December 1st, 2015 (Tue) 16:00 - 17:30[Attendees]
Masayuki Mitsuka, President & Representative Director, CEOTakashi Kobayashi, Board Director, Managing Executive Officer, Division Manager ofSohyaku. Innovative Research Division
Yoshiaki Ishizaki, Board Director, Managing Executive Officer, Division Manager of Sales &Marketing Division
Seiichi Murakami, Board Director, Managing Executive Officer, Division Manager of Ikuyaku.
Integrated Value Development Division
Eizo Tabaru, Board Director, Executive Officer, General Manager of Finance & Accounting
Department[Overview of Medium-term Management Plan 16-20]
Q: Will the majority of your operating income come from royalties in FY2020?
A: That is correct in comparison with current Japanese standards.
Q: Regarding the royalty income for FY2020 on slide 13, is this based on the assumptionthat you will still be posting royalties on Gilenya in the US?
A: We plan to offset the Gilenya cliff with an increase in royalty on INVOKANA and also with
contribution from running royalty/milestone on MT-1303 and other pipeline.
Q: What is your development policy for MT-3995?
A: We are currently determining the direction of our development based on the results ofclinical trials in Europe and Japan.
Q: Are there any plans for licensing out of MT-3995 in the next Medium-term ManagementPlan?
A: We are looking at a variety of possibilities to determine what course of action we shouldtake.
[Four Strategic Priorities to Open Up the Future]
1. Maximizing pipeline value
Q: Regarding slides 19-21, in aiming to achieve a group headcount of 5,000 employees inJapan, do you plan to expand R&D area? Will you be able to achieve optimal competitive
strength in each domain given the competitive environment growing more intense without
selection and concentration?
A: We do not plan to inject resources into antibody therapies for rheumatoid arthritis other1

than Remicade Simponi. The goal we are stressing in slides 19-20 is to expand ourmarket share by injecting resources into areas of strength where we already have sales
channels and development knowhow, and in related diseases with high medical needs.
This is also the case for central nervous system diseases. Moreover, slide 21 indicates
our plans for expansion by integrating medicinal chemistry, which is our strength, with thestrength of our alliance partners.
Q: How do you plan to undertake drug development research given that you currently do notpossess basic biotechnologies, including antibodies, proteins, and nucleic acids?
A: Slide 22 illustrates our challenges for new drug discovery research with opportunities. In
the development of new therapeutic antibodies that utilize antibody drug conjugate
technology mainly at TRL, we have reached the stage where we close to non-clinicalstudies. In addition, we are now able to make compounds using the bispecific antibody
technologies licensed from Covagen. We are also working with Osaka University in thefield of nucleic acid therapeutics to discover technologies for developing compounds thatwill overcome the issues of stability in blood and membrane permeability. As this shows,
we acquire new various technology formats by collaborations with other companies.
Going forward we aim to develop these compounds into pharmaceuticals that we candeliver to patients.
Q: Will your cooperation with AnGes MG, Inc. be a move toward undertaking regenerative
medicine?
A: Our collaboration with AnGes MG is about Collategene in gene therapies being
developed by AnGes MG. Regenerative medicine in slide 22 includes radical therapies,
the recovery of functions, and tissue regeneration.
Q: When you say preemptive medicine, do you mean an approach using Big Data based ona gene analysis database?
A: Our approach does not involve Big Data. We are looking for drug seeds related to theearly diagnosis and early discovery of diseases by exploring changes in the proteomics
and genomics of specific patient segments. We are also embarking on collaboration withan academic institution.
2. Strengthening IKUYAKU and Marketing
Q: Did you achieve your sales goal for Remicade?
A: Our plan factors in the impact of biosimilars and government policies. We plan to achieve
our sales goal by further boosting the product value of Remicade and also achieve sales
goal of Simponi.
Q: In Slide 30, what upside catalysts do you forecast from 2018 onward?
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A: We are planning to launch sales of new drugs, including MP-214 and MT-2412.
Q: How many MRs do you think you will need to achieve your domestic sales goal for newdrugs and priority products in FY2020?
A: Reflecting changes in the domestic market environment, we redefine the role of MRs, andallocate MRs in the diabetes and kidney diseases, and autoimmune diseases area,
which are our priority disease areas. We are not disclosing the number of MRs we planfor 2020 at this time.
Q: Some of competitors separate their long-listed drug businesses. What direction do you
plan to take going forward?
A: At this stage, we are not planning to separate the considerable portion of long-listeddrugs. Our 1,800 MRs are concentrating on our priority items. This covers the cost ofMRs for long-listed drugs. We plan to maintain this system for the time being.
3. Accelerating U.S. Business Development
Q: Can you give us details on how you came up with the figures for your ¥200 billion US
strategic investment, which is earmarked for creating a business foundation andstrengthening your product lineup?
A: In our US strategy, we plan to launch MCI-186 for ALS (domestic product name: Radicut)
in FY2016 on our own. Pivoting on MCI-186, we plan to acquire companies that possess
drugs in neurology to quickly maximize sales in this domain. The figures we presented
are based on specific methods for their achievement.
Q: Do you plan to prioritize the acquisition of a company with products and a development
pipeline in neurology, in addition to the launch of MCI-186?
A: Yes. Ideally, we want to acquire a company, and then launch of MCI-186.
Q: I believe that you were approached by other companies to create alliances for the drugs
which meet unmet medical needs, such as MCI-186. Do you have any business
partnering plans at this stage?
A: We do not plan a straight license given that this is the core product for our US businessdevelopment.
Q: Do you view your ¥80 billion goal for US sales in FY2020 as a challenge or a goal thatyou are fairly confident you can achieve?
A: The figures were calculated based on specific measures. We aim to achieve our goal of¥80 billion by employing alternative measures should we be unable to succeed with ourcurrent measures.
Q: What is your estimate for MCI-186 sales?
A: The sales for MCI-186 are not disclosed. The breakdown of our ¥80 billion sales goal in3

US in FY2020 includes MCI-186, vaccine, and businesses and products in which we plan
to make strategic investments.
Q: What hurdles do you foresee in developing your ALS therapy in the US?
A: We believe that relationships with patient groups are very important. In addition, we thinkthat our relationships with regulatory authorities and relationships with insurancecompanies that shoulder drug price reimbursements are also very important.
Q: What response do you expect when the results of your clinical trial for a group of around60 cases which will be presented at a conference in December 2015?
A: The data has been presented and we believe the response has been very positive.
Q: Can you discuss your commitment to the expansion of business in the US? Why did thethree kidney drugs in your current medium-term management plan fail? Taking thesefailures into account, what are you doing differently?
A: Regarding BindRen, we obtained data that makes it possible to acquire regulatory
approval and it was approved in Europe but we withdrew from the market given issues
with business prospects. The development of Kremezin was a disappointment as we did
not obtain a statistically significant efficacy. As for MCI-186, we do not expect FDA torequest additional data. We believe that FDA accepts our data of MCI-186 obtained inJapan.
Q: In the current medium-term management plan, plans were abandoned due to the failureof three drug products. Will this change your commitment to the ¥80 billion US sales goalin the next medium-term management plan?
A: We plan to achieve our goal by implementing various measures.
Q: How do you envisage Medicago in 2020?
A: We plan to generate sales in the US and Canada during the latter half of our next
medium-term management plan.
Q: Regarding the ¥200 billion US strategic investment, looking at your balance sheet, itappears there is capital of ¥400 billion available, including deposits to the parentcompany. Will the remaining ¥200 billion in deposits be left untouched?
A: We have cash on hand of around ¥380 billion. Deposits to the parent company are about¥190 billion. In the next medium-term management plan, our investment of ¥200 billion ormore indicates our investment to build a pipeline in the US and to establish a sales base.
We plan to continue to make investment to expand our business in the US in and after
FY2020. We plan to utilize deposits to the parent company.
[Financial guidance]
Q: Does your shareholders return include the buyback of shares?
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A: This does not include the buyback.
Q: Is the buyback one of options to achieve ROE of 7.5%?
A: We plan to place priority on investments to increase our core operating and net incomes.
Q: Do you not plan to reduce costs by more than ¥20 billion given the changes in theexternal environment?
A: We believe any cost reductions above this level would be difficult.
Q: Does your consolidated dividend payout ratio of 50% (IFRS) indicate the return toshareholders of 50% of core net profit on an IFRS basis, excluding special factors?
A: Yes, 50% of net income on an IFRS basis.
Q: In this case, if you conduct structural reforms, your net income will fluctuate. Does thismean that your dividend payout will also fluctuate?
A: Our FY2020 net income goal is ¥70 billion. We plan a dividend payout ratio of 50% at thatpoint. IFRS sees impairment losses as a risk so we plan to move forward with our next
medium-term management plan in a manner that will allow us to sustain a stabledividend.
Q: So it is correct to understand that you do not plan to reduce your dividend payout?
A. Yes, that is correct.
[Conclusion]
Q: The concepts and the plans in the next medium-term management plan look good to me.
What do your employees in the field think of it as they that have to carry it out? For
example, the plan to frontload POC, is there actually a system in place that sets goals foremployees in the field that will give them a place to start from? Can you please tell us
what efforts the president has made to create a sense of unity with employees?
A: I believe there is unity in the company. To reform the R&D process, the R&D reform office
is analyzing issues of the Company and competitors to accelerate R&D, and we are
already embarking on process reforms to achieve new goals. In sales reforms we are
currently redefining the roles of MRs but we have already begun enhancing our speedand forming alliances with other companies.
We plan to promote our conventional drug discovery process for the developmental
candidates we aim to commercialize under the next medium-term plan. Under the newR&D process, we believe it may be difficult to commercialize the early development
pipeline by FY2020. However, we aim to speed up our R&D and produce solid results by
FY2020. Each department has set KPIs and established a project management system
to shorten the R&D process. Moreover, in areas where we do not have proprietaryplatforms, we plan to actively move forward with alliances with other companies to speed5up our R&D process, and improve quality. This is part of our open shared business,where partnerships are already taking shape with academic institutions and with
AstraZeneca in the field of kidney therapies.
In sales, we plan to achieve our numeric goals for priority products and new drugs, andvia alliances with other companies. This should offset the decline in sales of long-listed
drugs due to the several drug price revisions we anticipate in our next medium-term
management plan. In light of this, we plan to expand out MR training program, mainly forthe handling of new drugs, and strengthen our sales support.
Q: Do your specific measures include conservative plans or are the plans a stretch?
A: The plans for US business development are a stretch given that growth is based on theuse of external resources. The goals in other plans we plan to achieve by maximizing ourefforts.
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