ROHTO Well-being Report
Rohto Well-being Report 2021

2021

Providing well-being to people allover the world by delivering healthWorking to realize a sustainable society in which people can lead long, happy, and healthy lives
Since our founding, “health” has been Rohto’s core value and we have provided many people with accessible

Rohto’s Profit Sharing Policy
Rohto believes that a company is a “public institution of society” and that we can only succeed with the support ofa variety of stakeholders, including employees and their families, business affiliates (suppliers and distributors),
citizens and future generations, countries and local communities, and shareholders. Our management team hasreiterated our determination to address issues concerning society from a long-term point of view in collaboration
with all the people surrounding us and to share the benefits gained thereby into part of our corporate philosophy.
Profits earned through solid businesses will be reinvested with the ideal goal of realizing a healthier and more soundsociety. At the same time, profits will be shared appropriately with the stakeholders who support us from a longterm point of view.

“health” through our over-the-counter (OTC) drug products and skincare products. Enhancing quality of life andextending the healthy lifespan of each individual will not only stimulate economic activity throughout the whole ofsociety but also curb rising social welfare costs, contributing to realization of a sustainable, healthy, and long-lived
society. In other words, our business activities have played a truly essential part in the formation of a sustainable
society in a way that can be considered similar to ESG management. Going forward, we believe our role will be to

Stakeholders That Support Rohto“connect” people all around the world to health, as well as to provide them with well-being. In cooperation with all of
our stakeholders, we practice “well-being management” that is focused on achieving our aim of contributing to the

Rohto’s employees
and their families

well-being of all people and realizing a sustainable society whereby people can enjoy long, healthy, and happy lives.

Corporate Philosophy

1
2

We recognize that Rohto’s greatest responsibility is to continue to contribute to people’s mental
and physical health so that they can lead affluent, happy lives. Therefore, we shall implement
management objectives from a long-term perspective and strive to create value in order toachieve our goals.
Being mindful of our mission as a public institution of society, we shall address issues
concerning society at large in collaboration with all of the people connected to the Company,
and we will share the benefits gained through these endeavors.

What do we mean by “Never Say Never”?
In order to make the world a healthier place, we will look ahead clearly to the path that we shouldtake. And, despite any difficulties, we will keep challenging ourselves to go forward and movebeyond the limitations of conventional thinking.

Citizens and future
generations

We will provide appropriate
remuneration to our employees andtheir families through salaries, benefits,
and training based on a steady increasein sales and profit and in accordancewith the work performed by theemployees. We will also practice healthmanagement to support the mental
and physical health of
employees
and their families.

We will contribute to mental
and physical health by offering
products and services at fair
prices. We will also contributeto keeping people beautiful
and healthy by sharing
knowledge and engaging in
health promotion activities.

Business affiliates(suppliers/distributors)
By steadily increasing oursales, we will not only increase
payments to our businessaffiliates, but also enable themto create more employment
opportunities.

Countries andlocal communities

Shareholders
and investors

We will contribute to society
by paying taxes on the profit
we earn through our businessactivities, -while also aiming tocontribute to the lives ofpeople in local communities.

We will take a long-term
perspective and strive to increase
our corporate value by becoming
a company that truly contributes
to society. We will pay dividends
that reflect business performance
while maintaining a dividend
distribution ratio of 25%.

CONTENTS
01
03
05
09
11
14

Corporate Philosophy and Profit Sharing Policy
The Strengths Supporting Our Sustainable Growth
Financial and Non-Financial Highlights
Our History of Growth
Message from Top Management
Initiatives for Medium- to Long-Term
Sustainable Growth
21 Tackling Climate Change and Consideration for
the Environment

01

ROHTO Well-being Report 2021

23
27
29
30
37
39
41

Human Resources Initiatives
Initiatives for Society
Quality Control and Supply Chains
Corporate Governance
Key Financial Data (11-Year Summary)
ESG and Corporate Data
Global Network

Editorial Policy
We are issuing Rohto Well-being Report 2021 in order to provide a deeper
understanding of our initiatives to increase Rohto’s medium- to long-term
corporate value for the benefit of all our stakeholders, including shareholders
and investors. It includes an overview of Rohto, our medium- to long-term
strategy centered on Well-being, and ESG information.
Any information concerning finances, research and development, or othermatters that is not included in this report can be found on our website.
https://www.rohto.co.jp/

Reporting Period
From April 1, 2020 to March 31, 2021 (some information included also pertains
to outside this period)
Please Note
Any business, planning, or strategic information included in this report which is
not based on the Company’s past performance is a forecast made bymanagement using data that was readily available as of the date of the creationof this report. Therefore, actual results may greatly differ from the forecasts due
to various factors that may affect business performance. We appreciate yourunderstanding of this matter.

ROHTO Well-being Report 2021

02

The Strengths Supporting Our Sustainable Growth
A Culture of Taking on Challenges in Cutting Edge Fields Cultivated over the 122 years“NEVER SAY NEVER”
Rohto’s growth is driven by a willingness to take on challenges that has been a constant part of our culture since theCompany was founded. We started out by selling gastronomical medicines, followed by eye drops, and then in 1931, we
combined the eye drop bottle and dispenser, which had always been provided separately, to launch our dual-end
dropper bottle. In 1985, our pregnancy test kit Checker was approved as the first over-the-counter test product in Japan.
In 1988, we fully entered into the skincare field and accelerated our global development by acquiring The Mentholatum
Company as a fully-owned subsidiary. Moving into the 2000’s, we began selling functional cosmetics such as Obagi and
Hada Labo. Even now, we are constantly taking on challenges in new business categories, such as entering into theregenerative medicine and functional food markets, as we continue our evolution into a comprehensive health and beauty
care company.

A Global Network Spanning over 110 Countries
We are actively expanding overseas in cooperation with our subsidiary The
Mentholatum Company. Rohto Group products are currently sold in over 110
countries and overseas sales account for approximately 40% of consolidated
sales. Our businesses in East and Southeast Asia in particular are driving theCompany’s growth. Following our expansion into Europe, North America,and Asia, we are currently working toward establishing businesses inemerging countries in regions such as South America and Africa.
U.K.

China

CanadaNet Sales by Region
RoW

1%
Asia

Japan

26.5 %

63.8 %

Europe4.5 %America

4.2 %Long-loved

Brands and a Broad Lineup of Products

In the healthcare category, we have a broad lineup of
products, including many brands that have been loved bycustomers for a long time. In addition to our eye drop
products, which boast a top market share, our eye carelineup also includes contact lenses, contact lens cleaning
solutions, and eyewash preparations. Currently, our V Rohto
Premium series of eye drop products that pursue greater
effectiveness is proving popular with customers. Our skincare
product lineup includes seasonal products such as handcreams, lip balms, and the Skin Aqua sunscreen range, alongside a diverse range of other products like De Ou, DEOCO,
and Refrea, which are focused on odor, and CareCera, which protects the body from dry skin. Sales are notably being
driven by Obagi, which fully pursues perfection in terms of vitamin C, and the Hada Labo series, which has pioneered
functional cosmetics through a simple formula. These representative functional cosmetics leverage our strengths as amanufacturer of pharmaceuticals. We also offer a wide range of other products that help citizens lead healthier lives,
such as Pansiron gastronomical medicines, the functional food Rohto V5, and Dotest pregnancy test kit.

A Stable

Financial Foundation

Indonesia

Vietnam

Over

Advanced Technological Capabilities
Through High-level Research and Development

Rohto ranked third in the 2020 rankings of firms’ capability to prevent
other industry companies from obtaining patent rights in the Japanesepharmaceuticals industry. The ranking shows the number of Rohto’s
patents referenced as a reason for rejecting another company’s patentapplication during examinations. This high ranking demonstrates our
status as an advanced company that has an advantage in terms oftechnology compared to our direct competitors. Going forward, we
will use the technological capabilities we have cultivated throughresearch and development into pharmaceuticals and cosmetics as aplatform for contributing to worldwide Well-being.

Ranking

Operating margin (%)

Owners’ Equity Ratio (%)

Free Cash Flow (billions of yen)

ROE (%)

11.5
11.1

11.3

12.3

7.6

2017

03

12.7
68.9

11.4

11.7

64.2

65.1

64.4

9.6

9.8

8.1

7.6

2018

2019

ROHTO Well-being Report 2021

2020
(FY)

2017

2018

2019

countries and regions2020 Ranking of Capability to Prevent Other Companies from Obtaining Patents in the Pharmaceuticals Industry

Despite the continuance of a harsh business environment due to the COVID-19 pandemic, we have been able to stably
maintain our operating margin, ROE, and owners’ equity ratio at high levels. Additionally, although we are carrying out
advanced investment in the ophthalmology area and regenerative medicines aimed at medium- to long-term growth, we
use free cash flow for investments in new projects and spending on facilities and equipment while always ensuring thebalance stays positive. This stable financial foundation ensures we can carry out investment activities from a long-term
perspective.
Operating Margin (%)/ROE (%)

110

U.S.A.

2020
(FY)

2017

2018

2019

2020
(FY)

Name of company

Country

Number of Number ofreferenced patents bypatents competitors

Active Participation by

Diverse Human Resources

As of March 31, 2021, the number of
employees was 6,596 (consolidated). Outof the 1,595 employees of Rohto
Pharmaceutical Co., Ltd., 57.5% were
women (677 men and 918 women) andour ratio of women in management
positions (above leader level) was 26.0%.
This shows that the active involvement of
women is essential to our growth. Also, in
our global network we value locally hired
employees. The identification andpromotion of talented local employees isa fundamental practice and our diverse
pool of human resources is actively
engaged across the entire Group.

1

Merck (Merck Germany)

Switzerland

388

361

2

Bayer

Germany

314

297

3

F. Hoffmann-La Roche

Switzerland

294

286

4

Novartis

Switzerland

288

304

5

PfizerU.S.A.

259

258

6

Otsuka Pharmaceutical

Japan

201

198

7

GlaxoSmithKline

U.S.A.

196

182

8

Merck Sharp & Dohme (Merck U.S.)

U.S.A.

195

193

9

AbbottGermany

193

211

RoW

10

Bristol Myers Squibb

U.S.A.

186

207

11

Takeda Pharmaceutical

Japan

185

189

0.7%

12

SanofiFrance

166

167

13

Genentech

181

14

AbbVie15

Employees by NationalityJapan

36.9% (2,432)(44)

U.S.A.

163

Netherlands

128

129

Asia

AstraZeneca

Sweden

123

130

51.1%

16

Boehringer Ingelheim International

Germany

115

104(3,369)

17

Amgen

U.S.A.

113

131

18

Novo Nordisk

Denmark

101

114

Europe18

Janssen Pharmaceutica

Belgium

101

104

20

Rohto Pharmaceutical

Japan

98

96

5.8% (384)America

5.6% (367)

Source: Research by Patent Result Co., Ltd. The spelling of the companies’ names is based on the names
published by Patent Results Co., Ltd.
ROHTO Well-being Report 202104

Financial and Non-Financial Highlights
Consolidated Financial Highlights
Net Sales

Operating Income and Share of Net Sales

181.2

22.9

billion yen

Operating income

billion yen

Total Assets and ROA

12.7

%

Share of net sales

225.7
Total assets

Owners’ Equity Ratio

billion yen

10.8 68.9
%

%

ROA

(billions of yen)(billions of yen)(%)(billions of yen)

(%)

(%)

200.0

50.0

15

400.0

12

100

183.5

188.3

10.9

181.2

171.7

12.3

154.5

40.0

11.1

150.0

12.7

10.0
12

11.3

300.0

10.8

9.5

80

8.8

9

10.0
9

30.0
100.0

23.0
19.0

20.0

20.8

200.0

22.9

200.9

198.1

181.5

215.6

68.9

64.7

64.2

65.1

64.4

2016

2017

2018

2019

60

225.7
6

6

40

15.4
50.0

0

3

100.0
3

10.0

2016

2017

2018

2019

2020

0

(FY)

In fiscal 2020, net sales decreased due to the impact of the worldwide
spread of COVID-19 and the normalization of mask wearing culture.

Ordinary Income and Share of Net Sales

23.9
Ordinary income

billion yen

2016

2017

2019

2020

(FY)

0

0

2016

2017

2018

2019

28 19.1

11.7

%

ROE

Net income per share
(%)

50.0

15

30.0

15

Net assets per share

12

11.4

200

11.7

1,217.67
150

10.3
20.0
9

7.6

7.6

6
10.0

Dividend payout ratio

(yen)

(yen)

(%)

1,600

30

60

28

10.0

9.2

1,147.42

25

146.781,200

135.13

21

26

22
40

20

15.4

9.7

87.95

81.55

800

86.00

27.0

29.1

23.9

5

10

19.2

19.1

2019

2020

20

400

50
3

10.0

2016

2017

2018

2019

2020

(FY)

0

Ordinary income reached record high levels primarily due to an increasein dividends income.

05

%

16.7
100

18.9

1,115.94
1,030.96

10
8.8

23.9

15.9

0

yen

1,363.42

12.1

18.8

Despite the continuance of a harsh business environment due to the
COVID-19 pandemic, we were able to stably maintain the owners’
equity ratio at a high level.

Dividend per share

(yen)

13.2

30.0

(FY)

146.78 yen 1,363.42 yenbillion yen

Profit attributable to owners of parent

11.0

2020

Dividend per Share and Dividend Payout Ratio(billions of yen)

20.0

0

Net Income per Share and Net Assets per Share

%

22.7

0

Profit Attributable to Owners of Parent and ROE

(%)

10.3

(FY)

There was a steady increase in total and net assets, while ROA wasmaintained above 10%.

(billions of yen)

40.0

2020

There was a slight decrease in operating income due to a decrease in
net sales alongside an increase in R&D expenses related toregenerative medicines and other fields, despite efforts to utilize selling,
general and administrative expenses efficiently.

13.2 16.7

Share of net sales

2018

20

ROHTO Well-being Report 2021

0

2016

2017

2018

2019

2020

(FY)

0

We also posted a record amount of profit attributable to owners ofparent, with five-year average ROE rising to 9.4%.

0

2016

2017

2018

2019

2020

(FY)

Net income per share improved year on year as profitability increased.

0

0

2016

2017

2018

(FY)

0

Following a 2-yen dividend increase in fiscal 2020, we plan to increase
the dividend by 2 yen for fiscal 2021 as well to realize an annual
dividend of 30 yen. This will be the 18th consecutive year that we haveraised our dividend.

ROHTO Well-being Report 2021

06

Financial and Non-Financial Highlights

Consolidated Financial Highlights

Non-Financial Highlights

Free Cash Flow

R&D Expenses

9.8

7.9

billion yen

HR*Rohto Pharmaceutical Co., Ltd. only (non-consolidated)

Female Employees

HR

57.5

26.0

%

billion yen

%

(%)

(%)

80
(billions of yen)(billions of yen)

12.0

6.5

9.0

6.0

58.7

60

9.8

9.6

30

7.9

8.0

11.5

6.8

57.5

58.1

57.7

26.0

57.5
20

7.0

18.6

19.2

2016

2017

21.1

22.8

40

6.1

10

20

8.1

0
6.0

Females in Management Positions

2016

2017

2018

2019

2020

(FY)

4.0

Currently approximately 60% of employees are women, showing thatthe active involvement of women is essential to our business.

2.0

HR

0

2018

2019

2020

(FY)

We are actively recruiting women and steadily growing the ratio of
women in management positions.

3.9
3.0

0

2016

2017

2018

2019

2020

(FY)

We ensured that free cash flow always remained positive while still
investing in new projects and spending on facilities and equipment.

0

2016

2017

2018

2019

2020

(FY)

We carried out advanced investment aimed at medium- to long-term
growth in the ophthalmology area and regenerative medicines.

Paid Annual Leave Taken by Employees

67.4

Net Sales by Region

Smoking Rate

0.1

%

%

(%)

(%)

80
62.2

Net Sales by Business Segment

HR

65.3

70.1

71.6

40

67.4

60

30

40

20

20

10

12.5

Others

2.6%

Eye CareProducts Business

23.2%

0

RoW

1%

Internal Medicines
Business

Japan

12.9%

63.8%

Asia

26.5%

2016

2017

61.3%

07

ROHTO Well-being Report 2021

2016

2017

2018

0.1

0.1

2019

2020

(FY)

13,327

248,000(t/year)20,000t/yearm3/year(1,000 m3/year)400
15,846

Although there was a decrease in sales in each region due to the
COVID-19 pandemic, the share acquisition of Nitten PharmaceuticalCo., Ltd. contributed to an increase in sales in Japan.

0

Environment Water Usage

15,772

14,66913,957300

13,327

10,000

200

5,000

100

0

Although there was a decrease in sales of skincare products such as
lip creams due to the COVID-19 pandemic, the Skincare Products
Business accounts for over 60% of net sales.

(FY)

Environment Total CO2 Emissions

4.5%

4.2%

2020

As a result of efforts in fiscal 2020 to reduce the number of smokers tozero, we were able to decrease the rate to 0.1%.

EuropeAmericas

2019

7.7

The ratio fell as employees worked from home and refrained from goingout due to the COVID-19 pandemic, lessening their need for leave.

15,000SkincareProducts Business

2018

11.6

2016

2017

2018

2019

2020

(FY)

At the Ueno Techno Center, we introduced a cogeneration system by
upgrading gas engine generators, which contributed to reducing total
CO2 emissions.

0

275

2016

290

2017

266

271

2018

2019

248

2020

(FY)

We primarily use both groundwater and tap water for manufacturing
purposes so reduction in production volumes resulted in a decrease inwater usage in fiscal 2020 over the previous fiscal year.

ROHTO Well-being Report 2021

08

Our History of Growth

2008

Rohto began selling Ikatsu gastrointestinal medicine in 1899 with a grand ambition of “making Japan healthy” by tackling
the rampant stomach diseases that had become a social issue in Japan at the time. Since then, we have kept health asa core value of our business as we constantly strived to address the issues of the times by expanding into eye drops,
skincare products, and then functional foods. In this way, we have delivered health to a wide range of people throughnew products and services.
We will continue to be a company that creates sustainable value for our stakeholders by contributing to the beautyand health of people all over the world.

(billions of yen)

120.0

Eye care productsInternal medicine and food products

OthersLaunched V Rohto Premium
high-functioning eye drops

Launched the Skin Aqua range ofsunscreens

2006

1995

Skincare products

2016

2015
100.0

Launched Wakansen kampo-yaku

2007
Launched Rohto C Cube contact lenssolution

1985

1975

Launched Rohto V5 functional food
80.0

2001

Launched Senobic, a beverage that
supports children during growth spurts
60.0

Acquired trademark rights for
Mentholatum

Launched Checker, the first pregnancy
test kit to be sold in pharmacies inJapan

Launched Obagi functional cosmetics

1993

2004

Skincare products

1979

40.0

Launched the Sunplay range ofsunscreens

Launched Hada LaboEye care products

Launched New V-Rohto compoundeye drops

20.0

Internal medicine and food products

Founded
1899

1975

1980

1990

2000

2010

Other

0

2020 (Year)

Major M&As

*Rohto Pharmaceutical Co., Ltd. only (non-consolidated)

09

1988 The Mentholatum Company (U.S.A.)

2007 Meguro Kako Inc.
(currently Qualitech Pharma Co., Ltd.)
2002 MG PHARMA Inc.

ROHTO Well-being Report 2021

2015 Mayado Pharmaceutical Co., Ltd.
2020 Nitten Pharmaceutical Co., Ltd.
2021 Amato Pharmaceutical
Products, Ltd.
2021 Olympus RMS Corporation(currently Interstem Co., Ltd.)ROHTO Well-being Report 2021

10

Message from the President
We will achieve our vision
for 2030 by realizing

Connect for Well-being
In line with its founding commitment to protecting people’s health––
Rohto has a history of venturing into new business fields in order toour cutting-edge technologies. Our history testifies to ourrelentless pursuit of opportunities to promote well-beingby meeting the demands of the times.
In this confused and unpredictable VUCA (Volatility,
Uncertainty, Complexity, and Ambiguity) era, we believet h a t s t a b l e g ro w t h w i l l b e a c h i e v e d t h ro u g h amanagement strategy with multiple-pillar approaches,rather than one that is singularly focused. We will not limitt h e b u s i n e s s d o m a i n s t h ro u g h “ s e l e c t i o n a n dconcentration.” Instead, we will pursue further growth byleveraging our business style which has broadened
business fields based on our unchanging philosophy ofcontributing to well-being.

Aiming for a further major advance in six business areas

address contemporary needs.
That history has imprinted a spirit of readiness to take onchallenges into our corporate DNA, and this spirit remains strong
today.
Under the Rohto Group Comprehensive Management Vision 2030,
which covers the remainder of this decade, we have taken on new
challenges in six fields with a view to contributing to human wellbeing worldwide.

Masashi Sugimoto
President and Chief Operating Officer

Continuing to pursue well-being in uncertain times
In 2019, the 120th anniversary of our founding, we
formulated the Rohto Group Comprehensive
Management Vision 2030, which covers the next 10
years of our business activities. We adopted the slogan“Connect for Well-being” to express our vision of thecompany we aim to become by 2030.
“Well-being” means that individual people are healthyboth physically and mentally and that the society ishealthy as well. We believe that true happiness comesfrom not only enjoying physical and mental health but
also from being able to live an active life every day,accompanied by a feeling of joy. In order to enablepeople all over the world to experience long-term wellbeing, we aim to be a pharmaceuticals company that,besides providing medicines, also connects our various
business, including existing medical and skincare
products so as to contribute to realization of a healthy,
long-lived society. Our determination to achieve this isexpressed through our new vision: Connect for Wellbeing.

11

ROHTO Well-being Report 2021

This approach is actually derived from the Rohto DNA
that has been an intrinsic part of the Company since its
inception. Our business began in 1899 with the marketingof “Ikatsu” gastrointestinal medicines, and developed
through a focus on OTC medicines such as Rohto Eye
Drops, from which the Company’s name originated.
In 1975, we acquired the trademark rights for theMentholatum brand and entered the skincare business(followed by acquisition of The Mentholatum Company asa subsidiary in 1988). We then leveraged our unique
technological capabilities as a pharmaceuticalmanufacturer to launch a succession of functional
cosmetic products, such as Obagi and Hada Labo. Thisbusiness has now grown to become one of our core
operations.
In recent years, we have been further expanding ourbusiness into areas such as regenerative medicine andfunctional foods.
We have been proactively venturing into new businessareas by quickly identifying society’s health needs andrapidly responding to such challenges while developing

Currently, we are continuing to work toward our Business
Area Vision 2030, which was announced alongside theConnect for Well-being management vision. Business
Area Vision 2030 clarifies the business areas that we
intend to focus on over the next 10 years and sets out
goals for each area. The six business areas that comprisethe vision are OTC medicines, skincare, functional foods,
ophthalmology, regenerative medicines, and contractdevelopment and manufacturing organization (CDMO).
In the OTC medicines business area, in which we havebeen active since our founding, we have set a goal of
becoming the market leader in Japan. As Japan’s budget
for healthcare spending tightens, we expect to see more
“switch OTC drugs” in order to curb growing healthcare
costs. Self-medication, whereby individuals attempt toaddress their own health needs before going to see a
doctor, will play an increasingly important role in both
extending healthy lifespans and reducing healthcare
costs. We already enjoy a dominant market share in theeye care product category in Japan, and we boast an
impressive lineup of products across other productcategories such as dermatological, digestive, andkampo-yaku. We plan to further expand this lineup andreinforce product categories by developing our own new
brands and collaborating with other companies.
In the skincare business area, which accounts foraround 60% of our sales, we intend to create productsthat regenerate healthy skin by working on thefoundational functions of the skin. We will win theconfidence of customers by leveraging our capabilities asa pharmaceutical manufacturer to provide products withhigh and reliable functionality based on evidence, with afocus on basic skincare.
We are developing our functional foods businessbased on evidence and trust as our third pillar after OTC
medicines and skincare. Healthy lifespans cannot be
extended solely through reliance on progress inpharmaceuticals and healthcare. Pre-symptomatic andpreventive care are also important. It is said that abalanced diet leads to a healthy body, so we want to help
people build healthy bodies with strong immune systems
through well-balanced nutrition by providing functional

food products that have been developed based on solid
evidence and that can be easily introduced into everyday
diets. We are searching for unique ingredients on whichto center research and development, such as nobiletin, acitrus flavonoid that is found in great quantities in thepeels of fruits such as shikuwasa (citrus depressa
hayata), and globin peptide, which limits build-up of
neutral fats.
A new challenge that we are taking on is accelerating
development of our prescription drug business. As aleading supplier of eye care products, we are especiallyexpanding the area of ophthalmology and aim to rapidly
realize profitability in that field. We took our first step in2020, when we made Nitten Pharmaceutical Co., Ltd.,w h i c h s p e c i a l i z e s i n m a n u f a c t u re a n d s a l e s o fophthalmology eye drops, a subsidiary. This will help us
to discover and develop effective chemical compounds
based on the technological capabilities that we have built
up in the OTC medicines area.
In the regenerative medicines business area, we areaiming to commercialize innovative life science
technologies. Regenerative medicine is currently
attracting attention as a way to address unmet medical
needs (conditions for which there exist no satisfactorytreatments). We are focusing our efforts on regenerative
medicine that uses mesenchymal stem cells. Presently,
we are advancing clinical trials for indications such as
cirrhosis of the liver, knee joint cartilage defects, andsevere pneumonia due to COVID-19.
In the pharmaceutical contract manufacturing field, we
are working to evolve into a CDMO that offers added
value through our unique development skills. In light of
the growing need for pharmaceutical development,
Qualitech Pharma, our pharmaceutical manufacturingsubsidiary, is currently constructing a laboratory building
to reinforce development frameworks.
Finally, the key to realizing our visions will be to“connect.” We are enhancing well-being for all people via
an integrated company approach by deepening
collaboration between various business domains beyond
organizational boundaries, and building mutual trust andconfidence among employees.

ROHTO Well-being Report 2021

12

Initiatives for Medium- to Long-Term Sustainable Growth

Message from the President

Contributing to the health of people worldwide through “well-being management”
Amid the global demand for achieving the UN’s
Sustainable Development Goals (SDGs), practicing ESG
management, and strengthening initiatives that createsocial value, we are committed to practicing well-being
management; Rohto’s unique approach to ESG
management. Focusing on our core value of “health,” weaim to create environmental and social value by building
a governance framework designed to realize that
objective.
A m a j o r p a r t o f t h i s i s p ro m o t i o n o f “ h e a l t hmanagement.” In order to contribute to well-being
worldwide, it is crucial that we first ensure that ouremployees, who will be the ones to make thiscontribution possible, can carry out their daily activities ingood health and happiness. Employees’ health has adirect relationship to the health of the Company, as wellas the health of society at large.
As a specific initiative for promoting employees’ health,
we have introduced the Rohto health currency “ARUCO,”
which is awarded to employees for actions such as
achieving daily steps targets or spending a certain
amount of time walking briskly. We also encourage them
to work toward targets that they can set for themselves,
such as recovering from metabolic syndrome andbringing the smoking rate down to 0%.

Another focus area is creating an environment thatfacilitates diverse and flexible work styles. We encourage
employees to live our traditional corporate culture of“positive persistence,” “taking on challenges,” and “doing
what others won’t do” by boldly and continuously tacklingdifficult issues on their own initiative. In order to maximize
the capabilities of each individual, we have establishedmeasures such as the External Challenge Work program
and the In-house Double Job program, which encourage
employees to take on multiple challenges concurrently,
and the Comeback hiring system, which enables former
employees to return to work at the Company.
Our initiatives for society include those aimed atregional vitalization, and we are putting a lot of effort into
providing operational support for the Michinoku Future
Fund, which is working toward recovery from the Great
East Japan Earthquake and supporting future generationsin affected areas. Regarding the environment, we areswitching to more environmentally friendly productpackaging.
In order to achieve Connect for Well-being, we will
expand connections both within and outside of theCompany and collaborate with trustworthy partners. We
look forward to your ongoing support and guidance.

Rohto Group Comprehensive Management Vision 2030
Rohto aims to be a corporate group that contributes to keeping people beautiful and healthy and that lives up to the
expectations of its many stakeholders. To clarify this commitment, in February 2019, our 120th anniversary, weestablished the Rohto Group Comprehensive Management Vision 2030 detailing our goals for 2030. At the same time,
we formulated the Business Area Vision 2030 clarifying the business sectors we will focus on over the next 10 years andour vision for each. This vision consists of six areas of focus. OTC medicines and skincare are positioned as core
domains, with functional foods as the third pillar of these core domains. Next, the ophthalmology area, regenerative
medicines, and contract development and manufacturing organization (CDMO) are positioned for business growth ascore surrounding businesses. We will seek to further grow and strengthen the OTC medicines and skincare domains as
our core business (businesses/brands that can generate stable profits). They will serve as cash cows providing the funds
to invest in other businesses enabling us to steadily make other businesses profitable.

Management Vision

Connect for Well-being
Education

Connect businesses and create new synergy
Regenerative
medicines
Regional
contribution

Content

Ophthalmology
area

Skincare

CDMO

OTC
medicines

DataCore businesses
Core surrounding
businesses

Exercise
Functional
foods
Agriculture

Devices
Tourism

Beyond corebusinesses

Areas being pursued under Business Area Vision 2030
HealthPre-symptom diseases

Minor diseases

Diseases
Areas to quickly realize profitability(2) Skincare
Create skincare products thatregenerate healthy skin byworking on foundational functionsof the skin(1) OTC medicines
Aim to be a leading OTC medicinescompany in Japan(3) Functional foods
Develop food business based on evidence and trust as our third pillar

Global business(4)
Ophthalmology
area

(5)
Regenerative
medicines

(6)
CDMO

Cultivate the area ofophthalmology as aleading company foreye-care products
and quickly realize
profitability in the
new business

Commercialize
innovative life
science technologies

Evolve into a contractdevelopment andmanufacturingorganization withunique development
skillsAreas to realize profitability overthe medium to long term

Self-care and self-medication

Professional medication

Core businesses

Growth investment businesses

In addition to the cash generated from our existing core businesses of (1) OTC medicines and (2) skincare, we will
optimize costs by controlling the SG&A expense ratio of existing products to generate further cash. Part of the cash
generated will be allocated to building the pipeline in the (4) ophthalmology area and funding R&D for (5) regenerative
medicines.
13

ROHTO Well-being Report 2021

ROHTO Well-being Report 2021

14

Initiatives for Medium- to Long-Term Sustainable Growth

OTC Medicines

SkincareStrategic Direction

Strategic Direction

Aim to be a leading OTC medicines company in Japan

Create skincare products that regenerate healthy skin by working on foundational functions of the skin

The Japan market is entering a period of population decline with little hope for quantitative growth, but due toenvironmental changes such as tighter medical finances, rising health consciousness, and advancements in online
medical appointments, OTC medicines will play an ever increasing role realizing a healthy, long-lived society. As aresult, the market is expected to grow even over the long term. We deal in a broad range of OTC medicine
categories, including eye drops, which is our mainstay product, gastrointestinal medicines, skincare products, andkampo-yaku. While maintaining and strengthening these categories, we believe there is still ample room for growthby expanding into new areas and areas of weakness, such as vitamin preparations, cold medicines, antiinflammatory analgesics, and antiflatulents.

Our skincare business covers four product areas: (1) dermatological medicines; (2) lip balms; (3) sunscreen; and (4)functional cosmetics. Among these, the growth of functional cosmetics is contributing greatly to our growth. Using
evidence-based R&D pursuing safety, efficacy, and mechanisms such as application of core technologies unique toa pharmaceutical company with unique products and knowledge in regenerative medicines, we will continue todifferentiate our products by providing products with high functionality unrivaled by peers. We will also seek out
further growth by actively tapping into large sales channels with room for growth, such as department stores ande-commerce, in addition to existing sales channels.

Strengthen existing categories

Priority Segments to Strengthen Within Existing Categories
Aim to firmly maintain top position and achieve
greater growth. Pursue growth using science andadvanced medicine for vision from eye drops totests and prevention.

Eye-careproducts

Enter New Markets Aiming to Become a
Leader in OTC Medicines
Focus Areas
Categories with large market potential but
without strong brands

Skincareproducts

Increase synergies of technology and brand image
with skincare.

Gastrointestinal
medicines

Category with large market size given our roots
and history. Reinforce from the perspective of
increasing OTC category coverage.

Categories with rising demand for selfmedication

Skin tone

Develop skincare products for maintaining even skin without freckles, acne, or discoloration

Leverage the Rohto Group’s assets to establish a
category strategy driven by “marketability effects”
and aim for top market share.

Categories meeting women’s health needs

Anti-aging care

Search out ingredients that will improve changes in skin due to aging (wrinkles and sagging)kampo-yaku

Sensory categories, such as nose and ears,
with rising needs due to aging population

Odor control

Elucidate odor occurrence mechanisms and develop technologies for controlling odor

Test kits

To prevent various illnesses, reinforce category to
prepare for market growth amid the switch OTC
drugs, such as influenza test kits, in addition toexisting test kits.

Categories where we aim to have a top
market share

Moisturizing and barrier functions Develop functional skincare brands based on core technologies for strengthening moisturizing and barrier functions
Application of tissue regeneration technology Next-generation skincare brand applying expertise from tissue regeneration technology and regenerative medicines to skincare

TOPICS 1

Obagi Series Marked 10 Millionth Sale in the Series in Its
20th Anniversary Year

TOPICS 1

Construction of New Building at Ueno Techno Center to Augment Production Facilities

The Ueno Techno Center manufactures many of our mainstay products including
eye drops such as V Rohto Premium, over-the-counter medicines, and skincare
products such as Hada Labo Gokujun Hyaluronic Lotion, functioning as amother plant and hub for quality control and logistics. We are in the process ofadding a people and environmentally friendly smart plant to increase production
capacity with completion slated for 2022. In addition to increasing production
capacity, the new plant will utilize IoT and AI technology to streamline work
processes and increase safety. The new plant will utilize renewable energy andfeature energy-efficient equipment, helping to lower energy consumption by 20%
compared to existing plants. The construction of this new building will increase
the plant’s production volume by 1.5 times. The new plant building will serve asa production base for both the Japan and overseas markets.

Since its launch in 2001 as a pioneer in functional cosmetics, the Obagi brand has led themarket with the aim of improving skin troubles while being a cosmetic marketed by apharmaceutical company. It has remained consistent in its approach to provide consumers withclear explanations based on scientific evidence for understanding the mechanisms of skintroubles and encourage use only after consumers are convinced that it will make a differencewith their own skin. We have worked on high concentration, high penetration, and super stablepure vitamin C since its launch, and in 2019 after 15 years of development we successfully
developed a C25 serum with a 25% pure vitamin C compound. This marks the first ever alldirection approach to skin troubles yet to be seen in other companies’ products. Obagi C25
Serum Neo, a beauty serum with the brand’s highest-ever concentration of vitamin C at 25%,
was recognized as the best cosmetic of 2020 by a number of beauty magazines. We haveshipped more than 10 million units during the series’ lifetime.

Ueno Techno Center

TOPICS 2
TOPICS 2

Acquired Amato Pharmaceutical Products to Strengthen Presence in the Hemorrhoid Remedy Category

In June 2021, we announced the acquisition of Amato Pharmaceutical Products, Ltd., which markets hemorrhoid remedy BORRAGINOL.
BORRAGINOL boasts the top market share in Japan among OTC hemorrhoid remedies. The acquisition of Amato Pharmaceutical
Products will extend our coverage to a category of weakness and take us one big step closer to our vision of becoming a leader in OTC
medicines. Not only that, we will be able to unlock significant growth by utilizing our subsidiaries’ marketing networks and know-how
through our own global network. This will help us to grow our business and in the future deliver products and bring joy to customers
around the world.

15

ROHTO Well-being Report 2021

Release of E-commerce Exclusive SKIO to Strengthen Our Presence in the Growing Online Marketplace

To address the growing e-commerce market, in July 2020, we launched sales of highly effective
and efficient skincare brand SKIO via its dedicated online shop and our e-commerce site basedon the concept of “beauty without effort and waste.” This brand is based on a skincare approachof delivering necessary ingredients to the right location*1 and expresses the ideals of effort-freethrough skincare using booster*2 beauty serum after face washing and of waste-free throughethical packaging combining outer packaging and cushioning. This brand supports all women
who want to shine today with the hope of being beautiful despite a busy schedule and little time
for beauty upkeep.
*1 Deep targeted delivery system *2 Moisturizing

ROHTO Well-being Report 2021

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Initiatives for Medium- to Long-Term Sustainable Growth

Functional Foods

Ophthalmology
area

Strategic Direction

Strategic Direction

Develop food business based on evidence and trust as our third pillar next to eye-care and skincare

Cultivate the area of ophthalmology as a leading company for eye-care products
and quickly realize profitability in the new businessWe believe that functional foods represent a high growth area in terms of pre-symptom diseases and disease
prevention covering the stages between health and illness. We are developing highly differentiated products targeting
unmet needs in this field in order to cultivate it into the third pillar of our business after OTC medicines and skincare.
We will strive to enhance customer satisfaction by fully utilizing the material technologies, manufacturing facilities,
and sales routes of the Rohto Group and its partners. We will focus development on the core areas of eyes,
pregnancy, menopause, lifestyle-related diseases, skin, and immunology. At the same time, we will explore
collaboration with other industries and branding opportunities.

Harnessing our technical prowess as the manufacturer with the top market share in the OTC medicines eye care
category for many years, we will cultivate the ophthalmology channel as a new business area and grow it into a pillarof our future profit growth as a growth domain. Currently, we are developing ophthalmology products along
conducting regenerative medicine research in the ophthalmology area and development of ophthalmology devices
while working closely with other companies. We are now aiming to quickly realize profitability in these new ventures.

TOPICS 1
Focus Areas

Targets

Nutrition

Address serious health risks such as lifestyle-related diseases,
locomotive disorders, and dementia

Differentiation targeting unmet needs in the foodbusiness domain

Lactobacillus
antiflatulent

Food product lineup contributing to antiflatulent and immunological effect and women’s health such as diet and skin beautification

Protein supplements

Consider development of new business models
such as direct marketing (including subscriptionbased services)

Categories supporting more healthy and active living

Acquired Nitten Pharmaceutical for Full-scale Inroads into Ophthalmology Field

We acquired Nitten Pharmaceutical Co., Ltd. in March 2021 to expand our business presence in the ophthalmology area so that we canmake full-scale inroads into ophthalmology drugs in the future utilizing the manufacturing and marketing base of an ophthalmology
formulation manufacturer. Nitten Pharmaceutical, established in 1961, mainly engages in the manufacturing and marketing ofophthalmology drugs. Since its founding, the company has continued with research and development into eye medications gentle on theeyes. Today, it possesses a sales network covering ophthalmologists across Japan, a stable production system built atop its advanced
production technologies and the PF Delami Container for preservative free formulations. Through this share acquisition, we will contributeto people’s eye care using our foundation in the ophthalmology area business bysynergistically utilizing Nitten Pharmaceutical’s technologies and our own strengths as aleader in over-the-counter eye medicines.

TOPICS 2

Concluded Business Partnership with Kaneka Corporation for Tear Duct Catheter Business

Following our policy to focus on the ophthalmology area, we concluded a business partnership agreement for the tear duct catheter
business with Kaneka Corporation in June 2020. Through this partnership, we aim to further expand our tear duct catheter businessthrough synergies between Kaneka Corporation’s technical and product development strengths with our marketing capabilities in theophthalmology area. This business partnership will first begin with marketing and then we will seek to further strengthen the relationshipby carrying over the company’s manufacturing and marketing approval of tear duct catheters to Rohto.

TOPICS 1

Rohto V5 Series Experiencing Substantial Growth as Mainstay ProductRohto V5, which was launched in 2015 as the Company’s first product to be labeled as a functional food, hasreached annual sales of approximately 2.5 billion yen (including all products in the series), contributing to theCompany’s earnings growth. Rohto V5 is a supplement containing 10-mg lutein and 2-mg zeaxanthin asfunctional ingredients that improves eye sight (color contrast sensitivity) by increasing macular pigment of theretina which decreases with age. This product was born from our commitment to help consumers with eye
problems as they age and consumers who want to start a new good habit for eye health to maintain theireyesight indefinitely and to support consumers who want to live an active and involved life regardless of age.
Sales of Rohto V5 have performed strongly thanks to the success of synergies with eye drops, which is ourstrength, and because it offers solutions to the needs of an aging society.

TOPICS 2

Released Hokkaido Wheat Tsubu-anpan, Japan’s First Anpan BreadLabeled as a Functional Food

Tsuruha Holdings Inc., our subsidiary MG Pharma Inc., and Nichiryo Baking Co., Ltd. jointly developed a new
product, Hokkaido Wheat Tsubu-anpan, the first anpan in Japan labeled as a functional food, which waslaunched in September 2020. The product contains MG Pharma’s proprietary ingredient of globin peptide(METAP®)*. It works by controlling the absorption of fat from foods and increases the breakdown of absorbedfats to control neutral fats in the bloodstream after eating. The product was released at Tsuruha Drug stores thatsell food products in Hokkaido, Aomori, Akita, and Iwate prefectures. Following its strong reception, however,the product’s release was expanded to Fukushima, Miyagi, and Yamagata prefectures in January 2021.
*METAP® is a peptide mixture containing the Valine-Valine-Tyrosine-Proline tetrapeptide, which is known to have inhibitory activity on neutral fat elevation.

17

ROHTO Well-being Report 2021

Regenerative
medicines
Strategic Direction
Commercialize innovative life science technologies
We are engaging in the regenerative medicines business positioning it as one of our growth businesses. We areapplying our proprietary technologies of “technologies handling cells” cultivated through long-standing research anddevelopment of OTC medicines and products for skin in cosmetics along with “sterile formulation technology” formass producing eye drops in regenerative medicines. Since 2013 when we established the Regenerative Medicine
Research & Planning Division, we have been focusing on regenerative medicines using human adipose-derived
mesenchymal stem cells. At Rohto Research Village Kyoto, we have developed an automated cultivation equipmentthat create high quality cells automatically.
ROHTO Well-being Report 2021

18

Initiatives for Medium- to Long-Term Sustainable Growth

In addition, we are working with research institutions including various universities such as Osaka University and The
University of Tokyo. In 2017, together with Niigata University we started the first clinical trial in Japan using
regenerative medicines for cirrhosis of the liver, for which we concluded a licensing agreement with Shionogi &Company, Limited. Research and clinical trials of regenerative medicines are underway around the world. We aim to
be a forerunner in pharmaceuticals using stem cells.

TOPICS 1(CDMO)

Acquired Olympus RMS to Add Orthopedic Surgery Area to Our Portfolio ofRegenerative Medicines

In March 2021, we acquired Olympus RMS Corporation (currently, Interstem Co., Ltd.). The company, established in December 2008,
has conducted research and development mainly of treatment methods using implantation of cartilage cells cultured inhouse. Today, aclinical trial using Interstem’s Cultured Chondrocyte Implantation (CCI) kit has been underway since November 2018 covering cartilage
defect in knee joints. This CCI kit targets minimally invasive treatment using fibrin glue, a biologic adhesive. This acquisition aims to add
the orthopedic surgery area to our development portfolio of regenerative medicine products and speed up the establishment of theregenerative medicines business as a future pillar of our business. At the same time, it is expected to reduce cell manufacturing costs
and generate novel and unique pipelines through the synergistic effects of both companies’ research and development field covering cellmanufacturing technologies.

TOPICS 2

Contract Development andManufacturing Organization

Launch of Corporate Clinical Trial on Regenerative Medicine Products Targeting Patients

Strategic Direction
Evolve into a contract development and manufacturing organization with unique development skills
We will establish competitive advantages by promoting the CDMO business providing one-stop services fromdevelopment to manufacturing in the biopharmaceutical field using our proprietary development capability to evolvethe conventional contract manufacturing organization (CMO) business. We are working to further enhance technicalprowess and cost competitiveness for CDMO at subsidiary Qualitech Pharma Co., Ltd. for internal medicines, at
subsidiary Nitten Pharmaceutical Co., Ltd. for ophthalmology medicines, and at our research facility in Kizugawa
City, Kyoto Prefecture for regenerative medicines.

with Severe COVID-19 Pneumonia Using Allogeneic MSCs
We began a corporate clinical trial of regenerative medicines using allogeneic mesenchymal stem cells (MSCs) targeting patients withsevere COVID-19 pneumonia in August 2020 (the trial is now complete with the phase II clinical trial initiated in June 2021 as the nextstep). ADR-001 (cell preparation consisting of allogeneic MSCs) used in the trial is made by Rohto solely in Japan from raw materials
procurement to production and it marks the first time that a Japanese-made formulation is being used in a clinical trial to treat severe
COVID-19 pneumonia using allogeneic MSCs. MSCs are believed to offer anti-inflammatory effects driven by multiple mechanisms. Since
ADR-001 is expected to benefit patients who have not had success with other COVID-19 treatment drugs approved in Japan, we believethat establishing treatment methods in Japan using MSCs will benefit treatments against COVID-19 and future infectious diseases. For
this reason, we are moving ahead with research.

TOPICS

Qualitech Pharma Posting Consecutive Years of Increased Revenue

Our CDMO subsidiary Qualitech Pharma Co., Ltd. continues to post higher revenue year on year for five consecutive years since 2016.
In recent years, the company has seen an increase in contract development of formulations, a trend that is expected to continue going
forward. Looking ahead, Qualitech Pharma plans to invest in research and development for establishing an R&D lab in order to further
expand and strengthen its development system with the aim of evolving from the CMO to CDMO business.

Pipelines of Regenerative Medicines and Ophthalmology Area (as of March 31, 2021)
Stage
DomainCell type

Code
ADR-001

ADR-002K

Human
adiposederived stem
cells

Regenerative
medicines

ADR-001

ADR-001

ADR-001

ADR-001

Human umbilical
cord-derived
stem cells

UDI-001

Indications

Cirrhosis of theliver
Serious heart
failureKidney diseases
Serious leg
ischemia
Lung fibrosis
COVID-19
Pneumonia
Neurodegenerative
diseases
Traumatic
cartilage defects

Cartilage
cell kit*1

Ophthalmology
area

Osteoarthritis

ROH-101

ROH-201

CMV*2
Corneal endotheliitis
Dry eyes*3

Planned regions

Japan

Partners

Non-clinicalP1

Shionogi

ROHTO Well-being Report 2021

P3

Application

Target*4

To becompleted in
FY2021

Japan

To be
completed in
FY2024

Japan

To be
completed in
FY2022

Japan

To be
completed in
FY2023

Japan

To be
completed in
FY2023

Japan

To be
completed in
FY2022

Japan

To be
completed in
FY2023

Japan

To be
completed in
FY2022

Japan

To be
completed in
FY2024

Japan

Japan

Théa,

Approval in

M’z Science

2025

Japan Tobacco*1 Produced by Interstem Co., Ltd. (our subsidiary) *2 Cytomegalovirus *3 Dry eye patients including those with Sjögren’s syndrome*4 Targets are for Rohto and are not agreed upon by partners.

19

P2

Global Business
As of 2020, our overseas businesses account for around 40% of our total sales and cover more than 110
countries around the world. We will continue working to increase corporate value while localizing our solutions to
consumer needs. In particular, we are moving ahead with the introduction of OTC eye-care medicines andskincare products. We will proactively commit management resources mainly to the Asian markets (China andSoutheast Asia) which have a high affinity in terms of business with Japan. In Europe and North America, we will
strive to maintain and expand centered around the establishment and execution of a growth strategy for
subsidiary The Mentholatum Company.
In the fiscal year ended March 31, 2021, seasonal products such as lip balms faced challenging conditions
worldwide including in the mainstay China market. COVID-19 has exposed the risk of relying too much on a
specific business segment. Going forward, we will focus more on eye drops and healthcare products such asacne treatments so that we can generate stable profits from multiple business segments. Particularly, we intend
to expand e-commerce market in China. Our goal is to increase sales from e-commerce in China from around
35% last fiscal year to 40% by reinforcing our presence.

Approval in
2027
Eye drops marketed in the U.S.

Hada Labo on sale in Hong Kong

ROHTO Well-being Report 2021

20

Tackling Climate Change and Consideration for
the Environment
Rohto believes that it is our duty to protect the environment for future generations. We therefore set out an Environmental
Policy in 2005 and work to prevent environmental pollution and continuously improve environments, both locally andglobally, through our corporate activities. In particular, we recognize that reducing greenhouse gas (GHG) emissions inorder to prevent global warming is a world-wide concern, and we are implementing a variety of initiatives in areas
including energy conservation in our offices, plants, and other sites, and the reduction of environmental impact in sectors
such as travel and transportation. In order to work toward achieving these reduction goals, we formulated our Basic
Company-wide Energy Management Policy in 2011 and are advancing it throughout the Company. We also signed theUnited Nations Global Compact in March 2018. In collaboration with our suppliers in Japan and overseas, we will strive
to achieve sustainable social development.

Initiatives for a Recycling-based Society
Initiatives with Retail Businesses
The social challenge of building a society that recycles its resources cannot be met by one business alone. We willcontribute to the creation of a sustainable society through collaboration with retailers, Rohto’s key business affiliates.
(1) ASKUL’s LOHACO “Go Ethical” Commences Sale of Older Products Left Behind by Product Updates
Since July 2020, we have been participating in Go Ethical, an initiative that aims to reduce loss from product wastage

Initiatives to Achieve a Low-carbon Society

in the popular OUTLET store of LOHACO, an online shopping platform for general

With the aim of tackling climate change, Rohto is pursuing initiatives to achieve a low-carbon society. For one of these
initiatives, we are participating, via an industry association, in the Low-carbon Society Action Plan of The Federation of
Pharmaceutical Manufacturers’ Association of Japan, which includes setting GHG reduction targets for fiscal 2030. We
have given ourselves the target of reducing GHG emissions (Scopes 1 and 2) by 25% as compared to fiscal 2013 levels
and are pursuing activities in line with this.

wastage for products that would previously have been destined for disposal* but that

consumers run by ASKUL Corporation. We are able to reduce loss from productpresent no quality defects, by reselling them in the outlet store.
*Unopened, discontinued products returned from distributors and wholesalers(2) Implementing a Packaging Collection Program, the “Nourish Your Skin and Our Planet Recycling Program”
Since September 2020, we have been operating the Nourish Your Skin and Our Planet Recycling Program together

Scope 1

Direct GHG emissions released into the atmosphere through fossil fuel consumption

with Matsumotokiyoshi Holdings Co., Ltd. and TerraCycle Japan. This program collects and recycles the empty

Scope 2

Indirect GHG emissions from the use of electricity and steam supplied by others

packaging of used skincare products, turning them into a way to keep our planet green. Collected skincare packaging

TargetCO2 emissions

Electricity Consumption (1,000 kWh/year)

16,55924,428 23,994 23,711 24,289 25,110 24,914

14,66913,957 13,327% reduction

by FY2030, as compared to FY2013

Total CO2 emissions (t/year)

15,846 15,772

25

will ultimately be recycled into plant pots.

Nourish Your Skin and
Our Planet Recycling
Program

Water usage (1,000 m /year)
3

Promoting Environmentally Friendly Product Development
292

275

290

266

271

The concept of SKIO, our e-commerce exclusive cosmetics line launched in July
248

2020, is “effort-free and waste-free, for the planet and for you,” with the SKIO
serum packaged in a 75% recycled glass bottle. In addition, the outer packaging isa bubble wrap that functions as both cushioning and exterior packaging. It is also
made from 80% recycled materials. By using one material as

2015

2016

2017

2018

2019

2020 (FY)

2015

2016

2017

2018

2019

2020 (FY)

2015

2016

2017

2018

2019

both outer packaging and cushioning, we both reduce overall

2020 (FY)

waste and save our customers time by removing the need toseparate packaging materials for disposal. Going forward, we
will continue to pursue environmentally friendly product

Endorsing the TCFD Recommendations*
In June 2021, as part of our efforts to further strengthen our environmental initiatives, we announced our endorsement of
the recommendations made by the Task Force on Climate-related Financial Disclosures (TCFD). Going forward, we willproceed with disclosures based on the TCFD’s recommendations, while also continuing to engage in exploring
possibilities for an action plan that includes target setting, with the aim of achieving low-carbon or decarbonization
through our business.
*The TCFD was established by the Financial Stability Board (FSB), an international organization seeking toincrease the stability of financial systems, and released recommendations calling for disclosure on the risks
and opportunities presented by climate change in June 2017. These recommendations reference theimportance of businesses recognizing the risks and opportunities posed by climate change andincorporating them into their management strategies.

development.
SKIO bubble wrap packaging

75% recycled glass bottles

Establishing the “R-eco” Symbol
With recent years having seen growing concern for the environment at a societal
level and in terms of customer awareness, and anticipating further gains inenvironmental consciousness, we established our own eco label, the “R-eco”
symbol, in 2019. We are introducing this symbol to our Hada Labo range and otherenvironmentally friendly products.

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ROHTO Well-being Report 2021

For a healthy mind,
body, and planet

ROHTO Well-being Report 2021

22

Human Resources Initiatives(2) Rohto Academy: supporting autonomous career creation for the future (since January 2021)

Message from the Director of Human Resources
Our people are our greatest management resource.
We must aim toward autonomous yet shared growth for both ourorganization and our employees.
Looking to the future, we are promoting people-centered wellbeing management by building an organization focused on diverse
individuals.
To enable our Company to contribute to future well-being and achieve sustainablegrowth, we must continually create new value and make the Company vital to the world
around us. Needless to say, each and every one of our employees is a driver of theseprocesses and, without employees’ growth, there can be no organizational growth.
Traditional philosophies, such as the idea that policies are decided by a company andsimply followed by its employees, make it difficult to innovate in times of rapid change.
We believe that essential factors for the Company’s growth are human resources thattake action in a bottom-up manner, transcending the existing frameworks, and anorganizational culture to support them. Therefore, as part of our well-being management,
Rohto is implementing various measures, described below, to encourage employees totake the initiative when engaging in business activities and to realize their own career
Chiharu Takakura visions as professionals.
Taking suggestions from employees and removing various restrictions is proving to be
Director, Executive Designer,
Human Resources &a more powerful driver of growth than creating programs from the top down. Accordingly,
Well-Being Management
we believe that all employees should be encouraged to have opportunities to tackle not
Promotion Department
only in-company assignments but also his or her own challenges, both within and outsideof Rohto. This will result in contributing to local communities and society as well as furthering the growth ofindividual employees and our organization. Going forward, we will continue to develop an organization that
effectively utilizes diverse individuals, regardless of simple attributes such as age, gender, or nationality, departingfrom the one-size-fits-all human resources development model long cultivated by Japanese businesses. In thisway, we will strive for shared growth for our individual employees and our Company.

We have created an online study platform in order to promote self-motivated study aimed at career autonomy. Using
videos, seminars, and other content, we are providing learning
opportunities and working to foster human resources who will continue todevelop of their own volition.
(3) External Challenge Work program (secondary employment)(since February 2016)

Participants in External Challenge Work program(persons)

This program recognizes diverse workstyles in the form of secondary
employment. We believe that workstyles that go beyond the bounds of
the Company allow employees to gain experiences that are difficult toaccess when working exclusively for the Company. Knowledge andexperience gained in this way lead to significant growth and yield benefits
for employees’ principal jobs. Our aim is to further expand our employees’
potential through their work in multiple jobs. (Secondary jobs must be
limited to weekends, holidays, or after working hours. To be eligible,
employees must have been in work for a minimum of three years.)(4) In-house Double Jobs program (concurrent positions)(since February 2016)

81

81
63

62

25

2016

2017

2018

2019

2020 (FY)Participants in In-house Double Jobs program(persons)

This program allows employees to volunteer to spend a portion of theirworking hours in another division of the Company. By facilitating work
beyond divisional limits, our aim is to allow employees to improve theirskills and increase their job satisfaction, at the same time asencouraging them to explore their own new possibilities.

(5) Asuniha project: Supporting entrepreneurs within the Company(since April 2020)

98
70
54

49
36

2016

2017

2018

2019

2020 (FY)This project provides support for employees starting businesses building on their own passions and ideas to tackle
social issues. To be eligible, businesses must be in domains connected to Well-being, in line with our management
vision, “Connect for Well-being.” We believe that the experience of starting a business will cultivate autonomous, selfdirected people. Three companies have been established as of March 2021.

Promoting Well-being Management Centered around the Independence of the Individual
Support for Diverse Workstyles andCareer Development
We encourage our employees to go beyond thebounds of the Company and gain experience inpositively impacting society with a variety ofcompanies and organizations, and to transcend thebarriers between divisions within the Company toactively engage with their work from multiple
perspectives. We believe that these independentworkstyles and self-driven initiatives will allow ouremployees to gain new knowledge and contacts
and facilitate further growth. Respecting theindividual and seeing shared growth for theCompany with each new challenge pursued, we
aim to maximize our efforts to create social value.

Concept of Rohto’s Human Resources Management
Individual
growthRespect for diverse
individuals
Autonomy and growth

Self-driven initiatives(1) Promoting women’s participation
Company
growthAutonomous relationship& shared growth
Creating corporate value
Providing opportunities
to take on challenges

as one-team
Rohto

ROHTO Well-being Report 2021

At Rohto, where approximately 60% of our employees are women, we believe that it is important to create
environments where our female employees feel secure and can work with ease, in order to help each and every one
to further thrive in her work. We also maintain high rates for uptake of parental leave and return to work and areenhancing our support programs, including providing free gynecological examinations and nursing care leave.
Female Employees (%)
Workingmothers

Our platform

Supporting individualcareer development
External ChallengeWork
In-house Double Jobs
Asuniha projectSpreading corporate
philosophy andfostering culture
Using “-san” suffix
rather than job titles
Open-plan offices
Workplace nicknames

48.9%
59.5
Rohto-style HR
management
HR management
tools
Rohto Academy(1) Strategic human resources management that utilizes the individual (since February 2020)
We have introduced human resources management tools that visualize employees’ individual backgrounds and areas ofexpertise to allow each employee to clearly set out a career vision. Using this as a basis, management are working
together to promote a model of human resources deliberation that focuses on growth of the individual. In the hope that
employees will adopt our corporate philosophy as their own, we are promoting Company-wide dialogue in order to bring
together employees’ individual visions and our section and Company visions.
23

Promoting Further Diversity

2015

58.7

2016

Uptake of Parental Leave andReturn to Work Among Women (%)

2017

58.1

2018

57.7

2019

100

57.5

2020 (FY)(%)

Uptake of parental leave
Return to work after parental leave

100
57.5

Females in Management Positions

98

100

95

100
19.1

18.6

19.2

2015

2016

2017

98

95

96

93

95

100

2015

2016

2017

2018

2019

2020 (FY)

21.1

2018

22.8

2019

26.0

2020 (FY)(2) Active involvement of employees of foreign nationality
We aim to increase the ratio of foreign nationals employed in sections relating to development and technology to 20%
and are working on recruitment and training. Currently, foreign nationals with diverse backgrounds from around 10
different countries are playing an active role at Rohto.
ROHTO Well-being Report 2021

24

Human Resources Initiatives

Approach to Human Rights

Key Initiatives to Date
2002

Implemented physical fitness evaluations (all employees continue to be evaluated annually today)

With our business expanding in countries and regions all over the world, Rohto considers due consideration of humanrights to be fundamental to our operation. Corporate efforts to respect human rights have become increasing vital inrecent years and initiatives are required not only of a company itself but also of the companies along its supply chain. We
have therefore declared our intention to uphold the Ten Principles of the Global Compact advocated by the United
Nations. We are also advancing our human rights initiatives by endorsing the Universal Declaration of Human Rights(UDHR) and the United Nations’ Guiding Principles on Business and Human Rights (UNGP). At the same time, while
carrying out our activities as a Group with respect for human rights, we aim to cooperate with various relevant parties,
including our business partners, to promote respect for human rights. We have provided employee training by creating
and distributing the Rohto CSR Code of Conduct and our CSR Guidelines for Suppliers, which summarize the ethicalstance and values that must be maintained by our employees. These documents allow employees to immediately verify
our standards of conduct if they are unsure how to deal with a customer or business affiliate, or other daily businessmatters.

2004

Established the All Well Project Office, a division exclusively dedicated to employee health promotion
Opened Smart Camp, a welfare facility, at our Osaka Headquarters

2007

Adopted a Company-wide no-smoking policy and put a program for quitting smoking into operation

2011

Held the 100-Day Health Promotion Project, an event with full-Company participation for all staff including the Chairman andPresident

2014

Established the position of Chief Health Officer (CHO), the first in Japan2015

Selected by the Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange as one of the first “Health and Productivity”
companies

2016

Established the Health Management Promotion Group within the General Aﬀairs and Human Resources Division
Offered free gynecological examinations (breast cancer screening, uterus cancer screening) for female employees

2017

Created the Happy Work for Women booklet and distributed it Company-wide, so that all employees can study women’s healthregardless of their own gender
2018

TOPICS

Kamonohashi Project, a specified NPO©Siddhartha Hajra

As a company that proudly supports the next generation, we consider acting to protect
children’s rights essential. Currently, over 100 million children are believed to be engaged inchild labor worldwide. We support the Kamonohashi Project, a specified NPO working in
Cambodia, India, and Japan to eradicate child prostitution and human trafficking, the mostemotionally and physically damaging forms of child labor. This organization not only protects
victims, but also considers it essential to eradicate the poverty that is the root cause of childprostitution, preventing child-trafficking triggered by poverty through measures such asproviding workplaces for adults in poor households.

Loaned all employees fitness-tracking devices and held the Finish Line Challenge, a walking event where participants attempt tomeet a goal of 8,000 steps and a minimum of 20 minutes’ brisk walking per day

Offered free serum ferritin tests, used to test for non-anemic iron deficiency (latent iron deficiency) in women
Conducted mass rubella vaccination and made these vaccinations free, as part of our measures to combat infectious diseases
Launched a project encouraging employees to quit smoking, following employee suggestions (aiming to achieve a smoking rate ofzero by April 2020)2019

Introduced ARUCO, our own unique “internal health currency” that allows employees to earn coins through their daily activities
Introduced a Sleep Improvement Program for employees by using sleep technology for health management and workstyle reform

2020

Achieved a 99.9% non-smoking rate among employees as of April 30
Implemented the Propo Challenge, an online exercise support project for employees under lockdown due to COVID-19

TOPICS 1

99.9% Non-smoking Rate Among Employees Achieved

Looking ahead to a time when life expectancy has reached 100, Rohto aims to contribute

Promoting Health Management

to expanding healthy life expectancy for all. As an initial step toward this, we are actively
engaging with health management centered around the idea of promoting our employees’
health. In 2018, we set a goal of achieving a smoking rate of zero across all employees by

Rohto’s Health Management Declaration

April 2020. Through efforts to help employees break their smoking habit that respected andWe want working at Rohto to bring health benefits, so in 2018 we set out our Health Management Declaration.

on April 30, 2020.

supported their own wishes, we achieved a 99.9% non-smoking rate among employees.
Our 100% non-smoking initiative received the Health, Labour and Welfare Minister’s Excellency Prize as part of the “9th Let’s Extend
Healthy Life Expectancy! Award” sponsored by the Ministry of Health, Labour and Welfare. We will continue our activities aimed at health

Our aim is to become a company fully staffed by “healthy human resources” who will always be able to healthily thrive

promotion going forward.

in their daily work.
We hereby declare that we will strive to further promote health management so that our healthy employees will lead toa healthy society, and on to a healthy next generation.

TOPICS 2

Health Management KPIs Set for 2023 to Pursue Employee Health Further

We have identified new health targets for 2023. We have set out eight indicators that form the foundation of health, including eliminating
metabolic syndrome, a risk factor for lifestyle diseases. By asking employees to declare targets that they will work toward within theseeight indicators, we are pursuing a health management model that enables the physical health that underpins Well-being.
Category

Our Approach to Health Management

Metabolic syndrome and pre-metabolic syndrome

2020

2023

ResultTarget

12.4%

0%

0.1%

0%

Rohto’s definition of “health” is not simply “not being ill.” “True health” is founded on both mental and physical health andSmoking rate

allows us to bring passion (a sense of meaning in our jobs and our lives) to our daily work. We believe that employees

Anemia (hemoglobin (Hb) levels < 12.0 g/dl)

14.3%

0%

possessing true health will support a healthy society as “healthy human resources.” Based on this idea, our Company

Proportion using alcohol in moderation

87.4%

100%

Proportion sleeping for at least 6.5 hours

41.7%

50%

further cultivates “healthy human resources” by focusing on creating opportunities for employees to make their own
positive efforts to stay healthy. We believe that the positive energy of our “healthy human resources” can impact theworld around them, sharing the health benefits they enjoy with society and the next generation.

25

ROHTO Well-being Report 2021

Proportion taking 30 min. of exercise at least twice a week

28.9%

50%

Proportion achieving 8,000 steps and 20-min. brisk walking per day (for a cumulative total of six months or more per year, calculated using fitness-tracking devices)

11.4%

50%

Proportion with a lower health age than chronological age (based on physical fitness evaluations)

48.3%

80%

ROHTO Well-being Report 2021

26

Initiatives for Society
Supporting thenext generation

As part of our corporate philosophy, Rohto states that, “Being mindful of our mission as a public institution of society weshall address issues concerning society at large in collaboration with all of the people connected to the Company, andwe will share the benefits gained through these endeavors.” We believe that it is essential to regularly give back to society
a portion of the profits gained through our business. We are actively engaged in activities that contribute to society andconsider them to be an important theme within the Rohto Group’s corporate activities. Of these social activities, we give
top priority to our actions to support our future society by helping to cultivate the next generation.

Solving social andlocal issues

Supporting
health

Employeemutual aid

Karugamo Fund: Social Contributions Through Shared Company and Employee Efforts
The Karugamo Fund is financed through a combination of Rohto employees’
voluntary contributions to a reserve fund and matched donations from theCompany. Each year, employees decide the Fund’s recipients, and it is used
to support welfare, education, and other fields that are vital to society. The
Fund was started in 2004, with 944 employees (approximately 60%)
participating in fiscal 2020.
Support Recipients in FY2020

Japan

The Michinoku Future Fund Providing Long-term Support for Children
who Lost Their Parents in the Great East Japan Earthquake
The Michinoku Future Fund is a scholarship program run by
Rohto Pharmaceutical Co., Ltd., Kagome Co., Ltd., Calbee,
Inc., and Ebara Foods Industry, Inc. The Fund provides fullscholarships for children who lost one or both parents in the
Great East Japan Earthquake, covering enrollment and tuition
fees for university, junior college, or technical school with norepayment required (up to a maximum of 3 million yen per year).
These children must not be forced to prematurely give up theirhopes and dreams for financial reasons. Recognizing thatallowing them to continue to confidently pursue their dreams is
an essential part of post-earthquake reconstruction, like-minded
companies from a wide range of industries have come together
to work toward this goal. Donations from throughout Japan
have already totaled more than 4 billion yen and, now in its 10th year, the Fund has given scholarships to approximately
1,000 recipients. With eligibility extending to children who were unborn at the time of the disaster, our plan is to continue
providing sustained support right up until this generation graduates in around 15 years. We plan to maintain our support
until we see the last child through his or her graduation.

Empowering Local Communities Through Sports:
Nara’s Konoike Sports Park Naming Rights Sponsorship Agreement
Nara is the birthplace of Rohto’s founder, and, in addition to previous work
to support the city’s food businesses and entrepreneurs, we have recently
been engaged in local development as a key partner of the professional
basketball team Bambitious Nara. Through our naming rights sponsorship,
we plan to contribute to promoting exercise and healthy lifestyles foreveryone in the local community and the children who will be the leaders of
tomorrow.

The Eye Mate, Inc. (Welfare)Tashima Douen foster home (Children)

Ikuno Mori (Welfare)Tanpopo-No-Ye Foundation (Welfare)

Women’s Eye (Support for women)

Rainbow Computer Volunteering Group (Welfare)

Ueno Braille Library (Welfare)Piccolare (Support for women)

Osaka Science & Technology Center (Education)

Beans (Welfare)

Osaka-Vietnam Friendship Association (International exchange)

Fukuoka FUN (Conservation)

Kansai Geijutsu-za’s Kurumi no Moromi recital group (Welfare)Momiji House (Children)

Cross Base (Education)

Homedoor (Welfare)Work Happiness Lab (Welfare)No particular order

Overseas

Contributing to International Eye Care Aid in Partnership with 13 Social Partners in Order to Gift
the Joy of Sight around the World (Donations from November 2020 to March 2021: 978,290 yen)
While already providing a range of support in countries across Asia, including backing for free eye examinations and care,
free provision of intraocular lenses for cataract treatment, and training of local ophthalmologists, Rohto established theSocial Partners program in 2016 with the aim of expanding these activities and reaching out to support more people atrisk of losing their eyesight. In fiscal 2020, together with 13 business affiliates who have endorsed these activities, wedonated a portion of the proceeds from our eye-care products to organizations providing eye care-related aid in Asia andAfrica and provided support for cataract treatment.
Donation RecipientsOUI Inc.

Asia Prevention of Blindness Association (NPO)

Mutual Aid Fund Established for Rohto-Mentholatum (Vietnam) Employees
Developing Children’s Skills Through e-Sports Program:
Held “Ikuno Kids e-Sports Challenge—Let’s Play Jailbreak!” in Our Local
Area, Ikuno-ku, Osaka
In 2019, Rohto entered into a comprehensive partnership agreement with Osaka’s Ikuno-ku, our local municipality. The
agreement covers cooperation and collaboration in five areas: health, children, disaster relief efforts, local revitalization,and city promotion. Even before this partnership agreement, employee volunteers set up the Reinvigorating Ikuno
Project, and we continue to run activities such as giving workshops at elementary and middle
schools and exhibiting at local events through this Project.
In 2020, we collaborated with Ikuno-ku and Digital Hearts Holdings Co., Ltd. to hold the “Ikuno
Kids e-Sports Challenge—Let’s Play Jailbreak!” Focusing on the educational potential of e-sports,
we provided an opportunity for adults and children to exchange ideas with the aim of developingchildren’s skills through games and allowing these experiences to be utilized in the children’s daily
studies and relationship-building.
27

ROHTO Well-being Report 2021

The Rohto Caring Fund, a mutual aid fund to support employees’ health and daily needs, was established at RohtoMentholatum (Vietnam) Co., Ltd. in December 2020. Initial funding totaled 4.05 million dong (approximately 1.98 millionyen), with a contribution from Rohto-Mentholatum (Vietnam) added to by sales from a charity bazaar held at thecompany’s plant. In addition, employees who endorse the fund are supplying it with monthly contributions deducted fromtheir salaries (10,000 dong, approximately 45 yen).
Behind the creation of the fund was the aim to support employees in difficult circumstances beyond the scope of
support offered by employee benefits or trade unions. Specific examples of those receiving support include a single
mother who had to be hospitalized following a cancer diagnosis and an employee forced to continue living in a shelter
after their home was destroyed by a typhoon and flooding. The Rohto Caring Fund also incorporated support under
employment regulations and contributions from trade union funds to help with care for employees with COVID-19, assist
with hotel quarantining for those who had come into close contact with someone testing positive for COVID-19, andsupport employees who lost relatives to the virus.

ROHTO Well-being Report 2021

28

Quality Control and Supply Chains

Corporate Governance

Company-wide Commitment to Quality Assurance Involving the Top Management

Message from the Chairman of the Board of Directors Meeting

Rohto has established a structure by which those in three roles (General Marketing Manager, Quality Assurance Manager,
and Safety Management Supervisor) work together to manage our products under a single manufacturing and salesorganization. Based on this structure, we have built a system in which the entire Company, including not only the
manufacturing and quality control sections, but also the management commit themselves to quality and safety.

We will aim for further evolution of corporate governance by

Rohto’s Integrated Quality Assurance Systemand enhance corporate value over the medium to long term.

President & Director(s) in charge
Overseas affiliatedcompanies
Purchasing section

Corporate QA and Safety
Marketing authorization
General Marketing Manager
Vigilance Division(Three roles)

Regulatory section

R&D section
Marketing section

Quality AssuranceManager

Call center

Safety Management
Supervisor

Sales section

Osaka Plant

Ueno Plant

Regenerative medicine plant

Distribution authorization (GDP)

Quality section

Quality section

Quality section

Distribution center

Manufacturingsection (Plant)

Manufacturingsection (Plant)

Manufacturingsection (Plant)

Order receiving section

High-quality Production System Enabling Overseas Exports
The Ueno Techno Center, Rohto’s manufacturing, quality control, and distribution site, is equipped with automated eyecare production lines that can also handle the production of a wide variety of products. We have achieved a high quality
and highly efficient production system with our sophisticated quality assurance system cultivated through pharmaceuticalmanufacturing, flexible production lines, advanced aseptic and foreign material control technologies, and centralized
management of test data using the laboratory
information management system (LIMS). The
Ueno Techno Center was the first Japanesepharmaceutical manufacturing site to comply
with FDA Part 11*1. The Center has also obtained
certification for ISO 13485*2 and CE marking*3,
and actively supplies products to overseas
markets.
*1 FDA Part 11 is standards for electronic records management stipulatedby the U.S. Food and Drug Administration.
*2 ISO 13485 is an international standard on quality assurance specificallyfor medical devices.
*3 CE marking is used to indicate a product has passed European safety
testing.

Always Working on Improving Manufacturing Sites with a Fresh Mind
With the aim of improving quality, cost, anddelivery (QCD), we formed groups called
I m p r o v e m e n t P r o m o t i o n Te a m a t o u r
manufacturing sites in 2005 to continue kaizen
activity cycles. The basic idea of this initiative isthat we will try and change anything that willlead to improvements in QCD. All personnel are(working to strike a balance between improving
quality and reducing costs by) striving with astrong will to solve issues using their findings.

Three Pillars for Improvement Activities
5S
Looking for findings

Develop an eye for
spotting an issue

29

ROHTO Well-being Report 2021

(sort, set, shine,
standardize, sustain)
activities

Specific
Improvement
Activities

Learn methods to solve
Create an environment issues and increase thewhere issues can benumber of personnel
spotted easily
who can do it

Ideas that come to mind in FY2020

10,465promoting diversity in order to achieve sustainable growth

Japan is experiencing an era of low economic growth due to a declining
birthrate, an aging population with a business environment constantly
subject to waves of dramatic change, such as accelerating globalizationand diversification of consumer preferences. In order to achievesustainable growth in such an environment, it is necessary to make bolddecisions, take risks, and manage in a way that enables flexible
responses to changes. Rohto seeks to achieve prompt decision-making
and business execution. At the same time, we are constantly working
toward evolution of the corporate governance system, which oversees
the soundness, fairness, and transparency of management in order tomanage business risks appropriately.
At Rohto, the Board of Directors has also been working on corporate
governance reforms to improve its effectiveness. The Board currently
comprises nine directors, two of whom have been with the Company
throughout their careers and have worked their way to top managementlevel. The other internal directors, including President Masashi
Sugimoto, bring management experience at leading companies in the
Kunio Yamada
business fields in which Rohto operates, including pharmaceuticals,
Chairman of the Board of Directors Meeting
cosmetics and foods. This allows us to examine issues based on a
Chairman of the Board of Directors and Chief
range of opinions and insights, without being bound solely by the
Executive Officer
Company’s accepted practices, and enables flexible, strategic decisionmaking and risk-taking (hedging) in an era of rapid change. The three external directors are Shingo Torii, who has
experience in the management of a leading Japanese company; Akie Iriyama, a business scholar with extensive
international experience; and Haruka Mera, a young entrepreneur in the Japanese social business field, putting in place asystem that enables Rohto’s management to gather opinions from wide-ranging perspectives. The total number of
directors was reduced from 12 in 2019 to nine in 2020 to create a system that enables expeditious decision-making.
Meanwhile, the executive officer system, which had been discontinued in 2016, was reintroduced in 2020. This has
established a structure whereby the role of the Board of Directors is to focus on making strategic management decisions
and supervising management, while the executive officers manage business operations in their respective areas of
responsibility in accordance with the basic policies that have been decided by the Board of Directors. In addition,
important issues relating to business execution are shared and discussed in the Executive Meetings (consisting of internal
directors and executive officers), which are held every other week as a general rule. By providing executive officers withsuch management experience, we aim to strengthen the development of next-generation management candidates, andwe are actively promoting external appointments in addition to internal promotions. In addition, the Nomination
Committee and the Compensation Committee, which are under the direct control of the Board of Directors, are also
composed of a majority of external directors. Thus, the objectivity and independence of each committee is ensured, andthe effectiveness of each committee as an advisory body to the Board of Directors is further enhanced through utilizing
the expertise and wealth of knowledge and experience of external directors.
We believe that corporate governance is an important mechanism that promotes timely and bold decision-making bymanagement, addresses management risks, and prevents ethics violations and corruption. We will continue to actively
promote diverse human resources from within and outside of the company, regardless of specialty, gender, or nationality,
and will pursue diversity in order to achieve both evolution and effectiveness in corporate governance. We will also work
to enhance corporate value over the medium to long term and resolve social issues by achieving sustainable growththrough realization of well-being, which is the unique value creation of the Rohto Group.

ROHTO Well-being Report 2021

30

Corporate Governance

Basic Approach to Corporate Governance

Board of Directors

At the same time as fulfilling our social responsibility, we are striving to earn the trust and meet the expectations of ourshareholders, consumers, business affiliates, employees, and all other stakeholders, and achieve co-existence and coprosperity. We recognize that enhancing and strengthening corporate governance to achieve this is an importantmanagement challenge. We will develop an organizational structure for management and implement the necessary
measures for ensuring transparency and fairness in management and responding to changes in the management
environment in a prompt and accurate manner.

The Company has nine Directors, three of whom are External Directors, and the Chairman and Chief Executive Officer
serves as chair of the Board of Directors. The Board of Directors is composed of all Directors (nine, including three
External Directors) and operates with the attendance of Audit & Supervisory Board members (four, including two External
Audit & Supervisory Board members) who have an obligation to attend.
Based on its fiduciary responsibility and accountability to shareholders, the Board of Directors aims to achievesustainable growth and enhance the corporate value of the Group over the medium to long term for the common interestof the Group, its shareholders, and all other stakeholders.
The Company’s Board of Directors makes decisions on important matters related to management in accordance withlaws, regulations, and the Articles of Incorporation in addition to supervising the execution of business by each Director.
In holding meetings of the Board of Directors, the secretariat of the Board of Directors provides the External Directors
with preliminary materials and briefings to make the deliberations at the meetings more substantive. In addition, External
Audit & Supervisory Board members hold an Audit & Supervisory Board prior to the Board of Directors’ meeting todiscuss and review the agenda of the Board of Directors’ meeting in advance. This makes the Board of Directors’
meeting a forum for constructive discussion, and thus they are striving for the sustainable growth of the Group and theenhancement of its corporate value over the medium to long term.

Outline of the Corporate Governance System and Reasons for Adopting the System
Rohto has adopted the framework of a company with an audit and supervisory board. Through the appointment of three
External Directors and two External Audit & Supervisory Board members, we aim to incorporate outside perspectives atthe same time as strengthening management monitoring functions. Cooperation between the Audit & Supervisory Boardand the Internal Audit Office has enhanced the effectiveness and efficiency of audits. We have also increased thetransparency of management through the establishment of the optional Nomination Committee and Compensation
Committee. In addition to the regular meetings of the Board of Directors, extraordinary meetings of the Board of Directors
are held flexibly or resolutions are adopted in writing in order to speed up the decision-making process in order to
respond to changes in the business environment promptly and accurately.
The Company’s Audit & Supervisory Board rigorously checks the status of business execution by the Directors incooperation with the Internal Audit Office and the Accounting Auditor, and we believe that we have put in place a systemthat provides adequate monitoring of management. External Audit & Supervisory Board members are also familiar with
the Company’s business operations, as they regularly exchange opinions with Representative Directors and Other
Directors as well as Full-time Audit & Supervisory Board member s. Moreover, External Audit & Supervisory Board
members ask candid questions and express their opinions from an independent and objective standpoint at meetings ofthe Board of Directors, and we believe that the objectivity and neutrality of the management monitoring function is
ensured.
Corporate Governance System (as of March 31, 2021)

General Meeting of Shareholders
Election/Dismissal

Election/Dismissal

Management/Supervision

Audit report

Accounting
Auditor

Audit & Supervisory Board

Board of Directors(Audit of business execution)(Decision-making/oversight of business execution)

4 Audit & Supervisory Board members

Audit

Cooperation (incl. 2 External Audit & Supervisory Board members)

Cooperation

Advise/Report

9 Directors

Raise issues/
ReportNomination Committee
Compensation Committee(incl. 3 External Directors)

Audit

Oversight/
Selection/
Dismissal

Accounting
audit andinternal
control audit

ReportChairman and Chief Executive Officer
President and Chief Operating Officer

ReportCompliance Committee
Information Security
Management Committee

Executive Meeting(Management Strategy Conference)

ReportInternal audit

31

ROHTO Well-being Report 2021

Instruction/President meeting

Business execution departments
and Group companies

The Nomination Committee is composed of three Directors, the majority of whom are External Directors. The committee
members are Shingo Torii, an External Director, Akie Iriyama, an External Director, and Kunio Yamada, Chairman andChief Executive Officer, and the committee is chaired by Shingo Torii, an External Director.
The Nomination Committee drafts the following proposals and submits them to the Board of Directors, which it isauthorized to do by the Board of Directors.
Proposals for the selection and dismissal of Directors
Proposals for the selection and dismissal of Executive Directors
Proposals concerning the positions of Directors, etc.

Policy on Selection and Nomination of Directors
Execution

Internal Audit Office

The Company has four Audit & Supervisory Board members, two of whom are External Audit & Supervisory Board
members and two of whom are Full-time Audit & Supervisory Board member s from within the Company. The Audit &Supervisory Board is chaired by a Full-time Audit & Supervisory Board member elected from among the Audit &Supervisory Board member s.
Based on its fiduciary responsibility and accountability to shareholders, the Audit & Supervisory Board ensures thesoundness of management with the aim of achieving sustainable growth and enhancement of the corporate value of theGroup over the medium to long term, and acts in the common interests of the Group, its shareholders, and all otherstakeholders.

Nomination Committee

Election/Dismissal

Audit

Audit & Supervisory Board

The Company aims to achieve sustainable growth and medium- to long-term enhancement of corporate value for thecommon interest of all stakeholders. Therefore, the Company believes it is important that the Board of Directors of theCompany consists of Directors who possess the diverse knowledge, experience, capabilities, insight, and values
necessary to ensure appropriate and flexible decision-making with respect to the Company’s business activities andsupervision of business execution. The Company also believes it is important to ensure a highly transparent and objective
corporate governance structure. Regarding internal Directors, the Company emphasizes that they should haveexperience of diverse business divisions and management experience at the Company’s subsidiaries, etc. and anunderstanding of their issues in order to formulate the Group’s management strategy. Regarding Independent External
Directors, the Company emphasizes that they should have diverse experience and expertise that are unavailable solely
from internal Directors and, at meetings of the Board of Directors, be able to offer the Company advice and suggestions
contributing to enhancement of corporate value.

Compensation Committee
The Compensation Committee is composed of three Directors, the majority of whom are External Directors in order tosecure more objectivity. The committee members are Shingo Torii, an External Director, Akie Iriyama, an External Director,
and Kunio Yamada, Chairman and Chief Executive Officer, and the committee is chaired by Kunio Yamada, Chairman
and Chief Executive Officer.
ROHTO Well-being Report 2021
32

Corporate GovernanceUpon delegation by the Board of Directors, the Compensation Committee formulates the amount of individualcompensation. The committee also prepares drafts for Directors’ compensation policies, procedures, and structures. It
also drafts proposals regarding Directors’ compensation that require approval at the General Meeting of Shareholders
and submits the drafts to the Board of Directors. The total amount of compensation for Directors determined, as well as
the allocation of basic compensation (fixed compensation) and performance-based compensation (variable
compensation) is reported to the Board of Directors.
Diversity of the Board of Directors (Skill Matrix of Members of the Board of Directors)
Corporate
management

Name

Finance/accounting

Sales/marketing

Production/technology

R&D/businessdevelopment

Risk management/
corporate
governance

Globalexperience

Human
resources

DX

Kunio Yamada
Masashi Sugimoto
Masaya Saito
Shinichi Kunisaki
Chiharu Takakura
Atsushi Hiyama
Shingo Torii
Akie Iriyama
Haruka Mera
*The table above indicates up to three specialized skills of each Director.
Not all knowledge and experience of each person is indicated.

External Directors (as of July 31, 2021)
Years in
officeAttendanceat meetings

Shingo Torii

Shingo Torii possesses abundant experience and broad insight acquired over his many years inmanagement. At meetings of the Board of Directors of the Company, his advice and suggestions about
overall management from a high vantage point have been highly beneficial. The Company expects that hewill contribute to the Company’s continued sustainable growth and enhancement of corporate value and that
he will be able to appropriately perform duties.

7

6/8

Akie Iriyama

After having been engaged at Mitsubishi Research Institute Inc. in consultancy for automakers and Japanese
governmental organizations and international organizations, Akie Iriyama received a Ph.D. from the Katz
Graduate School of Business, University of Pittsburgh, in the United States. He was then appointed AssistantProfessor at School of Management, University at Buffalo, The State University of New York. Currently, he isa professor specializing in management strategy and global management at Waseda Business School. His
advice and suggestions based on his wide-ranging knowledge of cutting-edge management have beenhighly beneficial. The Company expects that he will contribute to the Company’s continued sustainablegrowth and enhancement of corporate value and that he will be able to appropriately perform duties.

3

8/8

Haruka Mera

Haruka Mera launched the READYFOR crowdfunding service in 2011 when she was a graduate school
student and has continued to support people taking up challenges. She is a trendsetter as one of theforemost next-generation managers in Japan. Her advice and suggestions striking a good balance between
financial value and social value have been highly beneficial. The Company expects that she will contribute to
the Company’s continued sustainable growth and enhancement of corporate value and that she will be able
to appropriately perform duties.

2

Name

Reasons for appointment

Independent
Director

Total Amount of Compensation, etc. for Each Category of Officer, Total Amount of Each Type of Compensation, etc., and Number of Eligible Officers
7/7

Compensation of Officers
Matters related to determining the amount and the method of calculation of compensation, etc. for officers
The Company has established a compensation system (level of compensation and determination process) based on thefollowing policies.
(1) To motivate contribution to the enhancement of the corporate value of the Company from a long-term perspectivein order to achieve the philosophy specified in the Articles of Incorporation(2) To enable the philosophy to be put into practice and to be appropriate to the roles and responsibilities of each person(3) To ensure objectivity, transparency, and rationality that can be explained to all stakeholders
Based on these policies, which have been resolved by the Board of Directors, the compensation for each Director isdeliberated and determined by the Compensation Committee, with a majority of External Directors as its members, within the scope of the total amount of compensation, etc., previously approved by the General Meeting of Shareholders.

33

ROHTO Well-being Report 2021

Compensation for Audit & Supervisory Board members is decided in consultation with Audit & Supervisory Board
members within the scope of the total amount of compensation, etc., previously approved by the General Meeting of
Shareholders.
The 78th Ordinary General Meeting of Shareholders held on June 24, 2014 approved an annual amount of up to 700
million yen as the maximum amount of compensation for Directors (not including employee salaries for Directors who
serve concurrently as employees). The Company’s Articles of Incorporation at the time of this Ordinary General Meetingof Shareholders stated, “The Company shall have up to 15 Directors.” In addition, the 84th Ordinary General Meeting of
Shareholders held on June 26, 2020 also approved an annual amount of up to 70 million yen as the maximum amount ofcompensation for Audit & Supervisory Board members. The Company’s Articles of Incorporation at the time of this Ordinary General Meeting of Shareholders stated, “The Company shall have up to four Audit & Supervisory Board members.”(a) Structure of compensation for Directors
The compensation for the Company’s Directors consists of basic compensation (fixed compensation) based on the scaleof their responsibilities and roles, and performance-based compensation (variable compensation) based on the evaluation of individual Directors and business performance in the most recent fiscal year. However, External Directors are paid
basic compensation only as they are responsible for independent supervision.
(i) Basic compensation
The Company pays fixed compensation to individual officers according to the scale of their responsibilities and theirroles. The level of compensation at other companies is taken into consideration in determining fixed compensation.
(ii) Performance-based compensation (compensation based on individual evaluations and performance-linked
compensation)
Performance-based compensation consists of compensation based on individual evaluations that varies according to
the degree of contribution to Company-wide medium- to long-term issues (environment, society, and health) and resultsin the business areas under the control of each officer during the relevant period, and performance-linked compensationthat varies according to the degree of achievement of consolidated operating income targets for the previous fiscal year.
The ratio of basic compensation and performance-based compensation varies according to position and role. However, as a rough guideline, approximately 75% of the total compensation for internal Directors is allocated to basic compensation and approximately 25% is allocated to performance-based compensation. This ratio is based on a viewpointthat emphasizes management with a long-term perspective, and in terms of performance-based compensation, theCompany also places more importance on degree of achievement in initiatives to address medium- to long-term issues.
Compensation is paid in cash only. The annual amount of compensation during the term of each officer determined by
the Compensation Committee is divided into 12 and paid once a month in the same amount. The target for the indicatorrelated to performance-linked compensation for the fiscal year ended March 31, 2021 was 21,800 million yen, and theactual result was 22,990 million yen.
(b) Structure of compensation for Audit & Supervisory Board members
Auditors are paid basic compensation only as they are responsible for independent supervision. Compensation is determined through consultation among the Audit & Supervisory Board members taking into consideration the nature of theirduties.

Category of officer

Total amount of compensation,etc. (million yen)

Total amount of each type of compensation, etc. (million yen)
Number of eligible officers
Fixed compensation

Performance-linked compensation30

Directors(excludes External Directors)

370

340

Audit & Supervisory Board members(excludes External Audit & Supervisory Board members)

37

37

3

External officers

38

38

7

11

Total Amount, etc. of Consolidated Compensation, etc. for Each Officer

Name (category of officer)

Total amount of consolidated
compensation, etc.
(million yen)Company category

Kunio Yamada (Director)

186

Filing company

Amount of each type of consolidated compensation, etc.
(million yen)
Performance-linked
Fixed compensationcompensation

176

9*Information is only provided for those whose total amount of consolidated compensation, etc. is 100 million yen or more.

ROHTO Well-being Report 2021

34

Corporate GovernanceEvaluation of the Board of Directors
The Company conducted a self-evaluation (survey) of all the Directors in order to analyze and evaluate the effectivenessof the Board of Directors in the fiscal year ended March 31, 2021. We rated each question on a five-point scale fromthree perspectives: effectiveness of the Board of Directors, evaluation of oneself as a Director, and evaluation ofmanagement. The evaluation was generally positive. However, the following issues were raised: succession planning,
including CEO and future Director candidates, for the Board of Directors; timing of agenda proposals and distribution ofmaterials; opportunities for study and training tailored to individual Directors; and ensuring sufficient time for deliberationof each agenda item at the Board of Directors’ meetings. We will make improvements in these areas through operations.
The results of the evaluation of effectiveness were reported to the Board of Directors’ meeting held on June 24, 2021.

Messages from the External Directors

Risk Management
With regards to risk management, we have established a Crisis Management Committee to deal with unforeseen
circumstances, and have put in place a system to promptly deal with dangers and prevent losses or escalation while
listening to the opinions of legal counsel and other external advisors.

Compliance

Shingo Torii
External Director of the Company
Representative Director and Vice
Chairman of the Board, Suntory
Holdings Limited
Director, Beam Suntory Inc.

At the same time as fulfilling our social responsibility, we are striving to earn the trust and meet the expectations of ourstockholders, consumers, business affiliates, employees, and all other stakeholders, and achieve co-existence and coprosperity. We have established the Rohto CSR Charter and Rohto CSR Action Guidelines based on our corporate
identity and philosophy with the aim of realizing a truly healthy and evolving society. We have also distributed our CSR
Charter and CSR Code of Conduct to employees to promote compliance in addition to establishing a compliancesystem.

Anti-corruption Measures
The Company aspires to realize a truly healthy and evolving society. To accomplish this goal, we disapprove of and work
to prevent any form of corruption, including bribery. We do not respond to any act of obstruction or harassment, or any
request for unfair benefits. The Company engages in business in over 100 countries. Overseas, it is necessary to comply
with the laws and conventions of the local country as well as following the culture and customs of that country.
Nevertheless, we do not follow practices that are considered wrong by international standards, such as bribery. We strive
to contribute to the economic, social, and cultural development of the country through our corporate activities.
The Company has established a comprehensive whistleblowing system (Rohto Hotline) in order to prevent any kind of
corruption from taking place, including not only monetary bribes but also non-monetary favors or accommodations. The
ability to speak to a third party who is an external lawyer from the outset ensures whistleblowers will not bedisadvantaged. If a whistleblowing report is made at a subsidiary or Group company in Japan or overseas, the Internal
Audit Office immediately gathers information to put in place a Group-wide risk management system.

Akie Iriyama
External Director of the Company
Professor, Waseda Business
SchoolHaruka Mera
External Director of the Company
Representative Director & CEO,READYFOR, Inc.

35

ROHTO Well-being Report 2021

What I have realized since becoming an external director of Rohto is that thecorporate cultures of Rohto and Suntory are similar. “Never Say Never” is a great
corporate statement, and I feel that it empowers young persons.
Today’s Suntory Group is gigantic. Increased bureaucracy is an inevitable byproduct of becoming much larger. Looking at Rohto, it is also growing andbecoming ever bigger. Rohto owes a great deal to the leadership of Chairman andChief Executive Officer Kunio Yamada. However, it may be necessary for him andyoung employees to work together and try to get back to the Company’s essential
value and founding philosophy.
In other words, I think the Company’s young employees need to revisit thefounding spirit and philosophy of Rohto; this will lead to development of the nextgeneration business system.
These are things that have actually been said for a long time. However, I hopethat the young employees of Rohto will actively take on the challenge of not only
keeping up with changes and global trends in values but will also identify theiressence, explore creativity, initiate change, and create their own values.

The major challenge of the COVID-19 pandemic, which spread in 2020, has spurred
all of us to think about various health and social issues all over the world.
Meanwhile, humankind is also faced with a variety of fundamental challenges,
including climate change, food scarcity, health, and hygiene.
Against this backdrop, Rohto has established its vision “Connect for Well-being”,
and it is working diligently to address long-term issues in areas such as health,society, and the environment.
As an external director, I want to provide support by engaging in dialogue with
Rohto’s directors, officers and employees on what the Company should do in orderto promote well-being while taking into account the interests of various
stakeholders, including shareholders, employees, and business partners.
I am also acutely aware of the importance of corporate governance, both as amanagement scholar and from the perspective of serving as an officer at a numberof companies. I intend to adopt an active stance in making suggestions forcorporate governance that is more transparent and takes into consideration various
stakeholders, while retaining the traditional good qualities of the Company.
The commercial philosophy sampo-yoshi (three-way benefits), which means benefits
for the vendor, the customer, and society, has been the foundational principle of
Osaka merchants. The Osaka merchant spirit is embedded in Rohto, and I believethat this way of thinking is also connected to ESG and the SDGs, which arebecoming global trends. Many Rohto employees share a strong desire to resolve
social issues, and they are working to expand the Company’s business portfolio inline with the vision of well-being. I also value the Company's proactive approach todigital transformation (DX), in readiness for change, in order to achieve its vision.
Consumption trends are also changing, particularly among the younger generation,and companies that are more committed to resolving social issues will receive
support. In other words, we are living in a world where shiho-yoshi (four-way
benefits), which is sampo-yoshi plus mirai-yoshi (benefits for the future), will bechosen by both shareholders and consumers. How can we stay ahead of the times
in an era of such dramatic change? I hope to continue providing support as anexternal director.

ROHTO Well-being Report 2021

36

Key Financial Data (11-Year Summary)

(FY)

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Net sales (million yen)

115,472

120,292

129,146

143,822

151,774

167,016

154,599

171,742

183,582

188,327

181,287

Gross profit (million yen)

67,93870,495

Share of net sales (%)

58.8

58.6

75,87386,15790,59999,226

91,344

101,049

109,624

114,240

106,726

58.8

59.9

59.7

59.4

59.1

58.8

59.7

60.7

58.9

54,83256,871

61,493

69,33677,44083,54375,893

81,96288,812

91,154

83,736

Share of net sales (%)

47.5

47.3

47.6

48.2

51.0

50.0

49.1

47.7

48.3

48.4

46.2

Operating income (million yen)

13,105

13,624

14,38016,821

13,15915,683

15,451

19,087

20,812

23,08522,990Share of net sales (%)

11.3

11.3

11.1

11.7

8.7

9.4

10.0

11.1

11.3

12.3

12.7

Ordinary income (million yen)

13,293

13,684

14,73017,10014,09815,33915,964

18,84918,97022,73523,910Share of net sales (%)

11.5

11.4

11.4

11.9

9.3

9.2

10.3

11.0

10.3

12.1

13.2

7,966

8,184

8,087

8,947

8,631

9,098

10,011

9,289

9,799

15,41016,743Business Performance

Selling, general and administrative expenses (million yen)

Profit attributable to owners of parent (million yen)
Share of net sales (%)

6.9

6.8

6.3

6.2

5.7

5.4

6.5

5.4

5.3

8.2

9.2

R&D expenses (million yen)

3,697

3,717

4,062

4,547

5,585

5,811

6,123

6,553

6,831

7,050

7,903

Depreciation (million yen)

4,744

4,744

5,256

5,735

6,059

6,044

5,552

5,593

6,159

6,058

6,376

Return on assets (ROA) (%)

10.8

10.4

10.3

10.9

8.3

8.6

8.8

10.0

9.5

10.9

10.8

Return on equity (ROE) (%)

10.8

10.2

9.2

9.4

8.4

8.3

8.8

7.6

7.6

11.4

11.7

Total asset turnover (Times)

0.93

0.92

0.90

0.92

0.89

0.94

0.86

0.90

0.92

0.90

0.82

Trade receivable turnover (Times)

3.98

3.90

4.05

4.44

4.22

3.80

3.24

3.54

3.86

3.94

3.66

Inventory turnover (Times)

7.30

7.01

6.89

7.04

6.91

7.32

6.63

6.89

6.5

6.19

6.19

Current ratio (%)

156.0

158.6

156.3

146.5

162.6

171.4

189.0

186.2

191.6

209.5

235.7

Owners’ equity ratio (%)

60.9

60.9

61.7

60.2

61.7

61.4

64.7

64.2

65.1

64.4

68.9

Interest coverage ratio (Times)

50.0

74.1

118.7

126.7

78.0

80.6

138.8

165.2

184.6

197.7

194.7

Debt-to-equity ratio (Times)

0.12

0.13

0.1

0.13

0.11

0.07

0.07

0.07

0.06

0.08

0.07

Total assets (million yen)

126,472

136,008

150,643

162,249

177,509

179,573

181,543

198,166

200,953

215,644

225,790

Net assets (million yen)

77,911

83,627

93,771

98,627

110,516

111,271

118,436

128,440

132,189

140,032

156,612

Free cash flow* (million yen)

4,337

786

6,107

6,041

2,268

5,258

3,917

8,140

11,500

9,635

9,771

Cash and cash equivalents at end of year (million yen)

14,005

15,381

19,86723,02625,09322,49523,46630,06337,34544,66552,254

Net income per share (¥)

67.75

69.6

68.78

77.15

76.05

80.04

87.95

81.55

86.00

135.13146.78

Net assets per share (¥)

655.53703.93789.83861.49964.18969.22

1,030.96

1,115.94

1,147.42

118,089

118,089

Dividends per share (¥)

15

16

17

18

19

20

21

22

25

26

28

Dividend payout ratio (%)

22.1

23

24.7

23.3

25

25

23.9

27.0

29.1

19.2

19.1

Price-earnings ratio (Times)

13.2

14.8

18.7

23.6

22.5

25.6

23.7

36.5

33

21.9

20.1

Price-book value ratio (Times)

1.4

1.5

1.6

2.1

1.8

2.1

2

2.7

2.5

2.4

2.2

Dividends per share (¥)

14

15

16

17

18

19

20

21

22

25

28

Profitability Indicators

Efficiency Indicators

Stability Indicators

Financial Position

Cash Flows (Consolidated)

Per Share Information

Other Financial Information*Net cash provided by operating activities + Net cash used in investing activities

37

ROHTO Well-being Report 2021

ROHTO Well-being Report 2021

38

ESG Data

Corporate Data (as of March 31, 2021)
Rohto Pharmaceutical Co., Ltd. only (non-consolidated)

(FY)

2015

2016

2017

2018

2019

Company Profile

2020

Rohto Pharmaceutical Co., Ltd.

Company Name

Employees and Workstyles
Employees (persons)

1,524

1,562

1,400

1,474

1,529

1,595

Women (persons)

907

918

805

857

883

918

Men (persons)

617

644

595

617

646

677

Turnover rate (%)

4.2

4.6

5.4

5.3

3.1

2.7

Participants in in-house double jobs (persons)

—

36

49

70

54

98

Participants in external challenge work (persons)

—

25

63

81

81

62

Paid annual leave taken (%)

63.4

62.2

65.3

70.1

71.6

67.4

Females in management positions (%)

19.1

18.6

19.2

21.1

22.8

61

64

105

100

59

64

104

99

*1

Uptake of parental leave (persons)
Women (persons)Men (persons)Uptake of parental leave among women*2 (%)*2Return to work after parental leave among women (%)
Employment of people with disabilities (%)

Chairman and Chief Kunio
Executive Officer
YamadaFull-time
AuditorMasanori
Kimura

94

100

93

President and Chief Masashi
Operating Officer
Sugimoto

HidetoUemura95

Full-time
AuditorExecutive Vice
President

MasayaSaito

External
Auditor

Katsusuke
Amano

Managing Director

ShinichiKunisaki

External
AuditorYasuhiro
Tani

Chiharu
Takakura

0

1

1

1

5

100

98

93

95

100

98

95

96

100

95

100

Director

1.87

1.90

1.84

2.08

2.10

2.30

Director

AtsushiHiyamaExternal Director

Shingo
Torii

1,669

1,293

1,191

1,963

2,403

Improvements and findings (cases)

11,292

11,758

10,637

10,367

9,585

10,465

Donors to Michinoku Future Fund (persons)

871

854

866

858

897

Ended*4

Donors to Karugamo Fund (persons)

969

934

945

929

953

944

Changes in crude oil equivalent (kl)

8,319

8,160

8,175

8,015

8,179

7,930

Total CO2 emissions (t/year)

16,55915,846

15,772

14,66913,957

13,327

Shareholder

0.186

0.177

0.163

0.141

0.131

0.132

Electricity consumption (1,000 kWh/year)

24,42823,99423,711

24,28925,11024,914

Sales intensity (1,000 kWh/million yen)

0.274

0.268

0.245

0.233

0.236

0.247

2,383

2,395

2,410

2,087

2,072

2,913

27

27

25

20

19

29

292

275

290

266

271

248

3.3

3.1

3.0

2.5

2.5

2.4

Social Contributions

Environment

Sales intensity (t/million yen)

City gas consumption (1,000 m3/year)
Sales intensity (m3/million yen)
Water usage (1,000 m3/year)
Sales intensity (m3/million yen)

Health Management
Employees performing 8,000-step walking and20-min. Brisk walking at the time of events (%)

—

28.2

41.0

44.4

48.5

29.3*5External Director

HarukaMera

The Master Trust Bank of Japan, Ltd. (Trust account)

10,0308.79

STATE STREET BANK AND TRUST COMPANY 505223

9,668

8.47

Custody Bank of Japan, Ltd. (Trust account)

8,225

7.21

MUFG Bank, Ltd.

3,800

3.33

Kiyoko Yamada

2,968

2.60

Yamada Kosan Limited Private Company

2,807

2.46

Sansho Kosan Co., Ltd.

2,568

2.25

Nippon Life Insurance Company

2,119

1.85

HSBC-FUND SERVICES, HBAP CLTS UCITS A/C - IRELAND

2,054

1.80

1,954

1.71

25.6

26.2

Kunio Yamada

Obesity (women; BMI ≥ 25) (%)

9.9

13.7

15.3

15.2

16.4

16.6

Note) The Holding Ratio has been calculated by deducting the treasury stock (4,019,044 stocks).

Smoking rate (%)

13.5

12.5

11.6

7.7

0.1

0.1

5.1

7.3

5.1

4.9

5.1

14.3

*4 This program ended following the end of the collection of donations.
*5 Implemented in 2020 during Japan’s state of emergency.
*6 Changed the diagnostic criteria in 2020 (to align with the WHO criteria).

Basic Stock Information
Securities Code4527

Fiscal Year

April 1 to March 31 of the next year

Shareholder Registry Mitsubishi UFJ Trust and Banking Corporation
Administrator
Stock Listing

39

ROHTO Well-being Report 2021

Japanese financial
institutions 32.88%

Voting stake
(%)

22.5

*3 Positive responses such as letters of appreciation from customers

Japanese financial instruments
business operators 0.67%

Shareholdings(thousand shares)

24.0*2 Most people leave the Company due to a job relocation of their spouse.

Shareholdings by Shareholder Type

Major Shareholders (Top 10)

21.9*1 Excludes mandatory retirees and part-time employees.

18,087

Non-Japanese companies 30.22%

22.4

Anemia among female employees*6 (%)

Number of Shareholders

Japanese individuals
and others 21.70%

Obesity (men; BMI ≥ 25) (%)*Criteria: hemoglobin (Hb) levels < 10.9 g/dL (since 2020, < 12.0 g/dL)

114,070,111 shares(excl. 4,019,044 treasury shares)

Japanese companies
and corporations 11.13%

1,405

Akie
Iriyama

Number of Shares Issued

Treasury shares 3.40%

Pleasantly surprised testimonials (cases)

External Director

6,504 million yen

Number of Shares Authorized 399,396,000 shares

26.0

2

CapitalSharesAuditors

Products and Quality*3

Directors and Officers
Board of Directors

100

September 15, 1949

Number of Employees 6,596 (consolidated basis)
1,595 (non-consolidated basis)

February 22, 1899

FoundedIncorporated

Tokyo Stock Exchange, Inc. (First Section)

Inquiry
ESH Regional Collaboration Promotion Office,Public Relations & Creating Shared Value Division
Rohto Pharmaceutical Co., Ltd.

ROHTO Well-being Report 2021

40

Global Network
Europe

Asia

33
31

Dax Cosmetics

Mentholatum (Asia-Pacific) Ltd.

Mentholatum (China)
Pharmaceuticals Co., Ltd.

32

PT. Rohto Laboratories Indonesia

Rohto-Mentholatum (Vietnam)Co., Ltd.

Rohto Pharma (India) Pvt. Ltd.

EuropeTianjin Rohto Herbal Medicine
Co., Ltd.

North America
17

2
19

25

11

10

9

1

4

Japan

30
27

The Mentholatum Company, Ltd.
(U.K.)

18

16 15
28

29

3
8

7

The Mentholatum Company

5

12

6

20

13
14

24
26

South America

21

AfricaQualitech Pharma Co., Ltd.

22

35

23

Oceania
Rohto Mentholatum
do Brasil Comércio deProdutos para Saúde Ltda
Mentholatum South Africa Pty. Ltd.

Rohto Group34
36
Mentholatum Australasia Pty. Ltd.
(Australia)

The Company,

Ophthalmos S.A.

Countries with business footprint

63 subsidiaries, and 14 affiliates More than110 countries

45 consolidated subsidiaries and 2 consolidated subsidiaries accounted for by the equity-method
Main Subsidiaries and Affiliates
Company Name

Japan

Asia

Location

19 Mentholatum (AP) Ltd., Korea Branch

Seoul, South Korea

2 Mayado Pharmaceutical Co., Ltd.

Kobe, Hyogo Pref.

20 Rohto-Mentholatum (Thailand) Ltd.

Bangkok, Thailand

3 Nitten Pharmaceutical Co., Ltd.

Nagoya, Aichi Pref.

21 Rohto-Mentholatum (Malaysia) Sdn. Bhd.

Kuala Lumpur, Malaysia

4 Interstem Co., Ltd.

Hachioji, Tokyo

22 Mentholatum Singapore Division

Singapore

2 affiliated companies accounted

5 Amato Pharmaceutical Products, Ltd.

Toyonaka, Osaka Pref.

23 PT. Rohto Laboratories Indonesia

Jakarta, Indonesia

14 other companies

6 MG Pharma Inc.

Ibaraki, Osaka Pref.

24 Rohto-Mentholatum (Vietnam) Co., Ltd.

B nh D

7 Ceres Okinawa Co., Ltd.

Ogimi, Okinawa Pref.

25 Rohto Pharma (India) Pvt. Ltd.

Haryana, India

8 Yaeyama Farm Co., Ltd. (Specific agricultural production company)

Ishigaki, Okinawa Pref.

26 Rohto-Mentholatum (Lanka) Pvt. Ltd.

Colombo, Sri Lanka

9 Hokushinfoods Co., Ltd.

Ebetsu, Hokkaido Pref.

27 Rohto-Mentholatum (Bangladesh) Ltd.

Dhaka, Bangladesh

10 The Mentholatum Company

New York, U.S.A.

28 Rohto-Mentholatum (Cambodia) Co., Ltd.

Phnom Penh, Cambodia

11 The Mentholatum Company of Canada, Ltd.

Ontario, Canada

29 Rohto-Mentholatum (Myanmar) Co., Ltd.

Yangon, Myanmar

12 Mentholatum de México S.A. de C.V.

Mexico City, Mexico

30 Rohto-Mentholatum (Nepal) Co., Ltd.

Kathmandu, Nepal

13 Rohto Mentholatum do Brasil Comércio de Produtos para Saúde Ltda

Sao Paulo, Brazil

31 The Mentholatum Company, Ltd. (U.K.)

Scotland, U.K.

14 Ophthalmos S.A.

Sao Paulo, Brazil

32 Dax Cosmetics

Mazowieckie Province, Poland

15 Mentholatum (Asia-Pacific) Ltd.

Hong Kong, China

33 Rohto Mentholatum RU LLC

Moscow, Russia

16 Mentholatum (China) Pharmaceuticals Co., Ltd.

Guangdong Province, China

34 Mentholatum South Africa Pty. Ltd.

Cape Town, South Africa

17 Tianjin Rohto Herbal Medicine Co., Ltd.

Tianjin, China

35 Rohto-Mentholatum (Kenya) Ltd.

Nairobi, Kenya

18 Mentholatum Taiwan Ltd.

Taipei, Taiwan

36 Mentholatum Australasia Pty. Ltd.

Victoria, Australia

The Company and 13 consolidated
subsidiaries

8 consolidated subsidiaries
6 other companies

13 consolidated subsidiaries
1 non-consolidated affiliatedcompany accounted for by theequity-method

8 other companies

41

Company Name

Minato-ku, Tokyo

for by the equity-method

Americas

Location

1 Qualitech Pharma Co., Ltd.

ROHTO Well-being Report 2021

Europeand Africa
Oceania

10 consolidated subsidiaries
1 other company

1 consolidated subsidiaryng Province, Vietnam

ROHTO Well-being Report 2021

42

Rohto Pharmaceutical Co., Ltd.
https://www.rohto.co.jp/
1-8-1 Tatsumi-nishi, Ikuno-ku, Osaka, Japan 544-8666

Issued in November 2021
Printed in Japan