Business Report(From January 1, 2015 to December 31, 2015)
1. Nobelpharma
1.1. Progress and Results of Operations
The Company continues its business activities with its mission of “Contribute to society by providing
necessary but neglected pharmaceuticals and medical devices.” Sales and profits are importantmanagement indicators that should be pursued; however we regard these as results of carrying out themission as well as a means to accomplish the mission. The management policy and action criteria are ascited below:
Policy1. General
1) Share Mission, Policy and Action Criteria among all concerned (employees, shareholders,
officers)*Unable to share without routine review
2) Pursue evolution, yet upsizing is not our goal3) Comply with regulations and ethical codes
4) Ensure transparency and disclosure5) Launch out into overseas
2. Personnel
1) Value employees and families, respecting self-development
2) Value "Selected Few" and create environment for "Selected Few" to enjoy working*"Selected Few" = experienced experts passionately devoted to working, irrespective of gender,
age, nationality, religion or preference
3) Value suggestions and opinions from employees
3. Products
1) Pursue high quality in products and data
2) Ensure post-marketing safety
3) Search seeds externally
4. Capital
1) Profits as a result/means of achieving Mission2) Focus on higher return on sales/profits per employee3) Investment decision by observing damage of failure, not unreliable counts of success4) Profits distribution to shareholders (dividends)/employees/internal reserve*dividends: 1/3 of profits after tax*employees: up to dividends5) Asset management only with principal guarantee
Action Criteria
1. Principle: Give priority to patient benefit if inconclusive:
2. Challenge:
1) YMWS: "Yatte Minakucha Wakaranai, shikashi Songiri wo tamerauna"= You never know unless you try, but do not hesitate to cut loss
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2)

ZY: "Zenrei ga nainara Yattemiru"= If no precedence, try first
3. Speed:
1) Never forget patients are waiting
2) Never fear to buy time with money
3) Set a deadline first (specific date) regardless of possible delay*Off Limits = "about - ," "early/late - ," etc.
4) Start from whatever feasible5) If failed/troubled, prevent expansion first, then recurrence*Pursuit of responsibilities unnecessary6) Fast decision for < X mil yen by responsible person*X = 3 for Div Mngr; 1 for Dept Mngr/Branch Mngr/PM/PL
4. Cost/Efficiency:
1) Never carry/purchase deadwood, never take/cause wasteful actions
2) No overtime work considered good3) Consider patient needs, scientific rationality and nature of laws/regulations when pursuing
higher quality in products/data
4) Pursue cost reduction with the principle of multiple sourcing, while regarding providers as
partners
5. Communication/Relationship:
1) Never prioritize loyalty to company over morals
2) Superiors to confidingly entrust tasks to subordinates, but never leave unmanaged3) Hear anyone out, never interrupt in the middle
4) Start with conclusion when explaining/responding5) Merely greetings, yet surely significant

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As of March 2016, the Company is marketing the 13 new ethical drugs as listed below. As the agreementwith Clinigen expires at the end of 2016, Foscavir® will be transferred to the licensor, Clinigen, and theCompany will discontinue the marketing of the product.
Route ofBrand Name

LaunchIndication

Licensor
Administration

1

2

3

4

5

Nobelzin®
capsulesNobelzin®
tablets
Lunabell®
LD
Lunabell®
ULD
Nobelbar®

Fostoin®

Gliadel®

Wilson’s disease

Jul 2008
Sep 2013

dysmenorrhea

Dec 2008

Neonatal seizures, statusepilepticus

Teva

207

DirectJanssen

13,149Nippon Shinyaku
Fuji Pharma

In-house

133

DirectPfizer

1,617

Eisai

Co-promotion

Eisai

1,179

Marketing Approval (MA)transferred to Eisai

Co-promotion(Contracted product)

SBI
Pharmaceuticals(medac)243

DirectClinigen449

DirectOral
Administration

status epilepticus
prevention of
postoperative seizures, etc.

7

8

9

Alabel®

Foscavir®

injection
Intravenous
injection

malignant glioma

Indacin®

Cosmegen®

diagnosis of malignant

Oral

gliomaAdministration

cytomegalovirus
retinopathy, viremia andinfection

Intravenous

patent ductus arteriosus ofIntravenous

prematurity

injection

Sep 2013

Feb 2012

MA transferred frominjection

MSD
MA transferred fromJan 2013

Jan 2013

Lundbeck
Wilms’tumor
choriocarcinoma
pediatric solid malignant
tumor, etc

78

DirectMSD

Intravenous

MA transferred from
Lundbeck17

Directinjection

MSD

10

Unitalc®

Dec 2013

prevention of recurrent
malignant pleural effusion

Intrapleural

Novatech

63

Direct11

Respia®

Dec 2014

apnea of prematurity

Intravenous
injection/oral
liquidNipponBoehringer

124

DirectRapalimus®

lymphangioleiomyomatosi

Oral

12

Dec 2014

Pfizer

138

Directs

Administration

Keocyt165

Direct13

Zanosar®

Feb 2015

gastroenteropancreatic
neuroendocrine tumor

Both products
distributed by twocompanies

Intravenous

chemotherapy

6

Remarks

Administration

Interstitial
Jan 2013

Sales Channel

Oral

Apr 2008
Feb 2015

Jan 2012

2015 Sales(NHI pricebasis)
Yen inmillions

Intravenous
injection

Total

17,563

While most of the drugs under development request such as unapproved drugs including Unitalc® havea high probability of success, severe appraisal of the NHI prices hindered the Company to produce
profits as expected when we started the development.
As shown in the above table, the total sales from the 13 products in 2015 were 17,563 million yen on
the wholesale price (NHI price) basis and 6,854 million yen on the Company price basis. Sales of theCompany from Lunabell® family were 4,804 million yen, accounting for 70.1% of the total sales.
Adding royalty revenue of 580 million yen, the total sales in 2015 were 7,435 million yen, up 12.2%
Y-on-Y.
The cost of goods sold was 1,709 million yen, up 41.0% Y-on-Y and accounting for 23.0% of the total
sales (18.3% in 2014). The selling, general and administrative expenses totaled 6,201 million yen, up
20.3% and 83.4% (77.7% in 2014), mainly including personnel expenses of 2,085 million yen, up 13.4%
and 28.0% (27.7% in 2014), R&D expenses of 1,635 million yen, up 16.7% and 22.0% (21.1% in 2014),
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outsourcing expenses of 794 million yen and royalty expenses of 923 million yen. The outsourcing
expenses mainly included 34 million yen for the business management service by Hisanaga & Company,
36 million yen for temporary staffing by Recruit Staffing, 39 million yen for call center operation by
EP-PharmaLine, 40 million yen and 30 million yen respectively for system development by Application
Software Development Co., Ltd. and Perspective Co., Ltd., 94 million yen for PMS-related services by
CMIC PMS, and 39 million yen for safety database construction and operation by CMIC. Royalty
expenses were running royalties of 749 million yen, 154 million yen and 20 million yen respectively to
Jansen Pharma, Pfizer and Teva.
The resulting operating income was (476) million yen (262 million yen in 2014), accounting for(6.4)% of total sales (4.0% in 2014).
Ordinary income was (270) million yen (577 million yen in 2014) accounting for (3.6)% (8.7% in2014) of total sales, after recording non-operating income of 282 million yen including subsidy revenueof 276 million yen partly offset by non-operating expenses of 76 million yen including interest expenses
of 51 million yen and bond interest expenses of 22 million yen.
The Company posted an extraordinary income of 448 million yen including gains on sales of securities
as well as an extraordinary loss of 22 million yen.
With the income taxes of 109 million yen and income taxes-deferred of (111) million yen, the net
income was 157 million yen, down 34.6% Y-on-Y and accounting for 2.1% of total sales (3.6% in 2014),
and net income per employee was 649,000 yen (1,021,000 yen in 2014).
Retained earnings brought forward as of December 31, 2015 were 637 million yen, with the beginningbalance of retained earnings brought forward of 665 million yen, retrospective prior period adjustment of(18) million yen, a dividend payment of 77 million yen and reversal of retirement of treasury stocks of
90 million yen.

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Item
Sales
Product sales
Other
Cost of goods sold
Gross profit
SG&A expense* Personnel cost
* R&D expenses* Commission fee* Loyalty expenses
Operating income
Non-operating income
Non-operating expenses
Ordinary income
Extraordinary income
Extraordinary loss
Net income before tax
Income taxes
Net income
Ordinary income per
employee (‘000 yen)
Net income per employee(‘000 yen)mil yen

Y-on-Y% to total sales
2014
2015
100.0%
100.0%
89.0%
92.2%
11.0%
7.8%
18.3%
23.0%
81.7%
77.0%
77.7%
83.4%
27.7%
28.0%
21.1%
22.0%
8.3%
10.7%
12.4%
12.4%
4.0%
-6.4%
6.1%
3.8%
1.3%
1.0%
8.7%
-3.6%
0.0%
6.0%
2.8%
0.3%
5.9%
2.1%
2.3%
-0.0%
3.6%
2.1%

2014
6,628
5,902
726
1,212
5,415
5,153
1,838
1,401
553
819
262
401
87
577
185
391
151
240

2015
7,435
6,855
580
1,710
5,725
6,202
2,085
1,635
794
923
-476
282
76
-270
448
22
155
-2
157

112.2%
116.1%
79.9%
141.1%
105.7%
120.4%
113.4%
116.7%
143.2%
112.7%
70.3%
87.4%
11.9%
39.9%
65.4%

2,455

-1,116

-

-

-

1,021

649

63.6%

-

-

665
-18
-90

-

-

-

77
157
638

-

-

-

Retained earnings brought
forward
Beginning balance
416
Prior period adjustment
97
Retirement of treasury
stock
Dividend89
Net income
240
Ending balance665* Major items included in SG&A expenses

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1.2. Sales
The sales from the 13 products on market as of December 2015 are summarized as follows:
Brand Name
Nobelzin®
Lunabell® (LD),ULD
Nobelbar®
Fostoin®
Foscavir®
Gliadel®
Alabel®
Indacin®
Cosmegen®
Unitalc®
Respia®
Rapalimus®
Zanosar®
Total

Wholesale sales (NHI price basis, mil yen)2014 [1]2015 [2]20120711,80013,149
138
133
1,296
1,617
415
449
1,270
1,179
233
243
85
78
15
17
48
63
2
124
5
138
165
15,507
17,563

Y-on-Y([2]/[1])
103%
111%
96%
125%
108%
93%
105%
92%
113%
132%
6414%
2891%
113%

Lunabell®, our core product, is marketed on complete consignment basis by Nippon Shinyaku and Fuji
Pharma. In 2015, we promoted prescriptions of ULD giving the highest priority to shifting from LD to
ULD. As a result, the percentage of ULD to total sales of Lunabell® in December increased to 52%, but
fell short of our target of 70%. Sales of Lunabell® (total of LD and ULD) were 13.15 billion yen, an
increase of 760 million yen over the sales plan (up 7% over sales plan and up 11% Y-on-Y). Sales ofco-promotion products by direct sales fell slightly short of the plan to be 4.41 billion yen (down 1% fromthe plan and up 19% Y-on-Y). As Marketing & Sales made a concerted effort to sell Fostoin®, a major
product, sales of Fostoin® increased to 1.62 billion yen, up 13% over the plan and up 25% Y-on-Y.
As of March 1, 2016, the Company has 85 MRs with 13 sales offices nationwide. 37 of 85 MRs areseconded from the Medipal Holdings Group.
As for the sales of Noberzin® and Nobelbar®, to the consignment sales by Alfresa was terminated on
March 31, 2015 and the direct sales by the Company started from April 1.
For the logistics of the direct-sales products, the Medipal Group has, in principle, exclusively takenover the distribution.
1.3. Manufacturing and Capital Expenditure
The Company, having no manufacturing facilities of its own, outsources manufacturing of both APIs
and products to domestic and overseas manufacturers, and the stabilization of the drug supply fromoverseas manufacturers has been a big challenge.
Of the products imported from overseas, Foscavir® and Alabel® as well as Fostoin® have been steadily
imported despite the past experiences of certain troubles. However, Rapalimus®, primarily packaged
overseas, is facing some concerns over defects including spots on tablets caused by packaging. As for
Zanosar®, two lots imported in November and December 2015 were rejected in the quality inspections,leading the Company to take urgent actions to secure replacements.
For Lunabell®, Indacin®, and Cosmegen®, the partial change applications filed to the authority for thechanges in the API manufacturing methods or of the manufacturing sites were all approved after the
6/16

communication with reviewing authority continued over a year.
Considering the past troubles of Fostoin®, the Company has intensified the inspections on the
manufacturing facilities of Pfizer. Consequently, some partial deviations in the manufacturing methods
from the MA were found resulting in two meetings with reviewing authority where the Company
explains the detailed backgrounds. While received strict instructions from the reviewing authority, theapplication for changes in MA was accepted and under review as of March 2016.
For this period, there is no material capital investment.
1.4. Research and Development
The Company, in the past, mainly developed drugs already approved in Europe and US but not
approved in Japan (“unapproved drugs”) and smoothly obtained the approvals. Recently, as thelong-lasting social issue of unapproved drugs has been largely solved and the Company is shifting its
target seeds to more difficult drugs originated in Japan.
The table below summarizes the development stage, expected NDA and market size classification inthree categories of New Drugs, Life Cycle Management (LCM) and Overseas Development. Many are
drugs with new concepts originated in Japan. Of these products, those under development with our own
funds without any public subsidies are NPC-16 and NPC-04 under New Drugs, and NPC-02 (newindication of hypozincemia) and NPC-12 (new indication of hematopoietic stem cell transplantation)
under LCM. While the ways of financing Overseas Development have not been determined, publicfunds have been utilized in some form for other categories.
Development items are classified into the following six classifications:
I: Potential primary sources of revenue following Lunabell® (sales of over 3 billion yen)
II: Short term approval and marginal profit expected while not likely to be a primary source of revenue
III: Short term approval expected with a theme from academia such as a university. Lower
development cost with promising public subsidies. Difficult to estimate sales due to innovative
concepts.
IV: Similar to III but relatively long time required for approval.
V: LCM of the existing commercialized products. Lower development cost and increased marginal
profit expected.
VI: Theme under research (No applicable item in the table below)
It is notable that: (1) NPC-12G (angiofibroma) and NPC-17 received designation under the “sakigake”
fast-track review system, important measures of the Ministry of Health, Labor and Welfare, forprioritized review and NHI price listing; (2) NPC-12G received orphan drug designation for prioritized
review during the approval process, government subsidy for R&D expenses and an extended
re-examination period as well as tax benefits; and (3) NPC-14, NPC-09 and BK-SE36 were elected as
Practical Research Project for Rare/Intractable Diseases of 2015 Project Promoting Support for Drug
Discovery by Japan Agency for Medical Research and Development (“AMED”) to be granted agovernment subsidy for R&D expenses up to 200 million yen for each over three years. The Company is
the only company with several items designated and elected for both (1) and (3).

7/16

(New Drugs)
Indication

Licensor

Development
stage

Myringa regeneration

Foundation of
Biomedical
Research andInnovation (Kobe)
Kaken
PharmaceuticalPIII

Dec 2017

III

Spasmodic dysphonia

Foundation of
Biomedical
Research andInnovation (Kobe)
Wakayoshi
Seisakusho

PIII

Oct 2017

III

Gynecological diseases

In-housePIII

Jun 2018

I

Distal myopathy

In-housePIII

Jun 2018

IV

NPC-155Melatonin

Sleep disorders inchildren withneurodevelopmental
disabilities

In-house

PIII

Dec 2018

I

6

NPC-14
Arbekacin

Duchenne muscular
dystrophy

Undisclosed

PII

TBD

IV

7

NPC-04
Oxcarbazepine

Partial epilepsy

Novartis

Under review

Jun 2016

II

8

NPC-x3Pyruvic acid

Hyperuricemia due toKurume University
mitochondrial disorders

PI

TBD

IV

9

NPC-x4
P092

Prion diseaseNon-clinical

TBD

IV

Compound1

2

NPC-18
S-bFGF, etc.

NPC-17
Titanium bridge

3 NPC-16
4

NPC-09N-acetylneuraminic acid

Gifu University

Estimated
Classification
approval(LCM)
1

NPC-02
Nobelzin®

NPC-12G
2 Sirolimus® external
preparation

Hypozincemia (new indication)

PIII

Mar 2017

I

External preparation (new drug form),
angiofibroma (new indication)

PIII

Mar 2018

III3

NPC-02
Nobelzin®

For use in children

PIII inpreparation

TBD

III

4

NPC-05
Unitalc®

Refractory pneumothorax (new indication)

PIII inpreparation

TBD

III

5

NPC-12
Rapalimus®

Fbrodysplasia ossificans progressiva (newindication)

PII inpreparation

TBD

III

Severe hyperhidrosis, neurofibroma (newindication)

PI/II

TBD

IV

NPC-12G
6 Sirolimus® external
preparation
7

NPC-12
Rapalimus®

Prevention of GVHD after hematopoietic stem
cell transplantation (new indication)

PII inpreparation

TBD

IV

8

NPC-07
Alabel®

Diagnosis of bladder cancer

PIII(Addition)

TBD

V

PIb

TBD

I

(Overseas Development)
1

BK-SE36
Malaria vaccine

Prevention of falciparum
malaria

8/16

Osaka University

2

3

NPC-18
S-bFGF, etc.

NPC-17
Titanium bridge

NPC-12G
4 Sirolimus® external
preparation

Myringa regeneration

Foundation of
Biomedical Researchand Innovation
Clinical trial in(Kobe)
preparation
Kaken
Pharmaceutical

TBD

III

Spasmodic dysphonia

Foundation of
Biomedical Researchand Innovation
Clinical trial in(Kobe)
preparation
Wakayoshi
Seisakusho

TBD

III

Clinical trial in
preparation

TBD

III

Hemangiofibroma

Osaka University

1.5. Business Development & Strategy
Business Development & Strategy is responsible for playing core roles for the Company’s open
innovation and contacts for business negotiations, specifically (1) Planning and research for new themes,(2) In-licensing negotiations with a potential business partner for a new development theme, (3)Follow-up negotiations with the existing business partners, (4) Negotiations for MA transfer from othercompanies, (5) Intellectual property management such as patents, and (6) procurement negotiations.
With regard to (2), the Company entered into an option agreement in August 2015 for a license granted
for BK-SE36 (malaria vaccine) with Professor Toshihiro Horii of Osaka University, Osaka University
and The Research Foundation for Microbial Diseases of Osaka University as a cooperative project withacademia. In December 2015, the Company signed an agreement for an exclusive license with Professor
Nobuhiko Isshiki, professor emeritus at Kyoto University, as well as a memorandum for manufacturingwith Wakayoshi Seisakusho for NPC-17 (titanium bridge for spasmodic dysphonia). For in-licensing
from other companies, the Company has been negotiating for a respiratory system drug under clinical
trial in Europe by a European company since the conclusion of a term sheet in December 2015.
For (3), in February and March 2015, the Company entered into a memorandum with our business
partners to receive financial backings for supporting sales.
For (5), the intellectual property management software was implemented in September 2015 toestablish infrastructure for information management of intellectual property, with which a system toeffectively manage the recently increasing number of intellectual properties including in-house licenses.
The Company plans to establish regulations on handling of inventions in 2016.
(6) is a new role in line with strengthening the company-wide procurement system started in
November 2015.
1.6. Pharmacovigilance & Quality Assurance
Pharmacovigilance & Quality Assurance is responsible for largely three areas: (1) Quality assurance of
manufacturing, (2) safety control for the vigilance of side effects and adverse events and (3)Post-marketing Surveillance (PMS) for pharmacovigilance. The objectives of (2) and (3) are not to cause
drug-induced diseases and to pass re-examinations, and it is important to achieve these objectives
efficiently within laws and regulations.
For Lunabell® Tablet LD and Nobelbar® for intravenous injection filed for re-examination respectively
in July 2012 and January 2015, reliability related issues were repeatedly pointed out by the authority.
The executive officers and directors thrashed these matters out again in the regular camp meeting in
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November 2014 with the assistance of external consultants, from thorough fact-finding, cause
investigation and in-depth discussions on future improvements. Consequently, the Company establisheda project team for these two products to implement the measures and further separated the section
engaged in Post-marketing Surveillance from Pharmacovigilance & Quality Assurance in March 2015 as
Peri-Approval Science & Operations for the complete enhancement of PMS, all of which led to thecertain resolution. Accordingly, the project team was dissolved in November 2015, and the organization
was returned to normal by unifying Pharmacovigilance & Quality Assurance into one, harmonizing withthe three important persons under the PMD Act (General Marketing Compliance Officer, Safety
Management Supervisor and Quality Assurance Supervisor). The IT system related to (2) and (3) was
concurrently put into place.
1.7. Regulatory Affairs
Regulatory Affairs is responsible for administrative procedures related to the PMD Act and for NHI
price negotiations. A noteworthy event for this year was the renewal of the first-class drug marketing
authorization holder license.
1.8. Funding and Major Lenders
In February 2016, the Bank of Japan introduced negative interest policy for the first time in its history.
Considering its symbolized era of low-interest rate where capital demand is expected to rise until 2020,
the Company received financing through long-term (five to ten years) fixed-rate borrowing fromfinancial institutions and business companies in late 2014 and early 2015, in view of potential sales
decrease due to the expected launch of generics of Lunabell® LD, our core product, in the end of 2015,
approvals of the 3rd round development item expected after 2017, and the possibility of overseas
development in near future.
The new borrowing including bonds from financial institutions for the year of 2015 was 2,600 million
yen. Repayment to financial institutions was 1,573 million yen.
The resulting balance of loans payable and bonds as of December 31, 2015 was 5,684 million yen. As
the Company has cash and deposits of 5,097 million yen, the actual amount of borrowing is 587 million
yen.
In 2016, the Company has no plan for new borrowing and will repay 1,165 million yen, including
borrowing of 387 million yen from Inabata & Co., Ltd.
As of December 31, 2015, the status of borrowing is as follows:
Short-term loans payable
Current portion of long-term loans payable
Long-term loans payable
The Bank of Tokyo-Mitsubishi UFJ, Ltd., Odenmacho Branch
Mizuho Bank, Ltd., Yokoyamacho Branch
Sumitomo Mitsui Banking Corporation, Kandaekimae BranchJapan Finance Corporation
The Shoko Chukin Bank, Ltd., Kanda Branch
Resona Bank, Akihabara Branch
The Tokyo Shinkin Bank, Nihonbashi Branch
Total
Balance of bonds
Straight bond2nd straight bond -> Daiso Industries Co., Ltd.
10/16

1,165 million yen
460 million yen
180 million yen
650 million yen
193 million yen
184 million yen
100 million yen
152 million yen
1,919 million yen

500 million yen

3rd straight bond -> Medipal Holdings Corporation*
4th straight bond -> Mizuho Bank, Ltd.
5th straight bond -> The Shoko Chukin Bank, Ltd.
Total

1,500 million yen
500 million yen
100 million yen
2,600 million yen* On February 2, 2015, the Company redeemed the 1st straight bond before maturity and completed the issue
and underwrite of the 3rd straight bond as of the same day.

1.9. Financial Results, Assets and 2016 Forecast
The Company’s financial results, assets and 2016 forecasts are as follows:

mil yen except
for *

2012

2013

2014
12th year

2015(Forecasts)
13th year

2015(Actualresults)
13th year

2016(Forecasts)
14th year

10th year

11th year

Sales

5,056

6,542

6,628

7,630

7,435

7,456

Ordinary
income

660

463

577

309

160

Net income

279

339

240

185

△270
157

103

* Net income
per share

212,000 yen

258,000 yen

182,000 yen

141,000 yen

55,000 yen

89,000 yen

Total assets

5,598

6,098

9,291

9,395

9,671

7,830

Net assets

517

728

1,238

1,212

984

993

* Equity ratio

9.2%

11.9%

13.3%

12.1%

10.2%

12.7%

* Net asset per
share

393,000 yen

554,000 yen

941,000 yen

921,000 yen

845,000 yen

852,000 yen

1.10. Employees
As of March 1, 2016, the number of employees is 242 (including total 90 of 39 seconded employees,
10 temp staffs, and 46 contract employees but excluding directors) with an average age of 52.7. The
number of employees increased by 7 compared with 235 (including seconded employees) as of March 1,
2015.
In recent years, the Company has recruited five postdoctorals and those with equivalent status, whohave become a key driving force leading young employees in their departments. The Company has been
actively promoting excellent temp staffs to full-time positions.
In terms of overwork, chronic prolonged work seen with some members in Pharmacovigilance &Quality Assurance in particular has already been substantially improved.
Since November 2015, the Company has adopted personnel exchanges between and within departments.
1.11. Changes in Organization and Issues
In November 2015 reorganization, the Company consolidated the existing 10 divisions to 7.
To accomplish the Sales & Marketing mission to “Deliver the Company’s products to patients as soon
as possible,” and its corresponding motto is “Change activities” to achieve the mission. Sales &Marketing aims at achieving a sales target of 17 billion yen (11.9 billion with Lunabell® and 5.1 billion
yen with direct sales and co-promotion products) on the NHI price (wholesale price) basis under its
motto of “Change the Action.” The Company cooperates with the distributors to accelerate the expansion
11/16

of the Lunabell® ULD share in order to minimize the impact of generics on Lunabell® LD, as committed
to enhance the QOL of patients who suffer from dysmenorrhea. The Company has also established foursales policies to achieve the plan of direct sales and co-promotion products: First is to concentrate thesales force to our core products of Fostoin® and Gliadel® to achieve the plan, second is to enhance theproductivity of MRs by setting the bottom line target (42 million yen per MR) to aim at average sales of
MRs of 60 million yen, third is to promote fostering of the recently launched new products (market
penetration), Zanosar®, Respia® and Rapalimus®, and fourth is the New Product department started with
the intentions for (1) early commercialization of and maximizing sales of Nobelzin® with a new
indication of hypozincemia expected to be approved in 2017, (2) maximizing profits from NPC-16 andLunabell® LEP series, and (3) maximizing sales of new products including NPC-17 and 18 beyond
2018.

The tasks of Business Development & Strategy to find new themes continue to include searchingseeds through open innovation. The Company has certain matters under negotiation with existing
business partners and will advance negotiations by resolving the said matters to gain profit. The
efforts will continue to acquire public development funds. As for procurement, competitive quotes
will be a normal procedure and thorough and careful cost reductions will be pursued fornegotiations on expensive items.
In Research & Development, the pipeline is sufficient considering the size of the Company as
described in “1.4 Status of Development.” Phase III clinical trials are well underway for many themes
which will be steadily progressed according to the development schedule established, targeting, inparticular, the earliest possible approval for NPC-02 (hypozincemia).
For BK-SE36, NPC-12G, 17 and 18, the Company plans to start a contact to the FDA one by one.
Concerning the safety assurance of pharmaceutical products, under the emergency procedures
described in 1.6, the organizations related to (2) safety control for the vigilance of side effects andadverse events and (3) Post-marketing Surveillance (PMS) for pharmacovigilance have become bloated.
The organizations and the structure will be streamlined and the costs will be reduced while achieving thetwo points to cause no drug-induced diseases and to pass re-examinations all within laws and regulations
as the operation has returned back to normal were returned to usual operations in 2016 and also, an IT
system has been put into place. The Company endeavors to streamline organizations and systems withinlaws and regulations to reduce costs, while achieving the two points to cause no drug-induced diseases
and to pass re-examinations.
As for production, the most serious concern is to ensure stable supply of drug products from overseas
manufacturers. As a fundamental resolution, the Company is promoting to shift the manufacturing ofimported drug products to Japan.
Regarding Fostoin®, the Company applied for adding domestic manufacturing site in 2015 which iscurrently under review by the authority. Shifting the manufacturing site for Zanosar® to Japan is now in
consideration. The Company is also considering to shift the primary packaging site for Rapalimus® toJapan.
Regulatory Affairs is now required to actively support not only Research & Development as in the past
but also Pharmacovigilance & Quality Assurance. the human resources have been enhanced to gather
and succeed the know-how for NHI price negotiations. Through the activities of Samurai Biotech
Association of which the Company is a board member, lobbying the authorities for various issues will be
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continued.
Administrative Affairs & Corporate Planning (corporate planning and accounting) will primarily
increase the accuracy in obtaining real-time accounting information in order to achieve budgets.
Secondly for financial affairs, the Company intends to maintain good relationships with financial
institutions while no additional finance is considered necessary with sufficient funds currently in hand.
Financing from Medipal Holdings Corporation, a business partner, using the project finance that leads todiversification of development risks is considered for each development theme. Thirdly, as foraccounting standards, the Company believes that it is important to adopt accounting standards equivalent
to listed companies despite its policy to remain unlisted, and thus, the accounting audits by Deloitte
Touche Tohmatsu LLC since 2011 was changed from quasi-Financial Instruments and Exchange Act
audits to quasi-Companies Act audits which the Company intends to continue using.
As for the issue of HR & General Affairs (HR & general affairs), the Company has been hiringexperienced mid-carrier workers in principle but refreshing personnel is inevitable considering thecurrently aging workforce. Therefore, the Company started the recruitment of postdoctorals in 2013 andplans to continue such recruitments. Following the promulgation of the Act of Promotion of Women's
Participation and Advancement in the Workplace in August 2015, companies are required to takeapproaches such as establishment of an action plan to promote women's participation and advancement.
While medium- and small-sized companies with 300 employees or less are only obliged to make efforts,
the Company plans to make responses equivalent to large-sized companies. Having “Regardless ofgender, age, nationality, religion or preference” in our policy, the Company is committed to maintaining
and improving a non-discriminatory and friendly working environment, supporting women's
participation and advancement.
The Company has implemented an internal audit system in November 2015, and regular audits havebeen conducted for all departments since January 2016.
Overall, in 2016, due to the impacts of the generic on Lunabell®, the Company expects to enter aphase of challenging financial results for the first time since its foundation. However, the Company has
strengthened its financial grounds and taken measures from early on in preparation for such situation. As
development products are expected to be released from the beginning of 2017 one after another, theCompany believes that financial results will achieve a v-shaped turnaround with a new evolution.
The following shows the numerical targets for the mid-long term future vision of sales and profit as an
immovable high goal named North Star:
North Star
2020
Sales
20 billion yen
Ordinary income
5 billion yen
Net income
3 billion yen
1.12. Other Important Matters
No matters requiring special attention

2. Current Status of the Company
2.1. Shares① Number of shares authorized

As of December 31, 2015

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5,000 shares② Number of shares issued
As of December 31, 2015
Ordinary share 1,165 shares③ Number of shareholders
As of December 31, 2015
2
④ Status of Major Shareholders (as of December 31, 2015)
Hisanaga & Company (ordinary share)
1,000 shares (85.8%)
Inabata & Co., Ltd. (ordinary share)
165 shares (14.2%)
As for class A preferred shares owned by Development Bank of Japan Inc., the Company purchased
all 150 shares as treasury stock on March 27, 2015 under the agreement and as of November 1, 2015, it
retired treasury stock and reduced capital, accordingly.
2.2. Share Warrant
2.2.1. Share warrant that is issued to and held by the Company’s executive officers as
consideration for execution of their duties
Not applicable
2.2.2. Share warrant that is issued to and held by the Company’s employees as consideration for
execution of their duties
Not applicable
2.2.3. Share warrant in issue
Share warrant in issue is as follows: Inabata & Co., Ltd. can, by its discretion, execute the right andwhen executed, Inabata would have 499 ordinary shares (33.3%).
Resolution date for issuance
Maturity date
Number of share warrant
Class of share subject to share warrant
Number of shares subject to share warrant
Issuance price of share warrant
Balance of share warrant

March 29, 2012
August 23, 2016
1
Ordinary share
334 shares
1,160,000 yen
387,440,000 yen

2.3. Corporate Executives
2.3.1. Management Reshuffle(1) Scheduled directors (scheduled on March 30, 2016)
None(2) Director to resign (scheduled on March 30, 2016)
None(3) Scheduled company auditor (scheduled on March 30, 2016)
None(4) Company auditor to resign (scheduled on March 30, 2016)
None(5) Directors and Company Auditors
As of March 30, 2016, the status of full-time and part-time directors is as follows:
CEO and President:
Jin Shiomura
Directors (part-time):
Eiji Suzuki (Corporate advisor)

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Directors (part-time):

Isamu Sojyo(former Executive Managing Director of Japan Intellectual
Property Association, former General Manager of Intellectual
Property Department at Mitsubishi Chemical Corporation)

Directors (part-time):

Yasuyuki Fujimoto(General Manager, Life Industry Division, Inabata & Co., Ltd.)

Directors (part-time):

Nobukazu Kuboi(General Manager, Financial Management Office and General
Manager, Accounting Dept., Inabata & Co., Ltd.)

Company Auditor (part-time):

Takashi Akiyama(Section Head, Accounting Dept., Accounting, Financial
Management Office, Inabata & Co., Ltd.)(6) Executive Officers
As of March 30, 2016, the status of executive officers and directors is as follows:
Senior Executive Officer: Shigeki Shimasaki (Head of Research & Development)
Senior Executive Officer: Tsutomu Sugaya(Head of Administrative Affairs & Corporate Planning)
Executive Officer:
Hiroomi Kudo (Head of Marketing & Sales)
Executive Officer:
Tetsuo Hayase (Head of Supply Chain & Manufacturing)
Executive Officer:
Soichi Ikegaya(General Marketing Compliance Officer, Head
Pharmacovigilance & Quality Assurance)of

Executive Officer:
Executive Director:
Executive Director:
Executive Director:

Arata Tabata(Head of Business Development & Strategy)
Masanobu Murakami(General Manager of R&D Department 1)
Kenji Shimizu (General Manager of R&D Department 2)
Akira Ikeda(Deputy Head of Administrative Affairs & Corporate Planning)

Executive Director:

Masato Iwamoto(General Manager of Supply Chain Management, Supply Chain& Manufacturing)

Executive Director:

Yoshinobu Takahashi(Branch Manager of Tokyo Branch 1, Sales & Marketing)Executive Director:
Executive Director:

Osamu Kato
(Head of Regulatory Affairs)
Masafumi Mimura(Deputy Head of Business Development & Strategy)

Executive Director:

Yoshihide Yamamoto(Deputy Head of Sales & Marketing, General Manager of Sales
Strategic Planning)

Executive Director:

Masanori Osakabe(Deputy Head of Research & Development, General Manager ofOverseas Development)

Executive Director:

Hitoshi Hasegawa(Safety Management Supervisor, Deputy
Pharmacovigilance & Quality Assurance)
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Head

of

2.3.2.

Remuneration paid to directors and company auditors
Classification
Directors
Company auditor
Total

Head-count5
1
6

Amount paid
8,880,000 yen
8,880,000 yen
End of document

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