Kissei’s Materiality

Kissei Pharmaceutical leverages its business activities to provide continuous value based on its Management Philosophy, which is to “contribute to society through high-quality, innovative pharmaceutical products” and “serve society through our employees.” One of the basic policies of its five-year medium-term management plan, “PEGASUS”, is to “promote ESG and the SDGs.” Under this policy, the Company is working to achieve sustainability in terms of society and the earth’s environment, which is the ultimate goal of the SDGs.

The Seven Categories of Material Issues

Kissei identifies material issues by narrowing down issues that need to be addressed to realize a sustainable society according to two axes—relevance to the Company’s business (the medium-term-management plan, etc.) and the degree of impact on stakeholders. The most important issues are identified as material issues.
We have classified these material issues according to their relevance to one of seven categories. Three of these categories—“development and provision of products useful to society” “steady supply of high-quality products” and “communication with medical professionals and patients”—are related to business activities. The remaining four categories are related to Kissei’s management base, which supports the aforementioned activities. These categories are “strengthening and enhancement of governance” “creation of a fulfilling workplace environment” “environmental initiatives,” aimed at making the earth’s environment sustainable and “social contribution as a good corporate citizen,” which centers on social development in the local area of Nagano where Kissei’s head office is situated.

Kissei’s Materiality

In fiscal 2022, we promoted activities based on the KPIs for materiality set in fiscal 2021, with favorable progress overall.
Some KPIs have been revised to clarify the impact of activities further.

Material issues related to Kissei’s 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
Drug discovery initiatives and promotion of clinical development projects	Number of items in the research and development pipeline and progress Number of New Drug Applications and marketing authorization approvals
Promotion of licensing activities and overseas development	Number of countries where new drugs are launched via partnering *
Development of therapeutic and care foods	Number of new therapeutic and care food products launched

* Revised in fiscal 2022

②Contribution to scientific technology
We contribute toward greater 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
Joint research with academia and other pharmaceutical companies Participation in consortiums sponsored by the Japan Pharmaceutical Manufacturers Association	Progress of open innovation
Donation to the Kanzawa Medical Research Foundation for provision of research grants	Continued provision of research grants *

* Revised in fiscal 2022

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 related to people’s very lives.

Key initiatives

KPIs

Formulation and implementation of the “Stable Supply Manual” COVID-19-related countermeasures Implementation of the Kissei Pharmaceutical Quality System

Appropriate inventory (by product)* Implementation of management review and improvement to instructions 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 Product recalls ・Zero recalls of pharmaceutical products ・Complaint rate of 7.0 ppm (parts per million) or less for food products

* Revised in fiscal 2022

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
Creation of a sales system for rare disease treatments	Progress of activities for the Rare Diseases Project
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 information based on scientific evidence (zero instances of inappropriate provision of information that led to serious improper use or misuse) Construction of an efficient and effective system to provide information utilizing digital tools

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

Key initiatives	KPIs
Operation of the medicine consultation window	Provision of information from the patient’s perspective
Operation of a patient-oriented website	Website production from the patient’s perspective

Material issues related to Kissei’s management base

1. Strengthening and enhancement of governance

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①Strengthen 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
Formulation and implementation of the Kissei Basic Policy on Corporate Governance	Appropriate responses to Japan’s revised Corporate Governance Code
Appointment in a female director Increase in the number of outside directors Introduction of executive officer system	Improvement of Board of Directors’ functions through dialogue with stakeholders and evaluations of the effectiveness of the Board of Directors

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
Creation of a risk management system	Appropriate review of risk management items and examination and implementation of appropriate countermeasures
Development and update of business continuity plans to include disaster and pandemic countermeasures	Development and operation of business continuity management (BCM) and business continuity plans (BCPs)

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
Implementation of compliance program	Number of times compliance training was implemented (once every six months or more for each division) * Implementation of compliance questionnaire (response rate of 95% or higher)
Establishment of a whistleblowing and consultation system (Kissei Hotline)	Number of major compliance violations (zero incidents)
Consideration given to animal welfare when conducting experimentation on animals	Status of company initiatives related to experimentation on animals

* Revised in fiscal 2022

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
Implementation of rank-based and job-specific training	Implementation of rank-based and job-specific training Implementation of DX-based education for human resource development
Support for self-development	Rate of participation in correspondence courses
Establishment of an interview system for skill and career development	Implementation of the Company’s interview system for skill and career development

②Promote diversity 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
Initiatives to support raising next-generation children (Platinum Kurumin, etc.)	Percentage of female employees who take childcare leave (75% or higher annually, in line with Platinum Kurumin certification standard) Percentage of male employees who take childcare leave (30% or higher annually, in line with Platinum Kurumin certification standard)
Initiatives to for the promotion of female participation and career advancement in the workplace	Ratio of average length of employment for female employees to average length of employment for male employees (70% or higher)
Prevention of discrimination and harassment	Harassment prevention training
Recruitment of people with disabilities	Recruitment of people with disabilities (2.3% or higher)

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

Key initiatives	KPIs
Recognition under the 2023 Certified Health & Productivity Management Outstanding Organizations Recognition Program (Large Enterprise Category) Promotion of work–life balance	Implementation ratio of stress checks Percentage of employees who use commemorative leave (100% per year)
Initiatives related to occupational health and safety and maintaining employee health	Number of work-related accidents

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
Maintenance of environmental management systems (acquisition of ISO 14001 certification, etc.)	ISO certification renewal and maintenance
Implementation of environment conservation activities	Waste reduction, improvement of recycling rate, and improvement of final disposal rate (increase 1% year on year)
Priority purchasing of green products	Improvement of ratio of green products purchased

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
Proper management of research and clinical trials that involve genetically modified organisms	Implementation of proper research and clinical trials based on internal regulations, procedure manuals, and other guidance
Appropriate management of chemical substances	Appropriate management of hazardous chemical substances (including PRTR-listed substances) Continued drainage in line with water quality management standards

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 the Japan’s Carbon Neutrality Declaration.

Key initiatives	KPIs
Continued reduction of CO2 emissions Promotion of energy-saving measures and climate change countermeasures	Reduction of CO2 emissions • Fiscal 2030 reduction target for CO2 emissions (Scope 1 and 2): 46% reduction compared with fiscal 2013 Rate of renewable energy utilization • Fiscal 2030 target for renewable energy utilization rate: 74% or more of total electricity consumption Promotion of risk and opportunity assessments for climate change

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 an 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
Contribution to culture, the arts, and sports Donations to child welfare facilities and assistance for natural disasters	Number of sponsorships and donations that contribute to society and local communities
Participation in local cleanup activities and offering of factory and research institute tours	Status of social contribution activities by region *

* Revised in fiscal 2022