Print（PDF/5MB） Apr. 28, 2023 Finances
Sumitomo Pharma Announces Mid-term Business Plan 2027 (FY2023-FY2027)
Sumitomo Pharma Co., Ltd. (Head Office: Osaka, Japan; Representative Director, President and CEO: Hiroshi Nomura; Securities Code: 4506, Prime Market of TSE) announced today its Mid-term Business Plan 2027 (FY2023-FY2027) as described below.
Sumitomo Pharma (the “Company”) engages in business in accordance with its Corporate Mission: “To broadly contribute to society through value creation based on innovative research and development activities for the betterment of healthcare and fuller lives of people worldwide.”
As humanity is increasingly being challenged by enduring social issues, including an aging society with fewer children and the pandemic, healthcare needs in the Psychiatry & Neurology and Oncology areas are expected to expand continuously. Meanwhile, healthcare needs keep growing sophisticated, urging the Company to address social expectations for solving healthcare challenges by making the most of diverse modalities as it caters to a lifestyle fused digital and real life and people’s values.
Against this backdrop, the Company has drawn up the Mid-term Business Plan 2027, which will guide the Company through the five years commencing in FY2023, based on the following Vision drawn up in FY2019.
I. Vision
“For Longer and Healthier Lives.
We unlock the future with cutting-edge technology and ideas”
With a focus on the Psychiatry & Neurology and Oncology as priority disease areas, Sumitomo Pharma Group (the “Group”) will contribute to the betterment of healthcare and fuller lives of people worldwide through diverse approaches, including pharmaceutical products, regenerative medicine/cell therapy, and non-pharmaceutical solutions. In other areas, too, the Group will leverage its assets to deliver value to patients. With this, the Group aims to establish itself as a Global Specialized Player (“GSP”) by 2033.
In order to promote integrated management of the Group, effective July 1, 2023, the system of philosophies shall be reconfigured to coincide with the combination of Group companies in the U.S; Mission, Values, and the Declaration of Conduct shall collectively constitute a body of philosophies which will be shared and instilled throughout the Group.
The Company also defines the practice of its Mission that contributes to the realization of a sustainable society and leads to the sustained enhancement of its corporate value as “sustainability management.”
Mission (Sumitomo Pharma’s raison d’etre and pledge and commitment to society)
To broadly contribute to society through value creation based on innovative research and development activities for the betterment of healthcare and fuller lives of people worldwide |
Values (Value to be shared among all officers and employees)
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Patient First |
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Always with Integrity |
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One Diverse Team |
Declaration of Conduct (Norm of action to be observed in the course of daily business)
| 1. Follow through the global slogan “Innovation today, healthier tomorrows” | |
| 2. Pursue trustworthy corporate activities | |
| 3. Positively disclose and properly manage information | |
| 4. Improve individual capabilities and collaborate with peers | |
| 5. Respect human rights | |
| 6. Positively address global environmental issues | |
| 7. Build harmonious relationships with society |
II. Mid-term Business Plan 2027 (FY2023–FY2027)
1. Basic Strategy: Make a “qualitative transformation” of the business structure and business practices
The Company will transform its business structure by working to establish a revenue base that facilitates sustained growth, with a focus on maximizing the value of the three key products, namely, ORGOVYX®(therapeutic agent for advanced prostate cancer), MYFEMBREE® (therapeutic agent for uterine fibroids), and GEMTESA® (therapeutic agent for overactive bladder), and by engaging in research and development designed to bring the Company’s innovations to fruition. In the meantime, the Company will build a foothold for achieving renewed growth after the expiration of the exclusive marketing period for LATUDA® (atypical antipsychotic) in the U.S. and for establishing a position as a GSP. At the same time, the Company will take advantage of the combination of its Group companies in the U.S. to reengineer the Group operating structure and increase the flexibility and efficiency of its business foundation.
2. Priority Issues
(1) Strengthening Business Profitability
- In North America, the Company will concentrate its efforts on the early value maximization of the three key products while steadily moving forward with the combination of Group companies in the U.S. to create synergy.
- In Japan, the Company will focus on maximizing the value of priority products and new products to ensure business revenue while strengthening the Regenerative Medicine/Cell Therapy Business and Frontier Business.
- In China & Asia, the Company will expand the product line while maximizing revenue and profit by launching products in more countries/regions.
(2) Bringing Own Innovations to Fruition
- The Company will accelerate the development of late-stage assets such as ulotaront (product code: SEP-363856) and allogeneic iPS cell-derived dopaminergic neural progenitor cells (product code: DSP-1083), and work to achieve their successful launches.
- The Company will select priority products from among early-stage assets to accelerate in-house development. At the same time, the Company will seek to maximize the value of its pipeline through adequate measures, including partnerships with external parties, and realize appropriate investment allocation.
- In drug discovery, the Company will forge ahead with its translational research and biomarker research and develop modality technologies to further strengthen its highly unique foundation for drug discovery. The Company will also propel data-driven drug discovery to continuously create candidate compounds that focus on clinical conditions.
- The Company will shift the Regenerative Medicine/Cell Therapy Business and Frontier Business into full gear to make them pillars of its earnings during the next Mid-term Business Plan period beginning from FY2028.
- The Company will promote research and development of drugs to treat antimicrobial resistant bacterial infections and vaccines through partnerships with outside institutions, thus contributing to global health.
(3) Strengthening Group Governance
- The Company will take advantage of the combination of its Group companies in the U.S. to reengineer the Group operating structure and set about building a management structure that allows the Company to make prompt business decisions optimized for the Group.
(4) Accelerating Digital Transformation (DX)
- The Company will innovate its organization into one where all of its employees make maximal use of its digital platforms (DrugOME and Digital Innovation) and, following data-driven decisions, make continued autonomous efforts to innovate operations and create value.
(5) Instilling Corporate Culture and Implementing HR Strategies
- The Company will promote integrated management of the Group through the instillation of the philosophies. The Company will also set about building a global HR management foundation in order to create an HR portfolio that allows members of the Group to work together closely and achieve goals as one.
3. Business Goals
(1) Financial Goals
| PL/CF | FY2023 | FY2024-FY2027 |
|---|---|---|
| Revenue | ¥362 billion | CAGR 12% or higher (Base year: FY2023) |
| Core operating profit | ¥(62) billion | ¥192 billion or higher (For four-year total) |
| Operating cash flow | ¥(130) billion | ¥270 billion or higher (For four-year total) |
| ROIC | (8.5)％ | 6.5％ or higher (For four-year total) |
| ROE | (21.9)％ | 8％ or higher (For four-year total) |
| BS | At the end of FY2027 |
|---|---|
| Net D/E ratio | 0.5 or lower |
| Interest-bearing liabilities | ¥200 billion or lower |
| Ratio of equity attributable to owners of the parent to total assets | 40% or higher |
| Forex assumptions: USD1 = JPY130, RMB1 = JPY19.5 All financial goals above are after adjusting for the probability of success. CAGR: Compound Annual Growth Rate ROIC ＝ (Core operating profit - Income taxes) / (Equity + Interest-bearing liabilities) |
(2) Long-term ROE Goal
- The Company will aim for an ROE of 10% during the period of the next Mid-term Business Plan starting in FY2028.
(3) Dividend Policy
- The Company believes it important to distribute surpluses in an appropriate manner reflecting any improvement in its performance. Accordingly, a performance-linked dividend hike will be considered in addition to consistent dividend payout.
- Pursuant to this fundamental policy, during the Mid-term Business Plan 2027 period (FY2023-FY2027), the Company will suspend dividends as negative core operating profit is forecasted for FY2023 but will resume dividends for FY2024 as core operating profit is expected to return to positive. A consistent dividend payout will be the aim thereafter.
(4) Investment Policy
- Research and development investments in the Company’s assets will be prioritized. Resources will be allocated to M&As and in-licensing as well, so long as they do not significantly effect the achievement of financial goals.
For more details, please refer to the attached presentation material.
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, which involve both known and unknown risks and uncertainties. Actual results of those matters covered in the forward-looking statements including financial forecast may differ materially from those contained in this release, due to a number of factors.
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