First Quarter Business Resultsfor Fiscal 2023

August 4, 2023
Director, and CFO

Muneki Handa

1

agenda01

First Quarter Business Results for FY 2023

02

Initiatives and Progress for Domestic Business03

Initiatives and Progress for China Business

2

Here is the content for today’s presentation.
I will give an overview of the business results for the first quarter of fiscal
2023, discuss the initiatives and the progress we are making in ourdomestic business, and talk about the initiatives and the progress we aremaking in the China business.

2

Roadmap for the Realization of the TSUMURA VISION“Cho-WA” 2031
1st stage

2nd stage

3rd stage

FY2022-2024

FY2025-2027

FY2028-2031—Growth——Flowering——Germination—
Prescription Kampo
Products

Research

Development

Formulation
platform

Traditional Chinese
medical products business

Marketentry

Buildfoundations

Crude drug
platform

Crude drugs, drug pieces andYakushokudogen products

Sales
expansion

Research
platform

Smart factory
Sales

Labor
productivity

Personalized Kampo
treatments
Personalized Kampo
treatments
Scientific study of presymptomatic diseases

R&D

Chineseoperations

Over 50% physicians write 10
or more Kampo prescriptions

Standardization of Kampo
treatments

Traditional Chinese Medicine
Research Center

Establishment

Expand scope of
automation

Establish brands
Function
expansion

Shift to oversight/management

50% of physicians write basicprescriptions in all treatment areas

Socialimplementation

Establish brands
Lead industry development
Evidence-building for traditional
Chinese medical products

Realize smart factories

Sales per MR (Yen/MR)

Production

Physical labor productivity

Crude drugs

Personnel expenses per crude drug
arranging volume

Double productivity(vs. FY2021)
3This is a roadmap for the realization of the TSUMURA VISION “Cho-WA”
2031, which was announced in May 2022.
The first stage of the medium-term management plan, which will run
through fiscal 2024, is positioned as the stage for conducting upfront
investments and building a foundation as a step toward realizing the
TSUMURA VISION.

3

1Q Business Results for FY 2023
【Million yen】

1Q
FY 2022
results

1Q
FY 2023
results

Progress
Rate

YoY
1H planAmount（vs. 1H plan）

ChangeRatio to total sales

34,41737,036+2,618+7.6%

74,00050.0％

Domestic business

31,562

32,988+1,426+4.5%

65,90050.1％

China business

2,855

4,047

+1,191+41.7%

8,100

50.0％

6,353

4,684

(1,668)(26.3)%

9,500

49.3％

Domestic business

6,404

4,684

(1,719)(26.9)％

9,900

47.3％

China business

(50)

0

+51

－

(400)

－

8,665

5,989

(2,676)(30.9)%

9,800

61.1％

China business：
Crude Drug Platform 10.9%

6,632

4,332

(2,300)(34.7)%

6,800

63.7％

Domestic business：OTC Kampo etc. 2.3%

18.32

19.36

+1.04

－

－

－

Sales

Operating profit

Ordinary profit
Profitattributable to owners ofparentPL translation rate (CNY)

Domestic business：
Prescription Kampo
Products

86.0%

Domestic business：
Other prescription
pharmaceuticals 0.8%

*Forex rate at the time overseas subsidiaries’ PLs were incorporated; differs from the import rate for raw material crude drugs

4This is an overview of the business results in the first quarter of fiscal
2023.
Sales totaled ¥37.0 billion, a growth of 7.6% year-on-year.
The progress rate for sales versus our plan for the first half was 50.0%.
Sales broke down to ¥32.9 billion in sales in the domestic business and¥4.0 billion in sales in the China business.
The sales breakdown is as shown in the pie graph on the right.
Operating profit was ¥4.6 billion, a decrease of 26.3% versus the same
period, a year earlier. The progress rate for operating profit in contrast
with our plan for the first half was 49.3%.
Ordinary profit was ¥5.9 billion, a decline of 30.9% year-on-year. The
progress rate for ordinary profit in contrast with our plan for the first half
was 61.1%.

Meanwhile, profit attributable to owners of parent came to ¥4.3 billion, areduction of 34.7% year-on-year. The progress rate for profit attributableto owners of parent in contrast with our plan for the first half was 63.7%.

4

Key Points in Performance
・Net sales rose reflecting growth in the domestic and China businesses
・Profit declined chiefly due to impact from unrealized gains, a rise in the cost of procuring
crude drugs, and impact from a depreciation in the yen’s value
37,036

Net sales◼

Domestic business◼

China businessmillion yen

YoY

＋7.6％

Progress rate
(vs. 1H plan)

50.0％

Total sales for the 129 prescription Kampo products: 31,838 million yen, up 5.2% year-on-year
Total sales of the OTC Kampo formulations and other healthcare products: 837 million yen, down 7.2% year-on-year

Operating profit
Operating profit margin

Raw material crude drugs, drug pieces, Yakushokudogen products, etc. : 4,047 million yen, rose 41.7% year-on-year

4,684
12.6

million yen

YoY(26.3)％％

YoY(5.9)pt

Progress rate
(vs. 1H plan)

49.3％

◼

Cost-to-sales ratio: 54.9%, +7.1pt YoY: In the same period of the previous year, unrealized gains contracted due to the lockdown of Shanghai;
Unrealized gain is expected to rise in FY2023 owing to an increase in inventory; In addition, there is impact from crude drug procurement costs
and devaluation of the yen◼

SG&A ratio: 32.4%, (1.3)pt YoY: Sales growth offset growth investments, mainly in the DX transformation for Kampo value chain

Ordinary profit
◼

5,989

million yen

YoY(30.9)％

Foreign exchange gain primarily related to loans to overseas subsidiaries: 929 million yen, down 1,070
million yen year-on-year

Profit attributable toowners of parent

4,332

million yen

YoY(34.7)％

Progress rate
(vs. 1H plan)

61.1％*Foreign exchange gain not posted in plan
Progress rate
(vs. 1H plan)

63.7％
5

This slide depicts the key points of our performance.
In the domestic business, sales of the 129 prescription Kampo products came to ¥31.8 billion, agrowth of 5.2% versus the same period, a year earlier.
Under restricted shipment conditions, sales grew reflecting information provision activities owing
to e-promotions, which were partially restricted, and owing to continued prescriptions offormulations in the domain of cardiovascular diseases, and related to symptoms such as anxiety,insomnia and dizziness.
Sales of OTC Kampo products were ¥800 million, a decrease of 7.2% year-on-year, reflecting
impact from an ongoing shortage of formulations related to common cold-related symptoms.
From July, we launched operations for a new manufacturing line to strengthen our production
capacity for OTC Kampo products. We expect to gradually unwind our product shortage.
Sales in the China business totaled ¥4.0 billion, a rise of 41.7% in comparison with the same
period, a year earlier. This reflect an increase in sales of raw material crude drugs in the crude
drug platform business.
The cost-to-sales ratio was 54.9%, an improvement of 7.1pt year-on-year.
As factors triggering changes in performance, we posted an increase in unrealized gains, a risein the procurement cost for crude drugs, a depreciation in the yen’s value versus major
currencies, and furthermore there was impact from soaring energy and raw material expenses.
I will explain this in detail later on.
The SG&A ratio was 32.4%, a decline of 1.3pt year-on-year.
The increase in sales absorbed the rise in outlays due to growth investments, mainly for thedigital transformation of the Kampo value chain.
Operating profit totaled ¥4.6 billion, a decline of 26.3% versus the same period, a year earlier.
Under non-operating income, we posted a foreign exchange gain of ¥900 million, related to loans
to overseas subsidiaries. Accordingly, ordinary profit came to ¥5.9 billion, putting theachievement rate for ordinary profit slightly higher than where we planned to be at the end of thefirst quarter in our first half plan.
Extrapolating from the above, profit attributable to owners of parent totaled ¥4.3 billion, a fall of
34.7% year-on-year.

5Factors Triggering Changes in Operating Profit (YoY)(Million yen)

(Million yen)
Sales increase+957

Domestic business+957(1,986)+168

Cost of sales increase
Impact of
unrealized
gains(1,986)

Domestic business: Unit sales price (of which NHI price revision
impact was +395)(308)

Domestic business: Raw material crude drug cost (of which(332)

impact of unrealized gains was (1,278))

4,684

6,353

Rise inexpensesForeign
1Q FY 2023
exchange
Operating profit
impact+554(1,709)Domestic business: Raw material expenses(262)

Domestic business: Processing expense, etc. (of which energy
expense was (297); One-off expense at Tianjin Plant (277))(474)

China business: Increase in crude drug PF sales(95)

Rise in expenses

1Q FY 2022
Cost of sales
Operating profit Sales increase
increase+789

China business(308)

R&D expense(71)

Salary allowance(71)

Sales promotion expense+14

Depreciation（Of which, decrease in temporary expenses at the Tianjin Plant＋251）+246

Other（Of which, system introduction expenses etc(185) ,activities expenses(127)）(426)

Foreign exchange (yen depreciation) impact

(332)

6

This slide outlies factors that triggered changes in operating profit. I will only explain the key
points.
Operating profit was ¥4.6 billion, a decline of ¥1.6 billion year-on-year.
There was a positive impact from sales growth of ¥900 million.
This breaks down to a positive impact from sales growth in the domestic business of ¥700
million and a positive impact from sales growth in the China business of ¥100 million.
There was a negative impact of ¥1.9 billion due to an increase in cost of sales.
There was an improvement of ¥500 million reflecting a fluctuation in the unit sales price,including positive impact from the NHI drug price revisions. However, a rise in procurement
cost for crude drugs led to a negative impact of ¥1.7 billion, soaring raw material costs which
triggered a negative impact of ¥200 million, and an increase in process expense which
resulted in a negative impact of ¥400 million.
The ¥1.7 billion impact due to an increase in crude drug procurement cost included an impactof ¥1.2 billion reflecting one-off unrealized gains.
I will explain this later.
In addition, processing expense including a ¥200 million rise in energy expense as well as aone-off expense of ¥200 million at the Tianjin Plant.
We are conducting process validation ahead of the start of shipments at the Tianjin Plant.
The items that are manufactured are posted as inventory assets. The fixed costs related tothe idle period for carrying out process validation are posted as cost of sales.
There was a negative impact of ¥300 million in tandem with an increase in expenses.
This was primarily attributable to a rise in system-related outlays for the digital transformationof the Kampo value chain.
The impact from foreign exchange translations was a negative ¥300 million.
There was impact from a rise in the import cost of crude drugs mainly due to a depreciation in
the value of the yen.

6

Crude Drug Procurement Cost: Impact of Unrealized GainsThe one-off increase in unrealized gains owing primarily to the handling of alift on restricted shipments is expected to head toward a decline in and after
2Q
Inventory rose owing to an
expansion in production ahead ofthe lift of restricted shipments

Trends in unrealized gains

9billion yen

Decline in inventory
due to the lockdownof Shanghai

Increase(Deterioration in
cost-to-sales)

1Q
FY 20222Q
FY2022

Decrease

3Q
FY 2022

4Q
FY 2022

1Q
FY 2023(Improvement incost-to-sales)(3) billion yen

7This slide outlines the impact of unrealized gains to crude drug
procurement costs.
In the first quarter of fiscal 2022, given the brisk sales in the domestic
business, and the suspension of operations at the Shanghai Plant for
approximately 2 months due to the lockdown of Shanghai, inventory
assets substantially declined.
Consequently, unrealized gains, which are internal profit including
inventory, declined. Unrealized gains impacted the direction of
improvement for the cost-to-sales.
Meanwhile, in the first quarter of fiscal 2023, as a result of a rise ininventory reflecting a planned product hikes ahead of the lifting of
shipment restrictions, there was an one-off rise in unrealized gains, which
impacted the direction of deterioration in the cost-to-sales.
This rise in unrealized gains was an one-off event. We anticipate they will
decline in and after the second quarter in tandem with the lifting of
shipment restrictions.

7Raw Material & Energy Expense Trends（billion yen）

25

Raw material expense

Raw material expense

Energy expense

・It's been risen from FY2022 due to theeffects of inflation and the depreciation of theyen, and will be expected to be nearly flat after
the 2Q of FY2023

20

15

10

Energy expense
・Sharp rise started from FY 2022, andpeaked in 3Q FY 2022

5

0

1Q
FY 2021

2Q

3Q

4Q

1Q
FY 2022

2Q

3Q

4Q

1Q
FY 2023

・Level in 2Q FY 2023 expected to be on parwith the level in 1Q FY 2023

8This slide depicts raw material and energy expense trends.
Raw materials are the crude drug used to manufacture Kampo products
but also include diluting agents and packaging materials. Purchasing
expense is rising from fiscal 2022 due to impact from inflation and yen
depreciation.
This reflect initiatives, including the creating multiple suppliers while
continuing to pay close attention to market trends. We forecast raw
material expenses will likely trend flat in and after the second quarter.
Meanwhile, energy expenses rose sharply from fiscal 2022. It is ourrecognition that energy expenses peaked out in the second half of fiscal
2022.
In and after the second quarter of fiscal 2023, we anticipate transactions
will be conducted at stable prices. We anticipate a contraction in theimpact to cost-to-sales.

8Financial Condition/Cash Flow Position（Million yen）

FY 2022（March 2023）

FY 2023
1Q

Change8,623

Current assets

268,320

272,369

4,048

Non-current assets

128,492

133,067

4,574

124,566

126,345

1,779

Current liabilities

47,20549,402

2,197

Non-current liabilities

77,361

76,943(418)

272,246

279,091

6,844

63.5％

63.2%

(0.3)pt

Total liabilities

Total net assets

Equity ratio

Of which,
Exchange rate

101,726

107,501

5,774

1,306

Merchandise and finishedgoods

11,257

12,6591,402

83Work in process

14,43017,064

2,633

66

Raw materials andsupplies

76,03877,777

1,738

1,156

Inventories

Financing activities

ChangeInvesting activities

1Q

(15)

Operating activities

FY 2023（Million yen）

Cash and cash equivalents at
beginning of period

FY 2022（March 2023）

(49)

+7

889

Cash and cash equivalents
at end of period

405,437(1)

Impact of exchange ratetranslations

396,813

Total assets

947

9This is our financial condition and cash flow position.
I will only explain the key points here.
Current assets increased ¥5.7 billion, primarily attributable to an increase
in inventory assets in tandem with a production hike ahead of the lifting of
shipment restrictions.
Non-current assets grew ¥4.5 billion, primarily attributable to impact from
capital investments in tandem with the construction of the Tianjin Plant
and system-related investments in tandem with reforms to the IT
infrastructure.
The equity ratio stood at 63.2%, a decline of 0.3pt.

Cash flow is shown in the waterfall graph to the right.

9agenda01

First Quarter Business Results for FY 2023

02

Initiatives and Progress for Domestic
Business

03

Initiatives and Progress for China Business

10

Secondly, I will explain the initiatives and the progress we have made in
the domestic business.

10Comparison with the Prescription Pharmaceutical Market
Growth rate recovered owing to the lifting of restricted shipment items (23 items)
in JuneStatus for lifting ofrestricted shipments

August 2022of restricted
All sales channels 9.6% Startshipments

June 5: 22 items (restrictions lifted)
June 30: 1 item (restriction lifted)(YoY/NHI drug price basis)

9.3%

5.4%

4.1%

Tsumura4.4%

Prescription
pharmaceuticalmarket

1.8%

4.3%
2.6%
0.7%

1.3%

FY 2022

7.1%

3.3%
3.3%

1Q

6.5%

1.3%
(0.1)%

2Q

3Q

4Q

1Q

FY 2023

April

May

June

1Q FY 2023

Copyright © 2023 IQVIA. Proprietarily compiled based on “JPM April 2021 – June 2023” Copying prohibited

11

This slide shows a comparison with the prescription pharmaceuticalmarket.
In all sales channels to hospitals and general clinics, the growth rateyear-on-year on a NHI drug price basis outpaced the market.
Sales of prescription products at Tsumura trended above the market up
to the second quarter in fiscal 2022. The growth rate was the on a parwith the market from the third quarter of fiscal 2022 onward owing to theimplementation of restricted shipments from the end of August 2022
onward.
The graph on the right depicts a break down by month in the first quarterof fiscal 2023.
In the month of June 2023, the growth rate topped the market owing to
the lifting of shipment restrictions.

11

Sales of Restricted Shipment Items
・Sales of common-cold formulations declined in the winter months due to the start of
shipment restrictions in and after the end of August 2022
・ Sales of restricted shipment items recovered from June owing to a lift on restricted
shipments(Million yen)

11,000

Increase in demandfor common-cold
formulations during
the summer season

50

Sales 45of restricted
shipment
items
40
Number of restricted
35
shipment
items

10,000Started restricted
shipments at the end of
August 2022

9,000

30

28

8,000

April 2023: Lift 25
restrictions on 4
items
June 2023: Lift20
restrictions on 23
items

28
23

7,000

15

10restriction on
Lift
all items at the5
end of July 2023

6,000

1
5,000

0
1Q
2022年度FY 2022

2Q

3Q

4Q

1Q

2Q

2023年度FY 2023
12

Here are sales trends for restricted shipment items.
Restrictions were placed on shipments, including for antipyretic analgesic
formulations due to the spread of the Omicron variant of COVID-19 from
July 2022. Owing to this impact, restrictions were also placed on
shipments of 28 Kampo items, including common-cold formulations suchas Kakkonto and Bakumondoto.
In light of this, in and after the third quarter, the winter months when
demand increases every year, we were not able to respond all demand.
As a result, sales of the restricted shipment items declined.
In trends for restricted shipment items, shipment restrictions for all items
were lifted at the end of July 2023.
Accompanying this, sales of items for which shipments were restricted
are recovering.

12

Sales of Drug-fostering Program Formulations/Growing
Formulations（Million yen）
Net sales Product No./formulation
Ranking name

FY 2022 1Q

FY 2023 １Q

YoY

100 Daikenchuto

2,505

2,515

+9

+0.4%

2

54 Yokukansan

1,933

1,940

+6

＋0.4%

4

43 Rikkunshito

1,860

1,861

+1

+0.1%

9

107 Goshajinkigan

932

995

+62

+6.7%

23

14 Hangeshashinto

359

370

+11

+3.2%

Total sales for drug-fostering program formulations

7,591

7,683

+92

+1.2%

41 Hochuekkito

1,881

1,931

+49

+2.6%

5

17 Goreisan

1,542

1,801

+259

+16.8%

6

24 Kamishoyosan

1,296

1,305

+9

+0.7%

17

137 Kamikihito

501

590

+88

+17.7%

18

108 Ninjin’yoeito

507

561

+54

+10.6%

Drug-fostering program
formulations

1

Growing formulations

3

Total sales for growing formulations

5,730

6,191

+461

+8.0%

Total sales for 119 formulations other than drugfostering program and growing formulations

16,956

17,964+1,007+5.9%

Total sales for 129 prescription Kampo products

30,277

31,838+1,560+5.2%

Ratio to total sales
Drug-fostering
programformulations

24%
129
prescription
119 formulations
other than drugfostering programand growing
formulations

Growing
formulations

20%

56%

*Restricted shipments of Goshajinkigan to April 2, 2023

13

This slide covers sales for prescription Kampo products and sales for drug-fostering
program and growing formulations.
Sales for the 129 prescription Kampo products totaled ¥31.8 billion yen, a riseof 5.2% year-on-year.
In the drug-fostering program formulations, sales rose 1.2% year-on-year reflecting thepartial restriction of promotions during the restricted shipment period.
Sales of growing formulations increased 8.0% year-on-year owing to the continued
growth of Goreisan, Kamikihito and Ninjin’yoeito.
Sales of the following formulations increased. Goreisan is mainly prescribed to treat
cardiovascular diseases, headaches and dizziness, and Kamikihito is used in thetreatment of anxiety and insomnia. Ninjin’yoeito is prescribed to address the loss ofappetite in elderly patients that are prefrail.
Sales for the 119 formulations other than drug-fostering program and growing
formulations were ¥17.9 billion, an improvement of 5.9% year-on-year.
Sales for common-cold formulations are growing in tandem with the lifting of shipment
restrictions.

13

Status of Information Provision Activities after the Lift of Shipment
Restrictions
Partial restrictions, including Web video streaming, after the implementation of shipment
restrictions, and resumption of activities after the lifting of shipment restrictions
Trends of the number of cases of detailing impactMR
activities

Web video
streaming

Web lectures

Partial restriction on
Web video
streaming

e-promotion

Information provision
activities returning to priorlevels owing to lifting of
shipment restrictions
MR activities

Apr
4月

May
5月

Jun
6月

Jul
7月

Aug
8月

Sep
9月

Oct
10月

Nov
11月

Dec
12月

2022
2022年
＊Number of cases of detailing impact: Cases of information perception from each channel, including MR activities and the Internet＊e-promotion: Information provision, including WEB lectures and video streaming＊MR activities: Information provision via MRs + in-person lectures

Jan
1月

Feb
2月

Mar
3月

Apr
4月

May
5月

Jun
6月

2023
2023年

MR activities trending
toward recovery as
COVID-19 downgraded toa Class 5 common
infection disease

Intage Healthcare Survey “Impact Track”

14

In this slide we will discuss the status of information provision activities
after the lifting of shipment restrictions.
This graph shows trends of the number of cases of detailing impact,which is the number of cases of information perception by physicians
owing to MR activities (green) and e-promotions (yellow).
After the implementation of shipment restrictions, restrictions were also
partially placed on Web video streaming for e-promotions. This triggereda decline in detailing impact. However, information provision activities are
returning to their previous state along with the lifting of shipment
restrictions.
Consequently, the number of cases of detailing impact from April onward
is on the rise.
In addition, the number of interviews is trending toward recovery given
the downgrade of COVID-19 to a Class 5 common infection disease.
Going forward, we aim for the number of cases of detailing impact tosurpass levels in May and June. We are implementing aggressive
information provision activities.

14

Boost Production Capacity for Domestic Business: Launching the
Tianjin Plant (Tianjin Tsumura Pharmaceuticals Co., Ltd.)・Phase 1 construction is going through procedures tofrontload the timing of the start of shipments
・Phase 2 and Phase 3 construction is in progress as planned

Phase
2

Phase
1

Production capacity for Kampo
powdered extract (intermediate product) torise about 35% owing to full-fledged
operations from Phase 1 to Phase 3

Phase 1 construction
Phase
3・Kampo powdered extract production facilities,
warehouse, utilities, etc.
・Investment: approx. 15.0 billion yen
・Scheduled to start shipments in FY 2023

Phase 2 construction

・Kampo powdered extract production facilities
・Investment: approx. 8.5 billion yen
・Complete construction: January 2024 (tentative)

Phase 3 construction

・Kampo powdered extract production facilities, quality
control functions, etc.
・Investment: approx. 14.0 billion yen
・Complete construction: March 2025 (tentative)

Site area of the Tianjin Plant: approx. 60,000㎡
15This slide showcases the progress being made in the launch of the
Tianjin Plant for the purpose of strengthening production capacity.
The Tianjin Plant will manufacture Kampo powdered extract, anintermediate product, for our domestic business. Construction of thisplant will take place in three phases.
Construction of Phase 1 has already been completed. Shipments arescheduled to commence in fiscal 2023. Taking into account demand
trends for growth Kampo formulations, we are moving forward withprocedures with relevant parties so as to frontload the timing for the startof shipments as soon as possible.
In addition, we have already embarked on Phase 2 and 3. Construction
for Phase 2 is scheduled to be completed in January 2024 and Phase 3
construction is slated to be completed in March 2025.
Construction is progressing in line with plans.
Once Phases 1 to 3 are fully operational, this will boost the production
capacity of Kampo extract for the entire Tsumura by approximately 35%.
Moreover, we are working to build a production system that will address
an expansion in the Kampo market by successively strengthening otherprocesses.
15

agenda01

First Quarter Business Results for FY 2023

02

Initiatives and Progress for Domestic Business03

Initiatives and Progress for China Business16

Lastly, I will explain the initiatives and progress being made in the China
business.

16

Crude Drug Platform
Sales growth, mainly for mainstay raw material crude drugs, through quality-oriented sales activities
Raw material crude
drugs

41.7％
growth＊Drug pieces(Crude drug pieces)

1H plan81 billion yen

40billion yen

28
Sales for prescription-use andas an OTC to hospitals andpharmacies

Sales to traditional
Chinese medical products
companies as a raw
material

billionyen
Raw material crude drugs

Yakushokudogenproducts

Drug pieces(Crude drug pieces)
Yakushokudogenproducts

Sales of health food products togeneral consumers

1Q

1Q

FY2022

FY2023*Local current basis: 34.1% growth

17This slides shows initiatives to expand business in the crude drug
platform.

The crude drug platform mainly engages in the sales of raw material
crude drugs, drug pieces and Yakushokudogen products.
Sales, mainly of raw material crude drugs, totaled ¥4.0 billion, an
increase of 41.7% year-on-year, owing to the continued implementationof quality-oriented sales activities.
The scale of business operations in the crude drug platform is smoothly
expanding and progress is line with plans.

17Formulation Platform: July 31 Release

Background

Notification of the signing of an agreement related to the transfer of equity interest in
Shaanxi Unisplendour Life Care Pharmaceutical Co., Ltd. by Ping An Tsumura Inc.
•

Signed an agreement on the transfer of equity interest on April 13 (acquisition of total equity in Shaanxi
Unisplendour Life Care Pharmaceutical Co., Ltd (Unisplendour)•

After the completion of all procedures for this project (May 9, 2023), we were contacted by the government of
Baoji City, Shaanxi Province regarding differences in interpretation of national policy and related laws andregulations, etc. by the department in charge of the project at the Baoji municipal government.
Following this, we repeatedly held discussions with the department in charge of the project at the Baoji
municipality, and determined that conditions had not been satisfied for the continued implementation of thisproject.
We understand and respect the opinions of the Baoji municipal government and transferred equity in
Unisplendour.

••Equity transfer
partners： Shenzhen Hua Yu Tai Asset Management Co., Ltd., Baoji Investment (Group) Co., Ltd.

No. of shares sold： 100％ of the equity interest in Unisplendour

Sales price： 254,788 thousand RMB

Agreement date

： July 27, 2023

Earnings impact： Mild impact to FY 2023 consolidated earnings at Tsumura
18This slide outlines the details of our July 31 press release related to theformulation platform.
We signed an agreement on the transfer of equity interest on April 13,
2023. We completed all procedures for this project on May 9, 2023 andacquired 100% ownership in Shaanxi Unisplendour Life Care
Pharmaceutical Co., Ltd. (hereinafter Unisplendour).

Following this, we received contact that it was found that there was adifference in interpretation of national policy and related laws andregulations by the department in charge of the project at the Baoji
municipal government in Shaanxi Province.
We repeatedly held discussions with the department in charge of the
project at the Baoji municipal government,and determined that conditions
had not been satisfied for the continued implementation of this project.
We understand and respect the opinions of the Baoji municipal
government and transferred equity in Unisplendour.
This project will have minimal impact on our consolidated earnings infiscal 2023.

18

Vision for China BusinessStable procurement/supply of
raw material crude drugs

Contribute to the health of China’s citizens

Recuperation(Prevention)

Health & Medicine
business

Nutrition (food)
Exercise
Sleep

Traditional Chinese medical
products business

Raw material crude drugs
Traditional Chinese
medicine drug pieces

Gingseng
Three preventive measuresfor pre-symptomatic
diseasesYakushokudogen nutritional
ingredients

Health foods by function

Beverage by function

Treatment
Expand standard
Kampo treatments
Personalization oftreatments

Drug piece added-value service“Personalized medicine,” etc.
Pre-symptomatic
treatment(Prevention of preOTC versions of traditional
symptomatic
Chinese medicines
Prevent diseasediseases)Prevent recurrence
from becoming(Post-healing
seriousrecovery),
Apply for classical prescription(Prevent changes in
Chinese medicine
existing diseases),19

As I just explained regarding the situation with Unisplendour, we
completed the transfer of equity. It is our goal, as it has been thus far, to“contribute to the health of China’s citizens” and achieve “stableprocurement/supply of raw material crude drugs,” objectives which wehave been promoting as the goals of the China business.
We plan to grow into a traditional Chinese medical products andhealthcare company that deploys a major healthcare business, which
covers the domain of recuperation, prevention, and pre-symptomatic
treatment, and the traditional Chinese medical products business, whichspans the areas of treatment and pre-symptomatic treatment.

19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 avariety of risks and uncertainties 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 andforeign exchange 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 orshould sales 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.

20

20

Appendix

21

Curbing of the NHI Drug Price Revision Ratio
・We plan to continue to promote the “value” of our prescription Kampo products and make proposals to
related ministries in collaboration with industry groups
・In recent years, the reduction rate has been curtailed. In April 2023, a positive revision was implemented.
NHI drug price revision trends (％)

Tsumura+2.3

Prescription pharmaceuticals overall
2012

2014

2016

2018

2019

2020

( 0.4)

2021

2022
2023

0.0
( 0.9)( 1.8)( 3.8)(6.0)( 3.0)( 3.0)( 3.1)
(4.4)

(5.6)

(4.4)

(5.6)
(6.7)
(7.5)
22

22