Nippon Shinyaku 6th Five-Year Medium-termManagement Plan (FY2019-FY2023)

Aiming for Sustainable Growth–Pursuit of Further Originality–May 15, 2019
Nippon Shinyaku Co., Ltd.
President and Representative Director
Shigenobu Maekawa

5th Five-Year Medium-term Management Plan

Aiming for New Growth–Pursuit of Originality–
ＺFinancial Results for the Term of the 5th Plan
Net sales

Operating profit(million yen)(million yen)
114,716

120,000
98,781

100,000

80,00076,517

79,991

30,000101,448
25,00020,64484,20920,00017,07915,28060,00040,00015,000

8,038

8,562

8,549

10,00020,0005,00000
FY2013

FY2014FY2015Net sales

FY2016FY2017FY2018Operating profit

Net sales and Operating profit have steadily grown during the term of the 5th Plan.
3

Numerical Target Assessment for FY2018
Targets

Results¥110,000 mil¥114,716 mil

Pharmaceuticals¥95,000 mil¥100,223 mil

Functional Food

¥15,000 mil¥14,492 mil

Operating profit¥18,000 mil¥20,644 mil

Profit attributableto owners of parent¥12,000 mil¥16,302 mil

EPS¥180

¥242

ROE

10.0%

12.5%

Net sales4Qualitative Target Assessment for the Term of the 5th Plan (1)R&D Strategy

Enhance our pipeline to launch products continuously in the areas of focus●Launched seven products including Zalutia and Uptravi●Enhanced our pipeline by concluding license agreements for six products including NS-73 and NS-32

Reduce cost and speed up R&D by building a manufacturing facility for APIs for clinical trials●Completed the manufacturing facility for APIs for clinical trials in March 2016, promptly manufactured
nucleic acid API, and sped up R&D

Marketing Strategy

Develop product groups in three areas (PAH, urology, hematology) into drivers of growth●Vidaza and Zalutia became drivers of growth with sales of more than 10 billion yen●Awareness in PAH area increased by the launch of Uptravi and Opsumit and our information
provision activities

Supply Chain Strategy

Invest in a manufacturing facility for highly active medicines and manufacture our original products●Completed the manufacturing facility for highly active medicines in July 2017 and proceeding
5with in-house manufacturing of Uptravi

Qualitative Target Assessment for the Term of the 5th Plan (2)Overseas Business Strategy

Choose the best way to expand our business according to each country’s situation●Uptravi: launched in many countries and greatly contributed to the growth●NS-065/NCNP-01: proceeded with preparations for US NDA and establishment of sales organization

Functional Food BusinessTransform functional food business into a highly profitable entity●Significantly improved the operating profit on sales of functional food business●Started supplement business and built a foundation for transformation

Human Resource Strategy

Improve recruitment and employee training (“Human resources are the base of originality”)●Introduced a flextime system for medical representatives first in the Japanesepharmaceutical industry●Hired outside personnel with a high level of expertise●Recognized under the Certified Health and Productivity Management Organization
Recognition Program (White 500)
6

Summary and Outlook for the Next Plan
¥137,482 mil¥566,227 mil

Net sales(million yen)
114,716

Operating profit &Profit attributable to owners of parent(million yen)

14,492

20,64476,517

16,302

13,172100,223
8,038

63,345FY20135,750
FY2018
Pharmaceuticals
Functional Food

FY2013Operating profit

FY2018

Profit attributable to owners of parentAiming for sustainable growthMarket Cap at the end of FY2018

6th Medium-term Management Plan

Market Cap at the end of FY2013

Establish a new basis for growth by pursuing originality
76th Five-Year Medium-term Management Plan

Aiming for Sustainable Growth–Pursuit of Further Originality–
ＺBusiness Environment around Nippon Shinyaku
Measures to promote greater use of generics
Drug price reduction to curb medical expenses

Declining birthrate
Aging population
Decrease in working population
Arrival of the era of centenarians
Diversification in work style

Diversification in modality of drugdiscovery
Progress of precision medicine
Penetration of health/preventionoriented mindset

Actions outside the existing framework are needed
for sustainable growth9Six Actions in the 6th Plan
Creation of new❶ value through R&D❸

Increase in corporate value by
strengthening ESG management

Active use of AI❺ and adoption of IT

Development of global❷ business❹

Creation of organizational
climate in which each
employee can be active

Further strengthening of❻ management base

Corporate vision: company with a meaningful
existence in healthcare
10Action ❶Creation of new value through R&DＺPharmaceutical R&D Strategy
Expand the range of drug discovery to create new value by adding new modalities
and technologies to our drug discovery platform where we created a small molecule
drug NS-304 and a nucleic acid drug NS-065/NCNP-01.
New modalities in drug discovery
e.g. gene therapy
Nucleic acid DDS technology

Small molecule
Nucleic acid
iPS cells, AI drug discovery
Increase in efficiency of small
molecule drug discovery

Pharmaceuticals
with new value

12

Products to be Launched during the Term of the 6th Plan
Products of which we aim for approval by FY2023
Original

NS-065/NCNP-01

Exon 44 skipping drug

NS-018DMD

DMD

Myelofibrosis

License-in

NS-73

in Japan and overseas

in Japan and overseas

in Japan

Veno-occlusive disease (prevention)

in Japan

ZX008

Iron deficiency anemia

PLCM

in Japanin Japan

NS-304Chronic thromboembolic pulmonary hypertension

Macitentan

in JapanIntractable epilepsy
in Japan

NS-304in JapanNS-73

Veno-occlusive disease (treatment)

NS-32

Overseas

Arteriosclerosis obliteransin Japan

NS-17

Chronic thromboembolic pulmonary hypertension

AML

Products of which we aim for approval in the near future after FY2024
NS-580NS-304

NS-87

NS-917

Endometriosis

Lumbar spinal stenosis

Secondary AML

Relapsed/refractory AML

DMD treatments other than NS-065/NCNP-01 and Exon 44 skipping drug
DMD: Duchenne muscular dystrophy
AML: Acute myeloid leukemia
13

Functional Food R&D Strategy
Continuously launch highly original new products by enhancing R&D capability

Bulk businessSupplement business

Health food ingredientsProtein preparations

Preservatives

Grasp of needs through a trusting relationship
Provision of products which meet the needs

Manufacturers

Market analysis and needs survey
Provision of new products

Consumers
14

Action ❷Development of global business
ＺGlobal Business Strategy
GlobaloriginalproductUptravi

NS-065/NCNP-01
Reinvestmentof profit

Exon skipping drug
NS-018, NS-580 etc.

Maximize product value by further
strengthening cooperation with partners

Deliver unique products to theUS and all over the world

Build an organizational structure suitable to the development of global business in
Global Business Division, US subsidiary, and all departments of R&D,
manufacture, distribution and sales

Further accelerate the expansion of our global business
16Global Business Strategy
US business・Prepare for NS-065/NCNP-01 launch, establish sales organization
・Invest in R&D of nucleic acid drugs after NS-065/NCNP-01
・Enhance product pipeline

Europe/China business・Aim for early approval of NS-065/NCNP-01
・Consider sales organization

17

Action ❸Increase in corporate value by
strengthening ESG management
ＺActions for ESG Management

ＥEnvironment

We recognize that to pass on nature’s bounty to future generations is a
mission imposed on a company which continuously practices businessactivities. We will work to reduce our impact on the environment.

Ｓ

Social

We will increase the satisfaction and diversity of our employees creating newproducts, based on the idea that patients’ and customers’ satisfaction leads tocontributions to society and ultimately to the company’s sustainable growth.

ＧGovernanceWe recognize that it is a critical management priority to be transparent andaccountable to all stakeholders. We will work non-stop to enhance
corporate governance.
19

Action ❹Creation of organizational climate inwhich each employee can be activeＺPromotion of Motivation Management“Unique products come from unique human resources”
Respect diversity and provide opportunities for each employee toproactively take on challenges and grow
Changes inworking environment
Decrease in working generation
due to declining birthrate andaging population
Increase in senior generation
Changes in work style ofchild-raising generation

Increase in caregiving
generation
Globalization of business

Growth of working generation
Active senior generation
Active child-raising and caregiving generations
Increase in productivity
Revision of personnel systems and their operation
Measures to streamline operations
by using AI and RPA
Cultivation of next-generation leaders and global
human resources
Promotion of Health and Productivity Management

Allow employees to work in diverse ways andto try various things. Create an organizational
climate in which each employee canproactively take on challenges and grow.
21

Manpower Planning・Actively recruit new graduates and mid-career workers to deal withbusiness expansion
・Increase productivity per employee using AI, IoT and RPA⇒ The number of employees at the end of FY2023 will be slightly
more than 2,000 at the end of FY2018
2,000

Slightlyover 2,000

SubsidiariesSubsidiaries

Promotion of global businessNippon Shinyaku

Nippon Shinyaku
FY2018Enhancement of R&D

FY202322

Action ❺Active use of AI and adoption of ITＺActive Use of AI and Investment in IT Adoption
ClinicalDevelopment
Drug Discovery
Research

Functional FoodBusiness

Sales

AI

Reliability
Assurance

We will accelerate launch of new products, streamline operations andincrease productivity by actively using AI, RPA and other technologies,and by promoting adoption of IT.
24

Action ❻Further strengthening ofmanagement baseＺ

Further Strengthening of Management BaseStrengthening of Management Base

Achieve Sustainable Growth

Deal with Uncertainties in Business Environment

Effective UseofManagement
Resources

RebuildingofManagement
SystemCostManagement
Increase inBusinessProfitability

266th Medium-term Management Plan
Numerical Target for FY2023
Ｚ

Numerical Targets for FY2023
Targets

CAGR¥150,000 mil

5.5%

Pharmaceuticals¥133,000 mil

5.8%

Functional Food

¥17,000 mil

3.4%

OperatingOperating Income
profit¥40,000 mil

14.2%

ProfitIncome
attributable toNet¥30,000 mil

13.0%

¥445

13.0%

Net sales

ownerstoofowners
parentattributableof the parent

EPS

ROE

10% or more throughout the term28Strengthening of Strategic Investment

R&D Investment
Human Investment

Nippon Shinyaku’s Assets
Human Resources
Knowledge

Six Actions

Information
Facilities

Experienceetc.

IT Investment
Productivity
Investment

Company with a Meaningful Existence in Healthcare

6th Medium-term Management Plan
Aiming for Sustainable Growth29

Basic Policy for Return to Shareholders
ＺPolicy for Dividends●Increase the consolidated payout ratio to around 35% and aim to raiseannual cash dividends per share by increasing EPS.
35,000

Profit attributable to owners of parent
million yen（）

200円
180円

30,000160円

25,000140円120円

20,000100円

15,00080円
60円

10,000
5,000
¥25

¥28

¥48

¥52

40円

¥70

20円

00円

FY2014FY2014
EPS: ¥85

FY2015FY2016FY2017FY2018FY2018
EPS: ¥242

FY2023

FY2023
EPS: ¥445
31

ＺNippon Shinyaku Basic Policy
Corporate Vision

Company with a meaningful existence in healthcare

Business Philosophy

Helping people lead healthier, happier lives

Credo to realize the vision(Slogan)“Build a healthier future”

Management Policy
Basic policy
to realize the vision

Guidelines for Action
Guidelines
to realize the vision

Management PlanScenario
to realize the vision

・Customers: Supply Unique and High-quality Products
・Society: Earn the Trust of Society
・Employees: Develop Each Employee

・Challenge: Meet Challenges
・Speed: Speedy Action
・Investigation: Spirit of Investigation
・Smile: Keep on Smiling
6th Five-Year Medium-term Management Plan
“Aiming for Sustainable Growth–Pursuit of Further Originality–”
33

Safe Harbor Statement
Materials and information provided during this presentation may contain so-called “forwardlooking statements.” These statements are based on current expectations, forecasts andassumptions that are subject to risks and uncertainties which could cause actual outcomes andresults to differ materially from these statements.
 Risks and uncertainties include general industry and market conditions, and general domestic
and international economic conditions such as interest rate and currency exchange fluctuations.
Risks and uncertainties particularly apply with respect to product-related forward-looking
statements. Product risks and uncertainties include, but are not limited to, technologicaladvances and patents attained by competitors; challenges inherent in new productdevelopment, including completion or failure of clinical trials; claims and concerns about productsafety and efficacy; regulatory agency’s examination, obtaining regulatory approvals; domestic
and foreign social security reforms; trends toward healthcare cost containment; andgovernmental laws and regulations affecting domestic and foreign operations.
 Also, for products that are approved, there are manufacturing and marketing risks anduncertainties, which include, but are not limited to, inability to build production capacity to meetdemand, unavailability of raw materials, and competition with others.
 The Company disclaims any intention or obligation to update or revise any forward-lookingstatements whether as a result of new information, future events or otherwise.
This English presentation was translated from the original Japanese version.
In the event of any inconsistency between the statements in the two versions, the statements in
the Japanese version shall prevail.