Towa Group’s Sustainability
Approach toward sustainability
Now that the volume share of generics has reached about 80%, we believe that it is our social responsibility to strive for a morestable product supply and to further improve the quality of our products. Accordingly, we will thoroughly implement productmanagement and quality control. At the same time, we are committed to contributing to building a foundation for the creation of an
ideal local society through new businesses and regions, providing necessary services to promote health to those who need suchservices, and thereby contributing to extension of healthy life expectancy.
Under such policies, in order to develop a long-term vision for major changes in the future while integrating all of the strengths of
the Group, it is necessary for each business or company to define the goals that they should aim for, for each company to become anautonomous organization to discover new social issues, and for us to use the collective strengths of the Group to solve such issues,
so that we can realize the Company’s vision, “We contribute to people’s health. We are dedicated to people’s genuine smiles.”As a group governance system to realize the foregoing, the Risk Management Committee (chief risk officer: Itsuro Yoshida,
President and Representative Director), which is consulted by the Board of Directors regarding risks including climate change,
collects and analyzes information in collaboration with departments and affiliate companies and examines expected risks (including
opportunities related to climate change) and initiatives related thereto. The Board of Directors receives reports from the Risk
Management Committee on the status of examination twice a year, determines the policies, and supervises the Committee.
In addition, the Executive Strategy Meeting chaired by President and Representative Director, Itsuro Yoshida, meets once a week inprinciple and deliberates on important items related to management issues. The Meeting deliberates on our management policies andthe Mid-term Business Plan including personnel measures and clearly defines the basic strategies and management targets.

Sustainability

Environment

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TOWA PHARMACEUTICAL Integrated Report 2023

Governance
Organizational structure and processes
The TCFD Subcommittee was established as a
subcommittee under the Risk Management Committee
and responds to climate change-related issues. The Boardof Directors consults the Risk Management Committee,
determines their policies, and supervises the Committee.
The Risk Management Committee deliberates on thestatus of initiatives undertaken by the TCFD
Subcommittee, and reports to the Board of Directors on
the status twice a year.
The TCFD Subcommittee collects and analyzes
information in collaboration with departments andaffiliate companies, identifies and assesses expectedrisks and opportunities related to climate change, andreviews the assessment. In addition, the Subcommittee
formulates the action plans, countermeasures, etc.,
checks and follow ups the status of implementation ona periodic basis, and reports the status of
implementation to the Executive Strategy Meeting as
appropriate. Furthermore, it reports each importantmatter to Risk Management Committee members.
Departments and affiliate companies implement
various measures that are formulated in collaboration
with the TCFD Subcommittee, and provide data related
to climate change.

The Executive Strategy Meeting receives reports
from the TCFD Subcommittee as appropriate andissues instructions and approvals when necessary.
The Audit and Supervisory Committee and theInternal Audit Office conduct audits on these initiatives.

Decision-making and supervising function
Board of Directors
Directors(excluding those who are
Audit and Supervisory
Committee Members)
Consultation/supervising

Supervising

Audit/supervising

Audit and Supervisory
Committee

Directors
who are Audit and Supervisory
Committee Members

Reporting

Supervising

Cooperation

Reporting
Supervising

Business
executionfunction

Appointment/
removalPresident andRepresentative Director

Risk Management
Committee
TCFD
Subcommittee

Executing organizations/
meetings
Instructions andapprovals
Executive Strategy
Meeting
Reporting

Cooperation

Reporting

ReportingExecutive Monitoring
Meeting

Operating
Officers
Departments
Affiliate
companies

Supervising

Strategies
Assumptions for scenario analysis

Information disclosure based on the TCFD recommendations
The Group recognizes that global warming is a worldwide
issue, and thus has long been working on initiatives suchas installation of solar power generation systems andenergy saving at its plants, laboratories, offices, etc. In
addition, in the recognition that climate change is amanagement risk of the Group, we launched a TCFD (Task
Force on Climate-related Financial Disclosures) project andcommenced company-wide initiatives in FY2022.

The scope of examination will be expanded to theentire Towa Group from FY2023, and we will promotefurther information disclosure.

Internal Audit Office[Basic approach]
We act based on the principles in “the Charter of Corporate
Behaviors in Towa Group” with high ethical standards andsocial good sense to promote proper corporate activities
enabling us to gain trust and support from society. In ouraction, we strive to reduce global environmental load aspart of our social responsibility as a good corporate citizen.
Concretely, we are dedicated not only to proper
management of chemical substances and prevention ofpollution, but also to actions for alleviating environmental
concerns through plant drainage and emission systems andtaking energy-saving and decarbonization measuresthrough effective uses of mega solar systems. Furthermore,
we are aggressively working to achieve an eco-friendly
manufacturing method of APIs.

creation of a sustainable society by reflecting specificcountermeasures against risks and opportunities that havebeen materialized to our strategies, and aim to achieve
continuous growth of the Company’s businesses.

The Towa Group announced in December 2022 its
support for the TCFD recommendations established by the
Financial Stability Board (FSB). In FY2022, examination
was conducted with a single entity of Towa as the scope ofthe examination. We assessed and identified risks andopportunities posed by climate change issues on society
and corporations, and estimated the level of impact on
Towa’s businesses. In the future, we will contribute to

The Company conducted scenario analysis for
manufacturing, selling, businesses, etc. of its ethicaldrugs, assuming the world as of 2030. In the scenario
analysis, we have formulated three scenarios, namely
1.5°C, 2°C, and 4°C scenarios, in reference to various
reports issued by IPCC, IEA, etc. In the 1.5°C scenario,
it is assumed that various regulations, including acarbon tax, will be introduced to realize a decarbonizedsociety and there will be increasing demands fromvarious stakeholders to respond to climate change,
while new needs may arise due to changes in society
and lifestyles. In the 4°C scenario, it is assumed thatthe progress of global warming will increase the risk ofdisasters such as extreme heavy rainfall and healthrisks such as heat stroke, while new needs may also
arise for adaptation to climate change.

Results of scenario analysis
We identified risks and opportunities based on eachscenario, assessed the criticality on the businesses
depending on the likelihood of occurrence and thelevel of impact of each risk and opportunity, andconsidered countermeasures. As a result, there were

no serious business risks associated with climatechange on the subject businesses that have been
identified. Risks and opportunities expected in the
1.5°C scenario and the 4°C scenario are as listed in
the following page.

IPCC: Intergovernmental Panel on Climate Change
IEA: International Energy Agency

TOWA PHARMACEUTICAL Integrated Report 2023

34

Environment
Sustainability

Scenario analysis
Item

Event
Introduction ofa carbon tax

Transition

PolicyRisk andopportunity
1.5°C
scenario

Tightening of
regulations for CO2
emissions/energy
savingTechnology
Promotion of
decarbonization ofentire society
MarketAcuteIncreases in frequency
and magnitude ofmeteorological disasters

PhysicalRisk andopportunity
4°C
scenario

Chronic

An increase in extreme
weather (extremely hot
days, etc.)

Business impact

Level ofimpactCountermeasure[Risk]
An increase in business operating costs due to higher
carbon tax burden[Risk]
An increase in energy procurement costs associatedwith a shift to energy with less environmental load
[Opportunity]
Promotion of energy saving, reduction of business costs byreviewing supply chains, and promotion of decarbonization

Medium• Implementation of evaluation, factor analysis,
measures to control frequency of CO2 emissions• Introduction of low-carbon facilities and energy-saving
equipment

Medium• Collection of information and introduction of various
decarbonization technologies (while investment costs are
incurred, subsequent business operating costs are reduced)[Risk]
An increase in costs for procuring raw material due
to promotion of decarbonization at suppliers• Risk hedge by securing multiple suppliers[Risk]
Suspension of operations due to damage tocompany-owned locations and/or supply chainsLow• Establishment of manufacturing methods with low
environmental load

[Risk]
An increase in capital investment costs to promotedecarbonization

Low• Establishment of a backup system among business sites
Low[Risk]
An increase in air conditioning costs, etc. for quality
control• Introduction of energy-saving facilities

Low[Opportunity]
An increase in demand for drugs for diseases
increasing with climate change• Development and launch of products with an eye on
trends in demand for pharmaceutical products

Low

Responsible Business Activities• Strengthening of information disclosure
Low• Diversification of sales channels and user contact
pointsRisk management
The TCFD Subcommittee conducts an annual reviewof the risk and opportunity assessment to manage
climate change-related risks and opportunities.
Risks and opportunities are assessed from such
perspectives as the likelihood of occurrence, level ofimpact, presence or absence of countermeasures,
respectively, to determine the criticality.
In addition, we also subdivide them into value
chains* to assess them and consider countermeasures.
When assessing risks and opportunities, we conduct
interviews with relevant business departments asnecessary.

Those with high criticality are reviewed by the Risk
Management Committee and reported to the Board of
Directors through the Risk Management Committee asnecessary.
In addition, the TCFD Subcommittee formulates
countermeasures against climate change-related risks
and opportunities and manages the progress of suchcountermeasures based on preset indicators.
*Value chains:
Value chains are a classification of businesses by function, and the Company
categorizes businesses into “R&D; Purchase/Procurement; Manufacturing;
Distribution; Sales/Marketing; and Administration Management.”

Indicators and targets
The Group has calculated greenhouse gases emissions
as an indicator to manage climate change-related risks
and opportunities and set mid- to long-term reduction
targets. For Scopes 1 and 2, we will aim for emissions
reduction by 30% in FY2030 as compared withFY2021, and for the carbon neutrality by FY2050.

Emissions in Scopes 1, 2 and 3 (CO2 emissions (t-CO2))
FY2021
Scope 130,098FY2022
29,948

Scope 2

43,18047,661

Scope 3

947,466

1,045,925

Scope of calculation: TOWA PHARMACEUTICAL CO., LTD., J-Dolph Co., Ltd., Daichi Kasei Co., Ltd., Greencaps Pharmaceutical Co., Ltd., Towa
Pharma International Holdings, S.L., Sunsho Pharmaceutical Co., Ltd., etc.
Period of calculation: From April 2021 to March 2022 and from April 2022 to March 2023, including Sunsho Pharmaceutical Co., Ltd. and Towa
Pharma International Holdings, S.L. which changed the fiscal year end to March 31 starting from the fiscal year ended March 31, 2023

TOWA PHARMACEUTICAL Integrated Report 2023

[Basic approach]To fulfill our responsibilities as a company providing
ethical drugs, the Company strives to provide
information to patients and medical professionals inmany different ways, which include providing andcollecting pharmaceutical information through our
medical representatives. We also focus on our
responsible business activities ranging from stablesupply to quality assurance.

Low•C onducting risk assessment related to raw material
procurement• Operation of a crisis management system inpreparation for meteorological disasters[Opportunity]
Establishment of competitive advantage by leveraging proprietary
technologies and an increase in demand for value-added products

35

Society

Scope of analysis: TOWA PHARMACEUTICAL CO., LTD. (single entity) Period subject to analysis: FY2021-FY2030

Information Provision by Medical
Representatives
Our medical representatives, whose number is proudly
reported to be the largest among the domestic
manufacturers of generics, work on the provision,collection, and transmission of pharmaceuticalinformation. We are also enhancing the network of
medical representatives to be able to respond to various
needs of diverse medical service providers, including
clinics, local flagship hospitals, and health insurance
pharmacies. Further, we provide a qualification system
for medical representatives to recognize and enhancetheir specialized capabilities in cancer, immunology,
CNS areas, etc., so that we can provide information
requiring more specialized expertise.

Information Provision by DI Center
To ensure expeditious and accurate information
provision, the Company integrated multiple contacts
into Drug Information (DI) Center of Drug Information
Department, and uses the call-center system
connected to customer information. This allows us topromote optimal information provision activities forproper uses of generics. We also offer contact offices
to receive inquiries even at night or on holidays on a
24/7 basis.
Customer Service is offered for patients and thegeneral public. Toll-free services are available forvarious pharmaceutical inquiries about combinationsof multiple medications, side-effects, etc.

Information Provision via Websites
We provide necessary information about our ethicaldrugs through the corporate site and the site for medical
professionals. The corporate site offers information
about generics and materials that can be used byparents trying to help children take medication, as wellas other useful tips. The site for medical professionals
provides product information, governmental actions on
medical practices, and materials that can be used for
medical instructions for patients.

Information Provision to Promote
the Correct Uses of Medicines
To promote the correct uses of medicines, we provide
various explanatory materials for patients, e.g., about
how to take medicines, and conduct studies, e.g., on
combinations of medicines and other food/beverages
other than water to alleviate the bitterness for family
caregivers trying to help their children or those they
are caring for to take medication. The materials andresults of these studies are provided to patients andtheir family members through medical institutions.
People can access information about medicines byscanning a QR code* printed on a
product package with theirsmartphone or cell phone. For
formulations for children, QR codes
provide information to parents
about the taste of medication andhow to help patients (their children)
take medication smoothly.
*QR code is a registered trademark of
DENSO WAVE INCORPORATED.

Booklet to provide
information

TOWA PHARMACEUTICAL Integrated Report 2023

36

Society

Responsible Business Activities

Stable Supply System

Quality Assurance System

Stable supply is one of our important missions to beaccomplished as an ethical drug manufacturer. We
have production sites in Osaka, Okayama, andYamagata. To ensure stable product supply,
production of oral dosage forms is dispersed to thethree plants; and the production of injections is
integrated into Yamagata Plant built with theseismically isolated structures to minimize natural
disaster risks.

Osaka Plant

Okayama Plant

Products dispatched from the plants are stored in
the East Japan Distribution Center (in Yamagata) andWest Japan Distribution Center (in Okayama). This
enables us to deliver our products nationwide fromeither of the distribution centers in case one of whichis shut down due to a natural disaster, etc. We realize
stable supply through the two distribution centers inEast and West Japan.

Pharmaceuticals production is based on Good
Manufacturing Practice (GMP), the standards for
manufacturing control and quality control for
drugs laid down by the nation.
The Company has put in place procedures
compliant with the GMP three principles in all ofour plants in Yamagata, Osaka, and Okayama,and strives to manufacture reliable-quality
pharmaceuticals.

Minimizehuman error

GMP
three
principles
Prevent contamination
Establish
and quality degradation ofhigh-degree
medicinal products
system for quality
assurance

Yamagata Plant

Our Efforts for Stable API Procurement
We regularly inquire and confirm API manufacturers
whether they manufacture APIs in accordance withvarious standards, laws, and regulations to enable
the stable procurement of the APIs. In addition, toenable stable API procurement even if some suppliesof APIs are suspended, we promote a procurement

GMP Three Principles

Strict quality control standards established by the national
government apply to all processes of ethical drug
manufacturing operations. In order to be a trustworthy
company, we carry out company-wide quality control
initiatives ranging from product R&D, manufacturing, andmarketing to after-sales operations, and establish the quality
assurance system required for ethical drugs.
In the 5th Mid-term Business Plan, Policy 1 is “Enhancing
generics business as a core.” Under the policy, one of the key
themes is further strengthening the quality assurance system
in order to be a more trusted and needed company as acomprehensive generics manufacturer. Under the quality
assurance system, we not only comply with relevant
regulations including the Good Manufacturing Practice (GMP)
Ministerial Ordinance, but also strive to assure the quality andsafety of pharmaceutical products through introducing
international standards and establishing our original systems
and training programs from the perspective of “minimizing
human error,” one of the GMP three principles.

Recording of store-in/-out data with
Manufacturing Execution System (MES)

system in which a single API can be procured frommultiple manufacturers (multiple-sourcing system).
Another attempt to enhance stable supplies is madeby establishing methods of manufacturing APIs atinternal sites and actually manufacturing them at ourgroup company.

Manufacturing
Process A

Recording in manufacturing
instructions at each process

Quality Assurance Department(plants of Osaka, Okayama and Yamagata)

Process Control A
Manufacturing
Process B
Process Control B

Towa Group’s Initiatives

Risks in API
Procurement

Discontinuation of API shipment and manufacturing(Risks of environment pollution, natural disasters,
infectious diseases, accidents, etc.)
GMP violations by API manufacturers(Differences of quality and manufacturing controls
related to pharmaceutical regulations)Occurrences of mutagenic impurities(Conforming to ICH-M7 guideline)
Procurement of starting materials and intermediates(Overlapping of API upstream suppliers)

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TOWA PHARMACEUTICAL Integrated Report 2023

In-house manufacturing of APIs

Acceptance

Reduction of the risk of stable supply due to external factors bydeveloping synthesis processes and manufacturing at Daichi Kasei
or partnering companies

Manufacturing

Testing ofintermediate
products

Testing offinishedproducts

Product
shipment
decision byplants

Product
shipment
decision by
HQ QA Dept

Audit system for manufacturing sites
Audits in accordance with international standards as well as
domestic ordinances
Audits by technical experts (synthetic and physicochemical analyses)

Promotion of multiple sourcing of starting materials and intermediates
Maintaining a multiple sourcing rate of 60% or more for stablesupply even in case of emergency
Selection of suppliers avoiding duplication of starting materials
and intermediate suppliers

Dealing with mutagenic impurities

Confirmation of compliance withagreements and quality standards

Management of analysis data with Laboratory
Information Management System (LIMS)

Check of records and data forerrors or mistakes

Pharmacovigilance
and Quality Assurance Division

Taking appropriate measures with highly accurate measurement
and identification of generation mechanisms
Forecast of risks based on the latest knowledge

TOWA PHARMACEUTICAL Integrated Report 2023

38

Society

Making Job Satisfaction and Fostering Talented Human Resources

Job satisfaction for each employee
motivated by individual talent improvement
and career enrichment

Enrichment ofcareer paths

Enhancement ofcorporate fundamentals
Job satisfaction for strengthening
corporate fundamentals

Growth corresponding to changes
through employee’s growth and resulting
strength of corporate fundamentals

Job satisfaction
Growth ofemployees

Respect for diversity in work
styles and motivation foreach and every employee

Continuation of
Towa spirits
Towa Group exists
and prospers
for ever as it isFostering of talented
human resources

Special attachment
to making things

Continuation of Towa spirits by passing
down its commitment and desire
to make products to its employees

Encouraging employees togrow as important assets
for the company

Career Development Support
The Company is committed to “career development
support” for employees as part of our human resources
strategy, and strives to realize the continuous personal
growth of employees and create opportunities for
employees to demonstrate their abilities to the maximum
extent. By so doing, we aim to create an organization
where employees can work vibrantly, and thereby
become an organization and a company where all
employees feel a sense of job satisfaction.
More specifically, the Company holds interviews
between individuals and the Human Resources Division

staff and conducts career development training for thosein managerial positions based on internal questionnaire
surveys, so that the Company can support their
independent career development. In addition, we
conduct career development training every year for
those who are newly appointed to managerial positions
and those who are in the fourth year since their hiring
upon graduation. Meanwhile, the Career Development
Department proactively discusses initiatives toward
career development support and reports the results of
their discussions to the Executive Monitoring Meeting.

Our Commitments (T-SMILE)
We have established a new course of action named T-SMILE. This is ourphilosophy created when we marked the 70th anniversary of our foundation toaccommodate our growth and increasing employees and further disseminate ourvision to employees.
T-SMILE is an acronym of six words: Truthful that means sincerity, honesty andfairness; Speed that represents swift decision-making, action and information
sharing; Mission that expresses missions and passion to be of service to help
people maintain their good health in communities around the world; Idea that
represents creativity and imagination to challenge for unprecedented
transformation; Linkage that gives the impressions of connections between people
and information, coexistence, and co-prosperity; and Excellence that represents
the mind to choose the most appropriate technologies that fit with the times andhighest quality. These words serve as a course of action and criteria based on
which employees help realize the Group’s vision “We contribute to people’s health.
We are dedicated to people’s genuine smiles” through corporate activities.

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TOWA PHARMACEUTICAL Integrated Report 2023

Our new
commitmentsfor people’s
genuine smiles

Original Qualification Systems

Our Efforts for Diverse Work Styles

From the perspective of ensuring reliable quality andsafety, we develop employees with high awarenessthrough our educational training programs and original
qualification systems. Specific examples include a
GMP auditor certification and an expert certification
system. The expert certification system is a system
whereby we certify our employees who have a higher
degree of technical skills and greater knowledge inmanufacturing, packaging, testing, and quality
assurance units. In addition, we have introduced a“specialist MR system” as an internal qualification. We
aim to develop MRs who can contribute to team
medical services as specialists with knowledge in
specific fields such as cancer, psychiatric disorder, andprimary care, providing more appropriate information
to healthcare professionals. In addition to theforegoing, in FY2021, we established a new “inventory
observer qualification” as an internal qualification.
Going forward, by promoting various certification
systems, the Company will help employees in eacharea develop into specialists in manufacturing control
and quality control. Meanwhile, we aim to develop
employees who are highly aware of ensuring quality
and safety.

We perform various activities to help employees who raise
their children or take care of their family members in need ofnursing care. In 2010, we were awarded the next-generation
certification mark called Kurumin. The logo features aswaddled baby. The Ministry of Health, Labour and Welfare
grants the certification logo if it certifies companies aschildrearing-friendly businesses.
We have various parental and nursing care systems for our
employees. For example, they can take parental leave until
their children turn three years old for the maximum length,
they can extend using the shorter working hour system forparenting until their children finish the sixth grade atelementary school, and we provide family support leave towhich employees are entitled when they need to take care of
their sick family members requiring nursing care.
Indicator
TargetRate of holding interviews
100%with the Human Resources (October 2022 to the end of
Division staff
September 2023)
Ratio of women in
management positions

Achieve 13%

Ratio of paid leave taken

Achieve 65%

Result97.4%(Result for June 2021 toMarch 2022)

12.8%(As of March 2023)

66.3%(Result for FY2022)

Towa Health Challenge 2023
2023 Certified Health & Productivity
Management Outstanding Organizations
Recognition Program (White 500)
We were recognized as one of White 500 enterprises(large enterprise category) under the 2023 CertifiedHealth & Productivity Management Outstanding
Organizations Recognition Program selected jointly by
the Ministry of Economy, Trade and Industry and the
Nippon Kenko Kaigi (organization that takes practicalcommunity- and workplace-based actions, throughcollaboration among private organizations and with full
administrative support, in order to extend the healthy
lifespan of and provide appropriate medical care foreach individual in Japan.).
The program started in FY2017 to recognize
companies that care about employees’ healthmanagement from a business-management perspective
and strategically implement relevant initiatives. We havebeen recognized as one of the enterprises for six
consecutive years. This year, we were recognized as
one of White 500 enterprises, the top 500 implementing
a higher level of health and productivity management.

In June 2023, we had a health measurement event called “Towa
Health Challenge 2023.” This event was aimed to encourage
our employees to think about their own health. This event is a
substantial one, in which seven items, namely, vascular age andstress, body composition, cognitive ability, muscle strength andbalance, joint range of motion, walking posture, and generalendurance, are measured and “training movies” are delivered
on a continuous basis based on the measurement results.
Awards were also presented to employees who had achieved
particularly outstanding results in “Towa Health Challenge2022” conducted in the previous fiscal year. To help our
employees improve their lifestyle habits, we will continue tohold the event as an annual company-wide event.

TOWA PHARMACEUTICAL Integrated Report 2023

40

Society
Sustainability

GovernanceSocial Contribution Activities

Company-sponsored Daycare Centers

High School Student Business Contest
We held a “High School Student Business Contest
for the Future and People’s Health” for the fourth timein FY2022. As a part of our efforts to widely
disseminate the Group’s vision “We contribute topeople’s health” and contribute to a wide variety ofhealth-relatedindustries, the contest
is aimed at seeking
fresh ideas from highschool students whowill lead the future ofJapan and creating asocial contribution
opportunity for them.

[Basic approach]
We consider enhancing corporate governance to be an
important managerial task. By ensuring compliance-oriented
management and raising management efficiency andtransparency, we will continue to increase our corporate value.
To achieve this, we endeavor to respect and protect
shareholders’ rights as well as establish and maintain good
relationships with all of our stakeholders including
shareholders. At the same time, we continuously make efforts
to achieve our social missions as a healthcare company byfocusing on maintaining and improving corporate ethics andethical standards of officers and employees.
This policy also applies to the Towa Group companies. Eachof the Group companies fulfills required roles and obligations
to increase the corporate value of the Towa Group as a whole.

Overview of the corporate governance structure
Company-sponsored daycare centers are childcare
facilities established by companies to provide theiremployees with flexible childcare services according to
the employees’ different ways of working. We
established our company-sponsored daycare centersnear Okayama and Yamagata Plants in 2018 to realize awork environment where childrearing employees canwork for the Company without any concerns and tocontribute to local communities by reducing the numberof children on waiting lists at daycare centers. We also
conclude joint use contracts for company-sponsored
daycare centers of other companies to provide
additional options. In this way, we are committed tocreating an environment where employees find it easier
to be reinstated after parental leave.

On-demand Lectures

We deliver on-demand lectures using our technicalskills and content for children through an event called“After-school Educational Program for Kids” held in
elementary school districts of Osaka Prefecture so thatchildren can have an enriching learning experience. We
so far delivered lectures including the one themed“Let’s do an experiment and explore the secrets ofmedicine! —Generics are full of ingenious ideas—”

41

TOWA PHARMACEUTICAL Integrated Report 2023

General Meeting of Shareholders

Cultivation of Pharmaceutical
Product Raw Materials in Mongolia
As an example of social contribution activities in overseas
countries, the Company has been implementing a projectin Mongolia for more than 10 years to cultivate licorice
and other plants used as herbal medicine. Mongolia’s
industries to support its economy that are unique to itself
are limited, and in addition, the country is facing a serious
issue of desertification of land. Accordingly, as theCompany had a relationship with the country throughtrading of pharmaceutical products, we have pushedforward with support to Mongolia.
We have been working to encourage the cultivation oflicorice in this country in the recognition of the large
number of licorice plants growing wild in the vast
grasslands. Licorice is heavily used as a natural foodadditive, and also used for herbal medicine. It is avaluable plant that can be used as a pharmaceuticalingredient because glycyrrhizic acid can be extracted.
However, licorice requires at least five years fromplanting to harvest to be used as raw materials for herbal
medicine. Therefore, the Company has initiated a “100Year Plan” in which we support activities ranging fromsecuring cultivation land to planting, managing, andharvesting licorice, which are followed by drying,chipping and sales. Going forward, we are committed tocontributing todevelopment ofindustries in Mongolia
through cooperation withlocal people by making
the local licorice
extraction and salespossible to make theplant into pharmaceuticalproducts.

Appointment/dismissal

Decision-making andsupervising function

Appointment/dismissal

Board of Directors
Directors

Recommendation
Nominating
andCompensation
Committee Consultation

Directors
who are Audit and Supervisory Committee Members

Basic policy for developing the internal control system

Supervising

Business execution function

Appointment/
removalSupervising

President and Representative Director

Audit andSupervisory Committee

Audit/
supervising(excluding those who are Audit andSupervisory Committee Members)

Appointment/dismissal

Reporting Reporting

Audit

Cooperation

Cooperation

ReportingExecuting organizations/meetings

Risk Management
Committee(TCFD Subcommittee)

Executive Strategy
Meeting
Executive Monitoring
Meeting

Accounting
AuditorOperating Officers
Departments

Audit

Internal
Audit Office

Affiliate companies

Investigation/correction

Accounting
audit

Cooperation

Compliance Committee (Whistle-blowing helpline)

Enhancement of the corporate governance structure
Towa continuously makes efforts to enhance its
corporate governance structure. Towa is a company
with an audit and supervisory committee. The
Company is governed mainly by the Board of
Directors consisting of seven Directors and the Audit
and Supervisory Committee consisting of four
Directors who are Audit and Supervisory Committee
Members (including three Outside Directors).

One of the main roles of the Board of Directors is tomake decisions on mid- to long-term management
policies and important operations. Its important roles
also include resolving the basic policy of the internal
control system and supervising Directors’ businessexecution. To ensure the effectiveness of such decisionmaking and supervision, we need to reduce the number
of Directors, separate Directors and Operating Officers

TOWA PHARMACEUTICAL Integrated Report 2023

42

Governanceand clarify their roles, and build an environment thatencourages Outside Directors to express their opinions.
Under these policies, Towa has made several efforts.
These include the transition to a company with an audit
and supervisory committee, introduction of a mid- tolong-term performance-based stock compensation
system, establishment of the Nominating andCompensation Committee, enhancement of functions of
Outside Directors, and stimulation of the Board of
Directors. Going forward, Towa will continue to focus on
enhancing the corporate governance structure.

major offices. In addition, the Audit and Supervisory
Committee has established its own whistle-blowing
helpline, which accepts whistle-blowing on matters
involving officers as a highly independent contact.

Roles and independence of Outside Directors

Nominating and Compensation
Committee
The Nominating and Compensation Committee of theCompany is chaired by the Representative Director
and more than half of whose members are
Independent Outside Directors. The purpose of theNominating and Compensation Committee is todeliberate matters on the appointment and dismissalof Directors and Operating Officers, nomination ofcandidates, succession planning, and compensationin consultation with the Board of Directors, and to
make recommendations to the Board of Directors.

Board of Directors
The Board of Directors of the Company is chaired by the
Representative Director. Meetings of the Board of
Directors are held monthly in principle. The Board
discusses important management matters at themeetings and makes decisions promptly. With regard tobusiness execution, the Company has introduced an
operating officer system and built a governance structure
to clarify the Directors’ responsibilities. With the structure,
Operating Officers bear the responsibility for businessexecution while the Board of Directors focuses on
decision-making and supervision of management issues.

Analysis and evaluation of
the effectiveness of the Board of
Directors as a whole
In February to March 2023, the Company conducted aself-evaluation survey for Directors to analyze and evaluate
the effectiveness of the Board of Directors. The survey used
a questionnaire consisting of 21 questions including thoseon the structure, operations, and discussions of the Boardof Directors. Results of the survey were reported at themeeting of the Board of Directors held on April 17, 2023.
Although the survey showed no significant issues on theeffectiveness as a whole, it reminded us that we need tofurther discuss the discovery and development of humanresources from a mid- to long-term perspective as well as
mid- to long-term management challenges. Based on thoseresults of the evaluation, the Company will further endeavor
to enhance the effectiveness of the Board of Directors.

Audit and Supervisory Committee
The Audit and Supervisory Committee of the Company
consists of four members including three Outside Audit
and Supervisory Committee Members. Audit andSupervisory Committee Members conduct effective audits
according to audit plans formulated by the Audit andSupervisory Committee. Specifically, they attend important
meetings such as the Board of Directors meetings; receive
reports from Directors, Operating Officers, employees, and
the Accounting Auditor; and conduct on-site audits of

The Company formulated the basic policy for thedetermination of Directors’ compensation as detailed on
the next page. Currently, all of the Outside Directors are
Audit and Supervisory Committee Members. The Company
has built a system to help them fulfill their duties as Audit
and Supervisory Committee Members. Specifically, agenda
items of the Board of Directors are sent to them in advanceby the General Affairs Department, the administrative officeof the Board of Directors, so that the Members canconsider matters to be discussed thoughtfully. In addition,
they are provided with necessary support by the assistantstaff of the Audit and Supervisory Committee as well asreports and explanations on important matters by thefull-time Audit and Supervisory Committee Member.

The Company believes that fair and efficient corporate
management can be achieved through Outside Directors’
advice and opinions on the promotion of sound andefficient management at Board of Directors meetings. The
Company has established the Nominating andCompensation Committee as an advisory body to theBoard of Directors in order to further enhance andstrengthen the corporate governance structure. In
particular, the committee contributes to appropriately
providing the Outside Directors with opportunities for
involvement and advice so as to increase the objectivity
and transparency of the decision-making process on thematters such as the appointment or dismissal of andcompensation for Directors and other officers.

Reasons for nomination of Outside Directors
Name and
position
Outside Director(Audit and Supervisory
Committee Member)

Norikazu Eiki
Assumed the officein June 2019
Outside Director(Audit and Supervisory
Committee Member)

Kaori Oishi
Assumed the officein June 2020
Outside Director(Audit and Supervisory
Committee Member)

Kenryo Goto
Assumed the officein June 2021

Reasons for nomination

Attendance

Norikazu Eiki has wide-ranging insights and extensive experience at a global company,
and the Company expects that his advice and opinions will promote sound, efficient, andobjective management, for which reason it has appointed him as an Outside Director.

Board of Directors
meetings(held 14 times)
100%

Audit andSupervisory
Committee meetings(held 13 times)
100%

Kaori Oishi is well versed in corporate legal affairs as an attorney-at-law. The Company
expects that she will provide advice and opinions based on her wealth of experience andexpertise as well as from a female perspective, for which reason it has nominated her as
an Outside Director.

Board of Directors
meetings(held 14 times)
100%

Audit andSupervisory
Committee meetings(held 13 times)
100%

Kenryo Goto has expertise in fields including finance and accounting as a certified public
accountant and extensive experience as a corporate manager of an audit firm. The Company
expects that his advice and opinions based on such a background will improve the transparency
and objectivity of management, for which reason it has nominated him as an Outside Director.

Board of Directors
meetings(held 14 times)
100%

Audit andSupervisory
Committee meetings(held 13 times)
100%

History of Towa’s corporate governance
Skill matrix
Corporate
management

Itsuro Yoshida
InsideDirectors

Masao Tanaka
Osamu Uchikawa

Management
strategy
Businessstrategy

Finance/
Accounting

Legal affairs/
Riskmanagement

Personnel

Purchasing

R&D

Production

Quality control/
Reliability
assurance

GlobalJune 2019
Towa transitioned to a company with an audit andsupervisory committee
The mid- to long-term performance-based stockcompensation system was introduced

2020

October 2019
The Nominating and Compensation
Committee was established

2019
2018

Norikazu Inoue
Norikazu Eiki
OutsideDirectors

2017
2016

Kaori Oishi
Kenryo Goto

43

June 2015
An Outside Director assumed the position

TOWA PHARMACEUTICAL Integrated Report 2023

June 2020
A woman assumed the positionof Outside Director

2015

June 2018
The number of Outside Directors increased to two

TOWA PHARMACEUTICAL Integrated Report 2023

44

GovernanceRisk Management
Basic approach to risk management

Compensation for officers
The Company formulated the basic policy for thedetermination of Directors’ compensation. Under thepolicy, compensation shall:• Contribute to secure talented people to ensure Towa
Group Philosophy, Our Commitments, Corporate Policy,
and the Charter of Corporate Behaviors in Towa Group;• Be linked with clear targets for corporate and individual
performance to increase Directors’ motivation and moraleas they perform their duties;• Help to raise awareness of the contribution to improving
mid- to long-term performance and corporate value; and• Be determined with a focus on raising awareness of
sharing interests with shareholders and shareholdercentered management.
With the basic policy above, in 2019 the Company
introduced the mid- to long-term performance-based stockcompensation system for Directors (excluding Outside
Directors and Directors who are Audit and Supervisory
Committee Members). This introduction was made tofurther clarify the link between compensation and theCompany’s mid- to long-term performance and shareholder
value, as well as to improve corporate value over the
medium to long term by granting incentives while raising
Directors’ awareness of contribution to the improvement ofcorporate value and shareholder-centered management.
In addition, the Company has established the Nominating
and Compensation Committee as an advisory body to theBoard of Directors with the aim of increasing the objectivity
and transparency of the decision-making process ofcompensation for Directors or other matters as well as
further enhancing and strengthening the corporate
governance structure.

Total amount of compensation for Directors
Amount of compensation by type (JPY million)

Position

Total amount ofcompensation(JPY million)

Basic
compensation

Annual bonuses(based on individual
performance)

Monetary
compensation

Non-monetarycompensation

Directors (excluding those who are Audit andSupervisory Committee Members)

156

107

16

25

7

3

Directors who are Audit and Supervisory Committee
Members (of which Outside Directors)

49
(26)

49
(26)

(-)

(-)

(-)

-

4
(3)

Total (of which Outside Directors)

206
(26)

157
(26)

16
(-)

25
(-)

7
(-)

7
(3)

-

Performance-based compensation-

Number of eligible
officers

Cross-shareholdings
The Company may hold cross-shareholdings upon request from abusiness partner as a means to build, maintain, and strengthen longterm and stable transactional relationships with the business partner.
In that case, however, the Company holds cross-shareholdings only
when it is deemed that holding of such shares will contribute to theenhancement of its corporate value over the medium to long term.
Whether to hold cross-shareholdings is determined yearly by the
Board of Directors with consideration of mid- to long-term economic
rationality and future outlook. The Company exercises its voting
rights of cross-shareholdings appropriately after closely examining
the proposals and determining whether the holding of such shares

will contribute to the enhancement of shareholder value. The
Company does not make an affirmative determination on proposals
that may damage shareholder value. In addition, the Company will
be against proposals of appointment of directors and other officers
who committed any antisocial act or violation of legal obligations.
If a cross-shareholder expresses an intention to sell the shares, theCompany does not hinder the sale or other acts. When conducting
transactions with cross-shareholders, the Company will thoughtfully
examine the economic rationality of those transactions, just as withthose with other business partners.

Dialogues with stakeholders
The Company discloses the information on its management
strategies, finance/performance status, among other matters, toshareholders, investors, and other stakeholders through investor
relations activities in an appropriate and timely manner. In addition,
the Company emphasizes constructive dialogues with stakeholders
including shareholders and investors so as to deliver opinions,requests, and other similar things obtained from such dialogues tothe Board of Directors for the improvement of corporate value.

45

TOWA PHARMACEUTICAL Integrated Report 2023

The Company recognizes the importance of appropriate
collaboration with not only shareholders and investors but also
other stakeholders including patients, medical professionals,
business partners, local communities, and employees. For creating
corporate value, we are committed to disclosing information in an
appropriate and timely manner to all of our stakeholders in order tomaintain good and smooth relationships with them.

To ensure company-wide risk management, theCompany has formulated the “Basic Regulations for
Risk Management,” which shall be complied with by
all the departments, officers, and employees of the
Towa Group. It is critical for the Group’s continuationand growth to respond to the risks surrounding theGroup promptly and appropriately. We aim to prevent
risks as well as to minimize the loss of stakeholders’profits and impacts on corporate management whena risk occurs. The Group’s risk management isadministered by the Risk Management Committee,
established under President and Representative
Director, who is the chief risk officer.

Risk Management Committee
The Risk Management Committee addresses the risks
surrounding the Group promptly and appropriately
with the aim to minimize the loss of stakeholders’interests and impacts on corporate management
when a risk occurs while preventing risks.
The Committee consists of 17 members including
Representative Director Itsuro Yoshida, who serves as
the chief risk officer. In addition, Director (Audit andSupervisory Committee Member) Norikazu Inoueattends meetings of the committee as an observer.
In terms of the impact of climate change on the
Company’s business activities and earnings, etc., asubordinate organization of the committee, beginningin FY2022, works to implement scenario analysis andconsider GHG emissions reduction measures, basedon the recommendations of Task Force on Climaterelated Financial Disclosures (TCFD). We strive todisclose the information, upon report to the Board of
Directors, as appropriate.

Information security
To increase the Company’s trustworthiness andcompetitiveness, the Company has formulated its
information security regulations. The regulations
consist of basic rules for appropriate use,maintenance, and operation of information assets that
all the officers and employees must comply with in
the course of their duties. Based on the regulations,the Company works to secure information security as
part of daily management activities, businesspromotion, and organizational operation.

Disaster countermeasures
Towa Group takes various measures to prepare for alarge-scale disaster.
Specifically, those measures include: (1) provisionof emergency supplies, (2) clarification of initial
responses and preparation of manuals, and (3)introduction of a safety verification system. In
addition, we hold twice-a-year meetings of the Risk
Management Committee to share information.

Fire evacuation drill

Risk Information
Towa Group mainly handles prescription products,
and among them, generics are our leading products.
A generic drug has the same active ingredients,
indications, dosage, and administration as a branded
drug that has been on the market after its efficacy
and safety have been confirmed for a certain period

Control in accordance with
the Pharmaceutical andMedical Device Act, etc.

of time. Thus, the Group faces specific risks as a
generic business in addition to risks as a holder ofmarketing authorization for drugs. After recognizingthese risks, the Group makes every effort to avoid
their occurrence and set up a system for unexpected
events.

The Group has been manufacturing and marketing prescription products in accordance with the Pharmaceutical and Medical Device Act and related laws and regulations. Any
violation of those laws and regulations may cause administrative sanctions by the authorities concerned, which may affect the Group’s business activities. To address risks
related to various regulations, the Group collects information on the laws and regulations to conduct business in accordance with them. In addition, we have developed acompany-wide plan and system for compliance promotion.

TOWA PHARMACEUTICAL Integrated Report 2023

46

GovernanceCompliance
Patent andre-examination periods

The active ingredients of branded drugs are usually protected by patent rights, and the period is 20 years from the date of application (the period may be extended for up to 5
years). Since generics are approved for marketing after the expiration of the patent period, the extension of the patent period is expected to affect the Group’s launch of new
products (new generics). The Group collects information on patents and re-examination periods as well as facilitates collaboration among related departments. We strive toresolve discrepancies in indications by obtaining approval for partial changes, such as additional indications as soon as possible, after the patent period on a branded drug
expires, or by applying for partial changes after the re-examination period.

Re-evaluation based on
the Pharmaceutical andMedical Device Act

Re-evaluation of drugs is a system in which the quality, efficacy, and safety of approved drugs are reviewed from the current academic standards. If the drug efficacy
re-evaluation shows no usefulness, the product is recalled and disposed of. If the quality re-valuation shows that the drug is not equivalent to that of a branded drug,
subsequent marketing may be discontinued. These situations may affect our group’s financial position and operating results. The Group collects information on scientific andtechnological progress to appropriately evaluate drugs.

Adverse drug reactions

Generics are released after branded drugs have been used for many years. Their safety information has been confirmed, and they have been re-examined. Therefore, the riskof serious adverse reactions is minimal. However, if they occur, it may affect the Group’s financial position and operating results. The Group collects information on drugs
including that on the occurrence of adverse drug reactions in compliance with each country’s regulations. This allows us to determine and conduct necessary measures basedon the results obtained through assessment and consideration.

Drug price system andmedical cost
containment policy

To sell ethical drugs, which are our mainstay products, the products have to be listed in the NHI price list specified by the Minister of Health, Labour and Welfare. The Group’s
financial position and operating results could be affected if the medical insurance system is reviewed, the drug price system is significantly changed, or the medical cost
containment policy is reinforced. The Group aims to sell products at fair prices that match the value of the products while engaging in cost reduction activities by reducing
procurement costs of raw materials and increasing production efficiency.

Compliance policy
In order to be committed to ethical and law-abiding
corporate behavior in accordance with the “Towa Group
Code of Conduct,” the Group promotes measures aswell as training and education to raise complianceawareness of the officers and employees. Furthermore,
we develop and appropriately utilize a whistle-blowing
helpline so as to promptly detect and correct fraudulent
acts of the Group’s officers and employees.
The Internal Audit Office, which is under the directsupervision of the President and Representative Director,
conducts internal audits and reports the results directly
to the top management. In the case where the Internal
Audit Office finds anything that needs improvements, it
conducts a follow-up audit to check the improvements.

Compliance structure
Patent litigation

Mark-to-market
valuation of derivatives

Risks in the competitiveenvironment

The Group imports certain semi-finished products and raw materials from overseas manufacturers in foreign currencies. If the costs increase due to a weak yen, it is extremely
difficult to shift the increase onto the sales price under the drug price system in Japan. To avoid the risk of cost increase due to depreciation of yen and to provide a stablesupply of our products, we conduct long-term derivative transactions. Such transactions are subject to mark-to-market valuation at the time of financial closing, and valuation
losses may occur if the yen is stronger, or the long-term interest rate spread between Japan and the US is larger, than at the end of the previous fiscal year. Therefore,
valuation loss may occur depending on the exchange rate and the interest rate trend in Japan and the US. In the opposite case, valuation gains may occur. The Company
estimates the future amount of import transactions made in foreign currencies to conduct long-term derivatives transactions within the estimated range. This helps us prevent
derivatives transactions from being speculative.

The competitive market for generic drugs is composed mainly of a switch from brand-name drugs and is greatly affected by the number of sales promotion companies. In
recent years, companies have been planning strategies, such as introducing authorized generic products. Our actual sales revenue may differ from planned revenues,
depending on their trends. In addition, competitors’ supply status impacts demand for our products, which could risk a stable supply. The Group responds to such risks byincreasing production capacity through capital investment, improving the backup system for manufacturing sites, and ensuring a stable supply of products from the production
and sales aspects by monitoring the volume of demand and inventory daily. We are also making efforts to ensure reliability through transparent disclosure of information.

Stagnation and delay of
production owing todisasters and other causes

The Group has production sites in Japan (Osaka, Okayama, Yamagata, Shiga, Hyogo, and Shizuoka Prefectures) and Spain (Province of Catalonia), and any of these production
sites could be forced to cease business operations owing to the occurrence of natural disasters or technical/regulatory issues to affect the stable supply of products. Besides,
if natural disasters and other causes force us to halt purchasing raw materials from some specific supplier(s) and these halted raw materials are challenging to substitute, ourbusiness performance could be affected. The Group strives to organize a mutual backup system among our domestic plants and promote multiple sourcing of APIs. Moreover,the Group possesses its own API manufacturing plant to secure a stable supply of APIs.

Global risks

We completed the acquisition of Towa Pharma International Holdings, S.L. (“Towa HD”) in January 2020. We expect that the acquisition of Towa HD will contribute to building a
global structure and providing our value-added products to the market in Europe and the United States. However, the Group’s financial position and business performance could be
affected if the acquisition of Towa HD fails to produce the expected effects owing to changes in business environments and business operations of Towa HD, effects of local
systems and regulations, possible delay in the progress of the integration process between Towa HD and us, or events unrevealed during due diligence. The Group strives tostrengthen a global management structure through the integration process between Towa HD and us.

Risks of corporate
acquisition

Protosera Inc. became our subsidiary in March 2021. We also completed the acquisition of Sunsho Pharmaceutical Co., Ltd. by acquiring all of its shares in March 2022. If we failto achieve the expected effects of the acquisition of these companies due to changes in the management environment and business operations, possible delay in progress of theintegration process, and events unrevealed during due diligence, the financial position and operating results of the Group may be affected. The Group is in the process ofdeveloping a business plan and creating synergies through the integration process between the Company and its subsidiaries, as well as strengthening a management structureby, for example, dispatching directors.

Others47

Since our generic drugs sometimes use API that still has patent rights for their crystal form, formulations, use of the drug, etc., a patent suit may be filed by a manufacturer of
new drugs. Such cases may affect the Group’s financial position and operating results. The Group responds to such risks by collecting patent information and strengthening
collaboration among related departments, such as engineering and development departments. This enables us to develop drug formulations that have not been covered bypatents held by other companies.

The legal status of COVID-19 under the Act on the Prevention of Infectious Diseases and Medical Care for Patients with Infectious Diseases has changed from Class II Infectious
Disease to Class V Infectious Disease on May 8, 2023. As of the date of issuance of this Integrated Report (on November 30th, 2023), the Group expects that the impact of theinfection becomes even less severe. However, if the infection situation were to worsen in the future, it may cause an impact on the Group’s sales and production.
Meanwhile, the dire Russia-Ukraine situation is affecting the global economy, causing soaring prices of energy and raw materials, thus affecting the management of the Group.

TOWA PHARMACEUTICAL Integrated Report 2023

We have established the Compliance Committee
consisting of inside and outside committee members
under the officer in charge of compliance to promotecompliance activities. Under the Group’s compliancepolicy, the officers and employees shall promptly report to
Directors and the Compliance Committee when they finda problem that may cause damage to the Group’sbusiness and financial condition.
The Compliance Committee is in charge of the whistleblowing helpline (group helpline). It regularly reports theinformation from the officers and employees of the entire
Group collected through the helpline to the Board of
Directors. The Audit and Supervisory Committee sharesinformation with the Internal Audit Office and theCompliance Committee on a regular basis. It has a right torequest report submission.
In addition, because each organization needs to carryout activities such as promotion of and corrective actions
for compliance autonomously, we have designatedDivision Managers and Plant Managers as Departmental
Compliance Promotion Supervisors, and Department
Managers as
Departmental
Overview ofCompliance Promoters.
the compliance structure
The Compliance
Board of Directors
Committee works
Audit/appointment/
removaltogether with
President and
Departmental
Representative Director
ReportingCompliance Promotion
Executing organizations/Supervisors to planmeetings
Investigation/correction
and implement
Compliance Committee
Helplinemeasures such as
identification, analysis,
Compliance Committee
Officeand correction of
Departmental
Compliance Promotion Supervisorscompliance risks for
Departmental
Compliance Promoters
the Group as a whole.

Compliance activities/education
The Company conducts awareness-raising activities
for the officers and employees on a daily basis under
the leadership of the officer in charge of complianceand the Compliance Committee. In addition, we set
specific periods to promote compliance to take various
measures across the Group. Specifically, we conveyed
a President’s message and displayed a poster to raiseawareness of compliance. We also conducted anawareness survey for all officers and employees of theGroup, officer training, and workplace meetings related
to compliance at each department.
In addition, we provided e-learning on such themes
as how to use the whistle-blowing system and handle
privacy information. For overseas subsidiaries as well,legal affairs and compliance departments at theregional headquarters undertook measures such asprovision of training.

Delivered easy-to-understand complianceexample cases through group newsletters

Whistle-blowing helpline
The Company’s whistle-blowing system appropriately
deals with problems while protecting whistle-blowers.
Together with the monitoring by the Internal Audit
Office, the system has contributed to prompt
detection and correction of problems. The Group has
two contacts to deal with issues under the
Whistleblower Protection Act: a group helpline and awhistle-blowing helpline of the Audit and Supervisory
Committee. The group helpline is used as a helpline
shared within the Group companies in Japan. The
whistle-blowing helpline of the Audit and Supervisory
Committee addresses only cases involved with theofficers of the Group companies in Japan as acontact point independent from execution. As foroverseas, we have established whistle-blowing
helplines in Towa Pharma International Holdings,
S.L., the EU/US Regional Headquarters, for theofficers and employees of our subsidiaries overseas.
We regularly receive their reports on the status ofwhistle-blowing received and investigation.

TOWA PHARMACEUTICAL Integrated Report 2023

48

Governance

Board Members

Message from the Outside Directors

Norikazu Inoue
Director (Full-time Audit andSupervisory Committee Member)

Providing genuine smiles through Towa Quality
Itsuro Yoshida

Norikazu Eiki

The pharmaceutical industry currently faces three major, unprecedented issues. They are (1)the stable supply of generics, (2) a drug discovery capability decline, drug lag and drug loss,and (3) distribution and pharmaceutical pricing systems. In response to these issues, at Towa
Pharmaceutical, we conduct free and serious debate in the monthly meetings of the Audit andSupervisory Committee Members and Board of Directors. Further, to deepen our
understanding of specific themes, we hold separate meetings between the senior managers
and the Outside Directors. Towa will launch its 6th Mid-term Business Plan next fiscal year
(from April 2024). I hope to contribute to the Company’s efforts to demonstrate its strength,
namely Towa Quality, to the full in all situations so that it may offer many smiles to people inJapan and throughout the world.

Outside Director (Audit andSupervisory Committee Member)President andRepresentative Director

May 1979
Joined the Company
October 1983
General Manager of Finance & Accounting Department
December 1983 Director / General Manager of Finance & Accounting Department
August 1986
Director / General Manager of General Affairs Department
April 1990
Director / General Manager of President Office
June 1990
Senior Managing Director / General Manager of President Office
June 1991 	Senior Managing Director / Division Manager of Production
Division / General Manager of President OfficeNovember 1991 Senior Managing Director / General Manager of President Office
June 1996
President and Representative Director (to present)
October 2003 	Chairman and Representative Director of J-DOLPH Co., Ltd.
(currently J-DOLPH Pharmaceutical Co., Ltd.) (to present)
October 2010
Chairman and Representative Director of Daichi Kasei Co., Ltd.

Efforts to fulfill a social mission and deepen discussions in the Board of Directors
Masao Tanaka
Although the role expected of generics manufacturers is growing in importance, quality
problems by certain manufacturers in the generics industry have caused concerns aboutstability of supply and product quality, and the situation has yet to be resolved. Even under suchsevere circumstances, viewing its vision of contributing to people’s health as its social mission,
Towa is working steadfastly to expand its production capacity, as well as to unite across theCompany as a whole to realize the manufacture of sophisticated products with No. 1 total
product performance under thorough quality control. The enthusiasm with which the Company
is working toward these goals is conveyed deeply even to me as Outside Director. In the Boardof Directors, lively discussion takes place about issues such as the fostering of talented humanresources and the environment, with the social mission that Towa should fulfill in mind. I hope to
see even more in-depth debate aimed at the further promotion of sustainability management.

Director

April 2009 	Joined the Company / Deputy-General Manager of Internal Audit Office
April 2011
General Manager of Internal Audit Office
October 2016 	General Manager of Public Relations and Investor Relations Office /General Manager of Human Resources Department
June 2017
Director / Division Manager of Administration Division
April 2019
Director / Director in charge of Administration Division
June 2020
Director (to present)
April 2021 	Chairman and Representative Director of Protosera Inc. (to present)
July 2021 	President and Representative Director of Protosera Inc. (to present)

Kaori Oishi

Osamu Uchikawa

Kenryo Goto
Outside Director (Audit andSupervisory Committee Member)

49

The problem of insufficient supply of generics has, unfortunately, not been eliminated since it
first emerged in 2020. In light of structural challenges, a panel of experts convened to consider
this problem has recommended the development of a scheme for the market to commend
companies that are able to provide stable supply of generics of assured quality. Deliberations
are still ongoing.
In its desire to play a part in returning the industry to normal, Towa is working to expand its
production capacity and is in the process of formulating its new Mid-term Business Plan tostart in FY2024. I hope to support those efforts from the perspective of corporate governance.
In accordance with our vision of supporting “genuine smiles” by contributing to people’s
health, I hope that, with my outsider’s perspective, I can help the Company ensure a stablesupply of products that can be used with peace of mind in Japan and the rest of the world.

TOWA PHARMACEUTICAL Integrated Report 2023

Norikazu Eiki
Outside Director (Audit andSupervisory Committee Member)August 1979 Joined Ciba-Geigy Japan Limited
January 1994 Joined Bayer Yakuhin, Ltd.
March 1997 Director / Plant Manager of Shiga Plant, Bayer Yakuhin, Ltd.
July 2002
President and Representative Director of Bayer Yakuhin, Ltd.
January 2007 Chairman and Representative Director of Bayer Yakuhin, Ltd.
April 2010
Chairman and Director of Bayer Yakuhin, Ltd.
May 2014
Outside Director of AnGes MG, Inc. (currently AnGes, Inc.) (to present)
April 2015
Director of the Board of FunPep Co., Ltd. (to present)
June 2015
Outside Director of the Company
April 2016
Outside Director of Solasia Pharma K.K. (to present)
June 2018
Outside Director of Kidswell Bio Corporation (to present)
June 2019 	Outside Director (Audit and Supervisory Committee Member) of theCompany (to present)

Kaori Oishi
Outside Director (Audit andSupervisory Committee Member)

Outside Director (Audit andSupervisory Committee Member)

We want to help the industry to return to normal

October 2011 	Joined the Company / Deputy-General Manager of General Affairs
Department, Administration Division
April 2014
General Manager of General Affairs Department, Administration Division
April 2015
General Manager of General Affairs Department, General Affairs Division
October 2016 	General Manager of General Affairs Department, Administration Division
April 2017 	Operating Officer / General Manager of General Affairs Department,
Administration Division
April 2019 	Senior Operating Officer / Division Manager of Administration Division /General Manager of General Affairs Department
April 2020
Senior Operating Officer / Division Manager of Administration Division
April 2023
Senior Operating Officer / In charge of Administration Division
June 2023 Director (Audit and Supervisory Committee Member) (to present)

Director

August 2017 Joined the Company / Senior Advisor, API Business Division
April 2018 Operating Officer / Division Manager of API Business Division
April 2019 	Senior Operating Officer / Division Manager of API Business Division /In charge of Product Strategy Division and Innovative Technology
Research Division
April 2021 	Senior Operating Officer / Division Manager of API Business Division /In charge of Product Planning Division, Innovative Technology
Research Division, Pharmaceutical Research and Technology
Division, Pharmaceutical CDMO Management Division, andPharmaceutical Development Division
June 2021 	Chairman and Representative Director of Daichi Kasei Co., Ltd. (to present)
April 2022 	Senior Operating Officer / Division Manager of API Business Division /In charge of Pharmacovigilance and Quality Assurance Division,
Product Planning Division, Innovative Technology Research Division,
Pharmaceutical Research and Technology Division, Analytical
Technology Center, Pharmaceutical CDMO Management Division, andPharmaceutical Development Division
April 2023 	Senior Operating Officer / In charge of R&D Division,
Pharmacovigilance and Quality Assurance Division, andPharmaceutical CDMO Management Division
June 2023 Director (to present)

October 2001 Registered as an attorney at law
October 2001 Joined Kitahama Law Office (currently Kitahama Partners)
January 2013 Partner of Kitahama Partners (to present)
June 2017
Outside Director of PALTAC CORPORATION (to present)
June 2020 	Outside Director (Audit and Supervisory Committee Member) of theCompany (to present)
June 2022
Outside Director of FUJITEC CO., LTD.

Kenryo Goto
Outside Director (Audit andSupervisory Committee Member)

September 1981 Joined Asahi & Co. (currently KPMG AZSA LLC)
March 1984 Registered as a certified public accountant
May 2005
Partner of KPMG AZSA & Co. (currently KPMG AZSA LLC)
July 2010
Board member, Head of Division 3, Osaka Office, KPMG AZSA LLC
July 2013
Senior Executive Board member of KPMG AZSA LLC
July 2015
Osaka Office Managing Partner of KPMG AZSA LLC
July 2020 	Representative of Kenryo Goto Certified Public Accountant Office (to present)
April 2021
Auditor of Hyogo Medical University (to present)
June 2021 	Outside Director (Audit and Supervisory Committee Member) of theCompany (to present)
June 2022
External Director of West Japan Railway Company (to present)

TOWA PHARMACEUTICAL Integrated Report 2023

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