Kyowa Kirin Co., Ltd.

The Group operates critical information systems related to research and development, manufacturing, and sales across multiple global locations, and holds confidential data such as patient information, R&D data, and manufacturing know-how. With the increasing sophistication of ransomware and targeted attacks, system outages or information leaks could result in serious losses including business continuity failure, legal violations, fines, litigation, loss of social credibility, and loss of competitiveness. As countermeasures, the Group operates a 24/7 monitoring system across all regions, utilizes MSSPs, conducts annual penetration testing, and performs TPRM assessments; going forward, it plans to build a global security operations model and strengthen OT security.

The Group supplies a diverse range of modality products and investigational drugs, including biopharmaceuticals, both domestically and internationally, but manufacturing and quality issues, raw material procurement instability, natural disasters, geopolitical risks, and system failures could seriously affect supply. If shortages or shipment restrictions occur for critical products, this could result in difficulty continuing patient treatment, loss of social credibility, decreased sales, penalties, litigation, and other economic losses. As countermeasures, the Group maintains appropriate inventory levels, has upgraded the HB7 building at the Takasaki Plant and the Sanford Plant, established dual sourcing for critical products, and strengthened CDMO management; going forward, it plans operational reform through the use of DX.

The Group relies on numerous business partners for critical business processes such as raw materials, contract manufacturing, and distribution, and risks such as human rights and environmental issues, bribery, information security breaches, and regulatory violations can easily materialize due to inadequate management systems. When incidents occur, they can lead to difficulty continuing business, fines, penalties, loss of social credibility, financial losses, and require the investment of massive resources to respond to unforeseen situations. As countermeasures, the Group conducts due diligence in each region, participates in PSCI, and has established Group-wide basic policies; going forward, it plans to conduct SAQs, strengthen monitoring of high-risk partners, and implement global centralized management.

The pipeline and product portfolio, from research and development through to launch, form the foundation for sustainable growth, but expanded investment in late-stage pipeline products, imbalance in the early pipeline, and difficult partnering negotiations could disrupt the future balance of revenue and profit. Insufficient discussion from short-, medium-, and long-term perspectives and a lack of alignment with financial considerations could lead to investment misjudgments, development stagnation, share price declines, deterioration of medium- to long-term profitability, and lost opportunities. As countermeasures, the Group regularly conducts portfolio analysis (revenue and profit forecasts, sensitivity analysis, scenario-based growth forecasts) at the Global Management Strategy Committee; going forward, it will establish a quarterly Product Portfolio Management meeting.

In the rapidly changing pharmaceutical industry, securing talent with advanced expertise, diversity, and agility is essential, but delays in closing capability gaps, insufficient cultivation of corporate culture, and lack of competitiveness in Total Rewards could make it difficult to recruit and retain top talent, potentially hindering innovation, reducing competitiveness, and impeding execution of global strategy. A lack of consistent global x local talent strategy and delays in building a strategic talent pipeline could lead to long-term talent attrition. As countermeasures, the Group has introduced Global Succession Planning, is instilling the KABEGOE Principles, and has established a Virtual Global Sub-function; going forward, it plans to clarify expected roles for People Leaders and redesign the Total Reward Policy.

Amid rising healthcare costs, pressure to control drug prices, and an increasing emphasis on health technology assessment (HTA), reimbursement and pricing for pharmaceuticals are becoming stricter. If mechanisms to incorporate market access strategy from the early stages of development are lacking, post-launch pricing and access conditions could become unfavorable, significantly reducing profitability and growth potential. If trial design meeting European HTA standards, systems for responding to cost-effectiveness assessments, and flexibility to adapt to country-specific price negotiation practices are insufficient, there is a risk that access to products could be delayed or restricted. As countermeasures, the Group incorporates value maximization strategy into the Target Product Profile from the early stages of development, and is advancing planned responses to the European Joint Clinical Assessment (JCA) and building systems and developing talent for responding to cost-effectiveness assessments.

If the execution of the product lifecycle strategy for long-listed products, which form the core of the Japan business, is delayed, portfolio improvement could become difficult, potentially fixing a high-cost structure in place. If in-house development or domestic introduction of new products does not proceed as planned, competitiveness in the Japanese market could decline, affecting overall Group profitability, and delays in new drug launch plans could cause a significant shortfall against profit targets. As countermeasures, the Group has established a JP Pre-launch Team, organized cross-functional task forces, and conducted legal due diligence; going forward, it aims to improve the precision of milestone progress monitoring.

The Group formulated its "Digital Vision 2030" in 2021 and has been promoting DX, but efforts across departments and regions have been insufficient from a company-wide optimization perspective, raising concerns that the effects of Operational Transformation at the company-wide level (productivity improvement, faster decision-making, pipeline acceleration, etc.) may not be fully realized. Shortages of specialized talent in DX and AI, lack of transformative leaders, and an underdeveloped governance framework for IT/digital investment could hinder the creation of expected value. As countermeasures, the Group established the CDXO position in April 2025 and newly created ODX (Operational and Digital Transformation), advancing business reform centered on DX and building an investment governance framework.

In 2024, the Group acquired Orchard Therapeutics, obtaining a hematopoietic stem cell gene therapy platform, but if the formulation of post-integration strategy and the establishment of organizational governance do not proceed as planned, the Group may not be able to fully realize the expected Group synergies. In addition, if the response to changes in the business environment and regulatory changes in various countries in the gene and cell therapy field is insufficient, sales promotion of already-launched products and the creation of innovative pipeline products could stagnate, potentially affecting achievement of "Vision 2030 and Beyond." As countermeasures, the Group is promoting the regional expansion of OTL-200 (Libmeldy／Lenmeldy (OTL-200)), advancing the development of OTL-203/OTL-201, establishing joint governance meetings between the two companies, and developing specialized talent.

Policy changes by the U.S. administration (tariffs, drug pricing regulations, etc.) pose a risk of direct impact on the Group, and the legislation of the Most Favored Nation (MFN) Drug Pricing policy could make price reductions in the U.S. and spillover effects on drug pricing in other countries unavoidable. The introduction of high tariffs on pharmaceuticals could cause significant damage to manufacturing strategy for the U.S. market, and passing on costs through pricing carries political risk. As countermeasures, the Group has established a U.S. Tariff Task Force to strengthen cross-functional coordination among production, SCM, finance, legal, and external affairs, while also restructuring its supply framework, including relocating manufacturing sites, and enhancing its political influence through membership in PhRMA.