Materiality

Sumitomo Pharma has identified the material issues (Materiality) for our CSR-based management, assigns an order of priority to these issues in our Materiality Map and uses them as a guide in the pursuit of CSR-based management.

It is important to continuously address the demands of society in order for the Company to achieve sustained growth and to contribute to realizing a sustainable society. We will assess our contribution to solving social issues on a regular basis and review material issues for CSR-based management in light of feedback obtained through dialogues with diverse stakeholders.

Materiality Map

Establishing Materiality Targets and KPIs (June 2021)

We verified each of the material issues based on opinions obtained through stakeholder dialogue, to conclude that there was no need to change any of the issues for fiscal 2021 but would establish targets and KPIs for each of the material issues. In establishing such targets and KPIs, we ensured that they are linked to our business plans and management issues and serve as indicators with which to evaluate and analyze the progress of each material issue. By sharing of our initiatives with the public, including non-financial information, we believe we can further promote dialogue with our stakeholders.
Moreover, revision of material issues and targets and setting of KPIs are determined following deliberation by the Management Committee and are reported to the Board of Directors.

Materiality targets and KPIs

Material issues linked to value creation

Development of innovative products and healthcare solutions
Contributing to the development of science
Targets ●Continuous development of pharmaceuticals in areas with high unmet medical needs
●Development of healthcare solutions to respond to the future healthcare needs centered on areas where synergies with the pharmaceutical business can be expected
KPIs
◆Progress on main development pipeline    ○Targets in Psychiatry & Neurology area
ulotaront(SEP-363856) :launch in fiscal 2023 (U.S)
SEP-4199 :launch in latter half of 2020s
○Targets in Oncology area
DSP-7888 :launch in fiscal 2024 (Japan and U.S.)
○Targets in Regenerative Medicine / Cell Therapy field
congenital athymia :launch in fiscal 2021 (U.S.)
Parkinson's Disease :launch in fiscal 2023 (Japan)
age-related macular degeneration :launch in fiscal 2025 (Japan)
○Targets for other areas with high unmet medical needs
relugolix :Myovant approval for endometriosis in fiscal 2022 (U.S.)
rodatristat ethyl :launch in latter half of 2020s (Japan and U.S.)
○Targets for Frontier business
commercialization of multiple products :launch in fiscal 2023-2025 (Japan and U.S.)
◆Progress on early-stage development pipeline ○Number of transitions to Phase 2 and Phase 1 in Psychiatry & Neurology area and Oncology area
◆Progress on development of modalities
◆Work motivation of research & development staff   ○Evaluation score of research & development staff in employee engagement survey
Work Style Innovation
Targets ●More sophisticated work styles
●Virtuous cycle in Work-life balance
KPIs ◆Employee engagement
◆Employee Turnover Rate
Diversity & inclusion
Targets ●Promotion of active participation by female employees
●Promotion of LGBTQ understanding
●Promotion of active participation by people with disabilities through appropriate placement
KPIs ◆Percentage of female managers (maintain at least 10%)
◆Percentage of female senior employees, excluding female managers (15% by April 2023)
◆Percentage of male employees taking childcare leave (100%)
◆Number of participants in e-learning on LGBTQ
◆Number of ALLY activities
◆Average length of employment of employees with disabilities
Training and development of employees
Targets ●Fostering of leaders and training of globally-minded human resources
●Fostering a corporate culture that encourages self-disciplined and independent career development
KPIs ◆Number of participants in selective training
◆Number of employees with overseas work experience
◆Number of participants in programs to enhance English proficiency
◆Number of cases and applicants utilizing internal job posting system
◆Number of career consultations
Patient support and advocacy
Targets ●Improving disease-related literacy for patients, their families, and society
KPIs ◆Activities from patient perspective through healthcare professionals
◆Level of understanding and satisfaction of participants in public lectures
◆Number of support activities through donations and cooperation with patients' associations
◆Dissemination to raise awareness of diseases through our website
Local community contribution
Targets ●Fulfilling responsibilities and contributing as a member of the community with awareness of harmony with society
KPIs ◆Number of activities to support the development of the next generation and level of understanding and satisfaction of participants
◆Number of donations for social contribution that lead to resolution of social issues (disasters, people with disabilities, the environment, biodiversity, etc.)
◆Number of charitable activities in local communities
Contribution to global health
Targets ●Development of drugs to treat malaria and antimicrobial-resistant (AMR) bacterial infections
●Strengthening of public-private collaboration on countermeasures against AMR and appropriate use of antibiotics
●Promotion of public awareness-raising activities for health, hygiene, and nutrition
KPIs
◆Progress of development in infectious diseases area  ○Number of projects
○Number of products (number of products launched)
◆Number of policy recommendations in infectious diseases area*
◆Number of doctors and pharmacists who participated in the AMR countermeasure support program
◆Number of local residents assisted by maternal and child health programs in developing countries
Initiatives to improve access to medicines
Targets ●Promotion of public awareness-raising activities with the aim of improving medicine-related literacy
●Response to requests for the development of unapproved and off-label drugs
●Acceleration of provision of drugs at fair prices
KPIs ◆Number of programs aiming to improve medicine-related literacy
◆Number of responses to requests for unapproved and off-label drugs
◆Number of policy recommendations by the Company on access to medicines*
Improvement of healthcare infrastructure in developing countries
Targets ●Support for capacity building of healthcare professionals, development of healthcare networks, etc.
●Support for development of pharmaceutical regulations and supply chains in collaboration with local governments and international organizations
KPIs ◆Number of community care volunteers trained through maternal and child health programs in developing countries
◆Number of partnerships working to improve healthcare infrastructure in developing countries
Measures to address falsified medicines
Targets ●Prevention of falsified medicines and illicit distribution
KPIs

※ Disclosure of categories only, not actual figures, etc.

Material issues that form the foundation for business continuity

Respecting human rights
Targets ●Promotion of respecting human rights throughout all the value chain based on global trends
●Promotion of initiatives in accordance with the United Nations Guiding Principles on Business and Human Rights
KPIs ◆Formulation of a basic policy for human rights
◆Promotion of understanding of and action on the basic policy at Group companies 
◆Encouragement of respect for human rights by business partners, including suppliers
Corporate governance
Targets ●Pursuit of highly effective corporate governance
●Ensuring the independence of management and protecting the interests of minority shareholders
KPIs ◆Appropriate management and supervision of Group companies
◆Addressing the revised Corporate Governance Code appropriately 
◆Implementing evaluation of the effectiveness of the Board of Directors and working on priority issues based on the results of evaluation
◆Conducting appropriate transactions between Group companies with consideration to protecting the interests of minority shareholders
Risk management
Targets ●Implementing risk assessment and taking countermeasures
●Rebuilding of business continuity plans (BCP)
●Proper information management (management of confidential information, internal information and personal information, Information Technology security)
KPIs ◆Implementing risk assessment and examining and implementing appropriate countermeasures based on results of assessment
◆Rebuilding, and implementing training and drills of business continuity management (BCM) and business continuity plans (BCPs)
◆Provision of education and training aimed at proper information management
◆Number of serious information leaks and other incidents
Compliance
Targets ●Practice of the Declaration of Conduct and Compliance Standards
●Appropriate operation of compliance promotion system and establishment of rules
●Improvement in the effectiveness of the whistle-blowing system
●Ensure exclusion of anti-social forces and prevention of corruption
KPIs ◆Number of serious compliance violations
◆Implementation of compliance education and training
◆Implementation rate of initiatives to ensure compliance (identification of compliance risk and review of countermeasures)
◆Implementation of compliance awareness surveys
◆Level of awareness and understanding of whistle-blowing system and number of reports
Fair and transparent corporate activities
Targets ●Sincere corporate activities contributing to the enhancement of stakeholder engagement
KPIs ◆Number of stakeholder dialogues
◆Ensuring transparency on relationships with healthcare professionals and patients groups
◆Promotion of appropriate provision of information based on scientific evidence
Corporate regulatory compliance, quality assurance and stable supply
Targets ●Ensuring strong quality assurance and regulatory affairs as well as data integrity
●Practice of pharmacovigilance by centralized management of safety information and implementation of timely safety measures
●Prevention of occurrence of drug-induced suffering
●Promotion of proper use by provision of appropriate information
KPIs ◆Implementation of management reviews
◆Responding to inspections and audits
◆Providing education on collection of safety information, quality assurance and drug-induced suffering
◆Integrated management of safety information and early detection of risks
◆Consideration and implementation of revisions to Precautions in package inserts
Targets ●Continuation of three Ss (safe operations, sound quality and stable supply)
●Strengthening of supply chain
KPIs ◆Number of serious accidents
◆Number of product recalls due to quality issues
◆Rationalization of safety stock standards
◆Rebuilding and strengthening of BCPs
◆Implementation of supplier risk assessments
CSR procurement
Targets ●Achievement of balanced, fair, and transparent transactions
KPIs ◆Implementation of supplier surveys (identification of supplier survey targets and implementation of supplier survey)
Health, safety and welfare of employees
Targets ●Promotion of health through practice of the declaration of "Health Innovation"
●Occupational health and safety activities, prevention of occupational accidents
KPIs ◆Smoking rate of employees (target: -2%/year)
◆Prevention of serious illness (percentage of health checkups for employees covered by specific health guidance (target: 100%),
Percentage of health checkups for employees requiring treatment based on instructions of occupational physician (target: 100%)
◆Percentage of employees receiving stress checks (target: 100%)
◆All insured persons and dependents to receive specific health checkups for preventing metabolic syndrome in the over-40s (target: 100%)
◆Work-related accident frequency rate and lost-time injury frequency rate (excluding accidents involving business vehicles)
Environmental initiatives
Targets ●Building a low carbon society
●Efficient use of resources (water and waste)
●Proper information disclosure and responding to TCFD
KPIs ◆Implementation of measures to achieve fiscal 2030 and fiscal 2050 goals
◆Per-unit energy consumption
◆Recycling rate and final disposal rate of waste
◆Acquisition of third-party assurance for environmental data
◆Promotion of evaluation of risks and opportunities related to climate change and water

Historical changes of materiality

Initial Materiality Assessment Procedures (July 2018)

STEP 1: Compiling material issues

By referring to information* such as international guidelines and questionnaire factors evaluated by SRI assessment organizations,* we reviewed global societal issues and trends in ESG expectations to compile material issues which we should consider.

*The United Nation's Sustainable Development Goals (SDGs), GRI Standards, ISO26000, Dow Jones Sustainability Indices, FTSE4Good, MSCI, etc.

STEP 2: Narrowing down material issues

We narrowed down the material issues based on the expectations obtained through dialogues with our stakeholders.

STEP 3: Prioritizing material issues

The material issues were classified and prioritized in terms of their "Societal Significance (based on the expectations of various stakeholders and social demand)" and "Importance to Sumitomo Pharma's Business."

STEP 4: Deliberating and determining material issues

We conducted materiality assessment through deliberation at the Management Committee to determine the material issues and shared them with all of the Directors in the Executive Committee.

Changes to Material Issues (August 2019)

Based on stakeholder dialogue, we divided our materiality into the two categories below.
1.Materiality linked to value creation, which is highly unique and vital for the sustained growth of Sumitomo Pharma
2.Materiality that forms the foundation for business continuity, which is essential for the continuation of our business activities

Below are the reasons for the selection of the main material issues and how they are linked with value creation.

Development of innovative products and healthcare solutions, Contributing to the development of science
The development of innovative products and healthcare solutions to address unmet medical needs is our business and the source of value creation. We can also contribute to the development of science through drug discovery and research, product development, and clinical development.

Training and development of employees, Work Style Innovation, Diversity & Inclusion
A business is composed of its employees. Upgrading the capabilities of employees, improving labor productivity, and effectively utilizing human resources is essential for our sustained growth.

Contribution to global health, Initiatives to improve access to medicines
Sumitomo Pharma engages in drug discovery and research in the areas of malaria and antimicrobial resistant (AMR) infectious diseases. We also strive to improve access to our products for patients who need them, including responding to requests for development of unapproved and off-label drugs in Japan and public education aimed at improving medicine-related literacy. Such efforts contribute to global health in addition to expanding our business.

Changes to Material Issues (July 2020)

Changes to Some Material Issues

1. There are no changes in the area of "Material issues linked to value creation." "Development of innovative products and healthcare solutions" referred to psychiatry & neurology, oncology, regenerative medicine/cell therapy, infectious diseases, and frontier business, but we have deleted the reference to specific areas given that we will also focus on other areas in addition to these five.

2. In the area of "Material issues that form the foundation for business continuity," given rising global concern in human rights, we have made an adjustment to further address respect for human rights through all of our business activities, and divided "CSR procurement (respecting human rights)" into "Respecting human rights" and "CSR procurement."

Click here to see more about our initiatives on human rights.

Establishing Materiality Qualitative Targets

In striving to achieve sustained growth and enhance corporate value, we have established qualitative targets for each material issue after a series of deliberations at the Management Committee. Because the present targets are a mix of Group-wide targets and targets in Japan, we have decided to continue revising them going forward to create more appropriate targets based on our business strategy.