Summary of Consolidated Financial Statements
for the Third Quarter of the Term Ending March 31, 2021(Japan GAAP)
February 5, 2021
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: Ritsuko Inukai
Telephone: 81-3-6361-7100
Scheduled date of submission: February 8, 2021
Scheduled date of dividend payment commencement: Preparation of supplementary materials for the quarterly financial statements: Yes
Holding of the quarterly results briefing: Yes (for institutional investors and securities analysts)(Figures are rounded down to the nearest one million yen.)

1.

Consolidated business results for the third quarter of the term ending March 31, 2021
(From April 1, 2020 to December 31, 2020)(1) Financial results (year to date)(Figures in percentages denote the year-on-year change.)

Net sales

Nine-month period ended
December 31, 2020
Nine-month period ended
December 31, 2019

Operating profit

Profit attributable toowners of parent

Ordinary profit

Million yen%

Million yen%

Million yen%

Million yen%

99,482

4.5

17,5608.7

18,1368.8

13,35614.2

95,185

3.5

16,151

5.7

16,675

3.6

11,690(0.3)(Note) Comprehensive income： Nine-month period ended December 31, 2020: 12,725million yen［80.2%］
Nine-month period ended December 31, 2019: 7,061million yen［(30.8)%〕

Profit per share

Fully diluted profit per share

Nine-month period ended
December 31, 2020
Nine-month period ended
December 31, 2019

Yen

Yen

174.58－152.86－(2) Consolidated financial conditions
Total assets

Net assets

Shareholders’ equity ratio

Million yen

Million yen%

312,895
311,042

227,538
213,048

68.1
66.0

As of December 31, 2020
As of March 31, 2020

(Reference) Shareholders’ equity: As of December 31, 2020: 213,042 million yen

2.

As of March 31, 2020: 205,377million yen

Dividends
Dividend per share
End of Q1

End of Q2

End of Q3

End of FY

Total

Yen

Yen

Yen

Yen

Yen

Year ended March 31, 2020

－

32.00

－

32.00

64.00

Year ending March 31, 2021

－

32.00

－
32.00

64.00

Year ending March 31, 2021
(Projection)(Note)Revisions to dividends projection published most recently: No

3.

Projections of consolidated business results for the term ending March 31, 2021
(From April 1, 2020 to March 31, 2021)(Figures in percentage show the rate of increase or decrease from the previous fiscal year for full-year)

Net sales
Million yen

Full-year

130,500

Operating profit

Profit attributable toowners of parent

Ordinary profit

Profit per share% Million yen% Million yen% Million yen

%

Yen

5.9

2.2

2.8

9.0

196.06

19,30020,20015,000(Note)Revisions to dividends projection published most recently: Yes

Please see “1.Qualitative information on quarterly results (3) Description of projections of consolidated business results” on page 4 forrevision of projections of consolidated business results.

Notes(1) Important changes of subsidiaries during the term(change of specified subsidiaries that lead to a change in the scope of consolidation): No(Note) TSUMURA SHENGSHI PHARMACEUTICALS CO., LTD. was included in the scope of consolidation in the firstquarter because its importance had increased, although the company does not meet the conditions for transfer of specificsubsidiaries.
(2) Application of special accounting practices in consolidated quarterly financial statements preparation: Yes(Note) For details, see “2. Quarterly Consolidated Financial Statements and Key Notes (4) Notes to the Quarterly Consolidated
Financial Statements (application of specific accounting treatment to the preparation of quarterly financial statements)” on
page 11 of the material attached hereto.
(3) Changes in accounting principles and procedures and the method for indication, etc.
1) Changes associated with the revision of accounting principles, etc.: No
2) Change other than 1):
No3) Accounting estimate change:
No4) Retrospective restatement:No(4) Number of shares issued (common stock)1) Number of shares issued at the end of theterm(including treasury stock) (shares)

FY 3/2021 3Q

76,758,362

FY 3/2020

76,758,362

2) Number of treasury stock at the end of theterm(shares)

FY 3/2021 3Q

250,289

FY 3/2020

250,049

3) Average number of shares during the term
(shares)

FY 3/2021 3Q

76,508,220

FY 3/2020 3Q

76,483,089* This Summary of Quarterly Consolidated Financial Statements is exempt from quarterly review procedures.
* Explanation about the proper use of financial projections and other important notes(Note about forward-looking information)
In these materials, earnings forecasts and other statements about the future are forward-looking statements based on the information
currently available and certain assumptions that the company regards as reasonable. Accordingly, the Company cannot make promises
to achieve such forecasts. Actual financial results may differ materially from these forecasts depending on a number of importantfactors. Please see “1.Qualitative information on quarterly results (3) Description of projections of consolidated business results” onpage 4 for information regarding the forecast of consolidated financial results.

○Contents of accompanying materials
1.Qualitative information on quarterly results ·······························································································

2(1) Description of operating results ······································································································

2(2) Description of financial condition ····································································································

3(3) Description of projections of consolidated business results ······································································

4

2.Quarterly Consolidated Financial Statements and Key Notes···········································································

5(1) Quarterly Consolidated Balance Sheets ·····························································································

5(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income ·····

7

Quarterly Consolidated Statements of Income
For the Third Quarter Consolidated Accumulative Term ········································································

7

Quarterly Consolidated Statements of Comprehensive Income
For the Third Quarter Consolidated Accumulative Term ········································································

8(3) Quarterly Consolidated Statements of Cash Flows ················································································

9(4) Notes to the Quarterly Consolidated Financial Statements ·······································································

11(Notes on premise of a going concern) ······························································································

11(Notes on case of extreme change in shareholder's equity amount) ·····························································

11(Transfer of important subsidiaries during the quarter under review) ·························································

11(Application of specific accounting treatment to the preparation of quarterly financial statements) ·······················

111

1. Qualitative information on quarterly results(1) Description of operating results
During the first three quarters under review, the prescription medicine market continued to face difficult conditions such as the restriction
on activities imposed by medical institutions due to the effects of the COVID-19 pandemic expansion.
In this environment, sales of prescription Kampo formulations marketed by Tsumura & Co., and its consolidated subsidiaries (the“Group”) fell for treatment of the common cold but grew for skin diseases, mental disorders and other conditions. As a result, net
sales for domestic businesses during the first three quarters grew 1.0% year on year. Including sales at a Chinese subsidiary newly added
to the scope of consolidation, net sales rose 4.5% year on year, to 99,482 million yen.
Looking at profit, operating profit was 17,560 million yen (up 8.7% year on year), ordinary profit was 18,136 million yen (up 8.8% year
on year), and profit attributable to owners of parent was 13,356 million yen (up 14.2% year on year).
The cost-to-sales ratio rose 0.4 percentage point year on year due to the effect of external sales in China, despite offset of the cost
increase arising from the NHI drug price revision by reduced costs related to crude drugs. In addition, the SGA ratio fell 1.1 percentage
points year on year, partly due to a decrease in expenses associated with changes in activities. As a result, the operating profit margin
was 17.7%, rising 0.7 percentage point from a year ago.
[Consolidated business results](Unit: million yen)
FY 3/2020 3Q

FY 3/2021 3Q

Year-on-year change(ratio of change)

Net sales

95,185

99,4824,296
4.5(％)

Operating profit

16,151

17,5601,409
8.7(％)

Ordinary profit

16,675

18,1361,461
8.8(％)

Profit attributable to owners ofparent11,69013,3561,665
14.2(％)To expand the Kampo market and establish its presence there in a sustained manner, which is a strategic challenge adopted in theMedium-Term Management Plan, the Tsumura & Co. (the “Company”) has positioned geriatric health, cancer (supportive care) andwomen’s health as three important domains. The Company has been active in providing information on matters focused on “Drugfostering” program formulations*1 and “Growing” formulations*2.
In the first three quarters under review, net sales for overall prescription Kampo products increased 0.4% year on year, in spite of NHI
drug price revisions and restrictions imposed on information activities in connection with the effects of the COVID-19 pandemic.
Net sales for Daikenchuto, a drug fostering program formulation that represents a staple item for the Company, decreased 0.2% year on
year. The Company is reinforcing information activities at all hospitals. At the same time, the Company is continuously accelerating
activities for winning new markets, focusing on a sense of abdominal flatulence, which is viewed to produce a low level of satisfaction
with treatment at general clinics among constipation symptoms. In Growing formulations, Hochuekkito, Goreisan and Kamishoyosan
performed solidly.
Looking at sales activities, the Company sought to increase e-promotion-based information activities in addition to conventional visitbased information provision activities, given the continued restriction on activities. Moreover, the Company continues to implement
measures through its medical representatives according to the conditions in respective areas and medical districts.
The Company will continue enhancing these activities and advancing positive and effective information activities in the future.
Demand for Kampo medicine among health care professionals is increasingly growing and diversifying. The Company will continue its
activities for providing appropriate information on subjects, including evidence in basic and clinical medicine, clinical practiceguidelines in which Kampo products are described, and the proper use of Kampo medicine based on Kampo diagnosis.
*1 “Drug fostering” program formulations:
Formulations the Company is addressing by looking hard at the structure of diseases in recent years, targeting diseases that are difficult
to treat with new drugs for which prescription Kampo preparations prove specifically effective in domains where demand for medical
treatment is high, and calling the establishment of evidence “drug fostering”*2 “Growing” formulations:
Growth drivers aimed at registration in clinical practice guidelines as strategic formulations after five drug fostering program
formulations by constructing evidence (such as data on safety and effectiveness) in domains where the degree of satisfaction with medical
treatment and the degree of drug contribution are low2(2) Description of financial condition
The financial position at the end of the third quarter under review was as follows:
Total assets at the end of the third quarter increased 1,852 million yen from the end of the previous fiscal year, to 312,895 million yen.
Current assets increased 5,021 million yen from the end of the previous fiscal year, mainly due to a rise in notes and accounts receivabletrade, despite a decrease in cash and deposits. Non-current assets decreased 3,168 million yen from the end of the previous fiscal year,
mainly due to a decrease in other in investments and other assets associated with the consolidation of Tsumura Shengshi Pharmaceuticals
Co., Ltd. from the fiscal year under review, offsetting an increase in buildings and structures.
Total liabilities were 85,356 million yen, a decrease of 12,636 million yen from the end of the previous fiscal year. Current liabilities
decreased 3,481 million yen from the end of the previous fiscal year, mainly due to a decline in short-term borrowings, which offset anincrease in long-term borrowings scheduled for repayment within one year that resulted from their transfer. Non-current liabilities
declined 9,155 million yen from the end of the previous fiscal year mainly due to the transfer of long-term borrowings to current liabilities.
Net assets totaled 227,538 million yen, an increase of 14,489 million yen from the end of the previous fiscal year. Shareholders’ equity
rose 8,137 million yen from the end of the previous fiscal year, mainly reflecting an increase in retained earnings. Accumulated othercomprehensive income dropped 473 million yen from the end of the previous fiscal year, chiefly attributable to a fall in foreign currencytranslation adjustment. Non-controlling interests increased 6,824 million yen from the end of the previous fiscal year.
As a result, the equity ratio rose 2.1 percentage points, to 68.1%.
Cash flows in the first three quarters under review were as follows:
During the first three quarters under review, cash provided by operating activities was 12,675 million-yen, cash used in investing
activities was 4,975 million yen, and cash used in financing activities was 9,708 million yen.
Cash provided by operating activities was 12,675 million yen. Looking at its breakdown, a major cash inflow item was profit before
income taxes of 18,107 million yen, while a major cash outflow item was income taxes paid of 5,789 million yen. Compared to the first
three quarters of the previous fiscal year, cash inflow increased 2,040 million yen.
Cash used in investing activities was 4,975 million yen. Looking at its breakdown, a major cash outflow item was the purchase ofproperty, plant and equipment of 6,402 million yen. Compared to a year ago, cash outflow decreased 622 million yen.
Cash used in financing activities was 9,708 million yen. Looking at its breakdown, repayments of short-term borrowings of 13,380
million yen was a major cash outflow item. Compared to a year ago, cash outflow rose 4,722 million yen.
As a result, cash and cash equivalents decreased 2,160 million yen from the end of the previous fiscal year, and when combined with
the increase in cash and cash equivalents of 3,519 million yen associated with the consolidation of a subsidiary, reached 59,051 millionyen.

3

(3) Description of projections of consolidated business results
In light of recent business results, the Company revised its projections of consolidated business results for the fiscal year ending March
31, 2021, announced on May 11, 2020.
1) Revision of projections of consolidated business results
Revision of projections of consolidated business results for the fiscal year ending March 31, 2021 (from April 1, 2020 to March 31,
2021)

Million yen
132,000
130,500(1,500)(1.1)％

OperatingprofitMillion yen
17,00019,3002,300
13.5％

123,248

18,876

Net sales
Previous forecast (A)Revised forecast (B)Change (B - A)
Percentage change (%)

Million yen
17,90020,2002,300
12.8％

Profitattributable toowners of parent
Million yen
13,00015,0002,000
15.4％

19,64913,765

Ordinary profit

Profit per shareYen
169.92196.06（Reference) Resultsfor previous fiscal year
（ended March 31, 2020)

179.962) Reason of revision
The domestic prescription medicines business has been affected by the restriction of visit-based activities due to the effects of the
COVID-19 pandemic. However, demand for Kampo medicines among health care professionals is growing and the Company aims toachieve its plan through the implementation of activities via other means such as e-promotions. Nonetheless, sales are expected to belower than initially planned due to fewer prescribing opportunities especially in relation to the common cold, reflecting fewer medical
consultations and fewer other infections such as upper respiratory tract infections.
Consolidated net sales are expected to amount to 130,500 million yen, falling 1,500 million yen short of the initial plan, despite acontinued strong performance in China.
Aggregate SGA expenses are expected to be less than estimated at the beginning of the fiscal year, reflecting the promotion of remotemeetings, the digitalization of key operations and other efficiency improvements as well as unspent budgeted funds due to restrictions
on information activities at medical institutions and some research delays, despite the redistribution of resources to other areas such as
development of the environment for e-promotion-based information activities.
As a result, the Company forecasts operating profit of 19,300 million yen, an improvement of 2,300 million yen from the initial plan,
ordinary profit of 20,200 million yen, an improvement of 2,300 million yen, and profit attributable to owners of parent of 15,000 million
yen, an improvement of 2,000 million yen.
(Note) The above forecasts are based on information available as of the date of these materials and do not take into consideration theimpact of currently unforeseeable risks such as the impact of further coronavirus outbreaks on social and economic activity. Actual
financial results may differ materially from these forecasts depending on a number of factors. The Company will make timely andappropriate disclosure should the situation change in the future.

4

2. Quarterly Consolidated Financial Statements and Key Notes(1) Quarterly Consolidated Balance Sheets(Unit:Million yen)
As of March 31, 2020
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Other
Accumulated depreciation
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investment and other assets
Investment securities
Retirement benefit asset
Other
Allowance for doubtful accounts
Total investment and other assets
Total non-current assets
Total assets

5

As of December 31, 2020

61,957
47,161
10,33812,41850,553
11,882(22)

60,96749,595
11,973
13,41950,005
13,371(22)

194,288

199,310

68,67291,603(83,069)

76,495
95,386(88,312)

77,207

83,56912,016
1,324

11,447
1,567

13,341

13,014

10,7501,213
14,241(0)

10,193
1,513
5,293
(0)

26,20417,000116,753

113,584

311,042

312,895

(Unit:Million yen)
As of March 31, 2020
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings

As of December 31, 2020

10,12822,874

9,965
11,091－

9,376

Income taxes payable
Provision for sales returns
Other

3,607
10
11,8562,300
15
12,246

Current portion of long-term borrowings

Total current liabilities

48,47644,995

Non-current liabilities
Bonds payable
Long-term borrowings
Retirement benefit liability
Other

30,00012,39472
7,049

30,000
3,003
62
7,295

Total non-current liabilities

49,51640,361

Total liabilities

97,99385,356

Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares

30,142
14,041
158,610(678)

30,142
13,789167,001(679)

202,116

210,254

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans

Total shareholders’ equity

2,767
87
2,673
(1,318)
(949)

2,313
628
2,673
(1,946)(881)

Total accumulated other comprehensive income

3,260

2,787

Non-controlling interests
Total net assets
Total liabilities and net assets

6

7,671

14,496

213,048

227,538

311,042

312,895

(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income
Quarterly Consolidated Statements of Income / For the Third Quarter Consolidated Accumulative Term
(Unit:Million yen)
Nine-month period ended
December 31, 2019
(From April 1, 2019
to December 31, 2019)

Nine-month period ended
December 31, 2020
(From April 1, 2020
to December 31, 2020)

Net sales
Cost of sales

95,185
39,151

99,482
41,329Gross profit

56,034

58,152

Selling, general and administrative expenses

39,88240,592

Operating profit

16,151

17,560

438
253

377
249

106

76

Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity
methodOther
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Other
Total non-operating expenses

236

285

1,034

989

100
270
138

219
167
26

510

414

16,675

18,136

2
332

0
4

335

4

Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets

1
27

0
33

Loss on sales of investment securities

19－

Loss on valuation of investments in capital of subsidiaries
and associates

419－

Total extraordinary losses

467

33

Ordinary profit
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Total extraordinary income

Profit before income taxes

16,543

18,107

Income taxes

4,694

4,971

Profit11,84913,136158(220)

11,69013,356

Profit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

7

Quarterly Consolidated Statements of Comprehensive Income / For the Third Quarter Consolidated Accumulative Term
(Unit:Million yen)
Nine-month period ended
December 31, 2019
(From April 1, 2019
to December 31, 2019)
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans,net of tax
Share of other comprehensive income (loss) of entities
accounted for using equity method
Total other comprehensive income (loss)

Nine-month period ended
December 31, 2020
(From April 1, 2020
to December 31, 2020)

11,84913,136(1,813)(661)(2,256)
(34)

(453)
541
(559)
67

(21)

(6)

(4,787)(410)

Comprehensive income

7,061

12,725Comprehensive income attributable to
Owners of parent
Non-controlling interests

7,149
(87)

12,883(158)

8

(3) Quarterly Consolidated Statements of Cash Flows(Unit:Million yen)
Nine-month period ended
December 31, 2019
(From April 1, 2019
to December 31, 2019)
Cash flows from operating activities
Profit before income taxes
Depreciation

Nine-month period ended
December 31, 2020
(From April 1, 2020
to December 31, 2020)

16,543
4,808

18,107
5,964

－

441

0
(692)
100

2
(627)
219

(106)

(76)

25

33

419

－

(3,283)(5,470)716(2,459)(2,423)
(88)

(313)

(4)

(416)
11
1,446

(213)
0
(923)

Subtotal

13,792

17,953

Interest and dividends received
Interest paid
Income taxes paid

1,045
(121)
(4,081)748(236)(5,789)Net cash provided by (used in) operating activities

10,634

12,6759,984(8,471)
4(469)(27,370)

2,312(6,402)0(347)(21,216)

28,081

21,231(4,273)(3,000)
2
(85)

(451)
(155)
1
50

(5,598)(4,975)

Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expenses
Share of loss(profit) of entities accounted for using equity
methodLoss (gain) on sales and retirement of property, plant andequipment
Loss on valuation of investments in capital of subsidiaries
and associates
Decrease (increase) trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Loss (gain) on sales of short-term and long-term investment
securities
Decrease (increase) in retirement benefit asset
Increase (decrease) in retirement benefit liability
Other

Cash flows from investing activities
Decrease (increase) in time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of short-term and long-term investment securities
Proceeds from sales and redemption of short-term andlong-term investment securities
Purchase of investments in capital of subsidiaries
Loan advances
Collection of loans receivable
Other
Net cash provided by (used in) investing activities

9(Unit:Million yen)
Nine-month period ended
December 31, 2019
(From April 1, 2019
to December 31, 2019)

Nine-month period ended
December 31, 2020
(From April 1, 2020
to December 31, 2020)

Cash flows from financing activities
Proceeds from short-term borrowings

－

1,845

Decrease in short-term loans payable－(13,380)

Proceeds from share issuance to non-controllingshareholders
Dividends paid
Dividends paid to non-controlling interests
Payments from changes in capital of subsidiaries that do not
result in change in scope of consolidation
Other

－

7,567

(4,889)(56)(4,888)
(49)

－

(760)

(39)

(41)

Net cash provided by (used in) financing activities(4,985)(9,708)

Effect of exchange rate change on cash and cash equivalents

(768)

(152)

Net increase (decrease) in cash and cash equivalents(718)(2,160)Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting from inclusionof subsidiaries in consolidation

56,24357,692－

3,519

Cash and cash equivalents at end of period

55,52559,05110

(4) Notes to the Quaterly Consolidated Financial Statements(Notes on premise of a going concern)
No relevant items.
(Notes on case of extreme change in shareholder's equity amount)
No relevant items.
(Important changes of subsidiaries during the term)
No relevant items.
TSUMURA SHENGSHI PHARMACEUTICALS CO., LTD. was included in the scope of consolidation in the first quarter because
its importance had increased, although the company does not meet the conditions for transfer of specific subsidiaries.
(Application of specific accounting treatment to the preparation of quarterly financial statements)(Deferment of cost variance)
Cost variance caused by seasonal changes in operation rates, etc. is expected to be eliminated for the most part by the end of the costaccounting period, which is, therefore, deferred as “current assets (other) or current liabilities (other).”11