Message from the CEO

President & CEO
Morifumi Wada

【A Retrospective Look at EIKEN's 80th Business Year】
Please allow me to begin by extending my heartfelt gratitude to all our shareholders for your continued support of EIKEN Group (the “Group”).
In the clinical diagnostics industry, restricted medical expenses are causing continued severity in the business environment, leading various companies to seek further cost competitiveness and proactive overseas expansion in order. Overseas, developed countries have an increasing need for efficiency to keep medical costs under control, and preventive care is expanding as well. Developing countries are building medical infrastructure in keeping with their increasing populations and economic development. As a result, continuing growth is anticipated in both types of countries.
Due to these conditions, the Group has been carrying out the following initiatives as our top priority issues. 1) Increasing our proprietary product share in the domestic market, 2) Accelerating global expansion, 3) Improving our research and development ability, and 4) Developing foundations to increase management efficiency.
The results of these efforts are reflected in the net sales for the consolidated fiscal year ended March 31, 2018. In addition to major growth in foreign-marketed product sales, our domestic sales also increased, especially among our flagship fecal occult blood diagnostic reagents product line, for total net sales of 34,991 million yen (an increase of 5.2% on a year-on-year basis).
In terms of profits, in addition to our efforts to improve the efficiency of expense usage, the development of a small-sized fully automatic genetic screening device was mostly completed, and the total research and development costs for this project were approximately 700 million yen. From these results, operating income was 3,478 million yen (a decrease of 12.5% on a year-on-year basis), ordinary income was 3,549 million yen (a decrease of 13.7% on a year-on-year basis), and net income attributable to parent company shareholders was 2,608 million yen (a decrease of 10.6% on a year-on-year basis).
In addition, the year-end dividend for the current term was 25 yen per share.

On the business side, the national colorectal cancer screening tests program instituted by the Australian government started in January 2018, and our fecal occult blood diagnostic products are being used. Also, in our urine test business cooperation with Sysmex Corporation, the dried product plant (DPP) facility launched in the previous fiscal year has started manufacturing and shipping out urine testing drugs, and these products are being steadily adopted by foreign countries. In our overseas genetic testing business, the adoption of pulmonary tuberculosis detection method (TB-LAMP) and malaria molecular diagnosis systems by Cameroon was confirmed, and testing will soon start. We will use this success to set a precedent and promote expansion into other countries.
On the research front, the development of our "Simprova" product, a small-sized fully automatic genetic screening device which uses the LAMP method, is nearly complete, and we are continuing to work toward early market entry.

【Outlook for the EIKEN's 81th Business Year】
Regarding the economic outlook for Japan in this fiscal year (ending March 2019), improvement is anticipated in employment and earnings conditions, as well as corporate profits, with the economy continuing a gradual recovery. In the medical field, policies such as specialization of sickbed functionality and improvement of family doctor capability are expected to transition to the next stage in preparation for the promotion of regional comprehensive care systems. Overseas, developed countries need both increased efficiency to control medical costs and expanded preventive care, and developing countries are building medical infrastructure to keep up with the demands of their increasing populations and growing economies. For these reasons, continuous growth in both types of countries is anticipated.
In light of these conditions, for the final fiscal year of our group's medium-term management plan (March 2017 - March 2019), the Group will continue carrying out initiatives for critical policies such as accelerating our global expansion projects.
Regarding our business performance, anticipated figures are as follows. Net sales: 36,760 million yen (an increase of 5.1% on a year-on-year basis), operating income: 4,200 million yen (an increase of 20.7% on a year-on-year basis), ordinary income: 4,230 million yen (an increase of 19.2% on a year-on-year basis), and net income attributable to parent company shareholders: 3,040 million yen (an increase of 16.5% on a year-on-year basis).
In addition, we anticipate 6,870 million yen in net sales to overseas (an increase of 27.1% on a year-on-year basis), comprising 18.7% of total sales.
We hope for the continuing support and enthusiasm of all our shareholders in the future.