Business Results for Fiscal 2022

May 10, 2023

TSUMURA & CO.

Agenda01

Business Results for Fiscal 2022 andEarnings Forecast for Fiscal 2023

02

Outlook for China Business2

Business Results for Fiscal 2022 andEarnings Forecast for Fiscal 2023

Director, and CFO

Muneki Handa

Agenda01

FY 2022 Business Results Overview

02

FY 2023 Earnings Forecast

4Roadmap for the Realization of the TSUMURA VISION“Cho-WA” 2031
1st stage

2nd stage

3rd stage

FY2022-2024

FY2025-2027

FY2028-2031—Growth——Flowering——Germination—
Prescription Kampo
Products

Research

Development

Formulation
platform

Traditional Chinese
medical products business

Marketentry

Buildfoundations

Crude drug
platform

Crude drugs, drug pieces andYakushokudogen products

Sales
expansion

Research
platform

Smart factory
Sales

Labor
productivity

Personalized Kampo
treatments
Personalized Kampo
treatments
Scientific study of presymptomatic diseases

R&D

China
Business

Over 50% physicians write 10
or more Kampo prescriptions

Standardization of Kampo
treatments

Traditional Chinese Medicine
Research Center

Establishment

Expand scope of
automation

Establish brands
Function
expansion

Shift to oversight/management

50% of physicians write basicprescriptions in all treatment areas

Socialimplementation

Establish brands

Lead industry development
Evidence-building for traditional
Chinese medical products
Realize smart factories

Sales per MR (Yen/MR)

Production

Physical labor productivity

Crude drugs

Personnel expenses per crude drug
arranging volume

Double productivity(vs. FY2021)
5

FY2022 Business Results Overview【Million yen】

FY 2022Plan

FY 2022
Results

Achievement
rate

YoY
AmountChange101.1% +10,497+8.1%

138,500

140,043

Domestic business

124,300

124,698

100.3%－－

China business

14,20015,345108.1%－－

Operating profit

20,80020,916 100.6%(1,460)(6.5)%

Domestic business

21,20021,190100.0%－－

China business

(400)

(273)

－

－

－

(9.5)%

Sales

Ordinary profit

21,20023,453 110.6%(2,451)

Profit15,000

16,482 109.9%(2,354) (12.5)%

attributable to owners of parent

PL translation rate (CNY)

19.50

19.55

－

*Forex rate at the time overseas subsidiaries’ PLs were incorporated; differsfrom the import rate for raw material crude drugs

+2.51

－

Ratio to total sales

Prescription
Kampo Products

85.2%

External sales by
consolidated subsidiaries
11.6%
OTC Kampo etc 2.9%
Other prescription
pharmaceuticals 0.3%
6

Key Points in Performance
Achieved plans for sales and at each profit level.
Net sales◼

140,043

Domestic businessmillion yen Achievement rate

101.1%

YoY+8.1%

Total sales for the 129 prescription Kampo products: 119,362 million yen, rose 4.6% year-on-year

Total sales of the OTC Kampo formulations and other healthcare products: 3,966 million yen, grew 3.2% year-on-year◼

China business sales: 15,345 million yen

Operating profit
Operating profit margin◼

20,916 million yen
14.9%

Achievement rate 100.6%

YoY(6.5)%(0.1)pt

YoY(2.4)pt

vs. Plan

Cost-to-sales ratio: 51.2％, up 0.8pt vs. plan and a rise of 2.5pt year-on-year;
Versus plan: Mainly due to negative impact from soaring energy and raw material expenses◼

SG&A ratio: 33.8%, down 0.8pt vs. plan and a fall of 0.2pt year-on-year;
Versus plan: Implemented cost control in response to a rise in cost-to-sales that outperformed the plan

Ordinary profit◼

23,453

million yen Achievement rate

110.6%

YoY(9.5)%

Foreign exchange gain primarily related to loans to overseas subsidiaries: 1,508 million yen, down 965 million yen year-on-year;
foreign exchange impact

Profit attributable toowners of parent

16,482 million yen Achievement rate

109.9%

YoY(12.5)%◼

Extraordinary income: Refund margin owing to a reduction in paid-in capital at affiliates: 463 million yen◼

Extraordinary loss: Impairment loss in tandem with revision to construction plans for the Traditional Chinese Medicine ResearchCenter: 597 million yen

7

Domestic Business: Sales of Drug-fostering Program
Formulations/Growing Formulations(Million yen)
Net sales
Ranking

Product No./Formulation name

FY 2021

FY 2022

YoY

Drug-fostering program
formulations

1

100 Daikenchuto

9,569

9,739

+169

+1.8%

3

54 Yokukansan

7,379

7,380

+1

+0.0%

4

43 Rikkunshito

7,231

7,300

+69

+1.0%

8

107 Goshajinkigan

3,509

3,421

(87)

(2.5)%

24

14 Hangeshashinto

1,358

1,390

+32

+2.4%

Total sales for drug-fostering program formulations

29,04829,223

+184

+0.6%

41 Hochuekkito

7,232

7,727

+494

+6.8%

5

17 Goreisan

5,298

6,208

+910

+17.2%

6

24 Kamishoyosan

4,833

5,050

+217

+4.5%

17

108 Ninjin’yoeito

1,936

2,128

+191

+9.9%

18

137 Kamikihito

1,722

2,067

+344

+20.0%

Total sales for growing formulations

21,02323,182+2,159+10.3%

Total sales for 119 formulations other than drug-fostering
program and growing formulations

64,093

66,946+2,853+4.5%

Total sales for 129 prescription Kampo
products

114,165

119,362+5,197+4.6%

Growing
formulations

2*Restricted shipments of Goshajinkigan from August 2022 to April 3, 2023

Ratio to total sales
Drugfostering
programPrescription formulations
Kampo%
Products

25

Other

129

prescription(119
Growing
formulations
formulations)formulations

56%

19%

Status of restricted shipments
End-August 2022 onward➡Start restricted shipments of
28 formulations
As of May 9, 2023
➡Continue restricted shipmentsof 24 formulations*Plan to successively lift
restrictions in and after June 8China Business: Crude Drug Platform Business
Growth in sales, chiefly of raw material crude drugs
Raw material
crude drugs

54.6%
growthSales to traditional Chinese medical
products companies as a raw material＊

15.3
billionyen

Cultivate new customers
Expand the value of transactions with existing customers
Improve profit margins(Plan)

17.2
billion yen*At present, investing to cultivate new customers➡Correct in stages to fair price
Drug pieces (Crude
drug pieces)

Sales for prescription-use and as an OTC tohospitals and pharmacies

9.9
billionyen

Newly cultivate hospital sales channels
Expand existing online sales channels➡Cultivate new online channels

Yakushokudogenproducts

Sales of health food products to general
consumers
Development and market launch of new products➡Cultivate branding and online sales channels

2021

2022

2023

*Local current basis: 34.7% growth9Agenda01

FY 2022 Business Results Overview

02

FY 2023 Earnings Forecast10

FY 2023 Earnings Forecast
Forecasting an increase in sales and decline in profit year-on-year[Million yen]

FY 2022
Results

FY 2023
Earnings Forecast

YoY
AmountChange140,043

150,500+10,456+7.5%

124,698
15,345

133,300
17,200+8,601+1,854+6.9%+12.1%

20,91618,000(2,916)(13.9)%

21,190(273)

18,400(400)(2,790)(126)(13.2)%－

Ordinary profit

23,45318,600(4,853)(20.7)%

Profit attributable to owners ofparent16,482

13,000(3,482)(21.1)%

19.55

19.00

Net sales
Domestic business
China business

Operating profit
Domestic business
China business

Income statement
exchange rate
(JPY/RMB)

ROE
EPS

6.7 %
215.63 yen

5.1 %171.02 yen

Notes ・The impact from the signing of a contract to acquire anequity interest in Shaanxi Unisplendour Life Care PharmaceuticalCo., Ltd. was not factored into the earnings forecast.
・Foreign exchange impact (non-operating profit) was notfactored into the earnings forecast given the difficulty to reasonably
calculate this impact based on the status of the forex market.

11Factors Triggering Changes in Sales in FY 2023
・Further create demand for Kampo products by implementing sales measures, mainly thestrengthening of e-promotions
・Continue to implement a system to boost production capacity in response to demand for
Kampo products

150.5
billion yen
140.0
billion yen

FY 2022Net sales

Sales measures

COVID-19 impact

NHI drug pricerevision

Domestic business*(Sales for 129 prescription Kampo products)

Chinabusiness

Domestic
business(Healthcare, etc.)

FY 2023
Net sales
forecast
12

Domestic business: Trends in the Number of Physicians
Writing 10 or More Prescriptions for Kampo Pharmaceuticals
・The number of physicians writing 10 or more prescriptions for Kampo pharmaceuticals
increased by approximately 20,000 physicians, a ratio of 32%*
・The issue is the increase in physicians writing 10 or more prescriptions for Kampo
pharmaceuticals at HP (hospitals)*Trend in the number of physicians writing 10 or moreprescriptions for Kampo pharmaceuticals*Survey by Tsumura

320,000 clinicalphysicians

50%
approx. 84,000
physicians

26%
End-FY 2021

approx. 104,000
physicians

32%

32％

End-FY 2022

32%

Over
40%

End-FY 2023

Over
50%

End-FY 2024

First Medium-Term Management Plan

13

Domestic Business: Information Provision Activities
・The number of cases of information recognition (FY 2022) increased 53% in comparison with the level
prior to COVID-19 (FY 2019)
・Aim to improve the quality of activities through information provision that suits each individual medical
practitioner

By FY 2022

Number of cases of detailing impact*
Levelprior to
COVID-19

Owned
media

e-promotions

Diversification of information
provision methods

Paid
media

LINE
DM
Information
provision

Breifing/
Interviews
presentationsMR
activities

FY 2019

ChatbotDataaccumulation

FY 2020

FY 2021

FY 2023 onward

FY 2022

FY 2023

ActualPlan

Source: INTAGE Healthcare Inc. survey, Impact Track*Number of cases of detailing impact: Number of cases of information recognition from various channels,
including MR activities and the Internet
MR activities: Detailing, online interviews, in-hospital briefings, etc. conducted by MRs
e-promotion: Activities to provide information online that does not go through MRs

Lectures

Information provision that is suited tothe individual

Owned
media

Grasping needs byanalyzing
accumulated data

Email
Telephone

Paid
media

Breifing/
Interviews
presentations

Chatbot

LINE
DM

Lectures

EmailTelephone14

Factors Triggering Changes in Operating Profit in FY 2023
・Substantial impact from external factors, including inflation and yen depreciation

External factors:

20.9 billion yen (11)

(24)

+33
(18)
(24)

FY 2022
Operating profit

Crude drug
procurement cost

Internal factors:

Soaring energy andraw material costs

Exchange rate(yen
depreciation)

(3)

(5)
(35)

+29

NHI drug pricerevision(Recalculated unprofitableproduct)

18.0 billion yen

Sales increase

Rise in expensein tandem withsales growth

Growthinvestment torealize the vision

FY 2023
Operating profit
forecast

15

Improving corporate value through growth investment
Investing in growth to improve corporate value by realizing the vision
Growth Investment
・Research for personalize Kampo treatment
・Scientific elucidation of Pre-symptomatic Disease
・Research for expansion of the standardzation of
Kampo treatment
・Development of daikenchuto in the U.S.
・Expansion of sales of Crude drug and drug pieces
・Expansion of sales of traditional Chinese
medicines (Building foundation for Shaanxi
Unisplendour Life Care Pharmaceutical Co.,)・Expansion of e-promotion
・Introduction of AI technology to the Kampo value chain
・Cultivation technology development for crude drugs(double track for wild and cultivated crude drugs)

・Increase production capacity
・Securing manufacturing personnel in advance・Introduction of integrated core system
・Introduction of stock delivery system for employees

Sustainable expansionof Kampo market
Accelerate growthof China business
Productivity improvement
by DX(Reduce costs and SG&A expenses)

Improvingcorporate value
by realizing
TSUMURAVISION“Cho-WA” 2031

Strengthen businessfoundation
16

Improve Productivity via Introduction of DX in the Kampo Value Chain
Cultivation/procurement

Shenzhen Tsumura Medicine,
China Medico Technology
Ishioka Center, Yubari Tsumura

Automation of selection operations

Manufacturing

Sales/education/popularization

Ibaraki/Shizuoka Plants
Shanghai/Tianjin Plants

Automation of each process

・Automated selector loaded with AI
Start operations at 1 site from April 2023,
expansion of applicable items and introduction
at all sites

Local
producers
Production
entities

Furthermore introduce
into upstream processes
Aim to automate crude drug
cultivation and primary processing

・Series of automation and labor-saving technology for manufacturing processes
Sequential deployment at all plants
・Automation technologies for inspections, operations and incidental tasks
Implement development mainly using AI technologies

17Shareholder Return Policy
・Aim to improve corporate value through growth investments after continuing to payout
stable dividends

Dividend

In the upfront investment and foundation building stage,
continue to pay a stable annual dividend per share of ¥64

Growthinvestment

Upfront Investments/Foundation Building to Realize
the TSUMURA VISION “Cho-WA” 2031

Operating
CF

Interestbearing
debt

Improve
corporate
value•

Capital investments to secure a higher than ever level of production
capacity that will support growth in the domestic business•

Investment in M&A and the building of IT infrastructures to expand
the China business•DX investment to improve productivity

18

Basic Policy for the China BusinessPresident and Representative Director, CEO

Terukazu KatoAgenda01

China Business/Manufacturing Platform:
M&A Overview

02

Basic Policy for the China Business

20

Agenda01

China Business/Manufacturing Platform:
M&A Overview

02

Basic Policy for the China Business21

Formulation Platform: M&A Overview
Company name: Shaanxi Unisplendour Life Care
Pharmaceutical Co., Ltd. (Unisplendour)
Location: Baoji, Shaanxi Province
Registered capital: 80.07 million RMB
Number of group employees: More than 200 people(as of May 2023)

Unisplendour
100%
Beijing

Unisplendour Hi-tech
Pharmaceutical Co.,
Ltd.
100%

Baoji

Shaanxi Daxingtang
Pharmaceutical
Logistics Co., Ltd.

Shanghai
Xian

Overview of M&A progress
April 13: Entered into contract for transfer of equity interest (news release)
April 23: Completed procedures with the Bureau of Industry and Commerce (completed
filing notifications for a change in shareholders, change in legal representativeand change to a new Articles of Incorporation,issuance of new business licenses for 3 group companies)
May 9: Completion of closing
Slated for December: Change of pharmaceutical license holder
Completion of construction of new plant (Introduction of smart system in April 2024,
corporate name change in and after April, start of smart plant production in 2025)22

Shaanxi Unisplendour Life Care Pharmaceutical Co., Ltd.
History
1918: Founded as Xingling Drugstore
1944: Changed business name to Daxingtang Pharmacy Chain
1958: Changed business name to local government-run Baoji
Chengyao (Medicinal Product) Factory
1963: Changed business name to Baoji Zhiyaochang(Pharmaceutical Factory)
1997: Established Shaanxi Chenbao Pharmaceutical Co., Ltd.
2001: Shareholder change to the Baoshang Group
2003: Changed corporate name to Baoshang Group Shaanxi
Chenji Pharmaceutical Co., Ltd.
2011: Changed corporate name to Shaanxi Chenji PharmaceuticalCo., Ltd.
2013: Shareholder change to Tongfang Pharmaceutical Group Co.,
Ltd./Shaanxi Xinhuiyuan Technology Co., Ltd.
2015: Changed corporate name to Shaanxi Unisplendour Life Care
Pharmaceutical Co., Ltd.

Main business: Manufacturing and sales of traditional Chinese medical products
Pharmaceutical license: 147 licenses for traditional Chinese medical products(Of which 67 licenses are for classic prescriptions)

10 licenses for chemical agents
Drug dosage form: Pills, capsules, granules, drug piece, syrup, oral fluids,
medicinal compound, medicinal liquor, and tincture
23

Unisplendour: 147 License for Traditional Chinese Medical Products
Number of licenses for traditional
Chinese medical products by disease

Number of licenses for OTC/traditional
Chinese medical products

Number of license for traditional Chinese
medical products by dosage form

97 licenses in the
respiratory, digestive, blood supply
and urinary area, which are fields offocus for Ping An Tsumura(66% of the total)

104 licenses for OTC/switch OTC
traditional Chinese medical products (71% of
total)

There are many classical prescription
Chinese medicines
for all internal medicines; Pills make up 57%

Match with the Tsumura policy of “classicalprescription Chinese medicines + OTC”

In the China business, we are tackling
quality improvements for dosages forms thatexert efficacy/benefits, not only for granules

67 licenses for classical prescription
Chinese medicine: 45%

Tumor disease 1
Ears/nose 3

Capsules 3

Pediatrics 5
Cardiology 7

Granules 12
Obstetrics/gyn
Respiratory diseases

ecology 941

Switch OTC42

OTC 62

Oral fluids 22

Orthopedics 12

Pills 85
Nerves 13

Prescription
Digestive

Blood supply 10

system 28
Urology 18

Tablets 25

formulations
43

24

Unisplendour: Main Products
Jukankaiigan(proprietary item)

Yojingokakohukueki(proprietary item)

Shosekigan(proprietary item)

Rokumijiougan

25Building/Transforming Foundations in Chinese Business
Expand sales
channelsBrand building

Treatment/presymptomatic
disease/recuperation

Vision for Chinese
operations

Contributing to
the health of thecitizens of China

Sales image

April 2023
August 2022
March 2020

December 2016
Established
Tsumura China,
Inc.
Controllingcompany

Acquired equity
in Tianjin China
MedicoApril 2019Technology Co.,
Established Pingcun Ltd.: 80%
MedicalCore function ofSales function for the the Crude Drug
Crude Drug Platform Platform andJune 2018
Medical & Health
Established Ping
business
June 2019
An Tsumura
Changed name to
Established Pingcun
Investment
Ping An Tsumura
Zongying
function for the
Medicine Co., Ltd.
Pharmaceuticals Co.,
China Business
Ltd.

Manufacturing function
for the Crude Drug
Platform
business/Medical &Health business

Established Ping An
Tsumura Traditional
Chinese Medicine
Technology Co., Ltd.
Research
Platform/Tradition
Chinese medicine
Research function

10 billion
yuan

Acquired equity
in Unisplendour:100%
Core function of
Formulation
Platform

Mainly OTC/Classical prescription
Chinese medicines

China Business strategy
Become a trusted
traditional Chinese
medicine company in China
26

Formulation Platform: Basic Policy for the Traditional
Chinese Medicine/Medical Products Business1. Improvements to Tsumura quality
Crude drug GACP, stability/homogeneity/dosage form for formulations

2. Establish a production system
Smart system, low-cost operations

3. Expand sales channels
From Shaanxi Province to China nationwide/Southeast Asia, EC & SNS

4. Brand building
Tsumura quality brand, Ping An Tsumura brand27

Figure of Capital Ties between Major Corporate Groups in China

Tsumura100％

Tsumura China Inc. established in December 2016 [Shanghai]
100％

56％

100％

63％

Ping An Tsumura Inc. established June 2018 [Shanghai]

Shenzhen Tsumura
Medicineestablished in March
1991[Shenzhen]

100％
PingcunMedicineestablished in
April 2019
[Shenzhen]

80％

100％

Ping An Tsumura
Medicine
equity acquisition in
March 2020
[Tianjin]

Unisplendour
Equity acquired in April
2023[Baoji, Shaanxi
Province]

51％
PingcunZongying
Pharmaceuticals
established inJune 2019[Hubei]97.65％
China Medico
Technology
equity acquisitionin March 2020
[Tianjin]

Manufactures Kampo
powdered extract
for Japan
Tianjin Tsumura
Pharmaceuticals
established in March2018[Tianjin]

100％
Ping An Tsumura Traditional
Chinese Medicine Technology
established in June 2022
[Shenzhen]

Shanghai Tsumura
Pharmaceuticals
established in July
2001
[Shanghai]

Crude drug platform

Formulation platform
Traditional Chinese medicine
research platform

28

Agenda01

China Business/Manufacturing Platform:
M&A Overview

02

Basic Policy for the China Business29

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(Personalized)(Prevent change inexisting disease)30

Goals of 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.

31

TSUMURA VISION “Cho-WA” 2031
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 development of afull-fledged disease bydiagnosing and treating
pre-symptomatic diseases
based on unnoticed
changes in health andnoticeable symptoms(Prevent change inexisting disease)
Prevent disease frombecoming serious via early
detection, by predicting its
progress and throughproper early treatment

Prevent
relapses(Post-healing
recovery)
Improve treatment
prognosis and QOL toprevent a relapse so thatthe patient can fully
rehabilitate and get backto society
32

Vision for China Business
Recuperation(Prevention)

Health & Medicine
business

Nutrition (food)
Exercise
Sleep

Raw material crude drugs

Beverage by function

Traditional Chinese
medicine drug pieces

Gingseng

Yakushokudogen
nutritional ingredients

Health foods by function

Traditional Chinese
medical products business

Three preventive
measures for presymptomatic diseases

Treatment
Expandstandard Kampo
treatments
Personalizationof treatments

Drug piece added-value service“Personalized medicine,” etc.

Pre-symptomatic
treatment(Prevention of presymptomatic
diseases)Prevent
Prevent disease
recurrence
from becoming(Post-healing
seriousrecovery),(Prevent changes inexisting diseases),

OTC versions of traditional
Chinese medicines

Apply for classical prescription
Chinese medicine

33

Health & Medicine Business: Crude Drug Platform
Yakushokudogen
Recuperation(Prevention)
Nutrition (food)
Exercise
Sleep

China
Southeast Asia
Crude drug
platform

Beverages being sold at
Tsutaya Books(Shanghai)Ping An Tsumura
Medicine, etc.

34

Health & Medicine Business: Building New Sales Channels

Sales channels

Product sales

Integration/input

Brand
building

Brand
channels

Live commerce
platform

e-commerce
platform

Social media
Contents distribution

35

Traditional Chinese Medicine/Medical Products
Business: Crude Drug/Formulation Platforms

Treatment
Expand standard
Kampo
treatments
Personalizationof treatments

Personalized
medicine

Classical
prescription
Chinese medicines

China
Crude drug
platform

China
Southeast
Asia
Formulati
Shaanxi
Unisplendouronplatform

Ping An Tsumura
Medicine

Drug pieces
Drug piece
added-value
service
Personalized
medicine

Fluid extract

Powdered
extracts

Decoction

Fluid extract for
use by traditional
Chinese doctors

36

Traditional Chinese Medicine Business: “Personalized
Medicine” Drug Piece Added-Value Service

Traditional Chinese
medicine
Personalization oftreatments

Small-lot, high-mix smart production
systemCrude drug extract
extraction/concentration/packaging

Ping An Tsumura
Medicine
China Medico
Technology

37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.

38

Appendix

Factors Triggering Changes in Operating Profit (YoY)（ Million yen ）（ Million yen ）Breakdown of change in net sales:+3,417+3,417(1,352)(2,244)(1,280)

Domestic+2,737

Overseas+679

Breakdown of change in cost-to-sales: (1,352)
Crude drug procurement cost(619)

Raw material expense (Domestic: Soaring expense for(598)

materials other than raw material crude drugs)

22,376

20,916

Profit impact Profit impact Profit impact Profit impact
FY 2021
FY 2022from changes
due todue toOperating profit due to changes
Operating profit
in SG&A
exchangechanges inin salesexpensesrate
cost-to-sales

Processing expense, etc.

+235

Outside sales in China(369)

Breakdown of change in SG&A expense：( 2,244)
Depreciation（incl. one-off expense at Tianjin Plant）

(606)

R&D

(220)

Advertising＋101

Salary allowance（incl. one-off expense at Tianjin Plant）+140

Sales promotions+155

Other (system introduction(800), volume of activities(700)etc.)
Foreign exchange impact(1,280)(1,814)40

Financial Condition/Cash Flow Position（ Million yen ）Bond issuance: 30 billion yen (Sep. 8, 2022)

FY 2021

FY 2022(March 2022)(March 2023)

350,981

396,81345,831

Current assets

229,420

268,320

38,900Non-current assets

121,561

128,492

6,931

Total liabilities

92,871

124,566

31,695Current liabilities

45,87547,205

1,329

Non-current liabilities

46,99677,36130,365258,109272,246

14,136

68.3％

63.5％

(4.8)pt

FY 2021

FY 2022(March 2022)(March 2023)

92,751

101,726

8,974

3,347

Merchandise andfinished goods

10,247

11,2571,009

179Work in process

13,614

14,430816

118

Raw materials andsupplies

68,88976,038

7,148

3,049

Total assets

(154)

675

Cash and cash
equivalents at end of
periodImpact of exchange ratetranslations

Financing activities

Of which,
Exchange rate

Cash and cash equivalents at
beginning of period

Inventories

Change+164

Investing activities

Equity ratio（ Hundred million yen ）
947
+18
+244

Operating activities

Total net assets

Change41

Comparison with the Prescription Pharmaceutical Market
Sales increased 1.8% year-on-year on a NHI drug price basis; the rate of sales growth
was sluggish due to the negative impact of restricted shipments(YoY/drug price basis)

All sales channels
7.9%

Tsumura

9.6%

7.7%
6.6%

7.1%

5.5%
5.4%

Prescription
Pharmaceuticalmarket

4.6%

4.2%

3.6%

3.3%

2.9%

2.5%

3.3%

1.3%

1Q

FY 2021

2Q

3Q

4Q

1Q

5.5% (Excluding
restricted shipment
items)

1.8%
1.3%

2Q

3Q

4Q

FY 2022

Copyright © 2023 IQVIA.Tsumura proprietary calculation based on JPM April 2021–March 2023; All rights reserved (reproduction in any form prohibited)42

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

Prescription pharmaceutical market

General clinics (GP)
12%
10%

12%

11.1%
9.1%

8.7%

7.5%

8%

10%

7.8%

8%

6.3%
5.2%

6%
4%
2%

Hospital market (HP)

2.3%

1.9%

2.4%

0.7%

4.1%
2.3%

1.4%

3.0%

0%
-2%

1Q

-4% FY2021
-6%

2Q

3Q

4Q

1Q
FY2022

6%

2Q

3Q

4Q

4.7%

4.1%

5.1%
3.9%

4%
2%

1.3%

6.4%

1.1%
3.1%

3.4%

0%
-2%
-4%

3.8%

1Q
FY2021

2Q

1.3%

3.7%
3.2%

2.7%
3Q

4Q

1.1%
1Q

2Q

(0.3)%(0.3)%
3Q

4Q

FY2022-6%

Copyright © 2023 IQVIA. Proprietary calculation by Tsumura based on “JPM Apr. 2021 – Mar. 2023”
Reproduction prohibited

43

COVID-19 Impact and Outlook
・Symptoms reflecting changes in the living environment continue to offer prescription
opportunities despite a partial decline
・Increase in prescription opportunities for common cold-related formulations due to the
spread of common colds during the winter season(Shipment volume basis: Growth rate)

117%

Symptoms

Demand outlook

129 prescriptions

108%

106%

Common cold-related formulations

98%
FY2020FY 2021

FY 2022cold-related

114%

Common110%

Changes in theliving environment

Formulations for changes
in the living environment
Anxiety/insomnia (6 formulations)
Fatigue (2 formulations)Dizziness (2 formulations)
The pace of growth is sluggish

Skin irritation,acne due to the use of masks(4 formulations)

Common cold, influenza,
hay fever, etc.
(13 formulations)

Ease up of measures to control
infections

Growth owing to the spread of common
colds during the winter season

44

Create Value and Implement Job Satisfaction Reforms Leveraging
Organizational and Human Capital
Cultivate Management Personnel
Basic management lecture
・Employees that completed the course
52 people (of which 9 were women)
・Employees currently taking the course
49 people (of which 8 were women)

Directors, Executive Officer,
General Managers
Produce management
personnel

Division head

Foster Corporate CultureLong-Term Vision (10-year)
Standard KPIs
for all executive officers

Survey outcome was
Over 4.0

Average for responses to the 30 items in thesurvey for instilling philosophy(5 points is a perfect score)
4.06
4.02
4.00
3.99
3.91

Basic management
lecture(3-year period)

Chiefs/section
heads

Advance(3-year period)

General staff

Basic(3-year period)

2018

2019
Be able to see
things as one’s
own concern

Still waiting-and-seeing
Someone else’s concern
to a certain extent

2020

2021

2022

Make progress withinternal
branding/personalizati
on, and realize aconnection between
philosophy and action
Realizing that
Considering moreembodying theautonomously what should bephilosophy contributes
done from one’s heart
to results

45Create Value and Implement Job Satisfaction Reforms Leveraging
Organizational and Human Capital

Promote diversity and inclusion
Encourage male employees to takechildcare leave

Increased ratio of
female managers
8.4%
7.4%

100.0
90.0
80.0

6.3%

(Acquisition ratio for childcare leave and average period30
of childcare leave)
24.1 days

24.6 days

70.0

12.3 days

60.0

10

52%

50.0

0

37%

40.0
30.0
20.0

20

-10

19%
-20

10.0
0.0

April
2021
2021年4月

April
2022
2022年4月

April
2023
2023年4月

Results mainly from the active participation of womenin programs, including the basic management lectureand next-generation leader training, and the holding oftraining seminars for female managers-30

2020年度FY20202021年度FY20212022年度FY2022

Results from the promotion of men taking childcare leavethrough the further expansion of support systems forchildcare/nursing care and work, and through the“Ikumen Promotion Project”*The figures are standalone for Tsumura

46

Dividend and Payout Ratio Trends
45.0%

100

35.9% 35.7%
32.1%

31.9%

33.5%

37.4%

35.6%

40.0%

31.9%

29.7%

80

35.0%

26.0%

30.0%

60

25.0%

32

32

32

32

32

32

32

32

32

32

Year-end
dividend
期末配当（円）
(yen)

20.0%

40
15.0%

Interimdividend
中間配当（円）
(yen)

10.0%

20

32

32

32

32

32

32

32

32

32

Payout
配当性向ratio

32
5.0%

0

0.0%

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023
FY
2023
forecast

Note: The fiscal year-end dividend for FY 2022 and the dividend payout ratio (forecast) is a forecast number as it is predicated by the approval of thedividend resolution at the 87th Ordinary General Meeting of Shareholders.

47