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We would like to extend our heartfelt sympathies and condolences tothose who died from COVID-19. We sincerely hope that those infectedby COVID-19 will quickly recover as soon as possible.
We would also like to express our deep gratitude to all medical
practitioners treating patients on site and to government administratorsthat are working hard to prevent the spread of the infection.
In addition, we thank all of you for your continued support of Tsumura
and Kampo.
I would like to explain the first three points on this slide.
Regarding the acquisition of equity interest in Tianjin China Medico
Technology Co., Ltd. by Ping An Tsumura Inc., for which we signed aletter of intent on November 6, 2019, and then an agreement on
February 28, 2020, the deal has been wrapped up in March.

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This page is about the impact to the corporate activities of our China
business group.
At this stage, China group companies are conducting normal
operations.
As there was no impact to our supply of crude drug raw materials,
China group companies were able to resume operations early.
Although demand has risen for some crude drug raw materials using
in traditional Chinese medicines related to treating symptoms of
COVID-19, and seeds were not sown in spring 2020 in Hubei
Province, the impact to our crude drug prices is minimal.
There was also minimal impact to the production and supply of
Kampo extract powder at Shanghai Tsumura Pharmaceuticals.
At present, we expect to be able to secure our planned production
volume. There is also no issue with exports.
Following the acquisition of Tianjin China Medico Technology inMarch,
our China group company now has 1,300-plus employees.
None of the employees were infected as of May 11.

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The following are activities to support COVID-19 measures.
Tianjin China Medico Technology, in accordance with a request fromthe government, produced and sold Seihaihaidokuto drug pieces
which were newly developed in China as a treatment for COVID-19.
The photo depicts a scene at the time Seihaihaidokuto was donatedto Chinese medicine clinics in Hubei Province.

6This page is about the impact on business activities in Japan.
All domestic production-related sites and distribution centers areoperating normally. At this stage, there are no obstacles to stablesupply. In Japan, there are no infected employees.
From late March, there appears to be an increase in specificprescriptions in tandem with the dissemination of information on
COVID-19 treatments using Kampo by doctors that prescribe Kampo
medicine.
In accordance with the BCP (Business Continuity Plan), we arecarrying out planned production for priority prescription Kampo andregular Kampo medicines for which demand is increasing.
We are also building up inventories for the above prescription Kampo
drugs by conducting unplanned production.
Furthermore, we are supporting production focusing on long-termprescription trends.

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The following is the dissemination of information on Kampo
treatment related to COVID-19.
The articles contributed by Dr. Ogawa of Kanazawa University and
Dr. Watanabe, former director of Center for Kampo Medicine, Keio
University School of Medicine both referenced the Diagnosis andTreatment Protocol for Novel Coronavirus Pneumonia(Trial Version7) released by the National Health Commission, etc.
The aforementioned Seihaihaidokuto is also included in this protocol.
Dr. Shin Takayama, Tohoku University, Japanese Society of Oriental
Medicine, is involved in the "retrospective observational research forthe purpose of clarifying the correlation between symptomatic
treatment and severe aggravation in COVID-19 patients to help
address growing medical needs associated with aggravation ofsymptoms.”
We aim to provide research support in this area.

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The following is Tsumura’s support for research on the use of Kampo
medicine to treat COVID-19.
We plan to provide full-fledged support for research on Kampo
medicine, as requested by Chairman Ito of the Japanese Society ofOriental Medicine, including the observational research by Tohoku
University Associate Professor Takayama, who I mentioned earlier.

9On this page, the degree of impact due to the spread andcontinuation of COVID-19 is explained.
In 1Q, we estimate an increase in demand for COVID-19-relatedprescriptions, mainly in tandem with the dissemination of informationon Kampo medicines. There is growing interest in Kampo medicinesthat enhance the body’s natural healing power to promote
improvement of various symptoms.
Meanwhile, due to external environmental factors shown here, given
the limited sales activities via emails and the Internet, there is a
shortage of information provided face-to-face to clients by MRs, andpriority measures are going unimplemented or being postponed.
Since it cannot be determined when the spread of COVID-19 will end
or if the disease will spread in a second and third wave, we areunable to factor in the degree of impact into our earnings forecast.
Based on market estimates by external institutions and our actual
performance and forecasts under certain conditions, at this stage,
there is a possibility of a negative impact that will drag down annual
sales by around 2%-4%.
10

As its sustainability vision, the Tsumura Group, based on its CSR policy,“The Tsumura Group contributes to value creation and to the realizationof a sustainable society through its Kampo value chain. “11This page covers our ESG management and sustainability vision.
The Tsumura Group aims to continue to carry out ESG management.
This is the creation of value through our primary business of Kampo
and crude drugs to contribute to the realization of a sustainable
society.“
We aim to create a company that possesses unique, proprietary
technologies, a company that brings together diverse humanresources, and a company that can together create a sustainable
society.
As indicated in detail in the section on corporate governance in the
Integrated Report 2019, in the special feature titled Discussion
among Outside Directors, who compose the majority seats on the
Board of Directors, we aim to achieve an evolution toward more
highly effective corporate governance systems.
I will explain our environmental and social undertakings as well as
measures to achieve SDG development goals from the threeperspectives of skill, people and co-creation.

12

We inherited from our founder the belief of carrying out a “meaningfulbusiness that is a part of the public interest.”
We aim to conduct management in line with this philosophy.
From Jusha Tsumura, the second generation president and son of
the founder, we took the value that "Kampo is not “unscientific, it is
yet to be scientifically verified” and reflected this into our corporate
philosophy of "The Best of Nature and Science.”
Kampo has the potential to create and provide value not found insynthetic drugs. Kampo promotes balances between the body andmind overall. And by enhancing the body’s natural healing power, it
promotes the improvement of various symptoms.
Given the lack of therapeutic drugs and vaccines for COVID-19, weare exploring the potential of Tsumura Kampo formulations that willcontribute to medical care and society.

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The production and sale of safe and secure high-quality traditional
Chinese medicines in China is made possible by our group's uniqueand proprietary technology in the"Kampo Value Chain." Through this
we aim to contribute to people's health.
We are forming partnerships companies in China that have abundantfinancial strength, name value, and boast leading technologies,
including IT and AI. Through this, we aim to build a business model
for a new era, which includes the automatic selection and processingof crude drugs, scientific management of crude drug cultivation, andthe alleviation of physical labor.
It is no exaggeration to say that the quality of crude drugs
determines the quality of Kampo and traditional Chinese medicines.
Therefore, the crude drug platform, a key function, is the core of ourbusiness.

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The Tsumura Group aims to do its best to reduce the amount ofwaste generated in our business.
Moreover, for many years we have tackled the preservation of thenatural environment, environmental conservation and resource
recycling.
We aim to expand the functions of the Ping An Tsumura crude drug
platform. We plan to fulfill our role as a leader by accelerating therecycling of crude drug resources by establishing cultivation
technology to promote artificial cultivation of wild-grown crude drugs,
expanding the area of cultivation, and increasing the number of wild
crude drugs we research and domesticate.

15This page focuses on a model for the co-creation of a sustainable
society by overcoming poverty by consigning out the cultivation of
crude drugs.
The proprietary cultivation of cinnamon (keihi) in Laos is a cocreation model developed through the disposal of cluster bombs andundetonated bombs, and CO2 absorption.
The photo depicts a successful model in the cultivation of Chinese
rhubarb (da-huang) in a unified village in the mountainous region ofChina.
A long-term cultivation contract contributes to the local economy andcreates stable employment.
This case cleaned up poor housing, secured safe water and toilets,and created stable income from agriculture for ethnic minorities who
have difficulty finding jobs.
This matches the goal of the Xi Jinping administration which aims to"eradicate poverty." The goal is to expand and accelerate theimplementation of these cases by utilizing the finance capital of thePing An Insurance Group.
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The following is what the domestic model looks like.
From 2010, we have entered into a contract to consign cultivation
operations to “Temiru Farm” in Ishikari City, Hokkaido, which isworked by people with intellectual, psychological, and developmental
disabilities. This case undertakes the cultivation of perilla herbs(soyo) and Bukuryo using sawdust substrate cultivation technology.
Owing to the recognition that crude drugs were the raw material for
pharmaceuticals, in this case Kampo, which contributes to people’s
health, farmers unable to continue cultivating vegetables are able tocontinue to grow crude drugs.
This model is a co-creation of a specific value, in other words a"motivating job."
I visit this farm every year. Everyone working there does so believing
they are member of Tsumura.
In this way, we aim to create various value from the Kampo value
chain. Using our proprietary technology, we harness the power ofdiverse human resources to co-create a sustainable society. This is
the goal of our ESG management.
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The China Business Vision on this page remains unchanged from ourinitial plan.
In the third medium-term management plan for the China business,
our sales target is RMB240 million (approximately 4 billion yen).
We are progressing in line with plans to achieve this goal.

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This page outlines the conversion of Tianjin China Medico
Technology into a group company and the launch of a new crude
drug platform function.
Li Gang, founder, chairman and president of Tianjin China Medico
Technology, was put in charge of the crude drug platform function.
The goal, in particular, is to establish a solid position in the market
via expansion, mainly the expansion of the traditional Chinese
medicine (crude drug raw materials) and drug pieces (chopped crude
drugs) businesses in China.

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We will further expand domestic sales route in China possessed by
Tianjin China Medico Technology to expand sales of crude drug raw
materials and drug pieces (chopped crude drugs) for traditional
Chinese medicines.
The goal and KPI for the crude drug platform function is achieve a“domestic (China)/overseas sales ratio of 50%-plus” and to create a
steady supply of crude drug raw materials to Japan going forward.

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This page depicts that we are on scheduled with plans.
We have launched our crude drug platform function and solidified theframework for building a foundation for the China business.
The construction of the Tsumura Shengshi/Tianjin Plant is behindschedule due to COVID-19 but we plan to make up for lost time andaim to embark on operations in 2022. An extract formulation plant will
be located adjacent to Tianjin China Medico Technology, which is acrude drug supply base, so it will be both efficient and convenient.
The analysis research center is one year behind our initial schedule.
However, we aim to make this a cutting-edge analysis research
center by introducing the Ping An Insurance Group’s state-of-the-art
technology.
In addition, to build an infrastructure and sales system for the
traditional Chinese medical products, we have narrowed down our
M&A candidates to one company and are currently in negotiations.

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This page shows a summary of consolidated performance in FY2019.
Net sales increased 1.9% year-on-year to ¥123,248 million.
As such, we achieved 98.6% of our full-year plan.
Operating profit increased 1.9% year-on-year to ¥18,876 million.
The achievement rate for the full-year plan is a high 111.0%. However,this is primarily attributable to a delay in the posting of R&D expenses.
Another factor is that we did not fully use the earmarked costs reflecting
the refrainment from activities due to the spread of COVID-19.
Ordinary profit decreased 0.3% year-on-year to ¥19,649 million.
Meanwhile, profit attributable to owners of parent decreased 5.7% yearon-year, to ¥13,765 million.
This was due to an extraordinary loss of ¥431 million reflecting avaluation loss on investment in an affiliated company in connection withthe decision to dissolve and liquidate our joint venture company "SPH
Tsumura Pharmaceutical Co., Ltd."The planned annual dividend per share is ¥64.
25

The following are changes in major subsidiaries in FY2019.
Ping An Tsumura, a consolidated subsidiary of Tsumura, acquired an
80% stake in Tianjin China Medico Technology.
In tandem with this, this company and its five subsidiaries areincluded in the scope of consolidation.
The deemed acquisition date is December 31, 2019, for the purposeof reflecting business performance of acquired companies in ourconsolidated financial statements. However, assets and liabilities forthis consolidated fiscal year were only reflected in the balance
sheets.
The earnings from this acquired company were not accounted for in
the income statement.
The table below shows the value and major breakdown of assets
received and liabilities assumed on the day of the businesscombination.

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This page outlines the key points of performance.
Despite the NHI drug price revision was implemented in October 2019, salesof prescription Kampo products rose 1.8% compared to the previous fiscal
year. Domestic sales of Kampo for pharmacies and OTC Kampo products
trended favorably, totaling ¥123,248 million (up 1.9% year-on-year).
The cost-to-sales ratio stood at 41.2%. Although crude drug-related costs werelower than in the previous fiscal year, sales mix, in line with NHI drug pricerevisions, deteriorated 0.3pt.However, the decline in crude drug-related cost
improved 0.6pt compared to plan.
The SG&A ratio was 43.5%. Although sales-related expenses rose in tandemwith sales growth, compared with the previous fiscal year, there was a 0.3pt
decline due to earmarked costs going unused, reflecting the refrainment from
activities due to the spread of COVID-19.
Compared to plan, the SG&A cost ratio was down 1.1 pt mainly due to the shift
in the posting period for R&D and other expenses.
As a result, profit attributable to owners of parent was ¥13,765 million, down
5.7% year-on-year. As I explained earlier this was due to an extraordinary lossof ¥431 million in valuation loss on investment in an affiliated company
associated with the dissolution and liquidation of “SPH Tsumura
Pharmaceutical Co., Ltd.”
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This page outlines factors for changes in operating profit.
Net sales increased ¥2,341 million year-on-year. This positively impacted
operating profit by ¥1,383 million.
The negative impact from a change in the cost-to-sales ratio was ¥340
million.
The main components of this breakdown include a ¥398 million reductionof crude drug costs, a positive factor for operating profit,
and a ¥492 million deterioration in sales mix due to NHI drug pricerevisions, a negative factor for operating profit.
Changes in SG&A expenses included an increase in sales-related
expenses due to sales growth and a rise in R&D and personnel
expenses.
This negatively impacted operating profit at the end of FY 2019 by¥18,876 million.

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This page shows Tsumura’s financial condition.
Total assets as of the end of the fiscal year stood at ¥311.042 billion, an
increase of ¥23,719 million from the end of the previous fiscal year.
Current assets increased by ¥4,261 million yen year-on-year due to anincrease in inventories and other factors, and despite a decrease in advancepayments. This is primarily attributable to consolidation of Tianjin China
Medico Technology and its five subsidiaries.
Non-current assets increased by ¥19,458 million versus the previous fiscal
year, owing to a rise in goodwill associated with the consolidation of Tianjin
China Medico Technology, although the value of investment securities
declined due to the decline in stock prices.
Total liabilities stood at ¥97,993 million, an increase of ¥16,812 million fromthe previous year.Although accrued payments rose, current liabilities
increased ¥15,156 million year-on-year, due in part to an increase in shortterm loans payable for the acquisition of equity in Tianjin China Medico
Technology.
Total net assets were ¥213,048 million, an increase of ¥6,907 million from theprevious year.
Accordingly, equity ratio was down 4.2pts to 66.0%.

Tsumura’s cash flow is shown here.
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This page outlines our roadmap for realizing our long-term
management vision.
We have made no revisions to the third medium-term management
plan we announced in May 2019.
It continues to be positioned as a stage for growth investments.
We aim for consolidated net sales in excess of ¥135 billion, backed
by the continued expansion of the domestic Kampo market and theestablishment of a foundation for the China business. FY2020, whichis the second year after the start of the plan, is a key year.

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The following is the measures for the establishment of the Kampo
medicine which is a domestic business strategy.
In the third medium-term management plan, as part of our goal to get
one in two doctors to write Kampo prescriptions, we are aiming toincrease the number doctors writing Kamp prescriptions by 24,000 in
the third year of the plan.

In FY2019, we have increased our headcount by roughly 9,900
doctors, versus a target of 8,000.
In addition, as the three pillars of Kampo medicine education, we are
implementing support activities for Kampo medicine education atuniversities, on-campus Kampo study groups, and Kampo outpatient
clinics, among others.
Although it is a medium-to long-term theme, the measures being
implemented in each area are progressing smoothly.

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The graph on this page shows the actual sales volume for the 129
prescriptions for Kampo products.
The volume has been converted so that 1 unit equals 1 standard
packaged box.
The 22.22 million units sold in FY2019 is three times the 7.19 million
units sold in 2001.
On a monetary basis, the growth appears moderate due to the NHI
drug price revisions. This track record indicates that a large numberof patients at many medical institutions are being prescribed and areusing Kampo formulations.
It can be said that Kampo is an essential component of national
healthcare.

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This page depicts sales of prescription Kampo products.
Sales of the 129 prescription Kampo products totaled ¥117,347 million,
an increase of ¥2,992 million or 1.8% versus the previous fiscal
year.Sales of the 5 drug fostering program formulations grew 0.6% to¥30,496 million, and sales of the “growing” formulations rose 2.3% to¥26,245 million.
The total sales for 119 prescriptions other than drug fostering andgrowing formulations grew 2.2%.
The NHI drug price revision rate in April 2020 was in the negative 0.3%
range. The NHI drug price revision rate in October 2019 was in thenegative 1.8% range. Consequently, from the April 2018 prices, there
was an approximate impact to our drug prices at the negative 2.1%
range.
We believe that reducing the NHI drug price revision rate to around 2%
is the outcome of sales activities at a price that is appropriately
commensurate with the value of Kampo.
Despite a tough pharmaceutical market, sales of the 129 prescription
Kampo products achieved a 1.8% increase year-on-year.
However, we believe that further growth is essential for Daikenchuto,
Rikkunshito, and Yokukansan, which are drug-fostering program
formulations.
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This page shows the factors and measures for theunderperformance of Daikenchuto and Hochuekkito sales, whichwere down substantially year-on-year.
From the second half, we planned to promote Daikenchuto owing to
its efficacy in enhancing gastrointestinal hyperactivity, as well as its
efficacy for improving intestinal blood flow. However, due to impact
from a delay in briefing session measures, Daikenchuto sales
decreased 0.7% from the previous year.
In this fiscal year, we will carry out awareness-raising activities
regarding abdominal bloating, an efficacy of Daikenchuto, in an effort
to increase the product’s visibility in the market.
In addition, given the various mechanisms of action of Daikenchuto,
which include gastrointestinal hyperactivity, improvement ofintestinal blood flow, anti-inflammatory benefits and effectiveness in
improving intestinal flora, we aim to promote understanding of theproperties of Daikenchuto as a drug. Another goal for its use is to fix
or extend the perioperative period.
Sales of Hochuekkito did not grow, shrinking 0.6% year-on-year due
bad summer weather and a cold summer in the first half of the year,
and a lack of people catching colds in the second half.
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This page covers the progress of Yokukansan and Rikkunshito sales
measures.
Out of the three drug-fostering program formulation, sales of
Yokukansan and Rikkunshito were positive compared to the previous
fiscal year. Details of sales activities for these formulations are as
discussed earlier.
We made progress with various measures carried out for Rikkunshito
to further establish its presence as a therapeutic drug for uppergastrointestinal tract infections.
We plan to enhance these measures in FY2020.
We expanded measures to promote Yokukansan as a therapeutic
drug for treating peripheral symptoms of dementia, expanding from asingle promotion.

We are implementing activities to get dementia support doctors toaccept the use of Yokukansan, and encouraging facilities that use
Yokukansan to adopt the use of ninjin’yoeito. Consequently, the total
prescriptions of Yokukansan and ninjin’yoeito increased by 4.7% fromthe previous year.

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The following is the status of e-promotion in FY2019.
In FY2019, we held three Kampo Mega Web lectures, delivered onepoint videos four times, and held five on-site customer-oriented web
seminars.
E-promotion, including web lectures, is a very effective method as achannel for providing information, as it makes it possible to approach
unmet physicians.
In FY 2020 as well, we plan to promote e-promotions that aim tohave synergistic benefits with MR activities.

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This page outlines activities for disseminating information in FY2020.
In FY2019, many physicians watched the web lectures. We aim tocontinue to strengthen our e-promotion planning.
Given the current environment, where MRs are refraining frommaking visits due to the impact of COVID-19, going forward, we planto achieve optimal communication, by maximizing the benefit of MR
activities.
We will search for new access methods, including online interviews.
We plan to implement area planning that will respond to the needs ofphysicians that want to learn about Kampo.
As an area activity, we will provide detailed information taking into
consideration characteristics and features of the region and facilities.

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This page covers sales measures included in the third medium-term
management plan.
As you can see, we are undertaking the deployment of sales
approaches related to drug fostering program formulations, growing
formulations and the three key domains, so that they can be helpfulin treating the diseases and domains shown here.

This time around, in the domain of geriatric healthcare, we will focus
on the benefits for peripheral symptoms of cardiovascular diseases,
mainly the use of Goreisan, a growing formulation.

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We forecast net sales of ¥132 billion in FY2020.
We also target operating profit of ¥17 billion, ordinary profit of ¥ 17.9
billion, and profit attributable to owners of parent of ¥ 13 billion.
The main factors likely to negatively impact operating profit are an
increase of R&D cost of ¥1.23 billion to strengthen key fields in R&D,
including the carry-over portion of cost from FY2019, an increase of
SG&A expenses of ¥1.15 billion due to the consolidation of Tianjin China
Medico Technology, and ¥600 million for related goodwill amortization.
Meanwhile, profit from internal transactions with China Medico
Technology in FY2020 are expected to be fully written off as unrealized
gain.
Subsequently, contribution from China Medico Technology profits is
expected to be posted in or after FY2021.

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The planned annual dividend is ¥64 per share.
EPS is expected to be ¥169.92 and ROE 6.2%.
Note that at this stage, it is difficult to accurately predict when COVID-19
will end, therefore the above forecasts do not reflect the impact of
COVID-19.
Assuming the peak for COVID-19 is from April to June, after which it
gradually continues to dissipate, we estimate a negative impact to salesof 2% to 4%.
However, should it be prolonged, we will make timely and appropriate
disclosure in line with changes in the situation.

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This page covers return of profits to shareholders.
We plan to pay a year-end dividend of ¥32. This will put the full-year
dividend payout at ¥64, including the interim dividend of ¥32.
The dividend payout ratio for FY2020 is expected to be 37.7%, based on
the earnings forecast mentioned earlier.
We will continue to strive to improve corporate value through continued
expansion of the Kampo business, and growth investment in and thebuilding of foundation for China business.
At the same time, taking into account mid-to long-term profit levels andcash flow, we aim to continue to payout a stable dividend and makeheadway in our management of Tsumura.

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