Medium-term Business Plan and Important Groupwide Issue

Medium-term Business Plan
Realizing the Nippon Kayaku we Desire: Important Company-wide Issues

Medium-term Business Plan

Our KAYAKU Vision 2025 Medium-term Business Plan (KV25) lays in place the strategies we will deploy to put sustainable management into practice. Through the activities of our 3 business units and our KV25 Materiality initiative will we create both economic and social value that contributes to the realization of a sustainable society.

KAYAKU Vision 2025 Basic Strategies

Promotion of sustainable management	By implementing a value creation process can we deliver economic, environmental and social value, and help resolve social issues.
Prioritized distribution of management resources based on business portfolios	Our 3 business units of Mobility & Imaging, Fine Chemicals and Life Sciences will prioritize the distribution of management resources towards the most promising product lines
A cross-cutting company-wide team to deal with important issues	Our cross-cutting company-wide team (M-CFT) will engage with the issues of Creation of New Business and Products, Mitigation of Climate Change, DX, Business Process Re-engineering, and Work Style Reform, and pave the way for our sustainable growth
Strengthening our management base	Guaranteed safety Improved product and service quality A thorough approach to compliance Strengthened corporate governance

Medium-term Business Plan: KAYAKU Vision 2025 (KV25)

Realizing the Nippon Kayaku we Desire: Important Company-wide Issues

“Corporate governance, compliance, safety and product quality” form the base of Nippon Kayaku Group activities. KV25’s cross-cutting project will see us tackle the 5 important company-wide issues of Creation of New Business and Products, Mitigation of Climate Change, DX, Business Process Re-engineering, and Work Style Reform. The synergies we derive from the activities of our 3 business units and cross-cutting M-CFT efforts will help bring into being the Nippon Kayaku we want to see.

KV25 Vision for the Three Business Units

Business Unit	Group	Vision
Mobility & Imaging Business Unit	Safety Systems	Provide safety solutions to people around the world with products that support changing mobility technologies, and become a global brand that contributes to society
Mobility & Imaging Business Unit	Polatechno	Contribute to the diversification of displays in the mobility field and to human health, safety and security by providing highly durable polarizers, retardation films and various other highly functional optical components and X-ray components
Fine Chemicals Business Unit	Functional Materials	Continue to supply the best products, technologies and services to make social contributions through the establishment of a super-smart “Society 5.0” and environmental protections
	Color Materials	Contribute to resource conservation by supporting the digitalization of society through the provision of inkjet colorants and functional colorants
	Catalysts	Contribute to the enrichment of people’s lives and the reduction of CO₂ emissions by providing catalysts with higher yields in producing acrylic acid and methacrylic acid
Life Science Business Unit	Pharmaceuticals	Develop excellent pharmaceuticals and medical devices that provide new diagnostic and treatment opportunities Stable supply of Biosimilars and generic drugs, contributing to people’s health
Life Science Business Unit	Agrochemicals	Support the food supply, and contribute to the development of sustainable agriculture by continuing to provide excellent eco-friendly agrochemicals and related technologies and services

Mobility & Imaging Business Unit

Contribution to the SDGs

External environment	Nippon Kayaku’s strengths	Materiality
Safety Systems Business
Recovery of worldwide automobile production from the impact of COVID-19, and mitigation of the semiconductor shortage The installation rate of safety components is increasing, primarily in emerging countries Growing new demand due to EVs, etc. Expansion of applications such as drone transportation, etc., and demands for safety assurances	Technology and inherited expertise to handle explosives safely Industry top-level market share in automotive safety components Global expansion of locations	Inflators
		Expansion of production bases for cylinder-type inflators (Japan, China, Malaysia) Expand of sales to customers in China and South Korea Developing next-generation inflators
		Micro gas generators / squibs / pyrotechnic products
		Securing next-generation module projects from customers Securing increased volume projects, such as for rear seats Expansion of applications such as pedestrian protection and electric current shut-off Consideration of new pyro device applications
		Drone safety components
		Expansion of sales of PARASAFE® for 25kg drones Development and market launch of PARASAFE® for 15kg drones Development of safety parts for flying cars and large drones
Polatechno Business
Evolution and expansion of automotive display functions Growing demand for recycling rare metals	Optical and electromagnetic wave control technologies and microfabrication technologies Proprietary highdurability dye synthesis technologies for polarizers	Light-controlling products made from proprietary materials contributing to the realization of a Super Smart Society Expansion of new applications for X-ray analysis device parts / materials and inorganic polarizers Expansion of new in-car applications of highly durable polarizers such as parts / materials for HUDs

Fine Chemicals Business Unit

Contribution to the SDGs

External environment	Nippon Kayaku’s strengths	Materiality
Functional Materials
Semiconductor market to grow to 100 trillion yen by 2030	Synergies in semiconductorrelated products Design of functional molecules	Providing important and unique materials Expansion in semiconductor-related business areas such as substrates, encapsulants, cleaners, and manufacturing equipment Development and launch of resins for use in next-generation communications equipment (low-dielectric materials) Expansion of epoxy resin production capacity
Color Materials
Expansion of the digital printing market Expansion of the sensing market Expansion of the dimming glass market	Extensive colorant technologies covering a wide span of fields from traditional dyes to functional colorants Precision organic synthesis	Contribution to digitalization and resource conservation with our inkjet colorants and functional colorants Expansion of industrial inkjet inks, improvement of production systems Mass production and expansion of imaging sensor materials Mass production and expansion of dichroic colorants
Catalysts
Acrylic acid and methacrylic acid markets continue to grow by 5 to 6% Expansion of the carbon neutrality-related market	Optimal customization of catalyst composition and technical services	Providing catalysts with high-yield to contribute to CO₂ reduction and affluent lives Improvement of catalysts for higher yields of acrolein, acrylic acid, and methacrylic acid Secure repeat orders and development of new customers Development of catalysts contributing to a carbon-neutral society

Life Science Business Unit

Contribution to the SDGs

External environment	Nippon Kayaku’s strengths	Materiality
Pharmaceuticals Business
Pharmaceutical industry vision (quality and stable supply, manufacturing and sales, bio-pharmaceuticals, domestic manufacturing and development, encouraging use) Expansion of the CDMO market Annual drug price revisions	Consistent business operation from R&D to manufacturing, sales, quality assurance, pharmacovigilance and post marketing surveillance Top domestic anti-cancer drugs lineup and specialized MR Manufacturing technology for highly pharmacologically active substances	New Drugs
		Increasing share for ALAGLIO® in TURBT^* Maximizing value through drug fostering and evolution *TURBT: Transurethral Resection of Bladder Tumor (surgery to remove bladder tumors using an endoscope and excision loop)
		Biosimilars (BS)
		Market spread of bevacizumab BS Measures to promote biosimilars through the revision of medical fees Expansion of lineup through introduction of new biosimilars
		Generic anti-cancer drugs
		Enhancement of stable supply and quality assurance system Development and launch of the new generic drugs
		Working toward the vision for FY2030
		Enhancement of pipeline Development of new drugs in collaboration with external organizations Introduction of new drugs and medical devices
Agrochemicals Business
Domestic crop protection market remains at the current level, overseas crop protection market is growing due to increased demand for food Introduction of an agrochemical re-evaluation system has raised the bar for obtaining and maintaining domestic agrochemical business registration Strategy “MeaDRI” (Sustainable Food Systems) promotes innovation that enables the reduction of agrochemicals (risk conversion)	Insecticides and soil fumigants in the vegetable and fruit tree domain Formulation knowhow (innovative formulations) Operating activities combining technical services and information provision Manufacturing technologies (from raw ingredients to product formulation)	Japan
		Flometoquin formulations (FINESAVE®), expansion of FUMON® Expansion of sales by expanding the scope of agrochemical registration Response to the agrochemical re-evaluation system for DIAZINON® and other agrochemicals
		Overseas
		Rebuilding the EVISECT® business by restructuring the supply chain Registering and expanding sales of Flometoquin preparations
		Working toward the vision for FY2030
		Development of new insecticides and new innovative formulations Development and introduction of biostimulants

Important Groupwide Issue Initiatives

In order to reach where we wish to be, the Nippon Kayaku Group has analyzed the gap between our aims and our present condition and, as a cross-cutting groupwide project, fixed the five key issues needing to be tackled (Creation of New Business and Products, Mitigation of Climate Change, DX, Business Process Re-engineering and Work Style Reform). The twin tasks of devising ways to instill the Five Important Groupwide Issues in our workforce and speed up the process towards their resolution fall to our Materiality Cross-Functional Team (M-CFT), comprised of members selected from multiple departments.

Important Groupwide Issue	Initiative Details
Creation of New Business and Products	We will contribute to realizing our ideal form by linking the four fields of Mobility, Environment & Energy, Electronics and Life Sciences to our three business units, and cutting across existing boundaries to create new business and products.
Mitigation of Climate Change	We will set our targets for carbon neutrality and global warming prevention (through, for example, reducing greenhouse gas emissions), and unite every factory and research lab behind our climate change risk mitigation measures.
Digital Transformation (DX)	Our current target is to promote DX across the group, expand our sales through process innovation, and expand our business through cost-reductions. Our specific DX measures include: (1) IT education and raising IT consciousness, (2) strengthening our IT base through rebuilding our ERP & IT infrastructure, and (3) bringing DX to each working process in the areas of R&D, production, sales and marketing, and administration.
Business Process Re-engineering	We will reassess our methods for group, business and cost management, and eliminate various forms of waste while improving working methods and reducing costs through A3 Activities (KAIZEN)*, thereby boosting work efficiency and productivity, and upping both asset efficiency and earning power.
Work Style Reform	With our sights set on becoming a “vibrant, strong and good company,” we will reform our working practices and human resources system to increase employee vitality and engagement.

*Our A3 Activities (KAIZEN) are based on cost-reduction consciousness, and designed to make the Nippon Kayaku Group a more vibrant community through strengthening both the individual and the group (through skills and expertise), and through culture-change activities that help cultivate autonomy.

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Medium-term Business Plan and Important Groupwide Issue