NEWS RELEASE
August 26, 2014
5th Five-Year Medium-term Management Plan “Aiming for New Growth –Pursuit of Originality–”
Nippon Shinyaku Co., Ltd. (Headquarters: Kyoto, Japan; President: Shigenobu Maekawa)
announces the outline of the 5th five-year Medium-term Management Plan “Aiming for New
Growth –Pursuit of Originality–” (fiscal 2014 to fiscal 2018) which it started in April, 2014.
Even in the severe business environment, Nippon Shinyaku has been aiming to be trusted andappreciated by society as a “company with a meaningful existence in healthcare.” Based on thisconcept, in order to realize our vision, we implemented the 4th five-year Medium-term Management
Plan “Innovation and Growth” from fiscal 2009 to fiscal 2013.
In the pharmaceutical business, although the sales of new products grew more than we hadplanned, existing core products were affected by the measures to promote the greater use ofgenerics more severely than we had expected. Our functional food business was also hit by thedeflation and other factors. As a results, the numerical target of the 4th Plan was not achieved.
However, we promoted reforms such as enhancement of our R&D pipeline and establishment ofmanagement base independent of long-listed products, and marked record-high sales and each
income in fiscal 2013, the final year of the 4th Medium-term Management Plan.
In the 5th five-year Medium-term Management Plan started in fiscal 2014, we aim for new
growth to be a “company with a meaningful existence in healthcare” on the foundation which webuilt in the 4th Medium-term Management Plan. We position the 5th Plan as a scenario todifferentiate us from other companies in terms of all operations and to build our own platform, andpush forward vigorously toward the realization of our vision, with all employees committing to thesame goal.
Please see the accompanying sheet for the outline of the 5th five-year Medium-term Management
Plan “Aiming for New Growth –Pursuit of Originality–.”(Accompanying sheet)
Outline of the 5th five-year Medium-term Management Plan
“Aiming for New Growth –Pursuit of Originality–”
1. Nippon Shinyaku’s corporate vision
Due partly to the enhanced containment of medical expenses, the environment around us will beseverer in the future. However, we aim to be trusted and appreciated by society as a “company witha meaningful existence in healthcare,” by implementing the following measures. In thepharmaceutical business, we provide patients suffering from diseases with high-quality and uniqueproducts mainly targeting the niche diseases with unmet medical needs in our five areas of focus(urology, hematology, intractable/orphan diseases, gynecology and otorhinolaryngology). In thefunctional food business, utilizing the high technical capabilities as a pharmaceutical company, we
provide highly value-added products to meet the market needs in our three areas of focus (healthfood ingredients, preservatives, nutritional ingredients).
2. Aiming for New Growth –Pursuit of Originality–
We position the 5th five-year Medium-term Management Plan as a scenario to build our own
platform for new growth and implement the Plan.
(1) Corporate strategy
In the pharmaceutical and functional food business, we will achieve growth by differentiating us
from other companies, launching new products, and improving the profitability.
(2) Business strategy
1) Pharmaceutical businessWe will concentrate our management resources on our areas of focus (urology, hematology,
intractable/orphan diseases, gynecology and otorhinolaryngology), enhance our R&D pipeline,
and expand our market share.

We will build the platform to expand our overseas business mainly by our original compounds
in the areas of pulmonary arterial hypertension (PAH), hematological malignancies and nucleic
acid medicines.

2) Functional food business

As a functional food business sector in a pharmaceutical company, we will evolve into a highly
profitable entity by providing high-quality and highly value-added original ingredients which
contribute to the “healthy life expectancy,” “active life,” “safety and security of foods” and“reduction of food waste.”(3) Functional strategy
1) R&D strategy

For in-house research, we will concentrate our management resources on the areas of focus andutilize external resources to strengthen our capability for drug discovery.

We strive to launch the first antisense nucleic acid drug for muscular dystrophy in Japan byusing our accumulated fundamental technology of nucleic acid synthesis.

Through in-house research, in-licensing and product life cycle management (PLCM), we will
launch new products, implement active in-licensing activities as well as in-house research, andenhance our R&D pipeline.

We will build a manufacturing facility for investigational drugs, curb the cost for active
pharmaceutical ingredients (API), speed up our R&D, and deal with the synthesis of nucleic
acid API.

2) Marketing strategy

We will invest the management resources in our areas of focus, maximize the product value,and develop the three product groups (Zalutia®, Vidaza® and PAH treatments) into drivers ofgrowth.

We will upgrade our hospital MRs committed to the specialty products in the areas such ashematology and PAH, and increase the number of MRs to 700.

Through the in-house MR qualification test program, we will improve our MRs’ academic
knowledge about specialty products.

3) Supply chain strategy

We will invest in the manufacturing facilities for highly active medicines, manufacture ouroriginal products and enhance our consignment manufacturing business.

In addition to the stable product supply, we will promote streamlining of operations and costmanagement in each step of procurement, manufacture, and logistics.

4) Overseas business strategy

In principle we will license out our original products to be launched, but in the US, EU and Asia,
we will choose the best way to expand our business according to each country’s situation.

5) Functional food business

As for R&D, we will invest the management resources in our areas of focus (health foodingredients, preservatives, nutritional ingredients) and launch high-quality and highly
value-added products which can be differentiated from other companies’ products.

As for marketing, we will invest the management resources in our areas of focus, maximize theproduct value and make marketing activities avoiding price competition.

As for supply chain, we will improve the quality control and review and reduce the cost for
procurement, manufacture, and logistics.

6) Human resource management
We will increase the number of employees from 1,900 to 2,000, keeping the number of regular
employees in charge of core business as it is. We will actively utilize women and re-employedseniors.

Considering that human resources are the base of originality, we will improve our recruitment
and employee training.

3. Numerical targets(Consolidated)（Million yen）
FY 2013 results

FY 2018 plan

CAGR*1

Net sales

76,500110,000

8%

Pharmaceuticals

63,30095,0008%

Functional food

13,20015,0003%

Operating income

8,000

18,00017%

Net income

5,800

12,000

16%

ROE*2

6.3%

10%

-EPS*385yen

180yen16%*1: CAGR

Compound Annual Growth Rate

*2: ROE

Return On Equity*3: EPS

Earnings Per Share

4. Return to shareholders
We maintain a consolidated payout ratio of around 30% and aim to raise annual cash dividends
per share by increasing EPS.
Forward-looking statements
Statements contained in this release concerning expectations and forecasts are based on various
assumptions, and not a guarantee of future implementation of numerical targets and plans.