Shionogi & Co Ltd

This is Kyokawa of the Corporate Communication Department of Shionogi. Thank you very much for gathering today. From now, we would like to begin the presentation of the third quarter of fiscal 2024 financial results from Shionogi and Company Limited. First of all, let me introduce the people who are here with us. First of all, Toshinobu Iwasaki, Senior Executive Officer, Healthcare Business Supervisory Unit. Next, Koji Hanasaki, Senior Executive Officer of Supply Supervisory Unit. Next is Kazuhiro Hatanaka, Senior Executive Officer, Corporate Supervisory Unit and Corporate Strategy Division. And next is Takeki Uehara, Corporate Officer of Drug Development and Regulatory Science Division. Uehara-san is joining from different venue online. And we have Masako Kudo from the Finance and Accounting Department.

Let me briefly explain the flow of today's meeting.

First of all, we would like to give you the overview of the Q3 FY2024 financial results and transformation of Chinese business and pipeline progress will be explained, and we will have Q&A session after that. We will have a simultaneous interpretation service for this meeting, so if you are going to use the translation, Please press the globe icon and select the language you wish to listen to. Now let us begin. Ms. Kudo, please. Yes, I would like to give you the overview of the Q3 FY2024 financial results. First, on page 4, this is the highlight of financial results. Sales revenue was 333.6 billion yen, down 3.2 billion yen from last year's 336.8 billion yen. However, excluding the one-time payment of 25 billion yen associated with the license transfer of an ADHD drug that was recorded in the first quarter of last year, revenue increased by 21.8 billion yen, due to the significant growth of royalty income and overseas business, as well as the stabilization of our domestic business. In addition, for the same reason, operating profit increased by 15.5 billion yen, excluding the one-time payment. Next, regarding the consolidated financial results, the results for the third quarter of fiscal year 2024 were revenue of 333.6 billion yen, operating profit of 129.2 billion yen, profit before tax of 155.9 billion yen, and profit attributable to owners of parent of 133.8 billion yen. Revenue and each profit item are almost as expected and we are making solid progress against the full year forecast. This is due to the strong growth of the HIV business and overseas business as well as the stabilization of the infectious disease business in Japan. Although there is the impact of the one-time payment recorded last year, revenue was down ¥3.2 billion year-on-year, and operating profit was down ¥9.5 billion year-on-year, which is an improvement from the second quarter settlement, and we are making solid progress toward increasing revenue and profit for the full year. In addition, profit attributable to owners of the parent It increased by 6.6 billion yen while on wide. Regarding foreign exchange, the yen weakened more than expected, resulting in exchange gains on each currency. Next, on page six, we have the consolidated statement of profit or loss. As I mentioned earlier, revenue started off at minus 25 billion yen due to the impact of the temporary factors that occurred last year. but due to the strong growth of the HIV business and overseas business, it ended up exceeding expectations. On the other hand, the cost of goods increased by 8.6 percent year-on-year, but this was due to a change in the product mix due to the growth of the overseas business, and the full-year forecast was roughly in line with expectations. Research and development expenses increased 9.4% year on year due to the continued aggressive investment in high priority development pipelines and the impact of foreign exchange rates due to the expansion of clinical trials globally. Although overall expense, including the selling general and administrative expenses and R&D expenses, The overall expense appears to be poor, but we are implementing cost management in line with sales revenue in order to achieve the full-year operating profit forecast. If sales revenue remains strong, we expect to use expenses in the fourth quarter in line with the full-year forecast. In addition, the large increase in other income and expenses year on year is due to the implementation of a special early retirement program in the second quarter of last year. Looking at the overall picture, I believe you can see that our business is progressing very smoothly. Next on page seven, we will discuss the revenue by segment. Regarding domestic prescription drug, Sales was down 38.1% year-on-year and down 23% year-on-year, excluding the one-time payment of 25 billion yen. In the second quarter, these figures were down 50.5% and 33.1%, respectively.