FY2021 Results Presentation Topics
Healthcare Business
May 11, 2022

Contents

1. Corporate History
2. Performance Trends

3. Priority Measuresa) Diagnosis (POCT/non-POCT clinical test reagents)b) Prevention (influenza vaccine)c) Treatment (G47Δ virus preparation for cancer treatment)
4. New Initiatives for the Next Management Plan1

1. Corporate History

Contributing to society as a specialty company dealing ina range of vaccines and test reagents
EstablishedEstablished Niigata Branch,
Tokyo Shibaura Electric Co., Ltd
Physical and Chemical Research InstituteTransitioned to becomea subsidiary of Denki Kagaku
Kogyo Kabushiki Kaisha (Denka)

Established Physical and Chemical
Research Institute Co., Ltd.

1945

1950 1951

Launched Life
Innovation Division

Company name changed toDenka Seiken Co., Ltd.

Name changed to Toshiba
Chemical Corporation

Businessintegration

1979 1982-

Pathogenic escherichia coli immune

2017
-2020

-

Vaccine production begins (1945)-

Influenza vaccine (1952)-

Moved to Toshiba Gosen Plant (1947)-

Bacteria test reagents/Shigella (1952)-

Japanese encephalitis vaccine (1954)-

Virus test reagents/Adenovirus (1966)(1994)

to the Democratic Republic of Congo-Clinical chemistry reagents (1972)-

Influenza test reagents (1999)(2017)-

Influenza HA vaccine (1972)-

Hyaluronic acid preparation (2000)-Influenza A-B Quick Seiken (2000)-

Small dense LDL-cholesterol-

COVID-19 rapid antigen test kit (2020)

measuring reagent sd-LDL (2004)-

G47Δ virus for cancer treatment (2021)

serum O157 (1985)--

Kagamida Plant begins operations

Acquisition of all shares in Germanybased Icon Genetics (2015)--

Provided Ebola virus rapid diagnostic kits

Acquisition of 33.4% of shares inTaiwan-based PlexBio (2019)

QuickNavi™-Flu (2008)22. Performance Trends

Prevention

Diagnosis

Treatment
・ Macromolecular
hyaluronic acidformulation
・ G47Δ virus
preparation forcancer treatment

・ Test reagents・ Influenza HA vaccine(Rapid antigen testkit, immune serum
reagents, etc.)

・ Adsorbed tetanus toxoid

Sales and Operating Income Trends in the Healthcare
Business (Life Innovation Division)(Sales: ¥ billions)

50

14.8

15.5

25

5.5

50.0

10.0

35.5

34.1

7.0

6.3

16

46.1

42.9

32.3

(Operating income: ¥ billions)

800
FY2017
Prevention

FY2018FY2019

Diagnostics

FY2020Treatment

FY2021Others

FY2022(Forecast)

Operating income

In FY2020 and FY2021 sales skyrocketed for COVID-19 rapid antigen test kits3

3. Priority Measuresa) Diagnosis (POCT)

POCT sales almost doubled from pre-COVID levels
despite a significant decrease when compared to FY2021
Product Lineup

POCT Sales

Sales (¥ billions)

20100
FY2018FY2019FY2020Japan

FY2021

FY2022(Forecast)

Overseas

FY2023(Estimate)

FY2024(Estimate)*POCT: Point of Care Testing. Testing performed by a medical professional in the presence of the examinee, providing shorter test times andmore familiarity with the test to the examinee, contributing to prompt and accurate medical treatment, nursing care, disease prevention, andhealth promotion, and thereby improving the quality of medical care, quality of life (QOL), and satisfaction for the examinee.
43. Priority Measuresa) Diagnosis (POCT)As a leading manufacturer, proactively adapting to rapid POCT businessenvironment changes driven by COVID-19

Market・ Overseas: Accelerating the self-test area
Supply for U.S.-based Xtrava Health, etc.
・ Domestic: Ensure timely and stable supply andmarket share (30%) by strengthening
cooperation with distributors

Production

・ Expansion of manufacturing facilities
・ Increase in total production capacity including storage
and transportation
・ Improvement in productivity through digitaltechnologies and automation⇒ Proactive investment in the Kagamida Plant

Assumptions: POCT Business Environment

COVID-19
becomes
endemic
Ease of mutation
prevents
eradication

Resurgenceof influenza
Sharp distinctionneeded between
COVID-19 andinfluenza inmedicating

Entrenchment oftesting demandlevels for domestic
medical institutions
Growing societal needsmay lead to a lifted OTC
use banOverseasmarkets expand
with the spreadof self-testing
Polarization into twomarkets: low-cost andhigh-endDevelopment

・ High sensitivity
・ Support for assessment devices (readers/apps)*OTC: Drugs that can be purchased "over the counter" at pharmacies, drugstores, etc. without a prescription*Self-testing: Testing conducted by a large organization, e.g. corporate, academic, military, rather than a medical institution

5

3. Priority Measuresa) Diagnosis (Non-POCT Clinical Test Reagents)

Achieving sales of non-POCT clinical test reagents via OEM and bulk supply
to major platformers in Europe/North America as well as players in China,
meeting growing global demand

Sales (¥ billions)

Sales of Non-POCT Clinical Test ReagentsLineup of 2,000 products
Category

20.0

Negative
impactfrom
COVID-19

CRP, FER, IgG, etc.

Detection of various
substances in blood using
antigen-antibody reaction(wide range of applications)

Clinical chemistry
2test

Cholesterol (HDL, LDL,
sd-LDL), etc.

Detection of cholesterol andother blood substances
using enzymes andchemical reactions

３ Bacteria test

Shigella, pathogenic
escherichia coli,salmonella,staphylococcus, etc.

Epidemiological studies athealth centers, etc.

4 Virus test

Measles, rubella, etc.

Antibody titer testing prior
to vaccinations, prenatal
checkups

10.0
2017

2018

2019

2020

2021

Usage

Immunoserology
1
test

15.0

2016

Main testing items

CRP: 30% global
market share

2022
2023
2024
(Forecast) (Estimate)(Estimate)*Platformers: Companies that sell their own automated analyzers and specialized reagents⇒ Mainly for automatic analyzers
Terminology
・ CRP: C-reactive protein・ FER: Ferritin, an iron-binding protein
・ IgG: Immunoglobulin

63. Priority Measuresa) Diagnosis (All Clinical Test Reagents)

Decided to increase capacity to meet growing worldwide testing demand
POCT

Increasing facility capacity by Approx: 2.5x

Clinical test reagents

Increasing production capacity by Approx: 2x(Non-POCT)

Exterior view of the new manufacturing wing ofthe Gosen Site's Kagamida Plant (illustration)

Business, production, logistics
process reform and automation
through area expansion anddigitalization

Strengthening costcompetitivenessCompletion: Second half of 2024 / Investment: Approx. ¥11 billion
Applied for the Program for Promoting Investment in Japan to Strengthen Supply Chains subsidy

7

3. Priority Measuresb) Prevention (Influenza Vaccine)(thousand doses)

Domestic supply of influenza HA vaccine(total from four companies)
Quantity
manufactured*Prepared from publicly available
data of the Ministry of Health,Labour and Welfare

Medical institutional
usage

Start of regularvaccinations
for elderly people, etc.

Suspension of regularvaccinations
QuadrivalentvaccineSupply volume significantly decreased
due to degraded productivity among
manufacturing strains and difficulties inprocuring materials from COVID-19.

Stable demandeven amid theCOVID-19
pandemic

Four companies (including Denka) support social systems by manufacturing domestic influenza vaccines

Protecting Society from Influenza

Providing More Vaccines, Faster
https://bookshelf.wisebook4.jp/html/denkawebbook/46094/#1

8

3. Priority Measuresb) Prevention (Influenza Vaccine)Significant increase in facility capacity enables faster and more stable supply
FY2022 manufacturing target: 10 million vaccines (for approximately 20 millionpeople)

・ Launched March 2022
・ Investment: Approx. ¥16 billion
Selection of manufacturing strains (Jan-Mar)

Advantage
1

Flexibly adapting to productivity fluctuations and contributing
to stable supply

Advantage
2

Increasing supply early in the vaccination season

Advantage
3

Installing state-of-the-art automation equipment⇒ Fulfillment of social responsibility⇒ Elimination of lost vaccination opportunities⇒ Productivity Improvement

Influenza Vaccine Manufacturing Timeline
Undiluted production (Mar-Sep)

World Health Organization (WHO) expert
meeting to determine recommended strains
to be used in vaccines each year
The Ministry of Health, Labour and Welfare
and the National Institute of Infectious
Diseases select strains for production basedon epidemic status, productivity of candidate
production strains, and other factors

Oct-Dec(Approx.)

Productivity evaluation of candidate strains
by four Japanese manufacturers

93. Priority Measuresc) Treatment (G47Δ Virus Preparation for Cancer Treatment)
June 2021

Daiichi Sankyo Company, Limited receives approval to manufacture and market a regenerative medicine
product for the treatment of malignant glioma in Japan under conditional and time-limited approval

October2021

Shipments begin from Denka to Daiichi Sankyo

November
2021

Daiichi Sankyo begins sales of a treatment for malignant glioma under the product name "DELYTACT®
Injection"(Drug price: Approx: ¥1.43 million/1mL per vial)→ Daiichi Sankyo-driven studies are underway for expanding its range of indications

World's first virus preparation for cancer treatment approved for malignant glioma

Even after the virus is gone,
immune cells continue to attack the cancer cells!
*DELYTACT is a registered trademark of Daiichi Sankyo Company, Limited.

103. Priority Measuresc) Treatment (G47Δ Virus Preparation for Cancer Treatment)

Developing commercial production technology by integrating fundamental
technologies cultivated in the vaccine and test reagent business
Virus mass culture andpurification technology

Virus product evaluation
and analysis technology
Drug formulation
technology

Biohazard response

GCTP management(Regulations governing the manufactureof regenerative medical products)

Genetically modifiedorganisms management(Cartagena Act compliance)

Aiming to develop a stable supply system and expand into the Contract
Development and Manufacturing Organization (CDMO) businessfor viral preparations, etc.
114. Outlook for the Next Management Plan(IntelliPlex Business Development)

IntelliPlex™ System Features (PlexBio Taiwan)•

Multiple, simultaneous

Target(PCR Product)

measurements

Diameter: 40.5 um
Thickness: 3.5 um•High sensitivity•Compatible with both

πCode™ MicroDisc

antigen/antibody (immunoassay)

Probe
Add to one well as
detection reagent

πCode™
πCode™
Detection
Reagentand genetic testing

Number of sepsis cases worldwide: 20-30 million/year
Strengthen collaboration to develop systems (reagents and instruments) for identifying
pathogenic microorganisms and conducting genetic testing for drug-resistant bacteria in sepsis~ Acquired 33.4% stake in PlexBio Co., Ltd. (2019) ~➢ Reagents◼ Contribute solutions to the global challengeof combating drug-resistant bacteria-Develop a proprietary sepsis diagnostic
reagent

File for regulatory
approval in Japan by
the end of fiscal 2022

➢ Diagnostic Instruments◼ Improve convenience in clinical settings-Produce fully automated equipment
via joint development*IntelliPlex and πCode are trademarks of PlexBio Co., Ltd.

FY2025 Launch

Fully Automated Device(Conceptual Image)12

4. Outlook for the Next Management Plan
（Growth prospects for healthcare business）

Significant growth in the "Treatment" field（Sales: ¥ billions）

10050

46.1

50.00
FY2021(Actual)Prevention

FY2022(Forecast)

FY2023

Diagnostics

FY2024FY2025Treatment

FY2026
Others13

Respecting the Dignity of Life andProtecting People's HealthCorporate Communications Dept,
Denka Co., Ltd.
TELＵＲＬ03-5290-5511
https://www.denka.co.jp/eng/