Supply Chain

With the aim of promoting sustainable procurement to enable us to contribute to the development of a sustainable society by fulfilling our social responsibilities in cooperation with our business partners, Santen has established a Sustainable Procurement Policy, and formulated the Santen Group Sustainable Procurement Guidelines, which define the rules the Group's business partners are advised to comply with in order to promote sustainable procurement.

Santen always takes a patient-centric perspective. To designate critical products in full consideration of their influence on patients, we have defined Santen products that have a 50% or higher market share that are vital to patients (*) as our "critical products" from the perspectives of 1) the availability of alternative products and 2) their impacts on patients. Moreover, we have defined suppliers of intermediate products that are necessary for us to provide patients with our critical products-including contract manufacturing organizations (CMOs), raw material suppliers, and contract service providers in charge of packaging, labelling, sterilization, etc.-as "critical suppliers."

Santen conducts a Supplier Assessment to identify potential risks in its supply chain. In the assessment, we show suppliers the Santen Group Sustainable Procurement Policy and Guidelines and request them to complete the Guidelines Compliance Questionnaire to confirm their efforts to follow the guidelines. This ESG survey is defined as an official process that all suppliers must undergo at the beginning of their contracts with Santen and in a common three-year cycle afterward. It is being considered not to extend contracts with suppliers if the minimum ESG requirements are not met, and to give preference to suppliers with superior ESG initiatives.

These efforts are reported to the Sustainability Committee and are raised with the Board of Directors as necessary.

〔Target for FY2023〕 Percentage of critical suppliers receiving an evaluation in an assessment: 85% or higher

〔Target for FY2023〕 Implement 100% corrective action for suppliers that are determined to require corrective action

Corrective actions are planned when risky suppliers are identified; however, no corrective actions were taken during the current fiscal year because no risky suppliers were identified.

〔Target for FY2023〕 Percentage of critical suppliers undergoing training : 80%

Supplement：This program has been implemented since FY2022. The cumulative number of suppliers who have participated in the training is 96. The cumulative proportion of suppliers who have participated in the training among the total number of key suppliers is 64.4%.

To continue steadily supplying our products even if our supply chain faces various risks, including those of accidents, natural disasters, and climate change, Santen recognizes the necessity of risk management throughout our supply chain, such as building a backup system with multiple plants and procuring raw materials from multiple suppliers.

Supplier-related sustainability risks in the stable supply of pharmaceuticals are primarily interruptions in the supply of raw materials from critical suppliers. For example, suppliers may be subject to production discontinuation orders from regulatory authorities due to deviations from manufacturing and quality control standards or legal compliance, environmental protection or health and safety issues.

We recognize and manage risks comprehensively by identifying critical suppliers in terms of transaction volume, important raw materials, and the absence of alternative suppliers.

To ensure stable procurement, Santen grasps and manages the geographical distribution of suppliers in its supply chain.

With the belief that our suppliers are our partners essential for providing patients with medical and pharmaceutical products and the like, Santen strives to enhance our product quality and carry out improvements to cut prime costs through mutual exchanges and cooperation, as well as complying with the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors, and maintaining the secrecy of provided information, with the aim of building relationships that enable both parties to develop in a sustainable manner.

Santen has internal regulations, including the Regulations on Purchasing Management, providing that the selection of suppliers requires making competitive estimates and comprehensively evaluating candidates in terms of product quality, delivery periods, managerial reliability, etc. Concerning the prevention of conflict of interest, the Code of Conduct in the Santen Code of Practice provides against the receipt of profits provided by business partners.

In addition, with the aim of building new partnerships and coexistence and co-prosperity relationships throughout the supply chain, we endorse the main purpose of the "Declaration of Partnership Building" established by the "Conference on Promoting Partnership Building for the Future" promoted by the Cabinet Office, the Small and Medium Enterprise Agency, and others, and we disclose our declaration of partnership building.