Shionogi & Co Ltd

Hello, everyone.

My name is Kyokawa from Public Relations Department of Shionagi. Thank you very much for joining us today. This is the briefing for the financial result of the Q3 of fiscal year 2023. From Shionagi today, we have Dr. John Keller, Senior Executive Officer, Senior Vice President, Supervisory Unit. And then we have Dr. Iwasaki, Senior Executive Officer, Senior Vice President, Healthcare Business Supervisory Unit in Pharmaceutical Commercial Division. And then Dr. Ryuichi Kiyama, Senior Executive Officer, Senior Vice President, Corporate Strategy. And then Dr. Uehara, a corporate office, a senior vice president, and then we have Masako Kudo, vice president, finance and accounting department. Today, Kudo is going to brief you on the financial results for the Q3, and then Dr. Kiyama is going to explain our undertaking for the future growth. Then we'll have Q&A session. We are planning to end the session at 4 o'clock. Now let me explain simultaneous translation. Simultaneous translation is available for this session today. If you wish to use simultaneous translation, please click the globe icon at the bottom of your screen and choose either Japanese or English. Now let us start, Kudo-san. My name is Kudo. I'll give you the briefing of the financial result of Q3 and the amendment of the forecast. Now page 4. This is the actual. The 338 billion for revenue with the profit operating profit of 146 billion. And then the net profit 198 billion. As to the Koba, we booked 100 billion for the Koba. And for base business, it's been going very well. So as you can see at the right, as you can see, the revenue and other profit categories are achieving higher figures as compared to the previous year. This time we are indicating how many times we've increased our revenue and profit. And the progress as of Q3 is going very well. We've already achieved the forecast at the time of the Q3. So we are going to revise our forecast upward again. And also the corporate operating profit and profit before tax and profit attributable to owners of parent have already achieved the record high. Page five. This is statement of profit and loss. As to revenue purchased by the Japanese government was booked for the third quarter. And as to other products, the tendency or the trend is same as Q2. In addition to Zocoba, HIV royalty has increased as well because of the good sales and also the favorable exchange rate. And also, Cecily Delco is selling very well in Western countries. As to cost, it's very difficult to forecast the cost of COVID-19 products. So the progress rate is 55.7% for this. And this has been factored into the revision of the forecast. The cost of sales and SDA, as we have invested heavily, but the overall expense has been well controlled. So the operating profit is 146 billion, and it's already exceeding 120 billion of our original budget. As to financial income and costs, it's 52.3 billion, and it's increased a lot from the previous year. This is thanks to the increased dividend from BIB. The timing of the receipt of the dividend has shifted to April. That's one factor. And Weave is doing very well. Because of the reasons, we are now having very good figure. And the dividend is fluctuated because of the cash available at the Weave. Because of that, we are very conservative, but the progress rate is more than 90%. As to profit before tax and profit attributable to owners of parents, it seems lower than the previous year, but last year there was a one-off factor of return money from Osaka tax office. And this is revenue by segment. As to prescription drug in Japan, The actual between April and December is 54.7. It's a big down from the previous year. This is because of the Injunib and Vivance. They are doing well. However, because of the generic of Simon Valter and also because of the return of the anti-influenza, the sales declined. As to progress rate, it's 71.5%. It seems lower figure. However, The weight of this infectious disease is big in the fourth quarter. Therefore, it's on track for Q3. NSG overseas subsidiaries and export, it's going very well. As to Shionagi Inc., it seems like same as the previous year, but there was 2.2 billion of one-time revenue for the last year. But this year, we are seeing a big increase because of the sales of Petroza. As to contract manufacturing, it seems delayed. However, on the full year, there will be no difference from the budget. As to OTC, because of the eighth wave of COVID-19, it's going very well. As to royalty income, Continuing from the second quarter, HIV franchise, it's going very well in terms of the sales, and also there is a favorable effect of the exchange rate. So it's going very well. As to CRESTO for this year from AstraZeneca, we didn't factor in the royalty from AstraZeneca, but it's selling very well globally. Therefore, we received 1.3 billion as royalty. As to COVID-19 related products, the purchase of the Zocoba by government, that was 100 billion. 10 billion more is necessary to achieve the target. And we will try our best in Korea and China so that we can achieve our target. Page seven.

This is the revenue forecast for prescription drugs in Japan. With regard to the revenue of this, as I have said, it is smoothly progressing. With regard to influenza family, in the second quarter, there were some returns. So it was minus 3.8 billion. But as it says in the notes, there was a revenue increase of 1.5 billion from April to December. The next page, this is the results and progress in Q3 of FY 2022. What I would like to tell you is that we are finally able to deliver the COBA to our patients. Up to now, to COVID-19, we have conducted much investment, and at least this is contributing to our revenue and profit. And also with regard to vaccine S268019, we are conducting the submission for the approval and we have been able to attain a great progress. With regard to the settlement in the cost and also SGA in the COVID-19 related financial forecast, there were a lot of uncertainties. Therefore, we had a very conservative forecast. However, we were able to exceed our forecast. And now I would like to explain the financial forecast for 2022. This is regarding the changes in earnings forecast. In the HIV business, we are doing well, and there is a royalty from the HIV, and therefore we are going to revise our forecast. zocoba's cost and also because of the volume increase of the manufacturing the cost ratio has increased or improved with regard to general and administrative expense in order to prioritize kobe 19 related business some of the originally planned growth investments will be shifted to the next fiscal year and also It is there is going to be a proactive investment and increase in R&D expense in order to cope with the R&D expenses. Aggressive investment in product development, including COVID-19 related projects. Page 11. Because of. there were uncertainties in the past. I said that there is going to be a revision in the forecast And because of the clarification of the zelkova and the HIV business situation, we are going to implement the second upward forecast revision. It seems like there is not much a difference in the forecast, but because of the zelkova business in Korea and China, STS 2030 update will be conducted and also the forecast will align with that forecast starting from April. And this is a forecast that we are quite sure that we would be able to attain. and therefore further increase in sales may be expected from overseas, a progress of the COBA, and reflecting this situation, the second upward forecast revision will be conducted.