NEWS RELEASE

October 31, 2019

Name of Listed Company:

TSUMURA & CO.

Exchange:Tokyo Stock Exchange

Code:4540

URL:https://www.tsumura.co.jp

Representative:

President,Representative Director and CEO

Name: Terukazu Kato

Contact:

Head of Corporate Communications Dept.

Name: Yosuke Tsuchiya

Telephone: 81-3-6361-7100

Tsumura Announces Dissolution and Liquidation of its Joint Venture in China
Tsumura & Co. (Headquarters: Tokyo, Japan; President & CEO: Terukazu Kato; hereafter, “Tsumura”)
announces that at a meeting held on October 31, 2019, its Board of Directors passed a resolution dissolvingand liquidating SPH TSUMURA PHARMACEUTICALS CO., LTD. (hereafter, “SPH TSUMURA”), its
joint venture in China.

1. Reasons for the decision to dissolve and liquidate the joint venture
As officially announced in the news release titled “Tsumura Announces Establishment of a Joint
Venture in China” on May 6, 2016, Tsumura established a joint venture in Shanghai, China, withShanghai Traditional Chinese Medicine Co., Ltd. (hereafter, “Shanghai Traditional Chinese Medicine”),
a subsidiary of Shanghai Pharmaceuticals Holding Co., Ltd. (hereafter, “Shanghai PharmaceuticalsHolding”) to enable it to enter the business of traditional Chinese medicine compound granules and has
been preparing for manufacturing and sales as well as research and development on traditional Chinese
medicine compound granules.
However, SPH TSUMURA has been unable to obtain production licenses to manufacture traditional
Chinese medicine compound granules throughout China, which made it difficult to enter the business.
In this situation, SHP TSUMURA led to a resolution to dissolve and liquidate the company in light of theintention of Shanghai Pharmaceuticals Holding, its parent company.
After the termination of the joint venture agreement, Shanghai Pharmaceuticals Holding andTsumura’s partnership will remain unchanged because they have had a good, long-term relationshipsince the establishment of a joint venture, SHANHAI TSUMURA PHARMACEUTICALS CO., LTD.,in 2001, and cooperative relationships will be continued.

Tsumura acquired valuable assets from new knowledge in manufacturing technology and quality
evaluation technology accumulated through research and development related to traditional Chinese
medicine compound granules. Tsumura will continue working toward its original goal to contribute tothe health of China by taking advantage of its knowhow in kampo and the crude drug business, andfocusing management resources on other businesses being promoted in China to achieve the third
medium-term management plan announced in May 2019.

2. Outline of the joint venture
Name of company

SPH TSUMURA PHARMACEUTICALS CO., LTD.

Location

Shanghai, China

Representative

Zhang Yaohua, Chairman

Capital

600 million RMB (approximately 9.25 billion yen),
1 RMB = ¥15.42
Breakdown:
29.4 million RMB of paid capital from Tsumura China Inc.

Business description

Manufacturing and sales of traditional Chinese medicine compoundgranules, research and development of products, research anddevelopment of manufacturing methods, and other operations.

Date of establishment

July 13, 2016

Investment ratio

Shanghai Traditional Chinese Medicine: 51%,

Tsumura China

Inc.: 49%
3. Joint venture partner
Name of company

Shanghai Traditional Chinese Medicine Co., Ltd.

Location

Shanghai, China

Representative

Shen Bo, Chairman

Capital1,476 million RMB (approximately 22.75 billion yen)
1 RMB = ¥15.42

Parent company
Name of company

Shanghai Pharmaceuticals Holding Co., Ltd.

Location

Shanghai, China

Representative

Zhou Jun, Chairman

Capital2,842 million RMB (approximately 43.82 billion yen)
1 RMB = ¥15.42

Major shareholders

Shanghai Industrial Investment (Holdings) Co., Ltd., Shanghai
Shangshi (Group) Co., Ltd., and Shanghai Pharmaceutical (Group)Co., Ltd.

Listed inShanghai Stock Exchange, Hong Kong Stock Exchange

4. Future schedule
Conclusion of joint venture termination agreement: November 2019 (scheduled)
Dissolution and liquidation procedure will begin in November 2019 (scheduled) in accordance with thelocal laws and regulations and will conclude upon the completion of the required procedures.

5. Impact on the business performance
The loss related to the liquidation of the joint venture for the fiscal year ending March 2020 is currently
being confirmed. However, it will have a minor impact on Tsumura’s business performance for the term.