President and CEO's
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President and CEO’s Message President and CEO’s Message Santen is making significant strides toward realizing its long-term strategic vision through 2020 of becoming a specialized pharmaceutical company with a global presence. By focusing our efforts on ophthalmology and related areas, we will develop scientific knowledge and organizational capabilities that are unique and original to Santen. We will use these unique capabilities to contribute to society. We kindly ask for the continued support of all our stakeholders. September 2014 Akira Kurokawa President and Chief Executive Officer 10 Fiscal 2013 Overview We posted record net sales. We expanded our presence further in both the Japanese and overseas markets, thanks to our focus on sales promotion activities for key products, including new products. Fiscal 2013, the fiscal year ended March 31, 2014, was the treatment for dry eye. We also met the primary endpoint of President and CEO’s Message and CEO’s President final year of the Fiscal 2011-2013 Medium-Term Manage- a Global Phase 3 study of DE-109 (sirolimus) for the ment Plan. During fiscal 2013, net sales rose 24.9% year on treatment of non-infectious uveitis of the posterior segment. year to a record ¥148.7 billion. This result reflected This study is being carried out at approximately 150 sites in significant sales growth in both the Japanese and overseas Europe, the U.S. and Asia. markets. Operating income was up 11.1% to ¥27.4 billion Furthermore, in May 2014, we entered into an agreement and net income rose 3.6% to ¥17.1 billion. with U.S.-based Merck & Co., Inc. to purchase Merck’s In the domestic prescription ophthalmic business, we ophthalmology products in Japan, Europe and Asia Pacific. saw steady growth in sales of key products such as our Through these initiatives, we intend to enhance our range of glaucoma and ocular hypertension treatments Tapros glaucoma and ocular hypertension treatment products, with (tafluprost) and Cosopt (dorzolamide hydrochloride/timolol the aim of improving patient’s quality of life (QOL). At the maleate), as well as our dry eye treatment Diquas same time, we are convinced that we can accelerate our (diquafosol sodium). Launched in Japan in November 2012, progress toward realizing our long-term strategic vision. the intravitreal VEGF inhibitor EYLEA (aflibercept [genetical 1. As of March 31, 2014 recombination]) continued to grow rapidly, contributing immensely to sales. The anti-allergy ophthalmic solution Enhancing Shareholder Returns Alesion (epinastine hydrochloride), which was launched in Santen has positioned the stable return of profits to Japan in November 2013, is steadily penetrating the shareholders as a key management priority. market. In the overseas business, Santen posted higher For fiscal 2013, we paid a full-year dividend of ¥100 per sales of the glaucoma and ocular hypertension treatment share, the same amount as for the previous fiscal year. This Taflotan (tafluprost, sold as Tapros in Japan), one of its resulted in a dividend payout ratio of 48.2%. Going forward, growth drivers. Taflotan is now available in more than 60 we remain committed to the stable return of profits to countries worldwide1. shareholders. At the same time, we will continue to retain Turning to R&D, under a new framework aimed at funds primarily for R&D investments, while adopting a strengthening global R&D capabilities, we are working to flexible stance that includes the acquisition of treasury stock. create highly competitive new products based on the medical needs of the world’s patients. In December 2013, we applied in Europe for marketing approval of Ikervis (generic name: ciclosporin, development name: Cyclokat), a Santen Pharmaceutical Co., Ltd. Annual Report 2014 11 Summary of the Fiscal 2011–2013 Medium-Term Management Plan By steadily executing our growth strategy based on Santen’s Values, we accelerated our progress toward realizing our long-term strategic vision. Santen positioned fiscal 2011 to fiscal 2013 as a period to S.A.S. of France (formerly Novagali Pharma S.A.S.). Building invest in growth. We steadily implemented a number of on the results of the previous medium-term management measures to bring our business strategies to fruition. plan, Santen intends to execute new business strategies Notably, we actively invested in R&D to accelerate the with the aim of becoming a specialized pharmaceutical creation of new products, enhance our competitiveness in company with a global presence. Europe and Asia, and spur growth in our business in Japan. With the aim of making an even greater contribution to patients worldwide, we put a global manufacturing system in FY2011-2013 Medium-Term Management Plan place while pursuing efficiency. We also made tremendous Financial Targets and Results progress on building a stronger organization and developing FY2013 Targets FY2013 Results human resources. Both of these initiatives will enable us to Net Sales realize our long-term strategic vision. Over ¥121billion ¥148.7billion Santen made a Company-wide effort to pursue business Operating Income Over ¥31billion ¥27.4billion activities aimed at achieving sustained growth. As a result, we delivered significantly higher net sales than our target in Net Income Over ¥20billion ¥17.1billion the previous medium-term management plan. On the other R&D Expenditures Around ¥15.5 billion ¥19.0 billion hand, operating income and net income were both below 1 target, mainly due to the impact of upfront investments ROE 10% 10.2 % primarily in R&D. This included the acquisition of Santen 1. Three-year average for FY2011-2013 Strategic Objectives and Results for Fiscal 2011-2013 Medium-Term Management Plan Strategic Objectives Major Achievements • Established a global clinical development system. Product Promote globally oriented research • Reinforced product pipeline through business Development and development. development and acquisitions. Obtain high domestic market share and achieve Domestic • Long-listed drugs ratio declined due to new growth through the promotion of new products 3 Operations product growth. and implementation of marketing strategies. Overseas Accelerate growth in both Asia and Europe • Accelerated sales growth in China. Operations by reinforcing marketing platforms. • Asia business turned to profitability. Establish a global product supply system • Executed measures to reduce manufacturing cost. Product 2 • Structural reforms were conducted in Europe in order Supply with our existing four plants , which enable us to meet emerging market needs. to enhance efficient global product supply system. Organization Develop talents and organizational • Implemented an organizational management system and capabilities to promote in line with business globalization. Talents “creation and innovation” on a global level. 2. Four plants: Noto and Shiga (both in Japan); Suzhou (China); and Tampere (Finland) 3. Tapros, Cosopt, Diquas, EYLEA, etc. 12 Santen Pharmaceutical Co., Ltd. Annual Report 2014 Formulation of the Fiscal 2014-2017 Medium-Term Management Plan We will further sharpen our competitiveness as a specialty company by achieving ongoing product launches, along with growth and improved profitability in Asia and Europe. Santen has formulated the Fiscal 2014-2017 Medium-Term Santen aims to achieve a compound annual growth rate Management Plan, with a view toward realizing its long-term (CAGR) of 8%. In addition, the Company will focus on human strategic vision through 2020 of becoming a specialized resources development and establishment of a solid organi- pharmaceutical company with a global presence. A set of zational structure aimed at achieving sustainable growth. strategic goals have been formulated in the new plan. Among By making a Company-wide effort to implement this such goals are the drastic reform of Santen’s research and medium-term strategy, Santen will ensure steady progress on development system to enable sustainable development of the five policies toward achieving its long-term strategic new products, accelerated business operations in the Asian vision. Santen has set the goal of becoming one of the top market that is expected to grow rapidly, business expansion three ophthalmic pharmaceutical companies in the world by and early improvement of earnings in Europe where Santen 2020, a goal the Company has prescribed under its long-term Message and CEO’s President has been solidifying its business foundation. In doing so, strategic vision. Long-Term Strategic Vision through 2020 To Become a Specialized Pharmaceutical Company with a Global Presence 5 Policies toward the Achievement of Our Long-Term Strategic Vision 1. Develop products that meet true customer needs swiftly 2. Transform domestic business for further growth 3. Accelerate business expansion in Asia and promote market entry in Western Europe/the U.S. 4. Establish competitive global product supply and quality assurance systems 5. Strengthen talents and organizational capabilities to promote “Creation and Innovation” Basic Policies of the Fiscal 2014-2017 Fiscal 2017 Financial Targets Medium-Term Management Plan Net Sales Over ¥205billion Product Transform product development to realize enhanced Development productivity and achieve sustained growth Operating Income Over ¥45billion Net Income Over ¥31billion Business Grow business in Asia/Europe and strengthen ROE Over 13% Expansion market presence by entering into new markets R&D Expenditures Around ¥21billion Operating Income Organization Develop talents and organization before Amortization Over