The Kyorin Group operates a pharmaceutical business organized under the holding company KYORIN Holdings Inc., focusing primarily on ethical drugs. Management resources for new drugs are concentrated in designated fields (respiratory, otolaryngology, and urology) based on franchise customer (FC) strategy. The new ethical drugs, etc. business creates innovative new drugs, develops manufactures, and sell pharmaceuticals, and also sells products related to environmental hygiene and the diagnosis of infectious diseases, as well as other products including over-the-counter drugs. We are also engaged in the in-house development, manufacturing, and sales of generic drugs.

New ethical drugs, etc.

New ethical drugs

- Drug Discovery -

With medical responses to health becoming increasingly diverse and complex, and new drug discovery more difficult than ever before, global pharmaceutical manufacturers are creating innovative new drugs, but many unmet medical needs still exist.

KYORIN Pharmaceutical supplements its proprietary drug discovery through open innovation with domestic and overseas pharmaceutical companies, academic institutions, and venture capital start-ups, in efforts to activate its drug discovery platform and apply and cultivate new technologies, while also proactively seeking out and introducing external drug discovery themes in the pursuit of first-in-class drug discovery. Under the HOPE100-Stage3- medium-term business plan, we are strengthening our drug discovery capabilities to create innovative new drugs, expanding our development pipeline to support medium-term growth, and putting maximum effort into efficient clinical trials, with the aim of enhancing corporate value.

During fiscal 2020, we carried out first-in-class drug discovery with a focus on our priority research domains of fibrosis and kinase research, including kinase research through closer cooperation between the WATARASE research Center and ActivX Biosciences, Inc. (ActivX), based on our reorganized drug discovery structure, and we stepped up fibrosis research through our tie-up with Department of Drug Discovery for Lung Diseases, which we established at Kyoto University. We were also able to out-license a new candidate compound for sensorineural hearing loss to Otonomy, Inc. of the United States, and KRP-A218, a proprietary treatment for rhinovirus infection that risks becoming aggravated, began phase 1 clinical trials.

The spread of novel coronavirus infections had a negligible effect on KYORIN Pharmaceutical’s Discovery Research Headquarters, but during fiscal 2021, we will continue to pay close attention to the safety and health of our employees while carrying out research and development activities, strengthening our drug discovery capabilities, which is the Group’s most important priority, and striving to expand the development pipeline.

Initiatives under the medium-term business plan

Continue to add new layers to existing priority research domains and technologies and take on new research domains and technologies

KYORIN Pharmaceutical's WATARASE Research Center has technologies for analyzing disease models and low molecular weight drug discovery technologies, while ActivX has the KiNativ (broad and quantitative kinase analysis technology) platform. We have quantitatively and qualitatively reinforced our themes for initial-stage research and exploration in our priority research areas of fibrosis research and kinase research to make maximum use of the potential of these technologies and identify novel drug discovery targets. In fibrosis research, we are proactively working with academic institutions to explore candidate compounds that have pharmacological activity against identified discovery targets using iPS cells and human tissue, with a particular focus on creating innovative new drugs that act against targets that trigger fibrosis.

Pursuing open innovation

To supplement and build on KYORIN Pharmaceutical's proprietary drug discovery, we are proactively investigating external early-exploratory-stage drug discovery themes and candidate compounds, and using our evaluation technology platforms in areas including auditory function, bladder function, and infectious diseases to create a structure that can carry out speedy evaluations. This approach includes open innovation with academic institutions, venture capital start-ups, and domestic and overseas pharmaceutical companies, enabling us to approach drug discovery targets from various perspectives. We established the Department of Drug Discovery for Lung Diseases as a joint research program at the Graduate School of Medicine Kyoto University in fiscal 2017, and in fiscal 2020, extended for three years our program to integrate that academic institution’s pathological research and basic research capabilities with KYORIN Pharmaceutical’s drug discovery capabilities, to search for new targets for drug discovery. KYORIN Pharmaceutical is also pursuing joint research with the technology transfer company of the Hebrew University of Jerusalem to create new treatments in the respiratory field and is conducting joint research with the Microbial Chemistry to seek out antibacterial drugs effective against multidrug-resistant bacteria.

We are also acquiring early-stage drug discovery seeds from outside the Group to build new platforms for drug discovery, which will increase and expand our drug discovery seeds, diversify disease areas and modalities, and disperse risks.

Initiatives for innovative new drug discovery

KYORIN Pharmaceutical applies selection and concentration in its research domains and themes. In the initial exploratory research stage, drug discovery activities emphasize therapeutic target profiles (TPP)* and scientific approaches toward them. After optimization research on leading compounds, decisions on whether to move forward are based on target product profiles (TPP). In addition, KYORIN Pharmaceutical uses the following three approaches in its drug discovery activities:

*KYORIN Pharmaceutical’s approach to providing medical value: propose and pursue themes with an awareness of specific symptoms (suffering) of specific patients (disease) and the relevant treatment being created.

Search for novel targets

We are strengthening our early-exploration- stage research to search quickly for novel drug discovery targets and create innovative new drugs effective against those targets. To strengthen our early-stage drug discovery research both quantitatively and qualitatively, we are using human (patients), disease model animal tissue or cells, and applying technologies including KiNativ and genome editing to enhance the quality of our target identification and validation. We are also stepping up our fibrosis research as a priority research area. Working with academic institutions with strengths in basic research, we are making maximum use of cutting-edge technologies like human disease-specific iPS cells for an enhanced level of drug discovery evaluation to select candidate compounds.

Expand modalities

In addition to our existing low molecular weight drug discovery, we are using new technologies to explore compounds including medium molecular weight compounds and nucleic acid medicines, and building on our work on fusion protein formulations begun in January 2020 to pursue possibilities in new modalities and create new drugs with global potential that help address medical needs that cannot be met with low molecular weight drugs.

Restructure drug discovery research centers

System for Continuous Creation of Innovative New Drugs

- Development -

Expanding the pipeline to support growth

KYORIN Pharmaceutical, which considers the expansion of the pipeline to support medium-term growth an important management issue, is working to expand the development pipeline in its designated fields (respiratory, otolaryngology, and urology) as well as in infectious disease and in rare and intractable diseases.

During fiscal 2020, we acquired the benign prostatic hyperplasia treatment AKP-009 (in-licensed from ASKA Pharmaceutical Co., Ltd.). In terms of domestic development, the combination drug for asthma treatment Flutiform was approved for the additional indication of pediatric use, the injectable new quinolone antibacterial agent Lasivic Intravenous Drip Infusion Kit 150mg was successfully launched, and we received approval for the manufacture and sales of the interstitial cystitis treatment Zymso Intravesical Solution 50%.

We also aim to roll out global licensing activities for proprietary compounds at an early date.

Products under development

• Development pipeline

Promotion of proactive partnering activities

As per the business strategies in the HOPE10 -Stage3- medium business plan, KYORIN Pharmaceutical expanded its development pipeline by concluding an agreement with ASKA Pharmaceutical in September 2020 for the joint development and sales of benign prostatic hyperplasia treatment (development code: AKP-009) and an agreement with MSD in Apiril 2021 for the exclusive sales rights in Japan for the chronic cough treatment Gefapixant Citrate, for which MSD has applied for manufacturing and sales approval. Also, treatment of interstitial lung disease (Pulmonary sarcoidosis, etc) in Japan has progressed with the interstitial lung disease treatment KRP-120, for which a licensing agreement was concluded with aTyr pharma, Inc. of the United States in January 2020. Going forward, the Kyorin Group will continue its proactive partnering activities worldwide, with the aims of expanding the product pipeline to support medium-term growth and establishing a strong presence in our priority fields of respiratory, otolaryngology, and urology.

Promoting global out-licensing to increase overseas earnings

To maximize the value of its proprietary products, KYORIN Pharmaceutical is proactively engaged in out licensing activities with global companies. In August 2020, a licensing agreement for a proprietary new candidate compound for sensorineural hearing loss was concluded with Otonomy of the United States, giving Otonomy exclusive global development, manufacturing, and sales rights for the compound. In October 2020, the intellectual property rights for the immunomodulator KRP-203 were sold to Priothera Limited, and in March 2021, a licensing agreement was concluded with Eisai Co., Ltd. related to the development and sales in four ASEAN countries of Vibegron, a therapeutic agent for overactive bladder (sales name in Japan: Beova). We are also currently working on overseas out-licensing of the new quinolone antibacterial agent Lascufloxacin (sales name in Japan: Lasvic).

Partnering with Companies in Japan and Overseas

Initiatives toward direct entry into Asia

In tandem with our licensing activities, we conducted market surveys and collected information on Southeast Asia, aiming to lay the foundation for a direct entry into overseas markets in the future, focusing on Asia.

In 2017, we began selling our multipurpose disinfectant cleaner Rubysta through PT. Meiji Indonesian Pharmaceutical Industries (PT. Meiji Indonesia), a subsidiary of Meiji Seika Pharma Co., Ltd., and also concluded licensing agreement for generic drug manufacturing technologies with the Vietnamese company BinhDinh Pharmaceutical and Medical Equipment JSC, and in 2019, we concluded an agreement giving generic drug sales rights to the Mongolian company Monospharm Trade Co., Ltd. Going forward, we will continue to consider directly entering overseas makets on the basis of locally collected information and move steadily in that direction.

- Marketing -

Japan’s ethical drug industry is undergoing structural market changes, as a result of measures to reduce drug costs in line with the government's basic policy for reforming the drug pricing system. In this challenging market environment, the Kyorin Group has embarked on the HOPE100 -Stage 3- medium-term business plan. Fiscal 2020, the first year under the plan, was positioned as a period of renewed growth, and we strove to promote our new drugs group’s product. Nevertheless, the novel coronavirus pandemic led to people refraining from visiting physicians, resulting in weak markets in KYORIN Pharmaceutical’s priority fields, while restrained marketing activities by medical representatives meant that market penetration for new drugs was delayed. As a consequence, results for the year fell short of plans. At the same time, we developed and achieved a certain degree of success with new marketing styles in the field of infectious disease by going beyond treatment alone and providing total solutions that also include prevention and diagnosis. We also worked to meet current needs by supplementing and strengthening our marketing activities, which had previously consisted primarily of face-to-face interaction, by integrating digital technologies to provide information. We are confident that we have built a foundation for medical representative activities tailored to individual medical institutions and that we can anticipate accelerated grow in the new drugs group.

We expected novel coronavirus infections to continue to impact our marketing activities in fiscal 2021, but we have positioned the year as a period of turning around to a growth trend. With a shift to a solution-based approach in the field of infectious disease and the proactive development of activities that integrate digital technologies with face-to-face interaction, we will accelerate the growth of the new drugs group.

Shift in marketing style to solution-based approach

By engaging in solution-based activities that integrate the infection-related business with new drugs business, we have begun making uniquely Kyorin contributions to medical practitioners. We aim to demonstrate Kyorin’s originality by introducing Rubysta and Milton for prevention, GeneSoC for diagnosis, and Lasvic for treatment to doctors, pharmacists, and nurses of infection control teams (ICTs) and antimicrobial stewardship teams (ASTs) in particular, among medical practitioners, and by providing them comprehensive information.

The Kyorin Group’s Initiatives to Control Infectious Disease

The global threats posed by factors like antimicrobial resistance (AMR) and the spread of COVID-19 mean that there is greater demand than ever before for the prevention, diagnosis, and treatment of infectious diseases. The Kyorin Group has a proven track record in providing solutions to medical professionals in infection-related fields, offering comprehensive information and proposals for resolving issues related to infectious disease and infection control from a multifaceted perspective encompassing prevention, diagnosis, and treatment.

Lasvic

GeneSoC®

Rubysta and Milton

Achieving a growth trend in the new drugs group

We see growth in stage 3 driven by the new drugs group with the combination drug for asthma treatment Flutiform, the allergic disease treatment Desalex, the overactive bladder treatment Beova, and the new quinolone antibacterial agent Lasvic Tablets and Lasvic Intravenous Drip Infusion Kit.

During fiscal 2020, the market for ethical drugs, our primary business area, contracted roughly 15% because of factors including drug price revisions and the novel coronavirus pandemic. Against this backdrop, sales of Flutiform decreased from those of the previous year, to \13.3 billion, but our market share grew to 15.5%. We are aiming for 30% share by positioning the product asa a first-choice asthma treatment on the basis of the utility of its aerosol formulations. As of the end of March 2021, Desalex’s market share had recovered to the level prior to the temporary suspension of supplies (in December 2018). Going forward, we aim for Desalex to become the most prescribed drug in the field of otolaryngology and will also work toward increased prescriptions for internal medicine. Since the limit on the prescription period was lifted for Beova (in December 2019), the pace of prescriptions has been faster than forecast, leading to shipment adjustments. We apologize for any inconvenience caused, and as of now we expect to end these shipment adjustments during fiscal 2022. Lasvic was Significantly affected by a contraction of the antibacterial market as a result of thorough novel coronavirus infection control measures. We launched the Lasvic Intravenous Drip Infusion Kit in March 2021, and with that and Lasvic Tablets we are aiming to contribute to the field of respiratory and otolaryngological infectious disease in fiscal 2021.

We see the effect from novel coronavirus infections continuing to some extent in fiscal 2021 but will put maximum effort into these Stage 3 growth drivers as we strive to achieve a growth trend.

Establishing a presence in the franchise customer fields

With the aim of establishing a presence in designated fields focusing on respiratory, otolaryngology, and urology, KYORIN Pharmaceutical has roughly 700 medical representatives engaged in activities to provide, gather, and transmit to medical practitioners information about the proper use of pharmaceutical products.

The marketing structure is a “team structure” comprising teams based on secondary medical districts (multiple medical representatives responsible for designated area), using area management to cultivate an area as an entire team. Going forward, we will wort to create a culture in which teams help one another and achieve their targets by refining our activities to address increasingly diverse medical needs swiftly and systematically.

Providing information using digital channels and artificial intelligence

The Guidelines for Prescription Drug Marketing Information Provision having taken effect from April 2019 and the novel coronavirus infections pandemic have made it necessary to reform how information is provided to medical practitioners, in term of both content and method. With the declarations of states of emergency, medical representatives have been forced to refrain from visiting medical institutions and having face-to-face interaction with medical practitioners. Given this situation, we have proactively developed activities for providing information using digital technologies. Taking a multifaceted approach to the use of digital media to provide, gather, and transmit information, we will work to optimize how we provide information, including using outside platform in addition to our own media. We will also consolidate marketing data internally to enhance the quality of the information we provide to physicians. By supplementing and strengthening our marketing capabilities by integrating digital technologies with traditional face-to-face interaction, we will work to accelerate the growth of the new drugs group by developing medical representative activities tailored to each medical institution.

Over-the-counter drugs

We are addressing diversifying health needs by offering over-the-counter drugs　that can be used safely.

Over-the-counter drugs addressing diversifying health needs

* COOL ONE Cough Medicine GX tablets and syrup and COOL ONE expectorant capsules are applicable under the self-medication tax system.

• COOL ONE Japanese website

• KYORIN Pharmaceutical Co., Ltd.　Homepage

Manufacturing

With unique manufacturing capabilities from having three plants as manufacturing centers, KYORIN Pharmaceutical Group Facilities is carrying out overall product optimization and appropriate capital investment to create a highly reliable manufacturing structure with an awareness of low-cost operations. During fiscal 2020, we did not offer training involving transfers between plants because of the spread of novel coronavirus infections. Instead, we switched to training specific to each plant, as we strove to raise the level of our good manufacturing practices (GMPs) even higher. We also worked to improve our structures for quality management and stable supplies by pursuing new technologies, which included photographing manufacturing operations and using this visualization to pass on technologies and analyze optimal actions. We will build on these activities to achieve stable supplies of high-quality products at low cost, and aim to expand our competitive manufacturing structure to allow for increased subcontracting from outside the Group.

Initiatives under medium-term business plan

Initiatives for greater cost competitiveness

KYORIN Pharmaceutical Group Facilities exchanges staff and shares information across plants to acquire technologies that lead to improvements in manufacturing. Going forward, we will work to raise the level of our GMPs, strengthen our manufacturing capabilities (capacity and efficiency), and use outside organizations to create a stable supply structure. We will also emphasize obtaining subcontracted manufacturing from outside the Group, with the aim of building a solid manufacturing base. In April 2018, we consolidated our Group manufacturing functions and optimized manufacturing to overhaul our cost structure. Our initial goal for the restructuring effect was achieve cost saving of \1 billion by fiscal 2021, but we met that target in fiscal 2020. We will continue to pursue low-cost operations going forward.

Initiatives to maintain quality

We working in various ways to maintain quality and gain the trust of medical practitioners and patients. Initiatives include reciprocal GMP inspections among plants, strengthening data integrity (frameworks to ensure data completion, consistency, and accuracy), regular staff training and testing, and the use of video to standardize operations.

Initiatives to establish a new manufacturing center

To meet growing demand for generic drugs and make it possible to accept subcontracted manufacturing, we are preparing to stat construction on a new plant (Takaoka city, Toyama Prefecture) to increase our production capacity and raise productivity.

Supply chain management（SCM）

The Kyorin Group addresses its supply chain comprehensively, to respond flexibly to changes in demand and create a structure that achieves more efficient manufacturing and stable supplies. Our supply chain management individually oversees (visualizes) every product from raw material procurement to manufacturing, warehousing, and shipment, in Japan and overseas. We are working to reduce risks that would affect stable supplies, including measures for shorter lead times from order to delivery and an increasing number of suppliers, to achieve a reliable, stable supply of products.

Features of KYORIN Pharmaceutical Group Facilities’ Plants

Noshiro Plant：Low-cost, high-volume manufacturing through automation

Shiga Plant：Focusing on subcontracted manufacturing incorporating global GMP

Inami Plant：Manufacturing numerous types of products with focus on generic drugs

Generic drugs

Initiatives under medium-term business plan

Address authorized generics

The Kyorin Group has achieved a certain degree of recognition for its steady market penetration using its ability to handle, within the Group, both original drugs and authorized generics that meet the diverse needs of medical practitioners and patients. We released Montelukast Tablets “KM,” our authorized generic version of Kipres, in September 2016, followed by Mometasone Nasal 50μg “KYORIN,” our authorized generic version of Nasonex, in August 2019, and Imidafenacin Tablets “KYORIN,” OD tablets 0.1mg, our authorized generic version of Uritos, in June 2020. We currently have gained more than a 50% share of their respective generic markets.

Strengthen ability to create new generics

Make generics’ marketing structure more efficient to enhance the business’s cost competitiveness

KYORIN Rimedio has had its strength through a balanced approach using multiple sales channels, and going forward, it will build on that strength while also working to make its marketing structure more efficient, enhancing its sales capabilities and cost competitiveness through selection and concentration.

• KYORIN Rimedio Co., Ltd.　Homepage