KAKEN PHARMACEUTICAL CO., LTD.

The domestic pharmaceutical business is subject to various regulations under pharmaceutical administration, and healthcare cost containment measures such as drug price revisions and promotion of generic drug use are progressing. Depending on trends in relevant legal amendments and administrative policies related to the medical system and health insurance, there is a possibility of significant impact on business results and financial condition through drug price reductions or decreases in sales volume. No specific countermeasures are described in the securities report.

Pharmaceutical research and development requires substantial funds and a long development period of over a decade, but the probability of it resulting in a new product or new technology is low. If unproven efficacy or safety issues become apparent, development may be discontinued, and there is a possibility that the invested research and development expenses cannot be recovered, significantly impacting business results and financial condition. The company adopts a policy of proceeding carefully with development while confirming efficacy and safety.

If unforeseen adverse reactions occur after a product is marketed, product recall or discontinuation of sales may become unavoidable. Since clinical trials target a limited number of patients, post-marketing surveillance is used to supplement this, but it is difficult to identify all adverse reactions in advance. If a product recall or sales discontinuation occurs, it may significantly impact business results and financial condition.

The pharmaceutical industry is highly competitive, and there is a risk that sales competition with competing products having similar efficacy from other companies, as well as competition with generic drugs launched after patent expiration, will decrease the sales of the company's own products. Such intensifying competition may significantly impact the business results and financial condition of the Group. No specific countermeasures are described in the securities report.

If a third party infringes on intellectual property rights, litigation may become necessary, and depending on its outcome, this may affect business results and financial condition. In addition, if the Group's business infringes on the intellectual property rights of a third party, there is a risk that this could lead to disputes, damages claims, or business suspension. The company pays attention to appropriate management of intellectual property rights and prevention of infringement on third-party rights.

In the course of business activities both domestically and internationally, litigation may be filed related to pharmaceutical side effects, product liability, labor, environment, fair trade, etc. Depending on the outcome of litigation, damages compensation and other costs may arise, which may significantly impact business results and financial condition. No specific preventive or countermeasures are described in the securities report.

There is a risk that product supply may be delayed or suspended due to malfunctions in production facilities or delays in obtaining raw materials at the company and its product procurement sources. In addition, if quality issues occur, product recalls and other measures may become necessary, which may significantly impact business results and financial condition through lost sales opportunities and recall costs. No specific countermeasures are described in the securities report.

The Group has established its own sales system in the U.S. market, and continuous substantial investment will be required going forward to build a global infrastructure. If risks such as regulatory and institutional changes in each country, changes in political and economic conditions, and deterioration of diplomatic relations cannot be completely avoided, investment recovery may become difficult, potentially significantly impacting business results and financial condition. The company is proceeding with system development based on its overseas expansion strategy, but states that complete avoidance of risk is difficult.

There is a high degree of dependence on various information systems, and there is a possibility that business operations could be disrupted by system failures, computer viruses, cyberattacks, etc. If confidential information, including personal information, is leaked outside the company, this may significantly impact business results and financial condition through damages compensation, administrative sanctions, and loss of social credibility. No specific countermeasures are described in the securities report.

If natural disasters such as earthquakes and typhoons, accidents such as fires, or pandemics occur and cause large-scale damage to the Group's business locations and business partners, there is a risk that business activities could stagnate. It is also anticipated that substantial costs may arise to repair damaged facilities and equipment, which may significantly impact business results and financial condition. No specific BCP countermeasures are described in the securities report.