First Quarter Business Resultsfor Fiscal 2021

August 6, 2021
Director, and CFO

Muneki Handa

First Quarter Business Results for FY 2021
（ Million yen ）FY 2020
1Q

FY 2021
1Q

YoY
Amount Change

1H
FY 2021plan

28,396

31,771＋3,375＋11.9％

59,400

Domestic

27,41329,513＋2,100＋7.7%55,500Overseas

982

2,257

＋1,274＋129.7%

3,900

5,657

6,152

(19.9％)(19.4％)

＋494

＋8.7％

Ordinary
profit

5,674

7,247

＋1,572＋27.7％

9,000

Profitattributable

4,016

5,389

＋1,372＋34.2％

6,900

Net sales

Operatingprofit(Operating profit
margin)Ratio to total sales

Prescription Kampo
Products

89.3%

8,700
(14.6％)

to owners of parent

Other prescription
pharmaceuticals
0.4%
Healthcare
2.4%
External sales by
consolidated subsidiaries
7.9%* 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
Net sales and profits increased year on year, caused by increase ofdomestic and overseas sales.

Net sales

31,771

million yen

YoY＋11.9％◼

Domestic sales were 29,513 million yen. Overseas sales were 2,257 million yen.

◼

Sales of the 129 prescription Kampo products increased 7.8% year-on-year.

◼

Sales of healthcare products including OTC Kampo medicines increased 12.0% year-on-year.

Operating profit

6,152

Operatingprofit margin19.4

million yen

YoY

＋8.7％

％

YoY

(0.5)pt◼

The cost-to-sales ratio was 48.2%, a rise of 0.8pt year-on-year. The increase in the cost-to-sales ratio
reflects impact from external sales in China.

◼

The SG&A ratio totaled 32.5%, a decline of 0.2pt year-on-year.

Ordinary profit
◼

7,247

million yen

YoY＋27.7％

YoY＋34.2％

Impact of foreign exchange gain of 836 million yen.

Profit attributable toowners of parent

5,389

million yen

3Factors Triggering Changes in Operating Profit (YoY)( Million yen )（ Million yen ）Changes in sales : Breakdown(241)+1,775

Domestic＋1,105

Overseas＋670

Changes in cost-to-sales ratio: Breakdown(1,039)

Sales composition（Domestic）

6,152
5,657
Profit impact due Profit impact from
1Q FY 2021
1Q FY 2020
Profit impact due
to changes in cost- changes in SG&A
Operating profit
Operating profit to changes in sales
to-sales ratio
expenses＋31

Crude drug-related cost
（Domestic）＋127

Outside sales in China（Overseas）(399)

Changes in SG&A expenses: Breakdown

Sales-related expense(373)

R&D expense(143)

Traveling expense

(136)

Other

(387)
4

Financial Condition/Cash Flow Position（ Million yen ）

68.3％

68.4％

0.1pt

FY 2020

FY 20211Q

Non-current assets

Total liabilities
Current liabilities
Non-current liabilities

Inventories
Merchandise andfinished goods
Work in process
Raw materials andsupplies

80,755
13,93913,39653,41984,471
10,194
14,33659,940Change3,716(3,744)939
6,521

Cash and cash equivalents at
beginning of period(March 2021)

(23)

596

＋17

592

Cash and cash
equivalents at end of
periodEquity ratio

Current assets

Impact of exchange ratetranslations

7,892
6,764
1,128
1,123
1,653
(530)
6,769

(31)

Financing activities

326,956
211,038
115,918
87,01750,03436,983239,938+33

Investing activities

Total net assets

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

Total assets

ChangeOperating activities(March 2021)

FY 2021
1Q

FY 2020（ Hundred million yen ）5

COVID-19-related Symptoms and Prescription opportunities
Diseases for which prescription
opportunities have increased+560 million yen

Skin diseases

Psychiatric disorders

Dizziness

Acne and dermatitis due to theuse of masks

Anxiety and insomnia
accompanying a change in theexternal environment

Dizziness due to physical andpsychiatric disorders

Kamishoyosan
Kamikihito
Hangekobokuto
Yokukansankachimpihange,
etc.

Hangebyakujutsutenmato
Ryokeijutsukanto(Goreisan)*Keishibukuryogankayokuinin
Jumihaidokuto
Seijobofuto
Keigairengyoto

Total sales for six formulations

Hozai
Prescription group, including Kampo used to treat a deteriorationin health conditions, including post-illness fatigue, loss of appetiteand decline in stamina

Hochuekkito

In 1Q, sales grew for
Kampo prescribed totreat dizziness*Goreisan prescription opportunities
are also increasing for treatment inareas other than dizziness therefore
it has been excluded from the basisof calculations

Diseases for whichprescription
opportunities havedecreased(¥110 million)
Common cold-related
Decrease in the number of
respiratory disease patients due
to infection prevention
measures

Kakkonto
Shosaikotokakikyosekko
Maobushisaishinto
Bakumondoto
Maoto
Chikujountanto
Kikyoto, etc.
Total sales for 12 formulations

Juzentaihoto
6Comparison with the prescription pharmaceutical market（ YoY・ Drug price basis ）Overall
FY 2020

FY 2021

7.9%

8.0%

1.4%

4.0%

2.2%

1.2%

1.5%

0.0%
△4.0%

2.5%
(2.5)%(1.9)%(1.0)%

3Q

4Q

1Q

2Q

FY 2020

9.0%

1.8%

2.3%

0.0%
△5.0%

(5.4)%(3.3)%(3.0)%△10.0%

4.8%

6.0%

1.6%

0.0%

(1.6)%△3.0%(1.7)%

△6.0%
1Q

2Q

3Q

4Q

FY 20213.0%

0.6%(3.2)%FY 2020

FY 2021

10.0%

2.1%

1Q

Hospitals

General clinics

3.4%＋5.4pt(5.1)%

△8.0%

5.0%

Gap withmarket1Q(1.4)%

3.2%(0.3)%(2.4)%(2.0)%(4.8)%
1Q

2Q

3Q

4Q

1Q

Copyright © 2021 IQVIA. Estimated based on IQVIA JPM Apr.2019-Jun.2021. Reprinted with permission

7

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

FY 2020
1Q

FY 2021
１Q

YoY

Ratio to total sales

Drug-fostering
program formulations

1

100

Daikenchuto

2,385

2,430

＋45

＋1.9%

2

54

Yokukansan

1,779

1,872

＋93

＋5.2％

4

43

Rikkunshito

1,665

1,770

＋104

＋6.3％

8

107

Goshajinkigan

820

888

＋68

＋8.3％

23

14

Hangeshashinto

313

345

＋32

＋10.2％

6,965

7,308

＋342

＋4.9％

Total sales for drug-fostering program formulations

41

Hochuekkito

1,766

1,818

＋52

＋3.0％

5

17

Goreisan

1,032

1,297

＋265

＋25.8％

624

Kamishoyosan

1,042

1,205

＋162

＋15.6％

7

68

Shakuyakukanzoto

1,131

1,201

＋70

＋6.2％

10

29

Bakumondoto

812

806

(5)

(0.7)％

Total sales for growing formulations

5,785

6,330

＋545

＋9.4％

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

13,582

14,739＋1,156＋8.5％

Total sales for 129 prescription Kampo products

26,332

28,377＋2,044＋7.8％

Growing formulations

3* The 2020 results have been rearranged to the amount after applying new accounting revenue recognition standards.

129
prescription

Drug-fostering program
formulations

25.8%
Growing formulations

22.3%

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Tsumura website (site for medical practitioners)
Tsumura medical website for learning about Kampo, offering 24 hours access

Expand access by medical practitioners

 Explanations on the proper use of Kampo

 Also Western medicine-type, easy-to-use
explanations

 Access to online lectures available
 Abundant video contents
10Overseas sales（External sales in China）（ Million yen ）FY 2020

FY 2021

1Q

982

2,257

Full year

6,360

8,800

Raw material
crude drugs

drug pieces（forecast）
raw ginseng

Yakushokudogenproducts11

FY 2021 Earnings Forecast（ Million yen )FY2020 results

Net sales

FY2021 forecast

Vs. FY 2020
AmountGrowth116,413

122,500+6,086+5.2%

Domestic

110,053

113,700＋3,646＋3.3％

Overseas

6,360

8,800

＋2,439＋38.4％

Operating profit

19,382

19,500

+117

+0.6%

Ordinary profit

20,86620,000(866)(4.2)%

Profit attributable to15,332

14,200(1,132)(7.4)%

owners of parent

FY2020 results
Dividend

FY2021 forecast

￥64

￥64

EPS

¥200.4¥185.6

ROE

7.2%

6.4%

(per share)* The 2020 results have been rearranged to the amount after applying the PPA adjustment and new accounting 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 manner should there be any changes in the circumstances surrounding our company.

12

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%
31.9％

34.5％

35.0%

25.0%

30.0%

60

40

40.0%

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.

13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.
14

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
122.5

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 %6.4%

billion yen

19.5

16

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

Goreisan17

China Business Vision and Medium-Term Management Plan

FY2027
FY2020Net sales

about 400
million yuan(about ¥6.3
billion)FY2021
Sales image
Sales forecast
about 520
million yuan(about ¥8.8
billion)Crude drug platform
Raw material crude drugs, drug pieces,
raw ginseng, Yakushokudogen products, etc.

Formulation platform
Traditional Chinese medicine，Classical prescription
Chinese medicine complex formulations, etc.

about

10

billion yuan(about ¥170 billion)

Sales image

3 billion yuan(about ¥51.0 billion)

Sales image

7 billion yuan(about ¥119 billion)
18

Crude Drug Platform (drug piece services)
Drug piece services: Processing services to convert drug pieces intoa fluid extract, decoction, and granules(Sales in the online market)

Drug pieces

Drug piece services
Fluid extract

Decoction

Granules19Diagram of Corporate Group Ties & Crude Drug Platform
as of the end of April 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 201920

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)21