Sumitomo Dainippon Pharma : Announces Reviesd Mid-term Business Plan 2022 (FY2018-FY2022)

May 12, 2021

Sumitomo Dainippon Pharma Co., Ltd.

Sumitomo Dainippon Pharma Announces

Revised Mid-term Business Plan 2022 (FY2018-FY2022)

Sumitomo Dainippon Pharma Co., Ltd. (Head Office: Osaka, Japan; Representative Director,

President and CEO: Hiroshi Nomura; Securities Code: 4506, First Section of TSE) today announced a revised version of its Mid-term Business Plan 2022 (FY2018-FY2022), which was originally announced in April 2019.

1. Background to the Revision

Guided by the Mid-term Business Plan 2022, Sumitomo Dainippon Pharma set Psychiatry & Neurology, Oncology, and Regenerative Medicine/Cell Therapy as its three focus areas. Focusing on these areas, the Company aspires to establish a position as a "Global Specialized Player" in 2033, with a view to the growth of healthcare areas other than pharmaceutical products as well. At the same time, it will also be working to rebuild its business foundation through the establishment of a growth engine and the building of a flexible and efficient organization.

Preparing for the post-LATUDA era (after the loss of exclusivity in the U.S. regarding the atypical antipsychotic drug), we formed a strategic alliance with Roivant Sciences in December 2019. This alliance has allowed us to acquire a number of pipelines expected to become growth drivers, including relugolix and vibegron, as well as DrugOME and Digital Innovation, healthcare technology platforms that will accelerate the Company's digital innovation, and the related talent. On the other hand, in March 2021, we discontinued the development of napabucasin, on which we had placed high hopes as a post-LATUDA growth driver.

We expect that the impact of this discontinuation, which will result in decreased revenue, will be compensated for by increases in sales of new products from Sumitovant Biopharma. We also expect that our core operating profit will decrease as a result of posting sales, general and administrative expenses, as well as amortization of patent rights for new Sumitovant products. In view of these developments, we revised the FY2022 business goals set forth in the Mid-term Business Plan 2022.

2. Financial Goals

(1) FY2022 Business Goals

	Previous goals	Revised goals
Revenue	￥600 billion	￥600 billion
	1

Core operating profit	￥120 billion	￥60 billion
ROIC1	10％	3%
ROE2	12%	3%

1. ROIC = (core operating profit - income tax) ÷ (total capital + interest- bearing liabilities)

1. 2. ROE = profit attributable to owners of the parent ÷ equity attributable to owners of the parent

2. Dividend Policy (Unchanged from the previous version)

• Maintain a consistent payment policy but also consider reflecting any improvement in the

Company's performance in the dividend payment

• 5-yearaverage payout ratio of 20% or higher

3. Major Initiatives

While pursuing the maximization of the product value of relugolix and vibegron, we will be fully committed to developing products that are expected to become growth drivers in the areas of Psychiatry & Neurology, Oncology, and Regenerative Medicine/Cell Therapy for our medium-to-long-term business expansion. We will also promote developing frontier businesses. In business operations, we will continue to strengthen our management structure such as the reinforcement of the foundation of each business unit and region. Furthermore, we will work to improve productivity through digital innovation, foster a corporate culture that accelerates change, and develop talent.

We aim to achieve an ROE of 10% or higher in the second half of the 2020s through sustained growth.

Note: For more details, please refer to the attached presentation material (excerpted version of FY2020 financial results and revision of Mid-term Business Plan 2022 presentation materials).

Disclaimer Regarding Forward-looking Statements

The statements made in this press release contain forward-looking statements based on management's assumptions and beliefs in light of information available as of the day of this release, and they involve both known and unknown risks and uncertainties. Actual results of those matters covered in the forward-looking statements, including financial forecasts, may differ materially from those contained in this release, due to a number of factors.

Contact

Corporate Communications

Sumitomo Dainippon Pharma Co., Ltd.

TEL: + 81-6-6203-1407 (Osaka); + 81-3-5159-3300 (Tokyo)

2

Excerpted version of FY2020 financial results and revision of Mid-term Business Plan 2022 presentation materials

Revision of Mid-term Business Plan 2022

0

Revision of Mid-term Business Plan 2022

Background of Revision of Mid-term Business Plan 2022

• April 2019: Publication of Mid-term Business Plan 2022
• • Reshape business foundation through the "establishment of a growth engine" and the "building of a flexible and efficient organization," preparing for the "Time for Change" and post-LATUDA revenue replacement
• We decided to form the Strategic Alliance with Roivant due to a significant change in the medium- to long-

term business outlook after the events such as discontinuation of development of napabucasin for pancreatic cancer which was expected as a revenue driver in post-LATUDA

• Acquired relugolix and vibegron, which are expected to be the immediate revenues base

Revision of Mid-term Business Plan 2022

• Currently working on (1) maximizing the product value of relugolix and vibegron and products that are expected to contribute to latest revenues, (2) advancing R&D activities for medium- to long-term growth, (3) advancing the reinforcement of business infrastructure to strengthen the company

1

Revision of Mid-term Business Plan 2022

Corporate Mission and CSR-Based Management

Corporate To broadly contribute to society through value creation based on innovative research and Mission development activities for the betterment of healthcare and fuller lives of people worldwide

• Define implementation of corporate mission as "CSR-based management" and set material issues of CSR-based management (Materiality)
• Address material issues, aimed at solving social challenges and enhancing corporate value through our core competencies

Material issues linked to value creation

Very		- solving issues is important for our sustained growth
High		● Improvement of		● Contribution to		● Development of innovative products
Significance		healthcare		global health		and healthcare solutions
	infrastructure in		● Initiatives to		● Contributing to the advancement of
		developing countries		improve access		science
		● Measures to		to medicines
		address counterfeit
		medicines
Societal		● Local			●Patient support and		●Work style innovation
	community		advocacy		●Diversity and inclusion
		contribution				●Training and development of employees
High
High	Importance to Sumitomo Dainippon Pharma's Business	Very High
	Material issues that forms the foundation for business continuity
	- solving issues is essential for our sustained growth
		● Respecting human rights		● Risk management		● CSR procurement
		● Corporate governance		● Fair and transparent
				● Health, safety, and welfare of
		● Compliance		corporate activities
				employees
					● Corporate regulatory compliance,
					● Environmental initiatives
					quality assurance and stable supply

Research &

Development

Our	Global platform
strengths

Human resources

Contribute to improved quality of life (QOL) for patients and their families

Improve and sustain corporate value

Returns to shareholders (stable dividends, increases in dividends linked to improvements in performance)

Strategic investment aimed at sustained growth (includes research and development investment)

Also contributing to achieving the Sustainable Development Goals (SDGs)

2