(English Translation)
Consolidated Financial Results
for the Fiscal Year Ended March 31, 2022 (IFRS)

Company name: Nichi-Iko Pharmaceutical Co., Ltd.

May 13, 2022
Stock exchange listings:
Tokyo Stock Exchange(URL https://www.nichiiko.co.jp/)

Securities code: 4541
Representative: Yuichi Tamura
President and CEO
Contact:
Shuji Ishida
Tel: 076-432-2121
Executive Vice President, Head of
Administrative Division
Scheduled date of annual shareholders’ meeting:June 30, 2022
Scheduled date of commencement of dividend payment:
Scheduled date of filing of annual securities report:
June 30, 2022
Presentation of supplementary materials on financial results:
Yes
Holding of financial presentation meeting:
Yes(Note that all amounts have been rounded down to the nearest one million yen.)
1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2022
(From April 1, 2021 to March 31, 2022)(1)

Consolidated Results of Operations(Percentage figures represent changes from the previous fiscal year)
ProfitCore
Operating Profit before
attributable
Revenue
operating
Profitprofittax
to owners of
profitparent¥179,060-¥16,776-¥110,051-¥107,842-¥105,652-¥104,984
Fiscal year ended
millionmillionmillionmillionmillionmillionMarch 31, 2022(-4.9%)
(-%)
(-%)
(-%)
(-%)
(-%)
¥188,218 ¥977 million ¥107 million¥1,068-¥4,273-¥4,179
Fiscal year ended
million(-87.8%)(-96.3%)
millionmillionmillionMarch 31, 2021(-1.0%)(-85.6%)
(-%)
(-%)

Total
Basic
comprehensive earnings perincomeshare
Fiscal year
ended March
31, 2022
Fiscal year
ended March
31, 2021-¥102,352
million(-%)-¥2,579
million(-%)

Return on
equityRate ofprofitbefore tax
to total
assetsRatio ofoperatingprofit torevenue-¥1,554.37-168.6%-34.6%-61.5%-¥65.28

-3.7%

0.3%

0.1%

Dilutedearnings per
share-¥1,554.37-¥65.28

(Reference)
Share of profit (loss) of investments accounted for using equity method
Fiscal year ended March 31, 2022 203 million yen
Fiscal year ended March 31, 2021 432 million yen(Note)
Core operating profit is calculated by deducting gains and losses caused by extraordinary factors(extraordinary items) from operating profit, and extraordinary factors are also excluded from revenue.
(2)

Consolidated Financial Position

Fiscal year ended
March 31, 2022
Fiscal year ended
March 31, 2021
(3)

Total assets

Total equity

Equityattributable toowners ofparent¥260,559
million¥363,572
million¥13,773
million¥112,435
million¥13,394
million¥111,167
millionRatio of total
equityattributable toowners of theparent to total
assetsEquityattributable toowners ofparent per
share

5.1%

¥190.1730.6%¥1,733.58

Consolidated Cash Flows
Cash flows from
Cash flows from
Cash flows fromoperating activities investing activities financing activities

Cash and cash
equivalents at endof period-¥24,248 million-¥9,315 million¥19,677 million¥15,305 million¥5,006 million-¥29,334 million¥10,867 million¥29,142 million

Fiscal year ended
March 31, 2022
Fiscal year ended
March 31, 2021
2. Dividends

Annual dividends per shareFirst
quarter

Secondquarter

Third
quarterYearend

Total

Ratio ofdividends toTotal amountequityof cashPayout ratio
attributable to(consolidated)
dividends
owners of(annual)parent(consolidated)

Fiscal year
ended March
31, 2021
Fiscal year
ended March
31, 2022
Fiscal year
endingMarch 31,2023 (forecast)¥-¥15.00¥-¥10.00¥25.00¥1,605
million

-%

1.4%

¥-

¥0.00

¥-

¥0.00

¥0.00

¥-

-%

-%

¥-

¥0.00

¥-

¥0.00

¥0.00

-%

3. Forecast of Consolidated Financial Results for the Fiscal Year Ending March 31, 2023 (FromApril 1, 2022 to March 31, 2023)
On May 13, 2022, the Company formally applied for a specified certified dispute resolution procedure(the “Business Turnaround ADR”) under the Act on Strengthening Industrial Competitiveness. In thecourse of the procedure, we plan to proceed with consultations with the relevant companies. Therefore,
the consolidated earnings forecast for the fiscal year ending March 31, 2023 is yet to be determined.

*Notes(1) Changes in significant subsidiaries during the fiscal year under review(changes in specified subsidiaries resulting in change in scope of consolidation): No(2) Changes in accounting policies and changes in accounting estimates(i)

Changes in accounting policies required by IFRS:

No

(ii)

Changes in accounting policies due to other reasons:No(iii) Changes in accounting estimates:

No(3) Total number of issued shares (common stock)(i)

Total number of issued shares as of the end of the period (including treasury shares):
As of March 31, 2022
71,382,652 shares
As of March 31, 2021
65,162,652 shares(ii)

Number of treasury shares as of the end of the period:
As of March 31, 2022
948,131 shares
As of March 31, 2021
1,036,650 shares(iii) Average number of shares during the period:
Fiscal year ended March 31, 2022 67,541,284 sharesFiscal year ended March 31, 2021 64,023,932 shares(Note)
Number of treasury shares as of the end of the period includes shares held by the Employee
Shareholding Incentive Plan.
* Financial results reports are exempt from audit conducted by certified public accountants or an
audit corporation.
* Explanation on the appropriate usage of forecast of financial results, and other specific matters(Considerations on forward-looking statements)
The forward-looking statements including forecast of financial results contained in these materials
are based on the information currently available to the Company and certain assumptions which are
regarded as legitimate. As such, they do not constitute the Company’s guarantee that such results
would be achieved. Actual business and other results may differ substantially from the forecasts
provided in these materials as a result of various factors.
(How to obtain supplementary materials for financial results)
Supplementary materials for financial results will be provided on the website of the Company on
Friday, May 13, 2022.

Attachment – Contents
1. Overview of Operating Results, etc. ...................................................................................................... 2(1) Overview of Operating Results for the Current Fiscal Year............................................................ 2(2) Overview of Financial Position for the Current Fiscal Year ........................................................... 4(3) Cash Flows ....................................................................................................................................... 5(4) Prospects for the Future ................................................................................................................... 6(5) Significant matters regarding the premise of going concern ........................................................... 6
2. Basic Stance Regarding the Selection of Accounting Standards ........................................................... 7
3. Consolidated Financial Statements and Primary Notes ......................................................................... 8(1) Consolidated Statement of Financial Position ................................................................................. 8(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive
Income............................................................................................................................................ 10(Consolidated Statement of Income) ............................................................................................ 10(Consolidated Statement of Comprehensive Income) .................................................................. 11(3) Consolidated Statement of Changes in Equity............................................................................... 12(4) Consolidated Statement of Cash Flows ......................................................................................... 16(5) Notes to Consolidated Financial Statements.................................................................................. 18(Notes on premise of going concern) ........................................................................................... 18(Reporting entity) ......................................................................................................................... 19(Basis of preparation) ................................................................................................................... 19(Segment information, etc.) .......................................................................................................... 21(Per share information) ................................................................................................................. 26(Significant subsequent events) .................................................................................................... 26

-1-

1.

Overview of Operating Results, etc.

(1)

Overview of Operating Results for the Current Fiscal Year
(Operating Results for the Current Fiscal Year)
Although the Japanese economy is showing some signs of recovery in the current fiscal year, theoutlook for the economy remains uncertain due to the spread of COVID-19, the situation in Ukraine,and rising of resource prices .
In the generic drug industry, further enhancement of steps to address issues in quality and stablesupply is required, as well as strengthening of profitability in the face of the lower drug prices
resulting from the drug price revisions.
We are working to improve and strengthen the manufacturing and quality control system companywide and are resuming shipments of products manufactured at the Toyama Plant 1 after ensuring
their quality. However, due to the stringent quality checks and other measures, the number of items
that have resumed shipping is far below the initial expectations. Furthermore, due primarily to therecording of impairment losses on property, plant and equipment, intangible assets, goodwill, etc.,
we recorded net loss for the current fiscal year as in the previous fiscal year.
Under these circumstances, as stated in the press release “Notice of Formal Application andAcceptance of Business Turnaround ADR” dated May 13, 2022, we decided to engage in a businessturnaround based on the specified certified dispute resolution procedure (the “Business Turnaround
ADR”) under the Act on Strengthening Industrial Competitiveness and have submitted a formal
application for the Business Turnaround ADR procedure. We thereby aim to revitalize and continue
our business in the future and to drastically improve our financial position.

A. Results by segment(in millions of yen)

RevenueCore operating profit

Nichi-Iko Group
Fiscal year
Fiscal year
ended March ended March
31, 2021
31, 2022
152,481
139,027
2,995-14,017

Change-13,453-17,012

Sagent Group
Fiscal year
Fiscal year
ended March ended March
31, 2021
31, 2022
36,28940,056-2,017-2,759Change+3,767-741(Notes) 1. The two segments are the “Nichi-Iko Group” and the “Sagent Group,” with the “Sagent
Group” being made up of Sagent Pharmaceuticals, Inc. and its consolidated subsidiaries, andthe “Nichi-Iko Group” being made up of companies excluding the “Sagent Group.”
2. The Group has adopted “core operating profit” as an indicator representing ordinary
profitability, and has also adopted “core operating profit” for segment profit. “Core operating
profit” is calculated by deducting gains and losses caused by extraordinary factors fromoperating profit, and extraordinary factors are also excluded from revenue.
(i) Nichi-Iko GroupIn the Nichi-Iko Group, efforts are being made to resume production and release of products
manufactured at Toyama Plant 1 and to expand the types and volume of resumed items, but due tothe stringent quality checks and other measures, it is taking longer than originally expected toresume full shipments. We are making company-wide efforts to expand these shipments as quickly
as possible.
-2-

Results in Nichi-Iko Group during the current fiscal year showed revenue of 139,027 million yen(a decrease of 13,453 million yen year-on-year) and segment loss of 14,017 million yen (segment
profit of 2,995 million yen in the previous year), a significant decrease in both sales and profit, due
to a drop in drug prices as a result of the drug price revision, decrease in sales of Elmed productscaused by stoppage of production and shipments by manufacturing subcontractor, Kobayashi Kako
Co., Ltd., and the effect of delays in resuming release of products manufactured at Toyama Plant
1, despite contribution made by sales of products from Gifu Plant (approximately 32,700 million
yen).
(ii) Sagent GroupIn Sagent Group, efforts are being made in the in-house manufacturing and production capacity
expansion projects, with the aim of being more cost competitive and enhancing stable supply
capability. Furthermore, the Company is proceeding with efforts aimed at licensing out products
developed by Sagent to the Japanese and Southeast Asian markets.
Meanwhile, with regard to biosimilar and orphan drugs being developed with the aim of launchingin the U.S. market, it is certain that the approval application will be delayed more than planned,
and it has been decided to reconsider the entire future development plan.
Results in Sagent Group during the current fiscal year showed revenue of 40,056 million yen (anincrease of 3,767 million yen year-on-year) and segment loss of 2,759 million yen (an increase inloss of 741 million yen year-on-year) due mainly to the suspension of plant operation amid a review
of production facilities at SterRx and the decline in unit sales prices of mainstay products, despite
continued strong performance of products related to COVID-19 and growth in sales in the Canadianmarket.
B. Group Results(in millions of yen)
RevenueCore operating profit
Operating profit
Profit before tax
Profit attributable to owners of parent
Diluted earnings per share

Fiscal year ended
March 31, 2021
188,218
977
107
1,068
-4,179-¥65.28

Fiscal year ended
March 31, 2022
179,060-16,776-110,051-107,842-104,984-¥1,554.37

Change-9,158-17,754-110,158-108,911-100,804-¥1,489.09* The Group has adopted “core operating profit” as an indicator representing ordinary
profitability. “Core operating profit” is calculated by deducting gains and losses caused byextraordinary factors from operating profit.
Revenue decreased by 9,158 million yen year-on-year due to decrease in revenue in Nichi-Iko
Group despite increase in Sagent Group.
Core operating profit decreased by 17,754 million yen year-on-year due to decreases in earnings inboth Nichi-Iko Group and Sagent Group.
Operating profit decreased by 110,158 million yen year-on-year due mainly to the recording of
one-time expenses, including impairment loss on fixed assets including goodwill (32,480 million
yen for Nichi-Iko Group and 26,900 million yen for Sagent Group), impairment loss ondevelopment costs, etc., including biosimilars and orphan drugs (16,508 million yen for Nichi-Iko
Group and 8,241 million yen for Sagent Group), and inventory valuation loss due to revision of the-3-future manufacturing resumption schedule for products manufactured at Toyama Plant 1 (7,389
million yen for Nichi-Iko Group).
Profit before tax was down 108,911 million yen year-on-year mainly due to the reasons stated for
operating profit and the recording of foreign exchange gains due to the depreciation of the yen.
Profit attributable to owners of parent decreased by 100,804 million yen year-on-year due mainly
to the reasons stated for operating profit and the reversal of deferred tax liabilities due to theimpairment of development costs mentioned above.

(Impact from COVID-19)
The Group is continuing its endeavor to prevent the spread of COVID-19 by implementing
measures such as working from home, staggered working hours and dispersing of work areas pereach department, in addition to implementing workplace vaccinations at the Toyama headquarters,
Toyama Plant 1 and the Gifu Plant.
With regard to the impact on results, although there were some negative impacts on sales due torestraint on examinations, selective surgeries, restrictions on business activities, and shortages inthe supply of materials for certain products, there were also positive aspects such as increase insales of products related to COVID-19. As such, there has been no significant impact on results.
(2)

Overview of Financial Position for the Current Fiscal Year
Assets on a consolidated basis at the end of the current fiscal year decreased by 103,013 million
yen from the previous fiscal year-end to 260,559 million yen. This was mainly attributable to thefollowing factors:
Increase (decrease)(in millions of yen)

Cash and cash equivalents-13,837

Goodwill-27,181

Property, plant and equipment-29,654

Intangible assets-17,348

Main factors
Payments for inventories purchased in theprevious fiscal year
Recording of Sagent’s goodwill
impairment loss, etc.
Recording of impairment loss due todecline in profitability, etc.
Recording of impairment loss due todecline in profitability, etc.

Liabilities on a consolidated basis at the end of the current fiscal year decreased by 4,351 million
yen from the previous fiscal year-end to 246,785 million yen. This was mainly attributable to thefollowing factors:-4-Increase (decrease)(in millions of yen)
Trade and other payables-17,236

Borrowings
Other financial liabilities+13,497+4,693

Deferred tax liabilities-4,551Main factors
Payments for inventories purchased in theprevious fiscal year
Procurement of working capital
Increase in lease liabilities
Reversal of deferred tax liabilities due torecording of impairment loss indevelopment costs, etc.

Equity on a consolidated basis at the end of the current fiscal year decreased by 98,662 million yen
from the previous fiscal year-end to 13,773 million yen. This was mainly attributable to thefollowing factors:
Increase (decrease)(in millions of yen)
Share capital+2,615

Capital surplus+2,615Retained earnings-106,479

Other components of equity(3)+3,332Main factors
Issuance of new shares by third-party
allotment
Issuance of new shares by third-party
allotment
Recording of net loss, etc.
Exchange differences, etc. on translationof foreign operations due to yen
depreciation

Cash FlowsAt the end of the current fiscal year, cash and cash equivalents on a consolidated basis decreased
by 13,837 million yen from the previous fiscal year-end to 15,305 million yen.
Details of cash flows from each of the three activities for the current fiscal year are described below.
Net cash provided by operating activities on a consolidated basis for the current fiscal year
amounted to expenditure over income of 24,248 million yen. This was mainly attributable to thefollowing factors:
Increase (decrease)(in millions of yen)-107,842+84,130+12,653+5,525-16,710

Details
Recording of profit before tax
Recording of impairment loss
Recording of depreciation and amortization
Decrease in trade and other receivables
Decrease in trade and other payables

Net cash provided by investing activities on a consolidated basis for the current fiscal year
amounted to expenditure over income of 9,315 million yen. This was mainly attributable to thefollowing factors:-5-

Details
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of investments accounted for using equity method
Proceeds from collection of deposits

Increase (decrease)(in millions of yen)
-3,481-12,332+2,500+3,290Net cash provided by financing activities on a consolidated basis for the current fiscal year
amounted to income over expenditure of 19,677 million yen. This was mainly attributable to thefollowing factors:
Increase (decrease)(in millions of yen)
+12,176+5,207+5,641-2,338

Details
Net increase in borrowings
Proceeds from issuance of common shares
Proceeds from sale and leaseback transactions
Repayments of lease liabilities(4)

Prospects for the Future
Regarding the outlook for the future, while advancing discussion with all financial institutions
during the Business Turnaround ADR announced on May 13, 2022, we will ask the Japan
Association of Turnaround Professionals for investigation, guidance and advice from a neutral
standpoint, formulate a draft business rehabilitation plan, and attempt to have the draft plan
approved by all financial institutions. Details of the proposed plan will be announced as soon as
they are finalized.

(5)

Significant matters regarding the premise of going concern
・Statement to the effect that a significant event or situation exists and the contents thereof
Since April 2021, the Group has gradually resumed production and release while conducting
stringent quality control checks such as FMEA (Note) at Toyama Plant 1, but the plant has not yet
resumed shipments of some of the items scheduled for production. In addition, product sales havedeclined due to lower drug prices resulting from the price revisions and the stoppage of production
and shipments at manufacturing subcontractors. In order to improve this situation, we have
implemented various efforts in relation to products manufactured at Toyama Plant 1, the Group’s
main plant, with the aim of ensuring an appropriate production system and scale optimization.
These efforts include identifying products that are expected to take more time than anticipated toresume manufacturing, integrating products into formulations with compounds of the same typeand same effect, and organizing products for which improvement measures can be implemented.
As a result, we recorded a valuation loss on raw materials and work in progress, etc. likely to bedisposed of in the future. Furthermore, in the current fiscal year we recorded an operating loss of
110,051 million yen and a loss attributable to owners of parent of 104,984 million yen. This wasprimarily due to factors such as the reconsideration of development investments that have been
underway up to now and the resulting impairment of goodwill at overseas subsidiaries andimpairment loss on domestic fixed assets due to the decline in earnings conditions in Japan.
As a result of the above, large operating losses have occurred and operating cash flow expenditures
have been exceeded, and we are therefore in a situation in which material uncertainties have arisen
regarding entity’s ability to continue as a going concern.
-6-

・Countermeasures to resolve or improve the event or situation(Business side)
In order to resolve this situation, the Nichi-Iko Group will continue to gradually resume production
and shipment of products manufactured at Toyama Plant 1, and continue its efforts to improve
profitability by promoting initiatives aimed at optimization of the production system throughout
the entire Group. In addition, we are taking steps to improve cash flow by reducing expenses,
curbing logistics costs and thoroughly implementing inventory and purchasing management on acompany-wide level. Furthermore, we are working to accelerate structural reforms with a view torecovering business performance after the end of the current fiscal year, including reducing costs
by improving the efficiency of plant operations through optimization of manufacturing plants inJapan and overseas.
(Financial side)
On the financial side, financial institutions and others have agreed on matters related to financial
covenants and on extending the benefits of long-term loans that are due for repayment in March
2022. In addition, a formal application for a Business Turnaround ADR was submitted on May 13,2022 and was accepted on the same date. Going forward, we will proceed with discussions withthe relevant companies in the Business Turnaround ADR, including pre-DIP financing to facilitatesmooth business operations. With regard to further funding, we have received proposals fromsponsor candidates at this stage, and we are in consultation with them.
・Statement of the fact that material uncertainty is recognized and the reason therefor
In light of these circumstances, we are currently in the process of implementing response measures
to resolve material doubts regarding the premise of going concern. We recognize that there arematerial uncertainties regarding the premise of going concern given that the Company’s cash flow
may be impacted significantly depending on future business progress, discussions with the above
financial institutions and related companies, etc., and the status of financing, etc.
(Note)FMEA (Failure Mode and Effect Analysis) is a technique for assessing the risks inherent inproducts and processes primarily in the product design phase and the process design phase, andeliminating or mitigating such risks as much as possible. It is also recommended as a risk
evaluation method in ICHQ9, and is widely used in risk assessments of pharmaceutical companies.
2.

Basic Stance Regarding the Selection of Accounting Standards
Aiming at improved international comparability of financial information in capital markets, theGroup has applied International Financial Reporting Standards (IFRS).

-7-

3.

Consolidated Financial Statements and Primary Notes(1)

Consolidated Statement of Financial Position

Fiscal year ended
March 31, 2021
(as of March 31, 2021)
AssetsCurrent assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income taxes receivable
Other financial assets
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Goodwill
Intangible assets
Investments accounted for using equity method
Other financial assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets-8-(in millions of yen)
Fiscal year ended
March 31, 2022
(as of March 31, 2022)

29,142

15,30542,88238,605

96,11095,745

55

-

3,715

425

3,195

5,309

175,102155,391

68,94339,28945,661

18,47956,95739,6092,202

68

11,635

7,465

12

9

3,058

246

188,469

105,167

363,572

260,559

Fiscal year ended
March 31, 2021
(as of March 31, 2021)
Liabilities and equity
Liabilities
Current liabilities
Trade and other payables
Borrowings
Other financial liabilities
Income taxes payable
Refund liabilities
Contract liabilities
Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Other financial liabilities
Retirement benefit liability
Provisions
Refund liabilities
Contract liabilities
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
EquityShare capital
Capital surplus
Other equity instruments
Treasury shares
Retained earnings
Other components of equity
Total equity attributable to owners of parent
Non-controlling interests
Total equity
Total liabilities and equity-9-(in millions of yen)
Fiscal year ended
March 31, 2022
(as of March 31, 2022)

65,35948,123

63,11385,529

1,615

2,095

937

480

2,712

2,349

127

209

9,707

8,683

143,574

147,471

86,021

77,102

4,182

8,396

960

1,190

83

79

98

58

631

1,363

14,711

10,160874

964

107,562

99,314

251,136

246,785

23,36025,97521,896

24,511

9,918

9,918

(2,267)(2,124)50,822(55,657)

7,437

10,770111,167

13,394

1,268

379

112,435

13,773

363,572

260,559

(2)Consolidated Statement of Income and Consolidated Statement of Comprehensive Income(Consolidated Statement of Income)(in millions of yen)Previous fiscal year
(from April 1, 2020
to March 31, 2021)

Current fiscal year
(from April 1, 2021
to March 31, 2022)

Revenue
Cost of sales

188,218
166,973

179,060
175,094

Gross profit

21,245

3,965

Selling, general and administrative expenses
Research and development expenses
Other operating income
Other operating expenses
Operating profit

27,0294,335
12,962
2,734
107

27,8794,248
1,768
83,656(110,051)

Finance income
Finance costs
Share of profit (loss) of investments accounted for using
equity method

1,330
801
432

3,133
1,128
203

Profit before tax
Income tax expense

1,068
5,342

(107,842)(2,190)

Profit (loss)(4,273)(105,652)

Profit attributable to:
Owners of parent
Non-controlling interests
Profit (loss)(4,179)(93)(4,273)(104,984)(668)(105,652)

Earnings per share
Basic earnings (loss) per share (Yen)
Diluted earnings (loss) per share (Yen)(65.28)(65.28)(1,554.37)(1,554.37)- 10 -

(Consolidated Statement of Comprehensive Income)(in millions of yen)Previous fiscal year
(from April 1, 2020
to March 31, 2021)

Current fiscal year
(from April 1, 2021
to March 31, 2022)(4,273)(105,652)(565)(1,808)

53

(132)

(0)

-

(512)

(1,940)

2,206

5,241

2,206

5,241

1,693

3,300

Comprehensive income(2,579)(102,352)

Comprehensive income attributable to:
Owners of parent
Non-controlling interests
Comprehensive income(2,504)(75)(2,579)(101,737)(614)(102,352)

Profit (loss)
Other comprehensive income
Items that will not be reclassified to profit or loss
Financial assets measured at fair value through othercomprehensive income
Remeasurements of defined benefit plans
Share of other comprehensive income of investments
accounted for using equity method
Total of items that will not be reclassified to profit orloss
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign
operations
Total of items that may be reclassified to profit or loss
Other comprehensive income (net of tax)

- 11 -

(3)Consolidated Statement of Changes in Equity
Previous Fiscal Year (from April 1, 2020 to March 31, 2021)(in millions of yen)
Equity attributable to owners of parent

SharecapitalBalance as of April 1,
2020
Loss
Other comprehensive
incomeTotal
comprehensive
incomeDistributions toowners of other equity
instruments
Purchase of treasury
shares
Disposal of treasury
sharesTransfer of loss on
disposal of treasury
sharesExercise of shareacquisition rights
Forfeiture of shareacquisition rights
Dividends (Note)
Transfer from othercomponents of equity
Total transactions
with owners
Balance as of March
31, 2021

23,360Capitalsurplus

Other equity
instruments

TreasurysharesRetainedearnings

21,896

9,918(2,562)57,365

Other components ofequityFinancial
Exchange
assetsdifferences measured atonfair valuetranslation
throughof foreignotheroperations comprehensi
ve income
4,339

1,235

2,187

(565)

2,187

(565)

(4,179)

-

-

-

-

(4,179)

(440)
(0)
(85)

289

86

(86)

(1)

6
29
(1,919)
53

-

-

-

295

(2,363)--23,36021,896

9,918(2,267)50,822

6,526

669- 12 -

Equity attributable to owners of parent
Other components of equity
RemeasureTotal
ments of
OthersTotaldefinedbenefit plans
Balance as of April 1,
2020
Loss
Other comprehensive
incomeTotal comprehensive
incomeDistributions to owners ofother equity instruments
Purchase of treasury
shares
Disposal of treasury shares
Transfer of loss on
disposal of treasury shares
Exercise of shareacquisition rights
Forfeiture of shareacquisition rights
Dividends (Note)
Transfer from othercomponents of equity
Total transactions withownersBalance as of March 31,
2021

-

274

Total equity

5,848

115,826

1,343

117,170-(4,179)(93)(4,273)

1,675

1,675

18

1,693

1,675

(2,504)(75)(2,579)

-

(440)

(440)

-

(0)

(0)

-

204

204

-

-

-

(4)

(4)

0

0

(29)

(29)

-

-

-

(1,919)(1,919)

(53)

-

-

53
53

Noncontrollinginterests

-

(53)
(53)

(34)

(87)

(2,155)-(2,155)

-

240

7,437

111,167

1,268

112,435(Note)
The amount of dividends does not include the amount of dividends to the Employee Shareholding
Incentive Plan.

- 13 -

Current Fiscal Year (from April 1, 2021 to March 31, 2022)(in millions of yen)
Equity attributable to owners of parent

SharecapitalBalance as of April 1,
2021
Loss
Other comprehensive
incomeTotal
comprehensive
incomeIssuance of newsharesDirect issuance
expenses due toissuance of new shares
Distributions toowners of other equity
instruments
Purchase of treasury
shares
Disposal of treasury
sharesTransfer of loss on
disposal of treasury
sharesExercise of shareacquisition rights
Forfeiture of shareacquisition rights
Dividends (Note)
Equity transactions
with non-controllinginterests and otherTransfer to capitalsurplus from retained
earnings
Transfer from othercomponents of equity
Total transactions
with owners
Balance as of March
31, 2022

23,360Capitalsurplus

Other equity
instruments

TreasurysharesRetainedearnings

21,896

9,918(2,267)50,822Other components of equity
Financial
Exchange
assetsdifferences
measured atonfair valuetranslation
through otherof foreign
comprehenoperations
sive income
6,526

669

5,187

(1,808)5,187(1,808)(104,984)

-

-

2,615

2,615

-

-

(104,984)

(23)

(439)
(0)
(58)

133

58

(58)

(3)

8
39
(641)

(236)

263

(263)
(131)

(1)

2,615

2,615

-

142

(1,495)-(1)

25,97524,511

9,918(2,124)(55,657)

11,714(1,139)- 14 -

Equity attributable to owners of parent
Other components of equity
RemeasureTotal
ments of
OthersTotaldefinedbenefit plans
Balance as of April 1,
2021
Loss
Other comprehensive
incomeTotal comprehensive
incomeIssuance of new shares
Direct issuance expenses
due to issuance of newsharesDistributions to owners ofother equity instruments
Purchase of treasury
shares
Disposal of treasury shares
Transfer of loss on
disposal of treasury shares
Exercise of shareacquisition rights
Forfeiture of shareacquisition rights
Dividends (Note)
Equity transactions with
non-controlling interestsand other
Transfer to capital surplus
from retained earnings
Transfer from othercomponents of equity
Total transactions withownersBalance as of March 31,
2022

-

240

Total equity

7,437

111,167

1,268

112,435-(104,984)(668)(105,652)

3,246

3,246

53

3,300

3,246

(101,737)(614)(102,352)

-

5,231

5,231

-

(23)

(23)

-

(439)

(439)

-

(0)

(0)

-

74

74

-

-

-

(5)

(5)

0

0

(39)

(39)

-

-

-

(641)

(641)

-

(236)

-

-

-

131

-

-

(132)
(132)

Noncontrollinginterests

-

132

(274)

(510)

132

(44)

86

3,964

(274)

3,690

-

195

10,77013,394379

13,773(Note)
The amount of dividends does not include the amount of dividends to the Employee Shareholding
Incentive Plan.

- 15 -

(4)Consolidated Statement of Cash Flows(in millions of yen)

Net cash provided by (used in) operating activities
Profit (loss) before tax
Depreciation and amortization
Impairment loss
Increase (decrease) in allowance for doubtful receivables
Loss (gain) on sales and retirement of property, plant andequipment and intangible assets
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)
Gain on discounted purchases
Share of loss (profit) of investments accounted for using
equity method
Loss (gain) on sale of investments in associates
Decrease (increase) in trade and other receivables
Decrease (increase) in inventories
Increase (decrease) in trade and other payables
Increase (decrease) in contract liabilities
Increase (decrease) in refund liabilities
Increase (decrease) in deposits received
Other
Subtotal
Dividends received
Interest received
Interest paid
Income taxes paid
Income taxes refund
Net cash provided by (used in) operating activities- 16 -

Previous fiscal year
(from April 1, 2020
to March 31, 2021)

Current fiscal year
(from April 1, 2021
to March 31, 2022)

1,068
13,2175,950(8)(107,842)
12,65384,130
928

31

161

(124)
543
(755)
(12,275)(227)714(2,146)
-

(432)

(203)

(2,769)(1,739)
3,783
(105)
(650)
102
(484)
5,351
81
15
(535)
(423)
518
5,006

(363)
5,525
2,019
(16,710)
813
(402)
(941)
952
(20,938)92
2(725)(2,833)
154(24,248)(in millions of yen)Previous fiscal year
(from April 1, 2020
to March 31, 2021)

Current fiscal year
(from April 1, 2021
to March 31, 2022)(6,360)(12,767)(3,481)
950(12,332)

-

2,500

255
(3,290)(7,039)(130)(29,334)

3,290
(108)
(133)
(9,315)

Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of common shares
Proceeds from sale and leaseback transactions
Proceeds from sale of treasury shares
Repayments of lease liabilities
Dividends paid
Distributions to owners of other equity instruments
Other

15,3949,200(9,479)204(2,093)(1,918)
(440)
(0)

6,265
15,100(9,189)
5,207
5,641
74
(2,338)
(644)
(439)
(0)

Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents

10,867(341)

19,67749

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period(13,801)
42,944(13,837)
29,142

Cash and cash equivalents at end of period

29,142

15,305

Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of investments accounted for using
equity method
Collection of loans receivable
Proceeds from collection of deposits
Payments of deposits
Payments for acquisition of subsidiaries
Other
Net cash provided by (used in) investing activities- 17 -

(5)Notes to Consolidated Financial Statements(Notes on premise of going concern)
Since April 2021, the Group has gradually resumed production and release Toyama Plant 1 while
conducting stringent quality control checks such as FMEA, but the plant has not yet resumed
shipments of some of the items scheduled for production. In addition, product sales have declined
due to lower drug prices resulting from the price revisions and the stoppage of production andshipments at manufacturing subcontractors. In order to improve this situation, we have
implemented various efforts in relation to products manufactured at Toyama Plant 1, the Group's
main plant, with the aim of ensuring an appropriate production system and scale optimization.
These efforts include identifying products that are expected to take more time than anticipated toresume manufacturing, integrating products into formulations with compounds of the same typeand same effect, and organizing products for which improvement measures can be implemented.
As a result, we recorded a valuation loss on raw materials and work in progress, etc. likely to bedisposed of in the future. Furthermore, in the current fiscal year we recorded an operating loss of
110,051 million yen and a loss attributable to owners of parent of 104,984 million yen. This wasprimarily due to factors such as the reconsideration of development investments that have been
underway up to now and the resulting impairment of goodwill at overseas subsidiaries andimpairment loss on domestic fixed assets due to the decline in earnings conditions in Japan.
As a result of the above, large operating losses have occurred and operating cash flow expenditures
have been exceeded, and we are therefore in a situation in which material uncertainties have arisen
regarding entity’s ability to continue as a going concern.
In order to resolve this situation, the Nichi-Iko Group will continue to gradually resume production
and shipment of products manufactured at Toyama Plant 1, and continue its efforts to improve
profitability by promoting initiatives aimed at optimization of the production system throughout
the entire Group. In addition, we are taking steps to improve cash flow by reducing expenses,
curbing logistics costs and thoroughly implementing inventory and purchasing management on acompany-wide level. Furthermore, we are working to accelerate structural reforms with a view torecovering business performance after the end of the current fiscal year, including reducing costs
by improving the efficiency of plant operations through optimization of manufacturing plants inJapan and overseas.
On the financial side, financial institutions and others have agreed on matters related to financial
covenants and on extending the benefits of long-term loans that are due for repayment in March
2022. In addition, a formal application for a Business Turnaround ADR was submitted on May 13,2022 and was accepted on the same date. Going forward, we will proceed with discussions withthe relevant companies in the Business Turnaround ADR, including pre-DIP financing to facilitatesmooth business operations. With regard to further funding, we have received proposals fromsponsor candidates at this stage, and we are in consultation with them.
In light of these circumstances, we are currently in the process of implementing response measures
to resolve material doubts regarding the premise of going concern. We recognize that there arematerial uncertainties regarding the premise of going concern given that the Company’s cash flow
may be impacted significantly depending on future business progress, discussions with the above
financial institutions and related companies, etc., and the status of financing, etc.
Note that since the consolidated financial statements are prepared based on the premise of going
concern, the impact of such material uncertainties on the premise of going concern is not reflectedin the consolidated financial statements.

- 18 -

(Reporting entity)
Nichi-Iko Pharmaceutical Co., Ltd. (hereinafter referred to as the “Company”) is a company
incorporated in Japan. The consolidated financial statements of the Company and its subsidiaries(hereinafter referred to as “the Group”) with the fiscal closing date at March 31, 2022 are composedof the Company, its subsidiaries and ownership interests in its associates.
The Group is mainly engaged in the manufacture and sale of pharmaceuticals.
(Basis of preparation)
1

Compliance with IFRS
Pursuant to the provision of Article 93 of the Ordinance on Terminology, Forms, andPreparation Methods of Consolidated Financial Statements (Ordinance of the Ministry of
Finance No. 28 of 1976; hereinafter referred to as “Ordinance on Consolidated Financial
Statements”), the consolidated financial statements of the Group have been prepared incompliance with IFRS since the Group qualifies as a “Specified Company under
Designated International Accounting Standards” prescribed in Article 1-2 of the Ordinanceon Consolidated Financial Statements.

2

Basis of measurement
The consolidated financial statements have been prepared on a historical cost basis except
for financial instruments, etc. measured at fair value or liabilities and assets pertaining todefined benefit plans calculated by deducting the fair value of plan assets from the present
value of net defined benefit liability.

3

Presentation currency
The consolidated financial statements of the Group are presented in Japanese yen, which is
the Company’s functional currency, and figures are rounded down to the nearest million
yen.

4

Accounting judgments, estimates and assumptions
In preparing consolidated financial statements, the management is obligated to makejudgments, estimates and assumptions that may affect the application of accounting policies
and the reported amounts of assets, liabilities, revenue and expenses. Actual results may
differ from these estimates.
The main accounting judgments, estimates and assumptions are as follows.
Accounting judgments
・ Recognition of intangible assets arising from development
Estimates and assumptions
・ Significant assumptions used in the sales plans for Infliximab BS・ Significant assumptions used for calculation of discounted cash flows in impairment
test of property, plant and equipment, goodwill and intangible assets
・ Recoverability of deferred tax assets- 19 -

・ Actuarial assumptions- 20 -

(Segment information, etc.)(1)

Reportable segments
The Group’s reportable segments are components of the business units of the Group forwhich discrete financial statements are available and evaluated regularly by the Board of
Directors in determining the allocation of management resources and assessing the segment’s
performance.
The Company’s pharmaceutical business is made up of two segments: the “Nichi-Iko Group“and the “Sagent Group.” The “Sagent Group” is made up of Sagent Pharmaceuticals, Inc.
and its consolidated subsidiaries. The “Nichi-Iko Group” is made up of companies excluding
the “Sagent Group.”
Revenue and segment profit of the reportable segments are as follows.

Previous Fiscal Year (from April 1, 2020 to March 31, 2021)(in millions of yen)
Reportable segment
SagentGroup

Nichi-IkoGroup
Revenue
External revenue
Inter-segment revenue
Total
Segment profit (loss)(Core operating profit)(Note)

Adjustment

Consolidated

Total

152,481
152,481

36,28936,289188,770
188,770-

188,770
188,770

2,995(2,017)

977

-

977

(Note)
Core operating profit excludes profits and losses caused by extraordinary factors from operating
profit, and extraordinary factors are also excluded from revenue.
Current Fiscal Year (from April 1, 2021 to March 31, 2022)(in millions of yen)
Reportable segment
Nichi-IkoGroup
Revenue
External revenue
Inter-segment revenue
Total
Segment profit (loss)(Core operating profit)(Note)

SagentGroup

Adjustment

Consolidated

Total

139,027
139,027

40,05618
40,074179,084
18
179,102(18)(18)

179,084
179,084(14,017)(2,759)(16,776)-(16,776)(Note)
Core operating profit excludes profits and losses caused by extraordinary factors from operating
profit, and extraordinary factors are also excluded from revenue.
The difference between the total amounts for the reportable segments and the amount reported on
the consolidated financial statements has been adjusted as follows.
- 21 -

(in millions of yen)Previous fiscal year
(from April 1, 2020
to March 31, 2021)
188,770552
188,218

Total revenue
Provisions for returns in voluntary recall
Revenue on consolidated financial statements

Current fiscal year
(from April 1, 2021
to March 31, 2022)
179,08424
179,060(in millions of yen)

Total segment profit (loss)
Integration-related expenses
Impairment loss on development costs
Goodwill impairment loss
Impairment loss on fixed assets
Loss on valuation of Infliximab
Voluntary recall expenses
Loss on valuation of inventory (Note 1)
Plant downtime loss (Note 2)
Gain on discounted purchases
Operating profit (loss)
Finance income
Finance costs
Share of profit (loss) of investments accounted forusing equity method
Profit (loss) before tax on consolidated financial
statements

Previous fiscal year
(from April 1, 2020
to March 31, 2021)
977
196
5,950
3,585
2,158
1,253
(12,275)
107
1,330
801

Current fiscal year
(from April 1, 2021
to March 31, 2022)(16,776)
25
24,75030,33729,042
280
351
7,389
1,097
(110,051)
3,133
1,128

432

203

1,068

(107,842)(Note 1)
We recorded a valuation loss on raw materials and work in progress likely to be disposed of in
future at Toyama Plant 1.
(Note 2)
Fixed costs incurred during the suspension of plant operations due to the review of the
production facilities of the Sagent Group’s SterRx were recorded.
(2)

Information about products and services
Revenue from each product and service is as follows.
Previous Fiscal Year (from April 1, 2020 to March 31, 2021)- 22 -

(in millions of yen)

Treatments for blood andbody fluid
Treatments for circulatory
systemAntibiotics
Treatments for paramedics
Treatments for nervous
systemTreatments for digestivesystemTreatments for allergies
Chemotherapeutics
Other
Total

Nichi-Iko Group
27,217

Reportable segments
Sagent Group
-

28,932-28,932

8,400
18,397

8,972
15,950-17,372

16,063-

16,063

14,341
2,429
36,698152,481

10,322
1,045
36,28914,341

Total
27,217

15,95018,397

12,75237,743
188,770(Note)In the same manner as “core operating profit,” extraordinary factors are also excluded fromrevenue.
Current Fiscal Year (from April 1, 2021 to March 31, 2022)(in millions of yen)

Treatments for blood andbody fluid
Treatments for circulatory
systemAntibiotics
Treatments for paramedics
Treatments for nervous
systemTreatments for digestivesystemTreatments for allergies
Chemotherapeutics
Other
Total

Nichi-Iko Group
21,693

Reportable segments
Sagent Group-

Total
21,693

21,634-

21,634

8,829
15,613

10,952
16,846-

19,782
16,846
15,613

14,599-14,59912,026
2,463
42,167139,027

9,468
2,788
40,056

12,026
11,931
44,956
179,084(Note)In the same manner as “core operating profit,” extraordinary factors are also excluded fromrevenue.

- 23 -

Previous Fiscal Year (from April 1, 2020 to March 31, 2021)(in millions of yen)

Sales of merchandise andproducts
License agreement on salesof products, etc.
Total

Nichi-Iko Group
152,364

Reportable segments
Sagent Group
36,289

Total
188,654

116

-

116

152,481

36,289188,770(Note)In the same manner as “core operating profit,” extraordinary factors are also excluded fromrevenue.
Current Fiscal Year (from April 1, 2021 to March 31, 2022)(in millions of yen)

Sales of merchandise andproducts
License agreement on salesof products, etc.
Total

Nichi-Iko Group138,909

Reportable segments
Sagent Group
40,056

Total
178,966

118

-

118

139,027

40,056

179,084(Note)In the same manner as “core operating profit,” extraordinary factors are also excluded fromrevenue.
(3)

Information by geographical area(i)

Revenue

Revenue by geographical area is shown below.

- 24 -

Previous Fiscal Year (from April 1, 2020 to March 31, 2021)(in millions of yen)
Reportable segments
Sagent Group
31,647
4,642
36,289Nichi-Iko Group
152,284
196
152,481

Japan
United States
Other
Total

Total
152,284
31,647
4,838
188,770(Notes)1.

Revenue is based on the location of the destination of sales.

2.

In the same manner as “core operating profit,” extraordinary factors are also excluded fromrevenue.

Current Fiscal Year (from April 1, 2021 to March 31, 2022)(in millions of yen)
Reportable segments
Sagent Group
33,991
6,065
40,056

Nichi-Iko Group138,648379
139,027

Japan
United States
Other
Total

Total
138,648
33,991
6,444
179,084(Notes)1.

Revenue is based on the location of the destination of sales.

2.

In the same manner as “core operating profit,” extraordinary factors are also excluded fromrevenue.

(ii)

Non-current assets

The breakdown of the carrying amount of non-current assets (excluding financial assets anddeferred tax assets) by geographical area is shown below.
(in millions of yen)
Fiscal year ended
March 31, 2021
(as of March 31, 2021)
95,501
71,915
14,066
5
181,488

Japan
United States
CanadaOthersTotal- 25 -

Fiscal year ended
March 31, 2022
(as of March 31, 2022)
39,97942,627
15,078
6
97,693(4)Information about major customers

Revenue to external customers accounting for 10% or more of revenue is shown below.

Nichi-Iko Group
Nichi-Iko Group

Previous fiscal year
(from April 1, 2020
to March 31, 2021)
39,831
2,421

Nichi-Iko Group

26,186

Name of customer
Mediceo Corporation
Takeda Pharmaceutical
Company Limited
Alfresa Corporation

Related segment(in millions of yen)
Current fiscal year
(from April 1, 2021
to March 31, 2022)
28,48018,89818,428(Per share information)
The basis for the calculation of basic earnings per share attributed to owners of parent and diluted
earnings per share is as follows:
Previous fiscal year
(from April 1, 2020
to March 31, 2021)
Profit (loss) attributable to owners of parent
Profit attributable to owners of parent (in millions of yen)
Profit not attributable to common shareholders of parent(in millions of yen)
Profit used in calculation of earnings per share (inmillions of yen)
Weighted average number of shares of common stock(shares)
Dilutive effect of stock options (shares)
After adjustment for the impact of dilutive effect (shares)
Earnings per share (loss)
Basic earnings per share (Yen)
Diluted earnings per share (Yen)(in millions of yen)
Current fiscal year
(from April 1, 2021
to March 31, 2022)(4,179)-(104,984)-(4,179)(104,984)

64,023,932

67,541,284

64,023,932

67,541,284(65.28)(65.28)(1,554.37)(1,554.37)

As stock options have a negative dilutive effect in the previous and current fiscal years, this is notincluded in the calculation of the diluted loss per share.
(Significant subsequent events)
On May 13, 2022, the Company submitted a formal application for the Business Turnaround ADR
to the Japanese Association of Turnaround Professionals (an association that has been certified asa certified dispute resolution business operator by the Minister of Justice and has been accredited
as a specified certified dispute resolution business operator by the Minister of Economy, Trade andIndustry), and it was accepted on the same date. For details, etc. on the Business Turnaround ADR,
please see “1. Overview of Operating Results, etc. (5) Significant matters regarding the premise ofgoing concern,” and “3. Consolidated Financial Statements and Primary Notes (5) Notes toConsolidated Financial Statements (Notes on premise of going concern).”- 26 -