Sumitomo Pharma : Business

1897

Dainippon

Pharmaceutical

1944

Sumitomo

Pharmaceuticals

Innovation today,

healthier tomorrows

Integrated Report 2023

Purpose

What is Sumitomo Pharma's reason

For the betterment of healthcare and

fuller lives of people worldwide

Sumitomo Pharma Group is devoted to the research and development of innovative and useful pharmaceuticals and healthcare solutions for the betterment of healthcare and fuller lives of people worldwide.

Sumitomo Pharma Group's Philosophy

Mission

(The significance of the Group's existence, commitment and duty 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

for existence?

Values

(Values that all executives and

employees should share)

Patient First

Always with Integrity

One Diverse Team

Declaration of Conduct

(The code of conduct to be observed in daily

work by all executives and employees)

Follow through on our Slogan "Innovation today, healthier tomorrows"

Pursue trustworthy corporate activities

Transparently disclose information and properly manage information

Improve individual capabilities and collaborate with peers

Respect human rights

Positively address global environmental issues

Build harmonious relationships with society

R&D

With a focus on two priority disease areas with

high unmet medical needs and other areas

The Sumitomo Pharma Group is committed to contributing to the betterment of healthcare and fuller lives of people through a diverse range of approaches, including pharmaceuticals, regenerative medicine/cell therapy, and non-medical solutions, with a focus on the psychiatry & neurology area, and oncology area as its priority disease areas. We will also leverage our assets in other areas to deliver value to patients.

On what area is Sumitomo Pharma focused on?

Psychiatry & Neurology area

Number of new compounds under

development: 15*1

Oncology area

Number of new compounds under

development: 5*1

Other areas*2

*1 As of July 31, 2023

*2 Women's health issues, urological diseases, diabetes, rare diseases, and infectious diseases

Global

platform

In what region are we delivering value?

Become a company with a strong presence in

Japan, North America, and China & Asia

Since the merger, Sumitomo Pharma Group has strived to globalize its business. Currently, we have local headquarters, sales, and development functions in Japan, North America, and China & Asia, and are engaged in sales and marketing activities suited to each region, as well as expanding our business foundation with a focus on Asia.

Human

resources

Foster human resources with CHANTO spirits, the capability to deliver the highest performance

Based on the corporate culture of diligence, integrity, and resilient and detailed execution, Sumitomo Pharma fosters professional human resources with CHANTO spirits, the capability to deliver the highest performance to achieve continuously creating and delivering innovation to people while transforming themselves in flexible ways to adapt to changes in the world, as the greatest driving force for delivering value.

Five Conduct Guidelines essential for practicing CHANTO

What drives us to deliver value?

Goal-oriented, take as one's own issues, and follow through

Show courage to meet challenges

Self-disciplined, independent and exert individual abilities

Respect each other and collaborate with peers

Continue to cherish diligence and integrity

Vision

What sort of state are

we aiming for?

For longer and healthier lives. We unlock the future with cutting-edge technology and ideas

Sumitomo Pharma Group has established its vision - For longer and healthier lives. We unlock the future with cutting-edge technology and ideas. We deliver innovative and differentiated pharmaceutical product and we also aim to establish ourselves as a "Global Specialized Player*" by 2033 by providing healthcare solutions that encompass the entire patient journey, including disease prevention, diagnosis, long-term care, and rehabilitation.

*Global Specialized Player: The Sumitomo Pharma Group is committed to contributing to the betterment of healthcare and fuller lives of people and to establishing its unique position worldwide through a diverse range of approaches, including pharmaceuticals, regenerative medicine/cell therapy, and non-pharmaceutical solutions, with a focus on the psychiatry & neurology area, and oncology area as its priority disease areas.

Contents

Top Message

Capitals

Strategy

Governance

Business Overview

FOCUS Message from the marketing manager of the three key products 65

Sustainability

Strengthening Human Capital toward the Sustained Enhancement of Corporate Value 76

Data Section

Message from the President

Vision

After significant changes over the past 17 years, we aim to be a Global Specialized Player

In fiscal 2023 we launched a new Mid-term Business Plan running through to fiscal 2027. Here, I would like to briefly look back on the trajectory of the Company in light of the considerable transformation of our operations since its establishment 17 years ago. When Sumitomo Pharma was established through the merger of Dainippon Pharmaceutical and Sumitomo Pharmaceuticals in 2005, we were a Japan-based entity with a domestic sales weighting of more than 90%. However, in our first Mid-term Business Plan that kicked off in 2007, we identified globalization as a key theme and pursued the in-house development of the atypical antipsychotic drug LATUDA® for the sizeable U.S. market where we could independently determine drug prices. Then in 2009, through the acquisition of the former Sepracor we established our own sales structure in the U.S. and successfully turned LATUDA® into a blockbuster product that has brought in sales revenue of roughly ¥200 billion. As a result, we have transformed our operations and grown into a global company with overseas sales accounting for more than 60% of total revenue.

In 2012, we brought the former Boston Biomedical into the Group, marking our entry into the area of oncology where many unmet medical needs exist. Moreover, in recognizing the potential for creating groundbreaking products for diseases for which a full recovery is unlikely with conventional drugs, we seized the initiative in 2013 to enter the field of regenerative medicine and cell therapy. And in 2018 we completed the construction of "SMaRT," a regenerative medicine and cell therapy manufacturing plant in Japan that is the world's first commercial production facility for allogeneic iPS cell-derived products. We are also on schedule to complete the building of a similar cellular medicine manufacturing plant in the U.S. by the end of fiscal 2023.

In our Mid-term Business Plan 2022 (FY2018-2022) we adopted the following vision statement: "For longer and healthier lives. We unlock the future with cutting-edge technology and ideas." We also formulated a 2033 aspiration to establish ourselves as a global specialized player. Both the vision and aspiration were based on the belief that the pharmaceutical industry is facing a "Time for Change" in which we must not only create innovative new pharmaceuticals, but respond to the proliferation of digital technology and preventive medical care and establish business models that are not simply extensions of past endeavors. The term "healthier" in our vision encompasses not only treatment but also prevention, diagnosis, long-term care, and rehabilitation. It conveys

our intention of playing an indispensable role in all aspects of the patient journey. We therefore leveraged the technology of digital transformation (DX) and launched a frontier business that transcends the boundaries of pharmaceuticals to provide new healthcare solutions. Also, in view of the end of the exclusive sales period of LATUDA® in the U.S., in February 2023, we embarked on the reconstruction of our business foundation centered around the key themes of establishing a growth engine and building a flexible and efficient organization. I should also add that in fiscal 2022 we changed our name to Sumitomo Pharma Co., Ltd. by using the globally recognized "Sumitomo" brand to begin a new chapter with a fresh perspective.

Review of the Mid-term Business Plan 2022

Acquiring promising development pipelines in view of the post-LATUDA era, even though new drug R&D issues remain

Even though we posted record-high sales revenue during the period of the Mid-term Business Plan 2022 by virtue of LATUDA® sales in the U.S., in fiscal 2022, the final year of the plan, we recorded a ¥74.5 billion net loss attributable to owners of the parent owing to the booking of two large impairment losses, including the discontinuation of sales of KYNMOBI®, a treatment for "off" episodes in patients with Parkinson's disease. Over the five years of the plan, we directed a maximum of ¥600 billion into strategic investments and undertook a multitude of initiatives with the aim of rebuilding our business foundation. Put simply, however, despite making a certain amount of progress in terms of laying the groundwork for the future, we still did not achieve our most important challenge. That pertains to the discontinued development of napabucasin,

a therapeutic drug candidate for cancer that we had allocated our resources to as a potential post-LATUDA growth driver. Also, the fact that we were unable to introduce any in-house developed products for over a decade following the launch of LATUDA® weighs heavily on us, as it prevented us from establishing a growth engine.

Meanwhile, with the exclusive sales period for LATUDA® in the U.S. coming to an end in February 2023, as soon as the napabucasin clinical study targeting pancreatic cancer, which we had high hopes for, was discontinued, we quickly made the decision to forge a strategic alliance with Roivant Sciences in 2019. This enabled us to acquire a substantial development pipeline, including potential blockbusters like relugolix and vibegron. In 2021 we launched relugolix as ORGOVYX® (treatment for advanced prostate