Interim Term Financial Results Ended September 2016 November 8 , 2016 KYORIN Holdings, Inc. President Minoru Hogawa ■Outline of Consolidated Financial Results ■■Trends of mainstay products and Generic drugs ■Consolidated Financial Results Forecast and Dividends ■■Status of development pipeline 1 Outline of Consolidated Financial Results 2
※The results forecasts for the full year announced on May 12, 2016 remain unchanged
comprises New Drugs and Generic Drugs, while the Health Care Business comprises Skincare, Environmental Hygiene and Over the Counter Drugs and Others.
4
5
(Units: ¥billion) >Net Sales increased ¥2.2billion year on year. •increase of main products (Flutiform ,etc.) ·Launch of an authorized generic drug for KIPRES >Cost of sales ratio increased 2.4%. •Drug price revisions •Sales of generic drugs increased “authorized generic drug for KIPRES and the other generic drugs” ■Gross Profit is flat year on year >SG&A expenses increased ¥0.4billion year on year. •SG&A(excluding R&D) increased ¥0.3billion (increase of Labor costs) ■Operating Income decreased ¥0.4billion year on year. Mainstay Product Sales
7 Trends of mainstay products and Generic drugs a
Sales (unit : ¥billion)
Istatus in first half 2016
●LT antagonists market : shrink 5% ¥58.8bln(FY15 first half) ⇒ ¥56.1bln(FY16 first half)  ※1 ●share of Kipres sales 38.5%(FY15 first half ) ⇒ 38.2%(FY16 first half ) ※2 【price revision rate —8.3%】
effort for FY2016
●Further promote prescription to childhood asthma patient •Sales   (FY16 forecast) : ¥14.0billion (FY15: ¥15.0billion) ※1,2（Copyright © 2016 QuintilesIMS. IMS-JPM. Unauthorized copying prohibited ）
Sales (unit : ¥billion)
status in first half 2016
●ICS/LABA market : expand 6% ¥51.4bln(FY15 first half) ⇒ ¥54.3bln(FY16 first half) ※1 ●share of Flutiform sales 6.6%(FY15 first half ) ⇒ 9.3%(FY16 first half ) ※2 【price revision rate —0.2%】
effort for FY2016
●Expand the share in new clients and clients with high demand ●Promote prescription to asthma patient with inadequate control •Promotion of the advanced convenient pMDI device • Proposed new formulation for exacerbation of asthma pMDI : pressurized metered-dose inhaler ※1,2（Copyright © 2016 QuintilesIMS. IMS-JPM. Unauthorized copying prohibited ）
■Approval received  (MSD K.K., Sep. 2016) ■Launch scheduled for Nov. 2016 ■Sales forecast:¥1.9 billion (FY2016 sales) •Exclusive rights to market obtained from MSD K.K. (May 2016) •Kyorin and Kaken Pharmaceutical signed a Contract for the co-promotion (July 2016) The dermatology area accounts for 23% of the 146.5 billion yen market for antihistamines (for ages 12 and older). ※1
【Product features】
Brand name  :   DESALEX Tablets 5mg Efficacy :   2nd-generation histamine H1 receptor antagonist INDICATIONS   :   Allergic rhinitis, urticaria, itching resulting from skin diseases (eczema/dermatitis, prurigo, pruritus cutaneous, psoriasis vulgaris, multiform exudative erythema) DOSAGE AND ADMINISTRATION   :  Usually, for adults and childrens over 12 years of age, administer 5 mg as desloratadine hydrochloride once a day orally 【Feature】 •Has a high affinity for histamine H1 receptors and reliably exhibits an effect •Half-life is long, and a single daily dose suppresses symptoms for a long time •Fit patients’ lifestyles because it is non-drowsy and unaffected by food 【 Antihistamine market Aim to promote understanding of product characteristics and penetrate market soon after launch ※1  IMS-JPM (Copyright © 2016 QuintilesIMS. )  and JMDC, Unauthorized copying  prohibited Copyright © 2016 QuintilesIMS. IMS-JPM. Unauthorized copying   prohibited 11
■Concluded co-promotion contract with MSD (Sep. 2016) •Detailing activities targeting departments of internal medicine, otorhinology, and pediatrics ■Start promotion (November 2016)
【 Product features】
Efficacy     : Steroid nasal spray Indication  :  Allergic rhinitis :  Single daily dose of steroid nasal spray is Feature exceptionally effective against symptoms of allergic rhinitis (sneezing, runny nose, nasal congestion, nasal pruritus)
【About the market】
Market scale : 35 billion yen※ Main products : NASONEX 【Top market share】 Allermist, Erizas, Flunase, etc :2015(Jan-Dec):  ( Copyright © 2016 QuintilesIMS. IMS-JPM. Unauthorized copying   prohibi
Sales (unit : ¥billion) 25 21.5
Status in first half 2016
●Launch of an authorized generic drug for KIPRES (Sep. 2016) MONTELUKAST Tablets 5mg“KM”, 10mg”KM” ●Turnover increase rate, excluding AG : +15.4% Increase of Health insurance pharmacy market's sales
effort for FY2016
●Aim to acquire a large share of the GE market for Montelukast AG ●Consider acquiring new AGs as a follow-up to Montelukast AG ●Promotion of initiated joint development
【 Construction of new laboratory】
·Construction site : 11 Office Park, Takaoka-shi, Toyama Prefecture •Construction started : July 2016 ·Completion : Scheduled for March 2017 ·Start of operations  :  Scheduled for July of 2017 •Construction cost : Estimated at approx. 2 billion yen •Aim to strengthen product development capabilities and increase the number of product items developed by our company •Target : 20 or more development products per year Consolidated Financial Results Forecast and Dividends
①Cost of sales ratio :  increase 3% points    , SG&A ratio(include R&D expense): increased1% points ②forcast for R&D expense in FY2107 : ¥13.5bln ※The results forecasts for the full year announced on May 12, 2016 remain unchanged. 15

Basic Policy
-While maintaining the sound financial base, adopt the capital policy ensuring both growth investment and stable return to shareholders. - In shareholders return, aim for stable dividends. Dividend per share for fiscal 2016 (estimate): ¥58 (including interim dividend of ¥20)
Dividends

Status of development pipeline

【 Licensing development】
＜ FPR2 (Formyl peptide receptor ) agonist program＞ ■Mode of action  : G protein-coupled receptor.  FPR-2 agonists mainly inhibit the migration of neutrophils and exhibit anti-inflammatory action. ■Business partner  : BMS (License agreement executed on Dec. 2015) Kyorin Pharmaceutical grants Bristol-Myers Squibb exclusive worldwide license to develop, manufacture and commercialize products within the program. Bristol-Myers Squibb is committed to the development of Kyorin's promising novel therapeutics against this target for undisclosed indications so as to rapidly introduce the same to the global markets.
<KRP-203＞
■Mode of action : Sphingosine-1-Phosphate Receptor Agonist ■Business partner : Novartis (License agreement executed on Feb. 2006) ■State of clinical trials: Currently Phase I trial is under way directed at patients undergoing stem cell transplant for hematological malignancies. Based on the assumption that the number of participants is thirty in total, safety, efficacy and pharmacokinetics of KRP-203 are evaluated. Our priority aim is to develop KRP-203 as a treatment for GvHD, which constitutes an area of high unmet medical needs worldwide. 19

■generic name : Lascufloxacin (LSFX )
【 Features 】 •Have a broad antibacterial spectrum from Gram-positive bacteria to Gram-negative bacteria and atypical bacteria. Also have stronger antibacterial activity to anaerobic bacteria than similar agents. •showed a penetration into the excellent lung •High safety (abnormal blood glucose level, photosensitivity, digestive symptom, etc.) is expected.
Status of develpoment:KRP-AM1977X (Oral agent)
●Clinical trials:Ph3 Results (announced in November 2016) ◆ Confirmed to be highly safe and effective against community-acquired respiratory and otorhinological infections ●application To be prepared
Status of develpoment : KRP-AM1977Y (Injection)
●Clinical trials: Ph2 : Results ◆ Evaluated efficacy and safety for patients with mild to severe community acquired pneumonia • High efficacy including early therapeutic effect is confirmed • High safety is suggested ●Clinical trials: Ph3:2016/3   Start Study design : Double-blind comparative study in patients with community acquired pneumonia
Aim for early application and commercialization

KRP-AM1977X showed a penetration into the excellent lung Lascufloxacin concentration-time profiles in plasma and AMs 1 Lascufloxacin concentration in plasma, ELF, AMs andthe ratio of concentration in ELF and AMs to plasma
*1: Furuie Hidetoshi, et, al., Intrapulmonary Pharmacokinetics of Lascufloxacin (AM-1977), A New Generation Fluoroquinolone, in Healthy Japanese Subjects, ASM microbe 2016,健康はキョーリンの願いです。 reference
Sales (unit : ¥billion)
status in first half 2016
●OAB market :  expand 5% ¥42.6bln (FY15 first half)  ⇒ ¥44.7bln (FY16 first half) ※1 ●share of Uritos sales 9.6% (FY15 first half) ⇒ 9.3% (FY16 first half) ※2 【price  revision rate —7.0%】
effort for FY2016
●Establishing the position in nocturia of Uritos 【EBM】 ●Treatment proposal tailored to symptoms (twice a day orally , Which can be increase dosage up to 2 tablets at a time) ※ 1,2 （ Copyright © 2016 QuintilesIMS. IMS-JPM. Unauthorized copying prohibited ）
Sales (unit : ¥billion) Formulation another list of Pentasa In rich formulations that corresponds to the patient's individual treatment needs. It aims to maximize the value of IBD treatment in 5-ASA formulation

status in first half 2016
●market(Mesalazine etc.) :  shrink 7% •¥19.6bln (FY15 first half ) ⇒ ¥18.2bln (FY16 first half ) ※1 ●share of Pentasa sales •46.7% (FY15 first half ) ⇒ 48.4% (FY16 first half ) ※2 【price revision rate —9.3%】
effort for FY2016
●exacerbation phase 4g (twice daily), remission 2g (once daily)  proposal of prescription. ●maximize uptake and prescription of new formulation “Granules94%” (release12/2015) ●Combination Therapy penetration of oral and topical formulations ※1,2 ( Copyright © 2016 QuintilesIMS. IMS-JPM. Unauthorized copying prohibited ) 24
Sales (unit : ¥billion) 25
status in first half 2016
●expectorant market: shrink 9% ¥18.0bln(FY15  first half) ⇒ ¥16.3bln(FY16first half)  ※1 ●share of Mucodyne sales in expectorant market 37.8% (FY15 first half ) ⇒ 31.4% (FY16 first half ) ※2 ●share of generic (Carbocisteine) 13.3% (FY15 first half ) ⇒ 17.7% (FY16 first half )  ※3 【price revision rate — 7.0%】 ※ 1,2,3 （ Copyright © 2016 QuintilesIMS. IMS-JPM. Unauthorized copying prohibited ）
＜ Breakdown ＞

<Subsidiaries and Equity-method Affiliates>
Consolidated subsidiaries (8)   : • KYORIN Pharmaceutical Co., Ltd. • Kyorin USA, Inc. •Kyorin Europe GmbH • ActivX Biosciences, Inc. • KYORIN Rimedio Co., Ltd. • KYORIN Medical Supply Co., Ltd. • Dr. Program Co., Ltd. • KYORIN Pharmaceutical Facilities Co.,Ltd. Equity-Method Affiliates :  •Nippon Rika Co., Ltd. ■ Sales ¥54,628mil ● Ethical drug sales in Japan Year on Year ( +¥2,242mil) ¥41,272mil (一¥490mil)
● Ethical drug sales overseas ¥343mil ( — ¥251mil) • Gatifloxacin ¥0.4bln → 0.2bln (一¥0.2bln) ● Generic Drugs ¥10,321mil ( + ¥2,938mil) •Launch of an authorized generic drug (AG) for KIPRES ●Healthcare Business ¥2,691mil (+ ¥46mil)

＜ Breakdown ＞
◆Cost of Sales Ratio : up 2.4 percentage points Y/Y (41.2%→43.6%) •Drug price revisions •Sales of generic drugs increased MONTELUKAST (AG),The other generic drugs
◆ R&D Ratio :
down 0.5 percentage points Y/Y (13.9%→13.4%) *¥7.3bln→¥7.3bln (flat) ◆SG&A (exclude R&D) Expenses : down 0.8 percentage  Points Y/Y(37.1%→36.3%) *¥19.5bln→¥19.8bln (+¥0.3bln) • increase of Labor costs. ■ Operating Income ¥3,663mil  (一 ¥436mil) * Operating Income margin decreased 1.1percentage points to 6.7% ■ Net Income  ¥2,684mil  (一 ¥283mil) ■Dividend per share(interim dividend) ¥20.0
＜ Breakdown ＞ ■Current Asset：一¥ 7,873mil • Cash, deposits ( + ¥6,196mil) • Notes and accounts receivable  (一¥ 9,074mil) • Mk securities ( — ¥13mil) • Inventory ( — ¥1,894mil) • Other ( — ¥3,060mil) ■ Fixed Assets ：－1,667mil • Tangible Assets • Intangible Assets • Investments ( — ¥200mil) (  — ¥140mil) ( — ¥1,329mil) ■ Current Liabilities : 一¥3,923mil • Notes Payable • Other (  — ¥1,207mil) (   — ¥2,721mil) ■■ Non-Current Liabilities : 一¥2,281mil

Sales, Profit or Loss of each report segment

(Note ) The details of the Sales Segment have been changed from the first quarter ending March 31, 2017. Following the change, the Pharmaceutical Business comprises New Drugs and Generic Drugs, while the Health Care Business comprises Skincare, Environmental Hygiene and Over the Counter Drugs and Others.
(unit : ¥million)くBreakdown ＞ Year on Year ¥47,396mil ( +¥1,239mil) Sales ● Ethical drug sales in Japan ¥40,182mil (一¥422mil) Sep/2015 ⇒ Sep/2016 (¥ billion)
● Ethical drug sales overseas ¥221mil ¥0.4bln → ¥0.2bln ( — ¥283mil) ( — ¥0.2bln) • Gatifloxacin ● Generic Drugs ¥5,138mil ( + ¥1,885mil) •Launch of an authorized generic drug (AG) for KIPRES ●Healthcare Business (+ ¥89mil) ¥1,854mil ¥1.0bin → ¥1.1bin (+ ¥0.1bln) • milton • Rubysta   ¥0.3bln → ¥0.4bln (+ ¥0.1bln)
＜ Breakdown ＞ ◆Cost of Sales Ratio : up 3.4 percentage points Y/Y (39.8%→43.2%) •Drug price revisions •Sales ratio of generic drugs increased ◆R&D Ratio : down 0.3percentage points Y/Y(15.0%→14.7%) * ¥6.9bln→¥6.9bln(flat) ◆SG&A (exclude R&D) expenses : down 0.3 percentage points Y/Y (38.4%→38.1%) ■Operating Income ¥1,912mil （一¥1,249mil） * Operating Income margin decreased 2.8 percentage points to 4.0% ■Net Income   ¥1,510mil（－ ¥971mil）
＜ Breakdown ＞ ■Current Assets  :一¥6,362mil • Cash, deposits  (+¥5,893mil) • Accounts receivable  (一¥8,839mil) • Mk securities  (+¥8mil) • Inventory （一¥1,054mil） ■Fixed Assets   :  — ¥995mil •Tangible Assets （－¥422mil） •Intangible Assets （一¥28mil） •Investments (一¥544mil) ■ Current Liabilities :  — ¥2,030mil • Accounts payable (+¥814mil) ■ Non-Current Liabilities : 一¥1,482mil

(unit : ¥billion)

(unit : ¥million) <Capital expenditure (Actual/Forecast)>
(unit : ¥billion)
Ph III ~ Application submitted ※Changes from the previous announcement(July 29 2016)
POC Project (Ph I ~ Ph II)
■ These forecast performance figures are based on information currently available to the Company and may include uncertain factors or risk that affect our future performance. Accordingly, actual business results may materially differ from the forecasted figures due to various factors in the future.