consolidated financial report [ifrs] for fiscal 2015 (year
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CONSOLIDATED FINANCIAL REPORT [IFRS] for Fiscal 2015 (Year Ended March 31, 2016)
May 13, 2016
Eisai Co., Ltd.
Stock exchange listing: Tokyo Stock Exchange (TSE)
TSE Code: 4523
URL: http://www.eisai.com
Representative: Haruo Naito, Representative Corporate Officer & CEO
Contact: Sayoko Sasaki, Vice President, Corporate Affairs
Telephone: +81-3-3817-5120
Expected date of ordinary general meeting of shareholders: June 17, 2016
Expected date of annual report submission: June 17, 2016
Expected date of dividend payment commencement: May 23, 2016
Preparation of annual supplementary explanatory material: Yes
Annual results briefing held: Yes
(Figures are rounded to the nearest million yen.)
1. Consolidated Annual Financial Results (April 1, 2015-March 31, 2016)
(1) Consolidated Operating Results
(Percentage figures show year-on-year change.)
Revenue Operating profit Profit before
income taxes Profit for the year
Profit for the year
attributable to
owners of the
parent
Comprehensive
income for the year
(¥ million) (%) (¥ million) (%) (¥ million) (%) (¥ million) (%) (¥ million) (%) (¥ million) (%)
FY 2015 547,922 -0.1 51,935 83.3 50,473 95.1 55,045 26.7 54,933 27.0 16,452 -85.6
FY 2014 548,465 -8.5 28,338 -57.3 25,875 -58.5 43,453 12.9 43,254 13.1 114,230 35.2
Earnings per share
attributable
to owners of the
parent (basic)
Earnings per share
attributable
to owners of the
parent (diluted)
Profit ratio to equity
attributable to
owners of the parent
Profit before income
taxes ratio to total
assets
Operating profit
ratio to revenue
(¥) (¥) (%) (%) (%)
FY 2015 192.23 191.76 9.4 5.0 9.5
FY 2014 151.57 151.37 7.7 2.6 5.2
(Reference) Equity in earnings of affiliates: for FY2015: ¥70 million, for FY2014: ¥75 million
(2) Consolidated Financial Positions
Total assets Total equity Equity attributable to
owners of the parent
Ratio of equity
attributable to
owners of the parent
Equity per share
attributable to
owners of the
parent
(¥ million) (¥ million) (¥ million) (%) (¥)
March 31, 2016 973,987 576,828 573,661 58.9 2,006.22
March 31, 2015 1,053,818 602,061 598,749 56.8 2,096.39
(3) Consolidated Cash Flows
Operating activities Investing activities Financing activities Cash and cash
equivalents at end of year
(¥ million) (¥ million) (¥ million) (¥ million)
FY2015 95,617 (6,701) (72,944) 179,326
FY2014 76,022 (18,841) (59,742) 173,335
2. Dividends
Annual dividend per share
Total
dividends
Dividend payout
ratio
(consolidated)
Dividend on equity
attributable to
owners of the parent
ratio (consolidated)
End of
Q1
End of
Q2
End of
Q3
End of
FY
Total
(¥) (¥) (¥) (¥) (¥) (¥ million) (%) (%)
FY2014 — 70.00 — 80.00 150.00 42,837 99.0 7.6
FY2015 — 70.00 — 80.00 150.00 42,890 78.0 7.3
FY2016
(Forecast) — 70.00 — 80.00 150.00 146.9
3. Consolidated Financial Results Forecast for Fiscal 2016 (April 1, 2016-March 31, 2017) (Percentage figures show year-on-year change.)
Revenue Operating profit Profit before
income taxes
Profit for the
period
Profit for the
period attributable
to owners of the
parent
Earnings per
share
attributable to
owners of the
parent (basic)
(¥ million) (%) (¥ million) (%) (¥ million) (%) (¥ million) (%) (¥ million) (%) (¥)
Q2
(cumulative) 279,800 1.6 19,700 9.0 19,000 9.6 10,000 -10.2 8,200 -25.7 28.54
Fiscal Year 580,000 5.9 53,700 3.4 52,200 3.4 32,400 -41.1 29,200 -46.8 102.12
*Explanatory Notes
(1) Changes in number of significant subsidiaries in the period (changes in specified subsidiaries resulting in a change in scope of consolidation): Yes
Increase: —, Decrease: 1 subsidiary (subsidiary name: EIDIA Co., Ltd.)
(2) Changes in accounting policies, accounting estimates and restatements:
1) Changes in accounting policies required by IFRS: Yes
2) Changes in accounting policies other than 1): None
3) Changes in accounting estimates: Yes
(3) Number of shares issued (common shares):
1) Number of shares issued (including treasury shares)
As of March 31, 2016
296,566,949 As of March 31, 2015
296,566,949
2) Number of treasury shares As of March 31, 2016
10,555,842 As of March 31, 2015
10,869,758
3) Weighted average number of shares outstanding
For FY2015 285,764,248 For FY2014 285,370,874
The Company’s shares held through a trust (70,315 shares) are not included in the number of treasury shares as of the end of the period, but are included in the average number of shares outstanding as treasury shares that are deducted from the basis of the calculation of earnings per share.
* (Reference) Nonconsolidated Annual Financial Results (April 1, 2015-March 31, 2016)
(1) Nonconsolidated Operating Results
(Percentage figures show year-on-year change.)
Revenue Operating profit Profit before
income taxes Profit for the year
(¥ million) (%) (¥ million) (%) (¥ million) (%) (¥ million) (%)
FY 2015 315,950 1.5 35,181 87.6 36,280 139.7 67,230 218.2
FY 2014 311,160 -9.0 18,756 -48.5 15,136 -52.7 21,128 68.2
Basic earnings
per share
Diluted earnings
per share
(¥) (¥)
FY 2015 235.26 234.69
FY 2014 74.04 73.94
(2) Nonconsolidated Financial Positions
Total assets Equity Shareholders’
equity ratio
Shareholders’ equity
per share
(¥ million) (¥ million) (%) (¥)
FY 2015 736,200 489,949 66.4 1,710.82
FY 2014 765,159 462,790 60.4 1,616.97
(Reference) Shareholders’ equity:
As of March 31, 2016 ¥ 489,195 million As of March 31, 2015 ¥ 461,820 million
* Disclosure concerning the implementation status of audit procedures: This financial report is exempt from audit procedures as stipulated under the Financial Instruments and Exchange Act of Japan. At the date of disclosure, the audit procedures have not been completed as stipulated under the Financial Instruments and Exchange Act of Japan. * Explanation concerning the appropriate use of results forecast and other special instructions: Materials and information provided in this financial disclosure may contain “forward-looking statements” based on expectations, forecasts, estimates, business goals and assumptions that are subject to risks and uncertainties as of the publication date of these materials. Accordingly, actual outcomes and results may differ materially from these statements depending on a number of important factors. Please refer to pages 9-10 and pages 48-50 for details with regard to the assumptions and other related matters concerning consolidated financial results forecasts.
(Methods for obtaining supplementary materials and content of financial results disclosure) Supplementary materials are attached to this financial report. The Company plans to hold a financial results disclosure presentation for institutional investors and securities analysts on Friday, May 13, 2016. The printed materials distributed at the disclosure presentation will be made available on the Company’s website after the event.
1
Supplemental Materials: Table of Contents
1. Analysis Concerning Operating Results and Financial Position (Page)
1) Analysis Concerning Operating Results
(1) Outline of Operating Results ・・・・・・・・・・ 2
(2) Research & Development Pipeline, Alliances and Other Events ・・・・・・・・ 5
(3) Consolidated Financial Results Forecasts for Fiscal 2016 ・・・・・・・・・・・ 9
2) Analysis Concerning Consolidated Financial Position ・・・・・・・・・・・ 11
3) Basic Policy on Profit Appropriation and Dividend for Fiscal 2015/16 ・・・・・・ 12
2. Management Policy
1) Corporate Mission ・・・・・・・・・・・ 13
2) Management Objectives ・・・・・・・・・・・ 13
3) Medium- to Long-Term Corporate Management Strategy
and Issues that Need to Be Addressed ・・・・・・・・・・・ 13
4) Basic Policy for Capital Strategy ・・・・・・・・・・・ 16
5) Corporate Governance ・・・・・・・・・・・ 17
6) Compliance and Risk Management ・・・・・・・・・・・ 18
3. Basic Approach to the Selection of Accounting Standards ・・・・・・・・・・・ 18
4. Consolidated Financial Statements
1) Consolidated Statement of Income ・・・・・・・・・・・ 19
2) Consolidated Statement of Comprehensive Income ・・・・・・・・・・・ 20
3) Consolidated Statement of Financial Position ・・・・・・・・・・・ 21
4) Consolidated Statement of Changes in Equity ・・・・・・・・・・・ 23
5) Consolidated Statement of Cash Flows ・・・・・・・・・・・ 25
6) Notes to Consolidated Financial Statements
(Going Concern) ・・・・・・・・・・・ 26
(Basis of Preparing Consolidated Financial Statements) ・・・・・・・・・・・ 26
(Significant Accounting Policies) ・・・・・・・・・・・ 28
(Significant Accounting Estimates and Judgments) ・・・・・・・・・・・ 36
(Segment Information) ・・・・・・・・・・・ 37
(Consolidated Statement of Income) ・・・・・・・・・・・ 39
(Per Share Information) ・・・・・・・・・・・ 42
(Consolidated Statement of Financial Position) ・・・・・・・・・・・ 43
(Consolidated Statement of Cash Flows) ・・・・・・・・・・・ 44
(Business Combinations) ・・・・・・・・・・・ 44
(Sales of Subsidiaries) ・・・・・・・・・・・ 46
(Significant Subsequent Events) ・・・・・・・・・・・ 46
5. Other
1) Forecasts and Risk Factors ・・・・・・・・・・・ 48
2) Overview of the Eisai Group ・・・・・・・・・・・ 51
3) Proposed Changes in Directors and Corporate Officers ・・・・・・・・・・・ 54
2
1.Analysis Concerning Operating Results and Financial Position
1) Analysis Concerning Operating Results
(1) Outline of Operating Results
[Revenue and Profit]
〇 Eisai Co., Ltd. (“the Company”) and its affiliates (collectively referred to as “the Group”)
recorded the following consolidated financial results for the fiscal year from April 1, 2015 to
March 31, 2016.
Revenue: ¥547,922 million (0.1% decrease year-on-year)
Operating profit: ¥51,935 million (83.3% increase year-on-year)
Profit before income taxes: ¥50,473 million (95.1% increase year-on-year)
Profit for the period: ¥55,045 million (26.7% increase year-on-year)
〇 Revenue for the Group increased due to the growth of anticancer agents Halaven and
Lenvima and antiepileptic agent Fycompa, as well as the high growth recorded by the
Group’s pharmaceutical businesses in China and Asia, but decreased overall owing to
factors such as competition between long-listed products and generic products in the
Japan, finishing at ¥547,922 million (down 0.1% year-on-year).
By therapeutic area, total revenue from oncology-related products increased to ¥118,501
million (up 20.1% year-on-year), reflecting the growth of Halaven and smooth launches of
Lenvima in the U.S., Europe, Japan, and Asia. Meanwhile, overall revenue from epilepsy
products reached ¥37,694 million (up 19.0% year-on-year), reflecting Fycompa’s
expansion in the U.S., Europe, and Asia.
By product, combined revenue from all four global brands totaled ¥63,621 million yen (up
40.1% year-on-year); this included ¥40,168 million from Halaven and ¥11,477 million from
Lenvima in addition to the revenue from Fycompa and antiobesity agent BELVIQ. Aricept,
a treatment for Alzheimer’s disease and dementia with Lewy bodies, recorded revenue of
¥63,349 million (down 3.6% year-on-year). Pariet (U.S. brand name: AcipHex), a proton
pump inhibitor, recorded ¥46,053 million (down 17.7% year-on-year).
By segment, growth was achieved in all overseas segments, highlighted by sustained
growth in the China pharmaceutical business (up 20.2% year-on-year) as well as business
expansion in South Korea, Taiwan, and other key markets for the Asia pharmaceutical
business.
* Revenue for Pariet includes sales in Japan of Rabecure Packs 400/800 and Rabefine Pack, all of which are triple-formulation combination packs
indicated for use in Helicobacter pylori eradication.
〇 Operating profit totaled ¥51,935 million (up 83.3% year-on-year) due to an expansion in
revenue and profit for the pharmaceutical business mainly from high growth in global
brands as well as the China and Asia pharmaceutical businesses. In addition, improved
cost efficiency, sales of non-current assets and investments in subsidiaries and the receipt
of upfront payments under joint development and promotion agreements have also
contributed to the increase in operating profit. Profit for the period increased to ¥55,045
3
million (up 26.7% year-on-year) due to the decreased tax expenses resulted from share
transfer of an U.S. subsidiary and an increase in operating profit.
〇 Basic earnings per share for the period attributable to owners of the parent came to
¥192.23 (up ¥40.66 year-on-year).
〇 Comprehensive income for the period, after adding/deducting other comprehensive
income to/from profit for the period, was ¥16,452 million (down 85.6% year-on-year),
following a reduction in foreign exchange differences due to continuing appreciation of the
yen since the previous fiscal year.
[Performance by Segment]
(Revenue for each segment indicates revenue from external customers)
The Group’s business is comprised of pharmaceutical business and other business. The
pharmaceutical business is organized into the following six reporting segments: Japan
(Prescription medicines, Generics and Diagnostics), Americas (North America, Central, and
South America), China, Asia (primarily South Korea, Taiwan, Hong Kong, India, and ASEAN),
EMEA (Europe, the Middle East, Africa, and Oceania), and Consumer Healthcare
Business―Japan.
<Japan pharmaceutical business>
〇 Revenue totaled ¥266,810 million (down 4.2% year-on-year), with segment profit at
¥111,642 million (down 8.8% year-on-year). Of this amount, revenue totals for Prescription
medicines and Generics were ¥233,921 million (down 4.7% year-on-year) and ¥28,494
(up 6.0% year-on-year) respectively, while revenue for Diagnostics was ¥4,394 million
(down 26.5% year-on-year). The Group’s diagnostics subsidiary EIDIA Co., Ltd. was
transferred to Sekisui Chemical Co., Ltd. as of December 28, 2015.
〇 By product, revenue from Humira, a fully human anti-TNF-alpha monoclonal antibody,
came to ¥32,628 million (up 9.3% year-on-year). Co-promotion revenue for Lyrica, a pain
treatment being co-promoted with Pfizer Japan Inc., came to ¥24,716 million (up 14.7%
year-on-year), while revenue for Lunesta, an anti-insomnia agent, steadily expanded to
¥5,977 million (up 32.0% year-on-year). Regarding oncology-related products, revenue
from Halaven achieved double-digit growth at ¥6,799 million (up 12.1 year-on-year) and
Lenvima reached ¥1,547 million. Revenue for Aricept and Pariet was ¥40,478 million
(down 13.8% year-on-year) and ¥30,428 million (down 18.0% year-on-year) respectively.
〇 Lenvima was launched In May 2015, while in June of the same year, Tambocor Fine
Granules 10% was launched as a new formulation of the anti-tachyarrhythmia agent
Tambocor.
<Americas pharmaceutical business>
〇 Total revenue came to ¥122,246 million (up 2.0% year-on-year). Segment profit increased
59.4% year on year to ¥23,731 million due to reduced marketing costs as a result of
efficient marketing activities.
4
〇 Regarding revenue from oncology-related products, the antiemetic agent Aloxi and
Halaven showed positive growth, recording ¥54,702 million (up 9.8% year-on-year) and
¥18,285 million (up 10.9% year-on-year), respectively, while Lenvima, which was
launched in February 2015, showed signs of a smooth start with revenue of ¥8,800 million.
Regarding epilepsy products, both Banzel and Fycompa achieved high growth, recording
¥13,228 million (up 26.8% year-on-year) and ¥3,840 million (up 106.1% year-on-year),
respectively. BELVIQ recorded ¥4,422 million (down 18.6% year-on-year).
〇 Halaven and anticancer agent Gliadel were launched in Mexico in April 2015.
<China pharmaceutical business>
〇 Revenue totaled ¥49,289 million (up 20.2% year-on-year) with segment profit of ¥12,924
million (up 22.3% year-on-year), indicating sustained high growth for this business
segment.
〇 By product, revenue for major products achieved steady growth; this included the
peripheral neuropathy treatment Methycobal recording ¥18,719 million (up 8.0% year-on
-year), liver disease / anti-allergy agents Stronger Neo-Minophagen C and Glycyron
Tablets recording ¥9,278 million (up 34.4% year-on-year), Aricept recording ¥5,552 million
(up 17.7% year-on-year) and Pariet recording ¥3,265 million (up 14.0% year-on-year).
<Asia pharmaceutical business>
〇 In terms of revenue, with growth in markets such as South Korea, Taiwan, and Thailand,
total revenue for this segment reached ¥34,007 million (up 10.1% year-on-year). Segment
profit was ¥8,314 million (up 12.2% year-on-year).
〇 By product, revenue from Aricept came to ¥9,969 million (up 6.6% year on year), Humira
¥8,981 million (up 11.5% year-on-year) and Methycobal ¥3,087 million (up 18.0%
year-on-year), respectively, with all three products contributing to sustained growth. Pariet
recorded ¥3,518 million (down 4.2% year-on-year).
〇 Lenvima and Fycompa were launched in South Korea in February 2016.
<EMEA pharmaceutical business>
〇 Revenue totaled ¥41,331 million (up 7.3% year-on-year), with both the oncology related
products and epilepsy products recording year-on-year increases. Segment profit was
¥10,330 million (up 56.5% year-on-year).
〇 By product, revenue from oncology-related products saw sustained growth for Halaven at
¥13,166 million (up 13.8% year-on-year) while new product Lenvima reached ¥1,119
million. Regarding revenue for epilepsy products, revenue for Zonegran decreased to
¥7,626 million (down 6.0% year-on-year), while revenue from Zebinix and Fycompa
increased to ¥3,824 million (up 18.2% year-on-year) and ¥3,620 million (up 51.0%
year-on-year), respectively.
〇 Since the launch of Lenvima in the U.K. in June 2015, the product has been launched in
EMEA countries including Austria, Sweden, Germany, Spain, Switzerland and Portugal.
5
<Consumer Healthcare Business—Japan>
〇 Revenue totaled ¥18,077 million (up 6.2% year-on-year), while segment profit was ¥2,696
million (up 104.8% year-on-year).
〇 Revenue from Chocola BB brand products totaled ¥11,052 million (up 6.8% year-on-year).
(2) Research & Development Pipeline, Alliances and Other Events
[Status of Ongoing Research & Development Pipelines]
〇 The anticancer agent Halaven (eribulin) has obtained approval for use in (generally either
second- or third-line) chemotherapy for breast cancer in approximately 60 countries
including Japan, the U.S. and in Europe and Asia. A Phase III study in China to investigate
the agent as a third-line chemotherapy for breast cancer is underway. Applications for the
agent for use in the treatment of soft-tissue sarcoma were submitted in Japan, the U.S. and
Europe in July 2015. The agent was subsequently approved in the U.S. in January 2016
(for use in treatment of liposarcoma) and in Japan in February 2016 (for use in treatment of
soft tissue sarcoma). In Europe, the product was approved for treatment of liposarcoma in
May 2016. Furthermore, a Phase I/II study to investigate the agent in combination with the
anti-PD-1 antibody pembrolizumab from Merck & Co., Inc. (Kenilworth, New Jersey, U.S.)
in metastatic triple-negative breast cancer is underway.
〇 The anticancer agent Lenvima (lenvatinib) has obtained approval for use in the treatment
for thyroid cancer over 40 countries. Following initial approval in the U.S. in February 2015,
the agent received approval in Japan and Europe in March and May respectively in the
same year. In October 2015, the agent was also approved in South Korea as the first
country in Asia outside Japan to receive approval. Furthermore, a Phase II study of the
agent in renal cell carcinoma conducted in the U.S. and Europe met its primary endpoint,
and applications seeking approval for this indication were submitted in the U.S. and Europe
in November 2015 and January 2016, respectively. Moreover, for this potential indication,
the agent received a Breakthrough Therapy Designation as well as Priority Review from
the U.S. FDA, and was granted accelerated review by the European Medicines Agency. In
addition, a Phase III study of the agent in hepatocellular carcinoma is underway in the U.S.
and Europe and Asia, including Japan and China. In Japan, a Phase II study of the agent in
biliary tract cancer is in progress. Additionally, several other Phase II studies of the agent
are underway, including in third-line non–small cell lung cancer (NSCLC) single-agent
treatment, NSCLC with RET translocations and endometrial cancer. A Phase I/II study to
investigate the agent in combination with the anti-PD-1 antibody pembrolizumab from
Merck & Co., Inc. (Kenilworth, New Jersey, U.S.) in select solid tumors is also underway.
〇 The antiepileptic agent Fycompa (perampanel) has been approved in over 45 countries as
an adjunctive therapy for use in the treatment of partial-onset seizures in adult and
adolescent patients from 12 years of age with epilepsy. Additionally, the agent was also
approved as an adjunctive therapy for use in the treatment of primary generalized
tonic-clonic (PGTC) seizures in the U.S. and Europe in June 2015, and in the Philippines
for the first time in Asia in November 2015, respectively. A new drug application for the
agent seeking approval as an adjunctive treatment of partial-onset seizures as well as
6
generalized tonic-clonic seizures was submitted in Japan in July 2015, and subsequently
approved in March 2016. In addition, an application for a new suspension formulation was
approved in the U.S. in April 2016 while in Europe the application is currently undergoing
regulatory review. Furthermore, a Phase II study of the agent as a potential therapy for
partial-onset seizures in pediatric patients is being conducted in the U.S. and Europe.
〇 Regarding the fully human anti-TNF-alpha monoclonal antibody Humira (adalimumab), in
May 2015, the Japanese Ministry of Health, Labour and Welfare (MHLW) lifted the
“all-case surveillance” special drug use-results survey condition for use in patients with
ankylosing spondylitis in Japan.
〇 In August 2015, the Company received notification from the MHLW to the effect that the
“all-case surveillance” survey condition required for approval of the anticancer agent
Gliadel 7.7 mg Implant (carmustine) has been lifted in Japan.
〇 In September 2015, the Company received additional approval for the vascular
embolization device DC Bead (specially controlled medical device) to be used for the
treatment of hypervascular tumors and arteriovenous malformations in Japan.
〇 In November 2015, the Company received notification from the MHLW to the effect that the
“all-case surveillance” special drug use-results survey condition required for approval of the
antirheumatic agent Careram Tablets 25 mg (iguratimod) has been lifted in Japan.
〇 Regarding Humira, in February 2016, the MHLW lifted the “all-case surveillance” special
drug use-results survey condition for use in the treatment of polyarticular juvenile idiopathic
arthritis in Japan.
〇 Regarding the application for re-evaluation of the egg-white lysozyme preparation Neuzym
(lysozyme hydrochloride, “lysozyme”) submitted to the MHLW, in March 2016, the Group
received the Committee on Reevaluation of the Pharmaceutical Affairs and Food
Sanitation Council’s opinion that the medical usefulness of lysozyme in the present medical
environment is thought to have decreased, and its usefulness cannot be confirmed at this
point in time. As such, sales of the product have been discontinued, and a voluntary recall
is being conducted. Neuzym was manufactured by the Group's subsidiary Sannova Co.,
Ltd. (Gunma) and marketed by the Company in Japan.
〇 In November 2015, the U.S. FDA accepted for review a new drug application for a
once-daily formulation of the antiobesity agent BELVIQ (lorcaserin).
〇 In March 2016, the Company withdrew its new drug application for ultra-high dose
mecobalamin (development code: E0302) as a treatment for amyotrophic lateral sclerosis
(ALS) in Japan.
〇 Regarding the serotonin 2C receptor agonist lorcaserin, co-development with Arena
Pharmaceuticals has been discontinued for the smoking cessation indication at the Phase
II clinical study stage in the U.S.
7
〇 Development has been discontinued for the melanoma indication for the anticancer agent
E7272 (denileukin diftitox) at the Phase II clinical study stage in the U.S.
〇 A Phase II study of the anticancer agent E7777 in peripheral T-cell lymphoma and
cutaneous T-cell lymphoma has been initiated in Japan.
〇 Development has been discontinued for the functional dyspepsia indication for the proton
pump inhibitor Pariet (rabeprazole) at the Phase II clinical study stage in Japan.
[Major Alliances, Agreements and Other Events]
〇 In April 2015, the Company entered into a collaborative agreement with Genomics plc
(U.K.) to use Genomics’ sophisticated statistical analyses of large-scale multi-phenotype
genetic association data to inform the Company’s drug discovery process, including target
validation, indication selection and repositioning.
〇 In April 2015, the Company entered into a collaboration agreement with Nihon
Medi-Physics Co., Ltd. (Tokyo) to contribute to the diagnosis and treatment of dementia
with Lewy bodies (DLB) in Japan. The two companies will share information on dementia,
including DLB, and work to generate new evidence with each other as well as hold study
meetings in order to improve the diagnosis and treatment of DLB.
〇 In July 2015, the Group’s U.S. subsidiary Eisai Inc. entered into a definitive agreement to
transfer ownership of its manufacturing facility based in Research Triangle Park in North
Carolina to Biogen Inc. (U.S.). The transfer was completed in August 2015.
〇 In July 2015, JCR Pharmaceuticals Co., Ltd. (Hyogo) and the Company concluded a
feasibility study agreement on the application of JCR Pharmaceuticals’ blood-brain-barrier
penetration technology “J-Brain Cargo” to the discovery of new treatments.
〇 In July 2015, the Company and Halozyme Therapeutics, Inc. (U.S.) signed a clinical
collaboration agreement to evaluate Eisai’s anticancer agent Halaven in combination with
Halozyme Therapeutics’ investigational drug PEGPH20 (PEGylated recombinant human
hyaluronidase) in first-line HER2-negative advanced breast cancer.
〇 In August 2015, the Company and Purdue Pharma L.P. (U.S.) entered into a worldwide
collaboration agreement for the development and commercialization of the Company’s
clinical candidate lemborexant (development code: E2006), a dual orexin receptor
antagonist entering Phase III clinical development for the treatment of insomnia.
〇 In September 2015, the Drugs for Neglected Diseases initiative (Switzerland) and the
Company signed an agreement to proceed with the clinical development of the Company’s
antifungal drug fosravuconazole for the potential new treatment of eumycetoma, a fungal
form of mycetoma and one of the world’s most neglected diseases.
〇 The Company entered into two joint research agreements for the development of
antimalarial medicines with the Liverpool School of Tropical Medicine (U.K.) / University of
Liverpool (U.K.) and the non-profit public-private partnership Medicines for Malaria Venture
(Switzerland) in September and October 2015, respectively. In November 2015, these two
joint research programs were awarded a grant from the Global Health Innovation
Technology Fund.
8
〇 In November 2015, the Company entered into an agreement to grant Roivant Sciences Ltd.
an exclusive worldwide license concerning the research, development, manufacture and
marketing of its in-house discovered selective phosphodiesterase 4 inhibitor E6005. The
development of E6005 is at the Phase II clinical study stage in Japan for the indication of
atopic dermatitis.
〇 In November 2015, the Company entered into a share transfer agreement with Sekisui
Chemical Co., Ltd. (Osaka) concerning the transfer of all shares held by the Company in its
wholly-owned subsidiary EIDIA Co., Ltd. to Sekisui Chemical. All transfer processes were
completed on December 28, 2015.
〇 In November 2015, the Company entered into a share transfer agreement with Mitsubishi-
Kagaku Foods Corporation (Tokyo), a subsidiary of Mitsubishi Chemical Corporation,
concerning the transfer of all shares held by the Company in its wholly owned subsidiary
Eisai Food & Chemical Co., Ltd. to Mitsubishi-Kagaku Foods. The share transfer was
completed on February 1, 2016.
〇 In November 2015, the Group’s China holding company Eisai China Holdings Ltd. (Suzhou,
Jiangsu) entered into an agreement to acquire all shares of the Chinese generic
pharmaceutical company Liaoning TianYi Biological Pharmaceutical Co., Ltd. (Benxi,
Liaoning), and the transfer process was completed on December 28, 2015.
〇 In December 2015, the Company entered into a business acquisition agreement with
Alfresa Holdings Corporation (Tokyo) concerning the splitting off of the Company’s
consolidated pharmaceutical manufacturing and marketing subsidiary Sannova Co., Ltd.
(shareholding ratio: 79.5%) via an absorption-type split, its succession by a newly
established company, and the subsequent transfer of all shares issued in this newly
established company to Alfresa Holdings. The share transfer was completed on April 1,
2016.
〇 In January 2016, the Company entered into an exclusive license agreement with HUYA
Bioscience International, LLC (U.S.) to develop and market the oral histone deacetylase
inhibitor HBI-8000 in Japan, South Korea, Thailand, Malaysia, Indonesia, Philippines,
Vietnam and Singapore. Under the agreement, HUYA Bioscience International will be
responsible for development of the agent for peripheral T-cell lymphoma as well as adult
T-cell leukemia-lymphoma, while the Company will be responsible for commercialization in
the licensed territories. For all other indications, the Company retains exclusive rights to
develop and market the agent in the licensed territories.
〇 In February 2016, the Company entered into a comprehensive non-exclusive collaboration
agreement with Sysmex Corporation (Hyogo) aimed at the creation of new diagnostics in
the field of dementia.
〇 In March 2016, the Group’s U.S. subsidiary Eisai Inc. agreed to return all rights to promote
and distribute AKYNZEO (netupitant/palonosetron) in the U.S. to Helsinn Therapeutics Inc.,
the U.S. subsidiary of Helsinn Healthcare S.A. (Switzerland). Regarding the antiemetic
agent ALOXI (palonosetron), the Group will continue to co-promote the product with
Helsinn Therapeutics Inc. as in the past.
9
〇 In March 2016, the Group’s U.S. subsidiary Eisai Inc. entered into a share purchase
agreement concerning the transfer of all the shares of AkaRx, Inc. held by Eisai Inc. to
PBM Capital Group, LLC. (U.S., “PBM”). In accordance with the agreement, Eisai Inc. has
transferred to PBM ownership of AkaRx and the worldwide rights to develop, market and
manufacture the investigational thrombocytopenia treatment avatrombopag (generic name,
development code: E5501).
〇 In March 2016, the Company entered into an agreement to transfer the exclusive
worldwide development and marketing rights (excluding Japan and Asia) for its
investigational anticancer agent E7777 to Dr. Reddy’s Laboratories Ltd.
〇 In April 2016, the gastrointestinal specialty pharma EA Pharma Co., Ltd. (EA Pharma) was
established through the splitting off of a portion of the Company’s gastrointestinal disease
treatment business and its subsequent succession by AJINOMOTO PHARMACEUTICALS
CO., LTD. (Tokyo), a wholly-owned subsidiary of Ajinomoto Co. Inc. (Tokyo), via
absorption-type split. EA Pharma is a consolidated subsidiary of the Company, with the
Company and Ajinomoto holding 60% and 40% of the shares in EA Pharma, respectively.
(3) Consolidated Financial Results Forecasts for Fiscal 2016
(April 1, 2016, to March 31, 2017)
[Consolidated Forecast]
(Percentage figures show year-on-year changes.)
2nd quarter (cumulative) Fiscal year
Revenue ¥279,800 million 1.6% ¥580,000 million 5.9%
Operating profit ¥19,700 million 9.0% ¥53,700 million 3.4%
Profit before income taxes ¥19,000 million 9.6% ¥52,200 million 3.4%
Profit for the period ¥10,000 million (10.2%) ¥32,400 million (41.1%)
Profit attributable to owners
of the parent ¥8,200 million (25.7%) ¥29,200 million (46.8%)
* Forecasted earnings per share attributable to owners of the parent (basic): 2nd quarter (cumulative) ¥28.54;
fiscal year ¥102.12
* Assumptions: 1 USD = ¥113, 1 EUR = ¥127, 1 GBP = ¥165, 1 RMB = ¥17.2
(Reference) Currency exchange rates for fiscal 2015 (average)
1 USD = ¥120.14, 1 EUR = ¥132.57, 1 GBP = ¥181.30, 1 RMB = ¥18.85
<Revenue>
〇 A number of factors including further growth from additional indications and the expanding
launch of global brands Halaven, Lenvima and Fycompa, combined with growth in the
Japan Pharmaceutical Business driven by the establishment of EA Pharma Co., Ltd., and
the shift to a business structure with a greater focus on regional care, in addition to
maintenance of high growth in China and Asia, will help to offset the impact of drug price
10
revisions in Japan. As such, consolidated revenue is expected to increase to ¥580,000
million (up 5.9% year-on-year).
〇 Revenue is expected to increase for Halaven and Lenvima to ¥49,000 million (up 22.0%
year-on-year) and ¥28,000 million (up 144.0% year-on-year), while revenue for Fycompa
is also expected to increase to ¥13,500 million (up 78.7% year-on-year).
<Profit>
〇 In addition to the anticipated increase in revenue due to the expansion of global brands,
through the Group’s initiatives to improve productivity, operating profit is expected to come
to ¥53,700 million (up 3.4% year-on-year). Together with carrying out focused investment
on R&D projects for flagship candidates in the strategically important areas of neurology
and oncology, the Group is striving to further enhance its revenue structure through
various initiatives including thorough investment of resources optimized for revenue
expansion and promoting a reduction in cost of sales by leveraging local advantages and
technology at each production site.
〇 Due to the effect of temporary reductions in tax expenses in the United States that
occurred in the previous period, profit for the year is expected to come to ¥32,400 million
(down 41.1% year-on-year), while profit attributable to owners of the parent is expected to
be ¥29,200 million (down 46.8% year-on-year).
11
2) Analysis Concerning Consolidated Financial Position
[Assets, Liabilities and Equity]
〇 Total assets as of the end of the period amounted to ¥973,987 million (down ¥79,831
million from the end of the previous fiscal year), in part due to a decrease in property, plant
and equipment following the U.S. plant transfer and depreciation, and a decrease in
intangible assets due to amortization of marketing rights.
〇 Total liabilities as of the end of period amounted to ¥397,159 million (down ¥54,598 million
from the end of the previous fiscal year), in part due to redemption of bonds and a
decrease in trade payables and other liabilities.
〇 Total equity as of the end of the period amounted to ¥576,828 million (down from ¥25,233
million from the end of the previous fiscal year) following a reduction in exchange
differences from the previous fiscal year-end date.
〇 As a result of the above, the ratio of equity attributable to owners of the parent was 58.9%
(up 2.1 percentage points from the end of the previous fiscal year). Furthermore, the net
debt equity ratio (Net DER) as of the end of this period was 0.01 (down 0.05 points from
the end of the previous fiscal year).
(Note) Net DER = (Interest-bearing debts [Bonds and borrowings] - Cash and cash equivalents - Time deposits exceeding
three months) / Equity attributable to owners of the parent
[Cash Flows] (April 1, 2015, to March 31, 2016)
〇 Net cash provided by operating activities amounted to ¥95,617 million (up ¥19,595 million
from the previous fiscal year). Specifically, profit before income taxes was ¥ 50,473 million;
depreciation and amortization amounted to ¥34,064 million.
〇 Net cash used in investing activities amounted to ¥6,701 million (down ¥12,140 million for
the previous fiscal year). Proceeds from sale of property, plant and equipment totaled
¥13,995 million and purchases of intangible assets, including marketing rights, was
¥33,258 million. Furthermore, net cash flow on acquisition of a generics pharmaceutical
company in China totaled ¥8,954 million and net cash inflow on sales of a subsidiary in
Japan totaled ¥20,531 million. Capital expenditures totaled ¥14,500 million.
〇 Net cash used in financial activities amounted to ¥72,944 million (up ¥13,202 million from
the previous fiscal year), Redemption of bonds was ¥30,000 million, and the amount of
dividends paid was ¥42,865 million.
〇 As a result, cash and cash equivalents as of the end of this period stood at ¥179,326
million (up ¥5,991 million from the end of the previous fiscal year).
〇 Free cash flows (net cash provided by operating activities less capital expenditure) for this
period stood at ¥81,117 million (up ¥20,707 million from the previous fiscal year).
12
[Trends in Financial Indicators]
FY2012 FY2013 FY2014 FY2015
Ratio of equity attributable to owners
of the parent (%) 48.0 54.0 56.8 58.9
Ratio of equity attributable to owners
of the parent on market basis (%) 118.7 117.7 231.3 198.8
Debt to cash flow ratio 4.3 2.8 3.2 2.2
Interest coverage ratio 11.2 15.6 17.3 24.2
Ratio of equity attributable to owners of the parent: Equity attributable to owners of the parent / total assets
Ratio of equity attributable to owners of the parent on market basis: Market capitalization / total assets
Debt to cash flow ratio: Interest-bearing debts / cash flow
Interest coverage ratio: Cash flow / interest payments
(Notes)
1. Figures are calculated based on consolidated financial results
2. Market capitalization is calculated based on the number of outstanding shares excluding treasury stock
3. Cash flow represents operating cash flow
4. Interest-bearing debts include all debts subject to interest payment among the debt amounts stated in the
consolidated balance sheet.
5. As IFRS was adopted from fiscal 2013, only the past three periods are shown for comparison.
3) Basic Policy on Profit Appropriation and Dividends for Fiscal 2015 and 2016
At Eisai Co., Ltd., the dividend payments are determined by a resolution of the Board of
Directors as specified in the Company’s Articles of Incorporation. The Company has set the
year-end dividend for fiscal 2015 at ¥80 per share as previously projected. With the interim
dividend of ¥70 per share, the company intends to pay the total dividend of ¥150 per share for
the year (same amount as the previous year). In this context, the DOE ratio is 7.3%.
The annual dividend for fiscal 2016 (the year ending March 31, 2017) is expected to be ¥150
per share (¥70 for interim and ¥80 for year-end dividend), unchanged from fiscal 2015.
For further information on the Company’s dividend policy, please refer to “2. Management
Policy 4) Basic Policy for Capital Strategy (2) Shareholder Returns” on page 16.
13
2. Management Policy
1) Corporate Mission
The Eisai Group defines its corporate mission as “Giving first thought to patients and their
families, and to increasing the benefits that health care provides.” Guided by this mission, all
corporate officers and employees aspire to meet the various needs of global health care as
representatives of a “human health care (hhc) company” that is capable of making a meaningful
contribution under any health care system. The Group codified this fundamental approach into its
Articles of Incorporation and endeavors to share its basic concept with shareholders.
In order to understand the true needs of patients and their families, it is important for each
employee to first get close to the patients, and get a sense of their thoughts and feelings that
cannot be expressed in words. This is the starting point of all of Eisai’s corporate activities. The
Group recommends that all employees worldwide spend 1% of their working hours with patients.
Translating this hhc philosophy into action, the Group is committed to deepening the
relationships built on trust with its principal stakeholders, namely patients and their families,
shareholders, and employees, while continuously ensuring compliance with applicable laws and
ethical standards, thereby enhancing corporate value.
2) Management Objectives
The Group considers Return on Equity (ROE)*1 an important indicator of the sustainable creation
of value for shareholders. In terms of ROE management, the Group aims to attain a high ROE
level that exceeds the cost of capital by improving profit margins, financial leverage, and asset
turnover in the medium- to long-term.
Furthermore, Dividend on Equity (DOE)*2 shows the ratio of dividend to shareholders’ equity
and the Group positions DOE as an important index for balance sheet management and capital
policy. In addition, the Group uses the ratio of equity attributable to owners of the parent and net
debt equity ratio as indicators to measure a healthy balance sheet. *1
ROE (Profit ratio to equity attributable to owners of the parent) *2
DOE (Dividend on equity attributable to owners of the parent ratio)
3) Medium- to Long-term Corporate Management Strategy and Issues that Need to be
Addressed
Considering the expansion of the middle-income class in emerging countries, the global aging of
society, and the rapid increase in non-communicable diseases such as cancer, lifestyle diseases
and dementia, the quality, efficiency and sustainability of healthcare is being increasingly called
into question. In order to respond to the coming environmental changes to the global
pharmaceutical industry over the next decade, the Eisai Group has set out a new medium-term
business plan “EWAY 2025” along seven themes, namely: “Patient-centricity”, “Prevention, Cure
and Care”, “Regional Care / Home Care”, “Outcomes”, “Payers”, “Access” and “Digital
Technology”, and the plan was initiated in April 2016.
14
(1) Reflecting on the HAYABUSA Plan
According to the Group’s strategic plan “HAYABUSA” (FY2011-FY2015), results were attained to
a certain extent in qualitative areas such as strengthening the Asia Region, expanding into
developing countries, creating a global business organization, installing the oncology business
as part of the foundation of the Group, as well as enhancing product creation capability. Although
profit and loss related targets for revenue and profit were not met due to an inadequate response
to business environment changes stemming from LOE of major products as well as delays in
product creation, the Group was still able to obtain certain results to improve shareholder value
such as strengthening the balance sheet by replenishing shareholders’ equity and reducing
interest bearing liabilities, as well as maintaining dividend and increasing market capitalization.
(2) The New Medium-term Business Plan “EWAY 2025”
EWAY 2025 consists of three strategic intents, and the Group’s vision to work toward over the
next decade. The three strategic intents are:
a) Respond to patients thinking “I do not want to become ill. If I do, I want to know and be cured
as quickly as possible.”
b) Respond to patients thinking “I want to control my disease in my neighborhood and safely
spend the rest of my life with peace of mind.”
c) Focus on “business domains where Eisai can find out “Ricchi (opportunities)” based on needs
and fulfill them with Eisai innovation.”
Serving as the foundation for these strategic intents is the Group’s corporate philosophy of hhc
which reflects its desire to contribute to patients. Sharing experiences by spending time together
with patients and the strong motivation to understand their true needs is the source of the
Group’s innovation.
EWAY 2025 positions “dementia-related and neurological diseases (neurology)” and “cancer
(oncology)” as strategically important areas where the Group can find out “Ricchi”, areas where
patients true needs remain unmet and the Group can become a front-runner. Accordingly, the
Neurology Business Group (NBG) and the Oncology Business Group (OBG) were established.
These two business groups are organizational structures that aggregate all functions from
research and development through to sales, and will carry out investment focused on R&D for
flagship candidates for the Ricchi identified in these two areas.
Aiming to realize prevention and cure in the field of dementia, the NBG aims to steadily roll out
its development programs for next-generation Alzheimer’s disease treatments – the BACE
inhibitor E2609 and the anti-Aβ protofibril antibody BAN2401, as well as developing therapies to
improve the symptoms associated with dementia and early stage diagnostic methods.
Furthermore, the NBG aims to address new patient needs such as sleep fragmentation
associated with dementia in addition to insomnia with the orexin receptor antagonist lemborexant
(generic name). Also, the NBG is working to advance the development of a next-generation
AMPA receptor antagonist (for multiple neurological diseases) and other treatments while
15
maximizing value for patients through additional indications and formulations for the antiepileptic
drug Fycompa and the antiobesity agent BELVIQ, both global brands.
The OBG will continue to make full use of its technological strength in synthetic chemistry and
drug discovery targeting (for molecular targets) that fostered Lenvima and Halaven to advance
new drug development toward a cure for cancer. While advancing development on novel
compounds such as the Group’s first in-house discovered cancer immunotherapy candidate
E7046 and novel antibody therapies from U.S. research subsidiary Morphotek, Inc., another U.S.
research subsidiary, H3 Biomedicine Inc., is aiming to shorten development time for its FGFR4
inhibitor (for hepatocellular carcinoma, etc.) and SF3B1 modulator (for myelodysplastic
syndromes, etc.) by taking a drug discovery approach based on cancer genome information.
Additionally, by steadily expanding the indications for global brands Lenvima and Halaven, the
OBG strives to increase patient value through both products.
Additionally, to address the rapid accelerating advances in digital technology, the Group plans
to establish an hhc data creation center that will centrally manage the collection and access to
various kinds of data represented by big data and other data accumulated within the Group. By
analyzing these data with the free use of sophisticated parsing techniques such as artificial
intelligence, the Group may be able to identify new potential drug targets and biomarkers,
provide solutions that match the individual needs of patients, and create evidence for
outcome-based assessment.
Striving to respond to forecasted reforms to the medical system including the specialization
and coordination of medical functions as well as the enhancement of home care, the Group is
implementing a change to the business mix with medical, outcomes and access at the core to
focus on regional care. Especially in Japan, the Group plans to create evidence to show how a
mix of products from EA Pharma (gastrointestinal disease) and Elmed Eisai (generics) in
addition to Eisai can bring about the best outcomes for diseases with high incidence that require
home care such as dementia, insomnia, osteoporosis, and constipation, as well as increase
access for patients. Furthermore, based on knowledge and experience in the field of dementia
built up since the launch of Aricept, the Group aims to roll out a dementia solutions business that
features tools to support early diagnosis, a multidisciplinary cooperation system, and tools to
encourage adherence, in order to contribute to patients by providing an environment under which
they can live safely with peace of mind in their local community.
The Group's business portfolio is now concentrated into six areas consisting of Neurology
Business, Oncology Business, EA Pharma, Generics Business, Consumer Business, and
Dementia Solutions Business, where Ricchi can be found out and the Group can innovate
constantly in. In the global production system as well, the Group intends to establish innovation
based “Ricchi” that utilize the strengths of each factory, and expand demand innovation activities
on a global scale.
Looking toward 2025, the Group’s ideal form is to become a “medico societal innovator” which
will fulfil hhc needs in the two most important domains of “Prevention, Cure and Care”, and
“Regional care that ensures safety and peace of mind”. Moving forward, the Group will work to
16
fully implement its new medium term business plan EWAY 2025 and strive to contribute further
to patients around the world.
(3) Initiatives to Improve Access to Medicines
To help eliminate neglected diseases in developing nations, the Group has signed an
agreement with the World Health Organization (WHO) to provide a treatment for lymphatic
filariasis for use in elimination initiatives conducted in endemic countries. Under this agreement,
the Group will provide WHO with 2.2 billion tablets of DEC (diethylcarbamazine) free of charge
by 2020. These DEC tablets are manufactured at the Vizag Plant in India. As of March 2016,
approximately 600 million tablets have been supplied to 23 countries since the commencement
of supply in October 2013. The Group is also involved in the development of new drugs for the
treatment of other neglected tropical diseases as well as tuberculosis and malaria. Partnerships
are being actively promoted with international NPOs, research institutes, and other organizations
specializing in these diseases. The Group considers its contributions to the economic
development and expansion of the middle-income class through the enhancement of health and
welfare in developing and emerging countries as a form of long-term investment in the future
growth of these economies.
4) Basic Policy for Capital Strategy
Aiming to improve shareholder value, the Group’s capital policy revolves around “medium- to
long-term Return on Equity (ROE) management,” “sustainable and stable shareholder returns”
and “value-creative investment criteria.”
(1) Medium- to Long-term ROE Management
The Company believes that ROE is an important indicator of the sustainable creation of value
for shareholders. In terms of medium- to long-term ROE management, the Company aims for
an ROE that exceeds the cost of capital (creation of a positive equity spread*1) by improving
profit margins, financial leverage and asset turnover in the medium- to long-term.
(2) Shareholder Returns
In terms of shareholder returns, profits are returned to all shareholders in a stable and
sustainable way based on factors such as a healthy balance sheet and comprehensive
consideration of the consolidated financial results, Dividends on Equity (DOE) and free cash
flow, as well as taking into consideration the signaling effect. Because DOE indicates the ratio
of dividends to consolidated net assets, the Company has positioned it as an indicator that
reflects balance sheet management, and, consequently, capital policy. Acquisition of treasury
stock will be carried out appropriately after factors such as the market environment and capital
efficiency are taken into account. The Company uses the ratio of equity attributable to owners
of the parent and net debt ratio as indicators to measure a healthy balance sheet.
17
(3) Value-Creative Investment Criteria
To ensure that strategic investments create shareholder value, the Company invests
selectively using its Value-Creative Investment Criteria based on Net Present Value and the
Internal Rate of Return spread using a risk-adjusted hurdle rate
*1 Equity spread = ROE – Cost of shareholder capital
5) Corporate Governance
(1) Basic Approach to Corporate Governance
The Company believes that the focus of corporate governance is to respect the rights of all our
shareholders, ensure fair and transparent management, and enhance corporate vitality.
Always aiming for the best corporate governance, the Company strives to achieve corporate
governance in accordance with the following basic points of view.
(2) Shareholder Relations:
The Company shall:
・ Respect the rights of all shareholders;
・ Ensure the equality of all shareholders;
・ Develop positive and smooth relations with the Company's stakeholders including all
shareholders; and
・ Ensure transparency by properly disclosing Company information.
(3) Corporate Governance System
・ The Company has adopted a “Company with a Nomination Committee, etc.” System.
・ The Board of Directors (“the Board”) shall delegate to the Corporate Officers broad
powers of decision-making over business execution, to the extent permitted by the laws
and regulations, and it shall exercise the function of management oversight.
・ The majority of the Board shall be independent and neutral Outside Directors.
・ The Representative Corporate Officer and CEO shall be the only Director who is
concurrently a Corporate Officer.
・ To clarify the management oversight function, the positions of Chair of the Board and of
Representative Corporate Officer and CEO shall be separated and performed by different
people.
・ The Nomination Committee and the Compensation Committee shall be entirely composed
of Outside Directors, and the majority of the Audit Committee shall consist of Outside
Directors.
・ Each of the Chairs of the Nomination Committee, the Audit Committee and the
Compensation Committee shall be appointed from the Outside Directors.
・ The internal control system shall operate properly to ensure the credibility of financial
reports.
18
Detailed information on the Company’s corporate governance system is available on the Eisai
corporate website along with the Company’s Corporate Governance Guidelines, Rules of the
Board of Directors, Rules of the Nomination Committee, Rules of the Audit Committee, and
Rules of the Compensation Committee.
(http://www.eisai.com/company/governance/index.html)
The Corporate Governance Report submitted to the Tokyo Stock Exchange (TSE) is available
on the website of the TSE as well as on the Eisai corporate website.
(http://www.eisai.com/company/cgregulations.html)
6) Compliance and Risk Management
The Group defines compliance as “the observance of the highest legal and ethical standards”
and positions it at the core of management activities. In addition, the Group defines internal
control as “the systems and processes established and managed internally to ensure proper and
efficient operations,” and shares the Policy for Internal Control with all officers and employees.
The Group has appointed a Chief Compliance Officer and Corporate Officer responsible for
internal control, who works to enhance compliance and internal control on a global scale in hope
of raising awareness of compliance and risks and strengthening the Group’s ability to respond to
such issues.
3. Basic Approach to the Selection of Accounting Standards
In order to make it more convenient for various stakeholders including shareholders and
investors in Japan and overseas by improving disclosure and comparability of financial
information on an international basis, the Company voluntarily adopted IFRS from the fiscal year
ended March 31, 2014 and has disclosed its consolidated financial statements in accordance
with IFRS from the first three-month period ended March 31, 2015.
19
4. Consolidated Financial Statements
1) Consolidated Statement of Income
(Millions of yen)
Note Fiscal year ended March 31, 2016
Fiscal year ended March 31, 2015
Revenue (1) 547,922 548,465
Cost of sales (2) (194,459) (193,595)
Gross profit 353,463 354,870
Selling, general and administrative expenses (2) (192,817) (194,546)
Research and development expenses (2) (122,307) (131,907)
Other income (3) 17,661 981
Other expenses (4) (4,066) (1,061)
Operating profit 51,935 28,338
Financial income (5) 2,024 2,429
Financial costs (6) (3,485) (4,892)
Profit before income taxes 50,473 25,875
Income taxes (7) 4,571 17,578
Profit for the year 55,045 43,453
Attributable to
Owners of the parent 54,933 43,254
Non-controlling interests 111 200
Earnings per share
Basic (yen) 192.23 151.57
Diluted (yen) 191.76 151.37
20
2) Consolidated Statement of Comprehensive Income
(Millions of yen)
Fiscal year ended March 31, 2016
Fiscal year ended March 31, 2015
Profit for the year 55,045 43,453
Other comprehensive income
Items that will not be reclassified to profit or loss
Financial assets measured at fair value through other comprehensive income
1,609 3,365
Remeasurements of defined benefit plans (6,816) 4,965
Subtotal (5,207) 8,330
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
(32,660) 61,927
Cash flow hedges (725) 520
Subtotal (33,386) 62,447
Total other comprehensive income (loss), net of tax
(38,593) 70,776
Comprehensive income for the year 16,452 114,230
Attributable to
Owners of the parent 16,483 113,949
Non-controlling interests (31) 280
21
3) Consolidated Statement of Financial Position
(Millions of yen)
Note As of
March 31, 2016
As of
March 31, 2015
Assets
Non-current assets
Property, plant and equipment 104,555 132,999
Goodwill 174,877 183,756
Intangible assets 104,163 127,629
Other financial assets 43,824 42,343
Other assets 7,139 3,372
Deferred tax assets 91,630 88,995
Total non-current assets 526,188 579,094
Current assets
Inventories 73,677 87,641
Trade and other receivables 147,664 174,336
Other financial assets 19,542 28,421
Other assets 20,305 10,992
Cash and cash equivalents 176,830 173,335
Subtotal 438,018 474,724
Assets held for sale (1) 9,782 -
Total current assets 447,800 474,724
Total assets 973,987 1,053,818
22
(Millions of yen)
Note As of
March 31, 2016
As of
March 31, 2015
Equity
Equity attributable to owners of the parent
Share capital 44,986 44,986
Capital surplus 58,232 58,040
Treasury shares (36,231) (37,308)
Retained earnings 394,974 387,967
Other components of equity 111,701 145,064
Total equity attributable to owners of the parent
573,661 598,749
Non-controlling interests 3,168 3,313
Total equity 576,828 602,061
Liabilities
Non-current liabilities
Bonds and borrowings 203,593 205,846
Other financial liabilities 3,214 2,352
Retirement benefit liabilities 13,203 7,238
Provisions 1,189 1,198
Other liabilities 20,962 25,543
Deferred tax liabilities 287 514
Total non-current liabilities 242,448 242,691
Current liabilities
Bonds and borrowings - 30,235
Trade and other payables 56,399 84,586
Other financial liabilities 4,221 4,602
Income tax payables 5,437 3,880
Provisions 11,143 11,126
Other liabilities 74,728 74,636
Subtotal 151,927 209,065
Liabilities directly associated with assets held for sale
(1) 2,784 -
Total current liabilities 154,711 209,065
Total liabilities 397,159 451,757
Total equity and liabilities 973,987 1,053,818
23
4) Consolidated Statement of Changes in Equity
Fiscal year ended March 31, 2016
(Millions of yen)
Equity attributable to owners of the parent
Share
capital
Capital
surplus
Treasury
shares
Retained
earnings
Other components of equity
Financial assets
measured at
fair value
through other
comprehensive
income
Remeasurements
of defined
benefit plans
As of April 1, 2015 44,986 58,040 (37,308) 387,967 - -
Profit for the year - - - 54,933 - -
Other comprehensive income (loss) - - - - 1,608 (6,695)
Comprehensive income
(loss) for the year - - - 54,933 1,608 (6,695)
Dividends - - - (42,865) - -
Share-based payments - (216) - - - -
Acquisition of treasury shares - - (94) - - -
Disposal of treasury shares - 367 1,171 - - -
Reclassification - - - (5,087) (1,608) 6,695
Other changes - 41 - 25 - -
Total transactions with owners - 192 1,077 (47,926) (1,608) 6,695
As of March 31, 2016 44,986 58,232 (36,231) 394,974 - -
Equity attributable to owners of the parent
Non-controlling
interests
Total
Equity
Other components of equity Equity
attributable to
owners of the
parent
Exchange
differences on
translation of
foreign operations
Cash flow
hedges
Total other
components
of equity
As of April 1, 2015 145,475 (411) 145,064 598,749 3,313 602,061
Profit for the year - - - 54,933 111 55,045
Other comprehensive income (loss) (32,639) (725) (38,451) (38,451) (142) (38,593)
Comprehensive income
(loss) for the year (32,639) (725) (38,451) 16,483 (31) 16,452
Dividends - - - (42,865) (59) (42,923)
Share-based payments - - - (216) - (216)
Acquisition of treasury shares - - - (94) - (94)
Disposal of treasury shares - - - 1,538 - 1,538
Reclassification - - 5,087 - - -
Other changes - - - 66 (55) 11
Total transactions with owners - - 5,087 (41,570) (114) (41,685)
As of March 31, 2016 112,837 (1,136) 111,701 573,661 3,168 576,828
24
Fiscal year ended March 31, 2015
(Millions of yen)
Equity attributable to owners of the parent
Share
capital
Capital
surplus
Treasury
shares
Retained
earnings
Other components of equity
Financial assets
measured at
fair value
through other
comprehensive
income
Remeasurements
of defined
benefit plans
As of April 1, 2014 44,986 57,949 (38,481) 379,210 - -
Profit for the year - - - 43,254 - -
Other comprehensive income (loss) - - - - 3,364 4,923
Comprehensive income
(loss) for the year - - - 43,254 3,364 4,923
Dividends - - - (42,810) - -
Share-based payments - (135) - - - -
Acquisition of treasury shares - - (48) - - -
Disposal of treasury shares - 226 1,220 - - -
Reclassification - - - 8,288 (3,364) (4,923)
Other changes - - - 26 - -
Total transactions with owners - 91 1,173 (34,497) (3,364) (4,923)
As of March 31, 2015 44,986 58,040 (37,308) 387,967 - -
Equity attributable to owners of the parent
Non-controlling
interests
Total
Equity
Other components of equity
Equity
attributable to
owners of the
parent
Exchange
differences on
translation of
foreign
operations
Cash flow
hedges
Total other
components
of equity
As of April 1, 2014 83,587 (931) 82,656 526,320 3,084 529,405
Profit for the year - - - 43,254 200 43,453
Other comprehensive income (loss) 61,889 520 70,696 70,696 81 70,776
Comprehensive income
(loss) for the year 61,889 520 70,696 113,949 280 114,230
Dividends - - - (42,810) (52) (42,862)
Share-based payments - - - (135) - (135)
Acquisition of treasury shares - - - (48) - (48)
Disposal of treasury shares - - - 1,446 - 1,446
Reclassification - - (8,288) - - -
Other changes - - - 26 (0) 26
Total transactions with owners - - (8,288) (41,521) (52) (41,573)
As of March 31, 2015 145,475 (411) 145,064 598,749 3,313 602,061
25
5) Consolidated Statement of Cash Flows (Millions of yen)
Note Fiscal year ended March 31, 2016
Fiscal year ended March 31, 2015
Operating activities
Profit before income taxes 50,473 25,875
Depreciation and amortization 34,064 38,940
Impairment losses 2,133 65
(Increase) decrease in working capital (1) 35,913 18,493
Interest and dividends received 1,896 1,887
Interest paid (3,949) (4,403)
Income taxes paid (9,995) (10,249)
Income taxes refund 2,096 3,903
Other (17,014) 1,511
Net cash from operating activities 95,617 76,022
Investing activities
Purchases of property, plant and equipment (6,814) (11,483)
Proceeds from sale of property, plant and equipment
13,995 2,813
Purchases of intangible assets (33,258) (6,942)
Net cash outflow on acquisition of subsidiaries (2) (8,954) -
Net cash inflow on sales of subsidiaries (3) 20,531 -
Purchases of financial assets (16,526) (9,912)
Proceeds from sale and redemption of financial assets
16,659 10,777
Payments of time deposits exceeding three months
(26,976) (37,174)
Proceeds from redemption of time deposits exceeding three months
34,934 33,021
Other (291) 60
Net cash from (used in) investing activities (6,701) (18,841)
Financing activities
Net increase (decrease) in short-term borrowings
(227) (5,994)
Proceeds from long-term borrowings 39,904 107,812
Repayment of long-term borrowings (40,000) (118,968)
Redemption of bonds (30,000) -
Dividends paid (42,865) (42,810)
Other 244 219
Net cash from (used in) financing activities (72,944) (59,742)
Effect of exchange rate change on cash and cash equivalents
(9,982) 21,974
Net increase (decrease) in cash and cash equivalents
5,991 19,414
Cash and cash equivalents at beginning of year 173,335 153,921
Cash and cash equivalents at end of year (4) 179,326 173,335
26
6) Notes to Consolidated Financial Statements
(Going Concern)
Not applicable
(Basis of Preparing Consolidated Financial Statements)
(1) Compliance
As the Company meets the requirements of a “Specified Company,” pursuant to Article 1-2 of the Consolidated
Financial Statement Ordinance, the consolidated financial statements of the Group have been prepared in
accordance with IFRS subject to the provisions of Article 93 of said Ordinance.
(2) Basis of measurement
The consolidated financial statements are prepared on an acquisition cost basis except for the financial instruments
that are measured at fair value and assets (liabilities) of retirement benefit plans.
(3) Presentation currency and unit
The consolidated financial statements are presented in Japanese yen, which is the Company’s functional currency,
and figures less than 1 million yen are rounded to the nearest million yen.
(4) Changes in accounting policies
The Group has adopted the following main accounting standards and interpretations from the fiscal year ended March
31, 2016.
Accounting standards
and interpretations
Mandatory
application
(Date of
commencement)
To be applied
by the Group Description
IAS 19 Employee Benefits July 1, 2014 Fiscal year ended
March 2016
Amendment of accounting for
contributions from employees or third
parties to defined benefit plans
The effect of Accounting standards and interpretations above on the consolidated financial statements is immaterial.
(5) Changes in accounting estimates
From the fiscal year ended March 31, 2016, the useful life of sales rights was revised by changing the estimation
method regarding exclusive sales periods for pharmaceutical products. As a result, amortization expenses (cost of
sales) for the fiscal year ended March 31, 2016, have been reduced by ¥2,309 million.
The reporting segment mainly affected by this change is the Americas pharmaceutical business.
(6) Early application of new accounting standards and interpretations
The Group has early applied the following accounting standards and interpretations from April 1, 2012.
・IFRS 9 “Financial Instruments” (issued in November 2009 and revised in October 2010 and December 2011)
27
(7) New accounting standards and interpretations not yet applied by the Group
As of the date of approval of the consolidated financial statements by the Group, main new accounting standards and
interpretations that have been issued are as follows.
Accounting standards
and interpretations
Mandatory
application
(Date of
commencement)
To be applied
by the Group Description
IAS 16 IAS 38
Property, Plant and Equipment Intangible Assets
January 1, 2016 Fiscal year ended
March 2017
Clarification of acceptable methods of depreciation and amortization
IFRS 11 Joint Arrangements January 1, 2016 Fiscal year ended
March 2017 Accounting for acquisitions of interests in joint operations
IAS 1 Presentation of Financial Statements
January 1, 2016 Fiscal year ended
March 2017
Clarifying disclosure requirement regarding materiality considerations
IFRS 10 IFRS 12 IAS 28
Consolidated Financial Statements
Disclosure of Interests in Other Entities
Investments in Associates
January 1, 2016 Fiscal year ended
March 2017
Clarifying exceptions for applying consolidation and the equity method for investment entities
IAS 12 Income Taxes January 1, 2017 Fiscal year ended
March 2018
Clarification of accounting methods applicable to deferred tax assets for unrealized losses
IAS 7 Statement of Cash Flows January 1, 2017 Fiscal year ended
March 2018
Disclosure requirement for changes in liabilities arising from financing activities
IFRS 15 Revenue from Contracts with Customers
January 1, 2018 Fiscal year ended
March 2019 Amendment of accounting for revenue recognition
IFRS 9 (final ver.)
Financial Instruments January 1, 2018 Fiscal year ended
March 2019
Amendments of financial instrument classification and measurement, impairment and hedge accounting
IFRS 16 Leases January 1, 2019 Fiscal year ended
March 2020
Amendments to recognition and accounting methods for leases
IFRS 10 IAS 28
Consolidated Financial Statements Investments in Associates
Not decided Not decided Amendments to accounting for selling assets to associates
As of the reporting date, the Group has not yet applied these accounting standards and interpretations. The Group
evaluates that none of these accounting standards and interpretations that are applied in the fiscal year ended March
31, 2017 by the Group will have a material impact on the consolidated financial statements. The impact to the
consolidated financial statements by these accounting standards and interpretations that are applied in the fiscal year
ended March 31, 2018 and after is under review.
28
(Significant Accounting Policies)
The Group’s significant accounting policies described below are applied to the consolidated financial statements
throughout the period.
(1) Basis of consolidation
The Group’s consolidated financial statements are prepared based on the financial statements of the Company, its
subsidiaries and its associate under uniform accounting policies. In case where accounting policies applied by a
subsidiary or associate are different from those applied by the Group, adjustments are made to their financial
statements as needed. In addition, all inter-company transactions, balances and unrealized gains/losses from
inter-company transactions are eliminated on consolidation.
a) Subsidiary
A subsidiary is an entity that is controlled by the Group. The Group controls an entity when the Group has the power
over the investee, is exposed to variable returns from involvement with the investee, and has the ability to use power
over the investee to affect the investor’s return.
A subsidiary’s financial statements are included in the consolidation statements from the date the Group obtains
control of the subsidiary until the date the Group loses control of it. Changes in the Group’s interest in a subsidiary
that do not result in losing control of the subsidiary are accounted for as equity transactions in which the difference
between the adjustment amount of non-controlling interests and fair value of the consideration is directly recognized
as retained earnings and made attributable to the owners of the parent.
b) Associate
An associate is an entity over which the Group has significant influence on their management policies but does not
have control. An investment in an associate is accounted for using the equity method on all of associates from the
date the Group obtains significant influence until the date the Group loses significant influence.
(2) Business combinations
Business combinations are accounted for using the acquisition method.
Based on the acquisition method, acquisition costs are sum of the considerations measured at fair value at the
acquisition date and the amount of non-controlling interest in the acquiree. Non-controlling interests are measured at
either fair value or the proportionate share in the recognized net amount of the acquiree’s identifiable assets and
liabilities. Acquisition-related costs are recognized as expenses in the period which the costs are incurred.
In case that the sum of fair value of the consideration, non-controlling interests in the acquiree and the fair value of the
proportionate share that the Group has held before at the date the Group obtains control of the acquiree exceeds from
net amount of identifiable assets and liabilities, the difference is recognized as goodwill. On the other hand, if the sum
of the considerations of acquisition is lower than net amount of identifiable assets and liabilities, the difference is
recognized as income.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the provisional amounts for the items for which the accounting is incomplete are reported in the
consolidated financial statements. The provisional amounts recognized at the acquisition date are retrospectively
adjusted during the measurement period. The measurement period is the period starting from the acquisition date and
lasting up to a maximum of one year, during which the Group obtains the whole information about facts and
circumstances that existed at the acquisition date.
29
(3) Foreign currency translation
Each company in the Group determines its own functional currency for its separate financial statements, and
transactions of these companies are presented in their functional currency. On the other hand, the consolidated
financial statements of the Group are presented in Japanese yen, which is the functional currency of the Company.
Foreign currency transactions are translated into the functional currency using exchange rates at the dates of
transactions or approximations of rates at the dates of the transactions. Monetary assets and liabilities denominated
in foreign currencies are translated into the functional currency using the spot exchange rates at the consolidated
fiscal year-end date. Exchange differences arising from translation or settlement are recognized in profit or loss.
For the purpose of recording operating results and financial positions of foreign operations in the consolidated
financial statements, assets and liabilities of foreign operations are presented in Japanese yen translated at spot
exchange rates at the consolidated fiscal year-end date. Income and expense items of foreign operations are
translated at average exchange rates. The resulting translation differences are recognized as other comprehensive
income, while the cumulative amounts are recognized as other components of equity. In addition, accumulated
translation differences are recognized as profit or loss when the foreign operations are disposed of.
(4) Revenue
Revenue is recognized only when it is probable that the economic benefits will flow to the Group and the amount can
be measured reliably.
a) Pharmaceutical goods sales
Pharmaceutical goods sales are recognized when the significant risks and rewards of ownership of the goods are
transferred to the customers (usually at the time of delivery). Sales generated from the transaction are presented as
the fair value of consideration received after deducting various provisional amounts of sales deduction items. Sales
deduction items include sales rebates, sales discounts and sales returns.
b) Co-promotion revenue
The Group recognizes the proportionate share of revenue generated from a co-promotion activity as revenue when
the Group promotes goods with alliance partners and goods sales are recognized by the alliance partners. At the
same time, a proportionate share of expenses incurred from the co-promotion activity is recognized as selling,
general and administrative expenses.
c) License revenue
Considerations received for licensing patents of developing or developed products (upfront payments, milestone
payments and running royalties) are recognized as revenue, in accordance with the substance of the transactions.
Received upfront payments and milestone payments are recognized as revenue when their performance obligations
under the agreements are fulfilled. In case that the performance obligations under the agreements exist over the
licensing period, the revenue is recognized over the period based on rational methods.
Received running royalties are recognized as revenue, in accordance with the calculation basis.
(5) Research and development expenses
a) Research expenses
Expenditures on research activities (including collaborative research and contract research) are recognized as
research and development (R&D) expenses.
b) Development expenses
Expenditures on development activities are recognized as assets only if they meet the conditions of internally
generated intangible assets. Internally incurred development expenses in the Group do not meet these conditions
30
as there are risks that developing products may not get marketing authorization and developing activities may be
delayed or ceased. Therefore, these are recognized as R&D expenses.
Acquired in-process research and development investments from external entities are recognized as intangible
assets.
In case that the Group receives contributions for developments from alliance partners in accordance with
collaborative research and development agreement, the contributions are deducted from R&D expenses.
(6) Employee benefits
a) Retirement benefits
The Group has adopted defined benefit plans and defined contribution plans.
Regarding defined benefit plans, current service costs are recognized as expenses using the projected unit credit
method in actuarial calculations made at the consolidated fiscal year-end date. All of the actuarial gains/losses
incurred in the period are recognized as other comprehensive income, while the cumulative amount is reclassified to
retained earnings after it is recognized as other components of equity. Retirement benefit liabilities are the present
value of defined benefit obligations less fair value of plan assets.
Regarding defined contribution plans, contributions of the Group are recognized as expenses at the time employees
render services that give pension rights to them.
b) Termination benefits
Termination benefits are provided in the case that the Group decides to terminate an employee’s employment
before the normal retirement date, or an employee voluntarily decides to accept an offer of benefits in exchange for
the termination of employment. The termination benefits are recognized as expenses upon termination of
employment, if the Group has detailed official plans related to termination of an employee’s employment and can no
longer withdraw the offer of the benefits.
(7) Share-based payments
a) Stock option plan
The Company had granted a part of directors, corporate officers and employees equity-settled share-based
payments (stock options) until the fiscal year ended March 31, 2013.
Services received as considerations of stock options are recognized as expenses, while corresponding amounts are
recognized as an increase in equity. These expenses are the fair value of stock options that are evaluated by using
appropriate price models at the grant date, and recognized as expenses using the straight-line method over the
vesting period. Expired rates at the time of final vesting are considered when the Company makes estimations for
evaluation. In case that the estimation is revised, adjustments are made over the remaining vesting period.
b) Performance-related share-based compensation system
The Company has introduced a performance-related share-based compensation system that distributes the
Company’s shares to corporate officers every year based on performance for three years from the fiscal year ended
March 31, 2014 to the fiscal year ended March 31, 2016. The Group measures considerations of services rendered
referring to the fair value of the Company’s share granted. Considerations of services calculated are recognized as
expenses while the corresponding amount is recognized as an increase in equity.
31
(8) Income taxes
Income taxes are presented as the sum of current income taxes and deferred income taxes.
a) Current income taxes
Current income taxes are calculated based on current taxable income. Tax rates that have been enacted or
substantively enacted at the consolidated fiscal year-end date are used for tax calculation. Income tax receivables
and payables are measured at the amount expected to be paid to or refunded from the taxation authorities.
b) Deferred income taxes
Deferred income taxes are calculated based on temporary differences between the tax base and the carrying
amount for assets and liabilities using the balance sheet liability method. Deferred tax liabilities are basically
recognized for all taxable temporary differences, while deferred tax assets are recognized only when it is probable
that taxable income will be available against which the deductible temporary differences can be utilized. However,
the following deferred tax assets and liabilities on temporary differences are not recognized.
(i) Temporary differences arising from goodwill
(ii)Temporary differences arising from the initial recognition of assets or liabilities in transactions which affect
neither accounting profit nor taxable income (except for a business combination).
Regarding taxable temporary differences arising from investments in subsidiaries and associates, deferred tax
liabilities are not recognized if the Company is able to control the timing of the reversal of the temporary differences,
and it is probable that the temporary differences will not reverse in the foreseeable future.
Furthermore, regarding deductible temporary differences arising from investments in subsidiaries and associates,
deferred tax assets are recognized only when sufficient taxable income in order to realize benefits from the
temporary differences will be available, and it is probable that the temporary differences will reverse in the
foreseeable future.
Deferred tax assets and liabilities are calculated using tax rates that will be expected to be applied when the
deferred tax assets will be recovered or the deferred tax liabilities will be settled based on acts that have been
enacted or substantively enacted by the consolidated fiscal year-end date.
Deferred tax assets and liabilities are offset when the Company or its subsidiaries have legally enforceable rights to
offset income tax receivables and payables, and they intend to settle them as offset amounts.
(9) Property, plant and equipment
Property, plant and equipment is measured using the cost model and is presented at acquisition cost less
accumulated depreciation and accumulated impairment loss.
The acquisition cost includes any costs directly attributable to purchase of assets and present value of removal and
restoration costs. In case that certain conditions are met, borrowing costs that are directly attributable to the
acquisition and construction of assets are included in the acquisition costs of the assets.
Depreciation is recognized by reducing acquisition cost of assets less residual value using the straight-line method
over the estimated useful lives of the assets. Estimated useful lives, residual value and depreciation methods are
reviewed at each fiscal year-end date, and the effects of any changes in estimation are reflected on a prospective
basis.
The estimated useful lives of the main types of property, plant and equipment are as follows:
(i) Buildings 15 to 50 years
(ii) Machinery 5 to 20 years
32
Gains/losses arising from sales or disposal of property, plant and equipment are presented as other income or other
expenses.
(10) Intangible assets
Intangible assets are measured using the cost model and are presented at acquisition cost less accumulated
amortization and accumulated impairment loss.
Intangible assets acquired separately are measured at the acquisition costs at the initial recognition. Those acquired
through business combinations are measured at fair value at the acquisition date.
Amortization is recognized using the straight-line method over the estimated useful lives of the intangible assets.
Estimated useful lives, residual value and amortization methods are reviewed at each fiscal year-end date, and the
effects of any changes in estimation are reflected on a prospective basis.
The estimated useful lives of the main types of intangible assets are as follows:
(i) Sales rights 10 to 15 years
(ii) Core technology 20 years
(iii) Software 5 years
Accounting treatments for in-process research and development investments are as follows:
a) In-process research and development investments (IPR&D assets) acquired separately
Intangible assets acquired separately are recognized as assets that meet the following conditions:
(i) It is probable that the expected future economic benefits attributable to the asset will flow to the Group
(ii) The cost of the asset can be measured reliably
Expenditures of acquiring IPR&D investments from external entities (upfront payments and milestone payments)
are recognized as IPR&D assets as they meet these conditions.
Subsequent internal development expenses on IPR&D assets are recognized as R&D expenses.
IPR&D assets are reclassified to sales rights when their products become available for sale, and are amortized
using the straight-line method over their estimated useful lives. Estimated useful lives are determined by the
projected cash flow period, which is based on the period of legal protection granted by patents.
b) IPR&D investments acquired through business combinations
IPR&D investments acquired through business combinations and recognized separately from goodwill meet the
conditions listed in a) above. Therefore, these are measured at fair value at the acquisition date and recognized as
IPR&D assets.
IPR&D assets are reclassified to sales rights when their products become available for sale, and are amortized
using the straight-line method over the estimated useful lives. Estimated useful lives are determined by the
projected cash flow period, which is based on the period of legal protection granted by patents.
(11) Impairment of property, plant and equipment and intangible assets
The Group assesses whether there is any indication that property, plant and equipment and intangible assets are
impaired at the fiscal year end date, and if any such indication exists, an impairment test is performed. Intangible
assets with indefinite useful lives or not yet available for use are tested for impairment at the same time every year or
when there is an indication that the assets might be impaired.
As an impairment test, a recoverable amount is estimated and compared with a carrying amount. The recoverable
amount is higher of fair value less expenses for sales or value in use. Value in use is calculated as the present value
of estimated future cash flows. In case that a recoverable amount of the asset is lower than the carrying amount, an
impairment loss is recognized, and the carrying amount is reduced to the recoverable amount.
33
(12) Goodwill
Goodwill arising from business combinations is recognized as an asset at the date the Group obtains control of the
entity (acquisition date). Goodwill is measured as the amount by which the sum of the fair value of the consideration,
non-controlling interests in the acquiree and fair value of the proportionate share that the Group held at the date the
Group obtains control of the acquiree exceeds the net amount of identifiable assets and liabilities. On the other hand,
if the sum of the acquisition costs is lower than the net amount of identifiable assets and liabilities, the difference is
directly recognized as income.
Goodwill is allocated to groups of cash-generating units that are expected to benefit from the synergies of the
combination. Goodwill is not amortized; however, a test of impairment is performed for groups of cash-generating
units to which goodwill is allocated at the same time every year or when there is an indication that the assets might be
impaired. In the case that a recoverable amount of groups of cash-generating units is lower than the carrying amount,
the reduction is recognized as an impairment loss.
(13) Inventories
Inventories are measured at the lower of cost or net realizable value. The costs are determined using the
weighted-average method. The net realizable value is determined as the estimated selling price less the estimated
costs necessary to complete goods and expenses necessary to sell.
(14) Financial assets
a) Classification of financial assets
All financial assets are measured at fair value at initial recognition, and classified as financial assets measured at
amortized cost, financial assets measured at fair value through profit or loss (FVTPL financial assets) or financial
assets measured at fair value through other comprehensive income (FVTOCI financial assets).
(i) Financial assets measured at amortized cost
Financial assets measured at amortized cost are debt instruments that meet the conditions below.
(1) The asset is held within a business model whose objective is to hold assets in order to collect contractual
cash flows
(2) The contractual terms of the financial asset give rise on a specified date to cash flows that are solely
payments of principal and interest on the principal amount outstanding
The financial assets measured at amortized cost are initially recognized as the sum of the fair value and
transaction costs, and recognized at amortized cost calculated by the effective interest method less impairment
loss after initial recognition.
(ii) FVTPL financial assets
Debt financial assets that are not classified as financial assets measured at amortized cost are classified as
FVTPL financial assets.
FVTPL financial assets are initially recognized at fair value, and any movement of fair value as well as
gains/losses on their sale are recognized as financial income/expenses after initial recognition.
(iii) FVTOCI financial assets
All equity instruments are classified as FVTOCI financial assets.
FVTOCI financial assets are initially recognized as the sum of fair value and transaction costs. Movement of fair
value as well as gains/losses on their sale are recognized as other comprehensive income, while the cumulative
amount is reclassified to retained earnings after it is recognized as other components of equity.
34
Dividends on FVTOCI financial assets are recognized as financial income when the vesting is settled except for
the case that the dividend obviously indicates the collection of acquisition cost of investment.
b) Impairment of financial assets measured at amortized cost
The Group assesses whether there is any objective evidence that financial assets measured at amortized cost are
impaired at the fiscal year-end date.
The assessment is performed separately for financial assets that are individually significant, while it is performed
separately or collectively for financial assets that are not individually significant.
If there is any objective evidence of impairment, an impairment loss is recognized as the difference between the
carrying amount and estimated future cash flows discounted by the effective interest rate for the financial asset. An
impairment loss is recognized, with the carrying amount of financial assets being reduced either directly or through
use of an allowance for doubtful accounts.
c) Derecognition
The Group derecognizes a financial asset only when the contractual right to the cash flows from the financial asset
expires or the Group transfers the financial asset and almost all the risks and rewards of ownership of the asset to
counterparty. Regarding gain or loss on derecognition of a financial asset, those of financial assets measured at
amortized cost and FVTPL financial assets are recognized as profit or loss, and those of FVTOCI financial assets
are recognized as other comprehensive income.
(15) Hedge accounting
The Group utilizes derivatives, including interest rate swap contracts and forward foreign exchange contracts in order
to reduce the risks related to changes in interest and exchange rates. These derivatives are measured at fair value
and recognized as assets or liabilities at the contract date.
Movements of fair value after initial recognition are recognized as profit or loss if the hedged items and hedging
instruments do not meet the conditions of hedge accounting. The accounting treatments that meet the conditions of
hedge accounting are as follows:
a) Fair value hedges
Regarding derivatives hedging instrument for the purpose of hedging risks of fair value change on hedged items, the
gain or loss by changing in the fair value of hedging instrument is immediately recognized in profit or loss. At the
same time, the changes in the fair value on the hedged item attributable to the hedged risk adjusts the carrying
amount of the hedged item, and is recognized in profit or loss.
b) Cash flow hedges
Regarding derivatives for the purpose of hedging risks of cash flow movements on hedge items, the movements of
derivative assets or liabilities are recognized in other comprehensive income, while cumulative amounts are
recognized as other components of equity until the fair value movements of hedged items are recognized as profit or
loss. The amount recognized as other components of equity is reclassified to profit or loss when the fair value
movements of hedged items are recognized as profit or loss, in order to offset the effects.
(16) Provisions
Provisions are recognized when the Group has a legal or constructive obligation arising from a past event that can be
measured with sufficient reliability as a present obligation, and it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation.
The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation
at the consolidated fiscal year-end date, considering risks and uncertainties. The carrying amount of a provision is
35
measured at estimated cash flows that are discounted to be the present value where the effect of the time value of
money is material. Where discounting is used, the increase in carrying amount of a provision in each period to reflect
the passage of time is recognized as a financial cost.
a) Provision for sales rebates
To account for possible sales rebates for finished goods and merchandise sold that may be incurred after the
consolidated fiscal year-end date, provision for sales rebates is provided by multiplying the amount of revenue by
the estimated sales rebate ratio. It is expected to be mainly settled within one year from the fiscal year-end date.
b) Provision for asset retirement obligation
To account for the obligation of restoring the rental buildings and lands on which the Group is located and removing
harmful materials related to property, plant and equipment which the Group is using, provision for asset retirement
obligation is estimated and recognized depending on individual circumstances that is based on an estimated usage
period determined by past results of restoration and the useful lives of additional fixtures in the rental buildings. It is
expected to be mainly settled over one year from the fiscal year-end date.
c) Provision for restructuring costs
Provision for restructuring costs is mainly related to restructuring of the business organization. Provision for
restructuring costs is recognized when the Group has a detailed formal plan for the restructuring and has raised a
valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or
announcing its main scheme to those affected by it.
(17) Leases
a) Finance leases
Regarding finance lease transactions, leased assets and lease obligations are measured at the lower of either fair
value of leased assets at the lease inception date or present value of the minimum lease payments. Lease
payments are allocated to financial expenses and repayments of lease obligations using the interest method.
Leased assets are depreciated over the lower of either estimated useful lives or lease period using the straight-line
method.
b) Operating leases
Regarding operating lease transactions, lease payments are recognized as expenses over the lease period using
the straight-line method.
36
(Significant Accounting Estimates and Judgments)
Preparation of the consolidated financial statements of the Group requires management estimates and judgments.
Underlying assumptions for estimation are continuously reviewed. Effects of changes in estimations are recognized in
the period and future periods. Furthermore, significant revisions of asset and/or liability carrying amounts may be
required in the future as a result of uncertainties related to these estimates and assumptions.
Significant items that require management estimates and judgments are as follows.
a) Impairment test of goodwill and intangible assets
In order to perform impairment tests of goodwill and intangible assets, estimates of value in use of allocated
groups of cash-generating units are required. Value in use is measured at present value based on the
assumptions of future cash flows expected to arise from groups of cash-generating units and discount rates.
b) Estimates of useful lives of property, plant and equipment and intangible assets
Useful lives of property, plant and equipment and intangible assets are reviewed at the fiscal year-end date.
c) Evaluation of fair value of financial instruments
Evaluation methods including input that are not based on observable market data are used in order to estimate
the fair value of specific financial assets.
d) Retirement benefits
Defined benefit obligations are affected by assumptions used for actuarial calculation. Discount rate, future
payroll level, turnover and mortality rates used for assumptions are determined based on the latest market data
and statistics.
e) Income taxes
Current income taxes are recognized as the amount expected to be paid to each tax authority by reasonable
estimates in accordance with tax laws and regulations.
Liabilities are recognized based on the estimates of revised current income taxes and their possibilities as a
result of the tax audit. If the actual amount settled by the tax audit is different from the estimated amount, the
difference is recognized in the period in which the actual amount is settled.
Furthermore, deferred tax assets are recognized only when it is probable that taxable profit will be available
against which the deductible temporary differences and tax carryforwards can be utilized. Based on its
business plan and other factors, the Group makes reasonable estimates of the period and amount of taxable
profit will be available in future period, and evaluates the potential taxable profit.
37
(Segment Information)
(1) General information
Reporting segments are units for which the Group can obtain independent financial information and for which top
management undertakes periodic reviews in order to determine the allocation of management resources and
evaluate performance.
The Group’s business is comprised of pharmaceutical business and other business. The pharmaceutical business is
organized into the following six reporting segments in this report: Japan (Prescription Medicines, Generics and
Diagnostics), Americas (North America, Central and South America), China, Asia (primarily South Korea, Taiwan,
Hong Kong, India and ASEAN), EMEA (Europe, the Middle East, Africa and Oceania) and Consumer Healthcare
Business—Japan (CHB―Japan).
(2) Reporting segments
(Millions of yen)
Fiscal year ended March 31, 2016 Fiscal year ended March 31, 2015
Revenue
Segment
profit (loss) Revenue
Segment
profit (loss)
Pharmaceutical business
Japan (Note 4) 266,810 111,642 278,399 122,378
Americas 122,246 23,731 119,822 14,884
China 49,289 12,924 41,019 10,567
Asia 34,007 8,314 30,894 7,413
EMEA 41,331 10,330 38,516 6,601
CHB—Japan (Note 4) 18,077 2,696 17,019 1,316
Reporting segment total 531,761 169,636 525,669 163,159
Other business (Note 1) 16,162 3,453 22,796 7,776
Total 547,922 173,089 548,465 170,935
R&D expenses (Note 2) - (122,307) - (131,907)
Group headquarters’ management costs and other expenses (Notes 3, 4, 5) - (13,883) - (10,690)
Gain on sales of investments in subsidiaries - 15,035 - -
Operating profit in the consolidated financial statements - 51,935 - 28,338
(Note 1) “Other business” mainly includes the pharmaceutical ingredient business.
(Note 2) “R&D expenses” are not allocated to any particular segment as the Group manages such expenses on a global
basis.
(Note 3) “Group headquarters’ management costs and other expenses” are the costs and expenses covering Group-wide
operations.
(Note 4) From the consolidated fiscal year ended March 31, 2016, the management structure for part of the costs in
Japan was revised and the method for allocation of SG&A expenses changed as a result. As such, the “Japan
pharmaceutical business” and “CHB― Japan” segment profit (loss)” as well as “Group headquarters’
management costs and other expenses” figures stated for the previous fiscal year ended March 31, 2015, have
also been restated to reflect these changes.
(Note 5) During the fiscal year ended March 31, 2016, the Group’s U.S. subsidiary, Eisai Inc., transferred its North
Carolina Plant to Biogen Inc. (U.S.). Gain on this transfer is included as “Group headquarters’ management
costs and other expenses,” being based on the Group’s global logistics strategy.
38
(3) Information on major products
Revenue from external customers
(Millions of yen)
Aricept Pariet/
AcipHex
Oncology-
related
products
Other Total
Fiscal year ended March 31, 2016 63,349 46,053 118,501 320,019 547,922
Fiscal year ended March 31, 2015 65,695 55,973 98,637 328,160 548,465
(4) Information on major customers
Fiscal year ended March 31, 2016
(Millions of yen)
Name of customer Revenue Related segment
Alfresa Holdings Corporation 67,899 Japan Pharmaceutical Business, etc.
Suzuken Co., Ltd. 60,434 Japan Pharmaceutical Business, etc.
Medipal Holdings Corporation 53,603 Japan Pharmaceutical Business, etc.
Fiscal year ended March 31, 2015
(Millions of yen)
Name of customer Revenue Related segment
Alfresa Holdings Corporation 71,282 Japan Pharmaceutical Business, etc.
Suzuken Co., Ltd. 62,000 Japan Pharmaceutical Business, etc.
Medipal Holdings Corporation 55,113 Japan Pharmaceutical Business, etc.
(5) Information on major regions
Revenue from external customers (Note 1)
(Millions of yen)
Japan
Americas
(Note 2) China Europe Other Total
Fiscal year ended
March 31, 2016 296,151 122,943 48,676 42,473 37,678 547,922
Fiscal year ended
March 31, 2015 307,805 126,380 40,533 39,765 33,982 548,465
(Note 1) Revenue from external customers are categorized by country or region based on the location of the customer.
Major areas and countries included in this category other than Japan and China are as follows:
1) Americas: North America, Central and South America
2) Europe: United Kingdom, France, Germany
3) Other: Asia, Middle East, Oceania
(Note 2) Revenue for the fiscal year ended March 31, 2016, in the United States, which is included in Americas, was
¥121,833 million (¥125,654 million for the fiscal year ended March 31, 2015).
Non-current assets (Note 1)
(Millions of yen)
Japan
Americas
(Note 2) Europe China Other Total
As of March 31, 2016 84,482 267,448 19,752 14,039 5,013 390,734
As of March 31, 2015 100,519 311,990 23,519 6,125 5,536 447,690
(Note 1) Non-current assets are categorized by country or region based on the assets location.
Major areas and countries included in this category other than Japan and China are as follows:
1) Americas: North America, Central and South America
2) Europe: United Kingdom, France, Germany
3) Other: Asia, Middle East, Oceania
39
Non-current assets are mainly composed of property, plant and equipment, goodwill and intangible assets
excluding financial assets, deferred tax assets and net retirement benefit assets.
(Note 2) The carrying amount of non-current assets as of March 31, 2016, in the United States, which is included in
Americas, is ¥267,279 million (¥311,756 million as of March 31, 2015).
(Consolidated Statement of Income)
(1) Revenue
The breakdown of revenue for the fiscal years ended March 31, 2016 and March 31, 2015 is as follows.
(Millions of yen)
Fiscal year ended
March 31, 2016
Fiscal year ended
March 31, 2015
Pharmaceutical goods sales 505,705 489,012
License revenue 3,045 21,034
Other 39,173 38,419
Total 547,922 548,465
(2) Cost of sales, selling, general and administrative expenses, research and development expenses
Details regarding cost of sales, selling, general and administrative expenses (SG&A expenses), and R&D expenses
are as follows.
Fiscal year ended March 31, 2016
(Millions of yen)
Cost of sales SG&A expenses R&D expenses Total
Depreciation and amortization 19,711 4,590 9,763 34,064
Impairment losses (Note 1) 510 - 1,623 2,133
Reversal of Impairment losses - - (433) (433)
Short-term employee benefits 15,614 77,799 39,802 133,215
Post-employment benefit costs 521 3,654 1,983 6,158
Termination benefits (Note 2) 219 2,362 497 3,078
(Note 1) The components of impairment losses by account item were ¥1,600 million in intangible assets and ¥533 million
in plant, property and equipment (PP&E) respectively. Regarding intangible assets, impairment loss of ¥1,600
million was recognized in R&D expenses because of discontinued development of some new drug candidates.
Regarding PP&E, ¥510 million of Cost of sales was recognized as impairment loss, due to some productive
facilities becoming idle.
(Note 2) Termination benefits are primarily due to structural reform in the U.S. and Europe and the transfer of the North
Carolina plant in the U.S.
Fiscal year ended March 31, 2015
(Millions of yen)
Cost of sales SG&A expenses R&D expenses Total
Depreciation and amortization 24,590 4,636 9,714 38,940
Impairment losses 60 5 - 65
Short-term employee benefits 16,104 75,159 40,461 131,723
Post-employment benefit costs 904 3,215 1,859 5,978
40
(3) Other income
The breakdown of other income for the fiscal years ended March 31, 2016 and March 31, 2015 is as follows.
(Millions of yen)
Fiscal year ended
March 31, 2016
Fiscal year ended
March 31, 2015
Gain on sales of investments in subsidiaries (Note 1) 15,035 -
Gain on sales of non-current assets (Note 2) 1,673 372
Subsidy income 349 97
Equity in earnings of affiliates 70 75
Other 534 437
Total 17,661 981
(Note 1) During the fiscal year ended March 31, 2016, ¥15,035 million was recognized as gain on sales of investments in
subsidiaries due to the transfer of EIDIA Co., Ltd. (Tokyo) and Eisai Food & Chemical Co., Ltd. (Tokyo).
(Note 2) During the fiscal year ended March 31, 2016, ¥1,349 million was recognized as gain on sales of non-current
assets due to the transfer of the North Carolina plant in the United States.
(4) Other expenses
The breakdown of other expenses for the fiscal years ended March 31, 2016 and March 31, 2015 is as follows.
(Millions of yen)
Fiscal year ended
March 31, 2016
Fiscal year ended
March 31, 2015
Foreign exchange loss 3,464 356
Loss on sales and disposal of non-current assets 263 444
Other 339 260
Total 4,066 1,061
(5) Financial income
The breakdown of financial income for the fiscal years ended March 31, 2016, and March 31, 2015, respectively, is as
follows.
(Millions of yen)
Fiscal year ended March 31, 2016
Fiscal year ended March 31, 2015
Interest income 1,196 1,204
Dividend income (Note 1)
Financial assets measured at fair value through other comprehensive income
605 561
Financial assets measured at fair value through profit or loss
1 1
Other 221 663
Total 2,024 2,429
(Note 1) Among dividend income from financial assets measured at fair value through other comprehensive income,
there was no significant dividend income from financial assets that were sold in the fiscal year ended March 31,
2016 (¥23 million in the fiscal year ended March 31, 2015).
41
(6) Financial costs
The breakdown of financial costs for the fiscal years ended March 31, 2016, and March 31, 2015, respectively, is as
follows.
(Millions of yen)
Fiscal year ended March 31, 2016
Fiscal year ended March 31, 2015
Interest costs
Financial liabilities measured at amortized cost 3,392 4,678
Retirement benefit liabilities 28 147
Other 65 67
Total 3,485 4,892
(7) Income taxes
The breakdown of income taxes for the fiscal years ended March 31, 2016, and March 31, 2015, respectively, is as
follows.
(Millions of yen)
Fiscal year ended March 31, 2016
Fiscal year ended March 31, 2015
Income taxes―current (Note 1, 2) 2,858 3,606
Income taxes―deferred (Note 1, 2, 3) (7,429) (21,184)
Total (4,571) (17,578)
(Note 1) Decrease in income taxes due to transfer of U.S. consolidated subsidiary AkaRx, Inc.
During the fiscal year ended March 31, 2016, Eisai Inc., the Group’s consolidated subsidiary in the United States,
transferred all shares of its wholly owned consolidated subsidiary AkaRx, Inc. to PBM Capital Group. As a result,
decrease of tax expenses by ¥12,615 million was recorded in the recognition of capital loss for tax purposes at
Eisai Inc.
(Note 2) Decrease of income taxes due to a repayment of paid-in capital
Eisai Corporation of North America, the Group’s consolidated subsidiary, paid ¥58,430 million to the Company
for the repayment of paid-in capital in the fiscal year ended March 31, 2015. As a result, a decrease in tax
expenses of ¥27,822 million was recorded due to the recognition of taxable items such as capital losses for the
Company.
(Note 3) Remeasurement of deferred tax assets and liabilities due to a change in income tax rate
During the fiscal year ended March 31, 2016, according to the promulgation of “Partial Amendment of the
Income Tax Act, etc.” (Act No. 15 of 2016) and “Partial Amendment of the Local Tax Act, etc.” (Act No. 13 of
2016) in Japan, the corporate tax rate will change from the fiscal year beginning on or after April 1, 2016. As a
result, the effective statutory tax rates used to measure deferred tax assets and deferred tax liabilities changed
from 32.0% to 30.5%.
The changes in effective statutory tax rates resulted in a ¥2,433 million decrease in deferred tax assets (after
deducting deferred tax liabilities), a ¥242 million increase in other components of equity and a ¥2,675 million
increase in income taxes.
During the fiscal year ended March 31, 2015, according to the promulgation during that same period of “Partial
Amendment of the Income Tax Act, etc.” (Act No. 9 of 2015) and “Partial Amendment of the Local Tax Act, etc.”
(Act No. 2 of 2015) in Japan, the corporate tax rate changed from the fiscal year beginning on or after April 1,
2015.
As a result, the effective statutory tax rates used to measure deferred tax assets and deferred tax liabilities
changed from 35.5% to 33.0% for temporary differences expected to be reversed in the consolidated fiscal year
starting on or after April 1, 2015, and from 35.5% to 32.0% for temporary differences expected to be reversed in
the fiscal year starting on or after April 1, 2016.
42
The changes in effective statutory tax rates resulted in a ¥6,402 million decrease in deferred tax assets (after
deducting deferred tax liabilities), a ¥846 million increase in other components of equity and a ¥7,248 million
increase in income taxes.
(Per Share Information)
(1) Earnings per share attributable to owners of the parent (basic)
The basis for calculating earnings per share attributable to owners of the parent (basic) for the fiscal years ended
March 31, 2016 and March 31, 2015 is as follows.
Fiscal year ended March 31, 2016
Fiscal year ended March 31, 2015
Profit for the year attributable to owners of the parent (Millions of yen) 54,933 43,254
Weighted average number of common shares during the year (Thousands of shares)
285,764 285,371
Earnings per share attributable to owners of the parent (basic) (Yen) 192.23 151.57
(2) Earnings per share attributable to owners of the parent (diluted)
The basis for calculating earnings per share attributable to owners of the parent (diluted) for the fiscal years ended
March 31, 2016 and March 31, 2015 is as follows.
Fiscal year ended March 31, 2016
Fiscal year ended March 31, 2015
Profit for the year attributable to owners of the parent (Millions of yen) 54,933 43,254
Adjustment of profit for the year attributable to owners of the parent (Millions of yen)
- -
Profit for the year used for calculating diluted earnings per share (Millions of yen)
54,933 43,254
Weighted average number of common shares during the year (Thousands of shares)
285,764 285,371
Increase in number of common shares under stock options (Thousands of shares) (Note 1)
703 378
Weighted average number of diluted common shares during the year (Thousands of shares)
286,467 285,749
Earnings per share attributable to owners of the parent (diluted) (Yen) 191.76 151.37
(Note 1) There are no common shares reserved under the stock option plan that are excluded from the calculation of
diluted earnings per share due to antidilutive effects for the fiscal years ended March 31, 2016 and March 31,
2015.
43
(Consolidated Statement of Financial Position)
(1) Assets held for sale and liabilities directly associated with assets held for sale
During the fiscal year ended March 31, 2016, the Company entered into a business acquisition agreement concerning
the succession of the Company’s consolidated pharmaceutical manufacturing and marketing subsidiary Sannova Co.,
Ltd. (Gunma) via an absorption-type split, to a newly established company by Sannova Co., Ltd., and the subsequent
transfer of all shares issued in this newly established company to Alfresa Holdings Corporation (Tokyo). The date of
the share transfer was April 1, 2016.
For this reason, assets and liabilities of the successor company are classified as assets held for sale and liabilities
directly associated with assets held for sale, respectively.
The breakdown of assets held for sale and liabilities directly associated with assets held for sale is as follows.
(Millions of yen)
As of March 31, 2016
Assets held for sale
Property, plant and equipment
Inventories
Cash and cash equivalents
Other
5,430
1,619
2,496
238
Total 9,782
Liabilities directly associated with assets held for sale
Retirement benefit liabilities
Trade and other payables
Other
1,060
1,038
686
Total 2,784
44
(Consolidated Statement of Cash Flows)
(1) The breakdown of the increase (decrease) in working capital for the fiscal years ended March 31, 2016 and March
31, 2015 is as follows.
(Millions of yen)
Fiscal year ended March 31, 2016
Fiscal year ended March 31, 2015
(Increase) decrease in trade receivables 17,057 15,145
(Increase) decrease in inventories 5,402 3,893
(Increase) decrease in other receivables (567) 5,805
Increase (decrease) in trade payables 3,056 371
Increase (decrease) in other payables 10,965 (6,720)
(Increase) decrease in working capital 35,913 18,493
(2) Net cash outflow on acquisition of subsidiaries
Please refer to “Business Combinations (6) Net cash outflow on acquisition of subsidiaries”.
(3) Net cash inflow on sales of subsidiaries
Please refer to “Sales of Subsidiaries (2) Net cash inflow on sales of subsidiaries”.
(4) Cash and cash equivalents at end of period
Cash and cash equivalents at end of period for the fiscal years ended March 31, 2016 are the sum of cash and cash
equivalents of ¥176,830 million from the Consolidated Statement of Financial Position and cash and cash equivalents
of ¥2,496 million categorized as assets held for sale.
(Business Combinations)
In the fiscal year ended March 31, 2016, the Group’s China holding company, Eisai China Holdings Ltd., entered into an
agreement to acquire all shares of the Chinese generic pharmaceutical company, Liaoning TianYi Biological
Pharmaceutical Co., Ltd.
(1) Name of the acquiree
Liaoning TianYi Biological Pharmaceutical Co., Ltd.
(New name: Eisai (Liaoning) Pharmaceutical Co., Ltd.)
(2) Acquisition date
December 28, 2015
(3) Method for acquiring shares and percentage of voting rights for the acquisition
The Group acquired all shares of Liaoning TianYi Biological Pharmaceutical Co., Ltd. from the former shareholder.
(4) Primary reasons for the business combination
The China pharmaceutical market is the second largest in the world after the U.S. In particular, even higher growth is
expected for generic pharmaceuticals that will make up the majority of prescriptions in small and medium sized cities
in inland and regional areas as well as small and medium sized hospitals which have had inadequate access to
medicines until now. In addition to expanding its business focused on new pharmaceuticals, through this acquisition,
the Group will enter the generic pharmaceutical business in China as well. Further enhancing its business platform in
China, the Group aims to provide a stable supply of high quality pharmaceuticals from Liaoning TianYi Biological
45
Pharmaceutical Co., Ltd.’s GMP compliant facility under the Group’s strict quality management and quality assurance
system to meet the extensive needs of the China pharmaceutical market.
(5) Fair value of consideration transferred, assets acquired and liabilities assumed, and goodwill
(Millions of yen)
As of acquisition date
(December 28, 2015)
Consideration transferred (Note 1)
Assets acquired and liabilities assumed
Property, plant and equipment
Other non-current assets
Current assets
Non-current liabilities
Current liabilities
4,609
5,072
1,160
578
(223)
(4,696)
Goodwill 2,718
(Note 1) In addition to cash paid as consideration transferred, the Group has loaned ¥4,351 million to the acquiree as
repayment for the acquiree’s borrowings. Furthermore, ¥21 million of acquisition related costs has been
recorded in the consolidated statement of income as selling, general and administrative expenses.
(6) Net cash outflow on acquisition of subsidiaries
(Millions of yen)
As of acquisition date
(December 28, 2015)
Cash paid (Note 1)
Cash and cash equivalents in the subsidiaries acquired
8,961
(7)
Net cash outflow on acquisition of subsidiaries 8,954
(Note 1) Cash paid includes cash of ¥4,609 million as consideration transferred and loans receivable in cash of ¥4,351
million for the acquiree.
46
(Sales of Subsidiaries)
In the fiscal year ended March 31, 2016, the Company transferred all shares of EIDIA Co., Ltd. (Tokyo) held by the
Company to Sekisui Chemical Co., Ltd. (Osaka). Furthermore, the Company transferred all shares of Eisai Food &
Chemical Co., Ltd. (Tokyo) held by the Company to Mitsubishi-Kagaku Foods Corporation (Tokyo).
(1) Consideration received, assets and liabilities over which control was lost
(Millions of yen)
Fiscal year ended
March 31, 2016
Consideration received
Assets and liabilities over which control was lost
Property, plant and equipment
Other non-current assets
Current assets
Non-current liabilities
Current liabilities
32,016
2,673
5,878
20,604
(1,516)
(10,657)
Gain on sale of investments in subsidiaries 15,035
(2) Net cash inflow on sales of subsidiaries
(Millions of yen)
Fiscal year ended
March 31, 2016
Consideration received in cash
Cash and cash equivalents in the subsidiaries sold
32,016
(11,485)
Net cash inflow on sale of subsidiaries 20,531
(Significant Subsequent Events)
On April 1, 2016, the Company split off a portion of its gastrointestinal disease business via an absorption-type split, which
was then succeeded by Ajinomoto Co., Inc. (Tokyo)’s wholly owned subsidiary AJINOMOTO PHARMACEUTICALS CO.,
LTD.
Furthermore, the trading name of AJINOMOTO PHARMACEUTICALS CO., LTD. was changed to “EA Pharma Co., Ltd.”
This transaction will be accounted for using the acquisition method in accordance with IFRS 3 “Business Combinations”.
While goodwill is expected to arise, the amount of goodwill has not been determined yet.
(1) Name of the acquiree
AJINOMOTO PHARMACEUTICALS CO., LTD. (New name: EA Pharma Co., Ltd.)
(2) Acquisition date
April 1, 2016
(3) Method for acquiring shares and percentage of voting rights for the acquisition
The Company acquired 6,000 shares of common stock of AJINOMOTO PHARMACEUTICALS CO., LTD. as
consideration for the absorption-style split. As a result, the Company holds 60% in the voting rights ratio.
(4) Primary reasons for the business combination
The field of gastrointestinal disease is one with significant unmet medical needs. By integrating the Company’s
47
gastrointestinal disease business and AJINOMOTO PHARMACEUTICALS CO., LTD., this new integrated company
will become one of Japan’s largest gastrointestinal specialty pharmas with a product lineup that will comprehensively
cover the upper and lower digestive tract as well as the liver and pancreas, enabling the provision of an even wider
range of solutions in the field of gastrointestinal disease as well as specialized information for healthcare
professionals. In addition, consolidating both companies’ in-development products will serve to enhance the pipeline
toward the consistent launch of new treatments, and the companies aim to discover innovative new medicines by
exchanging expertise and know-how. The new integrated company will seek greater profitability through marketing
synergies from integration and the pursuit of efficiency through the review of overlapping functions, as well as to
secure necessary resources for new drug development and sustained growth.
(5) Non-consolidated performance of acquired company over last three fiscal years (Japan GAAP)
(Millions of yen)
Fiscal year ended March 31, 2015
Fiscal year ended March 31, 2014
Fiscal year ended March 31, 2013
Net assets 35,656 35,508 35,900
Total assets 49,545 50,976 61,091
Net sales 43,236 55,633 76,607
Operating profit (loss) 948 634 (2,397)
Ordinary income (loss) 1,017 699 (2,259)
Net income (loss) 147 (889) (7,530)
(Note 1) The figures in the table have not been audited by the Company’s independent auditor.
48
5) Other
1) Forecasts and Risk Factors
(1) Materials and information provided in this financial disclosure may contain “forward-looking
statements” based on current expectations, forecasts, estimates, business goals and
assumptions that are subject to risks and uncertainties, and actual outcomes and results could
differ materially from these statements depending on changes in important factors. Risks and
uncertainties include general industry and market conditions, as well as general domestic and
international economic conditions such as interest rate and currency exchange fluctuations.
(2) Risks that could cause significant fluctuations in the consolidated results of the Eisai Group or
have a material effect on investment decisions are described below. These risks, however,
have been evaluated and forecasted as of the disclosure date of the Financial Report.
〇 Risks related to overseas operations
The Group conducts production/sales activities for products in countries and regions such
as the Americas, Europe, and Asia. However, there is no guarantee that the Group can
entirely avoid risks such as legal restrictions and socio-political uncertainty in its global
business activities. In the event the Group faces such risks, there is a possibility that
original projected earnings may not be achieved.
〇 Uncertainties in new drug development
Development of a drug candidate substance may be discontinued due to shortcomings in
its effectiveness or safety profile. Even if clinical trials yield favorable results, approval may
not be granted due to changes in pharmaceutical regulations implemented during the
development of the product. As a result of the delay or discontinuation of development of a
new drug arising from the inherent uncertainties of drug development, future expected
profits may not be achieved.
〇 Risks in alliances with other companies
The Group has some products for which sales promotion activities are carried out through
business alliances with other companies. If productive relations with partners are not
sustained, revenues may decrease and significantly impact business results. Furthermore,
expected profits may not be achieved due to uncertainties associated with product
acquisition, or the licensing-in of products including products under development.
〇 Impact of medical cost containment measures
In Japan, the government enacts price revisions for prescription drugs every two years and
is adopting measures such as the promotion of generic drugs as part of its efforts to
control medical costs. Efforts to reduce drug costs are intensifying year after year in the
United States as well as in countries in both Europe and Asia. These kinds of measures
aimed at controlling medical costs may lead to a drop in revenues. Especially in Europe,
even if marketing approval is obtained for a product, the product may not be eligible for
health insurance reimbursement at the expected price and so there is a possibility that
original projected earnings may not be achieved.
49
〇 Risks related to generic products
Pharmaceutical patents have a limited term. It is common for generic makers to launch
generic products upon the expiration of a patent for the original drug. Additionally, in
countries such as the United States, an application for a generic product is accepted even
during the patent term. Generic products may have a significant impact on market share
because of their low price.
〇 Risks related to intellectual property
If a patent application is dismissed, a patent is found to be invalid after approval, or if there
is a failure to properly protect a patent, competitors may enter the market earlier than
expected, which could potentially lead to a decrease in revenues. Additionally, if the
business activities of the Group infringe on the intellectual property rights of a third party, it
may deteriorate profitability as well as necessitate a change in the business plan of the
Group or cause a significant impact on business performance of the Group, as a result of
the third party in question exercising its rights.
〇 Risks related to occurrences of side effects
If a product is found to have any serious side effects, there may be a serious impact on
performance due to the Group taking measures such as suspending product sales or
conducting a product recall.
〇 Risks regarding laws and regulations
As the Group’s pharmaceutical business is subject to various laws and regulations,
including pharmaceutical regulations and product liability, enactment of a law or changes
in the regulations may have a significant impact on business results. In the event
regulatory nonconformity is found in a product, the Group may issue a product recall, have
the product’s marketing approval revoked, or face liability claims.
〇 Risks relating to lawsuits
Results of pending or future lawsuits may have a significant impact on the Group’s
business results.
〇 Plant closure or shutdown
The Group’s plants may be closed or shut down due to technical problems, raw material
shortages, influenza and other pandemics, fire, earthquakes and other natural disasters.
In such cases, the supply of products may become difficult and can significantly impact
business results.
〇 Risks concerning the safety and quality of raw materials
If there is any concern over the safety and quality of raw materials, the Group may take
actions such as changing materials, conducting a recall, or suspending sales, which may
have a significant impact on business results.
〇 Risks associated with outsourcing
The Group outsources part of its operations, including research and production, to other
companies. Business results may be significantly impacted if the provision of outsourced
business service is disrupted due to the shutdown of any of the subcontractors’ operations
for any kind of reason.
50
〇 Environmental risks
If a serious environmental pollution event is reported at any of its business offices, the
Group may be required to close the office in question or be subject to other proceedings
required by law. Furthermore, the costs necessary to assume liability for payment of
compensation to neighboring regions and improve the environment may significantly affect
business results.
〇 Risks concerning IT security and information management
Since the Group makes full use of various IT systems for business, its operations may be
disrupted due to external factors such as inadequate system infrastructure and computer
viruses. In addition, the Group faces the risk of technical accidents that involve personal
information leakage outside of the Group, which may considerably damage the Group’s
social reputation and significantly impact business results.
〇 Risks related to financial market conditions and currency movement
As the Group holds stocks and other marketable securities, a decline in the stock market
could result in losses on sales or devaluation of stocks and other securities. In addition, an
increase in projected benefit obligations due to changes in the interest rate may have an
impact on business results. Furthermore, the effect of foreign exchange fluctuations on the
yen conversion of sales of overseas consolidated subsidiaries as well as export and import
transactions may also impact business results.
〇 Risks concerning internal control systems
In accordance with assessment and audit standards as well as implementation standards
for internal controls pertaining to financial reporting as mandated by the Financial
Instruments and Exchange Law of Japan, the Group establishes effective internal control
systems related to financial reporting and strives to appropriately manage those systems.
However, major losses that arise due to the malfunction of internal control systems or
occurrence of unexpected problems related to internal control systems may have a
significant impact on business results.
〇 Risks concerning disasters
The occurrence of disasters, including natural disasters, such as earthquakes and
typhoons, as well as accidents, such as fires, could result in large-scale damage to
business facilities and impact the business activities of the Group. In addition, repairs to
facilities damaged by these disasters may cause the Company to incur significant
expenses and have a major impact on business results.
51
2) Overview of the Eisai Group
The diagram below shows the principal operations and business flows within the Group.
Americas
(Americas Holding Company)
(Pharmaceutical Production/Sales) ◎ Eisai Corporation of North America
◎ Sannova Co., Ltd.
(Pharmaceutical R&D)
(Pharmaceutical Sales) Products Research ◎ Morphotek, Inc.
◎ Elmed Eisai Co., Ltd. ◎ H3 Biomedicine Inc.
(Pharmaceutical R&D) (Pharmaceutical R&D/Production/Sales)
◎ KAN Research Institute, Inc. ◎ Eisai Inc.
Research
(Management/Administration of Research ◎ Others—4
Pharmaceutical R&D) (Total 8 companies)
◎ Eisai R&D Management Co., Ltd.
Europe
◎ Other—1 (European Headquarters / Holding Company,
☆ Other—1 Pharmaceutical Sales)
(Total 6 companies) ◎ Eisai Europe Ltd.
E
(Pharmaceutical R&D/ Sales)
I Research
S (Pharmaceutical Sales)
◎ Eisai GmbH
A
◎ Eisai Farmacéutica S.A.
I
(Pharmaceutical Logistics) ◎ Eisai Manufacturing Ltd.
◎ Eisai Distribution Co., Ltd.
C ◎ Others—9
(Business Support Services) (Total 15 companies)
◎ Sunplanet Co., Ltd. O
China
(Total 2 companies) (Chinese Headquarters / Holding Company)
L ◎ Eisai China Holdings Ltd.
T (Pharmaceutical Production / Sales)
◎ Eisai China Inc.
D
◎ Other—2
(Total 4 companies)
Asia and Others
(Asia Holding Company)
◎ Eisai Asia Regional Services Pte. Ltd.
Symbols (Pharmaceutical Production / Sales)
Indicates sales flow ◎ PT Eisai Indonesia
◎: Consolidated subsidiary (46 companies)
☆: Associated company accounted for (Pharmaceutical R&D)
using the equity method (1 company) ◎ Eisai Clinical Research Singapore Pte. Ltd.
(Pharmaceutical R&D / Production / Sales)
◎ Eisai Pharmaceuticals India Pvt. Ltd.
(Pharmaceutical Sales)
◎ Eisai (Thailand) Marketing Co., Ltd.
◎ Eisai Taiwan Inc.
◎ Eisai Korea Inc.
◎ Others—5
(Total 12 companies)
(Pharmaceutical Production / Sales)
As of March 31, 2016
◎ Eisai Ltd.
◎ Eisai S.A.S.
<Other Business>
.,
.
Bulk /Products
[Japan]<Pharmaceutical Business>
[Overseas]<Pharmaceutical Business>
BusinessSupport
LogisticSupport
Research
Research / Products
Bulk / Products
Products
Bulk / Products
Bulk /Products
Bulk /Products
52
List of Group Companies
(As of March 31, 2016)
Company Name Location Description of Operations (*1)
Voting
Rights
(*2)
Relationship Note
Sannova Co., Ltd. Gunma Pref. 300 JPYPharmaceutical production /
sales
80.01%
(80.01%)
The Company purchases
pharmaceutical products*6
Elmed Eisai Co., Ltd. Tokyo 450 JPY Pharmaceutical sales 100.00% -
KAN Research Institute, Inc. Hyogo Pref. 70 JPY Pharmaceutical R&D 100.00%The Company commissions
pharmaceutical R&D
Eisai Distribution Co., Ltd. Kanagaw a Pref. 60 JPY Pharmaceutical logistics 100.00%The Company commissions
pharmaceutical logistics
Eisai R&D Management Co.,
Ltd.Tokyo 14 JPY
Management and
administration of
pharmaceutical R&D
100.00%
The Company is entrusted w ith
a part of management,
administration and other
functions related to R&D
Sunplanet Co., Ltd. Tokyo 455 JPYBusiness support services,
etc.85.45%
The Company purchases
business support services,
Eisai Corporation of North
America
New Jersey,
USA2,766,700 USD Americas holding company 100.00% - *3
Morphotek, Inc.Pennsylvania,
USA355,000 USD Pharmaceutical R&D
100.00%
(100.00%)
The Company commissions
pharmaceutical R&D*3
Eisai Inc.New Jersey,
USA151,600 USD
Pharmaceutical R&D /
production / sales
100.00%
(100.00%)
The Company commissions
pharmaceutical research,
development and production /
sells bulk drug substances
*3
*5
H3 Biomedicine Inc.Massachusetts,
USA8 USD Pharmaceutical R&D
100.00%
(100.00%)
The Company commissions
pharmaceutical R&D
Eisai Ltd. Ontario, Canada 30,000 CAD Pharmaceutical sales100.00%
(100.00%)-
Eisai Laboratórios Ltda.São Paulo,
Brazil73,174 BRL Pharmaceutical sales
100.00%
(100.00%)-
Eisai Laboratorios S. de R.L.
de C.V.
Mexico City,
Mexico3 MXN Pharmaceutical sales
100.00%
(100.00%)-
Eisai Medicamentos S. de
R.L. de C.V.
Mexico City,
Mexico3 MXN
Pharmaceutical business
(Business support services)
100.00%
(100.00%)-
Eisai Europe Ltd.Hertfordshire,
UK184,138 GBP
European headquarters /
holding company,
pharmaceutical sales
100.00%
The Company commissions
management and administration
of its Europe Pharmaceutical
business
*3
Eisai Ltd.Hertfordshire,
UK46,009 GBP Pharmaceutical R&D / sales
100.00%
(100.00%)
The Company commissions
pharmaceutical R&D*3
Eisai Manufacturing Ltd.Hertfordshire,
UK38,807 GBP
Pharmaceutical production /
sales
100.00%
(100.00%)
The Company sells bulk drug
substances*3
Eisai GmbHFrankfurt,
Germany7,669 EUR Pharmaceutical sales
100.00%
(100.00%)-
Eisai S.A.S. Paris, France 19,500 EUR Pharmaceutical sales100.00%
(100.00%)-
Eisai B.V.Amsterdam,
Netherlands540 EUR Pharmaceutical sales
100.00%
(100.00%)-
Eisai Farmacéutica S.A. Madrid, Spain 4,000 EUR Pharmaceutical sales100.00%
(100.00%)-
Eisai S.r.l. Milan, Italy 3,500 EUR Pharmaceutical sales100.00%
(100.00%)-
Eisai Pharma AGZurich,
Sw itzerland3,000 CHF Pharmaceutical sales
100.00%
(100.00%)-
Eisai ABStockholm,
Sw eden10,000 SEK Pharmaceutical sales
100.00%
(100.00%)-
Eisai Farmacêutica,
Unipessoal Lda.
Lisbon,
Portugal4,000 EUR Pharmaceutical sales
100.00%
(100.00%)-
Common Stock
Unit=million
(Consolidated Subsidiaries)
Unit=thousand
53
LocationDescription of Operations
(*1)
Voting
Rights
(*2)
Relationship Note
Brussels, Belgium 2,001 EUR Pharmaceutical sales100.00%
(100.00%)-
Vienna, Austria 2,000 EUR Pharmaceutical sales100.00%
(100.00%)-
Moscow , Russia 4,000 RUB Pharmaceutical sales100.00%
(100.00%)-
Jiangsu, China 664,465 RMBChinese headquarters /
holding company
100.00%
(100.00%)- *3
Jiangsu, China 576,125 RMBPharmaceutical production/
sales
100.00%
(100.00%)
The Company sells bulk drug
substances*3
Jiangsu, China 70,000 RMB Pharmaceutical sales100.00%
(100.00%)
The Company sells
pharmaceutical products
Liaoning, China 50,000 RMBPharmaceutical production /
sales
100.00%
(100.00%)- *7
Singapore 34,469 SGD Asia holding company 100.00% -
Singapore 300 SGD Pharmaceutical sales100.00%
(100.00%)
The Company sells
pharmaceutical products
Singapore 10 SGD Pharmaceutical R&D100.00%
(100.00%)
The Company commissions
pharmaceutical R&D
Hong Kong, China 500 HKD Pharmaceutical sales100.00%
(10.00%)
The Company sells
pharmaceutical products
Jakarta, Indonesia 5,000 USDPharmaceutical production
/sales100.00%
The Company sells bulk drug
substances
Petaling Jaya,
Malaysia470 MYR Pharmaceutical sales
100.00%
(5.74%)
The Company sells
pharmaceutical products
Bangkok, Thailand 103,000 THB Pharmaceutical sales100.00%
(100.00%)
The Company sells
pharmaceutical products
Taipei, Taiw an 270,000 TWD Pharmaceutical sales 100.00%The Company sells
pharmaceutical products
Seoul, South
Korea3,512,000 KRW Pharmaceutical sales 100.00%
The Company sells
pharmaceutical products
Manila, Philippines 62,000 PHP Pharmaceutical sales50.00%
(1.45%)
The Company sells
pharmaceutical products*4
Andhra Pradesh,
India2,708,324 INR
Pharmaceutical R&D /
production / sales
100.00%
(11.08%)
The Company commissions
pharmaceutical research,
development and production /
sells bulk drug substances /
purchases pharmaceutical
products
*3
*8
Sydney, Australia 4,000 AUD Pharmaceutical sales 100.00% -
- - - - - -
Location Description of Operations
(*1)
Voting
RightsRelationship Note
Tokyo, Japan 340 JPYContrast media imports/
production/sales49.00%
The Company purchases
pharmaceutical products
Notes:
*4. HI-Eisai Pharmaceutical Inc. is considered to be a consolidated subsidiary as the Company holds effective control over its operation
*5. Eisai Inc. is the only subsidiary w hose sales to external customers exceed 10% of consolidated revenue reported in the consolidated f inancial
statements for the f iscal year ended March 31, 2016. Key f inancial results of Eisai Inc. are as follow s:
Revenue ¥167,059 mil.
Operating profit (¥36,874 mil.)
Profit for the period (¥3,299 mil.)
Total Equity ¥296,676 mil.
Total assets ¥405,476 mil.
*6. In March 2016, the pharmaceutical manufacturing and marketing business of the Company's consolidated subsidiary Sannova Co., Ltd.
w as succeeded by a new ly established company via an absorption-type split. At the time of the absorption-type split, Sannova Co., Ltd.'s
trading name w as changed to Sansho Pharmaceutical Co., Ltd., and the new ly established company's trading name is Sannova Co., Ltd.
In April 2016, all shares issued in the new company Sannova Co., Ltd. w ere transferred to Alfresa Holdings Corporation.
*7. In December 2015, the Company's consolidated subsidiary Eisai China Holdings Ltd. acquired all shares of Liaoning TianYi Biological
completed in April 2015. The name of the merged entity is Eisai Pharmaceuticals India Pvt. Ltd.
9. In December 2015, all shares held by the Company in EIDIA Co., Ltd. w ere transferred to Sekisui Chemical Co., Ltd.
10. In February 2016, all shares held by the Company in Eisai Food & Chemical Co., Ltd. w ere transferred to Mitsubishi-Kagaku Foods Corporation.
11. With AJINOMOTO PHARMACEUTICALS CO., LTD., a w holly ow ned subsidiary of Ajinomoto Co., Inc., as the successor company
and the Company as the splitting company, EA Pharma Co., Ltd. w as established in April 2016 via an absorption-type company split.
Eisai (Liaoning)
Pharmaceutical Co., Ltd.
Unit=thousand
Company Name Common Stock
Eisai China Holdings Ltd.
Eisai SA/NV
Limited Liability Company Eisai
Pharmaceutical Co., Ltd. The new name of the company is Eisai (Liaoning) Pharmaceutical Co., Ltd.
Eisai GesmbH
Eisai Asia Regional Services
Pte. Ltd.
(Associated Companies Accounted for Using the Equity Method)
Eisai (Malaysia) Sdn. Bhd.
Eisai China Inc.
Eisai (Singapore) Pte. Ltd.
Eisai (Suzhou) Trading Co.,
Ltd.
P.T. Eisai Indonesia
Eisai Korea Inc.
Eisai Australia Pty. Ltd.
(As of March 31, 2016)
Eisai Clinical Research
Singapore Pte. Ltd.
Eisai (Thailand) Marketing Co.,
Ltd.
Eisai Pharmaceuticals India,
Pvt. Ltd.
Eisai (Hong Kong) Co., Ltd.
Other—2 companies
Eisai Taiw an Inc.
HI-Eisai Pharmaceutical Inc.
*8. Procedures to merge Eisai Pharmaceuticals India Pvt. Ltd. and Eisai Pharmatechnology & Manufacturing Pvt. Ltd. w ere
even though the Company's voting rights do not exceed 50%.
Common Stock
Unit=million
Company Name
*1. "Description of Operations" indicates the segment applicable to the respective entity.
*3. Signif icant subsidiaries. In June 2015, the Company made an additional investment to Eisai China Holdings Ltd. by providing in-
kind contribution. Follow ing this, Eisai China Holdings Ltd. has become a signif icant subsidiary w hose total capital accounts for
more than 10% of the capital of the Company.
*2. Voting rights (%): Figures in parentheses show percentage indirectly ow ned by the Company.
Bracco-Eisai Co., Ltd.
Equity(%)Equity(%)Equity(%)
Equity(%)Equity(%)Equity(%)
54
3) Proposed Changes in Directors and Corporate Officers (effective June 17, 2016)
(1) Changes in Representative Corporate Officers
None
(2) Changes in Directors/Corporate Officers
a) Nominees for New Director
Yasuhiko Katoh
(Outside Director)
currently, Chairman and Representative Director, Mitsui
Engineering & Shipbuilding Co., Ltd.
Hirokazu Kanai currently, Group Officer, Head of Corporate Accounting & Tax
Department
Tamaki Kakizaki
(Outside Director)
currently, Professor, Meiji University, School of Law
Daiken Tsunoda
(Outside Director)
currently, Partner, Nakamura Tsunoda & Matsumoto
b) Retiring Director
Kiyochika Ota
(Outside Director)
(currently, Director)
Hideaki Matsui (currently, Director)
Osamu Suzuki
(Outside Director)
(currently, Director, and Partner, YUASA and HARA)
Patricia Robinson
(Outside Director)
(currently, Director, and Associate Professor at Hitotsubashi
University Graduate School of International Corporate Strategy)
c) Nominees for New Corporate Officers
None
d) Corporate Officers Scheduled for Promotion
None
e) Retiring Corporate Officers
None
(3) Nominees for Directors
Haruo Naito currently, Director
Representative Corporate Officer and CEO
Nobuo Deguchi currently, Director
Graham Fry currently, Outside Director
Toru Yamashita currently, Outside Director, Chief Corporate Adviser, NTT DATA
Corporation
Ikuo Nishikawa currently, Outside Director, Certified Public Accountant and
Professor, Faculty of Business and Commerce, Keio University
Noboru Naoe currently, Director
Eiichiro Suhara currently, Outside Director, President, Mitsubishi Pencil Co., Ltd.
Yasuhiko Katoh currently, Chairman and Representative Director, Mitsui
Engineering & Shipbuilding Co., Ltd.
Hirokazu Kanai currently, Group Officer, Head of Corporate Accounting & Tax
Department
Tamaki Kakizaki currently, Professor, Meiji University, School of Law
Daiken Tsunoda currently, Partner, Nakamura Tsunoda & Matsumoto
55
NOTE: Graham Fry, Toru Yamashita, Ikuo Nishikawa, Eiichiro Suhara, Yasuhiko Katoh,
Tamaki Kakizaki, and Daiken Tsunoda are nominees who meet the requirements of an
Outside Director set forth in Article 2, Paragraph 3, Item 7 of the Ordinance for Enforcement
of the Companies Act of Japan.
(4) Selected Candidates for Appointment as Members of Committees
a) Nomination Committee
Chair: Eiichiro Suhara
Members: Graham Fry
Yasuhiko Katoh
b) Audit Committee
Chair: Ikuo Nishikawa
Members: Noboru Naoe
Hirokazu Kanai
Tamaki Kakizaki
Daiken Tsunoda
c) Compensation Committee
Chair: Graham Fry
Members: Eiichiro Suhara
Yasuhiko Katoh
d) Independent Committee of Outside Directors
Members Graham Fry
Toru Yamashita
Ikuo Nishikawa
Eiichiro Suhara
Yasuhiko Katoh
Tamaki Kakizaki
Daiken Tsunoda
(5) Career Summary of Nominees for New Outside Director
Name: Yasuhiko Katoh
Date of Birth: May 19, 1947
Career Summary:
Apr. 1973 Joined Mitsui Engineering & Shipbuilding Co., Ltd.
Apr. 2004 CEO, Mitsui Babcock Energy Limited
Jun. 2004 Director, in charge of Mitsui Babcock Energy Limited (stay in the United
Kingdom)
Dec.2006 Director, in charge of Special Mission, Mitsui Engineering & Shipbuilding
Co., Ltd.
Jun. 2007 President, Representative Director, Mitsui Engineering & Shipbuilding
Co., Ltd.
Jun. 2013 Chairman and Representative Director, Mitsui Engineering &
Shipbuilding Co., Ltd. (current)
Name: Tamaki Kakizaki
Date of Birth: Jan. 16, 1961
56
Career Summary:
Apr. 2002 Associate Professor, Atomi University, Faculty of Management
Apr. 2008 Professor, Toyo University, Graduate School of Law
Apr. 2012 Professor, Yokohama National University, Graduate School of
International Social Sciences
Apr. 2014 Professor, Meiji University, School of Law (current)
Name: Daiken Tsunoda
Date of Birth: Jan 29, 1967
Career Summary:
Apr. 1994 Admitted to the Tokyo Bar Association
Joined Mori Sogo(currently Mori Hamada & Matsumoto)
Jan. 2001 Partner, Mori Sogo
Mar. 2003 Partner, Joined Nakamura Tsunoda (currently Nakamura Tsunoda &
Matsumoto) (current)
Jun. 2004 Outside Auditor, Atlus Co., Ltd.
Sep. 2004 Outside Director, Polaris Principal Finance Co., Ltd.(currently Polaris
Capital Group Co., Ltd.)
Jun. 2005 Outside Auditor, INES Corporation
Jul. 2007 Outside Auditor, Sealy Japan Co., Ltd. (currently Sleep Select Co., Ltd.)
(current)
Apr. 2008 Outside Auditor, Mitsui Sumitomo Insurance Group Holdings,
Incorporated (currently MS&AD Insurance Group Holdings, Inc.)
Apr. 2008 Outside Auditor, Japan Stockholders Data Service Company, Limited
(current)
Apr. 2010 Outside Director, MS&AD Insurance Group Holdings, Inc. (current)
Mar. 2012 Outside Auditor, BILCOM, Inc.
Apr. 2014 Outside Director, Culture Convenience Club Co., Ltd. (current)
Mar. 2015 Outside Auditor, BILCOM, Inc. (current)
(6) Nominees for Corporate Officers
Representative
Corporate
Officer and CEO
Haruo Naito currently, Representative Corporate Officer and
CEO
Representative
Corporate
Officer
Hideki Hayashi currently, Representative Corporate Officer,
Japan Business and CIO
Japan Business
Dementia Solutions HQs
Chief Information Officer (CEO Office)
Representative
Corporate
Officer
Yutaka Tsuchiya currently, Representative Corporate Officer,
Healthcare Policy and China Business
Healthcare Policy
Global Product Emergency Management
Global Value & Access
Marketing Authorization Supervisor General
China Business
hhc Data Creation
Japan and Asia Medical (CEO Office)
57
Representative
Corporate
Officer
Hideshi Honda currently, Representative Corporate Officer and
Asia Region President
President, Asia Region
CEO's special mission
Executive
Vice President
Takafumi Asano currently, Executive Vice President
President, Eisai Demand Chain Systems
Executive
Vice President
Yasushi Okada currently, Executive Vice President
Chief Talent Officer
Head of Talent Innovation Headquarters
General Affairs, Environmental and Safety
Affairs
Senior
Vice President
Kenta Takahashi currently, Senior Vice President
General Counsel
Intellectual Property
Senior
Vice President
Edward Stewart
Geary
currently, Senior Vice President
Chief Medical Officer
Head of Corporate Medical Affairs Headquarters
Global Safety Board Chair
Senior
Vice President
Yuji Matsue currently, Senior Vice President
Deputy Chief Talent Officer
Senior
Vice President
Gary Hendler currently, Senior Vice President
Chief Commercial Officer, Oncology Business
Group
President, EMEA Region
Chairman & CEO, Eisai Europe Ltd.
Senior
Vice President
Terushige Iike currently, Senior Vice President
President, Oncology Business Group (CEO
Office)
Senior
Vice President
Ryohei Yanagi currently, Senior Vice President
Chief Financial Officer
Chief IR Officer
Senior
Vice President
Ivan Cheung currently, Senior Vice President
President, Neurology Business Group
President, Americas Region
Chairman & CEO, Eisai Inc. (CEO Office)
Vice President Takashi Owa currently, Vice President
Chief Medicine Creation Officer, Oncology
Business Group
Chief Discovery Officer, Oncology Business
Group
Vice President Yasunobu Kai currently, Vice President
Chief Strategy Officer, Oncology Business
Group
Lenvima Global Lead, Oncology Business
Group
Head of Strategy Department, Oncology
Business Group
Vice President Lynn Kramer currently, Vice President
58
Chief Clinical Officer, Neurology Business Group
Chief Medical Officer, Neurology Business
Group
Vice President Sayoko Sasaki currently, Vice President
Corporate Affairs
Vice President Junichi Asatani currently, Vice President
Chief Compliance Officer
Internal Control
Vice President Shaji Procida currently, Vice President
President & COO, Eisai Inc.
Vice President Teiji Kimura currently, Vice President
Chief Discovery Officer, Neurology Business
Group
Head of Neurology Tsukuba Laboratory,
Discovery, Medicine Creation, Neurology
Business Group
Vice President Satoru Yasuda currently, Vice President
Head of Regional Cooperation Shuto-Ken HQ,
Eisai Japan
Vice President Hidenori Yabune currently, Vice President
Head of Access & Outcome Headquarters, Eisai
Japan
Vice President Hiroyuki Kato currently, Vice President
Head of Medicine Development Center
Vice President Alexander Scott currently, Vice President
Chief Strategy Officer, Neurology Business
Group
Head of Strategy Department, Neurology
Business Group
Vice President Masayuki
Miyajima
currently, Vice President
President, Eisai Japan
Vice President Tatsuyuki Yasuno currently, Vice President
Corporate Planning & Strategy
Head of Corporate Planning & Strategy
Department (CEO Office)
Vice President Yanhui Feng currently, Vice President
President, Eisai China Holdings Ltd.
President, Eisai China Inc.
Vice President Rami Suzuki currently, Vice President
Head of Corporate BD Department
NOTE: Representative Corporate Officer and CEO Haruo Naito will also serve concurrently as a
Director.
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