Daiichi Sankyo : Value Report 2023 (10.1MB)

Daiichi Sankyo Group

Value Report

Passion for Innovation.

Compassion for Patients.TM

Contents

Introduction

1. The Daiichi Sankyo Group's Mission

1. History of the Daiichi Sankyo Group

1. At a Glance

Value Creation Story

1. CEO Interview

1. COO Interview

17 Value Creation Model Underpinned by our Strength in Science & Technology

19 Human Capital

35 Progress of the Current 5-year Business Plan (FY2021-FY2025) toward Realizing the 2030 Vision

37	Creating Shared Value with Stakeholders
41	Risk Management
45	Message from the CFO

Notes on publishing the Value Report 2023

In the Value Report 2023, we report on the challenges and activities we are addressing from short-,medium-, and long- term perspectives toward realizing our Purpose and Group Vision, and we aim to communicate a sustainable value creation cycle model as a story through our initiatives to provide value for and create shared value with our stakeholders. In particular, we have enhanced the content of the report to include our strengths in Science & Technology, initiatives to foster the One DS Culture toward realizing our 2030 Vision, and further enhancement of our execution system. We hope that this report will help our stakeholders gain a deeper understanding of the Daiichi Sankyo Group's initiatives and promote more constructive dialogue and initiatives for creating shared value.

1. Daiichi Sankyo's Challenge to Realize the 2030 Vision

1. Materiality

1. List of Materiality

1. Initiatives for Materiality on Business

49	Round-table Discussion with Outside Directors
53	Corporate Governance

63 Introduction of Directors and Audit & Supervisory Board Members

Editorial Policy

The Daiichi Sankyo Group began publishing Value Reports, its brand of integrated reports, in FY2013. These reports integrate reporting on sustainability activities conducted towards the improvement of corporate value and realization of our Purpose and Vision, by referring the IIRC framework, and are positioned

Cautionary Note Regarding Forward-Looking Statements Management strategies and plans, financial forecasts, future projections and policies, and R&D information that our Group discloses are all classified as "Daiichi Sankyo's future pros- pects." These forward-lookingstatements were determined by the Group based on information currently available with

Activity Report

67	Stakeholder Engagement		95	Financial Results and Financial Analysis
69	Sustainability Activities		99	Major Products
85	Value Chain Activities		101	Corporate Profile / Main Group Companies
87	Financial and Non-Financial Highlights		103	ESG (Environmental, Social, and Governance) Data
89	10-Year Financial Summary		105	Independent Assurance Report for Environmental and
91	Consolidated Financial Statements			Social Indicators
	107	Shareholders' Information

as a communication tool for helping shareholders and investors understand the Company's efforts to improve its long- term corporate value and realize a sustainable society.

Period Covered

April 1, 2022-March 31, 2023 (FY2022), and also information for the period from April 2023 onward

certain assumptions, premises, and future forecasts, and thus, there are various inherent risks as well as uncertainties involved. As such, please note that actual results of our Group may diverge materially from our outlook or the content of this material.

For inquiries related to this integrated report, please contact the Sustainability Promotion Department:

https://www.daiichisankyo.com/contact/form/index.php

The Daiichi Sankyo Group aims to realize sustainable corporate value enhancement by working to improve ROE, reduce the capital cost, and achieve DOE that exceeds the cost of equity. Reference pages for specific initiatives related to these three targets are listed.

Sustainability Related Information

Sustainable corporate value enhancement

Improving ROE			Reducing the				DOE* exceeding the
		capital cost				cost of equity

Value Report

The Value Report outlines the ongoing improvements to our corporate value as a story, explaining our value creation process in the short, medium, and long-term with the goal of realizing our Purpose, from both a financial and non-financial viewpoint. Via the report, we also integrate reporting on data and information regarding our year's activities from an ESG perspective.

Environmental Data Book

The Environmental Data Book seeks to increase understanding of the Group's environmental management initiatives, and the information which complements the Daiichi Sankyo Group Value Report and the environmental data on our website.

Sustainability Website

The Sustainability Website offers a comprehensive understanding of our approach and activities to sustainability, which we engage in to contribute to a sustainable environment, society, and economy, and to realize our Purpose.

	Achieving stable profit	Improving invested
	capital efficiency
	Value creation		Shifting to a profit
	model that utilizes		structure based on
	our unique capital		innovative
	▶ P17, 19		pharmaceuticals
		▶ P21

Promoting a business		Avoiding/		Further enhancing
strategy in line with
reducing ESG risks		shareholder returns
social requirements
Initiatives to address the	▶ P39, 67, 69, 77		Increasing dividends according
environment and human rights		to profit growth
Risk Management		▶ P41		Flexible acquisition of own
Engagement with				shares
	▶ P67		▶ P45
shareholders and investors
Improving our external ESG evaluation	▶ P106
Business Strategy in Line with		▶ P37, 67
Patient Centricity

Guideline Reference Table

The Guideline Reference Table compares the principles and standards of the various guidelines (UN Global Compact, Global Reporting Initiative (GRI) Standards, Environmental Reporting Guidelines 2018) with our disclosed information.

* Dividend on Equity = Total dividend amount / Equity attributable to owners of the company

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The Daiichi Sankyo Group's Mission

Purpose

Contribute to the enrichment of quality of life around the world

Purpose

Mission

Vision

Core Value

Core Behavior

One DS Culture

Purpose

Contribute to the enrichment of quality of life around the world

Mission

Create innovative pharmaceuticals addressing diverse medical needs

2030 Vision

Innovative Global Healthcare

Company Contributing to the

Sustainable Development of

Society

Core Value

Innovation

The introduction of new ideas, methods, or inventions

Integrity

The quality of being honest and of always having high moral principles

Accountability

Being responsible for the effects of your actions and being willing to explain or be criticized for them

Core Behavior

Be Inclusive& Embrace Diversity

Collaborate& Trust

Develop& Grow

One DS Culture

Aggregate of Purpose,

Mission, Vision, Core Value,

and Core Behavior

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History of the Daiichi Sankyo Group

A History as a Partner to

Patients for over 100 years

The Daiichi Sankyo Group leverages its century-long strengths in Science & Technology (S&T) forged by its predecessors to continue to take on the challenge of creating advanced pharmaceutical products.

Harnessing S&T as the driving force, we will continue to create innovative pharmaceuticals and realizing Healthcare as a Service (Haas)* by developing both a total care ecosystem and a total care platform through collaboration with other companies as we work toward our 2030 Vision and thereby "contribute to the enrichment of quality of life around the world."

• HaaS refers to providing health and medical services that are optimized and tailored to each individual by utilizing a variety of data and advanced technologies.

3rd Term

Promotion of measures toward sustainable growth beyond LOE*

4th Term

Transformation to become a Global Pharma Innovator with a competitive advantage in oncology

• Grow beyond LOE*

2030 Vision

Innovative Global

Healthcare Company

Contributing to

the Sustainable

Development of Society

5th Term

Become a "Global Pharma Innovator with a competitive advantage in oncology," and shift to further growth toward our 2030 Vision

A society that has realized HaaS

Source: Presentation document of Society 5.0 "A New Society Pioneered

Steps of our

5-year

business plan

History as a pharma innovator (major products over the years)

1st Term

Maximization of synergy and expansion

of growth foundation

• Focus on thrombosis, cancer, diabetes
• Maximize sales of Olmesartan franchises
• Acquire Ranbaxy Laborato- ries and integrate it into the Group

2nd Term

Advancement of global hybrid business model

• Focus on thrombosis, cardiovascular-metabolics, and cancer fields
• Expand operating foundations in Japan
• Conduct frontline and back-end collaboration with Ranbaxy

• Focus on thrombosis, cardiovascu- lar-metabolics, and cancer fields
• Divest and liquidate Ranbaxy
• Return to innovative business

* Loss of exclusivity

• Establish a foundation of

sustainable growth

by Science and Technology Innovation" by the Cabinet Office

Health	Illness	Treatment	Critical Illness	NursingCare/Prognosis/Extension of
Promotion	Prevention	Prevention	Healthy Life Expectancy
Healthcare as a Service tailored to the need of each and every individual
			Issues
Health field				Medical field
			Individual
			Total Care Platform

Total Care Ecosystem

1899		1965		20075		2010		2013

2016		2021		2025		2030

1899

Launched Taka-Diastase®, a digestive enzyme agent

1902

Adrenalin, an adrenal cortex hormone agent

1910

Dr. Umetaro Suzuki, a future Sankyo scientific adviser, established a foundation for the theory of vitamins

1915

Began domestic manufacturing of Salvarsan, a therapeutic drug for syphilis

1922

Began manufacturing of Bosmin®, a vasoconstriction/ hemostasis and asthma medicine

1965

Transamin®, a hemostatic and anti-inflammatory agent

1985

Tarivid®, a broad-spectrum oral antimicrobial agent

1986

Loxonin®, an anti-inflammatoryanalgesic

1989

Mevalotin®, hypercholesterolemia treatment

1993

Cravit®, a broad-spectrum oral antimicrobial agent

2002

Olmesartan (Olmetec® in Japan and Europe, Benicar® in the United States), an antihypertensive agent

2009	2010	2011
Efient®,	Inavir®,	Lixiana®,
an antiplatelet agent	anti-influenza treatment	an anticoagulant

2019	2020
Tarlige®, pain treatment	Enhertu®, an anti-cancer agent
	(HER2 directed antibody drug
	conjugate)

Creating innovative pharmaceuticals

by leveraging our strengths in Science & Technology (S&T)

Realizing Healthcare as a Service through development of both a total care ecosystem

1951

Manufactured Chloromycetin®, the first antibiotic produced in Japan

Transition of unmet medical needs throughout time

Infectious diseases (tuberculosis and pneumonia)

Lifestyle-related diseases

and a total care platform

Cancer, dementia, and emerging and re-emerging infectious diseases

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At a Glance

Becoming an Innovative Global Healthcare Company with Strengths in

Number of employees by region

EuropeNorthAmerica

Corporate Culture

・A corporate culture in which employees respect each other as a

specialist in science, and exchange opinions in a free and open-minded manner, regardless of positions and tenure

・A culture that promotes the transmission of experience and technologies for creating medicines

・Penetration of Core Behavior with the aim of fostering One DS Culture

Human Resources

• Diverse range of talents with high levels of expertise
• Scientific assessment capabilities
• Technologies originated from craftspersonship

• High levels of engagement

• Desire for innovation

Driving Force for

Value Creation

Science & Technology

Core Technologies

・Proprietary ADC technology platform ・Protein engineering, medicinal chemistry

・Pharmacological efficacy, translational research, and research DX infrastructure to support the above

2,554	Japan	3,062
	9,263

Asia, and Central

and South America

2,556

As of the end of March 2023

Number of global employees

17,435

Financial Highlight (FY2022 results)

RevenueMajor Products Worldwide

1,278.5billion yenAnti-cancer agent Enhertu ®

FY2025 financial estimate 2 trillion yen		Other
		50.9 billion
		yen
	Japan
Core Operating Profit Ratio before R&D Expense	11.7 billion yen	258.4	North
35.9%	Asia, and Central	billion yen	America
144.6
and South
	billion yen
America	Europe
14.2 billion yen	37.1
		billion yen

FY2025 Target 40%

ROEAnticoagulant Edoxaban

7.8%	Asia, and Central and	North America
	South America, Other	3.0 billion yen
	18.7 billion yen
FY2025 Target 16% or more	244.0
	Europe
DOE*	Japan billion yen	117.1
billion yen
	105.1billion
4.1%	yen
FY2025 Target 8% or more
* Dividend on Equity = Total dividend amount / Equity attributable to owners of the Company

Non-Financial Highlight (FY2022 results)

Contribution to patients

Number of countries and regions where Enhertu has been launched/Number of patients (Company estimate)/Number of indications

35countries and regions / approximately 22,000patients / 6indications

Social

Percentage of positive engagement survey responses*	Percentage of senior management employees who are female:
77%	21.1%
FY2025 Target 80% or more, or an increase of 10% or more compared to FY2021	FY2025 Target 30%
*Percentage of positive engagement survey responses in relation to our corporate culture and work environment
Environment
CO2 emissions reduction rate* (compared to FY2015 level)	Percentage of renewable electricity used
49.6%	78.1%
FY2025 Target Reduction of 42% (compared to FY2015 level)	FY2025 Target 60% or more
* Scope1+Scope2

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CEO Interview

We will enhance ESG management to realize

our Purpose, and achieve sustainable growth for both the Company and society by creating social and economic value together

with our stakeholders

What kind of year was FY2022 for Daiichi Sankyo Group and what was the most memorable event?

FY2022 was a year in which the global situation and the global economy continued to change significantly. The conflict in Ukraine, which began in February 2022, has caused a massive human rights, humanitarian and refugee crisis. In addition, while the prolonged COVID-19 pandemic has brought about serious health concerns, it has also magnified the problems that socially disadvantaged individuals are facing, such as widening inequality. The world is now facing important complex social issues such as climate change and human rights abuses, and we are deeply aware of the social responsibility that companies must fulfill in order

to develop a sustainable society. Furthermore, Turkey, where we also have an operation base, was hit by a large-scale earthquake in February 2023. I would like to once again extend my deepest sympathies to those who have suffered from the disaster.

The most memorable event for the Company in FY2022 was the presentation of the trial results for Enhertu® at the annual meeting of the American Society of Clinical Oncology (ASCO), one of the major medical conferences where cancer experts from around the world gather. At the most important plenary session (with all participants), the trial results of Enhertu, developed by the Company, for HER2 low metastatic breast cancer (post-chemotherapy treatment) were announced, which the audience of approximately 5,000 people at the venue spontaneously erupted in a standing ovation. I was very moved by the joy of delivering Enhertu to patients who had been waiting for a new treatment for breast cancer that had no effective treatment previously. The results also solidified our confidence in Enhertu and our future growth.

I believe that this event at ASCO is one example of how our efforts to help patients over the course of its more-than-100- year history have culminated under the Company's Purpose of "Contribute to the enrichment of quality of life around the world." Along with our mission to deliver Enhertu to as many patients as possible around the world, we also feel the high expectations placed upon us to create even more innovative new drugs. In order to meet these expectations, we will steadily achieve our current 5-year business plan ending in FY2025, and work as one group to realize our 2030 Vision.

There are growing concerns in many countries around the world about the sustainability of social security owing to falling birthrates and aging populations, and efforts to curb healthcare costs are on the rise. What challenges do you see in the business model of delivering our innovative pharmaceuticals globally?

Currently, the probability of success in creating new drugs is said to be less than approximately 1 in 20,000, making it an extremely difficult challenge for any pharmaceutical company. In addition, it takes a very long time over 10 years from the time a new drug candidate is discovered until it reaches the patients as a new drug. I believe we need to explore a variety of solutions that take into account the healthcare environment in each country and region, both in terms of continuous research and development (R&D) investment to create new therapeutic agents that will help future patients, while improving access to medicines to reach as many patients as possible around the world.

When it comes to innovative pharmaceuticals that offer new treatment options, it is critical for patients to be able to gain access quickly. On the other hand, if a therapeutic drug already exists, the price of the drug should be affordable for patients and the healthcare system in each country or region, while at the same time ensuring incentives for R&D and capital investment.

Currently, not only in Japan but also in Europe and the US, discussions are underway to streamline costs in order to continuously deliver the latest medical care to patients within the limited social security budget, and one of the targets for cost reduction is drug prices. In Japan, a growing number of drugs that are already in use in Europe, the US, and other developed countries not being approved, drug lag and drug loss, are issues because the value of innovative new drugs and the value of innovations are not properly evaluated.

From a patient centricity perspective, we will continue to improve patient access and strengthen our advocacy and engagement with governments, administration, and regulatory authorities.

In the society where Healthcare as a Service (HaaS) is realized in the near future, what role should Daiichi Sankyo play?

In recent years, digital transformation (DX) has been rapidly advancing in the corporate and in society sectors, especially in Japan. We have been also actively promoting DX, setting "Realization of data-driven management through DX promotion and transformation of the entire company through advanced digital technologies" as one of the foundations supporting the

Sunao Manabe

Representative Director

Executive Chairperson and CEO

Total Care Ecosystem

			Critical Illness	Nursing Care/Prognosis
Health Promotion	Illness Prevention	Treatment	Extension of Healthy
Prevention
			Life Expectancy

Healthcare as a Service tailored to the needs of each and every individual

	Vehicles					National and
						local
		Issues		governments
EC*	Food /	Health Screening	Medical
	supplements					Institutions

			Health field	Medical field
						Individual
						Total Care Platform
Fitness				Nursing Care
			IT infrastructure that enables data distribution andutilization
			by linking data in the personal health and medical fields
						with a common ID.
							Pharmaceuticals
		Social Media					& Medical
			Insurance	Devices
			Research

Institutions

Home

* Electronic Commerce

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CEO Interview

strategies of the current 5-year business plan. Our previous efforts have been recognized, and we have been selected as one of the Digital Transformation Stocks (DX Stocks) 2023.

The wave of DX is spreading throughout society is creating a new society in the not-so-distant future, where new value is created by utilizing digital innovation and the creativity of diverse individuals. In the healthcare field of the emerging societal concept "Society 5.0", we are working toward building HaaS by leveraging diverse data and advanced technologies to provide personalized and optimal services tailored to the needs of each and every individual.

In HaaS, we are working towards building a Total Care Ecosystem, which is a collaborative platform with companies and organizations to solve the challenges and achieve well-being for each individual, covering health promotion, disease prevention, treatment, and prognosis care. We are also developing a Total Care Platform that consolidates health and medical data associated with individuals, enabling data circulation and utilization. Furthermore, we aim to create and provide new values to address social issues such as promoting innovation, reducing social security costs, optimizing medical resources, improving access to healthcare, securing labor, extending healthy lifespans, and economic development. To realize HaaS, we take on the role of leading in the development of this Total Care Ecosystem and Platform, actively collaborating with companies and organizations in the health and medical fields, data providers, and IT companies. Leveraging our strengths in Science & Technology, we contribute to the creation of new medical services and strive to become a company that can contribute to the realization of a sustainable society.

• For more information on HaaS/DX initiatives, please refer to P21

Please tell us about Daiichi Sankyo Group's sustainable value creation process, which leverages the Group's strengths in Science & Technology to create new drugs and deliver them to patients globally, including your approach to creating shared value with stakeholders.

As a pharmaceutical company, I believe that we must meet the various demands and expectations from society, such as addressing unmet medical needs, improving access to medicines, addressing global environmental issues, engaging in corporate management with high ethical standards as a life science company, and taking ESG initiatives, while seriously addressing and responding to the specific requirements of each country

to meet these demands and expectations, and to sustainably circulate our value creation model that continuously creates innovative pharmaceuticals based on our strengths in Science & Technology and provides pharmaceuticals that address a wide variety of needs, we must manage with a long-term perspective. In the current 5-year business plan, we are strengthening ESG management to respond flexibly to new social issues and changes in the social environment, while incorporating the external environment into our business strategies. Our ESG management encompasses "management based on a long-term perspective that enhances both financial and non-financial value by reflecting ESG elements in business strategies," and we actively engage in dialogue with stakeholders to incorporate ESG perspectives. Furthermore, by creating shared value with patients and other stakeholders, we will provide the social and economic value we have created to our stakeholders. I believe that by circulating the process of reinvesting this as capital, we can achieve sustainable growth for both the Company and society.

In order to reinforce our strengths in Science & Technology and to expand our oncology business globally, I believe that the source of our competitiveness lies in acquiring and developing a diverse workforce and effectively managing human resources. We take on business strategy-linked to human capital enhancement initiatives by categorizing and clarifying "human capital," which is the most important capital invested in the value creation process, into three components: (1) the power of the individual, who is constantly growing; (2) the continuous supply of human resources to areas to be strengthened, structured in line with strategies; and (3) the structures, systems, and measures to synergize individuals and organization.

• For more information on value creation model, please refer to P17
• For more information on human capital, please refer to P19

Please tell us about the progress management and revisions of KPIs for Materiality linked to the current 5-year business plan, which was identified in FY2019, including the latest discussions

We have organized the material issues to be addressed for sustainable growth into "Materiality on Business" and "Materiality on Business Foundations," and have set long-term targets and KPI targets linked to the current 5-year business plan. In addition to reviewing progress twice every year, we add Materiality and improve and revise KPIs as necessary through discussions at the

based on the knowledge gained through constructive dialogues with internal and external stakeholders and changes in the external environment as we work to achieve our targets.

In March 2023, we added KPI targets related to two Materiality items. The first is the number of designations to the Priority Review System under the Materiality item of "Creating Innovative Pharmaceuticals." As an indicator that embodies our Mission and represents our commitment to fulfilling our Purpose by creating innovative pharmaceuticals and delivering them to patients as quickly as possible, we have set up a cumulative number of designations to the Priority Review System in Japan, the US, Europe, and China. The second is the establishment of CO2 emission reduction targets that we request to our business partners under the Materiality item of "Promoting Environmental Management." In response to the growing demand in recent years to reduce CO2 emissions throughout the supply chain to create a decarbonized society, we will collaborate with our business partners to reduce CO2 emissions in society as a whole.

Furthermore, we continuously engage in discussions at the Board of Directors meetings regarding indicators for contribution to patients, indicators for social impact, and others aimed at achieving our 2030 Vision. In FY2022, we made progress in line with our KPI targets for FY2025.

• For more information on Materiality, please refer to P29

Please tell us about the progress of the current 5-year business plan and the outlook for achieving the FY2025 KPIs in light of changes in the business environment.

The current 5-year business plan is positioned as a plan to achieve the FY2025 target of becoming a "Global Pharma Innovator with Competitive Advantage in Oncology," and shift to the growth stage toward realizing our 2030 Vision. The four strategic pillars for shifting to the sustainable growth stage are "maximize 3ADCs," "profit growth for current business and prod- ucts," "identify and build pillars for further growth," and "create shared value with stakeholders." As a foundation to support the execution of these four strategies, we are working to implement data-driven management through DX, company-wide transformation through advanced digital technology, and agile decision making thorough new global management structure.

With regard to "maximize 3ADCs," the product value of Enhertu increased as we gained data that far exceeded the assumptions

of the current 5-year business plan, and our contribution to patients is rapidly expanding as we obtained new indications and expanded the number of marketed countries and regions. Furthermore, the product value of Dato-DXd and HER3-DXd has also improved significantly over the past two years. As for "profit growth for current business and products," we are progressing transformation into a profit structure focused on patented drugs, backed by growth in sales of Lixiana® in Japan, Europe, and China, as well as progress in launching new products and transferring products after the expiration of the exclusivity period in various countries and regions. In the area of "identi- fy and build pillars for further growth," we are making steady progress in developing DS-7300 (anti-B7-H3 ADC) and DS-6000 (anti-CDH6 ADC), which are the next growth driver candidates following 3ADCs, as well as in selecting post DXd-ADC modali- ties. Moreover, in August 2023, we gained approval for the first Japan-made mRNA vaccine against COVID-19,Daichirona® for Intramuscular Injection (DS-5670).

With respect to "create shared value with stakeholders," we increased FY2022 dividends in order to further enhance shareholder value, reflecting the growth in profits from the expansion of Enhertu sales. We are accelerating our initiatives to address environmental issues, such as the shift to renewable energy sources for power used at our bases in Japan, in order to reduce the environmental footprint of the entire value chain. In terms of creating shared value with employees, we are fostering a One DS Culture in which all employees can work enthusiastically transcending nationality and cultural barriers by deepening

and region in conducting our global business activities. In order

Eight Materiality Identified

Materialityon	Creating Innovative Pharmaceuticals
Business	Providing a	Providing
Products
	Stable Supply	the Highest	Improving Access
	of Top-Quality
	Quality Medical	to Healthcare
	Pharmaceutical
	Information

Executive Management Committee and the Board of Directors

			Promoting the
MaterialityonBusiness Foundations		Corporate	Success and
Promoting	Development
	Governance
	of a Diverse
	Compliance	Aimed at
	Range of People
	Management	Fulfilling Our
	Who Create Our
		Mission
		Competitive

Advantages

Promoting Environmental Management

As of FY2020

• Oncology business launched
• Edoxaban growing
• Regional value being enhanced
• AstraZeneca strategic alliance
• Increased R&D investment

Current 5-year Business Plan (FY2021-FY2025)

Achieve FY2025 Target

"Global Pharma Innovator with Competitive Advantage in Oncology"

and shift to the growth stage

towards 2030 Vision

2030 Vision

Innovative Global

Healthcare Company

Contributing to the

Sustainable Development

of Society

•Global top 10 company in oncology

•Additional growth pillar as source of earnings

•New products being source of profit in each business unit

•Contributing to sustainable development of society through our business

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CEO Interview

the understanding of the Group's common Core Behavior and promoting initiatives that help them embody these behaviors through workshops and other activities held by the management team and all employees.

The four strategies of the current 5-year Business Plan are progressing steadily. As for the revenue, which is a KPI for FY2025, we expect to achieve ¥2 trillion, which exceeds the target of ¥1.6 trillion by ¥400 billion, thanks to revenue growth in the oncology field, especially for Enhertu. Over the past two years, we have gained extremely positive data from Enhertu clinical trials, and product sales and milestone revenue expectation have far exceeded our initial plan. On the other hand, as clinical trials for DXd-ADCs are progressing faster than originally planned, mainly for Enhertu and Dato-DXd, we are actively executing investment for growth to realize sustainable growth. At the same time, by pursuing well-balanced cash allocation that takes into account shareholder returns, we aim to achieve our FY2025 targets of core operating profit ratio before R&D expenses of 40%, ROE of 16% or more, and DOE* of 8% or more.

• DOE: Dividend on Equity = Total dividend amount / Equity attributable to owners of the company
  ▶ For more information on progress on the 5-year business plan, please refer to P35 ▶ For more information on creating shared value with stakeholders, please refer to P37

What roles will you and the new president play in achieving the 2030 Vision, and what are your expectations for the new president?

I became Executive Chairperson and CEO, and Mr. Okuzawa, who had been CFO, was appointed President and COO in this April. We have been considering the next president as soon as we were on track to achieve the final fiscal year targets of the current 5-year business plan, and engaged in discussions regarding succession planning at the Nomination Committee, which is an advisory body to the Board of Directors. I am confident that Mr. Okuzawa's outstanding knowledge and career, as well as his integrity, which

builds the trust of his superiors, colleagues and subordinates, will enable him to overcome any challenges.

Since the CEO is ultimately responsible for the Company's decision-making, I will continue to assume ultimate responsibility for directing the Company from a long-term perspective, while delegating authority as much as possible to President Okuzawa for decision-making related to individual operations. We expect our revenue to far exceed our initial target for the final fiscal year of the current 5-year business plan, and the Group will be entering a period of unprecedented rapid global expansion. We must quickly expand and build up our management foundation in various areas, including our human resources and organization, and I would like President Okuzawa to make every effort to achieve the targets of the current 5-year business plan, and furthermore, to formulate the concept for the next business plan. I believe that he will be a person who can lead our Group to even greater success.

Finally, please leave a message for our shareholders and investors.

The social and business environment surrounding the Group is constantly changing. Nevertheless, we are committed to addressing the diverse demands and expectations from society and accelerating our initiatives to realize our 2030 Vision in order to fulfill our Purpose. Last year, we held our second ESG briefing session for shareholders and investors, where we engaged in constructive dialogue on the progress of the Group's ESG man- agement. We will work to make further improvements based on their valuable feedback on expanding access to healthcare, investing in human capital, and strategically utilizing DX. We will further deepen discussions on advancing Materiality and clarifying social value with a view toward our 2030 Vision, as well as on creating shared value with patients and other stakeholders, and we will work as a unified Group to fulfill our Purpose.

COO Interview

We aim for remarkable growth as a truly global company by steadily achieving the targets of the current 5-year business plan to realize our 2030 Vision

Hiroyuki Okuzawa

Representative Director

President and COO

In order to enhance our strengths in Science & Technology and to expand our global oncology business, I believe that the source of our competitiveness lies in acquiring and developing a diverse workforce and effectively managing human resources.

Please tell us about your current state of mind and aspirations upon assuming the position of President and COO, as well as your experience and accomplishments to date.

I am very excited to take on the important responsibility of serving as President and COO of Daiichi Sankyo, a company built upon so many people's hearts and minds, and to work with Dr. Manabe, Executive Chairperson and CEO, to manage the Company from April 1, 2023. Daiichi Sankyo Group has raised its revenue expectation from ¥1.6 trillion to ¥2 trillion for FY2025, the final fiscal year of the current 5-year business plan, in light of the rapid growth of the oncology business, which we entered in earnest by launching Enhertu® in FY2020. Furthermore, I place high expectations on the ADCs that are under development. I find it extremely rewarding to be appointed President at this juncture, and we will make a concerted effort to achieve the targets of the current 5-year business plan and realize our 2030 Vision.

I joined Sankyo Company, Limited in 1986 and was subsequently involved in the negotiation of the business integration between Daiichi Pharmaceutical and Sankyo. I also worked on the acquisition of India-based Ranbaxy as well as the work that followed that acquisition and as the head of the Asia and Latin America region I focused on strengthening our business operations in China. I was also in charge of corporate strategy, human resources, and served as CFO. My favorite quote from Mahatma Gandhi, which I learned when I was in charge of the India busi- ness, is "Live as if you were to die tomorrow. Learn as if you were to live forever."

I believe that my specialty is in providing "coaching lead- ership." Rather than giving out answers, I am a leader who supports employees by helping them come up with their own answers through dialogue. I would like to lead the Group by leveraging this specialty to fully harness the inherent strengths

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COO Interview

and potential of our employees. In addition, I will continue to actively engage with our stakeholders and manage the Company together as a team.

Please tell us about what you would like to focus on to ensure the sustainable growth of the Group, based on your view of the current challenges and status of initiatives.

We are actively strengthening our global business by expanding oncology business, which is driving new growth, and we are becoming known as a Global Pharma Innovator with Competitive Advantage in Oncology with the growth of Enhertu. We are attracting talent from within the pharmaceutical industry, both in Japan and outside of Japan, thanks to our superior products, rich R&D pipeline and unique culture. I saw this as an excellent opportunity to strengthen our global business structure, and

continue spreading the One DS Culture and be a company where employees want to continue to work. I would like to carry on the senior management's exceptionally strong trust in the R&D organization, which has been present in every generation of our company to date.

• For more information on globalization initiatives, please refer to P21

Please tell us about the Group's growth strategy and initiatives aimed at achieving the goals of the current 5-year business plan, with a focus on the particularly important initiatives to take on in the current fiscal year.

• Maximize 3ADCs

First and foremost, our most important theme is to maximize 3ADCs, and I would like to make FY2023 a year to help healthcare professionals and patients around the world better understand and experience the value provided by Enhertu by expanding the indications and the marketed countries and regions. For Dato-DXd and HER3-DXd, we will execute their respective development plans under a global structure with strong functional collaboration.

Enhertu is expanding at a faster pace than originally planned thanks to the approval for new indications such as for the second-line treatment of HER2 positive metastatic breast cancer and HER2 low metastatic breast cancer (post-chemotherapy treatment). We need to make a firm commitment to ensure a stable supply of the product. For patients who need our products, including Enhertu, we will improve the accuracy of our demand forecasting and efficiently and gradually expand our supply capacity and personnel in line with product potential.

• Identify and build pillars for further growth

It is important to make effective investments in subsequent ADC products as well as to develop growth strategies in disease areas where there are no effective treatments, such as rare diseases, or where existing therapeutic drugs are not sufficiently effective, in order to ensure future sustainable growth. Looking ahead to 2030 and beyond, we will fully leverage our strengths in Science & Technology and continue making investments to continually produce pharmaceuticals that will fulfill new modalities and unmet medical needs. With the progress in the development of DS-7300 (anti-B7-H3 ADC) and DS-6000 (anti-CDH6 ADC), which are DXd-ADCs featuring the same linker and drug as Enhertu and are expected to be the next growth driver following 3ADCs, we advanced from our previous R&D strategy, "3ADCs and Alpha" to "5DXd-ADCs and Next Wave." In addition, we are also making progress in selecting post DXd-ADC modalities, including 2nd generation/new-concept ADCs.

Finally, please tell us your thoughts on creating shared value with the Group's stakeholders.

In addition to patients and their families, who are the most important stakeholders of the Group, we are working on creating shared value with our shareholders/investors, society, and employees as a pillar of our current 5-year business plan to promote ESG management, while also ensuring alignment with our Purpose.

Last year, we invited a person who had returned to their work after overcoming cancer treatment to our in-house lecture in order to foster a patient centric mindset among our

employees. After hearing the guest saying, "I want to live as long as possible, because I believe that a better treatment will be discovered in the process," I reaffirmed the fact that we are creating hope, while also further strengthening our commitment to our Purpose of "Contribute to the enrichment of quality of life around the world."

I tell our employees that I want them to find the overlap between the Group's Purpose and their own personal purpose and vision. Furthermore, shareholders and investors who agree with our Purpose and support us with a long-term perspective will always be essential to the Group as we create innovative pharmaceuticals, and I sincerely hope that they will continue to support our initiatives to enhance our corporate value. Finally, we would like to continue our efforts to become a company that is recognized as an indispensable presence in society.

began to develop a shared global human resource (HR) framework that would enable our talented employees, including those from outside of Japan, to utilize their expertise, sustain motivation and achieve results. To this end, we have initiated a global project team that collaborates across different units, local subsidiaries and workplaces, and will proceed with establishing a globally unified target performance management process, global job grading, and HR information system, while benchmarking the systems of mega-pharmaceutical companies in Europe and the US.

In addition, with a view to 2030 and beyond, we will constantly update and optimize our development plans and flexibly reallocate resources. I believe that now is the perfect time to create a sustainable growth cycle for the next 15 to 20 years, and we will use the cash flow generated by Enhertu to reinvest in R&D and capital investment for new ADCs to achieve exponential growth.

◉ Profit growth for current business and products

Although the oncology business is growing rapidly thanks to

FY2025 Financial Targets

Achieve FY2025 Target

"Global Pharma Innovator with Competitive Advantage

in Oncology" and Shift to Further Growth

• Revenue: ¥1,600.0 billion (Oncology business revenue: ¥600.0 billion or more)	• ROE: 16% or more
• Core operating profit*1 ratio before R&D expenses: 40%	• DOE*2: 8% of more

We are also working to globalize our corporate functions. In April 2023, we shifted to the structure in which a global head linking each function to each region leads the corporate functions in Japan, the US, and Europe. Personnel for high-level positions in each corporate function will be assigned without regard to age or nationality through a highly transparent selection process.

Furthermore, as we globalize our HR system, we will renew our ERP (Enterprise Resources Planning) system and complete "Project 4D (Daiichi Sankyo Data-DrivenDecision Making)" to implement data-driven management that will enable prompt and accurate decision making on a global scale.

Enhertu, the current growth of the Group is fundamentally

supported by existing businesses and products, including the

anticoagulant Lixiana® and the pain treatment Tarlige®. We will

ensure further profit growth in these existing businesses and

products. In particular, the product value of Lixiana has improved

with the addition of new dosage and administration, and we will

strive to further expand our market share in each market. In ad-

dition, we will take on the challenge of expanding the number of

countries and regions where our cholesterol-lowering treatment

Nilemdo®/Nustendi® is available in Europe, increasing sales of our

iron injection business in the US, and growing our business in

Maximize 3ADCs

• Maximize Enhertu and Dato-DXd through strategic alliance with AstraZeneca
• Maximize HER3-DXd without a partner
• Expand work force and supply capacity flexibly depending on changes around product potential

Profit growth for current business and products

• Maximize Lixiana profit
• Grow Tarlige, Nilemdo, etc. quickly
• Transform to profit structure focused on patented drugs
• Profit growth for American Regent, Inc. and Daiichi Sankyo Healthcare Co., Ltd.

Identify and build pillars for further growth

• Identify new growth drivers following 3ADCs
• Select post DXd-ADC modalities

Create shared value with stakeholders

• Patients: Contributing to patients through patient centric mindset
• Shareholders: Balanced investment for growth and shareholder returns
• Society: Environment load reduc- tion across the value chain, and actions against pandemic risks
• Employees: Create One DS Culture through fostering our Core Behaviors

What is important is to enhance our strengths in Science & Technology with our human resources, core technologies and corporate culture as we expand our value chain globally in order to pursue Daiichi Sankyo's distinct characteristics. We will

China and other ASCA countries and regions, while also continu-

ing to enhance transformation into a profit structure focused on

patented drugs that are advancing steadily.

• Data-drivenmanagement through DX, and company-wide transformation through advanced digital technology
• Agile decision making through new global management structure

*1 Excluding temporary income and expenses (gains/losses related to sales of fixed assets etc.) from operating income *2 DOE: Dividend on Equity = Total dividend amount / Equity attributable to owners of the company

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Value Creation Model Underpinned by our Strength in

Create Shared Value with our Stakeholders to Realize Sustainable Value Creation

As a global pharmaceutical company, the Daiichi Sankyo Group is uniquely positioned to address diverse social needs, including unmet medical needs. We endeavor to meet such needs throughout our entire value chain, by investing our human and intellectual capital, and by leveraging our excellence in Science & Technology-the source of our competitive advantages. We provide patients and other stakeholders with

social and economic value through pharmaceuticals that meet various medical needs, through reductions in our environmental footprint, and through the activities of our diverse range of people. Creating value with our stakeholders allows us to build a sustainable cycle of value creation, through which we aim to continually enhance our corporate value and contribute to the sustainable growth of society.

Requirements from

Society

Input

Output		Value Created for Stakeholders

Work

environments

where a diverse range of people can maximize their potential

Unmet medical

needs

Improved access to pharmaceuticals

Corporate

management

with high ethical

standards as a life science company

Human capital

• Number of global employees: 17,435 (as of March 31, 2023)
  Japan: 9,263, North America: 3,062,
  Europe: 2,554, Asia, and Central and South
  America: 2,556
  Number of new employees (global): 2,351
• Training/development investments: 2.5 billion yen (FY2022)

Intellectual capital

• Oncology and other pipelines
• Technologies and know-how for discovering and delivering new drugs
• Accumulated pharmaceutical information
• Research and development investments: 336.7 billion yen (FY2022)

Manufactured capital

• 13 production sites globally
• Utilization of our collaboration with CMOs (Contract Manufacturing Organizations)
• Capital investments: 103.6 billion yen including CMO investments (FY2022)

Social and relationship

capital

• Footprint in 26 countries/regions around the world
• Firm relationship with stakeholders
• Ensuring trust through compliance

Our Mission

Purpose Contribute to the enrichment of quality of

Mission Create innovative pharmaceuticals address-

2030 Vision Innovative Global Healthcare Company Con-

Mid-term strategy (FY2021 to FY2025)

• Maximize 3ADCs

• Profit growth for current business and products

Value Chain

Drug Discovery	Clinical	Supply	Value
and Research	Development	Chain	Delivery

Our greatest strength Science & Technology

life around the world
ing diverse medical needs	Pharmaceuticals
tributing to the Sustainable Development of Society	Responding to
Diverse Medical
	Needs
• Identify and build pillars for further	Innovative pharmaceuticals
growth	Generic pharmaceuticals
• Create shared value with stakeholders	Vaccines
	Consumer healthcare
	products

Materiality on

Business

• Creating Innovative Pharma-
ceuticals	Reducing
• Providing a Stable Supply of
Top-Quality Pharmaceutical	Environmental
Products	Footprint
• Providing the Highest Quality
Medical Information	(Carbon neutrality)
• Improving Access to

Patients

・Reform standard of care ・Improve Quality of Life

Example Outcomes

• Expand Enhertu® indications as well as launched countries and regions
• Achieve early launch and expansion of indica- tions of innovative pharmaceuticals
• Create pharmaceutical information in line with medical needs

Shareholders and

investors

・Enhance corporate value

・Improve total shareholder return

Example Outcomes

• Achieve DOE* exceeding the cost of equity

• DOE: Dividend on Equity = Total dividend amount / Equity attributable to owners of the company

Society and the

natural environment

・Respond to climate change ・Respond to emerging and

re-emerging infectious diseases of the future

Example Outcomes

Global

environmental

issues

ESG initiatives,

and other

requirements

Natural capital

• Total energy used: 680,723MWh (FY2022)
• Water consumed: 8,261,000 m3 (FY2022)

Financial capital

• Equity capital (total equity): 1.4459 trillion yen (as of March 31, 2023)
• Borrowed capital (total liabilities): 1.0630 trillion yen (as of March 31, 2023)

Materiality on Business Foundations

• Promoting Environmental Management

• Promoting Compliance Management

Core Value /

Healthcare

• Corporate Governance Aimed at Fulfilling

Our Mission

• Promoting the Success and Development

of a Diverse Range of People Who CreateDiverse Range Our Competitive Advantages

of People

Core Behavior

• Decrease CO2 emissions
• Decrease water consumption

Employees

・Encourage the mutual continuous growth of both our employees and our Group

Example Outcomes

• Diverse range of people who create our compet- itive advantages
• Improve engagement

Sustainable enhancement of

corporate value through the value creation cycle

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