Second Quarter Business Resultsfor Fiscal 2021

November ８, 2021
President and Representative Director, CEO

Terukazu Kato1

Today‘s agenda
１．２Q Business Results for FY2021 Overview
２．Domestic Business
３．Chinese Business
４．ESG／Sustainability
５．FY2021 Forecast■Today’s Agenda

2

Today‘s agenda
１．２Q Business Results for FY2021 Overview
２．Domestic Business
３．Chinese Business
４．ESG／Sustainability
５．FY2021 Forecast■Second Quarter Business Results for Fiscal 2021

Overview

3Second Quarter Business Results for FY 2021
（ Million yen ）FY 2021
2Q Plan(Before Revision＊)

FY 2021
2Q Results

Achievement
rate

YoY

FY 2020
2Q Results

AmountChange＋11.4％

59,40063,416106.8％

56,952＋6,464

Domestic

55,50054,475＋4,353

＋8.0％

3,900

58,8294,587

106.0％

Overseas117.6％

2,476＋2,110＋85.2％

Operating
Profit8,700(14.6％)

11,684134.3％

10,920

＋763

＋7.0％

Net sales（Operating Profit Margin）(18.4%）(19.2％)

Ordinary
Profit9,000

13,409149.0％

10,909＋2,499＋22.9％

Profitattributable

6,900

9,965

144.4％

8,002＋1,963＋24.5％

to owners of parent＊In the “Notice of Revision of Earnings Forecast” on October 29, we have revised and announced the second quarter earings forecast as net sales of 63,400 million
yen, operating profit of 11,600 million yen, ordinary profit of 13,400 million yen, and net profit attributable to owners of parent of 9,900 million yen.

0.4%

Ratio to total sales

88.9%
Prescription Kampo Products

Other prescription pharmaceuticals

2.7%
8.0%

Healthcare■Second Quarter Business Results for Fiscal 2021

External sales by consolidated subsidiaries

4

Overview

The overview of 2Q of FY 2021 denotes the initial plan at the start of the
fiscal year prior to revisions, actuals for 2Q, and year-on-year performance.
Furthermore, the year-on-year figures have been reshuffled to reflect
revenue recognition standards.
Performance is as shown. Profits are expected to achieve the Tokyo Stock
Exchange Timely Disclosure Standards. Given this, we revised our earnings
forecasts for 2Q and FY 2021, as indicated in the notes.

4Key Points in Performance
Sales and profits increased due to growth in domestic and overseas sales.

Net sales

63,416

million yen

Achievementrate＋106.8% YoY＋11.4%◼ Domestic sales totaled 58,829 million yen, increased 11.4% year-on-year.
◼ Sales of the 129 prescription Kampo products totaled 56,377 million yen, increased 7.7% year-on-year.
◼ Sales of healthcare products including OTC Kampo medicines totaled 1,713 million yen, increased 24.4% year-on-year.
◼ Overseas sales totaled 4,587 million yen, increased 85.2% year-on-year.

Operating profit
Operating profit
margin11,684

million yen

Achievement
rate
Comparison with theplan at the start of
the fiscal year

18.4%

+134.3%

YoY

+7.0%

+3.8ptYoY(0.8)pt◼

The expense-to-sales ratio was 48.4%, a climb of 1.3pts year-on-year, mainly impact of increased depreciation burden due tooperation of Ibaraki 3rd SD building, and external sales in China.

◼

The SG&A ratio totaled 33.1%, a decline of 0.6pt year-on-year. In comparison with plan at the start of the fiscal year, the SG&A
ratio dropped 4.1pts, mainly due to decrease in personnel expenses and impact of R&D expenses.

In comparison with the plan at the start of the fiscal year, the expense-to-sales ratio increased 0.3pt.

Ordinary profit◼

13,409million yen

Achievement
rate+149.0%

YoY+22.9%The impact of the 2Q foreign exchange gain: 1,184 million yen
Previous 2Q foreign exchange loss: 485 million yen Mainly affected by foreign exchange gains and losses.

Net profit attributableto owners of parent

9,965

million yen

Achievement
rate+144.4%

YoY+24.5%
5■Key Points in Performance
In Japan, sales of prescription Kampo products climbed 7.7% to ¥56.3 billion
year-on-year, and sales in healthcare increased 24.4% to ¥1.7 billion,
exhibiting a high level of growth in both of these businesses.
Overseas sales totaled ¥4.5 billion, a rise of 85.2% or ¥2.1 billion year-onyear. As with trends thus far, this was a result of an expansion in sales ofraw material crude drugs and drug pieces in the China business.
The expense-to-sales ratio was 48.4%, an improvement of 1.3pt year-onyear. This was primarily attributable to an increase in depreciation expense intandem with the SD line operations at the Ibaraki Plant in Japan, and a risein external sales in China. The outcome outperformed the plan by 0.3pt,
chiefly reflecting an increase in crude drug-related expense in tandem withproduct mix.
The SG&A ratio totaled 33.1%, a decline of 0.6pt year-on-year. Althoughsales growth offset the ¥1.8 billion increase in SG&A expense, in comparison
with plan at the start of the fiscal year, the SG&A ratio dropped 4.1pts. Of
the ¥1.0 billion in negative impact from SG&A expense, personnel expenses
and salary and various allowances decreased around ¥200 million primarily
due to a prolonged state of emergency, and a reduction of about ¥200
million owing to a change in the cut-off period for R&D expenses.
Non-operating expenses are as shown. This reflects impact from a reversal
to foreign exchange gains (2Q gain was ¥1.2 billion versus a loss of around¥500 million in the same period a year earlier).

5Factors Triggering Changes in Operating Profit (YoY)（ Million yen ）（846）+3,419（ Million yen ）Changes in sales : ＋3,419 Breakdown
Domestic＋2,303

Overseas＋1,116

Changes in cost-to-sales :(846) Breakdown
Sales composition（1,809）（Domestic）

Crude drug cost（Domestic）＋377

Processing cost etc(663)（Domestic）

11,684

10,9202Q FY 2020
Operating profit＋127

Outside sales in China（Overseas）(676)

Changes in SG&A expenses:(1,809) Breakdown

Profit impact due
to changes insales

Profit impact due
to changes incost-to-sales

Profit impact
from changes in
SG&A expenses

2Q FY 2021
Operating profit

Sales-related expense(551)

R&D expense(270)

Salary allowance

(267)

Other

(721)

6

■Factors Triggering Changes in Operating Profit (YoY)
Operating profit reached ¥11.68 billion, an increase of ¥760 million year-onyear.
The impact from sales growth was ¥2.3 billion in Japan, ¥1.1 billion overseas,
for a total impact of ¥3.4 billion.
The negative impact from an increase in expense-to-sales was ¥840 million.
However, in Japan, there was a negative impact of ¥290 million due to anincrease in processing expense, which includes a decrease mainly of crude
drug-related expenses and depreciations in tandem with the SD line
operations at the Ibaraki Plant. Overseas, the negative impact was ¥670
million due to an increase in expense in tandem with a rise in external sales
in the China business.
The negative impact from an increase in expenses was ¥1.8 billion in linewith the details shown.
Note that in the statement of income used for comparison, the figures are PPA
adjusted.
Operating profit in the first quarter of FY 2020 declined ¥2.0 billion after being
adjusted for PPA items.

6

Financial Condition/Cash Flow Position（ Million yen ）FY 2020(March 2021)

FY 2021
2Q

ChangeEquity ratio

68.3％

68.2％

△0.1ptNon-current assets

Total liabilities
Current liabilities
Non-current liabilities

Merchandise andfinished goods
Work in process
Raw materials andsupplies

80,755
13,93913,39653,41987,104
10,073
14,04362,988Change6,349△3,865646
9,568

Investing activities

Inventories

FY 2021
2Q

Operating activities(March 2021)

＋21

672

596

Cash and cash equivalents at
beginning of period

FY 2020△27

Cash and cash
equivalents at end of
period16,817
14,303
2,514
4,346△4,556
8,902
12,471△36

Impact of exchange ratetranslations

335,881
218,576
117,304
90,24043,824
46,416245,640

Current assets+118

Financing activities

Total net assets

319,063204,273
114,789
85,894
48,38037,513
233,169

Total assets（ Hundred million yen ）7■Financial Condition & Cash Flow Position
In comparison with the end of FY 2020, total assets rose ¥16.8 billion.
Current assets rose ¥14.3 billion, of which inventory assets increased ¥6.3
billion. In addition, non-current assets increased ¥2.5 billion, of which
tangible fixed assets climbed ¥2.38 billion.
The breakdown of the ¥6.3 billion rise in inventory assets comprises a
decline of ¥3.8 billion in product inventory due to an increase in sales, and arise of ¥600 million in work in progress. Meanwhile, raw material inventory
was up ¥9.5 billion. Of this, there was a ¥3.0 billion impact reflecting foreignexchange translations for crude drug inventories in China.
Total liabilities rose ¥4.3 billion. Between current and non-current liabilities,
the portion of long-term borrowings scheduled to be paid back within a year
declined ¥9.37 billion, in tandem with the reshuffling of debt. Meanwhile,
long-term borrowings expanded by the same amount. In current liabilities,
accounts payable increased ¥4.1 billion, reflecting a ¥3.9 billion rise inpurchasing in the China business.
The equity ratio stood at 68.2% and the cash flow is as shown.

7

Today‘s agenda
１．２Q Business Results for FY2021 Overview
２．Domestic Business
３．Chinese Business
４．ESG／Sustainability
５．FY2021 Forecast■Domestic Business

8Comparison with the Prescription Pharmaceutical Market
Overall
FY 2020

FY 2019

10.0%
6.0%

Prescription pharmaceutical market
Tsumura2.0%(2.0)%(YoY/drug price basis)
FY 2021

7.9%

8.9%
2.9%

5.9%

2.3%

1.6%

1.2%

0.6%

0.2%

(6.0)%

1.4%(2.5)%
2Q

3Q

4Q

1Q

5.0%

FY 2020

3.8%
7.6%

2Q

3Q

4Q

9.1%

9.0%
6.0%

(1.0)%(3.3)%(3.2)%(2.9)%(5.4)%(3.0)%

3Q

4Q

1Q

2Q

3Q

4Q

1Q

Increase in the number of doctors newly
writing prescriptions owing to
e-promotions X MR interviews and briefings

2Q

4.5%

FY 2021

2.7%

4.7%

4.3%
(0.3)%(1.7)%(1.4)%

0.0%(6.0)%

2Q

FY 20203.0%(3.0)%(10.0)%
1Q

2Q

10.5%

12.0%

0.7%2.3%

0.6%

1Q

FY 2019

8.7%

3.4% 2.3%

0.0%(5.0)%（2Q only：+3.5pt）(5.1)%FY 2021

2.0% 1.6% 2.1% 1.8%

＋4.5pt4.2%

Hospital market (HP)

7.1%

10.0%

Gap with market(1.9)% (1.0)%

General clinics (GP)FY 2019

7.7%

1.5%
2.5%

(10.0)%

1Q

1.2%

2.2%

(0.3)%
1Q

1.4%
2Q

3.1% 3.4%

0.1% (0.2)%(1.5)%(2.4)%(1.9)%(4.8)%
3Q

4Q

1Q

2Q

3Q

6.4%

1.6%

4Q

1Q

2Q

Trending toward recovery owing to the fortification of
e-promotions given ongoing visitation restrictions
Copyright © 2021 IQVIA. Estimated based on IQVIA JPM Apr.2019-Sep.2021. Reprinted with permission

9■Comparison with the Prescription Pharmaceutical Market
The green line in the graphs indicated trends in the prescription
pharmaceutical market and the brown line reflects performance trends at
Tsumura. These graphs factor in trends of COVID-19 impact which occurredin 1Q FY 2020.
Overall, the green line for the prescription pharmaceutical market indicates anegative trend from 1Q FY 2020. This trend touched bottom in 2Q and
exhibits a recovery trend from 3Q. Performance at Tsumura was not as
negatively impacted as the market. In 1H FY 2021, Tsumura’s performanceoutperformed the prescription pharmaceutical market by around 4.5pts.
In the general clinics (GP) market, performance is continuing to outperformthe prescription pharmaceutical market. Meanwhile, in the hospital market(HP), given tightening of visitation restrictions due to COVID-19,
performance has continued to underperform, with the exception of 2Q FY
2020. In addition, in 1H FY 2021, when there was a delay in recovery andthe e-promotion system was in place, we began to catch up with theprescription pharmaceutical market.

9

COVID-19 Related Symptoms and Prescription Opportunities
Diseases for which prescription +1.16 billion yen
opportunities have increased
PsychiatricdisordersAnxiety and insomnia
accompanying a change inthe external environment

Kamishoyosan
Kamikihito
Hangekobokuto
Saikokaryukotsuboreito
Total sales for six
formulations

Dizziness

Skin diseases

Dizziness due to physical andpsychiatric disorders

Acne and dermatitis due tothe use of masks

Hangebyakujutsutenmato
Ryokeijutsukanto(Goreisan)*Keishibukuryogankayokuinin
Jumihaidokuto
Seijobofuto
Keigairengyoto

Diseases for which prescription
opportunities have decreased(60) million yen
Commoncold-related
Decrease in the number of
respiratory disease patients
due to infection prevention
measures

Kakkonto
Maobushisaishinto
Shosaikoto
Shosaikotokakikyosekko
Keishito
Total sales for sevenformulations

Supplements
Prescription group, including Kampo used to treat a deterioration in healthconditions, including post-illness fatigue, loss of appetite and decline in stamina

Hochuekkito

Juzentaihoto* Goreisan prescription opportunities
are also increasing for treatment inareas other than dizzinesstherefore it has been excluded
from the basis of calculations

Bakumondotosales have been
positive from 2Q(YoY)(Amount: YoY, Shipping Base)A sequelae outpatient clinic for COVID-19 has been established, and Kampo is prescribed for the following symptoms.
➡Symptoms continuing after being infected with COVID-19 (Fatigue, malaise, shortness of breath, anxiety, sleep disorder, etc.)
10■COVID-19 Related Symptoms and Prescription Opportunities
Among the COVID-19-related symptoms, prescription opportunities are rising forpsychiatric disorders, dizziness and skin diseases. In addition, prescriptions arecontinuing to grow for supplements, mainly Hochuekkito and Juzentaihoto, which
alleviate post-illness fatigue and a decline in stamina. Consequently, accordingly to
our analysis, prescription opportunities rose ¥1.16 billion year-on-year.
Meanwhile, common cold-related formulations sharply declined thus far. The
negative impact is shrinking. In accordance with our analysis, demand contracted¥60 million year-on-year. Demand for Bakumondoto, which exhibited the largest
negative impact among these formulations, is trending toward recovery reflecting
the strengthening of information provision activities, triggering year-on-year
positive impact from 2Q.
Regarding COVID-19 aftereffects, some outpatient treatment facilities are starting
to be set up. There is an increase in opportunities for prescribing Kampo to treat
ongoing symptoms after infection as shown.

10

Sales of Drug-fostering Program Formulations/Growing
Formulations（ Million yen ）Netsales Product No./formulation nameRanking

FY 2020
2Q

FY 2021
2Q

YoY

+4.3%

+1,071+9.1%

Total sales for 119 formulations other than drug-fostering
program and growing formulations

26,81029,100+2,290+8.5%

Total sales for 129 prescription Kampo products

52,34356,377+4,033+7.7%

Drug-fostering
program formulations

4,790
3,720
3,557
1,736
678
14,482
3,741
2,680
2,426
2,415
1,531
12,794+62

Total sales for growing formulations

4,663
3,542
3,360
1,610
633
13,810
3,543
2,249
2,310
2,150
1,468
11,722

1

100

Daikenchuto

3

54

Yokukansan

4

43

Rikkunshito

8107

Goshajinkigan

24

14

Hangeshashinto

Total sales for drug-fostering program formulations

Growing formulations2

41

Hochuekkito

517

Goreisan

6

68

Shakuyakukanzoto

7

24

Kamishoyosan

1029

Bakumondoto

+126

+2.7%

+177

+5.0%

+196

+5.8%

+126

+7.8%

+44

+7.1%

+671

+4.9%

+197

+5.6%

Ratio to total sales

129
prescription+430 +19.2%

Drug-fostering program+115

formulations+5.0%+264 +12.3%* The 2020 results have been rearranged to the amount after applying new accounting revenue recognition standards.

25.7%
Growing formulations

22.7%

119 formulations other thandrug-fostering program andgrowing formulations

51.6%

11

■Sales of Drug-fostering Program/Growing Formulations
As shown in the pie graph on the right, the five drug-fostering program
formulations and the five growing formulations, which account for 48.4% of
total sales of the 129 prescription Kampo products are sales drivers and are
finally showing their ideal state.
In comparison with the pervious year, of the ¥4.0 billion sales increase forthe 129 prescription Kampo products, the growth in sales of the five drugfostering program formulations and the five growing formulations was ¥1.74
billion, accounting for a 43.2% degree of contribution to sales.
In the five drug-fostering program formulations, for which a high level ofevidence is being amassed, the development of new sales channels is mainly
being carried out at university hospitals, which place emphasis on evidence.
Meanwhile, by carrying out surface development to related formulations,mainly among high growth rate growing formulations, the HP market isexpanding. At the same time, by digging in-depth into the GP market, we
aim to establish Kampo medicine. This is our consistent business strategy.

11

Three Important Domains of Sales Activities◼

Positioned geriatric health; cancer (supportive care) and women’s health as the three important domains andaim to concentrate our activities in these domains◼

We plan to deploy a sales approach in the drug-fostering program formulations, growing formulations andthree important domains

Psychiatric andneurological disorders
D

Digestive systemdiseases

Respiratory diseases

G Bakumondoto

Yokukansan

D

Rikkunshito+ related
formulations

D

Daikenchuto

G

Peripheral symptoms forcirculatory disorders

G

Goreisan+ related
formulations(supportive care)

Women’shealth domain

Mitigation of side effects, etc.

Diseases specific to womenCancer domain

Geriatric health domain+ related
formulations

Hochuekkito+ related
formulations

D

Rikkunshito

D

HangeshashintoD

Goshajinkigan

G

Kamishoyosan+ related
formulations+ related
formulations

Peripheral symptoms
for frailty
D

G

Other diseases and symptoms

Goshajinkigan
Hochuekkito

D

Daikenchuto

G

Goreisan+ related
formulations+ related
formulations

D

Drug-fostering program formulations

G Growing formulations

12■Three Important Domains in Sales Activities
Mainly in drug-fostering program and growing formulations businesses, weare continuing activities mainly in our three important domains of geriatrichealth, cancer (supportive care) and women’s health, which are social issues
in Japan.
Today, I will explain Tsumura’s initiatives for peripheral symptoms forcirculatory disorders in the geriatric health domain, and gynecologicaldisorders in women’s health domain, as shown in the blue framed boxes.

12New initiatives in the geriatric health domain
Geriatric heart failure
Increase in geriatric heart failure in the elderly withthe advent of a super-aging

Peripheral symptoms forcirculatory disorders(Geriatric heart failure)

Goreisan growth rate
(main clinical departments)
130%

128%

125% 126%

123% 122%

128%

118%
115%

Edema, diarrhea, dizziness (Goreisan)G

Cardiology

Drug-fostering program formulations

Digestive system

D

G Growing formulations

Quantity

Obstetrics/gynecology

High

Orthopedics

Constipation (Mashiningan)

Psychiatry

Edema with chills in the limbs (Goshajinkigan) D

Neurosurgery

D

General surgery

Bloating (Daikenchuto)

D

ENT

Loss of appetite (Rikkunshito)

General internal medicine

Loss of appetite with marked fatigue(Hochuekkito) G

Low(YoY: Actual sales/quantity basis)
13■New Initiatives in the Geriatric Health Domain
Given the increase in cases of heart failure among seniors in tandem withthe arrival of a super-aging society, in the geriatric health domain, as shown,
we added peripheral symptoms for circulatory disorders as a key measurefrom FY 2020.
Goreisan exhibited the highest level of sales growth, or 19.2% year-on-year,
among the 129 prescription Kampo products. As shown in the graph to theright, the number of Goreisan prescriptions are increasing in many clinicaldepartments, including general internal medicine and ENT departments,
where the number of Goreisan prescriptions were the highest.
In addition, although the number of Goreisan prescriptions was still low,
reflecting the number of prescriptions for symptoms such as edema,
diarrhea and dizziness in seniors with heart failure, the number of Goreisanprescriptions is expected to rise going forward in the area of circulatory
disorders, which is outlined in red.

13

A survey revealed that 80% of females are “concealing their patience”
Work or perform household chores while enduring a disorder

34.3%
Frequently

Being patient

79.2%

44.9%
Sometimes

14.9% 5.9%

Rarely#OneMoreChoice projectNot at all

Top 10 disorders endured even if felt (Multiple choice)
1st

Fatigue/sluggishness

23.8%

2nd

Irritability

16.2%

3rd

Anxiety

15.6%

4th

PMS (premenstrual syndrome)

13.7%

5th

Difficulty falling asleep, do not wakeup feeling good, light sleep, insomnia

11.6%

6th

Chills11.3%

7th

Headache

11.2%

8th

Menstrual pain, menstrual irregularity,
abdominal pains before and after
menstruation

11.0%

9th

Disorders difficult to describe in words

10.9%

10th

Constipation

10.7%

Survey by Tsumura

Overall (n=10,000)

69th Asahi Advertising Award in the quasi drug, cosmetics and toiletries category
70th Nikkei Advertising Awards in the food, pharmaceuticals and daily goods
category: Award for Excellence
2nd Nikkei Women Empowerment Advertising Awards: Nikkei Special Award

14■ Survey Reveals 80% of Females are “Concealing their Patience”
In the women’s health domain, in line with International Women’s Day, heldon March 8, 2021, Tsumura launched the “#One More Choice project.” Alongwith sending out a message to women informing them “they have choices
other than simply putting up with pain from female disorders,” the project
aims to realize a comfortable and pleasant society where there are choices
for mental and physical disorders, other than having to put up with living in
pain or discomfort.

According to a fact-finding survey conducted by the project, it was foundthat around 80% of women endure disorders when carrying out their jobs orhousework.

14

Ongoing initiatives in the women’s health domain
Kampo formulations corresponding to the female life cycle(Shipping / Amount base)

Major Kampo
products that areprescribed for
symptoms uniqueto women

2Q FY2020
YoY

Tokishakuyakusan

Prescription
Kampo Products

Anemia, fatigue, menopause,
menstrual irregularity, menstrual
difficulties, etc.

Tokishakuyakusan+12.6%

Kamishoyosan+12.3%

Keishibukuryogan+8.7%

Kamishoyosan
Keishibukuryogan
Endometritis, menstrual irregularity,
Menstrual difficulties, menopause, etc.

Psychiatric and neurologicaldisorders, including anxiety
Menopause, menstrualirregularity, etc.
15

■Ongoing Initiatives in the Women’s Health Domain
In 1893, Tsumura was founded as a seller of Chujoto, a medicine forwomen. In the field of gynecology, the ratio of Kampo prescriptions is higher
than at other clinical departments. The Ministry of Health, Labour andWelfare’s NDB data shows that there is a high ratio of Kampo use among
women of all ages.
In particular, Tokishakuyakusan, Kamishoyosan, and Keishibukuryogan,which are shown in the illustration, are the three major Kampo formulations
being prescribed for symptoms uniquely experienced by women. As shown,sales growth for all three of these Kampo formulations have grown year-onyear.

15

Implementing e-promotions
Delivering information to 330,000＊
clinical physicians(times)Video streaming

Online lectures (Division plan only)

fiscal year

Digestive system domain
Geriatric health domain
Respiratory disease domain
Other (general)

FY 2020

Digestive system domain
Geriatric health domain
Sensitivity to cold
Respiratory disease domain
Psychiatric disorder domain
Other (cancer, general)

FY 2021
Includingscheduled

Digestive system domain
Psychiatric disorder domain
Geriatric health domain(supplements)
Respiratory disease domain
Women’s health domain
Orthopedics domain
Other (cancer, dizziness)

30

20

10

0
FY 2019

FY 2020

FY 2021 Including events scheduled

Event theme

FY 2019

Web lectures that are lots of viewing by hospital doctors (HP)※source:「About doctor‘s supply and demand estimation」（Ministry of Health, Labour and Welfare）
https://www.mhlw.go.jp/stf/shingi2/0000203370.html

16■Implementing e-Promotions
Earlier, I explained the expansion in the HP market. In particular, we areaccelerating e-promotions in the HP market, where there are strict visitation
restrictions in place.
Given that information on Kampo is delivered to around 330,000 clinicaldoctors, we are continuing to carry out activities based on the belief that our
vision is to realize a medical care setting where citizens can receive Kampo
treatment as needed at any medical facility or clinic in Japan.
The graph illustrates the number of times the Pharmaceutical Sales Division
carried out video streaming of large-scale planning and implementation of
one of the themes shown (green bar graph) and an online lecture (orange
bar graph). Online lectures are primarily viewed by doctors working at a
hospital (HP market).

16Effect of e-promotions
2,400,000

Improving awareness of Kampo information byintroduction of various digital tools
Detailing impact※

MR activies

e-promotion

40％
Expand video
streaming
1,200,000

1,200,000cases

Open medical site
Introduce my MR-kun

Regularly holdWeb lectures

400,000cases

0

FY2019/1H

FY2019/2H

FY2020/1H

FY2020/2H* Grasped from Internet surveys taken of doctors
Number of information recognition cases from each channel, including MR activities and Internet

FY2021/1H

Forecast for
FY2021/2H

INTAGE Healthcare Inc. survey (Tsumura Internet impact) 17■e-Promotion Benefits
This slide shows the ratio of information provision activities conducted via
MR activities and e-promotions. In addition, the line graph outlines thenumber of cases for the degree of information recognition owing to theimpact of detailing.
The definition for MR activities is “face-to-face and online interviews with andpresentations for doctors). e-promotions are defined as video streaming andonline lectures, formats for information provision activities that are notconducted through MRs.
In 2H FY 2020 to 1H FY 2021, owing to the necessary concentrated
investment in e-promotions, we are delivering information on Kampo
medicine to many doctors. In 2H FY 2021, we aim to boost the impact ofdetails by more than 3-times the level in 1H. We also plan to invest in digital,
including matters related to e-promotions.
A recent top priority has been to provide many doctors with valuable
information. We are implementing a “new form” of information provision
activities through a policy of improving the productivity of sales activities by
arousing the interest of doctors with e-promotions, conducting a follow-up
by MRs and tying this into prescriptions.

17Increase in prescription opportunities
Increase in doctors using Kampo owing toinitiatives to promote use, mainly e-promotions
Number of doctors who
newly prescribed Kampo*1

About

7,000people*

3

Number of doctors for which
there was an increase inprescription use*2

About

15,000people*

3*1：Confirmed number of doctors converted from non-prescribing to Kampo prescribing doctors*2：Confirmed number of growth in prescriptions written by doctors already writing Kampo prescriptions*3：Increase up to September 30, 2021, starting from April 1, 2021

Survey by Tsumura
18■ Increase in Prescription Opportunities
According to our own survey, the outcome of e-promotion activities
implemented has resulted in around 7,000 doctors newly prescribing Kampo
in 1H FY 2021. In addition to this, there were around 15,000 doctors that
increased the number of Kampo prescriptions they wrote.
Naturally, each year there is a decline in a certain number of doctors
prescribing Kampo and Kampo prescriptions. However, despite this, we
believe the current environment has become conducive for providing
information to a larger number of doctors through e-promotions.
This can likely be interpreted as the “early arrival of the future due to
COVID-19.”18

Today‘s agenda
１．２Q Business Results for FY2021 Overview
２．Domestic Business
３．Chinese Business
４．ESG／Sustainability
５．FY2021 Forecast■China Business

19

Future Outlook for the China Business

Aim to become a traditional Chinese medicine company that is trusted
by the citizens of China by promoting Ping An Tsumura brand products
Traditional Chinese medicine market [approx. 10 trillion yen]
Products for general consumers

Raw material
crude drugs anddrug pieces

Existing
markettraditional
Existing market
for fortraditional
ChineseChinesemedicalproducts
medical products(approx.
9,000
formulations)(approx. 9,000
formulations)[approx.

[approx. 7 trillion yen]

3 trillion yen]

Prescriptions listed in the
Pharmacopeia of the PRC(approx. 1,600 prescriptions)[approx. 7 trillion yen]

Prescriptions originatedfrom classical prescriptions(approx. 300 prescriptions)Classical prescriptions not yet launched(Seven prescriptions issued in advance from among
100 prescriptions exempt from clinical testing)

Products for
doctors

classical prescription
Chinese medicines(prescriptions listed in old
Chinese medical books)
Chinese medical books)

Creating markets
and customers
Prescription acquisition
through M&A
Expansion with newquality design
Create a new market bylaunching development
20■Outlook for China BusinessIn the traditional Chinese medicine market in China, our goal is to provide stable,
safe and good quality raw material crude drugs and drug pieces as products, which
is a market said to be worth a mere ¥3 trillion, by leveraging crude drug cultivation
contracts as a strength based on the Tsumura GACP management system for
cultivation and processing. Our sales plan at the end of FY 2021 is ¥9.7 billion. We
analyze that this demand will increasingly grow going forward.
Next, in the traditional Chinese medical products market, which is estimated to be
worth around ¥7 trillion, our targets are classical prescriptions and prescriptions
mentioned in the Pharmacopoeia of the People’s Republic of China, which isunderpinned on a national level legal basis, as a part of China’s pharmaceuticalquality assurance. This is equivalent to Japanese Pharmacopoeia (JP). This is similar
to Japan’s Kampo formulation. This field allows the Tsumura Group to utilize its
technology, knowhow and human resources. However, although many Chinesecompanies have already acquired approval, many of these companies do not carryout manufacturing and sales. The scale of this market is said to be around 10%20% of the traditional Chinese medical products market. Meanwhile, many of thecompanies serve general consumers. These classical prescription Chinese medical
products are a target for our M&A activities.
There are 100 classical prescriptions that have not hit the market and are under thecontrol of China. Of these 100 classical prescriptions that are exempt from clinical
trials, seven are targets for development launch. The Tsumura Group is preparing
to submit applications after narrowing down candidates to 1-2 prescriptions. This isalso similar to Kampo formulations in Japan, therefore we first aim for approval foruse by doctors.
In other words, it is not our goal to capture a share of the current traditional
Chinese medical products market. We aim to deliver a Ping An Tsumura brand of
products, mainly in the field of classical prescritpion Chinese medicines, which has asmall market scale, to citizens we have not yet reached.

20

Information on conducting a briefing

Long-term Business Vision 2031 andSustainability Vision 2050
Date

Late March 2022 （Scheduled for 90 minutes）
Program details■ Sustainability Vision 2050
■ Long-term Business Vision 2031 (Domestic Business／China Business)■ Ｒ＆Ｄ Policy／Strategy
■ Q&A
21

■Information on Conducting a Briefing
At present, we are formulating the Long-term Business Vision 2031 and theSustainability Vision 2050, which starts in FY 2022.
In late March 2022, we are scheduled to implement a briefing for the Longterm Business Vision 2031, Sustainability Vision 2050, and R&D policies andstrategies.
The local management of the China business will take this opportunity todirectly present the policies and strategies for the China business that areincluded in the Long-term Business Vision 2031, and I would like to hold adialogue with everyone. We are scheduled to have key persons participatingin the management of Ping An Tsumura, from the Ping An Insurance Group,
take the podium.

21

Today‘s agenda
１．２Q Business Results for FY2021 Overview
２．Domestic Business
３．Chinese Business
４．ESG／Sustainability
５．FY2021 Forecast■ESG & Sustainability

22

Tsumura Group materiality
Upgraded Tsumura Group Materiality from both aspects of“Resolve social issues through business” and “Reinforce business foundations"
Strengthen

Deepen23■ Tsumura Group Materiality
This topic can be found in the Integrated Report 2021 on pages 17 and 18.
We are embarking on an upgraded version of the Tsumura Group Materiality.
In addition to strengthening “solutions to social issues through businessactivities” for Kampo, traditional Chinese medicines and crude drugs,
Tsumura aims to become a company that is highly sensitive to changes andcrisis in the global and natural environment, in other words the“enhancement of the corporate infrastructure.” To this end, the TsumuraGroup is positioning the deepening of various initiatives as its utmost, key
issues.
While this naturally applies to the Kampo business in Japan, Tsumura plans
to newly pour energies into expanding access to medical care andpharmaceutical products through the traditional Chinese medicine andcrude drug businesses in China. As multi-component complex formulations
derived mainly from plants, these pharmaceutical products offer uniquevalue that is not provided by other pharmaceutical products. In particular,
we plan to tackle businesses with the resolution to lead the world in thesefields, given they are helpful in treating multiple symptoms suffered bygeriatric patients and diseases unique to women.

Activities pertaining to ESG and sustainability
Activity 1: Reduce greenhouse gas (GHG) emissions

Activity 2: Other sustainability activities[Production/crude drug
processing/storage facilities]

96,486(1) Further promote energy-saving(solar power, etc.)(2) Energy conversion (hydrogen, etc.)(3) Introduce renewable energy(t-CO2)

Group GHG emissions(CO2 equivalent)

Reductionof 50%[Head office & branches/sales
offices, etc.]
 Optimization, mainly of each site
and vehicles

Carbon Neutral
FY 2020

2030

2050
24

■ Activities Pertaining to ESG and Sustainability
The 26th session of the Conference of the Parties to the UN Framework
Convention on Climate Change (COP 26) is being held from October 31 November 12, 2021. Unfortunately, Japan did not endorse thedecarbonization declaration. Based on Japan’s energy policy, the first
concern is to spread the use of new technologies and renewable energies. As
shown, the Tsumura Group aims to reduce the current level of greenhousegas (GHG) emissions, which is nearly 100,000 tons, by 50% in 2030 andcarbon neutrality by 2050.
Across its Group, Tsumura plans to tackle the reduction of GHG emissions,primarily by further saving the energy used by production facilities, using
solar energy at plant facilities, and switching to renewable energies.

24Activities pertaining to ESG and sustainability
Activity 1: Reduce greenhouse gas (GHG) emissions
Activity 2: Other sustainability activities
Continue to be a company
that is the most sensitive tochanges in the naturalenvironment and risks
Pursue a cycle that returns
everything including not
only crude drugs but also
water and air to nature

Protect nature, returnto nature
25■ESG and Sustainability related Initiatives
The Tsumura Group, which conducts business operations that use crude
drugs, which are the best of nature, as raw materials, aims to continue to be
a company that is highly sensitive to changes and crisis in the naturalenvironment to achieve sustainable growth.
We are pursuing a cycle that returns everything to nature, not only including
crude drugs but also water and air.
We have already embarked on some activities, including deplasticization andthe further use of crude drug residuals. Going forward, we are boldly
challenging these goals mainly by applying new technologies.

25

Disclosure of climate-related financial information
On October 1, 2021, Tsumura endorsed the Task Force on Climaterelated Financial Disclosures (TCFD)
Based on the "Task Force on Climate-related
Financial Information (TCFD) Final Report," four
disclosure items (governance, strategy, risk
management, indicators and goals) will beconsidered as management issues, and policy
planning and disclosure will be implemented.
Executive Review Meeting with External Experts(Photo: FY2021) Extraction of Business Risks andOpportunities Due to Climate Change.
Director study group, including third-party experts

Plan to establish the Sustainability Vision 2050, with the FY 2022 as the first year26

■ Disclosing Climate Change-related Financial Information
On October 1, 2021, Tsumura endorsed the Task Force on Climate-related
Financial Disclosures (TCFD).
We are recognizing the four disclosure items (governance, strategy, risk
management and indexes/goals) as management issues, and considering
their implementation.
In FY 2021, a director study group, including third-party experts, wasimplemented and extracted business risks and opportunities related toclimate change.

26

System pertaining to ESG and sustainability
In October 2021, established a Sustainability Committee, chaired by the Co-COO, Director⚫ The committee receives instruction on direction from the Board of Directors, determines policy,
concrete goals, measures and other actions, and reports progress to the Board.
⚫ The committee is monitored by the Board of Directors and reflects the opinions and advice of theBoard into sustainability promotion activities.

Board of Directors
Instructions on
policy/oversight

ReportSustainability Committee

Sustainability Committee
Chairperson:
Vice chairperson:
Committee members:

Instruction/
oversight

ReportExecutive office:

Co-COO, Director
DivisionExecutive Officer General
Manager of Production Headquarters
CFO, Director, Operating officer,
General manager of each division/
Department head
Sustainability Promotion Office（Newly established in October 2021）

Executive officeSustainability Promotion OfficePlanning proposal, implementation and management
27■System Pertaining to ESG and Sustainability
The Board of Directors of Tsumura recognizes sustainability-related actions
as key management issues. In October 2021, we established a Sustainability
Committee, chaired by the Co-COO, Director.
The Board of Directors is positioning the Sustainability Vision 2050 as asuperordinate concept of Long-term Business Vision 2031. The Board alsopresents policies and carries out oversight to realize sustainability andmateriality actions, and the realization of the long-term businessvision/achievement of the Medium-Term Management Plan.
Given the policy of the Board of Directors, the Sustainability Committee,
which is comprised of the following members, will serve as the control tower,
and will implement, tackle, manage the progress of and report on initiatives
in the Group overall.

27

Today‘s agenda
１．２Q Business Results for FY2021 Overview
２．Domestic Business
３．Chinese Business
４．ESG／Sustainability
５．FY2021 Forecast■FY 2021 Earnings Forecast

28

Revision of earnings forecast FY 2021
（ Million yen )Original plan
(before revision)
2021.5.11

Net sales

Compared to theoriginal plan

Revised Plan
2021.10.29

Amountrate

122,500

127,500＋5,000＋4.1%

Domestic

113,700

117,800＋4,100＋3.6%

Overseas

8,800

9,700

＋900

＋10.2%

Operating profit

19,50021,100＋1,600＋8.2％

Ordinary profit

20,00023,400＋3,400＋17.0%

Profit attributable

14,20016,600＋2,400＋16.9％

to owners of parent

Original plan
(before revision)

Dividend (per share)

EPS
ROE

￥64
¥185.60
6.4%

Revised Plan

￥64
￥216.97
7.4%

Third medium-term
management plan
FY2019 - FY2021

Over

Net
Sales

1,200million

Operating
Profit190million

ROE

Over 6%

Over

Numerical targets after applying
revenue recognition standards(Note) The above forecasts were prepared based on the information available as of the date of publication of this presentation. Accordingly, the impact of risks that cannot be predicted at this time, including the impact on socio-economic activities
from the further spread of COVID-19, have not been factored in. Actual earnings performance may differ from the forecasts stated herein owing to various factors going forward. We will disclose trends and conditions in a timely and proper mannershould there be any changes in the circumstances surrounding our company.

29■Revisions to FY 2021 Earnings Forecast
The full-year earnings forecast we disclosed on October 29 is our revised
forecast.
We forecast net sales of ¥127.5 billion, operating profit of ¥21.1 billion,
ordinary profit of ¥23.4 billion, profit attributable to owners of parent of¥16.6 billion, an EPS of ¥216.97 and an ROE of 7.4%.
We did not revise our per-share dividend forecast.

The numeric targets in the Third Medium-Term Management Plan, shown on
the right, all top our full-year forecasts.

29

Shareholder Returns
Policy◼ We aim to improve our corporate value by continually expanding our Kampo businessand through growth investments in the China business, and by building foundations.
Accordingly, we plan to implement stable dividends, taking into account factors such as
medium/long-term profit levels and cash flow conditions.
45 .0 %

100

80

28.4%

32.1%

35.9% 35.7%

31.9% 33.5%

35.6%

40 .0 %

31.9％ 29.5％

25.0%

30 .0 %

60

40

35 .0 %

25 .0 %

32

32

32

32

32

32

32

32

32

32

15 .0 %

20

From Oct. to Mar.

20 .0 %

From Apr. to Sept.

10 .0 %

30

32

32

32

32

32

32

32

32

32

0

5. 0%

Dividends payout ratio

0. 0%

2012

2013

2014

2015

2016

2017

2018

2019

forecast
2020 2021
2021

Note: The FY 2021 year-end dividend and payout ratio (forecast) are an estimate based on the assumption that thedividend resolution is approved at the 86th Ordinary General Meeting of Shareholders.
30■Shareholder Returns
We plan to continue pursuing the shareholder return policies we have been
implementing thus far. In addition to further expanding the Kampo businessin Japan, in particular, in the China business, we plan to carry out growthinvestments, mainly through M&A and in the development market.
Consequently, we aim to improve our corporate value and shareholder value
by fortifying business foundations.

30Inquires about these materials
Corporate Communications Dept.

Investor Relations Groupinvestor_madoguchi@mail.tsumura.co.jp
Cautionary items regarding forecasts⚫ The materials and information provided in this presentation contain so-called forward-looking statements.
Readers should be aware that the realization of these statements can be affected by a variety of risks anduncertainties and that actual results could differ significantly.
⚫ Changes in Japan or other foreign countries related to healthcare insurance systems or regulations set by
medical treatment authorities on drug prices or other aspects of healthcare or in interest and foreignexchange rates could negatively impact the Company’s performance or financial position.
⚫ In the unlikely event that sales of the Company’s core products currently on the market be halted or shouldsales substantially decline due to a defect, unforeseen side effect or some other factor, there could be a major
impact on the Company’s performance or financial position.
31

31

appendix

32

FY2021 Forecast (Compared Medium-term Management Plan）
Applying new accounting revenue recognition standards to

The 3 rd Medium-Term Management Plan (2019-2021)
FY2021
Numerical goals

FY2021
Numerical goals

FY2021
Forecast

Apply new accounting revenue
recognition standards

After Revision

127.5

Net Sales

Over 135.0
billion yen

Over 120.0
billion yen

billion yen

Operating
ProfitOver 19
billion yen

Over 19
billion yen

billion yen

ＲＯＥOver 6 %Over 6 %

7.4%

21.1

33

33

Drug-fostering program formulations andGrowing formulations
Looking at the recent structure of disease, the Company
has selected certain diseases in fields where medical
treatment needs are high that are difficult to treat with
Western drugs and that Kampo products havedemonstrated special efficacy for. The Company will
establish a base of scientific evidence related to treatingthese diseases with Kampo medicine.

A growth driver that aims to be listed in medical
treatment guidelines as a strategic formulation following
the five “drug fostering” program formulations throughthe establishment of scientific evidence (data on safety,
efficacy, etc.) in fields where satisfaction toward
treatment and the contribution of medicine are low.

Drug-fostering program
formulations

Growing formulations

Daikenchuto

Hochuekkito

Yokukansan

Shakuyakukanzoto

Rikkunshito

Bakumondoto

Goshajinkigan

Kamishoyosan

Hangeshashinto

Goreisan34

34

Diagram of Corporate Group Ties
as of the end of September 2021

Tsumura100％

Tsumura China Inc. established December 2016
56％
100％

100％

63％

Tianjin Tsumura
Pharmaceuticals Co., Ltd.*2
established in March 2018

Shanghai Tsumura
Pharmaceuticals Co., Ltd.
established in July 2001

Ping An Tsumura Inc. established June 2018
80％

51％

Ping An Tsumura
Pharma Inc.*1
equity acquisition in March
2020

97.65％
Shenzhen Tsumura
Medecine Co., Ltd.
established in March 1991
Procurement, selection and processing, andstorage of raw materials for crude drugs andcrude drug pieces (drug pieces)
Raw material crude drugs and crude drug
pieces (drug pieces)
Sales in China

100％

China MEDICO Corporation
equity acquisition in March
2020

Pingcun Zhongying(Hebei)Pharmaceuticals Ltd.
established in June 2019

Procurement, selection and processing,and storage of raw materials for crude
drugs and crude drug pieces (drugpieces)Raw material crude drugs and crude
drug pieces (drug pieces)
Sales in China

Cultivation, procurement,
selection and processing, andstorage of raw materials for
crude drugs

Manufacturing of Kampo
powdered extracts

Formulation platform*1: In August 2020, changed name to Ping An Tsumura
Pharma Inc. from Tianjin China Medico Technology
Co., Ltd.
*2: In April 2021, changed name to Tianjin Tsumura
Pharmaceuticals Co., Ltd. from Tsumura Shengshi

Pingcun (Shenzhen)
Medical Ltd.
established in April 2019Pharmaceutical sales and sales of foodproducts, including raw ginseng andYakushokudogen products

Kampo powdered extracts
Manufacturing oftraditional Chinese medical
products

Pharmaceuticals Co., Ltd.

Crude drug platform

Newly added subsidiaries in and after 201935

35

Scale of the Traditional Chinese Medicine Market in China
Traditional Chinese
medical products

Crude drug pieces

193.3 billion yuan(about ¥3 trillion)(Domestic production value)
about ¥3.5 billion*

FY 2019652 billion
yuan(about ¥10.2 trillion)

458.7 billion yuan(about ¥7.2 trillion)(Domestic production value)
about ¥179.5 billion*

Exchange rate: ¥15.7/yuan(as of the end of December 2019)

Source: National Bureau of Statistics of China, Ministry of Industry and Information Technology (MIIT)*Source: Production statistics, including for Kampo formulations, Japan Kampo Medicine Manufacturers Association

Terminology

Definition

Corresponding terminology for Kampo
medicine(Meanings are not always the same)

Chinese medicine

Medicines used in traditional Chinese medicine (traditional
Chinese medical products, drug pieces, etc.)

Kampo, crude drug pieces, crude drugs

Drug pieces

Same meaning as crude drug pieces, Use as a decoction

Crude drug pieces

Traditional Chinese
medical products

Drugs in the form of granules, pills or other shapes based on thetheories of traditional Chinese medicine(Manufacturing of classicalprescription Chinese medicine
complex formulations )(Drugs in the form of granules, pills or other shapes based on old
traditional Chinese medical books)

Kampo extract formulations, crude drug
production(Kampo extract formulations)36

36