November 30, 2020

Sumitomo Chemical

IR Day1

Contents
Ⅰ

Corporate Strategy

Ⅱ

Petrochemicals & Plastics

Ⅲ

Energy & Functional Materials

Ⅳ

IT-related Chemicals

Ⅴ

Health & Crop Sciences

Ⅵ

Pharmaceuticals
2Corporate Strategy

Ⅰ Keiichi Iwata

Representative Director &President

3

Ⅰ

Corporate Strategy

1

Performance Trends

05

2

Progress on
the Corporate Business Plan

09

3

Sustainability Efforts

23

4

Ⅰ

Corporate Strategy

1

Performance Trends

05

2

Progress on
the Corporate Business Plan

09

3

Sustainability Efforts

23

5

I-1 Performance Forecast for FY2020 vs. FY2019（Billions of yen）

FY2020
Forecast

FY2019Change2,215.0

2,225.8

-10.8

100.0

132.7

-32.7

5.0

4.9

0.1

Operating income(IFRS)

105.0

137.5

-32.5

Finance income/expenses, income
tax expenses, andnet income attributable to noncontrolling interests-75.0-106.6

+31.6

30.0

30.9

-0.9

Sales revenue
Core operating income
Non-recurring items

Net income attributable toowners of the parent

Naphtha price¥28,900/kl¥42,900/kl

Exchange rate¥107.47/$¥108.70/$

IR Day: Corporate Strategy

6Core Operating Income Forecast by Sector for
I-1
FY2020 vs. FY2019（Billions of yen）

FY2020 FY2019
Forecast

ChangePetrochemicals &Plastics-33.0

14.5 -47.5

Energy & Functional
Materials

18.0

20.3

-2.3

IT-related Chemicals

36.0

25.1

10.9

Health & Crop
Sciences

31.0

2.1

28.9

Pharmaceuticals

51.0
-3.0

75.3 -24.3
-4.6
1.6

OthersTotal
IR Day: Corporate Strategy

ChangeWeaker petrochemical markets,
Petro Rabigh’s periodic shutdown
maintenance, and decreased
shipment volumes due to Covid-19
Decreased shipment volumes due to
Covid-19
Increased shipment volumes ofsemiconductor processing materials
Higher market price for methionine
and increased shipment volumes ofcrop protection products
Increased up-front expenses for the
strategic alliance with Roivant

100.0 132.7 -32.7
7

I-1

Shareholder Returns
Total dividends for FY2020 to be 12 yen per share（¥）

Interim dividend (left axis)

Year-end dividend (left axis)

Commemorative dividend (left axis)

Net income attributable to owners of the parent (right axis)(¥ Billions）

25

200

20

12
133.8

15
2
81.5

10

6

3

3

6

37.0

6

6

11

120

6
118.0

7

6

80

76.5

52.2

5

0

160

7

10

11

11

30.9

6

30.0

2013

2014

2015

2016

2017

2018

2019

2020（FY）

39.8

28.2

28.1

29.9

26.9

30.5

89.9

65.4

J-GAAP

IR Day: Corporate Strategy

400Dividend
payoutratio (%)

IFRS

8

Ⅰ

Corporate Strategy

1

Performance Trends

05

2

Progress on
the Corporate Business Plan

09

3

Sustainability Efforts

23

9

I-2 Priority Efforts for FY2020

Priority issues for FY2020
 Carry through post-merger
integration (PMI) for thelarge-scale M&As
 Focus on the further improvementof our business portfolio
IR Day: Corporate Strategy

10

I-2

Priority Efforts for FY2020:
PMI for the large-scale M&As
Focusing on post-merger integration for the
recently accomplished large-scale M&As
Strategic Alliance with
Roivant Sciences
Making good progress in thedevelopment of the acquired
pipeline drugs (due to belaunched in and after FY2020)
Building sales forces byleveraging the existing
North American functions(Sunovion Pharmaceuticals)

IR Day: Corporate Strategy

Acquisition ofFour South American
Subsidiaries of Nufarm
PMI being well under way amid
the pandemic—system integration
completed early throughactive communication via
virtual meetings

11

Priority Efforts for FY2020:
I-2
Further Improve Business Portfolio
Petrochemicals &Plastics

Energy & Functional
Materials□Enhance licensing
and catalyst
businesses□Maintain andstrengthen stablerevenue sources
including alumina
and resorcinol
businesses□Further improvebusiness portfolio
throughadvancement andfusion of underlying
technologies in
the areas of displays
and semiconductors□Take advantage of
5G and CASE andfocus on expanding
super engineering
plastics and battery
materials businesses□Drive optimizationin response tochanges in the LCD
market to secure
certain profit levels□Shift tohigh value-added
resin products□Develop businesses
and technologies
that contribute to
reducing
environmental
impactIR Day: Corporate Strategy

IT-related Chemicals

12Priority Efforts for FY2020:
I-2
Further Improve Business Portfolio
Health & Crop Sciences□Global expansion,
with a primary focus on
South America and India□Launch crop protection products inthe pipeline, including B2020 andA2020, without fail

□Build a foundation forstrengthening biorational business■Sales: Established dedicated sales units
in North America and Europe
and increased staff■ Development: Launched a biorationalteam in Health & Crop Sciences
Research Laboratory

IR Day: Corporate Strategy

Pharmaceuticals□Accelerate development of
post-Latuda blockbuster
直近の大型PJについて記載
candidate drugs
Relugolix: prostate cancer▶expected to be approvedin the U.S. in December 2020
Vibegron: overactive bladder▶expected to be approvedin the U.S. in December 2020
□Urovant becoming Sumitovant
Biopharma’s wholly-owned subsidiary□Sharing the data science
technology platforms, including
DrugOme, across the Sumitomo
Dainippon Pharma group toaccelerate digital innovation13

I-2 Major Developments in the Past Half Year

Good News
Termination of Completion Guarantee for
Rabigh Phase 2 Project Financing
Good progressin the development of pipeline drugs
Smooth progress in post-merger integration of theacquired South American crop protection business

IR Day: Corporate Strategy

14

I-2 Initiatives under Corporate Business Plan
Basic Policies ofCorporate
Business Plan

１

Continue to focus on accelerating the development of
next-generation businesses andimproving productivity through digital innovation

Accelerate
the development of
next-generation
businesses

2

Improveproductivity throughdigital innovation

Change &Innovation 3.0

3Further improvebusiness portfolio

5

Employ,develop and leverage
human resources forsustainable growth

IR Day: Corporate Strategy

For a
Sustainable
Futurea more robust
４ Build
financial structure

6

Ensure full andstrict compliance andmaintain safe andstable operations

15

Accelerate the Development of
I-2
Next-Generation Businesses
Four Priority Areas of
the Corporate Business Plan

Health care

Food

Reduction ofenvironmental
impactICT

Innovation Ecosystem
IR Day: Corporate Strategy

16

Accelerate the Development of
I-2
Next-Generation Businesses
Corporate unit-led research×
Business unit-led research
Major progress by area
Health care
Contract development andmanufacturing organization (CDMO) for
regenerative medicine and cell therapy
Established a Sumitomo ChemicalSumitomo Dainippon Pharma joint venture

Reduction of environmental impact
Solid-type batteries

Launched an industry-academia joint research
program with Kyoto University

Chemical recycling

Aim to commercialize all the three projects
during the 2020s

IR Day: Corporate Strategy

Advancingmajor development
projects in each area

Food
Biorational products
Established a SynBio hub in VBC of U.S.

ICT
Image sensor materials
Development of new materials for
CMOS image sensors

17

I-2

Improve Productivity through Digital Innovation:
DX Strategy 1.0

Significant improvement in efficiency and quality

in the areas of production, R&D, supply chain management and administration

DX Strategy 1.0
Initiatives completed
up to the previous
Corporate
Business Plan

Digital Plant

Partial introduction of
AI and IoT

Digital R&D

Partial introduction ofMaterials Informatics (MI)Digital SCM(including
marketing)

Digital Office

Partial introduction of
S/4HANA
Partial introduction of RPA
Introduction of Office365

IR Day: Corporate Strategy

Initiatives in progress under thecurrent Corporate Business Plan
Improving the quality of production
operations by leveraging AI and IoTtechnologies
Improving the efficiency and quality of
R&D activities by leveraging AI
Building MI into R&D activities
Full-scale introduction of S/4HANA
Job standardization and work style reform
Full use of robotics
Measures to boost communication
Promoting paperless operations

18

I-2

Improve Productivity through Digital Innovation:
Examples of DX Strategy 1.0 Initiatives

Promoting advanced use of data collected from production facilities toachieve higher productivity in plant operations management
Process data
Analysis data
Field data

Machine learning

Data
engineers

Signs-of-faults
detection system
Data analysis system

Identify causes for faults
Detect signs offacility faults
Predict the future of
the process

AI-aided control

Examples of signs-of-facility faults detection systems
Facility
operational status
Signs
offaultsIR Day: Corporate Strategy

Detect signs offaultsUse machine learning todetect signs of facility faults
and put out an alert
Currently used in 8 plants in

4 production sites andto be brought in phases toall the other plants
19

I-2

Improve Productivity through Digital Innovation:
Our DX Strategy Milestones
Corporate DX Strategy 1.0
unit-led Improve productivity inefforts
four focus areas for DX
Generate extra capacity andreduce operation cost by
streamlining processes
Improve quality and efficiency offunctions and operations and share
best practices across organization

Built in as
continuous
efforts
DX Strategy 3.0

Create new business models

DX Strategy 2.0

Businessunit-led
efforts

Consolidate competitivenessof existing businesses
Enhance customer interface andimprove customer satisfaction tocreate added value andexpand market shares and sales
Cross-functional drive to optimize
the entire supply chain

Create new business models leveraging
services and data and our core technologies
Improve our corporate value as
leading DX-driven company
IR Day: Corporate Strategy

20Striving for Sustainable GrowthI-2

We will strive to achieve a significant improvement in
performance in the next Corporate Business Plan period
by ensuring PRC’s stable operation and expanding sales of
new pharmaceutical and crop protection products.
（Billions of yen）

300

Core Operating Income

250
200

Upwardrevision

150

100

100

80

50
0

FY2018

IR Day: Corporate Strategy

FY2019FY2020

FY2021(Initial Plan）

FY2024（Target）

21

I-2

Striving for Sustainable Growth
Outlook for performance improvement bysectors (core operating income)● Actively invest resourcesin high-growth areas
such as 5G and mobility● Develop and promotehigh value-added
products and new
products such as products
for next-generation
displays
Energy & Functional Materials
IT-related Chemicals（billions of yen）

● Launch B2020 andA2020 products● Enhance sales of ourbiorational products● Expand business inSouth America and
India
Health & Crop Sciences

FY202020年(Forecast)

Pharmaceuticals（billions of yen）

（billions of yen）

30.0

18.0
36.0

●Increase sales of thedrugs acquired throughthe alliance with Roivant
and our oncology drugs

100.0

80.0
50.0
FY202X
２X(Target)IR Day: Corporate Strategy

51.0

31.0
FY2020(Forecast)

FY202X(Target)FY2020(Forecast)

FY202X(Target)22

Ⅰ

Corporate Strategy

1

Performance Trends

05

2

Progress on
the Corporate Business Plan

09

3

Sustainability Efforts

23

23

I-3 Sustainability Efforts: What We Strive to Be
Benefiting society(Rita*)Creating social value

Contributing to developing
a sustainable society

Scope ofvalue creation

Benefiting
Society at large,
not just
our own interests(Koushi-Ichinyo*)

Enhancing
corporate value

Creating economic value
Sustainable growth of our Group
What
WhatWeWe
VisionStriveStriveto
toBe
Be

Benefiting
our interests (Jiri*)(Jiri*)* in Japanese

Achieving sustained growth for the Sumitomo Chemical Group andhelping build a sustainable society by creating economic value andsocial value in an integrated way

IR Day: Corporate Strategy

24

I-3

Sustainability Efforts:

Contribution through Our BusinessContribution through our business（seizing opportunities)
Reducing
environmental impact

Food■ Carbon cycle■ Agrochemicals■ Chemical recycling■ Biorational■ Energy saving■ Methionine

・・・

・・・

ICT

Health care
■ Containment of

infectious diseases via
vector control■ Development of drugs
for infectious diseases■ Regenerative medicine
and cell therapy ・・・■ Meeting the needsof a super-smart
society and smart
mobility

・・・

Promotion of Sumika Sustainable Solution products

Provide solutions to build a sustainable society bypromoting development and widespread use of Sumika Sustainable Solution products

KPI

Examples of contributions to society

Sales revenue of
Sumika Sustainable Solution
billion yen
products（FY2021）（FY2019: 479.8 billion yen）

560

Contribution of
Sumika Sustainable Solution
products to GHG emissions
reduction

62 million tons

Contributing to building a sustainable society through our business
IR Day: Corporate Strategy

25

I-3

Sharing Our Aspirations with Stakeholders
Sumitomo Chemical creates

economic value and social value in an integrated way

Food

Healthcare

Reducing
environmental
impactICT

Contribute to realizing a sustainable society through our business- Sharing our aspirations with stakeholders -IR Day: Corporate Strategy

26

Petrochemicals &Plastics Sector

Ⅱ Noriaki Takeshita

Representative Director &Senior Managing Executive Officer

1

Ⅱ

Petrochemicals & Plastics Sector

1

Overview of
03
the Petrochemicals & Plastics Sector

2

Enhancing Profitability

103Social & Environmental Efforts

13

4

Prospective Business

18
2

Ⅱ

Petrochemicals & Plastics Sector

1

Overview of
03
the Petrochemicals & Plastics Sector

2

Enhancing Profitability

103Social & Environmental Efforts

13

4

Prospective Business18
3

Ⅱ-1 Major Products
Polyethylene (PE)Resin used as a packaging material,a major product of the petrochemical industry【Our features】
・Strengths in high quality protective films
・3 production bases in Japan/Singapore/Saudi Arabia

Polypropylene (PP)
Widely used resins for automobile parts andpackaging materials, etc.
【Our features】
・Global operation of PP compounds for automobiles
・Strong in high-performance packaging applications

MMA (MMA-m/PMMA)

Propylene Oxide (PO)【Our features】
・2nd largest market share in Asia, 4th in the world (MMA-ｍ)【Our features】
・Proprietary technology that does not produce co-products
・Promoting licensing of the proprietary technology

Resins with high transparency andexcellent weather resistance, and their raw materials

IR Day: Petrochemicals & Plastics

Raw material for urethane used in automobile seats andfurniture4Ⅱ-1 Petrochemicals & Plastics Sector by Region
LocationJapan

Positioning

・Development base for new
products & technologies

Challenge・Response to aging equipment
・Strengthening licensing business

Capacity
(KTA)
LDPE
LLDPE
HDPE
PP
PO
MMA-m
PMMA

Location
Location

Saudi Arabia

Japan

Singapore

172
183

255

307
200
90

670

Saudi
Arabia

223
150

150
600
300
700
200
90
50

Singapore

Major
affiliates

・Petrochemical corporation ofSingapore
・The polyolefin company
・Sumitomo chemicals Asia

Major
affiliates

・Petro Rabigh (PRC)

Positioning

・Refinery-Chemicals integration
complex, taking advantage of low-costfeedstocks and fuels

Positioning

・Petrochemical business hub withstrong customer base・Unstable profit and loss trends due tofluctuations in oil refining margin

Challenge

・Continue to add value to products
・Maintaining high share for leading
customers

Challenge

IR Day: Petrochemicals & Plastics5Ⅱ-1 Petrochemical Market Conditions
Margins for petrochemical products peaked around 2016 and had
been on a downward trend, but improved in 2020 despite COVID-19.
(USD/MT)

Margin trends – Polyolefin

900
800
700
600
500
400
300
200
100
0

LDPE-1.3*Nap

PP-1.3*Nap

NaphthaSource: Sumitomo Chemical calculated from IHS Markit

IR Day: Petrochemicals & Plastics

6Performance Trends for
Ⅱ-1
the Petrochemicals & Plastics Sector(Bil. JPY)

150
100
50
0
(50)

2015

2016
Singapore

2017
Petro Rabigh

2018
Others

2019
Total

2020
forecast※ 2015, 2016: Operating Income + Equity in earnings (losses) of affiliates2020 forecast: Petro Rabigh’s figure shows Jan.-Sep. Actual• The profit level of the Petrochemical & Plastics sector is affectedheavily by petrochemical product market conditions.
• The profit and loss forecast for FY2020 is a large deficit,
despite relatively favorable product market conditions,due to the deterioration of Petro Rabigh’s business performance.
IR Day: Petrochemicals & Plastics7

Ⅱ-1 Petro Rabigh’s Performance
FY2020
Income before tax(unit; USMM)

Jan.-Mar.

Apr.-Jun.

Jul.-Sep.

-547

-304

-168

Major causes for deterioration
Scheduled
Maintenance

Crude oil price plunge

Margin reduction
due to COVID-19

All these events hit during the scheduled maintenance period in Mar.-Apr.
- unprecedented and extremely special situation

Future outlook
 FY2020: Scheduled maintenance completed.
Product margins recovering, deficit shrinking
 FY2021: Impact from special events will diminish.
Improving profit & loss by continuing stable operations
IR Day: Petrochemicals & Plastics8

Ⅱ-1 Rabigh Phase Ⅱ Project –Resolved completion guarantee in Sep. 2020

Progress of the Phase Ⅱ Project
March 2018

All products compliedwith specifications

October 2019
Completed CRT*1

End of 2017

November 2019

September 2020

Started commercial
operations

Resolved completion
guarantee

Test run

2017

Maintaining stable operations at
both PRC Phase Ⅰ and PRC Phase Ⅱ

Construction completed

2012
Confirmed business feasibility
with a feasibility study*1 Creditors Reliability Test

Investment and Completion Guarantee
Total investment
in PRC:Approx. US＄

9.1bn.

Cash flow
before completion

0.9bn.

Approx. US＄

Project financing
Approx. US$

5.2bn.

Loan guarantees byparent companies
Approx. US$

3.0bn.

Completion guarantee(amount borne by Sumitomo Chemical)
Resolved in Jun. to Sep. 2020
Debt guarantees(amount borne by Sumitomo Chemical)

Approx.
US$

2.3bn.*2

Approx.
US$*2

1.5bn.

To continue until capital increase is executed＊2 As of Sep. 2020

IR Day: Petrochemicals & Plastics

9Ⅱ

Petrochemicals & Plastics Sector

1

Overview of
03
the Petrochemicals & Plastics Sector

2

Enhancing Profitability

103Social & Environmental Efforts

13

4

Prospective Business18
10Ⅱ-2 Licensing & Catalyst Business
Expansion of Technology Licensing BusinessPropylene Oxide Technology

Caprolactam Technology

Licensed to 4 Plants at 4 Companies(As of 2020)• Energy saving & environmental-friendly• World’s first co-product-free process

2020: Entry to Licensing Business• World’s first vapor-phase Beckman
rearrangement process• Ammonium sulfide free
• High performance catalyst

HCl Oxidation Technology

Catalyst Manufacturing Plant

Licensed to 10 Plants at 6 Companies(As of 2020)• Recycling of by-products• Significant energy savings(Chiba Works)

Started-up

PE & PP Technology

PE・PP
Cat.

2019
3Q

• Wide range of polymer grades and portfolio• High performance catalyst

PO
Cat.

2019
4Q

Stable profit through technology licensing and catalyst sales
IR Day: Petrochemicals & Plastics11

Ⅱ-2 High Value-Added Polymers
Flexible
Displays

5G materials
Mono-material film
Contribution tomaterials recycling

High performance
retort pouches
Reducing food loss,
reducing packaging
weightContribution toachievingan IoT society

Commodity
polymers

Highly rigid andtough materials forautomobiles
Reduction of CO2
emissions by
reducing weight

New resin heatstorage material
Contribution toenergy saving

Microwaveable
retort pouches

Prototype PMMA rearwindow for cars
HEATORAGE®

IR Day: Petrochemicals & Plastics

12

Ⅱ

Petrochemicals & Plastics Sector

1

Overview of
03
the Petrochemicals & Plastics Sector

2

Enhancing Profitability

103Social & Environmental Efforts

13

4

Prospective Business18
13

Ⅱ-3 COVID-19 Countermeasure Products
１) Product introduction
Transparent acrylic cast sheet: Sumipex
Transparent acrylic ext. sheet: Sumipex E
Features: Excellent transparency,
scratch resistance,
weather resistance, suitable for long-term use.
Example uses: Store/reception counters, restaurants, hospitals, schools, etc.

２) Global supply chain

America, Europe
Asia, Africa etc.
Acrylic cast sheet (Thailand)
Sumipex Thailand
9,000 tons/year

IR Day: Petrochemicals & Plastics

Acrylic ext. sheets (Japan)
Escarbo sheet Co., Ltd.
5,000 tons/year

Domestic sales in Japan
Overall management at
Sumika Acryl Co., Ltd
Acrylic cast sheet (Taiwan)
Sumipex Techsheet
6,000 tons/year14Ⅱ-3 COVID-19 Countermeasure Products
3) Expanding the functionality of acrylic sheets> Increased demand for antibacterial and antiviral materials due to COVID-19 situation> Providing solutions through technical collaboration with Sumika Environmental Science
Co., Ltd. (antiviral agent).
Antiviral
Expanded Functionality

Antiviral acrylic sheets

Targeting commercialization
by 2021★
Medical/health applications(display covers, handrails,
sideboards, etc.)

Antibacterial★
Scheduled to go on sale by

Antibacterial acrylic sheets
the end of 2020

Partition against
airborne droplets

General grade ofacrylic sheet

2020
IR Day: Petrochemicals & Plastics

2021
15

Ⅱ-3 Global Warming Initiatives ①
Promote fuel conversion to reduce CO2 emissions inmajor domestic production bases (Ehime & Chiba)
Build LNG terminal in Ehime through joint
investment by 5 firms
Introduce high-efficiency gas turbine
power generators
Replace some of the existing boilers
Composite image: LNG terminal at the Ehime works

Fuelconversion

Shift from coal, petroleum cokeand heavy oil to LNG

Thermalefficiency

Supply steam, using hightemperature exhaust gas fromgas turbines

Reduce CO2 emissions
Ehime: 650 thousand tons/ year
Chiba: 240 thousand tons/ year
IR Day: Petrochemicals & Plastics

CO2 Emission Factors for Fossil Fuels(tCO2/GJ)
0.10
0.08
0.06
0.04
0.02
0.00

Coal

Petro coke Heavy Oil

LNG

16

Ⅱ-3 Global Warming Initiatives ②
Propylene Oxide-only Method(Cumene Method)
Air
CumeneH2O
H2CumylAlcohole

CumeneHydroperoxide
PropylenePO

Co-product free,energy saving andstable operation

Cl2

Elec.

Relative energy consumption
against POCl (=100)

57

58

HPPO

PO/SM

100

33

POC

(Sumitomo) (incl.H2O2)

POCl(incl. Cl2)

Sumitomo
HCl Oxidation

NaCl
Electrolysis

Electricity[kWh/t-Cl2]

165

2,500

CO2 Emissions*1
[t/t]

0.08

1.3

Isocyanate
HCl
Urethane

HCl Oxidation

Steam

Comparison with typical alternative

HCl Oxidation Technology
Isocyanate Plant

Utility Consumption

Comparison with typical PO technologies

Recycling of by-products,
Significant energy savings*1 The value was calculated with CO2 emission factors
from the Japanese Ministry of the Environment

Contributing to reducing global warming by licensing energy-saving processes
IR Day: Petrochemicals & Plastics

17

Ⅱ

Petrochemicals & Plastics Sector

1

Overview of
03
the Petrochemicals & Plastics Sector

2

Enhancing Profitability

103Social & Environmental Efforts

13

4

Prospective Business18
18

Ⅱ-4 Prospective business
Aiming at a Decarbonized Society, Circular Economy
Plastic products make our lives richer and more convenient,but there are issues with both the carbon footprint caused byconsuming petroleum as a raw material and with how to handle
and reuse waste plastic products.
Area

Direction of business

Addressing
ClimateChangeContribute to reducing GHG emissions

Reducing
Environmental
ImpactContribute to reducing waste plastics

Effective Use of
Resources

Use biomass-derived raw materials

Contribute to reducing impact in foodproduction
Implement carbon resource recycling
Expedite carbon capture and utilization
technology

IR Day: Petrochemicals & Plastics

Direction of R&D
We strive to promote R&D in plastics productsthat contribute to the 3 Rs (Reduce, Reuse,
Recycle), and to enhance their environmental
friendliness and utility value.

Lighter Packaging
Promotion of Reusable Products
Development of technology to utilize
waste plastics and captured carbon

19Ⅱ-4 Materials Recycling Technology Automotive materials
Environmental Contribution Results (FY2018)
Reduction of Virgin PP usage: 4,700 T/Y
GHG emission reduction: 12,300 T/YConsumption
Disposal

Molding
Commercialization
through Sumika Polymer
Compounds Europe Ltd.
Glass fiber reinforced
PP compound (pellets)
Regenerated PP rate:
Over 60%

IR Day: Petrochemicals & Plastics

Collection

Initiatives of
the SC Group

Conversion to
new products

Recycling

Advancedmanufacturing andquality control
technology, andabundant know-how

20Ⅱ-4 Chemical Recycling Technology
Garbage, biomass

Adhesives,
Paint,
Chemicals etc.

Plastics(Polyolefins)

Waste plastics
Incineration

CO2, H23

CO
H2

MethanolDecomposition
Gasification*

1

Ethanol

Our
Technical
Competencies

2

1. Catalyst design
technology
2. Chemical process
design technology

Olefins(Ethylene, Propylene etc.)*existing technology

Produce plastics from waste plastics or garbage instead of fossil resources① Alliance with SEKISUICHEMICAL
RM

Garbage, waste plastics,
biomass
Prod. Polyethylene
React. Gasification→ ethanol(by microbes) → PE

IR Day: Petrochemicals & Plastics② Joint research with
Muroran Inst. Tech.
RM
Waste plastics
Prod. Ethylene, propylene
React. Catalytic cracking③Joint research with
Shimane Univ.
RM

Garbage, waste plastics,
biomass
Prod. Methanol
React. Catalytic synthesis of
CO2 and H2
21

Energy &Functional Materials

Ⅲ Kingo Akahori

Representative Director &Managing Executive Officer

1

Ⅲ

Energy & Functional Materials

1

Sector Summary

03

2

Toward Business Expansion

09

3

For Future Breakthroughs

29

2

Ⅲ

Energy & Functional Materials

1

Sector Summary

03

2

Toward Business Expansion

09

3

For Future Breakthroughs

293Ⅲ-1 Vision for Energy & Functional Materials
Contribute to Solving Environmental and Energy Issues throughInnovative Technologies

Active injection of resources into growing businesses□ Expand sales of core products and accelerate R&D□
 Secure stable revenue sources through higher added value□ Improve profitability of underperforming businesses and products□

Create new businesses in the fields of environment, energy, andhigh-performance materials

IR Day: Energy & Functional Materials4Ⅲ-1 Product Groups by Sector
Health & Crop
Sciences

Others●Synthetic rubber●Resorcinol●Super engineering
plastics●Aluminum●Super engineering
plastics●Resorcinol

Industrial
commodities(Aerospace, etc.)●Super engineering
plastics●Alumina

Automotive

Fiscal 2019
sales revenue

255 billion yen

Battery materials●Heat-resistantseparators●Cathode materials●High purity alumina

Living materials(building materials, etc.)●Aluminum●Resorcinol

IR Day: Energy & Functional Materials

Electronic goods●Super engineering plastics●Alumina5Ⅲ-1 Sector Performance(Sales revenue: JPY bn)
400 ・Business transferred from
IT-related Chemicals
・Acquired
Tanaka350
Chemical Corp.

(Core operating income: JPY bn)

Expanded heat-resistantseparator business

25
20

300
Established the
250 Energy &Functional
Materials Sector.
200

15Sales revenue
Core operating income

10

150

5

100
0

50
0

2015

2016

2017

2018

2019

2020

-5

* Figures for 2015 to 2019 are
results, and those for 2020are prospective

 Fiscal 2019 revenue and profit decreased from the previous year, impacted by lower
market prices for aluminum and decreased shipments of heat-resistant separators.
 Fiscal 2020 earnings are expected to deteriorate, affected by decreased automotive
demand due to the coronavirus pandemic.

IR Day: Energy & Functional Materials

6Ⅲ-1 Sector Earnings Forecast
Boosting earnings power by playing a part in specialty chemicals
Current Priority Management
Issues and Business Strategy(May 2020)■Core operating income (JPY bn)
Energy & Functional Materials

 Secure and enhance profits in businesses withstable earnings (Resorcinol, Alumina, etc.)
While at the same time, Increase earnings power by actively injecting
resources in growing areas in a timely manner

IT-related Chemicals

30
18
36
20年2020
Fiscal(forecast)

Active injection of resources
Batterymaterials

50
5G/
２X202X
Fiscal(planned)

IR Day: Energy & Functional Materials

mobility• Active investment in proportion to market
expansion• Accelerate development towardcommercialization of next-generation batteries

Super engineering plastics• Expand LCP sales for materials such as
those needed in high frequency
infrastructure• Expand sales of automotive materials forlightweight vehicles7Ⅲ-1 Preventing the Spread of the Coronavirus
Supplying raw materials for antiviral drugs(Koei Chemical Co., Ltd.)●Building a supply system●Ensuring prompt and stable supply

Avigan®

(RM: Pyridine)

Remdesivir(RM: Pyrrole)

Fulfilling social responsibility to help abate
the coronavirus pandemic
IR Day: Energy & Functional Materials

8

Ⅲ

Energy & Functional Materials

1

Sector Summary

03

2

Toward Business Expansion

09

3

For Future Breakthroughs

29

9Ⅲ-2 Positioning of Major Products

１ Stable revenue
sources• Alumina/High Purity Alumina• Resorcinol

Areas for２ active injectionof resources• Super Engineering Plastics• Heat-resistant separators• Cathode materials

IR Day: Energy & Functional Materials

10

Ⅲ-2

１ Stable revenue
sources• Alumina/High Purity Alumina• Resorcinol

Areas for２ active injectionof resources• Super Engineering Plastics• Heat-resistant separators• Cathode materials

IR Day: Energy & Functional Materials11Ⅲ-2 Maintain/Enhance Stable Revenue Sources
Use product groups with the global top share to secure stable earnings

Main usage
Lithium-ion secondary battery materials

Alumina/High Purity
AluminaHeat-dissipating fillers for resin
Sapphire use (LED substrate, crystal of watch)
Components for semiconductor manufacturing
equipment
Provide high value-added products, using particle size and shapecontrol technology

Adhesives for tires

Resorcinol

Ultraviolet ray absorbers
Fire retardants
Maintain a stable supply system through multiple production facilities(Chiba, Oita).

IR Day: Energy & Functional Materials

12Ⅲ-2 Maintain/Enhance Stable Revenue Sources(High Purity Alumina)

Our High Purity Alumina Lineup
Large

Specific surface area
Small

Meet wide-ranging needs withdiverse products

NXA Series
AKP-700,AKP-53,AKP-50

Sapphire ingredient,
Catalyst carrier, Spacer

AKP-20,AKP-30,AKP-3000

AKQ Series

AKP-15,AA-07

AA-03
AA-05

AA-1.5

Ceramics,
Lithium-ion secondary
batteries (LIB),
Abrasives, Fillers

AA-3
AA-5
AA-10
Resin fillers,Special fluorescentmaterial

Small
IR Day: Energy & Functional Materials

Particle size

Resin fillers,
Sapphire ingredientAA-18 Thermal

spraying

AKX Series

Large
13

Ⅲ-2 Maintain/Enhance Stable Revenue Sources(High Purity Alumina)

 40 years from the start of production, we are aiming to solidify
global top market share status, and accelerate growth even further

Market needs

Our own technology

 High strength, high corrosion

 Particle size precision

 Ultrafine, uniform qualities, and Highly productive

resistance, and high heat resistancestable supply

control technology

manufacturing method

NXA (Ultrafine Alumina)
 World-first mass production of alpha alumina
with a particle size of 0.0001mm
 Achieved fine and uniform particle distribution⇒ Expanding use to precision abrasives anddental materials in addition to existing uses

Moving on to the medium volume trial production phasewith an eye to launching in fiscal 2022
IR Day: Energy & Functional Materials

14Ⅲ-2 Maintain/Enhance Stable Revenue Sources(Resorcinol)

Strengths in the Resorcinol Business
Reliability• Multiple production facilites(Chiba, Oita)• Global stock points

Stable Demand• Adhesives for tires, ultraviolet ray
absorbers, pharmaceuticals,
crop protection products, etc.

Clean Process• Less energy consumption per unit
• Low effluent load

・Fulfill responsibility for stable supply as the world’s top manufacturer・Accelerate business growth by expanding into diverse uses, such as
pharmaceuticals, crop protection products, and feedstock for resin
IR Day: Energy & Functional Materials

15

Ⅲ-2

１ Stable revenue
sources• Alumina/High Purity Alumina• Resorcinol

Areas for２ active injectionof resources• Super Engineering Plastics• Heat-resistant separators• Cathode materials

IR Day: Energy & Functional Materials16Ⅲ-2 Expanding Automotive Use(Super Engineering Plastics)

 Heightened need for better fuel performance and forlightweight components⇒ Multi-material car body with the use of resin, etc.
Applicable components (including candidate components)
Power motor/Power devices
・Insulators
・Power device cases, bases

Electrical components
・Relays・Connectors
・FusesInterior
components
・Seat gears

Transmissions

Engines・Control motors
・Seal rings
・Oil circulation pipes

・Oil control valves
・Valve control motors
・Insulation covers

IR Day: Energy & Functional Materials

Lamps・Lamp reflectors
・Lamp sockets
・Lens holders17Ⅲ-2 Expanding Automotive Use(Super Engineering Plastics)

Increasingly adopted for use
as materials replacing metal automotive components
 Super Engineering Plastics (PES/LCP) are well positioned as components

where heat resistance, dimensional accuracy, thin design, andsliding performance are required in addition to lighter weight.

 Proposing designs that leverage the processability and functionality ofsuper engineering plastics

LighterweightSmaller

Quieter

Total cost
reduction

Twice Automotive use has been steadily increasing

FY201519

cases

IR Day: Energy & Functional Materials

FY2019FY2024

cases

cases

28

40

the level of
FY201518

Ⅲ-2 Paradigm Shift

IR Day: Energy & Functional Materials

19Ⅲ-2 Paradigm Shift 【ITC】
Enhanced
Mobile Broadband

eMBB

5G frequency bands
3.6GHz6.0GHz24.25GHz

Up to300GHzStarting
in 2020

4G

Ultra-Reliable
Low LatencyCommunications

URLLC

Massive
Machine Type
Communications

mMTC

For a full-scale
implementation of
millimeter wave range
 Performance required for

sub6

Millimeterwave range

5G

5G

IR Day: Energy & Functional Materials

5G-compatible components

Lowtransmission loss
Technology to process
signals and communications
without deterioration20

Ⅲ-2 Making arrangements for 5G penetration(Super Engineering Plastics)

Our proprietary technology
We flexibly provide materials with
optimal transmission properties,
using a permittivity control method
based on low dissipation factor
performance due to our
proprietary molecular designs.

 Molecular structure design, synthesis

technology

 Mass production technology for soluble LCP Compound design, mass production

technology

 Machining support technology utilizing

material properties

Circuit board applications


Adopted as a film substratematerial for smartphones
Provided in 2 types of LCP

Solution type: Solution casting method(applicable to PI process)Melting type: Inflation, extrusion

IR Day: Energy & Functional Materials

Connector applications


Adopted for use in high-speed
data transmission connectors fordata centers

Expanded permittivity control grade
Provide materials that enable both lowtransmission loss and flexible impedance
matching performance21Ⅲ-2 For Future Business Expansion(Super Engineering Plastics)



Expand business by supplying materials widely considered
indispensable for growing industries such as the automotive
industry and IT/Telecommunications.

Target sales revenue for Super Engineering Plastics business
: LCP

: PES

: Others (EPOXY, etc.)

50%
increasein salesrevenue
FY2014

IR Day: Energy & Functional Materials

FY2019FY2024(Target)22

Ⅲ-2 Paradigm Shift 【Automobile】
onnectivity

haringutomatic driving

lectrification

EV policy trends in various countries
UK

Terminating sales ofgasoline/diesel cars,
including hybrids, by 2035

FranceTerminating sales ofgasoline/diesel cars
by 2040.

US

California State declared
total abolition of gasoline
cars by 2035

China

Spain

Subsidies for EVs are extended
to 2022. Total abolition of newgasoline car sales by 2035 isunder consideration.

Achieve no CO2 emission
from all new cars soldby 2035(Source) “Status of the Greening of Tax Systems and Carbon Taxes in Japan and Overseas” by the Ministry of the Environment.

Need for EVs is expected to increase in the future.
IR Day: Energy & Functional Materials23Ⅲ-2 Expanding Demand for Electric Vehicles(Battery Materials)

Trends in lithium-ion secondary batteries (LIB)
LIB market expansion along withthe spread of EVs
Tighter pricing(JPY bn)

7,000

Expansion of battery capacity for
longer cruising distance in EVs

Market forecast for LIB

6,000
5,000
4,000
3,000
2,000

2035

2030

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

0

2010

1,000

■For power storage ■For housing ■For industrial and commercial use ■For automotive use ■For small devices■For portable terminals(Source) “Current Status and Future Outlook of Lithium-ion Battery Market 2019” by Fuji Keizai

IR Day: Energy & Functional Materials

24

Ⅲ-2

Expanding the Battery Business in the EV Market(Battery Materials - Cathode materials)

Market needsExpansion of battery capacity for
longer cruising distance for EVs

Advantages ofaramid-coated separators
High heat
resistanceLightweight

Cathode materials (NMC,NCA) More penetration of high-nickel
cathodes for higher capacity,
But in exchange, Decreased use of elements (Mn, Co,etc.) contributing to structural stability

Increasedcapacity

Tradeoff

SafetyLess
powderdust

Durability
Ensuring safety inhigh-nickel batteries aswell with aramid-coatedseparator.

Excellent safe performance of aramid-coated separators
contributes to increasing the capacity of LIBs.
IR Day: Energy & Functional Materials

25

Ⅲ-2

Expanding the Battery Business in the EV Market(Battery Materials - Separators)

Approach for business expansion
Increase production capacity
Our production capacity
2017

180

million ㎡

2021 expected

Reduce costs throughrationalization
Manufacturing costsof aramid-coated separators

400

million ㎡

SSLM(South Korea)
increased capacity
in response tocustomer demand2017 Target
initially

Ceramic-coatedseparators(our estimate)

Overhaul feedstock/manufacturing
process, and improve cost competitiveness

Increase cost competitiveness and expand LIB business
IR Day: Energy & Functional Materials26Ⅲ-2 Expanding the Battery Business in the EV Market(Battery Materials - Cathode Materials)

Sumitomo Chemical

Tanaka Chemical Highly productive calcination

 Automotive precursor manufacturing

process
 Analysis/Evaluation technology

technology

 Expertise with mass production

Business expansion through group synergy
To capture expanding demand Promote joint development of high-capacity cathode materials
 Consider installation of calcination equipment
Recent Initiatives at Tanaka Chemical
Sales
Concluded sales and manufacturing technical support
agreements with a European battery manufacturer

Manufacturing
Completed phase 3 expansion in September 2020,
started operations.
IR Day: Energy & Functional Materials

Expanding facilities

Phase 1

Expand main raw
material melting
facilities

Oct. 2018

Phase 2

Jul. 2019+1,200t/monthPhase 3

+1,200t/month

Sep.2020

27

For Future Business Expansion

Ⅲ-2 (Battery Materials Business)

Business target for battery materials
Aim to double sales
revenue in FY 2024

Cathodematerials
Heat-resistantseparators

2019売上高FY
20192025売上高FY
2024(target)Expand battery materials business with 2 components:
heat-resistant separators and cathode materials
IR Day: Energy & Functional Materials

28

Ⅲ

Energy & Functional Materials

1

Sector Summary

03

2

Toward Business Expansion

09

3

For Future Breakthroughs

29

29

Ⅲ-3

Toward the implementation of
next-generation batteries for EVs(Solid-type batteries)

IR Day: Energy & Functional Materials30Ⅲ-3 Trends in Battery Components: Higher Capacity
Breaking through safety and productivity limits is a must for higher capacity batteries
Current
solution
現行液LIB
LIBs (up to 2025)

Improved
solution LIBs
改良型液LIB(2020 to 2030)

Next-generation
次世代電池
batteries (from 2025)

100Wh/kg

250Wh/kg

500Wh/kg

Current
components【現行部材】

Example oftechnologicaldevelopment【技術開発例】

Candidates fornext-generation
batteries【次世代電池候補】（～2025年）
Energyエネルギー
density
密度

Cathode
正極材

Materials

Anode
負極材

materials（2020～30年）

MiddleMiddle Ni,Ni、High
Ni、Coフリー、High Ni,
Cobalt-free,

リン酸鉄

Niフリー、Li過剰

グラファイトGraphite

Silicone, aluminum,
シリコン、アルミニウム、(+silicone)（＋シリコン）

リチウム

Iron phosphate

Nickel-free, Lithium-excess

lithium

Aramid, Ceramic
Separator アラミド、セラミック
セパレータ

Resistance to high voltage
耐高電圧

電解液
Electrolyte LiPF6/EC
LiPF6/EC

Ionic liquid,
イオン性液体、高濃度化

IR Day: Energy & Functional Materials

higher concentrations（2025年～）

Solid-type batteries①全固体電池② Other batteries
Lithium-oxygen
batteries
lithium-sulfur
batteries

31

Ⅲ-3

Development of Solid-type Battery Materials(Sumitomo Chemical)

Development-I: Cobalt-free Cathode Materials

Designing high capacity and high output materials based on the findings
accumulated with Enervio®
Change in crystal axis length is small up to

Composition: NCM 3/0/1

high-voltage region. Even with a 4.5V charge, theParticle size: D50 = ５μm

materials show high cycle characteristics.

Cell voltage [V]

5.0

2μm

4.5V

4.5

4.3V

4.0
3.5

NCM 3/0/1
NCM 1/1/1

3.0
2.5
2.0

0

50

100

150

200

250

Capacity
容量 [mAh/g]
IR Day: Energy & Functional Materials32Ⅲ-3 Development of Solid-type Battery Materials(Sumitomo Chemical)

Development-Ⅱ: Cathode material surface-coating technology
 Role of coating: It does not inhibit the movement of Li+ but
suppresses reactions between cathode materials
and the electrolyte.
Ideal coating:thinly and uniformly covers all surfaces of cathode materials.
Coatinglayer
被覆層

被覆層 被覆層

Coating layer
活物質

Cathode正極材
materials

Cathode正極材
materials

Improvement

Severaldozen
十数nm
nanometers

IR Day: Energy & Functional Materials

Achieved a uniform
coating layer withthe thickness of afew nanometers.

A few
数 nm
nanometers33

DevelopmentofSolid-type
Battery
Materials
Ⅲ-3(Joint development)
The course on joint research between industry andacademia at Kyoto University
Opened in April 2020 for joint development of materials for solid-typebatteries (cathode materials, solid electrolytes, etc.) and optimal designs
for solid-type batteries Expand ideas through the deepening of discussions with professors at Kyoto University
 Validate utility with sample synthesis and the evaluation of actual battery performance Aim to complete development of materials for solid-type batteries in 2023
Implementation of solid-type batteries for EVs

Bestbalance

IR Day: Energy & Functional Materials

Energydensity

SafetyManufacturingcosts

34

IT-related
Chemicals

Ⅳ Masaki Matsui

Representative Director &Managing Executive Officer1

Ⅳ

IT-related Chemicals

1

Business Overview

03

2

Business Strategy for
FY2019-FY2021

09

3

Financial Statements

114Market Environment

135Progress on Major Issues

196Long-term Targets

30
2

Ⅳ

IT-related Chemicals

1

Business Overview

03

2

Business Strategy for
FY2019-FY2021

09

3

Financial Statements

114Market Environment

135Progress on Major Issues

196Long-term Targets

30
3Ⅳ-1 Business Overview: Our Major Products
End Market

Our Customers

Our Products

Touchscreen panels

Displays

Cover window films

LCD panels
Polarizing films

OLED panels

Polymer lightemitting materials

Semi-conductors

Compoundsemiconductor
epiwafers

Color resists

Photoresists

Processing chemicals

Developing business primarily in both display-related materials and semiconductor materials

IR Day: IT-related Chemicals

4

Business Overview:
Ⅳ-1
Manufacturing and Sales Locations

Building a business network centered in East Asia, an area witha high concentration of display-related and semiconductor industries
IR Day: IT-related Chemicals

5

Business Overview:
Ⅳ-1
Display-related Materials Business
Interface between people and ICT technology
 Contribute to creating displays with outstanding portability, visibility and operability
 Deliver high-value-added products by combining our material development capabilities with
our optimization technology

LCD Panel
Polarizing film

OLED Panel
Display cover materials
Cover glass
Cover window film

Glass substrate
Color filter layer
Color resist
Liquid crystal layer
TFT layer
Aluminum targets
Processing
chemicals
Polarizing film
Backlight(Note): Sumitomo Chemical’s products

IR Day: IT-related Chemicals

Circularly polarizing film
Liquid crystal-coatedpolarizer/
Liquid crystal-coatedretardation film
Touchscreen panel
OLED layer
Thin film encapsulation
Polymer light-emitting materials /Small-molecule light-emitting
materials and others
Barrier layer / Polyimide substrate6

Ⅳ-1 Business Overview: Semiconductor Materials
Infrastructure supporting modern society withultra-microfabrication technology1Contribute to the continuous evolution of microfabrication technology withsuper high-quality chemicals

Wafer cleaning

2 Metal-Film deposition

3

Processing chemicals

Exposure

Our products

Photoresists
Photoresists

Metal thin film

Silicon wafer

4

Resist coating

5 Development

6

Etching89Drying

Photomask

7

Resist stripping

Cleaning
Processing chemicals

IR Day: IT-related Chemicals

Processing chemicals

7

Business Overview:
Ⅳ-1
Compound Semiconductor Materials
Key technologies for Society 5.0

High
Power
generation/transmission

Silicon carbide

Maglev
Shinkansen
Train

SiC

Consumerelectronics

Silicon

Data centers

AC/DC
adapters

Wireless charging

OutputElectric
vehicles Contribute to the creation of a more advanced society by supporting
technologies such as high-speed broadband communications, energy
saving, and autonomous driving (sensing)

Gallium nitride(SiC substrate)

GaN on SiC

Mobilecommunicationbase stations

Gallium nitride(GaN substrate)

GaN on GaN

Si

Smartphones

Gallium arsenide

Operating frequency

Low

Power devices
IR Day: IT-related Chemicals

GaAs

High
Radio frequency devices

8

Ⅳ

IT-related Chemicals

1

Business Overview

03

2

Business Strategy for
FY2019-FY2021

09

3

Financial Statements

114Market Environment

135Progress on Major Issues

196Long-term Targets

30
9Business Strategy for FY2019-FY2021:
Ⅳ-2
Further Improvement of Our Business Portfolio
Action Plan

Major Issues


Display-relatedMaterials

Semiconductor
Materials

Maximize profit byrestructuring & focusing onhigh value-added products

Secure growing demand by
utilizing advance investment

Diversify product portfolio

Next-generation
Businesses

New products by increasing
the sophistication ofcore in-house technology
Approaches to adjacentmarkets based on
open innovation methods

IR Day: IT-related Chemicals



Restructuring
Polarizing films for LCD- Optimization of global supply chain
Focusing on highProducts for smartphones
value-added products- Secure a share of the high-end
market by utilizing core materials developed in-house
Focusing onhigh value-added
products

Touchscreen panels- Diversify product portfolioEnhance systems of production,
development and evaluation for photoresists



Invest in processing chemicals in ChinaNew processing chemicals orcompound semiconductors for power devices etc.

Products for image sensors andnext-generation displays etc.

Products developed by utilizing technologies fromtouchscreen panels and compound semiconductors etc.

10ⅣIT-related Chemicals

1

Business Overview

03

2

Business Strategy for
FY2019-FY2021

09

3

Financial Statements

114Market Environment

135Progress on Major Issues

196Long-term Targets30
11Ⅳ-3 Financial Statements(100 millions of yen)(100 millions of yen)

4,500

350

4,000

300

3,500

250

3,000

200

2,500

150

2,000

100

1,500

50

1,000

0

500

▲50

0

▲100

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Net Sales/Sales Revenue (Left Axis)(Forecast)

Operating Income/Core Operating Income (Right Axis)

IR Day: IT-related Chemicals

12

Ⅳ

IT-related Chemicals

1

Business Overview

03

2

Business Strategy for
FY2019-FY2021

09

3

Financial Statements

114Market Environment

135Progress on Major Issues

196Long-term Targets

30
13Ⅳ-4 Market Environment: Display-related Materials
Market assumptions
for FY2019-FY2021

New
factors

Current situation

accelerates(Korean panel
manufacturers withdraw
or downsize LCD-TV
business)

MarketReorganization• Mobile Displays:
Number of smartphones remains
almost the same, units with OLED
display increase(27% in 2018 -> 48% in 2021)

COVID-19

 Increase in OLED units

48

200

44

2019

2020
forecast

LCD-TV units (Left-axis)
OLED-TV units (Left-axis)
Average display size (Right-axis)

IR Day: IT-related Chemicals

ModerateーModerate

SlightSmartphone Market (Source: Gfk)

220

2018

SlightCOVID-19specialdemandslows down
(40% in 2021)

52

2017

2021

(especially in high-end)

240

2016

2020

 Market stagnates

TV Market (Source : Gfk)

180

2019

 Market shift to China• TV Displays:
Number of TV sets remains
almost the same, TV display size
continues to get larger (Growth
rate: YoY+4%)(Millionunits)

Impact on our business (est.)

40

2021
(inch)
forecast

1,500

45%

1,200

40%

900

35%

600

30%

300

25%

0
(Millionunits)

2016

2017

2018

2019

2020
forecast

2021
forecast

20%

LCD smartphone units (Left-axis)
OLED smartphone units (Left-axis)
OLED smartphone ratio (Right-axis)

14Ⅳ-4 Market Environment: Display-related Materials
Large LCD panel supply capacity(Source: Mizuho Securities, Sumitomo Chemical)

25,000 Global supply capacity of large LCD

panels is concentrating in China

 Market reorganization is going on within

20,000China (Consolidating to 2 major Chinese
panel manufacturers)

15,00010,0005,000
0(km2/Month)

2018

2019

2020

Korean Manufacturers
Chinese Manufacturer
Taiwanese Manufacturers

2021

Balance of supply/demand for mobile OLED panels(Source: Omdia, DSCC)

1,500

Suppliers of LCD-related materials will be
faced with fiercer competition

 Active investment by

Chinese panel manufacturers

 Slower growth of the end market of

OLED smartphones than expected

1,000
500
0

(Million units)

2018

SupplyDemand2019

SupplyDemandDemand for OLEDs
Chinese Manufacturers

IR Day: IT-related Chemicals

2020

SupplyDemand2021

SupplyDemandKorean Manufacturers
OthersDemand for differentiation to provide
additional value becomes stronger
due to the expanding supply/demand gap
15

Ⅳ-4 Market Environment: Display-related Materials
Now
Conventional
LCDs

QD* sheet

Conventional LCD + QD* sheet->Improved color reproduction

Color filter
Liquid crystal cell
QD* sheet
Backlight

LCD
Mini-LEDs

Organic LED

Mini-LED
Backlight

PrintedOLEDs
QD* OLEDs
Blue OLEDQD* color conversion layer

QD* electroluminecense layer

Inorganic LED

Self-luminous display

Conventional
OLEDs

Replace backlight with mini-LEDs->Improved local contrast

Color filter
Liquid crystal cell

* QD: Quantum dot

Micro-LED

QD*
displays

Micro-LEDs（TV）

The increasing sophistication of LCDs and the development ofnext generation self-luminous displays are progressing in parallel
IR Day: IT-related Chemicals

16

Ⅳ-4 Market Environment: Semiconductor Materials
Market assumptions
for FY2019-FY2021

New
factors

Current situation
• Steady market growthaccompanying digitaltransformation(Growth rate: +4%/year)

COVID-19


US-China
trade war

2019

2020

2021

Demand stays firm on
the whole, although somecategories are affected by
COVID-19ー

SlightSlightDemand for cutting-edge
products is very strong, andsupply/demand balance istight

SlightSlightSlightSemiconductor Market(Source: WSTS)

5,000

Compound Average
Growth Rate
(CAGR)

4,000
3,000
2,000
1,000
0

(100 mil.

Impact on our business (est.)

CY2014

CY2015

CY2016

CY2017

CY2018CY2019CY2020CY2021(Forecast)(Forecast)(Forecast)Analog

Micro

Logic

USD)

Discrete

Optoelectronics

IR Day: IT-related Chemicals

Sensors

Memory

8%

Logic

3%

Total
Semiconductor

4%

Memory17

Ⅳ-4 Market Environment: Semiconductor Materials
2017
DRAM
line-width
generation

1X

Logic
line-width
generation

10nm

2018

2019

2020

1Y
7nm /
7nm+

2021

1Z

2022

1b

1a

5nm

2023

3nm

Immersion ArF photoresists

Applicable
photoresists

EUV photoresists

Number of
NAND
Layers48 layers

Applicable
Photoresists

KrF

Rewiring
technology

Wire bonding
Flip-chip bonding

64 layers

Applicable
photoresists

92 layers

128 layers≧192 layers

KrF thick film photoresists
FOWLP (*1)

FOPLP (*2)

I-line thick film photoresists*1 Fan Out Wafer Level Package*2 Fan Out Panel Level Package

Line-width shrinking and multilayer structures are required to achieve
semiconductor performance improvement
IR Day: IT-related Chemicals

18

Ⅳ

IT-related Chemicals

1

Business Overview

03

2

Business Strategy for
FY2019-FY2021

09

3

Financial Statements

114Market Environment

135Progress on Major Issues

196Long-term Targets

30
19

Ⅳ-5

Progress on Major Issues:

Expand Product Portfolio & Develop New Businesses
Expand existing businesses
Increased sophistication of in-house core technologies andmultifunctional materials, fusion of display-related andsemiconductor materials technologies

Existing businesses
Display-related Materials

Semiconductor Materials

Develop new businesses
Collaboration and investment in business fields where we expect synergy
IR Day: IT-related Chemicals

20

Progress on Major Issues:
Ⅳ-5
Display-related Materials for OLED Displays
Major Issue

Progress

Action Plan

☑ Full-fledged mass-production of Secure a share of

Focusing onhigh value-added
products

polarizing film with in-house LC*
coating retardation for OLED
smartphones has started

the high-end market byutilizing core materials
developed in-house Expand touchscreen panel

product portfolio

See “Progress on Major Issues:
New products” section

 Develop products forflexible displays

Element technology

Polarizer
Retardation film

2018

2019

2020

2021

Stretched PVA
LC* coating (In-house)
LC* coating (Procurement)
LC* coating (In-house)* LC: Liquid crystal

Continue to secure high market share with a wide-lineup of polarizing
film materials for OLED displays
IR Day: IT-related Chemicals

21

Progress on Major Issues:
Ⅳ-5
Display-related Materials for LCDs
Major Issue

Action Plan

Market shift to
China Design polarizing films to meet

Restructuring Optimize

Focusing on
high-end LCDs

the requirement of Chinese panel
manufacturers

Progress☑ Lower shrinkage stress &improved permeability of polarizing film withacrylic protective film

☑ Optimization of product allocation of

our global supply chain

polarizing film for LCD-TVs has madesome progress Secure market share in☑ "Roll to Panel" lines for extra-large sized

extra-large sized TVs and PIDs*(polarizing film)

 Achieve wide color gamut &high color reproduction(color-resists)

Polarizing film production
sites
China
Korea
(Wuxi)

Japan

panels have been installed in customer
factories☑ Development of new color materials for high-end LCD-TVs (8K, Mini-LED etc.) has started* Public Information Displays

Focus our resources effectively on
promising fields (ex. next-generation
displays) while keeping some profit inconventional business fields

TaiwanIR Day: IT-related Chemicals

22

Progress on Major Issues:
Ⅳ-5
Semiconductor Materials
Major Issue
Securegrowingdemand byutilizing
advanceinvestment

Action Plan Expand production capacity for

immersion ArF photoresists

 Enhance the development andevaluation system of photoresists for
cutting-edge processes

 Invest in a processing chemical plantin China

Diversify
product
portfolio
Semiconductor Material
Production Sites

China(Xi’an,Changzhou)

 Expand sales of EUV photoresists
 Develop compound semiconductors

for power devices

Progress☑ Full-fledged operation has

started from the JulySeptember quarter of 2020

☑ Plan to start in the April-

September period of 2022

☑ Operating stably

See “Progress on Major
Issues: New products"
sectionKorea

IR Day: IT-related Chemicals

Japan

Secure market share by providing highperformance and high-quality chemicals
needed for enhancing the density ofsemiconductors (line-width shrinkage
and multilayer structures)

23

Progress on Major Issues:
Ⅳ-5
New Products (Foldable Display Materials)
Market for foldable display smartphones(Source: Omdia)

50 (Million units)

2.5%

40

2.0%

30

1.5%

20

1.0%

10

0.5%

0

2019

2020

2021

2022

2023

2024

 Our position• Have a wide-lineup of
foldable display materials• Have advantages in optimization of
product properties by utilizingorganic synthesis technology

0.0%

Foldable display smartphone units (Left-axis)
Foldable display smartphone ratio (Right-axis)

Foldable display materials

Display covermaterials
Polarizing film
Touchscreen
panel (TSP)
OLED Panel

Our products

Competitor

Clear resin film

Ultra thin glass

LC-coatedpolarizer/
retardation film

Stretched/coatedPVA polarizer

Flexible TSP(Add-on)On-cell TSP(Manufactured bypanel mfr. in-house)

IR Day: IT-related Chemicals

ActionPlan☑ Propose materials that meetthe requirement of panel/device
manufacturers☑ All products already have beenlaunched separately

Progress ☑ Prepare to launch

multi-functional materials in
2021

Secure market share in
foldable display materials
24Progress on Major Issues:
Ⅳ-5
New Products (5G Antenna on Display)
Comparison with existing technology
Existing product(Antenna in Package)

Our product indevelopment(Antenna on Display) Position of our technology•

For millimeter wave bands•

Making the most of touchscreen panel
technologies and production lines

ActionPlan

Progress
AoD
AIP

AIP

IR Day: IT-related Chemicals

AIP☑ Promote improved 5G communication
performance in combination withexisting technology☑ Develop new applications for whichthin, transparent and flexible
properties are suitable☑ Performance test using AoD antenna
modules is on going

AIP

Smooth commercialization by
utilizing our existing resources25

Progress on Major Issues:
Ⅳ-5
New Products (Polymer Light-emitting Materials)
Target markets for printed OLEDs
ppi
500
Definition300• Have light-emitting material technologies
for all RGB colors

Automotive
MonitorVacuumdeposition
OLEDs

 Our position• Already achieved mass-production of
mid-sized printed OLED panels before
competitors

TV

Printed OLEDs

200

Smartphone
AR/VR

100
5

10

30
Panel size

Action
Plan
100
inch

50

Comparison of luminescence mechanismwith existing OLED-TV panels
Use colorfilters

RGB light-emission -> Color mixing >White light -> Reproducing RGB
light through color filter

Bottom emission

IR Day: IT-related Chemicals

No color
filters

High utilizationof light

Top emission☑ Improve the lifetime ofblue light-emitting material☑ Performance tests on OLED
Progresspanels with new promisingmaterials are planned to start

Improve performance further
for mass-production of
TV panels
Introduce customers to thebest conditions to maximize
light-emitting performance26

Progress on Major Issues:
Ⅳ-5
New Products (EUV Resists)
EUV photoresist market (quantity)(Source: Fuji Keizai)(k gallon/year)80 Our position• Have the top market share (over 30%) in
immersion ArF photoresists, but slightly
lagging behind in EUV• Started sales in FY2020

60
40

ActionPlan

20
0

CY2018 CY2019 CY2020 CY2021 CY2022 CY2023 CY2024

Line-width Generation for EUV Resists
2018
Logic

7nm+

2019

2020

2021

2022

2023

DRAM

1Z

IR Day: IT-related Chemicals

1a

2024
2nm

3nm

5nm

Progress

1b

1c☑ Develop a composition that canachieve higher resolution to
expand sales☑ Found the optimum composition in
short time by utilizing
Materials Informatics☑ Obtained good evaluations in acompetition for mass production
scheduled after FY2023

Aim for 20~30% shareas soon as possible
27

Progress on Major Issues:
Ⅳ-5
New Products (Image Sensors)
Structure of image sensors (CIS)
Incident light

Layer

Function

Micro lensLight focusing

Color filter

Color separation

PhotodiodePhotoelectric
conversion

Logic

Image processing

Technical trends in CIS
Higherdefinition
Our
products

Highersensitivity
Ourproducts

 Our position• Built up technology and know-how inboth display & semiconductor fields• Have technologies applicable forhigh definition & high sensitivity

ActionPlan• Miniaturize photodiode pixels
ArF thick film photoresists• Increase the amount of light
focused by the lens
• Use CMY color filters instead of RGB

R G B

High refractive
clear resin

IR Day: IT-related Chemicals

CM Y

CMY color
resists

Progress☑

Secure mass-production results for
new color materials☑

Propose the combination ofclear resin for lenses & photoresists forshaping micro lenses☑

New color materials:
To launch in 2021☑

Resin for lenses:
Optimizing properties for launch in 2021

Increase in sensing demand(ex. autonomous driving)-> Seize the opportunity to expand
share of image sensor market
28

Ⅳ-5

Progress on Major Issues:
New Products (Next-generation Power Semiconductors)

Comparisons of Power Semiconductors
Type

Silicon(Si)
Siliconcarbide(SiC)
Gallium
nitride(GaN on GaN)

Operating Operating
frequency
voltage

○

○

◎

○

○

◎

Size
(*1)

△
○

◎

Characteristics••

Well proven
Cost competitiveness••High operating voltage
Already in massproduction (*2)•

At the R&D stage*1 Power unit size for the same output*2 For some electric vehicles and high-speed trains

 Our position• Have manufacturing technologies forboth GaN substrates and GaN
epi-wafers

ActionPlan

Development of the GaN on GaN
Power Semiconductors Market
Characteristics(compared with Si/SiC)

 Low loss-> Energy saving
 Small-sized-> Light weight

Example uses (expected)

 Power sources fordata centers Electric vehicles
 Wireless power supplies

Need to reduce costs and develop applications
that require the characteristics of GaN on GaN
power semiconductors
IR Day: IT-related Chemicals

Progress☑ Reduce cost of GaN substrate(produce large-diameter
substrates, improve productivity)☑ Develop applications bycollaborating with other players☑ Made progress in development ofelemental technology for
manufacturing GaN substrates
suitable for power
semiconductors

Create a market for GaN on
GaN power devices andenjoy first-mover advantage
29

ⅣIT-related Chemicals

1

Business Overview

03

2

Business Strategy for
FY2019-FY2021

09

3

Financial Statements

114Market Environment

135Progress on Major Issues

196Long-term Targets

30
30

Ⅳ-6 Long-term Targets(100 Million JPY)

Further improvement ofour business portfolio

500

Focusing onhigh value-added products &Developing/launching
new businesses

400
300
200
100
0

FY2019Results

FY2020
Forecast

Display-related materials
Semiconductor materials
Others (including new products)

IR Day: IT-related Chemicals

Mid-2020s
Estimate

Materials for OLED/
next-generation displays
Materials at the boundary area
between semiconductors &displays

Materials for cutting-edge
semiconductor processes
High-performance &energy-saving compound
power semiconductors etc.

Carry out action plans in response to
LCD market changes

Aim for a core operating
income of around ¥50 billion
in the mid-2020s
31

Health &Crop Sciences
SectorⅤ Nobuaki Mito

Representative Director &Managing Executive Officer

1

Ⅴ

Health & Crop Sciences Sector

1

Performance Trends

2

Contribution to the Containment of05
the Infectious Disease Pandemic

3

Vision & Growth Strategy

07

4

Performance Outlook

25

03

2

Ⅴ

Health & Crop Sciences Sector

1

Performance Trends

2

Contribution to the Containment of
05
Infectious the Disease Pandemic

3

Vision & Growth Strategy

07

4

Performance Outlook

25

03

3

Consolidated Performance Trends in the
Ⅴ-1
Health & Crop Sciences Sector
500
450

78

Sales

（Billion JPY）

Core Operating Profit

90
80

400

70

350

47

300
250

60

44

50

31

200

20

150
100
0

FY15

FY16

FY17

FY18

30
20

2

50

40

FY19

10
FY20

0

(Forecast)
IR Day: Health & Crop Sciences4

Ⅴ

Health & Crop Sciences Sector

1

Performance Trends

2

Contribution to the Containment of
05
Infectious the Disease Pandemic

3

Vision & Growth Strategy

07

4

Performance Outlook

25

03

5

Ⅴ-2

Contribution to the Containment of the
Infectious Disease Pandemic

SanTerra Co., Ltd.
Material for medical
gowns（PE Film）

Contribution to solving
the supply shortage of
medical PPE inclinical environments
IR Day: Health & Crop Sciences

Sumitomo Chemical
Garden Products Inc.
Household antiviraldisinfectants spray

Contribution to
improvinghousehold hygiene

Sumika Environmental
Science Co., Ltd.

Antiviral agentsContribution toenhancing public health(e.g. surface treatment for
buttons on a vending machine)

6

Ⅴ

Health & Crop Sciences Sector

1

Performance Trends

2

Contribution to the Containment of05
the Infectious Disease Pandemic

3

Vision & Growth Strategy

07

4

Performance Outlook

25

03

7

Long-Term Vision for
Ⅴ-3
the Health & Crop Sciences Sector

Ensure Public Healthand Hygiene

HealthFood

Increase Food Production
Sustainable Agriculture
Safer Agricultural Produce

Sumitomo
Chemical

Improve QoL andthe Environment

R&D

Environment

Strengthen high-profitability businesses
Expand business globally
Ensure compliance & maintain safe operations
Differentiation
IR Day: Health & Crop Sciences

Business
Creation

Innovation
8

Business Growth Strategy Aligned with
Ⅴ-3
Long-Term Vision
Key Words for
the Growth Strategy

GlobalInnovation

Differentiation
Business
Creation
IR Day: Health & Crop Sciences

Topics covered in this presentationProgress update on the AgroSolutions businessexpansion in LATAM & India

Progress update on the AgroSolutions productdevelopment pipelineNext Generation Tech-development：
Access to Synthetic BiologyDigital Transformation (DX) indomestic Ag-Market

Strengthening the Biorational business

Creating and expanding an
Antiviral-product business

Expanding our product portfolio in the
Animal Nutrition business

Business development in Nucleic Acid medicine
9Global Business Expansion:
Ⅴ-3
AgroSolutions

GlobalExpanding & strengthening our sales footprintin 5 of the 6 top global Ag-markets
Crop Protection Market Size（Year 2019）
Brazil
USA
China
Japan

Acquisition of
Nufarm’s LATAM business
Strengthening the sustainable
solution business at Valent USA
Reinvigorating growth in thedomestic AgroSolutions
business

Argentina
India
FranceCanadaMerger of subsidiaries in India

RussiaGermany
Australia
Italy(mil. US$) 0

2000

4000

6000

8000

10000

Source：AgbioCrop （Oct 2020)

IR Day: Health & Crop Sciences

10

Global Business Expansion:
Ⅴ-3
AgroSolutions Business in LATAM

GlobalAcquired 4 subsidiaries of Nufarm in LATAM(Brazil, Chile, Argentina and Columbia)

Invested
approx.
90bn. JPY

Sales in LATAM togrow to 200 bn. JPY

PMI Progress With new managementin place, integrated
operations began inAugust 2020
 Accelerate use of
Fortaleza plant―
5 new formulated
products entering
production

Plant in Fortaleza, Brazil

New product development
Decision A registration application for
a new INDIFLIN™ mixture product developedby Nufarm has been submitted,
following the application for an INDIFLIN™
mixture developed by SCC filed in 2017.

Closing
INDIFLINTM tobe launched in
LATAM‘19 ‘20 ‘21

‘25

‘29

*LARC: Latin America Research Center
IR Day: Health & Crop Sciences Other new product development is also being
accelerated by utilizing
Sumitomo Chemical’s LARC facility*11Ⅴ-3 PMI Progress (Acquisition of Nufarm LATAM)

GlobalCompleted onboarding forover 700 employees.
Sumitomo Chemical’s
history & spirit deeply
shared through active
participation by
SCC management

Over 10,000
stakeholders
engaged incommunication

Over 75 people
involved in the project,divided into
20 functional working
groupsDespite the Covid-19
situation and the fact thatsome people never met inperson, teams are highly
motivated and working
together wellOver 200 policies
and procedures
were mapped andanalyzed acrossall functional areas

Over 250 virtual
meetings held acrossall people engaged in
the integration project

174 milestones and851 activities mapped in
the integration plan –roughly half of thosemilestones completed

Early realization of
cost synergies &cost reduction due tosmooth integration of
IT systems (SCM, CRM,
etc.)

200 bp reduction ininterest on loans
achieved under
Sumitomo Chemical’sgroup finance scheme

IR Day: Health & Crop Sciences

12

Global Business Expansion:
Ⅴ-3
AgroSolutions business in India

GlobalAgroSolutions Market in India
Growing at 7 to 8% per year
(mil.USD)

600

FY25
TargetCombine Sumitomo Chemical’s proprietaryproducts with the former ECC’s generics.

FY18 results

500

 Utilize former ECC manufacturing facilities

400

Plan to manufacture some of
Sumitomo Chemical’s products in India to securesupply capacity in the existing plants in Japan300
ex-SC India

200
100

 Promote digital marketing

ex-ECC
Bayer

Syngenta

Integrated
Company

FMC

Integrated
Company0

Initiatives to achieve synergies from
integration
 Develop and Launch
new mixture products

Expand sales in India by using social media
and smartphone apps to reach end-users,
many of which are small-scale farms

 Strengthen the Biorational business

Promote the introduction of new products byworking closely with Valent BioSciences

Aiming to be a leading AgroSolution products company inIndia’s rapidly growing market
IR Day: Health & Crop Sciences13

Ⅴ-3 AgroSolutions Pipeline Outlook
B2020
CompoundUse

Evaluation

Full-scale
development

Innovation

Registration

Market Launch
Launched in Japan in 2020

INDIFLINTM

Agricultural fungicide
e.g. Soybean rust

☑ Completed☑ Registered in
Japan

PAVECTOTM

Agricultural fungicide
e.g. Septoria☑ Completed☑ Registered inJapan

Scheduled to belaunched in Japan
in 2021

ALLESTM

Agricultural insecticide
e.g. Major rice pests etc.

☑ Completed☑ Submitted

Scheduled to belaunched in Japan
in 2021

Name - TBD

Agricultural fungicide(inpyrfluxam)(methyltetraprole)(oxazosulfyl)(pyridaclomethyl)e.g. Field crop & vegetablediseases

Pipeline A

Agricultural plant growth
regulator

Pipeline B

Next generation herbicide
effective against
herbicide-resistant weeds

Pipeline C

Botanical insecticide for
agriculture andhousehold hygiene

Pipeline D

Agricultural insecticide tocontrol insecticide-resistant
Pests

A2020

☑ Completed

Scheduled to be launchedin LATAM in 2021

☑ Submitted☑ Submitted
Full-scale
developmentin progress
Full-scale
developmentin progress

Evaluationin progress

Potential sales: Approx. JPY150-200 billion in total
IR Day: Health & Crop Sciences

14

Development of
Ⅴ-3
Next-generation Technologies
Introduction of
new technology to strengthencore R&D capabilities

Discovery of
new chemical substances- AI (Docking simulation)- Target-based screening- Technology introduction
promoted by open
innovation approach

Innovation

Technology development for
creating new business

ChemicalProcesses- Utilize AI- Flow process

Applications- Utilize drones- Utilize sensing
technologies- Utilize eco-friendly
materials for
product design

Biorationals/Botanicals

Crops/Agriculture- Evaluate & introduce natural
plant-based products- Utilize synthetic biology- Innovative fermentation process
technologies- Develop a newvariety of rice
- Phenotyping- Plant growth prediction

IR Day: Health & Crop Sciences15

Ⅴ-3 Next-generation Technologies for the

Biorational Business

Discovery ofnovel microorganisms
and natural products
Provide library ofmarinemicrobes

Skill indeveloping
Biorational
products

Innovation infermentation processes
through synthetic biology

VBC
Biorational
ResearchCenterInfrastructure for,and skill inscreening
Sumitomo
discovered
Chemicalcompounds
H&CS Sector
Research Lab

IR Day: Health & Crop Sciences

Innovation

Sumitomo
ChemicalCorporate
Research Lab

16

Ⅴ-3 Long-term Biorational Growth Drivers

Differentiation

Cropping
System~10b People by 2050
50% More Food

Nutrient
Efficiency

Seeking Yield Boost
Abiotic
StressMitigation

Sustainable&
Holistic
Agriculture
Approach

Integrated
Pest
Mgmt.

(+17% crop loses 2050)

Soil
Biodiversity

Stress Mitigation
Soil Health Trend &Awareness
Microbial
Biodiversity
IR Day: Health & Crop Sciences

Food Supply  Grower

Sustainable Ag

Precision
Ag

Climate Change

Consumer Demand“Safe”/Local/Quality

Loss of Conventional

Non-Fertilizer Yield
Improvement
Bio Yield
Alternatives

Crop Protection

Integrated Programs17Ⅴ-3 Strengthening the Biorational Business

Differentiation

Contents
 Streamline management layers to enable

Business
Management
Structure

more swift strategic decision-making &resource allocation.
 Establish and strengthen SSBUs(Sstainable
Solution Business Units), dedicated teams for
Biorational demand creation in key countries /markets.

 NAFTA: Significant increase in personnel for SSBU LATAM and Europe: SSBU newly established Harness technological innovation in

R&D

Synthetic Biology for Biorational R&D activities(e.g. cost-reduction projects for existing products,
novel product development and launch) Establish Biorational Team in H&CS Sector
Research Lab to accelerate pipeline development

Accelerate launch of 6 pipeline products in later development
stages (PGR 4, Bioinsecticide 1, Rhizosphere 1)
IR Day: Health & Crop Sciences18

Agricultural Digital Transformation (DX)Ⅴ-3
in JapanInnovation
We aim to build a digital information platform which can provide
Japanese growers with useful & valuable information, which will
enable us to find solutions for various challenges (e.g. aging population,
frequent abnormal weather conditions, labor shortages, etc.) thatdomestic agri-business is currently facing
Agri-inputs

Distributors

Agri-inputs

Digitized Information
Human
Resorces
AgriInputs

Administ
rativeSales

Farming

IR Day: Health & Crop Sciences

19

Ⅴ-3

Create & Expand an
Antiviral-product Business
Development ofactiveingredients
 Improve quality ofexisting active
ingredients

Actionitems

Business
Creation

Product
portfolio
expansion
 Development of applied
technology for resin /coating use

 Discovery / Development of devices
development /(e.g.)
introduction of Optical film
new active ingredients

Sales
expansion
 Coordination &collaboration with
Sumitomo Chemical’sgroup companies, such as
Sumika Environmental
Science Co., Ltd.

 Smartphone case(e.g.) Natural plant extracts
 General-purpose
plastic films(buttons /touch panels on
vending machines,
elevators, etc.)

Creating a new, core business pillar in the Environmental Health
Division in response to societal demand for COVID-19 containment
IR Day: Health & Crop Sciences20On-going Profit Improvement Activities
Ⅴ-3 in the Methionine Business

Manufacturing

Logistics

Increase output withminimal CapEx
 Shut down
aging facilities to savemaintenance costs
 Cost reduction

Inventory managementwith DX
 Rationalization ofinternational shipping
costs





Sales & Marketing
Procurement
Reducing the purchase priceof key raw materials

IR Day: Health & Crop Sciences

Optimization of focused sales
territories / key accounts
 Efficient use of sales force

21

Expansion of the Animal Nutrition
Ⅴ-3
Business Product Portfolio
 The following pipeline products foranimal nutrition are
under development

Pipeline E

Pipeline F
Pipeline G
For cattle

For poultry

For hogs
Weight gain

Business
Creation

Guanidinoacetic
Acid
For poultry
Increased feed
efficiency/Increasein muscle mass

Increased
feed efficiency

Essential
amino acids

IR Day: Health & Crop Sciences22Promote the Nucleic Acid Medicine
Ⅴ-3 Business (1)Business
Creation Supply active ingredient of nucleic acid drug for Covid-19
 Bonac Corporation and Fukuoka Institute of Health &Environmental Sciences are jointly screening candidate
substances that can disintegrate virus genes

 A candidate substance will be selected by the end of 2020.
Production will commence in early 2021.
The virus adheres toa cell membrane

Bonac Nucleic Acid

Disintegrating the virus genes

It enters the cell

IR Day: Health & Crop Sciences

Virus genes flow out
in the cell

Proliferated viruses are
released outside the cell23

Promote the Nucleic Acid Medicine
Ⅴ-3
Business (2)Business
Creation Supply long-chain RNA for genome editing use
 Supply long-chain RNA for Crispr‐Cas9 genome editing technology(which won the Nobel Prize in Chemistry in 2020) The only technology in the world that enables the manufacture ofa large amount of high-purity long-chain RNA under GMP conditions

Cas9
DNA

gRNA

IR Day: Health & Crop Sciences24

Ⅴ

Health & Crop Sciences Sector

1

Performance Trends

2

Contribution to the Containment of05
the Infectious Disease Pandemic

3

Vision & Growth Strategy

07

4

Performance Outlook

25

03

25

Ⅴ-4 Top-line Growth Going Forward
Acquisition of
ECC (India)

Global

FY2014
Innovation Business
Creation

Acquisitionof MA (US)Acquisition of
Nufarm (LATAM)

FY2016FY2017

Acquisition of
BRA (Australia)

FY2019FY2021

INDIFLINTM
Launch in LATAM

Vision for Revenue GrowthNewproducts(e.g.B2020)

Existing
products

Expanded footprint
×
New product launches

Existing
Sales
Potential
Existing
footprint

IR Day: Health & Crop Sciences

Strive to achievestrong revenue growth byleveraging past strategic
investments in a
multiplicative way

Expanded footprint(e.g. LATAM)

26

Performance
Outlookinthe
Ⅴ-4
Health & Crop Sciences Sector
Core Operating Profit（billion JPY）

Revenue Growth80• B2020/A2020 Launches• Biorational Business Expansion• Growth in LATAM / India

Profit Improvement
Revenue Growth

31
2.1





FY2019ActualFY2020 FY202X
Forecast

IR Day: Health & Crop Sciences

ForecastStrengthen cost competitivenessof the methionine business
Differentiate our proprietary crop
protection products from generics
Optimize operating expenses

27

Pharmaceuticals
SectorⅥ Takashi Shigemori

Director &Senior Managing Executive Officer

1

Ⅵ

Pharmaceuticals Sector

1

Business Environment andProgress of Action Plan

03

2

Development of
Next-generation Businesses

113

Efforts to Prevent the Spread of
Infectious Diseases

17

2

Ⅵ

Pharmaceuticals Sector

1

Business Environment andProgress of Action Plan

03

2

Development of
Next-generation Businesses

113

Efforts to Prevent the Spread of
Infectious Diseases173Ⅵ-1 Business Environment
Environment+ Opportunities
アクションプラン・検討課題

 Global healthcare and pharmaceuticalmarkets continue to expand

 Emergence of new therapeutic
approaches through technologicalinnovation (preemptive, individualized
and regenerative medicine)-Threats

 Shortage of healthcare finances Competition with generic drugs after
the loss of exclusivity(Risks: Latuda®, FDG-PET) Entry of new players across industries
into healthcare business spaces Decline in industry-wide R&D
productivity
IR Day: Pharmaceuticals

Group Initiatives
1. Offering New Value in Medical
Practice through New Technologies

進捗状況• Regenerative medicine and cell therapy• Theranostics (fusion of diagnostics andtherapeutics)
2. Timely Launch of Next-generation
Products• Continuous expansion of promisingpipeline through in-house drug discovery
and in-licensing

Drastic reinforcement throughstrategic alliance with Roivant
3. Improving R&D Efficiency andIncreasing the Probability of Success• Strengthening in-house R&D capability
through various approaches, such as
digital technology and big data4

Ⅵ-1 Business Strategy: Pharmaceuticals Sector
FY2019-FY2021

Corporate Business Plan

Action plan & major issues

Progress Maintain profitability after◆Acquired late-stage assets
Post-merger integration is progressing, including
development of strategic pipeline and establishment ofsales structure utilizing existing North Americanbusiness bases.
◆Acquired data science technology platforms,
such as “DrugOme,” to accelerate digital innovation

Latuda’s loss of exclusivity

 Enhance drug discovery capabilities

and improve the success rate in R&D

 Strengthen innovation base withnew approaches to drug discovery

Strategic Alliance with Roivant Sciences

Launched sublingual film for the treatment of
Parkinson’s disease off episodes

Continuing clinical trials of napabucasin forcolorectal cancer

 Explore opportunities inPromoting R&D of new healthcare solutions using
cognitive activation therapy andbiological sensing technology

 Develop theranostics business and

R&D site for radiopharmaceuticals will be
operational in 2020.



Establishment of S-RACMO Co., Ltd.,a new CDMO company for regenerative medicine
and cell therapy, and development of novel drugs
for infectious diseases.

 Launch new products in oncology

frontier businesses(healthcare solutions)strengthen the competitiveness ofexisting radiopharmaceutical business Expand group synergies in

the pharmaceutical business

IR Day: Pharmaceuticals

5

Pipeline for Pharmaceutical Agents and
Ⅵ-1
In-vivo Diagnostic Agents
Product Launch Targets
FY2020

FY2021KYNMOBI™
(OFF episodes
associated with
Parkinson’s disease)
Launched in September
LATUDA(Schizophrenia／
Bipolar depression)
Launched in June

RVT-802(Pediatric congenital
athymia)

Relugolix(Prostate cancer)

Relugolix(Uterine fibroids)

Vibegron(Overactive bladder)

Imeglimin(Type 2 diabetes)：Psychiatry & Neurology：Regenerative medicine/
cell therapy：Frontier field：Oncology

IR Day: Pharmaceuticals：Oncology：Radiodiagnostic agent

FY2022

FY2023

SMC-01(Mobile App. formanagement of Type 2
Diabetes)

NMB46(Vasodilator forcoronary arteries)

Napabucasin(Colorectal cancer)

Napabucasin(Colorectal cancer)

Allo iPS cell-derived
products(Parkinson’s disease) *2

SEP-363856(Schizophrenia)

Allo iPS cell-derived
products(Age-related macular degeneration)

Launch target underconsideration*2

Relugolix(Endometriosis)
Expect peak annual sales to be
50 billion yen or more.
(described in first launch)

FY2024

NMB58(PET diagnostics formyocardial perfusion
scintigraphy)

Alvocidib(Myelodysplastic *1
syndrome)

Dubermatinib(TP-0903)(Solid tumors)

TP-0184(Solid tumors)

TP-3654(Hematologic
malignancies)

*1

*1

*1

*1 Premised on utilizing the accelerated approvalprogram. (consultation with FDA planned)*2 Launch schedule is based on
our targets, pending agreement with partners.

6

Progress in Strategic Alliance with
Ⅵ-1
Roivant Sciences: Pipeline Development
Current development status of strategic pipeline
Product

Relugolix

Indication

Current
development
statusExpected schedule for
NDA or approval

Prostate cancer

NDA submitted(US)

PDUFA date Dec. 2020

Uterine fibroids

NDA submitted(US, EU)PDUFA date June 2021

Endometriosis

Phase 3

Plan to submit NDA in
FY2020 4Q (at earliest)

Overactive bladder(OAB)

NDA submitted(US)

PDUFA date Dec. 2020

OAB in men withbenign prostatic
hyperplasia

Phase 3

Plan to submit NDA in
FY2021 4Q (at earliest)

Myovant

Vibegron
Urovant

IR Day: Pharmaceuticals

7

Progress in Strategic Alliance with
Ⅵ-1
Roivant Sciences: Post-Merger Integration etc.
Maximizethe value ofstrategic pipeline

Expansion of Group Synergies

2020/11
Acquired 100%
ownership ofUrovant
2021～

Expansion ofshared service
with Sumitomo
Dainippon
PharmaAmerica

2020/6, 8

Commercial
collaborationagreement with
Sunovion

2020/10

Co-promotion
agreementwith Sunovion

Expansion of Product Potentials

IR Day: Pharmaceuticals

8

Ⅵ-1 FY2020 Performance Forecast(Released on October 30, 2020)
Performance Trends

FY2020 Forecast (Billions of yen)Sales of pharmaceutical agents remain generally
strong regardless of the influence of COVID-19

進捗状況
Sales revenueOn the other hand, the number of laboratory tests
for in-vivo diagnostic agents is lower due to the
avoidance of medical consultation and restriction oflab tests because of COVID-19

Core operating incomeHigher SG&A and R&D expenses due to the alliancewith Roivant, with newly acquired drugs yet to belaunched

535.0
51.0

Variable Factors ofCore Operating Income(FY2019 Results against FY2020 Forecast)Risks and Challenges

Delay in sales expansion of newly-launched products
and in recovery of the number of lab tests, caused by
the recurrence or prolonged epidemic of COVID-19
Delay in determining the results of the Phase 3 clinical
trial for napabucasin because of the influence of
COVID-19
Increase in upfront investment in late-stage pipeline forsmooth market entry
The impact of acquiring 100% ownership of Urovant
announced in Nov. is being examined.

IR Day: Pharmaceuticals

75.3

-50.4

+15.0
+18.1

Upfront-7.0
expenses
for the​NHI drug Quantity
alliance withdifference
price
Roivant
revisions
Sciences

FY2019Results

Cost
cutting

51.0

FY2020
Forecast

9Mid- to Long-Term Outlook for
Ⅵ-1
the Pharmaceuticals Sector
Major changes in
the past 6 months
Investors’ Meeting for the Current Priority Management
Issues and Business Strategy on May 28, 2020

Initiatives in the Group1

Upward revision of
FY2020 resultsCore operating income
37.0 → 51.0 billion yen
2

レルゴリクス
開発・販売提携

Promotion of sharing
Sunovion’s capabilities

Use of Sunovion’s distribution
channels (Myovant, Urovant)Expansion of access togeneral practitioners(Urovant)

3

Acquired 100% ownershipof Urovant

Timely provision ofoperating & growth funds
Maximize group synergies
IR Day: Pharmaceuticals

10

Ⅵ

Pharmaceuticals Sector

1

Business Environment andProgress of Action Plan

03

2

Development of
Next-generation Businesses

113

Efforts to Prevent the Spread of
Infectious Diseases1711Ⅵ-2 Creating New Value through Group Synergies
Regenerative
medicine &cell therapy
Expansion of business scopein regenerative medicine &cell therapy area

Fundamental tech.
for iPS cells

Theranostics

Development ofnovel companion diagnostic& therapeutic agents forcancer using RI

RI-labeling Tech.

Infectious
Diseases
Control

Frontier
Businesses

Development ofnovel vaccines & therapeutic
agents against AMR bacteria

Offering healthcare
solutions beyond
pharmaceutical agents

Knowledge about
infectious diseases

Digital tech.

R&D capabilities forin-vivo diagnostics
R&D capabilities forpharmaceuticals
RI Radioisotopes
Today’s topics

Material design tech.
Organic chemistrytech.
Safety assessment
tech.

IR Day: Pharmaceuticals

12

Ⅵ-2 ① Regenerative Medicine and Cell Therapy
Proposed indication,
etc.

Partners

Region(planned)

Cell type-Duke
University

GlobalCultured thymus tissue

Under preparation to
resubmit BLA

GlobalAllo iPS cell-derived
retinal pigment
epithelium

In progress:
clinical researchPreparing to start
clinical study (Japan)-KyotoUniversity-CiRA

GlobalAllo iPS cell-derived
dopamine neuralprogenitor

In progress:
investigator-initiatedclinical study(Phase 1/2 study) (Japan)

Retinitis
pigmentosa-RIKEN

GlobalAllo iPS cell-derived
photoreceptor(3D)

In progress:
clinical research

Spinal cord injury-Keio
University-OsakaNational
HospitalGlobalAllo iPS cell-derived
neural progenitor

In progress:
clinical research

Kidney failure-JikeiUniversity-Bios-PorMedTec

Japan,
North
America

Auto/Allo iPS cell-based
differentiation-induced
nephron progenitor
cells (organ)

In progress:
pre-clinical research

Pediatric
congenital
athymia(RVT-802)

AMD(Age-related
maculardegeneration)

Parkinson’s
disease(Designated as a
“SAKIGAKE”)-Healios-RIKEN

StatusPlannedschedule
FY2020
Launchschedule
FY2022** Launch schedule is based on our targets, pending agreement with partners

IR Day: Pharmaceuticals

13

② Entry into CDMO Business for
Ⅵ-2
Regenerative Medicine and Cell Therapy
CDMObusiness Medicine
for
CDMOs forRegenerativeand medicine
Cell Therapy
regenerativeand cell therapy(Manufacturing
Development(Contract
Development Method
and Manufacturing
Organization)
and Contract manufacturing)□ Demand for pharmaceutical contractdevelopment and manufacturing offers
high growth potential.
□ In the area of regenerative medicine and celltherapy, there are only a limited number ofcompanies in Japan that have the advanced
technologies required for CDMOs.
□ Leverage the strengths of Sumitomo
Chemical and Sumitomo Dainippon Pharma

Projection of global demand forregenerative and cellular medicine($ Billion)

100.0

50.0

0.0

(worldwide)

Growing at

13%

76.4

approx.
annually
5.4
2018

17.5

2020

2025

(year)

 Fundamental technology related to
ES/iPS cells

 Industry-leading-level expertise on
regenerative medicine and cell therapy

 Expertise on CMO business for API

 iPS cell-derived cell therapies indevelopment pipeline Analysis and Safety Assessment of
the products

Contributing to Resolving Healthcare Issues by Leveraging Group Synergies
in the Area of Regenerative Medicine and Cell Therapy
IR Day: Pharmaceuticals

14

② Entry into CDMO Business for
Ⅵ-2
Regenerative Medicine and Cell Therapy(51％)• Expertise on regenerative medicine
and cell therapy• Lease of existing facilities• Dispatch of necessary personnel,
such as technical staff.

(49％)• Investment,
Financing• Providing Services• Dispatch of necessary personnel,
such as technical staff• Provide industrial technology inthe future.

S-RACMO Co., Ltd.
Contracts for development of
manufacturing process andproduct manufacturing

Solutions to
manufacturing issues

Access to new opportunities forcell therapeutics(iPSCs ＆ other cell types)

Therapeutic candidates developed by academia & startups(Issues: Establishment of manufacturing systems)* CorneaGen, Inc.(Washington State, US)and Sumitomo Dainippon Pharma will jointly develop
cellular therapeutics with corneal endothelial cells. S-RACMO plans to receive the contract todevelop the manufacturing process and to manufacture the product, as its first project.

IR Day: Pharmaceuticals

15

Ⅵ-2 ③Theranostics
Theranostics=

Therapeutics

Diagnostics

Basic concept of “Theranositcs”
executed by Nihon Medi-Physics

Diagnostic
RI
Ex. 89Zr(zirconium)

Utilize a common
core molecule(antibodies, peptides etc.)

A commoncore molecule

RI-labeledDiagnostic
Agent

Therapeutic
RI

RI-labeled
Therapeutic
Agent

Ex. 225Ac(actinium)

Selectively deliver
RI-labeled diagnostic
or therapeutic agents
to target organ

Adopted by AMED*1 as CiCLE*2*１ AMED: Japan Agency for Medical Research and Development*２ CiCLE: Cyclic Innovation for Clinical Empowerment

IR Day: Pharmaceuticals

Fusion of diagnostic andtherapeutics

Aims of Theranostics Project１

Offering new value in medical
practice through nuclear
medicine Development of companion diagnostic
and α-emitting therapeutic agents for cancer
using radioisotopes (RI) originated in Japan Expecting approval and launch in thesecond half of the 2020s through open
innovation within and outside the Group2

Building a new earnings base As the pillar for next-generation
businesses following FDG-PET Expanding the ratio of new products toapproximately 30% by 2030, along with
new PET diagnostic agents underdevelopment

16

Ⅵ

Pharmaceuticals Sector

1

Business Environment andProgress of Action Plan

03

2

Development of
Next-generation Businesses

113

Efforts to Prevent the Spread of
Infectious Diseases1717Ⅵ-3 Global Infectious Disease Issues
Besides COVID-19, the following issues remain to be solved
regarding infectious diseases.
* As for COVID-19, we participate in the US COVID-19 Research-Database, donate to the Kitasato Institute’s Project
for COVID-19 and provide medical protective equipment.

Global Health Issues• Threats of periodic pandemics by new
strains of influenza viruses.
• The target for developing new vaccines
has shifted to diseases for which
vaccines are more difficult to develop,
such as mycobacterium tuberculosis,
malaria and HIV, although the number of
infected patients is large.

Spread of Antimicrobial- Resistant(AMR) Bacteria• Since the 2010s, AMR bacteria have beenrecognized as a global issue.
• If no measures are taken, in 2050 an
estimated 10 million people will die
worldwide, and it is considered the next
threat after COVID-19.

We aim to create (I) Novel Vaccines (Universal Influenza and Malaria)
and (II) Therapeutic agents for AMR bacteria, by utilizing ouraccumulated knowledge in R&D in the area of infectious diseases.
IR Day: Pharmaceuticals

18

Development of Novel Vaccines and
Ⅵ-3
Therapeutic Agents against AMR Bacteria
Development of Vaccines

Universal
Influenza Vaccine

Joint
Research

The next-generation vaccinethat protects against various
subtypes of flu viruses incl.
pandemic ones
Joint
Research

Malaria Vaccine

IR Day: Pharmaceuticals

Therapeutic agents against AMR bacteria

Novel
VaccineAdjuvant

Possibility of
adjuvant
manufacturing
in Sumitomo
Chemicalin the future

Accumulated
knowledge indrug discovery
in the area ofinfectious
diseases.

Joint
ResearchResearch scientists at
Sumitomo Dainippon
PharmaNovel Malaria Vaccine

A long tradition andtrack record in
infectious disease researchover 100 years.

Drug discovery groupled by Dr. Ohmura(Nobel Prize Winner) in
Kitasato University

Aim to overcome global issues on AMR bacteria

19

Cautionary Statement
Statements made in this document with respect to Sumitomo Chemical’s current plans,estimates, strategies and beliefs that are not historical facts are forward-looking
statements about the future performance of Sumitomo Chemical. These statements
are based on management’s assumptions and beliefs in light of the information
currently available to it, and involve risks and uncertainties.
The important factors that could cause actual results to differ materially from those
discussed in the forward-looking statements include, but are not limited to, general
economic conditions in Sumitomo Chemical’s markets; demand for, and competitive
pricing pressure on, Sumitomo Chemical’s products in the marketplace; Sumitomo
Chemical’s ability to continue to win acceptance for its products in these highly
competitive markets; and movements of currency exchange rates.

- 20 20