Eisai : Latest Value Creation Report

Eisai

Value Creation Report 2023

Eisai Co., Ltd.

4-6-10, Koishikawa, Bunkyo-ku, Tokyo 112-8088, Japan https://www.eisai.com

Effectively Realizing

the Social Good

The front cover expresses Eisai, which continues to strive beyond the preconceived notions to realize the hhc concept and continue to create social impact.

Published in September 2023

Corporate Concept

We give rst thought to patients and the people in the daily living domain, and increase the benets that healthcare provides to them as well as meet their diversied healthcare needs worldwide.

Corporate Objective

A human health care company capable of making a meaningful contribution under any health care system while observing the highest legal and ethical standards in business activities.

Eisai conducts its business under the corporate concept of giving "first thought to patients and the people in the daily living domain, and increase the benefits that healthcare provides to them as well as meet their diversified healthcare needs worldwide".

This corporate concept is summarized by the term "human health care (hhc)". We believe that it is important for each employee to first develop proximity to patients and see the situation from their perspectives to learn to empathize with thoughts and feelings that they might not always express in words. All employees are recommended to spend 1% of their working hours with patients and the people in the daily living domain. Our corporate concept is understood and internalized by each employee within the Group, both in Japan and overseas. This understanding is then shared and implemented in the daily business activities of all Eisai employees, and serves to effectively transcend nationalities, national borders, gender, and age.

Eisai incorporated the corporate concept into the company's Articles of Incorporation in 2005 and has been shared with stakeholders. In 2022, the Company declared that it would evolve into an hhceco (hhc concept + ecosystem) company upon receiving approval at the Annual General Shareholders' Meeting.

Charter of Business Conduct of Eisai Network Companieshttps://www.eisai.com/company/philosophy/index.html

Realization of Social Good based on

Corporate Concept-based Management

Based on the hhc concept, Eisai aims to effectively realize social good by "relieving anxiety over health" and "reducing health disparities". We are working to create and provide innovative new treatments in disease areas with high unmet medical needs, such as dementia and oncology, which we position as strategic areas of focus. In addition, as a global health initiative, we are actively working with partners around the world to eliminate neglected tropical diseases (NTDs), which are a target of the United Nations Sustainable Development Goals (SDGs).

Mission and Results Sequence of

Mission and Result

Eisai's mission is the enhancement of satisfaction of patients and the people in the daily living domain and the realization of social good, such as relieving anxiety over health and reducing health disparities, and the creation of social value. We believe that fulfilling this mission first will generate economic value, including revenue and profit.

Contribution Empowering People in the Medical and Daily

Living Domains to Realize their Fullest Life

Eisai continues to evolve. The corporate concept was incorporated in the Articles of Incorporation and was approved at the 2005 General Meeting of Shareholders. In 2022, we evolved the Articles of Incorporation and redefined "people in the daily living and medical domains" as the main figures in our corporate concept, the human health care (hhc) concept, and expanded the target of our contribution from the previous "patients and their families" to "patients and people in the daily living domain". While adhering to our hhc concept, our goal is to evolve into an hhceco (hhc concept + ecosystem) company that empowers people to live their fullest lives, to further increase the satisfaction of patients and the people in the daily living domain through the realization of social good, such as relieving health anxiety and reducing health disparities by establishing an ecosystem model in collaboration with other industries.

Socialization with Patients

Mechanism for Employees to Embrace the Corporate Concept -Knowledge Creation Activities through the SECI Model-

Origin	Knowledge Creation through the SECI Model
	Origin of our Activities:

To fulfill Eisai's corporate concept to "increase the benefits to patients and the people in the daily living domain", what we value most is to understand the thoughts and feelings of patients and the people. The feelings that can be expressed in words are only a part of it. We believe that we need to be aware of, feel, and empathize with the deepest feelings behind the words or the indescribable feelings of patients. To that end, Eisai encourages all officers and employees of the Eisai Group globally to spend 1% of their working hours engaging in "socialization". This means spending time with patients and the people in the daily living domain or sharing experiences with them such as eating or working together.

Realization of Innovation based on Knowledge Creation Theory:

Mechanism for Employees to Embrace the hhc Concept

In order to realize our corporate concept, each and every employee at Eisai is committed to realizing innovations that relieves patients' anxieties over health and satisfy their health needs through their daily work based on the "Knowledge Creation Theory" advocated by Professor Ikujiro Nonaka, Professor Emeritus of Hitotsubashi University. In the "SECI model", it is important to keep rotating the SECI spiral, which consist of four modes to strategically create knowledge. By continuing to rotate the spiral of these

Spending time with patients and people in the daily living domain

	Tacit
Tacit	Socialization
Tacit	Internalization
	Explicit

Define anxiety

Confirm disparity

Tacit

Externalization	Explicit
Combination	Explicit
Explicit

four modes and repeatedly exchanging "implicit knowledge" and "explicit knowledge", knowledge is continuously created and the hhc concept is realized. This is the origin of Eisai.

Eisai calls these activities "hhc Driven Innovation activities (hhc activities)", and more than 500 hhc activities are carried out globally each year. In addition, we hold the annual event "hhc Initiative" to commend outstanding activities that have made significant contributions to patients and people in the daily living domain.

	Relieve anxiety	Planning to relieve/reduce
	Reduce disparity
	anxiety/disparity
	Implementation and feedback
	Reference: "The Wise Company" Ikujiro Nonaka, Hirotaka Takeuchi
Latesthhc activities	https://www.eisai.com/hhc/activity/index.html

Please refer to P38 for hhc activities in the dementia area, P40 for hhc activities in the oncology area, and P46 for hhc activities in the global health area

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History of Eisai

Since its founding in 1941, Eisai has strived to realize its corporate concept by cultivating a corporate culture that shares the thoughts of patients and the people living in the daily living domain and has continued to take on the challenge of delivering innovative new drugs. By continuing to meet the expectations of our stakeholders, we will bring about social impact that leads to sustainable enhancement in corporate value.

Founding period	Establishment of management base	Building a foundation for
and start of overseas expansion	global expansion

Rapid expansion of overseas	Focus on dementia, oncology,
business through two major brands	and global health areas

History
(Yen)
4trillion		Changes in PBR
	(after transition to consolidated accounting)
3trillion	(			/right axis)
2trillion

Fiscal 2002-2005

Millennium

Plan

Past medium-term business plans

Fiscal 2006-2010	Fiscal 2011-2015		Fiscal 2016-2020
Dramatic Leap	Plan Hayabusa		EWAY Current
Plan

Fiscal 2021-

EWAY Future

& Beyond

As of July 31, 2023
PBR	3.22
	(Maintain over 1 at all times)
Market capitalization	2,662 billion yen

(Times)

4

3

2

1trillion
Changes in Eisai Market Capitalization (Based on Issued Shares)※
(		/left axisc)
0

1

1941

1945

1950

1955

1960

1965

1970

1975

1980

1985

1990

1941 Establishment of Eisai

1961

Late 1960's

Establishment of R&D bases

1992 Establishment of

Our founder, Toyoji Naito,

Listed on the first section

Persuing overseas expansion

in Japan, the U.S. and Europe

corporate concept

of the Tokyo and

"human health care"

established Eisai and focused on

In 1966, Yuji Naito, who

In the 1980s, along with

medicine creation activities,

Osaka stock exchanges

became the second president

establishing a foundation

Haruo Naito, the third-generation

because he was dissatisfied with

of the company, actively

for global expansion, Eisai

president (currently Representative

how Japan's drug industry at the

pursued overseas expansion by

took a strong step toward

Executive Officer and CEO),

time remained overly reliant on

establishing local subsidiaries

global expansion.

established the company's corporate

imports.

in Southeast Asia.

concept of "human health care (hhc)".

1995 2000

Accelerating overseas expansion with the launch of two major brands of groundbreaking new drugs

Overseas expansion was accelerated by the launch of Alzheimer's disease treatment Aricept® and the proton pump inhibitor Pariet®/AcipHex® in 1997＊1.

2005	2010	2015	2020
Strengthening the compliance	Enhancement of
promotion system		corporate governance
In 1999, an officer in charge of	In 2004, the Company transitioned to a company
corporate ethics was appointed, and in	with a nominating committee, etc. and a majority
2000, the ENW (Eisai Network	of outside directors were appointed. In 2005, the
Companies) Charter of Business Conduct	corporate concept was stipulated in the Articles
and the Code of Conduct were	of Incorporation (approved at the General
established.		Meeting of Shareholders).

2025

Evolution into

an hhceco company

In 2022, the Company declared its evolution into an hhceco (hhc concept

• ecosystem) company and was
  approved by a special resolution of the General Meeting of Shareholders.

Product and R&D history

1983

Dementia Area

1997

2007

2014

2023

1951

Launch of vitamin supplement Chocola® A in Japan

1952

Launch of vitamin supplement Chocola BB® tablets in Japan

Not currently being sold.

1961

Launch of stomach medicine Saclon® in Japan

1972

Launch of peripheral neuropathy treatment Methycobal® (injection) in Japan

1974

Launch of metabolic cardiotonic agent Neuquinon® in Japan

		Initiated drug discovery research
See Page 25	in the area of dementia at
（	）	Tsukuba Research Institute

	1987
Oncology Area	Anticancer drug research and
development group was
(See Page 39)	established at Tsukuba
	Research Institute

Alzheimer's disease treatment Aricept® was launched (the U.S. and Europe (U.K.) in 1997, Asia (Thailand) in 1998, and Japan in 1999)

2010

Anticancer agent Halaven® was launched in the U.S.

Concluded a license agreement on Alzheimer's disease treatment BAN2401 regarding research and development, manufacturing, and commercialization with BioArctic AB

2015

Anticancer agent Lenvima® was launched in the U.S., Japan and Europe

Entered into joint development and co-promotion agreement with Biogen Inc. for Alzheimer's disease treatment

2018

Entered into strategic alliance with Merck & Co., Inc., Rahway, NJ, USA regarding anticancer agent Lenvima®

Alzheimer's disease treatment LEQEMBI® received full approval from

FDA

	LEQEMBI®
2021
Entered into exclusive strategic
partnership agreement with Bristol
Myers Squibb for joint development
and co-commercialization of
MORAb-202	Lenvima®

1977		1997
Launch of natural	Launched proton pump
vitamin E	inhibitor Pariet® in Japan
supplement	(1997), Europe (U.K.)
Juvelux® in Japan	(1998), and the U.S.
		(1999). Product name in
		the U.S. is Aciphex®

Global Health	2010年
Eisai and WHO formed a
Area
partnership on Neglected
(See Page 45)	Tropical Diseases (NTDs) for the
first time in Japan

2012	2013	2020
The only Japanese	The lymphatic filariasis treatment, DEC	Collaboration with Bill & Melinda
pharmaceutical company to	tablets manufactured by Eisai is the first in	Gates Foundation, pharmaceutical
participate in the "London	the world to receive WHO pre-certification	companies, etc. to create
Declaration", aimed at	as a treatment for an NTD and provision	therapeutic drugs and vaccines for
eliminating 10 NTDs	free of charge (price zero) was initiated	COVID-19 and future pandemics

2022
Signing of "the Kigali
Declaration", an
international public-private
partnership to eliminate
NTDs	Diethylcarbamazine (DEC) tablets

※We rely on the IIRC-PBR model (Yanagi model): "Shareholder value = long-term market capitalization = book value of shareholders' equity (BV) + market value added (MVA)". Corporate value is calculated from "financial capital", which is the book value of shareholders' equity, and non-financial capital, which is the MVA that exceeds PBR 1 ("intellectual capital", "human capital", "manufactured and social capital" and "natural capital".) and the total market capitalization is considered to be shareholder value. We also believe that there is a certain relationship between long-term market capitalization. (See P65)

＊1 Regarding the expiration date of loss of exclusivity, Aricept® expired in 2010 (the U.S.), 2011 (Japan), 2012 (Europe), and Pariet® expired in 2010 (Japan), 2012 (Europe), and 2013 (the U.S.).

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Eisai at a Glance

Eisai concentrates its management resources in three areas. We continue to take on challenges without compromise to continue creating social impact as a result of our efforts to realize the hhc concept.

Financial Indicators

(As of the end of March 2023)

Revenue	Operating profit	R&D expenses
744.4billion yen	40billion yen	173billion yen
		Ratio to revenue 23.2%
EPS	ROE	DOE
193.3yen	7.2%	5.9%
	Ratio of equity	Net interested-bearing
Net DER	attributable to owners
debt/EBITDA
-0.21times	of the parent
63.3%	-1.9years

Revenue Simulation Revenue Simulation toward fiscal 2032

(trillions of yen)

Others (including new potential products)

Lenvima®

LEQEMBI®

1.0

Social impact targets for fiscal 2025 and fiscal 2030

Social impact of LEQEMBI® (U.S.)

Fiscal 2025 targetFiscal 2030 target

Dementia	Approximately 260billion yen	Approximately 1.8trillion yen
Area
			See Page 32 for social impact of LEQEMBI®
	Social impact of free provision of DEC tablets＊
Global	Fiscal 2025 target	Fiscal 2030 target
Approximately 260billion yen	Approximately 280billion yen
Health
Area

＊ Created social impact of approximately 160 billion yen per year on average in 2014-2018

See Page 50 for social impact of free provision of DEC tablets

R&D Sites	14 R&D sites worldwide
		(As of the end of July 2023)
European Knowledge Center	Kawashima Industrial Park	Koishikawa Knowledge Center	Eisai Center for Genetics Guided
Drug discovery and clinical research (U.K.)	Drug development research	Clinical research (Tokyo, Japan)	Dementia Discovery (G2D2)
	(Gifu, Japan)	EA Pharma Co., Ltd.	Drug discovery research (U.S.)

Clinical research (Tokyo, Japan)

LEQEMBI®

Expect global revenue would

reach 1 trillion yen level

in fiscal

2030

0

Fiscal 2022

Fiscal 2025

Fiscal 2028

Fiscal 2030

Fiscal 2032

• The figure is a simulation based on internal estimates after adjustment of probability of success of R&D, formulated and disclosed at the March 10, 2023 Information Meeting and is not an official forecast. Please refer to the Consolidated Financial Report of each fiscal year for official financial forecasts.

Eisai China Inc.

Clinical research (China)

Knowledge Center, India

Drug development research (India)

Eisai Clinical Research

Singapore Pte. Ltd.

Clinical research (Singapore)

KAN Research Institute, Inc. Drug discovery research (Hyogo, Japan)

	Eisai Inc.
	Clinical research (U.S.)
Tsukuba Research Laboratories
Drug discovery and development research	Exton Site
(Ibaraki, Japan)
Drug discovery and
Kashima Business Office
development research (U.S.)
Drug discovery and development research
(Ibaraki, Japan)

EA Pharma Co., Ltd. Research Institute Drug discovery and development research (Kanagawa, Japan)

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