Annual Report 2020
Year Ended March 31, 2020

AboutNIPROContents

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

01

Financial/
Data Section

NIPRO Annual Report 2020

Contents

01

Contents

04

09

18

27

04

Aiming to Achieve Consolidated Salesof ¥1 Trillion in the FYE 2031.3��������������� 09

Research andDevelopment Activities���������������������������18

Financial Review����������������������������������������27

Approaches to SDGs����������������������������������11

Status of Corporate Governance��������� 22

Management Message

02

Outline of the Medium-Term
Management Plan

A Message fromthe President

About NIPROManagement Foundation

Outside Directors’ Messages���������������� 24

Businesses������������������������������������������������� 02

08

Financial Highlights��������������������������������� 03

A Message fromthe CFO

12

Board of Directors and Audit &Supervisory Board Members ���������������� 25

Review of Operations

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Consolidated Statements of Income�� 35
Consolidated Statements ofComprehensive Income������������������������� 35

Notes to Consolidated
Financial Statements������������������������������ 38
Corporate Information���������������������������� 56

Disclaimer

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Businesses
Financial Highlights

Consolidated Balance Sheets��������������� 34

Consolidated Statements ofCash Flows������������������������������������������������� 37

Medical-Related Business��������������������� 12

PharmaPackaging Business����������������� 16

About
NIPRO

Ten-Year Summary����������������������������������� 32

Consolidated Statements of
Changes in Net Assets���������������������������� 36

Pharmaceutical-Related Business������ 14

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This report contains forward-looking statements regarding business indices,
strategies and performance representing the expectations and judgments of the
management, based on information available to the Company and publishable atthe time this report was prepared. When reading this report, please understandthat forward-looking statements involve potential risks and uncertainties; actual
future business performance and forecasts may therefore differ materially fromthose contained in these statements, given the possible emergence of new
factors or changes in economic circumstances and/or the business environment.
In this report, fiscal 2020 represents the year ended March 31, 2020.

AboutNIPROContents

Businesses
Financial Highlights

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

02

Financial/
Data Section

NIPRO Annual Report 2020

About NIPRO

Businesses
We Meet the Needs ofMedical Professionals
and Patients throughOur Three Businesses
Sales ratio by business8%

Medical-Related
Business
Nipro engages globally in the development,
manufacture, and sale of medical equipment
for injection-infusion and dialysis treatment,
and products related to diabetes and cell
cultures, as well as the sale of artificial organrelated products.

PharmaceuticalRelated BusinessPharmaPackaging
Business

One of the world’s leading CDMO* companies,
Nipro performs contract manufacturing of orally
administered drugs, injectables, and external
preparations through its Pharmaceutical-Related
business, and supplies products to pharmaceuticalcompanies in Japan and around the world.

Nipro’s PharmaPackaging business, a part of thecompany since its founding, manufactures andsells glass products and other comprehensive
pharmaceutical packaging. Currently, Nipro
engages in this business globally from a base of
11 companies and 14 plants in 8 countries,
focused on Japan, China, Europe, and the U.S.

* Contract Development and Manufacturing Organization

PharmaPackaging
Business

Renal
Products

Injectables

Glass
Converting

Hospital
Products

OrallyAdministered
Drugs

Glass Tubing

Vascular
Products

External
Preparations

Devices

Fiscal 202016%

PharmaceuticalRelated BusinessNet sales

76%

Medical-Related
Business¥442,516 million

AboutNIPROContents

Businesses
Financial Highlights

Outline of theMedium-Term
Management Plan

Management
Message

Review ofOperations

Management
Foundation

03

Financial/
Data Section

NIPRO Annual Report 2020

About NIPRO

Financial Highlights
Net sales¥442,516

Operating income¥26,420

million

Net income attributable to owners of parent¥-12,281

millionmillionR&D expenses¥18,204

millionNet sales increased by 3.8% from fiscal 2019 due
to favorable Medical-Related and PharmaceuticalRelated sales.

Operating income increased by 10.9% from fiscal
2019 mainly due to growth of domestic share as wellas in foreign sales and cost reduction in production.

Net income attributable to owners of parent dropped
significantly mainly because of securities valuation
losses due to a steep decline in world share prices inreaction to the COVID-19 pandemic.

R&D expenses increased by 10.2% from fiscal
2019 mainly to due to the R&D expenses in MedicalRelated business.

(Millions of yen)

(Millions of yen)

(Millions of yen)

(Millions of yen)

366,650 359,699

395,397426,399 442,516

28,77024,20427,08823,827

26,42019,718
11,346

11,82912,136
10,26916,113

16,52620182019

18,204

11,517-12,281
2016

2017

2018

2019

2020

Capital investment

2017

2018

2019

2020

Total assets / Equity ratio¥57,865¥831,865

million(Millions of yen)

53,82656,276-7.9

millionTotal assets decreased by 1.6% from fiscal 2019 andequity ratio stood at 17.9%.
Total assets (Millions of yen)

57,865
708,882
23.4

2017

2018

2019

2020

22.1

2017

2020

¥13.5

%

Return on equity is down to -7.9% due to negative net
income attributable to owners of parent.

Nipro paid ¥13.5 per share for the year.

Net assets (Millions of yen)
(Yen)

Return on equity (%)

752,839

2016

Cash dividends per share

ROE:

Equity ratio (%)

57,7182016

Net assets / Return on equity

Total assets:

Capital investment increased by 2.8% from fiscal
2019 mainly due to investments in domestic andforeign manufacturing facilities.

49,9102016

826,44720.9

845,821 831,865

19.1

17.9

175,50711.8

176,408

6.8

183,4857.0

171,830

161,237

33.5
29.0

28.5

28.0

13.5

7.3
-7.9

2016

2017

2018

2019

2020

2016

2017

2018

2019

2020

2016

2017

2018

2019

2020

2016

2017

2018

2019

2020

Contents

About
NIPRO

Management
Message

A Message from the President
A Message from the CFO

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

04

Financial/
Data Section

NIPRO Annual Report 2020

Management Message

A Message from the President

Continuously developing products that meet user

Resultsneeds and striving to achieve the sales of ¥1 trillion
for the fiscal year ending March 2031

Net sales

Total¥442,516

million

3.8 % increase from fiscal 2019
Yoshihiko Sano

President & Representative Director

Operating income

Total

Summary for the fiscal year ended March 2020

We strived to improve the profit margin by further automating
manufacturing facilities and improving operating efficiency throughNet sales for the fiscal year ended March 2020 were ¥442,516 million,

marketing products by therapeutic units in this period. Although

an increase of 3.8% year on year, while operating profit was ¥26,420

we were affected by the National Health Insurance (NHI) drug pricemillion, an increase of 10.9% year on year. Meanwhile, net loss attributablerevision in October 2019 and strong yen against the Euro and Yuan,

to owners of parent was ¥12,281 million, a year-on-year decrease of

we could minimize the impacts of these factors by increasing¥24,417 million. This loss was attributable to the recording of a loss

the sales of dialyzers, our highly profitable product, and by contract

on devaluation of marketable securities of ¥29,892 million due tomanufacturing of drugs. As a result, the operating profit margin

the impact of the worsening market conditions of stocks caused by thewas 6.0%, showing a 0.4 points increase from the previous period, andnovel coronavirus (“COVID-19” hereafter) pandemic and extraordinary

we deduce that a certain level of percentage points was maintained.

losses including impairment loss of fixed assets of ¥5,655 million due

In terms of increased revenue, however, I think the results wereto a review of future plans in some businesses.

rather dissatisfactory compared with the past growth rate of our¥26,420

million10.9 % increase from fiscal 2019

Net loss attributable to owners of parent

Total¥12,281

millionContents

About
NIPRO

Management
Message

A Message from the President
A Message from the CFO

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

05

Financial/
Data Section

NIPRO Annual Report 2020

Management Message

A Message from the President

company, although the market was affected by COVID-19,

our presence as early as possible particularly in the US market.

which started spreading in the fourth quarter. One of theThus, we adopted the holdings system as an organizational policy.

reasons behind this belief is that we were focusing on the

We have already established regional managing companies in

COVID-19 has had an impact on our business in functions

development of new products, and aiming at growth over

Europe, China, and the US, and have been proceeding withsuch as manufacturing, purchasing, and logistics. Althoughseveral years. Also, we could not keep up with the production

the introduction of the holdings system. Under this system,

the lockdown has been lifted in the dialyzer plant in India, theof dialyzers, our main product due to the demand, and our

regional managing companies can provide the functions ofoperating speed of the assembly line is decreasing, which

promising vascular products did not show the growth that was

headquarters associated with intellectual property, finance,

may affect future sales. In addition, operations had been

initially projected.

Impact of COVID-19 on businessand laws and regulations, each business company under thesuspended for 10 days at the dialyzer plant in China in February

Therefore, the first challenge for the future is to increase

regional managing companies can conduct prompt decision

2020; however, it resumed normal operations in March.

the production of dialyzers. In this period, we started intro-

making for business, and the sales of our highly specialized

ducing three new lines at the dialyzer plant in India, which

products can be promoted.

We have seen an impact on sales in the domestic market.
In addition to the restriction of ambulatory practice and self-

will start operation from 2020 to 2021. We changed our plan

In this period, I had an impression that the business foun-

restraint on visiting doctors, some medical institutions still

for the new production line at the Hefei Plant in China after

dation of our company had been further growing based

restrict visitors. Moreover, we cannot sufficiently conductconsidering the local demand and in order to prevent country

on outcomes such as expansion of production capacity,

sales promotion of a drug that was released on to the market

risks, and are now planning to establish the new production

improvement in sales networks, and new product development.

in June 2020. In the overseas market, sales are decreasing

line at our plant in Vietnam in 2022.

We will continue these upfront investments aiming at further

primarily in Europe and India due to the decline in the production

growth in the next few years while our new products will bevolume of the Indian dialyzer plant. However, there are special

launched one after another worldwide.

procurement demands in the US for products such as artificial

Strengthening the sales of vascular products has been
another challenge. We could not provide a lineup of our strong
new products in this period. However, we are convinced thatheart-lung machines, test kits and facial masks.

our users both in Japan and overseas will understand theIn the domestic market, since we do not know when the

superiority of our products through further promotional sales

COVID-19 pandemic may end and we see some special

activities in the future. We have already achieved a certain

needs and other conflicting movements, the impacts of thedegree of success in the domestic market, but have been able

pandemic are not counted in the performance forecast for

to further increase our market share. We are now in the initial

the period ending March 2021. Conversely, in the overseas

stage of expanding our business overseas and we will establish

market, we included what has already been affected by theContents

About
NIPRO

Management
Message

A Message from the President
A Message from the CFO

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

06

Financial/
Data Section

NIPRO Annual Report 2020

Management Message

A Message from the President

lockdown, such as a decrease in the production volume anddrugs at medical settings as drugs become more sophisticated.

delay in the plan for increasing production, into the performance

Also, we have formulated a new medium-term management

forecast for the fiscal year ending March 2021, considering

plan in this fiscal year that covers five years from the fiscal

the impact on the first quarter as the base.

years ending March 2021 to March 2025 to achieve the sales
target of ¥1 trillion in the fiscal year ending March 2031.
We have established the following seven items as paths toManagement strategy and new medium-term
management plan for the fiscal year ending
March 2021

growth in the medium-term management plan, aiming toEnhancement of production capacity and new product devel-(1) Aim to be the manufacturer with No. 1 regional health-opment will continue to be the major themes in the fiscal year

maintain a sales growth rate of 7.0% or higher and achieve an
operating profit growth rate of 9.0% or higher.

drug price list in 2019 and we have been promoting its sale.
However, since we are making little profit due to the current

care contribution in the Japanese market

manufacturing costs, improvement of the manufacturing
process is a major concern. Thus, we have been striving toending March 2021. A new production line of dialyzers should(2) Top market share of dialyzers throughout the world

reduce costs including automatization of manufacturing

have started operation in the Vietnam Plant to enhance(3) Deployment of vascular products to the global market

facilities. Since regenerative medicine products have theproduction capacity. However, the plan has been delayed due

and participation in new areas in the domestic market

possibility of being applied to the treatment of various illnesses,

to the influence of COVID-19. So, we are planning to further
increase production of dialyzers at the Odate Plant in Japan.
Regarding the medical device business, we will advancethe development of vascular products. In the pharmaceutical(4) Deployment of the drug contract manufacturingbusiness to overseas markets.

the government has legislated the Sakigake Designation
Scheme and Conditional Early Approval in November 2019 as(5) Development of high-value-added products and reduction

national measures, and expectation has been increasing in Japanof manufacturing costs in the PharmaPackaging business.

and overseas. To meet this expectation, we are aiming at

business, we will increase the release of generic drugs and(6) Enhancement of cell drugs businessexpanding our business by manufacturing and selling not

strive to reduce manufacturing costs in the domestic and(7) Development of seeds of new businesses

only in Japan but also in the US and European markets inthe future.

overseas production plants. Regarding the PharmaPackaging
business, we can expect the increase in pre-fillable syringes

As for the cell drugs business, our regenerative medicine

that enable easy and safe preparation and administration of

product “STEMIRAC® for Injection” was listed in the NHIContents

About
NIPRO

Management
Message

A Message from the President
A Message from the CFO

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

07

Financial/
Data Section

NIPRO Annual Report 2020

Management Message

A Message from the President

Latin America. We established 8 centers in 4 countries including

shareholders, and thus, the commitment of the management

South Africa in this period, and we are now treating 1,332

toward medium-and long-term performance as well as

Our CSR activities are based on the “Good for everyone”

patients at 16 centers in 8 countries. We have also establishedincrease in corporate value will be further reinforced.

concept, which is part of our Code of Conduct. In other words,

23 training centers in 16 countries to provide high-quality

Although we are in the middle of an uncertain situation due

the basic concept of CSR activities is “making products frommedical care and disseminate dialysis technologies. Our goal

to the impact of COVID-19 in this period, we will continue tothe user's viewpoint, contributing to society through theis to contribute to the treatment of patients suffering fromdevelop products from the user's viewpoint, which is the basic

products and obtaining benefits for the company.” Thus, ourkidney diseases. There are many people in the world who arepolicy of our company, and steadily expand our business throughbusiness itself is a CSR activity.

still waiting for our products. In that sense, we can say that the

global promotion. We look forward to your continued support.

Our business contributes to SDGs

By developing this concept, we will greatly contribute to

global deployment of our company has only just begun.

society in the field of Quality of Life (QOL). There is no boundary

June 2020

between QOL and treatment. The major theme in medical care
is not merely prolonging life but providing a comfortable
life (extending healthy life expectancy). We will develop our

Toward enhancement of shareholder value

President & Representative Directorbusiness in the area related to improvement of QOL by using

Our goal is to achieve long-term growth as a company by

the experience and knowledge of medical and pharmaceuticalincreasing our social value. A company has no reason for

products that we have been cultivating for a long time.

existence if it does not have social value. Meanwhile, it is

These initiatives also address the focus of Sustainable
Development Goals (SDGs). I think of SDGs as the meaning of

Yoshihiko Sano

also a very important theme to share the economic value
generated from the company with shareholders.

work. Our users appreciate our efforts, all employees consider

We are planning to introduce a new performance-basedusers’ appreciation as their motivation to develop a plan andshare compensation system based on the resolution made

implement the PDCA cycle, and we achieve self-fulfillment.

during the shareholders' meeting in June 2020. In this system,

I believe this is the basis of SDGs (See page 11). This is exactly

the linkage between the compensation of internal directors

the fish philosophy that we are promoting.

and the performance and stock value of our company will

We have established and are running our dialysis centers

be more clarified. The management shared the advantages

all over the world, mainly in emerging countries such as inof rising share price and the risks of falling share price with

Contents

About
NIPRO

Management
Message

A Message from the President
A Message from the CFO

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

08

Financial/
Data Section

NIPRO Annual Report 2020

Management Message

A Message from the CFO
While improving ourfinancial soundness,
we shall steadily
implement capital
investment
to accelerate
medium- andlong-term growth

Review of the Year and Financial Targets of the New
Medium-Term Management Plan
The Company's goal is to achieve sales of ¥1 trillion by the fiscal year ending March 2031. To achieve this goal, our new medium-term management
plan sets financial targets for the fiscal year ending March 2025 from theperspectives of “profitability,” “financial soundness,” “asset efficiency,”
and “investment efficiency.”
First, regarding “profitability,” we aim to raise our operating profit margin
from 6.0% in the current fiscal year to 9.0% or higher over the next five years.
In the fiscal year ending March 31, 2021, we will negotiate raw material prices
to reduce manufacturing costs as we anticipate a decline in crude oil prices.
In addition, the novel coronavirus disease (COVID-19) pandemic will reduce
SG&A expenses such as promotional expenses and travel and transportation
costs, which will lead to improvements in the operating profit margin.
In addition, we set a target for the net interest-bearing debt/EBITDA ratio atless than 5 times to achieve “financial soundness.” Net interest-bearing debt
has been on an upward trend for the past five years through the current fiscal
year in line with increased capital investment. In the fiscal year ending
March 31, 2021, we plan to reduce net interest-bearing debt by liquidatingreceivables, asset liquidation by utilizing leases and other, funding securities,
and reducing tax costs through measures including consolidated tax payments.
The net interest-bearing debt/EBITDA ratio has also been on an upward trend
up to the current fiscal year, as the increase in net interest-bearing debt has
exceeded that of EBITDA. In the fiscal year ending March 31, 2021, we aim to lower
the net interest-bearing debt/EBITDA ratio by increasing EBITDA throughincreased operating income and reducing net interest-bearing debt.
Furthermore, we aim to improve “asset efficiency,” aiming for ROE of 14.0%
or higher. Although net income was negative for the current fiscal year due toa loss on the write-down of investment securities, we aim to achieve an ROE ofat least 8.5% by improving both sales and profit in the fiscal year ending March
31, 2021.
Lastly, we have set a goal of achieving positive free cash flow to improve“investment efficiency.” The operating cash flow for the past five years
has been around ¥40,000 million, but for the fiscal year ending March
2021, we plan to achieve ¥56,900 million and shall aim to turn cash-flow

Takehito Yogo
Chief Financial Officer

positive by maintaining or reducing investment cash flow to the same level
as the current fiscal year.

Capital Investment
Capital investment* for the current fiscal year increased 2.8% from the previous
fiscal year to ¥57,865 million. For the fiscal year ending March 31, 2021,
we plan to invest a total of ¥78,700 million in capital expenditures: ¥55,800
million, or a 132% increase, in the Medical-Related business due to investments
in large-scale facilities for regenerative medicine, ¥15,700 million in the
Pharmaceutical-Related business, ¥4,550 million in the PharmaPackaging
business, and ¥2,650 million in other businesses.
Under the new medium-term management plan, we plan to invest
aggressively in facilities to expand production capacity for medical devices
and pharmaceuticals, automate manufacturing facilities in the cell pharmaceutical business, and nurture the seeds of new businesses. Therefore,
compared to the total capital investment of ¥282,200 million over the past
five years, we plan to increase to the range of ¥300,000-350,000 million in
the five years of the new medium-term management plan.
* The amount of capital investment is based on acceptance inspection.

Dividend Policy
The Company uses the sum of 75% of consolidated net income and
25% of non-consolidated net income as the amount of profit as a basis for
dividends. For the current fiscal year, an interim dividend of ¥13.50 was paid.
However, due to the deterioration of stock market conditions caused by the
COVID-19 pandemic, we have decided not to pay a year-end dividend afterrecording an extraordinary loss on valuation of investment securities.
For the fiscal year ending March 31, 2021, we plan to return profits toshareholders by strengthening our financial position and paying stabledividends, while adhering to our dividend policy. We are forecasting anannual dividend of ¥27 per share for the fiscal year ending March 2021.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Aiming to Achieve Consolidated Sales of¥1 Trillion in the FYE 2031.3
Approaches to SDGs

Review ofOperations

Management
Foundation

09

Financial/
Data Section

NIPRO Annual Report 2020

O u t l i n e o f t h e M e d i u m - Te r m M a n a g e m e n t P l a n

Aiming to Achieve Consolidated Salesof ¥1 Trillion in the FYE 2031.3
Management Policy
Keeping up with the turbulent times, we will continue to respond to user needs, aim to become theworld's top manufacturer in terms of product competitiveness and market share, and promote local
production for local consumption globally.

Priority Tasks
1

Net sales

Average annual growth of

7.0+ %Net Debt*

Operating income

Average annual growth of

7.0+ %EBITDA

9.0+ %Net Debt/EBITDA ratio

Operating margin ratio

3 Upholding the Sanpoyoshi (Win-Win-Win for users, society, and the company) principle
4 Sharing information about each step of the Plan-Do-Check-Act (PDCA) process with all employees sothat they can manage the PDCA cycle with a sense of ownership
5 Becoming a company wherein the organization managers recognize a gap between theory andreality and can lead their staff to understand it

Enhancements

Net sales (Left)CAGR 7.0+%

6,000Operatingmargin ratio
at 9.0+% level

2,000
0

2016 2017 2018 2019 2020 2021

Challenge of becoming the No. 1 manufacturer contributing to regional healthcare in theJapanese market

Providing comprehensive medical infrastructure that connects patients, their families, hospitals, and pharmacies,
as well as offering medical equipment and pharmaceuticals that meet medical needs in the marketplace
2 Top share in the global market for dialyzers

Expanding the company's direct sales network and training centers, and accelerating the operation of our own
dialysis centers in emerging countries

Net Debt (Left)(100 M Yen)

4,000

Result

2025

10

5,000

8

4,000

6

3,000

4

4

2,000

3

2

1,000

0

0

EPS*

¥200 or higher

ROE

14.0+ %EPS (Left)

1
2025

0

Plan

Annual Dividend (Left)

150

15

Develop high-quality products for biopharmaceuticals and reduce manufacturing costs by automating the
manufacturing process

100

10

50

5

0

0

-50

-5

ROE at 14.0+%

250

-100

35.0 % (FYE 2023.3)
Maintain35.0 % (FYE 2024.3 -)Annual Dividend / Dividend Payout Ratio

20

Business expansion into surgical products, electromagnetic wave therapy products, active pharmaceuticalingredients (APIs), and pharmaceuticals in new fields

2

37.0 % (FYE 2021.3)
36.0 % (FYE 2022.3)

ROE (Right)

200

7 Development of seeds of new businesses

5

Shareholder return (dividend payout ratio*)

EPS/ROE

5 Development of high-value-added products and reduction of manufacturing costs in the

Promote manufacturing automation and expand business into the European and American markets

7
6

Result4 Deployment of the drug contract manufacturing business to overseas markets

6 Enhancement of cellular medicine business(Times)Net Debt/EBITDA ratio
less than X 5

2016 2017 2018 2019 2020 2021

Plan

(Yen)

PharmaPackaging business

Net Debt/EBITDA (Right)(100 M Yen)*N et Debt : Net interest-bearing debt

domestic market

Promote out-licensing of our GE products in the Chinese market and expand business in the US market

X5

(%)

3 Deployment of vascular products to the global market and entering new areas in the

Establishing a sales network for existing products in the U.S. market with a view to expand globally, and aiming
for a full range of products in the domestic market in the fields of cerebrovascular and arrhythmia

Less thanNet Debt / Net Debt/EBITDA

Operating margin ratio (Right)

8,000¥450,000 M Aiming for a level of ¥100,000+ M
Maintain aroundor higher

Net Sales/Operating Margin Ratio

Protecting a corporate culture that provides opportunities to motivated people

2 Making decisions from the end user's perspective is our top priority

1

KPIs for FYE 2025.3

2016 2017 2018 2019 2020 2021

Result* EPS: Earnings per share

2025

Plan

(%)

(Yen)

25

80

-10

Dividend Payout Ratio (Right)(%)

Maintain 35.0% payout
ratio from FYE 2024.3

60

50
40

40

30
20

20
0

60

10
2025 02011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

ResultPlan* The source of dividends shall be the sum of 75.0% of consolidated
profits and 25.0% of non-consolidated profits.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Aiming to Achieve Consolidated Sales of¥1 Trillion in the FYE 2031.3
Approaches to SDGs

Review ofOperations

Management
Foundation

Financial/
Data Section

10

NIPRO Annual Report 2020

O u t l i n e o f t h e M e d i u m - Te r m M a n a g e m e n t P l a n

Aiming to Achieve Consolidated Salesof ¥1 Trillion in the FYE 2031.3

Capital Investment Policy

Policy on Organization, HR Development, and IT Systems

Objectives

Overseas holdings structure

Expansion of the structure for increasing production of medical devices and pharmaceuticals
In cellular medicine business, promote manufacturing automation and expand business into theEuropean and American markets
Incubate new business seeds of surgical products, electromagnetic wave therapy products, APIs,
pharmaceuticals in new fields, etc.
Fiscal

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Medical equipment (dialyzers, catheters, etc.)¥107,100 M

Medical equipment (dialyzers, catheters, etc.)¥160,000 M

Pharmaceuticals: ¥90,300 M

Pharmaceuticals: ¥90,000 M

PharmaPackaging: ¥31,700 M

PharmaPackaging: ¥30,000 M

Cellular medicine

Sapporo Plant: ¥9,600 M

Sapporo Plant and additional manufacturing
facilities: ¥30,000 M

Incubation ofbusiness seeds

Production Technology Center, laboratories, etc.:¥43,500 M

Production Technology Center, laboratories, etc.:¥10,000 M

ResultPlan

Renewal ofexisting facilities

5-year results for
FYE 2016.3 through FYE 2020.3

5-year guidelines fromFYE 2021.3

EBITDA¥293,200 M

EBITDA

Aiming for ¥400,000–450,000 M

Capital investment*¥282,200 M

Capital investment*¥300,000–350,000 M range

Free cash flows¥-86,900 M

Free cash flows

Return to profit* The amount of capital investment is based on acceptance inspection

⦁ Establish holdings in Europe, China, and the U.S. to realize business management by regional
headquarters, and matrix management aimed at rapid business decision-making by each
operating company
⦁ Centralize compliance, financial, and tax management
⦁ Improve knowledge accumulation and efficiency by consolidating indirect divisions
⦁ New business incubation

Human resources development
⦁ Nurturing training in the medical field to foster a sense of value that enables us to always think andact from the user's viewpoint.
⦁ Introduction of the FISH philosophy, which aims to revitalize the workplace and encourage employees
to thrive in their work, and promote employee motivation
⦁ Follow-up training for younger employees, training for different levels of qualifications, and othernecessary training for each stage of employees
⦁ Focus on the development of global human resources through selective language training,in-house language classes, and a self-development support system for languages
⦁ Aim to create a workplace where each employee can maximize their abilities regardless of race,
nationality, gender, or age; conduct seminars to promote women's activities; and organize
exchange meetings to build networks among international employees
⦁ Establish a company-wide education and training system to raise compliance awareness⦁ Considering the physical and mental health of each employee, the "Nipro Health Declaration" wasissued in September 2018, and anti-smoking measures, mental health measures, work-stylereforms, and workplace revitalization activities have been promoted

IT systems
⦁ Review system functions to support management efficiently and expeditiously⦁ Enhance security against cyber-attacks, such as unauthorized remittance, information leaks bytargeted attacks, and ransomware
⦁ Develop an information infrastructure realizing a work style not confined by time and place,
improving labor productivity and employee satisfaction

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Aiming to Achieve Consolidated Sales of¥1 Trillion in the FYE 2031.3
Approaches to SDGs

Review ofOperations

Management
Foundation

11

Financial/
Data Section

NIPRO Annual Report 2020

O u t l i n e o f t h e M e d i u m - Te r m M a n a g e m e n t P l a n

Approaches to SDGs

Social issues that we aim to solve through our business
Providing treatment to patientsin remote areas with limitedaccess⦁ In emerging countries, such as in Latin America, dialysis clinics have been set up in suburban areas to provide dialysis treatment topatients living in remote areas, where it is more convenient for them to receive dialysis treatment.
⦁ In Southeast Asia and Africa, dialysis clinics have been set up in urban areas to provide patients with high-quality treatment.

Preventing medical accidents at
medical institutions

⦁ The company sells safety products to prevent medical accidents while using medical equipment.
⦁ They include winged needles that prevent needlestick accidents, colored syringes that can be distinguished by color to prevent mix-ups,
and pre-fillable syringes and kit preparations that reduce the risk of foreign matter contamination, bacterial contamination, andneedlestick accidents.

Providing safe and secure
medicines for all⦁ The company promotes products that can be used without difficulty, regardless of age or disability.
⦁ A range of products are offered that enable those with visual difficulties to identify tablets, to write down medication instructions andmedication dates, and to prepare PTP sheets for patients with reduced dexterity.

Dealing with new infections

⦁ The company sells products that are in high demand worldwide when new infectious diseases, such as COVID-19, become rampant.
⦁ Surgical masks, medical rubber gloves, tubes and other consumables, blood collection tubes, and disinfectants are stocked.

Stable supply of antimicrobial
agents that are in short supply⦁ We continue to manufacture and market antimicrobials, although they are unprofitable and there are concerns about the supply of APIs.
⦁ As a precaution against the future supply of APIs, we are developing some of them in-house.

Providing a medical environment
for patients who are remote ordifficult to access⦁ The company sells a cloud-based monitoring system (Nipro Heart Line™) that uses ICT to provide real-time information on patients, evenin remote locations.
⦁ The system enables patients with chronic diseases to receive regular and continuous medical care, sharing vital information in real time, andsending alerts when abnormal values are detected to remotely check the patient's condition.

Enhancing the labor productivityof healthcare professionals

⦁ The company sells the HN LINE™, which solves business problems by linking medical device information with electronic medical records.
⦁ The company hopes to support the reduction of labor, efficiency of nursing operations in hospitals, and work-style reforms ofhealthcare professionals.

Minimizing the environmental
impact of waste⦁ The heat generated when industrial waste in the manufacturing process is burned in incinerators is reused to generate electricity and hot
water, and the company also emphasizes reducing the volume of industrial waste.
⦁ We promote a paperless office by digitizing internal documents and eliminating meeting materials to reduce the use of paper and other materials.

Promoting efficient use ofnatural resources

⦁ To reduce the global environmental impact, the company promotes the introduction of solar power generation at its plants as part of energy
conservation efforts.
⦁ At Nipro Thailand, a solar power generation system was introduced in 2018 and the electricity generated is used for medical
device manufacturing.

Providing rewarding work
opportunities for all⦁ Training for women in supervisory positions and above is conducted so that they can build a career design with strategies for their work and lives.
⦁ For international students who have received job offers to seamlessly join the company, exchange meetings are held for the purpose of
networking with senior international employees prior to joining.

Related SDG

AboutNIPROContents

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Medical-Related BusinessPharmaceutical-Related BusinessPharmaPackaging Business

Management
Foundation

12

Financial/
Data Section

NIPRO Annual Report 2020

Review of Operations

Medical-Related Business
Financial Results for Fiscal 2020

Net sales

Total¥335,767 million

Strategy and Outlook for Fiscal 2021

In terms of the domestic sales of medical devices, the sales of renal
products such as dialyzers and dialysis machines significantly
increased, and the sales of consumables such as SafeTouch®
infusion systems and winged needles also increased. Among
pharmaceutical products, bepotastine and dexmedetomidinehydrochloride injection, Point products for additional indications,and leuprorelin, a high-value-added product, sold well. On theother hand, as a result of declining purchases due to the NHI drug
price revision in October 2019 and medical care restrictions dueto the effects of the coronavirus disease (COVID-19), overall sales
grew only slightly.
In terms of overseas sales, dialyzers and dialysis machines
sold well among NIPRO brand products. However, the sales of
OEM products decreased due to the sluggish special needle
business in Europe.
As a result, this segment’s net sales were ¥335,767 million, anannual increase of 2.6%, and operating profit was ¥36,249 million,an annual decrease of 1.3%.

Sales ratio by region
Overseas

Japan

42.3%

57.7%

Others8.2%
Nipro Brand
Generic
products
Surgicalproducts

1.0%

Diabetic
products

2.8%

Inspection
products

2.9%

26.7%

Net sales

Renal
Products

Fiscal 2020

Vascularproducts

8.1%

36.0%

300,117(Millions of yen)

327,359 335,767

Operating income
36,522

36,722(Millions of yen)

36,249

9.5%

4.8%

POINT

Dexmedetomidine hydrochloride injection
acquired the domestic top share of about 44%
The brand-name drug was actively switched at university andflagship hospitals after the expansion of indications for thedexmedetomidine hydrochloride injection, and thus, we achieved
expansion of our market share. We acquired approximately 44% of
the market share, the highest in Japan, in the fiscal year ended
March 2020.

Injection
Products

Infusion
Products

The results for the fiscal year ending March 2021 are expected tobe ¥358,300 million in net sales (a 6.7% increase year on year)and ¥39,000 million in operating profit (a 7.6% increase year onyear), respectively.
In terms of domestic sales of medical devices, we will strengthen
sales of vascular products and SD products in addition to renal
products, mainly dialyzers. In terms of pharmaceutical products,
since the Ministry of Health, Labour and Welfare promotes
switching from brand-name drugs to generic drugs, demand is
expected to continuously increase.
For overseas sales, we will continue active sales promotion
in various countries and continuously strengthen the sales ofour key products including dialyzers and dialysis machines.
In addition to promoting the establishment of our own dialysis
center in each country, we will continue to promote the establishment of training centers as places for developing medical
technicians, whose numbers remain insufficient. We will expand
our products and establish a sales system in the U.S. to promote
the overseas deployment of vascular products.
However, sales are expected to decrease in emerging
nations owing to the impact of COVID-19 causing a reduction in
production and restriction on distribution.

2018

2019

2020

2018

2019

2020

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Medical-Related BusinessPharmaceutical-Related BusinessPharmaPackaging Business

Management
Foundation

13

Financial/
Data Section

NIPRO Annual Report 2020

Review of Operations

Medical-Related Business

TOPICS

Impact of COVID-19 pandemic on Dialysis BusinessAmong overseas production bases, Chinese and Indian plants temporarily stopped operations
due to the current global COVID-19 pandemic after the declaration of a state of emergency.
However, we secured human resources and raw materials and continued production activities
at other bases through negotiations and with permission of government agencies in eachcountry. In terms of sales, the sales volume of dialyzers is expected to decrease in regions withfragile medical and social infrastructure. However, the annual sales volume of dialyzers in theentire overseas sales is expected to increase by 970,000 units to 64.45 million units, which is anincrease of 1.5% from the current period.

Expansion of our own dialysis centers/training centers
In this period, we established our own dialysis centers in South Africa, Guatemala, Ecuador,and India. We also established a new training center in Chile.
We will continue to establish our own dialysis centers in Latin America, India, Asia, and Africa
to provide high-quality treatment worldwide. Moreover, we will promote the establishment oftraining centers that serve as a place for developing medical technicians.
Our

16 dialysis centers in 8 countries (Patients: 1,332)

25 training centers in 18 countries
Training center

Plan to increase production of
dialyzers in Vietnam Plant
A dialyzer production line originally planned to beconstructed at the Hefei Plant in China will be
constructed at the Vietnam Plant in consideration of
the local demand and prevention of country-relatedrisks. We are planning to start operation in the period
ending March 2023, and subsequently, we will introduce the production line sequentially.

US

GuatemalaCooperation
with Davita

Peru

Center: 1

South Africa
In December last year, we took over the dialysate production business from Dimesol, a manufacturerof dialysate in the U.S., and acquired H&S Technical Service Inc., which provides a maintenanceservice for dialysis machines, in January this year. This enabled us to establish a comprehensive
service system for launching dialysis machines that acquired marketing approval from the U.S. Foodand Drug Administration (FDA) in July last year and to further expand the sales of renal products suchas dialyzers.

EcuadorCenter: 5

Chile

Dialyzer plant in Vietnam

Business expansion in the U.S.

Center: 4Center: 1

ThailandCenter: 2

Center: 1

As of March 31, 2020

Bangladesh
EuropeCooperation with
-Diaverum-B Braun-KfH

Center: 1

India

Center: 1

Our own dialysis center(Quito, Ecuador)

Our own dialysis center(Escuintla, Guatemala)AboutNIPROContents

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Medical-Related BusinessPharmaceutical-Related BusinessPharmaPackaging Business

Management
Foundation

14

Financial/
Data Section

NIPRO Annual Report 2020

Review of Operations

Pharmaceutical-Related Business
Financial Results for Fiscal 2020
The contract manufacturing division steadily increased the salesof generic drugs as the supply of active pharmaceutical ingredientsfrom China started to recover. In addition, a robust increase inorders for brand-name drugs and long-term listed drugs also
contributed to the sales growth.
With regard to the pharmaceutical manufacturing division, an
improvement of manufacturing efficiency at the Hida Plant of
Nipro Pharma Corporation (operation started in April 2019) as
well as operation commencement at the two sites of the Saitama
Plant of Nipro Pharma Corporation resulted in increased revenue
and profit. Point Furthermore, it was also the significant factor for
the increased sales and profits that contract manufacturingservices of the Vietnam Plant started in the previous period havereached the full scale.
As a result, net sales and operating profit of this segment
were ¥70,357 million (a 10.8% increase year on year) and ¥13,196
million (a 23.7% increase year on year), respectively.

Net sales

Total¥70,357 million

Supply records

Injectables

OrallyAdministered
Drugs

External
Preparations

Ampoules (Glass / Plastics) Tablets
Vials (Powder / Liquid /Lyophilized products)

Tapes (solvent type)Pre-filled syringes (PFS®)

Net sales

(Millions of yen)

Operating income

Tapes (hotmelt type)

160 million units

400

million capsules

Dual chamber bags (PLW®) Granules, Dry syrups

63,482

13,196
11,428

10,662390 million sheets

Liquid-liquid dualchamber bags

SyrupsOintments, Creams

460
thousand bottles(converted to 10g-sheet
units)

16.3 million tubes(converted to 10g-tube
units)In this period, we achieved an increase in the production
volumes of all products manufactured by our Nipro Group incomparison with the previous period, and it was particularly
remarkable in the production for drug formulations of finegranules, granules, powder, and dry syrup, showing a 157%
increase year on year. The Hida Plant of Nipro Pharma Corporation
greatly contributed to the results, taking advantage of its
high-variety low-volume production.

Drug formulations

Poultices

610 tons

Increase in production
volumes of all products fromthe previous period

Changes in production volumes of Nipro Group products

580 million sheets

33 million units
4 million units

60,080(Millions of yen)

14.8 billion tablets 120 million sheets
CapsulesWith regard to the financial results of this segment in the fiscal
2020 ending March 2021, the net sales and operating profit are
expected to be ¥72,250 million (a 2,7% year-on-year increase)and ¥11,000 million (a 16.6% year-on-year increase), respectively.
In the contract manufacturing division, a stable increase is
expected mainly in the sales of generic drugs.
Meanwhile, in the pharmaceutical manufacturing division, atentative decrease in the operating profit margin is expected
due to an increase in depreciation cost by starting the depreciation of the new facilities for injectable drugs as well as anincrease in labor cost by enhancing production volumes at
the Odate Plant. However, sales and the operating profit margin
are expected to improve in the medium- to long-term throughproduction capacity expansion resulting from the constructionof new production facilities and system enhancement toincrease production volumes.

POINT(May 2020)

70,357700 million units

Strategy and Outlook for Fiscal 2021

2018

2019

2020

2018

2019

2020

* From the fiscal year ended March 31, 2019, the Company has conducted a reorganization forthe purpose of doing synthetic PharmaPackaging business and increasing synergies with
Pharmaceutical-Related business. As a result of this reorganization, some business divisions
included in Pharmaceutical-Related business were changed to PharmaPackaging business.
The presentations for the prior fiscal year and two years ago are restated.

AmpoulesVials
Bags (excl. infusion bags)
Syringes
Tablets/capsules
Fine granules, granules,
powder, dry syrup

Change in production volume(Fiscal 2019 - 2020)(Fiscal 2020 - 2021*)
121%
120%
112%
124%
102%
113%
113%
112%
117%
100%
157%

113%
* : Expected

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Medical-Related BusinessPharmaceutical-Related BusinessPharmaPackaging Business

Management
Foundation

15

Financial/
Data Section

NIPRO Annual Report 2020

Review of Operations

Pharmaceutical-Related Business

TOPICS
System enhancement to increase production capacities
of manufacturing sites for injectable products
Ise Plant, Nipro Pharma Corporation
A production line for small-volume vial formulations isbeing introduced in the Ise Plant, Nipro Pharma Corporation.
The process validation production* was started in
March 2020, which was followed by the installation of alyophilizer in April. We will commence the operation of
the lyophilizer from April 2021. The annual production
capacity will be 29 million vials for liquid preparations
New facility for pre-filled syringe lines to be
and 2.3 million vials for lyophilized preparations.
constructed
In addition, the construction of a new facility for
pre-filled syringe lines was started in February 2020; production equipment will be installed inJune 2021 and the operation will start in February 2023. We plan to introduce two lines withannual production capacities of 59 million syringes for 1 - 3mL syringes and 55 million syringes
for 5mL and 10mL syringes.
* Process validation production: A pilot production to assure and establish documented evidence for the continuous production of the products
which meet predetermined specifications and quality.

Odate Plant, Nipro Pharma Corporation
An additional pre-filled syringe line is under installation at
the Odate Plant, Nipro Pharma Corporation. With the new
20mL pre-filled syringe line for which a high operating
rate is expected, we will be able to deconcentrate theproduction of pre-filled syringe formulations andthereby enhance their stable supply. The installation of
the manufacturing line will start in August 2020, andwe will commence its operation in February 2021.

System enhancement to increase production capacity
at plants for oral drugs
Kagamiishi Plant,
Nipro Pharma Corporation
We started to construct a new granulation facility at the Kagamiishi
Plant, Nipro Pharma Corporation, to implement a 200kg granulation
process and accordingly increase the production capacity andrealize cost reductions. The operation was started in June 2020and pilot production is now underway.

Manufacturing line of new granulation facility

Saitama Site,
Nipro Pharma Corporation
As a core plant next to the Kagamiishi Plant, the Saitama Site of
Nipro Pharma Corporation has a production capacity of 1.4
billion tablets for oral drugs, where pilot production has been
conducted since May 2020.

Fluidized-bed granulator (Annual
granulation volume planned: 400
million tablets)

Kishiwada Plant of Zensei
Pharmaceutical Co., Ltd.

20mL pre-filled syringe line (image)Construction of a new facility is aimed at strengthening thecontract manufacturing system at the Kishiwada Plant of Zensei
Pharmaceutical Co., Ltd., which will make it possible to expand
the production function for investigational drugs, improve thequality control capability, and enhance BCP-related activities.
The facility is scheduled to be completed in April 2022.

New facility to be constructed in April
2022 (image)AboutNIPROContents

Outline of theMedium-Term
Management Plan

Management
Message

Review ofOperations

Medical-Related BusinessPharmaceutical-Related BusinessPharmaPackaging Business

Management
Foundation

16

Financial/
Data Section

NIPRO Annual Report 2020

Review of Operations

PharmaPackaging Business
Financial Results for Fiscal 2020

Net sales

Total¥36,217 million

Sales ratio by region

Japan

29.9%

3.7%

Sales of rubber stoppers (commercially produced at the Biwako
Plant) and medical devices (e.g. administration kits, syringes,etc.) were strong in the domestic market. Sales of vials, which had
been affected by delays in delivery due to customers’ circumstances,
experienced a trend toward recovery.
Overseas, we have witnessed steady increased demand inglass tubing, leading to a sales boost of glass tubing in France,
the U.S. and India. In our German plant, the development sales ofsterilized syringes accelerated. A major vaccine manufacturer in
China adopted our global standard pharmaceutical containers
and we began making deliveries. Point From the financial point ofview, profits fell due to higher expenses for regular maintenanceof glass tubing furnaces at our plants in France and China, andstartup costs for the commercial manufacturing of rubber
stoppers at the Biwako Plant.
As a result, net sales in this sector increased by 1.9% from theprevious fiscal year, to ¥36,217 million, while operating income
decreased by 13% from the previous fiscal year, to ¥675 million.

Net sales

India

China

10.0%

Strategy and Outlook for Fiscal 2021

(Millions of yen)

35,526

Operating income (Millions of yen)
778

36,217675

28,404

Americas22.3%

The transition toward global
standard glass packaging

POINT

The Chinese market is promoting the re-assessment ofcontainers for injectable drugs under Quality Consistency
Evaluation for Generic Drugs by the government, whichcame into effect in October 2017. As a result, the demand
for global-standard glass pharmaceutical packaging is
expected to triple over the next decade, from 5,600 million
products in 2020 to 16,000 million by 2030.
Global products

Global products

5,600 million pcs. 16,000 million pcs.

367

Fiscal 2020

For the fiscal year ending March 2021, net sales are expected to
expand by 8.5% to ¥39,300 million compared to the current
term, and operating income is expected to rise by 107.4%, to¥1,400 million.
In terms of domestic sales, we shall strengthen sales of vials,
rubber stoppers, and device products. Regarding overseas sales,
we expect to increase sales of vials and sterilized syringes in
Europe and the U.S., as well as high-value-added global standard
products in China. With surging demand for vaccine containers,
especially for COVID-19 vaccines, we shall work to provide astable supply structure to meet the demand. In addition, we shallcontinue to push for the automation of production and optimize
production efficiency at our manufacturing sites to reduce costs
and improve profitability.

Europe

34.1%
2018

2019

2020

2018

2019

2020

* F rom the fiscal year ended March 31, 2019, the Company has conducted a reorganization for the purpose of doing synthetic PharmaPackaging business and increasing
synergies with Pharmaceutical-Related business. As a result of this reorganization,some business divisions included in Pharmaceutical-Related business were changed
to PharmaPackaging business. The presentations for the prior fiscal year and two
years ago are restated.

2020

2030

Source: Internal forecast

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Medical-Related BusinessPharmaceutical-Related BusinessPharmaPackaging Business

Management
Foundation

17

Financial/
Data Section

NIPRO Annual Report 2020

Review of Operations

PharmaPackaging Business

TOPICS
Product strategy overview
The basic strategy of the business is to provide one-stop-shop
solutions for products ranging from glass tubing to pharmaceutical packaging and drug reconstitution and administration
devices. We are working to develop premium pharmaceuticalpackaging products that meet the demand for higher quality
drugs (biopharmaceuticals, etc.). We are also working to improve
quality by applying automation in our manufacturing process tocope with the demand for premium products in growing markets
such as China, and as a result reducing manufacturing costs.
Moreover, we provide drug reconstitution and administration
devices which are highly convenient to use in combination with
our primary pharmaceutical packaging products. We are currently
developing a nasal spray device, addressing the needs for theend-user and patient in terms of easiness and gentleness.

Nipro ships the first batch of vials for a
COVID-19 vaccine
Nipro has shipped the first batch of vials for a COVID-19
vaccine. In support of pharmaceutical companies,
healthcare professionals, and patients, we increase
and accelerate supply wherever possible.

Vials
Vials accounted for 48% of the market composition of containers for injectable drugs as of 2018.
Injection will stay one of the dominant routes of administration for pipeline drugs, and vials are
expected to remain the most popular choice of packaging, especially in the wake of the COVID-19 crisis,
where the percentage of vials in the total market has seen a spike.
Amid these market conditions, we strive to strengthen the sales of high-value-added vials.
Our proprietary product VIALEX™ allows for the stable storage of pharmaceuticals without any
coating of the inner surfaces of the vials. With its limited pH shift, minimum delamination, and reductionof extractables, it is highly expected to be used for high quality biopharmaceuticals.

VIALEX™

Syringes
The glass syringes market is expected to experience the largest growth among various typesof containers.
In line with this development, we are building a supply system to expand sales of our own brandsterilized syringes D2F™.
Sterilized syringes D2F™ are washed, sterilized, and supplied as ready-to-use products for users'
filling lines. Syringes are assembled into nests and tubs, and EtO sterilized to provide simplicity
and efficiency on filling lines. Due to its easy application for users in laboratories and medical institutions, we are expecting increasing demand for D2F™ in the future.
* E tO sterilization: A method of sterilizing microorganisms with ethylene oxide gas. As it can be processed at relatively low temperatures, it
can be used for materials that are not heat resistant.

D2F
Direct To Fill

D2F™ sterilized syringes

Drug reconstitution and administration devices
Drug reconstitution and administration devices allow for quick, easy preparation and administration of
medicines at home, at one’s bedside, in an ambulance, the emergency room, etc. They also eliminate
safety risks (e.g., contamination and exposure faced by healthcare professionals and patients) and help
to prevent medical errors (e.g., needle sticks injuries), thereby improving the quality of care and reducing
overall cost.
Nasal spray pre-fillable syringes

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Research and Development Activities
Status of Corporate GovernanceOutside Directors’ Messages
Board of Directors and Audit & Supervisory Board Members

18

Financial/
Data Section

NIPRO Annual Report 2020

Management Foundation

Research andDevelopment Activities

4 Sapporo-Shi, Hokkaido

Contributing to Innovation in Medical Care throughOriginal Technologies and Ideas

1

2

3

Saitama
2 Kasukabe-shi,
Kawagoe-shi, Saitama

Kusatsu-Shi, Shiga

Nipro has seven research and development sites, centered on the Research andDevelopment Institute and Pharmaceutical Research Laboratories in Japan and theUnited States. We continually address the needs and issues of medical professionals
and patients as we work to develop and provide high-value-added products.

5

6

7

Seto-Shi, Aichi

California, USA

Massachusetts, USA

2 Pharmaceutical

6 AVANTEC VASCULAR

Number of employees

Number of employees

Research Laboratories

1 Research andDevelopment Institute

168

27

Research theme
⦁ Injection products⦁ Oral solids
⦁ Medical supplies for external application
⦁ Cancer drugs and biosimilars
⦁ High-performance medical containers

Research theme
⦁ Hemorrhagic & ischemic
stroke therapies
⦁ Vascular retrieval system
⦁ Endovascular/peripheral embolization
⦁ CTO catheterization technologies
⦁ Specialty coronary catheters
⦁ Vascular access technologies
⦁ Orthopedic & spinal access

Number of employees

209

Research theme
⦁ Cellular and regenerative medicine
products
⦁ Orthopedic surgery-related products⦁ Dialysis-related and general
medical devices
⦁ Circulatory organ- and interventionrelated products⦁ Artificial organs
⦁ Test and diagnosis-related products
⦁ High-performance medical containers⦁ Medical glass products
Status of industry-academia collaboration
Implementation of research aimed at thejoint development and early realizationof new products, in collaboration with
universities and research institutions
throughout the world.

CORPORATION

3 Production Technology

CenterNumber of employees

55

Research theme
The establishment of new production
technology and the design developmentof equipment to increase production, which
are for the enhancement of productivity.

4 Regenerative

5 Goodman Medical

Number of employees

Number of employees

Medicine R&D Center

Innovation Center

98

73

Research theme
Manufacturing equipment and consumables
for the realization of regenerative medicine
using autologous bone marrow cells forstrokes and spinal cord injuries.

Research theme
⦁ Catheters and accessories for cardiac
and circulatory organ inspection andtherapy⦁ Catheters and stents for cerebral bloodvessel therapy
⦁ Vascular access catheters

Status of industry-academia
collaboration
Conclusion of collaboration research
agreement concerning strokes and spinal
cord injuries, and license agreement on
regenerative medicine patents with
Sapporo Medical University.

Status of industry-academia
collaboration
⦁ Performance of physician-led clinical
trials with the National Cerebral andCardiovascular Center.
⦁ Implementation of research incollaboration with Hiroshima University.

7 Infraredx, Inc.
Number of employees

66

Research theme
⦁ IVUS + NIRS Intravascular Imaging
⦁ Thin cap algorithm
⦁ IVUS auto-detection software
Status of industry-academia
collaboration
⦁ University of Pennsylvania

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Research and Development Activities
Status of Corporate GovernanceOutside Directors’ Messages
Board of Directors and Audit & Supervisory Board Members

Financial/
Data Section

19

NIPRO Annual Report 2020

Management Foundation

Research andDevelopment Activities

In the NIPRO group, we are promoting the research and development (R&D) activities of medical devices and pharmaceuticaldrugs at the NIPRO Life Science Site in Minami-Kusatsu, Shiga.
In the Medical-Related business, we concluded a five-year
joint research agreement with the University of Tokyo Hospitalin March 2019 and named the establishment “the University ofTokyo and NIPRO Research and Development Center”. We aresharing the entire 13th floor, measuring 2,278 m2 (15 rooms), of
inpatient ward building B on the premises of the University ofTokyo, where our researchers are “developing innovative medical
technologies and devices for the next generation.” We advertised
for themes—which were then reviewed by the committee—
adopted numerous development projects, and concluded joint
research contracts for each project.
We will continue to proceed with our R&D projects with various
experts to develop items and services that will contribute as
businesses of the next generation.
In addition, the iMEP, a medical training facility, has alreadyaccepted more than 90,000 users since its establishment 6 years
ago. Last year, for the first time, students from the local juniorhigh school were provided with the experience of medical training.
We hope that through this experience they will support us as
NIPRO fans in the future.
In the Pharmaceutical-Related business, we have beendeveloping high-quality generic drugs targeting brand-namedrugs in all disease areas and dosage forms to meet the needsof reducing drug costs and improving the quality of medicalcare. We are also focusing on the development of value-added
products, such as easy-to-take orally disintegrating tablets forpatients and easy-to-handle kit formulations for medical staff.
The total amount of R&D expenses in the fiscal year underreview was ¥18,204 million.

The R&D activities for each segment are as follows:1

Medical-Related Business

The following R&D activities are conducted mainly by the Research and Development center.

Division of General-Purpose Medical Devices
We have launched “IP echo” and “Puncture guide kit”—portable vascular puncture echo that enables the safe and easy
peripheral puncture of the central venous catheter. The IP echo was awarded the Good Design Award in the fiscal year
under review.
In addition, we have launched “EASI-PON,” a device to prevent erroneous insertion of the nasal catheter into thetrachea and to assist introduction into the esophagus, and “Touchless,” a syringe dispensing cap, which allows blood
to be safely collected into a blood collection tube without removing an injection needle.

Division of Circulatory and Interventional Products
We have started a clinical study for the regulatory application of an in-company developed “drug-eluting stent”
frequently used in percutaneous coronary intervention (PCI). This stent has a particular number of crowns and a weaklink structure that no other companies have provided; furthermore, it has better conformability and fracture resistanceto the vessels of flexion lesions or bifurcation lesions than existing products. We are fulfilling the wishes of a deceased
doctor, our co-developer.
Furthermore, last year we launched “Guide Plus II,” a penetration catheter for the coronary artery. We have obtained
the top market share due to its superior crossability and high credibility of resistance to damage even in complex lesions,as compared with products of other companies. We will further improve the product, increase size variety, and expand theoverseas market since other companies have started to enter the market.
We have completed the development of a tapered PTA balloon catheter for a new approach in the treatment of chronic
thromboembolic pulmonary hypertension (CTEPH). We have also developed and will launch, in Japan, the first disposable
forceps for full endoscopic lumbar dissection (FELD), a minimally invasive treatment in the field of orthopedics, as a device
applying the interventional device technology to other fields.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Research and Development Activities
Status of Corporate GovernanceOutside Directors’ Messages
Board of Directors and Audit & Supervisory Board Members

Financial/
Data Section

20

NIPRO Annual Report 2020

Management Foundation

Research andDevelopment Activities

Division of Artificial Organs
We completed a clinical trial aiming at the long-term use of a centrifugal blood pumpwith hydrodynamic bearings for 30 days and are now proceeding with the regulatory
application work toward the launch.
Additionally, we launched cannulas for performing extracorporeal circulation by
inserting and placing them percutaneously into the blood vessel, with three sizes
each for blood removal and blood transmission. The tip of the part for insertion issmooth enough to reduce the risk of vascular injury compared to the products ofother companies.
It is mainly used for long-lasting hemofiltration in patients with acute renal failure,
and we have launched a continuous hemofiltration device in which the performancestability and biocompatibility of the ATA membrane meets the needs in clinicalsettings. We have also launched a needleless connection system (SafeTouch Plug fordialysis) and an antiseptic cotton for disinfection of catheters and puncture sites,“Almenderful™," as devices to be used together with vascular access catheters.

Division of Diagnostics and Inspections
The production of a second-generation diagnostic agent for drug-resistant tuberculosis(genetic testing) was started in Thailand, and cost reduction was achieved so that
we can respond to overseas bidding. We plan to expand our business mainly indeveloping countries. We are developing a hemostatic device using cationic cellulose
for quick hemostasis and will launch it soon. Hemostasis is sometimes difficult after
removal of a thick needle for dialysis.
We have also launched Multileaf® which can test different parameters with a dropof blood.

Division of Functional Pharmaceutical Containers
We solved various problems of the old alimentation bag, which had been on themarket for about 30 years, and launched “Alime Bag α.” We changed the infusion
set connection from a membrane tube to a rubber plug to prevent leakage even if
the infusion bottle needle comes off, and launched Three Tock, which is compatible

with specific vials; thus, Three Tock drugs can be safely and easily prepared for
CSL Behring.
We also launched the “container for endoscopic therapy,” which delivers the support
used for transporting NEOVEIL (absorbable tissue reinforcement) in a container to theaffected area and places it on the affected area after ESD. To cope with the flow rateaccuracy of pre-fillable syringes (1.0 mL/min ± 3.0%), we launched dexmedetomidine
injection 200 μg, for which the cause of non-conformity of the flow rate accuracy wasinvestigated and the countermeasures examined. We launched a new half kit designed
to prevent clogging of a needle hole for specific antibiotics by improving the drug vials
with a small diameter aluminum part so that it can be used without an adapter. We also
adjusted the thickness of the bottle body in the new half kit to improve drainage.

Division of Surgical Devices
We continued the industry-academia collaboration course with the “Course of handsurgery” at Nagoya University, which has been conducting joint research through thetrial of nerve regeneration-inducing tubes and carrying out joint development. We arealso jointly researching artificial bones with faster regeneration than the conventional
product using “octacalcium phosphate (OCP),” a new material, with Tohoku University
and preparing for a clinical trial.
These orthopedic products are being developed in cooperation with NexMed
International Co., Ltd., our group company. Also, Machida Endoscope Co., Ltd., which
joined our group two years ago, has improved the existing endoscope products,
developed new products, and is currently developing videoscopes for launch.

Division of Cell Drugs
We have commercialized “Plastic Pasteur,” a Pasteur Pipette made of resin so that it isless likely to crack than glass and its round tip does not damage cells, and the “Culture
Bag for Adhesion,” which can efficiently culture adhesive cells represented by ES/iPS
cells and mesenchymal stem cells in a closed environment.

AboutNIPROContents

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Research and Development Activities
Status of Corporate GovernanceOutside Directors’ Messages
Board of Directors and Audit & Supervisory Board Members

21

Financial/
Data Section

NIPRO Annual Report 2020

Management Foundation

Research andDevelopment Activities

Division of Clinical Trial/Regulatory Application
All devices requiring clinical trials are high-value-added products and contribute toour sales and profits. Clinical trials are planned and implemented inside the company,
and thus we suppress the increase in expenses compared to outsourcing. They also
contribute to product development and regulatory strategy planning through theaccumulation of know-how.

extended release product) for treating prostatic cancer and premenopausal breast
cancer (original: LEUPLIN® by Takeda Pharmaceutical Co., Ltd.). We are focusing on
and developing such challenging sustained release preparations, as well as others.
In the fiscal year under review, we obtained marketing approval for one genericproduct of a vial product.

Oral Drugs
Division of Medical Training
iMEP in Belgium has provided training mainly on our dialysis products and contributed
to medical safety through the proper use of medical devices. We sent one staff
member from Japanese iMEP to improve the utilization rate and thus further advanced
the approach to medical organizations. Since iMEP in Thailand is scheduled to begin
operations this year, their staff members came to Japan and are fully working forthe establishment and improvement of medical training. We appreciate suchcooperation to actively promote iMEP activities in these three countries (Japan,
Belgium, and Thailand).
Expenses related to R&D in this business segment were ¥9,726 million.

2

PharmaceuticalRelated Business

The Pharmaceutical Research Laboratories of our company mainly conduct thefollowing research and development activities.

Injectable Drugs
In addition to ordinary vial and bag products, we are actively pursuing the developmentof kit formulations designed for convenience in clinical practice. We have alreadylaunched dual chamber pre-fillable syringes for leuprorelin acetate (one-month

We are developing extended release drugs in addition to ordinary oral drugs (e.g.,tablets, granules). Meanwhile, in order to enhance efficiency in clinical practice,
we also provide technically unique products, such as tablets printed with thename of active ingredients, and more useful packages, such as individual packages
and aluminum pillows.
In this fiscal year, three compounds in eight generic drugs were launched. Moreover, we obtained marketing approval for seven compounds in 12 generic products.

Drugs for external use
We are currently developing several generic drugs, such as patches.
Microneedles, characterized by the novel concept of a “transdermal injectabledrug” are also under development. New production lines for investigational drugs
have already been constructed.

Biosimilars
While the biopharmaceutical market is rapidly expanding in Japan, National Health
Insurance (NHI) prices for biopharmaceuticals are generally high, and thus the needfor biosimilars with much lower price is increasing from the perspective of healthcare
cost reduction. Based on such circumstances, we have partnered with a biologicaldrug substances company that has comparable quality and price-competitiveness inbrand drugs, and aim to develop in-company biosimilars.
Expenses related to R&D in this business segment were ¥8,478 million.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Research and Development Activities
Status of Corporate GovernanceOutside Directors’ Messages
Board of Directors and Audit & Supervisory Board Members

22

Financial/
Data Section

NIPRO Annual Report 2020

Management Foundation

Status of Corporate Governance1

Corporate Governance System(1) Corporate Governance System and Reasons for Adoption
Nipro Corporation has an established corporate governance system including organizations for the
Meeting of Shareholders and directors as required under the Companies Act, in addition to a Board of
Directors, Audit & Supervisory Board Members, Audit & Supervisory Board and an Accounting Auditor.
Nipro has also established internal committees such as the Operational Risk Management Committee.
This committee continuously maintains close coordination with external parties such as the company
attorney, to enable effective monitoring and supervision of the efficiency and propriety of operations
across the Company as a whole.
(2) Internal Control Systems
Nipro strives to make business units the foundation of its internal control system for the Nipro Group asa whole. Nipro’s directors and Audit & Supervisory Board Members, as well as representatives of eachof the major companies of the Group, hold a Group management meeting on a monthly basis. Thesemeetings are used to report on the progress of business activities, decide key operating matters, anddeliberate on pending matters. To build awareness of compliance with laws, regulations and corporate
ethics among executives and employees, Nipro has established the “Nipro Code of Practice,” and has
thoroughly informed everyone in the company.
(3) Risk Management System
Nipro has established risk management regulations and a system for managing business and otherspecific risks. Their purpose is to recognize and capture risks that could have a material impact on
business operations, in an appropriate and comprehensive manner. Nipro has also established an
Operational Risk Management Committee to ensure cross-sectional management across all Group
companies. The committee endeavors to further strengthen risk management systems to prevent,
avoid and learn from risks and crises. Nipro has also established a Sanction Committee, chaired by
the President, which endeavors to ensure sound business management through the appropriate
handling of sanctions. Nipro produced a Disaster Prevention and Crisis Management Handbook anddistributed it to each employee within the Nipro Group. Nipro tries hard to keep employees fully
informed about taking calm and appropriate action when faced with disasters and about reassessing
and renewing business continuity plans as appropriate. In addition, to strengthen our rollout ofcompliance training and enhance our risk management system, Nipro established a Compliance
Section within its General Affairs Department, and is working to ensure awareness of complianceamong employees.

(4) Basic Structure of Corporate Governance and Risk Management

Meeting of Shareholders
Election

Accounting
Auditor(Auditors)
Board of Auditors(Directors)
Board of Directors

Committees[Decision-making]Accounting
Audit

Supervision of
Directors’
execution of duties

Operational
Audit

President

Third Party(i.e., lawyer,
accountant)

Director withresponsibility
for operation

Operational Risk
Management
Committee

Division General Manager, Operating Officer,
Manager, Assistant Manager
Conceptual Diagram of Corporate Governance(5) Business Continuity Planning (BCP)
At workplaces in Japan, we are improving our systems for disaster preparation and smooth continuityof business in the face of risks such as outbreaks of new types of influenza and large-scale natural
disasters, including major (around magnitude 6) earthquakes originating in the Nankai
Trough. At overseas workplaces, we are also preparing for risks including war, civil war, riots, terrorism,
anti-Japanese demonstrations, and strikes.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Research and Development Activities
Status of Corporate GovernanceOutside Directors’ Messages
Board of Directors and Audit & Supervisory Board Members

23

Financial/
Data Section

NIPRO Annual Report 2020

Management Foundation

Status of Corporate Governance

2 Internal and Statutory Auditing(1) Internal Auditing
Nipro has established the Internal Audit Division, consisting of the Audit Office and the Overseas Audit
Office, and conducts audits of accounting and other operations based on internal audit protocols.
(2) Statutory Auditing
For each statutory audit, Audit & Supervisory Board Members attend key meetings such as
those of the Board of Directors, in accordance with the auditing policy and roles determinedby the Audit & Supervisory Board. Audit & Supervisory Board Members receive performance
reports from directors and employees, and are able to request further explanation when necessary,and inspect key documents. Audit & Supervisory Board Members also undertake other auditing duties
such as investigating the state of operations and assets in key places of business. Audit & Supervisoryboard meetings are held regularly, or as necessary, in order to exchange views and hold discussions.

3 Outside Directors and Outside Audit & Supervisory Board Members(1) Outside Directors and Outside Audit & Supervisory Board Members
Two of the directors are Outside Directors and two of the three Audit & Supervisory Board Members are
Outside Audit & Supervisory Board Members. The two Outside Directors and one of the Outside Audit &Supervisory Board Members have been designated as independent directors/Audit & Supervisory
Board Members, and the Tokyo Stock Exchange has been notified of their designation.
(2) Policy and Criteria for Independence from the Filing Company in the Election of Outside Directors
and Outside Audit & Supervisory Board Members
Nipro determines the criteria for the independence of Outside Directors and Outside Audit & Supervisory
Board Members as a part of separate corporate governance guidelines taking into consideration theprovisions stipulated under the Financial Instruments and Exchange Act. In the event that either casedoes not fall within the scope of this criteria, Outside Directors and Outside Audit & Supervisory Board
Members are deemed to be independent from the Company and that there is no possibility of a conflictof interest with general shareholders.
(3) Approach to the Election of Outside Directors and Outside Audit & Supervisory Board Members
Close coordination with the Internal Directors and the full-time Audit & Supervisory Board Members,
employees of the Audit Office and assigned staff from the management section of the head office(as needed) ensures sufficient cover to implement the supervision and the audit function and role as
required by the current corporate governance system.

(4) Mutual Collaboration between Outside Audits and Internal, Statutory and Accounting Audits, andthe Relationship between Internal Control Divisions
The Outside Directors attend meetings of the Board of Directors and supervise our management basedon their extensive knowledge and management experience from an independent standpoint. The Outside Audit & Supervisory Board Members carry out auditing activities including attending key meetings
such as meetings of the Board of Directors in accordance with the audit policy and roles determined by
the Audit & Supervisory Board. They are able to access reports via the full-time Audit & Supervisory
Board Members or directly from directors and employees, and inspect key documents. The Outside
Audit & Supervisory Board Members also attend periodic or occasional meetings of the Audit & Supervisory Board to contribute to discussions and exchange opinions from an objective and independent
viewpoint. The Outside Audit & Supervisory Board Members strive to facilitate a smooth audit service
through close collaboration with employees of the Audit Office, the full-time Audit & Supervisory Board
Members, Audit & Supervisory Board Members of subsidiaries and the accounting auditor.

4 Accounting Audits
Name of Accounting Auditor: Hibiki Audit Corporation
Names of Certified Public Accountants conducting the Audit:
Kazuhiro Bando, Miho Ishihara, Takanori Nakasuka

Support Staff for Audits:
Certified Public Accountants: 19
Other Staff: 2

Remuneration paid to Directors and Audit & Supervisory Board Members
Millions of yen
Total amount of
remuneration

Total amount of remuneration by type
Annualremuneration

Retirement
benefits

Bonus

Number of eligible
corporate officers

206

—

49

28

Internal Audit & Supervisory Board Members

7

7

—

—

1

Outside Directors, Outside Audit &Supervisory Board Members

16

16

—

—

4

Internal Directors

¥

256

¥

¥

Thousands of U.S. dollars
Total amount of
remuneration

Total amount of remuneration by type
Annualremuneration

Retirement
benefits

Bonus

Number of eligible
corporate officers

1,893

—

Internal Audit & Supervisory Board Members

64

64

—

—

1

Outside Directors, Outside Audit &Supervisory Board Members

147

147

—

—

4

Internal Directors

$

2,352

$

$

450

28

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Research and Development Activities
Status of Corporate GovernanceOutside Directors’ Messages
Board of Directors and Audit & Supervisory Board Members

24

Financial/
Data Section

NIPRO Annual Report 2020

Management Foundation

Outside Directors’ Messages
Activating discussions among theBoard of Directors
I have been an outside director of Nipro for six years. During this time,
I have been trying to reflect honest opinions on society and mainly giving
my suggestions on management, with my experience accumulated as apharmacist at medical institutions and being involved in medical
consulting work. When I started working as an outside director, I was notfamiliar with areas other than medicine, my specialty. However, afterparticipating in various conferences on medical device-related businessincluding the Domestic Division, I am now able to understand the
Yoshiko Tanaka
problems in more depth. Outside directors can freely listen to the voices
Outside Director
inside the company, and such corporate culture is the strength of thegovernance of Nipro.
However, there is an issue regarding the Board of Directors. Since all the directors report theirown business operations, we do not have enough time to discuss important management issues.
There are 28 directors at present, which I find to be too many. To ensure sufficient discussion ofimportant themes, the number of directors should be about 10. In addition, I think few directors lookat overall management. I think reducing the number of directors and increasing discussions onimportant themes will strengthen directors’ awareness as managers and enable decision-making
looking at overall management.
Nipro introduced the operating officer system in May 2020, which is the beginning of
establishing a system that enables rapid decision-making for the management. As a result of thisorganizational change, 10 operating officers were newly appointed. However, in the future, thenumber of directors will be reduced, and authority will be transferred to the operating officers.
What is important here is not to simply reduce the number of directors but to separate management
and execution. This will make it easier for directors to cooperate across departments and activatedeliberations on strategies and new businesses. The Board of Directors is required to deeply
understand the business and have an objective viewpoint. I think that a slim organization allows
speedy decision-making after active discussions.
Furthermore, I have not sufficiently discussed the future direction of the company to achieve
the long-term goal of Nipro, that is, sales of ¥1 trillion for the fiscal term ending March 2031.
Discussions among the Board of Directors are important. In addition, we need to discuss priorities
for the optimization of the entire company and to which projects we should allocate the limited
resources, by establishing a training camp for directors, for example. In addition to such discussions,
it will be important to provide opportunities to have cross-departmental discussions by manager
and section manager classes. I will also contribute to this goal by making the most of my experience
as an outside director and proposing objective opinions based on a deep understanding of Nipro’s
business. Please look forward to our future growth.

The role of the Board of Directors in enhancing
corporate value
Nipro has been developing various products based on its management
philosophy of supporting the health of people worldwide and providing
products that meet their medical needs. In recent years, Nipro has opened
its own dialysis centers, mainly in developing countries, to provide
medical care to an even greater number of people. Therefore, Nipro’s
business activities can be said to offer high social value.
The premise of creating social value is to provide products genuinely
needed by patients. Drawing on my experience as a nursing manager in a
Minako Oomizu
medical institution, I advise Nipro on its product development and sales
Outside Director
strategies from a user perspective. Further, I deliver many lectures on
Fish Philosophy at Nipro Group Companies; Fish Philosophy, which has
been in use for some time now, is a sound source of thinking and motivates employees.
While it is great to see Nipro's high-social-value businesses expanding globally, the risks
involved in business expansion necessitate adequate risk management. Therefore, I believe that itis the role of the outside directors to distinguish risks to be taken from those to be avoided andsupport the management’s proactive decisions when necessary. In addition, the diverse andvigorous exchange of ideas at the Board of Directors’ meetings is essential to enhance corporate
value in the future. Currently, Nipro’s Board of Directors includes two female directors, which may
not be diverse enough in terms of gender composition. However, I believe that differences inthinking based on position and experience are more important than gender diversity, and in that
respect, I see diversity on Nipro’s Board of Directors. With the introduction of the operating officer
system in May 2020, I expect governance to evolve in terms of the authority that will be delegatedto the heads of each business area with extremely high levels of expertise and the discussions thatwill be held at the board meetings.
Moving forward, Nipro must continue to develop highly specialized human resources regardlessof age, work in close cooperation with them, and introduce new products and services to the worldcontinuously, to enhance social and economic value further. For the future development of Nipro,
I believe it is important to create an environment in which the opinions of younger employees arereflected in the management of the company, in conjunction with the top-down approach. As an
outside director, I would like to contribute to the company by proactively offering opinions from thesocietal and user viewpoints.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Research and Development Activities
Status of Corporate GovernanceOutside Directors’ Messages
Board of Directors and Audit & Supervisory Board Members

25

Financial/
Data Section

NIPRO Annual Report 2020

Management Foundation

Board of Directors and Audit &Supervisory Board Members
As o f Ju n e 26, 2020

Minako Oomizu

Yoshiko Tanaka

Kenichi Nishida

Yasushi Oyama

Takehito Yogo

Outside Director

Outside Director

Managing Director

Managing Director

Managing Director

Tsuyoshi Yamazaki

Kyoetsu Kobayashi

Kiyotaka Yoshioka

Yoshihiko Sano

Toshiaki Masuda

Kimihito Minoura

Kazuhiko SanoManaging Director

Managing Director

Managing Director

President & Representative Director

Managing Director

Managing Director

Managing Director

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Research and Development Activities
Status of Corporate GovernanceOutside Directors’ Messages
Board of Directors and Audit & Supervisory Board Members

Financial/
Data Section

26

NIPRO Annual Report 2020

Management Foundation

Board of Directors and Audit &Supervisory Board Members
As o f Ju n e 26, 2020

President & Representative Director
Yoshihiko SanoManaging Directors
Kiyotaka Yoshioka

Kazuhiko Sano

Domestic Division

Toshiaki Masuda

Construction & Engineering Headquarters;
Production Technology Development Division;
Production Technology Center; Deputy
General Manager, Global Production Division

Medical Technology Division for Planning,
Development & Marketing; Research &Development Center

Kenichi Nishida

Kyoetsu Kobayashi

Pharmaceutical Division; Pharmaceutical
Development Promotion Department

Global Production Division; Odate Plant

Yasushi Oyama

Kimihito Minoura

Vascular Division; Vascular Product Sales
and Development Headquarters

Division of Regenerative and Advanced
Therapy; New Business Development
Headquarters

Takehito Yogo

Tsuyoshi Yamazaki
Global Business Division; PharmaPackaging
Division

Corporate Planning Headquarters(Chief Financial Officer)

Directors

Outside Directors

Mitsutaka Ueda

Hiroshi Sudoh

Yoshiko Tanaka

Minako Oomizu

Deputy General Manager Medical
Technology Division for Planning,
Development & Marketing

Medical Technology Division for Planning,
Development & Marketing; Product
Planning Headquarters

May 1983: General Manager, Drug
Department, Tokushukai
Medical Corporation, Osaka
Headquarters

Yozo Sawada

Hiroshi Yoshida

Jun. 1997:

Intellectual Property Department

Medical Technology Division for Planning,
Development & Marketing; Enzyme Center;Research & Development Center;
Department III; LFR Business Office

Apr. 2008: Director of Nursing Department,
and Vice-Director, Jikei
University Hospital
Apr. 2010: Director, Office of Human
Resources Management and
Education, Wakokai Medical
Association
Jun. 2015: Appointed Director, Nipro
Corporation (to present)

Hideto Nakamura
General Affairs / Human Resources
Headquarters

Yasushi Kutsukawa
Domestic Division; Medical Sales & Marketing
Headquarters; Business Strategy Office

Masayuki Ito
Surgical Devices Division; Medical Technology
Division for Planning, Development &Marketing; Domestic Product Development
and Technical Sales Headquarters

Masanobu Iwasa

Akio Shirasu
Medical Technology Division for Planning,
Development & Marketing; Research &Development Center; Research Management
Department; Research & Development
Institute for Artificial Organs

Global Production Division; Quality
Assurance Department

Toshiya Kai
Pharmaceutical Division; Pharmaceutical
Research Laboratories

Itsuo Akasaki

Goichi Miyazumi

Toyoshi Yoshida
Quality Assurance & Regulatory
Compliance Headquarters

Kenju Fujita
Domestic Division; Pharmaceutical Sales &Marketing Headquarters; Deputy General
Manager, Business Strategy OfficeJun. 2002: President and Representative
Director, MEDY HOPE
Corporation (to present)
Jun. 2014: Appointed Director, Nipro
Corporation (to present)

Kouki Hatakeyama

PharmaPackaging Division

PharmaPackaging Division; Sales &Marketing Headquarters

General Manager, Planning andManagement
Department, and General
Manager, Drug Department,
Tokushukai Medical Corporation, Osaka Headquarters

Audit & Supervisory Board Member (Full-time)
Takayuki Nomiya

Deputy Division Manager Global Business
Division

Kaname Sadahiro
Medical Technology Division for Planning,
Development & Marketing; Global ProductDevelopment and Sales Headquarters;
Dialysis and Blood Purification ProductDevelopment and Sales Department

Audit & Supervisory Board Members (Outside)
Kazumichi Irie
Masayoshi Hasegawa

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

27

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

NIPRO Annual Report 2020

Financial/Data Section

Financial Review
Overview

Selling, General and Administrative Expenses

During the consolidated fiscal year under review, sales increased

Selling, general and administrative expenses increased by 0.9%

due to strong performance by the Medical-Related business,compared with the previous fiscal year to ¥107,791 million

which includes dialysis-related product sales in Japan and over-(US$990.4 million). This was mainly due to an increase of depreciationseas, and the Pharmaceutical-Related business, in which Nipro

expenses and research and development expenses.

(Years ended March 31)

Net sales

(Millions of yen)

366,650 359,699

395,397426,399 442,516

has one of the largest contract manufacturing structures in Japan.
Although operating profit was up due to growth of the Medical-

Operating Income

Related business and cost reduction efforts, the company recorded

As a result of the aforementioned factors, operating income

a substantial net loss because of securities valuation losses due toincreased by 10.9% compared with the previous fiscal year toa steep decline in world share prices in reaction to the COVID-19¥26,420 million (US$242.7 million). The operating profit margin

pandemic and impairment of fixed assets of subsidiaries whose

increased by 0.4% to 6.0%.

performance had deteriorated.

2016

2017

2018

2019

Operating income

2020(Millions of yen)

Other Income (Expenses)
Consolidated Business Results

Other expenses came to ¥36,579 million (US$336.1 million), which

Relevant quantitative data for the period under review have beenis ¥33,985 million lower compared with other expenses in theconverted at the rate of US$1.00 ¥108.83 (the rate of exchange asprevious fiscal year. One major factor in other expenses was anof March 31, 2020).

exchange loss of ¥2,999 million (US$27.5 million), compared to a

28,77024,20427,08823,827

26,420loss of ¥1,121 million in the previous fiscal year.
Net Sales
Net sales for the current term were ¥442,516 million (US$4,066.1

Loss before income taxes

million), an increase of 3.8% from the previous fiscal year.

As a result of the factors outlined above, loss before income taxes
is ¥10,158 million (US$93.3 million), compared to ¥21,233 million in

Cost of Sales

As a result, gross profit increased by 2.7% compared with theprevious fiscal year to ¥134,211 million (US$1,233.2 million).

2017

2018

2019

Income before income taxes

2020(Millions of yen)

the previous fiscal year.

Cost of sales increased by 4.2% compared with the previous fiscal
year to ¥308,304 million (US$2,832.8 million).

2016

Income Taxes

26,284

Income taxes, including deferred taxes, decreased by 84.7%,

18,324

17,02620172018

21,233compared with the previous fiscal year to ¥1,433 million (US$13.1
million). Income taxes decreased mainly due to securities valuation
losses mostly caused by a steep decline in world share prices in
2016

2019

-10,158
2020

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

28

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

NIPRO Annual Report 2020

Financial/Data Section

Financial Review
reaction to the COVID-19 pandemic and impairment of fixedAsia

assets of subsidiaries whose performance had deteriorated.

In Asia, net sales increased by 12.2% compared with the previous
fiscal year to ¥37,766 million (US$347.0 million) mainly thanks to

Net Income Attributable to Non-controlling Interests

the increase of sales in the Medical-Related business.

(Years ended March 31)

 et income attributable toNowners of parent
19,718Net income attributable to non-controlling interests amounted to¥689 million (US$6.3 million).

(Millions of yen)

11,346

11,82912,136

2017

2018

2019

Financial Position
Total assets decreased by ¥13,956 million year on year to ¥831,865

Net Loss Attributable to Owners of Parent

million (US$7,643.7 million). Current assets decreased by ¥9,923

Net loss attributable to owners of parent was ¥12,281 million

million and noncurrent assets decreased by ¥4,033 million.

(US$112.8 million), compared to net income attributable to owners

The main reason for decrease in current asset is ¥33,513 millionof parent of ¥12,136 million in the previous fiscal year. Basic earnings

decrease in cash and cash equivalents. The main reason for

per share decreased to ¥-75.3 (US$-0.7) from ¥73.6 in the previous

decrease in noncurrent asset is ¥22,073 million decrease in Invest-

fiscal year. Return on equity decreased to -7.9% from 7.3% for thement securities.

previous fiscal year.

Total liabilities decreased by ¥3,363 million year on year to¥670,627 million (US$6,162.2 million). Current liabilities increased

Net Sales by Geographic Segment
Japan
In Japan, net sales increased by 2.6% compared with the previous
fiscal year to ¥267,708 million (US$2,459.8 million) mainly thanks to
the increase of sales in the Pharmaceutical-Related business.
Americas

Capital investment

49,91053,826-12,281
2020(Millions of yen)

57,71856,27657,865

2018

2019

2020

by ¥15,127 million and long-term liabilities decreased by ¥18,489 million.
The main reason for the increase in current liabilities was a¥25,000 million increase in current portion of convertible bond.
The main reason for the decrease in long-term liabilities was¥25,000 million increase in current portion of convertible bond.
Total net assets decreased by ¥10,593 million year on year

In the Americas, net sales increased by 7.2% compared with theto ¥161,237 million (US$1,481.5 million). Shareholders' equity

previous fiscal year to ¥64,153 million (US$589.4 million) mainly

decreased by ¥15,947 million and accumulated other comprehensive

thanks to the increase of sales in the Medical-Related business.

2016

income increased by ¥3,242 million.

2016

2017

Total assets

708,882(Millions of yen)

752,839

826,447

845,821 831,865

As a result, the equity ratio decreased by 1.2 percentage points
Europecompared with the end of the previous fiscal year, to 17.9%.

In Europe, net sales decreased by 0.5% compared with the previous
fiscal year to ¥50,801 million (US$466.7 million).

2016

2017

2018

2019

2020

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

29

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

NIPRO Annual Report 2020

Financial/Data Section

Financial Review
Cash Flow

Risk Factors

Net cash provided by operating activities amounted to ¥37,246 million

The following are risks that may have an effect on the Nipro group’s(US$342.2 million). The major cash inflows were net income andoperational results and/or financial condition. The items concerned

depreciation and amortization. Net cash used in investing activities

were determined as of March 31, 2020.

(Years ended March 31)

Net assets

(Millions of yen)

175,507

176,408

183,485

2016

2017

2018

171,830

came to ¥58,272 million (US$535.4 million). The major cash outflow
was for purchases of property, plant and equipment. Net cash used

161,237(1) Risks Related to Product Safety

in financing amounted to ¥4,566 million (US$41.9 million). The major

Nipro group brings all of its capabilities to bear in ensuring

cash inflow was proceeds from long-term loans. As a result, cash andproduct safety in the design, development and manufac-

cash equivalents stood at ¥90,154 million (US$828.3 million) as ofturing of medical devices and pharmaceutical products.

March 31, 2020.

There are still the risks, however, that accidental defects

2019

2020

or adverse effects could result in damages to a third party
Staff

and our being sued for liability.

The total number of employees as of the end of the period was

To cover these risks, we therefore maintain general liability

32,786, compared to 29,235 at the end of the previous fiscal year.

and product liability insurance. In the unlikely event of a successful

The number of employees in Japan was 8,718, compared to 8,275 at

claim in excess of the insurance coverage, however, there could

the end of the previous fiscal year.

be a material adverse effect on our operational results and/or

The number of employees outside Japan was 24,068, compared

Basic earnings per share

(yen)

116.2
67.5

71.1

73.6

2017

2018

2019

financial condition.

to 21,050 at the end of the previous fiscal year.
(2) Risks Related to Supplier Concentration
Basic Policy on Distribution of Profit

Nipro group procures materials and parts for its operations

Nipro pays dividends to shareholders by positioning the returnfrom a large number of suppliers. Some key materials or partsof profits as an important management policy. Retained earnings

may be obtained only from a single supplier or a limited groupare actively invested in the research and development division,of suppliers. If circumstances at any of these suppliers make itin addition to the sales division and production division, as a part of

impossible for us to acquire a sufficient quantity of materials or

efforts to expand the business base and promote long-term businessparts to meet our production needs in a timely and cost-effective

development. Through these means, we ensure stable profits andmanner, there could be a material adverse effect on our operational

achieve continued growth.

results and/or financial condition.

2016

Number of employees

24.2

2016

-75.3
2020

(Thousand)

27.4

28.3

29.3

2017

2018

2019

32.8

2020

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

30

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

NIPRO Annual Report 2020

Financial/Data Section

Financial Review(3) Risks Related to Changes in Government Healthcare Policies(6) Risks Related to Overseas Expansion

The business sector to which Nipro group belongs is intimately

Nipro group maintains manufacturing bases and sales offices

connected with the healthcare system and is subject to thearound the world for the production and supply of its products.

regulations laid out by government organizations, including theShould there be unexpected revisions to legal regulations or

National Health Insurance System and the Pharmaceutical andpolitical or economic changes in these countries or regions,

Medical Devices Act formerly known as Pharmaceutical Affairs

there could be a material adverse effect on our operational

Law. Should circumstances arise in which we were unable toresults and/or financial condition.

(Years ended March 31)

Equity ratio
23.4

(%)

22.1

20.9

19.1

17.9

2019

2020

respond to changes in the environment brought about by
unforeseeable wholesale changes in government healthcare(7) Risks Related to Intellectual Property

policies, there could be a material adverse effect on our opera-

Nipro group owns numerous patents and trademarks, and main-

tional results and/or financial condition.

tains various proprietary rights for the products it manufactures.
Additionally, we take all possible measures to avoid infringing the(4) Risks Related to Changes in Sale Prices

2016

2017

2018

Return on assets(%)

patents and proprietary rights of any third party, and to avoid

The products sold by Nipro group include some that are affected

breaching any license agreements we have concluded concerning

on an irregular two-year basis by price reductions under thetechnologies. Nevertheless, if an unanticipated claim for damages

Japanese payment system for medical care, drug prices andwere to be made by a third party and the defense of the groupreimbursement prices for medical materials and supplies.

were to be rejected, there could be a material adverse effect on

Moreover, should measures to hold down medical costs also

its operational results and/or financial condition.

2.8
1.6

1.5

1.5

2017

2018

2019

become pervasive worldwide, resulting in intensified competition
between corporations and leading to prices falling to a greater(8) Risks Related to Environmental Regulations

degree than anticipated, there could be a material adverse

Nipro group believes it has taken adequate precautions toeffect on our operational results and/or financial condition.

comply with applicable regulations in the course of its business

2016

-1.5
2020

Return on equity

(%)

activities. Should our activities cause an unforeseen environ(5) Risks Related to Changes in Prices of Raw Materials

mental problem, however, with a claim for damages madeThe products manufactured by Nipro group include some thatagainst us, there could be a material adverse effect on ourare made from petrochemical products such as plastics. Should

operational results and/or financial condition.

11.8
6.8

7.0

7.3

2017

2018

2019

the cost of raw materials such as petrochemicals rise, there
could be a material adverse effect on our operational results
and/or financial condition.
2016

-7.9
2020

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

31

NIPRO Annual Report 2020

Financial/Data Section

Financial Review(9) Risks Related to Exchange Rate Fluctuations

raising capabilities or see an increase in the cost of fund raising. Any of these

Nipro group, including its overseas subsidiaries, carries out its foreign currency trans-

occurrences could have a material adverse effect on our operational results and/or

actions primarily in US Dollars and Euros, but calculates financial statements for its

financial condition.

overseas subsidiaries using Japanese Yen for the purpose of producing consolidated
financial statements. Fluctuations in exchange rates may therefore have a material
adverse effect on our operational results and/or financial condition.

(13) Risks Related to M&A and Business Alliances
Nipro group conducts M&A activities and enters into business alliances to reinforce its
business base. Prior to concluding these deals, we carry out a thorough investigation of(10) Risks Related to Investment Value

the target company. However, should any problems arise such as the discovery of

Nipro group’s assets include investments in stocks and other securities. These invest-

unrecognized liabilities or should the development of the acquired business notments have been made for purposes such as building good business relationships withproceed as planned, there could be a material adverse effect on our operational results

the issuers of such securities, or for gathering useful information for the development of

and/or financial condition.

new products or new business opportunities. Should the value of these investments
decline significantly owing to fluctuations in the stock market, circumstances at an issuer,(14) Other Risks

or a change in the accounting methods used to deal with these investments, there could

Fires, earthquakes, acts of terrorism, wars, epidemics, or other unforeseen man-madebe a material adverse effect on our operational results and/or financial condition.

or natural disasters affecting areas or facilities where Nipro group conducts its businessactivities may cause a delay or interruption in production, sales, distribution, or provision(11) Risks Related to Controls on Personal Information
Nipro group has established strict precautions to protect the confidentiality ofof services. Should such a delay or interruption be extended, there could be a material
adverse effect on our operational results and/or financial condition.

personal information in our possession. However, if due to unforeseen events oran accident this personal information is leaked outside the group, causing a loss of(15) Risks Related to Coronavirus Spread

trust or customers, there could be a material adverse effect on our operational results

An abnormal situation such as the spread of a novel coronavirus infection or a natural

and/or financial condition.

disaster could occur on a scale beyond our expectations. Should such an event
occur, production bases could close, logistics could be interrupted and business(12) Risks Related to Fund Raising

operations with major customers could become difficult, which will affect our financial

Nipro group relies on debt finance in the form of loans from financial institutions orcondition and business results. Hygiene management, telecommuting (remoteissuance of corporate bonds and commercial paper, etc., to raise business andwork), staggered working hours and web meetings as measures to prevent theinvestment funds. If due to turmoil in financial markets, there is a reduction in lending

spread of a novel coronavirus infection may have to be implemented. Nipro will also

from financial institutions or a significant downgrade of our credit rating by credit

make every effort to introduce the wearing of masks at meetings.

rating agencies, we may not be able to raise the necessary funds when we needthem on acceptable terms. At the same time, we may incur restrictions on our fundContents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Financial/
Data Section

32
32

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

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Financial/Data Section

Te n - Ye a r S u m m a r y
Nipro Corporation and its Consolidated Subsidiaries
Years ended March 31

Income Statement Data:
Net sales

Medical-Related (*1)

2020

¥

2019

442,516

335,767¥

70,357

Pharmaceutical-Related (*1)

¥

2017

395,397

300,117¥

66,84635,526174

Other (*1)

426,399

327,359
63,482

36,217

PharmaPackaging (*1)

2018359,699

262,198¥

69,14028,40431

2016

366,650

272,167¥

62,26628,33129

Millions of yen

2014

325,084

237,777¥

57,37232,18429

2015

300,753

221,363¥

51,50829,83032

2013

241,020

169,971¥

66,212

27,611

104

2012

271

2011

212,013145,082

¥

235

2020

195,942$4,066,122

132,817

3,085,248

6,954

24,704

332,789

59,715

4,603

Thousands of
U.S. dollars (Note 1)

38,005262

417

646,485
1,599

Cost of sales

308,304

295,767

268,272

244,602250,773

225,525

213,220

175,314149,253

137,768

2,832,896

Operating income

26,42023,82727,08828,77024,204

16,571

12,28911,37015,825

17,225

242,767

13,104

14,135

12,06010,553

8,013

3,988

4,940

1,658

121,256

88

1,625

107,791

Selling, general and administrative expenses

106,804

36,249

Medical-Related (*2)

36,722

13,196

Pharmaceutical-Related (*2)

778

176

Other (*2)

86,32636,522

10,662675

PharmaPackaging (*2)

100,036

30,638(1,308)146

91,671

28,204(1,313)75

82,987

23,813(1,618)(10)

75,242

61

54,336

20,436(2,889)(2,183)

131

46,934

14,287

17,078601

216

40,949222

18,437

454

2,701

230

990,458
333,082
6,206

Income before income taxes(10,158)

21,23317,02618,324

26,284

19,90812,891

18,05811,022

7,431

Increase in tangible and intangible fixed assets

64,67064,394

61,99058,31057,10147,69835,09337,99739,52523,323594,231

8,645

7,891

6,464

5,956

(12,281)Net income attributable to owners of parent

38,682

Depreciation and amortization

Total assets

Property, plant and equipment—net
Working capital

Current liabilities

Long-term liabilities
Common stock
Capital surplus
Net assets¥

831,865

307,551
143,626
289,404
381,223

84,397—161,237

11,82935,252

18,204R&D expenses

Balance Sheet Data:

12,13632,565

16,526¥

845,821284,483
168,676
274,277
399,71284,397—

171,830

11,346

31,128

16,113¥

826,447

270,273
184,861
251,186
392,087
84,397—

183,485

19,71830,147

11,517¥752,839244,222
134,983
251,792
324,639
84,397—

176,408

12,47027,667

10,269¥708,882

223,756
115,970

2,861¥

695,306

220,195

71,945

10,231

25,151¥

619,654

191,593

45,405

4,586

21,209¥579,302174,70374,216

21,581¥

499,687

145,679

61,346¥(93,344)2,455(112,854)

21,244355,440

4,977

167,275

476,510$7,643,715

128,505

2,825,977

40,6201,319,727

252,147

278,402250,714

213,758

189,090

176,401

2,659,231

84,39784,39784,39784,39784,39728,663775,501

109,037

1,481,552

281,227—

175,507

238,095
635

178,810

232,979688

135,960

236,781636

128,763

196,646

636

113,951

191,070

29,972

3,502,930—(*1) Effective the fiscal year ended March 31, 2011, the Company has adopted ASBJ Statement No. 17 “Accounting Standard for Disclosures about Segment of an Enterprise and Related Information” (March 27, 2009) and ASBJ Guidance No. 20 “Guidance on Accounting Standard forDisclosures about Segment of an Enterprise and Related Information” (March 21, 2008). Net sales and operating income for the period for the fiscal year ended March 31, 2010 have been restated to show what the Group’s result would have been if the new accounting standards
had been applied in that year. Before the fiscal year ended March 31, 2009, net sales and operating income have been stated in compliance with previous accounting rules. In addition, the corporate reorganization was conducted effective on October 1, 2012 in order to enforce
Pharmaceutical-Related business and build a strong cooperative relationship among Medical-Related, Pharmaceutical-Related and Glass-Related businesses. As a result of this reorganization, some business divisions included in Glass-Related business were changed toPharmaceutical-Related business. The segment information is presented as if the aforementioned reorganization had been conducted at the beginning of the fiscal year 2012, and the presentation for the prior fiscal years are not restated. Also, effective in the half-year ended
September 30, 2014, 13 subsidiaries including Nipro Glass France S.A.S., Nipro Glass Belgium N.V., Nipro Glass Germany AG, Nipro Sterile Glass Germany AG, and Nipro Glass Americas Corporation were reclassified from Medical-Related business to PharmaPackaging-Related
business which was formerly known as Glass-Related business by a reorganization. Segment information after 2014 is based on this reclassification.
From the fiscal year ended March 31, 2019, the Company has conducted reorganization for the purpose of doing synthetic PharmaPackaging business and increasing synergies for Pharmaceutical-Related business. As a result of this reorganization, some business divisions
included in Pharmaceutical-Related business were changed to PharmaPackaging business. The presentations for prior fiscal years are not restated.
(*2) Operating income at the operating segment level is not adjusted for intra-segment transactions. See Note 14. “Segment Reporting” of the consolidated financial statements.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Financial/
Data Section

Management
Foundation

33
33

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

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Financial/Data Section

Te n - Ye a r S u m m a r y

Nipro Corporation and its Consolidated Subsidiaries
Years ended March 31

U.S. dollars(Note 1)Yen

Per Share Data:

Basic earnings (*3)

Diluted earnings (*3)
Cash dividends

2020

¥

2019

(75.3) ¥
—

13.5

2018

73.6

66.7

28.0

¥

2017

71.1

64.5

28.5

¥

2016

67.5

61.3

29.0

¥

2015

116.2

114.7
33.5

¥

2014

81.0
—

32.5

¥

2013

18.2

16.3

30.5

¥

2012

60.0

54.1

27.5

¥

2011

35.3

31.0

23.5

¥

2020

19.4

17.4

50.0

912.2

990.1

1,037.2

999.5

977.6

988.8

832.1

703.5

643.9

839.7

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

63,878,505

Equity ratio (*4) (%)

17.9

19.1

20.9

22.1

23.4

24.1

20.2

20.7

22.0

22.4

Return on equity (*4) (%)

(7.9)

7.3

7.0

6.8

11.8

8.5

2.3

8.9

4.2

Equity (*3)

Number of common shares issued
Number of employees

Selected Data and Ratios:
Return on assets (*4) (%)
Price earnings ratio (*4) (times)

32,786(1.5)—

29,325

1.5

19.3

28,3301.5

21.6

27,415

1.6

23.2

24,2432.8

9.2

23,1531.9

14.1

21,8260.5

50.9

19,3271.9

13.9

14,566

0.9

17.4

$

(0.69)—
0.12
8.38

12,017

0.6

2.2

42.5

(*3) Effective the fiscal year ended March 31, 2012, the Company has adopted ASBJ Statement No. 2 “Accounting Standard for Earnings per Share” (June 30, 2010), ASBJ Guidance No. 4 “Guidance on Accounting Standard for Earnings per Share” (June 30, 2010) and ASBJ PITF
No. 9 “Practical Solution on Accounting for Earnings per Share” (June 30, 2010). In addition, the Company split one share of common stock into two shares on October 1, 2011 based on a resolution at the board of directors’ meeting held on August 27, 2011. In accordance with thisadoption, equity per share, basic earnings per share and diluted earnings per share are calculated on the assumption that the two-for-one stock split of common stock was conducted at the beginning of the fiscal year ended March 31, 2011. Before the fiscal year ended March 31,
2010, each amount has been stated in compliance with previous accounting rules.
(*4) Equity ratio is the ratio of the sum of the total shareholders’ equity and accumulated other comprehensive income to total assets at the period-end. Return on assets is the ratio of net income attributable to owners of parent for the period to average of total assets during the period.
Return on equity is the ratio of net income for the period to average of the sum of total shareholders’ equity and accumulated other comprehensive income during the period. The price earnings ratio is the ratio of the closing price of the Company’s shares listed on the First Sectionof the Tokyo Stock Exchange on the last trading day in March of each year to the basic earnings per share.
(*5) Until 2016, yen amounts are rounded to the nearest million yen. Since 2017, yen amounts are rounded down to the nearest million yen.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

34
34

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Financial/Data Section

Consolidated Balance Sheets
Nipro Corporation and its Consolidated Subsidiaries
As of March 31, 2020 and 2019

AssetsCurrent assets:

Cash and cash equivalents

Time deposits (over three months)

Trade notes and accounts receivable
Allowance for doubtful receivables
Inventories (Note 3)

Deferred income taxes (Note 4)
Other current assets

Total current assets

Property, plant and equipment (Note 5):Land

Buildings and structures

Machinery and equipment
Construction in progress

Accumulated depreciation

Property, plant and equipment—net

Intangible assets (Note 5):
Goodwill

Other intangible assets

Total intangible assets

2020

Millions of yen¥ 90,154
5,771
152,462(1,137)
153,280—
32,498433,0302019¥ 120,310
9,127
148,970(1,248)137,925—
27,867442,953

Thousands of
U.S. dollars (Note 1)

2020

Liabilities and net assets$

828,393
53,032
1,400,925(10,449)
1,408,442—
298,615
3,978,958

Investment securities (Note 6)
Lease deposits

Deferred income taxes (Note 4)
Other assets

Total investments and other assets

Total

The accompanying notes are an integral part of these statements.

Short-term bank loans (Notes 5 and 9)

Current portion of long-term debt (Notes 5 and 9)
Trade notes and accounts payable
Accrued income taxes
Accrued expenses

Notes and accounts payable for plant and equipment
Other current liabilities

Total current liabilities

Long-term liabilities:¥ 47,004
241,755
376,576
27,644
692,980(385,429)
307,551¥ 36,480
220,205
338,391
36,638631,715(347,232)
284,483¥ 14,738
18,66333,401¥ 19,327
20,07139,398$431,905
2,221,409
3,460,226
254,012
6,367,554(3,541,576)
2,825,977

Long-term debt (Notes 5 and 9)

Net defined benefit liability (Note 10)
Deferred income taxes (Note 4)
Other long-term liabilities

Total long-term liabilities$

135,428
171,489
306,918

Net Assets (Note 12):
Common stock

Issued: 171,459,479 shares

Capital surplus

Retained earnings

Less cost of common shares of treasury stock(8,361,856 shares in 2019 and 5,037,124 shares in 2018)
Total shareholders’ equity¥ 13,836¥

25,464
1,832
12,6704,078
57,882¥ 831,865

52,683
1,687
11,335
4,589
78,986¥ 845,821

8,690

$

127,135

233,986
16,838116,42237,477
531,860$ 7,643,715

2019

Thousands of
U.S. dollars (Note 1)

2020¥ 71,078
90,93869,5392,999
25,787
13,893
15,167289,404¥ 55,803
87,09369,646
4,068
31,337
12,695
13,632274,277$ 653,112
835,600
638,973
27,557
236,951
127,664
139,3712,659,231¥360,456
6,421
228
14,117381,223¥385,512
5,101
204
8,893
399,712$3,312,103
59,002
2,101
129,7223,502,930¥ 84,397¥ 84,397$ 775,501

5
74,768(10,827)—
90,719(10,826)47
687,017(99,485)

148,344

164,291

1,363,080

731
(69)
341
(563)
440
12,452
161,237¥831,865(5,173)
(54)
2,625
(199)
(2,802)
10,341
171,830¥845,821

6,724
(637)
3,138
(5,179)4,045
114,425
1,481,552$7,643,715

Commitments and contingent liabilities (Note 11)

Authorized: 400,000,000 shares

Investments and other assets:

Investment in unconsolidated subsidiaries
and an affiliate accounted for by the equity method

Current liabilities:

2020

Millions of yen

Unrealized gain on available-for-sale securities
Deferred gains or losses on hedges

Foreign currency translation adjustments

Remeasurements of defined benefit plans

Accumulated other comprehensive income

Non-controlling interests
Total net assets

Total

The accompanying notes are an integral part of these statements.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/Data Section

Gross profit

Selling, general and administrative expenses (Notes 15 and 16)
Operating income

2020

Millions of yen

2019

Thousands of
U.S. dollars (Note 1)

2020¥426,399
295,767
130,631$4,066,122
2,832,896
1,233,225

107,791
26,420106,804
23,827

990,458
242,767

2,559(3,347)

23,665(31,739)

(152)

(41)

(1,405)(2,999)89
3,607(5,655)(29,888)(702)(10,158)(1,121)
78
147
(915)
(80)
126
21,233(27,558)824
33,152(51,963)(274,630)(6,456)(93,344)

Current

Deferred

5,343(3,910)8,605
751

49,102(35,930)

Net income(11,592)

11,876(106,516)

689¥ (12,281)(260)¥ 12,136

6,338$ (112,854)

Interest expense

Loss on sale and disposal of property, plant andequipment—net
Exchange loss

Equity in profit of an affiliated company

Gain on sale of subsidiaries and affiliates’ stocks
Loss on impairment of fixed assets (Note 17)

Loss on devaluation of marketable securities (Note 6)
Other income—net

Income before income taxes
Income taxes (Note 4):

Net income attributable to non-controlling interests
Net income attributable to owners of parent

Amounts per common share:
Basic earnings

Diluted earnings
Cash dividends

The accompanying notes are an integral part of these statements.

U.S. dollars(Note 1)Yen¥

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(75.3)
—
13.5

¥

73.6
66.7
28.0

$

(0.7)
—
0.1

2020

Millions of yen

2019

Thousands of
U.S. dollars (Note 1)

2020¥(11,592)¥11,876$(106,516)

5,904
(14)
(2,688)(367)(4,460)15(8,891)(250)

54,255(136)(24,705)(3,377)

(93)

(127)

(858)

Comprehensive income¥ (8,852)¥ (1,838)$ (81,338)

Owners of parent(9,039)187(1,323)(514)(83,061)
1,723

Net income

Other comprehensive income:Unrealized gain on available-for-sale securities
Deferred gains or losses on hedges

Foreign currency translation adjustment

Remeasurements of defined benefit plans

Share of other comprehensive income of entities
accounted for using equity method

2,575(3,454)

Interest and dividend income

35
35

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2020 and 2019

¥442,516
308,304
134,211

Other income (expenses):

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

Consolidated Statements ofComprehensive Income

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2020 and 2019

Cost of sales

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Financial/Data Section

Consolidated Statements ofIncomeNet sales

Financial/
Data Section

Comprehensive income attributable to:Non-controlling interests

The accompanying notes are an integral part of these statements.

Contents

About
NIPRO

Outline of theMedium-Term
Management Plan

Management
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

3636

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

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Financial/Data Section

Consolidated Statements of Changes in Net Assets
Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2020 and 2019 consisted of the following:Thousands

Balance at March 31, 2018

Outstanding
number ofshares ofcommon stock

171,459

Net income attributable to owners of parent

Millions of yen
Commonstock¥84,397

Capitalsurplus¥—

Increase (decrease) in retained earnings due toinclusion of new subsidiaries in consolidation
Cash dividends

Purchase of treasury stock
Disposal of treasury stock

Change in the scope of consolidation

Decrease of retained earnings (Other)
Other net change during the year

171,459

Balance at March 31, 2019

Net income attributable to owners of parent—¥84,39700¥84,397

0
0
(0)
0
0
5
¥ 5

Increase (decrease) in retained earnings due toinclusion of new subsidiaries in consolidation
Cash dividends

Purchase of treasury stock
Disposal of treasury stock

Change in the scope of consolidation

Decrease of retained earnings (Other)
Other net change during the year

171,459

Balance at March 31, 2020

Total
shareholders’equityBalance at March 31, 2019

171,459

Net income attributable to owners of parent

Commonstock$775,501
0Cash dividends

Purchase of treasury stock

Capitalsurplus$—0(0)

Disposal of treasury stock

Decrease of retained earnings (Other)
Other net change during the year

The accompanying notes are an integral part of these statements.

171,459

Foreigncurrencytranslation
adjustments¥ 10,658¥10,863¥183,485

—
—
—

—
—
—

—
—
—

(4,957)(5,000)178—(8,778)¥ 2,625—(236)¥(199)—(13,460)¥ (2,802)—(522)¥10,341(29)(13,983)¥171,830

0
0
0

0
0
0

0
0
0

0
0
0

0
0
0

(3,669)
0
0

0
(14)
¥(69)

0
(2,284)
¥ 341

0
(364)
¥(563)

0
3,242
¥
440

0
2,111
¥12,452

0
5,353¥161,237

Accumulated
other comprehensive
incomeNoncontrollinginterests

Total
net assets¥ (6,004)¥161,963(4,957)———(5,000)178(4,957)(5,000)
178

—
—
—

—
—
—

—
—
—

(29)
—
¥ 90,719——¥(10,826)(29)—¥164,291—(4,461)¥(5,173)

—
15
¥(54)

(3,669)00000(3,669)
0
0

0
0
0

0
0
¥ 74,76800¥(10,827)00¥148,344

0
5,905
¥ 731

Treasury
stock

Total
shareholders’equity(12,281)—0

12,136(12,281)¥ (712)—0

Accumulated
other comprehensive
incomeTotal
net assets¥ 83,570

12,136

Remeasurementsof defined
benefit plans

Noncontrollinginterests

Treasury
stock

¥(69)
—

0

¥11,404
—

0

¥ 36
—

0

—

0

—

0

12,136(12,281)

Thousands of U.S. dollars (Note 1)

Increase (decrease) in retained earnings due toinclusion of new subsidiaries in consolidation

Balance at March 31, 2020

Deferred
gains orlosses onhedgesRetainedearnings

Thousands
Outstanding
number ofshares ofcommon stock

Unrealized
gain onavailable-forsale securities$775,501

47$47

Retainedearnings$ 833,591$(99,482)$1,509,611(112,854)

0(112,854)(33,719)
0
0
0

(3)
0

(33,719)(3)00$ 687,017$(99,485)$1,363,080

Unrealized
gain onavailable-forsale securities$(47,541)
054,266$ 6,724Deferred
gains orlosses onhedges$(500)
0(136)$(637)

Foreigncurrencytranslation
adjustments$ 24,1270(20,988)$ 3,138

Remeasurementsof defined
benefit plans$(1,831)0(3,348)$(5,179)$(25,747)$ 95,026$1,578,890

00(112,854)

19,399$114,425(33,719)(3)0049,192$1,481,552

29,793$ 4,045

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Financial/
Data Section

Management
Foundation

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
ConsolidatedStatements
StatementsofofCash
Cash
Flows
Consolidated
Flows
Notes to Consolidated Financial Statements
Corporate Information

37
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Financial/Data Section

Consolidated Statements of Cash Flows
Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2020 and 2019

Operating activities:

Income before income taxes

Depreciation and amortization
Impairment loss

Amortization of goodwill

Equity in loss of affiliated companies
Allowance for doubtful receivables
Exchange gain

Gain on sales of available-for-sale securities

Loss on devaluation of marketable securities
State subsidy

Loss on reduction of non-current assets
Gain on bargain purchase
Trade receivables
Inventories

Trade payables

Other current assets

Other current liabilities
Other, net

Accrued income taxes

Net cash provided by operating activities

Investing activities:

Deposit (Over three months)

Purchases of available-for-sale securities

Proceeds from sales of marketable securities

Purchases of investment in unconsolidated subsidiaries
and affiliates
Purchases of investments in consolidated subsidiaries
affecting scope of consolidation
Proceeds from sale of investments in consolidated
subsidiaries affecting scope of consolidation
Payments for transfer of business

Purchases of property, plant and equipment

Proceeds from sales of property, plant and equipment
Other, net

Net cash used in investing activities

2020

Millions of yen

Thousands of
U.S. dollars (Note 1)

2019

2020

¥(10,158)
38,682
5,655
3,143
(89)
242
1,651
(3,123)29,892
(898)
852
(27)
(2,652)(15,241)205
1,258(5,011)
1,973(9,108)37,246¥ 21,233
35,252
915
3,372
(78)
(699)
1,385
(147)
80
(1,036)865(317)(12,278)(11,448)
11,814(5,393)
5,544
552(8,175)41,362$ (93,344)
355,440
51,96328,888(824)
2,229
15,179(28,701)
274,671(8,260)7,834(251)(24,372)(140,052)
1,887
11,564(46,048)
18,135(83,697)342,241

3,168
(67)
8,884

(3,430)(875)
110

29,112(618)
81,638—(1,413)—(4,243)—(38,989)

—

2,294

—

—
(57,943)861(8,933)(58,272)(5,126)(55,980)
1,008(1,299)(64,712)—(532,424)
7,920(82,084)(535,445)

Financing activities:

2020

Millions of yen¥ 18,642—
61,890(96,052)
17,912(3,900)0(8)(3,773)

2019

2020

3,264
(10,000)
88,813(68,368)
9,933(1,215)178(5,000)(4,983)$ 171,295—
568,685(882,589)
164,588(35,835)
0(74)(34,670)

—

(114)

—

723
(4,566)136
12,646

6,645(41,955)

Cash and cash equivalents, beginning of period(4,563)(30,156)
120,310(4,659)(15,363)
135,599(41,935)(277,094)
1,105,488

—

74

—

Cash and cash equivalents, end of period¥ 90,154¥120,310$ 828,393

Net increase in short-term loans

Net decrease in commercial paper
Proceeds from long-term loans
Repayment of long-term loans

Proceed from issuance of bonds
Repayment of bonds

Proceeds from disposal of treasury stock
Payments from sales of treasury stock
Cash dividends paid

Payments from changes in ownership interests in
subsidiaries that do not result in change in scopeof consolidation
Other, net

Net cash used in (provided by) financing activities

Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents

Cash and cash equivalents of newly consolidated subsidiary,
beginning of period
The accompanying notes are an integral part of these statements.

¥

Thousands of
U.S. dollars (Note 1)

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

38
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Financial/Data Section

Notes to Consolidated Financial Statements
1. Basis of Presenting Consolidated Financial Statements

2. Summary of Significant Accounting Policies

The financial statements of Nipro Corporation (“the Company”) and its consolidated domestic subsidiaries(a) Basis of Consolidationof Japan and its related accounting regulations, and in conformity with accounting principles generally

and affiliated company accounted for by the equity method.

have been prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Law

accepted in Japan, which are different in certain respects as to application and disclosure requirements of

The consolidated financial statements include the accounts of the Company and the significant subsidiaries
Investments in unconsolidated subsidiaries are stated at cost and the equity method is not applied for theInternational Financial Reporting Standards. Effective from the year ended March 31, 2009, the Company has

valuation of such investments since they are considered immaterial in the aggregate.

solidated Financial Statements” (PITF No. 18) and as a result, the accounts of consolidated overseas subsidiaries

unrealized profits included in assets resulting from transactions within the Company and its consolidated

accounting principles in the United States, with adjustments for the specified four items as applicable.

ates and the equity in their net assets at the dates of acquisition is amortized on a straight-line basis over five

adopted the “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Conare prepared in accordance with either International Financial Reporting Standards or generally accepted

In preparing the accompanying consolidated financial statements, certain reclassifications have been madeto the consolidated financial statements issued domestically, in order to present them in a form which is morefamiliar to readers outside Japan. However, no adjustment has been made which would change the financial

position or the results of operations presented in the original financial statements. In addition, the notes toconsolidated financial statements include additional information which is not required under generally
accepted accounting principles and practices in Japan.

The financial statements presented herein are expressed in Japanese yen and, solely for the convenienceof the reader, have been translated into United States dollars at the rate of ¥108.83 = US$1, the approximate

All significant intercompany balances and transactions have been eliminated in consolidation. All material

subsidiaries have been eliminated. The difference between the cost of investments in subsidiaries and affilito twenty years.

All accounts herein have been presented on the basis of the 12 months ended March 31, 2020 for

the Company and for consolidated domestic subsidiaries, and December 31, 2019 for all consolidated
overseas subsidiaries.

Adjustments have been made for any significant intercompany transactions which took place during

the period between the end of the accounting period of the consolidated overseas subsidiaries and thatof the Company.

exchange rate on March 31, 2020. These translations should not be construed as representations that the(b) Translation of Foreign Currencies

amounts at that or any other rate.

rates as of the balance sheet date except for shareholders’ equity, which is translated at the historical rates.

Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollar

In preparing the accompanying consolidated financial statements and notes, Japanese yen figures lessthan one million yen have been rounded down to the nearest million yen, in accordance with the Financial

Instruments and Exchange Law and Enforcement Ordinance concerning the Banking Law of Japan, although
the figure of the past fiscal years before fiscal 2016 were rounded in this report.

Therefore, total or subtotal amounts shown in the accompanying consolidated financial statements andnotes thereto are not necessarily equal to sums of individual amounts.

Balance sheets of consolidated overseas subsidiaries are translated into Japanese yen at the current exchange

Income statements of consolidated overseas subsidiaries are translated into Japanese yen at the averageexchange rates for the period. Resulting translation adjustments are shown as “Foreign currency translation
adjustments” in the “Accumulated other comprehensive income” section of net assets.
(c) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, readily available deposits and short-term highly liquid investments with original maturities of three months or less.
(d) Allowance for Doubtful Receivables

An allowance for possible losses from trade notes and accounts receivable, loans and other receivables
is provided based on the actual rate of past bad debts and the uncollectible amounts of certain
individual receivables.
(e) Inventories

Inventories are stated principally at the lower of average cost or net realizable value.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

39
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Financial/Data Section

Notes to Consolidated Financial Statements(f) Property, Plant and Equipment

Depreciation of property, plant and equipment of the Company and its consolidated domestic subsidiaries iscomputed principally by the declining-balance method. The straight-line method is applied to buildings

acquired by the domestic companies after April 1, 1998 and buildings and accompanying facilities and struc-tures acquired by the domestic companies after April 1, 2016, and is principally applied to the property, plantand equipment of consolidated overseas subsidiaries.
(g) Intangible Assets

Amortization of intangible assets, including software for the Company’s own use, is computed by the straightline method over the estimated useful life of the asset.

Goodwill is amortized on a straight-line basis over the period the Company benefits from its use. If theamount is not significant, it is expensed when incurred.
(h) Investment Securities

Investment securities are classified and accounted for, depending on management’s intent, as follows:i) held-to-maturity debt securities, which are expected to be held to maturity with the positive intent andability to hold to maturity are stated at amortized cost.

ii) available-for-sale securities, which are not classified as the aforementioned securities, are stated at fairvalue. Unrealized gains and losses, net of applicable taxes, are reported as “Accumulated other comprehensive income” of net assets.

Non-marketable available-for-sale securities are stated at cost determined by the average method.

For other-than-temporary declines in fair value, investment securities are reduced to net realizable value by

a charge to income.

(i) Allowance for Loss on Clearance of Business

The Company has withdrawn from retail business and a provision for anticipated losses of sales of related fixed
assets is provided.

(j) Employees’ Retirement and Severance Benefits

Method of Attributing Expected Benefit to Periods

In calculating retirement benefit obligation, the estimated amount of retirement benefit is attributed to theperiods on the benefit formula basis.

Accounting Method of Actuarial Gains and Losses and Prior Service Costs

Prior service costs are amortized on the straight-line basis over a certain period (mainly 5 years) which is within
the average of the estimated remaining service years of the employees when they occur.

Actuarial gains and losses are amortized on the straight-line basis over a certain period (mainly 5 years)

which is within the average of the estimated remaining service years of the employees commencing from thefollowing year in which they arise.

Some consolidated subsidiaries amortize their actuarial gains and losses all at once in the fiscal year inwhich they arise.
(k) Derivatives

Derivatives are stated at fair value, with changes in fair value included in net income or loss for the period inwhich they arise, unless derivatives are used for hedging purposes. Please see (m) Hedge Accounting below.
(l) Leases

Finance leases, except for certain immaterial leases, are capitalized in the balance sheet. Amortization offinance lease assets is calculated by the straight-line method over the lease period assuming no residual value.
The Company and its consolidated domestic subsidiaries account for certain finance leases as operatingleases, which do not transfer ownership to the lessee and existed prior to April 1, 2008. The information of suchleases on an “as if capitalized” basis is presented in Note 7. “Leases”.
(m) Hedge Accounting<Method of hedge accounting>

The deferral hedge accounting method is applied in principle. The allocation method is applied to currency
swaps and the exceptional accounting method is applied to interest rate swaps when certain hedging
criteria are met.

<Hedge instrument and hedge items>(Hedging instruments)

Interest rate swap

<Hedge policy>(Hedged items)

Interest on short-term and long-term debt

The Company uses interest rate swaps to reduce interest volatility risk.

<Method for assessing hedge effectiveness>

Hedge effectiveness is not assessed when substantial items and conditions of hedging instruments and thehedged transactions are the same, and is not assessed when cash flow can be completely offset for awhole hedge period.
(n) Income Taxes

The provision for income taxes is computed based on income for financial statement purposes. The asset andliability approach is used to recognize deferred tax assets and liabilities for the future tax consequences of

temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

40
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Financial/Data Section

Notes to Consolidated Financial Statements(o) Amounts per Common Share

4. Income Taxes

weighted-average number of common shares outstanding for the period. Diluted earnings per share reflect the

The Company and its domestic subsidiaries are subject to several taxes based on income which, in aggregate,

Basic earnings per share is computed by dividing net income available to common shareholders by thepotential dilution that could occur if securities were exercised or converted into common stock. Diluted
earnings per share of common stock assume full conversion of the outstanding convertible notes and bonds

at the beginning of the year (or at the time of issuance) with an applicable adjustment for related interest

resulted in a normal statutory tax rate of approximately 30.6% for the years ended March 31, 2020.
The significant components of deferred tax assets and liabilities were as follows:

expense, net of tax, and full exercise of outstanding warrants.
(p) Accounting Standard Issued but not yet Effective

Accounting Standard for Revenue Recognition and Implementation Guidance on Accounting Standard for
Revenue Recognition

This standard and guidance specifies Revenue Recognition comprehensively. To recognize revenue under thisstandard and guidance, an entity applies the following five steps:
Step 1: To identify the contract(s) with a customer

Step 2: To identify the performance obligations in the contract
Step 3: To determine the transaction price

Step 4: To allocate the transaction price to the performance obligations in the contract

Step 5: To recognize revenue when (or as) the entity satisfies a performance obligation

The Company and its domestic subsidiaries will adopt the guidance effective from the beginning of the

fiscal year ended March 31, 2022. At present, the Company is in the process of evaluating the impact on the
consolidated financial statements of the adoption of Accounting Standard for Revenue Recognition and Implementation Guidance on Accounting Standard for Revenue Recognition.

Gross deferred tax assets
Less: Valuation allowance for net operating loss
carryforwards (*2)
Less: Valuation allowance for the deductible temporary
differences
Total Less: Valuation allowance (*1)

3. Inventories
Inventories consisted of the following:

Finished goods and merchandise
Raw materials

Work in process

Packing and other
Total

2020

Millions of yen¥106,284
29,00912,418
5,568¥153,280

Deferred tax assets
Tax loss carryforwards
Intercompany profits
Valuation loss on inventories
Allowance for bonuses to employees
Sales allowance
Loss on impairment of fixed assets
Excess of allowance for doubtful accounts over tax
allowable amounts
Net defined benefit liability
Accrued enterprise taxes
Unrealized loss on available-for-sale securities
Goodwill
Loss on liquidation of business
Other

2019

¥ 95,103
25,27812,347
5,195¥137,925

Thousands of
U.S. dollars (Note 1)

2020$ 976,612
266,554
114,109
51,165$1,408,442

Total deferred tax assets
Deferred tax liabilities
Unrealized gain on available-for-sale securities
Revaluation reserve for land
Revaluation reserve for fixed assets—other
Retained earnings on foreign subsidiaries
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities) (*1)

2020

Millions of yen¥ 20,849
1,004
1,379
1,261
394
426
2,174

1,707
243
(1)
—
165
3,845
33,450(13,893)(3,927)2019¥ 10,898
2,037
1,237
1,234
341
395
1,272

1,366
426
2,857
54
257
4,045
26,426

Thousands of
U.S. dollars (Note 1)

2020$ 191,582
9,228
12,676
11,591
3,620
3,922
19,983
15,686
2,236
(14)
—
1,516
35,338307,369(8,173)(127,666)(3,464)(36,086)(17,821)
15,629(11,637)
14,788(163,752)
143,616

342
783
439
565
1,057
3,188
¥ 12,441

450
783
687
551
1,184
3,657
¥ 11,131

3,145
7,198
4,040
5,197
9,713
29,295$ 114,321(*1) In the fiscal year ended March 2020, valuation increased by ¥6,183 million. The main reason of this increase is that valuation allowancefor the net operating loss carryforwards was increased by ¥4,263 million (US$39,176 thousand) in Goodman Co., Ltd.
(*2) Balance of the deferred tax assets on the net operating loss carryforwards by the expiration year.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

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Financial/Data Section

Notes to Consolidated Financial Statements

Reconciliation of the differences between the statutory tax rates and the effective income tax rates was as follows:
2020

—%
—
—
—
—
—
—
—
—
—
—%

Statutory tax rate

Expenses not deductible for tax purposes
Non-taxable dividend income
Effect of tax rate change
Amortization of goodwill

Tax credits primarily for research and development costs
Valuation allowance

Retained earnings on foreign subsidiaries
Unrealized gain
Other

Effective income tax rate

30.6%
1.8
(1.2)
0.0
3.0
(4.3)
3.0
2.4
4.5
4.3
44.1%

In fiscal year ended March 2020, the note for this section is omitted due to loss before income taxes.

Net operating loss
carryforwards (*A)

Valuation allowance
Deferred tax assets

2020

Net operating loss
carryforwards

Valuation allowance
Deferred tax assets

Within1 yearOver 1 year
within2 years

Over 2 years
within3 years

Over 3 years
within4 years

Over 4 years
within5 years

Over 5 years

Total$24,827$34,362$ 7,674$ 5,906$ 5,569$ 113,243$ 191,582(3,365)
21,461(5,184)29,177(6,584)
1,089(4,798)
1,107(4,430)1,138(103,302)
9,941(127,666)
63,916(*A) Each net operating loss carryforwards amount is multiplied by the statutory tax rate.
(*B) Deferred tax assets for net operating loss carryforwards (multiplied by statutory tax rate) for the years ended March 31, 2020 and2019 were ¥20,849 million (US$191,582 thousand) and ¥10,898 million, respectively. These deferred tax assets were mainly
recognized for the balance of net operating loss carryforwards (multiplied by statutory tax rate) in Nipro Corporation for the year
ended March 2020 and PT. NIPRO INDONESIA JAYA for 2019, respectively. As a result of tax scheduling, valuation allowance for thisnet operating loss carryforwards was not recognized due to the assumption that this amount is collectable.

5. Pledged Assets

Millions of yen

2020

Thousands of U.S. dollars (Note 1)

2019

Within1 yearOver 1 year
within2 years

Over 2 years
within3 years

Over 3 years
within4 years

Over 4 years
within5 years

Over 5 years¥2,701¥3,739

¥ 835

¥ 642

¥ 606

¥ 12,324¥ 20,849

(366)
2,335

(564)
3,175

(716)
118

(522)
120

(482)
123

(11,242)
1,081(13,893)6,956 (*B)

Total

The following assets were pledged as collateral:

Buildings and structures
Land

Other

Total

2020

Millions of yen¥ 9,454
3,137
376¥12,9692019¥ 8,855
3,137
418¥12,411

Thousands of
U.S. dollars (Note 1)

2020$ 86,876
28,8283,463$119,168

Millions of yen

Net operating loss
carryforwards (*A)

Valuation allowance
Deferred tax assets

2019

The above assets were pledged against the following liabilities:

Within1 yearOver 1 year
within2 years

Over 2 years
within3 years

Over 3 years
within4 years

Over 4 years
within5 years

Over 5 years

¥ 451

¥ 550

¥ 800

¥1,191¥ 757¥ 7,147

(306)
144

(334)
216

(402)
398

(704)
486

(525)
231

(5,899)
1,247

Total

¥ 10,898(8,173)
2,725 (*B)

Short-term bank loans

Current portion of long-term debt
Long-term debt
Total

2020

Millions of yen¥1,790384
2,131¥4,3072019¥1,2201,618
1,563¥4,402Thousands of
U.S. dollars (Note 1)

2020$16,456
3,535
19,589$39,581

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

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Notes to Consolidated Financial Statements

6. Investment Securities

Millions of yen

Investment securities as of March 31, 2020 and 2019 consisted of the following:2020

Non-current:

Marketable:

Millions of yen¥24,597—
24,597867¥25,464

Marketable equity securities

Investment trust funds and other
Subtotal

Non-marketable securities
Total

Thousands of
U.S. dollars (Note 1)

2019

2020

¥51,083—
51,083
1,599¥52,683$226,017—
226,017
7,968$233,986

The carrying amounts and aggregate fair values of marketable securities for investments as of March 31, 2020
and 2019 were as follows:

Available-for-sale securities
Equity securities

Debt securities and otherTotal¥23,501—¥23,501

Unrealized gain2020

¥1,635—¥1,635

¥539
—
¥539

Fair Value¥24,597—¥24,5972020

Equity securities

Debt securities and other
Total

Debt securities and otherTotal¥59,013—¥59,013

2019¥4,163—¥4,163

Unrealized loss

Fair Value¥12,092—¥12,092¥51,083—¥51,083

Proceeds from sales of securities and gross realized gains or losses on those sales for the years ended March
31, 2020 and 2019 were as follows:

Proceeds

Gains on sales

Losses on sales

2020

Millions of yen¥8,868
3,576
501

2019

¥110
0
—

Thousands of
U.S. dollars (Note 1)

2020$81,493
32,862
4,606

March 31, 2020.

Unrealized loss

Thousands of U.S. dollars (Note 1)

Available-for-sale securities

Equity securities

Unrealized gain

The company impaired ¥29,235 million (US$268,630 thousand) marketable equity security for the year ended

Millions of yen
Cost

Available-for-sale securities

Cost

Cost

Unrealized gain

Unrealized loss

$215,950—$215,950$15,028—$15,028$4,961—$4,961

Fair Value$226,017—$226,017

In case fair value for the marketable equity security fell by over 50% from the acquisition cost, the stock

impairment is applied unless there is a reasonable disproval, the asset is treated as an impairment. In case fairvalue for the marketable equity security fell by 30% to 50%, impairment is applied except when it is expected
to recover.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

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Financial/Data Section

Notes to Consolidated Financial Statements

7. Financial Instrumentswith loans payable, and currency swaps to hedge against the risk of foreign exchange rate fluctuations. For(1) Circumstances on financial instruments

policy, and the method for assessment of hedge effectiveness, please refer to “2. Summary of Significant(a) Policy for financial instruments

The Company and its consolidated subsidiaries manage the temporary surplus funds by deposits with banks
that have a high level of safety. Based on capital investment planning and financing planning, the Company andits consolidated subsidiaries raise funds for business operation with bank loans, commercial paper, corporate
bonds, and issuing convertible bond-type corporate bonds with warrant of booking new stocks.

The Company and its consolidated subsidiaries enter into derivative transactions for the purpose of

reducing funding costs and hedging their exposures to foreign exchange fluctuations and interest rate fluctuations, but not for speculative purposes.

(b) Details and risk of financial instruments and their risk management

Receivables such as trade notes and accounts receivable are exposed to customer’s credit risk. Receivables
denominated in foreign currencies are exposed to the market risk of fluctuation in foreign currency
exchange rates.

In order to reduce the customer’s risk, the Company monitors the dues and balances by customer in accor-

more information on the use of hedge accounting, including hedging instruments, hedged items, the hedging
Accounting Policies” (m) Hedge Accounting.

As the Company manages its exposure to credit risk by limiting its funding to high-credit rating financial

institutions, the Company recognizes that the exposure to credit risk is extremely low.

The Company executes and manages derivative transactions under the corporate derivative management

policy, which prescribes the authority and limitations on derivative transactions.
(c) Supplemental information on fair values of financial instruments

Fair values of financial instruments include values based on market price and reasonably estimated values
when market price is not available. Because variable factors are counted in the estimation, the estimatedvalues may vary by adopting different assumptions.

With respect to the contract amounts related to derivative transactions in Note 8, the amounts do notreflect market risks to derivative transactions.

(2) Fair values of financial instruments

dance with the Company’s credit administration regulations.

The book values, fair values and the differences between them as of March 31, 2020 and 2019 are as follows

which conduct business with the Company. The Company periodically reviews the market price of such securities.

described in remark 2.):

Investment securities are exposed to market fluctuation risk, but mainly consist of equity of the companies(Financial instruments for which the market value is extremely difficult to determine are not included as

Payables such as trade notes, accounts payable and accounts payable other are due within one year.

Millions of yen

Payables denominated in foreign currency are exposed to the risk of fluctuation in foreign currency

exchange rates.

Short-term loans payable are mainly borrowed to raise operating capital and long-terms loans payable aremainly borrowed to make capital expenditures. A part of long-term loans with the floating interest rate has therisk of interest rate fluctuation, but the Company and its consolidated subsidiaries use interest rate swaps tosolidify the interest rate. For some of the loans denominated in foreign currency, the Company and its consolidated subsidiaries use currency swaps to hedge the currency fluctuation risk.

Bonds and commercial paper are mainly issued to raise the funds for the retirement of bonds.

Cash and cash equivalents, time deposits

Trade notes and accounts receivable, net of allowance for
doubtful receivables

in foreign currencies, interest rate swaps to hedge against the risk of fluctuations in interest rates associatedDifference¥—

151,325—

Assets total

24,597¥271,848¥——

Trade notes and accounts payable¥ 69,539¥ 69,539¥—

162,016

162,016—

22,156360,456—
13,235¥627,403¥(86)

22,156360,635—
12,343¥626,692
¥
(86)

—
179
—
(891)
¥(711)¥ —Long-term debt

fluctuations in foreign currency exchange rates associated with trade receivables and payables denominated¥ 95,925

24,597¥271,848

Payables, loans and bonds are exposed to liquidity risk, but the Company and its consolidated subsidiaries
Regarding derivatives, the Company enters into forward exchange contracts to hedge against the risk of¥ 95,925
151,325

Lease obligations are mainly for capital expenditures, free from interest-rate risk because the interest

manage the risk by establishing cash planning.

2020

Fair value

Investment securities

Short-term bank loans, current portion of long-term debt,
and current portion of convertible bondrate is fixed.

Book value

Other notes and accounts payable (*1)
Convertible bondLease obligations (*2)
Liabilities total

Derivatives (*3)

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Financial/
Data Section

Management
Foundation

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

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Notes to Consolidated Financial Statements

Millions of yen

2019Book value

Fair value

Difference¥129,438¥129,438

147,721

147,721

Assets total

Investment securities

51,083¥328,243

51,083¥328,243¥——

Trade notes and accounts payable¥ 69,646¥ 69,646¥—

142,897

142,897—

31,169360,51225,0006,728¥635,955¥(51)

31,169359,397
27,5376,548¥637,196¥(51)—(1,115)2,537(180)¥ 1,241¥—

Cash and cash equivalents, time deposits

Trade notes and accounts receivable, net of allowance for
doubtful receivables

Short-term bank loans, current portion of long-term debt,
and current portion of convertible bond
Other notes and accounts payable (*1)
Long-term debt

Convertible bondLease obligations (*2)
Liabilities total

Derivatives (*3)¥——

Thousands of U.S. dollars (Note 1)

2020

Cash and cash equivalents, time deposits

Book value

Fair value

Difference$ 881,426$ 881,426

1,390,475

1,390,475

Investment securities

226,017$2,497,919

226,017$2,497,919$——

Trade notes and accounts payable$ 638,973$ 638,973$—

1,488,712

1,488,712—

203,5883,312,103—
121,612$5,764,990$(795)

203,5883,313,752—
113,424$5,758,450
$
(795)

—
1,648
—
(8,188)$(6,539)—

Trade notes and accounts receivable, net of allowance for
doubtful receivables
Assets total

Short-term bank loans, current portion of long-term debt,
and current portion of convertible bond
Other notes and accounts payable (*1)
Long-term debt

Convertible bondLease obligations (*2)
Liabilities total

Derivatives (*3)$——(*1) Other notes and accounts payable is included in accrued expenses and notes and accounts payable for plant and equipment on thebalance sheet.
(*2) Lease obligations is included in other current liabilities and other long-term liabilities on the balance sheet.
(*3) The amount represents the net amount of assets (liabilities).

Remark 1

Methods used to calculate fair values of financial instruments and the details of securities andRemark 2

Financial instruments for which the fair value is extremely difficult to determine

derivatives<Assets>• Cash and cash equivalents, time deposits and trade notes and accounts receivable
Cash and cash equivalents and trade notes and accounts receivable are stated at the relevant book value
because the settlement periods are short and the fair values are almost the same as the book value.
• Investments securities
Equity securities are stated at market value. See Note 6. “Investment securities” for the detailed information
by classification.
<Liabilities>• Trade notes and accounts payable and short-term bank loans and current portion of long-term debt andcommercial paper
Because the settlement periods of the above items are short and their fair values are almost the same as theirbook values, the relevant book values are used.
• Other notes and account payable
Because the settlement periods of the above items are short and their fair values are almost the same as theirbook values, the relevant book values are used.
• Long-term debt and convertible bonds
The fair value of long-term debt is calculated by applying a discount rate to the total of principal and interest.
The discount rate is based on the assumed interest rate if a similar new loan was entered into.
• Lease obligation
The fair value of lease obligations is calculated by applying a discount rate to the total of principal andinterest. The discount rate is based on the assumed interest rate if a current lease transaction was renewed.
• Derivatives
The fair value information for derivatives is included in Note 8.

Unlisted equity securities

2020

Millions of yen¥14,695

2019¥10,281

Thousands of
U.S. dollars (Note 1)

2020$135,030

They are not included in investment securities due to these items having no market value and are difficult to estimate the future cash flow
so that it is extremely difficult to determine their fair values.

Remark 3

Planned redemption amounts after the balance sheet date for monetary receivables withmaturity dates are as follows:

2020

Cash and cash equivalents, time deposits
Trade notes and accounts receivable

Millions of yen

Within 1 year

¥ 95,925
151,325

2019

Within 1 year

¥129,438
147,721

Thousands of
U.S. dollars (Note 1)

2020
Within 1 year

$ 881,426
1,390,475

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

45
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Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

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Notes to Consolidated Financial Statements

Remark 4

Planned repayment amounts after the balance sheet date for monetary payables with maturity dates

Planned repayment amounts after the balance sheet date for monetary payables with maturity dates at March 31, 2020 are as follows:
Millions of yen

Short-term bank loans, current portion of long-term debt, and current portion of convertible bonds
Long-term debt

Convertible bonds
Lease obligations
Total

Within 1 year

¥162,016——
3,080¥165,097

Over 1 year but
within 2 years¥—
79,846—
1,996¥81,842Over 2 years but
within 3 years

2020

¥

—
61,016—
3,901¥64,918

Over 3 years but
within 4 years¥—
43,053—
1,076¥44,129

Over 4 years but
within 5 years

Over 5 years¥—
59,812—913¥60,726¥—
116,727—2,266¥118,994

Thousands of U.S. dollars (Note 1)

2020

Short-term bank loans, current portion of long-term debt, and current portion of convertible bonds
Long-term debt

Convertible bonds
Lease obligations
Total

Within 1 year

$1,488,712——
28,308$1,517,021

Over 1 year but
within 2 years$—
733,677—
18,342$752,020

Over 2 years but
within 3 years

Over 3 years but
within 4 years$—
560,661—
35,851$596,513$—
395,600—
9,889$405,489

Over 4 years but
within 5 years$—
549,598—
8,392$557,990$

Over 5 years—
1,072,566—
20,828$1,093,394

Millions of yen

Short-term bank loans, current portion of long-term debt, and current portion of convertible bonds
Long-term debt

Convertible bonds
Lease obligations
Total

Within 1 year

¥142,897——
1,693¥144,591

Over 1 year but
within 2 years¥—
55,79725,0001,231¥82,029

Over 2 years but
within 3 years¥—
70,203—
1,031¥71,235

2019

Over 3 years but
within 4 years¥—
57,897—565¥58,463Over 4 years but
within 5 years¥—
33,230—1,727¥34,958

Over 5 years¥—
143,382—477¥143,860

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

46
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Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

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Notes to Consolidated Financial Statements

8. Derivatives

Thousands of U.S. dollars (Note 1)

2020

The Company and its consolidated subsidiaries had the following derivatives contracts outstanding at March
31, 2020 and 2019.

(1) Derivatives for which hedge accounting has not been applied.
Currency related

2020

Type of Derivative

Transaction other thanmarket transaction¥

Non-deliverable forward

Foreign currency forward contracts
Currency swap

876
13,089371

Over 1 year out-ofcontract amount¥———

Fair Value

¥(38)
18
(2)

Thousands of U.S. dollars (Note 1)

2020
Contract amountType of Derivative

Transaction other thanmarket transaction

Non-deliverable forward$

Foreign currency forward contracts
Currency swap

8,053
120,2713,409Over 1 year out-ofcontract amount$———Type of Derivative

Principle method

Currency swap$(349)
170
(18)

2019

Transaction other thanmarket transaction

Over 1 year out-ofcontract amount¥888

Non-deliverable forward

¥—

2020

Millions of yen

2020

Principle method

Currency swap

Account
receivables

Contract
amount¥394

Fair value is based on information provided by a financial institution at the end of the fiscal year.

Over 1 year
out-of-contract
amount¥—¥ 3,190¥(60)

15,000(*1)

Type of Derivative

Exceptional accounting method
for interest rate swap

Interest rate swap Long-term loans¥ 3,730

Interest rate swap Long-term loans

15,000Principle method

Principal Hedge Item

Over 1 year
out-of-contract
amount

Method of hedge accounting

Fair Value

Thousands of U.S. dollars (Note 1)

2020
Principal Hedge Item

Contract
amount

Method of hedge accounting

Type of Derivative

Interest rate swap Long-term loans$ 34,282

Exceptional accounting method
for interest rate swap

Interest rate swap Long-term loans

137,829

Over 1 year
out-of-contract
amountFair Value$ 29,314$(553)

137,829(*1)

Millions of yen

2019

Fair Value¥(9)

Principal Hedge Item

Contract
amount

Method of hedge accounting

Type of Derivative

Exceptional accounting method
for interest rate swap

Interest rate swap Long-term loans¥ 4,388

Interest rate swap Long-term loans

15,000Principle method(a) Currency related

Principal Hedge Item$(83)

Contract
amount¥3(2) Derivatives for which hedge accounting has been applied.

Type of Derivative$—

Fair Value

Fair value is based on information provided by a financial institution at the end of the fiscal year.

Method of hedge accounting$3,628Fair Value

Millions of yen

Fair Value

Millions of yen

Contract amountAccount
receivables

Contract
amount(b) Interest related

Principle method

Type of Derivative

Principal Hedge Item

N/A in 2019

Millions of yen

Contract amount

Method of hedge accounting

Over 1 year
out-of-contract
amountOver 1 year
out-of-contract
amountFair Value¥ 3,828¥(54)

15,000(*1)(*1) The fair value of interest rate swap to which the exceptional accounting method is applied and the fair value of forward foreignexchange contract, etc., to which the allocation method is applied are included in the fair value of long-term loans in Note 9. “Financial
Instruments” because such interest rate swap and forward foreign exchange contract, etc., are accounted for as a single item with thecorresponding long-term loans.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

47
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Financial/Data Section

Notes to Consolidated Financial Statements

9. Short-Term Loans and Long-Term Debt

10. Accrued Pension and Severance Liabilities

Short-term loans comprised overdrafts and promissory notes.

The Company and certain consolidated subsidiaries have defined benefit pension plans and unfunded retire-

The weighted-average interest rates of short-term bank loans for the years ended March 31, 2020 and 2019were 0.7643% and 0.8575%, respectively.

Long-term debt comprised the following:

0.57% unsecured bonds due 2020

0.25% unsecured bonds due 2025

0% convertible bond due 2021 (*1)
0.674% unsecured bonds due 2028
0.44% unsecured bonds due 2029

0.014%~0.120% unsecured bonds due from 2019 to 2025(*1) (*2)
Long-term bank loans due through 2077, with weightedaverage interest rate of 0.6016% for the year ended March
31, 2020, and of 0.5992% for the year ended March 31, 2019
Less current portion of long-term debt
Total

¥

2020

Millions of yen—
3,000
25,000[25,000]
10,00010,000

¥

2019

3,000
—
25,000—10,000—Thousands of
U.S. dollars (Note 1)

2020

$

—
27,565
229,716[229,716]
91,88691,8862023 and thereafter
Total(a) The reconciliation of beginning and ending balances of the benefit obligation (excluding the defined
benefit plans applied based on the simplified method) are as follows:

Obligation at April 1

Beginning balance of subsidiary consolidated fromthis fiscal year

2,000

56,050[1,600][600][14,701]

397,294432,606

3,650,598

Actuarial gains and losses(90,938)¥360,456(87,093)¥385,513(835,600)$3,312,103

Benefit payments

Millions of yen

2022(1) Defined Benefit Plans

6,100

The aggregate annual maturities of long-term debt outstanding at March 31, 2020 are as follows:

2021

Certain consolidated subsidiaries have recorded liabilities for retirement benefit and assets for a retirement

benefit based on the simplified method.

(*1) [] is the amount of the current portion of bonds.
(*2) This is the total amount of the bonds Goodman Co., Ltd. issued.
In March 2015, the Company issued ¥3,000 million (US$27,565 thousand) of 0.57% unsecured bonds due 2020.
In March 2020, the Company issued ¥3,000 million (US$27,565 thousand) of 0.25% unsecured bonds due 2025.
In January 2016, the Company issued ¥25,000 million (US$229,716 thousand) of 0% convertible bonds due 2021.
In October 2018, the Company issued ¥10,000 million (US$91,886 thousand) of 0.674% unsecured bonds due 2028.
In October 2019, the Company issued ¥10,000 million (US$91,886 thousand) of 0.44% unsecured bonds due 2029.
From February 2017 to February 2018, Goodman Co., Ltd. issued ¥6,100 million (US$56,050 thousand) of 0.014% and 0.120%
unsecured bonds due from 2022 to 2025.

2020

ment benefit plans, and defined contribution pension plan for employees.

2020¥ 64,338
78,24659,816
98,165¥300,565

Service cost

Interest cost

Prior service cost

Other (foreign currency translation adjustments, etc.)

Obligation at March 31

2020$ 591,182
718,975
549,635
902,012$2,761,805

As is customary in Japan, long-term and short-term bank loans are made under general agreements which provide that additional
securities and guarantees for present and future indebtedness will be given under certain circumstances at the request of the bank.
In addition, the agreements provide that the bank has the right to offset cash deposits against any long-term and short-term bankloan that becomes due, and in case of default and certain other specified events, against all other loans payable to the bank.

Thousands of
U.S. dollars (Note 1)

2019

2020

¥15,529¥14,544$142,693

70

—

651

1,293
77
356
184
(556)
4
¥16,961

1,251
94
291
0
(631)
(22)
¥15,529

11,886
716
3,279
1,693
(5,109)43$155,855(b) The reconciliation of beginning and ending balances of the fair value of the plan assets (excluding thedefined benefit plans applied based on the simplified method) is as follows:

Fair value of plan assets at April 1

Thousands of
U.S. dollars (Note 1)

2020

Millions of yen

Expected return on plan assets
Actuarial gains and losses
Company contribution
Benefit payments

Other (foreign currency translation adjustments, etc.)

Fair value of plan assets at March 31

2020

Millions of yen¥10,500
164
(337)
783
(475)
(11)
¥10,6242019¥10,177
162
(126)
740
(430)
(23)
¥10,500

Thousands of
U.S. dollars (Note 1)

2020$96,483
1,508(3,099)7,196(4,364)(103)$97,620

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

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Notes to Consolidated Financial Statements(c) The reconciliation of beginning and ending balances of liabilities for retirement benefit applied based(f) Remeasurements of defined benefit plans (Other Comprehensive Income)Thousands of
U.S. dollars (Note 1)

Millions of yen

on the simplified method is as follows:

2020

Millions of yen

¥72
10
(2)
—
—
3
¥83

Liabilities for retirement benefit at April 1
Retirement benefit cost
Retirement payments

Contribution for the plan

Decreasing by sale of subsidiary shares

Other (foreign currency translation adjustments, etc.)

Liabilities for retirement benefit at March 31

2019

¥185
21
(11)
(1)
(98)
(23)
¥ 72

2020

$665
94
(20)
—
—
28
$767

(d) The reconciliation of ending balance of the benefit obligation and the fair value of the plan assets, andliabilities and assets for retirement benefit are as follows:

Benefit obligation on funded scheme
Plan assets

Benefit obligations on non-funded scheme

Net assets (liabilities) on the consolidated balance sheet
Net defined benefit liability

Net assets (liabilities) on the consolidated balance sheet

2020

Millions of yen¥ 14,662(10,624)
4,038
2,382
6,421
6,421
¥ 6,4212019¥ 13,786(10,500)
3,286
1,814
5,101
5,101
¥ 5,101

Thousands of
U.S. dollars (Note 1)

2020$134,731(97,620)
37,111
21,89159,00259,002$ 59,002(*) Including the defined benefit plans applied based on the simplified method

Interest cost

Expected return on plan assets

Amortization of actuarial gains and losses
Amortization of past service obligation

Retirement benefit cost based on the simplified method
Other
Total

Prior service cost

2020

Millions of yen¥1,293
77
(164)
365
40
10
11
¥1,6352019¥1,251
94
(162)
233
(88)
21
4
¥1,3532020$11,886716(1,508)
3,361
369
94
109
$15,029¥(184)(342)¥(526)

Total

2019

¥ (0)
(371)
¥(371)

Thousands of
U.S. dollars (Note 1)

2020$(1,693)(3,144)$(4,838)(g) Remeasurements of defined benefit plans (Accumulated Other Comprehensive Income)The breakdown of the items recorded in adjustments to defined benefit plans is as follows:

Unrecognized prior service cost
Unrecognized actuarial loss
Total

2020

Millions of yen¥

373(1,206)¥ (833)

2019

¥ 517
(824)
¥(307)

Thousands of
U.S. dollars (Note 1)2020$ 3,428(11,089)$ (7,660)(h) Items concerning the pension assets
1. The breakdown of the pension assets
The ratio of the plan assets is as follows:
Bonds

Equities

General account
Total

Thousands of
U.S. dollars (Note 1)

2020

Actuarial gains and losses

Others(e) The breakdown of net pension and severance costs is as follows:

Service cost

The breakdown of the items recorded in adjustments to defined benefit plans is as follows:(*) Including the defined benefit plans applied based on the simplified method

2020

44%
17%
32%
7%
100%

2019

41%
23%
30%
6%
100%

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

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Notes to Consolidated Financial Statements

2. Setting of the long-term expected rate of return

The long-term expected rate of return is to be determined considering the current and future allocation ofplan assets, and the current and expected long-term rate of return from the diverse assets composing theplan assets.

12. Net Assets
The significant provisions in the Corporate Law of Japan (the “Corporate Law”) that influence financial andaccounting matters are summarized below:(i) Calculation basis of actuarial methods(a) Dividends

The main calculation basis of actuarial methods at the end of the period is as follows:2020

Primarily 0.2%
Primarily 1.5%
Primarily 6.7%

Discount rate

Expected long-term rate of return
Assumed wage increase rate

Under the Corporate Law, companies can pay dividends at any time during the fiscal year in addition to the2019

Primarily 0.2%
Primarily 1.5%
Primarily 5.3%

year-end dividend upon a resolution at the shareholders’ meeting. For companies that meet certain criteriasuch as (1) having the board of directors, (2) having independent auditors, (3) having the board of corporate

auditors, and (4) the service period of the directors is prescribed as one year rather than the normal term of

two years by its articles of incorporation, the board of directors may declare dividends (except for dividends inkind) if the company has prescribed so in its articles of incorporation. The Company’s present system meets(2) Defined Contribution Retirement Plans

The amounts of necessary contributions to defined contribution retirement plans within the Company andthe first three criteria but the two-year service period of the directors does not meet the fourth criterion.

Interim dividends may also be paid once a year by the resolution of the board of directors if the articles of

consolidated subsidiaries were ¥526 million (US$4,834 thousand).

incorporation of the company stipulate so. The Company’s articles of incorporation contain such a stipulation,

11. Commitments and Contingent Liabilities

treasury stock.

and it pays an interim dividend semi-annually by the resolution of the Board of Directors.

The Corporate Law provides certain limitations on the amounts available for dividends or the purchase of

The Company and its consolidated subsidiaries had the following commitments and contingent liabilities:

Liabilities for guarantees

Export drafts discounted
Total

2020

Millions of yen

¥17
¥17

Thousands of
U.S. dollars (Note 1)

2019

2020

¥4
¥4

$164
$164

(b) Increases / Decreases and Transfer of Common Stock, Reserve and Surplus

The Corporate Law requires that an amount equal to 10% of dividends must be appropriated as legal reserve(a component of retained earnings) or as additional paid-in capital (a component of capital surplus) dependingon the equity account charged upon the payment of such dividends until the total of the aggregate amount oflegal reserve and additional paid-in capital equals 25% of the common stock.

Under the Corporate Law, the total amount of additional paid-in capital and legal reserve may be reversed

without limitation.

The Corporate Law also provides that common stock, legal reserve, additional paid-in capital, other capitalsurplus and retained earnings can be transferred among the accounts under certain conditions by the resolution of the shareholders’ meeting.

The Company’s legal reserve, which is included in retained earnings, amounted to ¥5,135 million (US$47,184

thousand) as of March 31, 2020, and its additional paid-in capital, which is included in capital surplus, amounted
to ¥635 million (US$5,837 thousand) as of March 31, 2020.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

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Notes to Consolidated Financial Statements

13. Business Combination

14. Segment Reporting

Business combination through acquisition

1. Outline of Reportable Operating Segments(1) Outline of the business combination

prise and Related Information”, the reportable operating segments are components of an entity for which

1) Company name and business line at the time of the business combination
Name of the company: Nipro Corporation

Business line: Manufacturing and marketing of medical equipment, pharmaceuticals, pharmaceutical packaging.
Name of the company: Nipro (China) Holdings Co., Ltd.

Business line: Management of cash and new investments of local Chinese subsidiaries

2) Date of the business combination
November 30, 20193) Legal form of the business combination

In-kind investment of our subsidiaries’ capital investment into Nipro (China) Holdings Co., Ltd. (our consolidated subsidiary)4) Outline and purpose of the transaction

We are strengthening business management and efficient use of management resources in our Chinese
business through Nipro (China) Holdings Co., Ltd.

For this purpose, we have invested the equity held by the local Chinese subsidiaries in the form of In-kind
investment. The following are the main subsidiaries that invested in kind in this transaction.
Nipro (Shanghai) Co., LTD.

Nipro Trading (Shanghai) Co., Ltd.

NIPRO MEDICAL (HEFEI) CO., LTD.

Nipro PharmaPackaging (Shanghai) Co., Ltd.
(2) Implemented accounting treatment

This merger was processed as a transaction under common control, based on the “Accounting Standard forBusiness Combinations” (ASBJ Statement No. 21, January 16, 2019) and the “Guidance on Accounting Standard

for Business Combinations and Accounting Standard for Business Divestitures” (ASBJ Guidance No. 10,
January 16, 2019).

Applied ASBJ Statement No. 17 “The Revised Accounting Standard for Disclosures of Segments of an Enterseparate financial information is available and such information is evaluated regularly by the board of directors
in deciding how to allocate management resources and in assessing performance.

The Company currently operates its business on a stand-alone basis with the divisional organizationand evaluates the performance of sales and manufacturing of each division regardless of their products.
Accordingly, the Company has three reportable operating business segments according to the divisions(Medical-Related business, Pharmaceutical-Related business and Pharma Packaging business), which are
divided mainly by their products.
*Medical-Related

The domestic division sells injection and infusion products, artificial organ products, highly functional products,
dialysis products, diabetic products and pharmaceuticals such as generic and kit products. In the global

business division, head office plays the central role, placing overseas sales and manufacturing bases for
medical equipment and sales injection and infusion products, artificial organ products and diabetic products.
*Pharmaceutical-Related

The pharmaceutical division sells pharmaceutical products with containers for combination products (injectable kit products) consigned by other pharmaceutical companies. Domestic subsidiaries sell and manufacture
injectable drugs, oral drugs and combination products.
*PharmaPackaging

The PharmaPackaging division sells glass for vials and ampoules for medical use, glass for thermos bottles,
glass for lighting and containers for combination products (injectable kit products). Overseas subsidiaries
manufacture and sell tube glass and glass mainly for syringes, vials and ampoules for medical use.

From the fiscal year ended March 31, 2019, the Company has conducted a reorganization for the purpose of

doing synthetic PharmaPackaging business and increasing synergies for Pharmaceutical-Related business. As
a result of this reorganization, some business divisions included in Pharmaceutical-Related business werechanged to PharmaPackaging business.

The presentation for the prior fiscal year is not restated.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

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Notes to Consolidated Financial Statements

Business segment information for the years ended March 31, 2020 and 2019 was as follows:
Millions of yen

Net sales:

OutsideIntersegment
Total

Operating income

Identifiable assets
Other items

Depreciation and amortization
Amortization of goodwill

Increase in tangible and intangible fixed assets

Reportable Segment

2020

Medical-Related

Pharmaceutical-Related

PharmaPackaging

Total¥335,767
6,108
341,875
36,249454,185¥ 70,357
18,601
88,95813,196
176,605¥36,217
5,666
41,883675
65,914¥442,342
30,376
472,718
50,121
696,706

17,2962,800¥ 27,296

12,09210¥ 13,598

4,313
332¥ 6,036

33,702
3,143¥ 46,931

Other
(*1)

¥

Adjustment
(*2)

Total

Consolidated
financial statements

174
1,393
1,567
176
19,108¥442,516
31,769474,285
50,298715,814¥—(31,769)(31,769)(23,877)
116,050¥442,516—
442,516
26,420831,865

194—
75

33,896
3,143¥ 47,007

4,785—¥ 17,663

38,682
3,143¥ 64,670

Other
(*1)

Total

Adjustment(*2)

Consolidated
financial statements

1,599
12,805
14,404
1,625
175,580$4,066,122
291,920
4,358,042
462,171
6,577,367$—(291,920)(291,920)(219,403)
1,066,347$4,066,122—
4,066,122
242,767
7,643,715

1,784
—
694

311,466
28,888$ 431,931

43,974—$ 162,299

355,440
28,888$ 594,231¥

Thousands of U.S. dollars (Note 1)

2020

Net sales:

OutsideIntersegment
Total

Operating income

Identifiable assets
Other items

Depreciation and amortization
Amortization of goodwill

Increase in tangible and intangible fixed assets

Reportable Segment

Medical-Related

Pharmaceutical-Related

PharmaPackaging

Total$3,085,248
56,124
3,141,373
333,082
4,173,350$ 646,485
170,925
817,410
121,256
1,622,767$332,789
52,064
384,8546,206
605,668$4,064,523
279,114
4,343,638
460,5456,401,786

158,934
25,731$ 250,816

111,115101$ 124,955

39,631
3,055$ 55,466

309,681
28,888$ 431,237$$

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

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Millions of yen

Net sales:

OutsideIntersegment
Total

Operating income

Identifiable assets
Other items

Depreciation and amortization
Amortization of goodwill

Increase in tangible and intangible fixed assets

Reportable Segment

2019

Medical-Related

Pharmaceutical-Related

PharmaPackaging

Total¥327,359
6,724
334,083
36,722428,943¥ 63,482
18,31181,793
10,662
172,691¥35,526
5,099
40,625778
74,521¥426,368
30,135456,503
48,162
676,155

15,931
3,036¥ 25,208

11,6460¥ 21,138

3,712
335¥ 6,488

31,2893,372¥ 52,835

Other
(*1)

Total

Adjustment(*2)

Consolidated
financial statements

¥

31
1,463
1,494
146
3,815

¥426,399
31,598457,997
48,309679,970¥—(31,598)(31,598)(24,482)
165,850¥426,399—
426,399
23,827
845,821

165
—
¥ 757

31,455
3,372¥ 53,592

3,796—¥ 10,802

35,252
3,372¥ 64,394(*1) “Other” is the business segment which is not included in the reportable segment and consists of real estate income and sales by headquarters.
(*2) Adjustment is as follows:• Adjustments for operating income for the years March 31, 2020 and 2019 include ¥(1,371) million (US$(12,600) thousand) and ¥(2,380) million of adjustment for unrealized gain and ¥(22,506) million (US$(206,803) thousand) and ¥(22,102) million of corporate cost, respectively.
Corporate cost consists primarily of sales, general and administrative expenses and research and development costs which do not belong to the reportable segment.
• Adjustments for identifiable assets for the years ended March 31, 2020 and 2019 include ¥(14,784) million (US$(135,850) thousand) and ¥(15,637) million of elimination of inter-segment transaction and ¥130,835 million (US$1,262,198 thousand) and ¥181,488 million of corporate
assets, respectively. Corporate assets consisted primarily of cash and deposits, investment securities, assets for development and assets for the management division of head office which do not belong to the reportable segment.
• Adjustments for depreciation and amortization for the years ended March 31, 2020 and 2019 are for corporate assets. Depreciation and amortization and increase in tangible and intangible fixed assets include long-term prepaid expenses.
• Adjustment for increase in tangible and intangible fixed assets is an increase in corporate assets.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

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Notes to Consolidated Financial Statements

Loss on impairment of fixed assets and unamortized balance of goodwill by business segments were as follows:

Net sales and property, plant and equipment for each area were as follows:

Millions of yen
Reportable Segment

Loss on impairment of
fixed assets

Unamortized balance of
goodwill

Millions of yen

2020

Other

Adjustment

Total¥ 5,655¥—¥—¥ 5,655

14,738——14,738

Medical-Related

PharmaceuticalRelated

PharmaPackaging

Total¥ 2,626¥—¥3,02914,19343

501

Net sales

Property, plant andequipmentJapan¥267,708
206,748

Americas

2020

Europe

Asia

Total

¥64,153¥50,801¥59,853¥442,516

16,533

21,99062,277

307,551

Thousands of U.S. dollars (Note 1)

2020
Thousands of U.S. dollars (Note 1)

Net sales

2020
Reportable Segment

Loss on impairment of
fixed assets

Unamortized balance of
goodwill

Other

Adjustment

Total$ 51,963$—$—$ 51,963

135,428——

135,428

Medical-Related

PharmaceuticalRelated

PharmaPackaging

Total$ 24,129$ —$27,834

130,419

404

4,605

Property, plant andequipment

Reportable Segment

Other

Adjustment

915

¥—

¥—

¥

19,327——

19,327

PharmaceuticalRelated

PharmaPackaging

2

¥—

¥913

¥

18,481—845

Medical-Related

Unamortized balance of
goodwill

2019

¥

Total

Total

915

Americas

Europe

Asia

Total

$2,459,873$589,482$466,796$549,970$4,066,122

1,899,741

151,922

202,066

572,247

2,825,977

Millions of yen

Net sales
Millions of yen

Loss on impairment of
fixed assets

Property, plant andequipment

Japan

Japan

¥260,967
189,571

Americas

2019

Europe

Asia

Total

¥59,836¥51,042¥54,552¥426,399

10,99821,801

62,110284,483

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

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Notes to Consolidated Financial Statements

15. Selling, General and Administrative Expenses

17. Impairment Loss

Significant components of selling, general and administrative expenses for the years ended March 31, 2020

In the years ended March 31, 2020 and 2019, the Company and its consolidated subsidiaries recorded impair-and 2019 were as follows:

Salaries

2020

Millions of yen¥20,0202019¥20,115

Thousands of
U.S. dollars (Note 1)

2020

ment loss of ¥5,655 million (US$51,693) and ¥915 million, respectively.
The following table presents the major impaired assets.

Purpose of use

16. Research and Development Expenses

Business use

Research and development expenses for the years ended March 31, 2020 and 2019 were ¥18,204 million

Business use(US$167,275 thousand) and ¥16,526 million, respectively.

Millions of yen

Thousands of
U.S. dollars (Note 1)

AmountAmountBuildings and structures,
Machinery and equipment¥2,903$26,678

Goodwill

2,492

22,904$183,961
Location

Jilin Nipro Jiaheng
Pharmaceutical
Packaging Co., Ltd.

NexMed International
Co., Ltd.

2020

Type of assets

2020

The assets for business use are divided into groups on which separate financial information is reported for management accounting
purposes, whereas leased assets and idle assets are categorized individually. Headquarters assets, R&D facilities, dormitories andcompany-offered houses are categorized into assets for common use, since these assets cannot generate identifiable cash flows.
The company recognized the impairment loss, since the economic performance of above-mentioned assets will be worse than what
the company originally expected.
The recoverable amounts of those assets are measured by the value in use, and have been impaired to nil carrying value.
Millions of yen
Purpose of use

Business use
Business use

Location

Type of assets

Anyang Nipro Changda
Buildings and structures, Machinery
Pharmaceutical Packaging Co., Ltd. and equipment
Jilin Nipro Jiaheng Pharmaceutical
Packaging Co., Ltd.

Buildings and structures, Machineryand equipment

2019

Amount¥552
335

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Notes to Consolidated Financial Statements

18. Supplemental Disclosures of Cash Flow Information
Supplemental information related to the Consolidated Statements of Cash Flows was as follows:

Interest

Income tax

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

55
55

N II P
PR
RO
O A
An
nn
nu
ua
a ll RRe
ep
poo rr tt 2
20
02
20
0
N

Financial/Data Section

Cash paid during the year for:Financial/
Data Section

2020

Millions of yen¥3,201
9,108

2019¥3,211
8,175

Thousands of
U.S. dollars (Note 1)

2020$29,415
83,697

19. Contingent Liability
Material Litigation

In February 2018, Trividia Health, Inc. (hereinafter, ‘THI’) filed a request for arbitration at the International Courtof Arbitration of the International Chamber of Commerce, seeking a decision on THI being able to claim

damages due to a loss of product sales if the Company’s purchase volume did not reach the annual minimumpurchase volume in the third to fifth years of the International Distributor Agreement executed between the
Company and THI in October 2015, in which a minimum annual purchase obligation was imposed for each yearof the five-year agreement period. In March 2019, THI notified the Company of the termination of the agreement,
citing failure to fulfil the third year’s minimum purchase obligation imposed in such agreement.

In addition, in May 2019, THI, attributing the termination of the agreement to the Company’s failure topurchase the minimum purchase obligation for the third year, made an additional claim for damages for

estimated losses, ¥2,938 million (US$27 million) due to unfulfillment of the minimum purchase obligation for

the third to fifth years of the agreement and the abuse of trademark rights held by THI owing to the Company’s

violation of the agreement and the damages amounted to ¥2,176 million to ¥3,264 million (US$20 million to
US$30 million) for trademark infringement based on the US trademark law.

The Company considers the above claims and requests to have no justifiable reasons and will insist on thelegitimacy of our Company in the arbitration procedure. Depending on the result of the arbitration procedure,
it may affect the business performance of the group, but it is difficult to reasonably estimate the impact on theperformance and consolidated financial statements at the moment.

Contents

About
NIPRO

Management
Message

Outline of theMedium-Term
Management Plan

Review ofOperations

Management
Foundation

Financial/
Data Section

Financial Review
Ten-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

56

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Corporate Information

NIPRO Annual Report 2020

Financial/Data Section

Corporate Information

Stock Price Range (Tokyo Stock Exchange)

Principal Shareholders

As of March 31, 2020

Nippon Electric Glass Co., Ltd.
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
Resona Bank Limited
JP Morgan Chase Bank 385632
SSBTC CLIENT OMNIBUS ACCOUNT
Japan Trustee Services Bank, Ltd. (Trust Account 5)
Japan Trustee Services Bank, Ltd. (Trust Account 9)
JP Morgan Chase Bank 385151
Japan Post Insurance Co., Ltd.
Total

Date of Establishment
July 8, 1954
Head Office
3-9-3 Honjo-nishi, Kita-ku, Osaka 531-8510, Japan
Telephone: +81-6-6372-2331
Facsimile: +81-6-6375-0669
https://www.nipro.co.jp/en/

Number of
Shares Held(in thousands)

Percentage ofTotal Sharesin Issue (%)

20,225
8,504
5,365
4,414
3,251
2,971
2,814
2,289
2,187
2,052
54,076

12.40
5.21
3.29
2.71
1.99
1.82
1.73
1.40
1.34
1.26
33.16

(Yen)

1,800
1,600
1,400
1,200
1,000
800
600

12

3

2018

6

9

12

3

2019

6

9

12

3

2020

Major Group Companies (As of June 30, 2020)
Tokyo Office
4-3-4 Hongo, Bunkyo-ku, Tokyo 113-0033, Japan
Telephone: +81-3-5684-5611
Facsimile: +81-3-5684-5610

Area

Number of Employees
4,060
28,72632,786

Parent company
Consolidated subsidiaries
Total

Common Stock
Authorized
IssuedOutstanding
Number of Shareholders

400,000,000 shares
171,459,479 shares
163,097,623 shares
57,522

Stock Listings
Tokyo Stock Exchange, First Section
Ticker Code: 8086
Transfer Agent
Mizuho Trust & Banking Co., Ltd., Head Office
Stock Transfer Agency Dept.
1-2-1, Yaesu, Chuo-ku, Tokyo 103-8670, JapanCountry

DomesticJapan

Overseas

Thailand
China

VietnamSingapore
India

BangladeshIndonesia
UAE
BrazilU.S.A.

CanadaBelgium

FranceGermany
Switzerland
RussiaName

Nipro Medical Industries Co., Ltd.
Goodman Co., Ltd.
Nipro Pharma Corporation
Zensei Pharmaceutical Industries Co., Ltd.
Cell Science & Technology Institute, Inc.
NexMed International Co., Ltd.
Nipro (Thailand) Corporation Limited
Nipro Sales (Thailand) Co., Ltd.
Nipro (China) Holdings Co., Ltd.
Nipro (Shanghai) Co., Ltd.
Nipro Trading (Shanghai) Co., Ltd.
Nipro PharmaPackaging (Shanghai) Co., Ltd.
Jilin Nipro Jiaheng Pharmaceutical Packaging Co., Ltd.
Anyang Nipro Changda Pharmaceutical Packaging Co., Ltd.
Chengdu Pingyuan Nipro Pharmaceutical Packaging Co., Ltd.
Nipro Medical (Hefei) Co., Ltd.
Nipro Vietnam Company LIMITED
Nipro Pharma Vietnam Co., Ltd.
Nipro Asia Pte Ltd.
Nipro India Corporation Private Limited
Nipro PharmaPackaging India Private Limited
Nipro Medical (India) Pvt. Ltd.
Nipro JMI Co., Ltd.
Nipro JMI Pharma Ltd.
PT. Nipro Indonesia JAYA
Nipro Middle East FZE
Nipro Medical Ltda.
Nipro Medical Corporation
Nipro PharmaPackaging Americas Corporation
Infraredex, Inc.
CardioMed Supplies INC.
Nipro Europe Group Companies N.V.
Nipro Medical Europe N.V.
Nipro PharmaPackaging Belgium N.V.
Nipro PharmaPackaging France S.A.S.
Nipro PharmaPackaging Germany GmbH
Nipro Pharma Glass AG
Nipro PharmaPackaging Ural LLC

Principal business

Manufacturing and marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of pharmaceuticals
Manufacturing and marketing of pharmaceuticals
Development and manufacturing of cell culture media
Development, manufacturing and marketing of orthopedic products
Manufacturing and marketing of medical devices
Marketing of medical devices
Business management
Manufacturing and marketing of medical devices
Marketing of medical devices
Marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of pharmaceuticals
Marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of PharmaPackaging products
Marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of pharmaceuticals
Manufacturing and marketing of medical devices
Marketing of medical devices
Manufacturing and marketing of medical devices
Marketing of medical devices
Manufacturing and marketing of PharmaPackaging products
Development, Manufacturing and marketing of medical devices
Manufacturing and marketing of medical devices
Business management
Marketing of medical devices
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Manufacturing and marketing of PharmaPackaging products
Business management
Manufacturing and marketing of PharmaPackaging products