Astellas Pharma, Inc. Annual Report 2023

Plain-text annual report

Integrated Report 2023 For the Year Ended March 31, 2023Astellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation 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. 01 FY18FY221,518.61,306.31,300.81,249.51,296.2FY21FY20FY19FY18FY22327.8258.6–41.8222.0306.8257.4–84.5–389.8–81.9–62.4FY21FY20FY19216.9243.3195.0224.9–167.8FY18FY22286.9278.5277.8251.4244.7FY21FY20FY1918.9%18.9%21.3%21.4%20.1%18.9%Astellas At a Glance(Fiscal year ending March 2023)*1 Established markets: Europe, Canada*2 International Markets: Russia, Latin America, Middle East, Africa, Southeast Asia, South Asia, Korea, Australia, Export sales, etc.*3 Greater China: China, Hong Kong, TaiwanRevenue¥1,518.6 billion(billion yen)(billion yen)(billion yen) Core operating profit Core operating profit ratio to revenue Operating CF　 Investment CF FCFabout 70 countriesGlobal NetworkJapan: 7United States: 13Established Markets: 30International Markets: 21Greater China: 5Countries Where We Do BusinessSales Revenue by RegionOperating CF/Investment CF/FCF*FCF: ¥243.3 billionCore operating profit/ Core operating profit ratio to revenue¥286.9 billion/18.9%Dividend per share¥60R&D expensesFY18FY22276.1208.7224.2224.5246.0FY21FY20FY19¥276.1 billion6038404250FY18FY22FY21FY20FY19Total¥1,518.6 billionUnited States¥652.4 billion43.0%Established Markets*1¥358.4 billion23.6%Japan ¥262.3 billion17.3%International Markets*2¥144.7 billion9.5%Greater China*3 ¥80.0 billion5.3%Others ¥20.7 billion1.4%Financial Highlights(billion yen)(yen)* FCF: Free cash flowsAstellas Pharma Inc. Integrated Report 202302Corporate DataStrengthen Foundation for Value CreationValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerPrescription drug Major pipeline20 (Number of Programs)Sales of Main ProductsFY2022 Performance75% of answers to questions showed improvementOverseas employee ratioRatio of outside/ female DirectorsPercentage of female managersTarget (Base year 2015)Scope 1+2• Compared to the previous survey (FY2021)• 33 out of 44 questions showed improvement71Global43%Japan18%Outside: Global Inside: JapanOutside: Outside Directors Inside: Female Directors82%Outside Directors70%Female Directors30%FY203063% reductionScope 1+2 41.8% reduction1.8% reductionScope 3Scope 3Engagement scoreResponse rateReduce by 37.5% to a level well below 2°CFY2050Achieve Net Zerogilteritinib / XOSPATAfor the treatment of acute myeloid leukemiaenfortumab vedotin / PADCEV for the treatment of urothelial cancermirabegron*1 for the treatment of overactive bladdertacrolimus / Prograf*2immunosuppressant¥46.6billion¥44.4 billion¥188.6 billion¥198.8 billionSales of ProductsR&D143 million patients103 countries* were prescribed Astellas products cumulatively up to the first half of FY2022 (estimated)Innovative Drug BusinessGHG Emissions VolumeGlobal Engagement Survey*1 Betanis, Myrbetriq, Betmiga *2 Including Advagraf, Graceptor, ASTAGRAF XLAstellas achieved its existing goals in 2022, and established new, more ambitious goals in 2023.enzalutamide / XTANDIfor the treatment of prostate cancer¥661.1 billion34%Sales of Products/R&D Pipeline/Access to HealthNon-Financial HighlightAstellas At a Glance66%approx. Astellas Pharma Inc. Integrated Report 202303Corporate DataStrengthen Foundation for Value CreationValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerOur Philosophy and VISIONGuided by our business philosophy, we are committed to the realization of greater VALUE by patients and healthcare systems around the world.On the forefront of healthcare change to turn innovative science into VALUE for patientsVISIONPhilosophyContribute toward improving the health of people around the world through the provision of innovative and reliable pharmaceutical productsRaison D’êtreSustainable enhancement of enterprise valueMissionOur “beliefs” provide the code of conduct we prize at all times. Astellas will always be a group of people who act upon these beliefs.BeliefsHigh Sense of EthicsCustomer FocusCreativityCompetitive FocusAstellas Pharma Inc. Integrated Report 202304Corporate DataStrengthen Foundation for Value CreationValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerAstellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Contents/Editing Policy C O N T E N T S Message ........................................................................................................................... Astellas At a Glance ....................................................................................................... Our Philosophy and VISION .......................................................................................... Contents/Editing Policy ................................................................................................ On Publishing Integrated Report 2023 ..................................................................... Interview with Chief Executive Officer Value Creation Story Value Creation Model .................................................................................................... Our History of Value Creation ...................................................................................... Management Capital ..................................................................................................... The Ideal Company Astellas Aims to Become ......................................................... Astellas’ Business Model for Creating Innovation .................................................... Astellas’ Materiality ......................................................................................................... The VALUE that Astellas Provides ................................................................................ Providing Value to Stakeholders ................................................................................. Corporate Strategic Plan for Value Creation Top Management ........................................................................................................... Progress of Corporate Strategic Plan ......................................................................... Corporate Strategic Plan 2021 .................................................................................... Interview with Chief Strategy Officer ........................................................................ Financial Strategy 01 02 04 05 06 07 13 14 16 17 18 19 20 24 25 26 27 28 29 30 33 People Strategy Interview with Chief People Officer and Chief Ethics & Compliance Officer ............................. 36 Special Feature I Roundtable: An Evolving Organizational Culture -The Organizational Health Goals at Work- .............. 38 People and Organization for Innovation .................. 43 Engagement, Diversity, Equity and Inclusion ......... 47 Commercial Strategy Interview with Chief Commercial Officer ................ 48 Special Feature II VEOZAH: New nonhormonal treatment option for VMS due to menopause ........................... 49 Main Product Sales ....................................................... 52 How to use navigation buttons Using Category Tabs Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Click to go to first page of each category R&D Strategy Interview with Chief Medical Officer ........................ 53 Areas of Interest ............................................................. 54 Using Navigation Buttons 59 Search PDF content Forward one page DX Strategy Sustainability Strategy Interview with the Head of the Sustainability Division .................... 61 Initiatives for Contribution to Sustainability ........... 62 Return to top page Return to previously viewed page Return one page Strengthen Foundation for Value Creation Corporate Governance ................................................................................................. Dialogue with Outside Directors ................................................................................ Risk Management .......................................................................................................... Ethics & Compliance ...................................................................................................... Corporate Data Financial Data .................................................................................................................. Non-financial Data ......................................................................................................... Major Pipeline ................................................................................................................. Company Overview ....................................................................................................... 70 71 82 86 88 90 91 94 96 99 05 Scope of the Report Period covered: Fiscal year ended March 2023 (April 1, 2022 - March 31, 2023) · 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”) Cautionary Note In this integrated report, statements made with respect to current plans, estimates, strategies and beliefs and other statements that are not historical facts are for- ward-looking statements about the future performance of Astellas. These statements are based on management’s current assumptions and beliefs in light of the informa- tion 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 in the forward-looking statements. Such factors include, but are not limited to: (i) changes in general economic conditions and in laws and regulations relating to phar- maceutical markets, (ii) currency exchange rate fluctuations, (iii) delays in new product launches, (iv) the inability of Astellas to market existing and new products effectively, (v) the inability of Astellas to continue to effectively research and develop products accepted by customers in highly competitive markets, and (vi) infringements of Astel- las’ intellectual property rights by third parties. Information about pharmaceutical products (including products currently in development) which is included in this inte- grated report is not intended to constitute an advertisement or medical advice. Astellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data On Publishing Integrated Report 2023 In publishing an integrated report each year, we seek to inform our stakeholders in an easy-to-understand manner of how our financial and non-financial initiatives both enhance sustainability for Astellas and society, and contribute to sustainable enhancement in enterprise value. Astellas published its first integrated report in FY2022, in which we reported on progress in implementing Corporate Strategic Plan 2021 (CSP2021; our medium-term management plan kicking off in FY2021), while conveying just how Astellas creates and delivers VALUE as the company whose VISION is “to be at the forefront of healthcare change to turn innovative science into VALUE for patients.” In this second such report, Integrated Report 2023, Astellas’ Top Management talk directly of their commitment to achieving the goals set in CSP2021, while also discussing Targeted Protein Degradation, the Primary Focus newly added in FY2022, and VEOZAH (fezolinetant), a treatment for vasomotor symptoms accompanying menopause that received approval in the US in May 2023. To detail how the corporate culture is evolving through pursuit of our Organizational Health Goals, Integrated Report 2023 also describes round-table discussions between employees, Top Management, and outside Directors, as well as conversations between two outside Directors about their current Naoki Okamura Representative Director, President and CEO perception of Astellas. I hope that this Integrated Report 2023 will help promote dialogue with our stakeholders while also furthering the understanding of Astellas. 06 Interview with Chief Executive OfficerAstellas is firmly committed to achieving the goals set in Corporate Strategic Plan 2021 (CSP2021), as a cutting-edge VALUE-driven life science innovator with our VISION of turning innovative science into VALUE for patients.Naoki OkamuraRepresentative Director, President and CEOQYou were newly appointed as CEO in FY2023. As CEO, what do you feel particularly strongly about?I will make every effort to ensure that Astellas meets the goals set in CSP2021, as a cutting-edge VALUE-driven life science innovator.I was appointed as head of Corporate Strategy in 2016 and have spent the seven years since then formulating and implementing Astellas’ corporate strategy. The current Corporate Strategic Plan 2021 (CSP2021) really embodies my convictions, and I am particularly honored to be entrusted with the finishing touches.Continuous innovation is critical to achieving our goal of being a Cutting-edge, VALUE-driven life science innovator. We have adopted a Focus Area approach in our R&D strategy and are working to create innovative products that respond flexibly to rapid advances in science and the accompanying changes in how we perceive and treat diseases. We are also committed to developing products that not only reduce a patient’s symptoms but can significantly transform the underlying causes of disease, such as cell therapies and gene therapies. In the Rx+ business, we are also striving to integrate innovative medical technology with cutting-edge technology in various other fields, leveraging the strength we have cultivated through our prescription medicine business. We aim to deliver VALUE for patients in various ways across the whole patient journey (overall medical care, including diagnostic, preventive, therapeutic and prognostic care).I strongly believe that my own role as CEO is to foster a corporate culture in which every employee exercises their full potential in striving to excel as One Astellas, with a sense of urgency that “our patients are waiting.”Astellas Pharma Inc. Integrated Report 202307Corporate DataStrengthen Foundation for Value CreationValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerQCould you describe your own aspirations for Astellas, and the initiatives being taken toward fostering that corporate culture.I envision an organization in which every employee understands CSP2021, creating an environment that encourages mutual respect and the frank exchange of opinions.In formulating CSP2021, we set Organizational Health Goals (OHGs), which are steps to fostering a corporate culture in which: We learn from our mistakes and take intelligent risks based on bold ideas. Every employee thinks for themselves and demonstrates leadership commensurate with their role. We strive to excel as One Astellas, transcending departmental and regional lines.This mindset stems from a personal experience that prompted a change in my leadership style. When Astellas acquired OSI Pharmaceuticals in 2010, I was seconded to the US to spearhead the integration process. Up until then, I was the type of person who would take sole responsibility for any job I tackled, but in that role, I encountered many new experiences, bringing me to realize that not everything can be handled alone. This led me to radically alter my leadership style to one of placing more trust in my team members and delegate albeit all the while providing encouragement and support to aid members in accomplishing their tasks. I now believe that if I can suppress the urge to be out front and instead delegate to team members, those individuals will develop a sense of responsibility and motivation to get their task done.I take the same approach with other members of the executive team. Overall, our current executive team is comparatively new to the job, with some members only joining this fiscal year. Our executive team members have diverse experiences, and to facilitate teamwork while leveraging each individual’s expertise, we have been holding face-to-face team-building workshops. While this initiative is only a few months old, I feel that team members’ psychological safety is building day by day. If members of the executive team can set an example for other employees to follow, in terms of working together with mutual respect and not being afraid to speak their mind, I believe we can foster a corporate culture that promotes confidence in management and Astellas.“Collaboration” is another key word. As a global company, Astellas has employees with diverse backgrounds, in terms of nationality and otherwise. Working collaboratively demands mutual respect for each other’s values, which starts with taking the time to listen. I am not referring to all working together to build consensus or tackle the same tasks. Rather, I speak of exchanging diverse views and ideas, with the final decision left to the person in charge. It is important also that all team members are pulling in the same direction while individually fulfilling their specific roles and responsibilities. If we take individual employees’ capabilities and Aim to become a company with a Market Cap valued at more than ¥7 trillion in FY2025 by achieving1 Revenue: XTANDI and Strategic products* sales ≥ ¥1.2 trillion in FY20252 Pipeline Value: Focus Area projects expected sales ≥ ¥0.5 trillion in FY20303 Core Operating Profit Margin: ≥ 30% in FY2025Corporate Strategic Plan 2021Strategic Goal 1: Enable patients to achieve better outcomesStrategic Goal 2: Translate innovative science into proven VALUEStrategic Goal 3: Advance the Rx+ businessStrategic Goal 4: Deepen our engagement in sustainability* PADCEV, XOSPATA, zolbetuximab, Evrenzo, VEOZAH, AT132Brave ideas pursue ambitious outcomesTalent and leadership thrivesWe excel as one AstellasStrategic GoalsPerformance GoalsOrganizational Health GoalsInterview with Chief Executive OfficerAstellas Pharma Inc. Integrated Report 202308Corporate DataStrengthen Foundation for Value CreationValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerQWhat are Astellas’ greatest strengths when it comes to creating VALUE?In my view, these are our people, and their shared mission of turning innovative science into VALUE for patients.To my mind, Astellas’ greatest strength is its people. I believe Astellas’ growth is built on the personal growth and capabilities of its employees. Individuals do not evolve into fully fledged company people on their own; it is important that those in their orbit identify areas for improvement as well as strengths that the individual may not be aware of, thereby creating opportunities for growth. While some believe that a career is built by the individual, I believe environment is important also, including a framework for organizational support. In my own younger days, there were many instances of colleagues looking out for me and showing me the way. At the same time, Astellas is striving from a company perspective to provide opportunities for individuals to grow. By encouraging the growth of all employees in this manner, we seek to foster a corporate culture in which innovation comes naturally.This approach has borne fruit already, one example being a sizable shortening of the timeline for our lead program in the Targeted Protein Degradation (TPD) Primary Focus, newly added in 2022. Usually, it takes about two years for laboratories to commence clinical studies once they have narrowed down a raft of development candidates to just one. In our Primary Focus of TPD, though, we were able to identify a lead program in only a year or so, much to our surprise. This was achieved not via one person’s efforts, but rather through the combined ingenuity of team members who each took on a share of risk and were willing to try a new approach regardless of the difficulties involved. To me, this is a best practice of what can be achieved through individual awareness of our OHGs.Targeted Protein Degradation (TPD)Our aspiration is to deliver disruptive clinical benefit for selected cancer patients by inhibiting pathologic genomic signaling.responsibilities and complement these with cooperative relationships, I believe we can build the ideal team and in doing so greatly enhance collaboration.With mobility of the talents increasing day by day, there is a considerable gap in expertise between long-time employees of Astellas and those who have joined Astellas only recently. For example, whereas I am fully across the background to CSP2021, an employee of only a few weeks’ tenure would know nothing of how we formulated these ideas. I think it is important for longer-standing employees of Astellas to draw on their experience in enlightening their newer brethren. I strive to set an example in that respect, promoting internal communication with the aim of ensuring that every Astellas employee properly understands the objectives of CSP2021.For details about TPD and sizable shortening of the timeline, please refer to PP.57–58Interview with Chief Executive OfficerAstellas Pharma Inc. Integrated Report 202309Corporate DataStrengthen Foundation for Value CreationValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerFor details about VEOZAH, please see Special Featur II: “VEOZAH: New nonhormonal treatment option for VMS due to menopause” on PP.49-51FY2025FY2023Aim for consolidated core OP margin more than 30% in FY2025 (CSP2021 target)FY2024approx. ¥300 bil.¥49.3 bil.Sales growth will directly drive OP growthSales Forecast (Image)QAs FY2023 is the third year of CSP2021, it marks a key inflexion point in the five-year plan. What are you focusing on this year?We are putting everything in readiness for ensuring that VEOZAH reaches patients sooner rather than later.Among the three most important initiatives for FY2023, the foremost is ensuring that newly launched products gain traction as planned. In May this year, we received approval from the U.S. Food and Drug Administration (FDA) for VEOZAH (fezolinetant), a treatment for mild to moderate vasomotor symptoms (VMS; feelings of warmth in the face, neck, and chest or sudden intense feelings of heat and sweating, known as “hot flashes”) associated with menopause. Astellas seeks to address the unmet medical needs of women in whom VMS adversely affects quality of life, by offering a new treatment option in the form of a non-hormonal therapy. Initially, we will focus on educating healthcare professionals (HCPs) about VEOZAH, before moving on to fully branded direct-to-consumer activities including commercial campaigns. We seek to work together with HCPs to ensure that VEOZAH is delivered to VMS patients at the earliest possible juncture.Second, we are close to demonstrating Proof of Concept (PoC) for some lead programs in our Primary Focus. To hasten PoC, we delegated authority to each project team to expedite decision-making. While there are no projects expected to reach PoC in FY2023, we expect a number of projects to yield early clinical results that could pave the way for PoC demonstration in FY2024 or later.Third, we are proceeding with cost optimization with a view to achieving our goal of a 30% core operating profit margin in FY2025, as stated in CSP2021. Unfortunately, in FY2022 the core operating profit margin stayed short of 20%. In FY2023 we will continue to make active investments for future growth, but we will continue to make prioritized investments actively for future growth to improve profitability in FY2024 onward.Another strength, in my view, is our employees’ shared sense of commitment to turning innovative science into VALUE for patients, as expounded in our VISION. Astellas employees can often be found using terms such as “patient centricity” and the phrase “the patients are waiting.” Regardless of their department and role, Astellas employees share a common goal of delivering VALUE to patients.Interview with Chief Executive OfficerAstellas Pharma Inc. Integrated Report 202310Corporate DataStrengthen Foundation for Value CreationValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerIveric Bio Acquisition Constitutes New Revenue-generating PillarIn April 2023, Astellas and IVERIC bio, Inc. (Iveric Bio) entered into a definitive agreement under which Astellas agreed to acquire Iveric Bio for approximately US$5.9 billion in cash. The acquisition was completed in July 2023, and Iveric Bio has become Astellas’ indirect wholly owned subsidiary. Iveric Bio is a US biopharmaceutical company focusing on discovery and develop-ment of therapeutic drugs in the field of ophthalmology. In August 2023, the U.S. Food and Drug Administration (FDA) approved its lead program, avacincaptad pegol, for the treatment of geographic atrophy (GA) secondary to age-related macular degeneration as “IZERVAY (avacincaptad pegol intravitreal solution)”. GA leads to irreversible loss of vision in patients, and roughly 40% of the patients are considered to become blind. About 1.5 million people in the US are estimated to have GA, making this a disease with significant unmet medical needs. Astellas believes that IZERVAY not only could contribute to achieving the FY2025 sales target set in our Corporate Strategic Plan 2021, but also help compensate for sales decline resulting from the loss of exclusivity for XTANDI in the late 2020s along with VEOZAH and PADCEV. The acquisition of Iveric Bio will provide a foundation of ophthalmology-focused capabilities including a commercial team, access to ophthalmology experts and medical institutions, know-how in clinical development, and a research platform. Through these acquired capabilities, Astellas seeks to accelerate development and commercialization activities to positively contribute to the goals of Primary Focus “Blindness & Regeneration.”QIn July 2023 Astellas completed the acquisition of US company Iveric Bio. Tell us of the motivation for the approximately 800 billion yen deal, and management’s views on further M&A.We decided to acquire Iveric Bio in the view that it would contribute to Astellas’ overall sales while also providing a capability foundation in the opthalmology field. We remain prepared to consider various options including acquisitions providing they match our strategic needs.From a relatively early stage, we have been paying attention to IZERVAY (avacincaptad pegol; developed by Iveric Bio as a treatment for geographic atrophy secondary to age-related macular degeneration) as a drug that could contribute to the goals of our Primary Focus of Blindness & Regeneration. No clinical data was available at that time, but IZERVAY has since yielded favorable results in clinical trials. Based on these results as well as early US sales trend of competing drug, we determined that IZERVAY could become a blockbuster and decided to acquire Iveric Bio with a view to augmenting Astellas’ overall sales and also providing a foundation of various ophthalmology-focused capabilities, thereby accelerating our Primary Focus of Blindness & Regeneration.I have been involved in business acquisitions for a total of 15 years now. All have been for the purpose of obtaining new technologies and capabilities from external parties, but only when they align with our strategic goals. If we wanted to add a new compound to our pipeline, we could do so via a licensing agreement. With a technology that we are able to harness, we similarly have the option to acquire usage rights only. However, there are some technologies and compounds that we choose not to take on alone. In such cases we prefer to team up with the licensers or originators and undertake joint research, potentially going so far as to acquire the licensers and have them continue operating as part of Astellas. We strongly believe in taking the path that aligns best with our strategy, and to that end we remain prepared to consider various options including acquisitions providing they match our strategic needs.QCan you update us on initiatives for evolving sustainability and progress in the Rx+ business which are included in CSP2021 as Strategic Goals?We are contributing to societal sustainability through our core business. The Rx+ business has also made steady progress.At Astellas, we take pride in pursuing initiatives in our business that contribute to societal sustainability and exert a positive impact on society. With VEOZAH, for example, our aspirations are not limited to the financial objective of For details on this acquisition, please refer to the relevant presentation materials:https://www.astellas.com/en/system/files/20230501_presentation_final_4503_eg_1.pdfPotential to help compensate for XTANDI LOE as the “third pillar”*1 The figure above is for illustrative purposes only, and does not represent the exact figures of each drugs’ sales*2 LOE: Loss of exclusivityFY2030FY2023IZERVAYGrowthVEOZAHPADCEVFY2025IZERVAYVEOZAHPADCEVXTANDIXTANDILOE*2IZERVAY approval (anticipated)Interview with Chief Executive OfficerAstellas Pharma Inc. Integrated Report 202311Corporate DataStrengthen Foundation for Value CreationValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerQLastly, do you have a message for investors?As a man of my word, I will do everything in my power to achieve CSP2021.For Astellas to have an impact on society, I think it essential that every employee believes that by working at Astellas, they are both contributing to patients and achieving self-growth. In my view, the role of Astellas management is to create a corporate culture that fosters such belief. As a man of my word, I will do everything in my power to achieve CSP2021. Please look forward to Astellas’ continued growth.increasing product sales. We seek also to support women whose social activities are disrupted by menopause, thereby contributing to the sustainability of society. Furthermore, we strive to improve access to Astellas products by ensuring the availability of those products even in countries where we have no business presence.Needless to say, Astellas also is engaged in environmental initiatives. In terms of the climate change action highly demanded by society, not only have we obtained Science Based Targets (SBT) Initiative certification for the 2030 GHG emissions reduction targets laid out in our Environmental Action Plan, but also we have committed to achieving net zero GHG emissions by 2050.In our Rx+ business, in FY2023 we drew closer to commercialization of ASP5354, an imaging agent being investigated for intraoperative ureter visualization in patients undergoing surgery, by initiating and completing a Phase III clinical study. We also have plans to conduct a clinical study in diabetes patients with the digital health therapeutics we are developing under an alliance agreement with Welldoc, Inc. Furthermore, several projects are poised to enter clinical trials at group company Iota Biosciences, Inc., whose proprietary technologies employ ultrasound to provide battery-free power and wireless communication to innovative ultra-small implantable medical devices that combine biosensing with treatment via stimulation of nerves and muscles. Although the Rx+ business remains small in scale compared with our prescription pharmaceuticals business, just as digital cameras revolutionized the camera industry, we see potential for a paradigm shift in the world of pharmaceuticals. Our VISION is to bring new VALUE to patients, and we strongly believe that there are opportunities to provide VALUE across the entire patient journey.Naoki OkamuraRepresentative Director, President and CEOInterview with Chief Executive OfficerAstellas Pharma Inc. Integrated Report 202312Corporate DataStrengthen Foundation for Value CreationValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerValue Creation StoryValue Creation Model 14Our History of Value Creation 16Management Capital 17The Ideal Company Astellas Aims to Become 18Astellas’ Business Model for Creating Innovation 19Astellas’ Materiality 20The VALUE that Astellas Provides 24Providing Value to Stakeholders 25Value Creation StoryCONTENTSAstellas Pharma Inc. Integrated Report 202313Corporate DataStrengthen Foundation for Value CreationCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerValue Creation StoryImpactEnhance sustainability of society and AstellasSolving social issuesEnhancing management capitalMaximize VALUEOutcomeP.24Realization of sustainable societyProviding value to stakeholdersSustainable enhancement of enterprise valueEarning trust from stakeholdersPhilosophySocial issues and requests from societyKey Issues and MaterialityVISION Business ActivityMissionBeliefsRaison D’êtreGovernanceTalent and Organization which Create InnovationStrategyBusiness ModelCorporate Strategic Plan 2021 accelerating realization of VISIONFulfill the unmet medical needs by creating and delivering innovative treatmentsCutting-edge, VALUE-driven life science innovator“VALUE Creation” through research and development activities“Value Delivery” through later stage development and commercialization activitiesValue Creation ModelInputXTANDI and Strategic ProductsProducts derived from FA approaches, including cell medicine and gene therapyBased 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.OutputCommon Definition of VALUEP.54P.70P.29P.19P.17P.04P.20P.52P.29Financial Capital Invested capital Flexible financing for business opportunitiesManufacturing Capital Research facilities Manufacturing facilities covering commercial production of cell and gene therapiesIntellectual Capital Patents Know-how for global drug development and commercialization Technical capabilities for various new modalitiesSocial and Relational Capital Corporate brand Human network Collaboration / allianceHuman Capital Highly skilled talent DE&INatural Capital Natural resources Reusable energy BiodiversityStrategic Goals1 Enable patients to achieve better outcomes2 Translate innovative science into proven VALUE3 Advance the Rx+ Business4 Deepen our engagement in sustainabilityOrganizational Health Goals1 Brave ideas pursue ambitious outcomes2 Talent and leadership thrives3 We excel as one Astellas•Environment where diverse individuals can success• “Right person in right position” globallyCorporate Governance, Risk Management, Compliance Primary Focus • Genetic Regulation• Immuno-Oncology• Blindness & Regeneration• Mitochondria• Targeted Protein DegradationRx+® Healthcare Solutions• ASP5354: Visualization of the urethra in operations• Wireless medical implantable devices• Digital therapeutics• ECG analysis service• Exercise support serviceVALUE =Outcomesthat matter to patientsCost to the healthcaresystem of delivering those outcomesPerformance GoalsP.25Astellas Pharma Inc. Integrated Report 20231415Corporate DataStrengthen Foundation for Value CreationCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerValue Creation StoryApr. 200520182010202120232015Astellas Pharma Inc. was establishedOur History of Value CreationShifts in the Corporate Strategic Plan and strategic areasGlobal Category Leader (GCL) model Sept. 2023 Astellas launched IZERVAY Target disease: Geographic atrophy secondary to age-related macular degenerationGiven 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.*1 Renamed Astellas Institute for Regenerative Medicine.*2 Renamed Astellas Gene Therapies.2005–2010Urological disease, transplant fieldsFrom 2010 onwardsUrological disease, transplant fields, oncology platformOur VISION is updated in CSP2015CSP2018CSP2021Focus Area ApproachP.54 Dec. 2007 Astellas acquired Agensys, Inc. Acquisition of antibody-drug conjugate Entered field of cancer biology June 2010 Astellas acquired OSI Pharmaceuticals, Inc. Acquisition of oncology platform in the US Sept. 2012 Astellas launched XTANDI Target disease: Prostate cancer Entered cell therapy platform Dec. 2016 Astellas acquired Ganymed Pharmaceuticals AG Acquisition of late-stage product zolbetuximab Dec. 2018 Astellas launched XOSPATA Target disease: Acute myeloid leukemia Dec. 2019 Astellas launched PADCEV Target disease: Urothelial cancer June 2023 Astellas has applied for zolbetuximab in US, Europe, Japan and China Target disease: Stomach cancer May 2017 Astellas acquired Ogeda SA Acquisition of late-stage product fezolinetant Nov. 2019Astellas launched EvrenzoTarget disease: Renal anemia May 2023 Astellas launched VEOZAH Target disease: Vasomotor symptoms associated with menopause July 2023 Astellas acquired IVERIC bio, Inc. Acquisition of avacincaptad pegol (ACP) Acquisition of foundational foundational ophthalmology Acquisition of new revenue-generating pillar Feb. 2016 Astellas acquired Ocata Therapeutics, Inc.*1 Acquisition of pipeline and leading- edge core technology position in ophthalmology and cell therapy Entered cell therapy platform Feb. 2018 Astellas acquired Universal Cells, Inc. Acquisition of universal donor cell technology Dec. 2019 Astellas acquired Xyphos Biosciences, Inc. Acquisition of next-generation cancer immunotherapy technology Launched Rx+ business Entered genetic regulation platform Oct. 2020 Astellas acquired Iota Biosciences, Inc. Acquisition of unique bioelectronics technology Jan. 2020 Astellas acquired Audentes*2 Therapeutics, Inc. Acquisition of a foundation in adeno-associated virus (AAV)-based gene therapy (AT132, AT845)Astellas Pharma Inc. Integrated Report 202316Corporate DataStrengthen Foundation for Value CreationCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerValue Creation StoryFinancial Capital Invested capital Flexible financing for busi-ness opportunitiesSocial and Relational Capital Corporate brand Human network Collaboration / allianceNatural capital Natural resources Reusable energy BiodiversityManufacturing Capital Research facilities Manufacturing facilities covering commercial pro-duction of cell and gene therapiesIntellectual Capital Patents Know-how for global drug development and commercialization Technical capabilities for various new modalitiesHuman Capital Highly skilled talent DE&IWhile 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.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 use this capital in our business activities while taking steps to improve envi-ronmental sustainability. This includes using natural resources effectively, using reusable energy, and working to maintain and preserve 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.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.Management CapitalThe 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 activities that use financial capital, manufacturing capital, intellectual capital, social and relational capital, natural capital, and human capital. By further strengthening these capitals, we will realize a sustainable society and sustainable enhancement of our enterprise value.Share capital:¥1,508 billion (FY2022)Interest-bearing debt*1:¥125 billion (FY2022)Companies/organizations acquired or partnered with in FY2022:8R&D sites:16 (FY2022)Manufacturing sites:8 (FY2022)Volume of water resources withdrawn (1,000 m3):6,864Water resource productivity (billions of yen per 1,000 m3):0.22Renewable energy rate within total energy used:19%Number of patent applications published *2:38 (FY2022)Cumulative number of active ingredients and formulations newly approved in any country globally:24 (from April 1, 2007 to March 31, 2022)Cumulative number of countries in which above active ingredients and formulations have been approved:104 (from April 1, 2007 to March 31, 2022)Commercialization of various modalities*3, clinical trial experiencesPhDs (globally):1,281*4 (as of March 2023)Employees engaged in R&D (Research and Development) in cell therapy, gene therapy, and regenerative medicine:933Employees engaged in digital science (highly skilled digital talent):345Ratio of non-Japanese and female division heads*5:53% non-Japanese (37/70), 21% female (15/70)Succession planning*1 Total of corporate bonds, commercial paper, and bank loans. *2 Patent Cooperation Treaty (PCT) applications wherein Astellas Pharma Inc. and/or one or more of its subsidiaries is an applicant. Joint patent applications are included. In-licensed patent applications are not included. *3 Synthetic drug, antibody, cell therapy, gene therapy. *4 Based on data self-reported by employees; includes directors. *5 Includes those also serving as CxO. Those simultaneously heading multiple divisions counted as one person.For details, please refer to P.44Astellas Pharma Inc. Integrated Report 202317Corporate DataStrengthen Foundation for Value CreationCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerValue Creation StoryThe Ideal Company Astellas Aims to BecomeAstellas has established an ideal vision for the Company from a longer-term perspective to realize our Philosophy and VISION.PhilosophyIn order to realize our VISION, we are striving to be a cutting-edge, VALUE-driven life science innovatorWe will realize sustainable growth by pursuing innovation and VALUE for patients rather than the level of revenue aloneConcrete Steps to Realize the Ideal Vision for the Company from a Longer-Term PerspectiveVISIONThe Ideal VisionAstellas Is Aiming ForPhilosophy, VISION, Plan for Becoming the Ideal CompanyCorporate Strategic Plan 2021 For details, please see next page Astellas will grow as a company that creates and delivers VALUE through healthcare solutions, not only pharmaceuticals• Focus Area approach consistently and efficiently creates and delivers high VALUE pharmaceuticals• VALUE is created through a range of healthcare solutions, that go beyond pharmaceuticals• Astellas will not compromise on VALUE for patients in order to drive growth• Astellas will be a Partner of Choice and acquire or leverage attractive technologies and assets Astellas will excel by purposeful allocation of its resources• High operating profit will be achieved without sacrificing R&D investment sufficient for future innovation• Astellas will keep strong discipline in controlling expenses, including Cost of Goods Sold and SG&A Astellas will have an innovative culture and organization• Bold decision-making will be supported by intelligent risk-taking• Organizational design will continuously evolve to meet business priorities• An increasingly diverse team will be built to drive innovation Astellas will contribute meaningfully to the sustainability of society with a focus on improving Access to Health and protecting the environmentAstellas Pharma Inc. Integrated Report 202318Corporate DataStrengthen Foundation for Value CreationCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerValue Creation StoryAstellas’ Business Model for Creating InnovationAt 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 ModelFulfill the unmet medical needs by creating and delivering innovative treatmentsCutting-edge, VALUE-driven life science innovatorThis 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 one phrase and it should be understood as follows:We operate at the forefront of scientific and technological advances to create novel healthcare solutions.Cutting-edge: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.VALUE-driven: 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.Life science innovator:VALUE Deliverythrough later stage development and commercialization activities“ ”VALUE Creationthrough research and development activities“ ”Astellas Pharma Inc. Integrated Report 202319Corporate DataStrengthen Foundation for Value CreationCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerValue Creation StoryAstellas’ MaterialityClick 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.pdfReduction of environmental burdenAnimal welfareBiodiversityDE&I (Diversity, Equity & inclusion)Climate change and energyResponsible supply chain managementTalent and organizational culture for realizing innovationCompliance and ethical business practicesAccess to HealthProduct quality assurance and product safetyDigital transformationData governanceFulfilling unmet medical needs by creating novel healthcare solutionsTransformative treatment through innovative therapeutic methodsSafe and appropriate use of productsValue-based pricingAdvocacyPatient centricityResponsible R&DBe very highVery ImportantMost ImportantBe very highHighHighImportantSocietal significanceEnhancing sustainability through Materiality initiativesAstellas recognizes that our efforts to evolve sustainability will lead to increased enterprise value. The environment surrounding both society and business has changed significantly. In response to this shifting landscape, in FY2021 we identified and prioritized key issues and updated our Materiality Matrix as a guide to our sustainability efforts.In preparing a new Materiality Matrix, Astellas identified 19 key issues. We then prioritized nine material issues (Materiality) from this group. We believe that prioritizing and subsequently addressing the Materiality will set Astellas on the path to “transforming to be a cutting-edge, VALUE-driven life science innovator”, and “strengthening resilient and sustainable business opera-tions to meet the expectations of society”. This, in turn, will lead to improved sustainability for both society and Astellas.Steps in identifying MaterialityAstellas refreshed Materiality Matrix via the steps shown below.STEP 01:Issue identificationWe analyzed various references, such as SDGs-related frameworks, stakeholder engagement and communication, topics covered by ESG ratings, and recent trends in sustainability. We also ensured alignment with Corporate Strategic Plan 2021 (CSP2021) and acknowledged industry-specific issues. As a result, we identified 19 key issues.STEP 02:Issue prioritizationWe prioritized the key issues identified from the perspectives of significance to society and Astellas. Societal Significance, shown on the vertical axis of the matrix, was determined by considering the depth of interest from global stakeholders and the scale of economic losses caused by social issues. Significance for Astellas, shown on the horizontal axis, was determined by assessing Astellas’ opportunities for utilizing its capabilities and assets to contribute to the resolution of issues. The assessment also included management perspectives based on interviews with Top Management.STEP 03:Review and finalizationThe prioritized key issues were refined and validated through the information provided by various stakeholders and a series of interviews with experts. The Sustainability Advisory Panel* held further discussions before the Executive Committee reviewed and deliberated on the findings. Finally, the Materiality Matrix was approved by the Board of Directors.* For details, please refer to P.62Significance for AstellasAstellas Pharma Inc. Integrated Report 202320Corporate DataStrengthen Foundation for Value CreationCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerValue Creation StoryInitiatives and commitments for contribution to sustainabilityProcess of establishing our Sustainability DirectionSustainability Direction based on analysis of MaterialityIn FY2022, Astellas newly established its Sustainability Direction as a medium-term sustainability plan for the period through FY2025.Our new Sustainability Direction is closely aligned with CSP2021 and our Materiality Matrix. It focuses on Materiality and key issues related to environmental sustainability, which have been identified in Materiality Matrix.In establishing our Sustainability Direction, Astellas performed a gap analysis by referencing global standards and precedents in each issue. We also conducted discussions in the Sustainability Advisory Panel and identified the initiatives in need of improvement. We then categorized each issue into two pillars and environmental element and collaborated closely with relevant divisions to summarize “Mid-term priorities for Astellas,” “Initiatives” and “Our commitments by FY2025.” Finally, we established our Sustainability Direction. Astellas intends to step up sustainability advocacy both internally and externally to ensure that stakeholders and society gain a deeper understanding of Astellas’ path toward value creation.We plan to revise our Sustainability Direction each time we issue a new corporate strategic plan.By prioritizing and subsequently addressing the Materiality, Astellas is on its way to “transforming to be a cutting-edge, VALUE-driven life science innovator,” and “strengthening resilient and sustainable business operations to meet the expectations of society.”1. Transforming to be a Cutting-Edge, VALUE-driven life science innovatorThis is Astellas’ business model for enhancing sustain-ability and providing innovative healthcare solutions by creating and realizing “VALUE.” We will promote initia-tives to address the following five material issues.2. Strengthening resilient and sustainable business operations to meet the expectations of societyAstellas strengthens our business operations to ensure the stable supply of our products to patients under any circumstances. We will promote initiatives to address the following four material issues.We have established mid-term priorities for Astellas, initiatives, and our commitments by FY2025 for the Materiality related to the two pillars and environ-mental sustainability issues. We will also provide updates on our progress toward fulfilling our commitments.Key issues related to to environmental sustainability and Materiality identified in Materiality MatrixGap and opportunity analysisEstablishment of Sustainability DirectionSustainability DirectionGap analysisAs part of our Materiality initiative, we referenced stakeholder interviews, global standards and best practice to gauge Astellas’ performance and identified the area in need of improvement by gap analysis.Sustainability Advisory PanelWe solicited opinions on the sustainability initiatives that could be further enhanced from the employees’ perspective.Two pillars for evolving sustainabilityRelationship between Materiality and two pillars and environmental element of Sustainability DirectionAccess to HealthCompliance and ethical business practicesTransformative treatment through innovative therapeutic methodsProduct quality assurance and product safetyTalent and organizational culture for realizing innovationSafe and appropriate use of productsValue-based pricingResponsible supply chain managementFulfilling unmet medical needs by creating novel healthcare solutionsFY2022FY2023Contribute to Environmental SustainabilityEstablishment of Sustainability DirectionFY2021Revision of the Materiality MatrixMid-term priorities for AstellasInitiativesOur commitments by FY2025Astellas’ MaterialityFY2025Companies are required to be actively involved in environmental issues. Recognizing that harmony between the global environment and our business activities is a prerequisite to our corporate existence, we shall take proactive measures to conserve the global environment.Environmental SustainabilityClimate change and energyReduction of environmental burdenAstellas Pharma Inc. Integrated Report 202321Corporate DataStrengthen Foundation for Value CreationCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerValue Creation StoryTransforming to be a Cutting-Edge, VALUE-driven life science innovator1Based on the pillars of Astellas’ business model, “Transforming to be a Cutting-Edge, VALUE-driven life science innovator,” Astellas will provide innovative healthcare solutions by creating and realizing “VALUE.”Translate innovative science into VALUE through the Focus Area approach to R&D, introducing novel therapies and modalities to treat diseases with high unmet medical needs.Addressing unmet medical needs for provision of solutions that produce better outcomes than previously possible.Aim to improve the lives of patients and caregivers around the world and contribute to reducing the overall load on the healthcare system.Advocate a value-based pricing for stakeholders to ensure innovative medicines in new modalities contribute to the health of patients around the world and realize the sustainable healthcare system.Advocating for value-based pricing as a basis to support access to medical innovations.Contribute to sustain healthcare systems through advocating for value-based pricing.• Maximize patient access to Astellas’ innovations and enable them to achieve better outcomes.• Beyond the pharmaceutical space, develop and commercialize novel healthcare solutions.• Providing comprehensive access programs throughout the product lifecycle.• Supporting healthcare system-strengthening programs in partnership and Astellas Global Health Foundation.• Provide as many patients as possible with access to our products.• Impact more than 36 million people (cumula-tively) by improving disease awareness, prevention, and access to healthcare services.• Create an environment within Astellas that fosters innovation.• Align strategy with the right capabilities, embraced in a culture that promotes innovation.Optimizing the number of people under one manager’s control and reducing layers, reinforcement of succession planning, and cultivation of a culture ensuring psychological safety and encouraging active feedback.Foster talents and an organizational culture with trusted capabilities to deliver innovation.Most important issues (Materiality)Access to HealthTransformative treatment through innovative therapeutic methodsTalent and organizational culture for realizing innovationValue-based pricingFulfilling unmet medical needs by creating novel healthcare solutionsMid-term Priorities for AstellasInitiativesOur Commitments by FY2025Astellas’ MaterialityAstellas Pharma Inc. Integrated Report 202322Corporate DataStrengthen Foundation for Value CreationCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerValue Creation StoryEnvironmental Sustainability2Reduce the environmental burden of Astellas’ business, address climate change and energy issues, and respond to environmental sustainability.Sustains a resilient business that continuously supplies products during unpredictable or emergency situations.• Sustains a resilient business that continuously supplies products during unpredictable or emergency situations.• Enhancing material sourcing and product supply networks through various means including double sourcing and diversified distribution bases.Establish a more sustainable and resilient value chain.Further enhance capability to secure patient safety and product quality as well as optimizing customer interac-tion for maximizing value for patients.• Fostering a Culture of Quality through leadership commitment, employee engagement and patient centric mindset.• Evolving customer experience with coordinated omnichannel engagement leveraging digital.Ensure patient safety and product quality by fostering a Culture of Quality and by evolving customer experience.Responsible supply chain managementCompliance and ethical business practicesProduct quality assurance and product safetySafe and appropriate use of productsReduce greenhouse gas emissions toward a goal consistent with the Paris Agreement’s and achieve net zero emissions by 2050.Achieve by FY2025 the amount of reasonable reduction of greenhouse gas emissions target** GHG emission reduction targets by FY2030• Scope 1+2: 63% reduction (base year: FY2015)• Scope 3: 37.5% reduction (base year: FY2015)• Enhancing energy efficiency and shifting to renewable energy sources such as solar and wind power, reducing the carbon footprint of the supply chain.Reduction of environmental burdenClimate change and energyOur Commitments by FY2025Astellas’ MaterialityStrengthening Resilient and sustainable business operations to meet the expectations of societyIn order to deliver our products to patients under any circumstances, we will respond to the sustainability of society by focusing on "Strengthening Resilient and sustainable business operations to meet the expectations of society."Most important issues (Materiality)Mid-term Priorities for AstellasInitiativesOur Commitments by FY2025Key IssuesMid-term Priorities for AstellasInitiativesAstellas Pharma Inc. Integrated Report 202323Corporate DataStrengthen Foundation for Value CreationCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerValue Creation Story* Adapted from “What Is Value in HealthCare?” Porter, M.E. (2010). New England Journal of MedicineWith “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 care givers.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.The VALUE that Astellas ProvidesOur Common Definition of VALUE is the Foundation to Realize Our VISIONFor 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.PayerVALUEOF PATIENTSCommon Definition ofVALUE*VALUE=Outcomes that matter to patientsCost to the healthcare system of delivering those outcomesCaregiverPatientsHealthcare ProviderAstellas Pharma Inc. Integrated Report 202324Corporate DataStrengthen Foundation for Value CreationCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerValue Creation StoryValue provided• Driving innovation and creating new value through collaborations with Astellas and integration of capabilitiesValue 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 systemValue provided• Find new knowledge from research data to create scientific innovation• Applying cutting-edge research findings to medical care• Training researchersValue provided• Sustainable enhancement of enterprise value• Stable shareholder dividends• Timely and appropriate information disclosure• Engagement with investorsValue 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• Healthy organizational cultureValue provided• Social contribution activities and donations• Environmental conservation• Job creation• Increasing awareness and understanding of diseases and medical careValue 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 initiativesDialogue results• Medical seminars for patients and their families (twice, FY2022)Dialogue results• IR meetings with securities analysts and institu-tional investors (approx. 260 times/FY2022, including 20 ESG meetings)• Earnings calls and IR events (product-related meetings, R&D meetings, sustainability meetings, etc.) (10 times/FY2022)Dialogue results• Ask Me Anything* (21 times/FY2022)• Live Stream (four times/FY2022)Examples of activities• Open Forum targeting general public (twice/FY2022)• Cross Talk Forum (once/FY2022)Providing Value to StakeholdersPatients and their families, healthcare professionalsAcademia, research institutionsShareholders and investorsBusiness partnersEmployeesLocal communityPublic administration* Ask Me Anything: Large interactive sessions designed to promote two-way communication between management and all.Astellas Pharma Inc. Integrated Report 202325Corporate DataStrengthen Foundation for Value CreationCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerValue Creation StoryFinancial StrategyPeople StrategyCommercial StrategyR&D StrategyDX StrategySustainability StrategyCorporate Strategic Plan for Value CreationCONTENTSCorporate Strategic Plan for Value CreationTop Management 27Progress of Corporate Strategic Plan 28Corporate Strategic Plan 2021 29Interview with Chief Strategy Officer 30 33Interview with Chief People Officer and Chief Ethics & Compliance Officer 36Special Feature I Roundtable: An Evolving Organizational Culture -The Organizational Health Goals at Work- 38People and Organization for Innovation 43Engagement, Diversity, Equity and Inclusion 47Interview with Chief Commercial Officer 48Special Feature IIVEOZAH: New nonhormonal treatment option for VMS due to menopause 49Main Product Sales 52Interview with Chief Medical Officer 53Areas of Interest 54 59Interview with the Head of the Sustainability Division 61Initiatives for Contribution to Sustainability 62Astellas Pharma Inc. Integrated Report 202326Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationAstellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Top Management 7 3 2 1 4 6 5 8 1 Naoki Okamura 5 Hideki Shima Representative Director, President and Chief Executive Officer (CEO) Chief Manufacturing Officer (CMfgO) 2 Katsuyoshi Sugita 6 Claus Zieler Representative Director, Executive Vice President, Chief Commercial Officer (CCO) Chief People Officer and Chief Ethics & Compliance Officer (CPO & CECO) 3 Yoshitsugu Shitaka 7 Adam Pearson Chief Scientific Officer (CScO) Chief Strategy Officer (CStO) 4 Tadaaki Taniguchi 8 Catherine Levitt Chief Medical Officer (CMO) General Counsel (GC) 27 ROE15% or more: Maintain and improve this level after the strategic plan period15.1%: Average for 3 years, FY2015–FY2017RevenueCAGR (%): Mid single-digit+1.4%*1Core operating profitCAGR that exceeds revenue+7.5%*1R&D investmentHigher than 17% of revenue16–17% of revenue / improvement of cost structureCore EPSCAGR that exceeds CAGR of core operating profit+13.2%*: Achieved EPS CAGR exceeding CAGR of core OP along with enhancement of capital efficiencyDOE6% or more5.7%: Result of FY2017RevenueFY2017 level (¥1,300.3 billion)¥1,249.5 billionNot achievedR&D investmentMore than ¥200.0 billion¥224.5 billionAchievedCore operating profitCore Operating Profit margin 20%20.1%AchievedCore EPSExceed FY2017 level (¥100.64)¥113.03AchievedProgress of Corporate Strategic PlanFY2015–FY2017Corporate Strategic Plan 2015FY2018-FY2020Corporate Strategic Plan 2018FY2021–FY2025Corporate Strategic Plan 2021 Financial Guidance1 Maximizing Product VALUE and Operational Excellence • Sales of XTANDI and mirabegron steadily increased • Six post-PoC projects: Achieved important milestones as planned • Prioritize sales promotion expenses and promote global procurement efficiencies (approx. ¥50.0 billion*2 profit improvement)2 Evolving How We Create VALUE: With the Focus Area Approach • Enhanced utilization of innovative platforms among multiple Primary Focuses and produced multiple promising projects • Strengthened capabilities through collaborations and acquisitions3 Developing Rx+ Programs • Achieved partnerships with various technologies from different fields • Successfully advanced multiple programs toward commercialization*1 CAGR for 3 years starting from FY2014 results *2 Cumulative total of FY2018-FY2020*3 PADCEV, XOSPATA, zolbetuximab, Evrenzo, VEOZAH, AT132 Financial GuidanceMajor Initiatives and AccomplishmentsPerformance GoalsStrategic GoalsOrganizational Health GoalsAim to become a company with a Market Cap valued at more than ¥7 trillion in FY2025 by achieving1 Revenue: XTANDI and Strategic products*3 sales ≥ ¥1.2 trillion in FY20252 Pipeline Value: Focus Area projects expected sales ≥ ¥0.5 trillion in FY20303 Core Operating Profit Margin: ≥ 30% in FY2025Performance Goals are set to measure successful execution of CSP2021 and indicate our ambitious goals in financial terms. We set goals from three 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 FY2025.1 Enable patients to achieve better outcomes2 Translate innovative science into proven VALUE3 Advance the Rx+ Business4 Deepen our engagement in sustainability1 Brave ideas pursue ambitious outcomes2 Talent and leadership thrives3 We excel as One AstellasWe have four Strategic Goals, and the first three goals focus on “what’s next” following our efforts in CSP2018. SG4 is newly introduced. We considered that it is needed to set sustainability-related thinking at 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 three goals. We recognized that we need to transform our organization and create the best internal environment to drive innovation and maximize our execution.• Fostering a corporate culture that aims to achieve ambitious goals• Significantly improving our execution capabilitiesAstellas Pharma Inc. Integrated Report 202328Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationAstellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Corporate Strategic Plan 2021 Progress of Strategic Goals Goals Major Initiatives and Accomplishments in FY2022*1 Strategic Goal 1: Enable patients to achieve better outcomes • XTANDI: met primary endpoint in Phase 3 EMBARK study in non-metastatic castration sensitive prostate cancer (March 2023), supplemental New Drug Application (sNDA) accepted in US (August 2023) • PADCEV: granted accelerated approval in US for additional indication of first-line therapy for patients with locally advanced or metastatic urothelial cancer who are not eligible to receive cisplatin-containing chemotherapy (April 2023) • VEOZAH (fezolinetant): Marketing Authorization Application (MAA) accepted in Europe (September 2022) and approval obtained in US (May 2023) • Zolbetuximab: NDA/Biologics License Application (BLA)/MAA accepted in Japan (June 2023), US, Europe and China (July 2023) • IZERVAY (avacincaptad pegol): approval obtained in US (August 2023), MAA accepted in Europe (August 2023) Strategic Goal 2: Translate innovative science into proven VALUE • In FY2022, seven new drug candidates discovered through results of research • In FY2022, two programs entered clinical stage (both in Primary Focus Immuno-Oncology) • Selected Targeted Protein Degradation as new Primary Focus • Deployed new R&D operating model with view to accelerating PoC*2 achievement Strategic Goal 3: Advance the Rx+ business • Entered into an exclusive US commercialization agreement with Stryker for pudexacianinium chloride (ASP5354, a novel surgical imaging agent) • Commenced sales pilot of Holter electrocardiograph, EG Holter™ • Entered into agreement with Roche Diabetes Care Japan for commercialization of blood glucose monitoring system as combined medical product with BlueStar digital health solution for diabetes self-management • Established Sustainability Direction as guide to addressing nine material issues and two key issues related to the environment sustainability, incorporating medium-term priorities, initiatives, and commitments by FY2025 Strategic Goal 4: Deepen our engagement in sustainability • Visualized the impact of Astellas’ Access to Health (ATH) initiative by creating ATH metric with number of patients who received VALUE delivered by Astellas through comprehensive Access to Medicine mechanism • Declared Net Zero GHG emissions by 2050, received accreditation from the Science Based Targets (SBT) initiative for its 2030 GHG emission reduction targets, and established a GHG emissions reduction strategy to realize our commitment to climate change Progress of Organizational Health Goals Goals Major Initiatives and Accomplishments in FY2022*1 Relationship to Material Issues ➊ ➋ ➌ ➍ ➎ ➏ ➊ ➋ ➌ ➍ ➊ ➋ ➊ – 11 Relationship to Material Issues 1. Brave ideas pursue ambitious outcomes 2. Talent and leadership thrives 3. We excel as one Astellas • Driving the development of a feedback culture through the execution of forums and feedback tools that focused on improving psychological safety and innovation. Concentrated on talent development with the launch of simplified competencies, talent toolkit, improved succession planning and inaugural Female Connect & Lift program*3 • Driving a flatter organization with less management hierarchy to promote rapid decision-making and strategic transformation into an innovative organization ➒ *1 Some information includes after April 2023 *2 PoC: Proof of Concept (key clinical data supporting a decision to initiate late-stage development) *3 Female Connect & Lift program: program for the development of female leaders Key Issues and Materiality Astellas will evolve sustainability for society and Astellas by addressing the key social issues and materiality ➊ Access to Health ➋ Fulfilling unmet medical needs by creating novel healthcare solutions ➌ Transformative treatment through innovative therapeutic methods ➍ Value-based pricing ➎ Product quality assurance and product safety ➏ Safe and appropriate use of products ➐ Compliance and ethical business practices ➑ Responsible supply chain management ➒ Talent and organizational culture for realizing innovation ➓ Reduction of environmental burden 11 Climate change and energy 29 Interview with Chief Strategy OfficerUltimately, I learned how important what we do in a pharmaceutical company is and how much difference it makes.Last June in a regular medical checkup in Japan, I had some unusual blood test results which led to a diagnosis of a kidney condition. A further test showed a possible cause of this might be AL amyloidosis, a relatively rare bone marrow condition that is not curable. I returned to the UK for tests that confirmed the diagnosis. I was fortunate that they found the disease at an early stage and that several chemotherapy treatments are available. I've responded quite well to treatments. I'm fully back at work now and hope to continue to work without too much of a disease burden for a while. It’s the first time that I or anyone I’m close to has had such a serious disease. So, this experience has brought me a lot closer to the healthcare system in the UK and Japan, especially oncology. I gained perspective both as a patient myself and as a member of various patient groups: Living with uncertainty all the time, the need for information and explanation, how thankful you are when drugs are available to treat the disease—but also how difficult it can be when they are not. As CStO, I am in a position to help build the future of this dynamic company, by creating the frame in which strategy can develop and evolve in a coherent way within the context of our financial constraints and goals.I’ve worked at Astellas for nearly 20 years, and sometimes I’ve thought “why do we do that?” or “why not this?” Now I have a greater chance to understand why some decisions are made and also influence those in order to make an impact. My recent experience as a patient gives me even more motivation to help us make the right choices to have a big impact on patients. The CStO area is all about building our future, with functions like corporate strategy, patient centricity, business development, and the Primary Focus Leads all focusing around our long-term direction and how we collectively get there. It also covers Digital, Analytics and Technology*, which will help us to leverage these technologies to create VALUE in new ways. And it covers our new non-pharma businesses, including Rx+ and bioelectronics. Creating and executing strategy is not something a single person can or should do on their own. In order for the strategy to be well informed, and well executed, it needs leaders from across the business — from Top Management to Subject Matter Experts, to be part of the discussions. My role is to create the conditions and frame in which the right strategy can be developed and evolved, from Corporate to R&D and the portfolio to DX (Digital transformation) Strategy and How is strategy developed and executed within Astellas and what is your role within that process? My recent experience as a patient gives me even more motivation to help us make the right choices to have a big impact on patientsChief Strategy Officer (CStO) I experienced how confusing healthcare systems can be, in part because patients often have multiple diseases. I also found that side effects are really important—I stopped one very efficacious drug because of the side effects. Even for life-saving medicines, it’s a real trade-off. I also learned how kind people are. I got hundreds of messages and many people kept checking in. Several of them were on chemotherapy who were in a far worse condi-tion than me, but they still wanted to support me. But I suppose the biggest take away is that what we do in a pharmaceutical company is so important and makes such a difference. So many patients rely totally on medicines which companies like ours have a role in producing, to control their disease.Could you tell us about your recent medical issues and what you learned from them?Adam PearsonQQ* At the time of the interview conducted in April 2023.Astellas Pharma Inc. Integrated Report 202330Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value Creationfunctional strategies across the value chain. I need to make sure that it all hangs together across these areas. I also need to ensure that our strategy reflects not only our long-term aspirations but also our current financial context. Another aspect of my role is to make sure that we set up to implement strategy well—that we have the right capabilities, but also the right environment, talent, and culture which collectively makes up our organizational health. Astellas strives to be a VALUE-driven life science innovator, seeking to create and deliver VALUE for patients using innovative science. Astellas considers VALUE to be a reflection of the outcomes patients receive from our products within the context of the costs to the healthcare system for delivering those outcomes. In this way, we’re looking to make big changes to the treatment of patients, with R&D focusing on the linkages between modalities and biologies that will create platforms to generate innovative drugs. The Corporate Strategic Plan we launched just over two years ago, CSP2021, set out specific strategies for achieving our overall goal of bringing innovation to patients, in terms of how we provide VALUE to patients, how we create VALUE in our R&D, and how we create VALUE outside the prescription pharmaceutical business. It also set goals for our organizational health to enable us to be effective in executing our strategies. CSP2021 also includes financial performance goals both to provide a clear set of internal milestones for achieving sustainable financial performance as well as to communicate to outside investors and other stakeholders what we believe we can achieve. This is a good compass for us, guiding us in making choices and setting priorities to achieve our goals. This year at least, I am focusing on five priorities.It is important within my role and indeed across our Management Team to respond to internal and external changes as and where appropriate. However right now, I have five big priorities. Astellas is in a unique situation in that we have a new CEO and a new Top Management team. This means we can provide a fresh perspective on our selected strategies and bring What are your priorities for FY2023?new thinking to how we execute these within and across the business. This will be my first priority. The second involves the acquisition and integration of other companies to support the CSP goals. For instance, we acquired Iveric Bio, which is a fantastic opportunity for Astellas to serve patients in the field of ophthalmology who have some serious unmet needs, and are exploring other acquisitions. My third priority is the integration of our digital analytics and technology function, and supporting our new Chief Digital Officer as they start their role. I want to put digital analytical technologies, data, and information technologies at the heart of VALUE creation in the company, making sure that we not only make the right choices as to how we invest in technology, but also improve our capabilities to adopt technology. My fourth priority is to ensure that we drive simplification of our business to support operational effectiveness. We have evolved policies and procedures and ways of working with good intent and purpose, but it has become harder for everyone, especially those working directly to bring our drugs to patients, to get things done quickly and efficiently. It is at the top of my agenda to ensure that we tackle this top down, particularly with the corporate functions that govern a lot of processes and policies. Finally, my fifth priority is to support the new R&D operating model, ensuring that it is effective in progressing and accelerating our assets through to proof of concept and beyond.Looking beyond FY2025, we will address challenges in the early stage pipeline in part by bringing in outside innovation at different stages.CSP2021 set out ambitious performance goals for the business up to FY2025, but also implied goals beyond that. Critical to this was the launch of new indications of PADCEV and the launch of VEOZAH, zolbetuximab, and AT132. We also needed a number of early stage projects to reach proof of concept and enter late stage development. As far as the late stage assets are concerned, we are mostly satisfied with their growth and with the potential for assets not yet launched.The market is interested in the growth story for Astellas after the XTANDI loss of exclusivity. How would you achieve that growth? Interview with Chief Strategy OfficerQQAstellas Pharma Inc. Integrated Report 202331Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationWe’ve made good progress with many of our Strategic Goals, but still have work to do on our Organizational Health Goals and Performance Goals.The strategic ambitions we laid out have helped drive programs of change or development, and we are now seeing new ways of working or capabilities being implemented—for example, our R&D operating model built around the Primary Focuses, or new ways of combining different types of evidence as we develop new drugs. We have made steps forward in collaborating across different functions to support and communicate with our customers and stakeholders. Our late-stage portfolio and marketed products are largely delivering what we hoped they would, and we have two major Rx+ programs heading into the data generation and commercialization phase. We have also reshaped our Sustainability strategy. As for our Organizational Health Goals, there has been some positive change but we still have some way to go. I think collaboration has improved in critical areas, particularly among our functions developing and commercializing our drugs. We are gradually investing in and improving our approach to talent development, but there is still work to do. On creating a brave, open innovative culture, I think the message is out there and has been understood, but we are still working out how to really make it come alive—trying to encourage proactive sharing of ideas, risks and alternative views. Midway through CSP2021, what has Astellas achieved so far and what is to come? We haven’t had the success we wanted in the early stage pipeline. That’s something that’s always hard to control, especially when pursuing ambitious goals in new, innovative areas. We’re addressing both by building our own capabilities and by bringing innovation in from outside like Iveric Bio, that will support our financial goals and also build our presence and knowledge in the strategic franchise of ophthalmology, where much of our research and early stage development is. We will continue to look at other opportunities to bring outside innovation into the company, at different stages, to reach our growth ambitions after the XTANDI loss of exclusivity. In terms of Critical Enablers, we’ve made a lot of progress in the areas of VALUE Gene and patient centricity. In fact, we’ve been able to pilot new VALUE Gene capabilities and embed them into the business as business as usual. This has given us the space to identify new differentiating capabilities to pilot. In patient centricity, we’re getting a lot of good feedback from R&D about its ability to provide patient insight that informs our development areas and programs. The other Critical Enabler is Digital Transformation. Here, there have been some individual successes, but as a whole, we want the change to be broader and more value-creating. The last area is Performance Goals. We knew the financial trajectory was never going to be linear—a lot of the improvement in growth and profitability has come in the last two years. So it’s been hard to show as much progress as we would have liked. Having said that, we are responding to the challenges we have faced, particularly in the early stage pipeline, with acquisitions like Iveric Bio that address the post-FY2025 financial trajectory—and even pre-FY2025 performance—and bring in stronger cash flows to fund sustainable R&D investment. So we are making progress, but there is much work to do. Despite a tough external environment, our launched products are growing well and providing VALUE to patients. Our innovative pipeline is progressing slower than we might have anticipated, but we are making improvements to accelerate progress. Our CSP2021 is providing the roadmap to our VISION. With the new launches we have ahead of us, I am optimistic we will reach our goals.Interview with Chief Strategy OfficerQAstellas Pharma Inc. Integrated Report 202332Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationAstellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Financial Strategy 1. Basic Policy Astellas is committed to delivering VALUE for patients around the world, through corporate activities that put emphasis on generating stable cash flow and enhancing shareholder value (in short, market capitalization). The basic policy underpinning our financial strategy is to enhance enterprise value by achieving sustained growth in profit, through a well-balanced allocation of the cash thus generated between business investments geared toward future growth and returning profit to shareholders. One of the Performance Goals of our current Corporate Strategic Plan 2021 (CSP2021) is to PADCEV growth and launch readiness for VEOZAH (fezolinetant), such that sales promotion expenses rose YoY. Overall, we were able to rein in costs according to plan while also making the necessary investments, maintaining control over SG&A costs throughout the year. R&D expenses increased by 12.2% YoY to 276.1 billion yen but rose only 1.1% YoY when forex effects are excluded. The main factor behind the increase in R&D expenses was the booking of one-time costs for using a priority review voucher in Q1 to expedite approval in the US for VEOZAH. In real terms (excluding this one-time cost), R&D expenses decreased YoY. As a result, core operating profit increased 17.2% YoY to 286.9 billion yen. achieve a more than 30% core operating profit margin in FY2025. While from an investment (billion yen) FY2021 FY2022 Change Change (%) FY2022 FCST*3 Achievement efficiency standpoint we also see a need in future to monitor ROIC*1 and ROE*2 as two indices measuring the profitability of invested capital, the focus for now is on achieving our core operating profit margin target as we strive to build a financial structure that consistently generates profit. We also emphasize accountability and sustainability in our pursuit of increased enterprise value. Our policy is to expand information disclosure with a view both to enhancing enterprise value by earning the trust of shareholders and investors, and securing the understanding of other stakeholders. *1 Abbreviation for Return on Invested Capital; a financial metric that aims to measure the percentage return that a company earns on invested capital. *2 Abbreviation for Return on Equity; a financial metric for measuring the profits generated using shareholders’ equity. 2. Progress of Corporate Strategic Plan 2021 Review of FY2022 Revenue increased 17.2% YoY to 1,518.6 billion yen in FY2022, underpinned by growth in sales of the prostate cancer drug XTANDI, urothelial cancer drug PADCEV, and acute myeloid leukemia drug XOSPATA. Revenue Cost of sales % of revenue SG&A expenses US XTANDI co-pro fee SG&A excl. the above R&D expenses Amortization of intangible assets Gain on divestiture of intangible assets 1,296.2 1,518.6 +222.5 +17.2% 1,529.0 99.3% 253.0 19.5% 548.8 139.3 409.5 246.0 28.3 24.2 288.4 19.0% 630.3 175.5 454.8 276.1 +35.3 +14.0% –0.5 ppt +81.4 +36.2 +45.3 +30.1 +14.8% +26.0% +11.1% +12.2% 642.0 186.0 456.0 278.0 98.2% 94.3% 99.7% 99.3% 38.4 +10.2 +35.9% 0.2 –24.0 –99.1% Core operating profit 244.7 286.9 +42.2 +17.2% 290.0 98.9% Other income Other expenses Operating profit Profit before tax 15.3 104.3 155.7 156.9 124.1 3.6 157.5 133.0 132.4 98.7 –11.6 +53.2 –22.7 –24.5 –25.4 –76.1% +51.0% –14.6% –15.6% –20.4% 137.0 135.0 105.0 97.1% 98.0% 94.0% SG&A expenses, excluding co-promotion fees for XTANDI in the US, increased by 11.1% YoY Profit to 454.8 billion yen, but decreased by 1.3% or 5.1 billion yen YoY when the impact of forex is *3 FY22 FCST were announced in Oct 2022, provided that full basis is the revised forecast announced on April 11, 2023. excluded. Not only did personnel expenses fall amid global optimization of commercial personnel, but also Astellas strove to reduce sales promotion costs for mature products such as the overactive bladder treatment mirabegron. At the same time, we invested actively in 33 Toward Achievement of CSP2021 (Image)• Continue commitment to Corporate Strategic Plan 2021• FY2023 is the turning point to ensure growth from FY2024 onwards*1 The impact of the acquisition of Iveric Bio is not factored into the outlook for FY2023 and beyond.*2 PoC: Proof of concept*3 PF: Primary Focus*4 LOE: Loss of exclusivitySustainable growth after LOE of XTANDI19%approx.25%CSP2021 targetmore than 30%VEOZAHPADCEVzolbetuximabOptimization of cost structurePost-PoC PFportfolio Revenue Core OPFY2025FY2023FY2024Initiatives for FY2023 OnwardWe regard FY2023 as a turning point for CSP2021, marking a key inflexion point ensuring growth from FY2024 onward. We have high expectations that VEOZAH will become a blockbuster and to that end have assigned the drug greater investment priority, spending proactively with a view to realizing rapid market penetration and expanding sales after launch. In the case of PADCEV, we hope the indication of first-line therapy for metastatic urothelial cancer will become a major growth driver. We expect sales expansion in the US as well as progress in development toward global approval filings. With zolbetuximab, we will proceed with global submissions while at the same time making investments supporting market penetration after launch. In this manner, we will target sales expansion with new products and new indications while simultane-ously undertaking investments in creating the optimal cost structure for the future.To achieve a core operating profit margin of 30% in FY2025, we will maintain a policy of keeping SG&A expenses flat in terms of the absolute amount, while acknowledging that SG&A expenses in fact could increase in tandem with revenue as we make the optimal investments for prioritizing growth. We seek the most efficient balance as we look to realize sustained growth while also maximizing enterprise value.As we pursue cost structure optimization, though, we will continue to curtail any excessive growth in SG&A expenses. While we already have had a degree of success in optimizing the cost structure, there remain opportunities for efficiency gains. In the process of transforming our organization from a regionally segmented organization into one governed by function, the organization ended up gaining more layers. Against this backdrop, we continue to advance organizational flattening while simplifying procedures and eliminating duplication of effort, enhancing the organization’s decision-making speed as well as optimizing the cost structure through productivity and efficiency gains. In this manner, by further growing sales of high-margin products while persisting with efforts toward cost structure optimization, we seek to vastly improve the ratio of SG&A expenses to revenue.3. Capital AllocationIn our capital allocation policy at Astellas, our top priority is investment for business growth as a key plank in our policy of grasping opportunities to maximize product value while adapting to constantly changing circumstances. Our intention is to raise the dividend level throughout the period covered by CSP2021, in line with our profit/cash flow plan and actual performance. When excess cash is available, we will execute share buybacks flexibly.Investment for Business GrowthAs detailed above in “Initiatives for FY2023 Onward,” by “investment for business growth” we mean actively engaging in investment geared toward future growth. One of our options in this respect is to invest in other companies. In such cases, we eschew investment in companies Financial Strategy34Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationAstellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Financial Strategy with established businesses in favor of investing—by means such as M&A—in companies The 800 billion yen in funding for the Iveric Bio acquisition uses debt financing. With our offering cutting-edge technologies and programs. Our basic policy is to retain a flexible strong cash flow, we expect to repay this debt within the next five to seven years. If there is cash approach to undertaking M&A should the opportunity arise. left over after debt repayments, we will look at either paying down the debt early or returning In July 2023, Astellas acquired Iveric Bio, a biopharmaceutical company with expertise in the the excess cash to shareholders, depending on the circumstances. ophthalmology field. Iveric Bio has promising programs including IZERVAY*1 (avacincaptad pegol) for the treatment of Geographic Atrophy (GA) secondary to Age-Related Macular Degeneration (AMD), and capabilities across the entire value chain in the ophthalmology field. We believe that this acquisition will enable Astellas to deliver greater VALUE to patients with ocular diseases at high risk of blindness.” As this acquisition involved a large outlay of approximately 800 billion yen, our plan for now is to focus on integrating Iveric Bio’s operations and shifting its business into high gear. In enacting our current R&D strategy, though, we will continue employing M&A and other means to invest in the acquisition of necessary technologies, platforms, and capabilities, in line with our basic policy. We will make further investments in the fields of cell and gene therapies, as we consider these technologies critical to Astellas’ future growth. *1 FDA approval obtained in US (Aug 2023), MAA accepted by EMA in Europe (Aug 2023). Shareholder Returns Astellas also will continue working aggressively toward improving returns to shareholders. We strive to increase dividend payments stably and continuously based on medium- to long-term growth in consolidated profits. Further, we will flexibly buy back shares when excess cash is available, with a view to increasing capital efficiency and returning more profit to shareholders. In anticipation of medium- and long-term growth in FY2024 and beyond, we are planning a 10 yen dividend increase to 70 yen per share for FY2023. Investment for Business Growth ① Top priority is investment ② Raise dividend level aligned ③ Flexibly execute share for business growth with profit / cash flow plan buyback by excess cash and actual performance throughout CSP2021 period Aiming for higher level of dividends increase during CSP2021 aligned with the robust profit growth forecast Trend of Core OP and dividends Core OP (billion yen) 600 500 400 300 200 100 14 16 22 24 25 25 25 26 27 30 32 34 36 38 40 42 70 60 50 Dividends (yen) 100 80 60 40 20 0 FY2005 FY2007 FY2009 FY2011 FY2013 FY2015 FY2017 FY2019 FY2021 FY2023 FY2025 0 Core OP (left) Dividends (right) *2 Prior to FY2012, operating profit is in accordance with J-GAAP. *3 The impact of the acquisition of Iveric Bio is not factored into the outlook for FY2023 and beyond. 35 This fiscal year, Astellas made significant strides toward achieving our Organizational Health Goals (OHGs), and as Executive Vice President, I am committed to accelerating innovation at Astellas.Building an organizational culture that facilitates innovation is not an endeavor that delivers results swiftly. However, in this third year of CSP2021, significant changes have been observed in our organizational culture, particularly in our internal meetings involving Top Management. We will continue to foster an environment where ideas are freely proposed and encouraged during discussions. Similarly, our decision-making meetings have transformed into spaces that promote constructive debate, allowing participants to express frank and, at times, directly conflicting opinions. I believe that this approach has been instrumental in enabling us to make appropriate decisions while embracing intelligent risk-taking. Furthermore, I have noticed a significant increase in the number of employees taking proactive initiatives. Recent data shows a higher rate of employees voluntarily moving to different functions in response to internal job postings, fostering greater employment mobility within Astellas. This not only cultivates a proactive work environment but also ensures the right person in the right position.In our quest to foster innovation, we are working on transforming our organizational culture and making the organization flatter to facilitate quicker decision-making. While implementing this At Astellas, we understand the vital role of human capital disclosure, which extends far beyond presenting mere numbers. Instead, we aim to integrate a storytelling approach that aligns with our corporate strategy. By doing so, we can offer investors a more insightful and holistic view of our workforce and its impact on our organization. To this end, we provide detailed results from our global engagement survey which allows us to comprehend the sentiments and perspectives from our employees companywide.Incorporating human capital in management decisions is critical at present, and this belief has been steadfast throughout my career. I believe that management decisions must be grounded not only in qualitative information, but also in quantitative data, akin to the approach taken in sales or marketing decisions. As Astellas has a global human capital-related database, we have easy access to such vital data, and we are committed to further enhancing transparency going forward.QQJapanese companies are now required to enhance their human capital disclosure. Could you please provide information about Astellas’ disclosure policy as a global company and provide an overview of the measures being implemented?approach, we have faced some resistance. Concerns have been raised, suggesting that flattening the organization might lead to a reduction in managerial positions. However, personally, I do not believe that managerial experience is an indispensable aspect of one’s career trajectory. I firmly believe that individuals should have the autonomy to choose between a specialist or managerial career path based on their preferences and skills. To me, the distinction between the two paths is inconsequential. What truly matters is ensuring that the right individuals are involved whenever significant tasks arise. Transforming an organization’s culture is undoubtedly a challenging endeavor, but we have made significant progress by utilizing actual data to develop a comprehensive understanding of the organizational issues that existed before the reforms took place in Astellas.I have been a member of the Top Management team for some time now, and since my appointment as Representative Director and Executive Vice President, there have been no significant changes for me in the working environment. We live in an era that demands both an understanding of human capital management and a proactive approach to intervene in management matters. I believe my appointment reflects Astellas’ recognition of the necessity to actively pursue our OHGs in order to drive innovation.How did you contribute to Corporate Strategic Plan 2021 (CSP2021) as CPO & CECO, and how will that change with your new appointment as Representative Director, Executive Vice President?As work styles diversify, we seek to accelerate innovation by assembling the best possible team with a strong growth mindset, comprising individuals from both inside and outside Astellas.Interview with Chief People Officer and Chief Ethics & Compliance OfficerKatsuyoshi SugitaRepresentative Director, Executive Vice President Senmu Tantou-Yakuin Chief People Officer and Chief Ethics & Compliance Officer (CPO & CECO)People Strategy36Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationLastly, please tell us what you are currently focusing on and share your message for stakeholders.In an ever-changing society, Astellas aspires to be a dynamic company that not only fosters continuous growth and innovation, but also demonstrates the foresight and adaptability to navigate these shifts with flexibility.Transforming the organization into one that fosters continuous innovation requires a company- wide effort, involving not only the human resources (HR) division but every division. It is crucial to establish a framework that empowers managers in each division to independently ideate and implement their innovative ideas, maximizing the need for constant involvement from HR. To facilitate this, the development of supportive systems and tools becomes paramount. The HR data dashboard currently in use shows promise but has room for further improvements to enhance its user-friendliness. To nurture a culture of innovation throughout Astellas, we are committed to developing the skills and mindset of our managers themselves with the neces-sary training and resources.To better deliver on CSP2021, each of us must focus on our own priorities and dedicate more time to execution. I have several ideas for allocating more time to planning, discussions, and reviews, including a clearer division of periods for planning and execution.In addition, I believe that lifelong learning will increasingly become a crucial aspect for our employees. By continually pursuing further learning and acquiring new skills, both within our internal networks and externally, our employees can thrive in a world that demands continuous growth and adaptation. In fact, we embrace the idea of employees exploring side jobs outside Astellas to gain valuable experience. We aim for Astellas to become the preferred choice for external individuals seeking side job opportunities. To drive innovation, we actively encourage such practices and provide a supportive platform for lifelong learning. By assembling a team with a strong growth mindset, empowered by their diverse experiences, we strive to accelerate innovation and drive Astellas forward with unwavering momentum.In a world where change is accelerating, we have a strong sense of mission and will continue to ambitiously work toward the OHGs set by CSP2021. We invite you to look forward to Astellas’ endeavors in continuously creating innovation.I believe that human capital disclosure should not be limited to merely quoting numbers. Rather, it is important for human capital disclosure to tie in with the story telling approach following our corporate strategy. Astellas has a clear aspiration outlined in CSP2021 and our OHGs. To monitor the progress of our journey, we carefully identify the appropriate KPIs.Astellas utilizes an essential indicator, the global engagement survey score for all employees, to assess improvement opportunities and monitor progress. Instead of evaluating the score solely based on overall results, we analyze it in relation to each target of the OHGs and by functions. This approach allows us to identify specific areas for improvement. For instance, a team with a high score related to white space* doesn’t simply have extra time; it may be due to the leader’s imple-mentation of unique measures or effective work-life balance achieved through team discussions. Rolling out these successful practices horizontally to other functions holds great importance.* White space is defined as “having the time, tools, and expertise to think of new ideas.” It is having the necessary resources to be innovative.QPlease describe how Astellas secures and develops talent in this era of cross-border and cross-industry competition for talent.In recruiting and retaining talent, we place great emphasis on diversity and make decisions based on each individual’s career aspirations and potential.It is essential not only to recruit personnel but also to retain them. While employment conditions are crucial, we also believe that it is necessary to foster a deep understanding and respect for each individual’s career aspirations and potential. In this regard, the role of people in manage-ment and oversight positions is critical. When it comes to recruitment, I recall that when filling a senior position in a particular division, we posted the role globally to attract internal and external candidates, resulting in an impressive array of submissions. Looking ahead, we are committed to maintaining this creative approach in recruiting top talent.We have invested a lot of effort into succession planning. We have a system in place that clearly sets out succession plans and identifies candidates for each position, and in this respect, I believe Astellas compares very favorably with global peers. On the other hand, I still feel there is an opportunity for us to improve. For example, we must be sensitive to unconscious bias and make sure that we are choosing the best people drawn from a diverse candidate pool. My goal is to bring about improvement in this respect by promoting greater awareness of diversity.QInterview with Chief People Officer and Chief Ethics & Compliance OfficerPeople Strategy37Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationRoundtable: An Evolving Organizational Culture —The Organizational Health Goals at Work—Kats: Today, I would like to have an open discussion with all of you about the progress and upcoming challenges of Astellas’ Organizational Health Goals (OHGs) as part of CSP2021.I feel I was hired for the topic of OHGs, and to drive OHGs is my mission.On the other hand, since there are no short-term Key Performance Indicators (KPIs) for OHGs, I would like to hear about your experiences and challenges regarding the imple-mentation of OHGs. Additionally, I would appreciate honest feedback from Sakurai-san, our External Director, from a supervisory perspective.Two years have passed since OHGs were set in FY2021. Have you found any OHG-related changes in your daily work and what are they?Ricardo: I think that OHGs helped every employee understand not only what the company wants from them but also what the employees can expect from it. Changing the mindset is very important and we have worked hard not only to promote a mindset shift but also to develop a working environment where people can be their best version and contribute by working in a very cooperative way to achieve our goals.By doing so, in the last 4 years, Astellas Brazil was able to double its sales and triple its operating profit. It was something that worked well by having all employees understanding the value of OHGs. I think we have been very successful in implementing it in Brazil.Takahiro: With the penetration of OHG practices, it has become easier to share ideas and opinions with supervisors and team members. A culture of fearlessly embracing failure and venturing into new activities has been fostered, resulting in an environment where innova-tion is more likely to occur.In a case of ASP3082 in my division, Targeted Protein Degradation, a researcher proposed a new approach of using protein degraders instead of continuing the inhibitor research that had been investigated so far to address the research challenges on KRAS G12D. 0102040305Progress and future challenges of Organizational Health Goals (OHGs)To detail how the corporate culture is evolving through pursuit of our Organizational Health Goals, we held round-table discussions between employees, Top Management, and outside Director.NameIntroduction01Katsuyoshi Sugita (CPO & CECO)Katsuyoshi Sugita joined Astellas as the Head of Human Resources in FY2021. In October 2022, he assumed the position of CPO & CECO*1 (concurrently serving as the Head of the Human Resources), and in June 2023, he took on the role of Representative Director and Executive Vice President*2.02Eriko Sakuraioutside DirectorEriko Sakurai has been the outside Director of Astellas Pharma Inc. since June 2022 and partici-pated in Sustainability Meeting 2022. She has served in important positions in a US-based global company, including being the representative of Japanese subsidiaries.03Ricardo OgawaRicardo Ogawa had served as the General Manager (GM) of the Brazil branch since he joined Astellas 4 years ago. He is currently serving as the GM of the branches in Spain and Portugal, with over 30 years of experience in the pharmaceutical industry.04Nahrin MarinoNahrin Marino is the Senior Vice President in the Legal Department. Prior to joining Astellas, she had worked as an attorney at law firms and this is her 12th year with Astellas.05Takahiro MorikawaTakahiro Morikawa is a research team leader in TPD (Targeted Protein Degradation) that was selected as Primary Focus in FY2022. He has been working as a medicinal chemist for 6 years.*1 Senmu Tantou-Yakuin, Chief People Officer and Chief Ethics & Compliance Officer (CPO & CECO)*2 He continues to serve as Chief People Officer and Chief Ethics & Compliance Officer (CPO & CECO)Special Feature I 38Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationThis idea was promptly validated with the support of the leadership and team members, leading to the early creation of a first-in-class KRAS G12D degrader. A positive atmosphere into challenge and change can be observed in other research projects as well.On the other hand, I feel there are two challenges in the workplace. One of them is related to the feedback culture. I have realized that it is crucial to have a good under-standing of one another in order to provide appropriate feedback. I think it is important to make efforts to actively create white space for increasing opportunity to communicate with one another.Another challenge is collaboration within an organization. Since the introduction of shared objectives last year, there have been more opportunities for cross-organizational collaborations, and it has become easier to carry out research activities under specific, rapid decision making. However, there have been instances where collaboration within the organization, particularly between different projects has not been stimulated. I believe it is important for the organization to foster a sense of unity, rather than working independently with the boundaries of individual research goals and projects. I think that cultivating a sense of unity can promote communication and collaboration across different research projects, leading to improved overall performance and outcomes of organization.Kats: I was a bit surprised to learn about your experience Takahiro but this is a very interesting comment. Like what you have mentioned, by introducing shared objectives, we have promoted cross-function and cross-division collaboration. But I guess we are not as conscious about the collaboration within the same division.Of course, we also want to be more collaborative in our division. But sometimes it is exactly because we respect one another that deep and straightforward conversations with people in the same group become quite difficult.Nahrin: The OHGs that resonated with me and the legal team is related to intelligent risk-taking and learning culture. We embrace this shift in organization because we want people to think about risk and have conversations with legal and among each other.First and foremost, we developed educated lawyers that understand what the business objectives are and how they lead to value for patients. We created a 15-month program called “CSP Legal Ambassador Program,” where we put high performers in the legal team through rotation, taking each lawyer through every aspect of the product lifecycle.They learned about research, development, commercialization, strategies, and business objectives. This was what they chose to learn on top of their everyday jobs. This program is not yet completed but it has been an absolute success. The participants made presenta-tions to other members of the legal team about what they have learned. The program has taught our lawyers not to narrowly focus on the legal projects but to understand the whole picture of the business, why projects are moving forward, and how we fit into value for our patients.We’re developing lawyers that understand the business and how to support people in making educated business risk decisions, which is a key learning of the OHGs. It has changed our culture and impacted the business in a positive way. It has also given the business more ownership of key decisions. Ricardo: In Brazil, we have also held workshops with leadership teams to go over the CSP2021 and OHGs in order to make sure we all have the same and right understanding on the company’s strategies and goals. For example, people were a little confused about intelligent risk-taking because they did not know exactly what indeed could be considered intelligent risks. Thus, we have come up with a list of intelligent risk-taking. Some of the risks are beyond our control because they are dependent on others’ decisions. So we have only focused on the ones that we could manage and do something about. In the end, we were able to take intelligent risk effectively and get approvals from the regional team for implementation.P.43Overview of People and Organization prioritiesCSP2021: Organizational Health GoalsBrave ideas pursue ambitious outcomesWe excel as One AstellasTalent and leadership thrivesVISION213Roundtable: An Evolving Organizational Culture —The Organizational Health Goals at Work—Special Feature I 39Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationOnce Astellas’ employees started seeing actions taking place, they finally believed in the process. It is great to know that Nahrin’s team has been working on risk-taking as well. We can definitely support our affiliates to do the right things but at the same time take risks appropriately.Kats: We have many great practices in Astellas, and my focus in FY2023 is to share those great cases with all Astellas members and external stakeholders proactively. I believe this can help keep the momentum for transformation.Sakurai-san, please share your thoughts on OHGs from the viewpoint of an External Director.Eriko: I am very happy that Astellas has OHGs as a major goal in your activities and I am supportive of it. Organizational culture is usually the best reason that employees stay and engage themselves. It is good that Astellas made this an important objective for your organization globally.I also understand that this is a long journey. Culture cannot be changed overnight, and you have to work consistently. Perfection does not exist in this matter and there is no end to it either. I would like to see Astellas continue to challenge and evolve.Kats: Global Engagement Survey (GES) is one of the measurements of the progress of OHGs. Of course, GES is not a competition, but Ricardo’s team has an especially high score compared with the rest of the Company. Ricardo, what do you think is the reason for the high scores?For details about Global Engagement Survey, please refer to P.46Ricardo: Open Communication is key. I encouraged the members to communicate effectively. I got to know the team well and listened to their opinions in order to come up with bottom-up solutions. We have to lead by example. Once you lead by example, it is much easier for the subordinates to understand what is expected of them. Effects of Global Engagement Survey (GES) and future challengesI sometimes got comments directly from my members, “We want to better understand what the CSP2021 means for us.” I have a relatively small team compared to other countries, but I know every one of the 185 employees in my region, and I’ve had a chance to talk to every one of them. I’ve conducted townhall meetings, one-on-one sessions with most of them, and open talks with groups like what Mr. Okamura does with AMA (Ask Me Anything).It’s always good to come up with solutions by having frank conversations or open discussions with teams, but it is important to be honest with them when running into things that we cannot change. We have to tell them the truth as it is as well. Otherwise, you are going to have a group of people whining about things that cannot be changed.Also, we have worked on creating a working environment where people feel safe to be who they really are. I want people to freely speak up and share their feelings with others, provided that we always maintain our respect for each other. This is key for me. I believe in the end, our patients can also benefit from the changes we are working on in Astellas.Our employees can grow and get recognized, regardless of their age and gender. I am very proud of having 70% of our leadership team formed by women and 50% of the senior management under 40 years old. We are recognized both internally and externally for our thriving young people and great female leaders. Last year, we were ranked as the 4th best company to work for by GPTW (Great Place to Work Institute) within the entire pharmaceu-tical industry in Brazil. Nahrin: What Ricardo was doing in Brazil is impactful for the organizational culture. I have employees in Brazil who highly appreciate Ricardo’s leadership and open communication.Open communication and setting expectations are keys for the employees to under-stand what the organizational culture is like, which is what makes people want to stay. This way, you can get more engagement and participation from the employees too.Although our global engagement scores and efforts in communication have increased year by year, white space remained our work to do. We discussed what is important for the team regarding white space. We have a “development day,” where the legal team takes the entire day to develop themselves, whatever it means for every member. Some might think about a project and Roundtable: An Evolving Organizational Culture —The Organizational Health Goals at Work—Special Feature I 40Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value Creationhow they could do it better strategically, while some might participate in training to increase legal expertise. This has impacted our scores for white space in GES a great deal.Eriko: When I was responsible for the global teams, I observed differences in GES scores among countries and regions due to cultural differences. I think it is more important to see the changes in each country or region than to compare scores among them.Securing white space is a dilemma faced by many companies around the world. It is very difficult for me as well, because there are always urgent matters. If you work for a global company, you can work 24 hours. Therefore, I truly admire how you are making improvements to secure white space.Nahrin: We have to understand that what makes good white space for me might not be good white space for you. For some, white space means spending time with their children, and for others, it could be something else.We try to respect people’s time, working styles, and what they have to do.Kats: That’s another great point. I think white space is one of the challenges for us in Astellas. We have great corporate cultures with traits like diligence and kindness. People also want to achieve something big. However, we are not very skilled at prioritizing.In my opinion, if we want to start one thing new, we need to cut out three other redundant tasks. Otherwise, we cannot truly achieve something significant. This is our challenge in FY2023 and I believe simplifying and standardizing processes is key to making things smoother.To be creative and drive innovation, it is essential to secure enough time. I made a deep dive into all the details in GES scores and found the “action-taking” score is closely linked to the overall GES score. “Action-taking” here means whether the supervisor will take some action after the survey. If people feel, “Yes, my supervisor takes these survey results seriously, and he or she will take action for us.”, they usually have more positive expectations for the future and respond to this survey positively. On the contrary, if people feel that GES is no more than a survey but a competition and nothing will happen after it, it is very unlikely to see positive changes afterward.My next question goes to Takahiro. The research team also has a high score in GES. Please tell us your thoughts about the changes.Takahiro: The members of our team are highly aware of our goal to contribute to the patients. In the example of ASP3082, we set a highly challenging goal of achieving IND* application within 12 months from the selection of development candidate in order to deliver the drug to patients faster. Despite the complexity of the manufacturing process required for ASP3082, which is more intricate than those of conventional small molecules, the 12-month timeline is an unprecedented speed globally. This goal was beyond what could be achieved with conventional processes. However, we explored innovative strate-gies and took appropriate risks to successfully accomplish the goal.There were many occasions when we experienced unexpected challenges. But we always tried to make various preparations and imagine potential problems while at the same time expecting the best-case scenarios. Of course, some preparations ended up in nothing, but as a team, we agreed upon the priorities and expressed gratitude for one another’s contributions all the time. I believe that we developed a sense of autonomy and accountability as we engaged in tackling unprecedented and challenging goals, resulting in GES scores improvement.I feel what Ricardo said about communication also helps accelerate changes in the team. The foundation of intelligent risk-taking and speeding up was the result of each project researcher recognizing their role in the organization through dialogues with managers, leaders and teammates, allowing everyone to consider the best possible solutions.I think having role models in a team is also incredibly significant. It was highly effective when managers themselves embodied OHG behaviors and other leaders learned from them, then the behaviors spread to the researchers in the field.Roundtable: An Evolving Organizational Culture —The Organizational Health Goals at Work—Special Feature I * IND: Investigational New Drug41Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationKats: Not only did you consider ambitious goals but you also explored approaches to mitigate risks. This is a great demonstration of “hope for the best and prepare for the worst.” I also agree that role models are crucial. The selection and quality of the leaders are vital in any kind of transformation.Lastly, how do you expect Astellas to change in the future through the promotion of OHGs? Please also tell us about what you personally want to focus on in the future. Ricardo: I expect Astellas to keep fostering new ways of working. This is going to be especially important when we consider our market entry models for the new pipelines. We cannot afford to fail in delivering products to our patients so we need to come up with a different mindset and collaborate, with OHGs serving as a significant guide. By focusing on talent development based on OHGs, we will transform to become a more innovative pharmaceutical company. Nahrin: I think we still have some work to do with making decisions with intelligent risk-taking. We have built psychological safety, where the culture truly encourages bringing up your innovative ideas. Now, we need to continue on our journey to take risks and make business decisions wisely. Takahiro: I hope the promotion of OHGs will further integrate into the One Astellas mindset. A company that is filled with employees who perceive the activities of others as their own, possess a consciousness to maximize achievement for the organization and the company, and autonomously take action will deliver more innovative pharmaceuticals to patients.Personally, I want to involve the necessary talents to verify numerous ideas and approach research challenges with the consciousness of achieving them not just as a team, but as Astellas and carry out the One Astellas mindset.Eriko: Allow me to change the perspectives to talk about our Board of Directors (BoD) meetings. Many of you probably don’t know what does BoDs talk about, but we have a lot of discussions related to people and organizations, such as reviewing GES results and succession planning and listening to reports on Leadership Programs. Of course, from the perspective of governance, we do not make decisions regarding specific individuals or activities, but we oversee whether the systems and processes related to OHGs are truly functioning for Astellas because people are the most important part of the organization. It is people in Astellas who communicate, make decisions, and drive innovations. As BoD, we prioritize how you engage and grow.On behalf of the entire BoD, especially the External Directors, I want you to know that we truly support OHGs. I am genuinely happy to learn about the efforts you’re making globally and how serious you are when committing yourself to the goals.Kats: We have already introduced many new initiatives and FY2023 will be the year for full implementation and deep communication. Communication about “why” will be the key. Furthermore, we will continue to simplify processes at work to avoid wasting resources. I believe decision-making and innovation can further accelerate with our efforts. Thank you so much for your participation today. Expectations for Astellas and what we should focus onRoundtable: An Evolving Organizational Culture —The Organizational Health Goals at Work—Special Feature I 42Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationTo achieve our vision, the active engagement of our colleagues is absolutely crucial. Investing in our people is not only vital for Astellas’ future but also for enhancing our current execution capabilities. We will continue to invest in our people, viewing it from both short-term and long-term perspectives.In our Corporate Strategic Plan for 2021 (CSP2021), we introduced new Organizational Health Goals (OHGs) designed to elevate the company’s execution abilities. Astellas’ HR division is fully committed to deliver the ‘Priorities of Astellas HR,’ which we believe will directly contribute to realizing CSP2021 and, ultimately, our overarching vision. We are placing a particular emphasis on high impact initiatives geared toward achieving our OHGs.Overview of People and Organization prioritiesPriorities of Astellas HRCSP2021: Organizational Health GoalsBrave ideas pursue ambitious outcomesWe excel as One AstellasTalent and leadership thrivesPriorities of Astellas HRAstellas HR is a single division overseeing both domestic and overseas operations. At Astellas, we recruit and promote our people globally. We furthermore favor a data-driven approach using all kinds of information including business and organizational data to monitor the progress accurately. We can use the data to generate inside of the individual organization timely.We identified three core HR priorities: (A) organizational culture / mindset transformation, (B) developing global HR policies that support our people and organization, and (C) transforming the organization into an innovation engine. We believe that these priorities are supported by (D) monitoring the progress through reliable and data-driven approach.Organizational Health Goals 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• 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 divisionsThe Organizational Health Goals (OHGs) are a set of goals established in CSP2021 to improve Astellas’ ability to execute by building a company culture that seeks to realize ambitious goals through driving innovation, advancing our talent and leadership development, and fostering collaboration. The Organizational Health Goals (OHGs) are a set of goals established in CSP2021 to improve Astellas’ ability to execute by building a company culture that seeks to realize ambitious goals through driving innovation, advancing our talent and leadership development, and fostering collaboration.Planning processVISIONCSP2021P.29P.44(A) Organizational culture / mindset transformation(C) Transforming the organization into an innovation engine(B) Developing global HR policies that support our people and organization(D) Monitoring progress through reliable and data-driven approach1. Brave ideas pursue ambitious outcomesAggressively take on challenges for innovation and ambitious outcomes2. Talent and leadership thrivesEnvironment in which excellent people have ownership and demonstrate leadership3. We excel as One AstellasCollaborate across divisions to achieve shared goals for all AstellasOrganizational Health Goals• 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• 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 employeesInitiatives & ProgressFor details, please see next page123People and Organization for InnovationPeople Strategy43Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value Creation86105766620104252876Priorities of Astellas HR(A) Organizational culture / mindset transformationAstellas encourages employees to grow through intelligent risk-taking and continuous learning, and is focused on ensuring psychological safety and building a feedback culture. With this in mind, in 2022 we introduced a feedback tool globally that allows for feedback between all layers of the Company, not limited to supervisors and their subordinates. So far (as of the end of January 2023), there have been 4,324 submissions of feedback around the world.In addition, Ask Me Anything and Live Stream interactive sessions have been developed to promote two-way communication between Top Management and employees. Ask Me Anything sessions are large-scale fireside chat sessions open to employees from around the world while Live Stream sessions are places for Top Management to openly share their experiences on a specific theme. These shared experiences are not only about moving tales and success stories, but also included sharing failures, regrets and the lessons learned. The Live Stream sessions have been well received by employees, with the first attracting approximately 7,000 employees globally, and the second around 6,500.(B) Developing global HR policies that support our people and organization(1) Building up a diverse workforce through the deployment of succession plans globally in a consistent approachAt Astellas, we focus on the creation of succession plans for important positions. As of the end of September 2022, non-Japanese employees account for 57% of the 178 positions above executive director. Out of the 522 employees selected as successful candidates, 43% were non-Japanese and 36% were female, making for a diverse talent pool in our succession planning. At the level above senior director, non-Japanese employees account for 68% of the 238 positions, while for 38% of the 551 successor candidates, we are securing non-Jap-anese employees and 42% of female employees.In this way, even for above senior director positions, Astellas is already selecting talents regardless of nation-ality and gender. Based on the philosophy of ensuring the right person in the right position, we will continue to select the best people from around the world as successors.(2) Integration into global HR policiesIn line with the globalization of our business, we are transitioning to a global organization divided by function while also promoting the integration and harmonization of HR systems. We revised our objective setting and evaluation processes. We are aiming to enhance our performance as One Astellas by setting cross-functional objectives at the divisional level and promoting ambitious objective-setting and launching of our feedback tool at the individual level. With regard to our rewards and recognition systems, we changed the calculation factor for bonus payments to be based on company-wide performance rather than divisional performance. We also harmonized our job grading system to ensure consistency in grading regardless of where employees work or which division they belong to. We believe these HR measures have strengthened our competitiveness in recruiting talent globally.Number of hiresPositions above Executive Director: 178NationalityNon-Japanese: 57%Japanese: 39%Vacant: 4%Positions above Senior Director: 238NationalityNon-Japanese: 68%Japanese: 26%Vacant: 6%Number of successors: 522NationalityNon-Japanese: 43%Japanese: 57%GenderFemale: 36%Male: 64%Objective setting / Evaluation systemDivision• Cross-functional ambitious shared objectivesIndividual• Ambitious objective setting• Launch feedback toolRewards / Recognition• Change of the calculation factor of bonus payment amount from “divisional performance” to “company-wide performance”• Launch recognition programIntegrated job grading system• Operation of a globally integrated grading system• Simplification of grade classificationNumber of successors: 551NationalityNon-Japanese: 38%Japanese: 62%GenderFemale: 42%Male: 58%(3) Recruitment of PhD talentNumbers globally:1,281 (as of end-March 2023)*1 Based on data self-reported by employees.*2 Includes directors.Globally, Astellas applies a job-based approach to recruiting PhD talent.To this end, we have been proactive in approaching doctoral degree students in areas that rarely lead to employment in industry, also recruiting individuals based on referrals from PhD talent within the Company and recruiting year-round to increase opportunities for interacting with job seekers. By head-hunting employees from other pharmaceutical companies overseas and hiring PhD talent from the academic sector both domesti-cally and internationally, we are greatly enhancing our competitiveness within the industry.FY2017FY2019FY2021FY2018FY2020FY2022People and Organization for Innovation Internal hires Mid-career hires (Persons)In pursuit of greater mobility among the individuals we recruit and develop, Astellas utilizes all available recruit-ment channels, including those outside the Company, to ensure that we hire the right people. In recent years, the percentage of employees with professional skills has been rising—in short, the weighting of mid-career recruits is increasing. By FY2022, the number of mid-career hires had grown to 105, and the number of internal hires to 104, contributing to greater job mobility.(4) Promoting talent mobility through internal Job Posting systemPeople Strategy44Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value Creation(2) Correlation between remote working and employee engagementWe surveyed the entire workforce to investigate the relation-ship between remote working and engagement scores*2. Employees predominantly working remotely recorded high scores, based on which we plan to continue offering fully remote employment worldwide.*2 Scores assigned according to workplace attendance, with those attending once every quarter or less earning the highest scores.Frequency of workplace attendanceEngagement scoreOnce every quarter or less75Once a month70Once a week70Two or three times a week71Four or five times a week70Concept of HR organizational reformsIn order to achieve the goals set in CSP2021, we are encouraging employees to take up new work styles as a means of further accelerating innovation. By having a single worldwide HR division, we seek to find a smarter and simpler approach to ensuring that the right person in the right position, nurturing talent more effectively and enhancing the Company’s ability to execute.In that context, from April 2023 through April 2024 Astellas’ HR division is progressively introducing “HR People Partners” in each region. These HR People Partners assist employees and managers in resolving HR issues and provide other services including execution of HR processes and organizational change. In this manner, HR Business Partners provide each division with support focused on the development and execution of people and organizational strategy in each division.HR Transformation Lead / Excellence & Capability EnhancementOperationsCustomersCenters of ExcellencePeople PartnersBusiness PartnersTo Be: Organization with SPOC≧66661(C) Transforming the organization into an innovation engineOrganizational flatteningAstellas is promoting the organizational flattening to build an environment that encourages innovation. To promote fast decision-making, we believe it essential to reduce the number of layers in the organization. In principle, we aim to reduce the number of layers from the CEO to be six or less. Furthermore, the SPOC*1 should be six or more in principle.The percentage of departments separated from the CEO by six or fewer layers increased from 53% in April 2022 to 77.1% by July 2023, such that the average SPOC for all departments rose from 5.2 people in April 2022 to 6.02 people by July 2023. By March 2024, we expect these figures to rise still further to 92% and 6.4 people, respectively.*1 SPOC (span of control): the number people reporting to a single manager.(D) Monitoring progress through reliable and data-driven approach(1) Visualizing and sharing data using HR Leadership DashboardAstellas aims to promote organizational optimization and foster a sense of ownership through the visualization and sharing of data. As one such initiative, we released the HR Leadership Dashboard. This tool enables us to visualize various organizational data including personnel composition, the status of hiring and termination, SPOC, team sizes, and so forth. By looking at the organization from multiple angles, it is possible to identify issues that may be overlooked when focusing on individual data points, facilitating a strategic approach to business premised on the entire picture.People and Organization for InnovationPeople StrategyTOPICS45Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value Creation(3) Global Engagement Survey75% of answers to questions showed improvement*1*2 Partial excerpt of survey questions.*3 Scores have improved relative to FY2022, but we see scope for further improvement.*1 Compared to the previous survey (Jan 2022)Analysis of results from FY2022 surveyOnce a year, Astellas conducts a global survey with a view to measuring employee engagement and identi-fying organizational issues as well as opportunities for improvement. Through this survey, we can visualize scores for each item, individually assess progress toward each OHG, and perform trend analysis of comments with AI, enabling us to identify both organizational strengths and opportunities to improve.In the survey carried out in October 2022, 82% of all employees responded and 75% of answers to questions showed improvement over the previous fiscal year. While continuing to focus on the top three items which we regard as our strengths, we see the bottom three items as providing opportunities for improvement and to that end we are taking steps to create a better workplace environment and increase engagement levels. By monitoring the results of these initiatives through the next survey, we will continue to follow the Plan-Do-Check-Act (PDCA) cycle.Examples of Global Engagement Survey items and responses*2ItemQuestionChange from Jan 2022Non-discriminationI work in an environment that is free from harassment and discrimination.+1Contribution to successI understand how my work contributes to Astellas’ success.+1IntegrityPeople at Astellas behave with integrity at work.+1White spaceWe have the resources (e.g., time, tools, expertise) needed to explore new ideas.0Action takingI believe meaningful action will be taken as a result of this survey.–2Pay for performanceThe better my performance, the more I will be rewarded.+1*3Engagement score71Number of comments25,865Response rate82%Over 61% of employees provided more than one commentInitiatives already implemented in FY2022Initiatives planned in FY2023White space• Held Leaders’ Summit where we assigned an order of priority to tasks and identified opportunities either to halt activities or pursue efficiency gains• Conducted two “Global Dansharism” campaigns promoting elimination of low-priority work• Have Transformation Office identify, manage, and carry out key reform projects geared toward ensuring white space• Look at Dansharism training to create more white spaceAnd so forthAction taking• Shared results of engagement survey with all employees• Held management-level workshops in each area to enhance action-planning skills, recognizing importance of “Action taking”• Convey that importance to employees, stressing relationship between engagement survey feedback and company actions, encouraging employees to take actions• Have all team managers go over survey results with team members, with the goal of settling on one action itemAnd so forthPay for Performance• Held quarterly forums for leaders, managers, and employees, to provide training on feedback methods• Approved FY2023 revisions to compensation processes• Cross-regional harmonization of reward and recognition systems• Global introduction of recognition systemAnd so forthSeparate analysis of engagement scoresWe use results from the Global Engagement Survey to analyze progress toward each Organizational Health Goal, but also perform various separate analyses. For example, in analyzing responses by layer, we found that managers scored higher on engagement than employees at lower levels. Also, from our analysis of white space we learned that directors feel the most pressure in this regard. By performing these separate analyses, we can narrow our focus when addressing opportunities for improvement.By nationalityBy employment typeBy employment levelBy individual performance By tenureOur strengthsOur opportunitiesWhite spaceAction takingPay for performanceResource needed to explore new ideasImplement measures to address issues identified from the survey resultsCompensation based on resultsNon- discriminationPurposeIntegrityA culture that recognizes, comple-ments, and makes the most of each other's differencesAct with a consis-tent sense of purposeAlways honest choices and decisionsImprovement initiatives already completed and those yet to comeAt Astellas, we are using the results of this survey to devise concrete measures for addressing areas deemed in need of improvement. On the subject of white space, for example, “inefficient processes and tools,” “lack of experience,” “lack of resources,” and “lack of time” were among the root causes identified in comments. Based on these results, we see opportunities for improving white space in instances where there is no flexibility in terms of budget or headcounts, by specifying an order of priority and allocating resources (e.g., staff, funding, time) accordingly.As one specific initiative in this regard, we held a Leaders’ Summit in FY2022 where we assigned an order of priority to tasks and identified work that appeared to be wasting precious resources. Furthermore, in FY2023 we have fully embraced digital transformation in project management, with a view to securing more time for employees by supporting decision-making and execution.People and Organization for InnovationPeople Strategy46Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationAstellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data People Strategy Engagement, Diversity, Equity and Inclusion To become a life science innovator, diversity, equity and inclusion must be leveraged to unlock employee engagement, drive innovation, and improve patient outcomes. Our EDEI vision will be realized when our people, leaders and suppliers reflect the rich diversity of our patients; our people feel a high sense of inclusion, experience employment equity and collectively drive innovation; and our patients experience favorable and equitable health outcomes. Composition ratio of employees by region Foreign nationality ratio of Division Heads Mid-career hiring rate (Japan) Percentage of female managers JAPAN 34% United States 25% Established Markets 23% International Markets 10% Greater China 8% Foreign nationality 53% Japanese nationality 47% Mid-career hiring 55% New graduates hiring 45% Inside: Japan 18% Outside: Global 43% Female managers Our Strategy Data Insights EDEI Plans • Leverage data to deeply understand the employee, patient and supplier experience through an EDEI lens • Monitor progress, conduct self-assessment and benchmark against best-in-class organizations to improve upon opportunities and celebrate successes • Create custom EDEI plans and partner with divisions on execution • Consult with divisions to develop tailored EDEI plans and partner on implementation People Experience • Seek to better represent and bring the perspectives of the patients and communities we serve among Astellas leaders and employees as a whole • Brand Astellas as an Employer of Choice for diverse talent • Ensure equity across the employee lifecycle Culture Structure • Build global cultural competence and empathy across all levels of the organization • Value diversity in all its forms to instill psychological safety, belonging, and empowerment that unlocks the full potential of people to innovate and succeed • Launch Global EDEI Governance Council and Divisional EDEI Councils to foster decision-making, collaboration and accountability • Globalize and expand Employee Impact Groups (EIGs) to fully represent and include all underrepresented groups Our Mission and Goals Progress in FY2022 ENGAGEMENT All people are highly engaged; Goal: Parity in high employee engagement across all identities • Overall engagement score - 71; High response rate - 82%; High volume of qualitative data ~ 22K comments • Expanded voluntary self-disclosure demographics to include gender identity and sexual orientation DIVERSITY EQUITY Our people, leaders and suppliers reflect our diverse patients; Goal: Our employees, leaders, and suppliers reflect our patients and communities • Had C-suite level visible championship of diversity during Hispanic and LGBTQ+ Employee Impact Groups sessions • Netted positive year-over-year growth in global female representation at the Senior/Executive Director + levels All people experience equity in health and work; Goal: Everyone experiences equity across the employee and patient lifecycles, have equitable access to our portfolio, and achieve equitable health outcomes • Ensured equal pay for equal work based on gender and US race/ethnicity • Increased female representation in VP succession planning; The % of overall female Senior/Executive Directors matches the % of female Senior/Executive Directors on succession plans INCLUSION All people experience inclusion; Goal: Parity in high reporting of psychological safety, belonging, and empowerment • Created EIG Globalization Strategy to streamline process to join and/or propose a new EIG • EIGs and Functions held various forums and programs to instill a sense of community and education about diversity 47 Creating leading medicines that benefit patients requires ambition to be best-in-class and agility to adapt to new technologies and ways of workingChief Commercial Officer (CCO)Claus ZielerCreating leading medicines in both new and existing therapeutic areas and effectively communicating the benefits of our treatments are the major goals for the customer-facing organizations in Astellas.We have fantastic innovative assets to launch over the next few years. That is very exciting, but creating leading medicines also takes the concerted effort of the whole organization, to shape the scientific understanding of our customers on how new products change existing treatment paradigms and how they help patients lead a longer or a better life. Each of our launches is an opportunity to create leading medicines in the various therapeutic areas. Beyond the launches, we also have in-market assets that deserve our full attention. Our flagship product XTANDI is still growing wonderfully after ten years on the market. We just had a dataset (EMBARK study) published and we will communicate this new dataset to payers, prescribers, and key external experts after regulatory approval of the anticipated M0 CSPC indication for XTANDI to ensure that the drug is used in the best possible way to treat prostate cancer. With XTANDI and our other in-market products, we will continue to focus on expanding the number of patients that can benefit from these treatments. One challenge is that we will continue to enter new therapeutic areas, such as gastric cancer and ophthalmology, and gene therapy further down the line. Our Primary Focus model sources innovation where the technology takes us. So, for the customer-facing Com-mercial and Medical Affairs organizations, the challenge is that each new technology may require us to learn about a new target group of customers, about how the market in the new therapeutic area works, and about competitive treatments.Shaping a culture that aims to be best-in-class and adapting to new technologies and therapeutic areas are the main challenges for the customer-facing organizations in Astellas.The most important element of my vision is to shape the culture of the Commercial organi-zation worldwide to aim to be best-in-class in everything we do. This links to the ambitious Organizational Health Goals set out in CSP2021, which calls upon us to reward people appropriately for reaching stretch goals. It starts with the will to win, with the inner ambi-tion in the organization not to accept being second - after all, creating leading medicines means being the number one in the market. From a strategic point of view, we kicked off a Growth Strategy to review where the biggest opportunities are and where we can best use our resources. We are asking: Which brand in which market offers more growth opportunity, and are we resourcing it correctly? Attached to that is the question of the collaboration between both the Medical Affairs and Commercial organizations and the global and local organizations: are we all aligned to achieve the maximum impact on our customers? The Commercial organization I inherited has successfully built globalized functions for omnichannel marketing, training, certain kinds of event management, and, of course, brand management. Where I think we can improve is in terms of how these global elements deliver to the different geographies and how this process becomes best-in-class. For instance, we can shorten the timelines for the review of materials or increase the percentage of global materials suited for local usage. We also have to look at new technologies. This is something the industry as a whole is struggling with in a post-COVID world. To become the leading company in this space, we will have to understand, absorb, and master the deployment of technologies like AI algorithms that make predictions about future resource deployment. I think of the customer-facing Commercial and Medical Affairs organizations not as something static, where the only thing that changes are the products that we launch. Rather, I see them as living organisms that on the one hand have to learn and adapt to new therapeutic areas when we launch new products, and on the other hand have to learn and adapt to new ways of engaging the customer and to building the technology that helps us with that.Tell us about your goals as the new CCO and the challenges involved in achieving them.What is your vision for the Commercial organization and how are you thinking about organizational reform?QQCommercial StrategyInterview with Chief Commercial Officer48Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value Creation019921994199619982000200220042006200820102012201420162018202220205,00010,00015,00020,00025,00030,000VEOZAH: New nonhormonal treatment option for VMS due to menopauseBackground infoVasomotor symptoms (VMS), characterized by hot flashes and/or night sweats, are the most common symptoms of menopause for which women seek treatment.*1, *2, *3 They occur in up to 80% of women aged 40 to 65*4, *5, *6 and persist for a median of 7.4 years.*7 Today in the US, there are over 30 million postmenopausal women exist*8 , with 11 million experiencing moderate to severe VMS. However, many cannot or choose not to take hormone therapy. As a result, there has been a steady decline in its use. In the US alone, the total of hormone therapy patients from 2000 to 2022 has declined by 86%, which is approximately 25 million patients to less than 4 million. Our robust market research also showed us that more than 60% of women experiencing VMS (in the US) will not take hormone therapy for personal or medical reasons. Despite that, many are seeking treatment. During the COVID pandemic, all three SKYLIGHT studies (Phase 3) recruited faster than ever – faster than any of Astellas’ other studies – and maintained high rates of patient retention across all studies. This was a remarkable accomplishment and suggested that women want treatment and there is an existing unmet need for safe and effective nonhormonal treatment options—and the profound reaction we saw externally to the US FDA approval of VEOZAH reinforced the enthusiasm and readiness for our first-in-class therapy. Patients will not take hormone therapy for personal or medical reasons>60%Patients with moderate to severe VMS due to menopause are willing to use and/or ask physician~50%Physicians likely to prescribe~40%US Estimated HT Patients (000s)*1 Utian WH. Psychosocial and socioeconomic burden of vasomotor symptoms in menopause: a comprehensive review. Health Qual Life Outcomes. 2005;3:47.*2 Jones RE, Lopez KH, eds. Human Reproductive Biology. 4th ed. Waltham, MA: Elsevier, 2014:120.*3 Williams RE, Kalilani L, DiBenedetti DB, Zhou X, Fehnel SE, Clark RV. Healthcare seeking and treatment for menopausal symp-toms in the United States. Maturitas. 2007;58:348-58.*4 Freeman EW, Sammel MD, Sanders RJ. Risk of long-term hot flashes after natural menopause: evidence from the Penn Ovarian Aging Study cohort. Menopause. 2014;21:924-032.*5 Williams RE, Kalilani L, DiBenedetti DB, Zhou X, Granger AL, Fehnel SE, et al. Frequency and severity of vasomotor symptoms among peri- and postmenopausal women in the United States. Climacteric. 2008;11:32-43.*6 Whiteley J, Wagner JS, Bushmakin A, Kopenhafer L, Dibonaventura M, Racketa J. Impact of the severity of vasomotor symptoms on health status, resource use, and productivity. Menopause. 2013;20:518-524.*7 Avis NE, Crawford SL, Greendale G, et al. Duration of menopausal vasomotor symptoms over the menopause transition. JAMA Intern Med. 2015;175(4):531-9.*8 Kantar Health. Menopause Literature Review. 2017.*9 Source: IQVIA NPA Market Definition: HRT – ATC3 G03C Estrogen (Oral), G03F Estrogen Progestogens Combination (Oral) ; Premarin Family – Premarin, Prempro Patient estimate = Total Days of Therapy/182 daysSpecial Feature II 86%Total HT Patients 2002-202298%Premarin Family Patients2002-202249Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationApprovalOutlookVEOZAH is the first nonhormonal neurokinin 3 (NK3) receptor antagonist approved to treat moderate to severe VMS due to menopause in the US*7 VEOZAH uses a novel mechanism of action (MOA) to target the root cause of VMS, helping restore balance in the brain’s temperature control center and reduce the frequency and intensity of hot flashes. Since approval, the media coverage has been extraordinary and includes every major top-tier media outlet in the US, including on America’s most watched national morning show and every national broadcast network, which drove significant reporting in local markets and conversations online. Numerous media have said VEOZAH could be a “game-changer” for women, highlighted the unique MOA, and heralded this approval as “great news for women.” More importantly, external experts have expressed their excitement for “this new class of drug” noting “we need better nonhormonal therapies for those women who cannot or who choose not to take hormone therapy.” To quote a Contemporary OB/GYN article, “A new drug is here to make waves in the menopause symptom treatment landscape.”Through our extensive market research, we have identified roughly 2 million women and 97,000 healthcare professionals (HCPs) as potential early adopters. These women are extremely bothered by VMS and tend to talk openly about menopause and their experiences with family, friends and HCPs. In fact, many want to reframe how menopause is viewed and remove the stigmas. They are also actively involved in their healthcare and motivated to have informed discussions with providers. While we don't expect to reach 2 million in the first year or at peak, it indicates the size of our target audience. With regard to HCPs, VEOZAH will be primarily prescribed by obstetrician-gynecologists (Ob-Gyns), Primary Care Physicians and General Practitioners. These early adopting HCPs are knowledgeable about data, treat-ments and women’s health in order to help their patients find solutions; they are also willing to try new women’s health products. To maximize the value of VEOZAH and drive market share, we are combining our proven commercial expertise with fresh, innovative strategies and tactics to build and grow an iconic brand. We’ve successfully launched products with novel MOAs, established market leadership with therapies predominately prescribed by Ob-Gyns, and created strong relationships in the women’s health space. Within the US, we have had focused direct-to-consumer (DTC) efforts since the launch of VESIcare in 2004 and Myrbetriq (mirabegron) in 2012. And there are many similarities between these models and VEOZAH – specifically, the need for provider and patient education is strong and stigmas associated with the conditions are high. As the landscape evolves, our commercialization strategies stay at the forefront of pharmaceutical marketing, exploring new channels. We have an extremely experienced, knowledgeable and agile sales force with proven market leadership and capabilities in place to support this launch. 1,300+News Stories90+Ex-US News Stories1,600+Social Media PostsSuccessfully launching products with novel MOAsCreating strong relationships in the women’s health spaceExperienced, knowledgeable and agile sales forceVEOZAH: New nonhormonal treatment option for VMS due to menopauseSpecial Feature II 50Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationI’ve learned throughout my years in clinical practice that every patient’s experience during the menopause transition is unique. Some patients report mild symptoms, while what others experience is severe. Yet one thing my patients have in common are beliefs such as “I should accept it as normal” and “there is nothing I can do,” especially when experiencing hot flashes and night sweats, also known as VMS. VMS due to menopause are the most commonly reported symptoms, and can disrupt quality of life and daily activities, including sleep and workplace performance, but treatment options have been limited. Hormone therapy is effective; however, I have patients who are reluctant about taking it, and others simply cannot due to contraindications. And unfortunately, because other nonhormonal therapies are often less effective and not well tolerated, my patients often feel helpless – and I feel limited in the options I offer. Healthcare is about more than making the accurate diagnosis and prescribing medica-tion. It’s important to take a holistic approach to patient care, and education is critical. Some of my patients are embarrassed or hesitant to talk about their symptoms due to stigma and shame associated with menopause. This is why encouraging open and honest discussions is crucial to improving menopause care. I’m delighted Astellas is working to elevate the conversation around women’s health in midlife, and to provide resources and solutions that demonstrate our commitment to women’s changing healthcare needs during this natural life stage. I’m encouraged by the increase in research and surge in technology offerings, as well as how menopause discussions are becoming mainstream. I’m optimistic these efforts will inspire more women to speak with their providers about symptoms and treatments. With VEOZAH, we have a tremendous opportunity to help many of those suffering from moderate to severe VMS in the US, and hopefully in other countries soon. I’m extremely proud to be part of the organiza-tion and team that pioneered a first-in-class treatment for a condi-tion that’s lacked innovative therapies for too long. As a physi-cian, I’m excited to offer my eligible patients a new approach that may provide meaningful relief. Shayna Mancuso, D.O. (Doctor of Osteopathic Medicine), FACOG (Fellow of the American Congress of Obstetricians and Gynecologists), Medical Director Specialty, U.S. Medical Affairs To help drive brand awareness, we have invested heavily in a robust, integrated and analytics-driven multichannel launch campaign. Our aim is to deliver the right messages, to the right individuals, through the right channels, at the right time, with the goal of creating a consistent, engaging and trusted brand experience. We created dynamic content and are utilizing print materials, videos, broad-based media, digital tools and various advertising platforms, including TV, as well as congresses, speaking engagements and credible external voices. Our brand awareness activities will be closely evaluated to maximize our invest-ments and achieve our goals. This ongoing assessment will allow us the flexibility to adjust and scale our campaigns, as needed to help ensure we are meeting our forecasts. We want to redefine how VMS is targeted and ensure individuals understand the innovative aspects of VEOZAH: It is a first-in-class therapy with a novel MOA to target the root cause of VMS. It is not a hormone and does not behave like estrogen. We are confident in our ability to make VEOZAH an important therapeutic option for women with moderate to severe VMS. This confidence translates into what we think will be a significant growth driver for Astellas over several years, thus helping us achieve our CSP2021.VEOZAH: New nonhormonal treatment option for VMS due to menopauseSpecial Feature II Voice51Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationAstellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Commercial Strategy Main Product Sales Potential peak sales of XTANDI and Strategic products Key events expected in FY2023 For XTANDI, potential peak sales have been revised upward to more than 700 billion yen, incorporating the recent sales trends, M0 CSPC submission plan in Europe and FX rate trend. For VEOZAH, PADCEV, XOSPATA, and zolbetuximab, the range of potential peak sales remains unchanged from the Corporate Strategic Plan 2021 (CSP2021) announced in May 2021. In particular, VEOZAH and PADCEV are expected to be strong growth drivers during the CSP2021 period. On the other hand, the potential peak sales for EVRENZO have been revised downward to under 50 billion yen based on recent sales trends. For XTANDI, regulatory application for the additional indication of non-metastatic castra- tion-sensitive prostate cancer (M0 CSPC) was approved in the US in August and is expected to be filed in Europe in the latter half of FY2023. For PADCEV, topline results from the EV-302 study are expected between September and November. If the results are obtained on schedule and the data are positive, regulatory submission globally is expected in Q4. For zolbetuximab, regulatory applications for gastric and gastroesophageal junction cancer were submitted in Japan and the US in May, and in Europe and China in June. For VEOZAH, regulatory approval was obtained in the US in May, and the regulatory decision is expected for Europe between November and January next year. Product Potential Peak Sales*1 (Global, billion yen) Key Events in FY2023*3 Q1 (Apr-Jun) Q2 (Jul-Sep) Q3 (Oct-Dec) Q4 (Jan-Mar) Accepted (M0 CSPC; US) Filing (M0 CSPC; Europe) XTANDI (enzalutamide) 700 or more VEOZAH (fezolinetant) PADCEV (enfortumab vedotin)*2 XOSPATA (gilteritinib) zolbetuximab 300 - 500 300 - 400 100 - 200 100 - 200 Forecast of main products Regulatory decision (US) Regulatory decision (Europe) Filing (M1 CSPC; China) Regulatory decision Regulatory submission Data readout Accepted (Japan, US, Europe, China) EV-302 TLR Filing (1L mUC; global) *1 Only indications undergoing pivotal studies are included for projection. (as of April 2023) *2 Sales for Americas are calculated based on the sales booked by Seagen. *3 As of August 31, 2023. (billion yen) FY2022 Act FY2023 FCST XTANDI 661.1 669.9 PADCEV 44.4 66.7 XOSPATA 46.6 VEOZAH - 49.3 49.3 YoY +8.8 (+1%) +22.3 (+50%) +2.7 (+6%) - XTANDI In the US, the approval for the additional indication of non-metastatic castration-sensitive pros- tate cancer (M0 CSPC) is expected within FY2023. Although the sales contribution in this fiscal year will be limited, promotional activities will be more active after the approval, which is ex- pected to have a positive synergy effect on the existing indications. PADCEV In the US, the additional indication for first-line treatment was approved in April and is expected to be a growth driver going forward. In addition, PADCEV is recommended as first-line treatment for metastatic urothelial cancer in the NCCN guidelines, which many physicians refer to when making prescription decisions. In China, reimbursement for the additional indication of non-metastatic castration-resis- tant prostate cancer (M0 CRPC) started in March 2023, which is expected to contribute to sales. On the other hand, sales growth in Europe is expected to be moderate due to the in- In Europe, further growth is expected by obtaining reimbursement in major markets such as Germany, France, Italy, and Spain. In Japan, continued growth is expected through fur- ther market penetration with the current indication. creasingly competitive environment and the negative impact from pricing pressure. XOSPATA In large markets such as the US and Europe, continued growth is expected through market pen- etration of FLT3 testing in the market. In the International Markets, sales expansion is expected from the increase of launched countries and reimbursement start. 52 VEOZAH Regulatory approval was obtained in the US in May 2023. There is confidence in the market re- search carefully conducted to date, and from the market research results, that a high unmet medical need for treatment of VMS and a strong demand for effective non-hormonal therapies were recognized. Based on this confidence, rapid market penetration is expected. To achieve rapid penetration and to ensure the opportunity for sales expansion, VEOZAH is set to be the highest priority for this fiscal year and will continue proactive investment. More detail for VEOZAH is on the special feature page PP. 49-51. Under our Focus Area approach, Astellas continues to embrace the challenge of creating innovative new drugs. To further advance this, we aim to accelerate achievement of PoC through our new R&D operating model.Prior to joining Astellas, I was trained as a surgical oncologist, and then have been working in major global pharmaceutical companies for more than 22 years. I was struck by Astellas’ unique R&D strategy and transformation of its pipeline. In the past 10 years, Astellas has rapidly expanded its target disease horizons to include cancer and rare diseases, etc. For example, under our Focus Area approach, Astellas has undertaken a dramatic shift toward working with multiple modalities, including gene therapy, cell therapy, and protein degraders alongside small molecules and antibody drugs.To accelerate new drug development through the Focus Area approach, I believe we must thoroughly choose right modalities to focus on, develop greater scientific expertise, and leverage with new ideas by strengthening our external networks. In April 2023, we radically transformed our R&D organization. The primary objective of our “new R&D operating model” is to speed up development projects and accelerate PoC* achievement. By empowering each Primary Focus (PF) and Asset team and shifting the initiatives of activities from the function axis to the project axis, we have enabled agile decision-making. Also, while Astellas has an abundance of knowledgeable and experienced individuals with an even higher degree of specialization are required to tackle these new areas. To that end, we have created multiple functions and organizations focused on specialized fields.I also see scope for Astellas to engage more in product life-cycle management. I think it is possible to further enhance product value by identifying unmet medical needs from an early Members have started to set shared goals under our new organization, facilitating collaboration within teams. Now, we seek to strengthen early-stage development capabilities and step-up recruitment and training of global talent.The biggest change I have seen so far is that the delegation to PF Leads of decisions on strategy, budgeting, and order of priority has made them have a clear and positive awareness of their responsi-bilities within that PF more than before. Also, by clarifying the scope of responsibility for every single member of each project team, we have ensured that all members of each Asset team have shared key project objectives that transcend functional boundaries within the organization.Organizational transformation also demands that employees shift their mindset toward conducting business globally. As an organization from a business perspective, Astellas is focused on maximizing pipeline value to achieve the goals set in Corporate Strategic Plan 2021. We have identi-fied four critical elements such as new single R&D governance, appropriate team structures, supporting functions, and talents. My personal mission is to make progress on organizational trans-formation by thoroughly communicating the importance of these critical elements to oorganizations.There are still two remaining challenges to address. The first one is strengthening our early-stage development capabilities. This in turn involves speeding up new drug development by enhancing our scientific expertise in new disease areas and updating development strategies even looking beyond the post-PoC stage. The second challenge is to develop and recruit global talents and expertise. Our objective is to become a truly global organization by accelerating talent develop-ment and hiring external talents not only in Japan and the US, but also in Europe, Asia, and other regions. Building up our scientific presence globally is essential to attract talented individuals around the world to aspire to, as well as continue to, work for Astellas. We continue to address these challenges ahead, to maximize pipeline value and deliver innovative new medicines to patients.QQTell us of the response elicited by the current initiatives and describe the challenges to be tackled next.stage and formulating development strategies that widen target diseases and indications for use in combination with other medications. Increasing investment at the early stages of develop-ment can be a risky business proposition due to insufficient data. At Astellas, though, we make decisions by taking intelligent risks based on consideration of patient needs, scientific validity, and preclinical data and so on.* PoC: Proof of concept (key clinical data supporting a decision to initiate late-stage development)Can you describe your impressions of Astellas upon joining, and detail the aims of the organizational reforms?Under our new organization structure, we work as One Astellas to accelerate development toward the shared goal of maximizing pipeline value.Tadaaki Taniguchi, M.D., Ph.D.Chief Medical Officer (CMO)R&D StrategyInterview with Chief Medical Officer53Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationAstellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data R&D Strategy Areas of Interest Focus Area Approach Focus Area approach is designed to identify drug discovery opportunities flexibly and efficiently by combining innovative biologies Biology and modalities/technologies to address diseases with high unmet medical needs. Primary Focus is a specific focal point within our Focus Area approach where 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 Modality/ Technology Versatile technology Pathophysiology- characterized Disease Disease with high unmet medical needs Primary Focus Genetic Regulation The mission is to discover, develop and deliver meaningful gene-based therapies. Our mission for Primary Focus Genetic Regulation is to discover, develop and deliver transformative gene- based therapies for patients with genetic diseases. Genetic deficiencies cause almost 7,000 different diseases and contribute also to the pathophysiology of many common conditions. By targeting disease at the genetic level, we have the potential to develop life-changing therapies for patients who currently have limited or no effective treatment options. One of our programs in development is AT132, a gene therapy for X-linked myotubular myopathy (XLMTM) that is now in Phase II stage. In 2021, the FDA* placed a clinical hold on the trial after serious adverse events. identification of leads and follow-on programs, we are currently working on five Primary Focuses: We are working hard towards resumption of this clinical trial. Another gene therapy program, AT845, is in a Blindness & Regeneration, Mitochondria, Genetic Regulation, Immuno- Oncology, and Targeted Protein Degradation. We also identify the combination of biologies, modalities/technologies, and diseases that may become Primary Focuses in the future. Phase I stage for the treatment of Pompe disease.. We also have multiple programs at the research stage. We are collaborating with world-renowned academic and industry partners to overcome the complex challenges of gene therapy research and development. * FDA: U.S. Food and Drug Administration Primary Focus Immuno-Oncology Primary Focus Candidate Immune Homeostasis Genetic Regulation Immuno- Oncology Blindness & Regeneration Mitochondria Targeted Protein Degradation Exploratory Research Targeted Therapeutics for Auditory Regeneration Autophagy Bispecific Immune Cell Engager Engineered Phage Therapy Specific Treg Direct Reprogramming (Transdifferentiation) Innate Immunity Cell Therapy The mission is to discover, develop and deliver the best innovative cancer medicines to patients and ultimately cure cancer. In our Primary Focus Immuno-Oncology, our mission is to provide cancer patients with innovative medicines that potentially could cure them. Only about 20% of cancers respond to existing immuno-oncology treat- ments. Our goal is to turn that 20% into 100% by activating and enhancing the immune system in new and multiple ways, thereby reinvigorating its ability to discover, disarm and destroy more cancers in more patients. Currently, we have four immuno-oncology programs in Phase I clinical trials: a DGKζ inhibitor ASP1570, and three bispecific immune cell engagers (ASP2138, ASP2074, and ASP1002). Other drug candidates in our R&D portfolio include multiple modalities such as oncolytic viruses and cell therapies. Over the years, Astellas has brought together a wealth of expertise and talent, and we are actively partnering with leading-edge biotechnology companies and academia to further enhance these existing capabilities and grow our pipeline of innovative cancer treatments. 54 Astellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data R&D Strategy Areas of Interest Blindness & Regeneration Mitochondria The mission is to free patients from the fear of vision loss, and offer the hope of We are advancing innovative mitochondrial approaches to the treatment of recovery of lost sight. diseases with high unmet medical needs. Our mission for Primary Focus Blindness & Regeneration is to develop and deliver next-generation treatments to Our mission for Primary Focus Mitochondria is to become the global leader in discovering, developing, and restore sight for patients with eye diseases. By taking advantage of next-generation modalities represented by bringing to market mitochondria biology-based medicines that provide tangible VALUE to patients, clinicians, and cell therapy and gene therapy for patients with eye diseases at high risk of blindness, we seek to provide new healthcare systems. Mitochondria are specialized organelles in cells that have their own maternally inherited DNA treatment options to replace, preserve and restore the function of cells critical for vision. (mtDNA). They play essential roles in energy production and in processes such as metabolism and cell signaling. ASP7317, human embryonic stem cell-derived retinal pigment epithelial cells, is our lead program for Mitochondrial dysfunction is associated with diseases of the kidneys, liver, muscles, central nervous system, eyes, geographic atrophy secondary to age-related macular degeneration, and currently is in a Phase Ib clinical trial. and ears. Many of these diseases have significant unmet medical needs, as they have few treatment options. ASP2020, a universal donor cell-derived program, entered the pipeline recently as a new drug candidate at the We are conducting a Phase II clinical trial investigating the selective PPARδ* modulator ASP0367 in primary research stage. We believe universal donor cell technology could be a powerful tool for preventing immune mitochondrial myopathies. Our objective is to enable the delivery of innovative new treatment options for rejection and realizing allogenic cell transplantation. diseases associated with mitochondrial dysfunction, by pursuing development of novel cellular medicines Astellas has been a global leader in the transplantation field, and we continue to engage in R&D with a strong focusing on mitochondrial functions. passion for delivering safer transplantation therapy to more patients. * Peroxisome proliferator-activated receptor delta Targeted Protein Degradation Our aspiration is to deliver disruptive clinical benefit for selected cancer patients by inhibiting pathologic genomic signaling. In our Primary Focus Targeted Protein Degradation, our mission is to use the ability to access undruggable targets, are their permeability (they can pene- innovative modality of protein degrader to access so-called “undruggable” trate the cell membrane and blood-brain barrier), and their high degree of targets and develop novel treatments for cancer and other diseases. specificity to the target. Only about 20% of disease-related proteins have active binding sites suitable Our lead program, ASP3082, is currently in a Phase I clinical trial, and we for inhibition by conventional small molecules. The remaining 80% have have multiple follow-up programs ongoing. shallow binding pockets and their function cannot be controlled sufficiently We will persist with R&D activities utilizing this Targeted Protein Degradation by binding alone. The advantages of protein degraders, in addition to their technology, with a view to bringing innovative clinical benefits to patients. 55 New R&D Operating ModelIn FY2021, we modified our research organization from a function-led and hierarchical structure to an objective- based, agile organization. This transformation already is yielding outcomes including the creation of new Primary Focuses (PFs) and projects. We have since expanded this concept to include clinical development and shifted the main basis of the activities from the function/division axis to the PF/project axis, enabling agile decision-making through team empowerment.We set up a leadership team in each PF which is in charge of strategic planning, budget management, and project oversight and prioritization. We also reformed the organizational structure to reduce the number of layers between each project lead and Chief x Officer (CxO), delegating day-to-day decision-making for each project to the project team.At the corporate level, we established a new governance body called Kachi Committee. Chaired by CxO, the Kachi Committee is responsible for prioritizing/deprioritizing PFs and decision-making focusing on key development milestones. By empowering projects and PFs, we have reduced the need for visiting corporate governance bodies and facilitated agile decision-making on a project-by-project basis. In this manner, we aspire to achieve meaningful PoC as early as possible.TOPICSKachi CommitteePF Leadership Team• PF strategy development & execution• Budget management in place of divisionsEmpower PFs and projects Agile decision makingChaired by CxOsPF LeadProject LeadProject Team• Project strategy development & execution• Day-to-day decisions within projectMedicalTechClin OpeResearchFinance· · ·• Cross-Primary Focus (PF) / cross-project prioritization• Decision making focusing on key development milestones…Function/DivisionPF/ProjectFY2022 Progress in Focus Area ApproachWe advanced the evaluation of multiple projects but were unable to achieve any PoC* in FY2022. On the other hand, two projects (ASP2074 and ASP1002) entered the clinical stage. Like ASP2138, which already had entered the clinical stage, ASP2074 and ASP1002 are bispecific immune cell engagers. In this manner, we continue to generate new follow-up programs via our Focus Area approach.Among projects that already have entered clinical trials, we have succeeded in dosing the first subject in Phase I trials investigating ASP2138, ASP2074, ASP1002, and ASP3082 in cancer patients. We have suspended patient enrolment in a Phase Ib clinical trial of ASP7317 due to a manufac-turing delay, but were able to resume the trial after establishing capabilities enabling supply of cells that meet high quality standards.In addition, seven programs at the research stage advanced to the late phase as new drug candidates, to prepare for clinical trials.* PoC: Proof of concept (key clinical data supporting a decision to initiate late-stage development)Outlook for FY2023 onwardIn FY2023, we expect to restart dosing in the AT845 and ASP7317 clinical trials that were subject to a suspension of patient enrolment. We also anticipate data readouts for the monotherapy dose escalation part of ongoing Phase I trials of ASP1570, ASP2138, and ASP3082, which we expect to lead to PoC judgement in FY2024 or later. We furthermore plan to initiate clinical trials on a total of four programs from Primary Focuses Immuno-Oncology, Genetic Regulation, and Targeted Protein Degradation.Our goal is to build a robust post-PoC portfolio from our Primary Focus pipeline by the end of FY2025. Based on advances made in FY2022 and planned progress in FY2023 onward, we are aiming for PoC judgements on a total of sixteen projects by the end of FY2025. To accelerate PoC judgement for these projects, we deployed a new R&D operating model in April 2023.For details, please see Major Pipeline on PP.96-98Areas of InterestR&D Strategy56Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationTargeted Protein DegradationA protein degrader works by hijacking the body’s natural protein degradation process, the ubiquitin-proteasome systemA protein degrader consists of a protein binder, an E3 ligase binder and a linker connecting the twoProtein degraders catalyze the ubiquitination process. They do not need potent binding affinity to the targeted proteinPROTEIN DEGRADERThe protein degrader brings the target protein and E3 ligase adjacent where a ubiquitin “marked for destruction” tag is added to targeted proteinThe tagged protein is degraded, and the protein degrader is released to repeat the processProtein of interestUbiquitinProteasomeDegradationE3Targeted Protein Degradation as New Primary FocusIn October 2022, we selected Targeted Protein Degradation as a new Primary Focus. We aim to generate novel protein degraders that work by hijacking the body’s natural protein degradation process, the ubiquitin- proteasome system, allowing access to undruggable targets that have proven difficult to address using conventional small molecules. We will proactively invest resources in leveraging our proprietary technology platform to continuously create programs in oncology and also non-oncology fields.New Era of Synthetic DrugsRegulating disease-related proteins is a key approach to develop effective drugs. While many drugs have been produced by chemical synthesis, it was thought that conventional approaches would only be able to target about 20% of disease-related proteins. Conventional synthetic drugs are designed to bind to the pockets of disease-related proteins and control their functions. However, roughly 80% of disease-related proteins do not have deep enough pockets for synthetic drugs to bind to and adequately regulate their functions. These proteins historically have been regarded as “undruggable” targets. At Astellas, though, we have identified Targeted Protein Degradation as a novel approach to addressing undruggable targets and positioned this as a new Primary Focus, making it a priority endeavor. Protein degraders constitute a new modality, utilizing a process naturally occurring in the body to induce protein degradation.A protein degrader consists of a target protein binder, an E3 ligase binder, and a linker connecting the two. A protein degrader promotes polyubiquitination of target proteins by inducing proximity between target proteins and ubiquitin ligases. Polyubiquitin serves as a recognition signal marking proteins for degradation via intracellular proteasomes. Protein degraders do not necessarily require deep binding pockets when inducing proximity between the target protein and ubiquitin ligase, and therefore can be applied to a wider range of target proteins historically undruggable. Also, because protein degraders catalyze the polyubiquitination process rather than binding to the targeted protein and directly inhibiting its functions, they do not need the potent binding affinity required of conventional small molecule drugs. Furthermore, whereas molecular targeted drugs generally regulate the function of proteins, protein degraders selectively degrade the target protein and therefore are expected to demonstrate greater efficacy than conventional synthetic drugs. Protein degraders also retain the advantages of small molecules, including the possibility of systemic (including oral) administration, and potential for applying established methods and expertise to manufac-turing processes and regulatory compliance.We believe this technology can be applied to various targets through substitution of target protein binding sites. Moreover, we think that by modifying E3 ligase binding sites and linkers, we can enhance functions such as degradation efficacy and tissue specificity. We believe that this new modality could become an innovative therapeutic tool, and we aim to continue creating programs that address previously undruggable target proteins, either by substituting the target or further enhancing functions.TOPICSAreas of InterestR&D Strategy57Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationModified Organization StructureFunction-Led/HierarchicalObjective-Based/AgileOn-Site Decision-MakingTimely Investment Decisions by Top Research ExecutivesCultural and Behavioral TransformationAchievement from New Research Organization StructureDrug Discovery Research HeadPharma-cologyChemical synthesisSafety, etc.Unprecedented speed in R&D for lead program ASP3082Our lead program, ASP3082, is a potentially first-in-class KRAS G12D degrader that is progressing through R&D at a speed unprecedented for Astellas. KRAS is a prime example of protein targets previously deemed undruggable, with a key role to play in cell proliferation. KRAS mutations can cause the cellular switch to stay in the ‘on’ position, allowing cells to grow uncontrollably and give rise to tumor growth. Our interest in this area began in the 2010s, when we commenced research aimed at discovering conventional KRAS mutant inhibitors. It proved technically difficult to create compounds that would bind selectively to KRAS mutations such as G12D, but we were able to identify proprietary KRAS mutant binders by leveraging our historical small molecule capabilities. However, these compounds failed to demonstrate sufficient tumor-suppressing effect. Independently from this inhibitor research, we also initiated protein degrader research in the 2010s, building various technologies for drug discovery via this modality. In 2020, we combined these two streams of research and began investigating KRAS G12D degraders. In just the fifth month after commencing this research, we identified ASP3082. Furthermore, we were able to submit an Investigational New Drug (IND) application a mere 12 months after selecting ASP3082 as a new drug candidate.Organizational culture to create innovation from researchers’ ideasWe believe this unprecedented speed of development was made possible by Astellas’ agile research organization. We modified our research organization in 2021, transitioning from a traditional, function-led hierarchical structure to an objective-based, agile organization. Within this organization, we formed a team dedicated to researching targeted protein degraders, assigning researchers with the expertise and leaving decision-making in the hands of the department head with strong leadership. Under our previous research model, implementing an idea could take a long time owing to the multiple steps involved. In our new flat organization, though, researchers can voice original ideas and put forward ambitious plans. In fact, the break-throughs made in the process of creating ASP3082 stemmed from proposals and decisions made on-site in the laboratory, rather than top-down approach. In this manner, leadership encouragement is bringing researchers’ ideas to life and encouraging R&D across the organization, resulting in creation of new drug candidates in record time. This cultural and mindset change has spilled over from research to our manufac-turing and development divisions, quickly establishing a platform for cross-departmental collaboration.Outlook going forwardWe believe that Targeted Protein Degradation is a promising technology that will revolutionize the field of synthetic drugs and usher in a new era. In terms of our strategy, the goal in the first wave is to bring a KRAS-targeted protein degrader to market. In addition to the G12D mutation-targeting ASP3082, we have other programs targeting different KRAS mutations. In the second wave, we seek to utilize both proprietary technologies and novel external technologies to expand our reach to oncology targets other than KRAS and promote the creation of protein degraders harnessing next-generation technology. In the third wave, we aim to expand our horizons further to include targets related to diseases other than cancer—for example, immunological diseases. Since the technology is based on synthetic drugs, we believe we can leverage its accumulated knowledge and experience in this field to its advantage. Moreover, we have many experts in the area of synthetic drugs. We plan to proactively leverage the strengths of our external partners while harnessing the expertise of each researcher through our flexible organizational structure. By doing so, we aim to lead the industry with protein degraders and use this technology to create VALUE for patients.TOPICSAreas of InterestR&D Strategy58Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationInputBusiness ActivityVISIONOutputVALUEOutcomeFinancial capitalManufacturing capitalIntellectual capitalSocial and Relational capitalHuman capitalNatural capitalStrategy: Corporate Strategic Plan 2021Products derived from Focus Area approachTalent and OrganizationPortfolioPrimary FocusProjectCorporateMonitoring achievement of each goal to achieve Corporate Strategic Plan 2021CorporatePortfolio ManagementDev, CommercialCapturing Real Needs that Lead to VALUE through Social ListeningCorporateProviding Information that Contributes to Investment Decisions with Limited DataDevUtilizing RWE to Expand Indications without Clinical TrialsCommercialLeveraging RWD to Model Patient Journeys and Forecast MarketabilityHRInsights into Innovative Organizational Structures through the Use and Analysis of Human Resources DataDevCalculating VALUE based on RWD and Selecting Optimal IndicationsTechDemand Analysis for Stable Supply of ProductsMarketingMarketing Strategies Based on Long-term Sales ForecastsOn the forefront of healthcare change to turn innovative science into VALUE for patientsXTANDI and Priority Strategic ProductsVALUE=Outcomesthat matter to patientsCostto the healthcare system of delivering those outcomes Data-driven Data-driven + SimulationMaximizing VALUE by organically connecting all kinds of data from management decisions to individual projectsAstellas’ approach to DX is much more than simply streamlining operations through digital technology. We are implementing DX to realize our VISION “On the forefront of healthcare change to turn innovative science into VALUE for patients.”Aims of our digital transformation (DX) initiativesIn the pharmaceutical industry, the drug development process usually is a lengthy 10–20 years, entailing huge investment in the range of 10–100 billion yen. The probability of success moreover is extremely low at around one in 10,000 to 30,000, and there is risk in the meantime of scientific advances derailing existing hypotheses, or of significant change in target patient numbers or societal conditions. Pharmaceutical manufacturing accordingly is a business characterized by high levels of uncertainty, requiring extremely difficult decisions about what to invest in and when.Astellas aims to create innovative pharmaceuticals through our Focus Area approach. Inevitably, taking this kind of approach means challenging the areas where conventional experi-ence and knowledge cannot be directly applied, and where predictions are difficult to make based on the data we have in hand. We accordingly have used a hypothesis-oriented simulation approach in addition to usual data-driven approach. The simulation approach helps us test decision-making by generating possible outcomes of the decisions based on available data and assumptions such as a project’s probability of success, clinical trial duration and market needs. We think the approach helps us further improve decision-making by allowing us to deal with a high degree of uncertainty.At Astellas, we utilize analytics in all areas of our enterprise to maximize VALUE. In the exhibit below, we illustrate some examples, one being the initiative “Calculating VALUE based on RWD* and Selecting Optimal Indications,” which we use to determine which indication or indications will yield the highest VALUE for a product (“output”). Similarly, with the initiative “Insights into Innovative Organizational Structures through the Use and Analysis of Human Resources Data,” we take “Human Capital,” which is “Input” and “Talent and Organization” on the “Business Activity” and apply the power of analytics to improve upon the current situation and maximize VALUE.* RWD: Real World Data: Medical big data comprising a collection of information based on medical practices obtained in clinical settings.DX Strategy59Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationMasanori ItoDigital, Analytics and Technology – Enterprise Insights and Digital SolutionsDashboard (Image)The graph at top shows the number of reports generated on each goal set in CSP2021. The exhibit at bottom is a visualization of this data, with the size of each box an indication of report numbers. Colors correspond to the importance assigned to each objective.Astellas is advancing DX by performing advanced data analysis and utilizing machine learning, AI, and other digital capabilities.For Astellas, creating innovative medicines through our Focus Area approach means venturing into areas that are beyond the scope of our previous experience and expertise.In settings where strategic decision-making is required, there are instances in which historical data is not enough to make informed decision. We therefore are taking a vastly different approach to those premised on historical data.First, we use available data, information, theories, and findings to build the best-possible hypotheses on subjects such as probability of development success, the time required for development, market needs, and so forth. Next, based on those hypotheses, we look at future scenarios for opportunities and risks (for example the development status of competing products). We represent these scenarios mathematically and perform simulations to help decision makers identify the best option for improving the VALUE we create. In other words, in gener-ating possible outcomes and scenarios that inform and support strategic decision-making, we use the simulation-based approach combined with the hypothesis building.VoiceCaseMonitoring progress toward each goal set in Corporate Strategic Plan 2021 (CSP2021)In order to achieve the Strategic Goals laid out in CSP2021, Astellas has many projects in train. Most of these projects are cross-functional and thus require multiple departments to work together. While data on the progress of each project is centrally managed, the sheer volume of information is such that it has not been possible to gauge progress and expenditure at a glance. Nor has there been any mechanism for real-time analysis of circumstances and generation of insights that could inform management strategy.As a solution to this problem, we have developed a dashboard to support strategic decision-making by automating the analysis and processing of these huge amounts of data. This has enabled visualization of progress in the initiatives tied to each Strategic Goal, enabling prioritization of critical information and extraction of trends. As a result, we have managed to reduce the time required from data entry to visual-ization from three days to 15 minutes. We are utilizing the time thus saved to formulate strategic insights.DX Strategy60Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationInterview with the Head of the Sustainability DivisionPlease describe progress toward achieving Strategic Goal 4, and the outlook going forward.Making steady progress toward Strategic Goal 4 through a combination of sustainability initiatives focused on key issues, and advocacy activities promoting understanding of these initiatives among internal and external stakeholdersShingo IinoVice President, SustainabilityTell us about Astellas’ stance on sustainability, and the level of understanding among internal and external stakeholders.For Astellas, sustainability is the essence of our business activities. Thus, the concept is steadily gaining traction among stakeholders.For Astellas, sustainability is by no means a new concept, but rather an extension of Astellas’ business activities. In short, we think that our very operations contribute to sustainability for both society and Astellas. When we talk of Astellas and its approach to sustainability, first and foremost we think it’s important to promote deeper understanding of this tenet among our stakeholders (both internally and externally).In FY2021, we revised our Materiality Matrix that guides our sustainability efforts*1. Each of the issues identified is strongly associated with our existing operations but at the same time cannot be linked solely to a single business division. We therefore think it’s essential that each employee at Astellas understands our material issues and key issues.In FY2022, we proceeded to strengthen our advocacy activities on sustainability. We utilized a range of media to promote understanding of our sustainability activities among both internal and external stakeholders. Internally, we sought to replace one-way communication with dialog-based communication, using Ask Me Anything*2 sessions and division- or group-level small meetings to deepen stakeholder understanding via interactive communication. Through our global engage-ment survey, we know that employees have indeed developed a greater understanding of sustainability, attesting to gradual penetration of the concept throughout Astellas.In February 2023, we held our second Sustainability Meeting to apprise external stakeholders of the progress we are making with sustainability activities. We have remained proactive in dissem-inating information about our sustainability initiatives, including via frequent dialog with investors.We established a new Sustainability Direction and are now in the process of executing “Our Commitments by FY2025”In FY2022, the establishment of a new Sustainability Direction constituted a major step toward achieving Strategic Goal 4*3. A Sustainability Direction already existed but was created in the process of revisions to our Materiality Matrix. In formulating a new Sustainability Direction, we focused on the nine material issues (Materiality) as well as the two environmental issues identified as being of greatest concern to society. A cross-functional team then defined “Mid-term Priorities for Astellas,” “Initiatives,” and “Our Commitments by FY2025,” which were submitted for review by the Executive Committee and Board of Directors, and then finalized. In establishing this Sustainability Direction, we maintained a keen awareness of the Organizational Health Goals set in CSP2021, with a view to defining ambitious rather than easily achievable goals.In addition to establishing a Sustainability Direction, we also made progress in pursuing each of our Materiality initiatives. In improving Access to Health, for example, we began to provide countries with unmet needs in the cancer healthcare system support, one of the diseases targeted under our Primary Focus approach. In response to the latest Access to Medicines Index (ATMI)*4 Report, which identified a lack of transparency in Astellas’ equitable access strategies, we created an entirely new mechanism and strategy for access to medicine. I take great pride in Astellas’ creation of a comprehensive Access to Medicines strategy and a playbook to drive execution, going beyond the mere provision of economic support for organizations dedicated to improving access to medicines.In terms of environmental initiatives, we met our FY2030 GHG*5 emissions reduction target early, in FY2021, and received approval from the SBT*6 Initiative to set new targets. Furthermore, we announced our commitment to achieving net zero GHG emissions by 2050. Finally, with an eye to realizing resilient and sustainable business operations, we began to consider BCP measures against risks such as regional conflicts and electricity shortages, and we are now in the process of planning a system for maintaining stable supply.*1 For details, please refer to P. 20.*2 Ask Me Anything: Large interactive sessions designed to promote two-way communication between management and all.*3 Deepen our engagement in sustainability.*4 ATM Index: The Access to Medicine Index assesses and ranks the efforts of pharmaceutical companies in addressing access to medicines in developing countries.*5 GHG: Greenhouse gases.*6 Greenhouse gas emission reduction targets set by companies 5–15 years ahead, consistent with levels required by the Paris Agreement.QQSustainability Strategy61Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationAstellas’ SustainabilityAstellas recognizes that our contribution to social sustainability and earning trust from society will enhance Astellas’ sustainability.We have established the Sustainability Advisory Panel, and Environment, Social and Governance Working Groups (E·S·G Working Groups), all led by the Sustainability Division and consisting of cross-functional members. These organizations promote the following activities including Strategic Goal 4 for all divisions to contribute to sustainability from a long-term, strategic and groupwide perspective.In FY2022, Astellas considered how our efforts to address the nine material issues (Materiality) would lead to improving corporate value, and summarized them as two pillars for evolving sustainability. The first pillar “Transforming to be a cutting-edge VALUE-driven life science innovator” is related to five of these material issues. The second pillar “Strengthening resilient and sustainable business operations to meet the expectations of society” is related to the remaining four. Astellas has also established a sustainability direction as a guide toward FY2025 to address Materiality, as well as two important issues related to the environment that are pressed for by society. Astellas’ sustainability initiatives will be promoted in line with this sustainability direction moving forward. The following pages describe more detailed information including concrete initiatives.Sustainability Direction01 Transforming to be a Cutting-Edge, VALUE-driven life science innovator02 Strengthening resilient and sustainable business operations to meet the expectations of societyTwo Pillars for Evolving SustainabilityThe first pillar: Astellas will continue to create innovative healthcare solutions for unmet medical needs, utilizing new modalities such as cell and gene therapy, while striving to ensure that the VALUE we create reaches the patients who need it most. In order to create innovative thera-peutic methods continuously, appropriate price setting is necessary for innovation. Two Pillars for Evolving Sustainability01Transforming to be a Cutting-Edge, VALUE-driven life science innovatorEngage in the Sustainability of SocietyTrust from SocietyFulfill our social responsi-bilities as a pharmaceutical companyEnhance the Sustainability of AstellasAstellasSocietyAstellas’ Interaction with SocietyRaison D’êtreContribute towards Improving the Health of People Around the World through the Provision of Innovative and Reliable Pharmaceutical ProductsMissionSustainable Enhancement of Enterprise ValueSUSTAINABILITY GOVERNANCEExecutive Committee*1 / Board of Directors*1President and CEO• 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 of 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.Head of Sustainability division• Oversee all Astellas’ Sustainability activities including ESG*2 elements.• Decides on holding a Sustainability Advisory Panel.Sustainability Advisory PanelDiscuss and consider global sustainability issues that are overarching to ESG such as the change in the Sustainability Direction.Chair: Head of Sustainability divisionEnvironment (E)Working GroupSocial (S)Working GroupGovernance (G)Working GroupInitiatives for Contribution to Sustainability— Improve “Access to Health”— Contribute to Environmental Sustainability with Greater Transparency— Advocate our Efforts on SustainabilityStrategic Goal 4: Deepen our engagement in sustainabilityEnvironmental SustainabilitySustainability Strategy62Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationAstellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Sustainability Strategy Initiatives for Contribution to Sustainability Astellas will also work to create an environment and mechanisms to ensure that prices fairly medical care, including diagnostic, preventive, reflect the impact on society, including patients, their families, and the healthcare professionals therapeutic and prognostic care). Relationship to Material Issues and Key Issues 2. Enhancing availability of Astellas products who support patients’ health. We believe that one of the most important driving forces for creating and delivering signif- icant value to societies is an organizational culture that generates innovation. Thus, we will work to foster such an organizational culture at Astellas and acquire and develop people that will contribute to the creation of innovation. Improving Access to Health: Our Initiatives • Access to Health • Talent and organizational culture for realizing innovation • Fulfilling unmet medical needs by creating novel healthcare solutions • Transformative treatment through innovative thera- peutic methods • Value-based pricing Astellas recognizes Access to Health as a material issue, and through our VISION to be “On the fore- front of healthcare change to turn innovative science into VALUE for patients,” we proactively take a comprehensive approach to addressing this issue through the three methods defined below. Astellas’ initiatives improving Access to Health Astellas’ Core Business approx. 143 million patients 103 countries were prescribed Astellas products cumulatively up to the first half of FY2022 For patients who are unable to obtain Astellas medicines for social or economic reasons, we strategically imple- ment activities to improve access to our pharmaceutical products from the development stage to post-launch. For patients who are unable to participate in clinical trials but meet certain criteria, our Early Access Programs provide access to investigational therapy for patients with serious or life-threatening diseases who are unable to participate in clinical trials and have exhausted existing treatment options. For example, through the PADCEV Early Access Program, more than 1,400 early access requests have been approved for patients with locally advanced or metastatic urothelial cancer in 7 countries. Our International Pharmacy Program (IPP) allows products that have already been approved in major countries to be imported and used in countries not yet approved for eligible patients. Through this program, in the most recent year, PADCEV has now been imported into 17 countries. Over the life of the program, the IPP for PADCEV has served more than 50 patients. In addition, our Patient Access Initiatives (PAI) are active in 25 countries. These PAIs are programs that help eligible patients obtain affordable access to Astellas products either directly or through Governments, Healthcare System Agencies or other eligible organizations. We continued to build the capability to implement data and evidence-based pricing solutions for our Rx, Rx+ 2. Enhancing availability of Astellas products price for our newly launched medicines. 1. Astellas’ core business (Rx, Rx+) innovative products. These solutions ensure that payers and healthcare systems pay a fair and value-based 1. Astellas’ core business (Rx, Rx+) 3. Collaboration and support for the activities implemented by external partners to improve Access to Health EARLY ACCESS REQUESTS 900+ patients 1,400+ early access requests 40+ countries continued to receive early access to cumulatively for XOSPATA and PADCEV therapy in FY2022 have been approved INTERNATIONAL PHARMACY PROGRAM (IPP) 50+ patients have received therapy since initiation of the IPP for PADCEV in May 2021 that provides access to certain products 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 development based on our Focus Area approach and create diverse healthcare solutions by combining biologies and modalities/ PATIENT ACCESS INITIATIVES 45+ active patient access initiatives POST-TRIAL ACCESS 30+ countries 150+ oncology patients 25+ countries 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 to date in FY2022 that provide access for certain products after approval and before reimbursement, and primarily, after commercial availability in a country through various affordability programs called patient access initiatives continued on treatment with post-trial access to Astellas products (continued course of therapy following the end of a clinical trial given the patient is showing continued benefit) 63 Astellas is committed to rising to the challenge to ensure the sustainability of its programs. We established the Access to Medicines Operational Oversight Committee in FY2022 to bring together leads from each access program to ensure training is provided, processes are kept up to date, and proper reporting occurs. While stream-lined processes and cross-functional collaboration are vital, the passion and dedication of the Astellas team will bring about success. What you will find at Astellas is a team truly committed to bringing access to health for patients. As the most important materiality for both society and Astellas, we will contribute to improve ATH as One Astellas.Enhancing Availability of Astellas ProductsClinical DevelopmentMarket AuthorizationCommercializationClinical Trial ProgramsEarly Access ProgramPost-trial Access ProgramPatient Access InitiativesInternational Pharmacy Program (IPP) & International Import Program (IIP)Enhancing the literacy of healthcare professionals and patients through academic and patient societiesWe realize that some patients with life-threatening diseases may not be eligible for clinical trials and may have exhausted their treatment options.This is when early access programs become important. We established a centralized Early Access function at Astellas in 2020, which shows how seriously the company views these programs and the value they bring to patients. Astellas can receive a physician’s request for early access at any time, from any country. For this reason, we established processes to ensure that all early access requests are evaluated quickly and consistently.Astellas also realizes the importance of ongoing access to therapy for patients with life-threatening diseases who complete our clinical trials. Post-trial access programs bring value to patients who receive uninterrupted access to therapy until a product is commercially available.Early access and post-trial access programs are just two ways that Astellas helps patients with life-threatening diseases overcome availability challenges. These programs demonstrate that we remain committed to improving access to Astellas products.Ramona RorigBusiness Operations Lead, Early AccessVoiceHealth System Strengthening Program (Malaysia and Peru. Mexico and Dominican Republic are newly added FY2023)nearly $3 million 4 global charitable donationsMore than 1.2 million peopleexpected to be impactedStarlight Partner Activities*49 people (36 organizations)participated in Peer support training12 people (10 organizations) participated in Leadership Training Program1 people (1 organizations) participated in Patient Expert Program* Activities that support the self-reliance and sustainable development of patient organizations. For details, please visit the following website: https://www.astellas.com/en/sustainability/enrich-the-lives-of-patientsPATIENT CENTRICITY PROGRAMS20+ patient advocacy/patient organization programs supported in 2022 to understand and address what truly matters to patients20+ million individuals projected to be impacted3. Collaboration and support for the activities implemented by external partners to improve Access to HealthIn our efforts to improve access to health, we strive to provide cooperation and support for the activities implemented by external partners by combining our capabilities and technologies.Astellas continues joint research with Medicines for Malaria Venture and TCG LIFESCIENCE (TCGLS) for the exploration of novel antimalarial drug molecules with potential for further development.Together with a consortium of partners, Astellas has contributed by leveraging our formulation technologies and know-how to developing a potential new pediatric treatment option, arpraziquantel, for schistosomiasis in preschool-aged children. In December 2022, European Medicines Agency (EMA) has validated the regulatory appli-cation for arpraziquantel and has started its review process.In the areas of strengthening healthcare systems and improving health literacy, we are funding new projects with non-governmental organizations to impact society where expects synergy with Astellas’ current/future business activity.Astellas focuses on supporting and collaborating with external partners: National Cancer Society Malaysia and Asia Cancer Forum, Japan, City Cancer Challenge Foundation (C/Can), Peru, Academic Model Providing Access to Healthcare (AMPATH), Mexico and MAP International, Dominican Republic, to remove barriers to healthcare and strengthen health systems. The programs are focused on cancer care. Funding from Astellas is intended to help strengthen healthcare systems and health literacy in countries where the company has a business presence.Initiatives for Contribution to SustainabilitySustainability Strategy64Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationThe 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.* For details, please visit the following website: https://www.astellas.com/en/sustainability/advancement-of-medical-sciencesStrengthening Business Continuity Plan (BCP) for Geopolitical Risks & Natural DisastersAstellas is strengthening its BCP measures against unpredictable risks such as regional conflicts and natural disasters and is preparing for supply chain disruption, energy shortages, and rising energy costs. Specifically, in preparation for supply chain disruption, we adjust inventory levels to maintain a stable supply according to risk levels. In addition, we have secured secondary suppliers and secondary sites for many of our global products. To reduce energy-related risks, we are working on the introduction of solar power generation, introducing backup power supplies for manufacturing and research sites in Japan, and setting up emergency power supplies. By recognizing and preparing for unpredictable risks, we will maintain a stable supply of pharmaceuticals, which is our mission as a pharmaceutical company, and will realize a flexible and sustainable business.The Astellas Global Health FoundationThe Astellas Global Health Foundation (AGHF) is an international philanthropic organization dedicated to supporting 3 key areas: improving access to health – Neglected Tropical Diseases/Communicable Diseases, Mental Health and Children’s Health, building resilient communities, and providing disaster preparedness support in underserved global communities. Launched in 2018, the Foundation has awarded $11 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 35 million lives over the next three years in Kenya, Nepal, Dominican Republic, South Sudan, the Democratic Republic of the Congo, Ghana, Ethiopia, Nigeria, El Salvador, Honduras, Uganda, Senegal, Guinea Bissau and Venezuela.These two important issues related to the environment are being pressed for by society and so companies are required to be actively involved in such environmental issues. Recognizing that harmony between the global environment and our business activities is a prerequisite to our corpo-rate existence, we shall take proactive measures to conserve the global environment. In addition to the nine material issues, we will also promote initiatives for these two important issues.The second pillar: Astellas will build a robust system throughout our supply chain to manufac-ture products of superior quality to global standards and deliver highly safe products to patients under any circumstances. In addition, we will continue to provide information to ensure that Astellas products are used appropriately by patients and will ensure we work in strict compli-ance with laws and regulations in all our business activities. We will respond to the expectations of society by continuously working in an ethical manner, considering what health care solutions are best for patients and what Astellas prod-ucts can contribute to patients. In this report, we would like to introduce our Responsible Supply Chain activities.Relationship to Material Issues and Key Issues• Compliance and ethical business practices• Product quality assurance and product safety• Responsible supply chain management• Safe and appropriate use of productsRisk ControlManufacturing Supply ChainResponse to supply chain risks• Inventory management for a stable supply• Secure secondary suppliers and sites, and make efforts to secure them in as short a time as possibleEnergy ProcurementResponse to power shortages and high costs• Currently considering the introduction of solar power to reduce energy risksSecuring electric power in case of a power outage• Set up emergency power supplies for refrigerators containing import-ant drug substances and stored products• Introduce backup power supplies for manufacturing and research sites in JapanFrom regional conflicts and natural disasters• Supply chain disruption• Energy shortage• Rising energy costsRisks02Strengthening resilient and sustainable business operations to meet the expectations of societyEnvironmental SustainabilityTwo Pillars for Evolving SustainabilityRelationship to Material Issues and Key Issues• Reduction of environmental burden• Climate change and energyInitiatives for Contribution to SustainabilitySustainability Strategy65Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationAstellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Sustainability Strategy Initiatives for Contribution to Sustainability Disclosure based on TCFD recommendations An in-house cross-functional team for disclosures was established to conduct a scenario analysis. The team analyzed Astellas’ business and climate-related risks and opportunities, on the assumption that transition risks would materialize under a 1.5°C scenario for climate change and physical risks would materialize under a 4°C scenario. A qualitative risk/opportunity analysis was conducted in the FY2021 review. In FY2022, the team conducted a quantitative analysis on some items. As the GHG emission reduction action plan changed from a 2°C target to a 1.5°C target in terms of temperature increase the transition risk scenario was also changed to a scenario that assumes global temperatures rise by 1.5°C. The results of the analysis were reviewed by the EHS Committee. Analysis of Risk and Opportunities* Climate-Related Risks Potential Impacts Financial Impacts Affected Period Astellas’ Resilience Transition Risks (risk materializing at 1.5°C increase) Increased pricing of GHG emissions (costs if paying a carbon tax) Business sites that have not introduced renewable energies may have to add payment of a carbon tax to their costs. One billion yen in FY2030 assuming a carbon tax of $100 per ton Policy and Legal Obsolescence and impairment 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. No significant impact Physical Risks (risk materializing at 4°C increase) Increased severity of extreme weather events such as floods Acute • 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. 500 million yen * Referred to the flood countermea- sures of the Toyama Technical Center. Medium to long-term Medium to long-term Near to long-term • Some of the electricity consumed at the business site is generated internally by using renewable energy sources such as wind power and solar power. • Switch 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. • There are no existing facilities that we are required to dispose of at this moment. • Regarding freon gas, we will take appropriate measures that comply with laws and regulations. • From 2030 onwards, we need to respond to a required change in automotive vehicles (shift from internal combus- tion engines to electric motors and fuel cells). Shift to EVs for sales fleets and trucks and modal shift of transporta- tion will have an impact on business operations. The following investment was planned for the Toyama Technical Center flood response and the investment amount was estimated at 500 million yen. • Install a 3m waterproof wall around the power receiving building • Construction of substation equipment with a structure of 3 m or more • Purchase of generators If similar measures are required, a similar amount of investment will be considered. Climate-related opportunities • Use of more efficient production and distribution processes • Use of recycling Potential Financial Impacts Reduced operating costs • Development and/or expansion of low emission goods new products and services • Access to new markets Increased revenues through access to new and emerging markets Resource efficiency Products and markets Affected period Astellas’ response Near to long-term Near to long-term • In order to maintain a stable supply of pharmaceuticals even during pandemic of infectious disease or natural disasters such as earthquakes, storms, and flooding, three logistics centers are operated in Japan. • 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. • For the spread of infectious disease in endemic areas due to temperature change and the need for new drugs for infectious disease treatment assumed by the problem of antimicrobial resistance, collaboration with the phage biologics researches Course at a university to create engineered bacteriophages, could be a viable solution. • Climate change can change the geography of the morbidity associated with and severity of epidemics. Heart disease, respiratory disease, etc., may also increase. * Only some items were extracted from the analysis results. See the corporate website or EHS report for details. https://www.astellas.com/en/sustainability/TCFD-disclosure https://www.astellas.com/en/system/files/5ca463117e/ehs-report2023_en_final1.pdf 66 Steps toward 2050Base year 2015202320182030Target 20302050 Goal for SocietyScience Based Targets (SBT) for AstellasBack castingProgress on Environmental Action Plan (Scope 3)FY2015 (Base-year)FY2020FY2021FY2022GHG emissions (Scope 3) (tons)453,181268,118313,005445,007Improvement from Base-year (%)––40.8–30.9–1.80Renewable electricity335 TJ86%Wind6 TJ2%Biomass (wood)45 TJ12%Photovoltaic/Geothermal0.6 TJ0.2%Total Renewable Energy Consumption387 TJin FY2022Climate Change and EnergyMitigating 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 an important management issue to address. Astellas has made a long-term commitment to taking measures against climate change and decided to aim for achieving a 90% reduction in GHG emis-sions and a 10% neutralization of residual emissions to achieve net zero by 2050, based on 2015, for Scope 1 and 2 and Scope 3, respectively. In addition, the Science Based Targets (SBT)* initiative approved Astellas’ GHG emissions reduction targets through 2030. To address climate change as a management issue, we have adopted as targets, the 1.5°C (Scope 1 and 2) and well-below 2°C (Scope 3) targets of the Paris Climate Agreement.* Greenhouse gas emission reduction targets set by companies 5–15 years ahead, consistent with levels required by the Paris Agreement.Progress on Environmental Action PlanOur 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 action plan for the following year.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 find-ings into our action plan for the following year.Astellas will keep on conducting continuous reviews of investment plans related to matters such as introducing renewable energy.Progress on Environmental Action Plan (Scope 1 + 2)(%) scope 1 + 2 (V.S. FY2015 level)2021202220202015(FY)100–39.0–41.3–41.810030405060708090Environmental Action Plan (Climate Change Action) (2°C target)• GHG emissions (Scope 1+2): 30% reduction by FY2030• GHG emissions (Scope 3): 20% reduction per sales revenue by FY2030FY2021 Performance:• GHG emissions (Scope 1+2): approx. 41% reduction• GHG emissions (Scope 3): approx. 22% reduction per sales revenueNew Environmental Action Plan (Climate Change Action) • GHG emissions (Scope 1+2): 63% reduction to 1.5°C Target by FY2030• GHG emissions (Scope 3): Reduce by 37.5% by FY2030 to a level well below 2°C• Achieve Net Zero GHG emissions by 2050Using Renewable EnergyThe use of renewable energy is one of the most effective climate change countermeasures. Astellas is intro-ducing photovoltaic panels and wind power generation, and such equipment as biomass boilers, and purchases electricity derived from renewable energy sources to reduce GHG emissions. We will continue to strive to expand the use of renewable energies to help achieve net zero.Starting in April 2020, Astellas switched all electricity consumed by its three research and production sites in Japan (Tsukuba Research Center, Tsukuba Biotechnology Research Center and Takahagi Chemistry & Technology Development Center) to hydroelectric power, which is free of GHG emissions. This enabled a reduction of emis-sions of 37,133 tons. Moreover, we are also moving ahead on switching to electricity generated by renewable energy sources in areas outside of Japan.Looking ahead, Astellas will continue to explore opportunities for using renewable energy, and it will also consider formulating targets for the use of renewable energy.Initiatives for Contribution to SustainabilitySustainability Strategy67Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationAstellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Sustainability Strategy Initiatives for Contribution to Sustainability Breakdown of Energy Consumption Changes in Water Resources Withdrawn and Revenue Global energy usage in FY2022 by the Astellas Group amounted to 2,048 terajoules (TJ), for a decrease of 2.0% (41 TJ) over the previous year. The percentage of total energy consumption accounted for by electricity is high because in each region a large amount of electricity is consumed by the operation of air conditioning equipment. Astellas strives to reduce its energy consumption including through the continued implementation of energy-saving measures and the introduction of highly efficient equipment. Water resource withdrawn (thousand m3) Japan US Breakdown of Energy Consumption Established Markets (TJ) FY2019 (%) FY2020 (%) FY2021 (%) FY2022 (%) Greater China Liquid fuel Gaseous fuel Heat purchased Electricity purchased Renewable energy sourced Natural energy Wind Wood chip biomass Geothermal heat Photovoltaics Total 14 45 1 37 2 312 1,000 26 818 102 54 6 46 2 0.6 2,210 10 48 1 39 3 201 992 27 812 343 54 7 45 2 0.6 2,087 10 48 2 39 2 201 1,001 33 807 345 47 5 41 1 0.6 2,089 9 47 1 40 3 194 962 28 812 335 53 6 45 0 0.6 2,048 International Markets Revenue (billions of yen) Water resource productivity (billions of yen/thousand m3) Improvement from Base-year Waste Management Surface water Ground water Others Surface water Ground water Others Surface water Ground water Others Surface water Ground water Others Surface water Ground water Others FY2016 (Base-year) FY2020 FY2021 FY2022 8,774 7,705 758 – 146 – – 145 – – 21 – – – – – 1,312 0.15 – 7,564 6,932 436 – 24 – – 151 – – 21 – – – – – 1,250 0.17 11% 7,394 6,737 458 – 53 – – 128 – – 19 – – – – – 1,296 0.18 17% 6,864 6,231 432 – 55 – – 129 – – 15 – – – – – 1,519 0.22 48% Initiatives for Resources Recycling Effective Use of Water Resources The effective use of water resources serves as a useful indicator for gauging society’s impact on biodiversity. Astellas assesses the relationship between water resources and economic activity using a water resource 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. Moreover, Astellas also evaluates the relationship between the waste generation volume and economic activities with the index known as the Waste generated per unit, and the Company is making efforts to improve it. In FY2022, the waste generated per unit improved 16% over the base year (FY2016). productivity index, and has been striving to improve this index. Water resource productivity for FY2022 Changes in Waste Generation Volume and Revenue improved significantly by 48% compared with the base year of FY2016. Waste generated (tons) Japan US Established Markets Greater China International Markets Revenue (billions of yen) Waste generated per unit (tons/billions of yen) Improvement from Base-year FY2016 (Base-year) FY2020 FY2021 FY2022 13,899 11,836 54 1,956 54 – 1,312 10.6 – 14,352 10,714 361 3,228 50 – 1,250 11.5 –8% 13,882 10,158 576 3,043 105 – 1,296 10.7 –1% 13,544 9,787 783 2,866 109 – 1,519 8.9 16% 68 External Evaluation Regarding ESGESG AssessmentsFY2020FY2021FY2022FTSE ESG Ratings（0 to 5, higher scores are better）3.64.0 4.3MSCI ESG Ratings（Scale from CCC to AAA）AAAAAACDP [Climate Change/Water Security](A to F, A is the highest)A-/BB/BA-/BAccess to Medicine Index(ranks the world’s 20 pharmaceutical companies)−14th/2016th/20Sustainalytics(Scale from Negligible to Severe)MediumMediumLowTHE 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 USE BY Astellas Pharma Inc. OF ANY MSCI ESG RESEARCH LLC OR ITS AFFILIATES (“MSCI”) DATA, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT, RECOMMENDATION, OR PROMOTION OF Astellas Pharma Inc. BY MSCI. MSCI SERVICES AND DATA ARE THE PROPERTY OF MSCI OR ITS INFORMATION PROVIDERS, AND ARE PROVIDED ‘AS-IS’ AND WITHOUT WARRANTY. MSCI NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI.The 2-year progress report on Access to Medicine Index is as follows:2021: https://accesstomedicinefoundation.org/resource/2021-access-to-medicine-index2022: https://accesstomedicinefoundation.org/resource/2022-access-to-medicine-indexCopyright ©2023 Sustainalytics. All rights reserved. This [publication/ article/ section] contains information developed by Sustainalytics (www.sustainalytics.com). Such informa-tion 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.MISI Japan ESG Select Leaders IndexMSCI Japan Empowering Women Index (WIN)S&P/JPX Carbon Efficient IndexInclusion in ESG Investment IndexesCertified Health & Productivity Management Outstanding OrganizationAstellas supports our employees’ working styles and well-being and strives for organizational health. Astellas’ health management promo-tion system in Japan is planned and operated by Human Resources, Astellas Health Insurance Society and the labor union, and headed by the Chief People Officer and Chief Ethics & Compliance Officer (CPO & CECO). Our efforts to promote good health have been recognized with certification as a 2023 Certified Health & Productivity Manage-ment Outstanding Organization by the Ministry of Economy, Trade and Industry in Japan for two consecutive years.Astellas awarded Compliance Leader Verification™Astellas has earned Compliance Leader Verifica-tion® (“CLV”) from Ethisphere, a global leader in defining and advancing the standards of ethical business practices. Ethisphere’s Compliance Leader Verification CLV recognizes organizations with an outstanding commitment to achieving a best-in-class ethics and compliance program.Initiatives for Preventing PollutionAir Pollution—Reduction of VOC*1 emissionsAstellas sets voluntary numerical targets for reducing the amount of VOCs that are emitted accompanying the use of solvents in production and research activities, and makes efforts to reduce emissions. Moreover, as a measure to prevent environmental pollution by chemical substances as well as occupational illnesses, we are taking steps to minimize the impact of our business operations on our employees, local communities, and the environment, such as development of new manufacturing processes that do not use highly hazardous chemical substances.Air Pollution—Reduction of NOx*2 emissionsTo reduce the emission of NOx into the atmosphere, Astellas has installed boilers that use gaseous fuels (city gas, LNG, and LPG). The NOx emissions from all business sites in Japan are as shown in the table below. The NOx emissions from non-Japanese production sites in FY2022 amounted to 6 tons.Changes in Emission Volume (tons)SubstanceTargetFY2018FY2019FY2020FY2021FY2022VOCAll production facilities and R&D sites in Japan4428222123NOxAll production facilities and R&D sites in Japan2116211718*1: VOC: Volatile Organic Compounds*2: NOx: Nitrogen OxidesWater PollutionAstellas measures the extent of its impact on aquatic environments using the BOD*3 load as an index in Japan and the COD*4 load as an index in other countries, and makes the data available to the public. In Japan, the BOD load in FY2022 was 9 tons, the same as the previous fiscal year. Outside Japan, the COD in fiscal 2022 was 31 tons, an increase of 7% from the previous year.Since the discharge into water of chemical substances used in manufacturing processes can have a negative impact on ecosystems, we are examining ways of reducing such discharges as much as possible at all stages from R&D onward. With respect to future drug candidate substances discovered and developed by Astellas, we are examining the impact pharmaceuti-cals would have on ecosystems through the evaluation of their biodegradability in the natural environment.*3 Biochemical Oxygen Demand*4 Chemical Oxygen DemandChanges in BOD Load (tons)SubstanceTargetFY2018FY2019FY2020FY2021FY2022BODAll Japanese production facilities and R&D centers108999Drainage into rivers87886Drainage into sewer system21113Changes in Drainage Volume (thousand m3)DestinationTargetFY2018FY2019FY2020FY2021FY2022Drainage VolumeAll business facilities in Japan 8,0587,0617,3086,8106,298Drainage into rivers7,8206,8366,8356,6106,108Drainage into sewer system238225203200190Initiatives for Contribution to SustainabilitySustainability Strategy69Astellas Pharma Inc. Integrated Report 2023Corporate DataStrengthen Foundation for Value CreationValue Creation StoryInterview with Chief Executive OfficerCorporate Strategic Plan for Value CreationStrengthen Foundation for Value CreationCorporate Governance 71Dialogue with Outside Directors 82Risk Management 86Ethics & Compliance 88Strengthen Foundation for Value CreationCONTENTS70Astellas Pharma Inc. Integrated Report 2023Corporate DataValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerStrengthen Foundation for Value CreationCorporate GovernanceUpon Assuming the Post of Chairman of the Board I assumed the position of Chairman of the Board in June 2022 while serving as Representative Director, President and CEO. From April 2023, I passed the baton of Representative Director, President and CEO to Naoki Okamura, and continue to serve as Representative Director, Chairman of the Board.Following the Annual Shareholders Meeting in June 2023, the Board of Directors has started with a new composition of members. With the retirement of three outside Directors, who had contributed greatly to the Company, three new outside Directors have joined—namely, Masahiro Miyazaki, Yoichi Ohno, and Rie Akiyama. Katsuyoshi Sugita, Astellas’ Chief People Officer and Chief Ethics & Compliance Officer (CPO & CECO) has also joined as Representative Director, Executive Vice President. As a result, the Company has eleven Directors, including three female Directors, and continues to be diversified in terms of skills and experience and in composition overall.Since my appointment to the role of Chairman of the Board, I have encouraged the proactive and timely sharing of information as well as open and active discussions. In FY2022, the Board of Directors arranged more opportunities for advance briefings on important agenda items for outside Directors, and also had discussion sessions on how best to enable the Board of Directors’ oversight function. The Company has also been active in promoting dialogue with shareholders and other stakeholders, by, for example, including outside Director interviews in the Integrated Report and having outside Directors speak at the Sustainability Meeting 2022. I continue to be proactive in pursuing dialogue with stakeholders and would like to reflect the various insights gained in discussions at Board of Directors meetings.Astellas’ Board of Directors is highly effective, which we have achieved through diverse board composition and through open and active discussions.Kenji YasukawaRepresentative Director, Chairman of the BoardThe Board members share a common understanding of how the oversight function of our Board should be and are working toward improving it further.Our Corporate Governance Guidelines clearly state that the role of the Board is to determine basic management policies and strategies, and to serve as an oversight function for business execution. I believe it is essential to verbalize the oversight function expected of Directors and ensure a common understanding among all Directors in order for us to run the Board with a unified vision. In FY2022, all Directors had discussions on how best to enhance its oversight function. As a result of these discussions, all Directors have agreed that the oversight role of the Directors should be “to monitor and evaluate whether business execution is carried out appropriately along with the management policies or strategies determined by the Board,” “to identify opportunities for improvement and when necessary, nudge the Company toward course correction,” and ultimately, “to decide on the appointment and remuneration of Directors and Officers entrusted with business execution.” It is very important to perform these roles from the perspective of ensuring sustainable growth for the Company and enhancing corporate value over the medium- to long-term.Based on the discussions above, I will lead efforts to further enhance the effectiveness of the oversight function of the Board of Directors by implementing specific measures, including more active and open discussions with outside Directors.The Board members are engaging in “growth-oriented oversight” to achieve sustainable growth and medium- to long-term enhancement of corporate value.Lastly, I would like to talk a little more about “growth-oriented oversight,” raised in the above discussions of the Board’s oversight function.To date, the Board of Directors has been working solidly on “risk management-oriented oversight” by periodically checking company-wide risks and how they are managed, as well as the status of compliance activities. All Directors have agreed that we should place even greater emphasis on “growth-oriented oversight,” and continue discussions that encourage intelligent risk-taking.I believe that the continuous creation of innovation is essential in order to realize our VISION of being “On the forefront of healthcare change to turn innovative science into VALUE for patients,” and achieve sustainable growth and medium- to long-term enhancement of corporate value. Creating innovation, including our Focus Area approach, is to consistently challenge the unknown and do things that have never been done before. For these bold challenges, the Board of Directors appropriately supports the Company in making decisions in a transparent and fair but also swift and bold manner, creating innovation through intelligent risk-taking and agile business execution.In our new Board of FY2023, the members fully understand the role they have to play as an oversight function and are committed to working as one to achieve sustainable growth and medium- to long-term enhancement of corporate value. As Chairman of the Board, I remain determined to fulfil my own role and responsibilities to achieve our goals.71Astellas Pharma Inc. Integrated Report 2023Corporate DataValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerStrengthen Foundation for Value CreationAstellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Corporate Governance Board of Directors (As of June 20, 2023) Kenji Yasukawa Representative Director, Chairman of the Board Naoki Okamura Representative Director, President and CEO Katsuyoshi Sugita Representative Director, Executive Vice President Takashi Tanaka Outside Director Eriko Sakurai Outside Director Masahiro Miyazaki Outside Director Rate of attendance in meetings of the Board of Directors: 100% (14/14 times) Number of shares of the Company owned: 127,415 shares Rate of attendance in meetings of the Board of Directors: 93% (13/14 times) Number of shares of the Company owned: 33,400 shares Number of shares of the Company owned: 1,100 shares Rate of attendance in meetings of the Board of Directors: 100% (14/14 times) Number of shares of the Company owned: 0 shares Rate of attendance in meetings of the Board of Directors: 91% (10/11 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 April 1986: April 2005: June 2010: October 2010: April 2011: April 2012: June 2012: April 2017: June 2017: April 2018: April 2023: Joined the Company Vice President, Project Management, Urology, the Company 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. Corporate Executive, Vice President, Product & Portfolio Strategy, the Company Corporate Executive, Chief Strategy Officer (CSTO), the Company Senior Corporate Executive, Chief Strategy Officer (CSTO), the Company Senior Corporate Executive, Chief Strategy Officer and Chief Commercial Officer (CSTO & CCO), the Company Representative Director, Executive Vice President, Chief Strategy Officer and Chief Commercial Officer (CSTO & CCO), the Company Representative Director, President and Chief Executive Officer (CEO), the Company Representative Director, Chairman of the Board, the Company (present post) Joined the Company President & CEO, OSI Pharmaceuticals, Inc. April 1986: October 2010: April 2012: July 2014: April 2019: April 2016: April 2018: June 2016: Senior Vice President, Chief Strategy Officer, Astellas Pharma Europe Ltd. Vice President, Licensing & Alliances, the Company Vice President, Corporate Planning, the Company Corporate Executive, Vice President, Corporate Planning, the Company Corporate Executive, Chief Strategy Officer (CSTO), the Company Corporate Executive Vice President, 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 March 2022: Representative Director, Executive Vice September 2021: October 2019: June 2019: April 2022: April 2023: 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 Representative Director, President and Chief Executive Officer (CEO), the Company (present post) April 1991: January 2005: November 2008: August 2012: Vice President, Human Resources, Joined Asahi Kasei Corp. Director, Human Resources, Medical Devices, Johnson & Johnson K.K. Vice President, Human Resources, Hilti Japan Ltd. July 2016: May 2021: October 2022: June 2023: AstraZeneca K.K. Senior Director, Human Resources, Microsoft Japan Co., Ltd. Executive Vice President, Human Resources, the Company (present post) Senior Corporate Executive (Senmu Tantou-Yakuin), Chief People Officer and Chief Ethics & Compliance Officer (CPO & CECO), the Company Representative Director, Executive Vice President, Chief People Officer and Chief Ethics & Compliance Officer (CPO & CECO), the Company (present post) April 1981: April 2003: Joined Kokusai Denshin Denwa Co., Ltd. (KDD) Executive Officer, General Manager, Solution Product Development Division, Solution Business Sector, KDDI CORPORATION June 2007: Managing Executive Officer, Executive Director, Solution Business Sector, KDDI CORPORATION August 2007: 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 Communica- tions Inc. Representative Director, President, KDDI CORPORATION Representative Director, Chairman of the Board, KDDI CORPORATION (present post) Director, Okinawa Cellular Telephone Company (present post) Director, the Company (present post) June 2010: December 2010: April 2018: June 2018: June 2021: *1 Figures for the rate of attendance in meetings of both the Board of Directors and the Audit & Supervisory Committee are for FY2022. *2 The number of shares of the Company owned is as of the end of March 2023. 72 June 1987: Joined Dow Corning Corporation (current Dow Silicones Corporation) April 1977: Joined Nissei Sangyo Co., Ltd. (current Hitachi High-Tech Corporation) March 2009: Chairman and CEO, Representative May 2011: June 2014: February 2015: June 2015: Director, Dow Corning Toray Co., Ltd. (current Dow Toray Co., Ltd.) Regional President Japan/Korea, Dow Corning Corporation (current Dow Silicones Corporation) Outside Director, Sony Corporation (current Sony Group Corporation) President, Representative Director, Dow Silicones Holdings Japan Kabushiki Kaisha (current Specialty Products Japan Godo Kaisha) Outside Director, Sumitomo Mitsui Financial Group, Inc. (present post) August 2020: 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 March 2022: Outside Director, Kao Corporation June 2022: June 2023: (present post) Director, the Company (present post) External Director, Nippon Sheet Glass Co., Ltd. (present post) July 2004: April 2007: April 2010: June 2002: January 1995: March 1990: Chief Representative, Kuala Lumpur Representative Office, Nissei Sangyo (Singapore) Pte. Ltd. (current Hitachi High-Tech (Singapore) Pte. Ltd.) General Manager, Electronic Components Div., Nissei Sangyo America, Ltd. (current Hitachi High-Tech America, Inc.) Deputy General Manager, Electronics Div., Hitachi High-Technologies Corporation (current Hitachi High-Tech Corporation) General Manager, Electronics Div., Hitachi High-Technologies Corporation (current Hitachi High-Tech Corporation) Executive Officer, General Manager, Regional Branch Office for West Japan Area and Kansai Branch Office, Hitachi High-Technologies Corporation (current Hitachi High-Tech Corporation) President and CEO, Hitachi High Technologies America, Inc. (current Hitachi High-Tech America, Inc.) Senior Vice President and Executive Officer, General Manager, Corporate Strategy Div., Fine Technology Systems Business Div. and CSO (Chief Strategy Officer), Hitachi High-Technologies Corporation (current Hitachi High-Tech Corporation) Representative Executive Officer, President and Chief Executive Officer, Hitachi High-Technologies Corporation (current Hitachi High-Tech Corporation) Representative Executive Officer, President and Chief Executive Officer and Director., Hitachi High-Technologies Corporation (current Hitachi High-Tech Corporation) Chairman Emeritus, Hitachi High-Tech Corporation Outside Director, Kurita Water Industries Ltd. (present post) Director, the Company (present post) June 2015: June 2022: June 2023: April 2021: April 2014: April 2015: Skills Matrix and Composition of Advisory CommitteesAdvisory BodiesNameOutside DirectorCompany ManagementGlobal BusinessScience & TechnologyLegal · Risk Management*Finance · AccountingAcademiaNomination CommitteeCompensation CommitteeDirectorKenji Yasukawa——Naoki Okamura——Katsuyoshi Sugita——Takashi Tanaka (Telecommunication)ChairChairEriko Sakurai (Chemicals)Member of the CommitteeMember of the CommitteeMasahiro Miyazaki (Precision instruments / Trading)Member of the CommitteeMember of the CommitteeYoichi Ohno (Medicine)Member of the CommitteeMember of the CommitteeDirectorAudit & Supervisory Committee MemberToru Yoshimitsu——Raita Takahashi (Accountant)——Mika Nakayama (Chemicals) ——Rie Akiyama (Lawyer)——* The description of “Legal · Risk Management” is partially different from the previous version due to a change in the criteria for risk management skills.*1 Figures for the rate of attendance in meetings of both the Board of Directors and the Audit & Supervisory Committee are for FY2022.*2 The number of shares of the Company owned is as of the end of March 2023.Yoichi OhnoOutside DirectorToru YoshimitsuDirector, Audit & Supervisory Committee MemberRaita TakahashiOutside Director, Audit & Supervisory Committee MemberMika NakayamaOutside Director, Audit & Supervisory Committee MemberRie AkiyamaOutside Director, Audit & Supervisory Committee MemberResume, position and responsibilities at the CompanyMay 1993:Assistant Professor, Internal Medicine, School of Medicine, Keio UniversityApril 1995:Deputy Chief, Internal Medicine, Tokyo Denryoku HospitalApril 2002:Director, Green Town Clinic Center, and Chief, Internal Medicine, Green Town ClinicJuly 2005:Chief, Nephrology, Endocrinology and Metabolism Department, Internal Medicine, Saitama City HospitalApril 2007:Senior Lecturer, Nephrology, Saitama Medical UniversityAugust 2007:Senior Lecturer, Community Health Science Center, Saitama Medical UniversityApril 2013:Associate Professor, Community Health Science Center and Nephrology, Saitama Medical UniversityApril 2020:Visiting Professor, Social Medicine, Research Administra-tion Center and Medical Education Center, Saitama Medical University (present post)June 2023:Director, the Company (present post)Resume, position and responsibilities at the CompanyApril 1987:Joined the CompanyApril 2013:Senior Vice President, Product & Portfolio Strategy, the CompanyJune 2015:Corporate Executive, Senior Vice President, Product & Portfolio Strategy, the CompanyApril 2017:Corporate Executive, Senior Vice President, Corporate Finance & Control, the CompanyApril 2019:Corporate Executive, Senior Vice President, Corporate Financial Planning & Analysis, the CompanyOctober 2019:Corporate Executive, Senior Vice President, Finance and Corporate Financial Planning & Analysis, the CompanyApril 2020:Report to CEO, the CompanyJune 2020:Director (Audit & Supervisory Committee Member), the Company (present post)Resume, position and responsibilities at the CompanyOctober 1986:Joined Sanwa · Tohmatsu Aoki Audit Corporation (current Deloitte Touche Tohmatsu LLC)August 1995:Joined Chuo Audit CorporationMay 1997:Established TAKAHASHI Accounting & Tax office (present post)April 1999:Representative Partner, ChuoAoyama PricewaterhouseCoopersDecember 2000:Outside Audit & Supervisory Board Member, Alpha Group Inc. (present post)March 2001:Representative Director, Yoshida Management Co. Ltd. (present post)June 2011:Trustee, Japan Association of Healthcare Management Consultants (present post)January 2018:Section President, Japanese Institute of Certified Public Accountants, Minami-Kyushu Chapter, Kagoshima SubcommitteeJune 2020:Director (Audit & Supervisory Committee Member), the Company (present post)Resume, position and responsibilities at the CompanyAugust 1984:Joined Nippon Synthetic Rubber Co., Ltd. (current JSR Corporation)April 2015:Officer, General Manager of Corporate Planning Department and General Manager of Diversity Promotion Office, JSR CorporationApril 2017:Executive Officer, General Manager of Intellectual Property Department, JSR CorporationJune 2020:Director, Senior Officer, General Manager of Sustain-ability Promotion Dept., JSR CorporationJune 2022:Director (Audit & Supervisory Committee Member), the Company (present post)Resume, position and responsibilities at the CompanyApril 1992:Joined Sanwa Bank Ltd. (current MUFG Bank, Ltd.)April 1999:Registered as attorney-at-law (Tokyo Bar Association)April 1999:Joined Baba Law Office (current Baba & Sawada Law Office) (present post)June 2019:Outside Director, GOLDWIN INC. (present post)June 2023:Director (Audit & Supervisory Committee Member), the Company (present post)Number of shares of the Company owned: 0 sharesRate of attendance in meetings of the Board of Directors: 100% (14/14 times)Rate of attendance in meetings of the Audit & Supervisory Committee: 100% (19/19 times)Number of shares of the Company owned: 47,818 sharesRate of attendance in meetings of the Board of Directors: 93% (13/14 times)Rate of attendance in meetings of the Audit & Supervisory Committee: 100% (19/19 times)Number of shares of the Company owned: 0 sharesRate of attendance in meetings of the Board of Directors: 100% (11/11 times)Rate of attendance in meetings of the Audit & Supervisory Committee: 100% (14/14 times)Number of shares of the Company owned: 0 sharesNumber of shares of the Company owned: 0 sharesCorporate Governance73Astellas Pharma Inc. Integrated Report 2023Corporate DataValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerStrengthen Foundation for Value CreationAstellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation 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 gover- nance from the following perspectives: 1 2 Ensuring transparency, appropriateness and agility of management; and Fulfillment of our fiduciary duties and accountability to shareholders and appropriate collaboration with all stakeholders. The summary of the Company’s 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 business execution, the Company establishes the Executive Committee for discussing important matters and appoints Top Management (the President and Chief Executive Officer; the Chief Financial Officer; the Chief Scientific Officer; the Chief Medical Officer; the Chief Manufacturing Officer; the Chief Commercial Officer; the Chief Strategy Officer; the Chief People Officer and Chief Ethics & Compliance Officer; and the General Counsel are collectively referred to as “Top Management”) to take responsibility for business execution. The responsibility and authority for the execution of business of the organ described above and the 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 Corporate Governance Systems (As of the end of June 2023) General Shareholders’ Meeting Internal Directors (4 males) Outside Directors (4 males and 3 females) Ratio of females 27.3% Election / Dismissal Term of Office The terms of office of 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 and supervision Audit Election / Dismissal Election / Dismissal ➀ Audit & Supervisory Committee Audit & Supervisory Committee Office Report Direction Report D i r e c t i o n I n t e r n a l A u d i t Internal Audit ( i C o o r d n a t i o n ) i F n a n c a i l A u d i t o r ① Board of Directors ③ Nomination Committee Compensation Committee Number of meetings Proposal / Report Appointment / Removal, Supervision Top Management Summary President and CEO CFO CMfgO CPO & CECO CScO CCO GC CMO CStO Executive Committee Proposal / Report Direction / Supervision Divisions Execution 74 At least once every 3 months and additionally as necessary • The Board of Directors ensures the transparency and appropriateness of management by making decision of corporate manage- ment 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. • At least one outside Director is to have management experience at other companies. Specific matters considered by the Board of Directors in FY2022 Corporate Strategy Risk Management Stakeholder Engagement Corporate Governance • Quarterly review of the progress of the corporate strategic plan • Formulation and revision of Primary Focus strategy • Revision of Focus Area strategy • Determination of FY2023 Corporate Annual Plan • Review of enterprise risks and the management status thereof • Review of audit results obtained by the Audit & Supervisory Committee and Internal Audit • Review of status of compliance activities • Approval of matters related to financial results • Review of results of employee engagement survey • Revision of sustainability policy • Review of status of sustainability activities • Review of status of dialogue with investment community • Evaluation of Board of Directors effectiveness analysis results • Deliberations and decisions on Directors & Officers appointment/ remuneration • Review of status of succession planning Reasons for appointment of outside DirectorsPositionNameReasons for appointmentOutside DirectorTakashi TanakaHe has been engaged in corporate management as a business manager of global telecommunications 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.Evaluation of effectiveness of the Board of DirectorsThe Company conducts an annual analysis and evaluation of the effectiveness of the Board of Directors as a means of examining and improving issues to further enhance the effectiveness of the Board of Directors, and discloses a summary of the results thereof.1The Chairman of the Board of Directors conducted a survey based on questionnaires to Directors.2Based on the results of this survey, the Board of Directors performed its analysis and evaluation.3Evaluation of effectiveness in FY2022It was determined that the overall effectiveness of the Board of Directors is sufficiently ensured.As a result of the survey on effectiveness, we obtained a high evaluation as a whole, and con-firmed that the following activities and discussions took place.• The Board of Directors formulates strategy and corporate strategic plan based on the business philosophy, and has discussions and makes decisions while always taking into consideration strategic direction.• The Board of Directors effectively utilizes the Nomination Committee, and appropriately super-vises succession planning and makes decisions regarding nomination.• The Board of Directors effectively utilizes the Compensation Committee, and appropriately establishes the remuneration system and decides the amounts of remuneration.Outside DirectorEriko SakuraiShe 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. Since June 2022, she 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, she has contributed to the deliberations of each Committee by vigorously expressing opinions. The Company expects her to leverage her abundant international experience and extensive insight for the management of the Company from an independent standpoint in the future as well.Outside DirectorMasahiro MiyazakiHe has extensive experience working overseas for an industrial trading company, and has been engaged in corporate management for many years as a business manager of a company that develops business globally in the field of precision instruments, etc. He possesses abundant international experience and extensive insight. The Company expects him to leverage his abundant international experience and extensive insight for the man-agement of the Company from an independent standpoint.Outside DirectorYoichi OhnoHe has been engaged in medical treatment for many years as a medical scientist and a clinician, and has abundant specialized knowledge and experience in medical treatment. The Company expects him to leverage his abundant specialized knowledge and experience to the management of the Company from an independent standpoint.Outside Director, Audit & Supervisory Committee MemberRaita TakahashiWith 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 account-ing 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 indepen-dent 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.Outside Director, Audit & Supervisory Committee MemberMika NakayamaShe 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 manage-ment in the future as well.Outside Director, Audit & Supervisory Committee MemberRie AkiyamaShe has been engaged in corporate legal affairs as an attorney-at-law, and has abundant specialized knowledge and experience gained through working on international cases, serving as a civil mediator at the Tokyo District Court, etc. The Company expects her to leverage her abundant specialized knowledge and experience to supervise and audit the Company’s management.Corporate GovernanceInitiatives to raise the effectivenessThe Board of Directors evaluated itself as there being room for further improvement with regard to dialogue with stakeholders and oversight of sustainability activities. It will strive to further increase its effectiveness, by working to understand the expectations and opinions of various stakeholders and reflecting them in discussions at Board of Directors meetings, and by deepening its involvement in and strengthening oversight of sustainability activities, including environmental, social, and governance issues.75Astellas Pharma Inc. Integrated Report 2023Corporate DataValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerStrengthen Foundation for Value CreationAstellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Corporate Governance (2) Audit & Supervisory Committee (3) Nomination Committee and Compensation Committee Internal Director (1 male) Outside Directors (1 male and 2 females) Ratio of females 50% Term of Office Number of meetings The term of office of Directors who are Audit & Supervisory Committee Members shall be 2 years Once a month in principle 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, 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. At least one of the Audit & Supervisory Committee Members is to have sufficient expertise in finance and accounting. Specific matters considered by the Audit & Supervisory Committee in FY2022 Specific matters considered by the Audit & Supervisory Committee include the Audit & Supervisory Committee’s audit policy, audit plan and audit results, results of the audit of the business report and financial statements, the Internal Audit division’s audit plan and audit results, development of the internal control system and its operational status, Financial Auditor evaluation and remuneration, etc., and opinions about election, remuneration, etc., of Directors (excluding Directors who are Audit & Supervisory Committee Members). During FY2022, the Audit & Supervisory Committee focused on the following key audit items: • Status of HR systems, policies and measures • Status of PMI (Post Merger Integration) at the acquired companies • Status of governance of subsidiaries • Status of response to challenges associated with global- • Status of outsourcing • Status of risk response and risk management • Status of compliance and supervision • Status of Environmental, Social and Governance (ESG) policies and initiatives Nomination Committee Outside Directors (3 males and 1 female) Ratio of females 25% The Nomination Committee deliberates matters relating to the election and dismissal of Directors and appoint- ment and removal of Top Management, etc., and reports the results of their deliberations to the Board of Directors. Specific matters considered by the Nomination Committee in FY2022 Election and dismissal of Directors, etc. • Election and dismissal of Directors*1 • Selection and dismissal of Representative Directors • Selection and dismissal of Directors with executive power • Appointment and removal of Top Management, etc. • Top management structure, etc. Succession planning Succession planning for internal Directors and Top Management *1 This includes the method of searching for and selecting new candidates for outside Directors. Compensation Committee Outside Directors (3 males and 1 female) Ratio of females 25% 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 remuneration for individual Directors who are Audit & Supervisory Committee Members), and reports the results of their deliberations to the Board of Directors. Specific matters considered by the Compensation Committee in FY2022 Executive remuneration level, remuneration system, etc., for FY2023 • Establishment of remuneration levels by position and by individual • Revision of incentive-based remuneration system (introduction of clawback clause, adoption of a sustainability performance indicator in company-wide performance assess- ment for bonuses and design of assessment system, revision of performance assessment system for Top Management, etc.) Bonuses for FY2021 Company-wide performance assessment results and amount paid by individual Bonuses for FY2022 Company-wide performance targets and assessment table FY2019 stock compensation*2 Achievement of performance targets and number of shares delivered by individual FY2022 stock compensation*3 Trust setup and TSR Peer Group*4 setup *2 FY2019 is the first business year of the assessment period for stock compensation, and FY2021 is the last business year of the assessment period for ization and reorganization • Status of IT-related maintenance and support stock compensation. • Accounting procedures (including tax processing) based on management’s estimates and judgments involving significant risks *3 FY2022 is the first business year of the assessment period for stock compensation, and FY2024 is the last business year of the assessment period for stock compensation. *4 See P.79 for details. 76 Astellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Corporate Governance Amounts of remunerations 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 who are Audit & Supervisory Committee Members 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 delibera- tions 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 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 aforemen- tioned 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. Total amount of remunerations, total amount of remunerations by type, and number of Directors applicable for each category of Directors (FY2022) Category Total amount of remunerations (Millions of yen) (1)+(2)+(3) Total amount of remunerations by type of remuneration (Millions of yen) 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) Outside Directors who are Audit & Supervisory Committee Members Total 706 97 802 67 70 137 229 97 326 67 70 137 255 — 255 — — — 222 — 222 — — — 484 97 581 67 70 137 477 — 477 — — — 3 5 8 1 4 5 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 three whereas the number of outside Directors who are not Audit & Supervisory Committee Members was four. *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 five. *3 The amounts of “Basic remuneration” above include the amounts paid to two Directors (including 1 outside Director) who are not Audit & Supervisory Committee Members and one outside Director who is an Audit & Supervisory Committee Member who retired at the close of the 17th Term Annual Shareholders Meeting held on June 20, 2022. *4 The Company has introduced a performance-linked stock compensation scheme (stock compensation), which employs a framework referred to as the executive remuneration BIP (Board Incentive Plan) trust, for the purpose of increasing the awareness of contribution to the sustainable growth of the business results and enterprise value. The Scheme is a medium- to long-term incentive-based remuneration plan that is highly transparent and objective and closely linked with the Company’s business results. Under the Scheme, with respect to the three consecutive business years of an applicable period, the Company contributes, in the initial business year of each applicable period, funds for remuneration to the Directors to the executive remuneration BIP trust. The ceiling amount of the contribution was resolved to be an amount not exceeding ¥1,640 million at the 14th Term Annual Shareholders Meeting of the Company held on June 18, 2019. The maximum number of the Company’s shares acquired by Directors (including the number of the Company’s shares to be converted into cash) was resolved to be the number obtained by dividing ¥1,640 million by the average closing price of the Company’s shares on the Tokyo Stock Exchange in the month (March) before the initial month (April) of the first business year of every applicable period at said Annual Shareholders Meeting. At the close of such Annual Shareholders Meeting, the number of Directors who are not Audit & Supervisory Committee Members (excluding outside Directors) was three. The stock compensation stated above refers to the amount recorded as expenses under J-GAAP for the business year under review. 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 empha- sizes increasing enterprise value and shareholder value A remuneration system and composition that are closely linked to performance with an emphasis on increasing enterprise and share- holder value over the medium- to long-term 3 Fair and impartial remunera- tion 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). Remuneration structure/Remuneration levels* Type of remuneration Fixed Basic remuneration Variable Bonus (short-term incentive remuneration) Stock compensation (medium- to long-term incentive remuneration) Objectives and overview Fixed remuneration for encouraging job performance consistently aligned with professional responsibilities • Remuneration levels determined based on trends with respect to remuneration benchmark company groupings • Paid in equal installments every month Performance-linked remuneration geared to steadily improving results with the aim of achieving the business performance targets each business year • The base amount to be paid upon achieving targets is set as a proportion • Specific amount to be paid is to be determined within range of 0% to of basic remuneration, depending on factors such as professional 200% for the base amount, depending on factors such as level of responsibilities (consideration placed on trends with respect to achieving business performance targets each business year remuneration benchmark company groupings) • In principle, lump-sum payment immediately subsequent to conclusion of respective business years around between June and July Performance-linked remuneration to promote the management focused on improving the enterprise value and shareholder value over the medium- to long-term • 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 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 three-year period • In principle, delivered in a single installment around June occurring immediately after conclusion of the three-year applicable period (provided, however that 50% of payment shall be cash payment) *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 * To ensure competitive remuneration levels for the Company’s Directors that enable the Company to recruit and retain talents, the Company will use the objective remuneration survey data of an external expert organization (“Willis Towers Watson Executive Compensation Database (Japan)”) and other sources to select a group of companies for remuneration benchmarking, and set the remuneration levels in accordance with responsibility and other factors. 77 * The figures shown in parentheses indicate the remuneration levels (base amount) for FY2023.Bonus (short-term incentive remuneration) (FY2022)Targets, actual results and bonus payment rate of respective key performance indicators of bonusKey performance indicatorsAssessment weightingVariance of assessment coefficientReasons for the selection of indicators and targetsActual resultsAssessment coefficientRevenue25%0%–200%Reasons for the selection: To assess the increase in size of business• Maximum: Target × 105% (¥1,515.2 billion)• Target: Initially released forecast value (¥1,443.0 billion)• Minimum: Target × 95% (¥1,370.9 billion)¥1,518.6 billion200.0%Core operating profit ratio25%0%–200%Reasons for the selection: To assess the increase in business profitability and operational efficiency• Maximum: Target × 110% (22.1%)• Target: Initially released forecast value (20.1%)• Minimum: Target × 90% (18.1%)18.9%40.0%Core EPS*25%0%–200%Reasons for the selection: To assess the increase in profit per share• Maximum: Target × 115% (¥140.36)• Target: Initially released forecast value (¥122.05)• Minimum: Target × 85% (¥103.74)¥123.42107.5%R&D performance25%0%–200%Reasons for the selection: To assess the achievement of sustainable growthTarget: Set quantitative targets separately for research and development(1) Research: Number of new drug candidates(2) Development: Amount of increase in pipeline value—83.1%Total100%0%–200%Bonus payment rate: 107.6%* EPS: Earnings per ShareIndicator introduced from FY2023 onwardKey performance indicatorVariance of assessment coefficientReasons for the selection of indicator and targetsSustainability performance–10% to +10%Reasons for the selection: To assess efforts toward the achievement of a sustainable societyTargets: Set sustainability performance targets for the following four evaluation items(1) Initiatives for Access to Health(2) Initiatives for Talent and Organization(3) Initiatives for Stable Products Supply(4) Initiatives for Environment SustainabilityRemuneration levels (base amount) for Directors of the Company on a per position basis and allocated ratios of remuneration (FY2022) Base amount (Thousands of yen) Stock compensation (medium- to long-term remuneration) Bonus (short-term incentive remuneration) Basic remuneration500,000300,000100,000200,000400,000040%40%%3833%33%%3127%102,000127,500153,00070,30870,31684,376133,200(137,520)166,800(171,820)200,000(240,660)27%%31Representative Director, Chairman of the boardRepresentative Director, President and CEORepresentative Director, Executive Vice President“Deepen our engagement in sustainability” was set as one of the Strategic Goals in Corporate Strategic Plan 2021• Sustainability performance indicators added to bonuses (short-term incentive remuneration)• Performance targets related to sustainability initiatives set for each business year• Bonus payment rate within a range of –10% to +10% according to the level of achieving performance targetsReasons for selection of evaluation items:• These items were not adequately reflected in conventional indica-tors for our sustainability initiatives tackling major social issues.• Evaluation of major initiatives related to stakeholders (especially patients, investors, employees, and society) will be reflected widely in sustainability performance, which is one of the indicators for company-wide performance.Sustainability Compensation KPIsInitiatives for Access to HealthInitiatives for Talent and OrganizationInitiatives for Stable Products SupplyInitiatives for Environment SustainabilityIncorporation of Sustainability PerformanceThe Company newly incorporated sustainability performance into its key performance indicators in FY2023.Sustainability performance will be evaluated based on the following four evaluation items.Corporate GovernanceTOPICS78Astellas Pharma Inc. Integrated Report 2023Corporate DataValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerStrengthen Foundation for Value CreationAstellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation 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 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 promoting management that emphasizes increase in enterprise value and shareholder value over the * 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 medium- to long-term. As such, the Company’s shares will be delivered based on the level of growth of enter- tax and other such taxes. prise value and shareholder value over 3 consecutive business years (“Applicable Period”), and an appropriate (a) Basic points per position 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 = (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.78 (ii) Average closing price of the Company’s share on the Tokyo Stock Exchange in the month prior to start of the Applicable Period Company’s TSR and that of global pharmaceutical companies (the TSR Peer Group*2) for the Applicable Period. (b) Assessment coefficient 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 company 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. Targets and actual results of respective key performance indicators, and share delivery rate (stock compensation with FY2022 as the last business year of the assessment period for stock compensation) Stock price assessment benchmarks Assessment weighting Variance of assessment coefficient Reasons for the selection of benchmarks 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 Targets Actual results 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 (midrange) • Minimum (threshold): 25 percentile (lower quartile) TOPIX growth rate: 154.3% Growth rate of the Company’s TSR: 127.0% The Company’s ranking: 16th out of 31 companies Assessment coefficient 200.0% 82.3% = (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 calcu- lated is less than 50%. Company TSR during the Applicable Period TOPIX growth rate during the Applicable Period = { (B – A) + C } ÷ A + 100% (E – D) ÷ D + 100% A: Simple average closing price of the Company’s share on the Tokyo Stock Exchange in the month prior to start of the Applicable Period B: Simple average closing price of the Company’s share 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 midrange (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 assessment coefficient (1) Company TSR + 100% 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) * TSR of the Company and the TSR Peer Group companies is to be calculated using the formula shown below. TSR = { (B – A) + C } ÷ A 100.0% 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 compa- Total 100% 0% to 200% Share delivery rate: 91.2% nies during the Applicable Period 79 Astellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Corporate Governance Systems to Ensure the Appropriate Execution of Business The Company has set out basic policies 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 Direc- tors, who participate in decision makings 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 Financial Officer; the Chief Scientific Officer; the Chief Medical Officer; the Chief Manufacturing Officer; the Chief Commercial Officer; the Chief Strategy Officer; the Chief People Officer and Chief Ethics & Compliance Officer and the General Counsel 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 three (3) months and additionally as necessary. • The Company has established the Executive Committee and discusses material matters concerning business strategies, product strategies, cooperate 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 manage- ment as well as the decision-making process. • The Company has developed the personnel and organization 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 appro- priate 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 meet- ings of the Board of Directors and the Executive Committee are available for inspection by the Direc- tors 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 compa- nies 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 delib- eration 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 conti- nuity 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. 80 (3) Compliance System (System to Ensure (4) System for Disclosure and Management that the Performance of Duties by Direc- tors 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 People 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 People 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. 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 disclo- sure and dialogue, the Company is committed to further enhancing its transparency and strive 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 Report • The Company will design and operate internal controls over consolidated financial report in accordance with generally accepted standards in order to ensure reliability of the financial report, and assess the effec- tiveness 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 imple- mented, under the direction of the President and CEO, who owns 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 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Corporate Governance • The Company will apply the “Astellas Charter of Corpo- rate 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 as 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 struc- tures 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 compa- nies; 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. • The Head of Internal Audit division, who directly reports to President and CEO, will manage the entire global internal audit function, address risks effectively by leveraging assigned personnel (Business Partnership) in line with the functional based global organization and continuously enhance the function to provide all the Astellas 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. 81 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 report and methods of reporting by mutual agreement with 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 informa- tion with respect the Company and the Astellas Group companies. 4) System to Ensure that Informants Do Not Risk Unfavorable Treatments due to Their Reporting to the Audit & Supervisory Committee • The Company prohibits any unfavorable treatment of officers or employees of the Company and the Astellas Group companies who report to the Audit & Supervi- sory 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 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 Internal Audit division as needed. In the case where a direction from 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 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. (9) System to Exclude Anti-social Forces 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 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Dialogue with Outside Directors Takashi Tanaka Outside Director Mika Nakayama Outside Director Astellas’ Corporate Culture and its Strengths * This dialogue was conducted in May 2023. The Corporate Strategic Plan 2021 (CSP2021) is a very challenging plan, in other words, a highly ambitious plan to become a global leader in the pharmaceutical industry by continuously creating innovation. In the first fiscal year after Astellas’ foundation through a merger in April 2005, domestic revenue accounted for most of the consolidated total. In FY2022, though, only about 20% of total revenue was generated in Japan. In the 15 years from 2005 to 2020, Astellas has made a rapid and steady change in the regional composition of its revenues and is pushing for globalization. Another notable change has been the strategic shift from a business model focusing on specific disease areas to a Focus Area approach that explores new business opportunities from a multidimensional approach. In the process, Astellas has evolved into a company capable of sustained transformation, through prompt decision-making, delegation of authority, and organi- zational change. Astellas’ corporate culture does not always remain the same, nor is it forced to change, but rather, it anticipates change as One Astellas. Management mindset is extremely important for this, and while Astellas has a consistent strategy, it also has ability to quickly change course when necessary. In Astellas management I see an unwavering commitment to achieving its goals. As for initiatives helping employees to adapt to rapid change, I also have a Mika Nakayama: About a year has now passed since I assumed the role of outside Director. high regard for the Company’s use of data to monitor progress toward individual objectives, and Prior to my appointment, I just assumed that the organizational culture within Japan’s pharma- its creation of opportunities for direct communication between management and employees ceutical industry would retain many vestiges of the past. When I joined Astellas, though, I realized including Ask Me Anything sessions. that the Company is ahead of the curve, with operations that are much more global in nature than I ever imagined. Astellas does not seem to be hesitant to change, and I believe the Organizational Health Goals (OHGs) from outside Directors’ perspective Company is strongly committed to carrying through the decisions it makes. I also assumed that there would be some perception gaps between management and employees, but through Takashi Tanaka: Even excellent strategies are meaningless if not executed. And even if they are conversations with the latter, as part of Audit & Supervisory Committee activities, I found that executed, they are meaningless if not effective. OHGs are indicators used to ensure appropriate management views have penetrated through to employees more than I had imagined. conditions regarding the number of organizational layers, decision-making processes, and Astellas is strongly promoting globalization, and all employees are now moving forward delegation of authority, etc. It is essential, though, to monitor the progress of these initiatives and toward its goals after a period of turmoil associated with its transformation. There may be many in some cases adjust them according to the situation. For that reason, it is important from the difficulties, but I felt that employees are strongly motivated and optimistic about taking on outset to be a healthy organization that can adapt flexibly to change. At Astellas, not only do challenges and overcoming difficulties. management have a firm grasp of these indicators, but also, the OHGs are widely disseminated among employees, ensuring that management and employees have both a shared under- Takashi Tanaka: June 2023 marks two years since I assumed my role as an outside Director, standing and common goals. I remain very impressed by this approach, as an organization and I feel that “transformation” is at the heart of Astellas’ corporate and organizational culture. cannot be healthy if employees are positive in front of management but dissatisfied deep down. 82 Astellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Dialogue with Outside Directors Mika Nakayama: Companies often ostensibly state the importance of strategy and organization fiercely competitive worldwide, Astellas is setting remuneration levels and considering revisions health, but not many actually put it into practice at all levels of the organization. More often, to the remuneration system, referring to global benchmarks to promote change. The most recent employees may understand the ideal but hold contrasting opinions, resulting in less than full revision to the remuneration system was the adoption in FY2023 of a sustainability performance commitment to the ideal. At Astellas, though, rapid globalization has been accompanied by an indicator for determining Directors’ bonuses, a form of performance-linked remuneration influx of diverse talent, so employees are less willing to accept inconsistency between what is (short-term incentive remuneration). Although sustainability efforts are long-term and will not thought and said. If each and every employee is committed to their duties and works on shared yield results over a short period of time, I believe it is important to steadily build results each year goals, it will certainly show through in the results. This inconsistency between what is said and in order for the Company to achieve its long-term goals. As sustainability initiatives progress, what is actually meant can be common in Japanese companies, but I believe is rarely seen in priorities may change, and I highly rate the fact that the Company sets targets and action plans globalized organizations. By leveraging its global nature and diversity, I believe Astellas can each fiscal year and reflects how well targets were achieved in remuneration for management. become a very strong organization. Takashi Tanaka: As Ms Nakayama has said, it is rare in Japan for large companies to set organizational health goals and pursue those goals in a manner consistent with their strategy. When there is a lack of consistency between what employees are saying and what they are thinking, the organization’s strategy will suffer. However, from my perspective as an outside Director, I believe that in placing great emphasis on Organizational Health Goals, Astellas’ management is expressing its intent to carry through its strategy and conveying a very powerful message to its employees. Views on succession planning and compensation system Mika Nakayama: As for succession planning, Astellas has a list of several candidates (including emergency replacements) for all Top Management positions including the CEO. It identifies not only next-generation candidates but also those for the longer term, whom it closely monitors, with a view to providing opportunities for career development. Of course, unforeseen circum- stances can occur and things do not always go as planned. At Astellas, though, the Nomination Committee submits an annual succession planning report to the Board of Directors, adjusting the candidate list as needed. While I am not a member of the Compensation Committee, I have been given a detailed explanation of the remuneration system and what is discussed by the Compensation Committee. In order to better attract the talent needed to enhance corporate value in an industry that is 83 Astellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Dialogue with Outside Directors Takashi Tanaka: Astellas formulates strategy through highly transparent discussions including Effectiveness of Board of Directors the Nomination Committee and Compensation Committee. As a member of the Compensation Committee, I believe it an appropriate decision that sustainability performance be added to the Takashi Tanaka: The most important part of the deliberations, in my opinion, is the discussion indicators for determining Directors’ remuneration, since “Deepen our engagement in sustain- on sustainability, including the revision of the Materiality Matrix. As a pharmaceutical company, ability” is one of the Strategic Goals set in CSP2021. As FY2023 marks the first fiscal year of using Astellas naturally has a vision of how it should be conducting drug discovery. At the same time, this performance indicator, in FY2024 we plan to continue discussing and reviewing this practice, though, the Company has a societal obligation to pursue sustained improvement in corporate based on the progress and results in FY2023. value, including via non-financial initiatives. Outside Directors also place great importance on As can be said about the introduction of sustainability indicators, Astellas considers items on sustainability. I heard that thorough discussions were held when including sustainability in its agenda from a long-term perspective. It has a sincere company culture in terms of steadily CSP2021. I believe introducing sustainability indicators into Directors’ compensation was a growing each year toward its goals, and I think this is a characteristic typical for pharmaceutical meaningful decision by the Board of Directors. companies, given the long-term nature of pipeline development. Monitoring is another important responsibility for outside Directors. We use a data-driven approach to monitoring the progress of CSP2021, including the non-financial targets. At many companies, the person in charge of each business reports quarterly on progress and key issues to the Board of Directors. At Astellas, though, the CEO himself covers and reports on all company- wide operations. When joining Astellas I was very surprised by the CEO’s deep grasp on the Company’s operations. I feel that the effectiveness of the Board of Directors has improved over the past two years. In particular, the advance briefings to outside Directors, which it has been focusing on since FY2022 have contributed greatly. Since the Board members have most of their questions about financial results and other important matters answered in advance, important points can be focused on when the Board of Directors meets. Mika Nakayama: In my previous job, I also had the opportunity to give advance briefings to outside Directors on Board meeting agendas. While I struggled greatly with taking sole responsibility for briefing Directors on a wide range of issues, I believe this practice was highly effective. Takashi Tanaka: Without advance briefings, it takes time to gain Directors’ understanding of the issues, often leaving more items to be checked when questions are raised. However, when Board members meet having had prior questions answered, efficacy is significantly enhanced as one-directional explanations for the most part can be replaced with reciprocal dialog. At many 84 Astellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Dialogue with Outside Directors companies, outside Directors are not as well-informed as their internal counterparts. I think Expectations of Astellas Astellas’ efforts in this regard have been particularly effective. To further facilitate information-sharing, after the Board of Directors meeting we have a forum Takashi Tanaka: What I am most impressed with is that Astellas lists “We excel as One Astellas” (Outside Directors’ Meeting) for outside Directors to exchange opinions amongst themselves. as one of its most important organizational health goals for achieving sustainable growth. I have been able to add to my knowledge of Astellas by inquiring into other outside Directors’ Some might say that technologies and development capabilities are key to adapting to both views and the background information. In addition, at the Outside Directors Meetings, we discuss market changes and the modifications to organizational structures and pharmaceutical devel- matters to further improve the Board of Directors and convey the consensus of the outside opment processes dictated by globalization. Others might say that this rests on reviewing Directors to the executive team. Role of outside Directors in achievement of CSP2021 pipelines and organizational flattening. Ultimately, though, realizing sustained growth rests on Astellas’ organization—namely on One Astellas. I very much approve of Astellas’ choice of this wonderful goal, but at the same time one of the challenges is that the size of the Company’s goals requires a large amount of effort from employees. However, I feel that Astellas employees Takashi Tanaka: Unforeseen circumstances can force executive officers into correcting their have the ability to overcome these challenges. course. As an outside Director, it is very important to support the executive team when they are hesitant in making a decision about a change of course, if you believe that it is necessary to Mika Nakayama: Astellas has clearly defined objectives, strong management, and a sense of achieve the corporate strategic plan since it is difficult for the executive Directors to express a unity among employees. If such attributes are overemphasized, though, it may inhibit innovative statement that differs from what they said in the past. For Astellas to deliver sustained growth, organizational culture, free thinking, and new challenges. As Astellas continues to compete it is essential to manage the Company in accordance with the current management framework— globally, I believe it is important to avoid putting too many constraints on employees, and to CSP2021. To achieve each goal in CSP2021, I will support the executive team as an outside maintain and improve the vitality of employees, which is the foundation of the Company’s Director, and if Astellas should stray too far from its VISION, I will have the courage to speak up sustainability. and express my opinion clearly. From a diversity perspective, especially in Japan, while advancing initiatives for raising the female ratio to a certain level, we should not be bound by numerical objectives including the Mika Nakayama: As both an outside Director and Audit & Supervisory Committee member, percentage of female managers, but should understand what “diversity” really means so that we I engage with employees of various divisions. I will discuss both positive and negative aspects can achieve an all-around diverse talent pool in an appropriate and compliant manner. based on opinions from the workplace and encourage intelligent risk-taking to create innovation. Given the high degree of compliance awareness already fostered at Astellas, it is important to Takashi Tanaka: I feel that Astellas has been able to diversify naturally when it comes to the take a flexible approach to realize the Company’s VISION. The sincerity of the people at Astellas company as a whole including on a global scale. The remaining issue is the employee selection may lead to a situation in which they keep things they should be saying out loud to themselves. process. Recruitment is prone to company-specific quirks, and unique individuals sought by While monitoring the direction of management, as suggested by Mr. Tanaka, I would like to give management may be dropped in the early stages of hiring. However, in the case of Astellas, it hires appropriate support to the executive team. worldwide and attempts to diversify at the point of hiring, so I expect Astellas to continue to attract talent on a global basis while aiming to become a company where a diverse range of talent can play an active role. As outside Directors, we will continue to support Astellas’ future challenges from a supervisory standpoint, while maintaining appropriate communication with the executive team. 85 Astellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Risk Management Business Risks Regulations and other Systems regarding Risk 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 (1) Risk Management Framework Relating to the Performance of Business Activities Astellas’ risk management framework is as follows: Risk Management Framework Board of Directors Reports progress status Appoint Owner and promote risk mitigation within the Group and the proper response to such risks through the Executive Committee Catastrophic Risk Owners following activities: Report and approve the result of global risk and resilience management Report progress status of risk mitigation plan — With respect to measures dealing with risks relating to business opportunities, each responsible Global Risk and Resilience Management Committee division and unit will implement appropriate measures to mitigate risks within their respective • Identify catastrophic risk and appoint owner of the risk 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 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. • Discuss risk mitigation plan, report the plan to Executive Committee, and monitor the progress status • Monitor emerging risk, status of Crisis Response Plan, Scenario Specific Playbook and Business Continuity Plan, and on-going crisis Reports results of division risk and resilience management Corporate Strategy Analysis and aggregation Research DRRC Technology & Manufac- turing DRRC Medical & Develop- ment DRRC Japan Commercial DRRC Greater China Commercial DRRC Interna- tional Markets Commercial DRRC United States Commercial DRRC Established Markets Commercial DRRC Divisional Risk Owners DRRC: Acronym for Divisional Risk and Resilience Management Committee 86 Risk Management(2) Identifying and Mitigating Risks Relating to the Performance of Business ActivitiesPharmaceutical 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 imple-mented until now.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 an action plan. 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.(3) Catastrophic RisksThe 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.Any forward-looking statements are based on judgments at the end of FY2022.1 Risks related to Cyber SecurityIn recent years, the technology involved in cyber attacks is advancing at an unprecedented level and the methods of attack are growing more diverse and sophisticated. In light of this environment, Astellas has identified risks related to Cyber Security as one of its critical risks. The Ethics & Compliance division is leading the response to this risk, implementing various countermeasures against cyber attacks 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 cyber attack or serious system failure, etc., caused by a cyber attack, 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 managementIn 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. Technology & Manufacturing 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 introduced 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.In addition to the above catastrophic 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 disasters, 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.87Astellas Pharma Inc. Integrated Report 2023Corporate DataValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerStrengthen Foundation for Value CreationInspiring a Culture of IntegrityPromoting Accountability, Compliance, and IntegrityEnhancing and Sustaining an Ethical and Compliant CultureHealthcare ComplianceAnti-Bribery and Anti-Corruption (ABAC)Our dedication to serving patients is matched only by our commitment to acting with integrity in everything we do. The Astellas Charter of Corporate Conduct expresses the Company’s ethical business philosophy for corporate behavior. The Astellas Group Code of Conduct (Code) establishes the expectation that everyone globally, including those working on behalf of Astellas, perform their duties ethically and in compliance with laws and regulations. Ethics & Compliance enables employees to make ethical and compliant decisions by providing guidance and training. The ethical decision-making framework, called Ethics, Value & Risk (EVR), teaches employees how to identify risks and make ethical decisions. This promotes accountability for ethical decisions. In FY2022 Global Engagement Survey, Integrity became Astellas’ top strength, highlighting our continued focus on creating the right culture.“I feel strongly that Astellas employees strive to behave ethically and that this behavior rewards itself. Astellas rewards ethical behavior.”“My department has great integrity and trustworthy people. I respect my colleagues in my department.”Our mission is to provide safe, effective medical products that provide VALUE to patients. Therefore, we engage ethically with Healthcare Professionals (HCPs), Healthcare Organiza-tions (HCOs), and patient organizations, providing them with accurate information about our products and their approved uses. The medical and scientific exchange between manu-facturers and healthcare providers is essential to delivering innovative, reliable pharmaceuticals and contributes to improving the health of patients around the world. Astellas is committed to engaging in appropriate financial relationships with HCPs and HCOs. We enter into consultant, fee-for-service agreements with them based on eligibility criteria. There must be a documented and reasonable business need for their unique advice, expertise, or services, and payment is never provided as a reward or incentive for past, present, or future product use or recommendation. Astellas adheres to all transparency requirements across the globe, disclosing financial relationships (transfers of value) in accordance with local law and code. Such disclosures to stakeholders, legislative bodies, and the public, fulfill our obligations of corporate accountability.We are committed to operating with a high sense of integrity. Astellas strictly prohibits bribery and corruption in any aspect of its business, including facilitation payments, and has a zero-tolerance policy. We comply with all applicable anti-corruption laws. Our ABAC commitment is embodied in the Code, the Astellas Group Policy on Anti-Bribery and Anti-Corruption Compliance, global policies and procedures, training, communications, risk assessments, monitoring, auditing, reporting and investigation activities. These are consistent with the U.S. Foreign Corrupt Practices Act, the UK Bribery Act, and other applicable local ABAC laws and regulations. All employees are responsible for ethics and compliance and have the responsibility to Speak Up if there is a concern of a potential or actual violation of applicable laws, codes, Astellas policies and procedures, or other illegal or unethical behavior or business practices. Astellas’ hotline, EthicsPoint, provides a confidential method for anyone to share their compliance questions, concerns, or reports of alleged misconduct with us. Reports may be made anonymously, if allowed by local laws and regulations. Significant efforts are placed on preventing instances of non-compliance. Ethics & Compli-ance conducts proactive monitoring of business activities and processes, providing opportunities for early detection and risk identification. Lessons-learned discussions, communications, training, and process improvement help employees avoid non-com-pliance in the future.“I feel re-inspired in my profes-sion because the work is mean-ingful and mission-driven.”“Thankful for this opportunity to deliver VALUE to patients.”88Astellas Pharma Inc. Integrated Report 2023Corporate DataValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerStrengthen Foundation for Value CreationAstellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Inspiring a Culture of Integrity Astellas prohibits third parties from engaging in bribery and corruption as embodied in the Astellas Group Policy on Anti-Bribery and Anti-Corruption Compliance and the Astellas Business Partner Code of Conduct. We conduct ABAC due diligence assessments, monitoring, and periodic audits on third parties interacting with HCPs or government officials and include risk-based ABAC clauses in third party contracts. We investigate potential incidents of non-compliance and audit Astellas affiliates covering business activities that may involve heightened ABAC risks. Astellas signed the United Nations Global Compact, including its 10th Principle Against Corruption, and the Tokyo Principles for Strengthening Anti-Corruption Practices. Our internal control environment complies with J-SOX regulatory requirements to ensure financial reporting integrity, including fraud prevention and detection. Conflicts of Interest Astellas’ Global Conflict of Interest Policy reinforces the expectation that employees act and make business decisions that impact Astellas based on Astellas’ best interests and to avoid potential situations or the appearance of a conflict of interest. We engage employees in the disclosure process and associated training to enhance their ability to identify and avoid personal conflicts and take greater ownership of compliance. E&C Governance Structure Chief People Officer and Chief Ethics & Compliance Officer (CPO & CECO) Global Head of Ethics & Compliance Anti-Bribery / Anti-Corruption (ABAC) Data Privacy Third Party & Distributor Risk Conflicts of Interest Healthcare Compliance Compliance Investigations International Trade Compliance Global Excellence & Transformation Global Liaison Information Security Heads of Strategic Business Partnering Global Compliance Committee Regional Compliance Committees Global Functions Medical & Development Global Commercial Japan Established International Greater China United States Ensuring Fair Competition Astellas conducts its business in a fair and competitive environment. We do not make agreements with competitors regarding sales conditions, such as prices, sales plans and strategies, and market and customer shares. We limit our engagement with competitors and avoid any conversation concerning these topics when engagement is necessary, so that such interactions are not misinterpreted. Safeguarding Privacy Delivering VALUE for patients is at the core of everything we do. This includes safeguarding and ensuring the appropriate use of personal information we receive from individuals, physicians, patients, employees, and suppliers. Our stakeholders trust us to keep their information safe, use it transparently, and handle it with care. All Astellas employees and third parties working on behalf of Astellas are committed to respecting and protecting personal information. Astellas’ Ethics & Compliance Data Privacy Office ensures that Astellas has a robust global Privacy Program. We provide advice and guidance to ensure the appropriate collec- tion, processing, sharing, and retention of personal information across Astellas. We have a documented, structured Privacy Management Framework, which covers 21 basic data processing activities and provides a consistent Global Privacy Strategy. The organizational structure, privacy tools and processes allow the early identification of privacy risks globally and their effective remediation. Astellas’ E&C Data Privacy Office ensures we adhere to all applicable privacy laws and regulations globally and monitors compliance with them. Astellas’ Global Data Privacy Policy, privacy processes, controls and security measures constitute the essential framework to protect our organization, its assets, and the personal information we process. Astellas awarded Compliance Leader Verification™ Astellas has earned Compliance Leader Verification® (“CLV”) from Ethisphere, a global leader in defining and advancing the standards of ethical business practices. Ethisphere's CLV recognizes organizations with an outstanding commitment to achieving a best-in-class ethics and compliance program. 89 Corporate DataFinancial Data 91Non-financial Data 94Major Pipeline 96Company Overview 99Corporate DataCONTENTS90Astellas Pharma Inc. Integrated Report 2023Strengthen Foundation for Value CreationValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerCorporate DataAstellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Financial Data Income Statement IFRS core basis Revenue Gross profit SG&A expenses R&D expenses Core operating profit Core profit for the year R&D cost-to-revenue ratio (%) Core operating profit ratio to revenue (%) IFRS full basis Operating profit Profit before tax Profit for the year Operating profit ratio to revenue (%) FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 (one million yen) 1,247,259 914,062 452,522 206,594 216,500 153,244 16.6 17.4 185,663 189,683 135,856 14.9 1,372,706 1,037,110 500,359 225,665 267,456 198,802 16.4 19.5 248,986 261,770 193,687 18.1 1,311,665 991,162 470,777 208,129 274,554 213,343 15.9 20.9 260,830 281,769 218,701 19.9 1,300,316 1,006,066 1,306,348 1,014,299 1,300,843 1,024,104 1,249,528 1,003,465 1,296,163 1,518,619 1,043,154 1,230,266 478,330 220,781 268,698 204,326 17.0 20.7 213,258 218,113 164,679 16.4 490,263 208,682 278,514 249,343 16.0 21.3 243,912 248,967 222,265 18.7 499,295 224,226 277,758 223,178 17.2 21.4 243,991 245,350 195,411 18.8 504,316 224,489 251,375 209,906 18.0 20.1 136,051 145,324 120,589 10.9 548,840 246,010 244,744 190,584 19.0 18.9 155,686 156,886 124,086 12.0 630,272 276,128 286,902 224,619 18.2 18.9 133,029 132,361 98,714 8.8 * 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. 91 Astellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Financial Data Statement of Financial Position FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 (one million yen) Total assets Total non-current assets Total current assets 1,793,578 827,621 965,958 Total equity attributable to owners of the parent 1,317,916 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 (%) 54,771 420,890 10.5 5.1 73.5 Statement of Cash Flows 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 2,332,395 1,409,041 923,354 1,460,308 184,676 687,411 8.7 6.5 62.6 2,456,518 1,406,564 1,049,954 1,507,954 222,530 726,034 6.7 7.3 61.4 (one million yen) FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 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 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 –216,298 315,986 327,767 –84,500 243,267 –195,623 376,840 (yen) Key Figures per Share Basic earnings per share Book value per share Dividend per share FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 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 54.24 839.26 60 * 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. 92 Astellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data FY2019 FY2020 FY2021 FY2022 FY2019 FY2020 FY2021 FY2022 (hundred million yen) (hundred million yen) Financial Data Revenue by region Japan United States Established Markets Greater China International Markets Others Total 3,454 4,435 2,961 604 1,348 207 13,008 2,791 4,732 2,932 593 1,111 336 12,495 2,588 5,375 3,152 663 1,101 84 12,962 2,623 6,524 3,584 800 1,447 207 15,186 Sales of Main Products (hundred million yen) FY2019 FY2020 FY2021 FY2022 Main 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 International Markets Total 4,000 18 143 2 1,616 1,929 358 2,035 1,354 32 221 4,000 — 18 — — 18 4,584 128 238 11 1,636 1,827 402 2,386 1,493 49 255 4,584 — 128 — — 128 5,343 217 341 26 1,723 1,854 472 2,769 1,701 79 322 5,343 18 195 5 — 217 6,611 444 466 32 1,886 1,988 547 3,418 1,979 111 556 6,611 84 292 68 1 444 93 XOSPATA Japan United States Established Markets Greater China International Markets Total Evrenzo Japan Established Markets International Markets Total Betanis/Myrbetriq/BETMIGA Japan United States Established Markets Greater China International Markets Total Prograf Japan United States Established Markets Greater China International Markets Total 28 105 9 — — 143 2 — — 2 343 892 282 14 84 1,616 443 132 715 322 317 1,929 38 155 44 0 2 238 11 — — 11 351 880 299 22 85 1,636 407 118 642 342 317 1,827 39 189 90 15 7 341 25 1 — 26 375 872 367 29 81 1,723 382 94 679 381 317 1,854 43 255 121 25 22 466 24 6 2 32 335 965 428 39 118 1,886 356 107 693 468 363 1,988 *1 Sales of products in Japan are shown on a gross sales basis. *2 Established Markets: Europe, Canada *3 Greater China: China, Hong Kong, Taiwan *4 International Markets: Russia, Latin America, Middle East, Africa, Southeast Asia, South Asia, Korea, Australia, Export sales, etc. *5 From FY2022, the commercial segment of Australia was changed from Established Markets to International Markets.. For the purposes of this chart, FY2022 data reflect this change. Astellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Non-financial Data Environment Number of Employees per Region and Turnover Rate FY2020 FY2021 FY2022 GHG Emissions Volume*1 (Scope 1, Scope 2) (Tons) Scope 1 Scope 2 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) VOC NOx Changes in Drainage Volume*5 (1,000 m3) FY2020 FY2021 FY2022 123,320 63,276 60,044 2,087 7,564 14,352 22 21 7,308 118,679 63,691 54,988 2,089 7,394 13,882 21 17 6,810 117,644 61,171 56,473 2,048 6,864 13,544 23 18 6,298 *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 Target (VOC, NOx): all production facilities and R&D sites in Japan. 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 FY2020 FY2021 FY2022 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 70.8% 29.2% 15.1% 44.1% 55.8% 52.6% 53.9% 46.1% 39.7% 69.1% 30.9% 17.2% 44.8% 55.2% 53.5% 53.1% 46.9% 43.0% 68.8% 31.2% 17.6% 44.8% 55.2% 54.0% 52.9% 47.1% 42.8% * 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. Japan (Astellas Pharma Inc. · Group companies) Other Areas Total Established Markets Greater China International Markets United States Total Number of employees*1 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 5,659 2.6% 9,796 15.3% 3,608 10.9% 1,325 *2 41.1% 1,524 12.9% 3,339 10.9% 15,455 10.6% 4,948 *2 18.1% 9,574 15.7% 3,454 14.1% 1,183 *2 30.2% 1,445 22.7% 3,492 9.3% 14,522 16.5% 4,867 4.4% 9,617 14.5% 3,365 13.9% 1,129 14.3% 1,493 15.8% 3,630 14.5% 14,484 11.1% *1 The turnover rate in Japan excludes people retiring at the mandatory retirement age and employees moving outside of the Group due to transfer of Group businesses. *2 Implemented early retirement incentive system. Average Length of Service (Years) By Gender (As of March 31, 2023, Japan consolidated basis.) Male Female FY2020 FY2021 FY2022 18.4 13.4 17.4 13.0 17.3 13.6 Employment (Japan) New graduate hires (Astellas Pharma Inc. · Group companies) Mid-career hires (Astellas Pharma Inc. · Group companies) Mid-career hire ratio of new hires Total Male Female Total Male Female Astellas pharma Inc. Group companies in Japan Ratio of female employees in new hires* (Astellas Pharma Inc.) Ratio of people with disabilities employed * Japan consolidated basis FY2020 FY2021 FY2022 66 41 25 78 51 27 50.4% 100% 36.1% 2.37% 71 38 33 96 71 25 57.3% 58.8% 34.7% 2.49% 87 53 34 105 66 39 54.7% — 38.0% 2.78% 94 Astellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Non-financial Data Highly Skilled Employees with Specialized Knowledge and Skills FY2020 FY2021 FY2022 Occupational Health & Safety (Global) 2020.1–12 2021.1–12 2022.1–12 PhDs (globally)* Employees engaged in R&D (Research and Development) in cell therapy, gene therapy, and regenerative medicine — — — — 1,281 933 Number of work-related injuries (leave of absence) Frequency rate of work-related injuries Severity rate of work-related injuries 6 0.18 0.005 10 0.33 0.008 17 0.57 0.016 * As of March 31, 2023. Based on data self-reported by employees; includes directors. Data Related to Life Events (Japan) FY2020 FY2021 FY2022 Paternity Leave Child Care Leave acquisition rate*3 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 Leave for Nursing Care Shortened Work Hours for Nursing Care Nursing care 95 Female: 105% 96 Female: 101% Average days used: 396 Average days used: 399 Average days used: 402 Male: 76% Average days used: 91 Male: 96% Average days used: 62 Male: 74% Average days used: 29 101 Female: 97% 14 176 Average days used: 1,037 Male: 17 Female: 39 14 206 Average days used: 1,185 Male: 22 Female: 57 10 387 Average days used: 1,224 Male: 17 Female: 52 3 24 20 — 1 1 24 22 — 3 0 14 18 2 4 Child care, nursing care, injury, other Working at Home Registered Employees for the Program: 5,214 Registered Employees for the Program: 6,014 Registered Employees for the Program: 4,281 *1 Japan consolidated basis *2 The number of users indicates those who used the system in each fiscal year. This figure excludes cases where the term of leave was not com- pleted by the end of each fiscal year. In other words, it is limited to cases which ended within the fiscal year. *3 The Child Care Leave acquisition rate of male employees includes Astellas’ original child care leave system. Employee Engagement Engagement score FY2020 FY2021 FY2022 — — 71* * A new engagement survey platform was introduced in FY2022 which is better suited for timely identification of actions and responses related to the CSP2021 and Organizational Health Goals. Due to this change, only FY2022 scores are disclosed as they cannot be directly compared to past survey results. 95 Governance* Board of Directors structure Board of Directors (Persons) Of which Outside Directors (Persons) Ratio of Outside Directors Of which Female Directors (Persons) Ratio of Female Directors Audit & Supervisory Committee structure 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 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 * The numbers of the Board of Directors are as of the end of each fiscal year. FY2020 FY2021 FY2022 11 7 64% 2 18% 15 100% 4 3 1 15 100% 11 7 64% 1 9% 13 99% 4 3 1 14 10 7 70% 3 30% 14 98% 4 3 2 19 100% 100% Outside Director Outside Director Outside Director 5 4 7 5 4 7 4 4 7 100% 96% 100% Outside Director Outside Director Outside Director 5 4 7 5 4 8 4 4 7 100% 100% 100% Astellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Major Pipeline (as of July 2023) 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 Generic name Code No. (Brand name) enzalutamide MDV3100 (XTANDI) Modality / Technology Classification Target disease Metastatic castration-sensitive prostate cancer 1 2 3 F Phase*1 China Licensor*2 Small molecule Androgen receptor inhibitor US (June 2023) Pfizer Non-metastatic castration-sensitive prostate cancer Metastatic urothelial cancer, platinum-containing chemotherapy and PD-1/ L1 inhibitor pretreated Metastatic urothelial cancer, previously untreated (first line; combo with pembrolizumab) Europe China (Mar 2023) enfortumab vedotin ASG-22ME (PADCEV) Antibody-drug conjugate (ADC) Nectin-4 targeted ADC Muscle-invasive bladder cancer (combo with pembrolizumab) In-house [Co-development with Seagen] Other solid tumors Non-muscle-invasive bladder cancer Post-chemotherapy maintenance acute myeloid leukemia Post-hematopoietic stem cell transplant maintenance acute myeloid leukemia gilteritinib ASP2215 (XOSPATA) Small molecule FLT3 inhibitor Newly diagnosed acute myeloid leukemia with high intensity induction of chemotherapy In-house Newly diagnosed acute myeloid leukemia with low intensity induction of chemotherapy zolbetuximab IMAB362 Antibody Anti-Claudin 18.2 monoclonal antibody Acute myeloid leukemia in pediatric patients Gastric and gastroesophageal junction adenocarcinoma Pancreatic adenocarcinoma fezolinetant ESN364 (VEOZAH) Small molecule NK3 receptor antagonist Vasomotor symptoms due to menopause Japan (Jun 2023) US (Jul 2023) Europe (Jul 2023) China (Jul 2023) Europe (Sep 2022) China Japan In-house (Ganymed) In-house (Ogeda) *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. 96 Astellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Major Pipeline Generic name Code No. (Brand name) Modality / Technology Classification Target disease avacincaptad pegol Pegylated RNA aptamer Complement C5 inhibitor Stargardt disease resamirigene bilparvovec AT132 Gene therapy (AAV-based gene therapy) MTM1 gene replacement to express myotubularin X-linked myotubular myopathy Geographic atrophy secondary to age-related macular degeneration Phase*1 1 2 3 F Licensor*2 US (Feb 2023) Europe (Jul 2023) In-house (Iveric Bio) In-house (Audentes Therapeutics (currently Astellas Gene Therapies)) *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. Projects with Focus Area approach Primary Focus Generic name Code No. ASP1570 ASP2138 ASP2074 ASP1002 Antibody Antibody Antibody Immuno-Oncology Blindness and Regeneration Modality / Technology Classification Target disease Phase*1 1 2 3 F Licensor*2 Small molecule DGKζ inhibitor Cancer In-house Anti-Claudin 18.2 and anti-CD3 bispecific antibody Gastric and gastroesophageal junction adenocarcinoma, pancreatic adenocarcinoma Xencor [Discovered through collaborative research] Bispecific antibody Bispecific antibody Cancer Cancer ASP7317 Cell therapy Retinal pigment epithelium cells Geographic atrophy secondary to age-related macular degeneration Mitochondria bocidelpar ASP0367/MA-0211 Small molecule PPARδ modulator Primary mitochondrial myopathies Duchenne muscular dystrophy Genetic regulation Targeted Protein Degradation resamirigene bilparvovec AT132*3 Gene therapy (AAV-based gene therapy) MTM1 gene replacement to express myotubularin X-linked myotubular myopathy AT845 Gene therapy (AAV-based gene therapy) GAA gene replacement to express GAA enzyme Pompe disease ASP3082 Small molecule KRAS G12D degrader Cancer *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”. 97 In-house In-house In-house (Ocata Therapeutics (currently Astellas Institute for Regenerative Medicine)) In-house (Mitobridge) In-house (Audentes Therapeutics (currently Astellas Gene Therapies)) In-house (Audentes Therapeutics (currently Astellas Gene Therapies)) In-house Astellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation 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 (Aug 2022) In-house isavuconazole Small molecule Azole antifungal Invasive aspergillosis and mucormycosis in pediatric patients US (Jun 2023) 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+ Programs Category (Business area) Digital health Other services Program Concept Status* Partner Fit-eNce Fit-eNce Home BlueStar Service to provide scientifically evidenced exercise programs and systems supporting regular exercise Service to provide scientifically evidenced exercise programs and systems supporting regular exercise at home Under feasibility study Under feasibility study Digital therapeutics for adults with diabetes Under clinical trial preparation Welldoc Roche Diabetes Care Japan Stryker Drug-device combination pudexacianinium chloride ASP5354 * The list shows the most advanced stage if the stages are different depending on the region. Intraoperative ureter visualization for use in patients undergoing minimally invasive and open abdominopelvic surgeries Visualization and localization of lymph nodes in patients with breast cancer or melanoma undergoing lymphatic mapping P-III P-II 98 Astellas Pharma Inc. Integrated Report 2023 Interview with Chief Executive Officer Value Creation Story Corporate Strategic Plan for Value Creation Strengthen Foundation for Value Creation Corporate Data Company Overview (As of March 31, 2023) Company Information Company Name Astellas Pharma Inc. Headquarters 2-5-1, Nihonbashi-Honcho, Chuo-Ku, Tokyo 103-8411, Japan Foundation Capital 1923 103,001 million yen Representative Director Naoki Okamura (President and Chief Executive Officer)* Employees 5,123 (Unconsolidated) 14,484 (Consolidated) * Appointed as President and Chief Executive Officer effective April 1, 2023. Share Price and Volume Stock Price (Yen, Point) 2,500 2,000 1,500 1,000 500 0 Trading Volumes (Thousands of shares) 250,000 200,000 150,000 100,000 50,000 Stock Information Status of Shares Securities Code 4503 Listed Stock Exchange Prime Market Fiscal Year-end March 31 General Meeting of Shareholders June Minimum Trading Unit 100 shares Total Number of Authorized Shares Number of Shares Issued and Outstanding 9,000,000,000 shares 1,809,663,075 shares (Including 12,900,609 shares of treasury stock) Number of Shareholders 140,246 Trends in Shareholder-Type Ratio 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. Astellas (Left scale) TOPIX (Left scale)　■ Volume (Right scale) * The Company conducted a stock split of common stock at a ratio of five-for-one with an effective date of April 1, 2014. 2013/3 2014/3 2015/3 2016/3 2017/3 2018/3 2019/3 2020/3 2021/3 2022/3 2023/3 0 Major Shareholders (Top 10) Name of shareholders The Master Trust Bank of Japan, Ltd. (trust account) Custody Bank of Japan, Ltd. (trust account) Nippon Life Insurance Company State Street Bank West Client - Treaty 505234 JPMorgan Chase Bank 385781 SSBTC Client Omnibus Account State Street Bank and Trust Company 505103 JPMorgan Securities Japan Co., Ltd. Goldman, Sachs & Co. Reg State Street Bank and Trust Company 505001 0.1 0.0 0.0 Number of shares held (Thousands of shares) Shareholding percentage (%) 408,021 156,046 51,588 34,286 24,793 22,810 22,137 19,213 17,290 16,570 22.55 8.62 2.85 1.89 1.37 1.26 1.22 1.06 0.95 0.91 100 (%) numbers down to the third decimal (1,834,939,741 shares). * Number of shares held are presented by discarding the numbers down to the thousand, and percentage of shares are presented by discarding the FY2020 (93,953) FY2021 (86,322) 4.3 4.6 FY2022 (140,246) 5.0 0 38.3 38.4 3.1 8.6 3.2 8.2 39.6 3.1 8.9 20 40 60 45.6 45.5 43.3 80 ■ Securities Companies ■ Financial institutions ■ Other companies ■ Individuals, other ■ Foreign entities, etc. ■ Treasury stock 99 Subsidiaries & Locations (as of May 2023)As a global pharmaceutical company, we are currently working in about 70 countriesEstablished Markets*1United StatesJapanUniversal Cells, Inc.Astellas Pharma Global Development, Inc.Astellas (China) Investment Co., Ltd.Astellas Pharma Europe B.V. Meppel PlantTakahagi Chemistry & Technology Development CenterAstellas Gene TherapiesMitobridge, Inc.Business DevelopmentToyama Technology CenterTakaoka PlantXyphos Biosciences, Inc.Business Development(Cambridge UK office) Headquarters R&D bases Manufacturing Bases Business development basesIota Biosciences, Inc.Astellas Pharma China, Inc. Shenyang PlantBusiness Development(San Francisco office)Astellas Ireland Co., Ltd. Kerry PlantAstellas Gene Therapies (Sanford)Tsukuba Research CenterTsukuba Biotechnology Research CenterAstellas Rx+ Business Accelerator, LLCAstellas Venture Management LLC(San Francisco office)Business Development(Boston office)Astellas Institute for Regenerative Medicine (AIRM)Takahagi Technology CenterNanna Therapeutics Limited(United Kingdom)Yaizu Technology CenterHeadquarters (Tokyo)Yaizu Pharmaceutical Research CenterInternational Markets*3Greater China*2Astellas Ireland Co., Ltd. Dublin PlantCompany Overview*1 Established markets: Europe, Canada*2 Greater China: China, Hong Kong, Taiwan*3 International Markets: Russia, Latin America, Middle East, Africa, Southeast Asia, South Asia, Korea, Australia, etc.100Astellas Pharma Inc. Integrated Report 2023Strengthen Foundation for Value CreationValue Creation StoryCorporate Strategic Plan for Value CreationInterview with Chief Executive OfficerCorporate Data

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