Evaluation and Management of the Supply Chain

With the aim of promoting responsible procurement, Santen will ensure supply chain management and monitor its business partners to eliminate risks, including that of sparking boycott movements against the Group, and promote responsible procurement to improve the corporate value of our business partners and our company.

CSR Procurement Policy and Guidelines

With the aim of promoting CSR 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 CSR Procurement Policy, and formulated the Santen Group CSR Procurement Guidelines, which define the rules the Group's business partners are advised to comply with in order to promote CSR procurement.

Defining Critical Suppliers

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."

  • Products that are vital to patients: Treatments and diagnostic agents for serious diseases without which patients could not receive surgery or would lose their vision

Setting Goals

To promote ESG efforts throughout its supply chain, Santen has set goals for 2025, key performance indicators (KPIs) to be used to assess the progress of efforts to achieve the goals, and targets for those KPIs. We will review the KPI targets every fiscal year.

Goals

  • To have earned a global level of trust among stakeholders by contributing to sustainable social development and reducing risks to Santen's business continuity
  • To have achieved the complete permeation of the Santen CSR Procurement Policy among key suppliers, whose statuses of compliance with the policy are appropriately monitored

KPIs and targets

CSR survey of critical suppliers
  • Percentage of critical suppliers receiving an evaluation in a CSR survey: 85% or higher
  • Number of suppliers with risks: Aiming to reduce the number to zero
Supplier training
  • Percentage of critical suppliers undergoing training: 80%
ESG education of procurement departments
  • Percentage of procurement department staff members receiving ESG education: 100%

Conducting a CSR Survey

Santen conducts a CSR survey to identify potential risks in its supply chain. In the survey, we show suppliers the Santen Group CSR Procurement Policy and Guidelines and request them to complete the Guidelines Compliance Questionnaire to confirm their efforts to follow the guidelines. This 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.

In FY2020, we requested all 129 primary suppliers involved in product supply to respond to the questionnaire and received responses from more than 90% of them. In the FY2021 survey, we have distributed the questionnaire to our primary and secondary suppliers and have examined their responses to confirm their guideline compliance status. The survey has so far revealed no serious problems. If we find any suppliers incompliant with the guidelines, we will continue to approach them to encourage their efforts to achieve compliance. In addition, in response to the refusal or failure of suppliers to respond to the questionnaire, we adopt corrective action, including requesting them to complete it in the following year and, if they still refuse or fail to do so, considering replacing them with new suppliers.

Furthermore, we have also begun to obtain the agreement of suppliers in indirect purchase on the CSR Procurement Policy and Guidelines.

Through these activities, we promote responsible procurement and fulfill our social responsibility throughout our supply chain with the aim of increasing the corporate value of both Santen and suppliers in collaboration with them.

Risk Management on Supply Chain

To continue steadily supplying our products even if our supply chain faces various risks, including those of accidents, natural disasters, and climate change, Santen implements various measures for 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.

Supply Chain Spend Analysis

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

Building Healthy Relationships with Suppliers

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.

We are holding meeting with our business partners.