Thank you for participating in 3Q FY2019 conference call.
We also appreciate your great support for us and Kampo.

This is the roadmap for achieving our long-term vision, which we announced in May
2019.
The Third Medium-Term Management Plan, which starts from FY2019, is positioned
as the growth investment stage.
The guidelines of the plan are to sustainably expand the Kampo market in Japan andto build a business foundation for the Chinese business. To that end, we plan toaggressively carry out growth investments with the aim of attaining consolidated net
sales of over 135.0 billion yen in FY2021, which will be the final year of the Third
Medium-Term Management Plan.

The following is a summary of financial results in 3Q FY2019.
Net sales totaled 95,185 million yen, a rise of 3.5% compared to the same period of
the previous fiscal year.
Accordingly, as of the end 3Q, we completed 76.1% of our full-year plan for net sales.
Operating profit stood at 16,151 million yen, a growth of 5.7％ year-on-year.
The achievement rate for the full-year plan was high, due to the delay in payment of
R&D and sales promotion expenses.
Ordinary profit came to 16,675 million yen, a rise of 3.6% year-on-year.
Profit attributable to owners of parent amounted to 11,690 million yen, a decrease of0.3% year-on-year.

The following are key points in 3Q financial results.
Net sales were 95,185 million yen, an increase of 3.5% compared to the same periodof the previous fiscal year.
This mainly reflects a 3.3% year-on-year rise in prescription Kampo products, despite
the National Health Insurance (NHI) drug price revision in October, 2019. Theoutcome also factors in favorable domestic healthcare sales, including pharmacy andOTC Kampo products.
The cost-to-sales ratio stood at 41.1%. In contrast with the same period of theprevious fiscal year, although crude drug-related costs declined, the cost of sales ratio
deteriorated 0.4 percentage point due to an increase in unrealized profit in tandemwith a rise in inventory for intergroup transactions.The cost-to-SG&A ratio was 41.9%.
Although sales rebates and R&D expenses increased, the overall ratio improved 0.8
percentage point underpinned by benefits from the growth in sales.
As stated in our news release titled “Tsumura Announces Dissolution and Liquidationof its Joint Venture in China,” which we released on October 31, 2019, we posted an
extraordinary loss of 419 million yen to reflect a valuation loss on our investment in an
affiliate in tandem with the dissolution and liquidation of SPH TSUMURA
PHARMACEUTICALS CO., LTD.
As a result, profit attributable to owners of parent was 11,690 million yen.

On this page, the factors for changes in operating profit are explained.
Net sales increased 3,175 million yen year-on-year.
This positively impacted operating profit by 1,884 million yen.
The year-on-year change in the cost-to-sales ratio had a negative impact of 457
million yen.
This chiefly breaks down to a positive impact on operating profit of 571 million yen,
due to a reduction in crude drug-related costs and negative impact to operating profitof 552 million yen reflecting an increase in unrealized profit.
In SG&A expenses, although we worked to reduce other outlays, sales promotion
expenses rose 298 million yen in tandem with the growth in sales. In addition, R&D
and personnel expenses also grew.
Consequently, operating profit totaled 16,151 million yen.

This page is about financial condition and cash flow position.
Please refer to the balance sheet. Inventories rose roughly 4,682 million yen from theend of the previous fiscal year, due to impact from an increase in inventory of strategic
products.
At the end of 3Q, total assets were 286,183 million yen and net assets were 208,460
million yen.
Accordingly, our shareholders’ equity ratio came to 71.4%, a rise of 1.2 percentage
point.
The right hand side is the chart of cash flow position.
Net cash provided by operating activities was 10.6 billion yen, attributable to anincrease in trade receivables and inventories in contrast with quarterly net income,excluding the impact of depreciation expense.
Cash used in investment activities was 5.5 billion yen, mainly attributable to adecrease in time deposits and investments in the capital of subsidiaries.
Meanwhile, cash used in financing activities was 4.9 billion yen. This was primarily
attributable to dividends paid.
As a result, cash and cash equivalents at the end of the period totaled 55.5 billion yen,a decline of 700 million yen from the end of the previous fiscal year.

Sales performance of prescription Kampo products are explained on this page.
Sales of the 129 prescription Kampo products totaled 90,722 million yen, an increaseof 2,888 million yen or 3.3% year-on-year.
Meanwhile, total sales of the five Drug-fostering program formulations were 23,685
million yen, a rise of 1.4% year-on-year.
Total sales of Growing formulations came to 20,528 million yen, an expansion of 3.5%
year-on-year.
Total sales of the other 119 prescription Kampo products, in other words prescription
Kampo preparations other than the five Drug-fostering program formulations andGrowing formulations, rose 3.3% year-on-year.
Although the market for prescription drugs is harsh, we posted a strong growth of3.3% year-on-year.
We believe we need to achieve further sales growth for Daikenchuto, Rikkunshito, andYokukansan, which are Drug-fostering program formulations.
We are fortifying our measures for promoting Daikenchuto in the hospital market.
We are implementing activities to promote the characteristics for Daikenchuto using avideo on the how the product enhances intestinal motility. We are conducting
presentations at hospital wards in which various professionals, including young
doctors and nurses, participate.
In March 2020, we plan to hold a Web seminar for surgeons. We plan to convey theappropriate use of Daikenchuto to many doctors.
In addition, in September 2019, we conducted a Kampo Mega Web seminar as a partof web seminars by M3, Inc.
A total of 17,878 doctors viewed the seminar.
As a result of a continued follow-up of doctors that viewed the web seminars,
sales of Daikenchuto to hospitals where these doctors worked rose 6% in contrast
with the national average three months after the doctors viewed the web seminar.
In December 2019, we conducted a second Mega Web seminar, focusing on thetheme of the “common cold, frequent urination, insomnia and dizziness.”
This time around 18,855 doctors viewed this web seminar, overshooting thenumber of doctors who watched the previous web seminar. We plan to implement
an ongoing follow-up of these doctors to further spread of Kampo medicine.
We aim to continue to implement activities, primarily through interviews withdoctors, briefings at medical institutions, and Kampo medicine seminars, toappropriately supply information related mainly to Kampo medicine treatments andtreatments guidelines for Kampo formulations, and basic and clinical evidence.

7

This page is about return of profits to shareholders.

Our annual dividend projection is 64 yen per share, which is in line with the plan at thestart of the fiscal year.
We are forecasting a dividend payout ratio of 39.8% based on the earnings forecast
we discussed earlier.
We will push forward with management. We are reiterating our goal to improve
corporate value through the sustainable expansion of the Kampo business, growthinvestments in the Chinese business, and the building of business foundations in
China. In addition, we look to realize consistent and sustainable dividend payouts,
taking into account factors including medium/long-term profit levels and cash flow
trends.