Third Quarter Business Resultsfor Fiscal 2021

February 7, 2022
Director, and CFO

Muneki Handa

1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

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%

16,600Net sales

Operatingprofit(Operating profit
margin)Ratio to total sales

Prescription Kampo
Products

88.7%+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■Third Quarter Business Results for Fiscal 2021 Overview
Page 2 shows a summary of third quarter business results in FY 2021.
As you can see, net sales and profit rose year-on-year.
Net sales totaled ¥98,382 million, a growth of 11.2% year-on-year.
Operating profit reached ¥18,829 million, an increase of 9.2% year-on-year.
Ordinary profit came to ¥21,074 million, a rise of 18.3% year-on-year.
Quarterly net profit amounted to ¥15,389 million, an improvement of 16.4%
year-on-year.
The operating profit margin was 19.1%, a decline of 0.4pts year-on-year.

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■Key Points in Performance
Page 3 depicts key points in performance.
Net sales totaled ¥98,382. This breaks down to domestic sales of ¥91,317
million and overseas sales of ¥7,065 million.
Sales of the 129 prescription Kampo products rose 7.6% year-on-year.
Sales in healthcare, which includes OTC medicines, rose 23.8% year-on-year
owing to brisk store and online sales.
The cost-to-sales ratio was 48.8%, a climb of 1.7pts year-on-year. This
mainly reflects an increase in depreciation expense in Japan in tandem with
the No. 3 SD line operations at the Ibaraki Plant, and impact from externalsales in China.
The SG&A ratio was 32.1%, an improvement of 1.3pts year-on-year, in linewith the growth in sales.
Ordinary profit increased 18.3% year-on-year, but this was mainly attributable
to a gain of foreign exchange.

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）Changes in cost-to-sales :(1,619) Breakdown（2,040）+5,253

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
to changes insales

Profit impact due
to changes incost-to-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

■Factors Triggering Changes in Operating Profit (YoY)
Page 4 features factors triggering changes in operating profit. I will only goover the key points.
Operating profit was ¥18,829 million, a rise of ¥1,593 million year-on-year.
Impact owing to sales growth was approximately ¥5.2 billion. A breakdown ofdomestic and overseas factors are shown on this slide.
Impact reflecting a rise in cost of sales was around a negative ¥1.6 billion.
In Japan, a change in sales mix had a positive impact of ¥210 million, andthere was also a positive impact of ¥230 million owing to a decline in crudedrug related cost.
Meanwhile, operating profit was negatively impacted by ¥1.11 billion due toan increase in processing expense, and also negatively impacted by ¥950
million due to an increase in external sales in China.
That being said, the rise in processing expense is mainly attributable to anincrease in depreciation expense and labor expense in tandem with the No. 3
SD line operations at the Ibaraki Plant.
The impact from an increase in expense was a negative impact ofapproximately ¥2.0 billion. This negative impact was primarily due to a rise insales promotion expense in tandem with sales growth, and an increase in
R&D expense.
Note that in the statement of income used for comparison, the figures are PPA
adjusted. Operating profit in 3Q FY 2020 declined ¥320 million due to PPA
adjustments.
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

80,755
13,93913,39653,41987,217
8,005
14,14065,072

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

Merchandise andfinished goods

ChangeInvesting activities

Inventories

FY 2021
3Q

＋22

670

596

Operating activities(March 2021)△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■Financial Condition & Cash Flow Position
Page 5 covers our financial condition and cash flow position. I will only goover the main points here as well.
Current assets grew ¥17.2 billion, primarily attributable to an increase inaccounts receivable of ¥5.4 billion and inventory assets of ¥6.4 billion.
The breakdown of inventory assets comprises a rise of ¥11.6 billion in raw
materials and supplies, of which there was an impact of ¥3.4 billion due toforeign exchange translations.
Total liabilities rose ¥3.0 billion. Between current and non-current liabilities,
the portion of long-term borrowings scheduled to be paid back within a year
declined ¥9.3 billion, in tandem with the reshuffling of debt. Meanwhile,
long-term borrowings rose by the same amount. In current liabilities,
accounts payable increased ¥2.9 billion, mainly reflecting an increase inpurchasing in the China business.
Our equity ratio improved 0.4 points to 68.7%.
The waterfall chart on the right reflects our cash flow performance.

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%

1Q

2Q

3Q

4Q

1Q

5.0%

FY 2021

FY 2020

9.1%

7.1%

10.0%

3.8%
7.6%

2.0% 1.6% 2.1% 1.8%(1.0)%(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

2Q

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%

0.6%

（3Q only：+3.7pt）

FY 2019

3.4% 2.3%

0.0%(5.0)%＋4.2pt2.9%

Hospital market (HP)

General clinics (GP)FY 2019

4.2%(1.9)%(1.0)%(2.5)%(5.1)%(0.3)%
1Q

1.4%
2Q

4Q

1Q

2Q

3Q

4.1%

3.1% 3.4% 2.7%

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

6.4%

1.6%

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■Comparison with the Prescription Pharmaceutical Market
Page 6 features a comparison with the prescription pharmaceutical market.
The year-on-year growth rate on an NHI drug price basis was a positive
6.6% for Tsumura in the overall market, a positive gap of 4.2 points above
the market.
Looking at individual sales channel, sales to general practitioners (GP) rose
7.5%. As in 2Q, this outperformed the market.
Meanwhile, sales to hospitals (HP) rose 2.7%, a basic recovery trend.
However, in contrast with the market, sales in this channel underperformed.
We are continuing to strengthen information provision activities via
e-promotions given the ongoing restrictions on visitations to hospitals.
Later on I will explain activities conducted through e-promotions.

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

18.2

15

11.6

5.6

0

(1.1)

(0.6)

1Q

2Q

-5

(2.1)
3Q

(Monetary figures: YoY/shipment basis)*Goreisan prescription opportunities are also increasing for treatment in areas other than dizziness therefore it has been excluded from the basis of calculations

7■COVID-19 Related Symptoms and Prescription Opportunities
Page 7 details impact due to COVID-19-related symptoms and fluctuations inprescription opportunities.
Of the COVID-19 symptoms, prescription opportunities have increased in thetreatment of mental disorders, dizziness and skin diseases.
Demand for “supplements,” mainly used to treat post-illness fatigue and a
decline in stamina, continued to grow.
Consequently, we calculate the positive impact of ¥1.82 billion year-on-year.
Meanwhile, regarding prescriptions related to treatments for the common
cold, there was a negative impact of ¥210 million year-on-year due in part tofewer number of patients with respiratory diseases (common cold andinfluenza) due to ongoing measures to prevent infections.

7

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

FY 2020
3Q

FY 2021
3Q

7,334
5,678
5,548
2,687
1,052
22,301
5,655
4,111
3,692
3,752
2,455
19,666

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

41,934

Total sales for 129 prescription Kampo products

81,127

Drug-fostering
program formulations

Total sales for growing 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

YoY
+209

Ratio to total sales

+2.9%

+276

+5.1%

+380

+7.4%

+207

+8.4%

+79

+8.1%

+1,153

+5.5%

+327

+6.1%

129
prescription+684 +20.0%

Drug-fostering program+171

formulations+4.9%+401 +12.0%
+37

+1.6%

+1,622+9.0%

45,325+3,391+8.1%

87,293+6,166+7.6%* The 2020 results have been rearranged to the amount after applying new accounting revenue recognition standards.

25.6%
Growing formulations

22.5%

119 formulations other thandrug-fostering program andgrowing formulations

51.9%

8

■Sales of Drug-fostering Program/Growing Formulations
Page 8 outlines sales of drug-fostering program formulations and growing
formulations.
Sales of the 129 prescription Kampo products totaled ¥87,293 million, a riseof 7.6% year-on-year.
Sales of drug-fostering program formulations came to ¥22,301 million, agrowth of 5.5% year-on-year.
Sales of growing formulations came to ¥19,666 million, a growth of 9.0%
year-on-year.

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

Digestive systemdiseases

Respiratory diseases

G Bakumondoto

Yokukansan

D

Rikkunshito+ related
formulations

D

Daikenchuto

G

Peripheral symptoms forcirculatory disorders

G

Goreisan+ related
formulations(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

Goshajinkigan

G

Kamishoyosan+ related
formulations+ related
formulations

Peripheral symptoms
for frailty
D

G

Other diseases and symptoms

Goshajinkigan
Hochuekkito

D

Daikenchuto

G

Goreisan+ related
formulations+ related
formulations

D

Drug-fostering program formulations

G Growing formulations

9■Three Important Domains in Sales Activities
The three important domains in sales activities are shown on page 9.
Mainly in drug-fostering program and growing formulations businesses, weare continuing activities mainly in our three important domains of geriatrichealth, cancer (supportive care) and women’s health, which are social issues
in Japan.
I will explain Tsumura’s initiatives for three prescriptions, including Goreisan,related to the geriatric health domain, and Kamishoyosan in the women’s
health domain, as shown in the red framed boxes, carried forward from 1H.
From the next slide onward, I will introduce the details of performance in thethree important domains.

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)

2021
January

Online lectures

No. of viewers

CARDIOLOGY KAMPO
DAY

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
Page 10 covers initiatives in the geriatric health domain.
Within the domain of geriatric health, from FY 2020, we have been holding
online lectures related to cardiology.
CARDIOLOGY KAMPO DAY, which was held in January 2021, garneredviewership from approximately 8,300 physicians.
Based on the results of a survey of participants, many respondents said theywanted to learn about how to use and the purpose of use for Kampo inroutine medical care. In light of this, a three-part follow-up series was
conducted during the months of May to July.
From November, short lectures (a total of five lectures) were distributed byclinical physicians in areas nationwide. Many cardiologists participated.
Furthermore, more than 70 events were also held at branches nationwide.
Sales growth rate of the three drug-fostering program formulations andgrowing formulations, introduced during lectures, are shown on the right.
The ratio of cardiologists writing 10 or more prescriptions for Kampo is risingin comparison with April.

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

Pump Decline
in function

Shortness ofbreathInsomnia

Dyspnea

Easily fatigued
Considerable fatigue(Hochuekkito) G

Swelling

Feeling cold

Dizziness/edema

Swelling accompaniedby cold limbs(Goreisan) G(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 Geriatric Health Domain
Page 11 also deals with initiatives in the geriatric health domain.
In Japan, the number of patients with heart disease, including heart failure,is continuing to increase. Following cancer, it is the second leading cause ofdeath in Japan.
In tandem with the increase in senior citizens, the number of patients withheart failure is increasing by around 10,000 annually and is estimated toreach 1.3 million by 2030.
The number of patients with cancer is approximately 1 million people. This
indicates just how many patients there are suffering from heart failure.
For this type of social issue, we are promoting the value of Kampo toimprove the quality of life of seniors that are patients suffering from heart
failure.

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(Shipment and monetary basis)

2Q

Menopause
StressChillsStress

17,000people(Two times)

19,000people(Two times)

Menopause

Women’sdiseasesNo. of viewers(Number oftimes)

35,000people(One time)

38,000people(Two times)

Three majorprescription
formulations in thewomen’s healthdomain1Q

Video
streaming
Theme

Prescription
Kampo Products

YoY

Tokishakuyakusan+12.9%

Kamishoyosan+12.0%

Keishibukuryogan+8.8%Hangekobokuto+10.6%

Kamikihito+19.2%

Anxiety,
insomnia

Online lectures
Theme

No. of viewers(Number oftimes)

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■Initiatives in the Women’s Health Domain
Page 12 covers ongoing initiatives in the women’s health domain.
Tsumura has been carrying out activities that are close-knit to women’s life
stages for many years.
In FY 2021 as well, we are implementing online lectures and other activities
based on themes such as menopause, stress, and anxiety/insomnia.
Tokishakuyakusan, Kamishoyosan and Keishibukuryogan, the three majorprescriptions used in the women’s health domain that have been undertaken
in lectures, are continuing to grow.
In addition, Hangekobokuto and Kamikihito, which were introduced as atreatment for stress, are growing double-digits.
In obstetrics/gynecology, there are many doctors for which Kampo is a
useful medical treatment. The ratio of physicians writing 10 or moreprescriptions for Kampo is increasing.

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

Deepening

13■Implementing e-Promotions
Page 13 illustrates the format for information provision by implementing epromotions.
e-promotions undertook the realization of optimal information provisionsought by medical practitioners.
Up through FY 2020, the medical platform of other companies was used andinformation provision was expanded to clinical physicians.
In FY 2021, we renewed our proprietary medical website in April, and are
expanding e-promotion activities, mainly online lectures and video content.
Furthermore, we implemented three tools, that are boxed in red. The
environment facilitates the provision of information sought by medical
practitioners at any time. This also made it feasible to expand thepossibilities digitally.

13

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

FY 2021
4Q(tentative)

12
6

7

FY 2021

FY 2021

FY 2021

1H

3Q

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* Streaming from general medical site and proprietary medical site
Figures in parentheses are the number of times a video was streamed(Including scheduled)
14■Implementing e-Promotions
On page 14, I will also discuss the implementation of e-promotions.
As shown earlier, we are establishing an environment for e-promotions,deciding on themes based on patients and clinical departments, and also
simultaneously implementing online lectures and video streaming.
In and after 2H, we are expanding video streaming in particular. The benefitof video streaming is that viewers can narrow down the themes to thosethey want to watch.
We plan to continue to implement information provision activities in line with
the needs of medical practitioners.

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

FY20214Q (forecast)

3Q

FY2021（forecast）

INTAGE Healthcare Inc. survey, Impact Track

15■e-Promotion Benefits
On page 15, I will discuss the benefits of e-promotions.
The bar graph shows the trend for the impact of detailing, which is thenumber of cases in which doctors recognized information owing to
information provision activities. The color coding illustrates the ratio of MR
activities and e-promotions.
The definition for MR activities shown in green is “face-to-face and online
interviews with and presentations given to doctors.” e-promotions, which are
in orange, are defined as “video streaming and online lectures, formats for
information provision activities that are not conducted through MRs.”Thus far, e-promotions have been carried out to deliver information on
Kampo to around 330,000 clinical physicians.
As a result of these activities, we anticipate the level of detailing impact in FY
2021 will surpass levels prior to COVID-19.
In 4Q FY 2021, we are carrying out digital investments with the aim ofachieving an e-promotion ratio of over 50% and 1.2 million cases of detailing
impact in 2H.

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■Overseas Sales (External Sales in China)
On page 16, I will discuss overseas sales.
Overseas sales totaled ¥7.0 billion. In the crude drug platform business,
which consists mainly of Ping An Tsumura and the Shenzhen Tsumura
pharmaceutical businesses, sales, mainly of raw material crude drugs anddrug pieces, grew.
In the raw material crude drugs business, sales expanded to traditional
Chinese medical products companies.
In the drug pieces business, sales to hospitals primarily grew, and online
sales, that utilize the Ping An Health (former Ping An Good Doctor) platform,
were strengthened.
Our forecast for overseas sales in FY 2021 is ¥9.7 billion.
In the crude drug platform business, we are progressing steadily toward ourgoal of an external sales ratio of 50%-plus, which is a target in themedium/long-term vision.
We will present our vision for the China Business overall, including for the
crude drug platform business, on March 29, 2022.

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■Implementing a Briefing
Page 17 outlines information on holding a briefing.
At present, we are formulating the Sustainability Vision 2050, which will belaunched in FY 2022, and the Long-term Business Vision 2031.
On March 29, 2022, we are scheduled to implement a briefing on thecontents described herein. We hope you will join us.

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

Over

Net
Sales

1,200million

Operating
Profit190million

ROE

Over 6%

Over

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■FY 2021 Earnings Forecast
On page 18, I will discuss our FY 2021 earnings forecast. We revised ourfull-fiscal year earnings forecast on October 29, 2021.
We forecast net sales of ¥127.5 billion, operating profit of ¥21.1 billion,
ordinary profit of ¥23.4 billion, profit attributable to owners of parent of¥16.6 billion, an EPS of ¥216.97 and an ROE of 7.4%.
We did not revise our per-share dividend forecast.
The numeric targets in the Third Medium-Term Management Plan, shown on
the right, all outperform our full-year forecasts.

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■Shareholder Returns
I will cover shareholder returns on page 19.
We will continue to make it our basic policy to aim to improve our corporate
value through the sustainable growth of our Kampo business, and via growthinvestments in and by building foundations in the China business.
Accordingly, we plan to implement stable dividends, taking into accountfactors including medium/long-term profit levels and cash flow trends.
We ask for everyone’s continued support.

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

20

appendix

21

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

FY2021
Forecast

Apply new accounting revenue
recognition standards

After Revision

127.5

Net Sales

Over 135.0
billion yen

Over 120.0
billion yen

billion yen

Operating
ProfitOver 19
billion yen

Over 19
billion yen

billion yen

ＲＯＥOver 6 %Over 6 %

7.4%

21.1

22

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

23

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

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

Manufacturing of Kampo
powdered extracts

Formulation platform*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

Kampo powdered extracts
Manufacturing oftraditional Chinese medical
products

Pharmaceuticals Co., Ltd.

Crude drug platform

Newly added subsidiaries in and after 201924

24

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

25