Kissei’s Materiality

Kissei Pharmaceutical is committed to realizing a sustainable society and global environment through its business activities, based on our Management Philosophy to “Contribute to society through high-quality, innovative pharmaceutical products” and “Serve society through our employees.”
To realize our Management Philosophy, we identify key issues (materiality) that we should prioritize, taking into account changes in the internal and external environment, as well as our current situation and challenges.

We aim to be a company that is essential to society and grows alongside it by uniting the entire organization to address materiality issues, contributing to people's health, and fulfilling our responsibilities to society and the global environment.

Kissei’s 8 Material Issues

• 1.Creation and development of original products

• Selection Criteria

  We have set our management vision as "We aim to be an R&D-oriented pharmaceutical company that contributes to the health of people around the world through innovative pharmaceutical products." With our strength in small molecule drug discovery technology, we are committed to developing game-changing pharmaceuticals that revolutionize existing treatments. Additionally, we are expanding our research and development pipeline through licensing-in opportunities, ensuring a continuous delivery of innovative medicines to healthcare settings. Furthermore, through our healthcare food business, we support health from both the pharmaceutical and nutritional perspectives, contributing to the improvement of quality of life (QOL) for the elderly and patients.

• 2.Steady supply of high-quality products

• Selection Criteria

  It is the responsibility of pharmaceutical companies to consistently supply high-quality medicines to patients in need. We are committed to establishing a GMP system that meets international standards and strengthening our stable supply framework through strategic capital investments. Additionally, we are building a supply chain capable of effectively responding to procurement risks caused by natural disasters and changes in social conditions, ensuring the stable supply of high-quality pharmaceutical products both domestically and internationally.

• 3.Contribution to patientcentered medical care

• Selection Criteria

  By prioritizing the safety of patients, who are the ultimate customers in healthcare, and providing reliable information on safety and efficacy based on scientific evidence with a strong sense of ethics, pharmaceuticals can truly contribute to the improvement of healthcare. In ensuring product safety and conducting clinical trials, we evaluate risks and efficacy appropriately from a high ethical and scientific standpoint, and provide timely and appropriate information.

• 4.Improved access to medical care

• Selection Criteria

  Even today, with the advancement of medical technology, there are many patients who do not have access to adequate treatment. We are committed to addressing unmet medical needs, such as rare diseases and intractable illnesses, and strive to improve access to healthcare through collaboration with overseas partner companies.

• 5.Cultivate creative talent to execute management strategies

• Selection Criteria

  Amidst rapidly changing business environments, for us to embrace new challenges and transform into a truly growth-oriented company, it is essential to respect the diversity of each employee while maximizing their knowledge and abilities, thus enhancing our collective intelligence and strategic execution capabilities. People are the source of competitiveness and value creation, and the success and growth of each individual support the growth of the company. Through the development of creative talent, both our employees and the company can achieve sustainable growth, aiming to create further social value as an R&D-oriented pharmaceutical company.

• 6.Strengthening governance

• Selection Criteria

  Strengthening governance has become essential to respond quickly and accurately to rapidly changing business environments. Establishing a governance system based on compliance enables transparent, fair, swift, and decisive decision-making, we aim to achieve sustainable growth, enhance corporate value, and fulfill our social responsibilities.

• 7.Promotion of ESG management

• Selection Criteria

  In our Code of Conduct, we recognize that addressing environmental issues is a common challenge for humanity and an essential requirement for the survival and activities of a company. Therefore, we are committed to engaging in these efforts voluntarily and proactively. Social challenges related to environmental issues, such as the intensification of natural disasters due to global warming and the marine plastic problem, have become increasingly apparent. As a life-related company with a vision to contribute to the health of people worldwide, we must take the lead in participating in global environmental conservation activities.

• 8.Coexistence and prosperity with local communities

• Selection Criteria

  A company is a social institution, and contributing to the development of local communities and nurturing the next generation is one of its roles. Through our social contribution activities, we aim to contribute to the sustainable development of society. As a corporate citizen, we actively participate in social contribution activities, striving for coexistence and mutual prosperity with local communities.

Our sustainability activities are managed by the Sustainability Promotion Committee, based on initiatives and KPIs determined by the Board of Directors that each department reviews, focusing on our identified materiality issues.

• Previous Initiatives (Up to Fiscal Year 2024)

• Material issues related to business activities

  1. Development and provision of products useful to society

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  ① Development of innovative products (drugs, foods)
  We contribute to the health and medical care of people around the world by providing ethical drugs and other high-quality, innovative pharmaceutical products developed by the Company or through partnerships.

  Key initiatives	KPIs	Fiscal 2024 Result (as of March 31, 2025)
  Drug discovery initiatives and promotion of clinical development projects	Number of items in the research and development pipeline and progress Number of NDAs submitted/ number of NDAs approved	Domestic development: 6 themes, changes in fiscal year 2024: 1 application, and 1 discontinuation Overseas development (out-licensing): 5 themes, changes in fiscal year 2024: 1 new product launch, NDA for 1 theme, and 1 contract termination
  Promotion of licensing activities and overseas development	Number of countries where new drugs are launched via partnering Number of products and number of countries where they are launched	6 products, 62 countries
  Development of therapeutic and care foods	Number of new therapeutic and care food products launched	Discussing joint development with partners based on product profile targets set in light of market research

  ②Contribution to scientific technology
  We contribute toward better health and welfare by making patents and dissertations for innovative technology created through pharmaceutical research, and by open innovation with academic institutions and other entities.

  Key initiatives	KPIs	Fiscal 2024 Result (as of March 31, 2025)
  Joint research with academia and other pharmaceutical companies Participation in consortiums sponsored by the Japan Pharmaceutical Manufacturers Association	Progress of open innovation	Collaboration with Reborna Biosciences, Inc. in Joint Research Promotion Participating in AMED-sponsored industry-academia collaboration projects to develop a next-generation AI system for drug discovery and to build an innovative screening platform for DNA-encoded libraries (DELs)
  Donation to the Kanzawa Medical Research Foundation for provision of research grants	Continued provision of research grants	Donated to Kanzawa Medical Research Foundation

  2. Steady supply of high-quality products

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  ①Quality control and steady supply and procurement
  We build manufacturing and quality control systems that comply with the latest laws, regulations, and guidelines, procure environmentally friendly materials, and work to provide a steady supply of products in recognition of the fact that our products are a part of people’s lives.

  Key initiatives	KPIs	Fiscal 2024 Result (as of March 31, 2025)
  Formulation and implementation of the “Stable Supply Manual” COVID-19-related countermeasures Implementation of the Kissei Pharmaceutical Quality System	Implementation of management review and improvement to instructions	The management team conducted a management review, and provided feedback on the results Operational Launch of a quality event management system
  	Number of months of inventory (by product)	Secured adequate inventory, despite limited shipping for some products
  	Progress toward developing a system to ensure a steady supply of high-quality pharmaceutical products ・Regular review of the “Stable Supply Manual” ・Continuous capital investment to ensure stable production ・Implementation of rank-based training at plants ・Implementation of regular assessment of procurement risks for each raw material and product	Conducted regular review and revision of the Stable Supply Manual Construction of a new formulation building to strengthen the production system Implemented a rank-based training on pharmaceutical quality systems, GMP basics, and pharmaceutical approval matters Conducted regular risk assessments and implemented countermeasures related to raw materials, bearing in mind global situations and other factors
  	Product recalls ・0 recalls of pharmaceutical products ・Complaint rate of 7.0 ppm (parts per million) or less for food products	Pharmaceutical products recalls: 0 Nutrition Division complaint rate: 2.34ppm

  3. Communication with medical professionals and patients

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  ①Promote proper product usage (drugs, foods)
  We provide accurate information backed by science, understanding that offering proper information and promoting proper usage is essential for demonstrating the maximum value of our products.

  Key initiatives	KPIs	Fiscal 2024 Result (as of March 31, 2025)
  Creation of a sales system for rare disease treatments	Progress of activities for the Rare Diseases Project	Provided information on TAVNEOS® in conjunction with the Rare Disease Project and branch offices
  Promotion of activities to provide appropriate medical information Number of products introducing "AI Detail" Immediate provision of safety information via the safety information provision system	Provision of appropriate science-based information (0 instances of inappropriate provision of information that led to serious improper use or misuse)	Number of monitoring and material reviews: 1,918,025 (instances of inappropriate provision of information that lead to serious improper use or misuse: 0) Cases Subject to Administrative Guidance by the Ministry of Health, Labour and Welfare Monitoring Project: 2
  	Construction of an efficient and effective system to provide information utilizing digital tools	Strengthened communication with medical professionals through the provision of details via email Promotion of Utilization of the KISSEI Safety LINK safety information system

  ②Improvement customer satisfaction and patient support
  We contribute to medical treatment by offering the solutions that medical professionals and patients really need.

  Key initiatives	KPIs	Fiscal 2024 Result (as of March 31, 2025)
  Operation of the medicine consultation window	Provision of information from the patient’s perspective	Responses to telephone inquiries from patients: 293
  Operation of a patient-oriented website	Website production from the patient’s perspective	Enhanced existing patient-oriented website: Addition of dialysis-related pruritus content Number of facilities registered in searchable database for medical institutions offering treatment for ANCA-associated vasculitis: 166 (16 facilities added in fiscal 2024)

  Material issues related to management base

  1. Strengthening and enhancement of governance

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  ①Strengthening governance
  We have positioned strengthening corporate governance as an important management issue for the continued improvement of corporate value, and we are working to create a system that can address changes inside and outside the Company quickly and flexibly.

  Key initiatives	KPIs	Fiscal 2024 Result (as of March 31, 2025)
  Formulation and implementation of the Kissei Basic Policy on Corporate Governance	Appropriate responses to Japan’s revised Corporate Governance Code	Complied with all principles required by Japan’s revised Corporate Governance Code and disclosed them in the Corporate Governance Report
  Appointment of a female director Increase in the number of outside directors Introduction of executive officer system	Improvement of the Board of Directors’ functions through dialogue with stakeholders and evaluations of the effectiveness of the Board of Directors	Evaluated the effectiveness of the Board of Directors and disclosed the results in our Corporate Governance Report Female directors: 1 (out of 12 directors in total) Outside directors: 1/3 or higher (four of 12 directors in total) Conducted R&D Meeting Established the "Multi-Stakeholder Policy"

  ②Risk management
  We promote the smooth execution of corporate activities by properly managing risks that may hinder the realization of our Management Philosophy and the completion of our management plans and mounting an appropriate response to any risks that manifest.

  Key initiatives	KPIs	Fiscal 2024 Result (as of March 31, 2025)
  Creation of a risk management system	Appropriate review of risk management items and examination and implementation of appropriate countermeasures	The Risk Management Committee evaluated and confirmed the response status of 320 total risk items as reviewed by each department and reported to the Board of Directors that they were being appropriately managed.
  Development and update of disaster and pandemic countermeasures	Development and operation of business continuity management (BCM) and business continuity plans (BCPs)	Distributed Disaster Pocket Manual to all employees Conducted disaster response headquarters operation training

  ③Compliance
  We practice compliance when conducting corporate activities, understanding that this is fundamental to the sound development of the Company and earning stakeholder trust.

  Key initiatives	KPIs	Fiscal 2024 Result (as of March 31, 2025)
  Implementation of compliance program	The number of times compliance training was implemented (once every six months or more for each division)	Training Sessions Conducted for All Employees: 8 Sessions
  	Implementation of compliance questionnaire (response rate of 95% or higher)	Compliance Status Questionnaire response (implemented annually) Survey response rate: 90.9%
  Establishment of a whistleblowing and consultation system (Kissei Hotline)	Number of major compliance violations (0 incidents)	Number of major compliance violations: 0
  Consideration given to animal welfare when conducting experimentation on animals	Status of company initiatives related to experimentation on animals	Renewed accreditation (AAALAC International, etc.) via third party evaluation organizations Convened the Animal Experimentation Committee: 8 times Self-check conducted by the Animal Experimentation Committee: 6 times Regular clinical observations of all animals in the safety laboratories conducted by the veterinary care team: 12 times (more than once per month) Revised animal experimentation policies and regulations: 12 items

  2. Creation of a fulfilling workplace environment

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  ①Human resource cultivation
  We respect the individuality of each employee and provide a variety of opportunities for employees to develop their skills, focusing on individual abilities and aptitudes in an effort to develop human resources who can contribute to the development of the Company and society.

  Key initiatives	KPIs	Fiscal 2024 Result (as of March 31, 2025)
  Implementation of rank-based training and job specific education	Implementation of rank-based training and job specific education	【Rank-Based Training】 Education for new employees: 50 participants (joined the Company in April of fiscal 2024) Education for new division directors: 6 participants (appointed in or after June 2023) Education for mid-level managers: 19 participants (line managers with 3–4 years’ experience) Education for new managers: 28 participants Basic education for management: 27 participants 【Job-Specific Training】 Participants in the Research Division’s Human Resources Development Program: 276 Research and Drug Manufacturing Division employees) Pharmaceutical English training for the development of global human resources (elective): 1 participant from the Business Development Department, 11 participants from the Research Division, 5 participants from the Clinical Development Division, 6 participants from the Pharmaceutical Technology Division, 6 participants from the Quality, Safety and Regulatory Affairs Division MR development education: 24 participants from the Sales and Marketing Division, 4 participants from the Others
  	Implementation of DX-based education for human resource development	DX human resource development e-learning coursework participants: 233 people DX Literacy Assessment: All employees to score 50 or above by 2028. Fiscal 2024 score: 46.2 (a 4.6% increase from the previous year)
  Support for self-development	Rate of participation in correspondence courses	46.1%
  Establishment of an interview system for skill and career development	Implementation of interview system for skill and career development	Interview-based skills and career development: 119 participants (employees who were promoted in fiscal 2024)

  ②Diversity and gender equality
  We are striving to improve the Company’s working environment in terms of hiring practices, working styles, our human resource system, and other aspects to ensure that a wide range of employees can demonstrate a variety of abilities, based on the idea that when employees with different modes of thinking and value systems can recognize and inspire each other, they can add dynamism and creativity to a company.

  Key initiatives	KPIs	Fiscal 2024 Result (as of March 31, 2025)
  Initiatives to cultivate the next generation (Platinum Kurumin, etc.)	Percentage of female employees who take childcare leave (75% or higher annually, in line with Platinum Kurumin certification standard)	Women: 100%
  	Percentage of male employees who take childcare leave (30% or higher annually, in line with Platinum Kurumin certification standard)	Men: 100%
  Initiatives to promote the success of women	Ratio of average length of employment for female employees to average length of employment for male employees (70% or higher)	79.3%
  Prevention of discrimination and harassment	Harassment prevention training	Conducted the following awareness education "Power harassment," "Sexual harassment," "Various forms of harassment in the workplace", and "Proper promotion of labor management"
  Recruitment of people with disabilities	Recruitment of people with disabilities (2.5% or higher)	2.76%

  ③Enhancement of workplace environment
  We will create a worthwhile workplace environment that gives employees a strong sense of motivation as workstyle reforms and the response to COVID-19 bring major changes to working conditions.

  Key initiatives	KPIs	Fiscal 2024 Result (as of March 31, 2025)
  Recognition under the Certified Health & Productivity Management Outstanding Organizations Recognition Program (Large Enterprise Category) Promotion of work–life balance	Recognition under the Certified Health & Productivity Management Outstanding Organizations Recognition Program Percentage of employees who took stress checks Percentage of employees who use commemorative leave (100% per year)	Recognized under the Certified Health & Productivity Management Outstanding Organizations Recognition Program (Large Enterprise Category) Percentage of employees who took stress checks: 96.8% Percentage of employees who took commemorative leave: 99.4%
  Occupational health and safety initiatives and maintaining employee health	Number of work-related accidents	Number of work-related accidents: 3 incidents (including 2 that required leave), analyzed the causes of each incident and implemented measures to prevent recurrence

  3. Environmental initiatives

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  ①Waste management and resource recycling
  We work to promote the conservation of a sustainable environment through the effective use of resources, preventing pollution and reducing environmental impact.

  Key initiatives	KPIs	Fiscal 2024 Result (as of March 31, 2025)
  Maintenance of environmental management systems	ISO14001 recertification and maintenance	Maintained ISO14001 certification (Renewal)
  Implementation of environment conservation activities	Waste reduction, improvement of recycling rate, and final disposal rate reduction (improve rate 1% every fiscal year)	Amount of waste: increased 6.6% year on year Recycling rate: 77.3% (worsened 7.9% year on year) Final disposal rate: 3.6% (worsened 0.3% year on year)
  Priority purchasing of green products	The purchase rate of green products	32.11%

  ②Initiatives toward biodiversity
  We take care to ensure that our business activities do not adversely affect biodiversity and ecosystems and take action accordingly.

  Key initiatives	KPIs	Fiscal 2024 Result (as of March 31, 2025)
  Proper management of research and clinical trials that involve genetically modified organisms	Implementation status of proper research and clinical trials based on internal regulations, procedure manuals, and other guidance	Number of Genetic Recombination Experiment Safety Committee meetings: 2 Genetically Modified Organisms Clinical Trial Safety Committee: Not applicable Number of violations of laws / regulation: 0 Number of deviations from procedural manuals: 1 Number of accidents: 0 Operational rule revisions: 2 times (changes to committee members and deputy safety officer) Provided education and training for new staff and provided regular education for researchers and security guards.
  Appropriate management of chemical substances	Appropriate management of hazardous chemical substances (including PRTR-listed substances)	Managed appropriately
  	Continued drainage in line with water quality management standards	Managed appropriately

  ③Climate change countermeasures
  We promote environmental management that acknowledges that climate change is a risk factor, with the goal of sustainable growth for society and the Company, and in accordance with Japan’s Carbon Neutrality Declaration.

  Key initiatives	KPIs	Fiscal 2024 Result (as of March 31, 2025)
  Continued reduction of CO2 emissions Promotion of energy-saving measures and climate change countermeasures	Reduction of CO2 emissions ・Fiscal 2030 target: 46% reduction compared with fiscal 2013 (Scope 1 and 2)	Preliminary CO2 Emissions for Fiscal Year 2024: 10,154 tons (a 6% decrease compared to the same period last year) Established the "Kissei Group Basic Environmental Policy" Setting of Kissei Group CO2 Emission Reduction Target: Reduce CO2 emissions by 42% in fiscal year 2030 compared to fiscal year 2020
  	Rate of renewable energy utilization ・fiscal 2030 target: 74% or more of total electricity consumption	Preliminary fiscal 2024 figure: 81.7%
  	Assessment of risks and opportunities associated with climate change	Disclosed information in accordance with the TCFD recommendations CDP questionnaire score for fiscal 2024: B

  4. Social contribution as a good corporate citizen

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  ①Participate in social contribution activities
  We contribute to the sustainable development of society as a fundamental/ essential part of our corporate activities. Moreover, we actively participate in social contribution activities and endeavor to realize our Management Philosophy as a corporate citizen and a member of society.

  Key initiatives	KPIs	Fiscal 2024 Result (as of March 31, 2025)
  Contribution to culture, the arts, and sports Donations to child welfare facilities and relief for natural disasters	Number of sponsorships and donations that contribute to society and local communities	Number of sponsorships / donations: 39 Sponsored cultural events, the arts, and sports, provided sponsorship and donations to child welfare facilities and other organizations that contribute to local communities and society, provided support for recovery from natural disasters, etc.
  Participation in local cleanup activities and offering of factory and research institute tours	Number of social contribution activities by region	Cleaning activities around the company, river cleanup, environmental law training with local students, etc.