Sustainability Vision & Long-Term
Management Vision Presentation

March 29, 2022
TSUMURA & CO.

Today’s Agenda

1. Long-Term Management Vision
TSUMURA VISION “Cho-WA” 2031

2. Research & Development Vision
3. China Business Vision
4. Q&A2

Speakers

Director, Co-COO

Director, CFO

Susumu Adachi

Muneki Handa

Ping An Tsumura
Pharmaceutical Co.,Ltd.
CEO

China Ping An Insurance
Overseas (HD), Ltd.
Assistant General Manager

Executive Officer, Headof Sales & Marketing
Division

Gang Li

Kaipin Kui

Yukinori Sorada

President & Representative
Director, CEO

Co-COO, Chief
Representative in China

Koin Toda

Terukazu Kato

Executive Officer, Head of
Kampo Research &Development DivisionInternational Pharmaceutical
Research & Development
Division

Akihito Konda

3

Long-Term Management Vision—TSUMURA VISION “Cho-WA” 2031 —March 29, 2022

TSUMURA Group Purpose©2022 TSUMURA & CO. All Rights Reserved.

5

Lively Living for Everyone

Tsumura aims to be
Close-knit during various stages of people’s lives;
Scientifically study the wisdom of nature; andBe the power behind everyone’s healthy lives©2022 TSUMURA & CO. All Rights Reserved.

6

Origin of Founding©2022 TSUMURA & CO. All Rights Reserved.

7

Chujoto, a “good” medicine for women©2022 TSUMURA & CO. All Rights Reserved.

8

Chujoto was passed down from ancestors in the Nara Period andprovides excellent benefits. To rescue the sick in the world,This is a significant business that is apart of society’s public interest

Founded in 1893
Jusha Tsumura, founder©2022 TSUMURA & CO. All Rights Reserved.

9Kampo is not “unscientific.” It has “yet to be scientificallyverified”
Progress in the scientific understanding of Kampo willdefinitely be made, along with advances in medicine andscience and technology
Jusha Tsumura, thesecond president

Corporate Value: The Best of Nature and Science
Aim to achieve “harmony” (cho-wa) by leveraging thecharacteristics of Kampo and Western medicine,respectively

Dr. Keisetsu Otsuka
First director of the Kitasato University
Oriental Medicine Research CenterIn 1957, established the Chujoto
Building Clinic (Present-day Kinkikai
Clinic)Corporate Mission: To contribute to the unparalleled
medical therapeutic power of the combination of Kampo
medicine and Western medicine©2022 TSUMURA & CO. All Rights Reserved.

10

TSUMURA Group Sustainability Vision©2022 TSUMURA & CO. All Rights Reserved.

11Living with nature for tomorrow.

©2022 TSUMURA & CO. All Rights Reserved.

12

TSUMURA Group Long-term Vision©2022 TSUMURA & CO. All Rights Reserved.

13

TSUMURA VISION “Cho-WA” 2031
Cho-WA: Creating a Future of Harmony
Our goal is to create a future that achieves “Cho-WA” (harmony) between mind and body, andindividuals and society by implementing the 3 Ps

PHC：Personalized Health CarePDS ：Pre-symptomatic Disease and Science

PAD：Potential-Abilities Development©2022 TSUMURA & CO. All Rights Reserved.

14

Contents

1. Review of Vision 2021
(FY2012 - FY2021)

Tsumura Kampo
Memorial
Museum

2. Sustainability Vision

3. Long-Term Management
Vision 2031
(FY2022 - FY2031)
TSUMURA VISION“Cho-WA” 2031

©2022 TSUMURA & CO. All Rights Reserved.

15

Contents
Tsumura Kampo
Memorial
Museum

1. Review of Vision 2021
(FY2012 - FY2021)
2. Sustainability Vision

3. Long-Term Management
Vision 2031
(FY2022 - FY2031)
TSUMURA VISION“Cho-WA” 2031

©2022 TSUMURA & CO. All Rights Reserved.

16

Goals of Vision 2021
Long-Term Business Vision for 2021
We aim to be a value-creation company that contributes to people’s
health through its Kampo business.
A “Kampo,” “People,” and “Global Niche” company

Philosophy, Vision and ESG management
Create an environment where patient can receive Kampo
treatment in daily clinical practices
Corporate group comprised of trusted people that independently
develop new paths
Take on the development and launches in the U.S. and tackle thecreation of new businesses in China©2022 TSUMURA & CO. All Rights Reserved.

17

Vision 2021 Review

Results & Issues
1. Expansion of the Kampo market and stable growth
2. Enhance earnings power—Cost structure reforms—
3. U.S. development of TU-100 and tackling new
business creation in China
4. Implementation of philosophy and vision management
5. Implementation of ESG management©2022 TSUMURA & CO. All Rights Reserved.

18

Vision 2021 Management Indicators (FY2012 - FY2021)
Sales

Operating profit(¥100 million)(¥100 million)

1,400

Concentration/emphasis on Kampo business250

Expansion of Kampo market & stable growth

1,200
200

1,000
150

800

R
O
E 100

600

(%)
15

400

10

50

200
５

0

0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

ＲＯＥ
Sales
Operating profit©2022 TSUMURA & CO. All Rights Reserved.

Forecast
Revenue recognition
standards applied19

1. Expansion of the Kampo Market and Stable Growth
Setting/environment to be realized
Contributing to the realization of a medical setting where
patients in Japan can receive treatments that incorporate“Kampo” medicine should it be necessary, regardless of the
medical institution or clinic
Strategic issues➊ Consistent support to enrich, establish and develop Kampo medicine education
prior to, immediately after and post graduation❷ Development of basic/clinical evidence, mainly centering on drug-fostering
program❸ Achievement of a one-in-two ratio of “physicians prescribing 10 or more Kampo
formulations©2022 TSUMURA & CO. All Rights Reserved.

20

1.-➊-1 Consistent Support to Enrich, Establish and Develop Kampo
Medicine Education Prior to, Immediately after and Post Graduation
Provide support for Kampo medicine education, including to physicians, and disseminate
information to general consumers
Consistent support to enrich, establish and develop Kampo medicine education prior to, immediately after and post graduation

Pre-graduation

Immediately after graduation

Enrich, establish and develop Kampo medicine education
University school of medicine/medical schools

Postgraduate educational hospital (incl.
university hospitals)

Medical students

Interns・Kampo study groups for interns

・Lectures (overview)
・Clinical training (hospital ward/outpatient)・In-school teaching staff training course
・In-school study groups (group activities, etc.)
Changes in external environment for medical education

Post-graduation
Kampo medicine seminars

Physicians
Entry level
Follow-up
Step-up
Lecturer/teacher training

Physicians thatwrite 10 or more
Kampo
prescriptions

Increase in the number ofinterns in tandem with an
improvement in quality of
medical education

Implementing Kampo clinical training at all
university school of medicine and medical
schools nationwide

Activities targeting cancer
patients

Activities targeting women

Major changes to the medical education curriculum inJapan based on global standards set by the World
Federation for Medical Education

Disseminate information to general consumers

Activities targeting seniors©2022 TSUMURA & CO. All Rights Reserved.

21

1.-➊-2 Trends in Kampo Medicine Training at University School of
Medicine
80大学(Universities)

80大学

80大学 80大学 80大学 80大学

80大学

79大学

76

71大学

71
71

65

64大学

79

80
76

78

78

80
72

79

81大学 81大学 82大学 82大学 (Universities)

80大学 80大学 80大学 80大学 80大学 80大学 80大学

80

80

80

80

80

79

78

72

79
68

50

54

67

63

68 60

58
51
46

54
46

47

46
43

40

42

37

18

*3
■Universities teaching Kampo medicine ■Universities requiring more than 8 classes■■Clinical training*5

Outpatient Kampo treatment ■In-school teaching staff training system*4
Tsumura survey

2001-2017 Kampo Medical Symposium (co-sponsored by Tsumura) 2010 ECFMG*1 notification 2015 JACME*2 established/certified (2017 onward)
2016 Japan Kampo Medicine Education Foundation (JKME) established*1 US Educational Commission for Foreign Medical Graduates *2 Japan Accreditation Council for Medical Education (JACME) *3 Surveys in and after FY2007 *4 Surveys inand after FY2005 *5 Surveys in and after FY2014 ©2022 TSUMURA & CO. All Rights Reserved.

22

1.-➊-3 Current Trends in FY2021 for Kampo Medicine Education at
University School of Medicine
Offering education on
Kampo

4 or moreclasses

In-school teaching staff
training system

100%

89.0%

95.1%

82 universities

73 universities

78 universities

8 or moreclasses

Clinical training

Outpatient Kampo
treatment

57.3%

51.2%

96.3%

47 universities

42 universities

79 universities
Tsumura survey©2022 TSUMURA & CO. All Rights Reserved.

23

1.-❷-1 Switch from EBM to Standardization of Kampo Treatments
Drug-fostering/
Growing formulations
育

Drug-fosteringG

Growing formulations

EBM Kampo
treatment

3 important domains
Standardizationof Kampo
treatments
Write-ups in treatment
guidelines

Psychiatric andneurological disorders
育

Digestive systemdiseases

Yokukansan

育

Rikkunshito

育

Daikenchuto

G

Hochuekkito

G+ Associated formulations+ Associated formulations

Write-ups in dissertations,presentations atconferences, evidencebuilding（Supportive
care）

Cancer

Women’shealthRespiratory diseases

Mitigation of side effects,
etc.

Diseases specific towomen

Bakumondoto

育

Rikkunshito

育

Hangeshashinto

育

Goshajinkigan

Geriatric health

Peripheral symptoms
in patients withcardiovasculardiseasesG

Goreisan+ Associated formulations

Kamishoyosan

G+ Associated formulations+ Associated formulations

Other diseases andsymptoms

Symptoms associated withfrailty育

Goshajinkigan

育Daikenchuto

G

Hochuekkito

G

Goreisan+ Associated formulations+ Associated formulations+ Associated formulations｠

1997～ Support enrichment of Kampo medicine education (prior to graduation, immediately after graduation and post graduation)/ 2001 establish MCC*1 / 2011 MCC revision ➊ / 2017 MCC revision ❷2004～ 3 drug-fostering formulations / 2009～ 5 drug-fostering formulations (evidence-building) / 2016～ 5 Growing５
formulations Write-ups in treatment GL

2005～ Establish Kampo medicine*2 / Vision 2021: 1 in 2 physicians write 10 or more prescriptions (50%-plus)

FY2001FY2011*1 MCC: Medical education model core curriculum*3 (MEXT)*2 Establish Kampo medicine: 1 in 2 physicians writing 10 or more prescriptions (50%-plus)*3 At time of establishment: Can provide an overview of Japanese Kampo Revision ➊: Can provide an overview of properties of Japanese Kampo (Kampo medicine) and usage trends
Revision ❷: Can provide an overview of the properties of Kampo medicine, application of key Japanese Kampo medicines (Kampo), and their pharmacological actions©2022 TSUMURA & CO. All Rights Reserved.

24

1.-❷-2 Trends in Write-ups in Treatment Guidelines (GL)（GL number）

120

In the 108 treatment GL, there are 112 write-ups onprescriptions of the total 148* prescription Kampo
formulations (2021)
102

100

80

104

112

108

107

92
83

79

76

92

112
108

96

85
73

60

62
55

40

45

20

0

*148 NHI drug price listing formulations
Tsumura: 129 formulations out of 148

No. of Kampo write-ups in the

診療GL掲載の漢方処方数
treatment GL

No. of treatment GL with Kampo

漢方処方名掲載の診療GL数
name write-ups©2022 TSUMURA & CO. All Rights Reserved.

Source: Prepared by Tsumura based on
surveys by the Japan Society for Oriental
Medicine (JSOM) and Japan Kampo
Medicines Manufacturers Association (JKMA)

25

1.-❸-1 One in Two Physicians Writing 10 or More Kampo Prescriptions
Long-term business vision for 2021
Contributing to the realization of a medical setting where patients in Japan
can receive treatments that incorporate “Kampo” medicine should it benecessary, regardless of the medical institution or clinic

Clinical physicians:
320,000

25.2%*FY2021

Clinical physicians:
290,000
Clinical physicians:
260,000

5.9%*

7.5%*
FY2011

FY2004*Tsumura survey

Establishing Kampo medicine (2005 onwards): Aiming to get one in two physicians
to prescribe 10 or more Kampo prescriptions (50% or higher)
FY2001FY2011

FY2021

Source: <No. of clinical physicians> Prepared by Tsumura based on estimated demand among physicians, 19th meeting on physician demand of
the subcommittee of the Investigative Committee on Demand among Medical Practitioners, Ministry of Health, Labour and Welfare©2022 TSUMURA & CO. All Rights Reserved.

26

2. Strengthen Profit Margins—Cost Structure Reforms—
Setting/environment to be realized
Conditions that facilitate the realization of cost structurereforms in the Kampo value chain and the maximization of
cash flows

Strategic issues➊ Procurement: Rectify soaring crude drug prices, impact from foreign currency
exchange rates, crude drug inventories and turnover rates❷ Production: Automation/robotization by increasing production capacity andintroducing new production technologies❸ Sales: Impact of NHI drug price revisions©2022 TSUMURA & CO. All Rights Reserved.

27

2.-➊ Expansion of Proprietarily Managed Fields
350

100%
90%

300

241

250

200

234

80%

230 217

190

156

150

100

188 202 194 189 202

223

70%
60%
50%

117 110 110

71

100

36

50

36

72 78.4 79.6

50.4

40%
30%
20%
10%

0

2006

2007

2008

2009

2010

2011

2012

自社管理圃場率
Ratio of proprietarily

4

6

2013

2014

0%

2015

2016

当社価格指数
Tsumura price index

managed fields

2017

2018

2019

2020

2021

市場トレンドMarket price index (Prepared by Tsumura based on
external and in-house data)*1 Tsumura price index: Average weighted price based on the amount used by the Tsumura Group (2006 indexed at 100)
*2 Proprietarily managed fields: Direct guidance by the Tsumura Group on cultivation can be performed, making it possible to grasp costs incurred during cultivation and set prices
based on this. In the medium and long term, in comparison with the market, it will be possible to realize superior and stable procurement of high quality andhigh value crude drugs.
*3 Tsumura crude drug GACP: Targeting stable acquisition of raw material crude drugs that are safe and secure, this standard is Tsumura’s proprietary standard related to crude drug
production management. Its key pillars are GACP guidelines, crude drug traceability, crude drug production SOP manual, and education/training, oversightand certification.
*4 Crude drug production SOP manual: Specifies rules, including cultivation and processing methods and use of agrochemicals in accordance with the Tsumura crude drug GACP

©2022 TSUMURA & CO. All Rights Reserved.

28

2.-❷ Increase Production Capacity and Introduce New Production
Technologies
Automation/robotization of total
Reforms in production frontlines
production processes
Improve physical labor productivity toroughly 25% (versus FY2011)
Physical labor productivity (1,000 boxes/worker)

Approx.
25% in 10
years

Expand to all production sites
Robotizationof manual
operations

Automationof transport
betweenprocesses

Automationof quality
management(Est.)©2022 TSUMURA & CO. All Rights Reserved.

29

2.-❸ Impact of NHI Drug Price Revisions

2016 onward

Proposals from the study group on the Future
Vision for Kampo Medicines*
2008 onward

Continually promote the “value” of Tsumura prescription Kampo
formulations

FY2002FY2011FY2012

FY2021*Study group on the Future Vision for Kampo Medicines—Responsibility for People’s Health and Healthcare: Established in 2016 (Cosponsored by the Japan Society for Oriental Medicine (JSOM) and Japan Kampo Medicines Manufacturers Association (JKMA)©2022 TSUMURA & CO. All Rights Reserved.

30

3. Development of TU-100 in the US and Tackling New Businesses in
China
Long-Term Management Vision 2021
We are maximizing the use of the Tsumura Group’s technology and knowhow to develop and launch TU-100
Daikenchuto in the US, and we are tackling new businesses in China, including improving the quality of raw
material crude drugs.
Establish Ping An Tsumura Inc.

Created a capitaland businessalliance with
China’s Ping An
Insurance

China

Implemented an
M&A with Tianjin
China Medico
Technology

US
FDA Botanical Guidance
TU-100tolerability test

2004

2005

Developed test method/built a crude drug
RDB Exploratory testing for IBS-C*1 / CD*2 / POI*3

2008

FY2012*1 IBS-C: Irritable bowel syndrome (constipation) *2 CD: Crohn’s DiseaseSet up a POI
development
team

Late PII trial

2017 2018 2019 2020 FY2021*3 POI: Postoperative ileus©2022 TSUMURA & CO. All Rights Reserved.

31

4. Philosophy and Vision Management
Setting/environment to be realized
Continuous implementation the following: philosophy/vision
management, nurturing of a coaching culture, and training ofcandidates to take on management

Strategic issues➊ Management: Implement backcasting management to embody
our philosophy and realize our vision❷ Education/training: Establish the “Tsumura Academy,” an inhouse human resources development institution, and enrich andimplement various programs❸ Human resources: Employees that complete the basic
management courses (3-year program) are appointed to theposition of executive©2022 TSUMURA & CO. All Rights Reserved.

32

5. ESG Management
Setting/environment to be realized
Planning the medium/long-term improvement of corporate
value by continually co-creating shared value with society

Strategic issues➊ Environment: Preservation and domestication of wild crude
drugs, and preservation of the natural environment❷ Society: Expand access to Kampo medicine, a traditional form ofJapanese medicine, and to Kampo, which is a plant-derived
pharmaceutical❸ Governance: Actions to improve the effectiveness of the Boardof Directors (comprised of a majority of outside directors)©2022 TSUMURA & CO. All Rights Reserved.

33

Numerical Targets in Vision 2021, the 3rd Medium-Term Management Plan

Sales

Operating profit

ROE

JPY120.0

JPY19.0

billion-plus

billion-plus

6%-plusAfter applying revenue recognition
accounting standards(Disclosed initial plan: JPY135.0 billion-plus)

Revised earnings forecast released on Oct. 29, 2021

JPY127.5

JPY21.1

7.4

billion forecast

billion forecast% forecast©2022 TSUMURA & CO. All Rights Reserved.

34

Contents

1. Review of Vision 2021
(FY2012 - FY2021)

Tsumura Kampo
Memorial
Museum

2. Sustainability Vision
3. Long-Term Management
Vision 2031
(FY2022 - FY2031)
TSUMURA VISION“Cho-WA” 2031

©2022 TSUMURA & CO. All Rights Reserved.

35

Sustainability Vision
Living with nature for tomorrow.
Continue to be a company that is extremely sensitive to changes in and crises facing the natural environment.
To continue to supply, as a shared value with society, naturally-derived, traditional pharmaceuticals using ascientific approach, we will implement actions, including preservation of nature and the environment, humanrights, our procurement policy, diversity and inclusion, and health management, in accordance with the
Tsumura Code of Conduct.

Domestication of crude
drugs and automation ofprocessing

・Domestication research and commercialization of wild crude drugs

Human rights policy
Procurement policy

・Tackle the respect for human rights, with the support of the UNGP*1
・Build SCM for the sustainable procurement of crude drugs

Diversity & Inclusion

・Alleviate workload using AI-driven automated crude drug selection

・Realize the diversity of group management personnel
・Instill the #OneMoreChoice project*2 in house*1 United Nations Guiding Principles on Business and Human Rights*2 This projects aims to contribute to the creation of a heathy society by reducing people’s “hidden tolerance” of physical and mental stress (disorders) so thatanyone can enjoy a more comfortable life.
©2022 TSUMURA & CO. All Rights Reserved.

36

Materiality of Implementing Sustainability
We aim to contribute to solving social issues through our businesses through the fortification ofCreating Shared Value (CSV) with society and plan to enhance our business foundations byimplementing more in-depth Corporate Social Responsibility (CSR), which is a common foundation
with society.

©2022 TSUMURA & CO. All Rights Reserved.

37

Sustainability Targets for 2031
Target 2031

1st medium-term management plan

2nd medium-term management plan

3rd medium-term management plan

FY2022～FY2024

FY2025～FY2027

FY2028～FY2031

Key initiative themes
Introduce solar power generation

Reduce GHG
emissions 50%

Switch from gas to new
fuels

Switch to renewable energies
Further save on energy usage (reduce consumption per unit)

Convert to ecofriendly packaging[Partial substitution] Portion of packaging materials
Switch to plant-based or recyclable materials

Promote the use of recycled water

Recycling water andwaste

Crude drug residue
Establish methods for use
and processing

Realize recyclability
・Fuel in plants
・Fertilizer in crude drug
cultivation fields©2022 TSUMURA & CO. All Rights Reserved.

【Total substitution】Use newmaterials
・Switch to mono-materials
・Deplasticize

Initiatives for water resource
conservation
Realize high value-added use
・Fuel, raw materials
・Conversion to feed, etc.
38

Improve Evaluations from Environment-related Rating Agency andAim to Acquire Certification
FY2021

1st medium-term management plan

2nd medium-term management plan

3rd medium-term management plan

FY2022～FY2024

FY2025～FY2027

FY2028～FY2031

Apply for SBT
certification

Acquire certification

Execute certification planevaluation for CDP climate change
B－ Improve
Ｂ or higher
Ａ－ or higher

DeclaresupportＡ－ or higher

Expand TCFD climate change related financial information disclosure
Analyze/disclose fundamental content

Further boost level of analysis/disclosure©2022 TSUMURA & CO. All Rights Reserved.

39

Contents

1. Review of Vision 2021
(FY2012 - FY2021)

Tsumura Kampo
Memorial
Museum

2. Sustainability Vision
3. Long-Term Management
Vision 2031
(FY2022 - FY2031)
TSUMURA VISION“Cho-WA” 2031

©2022 TSUMURA & CO. All Rights Reserved.

40

Goals of the Long-Term Management Vision for 2031
Lively Living for Everyone
TSUMURA VISION “Cho-WA” 2031
We aim to create conditions in which the Tsumura Group is contributing to the well-being of all by supplying
evidence-based products and services, including Kampo and traditional Chinese medicines, that suits factors
including the life stage, symptoms, genetic makeup and daily life environment of each individual
Healthcare

Pre-symptomatic

Nutrition (food)
ExerciseSleep(prevention)

Prevent relapses(Post-healing recovery)

Treatment
Prevent disease
from becoming
serious(Prevent change inexisting disease)©2022 TSUMURA & CO. All Rights Reserved.

(Personalized)

41

TSUMURA VISION “Cho-WA” 2031

Goals to be realized under VISION 2031
1. 50% of physicians will write basic prescriptions in alltreatment areas
2. Expand standard Kampo treatments and personalize
Kampo treatments
3. Scientific study of pre-symptomatic diseases
Three preventive measures for pre-symptomatic diseases (treat disease before
symptoms appear, prevent change in existing disease and post-healing recovery)

4. Build foundation for the China Business (China
Business to account for 50%-plus of sales)
5. Digital transformation of the Kampo value chain
6. Implement purpose management, philosophy
management and vision management©2022 TSUMURA & CO. All Rights Reserved.

42

1.-１ 50% of Physicians Will Write Basic Prescriptions in All
Treatment Areas
1st medium-term management plan

2nd medium-term management plan

3rd medium-term management plan

FY2022～FY2024

FY2025～FY2027

FY2028～FY2031

FY2021TSUMURA VISION “Cho-WA” 2031
Contributing to the realization of a medical setting where patients inJapan can receive treatments suited for them individually, regardless ofthe medical institution or clinic

Clinical
physicians: 330,000

Drastic improvement in (quantity, quality,
speed) the provision of Kampo
information owing to DX solutions

50%-plus*

Clinical physicians:
337,000

2021

UP

Physicians writing 10 ormore prescriptions*1*1 Prescriptions for 10 formulations from among
Tsumura’s 129 prescription Kampo formulations

50%*
2031

25%*

2024
Clinical
physicians: 320,000
25.2%*

Clinical physicians:
345,000

2027
One in two physicians (50%-plus) will write prescriptions for all “basicprescriptions for treatment areas” based on Kampo medicine*2 Refer to the key “basic prescriptions in treatmentareas” on the next slide*Tsumura survey

Source: <No. of clinical physicians> Prepared by Tsumura based on estimated demand among physicians, 19th meeting on physician demand of the subcommitteeof the Investigative Committee on Demand among Medical Practitioners, Ministry of Health, Labour and Welfare©2022 TSUMURA & CO. All Rights Reserved.

43

1.-２ Key “Basic Prescriptions in Treatment Areas”
処方= formulations

Comprehensive medical care

Gastroenterology

Obstetrics/gynecology

Neurosurgery©2022 TSUMURA & CO. All Rights Reserved.

44

2. Expand Standard Kampo Treatments and Personalize Kampo
Treatments

Standardization of
Kampo
treatments

EBM
Kampo
treatment

Increase write-ups intreatment GL anddegree ofrecommendation

Write-ups intreatment GL

Personalize
Kampo
treatments
Responder marker
AI Kampo medical exam
support system

Write-ups indissertations,presentations atconferences,evidence-building

FY2001

Expandstandardization of
Kampo
treatments

2020～ Realize optimal, personalized medical care with digitalsolutions
2017～ Scientifically analyze multi-component/complex Kampo formulations
using KAMPOmics®

FY2012

FY2022©2022 TSUMURA & CO. All Rights Reserved.

FY203145

3.-1 Shift from “Treatment” to “Three Preventive Measures” and“Healthcare (prevention)”
Healthcare(prevention)
Nutrition (food)
Exercise
Sleep

Promote healththrough theenhancement of
the body’s natural
healing powers byrectifying areas,
including nutrition(food), exercise
and stress

Three Preventive Measures

Prevent disease
from becoming
seriousPresymptomatic(prevention)

Treatment
Expand andpersonalize
standard
treatments(Prevent change inexisting disease)
Prevent disease frombecoming serious via early
detection, by predicting its
progress and throughproper early treatment

Prevent development of afull-fledged disease bydiagnosing and treating
pre-symptomatic diseases
based on unnoticed
changes in health andnoticeable symptoms©2022 TSUMURA & CO. All Rights Reserved.

Prevent
relapses(Post-healing
recovery)
Improve treatment
prognosis and QOL toprevent a relapse so thatthe patient can fully
rehabilitate and get backto society46

3.-2 Scientific Study of Pre-symptomatic Diseases
1st medium-term management plan

2nd medium-term management plan

3rd medium-term management plan

FY2022～FY2024

FY2025～FY2027

FY2028～FY2031

Research phase

Development phase

Social implementation
phase

Gather/analyze information

Research to verify efficacy

FY2021

Apply to exams andPropose biomarker administration of medicine
hypothesis

Elderly

Cancer

geneA
geneB
geneC
geneD

Women

Administer
Kampo

Comprehensive
analysis

Kampo
Patient A
Patient B
Patient C

KAMPOmics®*
Scientifically study and define
pre-symptomatic diseases*Refer to next slide

Pharmaceutical efficacy category
Investigate the body’s makeup and type of
disease by running test, mainly on
genetics and intestinal flora to evaluate theefficacy of Kampo

Develop a system to detect presymptomatic diseases©2022 TSUMURA & CO. All Rights Reserved.

Establish an exam method for pre-symptomatic
prevention, prevent a disease from becoming
serious, and preventing a relapse
Recommend methods for Kampo treatment

Establish a method for diagnosing
pre-symptomatic diseases andtreatment recommendations47

3.-３ KAMPOmics®
KAMPOmics® combines research on cutting-edge technologies (metabolome,
genetics, intestinal flora, systems biology, etc.), a strength of Tsumura, to form a
proprietary research package (registered trademark) to gain a comprehensive
understanding of Kampo medicine, a traditional Japan medicine, and multicomponent, complex Kampo medicines
Kampo

Organism

Systems biology
ActionMetabolism

Multicomponents
Intestinal flora

Biologicalnetwork

Symptom“Variation”

Multi-components
Pharmacokinetics of a Functions of intestinal flora
substance
Substance metabolism

Functions of biometabolites©2022 TSUMURA & CO. All Rights Reserved.

Diverse biological reaction48

3.-４ Personalized Kampo Treatment
1st medium-term management plan

2nd medium-term management plan

3rd medium-term management plan

FY2022～FY2024

FY2025～FY2027

FY2028～FY2031

Research phase

Development phase

Social implementation
phase

Kampo exam (Four exams)

Trial implementation of Kampo
exam support system (education,
etc.)

Listening/smellingexam

Visualexam

Issues that need to be overcome tosocially implement personalized
Kampo treatments✓ Physician’s proficiency in
Kampo medicine✓ Shortening of exam times

Pulse
exam

Questionnaire

Chills/fever

Deficie
ncy/
exces
s

Qi/blood/fluidKAMPOmics®
Consider applying to Kampo
formulation recommendation
support system
Kampo
exam
supportsystem×

Kampo
formulation→

Pharmacometrics

Kampo exam support system
research, using AI and machinelearning✓ Compatibility with online exams©2022 TSUMURA & CO. All Rights Reserved.

✓ Compatibility with regional
medical collaborations between
hospitals and clinics

Develop and socially implement a
Kampo exam comprehensive
support system that includes RWD
DB analysis, scientific study of“proof,” and Kampo responders.
49

4. Yakushokudogen in Healthcare (Prevention)
Raw material crude drugs

Drug pieces

China
Yakushokudogenconcept

Japan

Yakushokudogen products
Ginseng©2022 TSUMURA & CO. All Rights Reserved.

50

5.-1 Supply Information using DX Solutions
Superiors (coaching, teaching)
CRM・SFA (notify, show)

ActionContinue to implement a cycle that connects one action to the next

Gather/integrate data

Partially automate using marketing automation
Physicians that are interested in Kampo will emerge
Customer
information

MR

Site
viewing

History ofactivities
Comprehenive
DB

DigitalSupply and gather information in
the manner desired by medical
practitioners

Lectureparticipation

In-house
sales

Decision-making engine
KI system
Who

Customer scoring& targeting

What
value
does ithave

Forecast desired
value andmessageWhatmethodForecast optimalchannels andfrequency

Proposemeasures

Decide on
optimalmeasures

Recommend actions
Recommend TG

MarketrivalsMedical practitioners

Data analysis◆High performer analysis ⇒ Equalization◆Visualization of experience and intuition◆Analyze areas people do not notice©2022 TSUMURA & CO. All Rights Reserved.

Recommend

resources, etc…

51

1st medium-term management plan

2nd medium-term management plan

3rd medium-term management plan

FY2022～FY2024

FY2025～FY2027

FY2028～FY2031

Improve operations

Shift to oversight/
management

・Development of workers with multi-skills
・Improve preparations
・Shorten process learning period・Reset worker positioning criteria
・Reallocate workers

・Improve efficiency of oversight andmanagement operations
・Mitigate troubles with preventive
actions

Equipment/
facilities

Cross-development of existing technologies

Enhancements using
BigData・Accumulate production data using
IoT
・Effective production that meetstargeted quality
・Use digital twins

・Introduce robots to handle manual operations
・Automate transport

Solve issues with new technologies

・Automation using AI for manual operations
・Realize inline full-scale inspections
・Automate peripheral operations(containers with detachable lids, materials supply, etc.)©2022 TSUMURA & CO. All Rights Reserved.

Implement additional
measures using cuttingedge technologies

Smartification of factories

People5.-２ Shift from Improving the Capital Intensity of Labor to the
Smartification of Factories

52

5.-3 Improve Supply Chain Efficiency by Introducing AI Robots
Realize AI automated crude drug selection･Automatically remove defective productwith the AI automated crude drug selection
device･Improve efficiency of selection operations
and reduction the number of workers
Automated selection device under development

SCM using a crude drug automated lot instruction system
Sales plan

Production plan

Crude drug automated
lot instructions

Inventory control/lot instructions
Crude drug database

System link

Medium/long-term Medium/long-term
data
data
Production plans
Demand forecast
Sales measures, etc. Inventory plans, etc.

Automate medium/long-term measures for
crude drugs
Transport (import) plans
Crude drug cultivation, purchase andinventory plans©2022 TSUMURA & CO. All Rights Reserved.

Crude drug warehouses at each site
･Rectify inventory levels, improveturnover･Effectively use warehouse capacity53

6.-１ TSUMURA Group DNA Pyramid

KeynoteCorporate Value©2022 TSUMURA & CO. All Rights Reserved.

54

6.-２ Ideal Personnel Being Sought©2022 TSUMURA & CO. All Rights Reserved.

55

Research & Development Vision

March 29, 2022

Agenda1. Review of Activities Thus Far

2. Research & Development Vision©2022 TSUMURA & CO. All Rights Reserved.

57

Review Thus Far (Drug-Fostering Program Initiatives)
Focusing on disease structure and patterns in recent years, in areas with high healthcare
needs, we need to build evidence (scientific basis) by narrowing down our target to diseases
where it is difficult to find new drug treatments and where Kampo will have a specific effect.
2004

2009

2011

2017

2021

scientific bases for
Kampo treatments”

Start of drugfostering program (3formulations)
43 Rikkunshito
54 Yokukansan
100 Daikenchuto

Accumulation of basic and clinical evidence
Evidence
package

Meta-analysis*RandomComparison Trial

Pharmacokinetics

Survey on
frequency ofside-effects

Rikkunshito

◯

◯

◯

◯

Yokukansan

◯

◯

◯

◯

Daikenchuto

◯

◯

◯

◯

RCT

*2020 evidence package completed◆Enhance treatment guidelines (No. of write-ups/recommendations)(2009 onward）

Build an infrastructure
for standard treatments

Address the “lack of◆Describe “Kampo” in the model core curriculum（2011 onward）◆Scientific study of Kampo©2022 TSUMURA & CO. All Rights Reserved.

(published in 2017)58

Impact to Prescription Kampo Formulation Sales in the Drug
Fostering Program
Sales growth trends in 2004 (start of drug fostering): All products excluding the 3
drug-fostering formulations and the 3 drug-fostering formulations【Growth %】vs. 2004

350%

3 drug-fostering formulations (Rikkunshito,
Yokukansan and Daikenchuto)

336%

300%

Growthrate
disparity
2.2x

250%

All products excluding
the 3 drug-fosteringformulations

200%

150%

154%
100%
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

©2022 TSUMURA & CO. All Rights Reserved.

2016

2017

2018

2019

2020

59

Agenda1. Review of Activities Thus Far

2. Research & Development Vision©2022 TSUMURA & CO. All Rights Reserved.

60

Big Picture of the “R&D Vision”
Continually expand prescription
Kampo formulations
Geriatric health
Psychiatric andneurological disorders

Digestive systemdiseases

育 Yokukansan

育 RikkunshitoG
育 Daikenchuto+ Associated formulations

1. Propose new “treatment” methods

Respiratory diseases

Bakumondoto—Initiatives for personalized medicine—+ Associated formulations

G Hochuekkito+ Associated formulations

Peripheral symptoms inpatients withcardiovascular diseases

Symptoms associatedwith frailty

G Goreisan

育 Goshajinkigan＋+ Associated formulations

G Hochuekkito+ Associated formulations

Cancer（Supportive care）

Mitigation of side effects, etc.

育

Rikkunshito

育

Hangeshashinto

育

Goshajinkigan*Develop a “Kampo exam support system” using DX and AI
technologies

Women’s health
Diseases specific to womenG

2. Tackle the area of pre-symptomatic diseases

Kamishoyosan+ Associated formulations+ Associated formulations

Realize a world where individuals can receive the optimal Kampo treatment*Scientifically study personalized medicine using KAMPOmics
technologies

Other diseases and symptoms

育 Daikenchuto*Undertake pre-symptomatic prevention, prevent disease frombecoming serious, and prevent relapses*Introduction mainly of “aging”-related diseases

G Goreisan+ Associated formulations

Source: Integrated Report 2021

©2022 TSUMURA & CO. All Rights Reserved.

61

Big Picture of the “R&D Vision”
Continually expand prescription
Kampo formulations
Geriatric health
Psychiatric andneurological disorders

Digestive systemdiseases

育 Yokukansan

育 RikkunshitoG
育 Daikenchuto+ Associated formulations

1. Propose new “treatment” methods

Respiratory diseases—Initiatives for personalized medicine—

Bakumondoto+ Associated formulations

G Hochuekkito+ Associated formulations

Peripheral symptoms inpatients withcardiovascular diseases

Symptoms associatedwith frailty

G Goreisan

育 Goshajinkigan

Realize a world where individuals can receive the optimal Kampo treatment＋+ Associated formulations

G Hochuekkito+ Associated formulations

Cancer（Supportive care）

Mitigation of side effects, etc.

育

Rikkunshito

育

Hangeshashinto

育

Goshajinkigan*Develop a “Kampo exam support system” using DX and AI
technologies

Women’s health
Diseases specific to womenG

2. Tackle the area of pre-symptomatic diseases

Kamishoyosan+ Associated formulations+ Associated formulations*Scientifically study personalized medicine using KAMPOmics
technologies

Other diseases and symptoms

育 Daikenchuto*Undertake pre-symptomatic prevention, prevent disease frombecoming serious, and prevent relapses*Introduction mainly of “aging”-related diseases

G Goreisan+ Associated formulations

Source: Integrated Report 2021

©2022 TSUMURA & CO. All Rights Reserved.

62

Personalized Medicine Initiatives (Scientific study of personalized medicine using
KAMPOmics technologies)

Western medicine

KAMPOmicsⓇ

Kampo

Tsumura’s proprietary, cutting-edge technical research
package for comprehensively understanding Kampo(multi-component drug)
Single substanceMulti-component≪Comprehensive analysis≫
・Genes, mRNA・Proteins・Metabolites
・Intestinal flora, etc.

SubstanceA

Substances A, C, E･･･
Metabolites/conjugates a, b, B*, c ,C*, e ･･･◆

Receptors, etc.

RNA

LipidsDNA･･･

・Systems biology
・Bioinformatics
・Data science, etc.

Increase in Akkermansia in the group administeredBofutsushosan (mouse)➡ Link between intestinal flora and
Kampo◆

Receptors Enzymes≪Cutting-edge technology≫

Tendency whereby the presence of Akkermansia
was high the lower the increase in weight wasamong those administered Bofutsushosan➡ Link between intestinal flora and theeffects of Kampo©2022 TSUMURA & CO. All Rights Reserved.

Nishiyama M, et al., Nutrients. 2020 Mar
20;12(3):839. doi: 10.3390/nu12030839.
63Personalized Medicine Initiatives (Develop a “Kampo exam support system”
that uses DX and AI technologies)
Exams based on Kampo medicine (four exams)

Visual exam
Examination of facial color or
expressions, attitude, postureand body type.
Sometimes an examination of
the tongue is performed.

Listening/smelling exam
An examination where thedoctor listens to the patients
loudness and tone of voice, theway they talk, coughing,phlegm conditions, andbreathing. Sometimes thedoctor will check a patient’s
body and mouth odor

Issues with deploying
personalized medicine✓

Impact of proficiency in Kampo medicine✓

Increase in exam time (medical cost)✓

Compatibility with online exams✓

Compatibility with regional medical
collaborations between hospitals and clinics

Automatic Kampo medical exam

Questionnaire

Palpation

There are a variety ofquestions, including whether
a patient is self-aware of
symptoms, what diseases
they have had, what food theylike, their lifestyle, work andmenstrual condition.

The doctor will perform atouch exam of the patient’s
body. This is largely broken
down into a “pulse exam” anda “abdominal exam.”

Develop a “Kampo exam support
system” that uses DX and AI
technologies

Frail lower abdomen

DisorderDepression/lethargic

Fluid deficiency

ExampleQi counterflow

Fluid disturbance⚫ “Deficiency/excess” exam support⚫ “Chills/fever” exam support

Kampo medical exam support⚫ “Qi/blood/fluid” exam support

Consider using the “Kampo medical
exam support system” for formulation©2022 TSUMURA & CO. All Rights Reserved.
recommendations

64

【Vision】 Realize a world where individuals can receive the optimal Kampo
treatment
1st Medium-Term Management Plan

2nd Medium-Term Management Plan

3rd Medium-Term Management Plan

(2022～2024)(2025～2027)(2028～2031)

Research phase

Development phase

Social implementation

Deficiency/excess &chills/fever exam

Qi/blood/fluid exam

① “Kampo Exam Support System”

Development/verification step・Automated questionnaire and formulation selection validation system① Trial implementation of the “Kampo Exam
Support System”

・Use for education/facilities that do automated Kampo exams

Automatic Kampo medical exam

Kampo medical exam support② Formulation recommendation
system based on the “Kampo② Consider applying to “Kampo formulation
recommendation system” (ePRO)・“Kampo exam support system” X Kampo formulations →Spin-out

Pharmacometrics

Consider using for healthcare/Well-being

Integrated system development

Cross-development of registry research (multi-facility joint research)

Exam Support System”©2022 TSUMURA & CO. All Rights Reserved.

65

Big Picture of the “R&D Vision”
Continually expand prescription
Kampo formulations
Geriatric health
Psychiatric andneurological disorders

Digestive systemdiseases

育 Yokukansan

育 RikkunshitoG
育 Daikenchuto+ Associated formulations

1. Propose new “treatment” methods

Respiratory diseases

Bakumondoto—Initiatives for personalized medicine—+ Associated formulations

G Hochuekkito+ Associated formulations

Peripheral symptoms inpatients withcardiovascular diseases

Symptoms associatedwith frailty

G Goreisan

育 Goshajinkigan＋+ Associated formulations

G Hochuekkito+ Associated formulations

Cancer（Supportive care）

Mitigation of side effects, etc.

育

Rikkunshito

育

Hangeshashinto

育

Goshajinkigan*Develop a “Kampo exam support system” using DX and AI
technologies

Women’s health
Diseases specific to womenG

2. Tackle the area of pre-symptomatic diseases

Kamishoyosan+ Associated formulations+ Associated formulations

Realize a world where individuals can receive the optimal Kampo treatment*Scientifically study personalized medicine using KAMPOmics
technologies

Other diseases and symptoms

育 Daikenchuto*Undertake pre-symptomatic prevention, prevent disease frombecoming serious, and prevent relapses*Introduction mainly of “aging”-related diseases

G Goreisan+ Associated formulations

Source: Integrated Report 2021

©2022 TSUMURA & CO. All Rights Reserved.

66

“Aging”-related Diseases: Approach Targeting Frailty
In 2031, it is forecast that 3.15 million people will be deemed frail, and 19.39 million will beclassified as pre-frail (around 6-times the number of frail)【Kampo medicine】（Pre-frail/frail-related score)

Vitality

HealthyPre-frail≪Kidney ischemia score≫
Frail
Requiresnursing care

Age
Pre-symptomatic
disease(prevention)

Prevent becoming serious(change in existing disease)

This is when the kidney, which mainly
serves as the body’s battery, lacks
energy vital for living (Tsumura website)【Western medicine】(Frail related score)● Basic checklist● Locomotive functions 5● Resilience scale● GDS-S-J15 etc.

Developed a new scale with the goal of
improving convenience and accuracy inactual clinical use

Working name: Japan Frailty Scale （JFS）
Diversefrailness

Socially

Physically

Mentally

⚫
⚫
⚫
⚫
⚫

Motor function
MentalCognitive functions
SocialNutrition…etc.

“Japan Frailty Scale” × Kampo formulations
Confirm clinical efficacy (Clinical research)©2022 TSUMURA & CO. All Rights Reserved.

67

Build a System to Improve Pre-symptomatic Diseases (Aging-relatedDiseases: Develop a Pre-symptomatic Indicator and Propose Treatment Methods)
Clarifies link with “disease” andconfirms treatment efficacy

Scientific study of “aging”
Precursor mRNA
Exon

Exon

IntronExon

IntronExon

Pre-symptomatic・Anti-aging

IntronSplicing

Normal mRNA
Intron retention occurs due to a splicing error or
biological abnormal response

Intron retention（IR）

Accumulated intron retention (IR) during aging
IR

Aging mouse＋Kampo
Aging mouse

Prevent disease frombecoming serious
・Dementia
・Frailty
Prevent relapse
・Cancer survivor

In addition to the definition foraging (IR), clarifies pathology● Improve chronic inflammation● Activate immune functions● Control cell aging● Increase in autophagy activity, etc.

IR
Normal mouse

Okada N et al., Gene. 2021 Aug20;794:145752. doi:
10.1016/j.gene.2021.145752.

Verify treatment efficacyof Kampo©2022 TSUMURA & CO. All Rights Reserved.

Recommended
treatment procedures
Hochuekkito, juzentaihoto,and ninjin’yoeito are mainly
effective
Health recommendation as apreventive measure

Anti-aging
Treatment recommendation toprevent from becoming serious

Treatment for MCI (minor
cognitive impairment), andfrailty and pre-frailty
Treatment recommendation to curb
relapseSupport cancer survivor in
the workplace68Diseases related to “Aging”: Develop Pre-Symptomatic Indicator andRecommend Treatment Methods
1st Medium-Term Management Plan

2nd Medium-Term Management Plan

3rd Medium-Term Management Plan

(2022～2024)(2025～2027)(2028～2031)

Research phase

Development phase

Social implementation

Gather/analyze information

Verify/research efficacy

Apply to exams and administrationof medicine

Drug

Propose biomarker
hypothesis
geneA
geneB
geneC
geneD

Elderly Cancer patients Women

Comprehensive analysis

Patient A
Patient B
Patient C

Administer Kampo

Pharmaceutical efficacy category

KAMPOmicsⓇ

Investigate the body’s makeup and typeof disease by running test, mainly on
genetics and intestinal flora to evaluate
the efficacy of Kampo©2022 TSUMURA & CO. All Rights Reserved.

Establish an exam method for presymptomatic prevention, prevent a
disease from becoming serious,and preventing a relapse
Recommend methods for Kampo
treatment69

Outlook
2004

2021

2017

2011

2009

Pharmacokinetics

Survey on thefrequency ofside-effectemergence

Rikkunshito

◯

◯

◯

◯

Yokukansan

◯

◯

◯

◯

Daikenshuto

◯

◯

◯

◯

(3 formulations)

43 Rikkunshito
54 Yokukansan
100 Daikenchuto◆Expansion of clinical practice guidelines *Completed evidence package in 2020

(Coverage/level of recommendation)(from 2009)◆Wording in the Model Core Curriculum describing Kampo medicine(from 2011)◆Scientific analysis of Kampo medicine

Tackle the pre-symptomatic domain

Meta-analysis

RCT*Randomized
Controlled Trial

Evidence
package

Propose new treatment methods

Start drug-fostering

Accrue basic and clinical evidence(Initiatives for personalized medicine)“Kampo formulations
have no scientificbasis”

Build infrastructure for standard
treatments

Addressing the issue of2022 onward(Published in 2017)©2022 TSUMURA & CO. All Rights Reserved.

70

【R&D Vision】＋α

We are contributing to therealization of a society that isheathy and full of hope, and which
is close-knit to the life stages ofmany people pivoting aroundKampo!

©2022 TSUMURA & CO. All Rights Reserved.

71

China Business Vision

March 29, 2022

Goals of the China BusinessContribute to the health of China’s citizens
Stable procurement/supply of raw material crude drugs

Quality; technology &experience

Finance; comprehensive IT
strength,
Scale and recognition©2022 TSUMURA & CO. All Rights Reserved.

73

Scale of and Opportunities in the Traditional Chinese Medicine
Market
The traditional Chinese medicine market is large. Aim to further develop this market throughchanges to healthcare policies and the awareness of citizens in China
Market scale comparison(FY2020)
About■Japan ■China

30x

JPY11.1 trillion

Healthcare policy trends

Japan

120000In January 2022, the government of China announced theJPY7.9 trillion

100000

600x

About

Japan

40x

80000

About

Japan

JPY3.2 trillion

60000◆Innovations in traditional Chinese medicine: Implement
R&D for formulations based on classical prescriptions◆Enhance quality of traditional Chinese medicines: Includes
fortification of a traceability system

Change in awareness among
citizens and industry

40000
20000
0

14th Five-Year Plan for China’s PharmaceuticalIndustry

JPY235.0 billion JPY230.0 billion JPY5.0 billion

Total (all traditional
Chinese medicine
companies)

Kampo/traditional
Chinese medicines

Raw material crude
drugs/drug pieces◆Improve health consciousness and recognition of traditional
Chinese medicines thanks to COVID-19◆Curb prices of pharmaceuticals covered by health insurance(expand centralized purchasing system)◆Increase in policy subscribers owing to OTC needs and forvoluntary insurance (commercial insurances)*Prepared by Tsumura based on data from the National Bureau of Statistics of China, Japan Kampo Medicine Manufacturers Association(JKMA) and IQVIA; *Kampo formulations in Japan include OTCs; Exchange rate: 1RBM = JPY18 (current as of the end of December 2021)©2022 TSUMURA & CO. All Rights Reserved.

74

Three Platforms in the China BusinessTraditional Chinese
medicines

Formulation
platform
Cultivate crude drugs and processing/preparation
Supply to the formulation platform for raw material crude
drugs

Crude drug
platform

Crude drug
cultivation
Processing/
preparation

Drug pieces

Yakushokudogenproducts

Raw material
crude drugs

Sales of raw material crude drugs,
processed drug pieces, andYakushokudogen products

Establish quality standards for the entire supply
chain from crude drug seedlings to final products

Research
platform

Sales of traditional
Chinese medicine
formulated from raw
material crude drugs

Production/quality research for crude drugs andquality research for traditional Chinese medicines©2022 TSUMURA & CO. All Rights Reserved.

Traditional Chinese
Medicine ResearchCenter75

China Business Milestones
Aim to achieve an overseas sales ratio of 50%-plus to become a traditional Chinese medicine
company that will lead the development of the traditional Chinese medicine industry

Formulation
platform

Crude drug
platform

Research
platform

2022-2024

2025-2027

2028-2031

Enter the traditional
Chinese medicine
business

Build a foundation for the
traditional Chinese medicine
business

Establish brand as a
traditional Chinese
medicine company

Acquire a traditional
Chinese medicine company
Apply for classicprescriptions

External sales ratio: 50%-plus

Increase sales of crude
drugs, drug pieces andYakushokudogenproducts

Establish brands for crude
drugs, drug pieces andYakushokudogen products

Industry TOP 10

Sales outlook

RMB7.0billion-plus(JPY126.0 billion-plus)

External sales ratio:
50%-plus

Expand sales routes to public
hospitals(including M&As)

Establish the
Traditional Chinese
Medicine ResearchCenterExpand functions of theTraditional Chinese
Medicine Research Center

Crude drug and drug piececompany that will lead thedevelopment of theindustry
Leading share in China

Sales outlook

RMB3.0billion-plus(JPY54.0 billion-plus)

Develop traditional
Chinese medicine
evidence*Exchange rate: 1RBM = JPY18 (current as of the end of December 2021)©2022 TSUMURA & CO. All Rights Reserved.

76Formulation Platform Vision
The target is classical prescriptions, a mountain of treasure. We aim tocontribute to the health and medical care of the citizens of China by stably
supplying products that are safe, homogeneous and effective【Opportunities and strengths】□ The government of China is developing and popularizing classicalprescriptions□ Classical prescriptions resemble Tsumura’s Kampo formulations.
They can be achieved by utilizing knowhow, including Tsumura
quality, evidence-building and manufacturing technologies.

Become a traditional Chinese medicine company
trusted in China, mainly for its classical prescriptions
that leverages Tsumura’s knowhow©2022 TSUMURA & CO. All Rights Reserved.

77

Trajectory of the Formulation Platform➢ Build a foundation for the formulation platform via M&A deals and by applying for market
launches of classical prescriptions➢ Establish a brand and expand sales by improving product quality and through evident
building

Acquire classicalprescriptions• M&As with companies
possessing classicalprescriptions
Complete by 2024

• Apply for new market
launches

Improve quality• Guarantee safety,
homogeneity and efficacy
with Tsumura’s quality
management system• Evidence-building for
products

Expand sales, mainly
centering on OTCs
• Strengthen collaborations
with Web medical exam
platform• Cultivate channels forcommercial insurance

Select and apply for not-yetmarketed prescriptions and fromthe 100 formulations for whichclinical trial exemption has
already been announced©2022 TSUMURA & CO. All Rights Reserved.

78

Crude Drug Platform

Career• Possesses experience as top management at a famous state-operated
pharmaceutical company.
• Abundant experience in the crude drug business• For many years, has poured energies into stably securing crude drugs
and improving quality through the cultivation and research of crude
drugs.

CEO, Ping An Tsumura
Medicine Co., Ltd.

CEO Gang Li• Launched former China Medico Technology in 2011 (present-day Ping
An Tsumura Medicine Co., Ltd.) and is nurturing the company tobecome No. 1 in overseas export volume.
• Promoting the China Business, as the person responsible for Ping An
Tsumura Medicine, as well as Shenzhen Tsumura Medicine.
©2022 TSUMURA & CO. All Rights Reserved.

79Crude Drug Platform Vision
Growth into an international, top-level traditional Chinese medicine healthcarecompany that leads the industry via the stable supply and branding of high-quality
crude drugs, drug pieces and Yakushokudogen products

Opportunities【Government/traditional Chinese medicine industry】• Strengthen level of quality and traceability management【Market/customers】• The market of drug pieces is worth RMB178.2 billion (approx. JPY3.2 trillion)• The Pharmacopoeia of the PRC is even stricter and the direction it is taking is to sell at
prices commensurate with high quality• Improve the health awareness and purchasing power of Chinese citizens• Further improve trust in traditional Chinese medicines by Chinese citizens owing to theimpact of COVID-19•

Advantages
優位性

•
•
•
•

A superior crude drug production supply chain with a GACP management systemthat is not possessed by rivals
Large-scale cultivation at cultivation bases
Competitive, superior items
Quality management that is top-level in the industry (personnel/test facilities)
Certain degree of name recognition of China Medico and crude drug pieces* *China Medicobrand)•

Industry leader in export volume (Japan, Taiwan, US and Europe)©2022 TSUMURA & CO. All Rights Reserved.

80Crude Drug Platform Vision

2024

2031

Ratio of external sales tototal sales:

Vision of external sales:

50%-plus

RMB3.0 billion-plus
CAGR: 17%Grow into a Chinese medicine healthcarecompany that leads industry development©2022 TSUMURA & CO. All Rights Reserved.

81

Trajectory of the Crude Drug Platform➢ Solidify the business infrastructure and expand sales by leveraging the advantages of thequality control system➢ Pour energies into expanding, especially of drug pieces, by creating high added-value
through drug piece services
Raw material
crude drugs

Drug pieces

Leading company in the crude
drug industry

Strengthen crude drug piece brand
Major supplier in the online medicalcare platform

Enhance superior items

Provide drug piece services by
expanding sales routes via M&A◆ Ginseng→ No. 1 ginseng brand in China◆ Expand other superior items◆ Fortify GACP management◆ Be a leader in industry
standards◆ Expand sales routes online and to
public hospitals◆ Strengthen priority items◆ Grow sales at Ping An Healthcare

Yakushokudogenproducts
Develop and sell products,
and build a brand
Develop products with highadded value and technicalbarriers◆ Development: Develop superior
raw materials and high valueadded products◆ Sales routes: Expand sales routes
via the Ping An Insurance Groupand cultivate other sales routes◆ Brand: Create a brand that istrusted by consumers©2022 TSUMURA & CO. All Rights Reserved.

82

Trajectory of the Crude Drug Platform (Drug Pieces)
Expand sales via drug piece services

Forecasting M&A deals with 2
companies gradually

ConsumerDrugpiecesPublichospitals【M&A criteria】

Drug piece
services◆ Personalized medicine◆ Stable substances◆ Mobile convenience◆ Online orders/delivery◆ Cost advantage◆High quality◆Safety/security

Privatehospitals

Expansion via M&A◆Same quality philosophy◆Key sales routes are throughpublic hospitals and online◆Place emphasis on the
Beijing/Tianjin regions, Pearl
River Delta region, and the
Yangtze River Delta region

Onlinemedical exam83Research Platform Vision

Become a presence that leads the traditional Chinese medicine industry bystandardizing quality and solving issues→ Support the earning of trust and improvement of brand recognition≪Analysis/evaluation≫≪R&D≫●Quality research based on “EBM”●Build a “quality space*” spanning crudes
drugs to formulations●Create “yardsticks” to evaluate the quality of
traditional Chinese medicines●Early detection of quality flaws and provide
improvement recommendations*“Quality space”: Utilize content analysis data for several substances to evaluate quality
characteristics in a multi-dimensional space.
©2022 TSUMURA & CO. All Rights Reserved.

84

Research Platform Structure
Propose traditional Chinese medicine quality standards/quality assessment
scale → Improve level of the overall traditional Chinese medicine industry

Gather/analyze information on quality andtechnology, and supply information
Cultivation
Harvesting

Information
data

BIGDATA
Primary
processing

Raw material
crude drugs

Information
data

Drug
piecesOriginguarantee

Raw material crude drug
quality control

Evidence
Traditional
Chinesemedicines

Final
product

Postmarket
information

Conduct R&D andsupply information©2022 TSUMURA & CO. All Rights Reserved.

Medicalinstitution

Pharmacy

Customer85

Supporting the Development of the China Business through thePing An Insurance Group
Career• Assistant General Manager and Head of Private Equity at theOverseas Investment platform for Ping An Insurance (Group).

• Research Assistant in the President’s Office, at Ping An Insurance(Group) and in charge of investment analysis for the group
strategy business, including Ping An Good Doctor.
• Lead the establishment of Ping An Japan Investment in 2015 andPing An Healthcare Japan in 2019.
• Ping An invested in SHIONOGI & Co., Ltd. in 2020 and launched ajoint venture in China.
Assistant General Manager and head of
Private Equity, Ping An Insurance (Group)
Company of China, Ltd.

• Implementing the China Business as a director of Ping An
Tsumura.

Kaipin Kui©2022 TSUMURA & CO. All Rights Reserved.

86Summary of the Ping An Insurance (Group)
In 1988, the Ping An Insurance (Group) was established as a private-sector company inShenzhen. At present, the company has developed into a global-scale, full-line financial group.
Corporate profile (based on FY2021 results)

Tech-related performance

Name

Ping An Insurance (Group) Company ofChina, Ltd.

Tech system

Locations

Shenzhen/Shanghai, China

Number of patent applications related to Tech

ChairmanPeter Ma

Business

Insurance, banking, investment

Total assets

RMB10.14 trillion (approx. JPY180 trillion)

・38,420 cumulatively
・No. 1 globally in AI patents
・No. 1 globally in FinTech patents
・No. 1 globally in Digital Healthcare patents

Sales

RMB1.18 trillion (approx. JPY20 trillion)

Application results

Net profit

RMB101.6 billion (approx. JPY1.8 trillion)

Customers

227 million
Ownership ratio of financial instruments at 2
or more companies: 39.3%

Online users

647 million

Employees

Approx. 1.50 million

Ranking

Fortune 500: 16th globally (2nd among
financial institutions)
Forbes 2000: 6th globally・As of December 2021, more than 110,000 IT technicians

・84% of customer services is AI compatible; annual number of AI compatible
cases was 2.07 billion cases; contributes to annual sales activities of
RMB275.8 billion; possesses application results for 2,158 types of operations,
including finance, credit cards and insurance products
・Apply to insurance screening for 1,600 types of diseases, improve operating
efficiency by around 30%;
Apply to insurance claims for 1,500 types of diseases, improve operating
efficiency by 20%
・Sales in the Tech business amount to RMB 99.3 billion, and its business iscomprised mainly of Lufax, OneConnect, Ping An Healthcare and Technology
and AutoHome©2022 TSUMURA & CO. All Rights Reserved.

87Development of Tsumura and the China Business
Capital investment
We forecast total investment of RMB880 million, or
44% of registered capital (RMB2.0 billion).

Corporate acquisitions
The private equity investment team always poursenergies into the expansion of Ping An Tsumura andprovides support for negotiations to acquire traditional
Chinese medicine companies. Completed acquisition of
Pingcun Zhongying Pharmaceutical in 2019, and of
China Medico in 2020.
Sales channels
Conducting sales of traditional Chinese medicinerelated products, including Yakushokudogen products
and drug pieces, by using Ping An Good Doctor andPing An Life sales channels. Furthermore, Ping An Lifeis participating in product development.
Share technologies
Ping An Technology is deploying a research projectwith Tsumura using image analysis and AI technology,
to improve production area management and quality.

1

2

3

Support all resources (including capital andsales channels) necessary for the developmentof the China business➡ Contribute to the health of China’s citizens
through the development of this businessSupport marketing, product development andsales measures that suit consumers in China➡ Achieve goals in the China business earlyonAccelerate the development of the China
business by utilizing capital markets➡ Improve corporate value and realize
continual development by
securing/training talented personnel,building a brand, improving trust, andexpanding the product market

Government affiliations
Ping An always provides full-fledged support, including
investing in the Chinese companies operated by
Tsumura, which is a foreign-owned company, and theestablishment of joint ventures, and conducts
negotiations with the government on behalf of Tsumura.
©2022 TSUMURA & CO. All Rights Reserved.

88Inquiries regarding this document
Corporate Communications Dept.
IR Group

PR Groupinvestor_madoguchi@mail.tsumura.co.jp

shuzai@mail.tsumura.co.jp

Cautionary statement regarding forecasts⚫ The materials and information provided in this presentation contain so-called forward-looking
statements. The realization of these statements is impacted by a variety of risks anduncertainties and that actual results could differ significantly. Consequently, be aware that
actual results may differ materially from these forecasts.
⚫ In the event of regulatory changes related to healthcare administration, including medical
insurance systems and drug prices, and reflecting in changes in interest rates and foreignexchange rates, there is potential impact to the Company’s performance or financial position.
⚫ In the event of a termination of sales or a substantial decline in sales of the Company’s core products
currently on the market due to a defect, an unforeseen side effect or some other factors, it would have amajor impact on the Company’s performance or financial position.
89