TOP MESSAGE

To keep on realizing
genuine smiles
Toward a production system of 17.5
billion tablets a year, to uphold our
mission of stable supply
When the government decided on its policy of transitioning
COVID-19 to a Class 5 infectious disease, the way out fromthe pandemic finally came into sight. The COVID-19
pandemic brought about major changes in society. The
penetration of digitalization in society, growth in healthconsciousness, and efforts to resolve global challenges, as
represented by the SDGs, have all accelerated as a result of
the pandemic. In Japan, a super graying society, establishinga social security structure that will address the demographic
challenge and extending healthy life expectancy are urgent
issues.
Japan’s social security benefits expenses, which continue
to rise year by year, are expected to reach about JPY 140
trillion by 2025. As one measure to address this, theJapanese government has promoted the use of genericdrugs since the early 2000s. The switch to generic drugs is
now helping to reduce healthcare costs by about JPY 1.7
trillion annually, thereby lightening the load on the national
government, health insurance societies, and patients.
With the business model of manufacturing and selling
generic drugs as its core business, the Towa Group has been
striving to contribute to the suppression of healthcare costs.
Along with enhancement of the quality and performance ofour products, a stable product supply is an importantmission. However, stable product supply has become amajor challenge, sparked by quality-related scandals in theindustry, and people’s trust in generics, which has been
nurtured for many years, has fallen apart as a result.
Consequently, the industry as a whole remains unable tofulfill its responsibility.
We have steadily proceeded with capital investments
toward the national government’s target of generics
accounting for an 80% volume share of drugs sold in Japan.
In 2018, we put the 2nd solid formulation building into
operation at our Yamagata Plant. Together with our Osakaand Okayama Plants, we secured a total annual production
capacity of 12.0 billion tablets in FY2021 as initially planned.

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TOWA PHARMACEUTICAL Integrated Report 2023

However, we are now in the extraordinary situation in which,because those manufacturers that caused the quality
problems cannot make their products, the industry as awhole is unable to deliver stable product supply. For thisreason, we brought forward our plans for additional
investments in the 2nd solid formulation building at
Yamagata Plant, adding 2.0 billion tablets to achieve a
production system of 14.0 billion tables. Further,
construction is underway of a 3rd solid formulation buildingthat will be capable of producing 3.5 billion tablets (due forcompletion in October 2023), and we expect to achieve a
production system of 17.5 billion tablets in FY2024 andbeyond. We will also proceed with the construction of a 2ndsterile formulation building and a warehouse building at the
Yamagata Plant to expand the production capacity of liquid
formulations and freeze-dried formulations, in our efforts to
expand our tangible facilities.
On the intangible front, this abnormal situation has alreadybeen ongoing for about three years, and to ensure that theburden on the employees working in our plants does notincrease even further, we are strengthening our structure ofincreased headcount. We are also working to install
automation and unmanned facilities and systems forenhancing production efficiency. We will continually sharethe latest market trends and future outlooks across theGroup. We have a great sense of mission that we must be at
the center of fulfilling the industry’s important roles in society,including stable product supply and quality control. In
addition to such production enhancement measures, if theentire industry proceeds with increases in production to acertain degree, we believe we can ease the shortage inproduction volume within the next several years.
In the quality assurance system, our products are
manufactured at all of our plants through procedures that arein compliance with the three GMP principles. Ongoingeducation and training for employees have ensured thateach employee works with a high awareness of quality. To
build a stricter quality assurance system, we also proactively
incorporate international standards such as PIC/S GMP and
ICH Guidelines, and we are building a structure that willthoroughly eliminate human error. What is more, to maintainand strengthen the system for stable product supply, we will

Itsuro Yoshida
President andRepresentative Director

push forward with efforts such as purchasing APIs frommultiple suppliers and audits of manufacturing sites. We arealso continually engaging in initiatives aimed at thestrengthening of governance and penetration of complianceacross the Group, from the manufacturing of APIs to the
manufacturing of formulations, logistics, and distribution. On
November 24, 2021, we announced the Towa
Pharmaceutical Declaration of Legal Compliance.
Meanwhile, in the face of profit-squeezing factors such as
the annual revision of drug prices and soaring raw material
and utilities costs, as an industry, we hope to propose asustainable drug price system in which capital investments
and other efforts toward the maintenance of appropriatequality and a stable supply system are properly recognizedand drugs can be sold at appropriate prices, as well as areview of the industry’s structure to position it as animportant form of social infrastructure.

Leveraging synergies in Japanand abroad to guide the creationof innovation
The changes in society that began with the pandemic
are about to pick up pace. We need to paint a long-term
vision by optimizing the entire Group and leverage ourorganizational strengths to execute that vision. To thisend, we must solidify the Group’s governance towardachieving its Philosophy, “We contribute to people’s
health; We are dedicated to people’s genuine smiles,”and transition to a structure in which we can exhibit
synergy. Each of the Group companies, as autonomous
organizations, will identify new social issues; and theGroup will aim to resolve such issues by leveraging its
combined strengths.

TOWA PHARMACEUTICAL Integrated Report 2023

12

TOP MESSAGE

improvement of product quality and the creation of added
value. To implement these initiatives, we are strengthening
and streamlining our research and development functions by
upgrading and expanding our R&D facilities and equipment.
To enhance the consideration for the global environmentand society, we newly established Environment, Health and
Safety Management Department in April 2022. The
department controls and manages the environment andsafety throughout the Towa Group in a unified manner andaims to further improve the environment and safety for Towa
employees and regional communities. In regard to the impact
of climate change on our business activities, profits, etc., wewill strive to disclose information based on the TCFD
recommendations while carrying out the scenario analyses ofour own business activities and taking stock of greenhousegas emission reduction measures. We will connect these
initiatives to the launch of a green sustainable chemistryindustry, hoping to further contribute to raising thecompetitiveness of the Japanese industry.

One area in which we can expect synergy effects is theleading-edge formulation and capsule technologies heldby Group companies, Sunsho Pharmaceutical Co., Ltd.
and Greencaps Pharmaceutical Co. Ltd. By combining
these technologies with Towa’s formulation technologies,
we aim to develop new technologies.
In overseas markets, through Towa Pharma International
Holdings, S.L. (“Towa HD”), which is based in Spain, we
supply generic drugs with over 210 ingredients in morethan 20 countries and regions across the globe, with afocus on Europe and the United States. As a foothold forsynergy creation, we are actively promoting tours of Towa
Pharmaceutical’s and Towa HD’s local plants, exchangesof opinions among executive managers, personnel
exchanges among researchers, and joint development of
new products, in our efforts to cultivate a corporate culture
and enhance our organizational strengths as a Group. Evenin this extraordinary situation of supply instability that wecurrently face, we are discussing the use of the Towa HD
Spanish plant’s production capacity and the introduction of
manufacturing technologies in Japan and considering thefurther strengthening of our stable supply system.
In June 2022, we standardized the trading names of thethree sales subsidiaries in Spain, Italy, and Portugal under
the Towa HD umbrella as “Towa Pharmaceutical.” We will
foster a sense of unity as the Towa Pharmaceutical Group,
promote collaboration in operations, and deliver valueadded products. By doing so, we will create a Towa brandimage that is clear for stakeholders, and promote thefurther expansion of our business.
The objective of globalization is to deliver Towa
Pharmaceutical’s highly value-added products widely
throughout the world. Individual countries and regions
have different laws concerning factors such as the quality,
efficacy, and safety of pharmaceuticals, and theirstandards and approaches are constantly being updated.
The ability to share these global circumstances is one of
the effects of synergy, and there are expansive
opportunities to contribute to new markets, such as thosein Southeast Asia, where increased demand is expected,
with the creation of innovation.

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TOWA PHARMACEUTICAL Integrated Report 2023

Contributing in part to thecompetitive edge of industries inJapan, with pride in Towa Quality
The Towa Group is working to provide Towa Quality products
and services and create technology innovation and productvalue through the manufacture of sophisticated products with
No. 1 total product performance. The ideal of the Group’s
manufacture is local production and local consumption. We
source APIs and intermediates both domestically and from allover the world. With the addition to the Group of Daichi Kasei
Co., Ltd., which researches, develops, and manufactures
APIs and intermediates, in 2010, alongside our research anddevelopment of continuous flow precision synthesis
technology, which offers a high level of safety, we are drawing
closer, step by step, to our ideal of local production and local
consumption of our products. By cultivating a high standardof technological capabilities in Japan and developing thehuman resources to support those capabilities, we believethat we will be able to contribute to the Japanese
government’s policy of making the supply chain more resilientand increasing national capacity.
Towa Quality means product quality that society wants andneeds and that has been upgraded to the latest and the bestof the times through continuous modifications andimprovements using all the latest technologies in the Towa
Group’s possession. Examples include orally disintegrating(OD) tablets, which disintegrate in the mouth without waterand are thus easy to take, techniques for masking a bitter
taste, and drug imprinting that makes it easy for doctors andpharmacists to distinguish tablets. A representative exampleof the Towa Group’s value-added formulation technology is
RACTAB, our proprietary technology combining thedisintegrating feature that makes a tablet easy to take, andthe hardness that enables a tablet to be handled like anordinary tablet. We are confident that the fine-tuned added
value thus generated will better address the concerns ofpeople and healthcare-related issues around the world.
Manufacture of sophisticated products with No. 1 total
product performance refers to our initiatives for the

Establishing an unwavering
position in the healthcare
industry
The Towa Group has entered the final year of the 5th Mid-term
Business Plan 2021–2023 PROACTIVE II, which started in
FY2021. Under the plan, we have been pursuing ourbusinesses with the basic policies of (1) Enhancing generics
business as a core, (2) Expanding and growing business inoverseas market, (3) Entering new health-related businesses,(4) Creating technology innovations and product values, and(5) Making job satisfaction and fostering talented humanresources.
With “Dawn of the 3rd growth period” as the sub-title of the
5th Mid-term Business Plan, all companies in the Group haverolled out businesses extensively, from “establishing an
unwavering position in the generic drugs industry” tobecoming “a comprehensive healthcare company for the era of
the 100-year life.” As one of our challenges, the Group aims tocreate a future that provides full coverage, from medical careto the care and prevention of pre-symptomatic diseases,
catering to a society with a long and healthy life expectancy.
Based on our vision of contributing to people’s health, we areproactively working to create health-related businesses thatare adapted to the medical system for the future, while
acquiring new techniques and integrating them withcompletely new knowledge and technologies.
The Japanese government is proceeding with thedevelopment of the Comprehensive Community Care System,with completion scheduled for around 2025, when Japanese
baby boomers turn 75 years of age (the age of eligibility for thelate-stage elderly medical care insurance system). Local
communities in which Society 5.0 has been implemented isbased on the development of a platform that will enable
Medical professionals to easily share information with ordinary
citizens by utilizing cutting-edge technologies, such as IoT, inwhich everything is connected via the Internet, artificial
intelligence (AI), and big data, to enable appropriate, efficient

treatment and care-giving by Medical professionals and thepromotion of the health of ordinary citizens (a platform forcoordinating and sharing data from facilities such as hospitals,
pharmacies, and those for nursing care).
The key to achieving this is a platform that utilizes personal
health records (PHR) and electronic health records (EHR). As
well as curbing medical costs, such a platform will also enableapproaches at all stages, from the healthy to symptomaticstages. Furthermore, we also hope to make a major
contribution to the realization of the Comprehensive
Community Care System, which will help the elderly tocontinue living in their own fashion, as much as possible, in
communities that are familiar to them.
In partnership with TIS Co., Ltd., Towa sells Healthcare
Passport, a cloud-based regional healthcare information
coordination service offered by TIS. It is predicted that medical
institutions in the future will have clearly defined roles
according to their location and functions, and that thehealthcare system will transform into one that is centered on
primary care physicians. Healthcare support will enable
Medical professionals and ordinary citizens to share medical
records, the content of prescriptions, and health information
on a bi-directional basis, making possible the efficient andeffective utilization of medical and healthcare information,
which was previously scattered between ordinary citizens,
hospitals, clinics, pharmacies, and so on. Multiple healthcare
facilities and prefectural governments are already considering
the introduction of this platform, and the development ofadditional functions to meet user needs is also underway. The
expansion of these products, services, and partnerships willlead to the development of the kind of health information
platform that the Towa Group envisages as the foundation of
the Comprehensive Community Care System.
Further, in September 2022, we launched Hana Support, asmartphone-based service that provides support for taking
medications. The service features an app for patients withfunctions for alerting the user when it is time to takemedication and recording when medications are taken, as well
as a function that allows for communication with pharmacies
and pharmacists. There is also a web-based service forpharmacies to record such interactions. Development of
coordination between this service and the Healthcare Passport
is ongoing. By giving both patients and pharmacies anaccurate picture of the status of the patient’s medication
regimes, our aim is to support effective medication by
preventing patients from forgetting to taking their medicine or
taking the same dose twice.
A major challenge for the super graying society is the early
detection of abnormalities in the pre-symptomatic diseasestage. We have converted Protosera, Inc., a company thatpossesses an original disease risk screening service (ProtoKey
test), into a subsidiary, and rolled out two types of tests for thedetection of colorectal cancer risk and pancreatic cancer
markers. We are also proceeding with research into taxifolin, aplant-derived substance that is expected to help prevent the
progression of dementia, jointly with the National Cerebral andCardiovascular Center. We will also start handling Cognitive
function Self checker, which tracks eye movement using virtual
reality to assess cognitive function. Various cutting-edge
technologies envisioning Society 5.0 will be incorporated sothat we may approach the extension of healthy life expectancy
from many different fields.

TOWA PHARMACEUTICAL Integrated Report 2023

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TOP MESSAGE

Creating an environment in which
employees can design their own career
paths and experience a variety of roles
Regarding “Making job satisfaction and fostering
talented human resources,” which is one of the basic
policies of the 5th Mid-term Business Plan, we areaiming to create workplaces where there is respect fordiversity in work styles and motivation for each andevery employee. We see talented human resources as
the source of the Group’s sustainable management. By
carrying out operations under the Towa’s vision whilefeeling satisfied with their jobs, each employee will beable to sense changes in society and create new values.
As DX and AI further penetrate society and work, manytasks will be replaced by digital technologies. In the
belief that having each employee mull over their careergoals, take the initiative, and act systematically towardachieving the goals will lead to job satisfaction, we haveestablished a new Personnel Development Department.
The new department conducts interviews with individual
employees to focus on their career plans from when theyfirst join the Company until they retire and to support
their career development. It is also clarifying therequirements for appointment to certain posts within the
Company and developing systems to help employees toobtain the experience, knowledge, and abilities
demanded by the positions they aspire to.
Discussions are currently underway for thedevelopment of the 6th Mid-term Business Plan, which
will start in FY2024. In that process, envisaging whatsociety should look like in 2040, we are attempting topaint a picture of the future of the healthcare industry
and social security system, with a focus on our corebusiness of the development, manufacture, and sales ofgenerics, and to design a business plan by backcastingfrom that vision. We will become increasingly active inentering new markets and new businesses, which will
give our employees more opportunities to demonstrate awide variety of skills.

The 100-Year Plan, our regional
revitalization challenge to deliver genuine
smiles to people all over the world
On the occasion of 2021’s 70th anniversary of Towa’s
founding, we announced internally the Towa Group’s
fundamental way of thinking and what it should be like inthe future so that each of our employees can confront
various social issues. The basis of this thinking is theGroup’s vision, “We are dedicated to people’s genuine
smiles.” The “genuine smile” refers to a state in whichhappiness wells up from within when the body is healthy
and the spirit is fulfilled, and brings a smile to a person’sface. What we should be like in the future represents acompany that continues to be needed by people living in
the region and to deliver products and services that theyneed, at any age and in any region.
To share this vision as a Group and turn it into
something unfaltering will require symbolic initiatives
that will be promoted based on the long-term vision. As

part of the Towa Pharmaceutical Group 100-Year Plan,
we have embarked on the challenge of growing licoricein Mongolia. Our association with Mongolia began in2009 when I was part of a delegation from a Rotary Clubin the city of Kadoma, of which I was a member in mycapacity of President and Representative Director of
Towa, that visited a Mongolian orphanage to which theclub had donated funds. This vast land, which had apopulation of less than 2.6 million people who looked sosimilar to us, was facing significant challenges as themining of finite underground resources caused
desertification and, consequently, climate change.
However, mining was a key industry that underpinned
the nation’s economy.
Towa considered what kind of sustainable support it
could provide, instead of one-off donations, and focusedon the fact that licorice, which is used in APIs, grew wildin Mongolia. Licorice is also used in traditional Chinese
medicine, and, besides its medicinal uses, licorice
extract has a wide range of applications, including as asweetener and in food products and cosmetics. We felt
that, if we could make a success of this cultivation, it
could grow into an industry for sustainable development,
which would help raise the standard of living of theMongolian people and bring more genuine smiles totheir faces. We also believe that the cultivation of licorice
will prevent the desertification of the land and suppress
the dispersion of yellow sand into the atmosphere.
We began in 2014 by ascertaining the situation in
Mongolia, including visiting areas where the plant grew
wild. In 2017, we secured about 1,000 hectares of land
in Kherlen, a district in the Khentii province of Eastern
Mongolia. Although the project stagnated due to the

COVID-19 pandemic, in September 2021, we were able
to plant 600 licorice seedlings on a trial basis. With theapproval of the chief of Kherlen, in 2023, we obtained
the community’s cooperation, and local residents
participated enthusiastically in raising seedlings andgrowing the licorice plants. Full-scale cultivation isscheduled to start in 2026. Because licorice has a
growing cycle of about seven years from fertilization of
the soil to harvest, we will divide the land into sevenzones so that we can obtain a harvest every year. The
plan is to harvest volumes of up to 500 tons a year
(assuming that the whole 100 hectares is planted at thesame time).
It is a grand plan, but the first thing we will do isprovide support so that the business can be managed
autonomously in Mongolia. If, in future, it leads to the
expansion of the business into domains such asprocessing into APIs and exports, we believe that it will
have tremendous significance for the revitalization of theregional community and economy. While it may take 100
years to become firmly established as an industry, forthe sake of people’s genuine smiles, we want to keep up
this activity, to symbolize the fact that, as a company
that continues to be needed by people living in theregion and to deliver products and services that theyneed, at any age and in any region, the entire Group will
advance business without hesitation.
With a view to realizing people’s genuine smiles
through its health-related business, the Towa Group willcontinue in its efforts to roll out all kinds of health-related
businesses both in Japan and around the world. We
would like to ask for your continued support in theseendeavors.

Cultivation of licorice in Mongolia (August 2023)

The root and stolon of the licorice plant contain glycyrrhizic acid, an invaluable raw material of pharmaceuticals.

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TOWA PHARMACEUTICAL Integrated Report 2023

TOWA PHARMACEUTICAL Integrated Report 2023

16

Towa Group’s Strength

Development of APIs

Product development

Quality control

Stable product supply

Information provision

Fostering of talented human resources

Generics are marketed later than new drugs (brand-name drugs); therefore, we can produce better productswith the same efficacy, quality, and safety as the new drugs by utilizing the latest formulation technologies.
We are engaged in various initiatives to provide easy-to-take, easy-to-handle and safe drugs, let alone quality
and safety.

Development of APIs
Shigenobu Nishiguchi

Developing and selecting the best APIs for
manufacturing productsManager,
API Process Research Department,
API Business Unit,
R&D Division

We use APIs meeting our original strict quality standard among countryauthorized APIs. We also actively research APIs and select the best APIs
for creating products based on our accumulated know-how. Additionally,
we have established manufacturing methods for the APIs in-house and asystem to outsource the production of the APIs to Daichi Kasei Co., Ltd.,a group API manufacturer, and collaborative API manufacturers. We
regularly inquire and confirm each manufacturer whether it manufactures
APIs in accordance with standards, laws, and regulations to enable thestable procurement of the APIs.

Relatedinformation
See page

37.

Without being bound by conventional
manufacturing methods, we aim to establish
revolutionary and efficient API manufacturingmethods to overcome various challenges,
including those in quality, environmentalload, and productivity. We thus work on the
R&D of APIs to let patients take their
medicines with peace of mind.

Stable product supply
Tetsuya Yamamoto

Established production capacity with threeplants to ensure stable supply at any time

Manager,
Production Planning
Department,
Production Division

By adopting a back-up system supported by three sites, we ensure that any
production disruption at one plant can be compensated by efforts at the otherplants. Furthermore, by dividing the physical distribution bases in East Japanand West Japan, we have established an efficient arrangement and a reliable
back-up system even in a worst-case scenario. At present, the three plants can
produce a total of 14.0 billion tablets* annually. In response to a further increasein demand, the construction of the 3rd solid formulation building in Yamagata
Plant will be complete in fall 2023. Shipment will commence sequentially fromFY2024, and we will proceed toward an annual production of 17.5 billion tablets.

Relatedinformation
See page37.

To fulfill the responsibility for stableproduct supply, the Production
Division actively prepares efficient
production plans and improves
productivity. We also attach
importance to cooperation between
plants and information sharing withother divisions.

*Production capacity of tablets/capsules

Relatedinformation
See page

Product development
Yasunobu Okamoto

Based on our technologies and experiences, developing
products that can be more easily taken and handled

We have the lineup consisting of more than 770 products to cover various
therapeutic areas. With the desire to serve as many patients as possible,
we offer value-added generics by responding to voices and requests frommedical professionals and reflecting them in our manufacturing process.
Among them, we have developed better dosage forms and tastes so thatdrugs can be easily taken by pediatric and elderly patients, and enhanced
visibility and stability against light, temperature, and humidity so thatdrugs can be easily handled at hospitals and pharmacies.

We work day and night to develop highquality and high added value
pharmaceuticals that patients andmedical professionals are comfortableusing. To establish a stable supply
system, we strive to design reproducible
manufacturing methods, with an eye tomanufacturing at multiple sites.

Relatedinformation
See page

Quality control
Tomoko Katsuragi

Working diligently to ensure reliable quality
and safety

TOWA PHARMACEUTICAL Integrated Report 2023

38.

General Manager,
Quality Assurance Department,
Pharmacovigilance andQuality Assurance Division

In order to be a trustworthy company, we comply with strict quality
control standards stipulated by the government, from product R&D,
manufacturing, and marketing to after-sales operations. We carry out
company-wide quality control initiatives to establish the quality assurance
system required for ethical medicines. Especially in manufacturing
pharmaceutical products, we strive to ensure adequate quality and safety
through our specific system, education and training, and other ways aswell as to comply with the Good Manufacturing Practice (GMP)
established by the government and other related laws and regulations.

17

29.

Deputy Unit Manager,
Pharmaceutical Research
and Technology Unit,
R&D Division

Delivering trusted Towa Quality to the world
We take on challenges every day todeliver trusted pharmaceuticals not only inJapan but overseas. We will improvepharmaceutical quality systems, ensure
thorough manufacturing control and quality
control, and move forward with close
attention paid to what patients are thinking.

Relatedinformation
See page

Information provision
Active provision of relevant information to
enable patients and medical professionals tofeel comfortable while using ethical medicines

Keisuke Watanabe

We have established a system that enables the prompt and appropriate
provision of information on the proper use of our products and academic
information to medical professionals, mainly through specially trained
medical representatives (MRs), to ensure that generics are used withreassurance. We also provide patients and their families with information
to ensure their safe use of pharmaceuticals. In addition to providing
information, we collect opinions from medical institutions and share
feedback internally for creating better products.

We plan and create sales and marketing
tools to advertise our company andincrease sales, with the Company’s
aspiration in mind and in cooperation withother divisions and departments. The task
is rewarding as it aims to strengthen sales
and marketing capabilities of the entire
Sales and Marketing Division.

Relatedinformation
See page

Fostering of talented human resources
Focusing on making job satisfaction andfostering talented human resources,
aiming for being a reliable company

36.

Manager,
Medical Communication
Department,
Sales and Marketing Division

Masakazu Kawashima

39.

Manager,
Personnel Development
Department,
Human Resources Division

We aim to be a more trusted and needed company as a comprehensive
generics manufacturer. Under the belief that talented human resources are thefoundation of a trusted company, we work to make job satisfaction, foster
talented human resources, and strengthen our organization. The 5th Mid-term
Business Plan 2021–2023 PROACTIVE II that will end in FY2023 sets out“Making Job Satisfaction and Fostering of Talented Human Resources” as
one of the priority policies. While aiming for job satisfaction for each
employee motivated by individual talent improvement and career enrichment,
we seek to strengthen our system for encouraging employee growth.

Human Resources Division staff havecareer development meetings with morethan 2,000 employees a year tounderstand what each and every
employee is thinking and help themdevelop the careers they want.
We will continue to plan and implement
policies that enrich employees’ careers.

TOWA PHARMACEUTICAL Integrated Report 2023

18

Feature Topic

01

Stable Product Supply

Fulfilling Our Social Mission of Stably
Supplying Generics through Continuous
Production Capacity Expansion
We will further strengthen production capacity and improve production efficiency
under the circumstances in which concerns over stable product supply remain.

We will continue to take on challenges toenable stable product supply.
The volume share of generics in Japan has exceeded
80%, and generics have become an important part ofthe social infrastructure. The responsibility of generics
manufacturers like us for stable product supply is evenheavier. Regrettably, however, unstable product supply
has been continuing due to recent quality issues ofgenerics companies.
As a leading company among generics manufacturers,
Towa has worked to install new equipment and increase
workforce with the aim of increasing production, so that
we can fulfill our responsibility for stable product supply.
Our annual production capacity reached 14.0 billion
tablets in the second half of FY2022. Furthermore, inorder to establish a structure for more stable productsupply, we plan to build the 3rd solid formulationbuilding in Yamagata Plant by October 2023 and toachieve the annual production capacity of 17.5 billion
tablets from FY2024 onward.
At the same time, we plan to construct the 2nd sterile
formulation building in Yamagata Plant and thereby
double the annual production capacity of vials from 5
million vials to 10 million vials.

For the new building under construction, we intend to
introduce automated and unmanned equipment
proactively and reduce the number of personnel
significantly, as part of measures to improve efficiency
and cope with the progress of aging population coupledwith declining birthrates.
We are also proactively promoting establishment of a
backup system and production efficiency improvement(scaling-up, series production, etc.).
Towa is committed to continuing to take on challenges
proactively to fulfill its social mission of stable supply ofgenerics.

Efficiency improvement through scaling-up(Conceptual images)

Example of manufacturing equipment:
Fluidized-bed granulation and drying machine

Equipment for small-scale production

Equipment for large-scale production

Equivalent to 0.5 million tablets/lot

Equivalent to 2 million tablets/lot

Scaling-up

Production volume per minute*:

Production volume per minute*:
Approx.

460 tablets

Approx.

1,580 tablets• By scaling up, man-hour can be reduced.
• The production volume per hour can be increased, which results in efficiency improvement.

Key points*Calculated using the average process hours for multiple items produced in the same scale and processes (including preparation and assembly as well as switching and cleaning)

Efficiency improvement through a continuous manufacturing method (Conceptual images)
Example of Product T:
Production lot scale of 2 million tablets [in Process B]
Process A

Process B

Process C

Process D

Basic manufacturing
steps for one-lot
production

Process E

Final Process

TT

Process hours

Preparation
Switching
Manufacturing
and
and
of
T
assemblycleaning
450

1,020

minutes

720

minutesminutes

2,190
minutes
in total

Batch manufacturing method [in case of six-lot production]

Takayuki Kanno
Senior Operating Officer in charge of
Production Division and Senior Plant Manager,
Yamagata Plant

Promoting production efficiency by, for example,
scaling up the manufacturing equipment
The Company has been striving to ensure quality andstable supply of generics for many years, and therefore
earned the unwavering trust of the market. On the other
hand, some of our competitors have received orders
such as an order to suspend their operations due toviolation of Good Manufacturing Practice (GMP; thestandard for manufacturing control and quality control ofpharmaceutical products), which resulted in continued
disruption of product supply. Given this situation, thedemanded volume of products of the Company has
continuously been exceeding the production capacity,
and we have no choice but to adjust the shipment
volume of some of our products in FY2023 as well.
In response to the circumstances, the Company has
been continuously working to strengthen its production

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TOWA PHARMACEUTICAL Integrated Report 2023

system and striving to meet the volume of demand forgenerics. At the same time, our production sites
dedicate themselves to improve production efficiency
and thereby increase the production volume per hour.
Such efforts to improve efficiency include the scaling-up
of manufacturing equipment for tablets. In addition,
while we previously used a batch manufacturing method
in which a wide range of products are produced in asmall quantity, we now use a continuous manufacturingmethod in which the number of production lots per run
is increased and which enables mass production withless hours. We will continue to fully fulfill our social
mission regarding stable supply of generics.

Cumulative
manufacturing hours

13,140 minutes (2,190 minutes/lot)T

Continuous manufacturing method [in case of six-lot production]
Cumulative
manufacturing hours

7,290 minutes (1,215 minutes/lot)

T

T

T

T

T

T

T

T

T

Hours shortened by the use of the continuous
manufacturing method

5,850 minutes• The fixed man-hour can be reduced by increasing the number of lots (number of batches) per run.
• The six-lot batch manufacturing method was changed to the continuous manufacturing method. » Man-hour: Reduced by approx. 45%

Key points

Production capacity expansion with the three-plant production system
Establishing a production system with an annual production capacity of 17.5 billion tablets by the end of FY2023(Unit: billion Tab/Cap)

Osaka
Plant

20.0

Okayama
Plant

15.0

Yamagata
Plant

T

17.5
14.0

3.5

6.5

6.5

5.0

5.0

5.0

2.5

2.5

2.5

2.5

FY2020

FY2021

FY2022

FY2023

11.5

12.0

10.0

4.0

4.5

5.0

5.0

0

Yamagata Plant
Capacity expansion at 2nd solid
formulation building
Yamagata Plant
Construction of 3rd solid formulationbuilding and 2nd sterile formulationbuilding (currently planned)*Production capacity of tablets/capsules
Production capacity: Actual number oftablets that can be produced
Production system: Number of tablets thatcan be produced after installing the facilities

Making steady strides toward
increasing the production
Construction of a new building at Yamagata
Plant was completed in October 2023, andoperations will commence sequentiallystarting from April 2024. We will proceed
toward shipment. Through these and otherefforts, as set forth in the Mid-term Business
Plan, in FY2025, we will realize theproduction system capable of producing
17.5 billion tablets.

TOWA PHARMACEUTICAL Integrated Report 2023

20

Feature Topic

02

Human Capital

Making Job Satisfaction by Strengthening
Human Capital Management
We will develop talents who will contribute to business diversification by,
for example, supporting career development.

Developing human resources whoare capable of responding tochanges in the business environment
Strengthening the linkage between management strategy andpersonnel strategy has become an important issue to achievesustainable growth of corporate value while responding tochanges in the business environment.
Since the establishment of a new Personnel Development
Department under the Human Resources Division, the Company
has been working on initiatives to support career development of
every employee so that they can create their own career plan. We
have been pushing forward with formulation of requirements for
managerial positions to encourage ability development,
visualization of requirements for necessary skills, presentation ofrequirements for career paths and promotion, among other efforts.
We are also focusing on creating an environment that supports
the autonomous career development of individuals by enhancing
ability development programs and training for those who are inmanagerial positions.
By promoting such diverse personnel measures, we aim tocreate a working environment with a sense of job satisfaction anddevelop human resources whoare capable of proactively taking
on challenges to address avariety of business issues.

Feature Topic

Working on Various Issues Related to the Global
Environment and Occupational Health and Safety

Environmental
Initiatives

From a mid- to long-term perspective, we will make steady strides toward groupwide efforts such as to reduce CO2 emissions.

03

Contributing to sustainablegrowth of the Group as a whole

A scene from a career interview

Importance of creating a career vision

Create a futureideal visionat Towa

Do what you can
do to realize theideal vision

Enrich a career pathand live a fulfilling life
(work and life)

Development of Towa career
Career vision

The mission of the Environment, Health and Safety
Management Department is to promote group-wide
activities by establishing targets of the Group related topreservation of the global environment and safety of
employees. In FY2022, we conducted energy-saving
diagnosis and formulated mid- to long-term targets aswell as a medium-term road map for reducing
greenhouse gas emissions. Since FY2023, we have beenpromoting reduction measures to realize the road map.
As for safety of employees, we undertake activities
related mainly to follow-ups on individual occupational
accidents, internal audit, and risk assessment. In
addition, we also focus on prevention of exposure ofchemical substances to workers, and have created avisual version of SDSs for active pharmaceuticalingredients (APIs), which is used on site.
In the future, we will also work on measures for the
global environment in our entire supply chain. We aimthat these group-wide
activities contribute tosustainable society andgrowth of the Group.

Realizing more

Own career envisioned
by individual employees

fulfilling careerof each employee

Toshikazu Kokubun
Division Manager,
Corporate Strategy Division
Operating Officer in charge of
Human Resources Division

Discussions for
optimization

Assignment
and transfer

Achievements
and experience

Career plan
Career plan of individuals
that is envisionedby the Company

Promoting creation of a working environment that enables employees
to feel a sense of job satisfaction
Strengthening human capital-oriented management is an
important issue to achieve future sustainable growth. In
FY2021, the Company reorganized the Human Resources
Department into the Human Resources Division, and newly
established the Personnel Development Department. By sodoing, the Company is working to create an environment inwhich employees can envision their own career and theCompany can create a career plan for each employee, with theaim of “creating an environment with a sense of job satisfaction
and developing talents who can respond to changes.”
As part of specific initiatives, we have formulated
requirements for managerial positions, visualized requirements
for skills that are necessary for operations of each department,

21

TOWA PHARMACEUTICAL Integrated Report 2023

created a rotation model, and presented requirements forcareer paths and promotion. In addition, we have established arotation scheme so that each of our employees candemonstrate their abilities, and are working to improve our
on-boarding and training systems so that employees candemonstrate their abilities at an earlier stage.
By promoting development of abilities of our employees andcontinuously supporting their growth through such initiatives,
we aim to develop talents who are capable of proactively taking
on challenges to address various issues, such as clinicaldevelopment efforts that we will be newly working on,
advances in formulation technology, entry into new healthcare
industries, and globalization.

Kaoru Makino
General Manager of the Environment,
Health and Safety
Management Department
Administration Division

Towa Group
Environmental,Healthand Safety Policy

Formulation of a road map that contributes to decarbonized society
Efforts to counter problems related to the global environment andsafety and health of our employees are part of our importantmanagement issues. Therefore, the Company has been
undertaking group-wide activities taking issues into consideration.
In April 2022, an Environment, Health and Safety Management
Department was newly established to reinforce our activities topreserve the environment and realize occupational health andsafety. This department is an organization dedicated tosupervision of the entire Group in three areas, namely,environmental management and the global environment; chemical
substance management; and occupational health and safety.
In the area of environmental management and the global
environment, the department plays a central role in TCFD-related
projects, and discloses information related to climate changerelated risks and profit-making opportunities associated with

global warming. In addition, it creates a road map toward
decarbonization of the Group and will commence efforts to realize
the road map.
In the area of chemical substance management, it has
formulated company-wide rules related to issues such as
appropriate management and legal compliance of chemical
substances used in plants and laboratories, and prevention of
exposure to highly potent compounds.
Furthermore, in the area of occupational health and safety, it
promotes establishment of a framework and education to prevent
recurrence of occupational accidents.
Starting from FY2023, in accordance with the newly formulated“Towa Group Environmental Safety Policy,” it also pushes forwardwith activities even further that take into consideration the global
environment and the safety of workplaces.
TOWA PHARMACEUTICAL Integrated Report 2023

22

Our Value Creation Process
To address social issues, Towa Group has created value by allocating its business capital to every business that
contributes to people’s health. We will contribute to the health of all people and help them achieve a genuine smile
based on the “5th Mid-term Business Plan 2021–2023 PROACTIVE II.”INPUT Business Capital

Towa
Quality

Financial capital

Towa Group’s
value proposition• Total assets: JPY 371.3 billion (consolidated)• Net assets: JPY 136.8 billion (consolidated)

Social Issues

Manufactured capital• Production sites: 12

Extension ofhealthy life
expectancy anddisease prevention
Production ofhigh-quality
pharmaceuticalproducts(11 in Japan [including Towa’s 3 plants], 1 in Europe)• Production capacity (Towa’s 3 plants):
14 billion tablets (tablets and capsules)• Production facilities for various dosage forms

Better accessibility
to primary
healthcare
services
Application ofadvanced
technology tohealthcare services
Improvement ofworkingenvironment

Manufacture of sophisticated productswith No. 1 total product performance

Extending healthy life
expectancy ofmore than
7 billion people
around the world• R&D offices: 9 (8 in Japan, 1 in Europe)• R&D expenditure: JPY 35 billion or more
• API synthesis process knowhow

Human capital• Employees: 4,298 (consolidated)• Consolidated subsidiaries: 12

5th Mid-term
Business Plan
2021–2023
PROACTIVE II(4 in Japan, 8 in overseas countries)• Qualified pharmacists: 254 (consolidated in Japan)• MRs: 773 (consolidated in Japan)

Social and relationship capital• Collaborate with business partners including
raw material manufacturers,
medical products distributors, and agents• Medical institutions coverage ratio (Towa):
Hospitals 91.9%
Dispensing pharmacies 96.3%

Natural capital• Energy input: 32,860 kl

Corporate Governance(Compliance and Risk Management)

Our Commitments (T-SMILE)• Water usage: 743,944 m (Towa’s 3 plants)
3

TOWA PHARMACEUTICAL Integrated Report 2023

Enhancing generics
business as a core
Expanding andgrowing business inoverseas markets
Entering newhealth-related businesses

GenuinesmilesControlling healthcare
costs ofthe government,
administrative
agencies, and local
communities

Maintaining
sustainable
healthcare system

People’shealthCreating technology
innovations
and product value

Vision(crude oil equivalent, Towa’s 3 plants)

23

We will support everyone
who cares about good
health to live a healthy
lifestyle by making it easier
to be and stay healthy aspart of everyday life.

SocialImpactIntellectual capital(accumulative) (FY2021–FY2023)

Quality assurance
and stable supplyof pharmaceuticalproducts

OUTCOME

Foundations supporting
value creation

Making job satisfaction
and fostering talented
human resources

TOWA PHARMACEUTICAL Integrated Report 2023

24

External Environment Surrounding Towa GroupEntering the era where measures for new challenges
are required despite having achieved the government’s
generics volume share target

Towa focuses on creating value across its Group by working sincerely to solve social issues while leveraging various
capitals gained in the past business operations. By solving issues including the extension of healthy life expectancy,
we will contribute to the health of people around the world.

a full speed revolution at a stroke that would take 10
years under normal circumstances. Achieving ahigh-quality economic society in the “New Normal
Lifestyle” is set as a goal for the New Future in the
post-pandemic.
Meanwhile, under the “Future Social Security
Reform – Looking to 2040” issued by the Ministry of
Health, Labour and Welfare, the government aims torealize a society where everyone can work longer andmore energetically by solving issues such as “diverse
employment and social participation,” “extension ofhealthy life expectancy” and “medical and welfare
service reforms.” Generics are playing a greater role
under these government policies and we are
expected to contribute to extending healthy life
expectancy by forming an infrastructure to create
ideal local communities and providing necessary
health promotion services to people in need of them.

In recent years, generics have come to play anincreasingly vital role in the society. Under the Basic
Policy on Economic and Fiscal Management andReform 2017 approved by the Cabinet in 2017, thegovernment has set a target to increase the generics
volume share to 80% by September 2020.
In response to this, the generics industry including
Towa has focused on enhancing production capacityand ensuring stable supply. The results of analysis
issued by the Japan Generic Medicines Association
show the volume share reached 81.2% in the third
quarter of fiscal 2022 (October to December 2022),
achieving the target of 80%.
Furthermore, in the Basic Policy on Economic andFiscal Management and Reform 2020, thegovernment says it will “protect people’s lives,
livelihoods, jobs, and businesses” to achieve the“New Future in the post-pandemic.” The government
also envisions achieving a “New Normal Lifestyle” by

Financial capital

371.3 billion (consolidated)• Net assets: JPY 136.8 billion (consolidated)• Total assets: JPY

Total assets at the end of FY2022 increased JPY 39,250
million YoY to JPY 371,347 million. Net assets at the end of
FY2022 increased JPY 4,725 million YoY to JPY 136,894
million. Consequently, capital-to-asset ratio was 36.9% at
the end of the consolidated fiscal year under review.

Generics volume share

Turmoil

85%

75%

81.6%

70%
65%

TOWA PHARMACEUTICAL Integrated Report 2023

FY2020

4Q

2Q

3Q

1Q

3Q

FY2021

4Q

2Q

1Q

4Q

2Q

3Q

1Q

3Q

FY2019

4Q

2Q

1Q

4Q

3Q

1Q

2Q

3Q

4Q

2Q

1Q

4Q

3Q

1Q

2Q

60%
FY2018• Production capacity (Towa’s 3 plants):

14billion tablets (tablets and capsules)• Production facilities for various dosage forms
Towa Group has 12 production sites in total, comprising of
11 in Japan and 1 in Catalonia, Spain. Production capacity
stands at 14.0 billion tablets for tablets and capsules
produced at Towa’s 3 main plants. Our subsidiaries produce
ointment, soft capsules, etc. and the Group is distinguishedby its capacity to produce diverse dosage forms.

Human capital

4,298 (consolidated)• Consolidated subsidiaries: 12• API synthesis process knowhow• Qualified pharmacists:(accumulative) (FY2021–FY2023)(4 in Japan, 8 in overseas countries)• MRs:
R&D is conducted in 9 offices in total, comprising 8 in
Japan and 1 in Europe. Target R&D expenditure fromFY2021 to FY2023 is JPY 35.0 billion or more(accumulative). This covers the leading-edge research on
API synthesis including molecular control technology.

• Medical institutions coverage ratio (Towa):

91.9

96.3%

We engage in nationwide marketing activities through 71
sales offices, 31 agents at 62 sites, and medical products
distributors, among others, in Japan. Towa has a highcoverage ratio of medical institutions: 91.9% for hospitals
and 96.3% for dispensing pharmacies.

254 (consolidated in Japan)

773 (consolidated in Japan)

Towa Group hires 773 MRs and 254 qualified pharmacists(both consolidated in Japan). In addition, we haveintroduced an internal qualification system for business
operations (experts, etc.) to nurture professionals.

Social and relationship capital

Hospitals%
Dispensing pharmacies

80%

12

(11 in Japan [including Towa’s 3 plants], 1 in Europe)• Employees:• Collaborate with business partners including raw
material manufacturers, medical products
distributors, and agents

FY2017• Production sites:

9 (8 in Japan, 1 in Europe)• R&D expenditure: JPY 35 billion or more
• R&D offices:confidence in generics, the entire industry shall
implement measures for ensuring a stable supply
based on thorough manufacturing and quality
management.
While still pursuing Towa Quality, we will make theutmost efforts to restore public confidence in theindustry by enhancing the product lineup needed andmaintaining and strengthening the system for stablesupply/quality assurance as well as for information
provision.
Our activities on health-related businesses conformto this direction and we will strive to become a valued
company that contributes to the society.

While the generics volume share has steadily risen,
the recent quality problems in the generics industry
have affected the entire industry. Public confidence ingenerics built by the industry so far is declining. As
the drug companies involved in quality problems
suspended their operations, the industry as a wholehas failed to fulfill its responsibilities for stable supply.
As a result, the generics market is still in turmoil andthe future of generics companies is worrisome.
Under such circumstances, the Ministry of Health,Labour and Welfare mentioned that the industry
would never gain understanding from patients andmedical professionals only by setting new numericaltargets for generics. In order to regain public

FY2016

Manufactured capitalIntellectual capital

There is a pressing need for industry-wide initiative torestore confidence in generics which has been eroded25

Towa Group’s Capital

Natural capital

32,860 kl• Energy input:(crude oil equivalent, Towa’s 3 plants)• Water usage:743,944 m

3(Towa’s 3 plants)

We use good quality water and energy resources to
produce high-quality pharmaceutical products. In thisregard, from an environmental perspective, we manage
chemical substances properly, enhance the plants’ water
discharge and air emission systems, take energy-saving
measures, and make other efforts.

FY2022

TOWA PHARMACEUTICAL Integrated Report 2023

26

Mid-term Business Plan
Mid-term Business Plan
2021–2023

PROACTIVE
which we offer the Group’s products. Furthermore, in
the realm of new health-related businesses, we areembarking on a new era, so will be steadily doing
what’s necessary as we look ahead to the future.
To implement these policies, it will be important tocontinuously deliver technological innovation andproduct value, and we will therefore be continuously
working to enhance job satisfaction and foster
talented human resources.

Under our 5th Mid-term Business Plan 2021–2023
PROACTIVE II (the “Mid-term Plan”), the Group will
be developing health-related businesses in line withfive policies as shown in the diagram below. With ourdomestic and overseas generics business, which is
our core business, we will be aiming to make an evengreater contribution as we move forward into the
future. And as for overseas markets, we will be
expanding the number of countries and territories in

Towa Group’s
Health-Related
Businesses

Progress with implementation of Mid-term Business Plan
In our performance in the fiscal year ended March 31,
2023 while net sales increased with the consolidationof Sunsho Pharmaceutical, profit attributable to ownersof parent fell significantly, primarily due to a decreasein gross profit caused by the impact of the rising costof living, and a decrease in operating profit caused byan increase in SGA expenses.
Regarding the progress of the Mid-term Business
Plan, with no changes to the challenges, policies, andkey theme, we will continue to work toward the further

enhancement of corporate value in line with the Plan.
In terms of the numerical targets for major items, while
there is no change to our net sales target, in May 2023,
we announced a revision of our accumulative target for
operating profit. The reasons for this revision include a
decline in sales volumes caused by limited shipments
resulting from problems with supply stability, soaring
raw material and utilities costs, and depreciation of
goodwill. Accordingly, the target has been revised fromthe initial target of JPY 57.0 billion to JPY 36.5 billion.

Policy 3Entering new health-related
businesses

FuturePolicy 2

Expanding and growing businessin overseas markets

Net sales

Operating profit

Targets

Target (cumulative)

JPY 200.0 billion

JPY 150.0 billion

JPY 36.5 billion or more(consolidated)(non-consolidated)(revised)

Results for FY2021

Results for FY2021

Policy 1

Enhancing generics
business as a core

Present

Policy 4

Creating technology innovations and product value

Policy 5

Making job satisfaction and fostering talented human resources

165.6

JPY
billion(consolidated)

208.8

Securing stable supply and providing appropriate
information based on thorough manufacturing control
and quality control to restore trust in generics
Being a more trusted and needed company as acomprehensive generics manufacturer

27

Policy[Policy 1]
Enhancing generics
business as a core

19.2 billion

Results for FY2022

124.0

JPY
billion(non-consolidated)

JPY

5.5 billion

Key Theme• Stable product supply- Stable API procurement- Enhanced production capacity- Optimized Towa Sales System• Quality assurance• Broad product lineup• Manufacture of sophisticatedproducts with No. 1 total
product performance

R&D expenditure

Capital investment

Dividend policy

Target (accumulative)

Target (accumulative)

TargetJPY 35.0 billion or more

JPY 75.0 billion or more

Stable dividends

Results for FY2021

Results for FY2021

Results for FY2021

Delivering high-quality, value-added generics tocontribute to the health of people around the world[Policy 2]
Expanding and growing businessin overseas markets

Contributing to the realization of healthcare and nursing
care for society with long and healthy life expectancy
and also to society that shifts from medical care to careof pre-symptomatic disease care and prevention[Policy 3]Entering new health-related
businesses

Contributing to society by constantly supplying the Towa
Quality products and achieving sustainable growth[Policy 4]
Creating technology innovations
and product value

Results for FY2022

Continuing to be an ever-growing company thatprovides job satisfaction to each and every employee
through growth of both the company and its employees[Policy 5]
Making job satisfaction andfostering talented human resources

JPY

TOWA PHARMACEUTICAL Integrated Report 2023

JPY

Results for FY2022

JPY
billion(consolidated)
Challenges

123.3

JPY
billion(non-consolidated)• Entry to Disease risk testing
service business

JPY

11.5 billion

15.3 billion

JPY

14.8 billion

Results for FY2022

JPY

39.6 billion

Annual dividend of JPY

60

Results for FY2022

Annual dividend of JPY

60

TOWA PHARMACEUTICAL Integrated Report 2023

28

Mid-term Business Plan

Policy1

PolicyEnhancing generics business as a core2

generics manufacturer and also to accommodate
future expansion of our market share. Going forward,
we will emphasize the perspective of supply chain
management and strive to maintain and strengthen
the stable supply system through risk-adapted
initiatives.

To improve our stable supply system, we will further
strengthen our efforts made to date in the areas of“API procurement,” “enhanced production capacity,”and “optimization of the Towa Sales System.” We aremaking capital investments in our Yamagata Plant tofulfill our responsibility for stable product supply as a

We will strive for the sustainable growth ofour business by introducing new products in
Europe and the United States, mainly throughTowa HD, which we acquired in 2020. At thesame time, we will develop Towa Quality
products that meet patients’ needs overseas.
Furthermore, we will explore market
opportunities in new countries/regions.

Business scale

Stable product supply

Expanding and growing business in overseas markets

GrowthDevelopment of Towa Quality products meeting
existing and potential patients’ needs overseas

Exploration of market opportunities
in new countries/regions

Overseas
markets with
Towa HD
as a hubQuality assurance system

Market / Area

Policy3

Broad product lineup
FY2020 Product Composition
by Therapeutic Area

Other

Bio-pharmaceuticals

Medicaleffects andmechanisms

Anti-allergic

Antibiotics andchemotherapeutic

Oncology

Respiratory
Vitamin120

Gastrointestinal

Bio-pharmaceuticals
New TA
Cardiovascular

Other

Cardiovascular

Oncology
Respiratory
Vitamin

FY2030 Product Composition
by Therapeutic Area (Forecast)

130

Medicaleffects andmechanisms

Gastrointestinal
Anti-allergic
Antibiotics andchemotherapeutic

Neurological
Metabolic, etc.

Neurological
Metabolic, etc.

Entering new health-related businessesKeymeasures• Building a foundation for extending healthy life expectancy by utilizing data
• Contributing to Contributing to the Comprehensive Community Care System• Further enhancing lineup of products and services to maintain and improve health• Entering the disease risk testing service business• Creating synergies between and with existing businesses

Manufacture of sophisticated productswith No. 1 total product performance

29

TOWA PHARMACEUTICAL Integrated Report 2023

Development andlaunch of
new products

Application oftechnologies
Improvement
and modification

Towa
Quality

Information provision

Feedback
Information collection
Ideas for improvements

Analysis and evaluation

In-house manufacturing of APIs / innovative technology development and application researchStrengthening and streamlining of research and development functions

Public health nurses

Ideal
products
Community
Comprehensive
Support Center, etc.

Nursing
supportCertifiedsocial workers

Frai
l
Care
d

Prevention

Treatment
tic
ptoma
m
y
s
Pre diseasee

Pharmacists•OTC drugs•Medication support tools

s
isea

D

Doctors

Nursing homes, etc.

City offices and community centers

Local residents, etc.

Caregivers

In dGenerics
Researchers

Care managers•Communication
support•Nursing support

Core businessCompanies anduniversities

Good
HealthTrainers

Public health centers

Pursuit of
Towa Quality

them with completely new knowledge and technologies.
In addition, regarding Sunsho Pharmaceutical Co., Ltd.,
which became a wholly owned subsidiary in March 2022,
we concentrated on the promotion of PMI and the creationof Group synergy. Going forward, by leveraging Sunsho
Pharmaceutical’s strong technological capabilities,
extensive customer base, and knowhow on health foods
that it has cultivated to date, we will aim to develop adiversified portfolio of health-related businesses.

As part of our challenges, the Company aims to contributeto the realization of healthcare and nursing care for society
with a long and healthy life expectancy and also to societythat shifts from medical care to pre-symptomatic diseasecare and prevention. Recognizing this as a task toaccomplish, and in line with our vision of contributing topeople’s health, we are working to create new healthrelated businesses that are suited to the new medical
system, while acquiring new techniques and integratingSports facilities, etc.

Manufacture of sophisticated products with No.
1 total product performance refers to our
initiatives in providing the market with products
characterized by “Towa Quality” that are desired
and needed by customers. This guarantees thequality of the products that we supply underthorough quality control. We are constantly
using the latest technologies to improve andmodify the quality of the products, and we areconstantly upgrading the products to the latest
and best. We are strengthening and streamlining
research and development functions throughinvestment in facilities and equipment.

Expansion

products, the testing of finished products, productshipment decision-making by plants, and productshipment decision-making by the HQ QA Dept, we will
strengthen our management systems and schemes, andcontinue to work to ensure reliable quality and safety.

Throughout manufacturing and quality control processes,
we will comply with GMP, GQP, and GVP ministerial
ordinances and the GDP guidelines to maintain andstrengthen our quality assurance system. In every processfrom the acceptance of APIs to the testing of intermediate

We will put together a generic-drug productlineup with a focus on medicines deemednecessary for future medicinal treatment. With
joint sales of Infliximab BS as a steppingstone, we have entered the biosimilar market,
and in December 2021, we started
manufacturing and sales of our first authorized
generic, Eldecalcitol Capsules 0.5 μg/0.75 μg
Towa. Subsequently, we launched sales of thebrand-name drug, Edirol 0.5μg/0.75μg, in
December 2022. In addition, we will be taking
on challenges in diversified areas such as drug
re-positioning with iPS drug discovery,
development of Rivastigmine transdermal
system twice-a-week medicine, etc.

Sustainable business growth with Towa HD as a
hub through new product launches in Europe
and the United States

Dispensing
pharmacies

NursesMedical institutions

ividrm
ual Heatfo
alth Information Pl•Health foods•Supplements•Health promoting tools

Contributing to forming of infrastructure for the creation of ideal local communities
Providing necessary health promotion services to people who need them and contributing to the extension of healthy life expectancy

TOWA PHARMACEUTICAL Integrated Report 2023

30

Mid-term Business Plan

Towa Group’s Target Business
Policy4Creating technology innovations and product value

To contribute to society by constantly supplying Towa
Quality products and achieving sustainable growth as acompany, we will continue to work on creating
technology innovation and product value.
In particular, we will pursue technological innovationin API technologies such as molecular control
technology, chiral synthesis technology, andcontinuous-flow precision synthesis, in formulation
technologies such as ones that allow the production of
OD tablets that are easy to take, and in manufacturing
technologies for continuous production.
Sunsho Pharmaceutical, which is now a Group
company, constructed an Innovation Center to serve asa R&D base for enabling the development of state-ofthe-art pharmaceutical formulation technologies. The
company also possesses advanced drug formulation

API Technology
Establishment of molecular control technology
Freely controlling crystal form and particle size of APIs
Contribution to the development of value-added products
Establishment of chiral synthesis technology
Enabling efficient API synthesis
Development of continuous flow precision synthesis
Pursuing green sustainable chemistry with wastes reductions
and low CO2 emissions as key initiatives

Manufacturing Technology

and capsule technologies such as Uni ORV®
technology, and we are aiming for innovation by
integrating them with our own RACTAB® technology.
We are also stepping up efforts to create new productvalue. Regarding joint research aimed at obtaining a
new indication for Bromocriptine the results ofphysician-led trials suggest potential for formulation
development based on iPS drug discovery. Goingforward, Towa Pharmaceutical and Time Therapeutics,
Inc., in cooperation with Kyoto University, plan toconsult with the regulatory authorities and determine adevelopment policy with a view to obtaining approval.
As for our formulation of Rivastigmine a drug used by
Alzheimer’s disease patients, we are conducting clinical
trials (Phase III trial) with a view to obtaining approval
for manufacturing and sale of the formulation.

Formulation Technology

manufacturer. In addition, we will maintain andstrengthen our system to provide a stable supplyof products that meet quality standards and todeliver information on safety and quality in atimely and accurate manner.
Furthermore, the Group will pursue corporate
activities to contribute to the creation of newhealth-related businesses. Through thesebusinesses, we will help form an infrastructure tocreate ideal local communities, and contribute toextending healthy life expectancy by providing
necessary health promotion services to people inneed of them.
And with regard to the Sustainable
Development Goals (SDGs), international
objectives to be achieved by 2030, we aim tocontribute mainly to the attainment of Goal 3(Good Health and Wellbeing), while also working
to achieve the other goals.

Restoration of healthat pre-symptomatic
stage

Maintenance of
healthy conditions

Extension of healthy
life expectancy

Pursuing OD tablets that are easy to take
Further improvement of RACTAB
Masking technology to reduce bitterness, miniaturization of tablets,and better oral disintegration

Lineup ofessential products

Realization of stable formulations
Development of formulations applying technologies to suppress
the decomposition of active ingredients
Assurance of expiration period of formulation for three years or more

Creation of New Product Value

Establishment of technology to monitor products in real time
(PAT: Process Analytical Technology)

Joint research aimed at obtaining a new indication for Bromocriptine

Application to integrated continuous manufacturing system

Development of new Rivastigmine formulation

Production carried out under an integrated flow leading to labor saving
Smaller manufacturing facilities and occupation area

Based on our vision “We contribute to people’s
health; we are dedicated to people’s genuine
smiles,” Towa Group contributes to people’s
health by creating superior products andservices. Through our corporate activities, we
aim to be a company that is valued and neededby patients, Medical professionals, local
communities, and others.
Under the 5th Mid-term Business Plan, we will
maintain our vision while expanding the scope ofour business to include health-related
businesses. Nevertheless, our core genericbusiness in Japan and overseas will maintain its
central role in our operations.
In this core business, we will further strengthen
and utilize the results of all the efforts we havemade so far. Based on the premise of “pursuit of
Towa Quality,” we will strengthen our“Assortment of needed products” to meet thedemands of society as a comprehensive generics

Clinical trials for familial Alzheimer’s disease started

Pursuit of
Towa Quality

Generic
business

Build up basics onhealth related
infrastructure

Maintenance andstrengthening of stablesupply and quality
assurance systems
Response to local
Comprehensive
Community Care System

Grasping healthconditions

Maintenance andstrengthening of
information provision

Health-related
businesses

OthersDevelopment of transdermal system twice-a-week medicine
Hope for reducing the burdens on patients, their families, and caregivers

With generics business set as our core, expansion of
all health-related businesses contributing to people’s health

Policy5

In response to the international initiatives of SDGs to beachieved by 2030, we will focus on Goal 3 (Good Health andWell-being), while also working to achieve the other goals.

Making job satisfaction and fostering talented human resources

As the growth of employees leads to the strengtheningof corporate fundamentals and facilitates growthcorresponding to change, we are working to establish
an environment for the enhancement of corporate
fundamentals. In connection with this, we are aiming
to create workplaces where there is respect for

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TOWA PHARMACEUTICAL Integrated Report 2023

diversity in work styles and motivation for each andevery employee. We also view our employees as vital
investment resources and assets for the Company,
and are stepping up fostering talented humanresources who can make an impact as we pursue
growth.

TOWA PHARMACEUTICAL Integrated Report 2023

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