Third Quarter Business Resultsfor Fiscal 2021

February 7, 2022
Director, and CFO

Muneki Handa

Third Quarter Business Results for FY 2021
（ Million yen ）FY 2020
3Q

FY 2021
3Q

YoY
Amount Change

FY 2021plan

88,444

98,382+9,938+11.2%

127,500

Domestic

84,57991,317+6,737+8.0%

117,800

Overseas

3,864

7,065

+3,200+82.8%

9,700

Net sales

OperatingprofitPrescription Kampo
Products

88.7%

17,235

18,829(19.5％)(19.1％)

Ordinary
profit17,811

21,074+3,262+18.3%

23,400

Profitattributable

13,226

15,389+2,162+16.4%

16,600(Operating profit
margin)Ratio to total sales+1,593+9.2%

21,100(16.5％)

to owners of parent

Other prescription
pharmaceuticals
0.4%
Healthcare
2.9%
External sales by
consolidated subsidiaries
8.0%* The 2020 results have been rearranged to the amount after applying the PPA adjustment and new accounting revenue recognition standards.

2

Key Points in Performance
Sales and profits increased due to growth in domestic and overseas sales.

Net sales

98,382

million yen＋11.2％YoY◼

Domestic sales totaled 91,317 million yen, increased 8.0% year-on-year.

◼

Sales of the 129 prescription Kampo products totaled 87,293 million yen, increased 7.6% year-on-year.

◼

Sales of healthcare products including OTC Kampo medicines totaled 2,876 million yen ,increased 12.0% year-on-year.

◼

Overseas sales totaled 7,065 million yen, increased 82.8 % year-on-year.

Operating profit
Operatingprofit margin

18,82919.1

million yen
％

YoY

＋9.1％

YoY

(0.4)pt◼

The cost-to-sales ratio was 48.8%, a climb of 1.3pts year-on-year, mainly impact of increased depreciation burden due tooperation of Ibaraki 3rd SD building, and external sales in China.

◼

The SG&A ratio totaled 32.1%, a decline of 1.3pt year-on-year, mainly impact of improvement due to sales growth.

Ordinary profit◼

21,074

million yen

YoY＋18.3％The impact of the 3Q foreign exchange gain: 1,421 million yen
Previous 3Q foreign exchange loss: 167 million yen, mainly affected by foreign exchange gains and losses.

Profit attributable to ownersof parent

15,389million yen

YoY＋16.4％
3

Factors Triggering Changes in Operating Profit (YoY)（ Million yen ）（ Million yen ）Changes in sales : ＋5,253 Breakdown
Domestic＋3,561

Overseas＋1,692（1,619）+5,253

Changes in cost-to-sales :(1,619) Breakdown（2,040）

Sales composition（Domestic）

Crude drug cost（Domestic）

Processing cost etc（Domestic）

18,82917,235

Outside sales in China（Overseas）

＋215
＋234

(1,110)(958)

Changes in SG&A expenses:(2,040) Breakdown

3Q FY 2020
Operating profit

Profit impact due Profit impact due
to changes into changes incost-to-sales
sales

Profit impact
from changes in
SG&A expenses

3Q FY 2021
Operating profit

Sales-related expense(618)

R&D expense(306)

Salary allowance

(170)

Other

(946)

4

Financial Condition/Cash Flow Position（ Million yen ）FY 2020(March 2021)

FY 2021
3Q

Change19,36817,2682,100
3,052△6,394
9,446
16,316Equity ratio

68.3％

68.7%

0.4pt

Current assets
Non-current assets

Total liabilities
Current liabilities
Non-current liabilities

Work in process
Raw materials andsupplies

87,217
8,005
14,14065,072

6,462△5,934743
11,652Financing activities

Merchandise andfinished goods

80,755
13,93913,39653,419Investing activities

Inventories

Change

＋22

670

596

Operating activities(March 2021)

FY 2021
3Q△51

Cash and cash equivalents at
beginning of period

FY 2020△75

Cash and cash
equivalents at end of
period338,432
221,541
116,890
88,946
41,986
46,960249,485+178

Impact of exchange ratetranslations

Total net assets

319,063204,273
114,789
85,894
48,38037,513
233,169

Total assets（ Hundred million yen ）5Comparison with the Prescription Pharmaceutical Market
Overall
FY 2020

FY 2019

10.0%
Prescription pharmaceutical market
Tsumura6.0%
2.0%(YoY/drug price basis)
FY 2021

7.9% 7.7%
6.6%

8.9%
2.9%

5.9%

2.3%

(2.0)%

1.6% 1.2%
0.6% 0.2%(6.0)%(10.0)%

1Q

2Q

3Q

4Q

1.4%

Gap with market

1.2% 2.2% 1.5%
2.5%

5.0%

1Q

2Q

3Q

FY 2021

FY 2020

3.8%

9.1%

7.6%

2.0% 1.6% 2.1% 1.8%

4Q

1Q(5.0)%(10.0)%

1Q

8.7% 7.5%

2Q

3Q

6.0%

(3.2)%(5.4)% (3.3)% (3.0)%(2.9)%
4Q

1Q

2Q

3Q

3Q

4Q

1Q

Increased number of
e-promotions X MR interviews and briefings

FY 2020

3Q

2.7%

4.7%

4.3%
(0.3)%(1.7)%(1.4)%

0.0%(6.0)%

2Q

4.5%

3.0%
(3.0)%FY 2021

10.5%

12.0%
9.0%

0.7% 2.3% 1.9%(1.0)%

2Q

FY 2019

3.4% 2.3%

0.0%

0.6%

（3Q only：+3.7pt）

Hospital market (HP)

7.1%

10.0%

＋4.2pt2.9%(1.9)%(1.0)%(2.5)%(5.1)%

General clinics (GP)FY 20194.2%(0.3)%
1Q

1.4%
2Q

4Q

1Q

2Q

3Q

4.1%

1.6%
3.1% 3.4% 2.7%

0.1%(0.2)%(1.5)%(2.4)%(1.9)%(4.8)%
3Q

6.4%

4Q

1Q

2Q

3Q

Strengthen e-promotion as visit restrictions continue
Copyright © 2022 IQVIA. Estimated based on IQVIA JPM Apr.2019-Dec.2021. Reprinted with permission

6

COVID-19 Related Symptoms and Prescription Opportunities
Diseases for which prescription
opportunities have increased +1.82 billion yen
PsychiatricdisordersDizziness

Skin diseases

Anxiety and insomnia

Dizziness due tophysical andpsychiatric disorders

Acne and dermatitis
due to the use ofmasks

Hangebyakujutsuten
mato
Ryokeijutsukanto(Goreisan)*Keishibukuryogankayokuinin
Jumihaidokuto
Seijobofuto
Keigairengyoto

Kamishoyosan
Kamikihito
Hangekobokuto
Saikokaryukotsuboreito
Total sales for six
formulations

Supplements

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

Trends in the monetary impact owing
to a fluctuation in prescription(Hundred million yen)opportunities (FY 2021)
20

10
5

Hochuekkito Juzentaihoto

Commoncold-relatedDiseases for which prescription
opportunities have decreased (210) million yen
Decrease in the number of respiratory disease patients due
to infection prevention measures

Kakkonto, Maobushisaishinto
Total of eight formulations including Shosaikotokakikyosekko and Kikyoto*Goreisan prescription opportunities are also increasing for treatment in areas other than dizziness therefore it has been excluded from the basis of calculations

18.2

15

11.6

5.6

0

(1.1)

(0.6)

1Q

2Q

-5

(2.1)
3Q

(Monetary figures: YoY/shipment basis)7

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

FY 2020
3Q

FY 2021
3Q

YoY

7,334 +209 +2.9%
5,678 +276 +5.1%
5,548 +380 +7.4%
2,687 +207 +8.4%+79 +8.1%
1,052
22,301 +1,153 +5.5%
5,655 +327 +6.1%
4,111 +684 +20.0%
3,692 +171 +4.9%
3,752 +401 +12.0%+37 +1.6%
2,455
19,666 +1,622 +9.0%

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

41,93445,325 +3,391+8.1%

Total sales for 129 prescription Kampo products

81,12787,293 +6,166+7.6%

Drug-fostering
program formulations

7,125
5,401
5,168
2,479
973
21,148
5,328
3,426
3,521
3,350
2,417
18,044

1

100

Daikenchuto

2

54

Yokukansan

4

43

Rikkunshito

8107

Goshajinkigan

23

14

Hangeshashinto

Total sales for drug-fostering program formulations

Growing formulations

3

41

Hochuekkito

517

Goreisan

7

68

Shakuyakukanzoto

6

24

Kamishoyosan

1029

Bakumondoto

Total sales for growing formulations* The 2020 results have been rearranged to the amount after applying new accounting revenue recognition standards.

Ratio to total sales

129
prescription

Drug-fostering program
formulations

25.6%
Growing formulations

22.5%

119 formulations other thandrug-fostering program andgrowing formulations

51.9%

8

Three Important Domains of Sales Activities◼

Positioned geriatric health; cancer (supportive care) and women’s health as the three important domains andaim to concentrate our activities in these domains◼

We plan to deploy a sales approach in the drug-fostering program formulations, growing formulations andthree important domains

Psychiatric andneurological disorders
D

YokukansanD+ related
formulations

D

Digestive systemdiseases

Respiratory diseases

Rikkunshito

G Bakumondoto

G

Peripheral symptoms forcirculatory disorders

G

Daikenchuto(supportive care)

Women’shealth domain

Mitigation of side effects, etc.

Diseases specific to womenCancer domain

Geriatric health domain+ related
formulations

Hochuekkito+ related
formulations

D

Rikkunshito

D

HangeshashintoD

GoshajinkiganD+ related
formulations

Goshajinkigan

G

Hochuekkito

Kamishoyosan+ related
formulations+ related
formulations

Peripheral symptoms
for frailty

GoreisanG

Other diseases and symptoms
D

Daikenchuto

G

Goreisan+ related
formulations+ related
formulations

D

Drug-fostering program formulations

G Growing formulations

9

Initiatives in the geriatric health domain
Increase in sales and the number of doctors that write 10 or more Kampo prescriptions
mainly reflecting the holding of lectures in cardiology(Shipment and monetary basis)

Online lectures
2021
January

CARDIOLOGY KAMPODAY

No. of viewers

about
8,300 people

Prescription Kampo
Products

YoY

Goreisan+20.0%

Hochuekkito+6.1%

Goshajinkigan+8.4%

Ratio of doctors writing 10 or more Kampo
prescriptions in the field of cardiology (FY 2021)

May-July(Total ofthree times)
Novemberonward(Total offive times)

Cardiology Kampo
Follow-up Seminar

Total of about
1,600 people

Cardiology Kampo
Short Lecturer

about 350
people/lecture

18.1%
16.4%

12.3%
April

September

December(Survey by Tsumura)
10

Initiatives in the geriatric health domain
The number of patients with heart failure increased by around 10,000 annuallyand is estimated to reach 1.3 million by 2030
Peripheral symptoms in tandem with heart
failure and Kampo prescriptions
Blood stasis

Shortness ofbreathDyspnea

Pump Decline
in function
Insomnia
Easily fatigued
Considerable fatigue(Hochuekkito) G

Swelling
Dizziness/edema(Goreisan) G

Feeling cold
Swelling accompaniedby cold limbs(Goshajinkigan) D(10,000 people)

Forecast for the total number ofpatients with heart failure140
1.3 million
people

130

120

110

100

90
2010

2020

2030

Source: Excerpt from Okura Y, et al. Circ
J.2008;72:489-91.

11Initiatives in the women’s health domain
Increase in sales and the number of doctors that write 10 or more Kampo prescriptions
reflecting measures that are mainly for webcasts and video streaming

1Q

2Q

Menopause
StressChillsStress

17,000people(Two times)

19,000people(Two times)Videostreaming
Theme

No. of viewers(Number oftimes)

Menopause

35,000people(One time)

Women’sdiseases

38,000people(Two times)

Prescription
Kampo Products

YoY

Tokishakuyakusan+12.9%

Kamishoyosan+12.0%

Keishibukuryogan+8.8%Hangekobokuto+10.6%

Kamikihito+19.2%

Anxiety,
insomnia

Online lectures No. of viewers(Number ofThemetimes)

Three majorprescription
formulations in thewomen’s healthdomain(Shipment and monetary basis)

Ratio of doctors writing 10 or more Kampo
prescriptions in the field of women’s health (FY 2021)

37.0%
3Q

StressAnxiety/
insomnia

15,000Cold sensitivity
peopleAnxiety(Two times)

113,000
people(Five times)

39.7%

30.7%
April

September

December(Survey by
Tsumura)12

Implementing e-promotions
Realize the structure of optimal information provision sought by medical practitioners(introduction of MA tool)

Support MR activities (renew CRM tool)<Role of digital>

Develop new customers

Proprietary
medicalsite• Online lectures• Video streaming• Kampo online MRs• Kampo ONLINE SALON• AI Chat bots(K-chat)

Expanding
Kampo
App

Medicalplatform
etc.

Mobile app

etc.

<Role of MRs>

Build ties with customers
 Address individual needs
 Kampo medicine approach Proper use of formulations
etc.

Seminar

Breifing/
presentations

Interviews

Deepening13

Implementing e-promotions
Expand video streaming in and after 3Q 2021
(times)40

PeriodOnline lectures

Video streaming(Division plan only)
FY 2021
3Q

30

Event theme

Online lectures

Video

Psychiatry(1)
Obstetrics/gynecology (1)Respiratory disease(2)
Orthopedics(2)

Digestive system(5)
Psychiatry(3)
Obstetrics/gynecology(2)
Respiratory disease (2)Geriatric health
(1)

33
20

8
7

10

4

13
16

8

12

FY 2021
4Q(tentative)

6

7

FY 2021
3Q

FY 2021
4Q

Digestive system
Supplements

(2)
(1)

Dizziness(1)

Supportive care for cancer(2)
COVID-19 related
illnesses(1)

Digestive system(13)
Supplements(3)
Geriatric health(3)
Dizziness(2)
Cardiology(5)
Psychiatry(4)
Respiratory disease (2)Obstetrics/gynecology(1)0
FY 2019

FY 2020

FY 20211H* Streaming from general medical site and proprietary medical site
Figures in parentheses are the number of times a video was streamed(Including scheduled)14

e-Promotion Benefits
Due to the expansion of e-promotion, the detail impact * exceeds before COVID-19
Aim for an e-promotion ratio of over 50% in the fourth quarter*Including MR activities and Internet
Number of information recognition
cases from each channel

MR activities ：Detailing, online interviews (MRs), in-hospital briefings

e-promotions ：e-detailing, manufacturing websites, and online interviews (head office divisions)
Second half goal

1.2 million
cases

50%

35%

FY2019FY2020

FY2021（forecast）

4Q (forecast)

3Q

FY2021INTAGE Healthcare Inc. survey, Impact Track

15

Overseas sales（External sales in China）
Expand sales centered on Ping An Tsumura Pharma and Shenzhen Tsumura Medicine
amount of sales（ Million yen ）9,700
forecast

10,000
8,000
6,000

4,587

3,864

4,000
2,000

7,065

6,360
2,476

2,257

982

1Q

2Q
3Q
Full year0

Raw material
crude drugs

FY 2020

drug pieces

FY 2021

raw ginseng

Yakushokudogenproducts

16

Information on conducting a briefing

Sustainability Vision 2050
Long-term Business Vision 2031 andDate

March 29, 2022

13: 00 ~ 14: 30

Program details■ Sustainability Vision 2050

■ Long-term Business Vision 2031
• Ｒ＆Ｄ Policy• China Business
17

Revision of earnings forecast FY 2021
（ Million yen )FY2020 results

Net sales

Revised Plan
2021.10.29

Compared to theoriginal plan
Amountrate

116,413

127,500＋11,086＋9.5%

Domestic

110,053

117,800＋7,746＋7.0%

Overseas

6,360

9,700

＋3,339＋52.5%

Operating profit

19,382

21,100＋1,717＋8.9％

Ordinary profit

20,866

23,400＋2,533＋12.1%

Profit attributable

15,332

16,600＋1,267＋8.3％

FY2020 results

Revised Plan

￥64
¥200.407.2%￥64￥216.97
7.4%

to owners of parent

Dividend (per share)

EPS
ROE

Third medium-term
management plan
FY2019 - FY2021

Net
Sales

Over

1,200million
Over

Operating
Profit190million

ROE

Over 6%

Numerical targets after applying
revenue recognition standards(Note) The above forecasts were prepared based on the information available as of the date of publication of this presentation. Accordingly, the impact of risks that cannot be predicted at this time, including the impact on socio-economic activities
from the further spread of COVID-19, have not been factored in. Actual earnings performance may differ from the forecasts stated herein owing to various factors going forward. We will disclose trends and conditions in a timely and proper mannershould there be any changes in the circumstances surrounding our company.

18

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

100

80

28.4%

32.1%

35.9% 35.7%

31.9% 33.5%

35.6%

40.0%

31.9％ 29.5％

25.0%

30.0%

60

40

35.0%

25.0%

32

32

32

32

32

32

32

32

32

32

15.0%

20

From Oct. to Mar.

20.0%

From Apr. to Sept.

10.0%

30

32

32

32

32

32

32

32

32

32

0

5.0%

Dividends payout ratio

0.0%

2012

2013

2014

2015

2016

2017

2018

2019

forecast
2020 2021
2021

Note: The FY 2021 year-end dividend and payout ratio (forecast) are an estimate based on the assumption that thedividend resolution is approved at the 86th Ordinary General Meeting of Shareholders.

19Inquires about these materials

Corporate Communications Dept.
Investor Relations Groupinvestor_madoguchi@mail.tsumura.co.jp
Cautionary items regarding forecasts⚫ The materials and information provided in this presentation contain so-called forward-looking statements.
Readers should be aware that the realization of these statements can be affected by a variety of risks anduncertainties and that actual results could differ significantly.
⚫ Changes in Japan or other foreign countries related to healthcare insurance systems or regulations set by
medical treatment authorities on drug prices or other aspects of healthcare or in interest and foreignexchange rates could negatively impact the Company’s performance or financial position.

⚫ In the unlikely event that sales of the Company’s core products currently on the market be halted or shouldsales substantially decline due to a defect, unforeseen side effect or some other factor, there could be a major
impact on the Company’s performance or financial position.
20

appendix

FY2021 Forecast (Compared Medium-term Management Plan）
Applying new accounting revenue recognition standards to

The 3 rd Medium-Term Management Plan (2019-2021)
FY2021
Numerical goals

FY2021
Numerical goals
Apply new accounting revenue
recognition standards

FY2021
Forecast
After Revision

127.5

Net Sales

Over 135.0
billion yen

Over 120.0
billion yen

Operating
ProfitOver 19
billion yen

Over 19
billion yen

billion yen

ＲＯＥOver 6 %Over 6 %7.4%

billion yen

21.1

22

Drug-fostering program formulations andGrowing formulations
Looking at the recent structure of disease, the Company
has selected certain diseases in fields where medical
treatment needs are high that are difficult to treat with
Western drugs and that Kampo products havedemonstrated special efficacy for. The Company will
establish a base of scientific evidence related to treatingthese diseases with Kampo medicine.

A growth driver that aims to be listed in medical
treatment guidelines as a strategic formulation following
the five “drug fostering” program formulations throughthe establishment of scientific evidence (data on safety,
efficacy, etc.) in fields where satisfaction toward
treatment and the contribution of medicine are low.

Drug-fostering program
formulations

Growing formulations

Daikenchuto

Hochuekkito

Yokukansan

Shakuyakukanzoto

Rikkunshito

Bakumondoto

Goshajinkigan

Kamishoyosan

Hangeshashinto

Goreisan23

Diagram of Corporate Group Ties
as of the end of December 2021

Tsumura100％

Tsumura China Inc. established December 2016
56％
100％

100％

63％

Tianjin Tsumura
Pharmaceuticals Co., Ltd.*2
established in March 2018

Shanghai Tsumura
Pharmaceuticals Co., Ltd.
established in July 2001

Kampo powdered extracts
Manufacturing oftraditional Chinese medical
products

Manufacturing of Kampo
powdered extracts

Ping An Tsumura Inc. established June 2018
80％

51％

Ping An Tsumura
Pharma Inc.*1
equity acquisition in March
2020

97.65％
Shenzhen Tsumura
Medecine Co., Ltd.
established in March 1991
Procurement, selection and processing, andstorage of raw materials for crude drugs andcrude drug pieces (drug pieces)
Raw material crude drugs and crude drug
pieces (drug pieces)
Sales in China

100％

China MEDICO Corporation
equity acquisition in March
2020

Pingcun Zhongying(Hebei)Pharmaceuticals Ltd.
established in June 2019

Procurement, selection and processing,and storage of raw materials for crude
drugs and crude drug pieces (drugpieces)Raw material crude drugs and crude
drug pieces (drug pieces)
Sales in China

Cultivation, procurement,
selection and processing, andstorage of raw materials for
crude drugs*1: In August 2020, changed name to Ping An Tsumura
Pharma Inc. from Tianjin China Medico Technology
Co., Ltd.
*2: In April 2021, changed name to Tianjin Tsumura
Pharmaceuticals Co., Ltd. from Tsumura Shengshi

Pingcun (Shenzhen)
Medical Ltd.
established in April 2019Pharmaceutical sales and sales of foodproducts, including raw ginseng andYakushokudogen products

Formulation platform

Pharmaceuticals Co., Ltd.

Crude drug platform

Newly added subsidiaries in and after 201924

Scale of the Traditional Chinese Medicine Market in China
Traditional Chinese
medical products

Crude drug pieces

193.3 billion yuan(about ¥3 trillion)(Domestic production value)
about ¥3.5 billion*

FY 2019652 billion
yuan(about ¥10.2 trillion)

458.7 billion yuan(about ¥7.2 trillion)(Domestic production value)

about ¥179.5 billion*

Exchange rate: ¥15.7/yuan(as of the end of December 2019)

Source: National Bureau of Statistics of China, Ministry of Industry and Information Technology (MIIT)*Source: Production statistics, including for Kampo formulations, Japan Kampo Medicine Manufacturers Association

Terminology

Definition

Corresponding terminology for Kampo
medicine(Meanings are not always the same)

Chinese medicine

Medicines used in traditional Chinese medicine (traditional
Chinese medical products, drug pieces, etc.)

Kampo, crude drug pieces, crude drugs

Drug pieces

Same meaning as crude drug pieces, Use as a decoction

Crude drug pieces

Traditional Chinese
medical products

Drugs in the form of granules, pills or other shapes based on thetheories of traditional Chinese medicine(Manufacturing of classicalprescription Chinese medicine
complex formulations )(Drugs in the form of granules, pills or other shapes based on old
traditional Chinese medical books)

Kampo extract formulations, crude drug
production(Kampo extract formulations)25