Topics Held the "FY2020 Meeting of Compliance Managers and Managers in Charge of Compliance Management

Prior to the meeting, Makoto Hatano, Chairperson of the JPMA Code Compliance Committee, stated the basic policy of the Committee for FY2020: "The Code Compliance Committee is committed to ensuring that member companies comply not only with relevant laws and regulations but also with the JPMA Code of Practice and other voluntary codes, and that they fulfill their social responsibilities as members of the life-related industry with high ethical standards. The Committee's basic policy is to "support member companies in fulfilling their social responsibilities with high ethical standards as members of the life-related industry by complying with relevant laws and regulations as well as the Pharmaceutical Association of Japan Code of Practice and other voluntary codes," and its priority issues are to "support member companies in promoting compliance," "promote appropriate information disclosure based on Transparency Guideline," "respond to guidelines regarding sales information provision activities for ethical pharmaceuticals," and "support the government, Japan Federation of Pharmaceutical Manufacturers' Associations (JFPMA), Japan Pharmaceutical Manufacturers' Association, and Japan Medical Association. The presentation also outlined the "collaboration, collection, dissemination of information, and feedback with the government and related domestic and international organizations such as the Japan Pharmaceutical Manufacturers Association (JPMA), the Japan Fair Trade Council for Marketing of Ethical Drugs (JFTC), and the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA).

He also stated that, with the APEC SMEs Vision 2025 coming into effect in FY2020, the committee will continue to collect and disseminate information on global trends.

Mr. Toshiaki Nagasato, President and Representative Director of KM Biologics, gave a presentation titled "Toward Restoring Confidence," in which he reported on his ongoing efforts over the past three years since the succession of the business.

Mr. Nagasato began by outlining the causes, problems, and remedial measures in this compliance case, and then introduced specific improvements in the systems, functions, and mechanisms for "strengthening governance," "compliance promotion system," and "efforts to restore trust," respectively.

In the area of governance enhancement, he explained that the management and auditing systems were strengthened and the quality assurance and production management systems were restructured to clarify the respective responsibilities of management and employees and to resolve issues in a timely manner.

In addition, he stated that the company's compliance promotion system has been working to raise employee awareness of compliance through the establishment of a Compliance Committee chaired by the president and ongoing education, as well as by emphasizing bottom-up efforts by employees to detect and respond to risks as early as possible.

He concluded his report by stating that the top priority of the mid-term management plan is "restoration of trust," and that the company has implemented various initiatives from the perspectives of organization, roles, workplace environment, and awareness reform. He concluded his report by stating the importance of individual awareness, an open work environment, and management's constant attention to the workplace.

Professor Hajime Kakizaki of Meiji University School of Law gave a lecture titled "Governance Reforms for Sustainable Corporate Value Enhancement as Required by the Revised ERM".

Mr. Kakizaki began his presentation with an overview of the Committee of Sponsoring Organizations of the Treadway Commission (COSO)'s internal control framework and the revised Enterprise Risk Management (ERM). Explanation of the overall picture of the revised ERM and its five components: Governance and Culture, Strategy and Goal Setting, Performance, Review and Correction, and Information, Communication, and Reporting. He emphasized that risk management as a management strategy is indispensable to realize a corporate mission to enhance corporate value, and that a corporate culture that leads to autonomous governance is also important.

He then cited court precedents and the revision of the Whistleblower Protection Act as examples of governance issues in Japan related to risk management, and stated that it is necessary to ensure a system that enables prompt provision of risk information to the board of directors and sufficient consideration by the board of directors of the rationale for pre-action to future events.

Finally, he explained the key points of the new three-line model of the IIA (Institute of Internal Auditors) and the suggestions from the first draft of the ALI project for governance reforms that make use of the revised ERM. Then, in order to respond quickly to the accelerating changes in the corporate environment and to ensure that the board of directors properly oversees corporate risk management, the revised ERM and the 3-line model can be used to provide real-time risk information and enable substantial and flexible forward- He concluded by saying that the collaboration between the looking-into, second-line risk and compliance managers and the third-line internal audit is necessary, and that this is the cornerstone of governance reform for sustainable corporate value enhancement.

JPMA Executive Director Tokuo Tanaka thanked the speakers, Toshiaki Nagasato and Tamaki Kakizaki, and expressed his gratitude to the compliance managers and compliance practitioners for their participation in the meeting and their daily activities.

In his remarks, Mr. Tanaka referred to the recent incidents of GMP violations and inappropriate scholarship donations, and described them as extremely worrisome events that have seriously undermined public trust in the pharmaceutical industry as a whole. The JPMA's "Basic Idea on the Support of Clinical Research by Pharmaceutical Companies (JPMA, April 22, 2014)" clearly states how scholarship endowments should be provided, but the incident involving the scholarship endowment was caused by a convenient decision. The company stressed that this is a situation in which efforts must be made to restore trust in the industry.

He concluded his speech by saying that all those engaged in the pharmaceutical industry must fully understand that "research and development of new drugs" and "compliance" are two wheels of a cart, and that only when both are running properly can we move forward into the future, and that unless we practice them daily, we will not gain the trust of society.