Business Environment and Growth  Opportunities Towards the Next Growth Stage Business Risks The business environment for the pharmaceutical industry  is changing with unprecedented speed. Governments  around the world are strengthening measures to rein in  healthcare costs, including reductions in drug prices and  promotion of generics. Another change is the increasing  burden associated with meeting the requirements for  developing and marketing new drugs. On the other hand,  the global market for pharmaceuticals is projected to  keep growing, and we have seen a steady level of new  drug approvals in developed countries in recent years. There remain numerous diseases where medical needs  are largely unmet and Astellas is targeting these in its R&D  activities. Moreover, recent scientific and technological  advances are opening up vast new possibilities to create  highly innovative drugs at a time when regulatory authori- ties worldwide are starting to introduce systems to recog- nize innovation. Going forward, we will continue to focus  on new drugs, seeking to take advantage of growth  opportunities for Astellas through the development of  high-value-added pharmaceuticals. These risks include factors relating to R&D or marketing  activities, intellectual property, side effects and other safety  aspects, the impact of regulatory actions, environmental  issues, litigation and foreign exchange rate movements.  (For further details, please refer to page 102.) Each busi- ness division of Astellas has the basic responsibility for  managing its own risks, and works to mitigate them and  ensure appropriate responses.  In particular, one inherent risk that pharmaceutical  companies face relates to the advent of tough competi- tion from generic drugs after the expiry of patents on  mainstay products. Minimizing the fluctuation of sales  revenue and ensuring sustained growth over the medium  and long term are critical management issues. Having overcome the “patent cliff” that we faced with  earlier growth drivers Prograf, an immunosuppressant,  and Harnal, a treatment for functional symptoms of  benign prostatic hyperplasia, we have made steady prog- ress since fiscal 2010 in implementing growth and effi- ciency strategies that will support Astellas’ sustainable  growth into the future. To support swift and flexible  responses to a rapidly changing business environment  and to ensure continued growth, we are focusing on three  strategic initiatives: maximize the value of new products;  enhance innovation; and pursue operational excellence. Business activities are subject to many risks and uncer- tainties, both known and unknown, that have the potential  to impact operating and financial performance significantly.  Business Strategy Annual Report 2014 _  Astellas Pharma Inc.  23 Source: EvaluatePharma Strategic initiatives for Sustainable Growth Continue to pursue three strategic initiatives to  respond smoothly to environmental changes and  achieve sustainable growth Maximize the value of new products Enhance  innovation Pursue  operational  excellence Growth strategy Efficiency strategy Global pharmaceutical Market Size Forecast (US$ billion) 800 600 400 200 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 CAGR +3.1%