Astellas Pharma, Inc.
Annual Report 2022

Plain-text annual report

For the Year Ended March 31, 2022 Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Turn innovative science into VALUE for patients Since Astellas was established in 2005, the Company has strived to continue to create innovation and deliver innovative medical solutions that meet the needs of patients. Going forward, we are committed to achieving our VISION of tuning innovative science into VALUE for patients. In the future as well, Astellas aims to stand on the forefront of healthcare change to turn innovative science into VALUE for patients and will continually strive to fulfill the expectations of our stakeholders and society. Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Astellas At a Glance Total sales revenue Sales of Major Products Sales revenue by region ¥1,296.2 billion Core operating profit ¥244.7 billion enzalutamide / XTANDI for the treatment of prostate cancer enfortumab vedotin / PADCEV for the treatment of urothelial cancer gilteritinib / XOSPATA for the treatment of acute myeloid leukemia mirabegron*1 for the treatment of overactive bladder tacrolimus / Prograf*2 immunosuppressant ¥534.3 billion ¥ 21.7 billion ¥34.1 billion ¥172.3 billion ¥185.4 billion (For the year ended March 2022) (For the year ended March 2022) ¥66.3 billion / 5.1% ¥8.4 billion / 0.6% Others Greater China*5 ¥110.1 billion / 8.5% International Markets*4 ¥258.8 billion / 20.0% Japan Total ¥1,296.2 billion ¥537.5 billion / 41.5% United States ¥315.2 billion / 24.3% Established Markets*3 (For the year ended March 2022) R&D expenses RX: Prescription drug Major pipeline Overseas employee ratio 10.0% International Markets*4 8.1% Greater China*5 ¥246.0 billion 24 (Number of Programs) About 66% 24.0% United States Employee ratio per region 34.1% Japan 23.8 % Established Markets*3 (For the year ended March 2022) (As of July 31, 2022) (As of July 31, 2022) *4 International Markets: Russia, Latin America, Middle East, Africa, Southeast Asia, South Asia, Korea, Export sales, etc. *1 Betanis, Myrbetriq, Betmiga *2 Including Advagraf, Graceptor, ASTAGRAF XL *3 Established markets: Europe, Canada, Australia *5 Greater China: China, Hong Kong, Taiwan 01 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Astellas At a Glance Global Network As a global pharmaceutical company, we are currently working in over 70 countries Established Markets United States Astellas Pharma Ireland Co., Limited Dublin Plant Astellas Pharma Ireland Co., Limited Kerry Plant Astellas Pharma Global Development, Inc. Mitobridge, Inc. Astellas Innovation Management LLC (Boston office) Astellas Institute for Regenerative Medicine (AIRM) Astellas Gene Therapies (Sanford) Astellas Pharma Europe B.V. Meppel Plant International Markets Astellas Pharma China, Inc. Shenyang Plant Japan Toyama Technology Center Takaoka Plant Astellas Innovation Management LLC （Cambridge UK office） Nanna Therapeutics Limited Greater China Astellas China Investment Co., Limited Yaizu Technology Center Yaizu Pharmaceutical Research Center Takahagi Technology Center Takahagi Chemistry & Technology Development Center Tsukuba Research Center Tsukuba Biotechnology Research Center Headquarters (Tokyo) Universal Cells, Inc. Iota Biosciences, Inc. Astellas Gene Therapies Astellas Venture Management LLC (San Francisco office) Astellas Rx+ Business Accelerator, LLC Astellas Innovation Management LLC (San Francisco office) Xyphos Biosciences, Inc. Headquarters R&D bases Manufacturing Bases Corporate Venture Capital 02 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Our Philosophy and VISION Guided by our business philosophy, we are committed to the realization of greater VALUE by patients and healthcare systems around the world. Philosophy Raison D’être Contribute toward improving the health of people around the world through the provision of innovative and reliable pharmaceutical products Mission Sustainable enhancement of enterprise value Beliefs Our “beliefs” provide the code of conduct we prize at all times. Astellas will always be a group of people who act upon these beliefs. High Sense of Ethics Creativity Customer Focus Competitive Focus On the forefront of healthcare change to turn innovative science into VALUE for patients 03 VISIONAstellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data CONTENTS Message Astellas At a Glance Our Philosophy and VISION Contents/Editing Policy Statement of Responsibility Strategic Goal 3 Message from the Head of the Rx+ Business Accelerator Progress of Strategic Goal 3 01 03 04 05 Interview with Chief Executive Officer 06 Value Creation Story Value Creation Model Our History Management Capital Astellas’ Business Model for Creating Innovation Strengthening Our Sustainability by Revising the Materiality Matrix The VALUE that Astellas Provides Providing Value to Stakeholders 11 12 14 15 16 17 21 22 Strategic Goal 4 Message from the Head of the Sustainability Division Progress of Strategic Goal 4 Organizational Health Goals Message from the Head of Human Resources People and Organization for Innovation Initiatives for People and Organization Organizational Health Goals Engagement, Diversity, Equity and Inclusion Strengthening Governance Board of Directors Corporate Governance Progress of Corporate Strategic Plan 23 Interview with an Outside Director Corporate Strategic Plan Review Corporate Strategic Plan 2021 Interview with Chief Strategy Officer Interview with Chief Financial Officer Strategic Goal 1 Message from Chief Commercial Officer Progress of Strategic Goal 1 Strategic Goal 2 Message from Chief Scientific Officer Progress of Strategic Goal 2 Digital Transformation 24 25 28 31 34 35 36 39 40 41 45 Risk Management Ethics & Compliance Corporate Data Major Pipeline Financial Data Non-financial Data Company Overview 04 46 47 48 50 51 52 58 59 61 62 63 65 66 67 69 76 78 80 82 83 86 89 91 How to use navigation buttons Using Category Tabs Interview with the CEO Value Creation Story Progress of Management Strategy Click to go to first page of each category Using Navigation Buttons Search PDF content Return to top page Forward one page Return to previously viewed page Return one page Scope of the Report Period covered: Fiscal year ended March 2022 (April 1, 2021 - March 31, 2022) As much as possible, we have included the latest information available at the time of publication. The period and scope of coverage may vary depending on the subject. We have noted each such case individually. Organizations covered: Astellas Pharma Inc. and its consolidated subsidiaries in Japan and overseas (referred to in this report as “Astellas”) Disclaimer In this integrated report, statements made with respect to current plans, estimates, strategies and beliefs, and other statements that are not historical facts are forward-looking statements about the future performance of Astellas Pharma. These statements are based on the management’s current assumptions and beliefs in light of the information currently available to it and involve known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those discussed. Information about pharmaceutical products (including products currently in development) which is included in this integrated report is not intended to constitute an advertisement or medical advice. Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Statement of Responsibility Kenji Yasukawa Representative Director, President and CEO, Chairman of the Board 05 In May 2021, Astellas announced its Corporate Strategic Plan 2021 (CSP2021) for realizing its VISION “On the forefront of healthcare change to turn innovative science into VALUE for patients”. Since the launch of CSP2021, we have been promoting initiatives aligned to the plan, and steadily achieving its goals. Integrated Report 2022 reports on the progress of CSP2021. The financial and non-financial information provided is intended to provide an understanding of Astellas' path to sustainable growth and value creation. The report includes an overview of our updated materiality, which is essential for realizing VISION. In preparing this report, we referred to the International Integrated Reporting Framework by the IFRS Foundation and the Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation by the Ministry of Economy, Trade and Industry. For ESG information, we also referred to the Ministry of the Environment's Environmental Reporting Guidelines (FY2018 version), the Global Reporting Initiative's Sustainability Reporting Standards, and the final report of the Task Force on Climate-related Financial Disclosures (TCFD). Divisions across Astellas collaborated to prepare this report. I hereby represent that the creating process and its contents are valid, and that it has been prepared based on the current situation and the future for which we strive. We hope that this report will help you further understand Astellas' story of value creation, which is directed toward the realization of our VISION. We also hope that it will help to enrich our dialogue with our stakeholders.Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Interview with Chief Executive Officer We will take on the challenge of creating innovative products, delivering Astellas’ unique VALUE to patients. Q A Please tell us about Corporate Strategic Plan 2021 (CSP2021). What are its aims and how is it different from Corporate Strategic Plan 2018 (CSP2018)? CSP2021 is a phase for steadily carrying out our Focus Area approach and linking it to results. CSP2018 was a phase for exploring and confirming the effectivity our new business model. We moved away from our old business model of creating products with a focus on specific disease areas. For the first time, we introduced the Focus Area approach into our strategy. The idea of the Focus Area approach is to take in a range of perspectives as we map out areas for research and development. We explore areas where the biology that causes a disease is clear, aiming to fulfill unmet medical needs in 10 to 15 years from now. We efficiently identify drug discovery opportunities by flexibly choosing the best modalities/technologies for the biologies. In CSP2018, we worked to expand our Focus Area approach on several fronts. We increased the number of development projects in several Primary Focuses, which carry out strategic research and development investments within each Focus Area. As these Primary Focuses began to connect with each other to generate new Primary Focus candidates, we could see that our Focus Area approach was sound. Meanwhile, developed countries have worked to curb healthcare costs by promoting generic drugs, it became difficult for pharmaceutical manufacturers to earn sustainable profits from a single product after the patent expired, resulting in their need to create new drugs continuously. 06 Kenji Yasukawa Representative Director, President and CEO, Chairman of the Board Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Interview with Chief Executive Officer The 3-year period of CSP2018 was a time when this point became decisive. Pharmaceutical com- panies now face a choice between being a new drug development company or a generic company. At Astellas, we decided to pivot quickly away from the traditional business model, divested 16 off-pat- ent products to other pharmaceutical companies and shifted to our Focus Area approach. Q A In these times, what role should Astellas play in society? Our role is to deliver the unique VALUE of Astellas. We need to be an innovative company that sets an example for a new era. The Astellas business is undergoing a transformation. We are breaking away from the strategy of competing for markets that have many similar products. We are instead focusing our business on delivering highly unique and innovative products. Our strategic products, which began with XTANDI and later expanded with products such as XOSPATA and PADCEV, are truly unique to Astellas. Under our Focus Area approach, we are also carrying out research and development in the areas of cell therapy, gene therapy, and immuno-oncology. Through these efforts, we expect to create products that are even more unique and innovative. Continuing to provide unique VALUE to society in this way is the most important role for Astellas. That is why Astellas must be an innovative company. My biggest focus right now is on tackling our Organizational Health Goals (OHGs) for becoming an innovative company. One example is revising our job-based compensation system. Firstly, we integrated the HR system globally which was different by each region. Then we globally integrated the job grades and remuner- ation systems and promoted the development of a system that determines grades and remuneration depending on the job. The system is based on globally unified standards regardless of the organization to which the person belongs or the country/region where he or she works. We also put in place a job posting system that is shared globally. This allows employees to apply for positions within the Company regardless of where they sit in the organization or in the world. We will use this as a way of making sure that we can place the right person in the right position. This system has had a very strong response. By our latest count,* we had more than 500 applicants for over 20 divisions. Through measures like this, we can become an innovative company that sets an example for a new era. I see that as one of the roles of Astellas. * Aggregate results for the first quarter of FY2022 07 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Interview with Chief Executive Officer Q A What were the key processes for drawing up CSP2021 and how will we be able to carry out such bold measures for organizational transformation? After interviewing employees around the world, we realized that we needed a strong commitment to clearing away obstacles to innovation. To develop CSP2021, we held interviews with employees around the world over a 6-month timeframe starting in the spring of 2020. We analyzed hundreds of responses to the question, “What is holding Astellas back from innovation?” The most troubling obstacle we found was that our organization as a whole was too conservative and too afraid of failure to be able to take on new challenges. Other issues that were highlighted included challenges toward new goals were not appreciated and that the role of leadership in executing ideas was unclear. There needs to be the right level of collaboration between various departments, such as research, development, manufacturing, and commercial. Only then can innovation emerge. However, we also found opportunities to improve our evaluation system and organizational structure. For example, our previous system involved setting goals for each department and evaluating them on a department-by-department basis. This hindered cross-departmental collaboration and meant that employees were not incentivized to achieve more ambitious goals. We had to tackle these challenges head-on. Overcoming them will change us into a more innovative organization and better position us to deliver on our Strategic Goals. To this end, we have positioned our set of OHGs as one of the major goals of CSP2021. Our OHGs consist of 3 types of goals. The first OHG is “Brave ideas pursue ambitious outcomes.” To achieve this we need a corporate culture that encourages taking on challenges without fear of failures. We need a psychologically safe environment that allows for learning from intelligent failures. To support this, we introduced an evaluation system that encourages departments and individuals to set ambitious goals. The second goal is “Talent and leadership thrives.” We are actively carrying out training to change the mindset and style of employees in leadership positions, who are key to enabling our people to thrive in their work. Specifically, we created the Astellas Leadership Expectations and provided training to approximately 3,000 leaders. The third goal is “We excel as one Astellas.” To support this goal, we introduced the Shared Objectives system for promoting cross-functional cooperation, collaboration, and coordination as “One Astellas.” As part of our review of the evaluation system, we aligned our individual bonus system to company-wide performance rather than the performance of the department. 08 Process for transformation into an innovative organization Identified Issues Goals • Extensive fear of failure and unwillingness to take business risks to achieve innovation • Conservative objective setting • Reluctance to update or develop new systems and processes Organizational Health Goal 1 “Brave ideas pursue ambitious outcomes” Aggressively take on challenges for innovation and ambitious outcomes Initiatives for Organizational Health Goal 1, e.g. Culture development with psychological safety • Lack of clarity about the leadership style needed to generate innovative ideas • Lack of development plans to foster leadership Organizational Health Goal 2 Initiatives for Organizational Health Goal 2, e.g. “Talent and leadership thrives” Environment in which excellent people have ownership and demonstrate leadership Astellas Leadership Expectations • Evaluation system that promotes optimization of divisions • Silo situation and lack of trust between divisions Organizational Health Goal 3 Initiatives for Organizational 組織健全性目標3 Health Goal 3, e.g. “We excel as One Astellas” Collaborate across divisions to achieve shared goals for all Astellas Shared Objectives Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Interview with Chief Executive Officer Performance Goals of CSP2021 FY2025 Stock market capitalization: 7trillion yen 1 XTANDI and Strategic products: ≥¥1.2T in FY2025 2 Focus Area projects: ≥¥0.5T in FY2030 3 Core OP margin of ≥30% in FY2025 ≥¥0.5T 3 Focus Area projects ≥¥1.2T 1 Strategic products XTANDI CoGs XTANDI Co-Pro SG&A R&D Q A What kind of people will support Astellas in the future? The people who will support Astellas in the future are those who understand the true intentions of the OHGs. They embrace challenges while improving their individual capabilities. I think of the individual capabilities of our employees to be like the letter T of the alphabet. The vertical bar of the T stands for expertise. It is important for employees to have a core area of expertise of their own. After building a career around that expertise, we can advance our understanding of the overall pharmaceutical value chain and extend our capabilities like the horizontal bar of a T. The letter T can take many forms. Some employees have a long vertical axis. Some have a long horizontal axis. Others have 2 vertical axes like the Greek letter π (pi). I believe that by placing a wide range of people in the right places we can energize and strengthen our organization. We expect all employees to understand the intent of the OHGs, and not just superficially, but thoroughly. All of these goals align with our aim for Astellas to become an innovative company. The psychological safety I mentioned is not about trying to create a friendly company. On the contrary, we want to create a culture where supervisors do not put the brakes on various challenges, so that will actually take more effort from employees. We want all of our employees to embrace challenges based on an understanding of the true intentions of the OHGs. I believe that the people who can do that are the ones who will support the future of Astellas. Core OP 2 ≥30% Sales by Products P&L Sales by Products P&L FY2025 FY2030 Q A Looking back at FY2021, what are your thoughts on the year from a business perspective? Although some factors such as the weak yen had a temporary impact, our first year of CSP2021 has got off to a good start. The first year of CSP2021 was a phase of preparation for achieving our goals. This involved some cost as we made upfront investments in areas such as promoting the OHGs and building our global system. In addition, the yen weakened just prior to the fiscal year-end. This had a temporary negative effect on the P/L before the benefits of the weaker yen could emerge. As a result, we recorded sales growth but decrease in core operating profit. In the fourth quarter, Russia's invasion of Ukraine triggered inflation that impacted overseas sales. Furthermore, for economic reasons, self-insured health plans in countries such as the US prioritized low cost even in the treatment of serious diseases such as cancer. This meant 09 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Interview with Chief Executive Officer that we were unable to achieve the revenue we had forecast at the beginning of the fiscal year. However, these developments mostly relate to temporary factors. The fundamentals of our business have not been negatively affected, so I believe we have made a good start. On the other hand, during FY2021, COVID-19-related delays were a cause for concern. These affected some development, namely projects in the early stages of clinical trials. Projects in the later stages of clinical trials are moving ahead largely as planned. This is because early-stage clinical trials are susceptible to the impact of hospital staffing shortages and patient visitation restrictions caused by COVID-19. However, that situation is gradually recovering. We expect progress in FY2022 to be on schedule. Q A Lastly, do you have a message for shareholders and investors? We aim to achieve performance goals through the implementation of strategic goals and organizational health goals which we have set in CSP2021. As a result, we expect to be recognized as a company with a market capitalization of 7 trillion yen. Please look forward to our research and development progress. In CSP2021, we have set performance targets consisting of 3 goals: “Revenue: At least 1.2 trillion yen in sales of XTANDI and key strategic products* in fiscal year 2025. Pipeline value: Expected sales from Focus Area assets of more than 500 billion yen in fiscal year 2030. Core operating margin: More than 30% core operating profit margin in fiscal year 2025”. We will be able to achieve performance goals when the strate- gic goals and organizational health goals are achieved. And when we achieve our performance goals, we believe that we will be evaluated by the stock market with a market capitalization of 7 trillion yen. The important point is how many flagship products we can develop. It is still in the early research stage, but it will support the next generation of Astellas. Our challenge is not in an area where we can know the probability of success, and it is hard to perfectly predict in which areas we will be able to create new products. Still, we are confident that our Focus Area approach will bear fruit and create VALUE. This performance target becomes achievable when the strategic target and organizational health target are achieved in the near future. We are committed to creating innovative medicines in areas such as cell therapy and gene therapy, where there are very few precedents. Until a new drug is approved, it must pass through many gates and meet many requirements. No one can tell it how to do that. We are working toward our VISION, to be on the forefront of healthcare change to turn innovative science into VALUE for patients. Delivering on that will not be easy, but Astellas will keep pushing. We appreciate your continued support. 10 Representative Director, President and CEO, Chairman of the Board Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Value Creation Story CONTENTS Value Creation Story Value Creation Model Our History Management Capital Astellas’ Business Model for Creating Innovation Strengthening Our Sustainability by Revising the Materiality Matrix The VALUE that Astellas Provides Providing Value to Stakeholders 11 12 14 15 16 17 21 22 11 1111 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Value Creation Model Based on our business philosophy to “Contribute towards improving the health of people around the world through the provision of innovative and reliable pharmaceutical products,” Astellas is striving to continue to create innovation and deliver innovative medical solutions that meet the needs of patients. Philosophy Raison D’être Mission Beliefs Social issues and requests from society Solving social issues VISION P.03 Output Key Issues and Materiality P.17 XTANDI and Priority Strategic Products Input Financial Capital Invested capital Flexible financing for business opportunities Manufacturing Capital Research facilities Manufacturing facilities covering commercial production of cell and gene therapies Intellectual Capital Patents Know-how for global drug development and commercialization Technical capabilities for various new modalities Social and Relational Capital Corporate brand Collaboration / alliance Human network Human Capital Highly skilled talent DE&I Natural Capital Natural resources Reusable energy Biodiversity Business Activity Business Model Fulfill the unmet medical needs by creating and delivering innovative treatments Cutting-edge, VALUE-driven life sciences innovator P.16 “VALUE Creation” through research and development activities “VALUE Realization” through later stage development and commercialization activities Strategy Corporate Strategic Plan 2021 accelerating realization of VISION P.25 Strategic Goals 1 Enable patients to achieve better 2 Translate innovative science into proven outcomes VALUE 3 Advance the Rx+ Business 4 Deepen our engagement in sustainability Environment where diverse individuals can success “Right person in right position” globally Organizational Health Goals 1 Brave ideas pursue ambitious outcomes 3 We excel as one Astellas 2 Talent and leadership thrives Talent and Organization which Create Innovation Governance P.15 P.66 P.36 Products derived from FA approaches, including cell medicine and gene therapy Rx+® Healthcare Solutions P.43 P.48 Outcome Maximize VALUE P.21 Common Definition of VALUE VALUE = Outcomes that matter to patients Cost to the healthcare system of delivering those outcomes Performance 成果目標 Goals P.25 P.×× 12 13 Impact Enhance sustainability of society and Astellas Realization of sustainable society Providing value to stakeholders P.22 Sustainable enhancement of enterprise value Earning trust from stakeholders Enhancing management capital Primary Focus • Genetic Regulation• Blindness and Regeneration• Mitochondria• Immuno-Oncology• ASP5354: Visualization of the urethra in operations• Wireless medical implantable devices• Digital therapeutics• ECG analysis service• Exercise support serviceCorporate Governance, Risk Management, ComplianceAstellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Our History Shifts in the Corporate Strategic Plan and strategic areas Our VISION is updated in CSP2015 CSP2018 CSP2021 Global Category Leader (GCL) model 2005–2010 Urological disease, transplant fields From 2010 onwards Urological disease, transplant fields, oncology platform Focus Area Approach P.41 Apr. 2005 2010 2015 2018 2021 Astellas Pharma Inc. was established Dec. 2007 Astellas acquired Agensys, Inc. Acquisition of antibody- drug conjugate Entered field of cancer biology Sept. 2012 Astellas launched XTANDI Target disease: Prostate cancer June 2010 Astellas acquired OSI Pharmaceuticals, Inc. Created an oncology platform in the US Given major changes in the healthcare industry environment, Astellas is conducting its research activities while incorporating cutting-edge science from outside the Company, and continuously creates new valuable drugs. Astellas will continue to work on Focus Areas, where we have a competitive advantage, and turn innovative science into VALUE for patients. Dec. 2019 Astellas launched PADCEV Target disease: Urothelial cancer Dec. 2018 Astellas launched XOSPATA Target disease: Acute myeloid leukemia Dec. 2016 Astellas acquired Ganymed Pharmaceuticals AG Acquisition of late-stage product zolbetuximab Nov. 2019 Target disease: stomach cancer, etc. Astellas launched Evrenzo Target disease: Renal anemia 2023 Plan to apply for zolbetuximab May 2017 Astellas acquired Ogeda SA Aug. 2022 US FDA accepts application Acquisition of late-stage product fezolinetant Target disease: Vasomotor symptoms associated with menopause for fezolinetant Entered cell therapy platform Feb. 2016 Dec. 2019 Astellas acquired Ocata Therapeutics, Inc.* Acquisition of pipeline and leading- edge core technology position in ophthalmology and cell therapy Astellas acquired Xyphos Biosciences, Inc. Acquisition of next-generation cancer immunotherapy technology * Renamed Astellas Institute for Regenerative Medicine Feb. 2018 Astellas acquired Universal Cells, Inc. Acquisition of universal donor cell technology Entered genetic regulation platform Jan. 2020 Astellas acquired Audentes Therapeutics, Inc. Acquisition of a foundation in adeno-associated virus (AAV)-based gene therapy (AT132, AT845) Launched Rx+ business Oct. 2020 Astellas acquired Iota Biosciences, Inc. Acquisition of unique bioelectronics technology 14 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Management Capital The capital that Astellas has accumulated along with its steady growth is essential for enhancing the sustainability of society and of Astellas. We will promote corporate activi- ties that use financial capital, manufacturing capital, intellectual capital, social and relational capital, human capital, and natural capital. By further strengthening these capitals, we will realize a sustainable society and sustainable enhancement of our enterprise value. Financial Capital Invested capital Flexible financing for business opportunities Social and Relational Capital Corporate brand Human network Collaboration / alliance While maintaining a sound financial position, our top priority is investment for future business growth. We will be agile in our financing for business opportunities. We are promoting our business by leveraging the following: our corporate brand of running our business globally through innovative and reliable pharmaceutical products, a broad human network of our individual employees active in various specialized fields, and proactive and effective collaboration and alliances with various business partners, such as open innovation. Manufacturing Capital Research facilities Manufacturing facilities covering commercial production of cell and gene therapies Human Capital Highly skilled talent DE&I We have state-of-the-art in-house research facilities and manufacturing facilities covering commercial production of cell therapy and gene therapy. These are necessary for creating innovative new drugs and healthcare solutions, and we are expanding our business globally. We drive innovation and create new value through the activities of our highly skilled employees. We empower diverse people to contribute to our business using their specialized knowledge and skills, regardless of their race, nationality, gender, age, or other attributes. Intellectual Capital Patents Know-how for global drug development and commercialization Technical capabilities for various new modalities Natural Capital Natural resources Reusable energy Biodiversity We possess not only patents related to our products, but also intellectual capital that sustains our competitive strength. This takes the form of know-how for global new drug development and commercialization, and technical capabilities for various new modalities. 15 We use this capital in our business activities while taking steps to improve environmental sustainability. This includes using natural resources effectively, using reusable energy, and working to maintain and preserve biodiversity. Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Astellas’ Business Model for Creating Innovation At Astellas, we are relentless in our pursuit of innovative science and in identifying unmet medical needs by monitoring changes in healthcare from multiple perspectives. We are achieving VALUE creation and realization for patients through development of innovative new drugs and healthcare solutions, and enhancement of patient access to healthcare and outcomes around the world by leveraging our strengths. Business Model Fulfill the unmet medical needs by creating and delivering innovative treatments Cutting-edge, VALUE-driven life science innovator This is the simplest answer to the question: “who do we want to be?”. Created in parallel with the 5 year CSP2021, the “Mature State” description of Astellas is an evolving, longer-term image of the Company we expect to become as we strive to realize our VISION. We have distilled the sentiment of the Mature State into 1 phrase and it should be understood as follows: – Cutting-edge: We operate at the forefront of scientific and technological advances to create novel healthcare solutions. – VALUE-driven: Our common definition of VALUE means that everything we think and do is informed by what leads to more and better outcomes that matter to patients. – Life sciences innovator: We leverage and evolve our capabilities to exploit the greatest opportunities across the prescription biopharmaceutical business and beyond, and then continuously bring innovation to life. “VALUE Creation” through research and development activities “VALUE Realization”  through later stage development and commercialization activities 16 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strengthening Our Sustainability by Revising the Materiality Matrix New Materiality Matrix To prepare the new materiality matrix in FY2021, Astellas selected 19 key issues from the perspective of importance for both society and Astellas in sustainability. We then prioritized the 9 material issues (Materiality) from this group. As we believe that the act of prioritizing h g i h y r e v e B and subsequently addressing these 9 material issues will put Astellas on the path to becoming a cutting-edge, VALUE-driven life science innovator with enhanced our business activities meeting expectations from society. This, in turn, will lead to improved sustainability for both Reduction of environmental burden Talent and organizational culture for realizing innovation Responsible supply chain management Access to Health Compliance and ethical business practices Product quality assurance and product safety Astellas and society. VOICE In FY2021, the materiality matrix was revised on a cross-divisional basis, and I led the entire process. In the previous materiality assessment (FY2017), many issues were positioned as the most important, and we received suggestions from external stakeholders that they were too generalized and difficult to understand. In the assessment for FY2021, we took a different approach than in FY2017 in order to narrow down the issues from a more objective perspective and to ensure that Astellas’ unique character- istics are reflected in the assessment results. For the weighting of “Societal Significance” on the vertical axis, we determined priorities by combining the magnitude of the social issues and the level of interests from stakeholders. Furthermore, in weighting the “Significance to Astellas” on the horizontal axis, we also added the perspective of whether Astellas’ assets and capabilities can be used to address the issues. Obviously, we collected input from many internal and external stakeholders as we proceeded with the revision. Internally, the Sustainability Advisory Panel, the Biodiversity Climate change and energy DE&I (Diversity, Equity & inclusion) e c n a c i f i n g i s l a t e i c o S Fulfilling unmet medical needs by creating novel healthcare solutions Safe and appropriate use of products Transformative treatment through innovative therapeutic methods Value-based pricing Animal welfare Data governance Advocacy Digital transformation Patient centricity Responsible R&D Executive Committee, the Board of Directors, and other committees actively discussed this materiality matrix. The revised materiality matrix has narrowed down the number of issues and made it clear which issues Astellas should address. As a result, many stake- holders have commented that it has become a materiality matrix that is unique to Astellas. h g H i High Sayaka Konishi Sustainability Significance for Astellas Important Very Important Most Important Be very high Click here to learn more about the definitions of the key issues (PDF) https://www.astellas.com/system/files/definition_of_key_issues_en_2022_0.pdf 17 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strengthening Our Sustainability by Revising the Materiality Matrix Process of Updating the Materiality Matrix Astellas revised its materiality matrix in FY2021 to reflect changes in the internal and external environment in the steps shown below. Under the VISION “On the forefront of healthcare change to turn innovative science into VALUE for patients,” we have developed specific action plans and started implementation to drive our efforts to address the key issues identified in the materiality matrix. STEP 01 Issue identification STEP 02 Issue prioritization STEP 03 Review and finalization Astellas identifies key issues referring to SDGs and Astellas developed the materiality matrix by The draft materiality matrix was refined and validated various frameworks (IIRC, SASB and GRI standard, ISO prioritizing the identified key issues from the through the information provided by, and a series of 26000 the UN Global Compact’s 10 principles, TCFD perspectives of significance to society and Astellas. interviews with various stakeholders including recommendation), stakeholder engagement informa- Societal Significance, the vertical axis of the institutional investors, industry associations, NPOs, tion, and topics covered by ESG ratings. matrix, was determined by considering the depth of and NGOs. The Sustainability Advisory Panel, In updating a materiality matrix in FY2021, we interest from global stakeholders—multinational consisting of cross-functional Astellas employees, surveyed the shifts in sustainability trends since organizations, governments, NGOs, investors, and held further discussions before the Executive FY2017—the year of the previous matrix update, we industry associations—and the scale of economic Committee reviewed and deliberated the findings, ensured alignment with Corporate Strategic Plan losses caused by social issues. Significance for and the materiality matrix was finally approved by 2021 as well as acknowledging the industry-specific Astellas, the horizontal axis, was determined by the Board of Directors. issues we must address as a pharmaceutical company. assessing not only risks but also Astellas’ degree of The materiality matrix is reviewed and verified by As a result, a list of 19 key issues has been identified. opportunity in utilizing its capabilities and assets to the Sustainability Division annually and will be Viewpoints for identifying key issues #1 Alignment with CSP2021 #2 Shifts in sustainability trends #3 Industry-specific issues we must address as a pharma- ceutical company contribute to the resolution of issues and added updated as necessary. Astellas has set targets and management perspectives based on interviews with action plans to ensure addressing the material issues. top management. 18 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strengthening Our Sustainability by Revising the Materiality Matrix Addressing the 9 most important issues, Astellas will transform to be a VALUE-driven life science innovator, and expand its level of trust as an industry leader. Transforming to be a cutting-edge, VALUE-driven life science innovator There are patients and their families suffering from diseases with no or limited treatment options that cannot provide satisfactory outcomes in society. Astellas is pursuing transformative healthcare solutions that do not simply alleviate the symptoms of diseases. Instead, we are developing innovative therapeutics, such as cell therapies and gene therapies, which are disease-modifying and directly address the underlying cause of the disease. Symptomatic treatment not only places a burden on the patient through commuting to the hospital and inpatient stays, but also increases the burden on their families who nurse and care for them as the social and economic losses are not small. By actively creating innovative treatment measures, Astellas aims to free patients and their families from years of treatment and care, while significantly improving symptoms with only a few treatment cycles. As a result, patients can return to their normal lives sooner, thereby reducing the overall load on the local healthcare system far and wide from the constant need for medical treatment. We believe that one of the most important driving forces to create and deliver great VALUE to society is an organizational culture that realizes innovation. Astellas will continue our endeavor to cultivate an organizational culture and achieve sustain- able value creation through acquiring and developing talent in order to provide the access to healthcare solutions we have created to as many patients as possible. In addition, in order to sustainably create innovative therapeutic approaches and other innovations, it is necessary to set appropriate prices for innovations. Astellas will also cultivate an environment and scheme to ensure that prices fairly reflect the value impact on society, including patients, their families, and the healthcare professionals who support patients' health. Material issues to realize the above Fulfilling unmet medical needs by creating novel healthcare solutions Addressing advanced and hard-to-treat diseases and conditions with a high level of unmet medical needs through Talent and organizational culture for realizing innovation Ensuring talent and an organizational culture that contribute to generating innovation through attraction, retention novel therapeutic molecules and delivery methods, as well as new technologies for disease management—such as and organizational/talent development, with paying attention to employee well-being and new way of working. prevention, diagnosis, treatment and post-treatment care and management—to enable patients to improve their This includes not only the areas directly involved in cutting-edge scientific research and digital technology, but also quality of life. initiatives targeting all functions and talent within the Company. Transformative treatment through innovative therapeutic methods Bringing new value to patients and their families suffering from diseases with no or limited treatment options that Access to Health Delivering medicines and medical services to those who need them through diverse approaches, including creating cannot provide satisfactory outcome, as well as to society as a whole, through innovative therapeutic methods such innovation and patient support programs for patients who cannot access necessary healthcare due to various as cell and gene therapies that could significantly improve symptoms or potentially cure diseases with a single or a circumstances such as geographical and socioeconomic factors. In addition, ensuring a stable and resilient supply of few administrations by addressing the underlying causes of diseases. products to patients by appropriately controlling the supply of raw materials, manufacturing, and distribution. This includes measures against counterfeit medicines. Value-based pricing Ensuring that the price of products in the healthcare industry are set in a manner that fairly reflects the value they bring to patients, their families, healthcare systems, and society. 19 1Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strengthening Our Sustainability by Revising the Materiality Matrix Strengthen business activities to meet expectations of society Astellas manufactures products of excellence in quality at the global standard and continues to deliver safe products to patients. It is our mission to ensure the stable delivery of our products to patients under any circumstances. While ensuring the protection of human rights and safety of all those engaged in procurement, manufacturing, and distribution, ensuring resilient supply chain management in the change of external environment throughout the supply chain. In addition, we will continue to provide information to facilitate the safe and appropriate use of our products by patients. We will foster trust from society by always thinking of patients and their families who are suffering from diseases, considering what healthcare solutions are best for them and what Astellas’ products can contribute to them, and continuing our activities in an ethical manner. We act with compliance and high ethical business practices in all aspects of our business as well as the provision of product information. In addition, we contribute to the societal sustainability with evolving our governance to ensure fair management decisions and operations. Material issues to realize the above Product quality assurance and product safety Ensuring our products are manufactured with appropriate quality assurance standards. Responsible supply chain management Selecting suppliers in compliance with selection criteria, including sustainability perspectives, such as compliance with laws, respecting human rights as well as diversity. Coaching suppliers that need improvements and sup- porting their capacity building. Respecting the human rights of employees and business partners, including the Safe and appropriate use of products Enhancing the safe and appropriate use of our products by healthcare professionals and patients to ensure patient safety and the efficacy and safety of our products. This includes responsible marketing and ethical advertising, maintaining a functional and robust pharmacovigilance system. Compliance and ethical business practices Acting with integrity and making ethical decisions in all aspects in accordance with the spirit of the law and the elimination of discrimination, the freedom of association and the protection of the rights to organize, and the social norms that support it and going beyond compliance with applicable laws, regulations and industry codes. exclusion of child labor and forced labor. Promoting such behavior through our global compliance structure and the development, implementation, and continuous enhancement of necessary policies and processes, and focusing our activities on Anti-bribery / Anti-corruption compliance, avoiding conflicts of interest, seeking to pay the right amount of tax in the right place at the right time, encouraging a “speak-up” culture, and demonstrating our commitment to integrity, ethics and compliance. 20 2Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data The VALUE that Astellas Provides Our Common Definition of VALUE Is the Foundation to Realize Our VISION For Astellas to realize its VISION, we work with a “Common Definition of VALUE” (see graphic below) to clearly communicate and share our aspirations with diverse stakeholders. * VALUE OF PATIENTS With “outcomes that matter to patients,” Astellas is committed beyond the safety and efficacy of treatments. We seek to understand and optimize our products, and their subsequent use, to maximize improvements in quality of life (QOL) and to minimize the burdens they create. For “costs to the healthcare system of delivering those outcomes,” we are looking at the individual costs borne by the patient, the healthcare costs borne by insurance companies and public institutions, as well as the indirect costs and burdens imposed on the patient’s family and caregivers. For example, if a drug proves effective in treating a disease that has conventionally required surgery, the outcome for the patient will be significant. It will not only lessen the physical burden on the patient, but also the mental and lifestyle burdens generally experienced by patients. These benefits are not limited to the patients alone. They will ripple out across society, from the patient’s families and friends to medical institutions as a whole. With lower hospitalizations and surgeries, these institutions can care for a higher number of patients. Therefore, reducing the denominator in our Common Definition of VALUE equation can affect a positive change across society. We believe that by placing this concept at the core of our business and adapting it to all divisions and regions, Astellas will be able to make a greater contribution to healthcare. Corporate Strategic Plan 2021 (CSP2021) is based on this “VALUE” equation, with an overall aim to increase VALUE for patients and realize our VISION. * Adapted from “What Is Value in HealthCare?” Porter, M.E. (2010). New England Journal of Medicine 21 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Providing Value to Stakeholders Value provided • Improving people’s quality of life and enhancing community healthcare by creating innovative new medicines • Improving technology level, development of healthcare industry • Recommendations for better healthcare policy • Participating in economic and industry associations and various external initiatives Public administration Value provided • Social contribution activities and donations • Environmental conservation • Job creation • Increasing awareness and under- standing of diseases and medical care Examples of activities: • Open forums (2 times/FY2021) Target: General public (including patients and their families) Local community Value provided • Opportunities and places for self-development and self-actualization • Places, co-workers, and resources for solving social issues and contributing to the health of people around the world • Job satisfaction • Good working environment (work style reforms, promotion of remote work, etc.) • Compensation Employees Value provided • Find new knowledge from research data to create scientific innovation • Applying cutting-edge research findings to medical care • Training researchers Academia, research institutions Patients and their families Healthcare professionals Value provided • Fulfilling unmet medical needs by creating innovative medicines and medical solutions • Providing information on safety and efficacy • Improving Access to Health (ATH) • Ensuring a continuous stable supply of investigational drugs and commercialized products • Support for patient organizations • Reducing the burden on families and the entire healthcare system Dialogue results: • Medical seminars for patients and their families (4 times/FY2021) Value provided • Providing information on safety and efficacy (including promotions) • Ensuring a stable and resilient supply of investigational drugs and commercialized products Dialogue results: • Ask me anything (18 times/FY2021) • Dialogue with CEO (30 times/FY2021) • OHG Leadership Conversations (3 times/FY2021) Value provided • Driving innovation and creating new value through collaborations with Astellas and integration of capabilities Business partners Shareholders and investors Value provided • Sustainable enhancement of enterprise value • Stable shareholder dividends • Timely and appropriate information disclosure • Engagement with investors Dialogue results: • IR meetings with securities analysts and institutional investors (approx. 220 times/ FY2021, including 20 ESG meetings) • Earnings calls and IR events (Corporate Strategic Plan announcement, R&D meeting, Sustainability meeting, etc.) (10 times/FY2021) 22 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Progress of Corporate Strategic Plan CONTENTS Progress of Corporate Strategic Plan 23 Corporate Strategic Plan Review Corporate Strategic Plan 2021 Interview with Chief Strategy Officer Interview with Chief Financial Officer Strategic Goal 1 Message from Chief Commercial Officer Progress of Strategic Goal 1 Strategic Goal 2 Message from Chief Scientific Officer Progress of Strategic Goal 2 Digital Transformation Strategic Goal 3 Message from the Head of the Rx+ Business Accelerator Progress of Strategic Goal 3 Strategic Goal 4 Message from the Head of the Sustainability Division Progress of Strategic Goal 4 Organizational Health Goals Message from the Head of Human Resources People and Organization for Innovation Initiatives for People and Organization Organizational Health Goals Engagement, Diversity, Equity and Inclusion 24 25 28 31 34 35 36 39 40 41 45 46 47 48 50 51 52 58 59 61 62 63 65 23 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Review of Corporate Strategic Plan Corporate Strategic Plan 2015 (FY2015-FY2017) Financial Guidance ROE 15% or more Maintain and improve this level after the strategic plan period 15.1% Average for 3 years, FY2015 – FY2017 Revenue CAGR (%): Mid single-digit Core operating profit CAGR that exceeds revenue +1.4%*1 +7.5%*1 R&D investment Higher than 17% of revenue 16-17% of revenue / improvement of cost structure Core EPS CAGR that exceeds CAGR of core operating profit DOE 6% or more +13.2%* Achieved EPS CAGR exceeding CAGR of core OP along with enhancement of capital efficiency 5.7% Result of FY2017 Corporate Strategic Plan 2018 (FY2018-FY2020) Financial Guidance Revenue FY2017 level (¥1,300.3 billion) R&D investment More than ¥200.0 billion Core operating Profit Core Operating Profit margin 20% Core EPS Exceed FY2017 level (¥100.64) ¥1,249.5 billion Not achieved ¥224.5 billion Achieved 20.1% Achieved ¥113.03 Achieved Major Initiatives and Accomplishments Strategic Goal 1 Maximizing Product VALUE and Operational Excellence Sales of XTANDI and mirabegron steadily increased. XTANDI’s growth exceeded original expectations Continued launches of new products in Japan 6 post-PoC projects: Achieved important milestones as planned. Successful launches of XOSPATA, PADCEV, EVRENZO and positive initial uptake Operational Excellence: Prioritize sales promotion expenses and promote global procure- ment efficiencies and travel cost reductions (approx. ¥50.0 billion*2 profit improvement) *2 Cumulative total of FY2018-FY2020 Major Initiatives and Accomplishments Renewed the VISION in 2015. Astellas declared approach. Through the Corporate Strategic a graduation from a business model that Plan 2015-2017, we strengthened our global specializes in specific disease areas. This management system, expanded to various became the origin of the shift to a Focus Area modalities and biology, advanced late-stage approach that constantly explores new busi- development programs, and acquired key ness opportunities from a multidimensional assets. *1 CAGR for 3 years starting from FY2014 results Strategic Goal 2 Evolving How We Create VALUE: With the Focus Area Approach Progressed clinical programs in the designated Primary Focus Strengthened capabilities through collaborations and acquisitions to continuously produce innovative projects Enhanced utilization of innovative platforms among multiple Primary Focuses and produced multiple promising projects Strategic Goal 3 Developing Rx+ Programs Progressed toward establishment of a foundation for Rx+ business Achieved partnerships with various technologies from different fields Successfully advanced multiple programs toward commercialization Summary of CSP2018 We have established a common definition of entry into gene therapy in addition to cell VALUE that is the foundation to realize our therapy. We have included Rx+ as one of our VISION. As a strategy for creating VALUE, we strategies in order to develop new healthcare established a Focus Area approach and identi- solutions. We have built the foundation to fied Primary Focuses to invest in as a priority. execute a Focus Area approach fully in the next Through acquisitions, we have made a full-scale CSP2021. 24 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Corporate Strategic Plan 2021 Corporate Strategic Plan (CSP) 2021 Overview VISION FY2021 - FY2025 CSP2021 Performance Goals Aim to become a company with a Market Cap valued at more than ¥7 trillion yen in FY2025 by achieving 1. Revenue: XTANDI and Strategic products* sales ≥ ¥1.2 trillion in FY2025 2. Pipeline Value: Focus Area projects expected sales ≥ ¥0.5 trillion in FY2030 3. Core Operating Profit Margin: ≥ 30% in FY2025 * XOSPATA, PADCEV, zolbetuximab, Evrenzo, fezolinetant, AT132. Strategic Goals 1. Enable patients to achieve better outcomes 2. Translate innovative science into proven VALUE 3. Advance the Rx+ business 4. Deepen our engagement in sustainability Astellas created Corporate Strategic Plan 2021 (“CSP2021”) as a 5-year plan for FY2021 to FY2025 to pursue our VISION. We characterize CSP2021 as follows: • Evolved strategy • Ambitious goals • Transformative execution • Same deep commitment to our VISION In creating the CSP2021, we considered who we want to be in the long term. We refer to this as the “Mature State” and, in short, our Mature State image is to be a “Cutting-edge, VALUE-driven life sciences Innovator.” One of the major differences between CSP2021 and CSP2018 is that it consists of 3 types of goals that mutually reinforce each other as they are pursued. First, we have strategic goals (“SGs”). We have 4 Strategic Goals, and the first 3 goals focus on “what’s next” following our efforts in CSP2018. SG4 is newly introduced. We considered that it is needed to set the sustainability thinking in the core of our business. We aim at solving social issues through our core business. Our sustainability is the sustainability for both society and Astellas. We have newly set Organizational Health Goals in CSP2021. We have adopted 3 goals. We recognized that we need to transform our organization and create the best internal environment to drive innovation and maximize our execution. Organizational Health Goals 1. Unlock innovation 2. Talent & leadership thrives 3. Strengthen collaboration • Fostering a corporate culture that aims to achieve ambitious goals • Significantly improving our execution capabilities Performance Goals are set to measure successful execution of CSP2021 and indicate our ambitious goals in financial terms. We set goals from 3 aspects: revenue, pipeline value, and core operating profit margin. By achieving these Performance Goals, we aim to become a company with a market capitalization of more than ¥7 trillion in FY2025. 25 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Corporate Strategic Plan 2021 Progress of Strategic Goals Goals 1. Enable patients to achieve better outcomes 2. Translate innovative science into proven VALUE 3. Advance the Rx+ business 4. Deepen our engagement in sustainability Progress of Organizational Health Goals Major Initiatives and Accomplishments • Although the ambitious full-year forecast was not achieved, sales of XTANDI and strategic products increased 19% year on year • Fezolinetant obtained top-line results from a SKYLIGHT 4 study, which is a Phase III long-term safety study. (Submitted fezolinetant NDA to the US FDA in June) • Enfortumab vedotin received a CHMP positive opinion (subsequently, PADCEV was approved in the EU in April and launched). PADCEV was also approved and launched in Japan Achieved additional approvals in the US • Xtandi additional indication (mHSPC) approved in the EU • EVRENZO approved and launched in the EU • Reorganization of commercial functions in order to centralize and standardize functions globally and build stronger capabilities • AT132 clinical study was put on clinical hold and the development plan was revised • Achieved 9 candidate nomination decisions in research for clinical development • 4 projects entered the clinical development phase with new modalities/technologies such as bispecific immune cell engager and protein degrader • There were judgments in 7 projects among the ones expected for PoC judgement within the CSP2021 period. As a result, no projects achieved PoC in FY2021 • Reformed the research organization to be agile and accelerate innovation • First program commercialization (My Holter II, ECG analysis service using AI) • Based on the good results obtained in the Phase II study of ASP5354, preparations are being made for conducting the Phase III study P.34 P.39 P.46 • Updated our materiality matrix and reidentified 19 key issues including 9 material issues (Materiality) • Developed and disclosed Access to Medicines strategy, and selected 4 programs for the health system strengthening • Scenario analysis was conducted for disclosure based on TCFD recommendations. In 2021, a qualitative analysis was conducted and published • Strengthened in advocacy of our efforts on sustainability (e.g., conducted sustainability meeting for the investor community, named in the FTSE4Good Index P.50 Series for 11 consecutive years) Goals Major Initiatives and Accomplishments 1. Unlock innovation 2. Talent & leadership thrives 3. Strengthen collaboration • Promoted deep understanding of CSP2021 among all employees, with increased direct communication by Top Management • Redesigned divisional objective-setting with shared and ambitious objectives • Astellas Leadership Expectations were formulated to substantially transform our corporate culture, and training for all leaders (about 3,000 people) was completed P.58 26 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Corporate Strategic Plan 2021 Relationship to Material Issues 1 2 3 4 5 6 7 8 9 Access to Health Fulfilling unmet medical needs by creating novel healthcare solutions Transformative treatment through innovative therapeutic methods Value-based pricing Product quality assurance and product safety Safe and appropriate use of products Compliance and ethical business practices Responsible supply chain management Talent and organizational culture for realizing innovation Astellas will evolve sustainability for society and Astellas by addressing the key social issues and materiality Strategic Goals 1. Enable patients to achieve better outcomes 2. Translate innovative science into proven VALUE 3. Advance the Rx+ business 4. Deepen our engagement in sustainability Organizational Health Goals 1. Unlock innovation 2. Talent & leadership thrives 3. Strengthen collaboration 27 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Interview with Chief Strategy Officer Naoki Okamura Representative Director, Executive Vice President Chief Strategy Officer (CStO) Continuing to generate innovation is an abiding theme for us. To that end, we will transform Astellas into an optimal organization with optimal work styles as we steadily execute Corporate Strategic Plan 2021. Q. A. Tell us about the positioning of Corporate Strategic Plan 2021 and the key points involved in achieving its goals. Corporate Strategic Plan 2021 is a further evolution of Corporate Strategic Plan 2018. To realize the goals of the new plan, it is essential that employees themselves drive transformation proactively. Corporate Strategic Plan 2021 (“CSP2021”) is a like when our management approach and our roadmap for realizing Astellas’ VISION “to be at business direction are successfully matched. In the forefront of healthcare change to turn inno- other words, CSP2021 clearly lays out what to do, vative science into VALUE* for patients.” The 4 how to do it, and what we will achieve in the end. Strategic Goals set forth in the plan are a further To achieve the goals, I think it is vital for all evolution of the 3 Strategic Goals of Corporate Astellas employees to drive transformation by Strategic Plan 2018 (“CSP2018”), with the addition themselves proactively, with a deep under- of sustainability- related initiatives. The business standing of the concepts and philosophy of areas the Company is focusing on remain CSP2021 and broader perspectives between unchanged. Looking back on CSP2018, however, the Company’s position and each employee’s although the goals were clear, we realized there own mission. So, I believed that the penetration were factors which are hindering us from effec- of the concepts of CSP2021 was our most tive execution. In CSP2021, therefore, we set critical task, we focused on dialogue with Organizational Health Goals as means of achiev- employees in FY2021 as the first year of the ing the Strategic Goals, and set Performance CSP2021. We fully delineated the newly estab- Goals describing what the Company will look lished Organizational Health Goals and 28 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Interview with Chief Strategy Officer Performance Goals in particular, and held a sessions had about 7,000 employees (including Although there are several things not sense is that each Strategic Goal made solid total of 18 “Ask Me Anything” sessions— internal those attending multiple sessions), and 730 achieved when we see in detail, overall our progress in the first year of CSP2021. meetings held online in which employees were questions were answered. able to interact with me directly. Altogether, the *1 Proof of concept refers to confirming efficacy and other aspects of a product in clinical trials to support moving into late- stage development. *2 Investigational device exemption is an application made to the FDA to allow a device to be used in a clinical study in order to * Astellas defines VALUE as “Outcomes that matter to patients” divided by “Cost to the healthcare system of delivering those out- comes.” See P.21 for more information on our VALUE. collect safety and efficacy data. *3 For details, please refer to P.17. Q. A. Tell us about the progress of the Strategic Goals set out in CSP2021. Q. What kind of initiatives can we expect in FY2022? In FY2021 as the first year of the CSP2021, each strategy has made solid progress. A. We will steadily achieve development and regulatory milestones of strategic products. In particular, once we obtain approval of fezolinetant, we will finally be able to launch it in the US. I would like to look back at the Strategic Goals and commercialization of the My Holter II ECG individually. In terms of Strategic Goal 1 “Enable analysis service. In the area of bioelectronics, FY2022 is a key year for achieving the women suffering from VMS in the US received patients to achieve better outcomes,” sales of iota Biosciences, Inc., which we acquired in Performance Goals of FY2025. We plan to file in hormone replacement therapy (HRT). However, strategic products grew, offsetting sales declines 2020, moved forward with development of tiny the US for XTANDI for non- metastatic castration- since HRT was identified as posing a risk for by the termination of distribution agreements wireless and implantable medical devices as sensitive prostate cancer. We also plan to file in other diseases and there were no other alterna- and product transfers for mature products. small as a few millimeters or less. As this is the US for enfortumab vedotin (PADCEV) as a tives, VMS has been left virtually untreated for Although performance in the Q4 was not good promising for a wide range of applications, we first- line treatment for metastatic urothelial the past 2 decades. Fezolinetant meets this enough, I think our current growth strategies have high expectations for this technology as a cancer. We also expect to obtain the topline unmet medical need, using a completely differ- performed well throughout the year. next- generation business. Several projects are results of several pivotal trials. By steadily achiev- ent mechanism of action from HRT. Given the Regarding Strategic Goal 2 “Translate innova- tive science into proven VALUE,” we were disap- pointed not achieving any PoC*1 in FY2021. progressing ahead of schedule and we are preparing to apply for an IDE*2 to move forward ing these milestones, we will develop the foun- situation in 2000, we assume that the market dation for sustainable growth and move toward potential for the drug is unchanged, at 12 million to the clinical stage. a medium- to long-term profit growth trend. people. We forecast 500 billion yen peak sales at However, we did see following success results: 9 Finally, in terms of Strategic Goal 4 “Deepen Another important upcoming topic is the most, and expect fezolinetant to become a core new therapeutic drug candidates started prepa- rations for clinical development, and 4 projects our engagement in sustainability,” we revised the Materiality Matrix*3. It was a great accom- application for approval of fezolinetant in the US product after XTANDI. We will seek to garner in June 2022. This drug is for the treatment of awareness of the drug among both physicians entered into the clinical stage. plishment to redefine the former 31 key issues vasomotor symptoms (VMS) associated with and patients, aiming to expand sales quickly. We saw solid progress with Strategic Goal 3 into 19 issues, while clarifying that 9 of the 19 menopause. Until around 2000, 12 million “Advance the Rx+ business,” including starting key issues have priority in terms of our sustain- pilot marketing of the Fit- eNce Home service ability initiatives. 29 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Interview with Chief Strategy Officer Q. Going forward, what should be the central focus for Astellas and what should be transformed? A. Continuing to generate innovation is an abiding theme for Astellas. To that end, we will transform the organization, ways of working, and our talents. risks of new actions and responses before we report to me, 10 people are located outside take those new actions. That kind of approach Japan. Nearly all functions of the corporate is simply not viable at the frontlines of current organization are globalized. We are confident R&D. To survive, it is critical for highly special- that we can maintain close communication ized staff to step up the pace of repeated trial- with one another without going to the Tokyo and- error research while taking risks headquarters—it is how we are already operat- appropriately. However, the critical thing is not ing day to day. We will continue working to merely the shape of the research organiza- create a more open, more flat organization. The pharmaceutical industry underwent a major innovation. Our task is to take on the challenge tion—the idea is to raise the risk tolerance of We are also looking to attract core talent change at the turn of the 21st century. In the of doing something that has never been done the Company as a whole. from outside the Company. Not only in R&D but past, product development by improving exist- before. Fear of failure does not lead to success. For the work styles of employees outside of also in corporate divisions, professionals in their ing products generated profits well. Now, how- In FY2021, we transformed our research R&D, we are moving away from our former way respective fields have come onboard at Astellas ever, if a pharmaceutical company cannot organization, getting rid of the former top- of doing things as well. For instance, online at the level of executive leaders. I am delighted provide truly superior products to the market, it down and functional organizations and transi- meetings are now the mainstream, joining for the new vitality and creativity that such loses its raison d’ être. Consequently, by turning tioning to an agile organization that enables from all over the world. Of the 14 leaders who personnel are bringing to Astellas. innovation into VALUE, we seek to create prod- rapid decision- making and autonomous activi- ucts that only Astellas can deliver. ties. In the processes of the former organization, “Intelligent risk-taking” is needed for we spent a lot of time and effort analyzing the Q. As CStO, do you have a message for stakeholders? A. We will work as One Astellas to achieve sustainable growth. I put a secondary title to CSP2021 as the “5 years demonstrate leadership, and enjoy working to for us to prove that Astellas will continue to grow reach further heights. I ask our investors, cus- even after the XTANDI patent expires.” I believe tomers, and business partners to look forward other strategic products can fill the gap of the to VALUE that Astellas is going to create. expiration of the XTANDI patent. However, fur- ther growth will depend on the success of the pipeline from Primary Focuses and the Rx+ business. The key to success is achieving the Organizational Health Goals. Under the banner of “One Astellas,” I would like all employees to have the courage to take risks appropriately, 30 Naoki Okamura Representative Director, Executive Vice President Chief Strategy Officer (CStO) Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Interview with Chief Financial Officer We will target profit growth by balancing growth investments and cost reductions and increase our valuation through emphasizing accountability and sustainability. Minoru Kikuoka Senmu Tantou-Yakuin Chief Financial Officer (CFO) Q. What are your ambitions in your new role as CFO? A. I will use my experience and knowledge to contribute to Astellas, which is accelerating its globalization, in order to increase global competitiveness. and undertake a lot of technology out-licensing. employees go beyond the barriers of language, In recent years, to drive open innovation and culture, and distance further and push forward gain new capabilities, we have not only been to the same goal. pursuing in-licensing and alliances, but also I would like to contribute to Astellas, which actively acquiring companies outside Japan. is accelerating its globalization, by leveraging These companies continue to operate within my experience as a CEO, and as a CFO during the Astellas Group as independent divisions. the manufacturing of electronics-related mate- However, in the future, we recognize the need rials and parts, as well as my knowledge of the for “true” globalization, in which all Astellas pharmaceutical industry. Q. What are your thoughts on growth investment and cost reduction? A. Cost reduction wouldn’t always come first. It’s important to figure out investments which are crucial for Astellas to grow. In the electronics industry, in which I have One of the Performance Goals of the experience, the business model is that products Corporate Strategic Plan 2021 (CSP2021) is to have short product lifespans, so unless the achieve more than 30% core operating profit investment is quickly recouped, the product will margin in FY2025. Our explanation to achieve be replaced by the next new product. Therefore, this target is to keep SG&A expenses flat in while investing in development, the point is to terms of the absolute amount. In taking on the rapidly improve the profit margin by thoroughly challenge of achieving this goal, I would not reducing costs during the mass production approach it with a mindset of “defending the phase. In the pharmaceutical industry, however, absolute amount of SG&A expenses at all cost.” once a product is launched and is covered by This is because there are a variety of things that insurance reimbursement, a certain amount of change on a daily basis in the course of expand- profit is guaranteed for as long as the patents ing our strategic products, and if we only focus I am Minoru Kikuoka and I joined Astellas as CFO marily by in-house medical representatives (MRs). protect said product.. So the important question on cost reduction, we may miss opportunities. in March 2022. Since around the 2000s, Astellas I believe it promoted a unique globalization is how to deal with the huge investment in Increases and decreases in SG&A expenses has focused on commercialization by themselves among Japanese pharmaceutical companies, research, development and commercialization are the result of optimal investment that priori- for outside Japan, building an infrastructure pri- which at that time had many sales alliances strategy after the product launch. tizes growth. In reality, sales revenue may be 31 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Interview with Chief Financial Officer large and SG&A expenses may be large, or requires a marketing strategy focusing on fulfill- “monozukuri” (manufacturing) approach for concept of “Dansharism”, which promotes elimi- conversely, sales revenue may be small and ing patients’ needs. Although it is a product with which Japan is renowned around the world. nating work with low priorities and leads to SG&A expenses may be small. great profit potential, I believe it needs manage- Although Astellas has a different business making necessary investments, will be the As CFO, it is my responsibility to find the ment leadership because various activities after model, I believe that we can achieve significant foundation for Astellas’ global innovation and most efficient balance for Astellas’ sustainable obtaining marketing approval are important in improvements in business efficiency by sharing will lead to a significant improvement on the growth and maximization of corporate value. order to maximize its VALUE. For this reason, I successful Danshari examples globally. The SG&A ratio described in CSP2021. For example, fezolinetant, for which we believe that another role of the CFO is to disclose submitted an NDA to the US FDA in June 2022, and communicate detailed information and is not only an innovative new drug, but also further enhance the accountability of Astellas. Q. What is so-called “Dansharism,” which started from FY2022? A. Dansharism is a new initiative where each employee is encouraged to develop financial discipline and cost ownership. Furthermore, it dramatically improves labor productivity and brings innovation. The first initiative I introduced right after I was profits under improved efficiency if the existing appointed to the CFO was “Dansharism” and I corporate culture or environment remain am currently promoting all Astellas employees unchanged. In order to prevent this situation, I for better understanding. Dansharism does not encourage all employees to look back at their simply mean cost reduction but aims to dramat- individual work, identify every opportunity, and ically improve labor productivity by fostering become “brave” to release things that are in your financial discipline and cost ownership in each way (such as creating periodical reports uncon- employee, and a major shift in the mindset of sciously, or attending a marathon meeting). day-to-day operations. I believe the time and mental white space Many companies tend to have routine work created in this way will become the source of lasting for many years or labor and costs that do innovation for future Astellas employees. not directly link to the revenue. However, under Many Japanese companies have thoroughly * DX: Digital transformation Step of Dansharism 1. Thoroughly reevaluate our work and activities without exception 2. Define what work to halt or terminate 3. Actually halting or terminating that work Target: Specification: Execution: All work, including accepted practices continuing on from the past, outdated processes, and routine work Classification: Categorize work with a “Must have” or “Nice to have” perspective Specify work that brings “less” ROI or are “less” priority (Example) Existing outdated processes, reports of similar content, reports of excessive quality, review of meeting attendees, etc. Be “courageous” and halt work that was specified in order of less importance and eventually secure a white space for employees Consequently, invest resources in new things while reducing costs Building an environment that enables the creation of innovation in a sustainable manner through thorough efficiency improvements Q. What are your thoughts on capital allocation and financing? A. Our top priority is investment for business growth. We will also consider share buybacks while securing liquidity on hand. these circumstances, innovation would not eliminated such waste during the process of In our capital allocation policy at Astellas, our the profit/cash flow plan and actual perfor- occur. In addition, there are cases where, for improving profits and quality in mass produc- top priority is investment for business growth. mance throughout the CSP2021 period. When example, DX* investment cannot create additional tion at their factories. This has given rise to the We plan to raise the dividend level aligned with excess cash is available, we will execute share 32 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Interview with Chief Financial Officer buybacks flexibly. Astellas will consider these a large-scale acquisition that could affect the processes on the basis of securing liquidity on future of the Company. hand. If cash and deposits constantly exceed The financial status of Astellas is extremely 250-350 billion yen, we will consider executing healthy. To enhance our stock price valuation, share buyback. however, we need to deepen our discussion on As CFO, I believe that we should not limit our the optimal capital structure such as the debt- Q. A. Lastly, what are your thoughts on valuation? A. In addition to profit growth, we emphasize accountability and sustainability, and aim to increase corporate value. growth by too much sticking to maintaining a to-equity ratio and ROE. In particular, in prepara- Astellas has earned a certain degree of recog- shareholders and investors and gaining a conservative balance sheet. My responsibility is tion for the risk of an era of high interest rates, nition from the investment community for its sense of security and understanding from to support the acquisitions and alliances that we will also review the ratio of short-term and management strategy. But we need to make other stakeholders through the sufficient level are necessary for Astellas and to arrange the long-term borrowings. further efforts to increase corporate value of disclosure. financing, including capital policy in the case of going forward. One of our goals is to obtain a higher evaluation in terms of profit multiples on valuation by executing CSP2021, but as CFO I would like to manage the Company with sufficient attention to the stability of the exter- nal evaluation. In order to improve corporate value, not only profit growth but also accountability and sustainability are important components. As I mentioned earlier, our policy is to increase corporate value by earning the trust of our Minoru Kikuoka Senmu Tantou-Yakuin Chief Financial Officer (CFO) 33 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 1 Enable patients to achieve better outcomes Astellas is committed to maximize patient access to our products and to partner effectively with healthcare stakeholders to secure the realization of VALUE. To achieve this, we strive to accelerate submission of New Drug Applications (NDAs), reducing the time to achieve broad geographic coverage, implementing sophisticat- ed launch plans and prioritizing our efforts across the portfolio towards where the VALUE opportunity is greatest. It is through pursuing these activities in asso- ciation with this Strategic Goal that Astellas will maxi- mize the value of XTANDI and Strategic products that drive medium- to long-term growth. Strategic products are fezolinetant, PADCEV, XOSPATA, zolbetuximab, EVRENZO and AT132. Relationship to Material Issues • Access to Health • Fulfilling unmet medical needs by creating novel healthcare solutions • Transformative treatment through innovative therapeutic methods • Value-based pricing • Product quality assurance and product safety • Safe and appropriate use of products 34 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 1 Enable patients to achieve better outcomes Message from Chief Commercial Officer We are striving to globalize our organization with a view to continuing to deliver better outcomes to patients. Yukio Matsui Senmu Tantou-Yakuin Chief Commercial Officer (CCO) One of my major achievements as CCO has been the focus on the globalization of the commercial organization. It enabled us to establish a platform that can efficiently develop and deliver high-value-added products globally. environment such as the COVID-19 pandemic, we changed the organizational structure. It is promoting digital transformation and deploying online sales representatives to approach new customers as well as existing customers. At the same time, by optimizing the resource allocation to align with our business strategy we have been able to focus our resources on products that are highly profitable. As a result, we achieved double-digit growth for our strategic products. We continue striving to deliver better outcomes to patients while strengthening and improving our human resources and corporate culture. In FY2022, to realize the Strategic Goals set in CSP2021, maximizing VALUE for patients remains a key priority. My responsibility is to define and execute what to change and optimize in order to maximize VALUE for patients. This allows appropriate collaboration with Medical Affairs and other functions, rather than focusing solely on optimizing the commercial organization. Furthermore, we don’t rely on traditional face-to-face communication. We aim to pursue an omnichannel approach combining digital and non-digital communication depending on customer preferences. As we believe these initiatives will lead to maximizing the VALUE offered through our products, we are focusing not only on existing products such as XTANDI, but also As CCO, since FY2021 I have devoted my attention to meeting the goals set in our Corporate preparing for the launch of fezolinetant, and for the additional indication of PADCEV (first-line Strategic Plan 2021 (CSP2021). In that respect, I am proud of our efforts toward the globalization treatment for metastatic urothelial cancer). We expect these products to become potential of our commercial organization. We have strategically enhanced and consolidated product growth drivers. In CSP2021 we are targeting a core operating profit margin of 30% or greater in marketing functions. Also, we have been making bold changes to our organization and division FY2025. To achieve the goal, it is critical to enhance our organizational capabilities and create an of roles in such a manner. As a result, we enabled consistent operations worldwide. Specifically, efficient structure that generates higher returns on investment. we have undertaken workforce optimization, and transformed our organization. We changed it The key factors supporting these initiatives are talent, mindset and corporate and organiza- from a regionally segmented commercial organization into one that facilitates brand marketing tional culture. We will continue to strengthen and enhance all these factors through working and sales support globally. Furthermore, in order to respond to changes in the external toward Organizational Health Goals that are important to achieve Strategic Goals in CSP2021. 35 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 1 Enable patients to achieve better outcomes Progress of Strategic Goal 1 Potential peak sales of XTANDI and Strategic products XTANDI (enzalutamide) In CSP2021, we disclosed potential peak sales of XTANDI and Strategic products and we reviewed them in April 2022. We forecast robust growth for XTANDI and Strategic products. In one of our Performance Goals, we target more than 1.2 trillion yen in sales in total from these products in FY2025. Product*1 Potential Peak Sales (Global, billions of yen) XTANDI (enzalutamide) fezolinetant 600 – 700 300 – 500 PADCEV (enfortumab vedotin)*2 300 – 400 XOSPATA (gilteritinib) zolbetuximab EVRENZO (roxadustat)*3 100 – 200 100 – 200 50 - 100 *1 Only indications undergoing pivotal studies are included for projection. (as of April 2022) *2 Sales for Americas are calculated based on the sales booked by Seagen. *3 Astellas territories only; Japan, Europe, the Commonwealth of Independent States, the Middle East, South Africa, etc. Key events anticipated during CSP2021 (as of July 2022) For XTANDI, PADCEV and XOSPATA, we plan to expand indications to include cancer patients at earlier stages and seek to maximize product value. For fezolinetant, we filed for regulatory approval in the US in June 2022 and anticipate launching in late FY2022. For zolbetuximab, we aim to file for regulatory approval in FY2023. XTANDI sales totaled 534.3 billion yen in FY2021, up 17% year on year. In Europe, an additional indication of M1 CSPC (meta- static castration-sensitive prostate cancer) was obtained in April 2021, contributing to sales growth. During the CSP2021 period, we expect to expand indication for M1 CSPC in Mainland China and broaden indication for earlier stage M0 CSPC (non-metastatic castration-sensitive prostate cancer) in the US. Sales have been steadily increasing, raising the likelihood of achieving the potential peak sales of 600–700 billion yen. Sales Forecast (Image) M0 CSPC Peak 600 – 700 billion yen M0 CSPC M1 CSPC M0 CRPC M1 CRPC Product*4 XTANDI (enzalutamide) XOSPATA (gilteritinib) PADCEV (enfortumab vedotin) zolbetuximab fezolinetant AT132 (resamirigene bilparvovec) FY2021 FY2022 FY2023 FY2024 FY2025 or later Target Filing Timing M0 CSPC AML, post-HSCT maintenance AML, newly diagnosed and HIC-eligible mUC, previously untreated (AA in US) based on EV-103 study cohort data mUC, previously untreated (1L) MIBC FY21 FY25 M1: Metastatic, CRPC: Castration-resistant prostate cancer FY30 As of CSP2021 announcement (May 2021) Gastric and GEJ adenocarcinoma Moderate to severe VMS associated w/ menopause Glossary of Abbreviations XLMTM M0: Non-metastatic CSPC: Castration-sensitive prostate cancer AML: Acute myeloid leukemia HSCT: Hematopoietic stem cell transplantation HIC: High-intensity chemotherapy mUC: Metastatic urothelial cancer AA: Accelerated Approval 1L: First line MIBC: Muscle-invasive bladder cancer GEJ: Gastroesophageal junction VMS: Vasomotor symptoms XLMTM: X-linked myotubular myopathy *4 Only indications undergoing pivotal studies are included (as of Apr 2022). Subject to internal assessment, decision and regulatory consultation, as appropriate. Filing (submission) timing in the first country/region within US, EU, JP. 36 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 1 Enable patients to achieve better outcomes Progress of Strategic Goal 1 PADCEV (enfortumab vedotin) XOSPATA (gilteritinib) PADCEV sales totaled 21.7 billion yen in FY2021, up 70% year on year. In the US., additional indication was obtained in July 2021, and market penetration exceeded expectations in Japan and Europe where it was launched from November 2021. As for the development status of the first line mUC (metastatic urothelial cancer), which is expected to be the largest growth driver, positive topline results were obtained from one of the clinical trials, EV-103 study Cohort K in July 2022. Progress is on track to achieve the potential peak sales of 300–400 billion yen. Sales Forecast (Image) MIBC Peak 300 – 400 billion yen MIBC 1L mUC 2L+ mUC 1L mUC FY21 2L+: Second line and later FY25 FY30 XOSPATA sales totaled 34.1 billion yen in FY2021, up 43% year on year. Established the position of market leader in the US and Japan. It was launched in Mainland China in April 2021 and launches in other countries are planned. During the CSP2021 period, we expect to expand indications for earlier-stage patients, and progress is on track to achieve the potential peak sales of 100–200 billion yen. Sales Forecast (Image) Newly diagnosed and HIC-eligible Post-HSCT maintenance Peak 100 – 200 billion yen Newly diagnosed (HIC eligible) Post-HSCT maintenance R/R R/R: Relapsed or refractory FY21 FY25 FY30 As of CSP2021 announcement (May 2021) EVRENZO (roxadustat) EVRENZO sales totaled 2.6 billion yen in FY2021, up 132% year on year. In Japan, progress has been below expectations due to intense competi- tion. In Europe, where it was launched in September 2021, differentia- tion from existing standard of care has not progressed as expected. On the other hand, we expect reimbursement to start in European countries in the second half of FY2022 and expect the sales to increase thereafter. As of CSP2021 announcement (May 2021) Sales Forecast (Image) Peak 50 – 100 billion yen Anemia associated with CKD CKD: Chronic kidney disease FY21 FY25 FY30 As of CSP2021 announcement (May 2021) 37 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 1 Enable patients to achieve better outcomes Progress of Strategic Goal 1 zolbetuximab Zolbetuximab is a first-in-class antibody targeting Claudin 18.2. Topline results from 2 Phase Ⅲ studies in gastric and gastroesophageal junction adenocarcinoma are expected in the second half of FY2022. Based on these studies, we aim to file for regulatory approval in FY2023. Our goal is to establish zolbetuximab as the first- choice treatment for eligible patients, and we are projecting potential peak sales of 100–200 billion yen. Sales Forecast (Image) Peak 100 – 200 billion yen Gastric and GEJ adenocarcinoma FY21 FY25 FY30 As of CSP2021 announcement (May 2021) fezolinetant Fezolinetant is an investigational nonhormonal compound being developed for the treatment of moderate to severe vasomotor symptoms ( VMS) associated with menopause. We have obtained positive results from 3 Phase Ⅲ studies. Fezolinetant has progressively achieved development milestones and we are preparing for the launch, with the goal of achieving potential peak sales of 300–500 billion yen. Sales Forecast (Image) Peak 300 – 500 billion yen Moderate to severe VMS with associated menopause FY21 FY25 FY30 As of CSP2021 announcement (May 2021) Development of fezolinetant Vasomotor symptoms ( VMS), characterized by hot flashes (also called hot flushes) and/or night sweats, are common symptoms of menopause. In the US, about 60% to 80% of women experience these symptoms during or after the menopausal transition and, worldwide, more than half of women 40 to 64 years of age experience VMS. VMS can have a disruptive impact on women’s daily activities and overall quality of life. In the past, hormone replacement therapy (HRT ) was widely used for the treatment of menopausal symptoms. As of 2000, approximately 12 million patients were prescribed it annually in the US alone. However, in 2001, a study result was reported that showed an association between chronic HRT use and increased risk of breast cancer and cardiovascular disease. After that, the HRT use has sharply decreased, and the amount of its prescriptions is about one-thirtieth of that in 2000. To date, an effective alternative to HRT has not been developed, and VMS treatment options are considered to be limited. Fezolinetant, a neurokinin-3 receptor antagonist, works by blocking neurokinin B binding on the kisspeptin/neurokinin/dynorphin (KNDy) neuron to moderate neuronal activity in the thermoregulatory center of the brain (the hypothalamus), and then reduces the frequency and severity of moderate to severe VMS associated with menopause through a mechanism different from HRT. In June 2022, New Drug Application (NDA) was submitted to the US Food and Drug Administration (FDA), supported by the results of 3 Phase III clinical trials that collectively enrolled over 2,800 women with VMS at over 180 sites within the US, Canada and Europe and characterized the efficacy and safety of fezolinetant up to 52 weeks. The NDA was accepted by FDA in August, and the PDUFA target action date is February 22, 2023, following the use of a priority review voucher. If approved, fezolinetant would be the first-in-class nonhormon- al treatment for moderate to severe vasomotor symptoms associated with menopause. US Annual Premarin Family-treated Patients*1 # of Premarin Family TRx Patients (000s) 14,000 Approx. 12M Women TRx HRT 12,000 10,000 8,000 6,000 4,000 2,000 0 Market potential Approx. 0.4M 2000 2004 2008 2012 2016 2020 Hypothalamus KNDy neuron NKB Estrogen fezolinetant NK3R antago- nism blocks NKB and moderates neuronal activity Medium preoptic nucleus NKB NK3R ERα NK3R NKB Estrogen Thermoregulatory center Periphery Treatment of VMS VMS Frequency and Severity *1 IQVIA NPA - Premarin Family (Premarin, Prempro, Premphase) *2 The thermoregulatory center in the hypothalamus of the brain is innervated by KNDy neurons which are inhibited by estrogen and stimulated by NKB via NK3R in a delicate balance. *3 Absence of estrogen negative feedback leads to hypertrophy of the KNDy neuron and alters the activity on the thermoregulatory center. *4 Fezolinetant is a selective NK3R antagonist that blocks NKB binding on the KNDy neuron to moderate neuronal activity in the thermoregulatory center, helping to restore thermoregulatory balance. *5 Figure adapted from Depypere H, et al. Expert Opin Investig Drugs. 2021; 30: 681-694. KNDy: Kisspeptin/Neurokinin/Dynorphin; NKB: neurokinin B; NK3R: neurokinin-3 receptor; ERα: estrogen receptor alpha 38 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 2 Translate innovative science into proven VALUE Astellas enhances its pipeline value by giving priority to the investment of management resources into its Primary Focuses. Through acceleration of the demonstration of VALUE, the growth of Primary Focuses, and the effective exploration of cutting-edge biopharmaceutical innova- tion, we aim to take our efforts of CSP2018 to the next level. Astellas is working on researching and developing life-changing therapies through priority investment in Primary Focuses selected based on the Focus Area Approach. We believe that the innovative treatments we are developing will enable a paradigm shift from symptomatic to curative therapies*1, bringing great hope to patients desperate for new therapies that will treat previously untreatable diseases. 9 research programs with various new modalities have been progressed to new drug candidates*2 in FY2021. We will continue our best effort to develop innovative medicines from our Focus Area Approach in FY2022. *1 Curative therapies: A therapeutic approach that addresses the root cause of a disease and significantly improves the condition with one or only a few treatments. *2 New drug candidate: therapeutic entities that entered the preparation phase toward Investigational New Drug application/clinical development. Relationship to Material Issues • Access to Health • Fulfilling unmet medical needs by creating novel healthcare solutions • Transformative treatment through innovative therapeutic methods • Value-based pricing 39 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 2 Translate innovative science into proven VALUE Message from Chief Scientific Officer Our progress in Focus Area approach further expands our pipeline, with a boost from research reorganization. Yoshitsugu Shitaka Senmu Tantou-Yakuin Chief Scientific Officer (CScO) We are ready to create new drugs with a greater therapeutic impact, by incorporating evolutions in modalities and focusing on underlying causes of diseases in the most effective manner. As CScO, I would like to take this opportunity to reiterate Astellas’ reasons for adopting the Focus Area approach. In recent years, technological advancements provide us with more opportunities to incorporate them into our strategy, as various modalities are becoming realistic, including cells, genes, and mRNAs in addition to conventional small molecules and antibodies. Different combinations of biology and modality/ technology can greatly alter the target patient population and expected drug efficacy even for the same disease. We have opted for a Focus Area approach in which we consider ideas from a multifaceted perspective that adds modality/technology to the conventional disease and biology, always with an eye on the combination’s scientific validity. We believe that by selecting the most rational combination to address the cause of disease, we will be able to create new drugs with greater therapeutic impact. In my first fiscal year we focused on steady progress in the pipeline and building a foundation for sustainable growth. FY2021 was the first year of our Corporate Strategic Plan 2021 (CSP2021), and my first year as CScO. Our top priority has been to expand the pipeline. We were able to advance 4 programs to the clinical trial stage, including ASP3082*1 and ASP2138*2, which are expected to lead related products. We also created 9 new drug candidates and made progress in expanding our early-stage drug discovery program. ASP3082 is a novel compound employing a new drug discovery technology called Targeted Protein Degradation (TPD) *3. By reviewing the project process to the initiation of clinical trials from scratch and taking intelligent risks to shorten the period, we were the first in the world to enter the clinical stage for the 40 target. The TPD drug discovery platform created in the process of generating ASP3082 already support the discovery of follow-on compounds. We hope to launch multiple products as a product family using TPD before long. Another noteworthy achievement is the creation of new drug candidates from a wide range of cutting-edge modalities, including cell and gene therapies in addition to small molecules. Cell and gene therapies are no longer special modalities for us, and we are completing a system to generate a constant flow of development candidates. In addition, in FY2021 the strengthening of DX*4 began to bear fruit as the utilization of robotics and AI contributed to a reduction in the compound optimization period*5, and our proactive investment in DX began to contribute to the expansion of our pipeline. We undertook Research reorganization with the strong belief that this is key to enhancing our Research productivity. Through this reorganization, we transformed all groups involved in the candidate discovery into agile organizations*6 like bio-ventures. We are confident that this Research organizational structure will best suit Astellas, which is currently working on various new modalities and biology under our Focus Area approach globally at each laboratory. We also have embedded in our organization a mechanism for companies to evolve from the startup level to clinical-stage bio-ventures, survive shakeouts, and achieve growth. By rendering the organization, which is quite isolated from the outside world, closer to an environment regulated by external market principles, we wanted our researchers to have a keen awareness that Astellas is competing within a giant bio-ecosystem that surrounds the outside world. We also created departments responsible for developing new modalities and drug discovery platform technologies. We seek to create new programs by utilizing developed platform technologies anticipating medium-term technological progress. In FY2022, we will do our utmost to resume the ASP7317*7 clinical trial, which has been suspended as of end-July, and to elucidate the serious adverse events reported in clinical trials for AT132 and AT845*8. We also will take further steps to expand our pipeline, especially in the areas of TPD, Immuno-Oncology, and cell therapy. In addition to expanding our pipeline, we will be on the lookout constantly for external collaborators to aid in acquiring the requisite technology platforms. In addition to strengthening our current Primary Focus*9, we will also promote alliances and acquisitions in a well-balanced manner for sustainable development in the future. Reorganization has elicited a positive response from researchers and I can see a different look in their eyes. The speed of decision-making at the front line also has shown tangible improvement. Going forward, we will remain proactive in implementing activities designed to alter researchers’ mindsets and actions and foster an organizational culture, in the hope that reorganization aids us in continuously creating innovative new products and delivering VALUE to patients. *1 ASP3082: A protein degrader targeting KRAS G12D mutant. KRAS mutations are found in refractory pancreatic and lung cancer, for example, and mutations other than G12D (e.g., G12V) have been identified. *2 ASP2138: A bispecific antibody targeting Claudin 18.2 and CD3, positioned as a successor to zolbetuximab. *3 Targeted protein degradation: A new drug discovery method that uses an intrinsic proteolytic mechanism to inhibit the function of the targeted protein. *4 Please refer to P.44 for details of our DX initiatives. *5 Compound optimization period: The period taken for a hit compound (a compound active against a target molecule) to become a drug candidate compound (a compound having suitable properties as a pharmaceutical). *6 Agile organization: An organization in which members with various expertise get together to iterate by trial and error to continuously improve solutions. There, highly delegated mission-specific units make quick decisions and act autonomously. *7 ASP7317: A cell therapy program for targeting dry age-related macular degeneration (AMD). *8 AT132, AT845: Gene therapy programs for patients with X-linked myotubular myopathy and Pompe disease, respectively. *9 Primary Focus: Research and development areas where Astellas is investing proactively under the Focus Area approach. Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 2 Translate innovative science into proven VALUE Progress of Strategic Goal 2 Biology Pathophysiology- characterized Modality/ Technology Versatile technology Disease Disease with high unmet medical needs Regeneration, Mitochondria, Genetic Regulation, and Immuno-Oncology. We also identify the combination of biologies, modalities/technologies, and diseases that may become Primary Focuses in the future. Primary Focus Candidate Targeted protein degradation Primary Focus Blindness & Regeneration Mitochondria Immune Homeostasis Genetic Regulation Immuno-Oncology Focus Area Approach Focus Area Approach is designed to identify drug discovery opportunities flexibly and efficiently by combining innovative biologies and modalities/ technologies to address diseases with high unmet medical needs. Primary Focus is a specific focal point within our Focus Area Approach where a lead and follow-on projects show a clear R&D path with expected VALUE for patients. Based on criteria such as higher scientific validity and identification of leads and follow-on programs, we are currently working on 4 Primary Focuses: Blindness & Biology, Modality/Technology of interest Targeted Therapeutics for Auditory Regeneration Autophagy Bispecific Immune Cell Engager Direct Reprogramming ( Transdifferentiation) Engineered Bacteriophage Innate Immunity (Innate Lymphoid Cells) Innate Immunity (Microglia) Human Genetics Organizational Structure In FY2021, Astellas substantially revamped the research organization structure. Previously, the Drug Discovery Research organization was hierarchical and func- tion-led, and acquired bio-ventures were operating independently. This approach was not efficacious for swift decision making in new technology fields and creating overall synergy. To address this issue, a bio-venture-like agile research model was introduced with highly delegated mission-specific product creation units, and all research organiza- tions were consolidated under the Chief Scientific Officer (CScO), driving synergy among the various organizations. Furthermore, as 2 different organiza- CEO Acquired Bio-venture Acquired Bio-venture Acquired Bio-venture DDR Head DDR Multiple functions including the early-stage partnering department + tions handled early- and late -stage partnering opportunities respectively, these partnering functions were integrated into a new Business Development organization. The new research organization structure can be divided into 3 groups based on their key mission: Product Creation Units, Applied Research & Operations, and Administration Functions. Centered on the Product Creation Units, which are a collection of in-house and acquired bio-ventures, subject matter experts with strong expertise within each unit engage closely with external partners to provide VALUE for patients across the world. CScO Administration Partnering* Applied Research Platform Regulatory Translational In-house Bio-venture Acquired Bio-venture Acquired Bio-venture Acquired Bio-venture * Integrated into a new Business Development division under Chief Strategy Officer The new research organization Chief Scientific Officer (CScO) Research Strategy & Communications Affiliate Engagement Product Creation Units Applied Research & Operations Administration Functions AIRM* 1 Universal Cells Xyphos Immuno- Oncology AGT* 2 Mitobridge Discovery Accelerator Applied Research & Operations *1 AIRM: Astellas Institute for Regenerative Medicine *2 AGT: Astellas Gene Therapies Product Creation Units 41 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 2 Translate innovative science into proven VALUE Progress of Strategic Goal 2 FY2021 Progress in Focus Area Approach We intensively advanced evaluation of multiple projects from Focus Area Approach, but didn’t achieve any PoC* 1 in FY2021. However, 4 projects (ASP1570, ASP2138, ASP8731, and ASP3082) entered clinical stage. ASP3082 is a project that achieved IND* 2 application in 1 year from endorsement as a new drug candidate. Among projects that already have entered clinical trials, we have succeeded in dosing the first subject in a Phase II study of ASP7517 in acute myeloid leukemia and myelo - dysplast ic syndro me, and a Pha se I study of the same investigational drug in solid tumors. Similarly, we have dosed the first subject in a Phase II/III study of ASP0367 in primary mitochondrial myopathies. We continue to drive new drug candidates from our Focus Area Approach. *1 PoC: Proof of concept (key clinical data supporting a decision to initiate late-stage development) *2 IND: Investigational New Drug Lead project pipeline Outlook for FY2022 onward Among lead projects that already are at the clinical stage, in FY2022, we expect PoC judgement for the artificial adjuvant vector cell (aAVC), ASP7517. In the third quarter of FY2022, we anticipate submitting a response to the clinical hold placed by the FDA*5, with a view to resuming the clinical trial evaluating AT132. We furthermore plan to initiate clinical trials on an intravenously administered oncolytic virus as a *5 FDA: US Food and Drug Administration lead project, and on a checkpoint inhibitor, bispecific immune cell engager, and protein degrader as follow-on projects. Based on advances made in FY2021 and planned progress in FY2022 onward, we are aiming for PoC judgements on a total of 24 projects by the end of FY2025. Our goal is to build a robust post-PoC portfolio from our Primary Focus pipeline by the end of FY2025. Primary Focus Biology/Modality/Technology*3 Lead project Modality FY2022 FY2023 FY2024-FY2025 No. of projects aiming PoC  by end FY2025*4 Genetic regulation Gene replacement (AAV) Gene regulation (AAV) Checkpoint Artificial adjuvant vector cell (aAVC) Immuno- Oncology Oncolytic virus (intratumoral) Oncolytic virus (systemic) AT132 AT845 ASP1570 ASP7517 ASP9801 Gene Gene Gene Small molecule Other Gene Gene Bispecific immune cell engager ASP2138 Antibody Blindness & Regeneration Cancer cell therapy (UDC) Cell replacement Cell replacement (UDC) Gene regulation (AAV) ASP7317 Gene regulation & mitochondrial biogenesis ASP0367 Mitochondria Mitochondrial stress ASP8731 Primary Focus Candidates Mitochondrial transfer Immune modulating/regulatory cells Tissue-specific immune regulation Targeted protein degradation ASP3082 Cell Cell Cell Gene Small molecule Small molecule Cell Cell Antibody Small molecule Timeline for PoC judgement under discussion IND PoC IND IND IND 42 4 12 3 4 1 Total 24 Stage of the most advanced project in the category Discovery/Preclinical Pre-PoC Post-PoC PoC PoC judgement IND IND Phase 1 entry of lead project Phase 1 entry of follow-on project *3 Not exhaustively listed. *4 Estimated based on standard development timelines, assuming 100% probability of success. (as of July 2022) Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 2 Translate innovative science into proven VALUE Progress of Strategic Goal 2 Primary Focus: Blindness and Regeneration Our mission for Primary Focus Blindness & Regeneration is to identify, develop and deliver next-generation treatments to restore sight for patients with eye diseases. Utilizing our in-house ophthal- mology expertise and regenerative medicine capabilities, we seek to bring transformational changes in the man- agement of devastating eye diseases. Vision loss caused by eye diseases affects over 160 million people globally and can have a profound long-term im- pact on quality of life. Many of these diseases have few or no effective treat- ment options. Through cell and gene therapies, we aim to restore and preserve the critical vision-supporting cells in the eye through the discovery of new treat- ment options to protect against declining vision and even restore lost sight. The eye Cornea Retina Corneal endothelium: Keeper of transparency Corneal dystrophy Ganglion cell: Electric wire to the brain Glaucomatous optic neuropathy Corneal endothelium Ganglion cell Not disclosed Retinal pigment epithelium: Guardian of photoreceptor GA secondary to AMD, Stargardt disease ASP7317 Not disclosed Photoreceptor: Converter of light into signal Retinitis pigmentosa Photoreceptor Modality: Pluripotent cell-derived cell therapy AAV-based gene therapy In Primary Focus Blindness & Regeneration, we are partnering up with top-class venture companies and academia to build a highly competitive pipeline. Primary Focus: Mitochondria Our mission for Primary Focus Mitochondria is to become the global leader in discover- ing, developing, and bringing to market mitochondria biology-based medicines that provide tangible value to patients, clinicians, and healthcare systems. Mitochondria are specialized organ- elles in cells that have their own mater- nally inherited DNA (mtDNA). They are present in almost all human cell types and play essential roles in energy pro- duction and in processes such as metab- olism and cell signaling. Mitochondrial dysfunction is associated with diseases of the kidneys, liver, muscles, central nervous system, eyes, and ears. Many of these diseases have signifi- cant unmet medical needs and few treatment options. By targeting mito- chondria in our research, we have the potential to create entirely new ways of treating diseases associated with mito- chondrial dysfunction. Each asset has the potential to be devel- oped for multiple diseases and indications due to the broad impact of mitochondrial dysfunction in the human body. Gene regulation and mitochondrial biogenesis ASP0367 Research projects with Nanna Therapeutics, Ltd. Mitochondrial stress ASP8731 Research projects mtDNA ROS CELL MEMBRANE Metabolism (NAD+) enhancement and increased mitochondrial membrane potential Research projects including in partnership with Nanna Therapeutics, Ltd. Mitochondrial transfer Research partnership with Minovia Therapeutics, Ltd. Mitochondrial dynamics Research projects mtDNA: Mitochondrial deoxyribonucleic acid ROS: Reactive oxygen species ATP: Adenosine triphosphate NAD+: Nicotinamide adenine dinucleotide AAV: Adeno-associated virus, GA: Geographic atrophy, AMD: Age-related macular degeneration NUCLEUS ATP production Pipeline (as of Aug 2022) * Acquired (current programs classified as ‘in-house’) Pipeline (as of Aug 2022) * Acquired (current programs classified as ‘in-house’) Program Modality/Mechanism Indication Current phase Origin/Partner Program Modality Mechanism Target indication Current phase Origin ASP7317 RPE cell Geographic atrophy secondary to AMD, Stargardt disease Phase 1 ASP1015 Gene therapy (AAV ) Glaucoma ASP1819 ASP2020 Photoreceptor rescue cell Retinitis pigmentosa Universal donor cell (UDC) RPE Dry AMD, Other macular degeneration Preclinical Not disclosed Ganglion rescue cell Glaucoma, Optic neuropathy Not disclosed Corneal endothelial cell Corneal dystrophy Not disclosed Vascular progenitor cell Vascular disease Discovery Discovery Discovery Preclinical (IND planned in 2024) Preclinical * * ASP0367 Small molecule (oral formulation) PPARδ modulator Primary mitochon- drial myopathy Duchenne muscular dystrophy Phase 2 Phase 1 ASP8731 Small molecule BACH1 inhibitor Sickle cell disease Not disclosed Small molecule Not disclosed Not disclosed Small molecule Not disclosed Not disclosed Not disclosed Phase 1 (Phase 1 study FSFT in March 2022) Discovery Discovery Discovery * * * Not disclosed Gene therapy (AAV ) Dry AMD, Other macular degeneration Discovery University of Pittsburgh Not disclosed Cell therapy Mitochondrial Transfer Not disclosed RPE: Retinal pigment epithelial PPARO: Peroxisome proliferator-activated receptor delta, BACH1: BTB and CNC homology 1, FSFT: First subject first treatment 43 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 2 Translate innovative science into proven VALUE Progress of Strategic Goal 2 Primary Focus: Genetic Regulation One of the most active preclinical developers, with 16 3 gene therapy candidates in development cutting-edge laboratory and manufacturing facilities 400+ Passionate, highly skilled scientists, researchers and operational experts END-TO-END CAPABILITIES incorporating research, development, manufacturing and commercialization Active partnerships with leading industry and academia, including Dyno Therapeutics to develop next-generation (AAV) vectors  Our mission for Primary Focus Genetic Regulation is to discover, develop and deliver transformative gene therapies for patients with genetic diseases. Alongside our world-renowned partners and with competitive capabilities across the value chain we are working to build a portfolio of potentially lifechanging gene therapies, with a long-term goal to deliver transfor- mational VALUE for patients. Often present from birth and affect- ing young children, nearly 7,000 human diseases are caused by mutations or deficiencies in the genetic code. By targeting disease at the genetic level, Pipeline (as of Aug 2022) we can significantly improve outcomes for serious and potentially fatal diseases via a single or few treatments that replace or regulate the faulty gene. The rapidly evolving field of gene therapy cannot be navigated alone. We collaborate with world-renowned aca- demic and industry partners to overcome the complex challenges of gene therapy research and development. We continually investigate and assess new partnerships that could enhance our diverse portfolio, as well as those that can offer unique technology or research perspectives to better support patients. Program Mechanism Target indication Current phase Origin/Partner AT132 AT845 AT808 AT466 MTM1 gene replacement X-linked myotubular myopathy Phase 2 - Pivotal GAA gene replacement Pompe disease FXN gene replacement Friedreich’s Ataxia Phase 1 Preclinical Vectorized exon skipping/vectorized RNA knockdown for DMPK Myotonic dystrophy Discovery (Not disclosed) UBE3A restoring Angelman Syndrome MDL-201 Not disclosed MDL-202 Not disclosed Muscle disease Muscle disease Discovery Preclinical Preclinical MTM: Myotubularin, GAA: Acid alpha-glucosidase, RNA: Ribonucleic acid, DMPK: Myotonic dystrophy protein kinase, FXN: Frataxin Primary Focus: Immuno-oncology Our mission for Primary Focus Immuno- Oncology is to deliver innovative treatment options to patients and ultimately cure cancer. To that end, we are working to maximize our innovative capabilities while building a strong network of external collaborations. As many as 80 percent of patients are Our early-stage platforms are built to trigger an anti-tumor immune response by stimulating multiple immune functions. Through strategic external collaborations and acquisitions, we have established a robust and competitive Immuno-Oncology pipeline with multiple assets in the clinical stage. estimated to be refractory (non-responsive) to immune checkpoint inhibitors or to relapse (fail to maintain a re- sponse) during treatment. In Primary Focus Immuno-Oncology, our strategy is to target multiple aspects of the immune response to the cancer simultaneously. Pipeline (as of Aug 2022) Acquired immune system Innate immune system The Cancer Immunity Cycle* Priming and activation Oncolytic virus GITR Cancer antigen presentation aAVC Release of cancer cell antigens Oncolytic virus GITR aAVC Amplification and activation of innate immune response Cell therapy Infiltration of T cells into tumors Bispecific immune cell engager Recognition of cancer cells by T cells Bispecific immune cell engager Cell therapy Killing of cancer cells Bispecific immune cell engager * Chen DS & Mellman I. Immunity. 2013;39(1):1-10 and Demalia O. et al. Nature. 2019;574(7776):45-56. aAVC: Artificicial adjuvant vector cell Modality Oncolytic virus (OV ) aAVC Bispecific immune cell engager Program ASP9801 ASP1012 ASP7517 ASP0739 ASP2138 Mechanism OV IL-7, IL-12 Current phase Partner Phase 1 Systemic OV Leptin-IL2 fusion Preclinical WT1 NY-ESO-1 Anti-Claudin18.2 x and anti-CD3 bispecific antibody Phase 2 Phase 1 Phase 1 Not disclosed Probody® T cell engagers Discovery Not disclosed Bispecific immune cell engager Preclinical Small molecule ASP1570 DGKζ inhibitor ASP2802 CD20 convertibleCAR-T Cell therapy Not disclosed Mesothelin HiT TCR-T Not disclosed convertibleCAR-NK Phase 1 Preclinical Discovery Discovery IL: Interleukin, aAVC: Artificial adjuvant vector cell, DGK: Diacylglycerol kinase, CAR: Chimeric antigen receptor, TCR: T-cell receptor, HiT: HLA (human leukocyte antigen)-independent TCR, NK: Natural killer, WT: Wilms tumor 1, NY-ESO-1: New York esophageal squamous cell carcinoma 1, CD20: B-lymphocyte antigen CD20 44 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 2 Translate innovative science into proven VALUE Digital Transformation Aims of our digital transformation (DX) initiatives The pharmaceutical industry handles vast amounts of data throughout its entire value chain, from drug discovery(research), development, and manufacturing, to commercial and the post-mar- keting maximization of our product value. The impact that DX will have on the company’s future is huge, so Astellas is pursuing DX across all areas of the value chain. In R&D of prescription drugs, for example, it is important to achieve even a small reduction by improving the probability of R&D success and shortening drug development periods as a huge amount of money is spent on drug development. As the potential impact of DX is estimated that it would possibly reduce the cost of R&D by about 60% and shorten the development period by about 2.4 years*1 over the next 15 to 20 years, the acceleration of DX would greatly benefit the whole industry. Astellas’ approach to DX is much more than just streamlining operations through digital technology. We have positioned DX as one of the Critical Enablers accelerating execution of our Corporate Strategic Plan 2021 (CSP2021). Astellas’ DX Vision is to “become a world-class Intelligent Enterprise that accelerates digital transformation to turn innovative science into VALUE for patients”, and we have identified 4 levers (sources of value) centered around Digital x Data to realize our DX vision: “Sense,” “Analyze,” “Automate,” and “Engage.” By combining these 4 levers with the scientific knowledge that we have accumulated, and through the “best mix” of our people and digital technology, we seek to pursue DX in a way that only Astellas can. The type of DX we aspire to implement is not the one where digital technologies replace people but rather the one where digital technology works with people, complementing each other in areas of mutual strength. In this manner, we aim to achieve a superior pharmaceutical value chain and establish competitive advantages. DX Vision Become a world-class Intelligent Enterprise that accelerates digital transformation to turn innovative science to VALUE for patients • Establish competitive advantages by adding our accumulated scientific Approach knowledge to the 4 levers (sources of value) of Digital x Data • Best mix of people and digital Use sensors to collect all events as data Science Sense Analyze Utilize and analyze all data to anticipate the future and engage in bold and accurate decision-making early on Levers Use a combination of digital and analog to connect people across time and space Digital Data Engage Automate Use digital for high quality, fast operations Case “Mahol-A-Ba” drug discovery platform Handling iPS cells requires the practical skills and trained eyes of experienced researchers with subject matter expertise. However, the number of skilled researchers is limited, and even highly skilled researchers are subject to the possibility of human error, alongside a limitation on operating time. Astellas developed Mahol-A-Ba as a solution to these challenges. Mahol-A-Ba is a “Human-in-the- Loop” drug discovery platform, with no parallels worldwide, that integrates humans, AI, and robots. In this platform, our robot Maholo conducts cell culture and differentiation in its role as the “Expert Arm,” taking over the tasks previously performed by researchers. Our “Expert Eye” robot then evaluates the activity of differentiated cells and their pharmacological effects. In evaluating the activity of differentiated cells and their pharmacological effects, Mahol-A-Ba can conduct 100 to 1,000 times more experiments in the same amount of time compared to humans, even a skilled researcher, and can also continue experiments over long periods of time with high precision and reproducibility. Because researchers can operate Mahol-A-Ba remotely, there has been no need to halt experiments due to restrictions imposed under the COVID-19 pandemic on going to the laboratory and indeed leaving the home at all. In addition to applying AI and robotics in cell manipulation by Mahol-A-Ba, we can also utilize AI in reflecting researchers’ ideas in pharmaceutical compound property prediction and design. We aim to deliver superior pharmaceutical products to patients in the shortest possible time by combining the results of AI analysis with humans’ experience and knowledge to inform researchers and allow them to make comprehensive judgements, essentially integrating humans x AI x robotics. The use of AI and robotics is a new approach to accelerating the speed of R&D, reducing costs, and improving drug quality, enabling us to do things that previously were impossible for humans to achieve on their own. We will utilize these technologies globally in small molecules and antibodies, as well as in new modalities such as cells and genes, to realize agile drug discovery research. Past # Samples >10 Present >1,000 – >10,000 “Mahol-A-Ba” Experiment Manual “Expert Arm” robot Maholo AI Machine Learning “Expert Eye” robot Astellas’ unique system*2 *1 Source: “Paradigm of New Drug Discovery through Technology Advance” (Deloitte Tohmatsu Consulting LLC) “With advances in (digital) technology, it will be possible in 15 to 20 years from now to reduce the cost of pharmaceutical research and development by about 60% and shorten the development period by about 2.4 years.” 45 *2 Image source: Beckman Coulter, Inc., Yokogawa Electric Corporation Nov 2017– Mar 2019– Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 3 Rx+ Business Our main areas of progress in the Rx+ business during FY2021 included the initiation of a sales pilot of Fit-eNce Home, commercialization of AI-based MYHOLTER II ECG analysis service, a business alliance to initiate a sales pilot of disposable Holter ECG device “EG Holter”, and the topline results from the Phase II trial of the imaging agent pudexacianinium chloride (ASP5354) used to visualize the ureters. As for the MYHOLTER II ECG analysis service, we will further improve the system’s diagnostic accuracy by conducting additional learning using more ECG data. As for ASP5354, based on the positive results, a Phase III trial is scheduled to start during FY2022, and we plan to file a regulatory submission in the United States during FY2023. Relationship to Material Issues • Access to Health • Fulfilling unmet medical needs by creating novel healthcare solutions 46 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 3 Rx+ Business Message from the Head of the Rx+ Business Accelerator Q1 What is Astellas’ aiming for in its Rx+ initiatives? Q 4 What was accomplished, and what needs to be addressed in the second year of CSP2021? We are expanding Astellas’ ability to provide VALUE to patients, across the patient journey, through exploring new and innovative science and technologies that are not pharmaceutical in nature. We are taking a bold approach by seeking to create new and sustainable businesses that are independent from our existing pharmaceutical business. Richard Cassidy Senior Vice President, Rx+ Business Accelerator Q2 How do you see the Rx+ business unfolding over the longer term? We have a broad portfolio of projects in incubation and acceleration stages. The exciting development in the coming 2-3 years is that some of those projects will progress to being fully commercialized businesses. In parallel, we will continue to innovate and seek new ideas for future businesses. In the second year of CSP2021, we will be building on these pilot sales from June 2022 and move towards full commercialization. In addition, we will move other late-stage programs to cross the threshold of achieving sales. These are critical steps as we move towards our goal of achieving profitability from Rx+ activities by FY2025. Q 5 CSP2021 set out a goal of making the Rx+ business the backbone of Astellas in the coming decade. In the first year out, what changes do you see in the Company as an Rx+ organization, and in the general mood of the people who are working? CSP2021 goals for Rx+ have made us focus our activities even more on opportunities that have the potential to grow into new businesses and on pushing our teams to move to commercialize with great speed. The Rx+ teams are dedicated to providing VALUE to stakeholders through new and innovative solutions. As we move our programs forward, we are always learning from our activities because many things we are doing are new to Astellas. I see a greater understanding of Rx+ priorities across colleagues in Astellas and a greater willingness to support us in achieving our goals. Q3 What has the Company focused on since the launch of CSP2021? Q 6 What Rx+-related events are you most looking forward to in FY2022? In Rx+ we are pushing hard to commercialize our later-stage business opportunities. We achieved 2 significant milestones since the launch of CSP2021. As part of pilot commercial activities, we made Astellas’ first device sale and Astellas’ first service-based sale. Every day working with the Rx+ Business Accelerator team is special! We are all highly motivated to provide VALUE to patients and we are always breaking new ground and learning something. It is a very exciting part of Astellas to work in! We have so many programs that will progress during FY2022 that it would be unfair to single out any in particular. 47 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 3 Rx+ Business Progress of Strategic Goal 3 Explanation of Rx+ Strategic Goal 3 calls for Astellas to advance the Rx+ business, which is defined as a business that combines the expertise and knowledge of Astellas, cultivated through its Rx business, with technology in different fields to offer new healthcare solutions. Our aim is to create new revenue streams separated from our core Rx products. We will provide VALUE to patients across the patient journey not only for prevention and treatment through conventional medical drugs (Rx) but also through diagnosis and treatment support. Astellas aims to realize “a world where people can live mentally and physically healthy lives and be true to themselves through healthcare solutions based on scientific evidence.” To this end, the Rx+ business will create new businesses that provide the following value propositions. • Prevent disease onset and slow progression by using personal data • Expand options for people with limited access to current therapeutics • Support active living by enhancing physical and sensory functions Positioning of the Rx+ Business Patient Journey Diagnosis/ Treatment support Prevention/ Treatment New medical solutions that contribute positively to the entire patient journey + M edical solutions + Treatment solutions New treatment solutions that replace conventional therapy or add new VALUE Medical drugs New technology Healthcare technology 48 Programs Under Way Connecting Medical to Exercise – Value creation and provision through "Astellas x Fitness x Medical" – Toward a society in which people can enjoy becoming healthy. By exploring VALUE creation and provision through combining exercise and clinical evidence, built on Astellas’ strengths, s"uch as understanding disease and physicians’ and patients’ needs, scientific knowledge, and a network with healthcare providers, we will realize a society in which people can enjoy becoming healthy. Bioelectronics using iota Technology – Utilizing iota Biosciences' platform technology for tiny wireless medical implantable devices – Aiming for another way to realize innovative medical solutions Bioelectronics is an interdisciplinary field of biology and electronics that uses implantable devices to obtain biological data or transmit signals into organisms. Astellas will utilize this technology to implant the tiny wireless medical devices of iota Biosciences in organisms and harness their feedback control to aim for another way to realize innovative medical solutions. Image-guided Precision Surgery – Maximize patient outcomes using image-guided technology – Realize precise surgical procedures with drug and device combination Image-guided surgery can be achieved by fusing detecting devices and other medical device technology with imaging agents and other pharmaceutical technology, to support surgeons and patients. We aim to realize more precise and safer surgical methods. Clinically Relevant Holistic Solutions and Mobile Healthcare Solutions – Collect and analyze medically and clinically useful information through digital technology – Provides a personalized treatment and continuous interaction with healthcare providers Mobile healthcare solutions can collect and analyze medically and clinically useful information through digital technology to optimize and provide data to individual patients and healthcare professionals. This is a service which connects patients and healthcare professionals digitally and provides new treatments. Innovation in Management of Heart Disease Patient – An eco-system which supports home care of heart disease patients – Consists of simple and cost-effective novel sensing devices When in-home care management was left up to patients, the lack of devices was an issue. The Heart Disease Patient Support System is an eco-system that supports the in-home management of patients with heart disease by linking data with new monitoring devices that are easy to use and cost-effective. Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 3 Rx+ Business Progress of Strategic Goal 3 Progress and Outlook Main areas of progress in the Rx+ business in FY2021 included the initiation of a sales pilot of Fit-eNce Home, commercialization of AI-based MYHOLTER II ECG analysis service, a business alliance to initiate a sales pilot of disposable Holter ECG device "EG Holter", and the topline results from Phase II trials of the imaging agent pudexacianinium chloride (ASP5354) used to visualize the ureters. AI-Based Holter ECG Testing Service MYHOLTER II service realizes the auto- matic analysis of ECG data by using a proprietary AI-assisted algorithm. It was jointly developed by Astellas and M. Heart. M. Heart has obtained certification for EG Holter and MYHOLTER II as a medical device (Class II). Because it is cloud-based, MYHOLTER II allows healthcare professionals to conduct ECG data analysis from anywhere. EG Holter is a Holter electrocardio- Measures Taken Event Time to Achievement Fit-eNce Initiated pilot marketing of Fit-eNce Home service that can be implemented at home Sep 2021 MYHOLTER II Service commercialization Jul 2021 EG Holter Initiate sales pilot Jun 2022 pudexacianinium chloride(ASP5354) Topline results for Phase II study Nov 2021 graph designed and developed by Nitto. Because it is a disposable device, it is hygienic and does not require maintenance. It is 6 mm thick, 11 g in weight, has no cords, and is water resistant (IPX4). It is easy to attach and remove. Astellas, Nitto and M. Heart initiated a sales pilot of EG Holter for the Japan market. Data obtained by EG Holter will be analyzed by MYHOLTER II. Order Devices can be stocked. No need for complicated scheduling. Wearing Measurements can be taken from the patient’s first visit. Patient registration is done by reading a 2D code on a smartphone. Posting After measurements, patients return the device by postal mail. No need to visit a hospital to return the device. Analysis After the device arrives at the reception center, the data will be analyzed quickly by AI. Result confirmation After completing the AI analysis, the medical institution will be notified of the results. Results can also be confirmed on the cloud. 49 With the ECG testing service, after measurement, patients send the device to the reception center by postal mail, eliminating the need to return the equipment back to a medical institution. Medical institutions can also see results online via MYHOLTER II, resulting in reduction of the burden on both patients and medical institutions. Going forward, we will improve the system’s diagnostic accuracy by conducting additional learning using more ECG data obtained. Imaging Agent Pudexacianinium Chloride That Guides Precision Surgery The compound pudexacianinium chloride (ASP5354) fluoresces upon excitation with near-infrared light. When administered prior to surgery, the compound enables surgeons to confirm the position of the ureter during surgery. This holds the promise of reducing the risk of accidental injury to the ureter during surgery and of shortening surgery times. ASP5354 received Fast Track Designation from the US Food and Drug Administration (FDA) in 2020. The Fast Track Designation promotes the acceler- ation of development and testing of drugs for the treatment of serious or potentially life-threatening diseases with high unmet medical needs. The designation raises hopes that ASP5354 will be put into actual use earlier. In a Phase II study completed in November 2021, visualization of the ureter was confirmed at different does of the imaging agent. Results showed that visualization could be sustained until the completion of surgery. In addition, no major safety concerns were observed. Based on these positive results, A Phase III study is scheduled to start during FY2022, and we plan to file a regulatory submission in the United States during FY2023. Moreover, since visualization of the ureter using ASP5354 also requires a near-infrared light emitter, we are exploring collabo- ration with a device manufacturer as we move toward commercialization. Ureter Visualization at 30 Minutes Post pudexacianinium Administration and at End of Surgery 0.3 mg 1.0 mg 3.0 mg 30 min End of surgery Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 4 Deepen our engagement in sustainability Astellas is committed to our mission of sustainable enhancement of enterprise value in alignment with our raison d’être, "To contribute toward improving the health of people around the world through the provision of innovative and reliable pharmaceutical products." In other words, for Astellas, contributing to societal sustainability means the execution of our business philosophy. While leveraging our strengths and capabilities, we will deliver VALUE to society by creating innovative healthcare solutions that improve access to health and outcomes* for patients. We believe that our innovations will play a part in improving the sustainability of society. This will build trust from society, which will, in turn, also make Astellas more sustainable. In FY2021, Astellas has updated our Materiality Matrix to guide our sustainability efforts, selecting key issues from the perspective of importance for society and Astellas. We then prioritized the material issues (materiality) and will formulate action plans for each materiality identified, which will contribute to the improvement of sustainability through company-wide efforts. * Outcome includes not only the safety and efficacy of treatments, but also the minimization of the burdens on patients caused by the complexity of treatments and the improvements in quality of life (QOL). 50 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 4 Deepen our engagement in sustainability Message from the Head of the Sustainability Division We will address materiality as One Astellas to evolve sustainability for both society and Astellas. Shingo Iino Vice President, Sustainability A year of deepening our engagement in sustainability Companies today are expected to manage their operations with an awareness of sustainability. At Astellas, we feel that each year brings higher expectations of our sustainability efforts. Under Among the material issues, we will focus on “Access to Health”. With our VISION to be “On the forefront of healthcare change to turn innovative science into VALUE for patients”, we will promote initiatives that use our capabilities and assets, while improving access to Astellas products and to products under development in our portfolio. Our sustainability efforts cannot be completed by the Sustainability Division alone and all divisions and Astellas employees need to work together. In order to do so, we made a concerted effort to have engagement among Top Management about our initiatives. As an example, in FY2021, sustainability issues were reported to the management and discussed 10 times at the Executive Committee (including quarterly reporting meetings) and 6 times at the Board of Directors. In FY2022, we will further strengthen our advocacy activities on sustainability. As well as dialogues with investors and other external stakeholders, we will actively introduce Astellas initiatives to our employees to deepen their understanding. At the same time, we will create opportunities for gathering ideas so that more employees than ever can take part in our activities. Becoming a company whose Raison D’être is recognized, a company supported by people around the world. these circumstances, we have set “deepen our engagement in sustainability” as one of the We believe that our efforts to improve Access to Health will not only deliver more VALUE for Strategic Goals of Corporate Strategic Plan 2021 (CSP2021). In FY2021, the first year of the plan, patients but will also help reduce the burden on their families and even on the healthcare we carried out various initiatives to achieve this goal. system. As a cutting-edge VALUE-driven life science innovator, we aim to create innovative As key accomplishments in FY2021, we (1) refreshed our Materiality Matrix, (2) created an healthcare solutions, delivering them widely to patients in need while reducing the burden on Access to Medicine strategy for Astellas products, (3) selected 4 new HSS (Health System patients, on their families, and on the healthcare system to help bring about a sustainable Strengthening) programs, and (4) disclosed the results of scenario analysis aligned to TCFD society. Through our initiatives to address the key issues we identified, such as Access to recommendations. In particular, “(1) updating the Materiality Matrix” was a major achievement. Health, we are envisioning a future in which we earn recognition for our Raison D’être and Among a range of social issues, it enabled us to identify the key issues and material issues gain the support of people around the world. (Materiality) that Astellas should address. We could then present these as a compass to guide In FY2022, we will continue to work as One Astellas to evolve our efforts on sustainability our management. After the update, we held discussions with cross-functional members to set under CSP2021 and to strengthen our engagement with stakeholders through advocacy activi- each action goal for FY2022. We will carry out these action plans across relevant members to ties. We also plan to hold the second Sustainability Meeting, following on from last year’s achieve them. meeting. We hope that you will continue to take an interest in our efforts to evolve sustainability. 51 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 4 Deepen our engagement in sustainability Progress of Strategic Goal 4 Astellas’ Sustainability Astellas recognizes our contribution to social sustainability and earning trust from society will enhance Astellas’ sustainability. We have established the Sustainability Advisory Panel, and Environment, Social or Governance Working Group (E•S•G Working Group) led by the Sustainability division and consisting of cross-functional members. These organizations promote the following activities to contribute to sustainability from a long-term, strategic and groupwide perspective. • Improve “Access to Health” • Contribute to Environmental Sustainability with Greater Transparency • Advocate Our Efforts on Sustainability SUSTAINABILITY GOVERNANCE Astellas’ Interaction with Society Engage in the Sustainability of Society Trust from Society Society Astellas Fulfill our social responsibilities as a pharmaceutical company Enhance the Sustainability of Astellas Raison D’être Mission Contribute towards Improving the Health of People Around the World through the Provision of Innovative and Reliable Pharmaceutical Products Sustainable Enhancement of Enterprise Value Executive Committee*1 / Board of Directors*1 President and CEO Head of Sustainability division Sustainability Advisory Panel • Oversee all Astellas’ Sustainability activities including ESG*2 elements • Decides on holding a Sustainability Advisory Panel. Discuss and consider global sustainability issues that are overarching to ESG such as the change in the Sustainability Direction. Chair: Head of Sustainability division Environment (E) Working Group Social (S) Working Group Governance (G) Working Group • Discuss/exchange information on material issues on E, S or G, respectively, and create Advocacy strategy. • Report the outcome to Head of Sustainability. Oversight: Head of Sustainability Center of Excellence*3 *1 Sustainability annual plan and activities are required to be reported to the Board Directors. Important matters are deliberated by the Executive Committee and approval is obtained by the Board of Directors for each case in accordance with Corporate Decision of Authority. *2 Environment, Social, Governance. *3 Head of Sustainability Center of Excellence in Sustainability division has responsibility to lead ESG operations globally under the oversight of Head of Sustainability division. 52 Access to Health Many people across the globe struggle to receive the medical care they desperately need. Various factors contribute to this challenging situation, including a lack of appropriate treatments, healthcare system challenges, insufficient healthcare information, and poverty. At Astellas, we recognize these struggles as “Access to Health” issues and are active in tackling the root causes. We are committed to utilizing our capabili- ties and technology to provide healthcare solutions and improve access to health around the world. Main Hurdles of Access to Health • Lack of appropriate treatments • Insufficient healthcare information • Healthcare system shortcomings • Poverty Environmental Initiatives Astellas’ Charter of Corporate Conduct states that "recognizing that harmony between the global environment and our business activities is prerequisite to our corporate existence, we shall take proactive measures to conserve the global environment.” For Astellas to continue to grow sustainably, we need to be conscious of the issues affecting our local environment and ensure that factors such as energy efficien- cy, climate change, environmental pollution, and waste disposal, are central to our environmental initiatives. Advocacy Advocacy activities are designed to promote deeper understanding among our stakeholders regarding Astellas’ efforts on Sustainability. At the same time, these activities provide an opportunity for us to reassess how we can contribute to resolving social issues and provide patients with a better quality of life. Astellas will continue crystalizing and advocating a Sustainability story which has been developed based on the updated materiality matrix. Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 4 Deepen our engagement in sustainability Progress of Strategic Goal 4 Improving Access to Health Improving Access to Health: Our Initiatives Astellas recognizes Access to Health as a materiality, and through our VISION to be "On the forefront of healthcare change to turn innovative science into VALUE for patients," we are proactively taking a comprehen- sive approach to solving this issue through the 3 methods defined below. 1. Astellas’ core business (Rx, Rx+) Astellas continues to contribute to the health of patients by researching, developing, and delivering innovative healthcare solutions to address diseases with high unmet medical needs. 2. Enhancing availability of Astellas products For patients who have difficulty accessing Astellas therapies for socioeconomic reasons, we are establishing a mechanism to enhance the availability of Astellas therapies while taking into consideration the characteristics of various measures and regulations in each country. 3. Collaboration and support for the activities implemented by external partners to improve Access to Health In addressing the issues of Access to Health, Astellas promotes collaboration with external partners and support for their activities by leveraging Astellas’ capabilities and technologies with external partners. 1. Astellas’ core business (Rx, Rx+) Since our establishment, Astellas has continuously strived to create innovative healthcare solutions and deliver them to patients who need them. We will accelerate our research and develop- ment based on our Focus Area approach and create diverse healthcare solutions by combining biologies and modalities/ technologies. In addition, we will promote the Rx+ business which leverages the expertise and knowledge of Astellas, which have been cultivated through its Rx business, integrates innovative medical technology with cutting-edge technology in different fields, and contributes through the patient journey (overall medical care, including diag- nostic, preventive, therapeutic and prognostic care). Number of countries and people with access to Astellas’ innovative drugs (as of February 2022) Product Tamsulosin Tacrolimus Vesicare Xtandi Mirabegron Xospata Number of countries 106 105 86 96 69 33 Astellas’ initiatives improving Access to Health 1. Astellas’ core business (Rx, Rx+) Number of patients approx. 82 mil. approx. 1.6 mil. approx. 24 mil. approx. 0.62 mil. approx. 23 mil. approx. 1,300 Astellas’ business 2. Enhancing availability of Astellas products 3. Collaboration and support for the activities implemented by external partners to improve Access to Health 53 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 4 Deepen our engagement in sustainability Progress of Strategic Goal 4 2. Enhancing availability of Astellas products For patients who are unable to obtain Astellas medicines for social or economic reasons, we strategically implement activities to improve access to our phar- maceutical products from the development stage to post-launch. For patients who are unable to partici- pate in clinical trials but meet certain criteria, our Early Access Program provides treatment before marketing authorization. As a result, more than 900 acute myeloid leukemia patients in 35 countries have gained access to our drug, XOSPATA. Our International Pharmacy Program allows products that have already been approved in major countries to be imported and used in unapproved countries for eligible patients. Through this program, PADCEV now has been imported into 50 countries, Enhancing Availability of Astellas Products and prescribed to more than 30 patients. In addition, through our Patient Access Initiative which allows eligible patients in some countries and regions to receive financial assistance in purchasing our products, XTANDI and XOSPATA have been made available in 37 and 17 countries, respectively. We continued to build the capability to implement data and evidence-based pricing solutions for our innovative prod- ucts. These solutions ensure that payers and healthcare systems pay a fair and value-based price for our newly launched medicines. In FY2021, the Company implemented 4 new Evidence Based Pricing solutions, with 3 fully implemented by payers in-country, expanding access to more patients. Clinical Development Market Authorization Commercialization Clinical Trial Programs XOSPATA: over 900 patients in 35 countries PADCEV: over 270 patients in 7 countries PADCEV: over 30 patients in 50 countries Early Access Program Post-trial Access Program XTANDI: over 300 patients in 24 countries XOSPATA: over 40 patients in 9 countries PADCEV: over 10 patients in 10 countries International Pharmacy Program (IPP) & International Import Program (IIP) XTANDI (37 countries), XOSPATA (17 countries) Evrenzo (7 countries) and PADCEV (1 country) are available Patient Access Initiatives Enhancing the literacy of healthcare professionals and patients through academic and patient societies 3. Collaboration and support for the activities implemented by external partners to improve Access to Health In our efforts to improve access to health, we strive to provide cooperation and support for the activities implemented by external partners by combining our capa- bilities and technologies. Astellas continues to pursue collaborative research into new drugs for the treatment of tuberculosis, utilizing lead compounds* identified via our “joint research for exploration of new compounds for Mycobacterium tuberculosis.” Within a consortium of partners, Astellas furthermore has utilized its formulation technology to develop a pediatric formulation of praziquantel, the standard treatment for the parasitic disease schistosomiasis. In the areas of strengthening healthcare systems and improving health literacy, we are funding new projects with external organizations to impact society where anticipates synergy with Astellas sustainability. The Astellas Foundation for Research on Metabolic Disorders (AFRMD) contributes to medical and life sciences through the discovery and nurturing of brilliant young talent and support for researchers by providing training and an opportunity to study abroad. Described below, the Astellas Global Health Foundation primarily funds initiatives to support the most underserved communities in low- and middle-income countries where Astellas does not have a business presence. Both the AFRMD and AGHF operate independently of the corporation. In March 2022, Astellas pledged to provide charitable donations to interna- tional charitable organizations including National Cancer Society Malaysia and Asia Cancer Forum, Japan, City Cancer Challenge Foundation (C/Can), Fred Hollows Foundation and World Vision, India. The programs are focused on specific health issues such as cancer care, eye care and neglected tropical diseases. Funding from Astellas is intended to help strengthen healthcare systems and health literacy in countries where the company has a business presence. * A compound with a physiological activity that meets the predefined criteria discovered through compound screening (search for drug discovery seeds). Astellas Global Health Foundation The Astellas Global Health Foundation (AGHF) is an international philanthropic organization dedicated to supporting 3 key areas: improving access to health, building resilient communities, and providing disaster preparedness support in underserved global communities. Launched in 2018, the Foundation has awarded nearly $7 million in grants to support charitable initiatives focused on improving access to health, building resilient communities and providing disaster support. Through the funding, it is anticipated that the AGHF will impact more than 31 million lives over the course of 3 years in Kenya, Nepal, Dominican Republic, South Sudan, the Democratic Republic of the Congo, Ghana, Ethiopia, Nigeria, El Salvador, Honduras, Uganda and Venezuela. 54 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 4 Deepen our engagement in sustainability Progress of Strategic Goal 4 Environmental Initiatives Climate Change and Energy Mitigating and adapting to the threat posed by climate change requires active involvement by national governments, local governments, corporations, citizens, and others. Astellas recognizes that climate change will become a constraint on conducting sustained corporate activity and considers it one of management’s key issues to address. Astellas has adopted the method for setting reduction targets recommended by the Science Based Targets (SBT)*1 Initiative. This method is designed to achieve the 2°C Steps toward 2050 Astellas’ Science Based Targets Base Year 2015 2018 target of the Paris Agreement, which entered force in 2016. In November 2018, the SBT Initiative certified the targets laid out in Astellas’ Environmental Action Plan. To address climate change as a manage- ment issue, we have adopted as an indicator the 2° C Scenario of the International Energy Agency (IEA 2DS)*2. We are currently updating our Environmental Action Plan, setting a long-term target of net zero emissions by 2050 based on a 1.5°C scenario*3. Backcasting 2050 Social Goal 2030 2030 Target SBT Validated Environmental Action Plan (Climate Change Mitigation Measures) (SBT certified) Reduce GHG emissions (Scope 1 + Scope 2) by 30% by FY2030 (base year: FY2015) (Emissions in the base year: 202 kilotons) Reduce GHG emissions (Scope 3) by 20% per unit of revenue by FY2030 (base year: FY2015) *1 Greenhouse gas emission reduction targets set by companies 5–15 years ahead, consistent with levels required by the Paris Agreement. *2 Reference was made to the 2-degree scenario (2DS) of the International Energy Agency (IEA). *3 Reference was made to the Intergovernmental Panel on Climate Change (IPCC) Working Group I Summary for Policymakers (SPM) of the Sixth Assessment Report. 55 In FY2021, we invested 900 million yen in climate change mitigation measures, mainly in energy-saving measures at each business facility, the renewal of air condi- tioning equipment, and the introduction of LED lighting, yielding a reduction of 1,933 tons of GHG. This represented a reduction of about 41% in Scope 1 and 2 greenhouse gas emissions in FY2021 and about 22% in Scope 3 greenhouse gas emissions. Progress on Environmental Action Plan (Scope 1 + 2) 100 (%) 100 90 80 70 60 50 scope 1 + 2 (V.S. FY2015 level) -18.5 -39.0 -41.3 2015 2019 2020 2021 (FY) Progress on Environmental Action Plan (Scope 3 / revenue) FY2015 (Base year) FY2019 GHG emissions (Scope 3) (Tons) Revenue (billion yen) Emission per unit of revenue (tons/billion yen) Ratio to Base-year (%) 271,010 1,373 197 — 229,953 1,301 177 -10.5 FY2020 194,534 1,250 156 -21.1 FY2021 200,019 1,296 154 -21.8 Usage of Energy Astellas’ total energy consumption in FY2021 was 3,517 TJ, a year-on-year decrease of 0.2% (8 TJ). Across regions, air conditioning equipment uses a large volume of electricity, and electricity accounts for a large proportion of overall energy consumption. Going forward, Astellas will continue to strive to lower energy consumption by further introducing electricity derived from renewable energy sources and introducing hybrid cars and electric vehicles, chiefly at production sites in Japan. Renewable energy 1,003 TJ 29% Total Energy consumption 3,517 TJ in FY2021 Renewable sourced 98 GWh 43% Total Electricity consumption 226 GWh in FY2021 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 4 Deepen our engagement in sustainability Progress of Strategic Goal 4 Disclosure based on TCFD recommendations An in-house cross-functional team for disclo- sure based on TCFD recommendations was established and the team conducted a scenario analysis. The team analyzed Astellas’ business and climate-related risks and oppor- tunities, on the assumption that transition risks would materialize under a 2°C scenario for climate change and physical risks would materialize under a 4°C scenario*1. In FY2021, the team undertook a qualitative scenario analysis, and the content of the analysis was discussed and raised at the EHS Committee. *1 Reference was made to Working Group I Summary for Policymakers (SPM) of the Sixth Assessment Report published by the IPCC in August 2021. *2 Only some items were extracted from the analysis results. See the corporate website for details. https://www.astellas.com/en/sustainability/TCFD-disclosure Analysis of Risk and Opportunities*2 Climate Change Risks Potential Financial Impacts Astellas’ Resilience Transition Risks (Risks that would materialize under a 2°C scenario) Increased pricing of GHG emissions (costs based on premise of paying a carbon tax). Policy and Legal Business sites that have not introduced renewable energies may have to add payment of a carbon tax to their costs. Using renewable energies such as wind and solar power to generate electricity for some power used at business sites. Switched to purchasing energy derived from renewable sources at business sites (Part of manufacturing and research sites and sales offices in Europe and the United States. Some manufacturing and research sites in Japan started purchasing electricity derived from hydroelectric power in FY2020.) Promote the purchase of renewable energy-derived electricity at other business sites in the future. Purchase credits (CO2 emission rights) to reduce Scope 1 emissions and measures to control costs associated with the purchase will be issues for consideration. Obsolescence and impair- ment loss on existing facilities accompanying GHG emission regulations. • Possibility of being asked to discard facilities due to strengthening of environmental regulations • Refrigeration equipment using freon gas. • Vehicles that use fossil fuel may no longer be available in some countries after 2035. There are no existing facilities that we are forced to dispose of. Regarding freon gas, we will take appropriate measures that comply with laws and regulations. From 2030 onwards we need to respond to a change of automobile (shift from internal combustion engines to electric motors and fuel cells). Shift to EVs for sales fleets and trucks and modal shift of transportation will have an impact on the business operation. Physical Risks (risk materializing at 4°C increase) Acute Increased severity of extreme weather events such as floods. Operations halt at our business sites due to floods or other factors. Raw material and product supply is delayed due to damage in the supply chain caused by floods or other factors. [Toyama Technology Center]: For flood risk assessment, we asked a consultant to create a hazard map and designed the [Yaizu Facilities]: The Yaizu Facilities tsunami hazard map envisages damage being minor. building based on the recommendations. We are analyzing the supply chain for each business site. We are implementing measures such as inventory control with a margin for continuous stable supply. Environmental risk assessment of supply chain is conducted by using an in-house system called “Risk Assessment on Third Party Lifecycle Management”. Climate-related Opportunities Potential Financial Impacts Astellas’ Response • Use of more efficient produc- Reduced operating costs Resource efficiency tion and distribution processes • Use of recycling Together with other companies in the same industry we established and operate a joint logistics center in Hokkaido. This is conducive to making the logistics process more efficient. Started operating the Kyushu Logistics Center in Fukuoka Prefecture. As the joint distribution center in Hokkaido achieved an efficient supply of pharmaceuticals and reduction of CO2 emissions, the same outcome is expected for the Kyushu Logistics Center. In European countries and the United States, warehouses shared by multiple pharmaceutical manufacturers are being used to streamline the distribution process. We collect exhaust heat from air conditioning units at Japanese manufacturing plants and research sites and use it to pre-heat the air supply to improve heat efficiency. • Development and/or expansion Products and market of low emission goods • New products and services • Access to new markets Increased revenues through access to new and emerging markets For the spread of infectious diseases in endemic areas due to temperature change and the needs for new drugs for the treatment of infectious diseases as a result of antimicrobial resistance, collaboration with the Phage Biologics Research Course at a university to create engineered bacteriophages, which could be an option for solving these issues. Climate change can change the area of occurrence, morbidity, and severity of epidemic diseases. Heart disease, respiratory disease, etc., may also increase in prevalence. 56 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strategic Goal 4 Deepen our engagement in sustainability Progress of Strategic Goal 4 Initiatives for Resource Recycling and Pollution Prevention Astellas believes that maintaining a healthy global environment is an essential theme for building a sustainable society, and it is also an important element in ensuring the continuation of business activities. Our Environmental Action Plan sets out short-term and medium-term targets for our activities regarding the key points of the Astellas Environment, Health & Safety Guidelines. We renew our action plans on a rolling basis, by reviewing progress and conditions during the previous year and incorporating our findings into our Environment Action Plan for the following year. The Plan has been consistently managed well, and even higher targets have been set from FY2021. We are contin- uously implementing measures in line with the target fiscal years set out in each Plan. Results for FY2021 are as follows: Environmental Action Plan for Preventing Pollution Item Goal FY2021 Results Measures for the Conservation of Natural Resources Enhance water resource productivity*1 by around 20% of the FY2016 result by the end of FY2025 Ratio to base year 17% improvement External Evaluation Regarding ESG Astellas has been selected as a constitu- ent of numerous ESG investment indexes, having received high ESG scores from external rating agencies for its ESG initia- tives. We continually take a closer look at ESG Assessments such scores and indexes to identify opportunities for further improvement and to pursue sustained efforts to enhance our ESG activities. 2018 2019 2020 2021 FTSEESG Ratings (0 to 5, higher scores are better) ICB supersector: Health Care Percentile rank (1 to 100, higher scores are better) MSCI ESG Ratings (Scale from CCC to AAA) CDP Climate Change (A to F, A is the highest) 3.3 67 AA B 3.9 87 AA B - 3.6 81 AA A- - 4.0 94 AA B 14th/20 Waste management  Improve waste generated per unit of revenue*2 by around 10% of the FY2016 result by the end of FY2025 Ratio to base year 1% deterioration Access to Medicine Index (ranks the world’s 20 pharmaceutical companies) 19th/20 Biodiversity Quadruple the biodiversity index by FY2025 from the FY2005 level Ratio to base year 3.8 times Sustainalytics (Scale from Negligible to Severe) Medium Medium Medium Medium *1 Water resource productivity = Revenue (¥ billion)/Water resources withdrawn (1,000 m3) (For research and production sites in Japan and overseas) *2 Waste generated per unit of revenue = Volume of waste generated (tons)/Revenue (¥ billion) (For research and production sites in Inclusion in ESG Investment Indexes Japan and overseas) Effective Use of Resources The effective use of water resources serves as a useful indicator for gauging society’s impact on biodiversity. Astellas is promoting efforts to reduce the waste landfill volume to as close to zero as possible through the proactive recycling and reuse of waste materials. Resource Recycling Item Volume of water resource withdrawn (1,000 m3) Waste generation volume (Tons) FY2019 7,493 13,922 FY2020 7,564 14,352 FY2021 7,394 13,882 FTSE 4Good Index Series FTSE Blossom Japan Index FTSE Blossom Japan Sector Relative Index MISI Japan ESG Select Leaders Index MSCI Japan Empowering Women Index (WIN) S&P/JPX Carbon Efficient Index FTSE Russell (the trading name of FTSE International Limited and Frank Russell Company) confirms that Astellas has been assessed according to the FTSE4 Blossom Japan Sector Relative Index criteria, and has satisfied the requirements to become a constituent of the FTSE4 Blossom Japan Sector Relative Index. The FTSE4 Blossom Japan Sector Relative Index is used by a wide variety of market participants to create and assess responsible investment funds and other products. THE INCLUSION OF Astellas Pharma Inc. IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF Astellas Pharma Inc. BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES. The 2-year progress report on Access to Medicine Index is as follows: 2018: https://accesstomedicinefoundation.org/media/uploads/downloads/5e27136ad13c9_Access_to_Medicine_Index_2018.pdf 2021: https://accesstomedicinefoundation.org/media/uploads/downloads/613f5fb390319_Access_to_Medicine_Index_2021.pdf Copyright ©2021 Sustainalytics. All rights reserved. This [publication/ article/ section] contains information developed by Sustainalytics (www.sustainalytics.com). Such information and data are proprietary of Sustainalytics and/or its third party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an endorsement of any product or project, nor an investment advice and are not warranted to be complete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at https://www.sustainalytics.com/legal-disclaimers. 57 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Organizational Health Goals Organizational Health Goals (OHGs) have been estab- lished to implement CSP2021 more effectively. They are important for the reliable execution of CSP2021 and for the personal growth of individual employees to foster a corporate culture enabling the creation of greater inno- vation to reach more ambitious goals. We have promoted the understanding of CSP2021 by increasing the opportunities and frequency of dialogue between Top Management and employees and not just cascading down through functional responsibility. In addition, we have established the Astellas Leader- ship Expectations and completed training to all Astellas leaders (approximately 3,000) to dramatically transform organizational culture. We have also introduced “shared objectives” across divisions/functions and “ambitious objectives” in order to drive further collaboration and intelligent risk taking for innovation. Other OHG-related initiatives are also in progress. In order to increase our time and resources to focus on critical work, advance necessary activities faster and be more innovative, we started the "Dansharism" initiative from FY2022. Based on the idea that time is the most valuable resource, by identifying and being “brave” to eliminate work that lacks sufficient purpose reason, and identifiable return on investment (ROI), we secure resources for our priority core business and also drive further innovation. Relationship to Material Issues • Talent and organizational culture for realizing innovation 58 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Message from the Head of Human Resources We will focus on building an organization that continues to grow so that we can maximize our contribution VALUE to patients. Katsuyoshi Sugita Executive Vice President, Human Resources* *1 Appointed as Chief People Officer and Chief Ethics & Compliance Officer (CPO & CECO) effective October 1, 2022. People and organizational initiatives toward the Organizational Health Goals (OHGs) directly link to contributions to the business. intelligent risk-taking to embrace new challenges. Through these efforts under CSP2021, it will surely lead business results. While it is still too early to see major changes as we have only just finished the first year of CSP2021, in the first year of the plan, we carried out a leadership training program called “Ignite.” The program presented the detailed image of leadership style that Astellas expects of its leaders. I feel that this has given our leaders a heightened awareness of their importance as role models, and of the need to take ownership in fostering the development of our people and organizational culture. Our leaders now have a better grasp of the importance of giving their teams and organizations a high level of psychological safety. A total of 2,888 leaders attended, for a participation rate of 99%. We worked to develop this as a company-wide system. In addition, employees are increasingly interested in going beyond their own organizations to explore opportunities for work or positions in other divisions. There have been some positive changes, such as cases where employees planned their own careers and took up the challenge of open positions. In such case, the Company openly select employees while matching their wishes as much as possible. The basic rule for internal transfers is free competition based on the wishes of each individual. In addition, we have significantly increased the opportunities for direct communication When I joined Astellas in 2021, what surprised me was that globalization is progressing in every from top management*2. In the “Ask Me Anything” sessions, which are part of the measures to aspect. Along with the globalization of our business, which is reflected in the increase in the spread CSP2021 with employees, employees communicate directly with Top Management, who ratio of overseas sales and the ratio of overseas employees, we have also globalized our HR answer the employees’ questions directly in their own words. I see this as another unique policies and organizations to support that change. For example, most companies tend to divide Astellas initiative for employees to work together as One Astellas. their human resources divisions into domestic and overseas divisions by setting up an interna- tional human resources division. But at Astellas, our human resources division manages both domestic and international operations under a single division. This gives us a unified chain of command and a globally integrated human resources system. We put in place remote work from an early stage, creating an environment for company-wide collaboration to contribute to patients across countries. The OHGs set forth in Corporate Strategic Plan 2021 (CSP2021) will work as “a bridge” that *2 President and Chief Executive Officer, Chief Strategy Officer, Chief Administrative Office • Chief Ethics & Compliance Officer, Chief Medical Officer, Chief Commercial Officer, Chief Scientific Officer, Chief Financial Officer, General Counsel, and Chief Manufacturing Officer. There is still more that our organization and our employees can do to achieve CSP2021. connects these people and organizational efforts to contributions to our business. In working As I mentioned, our efforts to drive innovation are beginning to bear fruit. But there are still toward our OHGs, we will promote cross-functional collaboration so that we can “excel as One areas where we can improve. One example is the number of organizational hierarchies. In Astellas.” We will nurture innovation by encouraging people and organizations who can take general, the more hierarchies we have, the more approval processes we have and the slower 59 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Message from the Head of Human Resources the decision-making process becomes. This can hinder innovation in terms of time and cost. Another important factor for continuing to be chosen by stakeholders is to be a purpose-driven We are working to improve this by streamlining our organizational structure. The less hierarchy organization. All our employees have a clear understanding of our purpose as an organization. there is, the easier it is for people to propose and discuss ideas freely and frankly. Reducing They know that we are working toward our OHGs and using human resources initiatives to hierarchies is an important issue for approaching our target organization under the OHGs. The build an organization that can drive innovation. They understand how we aim to channel Dansharism initiative that we began this fiscal year also creates an environment that nurtures those efforts toward business results, so that we can maximize the VALUE we deliver to innovation. It does this by cutting out excess and inefficiencies and focusing resources on patients. They can see how all of these initiatives align with the VISION. what is truly necessary. In order to continue to create more VALUE through innovation and to be an organization Aside from organizational structure, another essential element of driving innovation is our that continues to be chosen by stakeholders, we will focus on achieving CSP2021, which employees’ mindset. We will continue to increase communication to further foster the mindset includes OHGs. And I will always enjoy taking on new challenges. of putting patients first and delivering Astellas VALUE. To continue driving innovation, it is important not only to have mutually supportive relationships, but also to actively pursue results. The key to this is psychological safety. When we are willing to take intelligent risks and challenge ourselves to achieve results, there can be a time for criticism or tough discussions. An organization with a high level of psychological safety can talk about things frankly without having to avoid such hard discussions. That enables the organization to put in the preparation needed to push itself to the next level. We will continue to work on building our organization to have this kind of psychological safety. We aim to build an organization that our stakeholders will continue to choose. One of my goals is for Astellas to be an organization where employees choose it because that is where they want to work. Astellas should be a place where people can continue to grow on their own with a growth mindset. A growth mindset means not placing limits on your qualities and abilities. It is the idea that you can develop your own potential as much as you want with your experience, effort, and attitude. I have always pursued my career with this idea. Based on this mindset, each and every employee will continue to have a willingness to learn, and will become highly motivated, capable, and able to choose their own careers. We aim to be an organization that continues to be chosen by such talents for their sympathy with the VISION, passion for their duties, job satisfaction, co-workers, and the good working environment. 60 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data People and Organization for Innovation To realize our VISION, the engagement of “talent” who are working in Astellas is essential. Investment in our people is important for the future of Astellas, in addition to enhancing our current ability for execution. We continue to invest with both short-term and long-term perspectives. We want our employees to feel empowered to shape the future of our organization. To that end, we are building a workplace where diverse teams and individuals can thrive amid a culture of mutual learning and respect. We are committed to creating an environment where all our employees can become peak performers at their jobs and stay both physically and mentally healthy. In 2016, Astellas has developed HR VISION based on Astellas Way to clarify our desired people and organization. By optimizing 3 key areas: attraction, retention and development, Astellas aims to be an “Employer of Choice”. In addition, we newly established “Organizational Health Goals (OHGs)” in CSP2021 by identifying the elements necessary to achieve CSP2021. With our effort to achieve OHGs, we nurture a corporate culture that aims at reaching ambitious goals by pro- moting innovation, optimizing our talent, and fostering collaboration, which enhanc- es Astellas’ ability for execution. Overview of the HR VISION Towards Realizing the Corporate VISION One Astellas with the Astellas Way Our People Our Organization Embrace Change and Challenge Value Diversity and Inclusion Serve Others Act with Integrity Resilient Inspired Aligned Ethical HR MANAGEMENT DEVELOP EMPLOYER OF CHOICE ATTRACT RETAIN The Astellas Way –5 Messages for One Astellas– VISION Patient Focus: Ask yourself if your decisions and actions contribute to improving patient health. Ownership: Embrace change and always challenge by taking ownership. Results: Commit to results each time you face a challenge, and consider fresh approaches to achieving them. Openness: Maximize your creativity through diversity and open communication. Integrity: Act With integrity by always considering the implications of your actions, and then responsibility for the outcomes. 61 Establishment of HR system corresponding to our global functional organization P.62 Setting of Organizational Health Goals to transform into more Innovative Organization OHGs P.63 Creating an environment in which diverse talent can thrive EDE&I P.65 Establishment of Astellas CSP2021 2005 2021 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Initiatives for People and Organization Establishment of HR system corresponding to our global functional organization Flattened the hierarchy In line with the globalization of our business, we are transitioning to a global organization divided by function, and are promoting the integration and harmonization of personnel systems so that we can deploy the right people in the right place on a global scale. These HR measures support Astellas’ business and strengthen its competitiveness in recruiting talent. Key Activities Details Achievements in FY2021 Harmonization of grade structure and job evalua- tion Succession planning Consistency in grades based on each position's responsibilities regardless of where they work or which division they belong to Job evaluations by globally com- mon methodology and processes Develop, discuss and implement Talent Review and Succession Plan Enhancing and Developing the Talent Pipeline Completed for managers and above Implemented for all VPs and above Prepared succession plan for all VPs and above. Expanding to other key positions Identify multiple candidates from the talent pool of the entire Astellas and execute a development plan Harmonizationof compen- sation structures and levels For all VPs and above worldwide • Completed a globally common compensation structure • Promote level integration between regions Job posting system Implementation of global job posting system (many positions around the world can be posted) Completed approx. 300 internal hirings Total of more than 2,000 applications HR Database Details HR CONNECT Establishment of a database that serves as a foundation of talent management by visualizing all talent data worldwide Operation and execution of talent management including the programs above within a globally integrated HR system Led by the CEO, Astellas is promoting measures to become an innovative organi- zation that does not become political even with a large number of people. By referring to the magic number*1 equation introduced in LOONSHOTS*2 by Safi Bahcall, which describes innovation in organizations, and by increasing this magic number, we aim to transform the organization into an organization that is more likely to generate innovation. Among the indicators that affect the magic number, we are focusing on the equity ratio, management span, and organiza- tional fitness level, and are working on reshaping the HR system. M ≈ ES2F G E: equity ratio S: management span F: organizational fitness level G: salary increase ratio *1 The critical size of an organization, considered in terms of incentives such as salary and equity (giving employees some form of a share of successful projects). At scale below this threshold, all employees struggle to produce LOONSHOTS, but at scale the balance shifts from project-focused to political-focused. *2 LOONSHOTS: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries by Safi Bahcall, published in 2019, published by St. Martin’s Press. As for equity ratio, we changed the calculation method for bonuses to be based on company-wide indicators. As a result, "VALUE" that Astellas creates will be more directly linked to the rewards for individuals, and the balance will shift to an organization that focuses on innovation and results rather than politics. At Astellas, management span is viewed as span of control, which represents the number of direct reports to each leader.. By increasing this management span, we aim to make our organization flatter and to make it maximum of 6 layers to speed up decision-making. In addition, we need leaders who can appropriately pick up innovative ideas that would arise in the flatter organization and can support the growth of their subordinates at the same time. We have clarified the leadership image that Astellas is aiming for under the OHG and promoting the development of leaders through leadership training. At Astellas, organizational fitness level refers to the right person in the right place, including timing, not seniority. In order to find the best talent for a certain position from all over the world, we have built a global HR system so that we can search for the right talent globally. In addition, we have established and operate a global job posting system that allows employees from all over the world to apply for desired posts. We believe that both reforming the organization structure and working to foster a culture of taking on challenges without fear of failure, it will accelerate the development of innovative medical solutions and lead to the realization of VISION. 62 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Organizational Health Goals We newly established “Organizational Health Goals (OHGs)” in CSP2021. The purpose of these goals is to nurture a corporate culture that aims at reaching ambitious goals by promoting innovation, optimizing our talent, and fostering collaboration, which enhances Astellas’ ability for execution. To identify the factors that block our innovation, interviews were conducted to collect employees’ and leaders' opinions. Furthermore, we analyzed the collected comments of employees and set OHG1-3. We are promoting initiatives to achieve each goal. Planning process Initiatives to achieve Organizational Health Goals Identified Issues Organizational Health Goals Initiatives & Progress Interviewing employees and leaders around the world and collect their opinions • Extensive fear of failure and unwillingness to take business risks to achieve innovation • Conservative objective setting • Reluctance to update and develop new systems and processes to meet new challenges I d e n t i f y t h e f a c t o r s • Unclear image of leadership to generate innovative ideas • Lack of development plans to foster leadership • Evaluation system that promotes departmental optimization • Silo situation and lack of trust between divisions 1. “Brave ideas pursue ambitious outcomes” Aggressively take on challenges for innovation and ambitious outcomes Launch of psychological safety playbook Implementation of ambitious objective setting for all individual employees, as well as for divisional objectives for FY2022 Introduction of Dansharism Launch of white space* toolkit for managers 2. “Talent and leadership thrives” Environment in which excellent people have ownership and demonstrate leadership 3. “We excel as One Astellas” Collaborate across divisions to achieve shared goals for all Astellas Establishment and launch of the Astellas Leadership Expectations Completion of leadership training to all Astellas leaders Introduction of global feedback initiative Execution of multiple talent development initiatives Implementation of shared objectives process Removal of focus on divisional performance and replacement with All Astellas Performance for Rewards Promotion of direct dialogue and Q&A sessions with Top Management First ever global online Top Management live stream to all Astellas employees 63 resources to be innovative. * White space is defined as “having the time, tools, and expertise to think of new ideas.” It is having the necessary Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Organizational Health Goals Specific initiatives to achieve Organizational Health Goals Organizational Health Goal 1 Brave ideas pursue ambitious outcomes In order to achieve OHG1, to embed psychological safety in our organizational culture is critical. We created and launched a psychological safety playbook with actual use cases in several divisions. Both divisions and individual employ- ees set ambitious objectives from FY2022 to achieve higher goals and training was provided for that globally. The Dansharism* initiative was introduced in FY2022 given the fact that a redesigned employee engagement survey revealed a need for white space. The white space toolkit was also launched for managers in response to that results to create better environment to pursue OHG1. * Dansharism stands for our strong belief and mindset to be "brave" in eliminating work that lacks sufficient purpose, reason, and identifiable return on investment (ROI) (excl. things that are necessary for legal regulations). Organizational Health Goal 2 Talent and leadership thrives We have newly set 12 Astellas Leadership Expectations with a specific focus on empowering ownership, delegating decision making to the right level and providing frequent feedback, then completed the so-called “IGNITE” leadership training for alll Astellas leaders (approx. 3,000 people). Through IGNITE and also newly initiated Astellas leader forums we are working on activating continuous feedback. This ultimately leads leads to an innovative and high-per formance culture. We are also actively engaging in multiple talent development initiatives including a female talent development program and enhanced succession planning and talent review process from FY2022. Organizational Health Goal 3 We excel as One Astellas A shared objectives process introduced during FY2022 annual planning which pro- moted dialogue and collaboration between divisions on initiatives in support of CSP2021. Up to 100 shared objectives identified, along with key contributors and success measures. For FY2022, STI (short-term incentive) and LTI (long-term incentive) Rewards for employees: we removed division performance measures and replaced them with All Astellas Performance to incentivize greater collaboration and non-siloed work. We undertook measures to disseminate CSP2021 and OHG throughout the organization and increased direct dialogue and Q&A opportunities with Top Management such as “Ask Me Anything” sessions. Also, the first ever global online Top Management live stream to all Astellas employees was held in May 2022 including the entire Top Management team focused on role modeling and collaboration. 64 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Engagement, Diversity, Equity and Inclusion Astellas is working to promote diversity so that diverse individuals can play a role in the Company, irrespective of their identity. Respecting the diverse values of our employees and reflecting their various perspectives in our business activities not only heightens creativity in our organization, but also helps to attract and retain talented people as employees and enhances our competitiveness. Based on our global Engagement, Diversity, Equity and Inclusion philosophy, Astellas integrates diversity, equity and inclusion into each region. Engagement When people are treated with respect and valued for who they are and what talent they bring, they speak up and share brave ideas in unimaginable ways. Diversity When organizations have diversity in their people, leaders and suppliers, they more fully represent the patients' community, are better positioned to understand and address patients' unmet needs and create sustainability in all its forms. Equity When people are seen and treated as the individuals they are, barriers are eliminated, and their unique needs are met, they can enjoy optimal health and the fullness of the value they bring is unleashed. Inclusion When we foster inclusive environments that create psychological safety, a sense of belonging, and empowerment, there is high-quality and efficient collaboration, problem-solving, decision-making, innovation and ultimately, VALUE creation. VOICE As we continue to foster organizational health and aspire towards our CSP2021, it is evident that diversity (in all forms) drives innovation; inclusion enables psychological safety, thoughtful risk-taking, and equitable experiences; and engaged employees are more productive. We know that all of these things foster a culture of ethics and integrity which is at the core of what we do and who we are at Astellas. Furthermore, with each passing day we witness just how interdependent we all are and how Engagement, Diversity, Equity and Inclusion (EDE&I) are mutually beneficial to each of us and our collective sustainability. La Toya McClellan The Head of Engagement, Diversity & Inclusion 65 Composition ratio of employees by region (As of July 2022) 8% 10% 34% 24% 24% ■ JAPAN ■ United States ■ Established Markets*1 ■ International Markets*2 ■ Greater China*3 Foreign nationality ratio of Division Heads (As of July 2022) 51% 49% ■ Foreign nationality ■ Japanese nationality Percentage of female managers (As of July 2022) Mid-career hiring rate (Japan) (As of July 2022) 13% 44% 57% 43% Outside: Global Inside: Japan ■ Female managers ■ Mid-career hiring ■ New graduates hiring *1 Established markets: Europe, Canada, Australia *2 International Markets: Russia, Latin America, Middle East, Africa, Southeast Asia, South Asia, Korea, Export sales, etc. *3 Greater China: China, Hong Kong, Taiwan Promoting Health Management Putting into practice work styles that allow every employee to demonstrate high productivity and creativity and realize their own potential will energize us as an organization and lead to corporate growth as One Astellas. The realization of such work styles is predicated on employee health and the creation of a sound corporate culture. A sound corporate culture requires a psychologically safe environment in which all employees respect each other and can actively communicate with peace of mind. Astellas is committed to pursuing organizational health through the support of diverse work styles and the promotion of employee health, ensuring all employees enjoy physical and mental wellbeing, thus enabling them to strive for even greater productivity. Health Management Promotion System Astellas’ health management promotion system in Japan is planned and operated mainly by the Human Resources (including health staff ), Astellas Health Insurance Society and labor union, and headed by the Chief Administrative Officer and Chief Ethics & Compliance Officer (CAO & CECO). In addition, these 3 parties collaborate to consider and advance measures for employee health issues in periodic health management meetings. Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Strengthening Governance CONTENTS Strengthening Governance Board of Directors Corporate Governance Interview with an Outside Director Risk Management Ethics & Compliance 66 67 69 76 78 80 66 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Board of Directors (As of June 20, 2022) Kenji Yasukawa Representative Director, President and CEO, Chairman of the Board Naoki Okamura Representative Director, Executive Vice President Mamoru Sekiyama Outside Director Hiroshi Kawabe Outside Director Takashi Tanaka Outside Director Eriko Sakurai Outside Director Rate of attendance in meetings of the Board of Directors: 100% (13/13 times) Number of shares of the Company owned: 78,715 shares Rate of attendance in meetings of the Board of Directors: 100% (13/13 times) Number of shares of the Company owned: 11,000 shares Rate of attendance in meetings of the Board of Directors: 100% (13/13 times) Number of shares of the Company owned: 0 shares Rate of attendance in meetings of the Board of Directors: 100% (13/13 times) Number of shares of the Company owned: 0 shares Rate of attendance in meetings of the Board of Directors: 90% (9/10 times) Number of shares of the Company owned: 0 shares Number of shares of the Company owned: 0 shares Resume, position and responsibilities at the Company Resume, position and responsibilities at the Company Resume, position and responsibilities at the Company Resume, position and responsibilities at the Company Resume, position and responsibilities at the Company Resume, position and responsibilities at the Company Joined the Company April 1986: April 2005: Vice President, Project Management, Urology, the Company June 2010: Corporate Executive of the Company and Therapeutic Area Head, Urology, Astellas Pharma Europe B.V. Corporate Executive of the Company and Therapeutic Area Head, Urology, Astellas Pharma Global Development, Inc. October 2010: April 2011: Corporate Executive, Vice President, Product & Portfolio Strategy, the Company April 2012: Corporate Executive, Chief Strategy Officer (CSTO), the Company June 2012: Senior Corporate Executive, Chief Strategy Officer (CSTO), the Company April 2017: Senior Corporate Executive, Chief Strategy Officer and Chief Commercial Officer (CSTO & CCO), the Company June 2017: Representative Director, Executive Vice President, the Company April 2018: Representative Director, President and CEO, the Company (present post) April 1986: October 2010: April 2012: July 2014: April 2016: Joined the Company President & CEO, OSI Pharmaceuticals, Inc. Senior Vice President, Chief Strategy Officer, Astellas Pharma Europe Ltd. Vice President, Licensing & Alliances, the Company Vice President, Corporate Planning, the Company June 2016: Corporate Executive, Vice President, Corporate Planning, the Company April 2018: Corporate Executive, Chief Strategy Officer (CSTO), the Company April 2019: Corporate Executive Vice President, June 2019: October 2019: September 2021: March 2022: April 2022: Chief Strategy Officer (CStO), the Company Representative Director, Executive Vice President, Chief Strategy Officer (CStO), the Company Representative Director, Executive Vice President, Chief Strategy Officer and Chief Financial Officer (CStO & CFO), the Company Representative Director, Executive Vice President, Chief Strategy Officer, Chief Financial Officer and Chief Business Officer (CStO & CFO, and CBO), the Company Representative Director, Executive Vice President, Chief Strategy Officer and Chief Business Officer (CStO and CBO), the Company Representative Director, Executive Vice President and Chief Strategy Officer (CStO), the Company (present post) April 1974: April 1997: General Manager, Power Project Joined Marubeni Corporation Dept.-I, Marubeni Corporation April 1998: General Manager, Power Project Dept.-III, Marubeni Corporation April 1999: Deputy General Manager, Power April 2001: Project Div.; General Manager, Power Project Dept. -I, Marubeni Corporation Senior Operating Officer, Utility Infrastructure Div.; General Manager, Overseas Power Project Dept., Marubeni Corporation April 2002: Corporate Vice President, Chief Operating Officer, Plant, Power & Infrastructure Div., Marubeni Corporation April 2005: Corporate Senior Vice President, Chief Operating Officer, Plant, Power & Infrastructure Projects Div., Marubeni Corporation June 2006: Corporate Senior Vice President, Member of the Board, Marubeni Corporation April 2007: Corporate Executive Vice President, April 2009: Member of the Board, Marubeni Corporation Senior Executive Vice President, Member of the Board, Marubeni Corporation Vice Chairman, Marubeni Corporation April 2013: April 2015: Corporate Adviser, Marubeni Corporation; Chairman, Marubeni Power Systems Corporation June 2017: Director, the Company (present post) April 2020: Outside Director and Audit & Supervisory Committee Member, A.D. Works Group Co., Ltd. (present post) 67 May 1979: Assistant, Department of Internal Medicine, Keio University School of Medicine April 1990: Assistant Professor, Health Center, Keio April 1981: April 2003: University Joined Kokusai Denshin Denwa Co., Ltd. (KDD) Executive Officer, General Manager, Solution Product Development Division, Solution Business Sector, KDDI CORPORATION April 2002: April 1991: Assistant Professor, Department of Internal Medicine, Keio University School of Medicine April 1996: Associate Professor, Health Center, Keio University; Associate Professor, Department of Internal Medicine, Keio University School of Medicine Professor, Health Center, Keio University; Professor, Department of Internal Medicine, Keio University School of Medicine Vice President, Health Center, Keio University President, Health Center, Keio University Trustee, Japan University Health Association Trustee, Daiwa Securities Health Foundation (present post) President, Foundation for Promotion of Medical Training (present post) Professor Emeritus, Keio University (present post) October 2003: October 2011: June 2013: March 2017: March 2018: April 2018: June 2007: Managing Executive Officer, Executive August 2007: Director, Solution Business Sector, KDDI CORPORATION President, Wireless Broadband Planning Inc. (current UQ Communications Inc.) April 2009: Managing Executive Officer, Solution Business Sector, KDDI CORPORATION April 2010: Managing Executive Officer, Solution Business Sector, Consumer Business Sector, and Product Development Sector, KDDI CORPORATION Senior Managing Executive Officer, Solution Business Sector, Consumer Business Sector, and Product Development Sector, KDDI CORPORATION; Chairman, UQ Communications Inc. Representative Director, President, KDDI CORPORATION Representative Director, Chairman of the Board, KDDI CORPORATION (present post) December 2010: April 2018: June 2010: June 2019: Director, the Company (present post) June 2018: Director, Okinawa Cellular Telephone Company (present post) June 2021: Director, the Company (present post) June 1987: March 2009: Joined Dow Corning Corporation (current Dow Silicones Corporation) Chairman and CEO, Representative Director, Dow Corning Toray Co., Ltd. (current Dow Toray Co., Ltd.) Regional President Japan/Korea, Dow Corning Corporation (current Dow Silicones Corporation) June 2014: Outside Director, Sony Corporation May 2011: February 2015: (current Sony Group Corporation) President, Representative Director, Dow Silicones Holdings Japan Kabushiki Kaisha (current Specialty Products Japan Godo Kaisha) August 2020: June 2015: Outside Director, Sumitomo Mitsui Financial Group, Inc. (present post) President and Representative Director, Dow Chemical Japan Limited; President, Representative Director, Dow Japan Holdings Kabushiki Kaisha (current Dow Chemical Japan Limited); President, Representative Director, Performance Materials Japan Kabushiki Kaisha Outside Director, Kao Corporation (present post) March 2022: June 2022: Director, the Company (present post) Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Board of Directors Toru Yoshimitsu Director, Audit & Supervisory Committee Member Haruko Shibumura Outside Director, Audit & Supervisory Committee Member Raita Takahashi Outside Director, Audit & Supervisory Committee Member Mika Nakayama Outside Director, Audit & Supervisory Committee Member Rate of attendance in meetings of the Board of Directors: 100% (13/13 times) Rate of attendance in meetings of the Audit & Supervisory Committee: 100% (14/14 times) Number of shares of the Company owned: 47,818 shares Rate of attendance in meetings of the Board of Directors: 100% (13/13 times) Rate of attendance in meetings of the Audit & Supervisory Committee: 100% (14/14 times) Number of shares of the Company owned: 0 shares Rate of attendance in meetings of the Board of Directors: 100% (13/13 times) Rate of attendance in meetings of the Audit & Supervisory Committee: 100% (14/14 times) Number of shares of the Company owned: 0 shares Number of shares of the Company owned: 0 shares Resume, position and responsibilities at the Company Resume, position and responsibilities at the Company Resume, position and responsibilities at the Company Resume, position and responsibilities at the Company August 1984: April 2015: April 2017: June 2020: June 2022: Joined Nippon Synthetic Rubber Co., Ltd. (current JSR Corporation) Officer, General Manager of Corporate Planning Department and General Manager of Diversity Promotion Office, JSR Corporation Executive Officer, General Manager of Intellectual Property Department, JSR Corporation Director, Senior Officer, General Manager of Sustainability Promotion Dept., JSR Corporation Director, the Company (present post) April 1987: April 2013: June 2015: April 2017: April 2019: October 2019: April 2020: June 2020: Joined the Company Senior Vice President, Product & Portfolio Strategy, the Company Corporate Executive, Senior Vice President, Product & Portfolio Strategy, the Company Corporate Executive, Senior Vice President, Corporate Finance & Control, the Company Corporate Executive, Senior Vice President, Corporate Financial Planning & Analysis, the Company Corporate Executive, Senior Vice President, Finance and Corporate Financial Planning & Analysis, the Company Report to CEO, the Company Director (Audit & Supervisory Committee Member), the Company (present post) April 1987: August 1987: April 1994: April 1999: October 2006: June 2015: April 2016: June 2018: June 2019: Joined Chiyoda Mutual Life Insurance Company Joined Kyushu University Press Registered as an attorney-at-law (Dai-ni Tokyo Bar Association); Joined Law Offices of Honma & Komatsu (current Homma & Partners) Partner Lawyer, Homma & Partners (present post) Committee member, Compliance Committee, TAMURA Corporation Outside Audit & Supervisory Board Member, NICHIREKI CO., LTD. Committee member, Compliance Special Committee, TAMURA Corporation Outside Director, TAMURA Corporation (present post) Director (Audit & Supervisory Committee Member), the Company (present post); Outside Director, NICHIREKI CO., LTD. (present post) Skill Matrix and Composition of Advisory Committees October 1986: Joined Sanwa · Tohmatsu Aoki Audit Corporation (current Deloitte Touche Tohmatsu LLC) Joined Chuo Audit Corporation Established TAKAHASHI Accounting & Tax office (present post) Representative Partner, ChuoAoyama PricewaterhouseCoopers August 1995: May 1997: April 1999: December 2000: Outside Audit & Supervisory Board Member, Alpha Group March 2001: June 2011: January 2018: June 2020: Inc. (present post) Representative Director, Yoshida Management Co. Ltd. (present post) Trustee, Japan Association of Healthcare Management Consultants (present post) Section President, Japanese Institute of Certified Public Accountants, Minami-Kyushu Chapter, Kagoshima Subcommittee Director (Audit & Supervisory Committee Member), the Company (present post) Name Outside director Company Management Global Business Science & Technology Legal·Risk Management Finance · Accounting Academia Nomination Committee Compensation Committee Advisory Bodies Director Director Audit & Supervisory Committee Member Kenji Yasukawa Naoki Okamura Mamoru Sekiyama Hiroshi Kawabe Takashi Tanaka Eriko Sakurai Toru Yoshimitsu Haruko Shibumura Raita Takahashi Mika Nakayama (Trading) (Telecommunication) (Chemicals) (Chemicals) — — Chair — — Chair (Medicine) Member of the Committee Member of the Committee Member of the Committee Member of the Committee Member of the Committee Member of the Committee — — — — — — — — (Lawyer) (Accountant) 68 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Corporate Governance Basic view The Company’s raison d’être is to contribute to improving the health of people around the world through the provision of innovative and reliable pharmaceutical products. The Company aims to sustainably enhance enterprise value by being chosen and trusted by all stakeholders. With this business philosophy, we work to ensure and strengthen the effectiveness of corporate governance from the following perspectives: 1. Ensuring transparency, appropriateness and agility of management; and 2. Fulfillment of our fiduciary duties and accountability to shareholders and appropriate collaboration with all stakeholders. The summary of the corporate governance systems is as follows: • The Company adopts the organizational structure of “Company with Audit & Supervisory Committee.” Outside Directors constitute the majority of the Board of Directors and the Audit & Supervisory Committee, respectively. • The Board of Directors determines basic policies of management, business strategies and other matters, and serves the oversight function of business execution. • As an organ for handling execution of business, the Company establishes the Executive Committee for discussing important matters, and also appoints Top Management (the President and Chief Executive Officer; the Chief Strategy Officer; the Chief Administrative Officer and Chief Ethics & Compliance Officer; the Chief Medical Officer; the Chief Commercial Officer; the Chief Scientific Officer; the Chief Financial Officer; the General Counsel; and the Chief Manufacturing Officer are collectively referred to as “Top Management”), who are responsible for the execution of business. The responsibility and authority for the execution of business by the Executive Committee and Top Management are clearly stipulated in the "Corporate Decision Authority Policy". • As advisory bodies to the Board of Directors, the Company establishes the Nomination Committee and the Compensation Committee, each of which are composed of a majority of Outside Directors. (1) Board of Directors Ratio of females 30% Governance systems Election / Dismissal Election / Dismissal Election / Dismissal General Shareholders’ Meeting Internal director (3 males) Outside Director (4 males and 3 females) Term Directors who are not Audit & Supervisory Committee Members and Directors who are Audit & Supervisory Committee Members shall be 1 year and 2 years, respectively Audit andsupervision Number of meetings At least once every 3 months and additionally as necessary ( i C o o r d n a t i o n ) i F n a n c i a l A u d i t o r 2 Audit & Supervisory Committee Audit & Supervisory Committee Office Report Direction Audit 1 Board of Directors 3 Nomination Committee Compensation Committee Proposal / Reoprt Appointment / Removal, Supervision Report Direction I n t e r n a l A u d i t Internal Audit President and CEO CAO & CECO CScO CMfgO CStO CCO GC Top Management CMO CFO Executive Committee Proposal / Report Direction / Supervision Divisions Execution 69 Summary • The Board of Directors ensures the transparency and appropriateness of management by making decision of corporate management policies and corporate strategies, etc., serving the oversight function of the execution of business. • The Board of Directors ensures the agility of management by delegating a substantial part of decision-making authority of important business execution to an executive Director by resolution of the Board of Directors and establishing “Corporate Decision Authority Policy” to clarify the responsibility and authority for the execution of business by Top Management and others. • The Board of Directors, in consideration of diversity and balance from the perspectives of expertise and experience and so forth, is composed of a number of Directors appropriate to facilitate agility. • In order to ensure decision-making from a broader viewpoint and objective oversight of the execution of business, the Board of Directors is composed of a majority of outside Directors. • We elect at least one outside Director who possesses corporate management experience at another company. • Corporate Strategy: Quarterly business updates, establishment and disclosure of Corporate Strategic Plan 2021, portfolio strategy, annual plan • Risk Management: Report on enterprise risk management status, compliance update • Stakeholder Engagement: Report on dialogue with investment community, sustainability activity reporting and planning • Corporate Governance: Board of Directors effectiveness analysis results ( please see next page Main Agenda Items of the Board of Directors in FY2021 for details about evaluation of effectiveness of the Board of Directors), Directors & officers personnel change / compensation, succession planning ( for details, please see Organizational Health Goal on P.63) Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Corporate Governance Evaluation of effectiveness of the Board of Directors Position Name Reasons for appointment As a means of considering issues and making improvements to further enhance such role of the Board of Directors, the Company conducts an analysis and evaluation of the effectiveness of the Board of Directors every year, and a summary of the result of the analysis and evalua- tion is disclosed below. (1) The Chairman of the Board of Directors conducted a survey based on question- naires to Directors (2) Based on the results of this survey, the Board of Directors performed its analysis and evaluation. (4) Trying to understand the expectations and opinions of various stakeholders and then reflecting them in discussions at Board of Directors meetings. (3) Evaluation of effectiveness in FY2021 It was determined that the overall effectiveness of the Board of Directors is sufficiently ensured. < Reasons for the evaluation> As a result of the survey on effectiveness, we have obtained a high evaluation as a whole, and confirmed that there are the following activities and discussions behind it. • The Board of Directors formulates strategy and business plans based on the business philosophy, and has discussions and makes decisions while always taking into consideration strategic direction. • The Board of Directors appropriately receives reports, has discussions and carries out supervision regarding issues and the progress of business plans. • The Board of Directors effectively utilizes the Nomination Committee, and appropriately supervises succession planning and appropriately makes decisions regarding nomination. • The Board of Directors effectively utilizes the Compensation Committee, and appropriately establishes the remuneration system and decides the amount of remuneration. Outside Director Takashi Tanaka Outside Director Eriko Sakurai Outside Director, Audit & Supervisory Committee Member Haruko Shibumura Reasons for appointment of outside directors Position Name Reasons for appointment Outside Director, Audit & Supervisory Committee Member Raita Takahashi Outside Director Mamoru Sekiyama Outside Director Hiroshi Kawabe He has been engaged in corporate management as a business manager of a general trading company for many years, and has abundant global experience and extensive insight. Since June 2017, he has been playing a key role as outside Director in the management of the Company from an independent standpoint. In addition, as the Chair of the Nomination Committee and the Compensation Committee, he has led the delibera- tions of each Committee. The Company expects him to leverage his abundant global experience and extensive insight to the management of the Company in the future as well, and therefore requests his election as outside Director. He has been engaged in medical treatment for many years while successively holding important posts at Keio University as a medical scientist, and has abundant specialized knowledge and experience in medical treatment. Since June 2019, he has been playing a key role as outside Director in the management of the Company from an independent standpoint. In addition, as a member of the Nomination Committee and the Compensation Committee, he has contributed to the deliberations of each Committee by vigorously expressing opinions. The Company expects him to leverage his abundant specialized knowledge and experience to the management of the Company in the future as well, and therefore requests his election as outside Director. 70 Outside Director, Audit & Supervisory Committee Member Mika Nakayama He has been engaged in corporate management as a business manager of telecommuni- cations companies for many years, and has abundant experience and extensive insight as a business manager. Since June 2021, he has been playing a key role as outside Director in the management of the Company from an independent standpoint. In addition, as a member of the Nomination Committee and the Compensation Committee, he has contributed to the deliberations of each Committee by vigorously expressing opinions. The Company expects him to leverage his broad knowledge in the telecommunications field and abundant experience and extensive insight as a corporate manager to the management of the Company from an independent standpoint in the future as well, and therefore requests his election as outside Director. She has served in important positions for many years at a chemical manufacturer that develops business globally and has its head office in the United States, and has been engaged in corporate management at a Japanese subsidiary in the corporate group of that company. She possesses abundant international experience and extensive insight. The Company expects her to leverage her abundant international experience and extensive insight for the management of the Company from an independent standpoint, and therefore requests her election as outside Director. She has been engaged in corporate legal affairs as an attorney-at-law, and has abundant specialized knowledge and experience gained while serving in positions such as professor at the Legal Training and Research Institute. The Company expects her to leverage her abundant specialized knowledge and experience to supervise and audit the Company’s management from the standpoint of Director who is an Audit & Supervisory Committee Member in order to enhance the Company’s enterprise value, and therefore requests her election as Director who is an Audit & Supervisory Committee Member. With his many years of experience as a certified public accountant, he has thorough knowledge of corporate consulting and auditing, and is also engaged in corporate management as a business manager of a consulting company relating to business accounting and tax accounting services, and has abundant specialized knowledge and experience. Since June 2020, he has been playing a key role as outside Director who is an Audit & Supervisory Committee Member in the supervision and auditing of the Company’s management from an independent standpoint. The Company expects him to leverage his abundant specialized knowledge and experience to supervise and audit the Company’s management in the future as well. Therefore, the Company requests his election as outside Director who is an Audit & Supervisory Committee Member. She has abundant experience in the field of intellectual property at a globally operating chemical manufacturer and, in addition to having served in important positions, has been engaged in corporate management in the company. She possesses abundant specialized knowledge and extensive insight. The Company expects her to leverage her abundant specialized knowledge and extensive insight to supervise and audit the Company’s management, and therefore requests her election as outside Director who is an Audit & Supervisory Committee Member. Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data (2) Audit & Supervisory Committee Amounts of remunerations Internal director (1 male) Outside director (1 male and 2 females) Ratio of females 50% Term Supervisory Committee Members shall be 2 years Number of meetings At least once every 3 months and additionally as necessary • Audit & Supervisory Board Committee assumes a part of corporate supervisory function, and contributes to the establishment of effective corporate governance systems by auditing the performance of duties by Directors, as an independent organization entrusted by shareholders. • The Audit & Supervisory Committee is the only deliberation body and decision-making body for the purpose of forming opinions with regard to audits by Audit & Supervisory Committee Members, and, where necessary, provides its opinions to Directors or the Board of Directors. Summary • The Audit & Supervisory Committee is composed of all the Directors who are Audit & Supervisory Committee Members, and its chairman is determined by resolution of the Audit & Supervisory Committee. • In order to further enhance the independence and neutrality of the Company’s audit system, the Audit & Supervisory Committee is composed of a majority of outside Directors. • The Company appoints as Audit & Supervisory Committee Members individuals who have appropriate experience and skills, as well as necessary knowledge of finance, accounting and legal affairs. (3) Nomination Committee and Compensation Committee Nomination Committee Ratio of females Outside director (3 males and 1 female) Compensation Committee Outside director (3 males and 1 female) 25% 25% Ratio of females The Nomination Committee deliberates matters relating to the election and dismissal of Directors and appointment and removal of Top Management, etc., and reports the results of their deliberations to the Board of Directors. The Compensation Committee deliberates matters regarding remuneration, bonuses and other financial benefits paid as consideration for the performance of duties for Directors and Top Management, etc. (excluding individual remunera- tion for Directors who are Audit & Supervisory Committee Members), and reports the results of their deliberations to the Board of Directors. Matters on Policy of determining remuneration amounts and calculation methods Remunerations for Directors are so designed as to enable the Company to recruit and retain talents, and to make the remuneration structures and levels fully commensurate with the responsibilities of the position. The Company endeavors to improve the objectivity of decisions on remuneration levels through measures such as the use of remuneration survey data from specialist third-party organizations. Remunerations for internal Directors who are not Audit & Supervisory Committee Members are based upon a remuneration system and composition that are closely linked to performance with an emphasis on increasing enterprise value and shareholder value over the medium- to long-term, and are composed of a fixed amount basic remuneration, bonuses, and stock compensation. The Company appropriately links remunerations with business performance. Remunerations for outside Directors and Directors are composed of a fixed amount basic remuneration only. Remunerations for each Director who is not an Audit & Supervisory Committee Member are determined by resolutions of the Board of Directors within a total ceiling amount approved by the Shareholders Meeting. Remunerations for each Director who is an Audit & Supervisory Committee Member are determined by the deliberations of the Audit & Supervisory Committee Members within a total ceiling amount approved by the Shareholders Meeting. Through the deliberations of the Compensation Committee prior to the resolution of the Board of Directors, the Company ensures greater transparency and objectivity of the deliberation process for remunerations for Directors who are not Audit & Supervisory Committee Members. The Company has set out the policy for determining details of remunerations for individual Directors in the internal policies concerning remunerations for Directors established by resolution of the Board of Directors after discussions at the Compensation Committee. The details of said policy are described on page 85 and subsequent pages. The Compensation Committee has deliberated on the details of remunerations for individual Directors who are not Audit & Supervisory Committee Members, including whether such details are in line with the aforementioned policy, and the Board of Directors has judged that they are in line with said policy with due respect to the proposal of the Compensation Committee. Meanwhile, remunerations for individual Directors who are Audit & Supervisory Committee Members are determined by deliberation of Audit & Supervisory Committee Members. Remunerations for internal Directors who are not Audit & Supervisory Committee Members* Remuneration policies Remuneration of the Company’s Directors is determined based on the following factors. 1. Competitive remuneration system A remuneration structure and levels that enable the Company to recruit and retain talents 2. Remuneration system that emphasizes increasing enterprise value and shareholder value A remuneration system and composition that are closely linked to performance with an emphasis on increasing enterprise and shareholder value over the medium- to long-term 3. Fair and impartial remuneration system A fair and impartial remuneration system based on responsibility and results regardless of country or region * Where “Director” is used in this section, it refers to Directors who are not Audit & Supervisory Committee Members (excluding outside Directors). 71 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Corporate Governance Total amount of remunerations, total amount of remunerations by type, and number of Directors applicable for each category of Directors (FY2021) Officer classification Total amount of remunerations by type of remuneration (Millions of yen) Total amount of remunerations (Millions of yen) (1)+(2)+(3) Basic remuneration (1) Bonus (2) Stock compensation (3) Total monetary remuneration (1)+(2) Total performance- linked remuneration (2)+(3) Number of applicable Directors Directors who are not Audit & Supervisory Committee Members (excluding outside Directors) Outside Directors who are not Audit & Supervisory Committee Members Total Directors who are Audit & Supervisory Committee Members (excluding outside Directors) Directors who are Audit & Supervisory Committee Members (excluding outside Directors) Total 999 88 1,087 62 64 126 302 88 390 62 64 126 250 — 250 — — — 446 — 446 — — — 552 88 640 62 64 126 696 — 696 — — — 3 5 8 1 3 4 *1 At the 14th Term Annual Shareholders Meeting of the Company held on June 18, 2019, the ceiling amount of basic remuneration for Directors who are not Audit & Supervisory Committee Members (excluding outside Directors) was resolved to be ¥590 million per year, with the ceiling amount for bonuses resolved to be ¥1,370 million per year, while the ceiling amount for basic remuneration for outside Directors who are not Audit & Supervisory Committee members was resolved to be ¥130 million per year. The ceiling amounts do not include the portion of salary paid in the capacity of employees. At the close of such Annual Shareholders Meeting, the number of Directors who are not Audit & Supervisory Committee Members (excluding outside Directors) was 3 whereas the number of outside Directors who are not Audit & Supervisory Committee Members was 4. *2 The ceiling amount of remuneration to the Directors who are Audit & Supervisory Committee Members as a group was resolved to be ¥260 million per year at the 13th Term Annual Shareholders Meeting of the Company held on June 15, 2018. At the close of said Annual Shareholders Meeting, the number of Directors who are Audit & Supervisory Committee Members was 5. *3 The amounts of “Basic remuneration” above include the amounts paid to 1 Outside Director who is not an Audit & Supervisory Committee Member who retired at the close of the 16th Term Annual Shareholders Meeting held on June 18, 2021. Remuneration levels (base amount) for Directors of the Company on a per position basis and allocated ratios of remuneration (FY2021) Base amount (Thousands of yen) 500,000 400,000 300,000 200,000 100,000 40% 33% 27% 40% 33% 27% %38 %31 %31 0 Representative Director, Chairman of the board Representative Director, CEO Representative Director, Executive Vice President Stock compensation (medium- to long-term remuneration) Bonus (short-term incentive remuneration) Basic remuneration Bonus (short-term incentive remuneration) Key performance indicators and details Key performance indicators Assessment weighting Variance of assessment coefficient Reasons for the selection of indicators and targets Remuneration structure Revenue 25% 0% to 200% Type of remuneration Fixed Basic remuneration Fixed remuneration for encouraging job performance consistently aligned with professional responsibilities Objectives and overview • Remuneration levels determined based on trends with respect to remuneration benchmark company groupings • Paid in equal installments every month Core operating profit ratio 25% 0% to 200% Performance-linked remuneration geared to steadily improving results with the aim of achieving the business performance targets each business year Bonus (short-term incentive remuneration) • The base amount to be paid upon achieving targets is set as a proportion of basic remuneration, depending on factors such as professional responsibilities (consideration placed on trends with respect to remuneration benchmark company groupings) • In principle, lump-sum payment immediately subsequent to conclusion of respective business years around between June and July • Specific amount to be paid is to be determined within range of 0% to 200% for the base amount, depending on factors such as level of achieving business performance targets each business year Variable Performance-linked remuneration to promote the management focused on improving the enterprise value and shareholder value over the medium- to long-term Stock compensation (medium- to long-term incentive remuneration) • The base amount is set as a proportion of basic remuneration, depending on factors such as professional responsibilities (consideration placed on trends with respect to remuneration benchmark company groupings) • The number of shares (basic points) to be delivered upon achieving targets is calculated as the base amount divided by the share price at the start of the three-year applicable period (the average closing price of the Company’s shares on the Tokyo Stock Exchange for the month prior to the start of the applicable period) • The specific number of shares delivered is to be determined within a range of 0% to 200% for the basic points, depending on factors such as the rate of growth attained by the Company share price over a 3-year period • In principle, delivered in a single installment around June occurring immediately after conclusion of the 3-year applicable period (provided, however that 50% of payment shall be cash payment) Core EPS* 25% 0% to 200% R&D performance 25% 0% to 200% Total 100% 0% to 200% * EPS: Earnings per Share 72 Reasons for the selection: To assess the increase in size of business • Maximum: Target × 105% • Target: Initially released forecast value • Minimum: Target × 95% Reasons for the selection: To assess the increase in business profitability and operational efficiency • Maximum: Target × 110% • Target: Initially released forecast value • Minimum: Target × 90% Reasons for the selection: To assess the increase in profit per share • Maximum: Target × 115% • Target: Initially released forecast value • Minimum: Target × 85% Reasons for the selection: To assess the achievement of sustainable growth Target: Set quantitative targets separately for research and development (1) Research: Number of new drug candidates (2) Development: Amount of increase in pipeline value Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Corporate Governance Stock compensation (medium- to long-term incentive remuneration)) Stock compensation (medium- to long-term incentive remuneration) is performance-linked remuneration for promoting management that emphasizes increase in enterprise value and shareholder value over the medium- to long-term. As such, the Company’s shares will be delivered based on the level of growth of enterprise value and shareholder value over 3 consecutive business years (“Applicable Period”), and an appropriate stock price evaluation indicator will be set to form a system that is closely linked to performance. Total shareholder return (TSR*1) will be adopted for the stock price evaluation indicator. The Company’s shares will be delivered and so forth based on the results of a comparison between the Company’s TSR and the growth rate of the Tokyo stock price index (TOPIX) for the Applicable Period and a comparison between the Stock price assessment benchmarks and details Company’s TSR and that of global pharmaceutical companies (the TSR Peer Group*2) for the Applicable Period. However, 50% of the delivered shares are to be paid out upon their conversion to cash in order for them to be allotted to a fund for payment of withholding income tax and other such taxes. *1 TSR is an acronym for “total shareholder return,” and it refers to shareholders' total return on investment, encompassing both capital gains and dividends. *2 TSR Peer Group refers to the global pharmaceutical com- pany groupings whose revenue is at least 0.5 times that of the Company at the time of selection. The selection of companies may be changed by resolution of the Board of Directors after deliberation at the Compensation Committee in cases where it has been deemed that such a company is inappropriate for inclusion as a selected company when calculating the assessment results due to circumstances that include restructuring of the company during the applicable period or changes to the content of its business. Stock price assessment benchmarks Assessment weighting Variance of assessment coefficient Reasons for the selection of benchmarks Targets TSR (1) (Comparison with TOPIX growth rate) TSR (2) (Comparison with TSR of global pharmaceutical companies) 50% 0% to 200% 50% 0% to 200% To assess the increases in enterprise value and shareholder value over the medium- to long-term Target: Set target range as follows • Maximum: 200% • Target: 100% (= TOPIX growth rate) • Minimum (threshold): 50% Target: Set target range as follows • Maximum: 100 percentile (top ranking) • Target: 50 percentile (mid-range) • Minimum (threshold): 25 percentile (lower quartile) Total 100% 0% to 200% Formulas for calculating the number of shares delivered and the amount of cash paid Number of shares delivered to respective Directors* (a) Basic points per position (b) Assessment coefficient * 50% of the delivered shares are to be paid out upon their conversion to cash to be allocated to a fund for payment of withholding income tax and other such taxes. (a) Basic points per position = (i) Base amount per position / (ii) Share price at start of Applicable Period (i) Refer to Remuneration levels (base amount) for Directors of the Company on a per position basis and allocated ratios of remuneration on P.72 (ii) Average closing price of the Company’s share on the Tokyo Stock Exchange in the month prior to start of the Applicable Period (b) Assessment coefficient = (i) TSR assessment coefficient (1) × 50% + (ii) TSR assessment coefficient (2) × 50% (i) TSR assessment coefficient (1) Whereas assessment coefficients are calculated using the formula shown below, the TSR assessment coefficient (1) is set to zero if the value calculated is less than 50%. Company TSR during the Applicable Period + 100% TOPIX growth rate during the Applicable Period + 100% = {(B – A) + C} ÷ A + 100% (E – D) ÷ D + 100% A: Simple average closing price of the Company’s shares on the Tokyo Stock Exchange in the month prior to start of the Applicable Period B: Simple average closing price of the Company’s shares on the Tokyo Stock Exchange in the final month of the Applicable Period C: Total dividend per share pertaining to dividend of retained earnings during the Applicable Period D: Simple average TOPIX in the month prior to start of the Applicable Period E: Simple average TOPIX in the final month of the Applicable Period (ii) TSR assessment coefficient (2) TSR of the Company and that of the TSR Peer Group are compared with respect to the Applicable Period. If the Company’s percentile rank is mid-range (50 percentile), the assessment coefficient (2) is set at 100%. If it has a top ranking (100 percentile), the assessment coefficient (2) is set to 200%. If it ranks in the lower quartile, the assessment coefficient (2) is 50%. If it is below the lower quartile, the assessment coefficient (2) is set to zero. * TSR of the Company and the TSR Peer Group companies is to be calculated using the formula shown below. TSR = {(B – A) + C} ÷ A A: Simple average closing price of respective companies’ share on the stock exchanges of the respective companies’ primary listings in the month prior to start of the Applicable Period B: Simple average closing price of respective companies’ share on the relevant stock exchanges as pertains to ‘A’ for the final month of the Applicable Period C: Total dividend per share pertaining to dividend of retained earnings of the respective companies during the Applicable Period TSR assessment coefficient (1) (%) Company TSR TOPIX growth rate + 100% 200 150 100 50 0 50 100 150 200 (%) TSR assessment coefficient (2) (%) Company’s TSR percentile rank 200 150 100 50 0 0% ile (Lowest ranking) 25% ile 75% ile 50% ile (Mid-range ranking) 100% ile (Top ranking) 73 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Corporate Governance Systems to Ensure the Appropriate Execution of Business The Company has set out basic policies for FY2022 regarding the following systems to ensure that the Company’s business is duly executed. (1) System concerning the Performance of Duties 1) System to Ensure the Efficient Performance of the Duties of Directors • The Company clearly separates the roles of the Directors, who participate in decision making of corporate management policies and corporate strategies, etc., and oversee business execution as members of the Board of Directors, and the roles of Top Management (the President and Chief Executive Officer; the Chief Strategy Officer; the Chief Administrative Officer and Chief Ethics & Compliance Officer; the Chief Medical Officer; the Chief Commercial Officer; the Chief Scientific Officer; the Chief Financial Officer; the General Counsel and the Chief Manufacturing Officer are collectively referred to as “Top Management”), who are responsible for the execution of business. • The Board of Directors meeting shall be held at least once every 3 months and additionally as necessary. • The Company has established the Executive Committee and discusses material matters concerning business strategies, strategies, corporate management and personnel of the Company and the Astellas Group companies. • The Company has established regulations concerning the committee mentioned above and the “Corporate Decision Authority Policy” to clarify the powers and positioning of the committee and the top management as well as the decision-making process. • The Company has developed the personnel and organiza- tion systems to enable the efficient execution of business. 2) System for Maintaining and Controlling Information regarding the Performance of Duties by Directors • The “Global Policy for Records and Information Management” has been established, based on which the Company will control and maintain, in an appropriate manner, information regarding the performance of duties by the Directors. • The Company has established systems to ensure that all documents and materials concerning important management matters, such as minutes of the meetings of the Board of Directors and the Executive Committee are available for inspection by the Directors when necessary. (2) Regulations and other Systems regarding Risk (Risk of Loss) Management • In order to conduct risk management properly as a whole group, the Company has categorized the risks into “risks relating to strategic management decision-making (risks relating to business opportunities)” and “risks relating to appropriate and efficient business conduct (risks relating to the performance of business activities).” Each division and unit of the Company and the Astellas Group companies will proactively put the Company’s risk management initiatives into practice and promote risk mitigation within the Group and the proper response to such risks through the following activities: • With respect to measures dealing with risks relating to business opportunities, each responsible division and unit will implement appropriate measures to mitigate risks within their respective scope of responsibility and roles according to internal processes and policies for decision making. Among these risks, matters concerning material risks will be decided upon deliberation by the Executive Committee and/or the Board of Directors depending on the level of materiality. • With respect to measures dealing with risks relating to the performance of business activities, the Company has established “Global” and “Divisional” Risk and Resilience Management Committees to manage comprehensively 1) identification and optimal management activities of risks, and 2) preparedness and status of crisis response plan and business continuity plan. Policies relating to such system will be decided upon deliberation by the Executive Committee and the Board of Directors. Significant risks identified under the system and responses to them will be decided upon deliberation by the Executive Committee and reported to the Board of Directors. • In order to enhance the effectiveness of risk manage- ment operations, the Company will formulate separate policies and manuals for matters such as disaster control, information security, and personal information protection based on the nature of these risks. 74 (3) Compliance System (System to Ensure that the Performance of Duties by Directors and Employees Complies with the Laws, Regulations, and the Articles of Incorporation) • The Company has established the “Astellas Charter of Corporate Conduct” and the “Astellas Group Code of Conduct” as the core standards of compliance for officers and employees of the Company and the Astellas Group companies. • The Company regards compliance not only as observing the law but also acting in accordance with social norms as well as the highest sense of ethics. We have a system for promoting and embedding the broadly defined “compliance” across the whole group and do the following toward its implementation: • The Company has established the “Global Compliance Committee” to understand the current situation of compliance and discuss policies and plans for the Company and the Astellas Group companies as a whole. Regional Compliance Committees have also been established to discuss compliance matters in their respective regions. • Under the control of the Chief Administrative Officer and Chief Ethics & Compliance Officer, Ethics & Compliance, in collaboration with the relevant divisions of the Company and the Astellas Group companies, designs and executes specific plans for global compliance. In addition, through continuous training and other measures, we ensure that each officer and employee of the Company and the Astellas Group companies can practice compliance on their own initiative. • The Company has established a global third party whistle-blowing hotline that is available for all Astellas Group employees and external stakeholders to report actual or potential non-compliance. • The Company has also established a system to ensure any material information is timely reported to the Chief Administrative Officer and Chief Ethics & Compliance Officer. In dealing with such reports, we ensure that confidentiality will be strictly maintained and unfair treatment against reporters is strictly prohibited. • Through the systems and activities mentioned above, the Company promotes a robust speak up culture with its strict non-retaliation policy. (4) System for Disclosure and Management of Information • The Company discloses corporate information to all of its customers, shareholders, community and other stakeholders in a timely, proper and fair manner. The Company also actively engages in dialogue with them and appropriately takes into consideration comments with respect to its business activities. Through disclosure and dialogue, the Company is committed to further enhancing its transparency and striving to build and maintain a trust relationship with its stakeholders. • Based on the basic stance above, the Company has established the “Disclosure Policy” and the “Corporate Disclosure Committee” that promotes and manages disclosure activities. • The Company has established policies concerning the handling of material information acquired in the course of the duties by the officers and employees of the Company and the Astellas Group to prevent violations of the laws and regulations and to ensure the appropriate management of information. (5) System to Ensure the Reliability of Financial Reports • The Company will design and operate internal controls over consolidated financial reports in accordance with generally accepted standards in order to ensure reliability of the financial reports, and assess the effectiveness in an appropriate way. • In accordance with the “Global JSOX Policy” formulated by the Board of Directors, assessment of internal controls over the consolidated financial reports will be implemented, under the direction of the President and CEO, who plays the role of the Global Internal Control Officer. (6) Group Management System (System to Ensure the Appropriate Execution of Business by the Corporate Group Composed of the Company and its Subsidiaries) • The Company engages in appropriate control and operation of the Astellas Group companies. With this in mind, the Company has taken the following actions in order to maintain and build a sound relationship between it and the Astellas Group companies: Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Corporate Governance • The Company will apply the “Astellas Charter of Corporate Conduct” and the “Astellas Group Code of Conduct” to all of the Astellas Group companies, and it will ensure that all persons concerned are fully aware of these policies and the code of the conduct of each Astellas Group company that are based on these policies. • The Company has established a system in which matters concerning performance of the duties by the Directors of the Astellas Group companies will be reported to the Company through functional line managers. • The Company will create clear rules regarding the composition of executives and decision-making authority and internal oversight systems at the Astellas Group companies to ensure the efficient execution of duties by the Directors of the Group companies. • As mentioned above, the Astellas Group will tackle risk management and compliance matters from an enterprise and global perspective. • The “Global Internal Audit Policy” will apply to all the Astellas Group companies and the internal audit system over the Group will be prepared. (7) Internal Audit System • The Company has established the Internal Audit division, which is independent from the ordinary business execution divisions and is under the direct control of the President and CEO, to develop the internal audit system of the Company and the Astellas Group companies, and takes the following actions: • The Internal Audit division will review and evaluate the effectiveness and efficiency of the systems and structures in the various management activities of the Company and the Astellas Group companies, put together an audit report, and submit the results of such review and evaluation to the President and CEO and the Audit & Supervisory Committee. The Internal Audit will also communicate such results, if necessary, to officers and divisions concerned. The report concerning the overall annual audit results will be made to the Board of Directors and Accounting Auditor. • The Company will comply with the “Act on Securing Quality, Efficacy and Safety of Pharmaceuticals, Medical Devices, Regenerative and Cellular Therapy Products, Gene Therapy Products, and Cosmetics” and other regulations as a pharmaceutical company, and conduct its business with a mission to provide safe and effective products with a high level of expertise through a fair organization structure. To this end, the Company has built a tiered-control structure separated by different functions in all the Astellas Group companies; namely, the tiers consist of self-control on-site, expert control by divisions related to RA and QA, and the internal audits conducted by the independent Internal Audit division. • Internal Audit division will promote improvement in the quality of the internal audits through meetings and other forms of collaboration with the relevant expert divisions. • Through managing the entire global internal audit function by the head of the Internal Audit division who directly reports too the President and CEO, and organizing the Internal Audit division in line with the functional-based global organizational structure across all the Astellas Group companies, the Company will address risks getting more globalized effectively and enhance the function to provide group companies with consistent high-quality assurance and advisory services. (8) System to Ensure Effective Audits by the Audit & Supervisory Committee The Company takes the following actions as a “company with an Audit & Supervisory Committee” to enable the Audit & Supervisory Committee to carry out their audit effectively. 1) Matters concerning Employees Assisting the Audit & Supervisory Committee • The Company establishes the Audit & Supervisory Committee Office, and assigns full-time staff to assist the Audit & Supervisory Committee to carry out their duties, so that the audit by the Audit & Supervisory Committee will be properly executed. 2) Matters concerning Independence of the Employees Assisting the Audit & Supervisory Committee from the Directors Who Are Not the Committee Members, and Effectiveness of Directions Given to Such Employees • The staff of the Audit & Supervisory Committee Office are independent from the Directors who are not the Committee Members and carries out his or her duties under the direct control of the Audit & Supervisory Committee. • The appointment, evaluation, transfer, and other matters concerning such staff will require the prior consent of the Audit & Supervisory Committee. 75 3) System concerning Report of the Directors Who Are Not the Committee Members and Employees to the Audit & Supervisory Committee, and Other Systems concerning Report to the Audit & Supervisory Committee • The Company has established a system to ensure that the Audit & Supervisory Committee, at any time, can access monthly reports and quarterly reports regarding the execution of duties by the Directors of the Company and the Astellas Group companies. • Regarding each of the divisions, Top Management decides reporting matters, persons giving reports and methods of reporting by mutual agreement with the Audit & Supervisory Committee. • The divisions responsible for internal audits, legal matters, compliance and risk management will each develop a system to report to the Audit & Supervisory Committee on a regular basis and will report their current statuses and provide the necessary information with respect to the Company and the Astellas Group companies. 4) System to Ensure that Informants Do Not Risk Unfavorable Treatment due to Their Reporting to the Audit & Supervisory Committee • The Internal Audit division will obtain endorsement from the Audit & Supervisory Committee on the annual plan of the internal audit. • The Audit & Supervisory Committee will receive the report from the Internal Audit division on the results of the internal audit, and be able to give guidance to the Internal Audit division as needed. In the case where a direction from the President and CEO conflicts with one from the Audit & Supervisory Committee, both parties will discuss and try to coordinate. • The Audit & Supervisory Committee Members appointed by the Audit & Supervisory Committee may attend the Executive Committee meetings where execution of the Company’s important business will be discussed, and also attend other meetings that the Audit & Supervisory Committee considers as important. In case that such Audit & Supervisory Committee Members are not available to attend these meetings, the staff of the Audit & Supervisory Committee Office may attend as observers by order of the Audit & Supervisory Committee. • The persons (divisions) of the Company and the Astellas Group companies subject to be audited will cooperate so that the Audit & Supervisory Committee may perform the audits in an appropriate manner. • The Company prohibits any unfavorable treatment of (9) System to Exclude Anti-social Forces officers or employees of the Company and the Astellas Group companies who report to the Audit & Supervisory Committee of the Company or the Audit & Supervisory Board Members of the Astellas Group companies, because of their reporting. 5) Matters concerning Policies to Treat Costs Incurred by the Audit & Supervisory Committee for the Execution of Duties • The Company has established a system that the Audit & Supervisory Committee Office prepares budgets and performs payment of costs incurred by the Audit & Supervisory Committee for the execution of their duties. 6) Other Systems to Ensure Effective Audits by the Audit & Supervisory Committee • The appointment, evaluation, transfer, and other matters concerning the head of the Internal Audit division will require the prior consent of the Audit & Supervisory Committee. • The Company and the Astellas Group companies will not only take a resolute attitude against any anti-social forces and groups that threaten the order and security of society and never succumb to unjust and illegal requests, but will also keep out such forces and groups. Accordingly, the Company and the Astellas Group companies do the following: • Clearly declare in the “Astellas Charter of Corporate Conduct” and the “Astellas Group Code of Conduct” that the Astellas Group will take a resolute attitude against anti-social forces and groups and exclude any relation with such forces and groups. • Particularly in Japan, in close cooperation with the police and other related parties, establish a solid system that will enable the Company to actively collect necessary information as to anti-social forces and groups, as well as to take organizational actions. • Continually implement educational activities, such as training on compliance and risk management, etc., for officers and employees, so as to exclude anti-social forces and groups. Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Interview with an Outside Director Astellas’ corporate governance is steadily evolving. As the Group perpetuates a corporate culture that is unafraid of change, I look forward to the further enhancement of corporate value. Haruko Shibumura Outside Director, Audit & Supervisory Committee Member Q A Looking back on your time as an outside Director, how do you evaluate Astellas’ corporate governance? Astellas’ corporate governance is steadily evolving, including more effective auditing by the Audit & Supervisory Committee and more robust deliberation in meetings of the Board of Directors. I assumed my role as an outside Director in 2019. In the 3 years since then, the Audit & Supervisory Committee has reinforced various initiatives to achieve more effective auditing and supervision. In meetings of the Board of Directors as well, every year I have seen more robust, open discussions on the part of outside Directors, who possess a wealth of knowledge and experience. I think that Astellas’ corporate governance is steadily evolving. One example of a useful step by the Audit & Supervisory Committee to better audit the effectiveness of the Board of Directors is that the Committee convenes later in the day after Board meetings, to go over once again the deliberations and proceedings of the Board meeting. All Audit & Supervisory Committee Members play a dual role: They sit on the Board 76 of Directors as Directors themselves, while also auditing and supervising the performance of duties by Directors as Audit & Supervisory Committee Members. I think it is very meaningful to approach Board deliberations from both perspectives. Astellas has also established a system for reporting on deliberations of the Nomination Committee and the Compensation Committee* to the Audit & Supervisory Com- mittee. These initiatives have all begun just in the past few years, and we will continue to seek other means of enhancing the effectiveness of the Board of Directors. For corporate governance to evolve further, it is necessary to provide even more compre- hensive information to outside Directors who are charged with management oversight. As we have enhanced the provision of the information to the Audit & Supervisory Committee, I feel there is a gap in the amount of information given between outside Directors who are Audit & Supervisory Committee Members and those who are not. Although their duties differ, I believe shrinking this information gap will further reinforce the management oversight function of outside Directors. * Committees established voluntarily, both of which consist of at least a majority of outside Directors, and are chaired by an outside Director. Currently, all members of both Committees are outside Directors. Q A Please tell us about any particularly distinctive initiatives among the Audit & Supervisory Committee’s activities in FY2021. I would mention both the more robust exchange of opinions with Top Management and the remote audits we carried out. The first point relates to the information provided to the Audit & Supervisory Committee Members I just mentioned. FY2021 saw a much more robust exchange of opinions with Top Management. One prerequisite to improving the effectiveness of the Board of Directors is sharing information germane to deliberations in advance with all outside Directors. In addition, I believe direct dialogue and discussion with Top Management are indispensable to more effective auditing and supervision by the Audit & Supervisory Committee. From this standpoint, since FY2020 we have established a venue for exchanging opinions with the CEO, CStO*, and other Top Management in charge of each division. These meetings are held once a month. In the first year out, our focus was on receiving reports from management and asking questions about them. In FY2021, though, we were able to put more stress on discussions and exchanging opinions than simply on reporting. Having been able to make more proactive comments about information we were given is a significant Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Interview with an Outside Director achievement, which I believe greatly helped us carry out more effective auditing and supervision. Right now, we are still just receiving reports and exchanging opinions but our goal is to go further, making this a venue where Audit & Supervisory Committee Members can proactively make recommenda- tions to Top Management. The second point is that the COVID-19 pandemic led us to carry out all audits online. The upside of remote audits is that we could dramatically increase the frequency of audits and the number of people involved, and have the chance to communicate with more out-of-the-way regions. Throughout the year, I received direct reports from numerous overseas site managers and operating officers. It was a great opportunity to get an even better feel for issues out in the field, and afforded me many more occasions to express my opinion as an Audit & Supervisory Committee Member. The downside is that on-site audits offer a number of advantages that remote audits do not. Going forward, therefore, I would like to establish a hybrid approach that combines on-site and remote audits. * CStO: Chief Strategy Officer Q A Tell us what you value as an Audit & Supervisory Committee Member. I believe building strong relationships of trust with information providers is necessary to enhancing auditing. Throughout my career as a lawyer, I have been involved in various aspects of corporate governance and risk management in a number of companies. This experience made me keenly aware that a framework for obtaining informa- tion in a timely manner is indispensable for the auditing of the Audit & Supervisory Committee to function fully. The Committee’s role is not limited to auditing business legality or validity: I believe it is also extremely vital to audit management and operations from the perspective of enhancing corporate value. This is why it is essential that the Audit & Supervisory Committee be given key information in a timely manner. Moreover, the information the Committee requires access to is wide-ranging. While having a framework in place to access information is important in itself, I think it is even more important that the people who provide the information and the Audit & Supervisory Committee have a strong relation- ship of trust. The committee has to be worthy of such trust. Without a relationship of trust, it is impossible to receive useful information. Building trust is not easy, but from my back- ground as a lawyer, I think it is crucial to always take some kind of action after receiving information. This lets the information provider realize that providing the information was meaningful. Trust is built up through a succession of small interactions like this. I believe the trust of all stakeholders in the Audit & Supervisory Committee will lead to stronger corporate governance for Astellas. Q A Please tell us what you see as Astellas’ strengths and what your hopes are going forward. One of Astellas’ biggest strengths is a corporate culture that is unafraid of change. My hope is that Astellas will pursue an HR strategy and other means needed to preserve and deepen that culture. Ever since I assumed my role as an outside Director, Astellas has boldly instituted global organizational reforms in line with the changing times. Moreover, Corporate Strategic Plan 2021 sets out an agenda for comprehensive reform. Astellas is also making changes that feed directly into greater organizational transparency, such as instilling a thorough awareness of compliance and fostering a culture of speaking up. I believe this kind of corporate culture that is unafraid of change is one of Astellas’ biggest strengths. Human resources are indispensable to sustaining and continuing to implement change, and HR strategies are more critical than ever. As competition for human resources intensifies on a global scale, it is becoming more important to consider the kind of talent Astellas needs specifically, and what kind of strategy is required both to acquire such talent and to bring out and cultivate internal potential. My hope at this point is that Astellas will continue to focus on its HR strategy, including its current proactive development of succession plans and talent reviews, as well as efforts to make effective use of an array of recruiting channels. In terms of diversity, I recognize that the Astellas Group on the whole is becoming more diverse. However, I feel Japan still has a long way to go toward empowering women in the workplace. Companies that lack diversity among their executives and their executive candidates responsible for future management cannot expect to grow sustainably. It is essential to continue proactively building an environment in which diverse personnel can play an active role. Finally, while Astellas is currently taking various steps to achieve the goals of Corporate Strategic Plan 2021, I still see areas where we can better enhance corporate value. I intend to do my part to help sustainably enhance corporate value, carrying out my mission as an outside Director who is an Audit & Supervisory Committee Member. 77 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Risk Management Business Risks Regulations and other Systems regarding Risk (Risk of Loss) Management In order to conduct risk management properly as a whole group, the Company has catego- rized the risks into “risks relating to strategic management decision-making (risks relating to business opportunities)” and “risks relating to appropriate and efficient business conduct (risks relating to the performance of business activities).” Each division and unit of the Company and the Astellas Group companies will proactively put the Company’s risk management initiatives into practice and promote risk mitigation within the Group and the proper response to such risks through the following activities: (1) Risk Management Framework Relating to the Performance of Business Activities Astellas’ risk management framework is as follows: • With respect to measures dealing with risks relating to business opportunities, each responsible division and unit will implement appropriate measures to mitigate risks within their respective scope of responsibility and roles according to internal processes and policies for decision making. Among these risks, matters concerning material risks will be decided upon deliberation by the Executive Committee and/or the Board of Directors depending on the level of materiality. • With respect to measures dealing with risks relating to the performance of business activities, the Company has established “Global” and “Divisional” Risk and Resilience Management Committees to manage comprehensively 1) identification and optimal management activities of risks, and 2) preparedness and status of crisis response plan and business continuity plan. Policies relating to such system will be decided upon deliberation by the Executive Committee and the Board of Directors. Significant risks identified under the system and responses to them will be decided upon delibera- tion by the Executive Committee and reported to the Board of Directors. • In order to enhance the effectiveness of risk management operations, the Company will formulate separate policies and manuals for matters such as disaster control, information security, and personal information protection based on the nature of these risks. Critical Risk Owners Designates risk owners Reports updates on risk mitigation plans Board of Directors Reports updates Executive Committee Reports/approves results of global risk and resilience management Global Risk and Resilience • Identifies critical risks and designates risk owners • Discuss risk mitigation plan, proposes it to Executive Committee, manages and supervises its implementation • Monitors statuses of emerging risk, crisis response plan, BCP and ongoing crisis response measures Major Risk Owners Reports results of division risk and resilience management Standardized processes, definitions, classifications, templates Research DRRC Pharmaceutical Technology DRRC Medical & Development DRRC Japan Commercial DRRC Greater China Commercial DRRC International Markets Commercial DRRC United States Commercial DRRC Established Markets Commercial DRRC Shares results of global risk and resilience management * DRRC: Acronym for Divisional Risk and Resilience Management Committee 78 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Risk Management (2) Identifying and Mitigating Risks Relating to the Performance of Business Activities Pharmaceutical companies that expand their business globally are expected to follow various regulations with a high level of compliance; Astellas must also address various risks that could impact its business results and reputation. In FY2019, Astellas pursued its operation of enterprise risk management with the aim of further developing the risk management activities implemented until now. This involved newly establishing the Corporate Risk Management Division to take control over risk management, and the Global Risk and Resilience Management Committee, chaired by the Chief Administrative Officer (3) Critical Risks The risks identified by management as having the potential to have a considerable impact on financial position, business results and cash flow position of the consolidated companies are mainly set forth below. and Chief Ethics & Compliance Officer. Under enterprise risk management, risks are identified on the Group-wide level and on the individual division level. Those risks are classified using a uniform evaluation process according to priority and, if deemed necessary, linked to formulation of a universal means for solution. Identified risks are regularly evaluated by the Global Risk and Resilience Management Committee, and solutions and mitigation measures for high priority risks are discussed at the Executive Committee, chaired by the Representative Director, President and CEO. Any forward-looking statements are based on judgments at the end of FY2021. 1. Risks related to cybersecurity In recent years, the technology involved in cyberattacks is advancing at an unprecedented level and the methods of attack are growing more diverse and sophisticated. In light of this environ- ment, Astellas has identified risks related to cybersecurity as one of its critical risks. The Information Systems Division is leading the response to this risk, implementing various counter- measures against cyberattacks on a global basis that includes monitoring of networks and facilities, and taking every precaution to manage the risk. However, despite having such measures in place, in the event that business is substantially interrupted due to a cyberattack or serious system failure, etc., caused by a cyberattack, or in the event that important data, including information that could identify individuals, is lost, corrupted or leaked externally, the Astellas Group’s business results may be significantly affected. 2. Risks related to supply chain management In the pharmaceuticals business, the ability to manufacture safe and effective pharmaceuticals reliably and then to provide their stable supply is extremely important. Astellas has identified risks related to supply chain management as one of its critical risks. The Pharmaceutical Technology Division is leading the response to this risk, establishing its own standards compliant with industry standard Good Manufacturing Practice (GMP), including manufacturing and quality controls, and Good Distribution Practice (GDP) and rigorously implementing consistent high-level quality control for not only manufacturing facilities and equipment but also inclusive of all operations from ingredient procurement to storage, manufacturing, and delivery. Furthermore, to respond to growing complexities in the supply chain, the Group has intro- duced on a global basis, management of its Contract Manufacturing Organizations (CMO) and is proceeding with measures including the creation of Business Continuity Plans (BCP) to ensure supply during emergency situations. However, despite having such measures in place, in the event that interruptions in supply, product shortage, or quality problems arise, or in the event that the reputation of Astellas is damaged as a result of the aforementioned, the Astellas Group’s business results may be significantly affected. 3. Risk of impact from pharmaceutical regulations The ethical pharmaceutical business is governed by a wide variety of regulations in each country. Astellas has identified changes in pharmaceutical pricing policy by the United States Government as one of its critical risks and is carefully watching trends. The Astellas Group’s business results may be significantly affected by policies for controlling the cost of medical treatment, or a tightening of various regulations concerning development, manufac- turing and distribution, particularly in developed countries. In addition to the above critical risks identified by the Astellas Group, there are many other risks. Some risks are unique to the pharmaceuticals business which include the uncertain nature of research and development, the risk of being infringed upon or infringing intellectual property rights, risk of drug side effects or safety issues arising thereof, and the risk of an Astellas Group business’s partial dependence on licensing and sales of third-party developed drugs. Other risks include the risk of infringement of related laws and regulations concerning competition with rival products, or environment or health and safety, or of commercial litigation regarding business processes, as well as risks of delays or stoppages in manufacturing due to natural disaster, etc., or of exchange rate fluctuation. Such risks may affect the Astellas Group’s business results and financial position. Note that the risks stated above do not cover all of the risks relating to the Astellas Group. 79 Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Ethics & Compliance Enhancing and Sustaining Integrity and Trust Ethical and Compliant Culture at Astellas Astellas is committed to long-term, sustainable growth through creating and delivering value to patients and having a positive impact for society. Keeping patients and integrity at the heart of what we do is imperative, and we are passionate about this at Astellas. To create value for patients we do not compromise on patient safety, the quality of our products, or ethics and compliance – we do not compromise on integrity. The Astellas culture is rooted in integrity, ethics and compliance. We promote an ethical culture where people are expected to act with integrity and put patients first, and the long-term sustainable success of the Company as their priorities. Integrity is one of our Astellas Way values. Together with a patient-focused mindset, employees understand how being ethical and compliant helps them live the Astellas mission. Global Compliance Structure (As of September 2022 and it is subject to change) Chief Ethics & Compliance Officer (CECO) Head of Ethics & Compliance Global Compliance Committee Anti-Bribery / Anti-Corruption Compliance Investigations Compliance Excellence and Transformation Third Party / Distributor Risk Data Privacy Medical and Development Innovation Commercial Strategies Greater China Japan International Markets Established Markets US Ethics & Compliance Head Ethics & Compliance Head Ethics & Compliance Head Ethics & Compliance Head Ethics & Compliance Head Compliance Committee Compliance Committee Compliance Committee Compliance Committee Compliance Committee Every aspect of our work to create innovative healthcare solutions is connected to evolving sustainability. The Astellas Ethics & Compliance Program and our values-based ethical culture of integrity enables innovation and bold ideas to foster sustainable value to patients. We provide risk-balanced, proactive, innovative, and practical ethics and compliance guidance, but more importantly, we support our employees to make ethical, compliant, and intelligent business risk-based decisions. In all aspects of our business, we do what is right, which includes following the letter and the spirit of applicable laws and regulations. This enables us to grow and keep the trust we have earned and continue to earn every day from our patients and our stakeholders. At Astellas, all employees are responsible for creating an ethical culture. Astellas leaders and managers are critical to model the Astellas core values of integrity, and ethics and compliance within their teams. Ethics & Compliance works closely with the leaders and managers to engage in various initiatives designed 80 to continually enhance and sustain an ethical and compliant culture at Astellas. This includes lessons learned and ethical decision-making workshops dedicated to providing insight into key ethical concepts that impact decision-making. They learn about practical tools they and their teams can use, to support ethical decision-making in their daily business activities. Our Ethics & Compliance program supports the fundamental mission to provide our patients with safe, effective medical products that improve their health and well-being. It is designed to keep the trust that we always act in the best interests of patients. This is strengthened through the efforts of Astellas’ global, regional and local com- pliance committees and their awareness, knowledge and understanding of ethics and compliance in the context of business operations and activities. Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Ethics & Compliance Anti-Bribery Anti-Corruption To achieve our mission, it is essential that we ensure all Astellas interactions, including those with HCPs, HCOs and patient organizations, are conducted in a legal and ethical manner and always for the ultimate benefit of patients. We do this through a comprehensive Ethics & Compliance Program with established global policies, processes and systems, tools and controls, and by proactively training employees on healthcare compliance, conducting compliance Conflict of Interest risk assessments and compliance monitoring, including on aspects of its ABAC (anti-bribery anti-corruption) compliance program, to ensure there is no undue influence or even appearance of misleading or influencing a Healthcare Professional. Through continuous improvement of our ABAC program, we ensure its effectiveness by being prepared to address current and future risks. This enables sustainability of our culture of Integrity. It is important to empower ownership of ethics and compliance within Astellas. One way we do this is by how we approach our own conflicts of interest. That is because the foun- dation of an effective Ethics and Compliance program is based on how a company manages its own internal behavior. By enhancing the disclosure process and providing global training resources, we continue to empower employees to identify and raise potential conflicts, resulting in increased business ownership of compliance. Data Privacy We earn society’s trust every day. Physicians, patients, employees, suppliers, and other individuals may share their personal information with Astellas, and they trust us to keep that information safe, to use it transparently, and to always handle it with care. Our Ethics & Compliance Program ensures the appropriate use of the personal information that is entrusted to us by individuals. Speaking Up The Ethics & Compliance Program embraces all employees to foster an effective and robust integrity culture at Astellas by ensuring a psychologi- cally safe speak up environment. Ethics & Compliance continuously encourages employees to speak up to report potential or actual violations of the Group Code of Conduct, as well as any unethical behavior or business practices, or receive advice on how to react in the event they discover or suspect misconduct. For the Future For the future, we will continue to evolve our Ethics & Compliance Program, ensuring that it is aligned to the evolving nature of our internal and external environment and focused on serving patients and stakeholders. We will take opportunities to adopt innovative tools and techniques that enhance the effectiveness and the 81 Speak Up is critical to ensure our integrity culture at Astellas. This Speak Up culture is further supported and enabled by a global investigations program that is prompt, fair, robust and objective. efficiency of our program. By putting the patient first and making decisions that support delivering innovation with agility and integrity, we create a long-term and sustainable future that will continue to add value to patients and reinforces the trust on which our success is founded. Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Corporate Data CONTENTS Corporate Data Major Pipeline Financial Data Non-financial Data Company Overview 82 83 86 89 91 82 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Major Pipeline (as of July 2022) The list shows the development status in the target diseases for which we aim to obtain approval in Japan, the United States, Europe and/or China. XTANDI and Strategic products Modality / Technology Classification Target disease Generic name Code No. (Brand name) enzalutamide MDV3100 (XTANDI) Small molecule Androgen receptor inhibitor 1 2 3 F Phase*1 China enfortumab vedotin ASG-22ME (PADCEV) Antibody-drug conjugate (ADC) Nectin-4 targeted ADC gilteritinib ASP2215 (XOSPATA) Small molecule FLT3 inhibitor Metastatic castration-sensitive prostate cancer Non-metastatic castration-sensitive prostate cancer Metastatic urothelial cancer, previously untreated (first line; combo with pembrolizumab) Muscle-invasive bladder cancer (combo with pembrolizumab) Other solid tumors Non-muscle-invasive bladder cancer Post-chemotherapy maintenance acute myeloid leukemia Post-hematopoietic stem cell transplant maintenance acute myeloid leukemia Newly diagnosed acute myeloid leukemia with high intensity induction of chemotherapy Newly diagnosed acute myeloid leukemia with low intensity induction of chemotherapy Acute myeloid leukemia in pediatric patients Gastric and gastroesophageal junction adenocarcinoma Pancreatic adenocarcinoma zolbetuximab IMAB362 roxadustat ASP1517/ FG-4592 (EVRENZO) fezolinetant ESN364 Antibody Anti-Claudin 18.2 monoclonal antibody Small molecule HIF-PH inhibitor Chemotherapy-induced anemia Small molecule NK3 receptor antagonist Vasomotor symptoms associated with menopause US Submitted (Jun 2022) Europe China Japan resamirigene bilparvovec AT132 Gene therapy (AAV-based gene therapy) MTM1 gene replacement to express myotubularin X-linked myotubular myopathy In-house (Audentes Therapeutics) *1 Compounds are developed globally unless noted. The list shows the most advanced stage if the stages are different depending on the region. The list specifies the area if the compound is developed in limited areas. The details of numbers and letters are as follows: 1: P-I, 2: P-II, 3: P-III, F: Filed *2 Compounds with “In-house” in this column include ones discovered by collaborative research. 83 Licensor*2 Pfizer In-house [Co-development with Seagen] In-house In-house (Ganymed) FibroGen In-house (Ogeda) Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Major Pipeline Focus Area approach Primary Focus Generic name Code No. Modality / Technology Classification Target disease Phase*1 1 2 3 F Licensor*2 ASP9801 Oncolytic virus Oncolytic virus carrying IL-7 and IL-12 Cancer ASP7517 Cell therapy (artificial adjuvant vector cells) WT1 loaded artificial adjuvant vector cell Acute myeloid leukemia and myelodysplastic syndrome Solid tumor ASP0739 ASP1570 ASP2138 ASP7317 Cell therapy (artificial adjuvant vector cells) NY-ESO-1 loaded artificial adjuvant vector cell Cancer Small molecule DGKζ inhibitor Cancer Antibody Cell therapy Anti-Claudin 18.2 and anti-CD3 bispecific antibody Gastric and gastroesophageal junction adenocarcinoma, pancreatic adenocarcinoma Retinal pigment epithelium cells Geographic atrophy secondary to age-related macular degeneration, Stargardt disease bocidelpar ASP0367/MA-0211 Small molecule PPARδmodulator Primary mitochondrial myopathies Duchenne muscular dystrophy ASP8731/ML-0207 Small molecule BACH1 inhibitor Sickle cell disease resamirigene bilparvovec AT132*3 Gene therapy (AAV-based gene therapy) MTM1 gene replacement to express myotubularin X-linked myotubular myopathy Gene therapy (AAV-based gene therapy) GAA gene replacement to express GAA enzyme Pompe disease Immuno-Oncology Blindness and Regeneration Mitochondria Genetic regulation (Other projects with Focus Area approach) AT845 FX-322 ASP0598 ASP3082 Small molecule Recombinant protein Inner ear progenitor cell activator (combination of GSK-3 inhibitor and HDAC inhibitor) Sensorineural hearing loss Recombinant human heparinbinding epidermal growth factor-like growth factor Chronic tympanic membrane perforation Auration Biotech Small molecule KRAS G12D degrader Cancer In-house *1 Compounds are developed globally unless noted. The list shows the most advanced stage if the stages are different depending on the region. The list specifies the area if the compound is developed in limited areas. The details of numbers and letters are as follows: 1: P-I, 2: P-II, 3: P-III, F: Filed *2 Compounds with “In-house” in this column include ones discovered by collaborative research. *3 AT132 is also listed in “XTANDI and Strategic products”. 84 Tottori University [Discovered through collaborative research] RIKEN [Discovered through collaborative research] RIKEN [Discovered through collaborative research] In-house Xencor [Discovered through collaborative research] In-house (Ocata Therapeutics) In-house (Mitobridge) In-house (Mitobridge) In-house (Audentes Therapeutics) In-house (Audentes Therapeutics) Frequency Therapeutics Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Major Pipeline Others Generic name Code No. mirabegron YM178 peficitinib ASP015K Modality / Technology Classification Target disease Phase*1 1 2 3 F Licensor*2 Small molecule β3 receptor agonist Neurogenic detrusor overactivity in pediatric patients Overactive bladder in pediatric patients Europe Europe In-house Small molecule JAK inhibitor Rheumatoid arthritis China In-house isavuconazole Small molecule Azole antifungal Invasive aspergillosis and mucormycosis in pediatric patients US Basilea ASP8062 Small molecule GABAB receptor positive allosteric modulator Alcohol use disorder In-house *1 Compounds are developed globally unless noted. The list shows the most advanced stage if the stages are different depending on the region. The list specifies the area if the compound is developed in limited areas. The details of numbers and letters are as follows: 1: P-I, 2: P-II, 3: P-III, F: Filed *2 Compounds with “In-house” in this column include ones discovered by collaborative research. Rx+ Program Category (Business area) Digital health Other services Program Concept Status* Partner Game application for exercise support Smartphone application to support exercise using motion sensing technology for people who need regular exercise Under development BANDAI NAMCO Entertainment Fit-eNce Fit-eNce Home BlueStar Service to provide scientifically evidenced exercise programs and systems supporting regular exercise Under test marketing Service to provide scientifically evidenced exercise programs and systems supporting regular exercise at home Under test marketing Digital therapeutics for adults with diabetes Under test marketing Welldoc Drug-device combination pudexacianinium chloride ASP5354 Precision surgery-guide enabling identification of ureter in hysterectomy and colorectal surgery, etc. P-III * The list shows the most advanced stage if the stages are different depending on the region. 85 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Financial Data Income Statement IFRS core basis Revenue Gross profit SG&A expenses R&D expenses FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 (one million yen) 1,139,909 1,247,259 1,372,706 1,311,665 1,300,316 1,306,348 1,300,843 1,249,528 1,296,163 809,281 914,062 1,037,110 991,162 1,006,066 1,014,299 1,024,104 1,003,465 1,043,154 397,018 452,522 500,359 470,777 478,330 490,263 499,295 504,316 548,840 191,460 206,594 225,665 208,129 220,781 208,682 224,226 224,489 246,010 Core operating profit 186,253 216,500 267,456 274,554 268,698 278,514 277,758 251,375 244,744 Core profit for the year 132,796 153,244 198,802 213,343 204,326 249,343 223,178 209,906 190,584 R&D cost-to-revenue ratio (%) Core operating profit ratio to revenue (%) 16.8 16.3 16.6 17.4 16.4 19.5 15.9 20.9 17.0 20.7 16.0 21.3 17.2 21.4 18.0 20.1 19.0 18.9 IFRS full basis Core operating profit 116,806 185,663 248,986 260,830 213,258 243,912 243,991 136,051 155,686 Profit before tax Profit for the year 121,975 189,683 261,770 281,769 218,113 248,967 245,350 145,324 156,886 90,874 135,856 193,687 218,701 164,679 222,265 195,411 120,589 124,086 Operating profit ratio to revenue (%) 10.2 14.9 18.1 19.9 16.4 18.7 18.8 10.9 12.0 * The Company discloses financial results on a core basis as an indicator of its recurring profitability. Certain items reported in financial results on a full basis that are deemed to be non-recurring items by the Company are excluded as non-core items from these financial results on a core basis. These adjusted items include impairment losses, gain/loss on sales of property, plant and equipment, restructuring costs, loss on disaster, a large amount of losses on compensation or settlement of litigations and other legal disputes, and other items that are deemed to be excluded based on the Company’s judgment. 86 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Financial Data Statement of Financial Position FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 (one million yen) Total assets Total non-current assets Total current assets Total equity attributable to owners of the parent Total non-current liabilities Total current liabilities Ratio of equity attributable to owners of the parent to gross assets (%) Dividend on equity (%) Ratio of equity attributable to owners of the parent to gross assets (%) 1,653,108 739,816 913,292 1,268,476 43,944 340,688 7.4 5.0 76.7 1,793,578 827,621 965,958 1,317,916 54,771 420,890 10.5 5.1 73.5 1,799,338 901,801 897,537 1,259,209 126,769 413,359 15.0 5.4 70.0 1,814,072 937,407 876,665 1,271,810 142,406 399,856 17.3 5.6 70.1 1,858,205 1,012,587 845,619 1,268,289 168,296 421,620 13.0 5.7 68.3 1,897,648 1,040,489 857,159 1,258,396 141,587 497,665 17.6 5.8 66.3 2,315,169 1,447,655 867,514 1,289,168 227,293 798,708 15.3 5.9 55.7 2,273,628 1,401,040 872,588 1,386,115 295,141 592,372 9.0 5.8 61.0 Statement of Cash Flows 2,332,395 1,409,041 923,354 1,460,308 184,676 687,411 8.7 6.5 62.6 (one million yen) FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 Cash flow from operating activities Cash flow from investing activities Free cash flows Cash flow from financing activities Cash and cash equivalents at the end of year 214,257 –26,851 187,406 –89,395 391,374 187,686 –71,476 116,210 –121,118 396,430 313,737 –147,050 166,687 –193,478 360,030 235,612 –73,383 162,229 –166,153 340,923 312,614 –121,799 190,816 –203,429 331,731 258,630 –41,757 216,874 –233,681 311,074 221,998 –389,793 –167,796 181,055 318,391 306,843 –81,894 224,949 –229,479 326,128 257,444 –62,413 195,031 –216,298 315,986 Key Figures per Share (yen) FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 Basic earnings per share Book value per share Dividend per share 40.45 568.53 135 61.50 600.93 30 89.75 592.58 32 103.69 615.89 34 81.11 641.80 36 115.05 667.29 38 104.15 694.03 40 64.93 748.03 42 67.08 799.26 50 *1 The Company discloses financial results on a core basis as an indicator of its recurring profitability. Certain items reported in financial results on a full basis that are deemed to be non-recurring items by the Company are excluded as non-core items from these financial results on a core basis. These adjusted items include impairment losses, gain/loss on sales of property, plant and equipment, restructuring costs, loss on disaster, a large amount of losses on compensation or settlement of litigations and other legal disputes, and other items that are deemed to be excluded based on the Company’s judgment. *2 The Company conducted a stock split of common stock at a ratio of 5 for 1 with an effective date of April 1, 2014. Earnings per share and book value per share are calculated based on the number of issued shares after the stock split (excluding treasury shares) on the assumption that the stock split was conducted at the beginning of FY2014. 87 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data FY2018 FY2019 FY2020 FY2021 FY2018 FY2019 FY2020 FY2021 (hundred million yen) (hundred million yen) Financial Data Revenue by region Japan United States Established Markets Greater China International Markets Others Total Major Products XTANDI PADCEV XOSPATA Evrenzo Betanis/Myrbetriq/BETMIGA Prograf XTANDI Japan United States Established Markets Greater China International Markets Total PADCEV Japan United States Established Markets Total Sales of Major Products (hundred million yen) FY2018 FY2019 FY2020 FY2021 Established Markets Total 3,331 4,000 4,584 5,343 Betanis/Myrbetriq/BETMIGA XOSPATA Japan United States Established Markets Greater China International Markets Total Evrenzo Japan Japan United States Established Markets Greater China International Markets Total Prograf Japan United States Established Markets Greater China International Markets Total 3,695 4,216 3,000 624 1,227 302 3,454 4,435 2,961 604 1,348 207 2,791 4,732 2,932 593 1,111 336 2,588 5,375 3,152 663 1,101 84 13,063 13,008 12,495 12,962 — 25 — 1,472 1,957 323 1,647 1,190 22 148 3,331 — — — — 18 143 2 1,616 1,929 358 2,035 1,354 32 221 4,000 — 18 — 18 128 238 11 1,636 1,827 402 2,386 1,493 49 255 4,584 — 128 — 128 217 341 26 1,723 1,854 472 2,769 1,701 79 322 5,343 18 195 5 217 88 6 20 — — — 25 — — — 327 808 253 12 72 28 105 9 — — 143 2 — 2 343 892 282 14 84 38 155 44 0 2 238 11 — 11 351 880 299 22 85 39 189 90 15 7 341 25 1 26 375 872 367 29 81 1,472 1,616 1,636 1,723 454 140 744 313 305 443 132 715 322 317 407 118 642 342 317 382 94 679 381 317 1,957 1,929 1,827 1,854 *1 Sales of products in Japan are shown on a gross sales basis. *2 Established Markets: Europe, Canada, Australia *3 Greater China: China, Hong Kong, Taiwan *4 International Markets: Russia, Latin America, Middle East, Africa, Southeast Asia, South Asia, Korea, Export sales, etc Astellas Pharma Inc. Integrated Report 2022 Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Non-financial Data For details, please visit the following website: https://www.astellas.com/en/sustainability/esg Environment Number of Employees per Region and Turnover Rate*1 日本 3,695 3,454 2,791 2,588 日本 3,695 3,454 2,791 2,588 FY2019 FY2020 FY2021 FY2019 FY2020 FY2021 GHG Emissions Volume*1 (Scope 1, Scope 2) (Tons) Breakdown of Energy Consumption (TJ) Volume of Water Resources Withdrawn *2 (1,000 m3) Waste generation volume*3 (Tons) Volume of Chemical Substance Emissions*4 (Tons) Changes in Drainage Volume*5 (1,000 m3) Scope 1 Scope 2 VOC Nox 166,138 70,898 95,239 3,656 7,493 13,922 28 16 7,061 123,320 63,276 60,044 3,523 7,564 14,352 22 21 7,038 118,679 63,691 54,988 3,517 7,394 13,882 21 17 6,810 *1 Non-energy GHG emissions are less than 5% of total emissions and therefore not included in the disclosed data. *2 Target: production facilities and R&D sites. *3 Target: production facilities and R&D sites. *4 VOC: all production facilities and R&D sites in Japan. NOx: all business facilities in Japan (excluding sales offices) Astellas does not use any equipment that runs on fuel oil, which is a major source of SOx emissions.. *5 Target: Plants and research facilities in Japan. Social Employee Ratio per Region and Ratio of Female Managers Japan (Astellas Pharma Inc. · Group companies) Other Areas Total International Markets Greater China International Markets United States Total Number of employees*2 Turnover rate Number of employees Turnover rate Number of employees Turnover rate Number of employees Turnover rate Number of employees Turnover rate Number of employees Turnover rate Number of employees Turnover rate 5,608 10.7% 10,275 — — — — — — — — — 15,883 11.6% 5,659 4,948 2.6% *3 18.07% 9,796 15.3% 3,608 10.9% 1,325 9,574 15.7% 3,454 14.1% 1,183 *3 41.1% *3 30.18% 1,524 12.9% 3,339 10.9% 15,455 10.6% 1,445 22.7% 3,492 9.3% 14,522 16.5% FY2019 FY2020 FY2021 *1 Regional data for 2019 (Established Market, Greater China, International Market, USA) are not aggregated due to regional classifica- tion changes. *2 The turnover rate in Japan excludes people retiring at the mandatory retirement age and employees moving outside of the Group 日本 3,695 3,454 2,791 2,588 Japan (Astellas Pharma Inc. · Group companies) Other Areas Total Average Male Female Ratio of female managers Male Female Ratio of female managers Male Female Ratio of female managers 70.7% 29.3% 10.2% 43.4% 56.6% 51.6% 53.0% 47.0% 40.0% 70.8% 29.2% 11.6% 44.1% 55.8% 52.6% 53.9% 46.1% 41.2% 69.1% 30.9% 13.3% 44.8% 55.2% 53.5% 53.1% 46.9% 43.9% *1 Expatriate employees seconded within the Astellas corporate group are included in the headcount of their current location. Expatriate employees seconded out of the Astellas corporate group are excluded from the headcount. *2 As of June 2022, the ratio of females in the Board of Directors was 30% and the ratio of females in managerial positions in Japan was 14.5%. 89 due to transfer of Group businesses. *3 Implemented early retirement incentive system. Average Length of Service (Years) By Gender (As of March 31, 2022, Japan consolidated basis.) 日本 3,454 2,791 2,588 FY2019 FY2020 FY2021 Male Female 18.5 13.8 18.4 13.4 17.4 13.0 Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Non-financial Data Employment (Japan) Occupational Health & Safety 日本 3,695 3,454 2,791 2,588 日本 3,454 2,791 2,588 FY2019 FY2020 FY2021 Global 2019.1–12 2020.1–12 2021.1–12 New graduate hires (Astellas Pharma Inc. · Group companies) Mid-career hires (Astellas Pharma Inc. · Group companies) Total Male Female Total Male Female 122 60 62 78 48 30 66 41 25 78 51 27 71 38 33 96 71 25 Number of work-related injuries (leave of absence) Frequency rate of work-related injuries Severity rate of work-related injuries 19 0.58 0.244 6 0.18 0.005 10 0.33 0.008 * Number of work-related injuries (leave of absence), frequency rate of work-related injuries and severity rate of work-related injuries for 2019 have been revised due to its recognition in 2021 as an occupational accident. Severity rate of work-related injuries for 2020 has been revised due to settlement of days lost in an occupational accident in 2021. Governance Data-Related Life Event (Japan) 日本 3,695 3,454 2,791 2,588 FY2019 FY2020 FY2021 Life Event FY2019 FY2020 FY2021 日本 3,695 3,454 2,791 2,588 Paternity Leave Leave for Child Care Time off for Infant Care Child-raising Shortened Work Hours for Childcare Use of the Company’s Vehicles for Child Raising Financial Assistance for Daycare Paid Leave for Employees Returning to Work After Leave of Absence Before and After Childbirth/Leave for Child Care Nursing Care Holiday Nursing care Leave for Nursing Care Shortened Work Hours for Nursing Care Child care, nursing care, injury, other Working at Home 104 Female: 190 Average days used: 402 Male: 11 Average days used: 60 12 186 Average days used: 1166 Male: 10 Female: 36 3 45 28 0 95 Female: 195 Average days used: 396 Male: 13 Average days used: 29 14 176 Average days used: 1037 Male: 17 Female: 39 3 24 20 0 ̶ 0 Registered Employees for the Program: 4,501 ̶ 1 Registered Employees for the Program: 5,214 96 Female: 186 Average days used: 399 Male: 27 Average days used: 91 14 206 Average days used: 1185 Male: 22 Female: 57 1 24 22 0 — 3 Registered Employees for the Program: 6,014 *1 The number of users indicates those who used the system in each fiscal year. *2 This figure excludes cases where the term of leave was not completed by the end of each fiscal year. In other words, it is limited to cases which ended within the fiscal year. 90 structure Board of Directors Board of Directors (Persons) Of which Outside Directors (Persons) Ratio of Outside Directors (%) Of which Female Directors (Persons) Ratio of Female Directors (%) Number of meetings of the Board of Directors (Number) Average rate of Outside Directors’ attendance of meetings of the Board of Directors (%) Audit & Supervisory Committee structure Audit & Supervisory Committee Members (Persons) Of which Outside Directors (Persons) Of which Female Directors (Persons) Number of meetings of the Audit & Supervisory Committee (Number) Average rate of Outside Directors' attendance of meetings of the Audit & Supervisory Committee (%) Nomination Committee structure Chair Member of the Nomination Committee (including Chair) (Persons) Of which Outside Directors (Persons) Number of meetings of the Nomination Committee (Number) Average rate of Outside Directors' attendance of meetings of the Nomination Committee (%) Compensation Committee structure Chair Member of the Compensation Committee (including Chair) (Persons) Of which Outside Directors (Persons) Number of meetings of the Compensation Committee (Number) Average rate of Outside Directors' attendance of meetings of the Compensation Committee (%) 12 7 58% 3 25% 14 96% 5 3 2 15 11 7 64% 2 18% 15 100% 4 3 1 15 11 7 64% 1 9% 13 99% 4 3 1 14 96% 100% 100% Outside Director Outside Director Outside Director 5 4 8 5 4 7 5 4 7 95% Outside Director 100% Outside Director 96% Outside Director 5 4 8 5 4 7 5 4 8 95% 100% 100% Astellas Pharma Inc. Integrated Report 2022Interview with the CEO Value Creation Story Progress of Corporate Strategic Plan Strengthening Governance Corporate Data Company Overview (As of March 31, 2022) Company Information Company Name Astellas Pharma Inc. Headquarters Foundation Capital 2-5-1, Nihonbashi-Honcho, Chuo-Ku, Tokyo 103-8411, Japan 1923 103,001 million yen Representative Director Kenji Yasukawa (President and Chief Executive Officer) Employees 3,943 (Unconsolidated) 14,522 (Consolidated) Share Price and Volume Stock Price (Yen, Point) 2,500 2,000 1,500 1,000 Stock Information Status of shares Securities Code 4503 Listed Stock Exchange Prime Market Fiscal Year-end General Meeting of Shareholders March 31 June Minimum Trading Unit 100 shares Total Number of Authorized Shares Number of Shares Issued and Outstanding 9,000,000,000 shares 1,835,851,575 shares (Including 911,834 shares of treasury stock) Number of Shareholders 86,322 Trends in shareholder-type ratio 2.8 March 31, 2020 (87,568) March 31, 2021 (93,953) March 31, 2022 (86,322) 4.3 4.6 0 35.6 3.2 8.6 38.3 3.1 8.6 Custodian of Register of Shareholders Sumitomo Mitsui Trust Bank, Limited 1-4-1, Marunouchi, Chiyoda-ku, Tokyo 100-8233, Japan Accounting auditor Ernst & Young ShinNihon LLC. 49.8 45.6 45.5 0.1 0.1 0.0 38.4 20 3.2 8.2 40 60 80 100（%） Securities Companies Individuals, other Financial institutions Foreign entities, etc. Other companies Treasury stock 91 500 0 2012/3 2013/3 2014/3 2015/3 2016/3 2017/3 2018/3 2019/3 2020/3 2021/3 2022/3 0 Astellas (Left scale) TOPIX (Left scale) ■ Volume (Right scale) * The Company conducted a stock split of common stock at a ratio of 5 for 1 with an effective date of April 1, 2014. Major Shareholders (Top 10) Name of shareholders The Master Trust Bank of Japan, Ltd. ( Trust account) Custody Bank of Japan, Ltd. ( Trust account) STATE STREET BANK AND TRUST COMPANY 505001 NIPPON LIFE INSURANCE COMPANY STATE STREET BANK WEST CLIENT - TREATY 505234 JP MORGAN CHASE BANK 385781 SSBTC CLIENT OMNIBUS ACCOUNT GOVERNMENT OF NORWAY STATE STREET BANK AND TRUST COMPANY 505103 Custody Bank of Japan, Ltd. (Securities Investment Trust Account) Number of shares held (Thousands of shares) 396,257 136,113 65,334 51,588 32,679 25,011 23,632 23,348 20,160 20,105 Shareholding percentage (%) 21.59 7.41 3.56 2.81 1.78 1.36 1.28 1.27 1.09 1.09 * Number of shares held are presented by discarding the numbers down to the thousand, and percentage of shares are presented by discarding the numbers down to the third decimal (1,834,939,741 shares). Trading Volumes (Thousands of shares) 250,000 200,000 150,000 100,000 50,000 Astellas Pharma Inc. Integrated Report 2022 

Continue reading text version or see original annual report in PDF format above