Teijin Limited (3401) Earnings Call Transcript & Summary

[Interpreted] Ladies and gentlemen, thank you very much for joining us for our health care business presentation. I am Naohiko Moriyama. On April 1st, I became the President of Healthcare Business of Teijin Group. Let me first briefly introduce myself. It's been a little more than 30 years since I joined Teijin. I started with Teijin and spent first 5 years as an engineer developing medical devices like those that I'm going to explain later or on a bit unusual note, helping build and commission an aramid fiber plant. During the following 10 years, I was in Corporate Strategy and Planning Division, where my main responsibility was to put together mid- to long-term plans. For the remaining 15 years, I built up experiences in pharmaceutical, medical devices and other health care businesses, of which, the longest time was spent in medical devices field, where we repeated the process of either developing our in-house medical devices or in-licensing products from external entities, conducting clinical trials to evaluate them and obtaining approval and insurance reimbursements, so we can have them marketed by our sales force. So that was my brief self introduction. Now in my presentation today, I will discuss medium- to long-term strategies for health care business field for about 25 minutes. There are 2 parts to my presentation; the overview; and the strategic focus, which I'm not sure if you are familiar with, but this used to be called transformation strategies. I will focus on our approach for developing new businesses. This first slide shows Teijin's history. We're born 100-plus years ago in 1918 as a fiber company. Subsequently, we evolved from fibers to chemicals expanding our businesses from [indiscernible] to include flat films and resin based on which our health care business was born. In other words, our Healthcare business was derived from Materials business as you can see from the bottom wave like diagram. More specifically, let me take an example of the machine in the middle of the slide, which is easier to explain. This will be mentioned repeatedly in my presentation, and so I will spend a bit longer on this. This is a device called an oxygen concentrator. There are patients who need oxygen due to their lung diseases. In the past, there were those who lost their lungs due to [indiscernible] from tuberculosis but now hardly ever. This device is used to supply oxygen to those with respiratory failure. This was a practice originally provided in hospitals, tubes coming out of the wall of a hospital are used to provide oxygen. That needs to be provided with such services at home led to 1 of our health care businesses. In order to enrich oxygen, you need to produce oxygen at home. People in our material business developed a membrane brain to produce oxygen. Oxygen comes out of the membrane in a higher concentration. But the membrane alone was not enough to make a machine. You need a compressor to expose the air to the end membrane and the device for electronic control and engineers work together to combine them into a full medical device. But even if we have developed products like that, we did not know if it would be useful in society. With referral for physicians received from the pharmaceutical business launch back then, we found possible needs for such a machine. Thus, we have used our materials technologies as a basis to launch various medical devices to meet the needs of the patients to reach where we are today. Over the course of its history, the Healthcare business has become 1 of the 2 major businesses to support Teijin. Its IT business is expected to further grow in size. As of 2019, the Healthcare business accounted for 18% in net sales and 40% in EBITDA, respectively. Under a very challenging environment with reduced social security expenditures, it is holding up quite well in terms of volume, thus refusing to drop on staying flat in sales value and profit as described in this slide on the right. Let me go more into substance of the business. Our health care business includes 3 businesses: pharmaceuticals, Home Healthcare and IT. Originally, our hope was to treat diseases in 3 therapeutic areas: bone and joint, respiratory system and cardiovascular and metabolic diseases, including diabetes. We are addressing those 3 areas with the 3 businesses. Since we have been in this business for 30 years now, during those years, in pharmaceuticals, FEBURIC, a drug to treat hyperuricemia and gout has won the top market share in Japan, contributing to a reduction in the uric acid level of a lot of patients. Although it takes time, I personally believe there are very few companies in Japan which are capable of creating such drugs. In Home Healthcare, we are the first company in Japan, which has realized a health care provided at home by creating a device to allow patients to inhale oxygen at home. Therefore, we are close to the top share in this as well. Following this, as I explain more later, we have launched various Home Healthcare devices in the market. As you can see here, if you stop breathing, while sleeping at night, that means you are sick, except it was not considered such 20 years ago. What we have done is to identify conditions not recognized a disease as diseases and introduce various products that will contribute to society. As a result, we have achieved 1 of the top shares in CPAP ventilators. When we announced the medium-term management plan, we strive to find out what new businesses we could embark on. By leveraging our strengths, we just built over the years out of the features that constituted our business, which brought about FEBURIC, oxygen concentrator and sleep apnea treating device. Those include innovative medical treatment, new business related to comprehensive community-based health care system and functional fluid business, which I will not discuss today, but which we can diversify into by leveraging our capabilities and features of the pharmaceutical business. We call those new areas, strategic focus and have positioned them as those to be developed for future revenue sources. It is this area that I am mainly responsible for. This diagram shows how these are translated into the breakdown of products. We tried to figure out how we could expand into those new areas by building upon the existing pharmaceutical products and medical devices, as shown on the right. We are hoping to enter areas such as rehabilitation, cranial nerve diseases and depression, where we expect to be useful in society. Community-based health care service is an extension of Home Healthcare, and we hope to offer various programs, products and services useful in the communities. In addition to expanding the areas we covered, we have been seeking to enter medical devices that are not used in our pharmaceuticals and Home Healthcare businesses, and found and entered the business of surgical implant products in 2015, where we are now exploring the possibility of leveraging our strengths. I will discuss this more towards the end of my presentation. What supports those businesses is our organization described here. The top half indicated a Teijin Pharma Limited is the organization that supports our pharmaceuticals and Home Healthcare businesses on a day-to-day basis, generating profits, while the bottom half is the organization that wishes to make the most efficient use of the profit generated to create as much new products as possible. I'm overseeing the whole health care organization. But in running the health care business, the top half, Teijin Pharma is managed by [indiscernible], and the bottom half to create new businesses is what I am mainly responsible for. That was about the organization. This shows the EBITDA target we came up with when we announced our medium-term management plan. In 2019, we achieved JPY 45 billion EBITDA. But obviously, we faced what is called a cliff in pharmaceutical products or fabric cliff in our case as well as revisions in NHI drug prices and medical fees, However, we put together a plan to maintain the JPY 45 billion posted in 2019 through structural reforms and expansion of new businesses. We also expect incremental growth on top of this with products obtained from Takeda Pharmaceutical. That is described in this diagram. Now I would like to turn to strategic focus or new business areas, which I am mainly responsible for. As I said earlier, strategic focus initiatives is about the areas indicated by arrows, where we can take advantage of our strengths, such as our industry knowledge, science and technologies and most importantly, close connection with patients and physicians. Of all these, what I will focus on today is creation of new businesses related to comprehensive community-based health care system, which I will explain first, followed by innovative medical treatment. This is the first part. Even as we talk about the transition to comprehensive community-based health care system, we did discuss before putting together the medium-term management plan, whether the system would be in alignment with the overall social trends or macro trends. The graph on the left shows the progress in aging society, which may be what everyone takes for granted. But there are a lot of different macro trends in society, of which, COVID-19 pandemic was totally unexpected. We perhaps partially expected as an infectious disease, but emerged out of the blue, while others like aging population or what everyone is aware. Obviously, we need to address those trends that everyone is aware of. And the diagram on the right shows how we believe we can help address such issues with our strength in the health care business. As people age, it is only natural, the community and home would become the place of care. Once this happens, of course, multi-disciplinaory collaboration will be required, and that is exactly what we have been fostering in our 30-year history of Home Healthcare business. And therefore, we will enter the area of comprehensive community-based health care business. where we can apply what we build. As the population ages, people talk about life expectancy of 100 years or 120 years, which entails diverse issues related to aging, in particular, extending the healthy life expectancy or dispute. When individuals stay in good health as long as possible to help revitalize society in our mission. In order to address such issues, we offer functional foods focused on aging. As you become older, you tend to lose some of your physical functions and providing artificial joints in those cases will be 1 of the strategic focus projects in line with the macro trends. Now even if the initiatives are in line with the macro trends, there's a question of whether the market is big enough, is expected to grow. And if it is not, there's no point entering such businesses. Therefore, we work hard to do our research and here the data from next-generation health care industrial counsel of the Ministry of Economy Trade and Industry. It shows that diverse industry is expected to emerge and grow in the comprehensive community-based health care system to the order of several trillions of yen. If this is a kind of markets we're looking at, we might as well enter. Now that we know the businesses are in line with the macro trends and have grown markets, how we should approach is shown in this diagram. As shown in this big picture map, we are going to address comprehensive community-based health care system. As you hear repeatedly, the bottom part is foundation to support businesses. Based on this foundation, various foods, products and services will be provided to those who are presymptomatic, who are suffering diseases and who are post-disease stages. And the place of care will be, of course, the community. This is the map of comprehensive community-based health care. We always use to show how we are committed to addressing this issue. This fits the macro trend and enable us to enter the growth market. But how can we win? We are always asking ourselves. There are 2 reasoning. It is a rather lengthy explanation, but this page shows the history, business platforms at the bottom, based on which, various products and services launched for the community and home-based health care businesses from 1985 to 2025. The oxygen concentrator mentioned earlier is the oldest. Back around 1985 when providing oxygen concentrators to homes nationwide. We built a sales network nationwide that included remote islands and mountainous areas. And in addition, keeping in mind the Medical Devices Fair Competition Code, we built an educational system to show how to operate the device on behalf of the physicians. Also a nationwide maintenance system for devices installed at homes. Now in addition to inhaling oxygen, people need to exhale CO2. So as to remove CO2 in the body, we launched noninvasive artificial respirator mask to be worn over the nose. And to help patients wear the masks, visiting nurses system was enhanced as a business platform. Then we launched the devices for people with mild cases of sleep apnea syndrome. As there are quite a number of SAS cases, we increased the number of call centers. Then there was the great Hanshin Awaji earthquake. Based on the experience at the time, we built a system to provide support and disaster situations, which was first put into operation during the [indiscernible] earthquake in [indiscernible]. Based on such experiences, we are now thinking of embarking on comprehensive community-based health care, for example, a program to prevent symptoms from deteriorating. We are entering this field with the belief that we can win because we have this proprietary multilayered business platforms on which to offer the comprehensive community-based health care program. There are many programs that we can offer in the comprehensive community health care. This program prevent symptoms from deterioration is just 1 example as it is easy to understand. For this program, we need a data platform. So we are currently building one. If I could repeat myself, we are not launching this from scratch toward new products and services for community-based and Home Healthcare. but rather have been building multi-layered business platforms over many years. That's one key to becoming a winner. But we know that that's not enough based on our experience over the past 30 years. Shifting therapies in various products and services from hospital to home within the framework of community and Home Healthcare can cause a lot of complexities and burden that cannot be handled by health care providers in today's Japan. Therefore, we take care of those complexities on their behalf, of course, paying attention to the Medical Devices Fair Competition Code by contracting with medical institutions, we took care of everything from arranging for necessary equipment, maintenance, troubleshooting, other things in the periphery and removed all the complexities. Teijin have been repeating that for 30 years. We are just going to do the same in the comprehensive community health care, as an example, apps or applications. If you bring a program used in the community or hospital setting to Home Healthcare as is, there, naturally, will be various issues, including the disruption in continued therapy, the adherence issue. This has been our challenge for the last 30 years. But we can provide a follow-up using 24/7 call centers and visiting nurses, Therefore, we believe we can win in the community-based comprehensive health care system by removing complexities faced by health care providers, that is explained here. I will skip 1 page and explain the Aggravation prevention program on the following page. The program was not created in-house. As has already been announced, we are building it with a company called Prevent Inc. This company excels in analyzing medical data, extracting the target people and determining what programs would be good for them and is engaged in a preventive support business, that caught our attention and vice versa. You may wonder why we don't make it ourselves. But over the past 30 years, we haven't been very particular about making things ourselves. If we did make treatment devices for sleep apnea, for example. But then we found that there was a company in Australia that made better devices. So we decided to partner with that company. The point is that products and services are important, but more important is what is best for the patient, and we select them and provide them on our business platforms. So we don't insist on making things ourselves. Rather, we choose to form a partnership for the better offerings. Now when Prevent Inc. brings its offerings to the medical field in Japan, it will face various difficulties as we did over the past 30 years. So that's where we can help. It says online and off-line on the left of the slide. Prevent is very good at online digital guidance. It's our job to remove burden from health care providers, when we bring digital guidance programs to the field offline. And we're working in partnership to prevent aggravation of diabetes. Recently, we obtained 4 drugs from Takeda Pharmaceutical. The addition of these 4 agents has enabled us to connect with many health care professionals. Rather than just providing medical treatments to diabetic patients, we can help them enjoy a better condition by providing them with exercise, diet and various other programs. It was with that in mind that we decided to obtain Takeda's drugs. That's the comprehensive community-based health care. Next, let me talk about the creation of innovative therapies. In a nutshell, it is about leveraging our characteristics in different therapeutic areas. As shown at the bottom, we are exploring ways to make good use of our characteristics in the implantable medical materials field. Originally, in the Home Healthcare field, we were offering noninvasive devices. Then in 2015, with a view to applying our characteristics in the implantable devices, we moved into the field of orthopedic implant materials and entered into the artificial joint business by establishing Teijin Nakashima Medical with Nakashima Propeller. I said at the very outset that this field is in line with the macro trend of Asian society. The market is going further as more elderly people want to recover their functions, not only joints, but also materials that melt in the body bonding materials, spine business and so on. We will acquire these businesses, not only to be in the orthopedics area but enter other areas as well, such as cardiovascular field, using repair patch, which is like a net, which has a very special knitting method and uses materials that are difficult to handle based on Teijin's material expertise. Nakashima Propeller has the largest market share in Japan for screws. So it is very good at metal processing. Artificial joints is not only metal but also soft polymers. By combining soft and hard materials technologies, we will enter the world of various special artificial joints. Competition is very fierce in this segment. So we are focusing on products specifically designed for Japanese. Moreover, specifically designed to shorten the surgery time. This is the knee joint and Japanese people sit upright, folding knees and placing buttocks on the heels. We offer artificial joints that allow sitting upright and but the types of artificial joints with detailed decides that foreign companies cannot easily match. Further, we are offering custom-made products that require complicated shapes matching specific cases that most companies would stay away. In other words, we have been focusing on providing tailor-made solutions for Japanese people or optimized for various locations since before 2015. The typical example is JTech. This is JTech cartilage product, truly individualized, cells taken from the individual are returned to the individual. We want to live in a world of products that fits perfectly into this field of tailor-made solutions. This figure shows a slightly different perspective. The horizontal axis is from young to elderly and the vertical axis is from mild to severe. We have a lineup of products that provide tailor-made treatments to everyone from young to elderly from mild to severe cases. The leftmost Teijin Medical Technology provides osteo synthesis screw. It's just a screw, if the cartilage was dislodged slightly, you only need to screw it, whereas in the most severe cases, you need replacement. We provide joints suitable for Japanese anatomy. In the middle, if you only have joint pain, the autologous cultured cartilage by JTech would come into play. We analyze our characteristics and go out into areas where we can expect them to work. I explained our view on fostering future revenue stores and strategic focus areas. The creation of innovative therapy in the second half and the comprehensive community-based health care system in the first half. This concludes my presentation. Thank you for your attention.

[Interpreted] I am [indiscernible], President of Teijin Pharma Limited. Let me introduce myself. I joined Teijin in 1985 and have always been in sales organization since as an MR, sales office manager, and branch manager and then got transferred to the headquarters where I served as the Head of Marketing in both Pharmaceuticals and Home Healthcare and then took the position of General Manager of Healthcare new business. And exactly 2 years ago, I was appointed to the President of Teijin Pharma. Thank you very much for this opportunity today. Now let's get started. This is the sequence of items that I would like to cover. The overview has been mostly covered by Moriyama. But in 1980s, we had a gamma globulin drug called [indiscernible], followed by 1 alpha for osteoporosis, which led to drugs such as [indiscernible] and FEBURIC. In Home Healthcare, we started with HOT or oxygen concentrator in 1980s, which is developed in 2 parts such as non-invasive positive pressure ventilator or sleep-up ventilators for sleep apnea. As was discussed earlier, our focal areas were bone and joint, respiratory diseases and cardiovascular and metabolic diseases. In bone and joint, we cover osteoporosis, ultrasound bone fracture healing device. And as Moriyama said, implantable products for orthopedics. More recently, on December 4, we launched a botulinum toxin type A called [indiscernible], which treats contraction of muscles after stroke as well as a depression treatment device and rehabilitation devices. Comprehensive community-based health care business was already explained by Moriyama. Teijin Pharma has about 4,400 employees with 75 sales offices in top branches across the country. This includes not just sales reps, but patient, caregivers, nurses, among others. On the global front, the business is centered around FEBURIC as well as 1 alpha and [indiscernible] being sold around the world. In Home Healthcare, we have joint ventures in Korea and Spain. There's a research and development base in Hino, Tokyo and production basis in [indiscernible] and [indiscernible]. Next, let us look at the current business environment, which I'm sure everyone is interested in. FEBURIC cliff is the expression we often hear. In other words, the patent expiration is expected to come. Externally, NHI drug price revisions have been implemented practically every year. Another trend is transitioned toward a society, which strives for health promotion and extension of healthy life expectancy. With this background, the Ministry of Health Labor and Welfare says, it will establish a comprehensive community-based health care system by 2025. And in this context, regional health care collaboration is is proactively promoted, and we're working to address this by mainly focusing on what is called secondary medical care areas. What is expected to emerge out of this is differentiation of hospital bed functions. In particular, regional health care collaboration and medical fee provisions are likely to be emphasized further. Then how are we going to survive in this situation? Major companies will select their focal areas and result to M&As to secure their pipelines, while small and medium-sized companies will follow suit. In-licensing may be another option for them. Headcount reductions are making headlines in newspapers recently. In Home Healthcare, in terms of internal environment, we anticipate a slowdown in the growth of Hot and [indiscernible] due to COVID-19. We will also need to explore next-generation products and services, including, as we said, new medical devices, rehabilitation and digital health. In terms of the external environment, there are entries by companies from other industries and digital transformation, which combines DTX or Digital Therapeutics and Phase II face treatments are quite active now. I always believe we are a very unique company, which has both pharmaceuticals and Home Healthcare businesses, a strength that we definitely want to leverage. COVID-19 pandemic is significantly accelerating the digitalization. Patients restriction on their hospital visits has resulted in deterioration of hospital financial management, while online treatments and guidance for taking medication is underway. At the same time, MRs are being restricted in their calls to hospitals. How we are going to create a new system in this context will become important going forward. Now Teijin Pharma is expected to decline in net sales and profits for fiscal 2020, for which, the biggest reason is FEBURIC, it's recalculation of the market expansion. Having said that, however, in terms of volume, sales are growing steadily. We also want to make sure to succeed in our launch of new in-licensed products and addition of new indications. As for the Home Healthcare, Hub is actually growing despite COVID-19 pandemic. It seems that the need to secure the availability of hospital beds has helped increase the number of rental units for use at home due to the restriction on hospitalization. But CPAP is slowing down in its growth under the pandemic partly because there are fewer [indiscernible] test done, preventing potential new patients from being identified. But the sales volume is increasing year-on-year steadily. How are we going to offset FEBURIC cliff? This is the biggest challenge facing us. As Moriyama said earlier, measures to implement include expansion of sales of pharmaceuticals and medical devices, improvement in productivity, reforming cost structure and expansion of new businesses. Through these measures, we hope to maintain in fiscal 2022, JPY 45 billion EBITDA, which was posted in fiscal 2019 despite FEBURIC cliff. It translated into a more specific diagram, this is how it would look. There are a number of new in-licensed products in the pipeline to be launched 1 after another as well as expansion of indications. We're also pursuing the integration of medical materials. We will also seek to grow sales of medical devices such as Hot, [indiscernible] and CPAP by expanding their use. Considering the period under the current medium-term management plan as a time to build a foundation for that, we have worked to achieve maximization in this regard. And I hope to add another main pillar of the business, we have decided to license in for diabetes strokes, which will be focused in the next medium-term management plan. But then what about the 1 after next? The question will obviously catch up with us. In order to address this issue, for example, in Home Healthcare, CVC or Corporate Venture Capital will accelerated program will be used to develop new medical devices and businesses. We will also promote overseas expansion mainly for device sales in Home Healthcare. Collaboration with new businesses will also be pursued. In Pharmaceuticals, we are now working with JCR Pharma and hope to launch JTR-161, a cell therapy for acute cerebral infection, and we're also saw in [ sea's ] now from which several could be launched. With 4 diabetes drugs licensing from Takeda, we would like to increase our sales profit to the levels of the orange line, as shown on the top graph, and then expect benefit in EBITDA of the red portion as shown on the bottom bar chart. This is the press release announced, but I would like to skip its details for today. Now what is going to happen with the 4 products from Takeda have been licensed in? Let me briefly take that up now. As you all know, in the case of diabetes, it is not diabetes itself that is a serious problem, but its complications such as diabetic nephropathy, diabetic neuropathy, diabetic retinopathy and many other different conditions. If you develop diabetic nephropathy, in the form of cardiorenal syndrome, you may have your heart deteriorate as well, making it highly likely to suffer heart failure. Furthermore, what is worrisome in diabetic nephropathy is sleep apnea, where CPAP could come into play. If you were diabetic and obese, it is said that you are 7x more likely to develop sleep apnea. Therefore, there will be quite a lot of synergistic effect with some of our products. In a bit more distant way, you may develop osteoporosis induced by diabetes. As Moriyama said earlier, in case of diabetic patients, the prior care is important, including diet and exercise therapies. That is where we can offer our products in food business and focus on digital therapeutics. One example of which is our alliance with Prevent Inc. mentioned earlier. Therefore, we can expect quite a lot of synergy between our businesses and diabetes. Moreover, as mentioned repeatedly, diabetes involves different types of health care professionals. as you need to go through diet and exercise therapies and focus on prevention, it will require a public health nurses and nutritious to get involved. This is not just doctors needed but nurses as well as those providing rehabilitation, those in the academia, scientific societies and the administrations and many others. Therefore, diabetes could cover a lot of ground. The new businesses we promote as part of strategic focus are exactly targeted at prevention of the onset and symptom deterioration of those lifestyle diseases, enabling high levels of statistic effect. We also take advantage of Vitalink, a network of health care professionals we have to secure our ability to contact those people. Once you get in touch with the network, you can get nurses from visiting nurse stations involved for intervention, monitoring can be provided through various means such as contact centers, and this is what we believe we can offer. Another point I'd like to make is our transition to a functional structure. Conventionally, our company had been organized by business units pharmaceutical and Home Healthcare. But this has been changed into a structure by function, marketing and sales and research development and technology. We want to leverage our strength of having both businesses to aim for a leading company in this new market. Comprehensive communities health care has been mentioned several times already, so I'll be very brief. It's about building a system that achieves healthy long life on a community and home care basis, so that once you leave the hospital, the rest is taken care of in that complete system. It's about shifting from health care to cure to supportive care, shifting from hospital-based care to community-based care. It's about shifting from public assistance to self assistance. The other thing is the deployment of digital transformation, leveraging wearable devices, transmit data to smartphone applications so as to facilitate changes in behaviors, extract personal data so that ultimately, personalized data could be transmitted to each individual. We believe such data business will emerge use PHR, Personal Health Record to build PSB, Personal Supporting Programs. What does Teijin do in such a situation? With the patient at the center, there is a primary care doctor and the doctor at the hospital, and there are cooperation between them, and various medical professionals are engaged, surrounding the patient on a community basis, watching over or monitoring the patient. Where does Teijin fits in? We have our own multidisciplinary sales team system. comprising not only of MRs, but also Home Healthcare, sales representatives as well as nurses, technicians and other specialists. We also have various business platforms. For example, Vital Link that encompasses all these people with information. We also have visiting us stations for intervention. We also have call centers that offer 24/7 access and the monitoring system and rehabilitation. cation envisions utilizing these systems to work together with the multidisciplinary team sales to support the integrated team health care. What is interesting about Teijin is that we have 3 types of sales force. One is good at promotion like MRs. Another is support, they visit not only doctors, but paramedics as well to explain medical devices. They also visit patients sometimes. The other is people active on the front line, namely care providers as well as this who install medical devices, do maintenance handle various complaints and nurses who support sales and medical engineers, MEs. There are always people who are engaged in frontline activities. This is the multidisciplinary team sales, in which these people work together as a trinity to engage in team sales. Vitalink was mentioned earlier, we are currently working on connecting the information of various providers into 1 and creating a network. We also provide control and monitoring, and there are contact centers. Our visiting nursing station is different in that there are not only nurses but also PTs, physical therapists and OT, Occupational Therapists as well. These professionals actually intervene, we also provide rehabilitation equipment to this. We engage the multidisciplinary team sales that I mentioned earlier, coordinating them all to complete the picture, complete the map, that's what we are working on. For example, there is the respiratory expert at the hospital. And when the patient is discharged, he or she is now under the care of the primary care doctor who is not necessarily a specialty doctor. Therefore, connecting these 2 with a Vital Link and always sharing information. But that still is not enough. So, for example, nurses at the visiting nursing station, visits the patient's home, observe the patient's condition under the supervision of the doctor, pass an information to both doctors. By connecting these things, it is possible to prevent the aggravation of patients' conditions. Furthermore, dietitians, pharmacists and care managers are involved. They are all well connected with Vital Link to form a single network. That's the vision that we have. Teijin coordinates the multidisciplinary team sales, and we also have this proprietary business platform. I mentioned connecting with Vital Link, intervention by nurses at Visiting Nursing Station Monitoring via contact center and IoT, and ultimately support patients independence. Furthermore, DX will be added going forward. DTX and the real physical bird coming together. This kind of patient support system is the foundation. Over this foundation, we will offer what we have. For example, JTR-161 cell therapy for acute [indiscernible] inflection currently being developed with JCR Pharmaceuticals. Patients with acute stroke needs to be administered blood clot dissolving drug, such as TPA within 4 to 5 hours, and the blood vessel needs to be secured within 8 hours. Beyond that, it's life-threatening. But with JTR-161, this may be extended to several days. POC has yet to be produced, but that's 1 thing that we are currently developing. In addition, there is Xeomin treatment for muscle spasticity announced on December 4. There are also rehabilitation equipment. Also, onset prevention and diagnosis. We have functional foods and nutraceutical [indiscernible]. In the diagnostic field, we will partner with other companies if necessary. And in the field of recuperation, we can do things described here. We are currently proceeding with our business with a view to deploying such total solution. From here, let me talk about research and development. As for research, we are promoting spinouts and ventures first. We are also interested in early-stage alliance. Once the seas are found and some candidate compounds are discovered, we will out-license to major companies. That's part of the pathways we want to pursue. Regarding development, while retaining the core part of planning and development and pharmaceutical affairs in-house, the rest will be left to CROs. Conversely, it will be important to collaborate with R&D specialized companies to create new products. Same goes for production, retain CMC, in short, retained the core in health. Other than that, take it to CMOs or be part of the consortia formed by CMOs. We would like to further promote open innovation. The same applies to Home Healthcare. We will thoroughly pursue core technology, but other than that, we will continue to drive open innovations. We are also promoting corporate venture capital programs. We also have the accelerator program to introduce new medical devices and businesses. And regarding the fusion area and GTx, it will be important to development together with the new business, as mentioned by Mr. Moriyama. Let me show you a simple example. This is Transera Bioscience, a Chinese company, a R&D-type global development manufacturer specializing in small molecules. The company was selected as 1 of the top 100 strongest chemical Asian R&D companies in China and is a unicorn company promoted by Nanjing City. What a sea is found and is to be developed into a candidate compound, we are willing to work with these companies, including Mega pharma. We have the accelerator program in Japan. We are working on focal areas such as depression. We have treatment equipment there. We are thinking of enhancing the adjacent areas. We have an award system, and we selected 3 recently, including a project on cognitive behavioral therapy, VR or Virtual Reality for mental illness. We hope to work in good cooperation in these areas as well. The other is corporate venture capital program, mainly focusing on the U.S. East Coast, but some in the West Coast as well. As a limited partner, Teijin will invest in promising entities using the Venture Capital Fund. If it's something really promising, we will go as far as acquiring them. We are also thinking of establishing basis overseas. Lastly, but not the least, digitalization. This is the trend, as I've already mentioned. So what are we going to do -- I'm sorry, this is a very busy slide. But currently, we can't meet face-to-face, we hold online seminars and remote briefing sessions instead and route inquiries to the head office. The other is e-promotion. Their information platforms such as M3, Carenet, Med Peer and [indiscernible] Medical online, through which we can connect with doctors. And we are driving a promotion on them. In addition, we have our own customer information system and by using marketing automation and Salesforce automation and a promotion together we can augment more information, strengthen the content and execute thorough e-promotion. This is the current trend and other pharmaceutical companies are doing the same. Now Teijin's strength is that we have multidisciplinary team sales. which is in the physical world. It is not only MRs, but home care sales, care providers, nurses, PTs, OTs and others driving various team sales. In that process, link a promotion and physical team sales in the doses and create 1 collaborative path in the community. That is what we are good at. The information obtained can be fed into the own site and media. We can then transition them We can then transition from customer relationship management to customer experience relationship management, capture the 2 potential needs. We will then drive that further through inside sales and field sales. Another important thing. We have businesses within the scope of insurance and others outside the scope. This side is health care professionals for this side is patients. We are doing business in the real world within the scope of insurance, covering medical professionals to patients handled by multidisciplinary team sales. There are various business platforms, the Vital Link to connect the visiting nursing stations to intervene and the contract centers and call centers to watch and monitor 24/7 and rehabilitation independence support going forward. It is important to complete the picture with these. On the other hand, there are business outside the insurance scope currently pursued by the new business division such as functional food, nutraceutical and DTX. I believe these will be combined to cover the businesses, both inside and outside insurance scope. But as I've said, Teijin's strength would be the proportion. This is the summary. Sorry, this is another busy slide. Offline, real human intervention, these things are important, multidisciplinary team sales and visiting nursing stations. The other is online, which means non-real. We will complete the picture by successfully building these business platforms and offer objects for things on top of them. Build service platforms and offer things to create a matter, a story, offer not only treatment but more from preventive medicine to independent support within that framework. That's our vision. Thank you for your attention.

[Interpreted] I am [indiscernible], Chief Officer for Corporate Strategy. My presentation will be the last 1 today, which is about medium-term investment strategy. Currently, I am responsible for corporate strategy, which covers IR, Corporate Communications, management strategy as well as corporate incubation, which has been newly added recently. In terms of my background, I have been mainly engaged in the finance, accounting and corporate strategy, but my immediate path position was General Manager of Resin and Plastic Processing business unit. Now let me discuss the medium-term investment strategy. And following recent major deals, acquisition of J-Tech and transfer of sales, manufacturing and marketing approvals of diabetes drugs from Takeda Pharmaceutical, what approach will be toward future investments? Here, you can see the business portfolio transformation announced when we came forward with our medium-term management plan. As of 2019, we posted JPY 107.2 billion in EBITDA, which we said we would work to increase to JPY 150 billion in 2022 and JPY 250 billion approximately around 2030. The strategic focus initiatives, as mentioned many times used to be only a minimal in 2019. But we said we would grow the share to 10% plus in 2022, the final year of the medium-term management plan and to 1/3 in 2030. As a result, by expanding the strategic focus area, which would transform the business portfolio, we hope to create the portfolio, which would look like a picture on the right bottom of the slide, where a snow man for materials and the snowman for health care are hogging IT and fibers and products converting in their both [indiscernible]. To that end, we position the period of the medium-term management plan of 2020 to 2022 as the 1 for upfront investments, or creating platforms for sustainable growth when we put the plan together. In terms of numerical goals, As I said, we see the targets of JPY 150 billion in EBITDA, 10% or more in ROE, 8% or more in operating income-based ROIC in the final fiscal year. And the breakdown by business unit is as shown on this slide. On the other hand, we said the investment was planned to total JPY 350 billion, and the metrics for financial health. The D/E ratio was targeted at 0.9x. For your information, the actual investment during the period of the previous medium-term management plan, was a little more than JPY 230 billion. Currently, we are executing the investment activities in accordance with the medium-term management plan. The top half is for materials and the bottom half is for health care as has been focused today. The portions in the dotted line boxes are what we call collaboration fields where we hope to see a synergy between health care and materials. In fiscal 2020, in Healthcare, as shown here, we have invested in a lot of different activities. many of which have already been explained today. But those that are among the largest in terms of invested amount include succession of Takeda Pharmaceutical sales of diabetes products in JPY 133 billion. Though the execution was in April 2021 and the conversion of J-Tech into the subsidiary. which we invested JPY 19.2 billion in March. Another relatively large investment was close to JPY 10 billion in U.S. Venture Capital Fund. On the other hand, In materials, relatively large investments that are expected to be continued going forward include the strengthening of aramid fiber production capacity CSP or Continental Structural Plastics Holdings Corporation, a producer of composites. In health care, we will continue to invest in the expansion of comprehensive community-based health care services and to explore potential M&A opportunities. The medium-term management plan calls for a continued focused resource allocation to the 3 solution areas, namely environmental value solution, safety, security and disaster mitigation solution and demographic change and increased health consciousness solution. We said we would invest approximately 85% of the total in these areas during the medium-term plan period. The succession of sales of diabetes products and the conversion of J-Tech into a subsidiary are positioned within the demographic change and increased health consciousness solution. Through these investments, we expect to increase the sales ratio of these 3 solutions to 75% by 2030. The recent medium and large-scale projects are positioned as part of this. To realize future portfolio mentioned earlier, We will invest in these health care and materials areas in strategic focus areas and also continue investing in these areas in profitable growth areas. J-Tech deal is positioned here in strategic focus. Diabetes are positioned across strategic focus and profitable growth areas. Our basic thinking on investment allocation during the remaining period under the medium-term management plan is to continue to focus on investment in strategic focus areas by utilizing cash generated from large-scale investments in health care. Of the total JPY 350 billion, we have already invested a considerable amount in the 2 cases mentioned above, exceeding JPY 150 billion in total. As for the diabetes trucks, Our expectation has been from the very beginning, a fairly large EBITDA starting this April, more than JPY 20 billion annually. Combined with the cash generated from this and the amount left over from the previous MTP period, the status of cash on hand at the beginning of this medium-term plan was about JPY 30 billion higher than initially expected. This will be used as future resource allocation as well. By business segment, the medium-term management plan envisions JPY 350 billion to be invested in materials and health care in this fashion. We are thinking of increasing the total amount. We will continue to actively invest in optimal projects. We have blurred boundaries, but this does not mean we are thinking of reducing investment in materials, nor do we think we have completed investing in health care By strategy, we would actively pursue mainly those in the strategic focus areas. As I mentioned earlier, we believe that diabetic drops are positioned across both strategic focus and profitable growth areas. We are looking for more of these types of investments. From the perspective of financial soundness and the shareholder return policy, as I mentioned earlier, we are considering funding the obtaining of diabetes trucks through cash on hand and bridge loans. After that, we will consider the optimal financing method on the premise of maintaining a certain level of financial discipline. We are not currently considering raising funds that would involve the issuance of new shares. In terms of financial soundness, we expect that our financial position will deteriorate temporarily. But we will aim for improving as soon as possible to the target debt-to-equity ratio level of 0.9x, and we expect it will improve. A report from a rating agency issued in relation to this project reads, although, it will deteriorate temporarily. The impact will be limited because the project is likely to contribute to the earnings. and the improvement of the financial balance over the medium term. The shareholder return policy will not be changed as promised in the medium-term management plan, which is to consider stable dividends as the guidance for a dividend payout ratio of 30%. Regarding the investment strategy, we plan to explain the outlook based on the results of FY 2020 after the annual earnings briefing in May. That concludes my brief presentation on our investment strategy. Thank you for your attention. [Statements in English on this transcript were spoken by an interpreter present on the live call.]