First Quarter Business Resultsfor Fiscal 2024

August 6, 2024
Director, and CFO

Muneki Handa

1Q Business Results for FY 2024
【Million yen】

1Q
FY 2023
results

1Q
FY 2024
results

YoY
AmountChange

FY2024
1H planProgressRate（vs. 1H plan）

Ratio to total sales

37,036

43,690+6,654+18.0%

89,70048.7％

Domestic business

32,98840,134+7,145+21.7%

79,60050.4％

China business

4,047

3,556(491)(12.1%)

10,100

35.2％

4,684

10,575+5,890 +125.7%

19,30054.8％

Domestic business

4,684

10,713＋6,028+128.7％

19,50054.9％

China business0(138)(138)－(200)－

5,989

14,118+8,128 +135.7%

19,30073.2％

China business：
Crude Drug Platform 8.1%

4,332

11,180+6,847+158.1%

14,20078.7％

Domestic business：OTC Kampo etc. 2.3%

19.36

20.63+1.27－－－SalesOperating profit

Ordinary profit
Profitattributable to owners ofparent
PL translation rate (CNY)

Domestic business：
Prescription Kampo
Products

88.9%

Domestic business：
Other prescription
pharmaceuticals 0.7%

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

2Key Points in Performance
・Both net sales and profits increased year-on-year
43,690Net sales◼

Domestic businessmillion yen

YoY＋18.0％

Progress rate
(vs. 1H plan)

48.7％

Total sales for the 129 prescription Kampo formulations: 38,820 million yen, up 21.9% year-on-year
Total sales of the OTC Kampo formulations and other healthcare products: 985 million yen, up 17.8% year-on-year◼

China business

Operating profit
Operating profit marginRaw material crude drugs, drug pieces, health products, etc. : 3,556 million yen, declined 12.1% year-on-year

10,57524.2

million yen

YoY+125.7％％

YoY+11.6pt

Progress rate
(vs. 1H plan)

54.8％◼ Cost-to-sales ratio: 47.7%, (7.2)pt YoY: Impact from the rise in crude drug procurement expenses and the depreciation of theyen’s value against major currencies was offset by the NHI drug price revision◼ SG&A ratio: 28.1%, (4.3)pt YoY: Due mainly to an increase in net sales

Ordinary profit◼

14,118million yen

YoY+135.7％(vs. 1H plan)

73.2％

Foreign exchange gain primarily related to loans to overseas subsidiaries: 3,228 million yen,
*Foreign exchange gain not posted in plan

+2,299 million yen year-on-year

Profit attributable toowners of parent◼

Progress rate

11,180 million yen

YoY+158.1％

Progress rate
(vs. 1H plan)

78.7％

Gain on sale of cross-shareholdings: 1,729 million yen, +1,729 million yen YoY
3

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

(Million yen)

Sales increase: +7,179 million yenDomestic business+7,179 （321） （129） (838)(including NHI price revision impact, Sales volume,
Sales Composition)+7,285China business（106）

Decrease in cost of sales: (321) million yen
Domestic business: Crude drug procurement cost

(321)

Domestic business: Raw material expenses(166)

business: Processing expense, etc.
10,575 Domestic(of which impact from the initial operation ofTianjin Plant in the previous year was +278）
China business: Increase in sales ratio

4,684

+24

Expense increase: (129) million yen
Depreciation
R&D cost

FY 2023 1QOperating
profit+142

Sales
increase

Cost of sales
decrease

Expenseincrease

Foreignexchange
impactFY 2024 1Q
Operatingprofit(125)(42)

Sales promotion expense

60

Salary allowance96

Other(118)

Foreign exchange (yen depreciation) impact: (838) million yen

4Financial Condition/Cash Flow Position（Million yen）

FY 2023（March 2024）

FY 2024
1Q

Change16,909Current assets

281,292

297,395

16,102

Non-current assets

146,961

147,768807

132,889

137,611

4,721

Current liabilities

68,55773,7185,161

Non-current liabilities

64,332

63,892(439)295,364

307,552

12,18863.2％

63.3%+0.1pt

Total liabilities

Total net assets

Equity ratio(38)

126,911

9,294

3,252

Merchandise and finishedgoods

12,13913,522

1,383

167

Work in process

18,30919,944

1,634

152

Raw materials andsupplies

87,16893,444

6,275

2,932

Financing activities

Of which,
Exchange rate

117,617

Inventories(6)

Investing activities

1Q

ChangeOperating activities（March 2024）

FY 2024

(13)

+2

725

+7889

(15)

Cash and cash equivalents at
beginning of period

FY 2023780（100 Million yen）

Cash and cash equivalents
at end of period

445,163

Impact of exchange ratetranslations

428,254

Total assets

5Domestic Business: Sales of 129 Prescription Kampo formulations• Net sales in 2H are expected to grow about 28% year-on-year on the back of an increasein production capacity• 1Q sales performance progressed well against the 1H plan
(Million yen)
80,000

To grow about 28%

To grow approx. 21%(to grow about 5% on a volume basis)(to remain flat on a volume basis)60,000Progress rate
40,000against 1H plan
50.5％

20,000

1Q
results

01H FY2023(results)

1H FY2024(plan)

2H FY2023(results)

2H FY2024(plan)6

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

FY 2023 1Q

FY 2024 1Q

YoY

100 Daikenchuto

※

2,515

3,877+1,362＋54.2%

254 Yokukansan

※

1,940

3,040

+1,100＋56.7%

5

43 Rikkunshito

1,861

1,757(104)(5.6)%

7107 Goshajinkigan ※995

1,467+472＋47.5%2514 Hangeshashinto

370358(12)(3.3)%

Total sales for drug-fostering program formulations7,683

10,502+2,819＋36.7%

129

2,090+288＋16.0%

prescription

Drug-fostering program
formulations

1Growing formulations

3

17 Goreisan

1,801

4

41 Hochuekkito

1,931

1,800(131)(6.8)%

924 Kamishoyosan

1,305

1,199(105)(8.1)%

19137 Kamikihito

590

539(51)(8.7)%

20

108 Ninjin’yoeito

561

527

(33)

(6.0)%

Total sales for growing formulations

6,191

6,157(33)(0.5)%

17,964

22,161+4,197＋23.4%

31,83838,820+6,982＋21.9%

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

Total sales for 129 prescription Kampo products

Ratio to total sales

Drug-fostering
programformulations

27%

119 formulations
other than drugfostering programand growing
formulations

Growing
formulations

16%

57%
*66 prescriptions subject to recalculationof unprofitable products (3 drug-fostering
program formulations + 63 otherformulations) (+36.2% to +50.7%)7Domestic Business: Analysis of Sales of Drug-fostering Program
Formulations / Growing Formulations• Sales of the following 6 formulations in March increased about 35% year-on-year

Change in monthly sales of 6 formulations (Rikkunshito, Hangeshashinto,
Hochuekkito, Kamishoyosan, Ninjin’yoeito, and Kamikihito)(10,000 packs)

40+50,000 packs (+4.4%)35(48,000) packs (down 5.5%)

2024
2023

30

25

20
Jan

FebMar

AprMayJun*1 pack is 1 standard box (1 box is for 9 weeks)8Domestic Business: Physicians Writing 10 or More Prescriptions
for Kampo formulations• Hospitals are the key in increasing the ratio of physicians writing 10 or more prescriptions forKampo formulations to 50% or more.
• E-promotion accounts for approx. 60% of information recognition cases among hospitals.
By further focusing on promotion activities targeting hospitals, we aim to increase the number ofphysicians writing 10 or more prescriptions for Kampo formulations
Number of physicians writing 10 or more prescriptions for Kampo formulations (by sales channel)
Approx. 320,000 physicians*Survey by Tsumura

Ratio of e-promotion to total
number of information
recognition cases

Approx. 60％

Ratio of e-promotion to total
number of information
recognition cases

50%

Approx. 35％

39％

28％
All physicians

Physicians at hospitals

32％

62％
GPs

As of the end ofFY20239Domestic Business: Approach to Physicians through Web Lecturers• Large-scale Web- lectures for hospital doctors planned, with a total of over 30,000 physicians
expected to attend• Detailing impact through Web lecturers almost doubled on a year-on-year basis
Web lecturers: Detailing impact
Kampo Online Seminars (4 sessions)Kampo short lectures for hospital doctors<Themes>
Session 1: Symptoms suitable for Kampo (insomnia and anxiety)
Session 2: Various symptoms in the elderly (frailty, sarcopenia, andcramps)
Session 3: Gastrointestinal symptoms (upper abdominal complaints,abdominal pain, and constipation)
Session 4: Selection of Kampo medicines for hospital doctors (summary)<Lecturers>

Department of Kampo Medicine, Tokai University School of Medicine
Kampo medical advisors (Dr. Nogami, Dr. Nakada, Dr. Arai)

2023年度1Q
1Q FY2023

2024年度1Q
1Q
FY2024INTAGE Healthcare Inc. survey, Impact Track

10

Domestic Business: Initiatives to Provide Customized Information
for Each Physician• Provision of customized information for each physician through "enhancement ofquantity and quality" of e-mail marketing mechanism• The number of pageviews (PVs) of Tsumura’s medical website has increased 20%

Provision of customized information foreach physician

Number of PVs

Identify potential needs and provide relevant content based on
website visits, clinical department, area of practice, and prescriptions

Email distribution

Email distribution

2023年度3Q
3Q FY2023

2024年度1Q
1Q FY2024

11

Domestic Business: Increase in Production Capacity•As a result of the lifting of shipment restrictions by increasing production capacity, the number ofrestricted shipment items has decreased to one formulation (Bakumondoto)•Production volume of Bakumondoto will significantly increase after the completion of the renewal ofShanghai Plant

Establishment of Tianjin Plant••

Renewal of Shanghai Plant•
Obtainment of manufacturing approval has
completed for all items as planned
Full-scale operation of Phase 1
manufacturing lines is expected to start in 2Q•

Renewal of manufacturing lines that havebeen in operation for more than 20 years isunderway
Construction will be completed by the end of
August due to a shortened construction
period, and operations are scheduled toresume12

China Business: Sales of Raw Material Crude Drugs in Crude Drug
Platform Business• Some business partners have refrained from buying raw material crude drugs as thereis speculation that crude drug price hikes are expected to ease
• Aim to expand sales by increasing the number of sale items(Million yen)
4000

Sales of raw
material crude
drugs

Decreased
about 18%

3000

Some business
partners haverefrained from buying
raw material crude
drugs

Manufacturers of traditional
Chinese medicinal products
and drug pieces, etc.

2000

Consumers

1000

01Q FY2021

1Q FY2022

1Q FY2023

1Q FY2024
13China Business: Sales of Drug Pieces in Crude Drug Platform
Business••

Sales of drug pieces have returned to growth through the expansion of sales routes to hospitals, etc.
Make further efforts for customer development by expanding drug piece added-value service“Personalized Medicine”
Expansion of sales
routes to hospitals(Million yen)
600

Sales ofdrug pieces

500

Impact of change instrategy for Ping An
Good Doctor

Increased
about 44%

400

Sales to hospitals andpharmacies as well as
online sales

300

Consumers

200

1000

1Q FY2021

1Q FY2022

1Q FY2023

1Q FY2024
14

China Business: Sales of Crude Drug Platform Products• Aim to achieve operating profit of the China Businessby improving operating profit margin in the crude drug platform
12.1％decrease＊

ChinaNet sales
business

3.55 billion yen

Crude drugplatform

0.12 billion yen

Operating profit

Raw material
crude drugs

Formulation platform, IT
infrastructure investments, etc.

Chinabusiness

Crude drug platform products
Drug pieces

Health products

Expenses, etc.

Operating profit（0.13）billion yen*Local currency basis: 17.5% decrease

Sales totraditional
Chinese medical
products
companies as araw material

Sales forprescription-use
and as an OTC
to hospitals andpharmacies

Sales of health foodproducts made fromcrude drugs togeneral consumers

15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.

16Appendix

Domestic Business: Changes in Number of Restricted Shipment
Items in 129 Prescription Kampo formulations
・There was only one restricted shipment item as of August 6 as a result of the lifting ofshipment restrictions by increasing production capacity
28 28 2628 2823 23 2324 24
19 1910121421
16713007118

Domestic Business:Trends in unrealized profit
・ Large fluctuations occurred quarterly in FY2023 due to special factors such as plantshutdown
Restarting some manufacturing lines at

・There were no special factors in 1Q FY2024
Trends inunrealized profit
未実現利益の推移

1.9 billion yen億円 yen
0.99billion

2.5 billion yen

Shanghai Plant and starting shipment of
extract powder at Tianjin Plant, whichobtained approval Inventories ofintermediate products recovered andunrealized profit increased

Halt all manufacturing lines forapproximately two months intandem with renewal
construction at Shanghai Plant
Unrealized profit declined
due to decrease in inventory forintermediate products

0.6 billion yen

0.5 billion yen
Increase(deterioration in costof goods sold)

7億円
1Q
FY20232Q
FY2023

3Q
FY20234Q
FY2023

1Q
FY202419