Highlights of FY2017 Business Results - chemiphar.co.jp

1 Highlights of FY2017 Business Results (Year ended March 31, 2018 )1 TSE4539 of FY2017 Results .. 2018 III. Management Strategy ..13 SlideI. SummaryofFY2017 Results 3 Sales, Income (Consolidated)4( mn)Amount% ofSalesAmount% ofSalesAmountChange (%)AmountAchieved (%) Net Sales35, , (358)( )35, Cost of sales19, , SG&A expenses13, , income2, , (988)( )1, before income taxesand minority interests2, , (1,072)( ) Net income attributable toowners of the parent2, , (893)( )1, * Revised forecast issued on October 31, 2017. FY2016 YOY FY2017FY2017(Forecast*)Pharmaceutical Sales (Consolidated)5( mn)Amount% of SalesAmount% of SalesYOY ( % )Total + 31, , Generics29, , To medical institutions27,80829, To other makers*1,395941( ) Amlodipine2,8652, Lansoprazole2,2792,163( ) Donepezil1,6421,557( ) Rabeprazole1,5861,558( ) Limaprost Alfadex1,4691,427( ) Pravastatine1,1731,147( ) Voglibose957870( ) Others17,22918, Proprietary products2, , ( ) Uralyt1,4091,225( ) Soleton679598( ) Calvan219214( )Total + 30,445 30,110 Generics (ODM)1,240 985 ( )* Includes exports FY2016 FY20176 Composition of Generics Sales by Destination(Non-consolidated)

2 70% of 58,000 dispensing pharmacies sell Chemiphar generics80% of 1,700 DPC hospitals sell Chemiphar generics Sales(%) (%) ( )11( )7473( ) ( )100( ) which, DPC hospitalsTotal FY2016 FY2017 Hospitals (100 beds or more)Clinics (less than 100 beds)PharmaciesBalance Sheet (Consolidated)7( mn)FY2016 FY2017 ChangeCash, deposits(200)Notes, accounts receivable-trade(699)Inventories444 Buildings and structures1,257 Machinery, equipment and vehicles477 Construction in progress(1,699)Total assets47,00246,814(187)Notes, accounts payable-trade165 Loans payable(126)Net assets17,35517,487132 Retained earnings894 Equity ratio (%) stock(1,118)Liabilities, net assets47,00246,814(187)Components487 Liabilities29,64629,326(319)Non-current assets17,99118,479 Current assets29,00928,334(674)CashFlow81,892 2,438 2,450 2,737 3,188 (2,499)(2,072)(151)(2,504)(1,606)(205)(1 37)(935)787 (1,741)(606)365 2,299 232 1,582 (8,000)(7,000)(6,000)(5,000)(4,000)(3,00 0)(2,000)(1,000)01,0002,000(3,000)(2,000 )(1,000)01,0002,0003,0004,0005,0006,000F Y2013FY2014FY2015FY2016FY2017 Operational Cash FlowInvestment Cash FlowFinancing Cash FlowFree Cash Flow( mn)( mn)II.

3 FY2018 Forecasts910 Sales, Income Consolidated)( mn)A. Main factors driving changes in net sales( ) NHI price revisions 14 %(+) New sales channels(+) New product launchesABB. Increased upfront expenses Vietnam+ 400mn YOY(Commercial productions start-up costs) R&D expenses for new drugs+ 300mn YOY(Expenses related to new drug development) % of% ofYOYA mount SalesAmount Sales (%)35,33110035, Pharmaceuticals32,15331,800( ) Generics30,11530, Proprietary products2,0381,650( )1, , ( )1, ( )Net income attributable to owners of the parent FY2017FY2018 (Forecasts)Net SalesOperating incomePharmaceutical Sales (Consolidated)11( mn) Amount% of Sales Amount% of SalesYOY (%)Total + 32, , ( ) Generics30, , To medical institutions29,17429, To other makers*941900( ) Amlodipine2,9402,900( ) Lansoprazole2,1631,900( ) Donepezil1,5571,350( )

4 Rabeprazole1,5581,350( ) Limaprost Alfadex1,4271,350( ) Pravastatine1,1471,100( ) Voglibose870750( ) Others18,44919, Proprietary products2, , ( ) Uralyt1,2251,070( ) Soleton598400( ) Calvan214180( )Total + 31, , Generics (ODM) , * Includes exportsFY2018 (Forecast)FY 201712 New Generics in FY 2018 Three items by two ingredients are planned for December Carbonate OD2 Lanthanum Carbonate2 Nalfurafine1 Minodroic Acid1 Planned June 2018 NHI price listing (Eight items by four ingredients)III. Management Strategy13 Three Plus 1 Principal Goals Goal 1 GenericsGoal2 HyperuricemiaGoal 3 Drug discoveryPlus 1 Overseas businessOverviewAt presentIn future14 Goal 1: Secure our presence in the generics businessDevelop unique Business by differentiating our products and enhance cost 2: Achieve a stronger position in the hyperuricemia market, focused on UralytEnhance group research initiatives, promote R&D in antihyperuricemic agents, and out-licensing new drugs 3: Contribute to society through drug discovery toward innovative medicineFocus on discovery in our particular areas of 1.

5 Apply our three goals to overseas markets centered on AsiaBusiness strategy by Three Principal Goals By fulfilling our three principal goals, we will establish a proprietary Business model. To make that growth sustainable, we are expanding our Business Strategy 1-(1)15 Intensified market competition with rise of authorized generics Market growth slowed due to NHI price reductions and coming era of generic drugs with an 80% shareStrengthen the entire supply chain(Review development and sales strategies, reduce costs)Challenges Related to Generic DrugsManagement Strategy 1-(2)16 DevelopmentEstablish advantageValue-added product development(First to launch generic drugs) Pursue efficiency Selection of items with priority on securing market share from market size Promote joint development in Japan and overseasManufacturing Cost reductions Promoting switch to high-quality and inexpensive APIs Vietnam factory New production ITsystem Improveoperating ratio Expanding contract Business in Japan and overseas Took over Quenmet(generic of Uralyt)

6 And manufactureSalesSales channel diversificationUtilizing new sales channels in line with acquisition of products from other companies Productivity improvement Strengthening dispensing chains and group hospitals Increasing efficiency and reducing inventory with two logistics basesStrengthen Generic Drug Supply ChainManagement Strategy 217 Multifaceted Approach to Hyperuricemia (Urine Alkalization) Nippon Chemiphar Group almost entirely controls the citrate formulation marketNPI took over Quenmet(generic of Uralyt) Possibility of citrate formulation market expansionProgress of clinical research at Tohoku University Development of drugs with different mechanism of actionNew drug discovery NC-2500 and NC-2700)Management Strategy 3-(1)18 New Drug DiscoveryPipeline (as of April 2018) (Target)PreclinicalPhase 1 Phase 2 NotesNC-2400 PPAR-delta agonist(Lipid metabolism)Finished Phase 1.

7 Licensed. Licensed to Cerenis Therapeutics (France). NC-2500 XOR inhibition (Hyperuricemia) Finished Phase 1. Conducting licensing activities . Phase1 was finished in September, after which data collection was also completed. Strengthening activities aimed at licensing and alliances based on trial antagonist (Neuropathic pain)Finished Phase 1. Conducting licensing activities . Joint research with Kyusyu University. Phase 1 was finished in September. Promoting data analysis while engaging in licensing activities for Japanese and foreign inhibition(Hyperuricemia)Finished preclinical trial. Conducting licensing activities Finished preclinical trial, after which data collection was also completed. Strengthening activities aimed at licensing and alliances based on trial *Delta opioid receptor agonist (Depression / Anxiety)Finished preclinical trial.

8 Preparing for Phase 1. Joint research with the University of Tsukuba, Kitasato University, and the National Center of Neurology and Psychiatry. Selected by the Japan Agency for Medical Research and Development (AMED) for its Fiscal 2017 Cyclic Innovation for Clinical Empowerment (CiCLE) funding program. Conducting trials under the new funding (Diffuse-type tenosynovial giant cell tumor and others Physician-initiated clinical trial 1 1blocker(Huntington's disease) Phase 2 is scheduled for new application by an overseas venture.* Supproted by the Japanese Agency for Research and Development (AMED).Letters in redare the revised parts from FY2017 2 QManagement Strategy 3-(2)192013 Selected for support under the Adaptable and Seamless Technology Transfer Program through Target Driven R&D (A-Step) Program for high-risk development by the Japan Science and Technology Agency (JST).)

9 (Support period: December 2013 September 2015)2015 Selected for research under AMED s Acceleration Transformative Research for Medical Innovation (ACT-M) program.(Support period: October 2015 March 2018)2017 Selected by AMED for the Cyclic Innovation for Clinical Empowerment (CiCLE) funding program in December 2017.(Support period: March 2018 March 2027 or up to nine years and one month; licensing activity permitted during support period)NC-2800 Adopted by CiCLEM anagement Strategy 4-(1)20 Overseas Business Pharmaceuticals DiagnosticsDP3000 Sales of CilostazolinHongKongbegan in October are conducting marketing, mainly in Asia, centering on the world s fastest allergy testing equipment (DP3000) and allergy testing reagent ( IgE NC).

10 Also, Business is also being developed in China in conjunction with a Japanese trading been approvedApproval applicationsChinaCalvan2 products center in ASEANHong KongPioglitazone, CilostazolKoreaSoleton, CalvanThailandUralytManagement Strategy 4-(2)21 Overseas Business Vietnam factory We took delivery of the building on September 14, 2017. Currently, trial manufacturing and various drug applications have been submitted for approval. Export to Japan to commence in 3rd quarter , Dac Lap Avenue, Vietnam-Singapore Industrial Park, An Phu Ward, Thuan An Town, Binh Duang Province, VietnamPropertyApprox. 10,000 m2 1 ha FactoryTwo stories, ,000 m2 Operation start dateSecond half of 2018 Investment amountApprox.