A Message from the President

Hiroshi NomuraHiroshi NomuraRepresentative Director,
President and CEO

First, before we report the summary of our Group’s business results for fiscal 2018 (April 1, 2018 to March 31, 2019), we would like to take this opportunity to express our sincere gratitude to all investors for their understanding and kind support of our endeavors.

In fiscal 2018, revenue declined sharply in Japan owing primarily to the impacts of NHI drug price revisions. In the U.S., on the other hand, sales of the Group’s mainstay atypical antipsychotic agent LATUDA® and other products showed growth, while performance in China remained steady overall. As a result, the Group’s consolidated revenue was 459.3 billion yen (down by 7.6 billion yen year-on-year) and core operating profit was 77.3 billion yen (down by 13.3 billion yen year-on-year).
For fiscal 2019, we expect a further revenue decrease in Japan due primarily to the declining sales of long-listed products. Nevertheless, we aim to maintain the previous level of consolidated revenue and core operating profit by remaining focused on maximizing revenue from LATUDA® in the U.S.

With regard to research and development, we will continue our active efforts in the three focus areas of Psychiatry & Neurology, Oncology, and Regenerative Medicine/Cell Therapy. For fiscal 2019, we are planning to re-submit a New Drug Application (NDA) for apomorphine (proposed indication: OFF episodes associated with Parkinson’s disease), for which a Complete Response Letter (CRL) has been received from the U.S. Food and Drug Administration (FDA). In Japan, we are planning to submit an NDA for lurasidone (branded in the U.S. as LATUDA®) for the treatment of schizophrenia and bipolar I depression, and to receive approval of and launch the LONASEN® transdermal patch for the treatment of schizophrenia. Meanwhile, we will expedite development of napabucasin (proposed indication: colorectal cancer and pancreatic cancer) and SEP-363856 (proposed indication: schizophrenia) in Japan and the U.S., both of which are expected to be a growth engine in the “post-LATUDA” era after the exclusive marketing right of LATUDA® has expired in the U.S.

In April 2019, we announced the five-year Mid-term Business Plan 2022 (fiscal 2018-2022). In order to prepare ourselves for times of change and post-LATUDA® revenue replacement, we will rebuild our business foundation through the “establishment of growth engine” and the “building of flexible and efficient organization.” (For details, please see the “Mid-term Business Plan 2022” at https://www.ds-pharma.com/ir/news/2019/20190411-1.html,
https://www.ds-pharma.com/ir/news/pdf/eir20190412.pdf ).

In line with our fundamental dividend policy, which is to maintain a consistent payment but to also consider reflecting any improvement in our performance in the dividend payment, we are aiming for a five-year average payout ratio of 20% or higher between fiscal 2018 and 2022.
With regard to the fiscal 2018 year-end dividend, we decided to pay 19 yen per share. Combined with the interim dividend of 9 yen per share, the annual dividend is 28 yen per share, the same amount as in the previous fiscal year, making the consolidated payout ratio 22.9%. For fiscal 2019, we are also planning to pay an annual dividend of 28 yen per share.

We continue to enhance our corporate value through persistent efforts to advance our business to respond to the faith of all of our shareholders. Your continued support will be greatly appreciated.

June 2019