Sustainability Vision & Long-Term
Management Vision Presentation

March 29, 2022
TSUMURA & CO.

1

Today’s Agenda

1. Long-Term Management Vision
TSUMURA VISION “Cho-WA” 2031
2. Research & Development Vision
3. China Business Vision
4. Q&A
22

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

33

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

Hello, my name is Terukazu Kato.
I would like to start off by expressing my gratitude for your continued
support.
The image you just saw is part of an image video on the newly
established “purpose” of the Tsumura Group.

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

5

Optimally achieving business aspirations to realize a better society.
This is the purpose of the Tsumura Group.

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“Lively Living for Everyone”
Kampo medicine is a form of personalized medicine.
In this digital age, Tsumura is dedicated to providing support to thelives of each individual
and it is our ambition to create a diverse society so that eachindividual can realize a bright future.

6

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

7

The inception of our purpose is in the origins of our founding.

7

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

8

The origin of Tsumura’s founding is Chujoto, a medicine for women.
During the Meiji era access to medical care was difficult.
It was during this time that women, who were the weak members ofsociety, came to depend on Chujoto.

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

The goal was to create a business that was an integral part of society’s
public interest.
This centered on the idea that if women, the center of every
household, were healthy and energetic, then all the members of thefamily would be healthy and energetic, and this would thereby result ina vibrant and emotionally fulfilling society.

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

The roots of our philosophy management stem from our corporate
value and mission.
“Kampo is not ‘unscientific.' It has ‘yet to be scientifically verified.’”This belief is the basis of our corporate value.
“We aim to achieve harmony (Cho-Wa) by leveraging thecharacteristics of Kampo and Western medicine, respectively.”This is the origin of our corporate mission.

10

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

11

Next is the key message of our Sustainability Vision.

11

Living with nature for tomorrow.

©2022 TSUMURA & CO. All Rights Reserved.

12

Living with nature for tomorrow.
The zest for life is the ability to live symbiotically with nature and tobenefit from the blessing of nature.
We aim to pass this “zest for life” on to future generations.

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

13

This is our Long-term Vision for the next decade.

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

TSUMURA VISION “Cho-WA” 2031
The theme of this vision is “Cho-WA: Creating a Future of Harmony.”
The goal is to realize a future that achieves “Cho-Wa” (harmony)
between mind and body, and individuals and society by implementing
the 3 Ps shown here.

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

I will explain the details of our long-term management vision.

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

First, let’s review Vision 2021.

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

As shown in this slide, these were the goals that we aimed for in
Vision 2021.

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

I will cover the following items shown here which outline the results of
Vision 2021, the remaining issues and our preparations for the next
vision.

18

Vision 2021 Management Indicators (FY2012 - FY2021)
Sales

Operating profit(¥100 million)

1,400(¥100 million)

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 applied

19

First, these are the trends for management indicators, sales, operating
profits and ROE under Vision 2021.
The issue is improvement to our ROE.

19

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

In “1. Expansion of the Kampo Market and Stable Growth,” weprimarily tackled the three strategic issues to realize thesetting/environment shown here.

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

Post-graduation
Kampo medicine seminars

Postgraduate educational hospital (incl.
university hospitals)

University school of medicine/medical schools

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

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

We are implementing ongoing support for Kampo Medicine Educationin line with the scheme shown here.

211.-➊-2 Trends in Kampo Medicine Training at University School of
Medicine
80大学 80大学(Universities)

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大学 80大学 80大学 80大学 80大学 80大学 80大学

80
72

79

80

80

80

79

81大学 81大学 82大学 82大学 (Universities)

80

80

78

72

79

50

54

67

63

68 60

68

58
51 54
46

46

47

46
43

42

37

40

18

■Universities teaching Kampo medicine ■Universities requiring more than 8 classes■ *3■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
2016 Japan Kampo Medicine Education Foundation (JKME) established2015 JACME*2 established/certified (2017 onward)*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

The graph outlines trends for the implementation of Kampo Medicine
Education for undergraduate work at a university’s school of medicine.
The ratio of clinical physicians that took Kampo Medicine Education willrapidly increase.

221.-➊-3 Current Trends in FY2021 for Kampo Medicine Education at
University School of Medicine
Offering education on
Kampo

4 or moreclasses

100%

89.0%

95.1%

82 universities

73 universities

78 universities

8 or moreclasses

In-school teaching staff
training system

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

These are levels in FY2021.
We believe clinical training is as issue, as opposed to the number ofclassroom lectures.

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
育育

Rikkunshito
G+ Associated formulations
育

Daikenchuto

G

Hochuekkito

Peripheral symptoms
in patients withcardiovasculardiseasesG

Goreisan

Women’shealth（Supportive
care）

Digestive systemdiseases

Yokukansan+ Associated formulations

Write-ups in dissertations,presentations atconferences, evidencebuilding

CancerGeriatric healthRespiratory diseases

Mitigation of side effects,
etc.

Bakumondoto

育

Rikkunshito

育

Hangeshashinto

育

Goshajinkigan+ Associated formulations

Diseases specific towomen
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 thei r pharmacological actions©2022 TSUMURA & CO. All Rights Reserved.

24

Given that it is being pointed out that there is “no evidence backing
Kampo,”
from 2004 we have pushed forward evidence collection and building as
a part of our drug-fostering program.
As progress is made in evidence-backed Kampo treatments,
we are seeing write-ups in treatment guidelines, mainly for the threeimportant domains, and drug-fostering/growing formulations.
According, the “standardization of Kampo treatments” is expanding.

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

In 2021, there were write-ups for 112 formulations in the 108
treatment guidelines.
The issue ahead is to further boost recommendations for the use of
these Kampo formulations in treatments.

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 physicia n 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

The next issues is it the percentage of “physicians that write 10 ormore prescriptions.”
In FY2011, the percentage was 7.5%.
The percentage is expected to have reached 25.2% in FY2021.
The issue is speeding up this growth using digital tools.

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

Regarding this slide, “2. Strengthen Profit Margins—Cost Structure
Reforms—,”
to achieve the setting/environment to be realized,
we undertook strategic issues in procurement, production and sales,
respectively.

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

市場トレンドMarket price index

2020

2021

(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 gra sp 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 ed ucation/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

In procurement, we built a system that procures high-quality andhigh-value crude drugs more advantageously and stably than themarket owing to the expansion of “proprietarily managed fields.”
An issue is the systematic expansion of cultivated hectares and items,
in tandem with the growth of the China Business.

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

In production, we realizes the automation/robotization of all
production processes by gradually strengthening production capacity
and introducing new production technologies, including robotics.
An issue going forward is the smartification of factories throughintroduction and expansion at all production bases and by realizing
automation, including oversight functions.

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

In sales, the rate of decline in NHI drug prices is tapering reflecting
ongoing demand for Tsumura Kampo value and written proposals fromthe study group on the Future Vision for Kampo Medicines.
This issue is whether we will be able to maintain NHI drug prices.

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

As shown in the slide “3. Development of TU-100 in the US andTackling New Businesses in China,” we implemented the following.
Given development in the US was unprecedented for our company, thiswas an extremely difficult challenge for Tsumura.
At present, we aim to employ the use of TU-100 Daikenchuto for POI
treatment, and issue for the time being is deriving positive results forthe late-stage phase-II trial by 2024.
We will explain the China business later on but the issue at hand is tobuild a foundation for the traditional Chinese medicine business,
mainly for classical prescription formulations.

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

We are reaping results to achieve the setting/environment to berealized in the slide titled “4. Philosophy and Vision Management.”
This including implementing and instilling backcasting management,
steadily moving forward with human resources education/training, andappointing qualified candidates to the position of executive.

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

To realize the setting/environment described in the slide titled “5. ESG
Management,”
in the environmental front we are continuing to preserve resources
and cultivate wild crude drugs.
In society, we are increasing people’s access to Kampo medicine,which is both a traditional medicine and pharmaceutical derived fromnatural ingredients.
In the field of governance, we are continuing to take measures toimprove the effectiveness of the Board of Directors, which iscomprised of a majority of outside directors.

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

We expect to achieve the numerical targets in Vision 2021, the 3rd
Medium-Term Management Plan. We are aiming for the earnings
forecasts shown here.

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

Next I will explain the Sustainability Vision.

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
・Alleviate workload using AI-driven automated crude drug selection

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

・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 a nd mental stress (disorders) so thatanyone can enjoy a more comfortable life.

©2022 TSUMURA & CO. All Rights Reserved.

36

We are promoting a sustainable natural environment and taking ascientific approach toward natural blessings to continue to provide
shared value with society.
To this end, we plan to continue to implement the following:
The acceleration of the domestication of crude drugs and automationof processing procedures;the continued procurement of crude drugs based on our human rights
and procurement policies; and the implementation of Diversity andInclusion.

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

The materiality of implementing sustainability is as shown.
We aim to create values to be shared with society based on the CSV
concept.
We also plan to fortify a common foundation with society, as a CSR
measure.

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【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.

©2022 TSUMURA & CO. All Rights Reserved.

38

The sustainability targets for FY2031 are a 50% reduction in GHG
emissions; conversion to eco-friendly packaging; and recycling water andwaste (crude drug residue).
We plan to attain these goals through the milestones shown here.

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

We aim to secure evaluations and certifications via the proceduresshown here to garner an objective evaluation of our sustainability
initiatives.

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

Next, I will explain the TSUMURA VISION, “Cho-WA” 2031.

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(Personalized)(Prevent change inexisting disease)©2022 TSUMURA & CO. All Rights Reserved.

41

To embody our purpose, in the Vision for 2031, we aim to create
conditions conducive for contributing to the well-being of people byproviding evidence-based products and services, including Kampo
medicines and traditional Chinese medicines that suit various factors,
including individual life stages, symptoms, genetic makeup and daily
life environment.

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

These are six main goals to be realized in Vision 2031.

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 physicia n 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

Firstly, the following are conditions we need to achieve to contribute 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.
50% or more of physicians that will write 10 or more Kampo
formulation prescriptions by FY2024

50% or more of physicians that will write 10 or more Kampo
formulation prescriptions for all treatment areas from FY2027, as
indicated on the next slide.
We target a rapid improvement in activities to supply information byusing DX solutions.

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

As shown, the number of basic prescriptions for treatment areas exceeds
10 prescriptions.

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

Secondly, to expand standardized treatments that use Kampo medicine,
we aim to increase the accumulation of evidence for treatment
guideline write-ups and to realize the personalization of Kampo
medicine. To this end, we plan to implement responder marker
research using KAMPOmics and develop an AI Kampo medical exam
support system using DX solutions.
We will explain KAMPOmics latter on.

45

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

Prevent
relapses(Post-healing
recovery)
Improve treatment
prognosis and QOL toprevent a relapse so thatthe patient can fully
rehabilitate and get backto society©2022 TSUMURA & CO. All Rights Reserved.

46

Thirdly, we aim to develop a Kampo treatment for “pre-symptomatic”
diseases on a scientific basis.
We will contribute Kampo and traditional Chinese medicines for use in
the “three preventive measures: pre-symptomatic (prevention),prevention of diseases from becoming serious (prevent changes inexisting diseases) and prevention of relapses (post-healing recovery).
In addition, in healthcare (prevention), we will provide support,
including for nutrition, exercise and sleep, with products and services
that are based on the Yakushokudogen concept. Through this, we willcontribute to better health by enhancing natural healing powers.

46

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

FY2022～FY2024

2nd medium-term management plan

3rd medium-term management plan

FY2025～FY2027

FY2028～FY2031

Research phase

Development phase

Social implementation
phase

Gather/analyze information

Research to verify efficacy

FY2021

Propose biomarker
hypothesis

Elderly

Cancer

geneA
geneB
geneC
geneD

Women

Administer
Kampo

Comprehensive
analysis

Apply to exams andadministration of medicine
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

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 recommendations©2022 TSUMURA & CO. All Rights Reserved.

47

In the scientific analysis of pre-symptomatic diseases, we plan toimplement the following in stages, scientifically analyze presymptomatic diseases and define pre-symptomatic conditions, develop
a pre-symptomatic disease detection system, and establish a presymptomatic exam method and recommend a Kampo treatment
method.

47

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

KAMPOmics is Tsumura’s proprietary research package. In combination
with research of advanced technologies accrued thus far, this will
provide a comprehensive understanding of Kampo medicine and multicomponent, complex Kampo medicines.

48

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

2nd 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.)

Visualexam

Listening/smelling
exam

Question
naire

Pulse
exam

3rd medium-term management plan

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

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✓ 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.

©2022 TSUMURA & CO. All Rights Reserved.

49

To realize the personalization of Kampo medicine, we plan to jointly
develop an AI Kampo medical exam support system with academia
using DX solutions and KAMPOmics.
We aim to commercialize this system through research, development
and social implementation.
This will be explained in detail later by Akihito Konda, Executive Officer
and head of the Kampo Research & Development Division.

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

Fourthly, we are currently in M&A negotiations in the formulation
platform to build foundations for the China business.
Co-COO Toda, Chief Representative in China will explain this later on.
In addition, in the field of healthcare (prevention),Given the risk ofside-effects of pharmaceuticals, we plan to push forward in the crude
drug-based food category, reflecting the Yakushokudogen concept.

Moving forward, we are currently carrying out marketing, to facilitate
the development of high value-added products, and to make products
acceptable in markets in both China and Japan.

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

Recommend◆Analyze areas people do not notice

resources, etc…

©2022 TSUMURA & CO. All Rights Reserved.

51

Fifth, we aim to provide optimal customer experiences by digitalizing
the Kampo value chain.
In the sales front, we plan to undertake actions that will allow us toprovide information required by individual medical practitioners at theright time using the necessary method.

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.)

Implement additional
measures using cuttingedge technologies©2022 TSUMURA & CO. All Rights Reserved.

Smartification of factories

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

52

We aim for low-cost operations by realizing the smartification offactories through their enhancement via further improvement in thecapital intensity of labor and by using Big Data related to production
and quality.

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 capacity
53

We aim for low-cost operations in the supply chain. We are alreadydeveloping an AI-driven device to automatically select crude drugs.
First we aim to realize a substantial reduction in worker headcount andboost the efficiency of selecting operations within the group by making
the device capable of handling crude drugs, which are comprised ofdifferent shapes and quality.

53

6.-１ TSUMURA Group DNA Pyramid

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

54

Sixth, as shown, we plan to revamp the Tsumura Group DNA pyramid. We
will continue to implement purpose, philosophy and vision management.

54

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

55

We are continuing to target the image of “ideal personnel being sought.”
As a source for creating corporate value,
we aim to continue to aggressively invest in human resources andorganizational capital,
mainly the Tsumura Academy, an in-house human resources development
institution.
This ends my portion of this presentation.

55

Research & Development Vision

March 29, 2022

Hello. My name is Akihito Konda, head of Kampo R&D.
I will brief you on the R&D vision.

56

Agenda1. Review of Activities Thus Far

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

57

I will start by reviewing the activities carried out thus far.

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

Start of drugfostering program (3formulations)

43 Rikkunshito
54 Yokukansan
100 Daikenchuto

2011

2017

2021

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 ofscientific bases for
Kampo treatments”

2009◆Describe “Kampo” in the model core curriculum（2011 onward）◆Scientific study of Kampo©2022 TSUMURA & CO. All Rights Reserved.

(published in 2017)58

Tsumura launched its drug-fostering program from 2004. Drugfostering is carried by Tsumura in areas with high healthcare needs.
We narrow down and build evidence for diseases for which it is difficult
to find new drug treatments and where Kampo will have a specificeffect. Through our drug-fostering research, we poured energies into
problem-solving to address the absence of a scientific foundation for
Kampo treatments, which is believed to be the main reason physicians
do not use Kampo.
Owing to our activities, we accumulated a great number of evidence
from the standpoint of efficacy and safety, mainly for the three drugfostering formulations, and were able to build a foundation,
underpinned mainly by the “rapid expansion of the quantity and qualityof write-ups in treatment guidelines,” “write-ups on Kampo in the
education model core curriculum, mainly at medical, dentistry,
pharmacy, and nursing schools,” and the publishing of the Kampo
Science Visual Review, which is a pamphlet that summarizes Kampo
evidence. This is aiding in gaining the understanding of certain
physicians regarding the use of Kampo formulations as a “standard
treatment.”

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

2016

2017

2018

2019

2020

©2022 TSUMURA & CO. All Rights Reserved.

59

Looking at the correlation between these drug-fostering research
activities and sales, comparing the growth rate of the three drugfostering Kampo formulations and all pharmaceutical products
excluding the three drug-fostering Kampo formulations, we can seethat there was a disparity in the growth rate of 2.2-times during a 17year period from 2004, the year the drug-fostering program waslaunched. This can also be interpreted as the three drug-fostering
Kampo formulations being growth drivers. At the same time, we canalso take this to mean that a foundation is being built as Kampo
formulations being used as standard treatments to a certain extent.

59

Agenda1. Review of Activities Thus Far

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

60

Taking these factors into account, I will now cover the “Research &Development Vision” in the latter part of this presentation.

60

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

Digestive systemdiseases

育 Yokukansan

育 Rikkunshito

G Bakumondoto

育 Daikenchuto+ Associated formulations

1. Propose new “treatment” methods

Respiratory diseases—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
Hangeshashinto

育

Goshajinkigan+ Associated formulations*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

育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

Under the R&D Vision, in addition to building an infrastructure forstandard treatments using Kampo, a measure we have undertaken
thus far, we also plan to further enhance this by pouring energies into
the “proposal of new treatment methods (tackling personalized
medicine)” and by “taking on the pre-symptomatic disease domain.”61

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

Digestive systemdiseases

育 Yokukansan

育 Rikkunshito

1. Propose new “treatment” methods

Respiratory diseases

G
育 Daikenchuto+ Associated formulations—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
Hangeshashinto

育

Goshajinkigan+ Associated formulations*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

育*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

In particular, to propose new treatment methods, we plan to pourenergies into accelerating “activities targeting personalized medicine”
to realize a world where individuals can receive optimal Kampo
treatment, specifically the “scientific study of personalized medicine”
leveraging multi-component analysis technologies and thedevelopment of a “Kampo medical exam support system” that utilizes
DX and AI technologies.

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 Enzymes

RNA

LipidsDNA･･･

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

Receptors, etc.

≪Cutting-edge technology≫

・Systems biology
・Bioinformatics
・Data science, etc.

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
Nishiyama M, et al., Nutrients. 2020 Mar
20;12(3):839. doi: 10.3390/nu12030839.

©2022 TSUMURA & CO. All Rights Reserved.

63

In “activities targeting personalized medicine,” we plan to utilize our multicomponent analysis technology (KAMPOmics), which is also one of Tsumura’s
strengths.
For instance, in Western medicine, selective medical efficacy is shown by using asingle substance drug. Meanwhile, Kampo, which is a multi-component drug,
displays multiple effects. In addition, in the case of multi-component drugs,
absorption, metabolization, and conversion within the body differs depending on theindividual. Consequently, by utilizing the accumulated results that are obtained froma multi-component drug, it is possible to more easily address the individual
characteristics of a patient.
By making maximum use of Tsumura’s proprietary, cutting-edge technical research
package (KAMPOmics), we will get a clearer clinical presentation of a drug’s efficacy,
in other words the responder, resulting in the realization of scientific evidence. This
will make it easier for physicians to administer Kampo to more patients and also leadto a rapid improvement in usability. This in turn will contribute to the use of Kampo
in even more patients.
One example is that we are gradually understanding “the correlation between
intestinal flora and Kampo” and “the correlation between intestinal flora and thebenefits of Kampo.” For patients in which a certain type of Kampo tends to beeffective, we are able to envisage a certain spectrum and combination of intestinal
flora.

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.

ライド修正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

Consider using the “Kampo medical
exam support system” for formulation©2022 TSUMURA & CO. All Rights Reserved.
recommendations⚫ “Qi/blood/fluid” exam support64

Next, we aim to tackle personalized medicine by developing a “Kampo medical exam support
system” that utilizes DX and AI technologies.
In the current Kampo treatments, four examinations (visual, listening/smelling, aquestionnaire, and palpation) are carried out based on Kampo medicine. However, these
Kampo medical exams are “slightly” within the area of expertise of a physician specializing in
Kampo medicine. In light of this, there are several issues obstructing advances in personalized
medicine, including impact due to the level of proficiency in Kampo medicine and an increasein the time it takes to conduct a medical exam (medical cost). Furthermore, going forward,
other crucial factors including compatibility with online medical exams and regional medical
collaborations between hospitals and clinics.
The deployment of the Kampo automated medical exam support system is gaining attention
as one solution to remedying these types of issues. In a clinical setting, this system
accumulates Kampo exam questionnaire data and other information into the AI to derive an
optimal solution, mainly for a Kampo diagnosis and Kampo prescription. In an actual medical
consultation, the patient responds to a physician’s questions addressed to the patient from theperspective of Kampo medicine, and these responses are then matched with the physician’s
findings and opinions. This is then finally fed to an AI-powered system so it can learn. The
outcome is an AI-driven system that can automatically make a Kampo diagnosis.
The more precision the system becomes, the current “slightly” specialized area of Kampo
diagnostic technologies will become mainstream (generalized). Even those physicians still
early on in their career of making Kampo diagnoses will be able to properly using Kampo thatsuits each individual and be able to apply this to the evaluation of benefits as well as to otherareas. We believe this will contribute supporting the diagnoses conducted by a wide range ofdoctors and not be kept within the realm of merely experiencing those experiences of Kampo
specialists and being taught in an oral tradition.

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

As a future development, we aim to complete various research,
verification and implementations related to the “building of a Kampo
exam support system” over the next ten years.
In addition, we are also considering the broader development of theseactions as well as their spread in the field of “education.” Our vision is
to “realize a world where individuals can receive the optimal Kampo
treatment.”

65

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

Digestive systemdiseases

育 Yokukansan

育 Rikkunshito

G Bakumondoto

育 Daikenchuto+ Associated formulations

1. Propose new “treatment” methods

Respiratory diseases—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
Hangeshashinto

育

Goshajinkigan+ Associated formulations*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

育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

Next, I will introduce our activities in “tackling the area of presymptomatic diseases.” In particular, I will provide a glimpse ofactivities that target the prevention of pre-symptomatic diseases,
preventing diseases from becoming serious, and preventing relapses,
mainly diseases related to aging.

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)

Healthy

Vitality

Pre-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

The number of patients suffering from frailty, which is one disease
related to aging, is expected to reach 3.15 million in 2031. The
number of people that are in the pre-frail category, which is the stage
before frail and candidates for becoming frail, is anticipated to climb to19.39 million. This is an increase of around 6-times the number of frail
people.
Frailty is said to be “reversible.” In light of this, we believe we canscientifically assess the shift between pre-frail and frail, in other words,
between pre-symptomatic and suspicious changes.
This falls in line with the concept of “kidney ischemia” (as viewed from
Kampo medicine. We believe this has a high affinity with the aging
syndrome, which includes frailty. In light of this, taking into accountthe correlation between the kidney ischemia score and frailty score, we
believe it is possible to scientifically define this pre-symptomatic
disease by developing a new scale, the Japan Frailty Scale (JFS), which
includes better precision and conducts validation, and confirms theobtained clinical results.

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

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 workplace©2022 TSUMURA & CO. All Rights Reserved.

68

I will prove another example. This has to do with research related to genes. This time around,
I used the aging promotion model as an image. This is called intron retention. This research ison the visualization primarily of the frequency of errors in gene reading. In this research, theaccelerated aging mouse, in comparison with the normal mouse, a phenomenon occurs
whereby some type of waste is compiled between genes. This results in intron retention.
Looking at this pre-symptomatic disease and suspicious changes scientifically, we began tohypothesize whether we could use this as a yardstick, a type of pre-symptomatic indicator. At
the same time, we also theorized whether some type of Kampo could be used to improve thiscondition.

Provisionally, we believe that this could not only be used for visualization and the practicalgeneralization in the area of treatment, but has also led us to focus on the substantial
potential of the pre-symptomatic disease market.
Naturally, research on pre-symptomatic diseases is an untried area therefore we do not know
to what extent we can actually carry out research. However, I believe that this is a challengethat Tsumura should tackle given our many years of experience in multi-component
substances. We are actually, slowly but surely, carrying out research and are starting to feel
confident about our research.
In intron retention research, going forward we will need to verify our finding from basic toclinical. There are also tailwinds from increasing attention on scientific research related to presymptomatic diseases. In summer 2022, GENE, an academic journal specializing in genes, isplanning to publish a feature article on Kampo, which also covers pre-symptomatic diseases.

68Diseases related to “Aging”: Develop Pre-Symptomatic Indicator andRecommend Treatment Methods
1st Medium-Term Management Plan

2nd Medium-Term Management Plan

(2022～2024)(2025～2027)

3rd Medium-Term Management Plan
(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

Establish an exam method for presymptomatic prevention, prevent a
disease from becoming serious,and preventing a relapse
Recommend methods for Kampo
treatment©2022 TSUMURA & CO. All Rights Reserved.

69

As I start to gradually conclude my portion of this presentation, weplan to utilize our multi-component analysis technology to makeprogress in the clarification of the in-depth drug efficacy of Kampo, amulti-component drug, and are internally accumulating an integrated
understanding as knowhow.
Going forward, we plan to leverage Tsumura’s strengths, in otherwords this accumulated knowhow, to favorably push forward with the
exploration of new domains. By doing so, we are envisaging theinnovative social implementation of a pre-symptomatic diseasebusiness, which we have been focusing on. As a schedule, over the
next 10 years, we plan to build a pre-symptomatic disease
improvement system. We aim to make it a major pillar for entering the
pre-symptomatic disease market.

69

Outlook
2004

2011

2009

2021

2017

RCT
*Randomized
Controlled Trial

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(Initiatives for personalized medicine)

Evidence
package

Propose new treatment methods

Start drug-fostering

Accrue basic and clinical evidence

Build infrastructure for standard
treatments

Addressing the issue of“Kampo formulations
have no scientificbasis”

2022 onward(Published in 2017)©2022 TSUMURA & CO. All Rights Reserved.

70

As I mentioned earlier, in addition to building an infrastructure forstandard treatments using Kampo, we also plan to move forward
toward our vision by “proposing new treatment methods (tacklingpersonalized medicine)” and “taking on the pre-symptomatic diseasedomain.”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

In implementing the “TSUMURA Vision: “Cho-WA” 2031, the R&D
vision focuses on contributing to the realization of a society that is
healthy and full of hope, and which is close-knit to the life stages ofmany people pivoting around Kampo.
This ends my portion of this presentation.

71

China Business Vision

March 29, 2022

My name is Koin Toda.
I will present the China Business Vision.

72

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

The goal of the China Business is to “contribute to the health of thecitizens of China” and to “stably procure and supply raw material crude
drugs.”
We aim to become a traditional Chinese medicine company operatingin the market in China by combining our “quality, technology andexperience” nurtured from Tsumura’s cultivation of raw material crude
drugs and the production of Kampo formulations with the customer
base and medical online platform possessed by China Ping An
Insurance (Group).
In 2017, we are aiming to foster Ping An Tsumura, a joint venture
established with the Ping An Insurance Group, as the No. 1 brand in
traditional Chinese medicine.

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

About

Japan

40x

80000

About

600x

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

The market in China boasts both scale and opportunity.
As shown, the traditional Chinese medicine market in China is large in scale,in comparison with the Kampo market in Japan. And recently, thegovernment in China has been hammering out many policies related to
traditional Chinese medicine. In January 2022, the government announced
the “14th Five-Year Plan for China’s Pharmaceutical Industry.” This includes apolicy to strengthen initiatives for moving forward with R&D in traditional
Chinese medicine and improving technology, quality and production levels.

The attitudes of the citizens of China and in the industry itself are changing.
Even in China, citizens have become more heath conscious owing to COVID19 and are also showing an improved recognition of traditional Chinese
medicines.
In addition, regarding pharmaceuticals covered by insurance, while prices arebeing curbed through the use of centralized purchasing, demand for OTCs, inother words pharmaceuticals not covered by insurance, is rising due to anincrease in commercial insurance policyholders.
As this indicates, the growth rate of the traditional Chinese medicine industry
is high, and we see this as a major opportunity for the Tsumura Group.

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

Traditional Chinese
Medicine ResearchCenter©2022 TSUMURA & CO. All Rights Reserved.

75

In the China Business, we plan to deploy three platforms. They are theformulation, crude drug and research platforms.
The formulation platform will be responsible for sales andmanufacturing functions for traditional Chinese medicines formulated
from raw material crude drugs.
The crude drug platform will be responsible for sales andmanufacturing functions, mainly for raw material crude drugs, drug
pieces and Yakushokudogen products.
In the research platform, we aim to establish quality standards for theentire supply chain, from crude drug seedlings to final products.
We will explain the details of each platform later on.

75

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

I will now discuss the milestones for each platform over the next 10 years.
The formulation platform solely deals in the production and sales of powdered extracts, anintermediate product for business operations in Japan. Going forward, we plan to enter the
traditional Chinese medicine market by acquiring traditional Chinese medicine companies andby applying for permits to launch classical prescriptions on the market. Meanwhile, we plan torealize M&A deals without fail by 2024. Following this, we plan to build a sales foundation in
the market in China to expand the scale of external sales to 50%-plus of total sales, become
one of the top 10 companies in the industry in the sales of traditional Chinese medicine,
mainly classically prescriptions, and to become the primary selection of citizens in China when
they purchase classical prescriptions. In the long run, we envisage sales of RMB7.0 billion.
In the crude drug platform, we are aiming to expand the ratio of external sale to 50%-plus of
total sales, mainly for raw material crude drugs, drug pieces and Yakushokudogen products.
Following this, we plan to expand sales channels, which including concluding M&A deals. Our
goals is to become a crude drug and drug piece company, with a leading share of the market
in China and which leads the growth of the industry. We estimate sales in the long term of
RMB3.0 billion-plus.
In the research platform, on top of establishing the Traditional Chinese Medicine ResearchCenter, we plan to expand functions successively, including R&D and analysis assessment. In
the future, we aim to become an R&D unit that builds evidence packages for traditional
Chinese medicine.

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

From here, I will explain the details of the each platform.
First, the formulation platform targets classical prescriptions, which is a mountain oftreasure. This platform will contribute to the health and medical care of the citizensof China through the stable supply of products that are safe, homogeneous andeffective.
I will explain why we are pouring energies into classical prescriptions from among
traditional Chinese medicine.

Classical prescriptions are written in ancient texts, such as the Classified Formulafrom Treatise on Cold Damage (Shanghanlun), which was edited several thousand
years ago. These formulations have been used for many years but in modern-day
China, the frequency of use has dropped and are not listed in the Pharmacopoeia of
the People's Republic of China. These formulations are literally hidden away in theseancient texts. We aim to pass on these classical prescriptions and develop themfurther. In recent years, the Chinese government, as a policy, has been promoting
the R&D and pharmaceutical registration of these classical prescriptions.
These classical prescriptions are similar to Tsumura’s Kampo formulations. In light of
this, by entering the market through the use of its knowhow and experiences,including Tsumura quality, evidence-building and production technologies, we aim tobecome a traditional Chinese medicine company that is trusted in China.

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

This is the trajectory for the formulation platform.
First, to enter the market, we plan to carry out M&A deals withcompanies that possess classical prescriptions and to apply for their
new launch onto the market.
Along with the Ping An Insurance Group, we plan to ascertain thevaluation and compliance of potential M&A candidates while exploringand negotiating with these candidates.
After acquiring classical prescriptions, we aim to further improve thequality of these formulations and build evidence to establish a brand.
For example, in Japan Yokukansan is mainly prescribed for childrenthat cry at night. By building evidence for this formulation, we are now
able to prescribe this formulation to help with the peripheral symptoms
of dementia.
In China as well, we aim to expand sales, mainly in the open price OTC
market, which includes online medical exam platforms and commercial
insurance channels that target customers seeking high-quality,
evidence-backed formulations.

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

Next is the crude drug platform.
Gang Li, CEO of Ping An Tsumura Pharmaceutical will present the crude
drug platform vision and the outlook for this platform.
Li is experienced as a member of top management at state-owned,
leading pharmaceutical company and has experience carrying out thecrude drug business in China.
At present, he is responsible for operating the crude drug platform. He
is working to achieve stable supply to Japan of raw material crude
drugs and is pushing to expand external sales, mainly of raw material
crude drugs and drug pieces.
Today he will present information on this platform from Beijing.

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

My name is Gang Li. Thank you for the introduction.
I will also explain the crude drug platform from my perspective.
The crude drug platform handles high quality crude drugs, drug pieces and Yakushokudogen products,
and carries out the cultivation, processing, quality tests, storage, sales and services of crude drugs.
The goal of this vision is to lead the industry and grow into a traditional Chinese medicine and healthcarecompany that is top level globally, through the stable supply and branding of high-quality crude drugs,
drug pieces and Yakushokudogen products by fully utilizing existing resources.
At present, we are endowed with various opportunities. The standard of living of the citizens of China is
continuing to improve in tandem with the ongoing development of China’s economy. In addition, thedemand among China’s citizens is growing daily for products and services related mainly to medical andhealthcare. Traditional Chinese medicine is vital in securing the health of China’s citizens. Moreover, thescale of the market for crude drugs and drug pieces, which are the raw materials for traditional Chinese
medicine, is continually expanding.
Also, according to statistical data, in FY2020 the market for drug pieces was valued at RMB178.2 billion(approx. JPY3.2 trillion), making it a fairly large market. Regulatory authorities in China are strengthening
their oversight of quality.
Strict demands were issued in the 2020 version of the Pharmacopoeia of the People's Republic of China,
which is equivalent to the Japanese Pharmacopoeia. A policy was set to sell high-quality products at a
price commensurate with its high quality. Furthermore, on top of improving health awareness among thecitizens of China and trust in traditional Chinese medicines, demand for products related to traditional
Chinese medicines is also rising.
The crude drug platform possesses large-scale cultivation bases in various areas in China, which is anedge. Tsumura’s GACP is being thoroughly implemented at all bases and traceability is being realized in all
the crude drug production processes. In addition to pouring energies into the provision of technicalguidance regarding cultivation and processing, and into the improvement of production quantity andproductivity, research is being carried out on issues related to certain items.
The platform produces high-quality drug pieces made from high-quality crude drugs cultivated at thesebases. China Medico and refined Chinese drug pieces have already garnered a certain degree of namerecognition in the domains of high-quality crude drugs and drug pieces owing to its many years ofexperience and marketing activities.
Moreover, the crude drug platform has also ranked No. 1 for many consecutive years in the ranking for
crude drug and drug piece exports from China. And it also continues to maintain its No. 1 position in theimport ranking for many years for items such as ginseng.

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

For sales not to the Tsumura Group, we aim to realize an externalsales ratio of 50%-plus by 2024.
In 2031, we envisage sales of RMB3.0 billion-plus (more than JPY54.0
billion) and a CAGR of 17%.
Our goal is to grow into a traditional Chinese medicine healthcarecompany with a No. 1 share of the market in China and which will leadindustry development.

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

The following is the trajectory for the crude drug platform to realize the vision we presented earlier.
The basic model for raw material crude drugs is to provide the best solution related to crude drugs.
Leveraging technologies that overlap with the quality management system, we plan to improve the qualityof crude drugs by supporting solutions for issues faced by contract farmers as well as non-group
customers. We aim to become a leading company in the crude drug industry, including a leader in theestablishment of industry standards.
Among sales items, ginseng is a mainstay raw material crude drug. We aim to further enhance thesuperiority of ginseng. Along with an expansion in market share, we plan to foster products such as
ginseng that will have an edge over rival products in quality, transaction volume and price. In addition,
among superior items, we will develop products with a high added value. We will leverage brand benefits
nurtured via BtoB to expand sales to general consumers.
We are pouring energies into drug pieces in particular. In addition to increasing our advantageous positionin sales to private-sector medical institutions, we aim to build our position as a leading company in highquality drug pieces by fortifying our brand of refined Chinese drug pieces, mainly key products, throughthe further expansion of online and public hospital sales channels. Taking advantage of the developmentof online services and the medical and healthcare industries, we will contribute to personalized medicine,by providing value-added services through drug piece services. Also, we will realize rapid expansion ofsales channels, human resources, and the scale of sales through M&A deals.
In Yakushokudogen products, we plan to develop high value-added products that suit the healthcare
needs of citizens in China by collaborating with Tsumura using superior crude drugs.
We also aim to achieve rapid growth in sales by utilizing market opportunities while building a brand by
expanding sales via China Ping An Insurance channels using resources accumulated over many years in
the traditional Chinese medicine industry.

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 exam
83

I will now explain the details of medical drug pieces, a crucial product group in the crude drug
platform.
Medical drug pieces are exhibiting the highest level of growth in sales by utilizing the superiorof the value chain for the crude drug platform at all stages, from cultivation bases to quality
system, cost, brand, product technology, and up to value-added services.
We are providing consumers with drug pieces and value-added related services through public
and private-sector hospitals and online clinics.
The issue with drug pieces is that after they are prescribed by a doctor, the patient must takethe drug pieces home where they must then boil the drug pieces and drink the liquid as adecoction. This is the general method of use. Having to boil the drug pieces and the fact thatthey are not portable are the issues patient face.
We are providing services on behalf the patient, including decoction. We are suiting the needsof patients by utilizing modern technologies and cutting-edge facilities and production
processes.
By boiling the drug pieces using cutting-edge facilities on behalf of the patient, it is possible tostably extract substances from the drug pieces and is expected to stabilize efficacy.
In addition, we realized an OTO method by which the drug pieces can be ordered online andhome delivered. In the future, low-cost production will be possible by large-scale production.
The criteria for M&A are shown in the slide. We plan to acquire in stages two drug piececompanies that have a certain scale of sales, superior marketing team and whose main sales
channels are public hospitals. Through this, we aim to realize a rapid expansion in sales byentering the public hospital market and developing key areas, including the Beijing/Tianjin
regions, Pearl River Delta region, and the Yangtze River Delta region.

This ends my portion of the presentation.

83

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

My name is Koin Toda. I will explain the Research Platform.
The research platform will be established to utilize the quality control
technologies and knowledge accumulated over many years by
Tsumura through crude drug and Kampo research, not only in business
operations in Japan but China as well.
We plan to promote quality research based on evidence and to build aquality space in the value chain that spans quality research, crude
drug seedlings and products.
We will use research results as “yardsticks” for assessing traditional
Chinese medicines, to detect quality issues and to provide
improvement recommendations.
We aim to become a presence that will lead the traditional Chinese
medicine industry by standardizing quality and solving issues andcontribute to the expansion of the China business by brand building
and improving product recognition.

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

Medicalinstitution

Pharmacy

Customer©2022 TSUMURA & CO. All Rights Reserved.

85

I will give a simple introduction of the research platform structure.
The research platform, as Big Data, is accumulating quality andtechnical information in areas from upstream to downstream in thevalue chain. This information is analyzed and contribution is made to
an improvement in the quality of raw material crude drugs and final
products by supplying information and technology to each site.
We also plan to propose traditional Chinese medicine quality standards
and a quality evaluation scale to parties outside Tsumura as we aim toundertake an improvement in the level of traditional Chinese medicine
industry overall.

85

Supporting the Development of the China Business through thePing An Insurance Group
CareerAssistant General Manager and head of
Private Equity, Ping An Insurance (Group)
Company of China, Ltd.

•

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.

•

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

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

86

Next, Kaipin Kui for Ping An Insurance will explain the support the Ping
An Insurance Group will provide to Ping An Tsumura Pharmaceutical.
At present, Kui is the assistant general manager of the overseas
investment company at the Ping An Insurance Group. He is also headof Private Equity.
As the Tsumura Group and as a director of Ping An Tsumura, he ismainly in charge of the China Business. Today, we will discuss the
Tsumura Group’s vision for the China Business.

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

It is good to meet you all. My name is Kaipin Kui.
Today, as a director of Ping An Tsumura, a joint venture between Tsumura and Ping An
Insurance, I would like to discuss Ping An Insurance’s ideas regarding business at Ping An
Tsumura.
The Ping An Insurance Group is one of China’s large private-sector companies, boasting thelargest business scale. The company was established in 1988 in Shenzhen, China, having
gotten its start as a small-scale non-life insurance company. Today, it is one of the leading
comprehensive financial groups in terms of scale in the world. It has also developed into a
company that boasts superior technology.
In FY2021, the Ping An Insurance Group posted total assets of around JPY180 trillion, sales ofroughly JPY20 trillion and net income of about JPY2 trillion.
In addition, the business infrastructure consists of approximately 230 million customers thathave directly purchased financial products from the company, around 650 million users that
directly access services via the Ping An Insurance internet platform, and roughly 1.5
employees, including sales agents.
The scale of business is extremely large. Ping An Insurance has a high level of trust in
Tsumura’s management and maintains a stance of not interfering with Tsumura’s
management. In addition, Ping An Insurance is not merely a financial company. It has been
actively investing in the field of technology for more than 10 years. At present, there are morethan 100,000 IT technicians in house. The company has already been garnering good resultsin AI, FinTech, and HealthcareTech to name a few areas.
This is but one example. We contributed to an improvement in sales performance of financial
product owing to the introduction of technologies, which did not just boost the efficiency of
customer service operations.
You might be wondering why I brought up the topic of technology. This is because this isrelated to the origins of the ideas both companies had when first forming this partnership. In
addition to integrating the IT technologies of Ping An Insurance with the superior technologies
of Tsumura’s Kampo, both our companies believe we want to contribute to improving thehealth of the citizens of China and to the development of standards for traditional Chinese
medicines in China.

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.

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.

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©2022 TSUMURA & CO. All Rights Reserved.

88

In addition to the technology I discussed, Ping An Insurance provides all necessary resources,
including capital and sales channels, for the Tsumura-Ping An joint venture in China.
There are five concrete initiatives described on the left-hand of the slide.
First, the provision of business capital and sales channels via the joint venture.
Second, full-fledged support of M&A activities in tandem with business expansion at the joint
venture.
Third, support of sales activities by using Ping An Good Doctor’s online channels and Ping An
Life Insurance’s off-line channels, and active support in product development.
Fourth, technological support that was discussed earlier. This is mainly the application ofimage analysis and AI technologies to the analysis of the types, DNA and quality of Kampo
materials.
Fifth, we will support ties with the government for business expansion in China. We will also
provide internal resources for negotiations with the government.
Ping An will continue to provide full-fledged support to Tsumura’s China business in a varietyof areas, including capital and sales channels, product development and sales activities in linewith consumer needs in China, the acquisition and training of personnel, and brand building.
China still has ample leeway to boost its per-capita income level. I believe that investment in
the health of China’s citizens will continue to grow going forward. In addition to thisenvironment, citizens in China are especially partial to traditional Chinese medicines. In lightof this, the Kampo market is a very appealing market. We aim to make the China Businesssuccessful by pairing up the Tsumura, which has superior Kampo technologies.

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.
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