Always putting healthier lives firstIntegrated Report
Financial Section

2023

For the year ended March 31, 2023

1 Eleven-year financial and non-financial summary
3 Consolidated Statements of Income
4 Consolidated Statements of Comprehensive Income
5 Consolidated Statements of Financial Position
7 Consolidated Statements of Changes in Equity
8 Consolidated Statements of Cash Flows
9 Notes to the Consolidated Financial Statements
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Eleven-year financial and non-financial summary

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.

-1-

Eleven-year financial and non-financial summary

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.

-2-

Consolidated Statements of Income
Yen in millions (except per share data)
Year ended March 31,
Note
Revenue5

Cost of sales

6

Gross profit

2022

2023
193,816

200,344(127,164)(137,711)

66,652

62,633

Selling, general and administrative expenses

6(46,690)(30,156)

Research and development expenses

6(24,413)(16,090)

Other income

715,181

869

Other expenses

8(46,618)(272)(35,888)

16,984

Operating profit (loss)
Finance income

9

145

213

Finance expenses

9

(471)

(407)

(36,214)

16,789(5,710)(3,954)(41,924)

12,836

Owners of the Company(28,269)

12,667

Non-controlling interests(13,655)

169(41,924)

12,836

Profit (loss) before tax
Income tax expense

10

Profit (loss) for the year
Profit (loss) attributable to:

Total
Earnings (loss) per share (yen)Basic earnings (loss) per share

11(645.53)

289.25

Diluted earnings (loss) per share

11(645.53)288.60-3-

Consolidated Statements of Comprehensive Income
Yen (in millions)Year ended March 31,
Note
Profit (loss) for the year

2022

2023
(41,924)

12,836

12

608

345

12

6,294

5,022

12

6,902

5,367

(35,022)

18,203

Owners of the Company(22,566)

17,125

Non-controlling interests(12,456)

1,078

Total

(35,022)

18,203

Other comprehensive income
Items that will not be reclassified to profit or loss:
Changes in fair value of financial assets measured at fairvalue through other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
Total comprehensive income (loss) for the year
Total comprehensive income (loss) attributable to:-4-Consolidated Statements of Financial Position
Yen (in millions)
March 31,
Note

2022

2023

AssetsCurrent assets
Cash and cash equivalents

47,71733,076

Trade and other receivables

26

65,05967,007

Inventories

13

85,853

101,805

Other financial assets

14

146

179

3,348

1,677

202,123

203,744-

1,602

202,123

205,347

Other current assets
Subtotal
Assets held for sale16

Total current assets
Non-current assets
Property, plant and equipment

15

111,218

121,330

Intangible assets

16

26,28927,096

Other financial assets

14

7,223

7,791

2,303

2,429

346

173

Total non-current assets

147,379

158,818

Total assets

349,502364,165

Other non-current assets
Deferred tax assets

10

-5-

Yen (in millions)
March 31,
Note

2022

2023

Liabilities and equity
Liabilities
Current liabilities
Trade and other payables

17

50,912

52,815

Bonds and borrowings

18

13,116

13,034

3,430

1,460

Income tax payables
Refund liabilities

26

7,581

5,440

Provisions

19

1,062

190

Other financial liabilities

20, 21

4,419

4,444

Other current liabilities

22

8,320

7,771

88,84085,154

Total current liabilities
Non-current liabilities
Borrowings

18

53,63360,098Provisions

19

319

101

20, 21

2,889

2,492

1,435

1,488

2,303

2,092

60,57966,272

149,419

151,426
10,000

Other financial liabilities
Other non-current liabilities
Deferred tax liabilities

10

Total non-current liabilities
Total liabilities
EquityShare capital24

10,000Capital surplus

24

73,672

37,714

98,709141,642

Retained earnings
Treasury shares

24

(2)

(2)

Other components of equity

24

7,688

12,289190,067

201,643

Equity attributable to owners of the Company

10,016

11,095

Total equity

Non-controlling interests

200,083

212,738

Total liabilities and equity

349,502364,165-6-

Consolidated Statements of Changes in Equity
Yen (in millions)
Equity attributable to owners of the Company
Note

Balance at April 1, 2021

SharecapitalCapitalsurplusRetainedearnings

41,21942,453

132,429

Loss for the year
Other comprehensive income

Other
Treasurycomponents
sharesof equity
2,177-(28,269)
12-

Total comprehensive income (loss)
Acquisition of treasury shares

24

Dividends

25

Transfer-(28,269)-

Total
equity218,278

22,472

240,750(28,269)(13,655)(41,924)

5,703

5,703

1,199

6,902

5,703

(22,566)(12,456)(35,022)(2)(5,693)(31,219)

Total

Noncontrollinginterests

(2)

(2)

(5,693)(5,693)--31,219Forfeiture of share-based payment

242

Share-based payments

(242)

-

-

50

50

50

Total transactions with owners(31,219)

31,219(5,451)

(2)

(192)

(5,645)-(5,645)

Balance at March 31, 2022

10,00073,672

98,709(2)

7,688

190,067

10,016200,083

Total

Noncontrollinginterests

Total
equity190,067

10,016200,083

Yen (in millions)
Equity attributable to owners of the Company
Note

Balance at April 1, 2022

SharecapitalCapitalsurplusRetainedearnings

10,00073,672

98,709Profit for the year
Other comprehensive income

(2)

25

Transfer to retained earnings from
capital surplus-

Balance at March 31, 2023

169

12,836

4,457

909

5,367

4,457

17,125

1,078

18,203

12,667(2,846)(2,846)(5,693)(5,693)(33,112)

33,112

-

-

145

145

145

- (35,959)
10,00012,667
4,457-

Share-based payments
Total transactions with owners

7,688

12,667
12

Total comprehensive income (loss)
Dividends

Other
Treasurycomponents
sharesof equity

37,714-7-

30,266-145(5,548)-(5,548)

141,642(2)

12,289201,643

11,095

212,738

Consolidated Statements of Cash Flows
Yen (in millions)Year ended March 31,
Note

2022

2023

Cash flows from operating activities
Profit (loss) before tax(36,214)

16,789Depreciation and amortization

17,045

17,683

Impairment loss

71,003

3,464-(1,626)

Financial income

(152)

(222)

Financial expenses

461

406

Gain on bargain purchase(Gain) loss on sale and disposal of property, plantand equipment and intangible assets(8,704)-(2,070)240(Increase) decrease in trade and other receivables

6,711

(319)

Increase in inventories(5,625)(14,868)

Increase (decrease) in trade and other payables

(170)

1,650

Decrease in refund liabilities(378)(2,551)

Increase (decrease) in provisions

292(1,090)

Reversal of impairment

194

167

Other

(1,704)(415)

Subtotal

40,68919,308

Increase in other financial liabilities

Interest received

2

18

Dividends received

141

195

Interest paid

(512)

(410)

(6,010)(7,473)-

1,389

34,31013,026(14,513)(20,727)

Income taxes paid
Income taxes refund
Cash flows generated from operating activities
Cash flows from investing activities
Acquisition of property, plant and equipment
Proceeds from sale of property, plant and equipment

3,122

50

Acquisition of intangible assets(8,831)(6,414)(10,114)

-

(59)

(43)

(30,395)(27,134)
10,00029

Payments for acquisition of business
Other
Cash flows used in investing activities
Cash flows from financing activities
Net proceeds from short-term borrowings

18-

Proceeds from long-term borrowings

18

-

9,500

Repayment of long-term borrowings

18(3,834)(3,118)

Redemption of bonds

18-(10,000)(1,715)(1,938)25(5,693)(5,693)

(20)

(18)

(11,262)(1,267)795

734

Net decrease in cash and cash equivalents(6,552)(14,641)

Cash and cash equivalents at the beginning of the year

54,26947,717

Cash and cash equivalents at the end of the year

47,71733,076

Payment of lease liabilities
Dividends paid
Other
Cash flows used in financing activities
Effect of exchange rate changes on cash and cash equivalents-8-

SAWAI GROUP HOLDINGS CO., LTD. and SUBSIDIARIES
Notes to the Consolidated Financial Statements

1.

Reporting Entity

SAWAI GROUP HOLDINGS Co., Ltd. (the “Company”) is a public corporation domiciled in Japan. The Company is engaged inmanaging the business activities of its subsidiaries based in Japan and abroad by holding shares or equity interests in them and insupporting and advising them in their management. Those consolidated subsidiaries are engaged in research and development for
generic pharmaceutical products and their manufacturing and marketing in Japan and the United States of America. The Company
and its consolidated subsidiaries are hereinafter collectively referred to as “Sawai.”

2.

Basis of Preparation(1)

Compliance with International Financial Reporting Standards

Sawai meets all of the requirements for a “Specified Company under Designated International Financial Reporting Standards” asstipulated under Article 1-2 of the “Ordinance on Terminology, Forms, and Preparation Methods of Consolidated Financial
Statements” (Ministry of Finance of Japan Ordinance No. 28, 1976, “the Ordinance”). Hence, in accordance with Article 93 of theOrdinance, the Consolidated Financial Statements have been prepared in accordance with International Financial ReportingStandards (“IFRSs”).
(2)

Authorized for issue of Financial Statements

The consolidated financial statements as of and for the year ended March 31, 2023 were authorized by Representative Director,
Mitsuo Sawai, on June 27, 2023.
(3)

Basis of Measurement

The consolidated financial statements have been prepared on a historical cost basis, except for certain assets and liabilities recorded
at fair value separately stated in Note 3.
(4)

Functional and Presentation Currency

The consolidated financial statements are presented in Japanese yen (“Yen” or “JPY”), which is the Company’s functional currency.
All amounts have been rounded to the nearest million Yen, unless otherwise indicated.
(5)

Significant Accounting Estimates, Judgements and Assumptions

The preparation of consolidated financial statements in accordance with IFRSs require management to make judgments, estimatesand assumptions that affect the application of accounting policies, the reported amount of assets, liabilities, revenues and expenses,
and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates. Estimates and underlying
assumptions are reviewed on a continuous basis. Changes in accounting estimates are recognized in the period in which the estimates
are revised and in any future periods affected.
Information about judgments and estimates that have been made in the process of applying accounting policies and information
about accounting estimates and assumptions that have significant effects on the amounts reported in the consolidated financial
statements, are as follows:-

Variable considerations in revenue recognition: (Note 3(5))-

Impairment of intangible assets: (Note 16)

-9-

(6)

New accounting standards and interpretations not yet adopted

There are no new or amended accounting standards and interpretations that have been issued as of the authorized date of theconsolidated financial statements but are expected to have a significant impact on Sawai’s consolidated financial statements.

3.

Significant Accounting Policies

The accounting policies set forth below have been continuously applied for the entire period presented in the consolidated financial
statements, unless otherwise stated.
(1)

Basis of Consolidation
The consolidated financial statements include the Company and its subsidiaries over which the Company directly or indirectly
controls (generally, as a result of owning more than 50% of the entity’s voting interest). The financial statements of subsidiaries areincluded in the consolidated financial statements from the date when control is obtained until the date when control is lost. Thosesubsidiaries’ financial statements have been adjusted to comply with the Company’s accounting policies as necessary.
Changes in the Company’s ownership interests in subsidiaries that do not result in a loss of control are accounted for as equity
transactions. Any difference between the adjustment to non-controlling interests and the fair value of consideration transferred or
received, is recognized directly in equity attributable to owners of the Company. When control over a subsidiary is lost, theinvestment retained after the loss of control is remeasured at fair value as of the date of the loss of control, and any gain or loss onsuch remeasurement and disposal of the interest sold is recognized in profit or loss.
Intercompany balances and transactions, and any unrealized income and expenses arising from intercompany transactions, areeliminated when the Company prepares the consolidated financial statements.
Sawai does not have any investments that are accounted for using the equity method at March 31, 2023.

(2)

Business Combination
In assessing whether acquired set of activities and assets meets the definition of a business, Sawai applies an optional‘concentration test’ that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The
optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single
identifiable asset or group of similar identifiable assets.
Business combinations are accounted for using the acquisition method. The identifiable assets acquired and liabilities assumed aremeasured at their fair values as of the acquisition date. Goodwill is measured as the excess of the sum of the fair value ofconsideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously
held equity interest in the acquiree over the net amount of identifiable assets acquired and liabilities assumed at the acquisition date.
If the sum thereof is lower than net amount of identifiable assets acquired and liabilities assumed at the acquisition date, thedifference is recognized immediately as gain on bargain purchase in the consolidated statements of income.
The consideration transferred for an acquisition of a subsidiary is measured as the fair value of the assets transferred and theliabilities incurred to former owners of the acquiree. The consideration for acquisitions may include amounts contingent upon
future events, such as the achievement of development milestones and sales targets.
Any contingent consideration included in the consideration payable for a business combination is recorded at fair value as of theacquisition date. These fair values are generally based on risk-adjusted future cash flows discounted using appropriate discountrates. An obligation to pay contingent consideration that meets the definition of a financial instrument classified as liability isremeasured at fair value at each reporting date and subsequent changes in the fair value are recognized in finance income or
expenses in the consolidated statements of income. If contingent consideration is classified as equity, then it is not remeasured andits settlement is accounted for within equity.
Acquisition related costs are recognized as expenses in the period they are incurred. Changes in the Company’s ownership interestsin subsidiaries that do not result in the Company losing control over a subsidiary are treated as equity transactions and therefore, do
not result in adjustments to goodwill.

-10-

(3)

Foreign Currency[1]

Foreign Currency Transactions
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions or
rates that approximate the exchange rates at transaction dates. Monetary assets and liabilities denominated in foreign currencies aretranslated into the functional currency using the exchange rates at the end of each reporting period. Non-monetary assets andliabilities measured based on historical cost that are denominated in foreign currencies are translated at the exchange rate at the dateof the initial transaction.
Gains or losses on exchange differences arising from the settlement of foreign currency denominated monetary assets andliabilities, or from their translations to functional currency at the end of the reporting date, are recognized in Finance income or
Finance expenses in the consolidated statements of income.

[2]

Foreign Operations
Assets and liabilities of foreign subsidiaries, which use a functional currency other than Yen, are translated into Yen using theexchange rate at the end of the reporting period. Revenue and expenses of foreign operations are translated into Yen using theexchange rate at the transaction date or the rate that approximates the exchange rate at the transaction date (e.g., average exchange
rate for the period).
Exchange differences arising from the translation are recognized in other comprehensive income and accumulated in othercomponents of equity in the consolidated statements of financial position. In the event a foreign operation is disposed, thecumulative amount of exchange differences related to the foreign operation is reclassified from equity to profit or loss in thedisposal period.

(4)

Financial Instruments
A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument ofanother entity. When Sawai becomes a party to the contractual provision of a financial instrument, the financial instrument isrecognized either as a financial asset or as a financial liability. Sawai does not have any derivative assets or liabilities.

[1]

Financial Assets(i)

Initial recognition and measurement
Sawai initially recognizes all financial assets as of the trade date when Sawai becomes a party to the contract. In principle, financial
assets are initially measured at fair value plus, in the case of a financial asset not at fair value through profit or loss, the transaction
costs directly attributable to the financial assets. Trade receivables, however, are initially measured at the transaction price(provided that there are no significant financing components thereto).
Financial assets are classified as financial assets measured at amortized cost, financial assets measured at fair value through othercomprehensive income (“FVOCI”) or financial assets measured at fair value through profit or loss (“FVTPL”) at initial recognition.
The classification, depending on whether financial assets are debt instruments or equity instruments, is made as follows:(a)Financial assets which are debt instruments

If both of the following conditions are met, they are classified as financial assets measured at the amortized cost:Assets are held within the business model whose objective is to hold assets to collect contractual cash flows; andThe contractual terms of financial assets give rise on specified dates to cash flows which are solely payments ofprincipal and interest on the principal amount outstanding.

Debt instruments are measured at FVOCI if both of the following conditions are met:


The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows
and selling financial assets, and;

The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.

Financial assets that are debt instruments which are not classified as financial assets measured at amortized cost or FVOCI areclassified as financial assets measured at FVTPL. Sawai holds debt financial assets measured at amortized cost while it does nothold financial assets that are debt instruments classified as FVOCI or as FVTPL as of March 31, 2023.
(b)

Financial assets which are equity instruments

For financial assets which are equity instruments, Sawai made an irrevocable election at initial recognition to present subsequentchanges in fair value in other comprehensive income.
Sawai does not hold financial assets for trading purpose under its policy.

-11-

(ii)

Subsequent measurement(a)Financial assets measured at amortized cost

These assets are measured at amortized cost using the effective interest method. Amortization under the effective interest method,
impairment loss and any gain or loss in case of derecognition are recognized in profit or loss as finance income or expenses.
(b)Financial assets measured at fair value

Changes in the fair value for financial assets that are debt instruments are recognized in profit or loss. Changes in the fair value for
equity financial assets are recognized in other comprehensive income and cumulative gains or losses are transferred directly toretained earnings when those assets are derecognized. Dividends are recognized in profit or loss as finance income unless thedividend clearly represents a recovery of part of the cost of the investment.
(iii)

Impairment loss

Sawai recognizes allowance for expected credit losses (“ECLs”) on (a) trade receivables and contract assets, and (b) debt
instruments other than trade receivables and contract assets measured at amortized cost.
(a)Trade receivable and contract assets

Sawai measures loss allowance for trade receivables and contract assets at an amount equal to lifetime ECLs.
(b)

Debt instruments other than trade receivables and contract assets

Loss allowance for debt instruments other than trade receivables and contract assets are generally measured at an amount equal to
12-month ECLs, except when it is determined that the credit risk has significantly increased since initial recognition. In that case,the loss allowance is measured at an amount equal to lifetime ECLs. 12-month ECLs are the portion of lifetime ECLs that result
from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the
instrument is less than 12 months).
When determining whether the credit risk of a financial asset has increased significantly since initial recognition, Sawai considers
reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitativeand qualitative information and analyses based on Sawai’s historical experience and continuous credit assessment that includes
forward-looking information.
Sawai assumes that the credit risk on a financial asset has increased significantly if it is more than one day past due without
reasonable explanation as past due financial assets have historically resulted in increase in default rates.
In addition, Sawai considers financial assets to be in default when there is an evidence indicating that a debtor is delinquent withthe following observable data;•

significant financial difficulty of the debtor;•

a breach of contract; or•

it is probable that the debtor will enter bankruptcy or other means of financial reorganization.

Sawai considers the defaulted financial asset as credit-impaired.
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls suchas the difference between the contractual cash flows due to Sawai and the cash flows that Sawai expects to receive.
ECLs are discounted using the effective interest rate of the financial asset.
(iv)

Derecognition

Sawai derecognizes a financial asset when the contractual right to receive cash flows from the financial asset expires, or thecontractual right to receive cash flows from the financial asset is transferred and substantially all the risks and rewards related toownership of the financial asset are transferred to another party.
[2]

Financial Liabilities(i)

Measurement
Sawai initially recognizes all financial liabilities when Sawai becomes a party to the contract. While financial liabilities are initiallymeasured at fair value transaction costs directly attributable to the financial liability are deducted from the initial carrying amount.
After the initial recognition, financial liabilities are measured at amortized cost using the effective interest method. Amortization
under the effective interest method and any gain or loss in case of derecognition are recognized in profit or loss as finance income
or expenses.

(ii)

Derecognition
Sawai derecognizes a financial liability when the obligation specified in the contract is discharged, cancelled or expired.

[3]

Offsetting
Financial assets and financial liabilities are offset and the net amount is presented in the statement of financial position when, andonly when, Sawai currently has a legally enforceable right to set off the amounts and intends either to settle them on a net basis or
to realize the asset and settle the liability simultaneously.
-12-

(5)

Revenue
Sawai solely earns revenue from sale of generic pharmaceutical products, primarily generic medicines, to distributors, wholesalers
and retailers in Japan and the United States. Revenue on sales of products is recognized when control of the products is passed tothe customer in an amount that reflects the consideration to which Sawai expects to be entitled in exchange for those products.
Control is generally transferred at the point in time of acceptance of the products by customers.
The consideration Sawai receives in exchange for the goods may be fixed or variable. Variable consideration is only recognized tothe extent it is highly probable that a significant reversal will not occur. The most common elements of variable consideration arelisted below:[1]

Rebates and Chargebacks
Rebates are incentive programs payable upon the achievement of certain pre-determined sales volumes, which are granted tocustomers. Chargebacks offered in the United States are programs payable to certain wholesalers to compensate the difference
between the invoice price paid by wholesalers to Sawai for a particular product and the price agreed to between Sawai and thewholesalers’ customers for that product. Rebates are paid to customers and chargebacks are deducted from trade receivables basedon the specific terms in the individual agreements.
Accruals for rebates and chargebacks are estimated on the basis of historical experience and recorded at the time the related
revenue is recognized as a reduction from revenue. The estimation made in calculating accrual for rebates includes rebate ratio
applied in the forthcoming year. Accruals for chargebacks are calculated by developing future percentages of chargebacks incurredon sales as there is a time lag between when Sawai sells the product to the wholesalers and when the chargebacks are paid by
Sawai. As the percentages of chargebacks incurred on sales are specific to the wholesalers’ customers, the relevant assumptions
used to calculate the estimated future percentages of chargebacks incurred on sales relate to estimating to which wholesaler’scustomers Sawai’s products will ultimately be sold. Accruals for rebates are presented in the consolidated statements of financial
position as Refund liabilities, while accruals for chargebacks are presented by deducting from Trade and other receivables.

[2]

Sales Return
Sawai accepts returns for defective products and customarily accepts returns for expired products. Sales return provisions are
estimated based on historical rate of return, taking into consideration other factors such as time lag between the sales and returns
and estimated levels of inventory in the distribution channel.
Sales returns are recorded as revenue deductions and refund liabilities are recognized in the consolidated statements of financial
position for the expected future returns. Returned products are disposed of and no returned assets are recorded.

(6)

Research and Development Expenses
Expenditure on research activities is recognized in profit or loss as incurred. Expenditure on development activities is capitalized
only if the expenditure can be measured reliably, the product is technically and commercially feasible, future economic benefits areprobable and Sawai intends to and has sufficient resources to complete the development project and to use or sell the related asset.

(7)

Income Taxes
Income tax expense comprises current and deferred tax, and is recognized in profit or loss for the year, except for the items
resulting from business combination and items directly recognized in equity or other comprehensive income.
Current tax comprises the expected tax payable and receivable that are calculated at the amount expected to be paid or recoveredfrom the taxation authority by applying the tax rate enacted or substantively enacted at the reporting date. Sawai’s current tax
payable also includes liabilities related to uncertain tax positions.
Deferred tax assets and liabilities are calculated based on the temporary differences between the carrying amounts of assets andliabilities for financial reporting purposes and their tax bases at the end of the reporting period. However, deferred tax assets andliabilities are not recognized in the following cases:•

Taxable temporary differences arising from the initial recognition of goodwill;•

Temporary differences on the initial recognition of assets or liabilities in a transaction which is not a business combination
and, at the time of the transaction, affects neither accounting profit nor taxable profit (loss); and•Temporary differences related to investments in subsidiaries to the extent that Sawai is able to control the timing of thereversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates
enacted or substantively enacted at the reporting date, and reflects uncertainty related to income taxes, if any.
Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible
temporary differences, unused tax loss, and unused tax credits can be utilized. Deferred tax assets are reviewed at the end of eachperiod and reduced for the portion where it is not probable to gain the taxable income sufficient to realize the benefit of part or allof deferred tax assets.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax
liabilities, and the deferred tax assets and liabilities are related to income taxes levied by the same taxation authority on the same
taxable entity.
The Japanese group relief system has applied to the Company and its domestic subsidiaries since April 1, 2022.

-13-

(8)

Earnings Per Share
Basic earnings per share is calculated by dividing profit for the period attributable to owners of ordinary shares of the Company by
the weighted average number of ordinary shares outstanding for the reporting period, adjusted by the number of treasury shares.
Diluted earnings per share is calculated by adjusting the dilutive effect of potential ordinary shares.

(9)

Cash and Cash equivalents
Cash and cash equivalents are cash on hand, demand deposits and short-term, highly liquid investments with maturities of 3 months
or less from the acquisition date, which are readily convertible to known amounts of cash and which are subject to an insignificant
risk of changes in value. As of March 31, 2023, Sawai had only cash on hand and bank deposits as cash and cash equivalents.

(10)

Inventories

Inventories are mainly comprised of finished goods, work-in-process, and raw materials and supplies. Inventories are measured at
the lower of cost and net realizable value. The cost of inventories is determined mainly using the weighted average cost method.
The cost of inventories includes purchase cost, processing cost, and any other related manufacturing costs. Net realizable value iscalculated based on the estimated selling price in the ordinary course of business less the estimated costs of completion andestimated costs necessary to sell.
(11)

Property, Plant and Equipment

Property, plant and equipment are measured using the cost model and is stated at cost less accumulated depreciation andaccumulated impairment loss. Acquisition cost includes those costs that are directly attributable to the acquisition and the initial
estimated dismantlement, removals and restoration costs associated with the asset. Except for assets that are not subject todepreciation, such as land and construction in progress, assets are depreciated using the straight-line method over the estimateduseful life of the asset. Right-of-use (ROU) assets are depreciated using the straight-line method over the shorter of the lease termor the estimated useful life unless it is reasonably certain that Sawai will obtain ownership by the end of the lease term. Theseassets depreciation begins when they are available for use.
The estimated useful life by type of major assets is as follows:•

Building and structures: 2 to 50 years•

Machinery and equipment: 2 to 20 years•

Tools, furniture and fixtures: 2 to 20 years

Depreciation method, residual value and useful life are reviewed at least at the end of each reporting period and revised asnecessary.
(12)

Leases[1]

Definition of a lease
A contract is, or contains, a lease if it conveys the right to control the use of an identified asset for a period of time in exchange forconsideration.

[2]

LesseeSawai recognizes ROU assets and lease liabilities at the commencement date of the lease except for short-term leases with a leaseterm of 12 months or less and leases of low-value assets for which Sawai has elected not to recognize ROU assets and leaseliabilities. For short-term leases and leases of low-value assets, Sawai recognizes lease payments associated with these leases as an
expense on a straight-line basis over the lease term.
Lease liabilities are initially recognized at the present value of the lease payments that are not paid at the commencement date,discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, Sawai’s incremental borrowing
rate. Generally, Sawai uses its incremental borrowing rate as the discount rate. After the commencement date, the lease liabilities
are measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments
arising from a change in an index or rate, if there is a change in Sawai’s estimate of the amount expected to be payable under aresidual value guarantee, or if Sawai changes its assessment of whether it will exercise a purchase, extension or termination option.
The ROU assets are initially measured at an amount equal to the lease liability, adjusted by any lease payments made at or before
the commencement date, less any lease incentives received, any initial direct costs incurred and an estimate of costs to be incurredin dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset.
The ROU assets are subsequently depreciated using the straight-line method from the commencement date to the earlier of the endof the useful life of the ROU assets or the end of the lease term applying a cost model. The estimated useful lives of the ROU assets
are determined on a same basis as those of underlying assets.
The carrying amount of the ROU assets are included in Property, plant and equipment as disclosed in Note 15 and the leaseliabilities are included in Other financial liabilities in the consolidated statements of financial position.
The cash payments for the principal portion of the lease liabilities are presented in the cash flows from financing activities in the
consolidated statements of cash flows.

-14-

[3]

Sale and Leaseback
For sale and leaseback transactions, Sawai considers when performance obligations are satisfied to confirm whether the transfer ofassets should be accounted for as a sale. It is generally considered as such if legal title is transferred to the buyer-lessor, and there is
no repurchase option on the asset.
If the transfer of the asset is a sale, Sawai discontinues the recognition of the underlying asset and recognizes a right-of-use asset
arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained. Anygain or loss that relates to the rights transferred to the buyer-lessor is recognized in profit or loss.

(13)

Goodwill

Goodwill arising from business combination is not to be amortized but allocated to a cash-generating unit (“CGU”) or groups of
CGUs based on expected synergies and tested for impairment annually and whenever there is an indication that CGU may be
impaired. Impairment losses of goodwill are recognized in profit or loss and reversal is not made thereafter.
Goodwill is allocated to the U.S. Business segment, a CGU. However, during the year ended March 31, 2022, Sawai wrote down
the full value of goodwill and recognized it as an impairment loss.
(14)

Intangible Assets

Research and Development
Research and Development are intangible assets related to products in development stage that are not yet available for use or sale.
These intangible assets are not amortized but tested for impairment annually or more frequently if indicators of a potential
impairment exist. If a project fails or ceases development, or is no longer considered to achieve the expected cash flows, theintangible assets are written down to their recoverable amount. The impairment charges are recognized in research anddevelopment expenses in the consolidated statements of income. Upon successful completion of the development project, these
intangible assets are reclassified from Research and Development to Marketed Products.
Marketed Products
Intangible assets associated with marketed products are amortized on a straight-line basis over estimated useful lives, which range
from 6 to 10 years. If there is an indication of impairment, each asset’s recoverable amount is estimated. If the recoverable amountof an asset is lower than the carrying amount, the carrying amount of the asset is reduced to the recoverable amount and impairment
losses are recognized in profit or loss. Amortization and impairment charges of the internally developed intangible assets arerecognized in research and development expenses while those charges of separately acquired intangible assets or intangible assets
acquired in a business combination are recognized in selling, general and administrative expenses in the consolidated statements ofincome.
Trademarks
Trademarks mainly represent the Upsher-Smith Laboratories, LLC (“USL”) trademark that was acquired in conjunction with theacquisition of USL that was determined to have an indefinite useful life based on historical sales and cash flow performance of
USL-branded products. The trademark related to USL were not amortized, but evaluated for potential impairment on an annual
basis.
During the year ended March 31, 2022, Sawai wrote down the full value of the trademark of the U.S. Business segment andrecognized it as an impairment loss.
Software
Software is recognized at cost and amortized on a straight-line basis over the expected useful life. The useful life is 3 to 5 years.
Amortization of software is recognized in cost of sales, selling, general and administrative expenses, and research and development
expenses in the consolidated statements of income.
(15)

Impairment of Non-financial Assets

Sawai assesses, at the end of reporting period, whether there is any indication of impairment of non-financial assets, excluding
inventories and deferred tax assets. If there is an indication of impairment or annual impairment test is required, each asset’s
recoverable amount is estimated. If estimating the recoverable amount for an individual asset is not possible, then Sawai estimates
the recoverable amount of the CGU to which the asset belongs. The recoverable amount of assets or CGUs is measured at thehigher of its fair value less costs of disposal or its value in use. Value in use is determined by discounting the estimated future cash
flows to the present value using a discount rate that reflects the time value of money and risk specific to the asset. Only if therecoverable amount of an asset or CGU is lower than the carrying amount, the carrying amount of the asset or CGU is reduced to
the recoverable amount and impairment losses are recognized in profit or loss.
For assets or CGUs other than goodwill, Sawai assesses at the end of each reporting period whether there is any indication that an
impairment loss recognized in prior periods may no longer exist or may have decreased. If such an indication exists, Sawai
estimates the recoverable amount of the asset or CGU and if the recoverable amount exceeds the carrying amount, impairment
losses are reversed up to the lower of the estimated recoverable amount or the carrying amount that would have been determined(net of amortization or depreciation) had no impairment loss been recognized for the asset in prior periods. The reversal of
impairment loss is recognized in profit or loss.

-15-

(16)

Assets Held for Sale

Non-current assets are classified as held-for-sale if it is highly probable that they will be recovered primarily through sale rather
than through continuing use, and are currently available for immediate sale and if the Group’s management has already promised to
implement a plan to sell them and will complete the sale within one year. The amount of such assets is generally recorded with theircarrying amount or fair value less costs to sell, whichever is lower. Impairment losses on their initial classification as held-for-saleare counted in loss, while their reversal is counted in profit, if any. Once classified as held-for-sale, no intangible assets, property,
plant or equipment are amortized or depreciated any longer.
(17)

Provisions

Sawai recognizes provisions when Sawai has present legal or constructive obligations as a result of past events, it is probable that
outflows of resources embodying economic benefits will be required to settle the obligations, and reliable estimates can be made of
the amount of the obligations. Sawai’s provisions consist primarily of provisions for drug product safety assessment and provisions
for compensation for the losses that its suppliers incurred.
(18)

Employee Benefits

Sawai sponsors defined contribution plan for its employees. Under the plan, Sawai as a sponsor pays fixed contributions into anindependently administrated fund and employees also pay fixed contributions into the fund. Defined contribution retirement benefit
expenses are recognized as expenses in the period when an employee renders related service.
Short-term employee benefits are recorded as the expenses for the period during which employees rendered related services.
(19)

Shareholders’ Equity

For Company-issued equity instruments, the issuance proceeds are recorded as share capital and capital surplus. Costs directly
attributable to the issuance (after considering the tax effect) are deducted from equity.
The Company does not recognize any gains or losses on the acquisition, sale or cancellation of treasury shares. When the Company
acquires treasury shares, it is recognized at acquisition cost and deducted from equity. Transaction expenses directly arising fromthe acquisition is deducted from capital surplus. When the Company cancels treasury shares, the amount that should be deductedfrom capital surplus is determined in accordance with the Companies Act in Japan, and the remaining balance, if any, is deductedfrom retained earnings. When the Company sells the treasury shares, the difference between the carrying amount and theconsideration received is charged to capital surplus.

-16-

4.

Operating Segment

Sawai’s reportable segments are the components for which separate financial information is available, and the Board of Directors as
the chief operating decision maker, regularly assesses the financial information in deciding how to allocate resources, measureperformance and forecast future periods.
Sawai manufactures and sells generic pharmaceutical products with operations in Japan and the United States, each requires differing
marketing strategies. Accordingly, Sawai has designated two reportable segments, Japan Business segment, and U.S. Businesssegment.
(1)

Segment information
Year ended March 31, 2022
Yen (in millions)
Amountrecorded in the
Adjustments
consolidated
and elimination
statements ofincomeJapan Business

U.S. Business

Total

Revenue from external customers

163,841

29,975

193,816-

193,816

Intersegment revenue or transfers

-

-

-

-

-

Total

163,841

29,975

193,816-

193,816

Segment (operating) profit (loss)

32,361(68,249)(35,888)-(35,888)

Segment revenue

Finance income

145

Finance expenses(471)

Loss before tax(36,214)

Other items
Depreciation and amortization

11,372

5,673

17,045-17,045

Impairment loss

2,233

68,77071,003-71,003

Year ended March 31, 2023
Yen (in millions)
Amountrecorded in the
Adjustments
consolidated
and elimination
statements ofincomeJapan Business

U.S. Business

Total

Revenue from external customers

163,70236,642200,344-

200,344

Intersegment revenue or transfers

-

-

-

-

-

163,70236,672200,344-

200,344

16,054930

16,984-

16,984

Segment revenue

Total
Segment (operating) profit
Finance income

213

Finance expenses(407)

Profit before tax

16,789Other items
Depreciation and amortization

14,255

3,428

17,683-

17,683(Reversal of) Impairment loss

3,464

(1,626)

1,838

-

1,838

-17-

(2)

Geographic Information
Revenue from contracts with customers
Yen (in millions)Year ended March 31,
2022

2023

Japan

163,841

163,702

U.S.

29,84536,505

Other

130

137

193,816

200,344

Total
Non-current Assets

Yen (in millions)
March 31,
2022
Japan

107,617

117,718

U.S.

32,19233,136

139,809150,855

Total
(3)

2023

Information by Major Customer

External customers account for more than 10% of revenue are as follows:
Yen (in millions)Year ended March 31,
2022

2023

Related segment

Mediceo Corporation

30,80632,325

Japan businessAlfresa Corporation

28,55428,508Japan business

-18-

5.

Revenues(1)

Revenue stream and disaggregation of revenue

Sawai solely recognizes revenue from sale of generic pharmaceutical products to distributors, wholesalers and retailers. Revenue isrecognized at a point in time when customers obtain control of products. There is no contract for which revenue is recognized overtime.
The following table shows revenue for our key therapeutic category by operating segment (see Note 4 for geographic information):
Year ended March 31, 2022
Yen (in millions)
Products

Japan Business

U.S. Business

Total

Cardiovascular drugs

42,197

9,218

51,415Central nervous system drugs

20,778

14,57935,357

Gastro-intestinal drugs

18,884120

19,004

Blood/body fluid pharmaceutical products

17,050-17,050

Other metabolic drugs

13,622-

13,622

Antibiotics drugs

7,078

251

7,329

Vitamin preparations

8,836

15

8,851

Antiallergic drugs
Drugs for urogenital organs and the anus

6,884

-

6,884

4,949

721

5,670

Antineoplastic agents

4,675

358

5,033

Drugs for respiratory organs

5,076

-

5,076

Other

13,812

4,713

18,525

Total

163,841

29,975

193,816

The comparative information is adjusted to align with the classification of the current reporting period.
Year ended March 31, 2023
Yen (in millions)
Products

Japan Business

U.S. Business

Cardiovascular drugs

38,983

10,15149,135Central nervous system drugs

23,01919,12842,147

Gastro-intestinal drugs

18,198159

18,357

Blood/body fluid pharmaceutical products

16,448-16,448Other metabolic drugs

15,827-

15,827

Antibiotics drugs

7,710

323

8,033

Vitamin preparations

7,426

-

7,426

Antiallergic drugs

6,522

-

6,522

Drugs for urogenital organs and the anus

5,363

670

6,033

Antineoplastic agents

5,125

537

5,662

Drugs for respiratory organs

5,236

-

5,236

Other

13,846

5,673

19,520Total

163,70236,642200,344

-19-

Total

(2)

Contract balances
There are no advanced receipts from customers and unsatisfied performance obligations at the end of the reporting period, therefore
no contract liability is recognized.
Contract assets relate to the rights to consideration in exchange for the products that Sawai has transferred to a customer, but areconditioned on resale from the customer to its customers. The contract assets are reclassified to trade receivables when thecustomer resells the products to its customers.
Trade receivables and contract assets balances as of March 31, 2022 and 2023 are as follows:
Yen (in millions)
March 31,
2022

2023

Trade receivables

61,21562,011

Contract assets

360

439

6.

Expense by nature

The breakdown of expenses by nature is as follows:
Yen (in millions)Year ended March 31,
2022

2023

Raw materials and supplies

61,032

66,606

Employee benefits

30,90634,211

Depreciation and amortization

17,045

17,683

Subcontractor costs

30,87236,331

7.

Other Income

The breakdown of other income is as follows:
Yen (in millions)Year ended March 31,
2022

2023

Gain on bargain purchase

8,704

-

Gain on sale and disposal of property, plant and equipment

2,091

17

Gain on early termination of the escrow account

4,122

-

264

853

15,181

869

Other
Total

Gain on bargain purchase for the year ended March 31, 2022 arose from the acquisition of assets related to production activities from
Kobayashi Kako Co., Ltd. For details, please refer to Note 29.
Gain on sale and disposal of property, plant and equipment for the year ended March 31, 2022 arose mainly from a sale-andleaseback transaction concerning USL’s factory in Denver.
Gain on early termination of the escrow account for the year ended March 31, 2022 arose from the release of the escrow that Sawai
had set up when acquiring USL to avoid the potential risk of costs and damages associated with those legal proceedings. (Refer toNote 30.)

-20-

8.

Other Expenses

The breakdown of other expenses is as follows:
Yen (in millions)Year ended March 31,
2022
Impairment losses

2023
46,606

-

Other

12

272

Total

46,618272

Impairment losses for the year ended March 31, 2022 arose from the impairment of assets of the U.S. Business segment, including
goodwill. For details, please refer to Note 16.

9.

Financial Income and Financial Expenses

The composition of financial income is as follows:
Yen (in millions)Year ended March 31,
2022

2023

Interest income
Financial assets measured at amortized cost

2

18

141

195

2

-

145

213

Dividend income
Equity instruments measured at fair value through othercomprehensive income
Other
Total
The composition of financial expenses is as follows:
Yen (in millions)Year ended March 31,
2022

2023

Interest expenses
Financial liabilities measured at amortized cost
Bonds

67

12

Borrowings

277

322

Other

88

61

Foreign exchange losses

11

1

Other

28

11

Total

471

407

-21-

10.

Income Tax Expense and Deferred Taxes(1)

Income Tax Expense

The composition of income tax expense is as follows:
Yen (in millions)Year ended March 31,
2022
Current tax expense

2023
6,054

4,142

Origination and reversal of temporary differences

(344)

(188)

Subtotal

(344)

(188)

Total

5,710

3,954

Deferred tax expense

The Company is principally subject to income taxes, inhabitant tax and enterprise tax in Japan. The statutory tax rate applicable to
the Company for the year ended March 31, 2022 and 2023 were 30.6%. The U.S. subsidiaries are subject mainly to federal and state
income taxes. The applicable tax rate was 23.8% for the year ended March 31, 2023.
The following table represents reconciliation of the effective tax rate:
Percentage
March 31,2022
Tax using the Company’s domestic tax rate

(30.6)

30.6

0.1

0.2

Tax credits

(4.7)

(6.5)

Changes in unrecognized differed tax assets

37.2

0.4

Effect of tax rates in foreign jurisdictions

22.1

(0.4)

Gain on bargain purchase

(7.3)

-

Other

(1.0)

(0.7)

Effective tax rate

15.8

23.6

Non-deductible expenses

(2)

2023

Deferred taxes

The composition of deferred tax assets and liabilities are as follows:
Yen (in millions)
March 31,
2022

2023

Deferred tax assets

346

173

Deferred tax liabilities(2,303)(2,092)

Net deferred tax assets (liabilities)(1,957)(1,919)-22-

The components of changes in deferred tax assets and liabilities are as follows:Year ended March 31, 2022

Yen (in millions)
As of April 1,
2021

Recognizedthrough profit or(loss)

Recognized inothercomprehensive
incomeInventories

2,116

528

-

6

2,650

Property, plant andequipment

1,368

(265)

-

28

1,131

Accruals

806

26

-

-

832

Refund liabilities

908

104

-

-

1,012

Trade and other payables

556

(73)

-

-

483

Intangible assets

358

36

-

-

394

Income tax payables

307

(31)

-

-

276

Provisions

302

89

-

-

391

Other

316

176

-

-

492

7,037

590

-

34

7,661

(4,086)

(365)

-

-

(4,451)

Valuation difference related
to a business combination

-

64

-

(3,870)(3,806)

Financial assets measured
at FVOCI

(653)

-

(173)

-

(826)

Property, plant andequipment

(585)

57

-

-

(528)

(5)

(2)

-

-

(7)

Subtotal(5,329)

(246)

(173)

(3,870)(9,618)Net deferred tax assets(liabilities)

1,708

344

(173)

(3,836)(1,957)

Business
combination

As of March 31,
2022

Deferred tax assets

Subtotal
Deferred tax liabilities
Intangible assets

Other

In the year ended March 31, 2022, the Company and its domestic subsidiaries applied for approval for application of theJapanese group relief system to them. As a result, approval was obtained, and it was determined that the system would be applied
to them from April 1, 2022. Accordingly, Sawai prepared these financial statements by adopting accounting treatment that
anticipates application of the group relief system.

-23-

Year ended March 31, 2023

Yen (in millions)
As of April 1,
2022

Recognizedthrough profit or(loss)

Recognized inothercomprehensive
incomeInventories

2,650

266

-

-

2,916

Property, plant andequipment

1,131

138

-

-

1,269

832

143

-

-

975

1,012

(317)

-

-

695

Trade and other payables

483

71

-

-

554

Intangible assets

394

96

-

-

490

Income tax payables

276

(85)

-

-

191

Provisions

391

(333)

-

-

58

Other

492

114

-

-

606

7,661

93

-

-

7,754

Intangible assets(4,451)

(704)

-

-

(5,155)

Valuation difference related
to a business combination(3,806)786--(3,020)Financial assets measured
at FVOCI

(826)

-

(150)

-

(976)

Property, plant andequipment

(528)

18

-

-

(510)

(7)

(5)

-

-

(12)

Subtotal(9,618)

95

(150)

-

(9,673)Net deferred tax assets(liabilities)(1,957)

188

(150)

-

(1,919)Business
combination

As of March 31,
2023

Deferred tax assets

Accruals
Refund liabilities

Subtotal
Deferred tax liabilities

Other

-24-

Deductible temporary differences and carryforward of tax losses for which no deferred tax asset is recognized
The components of deductible temporary differences and carryforward of tax losses for which no deferred tax asset is recognized are
as follows:
Yen (in millions)
March 31,2022
Deductible temporary differences

2023
69,75770,752Carryforward of tax losses
Within 1 year--

Over 1 year within 5 years

1950

Over 5 years

6,703

14,546

Carryforward of tax losses - Total

6,722

14,596

Deferred tax assets have not been recognized for deductible temporary differences, because it is not probable that the temporary
differences will be reversed in the foreseeable future, or it is not probable that future taxable profits will be available against
which Sawai can use the benefits therefrom. During the year ended March 31, 2022 and 2023, Sawai derecognized any deferred
tax assets related to JPY 76,435 million and JPY 82,984 million of deductible temporary differences in the U.S. business segment
as Sawai reassessed it is not probable that future taxable profit will allow the deferred tax assets to be recovered.
Unrecognized deferred tax liabilities
There was a taxable temporary difference of JPY 18,621 million and JPY 24,032 million as of March 31, 2022 and 2023 related toinvestments in subsidiaries. However, this liability was not recognized as management has the ability to control any future reversal
and does not consider such a reversal to be probable.

11.

Earnings Per Share

The basis of calculation of basic and diluted earnings per share (“EPS”) is as follows:Year ended March 31,
2022

2023

Profit (loss) attributable to owners of parent (million Yen)

(28,269)

12,667Weighted average number of ordinary shares outstanding during
the year (thousand shares)

43,791

43,791

Average number of ordinary shares during the period (thousand
shares)

43,791

43,791-

99

43,791

43,890

Basic earnings per share (Yen)(645.53)

289.25

Diluted earnings per share (Yen)(645.53)288.60

Dilutive effect (thousand shares)
Weighted average number of ordinary shares outstanding during
the year after dilutive effect (thousand shares)
Profit (loss) per share (attributable to the owners of parent)

The above figure of diluted earnings per share for the year ended March 31, 2022 does not include 58 thousand potential ordinary
shares for stock options because they were not dilutive due to a reduction in the loss per share caused by the exercise of stock option
rights. For the year ended March 31, 2023, there were no potential ordinary shares for stock options that were not dilutive and thus
not included in the calculation of diluted earnings per share.

-25-

12.

Other Comprehensive Income

The components of other comprehensive income are as follows:
Yen (in millions)Year ended March 31,
2022
Changes in financial assets measured at FVOCI during the year

781

495

Related tax effects

(173)

(150)

Net

608

345

6,294

5,022

-

-

6,294

5,022

6,902

5,367

Exchange differences on translation of foreign operations
Related tax effects
Net
Total other comprehensive income

13.

2023

Inventories

The components of inventories are as follows:
Yen (in millions)
March 31,
2022

2023

Finished goods and products

40,84550,566Work-in-process

18,30520,897

Raw materials and supplies

26,70330,342

Total

85,853

101,805

The write-down of inventories recorded within cost of sales was JPY 6,811 million and JPY 8,010 million for the year ended March
31, 2022 and 2023, respectively.

-26-

14.

Other Financial Assets

The components of other financial assets are as follows:
Yen (in millions)
March 31,
2022

2023

Financial assets measured at amortized cost
Guarantee deposits

250

253

Other

197

243

Equity securities

6,922

7,474

Total

7,369

7,970

Equity instruments measured at FVOCIOther financial assets (current)
Other financial assets (non-current)

146

179

7,223

7,791

The fair value of major shareholdings within equity instrument measured at FVOCI is as follows:
Yen (in millions)
March 31,
2022

2023

Sumitomo Corporation

1,818

2,009

Nippon Kayaku Co., Ltd.

1,016

1,047

Yakult Honsha Co., Ltd.

485

716

MEDIPAL HOLDINGS CORPORATION

439

393

Alfresa Holdings Corporation

381

380

Medical Ikkou Group Co., LTD.

360

337

SUSMED Inc.

324

316

Other

2,099

2,275

Total

6,922

7,474

Other includes equity investment in private companies in the amount of JPY 1,664 million and JPY 1,862 million as of March 31,
2022 and 2023, all of which are classified as level 3 in the fair value hierarchy (see Note 26). There were no equity instruments
measured at FVOCI that were disposed during the years ended March 31, 2022 and 2023.

-27-

15.

Property, Plant and Equipment

The components of property, plant and equipment are as follows:Year ended March 31, 2022
Yen (in millions)
Buildings
andstructures

Machinery
Tools,
andfurniture andequipment
fixtures

Construction
ROU assets
in progress

Land

Total

Acquisition cost
63,86068,697

13,74912,04010,944

5,122

174,412

765

2,450

1,079

-

10,234

1,220

15,74816,314

4,252

192

647

962

-

22,367(1,665)(1,743)

(497)

(769)

(1)

(625)

(5,300)Transfer

15

275

100

-

(390)

-

-

Foreign currency translationdifferences

778

472

122

113

1,261

31

2,777

-

-

-

-

147

3

150

80,06774,403

14,745

12,031

23,157

5,751

210,154

Balance at April 1, 2021

(28,634)(48,140)(10,669)(467)-(1,794)(89,704)

Depreciation expenses(2,470)(5,514)(1,195)

-

-

(950)

(10,129)

Impairment

(858)

(286)

-

-

(1,717)-(2,861)

Sale and disposition

1,203

1,683

499

463

-

610

4,458

Foreign currency translationdifferences

(184)

(257)

(88)

-

(153)

(18)

(700)

Balance at March 31, 2022

(30,943)(52,514)(11,453)(4)(1,870)(2,152)(98,936)

Balance at April 1, 2021

35,226

20,557

3,080

11,573

10,944

3,328

84,708

Balance at March 31, 2022

49,124

21,8893,292

12,027

21,2873,599

111,218

Balance at April 1, 2021
Acquisition
Acquisition by
combination

business

Sale and disposition

Other
Balance at March 31, 2022
Accumulated depreciation
amount and accumulated
impairment losses

Carrying amount-28-

Year ended March 31, 2023
Yen (in millions)
Buildings
andstructures

Machinery
Tools,
andfurniture andequipment
fixtures

Construction
ROU assets
in progress

Land

Total

Acquisition cost
Balance at April 1, 2022

80,06774,403

14,745

12,031

23,157

5,751

210,154

Acquisition

1,175

4,542

1,408

249

13,037499

20,911(54)(1,282)

(411)

-

(58)

(488)

(2,292)15,805

6,522

181

-

(22,507)

-

-

538

441

118

105

1,454

31

2,687

-

-

-

-

66

0

67

97,531

84,626

16,041

12,38615,1495,792

231,527

Balance at April 1, 2022

(30,943)(52,514)(11,453)(4)(1,870)(2,152)(98,936)

Depreciation expenses(3,424)(6,928)(1,306)--(1,001)(12,658)

Sale and disposition

36

1,210

399

-

-

461

2,106

(155)

(251)

(86)

-

(200)

(18)

(709)

Other

(2,070)

-

-

-

2,070

-

-

Balance at March 31, 2023

(36,556)(58,483)(12,446)(4)-(2,710)(110,197)

Balance at April 1, 2022

49,124

21,8893,292

12,027

21,2873,599

111,218

Balance at March 31, 2023

60,97626,143

3,596

12,382

15,1493,083

121,330

Sale and disposition
Transfer
Foreign currency translationdifferences
Other
Balance at March 31, 2023
Accumulated depreciation
amount and accumulated
impairment losses

Foreign currency translationdifferences

Carrying amount

Depreciation expenses of property, plant and equipment are included in cost of sales, selling, general and administrative expenses,
and research and development expenses of the consolidated statements of income.
Sawai reviewed the plans of its U.S. Business segment, which is a cash generating unit (CGU), and considered how Upsher-Smith
Laboratories, LLC, one of its subsidiaries, should attain sustainable growth, reaching the decision to embark on the businessrestructuring of the subsidiary. As a result, Sawai determined that the recoverable amount of the CGU would be lower than its bookvalue and recognized impairment losses for the year ended March 31, 2022. For details, please refer to Note 16.
Carrying amount of lease assets by finance lease or right-of-use assets included in property, plant and equipment is as follows:
Yen (in millions)
Machinery andTools, furniture
equipment
and fixtures

Building andstructures

Total

Year ended March 31, 2022

2,599

834

166

3,599

Year ended March 31, 2023

2,261

652

171

3,083

-29-

16.

Goodwill and Intangible Assets

The components of goodwill and intangible assets are as follows:Year ended March 31, 2022
Yen (in millions)Intangible Assets
Goodwill

Marketed Research andTrademarkproducts development

Software

Other

Total

Acquisition cost
Balance at April 1, 2021

39,30466,02917,853

6,618

6,779

276

97,555Addition

-

135

4,623

2

553

220

5,533

Disposition--(1,653)

-

(103)

-

(1,756)

Transfer-

2,927(2,927)

-

7

(7)

-

4,146

5,586

615

697

83

8

6,989

-

-

-

-

231

(20)

211

43,45074,677

18,511

7,317

7,550

477

108,532

Balance at April 1, 2021-

(32,163)(5,464)(9)(5,421)(26)(43,083)

Amortization expenses-(6,344)

-

-

(531)

(42)

(6,917)

Impairment(39,897)(16,533)(5,002)(6,709)--(28,244)

Disposition

-

-

1,631

-

91

-

1,722

(3,553)(4,490)

(560)

(598)

(71)

-

(5,719)

-

(14)

11

1

-

-

(2)

(43,450)(59,544)(9,384)(7,315)(5,932)(68)(82,243)

39,30433,866

12,389

6,609

1,358

250

54,472-

15,133

9,127

2

1,618

409

26,289Exchange differences
Other
Balance at March 31, 2022
Accumulated amortization
amount and accumulated
impairment losses

Exchange differences
Other
Balance at March 31, 2022
Carrying amount
Balance at April 1, 2021
Balance at March 31, 2022

-30-

Year ended March 31, 2023
Yen (in millions)Intangible Assets
Goodwill

Marketed Research andTrademarkproducts development

Software

Other

Total

Acquisition cost
Balance at April 1, 2022

43,45074,677

18,511

7,317

7,550

477

108,532

Addition

-

225

7,394

-

497

496

8,612

Disposition

-

(27)

(1,016)

-

(222)

(24)

(1,290)Transfer-

4,679(4,679)

3

38

(40)

-

Transfer to Assets held forsale-(15,400)

-

-

-

-

(15,400)

3,955

5,559

569

665

80

6

6,879

-

-

-

-

-

(12)

(12)

47,40569,712

20,779

7,985

7,943

902

107,321

Balance at April 1, 2022

(43,450)(59,544)(9,384)(7,315)(5,932)(68)(82,243)

Amortization expenses-(4,331)

-

(0)

(630)

(62)

(5,024)

Impairment and reversal of
impairment

-

1,416

(3,253)---(1,838)

Disposition

-

22

1,016

-

138

-

1,176

Transfer to Assets held forsale-

13,775----

13,775(3,955)(4,768)

(569)

(665)

(68)

-

(6,071)

-

(312)

312

-

-

-

-

(47,405)(53,743)(11,879)(7,980)(6,492)(130)(80,225)

Balance at April 1, 2022-

15,133

9,127

2

1,618

409

26,289Balance at March 31, 2023-

15,969

8,900

4

1,450

772

27,096

Exchange differences
Other
Balance at March 31, 2023
Accumulated amortization
amount and accumulated
impairment losses

Exchange differences
Other
Balance at March 31, 2023
Carrying amountThe table below provides information about significant intangible assets:
Yen (in millions)
Carrying amountas of March 31,

Category

2022
Zomig®

Marketed products-31-

Remainingamortization period
as of March 31, 2023

2023
786

258

1 yearSawai has two CGUs: the Japan Business Segment and the U.S. Business Segment. Details of the impairment test and impairment
loss for each CGU are as follows:Year ended March 31, 2022
Impairment Related to Japan Business Segment
During the year ended March 31, 2022, Sawai recognized impairment losses related to Marketed Products and Research andDevelopment in the Japan Business segment.
Research and Development are tested annually for impairment and Marketed Products are tested whenever indicators of impairment
arise. The recoverable amount of the CGU, which is based on value-in-use, has been derived from discounted forecast cash flow
models, pre-tax WACC of 5.4% as of March 31, 2022. The forecast cash flows involve number of assumptions, including future
sales price and volume growth, costs, the future expenditure required to maintain the product’s marketability and registration in therelevant jurisdictions. These assumptions are based on historical experience and are reviewed as part of management’s budgeting andstrategic planning cycle for changes in market conditions and sales erosion through competition. A change in these assumptions may
have a significant impact on the amount, if any, of an impairment charge.
Following is a summary of impairment losses recognized in the Japan Business Segment in the year ended March 31, 2022:
Yen (in millions)
Amount of impairment loss
Marketed products

231

Research and development

2,002

Total

2,233

Impairment losses related to marketed products arose from a decrease in the expected profitability of certain products due tocompetition with other companies. Impairment losses related to research and development arose from a decrease in the expected
profitability of certain ongoing development projects due to the abandonment of some of those projects, changes in the market
situation, and competition. Those impairment losses are included in “Research and development expenses” in the consolidated
statements of income.
Impairment Related to U.S. Business Segment
U.S. Business segment saw entries of competitors for its main products one after the other during the year ended March 31, 2022 andeven though it strived to expand the number of products placed on the market, the business environment was severe. Therefore,
Sawai considered how its subsidiary Upsher-Smith Laboratories, LLC should attain sustainable growth and decided to embark on
business restructuring. As a result of this review of its future plan for the U.S. Business segment, which represents a cash generating
unit (CGU), Sawai determined that the recoverable amount of the CGU would be less than book value.
The recoverable amount of the CGU is valued at JPY 53,760 million based on its fair value less disposal costs for intangible assets(marketed products and research and development, classified as level 3 inputs in the fair-value hierarchy) and based on the value-inuse of the other assets. The recoverable amount is calculated by discounting the value of future cash flows forecast based on thebusiness plan of the U.S. Business segment to their present value. For the calculation for the year ended March 31, 2022, a 5-year
forecast of cash flows, a terminal growth rate of zero, and a pre-tax WACC (discount rate) of 8.5% to 10.5% were used. There is
uncertainty in the future revenue price and volume growth included in the business plan and a change in these assumptions may havea significant impact on the forecast cash flows, even though management has reasonably estimated the main assumptions. In
addition, estimation of the terminal growth rate and discount rate requires the high skills and technical talent of valuation in terms of
the use of unobservable inputs and valuation method.

-32-

Following is a summary of impairment losses recognized in the U.S. Business Segment in the year ended March 31, 2022:
Yen (in millions)
Amount of impairment loss
Buildings and structures (Property, plant and equipment)

858

Machinery and equipment (Property, plant and equipment)

286

Construction in progress (Property, plant and equipment)

1,717

Goodwill

39,897

Marketed products (Intangible assets)

16,302

Research and development (Intangible assets)

3,001

Trademark (Intangible assets)

6,709

Total

68,770

Impairment losses above are included in the following account on the consolidated statements of income.
Yen (in millions)
Amount of impairment loss
Cost of sales

2,299

Selling, general and administrative expenses

14,141

Research and development expenses

5,724

Other expenses

46,606

Total

68,770Year ended March 31, 2023
Impairment Related to Japan Business Segment
During the year ended March 31, 2023, Sawai recognized impairment losses related to Marketed Products and Research andDevelopment in the Japan Business segment.
Research and Development are tested annually for impairment and Marketed Products are tested whenever indicators of impairment
arise. The recoverable amount of the CGU, which is based on value-in-use, has been derived from discounted forecast cash flow
models, pre-tax WACC of 4.7% as of March 31, 2023. The forecast cash flows involve number of assumptions, including future
sales price and volume growth, costs, the future expenditure required to maintain the product’s marketability and registration in therelevant jurisdictions. These assumptions are based on historical experience and are reviewed as part of management’s budgeting andstrategic planning cycle for changes in market conditions and sales erosion through competition. A change in these assumptions may
have a significant impact on the amount, if any, of an impairment charge.
Following is a summary of impairment losses recognized in the Japan Business Segment in the year ended March 31, 2023:
Yen (in millions)
Amount of impairment loss
Marketed products

210

Research and development

3,253

Total

3,463

Impairment losses on intangible assets related to marketed products mainly arose from a decrease in profitability due to the impact of
NHI drug price revision. Impairment losses related to research and development arose from a decrease in the expected profitabilityof certain ongoing development projects due to the abandonment of some of those projects, changes in the market situation, andcompetition. Those impairment losses are included in “Research and development expenses” in the consolidated statements ofincome.

-33-

Reversal of Impairment Related to U.S. Business Segment
In the U.S. Business Segment, Sawai is considering maximizing the value of intangible assets related to certain products on which
impairment losses have been recognized in prior periods by adopting such measures as increasing efficiency in sales promotion
activities for cost reduction and transferring such assets to other companies during the following fiscal year. Based on its
determination that those assets can be classified as held-for-sale, Sawai has estimated their recoverable amount in the case of theirtransfer and is reversing some of the impairment loss recognized on those assets in prior periods.
The recoverable amount of those assets is estimated to be equivalent to their fair value less disposal costs (classified as level 3 inputs
in the fair-value hierarchy), based on the most likely transfer price. Although management recognizes this fair value as reasonable,
there are uncertainties in the future tranfer, with a high likelihood of management’s judgement exerting a significant impact on fairvalue assessment.
Below is a summary of reversal of impairment losses recognized in the U.S. Business segment in the year ended March 31, 2023:
Yen (in millions)
Amount of reversal of
impairment losses
Marketed products

17.

Account on the consolidated
statements of income

1,626

Selling, general andadministrative expenses

Trade and Other Payables

The components of trade and other payables are as follows:
Yen (in millions)
March 31,
2022

2023

Trade accounts payable

28,66530,254

Other accounts payable

22,24722,561

Total

50,912

52,815Trade payables and other payables are classified as financial liabilities measured at amortized cost.

18.

Bonds and Borrowings

The components of bonds and borrowings are as follows:
Yen (in millions)
March 31,2022
Short-term borrowings

2023-

10,000Current portion of long-term borrowings

3,117

3,034

Current portion of bonds

9,999

-

Long-term borrowings, less current portion

53,63360,098

Total

66,74973,133

Bonds and borrowings (current)

13,116

13,034

Borrowings (non-current)

53,63360,098-34-

The composition of the bonds is as follows:
Yen (in millions)
March 31,Principal amount inIssue date
contractual currency

Name of Bond
1st Unsecured Bonds

June 2015

2022

10,000Interest
Maturity
rate

2023
9,999

-

9,999

-

0.67%

June 2022

The composition of the borrowings is as follows:
Yen (in millions)
Name of Borrowings

Carrying amountMarch 31,

Original principal
amount2022

Interest rate

Maturity

2023

Short term variable rateloans

10,000-10,0001-month TIBOR+ 0.3%

April 2023

2017 fixed rate loans

13,00013,00013,0000.67%

December 2027

2017 variable rate loans

47,00033,75030,6333-month TIBOR+ 0.35%

December 2032

2020 fixed rate loans

10,00010,00010,0000.35%

December 2025

2022 fixed rate loans

9,500

-

9,500

0.45%

June 2027

56,75073,133

Changes in liabilities accompanying changes in cash flows from financing activities are as follows:Year ended March 31, 2022
Yen (in millions)
Changes by non-cash elements
Foreign
Acquisition
exchange
Othermovement
8

Balance atthe beginning of
the year

Cash flows fromfinancing
activities

9,991

-

60,584(3,834)---56,75070,575(3,834)--

8

66,749Yen (in millions)
Changes by non-cash elements
Foreign
Acquisition
exchange
Othermovement
1

Balance at the end of
the year

Bonds
Long-term
borrowings
Total

Balance at the end of
the year
9,999

Year ended March 31, 2023

Bonds
Short-termborrowings
Long-term
borrowings
Total

Balance atthe beginning of
the year

Cash flows fromfinancing
activities

9,999(10,000)-

10,00056,750

6,382

-

-

-

63,13366,749

6,382

-

-

1

73,133

10,000-35-

19.

Provisions

Changes in provisions are as follows:
Yen (in millions)
Provisions for
drug productsafety assessment

Provisions forcompensation forthe loss

502

777

102

1,381

Increase

-

46

-

46

Usage

April 1, 2022

Other

Total

(358)

(471)

-

(829)

Reverse

-

(306)

-

(306)

Other

-

-

(1)

(1)

March 31, 2023

144

46

101

291

Provisions (current)

144

46

-

190

-

-

101

101

Provisions (non-current)

In anticipation of conducting pharmaceutical product safety assessments required by the amended quality guidelines issued by theJapanese authorities in conformity with the International Council for Harmonization of Technical Requirements for Pharmaceuticals
for Human Use (ICH) guideline Q3D, Sawai recognizes the estimated amount of costs for future assessment of its goods andproducts as “provisions for product safety assessments.” Such costs are normally expected to be paid within one year.
Moreover, in anticipation of paying compensation in consultation with suppliers, Sawai recognizes the estimated amount necessary
to cover expenses for compensation in the future as “provisions for compensation for loss.” Such expenses are normally expected tobe paid within one year.
Other provisions mainly consist of asset retirement obligations of ROU assets.
Sawai reviews and adjusts each provision if its estimate changes significantly.

20.

Other Financial Liabilities

The components of other financial liabilities are as follows:
Yen (in millions)
March 31,
2022

2023

Financial liabilities measured at amortized cost
Guarantee deposits

2,829

2,996

Lease liabilities

4,479

3,941

Total

7,308

6,936

Other financial liabilities (current)

4,419

4,444

Other financial liabilities (non-current)

2,889

2,492

-36-

21.

LeasesAs a Lessee
The amounts recognized in profit or loss are as follows:
Yen (in millions)Year ended March 31,
2022

2023

Interest expense on lease liabilities

53

46

Expense relating to short-term leases

381

407

Expense relating to leases of low-value assets

101

157

Expense relating to variable lease payments

30

36

1,905

-

Gain on sale and leaseback transaction

The following table shows the depreciation expenses for right-of-use assets by class of underlying asset. Note 15 sets
out the information of the carrying amount of right-of-use assets by class of underlying asset.
Yen (in millions)Year ended March 31,
2022

2023

Buildings and structures

669

734

Machinery and equipment

232

221

Tools, furniture and fixtures

49

45

Total

950

1,001

The following table shows the maturity analysis of lease liabilities.
Yen (in millions)
March 31,
2022

2023

Current portion

1,602

1,456

Over 1 year and within 5 years

2,516

2,484

Over 5 years

489

89

Total

4,607

4,030

Present value of total minimum lease payment

4,479

3,941

Lease liabilities (current)

1,590

1,449

Lease liabilities (non-current)

2,889

2,492

The total cash outflow for lease for the year ended March 31, 2022 and 2023 were JPY 2,281 million and JPY 2,583
million, respectively.
Leases of inventory warehouse represents major parts of lease transactions by Sawai, for which the typical lease termis 1 year. Sawai assesses to determine the lease term whether there is an option to extend or terminate lease to be
exercised with reasonable certainty taking into a consideration if penalty imposed on the cancellation of lease issignificant. Sawai has assessed that Sawai is not reasonably certain to exercise the option to extend lease after theperiod penalty is imposed on.

-37-

22.

Other current liabilities

The components of other current liabilities are as follows:
Yen (in millions)
March 31,
2022

23.

2023

Accrued bonuses

3,658

3,878

Accrued expenses

3,377

3,442

Accrued consumption taxes

535

73

Other

750

377

Total

8,320

7,771

Employee Benefits

Amount recognized as expenses in relation to the defined contribution plan is JPY 714 million and JPY 773 million for year ended
March 31, 2022 and 2023, respectively.

24.

Equity and other Equity Items(1)

Share Capital and Capital Surplus

The components of share capital and capital surplus are as follows:
Number of shares
Number of sharesauthorizedissued(Thousands of shares) (Thousands of shares)

Capital surplus

Share capital(Yen in millions)(Yen in millions)41,21942,45377,60043,791

Increase---

31,219Decrease--(31,219)-

77,60043,791

10,00073,672----

Balance as of April 1, 2021

Balance as of March 31, 2022
Increase
Decrease
Balance as of March 31, 2023

-

-

-

(35,959)

77,60043,791

10,00037,714The decrease in the amount of share capital and the increase in the amount of capital surplus in the year ended March 31, 2022 were
due to a share transfer. The decrease in the amount of capital surplus in the year ended March 31, 2023 was due to dividend payment
and transfer of some capital surplus to retained earnings.
(2)

Treasury Shares

Number of treasury shares and an increase/decrease in its amount are as follows:
Number of shares(Thousands of shares)-

Balance as of April 1, 2021

Amount(Yen in millions)-

Increase

02

Decrease--

Balance as of March 31, 2022

02

Increase--

Decrease

-

-

0

2

Balance as of March 31, 2023

The increase in the number of treasury shares in the year ended March 31, 2022 was due to shareholders’ requests for Sawai topurchase shares of less than one unit.

-38-

(3)

Other Components of Equity
Year ended March 31, 2022
Yen (in millions)
Changes in
Foreign currency
financial assets
translation
measured at
differences
FVOCI

Reserve for sharebased payments

Total

Balance at the beginning of the year

437

1,352

388

2,177

Other comprehensive income

-

566

5,137

5,703

Total current comprehensive income

-

566

5,137

5,703

Forfeiture of share based payment

(242)

-

-

(242)

Share-based payments

50

-

-

50

Total transactions with owners

(192)

-

-

(192)

Balance at the end of the year

245

1,918

5,525

7,688

Year ended March 31, 2023
Yen (in millions)
Changes in
Foreign currency
financial assets
translation
measured at
differences
FVOCI

Reserve for sharebased payments
Balance at the beginning of the year

245

1,918

5,525

7,688

Other comprehensive income

-

345

4,113

4,457

Total current comprehensive income

-

345

4,113

4,457

145

-

-

145

Share-based payments

25.

Total

Total transactions with owners

145

-

-

145

Balance at the end of the year

390

2,263

9,637

12,289Total amount ofdividends(Yen in millions)

Dividends per
share
(Yen)

Date of record

Effective date

2,846

65

March 31, 2021

June 29, 2021

2,846

65

Total amount ofdividends(Yen in millions)

Dividends per
share
(Yen)

Date of record

Effective date

2,846

65

March 31, 2022

June 27, 2022

2,846

65

Dividends

Amount of dividends and dividends per share are as follows:Year ended March 31, 2022
Declaration date
Annual general meeting of shareholders,
Sawai Pharmaceutical Co., Ltd.
(June 28, 2021)
Board of Directors’ meeting(November 12, 2021)

September 30, 2021 December 3, 2021

Year ended March 31, 2023
Declaration date
Annual general meeting of shareholders(June 24, 2022)
Board of Directors’ meeting(November 8, 2022)-39-

September 30, 2022 December 2, 2022

Dividends declared for which the effective date falls in the following year are as follows:Year ended March 31, 2022

Date of resolution

Total amount of Dividend amountdividends
per share(Yen in millions)(Yen)

Annual general meeting of shareholders(June 24, 2022)

2,846

65

Record date

Effective date

March 31, 2022

June 27, 2022

Record date

Effective date

March 31, 2023

June 28, 2023

Year ended March 31, 2023

Date of resolution

Total amount of Dividend amountdividends
per share(Yen in millions)(Yen)

Annual general meeting of shareholders(June 27, 2023)

26.

Financial Instruments(1)

Capital Management

2,846

65

Sawai sets a basic policy for capital management to maintain the optimum capital composition, which improves capital efficiency
securing financial soundness and flexibility to continue corporate value improvement and realize return improvement toshareholders.
Sawai conducts monitoring of financial indices to maintain the optimum capital composition. Sawai continuously monitors its credit
rating for soundness and flexibility of finance and return on equity attributable to owner of the Company (ROE) for its capitalefficiency.
There are no material capital regulations applied to Sawai.
(2)

Risk Management Policy

Sawai is exposed to various financial risks (credit risk, market risk and liquidity risk) in performing business activities. Therefore,
based on internal rules, Sawai monitors financial risks on a regular basis and carries out measures for avoiding or reducing risks asnecessary.
Sawai does not conduct any derivative transactions.
(3)

Credit Risk

[1]

Overview

Credit risk means the risk of financial losses incurred by Sawai if customers or counterparties of financial instrument transactions
cannot perform obligations under contracts, which mainly arises from the receivables and contract assets of Sawai from customers.
(i)

Credit risk management

The credit risk in Sawai arises principally from receivables from customers, which resulted in Sawai mainly focusing on the credit
risk management for its trade receivables. Sawai considers that its cash and cash equivalents have low credit risk based on theexternal credit ratings of banks that hold the cash and cash equivalents.
Sawai has established a credit policy under which each new customer is analyzed individually for creditworthiness before Sawai’s
standard payment and delivery terms and conditions are offered. Sawai’s review includes financial statements, industry informationand in some cases bank references. Sale limits are established for each customer and reviewed annually. Any increase from those limits
requires approval of the person in charge, in accordance with Sawai’s internal policy. In order to limit its exposure to credit risk fromtrade receivables, Sawai receives cash from small sized customers as guarantee deposits to secure the payment from these customers.

-40-

(ii)

Concentration of credit risk

In the Japan Business segment, Sawai sells products mainly through a small number of wholesalers. Total revenue from the top
four companies account for approximately 56% of revenue in the Japan Business. Trade receivables with the top four companies
were JPY 25,387 million and JPY 25,822 million as of March 31, 2022 and 2023, respectively.
[2]

Credit exposure

The maximum exposure to credit risk of financial assets equals to the carrying amount of the financial assets which is net ofallowances for ECLs, while there was no material impairment loss in the previous years.
[3]

Changes in loss allowance

Loss allowance for the year ended March 31, 2022 and 2023 were as follows:Year ended March 31, 2022
Yen (in millions)
Loss allowance measured Loss allowance measured
at the amount equal to at the amount equal to 12lifetime expected credit
month expected credit
loss
loss
Balance at the beginning of the year

Total

24

-

24

Increased amount during the period

-

-

-

Decreased amount during the period(utilization)

(3)

-

(3)

Decreased amount during the period(reversal)

(3)

-

(3)

18

-

18

Balance at the end of the year
Year ended March 31, 2023

Yen (in millions)
Loss allowance measured Loss allowance measured
at the amount equal to at the amount equal to 12lifetime expected credit
month expected credit
loss
loss
Balance at the beginning of the year

Total

18

0

18

Increased amount during the period

0

-

0

Decreased amount during the period(utilization)

-

-

-

Decreased amount during the period(reversal)

-

(0)

0

18

0

19

Balance at the end of the year

-41-

[4]

The exposure to credit risk for financial assets

The following table provides aging analysis of the exposure to credit risk of financial assets at the end of reporting period:
As of March 31, 2022
Yen (in millions)
Trade receivables andcontract assets for whichloss allowance ismeasured at the amountequal to lifetime expectedcredit loss

Other receivables forwhich loss allowance ismeasured at the amountequal to 12-month
expected credit loss

61,593

3,482

65,075

Within 30 days

-

-

-

Over 30 days within 60 days

-

-

-

Over 60 days within 90 days

-

3

3

Over 90 days within 1 year

-

-

-

Not past due

Over 1 year
Total

Total

-

-

-

61,593

3,485

65,078

As of March 31, 2023
Yen (in millions)
Trade receivables andcontract assets for whichloss allowance ismeasured at the amountequal to lifetime expectedcredit loss

Other receivables forwhich loss allowance ismeasured at the amountequal to 12-month
expected credit loss

62,4694,544

67,013

Within 30 days

-

12

12

Over 30 days within 60 days

-

-

-

Over 60 days within 90 days

-

-

-

Over 90 days within 1 year

-

-

-

Over 1 year

-

-

-

62,4694,557

67,026

Not past due

Total
[5]

Total

Details of security and other credit supplementation

Sawai holds guarantee deposits as a security for some trade receivables. Balance of guarantee deposits recorded in other financial
liabilities at the end of reporting period is as follows:
Yen (in millions)
March 31,2022
Guarantee deposits

2023
2,829

-42-

2,996

(4)

Liquidity Risk

[1]

Overview

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are
settled by delivering cash or another financial asset.
[2]

Maturity analysis

Balance by maturity date of financial liabilities of Sawai is as follows:
As of March 31, 2022
Yen (in millions)
Over
Over
1 year
2 years
withinwithin2 years
3 yearsOver
3 years
within4 yearsOver
4 years
within5 years

Carrying
amountContractual
cash flows

Within1 yearOver
5 years

Bonds

9,999

10,01010,010

-

-

-

-

-

Borrowings

56,75058,164

3,372

3,273

3,434

13,3253,287

31,473

Refundliabilities

7,581

7,581

7,581

-

-

-

-

-

Guarantee
deposits

2,829

2,829

2,829

-

-

-

-

-

Total

77,15978,58423,792

3,273

3,434

13,3253,287

31,473

Yen (in millions)
Over
Over
1 year
2 years
withinwithin2 years
3 yearsOver
3 years
within4 yearsOver
4 years
within5 yearsOver
5 years(Note) For lease liabilities, refer to Note 21.

As of March 31, 2023

Carrying
amountContractual
cash flows

Within1 yearBorrowings

73,13374,503

13,321

3,482

13,372

3,333

25,78815,206

Refundliabilities

5,440

5,440

5,440

-

-

-

-

-

Guarantee
deposits

2,996

2,996

2,996

-

-

-

-

-

Total

81,56982,93921,757

3,482

13,372

3,333

25,78815,206(Note) For lease liabilities, refer to Note 21.

[3]Committed Credit Line

Sawai has committed credit lines with five financial institutions in order to efficiently procure working capital as follows:
Yen (in millions)
March 31,2022

Total committed credit lines
Usage during the year
Unused credit lines

-43-

2023
16,00016,000-10,00016,000

6,000

(5)

Market Risk

[1]

Overview

Market risk is the risk related to market price changes, including foreign exchange rate, interest rate and stock price, which impacts
Sawai’s income or the value of financial instruments held by Sawai. The purpose of market risk management is to maximize returns
while managing and controlling exposure to market risk within a tolerable range.
[2]

Exchange risk

Sawai is mainly exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in whichpurchases are denominated. The currency in which these transactions are primarily denominated in U.S. dollars. Sawai hedges theestimated foreign currency exposure in its purchase transaction in U.S. dollars by investing a foreign currency deposit in U.S. dollars
under its risk management policy.
(i)

Exposure to exchange risk

Summary of quantitative data of Sawai’s exchange risk exposure, which were submitted to Sawai’s management based on the risk
management policy, is as follows:
Yen (in millions)
March 31,
2022

(ii)

2023

Financial assets

846

846

Financial liabilities(308)(1,041)

Net amount of exposure in the consolidated statement offinancial position

538

(195)

Net amount of exposure

538

(195)

Exchange sensitivity analysis

Sawai is exposed mainly to U.S. dollars exchange risk. The strengthening (weakening) of Yen against the U.S. dollars by 10% would
have affected the measurement of financial instruments denominated in a foreign currency held by Sawai at the end of reporting
period and affected equity and profit or loss by the amounts shown below (net of tax). This analysis assumes that all other variables,in particular interest rates, remain constant. In this regard, they do not include the impact on translation into Yen for assets, liabilities,
revenue and expenses of foreign operations.
Year ended March 31, 2022
Profit or loss
Strengthening

Equity, net of tax

Weakening(5)

5Strengthening

Weakening(5)

5Year ended March 31, 2023
Profit or loss
Strengthening
2

Equity, net of tax

Weakening(2)

Strengthening

Weakening

2

(2)

-44-

[3]

Interest rate risk

Sawai conducts financing by interest-bearing liabilities. Variable interest rate applies to some interest-bearing liabilities, which areexposed to interest rate fluctuation risk.
If the interest rate increases by 1% on the financial instruments issued by Sawai as of the reporting date to which the variable interest
rate applies, an impact on net profit or (loss), gross of tax, is JPY (338) million and JPY (406) million in the year ended March 31,
2022 and 2023.
Exposure to interest fluctuation risk is as follows:
Yen (in millions)
March 31,2022
Borrowings to which variable interest rate applies[4]

Stock price risk(i)

Exposure to stock price risk

2023
33,75040,633

Sawai holds equity securities in certain companies and is exposed to the market price risks. These equity instruments were acquired
for the strategic purposes, taking into consideration of various relationships and factors with customers or other business partners.
Sawai periodically confirms the validity and reasonableness of holding the instruments, both from strategic and financial perspective.
(ii)

Stock price sensitivity analysis

The following summarizes the impact (net of tax) to the equity of Sawai at the reporting date if equity instruments would havedecreased by 10%:
Yen (in millions)
March 31,
2023

2022
10% decrease in stock price(6)

Classification of Accounting and Fair Value[1]

Calculation method of fair value(i)Equity securities

(365)

(390)

Fair value of equity securities is measured by market price. For investment in private company, fair value is measured using
appropriate valuation method based on investees’ financial condition and projections.
(ii)

Bonds and borrowings

Fair value thereof is measured by the method calculating by discounting at the interest rate expected in the case of similar new
financing for the total of principal and interest and with the same terms.

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[2]

Fair value hierarchy level

Each level is defined as follows:
Level 1: Market price (unadjusted) of the same assets and liabilities in active markets
Level 2: Input directly (that is, by price) or indirectly (that is, due to price) observable for assets and liabilities other than market
price included in Level 1.
Level 3: Input about assets and liabilities not based on the observable market data (unobservable input)
Transfer between fair value hierarchy levels is recognized on the day of change of events or situations that caused transfer.
[3]Comparison between fair value and carrying amount
Yen (in millions)
March 31,
2022
Carrying
amount2023
Fair value

Carrying
amountFair value

Financial liabilities measured at amortized cost
Bonds

9,999

10,023－－

Borrowings

56,75057,00973,13373,351

66,74967,032

73,13373,351Total

The carrying amount of financial assets and financial liabilities other than the above is a reasonable approximation of fair value.
The levels of fair value of bonds and borrowings are classified as Level 2.

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[4]

Measurement of fair value recognized in the consolidated statement of financial position
As of March 31, 2022
Yen (in millions)Level 1

Level 2

Level 3Total

Equity instruments measured at fair value
through other comprehensive income
Equity securities

5,258

-

1,664

6,922

During the year ended March 31, 2022, Sawai transferred the category of some of its equity securities from Level 3 to Level 1
because the company in which Sawai held those shares was newly listed on an exchange and published price quotations for thosesecurities in the active market became available. Sawai makes this kind of category transfer in the fair-value hierarchy on the day of
the relevant actual event or the occurrence of the relevant actual situation.
As of March 31, 2023
Yen (in millions)Level 1

Level 2

Level 3Total

Equity instruments measured at fair value
through other comprehensive income
Equity securities

5,612

-

1,862

7,474

There was no financial instrument transferred between levels of the fair value hierarchy.
The following table illustrates a reconciliation from the beginning to the ending balance for Level 3 financial assets, which solely
consists of equity investment in private companies:
Yen (in millions)
March 31,2022
Balance at the beginning of the year

2023
1,499

1,664

Gain recognized as changes in fair value of financial
instruments measured at FVOCI

313

137

Purchases

211-

Sales or settlements

(210)

-

Transfers out of Level 3

(210)

-

61

60

1,664

1,862

Other
Balance at the end of the year

Reasonableness of the valuations is reviewed by the accounting department and approved by the department manager.

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(7)

Offsetting financial assets and financial liabilities

Financial assets and liabilities are offset and the net amount is reported in the consolidated statements of financial position where
Sawai currently has a legally enforceable right to offset the recognized amounts, and there is an intention to settle on a net basis or
realize the asset and settle the liability simultaneously.
Sawai gives chargeback programs to wholesalers in the United States. Under the term of the agreement, the amounts payable by
Sawai are offset against receivables from the wholesalers and only the net amounts are settled. Accruals for chargebacks recognized
as Refund liabilities are offset against Trade and other receivables in the statements of financial position.
The following table presents the recognized financial instruments that are offset as of March 31, 2022 and 2023.

Yen (in millions)
Effect of offsetting on the statement of financial position
Gross Amounts

Gross amounts set off

Net amounts presented

As of March 31, 2022
Financial assets
Trade receivables and others

70,742(5,683)65,059Total

70,742(5,683)65,059Refund liability

13,264(5,683)

7,581

Total

13,264(5,683)7,581

Trade receivables and others

71,911(4,904)67,007

Total

71,911(4,904)67,007

Refund liability

10,345(4,904)

5,440

Total

10,345(4,904)

5,440

Financial Liabilities

As of March 31, 2023
Financial assets

Financial Liabilities

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27.

Subsidiaries

The Company’s major subsidiaries are as follows:
Names of Major Subsidiaries

28.

Major Business Activities

Ownership ratioof voting rights(%)

Location

Sawai Pharmaceutical, Co., Ltd.

Manufacture and sale of ethicalpharmaceuticals

Japan

100.0

Medisa Shinyaku Inc.

Sale of ethical pharmaceuticals

Japan

100.0

Kaken Shoyaku Co., Ltd.

Manufacture and sale of ethicalpharmaceuticals

Japan

100.0

Trust Pharmatech Co., Ltd.

Manufacture and sale of ethicalpharmaceuticals

Japan

100.0

Sawai America Holdings INC.

Holding Company

US

100.0

Sawai America, LLC

Management of subsidiaries through holdingof interests in subsidiaries

US

80.0

Upsher-Smith Laboratories, LLC

Manufacture and sale of ethicalpharmaceuticals

US

80.0

Related Parties

Compensation for key management personnel is as follows:
Yen (in millions)Year ended March 31,
2022
Basic compensation and bonuses
Share-based compensation
Total

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2023
177

208

-

84

177

292

29.

Business Combination
Sawai, ORIX Corporation (Head office: Tokyo, Japan; hereinafter “ORIX”), and Kobayashi Kako Co., Ltd. (Head office: Fukui,Japan; hereinafter “Kobayashi Kako”) agreed that Sawai will take over Kobayashi Kako’s assets pertaining to production
activities and personnel of related divisions, and concluded a transfer agreement (hereinafter, this “Transfer Agreement”). Sawai
established Trust Pharmatech Co., Ltd., which acquired the assets in exchange for cash consideration on March 31, 2022.
1. Name and principal business of the acquiree
Company name: Kobayashi Kako
Principal business: manufacturing of generic pharmaceutical products
2. Primary reason for the business combination
Sawai is committed to strengthening its stable supply capabilities to increase its share in the Japanese generics market, as
stated in the Medium-Term Business Plan “START 2024” issued in May 2021. The core issue has been to obtain not only
manufacturing facilities but also the personnel engaged in drug manufacturing. The greatest reason for the decision for theTransfer Agreement is that by having them unite and act together with Sawai under its quality culture, we will be able tocontribute to resolving the supply problem in the generics industry. We also believe this is one step toward contributing to thegenerics industry, and to medical practitioners and patients.
3. Date of acquisition
March 31, 2022
4. Percentage of voting equity interests acquired
Sawai has established Trust Pharmatech Co., Ltd. as a new subsidiary (100% of ownership ratio of voting rights), which
received the facilities.
5. Fair value of assets acquired and the liabilities assumed, and breakdown of consideration transferred
Following is a summary of the assets acquired and liabilities assumed, and consideration transferred.
Yen (in millions)
Property, plant, and equipment

22,367

Other assets

285

Deferred tax assets

36

Deferred tax liabilities△3,870Gain on bargain purchase△8,704

Total net assets acquired

10,114Cash

10,114

Total consideration transferred

10,114

As a result of fair value measurement of assets acquired and liabilities assumed, fair value of net assets acquired exceeded
consideration transferred, which resulted in 8,704 million yen of gain on bargain purchase. Gain on bargain purchase isincluded in “other income” on the consolidated statements of income. Furthermore, acquisition related costs for the businesscombination in the amount of 50 million yen is included in “Selling, general and administrative expenses”.

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30.
(1)

Commitment and Contingency
Commitment

Commitment to acquire property, plant and equipment was JPY 35,989 million and JPY 25,035 million as of March 31, 2022 and2023, respectively.
(2)

Litigation

Sawai is involved in government investigations and litigation arising from the marketing of its pharmaceutical products in the UnitedStates.
Government investigation over USL
In January 2017, USL and its employees received subpoenas from the U.S. Department of Justice (“DOJ”) Antitrust Division seeking
documents and other information relating to the marketing and pricing of certain USL generic products and communications withcompetitors about such products. In May 2018, USL received a civil investigative demand from the DOJ Civil Division, pursuant to
the federal False Claims Act, seeking documents and information same as above. USL is cooperating with these subpoena requests.
Civil Antitrust Litigation
Beginning in December 2016 with respect to USL, numerous complaints have been filed in the United States on behalf of putativeclasses of direct and indirect purchasers of several generic drug products, as well as several individual direct and indirect purchaser
opt-out plaintiffs. These complaints, which allege that the defendants engaged in conspiracies to fix prices and/or allocate market
share of generic products have been brought against various manufacturer defendants, including USL. The plaintiffs generally seek
injunctive relief and damages under federal antitrust law, and damages under various state laws. All such complaints have beentransferred to the generic drug multidistrict litigation in the Eastern District of Pennsylvania.
Sawai has determined that outflow of economic resource is not probable from the complaints and thus has not recognized any
liabilities related to the complaints as of March 31, 2023.
Sawai will be required to compensate the plaintiffs out of its resources and recognize a loss if a settlement in the government
investigation or private actions is reached in the future.

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Always putting healthier lives firstIntegrated Report
Financial Section

2023

For the year ended March 31, 2023

1 Eleven-year financial and non-financial summary
3 Consolidated Statements of Income
4 Consolidated Statements of Comprehensive Income
5 Consolidated Statements of Financial Position
7 Consolidated Statements of Changes in Equity
8 Consolidated Statements of Cash Flows
9 Notes to the Consolidated Financial Statements
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