Medium-term Management Plan
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- Medium-term Management Plan
① In July 2024, Daito Pharmaceutical Co., Ltd. formulated DTP2027,* the Medium-term Management Plan for the three-year period from the fiscal year ending May 2025.
- Daito Transformation Plan 2027
For details and progress on DTP2027, please refer to the Financial Results Briefing Materials for Institutional Investors dated July 17, 2024 (Financial Results Briefing Materials) and the Financial Results Briefing Materials for Institutional Investors dated July 16, 2025 (Financial Results Briefing Materials) .
Concept of DTP2027
Under this Medium-term Management Plan, the Daito Group will transform itself and establish “Shin” Daito, as envisioned in the main concept of DTP2027.
Background to the Formulation of DTP2027
In formulating DTP2027, the Daito Group has identified the circumstances and challenges surrounding it as follows:
[Policy and Regulations]
- Advancement of medical and drug cost control measures such as introduction of selected medical care for off-patent, long-listed drugs and review of insurance benefits for OTC-equivalent prescription drugs, in addition to annual drug price revision.
- Securing of drug quality and safety as well as enhancement of stable supply systems upon partial amendment of laws including the Pharmaceuticals and Medical Devices Act (establishment of the Fund for Developing Infrastructure for Generic Drug Manufacturing).
- Streamlining of the drug delisting process and reduction of the time necessary to complete the regulatory procedure for product integration to 1.5 months
[Industry Trends]
- Rising momentum toward industry restructuring after the government indicated its policy on structural reform including product integration (integration of manufacturing and sales).
- Higher market shares of Gx drugs and faster transfer of off-patent, long-listed drugs enabled by introducing selected medical care for these drugs.
- Judicial rulings to acknowledge wider patent protection for brand-name drug manufacturers and increased difficulty of patent strategies.
- The Gx drug business peaking and increased entries into new domains (e.g., orphan drug development, overseas business, medical devices).
[Financial and Capital Markets]
- A faster shift to equity-focused corporate governance as the Tokyo Stock Exchange implements capital market reform.
- Heightened volatility in the financial market due to tariffs introduced by the Trump administration and growing tensions in the Middle East.
- Interest rate hike by the Bank of Japan as a response to cost-push inflation and a rise in funding costs.
④ Business Environment Surrounding Daito
In formulating the Daito Group’s Medium-term Management Plan, we have reaffirmed that the Group’s relative advantages lie in the following factors:
- Integrated manufacture of products, ranging from APIs to drug products
- Japan–China collaboration enabled by our adoption of a system for integrated manufacture both in Japan and China
- Our industry-leading quality control systems, whereby we can constantly pass the U.S. Food and Drug Administration (FDA) inspections and our high capacity for a stable supply backed by the quality control systems
Daito's Relative Advantages
Utilizing the rich experience and technical skills it has cultivated since its founding, the Group manufactures and sells not only APIs, or raw materials for pharmaceutical products, but also FDF products. Under a system that enables " Integrated manufacture of products ranging from APIs to drug products ," the Group deals with a wide variety of domestic and overseas pharmaceutical manufacturers. The Group is also actively engaged in the manufacture and sale of its self-developed products and the products jointly developed with other pharmaceutical manufacturers, as well as contract manufacture for major domestic manufacturers. Its business operation meets a wide variety of needs in the pharmaceutical industry, from original to generic drugs, as well as OTC drugs.
The integrated manufacture of products ranging from APIs to drug products, one of our relative advantages, extends beyond our facilities in Japan. We have established a similar system in China, the world’s largest producer and exporter of APIs. In China, following our investment in a local partner company in 2010, we have engaged in personnel exchanges and technical guidance for over a decade, establishing an unwavering relationship of trust and a robust quality assurance system. This Japan–China collaboration contributes to the stable supply of pharmaceuticals as one of Daito’s relative advantages. As " ONE Daito ."we are responding to customers’ diverse needs.
- We believe that our strength lies in our high capacity for a stable supply backed by our industry-leading quality control systems.
- In recent years, mainly due to repeated GMP violations in the Japanese pharmaceutical industry, there has been increased public focus on quality and a stable supply. Daito has long been committed to fostering a culture that prioritizes quality to elevate its quality standards. To this end, we have established a culture of open communication that spans from the frontline employees to top management.
- It is said that few pharmaceutical contract manufacturing (and development) companies in Japan have obtained FDA certification. Daito, however, has been undergoing multiple FDA inspections for over 30 years, consistently meeting their requirements. We continue our relentless efforts to further strengthen our quality standards.
Daito Business Strategy | Five Pillars
DTP2027, formulated based on the abovementioned recognition of our business environment and relative advantages, defines the five pillars of the Daito Group’s business strategy as follows:
- (1) Streamlining the existing businesses
- (2) Strengthening our China business
- (3) Entering into new businesses (alliance for new orphan drugs)
- (4) Addressing a PBR of below 1.0 and enhancing capital allocation
- (5) Investing in human capital
Financial Targets, Shareholder Return and Capital Allocation Policy
We have defined the Daito Group’s key goal indicators (KGIs) in DTP2027 as follows:
Recent performance and the revised KGI in DTP2027
To ensure that our efforts to achieve our KGI targets are as practically effective as possible, we have defined on-site key performance indicators (KPIs) that are directly linked to the KGIs, as well as targets for them, and have assigned each business division to achieve the relevant on-site KPI targets. We have therefore built Daito’s value creation model, a framework that ensures that each business division aims to achieve the on-site KPI targets through its daily business activities, leading to the entire Group achieving its KGI targets.
DTP2027 has newly adopted dividend on equity (DOE) as a KGI for shareholder returns and set a KGI target of a DOE of 2% or higher. We will work to further enhance returns to our shareholders.
Shareholder Return Policy
- Dividend Policy
- We consider achieving sustained growth in business enterprise value and providing shareholder returns reflecting this growth to be important management challenges. Based on this, starting from the period ending May 2025, we have set a new KGI target of achieving a DOE of 2% or higher. We will maintain stable dividend payouts by considering our present financial position and future growth investments, rather than basing them on yearly fluctuations in performance.
- Acquisition of treasury stock
- To improve capital efficiency and enhance shareholder returns, we acquired treasury stock totaling 1.1 billion yen in the fiscal year ended May 2024. We will continue to monitor stock price trends and establish a system that allows us to flexibly acquire treasury stock.
- A We carried out a 1:1.1 stock split and then a 1:2 stock split on September 1, 2023 and June 1, 2025, respectively, as the effective dates. Dividends per share shown are figures adjusted after the stock splits.
- *DOE stands for Dividend On Equity ratio and is obtained by dividing total dividends by shareholder’s equity and multiplying it by 100 (%). We use total dividends and shareholder’s equity to obtain DOE.
- *The dividend for the fiscal year ended May 2022 includes a commemorative dividend.
Our capital allocation (cash allocation) policy for the period of DTP2027 is as stipulated below. We will raise capital mainly through operating cash flow by such measures as shortening the cash conversion cycle (CCC), one of our KGIs, while proactively considering utilizing interest-bearing liabilities in line with certain financial rules.
Capital Allocation Policy
- Overview of cash allocation
- o While maintaining a stable supply of high-quality drugs and securing investment necessary for sustainable growth, we will stably and actively provide returns for our shareholders.
For more details, please refer to the Financial Results Briefing Materials for Institutional Investors dated July 17, 2024 (Financial Results Briefing Materials) .