First Quarter Business Resultsfor Fiscal Year 2020
Conference Call

August 6, 2020 (Thursday)

TSUMURA & CO.

Muneki Handa
Director,Managing Executive Officer and CFO

Summary of 1Q FY 2020 Consolidated Performance(million yen)
1Q
FY 2020

Vs. 1Q FY 2019

1Q
FY 2019

AmountChange

1H
FY 2020planNet sales

31,76830,6991,068

Operating profit(Operating profitmargin)

5,732(18.0%)

5,230(17.0%)

502

9.6%

9,100

Ordinary profit

5,750

5,401

348

6.5%

9,400

Profit attributable toowners of parent

4,045

3,903

141

3.6%

6,800

0%

20%

40%

60%3.5% 64,20080%

100%

Sales by product92.6%

Prescription Kampo Products
OTC medicines

0.4%

3.1%

3.9%

Other prescription pharmaceutical products
Outside sales at consolidated subsidiaries©2020 TSUMURA & CO.

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Key Points in Performance
Net sales and profit were up year-on-year.
(million yen)

Net sales

31,768 million yen

YoY

+3.5%

 Net sales rose 3.5% year-on-year reflecting a newly consolidated subsidiary in China.
 Net sales of the 129 prescription Kampo products decreased 0.2% year-on-year.
 Net sales of OTC medicines increased 37.4% year-on-year.

Operating profit

5,732 million yen

Operating profit
margin18.0 %



YoY+9.6%

YoY+1.0pt

The cost-to-sales ratio stood at 42.1%, up 1.6pt year-on-year. Although crude drug-related costs offset a rise
triggered by the NHI drug price revision, the cost-to-sales ratio deteriorated due to negative impact from anincrease in outside sales at subsidiaries.
The SG&A ratio was 39.9%, down 2.6pt versus a year earlier, mainly reflecting unused expenses in tandemwith the self-restraint of activities due to the spread of COVID-19.

Ordinary profit

5,750 million yen

YoY

+6.5%

Profitattributable toowners of parent

4,045 million yen

YoY

+3.6%

©2020 TSUMURA & CO.

3Factor for changes to Operating Profit (YoY comparison)+636(million yen)

（506）
+372

5,732

Profit impact from changes
in sales cost margin
Sales composition(254)

Crude drug cost

(62)

Processing cost

191

Increase in outside(381)salesProfit impact fromchanges in SG&A expenses
Sales-related99
expenses

5,230

1Q FY 2019
Operatingprofit(million yen)

Profit impact Profit impact
from changes from changes
in salesin sales cost
marginProfit impact 1Q FY 2020
from changes Operatingin SG&A
profitexpenses©2020 TSUMURA & CO.

R&D expenses

28

Personnel expenses

22

Other223
4

Financial Condition/Cash Flow Position(million yen)

FY 2019(3/2020)

1Q
FY 2020

Change311,042

312,668

1,625

194,288
116,753
97,99348,47649,516
213,048

201,075
111,592
100,268
50,95349,314
212,399

6,786(5,160)2,275
2,477(202)(649)

Equity Ratio

66.0%

65.7%

(0.3)ptInventories

FY 2019(3/2020)
73,310

1Q
FY 2020
75,163

10,33810,456

12,418

14,20450,55350,502

Total assets
Current assets
Non-current assets

Total liabilities
Current liabilities
Non-current liabilities

Total net assets（Merchandise andfinished goods）（Work in process）（Raw materials
and stores ）(billion yen)

FinancingNew
activities
consolidation
Investing
Effect ofOperating activities
exchange+3.5 65.3
activities
rate+1.2 （1.8） changes

+5.4

（0.6）

57.6

Change1,852
118
Cash and cash

1,785 equivalents at(50) beginning ofperiod©2020 TSUMURA & CO.

Cash and cash
equivalents
at end of period

5Roadmap for the Realization of the Long-term Management Vision
20182021 2022

2019

Third Medium-Term
Management Plan
Growthinvestment

Consolidated net sales
Over

135.0bn yen

Sustainably expanding
the Kampo market
Building foundations for
the China business
Consolidated
net sales

FY 2020 consolidated net sales forecast

120.9bn yen

132.0bn yen

Becoming a value-creation company
that contributes to people’s healththrough its Kampo business

RapidProgress

China businessvision for 2027
Overseas sales ratio

Over 50%Domestic business●Establish Kampo medicine
business
Having one in every two doctors
writing over 10 Kampo prescriptions

China business●Contribute to health ofChina’s citizens
Becoming the most trusted Chinese
medicine company in China

Strategic issues
1. Sustainably expanding the Kampo market and establishing a presence
2. Investing in growth and building business foundations in China
3. Improving productivity using new technologies (AI, automation, RPA)

4. Fostering a corporate culture through philosophy-based
management and developing diverse human resources
5. Promoting the SDGs through the Kampo Value Chain©2020 TSUMURA & CO.

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Sales of prescription Kampo products(Drug-fostering and Growing formulations)(million yen)
Salesranking

Product No./name

1Q FY 2019

1Q FY 2020YoY

Drug-fosteringprogram formulations

1100

Daikenchuto

2,662

2,664

2

0.1%

254

Yokukansan

1,995

1,987(8)(0.4)%

343

Rikkunshito

1,872

1,860(12)(0.7)%

9107

Goshajinkigan

936916(19)(2.1)%

2214

Hangeshashinto

364350(14)(3.9)%

7,831

7,779(52)(0.7)%

Total drug-fostering program formulations

41Hochuekkito

1,761

1,972

211

12.0%

568

Shakuyakukanzoto

1,340

1,263(76)(5.7)%

629

Bakumondoto

1,188906(281)(23.7)%

724

Kamishoyosan

1,165

1,164(0)(0.1)%

817

Goreisan

1,118

1,152

34

3.1%

Total growing formulations

6,574

6,461(113)(1.7)%

Total sales for 119 prescriptions other thandrug-fostering and growing prescription
formulations

15,073

15,16894

0.6%

Total sales for 129 prescription Kampo
formulations

29,48029,408(71)(0.2)%

Growing
formulations

4©2020 TSUMURA & CO.

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COVID-19 Impact■FY 2020 Monthly Shipments
120.0
100.0

Total
累計80.0

単月Month60.0

AprilMayJune■1Q FY 2020 Sales Growth YoY by Sales Channel (actual)
101.3

110.0

97.3

90.0

GPHP

70.0

■Sales (Shipments) YoY for prescriptions mentioned in the “Concept of Kampo
treatments for COVID-19” (special contribution)(million yen)

2019-1Q

YoY

2020-1Q

Kakkonto

754879124+16.5%

Hochuekkito

1,761

1,972

211+12.0%＊source： The Japanese Association for Infectious Diseases©2020 TSUMURA & CO.

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Kampo Mega Web Lectures
Kampo Mega Web lectures mainly target doctors that write 10 or less Kampo
prescriptions and doctors that do not write Kampo prescriptions
Theme

Prescription

FY 2019
Kampo is a MUST for Clinical Physicians

Shakuyakukanzoto,
Hochuekkito, etc.

Mastering Kampo Extracts

Maobushisaishinto,
Kakkonto, etc.

Acute respiratory tract infection & Kampo

Maoto,
Bakumondoto, etc.

LecturerDr. Masanori Niimi(School of Medicine, Teikyo
University)

Date
Sept. 25, 201917,878Dec. 16, 201918,855Mar. 23, 2020

17,354

Dr. Masanori Niimi(School of Medicine, TeikyoUniversity)

Dr. Shigeki Nabeshima(School of Medicine,Fukuoka University)

FY 2020
Easy-to-understand Kampo mainly for colds, dizziness and Maobushisaishinto,
Dr. Sadahiro Senpuku
stressRyokeijutsukanto, etc. (Senpuku CL)
Apr. 23, 2020
Support and application of Kampo for acute febrile disease Maoto,
Shin Takayama
Saikokeishikankyoto, Dr.
Jun. 8, 2020
Diagnosing the common cold today(TohokuUniversity)
etc.
Using Kampo to deal with changes in the external
environment (summer/stress)

Seishoekkito,
Hochuekkito, etc.

Evidence of Kampo treatment derived from guidelines―Mainly for functional gastrointestinal disorders―Kampo Lesson
Heat stroke/summer fatigue

No. ofviewers

23,917
19,639Jun. 25, 2020

20,306

Rikkunshito,
Daikenchuto, etc.

Dr. Shuji Ono(Ono Clinic)
Dr. Noriaki Manabe(Kawasaki MedicalSchool)

Jul. 2, 2020

2,0729Goreisan,Seishoekkito,
Hochuekkito

Dr. Shuji Ono,Supervisor(Ono Clinic)

July 3-Sep.
30, 2020
On-demandstreaming-©2020 TSUMURA & CO.

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Status of Area Online Lecture Planning
Area activities：Provide detailed information taking into account regional features and facilities➡Held area events, including an “introductory seminar on Kampo medicine after graduation”
to respond to the needs of doctors that want to learn about Kampo□HoldingCase: Video distribution by lecturers who are close-knit toeach respective region at branch offices
An 8-part lecture on Kampo （1st time ⇒ 274 people, 2nd time ⇒ 330 people）
Area online lectures held via video-streaming companies that operate on a nationwide scale→194
lectures under planning90
80

No. of events held: 1070
60
50

企画数
No. o f plans

90

40

Events held
開催済

30

37

20

23

10060
Hokkaido

92323Tohoku

KantoChubu

Kinki

111800Chugoku, Shikoku

Kyushu©2020 TSUMURA & CO.

10Framework for Building Foundations for the China Business(Progress Status)
Construction slatedfor completion inNovember 2021

Start inMarch 2020

Crude drug
platform
Strengthen stablesupply system for crude
drug raw materials

Implementing M&A
negotiations/survey

2027
Sales: RMB10billion

Advancing into traditional Chinese
medicine business(China business vision:
Image of sales

M&A
Approach for traditionalprescriptions

Establish
Tianjin Factory sales system
Establish productionsystem
Scheduled to launch
operations in 2022

Drug pieces andTCM business
PING AN HEALTHCAREAND TECHNOLOGY

Make the traditional
Chinese medicine
business a pillar

Analysis and research centerscheduled to launch operations in 2022

20192021
Sales: RMB240 million

Sales of crude drugs through thecrude drug platform(Medium-term management planfor China business)©2020 TSUMURA & CO.

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FY 2020 Forecast(million yen)

FY 2019 results

FY 2020 forecast

Vs. FY 2019
AmountGrowthNet sales

123,248

132,000

8,751

7.1％

Operating profit

18,87617,000(1,876)(9.9)％

Operating profit
margin

15.3%12.9%ーー

Ordinary profit

19,64917,900(1,749)(8.9)％

Profit attributable toowners of parent

13,76513,000(765)(5.6)％FY 2019 results

Dividend (per share)

ＥＰＳＲＯＥFY 2020 forecast

¥64

¥64

179.96 yen
6.8％

169.92 yen
6.2％

The impact of COVID-19 is not reflected in the above forecast as it is difficult to accurately predict the timing of COVID-19 will peakout. Assuming the peak for COVID-19, after which is gradually continues to dissipate, we estimate a negative impact to sales of 2%
to 4%. However, should it be prolonged, we will make timely and appropriate disclosure in line with changes in the situation.

©2020 TSUMURA & CO.

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Policy on Return of Profits to Shareholders
We seek to increase corporate value through the sustainable
expansion of the Kampo business and investments to build
business foundations in China
We will bear in mind the state of the mid-to-long term profit levels
and cash flow to ensure stable dividends
45.0
100

35.9

35.7

32.1
80

28.4

31.9

33.5

35.6

37.7

35.0
30.0

25.0

25.0

60
40
20

40.0

32

32

3232323232

32

32

From Oct. to Mar.

From Apr. to Sept.

20.0
15.0

Dividends payout
ratio (%)

10.0

30

32

32

32

32

32

32

32

32

2012

2013

2014

2015

2016

2017

2018

2019

2020
forecast
2020予想05.00.0©2020 TSUMURA & CO.

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Inquiries about this material

TSUMURA & CO.
Corporate Communications Department
PR Group

TEL：03-6361-7100

IR Group

TEL：03-6361-7101

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 avariety of risks and uncertainties and that actual results could differ significantly. Therefore, please beaware that actual results may differ materially from these forecasts.

•Governmental changes to the healthcare insurance systems or regulations set by medical treatment
authorities on drug prices or other aspects of healthcare in Japan or other regions, or changes ininterest and foreign exchange rates could impact negatively on the Company’s performance orfinancial 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 theCompany’s performance or financial position.

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