One Kyowa Kirin
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Annual Report 2019 For the year ended December 31, 2019 ONE KYOWA KIRIN Kyowa Kirin Co., Ltd. KYOWA KIRIN Annual Report 2019 02 Contents 03 Introduction 40 Management Foundation Editorial Policy We have published this integrated report to help investors understand the Kyowa Kirin Group’s 03 One Kyowa Kirin 40 Special Roundtable Discussion values, management vision, strengths, operating conditions and future vision, referencing the IIRC 04 Core Values 42 Corporate Governance International Integrated Reporting Framework and Guidance for Collaborative Value Creation released by Japan’s Ministry of Economy, Trade and Industry. A History of Creating Value Directors 08 47 We launched Nourianz in the US in 2019, achieving one of the goals in our Mid-term Business 10 Our Approach to 48 Company Auditors Plan – deliver global strategic products to patients worldwide. We are steadily transforming Research and Development Kyowa Kirin into a Global Specialty Pharmaceutical Company (GSP). I look forward to your contin- 49 Directors’ Profiles ued support as we drive the Group’s growth on the global stage. 50 Company Auditors’ Profiles Management Vision 11 51 Compliance Message from President High 11 52 Risk Management Annual Report (PDF version) 15 Message from Importance to Stakeholders https://ir.kyowakirin.com/en/library/annual.html the Executive Vice President 53 Financial Information 17 CSV Management Reported in Kyowa Kirin Website 54 Eleven-Year Selected Financial Data the book https://www.kyowakirin.com/ Progress in FY2019 55 Management’s Discussion & Analysis Financial Results 19 (MD&A) https://ir.kyowakirin.com/en/library/earnings.html 19 Financial Highlights Sustainability 61 Risk Factors https://www.kyowakirin.com/sustainability/ 20 ESG Highlights Reported through the website ESG Data 21 Pipeline 63 Corporate Information https://www.kyowakirin.com/sustainability/esg_data/ 63 Network Special Accelerate Growth by Importance to Management High 23 Feature Investor Information Developing Overseas Markets 64 65 Corporate Data Concerning the Scope of This Report Company Names 27 Value Creation Section (Six Capitals) The scope of this report is Kyowa Kirin Co., Ltd. and its In this report, group companies are abbreviated as follows: 27 Value Creation Process consolidated subsidiaries in Japan and overseas, and Kyowa Kirin Co., Ltd. (Kyowa Kirin). certain non-consolidated subsidiaries and affiliates are 28 Financial Capital mentioned in a part of the report. Environmental data is Numerical Data 30 Intellectual Capital annotated for the convenience of readers. The reporting The sum of the breakdown may not equal the total due period includes calendar year 2019, and 2020 in part. to rounding. 31 Manufactured Capital 32 Social and Relationship Capital Performance Forecasts Forecasts contained in this report are assumptions based Natural Capital 37 on reasonable judgments and information available at the 38 Human Capital time. Actual results may differ significantly due to a variety of factors. KYOWA KIRIN Annual Report 2019 Introduction > One Kyowa Kirin 03 Moving to a One Kyowa Kirin structure to drive the next leap forward We have implemented our new One Kyowa Kirin structure since April 2019. One Kyowa Kirin is a matrix management structure combining a regional organization based on four regions – Japan, EMEA (Europe/Middle East/Africa), North America, and Asia/Oceania – and a functional organization based on the functions needed by a pharmaceutical company. The new structure will allow us to accurately and rapidly respond to region-specific and global issues, while also supporting greater efficiency across all areas of the Group’s operations. We will accelerate our globalization under this One Kyowa Kirin structure. North America EMEA Asia/Oceania Japan ONE KYOWA KIRIN Business Restructuring Kyowa Kirin Group Kirin Holdings Channeling management resources into the pharmaceutical business 譲渡 Increase business speed in the health Kyowa Kirin transferred 95% of its shares in Kyowa Hakko Bio Co., Ltd. to parent company science domain Kirin Holdings Company, Limited on April 24, 2019. We made the decision to transfer the Kyowa Hakko Bio shares, as we believe Kyowa Hakko Bio will be able to continue growing and maximizing corporate value as a direct subsidiary of Kirin Holdings, which is enhancing its presence in the health science domain. The move will also allow Kyowa Kirin to concentrate its resources on new drug development in the pharmaceutical business, helping to accelerate Leaping forward Further synergies its transition to a Global Specialty Pharmaceutical Company. as a GSP with Kirin KYOWA KIRIN Annual Report 2019 Introduction > Core Values > Commitment to Life 04 MANAGEMENT PHILOSOPHY The Kyowa Kirin Group companies strive to contribute to the health and wellbeing of people around the world by creating new value through the pursuit of advances Transform lives with passion and excitement. Challenge the status quo in all of our work. in life sciences and technologies. Work for the most precious presence on this planet. Create value for patients, caregivers, healthcare professionals, and customer. One for all, all for one. Do the right things. Be sincere and Work in diverse teams and ethical consistently. respect each other. Make a better world through Go beyond boundaries and good business practices. collaborate with stakeholders. KYOWA KIRIN Annual Report 2019 Introduction > Core Values > Innovation 05 Transform lives with passion and excitement. Development of Challenge the status quo in all of our work. Four Major Modalities The Kyowa Kirin Group has world-class research and development capabilities in the field of biopharmaceuticals. To strengthen those capabilities, we continue to Next Generation Nucleic Acid Drugs Therapeutic Antibodies Nucleic acid function-enhancing actively invest in research and development in line with our firm commitment to Immune activating antibody technology nanoparticles innovation. Led by our research centers in Japan and San Diego in the US, we are Cell/tissue specific antibody DDS technology using lipid driving forward research efforts on a global scale in search of new drug candidates. Our Core Strengths Established by R&D and Production of Biopharmaceuticals Genetic engineering technology Further Evolution of Protein/antibody engineering technology Establishment of Existing Technology Excellence in analysis and control New Technology of carbohydrates Technology in cell culture and control of cell differentiation Technology for manufacturing of biologics New Small Molecule Drugs Regenerative Therapeutics Integrated approach with science of biologics Technology in control of cell differentiation and others Precise drug design and synthesis based on structural analysis of target molecule KYOWA KIRIN Annual Report 2019 Introduction > Core Values > Teamwork/Wa 06 * One for all, all for one. Work in diverse teams and respect each other. Go beyond boundaries and collaborate with stakeholders. One of our strengths as a Group is to shrink distances between divisions and affiliates worldwide to achieve seamless cooperation. We will continue to take on new challenges by harnessing that strength to support a high level of teamwork. We will also create new value by working closely with all stakeholders, including patients and their families and medical professionals. * Harmony and loop among people KYOWA KIRIN Annual Report 2019 Introduction > Core Values > Integrity 07 Do the right things. Be sincere and ethical consistently. Make a better world through good business practices. Initiatives are being implemented worldwide to realize the Sustainable Development Goals (SDGs). As a company, we have a social responsibility to also address SDG-related issues as part of our business activities. Specifi- cally, we are working to tackle social issues that have a direct connection to our business – developing innovative new drugs for conditions with unmet medical needs, contributing to the economics of healthcare by reducing medical costs, improving quality of life (QOL), and contributing to the field of pre-symptomatic treatment, such as preventative healthcare. KYOWA KIRIN Annual Report 2019 Introduction > A History of Creating Value 08 A History of Creating Value Open Innovation Formed in October 2008 through a merger between Kyowa Hakko Kogyo Co., Ltd. and 1988 Birth of a company Kirin Pharma Company, Limited, Kyowa Kirin is an R&D-based pharmaceutical company with Supported the establishment of the La with a unique state-of-the-art antibody technologies. Challenging the new possibilities as one of Jolla Institute for Immunology in the US; business structure Kyowa Kirin continues to collaborate and strengths in biotechnology Japan’s leading life-science companies, we are striving to contribute to the health and with the institute, which helped dis- well-being of people around the world by creating new value. cover KHK4083 2008 Kyowa Hakko Kirin Co., Ltd. starts operations Kyowa Hakko Kirin Pharma 1956 Kirin Successfully isolated mitomycin C and started Kyowa Hakko 1949 commercial production as an anticancer drug Kyowa Hakko Kogyo Co., Ltd. Technological Kyowa Kirin established as a secondary Alliance Innovation company of Kyowa Sangyo Co., Ltd. as part of restructuring plans 1984 Established joint-venture Developed POTELLIGENT, Kirin-Amgen, Inc. with US groundbreaking new antibody 1885 company Amgen Inc. to production technology that conduct erythropoietin Japan Brewery Company dramatically increases antibody