Print(PDF/1018KB) May 12, 2021 Finances

Sumitomo Dainippon Pharma Announces Revised Mid-term Business Plan 2022 (FY2018-FY2022)

Sumitomo Dainippon Pharma Co., Ltd. (Head Office: Osaka, Japan; Representative Director, President and CEO: Hiroshi Nomura; Securities Code: 4506, First Section of TSE) today announced a revised version of its Mid-term Business Plan 2022 (FY2018-FY2022), which was originally announced in April 2019.

1. Background to the Revision

Guided by the Mid-term Business Plan 2022, Sumitomo Dainippon Pharma set Psychiatry & Neurology, Oncology, and Regenerative Medicine/Cell Therapy as its three focus areas. Focusing on these areas, the Company aspires to establish a position as a "Global Specialized Player" in 2033, with a view to the growth of healthcare areas other than pharmaceutical products as well. At the same time, it will also be working to rebuild its business foundation through the establishment of a growth engine and the building of a flexible and efficient organization.

Preparing for the post-LATUDA era (after the loss of exclusivity in the U.S. regarding the atypical antipsychotic drug), we formed a strategic alliance with Roivant Sciences in December 2019. This alliance has allowed us to acquire a number of pipelines expected to become growth drivers, including relugolix and vibegron, as well as DrugOME and Digital Innovation, healthcare technology platforms that will accelerate the Company's digital innovation, and the related talent. On the other hand, in March 2021, we discontinued the development of napabucasin, on which we had placed high hopes as a post-LATUDA growth driver.

We expect that the impact of this discontinuation, which will result in decreased revenue, will be compensated for by increases in sales of new products from Sumitovant Biopharma. We also expect that our core operating profit will decrease as a result of posting sales, general and administrative expenses, as well as amortization of patent rights for new Sumitovant products. In view of these developments, we revised the FY2022 business goals set forth in the Mid-term Business Plan 2022.

2. Financial Goals

(1) FY2022 Business Goals

Previous goals Revised goals
Revenue ¥600 billion ¥600 billion
Core operating profit ¥120 billion ¥60 billion
ROIC1 10% 3%
ROE2 12% 3%
1. ROIC = (core operating profit - income tax) ÷ (total capital + interest- bearing liabilities)
2. ROE = profit attributable to owners of the parent ÷ equity attributable to owners of the

(2) Dividend Policy (Unchanged from the previous version)
• Maintain a consistent payment policy but also consider reflecting any improvement
in the Company's performance in the dividend payment
• 5-year average payout ratio of 20% or higher

3. Major Initiatives

While pursuing the maximization of the product value of relugolix and vibegron, we will be fully committed to developing products that are expected to become growth drivers in the areas of Psychiatry & Neurology, Oncology, and Regenerative Medicine/Cell Therapy for our medium-to-long-term business expansion. We will also promote developing frontier businesses. In business operations, we will continue to strengthen our management structure such as the reinforcement of the foundation of each business unit and region. Furthermore, we will work to improve productivity through digital innovation, foster a corporate culture that accelerates change, and develop talent.

We aim to achieve an ROE of 10% or higher in the second half of the 2020s through sustained growth.

Note: For more details, please refer to the attached presentation material (excerpted version of FY2020 financial results and revision of Mid-term Business Plan 2022 presentation materials).

Disclaimer Regarding Forward-looking Statements
The statements made in this press release contain forward-looking statements based on management's assumptions and beliefs in light of information available as of the day of this release, and they involve both known and unknown risks and uncertainties. Actual results of those matters covered in the forward-looking statements, including financial forecasts, may differ materially from those contained in this release, due to a number of factors.

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