Climate Change Data

KYORIN Pharmaceutical Co., Ltd.

Climate Impact & Sustainability Data (2015-04-01 to 2016-03-31, 2016-04-01 to 2017-03-31, 2019-04 to 2020-03, 2023-04 to 2024-03)

Reporting Period: 2015-04-01 to 2016-03-31

Environmental Metrics

Total Carbon Emissions:19,840 tCO2e/year
Scope 1 Emissions:Not disclosed
Scope 2 Emissions:Not disclosed
Scope 3 Emissions:Not disclosed
Renewable Energy Share:Not disclosed
Total Energy Consumption:Not disclosed
Water Consumption:Not disclosed
Waste Generated:638 tons/year
Carbon Intensity:Not disclosed

ESG Focus Areas

  • Environmental
  • Social
  • Governance

Environmental Achievements

  • Reduced CO2 emissions (target was 15,824 tons, actual was 19,840 tons)
  • Reduced waste volume (638 tons)
  • Improved recycling rate (50.8%)
  • Reduced amount landfilled (21 tons)
  • Started full-scale operation of the WATARASE Research Center, an environmentally friendly R&D facility

Social Achievements

  • Launched the environmental hygiene business
  • Launched new product shi zu me essence gel
  • Launched COOL ONE Cough Medicine GX Syrup
  • Continued support for the Sunflower Project
  • Donated ¥10 million for Kumamoto Earthquake relief
  • Implemented the Kyorin Smile Program
  • Raised awareness of the Maternity Mark

Governance Achievements

  • Appointed three outside directors to strengthen supervision and enhance transparency
  • Established a Group-wide compliance and risk management system
  • Established Guidelines for Transparency of Relationships between Corporate Activities and Medical Institutions, etc., and the Guidelines on Transparency of Relationships between Corporate Activities and Patient Groups

Climate Goals & Targets

Long-term Goals:
  • HOPE100 (FY2010–FY2023): By 2023, be recognized within and outside the Group as a company that supports sound and healthy lifestyles
Medium-term Goals:
  • Increase the percentage of the new drugs group to 50% or higher by fiscal 2019
  • Average annual growth rate of sales 3% or more
  • Consolidated operating income margin of 15% or more
Short-term Goals:
  • Launch three components and four new products by fiscal 2019

Environmental Challenges

  • Drug pricing revisions
  • Dramatic contraction of the market for longstanding pharmaceutical products due to the promotion of the development of generic drugs
  • Expiration of a patent for a key product, Kipres
  • Changes in the ethical pharmaceuticals market structure
  • Weak consumer spending
  • Increased competition from other companies
Mitigation Strategies
  • Developed four priority strategies and two development strategies under the new medium-term business plan HOPE100—Stage 2—
  • Rebuilding of the Group production system to ensure a stable, low-cost supply of high-quality products
  • Reorganized team areas based on the secondary medical districts
  • Strengthening of human resources development
  • Established a proactive joint development model in the generic drugs business

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement
  • Not disclosed

Climate-Related Risks & Opportunities

Physical Risks
  • Not disclosed
Transition Risks
  • Not disclosed
Opportunities
  • Not disclosed

Reporting Standards

Frameworks Used: International Integrated Reporting Council

Certifications: ISO 14001, OHSAS 18001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

  • Not disclosed

Not disclosed

Sustainable Products & Innovation

  • Not disclosed

Awards & Recognition

  • Not disclosed

Reporting Period: 2016-04-01 to 2017-03-31

Environmental Metrics

Total Carbon Emissions:18,192 tCO2e/year
Scope 1 Emissions:Not disclosed
Scope 2 Emissions:Not disclosed
Scope 3 Emissions:Not disclosed
Renewable Energy Share:Not disclosed
Total Energy Consumption:Not disclosed
Water Consumption:121,500 m3/year
Waste Generated:434 tons/year
Carbon Intensity:Not disclosed

ESG Focus Areas

  • Environmental
  • Social
  • Governance

Environmental Achievements

  • Reduced CO2 emissions to 18,192 tons in fiscal 2016 from 19,840 tons in fiscal 2015.
  • Reduced electric power consumption by 98,276 kWh and CO2 emissions by roughly 50 tons compared with conventional heat pumps at the WATARASE Research Center.
  • All 940 sales force vehicles met the standard for low emission (75% reduction from 2005 standard), with 460 being hybrid vehicles.

Social Achievements

  • Launched Desalex Tablets 5 mg, a treatment for allergic diseases.
  • Launched Montelukast Tablets “KM”, an authorized generic version of Kipres.
  • Responded to over 20,000 inquiries at the Drug Information Center.
  • Supported health-related events and provided first-aid training for employees.

Governance Achievements

  • Appointed three outside directors to strengthen supervision and transparency.
  • Established a Compliance Committee and Risk Management Committee.
  • Implemented a Group-wide compliance and risk management system.

Climate Goals & Targets

Long-term Goals:
  • Achieve long-term vision HOPE100 by 2023 (100th anniversary).
Medium-term Goals:
  • Achieve average annual growth rate of consolidated net sales of 3% or more and consolidated operating income margin of 15% or more by fiscal 2019.
  • Launch four new drugs by fiscal 2019.
Short-term Goals:
  • Reduce CO2 emissions by 2% annually until fiscal 2019.

Environmental Challenges

  • Sluggish market conditions in the ethical drug industry due to government policies promoting generic drugs and drug price revisions.
  • Expiration of a patent on a key product (Kipres).
  • Uncertainty in the healthcare business market.
  • Decreased sales of new ethical drugs due to drug price revisions and decreased prescription volumes.
Mitigation Strategies
  • Formulated and implemented the medium-term business plan HOPE100–Stage 2– to achieve continuous growth.
  • Developed a business model that enables continuous growth by overcoming the drop in new drug sales and developing core businesses in the healthcare sector.
  • Established a new manufacturing subsidiary to consolidate manufacturing functions and reduce costs.
  • Actively promoted alliances with external partners in Japan and overseas to expand the product pipeline.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement
  • Consolidation of manufacturing functions to ensure efficient manufacturing and stable supply.

Climate-Related Risks & Opportunities

Physical Risks
  • Not disclosed
Transition Risks
  • Not disclosed
Opportunities
  • Not disclosed

Reporting Standards

Frameworks Used: International Integrated Reporting Council framework

Certifications: ISO 14001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

  • Not disclosed

Not disclosed

Sustainable Products & Innovation

  • Not disclosed

Awards & Recognition

  • Honorable mention for the Kanto chapter of the Japanese Association of Building Mechanical and Electrical Engineers’ carbon neutral prize for ReHP technology.

Reporting Period: 2019-04 to 2020-03

Environmental Metrics

Total Carbon Emissions:27,477 tCO2e/year
Scope 1 Emissions:Not disclosed
Scope 2 Emissions:Not disclosed
Scope 3 Emissions:Not disclosed
Renewable Energy Share:Not disclosed
Total Energy Consumption:33,735 thousand kWh/year
Water Consumption:239,900 m3/year
Waste Generated:727 tons/year
Carbon Intensity:Not disclosed

ESG Focus Areas

  • Environment
  • Social
  • Governance

Environmental Achievements

  • Reduced CO2 emissions by at least 4% from the level of fiscal 2015 by fiscal 2019.
  • Reduced electric power consumption by 66,500 kWh and CO2 emissions by roughly 31 tons compared with conventional heat pumps for air conditioning and heating, for approximately 32% in energy savings.

Social Achievements

  • Launched Health Challenge Program in 2017 to promote employees’ health and contribute to local communities.
  • Provided relief goods to areas affected by Typhoon Hagibis in 2019 and heavy rains in western Japan in 2018.
  • Supported the Sunflower Project since 2011, bringing smiles and cheer to regions affected by the Great East Japan Earthquake.

Governance Achievements

  • Appointed three outside directors to further strengthen the supervision of the business execution of directors.
  • Established a Groupwide compliance and risk management system administered by the Compliance Committee and Risk Management Committee.
  • Established the Guidelines for Transparency of Relationships between Corporate Activities and Medical Institutions, etc., and the Guidelines on Transparency of Relationships between Corporate Activities and Patient Groups.

Climate Goals & Targets

Long-term Goals:
  • By 2023, be recognized both within and outside as a company that supports sound and healthy lifestyles (HOPE100 long-term vision).
Medium-term Goals:
  • Achieve a CAGR of at least 5% in consolidated net sales; achieve consolidated operating income before the deduction of R&D expenses of at least 20% of net sales.
Short-term Goals:
  • Reduce CO2 emissions from the level of fiscal 2019 by a further average 1.5% annually by fiscal 2023.

Environmental Challenges

  • Difficult market environment due to government measures to contain costs for medical treatment and drugs, higher difficulty in new drug creation, and changes in information provision activities.
  • Decreased domestic sales of new drugs due to lower sales of long-listed products and a delay in restarting supplies of Desalex.
  • Increased competition from peer products and entry of generic drugs after patent expiration of original drugs.
Mitigation Strategies
  • Formulated the new HOPE100–Stage 3– medium-term business plan to pursue originality and achieve a growth trend.
  • Consolidated the Group’s manufacturing functions to enhance cost reductions and create a competitive Group manufacturing structure.
  • Strengthened drug discovery capabilities through collaboration with the WATARASE Research Center and ActivX Biosciences, and open innovation.

Supply Chain Management

Supplier Audits: On-site supplier investigations are conducted when selecting new suppliers and regularly for existing suppliers.

Responsible Procurement
  • Confirming legal and regulatory compliance, labor safety, and environmental protection measures in suppliers.

Climate-Related Risks & Opportunities

Physical Risks
  • Not disclosed
Transition Risks
  • Not disclosed
Opportunities
  • Not disclosed

Reporting Standards

Frameworks Used: International Integrated Reporting Council framework

Certifications: ISO 14001 (KYORIN Pharmaceutical Group Facilities Co., Ltd. plants)

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

  • Not disclosed

The Kyorin Group has incorporated the SDGs into its business practices and efforts to co-exist with society.

Sustainable Products & Innovation

  • Not disclosed

Awards & Recognition

  • Honorable mention in the Kanto chapter of the Japanese Association of Building Mechanical and Electrical Engineers’ carbon neutral prize category (ReHP technology); Grand Prize in the Kanto Region Energy Saving Committee’s 2019 Chairman’s Awards (energy conservation activities related to ReHP system).

Reporting Period: 2023-04 to 2024-03

Environmental Metrics

Total Carbon Emissions:25,005 tons/year (Scope 1+2)
Scope 1 Emissions:12,895 tCO2e/year
Scope 2 Emissions:12,110 tCO2e/year
Scope 3 Emissions:16,807 tCO2e/year
Total Energy Consumption:527,808 GJ/year
Water Consumption:219,000 m3/year
Waste Generated:834 tons/year

ESG Focus Areas

  • Environmental
  • Social
  • Governance

Environmental Achievements

  • Reduced CO2 emissions by 25.5% compared with the level of fiscal 2015 (Scope 1 + Scope 2)

Social Achievements

  • Engagement survey’s “job satisfaction” score: 4.5
  • Percentage of female managers: 8.5%
  • Percentage of male employees taking childcare leave: 38.6%
  • Health examination participation rate: 100%
  • Stress check examination participation rate: 97.5%

Governance Achievements

  • Appropriate response to Corporate Governance Code
  • High-quality engagement with investors

Climate Goals & Targets

Long-term Goals:
  • Carbon neutrality by 2050
Medium-term Goals:
  • Achieve carbon neutrality by 2050, with an interim target of a 46% reduction in CO2 emissions by fiscal 2030 (from the fiscal 2015 level)
Short-term Goals:
  • Increase ratio of new drugs to at least 50% by fiscal 2025
  • Achieve operating profit before deduction of R&D expenses of at least 16% by fiscal 2025
  • Reduce CO2 emissions by at least 20% compared with the level of fiscal 2015 by fiscal 2025
  • Have at least 50% of eligible male employees take their childcare leave by fiscal 2025
  • Have at least 10% of management positions filled by women by 2030

Environmental Challenges

  • Annual NHI drug price revisions
  • High prices for energy resources and raw materials
  • Foreign exchange effects from the yen’s depreciation
  • Unstable supplies of generic drugs stemming from quality issues at some companies
  • Low price-book value ratio (PBR) below 1x
Mitigation Strategies
  • Increase capital efficiency through investment for growth and shareholder returns
  • Maintain a stable dividend
  • Increase operational efficiency and reduce costs
  • Strengthen product supply capacity with the new Takaoka Plant
  • Improve profit structure and build a low-cost structure
  • Proactively investing for growth to achieve targets of the medium-term business plan

Supply Chain Management

Responsible Procurement
  • Sustainable procurement initiatives
  • On-site investigations of suppliers

Climate-Related Risks & Opportunities

Physical Risks
  • Localized heavy rains, large typhoons, etc.
  • Sea levels rising
Transition Risks
  • Introduction of an environmental (carbon) tax
  • Changes in procurement/operational costs
  • Assessment from investors
Opportunities
  • Increases in infectious disease from rising temperatures

Reporting Standards

Frameworks Used: IFRS Foundation’s international integrated reporting framework, GRI sustainability reporting standards, ISO 26000, Ministry of Economy, Trade and Industry’s Guidance for Collaborative Value Creation, Ministry of the Environment’s Environmental Reporting Guidelines

Certifications: ISO 14001, ISO 45001

Awards & Recognition

  • Kurumin Certification