Always putting
healthier lives firstIntegrated Report 2023
5-2-30 Miyahara, Yodogawa-ku, Osaka 532-0003, Japan
TEL: +81-6-6105-5818 FAX: +81-6-6394-7311
URL: https://global.sawaigroup.holdings

Sawai Group corporate philosophy

Always putting
healthier lives first
The Sawai Group corporate philosophy of “always putting healthier lives first“
embodies our desire to contribute to the health of as many people as possible as a healthcare
corporate group which develops sustainably alongside society with the generic drugs businessas our core business. We will mobilize the strengths of all Group employees to pursue
the challenge of meeting the expectations of all stakeholders.

5Management message

Our value creation story
15 Our history of

Challenge

1

Aspiration

Sawai Group will serve every stakeholder wholeheartedly.
Sawai Group will continue the challenge toimprove access to healthcare for more people.
Sawai Group aspires to play a pivotal rolein healthcare through contribution to society.

Sawai Group Holdings Integrated Report 2023

17 Our value creation model
19 Sawai Group’s strengths
23 Sustainability at the

Value creation strategy
27 ESG strategy
29 Human asset strategy
31 Society
33 Environment
35 Japan business
38 U.S. business
39 Feature-Progress

management
12 Message from the newly
appointed external director
13 Management discussion &analysisvalue creation
Wholeheartedness

27

5 Message from the senior

15
Sawai Group Mind

Editorial policy

Contents

in fostering new businesses

41

Governance
41 Board of Directors
43 Corporate governance
47 Messages from

Sawai Group

25 Financial andexternal directors

non-financial highlights

49

Eleven-year financial andnon-financial summary

This report references the International Financial Reporting Standards
Foundation’s International Integrated Report Framework and includes
information that could impact our medium- to long-term corporate
value creation and that is connected with information about theCompany’s strategies, performance, and future projections, as well as
non-financial information concerning the environment, society, andgovernance. The contents herein have been assigned priority internallybased on their nature and quantity, risks, opportunities, and dialogues
with stakeholders, and have been deemed to be of particular importance.
This report has been prepared by the Group Sustainability
Committee, which is chaired by the President, and with the support ofthe committee’s administrative office.
Reporting period: April 1, 2022 - March 31, 2023 (some information
herein falls outside of this period)
Reporting scope: Sawai Group Holdings and its consolidated
subsidiaries
Abbreviations used: In this report, “generic drugs” are abbreviated aseither “GE drugs” or “GE.”A caution concerning forward-looking statements: This reportcontains forward-looking statements regarding the Company’s plans,
outlook, strategies, and results for the future. All forward-looking
statements are based on judgments derived from the information
available to the Company at the time of publication. Accordingly,
please be aware that the impact of certain risks and uncertainties
could cause the Company’s actual results to differ materially from any
projections presented in this report.

Sawai Group Holdings Integrated Report 2023

2

Sawai Group corporate philosophy

Always putting
healthier lives first
The Sawai Group corporate philosophy of “always putting healthier lives first“
embodies our desire to contribute to the health of as many people as possible as a healthcare
corporate group which develops sustainably alongside society with the generic drugs businessas our core business. We will mobilize the strengths of all Group employees to pursue
the challenge of meeting the expectations of all stakeholders.

5Management message

Our value creation story
15 Our history of

Challenge

1

Aspiration

Sawai Group will serve every stakeholder wholeheartedly.
Sawai Group will continue the challenge toimprove access to healthcare for more people.
Sawai Group aspires to play a pivotal rolein healthcare through contribution to society.

Sawai Group Holdings Integrated Report 2023

17 Our value creation model
19 Sawai Group’s strengths
23 Sustainability at the

Value creation strategy
27 ESG strategy
29 Human asset strategy
31 Society
33 Environment
35 Japan business
38 U.S. business
39 Feature-Progress

management
12 Message from the newly
appointed external director
13 Management discussion &analysisvalue creation
Wholeheartedness

27

5 Message from the senior

15
Sawai Group Mind

Editorial policy

Contents

in fostering new businesses

41

Governance
41 Board of Directors
43 Corporate governance
47 Messages from

Sawai Group

25 Financial andexternal directors

non-financial highlights

49

Eleven-year financial andnon-financial summary

This report references the International Financial Reporting Standards
Foundation’s International Integrated Report Framework and includes
information that could impact our medium- to long-term corporate
value creation and that is connected with information about theCompany’s strategies, performance, and future projections, as well as
non-financial information concerning the environment, society, andgovernance. The contents herein have been assigned priority internallybased on their nature and quantity, risks, opportunities, and dialogues
with stakeholders, and have been deemed to be of particular importance.
This report has been prepared by the Group Sustainability
Committee, which is chaired by the President, and with the support ofthe committee’s administrative office.
Reporting period: April 1, 2022 - March 31, 2023 (some information
herein falls outside of this period)
Reporting scope: Sawai Group Holdings and its consolidated
subsidiaries
Abbreviations used: In this report, “generic drugs” are abbreviated aseither “GE drugs” or “GE.”A caution concerning forward-looking statements: This reportcontains forward-looking statements regarding the Company’s plans,
outlook, strategies, and results for the future. All forward-looking
statements are based on judgments derived from the information
available to the Company at the time of publication. Accordingly,
please be aware that the impact of certain risks and uncertainties
could cause the Company’s actual results to differ materially from any
projections presented in this report.

Sawai Group Holdings Integrated Report 2023

2

Creating a society in which everyone
can receive healthcare with peace of mind
Throughout the world, including Japan, many people lack access to sufficient healthcare for financial reasons.
The Sawai Group strives to improve access to healthcare by developing
and offering a stable supply of high-quality, high valued-added generic drugs.
Sales volume

Approx.

Share of Japan’sprescription drug market(volume)15.0 8.2
Approx.

billion tablets
Sawai Pharmaceutical

Sawai estimate%

Amount of reductionin healthcare costs

Approx.

280.9¥

billionJapan businessApprox.

131.2 billion¥

U.S. business

Sawai GroupThe world
we want to build
A world where more people
can receive healthcare
services and live
a full life with peace ofmind among society

Vision 2030

Our ideal state
A company with a strong presence
that continues to contribute topeople’s health by providing a
multifaceted mix of products andservices based on scientificevidence that meet
individual needs

Aiming to become
a general healthcare company
that supports people’s healthIn not only its core generic drug business but also a wide range offields that extend from prevention to treatment,
the Sawai Group provides choices not limited to health foods and drug therapies,
including digital and medical devices,
but has also entered the new drug business for rare diseases.

3

Sawai Group Holdings Integrated Report 2023

Sawai Group Holdings Integrated Report 2023

4

Creating a society in which everyone
can receive healthcare with peace of mind
Throughout the world, including Japan, many people lack access to sufficient healthcare for financial reasons.
The Sawai Group strives to improve access to healthcare by developing
and offering a stable supply of high-quality, high valued-added generic drugs.
Sales volume

Approx.

Share of Japan’sprescription drug market(volume)15.0 8.2
Approx.

billion tablets
Sawai Pharmaceutical

Sawai estimate%

Amount of reductionin healthcare costs

Approx.

280.9¥

billionJapan businessApprox.

131.2 billion¥

U.S. business

Sawai GroupThe world
we want to build
A world where more people
can receive healthcare
services and live
a full life with peace ofmind among society

Vision 2030

Our ideal state
A company with a strong presence
that continues to contribute topeople’s health by providing a
multifaceted mix of products andservices based on scientificevidence that meet
individual needs

Aiming to become
a general healthcare company
that supports people’s healthIn not only its core generic drug business but also a wide range offields that extend from prevention to treatment,
the Sawai Group provides choices not limited to health foods and drug therapies,
including digital and medical devices,
but has also entered the new drug business for rare diseases.

3

Sawai Group Holdings Integrated Report 2023

Sawai Group Holdings Integrated Report 2023

4

Management message | Message from the senior management

Management message

Our value creation story

Value creation strategy

Governance

Financial section

Fulfilling our mission as a healthcare
corporate group with an eye toward
the future of the generic drug industry

Goal of the new system

Navigating the harsh environment of the generic drug businesswith a new system that makes quick decision-making possible

Mitsuo Sawai
Representative Director,
Chairman and President(Group Chief Executive Officer andGroup Chief Operating Officer)

5

Sawai Group Holdings Integrated Report 2023

In April 2021, the Group transitioned to a holding company structure by establishing Sawai Group
Holdings Co., Ltd. (hereinafter, “the Company”), and the three representative directors were
tasked with managing the Group based on a division of duties. I was the Chief Executive Officeof the overall group, Deputy Chairman and Sawai Pharmaceutical President Kenzo Sawai was
responsible for the generic drug business, our core business, and President Kazuhiko Sueyoshi
was in charge of overall management of the Group’s management departments and new andoverseas businesses.
Taking into consideration the results of these measures and the business environment,
we integrated management in June 2023 by having me serve as both the Chairman (Group CEO)and President (Group COO). At the same time, Kenzo Sawai resigned as both an officer of theCompany and Sawai Pharmaceutical President. Furthermore, Kazuhiko Sueyoshi resigned as
President of the Company but was then appointed Deputy Group CEO in charge of both special
missions and ESG.
After transitioning to a holding company structure, it was necessary to eliminate disparities
in risk management, compliance, information security, and sustainability within the Group andmake governance more effective, and these efforts have firmly taken root over the last two years.
For the U.S. business, too, bold revisions were made to the R&D system, which made it possible
to return the business to profitability. Therefore, Kazuhiko Sueyoshi, who was responsible forboth fields, resigned and was placed in charge of ESG (environment, society, and governance),
which are remaining issues.
On the other hand, for the generic drug business, our core business, it was possible toestablish a system that generates a certain level of profit even while competitors struggle byhaving each senior vice president think for themselves and fulfill their responsibilities and mission
under President Kenzo Sawai. However, we are confronting a situation in which it is impossible
to see future growth and expansion through a single company’s efforts unless there are changes
to systems and environment in the industry, such as annual drug price revisions.
In response to this situation, Kenzo Sawai decided to step back from management andfocus on industry-related activities based on his strong resolve and awareness that he “wants
to undertake activities to maintain business for the overall industry by leveraging his experience,
knowledge of systems, and other skills.”
Kenzo Sawai was succeeded by Motohiko Kimura, who had served as the Senior Vice
President of the Manufacturing Division at Sawai Pharmaceutical and will take control of thegeneric drug business. He was extremely successful in contributing to higher quality and anincrease in GMP level based on his experience and knowledge acquired at a new drug
manufacturer, and I expect that he will make further contributions to quality and the stable

Sawai Group Holdings Integrated Report 2023

6

Management message | Message from the senior management

Management message

Our value creation story

Value creation strategy

Governance

Financial section

Fulfilling our mission as a healthcare
corporate group with an eye toward
the future of the generic drug industry

Goal of the new system

Navigating the harsh environment of the generic drug businesswith a new system that makes quick decision-making possible

Mitsuo Sawai
Representative Director,
Chairman and President(Group Chief Executive Officer andGroup Chief Operating Officer)

5

Sawai Group Holdings Integrated Report 2023

In April 2021, the Group transitioned to a holding company structure by establishing Sawai Group
Holdings Co., Ltd. (hereinafter, “the Company”), and the three representative directors were
tasked with managing the Group based on a division of duties. I was the Chief Executive Officeof the overall group, Deputy Chairman and Sawai Pharmaceutical President Kenzo Sawai was
responsible for the generic drug business, our core business, and President Kazuhiko Sueyoshi
was in charge of overall management of the Group’s management departments and new andoverseas businesses.
Taking into consideration the results of these measures and the business environment,
we integrated management in June 2023 by having me serve as both the Chairman (Group CEO)and President (Group COO). At the same time, Kenzo Sawai resigned as both an officer of theCompany and Sawai Pharmaceutical President. Furthermore, Kazuhiko Sueyoshi resigned as
President of the Company but was then appointed Deputy Group CEO in charge of both special
missions and ESG.
After transitioning to a holding company structure, it was necessary to eliminate disparities
in risk management, compliance, information security, and sustainability within the Group andmake governance more effective, and these efforts have firmly taken root over the last two years.
For the U.S. business, too, bold revisions were made to the R&D system, which made it possible
to return the business to profitability. Therefore, Kazuhiko Sueyoshi, who was responsible forboth fields, resigned and was placed in charge of ESG (environment, society, and governance),
which are remaining issues.
On the other hand, for the generic drug business, our core business, it was possible toestablish a system that generates a certain level of profit even while competitors struggle byhaving each senior vice president think for themselves and fulfill their responsibilities and mission
under President Kenzo Sawai. However, we are confronting a situation in which it is impossible
to see future growth and expansion through a single company’s efforts unless there are changes
to systems and environment in the industry, such as annual drug price revisions.
In response to this situation, Kenzo Sawai decided to step back from management andfocus on industry-related activities based on his strong resolve and awareness that he “wants
to undertake activities to maintain business for the overall industry by leveraging his experience,
knowledge of systems, and other skills.”
Kenzo Sawai was succeeded by Motohiko Kimura, who had served as the Senior Vice
President of the Manufacturing Division at Sawai Pharmaceutical and will take control of thegeneric drug business. He was extremely successful in contributing to higher quality and anincrease in GMP level based on his experience and knowledge acquired at a new drug
manufacturer, and I expect that he will make further contributions to quality and the stable

Sawai Group Holdings Integrated Report 2023

6

Management message | Message from the senior management*1 An abbreviation for Good
Manufacturing Practices,international standards
related to pharmaceuticalmanufacturing and quality
control.

Management message

supply required of Sawai Pharmaceutical. Furthermore, Shoji Yokota, who was responsible for
R&D at Sawai Pharmaceutical, was appointed a Director of the Company. His duty will be toprovide overall supervision and management for future R&D, including that related to new
business development.
At the same time, the Tokyo Stock Exchange’s Corporate Governance Code requires thatcompanies listed on the Prime Market install external directors who possess management
experience at other companies. To meet this demand, Dr. Masayuki Mitsuka, who served six years
as the President of Mitsubishi Tanabe Pharma, took up the position of external director and will
be responsible for strengthening the Group’s governance. I consider it extremely significant that
we have a person with knowledge of management at overseas companies and with expertise in
the laws and regulations related to the Group’s business, such as the Act on Securing Quality,
Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices and GMP,*1 serving
as an external director.
Because of these personnel changes, we have transitioned to a system with a single
Representative Director that makes quick decision-making possible. In addition, we have reinforced
our governance system by having half of our six directors as external directors.

Business environment for the Japan generic drug industry

A period of transformation in old systems, necessary to provide
a stable supply of high quality generic drugs and contribute toa reduction in government spending on healthcare
For the generic drug business, our core business, Sawai Pharmaceutical is committed to patientsand strives to develop and provide products under the corporate philosophy of “always putting
patients first.” However, we are facing difficult conditions when we will no longer be able to fulfill
our corporate mission of offering a stable supply of high quality generic drugs.
Until now, the use of generic drugs has spread because of government policies that promoted
their use, which also resulted in growth for our business. Because of quality-related problems withproducts of some drug manufacturers that gave insufficient consideration to quality and possessed
insufficient related systems required of drug manufacturers, shipments of almost 40% of genericdrugs in 2022 were suspended or limited, resulting in supply shortages. Furthermore, in recent
years authorized generic (AG) drugs have captured a larger share of the market, and generic drug
manufacturers are fighting among themselves for the remaining market share.
Generic drugs produced through high-mix, low-volume production have a cost ratio of about
70%, which is more than twice that for general new drugs. Around 60% of our products are pricedat ¥10 or less, and because of annual drug price revisions, many products are priced below cost,
making 30% of our products unprofitable. However, despite being unprofitable, we cannot stop
producing and supplying certain drugs because of their importance for the lives and health ofpeople in Japan. Even though we have implemented more measures than other companies, such

Prescription drug sales (tablets)by company (Japan)
Sawai
Company A
Company B
Company C
Company D
Company E
Company F
Company G
Company H
Company I

7

Sawai Group Holdings Integrated Report 2023

8.2

Amount of medical expense savings due to
Sawai Pharmaceutical products (Japan)%¥
Japan market share(sales volume)
No. 1

280.9

billion annually

Difference assuming originatordrugs are used instead of
Sawai Pharmaceutical generic drugs

Our value creation story

Value creation strategy

Governanceas reforming management and increasing production efficiency, we recorded a decline in profit
for fiscal 2022 for various reasons, including higher energy costs.
Furthermore, in April 2024, fees for three medical services will be revised (medical service
fees, nursing fees, and fees for disability welfare services), resulting in a “triple revision.”
Because of increases in the cost of goods and personnel expenses, there are demands for an
increase in compensation for each of these services, but major increases in the budget for social
security expenses are out of the question. In 2025, all members of the baby boomer generation
will be at least 75, and social security expenses will continue to grow. Having launched an expert
working group regarding quick, stable supply of drugs, the Ministry of Health, Labour and Welfare
is conducting in-depth deliberations on various topics, including the structure of businesses in
the industry.
Under the current drug price system, the price of generic drugs is set at the weighted
average of three price ranges.*2 However, this mechanism does not reflect the efforts of individualcompanies. Sawai Pharmaceutical conducts formulation development in order to create productsthat are easy for patients to take and easy for healthcare professionals to use. It is our opinion
that the system of drug prices should revert back to one that pays different manufacturers
different prices in order to reward the efforts of companies that provide a stable supply of quality
generic drugs.
In response to increases in costs, Sawai Pharmaceutical was forced to raise the invoice price*3of some of its products in 2022. Although some wholesalers protested, it was only because of
these conditions, that we were able to communicate to society our strong determination toprovide a stable supply. Generic drugs account for a larger percentage of the market than the
80% target set by the Ministry of Health, Labour and Welfare, indicating that GE promotion
measures implemented so far have achieved some of the objectives. We are likely approachinga period of transformation in old systems, and one example of this transformation is moving
toward a system in which drug manufacturers receive proper compensation for drugs thatphysicians consider absolutely necessary, and discontinue drugs that are not.
Generic drugs contribute to about ¥1.7 trillion in healthcare cost savings annually, and Sawai
Pharmaceutical accounts for ¥280.9 billion of that. If generic drugs were replaced with originatordrugs, healthcare costs would increase a corresponding amount. Raising the price of inexpensive
generic drugs in order to ensure an appropriate return and creating a system that offers a stablesupply of generic drugs would be beneficial to both the Japanese people and the government.
If we can properly communicate correct information on the problems the industry faces andgeneric drugs to the Ministry of Health, Labour and Welfare, healthcare organizations, insurers,
politicians, and the people in Japan and transform the structure of the industry, I am confident
that the generic drug industry will surely grow.

Financial section*2 The rule is that the priceof listed generic drugs is
placed in one of three
price ranges (“less than
30% of highest drug
price,” “between 30%
and up to but notincluding 50% of highest
drug price, and “50% ormore of the highest drug
price”) based on theweighted average market
price at the time of the
drug price revision.
*3 Invoice price: the pricemanufacturers sell towholesalers.

Recovering trust for the overall industry

Taking the lead in eliminating supply shortages
and restoring trust as the industry leading company
Turning to the production of generic drugs, it is difficult to rapidly increase production because
there are intricate production plans for each production facility. Under these conditions, Sawai
Pharmaceutical has worked to release and ship as much inventory as possible, but because of
overall supply shortages, there have been times when we have caused problems, particularly forexisting business partners, and have been dressed down when making sales calls.
However, we were able to produce 16.6 billion tablets, more than 10% more tablets than
the actual production for the previous fiscal year, as a result of all employees, including those atpartner companies, working together to strengthen the system for increased production. Inventory
levels have almost returned to their original level, and there has been a dramatic decline in limited
shipments since April 2022. But, the Group is not the only company to face supply shortages.

Sawai Group Holdings Integrated Report 2023

8

Management message | Message from the senior management*1 An abbreviation for Good
Manufacturing Practices,international standards
related to pharmaceuticalmanufacturing and quality
control.

Management message

supply required of Sawai Pharmaceutical. Furthermore, Shoji Yokota, who was responsible for
R&D at Sawai Pharmaceutical, was appointed a Director of the Company. His duty will be toprovide overall supervision and management for future R&D, including that related to new
business development.
At the same time, the Tokyo Stock Exchange’s Corporate Governance Code requires thatcompanies listed on the Prime Market install external directors who possess management
experience at other companies. To meet this demand, Dr. Masayuki Mitsuka, who served six years
as the President of Mitsubishi Tanabe Pharma, took up the position of external director and will
be responsible for strengthening the Group’s governance. I consider it extremely significant that
we have a person with knowledge of management at overseas companies and with expertise in
the laws and regulations related to the Group’s business, such as the Act on Securing Quality,
Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices and GMP,*1 serving
as an external director.
Because of these personnel changes, we have transitioned to a system with a single
Representative Director that makes quick decision-making possible. In addition, we have reinforced
our governance system by having half of our six directors as external directors.

Business environment for the Japan generic drug industry

A period of transformation in old systems, necessary to provide
a stable supply of high quality generic drugs and contribute toa reduction in government spending on healthcare
For the generic drug business, our core business, Sawai Pharmaceutical is committed to patientsand strives to develop and provide products under the corporate philosophy of “always putting
patients first.” However, we are facing difficult conditions when we will no longer be able to fulfill
our corporate mission of offering a stable supply of high quality generic drugs.
Until now, the use of generic drugs has spread because of government policies that promoted
their use, which also resulted in growth for our business. Because of quality-related problems withproducts of some drug manufacturers that gave insufficient consideration to quality and possessed
insufficient related systems required of drug manufacturers, shipments of almost 40% of genericdrugs in 2022 were suspended or limited, resulting in supply shortages. Furthermore, in recent
years authorized generic (AG) drugs have captured a larger share of the market, and generic drug
manufacturers are fighting among themselves for the remaining market share.
Generic drugs produced through high-mix, low-volume production have a cost ratio of about
70%, which is more than twice that for general new drugs. Around 60% of our products are pricedat ¥10 or less, and because of annual drug price revisions, many products are priced below cost,
making 30% of our products unprofitable. However, despite being unprofitable, we cannot stop
producing and supplying certain drugs because of their importance for the lives and health ofpeople in Japan. Even though we have implemented more measures than other companies, such

Prescription drug sales (tablets)by company (Japan)
Sawai
Company A
Company B
Company C
Company D
Company E
Company F
Company G
Company H
Company I

7

Sawai Group Holdings Integrated Report 2023

8.2

Amount of medical expense savings due to
Sawai Pharmaceutical products (Japan)%¥
Japan market share(sales volume)
No. 1

280.9

billion annually

Difference assuming originatordrugs are used instead of
Sawai Pharmaceutical generic drugs

Our value creation story

Value creation strategy

Governanceas reforming management and increasing production efficiency, we recorded a decline in profit
for fiscal 2022 for various reasons, including higher energy costs.
Furthermore, in April 2024, fees for three medical services will be revised (medical service
fees, nursing fees, and fees for disability welfare services), resulting in a “triple revision.”
Because of increases in the cost of goods and personnel expenses, there are demands for an
increase in compensation for each of these services, but major increases in the budget for social
security expenses are out of the question. In 2025, all members of the baby boomer generation
will be at least 75, and social security expenses will continue to grow. Having launched an expert
working group regarding quick, stable supply of drugs, the Ministry of Health, Labour and Welfare
is conducting in-depth deliberations on various topics, including the structure of businesses in
the industry.
Under the current drug price system, the price of generic drugs is set at the weighted
average of three price ranges.*2 However, this mechanism does not reflect the efforts of individualcompanies. Sawai Pharmaceutical conducts formulation development in order to create productsthat are easy for patients to take and easy for healthcare professionals to use. It is our opinion
that the system of drug prices should revert back to one that pays different manufacturers
different prices in order to reward the efforts of companies that provide a stable supply of quality
generic drugs.
In response to increases in costs, Sawai Pharmaceutical was forced to raise the invoice price*3of some of its products in 2022. Although some wholesalers protested, it was only because of
these conditions, that we were able to communicate to society our strong determination toprovide a stable supply. Generic drugs account for a larger percentage of the market than the
80% target set by the Ministry of Health, Labour and Welfare, indicating that GE promotion
measures implemented so far have achieved some of the objectives. We are likely approachinga period of transformation in old systems, and one example of this transformation is moving
toward a system in which drug manufacturers receive proper compensation for drugs thatphysicians consider absolutely necessary, and discontinue drugs that are not.
Generic drugs contribute to about ¥1.7 trillion in healthcare cost savings annually, and Sawai
Pharmaceutical accounts for ¥280.9 billion of that. If generic drugs were replaced with originatordrugs, healthcare costs would increase a corresponding amount. Raising the price of inexpensive
generic drugs in order to ensure an appropriate return and creating a system that offers a stablesupply of generic drugs would be beneficial to both the Japanese people and the government.
If we can properly communicate correct information on the problems the industry faces andgeneric drugs to the Ministry of Health, Labour and Welfare, healthcare organizations, insurers,
politicians, and the people in Japan and transform the structure of the industry, I am confident
that the generic drug industry will surely grow.

Financial section*2 The rule is that the priceof listed generic drugs is
placed in one of three
price ranges (“less than
30% of highest drug
price,” “between 30%
and up to but notincluding 50% of highest
drug price, and “50% ormore of the highest drug
price”) based on theweighted average market
price at the time of the
drug price revision.
*3 Invoice price: the pricemanufacturers sell towholesalers.

Recovering trust for the overall industry

Taking the lead in eliminating supply shortages
and restoring trust as the industry leading company
Turning to the production of generic drugs, it is difficult to rapidly increase production because
there are intricate production plans for each production facility. Under these conditions, Sawai
Pharmaceutical has worked to release and ship as much inventory as possible, but because of
overall supply shortages, there have been times when we have caused problems, particularly forexisting business partners, and have been dressed down when making sales calls.
However, we were able to produce 16.6 billion tablets, more than 10% more tablets than
the actual production for the previous fiscal year, as a result of all employees, including those atpartner companies, working together to strengthen the system for increased production. Inventory
levels have almost returned to their original level, and there has been a dramatic decline in limited
shipments since April 2022. But, the Group is not the only company to face supply shortages.

Sawai Group Holdings Integrated Report 2023

8

Management message | Message from the senior management*4 See “Association’s Efforts
to Restore Trust in Generic
Drugs,” issued by theJapan Generic Medicines
Association.
https://www.jga.gr.jp/
english.html

Through industry organizations, including new drug manufacturers, and in collaboration with
the Ministry of Health, Labour and Welfare, Sawai Pharmaceutical has taken the lead in moving
forward with such efforts as making public information on supply conditions for all drugs.
As for the issue of generic drug quality, we have promoted not only efforts to restore trustin generic drugs through the Japan Generic Medicines Association but also general checks ofwhether all drug Manufacturing and Marketing Approvals held by each company are reflectedin actual production.*4 Although the goal has yet to be reached, the association is working torestore trust in the overall industry by fully releasing information. Third-party audits have begun,and Sawai Pharmaceutical underwent its audit before other companies. It will be impossible toconvince people to use generic drugs with peace of mind unless we restore trust in the overall
industry, not simply tell people that there are no problems with the Sawai Group’s quality. As theleading company in the industry, I consider it our mission to restore trust in generic drugs.

Rebuilding the U.S. business

Management message

Medical devices
business

Digitalbusiness

Health foodbusiness
New drugbusiness(Orphan diseases)

Our value creation story

Value creation strategy

Governance

Financial section

SWD001 (non-invasive neuromodulation device)• Acute-phase migraine treatment: Applied for approval to manufacture and market in
December 2022 and preparing to release• Depression: Plan to examine applying after trials in US completed
SWD002 (treatment app for NASH indications)• Preparing phase 3 trial for treatment app that a joint development and sales license with
CureApp Inc. was concluded. Expect to launch in FY2023.
SaluDi (PHR*6 management app)
• Selected for Yabu City Digital Health Aging Project (Yabu City, Hyogo Prefecture), and will be
introduced in FY2023*6 Personal health record(PHR)• Selected for Nagasaki’s official PHR app Ajisai Net and working to link with EHR*7 and PHR*7 Electronic health record(EHR)

Triple Seikatsu-Shukan (products with functional claims)• Completed test marketing in November 2022
• Evaluated business feasibility based on test marketing results and will launch the business fromthis fiscal year
Drugs for rare diseases (orphan drugs)• Reinforce in-house evaluation system and continue to examine pipeline expansion

Becoming profitable by revising the research system
Expectations for product launches developed at low cost
Turning to the business strategy for the U.S., while we acquired Upsher-Smith based on a strong
evaluation of its judgment regarding products for development, its R&D system was revised asbusiness has grown slightly more difficult. This led to a review of the cost structure and improved
operating profit. Chairman and CEO Taku Nakaoka, who took up the position in 2022, provided
the guidelines for the cost structure review, and the American President and COO Rich Fisher was
responsible for providing practical instructions.
At the new factory built in Minnesota, production was launched in January 2023, andstarting in fiscal 2024, costs are expected to fall between $4.00 million to $6.00 million as aresult of merging factories and bringing production of commissioned products in house. In
addition, the Company is examining increasing factory utilization rates and developing newrevenue sources by expanding into the commissioned production business.
As for products, we will not only launch new ones but also include Sawai Pharmaceutical
Paragraph 4 products. By product launches developed at low cost under new leadership, it may
be possible to achieve the vision of generating sustainable growth in the long term as a specialty
drug company.

has received high praise from physicians.
As for “health foods,” we are looking at expanding our lineup of products with a focus on
the field of pre-symptomatic approaches and preventive measures. With a sense of excitementthat only Sawai Pharmaceutical can provide, I want to develop and commercialize uniquehealth foods.
On the other hand, there are about 7,000 rare diseases in the world, and for orphan drugs,
treatments for these rare diseases, a single product does not make a business; therefore, we are
examining the pipeline of products in this field from a long-term perspective.
One of the new businesses is the “health foods” business, and for this business, the selling
price can be set to match demand and value added unlike for the generic drug business, our corebusiness. Furthermore, it is expected that the “digital medical devices” business will be one whose
profits reflect our efforts as it is relatively immune from drug price revisions.

Medium- to long-term growth strategy

Steadily achieving Sawai Group Vision 2030 targets
and meeting the expectations of shareholders
Monetizing new businesses

Fields relatively immune from the impact ofdrug price revisions will stabilize earnings*5 NASH
Non-alcoholicsteatohepatitis

9

In addition to activity making investments in growth opportunities outside the generic drug field,
we are taking on the challenge of new businesses in four fields that leverage the strengths wehave acquired in existing businesses in order to achieve the government’s goal of a society withhealthy longevity.
In the “digital medical devices” field, one of these fields, we applied for approval for the
non-invasive neuromodulation device SWD001, which is used to treat migraines in the acutestage, in December 2022. In the field of NASH,*5 too, we have made progress with the business,
which has included concluding a treatment app joint-development and marketing license with
CureApp, Inc. in August 2022. As there is no established drug therapy for NASH, treatment iscentered on dietetic therapy, and there are hopes that this will be a promising method if it ispossible to control diet with digital technology. The focus of both of these products and services

Sawai Group Holdings Integrated Report 2023

In fiscal 2022, the Group’s revenue surpassed ¥200.0 billion for the first time. The Group Strategy
Council firmly deliberates on the future growth strategy to achieve the numerical targets
appearing in Sawai Group Vision 2030. For growth-oriented investments, even individual small
investments, we impose governance on and manage them by having them examined by theGroup Investment Committee and referring them to the Group Strategy Council.
In particular, investments will be focused on R&D in the future. Because R&D is important
not only for the generic drug business but also the new businesses, I would like to fully discuss
the issue and make investments from which we can “reap” revenue in the future. Until now wehave limited investments, including capital expenditures, so that we could fund them fromoperating cash flows, but because we will now need to use large amounts of funds, we plan toraise funds primarily through bank loans. While keeping in mind ROE, we will examine making
use of leverage through loans and bonds.
What I have learned through dialogue with investors is that there are great expectations
for the Group in terms of “Sawai being the only company that can support generic drugs, partof Japan’s healthcare infrastructure.” It is well known that even if a company takes the lead

Sawai Group Holdings Integrated Report 2023

10

Management message | Message from the senior management*4 See “Association’s Efforts
to Restore Trust in Generic
Drugs,” issued by theJapan Generic Medicines
Association.
https://www.jga.gr.jp/
english.html

Through industry organizations, including new drug manufacturers, and in collaboration with
the Ministry of Health, Labour and Welfare, Sawai Pharmaceutical has taken the lead in moving
forward with such efforts as making public information on supply conditions for all drugs.
As for the issue of generic drug quality, we have promoted not only efforts to restore trustin generic drugs through the Japan Generic Medicines Association but also general checks ofwhether all drug Manufacturing and Marketing Approvals held by each company are reflectedin actual production.*4 Although the goal has yet to be reached, the association is working torestore trust in the overall industry by fully releasing information. Third-party audits have begun,and Sawai Pharmaceutical underwent its audit before other companies. It will be impossible toconvince people to use generic drugs with peace of mind unless we restore trust in the overall
industry, not simply tell people that there are no problems with the Sawai Group’s quality. As theleading company in the industry, I consider it our mission to restore trust in generic drugs.

Rebuilding the U.S. business

Management message

Medical devices
business

Digitalbusiness

Health foodbusiness
New drugbusiness(Orphan diseases)

Our value creation story

Value creation strategy

Governance

Financial section

SWD001 (non-invasive neuromodulation device)• Acute-phase migraine treatment: Applied for approval to manufacture and market in
December 2022 and preparing to release• Depression: Plan to examine applying after trials in US completed
SWD002 (treatment app for NASH indications)• Preparing phase 3 trial for treatment app that a joint development and sales license with
CureApp Inc. was concluded. Expect to launch in FY2023.
SaluDi (PHR*6 management app)
• Selected for Yabu City Digital Health Aging Project (Yabu City, Hyogo Prefecture), and will be
introduced in FY2023*6 Personal health record(PHR)• Selected for Nagasaki’s official PHR app Ajisai Net and working to link with EHR*7 and PHR*7 Electronic health record(EHR)

Triple Seikatsu-Shukan (products with functional claims)• Completed test marketing in November 2022
• Evaluated business feasibility based on test marketing results and will launch the business fromthis fiscal year
Drugs for rare diseases (orphan drugs)• Reinforce in-house evaluation system and continue to examine pipeline expansion

Becoming profitable by revising the research system
Expectations for product launches developed at low cost
Turning to the business strategy for the U.S., while we acquired Upsher-Smith based on a strong
evaluation of its judgment regarding products for development, its R&D system was revised asbusiness has grown slightly more difficult. This led to a review of the cost structure and improved
operating profit. Chairman and CEO Taku Nakaoka, who took up the position in 2022, provided
the guidelines for the cost structure review, and the American President and COO Rich Fisher was
responsible for providing practical instructions.
At the new factory built in Minnesota, production was launched in January 2023, andstarting in fiscal 2024, costs are expected to fall between $4.00 million to $6.00 million as aresult of merging factories and bringing production of commissioned products in house. In
addition, the Company is examining increasing factory utilization rates and developing newrevenue sources by expanding into the commissioned production business.
As for products, we will not only launch new ones but also include Sawai Pharmaceutical
Paragraph 4 products. By product launches developed at low cost under new leadership, it may
be possible to achieve the vision of generating sustainable growth in the long term as a specialty
drug company.

has received high praise from physicians.
As for “health foods,” we are looking at expanding our lineup of products with a focus on
the field of pre-symptomatic approaches and preventive measures. With a sense of excitementthat only Sawai Pharmaceutical can provide, I want to develop and commercialize uniquehealth foods.
On the other hand, there are about 7,000 rare diseases in the world, and for orphan drugs,
treatments for these rare diseases, a single product does not make a business; therefore, we are
examining the pipeline of products in this field from a long-term perspective.
One of the new businesses is the “health foods” business, and for this business, the selling
price can be set to match demand and value added unlike for the generic drug business, our corebusiness. Furthermore, it is expected that the “digital medical devices” business will be one whose
profits reflect our efforts as it is relatively immune from drug price revisions.

Medium- to long-term growth strategy

Steadily achieving Sawai Group Vision 2030 targets
and meeting the expectations of shareholders
Monetizing new businesses

Fields relatively immune from the impact ofdrug price revisions will stabilize earnings*5 NASH
Non-alcoholicsteatohepatitis

9

In addition to activity making investments in growth opportunities outside the generic drug field,
we are taking on the challenge of new businesses in four fields that leverage the strengths wehave acquired in existing businesses in order to achieve the government’s goal of a society withhealthy longevity.
In the “digital medical devices” field, one of these fields, we applied for approval for the
non-invasive neuromodulation device SWD001, which is used to treat migraines in the acutestage, in December 2022. In the field of NASH,*5 too, we have made progress with the business,
which has included concluding a treatment app joint-development and marketing license with
CureApp, Inc. in August 2022. As there is no established drug therapy for NASH, treatment iscentered on dietetic therapy, and there are hopes that this will be a promising method if it ispossible to control diet with digital technology. The focus of both of these products and services

Sawai Group Holdings Integrated Report 2023

In fiscal 2022, the Group’s revenue surpassed ¥200.0 billion for the first time. The Group Strategy
Council firmly deliberates on the future growth strategy to achieve the numerical targets
appearing in Sawai Group Vision 2030. For growth-oriented investments, even individual small
investments, we impose governance on and manage them by having them examined by theGroup Investment Committee and referring them to the Group Strategy Council.
In particular, investments will be focused on R&D in the future. Because R&D is important
not only for the generic drug business but also the new businesses, I would like to fully discuss
the issue and make investments from which we can “reap” revenue in the future. Until now wehave limited investments, including capital expenditures, so that we could fund them fromoperating cash flows, but because we will now need to use large amounts of funds, we plan toraise funds primarily through bank loans. While keeping in mind ROE, we will examine making
use of leverage through loans and bonds.
What I have learned through dialogue with investors is that there are great expectations
for the Group in terms of “Sawai being the only company that can support generic drugs, partof Japan’s healthcare infrastructure.” It is well known that even if a company takes the lead

Sawai Group Holdings Integrated Report 2023

10

Management message | Message from the senior management

Management message

Sawai Group Vision 2030 Targets and Prerequisite Values
FY2022 actual

FY2030 targets

Japan business revenue¥163.7 billion¥260.0 billion

New business revenue—¥80.0 billion

U.S. business revenue¥36.6 billion¥60.0 billion

Total revenue¥200.3 billion¥400.0 billion

6.5%

10% or moreROE

in making capital expenditures, it is difficult to benefit from this because of annual drug pricerevisions; therefore, there is agreement that “without changes to the system, this infrastructure
will be lost.”
Unless we are able to maintain the sustainability of the generic drug business, healthcare
costs for people in Japan will continue to increase. Furthermore, if the business is unsustainable
for domestic manufacturers and Japan ends up relying on overseas manufacturers, money willflow overseas. In terms of health and safety security—that is, protecting the health and safetyof people —we must meet the expectations that generic drugs used in Japan should be ones
produced in Japan.
As for the return for shareholders who support us, I want to conduct business so that wecan be sure to achieve and maintain a stable dividend with a target payout ratio of 30%.

Sawai Group’s reason for existing and corporate philosophy

Maintaining efforts to embody the corporate philosophy of“always putting healthier lives first” and“always putting patients first” and meeting expectations
Our corporate philosophy of “always putting healthier lives first” embodies our desire tocontribute to the health of even more people as a healthcare corporate group that is centeredon the generic drug business and continues to develop with society. Thoroughly adopting thisphilosophy and vision in business activities will lead to unshakeable trust. The Group’s mostimportant responsibility and the reason for its existence is to create the conditions so that throughthe generic drug business, our core business, we can provide the necessary volume of quality
generic drugs when necessary.
The many employees who joined the Company because they were attracted by our
corporate philosophy of “always putting healthier lives first” and Sawai Pharmaceutical’s corporate
philosophy of “always putting patients first” give shape to the Group’s corporate culture. I will
work so I can declare that one of the Group’s strengths is that new people who join the Groupfully adopt this philosophy. This is a never-ending issue. By marshaling the power of all employees
to embody the corporate philosophy and being persistent in our efforts, we will continue to takeon challenges in order to meet the expectations of all stakeholders.
Representative Director, Chairman and President(Group Chief Executive Officer and Group Chief Operating Officer)

11

Sawai Group Holdings Integrated Report 2023

Our value creation story

Value creation strategy

Governance

Financial section

Message from the newly appointed external director

Navigating a harsh business environment
and transforming the Company into one that
contributes to people’s health in the long term
Masayuki Mitsuka, Ph.D.

External Director

Despite being indispensable for the people in Japan,
there are clearly issues with generic drugs
For Japan’s pharmaceutical industry, the government has
set the target of generic drugs accounting for 80% of themarket on a volume basis, and the distinction between
generic drugs and new drugs has rapidly grown clearer.
This is necessary to ensure the sustainability of Japan’s
health insurance system. The use of generic drugs isrecommended because they lessen the financial burden
on patients, and thus, generic drugs have not only become
indispensable for all people in Japan but also contribute topromoting SDGs for the whole of Japan on various fronts.
On the other hand, two major issues have come tolight. One is concerns about the quality of generic drugs
as a result of incidents at several companies that haveshaken trust in generic drugs. The other issue is thesustainability of the business for the overall generic drug
industry because of annual drug price revisions that havea greater impact on generic drugs than new drugs.
Amid this difficult business environment, I received
an opportunity to participate in Sawai Group Holdings’
management as an outside party. The Company is one
that will navigate this difficult business environment fromvarious perspectives, including market share, producttrack record, and financial soundness, and possesses thepotential to contribute to people’s health while growing
in the long term.
Issue of quality provides a chance totransform the industry
The industry must overcome the issues of quality concerns,
excessive number of manufacturers and retailers, and, asa result of these, the downward pressure on drug prices.
Of these issues, quality concerns could provide an
opportunity for the overall industry to move to the nextstage. While the various companies in the industry arepromoting measures to reinforce the system that places
the greatest priority on compliance, governance, andquality, it is also important to focus on whether
management has set unrealistic targets for workplaces
regarding production volume, deadline for obtaining
approval, and similar activities, and whether sufficienthuman capital support is provided. As an external director,
I consider it important to check whether workplace
governance is effective and whether there are soundmanagement targets that match the actual capabilities of
the Company.
Focus on investing in people, the key to survival
Overall prescription drug sales in Japan hit a record highof ¥10.9 trillion in fiscal 2022, but considering the trend
since 2015, sales growth is flat, having grown only from¥10.5 trillion to ¥11.0 trillion, and this trend will continue
into the future. I expect that as sales and the market shareof expensive new drugs grows, generic drug manufacturers
will be weeded out before new drug manufacturers.
There are two keys to surviving this. The first is ensuring a
production volume that guarantees one’s presence in themarket, and the second is possessing both strong costcompetitiveness and quick development capabilities for
drugs whose patents have expired.
In the pharmaceutical industry, “investing in people,”
an important element for innovation, and “diversity ofhuman resources” are more critical than in other industries.
In the new drug business, new drug discovery anddevelopment require the skills of highly specialized
individuals, but in the generic drug business, a different
type of continual innovation, one that simultaneously
increases production volume, quality from a patientperspective, and cost competitiveness, is required. As an
external director, I want to focus on investing in humancapital that management needs, particularly the securingof highly specialized people, and diversity.

Sawai Group Holdings Integrated Report 2023

12

Management message | Message from the senior management

Management message

Sawai Group Vision 2030 Targets and Prerequisite Values
FY2022 actual

FY2030 targets

Japan business revenue¥163.7 billion¥260.0 billion

New business revenue—¥80.0 billion

U.S. business revenue¥33.6 billion¥60.0 billion

Total revenue¥200.3 billion¥400.0 billion

6.5%

10% or moreROE

in making capital expenditures, it is difficult to benefit from this because of annual drug pricerevisions; therefore, there is agreement that “without changes to the system, this infrastructure
will be lost.”
Unless we are able to maintain the sustainability of the generic drug business, healthcare
costs for people in Japan will continue to increase. Furthermore, if the business is unsustainable
for domestic manufacturers and Japan ends up relying on overseas manufacturers, money willflow overseas. In terms of health and safety security—that is, protecting the health and safetyof people —we must meet the expectations that generic drugs used in Japan should be ones
produced in Japan.
As for the return for shareholders who support us, I want to conduct business so that wecan be sure to achieve and maintain a stable dividend with a target payout ratio of 30%.

Sawai Group’s reason for existing and corporate philosophy

Maintaining efforts to embody the corporate philosophy of“always putting healthier lives first” and“always putting patients first” and meeting expectations
Our corporate philosophy of “always putting healthier lives first” embodies our desire tocontribute to the health of even more people as a healthcare corporate group that is centeredon the generic drug business and continues to develop with society. Thoroughly adopting thisphilosophy and vision in business activities will lead to unshakeable trust. The Group’s mostimportant responsibility and the reason for its existence is to create the conditions so that throughthe generic drug business, our core business, we can provide the necessary volume of quality
generic drugs when necessary.
The many employees who joined the Company because they were attracted by our
corporate philosophy of “always putting healthier lives first” and Sawai Pharmaceutical’s corporate
philosophy of “always putting patients first” give shape to the Group’s corporate culture. I will
work so I can declare that one of the Group’s strengths is that new people who join the Groupfully adopt this philosophy. This is a never-ending issue. By marshaling the power of all employees
to embody the corporate philosophy and being persistent in our efforts, we will continue to takeon challenges in order to meet the expectations of all stakeholders.
Representative Director, Chairman and President(Group Chief Executive Officer and Group Chief Operating Officer)

11

Sawai Group Holdings Integrated Report 2023

Our value creation story

Value creation strategy

Governance

Financial section

Message from the newly appointed external director

Navigating a harsh business environment
and transforming the Company into one that
contributes to people’s health in the long term
Masayuki Mitsuka, Ph.D.

External Director

Despite being indispensable for the people in Japan,
there are clearly issues with generic drugs
For Japan’s pharmaceutical industry, the government has
set the target of generic drugs accounting for 80% of themarket on a volume basis, and the distinction between
generic drugs and new drugs has rapidly grown clearer.
This is necessary to ensure the sustainability of Japan’s
health insurance system. The use of generic drugs isrecommended because they lessen the financial burden
on patients, and thus, generic drugs have not only become
indispensable for all people in Japan but also contribute topromoting SDGs for the whole of Japan on various fronts.
On the other hand, two major issues have come tolight. One is concerns about the quality of generic drugs
as a result of incidents at several companies that haveshaken trust in generic drugs. The other issue is thesustainability of the business for the overall generic drug
industry because of annual drug price revisions that havea greater impact on generic drugs than new drugs.
Amid this difficult business environment, I received
an opportunity to participate in Sawai Group Holdings’
management as an outside party. The Company is one
that will navigate this difficult business environment fromvarious perspectives, including market share, producttrack record, and financial soundness, and possesses thepotential to contribute to people’s health while growing
in the long term.
Issue of quality provides a chance totransform the industry
The industry must overcome the issues of quality concerns,
excessive number of manufacturers and retailers, and, asa result of these, the downward pressure on drug prices.
Of these issues, quality concerns could provide an
opportunity for the overall industry to move to the nextstage. While the various companies in the industry arepromoting measures to reinforce the system that places
the greatest priority on compliance, governance, andquality, it is also important to focus on whether
management has set unrealistic targets for workplaces
regarding production volume, deadline for obtaining
approval, and similar activities, and whether sufficienthuman capital support is provided. As an external director,
I consider it important to check whether workplace
governance is effective and whether there are soundmanagement targets that match the actual capabilities of
the Company.
Focus on investing in people, the key to survival
Overall prescription drug sales in Japan hit a record highof ¥10.9 trillion in fiscal 2022, but considering the trend
since 2015, sales growth is flat, having grown only from¥10.5 trillion to ¥11.0 trillion, and this trend will continue
into the future. I expect that as sales and the market shareof expensive new drugs grows, generic drug manufacturers
will be weeded out before new drug manufacturers.
There are two keys to surviving this. The first is ensuring a
production volume that guarantees one’s presence in themarket, and the second is possessing both strong costcompetitiveness and quick development capabilities for
drugs whose patents have expired.
In the pharmaceutical industry, “investing in people,”
an important element for innovation, and “diversity ofhuman resources” are more critical than in other industries.
In the new drug business, new drug discovery anddevelopment require the skills of highly specialized
individuals, but in the generic drug business, a different
type of continual innovation, one that simultaneously
increases production volume, quality from a patientperspective, and cost competitiveness, is required. As an
external director, I want to focus on investing in humancapital that management needs, particularly the securingof highly specialized people, and diversity.

Sawai Group Holdings Integrated Report 2023

12

Management message | Management discussion & analysis

Operating results for the fiscal year

Management message

each activity are as follows.
Cash flows from operating activities was ¥13,026
million for the year ended March 31, 2023 (decrease of¥21,284 million compared to the year ended March 31,2022) which mainly consists of profit before tax (¥16,789
million), depreciation and amortization (¥17,683 million),
impairment loss (¥3,464 million), increase in inventories(¥14,868 million), decrease in refund liabilities (¥2,551
million) and income taxes paid (¥7,473 million).
Cash flows from investing activities was ¥27,134
million for the year ended March 31, 2023 (decrease of¥3,261 million compared to the year ended March 31, 2022)
which mainly consists of acquisition of property, plant andequipment (¥20,727 million), and acquisition of intangible
assets (¥6,414 million).
Cash flows from financing activities was ¥1,267 million
for the year ended March 31, 2023 (decrease of ¥9,995
million compared to the year ended March 31, 2022) whichmainly consists of net proceeds from short-term borrowings(¥10,000 million), proceeds from long-term borrowings(¥9,500 million), repayments of long-term borrowings(¥3,118 million), redemption of bonds (¥10,000 million)
and dividends paid (¥5,693 million).

For fiscal 2022, the overall Group was able to record
revenue of ¥200.0 billion for the first time. Despite
returning to profitability, core operating profit fell year on
year for various reasons, including upfront costs to expand
production capacity for the Japan business.
For the Japan business, revenue was basicallyunchanged from the previous fiscal year because of new
products’ contributions to revenue and a recovery trend in
existing products following the removal of limits onshipments since the second half, but core operating profit
for the business declined year on year. This was primarily
because of drug price revisions in April, upfront costs related
to Trust Pharmatech, which was made a consolidated
subsidiary in 2022, and higher energy prices. For the U.S.
business, revenue rose on account of firm sales of brandproducts and the weak yen. It was also possible to record
operating profit due to cuts in expenses.
As for upfront costs, a reason for the decline in profit,a merit for investing in Trust Pharmatech and the Kyushu
Factory, the decision for which was quickly made before
the rise in the prices of goods in order to reinforce ourcapacity to provide a stable supply, is that it will definitely
be possible to recover the investment if the environment
surrounding the generic industry (including drug pricesystem) changes. We will determine which products will
ensure sustainable business and be sure to include thosein the next Medium-Term Business Plan.

Our value creation story

Value creation strategy

Governance

Financial section

Dividend Policy

This fiscal year, cash flows from operating activities
totaled ¥13,026 million, and some of those funds wereused to repay part of the loans taken out when acquiring
Upsher-Smith. As indicated in the Medium-Term Business
Plan, we also plan on actively and effectively making
investments for growth, which includes about ¥75.0 billion
for R&D investments/acquisitions (e.g., products), about¥70.0 billion for capital investments, and ¥30.0 billion for
new businesses (max. amount). As for capital investments,
we expect to construct a new solid dosage form facility at
Sawai Pharmaceutical’s Daini Kyushu Factory (total amountfor step 1, ¥35.0 billion) in order to expand production
capacity to meet greater future demand.

We have positioned shareholder return as one importantmanagement issue. Our policy on allocation of profit is that
we not only balance the active securing of investments for
future growth and shareholder return, but also basically
pay a stable, sustainable dividend with a target payout ratioof 30% taking into comprehensive consideration suchfactors as annual consolidated business performance,
payout ratio, and other shareholder returns.
As for internal reserves, we allocate those toinvestments for new growth, such as R&D and capital
investments that contribute to future enhancement ofcorporate value. The basic policy is to pay a dividend fromretained earnings twice a year, an interim dividend andyear-end dividend. The Board of Directors is the decision
making body for the interim dividend, and the General
Meeting of Shareholders is that for the year-end dividend.
The dividend for this fiscal year was an interim dividendof ¥65 per share and a year-end dividend of ¥65 per share.

Cause of change in core operating profit (Millions of yen)

(3,250)Financial policy

26,321

Our basic policy is to maintain the optimal capital structurethat ensures financial soundness and flexibility while
improving capital efficiency in order to continue to enhance
corporate value and increase shareholders’ return throughthat. As for fund demand related to R&D and capital
investments, we will implement our basic policy bycontinuing to secure cash flows from operating activities
and implementing flexible financial measures to matchchanges in the market environment.

Cash flows
Cash and cash equivalents as of March 31, 2023, decreasedby ¥14,641 million to ¥33,076 million, compared to thebalance as of March 31, 2022. The results of cash flow for

2,604
2,274

23,071R&D expenses

FY2022 core
operating profit939(3,112)(5,137)(864)
U.S. business: +2,348

Japan business: (5,591)

SG&A expenses,
FY2021 core
Gross profit
operating profit (Excluding Trust R&D expenses
Pharmatech) (Excluding Trust
Pharmatech)

Gross profit

Trust
Pharmatech
costs

SG&A expenses

Note: Results by segment in Japan and the U.S. are not consistent with the overall figures, as each segment profit includes inter-segment transactions.

FY2022 Business Performance and FY2023 Forecasts(Millions of yen)

FY2021

RevenueCore operating profit
Core operating profit(Excluding Trust Pharmatech)

193,816
26,321

FY2022

JapanUS

163,841

29,97527,016(708)

200,344
23,071

FY2023 (forecast)

Japan

US

163,70236,642

21,4251,640

217,200
19,900US

180,500

36,70016,300End of FY2022 (March 31, 2022)

End of FY2023 (March 31, 2023)

Total liabilities and equity

Total liabilities and equity

¥

¥

3,600

349,502

millionCurrent
assets25,30021,700–(35,888)

32,361(68,249)

16,984

16,054930

15,10013,5001,600

Non-current
assets–––21,82820,898–20,50018,900–EquityNon-current
assets147,379

200,083

158,818

Profit before tax(36,214)––

16,789––14,800––

Profit attributable toowners of the Company(28,269)––

12,667––

11,300––

Sawai Group Holdings Integrated Report 2023

* Translated at $1=¥135

Liabilities
and equity

Effect of exchange
rate change on cash
and cash equivalents

734

151,426–

47,717
million205,347

26,562

Assets13,026¥

million149,419

28,208202,123

364,165

Liabilities

Liabilities–

Note: Results by segment in Japan and the U.S. are not consistent with the overall figures, as each segment profit includes inter-segment transactions.

Cash flows fromoperating activities*1

Current
assets–Operating profit(Excluding Trust Pharmatech)Consolidated statements of cash flows (Millions of yen)*–

Operating profit

13

Japan

Consolidated statements of financial position (Millions of yen)

Equity212,738
AssetsLiabilities
and equity¥

33,076
million(27,134)
Cash flows
from investing
activities*2

Cash and cash
equivalents at
beginning of the period(1,267)
Cash flows
from financing
activities

Cash and cash
equivalents
at the end of the year

*1 Impact of increase in inventories, previous fiscal year impairment loss, etc.
*2 Impact of construction at Daini Kyushu Factory

Sawai Group Holdings Integrated Report 2023

14

Management message | Management discussion & analysis

Operating results for the fiscal year

Management message

each activity are as follows.
Cash flows from operating activities was ¥13,026
million for the year ended March 31, 2023 (decrease of¥21,284 million compared to the year ended March 31,2022) which mainly consists of profit before tax (¥16,789
million), depreciation and amortization (¥17,683 million),
impairment loss (¥3,464 million), increase in inventories(¥14,868 million), decrease in refund liabilities (¥2,551
million) and income taxes paid (¥7,473 million).
Cash flows from investing activities was ¥27,134
million for the year ended March 31, 2023 (decrease of¥3,261 million compared to the year ended March 31, 2022)
which mainly consists of acquisition of property, plant andequipment (¥20,727 million), and acquisition of intangible
assets (¥6,414 million).
Cash flows from financing activities was ¥1,267 million
for the year ended March 31, 2023 (decrease of ¥9,995
million compared to the year ended March 31, 2022) whichmainly consists of net proceeds from short-term borrowings(¥10,000 million), proceeds from long-term borrowings(¥9,500 million), repayments of long-term borrowings(¥3,118 million), redemption of bonds (¥10,000 million)
and dividends paid (¥5,693 million).

For fiscal 2022, the overall Group was able to record
revenue of ¥200.0 billion for the first time. Despite
returning to profitability, core operating profit fell year on
year for various reasons, including upfront costs to expand
production capacity for the Japan business.
For the Japan business, revenue was basicallyunchanged from the previous fiscal year because of new
products’ contributions to revenue and a recovery trend in
existing products following the removal of limits onshipments since the second half, but core operating profit
for the business declined year on year. This was primarily
because of drug price revisions in April, upfront costs related
to Trust Pharmatech, which was made a consolidated
subsidiary in 2022, and higher energy prices. For the U.S.
business, revenue rose on account of firm sales of brandproducts and the weak yen. It was also possible to record
operating profit due to cuts in expenses.
As for upfront costs, a reason for the decline in profit,a merit for investing in Trust Pharmatech and the Kyushu
Factory, the decision for which was quickly made before
the rise in the prices of goods in order to reinforce ourcapacity to provide a stable supply, is that it will definitely
be possible to recover the investment if the environment
surrounding the generic industry (including drug pricesystem) changes. We will determine which products will
ensure sustainable business and be sure to include thosein the next Medium-Term Business Plan.

Our value creation story

Value creation strategy

Governance

Financial section

Dividend Policy

This fiscal year, cash flows from operating activities
totaled ¥13,026 million, and some of those funds wereused to repay part of the loans taken out when acquiring
Upsher-Smith. As indicated in the Medium-Term Business
Plan, we also plan on actively and effectively making
investments for growth, which includes about ¥75.0 billion
for R&D investments/acquisitions (e.g., products), about¥70.0 billion for capital investments, and ¥30.0 billion for
new businesses (max. amount). As for capital investments,
we expect to construct a new solid dosage form facility at
Sawai Pharmaceutical’s Daini Kyushu Factory (total amountfor step 1, ¥35.0 billion) in order to expand production
capacity to meet greater future demand.

We have positioned shareholder return as one importantmanagement issue. Our policy on allocation of profit is that
we not only balance the active securing of investments for
future growth and shareholder return, but also basically
pay a stable, sustainable dividend with a target payout ratioof 30% taking into comprehensive consideration suchfactors as annual consolidated business performance,
payout ratio, and other shareholder returns.
As for internal reserves, we allocate those toinvestments for new growth, such as R&D and capital
investments that contribute to future enhancement ofcorporate value. The basic policy is to pay a dividend fromretained earnings twice a year, an interim dividend andyear-end dividend. The Board of Directors is the decision
making body for the interim dividend, and the General
Meeting of Shareholders is that for the year-end dividend.
The dividend for this fiscal year was an interim dividendof ¥65 per share and a year-end dividend of ¥65 per share.

Cause of change in core operating profit (Millions of yen)

(3,250)Financial policy

26,321

Our basic policy is to maintain the optimal capital structurethat ensures financial soundness and flexibility while
improving capital efficiency in order to continue to enhance
corporate value and increase shareholders’ return throughthat. As for fund demand related to R&D and capital
investments, we will implement our basic policy bycontinuing to secure cash flows from operating activities
and implementing flexible financial measures to matchchanges in the market environment.

Cash flows
Cash and cash equivalents as of March 31, 2023, decreasedby ¥14,641 million to ¥33,076 million, compared to thebalance as of March 31, 2022. The results of cash flow for

2,604
2,274

23,071R&D expenses

FY2022 core
operating profit939(3,112)(5,137)(864)
U.S. business: +2,348

Japan business: (5,591)

SG&A expenses,
FY2021 core
Gross profit
operating profit (Excluding Trust R&D expenses
Pharmatech) (Excluding Trust
Pharmatech)

Gross profit

Trust
Pharmatech
costs

SG&A expenses

Note: Results by segment in Japan and the U.S. are not consistent with the overall figures, as each segment profit includes inter-segment transactions.

FY2022 Business Performance and FY2023 Forecasts(Millions of yen)

FY2021

RevenueCore operating profit
Core operating profit(Excluding Trust Pharmatech)

193,816
26,321

FY2022

JapanUS

163,841

29,97527,016(708)

200,344
23,071

FY2023 (forecast)

Japan

US

163,70236,642

21,4251,640

217,200
19,900US

180,500

36,70016,300End of FY2022 (March 31, 2022)

End of FY2023 (March 31, 2023)

Total liabilities and equity

Total liabilities and equity

¥

¥

3,600

349,502

millionCurrent
assets25,30021,700–(35,888)

32,361(68,249)

16,984

16,054930

15,10013,5001,600

Non-current
assets–––21,82820,898–20,50018,900–EquityNon-current
assets147,379

200,083

158,818

Profit before tax(36,214)––

16,789––14,800––

Profit attributable toowners of the Company(28,269)––

12,667––

11,300––

Sawai Group Holdings Integrated Report 2023

* Translated at $1=¥135

Liabilities
and equity

Effect of exchange
rate change on cash
and cash equivalents

734

151,426–

47,717
million205,347

26,562

Assets13,026¥

million149,419

28,208202,123

364,165

Liabilities

Liabilities–

Note: Results by segment in Japan and the U.S. are not consistent with the overall figures, as each segment profit includes inter-segment transactions.

Cash flows fromoperating activities*1

Current
assets–Operating profit(Excluding Trust Pharmatech)Consolidated statements of cash flows (Millions of yen)*–

Operating profit

13

Japan

Consolidated statements of financial position (Millions of yen)

Equity212,738
AssetsLiabilities
and equity¥

33,076
million(27,134)
Cash flows
from investing
activities*2

Cash and cash
equivalents at
beginning of the period(1,267)
Cash flows
from financing
activities

Cash and cash
equivalents
at the end of the year

*1 Impact of increase in inventories, previous fiscal year impairment loss, etc.
*2 Impact of construction at Daini Kyushu Factory

Sawai Group Holdings Integrated Report 2023

14

Our value creation story | Our history of value creation

Management message

Our value creation story

Value creation strategy

Governance

Financial section

400.0(target)2021

Not only “always putting patients first”
but also striving to achieve “always
putting healthier lives first” for all people

Founded Sawai Group
Holdings Co., Ltd. (April)Founded Trust Pharmatech
Co., Ltd. (December)

Fiscal 2022 revenue

Acquired Upsher-Smith
Laboratories, LLC and entered
the U.S. market in earnest.

2006

1929

Completed new company buildingin Yodogawa-ku, Osaka.

Sawai Pharmacy, the forerunner of
Sawai Pharmaceutical Co., Ltd.,was founded in Asahi-ku, Osaka City.

2014

2007
Government adopted a target of
having generic drugs accountfor at least 30% in terms of volume
by March 2013.

Eye drops, our coreproduct when Sawai
was founded.

2009

Purchased sharesin Kaken Shoyaku
and made it a subsidiary.

1948
Sawai Pharmaceutical Co., Ltd.
incorporated in Asahi-ku, Osaka City.

Announced
Medium-TermBusiness Plan
M1 TRUST.

2003

1965
Sawai transformed itself
from a manufacturer of over-the-counter
medications into a manufacturerof prescription medications.
21.2

63.9

Listed on the First
Section of the TSE.

22.5

23.3

26.6

34.3

10.0

0.1

1.0

1929

1963

1970

FoundedTransitioned from a manufacturer of OTC medications
to a manufacturer of prescription medications

1982

2002

2003

2004

2005

200.3

¥
billion

2017

2006

37.6

44.3

Transformed Medisa
Shinyaku Inc. into
wholly-owned
consolidated subsidiary.

123.5

184.3 182.5 187.2

193.8

168.1

132.4

105.5
67.6

80.5

89.8

50.0

Medium-Term Business Plan

M1 TRUST

2007

2010

2008

2010

Consolidated net sales
exceeded ¥100.0 billion
for the first time.

2009

M1 TRUST 2015

2011

2012

2013

2014

M1 TRUST 2018

2015

2016

Became the leading generic drug manufacturer

M1 TRUST 2021

2017

2018

2019

Expanded globally

2020

START 2024

2021

2022

2023

2030

(FY)

Taking on the challenge ofestablishing new businesses

History of developing non-financial capital

1981
Manufactured
capital

1984
Intellectual
capital2007
Social andrelationship capital

2009
Social andrelationship capital2013 , 20172015

Manufactured
capitalIntellectual
capital2021
Social andrelationship capital

2022
Human
capital

Kanto
Factory

15

Completed the GMP
standard–compliant
Kyushu Factory

Opened the Osaka
Laboratory to
expand research

Established a new
Corporate Philosophy
and Code of Conduct

Announced M1 TRUST,
its Medium-TermBusiness Plan

We built the Kyushu Factory in
Iizuka City, Fukuoka Prefecture as
an advanced factory compliant with
GMP standards, the international
standards for pharmaceuticalmanufacturing and quality
management. In addition tounderpinning the stable supply ofhigh-quality Sawai products, thefactory also contributed todeveloping the brand image of
Sawai Pharmaceutical.

At that time, few generic drug
manufacturers had independentfacilities dedicated to R&D. From
our earliest days, our stance ofstressing R&D has been carried onby the Pharmaceutical ResearchCenter, which opened in 1994, and
the Pharmaceutical Development
Center, which opened in 2015.

We established the Corporate
Philosophy consisting of the threetenets of mission, challenge, andhope as the basis for theparticipation of all employees,
centered on the Company’s
longtime motto “Always putting
patients first.” We also established
the Code of Conduct as a guide forthe implementation of the
Corporate Philosophy.

We announced a plan to achieve¥100.0 billion in consolidated net
sales within five years by expanding
market share, further strengthening
the management structure, andbuilding a solid Sawai brand as thebasic policies. The basic policies
were carried over into theCompany’s subsequentMedium-Term Business Plans.

Sawai Group Holdings Integrated Report 2023

Built the Kanto Factory
and the Sanda Nishi
Factory to boost
production capacity
We built a new formulation factoryon the site of the Kanto Factory(Mobara City, Chiba Prefecture) in
March 2013, and the Sanda Nishi
Factory (Sanda City, Hyogo
Prefecture) specializing inpackaging processes adjacent to
the Sanda Factory in January 2017.
This boosted production capacity
and risk management, including
disaster response.

Built Pharmaceutical
Development CenterWe established a new
Pharmaceutical Development Centerin Suita City, Osaka Prefecture close
to the Head Office. The
Pharmaceutical Development Center
consolidated some of the functionsof the former Pharmaceutical
Technology Center, which had been
located in Asahi-ku, Osaka City, andthe Research Laboratories as a sitewith responsibilities includingcommercialization and stable supplyof products as well as improvementof launched products, in addition to
the development of new products.

Transitioned to holding
company structure
through the transferof shares
To continue to generate sustainablegrowth into the future, the Groupconsidered it necessary tosimultaneously reinforce existing
businesses and foster new
businesses that meet the demandsof the time and determined thattransitioning to a holding company
structure would be optimal.

Undertook the S-Wing
Project
With the goal of “promoting
diversity,” one element of theGroup’s long-term vision, we
conducted project-related activities
for about six months, and thenrelated proposals regarding a future
action plan were submitted tomembers of senior management inMarch 2023.

P.30 Topics

Sawai Group Holdings Integrated Report 2023

16

Our value creation story | Our history of value creation

Management message

Our value creation story

Value creation strategy

Governance

Financial section

400.0(target)2021

Not only “always putting patients first”
but also striving to achieve “always
putting healthier lives first” for all people

Founded Sawai Group
Holdings Co., Ltd. (April)Founded Trust Pharmatech
Co., Ltd. (December)

Fiscal 2022 revenue

Acquired Upsher-Smith
Laboratories, LLC and entered
the U.S. market in earnest.

2006

1929

Completed new company buildingin Yodogawa-ku, Osaka.

Sawai Pharmacy, the forerunner of
Sawai Pharmaceutical Co., Ltd.,was founded in Asahi-ku, Osaka City.

2014

2007
Government adopted a target of
having generic drugs accountfor at least 30% in terms of volume
by March 2013.

Eye drops, our coreproduct when Sawai
was founded.

2009

Purchased sharesin Kaken Shoyaku
and made it a subsidiary.

1948
Sawai Pharmaceutical Co., Ltd.
incorporated in Asahi-ku, Osaka City.

Announced
Medium-TermBusiness Plan
M1 TRUST.

2003

1965
Sawai transformed itself
from a manufacturer of over-the-counter
medications into a manufacturerof prescription medications.
21.2

63.9

Listed on the First
Section of the TSE.

22.5

23.3

26.6

34.3

10.0

0.1

1.0

1929

1963

1970

FoundedTransitioned from a manufacturer of OTC medications
to a manufacturer of prescription medications

1982

2002

2003

2004

2005

200.3

¥
billion

2017

2006

37.6

44.3

Transformed Medisa
Shinyaku Inc. into
wholly-owned
consolidated subsidiary.

123.5

184.3 182.5 187.2

193.8

168.1

132.4

105.5
67.6

80.5

89.8

50.0

Medium-Term Business Plan

M1 TRUST

2007

2010

2008

2010

Consolidated net sales
exceeded ¥100.0 billion
for the first time.

2009

M1 TRUST 2015

2011

2012

2013

2014

M1 TRUST 2018

2015

2016

Became the leading generic drug manufacturer

M1 TRUST 2021

2017

2018

2019

Expanded globally

2020

START 2024

2021

2022

2023

2030

(FY)

Taking on the challenge ofestablishing new businesses

History of developing non-financial capital

1981
Manufactured
capital

1984
Intellectual
capital2007
Social andrelationship capital

2009
Social andrelationship capital2013 , 20172015

Manufactured
capitalIntellectual
capital2021
Social andrelationship capital

2022
Human
capital

Kanto
Factory

15

Completed the GMP
standard–compliant
Kyushu Factory

Opened the Osaka
Laboratory to
expand research

Established a new
Corporate Philosophy
and Code of Conduct

Announced M1 TRUST,
its Medium-TermBusiness Plan

We built the Kyushu Factory in
Iizuka City, Fukuoka Prefecture as
an advanced factory compliant with
GMP standards, the international
standards for pharmaceuticalmanufacturing and quality
management. In addition tounderpinning the stable supply ofhigh-quality Sawai products, thefactory also contributed todeveloping the brand image of
Sawai Pharmaceutical.

At that time, few generic drug
manufacturers had independentfacilities dedicated to R&D. From
our earliest days, our stance ofstressing R&D has been carried onby the Pharmaceutical ResearchCenter, which opened in 1994, and
the Pharmaceutical Development
Center, which opened in 2015.

We established the Corporate
Philosophy consisting of the threetenets of mission, challenge, andhope as the basis for theparticipation of all employees,
centered on the Company’s
longtime motto “Always putting
patients first.” We also established
the Code of Conduct as a guide forthe implementation of the
Corporate Philosophy.

We announced a plan to achieve¥100.0 billion in consolidated net
sales within five years by expanding
market share, further strengthening
the management structure, andbuilding a solid Sawai brand as thebasic policies. The basic policies
were carried over into theCompany’s subsequentMedium-Term Business Plans.

Sawai Group Holdings Integrated Report 2023

Built the Kanto Factory
and the Sanda Nishi
Factory to boost
production capacity
We built a new formulation factoryon the site of the Kanto Factory(Mobara City, Chiba Prefecture) in
March 2013, and the Sanda Nishi
Factory (Sanda City, Hyogo
Prefecture) specializing inpackaging processes adjacent to
the Sanda Factory in January 2017.
This boosted production capacity
and risk management, including
disaster response.

Built Pharmaceutical
Development CenterWe established a new
Pharmaceutical Development Centerin Suita City, Osaka Prefecture close
to the Head Office. The
Pharmaceutical Development Center
consolidated some of the functionsof the former Pharmaceutical
Technology Center, which had been
located in Asahi-ku, Osaka City, andthe Research Laboratories as a sitewith responsibilities includingcommercialization and stable supplyof products as well as improvementof launched products, in addition to
the development of new products.

Transitioned to holding
company structure
through the transferof shares
To continue to generate sustainablegrowth into the future, the Groupconsidered it necessary tosimultaneously reinforce existing
businesses and foster new
businesses that meet the demandsof the time and determined thattransitioning to a holding company
structure would be optimal.

Undertook the S-Wing
Project
With the goal of “promoting
diversity,” one element of theGroup’s long-term vision, we
conducted project-related activities
for about six months, and thenrelated proposals regarding a future
action plan were submitted tomembers of senior management inMarch 2023.

P.30 Topics

Sawai Group Holdings Integrated Report 2023

16

Our value creation story | Our value creation modelManagement message

Our value creation story

Value creation strategy

Governance

Financial section

Providing high-quality healthcare
services to even more people
As the leading generic drug company, we strive to provide a stable supply ofhigh-quality generic drugs and support the healthy lives of people.
We are also taking on the challenge of evolving into a general healthcare company
by developing new businesses.

Social issues

Management
capital* (Input)
Financial
capitalRising medical
expenses
Medical expenses¥

43.0 trillion(FY2020)

Percentage of Japanese
population aged 65 or older

29.1%(September 2022)

Need for affordable
and safe drugs
Share (volume) of genericdrugs for all prefectures

80% or more(through March 31, 2023)

Increasing interest
in QOL

17

Sawai Group Holdings Integrated Report 2023

A world where more people can receive
healthcare services and live a full life
with peace of mind among society

Our ideal
state

A–

Manufactured
capitalProduction capacity (Japan)

tablets / year
Human
capitalMRs

375

Qualified pharmacists

246

A company with a strong presence that
continues to contribute to people’s healthby providing a multifaceted mix of products
and services based on scientific evidence
that meet individual needs

Business activities
Generic drug businessResearch anddevelopment

Procurement• Ability to undertake
research and analysis oforiginator drug patents• Formulation technology
capabilities based onhuman resources withexpertise in API
properties andformulation technology• Strong new product
API research andprocurement abilities• Selection andprocurement of raw
materials with primaryemphasis on quality
and safety

Production andreliability assurance• Manufacturing know-how
for high-mix, low-volume
production• Stringent quality
management• Own production factories
located throughout Japanand external partnercompanies

Sales and marketing• Provision of accurate
information• Extensive product lineup

Social andrelationship capital

13th consecutive year ranked
top in approval rating among
generic drug companies
favored by pharmacists(Research by Nikkei Drug
Information)* as of March 31, 2023

Improving healthcare access

Operating profit

15.0 billion tablets

17.0 billion

6.5%
Production volume

16.6

billion tablets(Japan business)

2.9

Enter into new businesses
Digital medical
devices businessWe will provide a neuromodulation device andtreatment app (DTx) as new treatment methods,
and a PHR management app as a healthmanagement tool.

New drugs
business

By making the most of our formulation
technology capabilities, we will provide newtreatment opportunities, such as those for rarediseases (orphan drugs).

Material issues leading to value creation

Material issues as the foundation ofsustainable growth

Improving healthcare access / Contributing to healthcare financing /Contributing to extension of healthy life expectancy / Developing talent

Environmentally friendly business / Work styles / motivation,
respect for human rights / Corporate governance

Sales volume(Sawai Pharmaceutical)

Contributing tohealthcare financing
Amount of reduction in healthcare costs

280.9 billion¥131.2 billion¥(Japan business)(U.S. business)billion tablets

New products
Health foodbusiness(Outcome)

200.3 billion¥(U.S. business)

By expanding our business to thepre-symptomatic illness and prevention fields,
we will provide products that support longer
healthy lives.

Value provided to society

Revenue

ROE

Patents owned

45

Businessresults*(Output)¥

Intellectual
capitalStrongest brand in genericdrug industry

Stable supplyof drugs

The world
we want tobuild

R&I credit rating

18.5 billion

The Hyper-aging
society

Sawai Group Vision 2030

23 products(Japan business)

Contributing to extensionof healthy life expectancy
Personal health record (PHR)
management app

Used by more than

2 products

400

Patentapplications

Developing talent

medical institutions(U.S. business)

32*actual for FY2022

Employee education and training
expenses (Sawai Group in Japan)¥

85.00 million

Sawai Group Holdings Integrated Report 2023

18

Our value creation story | Our value creation modelManagement message

Our value creation story

Value creation strategy

Governance

Financial section

Providing high-quality healthcare
services to even more people
As the leading generic drug company, we strive to provide a stable supply ofhigh-quality generic drugs and support the healthy lives of people.
We are also taking on the challenge of evolving into a general healthcare company
by developing new businesses.

Social issues

Management
capital* (Input)
Financial
capitalRising medical
expenses
Medical expenses¥

43.0 trillion(FY2020)

Percentage of Japanese
population aged 65 or older

29.1%(September 2022)

Need for affordable
and safe drugs
Share (volume) of genericdrugs for all prefectures

80% or more(through March 31, 2023)

Increasing interest
in QOL

17

Sawai Group Holdings Integrated Report 2023

A world where more people can receive
healthcare services and live a full life
with peace of mind among society

Our ideal
state

A–

Manufactured
capitalProduction capacity (Japan)

tablets / year
Human
capitalMRs

375

Qualified pharmacists

246

A company with a strong presence that
continues to contribute to people’s healthby providing a multifaceted mix of products
and services based on scientific evidence
that meet individual needs

Business activities
Generic drug businessResearch anddevelopment

Procurement• Ability to undertake
research and analysis oforiginator drug patents• Formulation technology
capabilities based onhuman resources withexpertise in API
properties andformulation technology• Strong new product
API research andprocurement abilities• Selection andprocurement of raw
materials with primaryemphasis on quality
and safety

Production andreliability assurance• Manufacturing know-how
for high-mix, low-volume
production• Stringent quality
management• Own production factories
located throughout Japanand external partnercompanies

Sales and marketing• Provision of accurate
information• Extensive product lineup

Social andrelationship capital

13th consecutive year ranked
top in approval rating among
generic drug companies
favored by pharmacists(Research by Nikkei Drug
Information)* as of March 31, 2023

Improving healthcare access

Operating profit

15.0 billion tablets

17.0 billion

6.5%
Production volume

16.6

billion tablets(Japan business)

2.9

Enter into new businesses
Digital medical
devices businessWe will provide a neuromodulation device andtreatment app (DTx) as new treatment methods,
and a PHR management app as a healthmanagement tool.

New drugs
business

By making the most of our formulation
technology capabilities, we will provide newtreatment opportunities, such as those for rarediseases (orphan drugs).

Material issues leading to value creation

Material issues as the foundation ofsustainable growth

Improving healthcare access / Contributing to healthcare financing /Contributing to extension of healthy life expectancy / Developing talent

Environmentally friendly business / Work styles / motivation,
respect for human rights / Corporate governance

Sales volume(Sawai Pharmaceutical)

Contributing tohealthcare financing
Amount of reduction in healthcare costs

280.9 billion¥131.2 billion¥(Japan business)(U.S. business)billion tablets

New products
Health foodbusiness(Outcome)

200.3 billion¥(U.S. business)

By expanding our business to thepre-symptomatic illness and prevention fields,
we will provide products that support longer
healthy lives.

Value provided to society

Revenue

ROE

Patents owned

45

Businessresults*(Output)¥

Intellectual
capitalStrongest brand in genericdrug industry

Stable supplyof drugs

The world
we want tobuild

R&I credit rating

18.5 billion

The Hyper-aging
society

Sawai Group Vision 2030

23 products(Japan business)

Contributing to extensionof healthy life expectancy
Personal health record (PHR)
management app

Used by more than

2 products

400

Patentapplications

Developing talent

medical institutions(U.S. business)

32*actual for FY2022

Employee education and training
expenses (Sawai Group in Japan)¥

85.00 million

Sawai Group Holdings Integrated Report 2023

18

Our value creation story | Sawai Group’s strengths

Management message

Research and development
Strength 1

Strength 2

intellectual property trends in the U.S. and Europe andleverage those trends for our intellectual property strategy
for Japan. In particular, it is possible to learn a lot fromapplying for paragraph IV certification in the U.S., and thisis a major asset that supports
Number of patents held
future business activities, which
is one of our strengths.

45

Sawai PharmaceuticalR&D expenses

12.5

¥

Sawai PharmaceuticalCore particle production
technology

QALCORE®

Number of R&D Division staff

billionTo undertake product development, which has grown more difficult in recent years,
we are not only increasing research efficiency through DX but are also broadly
strengthening our R&D foundation, which includes actively undertaking joint
research with such entities as independent research institutes and researching
physiological models that do not employ animal testing.
We will take on the challenge of being the first to introduce generic drugs andlaunching new businesses so that no suffering patients are left behind, and this entails
developing drugs for rare diseases that lack sufficient treatments and similar activities.

295

OD tablet production technology

SARAMEL®

Procurement

Escitalopram OD Tablets
QALCORE®

Dry coating, wet coating, and wet adsorption method
are three core particle production technologies thatallow us to reduce production time and makeproducts comfortable for patients to take.
THRUCOAT®

SARAMEL®

Dia. 7 mm
Levetiracetam Granular Tablets
THRUCOAT®

Strength

Moisture
resistanceThin gelcoating

Disintegration

Our original additive SARAMEL is a patented
technology of Sawai that makes it possible toproduce tablets with outstanding strength, moistureresistance, and disintegration properties by simply
mixing with API.

19

Water

Sawai Group Holdings Integrated Report 2023

With this technology, a gel coating forms on thesurface by moisturizing with water, creating tabletsthat are easy to take with little force. This makes it
easier to take the medicine.

Senior Executive
Officer,Group Chief
Intellectual
Property Officer

Sawai PharmaceuticalDrug-containing
particles

Film coating technology

Director,
Senior Managing
Executive Officer,
Group Chief
Research &Development Officer

NobukoSugimoto

Having handled patent cases, mainly those related to generic drugs, in the past, we
will strive to strengthen our intellectual property capabilities in new fields, such as
digital medical devices in the future.
Furthermore, we will work to maximize the value of intangible assets throughout
the Group by strengthening measures related to training personnel who possess
specialized knowledge in various fields, such as intellectual property, formulation,and property analysis; undertaking and maintaining systematic and comprehensive
activities, including the formulation of an advanced intellectual property strategy;
and promoting the protection and branding of intellectual property, Sawai’s originaltechnology, centered on SAWAI HARMOTECH®.

Strength 1

Sawai Pharmaceutical’s
main formulation technology

Financial section

Message from responsible officer (IP)

Promoting robust intellectual property capabilities,
including those for new business fields

to accumulate and expand our formulation technology.
We will provide drugs that meet the needs ofhealthcare professionals and patients and introduce first-oftheir-kind products using SAWAI HARMOTECH®, a seriesof formulation technologies born from this research.

GovernanceShoji Yokota,
Ph.D.

Taking on the challenge of new businesses in addition to
being the first to introduce generic drugs

Formulation technology capabilities based on human assets
with expertise in API properties and formulation technology

Another of our Group’s strengths is our formulation
technology capabilities, one aspect of which is collecting
the latest information related to APIs and formulation fromthroughout the world, and this makes it possible to conduct
development in line with international harmonization.
Furthermore, we have increased the certainty of our
product launches by continually revising and bringing
forward development plans. Even while busy with productdevelopment, we actively take on the challenge of researchlinked to future development topics and aggressively work

Value creation strategy

Message from responsible officer (R&D)

Ability to undertake research and analysis of original drug patents

By utilizing both human assets with extensive experience inpatent trials and proceedings and a proprietary databasethat includes information on patents and proceedings inJapan and overseas, we implement an extremely
sophisticated patent strategy. We develop the optimal
patent strategy for new issues in collaboration withpatent attorneys in Japan and overseas who possess
broad knowledge of pharmaceuticals.
In recent years, we have also been keeping an eye on

Our value creation story

Strong new product API researchand procurement abilities

As for APIs used in new development, we undertake various
activities such as searching for APIs throughout the world,
examining production facilities, quality, etc., and conducting
analysis and trial production of pharmaceuticals using
samples of these APIs. We use APIs that meet our own
standards, which are even higher than those of the Ministryof Health, Labour and Welfare. The API Sourcing Group
provides support for research and procurement throughits specialists in purchasing, including members withexperience at new drug manufacturers, API trading
companies, and Sawai factories.
Suppliers

Dia. 2.1 mm

Procure a wide range of raw materials from around500 companies in 30 countries throughout the world

Strength 2

Selection and procurement of
raw materials with primaryemphasis on quality and safety

In order to deliver even higher quality generic drugs, we
inspect the factories of API manufacturers, particularly the
Quality Assurance Department. Furthermore, we confirm
that API manufacturers’ quality management systems
meet Sawai standards by checking that the Production
Department undertakes manufacturing in an appropriate
environment and the Quality Control Department conducts
appropriate analysis. We also release information on the
country and factory where APIs are manufactured toprovide healthcare professionals with peace of mind. In
addition, we actively undertake multisourcing—that is,
procuring the same API from multiple manufacturers inorder to ensure stable procurement.

Sawai Group Holdings Integrated Report 2023

20

Our value creation story | Sawai Group’s strengths

Management message

Research and development
Strength 1

Strength 2

intellectual property trends in the U.S. and Europe andleverage those trends for our intellectual property strategy
for Japan. In particular, it is possible to learn a lot fromapplying for paragraph IV certification in the U.S., and thisis a major asset that supports
Number of patents held
future business activities, which
is one of our strengths.

45

Sawai PharmaceuticalR&D expenses

12.5

¥

Sawai PharmaceuticalCore particle production
technology

QALCORE®

Number of R&D Division staff

billionTo undertake product development, which has grown more difficult in recent years,
we are not only increasing research efficiency through DX but are also broadly
strengthening our R&D foundation, which includes actively undertaking joint
research with such entities as independent research institutes and researching
physiological models that do not employ animal testing.
We will take on the challenge of being the first to introduce generic drugs andlaunching new businesses so that no suffering patients are left behind, and this entails
developing drugs for rare diseases that lack sufficient treatments and similar activities.

295

OD tablet production technology

SARAMEL®

Procurement

Escitalopram OD Tablets
QALCORE®

Dry coating, wet coating, and wet adsorption method
are three core particle production technologies thatallow us to reduce production time and makeproducts comfortable for patients to take.
THRUCOAT®

SARAMEL®

Dia. 7 mm
Levetiracetam Granular Tablets
THRUCOAT®

Strength

Moisture
resistanceThin gelcoating

Disintegration

Our original additive SARAMEL is a patented
technology of Sawai that makes it possible toproduce tablets with outstanding strength, moistureresistance, and disintegration properties by simply
mixing with API.

19

Water

Sawai Group Holdings Integrated Report 2023

With this technology, a gel coating forms on thesurface by moisturizing with water, creating tabletsthat are easy to take with little force. This makes it
easier to take the medicine.

Senior Executive
Officer,Group Chief
Intellectual
Property Officer

Sawai PharmaceuticalDrug-containing
particles

Film coating technology

Director,
Senior Managing
Executive Officer,
Group Chief
Research &Development Officer

NobukoSugimoto

Having handled patent cases, mainly those related to generic drugs, in the past, we
will strive to strengthen our intellectual property capabilities in new fields, such as
digital medical devices in the future.
Furthermore, we will work to maximize the value of intangible assets throughout
the Group by strengthening measures related to training personnel who possess
specialized knowledge in various fields, such as intellectual property, formulation,and property analysis; undertaking and maintaining systematic and comprehensive
activities, including the formulation of an advanced intellectual property strategy;
and promoting the protection and branding of intellectual property, Sawai’s originaltechnology, centered on SAWAI HARMOTECH®.

Strength 1

Sawai Pharmaceutical’s
main formulation technology

Financial section

Message from responsible officer (IP)

Promoting robust intellectual property capabilities,
including those for new business fields

to accumulate and expand our formulation technology.
We will provide drugs that meet the needs ofhealthcare professionals and patients and introduce first-oftheir-kind products using SAWAI HARMOTECH®, a seriesof formulation technologies born from this research.

GovernanceShoji Yokota,
Ph.D.

Taking on the challenge of new businesses in addition to
being the first to introduce generic drugs

Formulation technology capabilities based on human assets
with expertise in API properties and formulation technology

Another of our Group’s strengths is our formulation
technology capabilities, one aspect of which is collecting
the latest information related to APIs and formulation fromthroughout the world, and this makes it possible to conduct
development in line with international harmonization.
Furthermore, we have increased the certainty of our
product launches by continually revising and bringing
forward development plans. Even while busy with productdevelopment, we actively take on the challenge of researchlinked to future development topics and aggressively work

Value creation strategy

Message from responsible officer (R&D)

Ability to undertake research and analysis of original drug patents

By utilizing both human assets with extensive experience inpatent trials and proceedings and a proprietary databasethat includes information on patents and proceedings inJapan and overseas, we implement an extremely
sophisticated patent strategy. We develop the optimal
patent strategy for new issues in collaboration withpatent attorneys in Japan and overseas who possess
broad knowledge of pharmaceuticals.
In recent years, we have also been keeping an eye on

Our value creation story

Strong new product API researchand procurement abilities

As for APIs used in new development, we undertake various
activities such as searching for APIs throughout the world,
examining production facilities, quality, etc., and conducting
analysis and trial production of pharmaceuticals using
samples of these APIs. We use APIs that meet our own
standards, which are even higher than those of the Ministryof Health, Labour and Welfare. The API Sourcing Group
provides support for research and procurement throughits specialists in purchasing, including members withexperience at new drug manufacturers, API trading
companies, and Sawai factories.
Suppliers

Dia. 2.1 mm

Procure a wide range of raw materials from around500 companies in 30 countries throughout the world

Strength 2

Selection and procurement of
raw materials with primaryemphasis on quality and safety

In order to deliver even higher quality generic drugs, we
inspect the factories of API manufacturers, particularly the
Quality Assurance Department. Furthermore, we confirm
that API manufacturers’ quality management systems
meet Sawai standards by checking that the Production
Department undertakes manufacturing in an appropriate
environment and the Quality Control Department conducts
appropriate analysis. We also release information on the
country and factory where APIs are manufactured toprovide healthcare professionals with peace of mind. In
addition, we actively undertake multisourcing—that is,
procuring the same API from multiple manufacturers inorder to ensure stable procurement.

Sawai Group Holdings Integrated Report 2023

20

Our value creation story | Sawai Group’s strengths

Management message

Production and reliability assurance
Strength 1

TopicsManufacturing know-how for high-mix, low-volume production

To produce various types of generic drugs using the samemachinery, it is vital to possess know-how regarding
preventing the mixing of principal ingredients.
For tablet presses that form granules into tablets, ittakes almost one whole day to switch between products,
and Sawai ensures safety by validating each cleaning
procedure. This know-how related to validating uniquegeneric drug production processes and managing
production makes it possible to conduct high-mix,
low-volume production and ensure quality.

Production capacity

15.5

billiontablets

tablets
5.0 billion
Upsher-Smith

Sawai Pharmaceutical

Number of products approved to manufacture

750

Approx.

Sawai Pharmaceutical

Approx.

60*

Upsher-Smith* Calculated according to the counting standards of Japan

Strength 2

Stringent quality management

Quality is managed to exceed government standards
through all process, from selection of API and additives to
production process, and even post-sales.
We are working to further improve ouruncompromising quality in order to provide generic drugs
that can be used with peace of mind.

Strength 3

411

Sawai Pharmaceutical

Financial section

employees provide onsite guidance for producing
and testing existing products. Even for ensuring quality,
Sawai Pharmaceutical offers support on all fronts,
such as holding guidance meetings and conducting
audits by the responsible person in the Quality Assurance
Department and Reliability Assurance Division.
Our goal is to achieve an annual production capacityof 3.0 billion tablets in the future by increasing the numberof employees involved in manufacturing through 2025.

Trust Pharmatech’s Seima Factory 2

68

Upsher-Smith

Sales and marketing
Strength 1

Number of internal GMP audits

153

Sawai Pharmaceutical

Embodying the Group philosophy throughcontinuous efforts to improve quality
The Group has expanded its production capacity within Japan to 18.5 billion tablets,
which includes 15.5 billion tablets for Sawai Pharmaceutical’s six factories (Kashima,
Kanto, Sanda, Sanda Nishi, Kyushu, Daini Kyushu), and 3.0 billion tablets for Trust
Pharmatech’s Yachi and Seima factories.
Through not only this production capacity but also continually implementing
measures to increase quality, we aim to embody the Group’s philosophy of “always
putting healthier lives first.”

Sawai Group Holdings Integrated Report 2023

Governance

Number of staff in Quality Control Department

62

Upsher-Smith

Message from responsible officer

21

Value creation strategy

Working to establish a production system at Trust Pharmatech

Founded as a new subsidiary of the Group in December
2021, Trust Pharmatech launched full productionin April 2023 and is moving forward with efforts
to establish a production system with an annual capacityof 2.0 billion tablets or more in 2024.
The most important efforts are thoroughly
introducing and spreading the corporate philosophyof “always putting patients first” and Sawai quality justlike has been done at Sawai Pharmaceutical.
In order to spread the corporate philosophy to eachand every employee and encourage its implementation,
we systematically undertake training and group activities
to raise compliance awareness. We are also rebuilding
our GMP system and providing continual employee
education to spread the Sawai culture regarding quality.
Furthermore, we are transferring production
to factories in a planned manner. As for new products,
in addition to passing on Sawai standards basedon witnessed manufacturing and testing by the Researchand Development Division, Sawai Pharmaceutical

Own production factories located throughout Japan and external partner companies

Production management and quality control are undertaken,
primarily for our eight main factories in Japan. All eightfactories observe GMP, and we strive to implement
continual improvements by acting in concert and sharing
the findings of audits.
We also conduct audits of formulation manufacturingsubcontractors at least once every three years.

Our value creation story

Toshiya Hasuo
Senior Executive
OfficerGroup Chief
Production Officer

Provision of accurate information

Extensive product lineup

Strength 2

We provide information to patients and healthcare
professionals through three channels—approximately 370
medical representatives (MRs); the Medical Information
Center, an inquiry desk open 24 hours a day, 365 days ayear; and a website.
In addition to undertaking activities for providing
accurate information to all healthcare professionals, MRscollect and compile information on side-effects and safetyof drugs, and this work is led by the Pharmacovigilance
Department. We are working to have our drugs properly
used by providing that information to healthcare
workplaces as feedback.

The lineup of products offered by our Japanese Group
companies extends to about 800 products. Our ability not
only to collect and provide information on various diseases
and in a wide range of fields but also to broadly meet thetreatment policies and needs of healthcare professionals,
which is possible because we market numerous products,
is another strength of Sawai Group.
On account of our continuing training for MRs thatcovers various products, MRs can acquire extensive
knowledge. It is precisely because of our wide lineup of
products, that we can propose multiple drugs to treat thesame disease and more concomitant drugs.

Number of MRs

Number of products on sale

Approx.

370

Sawai Pharmaceutical

Approx.

20

Upsher-Smith

800

Approx.

Sawai Pharmaceutical

140*

Approx.

Upsher-Smith* Calculated according to the counting standards of Japan

Sawai Group Holdings Integrated Report 2023

22

Our value creation story | Sawai Group’s strengths

Management message

Production and reliability assurance
Strength 1

TopicsManufacturing know-how for high-mix, low-volume production

To produce various types of generic drugs using the samemachinery, it is vital to possess know-how regarding
preventing the mixing of principal ingredients.
For tablet presses that form granules into tablets, ittakes almost one whole day to switch between products,
and Sawai ensures safety by validating each cleaning
procedure. This know-how related to validating uniquegeneric drug production processes and managing
production makes it possible to conduct high-mix,
low-volume production and ensure quality.

Production capacity

15.5

billiontablets

tablets
5.0 billion
Upsher-Smith

Sawai Pharmaceutical

Number of products approved to manufacture

750

Approx.

Sawai Pharmaceutical

Approx.

60*

Upsher-Smith* Calculated according to the counting standards of Japan

Strength 2

Stringent quality management

Quality is managed to exceed government standards
through all process, from selection of API and additives to
production process, and even post-sales.
We are working to further improve ouruncompromising quality in order to provide generic drugs
that can be used with peace of mind.

Strength 3

411

Sawai Pharmaceutical

Financial section

employees provide onsite guidance for producing
and testing existing products. Even for ensuring quality,
Sawai Pharmaceutical offers support on all fronts,
such as holding guidance meetings and conducting
audits by the responsible person in the Quality Assurance
Department and Reliability Assurance Division.
Our goal is to achieve an annual production capacityof 3.0 billion tablets in the future by increasing the numberof employees involved in manufacturing through 2025.

Trust Pharmatech’s Seima Factory 2

68

Upsher-Smith

Sales and marketing
Strength 1

Number of internal GMP audits

153

Sawai Pharmaceutical

Embodying the Group philosophy throughcontinuous efforts to improve quality
The Group has expanded its production capacity within Japan to 18.5 billion tablets,
which includes 15.5 billion tablets for Sawai Pharmaceutical’s six factories (Kashima,
Kanto, Sanda, Sanda Nishi, Kyushu, Daini Kyushu), and 3.0 billion tablets for Trust
Pharmatech’s Yachi and Seima factories.
Through not only this production capacity but also continually implementing
measures to increase quality, we aim to embody the Group’s philosophy of “always
putting healthier lives first.”

Sawai Group Holdings Integrated Report 2023

Governance

Number of staff in Quality Control Department

62

Upsher-Smith

Message from responsible officer

21

Value creation strategy

Working to establish a production system at Trust Pharmatech

Founded as a new subsidiary of the Group in December
2021, Trust Pharmatech launched full productionin April 2023 and is moving forward with efforts
to establish a production system with an annual capacityof 2.0 billion tablets or more in 2024.
The most important efforts are thoroughly
introducing and spreading the corporate philosophyof “always putting patients first” and Sawai quality justlike has been done at Sawai Pharmaceutical.
In order to spread the corporate philosophy to eachand every employee and encourage its implementation,
we systematically undertake training and group activities
to raise compliance awareness. We are also rebuilding
our GMP system and providing continual employee
education to spread the Sawai culture regarding quality.
Furthermore, we are transferring production
to factories in a planned manner. As for new products,
in addition to passing on Sawai standards basedon witnessed manufacturing and testing by the Researchand Development Division, Sawai Pharmaceutical

Own production factories located throughout Japan and external partner companies

Production management and quality control are undertaken,
primarily for our eight main factories in Japan. All eightfactories observe GMP, and we strive to implement
continual improvements by acting in concert and sharing
the findings of audits.
We also conduct audits of formulation manufacturingsubcontractors at least once every three years.

Our value creation story

Toshiya Hasuo
Senior Executive
OfficerGroup Chief
Production Officer

Provision of accurate information

Extensive product lineup

Strength 2

We provide information to patients and healthcare
professionals through three channels—approximately 370
medical representatives (MRs); the Medical Information
Center, an inquiry desk open 24 hours a day, 365 days ayear; and a website.
In addition to undertaking activities for providing
accurate information to all healthcare professionals, MRscollect and compile information on side-effects and safetyof drugs, and this work is led by the Pharmacovigilance
Department. We are working to have our drugs properly
used by providing that information to healthcare
workplaces as feedback.

The lineup of products offered by our Japanese Group
companies extends to about 800 products. Our ability not
only to collect and provide information on various diseases
and in a wide range of fields but also to broadly meet thetreatment policies and needs of healthcare professionals,
which is possible because we market numerous products,
is another strength of Sawai Group.
On account of our continuing training for MRs thatcovers various products, MRs can acquire extensive
knowledge. It is precisely because of our wide lineup of
products, that we can propose multiple drugs to treat thesame disease and more concomitant drugs.

Number of MRs

Number of products on sale

Approx.

370

Sawai Pharmaceutical

Approx.

20

Upsher-Smith

800

Approx.

Sawai Pharmaceutical

140*

Approx.

Upsher-Smith* Calculated according to the counting standards of Japan

Sawai Group Holdings Integrated Report 2023

22

Our value creation story | Sustainability at the Sawai GroupManagement message

Aiming to become a corporate group
trusted by stakeholders
Basic philosophies

Key policies• At the Sawai Group, we believe that a healthysociety and its sustainable development are thefoundation of why we exist.

• Based on our corporate philosophy of “Always
putting healthier lives first,” we strive to do ourpart in realizing a sustainable society through ourbusiness, by contributing to the maintenanceand development of healthy lives and superb
healthcare systems.

• The Sawai Group can only be sustainable if it isrecognized as an entity (in other words, aninstitution of our society) necessary for therealization of a sustainable society, and if itmaintains a firm relationship of trust with all our
stakeholders.

• We endeavor to stay engaged (building bonds ofmutual trust) with all our stakeholders including
patients and consumers, healthcare professionals
such as medical institutions, business partners,
employees, shareholders, local communities, andthe global environment.

• As our society changes, the Sawai Group cancontinue to exist in a sustainable way by rapidly
responding to these social changes and bycontinuing to evolve.

Material issues (set May 2022)
For the Group to achieve a sustained enhancement of its corporate value, we identify material issues (important issues) thatshould be given priority in resolving from the two perspectives of stakeholders' interests and impact on the Company, which
are based on the idea that business activities that take into consideration sustainability for the whole of society are indispensable.

Stakeholders’ interests

Extremely
high

High

23

Material issues leading to value creation

Material issues
leading tovalue creation

Material issues as
the foundation ofsustainable growth

Impact on the Company

Sawai Group Holdings Integrated Report 2023

Extremely
high

Improving healthcare access

Product quality and safety
Maintaining a stable supply
Providing meaningful information

Contributing tohealthcare financing

Development of high-value-added generic drugs

Contributing to extension ofhealthy life expectancy

Expanding business to a wider range of healthcare domains,
including pre-symptomatic illness and prevention

Developing talent

Training for future management candidates
Material issues as the foundation of sustainable growth

Environmentallyfriendly businessResponding to climate change
Recycling and waste control
Water use reduction
Biodiversity

Work styles/motivation,
respect for human rights

Realization of work-life balance
Maintenance of a safe, healthy workplace environment
Diversity promotion

Corporate governanceStronger risk management/compliance
Stakeholder engagement
Prevention of bribery/corruption
Supply chain management/fair, transparent transactions
Stronger information security

Value creation strategy

Governance

Financial section

Process for setting material issues
The Group’s material issues are identified through the following steps. We also regularly review and confirm theirappropriateness and revise them around once every three years from a medium- to long-term perspective because it isnecessary to take into account changes in the business environment and new social issues.

Step 1

Step 2

Step 3

List issues

Extract and evaluate
impact of issues

Check appropriateness

List the management issues that are considered deeply
connected to medium- to long-term corporate value based
not only international initiatives, such as the International
Integrated Reporting Council (IIRC) Framework, Sustainability
Accounting Standards Board (SASB) Standards, GRI
Sustainability Reporting Standards, and SDGs but also theGroup’s corporate philosophy, Group vision, and businessenvironment

Approve after the Board of
Directors deliberates andexamines the appropriateness of
the issues

Map issues on the two axes of
stakeholders' interests andimpact on the Group andclassify as either material issues
leading to value creation ormaterial issues as the foundationof sustainable growth

Risks and opportunities and our response
Risks

Generic drug business

Digital medical devices business• We pursue creativity and constantly evolve alongwith society, so that the Sawai Group can remainsustainable.

Our value creation story

Non-invasive
neuromodulation
device

NASH treatment app

PHR management
app (SaluDi)

Health food business

Opportunities

Response• Decline in drug prices for various reasons
including annual drug price revisions• General decline in trust in generic drugs• Increase in launch of AGs• Increase in API and raw material costs due tochanges in exchange rates and inflation• Growing demand because of aging society• Diversification and growing sophistication ofhealthcare and medicine needs• Movement to review drug price system• Chance to restructure the generic drug industry• Work to reform the system so that it is possible
to provide a long-term stable supply• Promote transition to a responsible corporategroup• Work to further reduce costs• Delay in development and issues with businessmodel• Unexpected safety and quality issues due tolack of experience• Increase in the medical consultation andtreatment rate due to the provision of newtreatment methods• Provision of new treatment options to patientsfor whom drug treatment is not appropriate• Collaborate closely with KOL* and related
academic associations• Collaborate with experts knowledgeable
in medical devices• Delays in development or failure of clinical trials• Launch of new drugs by competitors before
the app is ready• Becomes standard treatment and increases
medical consultation, diagnosis,
and treatment rates• Cooperate with corporations and entities
knowledgeable of DTx• Read KOL* and related academic
association needs• Continued differentiation from other apps
• Delays in creating in-house system as use ofapp expands• Entry of overseas IT companies into healthcare
services• Presence established in the pre-symptomatic
illness and disease prevention fields• Contribution to achieving a well-being society• Launch of services overseas, including Asia

• Expand disease prevention field and functions
that support the field• Secure DX personnel• Introduce services based on collaboration
with partners• Fiercer competition• Stricter advertising regulations and systemchanges due to revisions to laws
• Safety and quality issues due to lack ofknowledge and experience• Greater health awareness as people live
longer lives• Trust and brand strength built up in GE business• Clarify target by setting meticulous marketingstrategy and sales plans• Recruit human assets who possess
professional knowledge and experience• Delay or failure of clinical trials• Larger market by providing new treatment
options• R&D capabilities acquired through the GE
business• Possess sufficient resources and plan flexibility

Orphan drug business* KOL(Key opinion leader), an expert with influence in a particular field.

Sustainability promotion structure
We are promoting initiatives through the Group
Sustainability Committee, which is chaired by Sawai Group
Holdings Representative Director and President (COO). To
undertake practical initiatives, three promotion teams, theEnvironment (E) Team, Society (S) Team, and Governance(G) Team, subordinate bodies under the committee, werecreated and conduct related activities. The Secretariat is
responsible for aiding the committee, communicating
information on sustainability, and supporting thepromotion team.

Group Sustainability Committee• Sawai Pharmaceutical• Medisa Shinyaku • Kaken Shoyaku• Trust Pharmatech• Upsher-Smith Laboratories

Secretariat

Promotion Teams(Environment, Society,
Governance)

Participation in promotion
teams from each company

Sawai Group Holdings Integrated Report 2023

24

Our value creation story | Sustainability at the Sawai GroupManagement message

Aiming to become a corporate group
trusted by stakeholders
Basic philosophies

Key policies• At the Sawai Group, we believe that a healthysociety and its sustainable development are thefoundation of why we exist.

• Based on our corporate philosophy of “Always
putting healthier lives first,” we strive to do ourpart in realizing a sustainable society through ourbusiness, by contributing to the maintenanceand development of healthy lives and superb
healthcare systems.

• The Sawai Group can only be sustainable if it isrecognized as an entity (in other words, aninstitution of our society) necessary for therealization of a sustainable society, and if itmaintains a firm relationship of trust with all our
stakeholders.

• We endeavor to stay engaged (building bonds ofmutual trust) with all our stakeholders including
patients and consumers, healthcare professionals
such as medical institutions, business partners,
employees, shareholders, local communities, andthe global environment.

• As our society changes, the Sawai Group cancontinue to exist in a sustainable way by rapidly
responding to these social changes and bycontinuing to evolve.

Material issues (set May 2022)
For the Group to achieve a sustained enhancement of its corporate value, we identify material issues (important issues) thatshould be given priority in resolving from the two perspectives of stakeholders' interests and impact on the Company, which
are based on the idea that business activities that take into consideration sustainability for the whole of society are indispensable.

Stakeholders’ interests

Extremely
high

High

23

Material issues leading to value creation

Material issues
leading tovalue creation

Material issues as
the foundation ofsustainable growth

Impact on the Company

Sawai Group Holdings Integrated Report 2023

Extremely
high

Improving healthcare access

Product quality and safety
Maintaining a stable supply
Providing meaningful information

Contributing tohealthcare financing

Development of high-value-added generic drugs

Contributing to extension ofhealthy life expectancy

Expanding business to a wider range of healthcare domains,
including pre-symptomatic illness and prevention

Developing talent

Training for future management candidates
Material issues as the foundation of sustainable growth

Environmentallyfriendly businessResponding to climate change
Recycling and waste control
Water use reduction
Biodiversity

Work styles/motivation,
respect for human rights

Realization of work-life balance
Maintenance of a safe, healthy workplace environment
Diversity promotion

Corporate governanceStronger risk management/compliance
Stakeholder engagement
Prevention of bribery/corruption
Supply chain management/fair, transparent transactions
Stronger information security

Value creation strategy

Governance

Financial section

Process for setting material issues
The Group’s material issues are identified through the following steps. We also regularly review and confirm theirappropriateness and revise them around once every three years from a medium- to long-term perspective because it isnecessary to take into account changes in the business environment and new social issues.

Step 1

Step 2

Step 3

List issues

Extract and evaluate
impact of issues

Check appropriateness

List the management issues that are considered deeply
connected to medium- to long-term corporate value based
not only international initiatives, such as the International
Integrated Reporting Council (IIRC) Framework, Sustainability
Accounting Standards Board (SASB) Standards, GRI
Sustainability Reporting Standards, and SDGs but also theGroup’s corporate philosophy, Group vision, and businessenvironment

Approve after the Board of
Directors deliberates andexamines the appropriateness of
the issues

Map issues on the two axes of
stakeholders' interests andimpact on the Group andclassify as either material issues
leading to value creation ormaterial issues as the foundationof sustainable growth

Risks and opportunities and our response
Risks

Generic drug business

Digital medical devices business• We pursue creativity and constantly evolve alongwith society, so that the Sawai Group can remainsustainable.

Our value creation story

Non-invasive
neuromodulation
device

NASH treatment app

PHR management
app (SaluDi)

Health food business

Opportunities

Response• Decline in drug prices for various reasons
including annual drug price revisions• General decline in trust in generic drugs• Increase in launch of AGs• Increase in API and raw material costs due tochanges in exchange rates and inflation• Growing demand because of aging society• Diversification and growing sophistication ofhealthcare and medicine needs• Movement to review drug price system• Chance to restructure the generic drug industry• Work to reform the system so that it is possible
to provide a long-term stable supply• Promote transition to a responsible corporategroup• Work to further reduce costs• Delay in development and issues with businessmodel• Unexpected safety and quality issues due tolack of experience• Increase in the medical consultation andtreatment rate due to the provision of newtreatment methods• Provision of new treatment options to patientsfor whom drug treatment is not appropriate• Collaborate closely with KOL* and related
academic associations• Collaborate with experts knowledgeable
in medical devices• Delays in development or failure of clinical trials• Launch of new drugs by competitors before
the app is ready• Becomes standard treatment and increases
medical consultation, diagnosis,
and treatment rates• Cooperate with corporations and entities
knowledgeable of DTx• Read KOL* and related academic
association needs• Continued differentiation from other apps
• Delays in creating in-house system as use ofapp expands• Entry of overseas IT companies into healthcare
services• Presence established in the pre-symptomatic
illness and disease prevention fields• Contribution to achieving a well-being society• Launch of services overseas, including Asia

• Expand disease prevention field and functions
that support the field• Secure DX personnel• Introduce services based on collaboration
with partners• Fiercer competition• Stricter advertising regulations and systemchanges due to revisions to laws
• Safety and quality issues due to lack ofknowledge and experience• Greater health awareness as people live
longer lives• Trust and brand strength built up in GE business• Clarify target by setting meticulous marketingstrategy and sales plans• Recruit human assets who possess
professional knowledge and experience• Delay or failure of clinical trials• Larger market by providing new treatment
options• R&D capabilities acquired through the GE
business• Possess sufficient resources and plan flexibility

Orphan drug business* KOL(Key opinion leader), an expert with influence in a particular field.

Sustainability promotion structure
We are promoting initiatives through the Group
Sustainability Committee, which is chaired by Sawai Group
Holdings Representative Director and President (COO). To
undertake practical initiatives, three promotion teams, theEnvironment (E) Team, Society (S) Team, and Governance(G) Team, subordinate bodies under the committee, werecreated and conduct related activities. The Secretariat is
responsible for aiding the committee, communicating
information on sustainability, and supporting thepromotion team.

Group Sustainability Committee• Sawai Pharmaceutical• Medisa Shinyaku • Kaken Shoyaku• Trust Pharmatech• Upsher-Smith Laboratories

Secretariat

Promotion Teams(Environment, Society,
Governance)

Participation in promotion
teams from each company

Sawai Group Holdings Integrated Report 2023

24

Our value creation story | Financial and non-financial highlights

Management message

Financial highlights¥

Profit attributable to ownersof the Company

Core operating profit

Revenue

200,344
184,341

million ¥182,537

23,071

187,219

193,816

Return on equity attributableto owners of the Company

12,667

millionValue creation strategy

Non-financial highlights
Profit attributable to owners of the Company /Return on equity attributable to ownersof the Company

Revenue / Core operating profit

Our value creation story

6.5

million¥200,344

19,376

8.7

10.2

Sales volume / Production capacity
Sales volume

Number of GMP audits

153

15.0

19,279Production capacity

9.4

5.8

15.5

billion tablets
15.5

133

6.5

100

141
11.9

124

15.5

15.5

153

12,667

12,340Financial section

Scope of data: Sawai Pharmaceutical

15.5

14,017

168,068%

Number of GMP audits

Governancebillion tablets
15.5

15.5
15.0

2021

2022

14.8

13.3

12.4

10.6

110

-13.8

31,1182017

37,73834,391

34,043

2018

2019

2020

26,321

2021

23,071-28,269

2022

2017

(FY)

Revenue: For the Japan business, revenue was flat despite drug
price revisions because of growth in sales of new drugs and removalof limits on shipments, and for the U.S. business, revenue roseyear on year as a result of steady progress with brand drugs andother products and the weaker yen. As a result, revenue surpassed¥200.0 billion for the first time.

2018

2019

2020

2021

2022

16,671
14,533

2017

(FY)

2018

2019

2020

(FY)

Amount of reduction in healthcare costs

130

44.9
135

130

45

%
130

Amount of reduction in healthcare costs

Number of patents held

Dividend payout ratio

130

¥

130

42
36

37

2019

2020

280.9

billion

45
296.7
274.6

273.4

2017

2018

317.6

338.2

280.9

31

16,09013,4872022

Number of patents held¥
24,4132021

Dividends per share / Dividend payout ratio

130

million

2020

The Group’s ability to supply a relatively large number of top quality
generic drugs is backed by our industry-leading production capacity.
In addition to further expanding its production capacity throughinitiatives such as constructing the Daini Kyushu Factory, the Groupwill fulfill its role as a generic drug supply infrastructure company.

Dividends per share

16,0902019

Sawai Pharmaceutical has formed a dedicated audit team, which
performs more than 100 GMP audits a year. The number of audits
conducted each fiscal year fluctuates within a certain range as theyear for the next audit is determined based on the results of theprevious audit. As the number of products manufactured andmarketed grows, the number of audits at new manufacturing sites
has increased annually, and remote audits and (commissioned)
audits by independent parties have been used to cover the increase.

R&D expenses

¥

2018

In a challenging environment for both the Japan business and the
U.S. business, the Group worked to secure profits by aggressively
reducing raw material and other costs. Despite the impact of
upfront costs for the Japan business, there was no impairment
loss for the U.S. business as there was in the previous fiscal year,
resulting in net profit.

Core operating profit: Core operating profit fell year on year
for various reasons, including upfront costs to strengthen
production capacity for the Japan business.

R&D expenses

2017

(FY)

26

13,883
46.1

44.9

36.1

2017

2018

2019

2020

2021

2022

(FY)

The Sawai Group invested aggressively in research and development
in order to be first to market with new products that will differentiate
us from our competitors to achieve future growth. R&D expenses
fell 34.1% year on year to ¥16,090 million because not only there
was no impairment loss this fiscal year for the U.S. business as
there was for the previous fiscal year but expenses were also cut.

25

Sawai Group Holdings Integrated Report 2023

2017

30.5

29.5

2018

2019

2020

2021

2022

(FY)

We aim to pay stable and continuous dividends with a target
payout ratio of 30%, taking account of the balance between
investment for growth and dividends, as well as comprehensively
considering the consolidated financial results for each fiscal year,
the dividend payout ratio, and other measures aimed at shareholder
returns. In fiscal 2022, the Company provided an annual return toshareholders of ¥130 per share.

2017

2018

2021

2022

(FY)

We own a variety of patents, including a patent for reducing thebitterness of active ingredients and a patent for orally dissolving(OD) tablets that can be taken without water. Recently, numerous
new technologies have been developed, and there has been an
increase in various patent applications and registrations, includingones related to unique Sawai formulation technology (SAWAIHARMOTECH®). The Group is aiming to maximize the value of suchintangible assets as patents.

2019

2020

2021

2022

(FY)

The Sawai Group’s greatest contribution to society lies in increasing
the sustainability of the health insurance system by reducing theburden of medical expenses through the supply of generic drugs.
While the difference between the price of long-listed drugs whose
patents have expired and that of generic drugs is shrinking, they
contributed to a reduction in healthcare costs of about ¥280.0
billion, which still substantially exceeds our revenue.

Sawai Group Holdings Integrated Report 2023

26

Our value creation story | Financial and non-financial highlights

Management message

Financial highlights¥

Profit attributable to ownersof the Company

Core operating profit

Revenue

200,344
184,341

million ¥182,537

23,071

187,219

193,816

Return on equity attributableto owners of the Company

12,667

millionValue creation strategy

Non-financial highlights
Profit attributable to owners of the Company /Return on equity attributable to ownersof the Company

Revenue / Core operating profit

Our value creation story

6.5

million¥200,344

19,376

8.7

10.2

Sales volume / Production capacity
Sales volume

Number of GMP audits

153

15.0

19,279Production capacity

9.4

5.8

15.5

billion tablets
15.5

133

6.5

100

141
11.9

124

15.5

15.5

153

12,667

12,340Financial section

Scope of data: Sawai Pharmaceutical

15.5

14,017

168,068%

Number of GMP audits

Governancebillion tablets
15.5

15.5
15.0

2021

2022

14.8

13.3

12.4

10.6

110

-13.8

31,1182017

37,73834,391

34,043

2018

2019

2020

26,321

2021

23,071-28,269

2022

2017

(FY)

Revenue: For the Japan business, revenue was flat despite drug
price revisions because of growth in sales of new drugs and removalof limits on shipments, and for the U.S. business, revenue roseyear on year as a result of steady progress with brand drugs andother products and the weaker yen. As a result, revenue surpassed¥200.0 billion for the first time.

2018

2019

2020

2021

2022

16,671
14,533

2017

(FY)

2018

2019

2020

(FY)

Amount of reduction in healthcare costs

130

44.9
135

130

45

%
130

Amount of reduction in healthcare costs

Number of patents held

Dividend payout ratio

130

¥

130

42
36

37

2019

2020

280.9

billion

45
296.7
274.6

273.4

2017

2018

317.6

338.2

280.9

31

16,09013,4872022

Number of patents held¥
24,4132021

Dividends per share / Dividend payout ratio

130

million

2020

The Group’s ability to supply a relatively large number of top quality
generic drugs is backed by our industry-leading production capacity.
In addition to further expanding its production capacity throughinitiatives such as constructing the Daini Kyushu Factory, the Groupwill fulfill its role as a generic drug supply infrastructure company.

Dividends per share

16,0902019

Sawai Pharmaceutical has formed a dedicated audit team, which
performs more than 100 GMP audits a year. The number of audits
conducted each fiscal year fluctuates within a certain range as theyear for the next audit is determined based on the results of theprevious audit. As the number of products manufactured andmarketed grows, the number of audits at new manufacturing sites
has increased annually, and remote audits and (commissioned)
audits by independent parties have been used to cover the increase.

R&D expenses

¥

2018

In a challenging environment for both the Japan business and the
U.S. business, the Group worked to secure profits by aggressively
reducing raw material and other costs. Despite the impact of
upfront costs for the Japan business, there was no impairment
loss for the U.S. business as there was in the previous fiscal year,
resulting in net profit.

Core operating profit: Core operating profit fell year on year
for various reasons, including upfront costs to strengthen
production capacity for the Japan business.

R&D expenses

2017

(FY)

26

13,883
46.1

44.9

36.1

2017

2018

2019

2020

2021

2022

(FY)

The Sawai Group invested aggressively in research and development
in order to be first to market with new products that will differentiate
us from our competitors to achieve future growth. R&D expenses
fell 34.1% year on year to ¥16,090 million because not only there
was no impairment loss this fiscal year for the U.S. business as
there was for the previous fiscal year but expenses were also cut.

25

Sawai Group Holdings Integrated Report 2023

2017

30.5

29.5

2018

2019

2020

2021

2022

(FY)

We aim to pay stable and continuous dividends with a target
payout ratio of 30%, taking account of the balance between
investment for growth and dividends, as well as comprehensively
considering the consolidated financial results for each fiscal year,
the dividend payout ratio, and other measures aimed at shareholder
returns. In fiscal 2022, the Company provided an annual return toshareholders of ¥130 per share.

2017

2018

2021

2022

(FY)

We own a variety of patents, including a patent for reducing thebitterness of active ingredients and a patent for orally dissolving(OD) tablets that can be taken without water. Recently, numerous
new technologies have been developed, and there has been an
increase in various patent applications and registrations, includingones related to unique Sawai formulation technology (SAWAIHARMOTECH®). The Group is aiming to maximize the value of suchintangible assets as patents.

2019

2020

2021

2022

(FY)

The Sawai Group’s greatest contribution to society lies in increasing
the sustainability of the health insurance system by reducing theburden of medical expenses through the supply of generic drugs.
While the difference between the price of long-listed drugs whose
patents have expired and that of generic drugs is shrinking, they
contributed to a reduction in healthcare costs of about ¥280.0
billion, which still substantially exceeds our revenue.

Sawai Group Holdings Integrated Report 2023

26

Value creation strategy | ESG strategy

Management message

Messagefrom Deputy
Group CEOOur value creation story

Two governance reforms

Further expanding ESG initiatives,
the foundation
for sustainable growth
Kazuhiko Sueyoshi
Deputy Group Chief Executive Officer(in charge of special missions/in charge of ESG)

Since transitioning to a holding company, we have steadily
made progress in raising our level of governance. As aresult, we have expanded the four committees (RiskManagement Committee, Compliance Committee,
Information Security Committee, and Sustainability
Committee) throughout the Group, creating a system inwhich people tackle issues with a sense of unity.
We implemented two major reforms in fiscal 2022.
The first one was establishing a framework for succession
plans for such officers as CEO. The second one wasappointing external directors with management experience
for the first time. As a result, external directors account for
50% of directors. By steadily implementing these initiatives
and conducting quite thorough deliberations regarding
the Board of Directors, I think that we are getting close to
having the Board of Directors that we should have.

Value creation strategy

Governance

Financial section

Building strong bonds with all stakeholders
and aiming for sustainable growth
As stated at the beginning, it is impossible for the Groupto grow on its own. For us, sustainability is building bonds
and growing with all stakeholders, not only patients andhealthcare professionals but also local communities andglobal environment.
The Group’s corporate philosophy and corporate
culture must be valued in order to promote this sustainability.
Our employees who joined the Company because they
identify with our corporate philosophy and value
connections with society are one of our strengths, and it
is my duty to further improve the Group’s strong efforts
related to ESG, the foundation of sustainability, to a levelthat they are recognized. The goal is to create a corporategroup in which all employees work together and generate
sustainable growth with society over the long term.

Launch of initiatives to spread ESG awarenessWorking to expand ESG, a management issue
With a corporate philosophy of “always putting healthierlives first,” the Group is aiming to provide healthy lives. As
is clearly stated in our key sustainability policies, a healthysociety and its sustainable development are the foundationof why we exist.
I was involved in formulating these key policies in
2021, but I had started to think about the relation between
the ideal form of corporate activity and society when I wasyoung. During my time at the secretariat of a particularbusiness organization, I came across the idea that “businessactivities are circular like the natural environment, and both
one’s own company and society will prosper through thecycle of using profits to expand production, not fighting tocapture more of the pie.” Sustainability activities demandedof companies and this idea are connected at their roots.

Working to lessen the environmental burdencaused by production activities
As for our environment (E) initiatives, until then, theCompany had focused on reinforcing its production capacitywith the goal of providing a stable supply of generic drugs,
but consideration of the environmental burden caused byproduction activities was not necessarily sufficient.
Taking this point into consideration, in fiscal 2022,
we revised the environmental targets in the Medium-TermBusiness Plan. After examining concrete measures toreduce CO2 emissions, we switched the Group targets toemission volume from emission intensity per unit ofproduction, and then set the numerical target of reducing
2030 emissions 46% compared to fiscal 2013 + α (see page33). One example of our steady initiatives should be tofocus on further recycling waste plastics that were used as
packaging.

27

Sawai Group Holdings Integrated Report 2023

Steadily moving forward with initiatives to ensure
diversity and investments in human capital
As for the field of society (S), one of the things that I havewanted to do for several years is to promote inclusion,
diversity, and equity (ID&E).
While around one-third of the Group’s employees arefemale, women make up a small percentage of managers,
and we have failed to reach our target of 8% of managers
being women. Therefore, in fiscal 2022, we gathered
employees interested in the topic and launched a projectteam, which compiled proposals for management (seeTopics on page 30). We plan to establish a new body inthe near future so that we can move from these proposals
to action. Raising the percentage of managers who are
women, one of the goals for promoting ID&E, will result ina natural improvement in the wage differences between
men and women.
As for developing talent, we have traditionally worked
to expand training options so that employees can takecourses appropriate for their individual interest, awareness,career plan, and other aspect. By offering not only
traditional group training and correspondence training
but also a wide range of options linked to independent
professional organizations, we have raised the annual
number of training sessions per employee to 1.4 times. In
the future, I would like to add more training options for
management candidates.
In fiscal 2022, we also launched new measures related
to developing successors. The Group has a system in which
each employee creates and submits a goal sheet once every
six months, and for all levels of line managers, we haveintroduced a system in which 20% of goals are related todeveloping successors. Under this system, managers set
goals for succession planning and manage progress.

An important issue is spreading ESG awareness among
employees. Therefore, since fiscal 2022, we have included
an ESG perspective when selecting small-group activity
topics in Japan. Although this was the first year, we havealready had several successes, such as some factories
giving presentations on results related to “transforming
operations into ones that impose less of an environmental
burden by increasing energy efficiency.” There also seems
to be a good response to using the in-house intranet, too,
to frequently explain in-house activities and introduce abottom-up approach, not a top-down one.

Main initiatives in ESG fields
Issues to addressE
Environmentallyfriendly production

S
Talent development,
work styles /motivation, respectfor human rights

G
Deepening corporate
governanceTargets (quantitative/etc.)

FY2022 Results• Reduce CO2 emissions by 46% in FY2030 on agross volume basis (based on FY 2013
emissions + α)
• Net zero CO2 emissions by 2050
• Waste plastic recycling rate of 65% or more (in2030)• Changes and additions to medium term management plan environmental targets.
• Consideration of installing solar power panels installed at Kyushu Daini Factory.
• Started power generation using solar power generation panels at the Sanda Nishi
Factory (FY2022 power generation: 5.9% of annual electricity used by the plant).

• Safe and diverse work environment• Transition from a telecommuting system used during the COVID-19 pandemic to apermanent telecommuting system.
• Use of stress check results for workplace improvement.
• Conducting employee engagement survey and interview survey (examine measures
for the coming fiscal year).

• Promotion of diversity• Action plan proposal to promote ID&E for the in-house project established taking
into consideration the results of that gender awareness survey conducted in house.

• Initiatives for respect of human rights• Compliance e-learning on harassment.
• ID&E Initiatives based on engagement survey (Upsher-Smith).

• Improvement and deepening of governancethrough conversion to holding company
structure• Direct reporting and explanation at the Board of Directors meetings about various
committees which include related members.
• Started developing succession plans for CEO and other officials by Nomination,
Remuneration and Other Governance Committee• Stronger risk management / compliance• Implementation of E-learning on compliance, information security, etc.
• Strengthening information security governance, such as obtaining ISMS
certification (ISO27001) and targeted mail based training.

Sawai Group Holdings Integrated Report 2023

28

Value creation strategy | ESG strategy

Management message

Messagefrom Deputy
Group CEOOur value creation story

Two governance reforms

Further expanding ESG initiatives,
the foundation
for sustainable growth
Kazuhiko Sueyoshi
Deputy Group Chief Executive Officer(in charge of special missions/in charge of ESG)

Since transitioning to a holding company, we have steadily
made progress in raising our level of governance. As aresult, we have expanded the four committees (RiskManagement Committee, Compliance Committee,
Information Security Committee, and Sustainability
Committee) throughout the Group, creating a system inwhich people tackle issues with a sense of unity.
We implemented two major reforms in fiscal 2022.
The first one was establishing a framework for succession
plans for such officers as CEO. The second one wasappointing external directors with management experience
for the first time. As a result, external directors account for
50% of directors. By steadily implementing these initiatives
and conducting quite thorough deliberations regarding
the Board of Directors, I think that we are getting close to
having the Board of Directors that we should have.

Value creation strategy

Governance

Financial section

Building strong bonds with all stakeholders
and aiming for sustainable growth
As stated at the beginning, it is impossible for the Groupto grow on its own. For us, sustainability is building bonds
and growing with all stakeholders, not only patients andhealthcare professionals but also local communities andglobal environment.
The Group’s corporate philosophy and corporate
culture must be valued in order to promote this sustainability.
Our employees who joined the Company because they
identify with our corporate philosophy and value
connections with society are one of our strengths, and it
is my duty to further improve the Group’s strong efforts
related to ESG, the foundation of sustainability, to a levelthat they are recognized. The goal is to create a corporategroup in which all employees work together and generate
sustainable growth with society over the long term.

Launch of initiatives to spread ESG awarenessWorking to expand ESG, a management issue
With a corporate philosophy of “always putting healthierlives first,” the Group is aiming to provide healthy lives. As
is clearly stated in our key sustainability policies, a healthysociety and its sustainable development are the foundationof why we exist.
I was involved in formulating these key policies in
2021, but I had started to think about the relation between
the ideal form of corporate activity and society when I wasyoung. During my time at the secretariat of a particularbusiness organization, I came across the idea that “businessactivities are circular like the natural environment, and both
one’s own company and society will prosper through thecycle of using profits to expand production, not fighting tocapture more of the pie.” Sustainability activities demandedof companies and this idea are connected at their roots.

Working to lessen the environmental burdencaused by production activities
As for our environment (E) initiatives, until then, theCompany had focused on reinforcing its production capacitywith the goal of providing a stable supply of generic drugs,
but consideration of the environmental burden caused byproduction activities was not necessarily sufficient.
Taking this point into consideration, in fiscal 2022,
we revised the environmental targets in the Medium-TermBusiness Plan. After examining concrete measures toreduce CO2 emissions, we switched the Group targets toemission volume from emission intensity per unit ofproduction, and then set the numerical target of reducing
2030 emissions 46% compared to fiscal 2013 + α (see page33). One example of our steady initiatives should be tofocus on further recycling waste plastics that were used as
packaging.

27

Sawai Group Holdings Integrated Report 2023

Steadily moving forward with initiatives to ensure
diversity and investments in human capital
As for the field of society (S), one of the things that I havewanted to do for several years is to promote inclusion,
diversity, and equity (ID&E).
While around one-third of the Group’s employees arefemale, women make up a small percentage of managers,
and we have failed to reach our target of 8% of managers
being women. Therefore, in fiscal 2022, we gathered
employees interested in the topic and launched a projectteam, which compiled proposals for management (seeTopics on page 30). We plan to establish a new body inthe near future so that we can move from these proposals
to action. Raising the percentage of managers who are
women, one of the goals for promoting ID&E, will result ina natural improvement in the wage differences between
men and women.
As for developing talent, we have traditionally worked
to expand training options so that employees can takecourses appropriate for their individual interest, awareness,career plan, and other aspect. By offering not only
traditional group training and correspondence training
but also a wide range of options linked to independent
professional organizations, we have raised the annual
number of training sessions per employee to 1.4 times. In
the future, I would like to add more training options for
management candidates.
In fiscal 2022, we also launched new measures related
to developing successors. The Group has a system in which
each employee creates and submits a goal sheet once every
six months, and for all levels of line managers, we haveintroduced a system in which 20% of goals are related todeveloping successors. Under this system, managers set
goals for succession planning and manage progress.

An important issue is spreading ESG awareness among
employees. Therefore, since fiscal 2022, we have included
an ESG perspective when selecting small-group activity
topics in Japan. Although this was the first year, we havealready had several successes, such as some factories
giving presentations on results related to “transforming
operations into ones that impose less of an environmental
burden by increasing energy efficiency.” There also seems
to be a good response to using the in-house intranet, too,
to frequently explain in-house activities and introduce abottom-up approach, not a top-down one.

Main initiatives in ESG fields
Issues to addressE
Environmentallyfriendly production

S
Talent development,
work styles /motivation, respectfor human rights

G
Deepening corporate
governanceTargets (quantitative/etc.)

FY2022 Results• Reduce CO2 emissions by 46% in FY2030 on agross volume basis (based on FY 2013
emissions + α)
• Net zero CO2 emissions by 2050
• Waste plastic recycling rate of 65% or more (in2030)• Changes and additions to medium term management plan environmental targets.
• Consideration of installing solar power panels installed at Kyushu Daini Factory.
• Started power generation using solar power generation panels at the Sanda Nishi
Factory (FY2022 power generation: 5.9% of annual electricity used by the plant).

• Safe and diverse work environment• Transition from a telecommuting system used during the COVID-19 pandemic to apermanent telecommuting system.
• Use of stress check results for workplace improvement.
• Conducting employee engagement survey and interview survey (examine measures
for the coming fiscal year).

• Promotion of diversity• Action plan proposal to promote ID&E for the in-house project established taking
into consideration the results of that gender awareness survey conducted in house.

• Initiatives for respect of human rights• Compliance e-learning on harassment.
• ID&E Initiatives based on engagement survey (Upsher-Smith).

• Improvement and deepening of governancethrough conversion to holding company
structure• Direct reporting and explanation at the Board of Directors meetings about various
committees which include related members.
• Started developing succession plans for CEO and other officials by Nomination,
Remuneration and Other Governance Committee• Stronger risk management / compliance• Implementation of E-learning on compliance, information security, etc.
• Strengthening information security governance, such as obtaining ISMS
certification (ISO27001) and targeted mail based training.

Sawai Group Holdings Integrated Report 2023

28

Value creation strategy | Human asset strategy

Management message

to hold one-on-one discussions on such issues as
performance and career several times a year, and it is ouropinion that this contributes to greater motivation, an
open work environment, and thus employee retention.
Furthermore, on the in-house Intranet, which all employees
can access, we provide not only management information,such as business plans and management figures, but also
the thoughts of and daily routines of senior management.
These initiatives have been successful, and for many
years, Sawai Pharmaceutical has been able to keep our
employee turnover rate to less than 10%, while there are
surveys that indicate a turnover rate of more than 30% for
new graduate recruits over their first three years of work.

Message from General Manager ofGroup Human Resource Department

Promoting efforts to secure andtrain diverse human assets
indispensable for our growth strategy
Fumihito Yamakawa
General Manager of Group Human Resource Department

Promoting a human asset strategy basedon the Medium-Term Business Plan
In the three-year Medium-Term Business Plan START 2024,
we set the goals of further strengthening our generic drug
business and entering into new business in different growthfields. To further strengthen the generic drug business, wemust be the first to release and provide a stable supply ofhigh-quality, high-value-added products, and what isparticularly vital is strengthening our R&D and production
functions. We must also possess creative, transformative
human assets with unconventional ideas to promote new
businesses in fields unknown to us.
We are working to secure and train outstanding
human assets with diverse ways of thinking under the basic
human resources philosophy of “fostering and leveraging
the individual” with these types of business in mind.
While Japan’s labor market continues to be a seller’smarket because of a shortage of workers, Sawai
Pharmaceutical aggressively conducted recruiting in fiscal
2022 and hired 230 new employees, which includes new
graduates. We also reinforced our R&D and production
Ratio of female employees
in managerial positions(scope: Sawai Pharmaceutical)

(%)

6.0

6.1

5.8

6.6

6.9

8.0

In a seller’s labor market, retaining human assets is an issue
for all companies, including us. Regarding this point, wevalue the individuality and creativity of each employee andwork to strengthen employee engagement based on ourbasic human resources philosophy. Main Group companies
in Japan offer opportunities for superiors and subordinates
Turnover rate

6

4

4

2

2

5.6

(scope: Sawai Pharmaceutical)

5.7
2.8

We consider fostering a corporate culture in which people
mutually accept various values and backgrounds animportant element for growing the Company andindividuals. At Sawai Pharmaceutical, which is aiming tobecome a company in which anyone, not limited by theirsex, handicap, or other issue, can play an active role, one of
the goals is to achieve the goal of having women accountfor at least 8% of managers and employees with disabilities
account for at least 2.3% of our workforce by the end of
fiscal 2023.
Furthermore, in July 2022, a company-wide project,composed of members from the various Group companies,
was launched to examine measures to promote inclusion

TopicsValuing individuality and creativity andreinforcing engagement

8

0

3.3

3.1

2021

2022

Value creation strategy

Governance

Financial section

and diversity. Because of this project, many issues for
examination were proposed, such as providing training
to transform the awareness of employees, including
management, and we will develop concrete policies anda system to promote related initiatives in the future.

Focusing on promoting health and productivity
management based on the corporate philosophy
Touting the corporate philosophy of “always putting
healthier lives first” and with the idea that “better drugs areborn from workplaces that are both mentally and physically
healthy,” we are focused on creating an environment inwhich employees can work while maintaining their health.
We create an annual physical and mental healthpromotion plan and boast a system to implement that plan,and our main business offices in Japan offer an environment
in which the physical and mental problems of employees
can be quickly dealt with in collaboration with an
occupational physician. Furthermore, so that all employees
can enjoy their work, we are striving to eliminate
harassment by clearly stating the corporate stance of endingharassment through employment rules and other items
and operating a harassment helpline.
Because of these efforts, we were selected by the
Ministry of Economy Trade and Industry–as a “CertifiedHealth & Productivity Management Outstanding
Organizations.” We hope to continue to focus on promoting
health and productivity management.

Action plan proposal to promote ID&E through an in-house project

The project was initially launched in July 2022 as the“Active Participation of Women Promotion Project”(tentative name), but based on the collective opinion ofproject members, related activities were broadened fromones only targeting women to ones for all employees.
Furthermore, the project was named S-Wing, which
embodies the idea of making it possible for Sawai (S) tomove forward and offer pleasant workstyles without a bias
in the “wings” that support us.
Because of an imbalance in the ratio of male andfemale project members, during the almost nine months ofproject activities, around thirty new projects members wereadded as ambassadors in order to incorporate opinions
regardless of gender. This made it possible to undertake
activities that incorporate various perspectives. In March
2023, an action plan proposal regarding all employee
activities was submitted to senior management. In responseto the proposal, the Group will continue to promote
inclusion, diversity, and equity (ID&E).

S-Wing Project
https://www.sawai.co.jp/sawai-gender-action/
project.html(Japanese language only)

0

2018

29

functions by adding about 400 employees, mainly R&D andmanufacturing workers, from Trust Pharmatech, which
joined the Group in April 2022.
As for human asset training, the main Group
companies in Japan are working to create a system of
employee evaluations and training, and one related initiative
was preparing “skill requirement definition documents,”
which stipulate items such as the skills and expected role foreach job and grade. To achieve highly creative organization
management, we are focusing on cultivating a culture ofdiversity that values diverse ways of thinking regardless ofsex or age.

10

8
6

Cultivating a corporate culture ofmutual acceptance of diverse values

(%)

10

Our value creation story

2019

2020

2021

Sawai Group Holdings Integrated Report 2023

2022

2023
(target)(end ofeach fiscal
year)

2018

2019

2020

(end ofeach fiscal
year)

Note: We use the term “ID&E” because we consider inclusion (I) an important foundation for promoting diversity (D), but also view equity (E) as an essential related idea.

Sawai Group Holdings Integrated Report 2023

30

Value creation strategy | Human asset strategy

Management message

to hold one-on-one discussions on such issues as
performance and career several times a year, and it is ouropinion that this contributes to greater motivation, an
open work environment, and thus employee retention.
Furthermore, on the in-house Intranet, which all employees
can access, we provide not only management information,such as business plans and management figures, but also
the thoughts of and daily routines of senior management.
These initiatives have been successful, and for many
years, Sawai Pharmaceutical has been able to keep our
employee turnover rate to less than 10%, while there are
surveys that indicate a turnover rate of more than 30% for
new graduate recruits over their first three years of work.

Message from General Manager ofGroup Human Resource Department

Promoting efforts to secure andtrain diverse human assets
indispensable for our growth strategy
Fumihito Yamakawa
General Manager of Group Human Resource Department

Promoting a human asset strategy basedon the Medium-Term Business Plan
In the three-year Medium-Term Business Plan START 2024,
we set the goals of further strengthening our generic drug
business and entering into new business in different growthfields. To further strengthen the generic drug business, wemust be the first to release and provide a stable supply ofhigh-quality, high-value-added products, and what isparticularly vital is strengthening our R&D and production
functions. We must also possess creative, transformative
human assets with unconventional ideas to promote new
businesses in fields unknown to us.
We are working to secure and train outstanding
human assets with diverse ways of thinking under the basic
human resources philosophy of “fostering and leveraging
the individual” with these types of business in mind.
While Japan’s labor market continues to be a seller’smarket because of a shortage of workers, Sawai
Pharmaceutical aggressively conducted recruiting in fiscal
2022 and hired 230 new employees, which includes new
graduates. We also reinforced our R&D and production
Ratio of female employees
in managerial positions(scope: Sawai Pharmaceutical)

(%)

6.0

6.1

5.8

6.6

6.9

8.0

In a seller’s labor market, retaining human assets is an issue
for all companies, including us. Regarding this point, wevalue the individuality and creativity of each employee andwork to strengthen employee engagement based on ourbasic human resources philosophy. Main Group companies
in Japan offer opportunities for superiors and subordinates
Turnover rate

6

4

4

2

2

5.6

(scope: Sawai Pharmaceutical)

5.7
2.8

We consider fostering a corporate culture in which people
mutually accept various values and backgrounds animportant element for growing the Company andindividuals. At Sawai Pharmaceutical, which is aiming tobecome a company in which anyone, not limited by theirsex, handicap, or other issue, can play an active role, one of
the goals is to achieve the goal of having women accountfor at least 8% of managers and employees with disabilities
account for at least 2.3% of our workforce by the end of
fiscal 2023.
Furthermore, in July 2022, a company-wide project,composed of members from the various Group companies,
was launched to examine measures to promote inclusion

TopicsValuing individuality and creativity andreinforcing engagement

8

0

3.3

3.1

2021

2022

Value creation strategy

Governance

Financial section

and diversity. Because of this project, many issues for
examination were proposed, such as providing training
to transform the awareness of employees, including
management, and we will develop concrete policies anda system to promote related initiatives in the future.

Focusing on promoting health and productivity
management based on the corporate philosophy
Touting the corporate philosophy of “always putting
healthier lives first” and with the idea that “better drugs areborn from workplaces that are both mentally and physically
healthy,” we are focused on creating an environment inwhich employees can work while maintaining their health.
We create an annual physical and mental healthpromotion plan and boast a system to implement that plan,and our main business offices in Japan offer an environment
in which the physical and mental problems of employees
can be quickly dealt with in collaboration with an
occupational physician. Furthermore, so that all employees
can enjoy their work, we are striving to eliminate
harassment by clearly stating the corporate stance of endingharassment through employment rules and other items
and operating a harassment helpline.
Because of these efforts, we were selected by the
Ministry of Economy Trade and Industry–as a “CertifiedHealth & Productivity Management Outstanding
Organizations.” We hope to continue to focus on promoting
health and productivity management.

Action plan proposal to promote ID&E through an in-house project

The project was initially launched in July 2022 as the“Active Participation of Women Promotion Project”(tentative name), but based on the collective opinion ofproject members, related activities were broadened fromones only targeting women to ones for all employees.
Furthermore, the project was named S-Wing, which
embodies the idea of making it possible for Sawai (S) tomove forward and offer pleasant workstyles without a bias
in the “wings” that support us.
Because of an imbalance in the ratio of male andfemale project members, during the almost nine months ofproject activities, around thirty new projects members wereadded as ambassadors in order to incorporate opinions
regardless of gender. This made it possible to undertake
activities that incorporate various perspectives. In March
2023, an action plan proposal regarding all employee
activities was submitted to senior management. In responseto the proposal, the Group will continue to promote
inclusion, diversity, and equity (ID&E).

S-Wing Project
https://www.sawai.co.jp/sawai-gender-action/
project.html(Japanese language only)

0

2018

29

functions by adding about 400 employees, mainly R&D andmanufacturing workers, from Trust Pharmatech, which
joined the Group in April 2022.
As for human asset training, the main Group
companies in Japan are working to create a system of
employee evaluations and training, and one related initiative
was preparing “skill requirement definition documents,”
which stipulate items such as the skills and expected role foreach job and grade. To achieve highly creative organization
management, we are focusing on cultivating a culture ofdiversity that values diverse ways of thinking regardless ofsex or age.

10

8
6

Cultivating a corporate culture ofmutual acceptance of diverse values

(%)

10

Our value creation story

2019

2020

2021

Sawai Group Holdings Integrated Report 2023

2022

2023
(target)(end ofeach fiscal
year)

2018

2019

2020

(end ofeach fiscal
year)

Note: We use the term “ID&E” because we consider inclusion (I) an important foundation for promoting diversity (D), but also view equity (E) as an essential related idea.

Sawai Group Holdings Integrated Report 2023

30

Value creation strategy | SocietyManagement message

Our value creation story

Value creation strategy

Governance

Financial section

ESG data: https://global.sawaigroup.holdings/sustainability/esg/
SASB index: https://global.sawaigroup.holdings/sustainability/sasb/

Human rights and human resources

Society
Preventing counterfeit pharmaceuticals

Quality management

Upsher-Smith

Sawai Pharmaceutical

By conducting unannounced audits each year, Sawai
Pharmaceutical confirms that its factories can passinspections by government authorities whenever they may
occur. Similarly, Trust Pharmatech’s manufacturing locations,where operations were newly launched in fiscal 2022, aremanaged at the same level as Sawai Pharmaceuticalfactories, and similar audits have been started.
In terms of the quality of APIs, we rigorously check
whether each manufacturing factory complies with Good
Manufacturing Practices (GMP) stipulated by law using ourown standards by conducting onsite verifications, etc. ofAPI manufacturing sites forsome 300 ingredients (atotal of approximately 500
manufacturing sites), andonly use APIs that havepassed the verifications.
Quality audit

Quality management (Sawai Pharmaceutical)
https://www.sawai.co.jp/medicine/sawaigenerics/quality/(Japanese language only)
Main items• API quality • Quality management system at factories• Response to PIC/S • Conduct drug use-results surveys

Communication with patients
Sawai Pharmaceutical

Patient Support Office
Sawai Pharmaceutical’s Patient Support Office is the only
in-house department permitted to directly communicate
with patients. Because many inquiries by patients are due
to vague concerns about treatment and medicine, thePatient Support Office first works to accept those concerns.
The goal is to alleviate the worries of patients, whichhelps them be more positive about their treatment andmove forward with appropriate treatment.

Video explaining quality-related initiatives(Sawai Pharmaceutical)

Sawai Kenko Suishinka,
Website for general population

https://www.sawai.co.jp/medicine/sawaigenerics/
quality_movies/(Japanese language only)

Our corporate website offers knowledge and informationthat helps patients find peace of mind regarding drugs,
and this information includes basic information on genericdrugs and our quality initiatives. We also post a variety ofhealthcare-related information, including information on
pre-disease and preventive measures, disease awareness,and health promotion through pages called Sawai
Kenko Suishinka.
If using the PHR management application SaluDi tokeep PHR, it is possible to easily access the Sawai Kenko
Suishinka from within the app.

Upsher-Smith

Upsher-Smith consistently manufactures products ofpermissible quality by undertaking production and quality
management in line with the quality management system(QMS) required by U.S. government regulations.
For all raw materials and final products, the Company
conducts testing in line with FDA approval standards.
Furthermore, a comprehensive evaluation of final products
is conducted using an annual product review.
The Company also makes comprehensive self-checksof equipment/systems regularly in line with the in-houseprocedure manual. At new factories, electronic batchrecords are being introduced to further increase quality.

31

Upsher-Smith and its pharmaceutical supply chain arepromoting initiatives required under the Drug Supply Chain
Security Act (DSCSA). The requirements under the DSCSA
establish a chain of custody for each saleable unit (primarilybottles/blisters) in accordance with the Act.
As the deadline for becoming serialization compliant
is November 27, 2023, the Company is moving forwardwith related preparations. Furthermore, for all our bottles,
the seal clearly indicates if it was improperly opened.

Sawai Group Holdings Integrated Report 2023

Top page of Sawai Kenko
Suishinka (Japanese
language only)
https://kenko.sawai.co.jp/

The Sawai Group has established a Code of Conduct todefine its approaches toward respect for human rights,
consideration for the health and working environment of
employees, and fair and appropriate treatment of
employees. In line with the code, the Group is actively andproactively addressing these issues.
Details of policies and initiatives are reported on thewebsite.
Human rights and human resources
https://global.sawaigroup.holdings/sustainability/human/
Main items• Initiatives to respect humanrights• Consideration for thehealth and the working
environment of employees• Consideration for employees’
nursing care, childbirth andchildcare• Fair and appropriate
treatment• Enhancing diversity• Policy on human asset
development• Training system• Policy on ensuring
workplace diversity

Overseas Group companies

Since our overseas Group companies are more raciallydiverse than the Group companies in Japan, they devotespecial efforts to respect for diversity, including racial
diversity, which they recognize as an important social issue.
At Upsher-Smith Laboratories (USL), a Group Company
based in Minnesota, where the Black Lives Mattermovement in 2020 originated, members of senior
management have taken the initiative with the belief thatthe diversity of employees is a source of the Company’s
strengths and greater performance. In addition, the advisory
council related to four minorities (Blacks, women, Southern
Asians, and Hispanics) on four minority groups (Blacks,
Women, South Asians, and Hispanics) meets regularly toidentify the potential biases of employees and devise
measures to increase mutual understanding between them,and the Employee Resource Group is working on womenand LGBTQ+ issues.

Employee engagement survey

Disclosed data
• Percentage of paid leavedays used• Turnover rate
• Number of employees taking
nursing care leave, maternity
leave, or childcare leave• Percentage of female
managers (Sawai
pharmaceutical only)• Percentage of employeeswith disabilities (Sawai
pharmaceutical only)• Number of participants intraining

Policy on respect for human rights
As a healthcare corporate group closely related to life, ourGroup is committed to respecting the human rights ofvarious stakeholders, including patients, employees in Japanand overseas, and business partners, and supports theInternational Bill of Human Rights and the International
Labor Organization’s Declaration on Fundamental Principles
and Rights at Work, and promotes initiatives in accordancewith the United Nations Guiding Principles on Business andHuman Rights.

Sawai PharmaceuticalUpsher-SmithGroup companies in Japan

In the Group companies in Japan, we recognize employees
and labor unions as important stakeholders and maintainsound and good labor-management relations. In addition,
we are striving to raise awareness of human rights by clearlystating in our Code of Conduct that we oppose any formof discrimination on the basis of race, gender, nationality,
ethnicity, religion, ideology, political opinion, sexual
orientation, disease, disability, and refuse any involvementin the infringement of human rights.

In 2022, the Group conducted an employee engagement
survey, which is conducted every several years. The results
confirmed not only that employees possess a stronger senseof identification with the Company and its management
policies compared to the previous survey but also that wehave maintained a high level of satisfaction as an employer.
We consider this proof that even in the harsh businessenvironment in recent years, employees are conducting
their work with a sense of pride in and responsibility forproviding generic drugs.
However, there were signs of a decline in collaboration
between departments and sense of mutual help. Throughthis survey, we confirmed that there is engagement with
the Company and work but also that there are issues, suchas employees feeling stress regarding greater work volume
and difficulty of their work and employees having a low
desire to take on challenges because they are busy withthe work in front of them.
These issues were reported to the Management
Meeting and improvements were deliberated on. A
summary of this is shared with employees via the in-house
Intranet. We will continue to conduct this survey because
it leads to a stronger sense of unity and engagement by
delivering employee opinions to management andresolving problems.

Sawai Group Holdings Integrated Report 2023

32

Value creation strategy | SocietyManagement message

Our value creation story

Value creation strategy

Governance

Financial section

ESG data: https://global.sawaigroup.holdings/sustainability/esg/
SASB index: https://global.sawaigroup.holdings/sustainability/sasb/

Human rights and human resources

Society
Preventing counterfeit pharmaceuticals

Quality management

Upsher-Smith

Sawai Pharmaceutical

By conducting unannounced audits each year, Sawai
Pharmaceutical confirms that its factories can passinspections by government authorities whenever they may
occur. Similarly, Trust Pharmatech’s manufacturing locations,where operations were newly launched in fiscal 2022, aremanaged at the same level as Sawai Pharmaceuticalfactories, and similar audits have been started.
In terms of the quality of APIs, we rigorously check
whether each manufacturing factory complies with Good
Manufacturing Practices (GMP) stipulated by law using ourown standards by conducting onsite verifications, etc. ofAPI manufacturing sites forsome 300 ingredients (atotal of approximately 500
manufacturing sites), andonly use APIs that havepassed the verifications.
Quality audit

Quality management (Sawai Pharmaceutical)
https://www.sawai.co.jp/medicine/sawaigenerics/quality/(Japanese language only)
Main items• API quality • Quality management system at factories• Response to PIC/S • Conduct drug use-results surveys

Communication with patients
Sawai Pharmaceutical

Patient Support Office
Sawai Pharmaceutical’s Patient Support Office is the only
in-house department permitted to directly communicate
with patients. Because many inquiries by patients are due
to vague concerns about treatment and medicine, thePatient Support Office first works to accept those concerns.
The goal is to alleviate the worries of patients, whichhelps them be more positive about their treatment andmove forward with appropriate treatment.

Video explaining quality-related initiatives(Sawai Pharmaceutical)

Sawai Kenko Suishinka,
Website for general population

https://www.sawai.co.jp/medicine/sawaigenerics/
quality_movies/(Japanese language only)

Our corporate website offers knowledge and informationthat helps patients find peace of mind regarding drugs,
and this information includes basic information on genericdrugs and our quality initiatives. We also post a variety ofhealthcare-related information, including information on
pre-disease and preventive measures, disease awareness,and health promotion through pages called Sawai
Kenko Suishinka.
If using the PHR management application SaluDi tokeep PHR, it is possible to easily access the Sawai Kenko
Suishinka from within the app.

Upsher-Smith

Upsher-Smith consistently manufactures products ofpermissible quality by undertaking production and quality
management in line with the quality management system(QMS) required by U.S. government regulations.
For all raw materials and final products, the Company
conducts testing in line with FDA approval standards.
Furthermore, a comprehensive evaluation of final products
is conducted using an annual product review.
The Company also makes comprehensive self-checksof equipment/systems regularly in line with the in-houseprocedure manual. At new factories, electronic batchrecords are being introduced to further increase quality.

31

Upsher-Smith and its pharmaceutical supply chain arepromoting initiatives required under the Drug Supply Chain
Security Act (DSCSA). The requirements under the DSCSA
establish a chain of custody for each saleable unit (primarilybottles/blisters) in accordance with the Act.
As the deadline for becoming serialization compliant
is November 27, 2023, the Company is moving forwardwith related preparations. Furthermore, for all our bottles,
the seal clearly indicates if it was improperly opened.

Sawai Group Holdings Integrated Report 2023

Top page of Sawai Kenko
Suishinka (Japanese
language only)
https://kenko.sawai.co.jp/

The Sawai Group has established a Code of Conduct todefine its approaches toward respect for human rights,
consideration for the health and working environment of
employees, and fair and appropriate treatment of
employees. In line with the code, the Group is actively andproactively addressing these issues.
Details of policies and initiatives are reported on thewebsite.
Human rights and human resources
https://global.sawaigroup.holdings/sustainability/human/
Main items• Initiatives to respect humanrights• Consideration for thehealth and the working
environment of employees• Consideration for employees’
nursing care, childbirth andchildcare• Fair and appropriate
treatment• Enhancing diversity• Policy on human asset
development• Training system• Policy on ensuring
workplace diversity

Overseas Group companies

Since our overseas Group companies are more raciallydiverse than the Group companies in Japan, they devotespecial efforts to respect for diversity, including racial
diversity, which they recognize as an important social issue.
At Upsher-Smith Laboratories (USL), a Group Company
based in Minnesota, where the Black Lives Mattermovement in 2020 originated, members of senior
management have taken the initiative with the belief thatthe diversity of employees is a source of the Company’s
strengths and greater performance. In addition, the advisory
council related to four minorities (Blacks, women, Southern
Asians, and Hispanics) on four minority groups (Blacks,
Women, South Asians, and Hispanics) meets regularly toidentify the potential biases of employees and devise
measures to increase mutual understanding between them,and the Employee Resource Group is working on womenand LGBTQ+ issues.

Employee engagement survey

Disclosed data
• Percentage of paid leavedays used• Turnover rate
• Number of employees taking
nursing care leave, maternity
leave, or childcare leave• Percentage of female
managers (Sawai
pharmaceutical only)• Percentage of employeeswith disabilities (Sawai
pharmaceutical only)• Number of participants intraining

Policy on respect for human rights
As a healthcare corporate group closely related to life, ourGroup is committed to respecting the human rights ofvarious stakeholders, including patients, employees in Japanand overseas, and business partners, and supports theInternational Bill of Human Rights and the International
Labor Organization’s Declaration on Fundamental Principles
and Rights at Work, and promotes initiatives in accordancewith the United Nations Guiding Principles on Business andHuman Rights.

Sawai PharmaceuticalUpsher-SmithGroup companies in Japan

In the Group companies in Japan, we recognize employees
and labor unions as important stakeholders and maintainsound and good labor-management relations. In addition,
we are striving to raise awareness of human rights by clearlystating in our Code of Conduct that we oppose any formof discrimination on the basis of race, gender, nationality,
ethnicity, religion, ideology, political opinion, sexual
orientation, disease, disability, and refuse any involvementin the infringement of human rights.

In 2022, the Group conducted an employee engagement
survey, which is conducted every several years. The results
confirmed not only that employees possess a stronger senseof identification with the Company and its management
policies compared to the previous survey but also that wehave maintained a high level of satisfaction as an employer.
We consider this proof that even in the harsh businessenvironment in recent years, employees are conducting
their work with a sense of pride in and responsibility forproviding generic drugs.
However, there were signs of a decline in collaboration
between departments and sense of mutual help. Throughthis survey, we confirmed that there is engagement with
the Company and work but also that there are issues, suchas employees feeling stress regarding greater work volume
and difficulty of their work and employees having a low
desire to take on challenges because they are busy withthe work in front of them.
These issues were reported to the Management
Meeting and improvements were deliberated on. A
summary of this is shared with employees via the in-house
Intranet. We will continue to conduct this survey because
it leads to a stronger sense of unity and engagement by
delivering employee opinions to management andresolving problems.

Sawai Group Holdings Integrated Report 2023

32

Value creation strategy | Environment

Management message

Our value creation story

Value creation strategy

Governance

Financial section

ESG Data: https://global.sawaigroup.holdings/sustainability/esg/
Disclosure Based on TCFD Recommendations (details):
https://global.sawaigroup.holdings/sustainability/tcfd/

Environment

Strategy

Review of environmental targets in
Medium-Term Business Plan

Disclosure based on TCFD
recommendations (summary)Raised CO2 emission reduction targets

GovernanceOf the various environmental targets in the Medium-TermBusiness Plan START 2024 (April 2021–March 2024), we
partially revised our targets related to CO2 emissions. The
goal of these revisions was to align the target level withthe government’s goal of Carbon Neutrality by 2050 andreinforce initiatives to cut CO2 emissions to achieve thetarget of “cutting CO2 emissions 46% compared to FY2013
by FY2030.”
The revisions were approved after deliberations by
Sawai Pharmaceutical’s Sustainability Committee, theGroup Sustainability Committee, Group Strategy Council,
and Board of Directors. The main revisions are given in thefollowing table.

• The Group COO was assigned responsibility to address
climate change issues and the Board of Directors
oversees the performance of those duties.
• The Group Sustainability Committee (chaired by GroupCOO), which is composed of representatives from eachGroup company, meets four times a year to discuss andexamine sustainability-related matters, including climatechange issues. Regular reports are made to the Board of
Directors, and decisions are made under the direction andoversight of the Board of Directors.
• Global Environment Team, a subordinate body of theCommittee composed of members from each Group
company, was established, and reports to theCommittee quarterly.
• The envisioned risks and opportunities are as in thefollowing table.
• A Sustainability Committee, chaired by the President
and Representative Director, was also established at Sawai
Pharmaceutical, the Group’s core company, and meetsfour times a year.

Main revisions
Previous

Revised• Reduce emissions 25% on an
intensity-per-unit-of-production
basis by FY2030• Reduce total emissions volume
46% compared to 2013+α level
by FY2030• Net zero (2050)

Risks

Transition risks

Policy andlegal risks

Population,
economic,
andgeopoliticalrisks

Physical risks

Flood risks(acute risks)

Opportunities

Risk overview

Impacts on the Group’s businesses,
strategy, and financial planning

Introduction ofcarbon pricing (acarbon tax and anemissions trading
scheme) and theresulting increased
burdens• Burden on the Group created by carbon pricing• Need to pass on the carbon-pricing-createdfinancial burdens of suppliers with high GHG
emissions to the Group’s purchase prices ofraw materials• Burden on the Group of capital investment in energy
saving necessary to reduce its GHG emissions

Price hike forbio-derived raw
materials due topopulation growth
and temperature
increases• Population growth especially in emerging
economies will cause an increase in the prices ofgrain and grain-based products (starch, sucrose,corn, etc.) for food, feed, and other uses andconsequently in the prices of raw materials ofadditives for pharmaceutical products

Increased frequencyof typhoons,
torrential rains,
floods, etc.

• Increased risk of damage to the Group'sbusiness sites• Increased risk of damage to the business sites of theGroup’s suppliers

Magnitude of
impacts
1.5°C
4.0°C
scenario scenario

Moderate

Minor

Minor

Minor

Moderate• Diversifying suppliers• Studying alternative technologies

Major• Sandbagging the areas where
product inventories are stored• Obtaining damage insurance
coverage• Formulating BCPs for the Groupand its supply chain

As a result of our analysis and evaluation of climate-related opportunities that can have impacts on the Group’s operations, we have so far
not identified any opportunities that can have significant impacts on the Group's businesses, strategy, and financial planning.

Scope of coverage Sawai Group excluding Trust Pharmatech and Upsher-Smith
Impact classification Major: Major impacts on the Group’s businesses, strategy, and financial planning that the Group estimates to be worth approximately ¥6.0 billion
or more; Moderate: Moderate impacts on the Group’s businesses, strategy, and financial planning that the Group estimates to be worth approximately ¥3.0 billion or more
Minor: Minor impacts on the Group’s businesses, strategy, and financial planning that the Group estimates to be worth approximately less than ¥3.0 billion

33

Sawai Group Holdings Integrated Report 2023

• The following metrics and targets have been set, andprogress in achieving them is managed.
MetricTarget(Single fiscal year)
Reduce scope 1 and scope 2 emissions atleast 1% compared to the previous year
(Medium-term)
Reduce total CO2 emissions (scope 1 and 2)
46% compared to FY2013+α level by FY2030(1)
GHG emissions,
including CO2• Screen, evaluate, and identify risks with the participationand collaboration of in-house divisions and affiliatedcompanies strongly connected to each stage of the
supply chain, with the Global Environment Team playing
a core role.
• Have Group Sustainability Committee and Board of
Directors examine and deliberate on risks and thenmake related decisions based on the evaluation results.

(scope 1 and 2)(Long-term)
Achieve net zero by 2050
* Disclose annual reductions for each scopeon the corporate website.

(2)State of planned
introduction of
non-fossil energy

Introduce non-fossil energy equivalent to acertain reduction in CO2 emissions each year
proportional to actual emissions in order toachieve fiscal 2030 target

Achieving energy-efficient operations
by controlling air pressure differential between rooms

TopicsAt pharmaceutical factories, appropriately setting the air pressure
differential between rooms traps airborne granular material in
the room and prevents cross contamination (mixing of different
items). Because it is difficult to appropriately control the airpressure differential between rooms, ventilation equipment has
traditionally been operated even on days factories are closed, but
by properly adjusting such equipment as ventilation ducts andinverters for each room, it is possible to operate in an energy
efficient mode.

The Group’s methods
for addressing
climate-related risks• Considering the introduction ofrenewable energy• Devising and implementing
measures to enhance production
efficiency, including reducing
waste products

Metrics and targets

Risk management

Risks and opportunities related to climate change (period: fiscal 2021–fiscal 2030)
Type• Have the Board of Directors appropriately include this in
the annual business plan in the short term and Mediumterm Business Plan in the medium and long term.

• Work to reduce emissions intensity in the short term.
• Work to reduce emissions, including examining introducing
non-fossil energy, in the medium and long term.
• Examine the impact on the Group using various
scenarios, including the 1.5°C, which assumes theincrease in average global temperatures since theindustrial revolution is limited to less than 2°C, and the
4°C scenario, which assumes average global
temperature rise as GHG emissions continue to increase
because government policies and regulations basicallyremain unchanged from the current ones.

Air-conditioning equipment for which operating time was
successfully reduced by revising how it is used

Environment data (Japan)
CO2 emissions (kt- CO )CO2 emissions (scope 1)CO2 emissions (scope 2)3

CO2 emissions
intensity(1.0 billion tablets)

60

4.0

Water usage (clean water, industrial water,and desalinated water)
Water-use intensity (100 million tablets)
400

46.5
38.1

35.6

15

2.0

14.8

15.2

2020

2021

300

2.0

200

2.4

30
2.1

3.0

Volume of waste and othermaterials generated
Recycled volume
2.0

367
45

Volume of waste and othermaterials generated (tons)

Water usage (thousand m )

2

1.6

360

4,000

357

10.0
8.4

1.4

1.2

1.5

3,000

1.0

2,000

1,981

22.7
100

0

0

0

2022

7.9

2,094
1,363

1.0

(FY)

0.5

0

2020

2021

2022

(FY)

Waste intensity(100 million tablets)

1,000

7.9

8.0

2,285

6.0

1,508

946

4.0
2.0

0

0

2020

2021

2022

(FY)

Sawai Group Holdings Integrated Report 2023

34

Value creation strategy | Environment

Management message

Our value creation story

Value creation strategy

Governance

Financial section

ESG Data: https://global.sawaigroup.holdings/sustainability/esg/
Disclosure Based on TCFD Recommendations (details):
https://global.sawaigroup.holdings/sustainability/tcfd/

Environment

Strategy

Review of environmental targets in
Medium-Term Business Plan

Disclosure based on TCFD
recommendations (summary)Raised CO2 emission reduction targets

GovernanceOf the various environmental targets in the Medium-TermBusiness Plan START 2024 (April 2021–March 2024), we
partially revised our targets related to CO2 emissions. The
goal of these revisions was to align the target level withthe government’s goal of Carbon Neutrality by 2050 andreinforce initiatives to cut CO2 emissions to achieve thetarget of “cutting CO2 emissions 46% compared to FY2013
by FY2030.”
The revisions were approved after deliberations by
Sawai Pharmaceutical’s Sustainability Committee, theGroup Sustainability Committee, Group Strategy Council,
and Board of Directors. The main revisions are given in thefollowing table.

• The Group COO was assigned responsibility to address
climate change issues and the Board of Directors
oversees the performance of those duties.
• The Group Sustainability Committee (chaired by GroupCOO), which is composed of representatives from eachGroup company, meets four times a year to discuss andexamine sustainability-related matters, including climatechange issues. Regular reports are made to the Board of
Directors, and decisions are made under the direction andoversight of the Board of Directors.
• Global Environment Team, a subordinate body of theCommittee composed of members from each Group
company, was established, and reports to theCommittee quarterly.
• The envisioned risks and opportunities are as in thefollowing table.
• A Sustainability Committee, chaired by the President
and Representative Director, was also established at Sawai
Pharmaceutical, the Group’s core company, and meetsfour times a year.

Main revisions
Previous

Revised• Reduce emissions 25% on an
intensity-per-unit-of-production
basis by FY2030• Reduce total emissions volume
46% compared to 2013+α level
by FY2030• Net zero (2050)

Risks

Transition risks

Policy andlegal risks

Population,
economic,
andgeopoliticalrisks

Physical risks

Flood risks(acute risks)

Opportunities

Risk overview

Impacts on the Group’s businesses,
strategy, and financial planning

Introduction ofcarbon pricing (acarbon tax and anemissions trading
scheme) and theresulting increased
burdens• Burden on the Group created by carbon pricing• Need to pass on the carbon-pricing-createdfinancial burdens of suppliers with high GHG
emissions to the Group’s purchase prices ofraw materials• Burden on the Group of capital investment in energy
saving necessary to reduce its GHG emissions

Price hike forbio-derived raw
materials due topopulation growth
and temperature
increases• Population growth especially in emerging
economies will cause an increase in the prices ofgrain and grain-based products (starch, sucrose,corn, etc.) for food, feed, and other uses andconsequently in the prices of raw materials ofadditives for pharmaceutical products

Increased frequencyof typhoons,
torrential rains,
floods, etc.

• Increased risk of damage to the Group'sbusiness sites• Increased risk of damage to the business sites of theGroup’s suppliers

Magnitude of
impacts
1.5°C
4.0°C
scenario scenario

Moderate

Minor

Minor

Minor

Moderate• Diversifying suppliers• Studying alternative technologies

Major• Sandbagging the areas where
product inventories are stored• Obtaining damage insurance
coverage• Formulating BCPs for the Groupand its supply chain

As a result of our analysis and evaluation of climate-related opportunities that can have impacts on the Group’s operations, we have so far
not identified any opportunities that can have significant impacts on the Group's businesses, strategy, and financial planning.

Scope of coverage Sawai Group excluding Trust Pharmatech and Upsher-Smith
Impact classification Major: Major impacts on the Group’s businesses, strategy, and financial planning that the Group estimates to be worth approximately ¥6.0 billion
or more; Moderate: Moderate impacts on the Group’s businesses, strategy, and financial planning that the Group estimates to be worth approximately ¥3.0 billion or more
Minor: Minor impacts on the Group’s businesses, strategy, and financial planning that the Group estimates to be worth approximately less than ¥3.0 billion

33

Sawai Group Holdings Integrated Report 2023

• The following metrics and targets have been set, andprogress in achieving them is managed.
MetricTarget(Single fiscal year)
Reduce scope 1 and scope 2 emissions atleast 1% compared to the previous year
(Medium-term)
Reduce total CO2 emissions (scope 1 and 2)
46% compared to FY2013+α level by FY2030(1)
GHG emissions,
including CO2• Screen, evaluate, and identify risks with the participationand collaboration of in-house divisions and affiliatedcompanies strongly connected to each stage of the
supply chain, with the Global Environment Team playing
a core role.
• Have Group Sustainability Committee and Board of
Directors examine and deliberate on risks and thenmake related decisions based on the evaluation results.

(scope 1 and 2)(Long-term)
Achieve net zero by 2050
* Disclose annual reductions for each scopeon the corporate website.

(2)State of planned
introduction of
non-fossil energy

Introduce non-fossil energy equivalent to acertain reduction in CO2 emissions each year
proportional to actual emissions in order toachieve fiscal 2030 target

Achieving energy-efficient operations
by controlling air pressure differential between rooms

TopicsAt pharmaceutical factories, appropriately setting the air pressure
differential between rooms traps airborne granular material in
the room and prevents cross contamination (mixing of different
items). Because it is difficult to appropriately control the airpressure differential between rooms, ventilation equipment has
traditionally been operated even on days factories are closed, but
by properly adjusting such equipment as ventilation ducts andinverters for each room, it is possible to operate in an energy
efficient mode.

The Group’s methods
for addressing
climate-related risks• Considering the introduction ofrenewable energy• Devising and implementing
measures to enhance production
efficiency, including reducing
waste products

Metrics and targets

Risk management

Risks and opportunities related to climate change (period: fiscal 2021–fiscal 2030)
Type• Have the Board of Directors appropriately include this in
the annual business plan in the short term and Mediumterm Business Plan in the medium and long term.

• Work to reduce emissions intensity in the short term.
• Work to reduce emissions, including examining introducing
non-fossil energy, in the medium and long term.
• Examine the impact on the Group using various
scenarios, including the 1.5°C, which assumes theincrease in average global temperatures since theindustrial revolution is limited to less than 2°C, and the
4°C scenario, which assumes average global
temperature rise as GHG emissions continue to increase
because government policies and regulations basicallyremain unchanged from the current ones.

Air-conditioning equipment for which operating time was
successfully reduced by revising how it is used

Environment data (Japan)
CO2 emissions (kt- CO )CO2 emissions (scope 1)CO2 emissions (scope 2)3

CO2 emissions
intensity(1.0 billion tablets)

60

4.0

Water usage (clean water, industrial water,and desalinated water)
Water-use intensity (100 million tablets)
400

46.5
38.1

35.6

15

2.0

14.8

15.2

2020

2021

300

2.0

200

2.4

30
2.1

3.0

Volume of waste and othermaterials generated
Recycled volume
2.0

367
45

Volume of waste and othermaterials generated (tons)

Water usage (thousand m )

2

1.6

360

4,000

357

10.0
8.4

1.4

1.2

1.5

3,000

1.0

2,000

1,981

22.7
100

0

0

0

2022

7.9

2,094
1,363

1.0

(FY)

0.5

0

2020

2021

2022

(FY)

Waste intensity(100 million tablets)

1,000

7.9

8.0

2,285

6.0

1,508

946

4.0
2.0

0

0

2020

2021

2022

(FY)

Sawai Group Holdings Integrated Report 2023

34

Value creation strategy | Japan business

Management message

Japanbusiness

On assuming the position of Sawai Pharmaceutical
President—responding to change by melding
the strengths of each in-house divisions(SawaiPharmaceutical)

Navigating a turning pointin the generic drug industry
and providing a stable supplyof high quality drugs
Motohiko Kimura
Senior Managing Executive Officer
Representative Director and President of
Sawai Pharmaceutical Co., Ltd.

SWOT analysis

Revenue / Core operating profit

Strengths

Weaknesses(Millions of yen)

• One of the top supply capabilities in Japan• Proprietary product development
capabilities• Brand strength as top manufacturer• Stable financial base
• Integrity of employees based on
corporate philosophy• Takes time to train and secure
employees as demand grows• Difficult for management to decide tosuspend sales as many unprofitableproducts have top shares

200,000

Opportunities

Threats• Chance to restructure the generic drug
industry• Growing demand because of aging
society• Diversification and growing
sophistication of healthcare andmedicine needs• Decline in drug prices for various reasons
including annual drug price revisions• Decline in trust in generic drugs• Increase in launch of AGs• Weak growth in advanced countries• Increase in raw material costs

RevenueCore operating profit
40,000150,000 153,584

163,841 163,702

180,500
30,00030,25827,01621,425100,000

20,00016,30050,00010,000

0

2020

2021

2022

2023

(Forecast)(FY)

Our Future production capacity tostrengthen stable supply capabilities*1

FY2022 (actual)

FY2030 (target)¥153.6 billion¥163.7 billion¥260.0 billion

Sales volume

13.3 billion tablets

15.0 billion tablets

20.0 billion tablets

Share of sales

15.7%

16.0%

20.0% or more

15.5 billion tablets

18.5 billion tablets

23.0 billion tablets or morebillion tablets

185
155

155

2021

2022

Value creation strategy

Governance

Financial section

division to collaborate even closer with each other and for
us to rebuild our system so that we can quickly respondto change.
Because we produce an extremely large number ofgeneric drugs, we face different production difficulties thanthose of drug manufacturers that produce a small numberof new drugs, and these difficulties include having toroutinely change production equipment.
One of my responsibilities is to link not only research to
production but also marketing to production by formulatinga strategy and leading them like an orchestra conductor.
This makes it possible for work to progress smoothly both
inside and outside the Company. I would like to leverage
my skillful footwork, one of my strengths, for that.

Taking on the challenge of implementing various
measures to transform difficulties into opportunities
In fiscal 2022, we recorded revenue of ¥163,702 million
from the Japan generic drug business because despite theimpact of drug price revisions, sales of new products grew,
and we lifted limits on shipments. On the other hand, core
operating profit fell year on year to ¥21,425 million becauseof upfront investments and higher costs.
Furthermore, we project a decline in profit for fiscal
2023. The main reason for this decline is higher costs.
Although we have lowered production costs each year after
I became the Senior Vice President of the Manufacturing
Division, fiscal 2022 was the first year that it was notpossible to cover drug price revisions with lower production
costs. This was because of the impact of the war in Ukraine,and higher labor and heating and lighting costs. For
example, products that cost ¥100 in the previous year cost¥105 this year, an overall 5% increase in costs.
In response to this increase in costs, we worked tofurther raise productivity and reflect the impact of thosehigher costs in prices. We have requested the understanding

Shipping commencement
by Trust Pharmatech(in April 2023)

+3.0

300

200

FY2020 (actual)

Production capacity

My name is Motohiko Kimura and I am the new
Representative Director and President of Sawai
Pharmaceutical. Before entering the Company in 2016, I
worked in the department responsible for coordinatingproduction at Sumitomo Pharmaceuticals (currently
Sumitomo Pharma). Before that, I worked on
biopharmaceutical research and gained experience invarious divisions, including ones involved in the launch of
a commercial cell cultivation plant, sales and purchase of
intellectual property, business development, and purchasing.
When I was stationed in Europe, I also helped launch an
English corporation. At Sawai Pharmaceutical, as the SeniorVice President of the Manufacturing Division since 2017,
I pushed forward efforts related to restructuring andstrengthening the production system at each factory andincreasing their production capacity. I was appointed president
in order to leverage these experiences and contribute toquick solutions to problems related to quality and stablesupply, which are demanded of the generic drug industry.
The Company is now approaching a turning point.
In addition to annual drug price revisions, increases in raw
material costs, and a duty to provide a stable supply of
our GE new products, development is growing moredifficult due to the growing complexity of formulation.
Despite releasing new products, we have been unable tohalt the increase in the number of unprofitable products.
AGs are also growing in number, making it an extremely
difficult time. Furthermore, this is a period of numerous
expected changes, including the Ministry of Health, Labourand Welfare launching a working group on system reforms,
and we must properly respond to these changes.
Under these conditions, the management andmarketing strategies are important, and it is time for each(Billions of tablets)

0

Sawai Group Vision 2030 quantitative targets

Revenue

Our value creation story

New solid dosage form
facility at Daini Kyushu
Factory (Step1)(in April 2024)+2.0

billion tablets

205

Step 2*2+1.0billion tablets

215

100

0

2023

2024

(FY)

*1 Production capacity assumptions: Assumes continued operation of machinery using two shifts on weekdays for current number of products.
Does not include outsourcing.
*2 Step 2: Timing undecided.

35

Sawai Group Holdings Integrated Report 2023

Sawai Group Holdings Integrated Report 2023

36

Value creation strategy | Japan business

Management message

Japanbusiness

On assuming the position of Sawai Pharmaceutical
President—responding to change by melding
the strengths of each in-house divisions(SawaiPharmaceutical)

Navigating a turning pointin the generic drug industry
and providing a stable supplyof high quality drugs
Motohiko Kimura
Senior Managing Executive Officer
Representative Director and President of
Sawai Pharmaceutical Co., Ltd.

SWOT analysis

Revenue / Core operating profit

Strengths

Weaknesses(Millions of yen)

• One of the top supply capabilities in Japan• Proprietary product development
capabilities• Brand strength as top manufacturer• Stable financial base
• Integrity of employees based on
corporate philosophy• Takes time to train and secure
employees as demand grows• Difficult for management to decide tosuspend sales as many unprofitableproducts have top shares

200,000

Opportunities

Threats• Chance to restructure the generic drug
industry• Growing demand because of aging
society• Diversification and growing
sophistication of healthcare andmedicine needs• Decline in drug prices for various reasons
including annual drug price revisions• Decline in trust in generic drugs• Increase in launch of AGs• Weak growth in advanced countries• Increase in raw material costs

RevenueCore operating profit
40,000150,000 153,584

163,841 163,702

180,500
30,00030,25827,01621,425100,000

20,00016,30050,00010,000

0

2020

2021

2022

2023

(Forecast)(FY)

Our Future production capacity tostrengthen stable supply capabilities*1

FY2022 (actual)

FY2030 (target)¥153.6 billion¥163.7 billion¥260.0 billion

Sales volume

13.3 billion tablets

15.0 billion tablets

20.0 billion tablets

Share of sales

15.7%

16.0%

20.0% or more

15.5 billion tablets

18.5 billion tablets

23.0 billion tablets or morebillion tablets

185
155

155

2021

2022

Value creation strategy

Governance

Financial section

division to collaborate even closer with each other and for
us to rebuild our system so that we can quickly respondto change.
Because we produce an extremely large number ofgeneric drugs, we face different production difficulties thanthose of drug manufacturers that produce a small numberof new drugs, and these difficulties include having toroutinely change production equipment.
One of my responsibilities is to link not only research to
production but also marketing to production by formulatinga strategy and leading them like an orchestra conductor.
This makes it possible for work to progress smoothly both
inside and outside the Company. I would like to leverage
my skillful footwork, one of my strengths, for that.

Taking on the challenge of implementing various
measures to transform difficulties into opportunities
In fiscal 2022, we recorded revenue of ¥163,702 million
from the Japan generic drug business because despite theimpact of drug price revisions, sales of new products grew,
and we lifted limits on shipments. On the other hand, core
operating profit fell year on year to ¥21,425 million becauseof upfront investments and higher costs.
Furthermore, we project a decline in profit for fiscal
2023. The main reason for this decline is higher costs.
Although we have lowered production costs each year after
I became the Senior Vice President of the Manufacturing
Division, fiscal 2022 was the first year that it was notpossible to cover drug price revisions with lower production
costs. This was because of the impact of the war in Ukraine,and higher labor and heating and lighting costs. For
example, products that cost ¥100 in the previous year cost¥105 this year, an overall 5% increase in costs.
In response to this increase in costs, we worked tofurther raise productivity and reflect the impact of thosehigher costs in prices. We have requested the understanding

Shipping commencement
by Trust Pharmatech(in April 2023)

+3.0

300

200

FY2020 (actual)

Production capacity

My name is Motohiko Kimura and I am the new
Representative Director and President of Sawai
Pharmaceutical. Before entering the Company in 2016, I
worked in the department responsible for coordinatingproduction at Sumitomo Pharmaceuticals (currently
Sumitomo Pharma). Before that, I worked on
biopharmaceutical research and gained experience invarious divisions, including ones involved in the launch of
a commercial cell cultivation plant, sales and purchase of
intellectual property, business development, and purchasing.
When I was stationed in Europe, I also helped launch an
English corporation. At Sawai Pharmaceutical, as the SeniorVice President of the Manufacturing Division since 2017,
I pushed forward efforts related to restructuring andstrengthening the production system at each factory andincreasing their production capacity. I was appointed president
in order to leverage these experiences and contribute toquick solutions to problems related to quality and stablesupply, which are demanded of the generic drug industry.
The Company is now approaching a turning point.
In addition to annual drug price revisions, increases in raw
material costs, and a duty to provide a stable supply of
our GE new products, development is growing moredifficult due to the growing complexity of formulation.
Despite releasing new products, we have been unable tohalt the increase in the number of unprofitable products.
AGs are also growing in number, making it an extremely
difficult time. Furthermore, this is a period of numerous
expected changes, including the Ministry of Health, Labourand Welfare launching a working group on system reforms,
and we must properly respond to these changes.
Under these conditions, the management andmarketing strategies are important, and it is time for each(Billions of tablets)

0

Sawai Group Vision 2030 quantitative targets

Revenue

Our value creation story

New solid dosage form
facility at Daini Kyushu
Factory (Step1)(in April 2024)+2.0

billion tablets

205

Step 2*2+1.0billion tablets

215

100

0

2023

2024

(FY)

*1 Production capacity assumptions: Assumes continued operation of machinery using two shifts on weekdays for current number of products.
Does not include outsourcing.
*2 Step 2: Timing undecided.

35

Sawai Group Holdings Integrated Report 2023

Sawai Group Holdings Integrated Report 2023

36

Value creation strategy | Japan business / U.S. businessof wholesalers and retailers in fiscal 2023, too.
Under these conditions, we must take these kinds ofsteps so that we can fulfill our responsibility to continue todeliver required drugs, even unprofitable ones, to patients.
In this type of situation, what is important is properly
fulfilling our responsibility to be accountable to business
partners. In my previous position as Manager of thePurchasing Department, the most important thing was tofully explain the Company’s current situation before
requesting cooperation. Greater understanding not only
raises the level of cooperation but also leads to trust. I
consider it my role as head of the Company to continue
this type of dialogue.
Furthermore, there previously were few exchanges
among companies in the generic drug industry. I think that
we can build a relationship of mutual prosperity beneficial
to all through even deeper collaboration with stakeholders,
including business partners and suppliers. Fortunately,
there are extremely high expectations for the Company,
which boasts the largest market share in the industry, andI want to examine what type of collaboration is possible
through consultations with the Chairman of the Board
and Vice Chairman.

Moving forward with both increasing production
capacity and securing and training people in orderto further increase our share
Following an almost yearlong preparatory period, Trust
Pharmatech started to ship products fully produced in-housein June 2023 as scheduled in order to eliminate supply
shortages and increase production capacity. Furthermore,at the Daini Kyushu Factory, construction of a new solid
dosage form facility is moving with the goal of launchingproduction activities in April 2024. This will make it possible
to increase our production capacity to more than 20.0
billion tablets in fiscal 2024.
There is a need to improve the capabilities of
production facilities, which would also resolve the issue ofit being more difficult to commercialize new products.
This is because it is necessary to possess spare production
capacity and launch commercial production–scale tests at

Management message

the factory as quickly as possible so that we can swiftlytransition to stable production. First of all, we will focus
on launching full production at Trust Pharmatech andcompleting the new facility at the Daini Kyushu factory.
While our current share of the Japanese generic drug
market is about 16% on a volume basis, the long-term
vision for 2030 includes a target market share of 20% ormore. It is, however, my opinion that the mission of theCompany is to increase our market share beyond that.
To do that, it is important to recruit and train people.
We not only stress the turnover rate as a KPI, but havealso introduced a system in which more senior employees
close to the age of new recruits are assigned as mentors,
who serve as advisors and pass on their experience alongwith work guidance. Through these efforts, we lowered
the employee turnover rate to 3.1% in fiscal 2022 from
4.8% in fiscal 2017. Having employees remain at theCompany will also increase the capabilities of each andevery employee. In addition to a system in which a single
employee handles multiple operations, we are introducing
KPI and a numerical scale for work skill ranks.
Because of these efforts, since 2017, the year I
became the Senior Vice President of the Manufacturing
Division, our production volume has increased 1.6-foldwithout substantially increasing the number of employees.

Creating a “company that continues to contribute tosociety far into the future” by leveraging our strengths
One of Sawai Pharmaceutical’s strengths is its corporate
philosophy of “always putting patients first.” We are proudof the fact that we are all moving in the same direction under
this philosophy and are unsurpassed in the speed of our
response. My goal is to transform the Company into a“company that continues to contribute to society far into
the future.” While consulting with everyone regarding whatshould be done to achieve that and deliberating withstakeholders both in and outside the Company, we will move
forward with management so that we can win people’s trust.
Senior Managing Executive Officer
Representative Director and President of
Sawai Pharmaceutical Co., Ltd.

R&D expenses

Capital expenditures

More than ¥10.0 billion annually in R&D expenses todevelop high-value added products¥60.0 billion in capital expenditures over three years fromfiscal 2021 to increase production capacity(Millions of yen)

(Millions of yen)

12,53912,511

12,70037

Sawai Group Holdings Integrated Report 2023

2023

(projection)

(FY)

2021

2022

(Upsher-Smith)Financial section

Rich Fisher
President & COO, Upsher-Smith Laboratories

SWOT analysis

Revenue / Core operating profit(Millions of yen)

Strengths

Weaknesses• Consistent high quality supply frommanufacturing facilities located in the U.S.
• Strong relationships with major
wholesalers• High level of employee engagement• Strong development partnerships withoutside partners• Lower relative pricecompetitiveness compared to
Indian companies

Opportunities

Threats• High population growth rate for anadvanced country• Size of the market, which accounts
for about 40% of the global market• Supply disruptions of competitors thatstruggle to comply with regulations
and raise funds• Excessive decline in selling pricedue to competition with newentrants• Continuing pricing pressures driven
by consolidation into three majorpurchasing groups

30,00033,635

FY2022 performanceCore operating profit

36,642 36,700
29,975

8,000
6,000

3,765

10,000My name is Rich Fisher and I assumed the role of President
and COO of Upsher-Smith Laboratories (USL) approximately
one year ago. Despite the continuation of challenging
conditions in the U.S. generic market, USL had an
outstanding year. FY2022 marked USL’s first year-over-year
revenue increase in nearly a decade and USL also achieved
substantive improvements in profitability. We expect
additional revenue and profitability growth in FY2023.
Growth in FY2023 will be driven primarily by a significant
number of new product launches, which will more thanoffset expected revenue declines for mature products. USL’s
external R&D model, which was implemented over a year
ago, has been a spectacular success, leading to a dramatic
decrease in expense and an increase in pipeline products,
submissions to FDA, and new product launches.

Revenue

40,00020,0002023(FY)

Governance-looking to build on momentum from strong
FY2022 performance-

Investing in human resources for future growth(projection)

Value creation strategy

FY2022 Marks a turning point forUpsher-Smith

Shortages of workers in production areas continue to be achallenge, with unemployment in MN remaining at historiclows of approximately 3%. USL continues to aggressively
recruit and work on initiatives important to employees suchas Diversity, Equity and Inclusion. In FY2022, USL increased
the diversity pool of candidates for new jobs, implemented

11,9232022

U.S.
business

27,80021,1002021

Our value creation story

3,600

4,000
2,000

1,640

0

0
-10,000-2,000

(708)

2020

2021

2022

2023

(FY)

(Forecast)

new training tools, and expanded activities associated with
Employee Resource Groups. Despite worker shortages,
significant milestones were achieved in FY2022.

Outlook for FY2023
USL’s new 25,000 square meter manufacturing facility wasapproved by the FDA late in 2022 and began commercial
manufacturing in February of 2023. The outlook for FY2023
and beyond looks promising. USL has a strong reputationin the U.S. for consistently delivering quality products.
Some of USL’s competitors have stumbled due to 1) lackof regulatory compliance, leading to importation bansinto the U.S. 2) Financial difficulties, leading to bankruptcy
filings and inability to continue to market their products 3)
Insufficient investments in operations, leading to potential
non-compliance with pending serialization and aggregation
requirements. It is possible that these developments marka turning point in the U.S. generic industry, and USL is very
well-positioned to capitalize on competitor’s failures.

Sawai Group Holdings Integrated Report 2023

38

Value creation strategy | Japan business / U.S. businessof wholesalers and retailers in fiscal 2023, too.
Under these conditions, we must take these kinds ofsteps so that we can fulfill our responsibility to continue todeliver required drugs, even unprofitable ones, to patients.
In this type of situation, what is important is properly
fulfilling our responsibility to be accountable to business
partners. In my previous position as Manager of thePurchasing Department, the most important thing was tofully explain the Company’s current situation before
requesting cooperation. Greater understanding not only
raises the level of cooperation but also leads to trust. I
consider it my role as head of the Company to continue
this type of dialogue.
Furthermore, there previously were few exchanges
among companies in the generic drug industry. I think that
we can build a relationship of mutual prosperity beneficial
to all through even deeper collaboration with stakeholders,
including business partners and suppliers. Fortunately,
there are extremely high expectations for the Company,
which boasts the largest market share in the industry, andI want to examine what type of collaboration is possible
through consultations with the Chairman of the Board
and Vice Chairman.

Moving forward with both increasing production
capacity and securing and training people in orderto further increase our share
Following an almost yearlong preparatory period, Trust
Pharmatech started to ship products fully produced in-housein June 2023 as scheduled in order to eliminate supply
shortages and increase production capacity. Furthermore,at the Daini Kyushu Factory, construction of a new solid
dosage form facility is moving with the goal of launchingproduction activities in April 2024. This will make it possible
to increase our production capacity to more than 20.0
billion tablets in fiscal 2024.
There is a need to improve the capabilities of
production facilities, which would also resolve the issue ofit being more difficult to commercialize new products.
This is because it is necessary to possess spare production
capacity and launch commercial production–scale tests at

Management message

the factory as quickly as possible so that we can swiftlytransition to stable production. First of all, we will focus
on launching full production at Trust Pharmatech andcompleting the new facility at the Daini Kyushu factory.
While our current share of the Japanese generic drug
market is about 16% on a volume basis, the long-term
vision for 2030 includes a target market share of 20% ormore. It is, however, my opinion that the mission of theCompany is to increase our market share beyond that.
To do that, it is important to recruit and train people.
We not only stress the turnover rate as a KPI, but havealso introduced a system in which more senior employees
close to the age of new recruits are assigned as mentors,
who serve as advisors and pass on their experience alongwith work guidance. Through these efforts, we lowered
the employee turnover rate to 3.1% in fiscal 2022 from
4.8% in fiscal 2017. Having employees remain at theCompany will also increase the capabilities of each andevery employee. In addition to a system in which a single
employee handles multiple operations, we are introducing
KPI and a numerical scale for work skill ranks.
Because of these efforts, since 2017, the year I
became the Senior Vice President of the Manufacturing
Division, our production volume has increased 1.6-foldwithout substantially increasing the number of employees.

Creating a “company that continues to contribute tosociety far into the future” by leveraging our strengths
One of Sawai Pharmaceutical’s strengths is its corporate
philosophy of “always putting patients first.” We are proudof the fact that we are all moving in the same direction under
this philosophy and are unsurpassed in the speed of our
response. My goal is to transform the Company into a“company that continues to contribute to society far into
the future.” While consulting with everyone regarding whatshould be done to achieve that and deliberating withstakeholders both in and outside the Company, we will move
forward with management so that we can win people’s trust.
Senior Managing Executive Officer
Representative Director and President of
Sawai Pharmaceutical Co., Ltd.

R&D expenses

Capital expenditures

More than ¥10.0 billion annually in R&D expenses todevelop high-value added products¥60.0 billion in capital expenditures over three years fromfiscal 2021 to increase production capacity(Millions of yen)

(Millions of yen)

12,53912,511

12,70037

Sawai Group Holdings Integrated Report 2023

2023

(projection)

(FY)

2021

2022

(Upsher-Smith)Financial section

Rich Fisher
President & COO, Upsher-Smith Laboratories

SWOT analysis

Revenue / Core operating profit(Millions of yen)

Strengths

Weaknesses• Consistent high quality supply frommanufacturing facilities located in the U.S.
• Strong relationships with major
wholesalers• High level of employee engagement• Strong development partnerships withoutside partners• Lower relative pricecompetitiveness compared to
Indian companies

Opportunities

Threats• High population growth rate for anadvanced country• Size of the market, which accounts
for about 40% of the global market• Supply disruptions of competitors thatstruggle to comply with regulations
and raise funds• Excessive decline in selling pricedue to competition with newentrants• Continuing pricing pressures driven
by consolidation into three majorpurchasing groups

30,00033,635

FY2022 performanceCore operating profit

36,642 36,700
29,975

8,000
6,000

3,765

10,000My name is Rich Fisher and I assumed the role of President
and COO of Upsher-Smith Laboratories (USL) approximately
one year ago. Despite the continuation of challenging
conditions in the U.S. generic market, USL had an
outstanding year. FY2022 marked USL’s first year-over-year
revenue increase in nearly a decade and USL also achieved
substantive improvements in profitability. We expect
additional revenue and profitability growth in FY2023.
Growth in FY2023 will be driven primarily by a significant
number of new product launches, which will more thanoffset expected revenue declines for mature products. USL’s
external R&D model, which was implemented over a year
ago, has been a spectacular success, leading to a dramatic
decrease in expense and an increase in pipeline products,
submissions to FDA, and new product launches.

Revenue

40,00020,0002023(FY)

Governance-looking to build on momentum from strong
FY2022 performance-

Investing in human resources for future growth(projection)

Value creation strategy

FY2022 Marks a turning point forUpsher-Smith

Shortages of workers in production areas continue to be achallenge, with unemployment in MN remaining at historiclows of approximately 3%. USL continues to aggressively
recruit and work on initiatives important to employees suchas Diversity, Equity and Inclusion. In FY2022, USL increased
the diversity pool of candidates for new jobs, implemented

11,9232022

U.S.
business

27,80021,1002021

Our value creation story

3,600

4,000
2,000

1,640

0

0
-10,000-2,000

(708)

2020

2021

2022

2023

(FY)

(Forecast)

new training tools, and expanded activities associated with
Employee Resource Groups. Despite worker shortages,
significant milestones were achieved in FY2022.

Outlook for FY2023
USL’s new 25,000 square meter manufacturing facility wasapproved by the FDA late in 2022 and began commercial
manufacturing in February of 2023. The outlook for FY2023
and beyond looks promising. USL has a strong reputationin the U.S. for consistently delivering quality products.
Some of USL’s competitors have stumbled due to 1) lackof regulatory compliance, leading to importation bansinto the U.S. 2) Financial difficulties, leading to bankruptcy
filings and inability to continue to market their products 3)
Insufficient investments in operations, leading to potential
non-compliance with pending serialization and aggregation
requirements. It is possible that these developments marka turning point in the U.S. generic industry, and USL is very
well-positioned to capitalize on competitor’s failures.

Sawai Group Holdings Integrated Report 2023

38

Value creation strategy | Feature-Progress in fostering new businesses

Management message

Our value creation story

Value creation strategy

Governance

Financial section

1 Non-invasive neuromodulation device SWD001

Offering a new option
for patients who sufferfrom migraines

FeatureIn December 2022, Sawai Pharmaceutical applied for approval to
manufacture and market SWD001, a medical device used to treat
migraines during the acute phase, in Japan. This is a non-invasive
neuromodulation device that controls pain by simultaneously
stimulating the occipital nerve and trigeminal nerve.
Many Japanese suffer from migraines, and it is expectedthat the release of this device will increase the number of newtreatment options for patients.

Progress in fostering new businesses

Developing new businessfields to evolve into a general
healthcare company

Future schedule
December 2022
Applied for PMDA approval

2024
Release (target)

Provisionof health-related
information

Diagnosis(see following page), we are undertaking joint development andhave concluded a marketing license agreement with CureApp Inc.
related to a non-alcoholic steatohepatitis (NASH) treatment app
and are preparing clinical trials (phase 3).
Through the health food business, we will provide “foods
with functional claims” that support the extension of healthy life
expectancy in the life-style disease field, which the Group isparticularly strong in. As for the orphan drug business, we arereinforcing our in-house evaluation system and examining thecontinuous expansion of our pipeline in order to offer new
treatment opportunities for diseases lacking effective treatments.

Treatment
Generic drug businessPrimary
care fieldNewbusinesses

39

Health food business

Sawai Group Holdings Integrated Report 2023

Digital medical devices business

Orphan drug business

The neuromodulation device is expected tobroaden acute-phase migraine treatment.

Making health management
more convenient and intelligent

Target business fields

Disease prevention

8.4%

2 PHR management application SaluDi

To achieve sustainable growth for the Group, we will work to not only strengthen our existing generic drug
business but also foster new businesses. Our goal is to possess a strong presence and continue to contributeto people’s health by creating a world where more people can receive healthcare services and live a full life
with peace of mind among society, and providing a multifaceted mix of products and services based on
scientific evidence that meet individual needs.

Taking into consideration the ideas of contributing as a general
healthcare group that provides healthy lives to the creation of asociety with health longevity through pre-symptomatic approaches,
preventive measures, and data health reforms, which thegovernment is aiming for, and leveraging the knowledge andknow-how we have acquired through our generic drug businessover many years, we are targeting new businesses in the threefields of digital medical devices business, health food business,and orphan drug business.
In the digital medical devices business, in addition to a
non-invasive neuromodulation device to indicate migraines anddepression and personal health record (PHR) management app

Percentage ofJapanese
who suffer from
migraines each year

Specialty field

Visualizationof PHR

Main
functions

Communication
features
Linkage withtelemedicine

Released by Sawai Pharmaceutical in October 2021, SaluDi is apersonal health record (PHR) management app that makes it
possible for people themselves to record and manage their dailystate of health. In addition to offering integrated management
by recording not only daily health data, such as blood pressure,weight, and body temperature, but also information on foodeaten and medicines taken, the app makes it possible to provide
telemedicine services and for users to receive dietary instructions
by linking to medical facility systems. We will promote its use
by local governments, companies, and regional healthinformation networks.
Leveraging SaluDi to create a society with health longevity
As Japan’s declining population weakens the foundation ofmutual support in local communities, we hope that SaluDi canbe used to revitalize these communities, such as strengthening
bonds between residents and society. We also want to raise
health awareness among individual
residents and tie that to therealization of a society with healthlongevity and healthy aging.
Hiromichi Adachi
Digital First Section Manager
Planning Department, Yabu City

Sawai Group Holdings Integrated Report 2023

40

Value creation strategy | Feature-Progress in fostering new businesses

Management message

Our value creation story

Value creation strategy

Governance

Financial section

1 Non-invasive neuromodulation device SWD001

Offering a new option
for patients who sufferfrom migraines

FeatureIn December 2022, Sawai Pharmaceutical applied for approval to
manufacture and market SWD001, a medical device used to treat
migraines during the acute phase, in Japan. This is a non-invasive
neuromodulation device that controls pain by simultaneously
stimulating the occipital nerve and trigeminal nerve.
Many Japanese suffer from migraines, and it is expectedthat the release of this device will increase the number of newtreatment options for patients.

Progress in fostering new businesses

Developing new businessfields to evolve into a general
healthcare company

Future schedule
December 2022
Applied for PMDA approval

2024
Release (target)

Provisionof health-related
information

Diagnosis(see following page), we are undertaking joint development andhave concluded a marketing license agreement with CureApp Inc.
related to a non-alcoholic steatohepatitis (NASH) treatment app
and are preparing clinical trials (phase 3).
Through the health food business, we will provide “foods
with functional claims” that support the extension of healthy life
expectancy in the life-style disease field, which the Group isparticularly strong in. As for the orphan drug business, we arereinforcing our in-house evaluation system and examining thecontinuous expansion of our pipeline in order to offer new
treatment opportunities for diseases lacking effective treatments.

Treatment
Generic drug businessPrimary
care fieldNewbusinesses

39

Health food business

Sawai Group Holdings Integrated Report 2023

Digital medical devices business

Orphan drug business

The neuromodulation device is expected tobroaden acute-phase migraine treatment.

Making health management
more convenient and intelligent

Target business fields

Disease prevention

8.4%

2 PHR management application SaluDi

To achieve sustainable growth for the Group, we will work to not only strengthen our existing generic drug
business but also foster new businesses. Our goal is to possess a strong presence and continue to contributeto people’s health by creating a world where more people can receive healthcare services and live a full life
with peace of mind among society, and providing a multifaceted mix of products and services based on
scientific evidence that meet individual needs.

Taking into consideration the ideas of contributing as a general
healthcare group that provides healthy lives to the creation of asociety with health longevity through pre-symptomatic approaches,
preventive measures, and data health reforms, which thegovernment is aiming for, and leveraging the knowledge andknow-how we have acquired through our generic drug businessover many years, we are targeting new businesses in the threefields of digital medical devices business, health food business,and orphan drug business.
In the digital medical devices business, in addition to a
non-invasive neuromodulation device to indicate migraines anddepression and personal health record (PHR) management app

Percentage ofJapanese
who suffer from
migraines each year

Specialty field

Visualizationof PHR

Main
functions

Communication
features
Linkage withtelemedicine

Released by Sawai Pharmaceutical in October 2021, SaluDi is apersonal health record (PHR) management app that makes it
possible for people themselves to record and manage their dailystate of health. In addition to offering integrated management
by recording not only daily health data, such as blood pressure,weight, and body temperature, but also information on foodeaten and medicines taken, the app makes it possible to provide
telemedicine services and for users to receive dietary instructions
by linking to medical facility systems. We will promote its use
by local governments, companies, and regional healthinformation networks.
Leveraging SaluDi to create a society with health longevity
As Japan’s declining population weakens the foundation ofmutual support in local communities, we hope that SaluDi canbe used to revitalize these communities, such as strengthening
bonds between residents and society. We also want to raise
health awareness among individual
residents and tie that to therealization of a society with healthlongevity and healthy aging.
Hiromichi Adachi
Digital First Section Manager
Planning Department, Yabu City

Sawai Group Holdings Integrated Report 2023

40

Governance | Board of Directors

Management message

Our value creation story

Value creation strategy

Governance

Financial section

Board of Directors
Directors

Audit & Supervisory Board Members

Name(as of June 27, 2023)

Mitsuo Sawai

Toru Terashima

Shoji Yokota Ph. D.

Masatoshi Ohara

Masayuki Mitsuka Ph. D.

Nawomi Todo

Newly elected

Position

Tadao Tsubokura

Takanobu Tomohiro

Junichi Hirano

Full-time Audit & Supervisory
Board Member

External Audit & Supervisory Board
Member (independent officer)

External Audit &Supervisory Board
Member (independent officer)

Newly elected

Representative Director, Chairman
and President (Group Chief
Executive Officer and Group Chief
Operating Officer)

Director, Senior Managing
Executive Officer, and Group Chief
Quality & Safety Officer

Director, Senior Managing
Executive Officer, and Group Chief
Research & Development Officer

External Director (Independent
Officer)

External Director (independent
officer)

External Director (independent
officer)

Born in 1956

Born in 1959

Born in 1957

Born in 1951

Born in 1959

Born in 1954

Born in 1961

Born in 1958

Born in 1955

13/13 times-/- times (elected June 2023)

13/13 times

13/13 times

13/13 times
13/13 times

Date of birth
Nomination,
Remuneration and Other
Governance Committee(Committee Chairman)

Board of Directors meeting
attendance*

13/13 times

13/13 times-/- times (elected June 2023)

13/13 times

Audit & Supervisory Board
meeting attendance*

—

—

—

—

—

—

13/13 times

13/13 times

Shares of the Company held

1,057,200 shares

1,400 shares

500 shares

800 shares

1,000 shares

0 shares

900 shares

300 shares

300 shares

Significant positions held

April 1982
Joined Kyowa Hakko Kogyo Co., Ltd.
(currently Kyowa Kirin Co., Ltd.)
January 1989
Joined Sawai PharmaceuticalCo., Ltd.
June 2000
Director and Deputy Senior Vice
President of Sales Division of
Sawai Pharmaceuticals Co., Ltd.
June 2002
Managing Director and SeniorVice President of Sales Divisionof Sawai Pharmaceuticals Co., Ltd.
June 2008
Representative Director andPresident of Sawai PharmaceuticalCo., Ltd.
June 2020
Representative Director andChairman of Sawai PharmaceuticalCo., Ltd. (incumbent)
April 2021
Representative Director andChairman and Group Chief
Executive Officer of Sawai Group
Holdings Co., Ltd.
June 2023
Representative Director,
Chairman and President,Group Chief Executive Officer
and Group Chief Operating
Officer of Sawai Group Holdings
Co., Ltd.

April 1984
Joined Sumitomo Chemical
Company, Limited
October 1984
Joined Sumitomo Pharmaceuticals
Co., Ltd.(currently Sumitomo
Pharma Co., Ltd.)
January 2016
Joined Sawai PharmaceuticalCo., Ltd.
June 2017
Director, Corporate Officer, SeniorVice President of Reliability
Assurance Division of Sawai
Pharmaceutical Co., Ltd.
April 2021
Director, Senior Executive Officer,of Sawai Group Holdings Co., Ltd.
June 2023
Director, Senior Managing
Executive Officer, Senior Vice
President of Reliability Assurance
Division of Sawai PharmaceuticalCo., Ltd. (incumbent)
June 2023
Director, Senior Managing
Executive Officer of Sawai Group
Holdings Co., Ltd. (incumbent)

April 1982
Joined Yamanouchi
Pharmaceutical Co., Ltd. (currently
Astellas Pharma Inc.)
September 2016
Joined Sawai PharmaceuticalCo., Ltd.
June 2017
Corporate Officer, and Deputy
Senior Vice President of Research& Development Division, andDirector of Analytical Chemistry
Department of Sawai
Pharmaceutical Co., Ltd.
April 2021
Senior Executive Officer of Sawai
Group Holdings Co., Ltd.
June 2023
Director, Senior Managing
Executive Officer, and SeniorVice President of Research &Development Division of Sawai
Pharmaceutical Co., Ltd.
(incumbent)
June 2023
Director, Senior Managing
Executive Officer of Sawai Group
Holdings Co., Ltd. (incumbent)

April 1979
Registered as a lawyer at Osaka
Bar Association
Joined Kikkawa Sogo Law
Offices (currently Kikkawa Law
Offices)
February 1987
Attorney registered in the State
of New York, the U.S.
January 1988
Partner of Kikkawa Law Offices(incumbent)
April 2017
The President of Osaka Bar
Association, the Vice President ofJapan Federation of Bar
Associations
June 2019
Director of Sawai PharmaceuticalCo., Ltd.
April 2021
Director of Sawai Group Holdings
Co., Ltd. (incumbent)

July 1984
Staff Doctor at Osaka University
HospitalJanuary 2002
Staff Doctor at Osaka-tetsusyou
Health Insurance Society(incumbent)
January 2007
Obtained Certified Occupational
Physician Qualification of Japan
Medical Association
June 2015
Director of Sawai PharmaceuticalCo., Ltd.
April 2021
Director of Sawai Group Holdings
Co., Ltd. (incumbent)

April 1982
Joined Mitsubishi Chemical
Industries (currently Mitsubishi
Chemical Corporation)
June 2009
Board Director, Executive Officer,
General Manager of Global
Product Strategy Department of
Mitsubishi Tanabe Pharma
Corporation
April 2012
Board Director, Managing
Executive Officer, Division
Manager of Development
Division of Mitsubishi Tanabe
Pharma Corporation
June 2014
President & Representative
Director, Chief Executive Officerof Mitsubishi Tanabe Pharma
Corporation
June 2023
Director of Sawai Group Holdings
Co., Ltd. (incumbent)

July 2008
Joined Sawai PharmaceuticalCo., Ltd.
General Manager, Controller
Department of Sawai
Pharmaceutical Co., Ltd.
April 2012
General Manager, General
Affairs Department of Sawai
Pharmaceutical Co., Ltd.
June 2018
Full-time Audit & Supervisory
Board Member of Sawai
Pharmaceutical Co., Ltd.
April 2021
Full-time Audit & Supervisory
Board Member of Sawai Group
Holdings Co., Ltd. and Auditor of
Sawai Pharmaceutical Co., Ltd.
(incumbent)

April 1991
Registered as an attorney Joined
Kogoshi Takizawa Law Office(currently, Kobe-Kaito Law Office)April 1994
Partner of Kobe-Kaito Law Office(incumbent)
June 2016
Audit & Supervisory Board
Member of Sawai
Pharmaceutical Co., Ltd.
April 2020
President, Hyogo-ken Bar
Association
April 2021
Audit & Supervisory Board
Member of Sawai Group Holdings
Co., Ltd. (incumbent)

July 2013
Director, Co-ordination Division,
Second Large Enterprise
Examination Department, Osaka
Regional Taxation Bureau
July 2014
District Director, Higashi
Yodogawa Tax Office
July 2015
District Director, Himeji Tax Office
August 2016
Established a certified tax
accountant office, which heserves as representative of(incumbent)
June 2017
Audit & Supervisory Board
Member of Sawai
Pharmaceutical Co., Ltd.
April 2021
Audit & Supervisory Board
Member of Sawai Group Holdings
Co., Ltd. (incumbent)* Period April 1, 2022–March 31, 2023

Skill matrix
Reason considered important
Corporate management
Legal affairs / risk
management
Finance, accounting,tax affairs

41

Mitsuo Sawai

Toru Terashima

Shoji Yokota

Masatoshi Ohara

Nawomi Todo

Masayuki Mitsuka Tadao Tsubokura Takanobu Tomohiro

Junichi Hirano

Experience in making decisions in line with the corporate philosophy and being responsible for business is important for the Group’s management decisions.
Balancing set rules and risk tolerance is important when attempting to maximize corporate value.
These are important for accurately ascertaining and calculating the Group’s corporate value and properly paying taxes.

Production and quality

Advanced quality and production management are important so that consumers can use the Group’s products, etc. with peace of mind.

Marketing and sales

Communicating the merits of products and services that the Group produces and provides and broadly gathering information on needs are important.

Research, development,
technologies

This is important to continue to provide high value-added products and services that the Group produces and meet the needs of society.

Medicine and pharmaceuticals

Medicine and pharmaceuticals–related skills are important for the Group, which aims to become a general healthcare company related to life and health.

Sawai Group Holdings Integrated Report 2023

Sawai Group Holdings Integrated Report 2023

42

Governance | Board of Directors

Management message

Our value creation story

Value creation strategy

Governance

Financial section

Board of Directors
Directors

Audit & Supervisory Board Members

Name(as of June 27, 2023)

Mitsuo Sawai

Toru Terashima

Shoji Yokota Ph. D.

Masatoshi Ohara

Masayuki Mitsuka Ph. D.

Nawomi Todo

Newly elected

Position

Tadao Tsubokura

Takanobu Tomohiro

Junichi Hirano

Full-time Audit & Supervisory
Board Member

External Audit & Supervisory Board
Member (independent officer)

External Audit &Supervisory Board
Member (independent officer)

Newly elected

Representative Director, Chairman
and President (Group Chief
Executive Officer and Group Chief
Operating Officer)

Director, Senior Managing
Executive Officer, and Group Chief
Quality & Safety Officer

Director, Senior Managing
Executive Officer, and Group Chief
Research & Development Officer

External Director (Independent
Officer)

External Director (independent
officer)

External Director (independent
officer)

Born in 1956

Born in 1959

Born in 1957

Born in 1951

Born in 1959

Born in 1954

Born in 1961

Born in 1958

Born in 1955

13/13 times-/- times (elected June 2023)

13/13 times

13/13 times

13/13 times
13/13 times

Date of birth
Nomination,
Remuneration and Other
Governance Committee(Committee Chairman)

Board of Directors meeting
attendance*

13/13 times

13/13 times-/- times (elected June 2023)

13/13 times

Audit & Supervisory Board
meeting attendance*

—

—

—

—

—

—

13/13 times

13/13 times

Shares of the Company held

1,057,200 shares

1,400 shares

500 shares

800 shares

1,000 shares

0 shares

900 shares

300 shares

300 shares

Significant positions held

April 1982
Joined Kyowa Hakko Kogyo Co., Ltd.
(currently Kyowa Kirin Co., Ltd.)
January 1989
Joined Sawai PharmaceuticalCo., Ltd.
June 2000
Director and Deputy Senior Vice
President of Sales Division of
Sawai Pharmaceuticals Co., Ltd.
June 2002
Managing Director and SeniorVice President of Sales Divisionof Sawai Pharmaceuticals Co., Ltd.
June 2008
Representative Director andPresident of Sawai PharmaceuticalCo., Ltd.
June 2020
Representative Director andChairman of Sawai PharmaceuticalCo., Ltd. (incumbent)
April 2021
Representative Director andChairman and Group Chief
Executive Officer of Sawai Group
Holdings Co., Ltd.
June 2023
Representative Director,
Chairman and President,Group Chief Executive Officer
and Group Chief Operating
Officer of Sawai Group Holdings
Co., Ltd.

April 1984
Joined Sumitomo Chemical
Company, Limited
October 1984
Joined Sumitomo Pharmaceuticals
Co., Ltd.(currently Sumitomo
Pharma Co., Ltd.)
January 2016
Joined Sawai PharmaceuticalCo., Ltd.
June 2017
Director, Corporate Officer, SeniorVice President of Reliability
Assurance Division of Sawai
Pharmaceutical Co., Ltd.
April 2021
Director, Senior Executive Officer,of Sawai Group Holdings Co., Ltd.
June 2023
Director, Senior Managing
Executive Officer, Senior Vice
President of Reliability Assurance
Division of Sawai PharmaceuticalCo., Ltd. (incumbent)
June 2023
Director, Senior Managing
Executive Officer of Sawai Group
Holdings Co., Ltd. (incumbent)

April 1982
Joined Yamanouchi
Pharmaceutical Co., Ltd. (currently
Astellas Pharma Inc.)
September 2016
Joined Sawai PharmaceuticalCo., Ltd.
June 2017
Corporate Officer, and Deputy
Senior Vice President of Research& Development Division, andDirector of Analytical Chemistry
Department of Sawai
Pharmaceutical Co., Ltd.
April 2021
Senior Executive Officer of Sawai
Group Holdings Co., Ltd.
June 2023
Director, Senior Managing
Executive Officer, and SeniorVice President of Research &Development Division of Sawai
Pharmaceutical Co., Ltd.
(incumbent)
June 2023
Director, Senior Managing
Executive Officer of Sawai Group
Holdings Co., Ltd. (incumbent)

April 1979
Registered as a lawyer at Osaka
Bar Association
Joined Kikkawa Sogo Law
Offices (currently Kikkawa Law
Offices)
February 1987
Attorney registered in the State
of New York, the U.S.
January 1988
Partner of Kikkawa Law Offices(incumbent)
April 2017
The President of Osaka Bar
Association, the Vice President ofJapan Federation of Bar
Associations
June 2019
Director of Sawai PharmaceuticalCo., Ltd.
April 2021
Director of Sawai Group Holdings
Co., Ltd. (incumbent)

July 1984
Staff Doctor at Osaka University
HospitalJanuary 2002
Staff Doctor at Osaka-tetsusyou
Health Insurance Society(incumbent)
January 2007
Obtained Certified Occupational
Physician Qualification of Japan
Medical Association
June 2015
Director of Sawai PharmaceuticalCo., Ltd.
April 2021
Director of Sawai Group Holdings
Co., Ltd. (incumbent)

April 1982
Joined Mitsubishi Chemical
Industries (currently Mitsubishi
Chemical Corporation)
June 2009
Board Director, Executive Officer,
General Manager of Global
Product Strategy Department of
Mitsubishi Tanabe Pharma
Corporation
April 2012
Board Director, Managing
Executive Officer, Division
Manager of Development
Division of Mitsubishi Tanabe
Pharma Corporation
June 2014
President & Representative
Director, Chief Executive Officerof Mitsubishi Tanabe Pharma
Corporation
June 2023
Director of Sawai Group Holdings
Co., Ltd. (incumbent)

July 2008
Joined Sawai PharmaceuticalCo., Ltd.
General Manager, Controller
Department of Sawai
Pharmaceutical Co., Ltd.
April 2012
General Manager, General
Affairs Department of Sawai
Pharmaceutical Co., Ltd.
June 2018
Full-time Audit & Supervisory
Board Member of Sawai
Pharmaceutical Co., Ltd.
April 2021
Full-time Audit & Supervisory
Board Member of Sawai Group
Holdings Co., Ltd. and Auditor of
Sawai Pharmaceutical Co., Ltd.
(incumbent)

April 1991
Registered as an attorney Joined
Kogoshi Takizawa Law Office(currently, Kobe-Kaito Law Office)April 1994
Partner of Kobe-Kaito Law Office(incumbent)
June 2016
Audit & Supervisory Board
Member of Sawai
Pharmaceutical Co., Ltd.
April 2020
President, Hyogo-ken Bar
Association
April 2021
Audit & Supervisory Board
Member of Sawai Group Holdings
Co., Ltd. (incumbent)

July 2013
Director, Co-ordination Division,
Second Large Enterprise
Examination Department, Osaka
Regional Taxation Bureau
July 2014
District Director, Higashi
Yodogawa Tax Office
July 2015
District Director, Himeji Tax Office
August 2016
Established a certified tax
accountant office, which heserves as representative of(incumbent)
June 2017
Audit & Supervisory Board
Member of Sawai
Pharmaceutical Co., Ltd.
April 2021
Audit & Supervisory Board
Member of Sawai Group Holdings
Co., Ltd. (incumbent)* Period April 1, 2022–March 31, 2023

Skill matrix
Reason considered important
Corporate management
Legal affairs / risk
management
Finance, accounting,tax affairs

41

Mitsuo Sawai

Toru Terashima

Shoji Yokota

Masatoshi Ohara

Nawomi Todo

Masayuki Mitsuka Tadao Tsubokura Takanobu Tomohiro

Junichi Hirano

Experience in making decisions in line with the corporate philosophy and being responsible for business is important for the Group’s management decisions.
Balancing set rules and risk tolerance is important when attempting to maximize corporate value.
These are important for accurately ascertaining and calculating the Group’s corporate value and properly paying taxes.

Production and quality

Advanced quality and production management are important so that consumers can use the Group’s products, etc. with peace of mind.

Marketing and sales

Communicating the merits of products and services that the Group produces and provides and broadly gathering information on needs are important.

Research, development,
technologies

This is important to continue to provide high value-added products and services that the Group produces and meet the needs of society.

Medicine and pharmaceuticals

Medicine and pharmaceuticals–related skills are important for the Group, which aims to become a general healthcare company related to life and health.

Sawai Group Holdings Integrated Report 2023

Sawai Group Holdings Integrated Report 2023

42

Governance | Corporate governanceManagement message

Our value creation story

Value creation strategy

Governance

Financial section

ESG Data: https://global.sawaigroup.holdings/sustainability/esg/
SASB Index: https://global.sawaigroup.holdings/sustainability/sasb/

Governance system and reason for its adoption

Corporate governanceCorporate governance structureInternal

External

Chairman(as of June 27, 2023)

General Meeting of Shareholders
Election Dismissal

Election Dismissal
ReportElection Dismissal
Consult

Audit

Audit & Supervisory Board

Board of Directors(Including 2 External Audit &Supervisory Board Members)

Cooperation(Including 3 External Directors)

Chairman: Tadao Tsubokura
Meetings held in fiscal 2022: 13

Report /Recommendation

Accounting Auditor

Group Internal
Inspection Office

Cooperation

Audit

SurveyChairman

Representative Director, Chairman, CEO
Representative Director, President, COO

Incentives for directors(excluding external directors)

Introduced performance-linked
remuneration scheme Introduced
stock options scheme

Accounting auditor

KPMG AZSA LLC Japan

Selection/Removal/
Supervision

Recommendations/
ReportReportDirection Supervision

Audit
Audit

Direction Supervision

Group Strategy Council

Group Governance Council

Direction

Group Risk Management Committee

Group Information Security Committee

43

Business Divisions

ChairmanRole/function

Meetings heldin fiscal 2022

Group Strategy Council

Representative
Director andPresident (Group COO)
Mitsuo Sawai

The Group Strategy Council deliberates on important matters to besubmitted to the Board of Directors, discusses and decides the execution
policy of matters resolved at the Board of Directors meetings, andanalyzes business results and discusses the countermeasures.

11Group Investment Committee

Representative
Director andChairman (Group CEO)
Mitsuo Sawai

The Group Investment Committee undertakes objective, rational, andcareful deliberations when examining and making decisions regarding
important investment projects and the annual investment budget.

8Group Risk
Management Committee

Representative
Director andPresident (Group COO)
Mitsuo Sawai

To reinforce the management of various risks that the Company and Group
companies face, the Group Risk Management Committee oversees risk
management and manages and evaluates progress in managing risks
and works to continually improve risk management.

2Group Compliance Committee

Representative
Director andPresident (Group COO)
Mitsuo Sawai

The Group Compliance Committee conducts education and enlightenment
activities, etc. for officers and employees and strives to raise awarenessof compliance throughout the Group.

4

Group Sustainability Committee

Representative
Director andPresident (Group COO)
Mitsuo Sawai

In addition to deliberating and deciding on the basic Group policy onsustainability, the Group Sustainability Committee builds and maintains
a system to promote sustainability and undertakes various other activities,
including supporting and receiving reports on the construction andmaintenance of the promotion system at each Group company.

2

Representative
Director andPresident (Group COO)
Mitsuo Sawai

The Group Information Security Committee shares information on
information security, examines and deliberates on responses to issues,
and works to smoothly manage information security.

3

Group Information
Security Committee

Sawai Group Holdings Integrated Report 2023

Main items

1 year• Governance system• Audit system• Nomination, Remuneration and Other Governance Committee• Group Strategy Council• Group Governance Council• Other committees• History of measures to strengthen governance

Yes
Nomination, Remuneration andOther Governance Committee

Group Sustainability Committee

Direction and Supervision
Guidance/
Advice6 (including 3 external directors)

Remuneration for directors and Audit & Supervisory Board members

Group Compliance Committee
Group Investment Committee

Affiliate Companies

https://global.sawaigroup.holdings/sustainability/
governance/corporate_governance/

Board of Directors Chairman
Directors
Term of directors
Introduction of corporate
officer system
Board of Directors optional
advisory committee

ReportInternal Control Committee

Corporate governance
Company with the Audit &Supervisory Board

Chairman: Masatoshi Ohara
Meetings held in fiscal 2022: 8

and other issues into comprehensive consideration.
It is expected that external directors and external
Audit & Supervisory Board members possess professional
knowledge of such fields as law, taxes, accounting, andmedical care and provide useful advice, make decisions,and audit and supervise from an independent perspective.
The Group Internal Inspection Office, which now has
six staff to strengthen its capabilities, reported on the
results of and plans for business audits based on a risk
approach to the Board of Directors twice in fiscal 2022.

Governance system charts
Organizational design

Chairman: Mitsuo Sawai
Meetings held in fiscal 2022: 13

Audit
Cooperation

Nomination,
Remuneration and Other
Governance Committee

Counsel /Recommendation

Having directors with detailed knowledge of the prescription
drug industry, the Group’s core business, and the state of
the Company being involved in running the businesswhile maintaining high ethics and keeping an eye on thevarious parts of the Company is the best way to pursue
management efficiency and legality. Furthermore, an Audit& Supervisory Board, in which external directors and Audit& Supervisory Board members supervise management, wasadopted as it is considered the most appropriate, taking thesize of the Company, the direction management is moving,

Decisions concerning Director remuneration are reported
to the Board of Directors upon deliberation of mattersconcerning Director remuneration at meetings of theNomination, Remuneration and Other GovernanceCommittee
Remuneration for Directors (excluding External
Directors) consists of a base salary (fixed salary), bonus(performance- based remuneration), and stock options as
a medium and long-term incentive. Base salary andbonuses are generally paid at a 3:1 ratio. Stock options
generally account for at least 10% of total remuneration
and are granted based on Director position and years ofservice, and in accordance with the separately determinedinternal regulations of the Company.
The remuneration limit for Directors is ¥670 million
per year (of which, no more than ¥100 million is for External
Directors). There is also a remuneration limit for Audit &Supervisory Board Members of ¥50 million per year. The

remuneration system, including for Director remuneration,
will be reviewed every three years, in principle, based on acomprehensive accounting of market trends concerning
Director remuneration, the Company’s performance trends,
and cost of living trends. To clarify management’s
responsibility for performance, in addition to all Directors
returning their bonus for fiscal 2021, monthly remuneration
for fiscal 2022 was cut as planned, but payment of
performance-linked remuneration (bonus) was restarted inline with rules as fiscal 2022 earnings recovered.
Distribution of director remuneration fiscal 2022
Base salary(fixed salary)

Stock options

29%

52%

Bonus
(performance-based)

Note: Excluding
external directors

19%

Distribution of remuneration for directors and Audit & Supervisory Board members (A & SB members)
Classification
Directors (not including
External Directors)
A & SB Members (not including
External A & SB Members)
External Directors andA & SB Members

Total remuneration by category (Millions of yen)
Performance-based
Stock options
remuneration

Total remuneration(Millions of yen)Fixed salary

292

153

55

84

4

17

17

—

—

1

30

—

—

4

30

Number of
eligible persons

Sawai Group Holdings Integrated Report 2023

44

Governance | Corporate governanceManagement message

Our value creation story

Value creation strategy

Governance

Financial section

ESG Data: https://global.sawaigroup.holdings/sustainability/esg/
SASB Index: https://global.sawaigroup.holdings/sustainability/sasb/

Governance system and reason for its adoption

Corporate governanceCorporate governance structureInternal

External

Chairman(as of June 27, 2023)

General Meeting of Shareholders
Election Dismissal

Election Dismissal
ReportElection Dismissal
Consult

Audit

Audit & Supervisory Board

Board of Directors(Including 2 External Audit &Supervisory Board Members)

Cooperation(Including 3 External Directors)

Chairman: Tadao Tsubokura
Meetings held in fiscal 2022: 13

Report /Recommendation

Accounting Auditor

Group Internal
Inspection Office

Cooperation

Audit

SurveyChairman

Representative Director, Chairman, CEO
Representative Director, President, COO

Incentives for directors(excluding external directors)

Introduced performance-linked
remuneration scheme Introduced
stock options scheme

Accounting auditor

KPMG AZSA LLC Japan

Selection/Removal/
Supervision

Recommendations/
ReportReportDirection Supervision

Audit
Audit

Direction Supervision

Group Strategy Council

Group Governance Council

Direction

Group Risk Management Committee

Group Information Security Committee

43

Business Divisions

ChairmanRole/function

Meetings heldin fiscal 2022

Group Strategy Council

Representative
Director andPresident (Group COO)
Mitsuo Sawai

The Group Strategy Council deliberates on important matters to besubmitted to the Board of Directors, discusses and decides the execution
policy of matters resolved at the Board of Directors meetings, andanalyzes business results and discusses the countermeasures.

11Group Investment Committee

Representative
Director andChairman (Group CEO)
Mitsuo Sawai

The Group Investment Committee undertakes objective, rational, andcareful deliberations when examining and making decisions regarding
important investment projects and the annual investment budget.

8Group Risk
Management Committee

Representative
Director andPresident (Group COO)
Mitsuo Sawai

To reinforce the management of various risks that the Company and Group
companies face, the Group Risk Management Committee oversees risk
management and manages and evaluates progress in managing risks
and works to continually improve risk management.

2Group Compliance Committee

Representative
Director andPresident (Group COO)
Mitsuo Sawai

The Group Compliance Committee conducts education and enlightenment
activities, etc. for officers and employees and strives to raise awarenessof compliance throughout the Group.

4

Group Sustainability Committee

Representative
Director andPresident (Group COO)
Mitsuo Sawai

In addition to deliberating and deciding on the basic Group policy onsustainability, the Group Sustainability Committee builds and maintains
a system to promote sustainability and undertakes various other activities,
including supporting and receiving reports on the construction andmaintenance of the promotion system at each Group company.

2

Representative
Director andPresident (Group COO)
Mitsuo Sawai

The Group Information Security Committee shares information on
information security, examines and deliberates on responses to issues,
and works to smoothly manage information security.

3

Group Information
Security Committee

Sawai Group Holdings Integrated Report 2023

Main items

1 year• Governance system• Audit system• Nomination, Remuneration and Other Governance Committee• Group Strategy Council• Group Governance Council• Other committees• History of measures to strengthen governance

Yes
Nomination, Remuneration andOther Governance Committee

Group Sustainability Committee

Direction and Supervision
Guidance/
Advice6 (including 3 external directors)

Remuneration for directors and Audit & Supervisory Board members

Group Compliance Committee
Group Investment Committee

Affiliate Companies

https://global.sawaigroup.holdings/sustainability/
governance/corporate_governance/

Board of Directors Chairman
Directors
Term of directors
Introduction of corporate
officer system
Board of Directors optional
advisory committee

ReportInternal Control Committee

Corporate governance
Company with the Audit &Supervisory Board

Chairman: Masatoshi Ohara
Meetings held in fiscal 2022: 8

and other issues into comprehensive consideration.
It is expected that external directors and external
Audit & Supervisory Board members possess professional
knowledge of such fields as law, taxes, accounting, andmedical care and provide useful advice, make decisions,and audit and supervise from an independent perspective.
The Group Internal Inspection Office, which now has
six staff to strengthen its capabilities, reported on the
results of and plans for business audits based on a risk
approach to the Board of Directors twice in fiscal 2022.

Governance system charts
Organizational design

Chairman: Mitsuo Sawai
Meetings held in fiscal 2022: 13

Audit
Cooperation

Nomination,
Remuneration and Other
Governance Committee

Counsel /Recommendation

Having directors with detailed knowledge of the prescription
drug industry, the Group’s core business, and the state of
the Company being involved in running the businesswhile maintaining high ethics and keeping an eye on thevarious parts of the Company is the best way to pursue
management efficiency and legality. Furthermore, an Audit& Supervisory Board, in which external directors and Audit& Supervisory Board members supervise management, wasadopted as it is considered the most appropriate, taking thesize of the Company, the direction management is moving,

Decisions concerning Director remuneration are reported
to the Board of Directors upon deliberation of mattersconcerning Director remuneration at meetings of theNomination, Remuneration and Other GovernanceCommittee
Remuneration for Directors (excluding External
Directors) consists of a base salary (fixed salary), bonus(performance- based remuneration), and stock options as
a medium and long-term incentive. Base salary andbonuses are generally paid at a 3:1 ratio. Stock options
generally account for at least 10% of total remuneration
and are granted based on Director position and years ofservice, and in accordance with the separately determinedinternal regulations of the Company.
The remuneration limit for Directors is ¥670 million
per year (of which, no more than ¥100 million is for External
Directors). There is also a remuneration limit for Audit &Supervisory Board Members of ¥50 million per year. The

remuneration system, including for Director remuneration,
will be reviewed every three years, in principle, based on acomprehensive accounting of market trends concerning
Director remuneration, the Company’s performance trends,
and cost of living trends. To clarify management’s
responsibility for performance, in addition to all Directors
returning their bonus for fiscal 2021, monthly remuneration
for fiscal 2022 was cut as planned, but payment of
performance-linked remuneration (bonus) was restarted inline with rules as fiscal 2022 earnings recovered.
Distribution of director remuneration fiscal 2022
Base salary(fixed salary)

Stock options

29%

52%

Bonus
(performance-based)

Note: Excluding
external directors

19%

Distribution of remuneration for directors and Audit & Supervisory Board members (A & SB members)
Classification
Directors (not including
External Directors)
A & SB Members (not including
External A & SB Members)
External Directors andA & SB Members

Total remuneration by category (Millions of yen)
Performance-based
Stock options
remuneration

Total remuneration(Millions of yen)Fixed salary

292

153

55

84

4

17

17

—

—

1

30

—

—

4

30

Number of
eligible persons

Sawai Group Holdings Integrated Report 2023

44

Governance | Corporate governanceManagement message

Our value creation story

Value creation strategy

Governance

Financial section

ESG Data: https://global.sawaigroup.holdings/sustainability/esg/
SASB Index: https://global.sawaigroup.holdings/sustainability/sasb/

Evaluation of the effectiveness of
the Board of Directors
The Company regularly analyzes and evaluates theeffectiveness of the Board of Directors and strives toimplement continual improvements. An evaluation of theeffectiveness of the Board of Directors was conducted infiscal 2022 as outlined below. Initiatives regarding thefollowing three issues were launched in response to thefinding of the previous year’s evaluation.
Fiscal 2022 initiatives in response to the evaluationof the effectiveness of the Board of Directors for theprevious fiscal year
• Examined external director candidates who possess management
experience• Examined increasing the number of external directors• Created summary of the succession plan for CEO and other officers

and efforts are made to balance Group company
supervision and decision making speed by delegating
authority so that Group companies can make decisions
regarding matters up to a certain level of importance.
Main questions and opinions from external officers at fiscal
2022 Board of Directors meetings• (Regarding Trust Pharmatech) What should be done about including the
400 employees who joined the Group from the former Kobayashi Kako?
• (Regarding basic policy on internal controls) How should we inform andeducate employees about the quality policy and other items duringbusiness execution?
• (Regarding Group Governance Council report) I would like to see thenumber of female committee members increase a bit.
• (Regarding Group Sustainability Committee report) What orientation
regarding human capital, which must be included in the fiscal 2022
securities reports, is going to be disclosed?
• (Regarding Risk Management Committee report) Has there actually beena review of risk countermeasures following the evaluation of the measures?

Number of proposals

Improving the operation of the Boardof Directors
The Company’s Board of Directors implement ingenious
measures so that deep deliberations focused on more
important issues can be held regarding matters referred to
the Board of Directors following deliberations by the Group
Investment Committee and Group Strategy Council. Reportson the state of management at each group company aresubmitted to the Board of Directors in line with theRegulations on the Management of Affiliated Companies,

Matters to be resolved

Matters to be reported(matters)
300

285
250

200

198

156
150

92

100

129

100

106

0

2018

2019

2020

139

124

62

53

77

71

2021

2022

(FY)

Analysis and evaluation of the Board of Directors’ effectiveness in fiscal 2022

45

Implementation method

Evaluation results

Policy on fiscal 2023 measures• Conducted self-evaluation
using survey of Directors andAudit & Supervisory Board
members• Regarding 14 principles and23 supplementary principles
stipulated in section 4“Responsibilities of theBoard” of the Corporate
Governance Code,conducted evaluation using
the level required ofcompanies listed on thePrime Market as the standard• Used the Company’s
governance evaluation scoreprovided by outside
evaluation organization, too• Deliberated on evaluation
results at the May 23, 2023,
Board of Directors meeting

Main items that the Company meets the criteria forcompanies listed on the Prime Market• Expand deliberation time, hold meetings at an appropriate
frequency, distribute material in advance, etc.
• Collect and understand information through external board
members Liaison Committee• Receive reports by the Internal Inspection Office and various
committees• Hold frank and open discussions• Have a functioning Nomination, Remuneration and Other
Governance Committee• Identify necessary skills for Board of Directors and ensure abalance of people with those skills• Receive advice regarding diversity, including gender, fromexternal directors• Possess an environment in which it is possible to obtainrequired governance-related information

We will work to improve thefollowing three points while
examining “how to achieve
management conscious of costof capital and stock price.”

Sawai Group Holdings Integrated Report 2023

Main items that the Company failed to meet the criteria
for companies listed on the Prime Market• Have more than half of directors be external directors• Hold extensive deliberations on management strategy and plans• Link outlook for human capital and human asset training to
the management strategy• Strengthen relationship with stakeholders(1) Expand deliberations related
to management strategy
and plans(2) Link outlook for humancapital and human asset
training to management
strategy(3) Strengthen relationship withstakeholders

Business ethics

Board of Directors
https://global.sawaigroup.holdings/sustainability/
governance/board/

Sawai Pharmaceutical

Main items• Training policy for directors and Audit & Supervisory Board
members• Supporting system for External Directors and/or Audit &Supervisory Board members• Independence Standards for External Directors / Audit &Supervisory Board members• Policy for Cross-shareholdings and Voting Standards

IR communication
The Representative Director and President, and the person
in charge of information disclosure shall actively participate
in dialogue with shareholders and investors, provide
substantial information on management strategies,
finances, etc., and strive for two-way constructive
communication with shareholders and investors. In addition,
the results of the dialogue shall be reported to the Board of
Directors, etc., and the opinions of shareholders, etc., shallbe actively utilized in the management of the Company.
The department responsible for IR handles requests
for dialogue from shareholders and investors, and directors
and senior managers play an active role when theirschedules permit. The department responsible for IR also
handles e-mail and phone inquiries orally or in writing.
Fiscal 2022 communication activities
Meetings with Japanese and overseas investors

154

Meetings with the media

59

Information security governance
The Group stresses information security governance in orderto preserve and manage information assets. We undergo
regular information security assessments by independent
entities, and use those objective evaluations to develop a
medium-term information security plan.
In fiscal 2022, in addition to switching to a zero trust
network, we conducted e-learning for all employees (3times), training on phishing attacks (2 times), and held acybercrime lecture by an outside instructor for persons incharge of information security in each department.
Furthermore, the Group IT Department obtains ISMS
certification, objective proof that we properly conduct
information security management and response.

Domestic Sawai Group companies
For domestic Sawai Group companies, which includes Sawai
Pharmaceutical, we strive to conduct proper corporate
activities as a pharmaceutical company by complying withthe letter and spirit of the Charter of Corporate Behavior,
Compliance Program Guidelines, and Promotion Code for
Prescription Drugs set out by the Japan Generic Medicines
Association, as well as the Sawai Group Holdings Corporate
Philosophy and Code of Conduct. Furthermore, even interms of business with entities such as medical institutions,
we have formulated guidelines based on the JGA’s
Guidelines on Transparency in Corporate Activities Business
Relationships with Medical Institutions and disclose
information on payments and funds provided to such entities
on a dedicated webpage. We also disclose information for
Medisa Shinyaku Inc. and Kaken Shoyaku Co., Ltd. on thesame page.
In fiscal 2022, we formulated an Anti-Bribery andCorruption Policy, which is based on the Sawai
Pharmaceutical Anti-Bribery and Corruption Guidelines
and should be adhered to by all Group companies. One of
the reasons we did this is because a lack of fair competitionon account of misconduct, such as bribery or corruption,hinders continued development of a sound society andeconomy, and for the Group, which conducts suchbusinesses related to people’s lives and healthier lives,
such as healthcare, “existence of a sound society and its
sustainable development” are the foundation for that. It isprecisely by maintaining a firm relationship of trust withall stakeholders, that we can achieve the sustainability for
the Group. We formulated this precisely because of that.
Upsher-Smith

Overseas Sawai Group companies
At Upsher-Smith, efforts related to high quality standards
and ethics over many years have been the key to its success,and this is thought to have led to the Company winning
the trust of customers who purchase and use its products.
The Company conducts business based on high ethicalstandards and a strict code of conduct.
Upsher-Smith also operates a compliance system
program that it created itself and complies with all laws
and regulations that apply to business. In addition to
information on the Company’s initiatives related to
California’s Transparency in Supply Chains Act and Sunshine
Law (laws to increase transparency and requires thatpharmaceutical companies, medical device manufacturers,
and similar entities disclose information on payments todoctors and other issues), information on Upsher-Smith’scompliance program and code of conduct are disclosed on
its website.
Sawai Group Holdings Integrated Report 2023

46

Governance | Corporate governanceManagement message

Our value creation story

Value creation strategy

Governance

Financial section

ESG Data: https://global.sawaigroup.holdings/sustainability/esg/
SASB Index: https://global.sawaigroup.holdings/sustainability/sasb/

Evaluation of the effectiveness of
the Board of Directors
The Company regularly analyzes and evaluates theeffectiveness of the Board of Directors and strives toimplement continual improvements. An evaluation of theeffectiveness of the Board of Directors was conducted infiscal 2022 as outlined below. Initiatives regarding thefollowing three issues were launched in response to thefinding of the previous year’s evaluation.
Fiscal 2022 initiatives in response to the evaluationof the effectiveness of the Board of Directors for theprevious fiscal year
• Examined external director candidates who possess management
experience• Examined increasing the number of external directors• Created summary of the succession plan for CEO and other officers

and efforts are made to balance Group company
supervision and decision making speed by delegating
authority so that Group companies can make decisions
regarding matters up to a certain level of importance.
Main questions and opinions from external officers at fiscal
2022 Board of Directors meetings• (Regarding Trust Pharmatech) What should be done about including the
400 employees who joined the Group from the former Kobayashi Kako?
• (Regarding basic policy on internal controls) How should we inform andeducate employees about the quality policy and other items duringbusiness execution?
• (Regarding Group Governance Council report) I would like to see thenumber of female committee members increase a bit.
• (Regarding Group Sustainability Committee report) What orientation
regarding human capital, which must be included in the fiscal 2022
securities reports, is going to be disclosed?
• (Regarding Risk Management Committee report) Has there actually beena review of risk countermeasures following the evaluation of the measures?

Number of proposals

Improving the operation of the Boardof Directors
The Company’s Board of Directors implement ingenious
measures so that deep deliberations focused on more
important issues can be held regarding matters referred to
the Board of Directors following deliberations by the Group
Investment Committee and Group Strategy Council. Reportson the state of management at each group company aresubmitted to the Board of Directors in line with theRegulations on the Management of Affiliated Companies,

Matters to be resolved

Matters to be reported(matters)
300

285
250

200

198

156
150

92

100

129

100

106

0

2018

2019

2020

139

124

62

53

77

71

2021

2022

(FY)

Analysis and evaluation of the Board of Directors’ effectiveness in fiscal 2022

45

Implementation method

Evaluation results

Policy on fiscal 2023 measures• Conducted self-evaluation
using survey of Directors andAudit & Supervisory Board
members• Regarding 14 principles and23 supplementary principles
stipulated in section 4“Responsibilities of theBoard” of the Corporate
Governance Code,conducted evaluation using
the level required ofcompanies listed on thePrime Market as the standard• Used the Company’s
governance evaluation scoreprovided by outside
evaluation organization, too• Deliberated on evaluation
results at the May 23, 2023,
Board of Directors meeting

Main items that the Company meets the criteria forcompanies listed on the Prime Market• Expand deliberation time, hold meetings at an appropriate
frequency, distribute material in advance, etc.
• Collect and understand information through external board
members Liaison Committee• Receive reports by the Internal Inspection Office and various
committees• Hold frank and open discussions• Have a functioning Nomination, Remuneration and Other
Governance Committee• Identify necessary skills for Board of Directors and ensure abalance of people with those skills• Receive advice regarding diversity, including gender, fromexternal directors• Possess an environment in which it is possible to obtainrequired governance-related information

We will work to improve thefollowing three points while
examining “how to achieve
management conscious of costof capital and stock price.”

Sawai Group Holdings Integrated Report 2023

Main items that the Company failed to meet the criteria
for companies listed on the Prime Market• Have more than half of directors be external directors• Hold extensive deliberations on management strategy and plans• Link outlook for human capital and human asset training to
the management strategy• Strengthen relationship with stakeholders(1) Expand deliberations related
to management strategy
and plans(2) Link outlook for humancapital and human asset
training to management
strategy(3) Strengthen relationship withstakeholders

Business ethics

Board of Directors
https://global.sawaigroup.holdings/sustainability/
governance/board/

Sawai Pharmaceutical

Main items• Training policy for directors and Audit & Supervisory Board
members• Supporting system for External Directors and/or Audit &Supervisory Board members• Independence Standards for External Directors / Audit &Supervisory Board members• Policy for Cross-shareholdings and Voting Standards

IR communication
The Representative Director and President, and the person
in charge of information disclosure shall actively participate
in dialogue with shareholders and investors, provide
substantial information on management strategies,
finances, etc., and strive for two-way constructive
communication with shareholders and investors. In addition,
the results of the dialogue shall be reported to the Board of
Directors, etc., and the opinions of shareholders, etc., shallbe actively utilized in the management of the Company.
The department responsible for IR handles requests
for dialogue from shareholders and investors, and directors
and senior managers play an active role when theirschedules permit. The department responsible for IR also
handles e-mail and phone inquiries orally or in writing.
Fiscal 2022 communication activities
Meetings with Japanese and overseas investors

154

Meetings with the media

59

Information security governance
The Group stresses information security governance in orderto preserve and manage information assets. We undergo
regular information security assessments by independent
entities, and use those objective evaluations to develop a
medium-term information security plan.
In fiscal 2022, in addition to switching to a zero trust
network, we conducted e-learning for all employees (3times), training on phishing attacks (2 times), and held acybercrime lecture by an outside instructor for persons incharge of information security in each department.
Furthermore, the Group IT Department obtains ISMS
certification, objective proof that we properly conduct
information security management and response.

Domestic Sawai Group companies
For domestic Sawai Group companies, which includes Sawai
Pharmaceutical, we strive to conduct proper corporate
activities as a pharmaceutical company by complying withthe letter and spirit of the Charter of Corporate Behavior,
Compliance Program Guidelines, and Promotion Code for
Prescription Drugs set out by the Japan Generic Medicines
Association, as well as the Sawai Group Holdings Corporate
Philosophy and Code of Conduct. Furthermore, even interms of business with entities such as medical institutions,
we have formulated guidelines based on the JGA’s
Guidelines on Transparency in Corporate Activities Business
Relationships with Medical Institutions and disclose
information on payments and funds provided to such entities
on a dedicated webpage. We also disclose information for
Medisa Shinyaku Inc. and Kaken Shoyaku Co., Ltd. on thesame page.
In fiscal 2022, we formulated an Anti-Bribery andCorruption Policy, which is based on the Sawai
Pharmaceutical Anti-Bribery and Corruption Guidelines
and should be adhered to by all Group companies. One of
the reasons we did this is because a lack of fair competitionon account of misconduct, such as bribery or corruption,hinders continued development of a sound society andeconomy, and for the Group, which conducts suchbusinesses related to people’s lives and healthier lives,
such as healthcare, “existence of a sound society and its
sustainable development” are the foundation for that. It isprecisely by maintaining a firm relationship of trust withall stakeholders, that we can achieve the sustainability for
the Group. We formulated this precisely because of that.
Upsher-Smith

Overseas Sawai Group companies
At Upsher-Smith, efforts related to high quality standards
and ethics over many years have been the key to its success,and this is thought to have led to the Company winning
the trust of customers who purchase and use its products.
The Company conducts business based on high ethicalstandards and a strict code of conduct.
Upsher-Smith also operates a compliance system
program that it created itself and complies with all laws
and regulations that apply to business. In addition to
information on the Company’s initiatives related to
California’s Transparency in Supply Chains Act and Sunshine
Law (laws to increase transparency and requires thatpharmaceutical companies, medical device manufacturers,
and similar entities disclose information on payments todoctors and other issues), information on Upsher-Smith’scompliance program and code of conduct are disclosed on
its website.
Sawai Group Holdings Integrated Report 2023

46

Governance | Messages from external directors

Management message

Our value creation story

Value creation strategy

Governance

Financial section

Messages from external directors

Future issues of meeting stakeholders’ needs
and continuing to raise corporate value

Leveraging my experience and knowledge
as an attorney to provide advice and ask
questions useful for management
As an external director who is an attorney, I try to leverage
my experience and knowledge of numerous M&A deals toprovide advice and ask questions useful for such issues as
preventing legal risks and operations-related problems. I
also try to ask questions and make comments related towhether the facts that Sawai’s management and businessexecution are based on are appropriately understood,
whether policies are set in line with established procedures,and whether the results are appropriately evaluated andused by management.
For example, regarding post-merger integration (PMI)with Trust Pharmatech, at the external board members
Liaison Committee, which is composed of external directors
and Audit & Supervisory Board members, I obtained
information on measures and their implementation related
to such issues as establishing systems and procedures andtransforming employee awareness necessary to ensure
product quality. At the Board of Directors meeting, I
requested an explanation of and report on the subsequent
state of those efforts from the responsible officer andprovided my opinion.

Creating a personnel system necessary tomeet the expectations of society
The Nomination, Remuneration and Other GovernanceCommittee, which I serve as the chairman of, met eighttimes in fiscal 2022 and discussed such issues as the U.S.
business, officer assessments, proposals related to future
officers, revisions to remuneration rules, and succession
plans for the CEO and other officers. We carefully set
objective decision criteria and prepared reports regarding
officer remuneration and personnel so that evenstakeholders would consider them fair.
This fiscal year, we will take creative steps such as
interviewing key officers so that even fairer decisions are47

Sawai Group Holdings Integrated Report 2023

Keeping in mind the path Sawai should follow
as the leading generic drug company

Masatoshi Ohara

Nawomi Todo

External Director

External Director

made. It is particularly important to meet the expectationsof society and for Sawai to unite to provide a stable supplyof high-quality drugs. I will carefully examine such issues
as the creation of systems necessary to achieve that and therequired personnel, and work to report on this to the Boardof Directors. As for officer personnel as of May 2023,
because we have completed creating in-house systems,
rules, and other items for the Company and Group
companies, I reported on proposals related to officers forthe generic drug business, Sawai’s core business, who canstrengthen and promote production, development, andsafety in order to create a system to ensure a stable supplyof safe, high-quality drugs demanded by society and thus
further increase society’s trust in the Group.

Governance system must function effectively
At Sawai, the external board members Liaison Committee
periodically meets to not only receive Board of Directors
meeting material in advance but also share information
on items to add to the Board of Directors agenda, items
deliberated and reported on at the Management Meeting,and other important items. Furthermore, while a lot oftime at Board of Directors meetings is spent on reports
from the various committees, there are also opportunities
to ask questions.
As for communication with investors, external officers
are provided with reports on the state of meetings withinvestors at least once a quarter. Previously, I attended an
IR meeting with leading overseas investors, and had theopportunity to directly respond to questions.
It can be argued that the Company has alreadyestablished governance system mechanisms, which include
various rules and committees. As for future issues, my
opinion is that it is important to continually raise andexpand Sawai’s corporate value and ensure the governancesystem effectively functions in order to meet the needsof all stakeholders, including healthcare professionals,
shareholders, patients, and employees.

Principle of not changing the stable supply of“Sawai quality”

What it takes to become a company
that has a clear vision for the future

I always keep in mind the questions of what Sawai should
accomplish and what it can do.
First of all, I think that what Sawai should do is provide
a stable supply of generic drugs that are of Sawai quality.
To do that, Sawai quickly launched work to ensure a stablesupply, which involved establishing Trust Pharmatech andbuilding a solid dosage form facility at the Daini Kyushu
Factory. The Company does not hesitate to makeinvestments in thorough quality management and thedelivery of reliable generic drugs. Sawai’s philosophy is not
to change that in the future.
Therefore, Sawai must not overlook greater cuts in
National Health Insurance official drug prices. I havepersistently called for the Company’s greatest efforts to befocused on ensuring quality, not lowering costs. That is
Sawai’s responsibility as the leading generic drug company.

I want to eliminate all unconscious bias, be there for
employees, and discover their potential, and I will not spare
any effort to do that. This is because this stance is sure to
give rise to new trends, and this effort will result in Sawai
creating and developing new businesses, such as thoserelated to health management apps and supplements, asa general healthcare company not limited to generic drugs,
and growing into a company that does its utmost forpeople’s health.
I will strive to transform Sawai into a company witha clear vision of the future for stakeholders. By attending
Board of Directors meetings, collaborating with Audit &Supervisory Board members and external directors, andmeeting with project staff, I will vigorously fulfill my role toalways check whether Sawai is moving in the right direction.

Eliminating unconscious bias
Establishing diversity and inclusion is the next task that
Sawai should tackle. The S-Wing project was launched inorder to create a corporate system in which employees of
all genders can equally work with hope and pride. The
project is based on Sawai’s desire for “all genders to play
an active role” and “all employees to play an active role.”
Unconscious bias—that is, unconscious
preconceptions and prejudices—are a major factor thathinders a company’s growth. This type of unconscious bias,
including that related to gender, must be eliminated in allareas, including the work environment.
For example, regarding job-based employment, inwhich appropriate personnel for jobs required by Sawai are
hired, I am aware that it is necessary to keep this in mind
when implementing future shifts of a certain size, but ideas
such as “only a person with this skill can handle this project”
or “this experience is required for the person in charge ofthis” are based on a certain-type of unconscious bias.

Sawai Group Holdings Integrated Report 2023

48

Governance | Messages from external directors

Management message

Our value creation story

Value creation strategy

Governance

Financial section

Messages from external directors

Future issues of meeting stakeholders’ needs
and continuing to raise corporate value

Leveraging my experience and knowledge
as an attorney to provide advice and ask
questions useful for management
As an external director who is an attorney, I try to leverage
my experience and knowledge of numerous M&A deals toprovide advice and ask questions useful for such issues as
preventing legal risks and operations-related problems. I
also try to ask questions and make comments related towhether the facts that Sawai’s management and businessexecution are based on are appropriately understood,
whether policies are set in line with established procedures,and whether the results are appropriately evaluated andused by management.
For example, regarding post-merger integration (PMI)with Trust Pharmatech, at the external board members
Liaison Committee, which is composed of external directors
and Audit & Supervisory Board members, I obtained
information on measures and their implementation related
to such issues as establishing systems and procedures andtransforming employee awareness necessary to ensure
product quality. At the Board of Directors meeting, I
requested an explanation of and report on the subsequent
state of those efforts from the responsible officer andprovided my opinion.

Creating a personnel system necessary tomeet the expectations of society
The Nomination, Remuneration and Other GovernanceCommittee, which I serve as the chairman of, met eighttimes in fiscal 2022 and discussed such issues as the U.S.
business, officer assessments, proposals related to future
officers, revisions to remuneration rules, and succession
plans for the CEO and other officers. We carefully set
objective decision criteria and prepared reports regarding
officer remuneration and personnel so that evenstakeholders would consider them fair.
This fiscal year, we will take creative steps such as
interviewing key officers so that even fairer decisions are47

Sawai Group Holdings Integrated Report 2023

Keeping in mind the path Sawai should follow
as the leading generic drug company

Masatoshi Ohara

Nawomi Todo

External Director

External Director

made. It is particularly important to meet the expectationsof society and for Sawai to unite to provide a stable supplyof high-quality drugs. I will carefully examine such issues
as the creation of systems necessary to achieve that and therequired personnel, and work to report on this to the Boardof Directors. As for officer personnel as of May 2023,
because we have completed creating in-house systems,
rules, and other items for the Company and Group
companies, I reported on proposals related to officers forthe generic drug business, Sawai’s core business, who canstrengthen and promote production, development, andsafety in order to create a system to ensure a stable supplyof safe, high-quality drugs demanded by society and thus
further increase society’s trust in the Group.

Governance system must function effectively
At Sawai, the external board members Liaison Committee
periodically meets to not only receive Board of Directors
meeting material in advance but also share information
on items to add to the Board of Directors agenda, items
deliberated and reported on at the Management Meeting,and other important items. Furthermore, while a lot oftime at Board of Directors meetings is spent on reports
from the various committees, there are also opportunities
to ask questions.
As for communication with investors, external officers
are provided with reports on the state of meetings withinvestors at least once a quarter. Previously, I attended an
IR meeting with leading overseas investors, and had theopportunity to directly respond to questions.
It can be argued that the Company has alreadyestablished governance system mechanisms, which include
various rules and committees. As for future issues, my
opinion is that it is important to continually raise andexpand Sawai’s corporate value and ensure the governancesystem effectively functions in order to meet the needsof all stakeholders, including healthcare professionals,
shareholders, patients, and employees.

Principle of not changing the stable supply of“Sawai quality”

What it takes to become a company
that has a clear vision for the future

I always keep in mind the questions of what Sawai should
accomplish and what it can do.
First of all, I think that what Sawai should do is provide
a stable supply of generic drugs that are of Sawai quality.
To do that, Sawai quickly launched work to ensure a stablesupply, which involved establishing Trust Pharmatech andbuilding a solid dosage form facility at the Daini Kyushu
Factory. The Company does not hesitate to makeinvestments in thorough quality management and thedelivery of reliable generic drugs. Sawai’s philosophy is not
to change that in the future.
Therefore, Sawai must not overlook greater cuts in
National Health Insurance official drug prices. I havepersistently called for the Company’s greatest efforts to befocused on ensuring quality, not lowering costs. That is
Sawai’s responsibility as the leading generic drug company.

I want to eliminate all unconscious bias, be there for
employees, and discover their potential, and I will not spare
any effort to do that. This is because this stance is sure to
give rise to new trends, and this effort will result in Sawai
creating and developing new businesses, such as thoserelated to health management apps and supplements, asa general healthcare company not limited to generic drugs,
and growing into a company that does its utmost forpeople’s health.
I will strive to transform Sawai into a company witha clear vision of the future for stakeholders. By attending
Board of Directors meetings, collaborating with Audit &Supervisory Board members and external directors, andmeeting with project staff, I will vigorously fulfill my role toalways check whether Sawai is moving in the right direction.

Eliminating unconscious bias
Establishing diversity and inclusion is the next task that
Sawai should tackle. The S-Wing project was launched inorder to create a corporate system in which employees of
all genders can equally work with hope and pride. The
project is based on Sawai’s desire for “all genders to play
an active role” and “all employees to play an active role.”
Unconscious bias—that is, unconscious
preconceptions and prejudices—are a major factor thathinders a company’s growth. This type of unconscious bias,
including that related to gender, must be eliminated in allareas, including the work environment.
For example, regarding job-based employment, inwhich appropriate personnel for jobs required by Sawai are
hired, I am aware that it is necessary to keep this in mind
when implementing future shifts of a certain size, but ideas
such as “only a person with this skill can handle this project”
or “this experience is required for the person in charge ofthis” are based on a certain-type of unconscious bias.

Sawai Group Holdings Integrated Report 2023

48

Financial section | Eleven-year financial and non-financial summary

Management message

Our value creation story

Value creation strategy

Governance

Financial section

See the webpage for non-financial data (ESG data).
https://global.sawaigroup.holdings/sustainability/esg/

Financial indicators(Sawai Group Holdings Co., Ltd. and its subsidiaries)

IFRS

Japanese-GAAPFY2012FY2013

FY2014FY2015FY2016FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022Gross profit

80,50342,511
37,992

89,82448,353
41,471

105,454
60,04845,406

123,492
71,85851,634132,428
80,30952,119132,392
80,54851,844

168,068
98,62869,440184,341
109,442
74,899182,537
109,037
73,500187,219
114,785
72,434

193,816
127,164
66,652200,344
137,71162,633

Selling, general and administrative expenses /Selling, general and administrative expenses (including research and development expenses)

20,60722,38024,71828,44931,48628,49747,26449,051

46,86253,82071,103

46,246

17,38518,09812,022
4,551
4,599
3,793

19,091
18,99012,193
5,170
7,353
4,989

20,68820,29814,053
6,110
13,251
5,863

23,18523,092
17,156
8,019
17,775
7,044

20,633
19,871
15,914
10,20816,194
8,645

22,94322,757
17,9697,238
18,8398,520

22,20920,251
14,017
14,533
16,807
14,23925,79825,666
19,376
16,671
10,70916,28026,79326,497
19,27913,487
18,173
17,954

18,88818,46012,34013,883
21,124
18,291(35,888)(36,214)(28,269)
24,413
23,344
17,045

16,984
16,78912,667
16,09027,141
17,683

127,843
29,52930,10536,25861,480149,348
39,18239,097
8,949
101,302

166,180
44,66342,209
11,572
112,399

206,492
55,66850,07830,692
125,722

221,539
61,77754,87629,063
137,600

225,60961,924
57,66826,704
141,237

358,453
65,21774,57981,433
202,441

372,889
63,44972,82676,861
223,204

384,81475,46082,71568,413
233,686

393,341
79,12080,452
72,139240,750

349,50285,853
88,84060,579200,083

364,165
101,805
85,154
66,272
212,738

12,256(1,373)(10,970)
20,584

13,422(8,283)(178)
25,537

12,112(14,123)(922)
22,604

19,975(22,937)
13,47333,096

20,628(16,207)(6,740)30,771

23,270(18,827)(6,761)
30,771

28,472(127,900)
108,597
39,992

42,923(16,820)(9,513)57,06730,256(18,173)(12,747)
56,08231,857(21,794)(11,991)
54,26934,310(30,395)(11,262)
47,717

13,026(27,134)(1,267)33,076Return on equity / Return on equity attributable to owners of the Company

5.7
20.1

5.8
15.0

5.8
13.2

6.5
14.4

7.7
12.1

5.5
13.4

8.6
8.7

9.0
10.2

7.4
9.4

7.4
5.8

12.6
(13.8)

8.0
6.5

Shareholders’ equity to total assets /Ratio of equity attributable to owners of the Company to total assets

48.0

67.8

67.6

60.8

62.0

62.6

50.6

53.4

54.6

55.5

54.4

55.4

386.71
318.1785.00
2,027.15

365.18330.4195.00
2,755.29

382.26381.85105.003,053.29

465.57465.25120.003,405.20

431.65431.39130.003,722.90

487.38487.08130.003,830.84

360.49360.26130.004,143.15

442.62442.32135.004,551.50

440.37440.00130.004,796.40

281.80281.51130.004,984.51(645.53)(645.53)130.004,340.32

289.25288.60130.004,604.67

FY2012FY2013

FY2014FY2015FY2016FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

57
80
32
9
–
1,050
7
4.1
59
305
305
150
11,953

65
86
23
14
–
1,121
9
4.8
65
323
350
167
17,931

80
100
28
19
–
1,239
10
5.2
83
418
414
185
20,473

89
113
25
21
–
1,490
10
4.5
90
596
628
209
26,781

102
150
18
23
–
2,502
11
4.5
111
660
1,612
230
30,914

102
150
18
23
164
2,502
11
4.5
111
660
1,612
230
30,914

106
155
43
26
100
3,252
14
5.5
128
579
1,749
246
31,948

119
155
33
31
110
3,131
15
6.0
87
654
1,687
257
32,336

124
155
12
36
133
3,066
15
6.1
62
600
1,644
251
31,015

133
155
44
37
124
3,003
15
5.8
45
4,038
1,607
246
30,130

148
155
32
42
141
2,968
17
6.6
63
2,840
1,636
253
30,452

150
155
23
45
153
3,393
18
6.9
85
4,034
2,015
295
40,629EFor the fiscal year (Millions of yen)
Net sales / Revenue
Cost of sales

Operating income / Operating profit (loss)
Profit before income taxes / Profit (loss) before tax
Profit attributable to owners of parent / Profit (loss) attributable to owners of the Company
Research and development (R&D) expenses
Capital expenditures
Depreciation and amortization
At fiscal year-end (Millions of yen)
Total assets
Inventories
Total current liabilities
Total long-term liabilities / Total non-current liabilities
Net assets / Total equity
Cash flows (Millions of yen)
Net cash provided by operating activities / Cash flows from operating activities
Net cash used in investing activities / Cash flows from investing activities
Net cash provided by (used in) financing activities / Cash flows from financing activities
Cash and cash equivalents at end of year / Cash and cash equivalents at the end of the year
Financial indicators (%)
Ratio of R&D expenses to sales / Ratio of research and development expenses to revenue

Per share information (yen)Net income–basic / Basic earnings per share
Net income–diluted / Diluted earnings per share
Cash dividends applicable to period / Dividends per share
Net assets / Equity attributable to owners of the Company per shareNon-financial indicators(unless specially noted, for Sawai Pharmaceutical)
Sales volume (Billion tablets)
Production capacity (Billion tablets)
Number of new products launched
Number of patents held
Number of GMP audits
Number of employees (consolidated)
Number of female employees in managerial positions
Ratio of female employees in managerial positions (%)
Employee training expenses (Japan Sawai Group) (Millions of yen)
Employees who have received training (Japan Sawai Group)
Employees involved in production (Sawai Pharmaceutical, Medisa Shinyaku, and Kaken Shoyaku)
Employees involved in R&D (Sawai Pharmaceutical, Medisa Shinyaku, and Kaken Shoyaku)
Energy used (Japan Sawai Group) (Crude oil conversion kl)

Notes 1. If there are differences in representation between Japanese-GAAP and IFRS (voluntarily applied since fiscal 2017), the item is marked “Japan GAAP / IFRS.”
2. Capital expenditures are presented on a cash flow basis.
3. As the Company split its common stock two for one on October 1, 2013, amounts per share for fiscal 2012 – 2013 were recalculated to reflect the share split.
4. Dividend per share in fiscal 2018 included our 90th anniversary commemorative dividend of ¥5.

49

Sawai Group Holdings Integrated Report 2023

Sawai Group Holdings Integrated Report 2023

50

Financial section | Eleven-year financial and non-financial summary

Management message

Our value creation story

Value creation strategy

Governance

Financial section

See the webpage for non-financial data (ESG data).
https://global.sawaigroup.holdings/sustainability/esg/

Financial indicators(Sawai Group Holdings Co., Ltd. and its subsidiaries)

IFRS

Japanese-GAAPFY2012FY2013

FY2014FY2015FY2016FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022Gross profit

80,50342,511
37,992

89,82448,353
41,471

105,454
60,04845,406

123,492
71,85851,634132,428
80,30952,119132,392
80,54851,844

168,068
98,62869,440184,341
109,442
74,899182,537
109,037
73,500187,219
114,785
72,434

193,816
127,164
66,652200,344
137,71162,633

Selling, general and administrative expenses /Selling, general and administrative expenses (including research and development expenses)

20,60722,38024,71828,44931,48628,49747,26449,051

46,86253,82071,103

46,246

17,38518,09812,022
4,551
4,599
3,793

19,091
18,99012,193
5,170
7,353
4,989

20,68820,29814,053
6,110
13,251
5,863

23,18523,092
17,156
8,019
17,775
7,044

20,633
19,871
15,914
10,20816,194
8,645

22,94322,757
17,9697,238
18,8398,520

22,20920,251
14,017
14,533
16,807
14,23925,79825,666
19,376
16,671
10,70916,28026,79326,497
19,27913,487
18,173
17,954

18,88818,46012,34013,883
21,124
18,291(35,888)(36,214)(28,269)
24,413
23,344
17,045

16,984
16,78912,667
16,09027,141
17,683

127,843
29,52930,10536,25861,480149,348
39,18239,097
8,949
101,302

166,180
44,66342,209
11,572
112,399

206,492
55,66850,07830,692
125,722

221,539
61,77754,87629,063
137,600

225,60961,924
57,66826,704
141,237

358,453
65,21774,57981,433
202,441

372,889
63,44972,82676,861
223,204

384,81475,46082,71568,413
233,686

393,341
79,12080,452
72,139240,750

349,50285,853
88,84060,579200,083

364,165
101,805
85,154
66,272
212,738

12,256(1,373)(10,970)
20,584

13,422(8,283)(178)
25,537

12,112(14,123)(922)
22,604

19,975(22,937)
13,47333,096

20,628(16,207)(6,740)30,771

23,270(18,827)(6,761)
30,771

28,472(127,900)
108,597
39,992

42,923(16,820)(9,513)57,06730,256(18,173)(12,747)
56,08231,857(21,794)(11,991)
54,26934,310(30,395)(11,262)
47,717

13,026(27,134)(1,267)33,076Return on equity / Return on equity attributable to owners of the Company

5.7
20.1

5.8
15.0

5.8
13.2

6.5
14.4

7.7
12.1

5.5
13.4

8.6
8.7

9.0
10.2

7.4
9.4

7.4
5.8

12.6
(13.8)

8.0
6.5

Shareholders’ equity to total assets /Ratio of equity attributable to owners of the Company to total assets

48.0

67.8

67.6

60.8

62.0

62.6

50.6

53.4

54.6

55.5

54.4

55.4

386.71
318.1785.00
2,027.15

365.18330.4195.00
2,755.29

382.26381.85105.003,053.29

465.57465.25120.003,405.20

431.65431.39130.003,722.90

487.38487.08130.003,830.84

360.49360.26130.004,143.15

442.62442.32135.004,551.50

440.37440.00130.004,796.40

281.80281.51130.004,984.51(645.53)(645.53)130.004,340.32

289.25288.60130.004,604.67

FY2012FY2013

FY2014FY2015FY2016FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

57
80
32
9
–
1,050
7
4.1
59
305
305
150
11,953

65
86
23
14
–
1,121
9
4.8
65
323
350
167
17,931

80
100
28
19
–
1,239
10
5.2
83
418
414
185
20,473

89
113
25
21
–
1,490
10
4.5
90
596
628
209
26,781

102
150
18
23
–
2,502
11
4.5
111
660
1,612
230
30,914

102
150
18
23
164
2,502
11
4.5
111
660
1,612
230
30,914

106
155
43
26
100
3,252
14
5.5
128
579
1,749
246
31,948

119
155
33
31
110
3,131
15
6.0
87
654
1,687
257
32,336

124
155
12
36
133
3,066
15
6.1
62
600
1,644
251
31,015

133
155
44
37
124
3,003
15
5.8
45
4,038
1,607
246
30,130

148
155
32
42
141
2,968
17
6.6
63
2,840
1,636
253
30,452

150
155
23
45
153
3,393
18
6.9
85
4,034
2,015
295
40,629EFor the fiscal year (Millions of yen)
Net sales / Revenue
Cost of sales

Operating income / Operating profit (loss)
Profit before income taxes / Profit (loss) before tax
Profit attributable to owners of parent / Profit (loss) attributable to owners of the Company
Research and development (R&D) expenses
Capital expenditures
Depreciation and amortization
At fiscal year-end (Millions of yen)
Total assets
Inventories
Total current liabilities
Total long-term liabilities / Total non-current liabilities
Net assets / Total equity
Cash flows (Millions of yen)
Net cash provided by operating activities / Cash flows from operating activities
Net cash used in investing activities / Cash flows from investing activities
Net cash provided by (used in) financing activities / Cash flows from financing activities
Cash and cash equivalents at end of year / Cash and cash equivalents at the end of the year
Financial indicators (%)
Ratio of R&D expenses to sales / Ratio of research and development expenses to revenue

Per share information (yen)Net income–basic / Basic earnings per share
Net income–diluted / Diluted earnings per share
Cash dividends applicable to period / Dividends per share
Net assets / Equity attributable to owners of the Company per shareNon-financial indicators(unless specially noted, for Sawai Pharmaceutical)
Sales volume (Billion tablets)
Production capacity (Billion tablets)
Number of new products launched
Number of patents held
Number of GMP audits
Number of employees (consolidated)
Number of female employees in managerial positions
Ratio of female employees in managerial positions (%)
Employee training expenses (Japan Sawai Group) (Millions of yen)
Employees who have received training (Japan Sawai Group)
Employees involved in production (Sawai Pharmaceutical, Medisa Shinyaku, and Kaken Shoyaku)
Employees involved in R&D (Sawai Pharmaceutical, Medisa Shinyaku, and Kaken Shoyaku)
Energy used (Japan Sawai Group) (Crude oil conversion kl)

Notes 1. If there are differences in representation between Japanese-GAAP and IFRS (voluntarily applied since fiscal 2017), the item is marked “Japan GAAP / IFRS.”
2. Capital expenditures are presented on a cash flow basis.
3. As the Company split its common stock two for one on October 1, 2013, amounts per share for fiscal 2012 – 2013 were recalculated to reflect the share split.
4. Dividend per share in fiscal 2018 included our 90th anniversary commemorative dividend of ¥5.

49

Sawai Group Holdings Integrated Report 2023

Sawai Group Holdings Integrated Report 2023

50

Always putting
healthier lives firstIntegrated Report 2023
5-2-30 Miyahara, Yodogawa-ku, Osaka 532-0003, Japan
TEL: +81-6-6105-5818 FAX: +81-6-6394-7311
URL: https://global.sawaigroup.holdings