EPS Holdings, Inc.

Financial Results Overview
for the Fiscal Year Ended
September 30, 2020 (FY2020)

November 19, 2020
EPS Holdings, Inc.
Chairman & CEO
Yan HaoContents

1

Overview for FY2020 Financial Results

2

FY2021 Full-Year Plan

3

FY2021 Key Initiatives

4

Shareholder Returns

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2

1

Overview for FY2020 Financial Results

Copyright © 2020 EPS All rights reserved.

3

FY2020: EPS Group Business Areas

Domestic
Business

CRO

EPS

SMO

EP-SOGOEP Mediate(medical device development support)

CSO

EP-PharmaLine

NRO

EP-CRSU,
EP-Techno

Overseas
Business

GlobalResearch

EKISHIN
OthersEPS International
Holdings
EPS EKISHIN,EPS (China)

EP-Force(provision of pharmaceutical information)
ES-Link
EP Yamanashi
Chinese data service companies

Chinese CRO operating companies
Other overseas operating companies
Shanghai Hua Xin
ET MEDICAL TECHNOLOGY (SUZHOU)EP Trading
Other Chinese operating companies

EPBiz (shared services & peripheral business) TTC (health-function food in CRO)

Copyright © 2020 EPS All rights reserved.

Notes:
1. AC MEDICAL has been included in EPS (continuing CRO business) and EP-Force (continuing CSO business)
2. EP Mediate Co., Ltd. split off from EPS in April
3. TTC was made a subsidiary in January
4

FY2020 Consolidated Financial Results(¥million)

FY2020InitialForecast

FY2019Results

FY2020
Revised Plan
(Announced on
August 4; range)

62,000

FY2020Results~

66,689

6,170

2,500

4,553

(9.1%)(8.5%)

3,500(6.8%)

Recurring
Profit

6,271

6,320

2,500

4,978

(Ratio)(9.1%)(8.7%)

3,500(7.5%)

Profit Attributableto Owners of
Parent

3,633

3,540

1,000

1,995

Net Sales

69,00972,500Operating
Income6,279(Ratio)(Ratio)(5.3%)

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(4.9%)

65,000
~

~

~

1,500

(3.0%)

Percent
Percent
Change vsPercent
Change vsInitialChange YoY Revised
Forecast
Plan

-8.0%

-26.2%-21.2%-43.6%-3.4%-27.5%-20.6%-45.1%

7.6%
~

2.6%
82.1%
~

30.1%
99.1%
~

42.2%

99.5%
~

33.0%

5

FY2020 Financial Results by Business Segment(¥million)

CRO

Domestic

SMO

CSO

NRO

OverseasGR

EKISHIN

FY2019Results

FY2020 Initial
Forecast

Net Sales

27,71928,600Operating Income(Ratio)4,769(17.2%)

5,168(18.1%)Net Sales

14,33915,000Operating Income(Ratio)1,679(11.7%)

1,757(11.7%)Net Sales

9,399

10,800Operating Income(Ratio)489(5.2%)

641(5.9%)Net Sales

5,829

6,500

Operating Income(Ratio)428(7.3%)

450(6.9%)Net Sales

4,848

5,100

Operating Income(Ratio)258(5.3%)

50(1.0%)Net Sales

11,543

12,000381

150Operating Income(Ratio)(3.3%)

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(1.3%)FY2020
Revised Plan
(Range)Net Sales

25,000~26,000Net Sales

12,000~13,000Net Sales

10,400~10,800Net Sales

5,400
~

5,800
Net Sales

3,400
~

3,500
Net Sales

8,500
~

9,000

Percent Changevs
Initial Forecast

Percent Change
YoY

27,231

-4.8%

-1.8%

4,293

-16.9%-10.0%

13,220-11.9%

-7.8%

1,541

-12.3%-8.2%

11,424

5.8%

21.5%

849

32.4%

73.6%

5,673

-12.7%-2.7%

64-85.8%-85.0%

3,540-30.6%-27.0%

41-18.0%-84.1%

8,613-28.2%-25.4%-210――

FY2020Results(15.8%)(11.7%)(7.4%)(1.1%)(1.2%)(―)

Percent Change
vs
Revised Plan

Notes: 1. The CRO segment in the earnings report (kessantanshin) includes the NRO segment.
2. The calculation of segment operating income(1) Does not include management advisory fees for the holding company, and(2) Includes amortization of goodwill and outsourcing expenses for shared services.
3. EPS Associates, which was included in CRO in the previous fiscal year, has moved to GR.

8.9%
~
4.5%

10.2%
~
1.7%

9.8%
~
5.5%

5.1%
~
-2.2%

4.1%
~
1.1%

1.3%
~
-4.5%

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Assumptions for Revised Plan and Results
Assumptions for the Plan
• Due to the spread of COVID-19, limited visits to medical facilities and a decrease in thenumber of patients visiting hospitals, among other factors, will cause delays in anddiscontinuations of clinical trials and the postponement of new clinical trials.
• In China, due to pharmaceutical lines in the manufacturing business for pharmaceuticals
being temporarily halted, and the impact of COVID-19
Upper limit range:

If the State of Emergency is lifted in by end of May 2020 and thereafter
restrictions eased on visits to medical facilities in large cities in particular, andimplementation system put in place in hospitals.

Lower limit range:

If the COVID-19 pandemic does not end and restrictions continue from June
onward on visits to medical facilities in large cities in particular, and difficult to
conduct clinical trials in hospitals.

Results• The effects of limited visits to medical facilities and delays in and postponements ofclinical trials were smaller than expected.
• Clinical trials continued while steps were taken to control COVID-19 infections.
• The number of patients visiting hospital continued to fall in both Japan and China.
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7

FY2020 Overview of Consolidated Results
Vs. Initial Plan

Net sales vs. initial plan
-8.0%
• Net sales in CRO and SMO fell short of the plan due to COVID-19. Net sales in CSO
exceeded the plan.
• Net sales in GR were less than the plan due to sluggish new contracts.
• Net sales in EKISHIN Business fell short of the plan chiefly due to the suspension of
production lines.
Operating income vs. initial plan
-26.2%• Operating income fell short of the plan chiefly due to the lower-than-expected net sales.

Vs. Revised Plan

Net sales vs. revised plan
2.6%‒7.6%• The impact of the discontinuation and suspension of clinical trials was limited.
• Clinical trials continued while steps were taken to control COVID-19 infections.
Operating income vs. revised plan 30.1%‒82.1%• Net sales exceeded the revised budget.
• Costs were cut thoroughly.

Year on YearNet sales year on year
-3.4%
• Net sales in CSO increased year on year due to the strong performance of DI service.
• Net sales were adversely affected by the abovementioned factors.
Operating income year on year
-27.5%• Operating income was affected by a decrease in net sales.

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8

FY2020 Summary of Segment Operating Results
CRO• In monitoring services, orders, which were weak in the first half, rebounded owing to newalliances.
• Business other than monitoring services progressed nearly as planned.
• Pharmacovigilance (PV) improved low-earning projects.

SMO• Orders received struggled following a rebound from a strong performance in the previous
fiscal year, but this was covered by sales focusing on existing clinical trials.
• Trial subjects decreased and new orders were halted or postponed due to COVID-19.
• Secured operating income through appropriate allocation of CRC and tightened controlsof costs and SG&A expenses.

CSO• Medical call center business growth due in part to responding to urgent product recalls• Slumping demand for MRs in the pharmaceutical industry ended, CMR maintained
results• Steady performance in support for producing academic materials through the full
application of the Drug Sales Promotion Guidelines
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9

FY2020 Summary of Segment Operating Results
NRO• In clinical research services, the impact of restriction on visits to facilities was limited.
• Orders received increased due to steady inquiries about clinical research, etc.
• Orders for EDC (clinical trial information gathering system), including e-Catch, fell inclinical IT.

GR• Japan: New orders were weak due to intensifying competition with global CROs.
• China: Due to the expansion of the market, inquiries were strong, and profitability
improved.
• Asia (excluding China): Costs and SG&A expenses were controlled.

EKISHIN• Pharmaceutical business undersupplied due to the impact of a temporary halt inmanufacturing lines.
• Sales activities, demand and logistics were sluggish in China due to the impact of
COVID-19.
• In research materials, sales of main products grew due to progress in developing themarket.
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FY2020 Business Performance Topics
1. Participated in joint development of DNA vaccine for COVID-19
The inoculation of all subjects was completed in a Phase 1/2 clinical trial in the joint
development of DNA vaccine for COVID-19 with Osaka University and AnGes, Inc.

2. Joint research with National Cancer Center Japan started.
New joint cancer research using genomic analysis, CIRCULATE-Japan, started. Creatinga large database of genome information for the research and development of new cancer
diagnosis and cancer drugs

3. Development with MedPeer, Inc. of new service for pharmaceuticalcompanies started.
A new service provides information and enables the collection of information, including
information for raising recognition of drugs and follow-up services after the prescription ofdrugs, online in a timely fashion, using MedPeer provided by MedPeer, Inc.

4. Entry into the undeveloped health-function food clinical trial market, etc.
Made a CRO for health-function food (TTC) a subsidiary.
Entered a non-pharmaceutical market, taking advantage of Group synergy, which theGroup developed in clinical trials.
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FY2020 Business Performance Topics
5. Formed an alliance with Genova Group, which has biopharmaceuticalmanufacturing facilities
A biopharmaceutical plant in Japan that has one of the world’s largest recombinant drugs
manufacturing facilities
Building a new service model that supports a value chain fromthe clinical development of biopharmaceutical products to the
manufacturing, sale and distribution of them

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12

2

FY2021 Full-Year Plan

Copyright © 2020 EPS All rights reserved.

13

FY2021: EPS Group Business Areas

Domestic
Business

CRO

EPS

SMO

EP-SOGOCSO

EP-PharmaLine

Overseas
Business

EPS International
Holdings
EPS EKISHIN,EKISHIN
EPS (China)
GlobalResearch

Others

EP-CRSU (clinical IT has been brought in)
EP Mediate + TTC(medical devices + health-function food)EP Yamanashi

EP-Force (provision of pharmaceutical information)
ES-Link

Chinese CRO operating companies
Other overseas operating companies
Shanghai Hua Xin
ET MEDICAL TECHNOLOGY (SUZHOU)EP Trading
Other Chinese operating companiesEPS Digital-Share (IT, promotion of shared services)
EPBiz (creation of peripheral business)

Copyright © 2020 EPS All rights reserved.

14

FY2021 Consolidated Annual Budget(¥million)

FY2020Results

FY2021
Forecast

ChangeYoY

Percent
Change YoY

Net Sales

66,68969,800

3,110

4.7%

Operating Income

4,553

4,800

(Ratio)(6.8%)(6.9%)

246

5.4%

Recurring Profit

4,978

5,000

(Ratio)(7.5%)(7.2%)

21

0.4%

Profit Attributableto Owners of Parent

1,995

2,600

(Ratio)(3.0%)(3.7%)

604

30.3%

Copyright © 2020 EPS All rights reserved.

15

FY2021 Annual Budget by Segment(¥million)

FY2020Results
CRO
Domestic

SMO

CSO

OverseasGR

EKISHINNet Sales

30,504

Operating
Income (Ratio)

4,360

Net Sales

13,220Operating
Income (Ratio)

1,541

Net Sales

11,424

Operating
Income (Ratio)
Net Sales
Operating
Income (Ratio)

849

FY2021
Forecast

31,400(14.3%)Net Sales

8,613

Operating
Income (Ratio)

-210

4,760

(15.2%)

13,900(11.7%)

1,300(9.4%)

11,600(7.4%)

740(6.4%)

2,900

3,540
41

ChangeYoY(1.2%)

20(0.7%)

8,800
(―)

-200

(―)

Percent
Change YoY

896

2.9%

400

9.2%

680

5.1%

-241

-15.6%

176

1.5%

-109

-12.8%-640-18.1%-21-51.2%

187

2.2%

10

―

Notes: 1. The calculation of segment operating income(1) Does not include management advisory fees for the holding company, and(2) Includes amortization of goodwill and outsourcing expenses for shared services.
2. CRO and NRO have been consolidated, and the numbers for the previous fiscal year have been recalculated.

Copyright © 2020 EPS All rights reserved.

16

FY2021 Full-Year Plan Overview
Overview of the Plan
Regarding the impact of the new coronavirus, it is assumed that the situation in the fourth
quarter of the previous fiscal year will continue.
Net Sales:

Net sales will increase, particularly in domestic segments.
Net sales in GR will fall due to intensifying competition with global
CROs.

Operating Income: Cost restructuring will continue to be promoted.
The management structure will be strengthened, and the necessary
upfront investments will be made.
Operating income will be on a par with the year-ago level.

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17

Number of Clinical Trial Subjects Visiting Hospitals
Recovering
People giving consent to trials and registered subjects
Number of people giving consent to trials
Number of registered trial subjects
Down 45% from March
Recovering to 78%
of the level in March

Recovering to 68%
of the level in March

Down 52% from March
Note: Number of people giving consent to trials: The number of people who gave consent to participating to clinical trials
Number of registered trial subjects: The number of people who participated in clinical trials
Actual numbers at EP-SOGO

Oct.

Nov.

Dec.

Jan.

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Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

18

3

FY2021 Key Initiatives

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19

FY2021 Business Management Structure(Vertical Dimension)

EPS Holdings
Management, Support and Planningby Business Division (CBO)

CRO

SMO

CSO

Sasa
Sakuma*Shimada*Jike

Yamamoto
Washio*Ogasawara*
Ikeda*
Goto(Segment CEO)
(Segment
Vice CEO)GlobalResearch

Hayakawa*

EKISHIN
Yan
Tashiro* Appointed in October.

• Next-generation members (including women) have been promoted to senior management at
the segment level.
• The Business Division (CBO) is positioned as a headquarters function for four segments.

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FY2021 Business Management Structure(Horizontal Dimension)and Corporate Officer)(President and Corporate Officer)

Management Planning &Promotion Center(CPO)
Corporate Communication
Strategy Center(CCO)
IT Management Center(CIO)

Finance & Accounting Center(CFO)

Administration Center(CAO)

Human Resources Strategy Center(CHO)
Group Management Promotion
Center (GMP)EPS Reserch Center (CBO RC)

Sales Planning & Promotion
Center (CBO SP)

Business Strategy Center (CBO 4)

Business Strategy Center (CBO 3)

Business Strategy Center (CBO 2)

Business Strategy Center (CBO 1)

Group Business Management
Center (CBO GR)

21
Copyright © 2020 EPS All rights reserved.

Sekitani (Vice President
Nagaoka

Jike
TashiroYamamoto
YamadaKoyamaHayakawa
Ogasawara
Nagatsuma
Hayashi
Ando
Song
Okoso
Nagaoka
Jike

Administrative Headquarters(CMO)
Business Headquarters(CBO)

Audit &
Supervisory Board

Board of Directors

Chief Executive Officer (CEO)Yan Hao (Chairman)

Internal Audit OfficeKey Initiatives for the Group (1)Business Activation ~Product Innovation~
1. Combining existing products flexibly to develop new products (e.g. hybrid CRC/CRA)
2. Strengthening development strategy planning capabilities
3. Promoting virtual clinical trials and using AI and big data
4. Promoting one stop service (service ranging from development to sales at a high level of expertise)
5. Expanding into new fields, including devices and health-function food

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22

Key Initiatives for the Group (2)Business Activation ~Business Structure Innovation~
1. Restructuring operations for which needs are falling and operations where
profitability is low
2. Strengthening relationships with partners in markets in Europe and the UnitedStates3. Reorganizing the CRO business in China and Asia
4. Searching for new business models for academia and drug development ventures(e.g. incentive fee model)

5. Moving the EKISHIN business to the next stage

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23

Key Initiatives for the Group (3)Organization Activation
1. Changing the personnel system, including trials for new ways of working• Building work systems for a variety of ways of working• Increasing the mobility of human resources and creating personnel systems for
assigning the right person in the right place• Changing the personnel system to accelerate changes in businesses andorganizations
2. Promoting digitization and shared service• Improving operational efficiency using IT• Promoting concentration of Group management operations (improving efficiency inshared service)
3. Promoting efficient and effective use of offices
4. Creating Group management patterns• Establishing matrix management• Creating management patterns by repeatedly thinking and practicing• Making management patterns permeate the Group and establishing them, using
training systems
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24

Key Initiatives for the Group (4)30th anniversary project
1. 30th anniversary ceremonies and symposiums (communication with customers
and employees)
2. CI, company history (rebuilding identity)
3. Enlargement and revision of EPSWAY (penetration and establishment ofmanagement)

Formulating a new business plan

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Tsukudo project25

Business Environment and Initiatives in CRO Segment
Business environment• The domestic CRO market (clinical trials) is in the mature phase.
• Research on the medical database and operations related to medical devices are
growing.
• The use of ICT technologies, including virtual clinical trials, is accelerating.
• Alliance agreements with major CROs are established among major pharmaceuticalcompanies.
• The clinical research (led by doctors) has recovered and is expanding.

EPS’s initiatives• Alliance agreements are increasing, and inquiries are increasing.
• Accelerating digitization and new technologies to meet customer needs (Virtual Go)• Strengthening systems and sales activities in response to diversifying clinicalresearch• Expanding the business related to medical devices, health-function food businessand diagnostic agents business

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26

Initiatives for Virtualization
Monitors do not need to visit facilities.

Subjects do not need to visit hospitals.

Improving efficiency in monitoring
and reducing workload

Improving the convenience andsatisfaction of subjects

Virtualization

Virtualization

EHR

Collectionof samples(Electronic Health
Records)

Visiting nursing

DDC

Electronic worksheets, etc.
(Direct Data Capture)

Delivery of study drugs

eCOA(eClinRO, ePRO)
Procurement of devices
Copyright management

WearableeConsent(electric consent)

Online medical treatment
Medical facilities
Copyright © 2020 EPS All rights reserved.

Subjects
27

Business Environment and Initiatives in SMO Segment
Business environment• The market shrank temporarily due to COVID-19.
• The number of subjects visiting hospitals is recovering gradually.
• There are contracts for COVID-19 clinical trials.
• CRCs are requested to give special handling in response to limits to visits tomedical facilities by pharmaceutical companies and CROs.

EPS’s initiatives• Strengthening the ability to receive orders and marketing capability, thereby
increasing market share (promoting alliances)• Cultivating hybrid CRCs
• Assigning SDMs (Site Data Managers) to medical facilities• Digitizing documents related to clinical trials and selling clinical trial progress
management systems for medical facilities

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28

SMO Strategies
Promoting digitization at medical facilities

Reducing the total cost of clinical trials
Frontier(support for part of work
before clinical trials)

DDworks21/Trial Site(digitizing documents
related to clinical trials)

Remote SDV
Remote checking of processes

TOMA-s(progress management system
for medical facilities)

EDC entry
Handling queries

SMA(Site management
associates)

CRC

SDM*
(Hybrid CRC)

* Site Data Manager
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29

Business Environment and Initiatives in CSO Segment
Business environment• A decline in demand for CMRs caused by reductions in MRs in the pharmaceuticalindustry has slowed, and outsourcing is making progress.
• Discontinuation of dispatching CMRs and CSs due to COVID-19 is limited.
• There are needs in areas that cannot be covered by pharmaceutical companies anddemands for new types of promotion targeting doctors.
• Creation of academic materials, including slide reviews, is changing from thephysical approach to the virtual approach.

EPS’s initiatives• Changing from dispatching CMRs to a variety of promotion through the fusion ofphysical and digital approaches• Promoting activities to conclude contracts with companies that provide DI service bythemselves• Digitizing DI service, commercializing DX, promoting AI• Accelerating the cultivation of communicators having high levels of skill and knowledge(won an innovation award)

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30

Initiatives in Response to Diversifying Needs in CSO
Becoming a unique business partner that meets diversifying needs
through real and digital sales channels

Support for digitaltransformation, including
AI and the FAQ system

Contact center handling
multiple channels

Optimal fusion ofreal and digitalsales channels

Cultivating communicators
having skills and knowledge

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Compliance support
in the digital age

31

Business Environment and Initiatives in GR Segment
Business environment• As the development bases of pharmaceutical companies are concentrated inEurope and the United States, competition with global CROs is intensifying.
• Inbound projects from overseas and outbound projects to China from Japan are
increasing.
• Needs for clinical research and PMS projects from overseas customers are growing.

EPS’s initiatives• Strengthening sales of inbound projects from Europe, the United States and China
and outbound projects to China• Strengthening the management system at overseas bases chiefly in South Korea
and Taiwan• Restructuring the business scheme for international joint clinical trials originatingfrom academia

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32

Business Environment and Initiatives in EKISHIN Segment
Business environment• COVID-19 has localized effects, and the number of patients visiting hospitals
remains smaller.
• In the manufacturing business, regulations in China have been tightened, reflecting
international standardization.
• In sales of X-ray films, competition between overseas products, including Japanese
products, and Chinese products has been intensifying.

EPS’s initiatives• Promoting development, expanding pipelines• In manufacturing and sales (interferon), increasing profitability by selecting sales
channels• Advancing changes to move to the next stage, based on existing businessresources and forming alliances with new partners

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33

4

Shareholder Returns

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34

Dividends
Basic Dividend Policy
Secure the necessary retained earnings to strengthen the business structure
for future business development and improved earning capability
Continue to enhance shareholder returns
¥50

¥40

(Consolidated
payout ratio)

¥20

29.7%

30.0

20.0

SpecialDividend ¥4

SpecialDividend ¥8¥30

Term End Dividend

¥10

¥0

30.3%

34.6%

29.0

28.0

17.0

15.0

Mid-term Dividend

45.1%

33.9%

20.0

20.0 (Plan)

10.0

10.0

10.0

12.0

13.0

10.0

10.0

2017/92018/92019/92020/92021/9Copyright © 2020 EPS All rights reserved.

35

Thank you for your attention.
Please direct inquiries toInvestor Relations, Finance & Accounting Center, EPS Holdings, Inc.
Phone: +81-3-5684-7873 / Email: ir@eps.co.jp

EPS Holdings, Inc.

Copyright © 2020 EPS All rights reserved.

36

Disclaimer

The earnings forecasts and future predictions described in the document are made by our company
based on the available information at the time of the creation of the document, and contain potential
risks and uncertainties. Therefore, due to various factors such as changes in the businessenvironment, it is possible that actual earnings results may differ greatly from the future outlook
mentioned or described herein.
We have approached the creation of this document with caution, to ensure correctness. However, it
is not a guarantee of completeness. Our company cannot be held liable for any problems or
damages arising as a result of the information in this document. We appreciate your understanding.
 For inquiries about this document
Investor Relations, Finance & Accounting Center,
EPS Holdings, Inc.
Phone: +81-3-5684-7873
e-mail: ir@eps.co.jp

Copyright © 2020 EPS All rights reserved.

37