ONO PHARMACEUTICAL CO., LTD.

Long-term and substantial R&D investments may fail to bear fruit, forcing discontinuation of development and preventing the launch of innovative new drugs. In such cases, expected future revenue may not be realized, potentially having a significant impact on operating results and financial condition. As a countermeasure, the Company actively promotes open innovation in addition to in-house drug discovery, expanding its development pipeline to secure multiple product launch candidates.

Opdivo IV Infusion (nivolumab) and Royalty Income (BMS, Merck, etc.) related to anti-PD-1/PD-L1 antibodies account for approximately the mid-50% range of total revenue (FY2026, ending March 2026). If revenue declines due to drug price revisions, the emergence of competing products, patent expirations, or other factors, this could significantly affect operating results and financial condition. In response, the Company acquired Deciphera Pharmaceuticals, Inc. of the United States in June 2024, gaining a sales network in Europe and the United States (over 40 countries worldwide), and is working to diversify its product portfolio through the global rollout of new assets such as Velexbru Tablets and ONO-4578.

While the Company is building its own development and sales structure in Europe and the United States with the aim of becoming a global specialty pharma, if risks such as legal regulations, economic conditions, political instability, and region-specific natural disasters in each country cannot be fully avoided, this could impact operating results and financial condition. Although the Company is strengthening its commercial capabilities through Deciphera Pharmaceuticals, Inc., acquired in June 2024, development risks and uncertainties in the business environment remain.

There is a risk of decreased revenue due to domestic official drug price reductions, promotion of generic drug use in Japan, overseas healthcare cost containment measures including the executive order on Most Favored Nation drug pricing in the United States, and intensifying competition from competing products and generics. In response, the Company is promoting active R&D activities, cross-departmental collaboration to maximize product value, and strategies to respond to market changes from the early stages of development.

In addition to various laws and regulations such as the Pharmaceuticals and Medical Devices Act, anti-bribery laws, antitrust laws, and codes of practice, the Company is also required to respond to strengthening policies and regulations related to climate change in each country. If a serious legal violation or improper conduct occurs, it could lead to loss of credibility and deterioration of operating results. As countermeasures, the Company has established the ONO Group Code of Conduct and the Global Compliance Policy, set up a Group Compliance Committee, and conducts regular identification and monitoring of compliance risks.

Regarding intangible assets such as sales rights, in-process R&D expenses, and goodwill, if there is a divergence from business plans or difficulty in obtaining future cash flows, a significant impairment loss may occur, potentially having a material impact on operating results and financial condition. In particular, given the recognition of goodwill and other assets associated with the acquisition of Deciphera Pharmaceuticals, Inc., the significance of this risk is high. The Company has established a system for monitoring performance through budget-to-actual management and for timely impairment measurement when signs of business deterioration arise.

With the progress of globalization and the expansion of data utilization, risks of system failures caused by cyberattacks or unauthorized access, and leakage of confidential information or personal data, are increasing. If such incidents occur, they could significantly damage social credibility and adversely affect operating results. As countermeasures, the Company has established security-related policies and guidelines, built an incident response system, provides training to all employees domestically and overseas, and continuously strengthens measures based on third-party security assessments.

If serious adverse reactions not observed during clinical trials, or a significant increase in the frequency of adverse reactions, are identified after product launch, this could result in dispositions such as approval revocation, leading to a significant decline in revenue. As countermeasures, the Company formulates a risk management plan for each pharmaceutical product, continuously collects and evaluates safety information, and implements safety measures such as revising package inserts and providing information for appropriate use as necessary.

As international business operations involve foreign currency-denominated royalty receipts and expense payments, there is a risk that fluctuations in foreign exchange rates could lead to decreased revenue, increased cost of sales, or foreign exchange losses. In addition, significant fluctuations in the fair value of equity financial instruments held for business strategy purposes could also affect operating results. The Company addresses this through forward foreign exchange contract hedging based on its market risk management policy and by regularly monitoring the fair value and financial condition of equity financial instruments held.

If the functions of specific plants or outside contractors, or the supply of raw materials, are halted due to natural disasters such as earthquakes or typhoons, large-scale infectious disease outbreaks, fires, system failures, or deviations from the Pharmaceuticals and Medical Devices Act, this could result in stagnation or delay of production activities, affecting operating results and financial condition. As countermeasures, the Company maintains a two-site production structure with the Fujiyama Plant and the Yamaguchi Plant, secures multiple domestic logistics bases, thoroughly implements change management and deviation management based on strict quality standards, and conducts regular quality audits of its own plants and outside contractors.