Chugai Pharmaceutical : Script (including Q&A)

CHUGAI PHARMACEUTICAL CO., LTD.

3Q Results (Jan - Sep 2021) Conference Call

October 22, 2021

Event Summary

[Company Name]	CHUGAI PHARMACEUTICAL CO., LTD.
[Company ID]	4519-QCODE
[Event Language]	JPN
[Event Type]	Earnings Announcement
[Event Name]	3Q Results (Jan - Sep 2021) Conference Call
[Fiscal Period]	FY2021 Q3
[Date]	October 22, 2021
[Number of Pages]	42
[Time]	18:00 - 19:24
	(Total: 84 minutes, Presentation: 45 minutes, Q&A: 39 minutes)
[Venue]	Dial-in
[Venue Size]
[Participants]
[Number of Speakers]	6
	Dr. Osamu Okuda	President & CEO
	Toshiaki Itagaki	Executive Vice President & CFO
	Tetsuya Yamaguchi	Senior Vice President, Head of Project & Lifecycle
		Management Unit
	Shinji Hidaka	Vice President, Head of Marketing & Sales Division
	Dr. Junichi Nezu	Vice President, Head of R&D Portfolio Management
		Department of Projects & Lifecycle Management
		Unit
	Toshiya Sasai	Head of Corporate Communications Department
[Analyst Names]*	Fumiyoshi Sakai	Credit Suisse Securities (Japan) Limited
	Seiji Wakao	JPMorgan Securities Japan Co., Ltd.
	Hidemaru Yamaguchi	Citigroup Global Markets Japan Inc.
	Kazuaki Hashiguchi	Daiwa Securities Co. Ltd.
	Motoya Kohtani	Nomura Securities Co., Ltd.
	Shinichiro Muraoka	Morgan Stanley MUFG Securities Co., Ltd.

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*Analysts that SCRIPTS Asia was able to identify from the audio who spoke during Q&A.

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Presentation

Sasai: Good evening, everyone. CHUGAI PHARMACEUTICAL CO., LTD. will now hold a conference call to present results for the third quarter of FY2021. Thank you very much for taking time out of your busy schedule to join us today.

My name is Sasai, and I am the moderator of this session.

After the presentation, there will be a 30-minutequestion-and-answer session, during which any questions you may have will be answered.

Today's speakers are as follows. Dr. Okuda, the President and CEO. Mr. Itagaki, Executive Vice President and CFO. Mr. Yamaguchi, Senior Vice President and Head of the Project and Lifecycle Management Unit. Please have your presentation and disclosure materials ready.

The presentation will now begin. First of all, Dr. Okuda will give a summary of the third quarter.

Okuda: My name is Okuda, and I am the Company President & CEO.

I will now give a summary of the third quarter results. Please refer to slide 5.

Sales revenue for the January to September period totaled JPY677.5 billion, up 17.5% from the same period last year. Operating income and quarterly income each increased by more than 25% from the same period last year, resulting in a significant increase in sales and income for the third quarter.

Sales in the domestic market were affected by the NHI drug price revision and the market penetration of generic products. However, sales of several products grew steadily. These include mainstay products such as Tecentriq, which received an indication for the treatment of hepatocellular carcinoma in September last year,

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and new products such as Ronapreve, a COVID-19 treatment that received special approval for emergency in July. Deliveries of Ronapreve to the government have begun.

Overseas sales growth was driven by growth of Hemlibra, which was as expected, and higher-than-expected growth in Alecensa. The decrease in exports of Actemra to Roche from the previous year is in line with our expectations.

ROOI increased by nearly 25%, mainly due to increased royalties and profit sharing from the growth in overseas local sales of Hemlibra.

As a result of this progress, which was much stronger than we had initially forecast, we have significantly upwardly revised our original business forecast. After the revision, the forecasts are as follows: revenue is JPY970 billion, operating profit is JPY400 billion, quarterly income is JPY293 billion, and EPS is JPY178. As a result, we expect to achieve record results for this fiscal year. For the next fiscal year, although there are many uncertainties, we will continue to aim for our highest ever financial results.

Let's look at page 6. Here, we can see a breakdown of the difference between the original and revised forecasts for sales revenue.

In terms of sales in the domestic market, delivery of Ronapreve to the government has begun. We expect to record JPY82.3 billion from this for this fiscal year. Furthermore, in addition to mainstay products such as Tecentriq and Avastin, Polivy, and Enspryng are expected to exceed the original forecast, resulting in a total increase of JPY119.3 billion.

As for overseas sales, Actemra exports to Roche are expected to rise by JPY17 billion. This is due to increased demand related to COVID-19. In addition, sales of Hemlibra and Alecensa are both expected to exceed original forecasts.

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