Mid-Term Business Plan
New Mid-Term Business Plan "IBI 18"
Positioning of New Mid-term Business Plan
Transform Chugai into a globally successful company through our competitive advantages that leverage the strategic alliance with Roche and through the realization of the "top pharmaceutical company" goal (late 2010s)
Logo of "IBI 18"
Chugai has formulated the new mid-term business plan "IBI 18" (2016-2018), initiating new measures to become a globally successful company. The name "IBI 18" means "INNOVATION BEYOND IMAGINATION" Towards 2018, the last year of the plan, and is intended to convey our full-on drive for innovation.
Background of Mid-Term Business Plan "IBI 18"
In the previous mid-term business plan, ACCEL 15 (2013-2015), we achieved solid results on both a quantitative and qualitative basis, allowing us to establish the foundation to realize our goal of becoming a "top pharmaceutical company." Particularly in R&D, we generated numerous innovative research projects, making use of our world-class technologies for drug discovery, and many promising new drug candidates entered late-stage development. We now have the opportunity to make a significant leap forward, with these projects and compounds serving as the growth drivers.
Looking at the business environment, unprecedented growth and rapid aging of the global population in addition to remarkable advances in science and technology, represented by life science and ICT, are producing opportunities to cultivate new markets. At the same time, the competition to succeed in those markets is becoming increasinlgy fierce. Furthermore, amidst efforts at keeping healthcare sustainable, there has been growing movement in many countries to hold down expenditures for prescription drugs due to the severe state of public finances. In Japan, the introduction of policies to significantly reduce NHI drug prices, such as the new re-pricing rule for huge-seller drugs, is likely to adversely impact conditons for future market growth.
In these circumstances, it will be important for Chugai to focus on further innovation to succeed globally.
- Increasing importance of pharmaceuticals due to growth and aging of the global population
- Increase in opportunities to innovate due to advances in life science and ICT
- Accelerating pace of competition in innovation in order to grow
- Strong pressure to curb drug expenses with the rapidly aging population and financial difficulties
- April 2016 introduction of a special re-pricing rule for market expansion
- Possibility of drug price cuts for three consecutive years because of the consumption tax increase in April 2017
Earnings Forecasts of "IBI 18"
IBI 18 Quantitative Outlook
Core EPS CAGR (2015-18) Low single digit*
*Growth less than 4%, based on average exchange rates for 2015
In IBI 18, profit growth will shrink compared to FY2015 owing to NHI price revisions including the new re-pricing rule for huge-seller drugs. Under this outlook, we will work to enhance each function in the company and prioritize investments on numerous promising products, projects and research activities with good potential to be future growth drivers, thereby securing solid profits to ensure rapid growth in the 2020s.
Given these circumstances, during the three years of IBI 18, we project a Core EPS compound annual growth rate in the low single digits (3-4 percent or below), based on average exchange rates in 2015.
Mid-term Events and Performance Trend
Priority Agenda of "IBI 18"
Priority Agenda of IBI 18
- Acquisition and implementation of competitiveness at a top global level
- Selection and concentration strategy for acceleration of growth
Under "IBI 18," we plan to acquire and maintain competitiveness at a top global level in each function and carry out a selection and concentration strategy to accelerate growth through our competitive advantages that leverage the strategic alliance with Roche. In this way, we will strive to realize our goal of becoming a "top pharmaceutical company" and make further advances.
Continuous creation of first-in-class*1, and best-in-class*2 projects based on innovative technologies
Continuous creation of engineered antibody projects
- Accelerate research projects created at CPR through prioritized investments
- Establish innovative technologies following SMART*3
Establishment of drug discovery technologies for middle molecules
- Focus on cyclic peptide etc. as candidates for next-generation technologies
- Fulfill UMN*4 that cannot be solved with small molecules and antibodies
Strengthening of research foundation for oncology and immunology
- Acquire innovative seeds by collaborating with academia
- Strengthen biomarker discovery and utilize molecular information by cooperating with Roche
|*1||An original drug that is highly novel and useful, and will significantly change the therapeutic system|
|*2||A drug that offers clear advantages over other existing drugs in the same category, such as those with the same molecular target|
|*3||Sequential Monoclonal Antibody Recycling Technology|
|*4||Unmet Medical Needs|
Promotion of early launch and quick market penetration based on global top-class translational clinical research (TCR)*5 and development activities
Acceleration of emicizumab and atezolizumab development as a top priority
- Prioritize resources for executing the clinical development plan and promoting the medical plan
Realization of early PoC*6 with TCR
- Execute with global top-class quality and speed in Japan, US, and Europe
- Focus resources on early development to acquire PoC
Proof process for medical/economic value
- Develop and promote IDCP*7 which aims to maximize the product value in the market
- Accelerate late-stage development through the realization of smooth out-licensing to Roche or third parties
- Further enhance speed and efficiency in development in Japan
|*5||Translational clinical research: Clinical research ranging from preclinical research to PoC that clinically verifies the scientific concept of compounds created in drug discovery operations|
|*6||A demonstration that the therapeutic effect conceived in the research stage is effective in humans.|
|*7||Integrated Development and Commercialization Plan|
Strengthening of pharmaceutical technology system for multiple and simultaneous global development, fast global launch and cost reduction
Enhancement of CMC*8 development infrastructure for early PoC achievement
- Develop a system for investigational new drug supply of antibodies and highly active small molecule compounds to execute "Multiple and simultaneous global development" and "Fast global launch"
- Establish highly difficult formulation technology corresponding to middle molecules, etc.
Strengthening competitive advantages from late development to initial commercial production
- Strengthen the system for seamless supply promptly after PoC
- Realize the development and supply of high-value-added and low-cost formulations
- Plan and promote a future production system concept aiming for a global competitive advantage
Strengthening QC, QA and Regulatory functions
- Implement QC/QA activities at a global top level
- Realize a strategic regulatory promotion system to accelerate development and submission of NDA
|*8||Chemistry, Manufacturing and Controls: a concept that integrates API process research and pharmaceutical development research with quality evaluation research|
Provision of advanced and diverse solutions through both independent roles and cross-functional cooperation
Realization of sales growth by concentrating on sales drivers (Avastin® and Actemra® etc.) & emicizumab, atelolizumab
- Focus on growth products and promising new products
Providing advanced solutions through a cross-functional system
- Resolve medical issues through the cooperation of experts by breaking divisional silos
- Provide highly specialized information in specialty care and assistance for healthcare network
Establishment of system adapted to local characteristics
- Organize cross-functional teams and formulate/implement strategies adapted to local characteristics and needs
- Support from head office, back office and global network
Accelerate acquisition, development and assignment of talents who are key for innovation and responding to environmental changes
Selection of critical positions to accelerate innovation
- Identify critical positions/roles in creating innovation and responding to environmental changes at a global-top level, and establish their talent profiles
- Review positions and roles in conjunction with PDCA cycle of strategy
Planned and speedy acquisition, development, and deployment of human resources with "the right position filled by the right person"
- Select candidates for important positions and early development into global top level talents through tough assignments, etc.
- Make timely appointments from both internal and external talent pools with "the right position filled by the right person"
Basic Principles of Increasing Corporate Value and Shareholder Returns
Chugai's basic strategy is to continuously generate profits and increase its corporate value by focusing on innovation and providing a continuous flow of exceptional value for global health. The results will then be returned to shareholders through higher valuation in the capital markets and stable dividends.
In IBI 18, we will continue to target a Core EPS payout ratio of 50 percent on average while maintaining stable dividends. We remain committed to generating steady profit growth and maintaining appropriate returns to shareholders.