On May 6, 2021 Kyowa Hakko Kirin reported that Consolidated Financial Summary (IFRS) Fiscal 2020 (Press release, Kyowa Hakko Kirin, MAY 6, 2021, View Source [SID1234579492])
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1. Consolidated Financial Results for the Fiscal Year Ended December 31, 2020 (from January 1, 2020 to December 31, 2020)
2. Dividends
3. Consolidated Earnings Forecasts for the Fiscal Year Ending December 31, 2021 (from January 1, 2021 to December 31, 2021) These financial results reports are exempt from audit conducted by certified public accountants or an audit corporation.
* Notice regarding the appropriate use of the earnings forecasts and other special comments The forward-looking statements, including earnings forecasts, contained in these materials are based on the information currently available to the Company and on certain assumptions deemed to be reasonable by management. As such, they do not constitute guarantees by the Company of future performance. Actual results may differ materially from these projections for a wide variety of reasons.
For more information regarding our suppositions that form the assumptions for the earnings forecasts, please see pages 17 and 18 of the attachment, "
(5) Outlook for Fiscal 2021" in "
1. Summary of Business Performance and Financial Position."1. Summary of Business Performance and Financial Position Responding to the massive changes to the business and social environments occurring as a result of the global spread of the novel coronavirus disease (COVID-19), the Kyowa Kirin Group (the "Group") has been striving to provide stable supply of pharmaceuticals, which is a core mission of a pharmaceutical company, as an utmost priority, and while paying meticulous attention to preventing infection, carrying out activities such as information provision. Furthermore, as this fiscal year is the final year of our FY2016-2020 Mid-term Business Plan, we set our sights on achieving a further leap forward as a global specialty pharmaceutical company through various initiatives including efforts to maximize the value of three global strategic products, strengthen global governance, and research and development for future growth. In addition to changes to healthcare environments and restraints on business activities across the globe due to the COVID-19 pandemic, the Group faced other extremely difficult environments, such as the lowering of drug price standards in Japan.
Nevertheless, the Group increased its revenues mainly due to the penetration of three global strategic products in US/EU market. In Japan, the Group launched Duvroq, an oral treatment for renal anemia, in August 2020. By utilizing our abundant experience in the field of renal anemia, we carried out activities to provide information on proper use of medication, giving utmost attention to safety.
The Group is seeing steady progress for the three global strategic products. Regarding Crysvita, we obtained approvals for its additional indication for tumor induced osteomalacia in the United States and for extending its indication to include X-linked hypophosphatemia in older adolescents and adult patients in Europe and there was an increase in formulations for self-administration at home in Japan. Regarding the treatment for mycosis fungoides and Sézary syndrome, POTELIGEO, we commenced sales in Europe, beginning with Germany in June 2020.
Furthermore, regarding NOURIANZ (generic name: Istradefylline (product name in Japan: NOURIAST)), which has already been launched in the United States, our application for approval regarding its indication for combination therapy for Parkinson’s disease was accepted in Europe. Concerning the voluntary recall of mitomycin that occurred in 2019, the Group received the report on the investigation from the Group Investigation Committee spearheaded by a third-party in January 2020, and formulated the recurrence prevention measures. As matters of the highest priority for management, the Group has formulated three key management priorities to strengthen our foundation as a global specialty pharmaceutical company: creation of a strong production and quality assurance system, improvement of risk management and reformation of corporate culture. The Group will work on those management priorities continuously and sincerely over the five-year mid-term business plan commencing 2021.
(1) Summary of Business Performance in Fiscal 2020
1) Overview of results The Group now applies the International Financial Reporting Standards ("IFRS") in line with its policy of expanding business globally, and adopts "core operating profit" as a level of profit that shows the recurring profitability from operating activities. Core operating profit is calculated by deducting "selling, general and administrative expenses" and "research and development expenses" from "gross profit," and adding "share of profit (loss) of investments accounted for using equity method" to the amount.
For the fiscal year ended December 31, 2020, revenue was ¥318.4 billion (up 4.1% compared to the previous fiscal year) and core operating profit was ¥60.0 billion (up 1.0%). Profit attributable to owners of parent was ¥47.0 billion (down 29.9%).
The increase in revenue was the result of steady growth of global strategic products in North America and EMEA and strong sales in Asia, mainly in China, despite the impact of lower revenue in Japan from the reduction in drug price standards and the switching to Darbepoetin Alfa Injection Syringe [KKF], an authorized generic of NESP, a renal anemia treatment drug, among others. The negative effect on revenue from foreign exchange was ¥2.9 billion.
The increase in core operating profit was the result of an increase in gross profit due to an increase in overseas revenue, despite an increase in selling, general and administrative expenses, and a decrease in share of profit (loss) of investments accounted for using equity method. The negative effect on core operating profit from foreign exchange was ¥1.3 billion.
Profit attributable to owners of parent decreased as a result of the absence of the profit from discontinued operations recorded in the previous fiscal year, despite lower business restructuring expenses and impairment losses in addition to an increase in core operating profit.
Revenue in Japan decreased year on year because of the significant impact of switching to Darbepoetin Alfa Injection Syringe [KKF], an authorized generic of NESP, a renal anemia treatment drug whose patent has expired, in addition to the impact of the reductions in drug price standards implemented in October 2019 and April 2020, despite the growth in sales of new product groups.
Darbepoetin Alfa Injection Syringe [KKF] achieved rapid progress in switching from NESP, a renal anemia treatment drug.
Duvroq, an oral treatment for renal anemia, was launched in August 2020, and it is penetrating the market favorably. Revenue from Patanol, anti-allergy eye drops, and ALLELOCK, an anti-allergy agent, decreased as a result of smaller pollen counts and the impact of the suppression of examinations, etc. due to COVID-19.
Revenue from ORKEDIA, a treatment for secondary hyperparathyroidism, increased. Meanwhile, revenue from REGPARA, a treatment for secondary hyperparathyroidism, decreased due to factors such as switching to ORKEDIA and the impact of rival products.
Revenue from ROMIPLATE, a treatment for chronic idiopathic thrombocytopenic purpura, increased as a result of receiving approval of its indication for treatment of patients with aplastic anemia who have had an inadequate response to conventional therapy, in June 2019.
Firm growth in revenue was realized for G-Lasta, an agent for decreasing the incidence of febrile neutropenia, and Rituximab BS [KHK], an anticancer agent.
In December 2019, Crysvita, a treatment for FGF23-related diseases, and HARUROPI, a Parkinson’s disease treatment patch, were launched and they have been penetrating the market favorably.
Revenue in North America increased year year due to the steady growth of global strategic products.
Revenue from Crysvita, a treatment for X-linked hypophosphatemia, has been growing steadily since its launch in 2018. Approval for additional indication for treatment of tumor induced osteomalacia was acquired in June 2020.
Revenue from POTELIGEO, an anticancer agent, stayed at the same level as in the previous fiscal year, due to the impact of the COVID-19 pandemic.
NOURIANZ (product name in Japan: NOURIAST), an antiparkinsonian agent which was launched in October 2019, has been penetrating the market favorably.
Revenue in EMEA increased year on year due to the steady growth of global strategic products.
Revenue from Crysvita, a treatment for X-linked hypophosphatemia, has been growing steadily as the number of countries where it has been released has been increasing since its launch in 2018. Approval for sale with the extended indication for older adolescents and adults was acquired in September 2020.
In Germany, sales of POTELIGEO an anticancer agent, was launched in June 2020, and it has been penetrating the market favorably as the number of countries where it has been released has been increasing.
Revenue in Asia/Oceania increased year on year, reflecting strong sales particularly in China.
Revenue from REGPARA, a treatment for secondary hyperparathyroidism, increased year on year due to market expansion in China.
Revenue from Others decreased year on year.
Revenue decreased year on year due to a decline in other income such as original equipment manufacturing despite an increase in technology out-licensing such as royalties revenue from AstraZeneca in relation to benralizumab.
Core operating profit increased year on year due to an increase in overseas revenue mainly from global strategic products, despite a lower gross profit due to a decrease in revenue in Japan, and an increase in selling, general and administrative expenses associated with sales of global strategic products.