Business Results for Fiscal 2022

May 10, 2023

TSUMURA & CO.

1

Agenda01

Business Results for Fiscal 2022 andEarnings Forecast for Fiscal 2023

02

Outlook for China Business22

Business Results for Fiscal 2022 andEarnings Forecast for Fiscal 2023

Director, and CFO

Muneki Handa

Hello, my name is Muneki Handa.
I would like to start by thanking everyone participating here today for theirconstant support of Tsumura and its activities to promote the use of Kampo.

I would like to start today’s presentation by explaining our business resultsfor FY 2022 and our earnings forecast for FY 2023.

3

Agenda01

FY 2022 Business Results Overview

02

FY 2023 Earnings Forecast

4Firstly, I will give an overview of business results in FY 2022.

4

Roadmap for the Realization of the TSUMURA VISION“Cho-WA” 2031
1st stage

2nd stage

3rd stage

FY2022-2024

FY2025-2027

FY2028-2031—Growth——Flowering——Germination—
Prescription Kampo
Products

Research

Development

Formulation
platform

Traditional Chinese
medical products business

Marketentry

Buildfoundations

Crude drug
platform

Crude drugs, drug pieces andYakushokudogen products

Sales
expansion

Research
platform

Smart factory
Sales

Labor
productivity

Personalized Kampo
treatments
Personalized Kampo
treatments
Scientific study of presymptomatic diseases

R&D

China
Business

Over 50% physicians write 10
or more Kampo prescriptions

Standardization of Kampo
treatments

Traditional Chinese Medicine
Research Center

Establishment

Expand scope of
automation

Establish brands
Function
expansion

Shift to oversight/management

50% of physicians write basicprescriptions in all treatment areas

Socialimplementation

Establish brands
Lead industry development
Evidence-building for traditional
Chinese medical products

Realize smart factories

Sales per MR (Yen/MR)

Production

Physical labor productivity

Crude drugs

Personnel expenses per crude drug
arranging volume

Double productivity(vs. FY2021)
5This is our roadmap we announced in May 2022 for realizing the TSUMURA
VISION “Cho-WA” 2031.

The First Medium-Term Management Plan, which spans the three fiscal years
up to FY 2024, is positioned as a stage for conducting upfront investments
and building foundations to realize our vision.

5

FY2022 Business Results Overview【Million yen】

FY 2022Plan

FY 2022
Results

Achievement
rate

YoY
Amount138,500

140,043

Domestic business

124,300

124,698

100.3%－－

China business

14,20015,345108.1%－－

Operating profit

20,80020,916 100.6%(1,460)(6.5)%

Domestic business

21,20021,190100.0%－－

China business

(400)

(273)

－

－

－

(9.5)%

Sales

101.1% +10,497

ChangeOrdinary profit

21,20023,453 110.6%(2,451)

Profit15,000

16,482 109.9%(2,354) (12.5)%

attributable to owners of parent

PL translation rate (CNY)

19.50

19.55

－

+2.51

Ratio to total sales

+8.1%

－

Prescription
Kampo Products

85.2%

External sales by
consolidated subsidiaries
11.6%
OTC Kampo etc 2.9%
Other prescription
pharmaceuticals 0.3%

*Forex rate at the time overseas subsidiaries’ PLs were incorporated; differsfrom the import rate for raw material crude drugs

6Here is an overview of our business results in FY 2022.
We achieved all our plans set at the start of FY2022 for sales and at eachprofit level.

Net sales totaled ¥140.0 billion, 101.1% versus our plan and an increase of
8.1% year-on-year.
This breaks down to sales in the domestic business of ¥124.6 billion andsales in the China business of ¥15.3 billion.
The sales breakdown ratio is shown in the graph to the right.

Operating profit came to ¥20.9 billion, 100.6% versus our plan and a declineof 6.5% year-on-year.

Ordinary profit was ¥23.4 billion, 110.6% versus our plan but a decrease of
9.5% year-on-year.

Meanwhile, profit attributable to owners of parent totaled ¥16.4 billion,
109.9% versus our plan but a drop of 12.5% year-on-year.

I will explain the key points of our performance in FY 2022.

6

Key Points in Performance
Achieved plans for sales and at each profit level.
Net sales

140,043◼

Domestic business◼

China business sales: 15,345 million yen

million yen Achievement rate

101.1%

YoY+8.1%

Total sales for the 129 prescription Kampo products: 119,362 million yen, rose 4.6% year-on-year

Total sales of the OTC Kampo formulations and other healthcare products: 3,966 million yen, grew 3.2% year-on-year

Operating profit
Operating profit margin

20,916 million yen Achievement rate 100.6%
14.9%

vs. Plan◼

Cost-to-sales ratio: 51.2％, up 0.8pt vs. plan and a rise of 2.5pt year-on-year;◼

SG&A ratio: 33.8%, down 0.8pt vs. plan and a(0.1)pt

YoY(6.5)%

YoY(2.4)pt

Versus plan: Mainly due to negative impact from soaring energy and raw material expenses
fall of 0.2pt year-on-year;

Versus plan: Implemented cost control in response to a rise in cost-to-sales that outperformed the plan

Ordinary profit◼

23,453

million yen Achievement rate

110.6%

YoY(9.5)%

Foreign exchange gain primarily related to loans to overseas subsidiaries: 1,508 million yen, down 965 million yen year-on-year;
foreign exchange impact

Profit attributable toowners of parent

16,482 million yen Achievement rate

109.9%

YoY(12.5)%◼

Extraordinary income: Refund margin owing to a reduction in paid-in capital at affiliates: 463 million yen◼

Extraordinary loss: Impairment loss in tandem with revision to construction plans for the Traditional Chinese Medicine ResearchCenter: 597 million yen

7This slide shows the key points in our performance.
In the domestic business, sales of the 129 prescription Kampo products stood at ¥119.3 billion, an
expansion of 4.6% year-on-year. Although there was negative impact from restricted shipments, inaddition to growth reflecting e-promotion benefits, there was an increase in demand for formulations
related to the treatment of symptoms from COVID-19, including fever and coughing, and after-effects
such as fatigue and anxiety.
Sales of OTC Kampo products climbed 3.2% year-on-year to ¥3.9 billion, reflecting an expansion in thenumber of pharmacies and drugstores carrying Tsumura products and a growth in COVID-19-related
formulations.
Sales in the China business were ¥15.3 billion, owing to an expansion in the sales of raw material crude
drugs in the crude drug platform business.
The cost-to-sales ratio was 51.2%, a climb of 0.8pts year-on-year.
This primarily reflects soaring energy and raw material costs, which surpassed estimates.
The SG&A ratio was 33.8%, a decrease of 0.8pts year-on-year.

There were one-off expenses for full-fledged operations at the Tianjin Plant but we controlled SG&A
expenses to offset the rise in the cost-to-sales ratio.
Consequently, operating profit totaled ¥20.9 billion, nearly on a par with plans.
Ordinary profit was ¥23.4 billion, slightly in excess of plan owing to the impact from a foreign exchange
rate gain related to loans to overseas subsidiaries reflecting a depreciation in the yen’s value, and profit
attributable to owners of parent was ¥16.4 billion, which was marginally higher than planned.
As an extraordinary income, we posted ¥400 million from a refund margin owing to a reduction in paid-in
capital at affiliates, and as an extraordinary loss we booked ¥500 million in impairment loss in tandemwith a revision to construction plans for the Traditional Chinese Medicine Research Center.
The Traditional Chinese Medicine Research Center was originally scheduled to be constructed on thepremises of Shenzhen Tsumura Medicine Co., Ltd. However, to enhance investment benefits, we switched
our policy to promote research into crude drugs and traditional Chinese medicine through the use of
external talent and know-how, and by collaborating with partners that have their own research facilities.

7

Domestic Business: Sales of Drug-fostering Program
Formulations/Growing Formulations(Million yen)
Net sales
Ranking

Product No./Formulation name

FY 2021

FY 2022

YoY

Drug-fostering program
formulations

1

100 Daikenchuto

9,569

9,739

+169

+1.8%

3

54 Yokukansan

7,379

7,380

+1

+0.0%

4

43 Rikkunshito

7,231

7,300

+69

+1.0%

8

107 Goshajinkigan

3,509

3,421

(87)

(2.5)%

24

14 Hangeshashinto

Total sales for drug-fostering program formulations

1,358

1,390

+32

+2.4%

29,04829,223

+184

+0.6%

Growing
formulations2

41 Hochuekkito

7,232

7,727

+494

+6.8%

5

17 Goreisan

5,298

6,208

+910

+17.2%

6

24 Kamishoyosan

4,833

5,050

+217

+4.5%

17

108 Ninjin’yoeito

1,936

2,128

+191

+9.9%

18

137 Kamikihito

1,722

2,067

+344

+20.0%

Total sales for growing formulations

21,02323,182+2,159+10.3%

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

64,093

66,946+2,853+4.5%

Total sales for 129 prescription Kampo
products

114,165

119,362+5,197+4.6%*Restricted shipments of Goshajinkigan from August 2022 to April 3, 2023

Ratio to total sales
Drugfostering
programPrescription formulations
Kampo%
Products

25

Other

129

prescription(119
Growing
formulations
formulations)formulations

56%

19%

Status of restricted shipments
End-August 2022 onward➡Start restricted shipments of
28 formulations
As of May 9, 2023
➡Continue restricted shipmentsof 24 formulations*Plan to successively lift
restrictions in and after June 8This slide outlines the sales of formulations by prescription Kampo products in the drug-fostering
program and growing formulations.
Sales of the 129 prescription Kampo products were ¥119.3 billion, a rise of 4.6% year-on-year.

From the end of August 2022, we restricted shipments for some formulations owing to a rapid rise indemand accompanying the spread of COVID-19 and seasonal factors including the intense heat in themonths of July and August.
In the drug-fostering program, owing in part to this impact, sales growth was limited to 0.6% year-onyear.
Sales of growing formulations rose 10.3% year-on-year reflecting a substantial growth in sales ofGoreisan, Hochuekkito, and Kamikihito.
Sales of Goreisan are continuing to grow at a high rate owing to measures, including the conducting of
lectures in the field of cardiology.
Sales of Hochuekkito and Kamikihito expanded reflecting the provision of information in line with needs,
including fatigue, anxiety and insomnia related to symptoms from the after-effects of COVID-19.
Meanwhile, sales for 119 formulations other than the drug-fostering program and growing formulations
were ¥66.9 billion, an increase of 4.5% year-on-year.
Sales of formulations used for seasonal symptoms, including a loss of appetite and summer weight loss
due to the intense heat, and common-cold related prescriptions grew owing to the spread of theOmicron variant.
Note that we initially planned to restrict shipments for 28 formulations but as of May 9 we haverestricted shipments for 24 formulations.
We plan to lift shipment restrictions on these 24 formations in and after June.
I will explain the sales measures and results for FY 2022, and initiatives going forward in the section on
earnings forecasts for FY 2023.

8

China Business: Crude Drug Platform Business
Growth in sales, chiefly of raw material crude drugs
Raw material
crude drugs

54.6%
growthSales to traditional Chinese medical
products companies as a raw material＊

15.3
billionyen

Cultivate new customers
Expand the value of transactions with existing customers
Improve profit margins(Plan)

17.2
billion yen*At present, investing to cultivate new customers➡Correct in stages to fair price
Drug pieces (Crude
drug pieces)

Sales for prescription-use and as an OTC tohospitals and pharmacies

9.9
billionyen

Newly cultivate hospital sales channels

Expand existing online sales channels➡Cultivate new online channels

Yakushokudogenproducts

Sales of health food products to general
consumers
Development and market launch of new products➡Cultivate branding and online sales channels

2021

2022

2023

*Local current basis: 34.7% growth9Here are trends in the crude drug platform business.

Sales totaled ¥15.3 billion, a growth of 54.6% year-on-year thanks mainly to
an expansion in sales of raw material crude drugs.

In the raw material crude drug business, sales growth was high owing to theimplementation of sales activities focusing on quality, the cultivation of new
customers and an increase in sales items for existing customers.

Meanwhile, an issue is the improvement in profit margin.
At present, investments for cultivating new customers are taking precedence
but profit margins will improve further out owing to a shift in stages to a fair
price as customers recognize the value of quality.

New hospital sales channels were developed for drug pieces. However, sales
were level with the previous year due in part to a decrease in sales via
existing online sales channels.
Going forward, we plan to continue expanding hospital sales channels andaim to develop new online sales channels.

9Agenda01

FY 2022 Business Results Overview

02

FY 2023 Earnings Forecast

10

Next are the earnings forecasts for FY 2023.

10

FY 2023 Earnings Forecast
Forecasting an increase in sales and decline in profit year-on-year[Million yen]

FY 2022
Results

FY 2023
Earnings Forecast

YoY
AmountChange140,043

150,500+10,456+7.5%

124,698
15,345

133,300
17,200+8,601+1,854+6.9%+12.1%

20,91618,000(2,916)(13.9)%

21,190(273)

18,400(400)(2,790)(126)(13.2)%－

Ordinary profit

23,45318,600(4,853)(20.7)%

Profit attributable to owners ofparent(3,482)(21.1)%Net sales
Domestic business

China business

Operating profit
Domestic business
China business

16,482

13,000

Income statement
exchange rate
(JPY/RMB)

19.55

19.00

ROE

6.7 %

5.1 %

EPS

215.63 yen

171.02 yen

Notes ・The impact from the signing of a contract to acquire anequity interest in Shaanxi Unisplendour Life Care PharmaceuticalCo., Ltd. was not factored into the earnings forecast.
・Foreign exchange impact (non-operating profit) was notfactored into the earnings forecast given the difficulty to reasonably
calculate this impact based on the status of the forex market.

11This is our forecast for FY 2023.
We forecast net sales of ¥150.5 billion, operating profit of ¥18.0 billion,
ordinary profit of ¥18.6 billion, profit attributable to owners of parent of¥13.0 billion, an ROE of 5.1% and an EPS of ¥171.02.

In the First Medium-Term Management Plan, we previously forecast a
growth in sales but a drop in profit in FY 2023 reflecting upfront investments.
We are now factoring impact from soaring energy and raw material prices
due to inflation.

I will explain factors triggering changes in sales and operating profit on thenext page onward.

Note, we are currently establishing a detailed business plan for Shaanxi
Unisplendour Life Care Pharmaceutical Co., Ltd., with which we entered into
an equity interest acquisition agreement on April 13, 2023.
In light of this, we have not factored this into our earnings forecast.

11Factors Triggering Changes in Sales in FY 2023
・Further create demand for Kampo products by implementing sales measures, mainly thestrengthening of e-promotions
・Continue to implement a system to boost production capacity in response to demand for
Kampo products

150.5
billion yen
140.0
billion yen

FY 2022Net sales

Sales measures

COVID-19 impact

NHI drug pricerevision

Domestic business*(Sales for 129 prescription Kampo products)

Chinabusiness

Domestic
business(Healthcare, etc.)

FY 2023
Net sales
forecast
12This slide covers factors triggering changes in sales in FY 2023.

We are aiming for 4% growth on a volume basis by generating additional
demand, mainly by strengthening e-promotions in the domestic business.
We plan to continue to implement a system to boost production capacity inresponse to this demand.

In the “after COVID-19” period, although there are some factors triggering asales decline due to a reduction in skin disease patients, including skin irritation
and acne, as the percentage of people wearing masks declines. The scope ofusage of Kampo products by doctors is expanding.

We are anticipating continued strong sales growth owing to the deployment ofsales measures that will encourage ongoing use.

In the interim annual NHI drug price revisions in April 2023, we forecast sales
growth of 2.3% year-on-year on a value basis owing to the special re-pricing ofproducts with little-to-no profit margin in tandem with the sharp rise in prices for
40 Tsumura formulations.

From the next page, I will explain measures in the domestic business.
12Domestic business: Trends in the Number of Physicians
Writing 10 or More Prescriptions for Kampo Pharmaceuticals
・The number of physicians writing 10 or more prescriptions for Kampo pharmaceuticals
increased by approximately 20,000 physicians, a ratio of 32%*
・The issue is the increase in physicians writing 10 or more prescriptions for Kampo
pharmaceuticals at HP (hospitals)*Trend in the number of physicians writing 10 or moreprescriptions for Kampo pharmaceuticals*Survey by Tsumura

320,000 clinicalphysicians

50%
approx. 84,000
physicians

26%
End-FY 2021

approx. 104,000
physicians

32%

32％

32%

End-FY 2022

Over
40%

End-FY 2023

Over
50%

End-FY 2024

First Medium-Term Management Plan

13

In the domestic business, we are aiming to achieve a condition where 50%
or more of physicians are writing 10 or more prescriptions for Kampo
pharmaceuticals.

In FY 2022, 104,000 physicians were writing 10 or more prescriptions for
Kampo pharmaceuticals, an increase of around 20,000 physicians that meetthis criteria versus a year earlier owing to the hybrid provision of information
via e-promotions and MRs.

This accounts for 32% of all physicians.
Among this 32%, the ratio of physicians that are writing 10 or moreprescriptions for Kampo pharmaceuticals at clinics already exceeds 50% but
the percentage of physicians at hospitals is less than 50%.

We have already expanded e-promotions thus far to strengthen our
approach to physicians working at hospitals.
Moving forward we plan to make further efforts to facilitate the provision of
information in line with the needs of each individual physician.

13

Domestic Business: Information Provision Activities
・The number of cases of information recognition (FY 2022) increased 53% in comparison with the level
prior to COVID-19 (FY 2019)
・Aim to improve the quality of activities through information provision that suits each individual medical
practitioner

By FY 2022

Number of cases of detailing impact*
Levelprior to
COVID-19

Owned
media

e-promotions

Diversification of information
provision methods

Paid
media

Chatbot

LINE
DM
Information
provision

Breifing/
Interviews
presentationsMR
activities

FY 2023 onward

Lectures

FY 2020

FY 2021

FY 2022

FY 2023

ActualPlan

Source: INTAGE Healthcare Inc. survey, Impact Track*Number of cases of detailing impact: Number of cases of information recognition from various channels,
including MR activities and the Internet
MR activities: Detailing, online interviews, in-hospital briefings, etc. conducted by MRs
e-promotion: Activities to provide information online that does not go through MRs

Grasping needs byanalyzing
accumulated data

Email
Telephone

Information provision that is suited tothe individual

Owned
media

FY 2019

Data
accumulation

Paid
media

Breifing/
Interviews
presentations

Chatbot

LINE
DM

Lectures

EmailTelephone

14

This slide shows information provision activities.

The figure on the left depicts the number of cases of detailing impact, whichis the number of cases of information recognition by physicians.
Green represents MR activities and yellow represents e-promotions.

In FY 2022, we planned to enhance the method of information provision
mainly through e-promotions, including the streaming of videos and online
lectures via owned media. We approached medical practitioners throughdiverse methods.
Accordingly, the number of detailing impact cases was at a high level, 53%
higher in comparison with the level prior to COVID-19.

In FY2023, we plan to analyze data accumulated thus far to grasp theindividual needs of medical practitioners.
We then plan to improve the quality of our activities another notch byproviding information that is in line with individual medical practitioner needs.

14

Factors Triggering Changes in Operating Profit in FY 2023
・Substantial impact from external factors, including inflation and yen depreciation

External factors:

20.9 billion yen (11)

(24)

+33
(18)
(24)

FY 2022
Operating profit

Crude drug
procurement cost

Internal factors:

Soaring energy andraw material costs

Exchange rate(yen
depreciation)

(3)

(5)
(35)

+29

NHI drug pricerevision(Recalculated unprofitableproduct)

18.0 billion yen

Sales increase

Rise in expensein tandem withsales growth

Growthinvestment torealize the vision

FY 2023
Operating profit
forecast

15

This slides shows factors that we forecast will trigger changes to operating profit in FY 2023.
We are presenting these factors categorized by external and internal factors.
We estimate the negative impact from external factors will be - ¥2.4 billion.

This breaks down to a forecast of a negative ¥1.1 billion due to an increase in crude drug
procurement expense reflecting a rise in the price of a portion of crude drugs.
The factors that will likely trigger a rise price are irregular weather and an increase in China for wild
crude drugs. Furthermore, we see a rise in demand in food-use of Japanese peppers in Japan.
We aim to stabilize prices by completing research on the domestication of wild crude drugs as earlyas possible.
We plan to secure the cooperation of Japanese pepper producers to increase the cultivation area,
thereby aiming to improve the balance between supply and demand in the medium/long term.
Next, we forecast negative impact of - ¥1.8 billion due to soaring prices for energy and raw materials,
and a negative impact of - ¥2.4 billion reflecting impact from forex, due to continued weakness inthe yen’s value.
These items reflect the impact of global inflation, and therefore it is difficult for us to control. We plan
to closely monitor trends going forward and also work to reduce the cost of sales by improving our
productivity.
In contrast to our outlook for negative impact, although there will be a positive impact of ¥2.9 billion
owing to the NHI special re-pricing of products with little-to-no profit margin, we expect this will not
fully offset the negative impact. We estimate a net negative impact of ¥2.4 billion from external
factors.
Next, I will explain the impact of internal factors which we estimate will be a negative ¥500 million.
We look forward to a positive impact of ¥3.3 billion owing to an increase in gross profit in tandemwith a rise in sales in the domestic business and China business,but forecast a negative impact of¥300 million due to an increase in expenses in tandem with a rise in sales, and a negative impact of¥3.5 billion reflecting growth investments to realize our vision.

15

Improving corporate value through growth investment
Investing in growth to improve corporate value by realizing the vision
Growth Investment
・Research for personalize Kampo treatment
・Scientific elucidation of Pre-symptomatic Disease
・Research for expansion of the standardzation of
Kampo treatment
・Development of daikenchuto in the U.S.

Sustainable expansionof Kampo market

・Expansion of sales of Crude drug and drug pieces
・Expansion of sales of traditional Chinese
medicines (Building foundation for Shaanxi
Unisplendour Life Care Pharmaceutical Co.,)

Accelerate growthof China business・Expansion of e-promotion
・Introduction of AI technology to the Kampo value chain
・Cultivation technology development for crude drugs(double track for wild and cultivated crude drugs)

・Increase production capacity
・Securing manufacturing personnel in advance・Introduction of integrated core system
・Introduction of stock delivery system for employees

Productivity improvement
by DX(Reduce costs and SG&A expenses)

Improvingcorporate value
by realizing
TSUMURAVISION“Cho-WA” 2031

Strengthen businessfoundation
16

This slide illustrates growth investments necessary for realizing our long-term
vision.

In specific, these are investments for research and development, systems andto bolster production capacity.

Through these growth investments, we aim to continue to expand the Kampo
market, accelerate growth of the China business, reduce cost of sales andSG&A expenses by enhancing productivity via digitalization, and strengthen thefoundations that support our businesses.

Conditions in the business environment in which the Tsumura Group operates
are extremely harsh due to factors such as a continued depreciation in thevalue of the yen versus major currencies, and skyrocketing energy and raw
material expenses. Nonetheless, we plan to implement growth investments toimprove our corporate value through the realization of our vision.

16

Improve Productivity via Introduction of DX in the Kampo Value Chain
Cultivation/procurement

Shenzhen Tsumura Medicine,
China Medico Technology
Ishioka Center, Yubari Tsumura

Automation of selection operations

Manufacturing

Sales/education/popularization

Ibaraki/Shizuoka Plants
Shanghai/Tianjin Plants

Automation of each process

・Automated selector loaded with AI
Start operations at 1 site from April 2023,
expansion of applicable items and introduction
at all sites

Local
producers
Production
entities

Furthermore introduce
into upstream processes
Aim to automate crude drug
cultivation and primary processing

・Series of automation and labor-saving technology for manufacturing processes
Sequential deployment at all plants
・Automation technologies for inspections, operations and incidental tasks
Implement development mainly using AI technologies

17

We are aiming to implement the digitalization of the Kampo value chain which supports the
Kampo Group to improve productivity.

We plan to implement a series of automation technologies we developed and deploy
energy-saving technologies at all of our plants. We also aim to develop processes using
advanced technologies, including AI, for inspections, operations and supplemental
operations for which automation has been difficult thus far due to complex tasks.

We are pushing forward with the automation of selection operations in
cultivation/procurement.
The entire volume of raw material crude drugs that are delivered to each site by crude
drug production entities go through a visual sorting process, and defective and anomalous
raw material crude drugs are removed. As development of an AI-driven automatedselection device has been completed, we launched operations of the automated selection
device at one site from April 2023.

We plan to introduce the device at four sites by FY 2024. We are gradually expanding thecrude drugs that can be sorted using the device.

In addition, we look to embark on research to reduce the manpower required for crude
drug cultivation and primary processing, which are processes that are further upstream, byutilizing knowledge accrued from development carried out thus far.

17

Shareholder Return Policy
・Aim to improve corporate value through growth investments after continuing to payout
stable dividends

Dividend

In the upfront investment and foundation building stage,
continue to pay a stable annual dividend per share of ¥64

Growthinvestment

Upfront Investments/Foundation Building to Realize
the TSUMURA VISION “Cho-WA” 2031

Operating
CF

Interestbearing
debt

Improve
corporate
value•

Capital investments to secure a higher than ever level of production
capacity that will support growth in the domestic business•

Investment in M&A and the building of IT infrastructures to expand
the China business•DX investment to improve productivity

18

This is our shareholder return policy.

At present, we are in the foundation building stage for the realization of our
FY 2031 vision. On top of continued stable dividends, we are implementing
growth investments to improve our corporate value through the realizationof the TSUMURA VISION “Cho-WA” 2031.

Given our current situation, we are recognizing our PBR, which is below 1x,
and an ROE of under 8%, are critical management issues.

We are taking steps to realize an improvement in our corporate value in themedium/long term to meet the expectations of our stakeholders, including
investors.
This ends my portion of today’s presentation.

18

Basic Policy for the China BusinessPresident and Representative Director, CEO

Terukazu Kato

My name is Terukazu Kato.
I would like to start by thanking everyone for their constant support.
I will begin my portion of today’s presentation by going over the “Outlook for
the China Business.”

As we announced on April 13, 2023, in our formulation platform business in the
China business, we acquired 100% equity in Shaanxi Unisplendour Life Care
Pharmaceutical Co., Ltd.

19

Agenda01

China Business/Manufacturing Platform:
M&A Overview

02

Basic Policy for the China Business

20

First off, I will give an overview of this M&A deal and then explain the basic
policy going forward for our China business overall.

20

Agenda01

China Business/Manufacturing Platform:
M&A Overview

02

Basic Policy for the China Business

21

This is an overview of this M&A deal in the formulation platform business of
the China business.

21Formulation Platform: M&A Overview
Company name: Shaanxi Unisplendour Life Care
Pharmaceutical Co., Ltd. (Unisplendour)
Location: Baoji, Shaanxi Province
Registered capital: 80.07 million RMB
Number of group employees: More than 200 people(as of May 2023)

Unisplendour
100%
Beijing

Unisplendour Hi-tech
Pharmaceutical Co.,
Ltd.
100%

Baoji

Shaanxi Daxingtang
Pharmaceutical
Logistics Co., Ltd.

Shanghai
Xian

Overview of M&A progress
April 13: Entered into contract for transfer of equity interest (news release)
April 23: Completed procedures with the Bureau of Industry and Commerce (completed
filing notifications for a change in shareholders, change in legal representativeand change to a new Articles of Incorporation,issuance of new business licenses for 3 group companies)
May 9: Completion of closing
Slated for December: Change of pharmaceutical license holder
Completion of construction of new plant (Introduction of smart system in April 2024,
corporate name change in and after April, start of smart plant production in 2025)
22This time around, we acquired 100% equity in Shaanxi Unisplendour Life Care
Pharmaceutical Co., Ltd. in Shaanxi Province. Unisplendour Hi-tech PharmaceuticalCo., Ltd. and Shaanxi Daxingtang Pharmaceutical Logistics Co., Ltd. are under the
auspice of Shaanxi Unisplendour.

The location of Shaanxi Unisplendour is shown in the map. The company is located in
Baoji, which is about two hours drive by car from Xian, the capital of Shaanxi
Province.

After we entered into an agreement to transfer equity on April 13, we completed
filing procedures with the Bureau of Industry and Commerce on April 23, and thethree group companies were issued a business licenses.
In light of this, we transferred funds in accordance with the agreement andcompleted the closing on May 9, 2023.

Aiming for December, we plan to revise the drug license holders, complete the newplant which is under construction, and carry out production for new brands andquality in stages. At present, existing products are being produced at the Baoji Plant,
and we plan to continue selling these products over existing channels, mainly in
Shaanxi Province.

We aim to achieve low-cost operations, and therefore plan to introduce a cuttingedge smart system in April 2024.

22

Shaanxi Unisplendour Life Care Pharmaceutical Co., Ltd.
History
1918: Founded as Xingling Drugstore
1944: Changed business name to Daxingtang Pharmacy Chain
1958: Changed business name to local government-run Baoji
Chengyao (Medicinal Product) Factory
1963: Changed business name to Baoji Zhiyaochang(Pharmaceutical Factory)
1997: Established Shaanxi Chenbao Pharmaceutical Co., Ltd.
2001: Shareholder change to the Baoshang Group
2003: Changed corporate name to Baoshang Group Shaanxi
Chenji Pharmaceutical Co., Ltd.
2011: Changed corporate name to Shaanxi Chenji PharmaceuticalCo., Ltd.
2013: Shareholder change to Tongfang Pharmaceutical Group Co.,
Ltd./Shaanxi Xinhuiyuan Technology Co., Ltd.
2015: Changed corporate name to Shaanxi Unisplendour Life Care
Pharmaceutical Co., Ltd.

Main business: Manufacturing and sales of traditional Chinese medical products
Pharmaceutical license: 147 licenses for traditional Chinese medical products(Of which 67 licenses are for classic prescriptions)
10 licenses for chemical agents

Drug dosage form: Pills, capsules, granules, drug piece, syrup, oral fluids,
medicinal compound, medicinal liquor, and tincture
23This is the history of Shaanxi Unisplendour. The company is more than acentury old, having been founded in 1918.
The company possesses 147 licenses for traditional Chinese medical
products, including 67 licenses for classic prescriptions, and 10 licenses forchemical agents.

The Daxingtang Decree, at the bottom left, stipulates the company motto,
which lists six rules that must be observed.
・Crude drugs must be straightforward and simple. In other words, plants
should be grown in local soil and adapted to and grown in the environment,
and used as a crude drug based on its reputation as a medicine.
・Formulations must be unique.
・Weighing must be accurate.
・Crude drugs must be treated in line with regulations prior to their medical
use. This refers to the processing for raw material crude drugs, including“steaming,” “simmering,” and “stir frying/sauteing.”
・Quality must be excellent.
・People must be treated like family.

We assessed this company to be in line with the philosophy of Ping An
Tsumura and our conditions for an M&A deal.
23

Unisplendour: 147 License for Traditional Chinese Medical Products
Number of licenses for traditional
Chinese medical products by disease

Number of licenses for OTC/traditional
Chinese medical products

Number of license for traditional Chinese
medical products by dosage form

97 licenses in the
respiratory, digestive, blood supply
and urinary area, which are fields offocus for Ping An Tsumura(66% of the total)

104 licenses for OTC/switch OTC
traditional Chinese medical products (71% of
total)

There are many classical prescription
Chinese medicines
for all internal medicines; Pills make up 57%

Match with the Tsumura policy of “classicalprescription Chinese medicines + OTC”

In the China business, we are tackling
quality improvements for dosages forms thatexert efficacy/benefits, not only for granules

67 licenses for classical prescription
Chinese medicine: 45%

Tumor disease 1

Ears/nose 3

Capsules 3

Pediatrics 5
Cardiology 7

Granules 12
Obstetrics/gyn

Respiratory diseases

ecology 941

Switch OTC42

OTC 62

Oral fluids 22

Orthopedics 12

Pills 85
Nerves 13

Prescription
Digestive

Blood supply 10

system 28
Urology 18

Tablets 25

formulations
43

24

The graph on the left shows a categorization of the 147 licenses for
traditional Chinese medical products possessed by Shaanxi Unisplendour.
Based on diseases, 97 of the licenses are in the fields of respiratory,
digestive, blood supply and urological diseases, accounting for 66% of all its
licenses. This conforms with the domains that Ping An Tsumura is focused on.

As shown in the pie graph in the middle, Ping An Tsumura possesses 104
licenses for OTCs and switch OTCs, which accounts for 71% of all its licenses.
The Company also possesses 67 licenses for traditional Chinese medical
products, which represents 45% of all products.

As shown in the pie graph to the right, by dosage form, given classicalprescription Chinese medicines are the most prevalent, pills account for 57%.
In the China business, we plan to tackle an improvement in quality of dosage
forms that exert efficacy/benefits, not only for granules.

24

Unisplendour: Main Products
Jukankaiigan(proprietary item)

Yojingokakohukueki(proprietary item)

Shosekigan(proprietary item)

Rokumijiougan

25This is one example of the mainstays at Shaanxi Unisplendour. As proprietaryproducts, the company possesses unrivaled products.

There are classical prescription Chinese medicines that are similar to Japanese
Kampo formulations, but the crude drugs and compounds must conform withtraditional Chinese medical science and the Chinese Pharmacopoeia, and the
products must be produced using approved manufacturing methods.

It is our policy to revise regulations within an allowable scope further out, andwe will also build evidence using a quality design that is highly homogenous.

25

Building/Transforming Foundations in Chinese Business
Expand sales
channelsBrand building

Treatment/presymptomatic
disease/recuperation

Vision for Chinese
operations

Contributing to
the health of thecitizens of China

Sales image

April 2023
August 2022
March 2020

December 2016
Established
Tsumura China,
Inc.
Controllingcompany

Acquired equity
in Tianjin China
MedicoApril 2019Technology Co.,
Established Pingcun Ltd.: 80%
MedicalCore function ofSales function for the the Crude Drug
Crude
Drug
Platform
Platform andJune 2018
Medical & Health
Established Ping
business
June 2019
An Tsumura
Changed name to
Established Pingcun
Investment
Ping An Tsumura
Zongying
function for the
Medicine Co., Ltd.
Pharmaceuticals Co.,
China Business
Ltd.

Manufacturing function
for the Crude Drug
Platform
business/Medical &Health business

Established Ping An
Tsumura Traditional
Chinese Medicine
Technology Co., Ltd.
Research
Platform/Tradition
Chinese medicine
Research function

10 billion
yuan

Acquired equity
in Unisplendour:100%
Core function of
Formulation
Platform

Mainly OTC/Classical prescription
Chinese medicines

China Business strategy
Become a trusted
traditional Chinese
medicine company in China
26

Looking back on the transformation of the building of foundations in the China
business thus far, we established Tsumura China as a controlling company inChina in December 2016.
In June 2018, we merged with the Ping An Insurance (Group) Company ofChina, and established Ping An Tsumura as the function for investing into the
China business.
In April 2019, we established Pingcun Medical as the sales function for the
crude drug platform, and in June 2019 we created Pingcun Zhongying as the
production function for the crude drug platform.
In February 2020, we acquired 80% equity in Tianjin China Medico Technology
Co., Ltd. The name was changed to Ping An Tsumura Medicine as the corecompany of the crude drug platform business.
In August 2022, we established Ping An Tsumura Traditional Chinese Medicine
Technology as a Research Platform for traditional Chinese medicine.
In April 2023, we acquired 100% equity in Shaanxi Unisplendour Life Care
Pharmaceutical Co., Ltd., which has been positioned as a core company in the
traditional Chinese medical products business.
First, we aim to become a traditional Chinese medicine company that is trusted
in China.

26

Formulation Platform: Basic Policy for the Traditional
Chinese Medicine/Medical Products Business1. Improvements to Tsumura quality
Crude drug GACP, stability/homogeneity/dosage form for formulations

2. Establish a production system
Smart system, low-cost operations

3. Expand sales channels
From Shaanxi Province to China nationwide/Southeast Asia, EC & SNS

4. Brand building
Tsumura quality brand, Ping An Tsumura brand27

The traditional Chinese medical products business, which comprises mainly ofclassical prescription Chinese medicines, is being carried out based on the basic
policies which you can see here.

1.

As an improvement to Tsumura quality, we will manufacture and sell highquality traditional Chinese medical products, including adopting the crude
drug GACP, and achieving the stability, homogeneity and dosage form forformulations.

2.

We aim to realize low-cost operations by introducing a cutting-edge smart
system as the “establishment of a production system.”3.

As the expansion of sales channels, in addition to current store sales
channels in Shaanxi Province, we will expand the area, clarify the target
diseases, patient ages and gender, and develop new sales channels,
including e-commerce and social media.

4.

We will rapidly build a Tsumura quality brand and Ping An Tsumura brand,
and tackle brand building to become a traditional Chinese medicine
company that is trusted.

27

Figure of Capital Ties between Major Corporate Groups in China

Tsumura100％

Tsumura China Inc. established in December 2016 [Shanghai]
100％

56％

100％

63％

Ping An Tsumura Inc. established June 2018 [Shanghai]

Shenzhen Tsumura
Medicineestablished in March
1991[Shenzhen]

100％
PingcunMedicineestablished in
April 2019
[Shenzhen]

80％

100％

Ping An Tsumura
Medicine
equity acquisition in
March 2020
[Tianjin]

Unisplendour
Equity acquired in April
2023[Baoji, Shaanxi
Province]

51％
PingcunZongying
Pharmaceuticals
established inJune 2019[Hubei]97.65％
China Medico
Technology
equity acquisitionin March 2020
[Tianjin]

Manufactures Kampo
powdered extract
for Japan
Tianjin Tsumura
Pharmaceuticals
established in March2018[Tianjin]

100％
Ping An Tsumura Traditional
Chinese Medicine Technology
established in June 2022
[Shenzhen]

Shanghai Tsumura
Pharmaceuticals
established in July
2001
[Shanghai]

Crude drug platform

Formulation platform
Traditional Chinese medicine
research platform

28

This diagram on this slide shows the capital ties of the major corporategroups in China. As indicated in the area marked in red, all the functions forthe crude drug platform, formulation platform and research platform are
now complete owing to the recent acquisition of 100% equity in Shaanxi
Unisplendour and its subsequent conversion into a subsidiary in theformulation platform.

In the traditional Chinese medicine research platform, as was explained
earlier, we plan to depart from self-sufficiency by establishing a small-scalesite in the Greater Bay Area, which straddles Hong Kong, Macao andGuangdong Province and offers access within 30 minutes from Shenzhen,
and are also looking to proceed with joint research scheme.

We plan to move forward with the China business by leading crude
drug/product quality, manufacturing technology and research anddevelopment at business operations in which we have a majority stake.

28

Agenda01

China Business/Manufacturing Platform:
M&A Overview

02

Basic Policy for the China Business

29

Next, I will explain the basic policy for the China business overall.

29

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)30

As we are promoting our Corporate Purpose of “Lively Living for Everyone,”
we are also aiming to realize the TSUMURA VISION “Cho-WA” 2031 for the
China business as well.

30

Goals of 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.

31

We are pushing forward with the building of foundations in the China
business,and aim to make our China business account for 50% of ouroperations overall in 2031.

31

TSUMURA VISION “Cho-WA” 2031
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 development of afull-fledged disease bydiagnosing and treating
pre-symptomatic diseases
based on unnoticed
changes in health andnoticeable symptoms(Prevent change inexisting disease)
Prevent disease frombecoming serious via early
detection, by predicting its
progress and throughproper early treatment

Prevent
relapses(Post-healing
recovery)

Improve treatment
prognosis and QOL toprevent a relapse so thatthe patient can fully
rehabilitate and get backto society
32

In China as well, the number of metabolic syndrome patients is continuing toincrease reflecting the fast pace of aging, the same as in Japan, and due tochanges in lifestyle habits.

The three preventive measures for pre-symptomatic diseases is based on the“pre-symptomatic disease concept in traditional Chinese medical science.”
Recuperation and pre-symptomatic disease treatment have existed as aconcept in traditional Chinese medicine and Kampo medical science since the
Yellow Emperor's Classic of Medicine, which is the oldest medical book in
China.

In the China business, we aim to realize the aforementioned business, thesame as in Japan.

32

Vision for China Business
Recuperation(Prevention)

Health & Medicine
business

Nutrition (food)
Exercise
Sleep

Raw material crude drugs

Beverage by function

Traditional Chinese
medicine drug pieces

Gingseng

Yakushokudogen
nutritional ingredients

Health foods by function

Traditional Chinese
medical products business

Three preventive
measures for presymptomatic diseases

Treatment
Expandstandard Kampo
treatments
Personalizationof treatments

Drug piece added-value service“Personalized medicine,” etc.

Pre-symptomatic
treatment(Prevention of presymptomatic
diseases)Prevent
Prevent disease
recurrence
from becoming(Post-healing
seriousrecovery),(Prevent changes inexisting diseases),

OTC versions of traditional
Chinese medicines
Apply for classical prescription
Chinese medicine

33

In the China business, as you can see, we plan to implement the health &medicine business in the fields of recuperation, prevention and presymptomatic diseases, and the traditional Chinese medical products business,in the fields of treatment and pre-symptomatic diseases.

33

Health & Medicine Business: Crude Drug Platform
Yakushokudogen
Recuperation(Prevention)
Nutrition (food)
Exercise
Sleep

China
Southeast Asia
Crude drug
platform

Beverages being sold at
Tsutaya Books(Shanghai)Ping An Tsumura
Medicine, etc.

34

The health & medicine business covers the fields of recuperation, prevention
and pre-symptomatic diseases. Based on the Yakushokudogen concept, weplan to develop products by function by leveraging crude drugs, engage inbusiness that contributes to health in the crude drug platform, and aim to
expand sales channels in Southeast Asia, including through future businessaffiliations.

The ad on the right shows a " health drink that warms one's mind and body,"
which is a Ping An Tsumura brand product sold at Tsutaya Books in Shanghai.
This is a Yakushokudogen beverage that is based on a hint from “Jin Gui YaoLue,” a classical Chinese medical book, and contains crude drugs as
ingredients, including malt, large jujubes and licorice.

34

Health & Medicine Business: Building New Sales Channels

Sales channels

Product sales

Integration/input

Brand
building

Brand
channels

Live commerce
platform

e-commerce
platform

Social media
Contents distribution

35

Tsumura China, which is our controlling company in China, has appointed astrategic director, finance director and legal director to implement the China
business, including M&A. The marketing director plans the strategies for thehealth & medicine Business and the traditional Chinese medical products
business.

In the health & medicine business, we are hammering out policies to use social
media, e-commerce, and live commerce in a coordinated manner to build newsales channels and brands.

35

Traditional Chinese Medicine/Medical Products
Business: Crude Drug/Formulation Platforms

Treatment
Expand standard
Kampo
treatments
Personalizationof treatments

Personalized
medicine

Classical
prescription
Chinese medicines

China
Crude drug
platform

China
Southeast
Asia
Formulati
Shaanxi
Unisplendouronplatform

Ping An Tsumura
Medicine

Drug pieces
Drug piece
added-value
service
Personalized
medicine

Fluid extract

Powdered
extracts

Decoction

Fluid extract for
use by traditional
Chinese doctors

36

In the traditional Chinese medical products business, which is a field oftreatment, we aim to develop both standard treatments and personalized
treatments, as is the case in Japan.

In traditional Chinese medical science, “dialectical proof treatment” is thefundamental diagnosis and treatment method. Treatment is carried out using
a formulation that is suited for each individual. It is said to be the pioneer of
personalized medicine.
It takes time to brew each traditional Chinese medicine drug piece. Drughomogeneity and portability are among the inconveniences of using
traditional Chinese medicine drug pieces. In light of this, at Ping An Tsumura
Medicine, it is our policy to expand the “personalized medicine” business as avalue-added service for drug pieces.

China being a large country, it may be difficult to access medical institutions
in certain cases. Therefore, there are needs for household medicine
purchased through online medical consultations, vending machines and ecommerce.
In the field of primary care, mainly OTC medical products and classicalprescription Chinese medicines, it is our policy to supply medical productsthat boast superior efficacy, safety and quality.

36

Traditional Chinese Medicine Business: “Personalized
Medicine” Drug Piece Added-Value Service

Traditional Chinese
medicine
Personalization oftreatments

Small-lot, high-mix smart production
systemCrude drug extract
extraction/concentration/packaging

Ping An Tsumura
Medicine
China Medico
Technology

37

In this age of digital transformation, it is our policy to introduce a cuttingedge smart system for the production system to realize low-cost operations
using labor-saving and automated facilities.

At China Medico Technology, which is under the auspice of Ping An Tsumura
Medicine, the crude drug platform, as you can see, we have introduced asmall-lot, high-mix smart production system, and are at present at thevalidation stage.

We aim to expand distribution of high-quality crude drugs, and increasehigh-quality treatments using traditional Chinese medicine drug pieces at
hospitals.

We are positioning personalized medicines as a value-added services. This isa smart service in which digital instructions for traditional Chinese medicine
drug piece formulations are received from doctors of traditional Chinese
medicine, brewed for the patient in line with prescription, processed into
decoction, fluid extract, or powdered extract, and packaged and sent by
postal service directly to the patient.
It is our policy to increase the proportion of this service going forward.

37

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 avariety of risks and uncertainties 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 andforeign exchange 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 orshould sales 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.

38

We plan to move forward with the China business in accordance with thesebasic policies.

We are also embarking on the establishment of a business plan for Shaanxi
Unisplendour. We are forecasting corresponding impact from the addition ofthis new business to our First Medium-Term Management Plan. We aim toestablish Version 2 of our First Medium-Term Management Plan,and areconsidering an opportunity to announce and explain this newly revised First
Medium-Term Management Plan.

Moreover, given that the China business has entered the stage for full-scale
operations, we plan to supply information to investors and the media in
China going forward.

This ends my section of today’s presentation.
Thank you for listening.

38

Appendix

39Factors Triggering Changes in Operating Profit (YoY)（ Million yen ）（ Million yen ）Breakdown of change in net sales:+3,417+3,417(1,352)(2,244)(1,280)

Domestic+2,737

Overseas+679

Breakdown of change in cost-to-sales: (1,352)
Crude drug procurement cost(619)

Raw material expense (Domestic: Soaring expense for(598)

materials other than raw material crude drugs)

22,376

20,916

Processing expense, etc.

+235

Outside sales in China(369)

Breakdown of change in SG&A expense：( 2,244)
Depreciation（incl. one-off expense at Tianjin Plant）

Profit impact Profit impact Profit impact Profit impact
FY 2021
FY 2022from changes
due todue toOperating profit due to changes
Operating profit
in SG&A
exchangechanges inin salesexpensesrate
cost-to-sales

(606)

R&D

(220)

Advertising＋101

Salary allowance（incl. one-off expense at Tianjin Plant）

+140
+155

Sales promotions
Other (system introduction(800), volume of activities(700)etc.)
Foreign exchange impact(1,280)(1,814)40

40

Financial Condition/Cash Flow Position（ Million yen ）Total assets

FY 2021

FY 2022(March 2022)(March 2023)

350,981

396,81345,831
38,900Change268,320

121,561

128,492

6,931

Total liabilities

92,871

124,566

31,695Current liabilities

45,87547,205

1,329

Non-current liabilities

46,99677,36130,365258,109272,246

14,136

68.3％

63.5％

(4.8)pt

Total net assets

Equity ratio

92,751

101,726

8,974

3,347

Merchandise andfinished goods

10,247

11,2571,009

179Work in process

13,614

14,430816

118

Raw materials andsupplies

68,88976,038

7,148

3,049

Inventories

Cash and cash
equivalents at end of
periodOf which,
Exchange rate

Impact of exchange ratetranslations

ChangeFinancing activities

FY 2022(March 2023)

(154)

675

Cash and cash equivalents at
beginning of period

FY 2021(March 2022)+164

Investing activities

229,420（ Hundred million yen ）
947
+18

+244

Operating activities

Current assets
Non-current assets

Bond issuance: 30 billion yen (Sep. 8, 2022)

41

41

Comparison with the Prescription Pharmaceutical Market
Sales increased 1.8% year-on-year on a NHI drug price basis; the rate of sales growth
was sluggish due to the negative impact of restricted shipments(YoY/drug price basis)

All sales channels
7.9%

Tsumura

9.6%

7.7%
6.6%

7.1%

5.5%
5.4%

Prescription
Pharmaceuticalmarket

4.6%

4.2%

3.6%

3.3%

2.9%

2.5%

3.3%

1.3%

1Q

FY 2021

2Q

3Q

4Q

1Q

5.5% (Excluding
restricted shipment
items)

1.8%
1.3%

2Q

3Q

4Q

FY 2022

Copyright © 2023 IQVIA.Tsumura proprietary calculation based on JPM April 2021–March 2023; All rights reserved (reproduction in any form prohibited)42

42

Comparison with the Prescription Pharmaceutical Market
Tsumura(YoY/drug price basis)

Prescription pharmaceutical market

General clinics (GP)
12%
10%

9.1%

8.7%
7.5%

8%

10%

7.8%

8%

6.3%
5.2%

6%
4%
2%

Hospital market (HP)
12%

11.1%

2.3%

1.9%

2.4%

0.7%

4.1%
2.3%

1.4%
3.0%

0%
-2%

1Q

-4% FY2021
-6%

2Q

3Q

4Q

1Q
FY2022

6%

2Q

3Q

4Q

4.1%

5.1%
3.9%

4%
2%

1.3%

6.4%
4.7%

-4%

3.4%

2.7%

1Q

2Q

3Q

FY2021

1.3%

3.7%

3.1%

0%
-2%

3.8%

1.1%
3.2%

4Q

1.1%
1Q

2Q

(0.3)%(0.3)%
3Q

4Q

FY2022-6%

Copyright © 2023 IQVIA. Proprietary calculation by Tsumura based on “JPM Apr. 2021 – Mar. 2023”
Reproduction prohibited

43

43

COVID-19 Impact and Outlook
・Symptoms reflecting changes in the living environment continue to offer prescription
opportunities despite a partial decline
・Increase in prescription opportunities for common cold-related formulations due to the
spread of common colds during the winter season(Shipment volume basis: Growth rate)

117%

Symptoms

Demand outlook

108%

106%

Common cold-related formulations

98%
FY2020FY 2021

FY 2022

Common129 prescriptions

cold-related

110%

114%

Changes in theliving environment

Formulations for changes
in the living environment
Anxiety/insomnia (6 formulations)
Fatigue (2 formulations)Dizziness (2 formulations)
The pace of growth is sluggish

Skin irritation,acne due to the use of masks(4 formulations)

Common cold, influenza,
hay fever, etc.
(13 formulations)

Ease up of measures to control
infections

Growth owing to the spread of common
colds during the winter season

44

44

Create Value and Implement Job Satisfaction Reforms Leveraging
Organizational and Human Capital
Cultivate Management Personnel
Basic management lecture
・Employees that completed the course
52 people (of which 9 were women)
・Employees currently taking the course
49 people (of which 8 were women)

Directors, Executive Officer,
General Managers
Produce management
personnel

Division head

Foster Corporate CultureLong-Term Vision (10-year)
Standard KPIs
for all executive officers

Survey outcome was
Over 4.0

Average for responses to the 30 items in thesurvey for instilling philosophy(5 points is a perfect score)
4.06
4.02
4.00
3.99
3.91

Basic management
lecture(3-year period)

Chiefs/section
heads

Advance(3-year period)

General staff

Basic(3-year period)

2018

2019
Be able to see
things as one’s
own concern

Still waiting-and-seeing
Someone else’s concern
to a certain extent

2020

2021

2022

Make progress withinternal
branding/personalizati
on, and realize aconnection between
philosophy and action
Realizing that
Considering moreembodying theautonomously what should bephilosophy contributes
done from one’s heart
to results

45

45Create Value and Implement Job Satisfaction Reforms Leveraging
Organizational and Human Capital

Promote diversity and inclusion
Encourage male employees to takechildcare leave

Increased ratio of
female managers
8.4%
7.4%

100.0
90.0
80.0

6.3%

(Acquisition ratio for childcare leave and average period30
of childcare leave)
24.1 days

24.6 days

70.0

12.3 days

60.0

50.0

30.0
20.0

10

52%
0

37%

40.0

20

-10

19%
-20

10.0
0.0

April
2021
2021年4月

April
2022
2022年4月

April
2023
2023年4月

Results mainly from the active participation of womenin programs, including the basic management lectureand next-generation leader training, and the holding oftraining seminars for female managers-30

2020年度FY20202021年度FY20212022年度FY2022

Results from the promotion of men taking childcare leavethrough the further expansion of support systems forchildcare/nursing care and work, and through the“Ikumen Promotion Project”*The figures are standalone for Tsumura

46

46

Dividend and Payout Ratio Trends
45 .0 %

100

35.9% 35.7%
32.1%

31.9%

33.5%

37.4%

35.6%

40 .0 %

31.9%

29.7%

80

35 .0 %

26.0%

30 .0 %

60

25 .0 %

32

32

32

32

32

32

32

32

32

32

Year-end
dividend
期末配当（円）(yen)

20 .0 %

40
15 .0 %

Interimdividend
中間配当（円）(yen)

10 .0 %

20

32

32

32

32

32

32

32

32

32

Payout
配当性向ratio

32
5. 0%

0

0. 0%

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023
FY
2023
forecast

Note: The fiscal year-end dividend for FY 2022 and the dividend payout ratio (forecast) is a forecast number as it is predicated by the approval of thedividend resolution at the 87th Ordinary General Meeting of Shareholders.

4747