Third Quarter Business Resultsfor Fiscal 2023

February 7, 2024

TSUMURA & CO.

Agenda01

Third Quarter Business Results for FY 2023

02

Initiatives and Progress for
Domestic Business and China Business

03

Revision of FY2023 Earnings Forecast

2

3Q Business Results for FY 2023
【Million yen】

3Q
FY 2022
results

3Q
FY2023
results

YoY
AmountChangeRatio to total sales

107,076

115,826+8,749+8.2%

Domestic business

96,355

101,929+5,574+5.8%

China business

10,721

13,896+3,175+29.6%

17,723

19,143+1,420+8.0%

Domestic business

17,88219,427+1,554+8.6％

China business

(159)

(283)

(124)

－Ordinary profit

21,41022,400+990+4.6%

China business：
Crude Drug Platform 12.0%

Profit15,875

16,151+275+1.7%

Domestic business：OTC Kampo etc. 2.8%

19.41

19.62

+0.21

－

Sales

Operating profit

attributable to owners of parent
PL translation rate (CNY)

Prescription
Kampo Products
84.2%

Domestic business：
Other prescription
pharmaceuticals 1.0%

*Forex rate at the time overseas subsidiaries’ PLs were incorporated; differs from the import rate for raw material crude drugs

3Key Points in Performance• Sales and profit increased owing to ongoing growth in sales in both
the domestic business and China businessNet sales◼

115,826

million yen

＋8.2％

YoY

Domestic business Total sales of the 129 prescription Kampo products：97,635 million yen,up 6.2％ year-on-year
Total sales of OTC Kampo formulations and other healthcare products： 3,302million yen, down 1.7％ year-on-year◼ China business

Operating profit
Operating profit margin

Raw material crude drugs, drug pieces, Yakushokudogen products, etc.：13,896million yen,up 29.6％ year-on-year

19,143
16.5

million yen

YoY+8.0％％

YoY(0.1)pt◼ Cost-to-sales ratio：52.5％,+1.6pt YoY：Mainly reflects impact from a rise in crude drug procurement expense, still high raw
material expenses, and a depreciation in the yen’s value versus major currencies◼ SG&A ratio：31.0％, (1.5)pt YoY ：Sales growth offset growth investments, mainly in the DX transformation for Kampo value chain

Ordinary profit

22,400

million yen

YoY

+4.6％

◼ Foreign exchange gain primarily related to loans to overseas subsidiaries: 2,201 million yen, down 704 million yen year-on-year*Foreign exchange gain not posted in plan

Profit attributable toowners of parent

16,151

million yen

YoY

+1.7％
4

Factors Triggering Changes in Operating Profit (YoY)
Sales increase: +3,431 million yen(Million yen)Domestic business+3,431 +122 (1,010)
Decrease inunrealized profit

China business(1,123)+2,938+493

Decrease in cost of sales: +122 million yen*19,143

17,723(Million yen)Domestic business: Unit sales price(of which NHI price revision impact was +1,223)+1,467

Domestic business: Crude drug procurement cost

(355)

Domestic business: Raw material expenses(734)

Domestic business: Processing expense, etc.
(of which energy expense was (346), other productivity
improvements, etc.)
China business: Increase in sales ratio+77(333)

Expense increase: (1,010) million yen

3Q FY 2022
Operating profit

Sales
increase

Cost of sales
decrease*

Expenseincrease

Foreignexchange
impactR&D cost(499)

Salary allowance(258)

Sales promotion expense
3Q FY 2023
Depreciation (of which there was a decline in one-off
Operating profit

One-off decline in unrealized profit
due to a decrease in inventory ofintermediate products in tandem withconstruction for the renewal of theShanghai Plant

expense at the Tianjin Plant +662)

Other (of which system introduction expense, etc. (481),
activities expense (394))

(36)
+533
(750)

Foreign exchange (yen depreciation) impact: (1,123) million yen

5Financial Condition/Cash Flow Position（Million yen）

396,813418,272

21,459Current assets

268,320

278,724

10,404Non-current assets

128,492139,547

11,055124,566

121,144(3,422)Current liabilities

47,20557,608

10,403

Non-current liabilities

77,361

63,535(13,825)

272,246

297,127

24,881

63.5％

64.8%

+1.3pt（March 2023）

Total assets

Total liabilities

Total net assets

Equity ratio

3Q

Change(44)

10,172

4,644

Merchandise and finishedgoods

11,257

12,6381,381

290Work in process

14,43015,341

911

216

Raw materials andsupplies

76,03883,918

7,880

4,137

Financing activities

111,899

Inventories

3Q

Investing activities

101,726（March 2023）

Of which,Exchange rate

Operating activities

FY2023

Cash and cash equivalents atbeginning of period

FY 2022

Change（Million yen）

(124)

+33804

Cash and cash equivalents
at end of period

FY2023(8)

Impact of exchange ratetranslations

FY 2022947

6

Agenda01

Third Quarter Business Results for FY 2023

02

Initiatives and Progress for
Domestic Business and China Business

03

Revision of FY2023 Earnings Forecast

7Sales of Drug-fostering Program Formulations/Growing
Formulations（Million yen）

FY 2022 3Q

FY 2023 3Q

1

100 Daikenchuto

7,482

7,590+107

+1.4%

3

54 Yokukansan

5,687

5,826+138+2.4%

4

43 Rikkunshito

5,644

5,661+16+0.3%

9

107 Goshajinkigan

2,633

2,827+194+7.4%

24

14 Hangeshashinto

1,078

1,097+18+1.8%

Total sales for drug-fostering program formulations

22,52723,003+475+2.1%

129

41 Hochuekkito

6,096

6,185+88+1.5%

prescription

517 Goreisan

4,821

6

24 Kamishoyosan

1718

Drug-fostering program
formulations

Net sales Product No./formulation
Ranking nameGrowing formulations

2YoY

5,528+706+14.6%

3,935

3,935+0+0.0%

137 Kamikihito

1,6001,782+182+11.4%

108 Ninjin’yoeito

1,624

1,761+137+8.4%

Total sales for growing formulations

18,07819,193+1,114+6.2%

Total sales for 119 formulations other than drugfostering program and growing formulations

51,33555,438+4,102+8.0%

Total sales for 129 prescription Kampo products

91,941

97,635+5,693+6.2%

Ratio to total sales

Drug-fosteringprogram
formulations

24%

119 formulations
other than drugfostering programand growing
formulations

Growing
formulations

20%

56%

8

Expansion of the Information Provided on the TSUMURA MEDICAL SITE• Expand contents to deliver information that suits each and every physician• Video library, lectures/academic conferences/study groups, and Kampo custom files
are popular contents
TSUMURA MEDICAL SITE contents

Video library
Learn from videos with abundant contents,
including pathology/disease, explanation of Kampo
formulations, proper use of Kampo products andKampo lessons

Tsumura Kampo online MR

Lectures/academic
conferences/study groups

Kampo custom file

Introduction of information on co-sponsored Web
lectures/academic conferences/study groups. Also
implementing lectures with dialogue between
lecturers and viewers

Tsumura Kampo virtual MR

Kampo Web test

A file that compiles a leaflet that visualizes theproper use of Kampo products, information onside effects, and a leaflet concerning medication
guidance

Kampo digital booth

Product information

9Initiatives to Provide Information Suited to the Individual Physician• Enhance the marketing automation system to make personalized deliveries• Utilize a function that provides feedback to MRs to strengthen collaborations
between MR activities and e-promotions
Provide information that is suited to theindividual physician
Emaildelivery

Email delivery

Emaildelivery

MR interviews
Emaildelivery

Delivery by segment(From 2H FY 2022 onward)

Standardized delivery(From 1H FY 2022 onward)•Delivery ofsame contents
to all members•

Delivery by segment,including affiliateddepartments anddomains

Email delivery

Personalized delivery (FY 2023 onward)• Delivery of contents that corresponds tosite viewing status, affiliated departments,domains, prescription trends, etc.
10

Initiatives to Improve the Quality of Information Provision by MRs• Improve quality of information provision by MRs through an advancement inconversational skills
Training for MRs using UMU✓Clarify respective MR issues and make improvements by combining
performance evaluations conducted by humans and AI

Comprehensiveevaluation

XX92 points
Scorer comment

UMU Performance Learning Award 2023
Receive the “Superior Performance
Learning Award”

Details regarding issues
・XXXXXXXXXXXXXXXXX・XXXXXXXXXXXXXXXXX

AI scoring

Scorer (1): 90 points•
Good as the main points of thepresentation were compiled in acompact manner.

Scorer (2): 80 points•
I felt there were parts of XXX’spresentation that were not properly
conveyed.
Scorer (3): 85 points•
Had a good image of scenes where
information was conveyed tomedical practitioners.

UMU
refers to a service where skills are learned that can beused in actual business scenes through ongoinglearning after training, including training for talking
skills that envisage an actual sales scene or real-time
feedback using AI*Excerpt from the UMU Technology Japan website
11

The Status of Expansion for Information Provision Activities• Expand the number of detailing impact cases year-on-year through hybrid
information provision activities that combine e-promotions with MR activities(1,000 cases)
2,500

Detailing impactProprietary
medicalsite■ MR activities ■ e-promotions
2,000

Medicalplatformetc.

1,500

Mobile app

1,000

Seminar

Breifing/presentations

500

Interviews

02022/1Q

2022/2Q

2022/3Q

2022/4Q

2023/1Q

2023/2Q

2023/3Q*Number of cases of detailing impact: Number of cases of information recognition from various channels, including MR activities and the Internet*e-promotions: Information provision, mainly through online lectures and video streaming
INTAGE Healthcare Inc. survey, Impact Track*MR activities: Information provision via MRs + in-person lectures12

Domestic Business: The Status of Limited Shipments ofPrescription Kampo Formulations•Increase in demand for Kampo formulations owing to an expansion in infectious diseases
and a reduced supply of cough suppressants•Reflecting this impact, restricted shipments have once again been applied to common coldrelated Kampo formulations
Trends for cough suppressant and Bakumondoto sales, and for the number of infectious disease reports
Restricted shipments of cough remedy

1,200,000,000

Restricted shipments of Bakumondoto(1)Restricted shipments(2)90.080.0Sales of cough remedy

1,000,000,000

70.0（do not contain Kampo60.0formulations）

800,000,000

50.0Sales of Bakumondoto

600,000,000

40.0
Bakumondotosales up over150%(YoY)

400,000,000
200,000,000

30.0
Number of influenza reports per
20.0
sentinel site

10.0

Number of reports per sentinel0
Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-28 Sep-23 Oct-23 Nov-23 Dec-23

Restricted shipments of Bakumondoto (1)■ Sharp increase in demand for seasonal formulations
reflecting intense heat
■ Rapid rise in demand for common cold-related formulations
due to COVID-19■ Decrease in production due to a shutdown of operations at
the Shanghai Plant triggered by the lockdown of Shanghai

0.0
site for patients that tested
positive for COVID-19

Restricted shipments of Bakumondoto (2)■ Increase in demand due to the spread of COVID-19 and influenza and a
decline in the supply of cough suppressantsSource: Number of influenza reports per sentinel site (weekly report data for surveys on trends for infectious disease outbreaks)
Proprietary calculation for the number of reports on people who tested positive for COVID-19, based on data of people that newly tested positive(up to April 2023) and data on the number of reports per sentinel site (from May 2023)
Cough suppressant and Bakumondoto sales, IQVIA. Tsumura’s proprietary tally based on JPM data for April 2022–December 2023. Unauthorized
13
reproduction is prohibited.

Bolster Production Capacity in the Domestic Business• In FY 2023, planning to boost production capacity by commencing Phase 1
operations at the Tianjin Plant and by increasing the number of days ofoperations at existing plants• Full operation as planned until 3Q
Production capacity for Kampo extract powder due
to operation of Tianjin plant
Achieve fullFull-scale
operations inFY 2024

Reach fullscale
operations
around 2027

scale
operations
around 2028✓

Plan to strengthen
production
capacity,
mainlyBoost capacity
2,250attons/year
the Tianjin
Plant

Tianjin Plant※The period until full operation
Existing plants
・Ibaraki Plant
・Shizuoka Plant
・Shanghai Plant

Production capacity
6,250 tons/year
Prior to start ofoperations at Tianjin
Plant

・Completion → Process validation→ Actual operation(Approximately 1 and a half years)

・Actual operation → Full operation（Approximately 1 and a half years)

Tianjin Phase 1 after
start of operations

Tianjin Phase 2 after
start of operations

Tianjin Phase 3 after
start of operations

14

China Business: Crude Drug Platform Business Sales Expansion• Sales in the crude drug platform sales expanded mainly reflecting
raw material crude drug sales
29.6％

growth＊ChineseNet salesbusiness

13.89 billion yen

Crude drugplatform

0.82 billion yen

Operating profit

Crude drug platform products
Raw material
crude drugs

Formulation platform, IT
infrastructure investments, etc.

Chinesebusiness✓ Operating profit in the crude drug
platform continued to increase

Drug pieces

Yakushokudogenproducts

Expenses, etc.

Operating profit(0.28)billion yen*Local currency basis: 28.2% growth

Sales totraditional
Chinese medical
products
companies as araw material

Sales forprescription-use
and as an OTC
to hospitals andpharmacies

Sales of health foodproducts made fromcrude drugs to
general consumers

15

Agenda01

Third Quarter Business Results for FY 2023

02

Initiatives and Progress for
Domestic Business and China Business

03

Revision of FY2023 Earnings Forecast16Revisions to FY 2023 Earnings Forecast•

Operating profit is expected to exceed the plan due to factors such as domestic processing costs andSG&A expenses being lower than the initial plan•

Posted foreign exchange gains to non-operating profit owing to a depreciation in the yen(in the previously disclosed forecast, this was not posted)
Previously disclosed
forecast for FY 2023

Revised forecast for
FY 2023

Versus previously
disclosed forecast

150,500

152,000+1,500

Domestic business

133,300

133,300

0

China business

17,20018,700+1,500[Million yen]

Sales

Operating profit18,000*

19,500+1,500

Domestic business

18,40020,100+1,700

China business

(400)

(600)

(200)

18,60022,400+3,800

Ordinary profit
Profit attributable toowners of parent

13,00016,200+3,200* Special factors from 3Q to 4Q•

Factors contributing to the increase in
3Q operating profit
Unrealized profits decreased due to adecrease in inventory of intermediate
products due to renewal construction at
the Shanghai plant•

Factors reducing operating profit in 4Q

Increase in unrealized profit reflecting a
recovery in the inventory of intermediate
products
17Inquires about these materials
Corporate Communications Dept.
Investor Relations Groupinvestor_madoguchi@mail.tsumura.co.jp
Cautionary items regarding forecasts⚫ The materials and information provided in this presentation contain so-called forward-looking
statements. Readers should be aware that the realization of these statements can be affected by avariety of risks and uncertainties and that actual results could differ significantly.

⚫ Changes in Japan or other foreign countries related to healthcare insurance systems or regulations
set by medical treatment authorities on drug prices or other aspects of healthcare or in interest andforeign exchange rates could negatively impact the Company’s performance or financial position.
⚫ In the unlikely event that sales of the Company’s core products currently on the market be halted orshould sales substantially decline due to a defect, unforeseen side effect or some other factor, there
could be a major impact on the Company’s performance or financial position.

18

Appendix

Raw Material & Energy Expense Trends
Expense for raw materials used in the manufacturing of Kampo formulations andenergy expense continue to trend at a high level(Billion yen)
3.53Energy
expense2.5

2
1.5Rawmaterial
expense10.50

FY 2021
1Q

2Q

3Q

4Q

FY 2022
1Q

2Q

3Q

4Q

FY 2023
1Q

2Q

3Q

20

(For Medical Practitioners) Leaflet to Gain an Understanding of theContents of the TSUMURA MEDICAL SITE
Introduce contents that will help those who want to “immediately” search for
information on Kampo and “deepen” their learning of Kampo