02 16-13 kyowa kirin-results_q4

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02 16-13 kyowa kirin-results_q4

  1. 1. Medium-term business plan FY 2013 to 2015To become a global specialty pharmaceutical company January 31, 2013 Kyowa Hakko Kirin Co., Ltd. President and CEO Nobuo Hanai
  2. 2. Forward looking statements This document contains certain forward-looking statements relating to such items as the company’s (including its domestic and overseas subsidiaries) forecasts, targets and plans. These forward-looking statements are based upon information available tot eh company at the present time and upon reasonable assumptions made by the company in making its forecasts, but actual results in practice may differ substantially due to uncertain factors. These uncertain factors include, but are not limited to, potential risks associated with the pharmaceutical industry’s domestic and international operating environment, intellectual property risks, the risk of adverse reactions to pharmaceutical products, legal risks, risks arising from product manufacturing deficiencies, risks due to fluctuations in the market prices of raw materials, fuel and products, as well as exchange rate and financial market volatility. This document contains information on pharmaceutical products (including products under development), but its contents should not be construed as promotion, advertising or as a medical recommendation.
  3. 3. CONTENTS 1. FY 2010-2012 Medium-term business plan 4 2. FY 2013-2015 Medium-term business plan and strategy 9 3. Plans by business segment 1) Pharmaceuticals business 12 2) Bio-Chemicals business 27 4. Shareholder returns 30
  4. 4. FY 2010-2012 Medium-term business planSlide no.4
  5. 5. 2010 -2012 Medium-term business plan:Implementation Accelerated pipeline development through efficient use of management resources  Selection and concentration of business portfolio ・ Divested Chemicals and other businesses ・ Acquired ProStrakan, ensuring penetration of USA/Europe pharmaceutical markets ・ Entered biosimilars business through joint venture with FUJIFILM Corporation  Strengthened profitability by reorganizing production facilities ・ Reorganized production facilities including those of the Bio-Chemicals business ・ Constructed new production facilities with automated equipments.  Developed highest global standards for antibody technology business ・ Launched POTELIGEO, the world’s first POTELLIGENT therapeutic antibody ・ Promoted out licensing and advanced therapeutic antibody through development stages Building a unique operating foundation worldwideSlide no.5
  6. 6. 2010 -2012 Medium-term business plan:Results (¥ bn) (¥ bn) 250 50 Net sales Operating income1) 200 40 150 30 100 20 50 10 0 0 ‘10 ‘11 ‘12 ‘10 ‘11 ‘12 ‘10 ‘11 ‘12 ‘10 ‘11 ‘12 ‘10 ‘11 ‘12 ‘10 ‘11 ‘12 ‘10 ‘11 ‘12 ‘10 ‘11 ‘12 Pharma Bio-Chemical Chemical Other Pharma Bio-Chemical Chemical Other Blank columns: MTB targets Colored columns: Results 2010 -2012 MTB2) FY2012 plan FY2012 results Difference between Achievement ratio (¥ bn) plan and results Net sales 454.0 333.0 333.1 +0.1 100% Operating 51.7 52.0 52.9 +0.9 102% income1) 1) Income after amortization of goodwill 2)2012 targets as set forth in the 2010 Medium-term business planSlide no.6
  7. 7. 2010 -2012 Medium-term business plan:Pipeline and product launches Entered 10 products into clinical trials, revealing the benefit of our integration synergies Products newly entered into clinical trials*: 10 compounds KHK4563, KHK2866, LY2523355, CEP-37250/KHK2804, KHK2898, RTA 402, KHK4827, KHK6188, KHK4577, KHK7580 Products launched in Japan (new drugs, expanded applications, additional dosages/changes) 2010 2011 2012 Filed NESP subcutaneous Romiplate Apokyn KW-6002 ALLELOCK (infants) ALLELOCK Powder POTELIGEO KW-2246 ALLELOCK (OD) NAUZELIN OD Change to liquid NESP (infants) volumes of NESP DESMOPRESSIN MINIRINMELT OD TOPINA (infants) (Room temperature) Dacarbazine New Expanded Additional Leunase drugs applications dosages/changes ACTIVACIN *Phase1 as defined by FPI (First Patient In) PasetocinSlide no.7
  8. 8. Roadmap to Global Specialty Pharmaceutical Company (GSP) Leap to GSP ・Launch three products* ・Maximize value of originated from KHK in business in Japan USA/Europe ・Divested petro-chemical business *KW-0761/KW-6002/KRN23 ・Acquired ProStrakan ・Promote product・Integrated two companies ・Entered Biosimilars business・Transferred Food business・Reorganized production sites development in US/EU ・Materialize global ・Transferred alcohol & livestock Biosimilars business related business ・Improve revenue & profitability of Bio- ・Expand worldwide Bio- Chemicals business Chemicals business STEP 1Integrate strengths STEP 22008~2009 Select and concentrate 2010~2012 STEP 3 Strive toward GSP STEP 4 2013~2015 Realize our GSP model 8
  9. 9. FY 2013-2015 Medium-term business plan and strategySlide no.9
  10. 10. Basic strategy Become a global specialty pharmaceutical company 1. Further strengthen competitiveness in Japan through our category-based strategy* 2. Expand our business base in the USA, Europe and Asia and aim to become GSP 3. Strengthen the revenue base of our Bio-Chemicals business * Category-based strategy applies to the following four disease areas: Nephrology; Oncology; Immunology & Allergy; and Central Nervous System.Slide no.10
  11. 11. Management targets for Medium-term business plan Leveraging Kyowa Hakko Kirin Group synergies to achieve sustainable growth by responding to environmental changes (¥ bn) FY 2012 FY2013 FY2015 Compared Results Planned Guidance 1) to FY2012 Net sales 333.1 338.0 358.0 +24.9 Operating 52.9 55.0 60.0 +7.1 income 2) (operating income to sales ratio) (15.9%) (16.3%) (16.8%) Ordinary 49.0 49.0 53.0 +4.0 income 2) Net income2) 24.1 30.0 30.0 +5.9 EPS 3) (¥) 61.0 71.7 71.7 +10.7 1) To be updated annually 2) Income after amortization of goodwill 3) EPS calculated using net income before amortization of goodwillSlide no.11
  12. 12. To become a global specialty pharmaceutical company FY 2013-2015 Medium-term business plan = Pharmaceuticals business =Slide no.12
  13. 13. Pharmaceuticals business: Consolidated targets Increase revenues by further strengthening competitiveness in Japan through category-based strategies and contributions from ProStrakan (¥ bn) FY 2012 FY2013 FY2015 1) Compared Results Planned Guidance to FY2012 Net sales 249.8 251.0 260.0 +10.2 Operating 50.3 49.0 52.0 +1.7 income 2) (20.2%) (19.5%) (20%) (operating income to sales ratio) R&D expense (Sales to R&D ratio) 41.3 40.7 40.0 (1.3) (16.6%) (16.2%) (15.4%) 1) To be updated annually 2) Operating income after amortization of goodwill  Core strategy – Further strengthen competitiveness in Japan through our category-based strategy – Enhance business foundations in USA, Europe and Asia aiming to become a global specialty pharmaceutical company – Create a corporate culture and organization appropriate for a global specialty pharmaceutical companyslide no.13
  14. 14. Core strategy 1.Further strengthen competitiveness in Japan through our category-based strategy Implement PPM* in each category from R&D to S&M Realize sustainable growth while enhancing productivity Nephrology (Including diabetes/ Immunology & Allergy hypertension) Enhance presence in dermatology / Enhance presence in CKD otorhinology ・ Maintain high NESP market share ・ Accelerate development of KHK4563, ・Expand REGPARA market KHK4827 ・ Early launch/market . Address ALLELOCK/Patanol competitor penetration of Saxagliptin products Global Specialty Pharma Oncology Central Nervous Enhance position in hematology System Enhance presence in cancer Maximize synergy with support therapies existing products ・Establish POTELIGEO brand ・Early launch of KRN125, KW-2246 ・ Early launch/market ・Accelerate ARQ 197 development penetration of Apokyn ・Early launch of KW-6002 *PPM: Product Portfolio Managementslide no.14
  15. 15. Nephrology:Sales projection of core products in Japan Strive to be a thought leader in chronic kidney disease (CKD) therapy  Maintain leading share in renal (¥ bn) Sales plan of core nephrology products anemia therapy, primarily through 1200 120 NESP  Enhance value of NESP through 1000 100 unified injection volume for 800 predialysis chronic kidney 80 新製品 New products diseases 60 600 コニール CONIEL ロカルトロール Rocaltrol  Utilize largest renal specialist MR 400 40 レグパラ REGPARA structure ネスプ/エスポー NESP/ESPO  Promote sales through 400 MRs 200 20  Create product line-up to broadly 0 cover CKD market FY 2012 2012年 FY 2013 2013年 FY 2015 2015年  Respond to therapeutic needs  Introduce antidiabetic agent  DPP4 inhibitor saxagliptin (NESP)slide no.15
  16. 16. Oncology:Sales projection of core products in Japan Enhance our position in oncology area primarily through POTELIGEO Replace GRAN with new product (¥ bn) Sales plan of core cancer products 300 30 Continue activities to promote 250 25 appropriate usage of proprietary therapeutic antibody POTELIGEO 200 20 新製品drug New Continue to launch new 15 150 Romiplate ロミプレート investigational drugs フェントス Fentos GRAN KW-2246 10 100 グラン KRN125 50 5 0 2012年 FY 2012 2013年 FY 2013 2015年 FY 2015 Expand indications of KW-0761 ・ATL 1st Line ・CTCL (POTELIGEO) ・PTCLslide no.16
  17. 17. Immunology and Allergy:Sales projection of core products in Japan Continue to provide value in allergy drug market where competition is being intensified Sales projection of core  Anti-allergy drug (¥ bn) immunology and allergy products  Continue to improve product 500 50 value, primarily of ALLELOCK OD*tablet/granules 400 40  Anti-allergy eye-drops 30 300  Further strengthen its No.1 アサコール ASACOL パタノール position in the category 200 PATANOL アレロック 20 ALLELOCK *OD: Oral Disintegrant 100 10 0 Accelerate development of new FY 2012 2012年 FY 2013 2013年 FY 2015 2015年 therapeutic antibodies ・KHK4563 ・KHK4827 Expand indications of Z-206 (ASACOL) (ALLELOCK)slide no.17
  18. 18. Central nervous system (CNS):Sales plan of core products in Japan Focus on expanding products for treatment of Parkinson’s disease and penetrating markets with new drugs (¥ bn) Sales plan of core CNS products 200 20 Apokyn  Accelerate market 150 penetration 15 新製品 New drugs  Launch proprietary 100 10 Permax ペルマックス investigational drug アポカイン Apokyn デパケン DEPAKENE  KW-6002 5 50 0 2012年 FY 2012 2013年 FY 2013 2015年 FY 2015 Develop new low molecular drug ・KHK6188 (Apokyn)slide no.18
  19. 19. Core Strategy 2. Overseas strategyEurope/USA: Development/sales structure Development in USA/Europe: Promotion of ODDO1) centering on KKP 2) Develop robust sales structure for smooth transition to a global specialty pharmaceutical company Development in USA/Europe (KKP2)+PSK3)) ・Establish KKP1) as the central base for global development ・Make progress on development of in-house products ・Make progress on development of biosimilars in Europe PSK KKP Sales in USA/Europe (PSK3)) ・Promote market penetration of existing PSK3) products ・Expand product portfolio through active licensing activities 1) One Drug Development Organization ・Build structure for KW-0761 market launch in the Americas 2) Kyowa Hakko Kirin Pharma, Inc. 3) ProStrakan, Inc.slide no.19
  20. 20. Acceleration of drug discoveries Acceleration of drug discoveries • Discovery of new drugs for unmet needs • Improvement of R&D success rates through collaboration with medical institutions Antibodies Small molecules Oligonucleotides Translational Research Open Innovation Infinite pursuit of cutting-edge scientific progress Biotechnology Technology platform, a key strength Passion & Integrity Researchers’ integrity and passion towards drug discoveryslide no.20
  21. 21. Global network-based drug discovery research Japan San Diego • Concept verification using Generation of candidate clinical samples products using platform technologies including • Access to cutting-edge antibody scientific research progress • Promoting open innovation Focus on translational research Academia-industry alliances Singapore Bench to bedside by using bioimaging technologyslide no.21
  22. 22. Late stage pipeline products Core pipeline currently filed or scheduled for application Name Target Region Phase Application schedule KW-6002 Parkinsons Japan Filed Mar. 2012 disease OPC-262 Diabetes Japan Filed* Apr. 2012 (Saxagliptin) KW-2246 Cancer pain Japan Filed Dec. 2012 KRN125 Febrile neutropenia for chemotherapy patients Japan Phase 3 2013 KW-0761 ATL, 1st line combination therapy Japan Phase 2 2013 PTCL & CTCL Japan Phase 2 2013 ATL USA/Europe Phase 2 2015 CTCL USA Phase 3 2016 KW-3357 Disseminated intravascular coagulation Japan Phase 3 2014 Congenital antithrombin deficiency *: Filed by Otsuka Pharmaceutical; Launch scheduled for current periodslide no.22
  23. 23. Core strategy 3. Improvement of corporate culture andorganization toward Global Specialty Pharmaceutical company Create a corporate culture and organization appropriate for a global specialty pharmaceutical company Quality assurance / Stable supply • Quality assurance system suitable for global operation • Stable supply of high quality pharmaceuticals at a global level Compliance / CSR • Strict compliance • CSR activities for social expectations Productivity • Systems enhancing individual ability and motivation - Diversity - Expertise and breadth of vision - Global HR development • Cost competitivenessslide no.23
  24. 24. ProStrakan Steady growth: Road to profitability* *:Operating income after amortization of goodwill (¥ bn) Net sales Europe:  Sancuso: Launch 250 25.0  Abstral: Sales increase & profit improvement 200 20.0 USA: 150  Fareston (breast cancer product):Sales increase 15.0  Continuation of product licensing in oncology 100 10.0 category 50 5.0 0 2012 2013 Business 2014 Business 2015 Business Estimation Plan Plan Plan Operating income (¥ bn) 30 3.0 Photo 20 2.0 10 1.0 0 2012 2013 Business 2014 Business 2015 Business -1.0 -10 Estimation Plan Plan Plan -2.0 -20 -3.0 -30slide no.24
  25. 25. BioWa Advancing to next stage using venture network Sales trend forecast (image)  Maximizing value of POTELLIGENT® ($ mn) and other technologies 80  Promoting licensing 70 60  Out licensing developed product 50 + 40 Acquisition of promising seeds 30 for drug discovery 20 • Promotion of open innovation 10 • Accurate evaluation of seeds potential 0 through collaboration with research base 2012 2013 2014 2015 2016 2017 2018slide no.25
  26. 26. FUJIFILM KYOWA KIRIN BIOLOGICS Initiate adalimumab biosimilar clinical trials in Europe in 2013 H1 Development plan: Development of four biosimilars KHK Fujifilm Clinical trials of one biosimilar per Biopharmaceutical Production, quality control and manufacturing capabilities analysis technology year from 2013 Initial targets: Adalimumab (clinical trials to begin in 2013) Innovative production process Bevacizumab (clinical trials to begin in 2014) High level of reliability and quality, and cost-competitiveness The concept of Interchangeable biosimilars is a valuable opportunity to demonstrate our strengths in biopharmaceutical manufacturing Photo: Manufacturing and Development Centerslide no.26
  27. 27. A strong presence in the pharmaceutical, medical and healthcare fields FY 2013-2015 Medium-term business plan = Bio-Chemicals business =slide no.27
  28. 28. Bio-Chemicals business: Consolidated targets Strengthen profitability through on-going business restructuring Reconstruct business foundation minimizing impact of exchange-rate fluctuations (¥ 100 mn) FY2012 FY2013 FY20151) Compared Results Plan Guidance to FY2012 Sales 769 810 910 +141 Operating income 2) 21 58 80 +59 (operating profit (2.8%) ( 7.2%) (8.8%) ratio) 1) To be updated annually 2) Operating income after amortization of goodwill  Factors increasing profitability – Cost reductions – Volume increase of amino acids – Production of tranexamic acid and APIs* – Expansion of healthcare business in Japan **: Active Pharmaceutical Ingredientsslide no.28
  29. 29. Bio-Chemicals business: Strategy to improve revenue Meet strong demand for high Value-added amino acids Expand healthcare business ◆ Increase amino acids production ◆ Further improve public awareness through investment in existing of ornithine through active overseas plants advertising ◆ Maintain fair pricing and ◆ Expand sales of original materials build/maintain a relationship of such as citrulline trust with customers through high quality products and services ◆ Significantly improve profitability utilizing manufacturing capacity of ◆ Develop new materials in APIs at Daiichi Fine Chemical pharmaceutical, medical and healthcare areas ◆ Reduce costs through introduction of new technologies Reorganize business facilities Promote development of and streamline production new products and materialsslide no. 29
  30. 30. FY 2013-2015 Medium-term business plan = Shareholder returns =slide no.30
  31. 31. Shareholder returns Targeting a consolidated dividend ratio of 40% before goodwill amortization Basic policy Consolidated dividend and dividend payout ratio 50.0%  Dividend Dividend payout ratio 配当性向(のれん前) of goodwill) (before amortization Stable dividend policy 45.0% Consolidated dividend payout ratio 40.0% 2010 MTB: targeted 30% or more 35.0% 2013 MTB: Targeting 40% or more 30.0% 25.0% 2010.12 2011.12 2012.12 2013.12  Share repurchase (予定) (Planned) Fast and flexible response Dividend (¥) 20 20 20 25slide no.31
  32. 32. KHK Group’s unique business structure Leap to a Global Specialty Pharmaceutical company Biosimilars Bio-Chemicals Diagnostics business business business Biotechnology Management philosophy Passion & Integrityslide no.32
  33. 33. If you have any inquiries regarding this presentation please call:Corporate Communications Department, Kyowa Hakko Kirin Co., Ltd Tel: +81-(0)3-3282-0009
  34. 34. APPENDIX
  35. 35. 2013 Medium-term Business PlanManagement targets by business segment (¥ bn) FY2012 FY2013 FY2015 Compared Results Planned Guidance 1) to FY2012 Net sales 333.1 338.0 358.0 +24.9 Pharmaceutical 249.8 251.0 260.0 +10.2 Bio-Chemical 76.9 81.0 91.0 +14.1 Others 6.3 6.0 7.0 +0.7 Operating income2) 52.9 55.0 60.0 +7.1 Pharmaceutical 50.3 49.0 52.0 +1.7 Bio-Chemical 2.1 5.8 8.0 +5.9 Others 0.3 0.2 1.0 (2.0) 1) To be updated annually 2) Operating income after amortization of goodwill 44.8 44.0 43.0 R&D expense (1.5) 13.4% 13.0% 12.0% 41.3 40.7 40.0 Pharmaceutical (1.3) 16.6% 16.2% 15.4% 3.4 3.3 3.0 Bio-Chemical (2.0) 4.5% 4.1% 3.3% Net sales to R&D expense ratio figures have been italicizedSlide no. A-1
  36. 36. Basic concept To become a global specialty pharmaceutical companyslide no. A-2
  37. 37. Aims for 2015 Kyowa Hakko Kirin The Kyowa Hakko Kirin Group companies strive to contribute to the health Group management and well-being of people around the world by creating new value through the philosophy pursuit of advances in life sciences and technologies. Kyowa Hakko Kirin will be a Japan-based Global Specialty Pharmaceutical Company contributing to human health and well-being worldwide through Business vision innovative drug discovery and global commercialization, driven by state-of- the-art antibody technologies mainly in the core therapeutic areas of oncology, nephrology and immunology. Category-based strategy Accelerate therapeutic competitive advantage by becoming a major category player Overseas strategy Expand global business in accordance with country- and region-specific business strategy Aims for 2015 Compliance / Organization Build a structure and environment appropriate for a global specialty pharmaceutical company Productivity Create a high-productivity environment which brings out individual abilities and organizational strengthsSlide no. A-3
  38. 38. Strategy map Kyowa Hakko Kirin will be a Japan-based Global Specialty Pharmaceutical Company contributing to human health and well-being worldwide through innovative drug discovery and global commercialization, driven by state-of-the-art antibody technologies mainly in the core therapeutic areas of oncology, nephrology and immunology. •Sales of in-house products in USA/Europe •Maximize business value in Japan •Category-based strategy ・Strategic Reorganization of Production Activities 3.Improve productivity 1. Strengthen business in Japan 2. Pursue overseas strategy •Reduce cost •Increase R&D success rate by TR1) •Enhance value of development pipeline •Optimize resources allocation •Expand global business through PPM2) Improvement of Compliance corporate culture HR development and organization 1) TR:Translation research 2) PPM: Product portfolio managementSlide no. A-4
  39. 39. Core strategy 1. Strengthen business in Japan:Background of category-based strategy To win in an increasingly challenging external environment Increase in new Complexity of information drug creation and high level of expertise hurdles demanded by medical front To become a global specialty pharmaceutical company Further restriction of medical Strengthen competitiveness Change from competition on expenses scale to era requiring in focused categories intelligence , network and internal and external collaboration Emergence of new medical technologies Change from competition by individual item to competition by comprehensive strengthsSlide no. A-5
  40. 40. Core strategy 2. Overseas strategyAsia: Development/Sales structure • Promote development centering on KHK with utilization of local subsidiaries, etc. • Introduce new products in each country under sales and marketing scheme adapted to respective healthcare environment Kyowa Hakko Kirin China Pharmaceutical • Accelerate development (NESP and others Kyowa Hakko Kirin Korea under multinational developments) • Build strong presence in targeted treatment area • Improve sales by strengthening sales-force for cancer, nephrology and hematology capabilities • Accelerate multinational studies by strengthening • Initiate in vitro diagnostics business development capability Kyowa Hakko Kirin (Taiwan) Kyowa Hakko Kirin (Hong Kong) • Launch new products and promote market • Strengthen sales capabilities for targeted penetration (Sancuso,Nplate) clinical departments and improve sales of • Reorganize sales structure corresponding to existing products upcoming biosimilar entry • Launch new products and promote market penetration (Sancuso, Nplate) Kyowa Hakko Kirin (Thailand) • Launch new products and promote market penetration (Regpara) • Enhance presence in Nephrology Kyowa Hakko Kirin (Singapore) • Promote sales in Malaysian market • Launch new products and penetrate market (Regpara, Sancuso, Nplate)slide no. A-6
  41. 41. Progress of reorganization plan of production and research facilities Reorganization and consolidation of each function is proceeding as planned Low molecular medicine (APIs) Daiichi Fine Chemical new facility (Toyama) → 2014 Start of commercial production Biopharmaceutical products, injectable solutions Low molecular medicine Takasaki Plant, new facility (Gunma) (oral formulation) → 2016 New facility operation → 2017 Start of commercial Ube Plant new facility (Yamaguchi) production → 2013 New facility operation → 2015 Start of commercial production Fuji Plant (Shizuoka) → after reorganization 2017closure Yokkaichi Plant (Mie) → after reorganization Sakai Plant (Osaka) 2013 closure → after reorganization 2015 closure Restructuring of synthetic APIs Restructuring of oral formulations Restructuring of injectable Restructuring of research Kyowa Hakko Kirin plant Kyowa Hakko Bio plant solutions facilitiesslide no. A-7
  42. 42. Development progress with outlicensed compounds Phase Name Partner Application Remarks I II III Tivozanib AVEO Cancer FDA (KRN951) Astellas (VEGF receptor inhibitor) KW-2871 Cancer Life Science (Low-fucose antibody) (Anti-GD3 antibody) MEDI-563 Asthma MedImmune (KHK4563:POTELLIGENT®) (Anti-IL-5R antibody) KRN5500 DARA Peripheral neuropathy Cancer LY2523355 Eli Lilly (Mitotic kinesin Eg5 inhibitor) AMG 761 Asthma Amgen (KW-0761:POTELLIGENT®) (Anti-CCR4 antibody) RGI2001 REGiMMUNE Phase1/2 Immunosuppressive Inflammatory bowel disease SAR252067 Sanofi (anti-LIGHT antibody) (as of January 24, 2013)Slide no. A-8
  43. 43. Kyowa Medex Contribute to the advancement of personalized medicine through companion diagnostics POTELIGEO ® TEST FCM Group synergy POTELIGEO ® TEST IHC Development of companion diagnostics can be synchronized with new drug development at Kyowa Hakko Kirin from early stage (¥ bn) Net sales 13.00  Basic strategy 12.50 – Challenge as a pioneer in companion diagnostics – Pursue business synergy through integrated 12.00 strategy for diagnostic reagents and instruments – Strengthen market access capabilities through its 11.50 subsidiary in China – Enhance cost competitiveness and increase 11.00 production capacity through facility investment 10.50 2010 2011 2012 2013 2015Slide no. A-9
  44. 44. Bio-Chemicals business: Aims for 2015 Kyowa Hakko Kirin Group The Kyowa Hakko Kirin Group companies strive to contribute to the health and well- management philosophy being of people around the world by creating new value through the pursuit of advances in life sciences and technologies. We will utilize innovative fermentation and synthesis technologies and continue to supply superior quality, high value-added functional materials that satisfy needs in the Business vision pharmaceutical, medical and healthcare fields to become the world’s premier biochemical manufacturer. Product value enhancement Increase product value by further strengthening collaborations with Group companies to stably supply safe and secure products under solid quality assurance system and strong branding Profitability improvement Achieve high profitability structure by steadily implementing restructuring plan for higher productivity and low cost operation Growth strategy Aims for 2015 Achieve sustainable growth in the pharmaceutical, medical and healthcare fields through creation of new materials and new business development Compliance Realize steady business operations from CSR points of view, environmental conservation/protection and compliance, by working together with other group companies HR / Organization Achieve vigorous corporate culture with high-productivity in which individual abilities and organizational strengths can be exercised as global enterpriseSlide no. A-10
  45. 45. Bio-Chemicals business: Strategy map We will utilize innovative fermentation and synthesis technologies and continue to supply superior quality, high value-added functional materials that satisfy needs in the pharmaceutical, medical and healthcare fields to become the world’s premier biochemical manufacturer. Strengthen earnings base • Restructure production system • Reform synthetic API business • Sophistication of SCM* Growth strategy Profitability improvement Product value enhancement Develop new products Strengthen global quality assurance Commercialize R&D results Promote product brand penetration Improvement of Compliance corporate culture HR development and organization * SCM: Supply chain managementslide no. A-11
  46. 46. Expansion and new construction of production facilities Trends in the high value-added amino acid market Amino acid demand (global estimate) Targeting value-added amino acid market for pharmaceuticals, 50,000 tons + medical treatment and healthcare: Kyowa Hakko Bio sales volumes High growth globally Rapid market expansion, particularly in Asia, in recent years 30,000 tons + Forecasting similar growth in overseas markets 17,000 tons Bolstering production capacity to secure market share KHB share KHB share 40% + and capture opportunities in a growing market KHB share 35% + 30% + 2000 2010 2020 (planned) Established subsidiary in Thailand—new production facility for amino acids ◆Outline of new company◆ ・THAI KYOWA BIOTECHNOLOGIES CO., LTD. New facilities in High-quality amino ・Wholly-owned by Kyowa Hakko Bio Co., Ltd acids by advanced ★Outline of factory plans★ resource-rich production ・Rayong province, Thailand South East Asia, technology and ・Annual production capacity: 2200t close to markets quality management ・Start of production: H2 FY2015 ・Total capital: about ¥8.1 billion Customer assurance and satisfaction through steady supply of high-quality productsSlide no. A-12

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