Daiichi Sankyo Group Value Report 2017 Daiichi Sankyo Group Value Daiichi Sankyo Group Value Report 2017 Contents Messages from the CEO & the COO 02 Highlights of Value Report 2017 Our Mission 06 Daiichi Sankyo’s Strengths 08 Major Accomplishments in Fiscal 2016 10 Daiichi Sankyo’s Value Creation Process 12 5-Year Business Plan (FY2016 - FY2020) History of Daiichi Sankyo 14 Transformation 2025 Vision and 5-Year Business Plan 18 DS — A Bridge to Tomorrow 2025 Vision 20 5-Year Business Plan and its Progress 21 Operations and Financial Position 48 The Daiichi Sankyo Group’s Value Chain and Organization 52 P02-05 P08-09 P21-47 Global Management Structure 54 Business Activities Messages from the CEO & Daiichi Sankyo’s Strengths 5-Year Business Plan and the COO its Progress Business Units Here, you will find messages from This section explains the Daiichi Sankyo This section looks at the strategic targets ・ Sales & Marketing Unit 56 Chairman and CEO George Nakayama Group’s unique strengths, namely Science set forth for accomplishing the goals of the ・ Sales & Marketing Unit: Daiichi Sankyo Espha Co., Ltd. 57 on the management practices that take & Technology, Global Organization & 5-year business plan, progress toward advantage of the Group’s strengths and Talent, and Presence in Japan. these targets, and the initiatives that will ・ Vaccine Business Unit 58 from President and COO Sunao Manabe on be implemented in the future. ・ Daiichi Sankyo Healthcare Co., Ltd. 59 the Group’s initiatives for accomplishing the goals of the 5-year business plan. ・ Daiichi Sankyo, Inc.（DSAC） 60 ・ Luitpold Pharmaceuticals, Inc. 61 ・ Daiichi Sankyo Europe GmbH 62 ・ ASCA Company 63 Functional Units ・ R&D Unit 64 ・ Biologics Unit 66 ・ Pharmaceutical Technology Unit 67 ・ Supply Chain Unit 68 ・ Quality & Safety Management Unit 69 ・ Medical Affairs Division 70 P56-70 P71-87 P88-95 CSR Activities Business Activities CSR Activities Corporate Governance ・ CSR Management 71 ・ Promoting Compliance Management 76 This section provides detailed explanations This section details the various CSR activities In this section, we will explain the ・ Mutual Growth of Employees and the Company 78 of the activities of each of the Group’s incorporated into these business activities. corporate governance structure that forms business units and functional units. the foundations for the Daiichi Sankyo ・ Enhancement of Communication with Stakeholders 80 Group’s ongoing improvement of corporate ・ Promoting Environmental Management 82 value. Messages from independent directors and auditors are also provided. ・ Improving Access to Healthcare 84 ・ Social Contribution Activities 86 Corporate Governance 88 Description of Icons Risk Management 96 References (related websites) Data Section ・ Financial Data 99 ・ ESG (Environmental, Social, and Governance) Data 106 ・ Major Products 108 ・ Corporate Profile / Main Group Companies 110 ・ Shareholders’ Information 112 Editorial Policy 113 Daiichi Sankyo Group Value Report 2017 01 Message from the CEO Initiatives Leveraging Daiichi Sankyo’s In fiscal 2016, we welcomed Antoine Yver as the new the CEO & COO Messages from Unique Strengths head of Oncology R&D, which combines oncology field research functions with development functions. Yver has experience in taking a new oncology drug through the Science & Technology We will pursue sustainable process of clinical trials and eventually launch at record Daiichi Sankyo was formed through the merger of Sankyo speeds. With this new leadership, we have set our priorities improvement for corporate Co., Ltd., and Daiichi Pharmaceutical Co., Ltd., two in the field of oncology and are accelerating R&D activities companies with histories of innovation spanning roughly accordingly. In addition, we have established the Global value by leveraging a century. We also boast an impressive track record with Oncology Marketing, which will be headed by Thierry the research capabilities that gave birth to pravastatin, Gruson, an individual boasting a track record of successful Daiichi Sankyo’s strengths. levofloxacin, and olmesartan as well as the development launches of a immuno-oncology drug on a global basis. capabilities that contributed to the success of large-scale In this manner, we are employing many talented individuals with diverse backgrounds from across the globe. We have George Nakayama global clinical trials for olmesartan, prasugrel, and edoxaban. This DNA of scientific and technological enhanced our global organization & talent through Representative Director, excellence remains alive within the Group today. chemical reaction created by having such talents from Chairman and CEO We have defined our 2025 Vision as striving to become around the world work together with our highly capable a“Global Pharma Innovator with competitive advantage talents in Japan. Daiichi Sankyo will leverage the strength in oncology.” Our strength in science & technology will be born out of this process to supply the world with innovative an important strength toward accomplishing this vision, pharmaceuticals going forward. particularly when it comes to research and development in Presence in Japan the oncology field. In addition, I have high expectations for DS-8201, a top-priority project (flagship asset) that was Acting with integrity and in a trustworthy manner is a hallmark created through this strength. DS-8201 is a proprietary of our innovative pharmaceuticals business in Japan. As a Daiichi Sankyo antibody drug conjugate (ADC). The whole, our sales divisions have not been focused purely on antibody portion of this drug was created by applying the increasing short-term earnings, but rather have poured antibody research capability of the former Sankyo while their heart into finding ways to contribute to medicine. the drug payload and linker were born out of the research This dedication has led to physicians coming to regard our capabilities of the former Daiichi Pharmaceutical. By medical representatives (MRs) as trusted partners. merging these two strengths, we were able to develop the Moreover, Daiichi Sankyo has received high evaluation for ideal ADC. DS-8201 has been producing favorable results its sales capabilities from outside of the Company, and this in phase 1 studies, raising my expectations even higher. evaluation has help us receive licenses to promote other Furthermore, this drug has substantial potential to companies’ products. By growing sales of both our products contribute to the development of an ADC franchise as it and these in-licensed products, Daiichi Sankyo will win Through its business activities, the Daiichi Sankyo Group ̶to contribute to the ongoing development of society may be possible to attach its payload and linker to other greater evaluation, thereby sustaining a virtuous cycle. As a builds relationships with patients and their families, health- through the creation of innovative pharmaceuticals. We antibodies. This is just one example of how the scientific result, Daiichi Sankyo ranked No. 1 in both MR evaluation care professionals, shareholders, investors, business receive economic rewards for delivering the innovative and technological prowess fostered throughout our history and revenue in Japan during fiscal 2016. partners, local communities, employees, and various other pharmaceuticals created leveraging these strengths to is paving the road toward our future. The trend toward integrated community medical systems stakeholders. We believe that by keeping our stakeholders people around the world. These economic rewards are in Japan is inspiring healthcare professionals to work informed about our diverse activities, they can better returned to stakeholders in a balanced manner and are also Global Organization & Talent together in various regions to build and enhance medical appreciate our true value as a company. Based on this used to make investments for further drug discoveries and systems that encompass entire communities. Leveraging belief, we began compiling information on the Group’s developments. This process of creating an economic value Daiichi Sankyo has maintained a global management our robust product lineup and the efforts of our highly activities into annual, comprehensive value reports in fiscal cycle is the basis for the sustainable improvement of structure since the time of the merger to ensure that competent sales force, we will further cement our presence 2013. The contents of these reports include management corporate value. In order to continue stably maintaining its management decisions have incorporated a global in the Japanese market by exercising our strengths in policies, business strategies, and financial information, and developing this value creation process over the long perspective. The Global Management Committee has long relation to this trend. as well as information on the corporate social responsibility term, we aim to fulfill our responsibilities and duties as been the venue through which we practice highly diverse (CSR) activities that the Group conducts to contribute to members of society, and grow together with society. management. With participation by the heads of business the realization of a sustainable society. In other words, it is important that we simultaneously units, this committee has been responsible for making In Closing strengthen corporate governance systems and conduct decisions and tracking the progress of initiatives that are Value Report 2017 contains information on Daiichi Daiichi Sankyo’s Value Creation Process CSR activities aimed at promoting