Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Conservation
• Human Resource Development
• Corporate Governance
• Community Engagement
• Supply Chain Management

Environmental Achievements

• Worked to reduce CO2 emissions and undertook initiatives centered on all-employee participatory awareness activities.
• Achieved an average CO2 emission intensity reduction rate of at least 1% relative to FY2012 emissions (goal set between FY2012 and FY2017).

Social Achievements

• Introduced a flex-time system to support work-life balance.
• Formulated new regulations for a system enabling employees to return to work after having resigned.
• Established an internal volunteer leave system.
• Made a baseball field available for use by a youth baseball team.
• Increased employment opportunities for people with disabilities (1.55% as of March 31, 2015).

Governance Achievements

• Reinforced corporate governance with the aim of boosting management transparency and efficiency.
• Divided management functions into decision-making and supervisory functions; and executive functions.
• Established an internal control system to ensure that operations throughout the Nippon Chemiphar Group are both appropriate and efficient.
• Formulated Risk Management Regulations for identifying, managing and responding to risks.

Climate Goals & Targets

Environmental Challenges

• Japanese market for generics is changing significantly due to a growing number of new companies entering the industry and changes in NHI price calculation method.
• Shrinking Japanese market due to population decrease and concerns about public finances.
• Need to curb increases in healthcare costs driven by a rising elderly population.

Mitigation Strategies

• Implementing a broad array of measures across all functions, from development to manufacturing and marketing, to maximize the benefits of market expansion.
• Setting up an overseas manufacturing facility in Vietnam (expected to commence operation by 2018).
• Expanding sales routes overseas, particularly in rapidly growing Asian markets.
• Establishing a joint venture production base in Vietnam (construction slated for completion in 2016, production to commence in 2018).

Supply Chain Management

Responsible Procurement

• Double-sourcing Active Pharmaceutical Ingredients (APIs)
• Strengthening inspections to secure optimal APIs suppliers in Japan and overseas

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Corporate Governance
• Community Engagement
• Environmental Sustainability
• Employee Well-being
• Supply Chain Management

Environmental Achievements

• Launched initiatives to conserve electricity and enhance environmental awareness through in-house training.
• Implemented recycling programs (e.g., collecting pet bottle caps, books, and postcards for donations to developing countries).

Social Achievements

• Established an internal volunteer leave system to encourage employee participation in social welfare initiatives.
• Supported people with disabilities through donations.
• Implemented measures to prevent harassment (sexual, power, and maternity harassment) and improve employee mental health (yearly stress checks, physician interviews).

Governance Achievements

• Reinforced corporate governance to boost management transparency and efficiency.
• Established a Risk Management Committee and individual committees to respond to compliance and information security risks.
• Implemented measures to prevent repeat offenses related to compliance incidents.

Climate Goals & Targets

Environmental Challenges

• Intensified competition in the Japanese generics market due to the rise of authorized generics and NHI drug price revisions.
• Shrinking domestic market due to Japan's falling birthrate, aging population, and public finance considerations.
• Impact of the novel coronavirus pandemic on social and economic activities.

Mitigation Strategies

• Fundamental reform of the generics business, including streamlining supply chains, optimizing SG&A expenses, and establishing an efficient sales system.
• Establishment of a subsidiary in Vietnam (Nippon Chemiphar Vietnam Co., Ltd.) to strengthen production capacity and reduce costs.
• Implementation of teleworking, suspension of business travel, and webinars to mitigate the impact of the pandemic.
• Ensuring the steady operation of production lines to prevent interruptions to the stable supply of pharmaceutical products.

Supply Chain Management

Responsible Procurement

• Diversifying active pharmaceutical ingredient procurement partners
• Stepping up inspections of local manufacturing facilities

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced CO2 emissions by 2.7% year on year (from 11,209 t-CO2 to 11,511 t-CO2)
• Established the Group Quality Assurance Management Department and formulated a common quality policy for the entire Group in April 2022

Social Achievements

• Launched DropScreen allergy diagnostic product
• Donated pharmaceuticals to Ukraine
• Established the Nippon Chemiphar Scholarship at the University of Medicine and Pharmacy in Ho Chi Minh City
• Implemented Papa Quota System requiring male employees with children under two to take childcare leave

Governance Achievements

• Formulated a Basic Sustainability Policy and formed a Sustainability Committee
• Separated decision-making and supervisory functions from business execution functions
• Established a set of risk management rules

Climate Goals & Targets

Environmental Challenges

• Industrywide challenges associated with the response to COVID-19 and demand from customers seeking alternative generic drug providers due to quality issues at other generic drug manufacturers
• Shortages of pharmaceutical products
• NHI drug price revisions
• Higher R&D expenses
• Growth in cost of sales ratio
• Soaring raw material and transportation costs

Mitigation Strategies

• Increasing manufacturing capacity through capital investment and by increasing staff numbers at factories in Japan and abroad
• Expanding production facilities, adding staff, and diversifying procurement sources for active pharmaceutical ingredients
• Transferring the manufacture of items produced in large volumes from Japan to the Vietnam factory
• Strengthening quality assurance systems

Supply Chain Management

Responsible Procurement

• Expanding the pool of API suppliers
• Double sourcing of active pharmaceutical ingredients

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• DropScreen

Awards & Recognition

• Certificate of appreciation from the Japanese Red Cross Society for blood donation contributions
• Awards from the city of Misato, Saitama Prefecture

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced CO2 emissions by 4.2% year-on-year in FY2023. Reduced general waste by 1.9% year-on-year in FY2023. Reduced industrial waste by 9.1% year-on-year in FY2023. Reduced raw materials by 12.6% year-on-year in FY2023. Reduced packaging materials by 12.1% year-on-year in FY2023.

Social Achievements

• 13.5% of managers were women in FY2023. Over 1,000 units of DropScreen installed in Japan by March 31, 2024. Established a scholarship at the University of Medicine and Pharmacy in Ho Chi Minh City. Launched a new internship program for students from the same university in 2023. Male rate of childcare leave taken at 116.7% (Nippon Chemiphar) and 100% (Nihon Pharmaceutical Industry).
• Implemented a Papa Quota System requiring male employees with children under two to take at least five days of childcare leave.

Governance Achievements

• Established a Sustainability Committee chaired by the President & CEO. At least one-third of the Board of Directors are outside directors. Established a Risk Management Committee and an Internal Auditing Division. Implemented a system for evaluating the effectiveness of the Board of Directors.

Climate Goals & Targets

Environmental Challenges

• Maturity of the generic drug market in Japan. Increased public skepticism of generic drug quality and supply stability. Repeated NHI drug price revisions. Rising raw material and energy costs. Sluggish allergy market due to lower-than-anticipated pollen.
• Ensuring stable supplies of generic drugs.
• Competition among pharmaceutical companies.

Mitigation Strategies

• Developing value-added generics and in-licensing new drugs. Reducing costs by manufacturing overseas (Vietnam). Strengthening quality assurance systems. Introducing a special repricing of unprofitable products. Investing in domestic factories and increasing workforce. Implementing two-shift and three-shift systems.
• Strengthening logistics systems, double-sourcing active pharmaceutical ingredients, expanding API supplier pool, capital investments, and increasing staff headcount.
• Improving overall development capabilities, launching products ahead of competitors, improving development accuracy through academic cooperation, maintaining reliable application data.

Supply Chain Management

Responsible Procurement

• Double-sourcing active pharmaceutical ingredients
• Expanding API suppliers

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS (former IIRC), UN SDGs, TCFD

UN Sustainable Development Goals

• Goal 3: Good Health and Well-being
• Goal 9: Industry, Innovation and Infrastructure
• Goal 10: Reduced Inequalities
• Goal 13: Climate Action

Nippon Chemiphar contributes to these goals through its pharmaceutical products, diagnostic tools, new drug development, and sustainability initiatives.

Sustainable Products & Innovation

• DropScreen allergy screening kit

Awards & Recognition

• Certificate of commendation from Misato City Fire Prevention and Safety Association (Soka office)
• Awards from Misato City for contributions to city development (Soka office)
• Letter of appreciation from Ibaraki Prefecture branch of the Japanese Red Cross Society (Tsukuba Factory)