The Mochida Pharmaceutical Group’s “22-24 Medium-Term Management Plan”
This material is an English translation of the press release issued on May 13, 2022 in Japanese,and the Japanese release is given priority regarding content and interpretation.
May 13, 2022
Dear All,
Mochida Pharmaceutical Group(Mochida Pharmaceutical Co., Ltd., TSE: 4534, Prime section) is
pleased to announce that it has developed its “Vision for 2031” and the three-year “22-24 Mediumterm Management Plan”, which begins in FY 2022.
1.

Vision for 2031

Mochida Pharmaceutical Group has developed its business activities based on the fundamental
mission of “contributing to human health and well-being,” as stated in its corporate philosophy. To
expand on our past efforts and achieve sustainable growth by overcoming a business environmentthat is expected to become increasingly severe in the future, we have materialized our existing
long-term vision and developed the “Vision for 2031” that the Group aims to realize in 2031, amilestone year 10 years from now.
- Amid the diversification and sophistication of medical care, such as addressing intractable andrare diseases that have been difficult to treat with conventional small molecules and antibody drugs
alone, to take on the challenge of addressing unmet medical and health needs by incorporating
new drug discovery modalities that are expected to grow in the future;- In addition to the current mainstay pharmaceutical and healthcare businesses, to work to position
the biomaterials business as one of the pillars of the next generation.

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[Efforts toward 2031]
Pharmaceutical business- To incorporate new drug discovery modalities, such as cells, nucleic acids, and genes, toenhance our drug discovery pipeline and maintain the position as a core business;- Among them, to position regenerative medicine products as one of our focus areas and givepriority to projects using mesenchymal stem cells;- To launch products from our pipeline that incorporate new drug discovery modalities, including
regenerative medicine products, by FY2031.
Biomaterials Business- To promote each project based on alginate, which is expected to have various medical
applications, and work for an early launch and business expansion. Also, to promote
development with a view to global expansion.
(See Figure 2)
Healthcare businessTo focus on developing high-performance, value-added dermatological skin care products
through communications with physicians, pharmacists, and nurses etc.
- To steadily expand the scale of our business by improving our business structure via theinvestment of sales resources, etc., focusing on new areas, and introducing new and renewed
products.
Global expansion- To expand into overseas markets by offering a lineup of distinctive products that meet theneeds in each business segment;- To launch highly purified EPA drugs in Vietnam, China, the U.S., and other countries,
subsequently to Thailand;- Also, to promote the development of medical devices in our biomaterials business andregenerative medicine products in our pharmaceuticals business, which we aim to launch in the
future, with a view to global expansion.
[Scale of business targeted for 2031]


We aim to achieve sales of approximately 40 billion yen, including product fields such as thebiomaterials business products and regenerative medicine products in the pharmaceuticalbusiness(see Fig. 1), which are positioned as one of the pillars of the next generation.

With these new businesses as growth drivers, we aim to develop our business to achieve total
net sales of 140 billion yen and an operating margin of 15%.

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Figure 1: New business development

What are SHEDs (stem cells from human exfoliated deciduous teeth)?
SHEDs are stem cells taken from the pulp cavity inside the tooth and are a type of mesenchymal
stem cell. Stem cells collected from deciduous teeth are particularly active and have a highcapacity for tissue repair and regeneration. As they can be collected from deciduous teeth,
collection can be performed at any time, reducing the invasiveness on the donor. Therefore, it isexpected to be utilized in the future as a raw material for regenerative medicine products that canbe stably supplied domestically.
What are RECs (Rapidly Expanding Cells)?
RECs are high purity mesenchymal stem cells isolated from human bone marrow fluid. These cells
are obtained by a proprietary isolation and culture method, and have significantly superior
proliferative, differentiation, and migratory capacities compared to mesenchymal stem cells
isolated by conventional methods.

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Figure 2: Properties and potential applications of alginate

Versatile shape

Application

2D and 3D cultures
Cell and tissue preservation
High viscosity
solution

Bead-shaped
capsulesScaffolds for tissue regeneration
Encapsulation of secretory cells
Sustained release of drug

String-shaped
Sheet

Sheet

- Sodium alginate is a natural product molecule derived from brown algae. It becomes a highly
viscous aqueous solution, and it becomes a gel with calcium ions, which are divalent cations,being added. This property can be used to process the material into various forms and hardness
during gelation.
- Possible applications of alginate in the biotechnological and medical fields include 2D and 3D
culture, cell and tissue preservation, scaffolds for tissue regeneration, encapsulation of
secretory cells, and sustained release of drugs.
- We are working on various applications of endotoxin-free sodium alginate that can be used inliving organisms. Alginate, which is a polysaccharide, can be a nutrient source for cells. In
addition, when a gel is formed on the affected area, the alginate gel remains in the implantedarea for a certain period of time because no enzymes exist in the body to break it down. Also, it
does not harm cells due to its similarity to biological components. The relationship of alginate tonative cells when implanted in a wound or other sites is also currently being studied: we expect
further potential applications4

2.

22-24 Medium-term Management Plan

To realize its “Vision for 2031,” Mochida Pharmaceutical Group has adopted the 22-24 Medium-termManagement Plan as an action plan for issues to be addressed over the next three years from theperspective of the sustainable enhancement of corporate value and in alignment with its Group’s
Basic Sustainability Policy.
The business environment surrounding the pharmaceutical industry is expected to become evenmore challenging going forward, given the continued promotion of policies to curb drug costs against
the backdrop of the problem of securing financial resources for social security expenses. The Groupwill continue to invest in growth to realize its “Vision for 2031,” in spite of the expectation of atemporary deterioration in earnings during the 22-24 Medium-term Management Plan period.
Similarly to last fiscal year, we have decided not to prepare or announce management target values
for the final year of the Medium-Term Management Plan, which we had announced every year until
the 20-22 Medium-term Management Plan, because it continues to be extremely difficult to predict
how much and how quickly the future reform of the drug price system and other factors could affectthe industry environment.
2.1. Basic policy
We will respond to medical and healthcare needs with concentration of the total power of theGroup covering research and development, manufacturing and marketing, pursue sustainablegrowth by promoting selection and focusing processes, and restructure the earnings structure to
respond to further environmental changes.
2.2. Key issues to be addressed
We will focus on the following issues under the theme of innovation creation and productivity
improvement.
1) Maximization of profits in targeted areas with a focus on new drugs- To concentrate our resources on the targeted areas (cardiovascular medicine, obstetrics andgynecology, psychiatry, and gastroenterology) to maintain our prominence and maximize
earnings from new drugs in our core pharmaceutical business;- To continually work to maintain a stable supply and proper quality of our products, while
promoting improvements in our cost structure by reducing procurement costs and reviewing our
product lineup.
2) Continuous investment in growth to realize the “Vision for 2031”
To pursue investments in business activities that will lead to future competitiveness;- To work to expand and promote the biomaterials business and aim for an early launch;- To incorporate new drug discovery modalities, such as cells, nucleic acids, and genes. To givepriority to development especially in the field of regenerative medicine products.

53) Strengthening of the corporate organization to create innovation and improve productivity- To harmonize and coordinate four approaches: optimization of business processes andbusiness quality level, promotion of digital transformation, institutional reform, and the promotionof facility management, in order to achieve efficient organizational operations and increase
corporate value;- To continue to support capacity development to improve performance and promote thedevelopment of human resources that will drive innovation;- To focus on strengthening our human resource management system to ensure development
and vitalization of human resources;- To work to improve our organizational capabilities by optimizing our personnel strategy andallocation, while strengthening interdepartmental cooperation.
2.3. Business Strategies
1) Pharmaceutical businessi) Pharmaceutical research- To enhance our drug discovery pipeline by promoting open innovation and incorporating newmodalities through drug discovery utilizing external resources;- To prioritize and advance drug discovery using mesenchymal stem cells.
ii) Development- To optimize organizational structuring and to allocate resources for accelerating drug
development and improving accuracy, in close cooperation with our partners;- To obtain approval during the 22-24 Medium-term Management Plan period for MND-2119, a
new highly purified EPA drug, MD-711, an inhaled form of a treatment drug for pulmonary arterial
hypertension, the pediatric indication of Lialda, an ulcerative colitis treatment drug, the pediatricindication of Lexapro, an antidepressant, ACT-541468, a treatment for insomnia, and MD-120,
an antidepressant;- To promote the development of MND-21, a treatment for hypertriglyceridemia, in China;- To promote the addition of drug indications and dosage forms to the drugs under development
and products on the market;- To enhance the strategies for the in-licensing of the products in development so as to expand
the pipeline in the fields in which we specialize;- To promote the in-licensing and development of biosimilars.

6iii) Marketing- To develop medical representatives who can capably cover all targeted areas, and to optimize
information provision activities through the acceleration of both online and offline efforts
channels;- In the gastrointestinal field, to maximize sales of Lialda, an ulcerative colitis treatment drug
which is the mainstay of our revenue, aiming to be the No. 1 5-aminosalicylic acid drug; In
addition, to improve the position of Goofice and Movicol, chronic constipation treatment drugs in
the constipation market;- In the psychiatry area, to maintain the market position of Lexapro, an antidepressant, andfurther, to focus on the early maximization of sales of MD-120, an antidepressant, and ACT541468,a therapeutic agent for insomnia;- In the cardiovascular area, to promote propagation of the value of Urece, a treatment for
hyperuricemia in gout; Also, to focus on early maximization of sales of MND-2119, a highly
purified EPA drug, by leveraging our experience as a leading manufacturer of highly purified EPA
drug;- In the field of obstetrics and gynecology, to contribute to women’s health more broadly throughthe treatment of endometriosis, adenomyosis, and dysmenorrhea with Dienogest, and continue
to be a leader in this field;- For the treatment of pulmonary arterial hypertension, which is an intractable disease, to launcha new inhalant in addition to Treprost, and promote its proper use by frequently providing
information to medical facilities;- To work on the generic drug business to focus on lines with strong business potential such as
the authorized generic drug of Dinagest and biosimilars in cooperation with MochidaPharmaceutical Sales Co., Ltd. and other business partners;- To work toward increasing the prominence of the Epadel-OTC drug as a pioneer in the
manufacture and sales of an EPA drug.
2) Biomaterials BusinessWe will promote and develop the biomaterials business based on sodium alginate.
- To launch dMD-001, an articular cartilage lesion restoration material, during the 22-24 Mediumterm Management Plan period;- To promote the development of dMD-002, a treatment for cavernous nerve injury;- To work on the development of intervertebral disc tissue restorative materials using alginate
gelation technology in the affected area;- To work on the development of tissue adhesion prevention materials for tissue resection using
alginate sheets;- To consider alginate as a pharmaceutical material.

73) Mochida Pharmaceutical Plant Co., Ltd.
Mochida Pharmaceutical Plant will continually work to maintain a stable operation, a stablesupply, and proper quality of its products, while aiming to reduce the manufacturing cost ratio.
The plant will promote contract manufacturing business of medical products with high reliability
and efficiency in response to diverse needs of our customers, using both state-of-the-art
manufacturing facilities and leading-edge technologies that meet global standards.
4) Mochida Healthcare Co., Ltd.
- To strengthen its sales capabilities by deploying sales resources and promoting sales activities
that utilize digital technology;- To strengthen marketing based on its high rate of support and popularity among dermatologists,obstetricians and gynecologists;- To work to strengthen relationships with partner companies and expand sales channels;- To aim for the continued growth of the Collage Repair series and the Collage Furfur series.
2.4. Shareholder returns
Mochida Pharmaceutical Group considers it an important management issue to continuously strive
to increase corporate value by developing business performance and to return appropriate profits
to shareholders. Our basic policy is to maintain stable dividends while enhancing internal reserves
for future business development, and we will determine dividends based on an awareness of theimportance of returning profits to shareholders according to revenues.
The business environment is expected to become more severe as mentioned above, but we intend
to maintain a dividend of at least 80 yen per share during the 22-24 Medium-term Management
Plan period.
In addition, we will flexibly respond to changes in the business environment with respect to theacquisition of treasury stock.

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2.5. Sustainability
Under its Basic Sustainability Policy, Mochida Pharmaceutical Group will continue to growsustainably as a company playing a necessary role in society, by providing value as apharmaceutical company; in other words, by “contributing to human health and well-being.” Indoing so, it will contribute to the realization of a sustainable society that will also help achieve the
SDGs.
From the perspective of the sustainable enhancement of corporate value, we have developed the22-24 Medium-term Management Plan in alignment with the Basic Sustainability Policy. We willcontinue to step up our efforts in sustainability issues and the promotion system in accordance withour basic policy.
Mochida Pharmaceutical Group Basic Sustainability Policy
Mochida Pharmaceutical Group aims to grow as a unique life and healthcare group which meets
medical and healthcare needs, gaining global recognition for its raison d’être, in accordance with its
corporate philosophy “Actively contributing to human health and well-being in the field of medicine,
totally committed to the development of innovative products.”
For the sustainable enhancement of corporate value, we will strive to provide value as apharmaceutical company “contributing to human health and well-being” under appropriate
corporate governance in accordance with the Code of Conduct of Mochida Pharmaceutical Group.
We will also contribute to the realization of a sustainable society while giving due consideration to
our impact on the global environment.

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Disclaimer
・ The information provided in this document contains some “forward-looking statements”.
These forward-looking statements are based on the judgments of the Company derived fromthe information available to us at this time, and include known and unknown risks anduncertain elements. Accordingly, the actual results may differ materially from these statements
due to a variety of factors.
・ These risks and uncertainties include general economic conditions in Japan and worldwide,such as the general situation in the industry and markets, interest rates and currency
exchange rate fluctuations. The risks and uncertainties exist in forward-looking statements
relating to products in particular. These product-related risks and uncertainties include, but are
not limited to, technological advancements, granting of patents to our competitors, completionof clinical trials, claims or concerns relating to safety or efficacy of products, acquisition of
approval from regulatory authorities, reform of health insurance systems inside and outside
Japan, trends toward the containment of health care cost, government law and regulations that
affect the Company’s business inside and outside Japan, and issues pertaining todevelopment of new products.
・ Approved products contain risks relating to manufacturing and marketing which include, but
not are limited to, situations in which the Company may face deficiencies in manufacturing
capacity needed to meet demand, difficulties in securing the supplies of raw materials, anddemand not created in markets.
・ We do not intend to, and assume no obligation to, update or modify any forward-looking
statements even if such updating or modification is desirable due to the emergence of new
information, future events or other reasons.
・ The information contained in this document regarding pharmaceutical products (including
those which are being developed) is not intended to act as a promotion or advertisement, or toprovide medical advice.

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