First Quarter Business Resultsfor Fiscal 2022
August 4, 2022
Director, and CFO

Muneki Handa

agenda01

First Quarter Business Results for FY 2022

02

Initiatives and Progress for
Domestic Business and China Business03

FY 2022 Earnings Forecast2Summary of the FY 2022 PlanFirst Medium-Term Management Plan
¥162.0 billion
Sales¥129.5 billion¥138.5 billion

40%●Entry into the traditional Chinese medical
35%
products business
30%

20%

18%

17%
15%

10%

0%

2022

2023

●Sales(2022-2024 Sales CAGR: 30％）

15%

5%

Domestic
business

China business (Crude-drug platform)

25% ●High growth and steady profit contribution

Operatingprofitmargin2021

China business (Formulation platform)

Domestic business●Stable growth and launch of thedevelopment of Kampo-related new areas(2022-2024 Sales CAGR: ５％）

2024●Cost of sales
・Rise in sales in the China business, depreciation in the yen’s value,・Expansion of the Kampo market by providing Kampo solutions
soaring commodity prices, etc.
that suit each medical practitioner through the integration of・Improved production efficiency owing to a rise in sales volume
e-promotions and MR activities●SG&A expense
Chinabusiness

・Sales expansion of high-quality raw material crude drugs,
drug pieces and “Yakushokudogen” products

・One-off expenses, including for validation, ahead of full-fledged
operations at the Tianjin Plant
・Upfront expenses, including a rise in headcount and outlays to build
an IT infrastructure in the China business3

1Q Business Results for FY 2022
[Million yen]

1Q
FY 2021
results

1Q FY 2022
results

Key points in performance
Sales and profits increased year on year

YoY
AmountChangeSales

31,771

34,417＋2,645＋8.3%

Domestic business－

31,562－－◼

China business

－

2,855

－

－

[Ref.] Domestic

29,51331,562+2,048+6.9%◼
◼

[Ref.] Overseas

2,257

2,855

+597

+26.5%

Cost of sales

15,29816,462+1,164+7.6%

SG&A expense

10,321

11,601+1,280+12.4%

Operating profit

6,152

6,353

+201

+3.3％

◼
◼

Domestic business

－

6,404

－

－

◼

China business

－

(50)

－

－

Operating profit

7,247

8,665

+1,418+19.6%

5,389

6,632

+1,243+23.1％

16.37

18.32

－

－

Sales

Ordinary profit
Profitattributable to owners ofparentPL translation rate (CNY)

Prescription Kampo products: ¥30,277 million (growth of
6.7％)
OTC Kampo products, etc.: ¥914 million (growth of 18.0％)
China business (crude-drug platform): ¥2,855 million

Cost of sales◼
◼

Decline in unrealized profit owing to lower inventory assets
CoGS ratio dropped 0.4pt to 47.8％

SG&A expense◼
◼
◼

Increase in R&D expense
One-off expenses ahead of full-fledged operations at the
Tianjin Plant
SG&A ratio rose 1.2pt to 33.7％

Negative impact from yen depreciation: ¥191 million
Loss in the China business due to expense for building
foundations, mainly the formulation platform
Operating profit margin deteriorated 0.9pt to 18.5%

Ordinary profit◼

Forex gain related to loans to overseas subsidiaries: ¥1,999
million4

Factors Triggering Changes in Operating Profit (YoY)（百万円）（ Million yen ）+1,159+321 （1,088）

Changes in sales ：＋1,159 Breakdown

Domestic＋1,120Overseas＋39

Changes in cost-to-sales : +321 Breakdown（191）

Crude drug-related cost
（Domestic）+438

Row material cost（Domestic）（63）

Processing cost etc（Domestic）（169）

Outside sales in China（Overseas）

6,152

1Q FY 2021
Operating profit

6,353

Profit impact
due tochanges insales

Profit impact Profit impact Profit impact 1Q FY 2022
from changes
due todue toOperating profitin
SG&A
exchange ratechanges incost-to-sales expenses+115

Changes in SG& A expenses:(1,088)
Breakdown

R&D expense（350）

Depreciation

（248）

Other

（490）

Exchange rate

（191）
5

Financial Condition/Cash Flow Position（ Million yen ）

68.3％

68.8%

+0.5pt2021年度（2022.3）

2022年度１Q

Change92,751
10,247
13,614
68,88995,902
10,36813,054
72,480Non-current assets

Total liabilities
Current liabilities
Non-current liabilities

Inventories
Merchandise andfinished goods

Work in process
Raw materials andsupplies675

Of which,
Exchange rate

3,151

3,806

120

233

（560）

110

3,590

3,462

（24）

＋23

680

Cash and cash
equivalents at end of
periodEquity ratio

Current assets

Impact of exchange ratetranslations

11,598
8,428
3,170
640
923
（283）
10,958Financing activities

362,580
237,849
124,731
93,512
46,79946,713
269,068（41）

Investing activities

Total net assets

350,981229,420
121,561
92,87145,875
46,996258,109

Total assets+47

Operating activities

ChangeCash and cash equivalents at
beginning of period(March 2022)

FY 2022
1Q

FY 2021（ Hundred million yen ）6agenda01

First Quarter Business Results for FY 2022

02

Initiatives and Progress for
Domestic Business and China Business03

FY 2022 Earnings Forecast

7Comparison with the Prescription Pharmaceutical Market
In 1Q, the market grew 5.4% YoY; the gap with the market grew 4.1 points
10%

All sales channels
7.9%
8%

Tsumura(YoY/drug price basis)
7.7%
6.6%

7.1%

6%

5.4%
4%
4.2%

Prescription2%
pharmaceuticalmarket

3.6%
2.9%

2.5%

1.3%

Gap withmarket＋4.1pt0%1Q-2%

FY 2021

2Q

3Q

4Q

1Q

FY 2022
Copyright © 2022 IQVIA. Proprietary calculation by Tsumura based on “JPM Apr. 2020 – Jun. 2022”
Reproduction prohibited

8

Sales of Drug-fostering Program Formulations/Growing
Formulations（ Million yen ）Net sales
Product No./formulation nameRanking

FY 2021 1Q

FY 2022 １Q

Ratio to total sales

YoY

100 Daikenchuto

2,430

2,505

+74

+3.1%

2

54 Yokukansan

1,872

1,933

+60

+3.2%

4

43 Rikkunshito

1,770

1,860

+90

+5.1%

8

107 Goshajinkigan

888

932

+43

+4.9%

23

14 Hangeshashinto

345

359

+13

+3.9%

Total sales for drug-fostering program formulations

7,308

7,591

+282

+3.9%

41 Hochuekkito

1,818

1,881

+63

+3.5%

5

17 Goreisan

1,297

1,542

+244

+18.8%

6

24 Kamishoyosan

1,205

1,296

+91

+7.6%

17

108 Ninjin’yoeito

484

507

+23

+4.9%

18

137 Kamikihito

411

501

+90

+22.0%

5,217

5,730

+512

+9.8%

Total sales for 119 formulations other than drugfostering program and growing formulations

15,852

16,956+1,104+7.0%

Total sales for 129 prescription Kampo
products

28,37730,277+1,900+6.7%

Drug-fostering program
formulations

1

Growing formulations

3

Total sales for growing formulations

Drug-fostering
programformulations

25%
129
prescription
119 formulations
other than drugfostering programand growing
formulations

Growing
formulations

19%

56%

Newly added from FY 2022
*Growing formulations up to FY 2021

68 Shakuyakukanzoto
29 Bakumondoto
9

Indications for New Growing Formulations in the Three
Important Domains
Build basic and clinical evidence with the aim of achieving write-ups intreatment guidelines*What is frailty?

<Efficacy/benefits>
Decline in stamina
after illness, fatigue,poor appetite,night sweats, cold
hands and feet, anemia

Geriatrics

Physically frail(fatigue, poor appetite)

A condition between
being healthy andrequiring nursing care, acondition where mental
and physical activity has
decline*Three components offrailty<Efficacy/benefits>

Geriatrics

Following symptoms
of a person that does
not look well due to a
weak constitution:

CancerAnemia, insomnia,
anxiety, neurosis

Mentally frail(supportive
care)

Anxiety

Women’shealthAnxiety/insomnia

PhysicallyfrailSocially
frail

Mentally
frail

10Aiming to Deliver Information to Medical Practitioners
Target the continued expansion of the Kampo market byproviding Kampo solutions that suit each medical practitioners
e-promotions
・Kampo online salon・Web lectures
・Video library etc.

MR activities
・Activities for formulationand permanent use
・Small study groups
・Lectures/study groups etc.

Information collaborations

Implement measures,
improve activities

Propose optimalmeasures by using andanalyzing information

Implement measures,
improve activities
11

Overseas Sales (China Business)
In the crude-drug platform, expand sales of raw material crude drugs,
drug pieces and “Yakushokudogen” products
about ¥2.8
billionRaw material crude drugs

Expand sales of superior products, mainly ginseng
Delay in some sales activities and shipments due toimpact from COVID-19••

about ¥2.2
billionDrug pieces (chopped crude drugs)•••

approx. 75% growth

Increase sales items by developing new business
partners and via existing business partners bypromoting high quality“Yakushokudogen”
products

1Q FY 2021

approx. 18% growth

approx. 49% growth

Expand product lineup by launching new products
Grow sales along Ping An Health sales channels

1Q FY 202212

agenda01

First Quarter Business Results for FY 2022

02

Initiatives and Progress for
Domestic Business and China Business03

FY 2022 Earnings Forecast

13

FY 2022 Earnings forecast【Million yen】

2Q FY2022
Initial Plan

2Q FY2022
Revised Plan

Compared to theInitial plan

AmountFY2022 Plan

Change67,00068,900+1,900+2.8%

138,500

Domestic business

－

－

－

－

China business

－

－

－

－

124,300
14,20034,70023,500+1,200+3.6%

SG&A expenses

33,50023,700（200）（0.8）%

69,80047,900Operating Profit

9,800

10,700

+900

+9.2%

20,800

Domestic business

－

－

－

－

China business

－

－

－

－

21,200（400）

Ordinary Profit

10,00014,000+4,000+40.0%

21,200Net profit attributable

7,400

9,600

+2,200+29.7%

15,000Net sales

Cost of sales

to owners of parent

Dividends（per share）

64円

EPS

196.1円

ROE

6.0％

14

Key Point of revised plan
Net Sales

2Q Revised Plan 68,900 million yen

Compared to
the Initial plan

＋1,900 million yen◼ The domestic business exceeded the initial plan due to the temporary impact of the re-expansion of COVID-19 andextreme heat, but the full-year level is expected to be in line with the plan.

Cost of sales

34,700 million yen+1,200 million yen◼ Unrealized profit is declining due to a decline in inventory due to the suspension of production (lockdown) at the
Shanghai Plant. The level of unrealized profit in the first half and the full year is expected to be as planned due to anincrease in inventory caused by the resumption of production.

SG&A expenses

23,500 million yen(200)million yen◼ Full-year SG&A expenses are expected to be in line with the plan, although some of SG&A expenses have not beenused due to restrictions on activities caused by lockdowns in various parts of China.

Operating Profit

10,700 million yen+900 million yen

Ordinary Profit

14,000 million yen+4,000 million yen◼ Foreign exchange gains related to loans to overseas subsidiaries will be approximately 2.8 billion yen in the first half(year-end exchange rate: 20.37 yen/yuan). We will not revise full-year plan due to difficult to make rational
calculations for the future exchange rate conditions.

Net profit attributableto owners of parent

09,600 million yen+2,200 million yen
15

Shareholder Returns
Policy◼ We aim to improve our corporate value by continually expanding domestic businessand through growth investments in the China business, and by building foundations.
Accordingly, we plan to implement stable dividends, taking into account factors such as
medium/long-term profit levels and cash flow conditions.
45.0%

100

32.1%

35.9% 35.7%

31.9% 33.5%

35.6%

32.6%

31.9%

40.0%

35.0%

80

26.0％

25.0%

30.0%

60

40

25.0%

32

32

32

32

32

32

32

32

32

32

20.0%

15.0%

20

From Oct. to Mar.
From Apr. to Sept.

10.0%

32

32

32

32

32

32

32

32

32

0

32

Dividends payout ratio
5.0%

0.0%

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022forecast
2022

Note: The FY 2022 year-end dividend and payout ratio (forecast) are an estimate based on the assumption that the dividend resolution isapproved at the 87th Ordinary General Meeting of Shareholders.

16Inquires about these materials
Corporate Communications Dept.
Investor Relations Groupinvestor_madoguchi@mail.tsumura.co.jp
Cautionary items regarding forecasts⚫ The materials and information provided in this presentation contain so-called forward-looking
statements. Readers should be aware that the realization of these statements can be affected by avariety of risks and uncertainties and that actual results could differ significantly.

⚫ Changes in Japan or other foreign countries related to healthcare insurance systems or regulations
set by medical treatment authorities on drug prices or other aspects of healthcare or in interest andforeign exchange rates could negatively impact the Company’s performance or financial position.
⚫ In the unlikely event that sales of the Company’s core products currently on the market be halted orshould sales substantially decline due to a defect, unforeseen side effect or some other factor, there
could be a major impact on the Company’s performance or financial position.

17

Appendix

[Revise content of disclosure] Disclosure by Segment & Area•

Disclose segment information (sales and operating profit) by business from FY 2022
Domestic business: The company that makes final sales to external customers is Tsumura
and/or a domestic affiliate
China business: The company that makes final sales to external customers is an affiliate in
China

Segment (FY 2022 onward)

Domestic business

Domestic

By area(FY 2020
onward)Overseas

China business• Prescription Kampo products• Other prescription
pharmaceuticals• OTC Kampo products, etc.
(domestic sales)• External sales at domestic
affiliates

ー・OTC Kampo products, etc.
(overseas sales)• Crude-drug platform (rawmaterial crude drugs, drug pieces
and “Yakushokudogen” products)• Formulation platform
19

Comparison with the Prescription Pharmaceutical Market(YoY/drug price basis)

TsumuraPrescription pharmaceutical market

10%

7.9%

7.7%

8%

7.1%

6.6%

6%

5.4%

Overall
4%
2%
0%

4.2%

3.6%

2.9%

2.5%

1.3%

-2%

General clinics (GP)
10%

9.1%

8.7%

8%

1Q
FY2021

2Q

3Q

7.5%

8%

7.8%

6%

2%

2.3%

1Q
FY2022

Hospital market (HP)
6.3%

4%

4Q

1.9%

2.4%

0.7%

6%

6.4%
4.7%

4.1%

5.1%

4%
1.4%

2%

3.1%

3.4%

2.7%

3.7%

0%

0%
-2%

1Q

-4%

FY2021

2Q

3Q

4Q

1Q
FY2022

-2%
-4%

1.1%
1.1%

1Q
FY2021

2Q

3Q

4Q

1Q
FY2022

Copyright © 2022 IQVIA. Estimated based on IQVIA JPM Apr.2020-Jun.2022. Reprinted with permission

20

COVID-19 impact
129 prescription Kampo products grew roughly 4% owing to positive-impact formulations in 1Q
Increase reflecting changes inliving environment

Increase owing to theuse of masks•

Skin irritation, acne (4 formulations)•••Anxiety/insomnia (6 formulations)（shipment volume basis：growth rate）
Dizziness (2 formulations)
Loss of appetite, fatigue (2 formulations)
119% Formulations with apositive impact

111%

115%129 prescriptions

108%

FY2020
1Q

96%

97%

FY2021
1Q

FY2022
1Q

Formulations with anegative impact

Decrease due to measures toprevent infections•

Common cold, influenza and hay fever (13 formulations)

21

COVID-19 Related Symptoms and Prescription Opportunities
Diseases for which prescription opportunities have increased
PsychiatricdisordersDizziness

Skin diseases

Anxiety and insomnia

Dizziness due tophysical andpsychiatric disorders

Acne and dermatitis
due to the use ofmasks

Hangebyakujutsuten
mato
Ryokeijutsukanto(Goreisan)*Keishibukuryogankayokuinin
Jumihaidokuto
Seijobofuto
Keigairengyoto

Kamishoyosan
Kamikihito
Hangekobokuto
Saikokaryukotsuboreito
Total sales for six
formulations

Supplements

Prescription group used to treat a deterioration in
health conditions, including post-illness fatigue, loss ofappetite and decline in stamina

Hochuekkito Juzentaihoto

Diseases for which prescription
opportunities have decreased
Decrease in the number of respiratory disease patients
due to infection prevention measures

Kakkonto、Saikokeishito、Bakumondoto、Keishito、Jinsoin、
Saikanto、MaobushisaishintoTotal of seven formulations

Trends in the monetary impact owing
to a fluctuation in prescription
opportunities (FY 2022 1Q)(Hundred million yen)

500

422

400
300
200
100
0
-100

(44)*
(Amount: year-on-year / shipment basis）*Calculated only for 7 prescriptions
decreased from the previous year

*Goreisan prescription opportunities are also increasing for treatment in areas other than dizziness therefore it has been excluded from the basis of calculations

22

Important Domains & Drug-Fostering Program/Growing
Formulations
Geriatric health domain
Psychiatric and neurological disorders

Peripheral symptoms for frailty

D Yokukansan
I Yokukansankachimpihange

Diseases specific to women
G KamishoyosanD

Rikkunshito

G Kamikihito

D

Hangeshashinto

Hochuekkito

DGoshajinkigan

D Goshajinkigan

G

Hochuekkito+ related formulations

G

Kamikihito

Other

Digestive system diseases

I

Juzentaihoto

DG

I Bakumondoto+ related formulations
Peripheral symptoms for circulatory
disordersG

Mitigation of side effects, etc.

G Ninjin’yoeito+ related formulations

Respiratory diseases(supportive care*)

Women’s healthdomainCancer domain

Goreisan+ related formulations

G

Rikkunshito

G

Daikenchuto

KamikihitoI+ related formulations

I Shakuyakukanzoto+ related formulations

G Growing formulations:

Focusing on the structure of diseases in recent years, intreatment domains with a high degree of medical needs,
there are patients in dire distress of finding new drug
therapies; narrow down target to patients in whichprescription Kampo formulations are demonstrating specificeffects and prescribe to build evidence (scientific basis)

As focal formulations to follow the five drug-fostering
program formulations, aim for write ups in treatment
guidelines by building evidence (safety and efficacy data,etc.) in domains with a low treatment of satisfaction and a
low degree of contribution to medicine

Daikenchuto

G Goreisan+ related formulations

D Drug-fostering program formulations:

Tokishakuyakusan+ related formulations
I

Important formulations:
Important formulations following drugfostering program formulations andgrowing formulations for the penetration of
Kampo in important domains

23Profile of the Tianjin Plant (Tianjin Tsumura Pharmaceuticals Co., Ltd.)The plant will be established as a site in charge of manufacturing powdered extracts(intermediate products) for the domestic business
Phase 1 construction
・Construct the No. 1SD (powdered extract production),
warehouse, etc.
・Construction to be completed in May 2022, full-fledged
operations scheduled to be started up at the end of FY 2022
・Investment: approx. ¥15.0 billion

Phase 2 construction
・Construct the No. 2 SD (powdered extract production)

・Construction to be completed in FY 2023, full-fledged
operations scheduled to be started up in FY 2025
・Investment: approx. ¥10.0 billion

Benefitsfromestablish-ment•

Powdered extract production capacity for the domestic business: 20％ increase•

Labor productivity improvement owing to automation*1: 13％ improvement•

CO2 emissions reduction owing to the introduction of energy-saving
technologies*2: 5,700 t/year reduction•

Reduction of water intake, mainly reflecting the reuse of cooling water *3: 70％※1 Comparison with the Shanghai Plant※2 Comparison with the case where energy-saving technology was not introduced (1st and 2nd period total)※3 Planned values for the 2nd phase of the Tianjin Plant
24