Our Responsibility

Grants:

Kowa Pharmaceutical Europe Co. Ltd. (KPE) regularly receives requests for monetary grants to support a range of activities by professional healthcare organisations. These unrestricted grants are provided to support such activities as research where Kowa is not directly involved, Independent Medical Education Programmes or attendance of the organisations healthcare professionals at medical or scientific meetings where it may be used to cover expenses.

KPE does not solicit requests for grants nor does it get involved in the detail of how the grant is used, we do however ensure that it is for a valid purpose to benefit either patients or public health.

Payments to healthcare professionals and healthcare organisations:

Healthcare professionals (HCPs) and Healthcare organisations (HCOs) provide a number of services to KPE, based on their clinical knowledge or knowledge of healthcare systems and healthcare management.

These services are provided through a number of means:

Advisory boards: Where they join with other experts in a particular field to provide insight and direction to our research activities helping us to ensure we are able to develop products that provide benefit to patients or satisfy an unmet clinical need.

Symposia speaker services: KPE provides a number of educational speaker services at symposia and congresses where HCP/HCOs are invited to speak either on a therapy area relevant to our company or to inform HCP/HCOs of recent scientific findings related to a Kowa product. Reimbursement for these services accurately reflects the experience of the HCP/HCO as well as the time and effort contributed by the HCP/HCO and conforms to local guidelines.

The payments made by KPE are in respect of products currently or soon to be marketed. For pipeline products payments are made by Kowa Research Europe Ltd. (KRE) a sister company in the group.

Support provided is never an inducement to either prescribe or reward prescription of our products and we make every effort to ensure that the HCPs and HCOs are transparent about our support both to their colleagues and to their employers.

Since 2013 Kowa Pharmaceutical Europe Co. Ltd. (KPE), in line with transparency and best practice, has reported the total amount paid to healthcare professionals in fees for consultancy services received. Each year the total amount paid for the previous calendar year is reported, as well as the number of UK healthcare professionals that received such payments. In 2016 this was extended to capture all payments made to both HCPs and HCOs within Europe.

Payments made by Kowa Pharmaceutical Europe Co. Ltd. (KPE) to UK Healthcare Professionals in 2016:
Total KPE amount paid in 2016 to HCPs No. of HCP's* Total KPE amount paid in 2016 to HCOs No. of HCO's*
Total payments made by KPE £16,991.95 10** £5,254.96 2**
Attendance & Participation to Ad Board £16,313.34 10 £5,254.96 2
Attendance & Participation to Speaker Meeting / Congress Symposium £300.00 1 £0 0
Other Consultancy (inc. Travel & Accomodation) £378.61 1 £0 0
Payments made by Kowa Research Europe Ltd. (KRE), to European Healthcare Professionals and Healthcare Organisations in 2016:
Total KRE amount paid in 2016 to HCPs No. of HCP's* Total KRE amount paid in 2016 to HCOs No. of HCO's*
Total payments made by KRE £8,839.66 4** £7,719.36 1**
Attendance & Participation to Ad Board £4,660.57 3 £7,719.36 1
Attendance & Participation to Speaker Meeting / Congress Symposium £0 0 £0 0
Other Consultancy (inc. Travel & Accomodation) £4,179.09 4 £0 0

* Some individual HCPs/HCOs may have engaged several times for each consultancy activity. These HCPs will only be counted once in each activity

** Some individual HCPs/HCOs may have engaged for multiple types of consultancy activities, e.g. participation at Advisory Board and participation at a Speaker Meeting. These HCPs/HCOs will only be counted once in this total.

Payments made by Kowa Pharmaceutical Europe Co. Ltd. (KPE) to UK Healthcare Professional in 2015 totalled £11,662.53 for providing advice and consultancy, including chairing and speaking at meetings, and participation in advisory boards.

Payments made by Kowa Pharmaceutical Europe Co. Ltd. (KPE) to UK Healthcare Professional in 2014 totalled £37,765 for providing advice and consultancy, including chairing and speaking at meetings, and participation in advisory boards.

Payments made by Kowa Pharmaceutical Europe Co. Ltd. (KPE) to UK Healthcare Professional in 2013 totalled £8,681 for providing advice and consultancy, including chairing and speaking at meetings, and participation in advisory boards.

KPE ensures that any payment made to HCPs is reasonable, within market rates and reflects the time they spend speaking / advising.

Hospitality and promotional expenditure:

In the course of our usual business we must interact with HCPs and provide in some instances hospitality. This hospitality and these interactions are highly regulated and are governed by the local Marketing Code of Practice. We commit that our promotional practices are ethical and in line with UK and European marketing codes and that we will not enter into any promotional activity for unapproved medicines or for unapproved uses of our medicines. Our business practices prohibit the offering of any bribe, kick back or inducement to any government official or any other person in return for a service.

The Bribery Act 2011:

KPE requires that all of its staff and those of third parties acting on its behalf comply with all anti-corruption legislation and act with the highest ethical standards. Payments or acts that create the impression that a received service will receive a payment in kind are not tolerated. All existing agreements with partner organisations are reviewed and updated to ensure that they comply with the anti-bribery and corruption legislation. Particular efforts are focussed on ensuring that any activities carried out by staff of KPE or partner organisations in high risk markets are reviewed on a regular basis and a process is put in place whereby any staff who have concerns can raise it with senior management in a confidential manner. Regular reviews of partner organisations anti-bribery policies will take place to ensure they fully support the UK Bribery Act and the US Foreign Corrupt Practices Act as well as any other relevant anti-corruption laws.

Tax Strategy for Kowa group operations in the United Kingdom

Scope:

Kowa Group is a complex corporate entity that consists of many associated companies and engages in diverse business activities. At the group’s pinnacle is Kowa Company Ltd., which is based in Nagoya, Japan. With a history of over 100 years since being founded in 1894, Kowa has continually made progress based on both the discipline of manufacturing and the challenges of enterprise. The group aims to pursue the happiness of people throughout the world and help them achieve healthy and prosperous lifestyles. Kowa aims to continue to provide new and better products and services through its global network.

Responsibility for formulation of this strategy is delegated by the Group to the boards of directors of the UK Companies.

This strategy applies to current and future Kowa undertakings in the United Kingdom. The strategy is published in accordance with paragraph 19 of Schedule 19 to the Finance Act 2016. A list of the entities to which it applies is set out below. In this strategy, references to ‘Kowa’, ‘the company’ or ‘the group’ will embrace all these entities. The strategy is being published in accordance with paragraph 16(4) of the Schedule.

This strategy applies from the date of publication until it is superseded. References to ‘UK Taxation’ are to the taxes and duties set out in paragraph 15(1) of the Schedule which include Income Tax, Corporation Tax, PAYE, NIC, VAT, Insurance Premium Tax, and Stamp Duty Land Tax. References to ‘tax’, ‘taxes’ or ‘taxation’ are to UK taxation in respect of which the Group has legal responsibilities.

Aim:

Kowa is committed to full compliance with all statutory obligations and full disclosure to relevant tax authorities. The group’s tax affairs are managed in a way which takes into account the group’s wider corporate reputation in line with the group’s overall high standards of governance.

Governance in relation to UK taxation:

• Ultimate responsibility for Kowa’s UK tax strategy and compliance rests with the Board of Kowa Research Europe Ltd in combination with the Board of Kowa Pharmaceutical Europe Co Ltd herein referred to as “the boards”.

• Executive financial management of the group is delegated by the boards to the Chief Financial Officer who is presently the Logistics and Finance Director of Kowa Research Europe Ltd.

• The boards’ responsibility to monitor the integrity of Kowa’s financial reporting system, internal controls and risk management framework, expressly includes those elements relating to taxation.

• Day-to-day management of Kowa’s UK tax affairs is delegated to the Accountant, who reports to the Logistics and Finance Director.

• The Kowa Tax Team is staffed with appropriately qualified individuals.

Risk Management:

• Kowa operates a system of tax risk assessment and controls as a component of the overall internal control framework applicable to the group’s financial reporting system.

• Kowa seeks to reduce the level of tax risk arising from its operations as far as is reasonably practicable by ensuring that reasonable care is applied in relation to all processes which could materially affect its compliance with its tax obligations.

• The Tax Team remains abreast of current developments through regular training and by access to online technical services provided by government, professional bodies and paid for reference services.

• Processes relating to different taxes are allocated to appropriate process owners, who carry out a review of activities and processes to identify key risks and mitigating controls in place. These key risks are monitored for business and legislative changes which may impact them and changes to processes or controls are made when required.

• When staff outside the Tax Team manage or process matters which have tax implications they are provided appropriate training and advice.

• The company maintains a detailed employee handbook and various staff policies where employee activities could affect their own or the group’s tax obligations.

• For complex issues, advice is sought from external advisers.

Attitude towards tax planning and level of risk:

The boards seek to ensure that any risks to compliance with legal requirements are understood and evaluated.

When entering into commercial transactions, Kowa seeks to take advantage of available tax incentives, reliefs and exemptions in line with, and in the spirit of, tax legislation. Kowa does not undertake tax planning that is unrelated to its core commercial activities.

The level of risk which Kowa accepts in relation to UK taxation is consistent with its overall objective of achieving certainty in the group’s tax affairs. At all times Kowa will seek to comply fully with its regulatory and other obligations and to act in a way which upholds its reputation as a responsible corporate citizen. In relation to any specific issue or transaction, the Boards are ultimately responsible for identifying the risks, including tax risks, which need to be addressed and for determining what actions should be taken to manage those risks while having regard to the materiality of the amounts and obligations in question.

Relationship with HMRC:

Kowa seeks to have a transparent and constructive relationship with HMRC. The company has a policy of openness in respect of developments in its business, current, future and retrospective tax risks, and interpretation of the law in relation to all relevant taxes.

Kowa will always endeavour to submit returns in a timely manner together with all requisite supporting documents.

Any inadvertent errors in submissions made to HMRC will be fully disclosed as soon as reasonably practicable after they are identified and quantified.

Legal and ethical:

The company will act lawfully and with integrity and expects the same from its employees, tax authorities and other parties with whom it interacts.

List of entities covered by this Tax Strategy

• Kowa Research Europe Ltd, a private company registered in England and Wales.

• Kowa Pharmaceutical Europe Ltd, a private company registered in England and Wales.

• Kowa Optimed Europe Ltd, a private company registered in England and Wales.

• A permanent UK establishment of Kowa Optimed Deutschland GmbH, a company registered in Germany.

Approval:

Approved by the group headquarters on 14th December 2017

UIN: KPE17 00003a
Date of Prep: May 2017

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