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[Interpreted] Thank you very much for joining us today. I like to give you FY 2018 business highlights. As you know, this is our values and mission statement: Tenki ni sanyo suru. Based on the values, we explore the secrets and mechanism of nature in order to contribute to people's health, and that is our basic values. And by focusing on ophthalmology, Santen wants to contribute to well-being of people, including patients and loved ones and to society. This organ, eye, the size is only a size of a coin. It's a sphere, but it is essential for human activities. You see. You read. And in addition, you have a balance, taste, exercise. In every aspect of activities, eyes' function is involved, and 80% of input into the brain is your eyes. Therefore, when in 30, suffer from eye disease or low vision or blindness and their various diseases, it's not only the disease of the eyes. It's impacting employment and how you live. It has social significance and economic significance. We, Santen, focus on eye ophthalmology, and we focus on disease in this area. And we want to provide solutions, including devices, information and drugs. Through that we hope that people in the world will be able to have brighter future and live happily. And that is what we always keep in our mind in our day-to-day activities.
Last year, we announced MTP2020, and fundamental policy is shown here. We want to become a specialized pharma company with a global presence. And also for midterm, we want to construct a path for sustainable growth and 3 improvements, including customer satisfaction, profitability and organizational strength. We are focusing on those areas. Details will be explained later. For FY '18, we were able to achieve many aspects. And financially, we have a very good result. I'll explain one by one later. First is global business, and we want to outperform the market. Santen has a Vision 2020. And then based on that, in Asia and in Europe, we were able to expand our business and business platform, and the number of countries and the number of products increased significantly. And the next big challenge is U.S. market entry. We have explained to you before, Santen in 2020, that's the goal with approval with PreserFlo MicroShunt. We want to go into the U.S. market with this product. And for Canada this year, Vekacia is a product, and that's how we go into the market. Those are both differentiated products. And at the end of April, we announced this partnership in U.S. in order to have a better startup of sales and to establish higher probability of success. In our U.S., we have distribution agreement with a company called Glaukos. And this slide explains how we want to go into the U.S. market and explaining the significance of this partnership. This is a distribution agreement. This is not a license. I want to be clear about that. Santen has its R&D activities, and that will continue. And the registration will be done by us. And we, Santen brands, will be introduced to the market. And Santen, regarding the supply of this product and marketing activities and medical affairs activities and activities at Congress sales will be done by Santen.
What does Glaukos do? Glaukos does -- is approaching physician surgeries who do surgeries. And in operation room, we may provide education training and explain the product. The training for surgeons about the product requires expertise, and the time is required to penetrate very well. In the U.S., Glaukos has the presence and know-how. This is a leading company in glaucoma. And by having the partnership with this company, this startup period, the important period can be leveraged by using their distribution channels to make sure of our success in the U.S. market. For example, if you have to do everything on our own to hire surgical sales reps and to deploy them in the U.S., and when you compare that to this partnership in terms of cost-effectiveness and the speed, we will be able to enjoy advantages.
I, myself, had experience in Europe and China and had experience of startup on new launches. What I can say is the key to success is, of course, differentiated product. You need that definitely. In addition, in each country and actual marketing capability and trust relationship with the customer and operational capability is very important, including supplier product, finance and human affairs. All those need to be well built up.
In the U.S. and Canada. In the U.S., we have the Glaukos partnership. Santen have MicroShunt and DE-117 and other pipeline assets available, and we can maximize the value of those products and pipeline and the marketing capability and operational capability. We can really focus on what we need to do. And through marketing activities or through medical affairs and Congress activities, we are able to build trust relationship with experts in the U.S. So with this partnership in the U.S. market, we want to make sure of our presence. MicroShunt is a door opener for us in the U.S. market, and we have other product that should follow, and we are able to establish foundation for those coming products to be successful in the next 3 years. We want to build strong relationship, and we want to be a company that can market products that are differentiated from other companies. Next is about Asia where growth is quite significant. 4 billion people live in Asia, and there is high economic growth and underdeveloped but healthcare infrastructure that require further development. On the top of that, beyond 2020, aging would be accelerating in those countries. And of course, we have good growth, but we are aiming at even higher growth. And growth potential is very high in Asia. Santen with the past activities have established ourselves as #1 in China and Korea in terms of shares. And in other major Asian countries, we are among the top 3. And we have high customer satisfaction, and we have built good trust relationship with customers in India, and there are some other countries where we have not entered yet, but we are preparing for the possibility. And we have new products from Japan, U.S. and Europe to those Asian marketing future, not only Asia members, but global team like global medical office team can help Asian countries, and Santen's global power should be collectively be able to support our business success in Asia, not only share, but our scale in the business platform should be expanded. And we have done so, and we want to continue that so that we can be #1 in Asia. And we want to enjoy good profitability in a sustainable manner. The second aspect is enriching product pipeline and develop new treatment outcomes on options. First, in glaucoma treatment, PreserFlo MicroShunt would be able to bring about a new breakthrough. This is being developed in U.S. within 2019. Filing should be done and 2020, should see launches. We are preparing for that. And from last year, in Europe, soft launch has started, and some important centers have received our products and dozens of doctors received training for surgery and procedure and, actually procedures are being implemented in clinical setting. European experience of market and approval in the U.S. should leverage our activities in Asia and also in Japan, and we are preparing our activities for that. That includes Congress and the society meetings and provide information to doctors in detailing, and we have various activities that are ongoing for global success. Next is September 2018. This was approved, EYBELIS. EYBELIS is now being used already, and we are trying to penetrate furthermore. Phase III in the U.S. is ongoing. And in Asia, we are preparing for filing. In April, we have completed filing in Korea and Taiwan. So Japan-originated global products growing, and we hope this is one of them. This has a new mechanism action, and Japan was the first to launch this. This is quite new. And in actual clinical settings, safety and efficacy should be very well examined, and there are many inquiries. And actual patient use should be accumulated as data, and they do require more time than we anticipated, but we are steadily penetrating into the market, and sales is going up. So learnings from Japan is very important. We can utilize learnings for U.S. and also for Europe and Asia. We have cross-border activities so that this product will be a global product.
Another one is from the spring in Japan. This was launched. It has a new LENTIS Comfort product intraocular lens compared to the traditional monofocal structure. This has intermediate far, not only the far distance, so it has broader distance coverage for visual acuity. And there are multifocal lenses in the world. And because of multifocal design, they have the structure. But because of the optical characteristics, there could be some glares, and that gives discomfort to the user. And with this product, over the discomfort, less optical discomfort is observed. And this can be covered by insurance. For multifocal lenses, you have to pay out of your pocket, but this is covered by insurance. This is quite a merit for the patient in that sense as well. My mother had cataract surgery, and my mother used this product, LENTIS Comfort, and my mother said it's very good. My mother had a far distance, and she suffered from aging of distance -- looking at distance far away and that she needed many glasses. But after this lens, she does not need so many types of glasses for short distance or far distance. And it was covered by insurance, but it was only JPY 72,000. That's my mother's comment. And I had my own experience of my own family, and I want to make sure this is true for other people as well. Going forward, injector will be used so that this product will be more easier to use. When that is approved, we can also leverage further more in our promotion activities. We hope this product will grow very strongly, not only those products this year for mid- to long-term innovation. We have various activities.
UCL or Singapore SERI, we have partnership with them for core developmental core research. And from these activities, DE-127 for myopia will start clinical study this year in Japan. Last year, we had a news release of gene therapy joint project with RIKEN or with PeptiDream. We have partnership for new compounds. They will come yet in -- they are not here yet, but there are various unmet needs, and we hope that this partnership will bring some innovative therapies to address unmet needs in future.
The third is business platform. And in the past, we have a globalization significantly. And in terms of business structure and platform, we had many learnings. We spent many years to develop in Japan. But for the global development, we have more channels and countries to cover, and we need to improve our business platform or framework. For FY '18 cost-reduction activities or BPR activities were implemented. That include global standardization and streamlining and integration for efficiency of business, and we have achieved billions of cost reduction. And we have new management framework, and the global organizational structure will be created. And we have now this business organization established for global strategy building and the operation. And going forward, we want to make our business more efficient, and a new ERP will be introduced, and there are many other activities we have in plan.
For development of products and penetration of message, we have various activities for patients suffering from diseases. For example, we ask doctors' donation for the patient with eye disease. For example, glaucoma patients sometimes suffer from discoloration because of the treatment around eyes. And how to do makeup is one of the seminars we had for those patients. It's not that we provide only sponsorship, but children with visual impairment can have soccer games. And we invite children for those events, and we have World Glaucoma Week activities. Of course, our main business is drug and devices in ophthalmology and so that we will make contribution, but we also want to provide activities for patient from social aspect as well. MTP 2020, and this is the year 1. We are able to achieve a lot. And for mid to long term, we have various activities already started.
And as for the revenue and profit. As announced yesterday, we had an NHI price cut, and there are various against -- or negative factors. But in spite of that, we were able to grow in Japan, Asia and in Europe. And cost-reduction company-wide is done, and we have record revenue of JPY 234 billion, and core operating profit of JPY 48.2 billion was achieved. For FY 2019, we want to continue the similar strength for growth.
Purpose of our business, as I said in the beginning, is that the -- in our area, needs will be more and more diversified and being focused in ophthalmology. And we want to have growth for mid to long-term range. For that, we would make investment, including R&D, in a very active manner. And in order to support that, we would have CapEx, including production capability and ERP investment. We will continue that. The world should be brighter and happier.
For that, we want to grow for that and as a company, as a team. Thank you very much.
[Interpreted] Thank you. Now we'd like to discuss the FY 2018 results and FY 2019 forecast, and Mr. Koshiji is going to explain.
[Interpreted] Thank you for your kind introduction. This is Koshiji speaking. I'd like to now make presentation. And as to the content of the PowerPoint presentation, this has been already published yesterday. Therefore, I just would like to focus on major points.
And let me now begin by explaining the financial result of FY '18, and the result was very close to the guidance. In core base, the revenue, the growth was by 4%. And there was a press revision in Japan, and this impact is also included. Therefore, in actuality, it will be the growth by 7%. And also the -- for the core basis on the IFRS, the operating profit are shown here like this. And also the net profit in FY '17, we had a tax rate, reduction and the impact was JPY 5.1 billion. And compared to that, it was a negative growth by 9.4% year-on-year.
And let's move on to the next page. This shows the breakdown of the revenue, and this was quite as we have expected, and there's a minimum currency impact. Especially in Asia, we had major growth. And as is mentioned in the material, and that those product launched in Asia accounted to 21 products, and the 42 products have been approved in Asian region. And those are the major contributors.
And let's move on to page -- next page, and this shows the leveraging from the previous fiscal year in terms of the core operating profit. And in Japan, it stayed rather flat due to the price revision, however, in overseas, mostly in Asian countries, we saw the major growth. So now let's move on to the FY 2019 forecast. We see the forecast of FY 2019. And in FY '19, the revenue was JPY 248 billion; and the core base operating profit was JPY 51 billion; and the net profit was JPY 37.7 billion; and IFRS basis, JPY 34.5 billion. And therefore, this was minus 23.5% year-on-year, and the net profit was JPY 23.2 billion and minus 27.4% year-on-year.
And in terms of revenue, we are maintaining the existing momentum. And the next point is the SGA, and we expect the growth by 3.8%. And as has been already explained by our President, since last year, we have been carrying out the cost-reduction activities and at least, and we would like to suppress the less than the growth level of the revenue. And in FY '19, the SGA can be classified into 4, generally speaking: and variable cost, labor cost, royalty and depreciation. And royalty will increase in time with the sales growth. However, the variable cost should stay flat or 1% growth at the most. And for labor cost, we would like to maintain to 3% to 4%. Therefore, we will like to strongly control all these costs so that we can secure the profit.
And on the other hand, as to the R&D expenses, that is JPY 28 billion, and we expect the growth from the previous year. And it is stated that this is for the future. However, in the last fiscal year, we had some underspending and so those may be used this year. And also for the future, every year, we set a cap to a certain spending. But this year, we will not apply such -- the cap to reflect that in the budgeting process, so we have come up with a number of JPY 28 billion. And in our core base, the operating profit is JPY 51 billion and up plus 5.7% from the previous year. And as to the IFRS base and the DE-128 MicroShunt, the development progresses and milestone payment is expected. And in FY '16, when we purchased this company, we didn't pay full amount, and we have included the contingent payment in the contract. And at the time point of filing and approval, the payment will occur. These are regarded to the events to -- induce payments.
And these are all regarded as the noncurrent liability and was a progress of the development that there is increased probability of the payment occurrence. Therefore, for this fiscal year, fiscal year '19, filing and approval will take place at the same time. This means that the noncurrent liability will have a higher probability to occur. Therefore, this will be all included in the IFRS cost. Most specifically, it will be included in other spending and the core operating profit. And this amount will be JPY 8 billion in total. And this is the onetime spending on accounting processing, and this is actually the cash payment. But when the cash payment occurs, there is no impact to the cash -- profit and loss. Therefore, for this fiscal year, we expect the major negative growth of the profit. However, the JPY 9 billion of the spending will not be repeated in the next fiscal year. We do not believe this will happen again. However, when we're looking to the future milestone payments, of course we have concluded everything related to the development for this fiscal year. Therefore, in coming years, once we start manufacturing and once we reach a certain level of the sales, then there will be other milestone payment expected. Therefore, let's see. We may have to revise the projection or peak sales. It will be somewhere around the JPY 200 million to JPY 250 million, but it far exceeds. Or if that is expected, then in next fiscal year, we may have to expect or revise the contingent payment. And it is -- may give some impact to PL. However, it is too premature to say anything about this. And if that may happen next year, the size is not as large as what happened this year. And of course, it really depends upon the contingent payment amount. However, it will be somewhere around JPY 2 billion or so. So this could happen. However, this large impact will only take place this year alone.
And on the other hand, for the depreciation, we have started to launch in Europe. We call it a soft Launch. And then we have JPY 2.8 billion here. And this year, sales is expected around slightly more than JPY 400 million compared to the -- that the depreciation is not large in an IFRS basis, but this could be absorbed through the growth of the sales in the future.
And this has been the core base discussion, and so let's move on to the next page. And we have a trend of the consolidated performance from FY '2014. And we had some decline in 2016 FY. But in principle, we would like to maintain the sustainable growth. That is always our goal. Therefore, be it a price revision or increase of the R&D spending, we are always aiming at growth of the revenue and operating profit. And through the cost reduction and streamlining, we would like to maintain the -- a positive growth of the revenue and the core operating profit towards the last year of the midterm plan.
On next page, we have the trend in the business performance of Japan business. In Japan also, for the Japan pharma, we expect the price revision again. And last year, the price cut was about 15% for the long-term listed products. Therefore, profitability-wise, the trend is quite positive. And starting from this year, we expect the surgical business will further contribute to the growth of the revenue and the profit.
And on the next page, we have Asian business performance. And the contribution margin, the level was -- is about 30%, and this level will be maintained.
And for EMEA, we expect a similar situation.
On the next page, we have dividend forecast. As has been discussed already by the President, this year, it is forecasted at the JPY 26 per share, and we will maintain the same level as last year. But as it appears on the Page 15 of the data book, as of the end of the March, the rate of the institutional investor in Japan and overseas is 75.6%. Therefore, the ratio of the institutional investor is very high. And of course, the shareholder return is one of the important policies for our management. And in the midterm plan, we actually didn't show any specific number for the dividend, and this may be criticized however. And we've been having a very serious discussion internally in terms of shareholders returns, and I myself is having a very difficult time, and that's the situation. Therefore, we would like to maintain the dividend payment. And also, we would like to continue the share buyback also.
Thank you very much for the attention.
[Interpreted] Now let's move on to the presentation of the status of research and development. Now Dr. Shams, please?
Thank you very much. My name is Naveed Shams. I'm the head of R&D. I will give you a quick update on products in the pipeline. So I'll start with DE-111. This is for glaucoma and ocular hypertension and is mainly for the China market. We are looking at -- the plan is that, in 2020, we will complete the Phase III studies, and we are on track. I want to say the DE-117 that Taniuchi-san mentioned is currently in Phase III in the U.S. We are on track with our enrollment in the pivotal study, and we'll meet the planned first half of 2020 approval as of today.
The DE-126, as you know, is a FP/PE3 agonist, and we've had the Phase II data for a while. We are trying to properly position the product and looking for differentiation of the product before we move forward. Do you want to wait? It has been a lot of discussion. We are committed to completing our PMA filing by the end of this year in '19 then getting approval in 2020.
Catioprost or -- which is a formulation of latanoprost in a proprietary formulation, is calendar year Phase III 2021, we should finish the Phase III program. Next slide is DE-109. DE-109, as you know, is our uveitis post-noninfectious uveitis product. It is in Phase III. The recruitment is challenging, but we are continuing to move forward as best as we can currently. We are still looking to January, June, our 2021 Phase III completion.
DE-122 is an anti-endoglin product, which is for wet AMD. This is now we will have data from the Phase II study this year in the second half of this year -- or this fiscal year, I must say.
Vekacia or as it's called Ikervis in Canada, we have just gotten approval in December, and it's going to be launched in this year, 2019.
DE-127 also was mentioned by Taniuchi-san, We are looking to start a Phase II/III program in the second half -- oh, sorry, the Phase III -- Phase II and III program in the second half of fiscal 2019.
On the lens side, there is the MD-16, which is a toric lens. And we are looking to complete the Phase III -- actually have completed the Phase III and looking for submission later this year, first half of 2019 That's the end of my portion of it. I'd be happy to discuss any detail in the question-and-answer session. Thank you very much.
[Interpreted] We would like to entertain questions. [Operator Instructions]
[Interpreted] Yamaguchi from Citi. My first question. Maybe I did not quite understand. But Glaukos, you mentioned this a distributor business plan. As you work together with Glaukos, up to launching, there will be training, and you will also do sales separately also. So you are selling yourselves, and a the part of that would be done by Glaukos. That's how it sounded to me, so there are various payment. In the future, you will take over all the sales. So sales will go up, but the costs will also go up. What's the merit and demerit of Glaukos? Can you explain that from the P&L point of view?
[Interpreted] Let me explain that. Distributor agreement is the agreement. It's not that you throw everything to the distributor. In terms of P&L -- of SG&A, marketing costs will be on Santen but sales costs. Will we hire sales reps? No. There's no cost on that part on Santen. That is done by Glaukos. Therefore, in terms of P&L, sales cost would be none, and that will go to Glaukos margin. And that is the structure. Therefore, this is a multiyear distribution agreement. We do not disclose details but during that agreement period, medical affair marketing expenses, they are on Santen. And through Glaukos, they have the margin, and they will bear the sales cost. That's the construct or design. So sales will be recognized through Glaukos, so the sales price may be a bit lower. The sales will come through Glaukos through distribution.
[Interpreted] Can you take over when the sales scales go up and you're able to cover many? Then you would take back all the sales activities?
[Interpreted] As for what happens after the agreement period over, we will see how it goes. But one thing that we want to tell you is activities in the operation room 116, 117, it's not very relevant. So we, going forward, when device supply is increased, maybe we need to consider that, but for 117, 109 that is not so relevant. And it's only to be marketing that we will be in charge. And separately from that, aside from Glaukos, we will be able to sell the product when the approval is even...
[Interpreted] EYBELIS domestic is my next question. Timing wise, it's not really a time for push but JPY 400 million, it's a bit soft-ish number. And it seems for this quarter, it may be a bit stronger, but the side effect on PI was mentioned. Can you explain the balance between efficacy and side effects? And if -- of course, there's high expectations but maybe some feedback that was not anticipated beforehand, and what are our actions?
[Interpreted] For FY '18, it is true, the number was a bit slow or soft, as you said. And the reason for that is a new product. And of course, side effects profiles are shown from clinical studies. But what about the actual experience in real world? While it required much time for communicating that, for example, after the first patient uses this product, we ask what the feedbacks. And also, we did monitoring regarding edema after the use and resource was taken up for that. And because of that focus in detailing, core may be a bit slow. So first the pickup was a bit slow, but it has settled more or less, and the physicians now know how to use his product versus Latanoprost in the FP analogue and the F side effect profile is different, no discoloration or pigmentation. So they understand more and we have better penetration nowadays. So compared to the initial idea in FY '18 was a bit slow, but pick up is steady and growing, and we want to continue that in FY '19.
[Interpreted] Regarding surgical business. In the past, intraocular lens was introduced in the high expectation, but in the end because of our competitive advantage, this was not quite good. But for this time around, you seem to have been very confident about this product, but the product and the marketing, well, you considered 2 aspects. For this time, you seem to be confident. And can you explain more about that in comparison to the past approaches?
[Interpreted] Well, you can explain the past but let me start with future. In clinical data, well, aside from my mother, but actual physicians' feedback has been very positive. At the end of April, there's Japan Ophthalmology Society in Japan, and we had a lecture meeting twice. And it was full of people in the audience, and the data and actual use experience was shared and people are very much interested in that because, for one, this is covered by insurance and it has this profile. And we are unique in that sense and the interest was very high. From April, our surgical and Rx business is integrated, and it's one team now. And MRs activities and surgical team members are working together for promotion. So far, we have very good feedback. After injector is coming, it would be further promoted, and so far encouraged, our feedback has been very positive. Regarding the past, please?
[Interpreted] Well, compared to the past, well I don't know what to say. The past lens product, AVS lens was used, and we do have the product even now. It was not up to our expectation. The lens was a bit hard. And Elzetta was betraying our expectation. The Elzetta did not quite work. Lens may come off or Elzetta development required much time, and we had those experience. That invited some disappointment from the customer. And now this LENTIS Comfort product after the physicians use, and they have very positive feedback and Taniuchi's mother included. So the feedback has been very good and the feel is good, especially glare of layer, it's much less or none with these lens. That is one of the reasons for the positive feedback. We have high expectation on this product. Thank you.
[Interpreted] Ueda from Goldman Sachs. I have three questions also. The first question is in terms of the trend in Asian business, in our past fiscal year, there are Hyalein [ sold ] too high. And this year, you did not have any specific event, and so we do not expect any of the major growth or rapid growth. And in the midterm, is it sustainable to maintain this 15% growth? And as to the cost, and if it is reimbursed in China, what will be the potential? For example, Hyalein had become a very major product, and can you expect that this drug will also grow like that drug?
[Interpreted] In terms of the Asian business, in FY '19, we do not expect any major event. And centering around China, and Korea and Southeast Asian countries, existing drug will grow and it's growing, and also tafluprost and Tapcom and Diquas, those -- and Ikervis those are new products in Asia, and they are showing a very rapid ramp-up. And we believe that this product will greatly contribute. And as to the Diquas, as to the reimbursement, it will take more time to have a decision, but we are now attacking one province at a time. And of course, we like to make it another hiring, however, the -- it really depends upon the progress of our negotiation for -- or the reimbursement. But in principle, we would like to make it as big as possible.
[Interpreted] The next question is about Alesion assumption domestic. And this year, you have a very aggressive plan, and you expect some [ amaxia ] growth, and also the high-dose product will be launched. Then what will be the impact of these activities? And if possible, please tell me the -- your idea for the pricing and also the volume.
[Interpreted] And in the last season, the allergy season started earlier. Therefore, all the FY '18 would help to some extent, and it started earlier. And this time, we had a quick drop of the sales. So the situation is different from the last year. Last year, we had the sales after spring, but this year, the season may terminate earlier than last year and so forth. And we are expecting the approval. And for the drug price, we are now negotiating with the authority. Therefore, it's a bit premature to say anything. But one major difference is the number of administration, it's twice a day. So allergic patients may have a difficulty to have an eyedrop in the daytime and it requires only twice. So if you are going to school or office and after coming back, and this is more convenient for the patient's lifestyle. So I think that is a differentiating point. So we would like to promote this, and I would like to differentiate this to product, and if possible, we would like to also promote the high-dose product at the same time.
[Interpreted] And then you expect the growth in the high-dose product, right?
[Interpreted] Yes. That's right.
[Interpreted] Third question. That's about the intraocular lens, and it's about the profit ratio. In domestic surgical business, the sales is also growing, but you are expecting the increase of the profit. The growth was JPY 1.5 billion in profitability, and do you think that this is really such a profitable business?
[Interpreted] Well, we are going to make a projection in the midterm in the future, but as far as FY '18 is concerned, that was a timing for the breakeven. So of course, we are spending more to expand the market channel. But as I said, that we have ophthalmology division and we can use the sales force -- existing sales force. Therefore, the SG&A, especially the head count growth should be suppressed, and we are going to increase the gross profit. That's the -- we expect in FY '19. So that contributes to the major improvement of the profitability. And in Japan, the marketing cost is not that high in Asia or America. Therefore, all the market channel costs will be the mainstay and, therefore, we have MR or the force and the dose will be enough for all the profitability.
[Interpreted] Kohtani from Nomura Securities. First, I don't have knowledge, IOL, intraocular lens, what's the domestic market situation? And there are various types of IOLs, including multifocal and toric lenses. Can you explain how they are segmented, and what's the market size for each? That's the first question.
[Interpreted] I don't have the amount or detailed number regarding the market. But much of the market is mono-focal, and holdable lens is widespread. AVS' product fall into this category. And there are various manufacturers of projects, major ones included. They have high share. Our share is not so high in this segment.
The multifocal, this is our pocket product. The share is still very small, it depends on hospital but the patients need to pay JPY 0.5 million, so not many patients go to use those IOLs. But the number is steadily increasing and mono-focal and multifocal and toric, that is for astigmatism. Whether it's mono or multifocal, you need to make adjustment, but if you have astigmatism, then the focus is not clear, so you need to add astigmatism and. SKU increases significantly because you need to change the [ angoids ], like glasses. And so it's a value-added type IOLs.
[Interpreted] So toric it should be included in your product portfolio like AVS product.
[Interpreted] We do not have toric because our share in that segment is not very high. So LENTIS Comfort is for multifocal. It's not you're aiming at mono-focal. We will, of course, aim at mono-focal with insurance coverage. This is mono-focal with greater distance, so depths and breadths of focus is strong characteristics that's a differentiating point. So we want to aim at the main market, which is the mono-focal.
The last question's about the MicroShunt. I think at the ASCRS meeting that was held on May 6, the MicroShunt European data, 2-year data, has been disclosed. And I think this is 124 patients, this is probably the largest data set we've seen so far. And it looks like the IOP does go from 22.5, mean, to 13.9 post operation. I think this is probably acceptable. The only problem I see is that there is a little bit of -- about 13 patients out of 124 had undergone glaucoma reoperation. And obviously, there was no detail disclosed here. Is this pretty significant, reoperation, as in a full-on trabeculectomy? Or is just basically something to do with blebs or a very small procedure? This is my last question.
Okay. So let me just be generic in one way, which is that reoperations to treat rising IOP progression of disease is not unusual at all. And I would also say that we should take that data with a little bit of a grain of salt because these are open-label studies conducted in 2 very different centers, with 2 very different surgeons, their own technique and stuff. So I think we should probably wait for the control study data to draw some conclusions. But that rate is probably -- if I'm guessing at this point, I don't have the exact number, just lower than what you might expect from leaking blebs after trabeculectomy. So I don't think that's unusual, but let's wait for the good data to come out later in this year.
[Interpreted] Hashiguchi from Daiwa Securities. I also have 3 questions. First question is about the R&D spending. And in your FY '19 plan, you said that you always have a cap, but this year you will not give any cap, and I think Mr. Koshiji said that in his presentation. And when you make a budget, you'll make a different budgeting this year, and what is the reason? And was this -- and what is the possibility for the forecast versus actuals?
[Interpreted] Thank you. This is Koshiji speaking. Let me answer to your question. And the budgeting process and the procedure, where the concept hasn't been changed. It may be the slight adjustment. And this year, we have some improvement this part of map, and then that was reflected directly into the budgeting amount. And as to the forecast versus actuals, therefore, this year -- previous year in FY '18, against the JPY 25 million, the actual was JPY 23.8 million. But this year, we also have to look into the trend in the term. But in principle, at this moment, we believe that we can achieve the budget amount. But of course, we have included the bottom-up a little bit more than useful. That, actually, we have done.
[Interpreted] Then why have you changed that? Why?
[Interpreted] You asked, and this is not really the single year number adjustment, but in order to enhance the pipeline. Then in R&D, there are some challenges, but amongst of them, we would like to prioritize those challenges and, therefore, it is more from the viewpoint of a strategic consideration and that was the background.
[Interpreted] My second question is in the progress status of the current year against the midterm plan. And next year, you will expect a drug price revision. Therefore, after FY '19, you have to have the lots of the sales growth to cope with the price cuts. And you have some growth in the overseas, but -- in line but slightly weaker, I think. What do you think about this?
[Interpreted] In principle, we perceive it is in line. Of course, we have individual plus and minuses, but overall, I think we are in line. Naturally, the 6% growth is the target for FY '19. Of course, we expect the price revision in Japan, but we have intraocular lens and also we have other growth potentials and also in the Europe and the Asia. Therefore, we think that we are still in line.
[Interpreted] And Asia, a 16%; EMEA, a 10% or more. And -- but that may be a little bit challenging.
[Interpreted] Well, EMEA, 10% for FY '18 and '19, maybe slightly difficult to achieve, and that there are some difference in assumption and we stop the selling. There's some less profitable products. And so, actually, the some top line have been sacrificed by this. And also for product supply, we had some quality problem for all those, the suppliers of the product. And therefore, we have some accidental factors, or unexpected factors, but including them all, then we are still growing steadily.
[Interpreted] Lastly, and the long-term point of view, and I'd like to ask for your long-term view for China, and the Chinese government is now evaluating and accepting the innovation, and many companies are enriching their pipeline in China. And once you try to evaluate the innovation, then of course, they have a limited budget amount. Therefore, there is a very strong -- the price cut for the non-innovative products. And if this -- I also would like to know how much you expect such risks? And if there is such a risk then, and your development pipeline is organized, so that you can still grow in such a situation.
[Interpreted] In a long-term trend wise, yes you are right, that the appropriate development of the innovative drug. And also, those should be priced appropriately, but also the price cut will be expected in other products or non-innovative products. And what we can do in a long-term basis, if that the expectation or the forecast of the market growth in China. And in China, the market size is still very limited compared to the total population size, and also the number of ophthalmologists is maybe 20% compared to Japan in terms of the per capita basis and, therefore, the number of the cataract surgery is limited and also number of specialists are limited, so there are many bottlenecks existing. And, of course, would like to launch new product as quickly as possible and carrying out clinical development locally. And then we also would like to strengthen such capabilities in China. But of course, the market has a huge potential. It will grow many folds, and I'm really thinking about expecting the capacity. And if our sales triples or quintuples, what happens? And once -- we have to avoid the situation that we don't miss the opportunity by not having the sufficient sales capacity. And therefore, we have to make a capital investment, other reinvestment, so that we have the sufficient capability to cover Chinese market and a market growth.
[Interpreted] Sakai from Credit Suisse. Regarding China, you make investment in China and have profit. I understand the scheme may develop furthermore, but how to recover the profit from China is an issue. West pharma companies reinvesting the profit in China because you can't really observe the profit from China to outside, including capital flow. We don't know how the money moves, but the profit in China, how is it utilized at present? Can you explain that?
[Interpreted] Regarding the money flow, I would explain. As for China, we have 2 flows. One is reinvestment in -- we have a joint venture in Chongqing, so we make investment there. And that is done through our subsidiary in China. We have these joint ventures or investment in the second plant in China. And building is being constructed now, and that's the investment.
Another is of the cash position we had regarding China last year, end of second quarter, it was about JPY 8 billion, and a part of that money was lent -- loaned upstream loan. That's a scheme. It's not a dividend, but it was used for Japan. It was loaned to Japan organization. That's how we absorbed the money from China. And we have reached cash position in Japan. So in U.S., in R&D, there's demand for R&D financing and derivative in terms of FX, and that money goes to U.S. And that's how the money moves. Going forward, regarding China, when there's cash, and in Chongqing, reinvestment that may not be enough to absorb, therefore excess cash would be directed to Asian countries or to U.S. where there is a demand for cash, and we will construct this option to do that. That is through the scheme of loan, yes. So in the end, it will go back to China, but it is a long-term loan, for example, 3-year or 5-year loan scheme. Within the group companies, we're the -- so the group as a whole, cash flow status does not change and of course, we will make judgment as needed.
[Interpreted] Regarding reinvestment, as mentioned, CapEx in Chongqing, we have a building being constructed in [ Xiujun ], and we have a plant; and there are 3 shifts already, and we have a high-speed line being introduced. And when there is permission from the authority, that will be also introduced. 80 million or 90 million bottles is the amount in China. And in Japan, we have 4 shifts, in China, also 3 shifts, therefore, we would need another CapEx. Rather than the current plan, maybe we need extra plant, and that's one possibility in [ Xiujun ]. It was a JPY 2 billion plant 10 years ago, and the [indiscernible] plant does not require so much money, but several billions of yen would be required.
And for R&D, in China so far, we have the clinical studies, but not large-scale. It is more or less procedure steps. But going forward, we may need more diversified activities, including some possible clinical studies.
[Interpreted] Dr. Sham, when you explained 109, you mentioned challenging. That's the word you used. And we don't like to hear the word challenging, so can you give us an update on that?
We don't like it either. However, if you recall, that we had hit a road bump a year or 2 years ago, and the goal of this program is to be successful. That's number one. And so we identified at that time some 8 potential corrective actions that we should take to maximize the probability of technical success. And so, therefore, those 8 different initiatives are slowing down the recruitment of subjects. However, we are looking at options to deal with the situation. And therefore, the current time line has not changed, at least not today. And so the goal for us is that we would like to maintain the time line and recruit the best patients, the appropriate patients, so we can succeed. That's why it was the most challenging. But it is a little bit under our control, how much tuning we can do, but we don't want to do too much to be tweaking that it compromises the probability of success too much. Approval is very, very important. The drug is very, very important to the patients. So that's why I used the word cautiously, but we have ideas and we will implement those as soon as possible.
[Interpreted] I'm [ Motare ] of Merrill Lynch. I have two questions, just briefly, and this is the request for clarification for MicroShunt. And MicroShunt positioning in the U.S. market entry. You said that you are going to use it as a door opener. And with MicroShunt, you are going to maximize the sales. And in addition, you also included marketing and regulatory affairs, you are going to review how you do the business. And what this is the priority right now?
[Interpreted] And actually, the MicroShunt is a very important asset for us, therefore, we have to maximize it. And from the U.S. President, this is the first the product to make an entry to U.S. market, and we will maximize it, but that is not really the end. And we maximize it, but also Santen will establish the strong presence there and, therefore, we would like to establish our platform so that we can do a business probably in the U.S. So that's what we say it is a door opener.
[Interpreted] If that is the case, then Glaukos' pipeline, when we look at them, and then they have quite rich, the platform therefore, the MicroShunt alone, in 2022, then the competition will be very severe. Then, in terms of development of the other follow-on products, and quite naturally, in non-U.S. market, it's now growing very rapidly and therefore, for the mix business in Europe and you have made a soft launch when will that be the significant amount?
[Interpreted] And the Glaukos product and the competition, actually, the Glaukos product is for the cataract surgery, the doctors and also those are intraocular treatment. And also, the glaucoma, approaches made from outside in, and therefore, we have more advantage to having a lot of options. And I discussed with many experts at the Academic Conference, and they are happy to have a richer portfolio. But therefore, rather than that, they are competitors that we would like to cooperate and we would like to grow together.
And in terms of the European market, and in FY '19, we would like to make a fierce approach to expand. And we have a soft launch already made. In the U.K. or France and Germany, our surgical reps are working there, and we have the staff, with the reps and the doctors are now being trained and they are going to issue it with a certificate. And in the latter half of the FY '19, we would like to complete the establishment of the sales force into those countries.
Thank you very much. This concludes today's meeting. Thank you very much for your attention. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]