TSUMURA & CO.
Third Quarter Business Resultsfor Fiscal Year 2019
(From April 1, 2019 to December 31, 2019)

Conference CallFebruary 10, 2020

Muneki Handa
Director, Managing Excecutive Officer and CFO

Roadmap to Realizing Our Long-Term Vision2018 20192021 2022
Becoming a value-creation company
that contributes to people’s healththrough its Kampo business

Third medium-term
management plan

Growthinvestments

Consolidated Sales
Over

135billion yen

Sustainably expanding
the Kampo market
Consolidated Sales

120.9
billion yen

Building the foundation
for the Chinese business

Rapidprogress

Overseassales ratio
Over50％

Domestic Business●Establishing a Kampo
medicine business

Having one in every two doctors
writing over 10 Kampo prescriptions

Chinese Business●Contributing to thehealth of China’s citizens
Aiming to become a number one
Chinese medicine company-Becoming the most trusted Chinese
medicine company in China-2

3Q Consolidated Performance for FY 2019
FY 2018
3Q

FY 2019
3Q（million yen）

Vs. FY 2018 3Q

FY planAmountChangeAmountAchievement
rate

Net sales

92,01095,185+3,175+3.5%

125,000

76.1%

Operating profit

15,28016,151+871+5.7％

17,00095.0%

Operating profit
margin

16.6%

17.0%

－－－－

Ordinary profit

16,094

16,675

+581

+3.6％

18,00092.6%

Profit attributableto owners ofparent

11,731

11,690(41)(0.3)％

12,30095.0%

Other prescription
pharmaceutical
Products
0.4%

Sales by productPrescriptionKampo
Products
95.3%

OTC medicines
3.0%
Other
1.3%

3

Key Points in Performance
Net sales were up year-on-year but profits were down marginally.
Net sales

95,185 Million yen

YoY

+3.5％

YoY

+5.7％
+0.4pt Net sales of the 129 prescription Kampo products rose 3.3% year-on-year.
On a yen-basis, sales rose for 80 prescriptions.
 Net sales of OTC medicines increased 15.6% year-on-year.

Operating profit
Operating profit margin

16,151 Million yen
17.0 ％YoY

 The cost-to-sales ratio stood at 41.1%, up 0.4pt year-on-year. Although crude drug-related costs weredown, this rise reflected impact from unrealized profit.
 The cost-to-SG&A ratio was 41.9%, down 0.8pt from a year earlier, owing to a rise in sales, despite theincrease in sales rebates and R&D expenses.

Ordinary profit

16,675 Million yen

YoY

+3.6％

Profit attributable toowners of parent

11,690 Million yen

YoY(0.3)％

 An extraordinary loss of 419 million yen was recorded as a loss on valuation of equity due to the decision
to liquidate an affiliate.

4Factors for changes in Operating Profit+1,884（million yen）

(457)

（million yen）

Profit impact from changes insales cost margin(556)
16,151

15,280

Sales composition(286)

Crude drug cost＋571

Processing cost(190)

Unrealized profit(552)

Profit impact from changes inSG&A expenses

FY 2018
3Q
OperatingprofitProfit impact Profit impact Profit impact
from changes from changes from changes
in SG&A
in sales costin salesexpenses
marginFY 2019
3Q
OperatingprofitSales promotion
expenses(298)

R&D expenses(240)

Personnel expenses(129)

Other＋111

5

Financial Condition / Cash Flow Position
Balance Sheet（million yen）
As of March2019

Total assets
Current assets
Non-current assets

Total liabilities
Current liabilities
Non-current liabilities

Total net assets
Equity Ratio

As ofDecember

Change2019

287,322

286,183(1,139)

190,027
97,295
81,18133,32047,861
206,141

185,325
100,857
77,72330,58847,135
208,460(4,701)
3,562(3,457)(2,732)
(725)
2,318

70.2%

71.4%

1.2pt

Cash Flow Position（billion yen）

Operating Investing
Effect ofActivities Activities Financing exchange
rate+10.6 (5.5) Activities
Changes

56.2

(4.9)

(0.7)

55.5

（million yen）
Balance Sheet

As of March2019

As ofDecember

2019

51,80856,490（Merchandise andfinishedgoods）

9,382

7,361

（Work in process）

11,125

12,467（Raw materialsand stores ）31,29936,660

Inventories

Change4,682

Cash and cash
(2,021) equivalents at
beginning of
1,342
period5,361

Cash and cash
equivalents at endof period

6Sales performance of prescription Kampo products （million yen）
Drug-fostering
program formulations

Salesrank

Product No. / name

FY 2018 3Q

FY 2019 3Q

YoY Change

1100

Daikenchuto

8,053

8,023(30)(0.4)%

254

Yokukansan

5,916

6,028

111

1.9%

343

Rikkunshito

5,564

5,726

161

2.9%

9107

Goshajinkigan

2,794

2,813

18

0.7%

2214

Hangeshashinto

1,030

1,094

64

6.2%Total sales of the five Drug-fostering
program formulations

23,36023,685

325

1.4%

41

Hochuekkito

5,597

5,589

(7)

(0.1)%

568

Shakuyakukanzoto

3,970

4,112

141

3.6%

629

Bakumondoto

3,530

3,682

151

4.3%

724

Kamishoyosan

3,533

3,621

88

2.5%

817

Goreisan

3,199

3,522

323

10.1%

Total sales of the five Growing formulations

19,83020,528698

3.5%

Total sales 119 prescription kampo products except thefive Drug-fostering, the five Growing formulations

41,39542,759

1,364

3.3%

Total of 129 prescription Kampo products

87,83490,722

2,888

3.3%

Growing
formulations

4Growth rate of 129 prescription Kampo formulations
Amount base
Number of itemswith higher yen sales

FY2019 1Q FY2019 2Q FY2019 3Q

FY2014FY2015FY2016FY2017FY2018

2.4%

2.3%

1.9%

2.4%

2.7%

3.3%

4.2%

3.3%

81

68

95

63

83

80

8780

7

Return of Profits to Shareholders

Return of Profits to Shareholders
Policy• We seek to increase corporate value through the sustainable expansion ofthe 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
39.8%

Dividend history

10080

35.9%

35.7%

32.1%

31.9%

33.5%

28.4%

30.0% From Oct.
25.0%

60

20

40.0%
35.0%

25.0%

40

45.0%

32

32

32

32

32

32

32

32

to Mar.

20.0% From Apr.
15.0%

to Sept.

Dividends
payout
5.0% ratio
10.0%

30

32

32

32

32

32

32

32

(FY)
0.0%

02012

2013

2014

2015

2016

2017

2018

2019 Forecasts

The year-end dividend and dividend payout ratio for FY2019 are based on the assumption that the dividend item will be approvedat the 84th annual shareholders’ meeting

9TSUMURA & CO.
Investor Relations Group
Corporate 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 varietyof risks and uncertainties 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 the Company’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 theCompany’s performance or financial position.