08 05-12 chugai presentation-q1-1

FY2012 2Q Consolidated Financial Overview

CHUGAI PHARMACEUTICAL CO LTDCHUGAI PHARMACEUTICAL CO., LTD.Executive Vice President CFO Yoshio Itaya

July 26/27, 2012


Forward Looking StatementsForward-Looking Statements

This presentation may include forward-looking statements pertaining to the business and prospects of Chugai Pharmaceutical Co., Ltd. (the “Company”). These statements

fl t th C ’ t l i f i ti i f tireflect the Company’s current analysis of existing information and trends. Actual results may differ from expectations based

i k d t i ti th t ff t th C ’on risks and uncertainties that may affect the Company’s businesses.

2


SummarySummary

Revenues 185 3 billion JPY (+1 9%) Revenues 185.3 billion JPY (+1.9%)• Tamiflu: approx. 1.8 times higher, reflecting a large flu season• Domestic sales excl. Tamiflu: flat YoY growth as new product sales

ff t b d li f E i /HCV d t l d th i t f NHIoffset by decline of Epogin/HCV product sales and the impact of NHI price revision

• Overseas sales: double-digit growth led by Actemra export • Other operating revenues: approx. 30% decline due to a YoY decrease

in one-time income

O ti I 34 3 billi JPY ( 2 6%) Operating Income 34.3 billion JPY (-2.6%): • Drop in gross profit associated with an unfavorable product mix

outweighed cost containment

Net Income 20.9 billion JPY (+22.2%)• Extraordinary loss of 6.5 billion JPY recorded last year due to the

earthquake

3

q


Financial Overview Jan JunYear on Year

Financial Overview Jan - Jun(Billion JPY)

Sales excl. TamifluDomestic -0.5Overseas +2.2

Sales of Tamiflu* +3 5

2011 2012Jan-Jun As % of

RevenuesJan-Jun As % of

Revenues %

181 9 185 3 +3 4 +1 9

Growth

Revenues

(Billion JPY)

Sales of Tamiflu +3.5

Other Operating Revenues -1.9Decline in one-time income

181.9 185.3 +3.4 +1.9

Sales 174.8 180.0 +5.2 +3.0

excl. Tamiflu 170.2 171.9 +1.7 +1.0

Tamiflu 4.6 8.1 +3.5 +76.1

Revenues

Operating Income -0.9

Non-operating Inc./Exp. -1.0

Other Operating Revenues 7.2 5.3 -1.9 -26.4

35.2 19.4 34.3 18.5 -0.9 -2.6

Non-operating Income 1.3 1.0 -0.3 -23.1

Operating Income

Extraordinary Gain/Loss +7.6Decline in Extraordinary Loss

Loss on disaster -6.5

Non-operating Expenses 0.4 1.0 +0.6 +150.0

36.2 19.9 34.3 18.5 -1.9 -5.2

Extraordinary Gain - 0.0 +0.0 -

Ordinary Income

Average exchange rate (JPY)2011 Jan Jun 2012 Jan Jun

* Tamiflu2011 Jan Jun 2012 Jan Jun Growth

Asset retirement obligations -1.0Extraordinary Loss 7.6 0.0 -7.6 -100.0

17.1 9.4 20.9 11.3 +3.8 +22.2Net Income

4

2011 Jan-Jun 2012 Jan-JunCHF 90.38 85.82 EUR 114.86 103.39

2011 Jan-Jun 2012 Jan-Jun GrowthOrdinary 4.1 7.8 +3.7Govt. Stockpile etc. 0.5 0.4 -0.1


Sales (excl Tamiflu) Jan JunYear on Year

Sales (excl. Tamiflu) Jan - JunSales (excl. Tamiflu) 1 1 9 ( 1 1 0%)

(Billion JPY)

170.2

171.9 (+1.7, +1.0%)(Billion JPY)

MiE i

9 816.8 15.0

19.3 21.5 -8.9

-1.4 Others

-1.8, -10.7%

Overseas+2.2, +11.4% +7.5

+4.3

Mircera(7.5)

Actemra(overseas)

Epogin(7.7)

Neutrogin(overseas)

24.3 22.9 11.5 9.8

-1.0

DomesticD tiRenal diseases

Transplant, Immunologyand Infectious diseases

-1.7, -14.8% +3.2

( )(13.4)

Avastin(29.6)

( )(6.7)

Alfarol(4.4)

30.4 30.3 -1.0

-1.0

DomesticSales150.4

-0.5, -0.3%

DomesticSales

150.9 Bone and Joint-0.1, -0.3%

-1.4, -5.8%+1.9

+1.3

Edirol(2.5)

Rituxan(11 7)

Pegasys(3.4)

Sigmart(4 7)

67.9 72.4 Oncology+4.5, +6.6%

Left : Sales by Disease Field

(11.7)(4.7)

5

Jan-Jun2011

Jan-Jun2012

Right : Sales by Product, Variance Year on Year( ): FY2012 Actual


Tamiflu Sales PerformanceTamiflu Sales PerformanceFY2007.12 FY2008.12 FY2009.12 FY2010.12 FY2011.12 SeasonalFY2012.12 Cases per

Fiscal Term Sales

FY2005.12 FY2006.12(Billion JPY)

Jan-Jun Jul-Dec Jan-Jun Jul-Dec Jan-Jun Jul-Dec Jan-Jun Jul-Dec Jan-Jun Jul-Dec Jan-Jun Jul-Dec Jan-Jun Jul-Dec Jan-Jun Jul-Dec

2004-05 23.2 24.6 1.47

2005-06 11.9 9.9 21.8 0.92

2006-07 3.7 5.0 8.7 1.01

2007 08 5 2 1 4 6 6 0 66

Salessentinel *(m i l l ions)

2007-08 5.2 1.4 6.6 0.66

2008-09 5.7 11.0 16.7 1.27

2009-10 25.2 1.4 26.6 2.02

2010-11 0.2 4.1 4.3 1.26

2011-12 1.3 7.8 9.1 1.63

Ordinary

2012-13 1.5 - -

Ordinary 35.1 (+26.5) 13.6 (-21.5) 10.2 (-3.4) 7.1 (-3.1) 36.2 (+29.1) 1.6 (-34.6) 5.4 (+3.8) 9.3 (+3.9)

2005-06 0.2 6.5 6.7

2006-07 17.9 18.9 36.8

2007-08 9.6 0.2 9.8

2008-09 1.1 14.4 15.5

2009-10 25.6 10.6 36.2

2010-11 5.9 0.5 6.4

Govt. Stockpile

etc.

2011-12 2.8 0.4 3.2

2012-13 0.0

Govt. Stockp i le e tc. 0.2 (+0.2) 24.4 (+24.2) 28.5 (+4.1) 1.3 (-27.2) (+38.7) 16.6 (-23.4) 3.3 (-13.3) 0.4 (-2.9)

23.2 12.0 16.3 21.6 23.8 14.8 1.6 6.8 25.4 50.8 12.0 6.1 4.6 4.1 8.1 1.535 2 ( ) 38 0 ( ) 38 7 ( ) 8 4 ( ) 76 2 ( ) 18 2 ( ) 8 7 ( ) 9 7 ( )

40.0

Total

6*Total patients number of the controlled samples in the infectious Diseases Weekly Report, period between late October and mid-April (between early July 2009 and mid-March 2010 for 2009/2010), published by Japan’s National Institute of Infectious Diseases.

Company forecast() Year on year

35.2 (+26.6) 38.0 (+2.8) 38.7 (+0.7) 8.4 (-30.3) 76.2 (+67.8) 18.2 (-58.0) 8.7 (-9.5) 9.7 (+1.0)


Operating Income Jan JunYear on Year

Operating Income Jan - Jun(Billion JPY) 2011 2012 G h(Billi JPY)(Billion JPY) 2011 2012

Jan-Jun Jan-Jun (%)

Revenues 181.9 185.3 +3.4 +1.9

Cost of Sales 74.5 81.7 +7.2 +9.7

Growth(Billion JPY)

Decrease in SG&A (excl. R&D) exp.

Other operating

Gross profit from Sales

Decrease in R&D exp1 9

Gross Profit 107.4 103.5 -3.9 -3.6

Sales 100.2 98.3 -1.9 -1.9 Other Operating Revenues 7.2 5.3 -1.9 -26.4p g

revenuesR&D exp.

+2.3-1.9 +0.7

-1.9 SG&A (excl. R&D) exp. 45.3 43.0 -2.3 -5.1

R&D exp. 26.9 26.2 -0.7 -2.6

Operating Income 35.2 34.3 -0.9 -2.6

35.2 34.3 Decrease in Gross Profit from Sales -1.9

Decrease in Other Operating Revenues -1.9

Jan-Jun Jan-Jun

-0.9 (-2.6%)

p gDecrease in one-time income

Decrease in SG&A (excl. R&D) exp. +2.3Cost containment

7

Jan-Jun2011

Jan-Jun2012 Decrease in R&D exp. +0.7

Completion of late stage projects


Financial Overview Apr JunYear on Year

Financial Overview Apr - Jun(Billion JPY)

2011 2012 G th(Billi JPY) Sales excl. Tamiflu -1.1

Mircera +4.5Avastin +2.2

Apr-Jun As % ofRevenues

Apr-Jun As % ofRevenues %

96.2 95.0 -1.2 -1.2

Sales 94.4 93.2 -1.2 -1.3

Growth(Billion JPY)

Revenues

Edirol +1.3Rituxan +0.8Epogin -5.3N t i ( ) 1 3

excl. Tamiflu 94.0 92.9 -1.1 -1.2

Tamiflu 0.4 0.3 -0.1 -25.0

Other Operating Revenues 1.8 1.8 +0.0 +0.0

Cost of Sales 39.4 42.1 +2.7 +6.9 Neutrogin (overseas) -1.3Actemra (overseas) -1.1

Sales of Tamiflu* -0.1

Cost of Sales 39.4 42.1 2.7 6.9

56.8 59.0 52.9 55.7 -3.9 -6.9

SG&A (excl. R&D) exp. 23.2 22.0 -1.2 -5.2

R&D exp. 13.9 13.2 -0.7 -5.0

Gross Profit

Other Operating Revenues

+0.019.6 20.4 17.7 18.6 -1.9 -9.7

Non-operating Income 1.2 1.5 +0.3 +25.0

Non-operating Expenses 1.4 1.2 -0.2 -14.3

19 5 20 3 18 0 18 9 1 5 7 7

Operating Income

Ordinary IncomeOperating Income -1.9 19.5 20.3 18.0 18.9 -1.5 -7.7

Extraordinary Gain - 0.0 +0.0 -

Extraordinary Loss 0.5 0.0 -0.5 -100.0

12.1 12.6 11.5 12.1 -0.6 -5.0

Ordinary Income

Net Income

8

* Tamiflu 2011 2012 GrowthApr-Jun Apr-JunOrdinary 0.4 0.3 -0.1Govt. Stockpile etc. - - -


Financial Overview Jan Junvs. Forecast

Financial Overview Jan - JunActual

A hi

Forecast on Feb. 1

20122012(Billion JPY)

Actual Forecast on Feb. 1

Achiev.(%)

Sales excl. Tamiflu 171.9 181.2 94.9Oncology 72.4 74.4 97.3

Avastin 29 6 30 7 96 4

2012Jan-Jun

2012Jan-Jun

(Billion JPY)

2012 2012Achiev.

(%)

185 3 195 5 94 8

(Billion JPY)Jan-Jun Jan-Jun

Revenues

Avastin 29.6 30.7 96.4Herceptin 13.5 12.7 106.3Rituxan 11.7 11.3 103.5Xeloda 5.2 7.3 71.2Tarceva 4.5 3.6 125.0185.3 195.5 94.8

Sales 180.0 189.5 95.0

excl. Tamiflu 171.9 181.2 94.9

Revenues Tarceva 4.5 3.6 125.0Bone and Joint 30.3 31.4 96.5

Actemra 7.9 7.8 101.3Evista 7.6 8.0 95.0Svenyl 5.9 6.8 86.8

Tamiflu 8.1 8.3 97.6

Other Operating Revenues 5.3 6.0 88.3

34.3 36.5 94.0Operating Income

y 5 9 6 8 86 8Edirol 2.5 2.7 92.6

Renal 22.9 28.3 80.9Epogin 7.7 8.7 88.5Mircera 7.5 12.1 62.0

34.3 37.0 92.720.9 22.0 95.0

Ordinary IncomeNet Income

Transp., Immun., Infectious 9.8 11.9 82.4Pegasys 3.4 5.6 60.7Copegus 1.0 1.2 83.3

Others 15.0 14.8 101.4

9

Overseas 21.5 20.4 105.4Actemra 13.4 12.3 108.9Neutrogin 6.7 6.5 103.1


Impact from Foreign Exchangevs. Forecast

Impact from Foreign Exchange

FX impacts Jan-Jun FX rate to the JPY 1CHF 1EUR(Billion JPY)FX impacts Jan Jun

(vs. Forecast on Feb. 1)

-0.3

FX rate to the JPY 1CHF 1EUR

Assumption as of Feb 1(Jan – Dec) 85.00 109.00

Actual Jan – Jun avg. 85.82 103.39Revenues Neutrogin (Overseas) -0.3

Actemra (Export) +0.2Other Operating Revenues -0.2 [Reference]

Historical exchange rates to the JPY (Jan-Jun)

Cost of salesSG&A expenses

Cost of Roche products -0.1Overseas SG&A exp., etc. +0.1

115

120

125 JPY EUR 2012 CHF 2012 EUR 2011 CHF 2011

Operating Income -0.3

Non-operating I /E

Gain/loss on foreign exchanges and exchange forward contracts 100

105

110

115

Inc./Exp.g

-0.6

Ordinary Income -0.980

85

90

95

10

Jan Feb Mar Apr May Jun


Balance Sheet Items (Assets)Actual 2012

Balance Sheet Items (Assets)(Billion JPY)

Cash and depositsMarketable securities

Accounts receivable

Inventories

Cash and deposits +22.8 Marketable securities +10.0-11.4

securities Accounts receivable -11.4

Seasonal change-1.0 Others+32.8 Property,

l t d

-5.6

-6.0

Inventories -5.6plant and equipment

533.5542.2

Property, plant and equipment-1.0

Assets

Others -6.0Decrease in account receivables - other and deferred tax assets

+8.7 (+1.6%)

11

Dec2011

Jun2012


Balance Sheet Items (Liabilities)Actual 2012

Balance Sheet Items (Liabilities)Income (Billion JPY) Accounts payable +9 4

Accounts payable

taxes payable

Accounts payable +9.4

Income taxes payable -4.0P f i

Reserves for bonuses to employees and Other -4.0

Payment of income taxes

Reserves for bonuses to employees

reserves+9.4 -1.0-6.2

OthersLiabilities

-0.3 Other reserves -0.8

-1.6 (-2.2%)74.4 72.8

Others -6.2Decrease in accrued payables and accrued expensesp

Equity Ratio

Dec. 2011 Jun. 2012 Variance

12

Dec2011

Jun2012

85.6% 86.2% +0.6%pts


Cash Flow Statement Jan JunActual 2012

Cash Flow Statement Jan - Jun

In esting Cash flow from operating activities +50 3(Billion JPY)

Operating activities

Investing activities

Financing activities

Exchange rate-15.9

Cash flow from operating activities +50.3Income before taxes and minority interests +34.4Depreciation and amortization +7.1Decrease in working capital +26 4

+50.3

Exchange rate changes-11.3

-0.1Cash and h

Decrease in working capital +26.4Decrease in trade notes and accounts receivable +11.5Decrease in inventories +5.5Increase in trade notes and accounts payable +9.4

cash equivalents

Payments for loss on disaster -1.1Income taxes paid -13.9

C h fl f i ti ti iti 15 9

94.5

117.5 Cash flow from investing activities -15.9

Increase in marketable and investment securities-8.7

Purchases of noncurrent assets -7 2+23.0 Purchases of noncurrent assets 7.2

Cash flow from financing activities -11.3Cash dividends paid -10.9

13

Dec2011

Jun2012

Cash dividends paid 10.9 Cash dividends paid to minority interests

-0.4

Overview of Development PipelineOverview of Development Pipeline

CHUGAI PHARMACEUTICAL CO., LTD.Senior Vice PresidentHead of Project Lifecycle Management Unit Yutaka Tanaka

July 26/27, 2012

Overview of Development Pipeline

Projects under Development ( f 26 J l 2012)

Phase I Phase II Phase III Filed

Projects under Development (as of 26 Jul. 2012)

Oncology CIF/RG7167 ‐ solid tumorsCKI27/RG7304 ‐ solid tumorsPA799 ‐ solid tumors

AF802 ‐ NSCLC (PI/II) GC33/RG7686 ‐ liver cancerRG340/Xeloda ‐ aGC★

RG435/Avastin

RG435/Avastin‐ GC‐ aBC‐ glioblastoma

RG1273/pertuzumab‐ BC ★RG1415/Tarceva‐ NSCLC (1st line)★

WT4869‐myelodysplastic syndromes (PI/II)‐ solid tumorsRG3638/onartuzumab

/‐ glioblastoma (relapsed)

gRG1273/pertuzumab‐ aBCRG3502/trastuzumab emtansine‐ BC

( )

RG3638/onartuzumab‐ NSCLC

‐ BCGA101 (RG7159)/obinutuzumab ‐ NHL

Bone & Joint RG484/Bonviva(oral)‐ osteoporosis

NRD101/Suvenyl‐ enthesopathy

RG484/Bonviva (inj) ‐ osteoporosis★osteoporosis enthesopathy osteoporosis★

Autoimmune SA237 ‐ RARG7415/rontalizumab‐ SLE★

MRA/Actemra (overseas)‐ RA (sc)

MRA/Actemra (Japan)‐ RA (sc)

CNS RG1450 /gantenerumab‐ alzheimer's disease

RG7090 (mGluR5)‐major depressive disorder

RG1678/bitopertin(GlyT1)‐ schizophrenia

Others CIM331‐ atopic dermatitis★

CSG452/tofogliflozin‐ diabetes

RG3637/lebrikizumab‐ asthma

15Letters in orange in-house projects

★: Projects with advances in stages since 24 Apr., 2012


Development Status OncologyDevelopment Status - Oncology

RG1273/pertuzumab : HER2 positive breast cancer

In-licensed

Filed in May 2012

Tarceva :In- Tarceva : Non-small cell lung cancer (1st line) Filed in Jun 2012

licensed

Avastin : In-licensed

Filed in Jun. 2012

Adjuvant breast cancer Did not meet primary endpoint in global P3 study

16


Development Status OncologyDevelopment Status - Oncology

Xeloda : Adjuvant gastric cancer

In-licensed

j gStarted P2 in Jul. 2012Co-development with Yakult Honsha

AF802 (Overseas) :Non-small cell lung cancer

In-house

Actemra : Pancreatic cancerI

Non small cell lung cancerStarted P1/2 in May 2012

Actemra : Pancreatic cancerDevelopment suspendedDifficulty in clinical evaluation of efficacy and safety

In-house

17

Difficulty in clinical evaluation of efficacy and safety


Development Status- Bone & Joint, Autoimmune, Others

RG484 (injection) : Osteoporosis

In-licensed

pFiled in Jul. 2012Co-development with Taisho Pharma

RG7415/rontalizumab : Systemic lupus erythematosus

In-licensed

Systemic lupus erythematosus Started P1 in Jul. 2012

CIM331 : Atopic dermatitis

In-house

18

pStarted P1 in Sep. 2011


Projected Submissions (P t P C d t d NME )Projected Submissions (Post PoC products and NMEs )

Seamless filings every yearg y y

in-licensedin-house

NME line extension

TARCEVANSCLC (1st line)

AVASTINBC Adj

AVASTINGlioblastoma

ACTEMRARA (sc)

SUVENYL(NRD101)

BONVIVA*

NSCLC (1 line) BC Adj.

pertuzumab(RG1273)

BC

tofogliflozin(CSG452)

Type 2 DiabetesT‐DM1 GLYT1/bitopertin

Enthesopathy

GA101/obinutuzumab

pertuzumab(RG1273)BC Adj.

XELODAGC Adj.

2014

BONVIVA*Osteoporosis

2012(Filed)

2013

T DM1(RG3502)

BC

GLYT1/bitopertin(RG1678)

Schizophrenia

2015‐

GA101/obinutuzumab(RG7159)

NHL

*Overseas brand name (Filed)

19


Rontalizumab SLE and the PathophysiologyRontalizumab - SLE and the Pathophysiology No. of patients: 53,000 Autoimmune diseases with male: female ratio of 1:9 Autoimmune diseases with male: female ratio of 1:9 Symptoms: Systemic symptoms, focal symptoms such as skin and joint symptoms, organ

disorders Standard treatment: Steroid, Immunosuppresants

Acquire self-responsiveness by

Symptoms of SLE

Systemic Symptomsf f

q p yenvironmental and genetic factors(Breakdown of self immune tolerance)Systemic

symptoms

General malaiseFatigabilityFever

Conversion

Hair loss from front to top of head

Butterfly rash

Oral and nasal ulcer

Auto-antibody productionDepression

Pericardial effusion

Renal disorder

SLE

Induce chronic inflammation with deposition of immune complex of auto-antibody to various organs

Focal symptoms

Reynaud's phenomena

Skin rash

Joint pain

Sited from http://www.collagen-disease.com/

y gsymptoms

Skin rash

EdemaPurpura

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Rontalizumab SLE and IFN α Mode of ActionRontalizumab - SLE and IFN-α： Mode of Action IFN- drives processes important in pathogenesis of SLE

Ann Rheum Dis 2010;69:1603–1611. (modified); ( )

Maturation and activation of antigen presentation cells

IFN-a

Promotion of T cell differentiation

Promotion of Rontalizumab:

Humanized IgG1 mAbB cell maturation

cell

Promotion of auto-antibody production by plasma cell

Humanized IgG1 mAb Binds to all 12 human IFN-subtypes

Therapeutic Hypothesis: Bl ki IFN d l t th t t ib t t h i Blocking IFN- may down-regulate processes that contribute to chronic

inflammation, reduce signs/symptoms of SLE

21


Update on the Requests Made by Unapproved

Review Committee of development request for Unapproved Drugs/indication 7 t f 8 d t (9 t f 10 i di ti i l di dditi l d ) ffi i ll

Drug Committee

7 out of 8 products (9 out of 10 indications including additional dosages) officially requested by MHLW at the 1st round have been approved.

Products remaining from the1st round {(Avastin (OC) and Bactramin)} and products from the 2nd round {Avastin (GBM) and Herceptin (dosage)} are shown belowfrom the 2 round {Avastin (GBM) and Herceptin (dosage)} are shown below.

Product Indication Current Situation

Avastin Ovarian cancer Planning

1st round requests

Avastin Ovarian cancer Planning

PulmozymeImprovement of pulmonary function in patients with cystic fibrosis

Launched in June 2012

i & f iBactramin

Prevention & treatment of pneumocystispneumonia

Filed on 13 Feb. 2012

Avastin Recurrent glioblastoma Study on‐going2nd round requests Herceptin

Weekly dosage with chemo‐therapy for HER2 + adjuvant breast cancer

NDA based on evidence in the public domain: Under assessment

22Letters in red: Projects with change in status since Feb. 1, 2012

Contacts: Corporate Communications Dept. Corporate Communications GroupTel: +81 (0)3-3273-0881 Fax: +81 (0)3-3281-6607Tel: 81 (0)3 3273 0881 Fax: 81 (0)3 3281 6607e-mail: [email protected] Aikawa, Koichi Kawahara, Kae Miyata, Hiroshi Araki

Investor Relations GroupT l +81 (0)3 3273 0554 F +81 (0)3 3281 6607Tel: +81 (0)3-3273-0554 Fax: +81 (0)3-3281-6607e-mail: [email protected] Uchida, Yusuke Tokita, Chisato Kitamura, Yuka Minoshima, , ,

08 05-12 chugai presentation-q1-1

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