Annual Report 2013 Year ended March 31, 2013 Annual Report 2013 SONG for the Real Growth The Company Policy of Shionogi Shionogi’s purpose Shionogi strives constantly to supply the best possible medicine to protect the health and wellbeing of the patients we serve. For this purpose, Shionogi will need to Pursue the search for even better medicines. Produce even better medicines. Promote awareness of these better medicines to more people so that more people will be able to use these medicines. Research, produce, and promote in an even more economical manner. For this purpose, Shionogi people will need to Strive ceaselessly day after day to improve their skills. Strive ceaselessly day after day to improve as human beings. As a result, Shionogi people will Find even greater satisfaction in their daily work and in their daily lives. Find even greater improvement in the quality of their lives. Find even greater prosperity in their lives. (Established in 1957) Shionogi’s Action Guidelines Mission Vision Value Mission We will deliver pharmaceuticals that offer an even higher level of satisfaction to patients, their families, and healthcare providers and improve the quality of life for patients and their families. Vision A company with a strong presence worldwide A company that has pride and dreams and embraces challenges Value Customer focus, Trust, Professionalism, On-site orientation, Respect for the individual Contents 02 Management Management 02 Shionogi’s 135-Year History 04 To Our Stakeholders 06 Snapshot 08 Performance Highlights 10 Interview with the President Shionogi’s Business 20 Shionogi’s Business Activities Activities 20 Research 22 Development 24 Sales 25 Overseas Business Activities 28 Manufacturing Editorial Policy 30 Pipeline Period Under Review 32 Major Products Fiscal 2012 (April 1, 2012–March 31, 2013) Certain activities continuing after fiscal 2012 are also included. Scope and Organization Shionogi’s CSR 34 Shionogi’s CSR Activities This Annual Report encompasses the activities of Shionogi & Co., Ltd. Activities 34 Fundamental Policy on CSR and 38 companies (32 consolidated subsidiaries and 6 affiliates). The section entitled Efforts to Preserve the Environment covers all 35 Community Relations business facilities of Shionogi & Co., Ltd., and six domestic subsidiar- 37 Relationship with Employees ies. In this report, “Shionogi” refers to Shionogi & Co., Ltd. and all its on-site subsidiaries. 38 Efforts to Preserve the Environment “Domestic subsidiaries” refers to the one domestic manufacturing subsidiary (Shionogi Pharma Chemicals Co., Ltd.) and two domestic non-manufacturing subsidiaries (Shionogi General Service Co., Ltd. and Saishin Igaku Co., Ltd.). “Shionogi Group” refers to all the aforemen- Management 40 Management System tioned companies. System 40 Corporate Governance Notes Concerning Numerical Values and Graphs 44 Members of Boards All numerical values are rounded to the nearest unit, as applicable. Totals may not match due to rounding. Financial 46 Financial Section Forward-looking Statements Section 46 Ten-year Consolidated Financial Highlights This report contains forward-looking statements. These statements are 48 Management’s Discussion and Analysis based on expectations in light of the information currently available, assumptions that are subject to risks, and uncertainties which could 51 Business and Other Risks cause actual results to differ materially from these statements. 52 Consolidated Financial Statements Risks and uncertainties include general domestic and international economic conditions, such as general industry and market conditions, and changes of interest rates and currency exchange rates. These risks and uncertainties particularly apply to forward-looking Corporate 74 Corporate Information statements concerning existing products and those under development. Information Product risks and uncertainties include, but are not limited to, comple- 74 Shionogi Group Directory tion and discontinuation of clinical trials; obtaining regulatory approvals; 75 Corporate Information claims and concerns about product safety and efficacy; technological advances; adverse outcome of important litigation; domestic and foreign healthcare reforms; and changes of laws and regulations. For existing products, there are also manufacturing and marketing risks, which include, but are not limited to, inability to build production capacity to meet demand, unavailability of raw materials, and competi- tion with other companies’ products. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise. This report contains information on pharmaceuticals (including compounds under development), but this information is not intended to make any representations or advertisements regarding the efficacy of these pharmaceuticals nor provide medical advice of any kind. Shionogi Annual Report 2013 01 Shionogi’s Business Activities Shionogi’s CSR Activities Management System Financial Section Corporate Information Management Shionogi’s 135-Year History Shionogi has positioned fiscal 2013 as the first year of the Group’s globalization, based on a tradition and history stretching back 135 years to the Company’s foundation. Shionogi is looking to realize the Company Policy—“to strive constantly to supply the best possi- ble medicine to protect the health and wellbeing of the patients we serve”—on a global basis. 1878 1900 1950 1878 1909 1957 • Gisaburo Shiono, Sr., founder of the • The corporate emblem FUNDOH • The Company Policy of Shionogi Company, launched Shiono Gisaburo was registered. was established. Shoten as a drug wholesaler at the 1963 present site of the head office, FUNDOH Means Pursue Taiwan Shionogi & Co., Ltd. Doshomachi, Osaka. the Truth was established. Shionogi’s corporate emblem is Founder derived from FUNDOH, which is 1968 Gisaburo Shiono, Sr. a weight used to measure • Established the Settsu Plant. medicine on a balance. It sym- (1854-1931) bolizes “accuracy,” “honesty” 1980 Gisaburo Shiono, Sr. was and “trust,” and expresses • Established the Developmental Research born in 1854 in Doshomachi, Shionogi’s wish for the constant Laboratories (Now Shionogi Pharmaceutical Osaka. Under the guidance pursuit of the truth. Research Center (SPRC)). of his father Kichibe he learned the wholesale trade 1983 and on March 17, 1878 (FUNDOH from the Edo era) • Constructed the Kanegasaki Plant. launched his own drug wholesaling business in 1997 Doshomachi on his 24th 1909 Launched the cephem antibiotic, Flomox. Antacidin, an antacid agent, was launched as birthday. This wholesaler the first drug produced. was the predecessor of 1998 • Established the Shionogi Charter Shionogi & Co., Ltd. 1910 of Conduct. • A manufacturing plant, Shiono Seiyakusho, 1886 was constructed. • The management of Shionogi decided to con- 1919 centrate on imported western drugs. • Shiono Gisaburo Shoten and Shiono Seiyakusho were merged and the new company was named 1897 Shionogi Shoten Co., Ltd. • Shionogi started to deal directly with trading firms in Europe and the US. 1922 • Established the Kuise Plant (Now Kuise Site). 1943 • The Company was renamed, Shionogi Seiyaku K.K. (Now Shionogi & Co., Ltd.). 1946 • Developed the Aburahi Laboratories (Now Aburahi Facilities). 135th 02 Shionogi Annual Report 2013 Shionogi Limited, UK C&O Pharmaceutical Shionogi Inc. (Development foothold in EU) Technology (Holdings) Limited (Development, manufacturing, and sale of (R&D, manufacturing, and sale of pharmaceuticals in US) pharmaceuticals in China) 2000 2005 2010 2000 2005 2010 The First Medium-Term The Second Medium-Term The Third Medium-Term Business Plan starts. Business Plan starts. Business Plan starts. “Laying the foundation” “Accelerating toward significant strides” “SONG for the Real Growth” Completion of corporate restructuring to Established constant flow of pipeline products Launch of multiple products developed concentrate on pharmaceutical business. through energizing and globalizing R&D. globally and real growth. 2001 Launched the hyperlipidemia treatment, Crestor. Launched the anti-viral drug for influenza, Launched the carbapenem antibiotic, Finibax. Rapiacta. Established Shionogi USA, Inc. • Sold Bushu Pharmaceuticals Ltd., a contract (Now Shionogi Inc.) 2007 manufacturing company. • Transferred agricultural chemicals business. Launched the cancer pain analgesic, OxiNorm. Launched the antidepressant drug, Cymbalta. Established a joint venture named Shionogi- 2008 • Established the PET Molecular Imaging GlaxoSmithKline Pharmaceuticals LLC • Established Shionogi Analysis Center Co., Ltd. Center at the Osaka University Graduate (Now Shionogi-ViiV Healthcare LLC). School of Medicine. Launched the hypertension treatment, Irbetan. * Started joint research and development, • Established a joint research facility with Hok- Established Shionogi Inc. as the US including HIV integrase inhibitors kaido University, Shionogi Innovation Center for group headquarters. 2002 Drug Discovery. • Established Shionogi Techno Advance • Transferred veterinary drugs business and Acquired Sciele Pharma, Inc. Research Co., Ltd. clinical laboratory. (Now Shionogi Inc.) Sold Ohmori Co., Ltd., a wholesaler 2011 Launched the acne vulgaris treatment, Differin. of pharmaceuticals. • Completed a new research facility SPRC4. Launched the idiopathic pulmonary fibrosis Acquired a Chinese pharmaceutical 2003 treatment, Pirespa. company, C&O Pharmaceutical Launched