥
112,970
52,726
9,554
695
124,396
36,774
14,775
16,209
4,082
1,772
4
9,379
4,531
33,142
18,1095,352

172,113
111,084
48,754
11,437838
123,108
35,32813,677
15,830
3,271
1,890
13
8,260
4,454
25,90015,054
6,194$3,206,167
2,337,095
616,276
252,528267
2,180,253
769,467
256,446
273,098
125,994(11,710)(95)
163,335
101,133
519,744
277,459
102,663

330,641 ¥
126,739
46,070114,796
119,285
28,66329,97396,560349,302
118,81253,911
108,835
120,923
28,66329,975
119,544$6,710,395
2,176,864
1,203,171
2,244,336
2,893,654
752,275–
1,572,404

2017

2016

2015

2014

2013

2012

2011

2010

2009

Income Statement Data:¥
Net sales
Medical-Related (*1)
Pharmaceutical-Related (*1)
PharmaPackaging (*1)
Other (*1)
Cost of sales
Selling, general and administrative expenses
Operating income
Medical-Related (*2)
Pharmaceutical-Related (*2)
PharmaPackaging (*2)
Other (*2)
Income before income taxes
Net income attributable to owners of parent
Increase in tangible and intangible fixed assets
Depreciation and amortization
R&D expenses

359,699 ¥262,198
69,14028,331
29
244,60286,326
28,77030,63814,135(1,313)(10)
18,324
11,34658,31031,128
11,517

366,650 ¥272,168
62,26632,18432
250,773
91,672
24,20528,204
12,060(1,618)61
26,285
19,71957,10130,147
10,269325,084 ¥
237,777
57,372
29,830105
225,525
82,987
16,572
23,813
10,553(2,889)131
19,90812,47047,69827,6688,646

300,753 ¥
221,363
51,50827,611
271
213,22175,242
12,29020,436
8,013(2,183)
216
12,891
2,861
35,09325,151
7,891

241,021 ¥
169,971
66,212
4,603
235
175,31454,336
11,371
14,287
3,988
601
222
18,060
10,23237,997
21,2106,464

212,013 ¥145,082
59,715
6,954
262
149,253
46,935
15,825
17,078
4,940
454
230
11,022
4,586
39,525
21,581
5,957

195,943 ¥
132,817
38,00524,704417
137,768
40,95017,225
18,437
1,658
2,701
88
7,432
2,456
23,323
21,244
4,977

177,830 ¥
118,517
34,52824,338447
126,145
33,591
18,09419,923
2,102
3,103
64
13,872
7,253
15,20918,421
4,846

Balance Sheet Data:
Total assets
Property, plant and equipment–net
Working capital
Current liabilities
Long-term liabilities
Common stock
Capital surplus
Net assets

752,839 ¥244,222
134,983
251,792
324,639
84,397–
176,408

708,883 ¥
223,757
115,970
252,148
281,227
84,398–
175,508

695,307 ¥220,195
71,945
278,402
238,095
84,398635
178,810619,655 ¥191,594
45,405
250,715232,979
84,398689
135,961

579,302 ¥174,70374,216
213,758
236,781
84,398
636
128,763499,687 ¥145,679
61,346
189,090
196,646
84,398636
113,951476,510 ¥128,506
40,621
176,401
191,071
28,66329,973109,038

383,397 ¥124,20941,725
138,204
129,122
28,66329,973116,071¥(*1) Effective the fiscal year ended March 31,2011, the Company has adopted ASBJ Statement No. 17 “Accounting Standard for Disclosures about Segment of an Enterprise and Related Information” (March 27, 2009) and ASBJ Guidance No. 20 “Guidance on Accounting Standard forDisclosures about Segment of an Enterprise and Related Information” (March 21, 2008). Net sales and operating income for the period for the fiscal year ended March 31, 2010 have been restated to show what the Group’s result would have been if the new accounting standards had
been applied in that year. Before the fiscal year ended March 31, 2009, net sales and operating income have been stated in compliance with previous accounting rules. In addition, the corporate reorganization was conducted effective on October 1, 2012 in order to enforce
Pharmaceutical-Related business and build a strong cooperative relationship among Medical-Related, Pharmaceutical-Related and Glass-Related businesses. As a result of this reorganization, some business divisions included in Glass-Related business were changed toPharmaceutical-Related business. The segment information is presented as if the aforementioned reorganization had been conducted at the beginning of the financial year 2012, and the presentation for the prior financial years are not restated. Also, effective on the half year ended
September 30, 2014, 13 subsidiaries including Nipro Glass France S.A.S., Nipro Glass Belgium N.V., Nipro Glass Germany AG, Nipro Sterile Glass Germany AG, and Nipro Glass Americas Corporation were reclassified from Medical-Related Business to PharmaPackaging Business which
was formerly known as Glass-Related Business by the corporate reorganization. Segment information after 2014 is based on this reclassification.
(*2) Operating income at the operating segment level is not adjusted for intra-segment transactions. See Note 14. “Segment Reporting” to the consolidated financial statements.

NIPRO Annual Report 2017
About NIPRO
Financial Review

33

Contents

Message fromTop Management

Ten-Year Summary

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Ten-Year Summary

Message from the CFO

Research andDevelopment Activities

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Nipro Corporation and its Consolidated Subsidiaries
Years ended March 31
U.S. dollars(Note 1)Yen

Per Share Data:
Basic earnings (*3)
Diluted earnings (*3)
Cash dividends
Equity (*3)

¥

2017

2016

2015

2014

2013

2012

67.5 ¥
61.3
29.0
999.5

116.2 ¥
114.7
33.5
977.6

81.0 ¥
–
32.5
988.8

18.2 ¥
16.3
30.5
832.1

60.0 ¥
54.1
27.5
703.5

35.3
31.0
23.5
643.9

2011

¥

19.4
17.4
50.0
839.7

2010

¥

114.4
114.1
53.0
1,802.3

2009

¥

71.4
–
32.0
1,498.5

2017

2008

¥

70.2
–
37.5
1,861.8

Number of common shares issued
Number of employees

171,459,479
24,715

171,459,479
24,243

171,459,479
23,153

171,459,479
21,826

171,459,479
19,327

171,459,479
14,56663,878,505
12,017

63,878,505
9,939

63,878,505
9,354

63,878,505
9,020

Selected Data and Ratios:
Equity ratio (*4) (%)
Return on assets (*4) (%)
Return on equity (*4) (%)
Price earnings ratio (*4) (times)

22.1
3.9
6.8
23.2

23.4
3.5
11.8
9.2

24.1
2.5
8.5
14.1

20.2
2.1
2.3
51.0

20.7
2.1
8.9
14.0

22.0
3.2
4.2
17.5

22.4
4.0
2.2
42.5

29.8
5.1
6.9
15.8

28.7
4.3
4.2
21.5

33.8
4.0
3.7
24.8

$

0.60
0.55
0.25
8.90

(*3) Effective the fiscal year ended March 31, 2012, the Company has adopted ASBJ Statement No. 2 “Accounting Standard for Earnings per Share” (June 30, 2010), ASBJ Guidance No. 4 “Guidance on Accounting Standard for Earnings per Share” (June 30, 2010) and ASBJ PITF No. 9“Practical Solution on Accounting for Earnings per Share” (June 30, 2010). In addition, the Company split one share of common stock into two shares on October 1, 2011 based on a resolution at the board of directors’ meeting held on August 27, 2011. In accordance with thisadoption, equity per share, basic earnings per share and diluted earnings per share are calculated on the assumption that the two-for-one stock split of common stock was conducted at the beginning of the fiscal year ended March 31, 2011. Before the fiscal year ended March 31,
2010, each amount has been stated in compliance with previous accounting rules.
(*4) Equity ratio is the ratio of the sum of the total shareholders’ equity and accumulated other comprehensive income to total assets at the period end. Return on assets is the ratio of operating income for the period to average of total assets during the period. Return on equity is the ratioof net income for the period to average of the sum of total shareholders’ equity and accumulated other comprehensive income during the period. The price earnings ratio is the ratio of the closing price of the Company’s shares listed on the First Section of the Tokyo Stock Exchangeon the last trading day in March of each year to the basic earnings per share.

NIPRO Annual Report 2017
About NIPRO
Financial Review

34

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Nipro Corporation and its Consolidated Subsidiaries
As of March 31, 2017 and 2016
Thousands of
U.S. dollars(Note 1)Millions of yen

2017

AssetsCurrent assets:
Cash and cash equivalents
Time deposits (over three months)
Trade notes and accounts receivable (Note 5)
Allowance for doubtful receivables
Inventories (Note 3)
Deferred income taxes (Note 4)
Other current assets
Total current assets
Property, plant and equipment (Note 5):Land
Buildings and structures
Machinery and equipment
Construction in progress

Intangible assets (Note 5):
Goodwill
Other intangible assets
Total intangible assets
Investments and other assets:
Investment in unconsolidated subsidiaries
and an affiliate accounted for by the equity method
Investment securities (Note 6)
Lease deposits
Deferred income taxes (Note 4)
Other assets
Total investments and other assets
Total

2017

2016

¥ 112,046
11,141
121,038(1,378)115,329
6,404
22,194
386,775¥ 111,97814,690113,236(983)
102,702
6,380
20,115368,118$ 998,723
99,309
1,078,869(12,285)
1,027,980
57,082
197,827
3,447,507¥¥$ 213,812
1,777,977
2,590,266
231,335
4,813,392(2,636,528)
2,176,864

Long-term liabilities:
Long-term debt (Notes 5 and 9)
Net defined benefit liability (Note 10)
Deferred income taxes (Note 4)
Other long-term liabilities
Total long-term liabilities¥¥

23,987
199,471
290,601
25,953
540,014(295,792)
244,222

27,996
15,83943,836

4,725

64,170
1,659
1,459
5,990
78,004¥ 752,839¥¥

21,124
184,038
267,281
27,644500,087(276,330)
223,757

28,877
16,03644,913

2,799

56,019
1,472
3,948
7,857
72,095¥ 708,883$ 249,546
141,185
390,732$

42,121

571,977
14,787
13,00453,398695,290$6,710,395

Thousands of
U.S. dollars(Note 1)Millions of yen

Liabilities and net assets
Current liabilities:
Short-term bank loans (Notes 5 and 9)
Current portion of long-term debt (Notes 5 and 9)
Trade notes and accounts payable
Accrued income taxes
Accrued expenses
Allowance for loss on clearance of business
Commercial paper (Note 9)
Notes and accounts payable for plant and equipment
Other current liabilities
Total current liabilities

Accumulated depreciation
Property, plant and equipment–net

The accompanying notes are an integral part of these statements.

Review of Operations

Commitments and contingent liabilities (Note 11)
Net Assets (Notes 13):
Common stock
Authorized: 400,000,000 shares
Issued: 171,459,479 shares
Capital surplus
Retained earnings
Less cost of common shares of treasury stock(5,300,071 shares in 2017 and 1,666,187 shares in 2016)
Total shareholder’s equity
Unrealized gain (loss) on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Accumulated other comprehensive income
Non-controlling interests
Total net assets
Total
The accompanying notes are an integral part of these statements.

2017

2016

2017

¥ 46,208
86,88557,587
3,261
25,093155
10,00014,5998,001
251,792¥ 46,062
82,05056,185
4,266
22,691–
10,00022,0598,835
252,148$ 411,874
774,445
513,304
29,071
223,669
1,386
89,134130,132
71,3172,244,336¥311,396
5,126
1,766
6,349
324,639¥268,276
5,017
1,985
5,949
281,227$2,775,617
45,697
15,74556,593
2,893,654¥ 84,397¥ 84,398$ 752,275–
78,422(6,243)–73,068(1,475)–
699,018(55,650)

156,577
1,589
(141)
8,640
(582)
9,504
10,325
176,408¥752,839

155,991(3,347)(12)
14,187(821)
10,007
9,510
175,508¥708,883

1,395,643
14,165(1,262)77,012(5,193)84,722
92,038
1,572,404$6,710,395

NIPRO Annual Report 2017
About NIPRO
Financial Review

35

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Thousands of
U.S. dollars(Note 1)Millions of yen

2017

2016

2017

¥359,699
244,602
115,097¥366,650
250,773
115,877$3,206,167
2,180,253
1,025,914

86,326

91,672

769,467

28,77024,205

256,446

1,996(3,796)2,182(4,501)

17,798(33,840)

Selling, general and administrative expenses(Notes 15 and 16)
Operating income
Other income (expenses):
Interest and dividend income
Interest expense
Loss on sale and disposal of property, plant andequipment–net
Exchange gain (loss)
Equity in profit (loss) of an affiliated company
Gain (loss) on sale of subsidiaries and affiliates’ stocks
Loss on impairment of fixed assets (Note 17)
Loss on step acquisitions
Other income (loss)–net
Income before income taxes(1,127)(310)(10,046)(2,273)112
0(1,554)–(3,803)18,324(7,182)(95)
15,6740(2,239)(1,449)26,285(20,266)999
2(13,851)–(33,906)
163,335

Income taxes (Note 4):
Current
Deferred

6,613
107

2,110
4,697

58,947954

Net income

11,604

19,478103,433

258

(241)

2,299

¥ 11,346¥ 19,719$ 101,133

Yen

Amounts per common share:
Basic earnings
Diluted earnings
Cash dividends
The accompanying notes are an integral part of these statements.

Financial/Data Section

Report of Independent Auditors

Corporate Information

Consolidated Statements of Comprehensive Income

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2017 and 2016

Net income (loss) attributable tonon-controlling interests
Net income attributable to owners of parent

Corporate Governanceand Compliance

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Consolidated Statements of Income

Net sales
Cost of sales
Gross profit

Research andDevelopment Activities

¥

67.5
61.3
29.0

¥

116.2
114.7
33.5

U.S. dollars(Note 1)

$

0.6
0.5
0.2

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2017 and 2016

Thousands of
U.S. dollars(Note 1)Millions of yen

Net income
Other comprehensive income:Unrealized gain (loss) on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income of entities
accounted for using equity method
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests
The accompanying notes are an integral part of these statements.

2017

2016

2017

¥ 11,604¥ 19,478$ 103,433

4,936
(129)
(5,860)240(1,036)(51)(13,861)(655)

44,000(1,155)(52,240)
2,140

(36)

(1)

(324)

¥ 10,753
10,844
(90)

¥

3,874
4,298
(424)

$

95,85496,657(803)

NIPRO Annual Report 2017
About NIPRO
Financial Review

36

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Consolidated Statements of Changes in Net Assets

Research andDevelopment Activities

Review of Operations

Balance at March 31, 2015
Net income attributable to owners of parent
Increase (decrease) in retained earnings due toinclusion of new subsidiaries in consolidation
Cash dividends
Purchase of treasury stock
Disposal of treasury stock
Change in the scope of consolidation
Decrease of retained earnings (Other)
Other net change during the year
Balance at March 31, 2016
Net income attributable to owners of parent
Increase (decrease) in retained earnings due toinclusion of new subsidiaries in consolidation
Cash dividends
Purchase of treasury stock
Disposal of treasury stock
Change in the scope of consolidation
Decrease of retained earnings (Other)
Other net change during the year
Balance at March 31, 2017

171,459

Commonstock¥84,398

CapitalsurplusRetainedearnings

¥635

–
(635)

Treasurystock¥58,886
19,719¥(1,687)

84,398

–

–
–
(166)
73,067
11,346(4)
216(1,475)(0)(4,073)––(0)(1,916)–¥78,422–¥84,397¥(5,001)
233¥(6,243)

Total
shareholders’equityUnrealized
gain onavailable-forsale securities¥142,232
19,719¥(2,311)

Balance at March 31, 2016
Net income attributable to owners of parent
Increase (decrease) in retained earnings due toinclusion of new subsidiaries in consolidation
Cash dividends
Purchase of treasury stock
Disposal of treasury stock
Decrease of retained earnings (Other)
Other net change during the year
Balance at March 31, 2017

171,459¥39

Foreigncurrencytranslation
adjustments

Remeasurementsof defined
benefit plans

Accumulated
other comprehensive
income¥27,870¥(171)¥25,427

Noncontrollinginterests¥11,151

Total
net assets¥178,810
19,719–(5,371)
(4)
216
–
(801)

(5,371)
(4)
216
–
(801)
(17,061)
175,507
11,346(1,036)(3,347)

155,990
11,346(51)(12)(13,683)
14,187

(650)
(821)

(15,420)
10,007(1,641)
9,510

(0)

(0)

(4,073)(5,001)233(0)(1,916)(4,073)(5,001)233(0)(1,916)313¥176,408

4,936¥1,589¥156,577(129)¥(141)(5,547)¥8,640238¥(582)(502)¥9,504815¥10,325

Thousands of U.S. dollars (Note 1)
Commonstock

Capitalsurplus$752,275–$––

Retainedearnings

Treasury
stock

Total
shareholders’equityUnrealized
gain onavailable-forsale securities$651,287
101,133$(13,151) $1,390,412–
101,133$(29,834)
–

(7)

(7)

(7)

(36,309)(36,309)(44,577)
2,078(17,086)–$(55,650) $1,395,643(36,309)(44,577)
2,078(17,086)
7,273
2,796
$92,038 $1,572,404–(17,086)
171,459

Deferred
gains orlosses onhedges–Thousands
Outstanding
number ofshares ofcommon stock

Corporate Information

Millions of yen(5,371)

171,459

Report of Independent Auditors

Nipro Corporation and its Consolidated Subsidiaries
For the year ended March 31, 2017 and 2016 consisted of the following:–

171,459

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Thousands
Outstanding
number ofshares ofcommon stock

Corporate Governanceand Compliance$752,275$–

The accompanying notes are an integral part of these statements.
(*) In 2016, yen amounts are rounded to the nearest million yen. In 2017, amounts are rounded down to the nearest million yen.

$699,018

Deferred
gains orlosses onhedges$(107)–

Foreigncurrencytranslation
adjustments

Remeasurementsof defined
benefit plans

Accumulated
other comprehensive
income$126,460–$(7,319)–$89,198–(44,577)
2,078

44,000$14,165(1,155)$(1,262)(49,447)$77,0122,126$(5,193)(4,476)$84,722

Noncontrollinginterests

Total
net assets$84,765 $1,564,375–
101,133NIPRO Annual Report 2017
About NIPRO
Financial Review

37

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Consolidated Statements of Cash Flows2017

Operating activities:
Net income attributable to owners of parent
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization
Amortization of goodwill
Loss on impairment of fixed assets
Equity in loss (profit) of an affiliated company
Allowance for doubtful receivables
Loss on sales of available for sales securities
Loss (Gain) on sale of investment in consolidated
subsidiaries
Loss on step acquisitions
Provision for deferred taxes
Exchange loss
Loss on devaluation of marketable securities
Loss on sale and disposal of property, plant andequipment–net
State subsidy
Loss on reduction of non-current assets
Other, net

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2017 and 2016
Thousands of
U.S. dollars(Note 1)Millions of yen

Changes in operating assets and liabilities:
Trade receivables
Inventories
Other current assets
Lease deposits
Trade payables
Accrued income taxes
Other, net
Total adjustments
Net cash provided by operating activities

Review of Operations

2016

2017

¥ 11,346¥ 19,719$ 101,133

31,128
2,907
1,554
(112)
433
0

30,147
3,687
–
95
1,023
289

277,459
25,917
13,851
(999)
3,863
6

369

(15,674)

3,293

–
107
4,008
–

2,239
4,697
1,645
80

–
954
35,726
–

1,127

310

10,046(1,900)
1,879
1,007

(3,721)
3,124
(348)

(16,938)
16,754
8,979(9,317)(17,730)(1,788)
(131)
4,576
38
3,968
22,12633,472(5,681)(6,705)(9,795)
(101)
6,162
332
(1,590)10,21529,934(83,050)(158,039)(15,939)(1,171)40,790343
35,374
197,224
298,358

Thousands of
U.S. dollars(Note 1)Millions of yen

Investing activities:
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of available-for-sale securities
Purchase of investments in unconsolidated subsidiaries
Proceeds from sales of available-for-sale securities
Purchases of investments in consolidated subsidiaries
resulting in change in scope of consolidation
Proceeds from investments in consolidated subsidiaries
resulting in change in scope of consolidation
Proceeds from sales of investments in consolidated
subsidiaries resulting in change in scope of consolidation
Payments for sales of shares of subsidiaries resulting inchange in scope of consolidation
Payments for transfer of business
Deposits (Over three months)
Other, net
Net cash used in investing activities
Financing activities:
Net increase (decrease) in short-term loans
Proceeds from long-term loans
Repayment of long-term loans
Proceeds from issuance of bonds
Repayment of bonds
Proceeds from disposal of treasury stock
Proceeds from sales of treasury shares
Cash dividends paid
Payments from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation
Other, net
Net cash used in financing activities
Effect of exchange rate changes on cash andcash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents of newly
consolidated subsidiary, beginning of period
Cash and cash equivalents, end of period
The accompanying notes are an integral part of these statements.

2017

2016

2017

(62,323)405(1,092)(1,967)0(38,086)
(746)
(513)
–
1,114

(555,519)
3,612(9,734)(17,536)2(3,126)–(27,871)

–

383

–

–

19,512

–

(703)

–

(6,272)

–
2,732
(275)
(66,351)

–
(989)
2,811
(16,514)–
24,359(2,459)(591,419)

1,018
145,298(97,424)
1,989(2,262)233(5,007)(4,101)(32,858)
105,370(66,012)
24,967(27,840)215(16)(5,385)

9,077
1,295,114(868,384)
17,736(20,166)
2,078(44,632)(36,557)(2,104)(1,600)(18,762)(1,157)36,483(474)(3,633)(10,314)325,189(3,773)

3,218(33,630)(168)
111,977

13,00598,199(1,502)
998,106

237

773

2,119

¥ 112,046¥ 111,977$ 998,723

NIPRO Annual Report 2017
About NIPRO
Financial Review

38

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements
1. Basis of Presenting Consolidated Financial Statements
The financial statements of Nipro Corporation (“the Company”) and its consolidated domestic
subsidiaries have been prepared in accordance with the provisions set forth in the Financial Instruments
and Exchange law of Japan and its related accounting regulations, and in conformity with accounting
principles generally accepted in Japan, which are different in certain respects as to application anddisclosure requirements of International Financial Reporting Standards. Effective from the year ended
March 31, 2009, the Company has adopted the “Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial Statements” (PITF No. 18) and as a result, theaccounts of consolidated overseas subsidiaries are prepared in accordance with either International
Financial Reporting Standards or generally accepted accounting principles in the United States, withadjustments for the specified four items as applicable.
In preparing the accompanying consolidated financial statements, certain reclassifications havebeen made to the consolidated financial statements issued domestically, in order to present them in aform which is more familiar to readers outside Japan. However, no adjustment has been made which
would change the financial position or the results of operations presented in the original financial
statements. In addition, the notes to consolidated financial statements include additional information
which is not required under generally accepted accounting principles and practices in Japan.
The financial statements presented herein are expressed in Japanese yen and, solely for theconvenience of the reader, have been translated into United States dollars at the rate of ¥112.19 = US$1,
the approximate exchange rate on March 31, 2017. These translations should not be construed as
representations that the Japanese yen amounts have been, could have been, or could in the future be,converted into U.S. dollar amounts at that or any other rate.
In preparing the accompanying consolidated financial statements and notes, Japanese yen figuresless than one million yen have been rounded down to the nearest million yen, in accordance with the
Financial Instruments and Exchange Law and Enforcement Ordinance concerning the Banking Law ofJapan, although the figure of the past fiscal years before fiscal 2016 were rounded in this report.
Therefore, total or subtotal amounts shown in the accompanying consolidated financial statements andnotes thereto are not necessarily equal to sums of individual amounts.

2. Summary of Significant Accounting Policies(a) Basis of Consolidation
The consolidated financial statements include the accounts of the Company and the significant subsidiaries
and affiliated company accounted for by the equity method.
Investments in unconsolidated subsidiaries are stated at cost and the equity method is not applied
for the valuation of such investments since they are considered immaterial in the aggregate.

All significant intercompany balances and transactions have been eliminated in consolidation. All
material unrealized profits included in assets resulting from transactions within the Company and its
consolidated subsidiaries have been eliminated. The difference between the cost of investments in
subsidiaries and affiliates and the equity in their net assets at the dates of acquisition is amortized on astraight-line basis over five to twenty years.
All accounts herein have been presented on the basis of the twelve months ended March 31, 2017
for the Company and for consolidated domestic subsidiaries, and December 31, 2016 for all consolidated
overseas subsidiaries.
Adjustments have been made for any significant intercompany transactions which took place
during the period between the end of accounting period of the consolidated overseas subsidiaries andthat of the Company.
(b) Translation of Foreign Currencies
Balance sheets of consolidated overseas subsidiaries are translated into Japanese yen at the current
exchange rates as of the balance sheet date except for shareholders’ equity, which is translated at thehistorical rates. Income statements of consolidated overseas subsidiaries are translated into Japanese yenat the average exchange rates for the period. Resulting translation adjustments are shown as “Foreign
currency translation adjustments” in “Accumulated other comprehensive income” section of net assets.
(c) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, readily available deposits and short-term highly liquid
investments with original maturities of three months or less.
(d) Allowance for doubtful receivables
An allowance for possible losses from trade notes and accounts receivable, loans and other receivables isprovided based on the actual rate of past bad debts and the uncollectible amounts of certain individual
receivables.
(e) Inventories
Inventories are stated principally at the lower of average cost or net realizable value.
(f) Property, plant and equipment
Depreciation of property, plant and equipment of the Company and its consolidated domestic subsidiaries
is computed principally by the declining-balance method. The straight-line method is applied to buildings
acquired by the domestic companies after April 1, 1998 and buildings and accompanying facilities andstructures acquired by the domestic companies after APR 1, 2016, and is principally applied to the property,
plant and equipment of consolidated overseas subsidiaries.

NIPRO Annual Report 2017
About NIPRO
Financial Review

39

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements(g) Intangible assets
Amortization of intangible assets, including software for the Company’s own use, is computed by thestraight-line method over the estimated useful life of the asset.
Goodwill is amortized on a straight-line basis over the period the Company benefits from its use. If
the amount is not significant, it is expensed when incurred.
(h) Investment Securities
Investment securities are classified and accounted for, depending on management’s intent, as follows:i) held-to-maturity debt securities, which are expected to be held to maturity with the positive
intent and ability to hold to maturity are stated at amortized cost.
ii) available-for-sale securities, which are not classified as the aforementioned securities, are stated
at fair value. Unrealized gains and losses, net of applicable taxes, are reported as “Accumulated
other comprehensive income” of net assets.
Non-marketable available-for-sale securities are stated at cost determined by the average method.
For other than temporary declines in fair value, investment securities are reduced to net realizablevalue by a charge to income.
(i) Allowance for loss on clearance of business
The Company has withdrawn from retail business and a provision for anticipated losses of sales of related
fixed assets is provided.
(j) Employees’ retirement and severance benefits
Method of attributing expected benefit to periods
In calculating retirement benefit obligation, the estimated amount of retirement benefit is attributed tothe periods on the benefit formula basis.
Accounting Method of Actuarial gains and losses and prior service costs
Prior service costs are amortized on the straight-line basis over certain period (mainly 5 years) which iswithin the average of the estimated remaining service years of the employees when they occur.
Actuarial gains and losses are amortized on the straight-line basis over certain period (mainly 5
years) which is within the average of the estimated remaining service years of the employees
commencing with from the following the year which they arise.
(k) Derivatives
Derivatives are stated at fair value, with changes in fair value included in net income or loss for the period inwhich they arise, unless derivatives are used for hedging purposes. Please see (m) Hedge Accounting below.

(l) Leases
Finance leases, except for certain immaterial leases, are capitalized in the balance sheet. Amortization offinance lease assets is calculated by straight-line method over the lease period assuming no residual value.
(m) Hedge accounting<Method of hedge accounting>
The deferral hedge accounting method is applied in principle. The allocation method is applied tocurrency swap and the exceptional accounting method is applied to interest rate swap whencertain hedging criteria are met.
<Hedge instrument and hedge items>(Hedging instruments) (Hedged items)
Currency swap
Short-term and long term debt denominated in foreign currency
Interest rate swap
Interests on short-term and long term debt
<Hedge policy>
The Company uses currency swaps and interest rate swaps to reduce currency exposure andinterest volatility risk.
<Method for assessing hedge effectiveness>
Hedge effectiveness is not assessed for currency swap which meets certain criteria of the allocation
method and interest rate swaps which meets certain criteria of the exceptional accounting method.
(n) Income Taxes
The provision for income taxes is computed based on income for financial statement purpose. The asset
and liability approach is used to recognize deferred tax assets and liabilities for the future tax consequencesof temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
(o) Amounts per Common Share
Basic earnings per share is computed by dividing net income available to common shareholders by theweighted-average number of common shares outstanding for the period. Diluted earnings per sharereflect the potential dilution that could occur if securities were exercised or converted into common
stock. Diluted earnings per share of common stock assume full conversion of the outstanding convertible
notes and bonds at the beginning of the year (or at the time of issuance) with an applicable adjustment
for related interest expense, net of tax, and full exercise of outstanding warrants.

NIPRO Annual Report 2017
About NIPRO
Financial Review

40

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements(p) Changes in accounting policy
Application of Practical Solution on a change in depreciation method due to Tax Reform 2016
in JAPAN
The company has applied the “Practical Solution on a change in depreciation method due to Tax Reform
2016” (ASBJ Practical Issues Task Force No. 32 issued on June 17, 2016) and changed the depreciation
method for facilities attached to buildings and structures acquired on or after April 1, 2016 from thedeclining-balance method to the straight-line method effective from the current consolidated fiscal year.
As a result, compared to the previous method, consolidated operating income, consolidated ordinary
income and consolidated income before income taxes increased 380 million yen in the current fiscal year.
(q) Change in representation
Consolidated Statements of Cash Flows
From the fiscal year ended March 31, 2017, to present more appropriately the content of “State subsidy”
and “Loss on reduction of non-current assets,” which were included in “Other, net” in Operating activities
in the fiscal year ended March 31, 2016, the Company decided to present these items as independentline items. The consolidated financial statements for the fiscal year ended March 31, 2016 have been
restated to reflect these changes in presentation method.
As a result, (2,187) million yen that was presented in “Other, net” in Operating activities for the
fiscal year ended March 31, 2016, was restated to (3,721) million yen in “State subsidy,” 3,124 million
yen in “Loss on reduction of non-current assets,” and (1,590) million yen in “Other-net.”(r) Supplementary information
The Company has applied the “Implementation Guidance on Recoverability of Deferred Tax Assets”(Corporate Accounting Standards No.26 of March 28, 2016) from the fiscal year under review.

3. Inventories
Thousands of
U.S. dollars(Note 1)Inventories consisted of the following:
Millions of yen

Finished goods and merchandise
Raw materials
Work in process
Packing and other
Total

2017

2016

2017

¥ 78,241
21,627
10,784
4,675¥115,329¥ 68,683
19,163
10,167
4,687¥102,702$ 697,398
192,777
96,13041,674$1,027,980

NIPRO Annual Report 2017
About NIPRO
Financial Review

41

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements
4. Income Taxes

Reconciliation of the differences between the statutory tax rates and the effective income tax rates was
as follows:

The Company and its domestic subsidiaries are subject to several taxes based on income which, inaggregate, resulted in a normal statutory tax rate of approximately 30.8% and 33.0% for the years ended
March 31, 2017 and 2016, respectively.
The significant components of deferred tax assets and liabilities were as follows:
Thousands of
U.S. dollars(Note 1)Millions of yen

Deferred tax assets
Tax loss carryforwards
Intercompany profits
Valuation loss on inventories
Allowance for bonuses to employees
Sales allowance
Loss on impairment of fixed assets
Excess of allowance for doubtful accounts over tax
allowable amounts
Net defined benefit liability
Accrued enterprise taxes
Unrealized loss on available-for-sale securities
Goodwill
Other
Gross deferred tax assets
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Unrealized gain on available-for-sale securities
Revaluation reserve for land
Revaluation reserve for intangible assets
Revaluation reserve for fixed assets—other
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities) (*1)

2017

2016

2017

¥ 7,044
2,177
1,512
1,115
326
173

¥ 6,411
2,552
1,312
1,017
282
88

$ 62,790
19,41013,480
9,942
2,910
1,544

1,368

1,201

12,198

1,466
350
47
757
2,304
¥18,645(8,702)¥ 9,943

1,479
283
2,084
1,023
2,497
¥20,229(8,048)¥12,181

13,075
3,127
423
6,756
20,538$166,198(77,571)$ 88,626

563
675
284
1,557
785
3,866
¥ 6,076

409
676
238
1,228
1,308
3,859
¥ 8,322

5,026
6,023
2,535
13,8797,002
34,466$ 54,160(*1) The current portion of Deferred Tax Liabilities for the year ended March 31, 2017 is ¥21 million (US$188 thousand) and is accounted
for as “Others” of Current Liabilities.

Statutory tax rate
Expenses not deductible for tax purposes
Non-taxable dividend income
Loss in subsidiaries
Effect of tax rate change
Amortization of goodwill
Tax credits primarily for research and development costs
Tax loss carryforwards
Valuation allowance
Adjustment procedure for consolidation of gain on sales of subsidiaries
and affiliates’ stocks
Other
Effective income tax rate

2017

2016

30.8%
2.2
(0.2)
–
–
3.8
(7.2)
–
3.6

33.0%
1.8
(0.4)
–
0.9
0.4
(3.4)
–
11.2

–

(19.9)

3.7
36.7%

2.3
25.9%

NIPRO Annual Report 2017
About NIPRO
Financial Review

42

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Research andDevelopment Activities

Review of Operations

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements
5. Pledged Assets

The carrying amounts and aggregate fair values of marketable securities for investments as of March 31,2017 and 2016 were as follows:
Millions of yen

Buildings and structures
Machinery and equipment
Land
Trade notes receivable
Other
Total

2017

2016

2017

¥10,104
59
3,383
–
1,917
¥15,465¥ 9,473
359
3,372
109
6,674
¥19,987$ 90,069
530
30,157–
17,090$137,848
Thousands of
U.S. dollars(Note 1)

The above assets were pledged against the following liabilities:
Millions of yen

Short-term bank loans
Current portion of long-term debt
Long-term debt
Total

Millions of yen

Thousands of
U.S. dollars(Note 1)

The following assets were pledged as collateral:

2017

2016

2017

¥1,2191,540
4,379¥7,139¥1,223
1,521
3,286¥6,030$10,865
13,731
39,037$63,633

2017
Cost

Available-for-sale securities
Equity securities
Debt securities and otherTotal¥60,744–¥60,744

Thousands of
U.S. dollars(Note 1)

Investment securities as of March 31, 2017 and 2016 consisted of the following:
Millions of yen

2017

Non-current:
Marketable:
Marketable equity securities
Investment trust funds and otherSub total
Non-marketable securities
Total¥62,335–
62,335
1,834¥64,170

2016¥54,288–
54,2881,731¥56,019

Unrealized loss

¥8,023–¥8,023¥6,432–¥6,432

Fair Value¥62,335–¥62,335

Thousands of U.S. dollars (Note 1)

2017
Cost

Available-for-sale securities
Equity securities
Debt securities and otherTotal$541,443–$541,443

Unrealized gain

Unrealized loss

$71,514–$71,514$57,332–$57,332

Fair Value$555,625–$555,625

Millions of yen

2016
Cost

6. Investment Securities

Unrealized gain

Available-for-sale securities
Equity securities
Debt securities and otherTotal¥59,717–¥59,717

Unrealized gain

Unrealized loss

¥7,382–¥7,382¥12,811–¥12,811

Fair Value¥54,288–¥54,2882017$555,625–
555,625
16,352$571,977

Proceeds from sales of securities and gross realized gains or losses on those sales for the years ended
Thousands ofMarch 31, 2017 and 2016 were as follows:
U.S. dollars
Millions of yen

Proceeds
Gains on sales
Losses on sales(Note 1)

2017

2016

2017

¥0
0
0

¥1,114
–
289

$2
1
8

NIPRO Annual Report 2017
About NIPRO
Financial Review

43

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements
7. Financial Instruments(1) Circumstances on financial instruments(a) Policy for financial instruments
The company and its consolidated subsidiaries manage the temporary surplus funds by deposit with banks
that have a high level of safety. Based on capital investment planning and financing planning, the company
and its consolidated subsidiaries raise funds for business operation with bank loans, commercial paper,
corporate bond, and issuing convertible bonds type corporate bond with warrant of booking new stocks.
(b) Details and risk of financial instruments and its risk management
Receivables such as trade notes and accounts receivable are exposed to customer’s credit risk.
Receivables denominated in foreign currencies are exposed to the market risk of fluctuation in foreign
currency exchange rates.
In order to reduce the customer’s risk, the Company monitors the dues and balances by customer
in accordance with the Company’s credit administration regulations.
Investment securities are exposed to market fluctuation risk, but mainly consist of equity of thecompanies which conduct business with the Company. The Company periodically reviews the market
price of such securities.
Payables such as trade notes, accounts payable and accounts payable other are due within 1 year.
Payables denominated in foreign currency are exposed to the risk of fluctuation in foreign currency
exchange rates.
Short-term loans payable are mainly borrowed to raise operating capital and long-terms loans
payable are mainly borrowed to make capital expenditures. A part of long-term loans with the floatinginterest rate has the risk of interest rate fluctuation, but the Company and its consolidated subsidiaries
use interest rate swaps to solidify the interest rate. For some of the loans denominated in foreign
currency, the Company and its consolidated subsidiaries use currency swap to hedge the currency
fluctuation risk.
Bonds and commercial paper are mainly issued to raise the funds for the retirement of bonds.
Lease obligations are mainly for capital expenditures, free from interest-rate risk because theinterest rate is fixed.
Payables, loans and bonds are exposed to liquidity risk, but the Company and its consolidated
subsidiaries manage the risk by establishing cash planning.
(c) Supplemental information on fair values of financial instruments
Fair values of financial instruments include values based on market price and reasonably estimated values
when market price is not available. Because variable factors are counted in the estimation, the estimatedvalues may vary by adopting different assumptions.

(2) Fair values of financial instruments
The book values, fair values and the differences between them as of March 31, 2017 and 2016 are as
follows (Financial instruments for which the market value is extremely difficult to determine are notMillions of yen
included as described in remark 2.):
2017Book value

Cash and cash equivalents, time deposits
Trade notes and accounts receivable,
net of allowance for doubtful receivables
Investment securities
Assets total
Trade notes and accounts payable
Short-term bank loans, current portion of
long-term debt, and commercial paper
Other notes and account payable (*1)
Long-term debt
Convertible bondLease obligations (*2)
Liabilities total

Fair value

Difference¥–¥123,188¥123,188

119,660

119,660

62,335¥305,183¥ 57,587

62,335¥305,183¥ 57,587

143,093

143,093–

28,508286,396
25,0003,977¥544,563

28,508284,576
29,7873,868¥547,421–(1,819)4,787(109)¥2,857

–
–
–
–

¥
¥

Thousands of U.S. dollars (Note 1)

2017

Cash and cash equivalents, time deposits
Trade notes and accounts receivable,
net of allowance for doubtful receivables
Investment securities
Assets total
Trade notes and accounts payable
Short-term bank loans, current portion of
long-term debt, and commercial paper
Other notes and account payable (*1)
Long-term debt
Convertible bondLease obligations (*2)
Liabilities total

Book value

Fair value$1,098,032$1,098,032

1,066,583

1,066,583

555,625$2,720,242$ 513,304

555,625$2,720,242$ 513,304

1,275,455

1,275,455–

254,106
2,552,781
222,836
35,455$4,853,939

254,106
2,536,560
265,50934,477$4,879,413–(16,220)
42,673(978)$25,473(*1) This is included in accrued expenses and notes and accounts payable for plant and equipment on the balance sheet.
(*2) This is included in other current liabilities and other long-term liabilities on the balance sheet.

Difference

$

–
–

$
$

–
–
–

NIPRO Annual Report 2017
About NIPRO
Financial Review

44

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements
Millions of yen

2016Book value

Cash and cash equivalents, time deposits
Trade notes and accounts receivable,
net of allowance for doubtful receivables
Investment securities
Assets total
Trade notes and accounts payable
Short-term bank loans, current portion of
long-term debt, and commercial paper
Other notes and account payable (*1)
Long-term debt
Convertible bondLease obligations (*2)
Liabilities total

Fair value

Difference¥–¥126,668¥126,668

112,253

112,253–

54,288¥293,209¥ 56,185

54,288¥293,209¥ 56,185–––

138,112138,112–34,063
243,276
25,0004,177¥500,813

34,063242,990
25,0004,088¥500,438

–
(286)
–
(89)
¥(375)¥¥• Lease obligation
The fair value of lease obligations is calculated by applying a discount rate to the total of principal andinterest. The discount rate is based on the assumed interest rate if a current lease transaction was renewed.

(*1) This is included in accrued expenses and notes and accounts payable for plant and equipment on the balance sheet.
(*2) This is included in other current liabilities and other long-term liabilities on the balance sheet.

Remark 1 Methods used to calculate fair values of financial instruments and the details of securities<Assets>• Cash and cash equivalents, time deposits and trade notes and accounts receivable
Cash and cash equivalents and trade notes and accounts receivable are stated at the relevant book value
because the settlement periods are short and the fair values are almost the same as the book value.
• Investments securities
Equity securities are stated at market value. See Note 6. “Investment securities” for the detailed
information by classification.
<Liabilities>• Trade notes and accounts payable and short-term bank loans and current portion of long-term debt
and commercial paper
Because the settlement periods of the above items are short and their fair values are almost the sameas their book values, the relevant book values are used.
• Other notes and account payable
Because the settlement periods of the above items are short and their fair values are almost the sameas their book values, the relevant book values are used.
• Long-term debt and convertible bond
The fair value of long-term debt is calculated by applying a discount rate to the total of principal andinterest. The discount rate is based on the assumed interest rate if a similar new loan was entered into.

Remark 2 Financial instruments for which the fair value is extremely difficult to determine
Thousands of
U.S. dollars(Note 1)Millions of yen

Unlisted equity securities

2017

2016

2017

¥6,552¥4,273$58,407

Because these items have no market value and are difficult to estimate the future cash flow and it is extremely difficult to determine theirfair values, they are not included in investment securities above.

Remark 3 Planned redemption amounts after the balance sheet date for monetary receivables
Thousands ofwith maturity dates are as follows:
U.S. dollars
Millions of yen

2017
Within 1 year

Cash and cash equivalents, time deposits
Trade notes and accounts receivable¥123,188
119,660(Note 1)

2016
Within 1 year

¥126,668
112,253

2017
Within 1 year

$1,098,032
1,066,583

NIPRO Annual Report 2017
About NIPRO
Financial Review

45

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Review of Operations

Consolidated Statements of Income

Research andDevelopment Activities

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Consolidated Statements of Cash Flows

Corporate Governanceand Compliance

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements
Remark 4 Planned repayment amounts after the balance sheet date for monetary payables with maturity dates
Planned repayment amounts after the balance sheet date for monetary payables with maturity dates at March 31, 2017 are as follows:
Millions of yen

2017
Within 1 year

Short-term bank loans, current portion of long-term debt, and commercial paper
Other notes and account payable
Long-term debt
Convertible bondLease obligations
Total¥143,093
–
–
–
1,107
¥144,201

Over 1 year but
within 2 years¥––
52,243–987¥53,230

Over 2 years but
within 3 years

Over 3 years but
within 4 years¥––
63,647–853¥64,500¥––
36,66925,000543¥62,213Over 4 years but
within 5 years

Over 5 years––
48,873–428¥49,301––
84,963–57¥85,020

Over 4 years but
within 5 years

Over 5 years¥¥

Thousands of U.S. dollars (Note 1)

2017
Within 1 year

Short-term bank loans, current portion of long-term debt, and commercial paper
Other notes and account payable
Long-term debt
Convertible bondLease obligations
Total$1,275,455
–
–
–
9,874
$1,285,330

Over 1 year but
within 2 years$––
465,668–
8,803$474,471

Over 2 years but
within 3 years

Over 3 years but
within 4 years$––
567,315–
7,607$574,923––
326,854
222,836
4,845$554,536––
435,629–3,815$439,444––
757,314–508$757,822$$$

Millions of yen

2016
Within 1 year

Trade notes and accounts payable
Short-term bank loans, current portion of long-term debt, and commercial paper
Other notes and account payable
Long-term debt
Convertible bondLease obligations
Total¥ 56,185
138,112Over 1 year but
within 2 years

Over 2 years but
within 3 years

Over 3 years but
within 4 years

Over 4 years but
within 5 years

Over 5 years

¥

¥

¥

¥

¥

–
–

–
–

–
–

–
–

–
–

34,063

–

–

–

–

–

–

73,594

38,581

48,331

21,75961,011––––

25,000

–

1,045

877

767

657

418

413

¥229,405¥74,471¥39,348¥48,988¥47,177¥61,424NIPRO Annual Report 2017
Message fromTop Management

About NIPRO
Financial Review

46

Contents

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Review of Operations

Consolidated Statements of Income

Research andDevelopment Activities

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Consolidated Statements of Cash Flows

Corporate Governanceand Compliance

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements
8. Derivatives(b) Interest related
N/A in 2017

Millions of yen

The Company and its consolidated subsidiaries had the following derivatives contracts outstanding at
March 31, 2017 and 2016.

2016
Type of Derivative(1) Derivatives for which hedge accounting has not been applied.
(a) Currency related

Millions of yen

2017Type of Derivative

Transaction other thanmarket transaction

NDF

Contract
amount¥174

Over 1 year
out-of-contract
amountFair Value

¥–

¥(1)

Thousands of U.S. dollars (Note 1)

2017Type of Derivative

Transaction other thanmarket transaction

NDF

Contract
amount$1,557

Over 1 year
out-of-contract
amount$–Fair Value$(16)

Millions of yen

2016
Type of Derivative

Transaction other thanmarket transaction

NDF

Contract
amount¥350

Fair value is based on information provided by a financial institution at the end of the fiscal year.

Over 1 year
out-of-contract
amount¥–Fair Value¥(1)

Interest rate option
Transaction other thanInterest rate swap
market transaction
To receive variable/To pay fixedContract
amountOver 1 year
out-of-contract
amountFair Value

¥66

¥–

¥ –

¥18

¥–

¥ (1)

Fair value is based on information provided by a financial institution at the end of the fiscal year.

NIPRO Annual Report 2017
About NIPRO
Financial Review

47

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Research andDevelopment Activities

Review of Operations

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements(2) Derivatives for which hedge accounting has been applied.

Millions of yen(a) Currency related

2017

Method of hedge accounting

Type of Derivative

Principal Hedge Item

Principle method
Allocation method of forward foreign exchange contract, etc.

Currency swap
Currency swap

Account receivables
Long-term loans

Contract amountOver 1 year out-of-contract amount

¥289
53

¥–
–

Fair Value

¥(11)
(*1)

Thousands of U.S. dollars (Note 1)

2017
Method of hedge accounting

Type of Derivative

Principal Hedge Item

Principle method
Allocation method of forward foreign exchange contract, etc.

Currency swap
Currency swap

Account receivables
Long-term loans

Contract amountOver 1 year out-of-contract amount$2,581
477$––

Fair Value$(102)(*1)

Millions of yen

2016
Method of hedge accounting

Type of Derivative

Principal Hedge Item

Principle method
Allocation method of forward foreign exchange contract, etc.

Currency swap
Currency swap

Account receivables
Long-term loans

Contract amountOver 1 year out-of-contract amount

Fair Value

¥ 371

¥ –

¥(11)

1,125

¥54

(*1)

(*1) The fair value of interest rate swap to which the exceptional accounting method is applied and the fair value of forward foreign exchange contract, etc., to which the allocation method is applied are included in the fair value of long-term loans in Note 9. “Financial Instruments”
because such interest rate swap and forward foreign exchange contract, etc., are accounted for as a single item with the corresponding long-term loans.
Millions of yen(b) Interest related

2017

Method of hedge accounting

Type of Derivative

Principal Hedge Item

Contract amountPrinciple method
Exceptional accounting method for interest rate swap

Interest rate swap
Interest rate swap

long-term loans
long-term loans¥4,716724

Over 1 year out-of-contract amount¥4,716245

Fair Value¥(130)(*1)

Thousands of U.S. dollars (Note 1)

2017
Method of hedge accounting

Type of Derivative

Principal Hedge Item

Contract amountPrinciple method
Exceptional accounting method for interest rate swap

Interest rate swap
Interest rate swap

long-term loans
long-term loans$42,0416,458Over 1 year out-of-contract amount$42,041
2,185

Fair Value$(1,160)(*1)

Millions of yen

2016
Method of hedge accounting

Type of Derivative

Principal Hedge Item

Contract amountPrinciple method
Exceptional accounting method for interest rate swap

Interest rate swap
Interest rate swap

long-term loans
long-term loans

¥ 138

¥ 70

¥4

2,222

725

(*1)

Over 1 year out-of-contract amount

Fair Value(*1) The fair value of interest rate swap to which the exceptional accounting method is applied and the fair value of forward foreign exchange contract, etc., to which the allocation method is applied are included in the fair value of long-term loans in Note 9. “Financial Instruments”
because such interest rate swap and forward foreign exchange contract, etc., are accounted for as a single item with the corresponding long-term loans.

NIPRO Annual Report 2017
About NIPRO
Financial Review

48

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Review of Operations

Consolidated Statements of Income

Research andDevelopment Activities

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Consolidated Statements of Cash Flows

Corporate Governanceand Compliance

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements
9. Short-Term Loans and Long-Term Debt

The aggregate annual maturities of long-term debt outstanding at March 31, 2017 are as follows:
Millions of yen

Short-term loans comprised overdrafts and promissory notes.
The weighted-average interest rates of short-term bank loans for the years ended March 31, 2017 and2016 were 0.9293% and 0.7878%, respectively.
The weighted-average interest rates of commercial paper for the years ended March 31, 2017 and 2016
were 0.011% and 0.069%, respectively.
Thousands ofLong-term debt comprised the following:
U.S. dollars
Millions of yen

2.04% unsecured bonds due 2018
1.09% unsecured bonds due 2018
0.61% unsecured bonds due 2019 (*1)
0.57% unsecured bonds due 2020
0%unsecured bonds due 2021
0.64% unsecured bonds due 2016 (*1)
0.10%~0.81% unsecured bonds due from 2017 to 2022 (*1) (*2)
0.33% unsecured bonds due 2018 (*1) (*3)
Long-term bank loans due through 2077,
with weighted-average interest rate of 0.7695%
for the year ended March 31,2017, and of 1.0198%
for the year ended March 31, 2016
Less current portion of long-term debt
Total

(Note 1)

2017

2017

2016

¥ 10,000
4,000
800
[400]
3,000
25,000
–
–
2,530
[730]
45
[30]

¥ 10,000
4,000
1,200
[400]
3,000
25,0001,000[1,000]
1,392
[862]
–
–

$

304,734

3,145,616

352,906(86,885)¥311,396[1,160](82,050)¥268,276[2,262]

89,13435,6537,130[3,565]26,740222,836––
22,551[6,506]401[267](774,445)$2,775,617[10,339](*1) [] is the amount of the current portion of bonds.
(*2) This is the total amount of the bonds Goodman Co., Ltd. issued.
(*3) This is the total amount of the bonds IMC Co., Ltd. issued.
In March 2008, the Company issued ¥10,000 million (US$89,134 thousand) of 2.04% unsecured bonds due 2018.
In March 2013, the Company issued ¥4,000 million (US$35,653 thousand) of 1.09% unsecured bonds due 2018.
In March 2014, the Company issued ¥2,000 million (US$17,826 thousand) of 0.61% unsecured bonds due 2019.
In March 2015, the Company issued ¥3,000 million (US$26,740 thousand) of 0.57% unsecured bonds due 2020.
In January 2016,the Company issued ¥25,000 million(US$222,836 thousand)of 0% unsecured bonds due 2021.
In April 2011, Nipro Pharma Corporation issued ¥1,000 million (US$8,913 thousand) of 0.64% privately placed bonds due 2016.
In June 2013, IMC Co., Ltd. issued ¥150 million (US$1,337 thousand) of 0.33% privately placed bonds due 2018.
From September 2011 to February 2017, Goodman Co., Ltd. issued ¥6,700 million (US$59,720 thousand) of 0.10% and 0.81% unsecured
bonds due from 2016 to 2022.

2016
2017
2018
2019 and thereafter
Total

Thousands of
U.S. dollars (Note 1)

2017

2017

¥ 86,885
66,38861,262
198,506¥413,041$ 774,445
591,749
546,057
1,769,374$3,681,626

As is customary in Japan, long-term and short-term bank loans are made under general agreements which provide that additional securities
and guarantees for present and future indebtedness will be given under certain circumstances at the request of the bank.
In addition, the agreements provide that the bank has the right to offset cash deposits against any long-term and short-term bank loan that
becomes due, and in case of default and certain other specified events, against all other loans payable to the bank.

10. Accrued Pension and Severance Liabilities
The Company and certain consolidated subsidiaries have defined benefit pension plans and unfunded
retirement benefit plans, and defined contribution pension plan for employees.
Certain consolidated subsidiaries have recorded liabilities for retirement benefit and assets for a retirement
benefit based on the simplified method.

(1) Defined Benefit Plans(a) The reconciliation of beginning and ending balances of the benefit obligation (excluding
the defined benefit plans applied based on the simplified method) are as follows:
Thousands of
U.S. dollars(Note 1)Millions of yen

Obligation at April 1
Service cost
Interest cost
Actuarial gains and losses
Prior service cost
Benefit payments
Increasing by change from the simplified method to theprinciple method
Decreasing by sale of subsidiary shares
Other (foreign currency translation adjustments, etc.)
Obligation at March 31

2017

2016

2017

¥13,554
1,088
70
(92)
(52)
(394)

¥11,467
835
129
701
7
(409)

$120,813
9,703
626
(821)
(471)
(3,514)

–

1,195

–

–
10
¥14,184(326)(45)¥13,554–
95$126,430

NIPRO Annual Report 2017
About NIPRO
Financial Review

49

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements(b) The reconciliation of beginning and ending balances of the fair value of the plan assets(excluding the defined benefit plans applied based on the simplified method) is as follows:
Thousands of
U.S. dollars(Note 1)Millions of yen

Fair value of plan assets at April 1
Expected return on plan assets
Actuarial gains and losses
Company contribution
Benefit payments
Increasing by change from the simplified method to theprinciple method
Decreasing by sale of subsidiary shares
Other (foreign currency translation adjustments, etc.)
Fair value of plan assets at March 31(d) The reconciliation of ending balance of the benefit obligation and the fair value of the plan
assets, and liabilities and assets for retirement benefit are as follows:

2017

2016

2017

¥9,084
158
(54)
671
(222)

¥8,339
156
(269)
633
(212)

$80,971
1,413
(482)
5,986
(1,983)

–

617

–

–
(41)
¥9,595(174)(7)¥9,083–(373)$85,530

Thousands of
U.S. dollars(Note 1)Millions of yen

Benefit obligation on funded scheme
Plan assets
Benefit obligations on non-funded scheme
Net assets (liabilities) on the consolidated balance sheet
Net defined benefit liability
Net defined benefit asset
Net assets (liabilities) on the consolidated balance sheet

2017

2016

2017

¥13,106(9,637)
3,468
1,430
4,899
5,126
(227)
¥4,899¥12,642(9,126)¥ 3,516¥ 1,248
4,764
5,017
(253)
¥ 4,764$116,821(85,905)
30,916
12,754
43,67045,697(2,027)$43,670(*) Including the defined benefit plans applied based on the simplified method.

(e) The breakdown of net pension and severance costs is as follows:(c) The reconciliation of beginning and ending balances of liabilities for retirement benefit
applied based on the simplified method is as follows:
Thousands of
U.S. dollars(Note 1)Millions of yen

Liabilities for retirement benefit at April 1
Beginning balance of newly consolidated subsidiary
Retirement benefit cost
Retirement payments
Contribution for the plan
Increasing by change from the simplified method to theprinciple method
Other (foreign currency translation adjustments, etc.)
Liabilities for retirement benefit at March 31

Thousands of
U.S. dollars(Note 1)Millions of yen

2017

2016

2017

¥294
12
23
(12)
(5)

¥ 573
–
136
(22)
(6)

$2,624
113
211
(113)
(46)

–

(346)

–

(7)
¥305

(40)
¥ 295

(63)
$2,725Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial gains and losses
Amortization of past service obligation
Retirement benefit cost based on the simplified method
Increasing by change from the simplified method to theprinciple method
Other
Total

2017

2016

2017

¥1,088
70
(158)
240
55
23

¥ 835
129
(156)
40
55
136

$ 9,703626(1,413)
2,141
492
211

–

231

–

25
¥1,345–¥1,270231$11,993NIPRO Annual Report 2017
About NIPRO
Financial Review

50

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements(f) Remeasurements of defined benefit plans (Other Comprehensive Income)The breakdown of the items recorded in adjustments to defined benefit plans are as follows:
Thousands of
U.S. dollars(Note 1)Millions of yen

Prior service cost
Actuarial loss gains and losses
Total

2017

2016

¥ 52
288
¥340

¥

(7)
(930)
¥(937)

2017

$ 471
2,567
$3,038(g) Remeasurements of defined benefit plans (Accumulated Other Comprehensive Income)The breakdown of the items recorded in adjustments to defined benefit plans are as follows:
Thousands of
U.S. dollars(Note 1)Millions of yen

Unrecognized prior service cost
Unrecognized actuarial loss
Total

2017

2016

2017

¥ (53)(781)¥(835)¥ (173)(1,003)¥(1,176)$ (480)(6,965)$(7,446)(h) Items concerning the pension assets
1. The breakdown of the pension assets
The ratio of the plan assets are as follows:
Bonds
Equities
Cash and deposits
General account
OthersTotal(*) Including the defined benefit plans applied based on the simplified method

2. Setting of the long-term expected rate of return
The long-term expected rate of return is to be determined considering the current and future allocationof plan assets, and the current and expected long-term rate of return from the diverse assets composing
the plan assets.
(i) Calculation basis of actuarial methods
The main calculation basis of actuarial methods at the end of the period is as follows:
Discount rate
Expected long-term rate of return
Assumed wage increase rate

2017

2016

Primarily 0.4%
Primarily 1.5%
Primarily 6.5%

Primarily 0.2%
Primarily 1.5%
Primarily 6.5%

(2) Defined Contribution Retirement Plans
The amounts of necessary contributions to defined contribution retirement plans within the Company
and consolidated subsidiaries were ¥463 million (US$4,128 thousand).

11. Commitments and Contingent Liabilities
The Company and its consolidated subsidiaries had the following commitments and contingent liabilities:

2017

2016

41%
21%
0%
33%
5%
100%

41%
21%
0%
33%
5%
100%

Thousands of
U.S. dollars(Note 1)Millions of yen

Liabilities for guarantees
Export drafts discounted
Trade notes receivable discounted
Total

2017

2016

2017

¥13
–
¥13

¥101
–
¥101

$119
–
$119

NIPRO Annual Report 2017
Message fromTop Management

About NIPRO
Financial Review

51

Contents

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Review of Operations

Consolidated Statements of Income

Research andDevelopment Activities

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Consolidated Statements of Cash Flows

Corporate Governanceand Compliance

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements
12. Stock Options
The stock options outstanding as of March 31, 2016 were as follows:
Consolidated subsidiary (Goodman Co., Ltd.)

Yen

2016
November 25, 2005
at board of directors’ meeting

2016
November 25, 2005
at board of directors’ meeting

Persons granted
Class and number ofsharesGrant date
Exercise period
Terms for vestingSpecified term of years
before vesting

April 27, 2006
at board of directors’ meeting

Directors of Goodman Co., Ltd: 4
Employees of Goodman Co., Ltd: 348
Others: 4
878,500 shares of common stockof Goodman
December 5, 2005
From December 6, 2005 toAugust 31, 2015
None
None

Employees of Goodman Co., Ltd: 67,000 shares of common stockof Goodman
April 28, 2006
From April 28, 2006 to
August 31, 2015
None

In addition to the aforementioned information of the stock options outstanding, the stock option activities
were as follows:
Consolidated subsidiary (Goodman Co., Ltd.)2016

Non-vested shares
At the beginning of the year
Granted during the year
Forfeited and expired during the year
Vested during the year
At the end of the year
Vested shares
At the beginning of the year
Vested during the year
Exercised during the year
Forfeited and expired during the year
Unexercised at the end of the year
The numbers of stock options were converted into that of common stocks.

¥2,169––There are no stock options outstanding as of March 31, 2017

None

November 25, 2005
at board of directors’ meeting

Exercise price
Average stock price at exercise
Fair value price at the grant date

April 27, 2006
at board of directors’ meeting

–
–
–
–
–

–
–
–
–
–

253,000–––
253,000

2,000
–
–
–
2,000

April 27, 2006
at board of directors’ meeting¥2,415––NIPRO Annual Report 2017
About NIPRO
Financial Review

52

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements
13. Net Assets

14. Segment Reporting

The significant provisions in the Corporate Law of Japan (the “Corporate Law") that influence financial
and accounting matters are summarized below:

1. Outline of Reportable Operating Segments
Applied ASBJ Statement No.17 “The Revised Accounting Standard for Disclosures of Segments of anEnterprise and Related Information”, the reportable operating segments are components of an entity forwhich separate financial information is available and such information is evaluated regularly by the boardof directors in deciding how to allocate management resources and in assessing performance.
The Company currently operates its business on a stand-alone basis with the divisional organizationand evaluates the performance of sales and manufacture of each division regardless of their products.
Accordingly, the Company has three reportable operating business segments according to the divisions(Medical-Related business, Pharmaceutical-Related business and PharmaPackaging business), which are
divided mainly by their products.

(a) Dividends
Under the Corporate Law, companies can pay dividends at any time during the fiscal year in addition to
the year-end dividend upon resolution at the shareholders’ meeting. For companies that meet certain
criteria such as (1) having the board of directors, (2) having independent auditors, (3) having the board ofcorporate auditors, and (4) the service period of the directors is prescribed as one year rather than thenormal term of two years by its articles of incorporation, the board of directors may declare dividends(except for dividends in kind) if the company has prescribed so in its articles of incorporation. The
Company’s present system meets the first three criteria but the two-year service period of the directors
does not meet the fourth criterion.
Interim dividends may also be paid once a year by the resolution of the board of directors if thearticles of incorporation of the company stipulate so. The Company’s articles of incorporation containsuch a stipulation, and it pays interim dividend semi-annually by the resolution of the Board of Directors.
The Corporate Law provides certain limitations on the amounts available for dividends or thepurchase of treasury stock.
(b) Increases / Decreases and Transfer of Common Stock, Reserve and Surplus
The Corporate Law requires that an amount equal to 10% of dividends must be appropriated as legal
reserve (a component of retained earnings) or as additional paid-in capital (a component of capitalsurplus) depending on the equity account charged upon the payment of such dividends until the total of
aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock.
Under the Corporate Law, the total amount of additional paid-in capital and legal reserve may bereversed without limitation.
The Corporate Law also provides that common stock, legal reserve, additional paid-in capital, othercapital surplus and retained earnings can be transferred among the accounts under certain conditions by
the resolution of the shareholders’ meeting.
The Company’s legal reserve, which is included in retained earnings, amounted to ¥3,622 million(US$32,288 thousand) as of March 31,2017, and its additional paid-in capital, which is included incapital surplus, amounted to ¥635 million (US$ 5,662 thousand) as of March 31, 2017.

*Medical-Related
The domestic division sells injection and infusion products, artificial organ products, highly functional
products, dialysis products, diabetic products and pharmaceuticals such as generic and kit products. In
the Global business division, head office plays the central role, placing overseas sales and manufacturingbases for medical equipment and sales injection and infusion products, artificial organ products anddiabetic products.
*Pharmaceutical-Related
The pharmaceutical division sells containers for combination products (injectable kit products) andpharmaceutical-related products consigned by other pharmaceutical companies. Domestic subsidiaries
sell and manufacture injectable drugs, oral drugs and combination products.
*PharmaPackaging
The company has changed a name of reportable segment from this fiscal year. Former Glass-Related
Business is newly named PharmaPackaging Business.
The change is only in name and has no effects on the business classification or the figures from theprevious fiscal years.
The PharmaPackaging division sells glass for vials and ampoules for medical use, glass for thermos
bottles and glass for lighting. Overseas subsidiaries manufacture and sell tube glass and glass mainly forsyringes, vials and ampoules for medical use.

NIPRO Annual Report 2017
About NIPRO
Financial Review

53

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Research andDevelopment Activities

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements
Business segment information for the years ended March 31, 2017 and 2016 was as follows:

Millions of yen

2017
Reportable Segment
MedicalRelated

Net sales:
OutsideIntersegment
Total
Operating income (loss)
Identifiable assets
Other items
Depreciation and amortization
Amortization of goodwill
Increase in tangible and intangible fixed assets

Other
(*1)

Total

Adjustment(*2)

Consolidated
financialstatements

PharmaceuticalRelated

PharmaPackaging¥262,198
1,575
263,773
30,638369,540¥ 69,140
9,917
79,057
14,135
160,467¥28,331
0
28,331(1,313)
61,262¥359,670
11,492
371,162
43,460591,270

¥

29
724
754
(10)
1,237

¥359,699
12,216
371,916
43,449592,508¥–(12,216)(12,216)(14,679)
160,330¥359,699–
359,699
28,770752,839

14,231
2,083¥ 22,684

10,761
4¥ 17,695

3,302
819¥ 6,795

28,2952,907¥ 47,175

0
–
¥ 731

28,2952,907¥ 47,907

2,832–¥ 10,403

31,1282,907¥ 58,310

Total

Thousands of U.S. dollars (Note 1)

2017
Reportable Segment

Net sales:
OutsideIntersegment
Total
Operating income (loss)
Identifiable assets
Other items
Depreciation and amortization
Amortization of goodwill
Increase in tangible and intangible fixed assets

Other
(*1)

Total

MedicalRelated

PharmaceuticalRelated

PharmaPackaging$2,337,095
14,0392,351,135
273,098
3,293,879$ 616,276
88,395
704,671
125,994
1,430,323$252,528–
252,528(11,710)546,061$3,205,900
102,434
3,308,335
387,382
5,270,263

$

267
6,459
6,726
(95)
11,033$3,206,167
108,894
3,315,062
387,287
5,281,297

126,850
18,570$ 202,195

95,92540$ 157,724

29,433
7,306$ 60,574

252,208
25,917$ 420,495

0–$ 6,521

252,209
25,917$ 427,017

Total

Adjustment(*2)

Consolidated
financialstatements$–(108,894)(108,894)(130,840)
1,429,097$3,206,167–
3,206,167
256,446
6,710,395

25,250–92,727

277,459
25,917$ 519,744$

NIPRO Annual Report 2017
About NIPRO
Financial Review

54

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Research andDevelopment Activities

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements
Millions of yen

2016
Reportable Segment
MedicalRelated

Net sales:
OutsideIntersegment
Total
Operating income (loss)
Identifiable assets
Other items
Depreciation and amortization
Amortization of goodwill
Increase in tangible and intangible fixed assets

Other
(*1)

Total

PharmaceuticalRelated

PharmaPackaging¥272,168
1,737
273,905
28,204
338,889¥ 62,266
8,815
71,081
12,060154,304¥32,184874
33,058(1,618)66,812¥366,618
11,426
378,044
38,646560,005

¥32
39
71
61
55

¥366,650
11,465378,115
38,707560,060

15,133
2,649¥ 24,549

9,327
5¥ 21,277

3,403
1,033
¥ 6,095

27,863
3,687¥ 51,921––¥ –27,863
3,687¥ 51,921

Total

Adjustment
(*2)

¥

¥

Consolidated
financialstatements–(11,465)(11,465)(14,502)148,823¥366,650–
366,650
24,205
708,883

2,284
–
5,180

30,147
3,687¥ 57,101(*1) “Other” is the business segment which is not included in the reportable segment and consists of real estate income and sales by headquarters.
(*2) Adjustment is as follows:• Adjustments for operating income ended March 31, 2017 and 2016 include ¥1,248 million (US$11,130 thousand) and ¥(1,070) million of adjustment for unrealized gain and ¥(15.927) million (US$(141,971) thousand) and ¥(13,432) million of corporate cost, respectively. Corporate
cost consists primarily of sales, general and administrative expenses and research and development costs which do not belong to the reportable segment.
• Adjustments for Identifiable assets ended March 31, 2017 and 2016 include ¥(7,339) million (US$(65,421) thousand) and ¥(10,777) million of elimination of inter-segment transaction and ¥167,670 million (US$1,494,518 thousand) and ¥159,599 million of corporate assets,
respectively. Corporate assets consisted primarily of cash and deposits, investment securities, assets for development and assets for management division of head office which do not belong to the reportable segment.
• Adjustments for depreciation and amortization ended March 31, 2017 and 2016 are for corporate assets. Depreciation and amortization and increase in tangible and intangible fixed assets include long-term prepaid expenses.
• Adjustment for increase in tangible and intangible fixed assets is increase in corporate assets.

NIPRO Annual Report 2017
Message fromTop Management

About NIPRO
Financial Review

55

Contents

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Review of Operations

Consolidated Statements of Income

Research andDevelopment Activities

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Consolidated Statements of Cash Flows

Corporate Governanceand Compliance

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements
Loss on impairment of fixed assets and Unamortized balance of goodwill by businesssegments were as follows:
Millions of yen

Net sales and Property, plant and equipment for each area were as follows:
Millions of yen

2017

2017

Reportable Segment
MedicalRelated

Loss on impairment of
fixed assets
Unamortized balance of
goodwill¥Japan

Pharmaceutical- PharmaPackaging
Related

Other

Total

32

¥120

¥1,401¥ 1,554

24,957

4

3,034

27,996

¥

Total

–

¥ 1,554–

27,996

Asia

Total

¥53,239¥42,579¥42,548¥359,699

148,090

9,791

16,70869,632

244,222

Asia

Total

Thousands of U.S. dollars (Note 1)

2017

2017
Reportable Segment
MedicalRelated$

Pharmaceutical- PharmaPackaging
Related286$1,071

222,46136$12,493
27,049

Other

Total

$13,851$

249,546

Total

–
–

249,546

2016
Reportable Segment
MedicalRelated¥

Pharmaceutical- PharmaPackaging
Related023,718

¥

–

¥

–

9

¥5,150

Other

Total

¥

0
28,877¥

Net sales
Property, plant andequipment

Americas

Europe$1,972,830$474,550$379,534$379,252$3,206,167

1,319,992

87,275

148,927

620,668

2,176,864

Millions of yen$13,851

Millions of yen

Loss on impairment of
fixed assets
Unamortized balance of
goodwill

Europe¥221,331

Japan

Thousands of U.S. dollars (Note 1)

Loss on impairment of
fixed assets
Unamortized balance of
goodwill

Net sales
Property, plant andequipment

Americas

Total

–

¥

0

–

28,8772016
Japan

Net sales
Property, plant andequipment

Americas

Europe

Asia

Total

¥203,462¥72,416¥46,156¥44,616¥366,650

125,709

9,586

14,68573,777

223,757NIPRO Annual Report 2017
About NIPRO
Financial Review

56

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Review of Operations

Consolidated Statements of Income

Research andDevelopment Activities

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Consolidated Statements of Cash Flows

Corporate Governanceand Compliance

Report of Independent Auditors

Corporate Information

Notes to Consolidated Financial Statements
15. Selling, General and Administrative Expenses

18. Supplemental Disclosures of Cash Flow Information

Significant components of selling, general and administrative expenses for the years ended March 31,
Thousands of2017 and 2016 were as follows:
U.S. dollars

Supplemental information related to the Consolidated Statements of Cash Flows was as follows:

Millions of yen

Salaries
Freight charges(Note 1)

2017

2016

2017

¥19,813
7,780¥22,230
8,205$176,604
69,348

16. Research and Development Expenses
Research and development expenses for the years ended March 31, 2017 and 2016 were ¥11,517
million (US$102,663 thousand) and ¥10,269 million, respectively.

17. Impairment Loss
In the year ended March 31, 2017, the Company and its consolidated subsidiaries recorded the
impairment loss of ¥1,554 million.
The following table presents the major impaired assets.

Millions of yen

2017
Purpose of use

Business use
Business use

Location

Type of asset

Nipro PharmaPackaging GermanyGmbH
Nipro PharmaPackaging Belgium N.V.

Goodwill, other intangible assets
and others
Goodwill

Amount¥1,113288
Thousands of
U.S. dollars(Note 1)

2017
Purpose of use

Business use
Business use

Location

Type of asset

Nipro PharmaPackaging GermanyGmbH
Nipro PharmaPackaging Belgium N.V.

Goodwill, other intangible assets
and others
Goodwill

Amount$9,924
2,568

The assets for business use are divided into groups on which separate financial information is reported for management accounting
purposes, whereas leased assets and idle assets are categorized individually. Headquarters assets, R&D facilities, dormitories andcompany-offered houses are categorized into assets for common use, since these assets cannot generate identifiable cash flows.
The company recognized the impairment loss, since the economic performance of above-mentioned assets will be worse than what thecompany originally expected.
The recoverable amounts of those assets are measured by the value in use, and have been impaired to nil carrying value.

Thousands of
U.S. dollars(Note 1)Millions of yen

Cash paid during the year for:
Interest
Income tax

2017

2016

2017

¥3,908
7,308¥4,506
4,780$34,841
65,140NIPRO Annual Report 2017
About NIPRO

Financial Review

57

Contents

Message fromTop Management

Ten-Year Summary

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Report of Independent Auditors

Review of Operations

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Report of Independent Auditors

Corporate Information

NIPRO Annual Report 2017
About NIPRO
Financial Review

Message fromTop Management

Ten-Year Summary

Corporate Information

Message from the CFO

Consolidated Balance Sheets

Consolidated Statements of Changes in Net Assets

Review of Operations

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Research andDevelopment Activities

Corporate Governanceand Compliance

Financial/Data Section

Consolidated Statements of Comprehensive Income

Notes to Consolidated Financial Statements

Corporate Information

Report of Independent Auditors(As of March 31, 2017)

Date of Establishment
July 8, 1954

Principal Shareholders

Head Office
3-9-3 Honjo-nishi, Kita-ku, Osaka 531-8510, Japan
Telephone: +81-6-6372-2331
Facsimile: +81-6-6375-0669
http://www.nipro.co.jp/english/

Nippon Electric Glass Co., Ltd. .................................... 24,003
Japan Trustee Services Bank, Ltd. ................................ 16,097
The Master Trust Bank of Japan, Ltd............................ 5,914
Resona Bank Limited ................................................... 5,360
Trust & Custody Services Bank,Ltd............................... 3,968
JP Morgan Chase Bank 380634 .................................. 3,115
Goldman Sachs International ...................................... 2,142
MSCO Customer Securities ......................................... 1,941
Kazumi Sano............................................................... 1,910
Chase Manhattan Bank GTS Clients Account Escrow... 1,813
Total ........................................................................... 66,267

Stock Price Range (Tokyo Stock Exchange)
Number of Percentage ofShares Held Total Shares(in thousands) in Issue (%)

Tokyo Office
4-3-4 Hongo, Bunkyo-ku, Tokyo 113-0033, Japan
Telephone: +81-3-5684-5611
Facsimile: +81-3-5684-5610
Number of Employees
Parent Company.............................................................. 3,367
Consolidated subsidiaries ................................................ 24,048
Total ............................................................................... 27,415
Common Stock
Authorized
IssuedOutstanding
Number of Shareholders

58

Contents

400,000,000 shares
171,459,479 shares
166,619,408 shares
50,199Stock Listings
Tokyo Stock Exchange, First Section
Ticker Code:8086
Transfer Agent
Mizuho Trust & Banking Co., Ltd., Head Office
Stock Transfer Agency Dept.
1-2-1, Yaesu, Chuo-ku, Tokyo, 103-8670, Japan

14.00
9.39
3.45
3.13
2.31
1.82
1.25
1.13
1.11
1.06
38.65

(yen)

1,800
1,600
1,400
1,200
1,000
800
600

12

2015

3

6

9

12

2016

3

6

9

12

2017

3

Major Group Companies (As of June 30, 2017)
Area
Country
Domestic Japan

Name
Nipro Medical Industries Co., Ltd.
Goodman Co., Ltd.
Nipro Pharma Corporation
Zensei Pharmaceutical Industries Co., Ltd.
Nichihos Co., Ltd.
Cell Science & Technology Institute, Inc.
NexMed International Co., Ltd.
Nipro (Thailand) Corporation Limited
Overseas Thailand
Nipro Sales (Thailand) Co., Ltd.
Nipro (Shanghai) Co., Ltd.
China
Nipro Trading (Shanghai) Co., Ltd.
Nipro PharmaPackaging (Shanghai) Co., Ltd.
Jilin Nipro Jiaheng Pharmaceutical Packaging Co., Ltd.
Anyang Nipro Changda Pharmaceutical Packaging Co., Ltd.
Chengdu Pingyuan Nipro Pharmaceutical Packaging Co., Ltd.
Nipro Medical (Hefei) Co., Ltd.
Nipro Vietnam Company LIMITED
VietnamNipro Pharma Vietnam Co., Ltd.
Nipro Asia Pte Ltd.
Singapore
Nipro India Corporation Private Limited
India
Nipro PharmaPackaging India Private Limited
Nipro Medical (India) Pvt. Ltd.
Bangladesh Nipro JMI Co., Ltd.
Nipro JMI Pharma Ltd.
PT. Nipro Indonesia JAYA
Indonesia
Nipro Middle East FZE
UAE
Nipro Medical Ltda.
BrazilNipro Medical Corporation
U.S.A.
Nipro PharmaPackaging Americas Corporation
Nipro Europe N.V.
Belgium
Nipro PharmaPackaging Belgium N.V.
Nipro PharmaPackaging France S.A.S.
FranceNipro PharmaPackaging Germany GmbHGermany
Switzerland Nipro Pharma Glass AG
Nipro PharmaPackaging Ural LLC
RussiaPrincipal business
Manufacturing and marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of pharmaceuticals
Manufacturing and marketing of pharmaceuticals
Management of dispensing pharmacies and marketing of pharmaceutical products
Development and manufacture of cell culture media
Development, manufacture and sales of Orthopedic Products
Manufacturing and marketing of medical devices
Marketing of medical devices
Manufacturing and marketing of medical devices
Marketing of medical devices
Marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of pharmaceuticals
Marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of PharmaPackaging products
Marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of pharmaceuticals
Manufacturing and marketing of medical devices
Marketing of medical devices
Manufacturing and marketing of medical devices
Marketing of medical devices
Manufacturing and marketing of PharmaPackaging products
Marketing of medical devices
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Business management
Manufacturing and marketing of PharmaPackaging products