TSUMURA & CO.
Business Results for Fiscal 2015
May 13, 2016

President, Representative Director

Terukazu KatoBusiness Results for Fiscal 2015

Consolidated Performance for Fiscal 2015
Net sales

FY 2015Plan
113,000

Vs. FY 2014
Achieve
FY 2014ment
Amount Change
112,625
99.7% 110,438
2,186
2.0%

FY 2015

Cost of sales

46,000

Cost of sales margin(40.7%)

Gross profit

67,000Gross profit margin(59.3%)

SG&A expenses

49,000

SG&A expenses margin(43.4%)

Operating profit

18,00019,826

Operating profit margin(15.9%)(17.6%)

Ordinary income
Net income

18,30019,494

106.5%

12,20012,557102.9%

attributable to owners ofparent（¥ million）

45,055(40.0%)

67,569(60.0%)

47,743(42.4%)

97.9%

100.9%
97.4%

110.1%

41,859

3,196

7.6%

-1,009-1.5%-1,343

-2.7%

334

1.7%

21,583-2,089-9.7%

14,075-1,517 -10.8%(37.9%)

68,578(62.1%)

49,087(44.4%)

19,491(17.6%)

Sales by product

ＥＰＳＲＯＥFY 2015
Plan
¥173
8.0%

FY 2015

FY 2014

¥178
8.3%

¥199
10.1%

Prescription
Kampo
Products
95.5%

Other prescription
pharmaceuticalproducts
0.5%
OTC medicines
2.3%
Other
1.7%

3

Key Points in Performance Sales increased, reflecting the steady sales of Kampo products. Despite the increase in crude
drug prices, consolidated operating profit rose, due in part to cost controls.

Consolidated netsales

¥112,625 million¥19,826 million

Operating profit
margin17.6 %



99.7％

YoY

2.0%

Consolidated net sales increased 2.0% year on year, partly because of the steady sales of Kampo formulation for prescription. The
rate of achievement of the plan ended at 99.7%.
Total sales of the 5 drug-fostering formulations(Daikenchuto, Rikkunshito, Yokukansan, Goshajinkigan and Hangeshashinto)
Sales growth rate： 2.1%
Total sales of the 77 products with differentiated approaches by disorder and symptom.
(Started in April 2015, added in July, and excludes five drug-fostering products.)
Sales growth rate： 2.6%

Operating profitVs. planned

Vs. planned

110.1%

YoY

1.7%

YoY0pt

The cost of sales ratio was 40.0%. It rose 2.1 percentage points year on year, mainly reflecting the increase in crude drug costs.
The cost of sales ratio fell 0.7 percentage points of the target, mainly reflecting the processing costs control.
The SG&A ratio fell 2.0 percentage points year on year to 42.4%, partially reflecting the cost controls that accompanied
improvements in operational efficiency.
Including the above factor, the SG&A ratio was lower by 1.0 percentage point of the target.

Ordinary income

Net income
attributable to owners ofparent¥19,494 million

Vs. planned

106.5%

YoY-9.7%¥12,557 million

Vs. planned

102.9%

YoY-10.8%
4Factors in Increase / Decrease of Operating Profit（¥ million）+2,186（¥ million）-3,196

Factors of Sales increase
Prescription Kampo 129
products
Other+1,343 19,826

19,491

Cost of sales margin
37.9%→40.0%+2.1pts

FY 2014
OperatingprofitSalesincrease

Sales cost
increase

SG&A
FY 2015
expenses Operating
decrease
profit+2,405-219

Factors ofCost of sales margin
Increase in crude drug cost

+2.6pts

Effect of processing cost control-0.7pts

Other+0.2pts

Factors in decrease ofSG&A expenses
Sales promotion expenses-217

R&D expenses-284Advertising expenses-129

Personnel expenses-344

Other-367

5

Analysis of Inventories Increase（¥ billion）

Impact ofvolumechangeImpact ofcrude drug
prices

Impact ofexchange
rate

1.6

-1.7

4.4

-0.7

-0.2

8.4

-0.4

-0.5

0.2

－-0.1

13.2

12.4

-0.8

-1.4

0.6

-00

28.5

31.4

2.9

0.2

3.6

-0.7

-0.2

B/S

FY2014
year-end

FY2015year-end

Inventories

50.7

52.3

(Merchandise andfinished goods)

8.8(Work in process)(Raw materialsand supplies)

YoY

Other6Cash Flow Position（¥ billion）

Operatingactivities+17.5

Investingactivities
-7.4

（YoY）

Financing
activities-4.6

Effect ofexchange
ratechanges
+0.2

25.1

19.3

Cash and cash
equivalents at
FY2014 year-end

Cash and cash
equivalents at
FY2015 year-end

7Capital Investment Plan
☆Scheduled start of operationsFirst Medium-Term Management Plan
Second Plan

Capital investment project
Shizuoka Plant

FY2012FY2013

FY2014FY2015

Production-related

New granulation and packaging
facilities, etc.

September, 2016

New crude drug warehouseMay☆

SD line-related
Ibaraki Plant

New granulation facilityFebruary

February(Additional)☆

New standard-based facilities, etc.

Crude drug
related

STP (Shanghai)

SD facilityProduction,otherDevelopment / maintenance / renewal

Ishioka

Ishioka Center reconstruction

STM (Shenzhen)

Warehouse

YubariYubari Tsumura building

Crude drugs, etc.

Maintenance / renewal

FY2016 and after

OctoberJanuary
March
September(Phase 2)

Capital investment：FY2012 ¥9.5 billion, FY2013¥9.2 billion, FY2014 ¥9.7 billion FY2015 ¥10.4 billion

 Will appropriately revise timing of new production facilities start up based on sales trends8Return of Profits to Shareholders
45.0%

110円

90円

30.3%
70円

17.8%

35.0%

28.4%
25.0%

30.0%

8.1%
861072005

2006

3030

32

32

32

25.0%
期末配当
4Q(¥)

32

20.0%

中間配当
2Q(¥)

23

9.1%

30円

-10円

32.1%

40.0%

22.3%

50円

10円

31.6% 31.5%

35.9%

15.0%

Dividend
配当性向
payout10.0%
ratio (%)

171310
2007

1723

2830

30

32

32

32

5.0%

2008

2009

2010

2011

2012

2013

2014

2015

（FY）

0.0%

The year-end dividend and dividend payout ratio for FY2015 are based on the assumption that the dividend
item will be approved at the 80th annual shareholders’ meeting

9FY2016 Performance Forecasts

FY 2016 Performance Forecasts
FY 2015

FY 2016（¥ million）
YoY
AmountChange112,625

115,400

2,774

2.5%

Cost of sales
Cost of sales margin

45,05550,700(40.0%)(43.9%)

5,644

12.5%

Gross profit
Gross profit margin

67,56964,700(60.0%)(56.1%)-2,869-4.2%

SG&A expenses
SG&A expenses margin

47,74350,200(42.4%)(43.5%)

2,456

5.1%

Operating profit

19,826

14,500Operating profit margin(17.6%)(12.6%)-5,326-26.9%Ordinary income

19,49415,000-4,494-23.1%

Net income attributable

12,557

10,700-1,857-14.8%¥64¥1788.3%¥64¥1526.9%

Net Sales

to owners of parent

Dividends per shareＥＰＳＲＯＥ■The Company estimates net sales of 115.4 billion yen (up 2.5%) taking into account increasing sales of Kampo formulation for prescription interms of volume and NHI drug price revision.
■The Company estimates an operating profit of 14.5 billion yen (down 26.9%), a ordinary income of 15.0 billion yen (down 23.1%) and a net
income attributable to owners of parent of 10.7 billion yen (down 14.8%) mainly due to the higher price of certain crude drugs and the effects
of exchange rate fluctuations.
■Dividends are expected to be 32 yen per share at the midterm and 32 yen per share at term end (a full-year dividend of 64 yen per share). 11

Reference Material

Prescription Kampo Product Market Trends
 Size of overall prescription Kampo Product market
in FY 2015 was about ¥146 billion
2,000
1,800
1,600

1,000

Over all market (¥ billion)
100.0

83.1 83.6 84.0 83.3 84.3 84.5 84.5 84.3 90.0
82.4
81.5
80.5
77.9 79.5
74.7 76.8
80.0
136.1 140.5 146.0

1,400
1,200

Share of Tsumura（%）

94.1 95.2
87.5 90.6 88.5 92.3

112.5
106.9
101.0

120.2 119.6

131.2

70.0
60.0
50.0

800

40.0

600

30.0

400

20.0

200

10.0

00.0
2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015
（FY）

Copyright 2016 IMS Health Incorporated. All right reserved.
Estimated based on “IMS JPM Mar. 2002 MAT- Mar. 2016 MAT.” Reprinted with permission.

13

Top 10 Kampo Products by Sales Amount
Product nameMain effectively treatable disorders（¥ million）

FY 2015

FY 2014

Y o Y Change

10,273

9,993

279

2.8%

1TJ-100 (Daikenchuto)

Abdominal pain / abdominal flatulence

2TJ-54 (Yokukansan)

Neurosis / insomnia , etc.

7,215

6,895

319

4.6%

3

TJ-41 (Hochuekkito)

Reinforcement of physical strength after illness /anorexia , etc.

6,968

6,965

30.1%

4TJ-43 (Rikkunshito)

Gastritis / maldigestion / anorexia , etc.

6,604

6,633

-29-0.4%

5TJ-68 (Shakuyakukanzoto)

Pain accompanying sudden muscle spasms , etc.

4,6884,440

247

5.6%

6TJ-29 (Bakumondoto)

Coughing / bronchitis / bronchial asthma

4,494

4,178

316

7.6%

7TJ-24 (Kamishoyosan)

Oversensitivity to cold / menstrual irregularity /climacteric disturbance , etc.

4,465

4,285

179

4.2%

8TJ-107 (Goshajinkigan)

Leg pain /low back pain / numbness / dysuria , etc.

3,838

3,814

230.6%

9TJ-114 (Saireito)

Acute gastroenteritis / swelling (edema) , etc.

3,351

3,308

421.3%

10TJ-1 (Kakkonto)

Common cold / coryza / shoulder stiffness , etc.

3,253

2,986

267

9.0%

20TJ-14 (Hangeshashinto)

Fermentative diarrhea / neurotic gastritis / stomatitis ,etc.

1,250

1,230

201.7%

Total sales of 129 prescription Kampo products

107,599

105,193

2,405

2.3%

Total sales of five“ Drug Fostering Program” formulations

29,182

28,568613

2.1%“ Drug Fostering Program” formulations

14

TSUMURA & CO.
Investor Relations Group

Corporation Communications Dept.

Cautionary items regarding forecasts• The materials and information provided in this presentation contain so-called forward-looking statements.
Readers should be aware that realization of these statements can be affected by a variety of risks anduncertainties and that actual results could differ significantly.
• Changes in the healthcare insurance systems or regulations set by medical treatment authorities on drug
prices or other aspects of healthcare or in interest and foreign exchange rates could impact negatively on theCompany’s performance or financial position.
• In the unlikely event that sales of the Company’s core products were halted or declined substantially due to a
defect, unforeseen side effect or some other factor, it would have a major impact on the Company’s
performance or financial position.