Eisai : Latest Value Creation Report (Former Integrated Report)

Eisai Value Creation Report 2021

Eisai Co., Ltd.

Materiality

Eisai's corporate philosophy is to give first thought to patients and their families. Likewise, Eisai provides employees, who are responsible for making a positive contribution to patients, with opportunities to develop their talents so as to enrich their careers and cultivate work satisfaction. Eisai's mission is the enhancement of patient satisfaction, then revenue and earnings will be generated as a consequence. We attach great importance to this sequence of placing the mission before the ensuing results.

At the same time, in order to sustainably maximize corporate value in a way that satisfies all stakeholders, and taking into account our corporate philosophy's concept of "mission and the results," it can be seen as

●Process for establishing materiality

Process 1: Identification of issues

In identifying guidelines, we taking into account various types of guidelines (e.g., Sustainability Accounting Standards for Pharmaceuticals by SASB＊2, GRI Guidelines), the Sustainable Development Goals (SDGs)＊3, communication with stakeholders, and socially responsible investment (SRI) indices (e.g., Dow Jones Sustainability Index).

more efficient to focus on long-term investors, who are beneficiaries of residual income, as the most important stakeholders＊1. While taking the long-term interests of all stakeholders including patients and employees taken into account, we believe that identifying the concerns relating to the interests of long-term investors and then implementing related initiatives on a priority basis, is the fast track to the maximization of corporate value.

The process for establishing materiality and Eisai's Materiality Matrix are shown below. Reviews and updates are undertaken as needed.

＊1 Concept derived from Enlightened Value Maximization Theory (Michael C. Jensen, 2001)

Process 2: Prioritization of issues and creation of Materiality Matrix

We prioritize issues that have a particularly high degree of importance, and then create a matrix, from the perspectives of "impact on Eisai's business" considering the corporate philosophy and impact on finances, and of "interest to long-term investors," which includes financial reporting, opportunities to create innovation, and the impact of legal restrictions and industry norms.

Process 3: Reviews and updates

Reviews and updates are undertaken as needed, taking into account the progress made in initiatives relating to relevant issues and changes in the business environment.

＊2 SASB (Sustainability Accounting Standards Board) is a U.S.-basednon-profit organization that identifies materiality by industry for reasonable investors and develops sustainability disclosure standards.

＊3 Sustainable Development Goals (SDGs) are a set of international goals established under the 2030 Agenda for Sustainable Development adopted at the United Nations. Sustainable Development Summit in September 2015.

●Eisai's Materiality Matrix

Very High

		Social value creation
value Social		Foundation for
	supporting value creation
Very High
ability creation
	Corporate foundations
High
High	Impact on Eisai's business	Very High

• Creating innovative medicines

• Offering solutions that go beyond providing medicines

• Strategic partnerships

• Improving access to medicines
  ❺ Stable supply and quality assurance

• Provision of job satisfaction, and opportunities for employees to develop careers and talent

• Supporting employee health and safety management
  ❽ Promoting diversity
  9 Corporate governance system
  ⬱ Compliance and risk management ⬲ Appropriate pricing
  ⬳ Protection and reinforcement of intellectual property ⬴ Financial strategy
  ⬵ Supply chain management
  ⬶ Business that takes human rights into account
  ⬷ Business that takes the global environment into account ⑰ Safety management for products
  ⑱ Ethical and transparent drug creation activities
  ⑲ Compliance-aware promotion
  ⑳ Information disclosure
  ㉑ Prevention of bribery and corruption
  ㉒ Initiatives against counterfeit drugs

1

Contents

Management

1 Materiality

Management Strategies

1. The Driving Force of Eisai: "human health care (hhc)"

1. Message from the CEO

1. Eisai's Social Value Creation

17 Value Creation Process and Flow

19 Medium-Term Business Plan 'Plan EWAY'

Eisai's Social Value Creation

1. Progress in Development of Next-Generation Dementia Treatments

1. Progress of Innovative Medicine Creation in Oncology Area

1. Stable Supply and Quality Assurance

1. Global Marketing Activities

1. Improving Access to Medicines (ATM)

1. Human Capital Strategy

Foundation for Supporting Value Creation

1. Taking the Global Environment Into Account in Our Business Activities

1. Taking Human Rights and the Sustainable Procurement Into Account in Our Business Activities
2. ESG Indices
3. CFO Dialogue: ESG Management AND Creation of Social Value

1. Financial Strategy

1. Corporate Governance

1. Compliance, Risk Management, and Internal Audit

Company Introduction

1. Major Products

1. History of Eisai

1. Global Business Outlook

1. Financial Indicators
2. Status of Shares
3. Corporate Information/On the Issuance of the Value Creation Report 2021

Strategies

Creation Value Social (R&D)

Creation Value Social Medicines) to (Access

Major External Evaluations As of July 2021

THE INCLUSION OF Eisai Co.,Ltd. IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF Eisai Co.,Ltd. BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

FTSE Russell (the trading name of FTSE International Limited and Frank Russell Company) confirms that Eisai has been independently assessed according to the FTSE4Good criteria, and has satisfied the requirements to become a constituent of the FTSE4Good Index Series. Created by the global index provider FTSE Russell, the FTSE4Good Index Series is designed to measure the performance of companies demonstrating strong

Environmental, Social and Governance (ESG) practices. The FTSE4Good indices are used by a wide variety of market participants to create and assess responsible investment funds and other products.

Morningstar, Inc. ("Morningstar") has authorized Eisai Co., Ltd. ("Eisai") to use the Morningstar Developed Markets Gender Diversity logo ("Logo") for informational purposes only to reflect the fact that, for 2020, Eisai Ranks in the top quintile of companies comprising the Morningstar® Developed Markets Gender Diversity IndexSM ("Index") on the issue of workplace gender diversity. Eisai's use of the Logo should not be construed as Morningstar either recommending Eisai as an investment or endorsing Eisai for any purpose. Morningstar accepts no liability for Eisai's use of the logo or its representations around the Index.

Creation Value Social Capital) (Human

Value Supporting	Foundation
Creation	for

Introduction Company

2	Eisai Value Creation Report 2021

(1) The Company's Corporate Philosophy is to give first thought to patients and their families, and increase the benefits that health care provides them. Under this Philosophy, the Company endeavors to become a human health care (hhc) company.

(2) The Company's mission is the enhancement of patient satisfaction. The Company believes that revenues and earnings will be generated by fulfilling this mission. The Company places importance on this sequence of placing the mission before the ensuing results.

(3) The Company strives to fulfill its social responsibilities by positioning compliance (i.e., the observance of legal and ethical standards) as the basis of all business activities.

(4) The Company's principal stakeholders are patients, customers, shareholders and employees. The Company endeavors to develop and maintain a good relationship with stakeholders and to enhance the value of their stake through:

1. Satisfying unmet medical needs, ensuring a stable supply of high-qualityproducts, and providing useful information on subjects including drug safety and efficacy;

2. Timely disclosure of corporate management information, enhancement of corporate value, and a positive return to shareholders; and

3. Ensuring stable employment, offering challenging and fulfilling duties, and providing full opportunities for the development of employees' capabilities.

Articles of Incorporation Article 2

The Driving Force of Eisai: "human health care (hhc)"

500 Number of global hhc activities per year

Eisai's corporate philosophy, established in 1992, is understood and internalized as our core value by our global employees

Eisai's corporate philosophy reflects our commitment to business activities aiming at increasing the benefits to patients, their families, and consumers, who we clearly recognize as the key players in healthcare.

This corporate philosophy 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 in order to learn to empathize with their thoughts and feelings that they might not always express in words. Accordingly, all employees are encouraged to spend at least

1% of their total business hours interacting with patients.

To share our values and goals with shareholders and to operate our business more effectively, we incorporated the corporate philosophy into the Company's Articles of Incorporation, upon receiving approval at the Annual General Shareholders' Meeting in June 2005.

Sequence of Mission

and Results Based on the hhc Corporate Philosophy

Mission

Enhancement of patient satisfaction

Business activities

Results

Revenues, earnings, etc.

Announcement of the Concept of Eisai Innovation in 1990 as the Origin of the Corporate Philosophy "hhc"

Haruo Naito, the current Representative Corporate Officer and CEO, was appointed President of Eisai in 1988. He began transforming Eisai's corporate image and challenging employees to adopt new mindsets and attitudes as soon as he began his tenure, by identifying changes in the times, in society, and in people's attitudes. Then, in 1990, clearly recognizing patients, their families, and the customers as key players in healthcare activities,

the company announced the concept of Eisai Innovation. This advocated taking pride in achieving business results through improving the benefits to these stakeholders, and urged each individual employee to transform themselves with the message "The world is changing. Let us change along with it." The spirit of this new concept was summarized as "human health care (hhc)" and incorporated into the company's Corporate Mission in 1992.

Business Model Based on "hhc"

Eisai's "hhc" is different from corporate social responsibility (CSR), which mainly involves social contribution activities such as acts of charity that do not directly contribute to business or corporate value. It is relatively close to Creating Shared Value (CSV), a business model that aims to pursue both social value

and economic value. Eisai's mission is to create social value by enhancing patient satisfaction, and economic value in the form of revenue and profit is generated as a result. Eisai places importance on this sequence of placing the mission before the ensuing results.

CSR

Corporate Social Responsibility

Value: Doing good

Citizenship, philanthropy, sustainability

Discretionary or in response to external pressure

Separate from profit maximization

Agenda is determined by external reporting and personal preferences

Impact is limited by corporate footprint and CSR budget

Example: Fair trade purchasing

CSV

Creating Shared Value

Value: Economic and social benefits relative to cost

Joint company and community value creation

Integral to competition

Integral to profit maximization

Agenda is company specific and internally generated

Realigns the entire corporate budget

Example: Transforming procurement to increase quality and yields

hhc

human health care

Value: The common good

Companies together create value in tune with community needs

No fixation on competition

Profits are gained as the result of striving for the common good

Agenda is shared by each company

Included in the company's regular operating budget

Example: Input of customer needs into value chain

＊Compiled by Deloitte Tohmatsu Consulting based on Michael E. Porter, "Creating Shared Value," Harvard Business Review, and other resources and revised by Eisai. Supervised by Ikujiro Nonaka, Professor Emeritus of Hitotsubashi University.

3

Initiatives to Realize Innovation Based on the Theory of Knowledge Creation

Each employee of Eisai is aiming to realize our	model, or narrative. (4) "Internalization (I)," a process of
corporate philosophy "hhc" through their daily work by	creating new tacit knowledge through practicing explicit
exercising ingenuity based on the theory of knowledge	knowledge. It is important to repeat this spiral of four
creation. There are 2 types of knowledge: "tacit	phases for strategic knowledge creation. Eisai places
knowledge" and "explicit knowledge." The former is	particular importance on socialization in understanding
subjective and not easily expressible, while the latter is	the reality of patients (i.e., emotions), and encourages
expressible. The "SECI model" is the core framework	all employees around the world to spend at least 1% of
of knowledge creation, which creates organizational	their total business hours interacting with patients.
innovation through the repeated and mutual conversion

of tacit and explicit knowledge. In

SECI Model Knowledge Creation Spiral

this model, knowledge creation

Tacit

Tacit

is captured in 4 phases: (1)

Share direct

Express tacit

Socialization(S)

Externalization(E)

"Socialization (S)," a process of

experience and

knowledge

building up tacit knowledge through

build up tacit

Tacit

Environment

E

O I

Explicit

through dialogue

knowledge

I

I

and reection

I

Individual

Group

directly sharing experience with

(Emphasizing)

(Conceptualizing)

I

I

others. (2) "Externalization (E),"

I

a process of expressing tacit

Internalization(I)

Combination(C)

knowledge through dialogue

Explicit

Organize

Practice the

Tacit

E

between individuals and articulation

O

G

model or

relevant concepts

G

into concepts or iconography.

narrative and

I

G Org. G

into a prototype,

(3) "Combination (C)," a process

create new

E

G

model, or

tacit knowledge

narrative

for combining explicit knowledge

(Practicing)

(Modeling)

Explicit

Explicit

of an organizational level into a

I = (Individual), G = (Group)

O = (Organization), E = (Environment)

Strategies Management

Creation Value Social (R&D)

Value Social Medicines) to (Access

Issuance of Eisai "hhc" Code

COVID-19 is believed to cause mental anxiety, and induce prejudice and discrimination in human relationships, besides the physical effects of infection. The Eisai hhc Code was issued internally for all employees in the Eisai group on August 8, 2020,

to serve as the basis of all business activities and business execution, because we think it is important to fully consider the value and significance of empathy, be considerate of other people, and learn to coexist while being in close proximity to each other in this unprecedented situation.

This code consists of the Main part and the Side story. CEO Haruo Naito wrote all of the Main part, which comprises 23 chapters about the background of corporate actions based on "hhc" philosophy, purpose, and results. The topics include the issuance of the Eisai Innovation Declaration in 1990, the medium-term business plan 'EWAY Future & Beyond,' the steps from

the emergence of the "hhc" philosophy to its realization, corporate behavior, the preparedness required of those who aspire to achieve results in business, and so on.

The Side story includes contributions from Ikujiro Nonaka, professor emeritus of Hitotsubashi University and Akihiro Okumura,

Professor emeritus of Keio University. They guided and encouraged us while we had been establishing and implementing Eisai's "hhc" philosophy, and we have received guidance from high places every time we need it. The Code is a guidepost showing the history, present, and future of "hhc."

Creation

Creation Value Social Capital) (Human

Value Supporting	Foundation
Creation	for

Eisai Received the Corporate Philanthropy Award for Its Efforts to Realize the "hhc" Philosophy

We received the 18th (fiscal 2020) Corporate Philanthropy Award from the Japan Philanthropic Association.

Eisai's corporate philosophy of "hhc" and the activities to realize it were evaluated as activities embodying preparedness based on a corporate culture in which employees can demonstrate their true value in working toward the realization of a society where people can live happily.

Presentation ceremony

Left: Yoko Takahashi, Chair of the Japan Philanthropic Association,

Right: Keigo Kato, Head of the Knowledge Creation Department, Eisai Co., Ltd.

Introduction Company

4	Eisai Value Creation Report 2021