Growth Investment in China &Building Business Foundations

November 7, 2019

Terukazu Kato
President and Representative Director, CEO

2Q FY 2019

China Business Vision
Contributing to the health of China’s citizens
Securing a stable source of crude drug raw materials
Ping An Tsumura Group
Aim to become the No. 1 company in traditional Chinese medicine—Become the most trusted Chinese medicine company in China—

2027
Net sales: RMB10billion(China Business Vision sales image)2021
Net sales: RMB240
million(Medium-Term Management Plan for theChina Business)

2018

Make the traditional Chinesemedicine business a pillar

Selling products made fromcrude drugs, such as“Yakushoku-dogen” products
and Chinese Crude Drug Pieces22Q FY 2019

All Tsumura Directors Visited China (Sep 2019)
Talked with Ma Mingzhe, chairman and CEO of the Ping An InsuranceGroup••

Discuss with Chairman and CEO Ma, co-CEO Chen and other executives
Exchanged opinions related to the business structure of Ping An Tsumura

Talked with Wang Tao, chairman and CEO of Ping An Good Doctor••

Exchanged opinions concerning matters, including the sales of traditionalprescriptions (crude drug pieces)
Exchanged opinions pertaining to matters such as the sales structure for traditional
Chinese medicines“百年津村、抱擁青春” Ma Mingzhe, chairman and CEO
The Chinese above reads, century-old Tsumura reaches its youth
Tsumura’s history expands over 100 years. In China, through the energy sparked by reform
and innovation in China, Tsumura will be able to shine brightly and grow with vigor.

3

2Q FY 2019

China Business: Progress Report2027

Net sales: RMB10billion

中成薬進出
Tianjin Factory
Crude drug
platform
Strengthen system forsteady crude drug
supply2019

Set up productionsystem
Launch slated for 2022

Establish asalessystem(China Business Vision sales image)

M&A
古典処方へのアプローチ
Make the traditional
Chinese medicine
business a pillar

Fortify/expand
collaborations

Analysis
ResearchCenter2021
Net sales: RMB240 million(Medium-Term Management Plan for the China Business)

4

2Q FY 2019

Diagram of Capital Ties/Sales Routes in China Business
Strategic partnership
Ping An
TsumuraTsumura China

Tsumura*Develop, invest in, manage
traditional Chinese medicine
business*Tentative

Ping An InsuranceGroup China
Analysis ResearchCenter
Pingcun Medical

Ping AnGood Doctor*Sales of traditional Chinese
medicines, health foods, etc.

Pingcun Zhongying
Tianjin China Medico
Technology*Produce crude drugs, manufacture
Yakushoku-dogen and other products

Jilin Lincun*Procure, process, analyze, store and sell
crude drugs

Shenzhen Tsumura*Tentative*Procure, process, analyze andstore crude drugs

Tsumura Shengshi
Pharmaceuticals* Manufacture Kampo extract
powderGuangdong
Dongguan

Baishan Lincun*Manufacture crude drugs (localcompany)*Manufacture Kampo extract powder
and traditional Chinese medicines

Shanghai Tsumura

Guandong
Yijian GroupCapital ties
Sales routes

Hospitals,
Traditional Chinese
medicinecompanies,
overseas sales

5

2Q FY 2019

Build a Crude Drug Platform
Tsumura/Ping An Tsumura
Share crude drug related
 Fortify foundation for crude
technologies

drug business

Crude drug platform
ShenzhenTsumuraCrude
drugs forJapan

China Medico

Crude drugs for China
Crude drugs for
traditional
Chinesemedicines

Drug pieces

 Fortify foundation for
Kampo business andestablish foundation forentry into traditional
Chinese medicine
business

 Establish a differential
advantage in the Chinese
market by using crude
drug related technologies

Yakushokudogenproducts6

2Q FY 2019Conclusion of Letter of Intent for Capital Alliance withTianjin China Medico Technology

Goal of acquisition
１．Fortify system for steady supply ofcrude drugs to Japan

２．Strengthen system for stable supplyof crude drugs for use by China
Business (traditional Chinesemedicines, etc.)
３．Acquisition of personnel

2018 crude drug/drug piececompany ranking by export value
企業名称
1

盛実百草薬業有限公司

2

深圳津村薬業有限公司

3

肇慶市祥信進出口貿易有限公司

4

湖南信華食品有限公司

5

安徽賀林中薬飲片科技有限公司*Source: Sorted based on Chamber of Commerce for Importers andExporters of Medicines and Health Products’ customs data7

2Q FY 2019

Build crude drug platform & sales system
Tsumura/Ping An Tsumura
Crude drug platform

Guandong Yijian
Group

Ping An
Life Insurance

PingcunMedicalSales promotion by insurance sales
staff
Online sales of Ping An Insurance

Ping An
Good Doctor

Guangdong
DongguanChina Medico【Overview of Ping An Good Doctor】
 One-stop medical care platform
 Provide services including medical records, medical services, drug
administration services, and healthcare plansOperates Qingping Medicine Market, atop class traditional Chinese medicine
market in China

Registered users: 289 million people
Number of consultations daily: more than 650,000 people
Online proprietary doctors: approx. 1,200 doctors

Network of 1,579 directly-operatedpharmacies. Pharmacy chain that ranks inthe Top 10 nationwide.
Ranks second in the number of pharmacies
in Guangdong Province

China Medico
sales route
Sells drug pieces and crude drugs tohospitals, etc.

8

2Q FY 2019

Patients & customers

Pingcun Medicine Sales Channels (current)
Online exam(Apps, etc.)

OnlineOffline(Dispensing /prescriptions)

PING ANGood Doctor
1,200 proprietary doctors
5,000 doctors on contract

i Online inquiry

Electronicprescriptions○Drug pieces

ii Return inquiry
data

OfflineOffline(Drug consultations)

Directly-operatedpharmacies(Online sales)
Guangdong
Dongguan

Guangdong
Dongguan
Pharmacy

PING ANGood Doctor○Patient data

(Brick & mortarstore sales)

Prescriptions

Online Flow
Real Store9

2Q FY 2019

China Business: NEXT Stage2027
Net sales: RMB10 billion(China Business Vision sales image)Enter traditional
Chinese medicine
business
Tianjin Factory
Crude drug
platform
Strengthen system forsteady crude drug
supply2019

Set up productionsystemLaunch slated for 2022

Establish asales system

M&A
Approach traditionalprescriptions

Fortify/expand
collaborations

Make the traditional
Chinese medicine
business a pillar

Analysis
ResearchCenter2021
Net sales: RMB240
million(Medium-Term Management Plan for the China Business)

10

2Q FY 2019

Integrated
Report 201911

2Q FY 2019

Sustainability Vision
CSR Basic Policy
Based on its corporate philosophy of “The Best of Nature and Science,”
the Tsumura Group will contribute to the medical field and to people’s
health through the stable supply of high-quality Kampo medicines madeusing naturally derived crude drugs. At the same time, we will fulfill ourcorporate social responsibilities by accelerating initiatives for resolving
environmental and social issues and reinforcing corporate governance.

Sustainability Vision
The Tsumura Group contributes to value creation and to therealization of a sustainable society through its Kampo value chain.
12

2Q FY 2019

Key Points in the Integrated Report2019
Tsumura’s long-term
management vision and thegovernance system that supports
this visionTsumura strengths and growthstrategies based on our founding
spirit and basic philosophy

Tsumura’s value creation cycle
driven by its Kampo value chain13

2Q, FY2019

TSUMURA & CO.

Investor Relations Group
Corporate Communications Dept.

Cautionary items regarding forecasts• The materials and information provided in this presentation contain so-called forward-looking
statements. Readers should be aware that realization of these statements can be affected by a variety
of risks and uncertainties and that actual results could differ significantly.
• Changes in the healthcare insurance systems or regulations set by medical treatment authorities on
drug prices or other aspects of healthcare or in interest and foreign exchange rates could impact
negatively on the Company’s performance or financial position.
• In the unlikely event that sales of the Company’s core products were halted or declined substantially
due to a defect, unforeseen side effect or some other factor, it would have a major impact on theCompany’s performance or financial position.