11-Year Financial Summary
2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022 (FYE March)

Net sales (JPY million)

48,71955,241

61,351

71,47082,11584,94993,430105,104

110,384

154,900

165,615

Operating profit (JPY million)

9,107

7,723

7,706

11,105

11,134

6,869

11,643

15,96816,14319,923

19,205

Ordinary profit (JPY million)

9,841

9,544

8,834

15,437

10,157

7,417

11,717

18,86520,99018,67722,739Profit attributable to owners of parent (JPY million)

5,737

6,201

5,992

11,118

7,684

5,576

6,495

13,475

14,503

13,95815,914Comprehensive income (JPY million)

5,745

6,348

5,999

11,175

7,313

5,858

6,533

13,40914,948

14,46917,960Net assets (JPY million)

50,49455,61060,14770,04870,60574,94579,92091,771

104,665

116,599

132,169

Total assets (JPY million)

81,24489,705

103,318

121,187

156,851

165,247

177,181

188,803

230,016

245,668

329,935

Net assets per share (JPY)990.36

1,090.70

1,179.69

1,373.89

1,434.79

1,522.99

1,624.09

1,864.92

2,126.72

2,369.21

2,685.18

Earnings per share (JPY)111.49121.62117.54218.07154.19113.32132.00273.85294.74283.62323.36----436.29314.23122.03253.32272.62271.93316.19

Capital-to-asset ratio (%)

62.2

62.0

58.2

57.8

45.0

45.4

45.1

48.6

45.5

47.5

40.1

ROE (Return on equity) (%)

11.8

11.7

10.4

17.1

10.9

7.7

8.4

15.7

14.8

12.6

12.8

Price-earnings ratio (%)

12.26

13.68

12.63

10.50

9.98

16.56

16.79

10.64

7.69

8.61

8.50

Cash flows from operating activities (JPY million)

3,379

8,645

8,144

8,037

3,732

10,195

19,23019,002

19,16412,00822,129Cash flows from investing activities (JPY million)(8,482)(11,298)(11,300)(8,230)(19,032)(22,206)(20,093)(3,994)(39,541)(9,100)(59,729)

Cash flows from financing activities (JPY million)

879

2,793

3,529

238

27,970

(92)

4,670

(809)

11,748

184

46,540Cash and cash equivalents at end of year (JPY million)

3,798

3,985

4,675

5,208

18,526

7,112

11,511

26,652

18,713

22,91532,830

Number of employees

1,567

1,696

1,879

2,060

2,203

2,408

2,449

2,472

3,325

3,456

4,078

R&D expenditure (JPY million)

4,076

4,478

5,296

6,144

8,924

9,352

7,725

7,916

8,566

10,642

11,488

Capital investment (JPY million)

11,251

7,855

9,727

13,816

15,79225,026

12,166

6,011

6,236

10,353

14,848Depreciation (JPY million)

2,637

4,909

5,407

5,724

7,329

7,980

8,173

8,340

8,285

9,674

10,153

Dividend per share (JPY)

75.0

75.0

75.0

95.0

95.0

95.0

95.0

107.5

44.0

44.0

60.0

Dividend payout ratio (%)

22.4

20.6

21.3

14.5

20.5

27.9

24.0

13.1

14.9

15.5

18.6

Diluted earnings per share (JPY)

Note: The Company conducted a 3-for-1 stock split of common shares effective April 1, 2019.
We calculated net assets per share and earnings per share assuming that the said stock split was conducted at the beginning of the fiscal year ended March 31, 2012.

47

TOWA PHARMACEUTICAL Integrated Report 2022

TOWA PHARMACEUTICAL Integrated Report 2022

48

Management Discussion and Analysis of Financial
Position, Operating Results, and Cash Flows
The details of the financial reports are excerpts from Annual Securities Report (from April 1, 2021 to March 31, 2022).

[5] Operating results
As for operating results for the consolidated fiscal year underreview, the Group recorded net sales of JPY 165,615 million (upOverview of Performance[1] Business environment
During the consolidated fiscal year ended March 31, 2022, theJapanese economy showed some signs of returning to normal,
backed by the rollout of COVID-19 vaccination. However, theemergence of more infectious variants made it difficult topredict when the pandemic will end. In Europe and the U.S.,
while restrictions on economic activities are gradually lifted andthe economies continued a recovery trend, the economic
outlook remain uncertain as cases of the new variants are on
the rise. There is also global concern over the impact on
economic activities due to rising energy and raw material
prices as the tension in Ukraine continues to intensify.
In the domestic generics industry, the Japanese Cabinet
decided the “Basic Policy on Economic and Fiscal
Management and Reform 2017” in June 2017. It stated that the
government would consider further measures for promoting theuse of generic drugs, aiming at an 80% usage rate of genericdrugs by September 2020 or its earlier achievement. As a resultof this decision, the Japanese government has implemented
various measures since the revision of medical fees in April
2018. Furthermore, in revising medical fees in April 2020, thegovernment decided “Further Promotion of Generic Medicine
and Biosimilars Use” policy, and generics have become more
popular. Consequently, the volume share in December 2021
reached 79.3% (according to the survey by Japan Generic
Medicines Association in October–December 2021). In
addition, the “Basic Policy on Economic and Fiscal
Management and Reform 2021,” which was approved by the
Cabinet in June 2021, stated, “With regard to generic drugs,
the Government will promptly secure the quality and the stablesupply thereof, conduct verification of new targets, andvisualize the implementation status, including the use ratio at
medical institutions, thereby contributing to the efforts of
insurers to optimize medical service costs, and will promotesetting of targets based on the effect of medical cost
optimization of biosimilars, consider reviewing the addition of ageneric drug prescription system based on the relationshipwith the new targets, and utilization of a formulary in order topromote further use of these kinds of drugs.”
On the other hand, the government revised drug prices in
October 2019 and April 2020. Also, it revised them in April
2021 based on the “Basic Policy on Economic and Fiscal
Management and Reform 2020” approved by the Cabinet in
July 2020. As described above, the government will revise thedrug prices every year, beginning in FY2021. The government
decided a policy to revise the drug prices in intermediate years
in addition to the regular revisions once every two years.
Therefore, we expect that extremely tough conditions for thepharmaceutical industry will continue.
The recent problems with the quality and stable supply ofgeneric drugs have undermined public confidence in generics.
As a result, the environment surrounding the generics industry
is becoming increasingly severe.
Amid such drastic changes in the industry, we announced the
5th Mid-term Business Plan 2021–2023 PROACTIVE II with thevision of “We contribute to people’s health, and we arededicated to people’s genuine smiles” in May 2021. Based on
the Mid-term Business Plan, we implemented various initiatives
with the aim of developing health-related businesses that

49

TOWA PHARMACEUTICAL Integrated Report 2022(“Sunsho Pharmaceutical”) a subsidiary in March 2022. It is acompany engaged in the planning, development, and contract
manufacturing of health foods, pharmaceutical products, etc.
We believe that the acquisition of Sunsho will enable the Groupto leverage the company’s strong technological capabilities,
extensive customer base and knowhow on health foods that it
has cultivated to date. And it will help us achieve our aim ofdeveloping diversified health-related businesses, thereby
further increasing our corporate value.

contribute to the realization of healthcare and nursing care forsociety with a long and healthy life expectancy and also tosociety that shifts from medical care to care of presymptomatic disease and prevention, while positioning thegenerics business at home and abroad as our core.
[2] Initiatives for sales growth
In 2021, we launched new products, including 18 items of six
APIs in June and 11 items of six APIs in December. As a result,the number of our generics has reached 778 items of 339 APIs.
In December 2021, we launched our first authorized generic,Eldecalcitol Capsules 0.5 μg/0.75 μg Towa.
[3] Initiatives for entering overseas markets
To expand and grow our business in overseas markets, wedevelop our generics business in the European and U.S.
markets through Towa Pharma International Holdings, S.L.
(“Towa HD”). During the consolidated fiscal year under review,
we launched Everolimus tablets, Asenapine sublingual tablets,and other new products in the U.S. However, sales in the U.S.
market were slightly below the plan due to negative impacts bychannel inventory adjustments caused by the change ofthird-party logistic companies and by API shortages of several
products, etc. Meanwhile, sales in the European market
exceeded the sales plan mainly due to better performance ofcontract manufacturing outsourcing (CMO) business andstrong sales of new products in B2C business. Going forward,
we aim to further expand our business by utilizing Towa HD’ssales network in several European countries and the UnitedStates as well as the production bases in Europe compliant toEuropean and the United States standards.
[4] Creation of new businesses
As one of our challenges, we aim for contributing to therealization of healthcare and nursing care for a society with along and healthy life expectancy and also to society that shifts
from conventional medical care to care of pre-symptomatic
disease and prevention. With such recognition, we are working
to develop new health-related businesses adapted to the latest
medical system while acquiring new techniques and promoting
integration with completely new knowledge and technologies.
As part of these efforts, during the consolidated fiscal year
under review, we worked on various projects to provide
healthcare services utilizing medical and health data. To
proceed with these projects, we concluded an allianceagreement with TIS Co., Ltd. for the joint sale of a cloud-based
information-sharing service for coordinated regional medicalcare, “Healthcare Passport.” We also conducted joint researchon lifestyle-related diseases with TIS Co., Ltd. and Healthtech
Laboratory, Inc. as part of the integrated medical/nursing caredata analysis project launched by Kyoto City. Furthermore,
together with Kyoto University and Healthtech Laboratory, Inc.,
we started a demonstration experiment of a medication
support tool, which is currently being jointly developed with
Bandai Namco Research Inc. In our Disease risk testing service
business, we are engaged in the selling of three types ofProtoKey® test kits, including colorectal cancer risk test kit, andthe research and development of new risk tests at Protosera
Inc. Additionally, we made Sunsho Pharmaceutical Co., Ltd.

6.9% YoY), gross profit of JPY 70,185 million (up 7.2% YoY),
SGA expenses of JPY 50,980 million (up 12.0% YoY), operating
profit of JPY 19,205 million (down 3.6% YoY), ordinary profit of
JPY 22,739 million (up 21.7% YoY), and profit attributable toowners of parent of JPY 15,914 million (up 14.0% YoY).
Operating results by segment are as follows. Net sales fromthe domestic segment amounted to JPY 126,676 million (up6.7% YoY) with segment profit of JPY 18,878 million (down
6.8% YoY). Net sales from the overseas segment amounted to
JPY 38,938 million (up 7.5% YoY) with segment profit of JPY
1,127 million (up 164.9% YoY). The figures for each reporting
segment profit are based on profit before amortization of
goodwill.

Financial position
The financial condition for the consolidated fiscal year under review is as follows.
[1] Assets
Total assets at the end of the consolidated fiscal year underreview amounted to JPY 329,935 million, up JPY 84,266
million YoY. This was mainly due to an increase in goodwillof JPY 37,597 million, an increase in inventories of JPY
11,749 million, an increase in cash and deposits of JPY
9,915 million, and an increase in trade notes and accounts
receivable of JPY 4,774 million.
[2] Liabilities
Liabilities amounted to JPY 197,766 million, up JPY 68,697

million YoY. This was mainly due to an increase in shortterm borrowings of JPY 48,224 million and an increase inlong-term borrowings of JPY 9,248 million.
[3] Net assets
Net assets amounted to JPY 132,169 million, up JPY
15,569 million YoY. This was mainly due to an increase inretained earnings of JPY 13,502 million. Consequently,
capital-to-asset ratio was 40.1% at the end of theconsolidated fiscal year under review.

Cash flows
Cash and cash equivalents at the end of the consolidated fiscal year under review amounted to JPY 32,830 million, up JPY 9,915
million YoY. Each cash flow for the consolidated fiscal year under review and factors behind it are as follows.
[1] Net cash provided by (used in) operating activities
Net cash provided by operating activities amounted to JPY
22,129 million (up JPY 10,120 million in the inflow YoY). Thiswas mainly due to profit before income taxes of JPY 22,246
million (up JPY 3,517 million YoY) and depreciation of JPY
10,153 million (up JPY 479 million YoY), partially offset by anincrease in inventories of JPY 7,950 million (down JPY 1,756
million YoY).
[2] Net cash provided by (used in) investing activities
Net cash used in investing activities was JPY 59,729 million(up JPY 50,629 million in the outflow YoY). This was mainly
attributable to purchase of shares of subsidiaries resulting inchange in scope of consolidation of JPY 45,405 million andpurchase of property, plant and equipment of JPY 11,140
million (up JPY 2,003 million YoY).
[3] Net cash provided by (used in) financing activities
Net cash provided by financing activities amounted to JPY
46,540 million (up JPY 46,355 million in the inflow YoY). Thiswas mainly due to a net increase in short-term borrowings of
JPY 47,135 million (net decrease of JPY 20,251 million in theprevious consolidated fiscal year) and proceeds from longterm borrowings of JPY 9,160 million (down JPY 31,339
million YoY), partially offset by repayments of long-termborrowings of JPY 7,181 million (up JPY 286 million YoY).

Dividend policy
We have a basic policy of paying dividends continuously
and steadily in accordance with our performance, while
enhancing internal reserves to prepare for future businessdevelopment, such as strengthening research anddevelopment capabilities and securing capital
expenditure funds.
Based on this policy, we paid a dividend of JPY 60 per
share for the current fiscal year (including an interim
dividend of JPY 27 per share, of which JPY 3 per share waspaid as a commemorative dividend, and a year-end

dividend of JPY 33 per share). Our basic policy is to pay
dividends of surplus twice a year for the interim dividend
and the year-end dividend. The decision-making bodies forthese dividends of surplus are the General Meeting of
Shareholders for the year-end dividend and the Board of
Directors for the interim dividend.
We have stipulated in the Articles of Incorporation that theCompany, by resolution of the Board of Directors, may pay
an interim dividend as of September 30 of each year, which
is set to be the record date for the interim dividend.

TOWA PHARMACEUTICAL Integrated Report 2022

50

Corporate Data

Corporate Data

Business Locations

Company Outline

Stock Data
As of March 31, 2022

Overview of Company
Company name TOWA PHARMACEUTICAL CO., LTD.

Yamagata Plant

Kyoto Analytical Science Center

East Japan Distribution Center

KENTO Healthcare Science Center
KENTO Life Innovation Center

2-11, Shinbashi-cho, Kadoma-shi, Osaka 571-8580
Main phone: +81(0)6-6900-9100

Representative

President and Representative Director Itsuro Yoshida

Established

June 1951

Incorporated

April 1957

Listing

The Prime Market of the Tokyo Stock Exchange (TSE)(Securities code: 4553)

Capital stock

JPY 4,717.70 million

Business operations Manufacturing and selling of ethical drugs

Amagasaki Research Center

Business locations and sales outlets

Tokyo Office

Headquarters

Okayama Plant

Headquarters

Osaka Research Center

Headquarters

Headquarters Moriguchi Annex Tokyo Office

Research &Development
Laboratories

Osaka Research Center Kadoma Laboratory
Kyoto Analytical Science Center
KENTO Healthcare Science Center
KENTO Life Innovation Center
Amagasaki Research Center Himeji Research Center

Moriguchi Annex

PlantsOsaka Plant Okayama Plant Yamagata Plant

Himeji ResearchCenterDistribution
centers

West Japan Distribution Center
Kansai Distribution Center
East Japan Distribution Center

Sales offices
and sales sites

71 sales offices
62 sites of agents

Osaka Plant

West Japan Distribution Center

As of March 31, 2022

Shares authorized .............................................. 147,000,000 shares
Shares issued ....................................................... 51,516,000 shares
Number of shares constituting one unit ......................... 100 shares
Number of shareholders ..................................... 5,198 shareholders

Major shareholders (Top 10)
Number of Ownershipshares(%)(Thousand)Shareholder nameYoshida Office Co., Ltd.

20,10040.83

The Master Trust Bank of Japan, Ltd. (Trust Account)

4,116

8.36

BNYM AS AGT⁄CLTS NON TREATY JASDEC

2,304

4.68

TOWA PHARMACEUTICAL Kyoeikai

1,472

2.99

Itsuro Yoshida

1,455

2.95

Custody Bank of Japan, Ltd. (Trust Account)

1,196

2.43

TOWA PHARMACEUTICAL Employee Stock Ownership
Group

907

1.84

State Street Bank and Trust Company

726

1.47

Yoshida Estate Ltd.

648

1.31

BBH FOR FIDELITY PURITAN TR: FIDELITY SR INTRINSICOPPORTUNITIES FUND

584

1.18

Note: The Company holds 2,294,101 shares of treasury stock but is excluded from the above major
shareholders. The Company calculated the ownership by deducting the number of treasury shares.

Share breakdown by shareholder typeKadomaLaboratory

Consolidated subsidiaries
J-DOLPH Pharmaceutical Co., Ltd.

Financial institutions
0.52%
Securities
companies
0.58%

Daichi Kasei Co., Ltd.

Major Group Companies

Towa Pharma International Holdings, S. L. and seven companies

Non-Japanese
corporations
3.98%

Individuals
and others
20.04%

Number ofshareholders ratio

Greencaps Pharmaceutical Co. Ltd.
Sunsho Pharmaceutical Co., Ltd.

Japanese corporations
1.54%

Individuals
and others
93.38%

Financial institutions
14.78%
Securities
companies
0.53%

Number ofshares ratio
Non-Japanese
corporations
21.91%

Japanese
corporations
42.74%

Stock Price
J-DOLPH
PharmaceuticalCo., Ltd.

Daichi Kasei Co.,
Ltd.

Greencaps
Pharmaceutical
Co. Ltd.

SunshoPharmaceuticalCo., Ltd.

Towa Pharma
International
Holdings, S.L.

Manufacturing and selling of
ethical drugs

R&D and manufacturing of APIs
and intermediates

Producing soft capsules forpharmaceutical products

Manufacturing and selling of
ethical and OTC drugs

Headquarters: Koka, Shiga

Headquarters: Fukusaki,
Kanzaki, Hyogo

Headquarters: Fujinomiya,
Shizuoka

Planning, development, andcontract manufacturing ofhealth foods, pharmaceuticalproducts, etc.

(JPY) 3,500

3,000

Headquarters: Barcelona, Spain

Headquarters: Fuji, Shizuoka

2,500
2,000

Non-consolidated subsidiaries

51

T Square Solutions Co., Ltd.

Protosera Inc.

Provision of healthcare related IT services

Disease risk testing service business and research and development of diagnostic drugs

Headquarters: Moriguchi, Osaka

Headquarters: Settsu, Osaka

TOWA PHARMACEUTICAL Integrated Report 2022

1,500
1,000

12.9 13.3 13.9 14.3 14.9 15.3 15.9 16.3 16.9 17.3 17.9 18.3 18.9 19.3 19.9 20.3 20.9 21.3 21.9 22.3 22.9

TOWA PHARMACEUTICAL Integrated Report 2022

52