Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Industrial Safety and Hygiene
• Compliance
• Community Engagement
• Employee Wellbeing

Environmental Achievements

• Reduced CO2 emissions from factories and research laboratories (specific figures provided in a graph, but not exact numbers in the text)
• Reduced waste volume and promoted recycling
• Managed chemical substances in accordance with PRTR Law
• Implemented measures to prevent atmospheric, water, and ground pollution
• Recycled paper and promoted paperless office

Social Achievements

• Launched Kyorin Smile Program, including employee blood donation, local beautification, and fundraising for UNICEF
• Supported sporting events for children
• Held community events like cherry blossom viewing and summer parties
• Reduced work accident frequency and severity below industry average; no fatal accidents

Governance Achievements

• Established a compliance framework including Kyorin Holdings Corporate Charter and Compliance Guidelines
• Established Compliance Committee and Risk Management Committee
• Implemented measures to prevent and manage risks, including those related to anti-social forces
• Implemented internal control system in accordance with the Corporation Law
• Established an Internal Audit Office for independent assessment of internal controls

Climate Goals & Targets

Environmental Challenges

• Increasing healthcare costs in Japan leading to government measures to contain costs (price reductions, generic drug promotion)
• Increased competition in the skincare market
• Economic downturn impacting consumer spending
• Increase in vehicle accidents among employees

Mitigation Strategies

• Implemented cost control measures and focused on maximizing penetration of core products
• Focused on high value-added products and repeat customers in skincare business
• Implemented various accident-prevention measures (physical and systematic)

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environmental
• Industrial Safety and Hygiene
• Social Contributions
• Compliance

Environmental Achievements

• Reduced CO2 emissions from factories and research laboratories (specific figures provided in a graph, but not explicitly stated in text)
• Reduced waste volume and promoted recycling
• Managed chemical substances covered by the PRTR Law
• Implemented measures to prevent atmospheric, water, and noise pollution

Social Achievements

• Launched Flutiform, a combination drug for asthma treatment
• Launched PENTASA Suppositories 1g, a treatment for ulcerative colitis
• Implemented the Kyorin Smile Program, including employee donations to UNICEF and JOICFP
• Participated in the Sunflower Project to support recovery from the Great East Japan Earthquake
• Supported sporting events such as the Shimotsuke Soccer Workshops

Governance Achievements

• Established a Group-wide compliance and risk management system
• Appointed compliance and risk management promotion officers at each Kyorin Group company
• Established the Compliance Committee and Risk Management Committee
• Appointed three outside directors to enhance management transparency and monitoring functions
• Utilized a corporate auditor system with two statutory corporate auditors and three outside corporate auditors

Climate Goals & Targets

Environmental Challenges

• Sluggish market growth in the pharmaceutical business due to measures to reduce drug costs
• Challenging environment in the consumer healthcare business
• Increased competition in the pharmaceutical industry
• NHI drug price revisions in Japan
• Potential side effects of new pharmaceuticals
• Slowdowns or delays in production due to technical or regulatory problems, natural disasters, and accidents
• Risk of pharmaceutical recalls
• Risk of ineffective intellectual property protection
• Potential lawsuits
• Exchange rate fluctuations
• Cancellation of tie-up agreements
• IT security and information management risks

Mitigation Strategies

• Implementing the MC strategy (Multi-Core) to mitigate risks in the pharmaceutical business and build a solid business portfolio
• Implementing the PC Model (Pharma Complex) for multi-faceted development of new drugs, original drugs, and generic drugs
• Advancing in-house drug discovery, development of in-licensing opportunities, and Life Cycle Management (LCM) of existing drugs
• Strengthening collaboration between Group subsidiaries
• Promoting proactive joint development and contract manufacturing of generic drugs
• Establishing a production infrastructure that supplies high-quality products in a stable manner at low cost
• Implementing Supply Chain Management (SCM) frameworks
• Promoting the FC strategy (Franchise Customer) to build relationships of trust with doctors
• Implementing various accident-prevention measures
• Regularly reviewing the fair value and issuers’ financial condition of investments
• Preparing and updating the cash management plan periodically

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced CO2 emissions from factories and research laboratories (specific figures provided in the report, showing a decrease year-on-year)
• Reduced waste volume (specific figures provided in the report, showing a decrease year-on-year)

Social Achievements

• Achieved zero days off due to work accidents
• Promoted social contribution activities (Kyorin Smile Program) including donations to UNICEF and used stamp collection

Governance Achievements

• Appointed three outside directors to strengthen supervision and enhance transparency
• Established a Group-wide compliance and risk management system

Climate Goals & Targets

Environmental Challenges

• Tough business climate due to drug pricing revisions and sluggish growth in the ethical pharmaceuticals market
• Decreased demand in consumer healthcare business due to consumption tax increase and moderate consumer spending
• Increased cost of sales ratio due to drug price revisions and change in product sales composition

Mitigation Strategies

• Reconstruction of sales strategies for the medium and long term
• Promoting the Group production model and challenging targets for generic drugs
• Accelerating growth in the RUBYSTA business and expanding product lineups in the environmental hygiene business
• Reforming drug discovery systems and augmenting the pipeline with the new WATARASE Research Center

Supply Chain Management

Responsible Procurement

• Securing second and third supply sources and alternate transport routes

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: International Integrated Reporting Council framework

Certifications: ISO 14001 (mentioned in the report, but year of certification is not specified), OHSAS 18001 (mentioned in the report, but year of certification is not specified)

Sustainable Products & Innovation

• RUBYSTA (multi-purpose disinfectant cleaner)

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced CO2 emissions (target was 25% reduction from 2009 levels by 2015, actual reduction was less than target)
• Started full-scale operation of the WATARASE Research Center, an environmentally friendly R&D facility

Social Achievements

• Launched the Kyorin Smile Program, an employee participation program aimed at creating “a society that smiles.” Initiatives included charity donations, collecting used stamps and plastic bottle caps, blood drives, and distributing eco-bags.
• Introduced programs to create an environment that facilitates balancing work with family (childcare leave, shortened work hours, and maternity/paternity leave).

Governance Achievements

• Appointed three outside directors to further strengthen the supervision of the business execution of directors, and to further enhance the transparency and fairness of management.
• Established a Group-wide compliance and risk management system administered by the Compliance Committee and Risk Management Committee.

Climate Goals & Targets

Environmental Challenges

• Drug pricing revisions creating a tough business climate.
• Expiration of patents for key products (e.g., Kipres).
• Increased competition in the pharmaceutical industry.
• Slowdowns or delays in production due to technical or regulatory problems, natural disasters, and accidents.
• Potential for pharmaceutical recalls.
• Risk of ineffective intellectual property protection.
• Potential for lawsuits.
• Exchange rate fluctuations.
• Cancellation of tie-up agreements.
• IT security and information management risks.

Mitigation Strategies

• Rebuilding business strategy to address changes in the operating environment.
• Implementing the new medium-term business plan HOPE100—Stage 2—.
• Developing a pharmaceutical business model with an ethical drugs business that can generate continuous growth.
• Pursuing strategies for concentration and development in the healthcare business.
• Strengthening production activities and supply chain management.
• Promoting Kyorin supply chain management (SCM).
• Reorganizing and optimizing the Group’s production system.
• Building a system for more efficient production and greater supply stability.
• Actively forming alliances and promoting strengthening of the development pipeline.
• Establishing a strong, cohesive production organization for the overall Group.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: International Integrated Reporting Council framework

Certifications: OHSAS 18001, ISO 14001

Sustainable Products & Innovation

• RUBYSTA (multi-purpose disinfectant cleaner)
• Detergent Milton

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

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

Social Achievements

• Launched Desalex, a treatment for allergic diseases.
• Opened the “Drug Information Center” helpline, responding to over 20,000 inquiries in fiscal 2016.
• Implemented the Kyorin Smile Program, including raising awareness of the Maternity Mark.

Governance Achievements

• Appointed three outside directors to strengthen supervision of business execution and enhance management transparency.
• Established a Group-wide compliance and risk management system.
• Established a voluntary Committee on Remuneration and Nominations.

Climate Goals & Targets

Environmental Challenges

• Sluggish market conditions in the ethical drugs business due to government policies promoting generic drugs and drug price revisions.
• Expiration of a patent on a key product.
• Uncertain market for the healthcare business with flat consumer spending.

Mitigation Strategies

• Formulated and implemented the medium-term business plan HOPE100–Stage 2– to achieve continuous growth.
• Worked to overcome the drop in new drug sales from patent expiration by focusing on generic drugs and new product launches.
• Developed core businesses in the healthcare sector by concentrating on environmental hygiene and over-the-counter drugs.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: International Integrated Reporting Council framework

Certifications: ISO 14001 (KYORIN Pharmaceutical Co., Ltd. plants and research laboratories)

Awards & Recognition

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

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced CO2 emissions to 16,978 tons in fiscal 2017 from 17,828 tons (target).
• Reduced total waste to 400 tons in fiscal 2017 from 434 tons (target).
• Improved recycling rate to 45.0% in fiscal 2017 from 43.3% (target).
• All 936 sales force vehicles met low emission standards (75% reduction from 2005 standard), with 614 being hybrid vehicles.

Social Achievements

• Launched Health Challenge program to promote employee health and contribute to local communities.
• Maintained a zero workplace fatality rate since founding.
• Work accident rate and severity substantially below industry averages.
• Provided mental health education to managers and employees.
• Supported employees' childcare and nursing care needs exceeding legal standards.

Governance Achievements

• Appointed three outside directors and three outside corporate auditors to strengthen supervision and transparency.
• Established a Group-wide compliance and risk management system.
• Established a voluntary Committee on Remuneration and Nominations.

Climate Goals & Targets

Environmental Challenges

• Challenging business environment for ethical drugs due to efforts to increase efficiency in medical expenditures and rein in drug prices.
• Expiry of patent on a main product.
• Increased competition in the pharmaceutical industry.
• Potential for NHI drug price revisions or changes to the NHI system.
• Risk of unknown side effects in new pharmaceuticals.
• Potential for slowdowns or delays in production.
• Risk of pharmaceutical recalls.
• Risk of ineffective intellectual property protection.
• Potential for lawsuits.
• Vulnerability to exchange rate fluctuations.
• Risk of cancellations of tie-up agreements.
• Vulnerability to IT security and information management disruptions.

Mitigation Strategies

• Refined pharmaceutical business model to facilitate continuous growth.
• Created new core businesses and searched for next candidates for a new core business to drive the healthcare business.
• Consolidated and optimized overall Group manufacturing functions.
• Established KYORIN Pharmaceutical Group Facilities Co., Ltd. to enhance cost reductions.
• Implemented supply chain management (SCM) to manage the entire process from procurement to supply.
• Proactively pursued lower costs and accelerated growth at peripheral businesses.
• Strengthened drug discovery capabilities through proprietary drug discovery and open innovation.
• Increased the ratio of the new drugs group.
• Expanded the healthcare business.
• Proactively addressed ESG issues.

Supply Chain Management

Responsible Procurement

• Comprehensive addressing of the Group’s entire supply chain from procurement to supply.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: International Integrated Reporting Council framework

Certifications: ISO 14001

Awards & Recognition

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

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Rapid changes in the domestic pharmaceutical market structure due to healthcare cost efficiency measures and drug price suppression policies.
• Decreased sales of new drugs (domestic) due to the April 2018 drug price revision.

Mitigation Strategies

• Implementing a speedy transformation strategy to strengthen the growth foundation and improve profitability.
• Focusing on cost reduction in sales and general administrative expenses.
• Consolidating production functions into Kyorin Pharmaceutical Group Factory Co., Ltd. to optimize overall in-house production and reduce costs.
• Strengthening business growth in environmental hygiene and accelerating growth in peripheral businesses.

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: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Compliance and risk management
• Human resource management
• Environmental management
• Social contribution activities

Environmental Achievements

• Reduced CO2 emissions to 28,823 tons in fiscal 2018 from 30,444 tons in fiscal 2015 (a reduction of approximately 5.3%)
• Achieved 65.2% hybrid vehicle usage among sales force vehicles.
• Reduced electric power consumption by 81,071 kWh and CO2 emissions by roughly 41 tons compared with conventional heat pumps at WATARASE Research Center.

Social Achievements

• Launched Health Challenge program to promote employee health and contribute to local communities.
• Provided first-aid training to approximately 750 medical representatives.
• Supported the Sunflower Project for Great East Japan Earthquake recovery.
• Responded to more than 20,000 inquiries at the Drug Information Center helpline.
• Recognized as a “2019 Certified Health & Productivity Management Outstanding Organization – White 500” by METI and the Nippon Kenko Kaigi.

Governance Achievements

• Strengthened corporate governance by appointing three outside directors and three outside corporate auditors.
• Established a Group-wide compliance and risk management system.
• Implemented swift decision-making and strengthened oversight functions for appropriate management.

Climate Goals & Targets

Environmental Challenges

• Drastic reform of the drug pricing system in Japan.
• Patent expiry for Kipres, one of their main products.
• Development delays for KRP-AM1977X.
• Temporary suspension of supplies of Desalex.
• Increased competition in the pharmaceutical industry.
• Potential side effects of new pharmaceuticals.
• Risks related to intellectual property protection.
• Potential lawsuits.
• Exchange rate fluctuations.
• Cancellations of tie-up agreements.
• IT security and information management risks.

Mitigation Strategies

• Implementing speedy transformation and creating a new path for growth.
• Consolidating and optimizing overall Group manufacturing functions.
• Pursuing low-cost operations.
• Strengthening human resource development and corporate governance.
• Proactive outside collaboration and acquisition of new technologies.
• Multilayered program development in drug discovery.
• Accelerating growth and increasing the earnings strength of peripheral businesses.
• Improving employee satisfaction.
• Implementing supply chain management (SCM).
• Strengthening risk management initiatives across the entire Group.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: International Integrated Reporting Council framework

Certifications: ISO 14001 (Noshiro and Inami Plants)

Awards & Recognition

• Kanto chapter of the Japanese Association of Building Mechanical and Electrical Engineers’ carbon neutral prize (Honorable Mention)

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced CO2 emissions by at least 4% from the level of fiscal 2015 by fiscal 2019 (achieved target of 27,477 tons)
• Introduced hybrid cars to reduce CO2 emissions (64% of sales force vehicles are hybrid)

Social Achievements

• Launched Health Challenge Program to promote employee health and contribute to local communities
• Supported employee-led social activities
• Provided relief goods to areas affected by natural disasters

Governance Achievements

• Appointed three outside directors to strengthen supervision of business execution
• Established a Groupwide compliance and risk management system
• Published information about funding to medical institutions and patient groups on website

Climate Goals & Targets

Environmental Challenges

• Decreased domestic sales of new drugs due to government measures to contain drug costs and promote generics
• Increased difficulty in new drug creation
• Changes in information provision activities
• Depressed earnings from frequent NHI drug price revisions
• Increased cost of meeting expectations for higher levels of quality
• Delays and interruptions in receiving raw materials from vendors

Mitigation Strategies

• Consolidated three internal manufacturing functions for overall optimization
• Strengthened drug discovery capabilities through proprietary drug discovery and open innovation
• Expanded product pipeline through in-licensing
• Improved efficiency of generic drugs sales structure
• Secured multiple suppliers of essential raw materials
• Implemented supply chain management to manage the entire process from procurement to supply

Supply Chain Management

Responsible Procurement

• On-site supplier investigations to confirm measures for legal and regulatory compliance, labor safety, and environmental protection

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: International Integrated Reporting Council framework

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

Awards & Recognition

• Honorable mention in Kanto chapter of Japanese Association of Building Mechanical and Electrical Engineers’ carbon neutral prize (ReHP technology)
• Grand Prize in Kanto Region Energy Saving Committee’s 2019 Chairman’s Awards (ReHP technology)

Environmental Metrics

ESG Focus Areas

• Health
• Innovation
• Sustainability
• Governance
• Employee Well-being

Environmental Achievements

• Not disclosed

Social Achievements

• Launched GeneSoC®, a microfluidic gene quantification device for rapid COVID-19 detection.
• Developed and released two dedicated COVID-19 detection reagents.
• Continued efforts in infection control and AMR (antimicrobial resistance) countermeasures.

Governance Achievements

• Appointed independent outside directors to constitute one-third of the total number of directors to enhance the effectiveness of the board of directors.

Climate Goals & Targets

Environmental Challenges

• Decreased revenue and profit due to drug price revisions and the COVID-19 pandemic.
• Reduced sales of new drugs due to restrictions on MR activities.
• Shrinking market for major products in the key medical field due to the prolonged COVID-19 pandemic.
• Impact of drug price revisions on long-term listed products and generic drugs.

Mitigation Strategies

• Cost reduction initiatives.
• Active promotion using digital tools for medical institutions under restrictions.
• Integration of real-world meetings and digital tools in medical sales.
• Accelerated development of new drugs and expansion of the development pipeline.
• Strengthening of drug discovery capabilities.
• Improvement of cost competitiveness.
• Expansion of overseas revenue.

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: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• GeneSoC®, COVID-19 detection reagents

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Switched to 100% renewable energy at headquarters in September 2021.
• Reduced CO2 emissions to 25,256 tons in 2021 (from 27,477 tons in 2019), exceeding the target of 1.5% annual reduction.

Social Achievements

• Launched a job return system for employees who have left the company due to life events.
• Achieved 100% maternity leave rate for women and 5.9% for men in 2021.
• Obtained Kurumin certification in 2021 for support of childcare.

Governance Achievements

• Established a compensation and nomination committee.
• Appointed three outside directors and three outside auditors.

Climate Goals & Targets

Environmental Challenges

• Price revisions impacting profitability.
• Supply chain disruptions due to quality issues in some generic drug companies.
• Impact of the COVID-19 pandemic on market conditions.

Mitigation Strategies

• Implemented cost reduction measures.
• Strengthened quality control and supply chain management.
• Developed alternative sourcing strategies and diversified supply chains.
• Increased production capacity.

Supply Chain Management

Responsible Procurement

• Compliance with laws and regulations
• Emphasis on environmentally conscious practices

Climate-Related Risks & Opportunities

Physical Risks

• Abnormal weather (typhoons, heavy rain)
• Changes in weather patterns, temperature rise, sea-level rise

Transition Risks

• Introduction of environmental taxes (carbon tax)
• Changes in procurement and operating costs due to the shift to a decarbonized society

Opportunities

• Increased demand for products related to infectious diseases due to temperature rise.

Reporting Standards

Frameworks Used: IIRC International Framework

Certifications: ISO 14001, ISO 45001

UN Sustainable Development Goals

• Goal 3: Good Health and Well-being
• Goal 8: Decent Work and Economic Growth
• Goal 9: Industry, Innovation and Infrastructure
• Goal 13: Climate Action

Kyorin's activities contribute to these SDGs through its pharmaceutical business, sustainability initiatives, and community engagement.

Awards & Recognition

• Kurumin certification (2021)
• Health Management Excellent Company Award (2019-2022)