FY2022 - FY2024

Fifth Medium-Term Management Plan
(Published May 12, 2022)

1

Establishment of New Medium-Term Vision
Continued
measures tocontrol medical
costs including
NHI drug pricerevisions

Increase in
expensive
specialty drugs

New Medium-Term Vision

Innovations indiagnostics,
devices and otherareas

Progress of DX in
the health caredomain

Revision ofCorporate
Governance CodeMarketreorganization

Business model innovation looking at next-generation capabilities

1. Pursuit of drug distribution model in keeping with market structure changes and market
characteristics
2. Evolution of distribution and marketing model in step with progress of DX in health care
3. Implementation of group management that meets prime market requirements
2Priority measure (1)Development of a moresophisticated supply chain3

Overview of Supply Chain

Hospital/Clinic

Development of a supply chain with both high levels of
expertise and quality
Manufacturer

Patient

Drug wholesaler
Highlyspecialized care

Inpatient care

Development

Information

Manufacturing

Drugs

Outpatient care

Treatment

PHR*

Pharmacy
Distribution

Taking of
medication

Medical devices
Diagnostics

Promotion of DX that will help improve the qualityof medical services

MedicationguidanceDrug
administration* PHR: Personal Health Record
Information about an individual's health andmedical and nursing care

4

SCM for Reliably Delivering Vital Products(1) Development of a high quality distribution structurethat is GDP*1-compliant and partially GMP*2-compliant(2) Sophisticated management capability for maintaining
distribution at all times
Freezer for storing drugs

Aim to be the preferred wholesaler not only of the
medical institutions and pharmacies that are ourcustomers but also of manufacturers and localgovernments*1 GDP: Good Distribution Practice*2 GMP: Good Manufacturing PracticeTemperature control via app5

March 16, 2022 Directly after Fukushima Earthquake

Confirmation of status of all sites

Clock that fell from the wall and broke

Drugs scattered on the floor

Demonstrationof resilience

Staff involved in recovery work later
into the night6

Improvement of Productivity to Maintain Stable Supply(1) Implementation of appropriate
personnel allocation

Improvement ofoperating profit margin(2) Review of sales anddistribution sites
FY3/2022 Results
Operating profit

2,945 million yen

FY3/2025 Plan

OP margin

0.51%

Operating income

3,700 million yen

OP margin

0.65%

7

Priority measure (2)Implementation of pharmacy
business initiatives and DX at
drug wholesalers and pharmacies

8Summary of Pharmacy Business

87 stores

FY03/2022

in total

Net sales 18.4 billion yen(109.7％ of level a year earlier)
Pharmacies cooperating withspecialized medical institutions
Pharmacies cooperating withlocal health care facilities

3 stores8 stores

Akita 2 stores

Yamagata 3 stores

Miyagi

Fukushima
10 stores* As of May 12, 2022

Further enhancement of pharmacy services
and promotion of supply chain optimization
and DX

60 storesSaitamaTokyo
Chiba
Kanagawa

5 stores3 stores3 stores1 store* As of May 12, 2022
9

Further Enhancement of Patient Services

Compliance with Pharmaceuticals andMedical Devices Act amendments

Online drug administration guidanceCompletion of clean benchInstallation of Miyagi Prefecture's
first medicine locker

10Promotion of Supply Chain Optimization and DX Among Wholesalers and Pharmacies

Improved efficiency throughpredictive ordering system

Alleviation of workload throughpackaged delivery

Thoroughgoing mechanization

Utilization of tablet-based drug history
11

Thoroughgoing Compliance

July 2021 Establishment of Pharmaceutical Affairs Audit Office
Conducts audits of each store and seeks to ensure compliance12

Priority measure (3)Enhancement of sales structure
for hospital market

13

Growing Hospital Market(hospitals)

8,605

2011
2011年

Hospitals' share of our sales

Trend in numberof hospitals

Decrease of305 hospitals

8,300

2019
2019年

8,150

8,250

8,350

8,450

8,550

8,650

FY2011(27.0%)(trillion yen)

20.1

2011年
2011

+3.7 trillion yen

Trend in hospital
medical expenses

FY2021

23.8

2019
2019年

(32.0%)
18192021222324

Source: Survey on the Trend of Medical Care Expenditures and Survey of Medical Institutions published by Ministry of Health, Labour and Welfare

14Continuously Growing Therapeutic Devices Market
Source: Statistics of Production by Pharmaceutical Industry System published by Ministry of Health, Labour and Welfare

Sales composition

Market trend(billion yen)

20,0002,000

18,0001,800

Other617.7 billion yen

16,0001,600
14,0001,400

2018

2.9 trillion yen

Diagnostic
563.3 billion yen

12,000
1,200
10,000
1,000
8,000
800

Diagnostic

6,000
600
4,000
400

Therapeutic
1,721.7 billion yen

Therapeutic

2,000
200

Other0(59.3%)
15

Establishment of MAPs (Medical Assist Partners)

Professionals who are experts in hospital treatments, drugs, devices, diagnostics, etc.
Organizational integration

Increased sales to Target hospitals

Meeting of various needs

Formation of teamApproaches at every level

Meeting of multifaceted needs

MAPs
Drugs MS

Devices/Diagnostics

SP drugs/
Regenerative
medicines

RentalSystems/DX

Management
Dr.

Devices MS
Head ofdepartment[MAPs-Target hospital team]Co-medicalSupervisor × Headquarters × Departments

Potential customerCustomerPartner16Priority measure (4)Group Management Strategies

17Strengthening of Financial Base and Enhanced Corporate Governance

1. Financial strategy(1) ROE 5% or more
(2) Implementation of appropriate shareholder return policy: Ensure
dividend payout ratio of 25% or more
(3) Reduction of cross-shareholding stocks

2. Consideration and development of enhanced corporate governance3. Further enhancement of corporate communication
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Profit Plan Under Fifth Medium-Term Management Plan
(Million yen, %)FY3/2023 (FY2022)
PlanNet sales

563,300

Operatingprofit

2,300

Ordinary profit
Profit attributableto owners of parent

Key externalevents

Margin-FY3/2024 (FY2023)

YoYPlanMargin－FY3/2025 (FY2024)

YoY

Plan

100.8

566,000

Margin－YoY

97.6

568,000

0.41

78.1

3,200

0.56

139.1

3,700

0.65

115.6

4,900

0.87

84.0

5,800

1.02

118.4

6,200

1.10

106.9

4,500

0.80

94.3

5,100

0.90

113.3

5,400

0.95

105.9

- Medical fee revision- NHI drug price revision- Review of market segments- Enactment of Amended Companies
Act- House of councillors elections- Off-year drug price revision

99.6- Simultaneous revision of medical fees
and long-term care fees
- NHI drug price revision- Launch of 8th Medical Plan
- Doctors' workstyle reform

19