The Daiichi Sankyo Group of companies identified eight material issues to be addressed to sustain growth in FY2019, based on the impact on the Group’s medium-to-long-term corporate value enhancement and expectations from society. In FY2020, we set Materiality key performance indicators (KPIs) based on the material issues sorted into two groups: materiality on business and materiality on business foundations.

Eight Material Issues for Value Creation

Creating innovative pharmaceuticals, the basis of our value creation, is our top material Issue. Providing a stable supply of top-quality pharmaceutical products, providing the highest quality medical information, and improving access to healthcare are important for delivering our patients pharmaceuticals created through research and development. To reinforce the foundation of sustainable management, we will promote compliance management, strengthen corporate governance, and promote environmental management, as material issues on business foundations. In addition, we will also continue to promote the success and development of a diverse range of human resources who can bring competitive advantages to the Group’s business operations.

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Materiality Identification Process and KPIs* Setting Process

In identifying and sorting material issues, 36 issues were selected from the corporate social responsibility (CSR) perspective in fiscal year (FY) 2015, and were narrowed down to 21 in FY2018. In FY2019, business and governance perspectives were added to the CSR perspective, and medium-to-long-term initiatives and challenges were extracted based on their impact on the Group’s medium-to-long-term corporate value and expectations from society and stakeholders. We prepared a proposal for materiality through discussions with stakeholders, and eight material issues were subsequently identified after review by the Board of Directors.
In FY2020, discussions were held on the setting of "KPI"*1, as indicators for initiatives for each Material issue linked to the 5-year business plan. The KPIs were approved at the meeting of the Board of Directors in March 2021 after several discussions among the members of the Board of Directors in addition to discussions at the Executive Management Committee of the Group. In conjunction with the current 5-year business plan disclosed in April 2021, we announced the long-term targets for each Material issue and the challenges in resolving material issues along with the KPIs.
＊ Key Performance Indicators

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Materiality Management Cycle

Materiality management is promoted under a materiality management system in which the Company’s Corporate Planning Department and the Sustainability Promotion Department serve as the administrative office. In response to changes in the social environment applicable to setting KPIs, the necessity of adding new material issues or making a change to existing material issues was also discussed among the members of the Board of Directors in light of factors including the impact of COVID-19 on society. In FY2023, the progress and evolution of the materiality was reported and discussed twice at the Board of Directors and Executive Management Committee, and it was decided to continue the current materiality and KPIs in FY2024.

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Stakeholder Engagement

In February 2021, the Company had an opportunity to exchange opinions on the Value Report with investors during an online meeting hosted by CREDIT SUISSE SECURITIES (JAPAN) LIMITED. The opinions received through these dialogues were referred during the identification of the Materiality KPI, which was disclosed in April 2021.
Since FY2021, we have been holding ESG briefings hosted by the Daiichi Sankyo Group to explain our perspective on ESG management and initiatives, and to exchange opinions with investors. Also we reflected the opinions collected in the briefing and daily interviews in our FY2022 review, and address the most frequently received opinion, "indicators for contribution to patients," with the aim of setting KPIs and targets for FY2023.
We will continue to create multiple opportunities to have dialogues with stakeholders.

Each Material issue

1. Creating Innovative pharmaceuticals
Reason for selection Contributing to the enrichment of quality of life around the world is our Purpose, and continuously creating innovative pharmaceutical products by leveraging our strength (science & technology) is the foundation of our value creation.
We will continuously deliver pharmaceuticals that meet healthcare needs to the healthcare fields through a cycle of reinvesting the profits generated from our pharmaceutical business in research and development and generating new medicines.
In the mid-term, we will enhance our advanced products and pipeline to transform the SOC* with the goal of becoming an advanced global pharma innovator with strength in oncology in FY2025.
Long-term target Create innovative pharmaceuticals continuously, utilizing our strength (science & technology).
Challenges for realizing materiality (toward 2025 targets)
  • Creating the advanced products and pipelines to transform SOC in the oncology field
  • Development of innovative medicines and preventive medicines with new modalities.
KPIs
  1. The number of new launches and new indication approvals for 3 antibody drug conjugates (ADCs)
  2. Progress in ADCs which is in early development stage/other Alpha projects
  3. Progress in development of post DXd-ADC projects
FY2025 targets
  1. 3ADCs: 8 additional indications
  2. Multiple products to become the new growth driver after 3ADCs are in late development stage or more advanced stage
  3. Post DXd-ADC modality is in development stage
FY2023 results Please click here
Social value creation Contribute to the enrichment of quality of life around the world
Economic value creation Expand research & development (R&D) pipeline and acquire intellectual property contributing to future sales and profit

*Standard of Care: Best and widely used treatment by current medical knowledge

2. Providing a stable supply of top-quality
pharmaceutical products
Reason for selection As the impact of natural disasters and political risks on the global supply chain is expanding, procurement risks at our business partners need to be considered. Establishing a robust supply chain structure and providing a stable supply of top-quality pharmaceutical products is one of the most important challenges for us. In the mid-term, to respond to the increase of new modality products, particularly ADCs, we realize the establishment of a global production and supply system by implementing appropriate capital investments.
Long-term target Establish a robust global supply chain system to provide a stable supply of top-quality pharmaceuticals
Challenges for realizing materiality (toward 2025 targets) Establishment of a global production and supply system through appropriate capital investment corresponding to the increase of new modality products including ADC
KPIs Construction of ADC production system and stable supply of top-quality pharmaceuticals to patients (including capital expenditure)
FY2025 targets In-house capital investment and CMO* investment: Maximum 300 billion yen
(Total capital investment from FY2021 to FY2025: Approximately 500 billion yen)
FY2023 results Please click here
Social value creation Contribute to the enrichment of quality of life around the world
Economic value creation Increase revenue and profit, reduce/prevent the risks of declining corporate value

*Contract manufacturing Organizations

3. Providing the highest quality medical information
Reason for selection Pharmaceutical products can be used by healthcare professionals for the treatment of patients with confidence only when highly reliable safety and efficacy information are available, thereby overcoming healthcare challenges (and social challenges through it).
As we provide many products in various fields, we strive to provide safety and efficacy information.
In the mid-term, we will generate new drug information in the oncology area, where information provision tailored to each patient’s condition is required, and provide it to healthcare professionals globally.
Long-term target Provide safety and efficacy information so that healthcare professionals can always use our products for the treatment of patients with confidence
Challenges for realizing materiality (toward 2025 targets) Provision of highly useful pharmaceutical information in areas with high expertise/individuality
KPIs Evaluation of our approach to information provision from stakeholders including healthcare professionals
FY2025 targets Improvement of evaluation scores
FY2023 results Please click here
Social value creation Contribute to the enrichment of quality of life around the world
Economic value creation Increase revenue and profit, reduce/prevent the risks of declining corporate value
4. Improving access to healthcare
Reason for selection Strive to improve access to healthcare by promoting the Daiichi Sankyo Group Policy on Access to Healthcare to employees, and seeking cooperation with the stakeholders including the government, payers and alliance partners.
In the mid-term, we will globally deploy oncology products through collaboration with AstraZeneca. We will also contribute to solving social challenges, such as addressing COVID-19, through the utilization of our business foundations and cooperation with external institutions.
Long-term target Contribute to improving access to healthcare, working with stakeholders such as the government, payers and alliance partners
Challenges for realizing materiality (toward 2025 targets)
  • Global expansion of oncology products by utilizing collaboration with AstraZeneca, etc.
  • Response to new risks such as COVID-19 through collaboration with external institutions by utilizing our strengths and assets.
KPIs
  1. The number of countries where oncology products are sold and the number of patients to which oncology products are provided through collaboration with partners, etc.
  2. Status of contribution to mitigating new risks through collaboration with the regulatory authorities and other companies, etc.
FY2025 targets
  1. Increase the number of launched countries　
  2. Achievement of supply of COVID-19 vaccine (AZD-1222) of AstraZeneca as planned (FY2021)
  3. Progress in development of DS-5670 as planned
FY2023 results Please click here
Social value creation Contribute to the enrichment of quality of life around the world
Economic value creation Increase revenue and profit, reduce/prevent the risk of declining corporate value
5. Promoting environmental management
Reason for selection The impact of environmental issues on sustainability, such as intensifying natural disasters associated with the progression of global warming and marine plastics pollution, has become apparent. Environmental protection is a challenge that requires the concerted efforts of the world including companies.
We recognize that changes in the disease structure and concerns about the stable supply of medicines are risk factors for our long-term business foundations due to the environmental impacts. We, as a responsible member of a society, will work integrally in our business activities and environmental initiatives for a sustainable society, to reduce the environmental impact of our products and operations.
Long-term target As a healthcare company, we will proactively reduce the environmental impacts of our business operations and seek to implement advanced climate change countermeasures
Challenges for realizing materiality (toward 2025 targets)
  • Reduction of the environmental impact of the entire supply chain
  • Proactive introduction and use of renewable energy
  • Use and implementation of decarbonization technologies, such as the hydrogen application
  • Expansion of the scope of use for plastics removal, and technological development
  • Minimize environmental risks such as pollution risks
KPIs
  1. CO2 emissions (Scope1 + Scope2)*1
  2. CO2 emissions intensity based on sales (Scope3, Cat1)*1
  3. Renewable electricity utilization rate
  4. Waste plastic recycling rate
  5. Disposal of hazardous waste
FY2025 targets
  1. 42% reduction from FY2015*2
  2. 15% reduction from FY2020
  3. More than 60% utilization rate*2
  4. Over 70% maintained
  5. 10% reduction from FY2020
FY2023 results Please click here
Social value creation Contribute to the development of sustainable living infrastructure through the early realization of a decarbonized society, solving of the marine plastic problem, and prevention of environmental pollution
Economic value creation Enhancement of corporate value by improving evaluation of environmental management initiatives (reduction/avoidance of the damage risk to corporate value)
  • *1Scope1：Direct emissions from the reporting company's factories, offices, vehicles, etc.
    Scope2 : Indirect energy-derived emissions from electric power and other energy consumed by the reporting company
    Scope3：Indirect emissions other than Scope1 and Scope2. Category 1 is emissions from activities up to manufacturing of raw materials, parts and containers / packaging materials
  • *2Reviewed in FY2022
6. Promoting compliance management
Reason for selection Since pharmaceutical companies handle products that affect human lives, we are asked to meet the high ethical standards. Compliance issues may damage corporate reputation. On the other hand, activities inherent to the pharmaceutical industry and the various stakeholders involved can result in latent risks that improper conduct may occur. Due to recent well-publicized incidents within the industry, regulations continue to be strengthened.
Across the Daiichi Sankyo Group companies, we believe compliance is the foundation of our business activities. Therefore, we promote a compliance management system which encourages each employee to behave with the high ethical standards, in addition to complying with applicable laws and regulations.
For our mid-term target, the Daiichi Sankyo Group will maintain the high ethical standards throughout the Group and mitigate compliance risks by further enhancing our global governance structure and compliance programs.
Long-term target An organization in which every employee behaves with high ethical standards as well as in compliance with laws and regulations
Challenges for realizing materiality (toward 2025 targets)
  • To raise awareness for compliance among all executives and employees
  • To prevent non-compliant behavior of employees
  • To promote business partners’ understanding of sustainable procurement and to minimize compliance risks
  • To improve human rights efforts through the human rights due diligence
KPIs
  1. Number of significant compliance violations*1
  2. Number of Notable Industry Code Violations (NICV)*2
  3. Periodic employee survey on ethical culture
  4. Compliance monitoring, monitoring of promotional activities
  5. Sustainable survey coverage rate (based on total procurement amount)
  6. Strengthening internal education and disseminating our thoughts with business partners
  7. Case of violation with ILO Core Labour Standards*3 according to human rights risk assessment through DS Group
  8. Reduce business partners risks related to ILO Core Labour Standards*3
FY2025 targets
  1. 0
  2. 0
  3. Improvement of scores following baseline
  4. Conducting continuous monitoring at each company
  5. 75％
  6. Disclosure of the result of education and training
  7. No case of violation with ILO Core Labour Standards*2 as a result of human rights risk assessment through DS Group*１
  8. Disclose results of business partners risk reduction initiatives related to ILO Core Labour Standards*2 *３
FY2023 results Please click here
Social value creation
  • Maintaining and enhancing trust in the pharmaceutical industry
  • Improving social compliance through sustainable procurement
Economic value creation Enhancement of corporate value by improving trust in our corporate brand (mitigation/prevention of the risks of damage to corporate value)
  • *1Compliance violations which occur in domestic and overseas group companies are regarded as significant when disclosure under the relevant laws or regulations is required by the DS group
  • *2Cases where there have been healthcare-related findings by the pharmaceutical regulatory authorities and industry-related organizations that may materially discredit or reduce confidence in Daiichi Sankyo Group of companies
  • *3Freedom of association and the effective recognition of the right to collective bargaining, the elimination of forced or compulsory labor, the abolition of child labor and the elimination of discrimination in respect of employment and occupation, occupational safety and health
7. Corporate governance aimed at fulfilling our mission
Reason for selection The external environment surrounding the Daiichi Sankyo Group is constantly undergoing major changes. Under such circumstances, a highly transparent and effective corporate governance system is essential for achieving sustainable growth of the company and enhancing its corporate value in the medium to long term.
We aim to achieve sustainable growth in corporate value by establishing and operating a corporate governance system embedded with both management structure that can respond speedily and flexibly to changes in the business environment and make decisive decisions swiftly, and a supervisory function for management and execution.
Long-term target Establish a corporate governance system that enable (i) speedy decision making and (ii) supervisory and monitoring function for management and execution.
Challenges for realizing materiality (toward 2025 targets)
  • Maintain and continue to build an optimal corporate governance system based on the expectations of society
  • Improve the effectiveness of both the Board of Directors and the Audit & Supervisory Board
  • Enhance and improve the transparent disclosure on corporate governance
KPIs
  1. Comply with all the principles of the revised Corporate Governance Code in Japan
  2. Evaluate the effectiveness of the Board of Directors by a third-party organization and implement measures for improvement
  3. Continuous evaluation and improvement of the effectiveness of the Audit & Supervisory Board
  4. Enhance and improve the transparent disclosure to help stakeholders to understand the company's corporate governance
FY2025 targets
  1. Comply 100% with the revised Corporate Governance Code in Japan
  2. Evaluate the effectiveness of the Board of Directors and implement measures for improvement (including third party evaluation, two times by the end of FY2025)
  3. Continuously evaluate and improve the effectiveness of the Audit & Supervisory Board
  4. Disclosure through various communication materials with improved transprency
FY2023 results Please click here
Social value creation
  • Total value provided through our business operations
  • Realize management with a high transparency to meet the expectations of shareholders, investors, and other stakeholders
Economic value creation Improve sustainable growth of the company and enhancement of corporate value in the mid- to long-term
8. Promoting the success and development of a
diverse range of people who create our competitive
advantages
Reason for selection People are the foundation of our business activities. Acquiring diverse talent and effective HR management are major sources of competitiveness in global business. “People” are the most important asset of the Daiichi Sankyo Group. We consider it is essential to respect the diversity of each and every employee based on our “Human Resources Management Philosophy”. We aim to achieve mutual continuous growth of employees and the Group companies by promoting and developing talents in each part of the value chain.
Long-term target Aim at mutual continuous growth of the employees and the company by respecting the diversity and promoting the success and development of talent in all businesses
Challenges for realizing materiality (toward 2025 targets)
  • Creating a work environment where a diverse range of talents are highly engaged and can maximize their potential
  • Acquisition and training of talents to enhance business competitiveness
KPIs
  1. Percentage of female in senior managerial employees*
  2. Positive response rate (%) on corporate culture & work environment through engagement survey
  3. Positive response rate (%) on development & growth opportunities through engagement survey
  4. Amount of training/development investments per employee
FY2025 targets
  1. 30%
  2. 80% or more, or 10% increase compared to FY2021
  3. 80% or more, or 10% increase compared to FY2021
  4. Disclose the result
FY2023 results Please click here
Social value creation Diversity of human resources, respect for human rights, talent development
Economic value creation Enhancement of corporate value through developing talents to carry out business activities

*Equivalent to Division Head / Vice President or higher position

Contribution to SDGs through Materiality Initiatives

We recognize that the social value created through our Materiality initiatives will be from the Group’s contribution to United Nations (UN) Sustainable Development Goals (SDGs).
We have organized an outline of the social significance of the Group’s initiatives in terms of Purpose, Vision, and Materiality, and summarized our progress in achieving our Purpose (creation of social value) in the below chart. Furthermore, we organized the social value that our Group is creating from the perspective of the UN SDGs. For example, “to contribute to the enrichment of quality of life around the world” to which society has high expectations and to which we can best contribute, is linked to UN SDGs Goal 3, “Ensure healthy lives and promote well-being for all at all ages.” We will also contribute to the achievement of Goals 9, 12, and 17 of the UN SDGs to realize our Purpose. In addition, to promote environmental management, we are endeavoring to meet the growing societal demand for “contribution to environmental load reduction”.
Furthermore, through our Materiality of “promoting compliance management” and “corporate governance aimed at fulfilling our mission”, we strive to realize highly transparent management along with promotion and development of talent so that each and every employee can find their work rewarding, solidifying our commitment to respect for human rights and thereby contributing to our achievement of Goals 5, 8, 10, and 16 of the UN SDGs.
In light of the external environment surrounding our Group, we are working to promote a deeper understanding of the SDGs within the Group companies, therefore each and every employee will be encouraged to take ownership in contributing to the SDGs as part of a company-wide effort to create social value. We will continue to work together as a Group to solve social issues not only by growing as a business, but also through creating new value.

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