TOHO HOLDINGS CO.,LTD.

Integrated Report 2023

Tokyo Midtown Yaesu, Yaesu Central Tower 9F
2-2-1, Yaesu, Chuo-ku, Tokyo 104-0028, Japan
https://www.tohohd.co.jp/en/

Total commitment togood health

Issued in January 2024

Core Values

Total commitment to good healthFive “Trust and Sympathy”“Total commitment to good health” is TOHO HOLDINGS’s pledge, representing our philosophyof constantly giving top priority to people who wish good health and creating customer value toPeople whowish good
healthraise their levels of satisfaction, and representing our desire to contribute to the broadenhancement of people’s health and to them realizing comfortable lifestyles.
Customers

About TOHO HOLDINGS

Corporate Slogan

Employees

Mission Statement

Society

Trust & Sympathy with People
who wish good health

Trust & Sympathy with
Customers

Trust & Sympathy with
Employees

We put people who wish good healthfirst all the time and act in the interestsof enhancing their satisfaction.

We strive our utmost every day to be acompany essential to our customers.

We respect the personality, talent, andteamwork of all members, and value a
corporate culture that is free andvigorous.

Trust & Sympathy with Society

Trust & Sympathy with
Shareholders

We observe laws and ethics, and strive
to grow in harmony with society and forthe benefit of its development.

We pursue ever-greater corporate value
and champion timely and adequate
disclosure.

Growth Strategy

Shareholders

Value Creation Foundation to
Support Growth

We shall live in harmony with society and our customers;
together, we shall create new values through the provision oforiginal service; and we shall contribute to the medical careand well-being of people around the world.

About TOHO HOLDINGS

Growth Strategy

Corporate Data

01 Vision Statement
03 The 75-year Trajectory of TOHOHOLDINGS
05 Business Field
07 Our Business
07 Pharmaceutical wholesaling
business
11 Dispensing pharmacy business
13 Pharmaceutical manufacturing
and sales business
14 Other peripheral businesses

15 Value Creation Story
17 CEO Message
21 Medium-term Management Plan
2023-2025 “Create the Next
Generation”
23 CFO Message
25 COO Message

45 Financial Summary (11years)
47 Non-financial Summary
48 Corporate Information/Stock
Information

Value Creation Foundation
to Support Growth
27 Sustainability
29 Environment
32 Social
37 Corporate Governance01

TOHO HOLDINGS Integrated Report 2023

Corporate Data

CONTENTS

Editorial Policy
As a corporate group engaged in the fields of medicine, health, and nursing care, TOHOHOLDINGS is engaged in a variety of initiatives to solve social issues through business andcontribute to the realization of a sustainable society. In the fiscal year ended March 2023, we
published an integrated report with the aim of ensuring that all stakeholders, including
shareholders and investors, understand our group’s initiatives.

Referenced Guidelines
International Financial Reporting Standards (IFRS) Foundation’s Integrated Reporting
Framework
Ministry of Economy, Trade and Industry’s Guidance for Integrated Corporate Disclosure
and Company-Investor Dialogues for Collaborative Value Creation
Global Reporting Initiative Standards etc.

Covered Organization
TOHO HOLDINGS CO.,LTD. and consolidated subsidiaries (including some non-consolidated
subsidiaries).

Caution Concerning Performance Forecasts Statements
Statements contained in this presentation that are not past facts are forward-looking
statements that reflect TOHO HOLDING’s group plans, expectations, strategies andassumptions, and involve known and unknown risks and uncertainties. These statements are
subject to numerous risks and uncertainties that could cause actual results, performance andachievements to differ materially from those described or implied in the forward-looking
statements.

Covered Period
April 1, 2022 - March 31, 2023. *Some information after April 1, 2023 is included.

TOHO HOLDINGS Integrated Report 2023

02

TOHO PHARMACEUTICAL

1948

Yoshinori Matsutani established
TOHO PHARMACEUTICAL
CO.,LTD. (currently TOHOHOLDINGS CO.,LTD.) in
Kitazawa, Setagaya-ku andstarted pharmaceuticalwholesaling company (capital:
300,000 yen).

PharmaCluster

Customer Support System/Service

2000

2007

1988

Tokyo Block Distribution Center(later TBC Heiwajima)
established.

Opened a call center
Release of “LXMATE HeLios”.

2002

1995

 elease of automatedR
medical care appointment
system “LXMATE”.

TOHO PHARMACEUTICAL
listed on the Second Section ofTokyo Stock Exchange.

2004

1968

TOHO PHARMACEUTICAL
listed on the First Section ofTokyo Stock Exchange.

Construction of a newheadquarters building in
Daizawa, Setagaya-ku.

2005

1980

TOHO PHARMACEUTICAL
listed on the OTC (over-thecounter) market.

1986 elease of inventoryRmanagement system, thefirst customer support
system.

1997

 elease of informationRterminal for pharmaceuticalordering “ENIF”.
Release of inventory control
system for large hospitals“ENIFwin”.

1999

Kyoso Mirai group established.

HOKUYAKU Inc., VITAL-NET,
INC., Nabelin Co.,Ltd.,NAKAKITA Co.,ltd, KSK CO.,LTD., ASTEM, Inc., IWABUCHIYAKUHIN Inc., OMWELL, Inc.
and TOHO PHARMACEUTICAL
decide to set up a joint
management company,
HEREON Inc.

2006

Tokai Toho is merged withTOHO PHARMACEUTICAL.

TOHO HOLDINGS net sales
Consolidated

Non-consolidated

 AKUSHIN is merged withY
Tsuruhara Yoshii to establish
Kyushu Toho Co., Ltd.
Enters into business alliancewith OHKI Co., Ltd. and
KOKUBU.
TOHO PHARMACEUTICAL
invested in Jointown
Pharmaceutical Group Co., Ltd.

2008

 onma Toho Co., Ltd. andH
KOYO Co., Ltd. becomeswholly owned subsidiaries.
Yamaguchi Toho Co., Ltd. andOgawa Toho Co., Ltd. becomeswholly owned subsidiaries.
Sue Pharmaceutical Co., Ltd.
and Ethos inc. becomeswholly owned subsidiaries.

2009 agaoka Pharmaceutical Co.,
N
Ltd. becomes a wholly owned
subsidiary.
Shift to a pure holding
company structure and changeof the company name to TOHOHOLDINGS CO.,LTD.
OMWELL becomes a wholly
owned subsidiary.
Release of voice-recognition
electronic medication history
recording support system“ENIFvoice”.

2010

 S
 ANUS is merged withOMWELL to establish
SAYWELL Inc.
 TOHO HOLDINGS has
established Hubei Kyoso
Pharmaceutical Co.,
Ltd.,(Joint venture company)
with Jointown
Pharmaceutical Group.
Okinawa Toho Co., Ltd.
becomes a wholly owned
subsidiary.
 ASUCOME CO., LTD., ismerged with TOHOPHARMACEUTICAL.
Release of website creation
service “Byouin-Navi
Homepage Service”.

2011 pening of web siteO
“eKenkoshop”.

2012

 S
 HOUEI CO., LTD., ismerged with TOHOPHARMACEUTICAL.
Release of “Initial
Examination Reservation
Service”.
Launched wholesale ofmedical materials in small
lots “ENIFme”.

Strengths
developed in the
trajectory

2013

 H
 onma Toho, Yamaguchi
Toho, Ogawa Toho and Sue
Pharmaceutical are mergedwith TOHOPHARMACEUTICAL.
 The Reorganization of
Dispensing Pharmacy
Business Companies (Japan
Pharmacy, Yotsuba, Mirai,
Pharma Square, Jus-Pharma
and Nest are merged with
PHARMA MIRAI INC.).
Release of centralizedadministration system ofpharmacy operations“ENIF-Honbu” (currently“Mizar”).

Communitybased
dispensary

2017

2021

2018

2022

 elease of online medicalRexamination/dosing
guidance system “KAITOS”.

 G
 odo Toho Co., Ltd. ismerged with TOHOPHARMACEUTICAL.
 H
 okuriku Toho Co., Ltd.
(former KYOUEI DRUG
WHOLESALERS CO., LTD. )becomes a wholly owned
subsidiary.

 T
 OHO HOLDINGS listed to
the Prime Market in Tokyo
Stock Exchange.

2019Release of “Future ENIF“.

2015(Billions of yen) S hift to an operating holding
company structure.

1,500

2016

 S
 hift to a Company with
Audit and Supervisory
Committee.
 Change of the company namefrom Yell Pharmaceutical Co.,
Ltd. to KYOSOMIRAIPHARMA CO., LTD.

1,200

900

600

Corporate Data

TOHO HOLDINGS

Development
and proposal ofcustomer
support system

About TOHO HOLDINGS

Since its founding, TOHO HOLDINGS has continued to evolve and grow in line with the changing
medical environment and customer needs. TOHO HOLDINGS will continue to strive to be a company
that is needed by society through its contribution to medical care and health.

Stable supply ofpharmaceuticals

Growth Strategy

Robust business
infrastructures

Maximizing
group value

Value Creation Foundation to
Support Growth

The 75-year Trajectory of TOHO HOLDINGS

300

0
1948

03

1960

1970

1980

1990

2000

2010

2020

1950〜
Postwarreconstruction
period1960〜
High economic
growth period

1970〜
First oil crisis

1980〜
Bubbleeconomy period

1990〜
Burst ofeconomic bubble

2000〜
Accelerating IT
adoption

2010〜
Arrival of a declining
population

2020〜
COVID-19 outbreak

TOHO HOLDINGS Integrated Report 2023

2022

（year）

1950

TOHO HOLDINGS Integrated Report 2023

04

Business Field

Pharmaceuticalwholesaling business

14
31

Pharmaceuticalmanufacturing andsales business

TOHO HOLDINGS

3

companies

About TOHO HOLDINGS

Dispensing
pharmacy businesscompanies

Other peripheralbusinesses

Synergy through closer intra-group collaboration

19

Companies in the wholesaling business sell and deliver pharmaceuticals and work with IT-related subsidiaries to develop customer
support systems for medical institutions and patients. Pharmacies in the dispensing pharmacy business take advantage of thesesystems for better service for patients. Companies in the manufacturing and sales business assess market needs in cooperation
with the wholesaling and dispensing pharmacy businesses and produce drugs systematically based on such assessment for stablesupply. Such close collaboration between and among these three businesses is one of our strengths. With this powerful synergy, we
contribute to society.

companies* Include non-consolidated subsidiaries

One overseas
company

Growth Strategy

We are active in a variety of health-related fields,
including the dispensing pharmacy business and thepharmaceutical manufacturing and sales business, withthe wholesaling pharmaceuticals at our core.

companies

One overseas
company

Quality security
through proprietary
verification systems

Utilize robot technology
to achieve efficiency andlabor savings
Supply processing
and distribution

KYOSOMIRAI PHARMA

Sales officeDistribution
centerHospitalMarketingspecialist

Support forMulti-professional
collaboration

Regional Comprehensive
Support Center

Mizar’s automaticordering function reduces
the number of deliveries
and inspections

Watching people withdementia on “Dokoshiru
Dengonban”

Visiting Nursing
StationDelivery of pharmaceuticals
and medical materials

Dispensing
pharmacy

Home medical care

ClinicSmooth online
medicalexamination

Dementia watch

Sales office

What are thesymptoms?

Initial examination
reservation
Secure communication
time with patients using
voice recognition
technology

Corporate Data

Delivery of specialty
pharmaceuticals atconstant temperature

Value Creation Foundation to
Support GrowthMulti-professional
collaboration

Provide medication
instruction smoothly

TOHO HOLDINGSTOHO PHARMACEUTICAL

Online medical
examination
Medication
instruction
Home guidance
Medical careappointment

Search “ByouinNavi” to find theright medical
institution

Dispensing pharmacy
05

TOHO HOLDINGS Integrated Report 2023

TOHO HOLDINGS Integrated Report 2023

06

Our Business
Strengths of the business 〜Logistics〜

Segment composition ratioHome
healthcare

Prescription
pharmaceuticals
Specialty
pharmaceuticals

Companion
diagnostics

OTC drugs

In-home medical
devicesCore system

Kyushu Toho Co., Ltd.

Hokuriku Toho Co., Ltd.

Okinawa Toho Co., Ltd.

SAKAI MEDICINES CO., LTD.

Taisyodo co.ltd.

SKYMEDICAL KYUSHU(As of September 30, 2023)



4,656

215

(As of December 31, 2023)



Number of business customers





10

110,000

Number of trading manufacturers

1,100Disaster control
network

Net sales

1,162,256

Accurate operations that match
physical inventory with theoreticalinventory in real time
Installaction ofprivate electoric
generators

Overview of the fiscal year ended March 2023

1,216,019

9,967

10,4430.82

0.78

2022/32023/32021/32022/32023/3

Net sales ■ ■ (Millions of yen)

Operating profit ■ ■ (Millions of yen)

Ratio of net sales by customers

Ratio of net sales by products

Large hospitals(200 or more beds)

Others10.0%

Dispensing
pharmacies

Sales office
Acheving integration oforder receiving and desk
work as well as laborsaving at sales offices by
expanding call centers

OutboundTrace movement of carriers andcheck the delivery status at thecall center

Shipment from sales offices

Distribution center

1,336,7660.34
2021/3

Order receivingfrom importantcustomers

InboundOperating profit/Operating margin
WMS inventory reserve

Patented

3,970

33.8%
FY ended
March 2023

Operating margin(%)

Medical equipment
and tools

Reagents

8.0%

1.8%
FY ended
March 2023

Clinics (19 or fewer beds)

Medium and small
hospitals(20 to 199 beds)

10.2%

5.6%

40.4%

TOHO HOLDINGS Integrated Report 2023

ClientCall center

Number of business sites

Number of distribution centers



07

Mizar

Pharmaceuticals

Corporate Data

KOYO Co., Ltd.

 ustomer support systems profit:C
3.75 billion yen

ENIF

Value Creation Foundation to
Support Growth

Number of employees*Excluding COVID-19-related products

MeissaCustomer support system

Automatic order receiving

SAYWELL inc.

 ales and profit increasedS
supported mainly by increases insales of COVID-19-related
products such as therapeutic
drugs and testing kits due to theseventh and eighth waves ofinfections, and cancer drugs andspecialty pharmaceuticals.
The Company’s net sales oflimited-handling products forselected wholesalers were
167.8 billion yen (16.5% increase
from the previous period).

Sales support terminal

Trade inventory reserve

Major group companies
TOHO PHARMACEUTICAL CO.,LTD.

Treatment

Testing anddiagnosis

The Group’s business infrastructure is the system processes incoming and outgoing shipments in real time to ensure thatthe inventory data always matches the actual inventory on the shelves. This enables sales offices, distribution centers, andcall centers to be linked with each other and to provide customers with real-time information on inventory status anddelivery dates. Also, we have established a system that enables centralized management of necessary information on any
order issued, regardless of which sales office or distribution center the products are shipped from across the country, from
Hokkaido to Okinawa. Because it is easy to transfer products between centers, we have a system that is mutuallycomplementary in the event of an emergency.

Growth Strategy

Pre-symptomatic
disease andprevention of
disease

Efficiency

Build a robust business infrastructure

Business outline
We purchase more than 200,000
types of products from about 1,100
manufacturers, and supply morethan 110,000 business customers
nationwide with the pharmaceuticals,
reagents, medical equipment,
medical materials, etc. that
consumers need in a variety ofsettings, from pre-symptomaticstate and prevention to diagnosis,
treatment, and home healthcare.

SafetyFor fulfilling our mission to distribute secure and safe pharmaceuticals, we achieve the highest level of quality (thoroughquality control), safety (traceability) and efficiency (establishment of the efficient logistics environment) by introducing
cutting-edge technologies. Robotic technology is used for product picking and loading to achieve efficiency and laborsavings. We have achieved a shipping accuracy of 99.99999% (“seven nines”). In addition, based on this high shipping
accuracy, we are promoting a no-inspection system, which contributes to the improvement of operational efficiency of ourcustomers by omitting inspection at the time of delivery. Furthermore, we are working to reduce the time it takes for
products to arrive at medical by operating a direct center delivery service, in which products are delivered directly from the
distribution center to medical institutions without going through a sales office.

92.47%

Pharmaceuticalwholesaling business

Quality

About TOHO HOLDINGS

Achieve the highest level of quality and safety
in the industry as well as efficient logistics

Labor saving by
robotic picking

Direct delivery from distribution centers

Thorough quality control
The Company has acquired ISO 9001:2015 (international standard for quality management systems for products andservices) certification and conducts quality control to fulfill. In addition, we have introduced state-of-the-art equipment
such as a dock shelter to prevent contamination by foreign matter by reducing the influence of outside air, and atemperature control system to monitor temperature round-the-clock and immediately report any deviation, thus ensuring
thorough quality control in accordance with Good Distribution Practice (GDP) Guidelines.

90.2%

TOHO HOLDINGS Integrated Report 2023

08

Our BusinessInitiatives for specialty pharmaceuticals

Strengths of the business 〜Customer support systems〜

In the specialty pharmaceutical such as biomedical products and regenerative medical products, strict temperature
control is required. Therefore, it is necessary to establish an optimal distribution system to meet the needs of individual
products. In our company, we have established a stable and continuous distribution system for specialty pharmaceuticals
based on shipment accuracy and an advanced temperature control system.

About TOHO HOLDINGS

We have developed in-house customer support systems that contribute to solving problems faced by patients andmedical institutions and improving profitability. We offer a variety of proposals tailored to the changing environment. In the
future, we will develop our existing customer support systems, introduce cutting-edge technologies such as AI throughactive alliances, and integrate our voice recognition technologies with those we have cultivated in our company, in order tofurther enhancement our customer support business.

Business continuity plan (BCP)
DisasteroccursDisastersite

Emergency
switchEast Japan center

Home

Hospital/Clinic

PharmacyWest Japan center
Onset/
Consultation

Finding
hospitals

Reservation/
Examination
Medical interview

Initial examination
reservation

Each base and distribution center of the Kyoso Mirai Group

Patients

Search medical institutions
and pharmacies Medical
consultation service
Medical care appointment

TBC DynaBASE

Dosing
Guidance

Cashless payment

Medication

Dosingfollow-up

Dosing follow-up

Send a prescription/Electronic
medicine notebook

Receipt of OTC drugs

Inward traﬃc will be restricted in the event ofan earthquake directly below the capital.

JR
Saikyo Line

Loop RoadNo.�
JR Chuo Line

Ikebukuro Station

Ueno Station
H

Loop Road
No.�

H
H

H

H

e
Lin
bu
So

r

( Core Wide-Area Disaster medical hospital )Arakawa River

Tokyo Metropolitan Hiroo Hospital
H

Shinkiba Station

The time required :�� minutes

Shinagawa Station

TBC WILL Shinagawa
H
H

H

To
ka
id
o

Li
ne

Ta
m
ag
aw
aR
ive
r

JR

To
ka
ido

Sh
ink
an
se
n

TBC DynaBASE

Medicalinstitution

Centralization of in-houselogistics and inventory
management

Split sales andinventory support

Wholesale of medical
materials in small lots

Electronic medication history
recording with automatic
voice-recognition

Rececon-Linked Pos
system

Supporting the separation ofdispensing and prescribing functionH

a RiveTokyo StationE�

PharmacyIn-pharmacy inventory
management and automaticordering

Kinshicho Station

Shinjuku Station

Shibuya Station

JR

H

Sumid

E��

Inward traﬃc will be suppressed in the eventof an earthquake directly below the capital.

Hospital

Pharmaceuticalordering, information
retrieval, and inventory

H

Ariake no Oka

Changes in the performance of customer
support system (Gross profit)
JR K
eiyo
Line

Wide-Area Disaster( Core)Prevention Base

The time required :�� minutes

Target4.0 billion yen

Tokyo BayH

The time required :�� minutes

Higahi Ohgishima East Park

( Relay stations for marine transportation)

3.75 billion yen
Tokyo International Airport“Haneda”

3.61 billion yen

3.54 billion yen

H Tokyo metropolitan
emergency heliport

TOPIC
ENIF
It is a multifunctional terminal that caneasily place orders for medicines bysimply scanning the bar code on theterminal, and can retrieve informationsuch as inventory, package inserts, andmedication instructions. Approximately
30,000 units have been installed.

Corporate Data

E17

Value Creation Foundation to
Support Growth

Operational efficiency and management support

Disaster response in the Tokyo metropolitan area
Being located inside the Loop Road No. 7 and near “Ariake-noOka,” the main wide-area disaster management base facility,
it’s capable of providing
pharmaceuticals promptly
and smoothly in the eventof a disaster such as theTokyo Inland Earthquake.

Reservation/
Reception

Online medical
examination/Dosing
guidance

TOPIC
TBC DynaBASE is a logistics center with cutting-edge
technologies for prescription pharmaceuticals built in the “Keihin
Truck Terminal,” an area designated by the Tokyo Metropolitan
Government as a wide-area transportation base in the event of
a disaster. TBC DynaBASE was the first in Japan to be licensed
by the Tokyo Metropolitan Government as a joint distribution anddelivery center for pharmaceutical wholesalers to share storage
space for pharmaceutical products, by completely managing thestorage location of pharmaceuticals by computer based on ahighly functional system. In addition, we are taking on thechallenge of innovation in pharmaceutical distribution, including
thorough automation through the active introduction of state-ofthe-art robots and dramatic improvements in logistics efficiency.

Home

Growth Strategy

To prepare for unforeseen circumstances, we haveestablished a system in which host computers at two
locations, one in Tokyo and the other in Osaka, areconstantly synchronized to provide backup even if one
is damaged by a disaster. In addition, we have beensteadily advancing our BCP by enabling remotecomputer support at our sales offices and distribution
centers. Furthermore, we have a system in place toensure a stable supply of pharmaceuticals even in theevent of a disaster through redundant warehousemanagement systems, coordination between callcenters, installation of uninterruptible power supply
equipment, periodic disaster drills, etc.

3.36 billion yen

Tokyo metropolitan
designated emergency
water transport base

3.12 billion yen

piece-picking robot
2019/32020/32021/32022/32023/32024/3

In 1996

09

TOHO HOLDINGS Integrated Report 2023

Future ENIFTOHO HOLDINGS Integrated Report 2023

10

Our Business

Strengths of the business

Promotion of DX in pharmacy

6.39%
Segment composition ratio

About TOHO HOLDINGS

Dispensing
pharmacy businessWe are improving the efficiency of pharmacy operations by promoting electronic prescriptions and online medication
instructions.
Kyoso Mirai -Akiho Pharmacy (Sakata, Yamagata) participated in an electronic prescription model business led by the
Ministry of Health, Labour and Welfare ahead of the full-scale launch of electronic prescriptions. In January 2023, we
actually started using electronic prescriptions, and as of December, 46.4% of all prescriptions in our pharmacy areelectronic. In our group, we are making use of the know-how we have accumulated at Akiho Pharmacy to expand ourbusiness within the Group.
To improve the efficiency of pharmacy operations and the convenience of patients, in October 2023, we released aportal application, “Kyosei Mirai Pharmacy Health Navi,” equipped with a prescription sending function and an electronic
medicine notebook. By sending prescriptions on a smartphone, waiting time at a pharmacy can be reduced andmedicines can be managed.

In addition to dispensing and providing medication guidance, we are making active efforts, as a community health-care
support pharmacy, to respond to recent changes in the health-care delivery system by providing home medical care,selling OTC drugs, strengthening advanced pharmaceutical management functions, etc.
Major group companies
PharmaCluster Co.,Ltd
PHARMA MIRAI INC.
Cure co., Ltd.

PHARMA DAIWAAOBADO
KOSEI

Number of employees 

VEGA PHARMAJ.MIRAIMEDICALSEIKO MEDICAL BRAIN
Shimizu Pharmacy

Number of stores

2,563
759

Value Creation Foundation to
Support Growth

Operating profit/Operating margin
91,8012022/392,3462023/3

Net sales ■ ■ (Millions of yen)

2,688

2,963

2,431

2.95

3.23

2.63

2021/32022/32023/3Operating profit ■ ■ (Millions of yen)

Operating margin(%)

Creating community-based pharmacies
As a community health support pharmacy, we are working to create a pharmacy where people can visit easily without aprescription. In order to support local people’s self-medication, dispensing pharmacies in our company are focusing on
selling OTC drugs, health foods, and nursing care products. In addition, they are conducting various activities such as
consultations and study groups on medicine, nutrition, and health, and dementia cafes.

Corporate Data

2021/3

Electronic medicine notebook app
Automated linkage of prescription datafrom ENIFvoice Core

Other Customer support apps

Net sales

91,098Prescription sending function app*Including non-consolidated subsidiaries and affiliates

Overview of the fiscal year ended March 2023
 he dispensing pharmacy businessT
increased revenues, supported bya trend of recovery in the numberof prescriptions demands despite
the negative impact of revisions
both to the medical fee scheduleand to NHI drug prices.
We made changes to our store
network to boost profitability,
closing 15 unprofitable stores but
opening new ones to increase thetotal number of stores by 10.

Growth Strategy

Business outline

Kyoso Mirai Group in Pharmacy
Kyoso Mirai Group in Pharmacy is a group of individual pharmacy owners, wishing to run their business with independences
and self-initiative in their local community. We address various issues and problems that are difficult to solve by individual
pharmacies. With PharmaCluster serving as a secretariat, we focus on enhancing the functionality of pharmacies, reinforcing
our management base, and improving our management efficiency.
Main support
 olding of various seminars and training: We offer lectures and online seminars on topics of high interest to our members, such as the health careHsystem, prescription compensation reform, formularies, home health care, and labor issues, as well as various training programs such as health support
pharmacy training and community collaboration pharmacist training.

Aroma oil workshop(Kurumi Pharmacy/Osaka·Hyogo)

 rovision of electronic money settlement system: We provide credit card and electronic money payment systems in order to support a variety ofPpayment methods in recent years (Alpharia tie-up).
 ales promotion support: The Kyoso Mirai Group in Pharmacy website provides promotional information, such as recommendations for sales andS
OTC drugs, special campaign information, and recipes introduced by registered dietitians.

Dementia café (Kyoso Mirai-Koga minami Pharmacy/Ibaraki)
KIRARA MIRAI Hoshinoko café (Osaka)

11

TOHO HOLDINGS Integrated Report 2023

TOHO HOLDINGS Integrated Report 2023

12

Pharmaceutical manufacturing
and sales business

0.69%

Other peripheralbusinesses

Segment composition ratio

Major group company

Number of employees

100

KYOSOMIRAI PHARMA CO., LTD.

Overview of the fiscal year ended March 2023
Net sales

8,090

Operating profit/Operating margin

9,093

9,944

9.72

9.01

884

729

2021/32022/32023/32021/32022/3Operating profit ■ ■ (Millions of yen)

Net sales ■ ■ (Millions of yen)

Operating margin

8.69
864

2023/3(%)

Tokyo Research Center ofClinical Pharmacology Co., Ltd.

Growth Strategy

Business outline

KYOSOMIRAI PHARMA CO., LTD. is involved in manufacturing
and sales business of prescription pharmaceuticals centered on
generic drugs. While ensuring quality through our uniqueverification systems such as elution testing, we strive for stable
and continual supply of high-quality and high-value-added
pharmaceuticals.

 surge in demand caused byA
shipment adjustments by
manufacturers affected some of
the Company’s products.
We continued to expand our
product lineup by launching 3
ingredients and 5 products of new
generic drugs during theconsolidated fiscal year underreview.

0.46%
Segment composition ratio

Nextit Research Institute,Inc e offer various services for hospitals, clinics, and patients,Wwith a focus on management consulting business and thedevelopment and sales of Chozai-kun, a system ofprocessing health insurance claims for dispensing
pharmacies.

We work with Shinanozaka Clinic
and Samoncho Clinic of Medical
Corporation Shinanokai, both ofwhich are a site management
organization (SMO), to conduct
SMO business while putting thesafety of trial subjects first.

eKenkoshop Corporation
Value Creation Foundation to
Support GrowthBusiness outline

About TOHO HOLDINGSOur Business e operate eKenkoshop, an online one-stop shop thatW
deals in health and nursing care products. This shopfeatures the receipt-at-pharmacy service whereby general
consumers send away for OTC drugs and receive them ata pharmacy.

K.K.eHealthcare
Our activities include operating
Byouin-Navi, a web-portal site forfinding hospitals and clinics, as well
as hospital marketing research andconsultation services.

ALF.Inc e develop customer support systems,W
one of our strengths. We also develop
and sell smart devices.

Strengths of the businessWe strive for optimization of the pharmaceutical supply chain from distribution to dispensing, based on accurate predictionof market demands in coordination with pharmaceutical wholesaling and dispensing pharmacy businesses.

Overview of the fiscal year ended March 2023
Net sales

Manufacturing
and sales

Pharmaceuticalwholesaler
KYOSOMIRAI PHARMA

Dispensing
pharmacy
TOHO PHARMACEUTICAL,
and others

PHARMA MIRAI, and others

Group companies

Operating profit/Operating margin

5,717

6,635

9.36
6.91

 okyo Research Center of ClinicalT
Pharmacology Co., Ltd.
Nextit Research Institute,Inc
K.K.eHealthcare
eKenkoshop Corporation
ALF.Inc621

395

Number of employees
2022/3

Release of the “drug substance manufacturing country” and “company nameof drug product manufacturers”
In order to provide safe use to healthcare professionals, we are making efforts to provide appropriate information on
pharmaceuticals by disclosing information on the “drug substance manufacturing country” and “company name of drug
product manufacturers” has been granted on the website for healthcare professionals on the KYOSOMIRAI PHARMA
website.
13

TOHO HOLDINGS Integrated Report 2023

Net sales ■ ■ (Millions of yen)2023/32022/3Operating profit ■ ■ (Millions of yen)

Corporate Data

Optimization of the pharmaceutical supply chain

2023/3Operating margin

188

(%)

*From the fiscal year ended March 2022, we have added 3 companies to our existing “SMO operations” and“information equipment sales operations” as well as our “Other peripheral business”: Nextit Research Institute,Inc,
eKenkoshop Corporation, and K.K.eHealthcare.

TOHO HOLDINGS Integrated Report 2023

14

Value Creation Story

Human capital

Dispensing
pharmacy business aximize the value of human capitalM
10,036
Number of employees

Financial capital ound financial position
S242,916 million yen
Net assets

Logistics and manufacturing
capital trong business infrastructure and stableSsupply of pharmaceuticals
Number of pharmaceutical wholesale sites 215
Number of distribution centers 
10Number of dispensing pharmacy stores  759

Pharmaceuticalwholesaling
business stablishment of more stableE
supply through highly functional
logistics
Further strengthening of BCP
Specialty products, Full service

Intellectual capital ustomer support system supporting clientsC
and patients
More than 20
Number of lineupsHighly functional logistics system, Utilizationof robots
95%
Robot picking rate in TBC DynaBASE
Shipping accuracy
99.99999%
Voice recognition technology
95%
Voice recognition rate of ENIFvoice

TOHO HOLDINGS Integrated Report 2023

Improvement of customer support businessPromotion of home health care
Using DX to improve productivity and create added value
Maximizing group synergy

Medium-term Management
Plan 2023-2025“Create the Next
Generation”

Improvementof capitalefficiency andenhancementof shareholder returns

Business
infrastructure forstable supply ofpharmaceuticals

Regional
healthcare
designMission Statement

Investment for
growth andimprovementof profitability
Alliance
Further
expansionof DX
Sustainability
management

Universal
medical access

We shall live in harmony
with society and ourcustomers; together, weshall create new values
through the provision oforiginal service; and weshall contribute to the
medical care and wellbeing of people aroundthe world.

MATERIALITY (Important issues)
Social capital
Strong partnership
1,100
Number of trading manufacturers
110,000
Number of business customers
Members of the Kyoso Mirai Group in Pharmacy
companies 7,500 stores 21,000Group Slogan

15

Other peripheralbusinesses

Health, presymptomatic
disease, andprevention of
diseaseBusinesstransformation

Business environment
 ontrolling socialC
security expenditures
Annual drug pricerevision
Establishment ofcommunity-based
integrated caresystemsCategory change inpharmaceuticals
Diversification ofmodalities
Promotion of medicalDXPromotion of homehealth careInsufficient supply of
drugs, mainly genericdrugs

Pharmaceuticalmanufacturing andsales businessNew business

Growth Strategy

 eclining birthrate,
D
aging population
Shrinking workforce
Promotion of work
style reformAdvances in digitaltechnology
Climate changeOccurrence of natural
disastersOccurrence of apandemicHeightened
geopolitical risk

What We Aim to Be

Value-added Business Model romotion of decarbonizationPConsideration of biodiversity
Reduction of waste
Stable supply of pharmaceuticals
and support for BCPImprovement of quality, safety andefficiency

 olve issues related to access to medical careSMaximize the value of human capitalHuman rights
Coexistence with society
Strengthening risk management
Establishment of a transparent governance system

Value Creation Foundation to
Support GrowthSocial environment

Input

Corporate Data

External
Environment

About TOHO HOLDINGS

Toho Holdings conducts business activities based on the corporate slogan, “Total commitment togood health.”
By using our group’s unique management resources as a source of value creation to contribute to
the health and medical care of people around the world, Toho Holdings aims to increase its
corporate value and establish its corporate brand over the medium to long term throughsustainable growth.

Our SDGs Marks

Total commitment to good health
TOHO HOLDINGS Integrated Report 2023

16

CEO Message

We build up human resources and businessfoundations for the next generation toremain as a company needed by society
The Group’s founding spirit andstrengths
The Company has a history of 75 years since it was
founded in 1948 as TOHO PHARMACEUTICAL CO.,LTD.
Our continued operations could not have been possible

17

TOHO HOLDINGS Integrated Report 2023

without the support of all our stakeholders in many
aspects. I would like to extend my heart-felt gratitude tothem.
As a corporate group that contributes in the medical,
health and nursing care fields, the TOHO HOLDINGSGroup conducts four types of business: pharmaceuticalwholesaling, dispensing pharmacy, manufacturing andsales of pharmaceuticals and others, and other peripheral

About TOHO HOLDINGS
Growth Strategy
Value Creation Foundation to
Support Growth

Representative Director, CEOsubsidiaries. They make it possible for us to develop andmanage these core systems on our own. This sets us
apart from our peers. As a result, we can give top priority
to system rehabilitation in times of emergency. This meansthat we have robust distribution infrastructure, which
ensures the continuation of our operations.
The Group enjoys yet another asset: customer support
systems. Our customer support systems stem from thedevelopment of inventory control systems during the
1980s. Now we have nearly 30 customer support
systems, including the medical care appointment system
LXMATE HeLios and the drug ordering and information
terminal ENIF. Since we have developed many of thesesystems and related services, we can promptly cope withvarious requests our marketing specialists (MSs) received
during their visits to our customers. Now that prices nolonger constitute a competition axis, our own customer
support systems are a major advantage for us.
To fulfill its social mission of ensuring a stable supply ofpharmaceuticals, the Group works on the sophisticationof distribution centers. We continue our efforts andstruggles to reach the acme in three aspects: quality,
safety, and efficiency. To cope with an expected labor
shortage and prevent human errors, we are proceedingwith total automation of physical distribution. This involves
the introduction of cutting-edge robot technology. We
now enjoy a shipping accuracy of 99.99999% (seven 9s),
meaning that we do not tolerate a single error in 10 million
shipments. We have ten distribution hubs across Japan.
One of them is TBC DynaBASE, located in one of theinter-municipal transport bases that the Tokyo
Metropolitan Government designates in its disaster
preparedness plan. TBC DynaBASE is the only large
distribution center for prescription pharmaceuticals inTokyo that can coordinate with the Tokyo Metropolitan
Government and the Self-Defense Forces in times of
emergency. Moreover, we have a fully duplicated backup
of two host computers and in-warehouse management
systems in eastern and western Japan. Also, we havedeveloped a mutual switching network by linking
distribution centers around the country. This allows us tocontinue our operations in times of disaster. These BCP(business continuity plan) arrangements are highly
evaluated by our customers. Among others, this factor
prompts them to choose the Group.

Corporate Data

Atsushi Udoh

businesses (including information services, sitemanagement organization (SMO) business, and corporate
and medical management consulting). In addition, we areengaged in the development and provision of customer
support systems. We are also active in the fields ofcommunity medical cooperation, and home healthcare
and nursing care.
There have been many changes over the years, but ourmotto – which reflects our desire to continue to be acompany needed by society by making a difference forpatients, their families, and all others who wish to behealthy – has remained unchanged. We believe that
excessive price competition has no future. We put
ourselves in the shoes of healthcare institutions andpatients and help them solve their problems. We aspire to
be a company chosen because of this stance, notbecause of price competitiveness. This stance has givenrise to our unique initiatives. I am convinced that these
initiatives have created two of our outstanding strengths.
One is sophisticated distribution infrastructure that
ensures the stable supply of pharmaceuticals even intimes of emergency. The other is customer support
systems that offer better convenience for our customers
and patients.
I feel strongly that we are a corporate group that has
grown by leveraging our human resources, one of ourstrengths. When I joined the Company in 1987, it had inplace a self-supporting accounting system. Under thissystem, small groups of employees enjoyed their own
autonomy. Group leaders (hancho), whose rankcorresponds to that of senior manager in the present
corporate hierarchy, had discretion to decide their own
sales areas and working hours. We worked in a quite
liberal corporate culture. In 1991, a new invoice pricing
system was introduced. This prompted changes both tothe healthcare system and to the roles of pharmaceuticalmanufacturers and wholesalers. Our organizational setup
also changed according to the changes of the times. But
our corporate culture, which respects the out-of-the-box
idea of individual employees, has remained unchanged
since our foundation. I believe that the Group has
successfully survived the ongoing reorganization of thewhole pharmaceutical wholesaler industry just because
ideas put forward by our employees have taken shapeand constituted the foundation for the growth of theGroup.
In the waves of major reorganization of the industry
since 2000, we did not give priority to the idea ofenlarging our corporate scale. Instead, we stuck to theidea of forming the Kyoso Mirai Group with like-minded
companies and starting by harmonizing core systems
while respecting the autonomy of individual member firms.
We struggled every time we switched from a familiar
system to a new one. But this experience paid off. It gave
rise to a mechanism that allows for centralized
management of information shared between all of our
locations across Japan even after subsequent corporate
mergers and moves to make other companies our
subsidiaries. We have system engineering firms as

Formulation of the Medium-termManagement Plan 2023–2025“Create the Next Generation”
In May 2023, we announced the Medium-termManagement Plan 2023–2025 “Create the Next
Generation,” a growth strategy for the Group. I think that
“Create the Next Generation” is the most important themeof this plan. In Japan, the government is working to curtail
medical expenses on the back of social issues such as
the declining birthrate, aging population, and shrinking

TOHO HOLDINGS Integrated Report 2023

18

CEO Message

19

TOHO HOLDINGS Integrated Report 2023

About TOHO HOLDINGSPHARMACEUTICAL, J.MIRAIMEDICAL, and Nextit
Research Institute, were each certified as an Excellent
Health Management Corporation 2023. Going forward,
we will encourage individual employees to raise theirhealth management awareness through such means as
training designed to make them feel that healthmanagement really concerns them. We will also build aworkplace environment where employees can work ingood health both physically and mentally and with a sensethat they are doing a worthwhile job.
Basic policy4 Improvement of capital efficiency andenhancement of shareholder returns
During the period of the current Medium-termManagement Plan, we will continue to steadily implement
measures aimed at boosting productivity through business
transformation and at improving through investment for
growth. Sustainable growth thus achieved will improve ourcorporate value over the medium to long term, which inturn will allow us to enhance shareholder returns. As partof such efforts, we have laid down three managementtargets concerning what the Company should look like inthe next generation. These targets are: (1) a price bookvalue ratio (PBR) of 1.0 times or higher, (2) a return on
equity (ROE) of 8% or more, and (3) a dividend on equity
ratio (DOE) of 2% or more. During the three-year period,
we plan to invest 38 billion yen in growth sectors,
infrastructure, and human capital. To achieve the threemanagement targets mentioned above, we will also work
to improve capital efficiency. This will involve purchasingtreasury shares in a timely and flexible manner, increasing
dividends, and unwinding cross-shareholdings in aphased manner.

Growth Strategy

Basic policy2 Investment for growth andimprovement of profitability
One of the measures for investment for growth andimprovement of profitability involves establishing a fullservice that meets the diverse needs of pharmaceuticalmanufacturers and others. Today, the mainstream of drug
development around the globe is the development ofspecialty products, most notably pharmaceuticals for rarediseases. In fact, the Group is posting growing net salesof cancer drugs and specialty pharmaceuticals. Under
these circumstances, Japanese and foreign venture firmsthat lead such development are increasingly asking theGroup to develop and manufacture products undercontract to them, suggesting a growing need for businessprocess outsourcing (BPO). The Group’ business
infrastructure is highly evaluated. Cases in point include
the high-performance distribution center TBC DynaBASE,
as well as the SALM Solution System, which optimizes
the domestic distribution of specialty pharmaceuticals
with the capacity to control the temperature within therange of -25°C to +37°C. Going forward, we will continue
to deepen collaboration with pharmaceuticalmanufacturers at home and abroad while enhancing thefunctionality of the full service in order to accumulate
relevant know-how.
Another issue is how to further upgrade our customer
support systems. To date, the Company has accumulated
various lineups that use voice recognition technology andother features it has developed. They have been used bymany customers. Going forward, the Company will makebetter use of the strengths we have developed over theyears and fuse cutting-edge technologies throughbusiness alliances to launch new customer support
business. As the first step in that direction, the Company
forged a capital and business alliance in September 2023
with MICIN Inc., a provider of online medical examination
services. The two companies have already launched ajoint project.
We will make active investments in other growth sectors
as well. These include health, pre-symptomaticmanagement, disease prevention and other healthcare
areas, in addition to the global market.

Basic policy3 Sustainability management
For sustainability management, we identify environmental,social, and governance issues and conduct operations
designed to address them as part of our efforts to solve
social issues through business activities. We regard
compliance with relevant laws and regulations andcompliance and risk management as top priorities for all
executives and employees. We continue to require themto receive monthly training on these two priorities. This
training is designed to drive home the norms that every
employee must observe. These norms concern the Act
on Pharmaceuticals and Medical Devices, and the
Antimonopoly Act, and other related laws and regulationsof importance. Training participants are strictly taught toprevent harassment and bribery and to observe traffic
regulations as well. Going forward, we will continue towork on compliance and to create a corporate culture
where employees feel free to give warnings to their coworkers.
With the belief that our employees are an integral partof our assets, that is, our precious human resources, we
implement employee-participatory projects, such as
MAXIS mentioned above. We also utilize human resources
regardless of gender, age, or nationality. I have explained
our customer support systems as an asset to the Group.
Still, no matter how good our systems and services may
be, success in business depends primarily on theperformance of employees who interact with ourcustomers. The Group’s biggest asset is none other thanour employees. For the growth of the Group and individual
employees working there, we make steady investments inhuman capital.
The Group is also engaged in health management. The
idea behind this engagement is that our goal to support
people in promoting their health and leading a comfortable
life cannot possibly be achieved unless our employees arehealthy. In March 2023, TOHO HOLDINGS, TOHO

Value Creation Foundation to
Support Growth

Basic policy 1 Business transformation
Measures to transform Pharmaceutical Wholesaling
include reorganizing us into an organization that can cope
better with changes in the environment surrounding us,
including the government’s regional medical care visionand distribution challenges. We will be active in unifying
pharmaceutical and reagent-related functions to better
meet market needs, consolidating offices, and rethinking
the roles of MSs and ENIF marketing supporters (EMSs).
In July 2023, we made a major reorganization at TOHOPHARMACEUTICAL, a pharmaceutical wholesaler
subsidiary. We have been successively consolidating ouroffices as well. In Dispensing Pharmacy, we will promptly
reorganize our operating companies, which totaled 27 in
number as of October 2023. To support home healthcare,
Dispensing Pharmacy will work with Pharmaceutical
Wholesaling to improve access to healthcare institutions
specializing in home healthcare. It will also facilitate
digitalization processes as highlighted by electronicprescription and online medication instruction. The idea is
to create an environment that allows pharmacists toconcentrate on in-person operations, their primary role.
Through the business transformation of Pharmaceutical
Wholesaling and Dispensing Pharmacy, we will design
healthcare arrangements that fit the characteristics ofindividual regions in Japan, thereby contributing toregional revitalization.
Moreover, we have launched the Cooperative Research
Lab in collaboration with the National Institute ofAdvanced Industrial Science and Technology (AIST), oneof the best centers of technological excellence in Japan.
At this lab, eight employees on loan and 16 inhouseresearchers are now working on joint research. The goalof this project is to achieve universal medical access,allowing all patients to receive quality medical services
wherever they live and regardless of the skill levels of theirhealthcare and nursing care providers. In contrast to
AIST’s manufacturing technology, the strength of theGroup, which supports the distribution aspect, lies in its

firm grip on the needs of customers and patients. Whileconsidering how we can use the synergy between thesestrengths of both parties to create new value, we willcontinue to pursue new business pillars with out-of-thebox thinking.
We have also launched MAXIS2021, an internal reformproject largely led by junior employees. In this project,
junior employees from distribution, sales, administration,customer support, and other functions spend a great dealof time discussing reforms. My hope is that their activities
will not only prompt internal reforms but also help tocultivate and develop human resources for the next
generation.

To our stakeholders
I always think that a company that is not needed bysociety has no value to society and that management
must continue to ask themselves whether their company
is really necessary in society. As I have been saying all
along, the Group has committed itself, since its
foundation, to addressing issues facing our customers as
its fundamental business principle. I feel the responsibility
to surely inherit many management resources that havebeen accumulated thanks to the efforts of ourpredecessors and pass them onto the next generation. To
fulfill this responsibility, we will steadily implement
measures laid down in the Medium-term Management
Plan to achieve growth. We will also develop humanresources that will pass our ideals onto the next
generation. Through these efforts, I want to lead theCompany so that it will continue to be appreciated by ourshareholders. I want to see them feel glad to be ourshareholders. I hope that the Company will continue to besuch that its employees feel so proud to work for it thatthey will want their children to join it. I also want theCompany to be always needed by society. I would
appreciate your continued understanding and support.

TOHO HOLDINGS Integrated Report 2023

Corporate Data

workforce. Efforts are being made to promote medical
digital transformation (DX) and build a community-based
integrated care systems by around 2025.This Mediumterm Management Plan has been developed with an eye
on the year 2030 and the next generation beyond. Overthe three years, we will build the foundation that allows
the Group to fulfill its social mission in the next generation.
While listening to what young employees – who will play apivotal role in the next generation – have to say, we willbuild this foundation so that they can exercise leadershipwith confidence.
The Medium-term Management Plan has four basic
policies: Business Transformation, Investment for Growthand Improvement of Profitability, Sustainability
Management, and Improvement of Capital Efficiency andEnhancement of Shareholder Returns. We will implement
specific measures under these policies, according towhich we also embrace out-of-the-box alliances and thefurther expansion of DX.

20

Medium-term Management Plan 2023-2025,“Creating the Next Generation”

Purpose of Formulating the Medium-term Management Plan
Looking ahead to social issues such as the declining birthrate, aging population, and shrinking workforce, known as the“2025 problem” or “2030 problem,” the market environment surrounding us is expected to change at an ever increasing
pace, including the construction of a “community comprehensive healthcare system” and the promotion of measures to
cut medical expenses to make the social security system sustainable, the expansion of markets for specialty products
such as biomedical products and regenerative medical products, and the promotion of medical DX.
Amid these rapid changes in the environment of the healthcare and pharmaceutical industries, the Group has
formulated this Medium-term Management Plan with a view to, as a corporate group engaged in the areas of medicalcare, healthcare, and nursing care, contributing to extending the healthy life expectancy of people and to establishing andmaintaining sustainable social security systems.

Investment for growth and improvement of profitability
1Specialty products, Full service

2

In order to increase trade in specialty products whose market
is expected to expand, we will establish a full service that canmeet the diverse needs of pharmaceutical companies andbio-ventures by capitalizing on our centralized management
system and active business alliances.
3

Building new businesses

We will build new businesses by proactively investing in
healthcare domains and products that have growth potential.
To this end, we will maximize the group synergies that only the
Kyoso Mirai Group – which covers everything from wholesaling
and dispensing pharmacy to pharmaceutical manufacturing
and sales businesses – can achieve.

Evolution of customer support businessWe aim to further evolve by incorporating
cutting-edge technologies such as AI throughactive business alliances. To this end, we willleverage our strengths in the customer
support business that we have built up overnearly 30 years. These strengths are
represented by, for example, the drug orderingand information terminal ENIF, the medicalcare appointment system LXMATE HeLios, theInitial Examination Reservation Service, andthe online medical examination / dosing
guidance system KAITOS.

About TOHO HOLDINGSIn May 2023, the Group formulated the Medium-Term Management Plan 2023-2025, “Creating the Next Generation.”
By implementing the Medium-Term Management Plan, which is to create a foundation for the “Next Generation,” weaim to achieve sustainable growth despite the difficult market environment and to become a corporate group that isrequired and continuously supported by all stakeholders.

 hat the “next generation”
Wshould be likeSpecific measures under the
Medium-term Management
Plan 2023-2025 “Create the
Next Generation”

 pecialty products, FullS
serviceImprovement of customer
support businessBuilding new businesses

Businesstransformation

Improvementof capitalefficiency andenhancementof shareholder
returns

Alliance
Further
expansionof DX

Investment for
growth andimprovementof profitability

 ustainability managementSof our company
Maximize the value of humancapitalCompliance/Riskmanagement

Sustainability
management

Sustainability management
1

Sustainability management of our company

2

Based on the Mission Statement, we, as a corporate groupengaged in the areas of medical care, healthcare, and nursing
care, work to solve social issues and contribute to therealization of a sustainable society through our businesses. As
for environmental activities, we will promote decarbonization
through the use of solar panels, storage batteries, and electricvehicles, and improve delivery efficiency through planneddelivery and joint delivery.
3

Maximizing the value of human capital

We will continue to cherish the Company’s corporate culture,
which has grown based on our human resources andrespected free thinking of our employees. We will also work to
maximize the value of our human capital by nurturing humanresources needed by the Kyoso Mirai Group, improving our
personnel system, and promoting work-style reforms.
Value Creation Foundation to
Support Growth ransformation ofT
Pharmaceutical wholesaling
businessTransformation of Dispensing
pharmacy businessRegional development- Regional healthcare design
Cooperative Research Lab
with AIST, MAXIS2021

Growth Strategy

Basic policy and specific measures of the Medium-term Management Plan 2023-2025 “Create the Next Generation”

Compliance/Risk Management

Compliance with relevant laws and regulations, such as the Act on Pharmaceuticals and Medical Devices, and compliance and risk
management are top priorities for all executives and employees.

Improvement of capital efficiency and enhancement of shareholder returns

1

Transformation of Pharmaceutical wholesaling businessIn order to promote distribution improvement, which is one of
the major challenges in the pharmaceutical industry, we will
move away from traditional business practices and press
ahead with organizational restructuring toward realizing thenext generation. Specifically, we will go ahead with theconsolidation of sales bases. We will also clarify each of theroles of sales and delivery. At the same time, we will improve
the productivity of wholesaling by, for example, exploring new
job types and work styles that fit the times and making betteruse of human resources.
3

Regional revitalization —Regional Healthcare Design—

We will transform ourselves into an organization capable ofconducting activities based on the concept area (secondary
medical care area) to implement initiatives that meticulously
reflect local realities and problems. We will integrate the logistics
systems that cover large and small areas with the medical DX
centered on the customer support systems to plan, design, andimplement the best solutions to problems, and strive to support
the medical care delivery system and improve the quality of life
(QOL) of people who want to stay healthy.
21

TOHO HOLDINGS Integrated Report 2023

2

Transformation of Dispensing pharmacy businessWe will promote organizational and functional transformation to
respond to digitalization and contribute to home healthcare. To
this end, we will concentrate the administrative functions ofdispensing pharmacy companies and integrate their systems forbetter functionality. Additionally, we will open new pharmacies
and close existing ones as necessary with an emphasis on
profitability. We will also expand non-insurance revenues.
Moreover, we will promote digital transformation (DX) involving
electronic prescriptions and online medication instructions.

What the“next
generation”
shouldbe like

Cooperative Research Lab with AIST, MAXIS2021

By combining the advanced development capabilities of
cutting-edge technologies of the National Institute of Advanced
Industrial Science and Technology (AIST) with the Group’s
industry knowledge and know-how, we will work to solve
medical access problems and implement new technologies,
systems and services in society. The goal is to realize universal
medical access. We will also promote the internal reformproject MAXIS2021 to develop human resources who will leadthe next generation.

1.0 times or higher(0.65 times in FY 2023)

Return On Equity (ROE):

Dividend on Equity Ratio (DOE):

More than 8%More than 2%(5.6% in FY 2023)(0.9% in FY 2023)

Specific measures under the Medium-term Management Plan 2023-2025

1
4

Price Book-value Ratio (PBR):

Corporate Data

Business transformation

Investment Plan: 38 billion yen
Investment in growth fields:
20 billion yen
Investment in infrastructure:
12 billion yen
Investment in human capital:
6 billion yen

2 urchase of treasury shares:
P
More than 30 billion yen

 e will purchase treasury shares flexiblyW
taking capital efficiency into consideration.

3

Dividends:

4

Cross-shareholdings:
 e will unwind crossW
shareholdings in aphased manner throughsufficient dialogue withthe partner companies.

 e will increase dividends stably with aWtarget of a DOE of 2%.

TOHO HOLDINGS Integrated Report 2023

22

CFO Message

Representative Director, CFO

Reforms needed to secure profit
The Group is engaged in pharmaceutical wholesaling as
its core business. Its social mission is to deliver
pharmaceuticals and medical equipment and supplies, ina timely manner, to medical institutions, dispensing
pharmacies, and patients that need them. As a company
that supports social infrastructure, the Group is required
to ensure stable business management above anythingelse. To maintain stable management, three requirements
need to be met: a stable financial standing, a better profit
performance, and efficient use of capital.
Amid continued downward trends in drug prices inannual NHI drug price revisions, distribution costs are
increasing, affected by such factors as increased
deliveries due to the COVID-19 pandemic, the issue ofadjustment of pharmaceuticals shipments, and soaring
energy prices. In addition, invoice prices frompharmaceutical manufacturers are on the rise. All thesefactors point to the need for better profit management
than ever. What matters more now is how to rein in selling,
general and administrative (SG&A) expenses, not tomention appropriate management control. It is crucial to
improve distribution efficiency by, for example, rethinking
the current delivery frequency using the centralizedadministration system for pharmacy operations Mizar, as
well as promoting planned delivery in coordination with
distribution centers. We must continue with more reforms
to maintain stable business management. These include
consolidating sales offices and promoting labor savingsand streamlined operations through digitalization with IoT
and other technologies.

23

TOHO HOLDINGS Integrated Report 2023

Disclosing what the next generation
should be like
The Medium-term Management Plan 2023–2025 shows
what the next generation following the current Mediumterm Management Plan should be like. Specifically, it
identifies three management targets: (1) a price bookvalue ratio (PBR) of 1.0 times or higher, (2) a return on
equity (ROE) of 8% more than, and (3) a dividend on
equity ratio (DOE) of 2% more than.
The current business environment involves uncertainties
surrounding a number of factors, including (1)developments in institutional reforms such as revisions to
the medical fee schedule, (2) what the Community-based
Integrated Care System will look like in 2025, and (3) thechange in mainstream new drugs from primary products
to specialty products. It is quite unclear how these
uncertainties will affect our revenues going forward. Thus,
no specific time has been set for achieving the threemanagement targets as of reporting. Yet we arecommitted to achieving these targets as soon as possible
to aim for greater heights. To this end, we will take various
measures by the end of the period of the Medium-termManagement Plan 2023–25.

Building a foundation with investment
for growth
As a specific measure, we plan to invest 38 billion yen
during the three-year period of the Medium-termManagement Plan 2023–25. Of the total investment, 20

Aiming for better capital efficiency andstable shareholder returns
As a measure to improve capital efficiency, we willpurchase company stock worth more than 30 billion yen
during the three-year period of the Medium-termManagement Plan 2023–25. We will make such purchasein a timely and flexible manner depending on the operating
environment. We have already announced the sharebuyback totaling 12 billion yen, with 6 billion yen
announced in May 31, 2023, and the remaining 6 billion
yen in September 15, 2023. As for the share buyback
announced in September, we are in the process of buying
back the 6-billion-yen worth of such stocks announced in
September, with a plan to cancel all the shares acquired.
Also, we have been steadily unwinding crossshareholdings every year, with the immediate target of
reducing our holdings to less than 20% of consolidated
net assets. To date, we have almost completed the saleof holdings in companies other than pharmaceuticalmanufacturers. We will unwind the remaining crossshareholdings – a majority of which are holdings inpharmaceutical manufacturers – in a phased manner
through sufficient dialogue with the partner companies
concerned.

Financial Highlights

Net sales

About TOHO HOLDINGS
Growth Strategy(Millions of yen)2022/32023/32023/32024/3Results

Results

Reference*

Initial plan

Value Creation Foundation to
Support Growth

Hiromi Edahiro

As for shareholder returns, we have set a target ofachieving a DOE of 2% or more to continue increasing
dividends stably without being affected by the annual
performance. The annual dividend for the fiscal year
ended on March 31, 2023, was 32 yen. For the fiscal year
ending March 31, 2024, we plan to pay an annual
dividend of 36 yen, up 4 yen from the previous year.
Going forward, we will continue aiming to improve ourcorporate value over the medium to long term. We will
also make continued efforts to enhance shareholder
returns.
The Company has been taking a number of actions todeal with its real estate holdings in the Daizawa area of
Setagaya-ku, Tokyo, where the Company was founded.
These actions in what is known as the Daizawa Project
include continued use, rebuilding, sale, and conversion
into profitable real estate. In December 2023, theCompany concentrated its headquarters functions –which had been separated into two locations: Daizawa
and Marunouchi – in Tokyo Midtown Yaesu. The idea will
be to enhance management efficiency, expedite thedecision-making process, and reduce total costs bycurtailing rents and other means.
To fulfill its mission as a social infrastructure company,
the Group will continue to work on its growth strategy anda range of measures designed to improve capitalefficiency, while primarily maintaining stable business
management, so as to win the appreciation of our
stakeholders.

1,266,171 1,388,565 1,392,117 1,325,000

Gross profit

108,687

110,814

114,366

113,400

Selling, generalandadministrative
expenses

96,15998,00098,000101,900

Operatingprofit12,527

12,813

16,365

11,500Ordinary
profit18,182

19,176

19,176

13,800

Profitattributableto owners ofparent13,37913,63013,63012,300

Corporate Data

To fulfill our responsibility as asocial infrastructure company,
we are committed toour growth strategy andcapital efficiency improvement
while primarily maintaining
stable business managementbillion yen will go to new businesses and tie-ups inpotential growth sectors and to growth sectors such as
the development of customer support systems, one of
our strengths; 12 billion yen to infrastructure needed tocontinue providing safe and secure medical supplies for
medical institutions and safe and medical care forpatients; and 6 billion yen to human capital that supports
all these activities.
Given that new drugs are expected to center on
specialty products, our investment in growth sectors willcontinue to focus on strengthening our alliance withbusinesses that have cutting-edge technology. We will
invest heavily on bio start-ups and build up thefunctionality of our Full Service. In fact, we have alreadyestablished an alliance with MICIN, Inc., a leading
company in the field of online medical examination. We
have also been working on joint research with the National
Institute of Advanced Industrial Science and Technology(AIST). Our investment in infrastructure will cover the costof enhancing the functionality of our distribution centersand core systems that have cutting-edge automation
technology in place. It will also cover the cost of building
and rebuilding sales bases in connection with theconsolidation of sales offices. Our investment in humancapital is designed to implement work-style reforms andenhance job satisfaction for employees. To these ends,
we will address a number of objectives, including
achieving a more competitive pay system with pay raises
and other means, further improving our work environment,
encouraging employees to acquire qualifications andcertifications, and offering more training opportunities,
which involves the reskilling of sales representatives.
We are committed to disciplined investment with theestablishment of the Investment Committee in November
2023. This committee deliberates investment proposals
before selecting them in light of a number of criteria,
including financial relevance, as well as profitability, growthpotential, and risks from the perspective of a businessstrategy.

*We have decided to include revenues from information service fees, etc. in net sales from thefiscal year ending March 31, 2024. Previously, such revenues were recorded as commission
income for non-operating income. They are important revenues earned from pharmaceuticalmanufacturers and other customers as part of the Group’s sales activities and are expected
to become more important going forward. The projected figures for the fiscal year ending
March 31, 2024, shown above, reflect this change to the presentation method. The actual
figures for the fiscal year ended March 31, 2023 do not reflect the change, whereas thereference figures for the same fiscal year do.

TOHO HOLDINGS Integrated Report 2023

24

COO Message

The pharmaceutical wholesaling sector
in a new age of change
The pharmaceutical industry is undergoing majorchanges. One such change is occurring in the category ofpharmaceuticals provided by pharmaceuticalmanufacturers as new drugs. For a long time, themainstream of prescription pharmaceuticals has been
primary products for what is known as lifestyle-relateddiseases such as high blood pressure. But now, themainstream of new drugs has shifted to specialty
pharmaceuticals, such as anticancer agents and orphan
drugs (pharmaceuticals for rare diseases). Some predictthat specialty pharmaceuticals will account for about ahalf of new drugs to be marketed in the future. These
drugs are limited in terms of the numbers of doctors whoprescribe them and patients who can receive them. They
are also characterized by general high prices and theneed for infrastructure for rigorous quality and distribution
control. In response to increasingly diversified modalities,
we need to constantly pursue supply stability and quality
control to contribute to healthcare delivery systems. To
this end, we should strive to build a more resilient andefficient distribution system and to negotiate unit prices
for individual products based on the value of eachproduct.
The Group has a corporate culture of opting tobecoming the company of choice by providing added
value that cannot be measured by price, instead of blindly
pursuing sales or scales as the top priority. This sets us
apart from our competition. This corporate culture proves
to be a major advantage in this age of change. Toward

25

TOHO HOLDINGS Integrated Report 2023

safe and secure pharmaceutical distribution, we haveupgraded spearhead distribution centers ahead of ourindustry peers. In organizing the Group, we haveintegrated core systems to build a mechanism for centrally
managing information as needed and leveraged, as acommon advantage of the Group, our proprietarycustomer support systems and services which have been
contributing to solving issues facing patients andhealthcare institutions and increasing the revenue for thelatter. I believe that these efforts have allowed us tocontinue and develop our business as a national
wholesaler in the age of radical change.

Driving business transformation under
the Medium-term Management Plan
2023-2025 “Create the Next Generation”
May 2023 signified the start of the three-year period of theMedium-term Management Plan 2023-2025 “Create the
Next Generation.” We embarked on organizational reformsin Pharmaceutical Wholesaling. Specifically, in July 2023,
we integrated the Pharmaceutical Sales Division and the
Diagnostic Reagents Sales Division into the Sales Division.
We also established the Sales Strategy Division to
integrate the functions formerly shared among the New
Business Promotion Department, the Supply Chain
Department, the Business Strategy Department, theRegional Medical Corporation Department, the Medical
Human Resource Department, etc. This new division istasked with administration, digital transformation (DX), andbusiness strategies designed to cope with diverse*Companion diagnostics: A diagnostic agent used to test in advance whether or not a patientis eligible for the use of a particular drug in order to further improve its efficacy and safety.

Upgrading customer support systems
and services
I believe that embracing collaboration with othercompanies holds the key to the future of our customer
support systems and services, which constitute one of
our strengths. Currently, some 10 million people use
Byoin-Navi, our web-portal site for finding hospitals andclinics, per month. Over 13,500 hospitals and clinics haveintroduced the Initial Examination Reservation Service, thelink to which is available on this site. Some 70,000
patients use this service per month. Our online medical
examination / dosing guidance system KAITOS is not only
capable of providing online medical examination anddosing guidance, the need for which has been on the rise
since the outbreak of the COVID-19 pandemic; it is also
capable of searching, and making reservations for,medical institutions that provide online examination incoordination with Byoin-Navi. In September 2023, weforged a capital and business alliance with MICIN Inc., aprovider of online medical examination services, etc.
Going forward, both the two companies will mutuallyprovide their own technologies to help enlarge the online
examination market. We will also introduce AI and othercutting-edge technologies in other customer support
systems and services through this business alliance.
For more efficient delivery, we also intend to make wider
use of the centralized administration system for pharmacy
operations Mizar, which is capable of predicting demand

About TOHO HOLDINGS

Sustainability is a priority issue for us as a company that
supports healthcare infrastructure. We have in place theSustainability Promotion Committee, which is comprisedof members from the sales, distribution, pharmaceutical,
and administration functions, to identify issues to beaddressed and come up with solutions to them. As thechair of this committee, I feel that sustainability is so
far-reaching – covering the environmental, social andgovernance aspects – that our employees may havedifficulty taking this issue as their own. The challenge fromthe perspective of environmental conservation is how toaddress the apparent trade-off between the delivery ofpharmaceuticals and the reduction of CO2 emissions. I
believe that our activity to improve delivery efficiency
through planned delivery and joint delivery constitutes partof collective efforts to reduce greenhouse gases. We arealso proactive in switching to an electricity pricing schemethat leverages renewable energy, in mounting solar
panels, and in introducing EVs. We work to raise theawareness of our employees so that they share or
empathize with the understanding that our business itself
leads to sustainability. Personally, I ask them to think
about what they can do in their daily work and life tosupport sustainability and act on it.
Looking ahead, we should pay attention to a wider
range of fields, including medical digital transformation(DX), home healthcare, and even pre-symptomaticmanagement. That is my understanding. It is thus
important to train talent well-versed in these fields. In fact,
we are enhancing our training programs specific todifferent job types and positions. We are also beefing up
our reskilling program designed for our MSs to upgrade
their skills, grow further, and create value. In collaboration
with the National Institute of Advanced Industrial Scienceand Technology (AIST), 24 employees are working on joint
research aimed at developing new technologies andputting them to use for the good of society.
I am convinced that company-wide collective efforts toimplement the Medium-term Management Plan will allow
us to grow further in a challenging management
environment. We will invest more in growth sectors, workwith a wider range of business partners, and develop
management resources we have inherited. We willcontinue to make our presence felt in places of medicalcare in the next generation.

TOHO HOLDINGS Integrated Report 2023

Growth Strategy

Senior Executive Managing Director, COO
President and Representative Director

Forging ahead with sustainability
management

Value Creation Foundation to
Support Growth

Akira Umada

based on past data and automatically placing orders.
Now more than 3,200 pharmacies have introduced Mizar.
This system allows them to avoid inventory shortage andto reduce delivery frequency. As it makes ordering
operations more efficient, the system also enables
pharmacists to dedicate more time for in-person
operations. Building on the capabilities and experiences
we have accumulated through the use of Mizar, we are
now considering a new mechanism for hospitals andclinics. Going forward, we will continue to help medical
institutions address the challenges they face, such as
overstock and dead stock. We will also continue to
conduct customer support business for better patient
convenience.

Corporate Data

With the collective effortof our employees,
we take on challenges
in the age of change tobuild up growth foundation
for the next generation

changes. In connection with this organizational integration
at the headquarters, 17 reagents sales offices (and thelike) were integrated with or transferred to thepharmaceutical sales offices and departments.
Two major factors were behind these organizational
reforms. One is a growing demand for point-of-care
testing in the medical practitioner market. This other is aprediction that demand will continue to grow in thehospital market for sets of pharmaceuticals – which are
made up of regents and therapeutic agents – that help
identify optimal therapies such as companion
diagnostics.* To date, we have had one organization forpharmaceuticals and another for reagents. Unifying thetwo can improve the efficiency of our sales and distribution
activities. If our marketing specialists (MSs) develop thecapacity to provide integrated support for health care,covering everything from pharmaceuticals and reagents tocustomer support systems, they will hopefully be able toreach potential customers who would otherwise beunapproachable.
Another objective of the organizational reforms is topromote work-style reforms and secure human resources.
Currently, one MS covers some 100 institutions. We will
rethink this arrangement and turn ourselves into anorganization that can accommodate a healthcare delivery
system that revolves around the concept area that thecentral government envisions (secondary medical area).
Moreover, we aim to be more flexible to accommodate
more diverse work styles while better clarifying the divisionof roles and exploring new roles. The intention is to reduce
the workload of individual employees and secure better
human resources amid a declining labor force.

26

Sustainability

Sustainability Promotion System

Based on the Mission Statement of “We shall live in harmony with society and our customers; together, we shall create
new values through the provision of original service; and we shall contribute to the medical care and well-being of people
around the world.,” we will work to solve social issues through our business and contribute to the realization of asustainable society as a business group engaged in the fields of medical, health and nursing care.

System of supervision by the Board of Directors

Climate change

Target Y 2025 target (short-term): 40% reduction inF
CO2 emissions compared to FY 2019
FY 2030 target (mid-term): 60% reduction in
CO2 emissions compared to FY 2019
FY 2050 target (long-term): Carbon negative*Scope1+2

Environment

 ater pollutionWImpact on theecosystem orporate management emphasizing
Cbiodiversity conservation and raising employee
awareness

Reduction of waste

Increasing
environmental impact

Appropriate disposal of industrial waste
Promotion of paperless operations throughDX (reduction target in Administration division:
80% compared to 2022)

Stable supply ofpharmaceuticals
and support for
BCP iscontinuation ofD
logistics functions intimes of disasterInsufficient supply of
drugs, mainly genericdrugs
Outbreak of a pandemicTermination of pharmacy
function due to disaster ontributing to the establishment of a systemC
to provide safe and secure medical care topatients in need of treatment
Stable supply of pharmaceuticals throughout
the supply chain

Consideration of
biodiversity

Improvement ofquality, safety andefficiency

S
SocialG
Governance27

Solve issues
related to access to
medical care

The Board of Directors monitors the Company’s engagement and target attainment performance with regard tosustainability and climate-related risks and opportunities, based on reporting from the Sustainability Promotion Committee.
It also supervises new measures and targets.
Important matters related to human capital are subject to approval by the Board of Directors. These include investments
concerning human capital, appointments and dismissals of officials and those of a higher position at key divisions anddepartments, and decisions on and changes to important standards for working conditions. Appointments and dismissalsof other employees and personnel management, as well as various measures, including those to advance theadministration of health management, are also reported to and supervised by the Board of Directors.

Sustainability Promotion Committee
The Sustainability Promotion Committee is comprised of members from the sales, logistics, and administration functions.
It identifies materialities (important issues), including matters related to climate change, and deliberates on oursustainability strategy, which involves, among other things, our actions for the Environment (E), Social (S), Governance (G),and digital transformation (DX). The results are reported to the Board of Directors.
Chaired by the Senior Executive Managing Director and COO, the Sustainability Promotion Committee conducts action
planning, target setting, progress control, and effectiveness assessment based on the Sustainability Policy. Every year, theCommittee assesses the impacts of climate change on our business, devises measures to cope with them, and sets
relevant targets, all in accordance with a policy aimed at minimizing the identified risks and seizing on the opportunities
involved. The Committee also deliberates on target attainment performance and reports the results to the Board of
Directors, which oversees it.
Sustainability promotion system
Board of Directors

 iversification of drugD
modalities and changes
in categories
Expansion of specialty
products
Medical safety andquality control inpharmacies

 stablish a specialty products, full serviceESupply of high-quality generic drugs

 hysician shortages andP
regional variations

 uilding Regional Healthcare Design
BRealization of Universal Medical AccessPromotion of medical DX through the use ofcustomer support systems

Maximize the valueof human capital hrinking workforce
SDiversity & Inclusion
Work-style reforms

Increase in the ratio of female managers(TOHO HOLDINGS’s target by early
2030: 30%、TOHO PHARMACEUTICAL’s
targets by 2026: 4%)
Creating a pleasant working environment

Human rights uman rights risks suchH
as labor, gender andprivacy espect for the fundamental human rights thatR
all people are born with

Coexistence withsociety stablishment ofE
Community-based
integrated care systems

 ontributing to a society where everyone canClive with peace of mind

Strengthening risk
management

 ccurrence of legal andO
compliance violations

Thorough compliance

Establishmentof a transparent
governance system eak governanceW
structure uilding a stronger corporate governanceBsystemFurther improving the effectiveness of theBoard of Directors

TOHO HOLDINGS Integrated Report 2023

SDGs

Value Creation Foundation to
Support Growth

Promotion of
decarbonization

Social Issues

Supervision,
instruction,
approvalGroup Compliance
Risk Management
Committee

Group Disaster
Countermeasure
Committee

Sustainability Promotion
Committee

Coordination

Coordination

ReportCommittee
chairparson

Senior Executive Managing Director, COO

Members

Sales, logistics, pharmaceutical affairs
and administration divisions

Coordination

Related departments

Group companies

Corporate Data

Important Issues

Growth Strategy

Materiality

E

We recognize sustainability action as one of our key managerial priorities. For this action, we have a corporate governancesystem in place with the Sustainability Promotion Committee playing a central role, subject to supervision by the Board of
Directors.

About TOHO HOLDINGS

Philosophy of Sustainability

Coordination

Risk management
The Group has the Risk Management Basic Rules in place to cope with any managerial risks – and situations that may
developed into them – and forestall such risks. The Risk Management Basic Rules and the related manual are regularly
reviewed for improvement by the Group Compliance and Risk Management Committee. The Committee, chaired by the
Representative Director and CEO, regularly engages in the early detection and assessment of risks, the improvement of
the system to prevent risks from emerging, and the development of measures to be taken when a risk emerges.
Risks related to sustainability and climate change are under the responsibility of the Sustainability Promotion
Committee, which identifies and assesses business risks and revenue opportunities arising from sustainability issues. The
Committee reports the results to the Board of Directors in cooperation with the Group Compliance and Risk Management
Committee and the Group Disaster Countermeasures Committee.

TOHO HOLDINGS Integrated Report 2023

28

Environment

Strategy

Our group engages in business activities while striving to preserve the environment.

Responding to Climate Change (Disclosures Based on TCFD
Recommendations)
The Company has positioned efforts to address climate change as one of our key issues, and the Sustainability Promotion
Committee is playing a central role in identifying climate change-related risks and opportunities, assessing their impact on
the Company, and considering specific measures to deal with them. The necessary data are being collected and analyzed,
and the content thereof are being disclosed in accordance with the information disclosure framework recommended by
the Task Force on Climate-related Financial Disclosures (TCFD)*.

About TOHO HOLDINGSThe Group recognizes sustainability action, including climate action, as one of our key managerial priorities supply chain
disruptions and reduced capacities to supply drugs due to intensifying natural disasters pose a significant business risk for
us – an entity responsible for the distribution of vital and other drugs. They also pose a risk for society at large. The Groupis characterized by low Scopes 1 and 2 emissions (emissions released directly from it) and high Scope 3 emissions(emissions released from its supply chains). With this understanding, we have conducted a scenario analysis to assessclimate impacts on our business and devise measures to cope with them.
Scenario analysis

https://www.tohohd.co.jp/en/csr/activity/climatechanges*TCFD: Task Force on Climate-related Financial Disclosures; The Group expressed its endorsement of the TCFD recommendations on June 6, 2023.

Classification

Policy/Legal

Carbon tax

Risk management
Electricity priceTransition(1.5°C scenario)

1 Risk identification

We identify climate-related risks in accordance with climate-related strategies. We identify the impacts of climatechange on our business as well as the risks of natural disasters that may be caused by climate change and therisks of social and other problems. Information on climate-related risks thus identified is shared with the Group
Compliance and Risk Management Committee and the Group Disaster Countermeasures Committee.

toMid- tolong term

Large

MediumMid- tolong term

Technology

 igher costs due to measures taken toH
reduce emissions

MediumMid- tolong term

Evaluation bystakeholders

 egative evaluation by suppliers and societyNat large, as well as stakeholders

MediumShort tomid-term

Extreme weather
events such as
cyclones andfloods igher operational costs associated withH
lower sales due to the increased frequency
and intensity of storms and floods

Increased
intensity andfrequency of
extreme weather
eventsImpact on the procurement and operations
due to the increased frequency and intensityof storms and floods

MediumMid- tolong term

Chronic

Averagetemperature
increase igher operational costs due to rising meanHtemperatures

Large

Mid- tolong termMarketMore efficient useof resources emand for more efficient delivery throughD
planned delivery and measures to reduce
misdeliveries

MediumShort tomid-term

 emand for distribution infrastructureDthat allows for stable supply (for BCP andother purposes) in the face of rising mean
temperatures

MediumShort tomid-term

 emand for new products in the face of risingDmean temperatures

MediumShort tomid-term

4 Target setting

Based on the risk assessment, we set targets to cope with climate risks.
5 Reporting and monitoring

Opportunities

We continuously review climate risk management plans, the risks to be addressed in times of emergency, and theset targets according to the progress and performance in attaining the targets for the purposes of improvement.

MediumHigher costs due to higher prices of fossil fuelPhysical(4°C scenario)

6 Risk review

 he prices of services and products andT
operational costs go up owing to higher
electricity prices associated with wider
renewables deployment

Oil price

Acute

The Sustainability Promotion Committee regularly reports on performance in relation to the climate targets to theBoard of Directors. The Board of Directors supervises the measures to cope with the risks as well as the set
targets. It also monitors progress.

Mid- tolong termMid- tolong term

We assess the potential impact of the identified risks and consider what measures to take according to theirorder of importance. Specifically, we consider measures to avert the risks according to their incidence and theextent of their impact. We also appraise the effectiveness of such measures and estimate the costs involved.

We design climate-related measures.

MediumMediumReputation

3 Development of climate-related measuresIncreases in procurement and operationalcosts due to the introduction of carbon taxes

 perations are suspended owing to a powerO
supply shortage associated with wider
renewables deployment

MarketRisks

2 Risk assessment

Timeframes*2

Sub-category

Governance···P28

The process of identifying, assessing, and managing risks related to climate change involves the following steps:

Impact*1

Products/
Service

Averagetemperature
increase

Growth Strategy

Major category

Risks and Opportunities

Value Creation Foundation to
Support Growth

We recognize climate-related action as one of our key managerial priorities. For this action, we have a corporate
governance system in place with the Sustainability Promotion Committee playing a central role, subject to supervision by
the Board of Directors.

Assessment/Item

Mediumto

Short tomid-term

Large

Corporate Data

GovernanceCategory*1 Consequence is qualitatively assessed in terms of probability and severity of impacts.
*2 Time frame: short term (up to 2025), mid-term (up to 2030), long term (up to 2050)

Risk management···P28

29

TOHO HOLDINGS Integrated Report 2023

TOHO HOLDINGS Integrated Report 2023

30

SocialEnvironment

Metrics and Targets

60%
reduction

Carbonnegative

Human resources development policy
With the corporate slogan “Total Commitment to Good
Health” as a compass, the Group will develop the humanresources necessary for the Group by (1) humanresources/training, (2) development of the personnel
system, and (3) work-style reforms.

41,20730,00020,00010,00002019 (base year)

2025

2030

2050

Measures to Achieve Goals
Procuring renewable energy: Switching the existing electricity plan to a renewable energy plan
Creating energy: Installation of own solar panels
3 Introduction of EV vehicles and installation of EV charging spots
1

Efficient deliveries
About 60% of the stores of PHARMA MIRAI INC. reduced the number of deliveries to less than twice a week. We are also
working to reduce the number of sales and delivery vehicles by replacing them with low-emission vehicles, such as hybrid
vehicles and light vehicles, and by using direct delivery services from distribution centers to customers without going throughsales offices. In some regions, MS is conducting demonstration experiments using public transportation and bicycle rental.

Management of energy consumption at logistics centers using BEMS
The Company’s mission is to provide a stable supply of pharmaceuticals. To ensure safe and secure delivery ofpharmaceuticals at any time, we have established distribution centers throughout Japan. Distribution centers have many
air conditioners and a lot of lighting equipment and use large material handling equipment and robots. This results inhigher electricity consumption than other business offices. For this reason, we have introduced
BEMS* at our distribution centers to manage the consumption.
In addition, robots at TBC DynaBASE are operated also by utilizing night-time electricity, andthe head part, where the robot vacuums products, is a power-saving type that stops vacuumingwhen a certain amount of power is generated. The automatic warehouse is a regenerative energy
type that is charged when the conveyor brakes. The system is also used at TBC Hiroshima and
TBC Saitama.

The human resources that the Group considers necessary are as
follows.
A person who has a high sense of ethics and always takes basic
actionsA person who thinks and learns by himself/herself and is not afraidof failure but is willing to take on challenges through free-thinking
A person who can make high-quality proposals and communicate
well with others
A person who can collaborate with business partners (customers,
municipalities, etc.) and other departments in the company
A person who can work globally

In-house environment improvement policy

2

Efforts to Reduce Environmental Loads

About TOHO HOLDINGS

40%
reduction(t-CO2)40,000

Based on the belief that employees are the Company’s assets, or “human capital,” the Group is committed to maximizing
the value of its human capital by developing the human resources needed by the Group, improving its personnel system,and promoting work style reforms, while carefully passing on its history of growth through human capital and its corporate
culture that respects the out-of-the-box idea of employees. The Group has placed no restrictions on the promotion of
women, foreign nationals, and mid-career hires to management positions and has been striving to ensure diversity. In theMedium-term Management Plan 2023-2025 “Create the Next Generation”, we plan to invest 6 billion yen in human capital.

Growth Strategy

 hort-term target: 40% reduction in CO2 emissions
S
compared to 2019
Mid-term target: 60% reduction in CO2 emissions
compared to 2019
Long-term target: Carbon negative

Human resources/Training

 nhanced training by rank and job classification
E
Providing opportunities to take on challenges such as participating in projects or being seconded
outside the company
Reskilling and assistance in obtaining personal qualifications
Development of professionals

Development of thepersonnel system iversity & Inclusion
DUtilization of seniors, Mid-career recruitment of excellent human resources
Strengthen career development
Staffing with the right people in the right places

Work-style reforms

 oing paperless through DX promotionGOutsourcing of routine work
Enhancement of work styles and systems to accommodate employees’ life events
Further improvement of the workplace environment

Value Creation Foundation to
Support Growth

CO2 emissions···P47

Maximize the Value of Human Capital

Setting short- to medium- to long-term targets:
Reduction of CO2 emissions (Scope1+2)

Human resources/Training
Internal project “MAXIS2021”“MAXIS 2021,” a project team led by young employees, is promoting internal reforms, and the customer support, sales,
logistics, internal operation work, and others teams are discussing solutions. As of the end of March 2023, 63 employees
participated in the project.

Corporate Data

As part of its efforts to reduce its environmental footprint,
the Group uses greenhouse gas emissions (Scope 1, 2, 3)
as key indexes to identify the fields with large emissions
and the targets for reduction. In light of changes in thesocial environment, we set our mid- to long-term targets
for reduction as far as Scope 1 and 2 emissions, which
we directly release. We are also considering specificreduction targets for Scope 3 emissions as well in the
belief that efforts to reduce such emissions are also
important toward the goal of carbon negative. Goingforward, we will work more closely with our suppliers andcustomers to advance efforts to reduce greenhouse gas
emissions.

Joint research with AIST
We established a joint research laboratory with the National Institute of Advanced Industrial Science and Technology (AIST)in April this year, and eight researchers on loan from the Group and 16 in-house researchers are conducting joint research
to solve issues related to medical access and to implement new technologies, systems, and services in society.

*Building and Energy Management System

Procuring renewable energy
As part of our efforts to reduce our environmental impact, our group is procuring renewableenergy. Since December 2023, we have been using demand response to replace the electricity
used in TBC Hokuriku with renewable energy.

Acquisition of ISO14001 to continuously improve energy conservation and waste reduction activities
We have acquired ISO 14001 certification and are making continuous improvements.
Plant at KYOSOMIRAI PHARMA CO., LTD. has acquired ISO 14001:2015 certification, an international standard forenvironmental management systems, in order to continuously improve activities of energy conservation and waste reduction.
31

TOHO HOLDINGS Integrated Report 2023

Major Initiatives in the Current Fiscal Year
Monthly compliance training for all employees: attendance rate 100%Monthly training the Antimonopoly Act for sales representative: attendance rate 100%
TOHO PHARMACEUTICAL CO.,LTD. Reskilling training for MS: trainee 751 persons
Training for new managers and new sales managers: trainee 85 persons
Training for sales director: trainee 134 persons

TOHO HOLDINGS Integrated Report 2023

32

SocialFoster a diversified business culture by utilizing a wide variety of human resources regardless of people’s gender,
nationality, etc.
The Group has improved the program to develop human resources who are capable of creating customer value. With
broad utilization of human resources regardless of gender, nationality, age, etc. and respecting individualities, capabilities
and teamwork of employees, we nurture a free-spirited corporate culture and work on human resources development,
aiming at mid- and long-term enhancement of corporate value through continuing sustainable growth and establishmentof our corporate brand.
In our group, there are fields where women work mainly, such as pharmacists, registered dietitians and call centers. The
customer support system developed independently by our company requires various perspectives and reflects theopinions of various human resources in our company, including women. We also believe that by incorporating the opinions
of a wide range of human resources regardless of gender, nationality, age, etc., we will create new awareness about thedevelopment of existing businesses.

TOHO HOLDINGS CO.,LTD.

TOHO PHARMACEUTICAL
CO.,LTD.

2023/3

4,649

4,691

4,675

Ratio of female
managers (%)

19.3

20.3

21.5

Number of female
employees

1,905

1,859

1,861

3.5

3.5

4.0

Number of female
employees

2,553

2,592

2,587

Ratio of female
managers (%)

44.3

44.9

47.5

Number of female
employees

100

102

90

Ratio of female
managers (%)

10.8

11.4

16.5

Number of female
employees

719

728

749

Ratio of female
managers (%)

3.8

3.7

4.3

Promoting the employment of persons with disabilities
Statutory employment rate of persons with disabilities has been raised to 2.3% from March 2021. At TOHO HOLDINGS
CO.,LTD., the rate was 3.63% as of the end of March 2023. Pharmacy for Pharmacies, a pharmacy of PHARMA MIRAI
INC., which is our dispensing pharmacy subsidiary, was given a letter of gratitude from the Setagaya Ward and the
Setagaya Ward Council for Employment Promotion of Persons with Disabilities for actively working to hire persons withdisabilities and contributing to their independence and local welfare. We will continue to strengthen this initiative in future.

Improvement of the workplace environment
Daizawa projectIn December 2023, we consolidated the functions of our head office, which had been divided into two locations, one in
the Daizawa area and the other in the Marunouchi area, into the “Tokyo Midtown Yaesu” as the Daizawa Project. In linewith this, we are working to revitalize the workplace by improving management efficiency, making prompt decisions, andcreating communication. In addition, we have introduced a free address system and are implementing work style reformand health and productivity management by making greater use of telework and other diverse work systems.
Corporate nursery school
As a part of our work-life balance initiatives, we opened the Mirai Nursery at the TBC
Sapporo Distribution Center and have operated it since October 2016 to reduce theburden of employees with infants and create a more comfortable working environment. We
participate in the Support for Balancing Work and Childcare promoted by the national
government, and will continue working to create an environment where employees canwork flexibly and actively.

We set “Total commitment to good health” as our group’s corporate slogan.
Protecting employees’ health is our top priority, as they are the ones who create customer value to raisepatient’s satisfaction and contribute to promoting people’s health and well-being. Employees’ health is not only
the cornerstone of their own and their families’ happiness, but also the base for the Company’s sound growth.
Hand in hand with employees, we pursue Health and Productivity Management for health maintenance andpromotion and build a work environment that protects their physical and mental health and keeps their morale inwork high.

Growth Strategy

2022/3Atsushi Udoh
TOHO HOLDINGS CO.,LTD. Representative Director, CEO

Value Creation Foundation to
Support Growth

Dispensing Pharmacy

2021/3
Number of female
employees

Ratio of female
managers (%)

 arge Enterprise Category: TOHO HOLDINGS and TOHO PHARMACEUTICAL andL
J.MIRAIMEDICAL
Small and Medium-Sized Enterprise Category: Nextit Research Institute.

Health Fair for Employees

Stretch signs in the office

Dissemination of health information in the office

Major Initiatives
Implementation of a health fair Implementation of health-related training Stretch signs in the office
Review of vacation days full five day work week/Increase in the number of summer vacation days
Dissemination of health information in the office

Corporate Data

Pharmaceutical Wholesaling

As a corporate group active in medical, nursing and healthcare fields, we are committed tocreating an environment in which each and every employee can face his or her own health.
Our group has been certified as a “Good Health Management Corporation 2023.”

Health and Productivity Management Declaration

Trends in Number of Female Employees and Ratio of Female Managers

Consolidated

Health and Productivity Management
About TOHO HOLDINGSDiversity & Inclusion

Human Rights
Under the corporate slogan “Total commitment to good health,” TOHO HOLDINGS group aims to achieve sustainablegrowth and increase corporate value by fulfilling its social mission of providing a stable supply of pharmaceuticals.
Recognizing that respect for human rights, which are the fundamental rights that all people are born with, is an importantsocial responsibility that we must fulfill as a company, we have formulated the Group’s Human Rights Policy.

Human Rights Policy

https://www.tohohd.co.jp/en/csr/activity/humanrights

33

TOHO HOLDINGS Integrated Report 2023

TOHO HOLDINGS Integrated Report 2023

34

SocialCoexistence with Society

Quality control
Quality control with international standards
The Logistics Division of TOHO PHARMACEUTICAL CO.,LTD. has acquired ISO 9001:2015 certification (an international
standard for quality management systems for products and services) and conducts quality control (certification scope:
TBC DynaBASE, TBC Hanshin, TBC Saitama and TBC Hiroshima). In addition, TBC Saitama, TBC Hiroshima and TBC
DynaBASE have established logistics systems that comply with Good Distribution Practice (GDP) Guidelines forpharmaceuticals, and are working to further strengthen them.
Establishment of an advanced temperature control system
We have established optimal distribution temperature control systems according to thetemperature zones of pharmaceuticals. With regard to specialty pharmaceuticals that
require strict temperature control, use of the constant-temperature transportation device
SALM allows specialty pharmaceuticals to be stored in hospitals and clinics after delivery
from distribution centers with no need for repackaging. Since the temperature in the box isrecorded continuously for more than one month, the quality is ensured, and thus the
economical use of the pharmaceuticals can be achieved.

Observation agreements with local governments, Dementia supporter
We have concluded a community watch agreement with local
governments. A total of 301 municipalities* have introduced our online
service Dokoshiru Dengonban. We have developed this custodyinformation-sharing service to allow senior citizens with dementia andpersons with disabilities, as well as their families, to live with peace ofmind in the community. To use this service, one needs to register andattach a dedicated QR code to his or her clothes or belongings. If theregistered user gets lost and has the code read with a smartphone orsome other device, the system will automatically send an email notifying
the user’s family, the municipality the user lives in, and other persons
concerned of the user’s whereabouts.
We also organize dementia cafes and health fairs at dispensing
pharmacies and provide our employees with workshops for training
dementia supporters.

About TOHO HOLDINGS

We are working on quality control and BCP measures to ensure a stable supply of pharmaceuticals.

Growth Strategy

Initiatives through Business Activities* as of December 31, 2023

The constant-temperature transportation
device “SALM”

Supply of high-quality generic drugs
While the use of generic drugs needs to be expanded, there have been frequent
recalls for GMP violations, causing confusion and anxiety in the market.
KYOSOMIRAI PHARMA CO.,LTD. has introduced highly accurate testing equipment
and established its own strict standards to check quality such as elution and purity
to ensure the supply of high-quality generic drugs.

Value Creation Foundation to
Support Growth

Promotion of medical safety and quality control at pharmacies
We have established an audit structure using machines, including the introduction of an audit system. In addition, in orderto promote drug therapy appropriately and safely, and to bring human errors as close as possible to zero, we report andshare our experiences of near misses that very nearly caused an accident. By analyzing these cases and implementing
solutions, we are trying to reduce the causes of accidents themselves and improve medical safety. PHARMA MIRAI INC.
is conducting more extensive research in collaboration with the University of Tokyo.

Support for sports and art in Setagaya, where thecompany was founded

Consistent BCP (Business Continuity Plan) is required for drug distribution. Even when there is a natural disaster or an
epidemic of infectious disease, we must deliver drugs without delay. For this reason, the Group has developed BCPs
based on various scenarios.

Corporate Data

Preparation of BCP for natural disasters

Official partner of a women’s soccer club
Sfida Setagaya F.C. was established in 2001 with a mission to provide an
optimal environment for women with a pure passion for soccer. The
Company has been supporting the club as an official partner since 2013
out of sympathy with its philosophy and commitment to building anamicable community through the sport.

Supporting the program for promoting performing arts
The Company supports the program for promoting performing arts planned by the SETAGAYA PUBLIC THEATER. The
SETAGAYA PUBLIC THEATER develops various projects with the aim of familiarizing many people with performing arts.
In the program Creating Future Performers for supporting young
people who will lead the next generation, junior high and senior highschool drama club members interested in performing are invited to see
performances sponsored by the SETAGAYA PUBLIC THEATER for a
special fee of 1,000 yen. Our support for the local community also
includes assisting the Setagaya Art Town festival, which is held in Octoberevery year, and sponsoring Setagaya Shimbun (local newspaper).

 edundant host computer and warehouse management system
RFormulation of the Kyoso Mirai Group Disaster Countermeasures
Manual (revised in 2021)
Establishment of the Kyoso Mirai Group Disaster Countermeasures
Committee and holding of meetings regularlyInstallation of in-house power generation facilities
Deployment of emergency bikes
Installation of disaster priority phones, satellite phones, etc.
Use of advance notification system for emergency vehicles, etc.
Introduction of safety confirmation system, etc.
Emergency bikes

In-house power generation facilities
Photo: Shinji Hosono

35

TOHO HOLDINGS Integrated Report 2023

TOHO HOLDINGS Integrated Report 2023

36

Corporate GovernanceDirectors

Directors Skill Matrix

About TOHO HOLDINGSThe Company’s Skill Matrix classifies the skills required of directors into 9 categories.
The skills possessed by directors are listed below.
Experiences and Expertise

8

6

1

Hiromi
EdahiroRepresentative
Director, CFO

Akira
Umada

Senior Executive
Managing
Director, COO

Takeo
Matsutani

Director

Masami
Tada

Director

KentaroMurakawa

Director

YoshiakiKamoyaOutside Directorof Audit andSupervisory
Committee
MemberShunsuke
WatanabeOutside Directorof Audit andSupervisory
Committee
Member

Hidehito
Kotani

Outside Directorof Audit andSupervisory
Committee
MemberSales/
Customer
support

IT/Logistics/
Quality
management

Pharmaceutical
Humanaffairs/
Compliance/
resources/
Government
Risk
Labor
and publicmanagement
management
policyFinance/
Accounting

Public/Investor
relationsGlobalGrowth Strategy

Representative
Director, CEO

9

7

5

2

AtsushiUdoh

Corporate
management

3

Corporate Data

4

Position

Value Creation Foundation to
Support Growth

Name

Director
1

Atsushi Udoh

2

Representative Director, CEO5

Masami Tada

Hiromi Edahiro

3

Representative Director, CFO

6

Director, General Manager
of Pharmaceutical Affairs
Headquarters and Quality
Assurance Department

Akira Umada
Senior Executive Managing
Director, COO
President and Representative
Director of TOHO PHARMACEUTICAL CO.,LTD.

Kentaro Murakawa
Director, in charge of Pharmaceutical Manufacturing
and Sales BusinessOutside Director
7

Yoshiaki Kamoya
Outside Director (Audit andSupervisory Committee
Member)37

TOHO HOLDINGS Integrated Report 2023

8

Shunsuke Watanabe
Outside Director (Audit andSupervisory Committee
Member)9

Hidehito Kotani
Outside Director (Audit andSupervisory Committee
Member)4

Takeo Matsutani

Transition of the Composition of Directors

Director
2019/72020/72021/72022/72023/7

Number of directors

19

19

14

9

9

Number of outside
directors (ratio)5(26.3%)

5(26.3%)

5(35.7%)

3(33.3%)

3(33.3%)

Number of female
directors (ratio)

1(5.3%)

1(5.3%)

2(14.3%)

1(11.1%)

1(11.1%)TOHO HOLDINGS Integrated Report 2023

38

Corporate Governance

Board of Directors

Company with Audit and Supervisory Committee

Director

9 Directors (of which 3 Independent Outside Directors who are Audit and Supervisory Committee Members)

Term of office of Director

1 year (2 years for Directors who are the Audit and Supervisory Committee Members)
Audit and Supervisory Committee, Group’s Management Committee, Nomination and Compensation

Committees

Committee, Investment Committee, Sustainability Promotion Committee

Basic Policy and System for Corporate Governance
The Company and the Group are committed to enhancing the corporate governance as one of the most importantmanagerial tasks, because we recognize that it is important to enhance the auditing and supervisory functions concerning
corporate management, achieve full compliance, and improve the transparency of management so that we can sincerely
fulfill our responsibilities towards various stakeholders, including customers, business partners, shareholders, employees,
and government entities, and enhance our corporate value as sustainable companies.

In order to achieve efficient and prompt group operations, the Company appoints Independent outside directors who havediverse viewpoints, experiences, and high-level skills, including business executives.
At the Board of Directors, these members hold discussions based on their individual knowledge, experiences, andabilities, make legal and managerial decisions,
Attendance of directors (excluding those who are the Audit andand supervise business execution. The
Supervisory Committee members)Company’s Board of Directors consists of 9
Name
Attendance at the Board of Directors meetings
persons (of which 3 Outside Directors who are
the Audit and Supervisory Committee
Atsushi Udoh
13/13 (100%)
Members). As a general rule, the Company
Hiromi Edahiro
13/13 (100%)
holds regular meetings of the Board of
Akira Umada
13/13 (100%)
Directors every month, and by holding special
Takeo
Matsutani
13/13 (100%)
meetings of the Board of Directors as needed,
Masami Tada
13/13 (100%)
the Company ensures the proper execution ofoperations and makes swift decisions.
Kentaro Murakawa
10/10 (100%)*

About TOHO HOLDINGS

Institutional design*Number of meetings held since the assumption on June 29, 2022

Growth Strategy

Corporate Governance Overview

Audit and Supervisory Committee

Please refer to the following web site for the details.

Governance Structure of TOHO HOLDINGS
Please refer to the diagram below for the Company’s governance structure.

Director (male)

Director (female)Outside Director (male)

Shareholder’s meeting
Appointment/Removal

Board of Directors
Audit, Supervision

Appointment/
RemovalReport, Statement(3 Independent Outside Directors of Audit
and Supervisory Committee Members)

ReportCoordination

Accounting auditor(Auditing company)

Appointment/
Removal,Supervision
Advisory
ReportAdvisory

ReportAdvisory

Proposal,ReportAudit,
Supervision

ReportInvestment
Committee

Sustainability
Promotion
Committee

Instruction,
Supervision

Accounting audit

Nomination
andCompensation
Committee

Attendance at the Board of
Directors meetings

Attendance at the Audit andSupervisory Committee meetings

Yoshiaki Kamoya

13/13 (100%)

8/8 (100%)

Shunsuke Watanabe

13/13 (100%)

5/5 (100%)*

Hidehito Kotani

9/10 (90%)*

5/5 (100%)*

Group’s Management Committee
In order to realize efficient decision making at meetings of the Board of Directors, the Company has established the GroupManagement Committee consisting of directors and corporate officers as well as directors and corporate officers of theGroup companies, as an organization tasked with deliberating in advance the proposals that are to be submitted to theBoard of Directors, and holds regular meetings every month. The Company ensures the proper execution of operations bythoroughly deliberating on relevant issues at this Group Management Committee.

Nomination and Compensation Committee

Proposal,Group’s
ReportManagement
Committee

Name*Number of meetings held since the assumption on June 29, 2022

Audit and Supervisory Committee(9 Directors of which 3 Outside Directors)

Attendance at the Board of Directors meetings and the Audit andSupervisory Committee meetings by directors who are Audit andSupervisory Committee Members

Representative Director

ReportCoordination

ReportCorporate Data

Appointment/Removal

The Audit and Supervisory Committee receives
reports mainly from directors concerning theexecution of operations and checks important
decision-making documents. Directors who are
Audit and Supervisory Committee Members
conduct strict audits by conducting
investigations of the status of business andassets in accordance with the audit policy andthe division of duties.

Value Creation Foundation to
Support Growth

https://ir.tohohd.co.jp/en/management/corporategovernance.html

In order to strengthen the independence and objectivity, the Company has established the voluntary Nomination andCompensation Committee as advisory committees to the Board of Directors. Committee is chaired by an outside director
and the majority members of committee are outside directors.

Audit, Supervision

Investment Committee
Executive Director
Corporate officer

Instruction, Supervision

Group auditing office

We have in place the Investment Committee, an advisory committee to the Board of Directors, to examine investment
proposals before selecting them. The Investment Committee is comprised of members from finance, legal, sales,
pharmaceutical affairs, and other divisions as well as of external experts. It is chaired by the Representative Director, CFO.

Internal audit

Sustainability Promotion Committee
Each department and group company

39

TOHO HOLDINGS Integrated Report 2023

Please refer to page 28 for the Sustainability Promotion Committee.

TOHO HOLDINGS Integrated Report 2023

40

Corporate GovernanceEvaluation method
Target: 6 internal directors and 3 independent outside directors
Evaluation method: Questionnaire survey for the target persons
Question content
1. Matters related to the composition of the Board of Directors
2. Matters related to operational status of the Board of Directors
3. Matters related to agenda deliberations by the Board of Directors
We evaluate each item in these categories. The questionnaire form also includes a box in which the respondent isfree to write comments. The idea is to collect diverse opinions.

Based on comprehensive consideration of management strategy and of establishing, maintaining, and strengthening
relationships with business partners, the Company holds stocks which are considered to contribute to the enhancementof the Group’s corporate value over the medium to long term. The Company reviews regularly the appropriateness ofthese stocks by carefully reviewing whether the benefits, etc., associated with holdings are in line with the above policy foreach stock held, and taking measures such as selling shares for which the appropriateness of holdings cannot berecognized. With regard to cross-shareholdings, we are continuously reducing them after sufficient dialogue with thecompanies in our business partners. The Company exercises its voting rights after comprehensively judging various
viewpoints including impacts on the Company, while taking into account whether exercising such voting rights will lead tothe enhancement of the corporate value of the invested companies over the medium to long term and conducting
dialogues with counterparties in cases where it is deemed that there is sluggish business performance or serious
compliance violation, etc.

About TOHO HOLDINGS

To analyze and evaluate the effectiveness of the Board of Directors as a whole, we conducted a questionnaire survey of all
directors (including the directors who are Audit and Supervisory Committee Members) with regard to the composition,
operational status, and framework of the Board of Directors as well as agenda deliberations by it. The analysis andevaluation results are reported to the Board of Directors’ meeting in June 2023.

Cross-shareholdings

Investment shares held for purposes other than pure investment(million yen)(%)

100,000

40.0

Growth Strategy

Evaluation of the Effectiveness of the Board of Directors

Summary of evaluation results
31.6
75,00029.0

67,62630.0

29.0
68,83367,09823.2
20.7

55,90050,00020.0

50,368

Value Creation Foundation to
Support Growth

The evaluation results mentioned above confirmed that the Company’s Board of Directors was effective in terms of
its roles and arrangements.
In response to the issue of too many observers attending the Board of Directors’ meeting, one of the findings ofthe effectiveness evaluation of the previous fiscal year, we changed the composition of the Board of Directors sothat its meetings are attended only by directors as a matter of principle.
In addition, the effectiveness evaluation of 2023 found that the Board of Directors was comprised of an
appropriate number of members, that it met with appropriate frequency, that there was an environment conducive
to constructive discussions, and that discussions were made in a free and open-minded manner.
Future initiatives
The Company holds a regular meeting with independent outside directors to exchange information and deepen
mutual understanding. It also works to reinforce information-sharing arrangements by allowing the members of the
Audit and Supervisory Committee to attend, as observers, the meetings of the Group Management Committee andof the boards of directors of operating companies.
In view of the effectiveness evaluation results, we will appropriately address the items on which advice orcomments were put forward. The aim is to make the Board of Directors more effective and to further improve ourcorporate governance.

25,00010.0

00
2019/3

Amount2020/32021/32022/32023/3

Ratio to net assets

Corporate Data

*The above amounts include unlisted shares. *The Company does not have any shares deemed to be held.

Remuneration Structure of Directors
With the aim of achieving sustainable growth of the Company and mid-to-long term corporate growth, the Company’s
remuneration for directors is determined in consideration of the Company’s performance and stock price, etc., in order topromote the execution of operations consistent with the Company’s mission statement and management strategy and tostrengthen the function of supervising the execution of operations.
The remuneration structure of the company’s directors (Excluding those who are Audit and Supervisory Committee
Members) consists of monthly remuneration, stock compensation (stock options and restricted stock compensation
system) and directors’ bonuses.
The remuneration structure of directors who are Audit and Supervisory Committee members consists of directors’
bonuses and monthly remuneration consisting of base remuneration and director’s remuneration in consideration of
performance and stock prices.

Number and Amount of Cross-shareholdings Sold
Fiscal year ended March

Number of issues

Amount (million yen)

2020

52

2,298

2021

16

7,391

2022

15

5,195

2023

12

5,808

*Including a partial sale.

41

TOHO HOLDINGS Integrated Report 2023

TOHO HOLDINGS Integrated Report 2023

42

Corporate GovernanceInternal Control System

Promotion of Compliance
The Company has established the “Basic Rules on Risk Management” in order to cope with any managerial risks as wellas situations that may develop into them and forestall such risks. Based on these rules, the “Group Compliance Risk
Management Committee” is held twice a year to promote compliance and to avoid risks that could have a material
impact on management. The Committee is chaired by the Representative Director, CEO, and collects and evaluates
information on our group’s management risks, identifies significant risks, and reviews avoidance and minimization
measures. Please see the figure below for the structure of the Company’s Group Compliance Risk Management
Committee.
In addition, in accordance with the “Compliance Promotion Regulations” and the “Anti-Bribery and Corrupt Practices
Regulations”, we are working to further ensure compliance.
In addition, our group requires compliance training for all employees. All sales staff has to attend training on the
Antimonopoly Act, and sales managers and department heads act as instructors to promote compliance.
In the fiscal year ended March 2023, attendance rate of the monthly compliance training for all employees and themonthly training on the Antimonopoly Act for sales staff were 100%.

About TOHO HOLDINGSThe Company is faithfully committed to the Basic Policy on Internal Control System to ensure the legality and efficiency ofits business operations and undertake risk management practices. It also revises this policy as appropriate in response tochanges in the socioeconomic climate and other aspects of the environment surrounding the Company so as to improveand enhance the policy.
Arrangements for ensuring proper operations of subsidiaries involve the Management Rules of the Affiliated Companies.
Under the rules, we assess the business conditions of major subsidiaries and hold prior consultations on importantmatters as part of our efforts to improve management efficiency and ensure operational propriety as a corporate group.
We make efforts to increase intra-group coordination. For example, we allow directors of subsidiaries to attend theregular meetings of major meeting bodies of the Company and to receive reports on the execution of duties. We also build
up information on the managerial status of the Group. Moreover, we share compliance practices in the meetings of theGroup Compliance Risk Management Committee.

Development of Consultation and Reporting Desk
Establishment of an internal reporting system

Growth Strategy

Building on the Group’s corporate slogan and Mission Statement, the Company has established the “Code of Ethics ofthe Kyoso Mirai Group”, which lays down action guidelines to be followed by all employees in conducting their businessactivities.
This code of ethics identifies the Antimonopoly Act and the Act on Pharmaceuticals and Medical Devices as two of theessential laws to be strictly observed. We take advantage of the code of ethics to provide training and mount information
campaigns, among other awareness-raising and knowledge-building efforts across the Group.

The Company has established an appropriate and effective system for internal reporting in order to prevent and detectfraud within the company at an early stage. In the operation of the desks, it is prohibited to treat the whistleblower, etc.
disadvantageously on the grounds that they have made a report.
Internal
contact

The Toho Hotline has been set up to allow employees to report directly via the internal intranet.

External
contact

A lawyer’s office has been established as a contact point to ensure fairness and anonymity for
whistleblowers.

Value Creation Foundation to
Support GrowthEstablishment of the Code of Ethics

Structure of Group Compliance Risk Management Committee
Board of Directors

Sustainability Promotion
Committee

Group Disaster
Countermeasures Committee

43

TOHO HOLDINGS Integrated Report 2023

coordination

coordination

Supervision/
Instruction/
Approval

The Company responds positively to dialogue (or interview) requests from shareholders or investors, which is specificallydone by the Corporate Communications Department/the Investor Relations Department. Also, the representative director,
a person responsible for information disclosure and outside directors directly engage in dialogue as often as possible tosome demands from shareholders or investors in the form of interview.
The Company has adopted the following policies in order to enhance constructive dialogues with shareholders or investors:

Group Compliance Risk
Management Committee
Committee
chairperson

Representative Director, CEO

Members

Sales, logistics, pharmaceuticalaffairs and administration
divisionscoordination

Compliance Committee of
each subsidiary(i)	Appoints a corporate officer as a person responsible for information disclosure and establishes the Corporate
Communications Department/the Investor Relations Department under the direction of the person as thedepartment in charge of investor relations.
(ii)	Makes efforts to enhance organic coordination under the direction of the person by sharing information more
effectively between the Corporate Communications Department/the Investor Relations Department and otherrelated departments.
(iii)	Holds biannual financial results briefings for investors and analysts to offer direct explanations from top
management and the person responsible for information disclosure. Furthermore, the Company holds tours offacilities to offer a deeper understanding of the Company’s management strategy. In addition, based on the
Company’s shareholder composition and capital policy, the Company engages in dialogue for foreign investors
and attend the conference sessions held by securities companies in North America, Europe, and Asian regions.
(iv)	IR activities and opinions from investors are fed back to senior management and the Board of Directors as
appropriate, and opinions from shareholders and investors obtained through dialogue are used in the formulationand implementation of management strategies.
(v)	Stringently manages information in accordance with internal regulations concerning those involved in handlinginsider information in order to prevent selective disclosure of insider information only to some market participants,
and in dialogue with investors, tries hard to make into dialogue topics the Company’s sustainable growth and thematters contributing to corporate value enhancement over the medium to long term.
TOHO HOLDINGS Integrated Report 2023

Corporate Data

ReportPolicy on Constructive Dialogues with Shareholders

44

Financial Summary (11years)(Millions of yen)
Fiscal year ended March

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Net sales

1,140,364

1,189,627

1,162,148

1,308,474

1,231,046

1,213,342

1,222,199

1,263,708

1,210,274

1,266,171

1,388,565

Cost of sales

1,038,358

1,084,520

1,055,793

1,182,429

1,121,182

1,099,149

1,110,152

1,148,354

1,110,961

1,157,484

1,277,750

Gross profit

101,998

105,103106,320

125,928

109,993

114,172

112,042

115,415

99,372

108,687

110,814Selling, general and administrative expenses

86,12092,77496,30397,30995,74995,15596,25897,825

95,06996,15998,000Operating profit

15,877

12,32810,01728,61814,24419,016

15,783

17,5904,303

12,527

12,813

Ordinary profit

19,58518,303

15,902

34,493

19,84425,045

21,452

23,732

10,28918,182

19,176

Profit attributable to owners of parent

11,526

10,407

13,535

21,771

14,225

14,384

13,863

16,2304,989

13,37913,630Total assets

562,668

580,137

598,976

641,877

598,155

645,799

663,727

670,827

683,181702,376

715,288

Net assets

134,272

147,190

157,371

174,656

188,271

207,772

213,848

231,009237,405

241,281242,916

Cash flows from operating activities

24,558-18,636

29,347

2,381

16,062

51,97813,428

10,815

8,768

16,341-9Cash flows from investing activities-10,453-7,957

3,457-4,942-6,294-12,448-7,649-15,664680-11,032

4,315

Cash flows from financing activities-15,9972,966-7,258-10,134-9,900-3,754

5,329

9,479

-680

-4,473-13,060

Free cash flow

14,104-20,594

32,804-2,561

9,767

39,5295,779-4,849

9,448

5,308

4,306

Cash and cash equivalents at end of period

37,36814,25740,55027,85427,721

63,671

75,38280,013

88,88290,014

81,839

Capital investment

13,871

13,895

4,857

6,959

9,326

9,406

4,053

14,604

6,000

4,480

3,309

Depreciation

2,913

3,709

4,729

4,721

4,483

4,498

4,869

5,198

6,424

6,634

6,119

Gross profit margin (%)

8.9

8.8

9.1

9.6

8.9

9.4

9.2

9.1

8.2

8.6

8.0

Operating margin (%)

1.4

1.0

0.9

2.2

1.2

1.6

1.3

1.4

0.4

1.0

0.9

Return on equity (ROE) (%)

9.01

7.40

8.89

13.12

7.84

7.27

6.58

7.30

2.13

5.60

5.64

Ratio of ordinary profit to total assets (ROA) (%)

3.56

3.20

2.70

5.55

3.20

4.03

3.28

3.56

1.52

2.61

2.71

Equity-to-asset ratio (%)

23.86

25.37

26.27

27.20

31.45

32.15

32.19

34.41

34.73

34.30

33.93

Price book-value ratio (PBR) (%)

1.14

1.12

0.90

0.95

0.85

0.83

0.88

0.69

0.60

0.54

0.65

Earnings per share (EPS) (yen)159.21139.58181.83316.51207.12209.84207.71233.3470.77

189.70196.701,902.43

1,952.04

2,246.54

2,544.58

2,736.30

3,030.58

3,135.45

3,273.86

3,364.65

3,415.50

3,623.81

16.00

20.00

24.00

28.00

30.00

30.00

30.00

40.00

30.00

30.00

32.00

Dividend payout ratio (%)

10.05

14.33

13.20

8.85

14.48

14.30

14.44

17.14

42.39

15.81

16.27

Total return ratio (%)

53.30

17.76

83.70

23.81

14.49

18.63

86.72

34.73

42.41

15.82

70.35

Dividend on equity ratio (%)

0.90

1.04

1.14

1.17

1.14

1.04

0.97

1.25

0.90

0.88

0.91

About TOHO HOLDINGS

Operating Results

Growth Strategy

Financial Position

Value Creation Foundation to
Support Growth

Cash Flows

Capital Investment/Depreciation

Net assets per share (yen)Annual dividend per share (yen)Corporate Data

Major Indicators

Shareholder Returns

45

TOHO HOLDINGS Integrated Report 2023

TOHO HOLDINGS Integrated Report 2023

46

Corporate Information/Stock Information

Corporate Information

10,036

Consolidated

Company Name:
Head Office:

5,536

5,361

Consolidated

4,649

4,691

4,675

Consolidated

Ratio of female employees (%)

45.4

45.9

46.6

Consolidated

Ratio of female managers (%)

19.3

20.3

21.5

Consolidated

Number of new employees

133

143

149

Consolidated

male

56

48

64

Consolidated

female7795

85

Consolidated

57.9

66.4

57.0

10,233

10,227

male

5,584

femaleNumber of all employees

Ratio of new hires who are females (%)
Average length of service (year)
male
femaleAverage annual salary (yen)Average overtime hours per month (hours)
Number of paid vacation days (days)
Ratio of paid vacation days (%)

18.1

18.9

19.4

21.0

21.7

22.3

11.4

12.3

12.8

5,875,981

6,049,697

6,010,459

13:10

12:38

11:50

9.4

10.7

11.9

39.8

45.2

50.2

Employees
Group Company:

Consolidated
TOHO HOLDINGSTOHO PHARMACEUTICALTOHO HOLDINGSTOHO PHARMACEUTICALTOHO HOLDINGSTOHO PHARMACEUTICALTOHO HOLDINGSTOHO HOLDINGS CO.,LTD.
Tokyo Midtown Yaesu, Yaesu Central Tower 9F
2-2-1, Yaesu, Chuo-ku, Tokyo 104-0028, Japan
September 17,1948
10,649 million yen
Tokyo Stock Exchange, Prime Market(Stock Code: 8129)
7,660 (Consolidated)(as of September 30, 2023)
TOHO PHARMACEUTICAL CO.,LTD.
PharmaCluster Co.,LtdKYOSOMIRAI PHARMA CO., LTD.
TOHO SYSTEMS SERVICE CO., LTD.
Toho Real Estate Co., Ltd.
Tokyo Research Center of ClinicalPharmacology Co., Ltd.
ALF.IncOrphan Trust Japan Co., Ltd.
Nextit Research Institute,Inc
eKenkoshop Corporation
K.K.eHealthcare
KYOSO MIRAI MEDICALCARE CO.,LTD

Stock Information
Number of shares authorized

192,000,000

Number of issued shares

78,270,142

Number of shareholders

4,301

Share Distribution by Type of Shareholder
Treasury Shares

Domestic companies

17.42%

18.08%

Securities companies

3.40%

20.84%
23.89%

Financial institutions

TOHO HOLDINGSTOHO PHARMACEUTICALTOHO HOLDINGS

16.37%

Group Company

https://www.tohohd.co.jp/en/company/kyosomirai

TOHO PHARMACEUTICAL

Shareholding by Number of Shares Held

TOHO HOLDINGSTOHO PHARMACEUTICAL

1,000 - 9,999

Less than 1,000

3.94%

0.75%

165

Consolidated

male

2

2

1

Consolidated

female

144

161

164

10,000 99,999

Consolidated

9.27%

7

12

13

Consolidated

Ratio of persons with disabilities (%)

2.66

2.77

3.63

TOHO HOLDINGS

Ratio of persons with disabilities (%)

2.18

2.30

2.30

TOHO PHARMACEUTICAL

Data related to the environment
Greenhouse Gas Emissions (t-CO2)

Number of issued shares

Executives
Representative Director, CEO

Atsushi Udoh

Representative Director, CFO

Hiromi Edahiro

Senior Executive Managing Director, COO

Akira Umada

Director

51.15%

22.48%

16,36815,887

15,105

Takeo Matsutani

500,000 - 999,999

Scope2* Location-based

16,236

15,79015,948Masami Tada

12.41%

Kentaro Murakawa

18,682

16,892

14,944

1,489,164

1,410,195

1,910,528

TOHO HOLDINGS

1,467,736

1,389,268

1,893,843

TOHO PHARMACEUTICAL

category2 (Capital goods)

13,087

12,3637,496

SAYWELL

category3 (Fuel and energy related activities notincluded in Scope 1 and 2)

4,827

4,816

4,715

Kyushu Toho

Makoto Kawamura

TOHO SYSTEMS SERVICE

Akiko Yoshikawa

Scope2** Market-based
category1 (Purchased goods and services)

category4 (Upstream transportation and distribution)

54

49

58

category5 (Waste generated in operations)

451

477

467

category6 (Business travel)

96

142

245

2,913

2,885

3,476

−

195

228

2021/72022/72023/7

35.7

33.3

33.3

category7 (Employee commuting)category13 (Downstream leased assets)
Governance data
Ratio of outside directors (%)
Ratio of female directors (%)* Direct emissions from use of fuels** Indirect emissions from use of purchased electricity

TOHO HOLDINGS Integrated Report 2023

14.3

11.1

11.1

KOYO

Director of Audit and Supervisory
Committee Members

Yoshiaki Kamoya *Shunsuke Watanabe *Hidehito Kotani *Corporate Officer

More than
1,000,000

78,270,142

100,000 499,999

Scope1

Scope3

Individuals
and others

Foreign investors

163

Number of users of nursing care leave system

Number of issued shares

78,270,142

146

Number of users of the short-time attendance system for childcare

47

Establishment:
Capital:Stock Listings:

Stock Information (As of September 30, 2023)

Value Creation Foundation to
Support Growth2023/3

Corporate Data

2022/3

About TOHO HOLDINGS

target2021/3

HR related data

Growth Strategy

Non-financial Summary

Share Prices/Trading Volume (monthly chart)
4,000

20,0003,250

15,0002,500

10,000

1,750

5,000

Tsuguo Nakagomi

Kengo Ogawa
Jun Ueno
Kazuyuki Watanabe
Satoshi Ikeda
Kazuki Shimizu
Aya Komai
Aiko Noshiro

TOHO HOLDINGS

Shigeki Nakata

TOHO HOLDINGS

1,000
(yen)

1
2022

2

3

4

5

6

7

8

9 10 11 12 1
2023

2

3

4

5

6

7

8

0
9 10 11 12 (Thousandsof shares)

Shuzo Kono*…Outside Director

TOHO HOLDINGS Integrated Report 2023

48