The Mochida Pharmaceutical Group’s “18-20 Medium Term Management Plan”
This material is an English translation of the press release issued on April 2, 2018 in Japanese,and the Japanese release is given priority regarding content and interpretation.
April 2, 2018
Dear All,
Every year, Mochida Pharmaceutical Group (Mochida Pharmaceutical Co., Ltd., TSE: 4534, 1stSection) establishes its rolling three-year plan. We are pleased to present an overview of theMedium-term Management Plan for the fiscal years 2018 through 2020
Medium-Term Management Plan Policy for the fiscal years 2018 through 2020
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 torespond to further environmental changes.
The three years from FY2018 to FY2020 are forecast to be even more challenging, given thecontinuing government policy of pharmaceutical cost reduction in the context of the need to securestable financial resources for the social security system, the further promotion of generic drugs withthe aim of raising the share of generic drug prescriptions to 80%, and the commencement of thedrastic reform of the National Health Insurance (NHI) drug price system.
The Mochida Pharmaceutical Group will intensively focus on the following three key points so theGroup can deal with all types of changes in the environment :1.Focusing on sales of new drugs, etc. by enhancing sales capabilities
2.Making continuous investments to create next-generation leading products
3.Redistributing resources strategically through the selection and focusing processes
We have reviewed the overall targeted areas of our core pharmaceutical business, which newly
includes gastroenterology, which is enhanced by Lialda®, an ulcerative colitis treatment drug, andGoofice® and AJG555, chronic constipation treatment drugs. As the top priority issue, we willconcentrate our resources on the targeted areas of cardiovascular medicine, obstetrics andgynecology, dermatology, psychiatry, and gastroenterology as well as focus on new drugs tomaximize profit. In addition, we will further promote strategic alliances which stress the importanceof partnerships.
We are pursuing investments in business activities that will lead to future competitiveness in orderto create leading next-generation products. In pharmaceutical research, we are enhancing ourdevelopment pipelines by introducing candidate drugs for development at an early stage through thepromotion of open innovation.
We will boost productivity by proceeding with selection and concentration in company-wideorganizational management, further promoting structural reform, and strengthening
interdepartmental cooperation. We will also strategically maximize the use of the Group’s finite
human, material, and financial resources, while actively seeking collaboration with externalresources at the same time.

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Aiming at specialty pharmaceuticals that will be valued globally, Mochida Pharmaceutical Group will
strive to continually increase its corporate value as a group of companies in the comprehensive
healthcare business by taking full advantage of the agility and responsiveness of a mid-sized firm.
Because of the drastic reform of the NHI drug price system and other factors, as mentioned above,the environment surrounding the pharmaceutical industry is expected to become increasingly severein the medium to long term. Against this backdrop, our profitability will temporarily decline to a certain
extent during the 18-20 Medium-Term Management Plan period, hitting the bottom in FY2018, dueto the following reasons: drug prices will be revised in FY2018, the first year of the Plan; our longstanding efforts for portfolio restructuring (shift to new drugs) have not yet been completed; and R&D
expenditure is expected to remain at a high level for future investment. However, we will aim to regain
profitability towards the final year (FY2020) and after by taking advantage of the progress of ourimplemented measures.

※Management Target Values for 2020(Consolidated):

Sales

103.0 billion yen

Operating income

8.5 billion yen

Research and development expenditures

10.0 billion yen

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1. Business Strategies
1) Pharmaceuticals
The Group will seek:To focus its resources on the targeted areas (cardiovascular medicine, obstetrics andgynecology, dermatology, psychiatry, and gastroenterology, etc.) in order to become aspecialty pharmaceutical company;

To expand our products and development pipelines by maximizing the benefits of alliances;

To build up our life cycle management to maximize values of development pipelines and

current products;
To promote customer-centered marketing and business strategies.

a) Development
The Group will seek:
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 period of this Medium-Term Management Plan for AJG555, achronic constipation treatment drug, an additional indication for the treatment of dysmenorrhea
for Dinagest (a treatment for endometriosis and adenomyosis), LBAL, a biosimilar ofadalimumab, which is a rheumatoid arthritis drug, and RGB-10, a biosimilar of teriparatide,which is an osteoporosis drug;
To promote the development of FYU-981, a treatment drug for gout and hyperuricemia, expand
the indication of Lialda®, an ulcerative colitis treatment drug, to children, and to promote thedevelopment of MD-711, an inhaled form of a treatment drug for pulmonary arterial hypertension(PAH);
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 introduction of the products in development so as to expand
the pipeline in the fields in which we specialize, including internal medicine;
To introduce and develop high value-added products which meet the needs of medical
professionals as well as customers;
To promote the introduction and development of biosimilars;
To promote the development of dMD-001, an articular cartilage lesion restoration material
created through industry-academia collaboration.
3b) Marketing
The Group will seek:
To develop medical representatives (MRs) who can capably cover all targeted areas(cardiovascularmedicine,obstetrics

andgynecology,dermatology,psychiatry,andgastroenterology), and to enhance sales capabilities through, among others, the positive use ofe-promotion;
To expand sales of Lialda®, an ulcerative colitis treatment drug, and elevate the drug to a key
product, benefiting from the cancellation of restrictions on prescription days;
To immediately maximize the sales of Goofice®, a chronic constipation treatment drug with anovel mechanism of action for which approval was obtained in January 2018;
To further increase sales of Lexapro®, an antidepressant to hold the No. 1 position in theJapanese market;
To streamline and bolster sales of Tramcet® (an analgesic for chronic pain/tooth extraction pain)
for which the framework for joint sales was changed in January 2017;
To continue to hold the top position in obstetrics and gynecology with Dinagest, a treatment
drug for endometriosis and adenomyosis, and its authorized generic drug, as well as
Frewell, a treatment drug for dysmenorrhea, and Doxil ®, an anticancer drug;
To aim at securely maintaining the prominence of Epadel, a drug for the treatment ofhyperlipidemia, in the cardiovascular area through the maximum utilization of the abundantEBM-information obtained from JELIS (the world’s first large-scale clinical trial of a highly purified
EPA drug), etc. as well as any new EBM-information and to promote overseas expansion;
To promote the appropriate use of Treprost® for the treatment of pulmonary arterial hypertension(PAH), an intractable disease, by providing medical professionals with accurate information in atimely manner based on the characteristics of the drug;
To aim to achieve future sales of more than 20 billion yen, mainly by Mochida Pharmaceutical
Sales Co., Ltd., for our generic drug business including the sales of the authorized genericdrug of Dinagest, biosimilars and generic anticancer drugs;
To work toward increasing the prominence of the Epadel-OTC drug as a leader in themanufacture and sales of EPA drugs.
c) Pharmaceutical Research
The Group will seek:
To enhance our development pipelines by introducing candidate drugs for development at an4

early stage through the promotion of open innovation.
2) Mochida Pharmaceutical Plant Co., Ltd.
Mochida Pharmaceutical Plant will promote contract manufacturing business of medical productswith high reliability and efficiency in response to diverse needs of our customers, using both stateof-the-art manufacturing facilities and leading-edge technologies that meet global standards. We will
strengthen our commitment to maintain a stable supply of our products.
3) Mochida Healthcare Co., Ltd.
Since 1970, our skincare products business has promoted itself as an expert in basic skin careproducts for sensitive skin. Our success includes Skina Babe, a baby bath oil that enjoys the top
market share, and the Collage series, a line of gentle basic skincare products. Building upon its highrate of support and popularity among dermatologists, obstetricians and gynecologists, Mochida
Healthcare will seek to expand sales of the Collage Furfur series (antimicrobial care products that
contain an antimycotic agent), etc. and consolidate their brand image through strengthened
marketing, and to further develop our market.
2. Promotion of restructuring and better awarenessMochida Pharmaceutical Group promotes structural improvement of the entire group and betterawareness by all employees of the group companies so as to eliminate every type of waste andinefficiency, and further enhance lean management style in order to respond to more difficult changes
in the business environment and to ensure continued profitable growth.
a) Innovations toward independent and collaborative business units
Business units such as pharmaceuticals, pharmaceutical research, pharmaceutical manufacturing
and skincare products are managed under the self-support accounting system with an awareness ofthe business environment of each unit and operational efficiency. In addition, the Group enhances
the liaison among the units. Headquarters will also seek to further strengthen its functions as one of
the Group’s business units so as to improve the efficiency in organizational operation and enhance
its corporate value.
b) Innovations toward boosting productivity
The Group will continue to review its personnel allocation, strategy, and utilization, from the viewpointof development and vitalization of human resources, in accordance with the restructuring of theGroup’s management system.
The Group will promote better awareness among employees and continue to assist them in theirefforts to develop competencies so as to enhance their performance. We will enhanceinterdepartmental cooperation in order to meet our target of increasing productivity by 10% throughoperational restructuring.

5Disclaimer
・ The target values contained in the Medium-term Management Plan and presented in thisdocument are not forecasts; rather they are only intended to show the directions of the goals weaim to achieve.
・ The information provided in this document contains some “forward-looking statements”. These
forward-looking statements are based on the judgments of the Company derived from theinformation available to us at this time, and include known and unknown risks and uncertain
elements. Accordingly, the actual results may differ materially from these statements due to avariety of factors.
・ These risks and uncertainties include general economic conditions in Japan and worldwide,such as general conditions in the industry and markets, interest rates and currency exchange
rate fluctuations. The risks and uncertainties exist in forward-looking statements relating toproducts in particular. These product-related risks and uncertainties include, but are not limited
to, technological advancements, granting of patents to our competitors, completion of clinical
trials, claims or concerns relating to safety or efficacy of products, acquisition of approval fromregulatory authorities, reform of health insurance systems inside and outside Japan, trends
toward the containment of health care cost, government law and regulations that affect theCompany’s business inside and outside Japan, and issues pertaining to development of newproducts.
・ 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, and demand 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 thosewhich are being developed) is not intended to act as a promotion or advertisement, or to provide
medical advice.

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