November 8, 2019
SEIKAGAKU CORPORATION(Securities Code: TSE 4548)

Seikagaku Announces A New Mid-term Management Plan
(Fiscal 2019 to Fiscal 2021)
Seikagaku Corporation (Tokyo, Japan, "Seikagaku") today announced that it has formulated a
new mid-term management plan for the three-year period starting in the fiscal year ending
March 31, 2020 (fiscal 2019). A summary of the plan follows.

1. Background of the new mid-term management plan
Based on the "Seikagaku Corporation Ten-Year Vision" formulated in 2009, Seikagaku
aims to grow as a "Global Category Pharma," a company which contributes to the healthand well-being of the world's people. Toward the vision's achievement, the Company has
undertaken various mid-term management plans as it progressed toward the ending periodof the fiscal year ended March, 31 2019 (fiscal 2018).
During this period, Seikagaku launched new products including Gel-One, an
intra-articular single-injection viscosupplemnt for the treatment of knee osteoarthritis, in theU.S. and HERNICORE, a treatment for lumbar disc herniation, in Japan. Together with this,it has enhanced its core drug discovery technology and enriched its development pipelines.
In addition, Seikagaku has completed multiple capital investments with the aim of putting inplace a medium- to long-term structure for the stable supply of products and has alsobolstered its quality control system to comply with global standards and raised its
production efficiency. In the LAL business, Seikagaku's U.S. subsidiary has followed agrowth trajectory to make a steady profit contribution to consolidated earnings.
However, in Japan a drastic reform of the NHI drug pricing system is taking place andhas had an oversized impact on the Company, which has longtime listed drugs as its coreproduct offerings. In overseas markets, competition among companies has intensified
more than expected and at breakneck speed. Because its responses to this upheaval in
the business environment have been insufficient, Seikagaku has taken an impairment loss
in fiscal 2019 on property, plant and equipment related to the pharmaceuticals business.
Going forward, the Company now plans to make prompt improvements to earnings, which
has remained an urgent issue.
2. Outline of the new mid-term management plan
While the abrupt changes to the business environment surrounding the pharmaceuticals
industry are becoming ever more severe, the need to lay out a growth path once again
makes the continual creation of innovative new drugs an imperative for the Company. In
parallel with this, the Company is embarking on initiatives based on a speedy transition to
rapid earnings improvement and promoting reforms that are not constrained by existing
frameworks.
(1) Seikagaku's vision"A company that is valued by the world through its innovative drug discovery"
By leveraging its expertise in the field of glycoscience into proprietary technology andcreating innovative drugs that are in demand, and through a broader global supply of

these products, Seikagaku aims to contribute to the health and well-being of people
around the world and be a company that is valued. By making this its foundation, theCompany will advance fair and earnest business activities.
(2) Basic philosophy & corporate slogan
Creativity, Fairness, Dreams and Passion
a. Core values (motto):b. Mission statement:
Glycoscience for Human Well-beingc. Corporate slogan of the new mid-term management plan: ”Innovative Thinking”~Creating value based on innovative thinking~(3) Important measures
Under the new mid-term management plan, Seikagaku positions the plan period as one
for solidifying the profit foundation in order to delineate a path to growth once again. To
this end, the Company will proceed with the following important measures.
a. Accelerating new drug discovery to become the pillar of new profits Strengthening and making use of the Company's own core technology related toGAGs
Leveraging drug discovery technology held by Seikagaku to the fullest extent andraise the possibilities for innovative drug discovery.
<Main technologies held by Seikagaku>a. New drug development based on modification, processing, and bioactivity
b. Drug delivery systems (DDS)c. Use of platform technology and a next-generation GAG drug development
approach Accelerating innovative drug discovery using an open innovation strategy
In addition to the technologies in its possession, Seikagaku will proactively undertake
initiatives toward technology having high affinity with other companies, maximize
synergies, and expand the number of projects in new drug development—all to speed
up its work.
 Steady expansion of the development pipeline with an eye toward globalexpansion
Seikagaku will quickly foster the development of SI-613, a treatment for osteoarthritis
and enthesopathy, as a new core product by applying for and successfully obtaining
drug approval, and by achieving launching. Seikagaku also aims to step up clinicalstudies for SI-722, a treatment for interstitial cystitis and bladder pain syndrome, andSI-449, an adhesion barrier. With regard to SI-6603, an indication for treatment for
lumbar disc herniation, the Company will focus on speeding up additional study for thePhase III clinical study as it pursues a full effort toward a U.S. market launchingb. Solidifying the profit foundation through market expansion for new products
 Post-marketing drug development of HERNICORE in Japan
Seikagaku places priority on information provision activities to ensure appropriate use
and safety as well as the collection of after-market safety information. Upon
agreement with the authorities while coordinating with relevant scientific societies, theCompany will work toward gradual expansion of requirements for available medical
practitioners and facilities together with steady market penetration. The Company will
also advance the disease awareness activities related to lumbar disc herniation forpatients.

 Accelerating multinational expansion of existing products and products indevelopment
By expediting the cultivation of new markets for existing products and products indevelopment to maximize product value, Seikagaku seeks to solidify its medium- tolong-term profit foundation. It will also be actively engaged in product improvement
and application development in accordance with medical treatment needs in thetargeted expansion regions.
 Global expansion of endotoxin-detecting reagents that utilize genetic recombination
technology
Overseas development of the Seikagaku Group's LAL business is under its
U.S.-based subsidiary, the Associates of Cape Cod, Inc. (ACC). With expectations of
future adoption, ACC aims for global expansion of gene-recombinant
endotoxin-detecting reagents, leading to the securing of a new profit foundation.
c. Productivity improvement reforms
 Thorough cost reductions
In manufacturing costs, as a result of a project that is already underway, Seikagaku
will conduct a review of procurement costs and the optimization and streamlining ofproduction, leading to greater assurance of product profitability.
In selling, general and administrative expenses, the Company will improve
work efficiency and make sure that thorough cost reductions are actually done.
Furthermore, in order to carry out new drug development continuously, it will addressefficient use of R&D expenses determined by priority.
 Diversifying the profit model
Regardless of the business model up to now, the Company will carry out a vigorous
examination of ways in which to produce new profit.
 Creating an organization for maximizing the value of resources
Seikagaku will advance organizational reform that enables flexible responses tochanges in the business environment and the nurturing of talent that can create newvalue, and which also lets each person demonstrate their potential to the fullest.
(4) Numerical targets
Fiscal 2018 results
Fiscal 2021 targets
Net sales¥28.3 billion¥28.3 billion
Ordinary income¥2.8 billion¥4.5 billion
SKK EBITDA*¥4.6 billion¥5.0 billion
Overseas sales ratio
42.2%
50.0%
<<Assumptions>>(1) Expansion of overseas sales including the LAL business makes up for the effects ofthe NHI drug price revisions in Japan(2) Depreciation expense declines as a result of impairment accounting(3) R&D expense is 25–30% of sales(4) Various royalty income is included as non-operating income(5) Exchange rate: ¥105 to the U.S. dollar* SKK EBITDA：A profit indicator consisting of operating income plus depreciation expense and royalty
income(5) Basic policy on profit distributions
In accordance with the new mid-term management plan, the Company has formulated anew basic policy on the distribution of profits as follows.
Note that with respect to dividend distributions to shareholders that the policy haschanged from the existing policy based on stable dividends to one that links dividends tobusiness performance.
<Basic policy on profit distributions>
As a means of ensuing sustainable profit growth and improving corporate value,
Seikagaku believes in the sharing of profits with its shareholders.
Seikagaku recognizes the return of profits to shareholders as an importantmanagement concern and has set a policy of linking the distribution of dividends tobusiness performance. While taking into consideration future business expansion and thepayout of total returns, the Company has also set a basic policy of examining thepurchase of the Company's treasury stock when appropriate. For the term of the new
mid-term management plan, the Company strives for continuous shareholder returns. For
fiscal 2019, the Company keeps in place its forecast for dividend distributions of ¥26 pershare; for fiscal 2020 and fiscal 2021, in consideration of business profits, it aims for adividend payout ratio of 50%.
In addition, in order to solidify the business foundation and improve capital efficiency,
the Company will direct its business investment toward R&D and the establishment of aproduction system for creating new value, and will also actively carry out initiatives forstrategic investments with prospects for future growth and synergy effects.

<Cautionary Notes>
This press release contains forward-looking statements regarding future management strategies orperformance forecasts. These descriptions are based on judgments derived from information that iscurrently available to Seikagaku and are subject to risk and uncertainty. Actual results anddevelopments may differ significantly from these descriptions due to various factors. Information
about pharmaceutical products or medical devices (including products currently in development)
included in this press release is not intended to constitute an advertisement or medical advice.

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