Utilizing Our Strengths to Create the New Drugs

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Utilizing Our Strengths to Create the New Drugs Business Model Utilizing our strengths to create the new drugs Capital that forms sources of value creation New drugs under *1 clinical development 29 Intellectual capital New drugs launched *1 since the merger*2 13 Number of medical Research & institutions Development Social and supplied 116,800 relationship We possess a rich pipeline, drug capital Number of joint discovery capability, leading-edge research projects 128 technology and know-how, broad network related to science, and dedicate efforts mainly in the Number of employees 3,023 three focus research areas*5. (of which, R&D positions) 661 Details on p.25 Global Platform Number of PC positions*3 37 Human Our We have a strong sales network in Number of participants Japan, North America, and China capital in the DSP Academy*4 which forms a base that supports to date Strengths global expansion, and we engage in 318 sales and marketing activities Response rate for tailored for each region. employee engagement Human Details on p.33 survey (fiscal 2019) 99.0% Resources High profitability and robust We have a framework that financial base utilizes the capabilities of individual employees, sincere and Financial ROE 7.9% excellent human resources, and a corporate culture that promotes capital Ratio of equity a spirit of perseverance and attributable to precision. owners of the Details on p.29 parent to total assets 42.3% Manufactured 2 plants and capital 2 research laboratories As of March 31, 2020 unless otherwise specified Intellectual capital and financial capital are presented as consolidated figures, and others are presented as non-consolidated figures *1 As of July 30, 2020 *2 New drugs for which approval obtained since October 2005 *3 Professional Contributor, a job title at Sumitomo Dainippon Pharma *4 A skill-specific, selective education and training system (details on p.31) *5 Three focus areas for research: Psychiatry & Neurology, Oncology, Regenerative Medicine/Cell Therapy 23 Sumitomo Dainippon Pharma Co., Ltd. Integrated Report 2020 Profile Value Creation Strategies CSR-Based Management Financial Section patients need Business activities Value provided to society Value chain Details on p.41 Contributing to Innovative Drug Discovery (Number of compounds as of July 30, 2020) improving quality of • Psychiatry & Neurology New compounds under Creating life (QOL) for patients ........................................ Area development: 10 innovative and their families • Oncology Area ....................... New compounds under development: 11 pharmaceutical • Regenerative Medicine / products and Improving sustained Cell Therapy Field .................. 6 projects • Infectious Diseases Area ....... 4 projects healthcare corporate value ............................ • Other Areas New compounds under solutions in • Returns to shareholders development: 6 (stable dividends, increases Drug Development, Production, Sale, and areas with high in dividends linked to Information Provision unmet medical improvements in • Development • Sales and Marketing performance) (product development • Corporate Regulatory needs and clinical development) Compliance & Quality • Strategic investment aimed at • M&A and In-Licensing Assurance / Medical sustained growth (includes Science • Production and Quality research and development Control investment) Also contributing to Materiality linked to value creation achieving the Sustainable • Work Style Innovation, Diversity & Inclusion Details on p.29 Development Goals • Training and Development of (SDGs) Employees, Health and Safety Details on p.31 Contributing to • Contributing to Global Health, Contributing to Local Communities Details on p.61 the development of science Materiality that forms the foundation for business continuity • Strengthening the Corporate Governance, Risk Management, Details on p.67 Compliance Systems • Environmental Initiatives Details on p.64 WeWe have established “Materiality (material issues forfor CSR-based management)”management)” for our business activities. activities Details on p.9 Sustained growth Sumitomo Dainippon Pharma Co., Ltd. Integrated Report 2020 24 Business Model Strength: Research and Development Aiming to be a global leader in three focus areas Opportunities and risks in research and development Opportunities Risks • There are high unmet medical needs in the three • The focus areas of psychiatry & neurology and focus areas (psychiatry & neurology, oncology, and oncology are areas with a higher degree of regenerative medicine/cell therapy) with significant uncertainty in research and development based impact on healthy life expectancy. on past performance, and there is a high degree • Open innovation with academia and biotech of difficulty in research and development. As companies is gaining momentum. regenerative medicine/cell therapy is a new field, the rules on regulatory approval and drug price • Support from regulatory authorities, public listing are not completely in place. institutions, governments and others can be actively utilized. • If clinical development fails, there are significant losses due to soaring research and development • The organizational structure to achieve optimum expenses. portfolio management on a global scale is in place. • There are global policy trends aimed at reducing medical and pharmaceutical expenses. • Non-pharmaceutical disease prevention and treatment methods are emerging (which is an opportunity for Frontier business). Research collaborations, in-licenses and acquisitions Sumitomo Dainippon Pharma actively promotes strategic investment in acquisitions and in-licensing from a viewpoint of expanding the development pipeline. We are also promoting research collaborations with research institutions, including universities, and biotech companies possessing innovative technologies. • Apposite Healthcare Fund, L.P. • DEFTA Healthcare Technologies, L.P. Life sciences, healthcare services Leading-edge medical treatments and regenerative medicine, next-generation medical devices, and healthcare IoT/ICT Investment • Remiges BioPharma Fund, L.P. destination Pharmaceuticals research and development and other life • MPM Oncology Innovations Fund sciences Academia and growing early-stage companies that are developing new drug candidate compounds in the oncology area • Kyoto University • RIKEN Project for drug discovery research focusing on the • The Jikei University School of Medicine, Bios, PorMedTec regulatory mechanisms of cell - cell interactions in tumor • Carna Biosciences, Inc. microenvironment (DSK Project) • Colombia University, Harvard University, The Wistar • The Kitasato Institute Institute Joint Drug Discovery Research for AMR (KS-Project) External • Medicines for Malaria Venture (MMV) collaboration • The Center for iPS Cell Research and Application (CiRA) (Kyoto University) • Ehime University • Hitachi Ltd. • NIBIOHN (National Institutes of Biomedical Innovation, Health and Nutrition) • Healios K.K. • MELTIN MMI • Keio University • National Hospital Organization Osaka National Hospital • PATH Note: For details: https://www.ds-pharma.com/rd/research-alliances/ 25 Sumitomo Dainippon Pharma Co., Ltd. Integrated Report 2020 Profile Value Creation Strategies CSR-Based Management Financial Section Development pipeline (as of July 30, 2020) Psychiatry & Neurology area ················· New compounds under development: 10 Development Development products Proposed indication stage Region Launch target Phase 3 U.S. FY2023 SEP-363856 Schizophrenia Phase 1 Japan TBD SEP-4199 Bipolar I depression Phase 2 U.S. Japan TBD • The prevalence of psychiatric and neurological disorders is increasing due to aging and stressful society. • The social and economic losses caused by psychiatric and neurological disorders are significant. • A high percentage of patients experience insufficient effect with existing therapeutic drugs, and there are high needs Opportunities for development of new drugs. • We possess unique drug discovery platforms incorporating cutting-edge technology (in silico, biomarkers, and iPS cells, etc.) • In addition to our track record of continually creating products, including the blockbuster LATUDA®, we possess a number of world-class development pipeline assets. • The psychiatry & neurology area is an area with a higher degree of uncertainty in research and development based on past performance. Risks • Due to lack of biomarkers for diagnosis and efficacy evaluation, research and development in this field is challenging with high uncertainty. Oncology area ················· New compounds under development: 11 Development Development products Proposed indication Region Launch target stage NDA relugolix Prostate cancer U.S. FY2020 submitted U.S. FY2021 napabucasin Colorectal cancer Phase 3 Japan FY2022 Myelodysplastic syndromes alvocidib Phase 2 U.S. FY2023*1 (MDS) • It is the disease area with the largest market (No. 1 cause of death for Japanese people*2). • Unmet medical needs are high, and there is significant scope for special regulatory measures. • Advanced technologies are being implemented in drug discovery research, clinical development, and the medical field (diagnosis and treatment), and the company’s own technology platforms are becoming increasingly important for Opportunities possessing an advantage in research and development. • We are promoting initiatives aimed at discovery of ground-breaking new drugs based on expertise accumulated through continuing our unique drug discovery research focusing on the tumor micro-environment (inter-cellular actions
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