A Hybrid Business Model Building Stability through Biosimilars and Pursuing Growth through Novel Biologics

「For the consolidated results of our Group for the interim consolidated accounting period, amid continued solid demand, we steadily delivered active pharmaceutical ingredients for biosimilars and other products in line with plan, resulting in net sales of ¥3,276,217 thousand, up 87.2% year on year and substantially above the net sales recorded in the same interim period of the previous year. Following this substantial increase in sales, operating income was ¥215,337 thousand, compared with an operating loss of ¥262,520 thousand in the same interim period of the previous year; ordinary income was ¥76,667 thousand, compared with an ordinary loss of ¥267,993 thousand; and interim net income attributable to owners of the parent was ¥60,583 thousand, compared with an interim net loss attributable to owners of the parent of ¥241,794 thousand.」

「Under this hybrid business structure combining the 2 businesses, we aim to achieve both stability and growth and maximize synergies between the businesses by reinvesting and applying the sustainable earnings generated by the biosimilars business, together with the know-how, knowledge and experience in biopharmaceutical R&D accumulated through many years of work (collectively, the "know-how and related assets"), in R&D for the cell therapy business, which is expected to offer high growth potential.」

「However, despite lower profit margins in the biosimilars business due to the external factors described above, the business has achieved profitability on a standalone basis.」

「We have established a stable earnings base because we are currently generating recurring revenue in excess of the Company's fixed costs.」

「In particular, the biosimilars business has grown to a scale at which sales and other revenue from its 3 existing products generate profit exceeding general and administrative expenses excluding the Company's R&D expenses, namely fixed costs. Accordingly, while investing in R&D for the drug discovery business, it is positioned as an important business supporting the distinctive model for a biotech venture of achieving both growth and stability by generating stable and recurring income from the biosimilars business.」

「In the biosimilars business, we are working to establish a stable earnings base and, against the backdrop of government policies promoting generic medicines to reduce healthcare costs in Japan, to provide patients with new treatment options and more affordable treatment. In the biologics new drugs and cell therapy businesses, including regenerative medicine, we are actively pursuing the challenge of creating new medicines with the aim of developing groundbreaking treatments not yet available, and pursuing their growth potential.」

「In the biosimilars business, we are working to establish a stable earnings base and, against the backdrop of government policies promoting generic medicines to reduce healthcare costs in Japan, to provide patients with new treatment options and more affordable treatment. In the biologics new drugs and cell therapy businesses, including regenerative medicine, we are actively pursuing the challenge of creating new medicines with the aim of developing groundbreaking treatments not yet available, and pursuing their growth potential.」

「Specifically, while establishing a stable earnings base through the biosimilars business, we are pursuing growth through the novel biopharmaceuticals business and the cell therapy business (regenerative medicine).」

「By advancing a biosimilars business with relatively low development risk and predictable earnings alongside biologics new drugs and cell therapy, including regenerative medicine, which involve development risk but offer high earnings potential, we will build a more robust management structure through businesses that combine stability and growth and mutually complement one another.」

「For biologics new drugs and regenerative medicine, we are reducing risk by pursuing early out-licensing and cost sharing through partnerships so as to avoid incurring substantial R&D expenses. For biosimilars, we are selecting partners based on the expiration dates of patents covering existing biologics, ensuring that opportunities are not missed, while concentrating our management resources on manufacturing process development to diversify risk.」

「For biologics new drugs and regenerative medicine, we are reducing risk by pursuing early out-licensing and cost sharing through partnerships so as to avoid incurring substantial R&D expenses. For biosimilars, we are selecting partners based on the expiration dates of patents covering existing biologics, ensuring that opportunities are not missed, while concentrating our management resources on manufacturing process development to diversify risk.」

「For biologics new drugs and regenerative medicine, we are reducing risk by pursuing early out-licensing and cost sharing through partnerships so as to avoid incurring substantial R&D expenses. For biosimilars, we are selecting partners based on the expiration dates of patents covering existing biologics, ensuring that opportunities are not missed, while concentrating our management resources on manufacturing process development to diversify risk.」

「Specifically, while establishing a stable earnings base through the biosimilars business, we are pursuing growth through the novel biopharmaceuticals business and the new biotechnology business, centered on cell therapy in regenerative medicine.」

「Specifically, while establishing a stable earnings base through the biosimilars business, we are pursuing growth through the novel biopharmaceuticals business and the new biotechnology business, centered on cell therapy in regenerative medicine.」

「By advancing a biosimilars business with relatively low development risk and predictable earnings alongside biologics new drugs and new biologics businesses, which involve development risk but offer high earnings potential, we will build a more robust management structure through businesses that combine stability and growth and mutually complement one another.」

「Specifically, while establishing a stable earnings base through the biosimilars business, we will pursue growth through the novel biopharmaceuticals business and the new biotechnology business, centered on cell therapy in regenerative medicine.」

「Specifically, while establishing a stable earnings base through the biosimilars business, we will pursue growth through the novel biopharmaceuticals business and the new biotechnology business, centered on cell therapy in regenerative medicine.」

「While emphasizing stability by generating steady earnings from the lower-risk biosimilars business, we will create innovative technologies and medical treatments through biologics new drugs and new biologics businesses, including regenerative medicine and cell therapy, and develop a business model aimed at both operational stability and growth.」

「Our biosimilars business continues to perform steadily, with sales of the neutropenia treatment Filgrastim BS by Fuji Pharma Co.,Ltd. and Mochida Pharmaceutical Co.,Ltd. progressing well, maintaining stability in our operations.」

「Our biosimilars business continues to perform steadily, with sales of the neutropenia treatment Filgrastim BS by Fuji Pharma Co.,Ltd. and Mochida Pharmaceutical Co.,Ltd. progressing well, maintaining stability in our operations.」

「While emphasizing stability in the biosimilars business, we will emphasize growth in biologics new drugs and new biologics businesses and develop a business model aimed at both operational stability and growth.」

「Against this backdrop, our biosimilars business continues to perform steadily, with sales of the neutropenia treatment Filgrastim BS by Fuji Pharma Co.,Ltd. and Mochida Pharmaceutical Co.,Ltd. progressing well, maintaining stability in our operations.」

「Against this backdrop, our biosimilars business continues to perform steadily, with sales of the neutropenia treatment Filgrastim BS by Fuji Pharma Co.,Ltd. and Mochida Pharmaceutical Co.,Ltd. progressing well, maintaining stability in our operations. In this context, as the next product following Filgrastim BS,」

「We aim to establish a management foundation that combines stability and growth and allows for mutual complementation, with a biosimilars business offering relatively low development risk and predictable earnings, and a biologics new drug business offering high earnings potential despite development risk, as the two pillars.」

「Our biosimilars business continues to perform steadily, with sales of the neutropenia treatment Filgrastim BS by Fuji Pharma Co.,Ltd. and Mochida Pharmaceutical Co.,Ltd. progressing well, maintaining stability in our operations. In addition, in September 2016, we began a Phase III clinical trial in Japan for a darbepoetin alfa biosimilar being jointly developed with 株式会社三和化学研究所.」

「For the time being, our policy is to concentrate management resources on biosimilars, whose R&D risk is clearly lower than that of new drugs.」

「The biosimilars business emphasizes stability, while the novel biopharmaceuticals business emphasizes growth. This business model seeks both management stability and growth through these two approaches.」