Business Results Briefing for
the Fiscal Year 2020

May 12, 2021
President and Representative Director, CEO

Terukazu Kato1

Today‘s agenda
１．FY2020 Business Results Overview
２．Impact of COVID-19
３．Domestic Business４．Overseas Business
５．FY2021 Forecast
６．Prospect of Chinese business
７．ESG／Sustainability

2

Today‘s agenda
１．FY2020 Business Results Overview
２．Impact of COVID-19
３．Domestic Business４．Overseas Business
５．FY2021 Forecast
６．Prospect of Chinese business
７．ESG／Sustainability

3

FY2020 Business Results Overview(Million yen)

FY2020
Revised Plan

FY2020Results

Achievement
rate

130,500

130,883

100.3％

Domesticー

124,516

ー

ー

ー

ー

Overseas

ー

6,367

ー

ー

ー

ー

Operatingprofit19,30019,382(14.8％)(14.8％)

100.4％

＋505

＋2.7％

20,20020,866103.3％

19,649 ＋1,216＋6.2％

15,00015,332102.2％

13,765 ＋1,567 ＋11.4％

20%

40%

60%

（Announced on
February 5, 2021）

Net sales(Operating profit
margin)Ordinary
profitProfitattributableto owners of parent

0%

Ratio to total sales

FY2019Results

Vs. FY2019
AmountChange123,248 ＋7,635＋6.2％

18,876(15.3％)

80%

100%

Prescription Kampo Products©2020 TSUMURA
& CO.
90.6%

0.3%
Other prescription pharmaceuticals

Healthcare

3.4%

5.7%

External sales by consolidated subsidiaries

4■FY 2020 Business Results Overview
First, I will give an overview of business results for FY 2020.
We revised our earnings forecast, in line with the announcement we madeon February 5, 2021, given the impact from COVID-19 to our businessactivities in FY 2020.
We achieved the results shown here in comparison with our revised earnings
plan.
We secured net sales and profit growth year-on-year.
In addition, starting from the fiscal year-end results for FY 2020, we aredisclosing net sales by region.

4

Key Points in Performance
Sales and profit growth despite of impact on business performance by
COVID-19. (YoY)
Sales and profit achieved revised plan.
Net sales

130,883

million yen

Revised Plan
achievement rate

100.3％YoY◼

Domestic sales were 124,516 million yen.

◼

Net sales rose 5.2% year-on-year owing to the consolidation of a subsidiary in China.

◼

Sales of the 129 prescription Kampo products climbed 1.1% year-on-year.

◼

Sales of healthcare products including OTC Kampo medicines increased 16.7% year-on-year.

◼

Overseas sales were 6,367 million yen.

Operating profit

19,382 million yen

Operatingprofit margin

14.8%

Revised Plan
achievement rate

100.4%

+6.2％

YoY

+2.7%

YoY

(0.5)pt◼

The cost-to-sales ratio was 42.7%, a rise of 1.5pt year-on-year. Although crude drug-related costs wereabsorbed by a rise owing to the NHI drug price revision, the increase reflects impact of outside sales of China.
Compared to plan, 0.2pt rose up.

◼

The SG&A ratio was 42.4%, a decline of 1.1pt year-on-year, mainly reflecting unused expenses due to restrictedactivities in tandem with the impact of COVID-19. Compared to plan, 0.3pt declined.

Ordinary profit

20,866 million yen

Revised Plan
achievement rate

103.3%

YoY+6.2%

Profit attributable to15,332 million yen

Revised Plan
achievement rate

102.2％

YoY+11.4%

owners of parent

5■Key Points in Performance
I will explain the key points of our performance in FY 2020.
Net sales rose 6.2% versus a year earlier. Sales of prescription Kampo
products climbed 1.1%, sales in healthcare increased 16.7%, and sales in
the Overseas and China Businesses totaled ¥6.3 billion.
The cost-to-sales ratio was 42.7%, an improvement of 1.5 points year-onyear. The rise in the cost-to-sales ratio reflects impact from the Overseas
and China Businesses.
The SG&A ratio was 42.4%, a decline of 1.1 points year-on-year. Meanwhile,
our operating profit margin stood at 14.8%, a decrease of 0.5 points.

5Factors Triggering Changes in Operating Profit(YoY)(Million yen)

(Million yen)

Changes in sales : Breakdown+4,491 (2,060)(1,925)

Domestic＋945

Overseas＋3,546

Changes in cost-to-sales ratio: Breakdown

Sales composition（Domestic）

19,382
18,876

Crude drug-related cost
（Domestic）＋1,047

Outside sales in China（Overseas）(2,007)

Reflection of PPA results（Inventories）(577)

Changes in SG&A expenses: Breakdown

Sales-related expense(872)

R&D expense(207)

Traveling expense＋758

SG&A expense of PINANTSUMURA MEDICINE CO.,FY2019OperatingprofitProfit impact
Profit impact
Profit impact FY2020
due to changes due to changes from changes Operatingin cost-to-sales
in salesin SG&A
profitratio
expenses(523)(1,205)

Amortization of goodwill, etc.

(533)

Other

＋134
6

■Factors Triggering Changes in Operating Profit (YoY)
I will explain the factors that triggered changes in operating profit year-onyear.
Operating profit totaled ¥19.3 billion, an expansion of ¥500 million year-onyear. Sales growth contributed ¥4.4 billion to operating profit, meanwhile,
cost-to-sales had a negative impact of ¥2.0 billion, and cost growth had anegative impact of ¥1.9 billion.
The increase in cost-to-sales of ¥2.0 billion reflects the following. Although
the decline in crude drug-related costs of ¥1.0 billion offset an increase of¥500 million in Japan caused by an increase in unit sales prices due to NHIdrug price revisions and impact from sales mix, there was an increase of¥2.0 billion in outside sales in the Overseas and China Businesses, and ¥500
million was posted as cost-to-sales in FY 2020 from the total allocations toinventory using the PPA (Purchase Price Allocation) goodwill method.
The increase in expense of ¥1.9 billion was mainly attributable to a growth in
SG&A expense of ¥1.2 billion at the acquired Ping An Tsumura Pharma(former Tianjin China Medico Technology), and amortization of goodwill andpost-PPA intangible fixed assets of ¥500 million. Expense posted in FY 2020
related to goodwill came to ¥1.1 billion versus a plan of ¥600 million.

6

Financial Condition/Cash Flow Position(Million yen)

196,973204,273

7,300

Non-current assets

115,017

114,789(227)

97,99385,894(12,098)

Current liabilities

48,476

48,380(95)

Non-current
liabilities

49,51637,513(12,003)

213,997

233,169

19,171

65.8％

68.3％

2.5pt

FY2019FY2020ChangeTotal liabilities

Total net assets
Equity ratio

Inventories

75,80680,755

4,948

Merchandise andfinished goods

10,924

13,9393,014Work in process

12,41813,396977

Raw materials andsupplies

52,46353,419955※The 2019 results have been rearranged after PPA adjustment.

(104)

596

+35

576
＋1

Cash and cash
equivalents at end of
periodCurrent assets

New consolidation

7,073

Impact of exchange ratetranslations

319,063

Financing activities

311,990

Total assets(Hundred million yen)+161 (73)

Investing activities

ChangeOperating activities

FY2020Cash and cash equivalents at
beginning of period

FY20197■Financial Condition & Cash Flow Position
This slide shows our financial condition and cash flow position. I will also
only explain the pertinent points here.
Of the total increase in current assets of ¥7.3 billion, the rise in inventory
accounted for ¥4.9 billion. The rise in products was ¥3.0 billion, the growth
in work in progress was ¥900 million and the increase in raw materials andsupplies was ¥900 million. The increase in work in progress reflects impact
from the No. 3 SD building at the Ibaraki Plant which was fired up in June
2020.
As mentioned in the appendix, the goodwill for intangible fixed assets at theend of the previous fiscal year was ¥12.0 billion. However, we posted
goodwill based on PPA of ¥8.2 billion, inventory of ¥2.6 billion, intangible
fixed assets of ¥2.0 billion, and a non-controlling interest of negative ¥900
million.
Total liabilities reflected repayment of short-term borrowings by aconsolidated subsidiary in China, and transfer of a portion of long-termborrowings to long-term borrowings due within 12 months.
Our equity ratio improved 2.5 points to 68.3%.
The waterfall chart on the right illustrates our cash flow performance.
7

Today‘s agenda
１．FY2020 Business Results Overview
２．Impact of COVID-19
３．Domestic Business４．Overseas Business
５．FY2021 Forecast
６．Prospect of Chinese business
７．ESG／Sustainability

8

COVID-19 Impact
Analysis of impact to sales of prescription Kampo products(Actual sales basis)

Although there were rising expectations in Kampo for the alleviation of
COVID-19 related symptoms, there was a major negative impact ofaround ¥2.6 billion due to a decrease in prescriptions for treating thecommon cold.
(Hundred million yen)

COVID-19 Impact

30
15

+17

0
-15
-30

(43)

-45
(Common cold-related prescriptions: (¥2.7 billion))
9■COVID-19 Impact
As an impact from COVID-19, in China business activities were suspended
from 1Q to 2Q.
In Japan, there was negative impact mainly from a curb in medical exams
and positive impact from an increase in related prescriptions. Internally, we
verified the yen-amount of impact to sales of prescription Kampo products,
positive impact totaled ¥1.7 billion, negative impact came to ¥4.3 billion.
Deducting the positive factors from the negative factors, there was aremaining negative impact of ¥2.6 billion.
Of the negative impact of ¥4.3 billion, a major factor was a ¥2.7 billion in
negative impact from cold-related formulations.

9Main Kampo Formulations Impacted
by COVID-19
Change in key prescriptions due to impact from COVID-19(Actual sales basis)

Formulations with positive impact

Formulations with negative impact

Hochuekkito (Fatigue, loss of appetite)✓ Bakumondoto (Cough, bronchitis)✓ Shoseiryuto (Nasal inflammation, bronchitis)

Juzentaihoto (Fatigue, loss of appetite)
Kamishoyosan(Anxiety, menstrual irregularity)

Hangekobokuto (Anxiety, insomnia)
Bofutsushosan (Obesity)✓ Shosaikotokakikyosekko (Tonsillitis)✓ Maoto (Influenza, rheum/catarrh)✓ Chikujountanto (Influenza, common cold)✓ Kakkontokasenkyushini(Nasal inflammation, nasal congestion)

Keigairengyoto (Acne)✓ Kikyoto (Tonsillitis)✓ Shin'iseihaito

Seijobofuto (Acne)✓ Maobushisaishinto

Jumihaidokuto (Dermatitis)(Nasal inflammation, nasal congestion)(Rheum/catarrh, bronchitis)

Shakuyakukanzoto (leg cramps)*Common cold-related prescriptions, with the exception Shakuyakukanzoto
10■Main Kampo Formulations Impacted by COVID-19
Sales of main Kampo formulations that fluctuated due to COVID-19 impact
grew primarily owing to mental disorders and skin diseases triggered bychanges in the living environment and as it has become routine to wear amask.
Also, most of cold-related formulations were negative results.

10

COVID-19 Impact on Sales Activities
Impact to operating activities◇ Increase in opportunities to prescribe Kampo
to treat COVID-19-related symptoms
Positive(Patients with anxiety and skin disorders, etc. ↑)◇ Rising expectations in Kampo(Contact via Web Lectures with doctors that prescribe 10
or less Kampo prescriptions ↑)◇ Decrease, including for upper respiratory tract
inflammation due to enforcement of infection
prevention
Negative◇ Refraining from undergoing medical exams anddecrease in number of surgeries◇ Fortify restrictions on visitations to hospitals
11■COVID-19 Impact on Sales Activities
Summarizing the impact to sales activities, a positive impact was an increasein prescription opportunities for and heightened expectations in Kampo for
COVID-19-related symptoms.
Conversely, as negative impact, in addition to a decrease mainly for upper
respiratory tract inflammation due to the enforcement of infection prevention,
medical exams were curbed and the number of surgeries declined, andrestrictions were tightened for visiting medical institutions.

11

Today‘s agenda
１．FY2020 Business Results Overview
２．Impact of COVID-19
３．Domestic Business４．Overseas Business
５．FY2021 Forecast
６．Prospect of Chinese business
７．ESG／Sustainability

12

Domestic business；prescription Kampo productsComparison with the prescription pharmaceutical market(Drug price basis)

Prescription
pharmaceuticalmarket（YoY）

Tsumura（YoY）Marketcomparison
from ourperspective

Overall(2.7)%+1.6%+4.3ptHospitals(1.3)%(1.9)%(0.6)pt

General clinics(3.7)%+2.4%+6.1ptCopyright © 2021 IQVIA.
Estimated based on IQVIA JPM Apr.2019-Mar.2021.
Reprinted with permission

13■Domestic Business: Prescription Kampo Products
I will now explain the major prescription Kampo products in the domestic
business.
In comparison with trends in the market overall, our performance wasnegative in the hospital (HP) market. The decrease in surgeries at hospitals,
among other factors, has a negative impact on our mainstay formulations.
We also determined that this reflects a decline in the volume of information
on prescription Kampo products chiefly due to stricter restrictions on
visitations.

13

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

FY 2019

FY 2020

YoY

Drug-fostering program
formulations

1

100

Daikenchuto

10,357

10,394

+37

+0.4%

2

54

Yokukansan

7,774

7,884

+110

+1.4％

4

43

Rikkunshito

7,370

7,501

+130

+1.8％

8

107

Goshajinkigan

3,603

3,628

+25

+0.7％

24

14

Hangeshashinto

1,390

1,413

+22

+1.6％

30,49630,822

+325

+1.1％

Total sales for drug-fostering program formulations

41

Hochuekkito

7,113

7,632

+519

+7.3％

5

68

Shakuyakukanzoto

5,202

5,084

(118)

(2.3)％

10

29

Bakumondoto

4,839

3,513

(1,325)(27.4)％

724

Kamishoyosan

4,598

4,873

+274

+6.0％

6

17

Goreisan

4,491

4,960

+468

+10.4％

Total sales for growing formulations

26,245

26,064(180)(0.7)％

Total sales for 119 formulations other than drugfostering program and growing formulations

60,60561,725+1,119+1.8％

117,347

118,612+1,264+1.1％

Growing formulations

3

Total sales for 129 prescription Kampo products

14■Sales of Drug-fostering Program Formulations/Growing
Formulations
Sales of drug-fostering program formulations and growing formulations were
impacted due to the NHI drug price revisions in April 2020, and a curb in
medical exams due to COVID-19. Sales for prescription Kampo products
overall grew 1.1% year-on-year.
Sales of the five drug-fostering program formulations rose 1.1% year-onyear while sales of the five growing formulations dipped 0.7%. Sales of
Bakumondoto decreased 27.4% year-on-year, and sales of
Shakuyakukanzoto dropped 2.3%. Sales of other formulations grew.
Sales of the other 119 prescription Kampo products rose 1.8% year-on-year.

14Analysis of Factors Impacting Drugfostering Program Formulations
Key positive factors versus the previous fiscal year
(YoY)

Daikenchuto(+0.4%)

Yokukansan(+1.4%)

Rikkunshito(+1.8%)

Goshajinkigan(+0.7%)

Hangeshashinto(+1.6%)

Realization of a market owing to awarenessactivities for abdominal bloating in tandem withconstipation
Recommend several prescriptions, including
Ninjinyoeito, depending on the behavioral andpsychological symptoms of dementia
Realize a market through awareness activities forupper abdominal symptoms in tandem with FD(functional gastrointestinal disorders) and GERD
(gastroesophageal reflux disease)
Deploy the provision of information, mainly inorthopedics, anesthesiology and urology
As a dual promotion with Rikkunshito, deploy
awareness activities on heartburn in tandem with
GERD, using new EBM

Implement sales measures to cover the negative performance of sales tohospitals (HP) with sales to general practitioners (GP)15

■Analysis of Factors Impacting Drug-fostering Program Formulations
This is an analysis of factors impacting drug-fostering program formulations.
The main factor for year-on-year growth in the five drug-fostering program
formulations is that sales to general practitioners (GP) offset the negative
performance in sales to hospitals (HP).

15Three Important Domains of Sales Activities◼

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

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

Geriatric health domain
Psychiatric andneurological disorders
D

Yokukansan+ related
formulations

Digestive systemdiseasesD

Rikkunshito

D

Daikenchuto

G

Hochuekkito+ related
formulations

Respiratory diseases

G Bakumondoto+ related
formulations
Peripheral symptoms
for frailty
D

Goshajinkigan

G Hochuekkito+ related
formulations(supportive care)

Women’s healthdomainMitigation of side effects, etc.

Diseases specific to womenCancer domain

D

Rikkunshito

D

HangeshashintoD

Goshajinkigan+ related
formulations

Peripheral symptoms for circulatory disorders

G

G

Kamishoyosan+ related
formulations

Other diseases and symptoms
D

Daikenchuto

G Goreisan+ related
formulations

Goreisan + related formulations

D

Drug-fostering program formulations

G Growing formulations

16■Three Important Domains in Sales Activities
As we have thus far, we are positioning geriatric health, cancer (supportivecare) and women’s health as the three important domains in our sales
activities, and continuing to carry out activities that focus primarily on drugfostering program formulations and growing formulations.
In the domain of geriatric health, as a key measures, we are newly adding
the fields of peripheral symptoms for circulatory disorders and peripheral
symptoms for frailty owing to their substantial market needs. The sections
with the blue borders are the newly added fields.

16Symptoms of Circulatory Disorders and Frailty
Main symptoms and representative
prescriptions for Kampo indications
Peripheral symptoms forcirculatory disorders

Peripheral symptoms for frailty(Seniors/weakness)(Geriatric heart failure)

Edema, diarrhea, dizziness(Goreisan)

Fatigue (Hochuekkito)
Bloating (Daikenchuto)

D

D

D

Fatigue (Hochuekkito)

G

Loss of appetite (Rikkunshito)
Chills (Goshajinkigan)

Abnormal urination/pain(Goshajinkigan)

G

D

G

Loss of appetite (Rikkunshito)
Insomnia (Yokukansan)

D

D

Anxiety (Kamikihito)

Constipation (Mashiningan)D

GrowingDrug-fosteringGformulations
program formulations

17■Symptoms of Circulatory Disorders and Frailty
In the field of peripheral symptoms for circulatory disorders, the peripheral
symptoms shown for heart failure in seniors and in the field of peripheral
symptoms for frailty, the peripheral symptoms shown are those which can betreated using Kampo as a measure to prevent them from becoming bedridden.
Major formulations for each of these symptoms is mentioned herein.

17

Ideal information provision for a newgeneration
Increase contact with doctors via a new form of information provision activities
Number of activity targets (image of percentage)
4,00 0,000

1.2

3,50 0,000

1

3,00 0,000

0.8

2,50 0,000

2,00 0,000

0.6

1,50 0,000

0.4

Restrictedactivities due to
COVID-19

1,00 0,000

50 0,000

0.2

0

0

2018

2019

2020

Visitations

Online lectures

Remoteinterviews

2021 plan

2022 plan

e-promotion

Remotepresentations

On-demand
videos

Proprietarywebsite18■Ideal Information Provision for a New Generation
Due to COVID-19, the method of information provision itself is undergoing achange. We are pushing forward with discussions on this topic internally.
As explained earlier, we are enhancing e-promotions, mainly at hospitals, forthose areas that were negatively impacted.
We are intensively implementing necessary investments into the epromotions mentioned below.
It is our policy to take a new approach to dramatically improving the
productivity of our information provision.

18

Today‘s agenda
１．FY2020 Business Results Overview
２．Impact of COVID-19
３．Domestic Business４．Overseas Business
５．FY2021 Forecast
６．Prospect of Chinese business
７．ESG／Sustainability

19

Overseas Business；China Business
Overseas sales：6,367 million yen
Overseas sales composition ratio

other
7%

drug pieces16%

Raw material crude drugs
77%

20■Overseas Business: China BusinessThis pie graph shows a breakdown of sales ratios for the total overseas salesof ¥6,367 million.
Raw material crude drugs accounted for around 77%, drug pieces made up
16% and others represented 7% of total overseas sales.

20Overseas Business；US development
Policies for TU-100 (Daikenchuto) development in the United States

Target disease – Postoperative Ileus (POI)FY 2019

FY 2020Type C
meeting with
the FDAFY 2021

FY 2022

FY 2023 onwards

Late PhaseⅡ

Decision on
the Master
Schedule

3 months delay due to the
influence of COVID-19

After Late Phase Ⅱ
has finished, decideon policies for
Phase III onwards

About 50 facilities
nationwide

21■Overseas Business: Development in the US
In the development of TU-100 (Daikenchuto) in the US, the primarydevelopment target was narrowed down to postoperative ileus in FY 2018.
From the second half of FY 2020, we embarked on Phase 2 trials.
We plan to implement trails at 50 facilities around the US. However, we areexperiencing a delay of around 3 months due to the impact of COVID-19.
However, we are gradually pushing forward with procedures starting withfacilities where we can resume trials.

21

Today‘s agenda
１．FY2020 Business Results Overview
２．Impact of COVID-19
３．Domestic Business４．Overseas Business
５．FY2021 Forecast
６．Prospect of Chinese business
７．ESG／Sustainability

22

Change in Accounting Standards
Adoption of “revenue recognition standards” from FY 2021
[Reference: Assumption of adoption in FY 2020]
FY 2020 results FY 2020 results(former standards)(new standards)

Net sales

130,883

116,413

Cost of sales

55,951

55,949Gross profit

74,93160,464

SG&A

55,54841,081

Operatingprofit19,382

19,382(Million yen)

Impact(14,469)(2)(14,467)

23■Changes in Accounting Standards
First, I will explain revisions to those accounting standards which will be
adopted from FY 2021.
The new revenue recognition standards we will adopt from FY 2021 will
chiefly impact the recording of net sales and SG&A expenses but will not
impact operating profit.

The table on this slide shows the FY 2020 income statement rearranged
using the new revenue recognition standards. The impact to net sales andSG&A expense is ¥14.4 billion, respectively.

23

FY2021 Forecast(Million yen)
FY2020 results（New AccountingStandards base）

Net sales

FY2021 forecast

Vs. FY 2020
AmountGrowth116,413

122,500+6,086+5.2%

Domestic-

113,700--

Overseas

-

8,800

-

-

Operating profit

19,382

19,500

+117

+0.6%

Ordinary profit

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

Profit attributable to15,332

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

owners of parent

FY2020 results

Dividend

FY2021 forecast

￥64

￥64

EPS

¥200.4¥185.6

ROE

7.2%

6.4%

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

24■FY 2021 Earnings Forecast
Our earnings forecast for FY 2021 reflects the adoption of the new revenue
recognition standards.
We forecast net sales of ¥122.5 billion, a growth of ¥6.0 billion year-on-year,
operating profit of ¥19.5 billion, ordinary profit of ¥20.0 billion, profit
attributable to owners of parent of ¥14.2 billion, and an ROE of 6.4%.

This earnings forecasts reflects the standard required for achieving thenumerical goals in our Third Medium-term Management Plan, for which FY
2021 is the final year of the plan.
However, we will make a timely disclosure in the event that changes arise totrends, such as the impact from COVID-19 in FY 2020.

24

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

45 .0

100
80

28.4％

32.1%

35.9% 35.7%

31.9% 33.5%

35.6%
31.9%

34.5％

35 .0

25.0%

30 .0

60
40

40 .0

to Mar.

25 .0

32

32

32

32

32

32

32

32

32

32

20 .0

15 .0

20

From Oct.

From Apr.
to Sept.

10 .0

30

32

32

32

32

32

32

32

0

32

32

5.0

0.0

2012

2013

2014

2015

2016

2017

2018

2019

forecast
2020 20212021

Dividends
payout ratio

Note: The FY 2020 year-end dividend and payout ratio (forecast) are an estimate based on the assumption that thedividend resolution is approved at the 85th Ordinary General Meeting of Shareholders.
25■Shareholder Returns
We aim to maintain our shareholder return policy.
We plan an interim dividend of ¥32 per share and a fiscal year-end dividendof ¥32, for a total annual dividend per share of ¥64.
In FY 2021, we forecast a payout ratio of 34.5%, based on the
aforementioned earnings forecast.
We aim to pour energies into improving our corporate value through ongoingstable growth in the domestic business and the building and growth ofbusiness foundations in the China Business.

25

Today‘s agenda
１．FY2020 Business Results Overview
２．Impact of COVID-19
３．Domestic Business４．Overseas Business
５．FY2021 Forecast
６．Prospect of Chinese business
７．ESG／Sustainability

26

Outlook for China BusinessContribute to the health of
China’s citizens

Manufacturing of classical prescription
Chinese medicine complex formulations
M&A of traditional Chinese medical product companies
Application for classical prescription Chinese medicines

Traditional Chinese medicine + sales channels[Brick-and-mortar store]

Formulation platform
Mainly classicalprescription Chinese
medicine complex
formulations
Products for general
consumers[Brick-and-mortar stores][Online market]
Ping An Healthcare and Technology(Ping An Good Doctor)

Drug pieces[Hospital market]

Classical prescription
Chinese medicine
complex formulations

Products for
doctors[Hospital market][Online market]
Ping An Healthcare andTechnology(Ping An Good Doctor)

Drug piece
services[Online market]
Ping An Healthcare andTechnology(Ping An Good Doctor)

Crude drug platform
Raw material crude drugs
Stable procurement and supplyof raw material crude drugs[Tsumura Group/Peers] for the Japanese market[Pharmaceutical market/Yakushokudogen productmarket] for the Chinese market

Traditional
Chinese Medicine
Research Center

Post-market
survey, etc.
Development
and market
launch of
new products
Componentsof evidence
Qualityassurance
Standards
Qualitystandards
Analytical tests
Cultivation
research

27■Outlook for China Business
Now I will show our outlook for the China Business. The picture on the left shows aperson climbing up a cliff. The goal and vision for the China Business is first andforemost to stably procure and supply raw material crude drugs. In this area, we are
currently moving forward mainly with the crude drug platform. Going forward, we aim
to “contribute to the health of China’s citizens,” which is the goal shown at the top. We
plan to build a business infrastructure, mainly classical prescription Chinese medicine
complex formulations in the formulation platform.
The strategy for the China Business is to become a traditional Chinese medicine
company that is trusted by the citizens of China. To this end, we envisage sales of
10.0 billion yuan (or roughly ¥170.0 billion) and believe it will be necessary to instill
the Ping An-Tsumura brand.
The crude drug platform, shown at the bottom of this slide, currently mainly deploys
the three businesses of raw material crude drugs, drug pieces, and drug piece services.
In particular, we are pouring energies into the development of the hospital market to
expand the drug piece business. In addition, in the online market, we are launching
the drug piece service business using Ping An Good Doctor (a service to provide added
value via the decoction of drug pieces into a liquid, powder, granules or jelly).
The formulation in the upper part of the slide is up and coming. We plan to build abusiness foundation, mainly for classical prescription Chinese medicine complex
formulations. As one approach for this, we plan to explore M&A deals with traditional
Chinese medicine companies.
The Traditional Chinese Medicine Research Center on the right-hand side was theworking name for an analysis center. As a Traditional Chinese Medicine ResearchCenter, its main functions will be to handle quality assurance from raw material crude
drugs to brand products, the establishment of evidence on classical prescription
Chinese medicines for doctors, the development and launch of new products, andpost-marketing surveillance.

27

Diagram of Corporate Group Ties &Crude Drug Platform
as of the end of April 2021

Tsumura100％

Tsumura China Inc. established December 2016
56％
100％

100％

63％

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

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

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 201928

■Diagram of Corporate Group Ties & Crude Drug Platform
The green bordered area is the corporate company group for the crude drug
platform, which consists mainly of companies in the Ping An Tsumura
Pharma Group.
Pingcun (Shenzhen) Medical Ltd., at the bottom left, was incorporated as awholly-owned subsidiary of Shenzhen Tsumura Medicine Co., Ltd. We aim tostrengthen the full-fledged entry into the drug piece business in the southern
region of China using a system where Shenzhen Tsumura is in charge ofmanufacturing and Pingcun Medical carries out sales. In particular, we plan
to expand hospital sales routes.
In the northern region of China, Ping An Tsumura Pharma plans to further
expand its drug piece business, mainly via hospital routes, as it has been
doing thus far. We have shown the breakdown of sales ratios for total
overseas sales earlier, and we aim to boost the sales ratio for drug pieces
rather than raw material crude drugs from now on.
In the online market, in the crude drug platform overall, we plan to further
expand drug piece services that leverage Ping An Good Doctor.

28

Future Outlook for the Crude Drug
Platform Business
Crude drug platform business vision: Envisage sales in China of
3 billion yuan (roughly ¥51.0 billion)
Uniform quality policy

RecentChina Medico
Technology
Tianjin Plant

Drug pieces

ShenzhenSuperior productTsumuraShenzhen Plant

Mediumterm

Drug pieces

Business infrastructure
Stable supply of Tsumura
raw materials

Superior productRawmaterial
crude drugs

Sales

M&A

Key
strategies

Expand development of
external sales business

China Medico +ShenzhenIntroduction ofquality philosophy
Superior product

Sales route
Management
resources

Ping An Healthcare and Technology(Ping An Good Doctor) etc.

Prioritization:
Public hospital route

China Medico + Shenzhen+external entities

Medium/long term

Brand
products(Yakushokudogenproducts, etc.)

Business
infrastructure

QualitysystemSales
Product plan

Product
development

Cultivation

Trial

Market plan
Brand targeting
consumers
Production

HR

Support from the Tsumura Group29■Future Outlook for the Crude Drug Platform Business
I will explain a little more in depth from a medium-term perspective. I believethat there is major significance in expanding traditional Chinese medicine anddrug pieces, which are used in classical Chinese medicine, as businesses.
The market scale is around ¥3 trillion. There are many doctors dealing in
traditional Chinese medicine that are currently prescribing Chinese medicine
and drug pieces in this field. I believe that the Tsumura Group can play a role instandardizing specifications for drug pieces and solving quality issues. One of
our pillars is the expansion of this traditional Chinese medicine drug piecebusiness, as we are also able to utilize raw material drug pieces owing to ourcrude drug GACP, which is a strength of the Tsumura Group.
In the same manner, in the drug piece service business, should we be able toadd value, then the compensation for these services will grow. From theperspective of customers, in the online market, we are deploying, mainly
through Ping An Good Doctor, value added services that take into accountbenefits and convenience.
In the medium term, we aim to expand sales of drug pieces in the hospital
market, which is a large market. There are difficult aspects to developing the
public hospital route, therefore one of our focuses is on M&A deals with drug
piece companies.
In the medium/long term, one policy we are promoting is the manufacturing
and sales of brand products while aiming to boost recognition of the Ping An
Tsumura brand among general consumers. At present, the OTC businessdepartment of Shenzhen Tsumura is carrying out sales of products such as
Yakushokudogen products, raw ginseng and tea bags. We aim to further
expand this business.
29

Future Outlook for the Formulation
Platform Business
Formulation platform business vision: Envisage sales in China of 7.0 billion yuan (roughly ¥119.0 billion)

Aim to become a traditional Chinese medicine company
that is trusted by the citizens of China by promoting Ping
An-Tsumura brand products

Business that places focus on classical prescription Chinese
medicine prescriptions(Originating from prescriptions listed in old medical books)

Traditional Chinese medicine

100 years of Tsumura,a life time of Ping An(Ping An Tsumura logo)

Traditional
Chinese medical
products

Products for general
consumers

Products for
doctors

Prescriptions listed in old medical books(Classical prescription Chinese medicines)
Classical prescription
Chinese medicines(Complex formulations)

Already on the market

Not yetlaunched

Prescriptions approved by the Chinese
government and launched on the market(1,607 prescriptions from the Pharmacopoeia of the PRC, from outof around 9,000 prescriptions)

Prescriptions that are currently not on the market andfor which applications are being filed for waiver ofclinical testing(100 prescriptions)M&Atargets

Application
targets

30■Future Outlook for the Formulation Platform BusinessWe are aiming to become a traditional Chinese medicine company that is trusted by
the citizens of China by promoting Ping An Tsumura brand products.
We envisage sales of 10.0 billion yuan or higher, and have reached an agreementwith President Ma of the Ping An Insurance Group. This is the foundation for thisbusiness alliance. In light of this, we visualize a high percentage of sales to general
consumers. The Ping An Insurance Group has sales channels other than the Good
Doctor and we intend to use those as well.
We have a logo for Ping An Tsumura. Our catchphrase is a “100 years of Tsumura, alife time of Ping An.” In China, we aim to expand sales, mainly for classicalprescription Chinese medicine complex formulations for which there is almost no
market, through synergies between the strength of Tsumura, a centennial company,
and the level of recognition of the Ping An Group, with which consumers have a life
time relationship.
In the table at the bottom of the slide, we are exploring M&As with traditional
Chinese medical product companies at sties that will become our foundation.
The market for classical prescription Chinese medicine complex formulations is notvery large but there are already companies that have formulations that have beenlaunched on the market. We aim to enhance corporate value by using Tsumura’s
technology and knowhow to further improve the quality of these mainstay
formulations, and by undertaking the establishment of evidence.
In cases where a company appears to already have many formulations on themarket but is not selling them, I believe we can build a brand starting from quality
and manufacturing design and also handle sales. These are our targets for M&A.
At present, in China we are tackling 100 formulations that are not yet on the market
but for which applications have been filed for exemption from clinical trials. Of these,
7 formulations have been announced in advance. And we plan to narrow this down
to 1-2 formulations for which applications will be filed.

30Today‘s agenda
１．FY2020 Business Results Overview
２．Impact of COVID-19
３．Domestic Business４．Overseas Business
５．FY2021 Forecast
６．Prospect of Chinese business
７．ESG／Sustainability

31

TSUMURA-DNA

Share withthe group

Sustainability Vision 2050

Long-Term Vision 2031
Group company management
policies

First Medium-Term Management Plan

32

■TSUMURA-DNA
The Tsumura-DNA Pyramid should be called the organizational capital of the
Tsumura Group.
We aim to share the basic philosophy and vision with the group, and as theanimating force for Kampo, our goal is to deeply instill the basic philosophy
and vision into the organization and carry out activities.

From FY 2022, as the next important position for the basic philosophy, weplan to establish the Tsumura Group Sustainability Vision 2050, based on
which we will formulate a Long-term Vision 2031.
Furthermore, we will set milestones for the Long-term Vision and establish a
new First Medium-Term Management Plan.
Under a system of management based on the philosophy and vision, and asystem where the majority of Board members consist of outside directors,
we plan to implement management that prioritizes ESG.

32

“Intrinsic value” of the Tsumura Group

NatureHealthScienceContinue to be acompany that is highly
sensitive to changes in
the naturalenvironment and crisis

Contribute to people’s
health and medicalcare by maximizing
the use of nature’s
blessings

Illuminate themechanism of action andprove the therapeutic
results of “traditional
medicine,” which is thewisdom of humankind

Pursue an environmentthat focuses on a returnto nature for everything,naturally for crude drugs
but also including waterand air

Get close to the mental
and physical health ofeach person based on
crude drugs

Create happiness and social
value for people throughthe preventive,
presymptomatic andtherapeutic treatments on ascientific basis

As a corporate group dealing in traditional medical products,
become a presence that people cannot do without
33■“Intrinsic value” of the Tsumura GroupI believe the intrinsic value of the Tsumura Group is integrated into the Bestof Nature and Science, which is the corporate philosophy of Tsumura.

33

Spirit of Junten

Tsumura Juntendo
Obey the heavens

Origin“Mengzi”, classical Chinese literature
Those who obey the Heavens will survive,
those against the Heavens will perish(Those who follow the heavenly law willprosper while those who oppose will perish)“I Ching” 「順天応人」(Obey the will of heaven, respond topeople’s wishes)
34■Spirit of Junten
We plan to implement management based on our philosophy, in accordancewith the Spirit of Junten, which was incorporated in the company name,
Tsumura Juntendo, at the time of its founding in 1893.
Our DNA since the company’s founding is to “obey the will of heaven andrespond to people’s wishes.”34

Nature x Health x Science
NatureContinue to be a company that is highly sensitive to changes in the natural environment and crisis
Pursue an environment that focuses on a return to nature for everything, naturally for crude drugs but also
including water and air❖ Aim to realize a recycling-oriented society in the Kampo value chain◆Suigen no Mori (water source forest):
Co2 absorption, water resource
reservoir, and water quality purification
・Tosa Tsumura Collaborative Forest
・Yakugi no Mori (medicinal tree forest)in Yubari’s far-reaching plan
・Cultivation of cinnamon bark in Laos
◆Crude drug cultivation: Cultivation of wild crude
drug
Develop new cultivation methods◆Resource saving: Rectify distribution of package
variety◆De-plasticization: Use aluminum pouches to replacebottled formulations
Consider new material heat seal
◆Water cycle use: Circular use, including washingwater◆Crude drug residue: Biomass fuel and composting◆Renewable energy: Convert to solar powered or
natural energy power

35■Nature portion in the Best of Nature and Science (Nature x Health x
Science)
We plan to continue to be a company that confronts nature, which forms thebasis of our business, and is highly sensitive to changes in the naturalenvironment and crisis.
We aim to pursue a circulatory environment that will return all things back tonature. This naturally applies not only to crude drugs but also to water andair.
We are continuing to implement activities to protect Suigen no Mori (water
source forests), to protect resources and the natural environment throughcrude drug cultivation, to tackle resource saving and deplasticization, toreuse water and energy resources, and to use crude drug residue. We intend
to further accelerate these activities.
To realize carbon neutrality in 2050, we aim to further save energy, reducethe volume of energy consumption through the development of technologies,
including the improvement of circulation efficiency, while simultaneously
reducing manufacturing cost.
Furthermore, we plan to switch to the use of electricity during off-peak hours
and to the use of reusable energy.
35

Nature x Health x Science
HealthContribute to people’s health and medical care by maximizing the use of nature’s blessingsGet close to the mental and physical health of each person based on crude drugs❖ Aim for curative treatment that suits each individual with Kampo made from raw
material crude drugs, mainly plants

Natural healing power[Ideal ultimate medical care]

Kampo promotes improvement of symptoms byenhancing natural healing power that people
originally possess✔ There is no east or west when it comes totreating people’s illnesses✔ Treatments that utilize the fortes of both✔ Doctors licensed in Western medicine learn
and prescribe Kampo medicine

Mind and body as one
Kampo takes the heart and body as one , andcreates balance between the heart and bodyDifferent treatment for same disease andsame treatment for different diseases

Kampo
Medecine

Western
Medecine

Different prescriptions are used to treat the samedisease depending on the person / the sameprescription is used to treat different disease(treatment suited for each individual)
36■Health portion in the Best of Nature and Science (Nature x Health x
Science)
The mission behind Tsumura’s belief that “Quality Medicine is Guaranteed toSell,” a conviction of our company founder, is to truly create quality medicine
that will contribute to people’s mental and physical health, as this isdefinitely become a part of public interest and create a meaningful business.
We aim to contribute to treatments that suit each individual by further
enhancing the value of traditional medicine, which is backed by the long
history of Kampo, a plant-based medicine that maximizes the use of nature’s
blessings, and which has been incorporated into the national healthinsurance system, which is a rarity worldwide.
We plan to accelerate our corporate mission “to contribute to theunparalleled medical therapeutic power of the combination of Kampo
medicine and Western medicine.”36

Nature x Health x Science
ScienceIlluminate the mechanism of action and prove the therapeutic results of “traditional medicine,” whichis the wisdom of humankind
Create happiness and social value for people through the preventive, presymptomatic and therapeutic
treatments on a scientific basis❖ Aim to provide health support for preventive, presymptomatic and therapeutic
treatments on a scientific basis

Going forward
Prevention

HealthThus far and going
forward(1) Presymptomatic (2)MalaiseTreatment

Illness

Self-management

DosageNutrition, exercise and sleep

Prescription pharmaceuticals(Kampo products)(1) Presymptomatic as diagnosed using Western medicine: No subjective symptoms, test numbers are within a normal range but
gradually worsens(2) Presymptomatic as diagnosed using Kampo medicine: Just feel bad with subjective symptoms but test numbers are not abnormal

37■Science portion in the Best of Nature and Science (Nature x Health x
Science)
Kampo formulations, which are made from raw material crude drugs, mainly
from plants, are multi-component complex formulations and in most cases
multiple symptoms cannot be treated with a single agent.
At the same time, given the multiple components of Kampo formulations, wewill need to illuminate evidence— the clarification of mechanism of action
and proof of therapeutic benefits. We therefore plan to continue our pursuit
along this course.
Thus far, we have mainly pushed forward with scientific clarification, mainlyin the realm of “treatment.” However, going forward, our policy is to expand
our contribution in the areas of presymptomatic, preventive and healthcare
regimens, and pour energies into the scientific clarification of these areas.

37

“Seven Forms of Capital” for Sustainability
Cumulate added-value for
proprietary crude drug cultivation,
for a processing and storage
technology system, Kampo
formulation production system,and quality analysis knowhow
Provide informationand cumulateknowhow, including
basic and clinical
trials for crude drug
and Kampo
formulations,manufacturing
technology system,and drug-fostering
programformulations

Manufacturing
capitalProduction facilities
Production
technology

Intellectual
capitalIntellectual
property
Knowhow

A group of trusted individuals that arerooted in the ambition, passion, sense of
mission, professional, independence andaltruism, an ideal image of a person

Accrue added value with business activities

Financial
capitalCapitalBusinessalliance

Organizational
capitalTacit knowledge
DNA

Human
capitalHR
Capability
development

Value created by cyclical andhealthy preservation activities,
including environmental resources(mountain forests, water resources)
and crude drug resources

NaturalcapitalNaturalresources
Circular model

Amass by jointly
creating value withsociety in the Kampo
value chain, which
extends from crude
drug cultivation to
Kampo formulationuse

Social andrelatedcapitalShared value
BrandManagement’s unyielding
persistence based on the founding
belief, philosophy and vision—the
Spirit of Junten and Quality
Medicine is Guaranteed to Sell.
38■Seven Forms of Capital for Sustainability
It is our policy to establish “Sustainability Vision 2050” and “ Long-term
Vision 2031” by renewing a groupwide shared recognition of the TsumuraGroup’s “seven forms of capital,” which are sources of profit to create sharedvalues with society and to contribute to the realization of a sustainable
society.
The “Seven Forms of Capital” are financial capital (capital and businessalliances), manufacturing capital (production facilities and technologies),
intellectual capital (intellectual property and knowhow), human capital (HRand capability development), social and related capital (shared value andbrands), natural capital (natural resources and a circular model),organizational capital (corporate DNA and tacit knowledge spanning 128
years since our founding). These seven forms of capital are the foundation
for building tradition through continuous innovations. We plan to once again
share these profit sources and reflect them into the establishment of a new
vision.

38

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 interestand foreign 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 haltedor should 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.

39

39

appendix

40

FY2021 Forecast (Compared Medium-term Management Plan）
FY2021 The 3 rd Medium-Term Management Plan
（ Apply new accounting standards to medium-term plan ）FY2021 Forecast

FY2021 Forecast

FY2021
Forecast（The 3 rd Mediun-termManagement Plan）（The 3 rd Mediun-termManagement Plan）
New AccountingStandards BaseNet Sales

Over 135.0
billion yen

Over 120.0
billion yen

122.5 billion

Operating
ProfitOver 19
billion yen

Over 19
billion yen

19.5 billion

ＲＯＥ

Over 6 %Over 6 %

6.4%

yen

yen

41

41

BS impact of PPA (Purchase Price Allocation) due toacquisition of PINAN TSUMURA MEDICINE Co.,
(Million yen)

Merchandise andfinished goods

12,016586

Raw materials
and supplies
current
assets
1,910
other

188

Intangible
assets other(Customerrelated assets) Intangible
assets other(Technological423
assets)

1,632

948

8,222

noncontrollinginterests

Before PPA
Goodwill Amount

After PPA
Goodwill Amount42

42

Medium-term Management Plan and Vision for the
China Business

FY
2020

FY
2021

FY
2027
Sales image 10 billion yuan(about ¥170 billion)

FY 2020 Plan & Vision for the Crude Drug Platform
Raw material crude drugs, drug pieces, raw ginseng, Yakushokudogen products, etc.
Sales image

3 billion yuan(about ¥51.0 billion)

Vision for the Formulation Platform
Classical prescription Chinese medicine complex
formulations and traditional Chinese medicine(including M&A), etc.

Sales image 7 billion yuan(about ¥119 billion)*Exchange rate: ¥17/yuan (as of the time of the release of the Vision)

43

43