CORPORATE REPORT

2024

2-2-3, Iwamoto-cho, Chiyoda-ku, Tokyo 101-0032, Japan
Tel.: +81-3-3863-1211 Fax: +81-3-3864-5940

2024.08

Business Philosophy

The goal of the Nippon Chemiphar Group is to make adifference in society by providing pharmaceutical drugs
and health-related services to help people become andremain healthy.
Nippon Chemiphar has operated as a pharmaceutical company since its
founding in 1950.
Throughout the years, we have consistently developed, manufactured,and sold distinctive, original pharmaceutical formulations. Since the year
2000, we have made generics a pillar of our business and conducted related
development, manufacturing, and sales operations in-house.
We have taken on the challenges of diagnostic products that contributeto speedy diagnoses, as well as drug discovery and development which
are involved in the multifaceted deployment that leverages our expertise inalkalization therapy that we have cultivated over many years.

NIPPON CHEMIPHAR CORPORATE REPORT 2024
Contents
At a Glance

1

Pharmaceutical Products Segment

11

History of Value Creation

2

Others Segment

20

Value Creation Strategy

4

Sustainability Initiatives (for a Sustainable Society)21

Business Strategy

6

Corporate Data

33

Business Overview by Segment

10◆ Scope of Report
This report contains information regarding the Nippon
Chemiphar Group’s business strategy, financial situation,and corporate social responsibility-related activities.
• Reporting period: FY2023 (April 1, 2023–March 31,2024)• Reporting companies: Nippon Chemiphar Co., Ltd.
and its Group companies• Note Regarding Forward-looking Statements
Statements made in this corporate report with respect
to current plans, estimates, strategies and beliefs, andother statements of Nippon Chemiphar are forecasts for
the Company’s future performance. These forecasts are
based on information currently available to management.
Consequently, they are subject to known and unknown
risks and uncertainties and may differ significantly
from actual results. Items that may influence forwardlooking statements and forecasts include changes inthe economy, changes in the business and competitiveenvironment for Nippon Chemiphar’s business, revisions
to the Pharmaceutical Affairs Law and related legislation,and other items not limited to the above.

Cover painting
Provided by Paralym Art,* an association thatassists artists with disabilities to achieve economic
independence by supporting their business.

Title of work: “Move forward, move forward, let’s all fly
together”
The artist Mika Kamijo was born in Nagano Prefecture.
In 1995, her anosteic dysplasia (an extremely rareautosomal recessive genetic disorder suffered byonly five people worldwide) worsened and she washospitalized. While bedridden, she began drawing
pictures with the hospital staff.
This work represents an image of flying ahead like abird, come what may, against a background in the colorsof the SDGs.
* A welfare service for people with disabilities or intractablediseases who, due to reasons associated with age orphysical strength, have difficulty working at companies
or other conventional places of business. Through this
support, individuals can receive training involving lightwork or other forms of employment.

At a GlanceTime since Company founding

74 years(listed on the TSE in 1971)

Number of employees

887 persons(as of March 31, 2024)

Number of generic drugs available

220 products(as of March 31, 2024)

Percentage of female managers

12.2 %(Non-consolidated, as of April 1, 2024)

Rate of childcare leave taken2

110.0 %*
(men: 116.7%, women: 100%.
Calculated on an annual basis; as of March 31,
2024.)Net sales¥

30.7 billion(FY2023)

Manufacturing bases

Japan: 2
overseas: 1
Domestic installation of DropScreen

Over1,000 units(as of March 31, 2024)

Percentage of outside directors

37.5 %(three of eight directors, as of March 31, 2024)

Rate of paid leave taken

60.4 %(FY2023)* Based on the provisions of the Law Concerning the Welfare of Workers Who Take Care of Children or Other Family Members Including Child
Care and Family Care Leave (Law No. 76, 1991), the percentage of child care leave taken is calculated in accordance with Article 71-4-1 of
the Enforcement Regulations of the Law Concerning the Welfare of Workers Who Take Care of Children or Other Family Members IncludingChild Care and Family Care Leave (Ministry of Labor Ordinance No. 25, 1991).
Nippon Chemiphar Corporate Report 2024

1

History of value creation

Over the past 74 years, Nippon Chemiphar has remained true to the time-honored traditions it developed as a result of its
business activities. Keeping pace with the times, we have undertaken evolution as necessary, and spared no effort in taking on
new challenges.
We will continue to contribute to medical care through our generics, diagnostics, as well as new drugs. By continuing totake on new challenges, we will increase the value of the Group.

Main product developments and business strategies
1951

1957

1976

1988

1993

2000

2001

2007

2020

2021

2023

Manufacture andmarket our products,
Nalpyrin and Nalbron(injectable solutions,pain relievers, andantipyretics for use
by doctors).

Begin marketing
imported drugs.

Expand into theclinical diagnostics
business, in
anticipation of
the increasing
importance of premedication clinicaltests in the future.

The need for urinary
alkalinizationis recognized
in response
to increased
complications inpatients with goutand hyperuricemia
due to changes inliving conditions.
Launch alkalizing
agent Uralyt-U.

Launch Soleton tablets (an analgesic/antiinflammatory agent) developed in-house. The
product has few side effects.

Full-scale entry
into the genericdrug business.
Change business
policy from beinga new drug
manufacturer toa manufacturer
that handles bothnew drugs andgeneric drugs.

Launch allergy-specificIgE measurement
device DiaPack
2000 and dedicatedmeasurement reagent
IgE NC.

We decide to divide
our growth prospects
into three principal
goals as part of ourlong-term strategy.
The themes,
including genericdrugs and new
drug discovery
and development,
represent threestages that coverdiffering areasof business andtimescales.

Launch DropScreen, an allergy screening
test kit. It allows 41 items to be measured
with a single drop of blood. Of compact
design, the kit occupies a space about thesize of an A3 (29.7 cm × 42 cm) sheet ofpaper, allowing it to be used for in-hospitalallergy testing.

Sign a joint development agreement
and option agreement for NC-2800
with Sumitomo Pharma. NC-2800 is
a compound discovered at Nippon
Chemiphar’s drug discovery researchlaboratories. It has the potential to becomea revolutionary antidepressant/antianxiety
drug with superior efficacy and safety.

We define threemain areas ofbusiness in order tofurther develop eachof our three goals,
namely genericdrugs, diagnostics,
as well as new
drugs.

1958
Launch sales of
Donpyline tablets(therapeutic agent
for neuralgia andrheumatism),manufactured inhouse.

1983
Advance into thecosmetics and healthfood fields.

1995
Market Calvan tablets (for hypertension).

2003
Launch Pravastan,
the first in-housedeveloped
generic
drug.

Conclude a licensing agreement with
Delta-Fly Pharma for antitumor drug DFP14323. Development targeting lung cancer
is underway, and we are strengthening thepipeline in the oncology field.

Measuring device
A-1

2005

Sign a licensing agreement with DeltaFly Pharma for DFP-17729, a cancer
microenvironment improving agent.
Support development at Delta-Fly Pharma
with our expertise in alkalinization.

License out NC-2400(lipid metabolism
improving agent) toCerenis.

Starting in 1950

Business development centeredon pharmaceuticals for doctors,
and business expansion against
the backdrop of Japan’s universal
health insurance system.

Since 1980, have been
restoring trust and launching
new drugs

Following an incident of data falsification, newdrugs are launched as we strive to regain trust.

Specific IgE
measuring kit ST-1

Since 2000, expanding
generic drugs

Since 2015, pursuing new drug and new productdevelopment and overseas expansion funded byearnings from generics business.

Sale of generic drugs increases, resulting from government
policy promoting their use.

Business timeline(Sales, ¥ bn)
40
1950

1977

1982

2002

2010

2017

Establish Ibaraki Factory in
Makabe-gun, Ibaraki Prefecture(Nihon Pharmaceutical Industry's
current Tsukuba Factory).

The Ministry of Health, Labor andWelfare’s medical fee revisions for the firsttime include measures to promote the useof generic drugs.

Nihon Pharmaceutical Industry
Co., Ltd. becomes a subsidiary.

2014

Establish West Japan Logistics Centerin Kobe City, Hyogo Prefecture, thus
having one base each in both eastern
and western Japan.

Company changes name to Nippon Chemiphar Co., Ltd.

Clinical trial data submitted with application for
approval of three new drugs is found to havebeen partially falsified. The then-Ministry of
Health and Welfare orders an 80-day freeze
on Chemiphar’s manufacture and import of all
pharmaceuticals.

Third plant at NPI’s Tsukuba
factory comes on line.

2018

1973

1986

Establish Hitachi Chemical Co., Ltd. (as Chemiphar was formerly
known) with the main business being the manufacture and saleof pharmaceuticals.

1970

30

2007
A quantitative target for generic drugs(30% or more) is set for the first time in thebasic policy of the government’s economic
and fiscal reforms.

Safety Research Institute for ChemicalCompounds Co., Ltd. becomes a subsidiary.

Establish laboratory in Misato City, Saitama Prefecture.

NC-VN factory starts exporting to Japan.

20
1979

1976

10

2015

Establish office in London tocollect information on overseas
products for market research.

Establish Nippon Chemiphar
Vietnam Co., Ltd. (NC-VN)
in Vietnam.

• Transfer to the Tokyo Stock Exchange’s First Section• Establish Japan Sopharchim Co., Ltd. to ensure astable supply of fine chemicals.

Sale of generic drugs2

Net sales1

2023
Total number of DropScreen units
installed exceeds 1,000.
Notes 1. Sales are presented on aconsolidated basis since FY1999.
2. We have disclosed sales ofgeneric drugs since FY2004.

0
FY 1950

2

1970

Nippon Chemiphar Corporate Report 2024

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2023

Nippon Chemiphar Corporate Report 2024

3

Value Creation Strategy

Nippon Chemiphar Group’s Value Creation Strategy

Business Model
Input*

Three business areas

Financial capital
Consolidated net
assets: ¥49 billion

Generic drugs thatlead to lightened burdens
on patients and publicfinanceIntellectual
capital
R&D: ¥2 billion

Creation of breakthroughdrugs
Manufacture and stablesupply of high-quality
pharmaceutical drugs
Greater safety of, andconvenience in,pharmaceutical drugs

Manufactured
capitalFactories: Japan,
abroadSocial andrelationshipcapitalWork with business
partners

Natural capital
Energy use (crude oil
equivalent) 6,695kl

Integrated system to develop,
manufacture, and market
generic drugs.

Generic drugs (p. 11)

Offered value
Increased patient
quality of life

We aim to market distinctive generic drugs in the pursuit of quality.

Diagnostics (p. 13)
We are expanding our business by developing innovative products based on coretechnologies cultivated for the treatment of allergies.

New drug
discovery and development (p. 14)
We are developing and monetizing groundbreaking new drugs based on our
proprietary technologies and on expertise that includes alkalization therapy.

Overseas business (p. 18)
We are aggressively expanding ourthree business areas into overseas markets and becoming a group with a strong
global presence.

OthersSegment

Market demands

Pharmaceutical Products Segment

Human capital
Employees: 887 people(consolidated)

Strengths

Contracted testing (p. 20)
We use a comprehensive one-stop system to provide total support for non-clinicaland clinical trial.

Factories in Japan and abroad
attain advanced manufacturing
technology, become costcompetitive.
Broader information delivery,
data gathering resulting frommarketing new drugs.

Expertise in alkalizers andcitrate preparations.

Venture-based drug discovery
research targeting earlyout-licensing to domestic andoverseas companies.
Adoption of new technologies,
collaboration with specialists invarious disciplines and fields.

• Quality assurance and stable supply (p.12)• Initiatives to reduce environmental impact (p. 21)• Contribution to local communities (p. 24)• Corporate governance (p. 27)

Extended
healthy life spans

Reduced patientburden, healthcare
expenses
Employee fulfillment
in personal growththrough work
Stable, sustainable
shareholder returns

Safeguarding of
global environment

Community
involvement• Compliance and risk management (p. 30)

Our corporate philosophy, principles of conduct, support for employee abilities, and training system (p. 25)* Based on the IFRS (former IIRC)
framework for FY2023 results.

4

Nippon Chemiphar Corporate Report 2024

Sustainable growth in corporate value through value creation cycle

Nippon Chemiphar Corporate Report 2024

5

Business Strategy

Management Strategy: Three Business Areas
Since 2000, the Nippon Chemiphar Group has been working to attain three principal goals. In order toadvance the themes of those goals, the Group has determined three main areas of business: generics,
diagnostics, and new drugs including alkalizing agents.
By expanding these business areas overseas, the Group will maximize its corporate value andachieve sustainable growth.

Main Business Areas

Generic drugs
Develop a distinctive generic drug
business that pursues quality.

Fiscal 2023 business• In addition to further strengthening
our quality assurance system, we are
pursuing improvements in manufacturing
capacity through additional capital
investment in domestic factories andincreased personnel, while cutting costs
and increasing efficiency throughout our
supply chain.

Diagnostics
Expand business by developing innovative
products based on core technologies
cultivated in the field of allergy.

• Since its launch in 2020, more than 1,000
units of DropScreen have been installed inJapan. Our aim is to increase this numberin the domestic and overseas markets.

New drugs
Continuously develop and monetize
groundbreaking new drugs based on our
proprietary technologies and know-how,including alkalization therapy.

Overseas BusinessRealize a global presence by aggressively
developing our three areas of businessabroad.

6

Nippon Chemiphar Corporate Report 2024

• Phase I study of NC-2800 completed.
Phase III study of DFP-14323 commences in
February 2024.

• Obtained approval in China for Epinastine
tablets, and in Vietnam for both Rebamipide
and Febuxostat tablets. Target countries
and partners for product sales in the
Middle East and Africa are being narrowed
down and are currently in negotiations for
multiple products.

Message to Our Stakeholders
The Nippon Chemiphar Group has been working toattain its three principal goals since 2000. In order tofurther advance the themes of those goals, the Grouphas created three main areas of business: generics,
diagnostics, and new drugs.
By expanding these areas overseas, graduallyattaining sustainable development, and maximizing
our corporate value, I believe we can build a businessmodel with incomparable value for all our stakeholders.
It is our view that our FY2023 financial results weresignificantly affected by temporary factors, such as
the impact of shipment adjustments made in the third
quarter of the previous fiscal year, which continued
through the first half of FY2023; the sluggish allergy
market, due to the lower-than-anticipated amountof airborne pollen in the fourth quarter; and the factthat the new drug out-licensing agreement that we
expected to be concluded in the second half of the
fiscal year did not result in a contract.
In fiscal 2024, we expect to achieve a return toprofitability. Certainly, the Pharmaceutical Products
segment faces the impact of drug price revisions,but the recovery trend from the second half of theprevious fiscal year continues. In addition, we expect
to gain further domestic market penetration for our
DropScreen allergy screening kit, which has been
growing remarkably in recent years.
With the ongoing changes to the environment
surrounding the Japanese economy andpharmaceutical industry, the Nippon Chemiphar
Group’s goal is to contribute to society through ourunique initiatives and thereby develop our business.
To the end, we will plan to continue making
Company-wide efforts in its three areas of business tohelp patients suffering from diseases for which there is
still no adequate treatment, and to alleviate further theburden on patients and national healthcare costs.
We look forward to your continued support.

Kazushiro Yamaguchi
President & CEO
June 2024

Nippon Chemiphar Corporate Report 2024

7

Business Strategy

Interview with the President
Q1

What is your earnings outlook for FY2024?

A1

In pharmaceuticals, we expect sales to remain
basically flat year on year. However, we expect tosee consolidated sales grow, thanks to factors
such as the more widespread use of DropScreen.

In terms of our FY2024 pharmaceuticals earnings
outlook, we expect sales to remain essentially flat year
on year. That is due to the NHI drug price revisions, andin spite of the ongoing recovery since the second half oflast fiscal year.
However, we do forecast an increase in consolidated
net sales of 2.4% year on year to ¥31.5 billion. This should
result from continued domestic market penetration of
DropScreen, and the predicted growth in demand forcontract testing.
Further, we forecast a return to profitability, with anoperating profit of ¥200 million and a profit attributable toowners of the parent of ¥60 million. This forecast takes into
account factors such as a rise in the cost-of-sales ratio,
due to NHI drug price revisions; higher purchase prices,reflecting soaring raw material and energy costs; andincreased research and development outlays.
Consolidated Sales and Profit(¥mn)

FY2023 (Results)

FY2024 (Forecast)AmountDistrib.
Amount(%)

Distrib.
(%)

YOY
(%)

30,748100.0

31,500

100.0

＋2.4

Pharmaceutical products 29,611

56.3

—

—

—

24,093

78.4

23,620

75.0

(2.0)

Diagnostics

4,101

13.3

5,250

16.7

＋28.0

Others segment

1,137

3.7

—

—

—

Operating profit

(494)

—

200

0.6

—

Ordinary profit

(219)

—

100

0.3

—

Profit attributable toowners of parent

(180)

—

60

0.2

—

Net sales

Pharmaceuticals

Q2

The NHI drug price reform in FY2024 seems tohave introduced new systems to ensure stablesupplies of generic drugs; how will this affectChemiphar?

A2

Ensuring stable supplies is becoming an
increasingly crucial challenge, but we believe thatsome of the systems will work positively for us.

The drug price reform system, implemented in April thisyear, introduced measures to ensure a stable supplyof pharmaceuticals for generic drugs, including: (1) acorporate mindset that can ensure a stable supply ofgeneric drugs, (2) prices for generic drugs on initial listing,and (3) a more rigorous price support system.

8

Measure (1) partially introduces corporate metrics toevaluate manufacturers’ stable supply systems and otherfactors, as well as a mechanism to reflect the results in
NHI prices.
The aim is to visualize companies that are capable of
ensuring a stable supply, and to make it easier for medical
facilities to select products from those companies. Thissystem has made it increasingly important to ensure stablesupplies as well as to improve quality.
Measure (3) is a response to the recent rapid
increase in raw material costs and supply issues. By
introducing a special repricing of unprofitable products,
the prices of products that are no longer profitable
are raised. At Chemiphar, 47 products were subject torepricing, which significantly helped mitigate the impactof the drug price revisions.
Other new policies include the introduction of
selective medical care. This allows patients, who wish touse brand-name drugs rather than generic drugs—even
when there is no medical need to do so—to pay part ofthe difference in price.
Further, the Ministry of Health, Labour and Welfare has
set a secondary goal for generic drugs: monetary value
share. This is in addition to the existing goal of volume
share. We believe that both will lead to a further shift togeneric drugs, which will be positive for the Company.

Nippon Chemiphar Corporate Report 2024

Q3

The market share of the DropScreen allergy
screening kit has been steadily increasing since
its launch. How do you feel about the future of
the product?

A3

The total number of installed units in Japanexceeded 1,000 in FY2023, and we aim to achievesales of 2,000 units by FY2025.

Not only is the DropScreen kit a space-saving product,
but it requires only a small amount of blood to screen 41
items simultaneously and in a short time. Thanks to this, we
believe that the device is creating an in-hospital market for
immediate allergy testing which, traditionally, primarily has
been outsourced to testing centers.
One of the greatest advantages of DropScreen isthat its immediate diagnosis allows treatment regimens to
be arranged quickly. We have received feedback statingthat eliminating the need to draw blood with a syringe hashelped examinations go more smoothly, especially when
young children are involved.
The cumulative number of units installed in Japan has
exceeded 1,000, which was our target for FY2023. Thatis a result of a sales effort of our pharmaceutical sales
department, and a sales partnership agreement signed inJune 2023 with FUJIFILM Medical Co., Ltd.
We have seen solid results in expanding productsales, and in the months and years ahead, we will continue
to develop next-generation equipment and reduce
manufacturing costs. Our aim is to further expand the useof the kit and contribute more to business profitability.
The product has also attracted the attention ofoverseas companies, and we are currently working tolaunch the kit globally. Already we are taking steps,

Business Strategy

including product development for overseas markets,compliance with national laws and regulations abroad, andpartner selection.
Q4

In October 2023, you subscribed to a private
placement of new shares from Delta-Fly
Pharma, Inc. (DFP). What were your objectives
in doing so?

A4

We hope that our shareholding will further deepen
the relationship between the two companies andthat the clinical trial for the companies’ pipelines
will progress without delay, leading to an earlymarket launch and commercialization.

DFP is a drug discovery venture company specializing
in oncology drug development, based on the venture’s
distinctive concept of module drug discovery.
In March 2020, we signed a licensing agreement with
DFP to obtain exclusive sales and manufacturing rights inJapan for DFP-17729. This is a cancer microenvironment
improving agent that the company is developing.
In addition, in March 2022 we signed a licensing
agreement with DFP that gives us exclusive sales
rights in Japan for DFP-14323, which the company isdeveloping for the treatment of lung cancer.
Thus, DFP, with which we have licensing agreements
for two pipelines, issued new shares through a third-party
allotment in October 2023. We subscribed for approximately¥500 million worth of those new shares.
Of the approximately ¥1.3 billion raised at this time,
including new share warrants, DFP will allocate ¥650 million
to research and development for DFP-17729 clinical trial as
its top priority among its various other uses of the funds.
This share acquisition is expected to further deepen
the relationship between the two companies andensure that clinical trials of DFP-17729 and DFP-14323
proceed smoothly, leading to early market launch andthen to commercialization.
Q5

What is the status of the development of DFP17729 and DFP-14323?

A5

Both products have completed phase II
development. The next phase of DFP-17729 isundergoing preparation, while DFP-14323 hasadvanced to phase III.

The Phase II study of DFP-17729 was completed in FY2022.
It compared use of the combination of DFP-17729 and otheranticancer agents with the use of other anticancer agentsalone. Data analysis and study planning for the next phaseare currently underway.
DFP-17729 is a revolutionary drug that is the world’s firstattempt to apply alkalizing therapy to cancer. In non-clinical
trials, it has been shown to have antitumor effects whenused in combination with existing chemotherapy agents.
It is expected to be a groundbreaking therapeutic agent
for intractable cancers. In a phase II study conducted by
DFP, it was found that DFP-14323 in combination with half
the standard dose of afatinib was associated with longer

progression-free survival than that reported for afatinib orosimertinib alone.
Based on these results, the Pharmaceuticals andMedical Devices Agency [PMDA] requested that DFP
conduct a phase III study to verify the superiority of DFP14323 in patients with EGFR mutation-positive non-small
cell lung cancer. In February 2024, DFP commenced aphase III study. This will note how use of DFP-14323 incombination with a half dose of afatinib works, comparedwith use of afatinib alone.
Q6

Could you give us an update on the developmentof other in-house pipelines and alkalizing agents?

A6

Phase I of NC-2800 was completed in FY2023,
and preparations are currently underway for the
implementation of phase IIa.

Antidepressant and antianxiety drug NC-2800 (a δ opioid
receptor agonist) has been adopted by the Japan Agency
for Medical Research and Development [AMED] for its
Cyclic Innovation for Clinical Empowerment [CiCLE] Project.
We have concluded a joint research and development
agreement and an option agreement with Sumitomo
Pharma Co., Ltd., which has joined the project as a partnerorganization. Phase I ended in FY2023, and we are now
proceeding with preparations for phase IIa.
We continue to introduce NC-2600 (P2X4 receptor
antagonist) to companies in Japan and overseas. Given thefocus on indications of neuropathic pain and chronic cough,we hope to complete out-licensing as soon as possible.
In the area of new developments in alkalization therapy,
in addition to the cancer targeted by DFP-17729 mentioned
earlier, we are moving forward with developments in thefield of chronic kidney disease [CKD].
Clinical studies conducted at Tohoku University, inwhich the Nippon Chemiphar Group cooperated, havesuggested that Uralyt is useful in treating. Based on realworld data analysis, attained using AI, we are considering
the possibility of expanding Uralyt’s indications as well as tooverseas market.
Approaches to new drug development can bedivided broadly into two categories: development ofnovel drugs and repositioning of existing drugs. I like torefer to the former as “innovation drugs,” and the latter as“renovation drugs”.
In our pipeline, NC-2800 and NC-2600 fall into theformer category and will require an extended period ofdevelopment. But they have the potential to becomecompletely new first-in-class drugs, with unprecedented
mechanisms of action.
Meanwhile, DFP-17729, DFP-14323, and thedevelopment of alkalization agents are examples ofrenovation drugs and, because they have a proven safety
track record, we believe they can be developed in less time.
Both innovation and renovation drugs have pros andcons. Yet, by working on both, we are able to strike abalance between increasing revenue from our new drug
business and reducing development risks.

Nippon Chemiphar Corporate Report 2024

9

Business Overview by Segment

The Nippon Chemiphar Group comprises the parent company, Nippon Chemiphar; its affiliate, Japan Sopharchim Co., Ltd.;and the parent’s consolidated subsidiaries Nihon Pharmaceutical Industry Co., Ltd., Safety Research Institute for ChemicalCompounds Co., Ltd., and Nippon Chemiphar Vietnam Co., Ltd. The Group is engaged in medical, health, and beauty-related
businesses with a core focus on prescription pharmaceuticals. Individual segment sales are presented in the pie chart below.

(Millions of yen)Pharmaceuticals
24,093

Pharmaceuticalproducts segment
29,611

Diagnostics
4,101

Others segment
1,137
Contracted
manufacturing, others
1,417
Segment

Breakdown

Pharmaceuticals

Pharmaceuticalproduct

Generics

Handles all aspects of development, manufacturing, and sales for the
Nippon Chemiphar Group, and accounts for 90% of pharmaceuticals.
☞ For details, see p. 11.

Proprietaryproducts andnew drugs

Takes care of sales of products developed by the Company and new
drugs licensed from other companies.
☞ For details, see p. 14.

Diagnostics

Business is expanding rapidly, mainly due to sales of the DropScreenallergy screening kit.
☞ For details, see p. 13.

Contracted manufacturing

Contract manufacturing of other companies’ products and licensing
income for new drugs and generic drugs.

Contracted testing

Contract business for non-clinical and clinical trials of pharmaceuticals,
medical devices.
☞ For details, see p. 20.

Healthcare-related products

Based on its strengths as a pharmaceutical manufacturer, theCompany markets various creams and health foods.
☞ For details, see p. 20.

Others10

Overview

Nippon Chemiphar Corporate Report 2024

Pharmaceutical Products

I Initiatives Involving Generics
In Japan, as the government’s target of 80% generic drug
usage by volume has been fulfilled, the market is reaching
maturity. In addition, in recent years, due to quality issues
at other companies, the public has grown increasingly leeryof the quality assurances given by companies handlinggenerics and those companies’ ability to maintain stablesupplies. Moreover, the business environment has become
ever more severe, due to repeated NHI drug price revisions.
While the provision of a stable supply of highquality pharmaceuticals is our top priority, we have beendeveloping the market for generic drugs by capitalizing on
our strength as an integrated developer, manufacturer, andseller. In recent years, we have sought to secure profitability
by reducing costs by manufacturing overseas. In addition
to our ongoing efforts to strengthen our quality assurance,
while maintaining a stable supply of generics, we willcontinue to enhance our quality assurance and strengthen
our earnings base by providing added value that only we
can deliver. This we will do by using reliable information andcontinuing to create products that meet market needs.

1. Development

2. Manufacturing
Aiming to improve productivity and reduce manufacturingcosts at Nippon Chemiphar Vietnam’s factory, we are
currently working to offshore production from our factories
in Japan. The manufacturing cost is expected to drop
20–30% below our Japan levels.
In addition to offshoring products to our highly
cost-competitive Vietnam factory, we plan to utilize theadvanced technological capabilities of our main Tsukuba
factory to create added value and enhance Group
manufacturing productivity. In addition, in response to therecent shortage of generic drugs, we are making capital
investments and increasing our workforce. In FY2023, we
strengthened our two-shift system at our Vietnam factory,
and transferred to in-house production some of the
manufacturing processes for items that were previously
outsourced to other companies. We are also increasing
the number of employees at our two domestic factories,
while implementing two-shift and three-shift systems on aprocess-by-process basis.
☞ Please refer to page 18 for overseas manufacturing.

Competition among pharmaceutical companies is growing
increasingly intense. Primarily, it is a result of both theprevalence of authorized generics and the increasing
difficulty of developing them.
To maintain our good reputation in the market despite
this, we must improve our overall development capabilities.
Doing so requires that we launch products ahead of othercompanies and improve the accuracy of development
through cooperation with academia. In addition, we must
maintain and improve the reliability of application data,
which increasingly is being scrutinized.
We aim to develop products that are highly regarded
in relevant markets by concentrating our development
resources and implementing efficient procedures.
☞ Please refer to page 23 for information on tablet imprint
and packaging.

Tsukuba factory

Vietnam factory

Nippon Chemiphar Corporate Report 2024

11

Pharmaceutical Products

3. Quality Assurance

5. SalesTo ensure quality control and production managementof the highest standards, our quality assurance
efforts comply with good quality practices1 and good
manufacturing practices.2
In order to confirm that we appropriately manage thedrugs we manufacture, we evaluate the degree to which
the raw materials and additives we use in production
conform to stipulated standards; assess our methods ofprocurement and storage of materials; and appraise how
we ship our products.
We are constantly making every effort to strengthen
our Group-wide reliability assurance system to fulfill ourfundamental responsibilities as a maker of pharmaceuticalproducts. This we do primarily through our Group Quality
Assurance Management Department. At the same time,
we conduct periodic audits of our Group’s and contract
manufacturing sites.

In response to changes in the environment surrounding
generic drugs, in addition to using sales management
systems and AI to streamline sales activities, we are
seeking to take advantage of a diverse range of sales
channels that will synergize with the distinctive attributesof Nihon Pharmaceutical Industry Co., Ltd.

1. According to quality standards for drugs, quasi-drugs, cosmetics, andproducts such as regenerative medicine.
2. According to laws on the control of the manufacture and quality ofdrugs and quasi-drugs.

4. Ensuring a Stable Supply Structure(1) Logistics management system
As generics become more prevalent, manufacturers aretaking on growing responsibilities with regard to supply
stability. This requires carefully crafted logistics systems.
The Company is expanding its distribution system
nationwide together with Otsuka Warehouse Co., Ltd.,
which allows us to improve the quality of our logistics by
cutting lead times, tracking transit status in real time, andpreventing incorrect deliveries.

6. Creating Synergies with Our Main Products
Nippon Chemiphar categorizes new drugs that it hasdeveloped, as well as new drugs and long-listed drugs inlicensed from other companies, as proprietary products
and new drugs.
Among its proprietary products are three formulations
that the Company developed in-house: alkalization
therapeutic drug Uralyt-U, analgesic and antiinflammatory drug Soleton, and hypertension therapeutic
drug Calvan.
Included among the new and long-listed drugs we havein-licensed from other companies are new oral intestinal
cleansing agent PICOPREP and macrolide antibiotic
agent Klaricid. We expect these to strengthen our productportfolio and anticipate utilizing them to generate synergies
that will help expand our generics business.
☞ Please refer to page 14 for details.

(2) Double-sourcing active pharmaceutical ingredients
Providing a steady supply of drugs requires efforts bothto reinforce manufacturing capacity and ensure the stableprocurement of active pharmaceutical ingredients.
To meet the requirements, we are strengthening oursurvey and evaluation efforts to secure optimal multisource active pharmaceutical ingredients supplies inJapan and overseas.

Initiatives to Foster a Culture of Quality First
In order to supply high-quality pharmaceuticals, it is essential to foster a culture that places quality first. At theGroup’s main factory, Nippon Pharmaceutical Industry’s Tsukuba Factory, we conduct awareness surveys of
employees involved in the manufacturing process and implement a mentoring system in which executives anddepartment managers are paired with mid-level managers on the front lines.
In addition, our survey on quality culture, which we previously conducted in our quality and manufacturing
departments, was expanded to all employees in FY2023.

12

Nippon Chemiphar Corporate Report 2024

Pharmaceutical Products

II Diagnostics Business
Our products are making a substantial contribution ata time when a growing number of people are sufferingfrom allergic and lifestyle-related diseases. By delivering
speedy test results, the products make possible early
diagnosis and the compilation of appropriate treatment
plans. We will continue to develop and sell clinical testing
equipment and reagents to meet the needs of both
medical institutions and patients, thereby supporting
healthcare. Further, we are conducting marketing
activities designed to expand our business both in Japanand overseas.

1. DropScreen
Together with Riken, a major scientific research institute inJapan, Nippon Chemiphar has developed the DropScreen
specific IgE measuring kit ST-1, a new extracorporeal
diagnostic kit that combines the Company’s allergy
measurement reagent technologies with screening
systems based on microarray technologies. We launchedsales of the kit in February 2020.
Since its release, it has won rave reviews frommedical professionals and patients, and as of March
2024, the cumulative number of units installed in Japanexceeded 1,000.

Specific IgE measuring kit ST-1

● Product characteristics
The DropScreen kit was developed bearing in mind
the discomfort experienced by individuals undergoingsmall-volume blood sampling, and the need for greaterfamiliarity regarding allergy screening.
This breakthrough diagnostic kit, which can beinstalled in small spaces, can screen for 41 allergens injust 30 minutes using only a single drop (20 microliters)of blood (whole blood, blood plasma, or blood serum),making it possible for those being tested to obtain test
results quickly. Using it for children and those with anaversion to syringes is ideal, since whole blood samples
can be taken from fingertips. Due to these features, it has
been praised by a wide range of clinical departments,
including those specializing in the treatment of allergies.
Traditionally, allergy testing primarily has been outsourced
to third parties. However, with DropScreen, we arecultivating a new market for in-house allergy testing.

2. New Model of Glycohemoglobin Analyzer
Since September 2022, we have been marketing the new
HLC-723 GR01 automatic glycohemoglobin analyzer,
developed by a global chemical and specialty materials
company Tosoh Corporation. The device provides moreaccurate results than the previous model, a similarlyhigh speed.

Measuring device A-1
HLC-723 GR01

Sales of DropScreen rising in Japan
Since its launch, DropScreen has won rave reviews from medical
professionals and patients for its revolutionary ability to measure 41
allergens from a single drop of blood without the need to draw blood
with a syringe. By the end of March 2024, the total number of units
installed in Japan had reached 1,000.
We plan to improve the kit’s versatility and convenience bydeveloping a series of reagents and shortening measurement times,
with the goal of having a cumulative total of 2,000 units installed by
FY2025. We are also preparing to expand business globally.

Nippon Chemiphar Corporate Report 2024

13

Pharmaceutical Products

III New Drug Discovery and Development
We are working to develop new breakthrough drugs to benefit patients from diseases for which currently there are no
appropriate therapeutic drugs. In addition to leveraging the alkalization therapy technology and knowledge that we havecultivated over many years, we are also actively working on alliances with other companies and research institutions
to further expand our development pipeline and incorporate rapidly evolving digital technologies such as AI into drug
discovery methods.
In-house drug development

As of March 2024

Item

Function (Target)

NC-2500

XOR inhibitor(Hyperuricemia, gout)

NC-2600

P2X4 receptor antagonist(Neuropathic pain, chronic cough)NC-2700

URAT1 inhibitor(Hyperuricemia, gout)

NC-2800

δopioid receptor agonist(Depression/anxiety)

DFP-17729

Cancer microenvironment
improving agent(Pancreatic cancer)

DFP-14323

Anti-cancer agent(Non-small cell lung cancer)

Calvanα1 β1 blocker(Huntington’s disease)

Preclinical

1. Alkalization Therapy
Since the launch of Uralyt in 1988, we have been working
to cultivate alkalization therapy and to alleviate aciduria.
By utilizing our know-how accumulated over many years,
we are trying to apply alkalization therapy to various
fields, such as new therapeutic areas and health food.

■ Application of alkalization technologies

Development through alliances

Phase I

Development by licensees

Phase II

Phase III(1) Development in oncology
In March 2020, we concluded a licensing agreement withJapanese drug discovery venture Delta-Fly Pharma, Inc.
concerning DFP-17729, an anticancer drug that improvescancer microenvironments through alkalization.
By this process, DFP-17729 has been shown tosuppress cancer cell activities and facilitate the efficacy
of anticancer agents in non-clinical studies.

Uralyt・Gout・Hyperuricemia
・Acidosis

Anti-cancer agent(DFP-17729 forpancreatic cancer）

Conduct a wide range of activities
utilizing our alkalinization-related
technologies and expertise

Prevent progress ofchronic kidney disease
Based on the results of the CKOALA
study, we are considering application
to additional indications.

14

Nippon Chemiphar Corporate Report 2024

Supplements
We are currently considering
future product development
utilizing the data obtained. We
also plan to deploy branding.

Pharmaceutical Products

DFP completed a clinical phase II study for end-stage
pancreatic cancer and is currently making preparations forthe next phase. We expect to be able to apply for approvalaround 2027, and in the future we will consider expanding
its application to other types of cancer.
■ Mechanism of DFP-17729• Improves cancer microenvironments through alkalization• It is expected to generate groundbreaking therapeutic effects as atreatment for refractory cancer
Acidic environments, generated aroundtumors by extracellular excretion,
facilitate cancer growth.
Cancer cell activity is
expected to be inhibited.
Cancer microenvironment
CancerCancer microenvironment

Administer DFP-17729

Acid

CancerBecomes alkaline(2) Treatment for chronic kidney disease
It is said that some 13.3 million people suffer from chronic
kidney disease (CKD) in Japan. Once it progresses,
dialysis is required and, since the number of patients on
dialysis in Japan is increasing, steps must be taken to
reduce related medical costs.
For many years, we have supported the clinicalresearch (CKOALA study*) conducted at Tohoku
University to clarify the relationship between urinary
alkalization medications and CKD. Based on research
results, we are considering how to develop the treatment
for CKD by using AI and real-world data.
* The title of the study is Investigation of the renal protective effect of oral
alkalizing agents in chronic kidney disease.

2. New Drug Pipeline
In addition to developing compounds identified throughexploratory studies conducted both at our drug discovery
research laboratories and with collaborating research
institutions, we have been expanding our pipeline byin-licensing drugs concerning which we both possess
extensive expertise and expect to generate synergies withexisting pipeline products.
(1) In-house development pipeline(a) NC-2800, a δ opioid receptor agonist for anxiety anddepression
NC-2800 is a chemical compound with strong potential
as an antidepression and antianxiety treatment that theCompany discovered through collaborative study with
the University of Tsukuba, Kitasato University, and the
National Center of Neurology and Psychiatry.
The Japan Agency for Medical Research andDevelopment (AMED) selected this compound for its
industry–academia collaboration program in 2015 and,with the agency’s support, we conducted preclinical trial.
As a result, the compound received high acclaim forits potential as a therapeutic drug candidate.
In 2018, AMED’s CiCLE project selected it for publicfunding and support,* with which a phase I trial wasstarted. Phase I was completed in FY2023, and since
there were no major safety issues and tolerability was
ensured, we are currently preparing to conduct phase IIa.
In June 2021, we concluded a collaborative researchand development agreement and an option agreement
for NC-2800 with Sumitomo Pharma Co., Ltd., which isparticipating in research and development for the CiCLE
project as a contributing institution.
While each year sees more patients with mooddisorders, such as depression and anxiety, only about
40% of the patients are satisfied with the drug treatment
they receive. NC-2800 is expected to be a first-in-classdrug with an excellent balance between safety andefficacy, and minimal impact in terms of side effects.
* Period: From March 30, 2018 to March 31, 2028.

(3) Application to food products
By applying alkalization know-how we have accumulated
through Uralyt and clinical researches, we are trying to
expand to health-promoting foods. Based on the dataobtained from test sales conducted in recent years,
we will continue to consider the matter further, andalso plan to develop branding related to alkalization forgeneral consumers.

Nippon Chemiphar Corporate Report 2024

15

Pharmaceutical Products

Mood Disorders(Cases)2mn

2022 Satisfaction ratewith pharmacotherapy

40.8%

NC-2700
This is a new chemical compound that, unlike NC-2500,
promotes the excretion of uric acid from the body byinhibiting the transporter URAT 1, which is responsible forthe re-absorption of uric acid by the kidneys.
Non-clinical studies have shown that NC2700 facilitates the excretion of uric acid and alsoameliorates aciduria, thereby helping to prevent kidneydamage and kidney stones, which are concerns whenuric acid is excreted.
We seek to out-license the compound to domestic andoverseas companies.

1.5mn

1mn

0.5mn

0

1999

2002

2005

2008

2011

2014

2017 2020

Source: Annual Health, Labour and Welfare Report2020 (Calculation method changed in 2020).
Satisfaction rate announced by the Office ofPharmaceutical Industry Research in November 2021.

(b) NC-2600, a P2X4 receptor antagonist for neuropathic
pain and chronic coughIn joint research with Kyushu University, we havedeveloped a new drug candidate to treat neuropathic
pain. Since FY2012, the Company has been carrying out
research and development with the support of the Japan
Science and Technology Agency, taken over by AMED in
FY2015. With the support of AMED, we completed phase I
trial in FY2017.
In FY2020, we added chronic cough to the primary
indications of the compound. While moving to enhance
its value by collaborative research for various indications,
we have been conducting out-licensing activities of thecompound to domestic and overseas companies.
(c) NC-2500, an XOR inhibitor; NC-2700, a URAT 1 inhibitor
for gout, hyperuricemia
NC-2500
It should be noted that current drug therapies for loweringuric acid pose a risk of causing an acute attack of gout,due to the sharp decrease in uric acid levels. However, in
NC-2500 phase I trial, we confirmed its unique property tolower blood uric acid levels gradually, suggesting it may
rectify this issue. In February 2023, we signed a licensing
agreement with Nanjing Neiwa Faith PharmaceuticalCo., Ltd., which is working to develop the drug in China.

16

In addition, preclinical data indicates that NC2500 is effective against neurodegenerative disorders
such as Alzheimer’s disease. So we are exploring thepossibility of expanding the application of NC-2500 to
include such disorders.

Nippon Chemiphar Corporate Report 2024

(2) In-licensing pipeline(a) DFP-17729, a cancer microenvironment improving
agent for pancreatic cancer
In March 2020, we concluded a licensing agreementwith Delta-Fly Pharma, which is pursuing developmentof this agent.
☞ Please refer to page 14 for details.

Pharmaceutical Products(b) DFP-14323, an anti-cancer agent for non-small celllung cancer
Lung cancer is the fourth-most common cancer by siteboth in men and women.
A National Cancer Center Research Institutesurvey* shows that, in 2019, some 120,000 cases werediagnosed as lung cancer in Japan. In 2022, lung cancer
caused 76,000 deaths in Japan, which is the highest
number by site.
In March 2022, we concluded a licensing agreementwith Delta-Fly Pharma for DFP-14323, which targets
epidermal growth factor receptor (EGFR) mutationpositive non-small cell lung cancer.
Previous studies have suggested that DFP-14323
strengthens the immune response of cancer patientsby binding to aminopeptidase N, which is found on thesurface of cancer immunocompetent cells. In this way,
the substance reduces the dose required of standard
anticancer drugs, and enhances their efficacy without
increasing the side effects. That makes DFP-14323 a
promising therapeutic agent, especially for late-stage andelderly cancer patients.
The results of phase II trial for EGFR mutationpositive, non-small cell lung cancer at stages 3 and
4 were presented at an American Society of ClinicalOncology meeting held in June 2022. Again the results
demonstrated the agent’s efficacy. Phase III trial began
in February 2024, and we expect to submit an application
for approval by around 2029.
* National Cancer Center Research Institute, Cancer Statistics in Japan 2023 .

■ Final Progression-free Survival (PFS) Report
The median PFS in phase II trial of DFP-14323 with 20 mg/day
of afatinib: 23.0 months.
Although the standard dose of afatinib is 40 mg/day, a halfdose was administered in the trial.
For reference
Afatinib 40 mg/day phase III median PFS: 11.1 months
Osimertinib 80 mg/day phase III median PFS: 18.9 months
Key Selection Criteria• Non-small cell lung cancer• Stage 3/4 postoperative recurrence• Common EGFR mutations (Del 19 or L858R)• Performance status 0–2• No prior systemic chemotherapy or deﬁnitive thoracic
radiotherapy

3. Repositioning of Existing Drugs
The experience and research of medical professionals
indicate that some long-listed drugs may have efficacy
for other than the original indications. As with new
medicines, development of such drugs for diseases
for which there are currently no particularly effective
medications is awaited.
To discover new uses for our long-listed drugs, weare supporting research in Japan and abroad. In Europe,
Spain-based SOM Biotech is developing our Calvan
tablets for Huntington’s disease and other conditions.
Phase IIb trial commenced in fiscal 2023.

4. Access to New Technologies
To create further promising pharmaceutical productcandidates, we must use innovative drug discovery
methods by adopting innovative information technologies
and using AI. In FY2022, we set up an AI promotion
office within our drug discovery research laboratories.
In addition, we are forming capital and businessalliances with companies that have strengths in digitaltechnology. We are promoting the introduction of newtechnologies, with the aim of generating promising drug
discovery themes and speeding up and streamlining thedevelopment process.
With the aim of streamlining the process of compound
discovery and optimization in the early stages of drug
discovery, we have collaborated with MOLCURE Inc., an
AI drug discovery company. For the first time, the Nippon
Chemiphar Group is hoping to develop and optimize leadpeptides, which are the building blocks of peptide drugs.
We will leverage the lessons learned by this process and,in order to efficiently produce results using more accurate
AI and experimental systems, we have selected newthemes and have commenced work on them.
■ Collaboration with partners expected to speed up andstreamline drug discovery processes
Search for and Optimization Non-clinicalidentify targets
tests

Clinical tests Manufacturing
approval

MOLCURE Inc. is a pharmaceutical AI drug
venture company that designs
pharmaceuticals using proprietary AI
algorithms and a next-generation sequencer.
It conducts testing using its antibody library or
by combining automated robot technologies.

Nippon Chemiphar Corporate Report 2024

17

Pharmaceutical Products

IV Overseas BusinessAs demand for prescription drugs grows, securing
production capacity is critical for generic manufacturers.
Further, as the business environment becomesincreasingly severe, due to such factors as repeated
NHI drug price revisions, manufacturing costs must be
reduced for the business to stay sustainable.
To address these issues and maintain growth, weestablished Nippon Chemiphar Vietnam Co., Ltd. (NC-VN)
in March 2015. In addition to enhancing manufacturing
capacity, and reducing costs at its factory, we aredeveloping overseas sales channels, especially in Asia.

(1) Business expansion in Vietnam
Rebamipide tablets, approved in December 2022, areclassified as Group 1, which allows them to be sold at
the highest drug price under Vietnam’s current bidding
system. Leveraging this advantage, we are currently
marketing to hospitals and pharmacy chains throughlocal wholesalers.
In addition, in March 2024 we obtained marketing
approval for Febuxostat tablets 80 mg, a high dosage
formulation not available in Japan. We expect to ship the
product in FY2024. Due to the strong sales of the 80 mg
in overseas, we will consider expansion into neighboring
countries and regions.

1. Manufacturing
Having worked to expand manufacturing capacity, reduce
costs, and expand overseas, NC-VN began commercial
production for the Japanese market at its factory in
November 2018. We have been gradually expanding thenumber of products manufactured at NC-VN, focusing on
items with strong cost advantage potential. As of March
2024, eight products are being manufactured.
Responding to supply shortages in Japan, we
strengthened our manufacturing capabilities in
FY2023 by switching to two-shift operations at the
NC-VN factory. In the same year, we achieved inhouse production of items that previously had been
outsourced to other companies. This was done byconducting a portion of the manufacturing processes at
NC-VN. In FY2024, we plan to begin full-scale contract
manufacturing of products from other companies. We
will continue to use the factory to cut manufacturingcosts, strengthen manufacturing capacity, and improve
our competitiveness in the generic drug market.

2. SalesWe are working with local distributors to sell our
proprietary products and generic drugs in Thailand,
China (including Hong Kong), Vietnam, and South Korea.
As of March 2024, we have approval to market eight
products in those four countries. We will continue toexpand our business to other countries and offer moreproducts, with the goal of selling 14 products in fivecountries by FY2026.

18

Nippon Chemiphar Corporate Report 2024

Febuxostat tablets 80 mg(2) Business expansion in China
We are rolling out Calvan tablets in China. In Hong Kong,
we are marketing Cilostazol tablets, which have beenprescribed at all public hospitals there since 2017 andwill remain on sale until 2026. In addition, Epinastine
tablets, which were approved in May 2023, are scheduled
to be shipped to China for the first time in FY2024. We willcontinue to steadily build up our track record in China,
and to develop our licensing business through technology
transfers to local companies.
(3) Joint project with International Finance Corporation
In March 2022, we concluded an advisory agreement with
the International Finance Corporation (IFC), a member ofthe World Bank Group, concerning studies targeting the
local marketing of generic drugs in Asia, the Middle East,
and Africa.
Taking the IFC’s advice and using its network, we are
narrowing down the target countries and partners and are
currently in negotiations regarding several specific items
to be sold locally. Together, we will work to ensure thatpeople in emerging markets have access to affordable,
high-quality medicines, as we expand in ASEAN markets
and beyond.

Pharmaceutical Products

V Management Strategy
Area

Generics

Activity

2021

2022

Launch value-added
generics and introduce
new/long-listed drugs
from other companies

2023

2024

2025

2026

2027

2028

2029

2030

Aim to launch two or more value-added products per year

Expand domestic market, targeting 2,000 installations in FY2025 / Aim to achieve continuous businessexpansion by creating new series of measuring reagents

Diagnostics

Expand sales of
DropScreen

Start, gradually expand exports

Create new version of equipment for domestic market andadditional reagents for abroad

DFP-17729: Develop
anti cancer agent

Alkalizers

Phase I/II for評価・検討Evaluation
and
次フェーズ
pancreatic cancer
preparation

Investigation of CKD-related indications—initiation ofclinical trials

Supplements, functional
foods

Launch three products during
FY2024–2026

Test-marketed one
item in FY2022

Agreements

NC-2600: Outlicencing foradditional indications

New drugs

Licensee company willconduct phase IIb andIII trial

Undergoing development in China by licensee as atreatment for hyperuricemia and gout
Continue out licencing for other indications

License out for chronic coughLicensee company will conduct clinical trial

NC-2700: Continue out
licencingContinue out licencing

DFP-14323: Develop anticance agent

Finished phase II

Discover newcompounds using AI

Search for and identify targets,
optimize new compounds

Export, local development
and production

Application,
approval,launchSequentially launch other
health-related products

Conduct phase I and IIa trials in accordance with
AMED’s CiCLE program

NC-2500: Out licencing
for additional
indications

Overseasbusiness

Application,
approval,launchConsider expanding
applications to include
Clinical data analysis/
additional chronic kidney
addition of basic datadisease-related indications

NC-2800: Conduct
phase I and IIa trial;
out-license

Other thanalkalizers

Move to next phase

Application,
approval,launchPhase III

Preclinical phase/licence out

ASEAN, China, Middle East, and Africa:
FY2021 FY2026
Country
4
5
Products
5 ⇨ 14

Discover new compounds
using new methods

Expand number of countries
and products

Nippon Chemiphar Corporate Report 2024

19

Other Segment

I Contracted Testing
The Nippon Chemiphar Group facilitates the creationof safe, high-quality products by providing support for
nonclinical and clinical trials performed when developing
pharmaceutical products and medical equipment.
The Group company Safety Research Institute for
Chemical Compounds Co., Ltd. has set up an internal
one-stop system to support from non-clinical andclinical studies conducted to help develop a number oftherapeutic modalities. These include pharmaceuticaldrugs, medical devices, and regenerative medicinerelated products.
Thanks in part to this system, the institute has attained
a distinctive status among contract research organizationsin Japan.
By taking full advantage of the strengths of thisframework, we believe we will be able to provide
high-quality services. At the same time, we will placeemphasis on customer satisfaction, while keeping
costs down for non-clinical and clinical trials for thedevelopment of a range of product.

Using the Bovine Corneal Opacityand Permeability test.

A good laboratory
practice compliancecertificate for aregenerative medication

II Healthcare-related Products
The Group handles a diverse array of healthcare products,
including nutrients, health foods, cosmetics, and various
types of creams, classified as quasi-drugs because they
contain a certain concentration of active ingredients.
Amid the rising needs surrounding consumer
self-medication, we are leveraging trustworthiness,the development expertise we have gained as apharmaceutical product manufacturer, our goal to makea difference in people’s lives, and our efforts to provide ahigh level of added value.

20

Nippon Chemiphar Corporate Report 2024

Moispolia White (hand cream)

CoQ10 (supplement)

Himematsutake: Agarics blazei
Murrill (supplement)

Green Juice Moringa Blend(health food)Sustainability Initiatives (for a Sustainable Society)

Currently, there is a growing recognition that addressing
global issues, such as the environment and poverty, requires
social development from a medium- to long-term perspective,
rather than short-term action. In this context, use of theword sustainability has spread, while movements aimed atachieving a sustainable society can be found in countries
around the world. The Nippon Chemiphar Group will attainboth the Sustainable Development Goals adopted at the UN
Summit in September 2015, as well as recommendations
made by the Task Force on Climate-related Financial
Disclosures. The latter is an international body that monitors,
and makes recommendations about, the global financial
system in order to promote international financial stability.
To facilitate our initiatives, in December 2021 we formulated

a Basic Sustainability Policy and formed a Sustainability
Committee, chaired by our president and CEO.

Basic Policy for Sustainability
Through its business philosophy to “make adifference in society by providing pharmaceuticaldrugs and health-related services to help people
become and remain healthy” and its businessactivities, the Group is working to enhance its
corporate value and contribute to developing asustainable society.

I Environment-related Initiatives
To attain a sustainable society, we believe that companies
must consider the environmental impact of theirbusiness activities.

(3) Release impartial, appropriate information about
environmental conservation to boost corporatetransparency.
(4) Educate employees eco-conscious; how to protect theenvironment.

3. System for Environmental Conservation

1. Environmental Philosophy
The Nippon Chemiphar Group will conduct businessactivities that take into consideration the conservation of
the global environment and contribute to the developmentof a sustainable society.

2. Basic Policies
Take firm actions to:(1) Minimize our environmental footprint across all areasof business— including in R&D, manufacturing, andsales—by efficiently using resources and energy,
minimizing waste, reusing, and recycling.
(2) Establish a management system within the Group andtake actions from environmental conservation.

Our Sustainability Committee devises, implements, andevaluates environment-related conservation initiatives
for the entire Group. Our steps to protect the global
environment are a Group-wide theme such as CO 2
emissions. In addition, we have launched a campaign
to conserve electricity, and provide in-house training toenhance awareness of environment-related activities.

Corporate Officers
Reports
Sustainability Committee(Devizes, implements, and evaluates
initiatives; reports to management)

Nippon Chemiphar

Safety ResearchInstitute for
Chemical Compounds

Nihon PharmaceuticalIndustry

Nippon Chemiphar
VietnamJapan Sopharchim

Nippon Chemiphar Corporate Report 2024

21

Sustainability Initiatives

4. Impact of Group Operations (April 1, 2023–March 31, 2024)● INPUTINPUT
EnergyEnergy Used

FY2022

FY2023YOY (%)

Electricity

18,501,000Wh

18,863,000Wh+2.0

Gasoline

334kl

319kl

‒4.6

Heavy oil

99kl

63kl

‒36.4

Light oil

273kl

274kl

+0.4

Kerosene

826kl

973kl

+17.9

2t

1t

‒39.3

Town gas273,357Nm3

274,426Nm3

+0.4

Total

252,865GJ

259,482GJ

+2.6

LPG

Resource
Water (consumption by factories, laboratory)
Tap water

33,833m3

32,443m3‒4.1

Well water

95,649m3

139,199m3

+45.5

Total

109,069m3

152,380m3+39.7

Raw materials

654t

571t

‒12.6

Packaging materials

259t

228t

‒12.1

Total

913t

799t

‒12.5

Materials

CO 2 emissions
PRTR-related substances

250,000

200,000

PRTR-related substances

25.00

228,788
20.92

22.25

20.00

20.40
16.30

150,000

10.00

50,000

5.00

0.00

FY

2019

2020

2021

2022

2023

Usage to total emissions to sales
and other activities

Amount of usage(gigajoules)● OUTPUT

CO2 Emissions(t-CO2)

FY2022

FY2023

12,116t-CO2

12,622t-CO2

+4.2

0.00t

0.00t

±0

YOY (%)

15,0001.60

11,77451,736m3

60,675m3

+17.3

0.00t

0.00t

±0

11,20911,511

12,116

12,622

10,000

1.00

0.92
156t

+1.9

Industrial waste

333t

302t

‒9.1

PRTR-related substances

3.40t

1.30t

‒61.8

1.40
1.20

1.02
153t

15.00

100,000

As Waste
General waste

235,184

259,482

18.64

As Industrial Waste Water (from factories, laboratory)
Used water

252,865
240,992

0

OUTPUT
Into Atmosphere

(GJ)

0.90

0.80

0.81
0.73
5,000

0.60
0.40
0.20

RECYCLING
FY2021
Container andpackaging recycling

22

Nippon Chemiphar Corporate Report 2024

FY2022
37t

0.00

0

YOY (%)
31t

–16.5

FY

2019
Tons of CO2

2020

2021

2022

2023

Amount of total emissions to sales
and other activities

Sustainability Initiatives

II Medical Professionals and Patients
It is said that drugs cannot fulﬁll their proper roles unlessthey are used together with the appropriate information.
Bearing this in mind, we are quick to provide medical
institutions with accurate information about the properuse of our drugs. We do this through our medical
representatives (MRs), who are located nationwide.
At the same time, we collect information on quality andsafety, consolidate collected safety particulars, and provide
this to assist in creating new pharmaceutical preparations.

(3) Support Materials
For physicians and pharmacists, we publish a periodical
by means of which we share our latest information.
We also produce pamphlets that provide guidance on
nutrition-related and exercise therapies, for supporting
health management.
Through these materials, we are contributing to help
improve the quality of healthcare.
(4) Response to Inquiries SwiftTo ensure accurate and speedy responses to telephoneinquiries from medical professionals and patients, wehave a customer support office that provides informationon the appropriate use of our pharmaceuticals.

2. Strengthening Our Quality Assurance andSupply Systems
1. Initiatives to Ensure Proper Use of Drugs
We train our MRs to provide information and educate them
about the proper use and efficacy of our products. With
the patient always in mind, we strive to cultivate humanresources who can serve as team-based healthcare
providers for pharmacotherapy partners.
(1) Role of MRs
Nippon Chemiphar has some 200 MRs across Japan.
It strives to supply information promptly to medical
institutions through pamphlets and newsletters. To thisend, we collect information on side effects; provide
patient guidance and consultation services on drug use;and disseminate news about medical fee revisions.
In similar fashion, we are providing IT-based information
to help prevent the spread of COVID-19 and its variants.
We work to ensure the efficiency of our MRs throughties with medical institutions, particularly core hospitals
that are central to regional healthcare.
(2) Platform for Learning
The Company conducts seminars and has study groups
for various medical conditions, including dementia andlifestyle-related illnesses.
We provide medical professionals with the most up-todate information and opinions related to treatment.

In recent years, the domestic pharmaceutical industry
has faced an urgent need to restore public trust in
generic drugs, due to such issues as quality-related
improprieties having been observed among several
generic drugmakers. At the Nippon Chemiphar Group,
the Group Quality Assurance Department, set up in April
2022, plays a central role in promoting activities to foster aculture of quality. It takes action such as examining issues;
solving problems; proposing, then implementing, unified
management standards and methods; as well as further
strengthening the entire Group’s level of quality assurance.
In addition, to ensure a stable supply ofpharmaceuticals, even during demand surges andnatural disasters, we are expanding our pool of API
suppliers, carrying out capital investments, andincreasing our staff headcount.
☞ Please refer to page 12 for details regarding quality
assurance and stable supply.

3. Quality, Information ParamountWe are working on initiatives to ensure the quality ofboth generics and proprietary products, as well as toprovide information more effectively. At the same time,
we are devising ways to improve the visibility and userfriendliness of our products.

Product Initiatives Aimed at Safety and Convenience
Improving Visibility and Convenience
1. Matte press-through packaging
Reduced shine makes it easier to read the information written on the aluminum backing of medication packaging.
2. Universal design font
For sheets of press-through packaging and outer packaging, we use a font that is easily legible to prevent misreading.
3. Tablet imprint
All tablets are scored on both sides, with the name of the drug and the maker printed on the top and bottom half, respectively, on one side, and the bottom
and top half on the other side.

Nippon Chemiphar Corporate Report 2024

23

Sustainability Initiatives

III Community Participation
As members of local communities and society, we support
projects that beneﬁt the communities and society in which
our ofﬁces are located. Our aim is to grow, while being an
integral part of society.

1. Cooperation with Local Communities
Nippon Chemiphar’s Soka office conducts annual fire
drills, and in June 2022 it was awarded a certificate
of commendation by Saitama Prefecture’s Misato City
Fire Prevention and Safety Association for its rigorous
safety management, legal compliance, and exemplary
facility management.
In November of the same year, two employees
from the Soka office received awards from Misato City,
identifying them as having contributed to the city’s
development over many years.
In addition, Nippon Pharmaceutical Industry Co.,
Ltd.’s Tsukuba Factory has regularly participated inblood drives by the Japanese Red Cross Society since
the factory first came on stream. In recognition of thislong-standing contribution, in December 2023 thefactory received a letter of appreciation from the Ibaraki
Prefecture branch of the Japanese Red Cross Society.

3. Educational Support in Vietnam
Nippon Chemiphar Vietnam has set up a scholarshipat the University of Medicine and Pharmacy in Ho Chi
Minh City, southern Vietnam. The Nippon Chemiphar
Scholarship aims to support the development of humanresources, who will play a crucial role in the expansion ofVietnam’s pharmaceutical industry by assisting students
who have exhibited excellent academic ability, but are
struggling with financial challenges. In addition, in 2023,
we launched a new internship program for students fromthe university.
The Nippon Chemiphar Group will continue to support
human resource development in Vietnam and other
ASEAN members.

Group photo of internship participants

4. Recycling, Support for Developing Countries
We help developing countries through such activities ascollecting PET bottle caps, books and miswritten wasted
postcards. In Japan, caps and books can be collected
and sold to recycling companies, while postcards can beexchanged through the postal service for money. Group
companies have been generating donations in this way
since 2011.
Certificate from the Japanese Red Cross Society.

2. Volunteer Activities
We have established an in-house system of volunteer
leave that encourages employees to take part in volunteer
activities. These include social welfare initiatives andrescue efforts in disaster areas.
We support people with disabilities through donations
to Hands On Tokyo, an NPO which supports those withdisabilities among other activities.

24

Nippon Chemiphar Corporate Report 2024

Books donated by employees to raise funds fordeveloping countries.

Sustainability Initiatives

IV Employees
The Group is striving to create a corporate culture that
respects the individuality and talents of each employee.

1. Women’s Participation and Advancement
We recruit women, promote women to management
positions, and incorporate a variety of viewpoints and waysof thinking in business management. We will continue
to make our workplaces enjoyable and the work fulfillingthrough the presence of hardworking female veteranemployees and managers, who serve as role models for
ambitious female colleagues.
Our support for participation by women involves efforts
to raise awareness among all employees. As an example ofour approach, we conduct surveys of employee awarenessand needs concerning the promotion of active participation
by women. Further, through the Company newsletter,
we inform staff about topics related to work–life balance;roundtable discussions held by female employees raisingchildren; and the activities of men who have taken childcare
leave. We formulated an action plan, based on the Act on
Promotion of Women’s Participation and Advancement in the
Workplace (see table below). We plan to continue our efforts
to create an organization that enables female employees andmanagers to take pride in their work.
Furthermore, recognizing that promoting the active
participation of female employees starts with involvement in
the childcare process, we set up the Papa Quota System. It
requires all male employees with children under two yearsof age to take childcare leave. We expect the system will
help raise awareness regarding participation in the childcare
process. A minimum of five days’ childcare leave ismandatory under the system, with a maximum of five days’
paid leave.
(As of March 31, 2024)

Goal (April 1, 2023–March 31, 2024)

ResultHave women account for more than 10% of managers.

13.5%

2. Diversity Initiatives
We believe that employee diversity—including differences
in sex, gender roles, nationality, workstyles, and individual
values—provide foundations for company vitality andgrowth, thereby boosting corporate value. The Group is
working to create a corporate culture that draws on thevarious characteristics and abilities of its employees, while atthe same time promoting the participation and advancementof women in the workplace.
In response to an increase in business with companies
abroad, resulting from the establishment of the Vietnam
factory, we are recruiting—without regard for nationality or
gender—human resources highly specialized in our Group’s
strategic areas.
We are continuing to develop employment opportunities
for people with disabilities in order to provide a workplaceenvironment that is comfortable for everyone.

3. Structures and Training Systems That
Leverages Employee Capabilities
We provide employees with training and support systems,
tailored to different ages and types of work, in order toexpand their capabilities and develop next-generation
managers. We support our employees by conducting
performance-based evaluations; applying rating standards
that assess managerial ability; encouraging the acceptanceof challenges; establishing personnel systems that
accommodate a variety of workstyles to fit each employee’s
life stage; and promoting diversity. And to develop humanresources that can play an active role on the global stage, wesend researchers to university overseas, support employees
studying to earn an MBA, and subsidize the TOEIC test forlearners of English.
Support to Develop Human Resource Capabilities
Rank-based Training• Leader training• Management training• Training for newly
appointed managers• Level-appropriate
training for team,section, andgeneral managers• Training for newly
appointed executives• Evaluator training

Support for Elective Education• Dispatch to management• Support for acquiring an MBAteam seminars• Researcher education (overseas)

Personal Development• Correspondence education • Support for obtaining • External public• IT training
public certiﬁcations
lectures• TOEIC IP test

Nippon Chemiphar Corporate Report 2024

25

Sustainability Initiatives

4. Employee Questionnaires;
Factory Mentoring Programs
To deliver high-quality pharmaceuticals, it is essential
to foster a workplace culture that places top priority on
quality. We cannot strengthen our work system and foster aculture of quality without there being a mutually beneficial
relationship between personal and organizational growth.
To this end and to judge awareness of important issues,
NPI’s Tsukuba Factory regularly distributes questionnaires
to employees. A cloud-based system has been introduced
to simplify responding to questionnaires, as well as thecollection of completed documents and their analysis.
In FY2022, we put in place a mentor system in eachdepartment. It uses mid-career employees, who are well
positioned to provide employee guidance while at thesame time doing their work. To date, we have had a degreeof success with having directors act as mentors, holding
regular interviews and providing advice. Since last fiscal
year, we have been introducing a system of mentoring toseveral generations of factory employees.
As the voices of our employees are heard and theirissues made clear, we will continue to implement initiatives
to improve our organization.

5. Harassment Prevention and Mental HealthIn order to prevent our employees from being perpetrators or
victims either within or outside the Company, all employees
learn about sexual, power, and maternity harassment.
Company regulations prohibit sexual harassment and wehave a sexual harassment prevention manual. In addition, we
have in place internal and third-party hotlines for preventing,and taking appropriate responses to, various types ofharassment.
Also, we strive to maintain and improve employee
mental health by conducting yearly stress checks on all our
staff, and offering interviews and guidance conducted byphysicians to interested parties.

6. Supporting Work–Life Balance
In recent years, we have promoted work–life balanceby eliminating long working hours; having overtime-freedays; in principle prohibiting overtime after 8:00 p.m.;and facilitating morning overtime, should additional work
be necessary.
Since FY2021, we have made it easier for employees
to use paid leave, as well as reduce and manage overtime.
In addition, we have raised employee awareness regarding
workstyles and implemented ongoing follow-up efforts insupport of work–life balance. We have a variety of systems
that enable all staff to demonstrate their skills and, at thesame time, work in a comfortable environment.

26

Nippon Chemiphar Corporate Report 2024

The systems include flextime, which allows employees
to adjust their starting and finishing times according tooperational circumstances; a discretionary work system;
a comeback registration system that promotes thereinstatement of employees who have left the workplace
for such reasons as childcare, nursing care, or a change
in the workplace of their spouse; an employment contract
non-relocation clause, for employees who cannot movefrom their current place of work for reasons such as nursing
care or the workplace of their spouse; and a reemployment
system that allows senior employees to continue working
after retirement.
We have adopted various approaches that take into
consideration each employee’s personal circumstancesand preferences. When we select a work environment forour staff, we ensure that they can make full use of theirexperience and expertise.
Following the introduction of teleworking, staggered
working hours, and online conferences, we are continuing
our efforts to protect our stable supply of pharmaceuticalproducts from disruption, while protecting the safety of
our employees.

7. Promoting the Use of Paid Leave
As part of our efforts to promote work–life balance, we
implemented a pre-registration system for 10 days ofannual paid leave that started in FY2021. The system
is based on the idea that employees should be lively,energetic, and focused not only in their work, but at home
and when pursuing their hobbies.
We believe that ensuring happiness in the private
lives of our employees will ultimately enable us toprovide better products and services. Accordingly, we
recommend that employees who make use of this preregistration system take consecutive days of paid leave
whenever possible.

Sustainability Initiatives

V Management System
1. Corporate Governance(1) Underlying Philosophy
We take very seriously the managerial responsibilities
with which our shareholders have entrusted us. Thus,
we strive to ensure that our management organizationand operations are appropriate. Our top priority is toguarantee that management is fair by making it astransparent as possible.
(2) Organization
To improve management efficiency and strengthen
corporate governance, we have separated the decisionmaking and supervisory functions from our businessexecution functions. The former have been delegatedto the Board of Directors (eight members with two-year
terms), at least one third (three members) of whose
members are outside directors; the latter functions are thepurview of the Corporate Executive Officers Meeting.
In addition, we have formed an Audit and Supervisory
Board comprising members who conduct rigorousand neutral audits concerning the overall execution ofduties performed by directors, executive officers, andother personnel. This they do in part through active

participation in meetings of the Board of Directors andother key bodies within the Company. The Audit andSupervisory Board comprises one full-time and two parttime (outside) members.
Our outside directors and outside Audit andSupervisory Board members satisfy the independence
standards stipulated both by the Tokyo Stock Exchange(TSE) and Nippon Chemiphar and, therefore, are notsubject to undue influence from our Company.
As required by TSE, the Company has notified thatit has designated its outside directors and outside Audit
and Supervisory Board members as independent officers.
At the same time, we are striving to strengthen ourinternal management system through risk management
and the development of in-house control systems.
We are promoting sound corporate activities andenhancing our corporate governance in accordancewith our Fundamental Internal Control Policy and Legal
Compliance Code of Conduct.
We expect these efforts to further strengthen the trustbased relationships we maintain with our shareholders
and stakeholders, thereby enhancing our corporate value.

Management Organization
General meeting of shareholders
Election anddismissal
Remuneration Advisory
Committee

AdviceAuditsBoard of Directors

Requests

Reports

Reports
Reports
Sustainability Committee

Election anddismissal

Risk Management Committee

Selects,
dismisses,
Reports
andsupervises

Election anddismissal

Audit and Supervisory
Board members
Cooperation
Audits and reporting

Reports

Independent
auditor

AuditsPresident & CEO
Reports
Promotes

Oversees

Instruction andsupervisionCorporate Executive
Officers Meeting
Reports

Reports

Internal auditing divisionInternal audits

Instruction andsupervision

Departments and Group companies

Nippon Chemiphar Corporate Report 2024

27

Sustainability Initiatives(3) Directors, Audit and Supervisory Board Members(a) Directors
Before appointing someone to our Board of Directors,
we check to ensure they are of flawless character, andhave the appropriate insight and level of professional
expertise, broad experience, superior ability, and deep
sense of responsibility (please refer to the skills matrix
below). They must also display advanced professional
proficiency, and thorough knowledge of the Board’s
efforts to enhance corporate governance while
generating Group-wide business value in accordancewith the Innovation Roadmap.
Candidates for the position of inside director

are reviewed to ensure that their performance andmanagerial ability are excellent, that they have fulfilled
their operational responsibilities thus far, and that they
are able to observe the Company’s operations from a
broad perspective.
Meanwhile, candidates for the position of outside
director must meet the independence standards
stipulated both by TSE and our Company.
Candidates for the post of director are selected by
the president and CEO and, following approval by the
Board, are appointed to their positions in line with annual
shareholder meeting resolutions.

Director Experience and Expertise
Position as ofJune 2024
Kazushiro Yamaguchi President and CEO
Director and Senior
Masanori Kutsuwada Managing
Corporate Officer
Director and Senior
Tomio Yamakawa
Managing
Corporate Officer
Director andMasahide Yasumoto Managing
Corporate Officer

Corporate
Management

R&D/
New Business

Sales/
Marketing

√

√

√

√

Intellectual
Property

√

√

√

√

√

√

Legal/Risk
Management

Financial
Affairs/
Accounting/
Financing

√

√

√

√

√

√

√

Koki Hayamizu

Director andCorporate Officer

Yuji Harada

Outside Director

Masaki Yoshino

Outside Director

√

√

√

Naoko Omukai

Outside Director

√

√

√

√
√

(b) Audit and Supervisory Board Members
Before appointing an Audit and Supervisory Board
member, we closely examine the candidates and selectan individual of excellent character and insight, with a highlevel of professional expertise, wide-ranging experience,superior abilities, and a deep sense of responsibility.
A candidate for the post of inside Audit andSupervisory Board member is evaluated to ensure thatthey are well-versed in our operations and have theaptitude necessary to audit the appropriateness and levelof propriety of our directors as they perform their duties.
A candidate for the post of outside Audit
and Supervisory Board member must meet theindependence standards of both the Tokyo Stock
Exchange and our Company.

28

Overseas
Business/
International
Experience

Nippon Chemiphar Corporate Report 2024

√

√

√

√

Sustainability Initiatives(4) Director Compensation
The Board of Directors has formulated a policy for
determining the details of compensation for individual
directors (hereinafter, the "Compensation Determination
Policy"), the outline of which is as follows:
Compensation
Type

OutlineBase
compensation

A fixed, monthly, cash remuneration the amount of
which reflects the recipient’ s position, responsibilities,
and years in office. It is based on the Company’ sbusiness results, and evaluations of the individual’ sbusiness performance.

Non-monetarycompensation

The Board shall determine the appropriate details, size,
and amount of stock-based compensation that isprovided as an incentive to some or all inside directors
to promote management that will sustainably enhance
corporate and shareholder value by improving theCompany’ s business performance. The Board shallalso reveal how stock-based compensation is
calculated, the timing and conditions according towhich it is to be granted, and other relevant matters.

(a) Basic Policy
The Company’s basic policy for determining individual
director compensation is to set said compensation atlevels commensurate with the responsibilities of thedirector in question, while also considering the role ofcompensation as an incentive for promoting managementtargeting sustainable growth in corporate and shareholder
value through improved business performance.
Specifically, inside directors receive both monetarycompensation (base compensation) that is fixed, in
addition to non-monetary compensation that is not fixed.
Outside directors receive only base compensation.
(b) Composition
Inside directors’ compensation comprises a fixedmonetary amount plus non-monetary compensation thatis determined relative to their general compensation.
They are allotted optimal percentages to ensure that
their compensation serves as an incentive to focus on
improving business performance, and so enhances
corporate and shareholder value. The percentages are
determined based on a director’s position, responsibilities,
and tenure; the Company’s performance; employee salarylevels; and compensation levels at companies of similar
size and in comparable industries or business categories.
Outside directors, meanwhile, receive only basecompensation, in the form of fixed monetary remuneration.

(c) Method of Determination
Reflecting resolutions adopted by the Board of
Directors, the president and CEO decides the detailsof each director’s basic compensation according to ourCompensation Determination Policy.
Subsequently, the Board consults with theCompensation Advisory Committee to ensure that thepresident and CEO’s decisions comply with this policy, andlater receives a report detailing the committee’s response.
The Board determines the number of shares tobe awarded each inside director as share-based
remuneration. This follows a review of the Compensation
Advisory Committee report with recommendations
for the appropriate ratio of an inside director’scompensation (fixed monetary and non-monetary)
relative to general compensation.
(5) Remuneration Advisory Committee
The Company set up the Remuneration Advisory
Committee as an advisory body to the Board of Directors.
The committee comprises four members including thePresident and Representative Director, three of whom are
independent outside directors.
(6) Compensation of Audit and Supervisory Board Members
The maximum amount of total compensation for Audit andSupervisory Board members is determined by a resolutionof the General Meeting of Shareholders. Meanwhile, themembers of this board meet to decide the amount ofcompensation each member shall receive.
(7) Evaluating the Board’s EffectivenessTo evaluate the overall effectiveness of the Board of
Directors, we deliver self-evaluation questionnaires
each year to all Board and Audit and Supervisory Board
members. The data compiled from the responses is thenanalyzed and discussed by the Board. In FY2023, it was
found that the Board, on the whole, had been effective.
We will continue to analyze and evaluate the Board’s
effectiveness in a bid to increase it, while taking the steps
necessary in areas needing examination or improvement.
Main Meetings, Attendance during FY2023*
Board ofDirectors’ Meeting(attendance rate)

Audit andSupervisory Board
Meetings (attendance rate)

Outside directors

14 times (100%)—

Outside auditors

14 times (100%)

16 times (100%)* The outside directors appointed on June 21, 2023 attended Board
meetings 11 times (100%).

Nippon Chemiphar Corporate Report 2024

29

Sustainability Initiatives

2. Compliance and Risk Management(1) Internal controls
We have established a Fundamental Internal Control
Policy based on the Companies Act and the Regulation
for Enforcement of the Companies Act. In addition, we
have set up a framework that ensures our operations areappropriate in terms of risk management compliance, theefficient performance of professional duties, and reliablefinancial reporting.
Further, we have created an Internal Auditing Division,
which operates under the direct supervision of thepresident and CEO. This division cooperates with various
committees, including the Risk Management Committee,
to investigate the appropriateness of our operations andsuggest improvements.

(2) Risk management
In accordance with our Fundamental Internal Control
Policy, we have established a set of risk management
rules to foster comprehension, management, andresponse to a variety of risks that have significant impact
on the administration of our businesses.
The rules include provision for the creation of a Risk
Management Committee, with the director in charge ofrisk management serving as its chairperson. We also have
set up individual committees to respond to risks related
to compliance and information security, and are sharing
relevant information with our employees.

Business and Other Risks (presented in securities report)

Business strategy risks☆ Changes to the NHI drug price and medical insurance
systems, and regulations and laws governing
pharmaceutical affairs☆ Pharmaceutical R&D
Prolonged time required to develop new and generic drugs;
suspension or cancellation of such development.

☆ Excessive competition among generic drugs☆ Litigation-related risks
Proceedings regarding product liability, environment, labor, andother matters.
Patent lawsuits filed by manufacturers of original pharmaceuticals,
despite thorough preemptive investigation of patents.

☆ Fluctuating financial markets, exchange rates, andincrease in raw material prices☆ Overseas risks
Political instability in countries where we operate;
deterioration of economic conditions or other relevant
circumstances; violation of laws, regulations,administrative guidance, or other directives; andlabor–management conflict.

☆ Risks related to legal violations, corporate governance

Risks posed by natural disasters and accidents☆ Delayed, interrupted material and product procurement
Regulatory issues at supplier companies or countriesof manufacture; disasters such as earthquakes andfires; accidents during transportation.

☆ Delayed, interrupted production
Resulting from technical or regulatory issues; fires, earthquakes,
and other disasters.

☆ Spread of infectious disease
COVID-19 and other illnesses.

☆ Unexpected medicinal side effects☆ Drug quality-, safety-related issues☆ Trouble involving systems☆ Information leaks

30

Nippon Chemiphar Corporate Report 2024

Impact on operating results or financial position

External environmental risks

Sustainability Initiatives

3. Messages from Outside Director and Auditor

Perspectives as a new member of the board of directors

Naoko Omukai
Outside Director

In June 2023, I was appointed as an outside director of Nippon Chemiphar’s Board.
Within Nippon Chemiphar, before the Board meetings, three outside directors
and two outside auditors attend briefing sessions at which the person in charge offers
detailed preliminary explanations followed by questions and answers. The Board within
Nippon Chemiphar comprises members that reflect diversity based on its significance interms of gender, work experience, and age; and members exchange opinions to benefit
from each other’s knowledge, experience, and abilities. Reflecting that diversity, thebriefings are characterized by vigorous and open discussions, and the issues raised atthese meetings form the basis of the deliberations conducted at Board meetings.
While the economic environment in the pharmaceutical industry is challenging,
we are seeking to attain sustainable growth and development through our growthstrategy, which stems from three areas of business: generics, diagnostics, and new
drugs. Further, by aggressively expanding into overseas markets, we aim to achievea global presence.
The Board oversees the allocation of management resources and theimplementation of business strategies designed to enhance the Company’s growth.
In order to boost corporate value over the longer term, the Company recognizes theimportance of investing in human capital and intellectual property.
From those perspectives, the Company is challenged to develop new products anddrugs, such as DropScreen clinical diagnostics and alkalizing agents, while pushingahead with in-house drug discovery. If we are to improve and strengthen the profitabilityof our areas of business, while simultaneously growing and developing due to overseas
expansion, it is vital that our human resources reflect our policy of diversity, equity, andinclusion (DE&I). Moreover, it is becoming increasingly important how we respond to thechallenges of intellectual property both domestically and abroad.
As a recently appointed outside director, I aim to contribute to the sustainablegrowth and development of the Company by drawing on my experience as an outside
officer at other companies, and as an attorney experienced in corporate legal matters inJapan and overseas.

Outside corporate auditor contributes to corporate value

Rumi Yamaguchi
Outside Audit & Supervisory
Board member

While outside auditors are responsible for independently assessing how directors
perform their duties, our ultimate goal is to increase corporate value and prevent it frombeing adversely affected. Given the numerous companies where a lack of complianceand internal controls has led directly to a loss of corporate value, the benefits of having
outside auditors is now being called into question.
Although an understanding of a company is required if the activities of directors
are to be properly assessed, a major obstacle to independent assessment is a lack of
information. At Nippon Chemiphar, however, information is proactively provided to ensurethat outside directors and auditors can function as necessary.
Detailed information and careful explanations are offered, and multifaceted
discussions held, at agenda briefings provided for the Board. In addition, there are
frequent opportunities to hear directly from departmental managers about such matters
as quality control, and to obtain information derived from actual business operations.
During factory inspections that include outside directors, we check
manufacturing and quality control procedures. This enables us to ascertain whether
corporate governance has penetrated the workplace, and whether operations andstaff understanding deviate from management policies. This aspect of inspections isvery useful, as it leads to discussions based on actual on-site circumstances.
While Nippon Chemiphar proactively offers information, I nevertheless would
like to encourage the Company to provide such information as will make the audit
more effective.
A chartered public accountant, I have over 30 years’ experience in auditing
financial statements and internal controls of various companies. I use my experienceand knowledge to evaluate and review the degree to which disclosed information isappropriate and useful, as well as whether internal control systems are sufficient andeffective. In addition, I am working to further improve the transparency and fairness ofcorporate management.

Nippon Chemiphar Corporate Report 2024

31

Sustainability Initiatives

4. Directors, Audit & Supervisory Board Members, and Corporate Officers (as of June 21, 2024)(Back row, from left)
Outside Directors Masaki Yoshino, Yuji Harada and Naoko Omukai; Director and Managing Corporate Officer Masahide
Yasumoto; Director and Corporate Officer Koki Hayamizu(Front row, from left)
Director and Senior Managing Corporate Officer Masanori Kutsuwada; President and CEO Kazushiro Yamaguchi; Director
and Senior Managing Corporate Officer Tomio Yamakawa(From left)
Audit & Supervisory Board member (full-time)
Sakaru Makino, Outside Audit & Supervisory
Board members (part-time) Rumi Yamaguchi
and Takeshi Shiba

32

Nippon Chemiphar Corporate Report 2024

(Back row, from left)
Corporate Officers Takahiro Mataki, Fumio Tangiku, andShinya Yoshida(Front row, from left)
Corporate Officers Shinji Nakajima, Shinichi Kudo, andHirofumi Miyata

ESG の取り組み

企業情報

Corporate Data

34 Ten-year Consolidated Performance Outline
36 I. Overview
II. Domestic Locations
III. Group Companies
IV. History

Nippon Chemiphar Corporate Report 2024

33

Corporate Data

Ten-year Consolidated Performance Outline
FY2014(Ended March 31, 2015)

FY2015(Ended March 31, 2016)

FY2016(Ended March 31, 2017)

FY2017(Ended March 31, 2018)35,11835,60235,68935,331

Net sales
Pharmaceutical products segment

34,16834,50934,551

34,279Generics

27,74928,85729,35829,872

Proprietary products and new drugs

3,374

2,888

2,294

2,009

949

1,092

1,137

1,051

18,35218,803

19,44919,535

Selling, general and administrative expenses 13,480

Diagnostics1
Others segment
Income Statement

Cost of sales

13,653

13,403

13,947

1,755

1,889

1,984

2,280

Operating profit

3,285

3,145

2,836

1,848

Ordinary profit

3,217

2,945

2,849

1,696

R&D expenses

Financial positionat year end

Cash flow from

Profit attributable to owners of parent

1,899

1,961

2,054

1,160

Total assets

41,42843,64447,002

46,698

Total net assets

15,626

16,041

17,355

17,487

Operating activities

2,438

2,450

2,737

3,188

Investing activities−2,072−151−2,504−1,606

Financing activities

−137

−935

787

−1,741

Capital expenditure Capital expenditureand other
Depreciation and amortization

Earnings per share (¥)
Amounts per share2 Book value per share (¥)

Indexes

1,710

1,172

2,928

1,645

1,200

1,178

1,112

1,192

474.49499.12530.02315.283,900.05

4,099.74

4,548.80

4,859.86

Dividend per share (¥)

100.0

100.0

100.0

100.0

EBITDA (millions of yen)

4,588

4,280

4,104

3,025

Operating income to sales (%)

9.4

8.8

7.9

5.2

Return on equity (%)

13.1

12.4

12.3

6.7

Return on assets3 (%)

7.9

6.9

6.3

3.6

Debt-to-equity ratio (%)

80.1

81.1

85.3

84.0

Equity ratio (%)

37.7

36.7

36.9

37.4

Dividend payout ratio (%)

21.1

20.0

18.9

31.7

Number of employees

743

756

769

816

15.8

15.2

14.7

14.2

Nippon Chemiphar (%)

—

7.2

11.2

10.4

Nihon Pharmaceutical Industry (%)

—

—

—

—

Nippon Chemiphar (%)

—

—

—

—

Nihon Pharmaceutical Industry (%)

—

—

—

—

Average length of employment
Nippon Chemiphar (year)
Percentage of female managers4
Non-financial data

Male rate of childcare leave taken5

Notes:
1. We have disclosed sales of diagnostics since FY2021.
2. As we conducted a 10 :1 reverse stock split on October 1, 2016, per share data have been adjusted as if the split had been conducted at the start of FY2014.
3. Return on assets = ordinary profit / [(total assets for the previous term + total assets for this term) / 2].
4. Calculated based on the provisions of the Act on Promotion of Women's Participation and Advancement in the Workplace (Law No. 64 of 2015).
5. Based on the provisions of the Law Concerning the Welfare of Workers Who Take Care of Children or Other Family Members Including Child Care and Family Care Leave (Law No.
76, 1991), the percentage of child care leave taken is calculated in accordance with Article 71-4-1 of the Enforcement Regulations of the Law Concerning the Welfare of Workers
Who Take Care of Children or Other Family Members Including Child Care and Family Care Leave (Ministry of Labor Ordinance No. 25, 1991).
6. Because we have been applying the Accounting Standard for Revenue Recognition (Corporate Accounting Standard No. 29) since FY2021, it is not possible to make a simple
comparison of indicators based on sales revenue before and after that fiscal year.
7. Announced on May 13, 2024.

34

Nippon Chemiphar Corporate Report 2024

Corporate Data

(Millions of yen)
Forecast for FY20247(Ending March 31, 2024)

FY2018(Ended March 31, 2019)

FY2019(Ended March 31, 2020)

FY2020(Ended March 31, 2021)

FY20216(Ended March 31, 2022)

FY2022(Ended March 31, 2023)

FY2023(Ended March 31, 2024)

34,18231,756

31,541

32,50631,55930,74832,682

30,63230,42331,50130,54329,611—

28,31526,42525,532

26,28324,80322,766

24,640

1,548

1,362

1,790

1,754

1,345

1,326

1,230

2,163

2,780

4,101

4,500

1,500

1,123

1,117

1,004

1,015

1,137

—

19,654

19,20020,09723,432

23,37423,010—13,063

12,19010,879

8,248

8,425

8,232

—

2,066

2,173

1,998

2,392

2,419

2,325

2,820

1,464

364

564

825

−241

−494

200

1,512

307

582

1,022

58

−219

100

32,700

881

436

495

700

339

−180

60

46,92645,862

47,12449,453

48,57149,548—17,863

17,39218,01418,501

18,534

18,460

—

2,196

1,394

1,503

1,801

−916

296

—

−960

326

−1,02435−394−3,139

—

110

−961

29

−793

144

1,447

—

784

660

1,812

1,131

573

2,747

3,700

1,345

1,272

1,393

1,586

1,500

1,459

1,450

245.11121.42137.75194.3394.07−50.1416.62

4,963.24

4,830.92

5,006.49

5,119.99

5,130.65

5,116.02

—

100.0

50.0

50.00

50.00

50.00

50.00

50.00

2,987

1,704

2,099

2,727

1,682

1,391

—

4.3

1.1

1.8

2.5

—

—

—

—

5.0

2.5

2.8

3.8

1.8

3.2

0.7

1.3

2.1

0.1

85.7

85.2

84.0

78.9

81.0

90.5

—
—
—

38.0

37.9

38.2

37.4

38.1

37.3

—

40.8

41.2

36.3

32.8

53.2

—

300.8

846

807

760

809

872

887

—

12.9

12.8

13.7

13.9

13.3

13.0

—

11.5

11.4

9.4

9.5

12.3

12.2

—

—

—

—

13.7

9.1

—

—

—

40.0

92.3

116.7

—

—

—

—

100.0

100.0

Nippon Chemiphar Corporate Report 2024

35

Corporate Data

I Overview
Company Name: Nippon Chemiphar Co., Ltd.
Founded: June 16,1950
Capitalization: ¥4,304 million
Securities Exchange: Tokyo Stock Exchange (Standard Section)
Net sales: ¥30,748 million (Consolidated, FY2023)
Employees: 887 (Consolidated, as of March 31, 2024)
Website: https: //www.chemiphar.co.jp/english/

II Domestic Locations
Head Office:2-2-3, Iwamoto-cho, Chiyoda-ku, Tokyo 101-0032, Japan
Tel.: +81-3-3863-1211
Fax: +81-3-3864-5940
Discovery Research Laboratories:
1-22, Hikokawado, Misato City, Saitama Prefecture, 341-0005, Japan

III Group Companies
Subsidiaries:
Nihon Pharmaceutical Industry Co., Ltd.
Safety Research Institute for Chemical Compounds Co., Ltd.
Nippon Chemiphar Vietnam Co., Ltd.
Affiliated Company:
Japan Sopharchim Co., Ltd.

IV History
1950 Hitachi Chemical Co., Ltd. (as Chemiphar was formerly known) is set up
1969 Nihon Pharmaceutical Industry Co., Ltd. (NPI) becomes an affiliated company
1970 Company changes name to Nippon Chemiphar Co., Ltd.
1971 Listed on Tokyo Stock Exchange (Second Section)
1976 Listed on Tokyo Stock Exchange (First Section) and starts diagnostics business
Establishes Japan Sopharchim Co., Ltd. (currently an affiliated company)
1986 Safety Research Institute for Chemical Compounds Co., Ltd. becomes a subsidiary1988 Launches Uralyt-U (soluble powder)1993 Launches Soleton 80
1995 Launches Calvan
2010 NPI becomes a wholly owned Chemiphar subsidiary; Chemiphar spins off its Ibaraki Factory to NPI(NPI’s current Tsukuba Factory)
2014 New plant at NPI’s Tsukuba Factory comes on line
2015 Establishes Nippon Chemiphar Vietnam Co., Ltd.
2017 Establishes West Japan Distribution Center, resulting in one base each in eastern and western Japan2018 Vietnam factory starts exporting to Japan
2020 Launches DropScreen
Concluded a license agreement with Delta-Fly Pharma, Inc. for DFP-17729
2021 Concluded a collaborative research and development agreement and an option agreement for NC-2800 with Sumitomo
Pharma Co., Ltd.
2022 Concluded a license agreement with Delta-Fly Pharma for DFP-14323

36

Nippon Chemiphar Corporate Report 2024

CORPORATE REPORT

2024

2-2-3, Iwamoto-cho, Chiyoda-ku, Tokyo 101-0032, Japan
Tel.: +81-3-3863-1211 Fax: +81-3-3864-5940

2024.08