Annual Report 2018Year Ended March 31, 2018

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

01

Contents
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01 Contents

15 Management Foundation

02 About NIPRO

15 Research and Development Activities

03 Financial Highlights

04 Management Message

21 Board of Directors and Audit &Supervisory Board Members

23 Financial/Data Section
23 Financial Review

04
A Message from the President

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Contents

About NIPRO

16 Progress of Research and Development
19 Status of Corporate Governance

02 Businesses

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27 Ten-Year Summary
29 Consolidated Balance Sheets

Businesses
Financial Highlights

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30 Consolidated Statements of Income
30 Consolidated Statements ofComprehensive Income

08
A Message from the CFO

31 Consolidated Statements of Changes in Net Assets
32 Consolidated Statements of Cash Flows
33 Notes to Consolidated Financial Statements

09 Review of Operations
09 Medical-Related Business
11 Pharmaceutical-Related Business
13 PharmaPackaging Business

51 Report of Independent Auditors
52 Corporate Information

Disclaimer
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 andpublishable at the time this report was prepared. Whenreading this report, please understand that forward-looking
statements involve potential risks and uncertainties; actual
future business performance and forecasts may therefore
differ materially from those 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 2018 represents the year ended
March 31, 2018.

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

02

Businesses
Financial Highlights

About NIPRO

Businesses
We Meet the Needs ofMedical-Related
Business

Medical Professionals
and Patients throughNipro engages globally in the development,
manufacture, and sale of medical equipment for
injection-infusion and dialysis treatment, andproducts related to diabetes and cell cultures, aswell as the sale of artificial organ-related products
and generic drugs.

Our Three Businesses

Renal Products

Injection Products

Infusion Products

Injectables

Orally Administered Drugs

External Preparations

Glass Molding

Glass Tubing

Nasal Administration Device

Sales ratio by businessPharmaPackaging
Business

Medical-Related
Business

7%

76%

Total sales¥395,397million

PharmaceuticalRelated BusinessOne of the world’s leading CDMO* companies, Nipro
performs contract manufacturing of orally administereddrugs, injectables, and external preparations throughits Pharmaceutical-Related Business, and supplies
products to pharmaceutical companies in Japan andaround the world.
* Contract Development and Manufacturing Organization

Fiscal 2018

PharmaPackaging
Business
PharmaceuticalRelated Business17%

Nipro’s PharmaPackaging Business, a part of thecompany since its founding, manufactures and sells
glass products and other comprehensive
pharmaceutical packaging. Currently, Nipro engages
in this business globally from a base of 14
companies and 15 plants in 8 countries, focused onJapan, China, Europe, and the U.S.

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

03

Businesses
Financial Highlights

About NIPRO

Financial Highlights
Net sales

Operating income

Net income attributable to owners of parent

395,397

27,088

11,829millions of yen
Despite recording extraordinary losses, net income
attributable to owners of parent increased 4.2%
due to reduced income taxes.

millions of yen
Nipro worked on development of regenerative
medicine and high-quality generic drugs.

(Millions of yen)

(Millions of yen)

(Millions of yen)

(Millions of yen)millions of yen
Net sales increased 9.9% from fiscal 2017
due to favorable Medical-Related sales.

300,753

325,084

366,650 359,699

millions of yen
Operating income decreased 5.8% from fiscal
2017 due to significantly increased R&D.

28,770395,397
24,205R&D expenses

16,113

19,71927,088

16,113

12,47016,572

11,346

11,82920172018

12,290

7,891

8,646

2014

2015

10,26911,517

2,861
2014

2015

2016

2017

2018

Capital expenditures

57,718millions of yen
Capital expenditures increase 7.2% from fiscal
2017 mainly due to investments in domestic
and foreign manufacturing facilities.

2014

2015

2016

43,511

49,91053,826

2014

2018

2015

2016

Total assets / Equity ratio

Net assets / Return on equity

Total assets:

ROE:

millions of yen
Total assets increased by ¥73,920 million fromfiscal 2017 and the equity ratio stood at 20.9%.

%
Return on equity increased 0.2 percentage
points from fiscal 2017 due to an increase in
net income attributable to owners of parent.

826,759
Total assets (Millions of yen)  (Millions of yen)

2017

Equity ratio (%)

57,718619,655

695,307 708,883

752,839826,759

178,810
135,961

31,089
20.2

24.1

23.4

22.1

8.5

175,508

2017

2018

Cash dividends per share

7.0

Net assets (Millions of yen)  

2016

Return on equity (%)
183,485
176,408 183, 485

28.5

yen
Nipro paid ¥28.5 per share for the year,
including an interim dividend of ¥17.5 per share.

(Yen)

30.5

32.5

33.5

2015

2016

11.8
6.8

29.0

28.5

2017

2018

7.0

20.9
2.3

2014

2015

2016

2017

2018

2014

2015

2016

2017

2018

2014

2015

2016

2017

2018

2014

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

04

A Message from the President
A Message from the CFOManagement Message

A Message from the President
Further Enhancing Product Competitiveness with
Continued Global Development Efforts
Reporting of accounts for fiscal year ended March 31, 2018
Net sales for the fiscal year ended March 31, 2018, increased 9.9% over the previous year.
Medical-Related business continued to show strength in each major product, and sales increased
more than originally anticipated. The Nipro Group’s main product, dialyzers, in particular saw
growth overseas. Although continued strengthening of the North American sales network has been

Results
Net sales¥ 395,397 million
9.9%increase from fiscal 2017

successful, further expansion is expected thanks to the acquisition of CardioMed Supplies Inc in
Canada as of January 2018. Even in China, where we enjoy rock-solid sales trends, low-priced
dialysis products are becoming more prevalent, which we expect will bring about full-scale growth

Operating incomeof Nipro products with high customer satisfaction. In India, dialyzers are becoming increasingly
common at medical facilities, and we are working on constructing a reliable sales network that canmatch the country’s growth.
Meanwhile, sales of vascular products in Japan were very strong. The competitiveness of¥ 27,088 million
5.8%

decrease from fiscal 2017

Nipro’s market-launched products remains impressive, and by introducing new products, we
expect to claim a majority share of overall vascular products in the near future.
PharmaPackaging business performance, however, was slightly lower than expected.
Pharmaceutical-Related business also struggled. The main factor for this was the influence of

Net income attributable toowners of parent

restrained purchasing in anticipation of the 2018 National Health Insurance (NHI) drug pricerevisions, particularly toward the end of the last fiscal year. The NHI drug price revisions will have asignificant impact on accounts for the coming fiscal year, and we anticipate negative impacts on
Medical-Related business and Pharmaceutical-Related business.

Yoshihiko Sano
President & Representative Director¥ 11,829 million
4.2%

increase from fiscal 2017

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

05

A Message from the President
A Message from the CFOManagement Message

A Message from the President

Product competitiveness: The essence of the company
At Nipro, we develop products based on users' viewpoints,

sales force, we can develop products with higher

remains unchanged. However, growth is expected toand our basic policy is to continue providing users withcompetitiveness than specialized manufacturers.

continue for going forward for outsourced manufacturing,high-quality products that meet their needs.
Making sure we can continue implementing this policy

In the Medical-Related business, as demand for dialyzers—

which offers one of the world’s most productive capabilities.

Nipro’s main product—is expected to increase in Latin America,

Meanwhile, we remain dedicated to developing new

requires various upfront investments, which is why ourAsia, the Middle East, India, China, and other emerging countries,

products in PharmaPackaging business. Finally, our products

capital expenditures and R&D expenditures are large.

Nipro is dedicated to strengthening its sales activities inin China continue to become better quality as our high-Only by continuing to introduce high-quality products in theeach country. Moreover, as mentioned above, sales of vascularvalue-added vials and glass ampoules begin to attract amarket will Nipro be able to continue to grow. In other words,

products have increased greatly in Japan due to the highwide variety of attention, generating a tailwind in the

our survival as a manufacturer depends on our productquality of Nipro products. For this reason, our goal is to continue

businesses from emerging countries.

competitiveness. For the coming fiscal year, capital

to increase our Japanese market share in the future in theinvestments are expected to be 55.6 billion yen, while

hopes that the product will see increased growth overseas,

research and development expenses are expected to reachjust as with Nipro dialyzers. Regarding generic drugs, although

16.4 billion yen. We will continue to invest in developing

sales from about three years ago were less than 50 billion yen,highly competitive products without lowering these levels.

sales are expected to exceed 70 billion yen in the coming

Moreover, our product development process includes directfiscal year.

contact with hospitals and doctors, earning us a high level oftrust from various medical institutions. By leveraging thisAs for Pharmaceutical-Related business, the trend in
OEM production of domestic pharmaceutical companies

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

06

A Message from the President
A Message from the CFOManagement Message

A Message from the President

Striving for a sales target of 500 billion yen as a management objective
Nipro’s management target for the fiscal year ending

and accelerated growth in each region without diverging

practical applications. Moreover, this field offers a highMarch 31, 2021 is consolidated net sales of 500 billion

from the internal management structure of the Nipro Group.

possibility for growth as more and more treatment areasyen. We believe that we have already set in place theEven while overseas business continues to grow and expand,become viable.

measures necessary to achieve that goal. As such, we

we believe that this new structure will be a valuable asset

expect to reach the goal without issues, although the actual

as going forward as we look toward full-fledged expansion

personnel. Proficiency in the medical field is not something

date of accomplishment is not guaranteed. We areof vascular products.

that can be gained over only a short period but instead

currently concentrating our efforts on further investment

The second focal point is expanding Nipro’s product

Finally, the third focal point is securing talented

requires extensive experience and accumulated skill.

with an eye to the future with the following three points asfields. Specifically, we anticipate significant growthAs such, Nipro strives to create an environment thatthe main focus.

in or t hope dic sur ge r y a nd re ge ne r a t iv e me dic i ne.

makes this possible. Women in particular are faced withFor orthopedic surgery, the Nipro Group will utilize thehaving to retire due to marriage, childbirth, and childFirst, the establishment of regional headquarters—as isbusiness foundation established by NexMed Internationalrearing, for example. However, the loss of experienced

already under way in Europe—will continue throughout theCo., Ltd., which was acquired in January 2017, as a starting

female employees is a major setback for Nipro. To counterworld, thus establishing a hub from which we canpoint, and through the addition of synergies by introducing

this, we have introduced a “Job Return Program” that

continue to expand our numerous overseas group bases.

newly developed products, we believe medium- to long-term

makes it easier for employees who have left the workforce

Current plans are to establish regional headquarters ingrowth will be possible. For regenerative medicine,

to return, making it possible for those with extensive

China and the US. Regional headquarters will bebecause a patient’s own cells are grown in culture andmedical knowledge to continue working as long as possible.

responsible for various functions—originally thetreated, side effects are less likely, opening the door toMoreover, in addition to offering staggered working hours forresponsibility of the head office—such as regional

revolutionary medical treatment that eliminates the need

employees with childcare or nursing care responsibilities,

compliance, quality assurance, acquisition of permits andfor surgical operations. Following submittal of

Nipro has also established nurseries at factories andlicenses, financing, and personnel affairs. This will allow

manufacturing and marketing approval applications inlaboratories throughout Japan in an effort to improve theus to build a powerful structure that enables autonomous

June 2018, we have been steadily working toward

workplace environment.

The first focal point is strengthening our overseas business.

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

07

A Message from the President
A Message from the CFOManagement Message

A Message from the President

Nipro’s desired corporate image
At Nipro, we believe our current and future responsibility

inspection and treatment equipment that uses

provide generous opportunities and support to thoseto society is to develop innovative, value-added products

electromagnetic waves.

employees that show such levels of willingness.

and technologies that improve patient outcomes andIn order for us to contribute to greater health

At Nipro, our goal is to become a “truly global

healthcare worldwide. This is the management philosophy

expectancy—that is, to ensure users a happy life—

comprehensive health care company” that is able tounder which we promote our business activities. We are

we must consider from a broader perspective than our

respond to a wide variety of medical needs. We ask ourdedicated to providing satisfying products for medical

business activities. When faced with something that weshareholders for their kind support and understanding as

professionals and patients from the user’s viewpoint.

cannot do alone, perhaps collaborating with competitors

we continue working toward this goal.

Nevertheless, so long as the company remains a major

will allow us to develop a more comprehensive system of

player in medical care, we must set our sights even higher.

products and services. Moreover, incorporating the

Even if we are able to treat diseases and therefore

development capabilities of venture companies andincrease the average life expectancy, the individuals

forming good relationships with suppliers arethemselves will not live happy lives if they continue to haveindispensable factors for contributing to society throughperiods of unhealthiness. For this reason, Nipro should

our business activities. This of course means performing

work toward contributing to the improvement of quality ofour daily tasks—from maintaining product sales networks

life (QOL), which offers even greater increases to healthand strengthening maintenance systems to implementing

expectancy. As a means to contributing to QOL

more comprehensive employee training and integrating

advancements in the future, Nipro aims not only to help

with acquired companies—with a keen eye to the idea of

promote regenerative treatments but also to develop“improving the health of people.” It is also important toJuly 2018

Yoshihiko Sano
President & Representative Director

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

08

A Message from the President
A Message from the CFOManagement Message

A Message from the CFO
Consolidated earnings forecast for fiscal year
ending March 31, 2019
For the coming fiscal year, the consolidated earnings forecast
indicates net sales are set to increase by 7.9% to 426.8 billion
yen through an active focus on sales both in Japan andoverseas. With regard to profit, however, we anticipate adecrease of about 15 billion yen overall—4 billion yen for

Ensuring Stable
Future Profit while
Implementing Stable
and Continuous
Dividends

Takehito Yogo
CFO

medical devices and 11 billion yen for medicines—as a result of
the NHI drug price revisions of April 2018. In addition toincreases in expenses due to an expansion of the company’s
scale of sales, research and development expenses for celltherapy medicine are expected to increase, resulting in adecrease in operating profit by 13.6% to 23.4 billion yen.
Net income attributable to owners of parent is expected toincrease by 20.0% to 14.2 billion yen.
The assumed exchange rates for these performance
forecasts are 105 yen per dollar and 130 yen per euro. The
Nipro Group has business developments in 56 countries
with overseas sales—accounting for 39% of current total
sales—steadily increasing every year. Although exchange rates
remained relatively stable throughout the year, Nipro willcontinue to consider measures to mitigate the impact of
exchange rate fluctuations as a means to reduce foreignexchange risks.

Aggressive capital investments
To continue providing users with high-quality products thatmeet the needs of our customers, Nipro continues to conduct
aggressive capital investments. Capital investment for the fiscal
year ended March 31, 2018 increased 7.2% to 57.7 billion yen.
In Japan, Nipro invested 2.5 billion yen in installation of syringe
manufacturing facilities at its Odate Plant, 2.4 billion yen in the
medical rubber components manufacturing facilities and building
at the Biwako Plant, and various other regenerative medicine
research and development centers and the like. Moreover,
we have invested 5.5 billion yen in inspection and packaging
facilities as a result of increased demand for Nipro Pharma
Corporation contract manufacturing. Overseas, we have also

invested 2.3 billion yen in dialyzer manufacturing facilities at
Nipro India Corporation Private Limited in response to vigorous
demand for increased dialysis treatments.
In the coming fiscal year, capital investments are scheduled
to be 24 billion yen for Medical-Related business, 17.9 billion
yen for Pharmaceutical-Related business, and 7.3 billion yen for
PharmaPackaging business, resulting in an expected total of
55.6 billion yen.

Dividend policy
Nipro believes that returning profit to shareholders is one of
the most important and effective management measures.
We intend to strengthen the foundation of each of theDevelopment, Production, and Sales departments from along-term perspective, and strive to increase Nipro's revenue
as well as aim for rational profit distribution based on a sliding
wage scale system. In determining the dividend amount,
we have adopted the concept of consolidated payout ratio.
For the fiscal year ended March 31, 2018, we set the base for
profit dividends by summing two-thirds of non-consolidated net
income and one-third of consolidated net income, and use 40%
of it as the source for dividends, resulting in an annual dividendof 28.5 yen per share.
For the fiscal year ending March 31, 2019, we plan to set
the base profit for dividends by summing three-quarters ofconsolidated net income and one-quarter of non-consolidated
net income, and use 39% of it as the source of dividends.
We plan to reduce the distribution ratio of the source ofdividends by 1% each fiscal year, while paying attention tostrengthening our financial structure and stabilizing dividends,
to around 35% in approximately four years' time.

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Management
Foundation

Review ofOperations

Financial/
Data Section

09

Medical-Related BusinessPharmaceutical-Related BusinessPharmaPackaging Business

Review of Operations

Medical-Related BusinessNet sales

Totalmillionfrom the fiscal year under review to ¥324,200 million.

Sales in Japan remained firm in all product areas.

We will vigorously push forward the enhancement of product

Sales of dialyzers (renal products) followed by drug-eluting

lineups and launch of new products Point in the areas of renal,

balloon catheters (vascular products) and left implantablediabetes, vascular and surgical devices to expand our

auxiliary artificial hearts (cardiac surgery products) inmarket share.

particular grew strongly. In the Pharmaceutical Sales Division,

Overseas, we will work to obtain greater market share in

we launched Nipro Brand's first authorized generic in Marchrenal products such as dialyzers and dialysis machines, adopting

2018, capturing a significant share of the market in its firsta hands-on approach and global end-user’s perspective-based

month and contributing to sales and income.

policy. Moreover, we will proactively engage in establishing newsites in emerging markets such as India and China andenhanced sales in mainstay renal products, such as dialyzers,

strengthening cooperation with a major dialysis clinic

and hospital products, with favorable sales of new modelgroup in Europe.

Renal
Products

34.7%

Nipro Brand
Generic
Drugs

Net sales

Operating income(Millions of yen)

(Millions of yen)

272,168 262,198

Fiscal 2018
Injection
Products

Infusion
Products

Catheter
Products

POINT
36,522300,117
28,204

Diabetic
Products

4.6%

14.5% to ¥300,117 million.

57.1%

9.1%

4.1%

For the coming fiscal year, we expect net sales to increase 8%

Japan

Others

26.6%

Net sales for the fiscal year ended March 31, 2018 increased

dialysis machines contributing to revenue.

Sales distribution ratio by region and product

42.9%

Strategy and Outlook for Fiscal 2019

Overseas sales activity also displayed healthy growth due to¥300,117
Overseas

Financial Results for Fiscal 2018

30,638NIPROHeartLine™ was introduced to enhance the convenienceand quality of home healthcare. We will provide a sense of security
to patients and their families by connecting them in real-time to
medical staff.

10.9%
10.0%

2016

2017

2018

2016

Launch of Telemedicine Support Equipped
Monitoring System NIPROHeartLine™

2017

2018

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Management
Foundation

Review ofOperations

Financial/
Data Section

10

Medical-Related BusinessPharmaceutical-Related BusinessPharmaPackaging Business

Review of Operations

Medical-Related Business

TOPICS
Initiatives in Top Priority Markets
North America
Sales Expansion Owing to Acquisition of
CardioMed Supplies Inc.
In January 2018 we acquired CardioMed Supplies Inc., a local
distributor of our renal products for approximately 25 years in
Canada. The company also boasts 40 years of sales growth since
its establishment and a high degree of market recognition.
This is our first sales site in Canada. Through this acquisition
we will enhance our business by complementing productcapabilities and sales strengths, focusing on expanding market
reach. In fiscal 2018 we achieved US$100 million in sales in North
America and, including the favorable effect by this acquisition,
we expect an increase in sales of around 30% next fiscal year.

Sales Expansion of Dialyzers
Sales Volume Year Over Year

181% Increase

The sales volume of dialyzers skyrocketed by 181% year overyear in fiscal 2018. In fiscal 2019 we aim to further expand
sales and expect an increase of 128%.
Furthermore, we also expect other key products such as
blood tubing sets and AVF needles to show healthy revenue
growth in fiscal 2019.

Expansion of Overseas Sites

Regional Headquarters

128 sales sites in 54 countries worldwide
With the accessibility of our
products to every corner of theworld as our mission, Nipro
continues to proactively
expand overseas sites.
We established complementary
sales sites in Cameroon, Brazil
and China in the first half offiscal 2018. In the second half
we established complementarysites in Canada, and further
expanded in Brazil and China.

New sales site

Local Office

Nipro Trading (Shanghai) Co., Ltd.
Huherhaote Rep. Office

CardioMed
Supplies Inc.
Nipro Trading(Shanghai) Co., Ltd.
Xuzhou Rep. Office
Nipro HQ
Nipro Trading (Shanghai) Co., Ltd.
Nangtong Rep. Office
Nipro Medical
Cameroon branch* Offices controlled only by Global Business Division

Nipro Medical
Corporation Produtos
Medicos Ltda.
Porto Alegre
Representative Office

As of March 31, 2018

China
Sales Expansion of Dialyzers and Dialysis Machines
Sales Volume* Year Over Year

115% Increase in Dialyzers 121% Increase in Dialysis Machines* Nipro Trading (Shanghai) Co., Ltd.

In China, the number of patients and dialysis clinics is increasing due to government expansion of theinsurance system and enabling of privately run dialysis clinics. Accordingly, sales of dialysis machines are
steady in China. Moreover, the sales volume of dialyzers is also steadily growing.
Dialysis clinics are increasing 10 to 15% yearly and, as dialysis patient numbers are expected tocontinue to increase, we expect sales of our products to expand further.
We established the “Nipro iCEP” (Institute for Clinical Engineering Practice) for dialysis research within
Shanghai University of Medicine & Health Sciences, the largest university specialized in medical care in China.

Nipro iCEP

Nipro Medical
Corporation
Produtos
Medicos Ltda.
Recife Rep.
OfficeNIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Management
Foundation

Review ofOperations

Financial/
Data Section

11

Medical-Related BusinessPharmaceutical-Related BusinessPharmaPackaging Business

Review of Operations

Pharmaceutical-Related Business
Financial Results for Fiscal 2018

Strategy and Outlook for Fiscal 2019

Net sales for the fiscal year ended March 31, 2018 decreased

For the coming fiscal year, we expect net sales to decrease 3%

3.3% to ¥66,846 million.

from the fiscal year under review to ¥64,400 million due to the

Our contract manufacturing division has endeavored toprovide a diverse and detailed array of contract services in

Total¥66,846

developed countries while further expanding Point andand supplying packaging materials such as vials, syringes andstrengthening domestic and overseas production capacities sobags, such services include the support and manufacture ofthat the global supply of pharmaceutical products is assured

investigational new drugs from the initial stages of development

through an enhanced stable supply and cost competitiveness.

279 Number of products(May 2018)

160 million units/year
Dual chamber bags (PLW ) 33 million units/year
Pre-filled syringes (PFS®)

Furthermore, cooperating with our PharmaPackaging Division,
the Pharmaceutical-Related Business will draw on synergies

Sales of pharmaceutical containers, pharmaceutical

Supply records
Injectables:and quality assurance systems that meet requirements inexternal preparations. Leveraging our strength in developing

added value and differentiation of products.

millionIn our contract manufacturing division, we will build production

addition to the contract manufacturing of oral, injectable andand support for lifecycle management that aims to enhance

Net sales

impact from business segment changes.

among our divisions, which is unique to Nipro, to develop,

preparations and administration devices were favorable as we

manufacture and provide value-added pharmaceuticals, with

provided containers and administration systems suitable tothe safety and convenience needed for medical professionals

each pharmaceutical product through self-development or joint

and patients in mind.

development with pharmaceutical manufacturers.

®

Orally Administered Drugs:
Tablets

315 Number of products(May 2018)14 billion tablets/year
400 million capsules/year

CapsulesExternal Preparations:

73 Number of products

Net sales

Operating income(Millions of yen)

(Millions of yen)

62,266

14,135

69,140 66,846
12,060POINT

13,104

Facility Enhancement at Our
Pharmaceutical Manufacturing Plant

Responding to an increase in contract manufacturing demand,
we have completed the construction of a building specialized for
product inspection and packaging at the Nipro Pharma Corporation
Ise Plant. Production is scheduled to begin in October 2018.

(May 2018)

150 million sheets/year(converted to 10g-sheet units) 390 million sheets/year
Tapes (hotmelt type)

Orallyadministrated
drugs line

Poultices

2016

2017

2018

2016

2017

2018

For more information, please refer to the next page.

Injectables
line

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

12

Medical-Related BusinessPharmaceutical-Related BusinessPharmaPackaging Business

Review of Operations

Pharmaceutical-Related Business

TOPICS

Odate Plant – Completion of new building construction forvarious formulations and have a production capacity ofhormone drugs

approximately 1.2 billion units/year. Furthermore, we plan to

We completed the construction of a new building for hormone

operate a third line from March 2019.

drugs in October 2017 and plan to begin product shipments in
2019. With a production capacity two to three times larger thanJapanthat of the existing production buildings and an extension space
available for the production of double-chamber pre-filled syringe

Nipro Pharma Corporationand microcapsule formulations, the building can also handle

Overseas

future expansions in production.

Enhancing Competitiveness in Vietnam

Ise Plant – Construction completion of building specialized
for pharmaceutical product inspection and packaging:
As the bringing of new pharmaceutical products to the

Supporting Mekophar Chemical Pharmaceutical Joint-StockJapanese market by foreign pharmaceutical companies

Company’s New Plant Construction Project

New building construction forhormone drugs

spreads rapidly, the demand of these foreign pharmaceutical

The Nipro Group has provided full support for the construction

companies is rising for domestic contract services on productproject of a new plant undertaken by the Mekophar Chemical

inspection and packaging processes suitable for the JapanesePharmaceutical Joint-Stock Company, our technology partner,

market and in compliance with good manufacturing practiceZensei Pharmaceutical Co., Ltd.

of which construction and tradition were completed in December(GMP). Responding to such demand, we have constructed a
production building specialized in the product inspection and2017. At present, equipment capable of manufacturing 500 million
units/year of oral drug formulations has been introduced andIzumi Plant

packaging of oral and injectable formulations at the Ise Plant

At the Izumi Plant, the first line that went into operation in May

and plan to begin commercial production in October 2018.

2016 is already running at full capacity and the second line

Ise Plant

aims to go into operation during fiscal 2018.
Continuously, we will establish a supply system for highly

started its operation in June 2017. The first and second lines,

cost competitive pharmaceuticals that meets the PIC/S-GMP

equipped with 24-hour unmanned operations, can manufacture

standards, in cooperation with Mekophar.

Izumi Plant

Mekophar chemical
pharmaceuticaljoint-stock company’s
new plant

NIPRO Annual Report 2018

Contents

Management
Message

About NIPROManagement
Foundation

Review ofOperations

Financial/
Data Section

13

Medical-Related BusinessPharmaceutical-Related BusinessPharmaPackaging Business

Review of Operations

PharmaPackaging BusinessNet sales

Total¥28,404

million

Sales ratio by region

Japan

Asia

13.9%

5.9%

Financial Results for Fiscal 2018

Strategy and Outlook for Fiscal 2019

Net sales for the fiscal year ended March 31, 2018 increased
0.3% to ¥28,404 million.
In addition to sales of existing products, the PharmaPackaging
Business has developed high-performance and high-quality
packaging materials through industry-academia collaborations
and has been proactive in its technical sales. Furthermore,in addition to working to develop new technologies and new
products from the users’ viewpoints and expand sales atacademic meetings, in Japan and overseas we pushedforward with the development of stable high-quality andhigh‐value‐added products and technologies matched to
injectable formulations and filling processes.
In Japan, sales remained strong with a focus on syringes.
Our Biwako Plant is equipped with facilities for mass production of medical rubber components from this fiscal year andis steadily progressing towards a high-profit structure.
Overseas, we were able to increase our sales of syringes in
Europe and sales of vials in the U.S. Furthermore, in China,
sales of high-quality vials and glass ampoules was strong. In India,
we were able to witness a robust sales of high-quality glass
tubes and vials.

In April 2018, we integrated the Medical System Development
Department and the Medical System Sales Department –within the Pharmaceutical Division – and the PharmaPackaging
Division, in accordance with our structural reforms. Accordingly,
for the coming fiscal year, we expect net sales to increase 34%
from the fiscal year in review to ¥38,200 million.
As the market experiences change through drug pricerevisions and the restructuring of the pharmaceutical industry,
we aim to promote domestic and overseas collaborations,standardizing product specifications and quality standards aswell as enhancing logistics, in order to construct a frameworkthat enables stable production, storage and sales ofhigh-performance and high-quality products. In addition,
we will strive to increase earnings through proactively engaging
in the planning and development of new products. Point

China

14.3%
Americas

25.8%

Net sales

Operating income(Millions of yen)

(Millions of yen)

32,184

Fiscal 201828,331 28,404

2016

2017

2018

-1,313-1,308Europe

40.1%

2016

2017

2018

-1,618POINT

Joint Development of DLC Film
Deposition Technology

From December 2017, through joint development with Keio
University, we are developing DLC (Diamond Like Carbon) film
deposition technology that can be applied to pharmaceuticalglass packaging and containers. By forming a DLC film on the
inner surface of pharmaceutical glass packaging and containers(vials, syringes, cartridges, etc.), we aim to plan and develop
innovative pharmaceutical glass packaging and containers
with a low-risk of exhibiting a high water repellency on theglass surface.
For more information, please refer to the next page.

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

14

Medical-Related BusinessPharmaceutical-Related BusinessPharmaPackaging Business

Review of Operations

PharmaPackaging BusinessInitiatives in China

TOPICS
Provision of One-Stop Solutions
In April 2018, the PharmaPackaging Division was integrated
with the Pharmaceutical Division's Medical System Development
Department and Medical System Sales Department. As a resultof this integration, while focusing on glass, the division now also
handles combination products combining plastics and needles– areas of specialty. Accordingly, we aim to optimize management
resources and construct a framework that enables rapid
development and sales.
The possession of all pharmaceutical containers andsystems will be a huge advantage to the PharmaPackaging
Division. Leveraging this advantage, we will continue to actively
develop new products in Japan and enhance our one-stop
solutions by utilizing our network to provide products with aproven track record in Japan to international markets.
Integration of "Medical System Development Department"

China has reached a major turning point in recent years
with the shift from "quantity to quality". Of the approximately
87 billion glass ampoules and vials used worldwide (45 billion
glass ampoules and 42 billion vials), half are used in China.
Meanwhile, the quality required in Chinese pharmaceuticals has
been different compared to Europe, the U.S. and Japan.
Against this backdrop, in August 2017 the Chinese government
announced the introduction of a conformity evaluation test
system that requires companies to test generic drugs using tests
equivalent to those used for original drugs. As a result, there is a
growing demand for high-quality products within China.
At Nipro, in order to cater to such demand, we are promoting
initiatives that ensure high-quality, such as organizing
technological and scientific lecture meetings (sponsored by the
China National Pharmaceutical Packaging Association) by
Chengdu Pingyuan Nipro Pharmaceutical Packaging Co., Ltd.
We wish to connect the ongoing implementation of suchactivities to the further sales expansion of Nipro products.
World market: 87 billion pcs (Ampoules: 45 billion pcs, Vials: 42 billion pcs)

and "Medical System Sales Department"
Nipro Group

AmpoulesPharmaceuticals

Pharmaceutical Containers
Combination Products
Self-injection Medical Devices
Pulmonary & Nasal Systems
Other Non-invasive
Administration Systems

25 billion pcs
Chinese Market

45 billion pcs
Medicaldevices

Other regions
Vials

22 billion pcs
According to in-house research

DLC (Diamond Like Carbon) is a carbon allotrope which isdifficult to be recognized as a foreign substance withinbiological tissue and is found widely in the human body.
Glass surfaces deposited with this DLC film, having different
properties to conventional glass, can display low friction andthe high water repellency characteristic of DLC and, furthermore,possess the distinctive feature of being able to reduce theamount of alkaline elution during heat treatment. Applying thesefilm deposition technologies, we are developing special
containers for bio pharmaceuticals by 2020.
Improving water repellency
Without DLC Film

With DLC Film

Contact Angle

Nasal Administration Device that Achieves a
New Form of Administration

Ampoules20 billion pcs
PharmaPackaging Division

Joint Development of DLC Film Deposition
Technology

42 billion pcs

Vials

20 billion pcs

At Nipro, we are developing an administration device capable ofspraying intranasal metered doses of various preparations suchas vaccines. This product has a spray
performance that does not dependon operator’s skills, and is therefore
not any longer prone to human error.
This fiscal year, we initiated the provisionof non-invasive nasal administration
Nasal Administration Device
devices worldwide.

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Financial/
Data Section

Management
Foundation

15

Research and Development Activities
Progress of Research and Development
Status of Corporate Governance
Board of Directors and Audit & Supervisory Board Members
4Management Foundation

Research and Development Activities

Number of employees

70

Contributing to Innovation in Medical Care through Original Technologies and Ideas

178

Nipro has five research and development sites, centered on the Research and Development Institute and Pharmaceutical

53
1 2
3

Research Laboratories in Japan. We continually address the needs and issues of medical professionals and patients as we

5work to develop and provide high-value-added products.

54
Kusatsu-Shi, Shiga1

Researchtheme

Status ofindustryacademia
collaboration

Research andDevelopment Institute

Cellular and regenerative
medicine products
Dialysis-related and general
medical devices
Circulatory organ- andintervention-related products
Artificial organs
Test and diagnosis-related products
High-performance medical containers
Medical glass products

Implementation of research aimed at
the joint development and early
realization of new products, incollaboration with universities andresearch institutions in Japan.

2

Pharmaceutical
Research Laboratories

Artificial organs
Test and diagnosis-related products
Injection products
Oral solids
Medical supplies for external application
Cancer drugs and biosimilars
High-performance medical containers

3

Production
Technology Center

Production technology andequipment design for theenhancement of productivity.

70
Sapporo-Shi, Hokkaido

4Regenerative
Medicine R&D Center

Seto-Shi, Aichi

5

Goodman Medical
Innovation

Manufacturing equipment andconsumables for the realization ofregenerative medicine using autologous
bone marrow cells for strokes andspinal cord injuries.

Catheters and accessories for
cardiac and circulatory organ
inspection and therapy
Catheters for cerebral bloodvessel therapy
Vascular access catheters

Conclusion of collaboration research
agreement concerning strokes andspinal cord injuries, and license
agreement on regenerative
medicine patents with Sapporo
Medical University.

Performance of physician-led clinical
trials with the National Cerebral andCardiovascular Center.

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

16

Research and Development Activities
Progress of Research and Development
Status of Corporate Governance
Board of Directors and Audit & Supervisory Board Members

Management Foundation

Progress of Research and Development
1. Medical-Related BusinessNipro conducts research and development (R&D) in the following fields, with the R&D laboratory playing a pivotal role.
Expenses related to R&D in this business segment were 8.2 billion yen.

Division of cell drugs

catheter tip enables injection, closing, and suction. Silicone,

marketing approval for a diagnostic agent that will bea vessel-friendly material, is used and the silicone is also

used for rapidly progressive glomerulonephritis (ANCA).

We have been developing cellular pharmaceuticals

reinforced with two aramid fibers to reduce the risk of(regenerative medicine products) through ongoing researchcatheter detachment.

projects with the government, universities, and industries in thefield of cell therapy.
Regarding cell drugs, Nipro has entered into a licensing

Our Enzyme Center has developed and launched three
enzymes: glycine oxidase, 3-hydroxybutyrate dehydrogenase,In the field of examination-related products, Nipro launched

and the new bilirubin oxidase.

two products in August 2017: Nipro SAFETOUCH Lightshot®

(a puncture device used for collecting a small amount of blood

Division of functional pharmaceutical containers

agreement with Sapporo Medical University with the objective

and the self-monitoring of blood glucose), and Niproof making autologous bone marrow cells into pharmaceutical

SAFETOUCH® Lancet (a puncture needle). These products

A safety mechanism, a “needle protector” (NP), was added to

products for practical use in the regenerative treatment ofboth have the following features: (1) Mechanisms that

our Double-chamber Pre-filled Syringe (D-PFS). After medicine

cerebral infarctions and spinal cord injuries. To allow for early

prevent accidental puncture and re-use. (2) Easy-to-holdis administered to a patient with the above is 'needle protector'

practical usage of the product, our Regenerative Medicine

pen-like shape. (3) Five levels of adjustment for puncture

NP, a protective guard will safely and easily cover the tip of the

Research Center has actively promoted the collaborative

depth and (4) A disposal button on the back end of the device

needle to prevent puncture accidents to and by medical staff.

research and development of cellular medicine. The center

that allows used lancets to be safely disposed of without having

This D-PFS is used for leuprorelin, a hormone used to treat

will also serve as a location for the practical use of regenerative

to touch the needle.

prostatic cancer and endometriosis. Products with the needle

treatment for cerebral infarctions and spinal cord injuries.

protector NP were launched in June 2017.

Division of diagnostic and testing products
Division of medical devices

We have finished developing a new type of half kit.
Compared with the old type of half kit, this new type includes

We acquired manufacturing and marketing approval in bothprevention mechanisms of angled insertion into vials, as well as

In the field of infusion-related products, Nipro launched theJapan and Indonesia for a second-generation diagnostic

leakage when the needle is removed from the vial. Transparency

Nipro PICC Kit (an introducer kit that allows for peripheral

agent that will be used for drug-resistant tuberculosis testing.

of the bottle and heat resistance of the new half kit have also

venous access using a central venous catheter). This device

This product enables the easy detection of tuberculosis,

been improved. This new type of half kit is scheduled to be

can be used with the brachial PICC method: the catheter iseven from samples of sputum that contain a small number

released around June 2018.

inserted through a brachial vein, extends to the superior venaof bacteria. We plan to sell this product overseas, primarily

In addition, we have almost finished developing devices thatcava, and stays within the veins until removed. A slit valve in thein Southeast Asia. We also acquired manufacturing andprevent exposure to anticancer agents. There are four types of

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

17

Research and Development Activities
Progress of Research and Development
Status of Corporate Governance
Board of Directors and Audit & Supervisory Board Members

Management Foundation

Progress of Research and Development
1. Medical-Related Businessdevices that are used throughout the process of preparation,

developing the “FILTRAP® II” catheter. The “FILTRAP® II” catheter

procedures in each of the surgical fields mentioned above,from dissolution to administration, for anticancer drugs:

has improved operability in the delivery and retrieval of filters

including orthopedics. In the future, we plan to continue

bag access, vial access, syringe connector, and lock connector.

through stents. This product is scheduled to be released fordeveloping more products within the endoscopic field, as well

These devices prevent the leakage of the anticancer agents atsale by March 31 2019.

as collaborate with other affiliated companies.

the time of connection and detachment. This device isscheduled to be released by March 31, 2019.

In the field of percutaneous peripheral intervention (PPI)
products, we have launched a guiding sheath catheter

Division of artificial organs

named “CROSSROADS ”. This device is used for treatment®

Division of circulatory and interventional products

methods requiring a contralateral approach to branches of

In October 2017, we started a clinical trial for an extracorporeal

the iliac arteries.

artificial heart system with auxiliary continuous flow and a

In the field of Percutaneous Coronary Intervention (PCI) treatment

Nipro applies vascular intervention techniques and

30-day usage. The trial is expected to be completed in fiscal 2018,

for cardiovascular-related issues (for example, acute myocardialtechnologies to endoscopic gastrointestinal-related treatment

and the regulatory application in fiscal 2019. In February 2018,

infarctions and coronary occlusions in the coronary arteries),

devices as well, and has launched “E-dive ”, an esophageal

Nipro launched a pulse oximeter, an extracorporeal circulation

Nipro provides a “rapid exchange” (RX) penetration catheter called

balloon catheter. This catheter can be used to treat the impaired

device. By simply attaching it to a blood circuit tube, this

“GUIDEPLUS®”. This product provides an access route for balloon

passage of food due to narrowing of the esophagus after

revolutionary device can measure hematocrit and oxygen

catheters and pharmaceutical-coated stent delivery catheters

esophageal cancer and cancer treatment.

saturation without the need for any specialized parts.

Division of surgical devices

surgery devices for both adults and children, and plan to®

We are continuously promoting the development of open-heart

used to treat stenotic lesions. In addition, we have acquired
manufacturing and marketing approval for “GUIDEPLUS® II”.

expand our product lineup.

As compared to the products of other companies, Nipro's“GUIDEPLUS® II” catheter has a larger inner diameter, which

We have been developing surgical products, particularly in-vivo

In the field of hemocatharsis, Nipro applied for manufacturing

allows for better compatibility with passing devices (for example,

implantable medical devices for orthopedic, cardiac, abdominal

and marketing approval for a continuous hemofilter. This device

stents and intravascular ultrasound (IVUS) catheters) while still

and other types of surgery.

has superior antithrombotic properties, a high level of biosafety,

retaining superior delivery to lesions. We will start manufacturingof this product for sale in the future.

Utilizing our own original, bio-absorbable materials, Nipro isand can be used for long-term, extracorporeal circulation

currently developing other types of non-cellular regenerative

treatment for acute kidney injuries. We expect to receive
manufacturing and marketing approval in the near future.

In addition, as a successor to Nipro's thrombus capturing

medicine products, including nerve regeneration assisting tubes

catheter “FILTRAP®”, a catheter that prevents the “no-flow” orand auxiliary material for pericardium regeneration. In fiscal 2017,“slow-flow” of blood due to clots or debris in peripheral arteries

we launched a nerve regeneration assisting tube in Japan.

during the treatment of stenosed arteries, Nipro has finished

We have been developing products for minimally invasive surgicalNIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

18

Research and Development Activities
Progress of Research and Development
Status of Corporate Governance
Board of Directors and Audit & Supervisory Board Members

Management Foundation

Progress of Research and Development
2. Pharmaceutical-Related Business

1. Medical-Related BusinessNipro is conducting research and development (R&D) in the following fields, with our Pharmaceutical Research Center playing a pivotal role.
R&D expenditures were ¥7,924 million in fiscal 2018.

Division of Pain Treatment Devices

Injectable Drugs

External Use Products

and developing revolutionary electric and magnetic therapy

In addition to our normal vial formulations, bag formulations andWe are developing several generic drug products, including

devices that recognize and accommodate the biologicalother products, we are actively pursuing the development ofpatches and liquids for external use.

rhythms in the human body. These devices are aimed to treat

kit formulations designed to enhance operation efficiency inintractable pain, mood disorders, dementia, and other afflictions.

clinical practice.

In 2015, Nipro established the Life-Fluctuation-Resonance(LFR) R&D Center. The LFR R&D Center has been researching

In addition, in order to treat these types of higher nervous

During the fiscal year in review, we brought one generic drug

We are also developing microneedles, an “Injection Patch”
as a new generation of percutaneous absorption formulation,and installed a new investigational drug manufacturing line.

function disorders, Nipro is also developing a monitoring device

product in bag formulation for intravenous infusion on the market, andDuring the fiscal year in review, we brought a total of one

for quantitative sensory examination as a “business-academia”

acquired manufacturing and marketing approval for one product.

active ingredient and two dosage forms (gel and cream) of

collaboration. This device is intended to identify and diagnose
selective and autonomic nerve disorders, including

external use products on the market.

Oral Drugs
Biosimilars

accompanying stress. The device can provide comprehensive,
differential diagnoses.

In addition to the development of general oral drugs (for example,

In addition to the fluctuation-related treatment devices

tablets and granules), we develop value-added formulations such

In Japan, bio pharmaceuticals, for which the market is rapidly

and 3D brain function monitoring devices mentioned, Nipro

as orally disintegrating tablets (OD tablets) and OD film formula-

expanding, are generally high-priced, so from the standpoint ofwill continue promoting the development and product launches

tions, which suppress bitterness and can be taken without water.

reducing medical treatment expenses, the need for biosimilars,of non-invasive devices and dynamic cell observation devices.

Moreover, we offer products with innovative technology. Tablet-pill

which are low-priced, is increasing. Accordingly, we are aiming

Nipro will collaborate with universities, start-up companies, andprinting enables to print information such as active ingredients andto develop products by partnering with companies that produce

Brain Functions Laboratory, Inc., a company that is scheduledindividual packaging and aluminum pillow packaging are speciallybioactive pharmaceutical ingredients that maintain equal quality

to become one of our subsidiaries in April 2018.

designed to improve operation efficiency in medical practice.

and cost-effectiveness compared with brand-name drugs.

During the fiscal year in review, we brought a total of 10

We will continue to actively undertake development of generic

active ingredients and 38 generic drug products on the market,

drugs so as to contribute to the reduction of rising medical costs

including four authorized generic drug products. We also

by offering a stable supply of high-quality, low-cost generic drugs.

acquired manufacturing and marketing approval for four active
ingredients and eight products, including one OD film product.

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Management
Foundation
Foundation

Financial/
Data Section

19

Research and Development Activities
Progress of Research and Development
Status of Corporate Governance
Board of Directors and Audit & Supervisory Board Members

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 Boardof 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
as a whole. Nipro’s directors and Audit & Supervisory Board Members, as well as representatives ofeach of the major companies of the Group, hold a Group management meeting on a monthly basis.
These meetings are used to report on the progress of business activities, decide key operating matters,
and deliberate on pending matters. To build awareness of compliance with laws, regulations andcorporate 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 handlingof sanctions. Nipro produced a Disaster Prevention and Crisis Management Handbook and distributed
it to each employee within the Nipro Group. Nipro keeps 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 of compliance training andenhance our risk management system, Nipro established a Compliance Section within its General
Affairs Department, and is working to ensure awareness of compliance among employees.

(4) Basic Structure of Corporate Governance and Risk Management

Meeting of Shareholders
Election

Accounting
Auditor

Audit & Supervisory
Board Members(Directors)
Board of Directors

Audit & Supervisory Board

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,
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-Japanesedemonstrations, and strikes.

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Management
Foundation
Foundation

Financial/
Data Section

20

Research and Development Activities
Progress of Research and Development
Status of Corporate Governance
Board of Directors and Audit & Supervisory Board Members

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 determined by 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 thestate of operations and assets in key places of business. Audit & Supervisory Board 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.

(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
based on 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 andindependent 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: 11
Other Staff: 2

Remuneration paid to Directors and Audit & Supervisory Board Members
Millions of yen(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 the provisions stipulated under the Financial Instruments and Exchange Act. In theevent that either case does 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 conflict of 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 androle as required by the current corporate governance system.

Total amount of
remuneration

Total amount of remuneration by type
AnnualRetirement
Bonus
remuneration
benefits

¥

¥

46

28

Internal Audit & Supervisory Board Members

7

7

—

—

1

Outside Directors, Outside Audit &Supervisory Board Members

14

14

—

—

4

Internal Directors

509

134

¥

328

¥

Number of eligible
corporate officers

Thousands of U.S. dollars

Internal Directors
Internal Audit & Supervisory Board Members
Outside Directors, Outside Audit &Supervisory Board Members

Total amount of
remuneration

Total amount of remuneration by type
AnnualRetirement
Bonus
remuneration
benefits$ 54,096$ 14,246$ 34,914

4,934

28

764

764

—

—

1

1,529

1,529

—

—

4

$

Number of eligible
corporate officers

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Financial/
Data Section

Management
Foundation

21

Research and Development Activities
Progress of Research and Development
Status of Corporate Governance
Board of Directors and Audit & Supervisory Board Members

Management Foundation

Board of Directors and Audit & Supervisory Board Members
As of August 1, 201813

Minako Oomizu

12Outside Director

Yoshiko Tanaka

9Outside Director

Kazuhiko SanoManaging Director

8

Yasushi Oyama

10

Managing Director

Kenichi Nishida

11

Managing Director

Takehito Yogo
Managing Director

13
6
6

Kimihito Minoura
Managing Director

4

Toshiaki Masuda
Managing Director

2

Kiyotaka Yoshioka
Managing Director

1

Yoshihiko Sano
President & Representative Director

3

Kazuo Wakatsuki
Managing Director

5

Kyoetsu Kobayashi
Managing Director

7

Tsuyoshi Yamazaki
Managing Director

9

12
4

2

8
1

11

10
3

5

7

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

22

Research and Development Activities
Progress of Research and Development
Status of Corporate Governance
Board of Directors and Audit & Supervisory Board Members

Management Foundation

Board of Directors and Audit & Supervisory Board Members
As of August 1, 2018

President & Representative Director

Outside Directors

Directors

Yoshihiko Sano

Yoshiko Tanaka

Mitsutaka Ueda

Managing Directors

Kiyotaka Yoshioka
Domestic Division

Kazuo Wakatsuki
Global Business Division

Toshiaki Masuda

Medical Technology Division for Planning, Development &Marketing; Research & Development InstituteKyoetsu Kobayashi

Global Production Division; Odate Plant

Kimihito Minoura

Division of Regenerative and Advanced Therapy;
New Business Development Headquarters

Tsuyoshi Yamazaki

May 1983: General Manager, Drug Department, Tokushukai
Medical Corporation Osaka Headquarters
Jun. 1997: G eneral Manager, Planning and Management
Department, and General Manager, Drug
Department, Tokushukai Medical Corporation
Osaka Headquarters
Jun. 2002: P
 resident and Representative Director, MEDY HOPE
Corporation (to present)
Jun. 2014: Appointed Director, Nipro Corporation (to present)

Minako Oomizu
Apr. 2008: Director of Nursing Department, and Vice-Director,
Jikei University Hospital
Apr. 2010: Director, Office of Human Resources Managementand Education, Wakokai Medical Association

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

Yozo Sawada

Intellectual Property Department

Hideto Nakamura

Enzyme Center; Department III; Research & Development
Institute; Medical Technology Division for Planning,
Development & Marketing

Akio Shirasu

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

General Affairs / Human Resources Headquarters

Yasushi Kutsukawa

Deputy General Manager Business Strategy Office;Medical Sales & Marketing Headquarters; Domestic Division

Masayuki Ito

Kouki Hatakeyama

Quality Assurance Department; Global Production Division

Toshiya Kai

Pharmaceutical Research Laboratories; Pharmaceutical Division

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

Goichi Miyazumi

Masanobu Iwasa

Kaname Sadahiro

Deputy General Manager Global Business DivisionJun. 2015: A ppointed Director, Nipro Corporation (to present)
Business Development Department;
PharmaPackaging Division

Global Product Development & Sales Headquarters; Dialysis &Blood Purification Product Development & Sales Department;
Medical Technology Division for Planning, Development & Marketing

Itsuo Akasaki

Technical Sales Department; PharmaPackaging Division

PharmaPackaging Division

Kazuhiko Sano

Hiroshi Yoshida

Hideo Okamoto

Audit & Supervisory Board Member (Full time)

Takayuki Nomiya

Deputy General Manager Global Production Division;
Production Technology Center

Construction & Engineering Headquarters;
Deputy General Manager Global Production Division;
Process Management & Planning Center

Kenichi NishidaToyoshi Yoshida

Audit & Supervisory Board Members (Outside)

Kenju Fujita

Kazumichi Irie

Pharmaceutical Development Promotion Department;
Pharmaceutical Division

Yasushi Oyama

Quality Assurance & Regulatory Compliance Division

Vascular Product Sales & Development Headquarters;
Vascular Division

Deputy General Manager Business Strategy Office;Pharmaceutical Sales & Marketing Headquarters;
Domestic Division

Takehito Yogo

Hiroshi Sudoh

Corporate Planning Headquarters(Chief Financial Officer)

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

Masayoshi Hasegawa

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

23

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Financial Review(Years ended March 31)

Overview
The Japanese economy, during the fiscal year under review,As a result, gross profit increased by 10.4% compared withthe previous fiscal year to ¥127,125 million (US$1,196.5 million).

Net sales(Millions of yen)saw a continued gradual recovery as corporate earnings
remained steady. Meanwhile, although concerns such as risingSelling, General and Administrative Expenses

geopolitical risks existed, the global economy in general also

Selling, general and administrative expenses increased bysaw a gradual recovery. Furthermore, foreign exchange levels

15.8% compared with the previous fiscal year to ¥100,036

remained relatively stable throughout the fiscal year. Even under

million (US$941.6 million). This is mainly due to the increase inthese circumstances, the Nipro Group made efforts to increase

research and development expenses.

300,753

sales and cut production costs, and worked to improve2014

business performance with the goal of realizing user wishes as

Operating Income

soon as possible.

As a result of the aforementioned factors, operating income wasdown 5.8% compared with the previous fiscal year to ¥27,088

Consolidated Business Results

million (US$254.9 million). The ratio of operating income to net

Relevant quantitative data for the period under review has beensales was down 1.15 percentage points to 6.85%.

359,699

2015

2016

2017

395,3972018

Operating income(Millions of yen)

28,77024,205converted at the rate of US$1.00 = ¥106.24 (the rate ofexchange as of March 31, 2018).

366,650
325,084

27,088

16,572Other Income (Expenses)

12,290We recorded other expenses of ¥10,061 million (US$94.7
Net Sales

million), ¥384 million lower compared with other expense in theSales for the current term were ¥395,397 million (US$3,721.7

previous fiscal year. In the period under review, we recorded

million). Sales increased 9.9% year on year.

¥2,561 million (US$24.1 million) in foreign exchange losses,
while we reported ¥2,273 million in foreign exchange losses in

Cost of Sales

the previous period.

2014

2015

2016

2017

2018

Income before income taxes(Millions of yen)

The cost of sales increased 9.6% compared with the previous

26,285fiscal year to ¥268,272 million (US$2,525.1 million). This

Income before Income Taxes

increase corresponded to the increase in net sales. The ratio of

As a result of the factors outlined above, income before income

cost of sales to net sales decreased by 0.2 percentage points

taxes decreased by 7.0% compared with the previous fiscal

compared with the previous fiscal year to 67.8%.

year to ¥17,026 million (US$160.2 million).

19,90818,324

17,026

12,891

2014

2015

2016

2017

2018

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

24

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Financial Review(Years ended March 31)

Income Taxes

with the previous fiscal year to ¥56,704 million

Income taxes, including deferred taxes, decreased by 29.6%,(US$533.7 million) mainly thanks to the increase of sales

compared with the previous fiscal year to ¥4,727 million

in the Medical-Related business.

Net income attributable to owners of parent(Millions of yen)

19,719(US$44.5 million). The effective tax rate was 27.8%, 8.9%
lower than the rate for the previous fiscal year. This decrease isEuropemainly due to effecting of the Tax Cuts and Jobs Act, which

In Europe, net sales increased by 8.9% compared with the

reduces the federal corporate income tax rate from 35% toprevious fiscal year to ¥46,389 billion (US$436.6 million) mainly

21% in the U.S.

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

12,470Asia

Net income attributable to non-controlling interests amounted

In Asia, net sales increased by 18.8% compared with theto ¥468 million (US$4.4 million).

previous fiscal year to ¥50,553 million (US$475.8 million) mainly

11,829

2016

2017

2018

57,101

58,310

2015

2016

2017

695,307

708,883

2015

2016

2,861

2014

Net Income Attributable to Non-controlling Interests

11,3462015

Capital expenditures(Millions of yen)

thanks to the increase of sales in the Medical-Related business.
Net Income Attributable to Owners of Parent

47,698Net income attributable to owners of parent decreased by 4.2%

Financial Position

compared with the previous fiscal year to ¥11,829 million

Total assets increased ¥73,919 million year on year to(US$111.3 million). Net income per share increased to ¥71.1¥826,759 million (US$7,781.9 million). Current assets increased(US$0.6) from ¥67.5 for the previous fiscal year. Return on¥49,271 million and noncurrent assets increased ¥24,648

equity increased 0.2 percentage points to 7.0% from 6.8% formillion. The increase of current assets was mainly due to an

the previous fiscal year.

increase of ¥19,473 million in trade notes and accounts
receivable, and the increase of noncurrent assets was due to

Net Sales by Geographic Segment
Japan

61,990an increase of ¥11,584 million in construction in progress.

35,0932014

Total assets(Millions of yen)

Total liabilities increased ¥66,842 million year on year to

In Japan, net sales increased by 9.2% compared with the previous¥643,273 million (US$6,054.9 million). Current liabilities decreased

fiscal year to ¥241,750 million (US$2,275.5 million) mainly¥605 million and total long-term liabilities increased ¥67,448

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

million. The main reason for the decrease in current liabilities was

2018619,655

752,839826,759

a decrease of ¥22,250 million in current portion of long-term debt,
Americasand the primary reason for the increase in total long-term liabilities

In the Americas, net sales increased by 6.5% compared

was a ¥69,120 million increase in long-term debt.

2014

2017

2018

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

25

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Financial Review(Years ended March 31)

Total net assets increased ¥7,077 million year on year to

Basic Policy on Distribution of Profit¥183,485 million (US$1,727.0 million). Shareholders’ equity

At Nipro, we have been paying dividends to shareholders byincreased by ¥5,385 million and accumulated otherpositioning the return of profits as an important management

comprehensive income increased by ¥1,153 million.

policy. Retained earnings will be actively invested in the

As a result, the equity ratio decreased by 1.2 percentage

Net assets(Millions of yen)division and production division, as a part of efforts to expand

to 20.9%.

the business base and promote long-term business development.

175,508

176,408

183,485

2015

2016

2017

2018

67.5

71.1

2017

2018

27.4

28.3

2017

2018

135,961

research and development division, in addition to the sales

points compared with the end of the previous fiscal year,

178,810

Through these means, we will ensure stable profits and achieve
Cash Flowcontinued growth.

2014

Net cash provided by operating activities amounted to ¥41,046
million (US$386.3 million). The major cash inflows were net

Risk Factors

income attributable to owners of parent and depreciation

The following are risks that may have an effect on the Nipro

and amortization.

Group’s operational results and/or financial condition. The items

Net cash used in investing activities came to ¥64,140 million

Basic earnings per share
(yen)

116.2

concerned were determined as of March 31, 2018.
81.0(US$603.7 million). The principal cash outflow was purchase ofproperty, plant and equipment.

(1) Risks Related to Product Safety

Net cash provided by financing activities amounted to

The Nipro Group brings all of its capabilities to bear in¥47,341 million (US$445.6 million). The main account of cash

ensuring product safety in the design, development andinflow was proceeds from long-term loans.

manufacturing of medical devices and pharmaceutical

As a result, cash and cash equivalents stood at ¥135,599
million (US$1,276.3 million) as of March 31, 2018.

2014

2015

2016

23.2

24.2

2015

2016

products. There are still the risks, however, that accidental
defects or adverse effects could result in damages to athird party and our being sued for liability.

Staff

18.2

Number of employees(Thousand)To cover these risks, we therefore maintain general

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

liability and product liability insurance. In the unlikely event

under review increased by 915 compared with the end of theof a successful claim in excess of the insurance coverage,

previous fiscal year, to 28,330. Employees in Japan increased

however, there could be a material adverse effect on ourby 621, to 7,821, and the number of overseas employees

operational results and/or financial condition.

21.8

increased by 294, to 20,509.
2014

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

26

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Financial Review(Years ended March 31)(2) Risks Related to Supplier Concentration

medical materials and supplies. Moreover, should measures

The Nipro Group procures materials and parts for its

to hold down medical costs also become pervasive

operations from a large number of suppliers. Some key

worldwide, resulting in intensified competition between

materials or parts may be obtained only from a single

corporations and leading to prices falling to a greater

supplier or a limited group of suppliers. If circumstances atdegree than anticipated, there could be a material adverse

any of these suppliers make it impossible for us to acquire

effect on our operational results and/or financial condition.

Equity ratio
(%)

24.1

23.4

20.2

22.1

20.9

a sufficient quantity of materials or parts to meet our
production needs in a timely and cost-effective manner,(5) Risks Related to Changes in Prices of Raw Materials

there could be a material adverse effect on our operational

The products manufactured by the Nipro Group include

results and/or financial condition.

some that are made from petrochemical products suchas plastics. Should the cost of raw materials such as(3) Risks Related to Changes in Government Healthcare Policies
The business sector to which the Nipro Group belongs ispetrochemicals rise, there could be a material adverse

2014

2015

3.9
3.5

(6) Risks Related to Overseas Expansion
The Nipro Group maintains manufacturing bases and sales

Pharmaceutical and Medical Devices Act, formerly known

offices around the world for the production and supply of its

as the Pharmaceutical Affairs Law. Should circumstances

products. Should there be unexpected revisions to legalarise in which we were unable to respond to changes inregulations or political or economic changes in these

the environment brought about by unforeseeable wholesalecountries or regions, there could be a material adversechanges in government healthcare policies, there could be

effect on our operational results and/or financial condition.

2018

(%)

effect on our operational results and/or financial condition.

including the National Health Insurance System and thea material adverse effect on our operational results and/or

2017

Return on assets

intimately connected with the healthcare system and is subject
to the regulations laid out by government organizations,

2016

3.4

2.5
2.1

2014

2015

2016

2017

2018

6.8

7.0

2017

2018

Return on equity(%)

financial condition.

11.8
8.5

(4) Risks Related to Changes in Sale Prices
The products sold by the Nipro Group include some thatare affected on an irregular two-year basis by price

2.3

reductions under the Japanese payment system for
medical care, drug prices and reimbursement prices for

2014

2015

2016

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

27

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Ten-Year Summary
Nipro Corporation and its Consolidated Subsidiaries
Years ended March 31
Thousands of U.S. dollars(Note 1)Millions of yen

2018

2017

2016

2015

2014

2013

2012

2011

2010

2018

2009

Income Statement Data:

175,945$3,721,741

Medical-Related (*1)

300,117

262,198

272,168

237,777

221,363

169,971

145,082

132,817

118,517112,970

2,824,901

Pharmaceutical-Related (*1)

66,846

69,14062,26657,37251,50866,212

59,71538,00534,52852,726629,205

PharmaPackaging (*1)

28,40428,33132,18429,83027,611

4,603

6,954

24,70424,3389,554

267,357

Other (*1)

29

29

32

105

271

235

262

417

447

695

276

Cost of sales

268,272

244,602250,773

225,525

213,221

175,314149,253

137,768

126,145

124,396

2,525,157

Selling, general and administrative expenses

100,036

86,326

91,672

82,98775,242

54,336

46,93540,95033,591

36,774

941,612

Operating income

27,08828,77024,205

16,572

12,29011,371

15,825

17,22518,094

14,775

254,970

Medical-Related (*2)

36,522

30,63828,204

23,813

20,436

14,287

17,07818,437

19,923

16,209343,773

Pharmaceutical-Related (*2)

13,104

14,135

12,06010,553

8,013

3,988

4,940

1,658

2,102

4,082

123,350

PharmaPackaging (*2)

(1,308)(1,313)(1,618)(2,889)(2,183)

601

454

2,701

3,103

1,772

(12,317)

75

(10)

61

131

216

222

230

88

64

4

709

Income before income taxes

17,02618,324

26,285

19,90812,891

18,06011,022

7,432

13,872

9,379

160,261

Net income attributable to owners of parent

11,82911,346

19,71912,4702,861

10,232

4,586

2,456

7,253

4,531

111,351

Increase in tangible and intangible fixed assets

61,99058,31057,10147,69835,09337,99739,52523,323

15,20933,142

583,492

Depreciation and amortization

32,56531,12830,147

27,66825,151

21,21021,581

21,244

18,421

18,109306,532

R&D expenses

16,113

11,517

10,269

8,646

7,891

6,464

5,957

4,977

4,846

5,352

151,674

Net sales¥

Other (*2)

395,397¥359,699¥

366,650¥

325,084¥

300,753¥

241,021¥212,013¥

195,943¥

177,830¥

Balance Sheet Data:

330,641$7,781,993

Property, plant and equipment—net

270,273244,222

223,757

220,195

191,594

174,703

145,679

128,506

124,209126,7392,543,994

Working capital

184,861

134,983

115,970

71,94545,40574,216

61,346

40,621

41,72546,0701,740,035

Current liabilities

251,186

251,792

252,148

278,402250,715

213,758

189,090

176,401

138,204

114,7962,364,327

Long-term liabilities

392,087324,639281,227

238,095

232,979

236,781

196,646

191,071

129,122

119,285

3,690,578

Common stock

84,39784,39784,39884,39884,39884,39884,39828,663

28,663

28,663

794,407

Capital surplus

—

—

—

635

689

636

636

29,97329,97329,973—

183,485

176,408

175,508

178,810

135,961

128,763

113,951

109,038

116,071

96,5601,727,087

Total assets

Net assets¥

826,759¥

752,839¥

708,883¥

695,307¥619,655¥

579,302¥499,687¥

476,510¥383,397¥(*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 for Disclosures 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 to Pharmaceutical-Related business. The segment information is presented as if theaforementioned reorganization had been conducted at the beginning of fiscal 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 the corporate reorganization. Segment information after 2014 isbased on this reclassification.
(*2) Operating income at the operating segment level is not adjusted for intra-segment transactions. See Note 14. “Segment Reporting” to the consolidated financial statements.

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

28

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Ten-Year Summary
Nipro Corporation and its Consolidated Subsidiaries
Years ended March 31
U.S. dollars(Note 1)

Yen

2018

2017

2016

2015

2014

2013

2012

2011

2010

2018

2009

Per Share Data:
Basic earnings (*3)

¥

71.1

¥

67.5

¥

116.2

¥

81.0

¥

18.2

¥

60.0

¥

35.3

¥

19.4

¥

114.4

¥

71.4

$

0.67

Diluted earnings (*3)

64.5

61.3

114.7

—

16.3

54.1

31.0

17.4

114.1

—

Cash dividends

28.5

29.0

33.5

32.5

30.5

27.5

23.5

50.0

53.0

32.0

0.26

1,037.2

999.5

977.6

988.8

832.1

703.5

643.9

839.7

1,802.3

1,498.5

9.76

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

171,459,479

63,878,505

63,878,505

63,878,505

28,33024,71524,24323,153

21,826

19,327

14,566

12,017

9,939

9,354

Equity ratio (*4) (%)

20.9

22.1

23.4

24.1

20.2

20.7

22.0

22.4

29.8

28.7

Return on assets (*4) (%)

3.4

3.9

3.5

2.5

2.1

2.1

3.2

4.0

5.1

4.3

Return on equity (*4) (%)

7.0

6.8

11.8

8.5

2.3

8.9

4.2

2.2

6.9

4.2

Price earnings ratio (*4) (times)

21.6

23.2

9.2

14.1

51.0

14.0

17.5

42.5

15.8

21.5

Equity (*3)
Number of common shares issued
Number of employees

0.61

Selected Data and Ratios:(*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 this adoption, 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 compliancewith 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 operating income for the period to the average of total assets during the period. Return on equity is the ratio of net
income for the period to the 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 Section of 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.

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

29

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Consolidated Balance Sheets
Nipro Corporation and its Consolidated Subsidiaries
As of March 31, 2018 and 2017
Thousands of U.S. dollars(Note 1)Millions of yen

2018

2018

2017

AssetsTime 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¥ 112,046
11,141
121,038(1,378)115,329
6,404
22,194
386,775$ 1,276,352
59,687
1,322,587(13,534)
1,216,285
65,508
177,475
4,104,362

Machinery and equipment
Construction in progress
Accumulated depreciation
Property, plant and equipment—net¥ 32,079
207,198
316,947
37,537593,763(323,489)
270,273¥ 23,987
199,471
290,601
25,953
540,014(295,792)
244,222$

301,955
1,950,288
2,983,314
353,327
5,588,886(3,044,892)
2,543,994

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
Commercial paper (Note 9)
Notes and accounts payable for plant and equipment
Other current liabilities

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

Other intangible assets
Total intangible assets¥ 54,245
64,635
62,105
4,993
29,036
10,00015,246
10,923
251,186¥ 46,208
86,88557,587
3,261
25,093
10,00014,5998,156
251,792$ 510,598
608,387
584,573
47,003
273,311
94,126
143,512102,8142,364,327¥380,517
4,530
783
6,255
392,087¥311,396
5,126
1,766
6,349
324,639$3,581,674
42,647
7,373
58,882
3,690,578¥ 84,397¥ 84,397$ 794,407

83,570(6,004)78,422(6,243)786,615(56,521)

161,963

156,577

1,524,501

(712)
(69)
11,40436
10,658
10,863
183,485¥826,759

1,589
(141)
8,640
(582)
9,504
10,325
176,408¥752,839(6,706)(654)
107,342
345
100,327
102,258
1,727,087$7,781,993

Commitments and contingent liabilities (Note 11)
Net Assets (Note 12):
Common stock
Authorized: 400,000,000 shares

Intangible assets (Note 5):
Goodwill

2018

Long-term liabilities:

Property, plant and equipment (Note 5):
Buildings and structures

2017

Current liabilities:¥ 135,599
6,341
140,511(1,437)129,218
6,959
18,854
436,047

Total current liabilities

Land

2018

Liabilities and net assets

Current assets:
Cash and cash equivalents

Thousands of U.S. dollars(Note 1)Millions of yen¥ 27,358
18,63545,994¥ 27,996
15,83943,836$

257,520
175,405
432,925

Issued: 171,459,479 shares
Retained earnings
Less cost of common shares of treasury stock(5,037,124 shares in 2018 and 5,300,071 shares in 2017)
Total shareholders’ equity

Investments and other assets:
Investment in unconsolidated subsidiaries
and an affiliate accounted for by the equity method
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.

¥

4,150

58,794
1,896
3,706
5,896
74,443¥ 826,759

¥

4,725

64,170
1,659
1,459
5,990
78,004¥ 752,839$

39,063

553,407
17,84834,88955,501
700,711$ 7,781,993

Unrealized gain (loss) 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.

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

30

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2018 and 2017

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2018 and 2017
Thousands of U.S. dollars(Note 1)Millions of yen

Net sales
Cost of sales
Gross profit

2018

2017

2018

¥395,397
268,272
127,125¥359,699
244,602
115,097$3,721,741
2,525,157
1,196,583

Net income

86,326
28,770100,036
27,088Operating income

941,612254,970

Unrealized gain (loss) on available-for-sale securities

2,221(3,543)

1,996(3,796)

20,907(33,349)(718)(1,127)(6,761)(2,561)113
736(2,216)(4,093)17,026(2,273)112
0(1,554)(3,803)18,324(24,110)
1,069
6,936
(20,866)(38,533)
160,261

Deferred

7,708(2,980)6,613
107

72,552(28,050)

Net income

12,298

11,604

115,759468¥ 11,829

258¥ 11,346

4,407$ 111,351

Interest and dividend income
Interest expense
Loss on sale and disposal of property, plant andequipment—net
Exchange gain (loss)
Equity in profit (loss) of an affiliated company
Gain (loss) on sale of subsidiaries and affiliates’ stocks
Loss on impairment of fixed assets (Note 17)
Other income (loss)—net
Income before income taxes
Income taxes (Note 4):
Current

Net income (loss) attributable to non-controlling interests
Net income attributable to owners of parent

U.S. dollars(Note 1)

Yen

Amounts per common share:
Basic earnings
Diluted earnings
Cash dividends
The accompanying notes are an integral part of these statements.

Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income of entities accounted
for using equity method

Other income (expenses):

¥

71.1
64.5
28.5

¥

67.5
61.3
29.0

$

0.7
0.6
0.2

2018

2018

2017

¥12,298¥11,604$115,759(2,301)
72
2,882
628

4,936
(129)
(5,860)240(21,659)
679
27,133
5,916

(87)

(36)

(827)

¥13,492¥10,753$127,000

12,983508

10,844(90)

122,212
4,788

Other comprehensive income:Deferred gains or losses on hedges

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

Thousands of U.S. dollars(Note 1)Millions of yen

Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests
The accompanying notes are an integral part of these statements.

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

31

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Consolidated Statements of Changes in Net Assets
Nipro Corporation and its Consolidated Subsidiaries
For the year ended March 31, 2018 and 2017 consisted of the following:Thousands
Outstanding
number ofshares ofcommon stock

Balance at March 31, 2016

171,459

Millions of yen
Commonstock

Retainedearnings

Treasurystock¥84,397¥73,067
11,346¥(1,475)

Net income attributable to owners of parent
Increase (decrease) in retained earnings due to inclusion of
new subsidiaries in consolidation¥155,990
11,346(0)(4,073)

Cash dividends(5,001)
233

Purchase of treasury stock
Disposal of treasury stock(0)(1,916)

Change in the scope of consolidation
Decrease of retained earnings (Other)

Unrealized
gain onavailable-forsale securities

Total
shareholders’equity171,459

84,397

Net income attributable to owners of parent

78,422
11,829(6,243)Foreigncurrencytranslation
adjustments¥ (12)

Remeasurementsof defined
benefit plans¥14,187¥(821)

Accumulated
other comprehensive
income¥10,007

Noncontrollinginterests¥ 9,509

Total
net assets¥175,507
11,346(0)(0)(4,073)(5,001)233(0)(1,916)(4,073)(5,001)233(0)(1,916)313
176,408
11,829Other net change during the year
Balance at March 31, 2017¥(3,347)

Deferred
gains orlosses onhedges156,577
11,829

4,936
1,589

(129)
(141)

(5,547)
8,640

238
(582)

(502)
9,504

815
10,325

Increase (decrease) in retained earnings due to inclusion of
new subsidiaries in consolidation(6,498)Cash dividends
Purchase of treasury stock(0)

Disposal of treasury stock

(1)
240

(6,498)(1)
240(6,498)(1)
240

Change in the scope of consolidation(184)

Decrease of retained earnings (Other)(184)

Other net change during the year
Balance at March 31, 2018

171,459¥84,397¥83,570¥(6,004)¥161,963

Commonstock

Retainedearnings

Treasury
stock

Total
shareholders’equity$794,407—$738,167
111,351$(58,767)—$1,473,807
111,351

(15)
2,261

(61,164)(15)
2,260(1,737)$(56,521)$1,524,501

Thousands
Outstanding
number ofshares ofcommon stock

Balance at March 31, 2017

171,459

Net income attributable to owners of parent(2,301)¥ (712)72¥ (69)

2,764¥11,404

619
¥ 36

1,153
¥10,658538¥10,863

(184)
1,691
¥183,485

Thousands of U.S. dollars (Note 1)
Unrealized
gain onavailable-forsale securities$ 14,959—

Deferred
gains orlosses onhedges$(1,333)—

Foreigncurrencytranslation
adjustments$ 81,325—

Remeasurementsof defined
benefit plans$(5,484)—

Accumulated
other comprehensive
incomeNoncontrollinginterests$ 89,466—$ 97,193—$1,660,467
111,351

5,064$102,258(61,164)(15)
2,260(1,737)
15,925$1,727,087

Total
net assets

Increase (decrease) in retained earnings due to inclusion of
new subsidiaries in consolidation(61,164)

Cash dividends
Purchase of treasury stock(0)(1,737)

Disposal of treasury stock
Decrease of retained earnings (Other)
Other net change during the year
Balance at March 31, 2018
The accompanying notes are an integral part of these statements.

171,459$794,407$786,615(21,665)$ (6,706)

679$ (654)26,017$107,342

$

5,830
345

10,860$100,327

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

32

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Consolidated Statements of Cash Flows
Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2018 and 2017
Thousands of U.S. dollars(Note 1)Millions of yen

2018

2018

2017

Operating activities:
Net income attribute to owners of parent

Amortization of goodwill
Loss on impairment of fixed assets
Equity in loss (profit) of an affiliated company
Allowance for doubtful receivables
Loss (gain) on sales of available for sales securities
Loss (gain) on sale of investment in consolidated subsidiaries
Provision for deferred taxes
Exchange loss
Loss on devaluation of marketable securities
Loss on sale and disposal of property, plant andequipment—net
State subsidy
Loss on reduction of non-current assets
Other, net¥ 11,829¥ 11,346$

111,351

Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of available-for-sale securities

32,565
3,431
2,216
(113)
443
(791)
—
(2,980)559
031,128
2,907
1,554
(112)
433
0
369
107
4,008
—

306,532
32,29920,866(1,069)4,175(7,449)—(28,050)
5,266
0

718

1,127

6,761

(1,613)1,500
963(1,900)
1,879
1,007

(15,183)
14,121
8,979

Proceeds from sales of available-for-sale securities
Purchase of investments in unconsolidated subsidiaries
Proceeds from investment in unconsolidated subsidiaries
and affiliates
Purchase of investments in consolidated subsidiaries resulting
in change in scope of consolidation
Payments for sales of shares of subsidiaries resulting
in change in scope of consolidation
Deposits (Over three months)
Other, net
Net cash used in investing activities

Inventories
Other current assets
Lease deposits
Trade payables
Accrued income taxes
Other, net
Total adjustments
Net cash provided by operating activities

2017

2018

¥ (60,144)
323
(549)
4,480
(921)

¥ (62,323)
405(1,092)—(1,967)$ (566,116)
3,043(5,167)42,175(8,676)

384

—

3,619

(11,888)(3,126)(111,901)

—

(703)

—

4,957
(782)
(64,140)

2,732
(275)
(66,351)

46,664(7,369)(603,729)

8,825
135,110(74,903)993(15,160)240(22)(6,505)

1,018
145,298(97,424)
1,989(2,262)233(5,007)(4,101)

83,072
1,271,750(705,039)
9,351(142,695)
2,261
(214)
(61,231)(56)(2,104)(529)(1,180)47,341(1,157)36,483(11,112)445,612(695)
23,552
112,046(3,773)(168)
111,977(6,547)
221,694
1,054,657

—

237

—

¥135,599¥112,046$1,276,352

Financing activities:
Net increase (decrease) in short-term loans
Proceeds from long-term loans
Repayment of long-term loans
Proceeds from issuance of bonds

Changes in operating assets and liabilities:
Trade receivables

2018

Investing activities:

Adjustments to reconcile net income to net cash provided byoperating activities:
Depreciation and amortization

Thousands of U.S. dollars(Note 1)Millions of yen(7,331)(4,902)
1,755(217)(3,821)689
6,143
29,216
41,046(9,317)(17,730)(1,788)
(131)
4,576
38
3,968
22,12633,472(69,006)(46,141)
16,525(2,050)(35,971)
6,485
57,828275,007386,358

Repayment of bonds
Proceeds from disposal of treasury stock
Proceeds from sales of treasury shares
Cash dividends paid
Payments from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation
Other, net
Net cash provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents of newly consolidated subsidiary,
beginning of period
Cash and cash equivalents, end of period
The accompanying notes are an integral part of these statements.

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

33

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
Report of Independent Auditors
Corporate Information

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 have been(a) Basis of Consolidation

prepared in accordance with the provisions set forth in the Financial Instruments and Exchange law of Japan and its

The consolidated financial statements include the accounts of the Company and the significant subsidiaries andrelated accounting regulations, and in conformity with accounting principles generally accepted in Japan, which areaffiliated company accounted for by the equity method.

different in certain respects as to application and disclosure requirements of International Financial ReportingStandards. Effective from the year ended March 31, 2009, the Company has adopted the “Practical Solution on
Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (PITF No. 18)

Investments in unconsolidated subsidiaries are stated at cost and the equity method is not applied for the valuationof such investments since they are considered immaterial in the aggregate.
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized

and as a result, the accounts of consolidated overseas subsidiaries are prepared in accordance with either

profits included in assets resulting from transactions within the Company and its consolidated subsidiaries have been

International Financial Reporting Standards or generally accepted accounting principles in the United States, witheliminated. The difference between the cost of investments in subsidiaries and affiliates and the equity in their net

adjustments for the specified four items as applicable.

assets at the dates of acquisition is amortized on a straight-line basis over five to twenty years.

In preparing the accompanying consolidated financial statements, certain reclassifications have been made to theconsolidated financial statements issued domestically, in order to present them in a form which is more familiar toreaders 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 to consolidated financial

All accounts herein have been presented on the basis of the 12 months ended March 31, 2018 for the Company
and for consolidated domestic subsidiaries, and December 31, 2017 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 that of the Company.

statements include additional information which is not required under generally accepted accounting principles andpractices in Japan.
The financial statements presented herein are expressed in Japanese yen and, solely for the convenience of the(b) Translation of Foreign Currencies
Balance sheets of consolidated overseas subsidiaries are translated into Japanese yen at the current exchange rates

reader, have been translated into United States dollars at the rate of ¥106.24 = US$1, the approximate exchange rate

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

on March 31, 2018. These translations should not be construed as representations that the Japanese yen amounts

statements of consolidated overseas subsidiaries are translated into Japanese yen at the average exchange rates

have been, could have been, or could in the future be, converted into U.S. dollar amounts at that or any other rate.

for the period. Resulting translation adjustments are shown as “Foreign currency translation adjustments” in the

In preparing the accompanying consolidated financial statements and notes, Japanese yen figures less than one“Accumulated other comprehensive income” section of net assets.

million yen have been rounded down to the nearest million yen, in accordance with the Financial Instruments andExchange Law and Enforcement Ordinance concerning the Banking Law of Japan, although the figure of the past(c) Cash and Cash Equivalents

fiscal years before fiscal 2016 were rounded in this report.

Cash and cash equivalents include cash on hand, readily available deposits and short-term highly liquid investments

Therefore, total or subtotal amounts shown in the accompanying consolidated financial statements and notes

with original maturities of three months or less.

thereto are not necessarily equal to sums of individual amounts.
(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.

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

34

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

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

Accounting Method of Actuarial Gains and Losses and Prior Service Costs

Depreciation of property, plant and equipment of the Company and its consolidated domestic subsidiaries isPrior service costs are amortized on the straight-line basis over a certain period (mainly 5 years) which is within thecomputed principally by the declining-balance method. The straight-line method is applied to buildings acquired by theaverage of the estimated remaining service years of the employees when they occur.

domestic companies after April 1, 1998 and buildings and accompanying facilities and structures acquired by the

Actuarial gains and losses are amortized on the straight-line basis over a certain period (mainly 5 years) which isdomestic companies after April 1, 2016, and is principally applied to the property, plant and equipment of consolidated

within the average of the estimated remaining service years of the employees commencing from the following year inoverseas subsidiaries.

which they arise.

(g) Intangible Assets(k) Derivatives

Amortization of intangible assets, including software for the Company’s own use, is computed by the straight-line

Derivatives are stated at fair value, with changes in fair value included in net income or loss for the period in which theymethod over the estimated useful life of the asset.

arise, unless derivatives are used for hedging purposes. Please see (m) Hedge Accounting below.

Goodwill is amortized on a straight-line basis over the period the Company benefits from its use. If the amount is
not significant, it is expensed when incurred.

(l) Leases
Finance leases, except for certain immaterial leases, are capitalized in the balance sheet. Amortization of finance lease(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 and ability tohold to maturity are stated at amortized cost.

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 operating leases,
which do not transfer ownership to the lessee and existed prior to April 1, 2008. The information of such leases on an“as if capitalized” basis is presented in Note 7. “Leases”.

ii) available-for-sale securities, which are not classified as the aforementioned securities, are stated at fair value.
Unrealized gains and losses, net of applicable taxes, are reported as “Accumulated other comprehensive(m) Hedge Accounting

income” of net assets.

<Method of hedge accounting>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 acharge to income.

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)(Hedged items)(i) Allowance for Loss on Clearance of BusinessCurrency swap

Short-term and long-term debt denominated in foreign currency

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

Interest rate swap

Interest on short-term and long-term debt

is provided.

<Hedge policy>(j) Employees’ Retirement and Severance Benefits<Method for assessing hedge effectiveness>

The Company uses currency swaps and interest rate swaps to reduce currency exposure and interest volatility risk.
Method of Attributing Expected Benefit to Periods

Hedge effectiveness is not assessed for currency swaps which meet certain criteria of the allocation method andIn calculating retirement benefit obligation, the estimated amount of retirement benefit is attributed to the periods oninterest rate swaps which meet certain criteria of the exceptional accounting method.

the benefit formula basis.

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

35

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements(n) Income Taxes
The provision for income taxes is computed based on income for financial statement purposes. The asset and liability
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

3. Inventories
Inventories consisted of the following:(o) Amounts per Common Share
Basic earnings per share is computed by dividing net income available to common shareholders by the weightedaverage number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilutionthat 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 thetime of issuance) with an applicable adjustment for related interest 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 Guidanceon Accounting Standard for Revenue Recognition.

Thousands of U.S. dollars(Note 1)Millions of yen

used for income tax purposes.
Finished goods and merchandise
Raw materials
Work in process
Packing and other
Total

2018

2017

2018

¥ 88,710
22,78912,666
5,052¥129,218¥ 78,241
21,627
10,784
4,675¥115,329$ 834,997
214,507
119,225
47,554$1,216,285

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

36

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements

4. Income Taxes

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

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

Statutory tax rate

resulted in a normal statutory tax rate of approximately 30.8% for the years ended March 31, 2018 and 2017.
The significant components of deferred tax assets and liabilities were as follows:
Thousands of U.S. dollars(Note 1)Millions of yen

2018

2018

2017

¥ 8,323
2,242
897
1,197
327
184

¥ 7,044
2,177
1,512
1,115
326
173

$ 78,344
21,106
8,451
11,272
3,082
1,732

Excess of allowance for doubtful accounts over tax
allowable amounts

1,801

1,368

16,953Net defined benefit liability

1,275
400
787
242
283
3,752
21,716(9,086)
12,630

1,466
350
47
757
—
2,304
18,645(8,702)
9,943

12,008
3,773
7,416
2,278
2,672
35,319204,410(85,529)
118,881

350
675
2
1,068
650
2,748
¥ 9,881

563
675
284
1,557
785
3,866
¥ 6,076

3,303
6,360
22
10,0596,125
25,871$ 93,010

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

Accrued enterprise taxes
Unrealized loss on available-for-sale securities
Goodwill
Loss on liquidation of business
Other
Gross deferred tax assets
Less: Valuation allowance
Total deferred tax assets
Unrealized gain on available-for-sale securities
Revaluation reserve for intangible assets
Revaluation reserve for fixed assets—other
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities) (*1)

Non-taxable dividend income
Effect of tax rate change
Amortization of goodwill
Tax credits primarily for research and development costs
Valuation allowance

Deferred tax liabilities
Revaluation reserve for land

Expenses not deductible for tax purposes(*1) The current portion of Deferred Tax Liabilities for the year ended March 31, 2018 is ¥66 million (US$621 thousand) and is accounted for as“Others’’ of Current Liabilities.

Other
Effective income tax rate

2018

2017

30.8%
2.5
(1.3)
2.0
6.3
(7.5)
(9.1)
4.1
27.8%

30.8%
2.2
(0.2)
—
3.8
(7.2)
3.6
3.7
36.7%

The Tax Cuts and Jobs Act, which reduces the federal corporate income tax rate from 35% to 21% in the U.S.
effective January 1, 2018, was enacted on December 22, 2017.
In line with this, the deferred tax assets and liabilities of U.S. subsidiaries were calculated in accordance with therevised statutory tax rate. In addition, tax is occurred to certain US Foreign retained earnings for U.S. subsidiaries.
As a result of re-measurement of deferred tax assets and deferred tax liabilities of U.S. subsidiaries, net income
attributable to owners of parent decreased by ¥338 million ($3,181 thousand) for the year ended March 31, 2018.

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

37

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements

5. Pledged Assets

The carrying amounts and aggregate fair values of marketable securities for investments as of March 31, 2018 and2017 were as follows:
Millions of yen

The following assets were pledged as collateral:

Buildings and structures
Machinery and equipment
Land
Other
Total

2018

Thousands of U.S. dollars(Note 1)Millions of yen

2018

2017

¥ 9,422—3,137
445¥13,005¥10,104
59
3,383
1,917
¥15,4652018$ 88,686—
29,531
4,196$122,414

Cost

Unrealized gain

Unrealized loss

¥7,206—¥7,206¥8,797—¥8,797

Fair Value

Available-for-sale securities
Equity securities
Debt securities and otherTotal¥58,268—¥58,268¥56,678—¥56,678

Thousands of U.S. dollars (Note 1)

2018

The above assets were pledged against the following liabilities:
Thousands of U.S. dollars(Note 1)Millions of yen

Short-term bank loans
Current portion of long-term debt
Long-term debt
Total

2018

2017

2018

¥1,2491,520
3,855¥6,625¥1,2191,540
4,379¥7,139$11,761
14,31236,290$62,364

Cost

Unrealized gain

Unrealized loss

Fair Value$548,463—$548,463$67,832—$67,832$82,805—$82,805$533,490—$533,490

Unrealized gain

Unrealized loss

Fair Value¥8,023—¥8,023¥6,432—¥6,432Available-for-sale securities
Equity securities
Debt securities and other
Total

Millions of yen

2017
Cost

Available-for-sale securities

6. Investment Securities

Equity securities
Debt securities and other
Total

Investment securities as of March 31, 2018 and 2017 consisted of the following:Thousands of U.S. dollars(Note 1)Millions of yen

2018

2017

2018

Non-current:¥60,744—¥60,744

Proceeds from sales of securities and gross realized gains or losses on those sales for the years ended March 31,2018 and 2017 were as follows:

Marketable:
Marketable equity securities
Investment trust funds and other
Subtotal
Non-marketable securities
Total

Thousands of U.S. dollars(Note 1)Millions of yen¥56,678—
56,6782,116¥58,794¥62,335—
62,335
1,834¥64,170$533,490—
533,490
19,917$553,407¥62,335—¥62,335

2018

Proceeds
Gains on sales
Losses on sales¥4,480
736
—

2018

2017

0
0
0

$42,175
6,936—

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

38

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements

7. Financial Instruments(1) Circumstances on financial instruments(a) Policy for financial instruments
The Company and its consolidated subsidiaries manage the temporary surplus funds by deposits with banks that havea high level of safety. Based on capital investment planning and financing planning, the Company and its 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 its 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 accordance

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 whenmarket price is not available. Because variable factors are counted in the estimation, the estimated values may vary byadopting different assumptions.
With respect to the contract amounts related to derivative transactions in Note 8, the amounts do not reflectmarket risks to derivative transactions.

(2) Fair values of financial instruments
The book values, fair values and the differences between them as of March 31, 2018 and 2017 are as follows(Financial instruments for which the market value is extremely difficult to determine are not included as described inremark 2.):Millions of yen

with the Company’s credit administration regulations.

2018

Investment securities are exposed to market fluctuation risk, but mainly consist of equity of the companies which

Book value

Fair value

Cash and cash equivalents, time deposits¥141,940¥141,940

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

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

139,073

139,073

Short-term loans payable are mainly borrowed to raise operating capital and long-terms loans payable are mainly

Investment securities

conduct business with the Company. The Company periodically reviews the market price of such securities.
Payables such as trade notes, accounts payable and accounts payable other are due within 1 year.

Difference¥——

borrowed to make capital expenditures. A part of long-term loans with the floating interest rate has the risk of interest

Assets total

56,678¥337,692

56,678¥337,692¥——

rate fluctuation, but the Company and its consolidated subsidiaries use a interest rate swaps to solidify the interest

Trade notes and accounts payable¥ 62,105¥ 62,105¥—

rate. For some of the loans denominated in foreign currency, the Company and its consolidated subsidiaries use

Short-term bank loans, current portion of long-term debt,
and commercial paper

128,881

128,881—Bonds and commercial paper are mainly issued to raise the funds for the retirement of bonds.

Other notes and account payable (*1)

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

Long-term debt

Payables, loans and bonds are exposed to liquidity risk, but the Company and its consolidated subsidiaries

Convertible bond

33,089355,51725,0003,742¥608,335¥(83)

33,089353,642
28,787
3,673¥610,179¥(83)—(1,874)
3,787(69)¥ 1,843¥—

currency swaps to hedge the currency fluctuation risk.

manage the risk by establishing cash planning.
Regarding derivatives, the Company enters into forward exchange contracts to hedge against the risk offluctuations in foreign currency exchange rates associated with trade receivables and payables denominated in foreign
currencies, interest rate swaps to hedge against the risk of fluctuations in interest rates associated with loans payable,
and currency swaps to hedge against the risk of foreign exchange rate fluctuations. For more information on the use ofhedge accounting, including hedging instruments, hedged items, the hedging policy, and the method for assessmentof hedge effectiveness, please refer to “2. Summary of Significant Accounting Policies” (m) Hedge Accounting.

Lease obligations (*2)
Liabilities total
Delivatives (*3)

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

39

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements

Remark 1

Millions of yen

2017Book value

Fair value

Cash and cash equivalents, time deposits¥123,188¥123,188

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

119,660

119,660

Investment securities
Assets total

62,335¥305,183

62,335¥305,183¥——

Trade notes and accounts payable¥ 57,587¥ 57,587¥—

Short-term bank loans, current portion of long-term debt,
and commercial paper

143,093

143,093—

Other notes and account payable (*1)

28,508286,396
25,0003,977¥544,563¥(143)

28,508284,576
29,7873,868¥547,421¥(143)—(1,819)4,787(109)¥ 2,857¥—

Long-term debt
Convertible bondLease obligations (*2)
Liabilities total
Delivatives (*3)

Difference¥——

Thousands of U.S. dollars (Note 1)

2018Book value

Fair value

Cash and cash equivalents, time deposits$1,336,039$1,336,039

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

1,309,052

1,309,052

Investment securities
Assets total

533,490$3,178,582

533,490$3,178,582$——

Trade notes and accounts payable$ 584,573$ 584,573$—

Short-term bank loans, current portion of long-term debt,
and commercial paper

1,213,112

1,213,112—

Other notes and account payable (*1)

311,455
3,346,358
235,316
35,230$5,726,047$(785)

311,455
3,328,716
270,966
34,578$5,743,403
$
(785)

—
(17,642)
35,650(652)$ 17,355$—

Long-term debt
Convertible bondLease obligations (*2)
Liabilities total
Delivatives (*3)

Difference$——

Methods used to calculate fair values of financial instruments and the details of securities andDelivatives<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 byclassification.
<Liabilities>• Trade notes and accounts payable and short-term bank loans and current portion of long-term debt and commercial
paper
Because the settlement periods of the above items are short and their fair values are almost the same as their bookvalues, 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 their bookvalues, the relevant book values are used.
• Long-term debt and convertible bond
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 and interest.
The discount rate is based on the assumed interest rate if a current lease transaction was renewed.
• Delivatives
The fair value information for delivatives is included in Note 8.
Remark 2

Financial instruments for which the fair value is extremely difficult to determine
Thousands of U.S. dollars(Note 1)Millions of yen

Unlisted equity securities

2018

2017

2018

¥6,258¥6,552$58,911

Because these items have no market value and are difficult to estimate the future cash flow and it is extremely difficult to determine their fair values,
they are not included in investment securities above.

Remark 3

Planned redemption amounts after the balance sheet date for monetary receivables with maturity
dates are as follows:
Thousands of U.S. dollars(Note 1)Millions of yen(*1) This is included in accrued expenses and notes and accounts payable for plant and equipment on the balance sheet.
(*2) This 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).

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

2018

2017

2018

Within 1 year

Within 1 year

Within 1 year

¥141,940
139,073¥123,188
119,660$1,336,039
1,309,052

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

40

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

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, 2018 are as follows:
Millions of yen

2018
Within 1 year

Short-term bank loans, current portion of long-term debt, and commercial paper
Other notes and account payable
Long-term debt
Convertible bondLease obligations
Total¥128,881
—
—
—
1,198
¥130,079

Over 1 year but
within 2 years¥——
76,507—
1,054¥77,561Over 2 years but
within 3 years

Over 3 years but
within 4 years¥——
46,39425,000721¥72,116¥——
64,203—566¥64,770

Over 4 years but
within 5 years

Over 5 years¥——
42,557—
115¥42,673¥——
125,854—85¥125,940

Thousands of U.S. dollars (Note 1)

2018
Within 1 year

Short-term bank loans, current portion of long-term debt, and commercial paper
Other notes and account payable
Long-term debt
Convertible bondLease obligations
Total$1,213,112———
11,280$1,224,393

Over 1 year but
within 2 years$——
720,136—
9,925$730,062

Over 2 years but
within 3 years

Over 3 years but
within 4 years$——
436,694—
6,795$443,489$

Over 4 years but
within 5 years——
604,325—
5,333$609,658$——
400,577—
1,088$401,666

Over 3 years but
within 4 years

Over 4 years but
within 5 years

Over 5 years$——
1,184,624—
807$1,185,431

Millions of yen

2017
Within 1 year

Short-term bank loans, current portion of long-term debt, and commercial paper
Other notes and account payable
Long-term debt
Convertible bondLease obligations
Total¥143,093
—
—
—
1,107
¥144,201

Over 1 year but
within 2 years¥——
52,243—987¥53,230

Over 2 years but
within 3 years¥——
63,647—853¥64,500¥——
36,66925,000543¥62,213¥——48,873—428¥49,301

Over 5 years¥——
84,963—57¥85,020NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

41

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements

8. Derivatives(b) Interest related
Millions of yen

2018

The Company and its consolidated subsidiaries had the following derivatives contracts outstanding at March 31, 2018and 2017.

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

Contract
amountOver 1 year
out-of-contract
amountFair Value

Method of hedge accounting

Type of Derivative

Principal Hedge Item

Principle method

Interest rate swap

Long-term loans¥4,960¥4,589¥(69)

Exceptional accounting method
for interest rate swap

Interest rate swap

Long-term loans

245

—

(*1)

Millions of yen

2018Type of Derivative

Transaction other than market transaction

Contract amountOver 1 year out-ofcontract amount

¥621

¥—

NDF

Thousands of U.S. dollars (Note 1)
Fair Value

2018

¥(13)

Thousands of U.S. dollars (Note 1)

2018Type of Derivative

Transaction other than market transaction

Contract amountOver 1 year out-ofcontract amount$5,849$—NDF

Contract
amountOver 1 year
out-of-contract
amountFair Value

Method of hedge accounting

Type of Derivative

Principal Hedge Item

Principle method

Interest rate swap

Long-term loans$46,691$43,196$(654)

Exceptional accounting method
for interest rate swap

Interest rate swap

Long-term loans

2,307

—

(*1)

Fair Value$(131)

Millions of yen

2017
Millions of yen

2017Type of Derivative

Transaction other than market transaction

Over 1 year out-ofcontract amountContract amount

¥174

NDF

Fair Value

¥—

¥(1)

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

(a) Currency related
N/A in 2018
Millions of yen

2017Type of Derivative

Principal Hedge Item

Principle method

Currency swap

Account receivables

Allocation method of forward
foreign exchange contract, etc.

Currency swap

Long-term loans

Over 1 year
out-of-contract
amountFair Value

Method of hedge accounting

Type of Derivative

Principal Hedge Item

Principle method

Interest rate swap

Long-term loans¥4,716¥4,716¥(130)

Exceptional accounting method
for interest rate swap

Interest rate swap

Long-term loans

724

245

(*1)

(*1) The fair value of interest rate swap to which the exceptional accounting method is applied and the fair value of forward foreign exchange
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 the corresponding
long-term loans.

(2) Derivatives for which hedge accounting has been applied.

Method of hedge accounting

Contract
amountContract
amountOver 1 year
out-of-contract
amountFair Value

¥289

¥—

¥(11)

53

—

(*1)

(*1) The fair value of interest rate swap to which the exceptional accounting method is applied and the fair value of forward foreign exchange
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 the corresponding
long-term loans.

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

42

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements

9. Short-Term Loans and Long-Term Debt

The aggregate annual maturities of long-term debt outstanding at March 31, 2018 are as follows:
Millions of yen

Short-term loans comprised overdrafts and promissory notes.
The weighted-average interest rates of short-term bank loans for the years ended March 31, 2018 and 2017 were0.8180% and 0.9293%, respectively.

2019

The weighted-average interest rates of commercial paper for the years ended March 31, 2018 and 2017 were0.0010% and 0.011%, respectively.

Total
Thousands of U.S. dollars(Note 1)Millions of yen

2018

1.09% unsecured bonds due 2018
0.61% unsecured bonds due 2019 (*1)
0.57% unsecured bonds due 2020
0% unsecured bonds due 2021
0.021%~0.810% unsecured bonds due from 2017 to 2023 (*1) (*2)
0.33% unsecured bonds due 2018 (*1) (*3)
Long-term bank loans due through 2077, with weighted-averageinterest rate of 0.6433% for the year ended March 31, 2018,
and of 0.7695% for the year ended March 31, 2017
Less current portion of long-term debt
Total

2020
2021 and thereafterLong-term debt comprised the following:

2.04% unsecured bonds due 2018

2018

2018

2017

—
—
400
[400]
3,000
25,000
2,800
[800]
15
[15]

¥ 10,000
4,000
800
[400]
3,000
25,000
2,530
[730]
45
[30]

413,937

352,906

3,896,246(64,635)¥380,517(86,885)¥311,396(608,387)$3,581,674

¥

$

—
—
3,765
[3,765]28,237
235,316
26,355[7,530]141[141](*1) [] is the amount of the current portion of bonds.
(*2) This is the total amount of the bonds Goodman Co., Ltd. issued.
(*3) This is the total amount of the bonds IMC Co., Ltd. issued.
In March 2008, the Company issued ¥10,000 million (US$94,126 thousand) of 2.04% unsecured bonds due 2018.
In March 2013, the Company issued ¥4,000 million (US$37,650 thousand) of 1.09% unsecured bonds due 2018.
In March 2014, the Company issued ¥2,000 million (US$18,825 thousand) of 0.61% unsecured bonds due 2019.
In March 2015, the Company issued ¥3,000 million (US$28,237 thousand) of 0.57% unsecured bonds due 2020.
In January 2016,the Company issued ¥25,000 million (US$235,316 thousand)of 0% unsecured bonds due 2021.
In June 2013, IMC Co., Ltd. issued ¥45 million (US$4,235 thousand) of 0.33% privately placed bonds due 2018.
From May 2012 to February 2018, Goodman Co., Ltd. issued ¥5,300 million (US$49,887 thousand) of 0.021% and 0.81% unsecured bonds
due from 2017 to 2023.

Thousands of U.S. dollars(Note 1)

2018

2018

¥ 64,635
76,507
71,394
232,615¥445,151$ 608,387
720,136
672,0112,189,527$4,190,062

As is customary in Japan, long-term and short-term bank loans are made under general agreements which provide that additional securities andguarantees 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 bank loan that
becomes due, and in case of default and certain other specified events, against all other loans payable to the bank.

10. Accrued Pension and Severance Liabilities
The Company and certain consolidated subsidiaries have defined benefit pension plans and unfunded retirement
benefit plans, and defined contribution pension plan for employees.
Certain consolidated subsidiaries have recorded liabilities for retirement benefit and assets for a retirement benefit
based on the simplified method.

(1) Defined Benefit Plans(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:
Thousands of U.S. dollars(Note 1)Millions of yen

2018

2018

2017

¥14,184
1,089
94
142
(604)
(520)

¥13,554
1,088
70
(92)
(52)
(394)

$133,511
10,258885
1,345(5,687)(4,898)

Increasing by change from the simplified method tothe principle method

165

—

1,555

Other (foreign currency translation adjustments, etc.)(6)¥14,54410¥14,184(63)$136,906

Obligation at April 1
Service cost
Interest cost
Actuarial gains and losses
Prior service cost
Benefit payments

Obligation at March 31

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

43

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements(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:

liabilities and assets for retirement benefit are as follows:
Thousands of U.S. dollars(Note 1)Millions of yen

Fair value of plan assets at April 1
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(d) The reconciliation of ending balance of the benefit obligation and the fair value of the plan assets, and

2018

2017

2018

¥ 9,595
164
136
694
(364)
(49)
¥10,177¥9,084
158
(54)
671
(222)
(41)
¥9,595$90,320
1,547
1,285
6,537
(3,427)(466)$95,7972018

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 defined benefit asset
Net assets (liabilities) on the consolidated balance sheet(c) The reconciliation of beginning and ending balances of liabilities for retirement benefit applied based onThousands of U.S. dollars(Note 1)Millions of yen

2017¥ 13,090(10,223)
2,867
1,663
4,530
4,530
—
¥ 4,530¥13,106(9,637)
3,468
1,430
4,899
5,126
(227)
¥ 4,8992018$123,217(96,231)
26,986
15,66142,64742,647—$ 42,647(*) Including the defined benefit plans applied based on the simplified method

the simplified method is as follows:
Thousands of U.S. dollars(Note 1)Millions of yen

2018

¥294
12
23
(12)
(5)

$2,878
—
350
(122)
(45)

Increasing by change from the simplified method tothe principle method

(165)

—

(1,555)

Other (foreign currency translation adjustments, etc.)

25
¥185

(7)
¥305

244
$1,749Beginning balance of newly consolidated subsidiary
Retirement benefit cost
Retirement payments
Contribution for the plan

Liabilities for retirement benefit at March 31

Thousands of U.S. dollars(Note 1)Millions of yen

2018

2017

¥305
—
37
(13)
(4)

Liabilities for retirement benefit at April 1(e) The breakdown of net pension and severance costs is as follows:

Service cost
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

2018

2017

2018

¥1,089
94
(164)
241
(3)
37
(7)
¥1,286¥1,088
70
(158)
240
55
23
25
¥1,345$10,258
885(1,547)
2,268
(37)
350
(68)
$12,109(f) Remeasurements of defined benefit plans (Other Comprehensive Income)The breakdown of the items recorded in adjustments to defined benefit plans is as follows:
Thousands of U.S. dollars(Note 1)Millions of yen

2018

Prior service cost
Actuarial gains and losses
Total

¥604
295
¥900

2017

¥ 52
288
¥340

2018

$5,6872,785$8,473NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

44

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements

11. Commitments and Contingent Liabilities(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:
Thousands of U.S. dollars(Note 1)Millions of yen

2018

Unrecognized prior service cost
Unrecognized actuarial loss
Total

¥ (53)(781)¥(835)

¥ 606
(541)
¥ 64

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

2018

2017

$ 5,704(5,094)$ 610

Thousands of U.S. dollars(Note 1)Millions of yen

2018

2017

2018

Liabilities for guarantees
Export drafts discounted
Total

¥4
¥4

¥13
¥13

$38
$38

(h) Items concerning the pension assets
1. The breakdown of the pension assets

12. Net Assets

The ratio of the plan assets are as follows:
Bonds
Equities
General account
Others
Total

2018

2017

39%
23%
32%
6%
100%

41%
21%
33%
5%
100%

The significant provisions in the Corporate Law of Japan (the “Corporate Law”) that influence financial and accounting
matters are summarized below:(a) Dividends
Under the Corporate Law, companies can pay dividends at any time during the fiscal year in addition to the year-end
dividend upon a resolution at the shareholders’ meeting. For companies that meet certain criteria such as (1) having(*) Including the defined benefit plans applied based on the simplified method

the board of directors, (2) having independent auditors, (3) having the board of corporate auditors, and (4) the service
2. Setting of the long-term expected rate of return

period of the directors is prescribed as one year rather than the normal term of two years by its articles of

The long-term expected rate of return is to be determined considering the current and future allocation of plan assets,

incorporation, the board of directors may declare dividends (except for dividends in kind) if the company has

and the current and expected long-term rate of return from the diverse assets composing the plan assets.

prescribed so in its articles of incorporation. The Company’s present system meets the first three criteria but thetwo-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(i) Calculation basis of actuarial methods

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

The main calculation basis of actuarial methods at the end of the period is as follows:
Discount rate
Expected long-term rate of return
Assumed wage increase rate

2018

2017

Primarily 0.3%
Primarily 1.5%
Primarily 5.3%

Primarily 0.4%
Primarily 1.5%
Primarily 6.5%

(2) Defined Contribution Retirement Plans
The amounts of necessary contributions to defined contribution retirement plans within the Company and consolidated
subsidiaries were ¥560 million (US$5,277 thousand).

pays 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 oftreasury stock.

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

45

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements(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 (acomponent of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on theequity account charged upon the payment of such dividends until the total of aggregate amount of legal reserve andadditional 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 capital surplus
and retained earnings can be transferred among the accounts under certain conditions by the resolution of theshareholders’ meeting.

3) Date of the business combination
October 1, 20174) Legal form of the business combination
Acquisition of shares5) Name of the company after business combination
Nipro ES Pharma Co., Ltd.
6) Ratio of voting rights acquired
100.0%
7) Primary basis for determining acquiring company
The company acquired Tanabe Seiyaku Hanbai Co., Ltd.’s shares for cash consideration

The Company’s legal reserve, which is included in retained earnings, amounted to ¥4,272 million (US$40,213
thousand) as of March 31, 2018, and its additional paid-in capital, which is included in capital surplus, amounted to¥635 million (US$5,979 thousand) as of March 31, 2018.

(2) Period for which the operating results of the acquired company in the consolidated
statements of income
From October 1, 2017 to March 31, 201813. Business Combination(3) Acquisition cost and type of consolidation paid

Business combination through acquisition(1) Outline of the business combination

Millions of yen

Consolidation paid for acquisition

Cash

Total

¥10,870¥10,870

Thousands of U.S. dollars(Note 1)$102,317$102,317

1) Name of the acquired company: Tanabe Seiyaku Hanbai Co., Ltd.
Business of the acquired company: Manufacture and sales of pharmaceuticals
2) Reason of the acquisition(4) Amount and details of major acquisition-related cost

The company and its consolidated subsidiaries own pharmaceutical product manufacturing plants that have theMillions of yenlargest production capacity in Japan. They plan to expand the contract manufacturing business that includes

Due diligence cost

co-development activities and own-brand generic drug business. Thanks to governmental promotion to encourage

Total

the use of generic drugs; their utilization is expected to grow to account for 80% of total drug utilization by 2020.
This, however, has caused intensive price and quality competition with dozens of companies entering drugs into
the market.
Under such circumstances, the Company decided to acquire the shares of the acquired company as theCompany considered it very important to enhance business efficiency by increasing the market share andstrengthening its brand and sales channels to pharmacies and in the psychiatry area in order to survive withthe own brand generic drug at this moment when promoting the generic drugs in preparation for the expected
year 2020.

(5) Amount, cause, and amortization of goodwill arising from the acquisition
1) Amount of goodwill¥3,865 million (US$36,388 thousand)2) Cause of goodwill
Excess earnings power expected in the future due to business development
3) Amortization method and period of goodwill
Straight-line method over 5 years.

¥2¥2

Thousands of U.S. dollars(Note 1)

$26
$26

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

46

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements(6) Amounts of assets acquired and liabilities assumed on the date of the business combination
Millions of yen

Current assets
Fixed assets
Total assets
Current liabilities
Fixed liabilities
Total liabilities

Thousands of U.S. dollars(Note 1)

¥10,435
28¥10,463$98,229264$98,493¥ 3,297
162¥ 3,459$31,034
1,530$32,564(7) Estimated impact on the Consolidated Statement of Income for the Fiscal Year ended March
31, 2018 as if the business combination had been completed at the beginning of the Fiscal
Year ended March 31, 2018 and the calculation method
Millions of yen

Net Sales
Operating income (expense)
Ordinary income (expense)
Net income (loss) attributable to non-controlling interests¥6,625
(38)
(41)
(664)

Thousands of U.S. dollars(Note 1)

$62,366(364)(392)(6252)

14. Segment Reporting
1. Outline of Reportable Operating Segments
Applied ASBJ Statement No.17 “The Revised Accounting Standard for Disclosures of Segments of an Enterprise andRelated Information”, the reportable operating segments are components of an entity for which separate 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 organization and 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 PharmaPackaging 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(Calculation method of estimated impact)
The estimated impact amounts were calculated as the difference between sales and other profits or losses assumingthat the business combination was completed at the beginning of the fiscal year ended March 31, 2018 and theCompany’s sales and other profits or losses on the consolidated statements of income.
This note has not been audited.

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

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

47

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements

Business segment information for the years ended March 31, 2018 and 2017 was as follows:
Millions of yen

2018
Reportable Segment
Medical-Related

Pharmaceutical-Related

PharmaPackaging¥300,117
1,636
301,753
36,522417,884¥ 66,846
14,78981,636
13,104
166,188¥28,40469
28,473(1,308)67,319¥395,368
16,494
411,863
48,318651,392

14,836
2,738¥ 20,412

11,1464¥ 17,469

3,043
689¥ 9,024

29,0263,431¥ 46,906

Other
(*1)

Total

¥

29
1,180
1,210
75
4,317

¥395,397
17,675413,073
48,394
655,710¥—(17,675)(17,675)(21,306)
171,048¥395,397—
395,397
27,088
826,759

48—¥1,76929,074
3,431¥ 48,675

3,491—¥ 13,314

32,565
3,431¥ 61,990

Other
(*1)

Total

Adjustment(*2)

Consolidated
financial statements

Total

Adjustment(*2)

Consolidated
financial statements

Net sales:
OutsideIntersegment
Total
Operating income (loss)
Identifiable assets
Other items
Depreciation and amortization
Amortization of goodwill
Increase in tangible and intangible fixed assets

Thousands of U.S. dollars (Note 1)

2018
Reportable Segment
Medical-Related

Pharmaceutical-Related

PharmaPackaging

Total$2,824,901
15,4012,840,303
343,773
3,933,403$ 629,205
139,206
768,411
123,350
1,564,277$267,357
651
268,008(12,317)633,650$3,721,464
155,259
3,876,723
454,807
6,131,331$

276
11,113
11,389709
40,640$3,721,741
166,372
3,888,113
455,516
6,171,971$—(166,372)(166,372)(200,546)
1,610,022$3,721,741—
3,721,741
254,970
7,781,993

139,647
25,772$ 192,137

104,92237$ 164,433

28,647
6,489$ 84,939

273,216
32,299$ 441,511

454—$16,653

273,671
32,299$ 458,164

32,861—$ 125,328

306,532
32,299$ 583,492

Net sales:
OutsideIntersegment
Total
Operating income (loss)
Identifiable assets
Other items
Depreciation and amortization
Amortization of goodwill
Increase in tangible and intangible fixed assets

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

48

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

Notes to Consolidated Financial Statements

Millions of yen

2017
Reportable Segment
PharmaPackaging

Other
(*1)

Total

29
724
754
(10)
1,237

¥359,699
12,216
371,916
43,449592,508¥—(12,216)(12,216)(14,679)
160,330¥359,699—
359,699
28,770752,8390—¥ 731

28,2952,907¥ 47,907

2,832—¥ 10,403

31,1282,907¥ 58,310

Medical-Related

Pharmaceutical-Related

Total¥262,198
1,575
263,773
30,638369,540¥ 69,140
9,917
79,057
14,135
160,467¥28,331
0
28,331(1,313)
61,262¥359,670
11,492
371,162
43,460591,270¥

14,231
2,083¥ 22,684

10,761
4¥ 17,695

3,302
819¥ 6,795

28,2952,907¥ 47,175

Adjustment(*2)

Consolidated
financial statements

Net sales:
OutsideIntersegment
Total
Operating income (loss)
Identifiable assets
Other items
Depreciation and amortization
Amortization of goodwill
Increase in tangible and intangible fixed assets(*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 ended March 31, 2018 and 2017 include ¥(704) million (US$(6,628) thousand) and ¥1,248 million of adjustment for unrealized gain and ¥(20,601) million (US$(193,918) thousand) and ¥(15,927) million of corporate cost, respectively. Corporate cost consists primarilyof sales, general and administrative expenses and research and development costs which do not belong to the reportable segment.
• Adjustments for Identifiable assets ended March 31, 2018 and 2017 include ¥(9,114) million (US$(85,787) thousand) and ¥(7,339) million of elimination of inter-segment transaction and ¥180,162 million (US$1,695 thousand) and ¥167,670 million of corporate assets, respectively. Corporate assets
consisted primarily of cash and deposits, investment securities, assets for development and assets for management division of head office which do not belong to the reportable segment.
• Adjustments for depreciation and amortization ended March 31, 2018 and 2017 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 increase in corporate assets.

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

49

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

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

Millions of yen

2018

2018

Reportable Segment

Loss on impairment of
fixed assets¥ 2,107¥—¥109¥ 2,216

27,358——27,358

PharmaPackaging

Total

139

¥—

¥1,96826,153

0

1,205

¥

Unamortized balance of
goodwill

Other

PharmaceuticalRelated

Medical-Related

Japan

Adjustment
(*3)

Total

Americas

Europe

Asia

Total

Net sales¥241,750¥56,704¥46,389¥50,553¥395,397

Property, plant andequipment

177,250

10,407

21,90960,706

270,273

Thousands of U.S. dollars (Note 1)

2018
Japan

Americas

Europe

Asia

Total

Net sales$2,275,513$533,736$436,652$475,838$3,721,741

Property, plant andequipment

1,668,397

97,959206,227

571,4102,543,994

Thousands of U.S. dollars (Note 1)

2018
Reportable Segment
Medical-Related

PharmaceuticalRelated

PharmaPackaging

Total

Other

Adjustment
(*3)

Total

Loss on impairment of
fixed assets

$

1,312

$—

$18,525$ 19,837$—$1,025$ 20,866

Unamortized balance of
goodwill

246,178

011,342257,520——

257,520(*3) Adjustments for Loss on impairment of fixed assets ended March 31, 2018 is for corporate assets. These assets are not included in any
reporting segments.

Millions of yen

2017
Reportable Segment
Medical-Related

PharmaceuticalRelated

PharmaPackaging

Total

Other

Total

Loss on impairment of
fixed assets

¥

32

¥120

¥1,401¥ 1,544¥—¥ 1,554

Unamortized balance of
goodwill

24,957

4

3,034

27,996—27,996

Millions of yen

2017
Japan

Americas

Europe

Asia

Total

Net sales¥221,331¥53,239¥42,579¥42,548¥359,699

Property, plant andequipment

148,090

9,791

16,70869,632

244,222NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Data Section

50

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
Report of Independent Auditors
Corporate Information

Financial/Data Section

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, 2018 and 2017

In the year ended March 31, 2018 and 2017, the Company and its consolidated subsidiaries recorded impairment

were as follows:

losses of ¥2,216 million (US$20,866) and ¥1,554 million, respectively.
Thousands of U.S. dollars(Note 1)Millions of yen

Salaries

2018

2017

¥20,111¥19,813

2018

The following table presents the major impaired assets.

$189,306

Millions of yen
Purpose of use

16. Research and Development Expenses
Research and development expenses for the years ended March 31, 2018 and 2017 were ¥16,113 million(US$151,674 thousand) and ¥11,517 million, respectively.

Location

Type of assets

Thousands of U.S. dollars(Note 1)

2018

2018

AmountAmountBusiness use

Nipro PharmaPackaging
France S.A.S

Goodwill¥810$7,629Business use

Nipro PharmaPackaging
India Private Limited

Construction in progress, Machineryand equipment and others

450

4,243

Business use

Nipro Pharma Glass AG

Goodwill

353

3,327

Business use

Nipro PharmaPackaging
Ural LLC

Buildings and structures, Constructionin progress and others

261

2,457

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 and company-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 thecompany 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

2017
Purpose of use

Location

Type of assets

AmountBusiness use

Nipro PharmaPackaging
Germany GmbH

Goodwill, other intangilble assets
and others

Business use

Nipro PharmaPackaging Belgium N.V.

Goodwill¥1,113288

18. Supplemental Disclosures of Cash Flow Information
Supplemental information related to the Consolidated Statements of Cash Flows was as follows:
Thousands of U.S. dollars(Note 1)Millions of yen

2018

2017

2018

¥3,2997,329¥3,9087,308$31,058
68,994

Cash paid during the year for:
Interest
Income tax

NIPRO Annual Report 2018

Contents

About NIPROManagement
Message

Review ofOperations

Management
Foundation

Financial/
Data Section

51

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

Financial/Data Section

Notes to Consolidated Financial Statements

19. Subsequent events
Share Buybacks
The Company held its Board of Directors on July 3, 2018 and passed a resolution setting out details of the Company’s
share buybacks to be conducted in accord with Article 156 of the Companies Act applied pursuant to Article 165,
paragraph 3, of the Act.

1. Reason for share buybacks
To enhance the shareholder return and improving capital efficiency.

2. Details of share buybacks(1) Class of shares
Issued and Outstanding shares of the Company(2) Potential total number
4,000,000 shares (upper limit)(equivalent to 2.40% of issued and net outstanding shares excluding treasury stock)(3) Total price¥5,000,000,000 (upper limit)(4) Period
July 4, 2018—December 28, 2018
(For reference) Treasury stock holdings of the Company as of March 31, 2018
Number of issued and outstanding shares (net of treasury stock): 166,618,455 shares
Number of shares held in treasury stock: 4,841,024 shares
Note: Number of the treasury stocks does not include 196,100 shares owned by Trust and Custody Service Bank, Ltd(Trust Account E).

Report of Independent Auditors

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

NIPRO Annual Report 2018

Contents

Management
Message

About NIPRO

Review ofOperations

Management
Foundation

Financial/
Financial/
Data
Data Section
Section52
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Auditors
Corporate Information

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

Financial/Data Section

Corporate Information

Principal Shareholders

Stock Price Range (Tokyo Stock Exchange)(As of March 31, 2018)

Nippon Electric Glass Co., Ltd.
Japan Trustee Services Bank, Ltd.
The Master Trust Bank of Japan, Ltd.
Trust & Custody Services Bank, Ltd.
Resona Bank Limited
Japan Post Insurance Co., Ltd.
Kazumi Sano
Nipro Employee Stock Ownership
JP Morgan Chase Bank 385151
Mizuho Bank, 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
http://www.nipro.co.jp/english/

Area

Country

DomesticJapan

Overseas

ThailandNumber of Employees
Consolidated subsidiaries

3,499
24,831

Total

28,330Common Stock
Authorized
IssuedOutstanding
Number of Shareholders

400,000,000 shares
171,459,479 shares
166,618,455 shares
52,659Stock 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, Japan

Percentage of Total
Shares in Issue (%)

21,945
19,284
9,182
4,474
4,414
1,912
1,910
1,643
1,613
1,565
67,946

13.18
11.58
5.52
2.69
2.65
1.15
1.15
0.99
0.97
0.94
40.78

(yen)

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

3

12

2016

6

9

12

3

2017

6

9

12

3

2018

Major Group Companies (As of June 30, 2018)

Tokyo Office
4-3-4 Hongo, Bunkyo-ku, Tokyo 113-0033, Japan
Telephone: +81-3-5684-5611
Facsimile: +81-3-5684-5610

Parent company

Number of
Shares Held(in thousands)

China

VietnamSingapore
India

BangladeshIndonesia
UAE
BrazilU.S.A.
Belgium

FranceGermany
Switzerland
RussiaName

Principal businessNipro Medical Industries Co., Ltd.
Goodman Co., Ltd.
Nipro Pharma Corporation
Zensei Pharmaceutical Industries Co., Ltd.
Nichihos Co., Ltd.
Cell Science & Technology Institute, Inc.
NexMed International Co., Ltd.
Nipro (Thailand) Corporation Limited
Nipro Sales (Thailand) 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
Nipro Europe Group Companies N.V.
Nipro 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

Manufacturing and marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of pharmaceuticals
Manufacturing and marketing of pharmaceuticals
Management of dispensing pharmacies and marketing of pharmaceutical products
Development and manufacture of cell culture media
Development, manufacture and sales of orthopedic products
Manufacturing and marketing of medical devices
Marketing of medical devices
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
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