Under the corporate mission “to contribute to the enrichment of quality of life around the world through the creation of innovative pharmaceuticals, and through the provision of pharmaceuticals addressing diverse medical needs,” the Daiichi Sankyo Group will deliver value to society and stakeholders through its business operations, while working on the Group’s further growth and advancement. In fiscal 2019, the Group identified the following as high-priority issues in our business operations: materiality on business, such as creation of innovative pharmaceuticals; and materiality on business foundations, including governance and environmental management.

Eight Material Issues for Value Creation

Creating innovative pharmaceuticals, the basis of our value creation, is our top material Issue. Providing a stable supply of top-quality pharmaceutical products, providing the highest quality medical information, and improving access to healthcare are important for delivering pharmaceuticals created through research and development to our patients. To reinforce the foundation of sustainable management, we will promote compliance management, strengthen corporate governance, and promote environmental management, as material issues on business foundations. In addition, we will also continue to promote the success and development of a diverse range of human resources who can bring competitive advantages to the Group’s business operations.

Materiality Identification Process

 In identifying and sorting material issues, 36 issues were selected from the CSR perspective in fiscal 2015, and these were narrowed down to 21 in fiscal 2018. In fiscal 2019, business and governance perspectives were added to the CSR perspective, and medium-to-long-term initiatives and challenges were extracted in light of their importance based on their impact on the Group’s medium-to-long-term corporate value, and expectations from society, including our various stakeholders. Then we prepared a proposal for materiality through discussions with stakeholders. The eight material issues were subsequently identified after two meetings of the Board of Directors.

Materiality Management Cycle

We will set goals for each material issue identified and advance specific initiatives. For effective evaluation and analysis, KPIs will be set, and the progress and achievement of initiatives will be evaluated. In evaluating and analyzing the initiatives, we will consider perspectives from both inside and outside the Group through constructive discussions with various stakeholders, while assessing risks and business opportunities to extract new issues.

We will evaluate the progress and achievement of initiatives each year and check whether we should conduct materiality assessment.

Key Performance Indicators

Long-term targets and KPIs for the eight material issues

Daiichi Sankyo board of directors approved long-term targets for each material issue and KPIs in conjunction with the 5-year Business Plan (FY2021-FY2025) disclosed in April 2021. These KPIs are indicators of progress toward challenge of realizing materiality. Going forward, we will monitor and manage the progress of our activities by utilizing KPIs, and communicate with our internal and external stakeholders constructively. This will enable us to make our activities more meaningful in line with the long-term targets for each material issue.

Stakeholder Engagement

We arranged several web meetings with investors to have dialogues focusing on our sustainability initiatives including Materiality, after the publication of the Value Report in September 2020. In addition, our management had an opportunity to exchange opinions on the Value Report with investors through the online small meeting hosted by CREDIT SUISSE SECURITIES (JAPAN) LIMITED in January 2021. The opinions received through these dialogues were referred to the identification of the Materiality KPI, which was disclosed in April 2021. We will continue to take a variety of opportunities and to have dialogues with stakeholders.


Materiality on business

Materiality Long-term target Challenges for realizing materiality
(toward FY2025 targets)
KPIs FY2025 targets
Creating innovative pharmaceuticals

Create innovative pharmaceuticals continuously, utilizing our strengths (Science and Technology) Creating the advanced products and pipelines to transform SOC*1 in the oncology field The number of new indications for 3ADCs (lines, Indications) 3ADC : 8 additional indication launch
Development of innovative medicine and prevention with new modalities Progress in development of early ADCs Multiple projects to become the new growth driver after 3ADC are in or above late stage
Progress in development of Post-DXd Candidates in clinical stage for Post DXd-ADC modality to become additional growth pillars
Providing a stable supply of top-quality pharmaceutical products

Establish a robust global supply chain system to provide a stable supply of high-quality pharmaceuticals Establishment of a global production and supply system through appropriate capital investment corresponding to the increase of new modality products, including ADC Construction of ADC production system and stable supply of high-quality pharmaceuticals to patients (including Capex) In-house Capex/CMO investment:
Max. \300Bn
Providing the highest quality medical information

Provide information on safety and efficacy so that healthcare professionals are always reassured to use in the treatment of patients Providing useful pharmaceutical information in areas of high expertise/individuality Evaluation of our information-giving attitudes from stakeholders like healthcare professionals Improvement of scores
Improving access to healthcare

Contribute to the expansion of healthcare access, working with stakeholders such as government, insurers, and alliance partners Global expansion of oncology products utilizing collaboration with AZ, etc. The number of countries/patients providing oncology products thru cooperation with partners, etc. Increase of No. of countries
Cope with new risks such as COVID-19 through collaboration with external institutions, utilizing the In-house strengths/assets Contribution to new risks in cooperation with authorities and other companies
  • AZD-1222 supply as planed (FY21)
  • DS-5670 development progress as planed
*1 Standard of Care: Best and widely used treatment by current medical knowledge

 

Materiality on business foundations

The 2025 targets are established for the Group in order to further promote initiatives based on the current status.The current status is reported in the detailed section for each materiality (except for indicators for new initiatives).

New indicator

Materiality Long-term target Challenges for realizing materiality
(toward 2025 targets)
KPIs 2025 targets
Promoting environmental management

As a healthcare company, we will proactively reduce the environmental impacts of our business operations and implement advanced climate change countermeasures Reduce the environmental impact of the entire supply chain CO2 emissions (Scope1 + Scope2)*2 25% reduction from FY2015
CO2 emissions intensity based on sales (Scope3, Cat1) *2 15% reduction from FY2020
  • Proactive introduction and use of renewable energy
  • Use and implementation of decarbonization technologies, such as the hydrogen application
  • Expansion of the scope of use for plastics removal, and technological development
  • Minimize environmental risks such as pollution risks
Renewable electricity utilization rate More than 30% utilization rate
Waste plastic recycling rate Over 70% maintained
Disposal of hazardous waste 10% reduction from FY2020
Promoting compliance management

An organization in which every employee behaves with high ethical standards as well as in compliance with laws and regulations
  • To raise awareness for compliance among employees
  • To prevent non-compliant behavior of employees
  • Number of significant compliance violations
  • Number of significant code violations
  • 0



  • 0


Periodic employee survey on ethical culture Improvement of scores
  • Compliance monitoring
  • Monitoring of Promotional Activities
Conduct continuous monitoring at each company
To promote business partners’ understanding of sustainable procurement and to minimize compliance risks Sustainable survey coverage rate (based on total procurement amount)
75%
Strengthening internal education and disseminating our thoughts with business partners Disclose the result of education and training* 
Corporate governance aimed at fulfilling our mission

Establish a corporate governance system that enable speedy decision making and supervisory and monitoring function for management and execution Maintain and build-up an optimal corporate governance system based on expectations of society Comply with all the principles of the revised Corporate Governance Code in Japan Comply 100% with the revised Code
Improve the effectiveness of both Board of Directors and Audit and supervisory Board Evaluate the effectiveness of the Board of Directors by a third-party organization and implement measures for improvement Evaluate the effectiveness of the Board of Directors and implement measures for improvement (including third party evaluation, two times by the end of FY2025)
Continuous evaluation and improvement of the effectiveness of the Audit and Supervisory Board Continuous evaluation and improvement of the effectiveness of the Audit and Supervisory Board
Enhance and improve the transparent disclosure on corporate governance Enhance and improve the transparent disclosure which can help stakeholders to understand the company's corporate governance Enhance and improve the transparent disclosure through various communication materials
Promoting the success and development of a diverse range of people who create our competitive advantages

Aim at mutual sustainable growth of the employees and the company by respecting the diversity and promoting the success and development of people in all business fields Creating a work environment where a diverse range of talents are highly engaged and can maximize their potential Percentage of female in senior managerial employees*3 30%
Positive response rate (%) on corporate culture & work environment through engagement survey < 80% or 10% increase compared to FY2021
Acquisition and training of talents to enhance business competitiveness Positive response rate (%) on development & growth opportunities through engagement survey < 80% or 10% increase compared to FY2021
Amount of training/development investments per employee Disclose the result
*2 Scope1:Direct emissions from the reporting company's factories, offices, vehicles, etc.
  Scope2 : Indirect energy-derived emissions from electric power and other energy consumed by the reporting company
  Scope3:Indirect emissions other than Scope1 and Scope2. Category 1 is emissions from activities up to manufacturing of raw materials, parts and containers / packaging materials
*3 Equivalent to Division Head / Vice President or higher position

 

Materiality and Examples of Initiatives

1. Creating Innovative pharmaceuticals
Reason for selection Contributing to the healthy and enriched lives of people all over the world is the DS Group's Purpose (Corporate Value), and continually creating innovative pharmaceutical products leveraging our strengths (Science and Technology) is the foundation of our value creation.We will continuously deliver pharmaceuticals that meet healthcare needs to the healthcare fields through a cycle of reinvesting the profits generated by our pharmaceuticals business in research and development and generating new medicines in the future.In the mid-term, we will enhance its advanced products and pipeline to transform its SOC*1 with the goal of becoming an advanced global pharma innovator with oncology strengths in FY2025.





Long-term target Create innovative pharmaceuticals continuously, utilizing our strengths (Science and Technology)
Challenges for realizing materiality (toward 2025 targets)
  • Creating the advanced products and pipelines to transform SOC in the oncology field
  • Development of innovative medicine and prevention with new modalities
KPIs
  1. The number of new indications for 3ADCs (lines, Indications)
  2. Progress in development of early ADCs
  3. Progress in development of Post-DXd
2025 targets
  1. 3ADC:8 additional indication launch
  2. Multiple projects to become the new growth driver after 3ADC are in or above late stage
  3. One or more candidate in clinical stage for Post DXd-ADC modality to become additional growth pillars
Social value creation Contribute to the enrichment of quality of life around the world
Economic value creation Expand R&D pipeline and acquire intellectual property contributing to future sales and profits
*1 Standard of Care: Best and widely used treatment by current medical knowledge

 

Examples of Initiatives

  • Accelerate development and obtain early approval by utilizing expedited regulatory pathways for innovative new drugs
  • Advance disease research and create innovative medicines through multi-modality strategy based on cutting-edge science & technology
  • Enhance translational research utilizing Omics
  • Activate collaborative relationships with academia, biotech and other industries (open innovation)
  • Develop R&D human resources capable of working together across boundaries
2. Providing a stable supply of top-quality pharmaceutical products
Reason for selection As the impact of natural disasters and political risks on the global supply chain is expanding, procurement risks at business partners need to be considered. Establishing a robust supply chain structure and providing a stable supply of top-quality pharmaceutical products is one of the most important challenges for us.In the mid-term, in order to respond to the increase of new modality products, particularly ADC, we realize the establishment of a global production and supply system by making appropriate capital investments.





Long-term target Establish a robust global supply chain system to provide a stable supply of high-quality pharmaceuticals
Challenges for realizing materiality (toward 2025 targets) Establishment of a global production and supply system through appropriate capital investment corresponding to the increase of new modality products, including ADC
KPIs Construction of ADC production system and stable supply of high-quality pharmaceuticals to patients (including Capex)
2025 targets In-house Capex/CMO investment: Max. \300Bn
Social value creation Contribute to the enrichment of quality of life around the world
Economic value creation Increase sales and profits, reduce/avoid the risks of damage to corporate value

Examples of Initiatives

  • Development of commercial manufacturing processes to continuously produce high-quality pharmaceuticals through research on drug substances, drug products, and quality evaluation
  • Establish a flexible and efficient global manufacturing and supply system (supply chain management)adapted to address changes in the product mix
  • Establish a manufacturing and supply system for cutting-edge pharmaceutical products, including DS-8201 and other ADCs, Axi-Cel™, and oncolytic virus
  • Guarantee the quality of our products in adherence with GMP, whereby we use a scientifically backed method of managing all processes, from receiving raw materials to manufacturing and shipping products
  • Put systems in place to restore operations quickly in the event of an emergency and to ensure a steady supply of pharmaceutical products (including stable procurement of raw materials) with assured quality to help support the continued provision of medical services
3. Providing the highest quality medical information
Reason for selection Pharmaceutical products can be used by healthcare professionals with peace of mind for the treatment of patients based on the reliable safety and efficacy information, thereby helping to overcome healthcare challenges(and social challenges through it). We sell products in various fields and strive to provide safety and efficacy information.In the mid-term, we will generate new drug information for oncology that needs to be provided according to the individual conditions of the patients, and provide it to the healthcare fields globally.





Long-term target Provide information on safety and efficacy so that healthcare professionals are always reassured to use in the treatment of patients
Challenges for realizing materiality (toward 2025 targets) Providing useful pharmaceutical information in areas of high expertise/individuality
KPIs Evaluation of our information-giving attitudes from stakeholders like healthcare professionals
2025 targets Improvement of Scores
Social value creation Contribute to the enrichment of quality of life around the world
Economic value creation Increase sales and profits, reduce/avoid the risks of damage to corporate value

Examples of Initiatives

  • Promote science-driven global development that maximizes the benefits and minimizes risks of drugs
  • Consolidate the management of patient safety information on a global basis and share the results of assessment and analysis with physicians and other healthcare professionals in clinical settings in order to promote the proper use of our products
  • Create new information in the real world through clinical research and other efforts to further benefit patients after product launch
  • Undertake activities in providing medical information that meets the needs of healthcare professionals including those who engage in team medical care
  • Enhance the expertise of call center staff and use artificial intelligence (AI) to respond quickly and appropriately to diverse inquiries from healthcare professionals
4. Improving access to healthcare
Reason for selection Established based on the Daiichi Sankyo Group Medical Access Policy.Enhance employee penetration of the Policy and work with stakeholders, including the government, insurers and alliance partners, to increase access to healthcare. In the mid-term, we will deploy Oncology products globally through collaboration with AZ. We will also contribute to solving social challenges such as COVID-19 response, by using our business infrastructure and external institutions.





Long-term target Contribute to the expansion of healthcare access, working with stakeholders such as government, insurers, and alliance partners
Challenges for realizing materiality (toward 2025 targets)
  • Global expansion of oncology products utilizing collaboration with AZ, etc.
  • Cope with new risks such as COVID-19 through collaboration with external institutions, utilizing the In-house strengths/assets
KPIs
  1. The number of countries/patients providing oncology products through cooperation with partners, etc.
  2. Contribution to new risks in cooperation with authorities and other companies
2025 targets
  1. Increase of No. of Countries 
  2. AZD-1222 supply as planed (FY21)
    DS-5670 development Progress as planed
Social value creation Contribute to the enrichment of quality of life around the world
Economic value creation Increase sales and profits, reduce/avoid the risk of damage to corporate value

Examples of Initiatives

  • Focus on continued initiatives targeting rare diseases
  • Promote research and development in the field of infectious diseases and measures against Antimicrobial Resistance (AMR)
  • Participate in Access Accelerated, an initiative intended to improve non-communicable diseases (NCDs) in low and lower-middle income countries
  • Participate in the Global Health Innovative Technology (GHIT) Fund, a public-private partnership, which aims to encourage drug discovery for combating infectious diseases in developing countries
  • Provide mobile clinic services in Myanmar
5. Promoting environmental management
Reason for selection The impact of environmental issues on sustainability, such as the intensifying natural disasters associated with the progression of global warming and marine plastics pollution, has become apparent. Environmental protection is a challenge that requires the concerted efforts of the world including companies. We recognize that changes in the disease structure and concerns about the stable supply of medicines are risk factors for our long-term business foundations due to the environmental impacts. We, as a responsible member of a society, will work integrally to continue our business activities and to engage environmental protection for a sustainable society, reducing the environmental impact of our products and operations.





Long-term target As a healthcare company, we will proactively reduce the environmental impacts of our business operations and implement advanced climate change countermeasures
Challenges for realizing materiality (toward 2025 targets)
  • Reduce the environmental impact of the entire supply chain
  • Proactive introduction and use of renewable energy
  • Use and implementation of decarbonization technologies, such as the hydrogen application
  • Expansion of the scope of use for plastics removal, and technological development
  • Minimize environmental risks such as pollution risks
KPIs
  1. CO2 emissions (Scope1 + Scope2)*2
  2. CO2 emissions intensity based on sales (Scope3, Cat1)*2
  3. Renewable electricity utilization rate
  4. Waste plastic recycling rate
  5. Disposal of hazardous waste
2025 targets
  1. 25% reduction from FY2015
  2. 15% reduction from FY2020
  3. More than 30% utilization rate
  4. Over 70% maintained
  5. 10% reduction from FY2020
current status
  1. FY2019:15.8%
  2. New indicator (aggregate data from FY2020)
  3. FY2019:9.6%
  4. FY2019:78%
  5. New indicator (aggregate data from FY2020)
Social value creation Contributing to the development of sustainable living infrastructure through the early realization of a decarbonized society, solving of the marine plastic problem, and prevention of environmental pollution
Economic value creation Enhancement of corporate value by improving evaluation of environmental management initiatives (reduction/avoidance of the damage risk to corporate value)
*2 Scope1:Direct emissions from the reporting company's factories, offices, vehicles, etc.
 Scope2 : Indirect energy-derived emissions from electric power and other energy consumed by the reporting company
 Scope3:Indirect emissions other than Scope1 and Scope2. Category 1 is emissions from activities up to manufacturing of raw materials, parts and containers / packaging materials

 

Examples of Initiatives

  • Improve the efficiency of energy use with the Energy-saving Diagnosis and reduce CO₂ emissions by utilizing renewable energy
  • Disclose information in accordance with the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and scenario analysis for flood prevention
  • Improve the credibility of environmental performance data by receiving third-party assurance
  • Promote efforts to conserve water resources, such as reducing water consumption by using water reasonably and promoting reuse with purification equipment
  • Optimize the environmental management system to maximize compliance with environmental laws, regulations, and other requirements through environmental auditing
6. Promoting compliance management
Reason for selection Since pharmaceutical companies handle products that affect lives, we are held to higher level of ethical standards. Compliance issues may damage corporate values. On the other hand, there are potential risks that may lead to inappropriate relations with various stakeholders in the course of business activities involving pharmaceuticals, and regulations have been strengthened given the occurrence of various recent incidents. For the Daiichi Sankyo Group, we believe that compliance forms the foundation of our business activities. Therefore, we promote management in which each of our employees behaves with high level of ethical standards, in addition to complying with applicable laws and regulations. During the mid-term, Daiichi Sankyo will maintain the highest ethical standards of the entire Daiichi Sankyo Group and reduce compliance risks by enhancing its global governance structure and compliance promotion activities.





Long-term target An organization in which every employee behaves with high ethical standards as well as in compliance with laws and regulations
Challenges for realizing materiality (toward 2025 targets)
  • To raise awareness for compliance among employees
  • To prevent non-compliant behavior of employees
  • To promote business partners’ understanding of sustainable procurement and to minimize compliance risks
KPIs
  1. Number of significant compliance violations
  2. Number of significant code violations
  3. Periodic employee survey on ethical culture
  4. Compliance monitoring, Monitoring of Promotional Activities
  5. Sustainable survey coverage rate (based on total procurement amount)
  6. Strengthening internal education and disseminating our thoughts with business partners
2025 targets
  1. 0
  2. 0
  3. Improvement of scores
  4. Conduct continuous monitoring at each company
  5. 75%
  6. Disclose the result of education and training
current status
  1. -
  2. -
  3. -
  4. -
  5. Previous survey:72%
  6. New indicator (aggregate data from FY2021)
Social value creation
  • Maintaining and enhancing trust in the pharmaceutical industry
  • Improving social compliance through sustainable procurement
Economic value creation Enhancement of corporate value by improving trust in our corporate brand (reduction/avoidance of the risks of damage to corporate value)

Examples of Initiatives

  • Implement the Daiichi Sankyo Group Employee Code of Conduct
  • Enhance global policies related to preventing bribery and corruption
  • Promote Ethical marketing practices
  • Consider R&D ethics, bioethics, and genetic resources
  • Promote compliance in procurement
  • Initiatives for promoting respect for human rights
7. Corporate governance aimed at fulfilling our mission
Reason for selection The external environment surrounding Daiichi Sankyo Group is constantly undergoing major changes. Under such circumstances, a highly transparent and effective corporate governance system is essential for achieving sustainable growth of the company and enhancing its corporate value in the medium to long term. We aim to achieve sustainable growth in corporate value by establishing and operating a corporate governance system embedded with both management structure that can respond speedily and flexibly to changes in the business environment and make decisive decisions swiftly, and a supervisory function for management and execution.





Long-term target Establish a corporate governance system that enable (i) speedy decision making and (ii) supervisory and monitoring function for management and execution.
Challenges for realizing materiality (toward 2025 targets)
  • Maintain and build-up an optimal corporate governance system based on expectations of society
  • Improve the effectiveness of both Board of Directors and Audit and supervisory Board
  • Enhance and improve the transparent disclosure on corporate governance
KPIs
  1. Comply with all the principles of the revised Corporate Governance Code in Japan
  2. Evaluate the effectiveness of the Board of Directors by a third-party organization and implement measures for improvement
  3. Continuous evaluation and improvement of the effectiveness of the Audit and Supervisory Board
  4. Enhance and improve the transparent disclosure which can help stakeholders to understand the company's corporate governance
2025 targets
  1. Comply 100% with the revised Code
  2. Evaluate the effectiveness of the Board of Directors and implement measures for improvement (including third party evaluation, two times by the end of FY2025)
  3. Continuous evaluation and improvement of the effectiveness of the Audit and Supervisory Board
  4. Enhance and improve the transparent disclosure through various communication materials
current status
  1. Comply 100% with the Code revised in June, 2018
  2. Annual self-evaluation
  3. Annual evaluation since FY2019
  4. Disclosure through various communication materials
Social value creation
  • Total value provided through our business operations
  • Management with a high transparency that responds to the expectations of shareholders, investors, and other stakeholders
Economic value creation Sustainable growth of the company and enhancement of corporate value in the mid to long term

Examples of Initiatives

  • Appointment of female outside director (June 2019)
  • Appointment of outside director as Chairman of the Board (June 2020)
  • Enhance information sharing which promotes understanding of outside members of the board and stimulates discussions at the Board of Directors
  • Improve the effectiveness of the Board of Directors through Board evaluation (annual self-evaluation)
  • Evaluation of the effectiveness of the Audit and Supervisory Board (Since FY 2019)
8. Promoting the success and development of a diverse range of people who create our competitive advantages
Reason for selection People are the foundation of our business activities. Acquiring diverse talents and effective HR management are the sources of competitiveness in global business. Daiichi Sankyo Group positions our people as the most important capital and respects the diversity of each employee based on HR Management Philosophy. We aim to achieve mutual sustainable growth of employees and the Company by promoting and developing talents in each part of the value chain.





Long-term target Aim at mutual sustainable growth of the employees and the company by respecting the diversity and promoting the success and development of people in all business fields
Challenges for realizing materiality (toward 2025 targets)
  • Creating a work environment where a diverse range of talents are highly engaged and can maximize their potential
  • Acquisition and training of talents to enhance business competitiveness
KPIs
  1. Percentage of female in senior managerial employees*3
  2. Positive response rate (%) on corporate culture & work environment through engagement survey
  3. Positive response rate (%) on development & growth opportunities through engagement survey
  4. Amount of training/development investments per employee
2025 targets
  1. 30%
  2. < 80% or 10% increase compared to FY2021
  3. < 80% or 10% increase compared to FY2021
  4. Disclose the result
current status
  1. FY2019:22.8%
  2. FY2020:81%(DS), 76%(JP)
  3. FY2020:76%(JP)
  4. FY2019:JPY100,862
Social value creation Diversity of people, respect for human rights, people development
Economic value creation Enhancement of corporate value through reinforcement of people to carry out business activities
*3 Equivalent to Division Head / Vice President or higher position

 

Examples of Initiatives

  • Promote group talent management with a focus on developing and nurturing the next generation leaders
  • Promote diversity and inclusion
  • Implement initiatives based on action plans for further empowering women
  • Promote occupational health and safety and work style reforms
  • Promote the “Work-Life Cycle”

Contribution to SDGs through Materiality Initiatives

The Daiichi Sankyo Group aims to fulfill its purpose of "Contributing to the enrichment of quality of life around the world" through the creation of innovative pharmaceutical products and other materiality issues, and in this process we create not only economic value but also a variety of social value (Social Value Created by Daiichi Sankyo). This is also consistent with Goal 3: “Good health and well-being” of the Sustainable Development Goals (SDGs) established by the United Nations.
Initiatives for other materiality on business contribute to the promotion of innovation (Goal 9) and the promotion of partnerships (Goal 17), while initiatives for materiality on business foundations are a source of social value creation in our business and contribute as a corporate citizen to the SDGs of gender equality (Goal 5), decent work (Goal 8), climate action (Goal 13), peace and justice through compliance (Goal 16), among others.

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