Evaluation of the Effectiveness of the Board of Directors
Sumitomo Pharma has evaluated the effectiveness of the Board of Directors annually since fiscal 2015. In fiscal 2025, the Company also engaged an external evaluation for the third time, following those carried out in fiscal 2018 and fiscal 2021.
Purpose, Method and Process of Evaluation of Effectiveness
The Company has evaluated the effectiveness of the Board of Directors as part of its efforts to strengthen corporate governance. Through this evaluation, the Company identifies any gaps between the roles and responsibilities expected of the Board of Directors under the Basic Policy on Corporate Governance and actual practice. By regularly identifying issues and implementing improvement measures, the Company aims to continuously enhance the effectiveness of the Board and its governance functions.
Evaluation Process for Fiscal 2025
- February-March 2026: The Company conducted a questionnaire among all Directors.
- April 2026: The Board of Directors exchanged opinions based on the analysis of the questionnaire results.
- May 2026: The Board of Directors held further discussions based on the questionnaire analysis and the external evaluator’s review, and identified key issues to be addressed in fiscal 2026.
The external evaluator assessed the effectiveness of the Board of Directors in fiscal 2025, including progress made on key issues, based on the following information and reported the results to the Board of Directors at its meeting in May 2026:
- Review of Board of Directors meeting minutes and other related materials
- Discussions among Outside Directors regarding revisions to the questionnaire used for the effectiveness evaluation
- Analysis of the questionnaire results
- Observation of discussions on the effectiveness evaluation at the Board of Directors meeting held in April 2026
Evaluation Topics
The questionnaire was conducted anonymously and was designed to collect both quantitative evaluations using a four-point scale for each topic and qualitative feedback through open-ended comment sections. For the fiscal 2025 effectiveness evaluation, the Company took the opportunity presented by its transition to a Company with an Audit and Supervisory Committee to undertake a substantial review of the questionnaire items. Based on feedback from Outside Directors and external legal counsel, the evaluation topics were significantly revised.
The major topics of the questionnaire were as follows:
- ①Efforts Made for the Major Agendas
- ②Exercise of Oversight Functions
- ③Enhancement of Oversight through the Transition to a Company with an Audit and Supervisory Committee
- ④Appropriate Oversight of Related Party Transactions
- ⑤Appropriate Oversight in Light of the Functions Exercised by the Nomination and Compensation Committee
- ⑥Composition of the Board of Directors
- ⑦Status of the Operations of the Board of Directors and Support for the Operation
- ⑧Roles and Responsibilities of Independent Outside Directors
- ⑨Relationship with Stakeholders
- ⑩Other (Training, the Method of Implementation of Evaluation of the Effectiveness of the Board of Directors and the Content Thereof, etc.)
Results of the Evaluation
Based on the quantitative analysis of the questionnaire results, including a comparative analysis of responses from Internal Directors and Outside Directors, as well as all comments provided through the open comment sections, the Board of Directors held discussions in April and May 2026, taking into consideration the findings reported by the external evaluator. As a result, the Board confirmed that the evaluation process, methodology, and results of the fiscal 2025 Board effectiveness evaluation were appropriate, that there were no significant issues in the operation of the Board of Directors during fiscal 2025, and that the effectiveness of the Board of Directors was confirmed. The external evaluation also confirmed the effectiveness of the Board of Directors.
With regard to the key agenda identified for fiscal 2025, namely (i) supervision of management to realize "Reboot 2027" and (ii) discussions on medium- to long-term issues aimed at becoming a "Strong Sumitomo Pharma," the Board agreed that appropriate progress had been made on both initiatives. At the same time, the Board recognized the need to continue focusing on the latter issue as an ongoing priority. In addition, the external evaluator provided recommendations on matters that should be considered to further enhance the effectiveness of the Board of Directors.
Major Agendas to Be Addressed in Fiscal 2026
The following agendas have been identified as major agendas to be addressed in fiscal 2026 as a result of the evaluation of the effectiveness of the Board of Directors for fiscal 2025.
- Formulation of the next Mid-term Business Plan and further enhancement of medium- to long-term discussions looking beyond the plan period.
- Further strengthening of the oversight functions of the Board of Directors and deeper discussions on the optimal composition and operation of the Board to support such efforts.
The Board of Directors is determined to further enhance its functions while addressing these major agendas.