ROHTO Well-being Report
Integrated Report2023

Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
Section

Providingwell-being

to people all over the world
through the provision of the value of health
Since our founding, “health” has been Rohto’s core value and we have provided many people with accessible“health” through our over-the-counter (OTC) drug products and skincare products.
By extending the healthy life expectancy for each consumer and improving their quality of life,
the economic activities of society as a whole will be revitalized.
Increasing social security costs will be curbed,
and a sustainable society of healthy longevity will be realized.
The purpose of our company “Rohto” is to lead all individuals and society surrounding us to“well-being” by delivering “health” to people around the world through our products and services.
We will continue to contribute to the well-being of people all over the world through our business activities andaim to realize a sustainable society in which people can live healthy and happy lives.

Well-being as envisioned by Rohto
A state of happiness that is fulfilled in all aspects, including physical health, mental
health, social health, and the health of the environment that surrounds them.

01

ROHTO Well-being Report 2023

ROHTO Well-being Report 2023

02

Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionCorporate Philosophy
Chapter 1, Article 2 of the Articles of Association

CONTENTS

For the people to enjoy their fulfilled and happy
life, the Company takes the greatest responsibility
to contribute to their mental and physical healthcontinuously, and to attain such responsibility, theCompany endeavors to operate its business froma long-term perspective and generate value.

Rohto’s Corporate
Identity

Being fully aware of its mission as a public organ,
the Company endeavors to cooperate with all
persons surrounding the Company to solve social
issues and share with them all benefits gained
through such efforts.

Rohto’s Vision

Sustainable Global Environment

03 Corporate Philosophy/CI/Vision

45 Environmental Policy/Responding to Climate

05 Message from the President

Change46 Initiatives to Achieve a Low-carbon Society
47 Initiatives for a Recycling-based Society
49 Initiatives for Water Resources Conservation/
Initiatives for Biodiversity Conservation

09 Rohto’s “Well-being Management”
11 Message from the CFO
13 Financial and Non-Financial Highlights

Value Creation Story

Coexistence with Society

15 At a Glance

Rohto’s NEVER SAY NEVER means that we willcontinue to challenge the future by focusing on
moving forward and taking on challenges, while
exceeding the frame of perceived wisdom tomake the world a healthier place.

Rohto’s Vision

Rohto Group Comprehensive
Management Vision 2030
-Connect for Well-being“Well-being” means that people feel energized both mentally and

17 Rohto’s Strengths by Numbers
19 History of Value Creation
21 Value Creation Process
23 Materiality

Realization of Well-being throughBusiness
24 Rohto Group Comprehensive Management

Vision 2030
25 Core Businesses
28 Rohto’s Future Growth Areas
31 Global Expansion
35 Manufacturing Capital Enhancement
37 Intellectual Capital Enhancement

Maximizing Human Capitalphysically, and they spend every day filled with laughter andhappiness throughout the various stages of their life.
Rohto strives to be innovative in the fields of medicine and skincare

39 Basic Approach to Human Resources
40 Initiatives for Maximizing Human Capital

50 Respect for Human Rights
51 Building a Sustainable Supply Chain
52 Quality and Safety Assurance
54 Initiatives for Society
56 As a Leading Eye Care Company

Corporate Governance
59 A Conversation Between the Chairman of theBoard and an Outside Director
64 Corporate Governance
71 Directors and Audit & Supervisory Board
Members

Data Section
73 Key Financial Data (11-Year Summary)
75 Non-Financial Data
76 Corporate Data
77 Global Network

products, as well as other business areas, so that people all over
the world can experience “Well-being” then together.
In order to fully realize this goal, we closely “connect” members to
those inside and outside of company. We also “connect”
organizations to each other.
We train our staff members in our chain of trust, so that we cancreate an organization with a sense of unity and then “connect”
them to further people’s “well-being”.

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ROHTO Well-being Report 2023

Editorial Policy
We are issuing Rohto Well-being Report 2023 in order to help a deeper
understanding of our initiatives to increase Rohto’s medium- to long-term
corporate value for the benefit of all our stakeholders, in particularshareholders and investors. It includes an overview of Rohto, our mediumto long-term strategy centered on Well-being, and ESG information.
Any information concerning finances, research and development, or othermatters that is not included in this report can be found on our website.
https://www.rohto.co.jp/

Reporting Period
From April 1, 2022 to March 31, 2023 (some information included also
pertains to outside this period)
Please Note
Any business, planning, or strategic information included in this report which
is not based on the Company’s past performance is a forecast made bymanagement using data that was readily available as of the date of thecreation of this report. Therefore, actual results may greatly differ from theforecasts due to various factors that may affect business performance. We
appreciate your understanding of this matter.

ROHTO Well-being Report 2023

04

Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionMessage from the President

Well-being management in
the pursuit of health andhappiness is the source of
the Company’s growth‘What business strategies are the pillarsof Rohto Pharmaceutical’s growth?’‘Where are you setting your numericaltargets for the future?’ These are thekinds of questions that I am often asked.
While, of course, the efforts of ouremployees are a major contributor,
whenever I receive these kinds ofquestions, I explain that the source of our
growth is our well-being management.
Our goal of ensuring that our stakeholders
are healthy and happy is our very
management strategy.
In my message for the ROHTO Wellbeing Report 2023, I will talk about
well-being management as we at Rohto
see it.

Masashi Sugimoto
President and Chief Operating Officer

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ROHTO Well-being Report 2023

Our mission is to contribute to the beauty and health of people around the world
When we reflect on the history of Rohto Pharmaceuticalsince the year 2000, we have been steadily expanding
our business areas, releasing Obagi, a pioneer infunctional cosmetics, in 2001 and venturing into thefunctional foods area in 2015.
We have progressed even further by embarking on thechallenge of prescription medicines in the areas ofregenerative medicine and ophthalmology and entering
the Contract Development and Manufacturing
Organization (CDMO) field. In the Rohto Group
Comprehensive Management Vision 2030 (“Management
Vision 2030”), which we formulated in 2019, we definedsix business areas, namely OTC drugs, skincare,functional foods, ophthalmology, regenerative medicine,and contract development and manufacturingorganization (CDMO).
The history of Rohto dates back 124 years, and theimage that many people who have known Rohto since
before 2000 may have is that of a company that
manufactures and sells gastrointestinal drugs such as“Pansiron,” eye drops such as “V Rohto” and topical
products such as “Mentholatum.” However, our businessportfolio has changed greatly in the past 20 years, andtoday, the skincare business accounts for some 60% of
total sales.
I am pleased to report that, in the year ended March
31, 2023, we recorded sales of 238.6 billion yen,operating income of 33.9 billion yen, and return on equity(ROE) of 13.6%. These figures were the highest they
have been in the past five years.
Where do the strengths of Rohto Pharmaceutical, with
its sustainable growth, lie? Those strengths are, without
doubt, the efforts of our employees, our research anddevelopment, and our business strategies. However, I
would like to stress that, above all else, it is the
positioning of well-being as the pillar of our managementthat is the source of our growth. We clearly expressed
this concept of well-being in the slogan for theManagement Vision 2030, “Connect for Well-being,” in2019. However, this well-being DNA is not somethingthat began in 2019. Indeed, it is something that has beenin place since the company’s founding.
Rohto’s mission is to contribute to the beauty andhealth of people around the world. This mission will notchange. When we formulated the Management Vision
2030, deriving from that mission, we adopted the word
“well-being” as a softer expression that verbalizes in acomprehensive way the concept of a state of happinessthat is fulfilled in all aspects, including mental health aswell as physical health, and, further, a socially healthy
state and the health of the environment that surrounds
them.
As we expand the scope of our business fields, wehave set out clearly that we will contribute to society bypositioning our respective businesses and connecting
them within that concept of well-being.

“Selecting” and “diversifying” businesses with well-being
Not only are our businesses connected by our mission ofwell-being, but we also place importance on the wellbeing of our employees. I firmly believe that one factor in
our growth is the fact that so many of our employees areenjoying their lives in good physical and mental healthand pressing forward with their work freely and in an
open and natural way. I view not only our businessportfolio but also the well-being of our employees as
crucial to our well-being management.
I joined Rohto in January 2019, and I was immediately
impressed by how many employees have such avidly
curious minds. I believe that, in the 124 years of theCompany’s history, a culture of employees taking onchallenges has taken firm root.
That curiosity and spirit of challenge has become thebasis for the expansion of our business domains since
2000. However, there is a risk that taking on challenges
as far as curiosity leads us could result in the overextension of our business. For this reason, I believe thatmy mission as President is to watch to ensure that suchchallenges are not straying from our pursuit of society’s
health and happiness and that they are in line with our
mission.

“Selection and concentration” is a common theme incorporate management, but here at Rohto, we value“selection and diversification.” We “select” the businessscope of well-being. On the other hand, when actuallyrolling out business, we have OTC drugs, skincare,prescription medicines, and regenerative medicine aswell. This is where we “diversify.”
To take a simple example, on November 29, 2022, weformed a business alliance with AHB Inc., a company
that operates Pet Plus pet shops throughout Japan withthe philosophy of “realizing a society of happiness andharmony between animals and humans,” and launched acompanion animal business.
While companion animals may be more conventionally
thought of in terms of the more familiar word “pet,” there
has been a significant change in their purpose, value, androle. The happiness of companion animals, which are an
indispensable presence in people’s lives, will also lead to
the well-being of people. In the same way as humans, we
believe that, for companion animals as well, everythingstems from their physical and mental health. We will
support the health of companion animals by adapting the
research and networks we have cultivated to date, whileoccasionally collaborating with partner companies. We

ROHTO Well-being Report 2023

06

Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionMessage from the President
also envisage the use of regenerative medicine
technologies and the development of skincare products.
Our decision to call this new business the companion
animal business also stems from our belief that viewing

animals as partners to humans brings them within ourbusiness scope of well-being.

Business domains of focus can change over time
As we expand into different fields within our businessscope of well-being, one major goal is that, instead ofeach business expanding independently, we connect ourbusinesses with each other to cover the scope of wellbeing. As well as growing the businesses that we embark
on, we will also develop breakthrough products that willconnect the individual businesses. I also believe that weneed to generate synergies among our businesses.
Although we defined six business domains in theManagement Vision 2030, the business domains of our
focus can change over time.

Our vision draws a picture of what the Company
should be like five years, or ten years, from now. Thes o c i a l e n v i ro n m e n t h a s u n d e r g o n e a d r a m a t i ctransformation since the COVID-19 pandemic. When
thinking about the future another five or ten years on, it isessential that we review our vision from time to time.
While our mission of contributing to the beauty and healthof people around the world must not change, I believethat it is only proper that we change our vision. If it issomething that will contribute to well-being, it is fine for
us to actively incorporate a new vision. The companion
animal business is part of that.
One new business domain may be wearable devices
that are able to measure vital signs. Besides, if noninvasive testing technologies advance, our test kit
business may also advance further. I have mentioned
these simply as possibilities, and the specifics are foreach of our young employees to consider. With wellbeing as the horizontal link, if our individual businesses
complement each other and synergies are generated
among them, our vision based on six business domains
may change in the future. If we can continue to pursue
the possibility, I believe that we will be able to accomplish
the sustainable growth of Rohto Pharmaceutical.

Measures for the well-being of employees
One area that we are emphasizing for the Company’s
growth is our personnel measures, including humanresources development. At the risk of repeating myself,
the well-being of our employees is essential to the growthof our business.
Personnel measures that we have launched include
External Challenge Work (secondary employment) andInternal Double Jobs (concurrent positions), based on aconcept devised by a volunteer group of employees in2016. External Challenge Work allows employees to gain
experiences that are difficult to access when working
exclusively for the Company by working outside of theCompany’s bounds, with the objective of connecting
those experiences to personal growth that will benefit theCompany’s business. The Internal Double Jobs program
allows employees to volunteer to work in another divisionof the Company within their working hours, to encouragethem to explore their own new possibilities by working
outside the bounds of their division. By promoting
multiple jobs both externally and within the Company, our

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ROHTO Well-being Report 2023

aim is to produce talented people who are able tocontribute to society in various ways.
Another scheme that has been in place for some timeis the “My Vision” form that employees are asked tocomplete once a year. We ask them to write down things
like what kind of work they hope to be doing in three
years’ time and what kind of career goals they have. The
completed My Vision forms are submitted directly tosenior management, without going through theemployees’ immediate superiors, and the executive
management team takes time to read them carefully. The
information they provide may then be put to use in actual
personnel movements and business strategies oforganization change.
The My Vision form gives employees the opportunity
to inform the Company what they are really thinking.
However, I would like to add that the purpose of the My
Vision forms is less about allowing the executive
management team to hear the employees’ thoughts andwishes, and more about encouraging employees in theirown, individual career growth. Rather, it could be
described as a once-a-year opportunity for them toreflect themselves.
In a similar vein of reflection and raising motivation, in
April 2022, we started conducting a “Well-being Points”
survey on a six-monthly basis. In this survey, employees
are asked to indicate, on a scale of 1 to 10, their viewson questions such as “Are you contributing to society?”,“Do you have a sense of growth?”, and “Are youcontributing to teamwork?” The factors that give a senseof reward in one’s work differ for everyone. However, bygiving all employees a chance to reflect, we want them torecognize any changes in their motivation themselves
and to raise that motivation alongside their colleagues
around them. Of course, such assessment also connects
to an assessment of management, so we executive
managers must constantly think about measures for the
improvement of well-being.
In October 2022, we launched our new personnel
system, Rohto WAY 2020. The objective of this new
system is for our personnel to not only improve theiroperational skills, but also to keep growing as people
who are better able to contribute to society. To further
encourage continued growth as “professional workers”
based on the concept of “autonomy and growth,” while

securing remuneration levels that are on a par with ourcompetitors, we have eliminated seniority-based
elements and designed a system in which employees are
remunerated in a way that is commensurate with thevalue of their work and their outcomes, regardless of age.
It is designed to encourage each individual employee togrow into autonomous human resources, with the aim ofrealizing the “co-development of individuals andcompany.”
Furthermore, we announced our “New Workstyle
Declaration” in June 2023. This is one of our major
policies for fiscal 2023. Working until late every night is
not going to raise the standard of individual employees’
well-being. As one means of improving this situation, we
have declared that we will aim for “zero overtime” as asymbolic goal.
What I want to emphasize is that eliminating overtime
is not the ends, but the means of raising the standard ofwell-being. It means leaving work at the regular time andusing time for the sake of one’s family or for selfdevelopment, such as some kind of training for one’s
own growth. It is my belief that raising the standard ofwell-being will help to strengthen our managementfoundations.

Oriented toward long-term stable growth
For the year ending March 31, 2024, we have forecast a
10.2% year on year increase in net sales to 263.0 billion
yen and a 9.0% increase in operating income to 37.0
billion yen. We also plan to increase our annual dividend
for the 20th consecutive year.
OTC drugs, skincare, and functional foods remain thecore of our business. Since the pandemic, the Japanese
populace has become more conscious of boosting theirimmune system in their everyday lives, and the selfmedication and self-care markets are expected to keep
growing for some time.
Against this market background, we believe that there
is ample room to achieve our fiscal 2023 targets.
Nevertheless, we are taking this opportunity to question
anew, within the company, our consciousness of carefullybuilding up these three businesses. Just like the saying“clouds always follow the sunshine,” in corporate
management, there is always the risk that arrogance inthe good times will lead us into pitfalls. I believe that our
only option is to look carefully at our customers and toaccomplish development without compromise right tothe end, steadfast in our intentions of contributing tocustomers’ well-being.
Meanwhile, in the area of prescription medicines, weare now at the stage of making upfront investments. This
involves development directed not at general consumers
but the medical profession, making it a completely
different business model from that of OTC drugs,
skincare, and functional foods. We are continuing ourdevelopment efforts with the goal of receiving approval ofprescription medicines within the next several years, andwe hope to build an earnings structure that is likely to
produce returns.
Rohto Pharmaceutical is oriented toward long-term
stable growth. We do not intend to set targets like
multiplying net sales by many times in certain years. I
hope to steer the Company’s management in the
direction of stable growth over the long term, steadily
year by year, by contributing to well-being.
Viewing our customers, business partners,
shareholders, employees, and the whole of the society
surrounding Rohto Pharmaceutical as our stakeholders,we will make our contributions to ensure that our
stakeholders remain healthy and happy.

ROHTO Well-being Report 2023

08

Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionShareholders andinvestors
We will take a long-term
perspective and strive to increase
our corporate value in a stable
and sustainable manner bybecoming a company that truly
contributes to society. We will pay
dividends that reflect businessperformance while aiming for adividend payout ratio of 25%.

Consumers andfuture generations

Rohto’s“well-being management”

We will contribute to mental
and physical health by offeringhigh-quality products andservices at fair prices.
We will also help improve
people’s well-being by sharing
knowledge and engaging in
health promotion activities.

Commitment tooutside of the Company, we will continue to take on

well-being

challenges hand in hand with our colleagues inside andoutside the Company, based on our business strengths
based on science, and a corporate culture where eachindividual is autonomous and continues to take onchallenges, aiming to create a social environment where
the Company and people all over the world can live long
lives while enjoying healthy, happy days with a smile.

We aim to contribute to the healthof more people by providing
solutions in various fields.
As a result, we will form multiple
strong business pillars and build
a stable business foundation.

Self-supporting
manufacturing ineach region
We value self-supporting manufacturing, which
encompasses all processes from development
to sales, in each region.
Pursuing the necessary perspective andcommitment to quality in each region andsociety will lead to the delivery of well-being topeople all over the world.
We believe that, by building a distinctive
management structure that allows each Group
company to run on its own, we can minimize
supply chain risks for the entire Group.

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ROHTO Well-being Report 2023

Profit-sharing policy

Enhancement ofhealth portfolio

Management from along-term perspective
As a company that is a “Public organof society,” we will continue tocontribute to society from a longterm perspective, rather than seeking
short-term profits, in order to return
the profits obtained through ourbusiness activities to all stakeholders
in a sustainable manner.

By increasing our sales steadily,
we will contribute to not only
the earnings growth of ourbusiness partners, but also theircreation of employment
opportunities.

stakeholders who co-create

In order to expand the circle of well-being both inside andand cultural qualities such as health, beauty, high quality

Business partners(suppliers/distributors)

Rohto’s employees
and their families

Countries and local
communities

We will reward our employees
and their families appropriately
through remuneration, benefits,
and training by creating jobs
based on steady growth in sales
and profits.
We will also support the physicaland mental health of ouremployees and their families
through the promotion of healthand productivity management.

We will pay taxes on profits
generated by our businessactivities and fulfill our social
responsibilities.
We will also contribute to therevitalization of local communities
and the creation of a society withwell-being through our businessactivities and social contribution
activities.

Environment(global society)We will work to reducegreenhouse gas emissions,conserve resources and theenvironment, build a resource
recycling-based society, andtake other environmental
considerations into account.

ROHTO Well-being Report 2023

10

Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionMessage from the CFO
Improvement of profitability

For the further leap in the growth of the
Rohto Group, we will simultaneously
achieve a sound financial structure, growthinvestments, and stable shareholder returns

Masaya Saito

Executive Vice President
Chief Financial Officer (CFO)

In fiscal 2022, although the movement restrictions of the
COVID-19 pandemic were eased, and social andeconomic activities started to return to normal, theprogression of global inflation, soaring prices of energy
and raw materials, and other factors led to a growing
tendency toward economizing in Japan. As such, wefaced a considerably severe business environment during
the year. Under our financial policy, we aim for operations
that maintain a balance between sound financial
structure, growth investments, and stable shareholder
returns. In fiscal 2022, we were able to achieve each ofthese goals while generating record high profits at each
income level, even in an unstable market environment.

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ROHTO Well-being Report 2023

Our ability to continue making growth investments in
new areas, while also steadily growing our corebusinesses, for the realization of the Rohto Group
Comprehensive Management Vision 2030 is, I believe,
one of our financial strengths. Engaging in growthinvestment areas, including the area of regenerative
medicine that we are currently pursuing, will further
enhance the value chain of the Group’s future products
and services, and their organic connection will create
major added value, leading in a significant way to thei m p ro v e m e n t o f w e l l - b e i n g i n s o c i e t y a n d t h eenhancement of our corporate value. For this reason, in
addition to consolidating the foundations of our corebusinesses of OTC drugs and skincare, allocating andpassing on the profits generated by those businesses ina properly balanced manner to investments in future
growth opportunities, R&D, human capital investment,
environmental responses, and shareholder returns willbe essential to the realization of future sustainablegrowth.
In addition, the importance of ESG management isincreasing year by year against the background ofgrowing expectations of corporate social responsibility
and requirements for the disclosure of non-financial
information. As well as conducting information
disclosures in response to external demands, we will
examine those areas where our disclosures andinitiatives are insufficient, and step up our responses inthose areas, including the establishment of targets in
non-financial areas for the realization of our corporate
purpose of leading all individuals and society
surrounding us to “well-being.” We will also formulate
and thoroughly enforce a Group tax policy to ensure that
our responses to tax affairs in the individual countries
and regions where we operate our businesses are
consistently fair and appropriate.
Going forward, I will pay careful attention to thestrengthening of cash flow management and themaintenance of a sound financial structure in the Group
as a whole. Further, taking non-financial value fully into
consideration as the officer in charge of ESG, I will strive
to realize the Rohto Group Comprehensive Management
Vision 2030 and the enhancement of corporate value.
Also, to ensure deeper stakeholder understanding of theGroup’s vision and strategies, I hope to further enhancedialogues with stakeholders taking advantage ofopportunities including financial and non-financial
disclosures and briefing sessions.

For the continued growth of our business, we are placing
importance on the expansion of demand (sales growthratio) and firm profitability to make such expansion
possible. As a result of ongoing structural reforms since2019, we have improved the ratio of operating income to
net sales through reductions in general, selling andadministrative costs resulting from marketing approach
reforms, the reduction of returned goods, productivity
improvements in Group plants, and the reduction of costof sales ratio resulting from reviews of the procurement of
raw materials and merchandise. The harsh situation of
soaring raw materials costs continues, but we willcontinue to pursue activities for the improvement of
profitability.

Sound financial structure
Securing a sound, solid financial foundation is also crucial
if we are to place efforts into aggressive growthinvestments. In readiness for increasingly unpredictable
future changes in the environment, the Rohto Groupsecured a high current ratio of 237% and high equity ratioof 67.6% at the end of fiscal 2022. Return-on-equity(ROE) is also increasing every year, reaching 13.6% in
fiscal 2022 for a five-year average of 11.4%.

Active growth investment
We continue to achieve stable growth and global
expansion in our existing businesses. Meanwhile, for new
businesses 10 to 20 years into the future, we areundertaking long-term investment actions as a way of
exploring knowledge. Further, for the sake of sustainablecorporate growth, we are firmly allocating investments to
R&D, as well as human capital, environmental responses,
and spending on facilities and equipment. While actively
carrying out these kinds of investments, we are
generating stable free cash flow through sufficient
operating cash flow.

Stable shareholder returns
Our basic policy on shareholder returns is to enhancethem in a stable manner through dividends with thetarget of around 25% payout ratio. In fiscal 2022, wereached record highs for net sales and at each income
level and raised our dividend for the 19th consecutive
year. We also plan to raise our dividend in fiscal 2023.
Moving forward, we will continue to place our utmost
efforts into the long-term enhancement of corporate
value through business growth.

Trends in Net Sales and Operating Income
Net Sales(millions of yen)

Operating Income (millions of yen)

240,000

40,000180,000

30,000120,000

20,00060,00010,000002003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (FY)ROE

Equity Ratio

(%)

(%)

100

20

15

11.4

10

11.7

12.7

13.6

75

65.1

64.4

2018

2019

68.8

64.8

67.6

2021

2022 (FY)2021

2022 (FY)

50

7.6

5

25

0

2018

2019

2020

2021

0

2022 (FY)2020

Free Cash Flow(millions of yen)

18,00012,000

6,000

0

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Trends in Dividend Per Share and Dividend Payout Ratio(yen)

Dividend per share

Dividend payout ratio

(%)

30.0

25.0
20.0

20.0

15.0
10.0

10.0

5.0
0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (FY)0

In January 2023, the Company conducted two-for-one stock split of its common stock. The objectives of thisstock split were the improvement of stock liquidity and expansion of the investor base by lowering the amountper investment unit. At the end of fiscal 2022, the number of shareholders increased by 2,400 from the end of theprevious fiscal year, primarily with individual shareholders, to 18,688. Our individual shareholders are valued
supporters who patronize our products. We will continue in our efforts to enhance long-term corporate value by
increasing our growth investments and continuing to develop and deliver products that will make our customers
happy.

ROHTO Well-being Report 2023

12

Value Creation
Story

Rohto’s
VisionRealization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionFinancial and Non-Financial Highlights
Consolidated Financial Highlights
Net Sales

Operating Income and Share of Net Sales

238.6

33.9

billion yen(billions of yen)(billions of yen)

238.6

250.0
200.0

188.3

183.5

181.2

11.3

23.0

22.9

12.3

12.7

2021

2022

0

(FY)

The recovery of consumer confidence, proposal of new products
which meet customers’ needs, and depreciation of the yen
contributed to significant sales growth, albeit the impact of COVID-19.

Profit Attributable to Owners of Parent andReturn on Equity

26.3(billions of yen)billion yen /

11.7

11.4

211

20.0
7.6

12.7

13.6

19.2

20

14.5

14.2

2018

2019

2020

2021

2022

0

As a result of a significant sales growth and efforts to efficiently utilize
selling, general and administrative expenses, the Company achieved
a significant increase in profit, despite a worsening cost of sales ratio
due to higher raw material prices.

2021

2018

2022

(FY)

0

* The Company implemented a stock split on January 1, 2023. The figures were
calculated on the assumption that the stock split was implemented at the beginningof fiscal 2018.

0

Non-Financial Highlights

3.0

10.0

2.0

HR

Scope 1 total

(FY)

0

1.0

2019/32020/32021/32022/302023/3PBR trended stably around 2.5x, and is around 3.5x lately. This isconsidered to be the result of ROE exceeding the cost of capital. We
will continuously aim to improve the return on capital.

(%)(billions of yen)

20.0

10.4

10.3

5.4

5.5

2015

2016

9.2

5.5

4.8

4.7

2017

2018

2019

6.7

6.9

5.9

6.7

7.3

7.2

2020

2021

2022

81
9.7

10.8

70

123

52

0

Despite the continuance of a harsh business environment due tovarious social situations, we have been able to stably maintain theequity ratio at a high level.

13

ROHTO Well-being Report 2023

2022

(FY)

We ensured that free cash flow always remained positive while still
investing in new projects and spending on facilities and equipment.

2018

2019

Smoking Rate

30

0

2021

(FY)

62

0

2020

2022

40

10

2019

2020

%

5.0

2018

2019

2.8

25

(FY)

2018

We are actively recruiting women. In addition, the ratio of women in
management positions remains high. We are promoting the creationof a pleasant workplace where employees can make the best of theirability regardless of gender.

10.0

2022

2021

22.8

(%)

81
54

0

HR

98

17.7

9.6

(FY)

(persons)

123

30.0

10

Internal Double Jobs

billion yen

31.1
27.0

20

External Challenge Work and Internal
External Challenge Work

(FY)

Ratio of Female Managers

21.1
9.9

Double Jobs

15.0

67.6

11.1

2022

(%)

Scope 2 total (market standard)

50

2021

2021

%

Although we consumed more energy than before due to increased
production and full-scale operation at a new plant, CO2 emissions
decreased due to the utilization of solar power generation and partial
conversion to carbon-free electricity.

HR

11.5

2020

2020

30.0

t/year

5.0

100

2019

2019

* Rohto Pharmaceutical Co., Ltd. only (non-consolidated)

30

17.7

2018

2018

We carried out advanced investment aimed at medium- to long-term
growth in the ophthalmology area and regenerative medicine.

15.0

%

64.8

2021

40

67.6

68.8

2020

20.0

Free Cash Flow

64.4

2019

(1,000 t)

Equity Ratio

65.1

6.8

3.0

13,120x (as of the end of March 2023)

8.7

7.9

7.0

6.0

4.0

We also posted a record amount of profit attributable to owners ofparent, with five-year average ROE risen to 11.4%.

75

19.0

9.0

(time)

10

2022

18

20

15

5

2020

14

22

Environment CO² Emissions (Scope 1 and 2)

2.5

2019

19.4

10

0

(FY)

11.0

3.5

97

2018

19.1

13

12.5

1.5
0

12.0

(%)

263

167

154

(billions of yen)

30

20

Price Book-value Ratio

ROE

(%)

We plan to realize an annual dividend of 24 yen for fiscal 2023. This
will be the 20th consecutive year that we have raised our dividend.

%Profit attributable to owners of parent

Dividend payout ratio

billion yen

29.1

10

13.6 3.55

30.0

Dividend per share

10

29.0
20.8

%

30

30

30.0

50.0
2020

(yen)

(%)

10.0

2019

11.0

%

Share of net sales

199.6

20.0

2018

22 19.0

33.9

100.0

10.0

Operating income

R&D Expenses

yen /

14.2

40.0

150.0

0

billion yen /Dividend per Share and Dividend Payout Ratio

2020

2021

20

49

2022

(FY)

We further expand our employees’ potential through their work in
multiple jobs.

7.7

2018

0.1

0.1

1.9

2.8

2019

2020

2021

2022

(FY)

We will continue to work toward our zero smoking rate goal.

ROHTO Well-being Report 2023

14

Rohto’s
VisionRealization of Well-being
through Business

Value Creation
Story

Maximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionAt a Glance
Fiscal 2022

Net Sales

Operating Income

238.6

33.9

billion yen

Net Sales by Business Segment

Eye Care Products
Business

7.2

48.1

Internal
Medicines
Business

26.5

billion yen

Others

2.3
Asia

70.7

Net Sales

Rohto andconsolidated
subsidiaries

Net Sales and Operating
Income by Region (billions of yen)(billions of yen)

OthersNumber of the Group Companies and Employees

0.2
10.3

Japan

46

Skincare Products
Business

156.6

12.2

7,176

employees* As of March 31, 2023

Other affiliates: 36 companies
Europe375 employees
8 companies
3 plants

Japan

Americas

2,784
15 companies
9 plants

employees

Asia

136.6
Net sales(outer circle)

3,500 employees
13 companies
5 plants

Operating income
21.1(inner circle)

Europecompanies

Number of
employees(consolidated)

0.9
0.7

471 employees
9 companies
3 plants

Americas

16.6* Amounts less than 0.1 billion yen are rounded down.
* The total amount of operating income includes an adjustment amount (0.5 billion yen) in addition to the amounts by region. The adjustment amount consists entirely of elimination ofinter-segment transactions.

46 employees

Other

1 company

1 plant

Eye care products

Skincare products

Japan

Asia

Eye drops, eyewash preparation, contactlenses, and contact lens care products are
manufactured and sold.

Dermal medicines, hemorrhoid remedies , andother medicines and functional cosmetics, lipbalms, sunscreens, hair care products, and othercosmetics are manufactured and sold.

Rohto operates a wide range of businesses
including eye care, internal medicines, food, andskincare products. Its subsidiaries market internal
medicines, eye drops, medical devices, andhemorrhoid remedies.

A wide range of products are marketed including
eye drops, sunscreens hair care products, andbasic skincare products including Hada Labo andDermacept. The marketing of supplements is
gradually expanded.

Net Sales

Net Sales
136.6(billions of yen)

105.2

112.2

115.8

115.6

(billions of yen)

47.4

2017

2018

2019

2020

70.7

121.4

2021

2022 (FY)

2017

51.7

53.0

2018

2019

48.1

2020

55.9

2021

2022 (FY)Internal Medicines Business

Other

Americas

EuropeGastrointestinal medicines, laxatives, allergy
medicines, kampo-yaku (Chinese herbal medicines),and other internal medicines, as well as supplements
and other foods are manufactured and sold.

In-vitro test kits and medical devices are
manufactured and sold, and cell-processing
business is operated.

Products including eye drops, OXY, Mentholatum
Ointment, lip balms, and other products aremarketed. Hydrox Laboratories, Inc. became asubsidiary in fall 2021, whose medical disinfectants
has significantly contributed to profit.

Deep series for topical anti-inflammatory
analgesics, the main brand, as well as skincare
products including HADALABO TOKYO, andcosmetics including Perfecta by Dax Cosmetics aremarketed. The sale of eye drops was also started.
Net Sales

Net Sales
16.6(billions of yen)(billions of yen)

12.2
10.2
8.7

9.3

9.1

2017

2018

2019

10.0

8.3

8.6

8.7

8.1

2017

2018

2019

2020

7.7

2020

2021

2022 (FY)2021

2022 (FY)For details, see p.25

15

ROHTO Well-being Report 2023

ROHTO Well-being Report 2023

16

Rohto’s
Vision

Rohto’s Strengths by Numbers

Brand power

Realization of Well-being
through Business1.0 billion yen or more
5.0 billion yen or more

3.0 billion yen or morethat delivers timeless attractivenessLong sellers

3
3
2
2
8
5

brands10 to
19 years

20 yearssince launchsince launchor more* Number of brands that have been continuously sold for more than 10 years since theirlaunch and have sales of more than 1 billion yen in fiscal 2022.

of reading the times and delivering appropriately
The sales, marketing, customer support, R&D, andproduction departments work together to create anenvironment conducive to capturing signs of ongoing change
to develop products and make proposals that meet theneeds of customers in a speedy and agile manner. We willcontinue to make new proposals in order to deliver wellbeing to everyone every day.

items
(FY2022)*Only national brand products are counted.
Limited edition products excluded.

Technological capabilities and R&D capabilities— Wide range of research fields represented by our six pillars —With our know-how and perfection accumulated over 124 years since our foundation, we areconducting research and development that pursues not only functionality and effectiveness, but also
comfort of use for a long time to come. Our R&D activities cover a wide range of fields, including
gastrointestinal medicines, eye drops, hay fever treatments, dermal medicines, kampo-yaku (Chinese
herbal medicine), hair regrowth agents, in vitro diagnostics, contact lenses, skin care, odor care,functional foods, foods, agriculture, livestock breeding, and regenerative medicine. The exchange of
researchers internally in a wide range of fields creates synergy across disciplines, and joint research
externally in a wide range of fields, both in industry and academia, makes new discoveries andapplications possible. We aim for further evolution.

(FY2022)

category top

Eyecare-related products account for 20.2% of our sales, and skincare-related
products account for 65.6%. In both these areas, we enjoy overwhelming support
from customers. In Japan, our OTC eye drops have maintained a high market
share for many years. In fiscal 2022, we achieved a 43%*1 share of the market
and held the top position in this category. Our skincare products increased its
market share rapidly and became the No. 1 manufacturer*2 in fiscal 2022 at last.
With our development capabilities and customer perspective, we will strive to win
great support in other categories that we enter in the years ahead.

stRohto Pharmaceutical

PFIZER
Kowa Company

Senju Pharmaceutical

F. HOFFMANN LA

NOVARTISROCHEABBVIEBRISTOL-MYERS
SQUIBB
UNIVERSITY OF
CALIFORNIA

17

ROHTO Well-being Report 2023

Sales of Skincare Products by Manufacturer(FY2022)(x 1,000 units)
36,64230,768of history andtechnology

30,000

Sales of OTC
Eye Drops by
Manufacturer

were ranked first in overall strength ofophthalmological medicine-related technology
patents in the ranking where quality andquantity of patents are comprehensively taken
into consideration.
We will continue to contribute to the wellbeing of society by linking our advanced
research to the development of novel andhighly unique products.
* Source: Research by Patent Result Co., Ltd. Patents issued between
January 1993 and September 9, 2022 are included. The spelling of
the companies’ names is based on the names published by Patent
Result Co., Ltd.

Rohto
Pharmaceutical

25,90826,721countries

43%

Improvements and findings

2019

in salesBasic skincare
products*2
in sales

20,000

0

*1

Rohto
Pharmaceutical

10,000cases

Sales network inmore thanOTC eye drops

40,000years

Data
SectionWe share customer feedback with all of our members
as “Happy Surprise” testimonials. We are grateful forand encouraged by the voices of our customers, and incorporate them into
product improvements and the planning of the next products. It all started in 1952
with a questionnaire postcard called User’s Voice survey card enclosed with Rohto
Peni-my Eye Drops. Since then, for more than 70 years, we have treasured thefeedback we have received from our customers in various forms, including
postcards, phone calls, and emails.

cases

Aim forCorporate
GovernancecustomerperspectiveIntellectual Property
Santen Pharmaceutical

Coexistencewith Society

ThoroughHappy surprise

Sales of OTC Eye Drops by Manufacturer(FY2022)

Comprehensive
strength ofophthalmological backed by advanced technological capabilities
In the ophthalmological medicine field, we
medicine patents
Ranking of Comprehensive Strength of Ophthalmological
Medicine-Related Technology Patents*

Sustainable Global
Environment

We are aggressively expanding overseas in cooperation with our subsidiary, The
Mentholatum Company. Rohto Group products are currently sold in over 110
countries, and the ratio of consolidated overseas sales to total sales is as high as
approximately 40%. Our businesses in East and Southeast Asia in particular are
driving our growth, and following Europe, North America, and Asia, we have now
established local subsidiaries in emerging countries in regions such as South Americaand Africa to promote our business. This worldwide network is one of our strengths.
In every region, we need to develop our business in accordance with not only theclimate, customs, and preferences of each country, but also the regulations of eachcountry. While staying true to the important aspects of our brands and products, we
engage in our business in each region with an emphasis on our self-supporting
manufacturing, from development to sales, and human resource development.

Speed capabilities

New
products

Maximizing
Human Capital

Global — Localized development —Long seller brands*

In the healthcare category, we have a broad lineup of
products, including many brands that have been loved bycustomers for a long time. Since the launch of the V
Rohto in 1964, we have delivered many products fromthe V Rohto series and they are still loved by many
people today. Our long-selling and hit products, fromdrugs to skincare, such as Pansiron, Obagi, and Hada
Labo, continue to grow as they contribute to the healthpromotion of consumers.

Value Creation
Story

2020

2021

2022

(FY)

*1 Intage SRI+ eye drops
Estimated sales volume from April 2022 to March
2023*2 Intage SRI+ total cosmetics (5 categories)
Estimated sales volume from April 2022 to March
2023

High quality achieved by improvements
In 2005, we launched the “Kaisen-tai” to improve QCD (Quality, Cost, Deliverytime) and to maintain and continue the improvement cycle. At Rohto, we view
“improvements” born of awareness by our people as the true seeds ofevolution, and with the basic stance of “try first and try to change things” that
leads to QCD improvement, each and every one of us is working withdetermination to achieve both quality improvement and cost reduction. This has
led to the development of human resources that realize high quality.

(FY2022)
ROHTO Well-being Report 2023

18

Rohto’s
VisionRealization of Well-being
through Business

Value Creation
Story

Maximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionHistory of Value Creation
Rohto was founded at the beginning of the Meiji era with the desire to protect the health of people suffering from stomach
diseases. Since then, with health as our core value, we have responded to the needs of the times and society, accumulated
wisdom and research, and delivered health to people around the world through valuable products and services. We willcontinue to tackle problems and take on challenges through innovation.

(billions of yen)

1890s

1900s

1980s

1990s

2000s

2010s

Present80.0

Prevalence of eyediseases
Launch of Rohto
Eye Drops due to
growing demand

Japan’s first OTC
pregnancy test kit
to protect mothers
and babies

The Mentholatum
Company became
our subsidiary
Full-scale entry into
the skincare field

Launched our brandfor contact lenses
Shift from eye drops
to eye care

Turning
pharmaceuticalconcepts into
cosmetics
Birth of functional
cosmetics

Entering the
kampo-yaku(Chinese herbal
medicine) market
with ease ofunderstanding andaccessibility

Concentrating
cutting-edge
technology
Taking on thechallenge ofcounseling sales ofcosmetics

Self-care starts witheveryday diet
Launch of foods
with functional
claimsTowards a new eraof eye care
High-functioning
eye drops designed
for overused eyesof modern people

At the time, the number ofpeople suffering from stomach
diseases was increasing year by
year in Japan due to changes in
dietary habits, and this was
becoming a social issue. The
founder of the Company, who
was convinced that all diseases
start from the stomach, launched
Ikatsu gastrointestinal medicine.
This led to the launch of Siron
and Pansiron, as well.

After the Russo-Japanese War,th e e y e d i s e a s e tr a ch o ma
became prevalent due to thedeterioration of the sanitaryenvironment, causing thenumber of people losing theireyesight to increase. Demand foreye drops increased, leading us
to launch Rohto Eye Drops,
which marked the beginning of
our eye drops. Thereafter, we
continued to develop innovative
bottles and respond to newneeds.

In the past, pregnancy tests
could only be done at hospitals.
Rohto recognized the need for
self-checking in order to protect
mothers and babies in the earlystages of pregnancy, and in
1985, we began marketing
Checker, a product introduced
from overseas. In 1992, it was
first approved as an OTC drug inJapan, and the following year,
we launched our self-developed
product, Dotest hCG.

We acquired The Mentholatum
Company and made a full-scale
entry into the skincare market,
starting with dermatological
medicines and lip balms.
We developed and expanded our
lineup of various products,
including sun care, acne care,and hand care, to help solve ourcustomers’ skin problems.

The popularity of contact lenses
began to rapidly rise. Fromselling as a set with lenses atstores attached to ophthalmology
clinics, which was themainstream at the time, we
shifted to offering care productsof customers’ own choice atdrugstores. We also set up a
dedicated call center so that
customers could makepurchases with peace of mind.

We m o v e d f r o m a n e r a o fprotecting skin with skincare
products to an era of pursuing
beauty ourselves.
We pursued functions andevidence with Obagi and Hada
Labo, which focus on thefundamentals of skin, andproposed new value that
overturns conventional thinking.

Without being bound by theconventional framework of
kampo-yaku, we made kampoyaku more accessible througheasy-to-understand packaging
and comfort of use. We also
launched a pouch type that canbe tried for one week.

We concentrated our cuttingedge technology and started
counseling sales of cosmetics at
department stores. We listen
carefully to our customers andoffer innovative skincare
products that incorporate thelatest technology.

As a leading manufacturer of
OTC eye care products, welaunched Rohto V5, a food withfunctional claims, which issupplement for eyes.
We are also taking on the foodbusiness, as we see food as animportant thing that can lead topre-symptomatic and preventivecare.

We are moving into an era
where all kinds of environmental
changes, including the shift to adigital society, put a lot of strainon our eyes. We launched highfunctioning eye drops that takeaccumulated fatigue in the eyes
into consideration.
We are continuing to expand thepossibilities of eye drops andpursue the “best drop.”

IkatsuRohto Eye Drops

Checker

AD Cream

Rohto C Cube

Obagi

Wakansenepisteme

Rohto V5

V Rohto Premium series

Dotest hCG

SUNPLAY

Skincare products

100.0“All diseases start from thestomach”
Founded withgastrointestinal medicines
to help the increasing
number of people sufferingfrom stomach diseases

Other

120.0

40.0

V Rohto Premium Eye
Oral Tablet

Hada Labo

20.0

2016 V Rohto Premium
2018 DEOCO

Main products launched
1899 Ikatsu

1909 Rohto Eye Drops
1962 Pansiron

1985 Checker

1990 AD Cream

2021 Dotest motile sperm

1995 Rohto C Cube

2001 Obagi

2006 Wakansen

1996 Dotest LH

2003 Mediquick

2006 OXY

2008 Skin Aqua2013 De Ou

2007 Senobic

2009 Melano CC

2014 CareCera

2007 50 Megumi

2009 episteme

2015 Rohto V5

1975 Mentholatum

1987 Rohto Alguard

1993 Dotest hCG

1998 Acnes

2004 Hada Labo

1979 New V Rohto

1987 Rohto Zi

1993 SUNPLAY

1998 Hand Veil

2004 Dry Aidconcentration test kit
Dotest COV19
2022 V Rohto Premium Eye
Oral Tablet

0

Plant

1959 Opened Osaka Plant

M&A

2002 MG PHARMA Inc.

M&A

1988 The Mentholatum Company (U.S.A.)

Lab.

2006 Opened Research Village Kyoto

Plant

1998 Opened Vietnam Plant

M&A

2007 Meguro Kako Inc.
(currently Qualitech Pharma Co., Ltd.)

Plant

1999 Opened Ueno Plant

New business
M&A
New business2013 Started regenerative medicine research

M&A

2020 Nitten Pharmaceutical Co., Ltd.
(currently Rohto Nitten Co., Ltd.)

M&A

2021 Amato Pharmaceutical Products, Ltd.

M&A

2021 Olympus RMS Corporation(currently Interstem Co., Ltd.)

Plant

2022 Opened new Ueno Plant building

2015 Mayado Pharmaceutical Co., Ltd.
2019 Entered the medical ophthalmology area

New business

19

ROHTO Well-being Report 2023

2022 Entered the companion animal business domain

ROHTO Well-being Report 2023

20

Internal medicine and food products

Eye care products

60.0

Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionValue Creation Process
Since its foundation, Rohto has delivered health to people all over the world through its business activities and has
acquired many assets, as well as business and cultural strengths. Rohto is now leveraging these assets andstrengths to develop, manufacture, and market a wide range of products and services, contributing to well-beingaround the world. As a public organ of society, we also return the profits we generate to our stakeholders andInput

actively invest in the future to further strengthen our assets and strengths to create new value. Through this value
creation process, we aim to realize sustainable growth and a society with well-being.

Materiality
Strengthsof Rohto

Human capital
Number of employees

OutputRealization ofwell-being

OTC drugs

Eye drops, dermal medicines,
gastrointestinal medicines, kampoyaku, in-vitro test kits, hemorrhoid
medication, etc.

Skincare

Basic skincare products, sunscreen,
hand and body care, odor care, etc.

Composition of employees (consolidated)Japan ���������������������������������������������������������������� 38.8%
Asia �������������������������������������������������������������������� 48.8%
Americas ������������������������������������������������������������� 6.6%
Europe ����������������������������������������������������������������� 5.2%
Other �������������������������������������������������������������������� 0.6%

Manufacturing capital
Major production sites �������������������������� 21 locations
Expansion of production capacity throughconstruction of new plant building and conversion
to smart plants

Intellectual capitalBusiness activities������ 1,628 (non-consolidated) 7,176 (consolidated)

Brand strength

Technologicalcapabilities
R&D
capabilities

Quality

R&D expenses ���������������������������������� 11.0 billion yen
For details, see p.24~

Comprehensive strength of ophthalmological
medicine patents ��������������������������������������������������� 1st*
*For details, see p.17

Marketing know-how tailored to the environmentof each country and region

Customerperspective

Maximizing human capital
For details, see p.39~

Financial capital
Ratio of ordinary income to net sales ��������� 14.9%
Price-book value ratio (PBR) ������������������ 3.55 times

Speedcapabilities

Return on equity (ROE) ����������������������������������� 13.6%

Contributing to the global
environment
For details, see p.45

Credit rating ����� A+ (Japan Credit Rating Agency, Ltd. (JCR))

Social and relational capital
Number of Group companies ���� 82 companies (global)

Global network

Number of countries where our products are soldCoexistence with society
For details, see p.50~

��������������������������������������������������� 110 countries or more

Natural capital
Electricity usage (non-consolidated) ���� 28.6 MWh
Water usage (non-consolidated) ��������� 276,000 m3

Human
resources

Strengthening of businessfoundations
For details, see p.59~

OutcomeRealization of a society
with well-being

with functional claims,
Functional foods Foods
supplements, and farms &Food products
restaurants

Ophthalmology
area

Ophthalmology medicines
Medical devices

Regenerative
medicine

Cell manufacturing and cell culture
related technology
Pharmaceutical and cosmetic productdevelopment based on the “regeneration
concept”

Contract Development
and Manufacturing
Organization (CDMO)

Contract development andmanufacturing of pharmaceuticals,
and manufacturing of cell-processed
products

Ratio of female managers...30.0%
Well-being Points...6.74 points
Participants in Internal Double Jobs...123 persons
Participants in External Challenge Work...49 persons
Scope 1 and 2: 17% reduction compared to FY2013
Product technology development that takes biodiversity
into consideration
Environmentally friendly product development andmaterial usage
Implementation of sustainable and responsible sourcing
Company-wide commitment to product quality involving
the top management
Continuing social contribution activities based on thethemes of “nurturing the next generation,” “vitalization of
local communities,” and “development of medicine.”
Continuing to implement business structure reforms
M&As and alliances to expand the business portfolio
Production system that is friendly to people and theenvironment
Establishment of the Compliance Division

21

ROHTO Well-being Report 2023

Rohto’s
employees andtheir families

Business
partners

Countries andlocal
communities

High-quality products andservices at fair prices
Sharing knowledge andliteracy for health promotion

Growth opportunities
Education and training
Benefits
Remuneration

Creating new value through collaboration
Coexistence and co-prosperity

Creation of a society with well-being
Paying taxes on profits

Environment

Reduction of greenhouse gas
emissions
Conservation of resources andthe environment
Building a recycling-basedsociety

Shareholders
and investors*All numbers are for FY2022

Corporate Philosophy andConsumers
Futuregenerations

Well-being Management

Stable andsustainable increasein corporate value
Paying dividends
that reflect businessperformance

ROHTO Well-being Report 2023

22

Rohto’s
VisionValue Creation
Story

Maximizing
Human Capital

Realization of Well-being
through Business

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionMateriality (Key Issues)
Realization of Well-being through BusinessIn order to promote efforts to resolve priority issues in sustainability, we have identified five materiality issues fromthe perspective of ESG/SDGs that we should prioritize through business activities. We will promote initiatives foreach materiality issue to enhance corporate value and achieve sustainable growth.

Rohto Group Comprehensive Management Vision 2030

Connect for Well-being

Materiality identification process
Step1

Identification of social
issuesStep2

The Sustainability Committee analyzes global social issues and ESG trends with reference to various
guidelines and norms such as SDGs and GRI standards, and identifies issues.

Discussions are held among senior management, including outside
officers, on the issues identified, and materiality issues are selected.

Identification ofcandidates for key issues

High

Viewpoints emphasized

Narrowing down key
issues

Does it contribute to the realization of a society with well-being, andcontribute to the development of the Company and society?
How much impact does it have on our management, including
consistency with our growth strategy?
Is it an ESG measure to be strengthened to contribute to the enhancementof our corporate value?

Low

High

Rohto will continue to contribute to the beauty and health of people around the world and continue to be a company
that people around us expect to exist. In February 2019, Rohto Pharmaceutical celebrated the 120th anniversary of
its founding, and in order to clarify its aspirations, we have established the “Rohto Group Comprehensive
Management Vision 2030,” which outlines our vision for the year 2030. In addition, we have also clarified thebusiness domains that we will focus on over the next 10 years, and established the “Business Domain Vision 2030”
as the vision we aim to achieve in each domain.
By connecting people all over the world with health, we aim to deliver well-being to people around the world andachieve a sustainable society where people can live long, healthy, and happy lives.

Connecting Businesses and Creating
New Synergies

Education

Step3

Assessment of validity
and identification ofmateriality

Lifestyle

Regenerative
medicine

Materiality issues identified in step 2 are finalized by the Sustainability Committee and approved by the

DataManagement Committee.

Ophthalmology
Area

Healthcontent
serviceFive materiality issues

SkincareMateriality
Realization of well1 being throughbusiness
Maximizing human

2 capital to enhance

corporate value

Contributing to a

3 sustainable global

environment

4

Coexistence withsociety
Further strengthening

5 of businessfoundations

Related SDGs

Prevention of global warming and harmony with thenatural environment

Impact on stakeholders

Functional
foods

Agriculture

HealthtourismStrengthening financial and organizationalfoundations to support sustainable growth

Domains addressed in Business Area Vision 2030
Most important

Important

Respect for human rights
Reduction of greenhouse gas emissions
Reduction of waste and promotion of recycling
Protection of water sources and biodiversity
Strengthening corporate governance and compliance awareness andsystems
Strengthening risk management and response capabilities

Contributing to solving social issues in the medical, healthcare, andbeauty area
Achieving both high-quality and fair prices in the provision of products
and services
Responsible response to consumers (assurance of safety and securityof products and services)Strengthening of financial base to support stable management
Promoting CSR procurement
Coexistence with local communities and support for future generations
Improve social trust and reputation through dialogue with stakeholders
and information disclosure
Ensuring occupational safety and health

Planning a personnel system that supports the growth of autonomous individuals
Improvement of employee well-being (promotion of health andproductivity management, improvement of engagement)
Promotion of diversity (diverse human resources and work styles)
Establishing a business and human resources portfolio from a longterm perspective
Improvement of productivity and profitability through cost efficiency,
business process review, etc. (including promotion of DX)

ROHTO Well-being Report 2023

Regional
development

SelfcheckdeviceBuilding trust with stakeholders to become
needed and trusted by society

High

23

OTC
drugs

Promoting co-growth between the Company andmembers

Materiality Matrix (Main Issues)

FairlyhighContract
Development andManufacturing
Organization(CDMO)

Strengthen development capabilities and competitivenessof businesses and well-being products and services tocontribute to the realization of a society with well-being

Impact on our sustainable business development

Fairlyhigh

HealthyPre-symptomatic state

Minor diseases

Diseases
Areas to quickly realize profitability

SkincareProvide highly functional skincare
products that apply the unique knowledgeof a pharmaceutical company

OTC drugs
Aim to be a leading company of OTC
drugs in Japan

Functional Foods and Food Products
Develop food business based on evidence and trust as our third pillar

Global business

Ophthalmology
Area

Regenerative
medicine

Contract Development
and Manufacturing
Organization (CDMO)

Cultivate the area ofophthalmology as aleading company foreye-care products

Commercialize
innovative life science
technologies

Evolve into a contractdevelopment andmanufacturingorganization with uniquedevelopment skills

Areas to realize profitability over the
medium to long term

Self-care and self-medication

Professional medication

Core businesses

Growth investment businesses
ROHTO Well-being Report 2023

24

Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionCore Businesses
Skincare

OTC drugs
Aim to be a leading company of OTC drugs in Japan

Health awareness has increased and values have changed among people in response to the spread of COVID-19, andOTC drugs have come to play an increasingly important role, not only in treating diseases, but also in diagnosis,
prevention, and the treatment of pre-symptomatic conditions.
We are developing products that meet health needs by expanding into new fields through our subsidiaries and byleveraging our existing wide range of categories such as eye care products, skin medicines, gastrointestinal medicines,
kampo-yaku (traditional Chinese medicines), and in-vitro test kits. By providing products that help meet the growing demand
for self-medication, we aim to contribute to a social environment where all individuals can live safe and healthy lives.

Provide highly functional skincare products as a pharmaceutical company

With the rise in mask wearing and changes in lifestyles, people are spending more time on skincare, and with thedissemination of information from the user’s perspective via social media, there has been a rise in awareness for skincare.
The way people choose skincare products has changed significantly, and more emphasis is being placed on ingredientsand functions that are effective for skin concerns.
Focusing on functional skincare as a pharmaceutical company, including our Hada Labo brand that has achieved theNo.1 sold skincare brand* for 15 consecutive years, as well as Melano CC and Obagi, we search for ingredients that
address the skin concerns of people of all ages and utilize high-concentration, high-penetration technology to deliverfunctional skincare that meets the needs of each and every customer.
* Number of units sold based on Intage SRI, SRI+ 5 Basic Skincare Categories (lotions, emulsions, beauty serums, creams, face masks) Self + Medicinal Market: by major series from June

FY2022 Overview

2007 to May 2017 (SRI), from June 2017 to May 2022 (SRI+)

Achievements

Challenges and opportunities

We actively developed a wide range of categories to meetvarious needs brought about by rising health awarenessDue to the spread of infectious diseases, the need for selftesting increased, and our new rapid COVID-19 antigen test
kits contributed significantly to sales. Moreover, we invested in
iXensor Co., Ltd., a Taiwanese mobile health company, withthe aim of expanding our test kit business and developing a
new diagnostic business.
Sales of high-valuable eye drops increased by 5.6% year-onyear due to increased demand for self-care products,
exceeding pre-COVID-19 sales.
We achieved sales of 1.0 billion yen for our new category hair
growth brand “REGRO” in the 5th year since its release.
We revitalized the brand for MILMAG , a non-irritating laxative,
with new forms of communication, including a redesigned
package that emphasizes the product’s
ability to prevent stomach pain, and ac o m m e rc i a l f e a t u r i n g a n o r i g i n a lcharacter.

In addition to continuing to strengthen our successful highvaluable eye drops, as a leading OTC eye care company, weare committed to addressing the eye health of people aroundthe world and carrying out activities to support the “joy ofseeing” by sharing information on eye care and conducting
educational activities.
In order to strengthen our internal medicines, we will leverage
our brand strength in eye care and skincare to drive productdevelopment, addressing our customer’s concerns both
inside and outside of the body. We will also rebuild branding
and communication for existing products to suit people’s
lifestyles, with the aim of acquiring new customers.
Demand for rapid antigen test kits is expected to decline dueto the reclassification of COVID-19 as a Category V Infectious
Disease. However, as awareness of diagnosis and prevention
increases, we will carry out educational activities for a wide
range of testing and diagnostic drugs with pregnancy test
kits, ovulation predictor kits , and rapid influenza virus antigen
test kits, as well as promoting our test kit business and new
diagnostic business with iXensor.

FY2022 Overview
Achievements

Challenges and opportunities

Functional cosmetics grew significantly, and we became thenumber one manufacturer*1 for sales of basic skincare products
In the skincare business, growth in functional cosmetics wasparticularly strong, with Hada Labo’s growth exceeding preCOVID-19 levels, and the strong performance of Melano CC’s
Enzyme Face Wash making a major contribution as well.
In the sunscreen category, the Skin Aqua brand, which has
expanded its lineup of well-performing tone-up essences,
achieved No.1 in sales*2 for the third consecutive year withsales exceeding pre-COVID-19 levels.

The market for lip balms, which had been in decline due tothe habit of wearing masks, has started to recover due to thereclassification of COVID-19 as a Category V Infectious
Disease and people starting to remove their masks. Goingforward, colored lip products are expected to become popularwith customers enjoying variety of colors and textures, andwe will offer a wide range of proposals from care to colored lip
products in line with needs and trends.
In the skincare category, Obagi, as well as Hada Labo products
in high-price range performed well. Ingredients and functionality
are attracting increasing attention, and as a pioneer in functional
cosmetics, we will strengthen our researchand development by exploring functional
ingredients and leveraging our knowledge ofregenerative medicine research. In addition, to
respond to people’s values and needs forskincare that change with the times, we will
strengthen the development of existing brands
and the launch of new brands.

Number ofunits soldBeautyserums

Lotions

1st

2nd
Hada Labo

New packaging incorporatinga universal design

New proposal for the feminine care market
Launch of Mentholatum Cabrena Emulsion“Mentholatum AD Cream m” is a long-selling brand celebrating its 33rd year
since release. We receive approximately 800 comments from customers every
year, and based on the requests for ease of use, we redesigned the packaging
to make it easier to open with less force. For our products in pharmaceuticals
category, we continuously pursue ease of use while maintaining theireffectiveness, and aim to create products that will be loved by many people
for a long time.

We have pursued a formulation that empathize towomen’s concerns, alleviate distressing symptoms
in delicate areas, and allows women to live
comfortably.
We have been dedicating ourselves to yearsof research to address the delicate concernsof women, prioritizing not
only the effectiveness aspharmaceutical products but
also product developmentfrom a customer perspective,
focusing on ease of use andaccessibility for purchase.

New packaging
Easy to open with one twist
Easy to grip with rounded and tall lid
Newly designed anti-slip grip

Melano CC

TOPICS
50 Megumi Anti-Grey Hair Essence
No.1 market share* in Hong Kong haircare market
Adopting an original formulation based on scalp andhair research, it was released in Hong Kong in March
2021. Supported by women in Hong Kong, who arehighly conscious about hair care, the 50 Megumi
brand has achieved No.1 market share* in the haircare market. We have also
been offering this product toJapanese customers since2022. We will strengthen scalp
and hair research and promote
the expansion of the hair caremarket.
* Nielsen ScanTrack Data (Total KA) MAT
Sep 2020-2021 (2019 Oct – 2021 Sep)

25

Melano CC*1 Intage SRI+ total cosmetics (5 categories) estimated sales volume from April 2022 to March 2023
*2 Intage SRI+ sunscreen (gel) market, sales by major series from June 2019 to May 2022

TOPICS

Old packaging

1st

ROHTO Well-being Report 2023

History of functional skincare development
As a pharmaceutical company, we manufacture products with particularattention to formulation, effectiveness, and quality. We will continue ourresearch on skin and explore functional ingredients to meet the needs of ourcustomers and the times.
2001

Our first functional skincare brand, that aims to create
healthy, beautiful skin by harnessing the natural powerof the skin.

2004

A brand committed to the core value of “Perfect Simple”,
brimming with only the best things for your skin.

2009

A brand focused on effectiveness with the concept ofvitamin C.
Our top skincare brand, infused with the history ofpharmaceutical research and cutting-edge researchtheory.
ROHTO Well-being Report 2023

26

Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionRohto’s Future Growth Areas
Functional Foods and Food Products

Ophthalmology area

Develop food business based on evidence and trust as our third pillar

Cultivate the area of ophthalmology as a leading company for eye-care products
and quickly realize profitability in the new businessWe believe this is an area with high growth potential, as rising health awareness is causing changes not only in OTC
drugs but also in the selection of functional foods and food products. Utilizing the material technologies andmanufacturing facilities of Group companies and partners, we develop evidence-based foods with functional claims, andprovide food products that can be easily incorporated into one’s diet and healthy menus at restaurants. In this way, ourfood business meets a wide range of health needs, from those who are more health conscious to those who seek
delicious and healthy food.

Eye diseases are increasing with the rise of the elderly population, and the ophthalmology area is expected to play anincreasingly important role in the future. Various symptoms caused by eye diseases are directly associated with a decline
in quality of life, therefore the maintenance of eye health is essential to maintaining a healthy lifespan. Harnessing ourtechnical prowess cultivated as the manufacturer with the top market share in the OTC drugs eye care category for many
years, we aim to develop ophthalmology medicines and medical devices specifically tailored to medical issues tocontribute to the further development and improvement of ophthalmology.
FY2022 Overview

FY2022 Overview
Achievements

Challenges and opportunities

Achievements

Challenges and opportunities

We developed the Rohto V5 brand and started offering the
new food brand ROHTO RECIPE
Through the development of the eye supplement Rohto V5
brand, the cumulative total sales of the series exceeded 10
million units*1, achieving sales exceeding pre-COVID-19 levels.
We launched Rohto V5 Memory Support , which focuses on
cognitive functions, and expanded the Rohto V5 brandcentered around our strength in eye care.
By collaborating with MG PHARMA Inc.’s original functional
ingredient METAP*2, which suppresses fat absorption, andother companies’ products, we were able to expand ourmaterial supply and sales channels. We devised products at
the intersection between daily eating habits and health, such as
the first melon bread in Japan labeled with functional claims,
and contributed to expanding awareness of functional
ingredients.
In the food business, we launched a new brand, ROHTO
RECIPE, which provides a delicious, healthy, and sustainable
food experience based on the concept of “energizing from thebottom of your stomach.” Connecting our food and agriculturerelated businesses, we provided well-being from everyday
foods through foods and beverages, product sales, andservices.

Challenges going forward include continuing to strengthen
and develop the Rohto V5 brand, while also launching new
categories other than eye care. We will strengthen our
exploration and development of functional ingredients thattake advantage of synergies with skincare, which is one of ourstrengths, and aim to expand into functional foods and foodproducts in the beauty category.
Foods with functional claims such as Rohto V5 are attracting
a lot of attention and demand overseas, and therefore we areaiming to expand sales channels through active overseas
expansion.
We will expand the functionality of existing ingredients andstrengthen the development of new ingredients, as well as use
a variety of approaches to deliver health through food, such as
supplements for those who are highly health and beauty
conscious, guilt-free foods to casually replace unhealthy foods,
and suggestions for delicious and healthy daily foods.
Through ROHTO RECIPE, we will promote the development
and messaging of the Rohto’s food brands.

We made satisfactory progress in product pipeline andproposed novel medical devices
The early phase II trial of ROH-201 for dry eye patients
including those with Sjögren’s syndrome, which began in
2021, was completed, and the late phase II trial began in
September 2022. We will continue to advance thedevelopment of this drug towards approval.
We launched handpieces, essential medical devices forophthalmic surgery, which is increasing as the population ages.
We contributed to the field of ophthalmic surgery by offering asafe and efficient medical device with a double-tube structure.
Rohto Nitten Co., Ltd. received approval to manufacture andsell glaucoma treatment agent Bimatoprost Ophthalmic
Solution 0.03% “Nitten.” Preparations for launch of the
product are currently underway.

To meet the needs of medical professionals and patients, wewill continue to work with our partners to develop new
ophthalmology medicines for various indications.
Rohto Nitten Co., Ltd. focuses on products that are easy on
the eyes, and aims to develop high-valuable products such aspreservative-free products, room-temperature storage, andeasy-to-use containers.
We will aim to improve the satisfaction levels of medical
professionals and patients by proactively providing information
and raising awareness of the correct way to administer eye
drops to maximize the effectiveness of treatment.

Pipeline of Ophthalmology Area (as of February 2023)
Domain*1 Cumulative shipment results of Rohto V5, Rohto V5 ACT-VISION , and Rohto V5a as of the end of
December 2022
*2 Peptide mixture containing the Valine-Valine-Tyrosine-Proline (VVYP) tetrapeptide

Ophthalmology
area

TOPICSROHTO RECIPE offers a food experience
ROHTO RECIPE, a new brand in the food business that offers delicious, healthy, andsustainable meals based on the concept of “energizing from the bottom of yourstomach,” has opened the ROHTO RECIPE Chayamachi Store , a shopping complex
with cafes, restaurants, and markets, as well as a new brand of side dishes, “ROHTO
RECIPE Shunkoku Shunsai .”Since its founding, Rohto has been committed to thedevelopment of gastrointestinal medicines and theconnection between diet and gastrointestinal health, basedon the belief that all diseases start from the stomach.
Leveraging that wisdom and experience, we promote “Wellbeing” foods by delivering foods that are good for the bodyand society as a whole. In addition, we will take on a variety
of initiatives while creating synergies with the Rohto Group’s
food-related business.

27

ROHTO Well-being Report 2023

Development of collaboration
products using functional ingredients
We have launched collaboration products
containing globin peptide (METAP), which
inhibits the elevation of neutral fat level after
meals. We will promote a variety of healthy
proposals for daily eating, such as “Browned
Butter Melon Bread ” such as Japan’s firstmelon bread labeled with functional claims,
and “Kameda-no-Kakinotane(KamedaCrisps)”Stage
Target*1

Indications

Plannedregions

ROH-101

CMV*2
Corneal endotheliitisJapan

Théa, M’z
Science

Approval in
2025

ROH-201

Dry eyes*3

Japan

Japan Tobacco

Approval in
2027

ROH-202

Ophthalmic
treatment agent

Japan

D. Western
Therapeutics
Institute, Inc.

—

ROH-001

Suppression of
myopia progression

Japan

TsubotaLaboratory, Inc.

—

Code

Partners

Nonclinical

P1

P2

P3

Application*1 Targets are for Rohto and are not agreed upon by partners. *2 Cytomegalovirus *3 Dry eye patients including those with Sjögren’s syndrome

TOPICS
Launched medical device for ophthalmic surgery,
I/A handpiece.
It has a double-tube structure, and by aligning the holes on the
inner tube and outer tube, it is possible to adjust the size of thesuction hole simply by turning a dial. This product contributes toi m p ro v i n g t h e s a f e t y a n dtechnology of cataract surgery.
It won 1st place in the
Innovative category of theEuropean Society of Cataract
and Refractive Surgeons(ESCRS).

Instruction sheets for patients
To protect patients’ precious eyes andmaximize the effectiveness of eye drops, wehave created instruction sheets for patients
which explain the correct way to apply eye
drops. We have also prepared instruction
sheets on how to use each product andprecautions for storage and handling. We
are working to provide continual support tohelp patients to administer eye drops
correctly.

ROHTO Well-being Report 2023

28

Rohto’s
VisionAlthough regenerative medicine has great potential to meet unmet medical needs, it is still limited to the treatment of a
select few diseases. Therefore, we aim to contribute to unmet medical needs by offering solutions that combine
regenerative medicine products, cell preparations, and culture media.
FY2022 Overview
Achievements

Challenges and opportunities

Satisfactory progress with pipeline and initiatives foroverseas expansion
Plans for some clinical trials were forced to change due to thepandemic, but progress was generally as expected as the
pandemic slowed down. We will continue to aim for the stage
completion targets as planned.
Aiming for early overseas expansion, we signed joint ventureagreements with multiple companies, including Bloomage
Biotechnology Co., Ltd. and BIOMIMETICS SYMPATHIES Inc., to establish a joint venture company that will serve as thefoundation for research, development and business expansionof regenerative medicine and cell culture media in China.

As we see a growing demand for regenerative medicine, thechallenge we face is the need to increase manufacturing
capacity to accommodate the expanding market for cell
preparations. We will actively invest in equipment tostrengthen our manufacturing system and create a stablesupply system for the industrialization of regenerative
medicine.
In order to promote expansion not only in Japan but also
overseas, including in China, we will proceed with building acell type portfolio centered on human adipose-derived
mesenchymal stem cells, and actively explore and research
the possibility of new indications that take advantage of theircharacteristics.

Pipeline of Regenerative Medicines (as of August 2023)
Code
ADR-001
ADR-002K

Human adiposederived stem cells

Regenerative
medicine

Cartilage cell kit*2

Cirrhosis of theliver
Severe cardiac
failureStage
Partners

Nonclinical

P1

P2

Application

Current stage
completion target*1
FY2023(P2 in preparation)

Achievements

Challenges and opportunities

We strengthened our development and manufacturing capacity by
establishing a new research facility
In internal medicines, we
completed construction of the
Chemistry, Manufacturing, andControls (CMC) Development
Center and Kakegawa Laboratory
within the Kakegawa Plant of
Qualitech Pharma Co., Ltd. in December 2022. We strengthened thedevelopment and manufacturing capacity to enable independent
manufacturing, including formulation design and analysis development.
In regenerative medicine, Cell Factory Kyoto not only manufactures its
own cell preparations, but also conducts and offers contract
manufacturing of clinical trials drugs and regenerative medicine
products.

In order to respond to the increasing demand for
CDMO, we will proactively expand our production
capacity while strengthening our foundation.
In response to increasingly complex customer needs,
we will leverage our expertise in formulation
development and manufacturing, centered on our
new research facility, to provide high-quality, detailed
solutions.
In order to respond to the growing demand forbiopharmaceuticals, we will proactively strengthen oursystem to ensure stable supply, and going forward,
we will continue to build a new system for earlyoverseas expansion.

Japan(P2 in preparation)

ADR-001

Severe leg
ischemiaJapan

FY2024

ADR-001

Lung fibrosis

Japan

FY2024Japan

FY2023

TOPICSFY2023

Won the 5th Japan Open Innovation Prize “Minister of Health, Labour and Welfare Award”

UDI-001

Osteoarthritis

Data
SectionFrom basic research to manufacturing and sales, the development of prescription medicines is time-consuming andcostly. Contract manufacturing organization (CMO) has long been used to deliver products to patients quickly and at areasonable price. But now, technological capabilities that enable stable, high-quality production are required, andcontract development and manufacturing organization (CDMO), which assumes quality control and manufacturingcontrol from the development stage, is attracting attention. Moreover, in recent years, demand has increased not only forinternal medicines but also for biopharmaceuticals that use cells, further expanding the role played by CDMO. In order tomeet a variety of needs, we will continue to improve quality and strengthen our stable supply system by leveraging ouradvanced technological capabilities and know-how with Qualitech Pharma Co., Ltd. for internal medicines, with our
research facility and plants (Cell Factory Kyoto) and our specific cell-processed product manufacturing facility in Daiba,
Tokyo and Interstem Co., Ltd. for regenerative medicine.

Kidney diseases

COVID-19
pneumonia
Neurodegenerative
diseases
Traumatic
cartilage defects

Corporate
Governance

FY2022 Overview

Japan

Japan
Japan
Japan

COLUMN
Obtained approval to manufacture and sell AutoloGel System
In Japan, as the population ages and the number of diabetes patients increases, patients with diabetic
ulcers and other chronic wounds are expected to increase. In recent years, the effectiveness of PlateletRich Plasma (PRP) therapy for wounds has been reported both domestically and internationally, and weare proceeding with its development as a new medical device. We have obtained approval to manufactureand sell the AutoloGel System, a wound treatment system that uses PRP therapy for the purpose of“promoting wound healing using PRP gel for wounds that do not respond to existing treatments,” and weare currently preparing for insurance coverage.
This medical device is expected to become a new treatment option for wounds that do not respond toexisting treatments.

ROHTO Well-being Report 2023

P3

Japan Shionogi*1 Targets are for Rohto and are not agreed upon by partners. *2 Produced by Interstem Co., Ltd. (our subsidiary)29

Coexistencewith Society

ADR-001

ADR-001

Human umbilical
cord-derived stem cells

Indications

Sustainable Global
Environment()

Application for approval
in FY2023 in preparation
FY2024

An initiative and project promoted by Human Life CORD Japan Inc. , IMSUT Hospital, The Institute of Medical Science, The University ofTokyo , Alfresa Corporation , and the Company won the Minister of Health, Labour and Welfare Award.
This initiative built an all-in-one supply chain organization, covering everything from the procurement of umbilical cords as raw materials
for regenerative medicines, the mass culture of umbilical cord-derived mesenchymal cells for commercialization, and the transportationand sale of these cell products to medical institutions. Using these cell products, we are conducting clinical trials for intractable diseases
with no effective treatments. We aim to socially implement a “cell therapy platform of domestic production and consumption model” thatuses umbilical cords collected in Japan as raw materials.
Role of each company in this project
Acquisition and storage ofumbilical cords

Manufacturing and storageof master cells

IMSUT Hospitalumbilical cord
blood/
umbilical cord bank

Mass culture and cell
product formulation

Product transportationand delivery

Human Life CORD Japan Inc.
(manufacturing and sales)

Transfer
agreement

Cell type

Maximizing
Human Capital

Evolve into a contract development and manufacturing organization with uniquedevelopment skills

Commercialize innovative life science technologies

DomainRealization of Well-being
through BusinessContract Development and Manufacturing
Organization (CDMO)

Regenerative medicine

Plannedregions

Value Creation
Story

Joint research
agreement
License agreement

Manufacturingoutsourcing
agreement

Logistics
outsourcing
agreement

ROHTO Well-being Report 2023

30

Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionGlobal Expansion
Providing Well-being to People Around the Worldthrough the Provision of the Value of HealthEurope (including the Middle East and Africa)

One of Rohto Group’s strengths is its worldwide network.
We develop different products for each country and region, taking into account the market environment andconsumer needs.
In addition to our mainstay skincare and eye care products, we will accelerate business expansion with a focus on
hair care going forward.

Japan
In addition to Rohto Pharmaceutical’s eye care and skincare products which form our corebusinesses, Qualitech Pharma Co., Ltd., whose main business is contract development andmanufacturing of prescription medicines, Amato Pharmaceutical Products, Ltd. and Rohto NittenCo., Ltd. which respectively focus on hemorrhoid medication and prescription eye drops, arepromoting their business in the Japanese market, which accounts for approximately 60% of theGroup’s sales.
In FY2022, the Group’s performance in the Japanese market was driven by Rohto
Pharmaceutical, the core company of the Group, thanks to the support of customers for its widelineup of healthcare products, including eye drops, gastrointestinal medicines, and skincare
products, which have been mainstay products since its founding. Subsidiaries Amato
Pharmaceutical Products, Ltd. and Rohto Nitten Co., Ltd. also contributed to consolidated sales
and profits.
Although Japan is experiencing a decline in population, the market for self-care and selfmedication is expected to expand. In anticipation of the expanding needs for high-quality OTC
drugs and highly functional cosmetics, the new plant at Ueno Techno Center has begun
operations with enhanced production capacity and strengthened compliance with international
pharmaceutical manufacturing standards. As a future investment, Rohto Pharmaceutical isinvesting in the regenerative medicine business and prescription medicine business, and is
working toward further growth.

Hada Labo

Melano CC* By obtaining CE certification, which certifies that the product meets the safety standards of EU member countries, it became possible to sell the product as a medical device in EU member
countries.

Connecting and Evolving Local Business Foundations Globallyto Accelerate Group Growth
Skin Aqua

REGRO

Asia
China and Hong Kong are driving growth along with Southeast Asian regions such as Vietnam, Indonesia, Taiwan, andMalaysia. Asia currently accounts for approximately 30% of the Group’s total sales. All regional segments reported strong
performance centered on the core skincare and eye care products, with particularly strong growth in Vietnam, Malaysia, andIndonesia, and among others, sales of our anti-dandruff shampoo Selsun increased. In East Asia, Hong Kong’s 50 Megumi
achieved No.1* sales in the hair care category.
In response to the growing market, we operate state-of-the-art plants in China, Vietnam, and Indonesia, supplying products
to Asian markets as well as globally. In addition, we will strengthen our production capacity in Vietnam through M&As. In
Indonesia, we are expanding our eye drop production lines and building a manufacturing system that will meet growing
demand in Asia going forward.

*Nielsen ScanTrack Data (Total HK hare care) MAT Dec 2022, Total HK hair care here is referring to sum of shampoo, conditioner and treatment

We are developing our business with a focus on skincarerelated products, centered on The Mentholatum Company,
Ltd. (U.K.) and Dax Cosmetics Spolka Z Organiczona
Odpowiedzlalnoscia (Poland). In the African region, we havesubsidiaries in Kenya and South Africa, and are expanding ourbusiness. The Deep series for topical anti-inflammatory
analgesics is performing well with sales increasing significantly,
especially in the Middle East. In addition, Hada Labo Tokyo has
Deep series
Hada Labo Tokyo
Rohto Dry Aid
been successful, winning the Cosmopolitan’s Beauty Award in
the UK, and becoming established in the drug store chain
Watsons in Dubai. Currently, it is also expanding its sales channels to major Middle Eastern countries and South Africa.
In eye care, we are developing the market with Rohto Dry Aid, an eye drop for dry eyes that received CE certification* andbegan sales in May 2021. We are expanding our sales channels in the UK, where we won the Best OTC Packaging DesignAward , as well as in Poland, Turkey, the United Arab Emirates, and Saudi Arabia.

SelsunAmericas
In Americas, we have a subsidiary in the U.S., The Mentholatum Company, Inc., as well as other subsidiaries in Canada,
Mexico, Brazil, and other countries, and are developing our business with a focus on eye care and skincare related products.
The Mentholatum Company’s mainstay lip balm and Mentholatum Ointment are selling well, and the skincare business,
including Hada Labo, is growing in Brazil.
We are also developing businesses in the medical field, including Hydrox Laboratories, Inc. (U.S.A.), which manufacturesand sells medical disinfectants, etc., and Ophthalmos S.A.
(Brazil), which deals in ophthalmic surgery devices as well as aneye drops business. Although hikes in raw material procurement
costs and rising labor costs caused by labor shortages pose achallenge, we are working to make efficient use of marketingcosts.

Based on our self-supporting manufacturing system, which encompasses all processes from development andproduction to marketing and sales in each region, we place top priority on human resource development andmaintain the belief that the strength of our global business lies in delivering high-quality products that areneeded in each region and society.
In particular, in Asia, which is a key driver of the Group’s growth, we have established manufacturing bases in
China, Vietnam, and Indonesia equipped with cutting-edge equipment to develop and produce eye care,skincare, and hair care products, building a system to supply high-quality products in Asian regions as well as
globally.
We will accelerate the growth of the Group by connecting human resources and organizations globally andcontinuously strengthening and evolving our local business foundations.

Emphasis on Face-to-face Communication
With the aim of fostering a corporate core and sense of unity as a Group,
we strive to sense and capture various consumer needs through daily
operations, and promptly translate them into product development. We aim
to deepen cooperation among countries and improve efficiency, while at thesame time exchanging researchers and improving synergies in themarketing department.
World Wide Meeting

R&D Global Meeting

We hold the Worldwide Meetings twicea year so that companies of the Rohto
G ro u p i n v a r i o u s c o u n t r i e s c a n
communicate smoothly and closely.
This provides a place to share thelatest initiatives and future plans ofeach country and region, as well as
the identity of each country, and tofoster a sense of unity as the Rohto
Group.

We have created a global meeting
where researchers from each country
can introduce and discuss theirresearch results and new products. In
addition, by providing a place forparticipants to gather at a researchlaboratory and deepen mutual learningin their research fields, we make iteasier to create synergies.

Enabling Quick Understanding
with Visualization using Digital
Technology
Up until now, data has been individuallyo p t imized in e a c h c o u n t r y, a n d IC T
infrastructure has been built separately, but
by connecting organically across the globe,
re g a rd l e s s o f v e r t i c a l o r h o r i z o n t a lboundaries, we will create more value than
was previously possible in each country.

Information
visualization
using ICT
infrastructure
construction

Hydrox Laboratories and its products

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Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionGlobal Expansion

Localization that Accommodates Diverse Lifestyle
Habits and Values
We have a flexible localization system that allows us to solve challenges and express our brands in ways that suit theenvironment of each country and region, while still retaining the core values and ideas of the brand. The charm of various
countries lies in their different and diverse cultures, customs and tastes. In addition to complying with each country’s
regulations and business practices, we actively take measures to adapt our operations to suit each country while
carefully protecting the values promised through our brands. Understanding the people of each country and supporting
their health directly connects to the growth of the Rohto Group as a whole.

Hada Labo Tokyo
Hada Labo, whose brand concept is “Perfect and Simple,” values the idea of eliminating unnecessary
things and focusing only on ingredients that are good for your skin, and is a brand that is loved bymany people.
The brand’s “made in Japan” quality and simple packaging are popular in Asian countries, but
because climates, skincare habits, and needs differ from country to country, we have developed uniqueproduct lineups for each country.
Hada Labo (Japan)
On the other hand, in Europe and North America, we are expanding our products by changing not
only the lineup and formulation, but also the packaging design, while keeping the core elements of thebrand the same. Since the skin types and skincare habits in Europe and North America are different from those in Japanand Asia, we are strengthening our lineup in the cream category, which is most valued in Europe and North America, andintroducing skincare methods centered on lotions. As for the packaging design, we purposely include cherry blossoms
to easily convey that the product is made in Japan, while using English writing insteadof Japanese. Hada Labo Tokyo, which was launched in the United States in 2013, has
now expanded to European countries, South Africa, the Middle East, Australia, andCanada, and is starting to take root in each country.
Rather than focusing on our successful experience in Japan, we will continue tolocalize our products in various countries and regions, and continue to evolve so thatthe brand can be loved by even more customers across borders.
Hada Labo Tokyo

ROHTO Brand
In Japan, the name “Rohto” often makes one think of eye drops, and ROHTO is currently theNo.1 eye care brand* in the world. In the 1980s, Rohto began its overseas eye care business in
ROHTO WORLDearnest with the launch of products in Asia, and in recent years, we have been expanding ourNO.1
sales channels to European countries such as the UK, Poland, and Turkey, as well as SouthEYE CARE
BRAND.
Africa and the Middle East, focusing on Rohto Dry Aid, which aims to expand globally.
Rohto Dry Aid is an eye drop that focuses on the structure of the human tear fluid, realizes thestabilization of the oil layer that covers the entire tear fluid, and improves the symptoms of dry eye,which causes pain that makes you want to close your eyes. During the COVID-19 pandemic, it is said that the number ofpeople overseas suffering from dry eye symptoms rose due to increased digital usage, and it isexpected that awareness of eye health will further increase going forward. Eye care awarenessand eye drop usage habits vary from country to country, as do the places where eye drops arepurchased. While emphasizing verification of effectiveness and safety, we conduct sales andmarketing activities in collaboration with experts such as doctors, pharmacists, and universities
around the world, and make sales to medical institutions (for specialists). Thus, we develop our
products according to the situation in each country.
As a leading eye drop company, we will continue to contribute to the eye health of people
Rohto Dry Aidaround the world.

50 Megumi
50 Megumi started in Japan as an all-in-one skincare brand containing 50 types ofnourishing ingredients, and has grown as a skincare cosmetics brand thanks to its
simplified skincare steps and support for its ingredient concept.
On the other hand, in Hong Kong, the brand entered the market targeting anti-aging
hair care with a focus on hair essences, and is continuously releasing unique productlineups that are not available in Japan, such as shampoo and treatment series that canbe selected according to hair concerns, an Anti-grey series that focuses on black hair,
50 Megumi (Japan)
and products for men. With the brand’s growth, it has gained the No.1 share* in the haircare market in Hong Kong. With the message of “never too early, never too late,” thebrand aims to present a value proposition to Hong Kong women, who are said to be highly conscious about hair care,by going beyond product proposals to focus on age-related scalp and hair concerns. 50 Megumi also carries out
awareness-raising activities about damage that causes hair loss, such as aging, childbirth, perms, and frequent hair
washing, and offers suggestions for maintaining healthy, beautiful hair.
The brand will continue to contribute to the beauty and health of people in each country while maintaining its
important concepts.

50 Megumi* Nielsen ScanTrack Data (Total HK hare care) MAT Dec 2022, Total HK hair care here is referring to sum of shampoo, conditioner and treatment

Mentholatum Lip Balms
The Mentholatum lip balm series is No.1* in terms of units sold in the Japanese lip balm market.
Our subsidiary, The Mentholatum Company, has been actively developing overseas markets for along time, and our lip balm products are loved by many customers not only in Japan, but all
around the world. The symbol of Mentholatum, a design featuring a little nurse, continues to
evolve while incorporating the needs and tastes of each country.
Lip balms are also a category enjoyed by younger generations. Therefore, in addition to usage
characteristics such as the softness and ease of application of the formulation, local consumer preferences such as
flavor, color, aroma, and design greatly influence product selection. Not only do our products moisturize lips, but theyalso quickly incorporate seasonal trends and offer consumers the joy of finding products that suit their tastes. We willcontinue to make propositions that enrich people’s lives while incorporating local trends.

China

Hong Kong

VietnamIndonesia* Intage SRI+ lip balms estimated sales volume from April 2022 to March 2023

*Euromonitor International Limited; Consumer Health Eye Care definition, retail value share, 2022 data

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Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
Section

Manufacturing Capital Enhancement

Rohto Group’s major
production sites

Major production
sites

21

Evolution of our Central Plant

locations

The construction of a new plant building at the Ueno Techno Center, our quality control and logistics base, wasundertaken to meet growing demand, such as the increasing need for high-quality OTC drugs due to the growing trend
toward self-medication and the expectations of highly functional cosmetics in beauty-related products. Production in the
new plant building began in September 2022. This plant building will be a “smart plant” (i.e., a plant that is friendly topeople and the environment) that ensures worker safety and efficiency through collaboration between robots andhumans, and aims to reduce energy consumption by 20% compared to existing plants. With a cyber-physical systemthat utilizes IoT and AI technologies, Rohto Pharmaceutical will further promote work styles that allow people to thrive as
well as initiatives to reduce environmental impact, which the Company has been promoting.
Overall energy
Utilization of energy-efficient equiment

Utilization of renewable energy

Qualitech Pharma Co., Ltd.
Shiga Plant
Amato Pharmaceutical Products, Ltd.
Fukuchiyama Plant
Amato Pharmaceutical Products, Ltd.
Sanda Plant
Mayado Pharmaceutical Co., Ltd.

Use of geothermal energy

Qualitech Pharma Co., Ltd. Shizuoka Plant
Rohto Nitten Co., Ltd. Nagoya plant

Rohto Pharmaceutical Co., Ltd. Osaka Plant

The Mentholatum Company, Inc.

Cyber-physical System (CPS)A CPS is a system that collects a variety of data in physical space (real space) by using sensor networks,etc., and analyzes and converts the data into applicable knowledge using leveraging large-scale dataprocessing technology, etc. in cyberspace (virtual space), so that the information and value created can beused to revitalize industries and solve social issues.
Rohto is collaborating with the Fujisawa Laboratory of the Institute of Mathematics for Industry, Kyushu
University and First Loop Technologies, Inc. to verify CPS toward implementation at the new Ueno plantbuilding, and in the future, we aim to realize the well-being of not only our employees but also thecustomers who use our services by turning the entire Group into a “smart plant”.
Cyberspace

Cloud
integration
Digitalization
The Mentholatum Company, Ltd. (U.K.)

Accumulation

Cyber-physical system
cycle

Hydrox Laboratories, Inc.

I/IoT sensor
Data collection

PT. Rohto Laboratories Indonesia

Mentholatum South Africa
Pty. Ltd.

Factory
automation
Automated
controlMentholatum (China) Pharmaceuticals Co., Ltd.
Rohto-Mentholatum (Vietnam) Co., Ltd.

Rohto-Mentholatum(Myanmar) Co., Ltd.

AI/deep
learning
Analysis/optimization

Big Data

Dax Cosmetics Spolka Z Organiczona
Odpowiedzlalnoscia

Air conditioning, gas,
electrical equipment

Rohto Nitten Co., Ltd. Nagano Plant

Rohto Pharmaceutical Co., Ltd. Ueno Plant

Tianjin Rohto Herbal
Medicine Co., Ltd.

Use of solar
energyMentholatum Australasia Pty. Ltd.

Physical space

Utilization

Ophthalmos S.A.

Reinforcement of Production Facilities in Vietnam
Since its completion in 1998, the Vietnam Plant has been the Group’s main plant responsible to produce eye drops anddermal medicines. Rohto-Mentholatum (Vietnam) Co., Ltd., the company that owns the Vietnam Plant, acquired Naris
Cosmetics Vietnam Co., Ltd., which produces cosmetics in the country, in December 2022 and expanded its production
facilities. With two factories in Binh Duong Province, Vietnam, the Group aims to achieve sustainable growth over the
medium- to long-term by responding to the increasing demand for our cosmetics in Southeast Asian regions including
Vietnam, where economic growth continues.

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Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionIntellectual Capital Enhancement
2022

Rohto
Pharmaceutical

2021

Rights holder score

Research/coretechnology

Comprehensive strength

Changes in the Number of Patent
Applications

Cosmetics x Ascorbic Acid (Vitamin C) Patents Held
Size of circle: number of valid patents

Rights holder score

The Rohto Group believes that intellectual property will play an increasingly important role in creating new value.
Positioning intellectual property as an important management resource, we are working to strengthen our global
intellectual property capabilities in order to create new value, lead the Group to sustainable growth, and thereby
contribute to the realization of a sustainable society.

2020
2019
2017
2015
2013

With health as the core value of our business, we havecontinuously faced changes in society and our customers
and continued to create value. Starting with theestablishment of a healthcare business centered on eye
care, we have seen the growth of our functional cosmetics
business in recent years, and now we are moving forwardwith management based on more business pillars. At thesame time, our intellectual property activities are also
evolving in many ways. We will strategically build an optimal
portfolio and strive to strengthen our future competitiveness.

Individual strength

Highest patent score
Brand value

Cosmetics x Hyaluronic Acid Patents Held
Size of circle: number of valid patents

2022
2021

Rights holder score

Product
commercialization
technology

Rohto
Pharmaceutical

Comprehensive strength

Rights holder score

Portfolio
construction

Business model

Highest patent score

2020
2019
2017
2015

Number of Patent Applications

2013

Individual strength

Food
products
10%Internal
medicines
5%

Other
8%

2006 to 2010

195 applications

Skincare31%

Eye care46%

Foodproducts
2%
Internal
medicines
6%

Other
12%

Other
10%

Eye care30%

2011 to 2015

241 applications

Regenerative
medicine
9%
Food
products
9%

Eye care(OTC)
17%

239 applications

Skincare43%

Internal
medicines
5%

Skincare52%

Eye care(prescription)
5%2018 to 2023

Highest patent score

Highest patent score*Created by the Company using Patent Result Co., Ltd.’s patent analysis tool “BizCruncher.” The size of the circle indicates the number of valid patents in the relevant field, the horizontal
axis shows the score of the single patent with the highest value among the patent group of each rights holder, and the vertical axis shows the sum of the scores of each rights holder’spatents.

Strengthening Brand ValueTo develop a strong brand, it is vital to create an attractive concept, devise trademarks and designs that embody theconcept, and protect them. We collaborate with the Marketing and R&D department to manage the procedures for timely
research, application, and registration.
In addition, protecting intellectual property is essential, not only to protect and develop the brand and secure profits,
but also to ensure the trust of customers and protect the company’s credibility. We will work to enhance our brand value
throughout the Group.

Strengthening Core Technology and Product Commercialization Technology
Brand Protection

Ophthalmological Medicine Patents

Comprehensive strength

Size of circle: number of valid patents
Vertical axis: rights holder score
Rohto(comprehensive strength)
Pharmaceutical
Horizontal axis: highest score(individual strength)
Rights holder score

By taking on the challenge of research and development
ahead of other companies, we have improved ourtechnological capabilities and product capabilities as thesource of our competitiveness. Through these efforts, wehave been able to hold highly useful patents.
We will continue to create products that not only
ensure the efficacy and safety of our products and thestability of our formulations, but also pursue the comfort
and convenience of our customers and patients. In order
to continue to be a company that is supported, we willappropriately protect and use technologies that is needed
to be protected.

ABBVIENOVARTIS

SantenPharmaceutical
Senju
Pharmaceutical

Individual strength

Highest patent score

As the number of brands that are widely loved by customers has increased, and the world’s commercial flow has changed significantlywith the emergence of many platforms that allow people to easily sell products to anyone anywhere in the country, now the damage
caused by counterfeit products has become a major social issue.
To ensure that all customers can use our products with peace of mind, we take a resolute stance against counterfeiting and work
together to address this issue as an industry-wide problem. This not only protects and prevents damage to our brands, but also
minimizes health damage to our customers.
We want to offer a daily life filled with “surprise” and “joy.” This idea is at the base of our manufacturing. Our brands are important
assets that have grown through the gratitude and encouragement we feel from the “happy surprise” testimonials of our many customers.
We will continue to listen to the voices of each and every customer and work hard every day to maintain trust and a sense of security in
our product brands.

Intellectual Property Utilization through Open Innovation
We license our patented technologies to contribute in solving social issues by using our technologies to drive innovationin various fields. Based on the technologies we have accumulated so far, we will develop new businesses in collaboration
with partners and contribute to the realization of a world of well-being.

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Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionInitiatives for Maximizing Human Capital

Maximizing Human Capital

Revision of the New Personnel System

Basic Approach to Human Resources
Strengthen initiatives aimed at human capital management:
The mutual growth of the Company and our company members by
respecting each “individual”
In order to continue to contribute to the “realization ofa society with well-being,” which is our purpose(reason for being), it is essential for us to create
sustainable corporate value. Needless to say, eachand every one of our members is a driver of theseprocesses and, without members’ growth, there canbe no growth of the Company. To that end, in today’s
world significance is placed on respect for theindividual and the mutual growth of the individual andthe company. Key factors in achieving this are:respect for diverse individuals, the linkage between
our Corporate Philosophy and business strategy as
its centripetal force, and coordination with humanresource management that maximize the potential ofdiverse individuals who will carry out our strategies inline with changes. Our basic approach to our humancapital (personnel system) is that the Company andemployees have a relationship of mutual growth,rather than viewing our employees as possessions of
the Company. In other words, the Company is able togrow due to employees proactively participating inbusiness activities and creating value for society, andin turn, the Company’s growth provides various“opportunities for active engagement” for individual
employees, which creates a virtuous cycle for theCompany and employees to grow together.
The “autonomous” career that we seek forindividuals is for them to become human capital who
share the Company’s purpose, proactively participate
in business activities, and continue to learn to create
value for society as “Professional SHIGOTONIN,”
professionals with responsibility and proactiveness. To
this end, we ask our employees to always consider
their future direction and what they should do now toachieve it by asking themselves what their purpose is,taking into account the needs of society and ourcustomers, as well as the expectations from thosearound them and their roles. We do this because webelieve that understanding oneself through the processof figuring out what is expected of oneself now, what
actions one should take, and what factors one lacks inorder to take action, is the first step towardautonomous career development. On the other hand,a company cannot address individual growth with aone-size-fits-all approach. For this reason, the top
management takes the time to read the career visionsof all employees each year, and organizes and assigns
personnel based on these visions. In addition, in orderfor employees to be able to develop their careers on
their own initiative without the Company inhibiting their
growth opportunities, we respect the individual’s will as
much as possible and believe in the potential of theindividual, and engage in initiatives to draw out theirstrengths. Such efforts include Internal Double Jobs
(concurrent positions) and External Challenge Work(secondary employment), as well as holding
semiannual “FEED-FORWARD” interviews (futureoriented interviews) for each work line to address the
careers of each individual.
Going forward, we will continue to develop an
organization that maximizes the potential of our diverse
individuals, regardless of simple attributes such as age,gender, or nationality, rather than the one-size-fits-all
human resources development model. We will also
develop an organizational culture that each individual
seeks to learn continuously. In this way, we will strive
for mutual growth for our individual employees and ourCompany.

Conceptual Diagram of the Company’s Human Capital Maximization
Supporting individual careerdevelopment
Believe in andexpand your own
potential

External Challenge Work(secondary employment)Internal Double Jobs
(concurrent positions)
Asuniwa project (support forentrepreneurs within the
Company)
Well-being Support RoomPervasion of Corporate
Philosophy/Promotion of healthand productivity management/
Fostering of organizational culture
Diverse humanresources thriving
Equal
relationships

39

Promoting diversity
Health indicators (well-being
KPIs)
Use of “-san” suffix andworkplace nicknames

ROHTO Well-being Report 2023

Maximizing human capital

Individual growth
Respect for diverse individuals/
Autonomy and growth

Self-driven
initiatives

Autonomous
relationship& shared
growthProvidingopportunities
to take onchallenges

Company growth
Creating corporate value as
one-team Rohto

Support for learning and selfimprovement
Willingness andattitude to always
keep learning

Rohto Academy (for individual
to actively select their own
learning)
Learning from the next
generation (new recruits, highschool interns)

Rohto-style HR management
Create and seize
your own
opportunities

Human Resources Committee
focusing on diverse individuals
Personnel system fordeveloping autonomous humanresources
Career Vision Sheet
In-house recruitment

Rohto focuses on human resource development with the aim of realizing a society with well-being through shared growthfor both the Company and our company members based on respect for the individual. In order for the company to grow,it is important to continue creating new value sought by society, by positioning well-being at the core. We believe that thiscan be made possible by the strong will of each and every employee to deliver new value to the world, and their actions
based on this will.
Rohto revised its personnel system in FY2022 for the first time in approximately 20 years, in order to enable diverse
individuals to play a proactive role and to respond to organizational expansion and the highly uncertain and changing
business environment. The new personnel system places emphasis on supporting and promoting autonomy and selfreliance as a “Professional SHIGOTONIN,” simultaneously pursuing the creation of value in work and the realization ofwell-being, and encouraging diverse and versatile work styles that enable autonomous career development. We are
implementing four measures designed to promote well-being management in which each employee autonomously drives
their own purpose and career growth, while working toward a common goal as part of the organization as a whole.
What is a “Professional SHIGOTONIN?”
A “Professional SHIGOTONIN” is someone who has aspirations, who is willing to overcome difficulties to realize asociety with well-being, and who continuously creates value both inside and outside the Company positioning Rohto
as a public organ of society. Rather than just completing tasks they are given, “Professional SHIGOTONIN” is selfreliant and capable of finding and taking on challenges and tasks on their own. This natural desire to continuelearning and growing as a “Professional SHIGOTONIN,” not to gain anything, but in order to give to those aroundyou, is an idea expressed in our “Seven Pledges* as “Our people are our greatest asset,” and it serves as our vision.
*Seven Pledges = Rohto’s Code of Values and Conduct

Four Measures to Drive Mutual Growth of the Individual and the Organization
Personnel transfers and organization building through dynamic human resource management- selection and appointment with an eye to nurturing the individual and to seeing the bigger picture
Rohto’s top management looks over each employee’s “My Vision Sheet,” which details the jobs each employee wants totake on as well as their career plans. Based on this information, we consider such questions as “What responsibilities
should we assign to this employee to help their growth?” or “Is now the right time to transfer them to another position? If
not, what experience do they need right now?” Through this process, we select and appoint employees based on acomprehensive consideration of both individual growth and strategic human capital allocation as an organization.
Evaluation based on the value of work as a “Professional SHIGOTONIN” - Rohto Value Points (RVP)(semi-annual evaluation)
Rohto Value Points (RVP) are a numerical measure of the value of each employee’s work using the same scale for all
employees, regardless of seniority, stage (rank), position, etc. The review process starts by each employee evaluating thevalue of their own work as “Professional SHIGOTONIN,” and then an evaluation is finalized through multifaceted
consideration by an Evaluation Committee made up of members of management.
In order to increase the value of one’s work, each and every person working at Rohto values dialogue and reflection
with their supervisors and co-workers, both at milestones and on a daily basis.
Improving the well-being of each individual - Well-being Points (WBP) (semi-annual self-assessment)This is a survey conducted at the same time as the work evaluation (RVP), where employees self-assess their own
situations using five questions on a scale of 1 to 10. The Company emphasizes this survey as a form of employee
engagement. Even if an employee has showed high work performance, if the person in question is not able to work ingood spirits, well-being has not been achieved. We believe that caring about the mental well-being of employees is also
an organization’s responsibility, and we use this information to take action to raise the overall well-being of each andevery employee to an even higher level.

Review of Well-being (Well-being Points)
1. I am able to serve and contribute to society through my work.
2. I enjoy my work and my life has been enriched.
3. I feel that I have grown through my work.
4. I have goals for the future and have high expectations for myfuture career development.
5. I am part of a team and contributing to teamwork.

May 2022

October 2022

6.37 points

6.74 points*Average score for items 1 to 5 (self-assessment on ascale of 1 to 10)
Target: All employees (all employment types)

ROHTO Well-being Report 2023

40

Rohto’s
VisionAiming for autonomous career development and continued learning - career ownership: encouraging
secondary employment and concurrent positions
Enhancing the employee experience
Initiatives for Autonomous Career Development
External Challenge Work (secondary employment) and Internal
1999: Introduced a self-nominated promotion system
Double Jobs (concurrent positions) are programs to encourage
and a self-career-declaration system (now known
autonomous career development and continued learning,as “My Vision Sheet”)
introduced with the aim of enhancing employee experience.
2016: External Challenge Work (secondary employment)
2016: Internal Double Jobs (concurrent positions)
What is important is the individual’s work experience and2020: Asuniwa project (support for entrepreneurslearning, and we believe that it is essential for the Company towithin the Company)
support the provision of such opportunities.
2021: Rohto Academy (for individuals to actively selecttheir own learning)

External Challenge Work(secondary employment)Internal Double Jobs
(concurrent positions)

Asuniwa project(support for entrepreneurs
within the Company)

Rohto Academy

Total from FY2016 to FY2022: 144
peopleFY2022: 49 people

FY2022: 123 people

Projects that led toestablishment of a company (asof June 2023): 7

Total number ofparticipants in FY2022:
1,520 people

Value Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionFostering a Work-friendly Culture
Creating a Work-friendly Environment
Use of “-san” suffix and workplace nicknames

In 1994, we began addressing all employees by the “-san” honorific suffix so that they could
address each other by name rather than position titles, out of respect for the fact that all
employees are important partners and equal in their work. Subsequently, the Company
launched an initiative to further stimulate communication by calling each other by workplacenicknames. Workplace nicknames are used on employee ID cards, in-house newsletters,
and in many other situations.
39 (Thank You) ARUCO campaign

Workplace nicknames used on
employee ID cards
Fitness-tracking devices for earning
ARUCO coins

We have implemented the “39 (Thank You) ARUCO” campaign to encourage employees toexpress their appreciation for each other and to instill a culture of praise and recognition.
“ARUCO” is a system that allows employees to earn internal currency (ARUCO coins) thatthey receive based on their implementation of healthy lifestyle habits. The coins can also beearned by expressing gratitude to each other. This naturally leads to the expansion of thecircle of appreciation beyond departments.

—Support for Autonomous Career Development—
Rohto Academy
Rohto Academy is a learning platform that enables members to face their own careersand choose the skills they need to learn so that they can continue to learn proactively.
We focus on content to enhance future insight.
Well-being Support Room (with external partners)
Through consultations with outside experts about concerns related to careers, work, management, etc., the Well-being
Support Room provides support for individuals’ well-being and growth.

Human Resource Acquisition Initiatives
New graduate recruitment focuses on alignment with our corporate
philosophy and vision
When recruiting new graduates, we emphasize on their thoughts on the Company’s corporate philosophy (purpose) andvision. In our recruitment activities for FY2022, we are striving to match the thoughts and growth vectors of individuals
and the Company, with application requirements that include applicants’ thoughts on the Company’s corporate
philosophy and their own future career vision.

Support for Voluntary Activities
ARK Project

Since 2003, we have been implementing the ARK “Thinking about the Future of Rohto”
project, in which employees proactively volunteer and participate in. With the participationof a wide range of employees, from young to experienced, we face and realize important
themes such as the environment, social contribution, human resources, and health andproductivity management. External Challenge Work (secondary employment) and Internal
Double Jobs (concurrent positions) were also conceived and implemented in this project.

Promotion of Internal Connections
In-house newsletters

Through “Seiryu,” our paper-based in-house newsletter, and “SHI-ROHTO+,” our Webbased in-house newsletter, we communicate the latest topics at the time of issue, including
new internal initiatives, messages from management, and personal anecdotes of ouremployees. “Seiryu” conveys the philosophy that runs through the Company and the ideas
we wish to pass on, while “SHI-ROHTO+” conveys the latest news in a timely manner, tohelp employees communicate with each other, and create new value.
Company-wide events

Comeback Recruits who Understand our Business, Culture and Are Able toContribute Immediately
We welcome people who have left Rohto and built-up networks through diverse activities outside the Company to takeon new challenges again at Rohto.

Through the “Grand Sports Day” and a walking event in which all employees participate, weare building connections among employees and promoting their health. Volunteer project
members plan and manage the “Grand Sports Day,” and participants, who are divided into
teams in advance, prepare for the day of the event by practicing the competitions in theirrespective teams. Through this series of events, we promote employee interaction andfoster teamwork while having fun.

Diverse Mid-career Recruitment that maximizes “Individuals”
To enable employees to play an active role based on their own aspirations and values, we also thoroughly confirm eachindividual’s purpose when hiring mid-career employees, and carefully communicate with them regarding the duties androles they will be responsible for.
Moreover, in order to promote new businesses, we are strengthening the recruitment of highly specialized humanresources as well as global human resources in the R&D field, conducting joint research with graduate schools, andhiring freelance workers with digital expertise.

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ROHTO Well-being Report 2023

42

Rohto’s
VisionIn order to realize one of our materiality issues, “Maximizing human capital to enhance corporate value,” we haveidentified particular items to focus on, set targets as “Sustainability Targets 2030,” and promoted initiatives while
monitoring progress towards achieving these targets.
Social issues

Non-financial KPI

Respect for human rights

Implementation of education on human rights andharassment for all employees
Uptake of parental leave among men
Employment of people with disabilities
Career training for employees over 50 years old

Maximizing humancapital andcoexistence withsociety [Society (S)]

Promotion of diversity(including workstyle reforms)

Ensuring occupational safety
and health
Improving employee
engagement

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionHealth Indicators

Promotion of Diversity

Materiality

Value Creation
Story

Installation of gender-neutral bathrooms at companyowned offices

Results

Targets

FY2022

FY2030

Irregular
implementation

100%

26.5%

100%

2.30%

3.0% or more

Not implemented

100%

Implementation as early as possible
no later than FY2025

Paid leave taken

72.9%

80% or more

Paid leave taken for five or more consecutive days

23.0%

80% or more

Number of serious work-related accidents (lost work)

2 cases

0 cases

Average of 6.8
points for 5 items

Full score for all
items

Well-being survey score (Well-being points)*Self-evaluation of employee well-being

We believe that health is the foundation for realization of well-being, and we have established health indicators that lookahead to the health of the next generation, in addition to those that prepare for current and future health risks. By setting
specific targets, we promote health and productivity management with the aim of enabling each employee to review their
daily life and make their own efforts toward the realization of well-being.

KPI

Resultindicators(physical
health)Behavioral
indicators(lifestyle)

Present(prevention ofpresenteeism andabsenteeism)

Rohto’s Health and Productivity Management Declaration
Our aim is to become a company fully staffed by “healthy human resources”
who will always be able to healthily thrive in their daily work.
We hereby declare that we will strive to further promote health andproductivity management so that our healthy employees will lead to a healthy society,and on to a healthy next generation.

FY2022
results

FY2023targets

14.8%(6.1%+8.7%)0%Proportion of female with anemia*1

14.2%

0%

Proportion with a lower health age thanchronological age*2

59.6%

80%

Proportion of smokers

2.8%

0%

Proportion using alcohol in moderation*3

76.9%

100%

Proportion sleeping for at least 6.5
hours

32.4%

50%

Proportion of persons taking 30 min. of
exercise at least twice a week

38.3%

50%

Proportion of persons who walk 8,000
steps and practice 20 minutes of brisk
walking per day

54.9%*450%*1 Anemia is defined as a hemoglobin level of less than 12.0 g/dl.
*2 Lower health age than chronological age is defined as demonstrating younger results than actual age in terms of physical fitness measurement results (physical fitness age, walking age,brain activity age).
*3 A single serving is defined as less than approximately 360mL for men and less than approximately 180mL for women.
*4 Average during the walking event Winter 2022 (3 weeks)

At our company, under the Chief Human Resources Officer(CHRO), the Health Management Promotion Group of the
Human Resources and General Affairs Division takes thelead in promoting health and productivity management
initiatives in collaboration with the human resources andgeneral affairs department of each base, HealthAmbassadors, Safety and Health Committee Members,
and Rohto Group Health Insurance Society.

Board of Directors and Management Committee
ReportChief Human Resources Officer(CHRO)
Health Management Promotion
Group of the Human Resourcesand General Affairs Division
Full-timemembers

Industrial
physicians/publichealth nurses

Health Ambassadors/
Employees

Personnel andGeneral Affairs
Group sites

Bodyworkers
Registered dietitianInternational healthfood masterCooperation

We believe that health is the foundation for realizing personal growth and individual well-being, and we establishedthe Health and Productivity Management Declaration in 2018 with the aim of “working at Rohto to bring healthbenefits.”
Rohto’s definition of “health” is not simply “not being ill.” “True health” is founded on both mental and physicalhealth and allows us to bring passion (a sense of meaning in our jobs and our lives) to our daily work. We believethat employees possessing true health will support a healthy society as “healthy human resources.” We further
cultivate “healthy human resources” by focusing on creating opportunities for employees to make their own positiveefforts to stay healthy.

Next generation(prevention of healtheffects on the next
generation)

Proportion of persons with metabolic
syndrome or pre-metabolic syndrome

Promotion System
Promoting Health and Productivity Management

Future(prevention of lifestylerelated diseases,
physical diseases, andmental health issues)

Rohto Group
HealthInsurance
Society

Safety and HealthCommittee

Concrete Actions
In addition to enhancing health checkups and providing dental checkups and influenza vaccinations every year, we also
implement initiatives that encourage employees to get involved and make health maintenance a habit.
Moreover, since FY2022, in addition to the Human Resources and General Affairs Division and the Health Care Office,we have established an external contact point (The CARE) exclusively for Rohto employees, where employees canconsult with qualified medical professionals (nurses, midwives, public health nurses) about various concerns such as
pregnancy, childbirth, childcare, balancing illness and work, and mental health.

Occupational Safety and Health
Basic Approach to Occupational Safety and Health

External Evaluation
In March 2023, Rohto was selected as one of the White 500 Certified Health &Productivity Management Outstanding Organizations sponsored by the Ministry of
Economy, Trade and Industry and the Nippon Kenko Kaigi.
In February 2023, we were certified as a “Sports Yell Company 2023” by theJapan Sports Agency. The Company received “Bronze” level certification awarded
for certification of five consecutive years and earned a “+” certification awarded tocompanies whose implementation rate of playing sports once or more in a week is
at least 70%.
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ROHTO Well-being Report 2023

Occupational safety and health are the foundation for the continuation of our business activities, that is, to protect the
lives and health of workers involved in our business, and we consider occupational safety and health in the workplace tobe of the highest priority in order to continue providing our customers with “safety and security,” the foundation of the
products and services we offer.

Basic Policies on Occupational Safety and Health
Based on the recognition that protecting the occupational safety and health of our employees is the most important issue
for business continuity, we are working to create a safe and comfortable work environment based on our Basic Policies
on Occupational Safety and Health.
ROHTO Well-being Report 2023

44

Rohto’s
VisionSustainable Global Environment

Policy andregulations

MarketEnvironmental Policy

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionTransition risks and opportunities
Category

It is our duty to protect the global environment for future generations. We therefore set out an Environmental Policy
in 2005 and work to prevent environmental pollution and continuously improve the environment, both locally andglobally, through our corporate activities. In particular, based on the recognition that reducing greenhouse gas (GHG)
emissions to prevent global warming is a society-wide concern, we have been implementing a variety of initiatives
to conserve energy use at offices, plants, and other sites and reduce the environmental impact of our activities
including business travel and transportation.

Value Creation
Story

Impact on business

Degree ofimpact2°C scenario

Increased cost of sales and selling, general and administrative(SG&A) expenses due to rising transportation costs (risk)

MediumIncreased cost of sales due to rising costs to dispose of defective
products, etc. (risk)

MediumRegulatory control of
CO2 emissions

Increased cost of sales and SG&A expenses due to rising
electricity costs as a result of switching to renewable energy (risk)

MediumChanging demand andconsumer preferences

Increased cost of sales due to increase of development and raw
material costs incurred by the development of environmentallyfriendly products (risk)
Increased sales due to higher needs for environmentally friendly
products and improved market recognition of these efforts(opportunities)

Subcategory
Introduction of carbon
tax

Measures being taken
Promote efficient deliveries andpalletization
Reduce inventory and returned goods,
and sell older products and returned
goods in an ethical manner
Install solar generation (private power
generation) and exhaust-heat utilization
systems
Reduce raw material usage by adoptinglabel-free packaging and reducing
package inserts
Adopt label-free packaging, reducepackage inserts, and use environmentallyfriendly materials

MediumMediumPhysical risks and opportunities

1. Assessing environmental impacts brought about
by our business activities, products, and services,setting environmental objectives and goals, andestablishing environmental management system,
Rohto will regularly examine that system toupdate and improve it constantly.
2. Rohto will take initiatives to protect the environment,
abiding by applicable laws, ordinances, regulations,regional agreements, and other guidelines.
3. Rohto will facilitate the efficient utilization oflimited resources and energy.
4. Rohto will facilitate the proper management andthe reduction of chemical substances that affectthe environment.
5. Rohto will facilitate the reduction and recycling ofwaste.

6. Rohto will advance with the introduction of novel
environmental technology to prevent pollution
and continuously improve the environment.
7. Rohto will strive to develop products that reduce
the environmental burden at each process, fromdesign, formulation, manufacturing, transportation,
distribution, and use to disposal.
8. Rohto will continuously promote environmental
education for all our officers and employees toenhance their understanding and appreciation ofpollution prevention and environmental conservation.
9. As a member of local society, Rohto will proactively
join in regional activities for environmental
conservation to pursue coexistence with local
communities.
10. This Environmental Policy is documented andpublicly announced, and Rohto will keep all theofficers and employees informed about the policy.

Responding to Climate Change (TCFD)
Taking seriously the impact of natural disasters caused by global warming, in June 2021 we announced our endorsementof the recommendations made by the Task Force on Climate-related Financial Disclosure (TCFD) and set our CO2* For Rohto Pharmaceutical’s non-consolidated basis only.
emission reduction target.*Governance
In September 2021, the Company established a Sustainability Committee to discuss risks and opportunities related toclimate change, determine policies for addressing them, and roll out these policies to the Group. The Board of Directors
receives reports on the content of these deliberations and discussions, and deliberates on the Group’s response to
climate change, including disclosure to and dialogue with stakeholders and capital expenditure plans from a long-term
perspective, and supervises the implementation of these plans. The Sustainability Committee consists of two Directors
and one Outside Audit & Supervisory Board member who serves as an advisor, and is chaired by an Executive Vice
President. The Executive Vice President concurrently holds the position of Chief Financial Officer (CFO) of the Group, andis responsible for evaluating and managing environmental issues as financial issues.

Strategy
We evaluate the impact of risks and opportunities related to climate change on our business, focusing primarily on thefinancial impact. We have local development and production bases in major countries with business footprint and havebuilt a system that is resilient to the fragmentation of the value chain caused by climate change. Here, we assumed a
2°C scenario and analyzed the comprehensive impact on our major global operation bases: Japan, China, Vietnam, theAmericas, and others. At this point, we are only assessing the 2°C scenario. However, going forward, we will assess andevaluate various scenarios on an ongoing basis and deliberate on countermeasures to enhance our resilience to an
uncertain future.

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ROHTO Well-being Report 2023

Category

Chronic

Degree ofimpact2°C scenario

Increased procurement costs due mainly to a supply shortage ofnatural materials (risk)

MediumIncreased energy bills due to extended use of air-conditioners(risk)

Small

Flooding of plants and offices in the lowlands (risk)
Reduced sales of anti-dryness products (risk)
Increased sales of sunscreen and the like (opportunity)—
MediumMediumReduced earnings due to the stoppage of procurement andsupply caused by supply chain disruptions (risk)

Large

Subcategory

Rising averagetemperatures andextreme weather events

Rising sea levels
Fluctuations in demand
for seasonal products
Acute

Impact on business

Typhoons and othernatural disasters andextreme weather events

Measures being taken
Diversify sources of procurement andoptimize inventory levels
Introduce summer time, allow businesscasual attire, and accelerate other energy
conservation efforts
Prevent unnecessary overtime chiefly byreforming work styles
Expect almost no impact at present
Create a portfolio not relying on particular
products
Collaborate closely with suppliers anddistributers while diversifying sources ofprocurement

Risk Management
In accordance with the framework proposed by the TCFD and the prediction of changes in the external environment, theSustainability Committee identifies the degree of business impact of the risks posed by climate change, based on our
resources and the services we provide. The Sustainability Committee manages the identified risks and holds discussions
on their responses. The Committee convenes the heads of related sections as necessary to confirm more specificmeasures and promote them in a flexible manner. The Sustainability Committee also evaluates and manages risks otherthan environmental issues that may affect the sustainability of our business in a comprehensive manner. Depending on
the case, the Sustainability Committee will also discuss with the Compliance Committee, which is chaired by the
President and Chief Operating Officer, to formulate a BCP.

Metrics and Targets
We have set our CO2 emission reduction target for Scope 1 and 2 for 2030 at a 46% reduction compared to fiscal 2013
levels, and are taking actions to achieve this goal. CO2 emissions in fiscal 2022 were 13,120 tons for Scope 1 and 2
combined (reduction of 17% compared to fiscal 2013 levels). Going forward, we will calculate Scope 1 and 2 emissions
by summing the emissions of domestic and overseas subsidiaries with major production bases, and we will work towardrefining the calculation of emissions and setting a target for Scope 3.

Initiatives to Achieve a LowCarbon Society

Scope1(thousand t-CO2)
20.0

Scope215.0

Trends in CO2 Emissions (Scope 1 and 2)
10.0

We have been working toward our goal of reducing CO2
emissions from Scope 1 and 2 by 46% (compared tofiscal 2013 levels) by 2030.
In fiscal 2022, we achieved a 17% reduction in CO 2
emissions, while expanding the scale of our business to137% of fiscal 2013 levels. This was attributable to aswitch to carbon-free electricity from renewable energy
sources and the operation of solar generation facilities.

11.1 10.4 10.3

9.9

9.2

5.5

4.8

4.7

5.0

5.4
0

5.5

6.7

6.9

5.9

6.7

7.3

7.2

2015 2016 2017 2018 2019 2020 2021 2022

(FY)

Note: As we changed the calculation standards in fiscal 2021 to conform to the GHG
Protocol, some of the figures above include emissions from gasoline and othersources.

ROHTO Well-being Report 2023

46

Rohto’s
Vision(thousand t-CO2)

CO2 Emissiong for Entire Value Chain
In fiscal 2021, we started measuring CO 2
emissions in our entire value chain—from raw
material procurement to manufacturing,transportation, marketing, and post-use
disposal—based on compliance with the
GHG Protocol Scope 3 Standard. In fiscal
2022, our CO2 emissions per unit of net sales
increased only slightly year on year, however,total emissions increased owing to soaring
raw material prices and strong net sales.
Going forward, we will continue working toenhance measurement accuracy. In parallel,
we will endeavor to reduce our environmental
impact, primarily by accelerating thedevelopment of environmentally friendly
products that will result in less Scope 3
Category 1 (purchased goods and services)emissions in particular, as those account for
the vast majority of our emissions.

1

2
3

0
5

6

4 7
6

Scope 1
Scope 2 (market-based)
Scope 3Purchased goods and services
Capital goods

Total CO2 emissions
in fiscal 2022:
207

Fuel- and energy-related activities(not included in Scope 1 or Scope 2)
Upstream transportation and distribution
Waste generated in operations

Value Creation
Story

Realization of Well-being
through Business47

ROHTO Well-being Report 2023

Data
SectionUsing recycled plastic
We are gradually switching thematerial for bottles, pouches,and blister packs tomechanically-recycled PET
made from recycled used PET
bottles. Also, we started using
recycled polypropylene for the
middle layer of the De Ou
bottle in fiscal 2022.

Using biomass materials
We are gradually switching thematerial for bottles andpouches to biomass plastic
m a d e f ro m p l a n t - d e r i v e dbiomass. In fiscal 2022, weswitched the 50 Megumi
product bottles to biomass
plastic ones, and launched the
Repair One lip balm sticks thatuse biomass plastic containers.

Upstream leased assets

171

Downstream transportation and distribution

End-of-life treatment of sold products

Using pallets upcycled from ocean waste
In an effort to reduce the environmental impact of our logistics operations, we introduced plastic pallets made in part fromocean-bound plastic (OBP)* to store, load, and unload products at our distribution centers. Those pallets have been
progressively put into use since August 2022.
* Plastic material collected from communities with no formal waste-management system within 50 km of the shoreline.

Reduction of paper usage

We established our own eco label, “R-eco” symbol, in 2019. We
are introducing this symbol to our Hada Labo series and otherenvironmentally friendly products.

Reduction of plastic usage

Reducing blister packs
We have also been simplifying
product packaging withconsideration for theenvironment. In 2022, weceased to use blister packs forthe De Ou deodorants. Thishas made waste sorting easierfor customers, and enabled us
to cut back on the use ofplastic and paper.

Corporate
Governance

Employee commuting

Environmentally Friendly Product Development and Materials Selection

91

Coexistencewith Society

Business travel

We believe that “the health of our planet is essential for thehealth of people,” and in order to make effective use of limited
natural capital, we not only use environmentally friendly
ingredients and materials, but also actively work to reduce theamount of waste after use by our customers. While paying
close attention to customer needs and ease of use, we areswitching to environmentally friendly materials and displaying
the “R-eco” symbol on applicable products.

%
reduction

Sustainable Global
Environment

Use of materials with low environmental impact

Initiatives for a Recycling-Based Society

Offering refillable products
We h a v e s t a r t e d o ff e r i n g
refillable cream products withfour stock-keeping units(SKUs) under three brands:
Obagi, Episteme, and SKIO.
Using an Obagi refill pod
reduces plastic by 91%
compared to buying a newcontainer.

Maximizing
Human Capital

Offering refill pouches
In 2005, the Hada Labo brandlaunched refills, and sincethen, we have actively adopted
refills in new brands. In fiscal
2022, this resulted in a
reduction of 1,100 tons ormore in plastic usage.

Reducing eye-catchingstickers
Since 2021, we have been
gradually eliminating plastic
eye-catching stickers attached
to our products in an effort to
reduce the amount of plastic
used. In fiscal 2022, our Acnes
products ceased to use eyecatching stickers and, instead,started to print the information
directly on the productcontainers.

Approx.

Elimination of enclosed separate
package inserts
By printing the necessary package inserts
for OTC medicines on the inside of thepaper box, we have reduced the amountof paper used for the package inserts thatused to be enclosed, as well as theamount of paper discarded. This initiative
has progressively been introduced tocertain eye drops and dermal medicines.

Reduction of packing materials
We reviewed ways of packing fortransportation, as a result of which someproducts that were put into inner boxes are
now packed using cardboard dividers.

Utilization of environmentally friendly paper materials
We promote the utilization of environmentally friendly paper in our businessactivities, including paper used for product boxes, package inserts,
pamphlets, and sales promotion materials. As a result, 63% of our productboxes* are made from paper certified by the Forest Stewardship Council(FSC).
* Product SKU basis.

1,100

tons reduction

Initiatives with Business Partners
Sale of older products left behind by product updates through the Go
Ethical initiative
Since July 2020, we have been participating in Go Ethical, an initiative that aims to
reduce loss from product wastage in the popular OUTLET section of the LOHACO by
ASKUL, an online shopping platform for general consumers run by ASKULCorporation. We are reducing loss from the wastage of products that have no quality
defects but would previously have been destined for disposal*, by reselling them in theoutlet section.
The Go Ethical initiative received the Commissioner of the Consumer Affairs Agency
Commendation at the Fiscal 2022 Award for Good Practices of Consumer-Oriented
Management.
* Unopened, discontinued products returned from distributors and wholesalers.

ROHTO Well-being Report 2023

48

Rohto’s
VisionInitiatives for Water Resources Conservation
With economic development and population growth, the world’s demand for water is increasing rapidly. Limited
water resources also pose a major challenge to society in terms of its quality. Our business activities require acertain amount of water use. Based on the recognition that our business is closely related to water resources, weconsider the effective use of water resources to be our social responsibility. In accordance with our Environmental
Policy, we engage in environmental preservation activities such as effective use of water resources, reduction ofwater usage, and prevention of water pollution from our entire business.
Efficient use of water

Our main plant, the Ueno Plant, uses groundwater. The wastewater generated in the groundwater refining process isreprocessed and recycled in an effort to efficiently use our precious water resources.
Reduction of water usage

Water use is essential to our products themselves, and water use will increase as production volume increases. Water isalso required for washing and other production processes to maintain quality. We are working to effectively reduce theamount of water used so that we can minimize environmental impact as much as possible while maintaining productquality. In addition to water usage at our plants, we are also working to control water consumption in flushing of toilets
and hand washing in offices.
Improvement of wastewater quality

Through regular daily monitoring and adjustments, we strive to reduce the impacts caused by wastewater discharge.

Initiatives for Biodiversity Conservation
Recognizing that all of our business activities benefit from and impact the natural environment, we are committed topreserving biodiversity for a sustainable society by working in harmony with the natural environment.
We will strive to understand how our business activities relate to and impact biodiversity, and work to avoid or
minimize the impact.
We will strive to conduct our business activities in a manner that takes into consideration the ecosystems of
the regions in which we operate.
We will strive to preserve the environment by promoting the development of products and technologies thattake biodiversity into consideration.
We will strive to raise employee awareness of biodiversity and support and promote environmental
preservation activities through cooperation and partnerships with a variety of related stakeholders.
We will comply with national and international agreements and laws regarding biodiversity.

Dealing with microplastic beads
Microplastic beads are sometimes contained in cosmetics such as
cleansing agents, but recently concerns have been raised both inJapan and overseas regarding their environmental impact, such as
marine pollution. We stopped adding microplastic beads to our
new cleansing products in 2010, and in 2016 we completed theswitch to microplastic bead-free formulas for our existing cleansing
products.

Utilization of sustainable raw materials
Palm oil is a vegetable oil obtained from the oil palm tree, some ofwhich is also used as a cosmetic ingredient (fatty acids andglycerin). In recent years, however, various problems have arisen,
including the destruction of tropical rainforests in relation to thedevelopment of oil palm plantations. We select and procuresustainable raw materials as much as possible. We will continue towork with suppliers to utilize sustainable raw materials.

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ROHTO Well-being Report 2023

Consideration for marine pollution andcoral protection
We have been making efforts to develop sunscreen that
does not contain ingredients with concerns of causing
marine pollution and coral die-off. These ingredients are
essential for sunscreen effectiveness, and are found inmany sunscreen products. However, we have developed
sunscreen products equipped with high sunscreen
effectiveness, comfort of use, and environmental
friendliness, without containing these ingredients by making
full use of our formulation technology. Our efforts
culminated in February 2022 in thel a u n c h o f t h e N E X TA
sunscreen series, which
was enhanced in January2023 by adding a new
product. We will continue
to develop products thatoffer both environmental
friendliness and the easeand comfort of use.

Value Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionCoexistence with Society
Respect for Human Rights
Basic Approach to Respect for Human Rights
With the aim to realize a society with well-being, we are expanding our business activities not only in Japan but also
throughout the world, and respect for human rights is the foundation of all our business activities. We recognize that wemay directly or indirectly affect human rights in the process of conducting our business. We support and respect
international norms related to human rights, such as the United Nations’ International Bill of Human Rights*, the ILO
Declaration on Fundamental Principles and Rights at Work of the International Labour Organization (ILO), andconventions related to workers’ rights, including wages and working hours. We uphold the Ten Principles of the United
Nations Global Compact as its signatory company and support the Guiding Principles on Business and Human Rights,
and will implement initiatives based on these principles. We will also comply with the laws and regulations applicable ineach country or region where we conduct our business activities. In the event of a conflict between internationallyrecognized human rights and the laws and regulations of a country or region, we will pursue measures that respect
international human rights principles.
* The International Bill of Human Rights is the collective name for the following three documents: the Universal Declaration of Human Rights and its treaties, namely the International
Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights.

Human Rights Issues of Particular Importance
Prohibition of discrimination and harassment

Prohibition of all forms of discrimination and harassment, respect of diversity, and provision of equal opportunity
Guarantee of workers’ rights

Prohibition of child labor and forced labor (including slavery and human trafficking)Respect for freedom of association and the right to collective bargaining
Prevention of low-wage work (work below minimum and living wage) and long working hours
Ensuring of occupational safety and health (including workers’ physical and mental health)Respect for privacy

Respect for privacy, such as the protection of personal information, including those of customers and employees
We will endeavor to establish and work toward the ongoing implementation of a human rights due diligence system toidentify, prevent or mitigate negative impact to human rights, and to take appropriate and effective remedial measures.

Labor and Management Cooperating to Address Human Rights Issues
The Company guarantees basic labor rights to its employees and allows them to organize a labor union and retain theright to collective bargaining. In labor-management consultations, labor and management work closely together to share
information on issues such as working conditions as well as the working environment, and labor and management
engage in a unified effort to resolve issues. At our overseas locations, we strive to build good labor-management relations
with labor unions in accordance with the labor laws and regulations of each country.

Example of human rights initiatives: Same-sex partner registration system
In order to recognize the diversity of our employees and promote a corporate culture that encourages a sense ofwell-being through mutual respect, in January 2022 we introduced a same-sex partner registration system forsexual minority (LGBTQ) employees directly hired by us. This allows the use of special leave for marriage,
childbirth, and other reasons, as well as application for childcare and nursing care leave, etc., in the samemanner as marriages between persons of the opposite sex.

ROHTO Well-being Report 2023

50

Rohto’s
VisionBuilding a Sustainable Supply Chain

Value Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

In order to achieve stable raw material procurement, we have been working to diversify our procurement bases byutilizing our global network. Local procurement and local production also contribute to risk diversification.
Moreover, we have established Rohto Group CSR Procurement Guidelines, with the aim of contributing to therealization of a sustainable society together with our partner suppliers. We work to familiarize Group companies andsuppliers with these guidelines, while joining hands with procurement stakeholders to promote activities in compliance
therewith, so that we can detect various risks and rectify issues relating to procurement activities at an early stage
wherever they occur in the supply chain. Through these efforts, we are committed to solving social issues and enhancing
the corporate value of both our Group and suppliers.

Corporate
Governance

Data
SectionIn order to provide reliable and safe products, we established our Quality Policy in January 2004, and all members
work together in accordance with this policy in their daily operations. Our Quality Policy is reviewed to keep pace withthe times and the expansion of our products with the aim of constantly meeting the growing needs of our customers
and patients. In April 2022, we introduced a new Quality Policy, having reviewed the previous policy with a view toensuring higher quality and safer use of our products by customers as we make a full-scale entry into the prescription
medicines business. We will pursue even higher levels of quality and safety for all our products and activities.

<Quality Policy>

Rohto pledges to provide all people with happiness and security by:
1. ensuring compliance and endeavor to communicate the truth;

Achieving Sustainable Delivery with Business Partners

2. controlling risks based on scientific evidence and pursuing highquality and safety; andAmid the concern for a logistics crisis caused by driver shortages and soaring fuel prices, we are implementing initiatives
not only to reduce the environmental burden of logistics activities but also to promote the well-being of drivers by
improving delivery efficiency.
Since our products are mostly pharmaceuticals and cosmetics, they tend to be relatively small in size and eachdelivery tends to be a small quantity of a variety of products. Therefore, with the cooperation of business partners, we aremaking various efforts such as bulk deliveries and ordering by pallet tiers. This has reduced the loading and unloading
work that used to burden the drivers, and changing the delivery time enabled the reduction of waiting times at thedelivery and pickup locations. In addition, we work on making deliveries to distributors by utilizing the unused upper
space of trailers that deliver products to our large warehouses. This makes it possible to reduce transportation thatwould be made by 76 trucks with a capacity of 10 tons each.
Pickup location

Coexistencewith Society

Quality and Safety Assurance

Sustainable and Responsible Sourcing

BeforeSustainable Global
Environment

Delivery station

3. valuing the communication and continuing to improve by promoting
transparency of information.

Our Quality Policy is a guideline for providing safe
products. To familiarize all of our members with the policy,
we have distributed Our Principles Cards to them andinstalled a Quality Policy board in each facility. These
initiatives reflect our belief that quality efforts should bespearheaded by the President and other management
members.

President and Chief Operating Officer

Masashi Sugimoto

Company-wide Commitment to Quality Assurance Involving the Top Management
We have an organization in which the three officers of the manufacturing authorization (General Marketing Manager,
Quality Assurance Manager, and Safety Management Supervisor) work together to guarantee the quality of all our
products. We promote a system in which not only the manufacturing and quality sections, but also the entire Company
including the management team, is committed to quality and safety. The same Quality Policy applies to our Group
companies, and we have a system in place to realize a high level of quality assurance.

Distributor
Rohto

President & Director(s) in charge

Rohto large warehouse(in Kanto)
Corporate QA
and Safety
Vigilance section

After

Rohto large warehouse(in Kanto)

Rohto

Quality AssuranceManager

Distributor

MarketingsectionWith respect to transporting products to the Kyushu region, Rohto and its business partner PALTAC CORPORATION
have been advancing a modal shift since fiscal 2021. As a result, the modal shift rate has doubled, leading to improved
working conditions for long-distance truck drivers as well as reduced CO2 emissions.
Going forward, we will continue to cooperate with our business partners to improve efficiency and environmental
friendliness.

General Marketing Manager

Safety Management
Supervisor

R&D section

Purchasing
sectionOsaka Plant

Ueno Plant

R&D QARaw materials
and packaging
materials

Quality section

Quality section

Production
section (Plant)

Production
section (Plant)

Regulatory
sectionMarketingauthorization(three officers)

Overseas
Group companies
Call center
Sales section

Order-receiving Regenerative Overseas Groupsectionmedicines plant manufacturing
sites
Distribution
centerQuality section

DomesticGroup
companies

Production
section (Plant)

Further Quality Enhancement through Cooperation among Group Companies
Rohto
distribution
centerShipping distance:
460 kmThe Port ofShinmojiTransport
distance:
100 kmThe South
Port of Osaka

Landtransport
Marinetransport

Rohto
distribution
centerPALTACCORPORATION

Transport distance: 800 km

Transport
distance:
100 kmPALTACCORPORATION

CO2 emissions from transporting 1 ton of cargo 1 km can be reduced by approximately 80% when using a ferry.

51

ROHTO Well-being Report 2023

The Rohto Group Marketing Authorization Holder Joint Meeting is regularly held as a forum for information sharing anddiscussion among five Group companies (Rohto Pharmaceutical Co., Ltd., Rohto Nitten Co., Ltd., Amato Pharmaceutical
Products, Ltd., Mayado Pharmaceutical Co., Ltd., and Qualitech Pharma Co., Ltd.) with the aim of enhancing the quality
and safety of the Group’s domestic manufacturing plants and building a platform for such enhancement. In addition, we
check manufacturing operations, records, sanitation standards, and other plant-related details to ensure that there are nodiscrepancies with approval documents, while conducting mutual inspections to make sure that there are no irregularities.
We also endeavor to enhance the management capabilities and solve the issues of individual companies by introducing
outstanding human resources. These initiatives are aimed at raising efficiency through human resource development andcollaboration, creating a compliance system, and sharing information on safety activities. Our Group companies arecomposed of various predecessors, each of which has a quality system that has been cultivated over many years. Buildingon the strengths of individual companies, the entire Group works together to provide even higher quality products.
ROHTO Well-being Report 2023

52

Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionInitiatives for Society

Safety Initiatives
We read through all information from our customers and patients, as well
as from academic societies and overseas, to regularly check andevaluate whether our products are safe and that they are being usedcorrectly. In cases when it is considered necessary to alert the public
about safety or usage, we will revise the Precautions and otherinformation as well as communicate the information to the public. These
activities are conducted in compliance with the Act on Securing Quality,
Efficacy and Safety of Products Including Pharmaceuticals and Medical
Devices, GVP Ministerial Ordinance*, and other regulations. The ultimate
goal of our safety measures is the well-being of our customers andpatients by ensuring that our products are used correctly and safely.

Health hazard
occurrence
Safety informationcollection andaccumulation

Appropriateuse

For safe use ofProvision of information/
Disclosure of information

our products

Determinationof response
measuresDataevaluation andanalysis

Considerationof safety
measures* Good Vigilance Practice (GVP) Ministerial Ordinance: A law to ensure that companies properly implement safetymeasures.

Compliance with Legal Guidelines
There has been a series of misconduct in the pharmaceutical industry. Based on the legal compliance guidelines issued
by the Ministry of Health, Labour and Welfare, we have prepared a document titled “Rohto Legal Compliance System”
and made it available to all employees. In addition, we provide all employees with compliance training using e-learning(Rohto Academy) on the contents of “Rohto Legal Compliance System” to deepen their understanding of the importanceof legal compliance and our system, thereby solidifying our compliance system.

Quality Management System
Our manufacturing, quality control, and logistics base, Ueno Techno
Center, has a highly automated eye care production line that enables us to
produce a wide variety of products. The high quality assurance systemand flexible production lines cultivated in pharmaceutical manufacturing,
advanced aseptic and foreign material control technology, and centralized
control of test data using a Laboratory Information Management System(LIMS), etc. enable high quality and highly efficient production systems.
The center was the first Japanese pharmaceutical manufacturer’s facility tocomply with FDA Part* 1, and has also acquired ISO13485*2 and CE
marking*3, and is actively promoting the provision of products overseas.

As part of our corporate philosophy, we state that “We shall address issues concerning society at large incollaboration with all of the people connected to the Company, and we will share the benefits gained through theseendeavors.” Accordingly, we are actively engaged in activities that contribute to society and consider them to be an
important theme of our business activities. Among other things, we are committed to health and support of the next
generation, vitalization of local communities, and development of medicine, over the long term in order to realize asociety with well-being.

Support for Next Generations
The Michinoku Future Fund providing
support for orphans from the Great East
Japan Earthquake
The Michinoku Future Fund is a post-high school
scholarship fund for orphans from the Great East
Japan Earthquake. The Fund is run by four
companies: Kagome Co., Ltd., Calbee, Inc., Ebara
Foods Industry, Inc., and Rohto. The circle ofsupport has expanded beyond industry boundaries,
with donations totaling 5.3 billion yen and thenumber of scholarship recipients reaching 1,099 asof April 30, 2023. We will continue to provide longterm support for approximately 25 years until thechildren who were in the womb at the time of thedisaster graduate from university, so that they cancontinue to pursue their dreams and hopes without
having to give up due to financial reasons.

Participating in the scholarship partner
program of Kamiyama Marugoto
College of Design, Engineering and
Entrepreneurship
Having opened in April 2023, Kamiyama Marugoto
College of Design, Engineering and
Entrepreneurship provides novel education thatcombines the three pillars of technology, design,and entrepreneurship, with the goal of fostering
entrepreneurs who can change society byleveraging their ability to create things andgenerate innovations. We endorse the college’s
ideal and have joined its scholarship partner
program that is aimed to make tuition free throughdonations. We intend to create opportunities forthe scholarship recipients and companies to work
together for a better future.

*1. FDA Part 11 is standards for electronic records management stipulated by the U.S. Food and Drug
Administration.
*2. ISO 13485 is an international standard on quality assurance specifically for medical devices.
*3. CE marking is used to indicate a product has passed European safety testing.

Efforts to Provide Safe and High-Quality Products

ROHTO Foundation for Children’s FutureWith the aim to realize a society with well-being, we bring a variety of products and services to society. To contribute to
the well-being of the earth and all the people living on it, we make every effort to provide even safer and higher-quality
products, at all stages from development to raw material procurement, manufacturing, distribution, sales, and use.

R&D

Acceptanceand testing of
raw materials

53

Production
planning

Procurement

Manufacturing
Quality
management

Distribution

Retailers
Medicalinstitutions

Measurement

Preparation

Filling

Packaging

Final testing

ROHTO Well-being Report 2023

Customers
Patients

Shipping

In 2021, we established the ROHTO Foundation for Children’s Future
to support children, who are the future of society, by respecting theirindividuality and fostering their perspectives to explore and support
their diverse learning. In fiscal 2022, we provided funds andmentoring to seven children to support their research. We also
signed a cooperation agreement with SPACE inc. and the Endowed
Institute for Empowering Gifted Minds at the University of Tokyo
Graduate School of Arts and Sciences; a project cooperationagreement with the Board of Education of Higashiosaka City inOsaka Prefecture; a cooperation agreement with SPACE inc. andthe Board of Education of Kamakura City in Kanagawa Prefecture;
and a comprehensive cooperation agreement with the Board of
Education of Toyooka City in Hyogo Prefecture. We are committed
to contributing to the well-being of individual children throughongoing efforts to expand their well-being network.

ROHTO Well-being Report 2023

54

Rohto’s
VisionCoexistence with Local Communities

Value Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionHealth Awareness Enhancement Activities
Publication of Fact-finding survey on pregnancy

Comprehensive cooperation agreement with Ishigaki CityIn Ishigaki City of Okinawa Prefecture, we have worked to create the so-called sextic industry—which integrates production,
processing, and sale of agricultural and livestock farming products—as a recycling-oriented, environmentally friendly businessthrough our subsidiary Yaeyama Farm Co., Ltd., a specific agricultural production company. In parallel, we have made avariety of efforts to enhance the health of people and invigorate communities in Ishigaki City. For example, as part of thenation’s hometown tax donation system, we provide the agricultural products we have grown and its processed products as
the city’s gifts in return for such donations. Moreover, we have donated table tennis tables to the city and organized the
Ishigaki mayor’s cup table tennis tournament so that children can engage in sports
despite the ever-changing island weather. In February 2023, the city of Ishigaki,
Rohto, and Yaeyama Farm concluded a comprehensive cooperation agreement torealize sustainable community development. We aim to help solve the city’s issues,
such as the provision of food education for children, who are the future of Ishigaki,
and the enhancement of the health of local people. At the same time, we arecommitted to helping Ishigaki City implement its comprehensive regional strategy,
develop a sustainable community, and become a SDGs Future City as it aspires to.

Helping increase the consumption of milk and dairy products in Obihiro City
During the prolonged COVID-19 pandemic, the consumption of milk and dairy products remained low partly due
to a temporary suspension of school meals. In light of the situation, we undertook an initiative to stimulate theconsumption of milk and dairy products and increase people’s understanding of nutrients essential for children in
the growth phase, together with the city of Obihiro in Hokkaido during the period of March to April when school
meals were not available. Specifically, we provided all of the city’s 8,000 schoolchildren with a leaflet explaining
the calcium in milk as well as a free sample of our Senobic powdered drink (milk cocoa flavor) that is dissolved inmilk before drinking and supports children in thegrowth phase. We are determined to help local
communities solve problems and support thehealthy growth of children, who are the future ofsociety.

Through our Dotest pregnancy test and ovulation predictor kit, we have closely supported our customers who wish to
become mothers and fathers. In the course of providing information in various places, we have come to realize that there isa lack of information about pregnancy and childbirth, and that many people are anxious and worried about these issues.
Therefore, since 2018, we have conducted ongoing surveys to understand the current situation regarding pregnancy andchildbirth and to disseminate information, and published an annual Fact-Finding Survey on Pregnancy. The 2022 FactFinding Survey on Pregnancy, the fifth issue, revealed that about a half of the young adult respondents said they do notwant children. However, while reflecting their anxiety and worry oversociety’s direction, the survey shed light on the knowledge and efforts ofpeople who try to conceive. Working hand in hand with the media, we
continue to provide a wider range of reliable information so that we canhelp create a society with well-being in which everyone takes care ofoneself and lives one’s own way.

Initiatives to extend healthy life expectancy and the ability to walk without assistance
In March 2023, Rohto acquired a stake in ORPHE Inc., a company developing and marketing sensors to be embedded
in footwear, by subscribing for a third-party allocation of new shares. At the same time, Rohto reached an agreementwith ORPHE and ASICS Corporation on launching initiatives to extend healthy life expectancy and walking ability using
gait data, with the cooperation of Shimokitazawa Hospital. One initiative is to develop an algorithm that quantifies thedegree of ambulatory ability by reference to gait characteristics in both healthy and presymptomatic populations, andimport the algorithm into a module for wider use by individuals, corporations, municipalities, medical institutions, andother entities. The algorithm will be developed by combining and analyzing data provided by respective partners: inparticular, pedometer and walking pattern data to be collected through ORPHE’s sensors; the unique knowledge on footand gait that the ASICS Institute of Sport Science has developed over the years; and the clinical and medical data that
Shimokitazawa Hospital possesses. Another initiative is to develop a package that will be utilized in the medical area
when providing rehabilitation and guidance to outpatients with knee osteoarthritis (OA) and other foot conditions in theacute to recovery phase.

Karugamo Fund: Corporate matching gift
The Karugamo Fund is financed through a combination of employees’ voluntary contributions to a reserve fundand matched donations from the Company. Each year, the employees decide on therecipients of the Fund, and use them to support welfare and educational activities thatare needed in society. The Fund was started in 2004, and is participated by 1,213
employees as of March 31, 2023.
We engage in many other community activities.
For details, please visit our website at: https://www.rohto.co.jp/sustainability/society/community/ (in Japanese).

Contributing to the Development of Medicine
We are contributing to the enhancement and development of medicine by widely funding science and technology, basic
research, and clinical research to realize a healthy and prosperous society with well-being. We will continue to support
young researchers, particularly in ophthalmology, dermatology, and obstetrics and gynecology.
Scienceandtechnology

55

1977 -

Yamada Science
Foundation

Established by Kiro Yamada, our first president, to subsidize and promote basic research in the natural sciences
and with the aim to contribute to the enhancement of science and technology and public welfare.

Eyes1995 -ROHTO AWARD

The award is given to young researchers who have made outstanding achievements in both basic and clinicalresearch, with the aim of advancing ophthalmology research. The award has produced human resources that will
be future leaders in ophthalmology.

Skin2007 -

Japanese Associationof GeriatricDermatology
Research: Rohto Prize

Established by the Japanese Association of Geriatric Dermatology Research and the Company to widely
encourage and aid basic and clinical research and study on age-related dermatology.

Skin

Since 2008

Rohto DermatologicalResearch Fund:Endowment by Rohto
Pharmaceutical

The Fund provides research grants for innovative and budding research, with the aim of supporting andpromoting basic research that is expected to make a significant contribution to the development ofdermatological medicine.

Women2009 -

Rohto Women’s HealthResearch Award

Developed from the Society for Women’s Health Science Research, this award is presented to an institute thathas made a significant contribution to the development and enhancement of obstetrics and gynecology research.

ROHTO Well-being Report 2023

As a Leading Eye Care Company
We have engaged in various researches together with universities and medical institutions for more than 100 years,
focusing on the eyes with the desire to make people healthy. As a leading eye care company, we are committed toreexamining eye health issues faced by people around the world, and will strive to contribute to the Joy of Seeing
beyond national borders.

Bringing the Joy of Seeing to the World beyond National Borders
In June 2022, the Rohto Group companies worldwide jointly launched a Joy of Seeing (JoS) project with a view toadvancing efforts to maintain the eye health of people around the world.

Raising awareness of and providing support for children’s eye health and myopia
The first theme the project has been focusing on since 2022 is children’s eye
health and myopia, which is considered a major global health issue, especially inJapan and other Asian countries. To help combat the issue, we undertake social
initiatives such as hosting awareness-raising events, disseminating information,offering free eye check-ups, and providing eyeglasses.

The logo represents our wish that the project will bring the Joy of
Seeing to the world beyond national borders with the “o” of joy
signifying the globe and colors and the “ee” of seeing depicted as
the eyes of a smiling face.

ROHTO Well-being Report 2023

56

Rohto’s
VisionEye Care Support in Developing Countries
Appropriate eye care for indigenous peoples in remote areas. The Joy of Seeing has no borders
To help indigenous Brazilian communities where people could noteasily receive eye care treatments, we continue to support the
Amazonian Cataract Project, which has been ongoing for morethan 20 years. Several medical camps are held each year to
improve quality of life in remote areas. Ophthalmos Rohto iscontributing to healthcare beyond regional and ethnic barriers byparticipating through volunteer staff and providing instruments andproducts for cataract surgeries free of charge.

Providing intraocular lenses for free to help as many people
as possible regain their sight
PT. Rohto Laboratories Indonesia, established in 1996, was thefirst company in the ASEAN region to manufacture and sell
intraocular lenses (IOLs) for cataract surgeries. The company
overcame challenges such as the difficulty in getting local
ophthalmologists to understand the quality of its IOLs, and now
sells its products in 15 countries, including Indonesia. We believethat IOLs, which can reduce the number of people with loss ofvision caused by cataracts, are an important business that also
leads to social contribution. We are actively developing support for“vision,” including conducting charity cataract surgeries (offering
IOLs for free) in collaboration with ophthalmologists.

Creating the custom of taking care of eyes with our customers
Vietnam was the first country in which we developed an overseas
market from scratch, and we established a local office in 1996.
While there is no culture or custom of using eye drops as healthcare medicine, we continue to conduct educational activities topromote the importance of eye care and free eye examinations forschools and the general public. We also support the free cataract
surgeries provided at eye hospitals that are committed tosustainable business models.

Together with Our Business Partners
As part of our activities to support the Joy of Seeing for people around the world, we have been donating to eye care
support activities in Asian and African countries in cooperation with our business partners since 2016. This is an initiativein which the Company and our retail business partners work together as social partners in social contribution activities
that transcend business boundaries. Cataracts are the leading cause of blindness in the world, and tens of millions ofpeople are thought to be blind today. In Japan, the rate of blindness due to cataracts has become very low due toadvances in surgical treatment. Globally, however, many people are losing their sight due to cataracts, not only becauseof poverty, but also because they are not properly screened and diagnosed due to lack of medical personnel andequipment, or unable to receive treatment due to poor surgical techniques.
In fiscal 2022, the seventh term, we matched a portion of the sales of eye drops made by 11 social partners during
the period and donated 992,380 yen to an organization engaged in international eye care support activities. We take asense of mission and pride in our support activities, and will continue to implement them.

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ROHTO Well-being Report 2023

Value Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionRecipients of SupportOUI Inc.
OUI is a startup that aspires to reduce the number of people goingblind by 50% worldwide and help people with their overall healthstarting with their eyes. Advocating the concept of making available theexpert eyes of ophthalmologists to the world, the company has
developed the “Smart Eye Camera” (SEC), an ophthalmic diagnostic
device used by attaching to smartphones. Using the simple portable
SEC device, a pilot demonstration test has been underway since 2022
in Vietnam, Cambodia, Indonesia, and Mozambique in collaboration
with the medical institutions and ophthalmologists of the respective
countries.
Asia Prevention of Blindness Association (NPO)This organization works to prevent as many people of low-income as
possible from losing their sight in Vietnam and other countries of the
Indochina Peninsula and the rest of Asia. To that end, it offers freeophthalmic treatment, teaches techniques in ophthalmology, andprovides medical goods such as ophthalmic devices and materials. In
2022, the organization dedicated its energy to Vietnam where the zeroCOVID policy was enforced, offering IOLs for free and teaching medical
techniques in Vinh Phuc and Dak Lak Provinces. Furthermore, in thecities of Hanoi, Hue, and Haiphong, it helped the underprivileged who
could not afford eye treatment to consult with an ophthalmologist,
performed eye examinations, and engaged in other awareness-raising
activities.

A SEC pilot test conductedby Kenya’s medical institution
in a rural community

A surgery performed locallyby the Asia Prevention of
Blindness Association

Protecting the Eyes of Protecting the Eyes of the Next Generation
An increase in children with myopia has been a serious social problem in recent years. Studies indicate that the earlier
the onset of myopia, the greater the risk of high myopia later in life;*1 and that the higher the degree of myopia, thegreater the risk of eye diseases leading to vision loss down the road.*2 Whereas the increase in myopia cases is
attributable in part to genetic factors, the recent rise is thought to have been largely caused by environmental factors,
such as less time spending outdoors, more time spent in close works and changes in sleeping hours. Given that myopia
progression is fastest in children who are in the growth phase, it is paramount to focus preventive efforts on thosechildren. Rohto has been making active efforts to help children maintain lifelong vision health.
*1. Chua SY, et al. Ophthalmic Physiol Opt. 2016. *2. Flitcroft DI. Prog Retin Eye Res. 2012.

Obu City’s project to prevent children’s myopia
Rohto signed a memorandum of understanding concerning the projectof Obu City in Aichi Prefecture to prevent children’s myopia, with the city,
Department of Ophthalmology Protective Care for Sensory Disorders,
Nagoya University Graduate School of Medicine, and Sugi Pharmacy
Co., Ltd. Working hand in hand with these three partners, Rohto intends
to support initiatives and make awareness-raising efforts aimed atpreventing children’s myopia.

Encouraging preschoolers to adopt healthy eye habits
These days, smartphones and tablets are prevalent even among preschoolers. Whereas
expectations are high that tablets will facilitate learning, there is growing concern among
parents about the adverse effects of these devices on children’s eye health. From June tolate September 2022, Rohto implemented an initiative to protect the eye health ofpreschoolers, who are in the eye development phase, together with Benesse Corporation’s
Kodomo Challenge brand that supports the education and development of preschoolers.
Specifically, on our website, we provided a poster for parents and children to check visualacuity while having fun; anime for children to learn tips to protect eye health with Shimajiro,
Kodomo Challenge’s main character; and information for parents. We continue to help
children adopt healthy eye habits.

ROHTO Well-being Report 2023

58

Rohto’s
VisionA Conversation Between the Chairman of theBoard and an Outside Director

Governance at Rohto
for achieving sustainable

Value Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionPharmaceutical
growthCaptivated by the Company’s Attitude and Attracted by the
Chairman’s Intentions
Could you tell us how you came to beappointed as an Outside Director of Rohto
Pharmaceutical?
Iriyama: Of course, I had known the name before then,but the presence of the company known as Rohto
Pharmaceutical first became deeply engraved in my mind
in March 2011 after the Great East Japan Earthquake.
Back then, I was working at a university in the UnitedStates, so I was constantly worrying about the tragedy inJapan and feeling powerless to do anything. When I readan online news article about Rohto Pharmaceuticalhaving set up the Reconstruction Support Office within
two weeks of the earthquake and, in October that year,
having established the Michinoku Future Fund to support
orphans from the Great East Japan Earthquake until theyfinished graduate school*, I was deeply moved by thiskind of company that is seriously working for social good.
(*Established by Rohto Pharmaceutical and two other companies)

On my return to Japan, I was introduced to Mr.
Yamada through a mutual acquaintance. That would
have been around 2015. However, I had no inkling at thetime that I would one day become an Outside Director.

Yamada: With that chance encounter, I was very inspiredby Professor Iriyama, finding him to be very impressive
and to have opinions from broad perspectives.
Iriyama: I was greatly impressed by Mr. Yamada’s
friendly approach and his willingness to listen to people’s
opinions regardless of their rank or social standing, andhis almost too uninhibited, very aggressive dynamism. I
was asked to become an Outside Director several years
after that meeting, but what surprised me most was that
Mr. Yamada contacted me directly with the offer via asocial media messenger app, dispensing with all theconventional formalities.
Yamada: You have a very good memory.
Iriyama: Not long after, Mr. Yamada suddenly turned up,
on his own, at my research lab at my university. With nomention whatsoever about remuneration, he talked
eloquently about Rohto Pharmaceutical’s challenges andwhat he wanted to do, and about what kind of role heexpected of me. I was convinced that my fi rst
impressions had not been mistaken, and, deciding that I
wanted to work to be of service to society through thiscompany, I accepted the offer.

Having Outside Directors who speak up brings new life to the
Board
Chairman Yamada, could you tell us yourreasons for selecting Professor Iriyama asan Outside Director?
Yamada: The first person we asked to be an Outside
Director was Professor Toshihiro Kanai of Kobe University.
At the time, I had been feeling the need for humanresources development related to management, so I
approached Professor Kanai, who is a leader in that field.
Iriyama: So, Professor Kanai was the very first Outside
Director for the Company.
Yamada: Even after that, by inviting people withspecialist experience and knowledge about the key
management issues at various times to join the Board,
we have been increasing the number of Outside
Directors. Although I had also studied the basics ofmanagement at business school, I approached Professor
Iriyama because I wanted someone whom I could ask for
opinions from perspectives that differed from my own,

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ROHTO Well-being Report 2023

while considering what is happening now at the cuttingedge of business administration.
Iriyama: If I may ask again, why me?
Yamada: You are researching business administration
both widely and deeply. Amid many economists who are
conducting deeper research in narrow fields, I thoughtthat your multifaceted perspectives would be invaluable.
You also have global insights from your time at an
American university, and, in fact, I decided from our very
first meeting that I wanted you to join our Board of
Directors. I worried that if I left it for too long, you would
be swamped with offers from other companies, and wewould miss the chance to have you join our Board. I
thought we would surely regret it if that were to happen,
which is why I visited you out of the blue.
Iriyama: You really did arrive out of the blue. In fact, I did
receive many offers from other companies several years
later.

Kunio Yamada

Akie Iriyama

Chairman and Chief Executive Officer(Chairman of the Board of Directors)

Outside Director
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60

Rohto’s
VisionGovernance that creates “good” over a longer timeframe
Professor Iriyama, what are your impressions
and assessment of Rohto Pharmaceutical’s
Board of Directors and governance?
Iriyama: While it depends on what is being asked of theBoard of Directors, I was somewhat bewildered initiallybecause it was not the typical, textbook Board that I had
imagined. I had served as an Outside Director for a certain
foreign-capital company, and the Board of Directors of thatcompany was of a typical foreign style, in that, every time,they would probe into the numbers as far as they possibly
could. In contrast, the way that Rohto Pharmaceutical’s
Board of Directors was run was a clear departure fromthose kinds of Boards. Of course, they do care about the
numbers, but a great deal more time is devoted to
identifying the essence of issues and to visions for the
future. I found it to be a very unique company in thisrespect, so I reasoned that it may also be able to create agovernance structure that would take advantage of Rohto
Pharmaceutical’s unique characteristics and look different
from the common image of governance.
That reasoning turned to conviction when Ms. Haruka
Mera joined the Board as an Outside Director. As an
academic, I am less likely to be hesitant in voicing mycandid opinions, but I am no match for Ms. Mera. I feltthat this ability to select such talent as Outside Directors
and the way the Board of Directors meetings are run areboth unique characteristics and strengths of Rohto
Pharmaceutical.

Yamada: Thanks to our Outside Directors, who speak up
without hesitation from independent perspectives, I feelthat we have created a good quality governance structurethat is not just a matter of making up the numbers.
Iriyama: There are many cases in which Japanesecompanies have somehow adopted American governancemethods, but there is actually no perfect definition of
governance. One global leader in governance researchclaims that making proper returns to investors is what
constitutes good governance. Other people insist that thedefinition of governance changes with the times. If you
were to ask me to define governance, I would say that it isa system that controls the company in a sound way tomake things better for society, the company, its
employees, and its stakeholders. Whatever the definition,
there is no doubt that governance is essential for building
the foundations of management of the future.
Yamada: As evidenced by use of the English word
“governance” as is in Japan, there is no word in Japanesethat fits it perfectly. The Japanese words that mean“control” and “rule” feel too unilateral, and “administration,”“supervision” and “audit” are also not quite right. Focusing
on money and providing returns to investors would be themost primitive interpretation in a capitalist society, but it
seems to me that this is more of a short-range thing.
Companies that, while they may be making profits, aredestroying the environment and society would not beallowed to survive into the future. In that respect, I thinkthat what governance is all about is checking to see
whether or not, and how well, the company is providing“good” to society, the company, its employees, and its
stakeholders over a longer timeframe.
It is from this position that we are enhancing the various
functions as required, such as the Sustainability
Committee, Compliance Committee, and Information
Security Management Committee. My hope is that
Professor Iriyama and the other Outside Directors will
check, or rather watch over, how much “good” we are
generating not only from internal logic, but also from social
perspectives.

Toward a Board of Directors that is not all about adopting
resolutions, but that has more heated debate
Professor Iriyama, could you tell us whatways the Board of Directors could improveand how you have approached such areas
for improvement to date?
Iriyama: Every company has its own issues, and I believethat resolving those issues one by one is what will lead tosustainable growth. If I may be presumptuous about myown achievements, I do have a sense that my

61

ROHTO Well-being Report 2023

suggestions have led to the Board of Directors changing
little by little.
For example, in terms of how the Board meetings arerun, whereas in the past, they had mostly been run on a
proposal basis, lately, we have been able to strengthen
the discussion element of the meetings. Given theoutstanding line-up of internal Directors and the variety of
Outside Directors, I suggested creating time for more indepth discussion about long-term topics, and I am

Value Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capitalpleased to say that my suggestion was accepted.
Another was the establishment of “executive sessions,”
in which only the Outside Directors gather to discuss
future issues and what should be done about them.
Rohto Pharmaceutical is a very unique company, and I
want it to keep being unique long into the future, so I set
up these sessions as a mechanism to match thatuniqueness.
As to what has changed as a result, while Mr. Yamada
still serves as the chair of the Board of Directors
meetings, during the free discussion part of the meetings,
I now act as a facilitator. This came about because of an
opinion expressed by another Outside Director that Mr.
Yamada should also have more opportunities to express

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
Sectionhis own opinions. Because I am not aware of the internal
circumstances, I have more freedom to ask questions,and the other Directors have also become more proactivein speaking up, which I believe has given new life to theBoard meetings. What do you think?
Yamada: I completely agree. The Board of Directors is abody for making resolutions on matters specified by law,
so there is a tendency for meetings to become just a
repetitive process of explanations and resolutions. By
having Professor Iriyama facilitate the discussion section,
I am able to say what I want without hesitation, and thediscussions progress very constructively.

Strong individuality and the pursuit of the essence are typical
traits of Rohto Pharmaceutical
Professor Iriyama, what do you see as the
typical traits of Rohto Pharmaceutical?

Iriyama: Seen from my position as an outsider, Rohto
Pharmaceutical is so unique and distinctive, I could neverrun out of things to say about it, which makes it anextremely interesting company. I think that it is a company
that places great value in the essence of why they dowhat they do and what the purpose of their existence is.
With governance as well, it is clear from their selection of
Outside Directors that they are not merely playing lip
service and that they are trying to think seriously about
what the true essence is of that governance.
To the trained eye, it would be obvious from the lineup
of its Outside Directors, putting myself aside, what kindof company Rohto Pharmaceutical is and what it wants
to achieve. If we also look at the employees, thiscompany has brought together people who want tomake society a place that is overflowing with happinessand do good things for society, and who want to enjoy
themselves while they do so, so the company is brimmingwith vitality.
However, if I could make one small criticism, I thinkthat the company could do a better job at verbalizing
those intentions. For example, even though the company
has all these cosmetics brands that are being used by somany people, many of those users do not even knowthat the products they are using come from Rohto
Pharmaceutical.
Yamada: You may have a point (laughs).
Iriyama: Deciding that it may be my role to help put thattrue picture into words, I started up a YouTube channel
for in-house PR purposes. The channel, which is now
available also for public view, features various people
from within the company who talk freely about why theywork for Rohto Pharmaceutical and what kinds ofintentions they have behind their work. One thing thatstruck me after starting the YouTube channel was that,even though it has such a diverse workforce, at afundamental level, the company’s people all havesomething in common that is the essence of Rohto
Pharmaceutical. Verbalizing those strong intentions ascommonalities and manifesting them will, I believe, makeRohto Pharmaceutical an even stronger company.
Yamada: Not only is Professor Iriyama active in the
Board of Directors, but he has also jumped in among theemployees, communicating messages, and doing otherthings that go beyond previous notions of what an
Outside Director does. This is why I am convinced that I
was not mistaken in approaching him to join our Board.
However, on that question of verbalization, I always feelthat it is truly difficult to get the balance right. Messages
that make the Company’s policies and goals clearer
would be easy to understand for people both inside andoutside of the company, but conversely, they could also
cause employees in particular to become complacent.
This is actually my biggest concern, in that verbalization
runs the risk that employees’ thinking will stop at ‘This iswhat the company does, so that’s all we need to do.’ For
the Company to create value and grow in a sustainedmanner, we need people who are constantly thinking,learning, and growing. For that very reason, I want us tocherish an environment in which, instead of management
simply giving them the answers and directions, ouremployees are constantly thinking for themselves. I
believe that this will maintain a good sense of tension and

ROHTO Well-being Report 2023

62

Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionCorporate Governancelead to the development of our people. From theviewpoint of competitive strategy as well, it is because
Rohto Pharmaceutical has been able to keep turning thecycle of being seen as a company that is difficult tounderstand and somewhat nebulous, and then coming
up with something unexpected, that we have been able
to maintain our competitive advantage in business. There
are still many challenges regarding verbalizing andmessaging, as Professor Iriyama points out, and we will
make efforts to improve. I would be grateful if people
understand that, for the sake of our sustainable growth,
we give comprehensive consideration to our relevant
stakeholders and continue to explore areas for
improvement.

To be a company that always thinks seriously about long into the
futureCould you tell us your image of Rohto
Pharmaceutical going forward?
Iriyama: I have mentioned repeatedly that Rohto
Pharmaceutical is a unique and distinctive company.
Good companies are all a bit peculiar in this way. Japan
has a tendency, when something is different, tostereotype it as “peculiar,” but it is actually thosecompanies that are unique and that persistently pursue
original value that make longer contributions to society.
Rohto Pharmaceutical is quite a peculiar company, butwhat makes it interesting is that it continues to produce
steady results. It is this point that is so amazing to people
like me who have studied textbook businessadministration. When record high earnings are achieved,
ordinarily, the Board of Directors would be jumping forjoy. However, at this company, instead of rejoicing, theatmosphere is more one of ‘Yes, but Mr. Iriyama, we haveeven more important issues to consider.’ I am quite
enamored of the serious thought that is always being
given to what the essence is.
Yamada: Partly due to the fact that we are a mid-tiercompany based in Osaka that has had to compete withthe large companies from Tokyo, and that even though
we have grown significantly as a whole, if we look closer
at individual business domains, we were not evenfollowers, but merely a niche operator, we would not havebeen able to survive unless we kept challenging the big
players. In the areas of regenerative medicine and food, if
we looked up, there was no end in sight, and we have
had no choice but to keep up the challenge while
demonstrating our uniqueness among global
competition. It is the repetition of those kinds ofchallenges that has brought us to where we are today.
Iriyama: Rohto Pharmaceutical does not have a single
product genre that it can make profit with ease, does it?
Yamada: The market for beauty products is a firm one,but that makes the competition much more intense, andif we venture overseas, we come up against the giant
companies.

Iriyama: If I were to put that phenomenon into words,
while I doubt that Rohto Pharmaceutical is aiming to
make trillions of yen in sales, it has continued to growsteadily by 2-3% every year by surely sowing small seedsof innovation and nurturing them over many years until
they are ready for plucking. This is something that isunderstood by both the market and society, which is why
it has also earned the confidence of shareholders.
Moreover, the Company is constantly thinking about
the distant future and actively investing in that future,such as in regenerative medicine. While each individual
investment may be small, they take a long time. In
embarking on many different challenges, there will also
be many failures, but by persisting diligently, the buds ofthose challenges may eventually emerge. Once suchpossibilities have emerged, I believe that the Company
has made the next investment to make those buds
blossom and bear fruit. This seems to be such a typicalJapanese business model, but in fact, global companies
do the same. Those companies are more practicalminded about it, but in Rohto Pharmaceutical’s case,your intentions are aimed at a more long-term future.
Yamada: Thank you for verbalizing what we do soappropriately. If we were to only think about dividends forshareholders, raising earnings would be our top priority,
but if we are to focus on sounder, more sustainablecorporate growth, we cannot dispense with investment in
R&D and human resources. Without that, we would lose
the strength to generate long-term social good. While
Japanese companies in particular have the capability andcapital to make investments from long-term perspectives,
I feel that many of them are not that enthusiastic about
doing so. If that does not change, the future for Japan
will become quite bleak. If I may speak of my own dream,
it is that society and people will live long, healthy andhappy lives, and that we use Rohto as the tool to makesociety better and better.

Basic Approach to Corporate GovernanceAt the same time as fulfilling our social responsibility, we are striving to earn the trust and meet the expectations of ourshareholders, consumers, business partners, employees, and all other stakeholders, and achieve coexistence and coprosperity. We recognize that enhancing and strengthening corporate governance to achieve this is an importantmanagement challenge. We will develop an organizational structure for management and implement the necessary
measures for ensuring transparency and fairness in management and responding to changes in the management
environment in a prompt and accurate manner.

Efforts to Strengthen Corporate Governance
We have been making ongoing efforts to enhance the corporate governance system with a view to a sustained increasein corporate value.
No. of Outside
Directors / Total no.
of Directors

No. of female
Directors / Total no.
of Directors

2013

1/10

10.0%

0/10

0%

2014

2/13

15.4%

1/13

7.7%

2015

2/12

16.7%

1/12

8.3%

2016

2/11

18.2%

1/11

9.1%

2017

3/11

27.3%

2018

3/12

25.0%

2/12

16.7%

3/9

33.3%

2/9

22.2%

4/11

36.4%

3/11

27.3%

ROHTO Well-being Report 2023

2/4

50%

An Independent Outside Director elected
A female Outside Director elected

Nomination and Compensation Advisory Committee created
Evaluation of the Board of Directors’ effectiveness initiatedA female (internal) Director elected2019

Nomination Committee and Compensation Committee created2020

Compliance Committee created2021

Sustainability Committee created

2022

2/4

50%

An Overview of Corporate Governance System
Rohto has adopted the framework of a company with an audit and supervisory board. Through the appointment of four
Outside Directors and two Outside Audit & Supervisory Board members, we aim to incorporate outside perspectives atthe same time as strengthening management monitoring functions. Cooperation between the Audit & Supervisory Boardand the Internal Audit Office has enhanced the effectiveness and efficiency of audits. We have also increased thetransparency of management through the establishment of the optional Nomination Committee and Compensation
Committee. In addition to the regular meetings of the Board of Directors, extraordinary meetings of the Board of Directors
are held flexibly or resolutions are adopted in writing, to speed up the decision-making process in order to respond tochanges in the business environment promptly and accurately.

Corporate Governance System (as of June 30, 2023)
General Meeting of Shareholders
Election/
dismissal
Audit
reportAccounting
Auditor

Audit

Election/
dismissal

Election/
dismissal

Audit & Supervisory Board(audit of business execution)(decision-making/oversight of business execution)

Accounting
audit andinternal
control audit

Audit

Internal Audit OfficeNomination
Committee

Advise/report11 Directors

4 Audit & Supervisory Board members

Cooperation ReportManagement
and Supervision

Board of Directors
Audit

Compensation
Committee(incl. 4 Outside Directors)

Cooperation (incl. 2 Outside Audit & Supervisory Board members)
ReportReportRaise issues,
Oversight/selection/dismissal
reportChairman and Chief
Executive Officer
President and Chief
Operating Officer
Executive Meeting(Management Strategy Conference)

Internal audit

63

No. of Outside Audit &Supervisory Board
members / Total no. of
Audit & Supervisory
Board members

ReportBusiness Execution

Sustainability Committee
ReportCompliance Committee
Information Security
Management Committee

Instruction, President meeting

Business execution departments
and Group companies

ROHTO Well-being Report 2023

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Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionCorporate GovernanceManagement and Supervision

Composition of the Board of Directors

Board of Directors
The Board of Directors is composed of all Directors and operates with the attendance of Audit & Supervisory Board
members who have an obligation to attend. The Board of Directors is chaired by the Chairman and Chief Executive Officer.
Based on its fiduciary responsibility and accountability to shareholders, the Board of Directors aims to achieve thesustainable growth of the Group and enhance its corporate value over the medium to long term for the common interest of
the Group, its shareholders, and all other stakeholders. Toward that end, it makes decisions on important matters related to
management and supervises the execution of business by each Director, in accordance with laws, regulations, and the
Articles of Incorporation. Directors perform their duties under the direction and supervision of Representative Directors andin accordance with the responsibilities and division of duties determined by the Board of Directors. Directors report the stateof execution of their duties to the Board of Directors quarterly. Outside Directors provide suitable advice and opinions as
appropriate at meetings of the Board of Directors from an independent standpoint, based on their broad knowledge andextensive experience, in order to contribute to the enhancement of corporate value over the medium to long term. In holding
meetings of the Board of Directors, the secretariat of the Board of Directors provides the Outside Directors with preliminarymaterials and briefings to make the deliberations at the meetings more substantive. In addition, Outside Audit & Supervisory
Board members hold an Audit & Supervisory Board prior to the Board of Directors’ meeting to discuss and review theagenda of the Board of Directors’ meeting in advance. This makes the Board of Directors’ meeting a forum for constructive
discussion, and thus they are striving for the sustainable growth of the Group and the enhancement of its corporate value
over the medium to long term.
In fiscal 2022, the Board of Directors met eight times to deliberate primarily on sustainability (mainly the environment andhuman capital), human resources strategy, new business strategy, M&As, and donations.

Ratio of
Outside Directors

Ratio offemale Directors
Outside: 4

Ratio of outside officers(Outside Directors and Outside Audit &Supervisory Board members)
Women: 3

Outside: 6

4/11

3/11

6/15

36.4%

27.3%

40.0%

Men: 8Internal: 7Internal: 9

Board of Directors’ Diversity (Directors’ Skills Matrix)
Corporate
management/
governance

Name

Finance/accounting

Socialrelationship

Well-being
management

Technology
management

Businessdevelopment/
alliance

Global business

Legal affairs /riskmanagement

Kunio Yamada
Masashi Sugimoto
Masaya Saito
Shinichi Kunisaki
Hidetoshi Segi
Yasunori Kawasaki

Audit & Supervisory Board
The Audit & Supervisory Board is composed of four members: two Outside Audit & Supervisory Board members; andtwo Full-time Audit & Supervisory Board members from within the Company. The Audit & Supervisory Board is chairedby a Full-time Audit & Supervisory Board member elected by and from among the Audit & Supervisory Board members.
Based on its fiduciary responsibility and accountability to shareholders, the Audit & Supervisory Board ensures thesoundness of management with the aim of achieving sustainable growth and enhancement of the corporate value of theGroup over the medium to long term, and acts in the common interests of the Group, its shareholders, and all otherstakeholders. In accordance with the audit policy and audit plan established by the Audit & Supervisory Board, each
Audit & Supervisory Board member attends meetings of the Board of Directors and other important meetings, audits theexecution of business by Directors, and offers advice and opinions as appropriate. Audit & Supervisory Board members
collaborate regularly and as appropriate with the Internal Audit Office, which is in charge of internal audits, and the
Accounting Auditor to enhance the effectiveness of their audits.
In fiscal 2022, the Audit & Supervisory Board met 28 times to discuss primarily on the formulation of an audit policy
and audit plan, preparation of audit reports, refusal of reelection of the Accounting Auditor, and audit of proposals to besubmitted to the Ordinary General Meeting of Shareholders. In addition, Full-time Audit & Supervisory Board members
performed their separate duties, such as liaising with the Internal Audit Office, conducting onsite audits of subsidiaries,
and attending Board of Directors meetings and other important internal meetings.

Nomination Committee
The Nomination Committee is composed of three Directors, the majority of whom are Outside Directors. The Committee
is chaired by a member elected by and from among the Committee members. The Nomination Committee drafts the
proposals for the selection and dismissal of Directors, the proposals for the selection and dismissal of Representative
Directors, and the proposals concerning the positions of Directors, etc., and submits them to the Board of Directors,
which it is authorized to do by the Board of Directors.
In fiscal 2022, the Nomination Committee met three times to deliberate primarily on the selection of Directors andsecuring of talent.

Yoshie Okochi
Akie Iriyama
Haruka Mera
Tatsuo Uemura
Eriko Hayashi
Note: The table above indicates highly specialized skills of each Director. Not all knowledge and experience of each person is indicated.

Policy on Selection and Nomination of Directors
The Company aims to achieve sustainable growth and medium- to long-term enhancement of corporate value for thecommon interest of all stakeholders. Therefore, the Company believes it is important that the Board of Directors of theCompany consists of Directors who possess the diverse knowledge, experience, capabilities, insight, and values
necessary to ensure appropriate and flexible decision-making with respect to the Company’s business activities andsupervision of business execution. The Company also believes it is important to ensure a highly transparent and objective
corporate governance structure. Regarding internal Directors, the Company emphasizes that they should haveexperience of diverse business divisions and management experience at the Company’s subsidiaries, etc. and anunderstanding of their issues in order to formulate the Group’s management strategy. Regarding Independent Outside
Directors, the Company emphasizes that they should have diverse experience and expertise that are unavailable solely
from internal Directors and, at meetings of the Board of Directors, be able to offer the Company advice and suggestions
contributing to enhancement of corporate value.

Reasons for Appointment of Outside Directors
Name

Akie Iriyama

Haruka Mera

Haruka Mera launched the READYFOR crowdfunding service in 2011 and has continued to support people taking up challenges. She is creating
new trends as one of Japan’s leading next-generation managers and is also a member of the Cabinet Secretariat’s Council of New Form of
Capitalism Realization. At the Board of Directors, she has been providing suggestions that contribute to financial value and social value of theCompany and effectively utilizing her insight and track record as a new-generation manager. The Company expects her to continue to fulfill her
duties as an Outside Director as she is a suitable person to contribute to the enhancement of corporate value of the Company.

Tatsuo Uemura

Tatsuo Uemura is a legal research specialist who is a university professor and has experience as a member of the Companies Act Subcommitteeof the Legislative Council of the Ministry of Justice and a member of the Self-Regulation Committee of the Tokyo Stock Exchange. In addition toextensive knowledge and expertise in capital markets and corporate law, he has a wealth of experience, including serving as an independent
outside director of other companies. He is effectively utilizing his knowledge and expertise as well as experience at the Board of Directors, which
greatly contributes to strengthening corporate governance to support medium- to long-term growth. The Company expects him to continue tofulfill his duties as an Outside Director as he is a suitable person to contribute to the enhancement of corporate value of the Company.

Eriko Hayashi

Eriko Hayashi is a licensed attorney who has held various positions and public offices due to her high level of knowledge and experience inglobal corporate legal affairs. She also manages her own law firm and has experience as an outside director and audit & supervisory board
member of other companies. She is effectively utilizing her insight and experience in global risk management and other legal affairs at the Boardof Directors. The Company expects her to continue to fulfill her duties as an Outside Director as she is a suitable person to contribute to theenhancement of corporate value of the Company.

Compensation Committee
The Compensation Committee is composed of three Directors, the majority of whom are Outside Directors in order tosecure more objectivity. The Committee is chaired by a member elected by and from among the Committee members.
Upon delegation by the Board of Directors, the Compensation Committee formulates the amount of individualcompensation. The Committee also prepares drafts for Directors’ compensation policies, procedures, and structures. It also
drafts proposals regarding Directors’ compensation that require approval at the General Meeting of Shareholders andsubmits the drafts to the Board of Directors. The total amount of compensation for Directors determined, as well as the
allocation of basic compensation (fixed compensation) and performance-based compensation (variable compensation), isreported to the Board of Directors.
In fiscal 2022, the Compensation Committee met four times to deliberate primarily on the determination of the amountsof compensation and performance-based bonuses for individual Directors and matters related to governance.
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ROHTO Well-being Report 2023

Reasons for appointment

Akie Iriyama worked at various institutions and organizations, specializing in management strategy and global management, before being
appointed as a professor at Waseda Business School. His advice and suggestions based on his wide-ranging knowledge of cutting-edge
management have greatly contributed to vitalization of the Board of Directors of the Company. His high-level of awareness of the issues is thecatalyst for vigorous discussion at Board of Directors meetings. He has been effectively utilizing his insight at the Board of Directors. The
Company expects him to continue to fulfill his duties as an Outside Director as he is a suitable person to contribute to the enhancement ofcorporate value of the Company.

ROHTO Well-being Report 2023

66

Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionCorporate GovernanceEvaluation of the Effectiveness of the Board of Directors

Business Execution

The Company conducted a self-evaluation (survey) of all the Directors in order to analyze and evaluate the effectivenessof the Board of Directors in fiscal 2022. We rated each question on a five-point scale from three perspectives:effectiveness of the Board of Directors, evaluation of oneself as a Director, and evaluation of operation. The evaluation
was generally positive. However, the following issues were raised: succession planning, including CEO and future
Director candidates, for the Board of Directors; timing of agenda proposals and distribution of materials; opportunities forstudy and training tailored to individual Directors; and ensuring sufficient time for deliberation of each agenda item at theBoard of Directors’ meetings. We will make improvements in these areas through operation. The results of the evaluationof effectiveness were reported to the Board of Directors’ meeting held on June 28, 2023, where Directors also discussed
ways to improve the operation of the Board of Directors during the current fiscal year.

Executive Meeting

Compensation of Officers
Matters related to determining the amount and the method of calculation of compensation, etc. for officers
The Company has established a compensation system (level of compensation and determination process) based on thefollowing policies:(1) To motivate contribution to the enhancement of the corporate value of the Company from a long-term perspective inorder to achieve the philosophy specified in the Articles of Incorporation.
(2) To enable the philosophy to be put into practice and to be appropriate to the roles and responsibilities of each person.
(3) To ensure objectivity, transparency, and rationality that can be explained to all stakeholders.
Based on these policies, which have been resolved by the Board of Directors, the compensation for each Director isdeliberated and determined by the Compensation Committee, the majority of whose members are Outside Directors, within
the scope of the total amount of compensation, etc., approved in advance by the General Meeting of Shareholders. The
Compensation Committee is composed of three Directors, the majority of whom are Outside Directors. The Committee ischaired by the Chairman and Chief Executive Officer. Compensation for Audit & Supervisory Board members is decided inconsultation with Audit & Supervisory Board members within the scope of the total amount of compensation, etc., approvedin advance by the General Meeting of Shareholders.
The 78th Ordinary General Meeting of Shareholders held on June 24, 2014 approved an annual amount of up to 700
million yen as the maximum amount of compensation for Directors (not including employee salaries for Directors who serve
concurrently as employees). The Company’s Articles of Incorporation at the time of this Ordinary General Meeting of
Shareholders stated, “The Company shall have up to 15 Directors.” In addition, the 84th Ordinary General Meeting of
Shareholders held on June 26, 2020 also approved an annual amount of up to 70 million yen as the maximum amount ofcompensation for Audit & Supervisory Board members. The Company’s Articles of Incorporation at the time of this Ordinary
General Meeting of Shareholders stated, “The Company shall have up to four Audit & Supervisory Board members.”(a) Structure of compensation for Directors
The compensation for the Company’s Directors consists of basic compensation (fixed compensation) based on the scale oftheir responsibilities and roles, and performance-based compensation (variable compensation) based on the evaluation ofindividual Directors and business performance in the most recent fiscal year. However, Outside Directors are paid basic
compensation only as they are responsible for independent supervision.
(i) Basic compensation
The Company pays fixed compensation to individual officers according to the scale of their responsibilities and their roles.
The level of compensation at other companies is taken into consideration in determining fixed compensation.
(ii) Performance-based compensation (compensation based on individual evaluations and performance-linked compensation)
Performance-based compensation consists of compensation based on individual evaluations that varies according to thedegree of contribution to Company-wide medium- to long-term issues (ESH [environment, society, and health]) and resultsin the business areas under the control of each officer during the relevant period, and performance-linked compensationthat varies according to the degree of achievement of consolidated operating income targets for the previous fiscal year.
The ratio of basic compensation and performance-based compensation varies according to position and role. However,as a rough guideline, approximately 75% of the total compensation for internal Directors is allocated to basic compensation
and approximately 25% is allocated to performance-based compensation. This ratio is based on a viewpoint thatemphasizes management with a long-term perspective, and in terms of performance-based compensation, the Company
also places more importance on degree of achievement in initiatives to address medium- to long-term issues.
Compensation is paid in cash only. The annual amount of compensation during the term of each officer determined by theCompensation Committee is divided into 12 and paid once a month in the same amount. The target for the indicator related
to performance-linked compensation for fiscal 2022 was 33,000 million yen, and the actual result was 33,959 million yen.
(b) Structure of compensation for Audit & Supervisory Board members
Audit & Supervisory Board members are paid basic compensation only as they are responsible for independent supervision.
Compensation is determined through consultation among the Audit & Supervisory Board members taking into consideration
the nature of their duties.
Total Amount of Compensation, etc. for Each Categoryof Officer, Total Amount of Each Type of Compensation,etc., and Number of Eligible Officers
Category of officer

Total amount ofcompensation,etc. (million yen)

Total amount of each type ofcompensation, etc. (million yen)
Fixedcompensation

Performance-linked
compensation

Number of
eligible officers

Directors (excluding
Outside Directors)
Audit & Supervisory Board
members (excluding Outside
Audit & Supervisory Board
members)

441

391

50

7

40

40

—

2

Outside officers

46

46

—

7

67

ROHTO Well-being Report 2023

Total Amount, etc. of Consolidated Compensation, etc.
for Each Officer
Name (category of officer)

Total amount ofconsolidated
compensation,etc. (million yen)Company
category

Kunio Yamada(Director)

205

Filingcompany

In order to respond quickly and accurately to changes in the business environment, the Company has strengthened
cooperation between sections that execute day-to-day operations, and established a Strategic Design Headquarters that
addresses management challenges from a medium- to long-term perspective. Every other week the Company holds
Executive Meetings (management strategy conference), which are attended principally by internal Directors and executive
officers, to promote appropriate decision-making and encourage more in-depth discussions at meetings of the Board of
Directors. President meetings are also held every other week to share information on important decisions made by eachsection and company-wide issues with all section heads in a timely manner. Directors have the function of executing andsupervising all of these operations. In order to respond quickly and accurately to changes in the business environment
and to achieve sustainable growth and enhance corporate value, we have a management structure that enables speedy
decision-making and the execution of measures based on roles and responsibilities. We work to increase the agility ofdecision-making related to management strategies, and strengthen the mobility of management, by clarifying theexecutive officers in each area.

Sustainability Committee
The Sustainability Committee serves as an advisory committee to the Board of Directors to promote sustainability
measures. The Committee discusses on ESG, SDGs, and other sustainability-related issues as well as relevant policies
and measures. Based thereon, it decides how to address the issues identified, formulates action plans, and monitorsand evaluates the progress. The deliberations of the Committee are reported and suggested to the Board of Directors as
appropriate, and particularly important matters are discussed and resolved by the Board of Directors. The Committee ischaired by the Executive Vice President (CFO and in charge of ESG) and composed of a Director appointed by the chairand one Outside Audit & Supervisory Board member who serves as an advisor.

Compliance Committee
As an organization directly reporting to the Board of Directors, the Compliance Committee is tasked with advancing themeasures needed to develop and strengthen the Company’s compliance system.
The Committee is responsible for and discusses various compliance-related matters: for example, developing
compliance policy, system, and rules; raising compliance awareness and providing compliance education and training;
investigating compliance violations and devising and implementing measures to prevent recurrence; and administering
contact points where employees can report or consult on compliance issues. The Committee is chaired by the President
and Chief Operating Officer, and consists of members who are appointed by the chair.

Information Security Management Committee
The Information Security Management Committee is tasked with ensuring the proper management of all information heldby the Company, which includes personal information of customers, shareholders, and employees; classified informationof the Company; and classified information received from other companies. To that end, the Committee has created an
information security system. The Committee appoints and is chaired by the Information Security Management Supervisor.

Strengthen Corporate GovernanceInternal Controls
Recognizing that the objective is to ensure the effectiveness and efficiency of operations, the reliability of financial
reporting, compliance with laws and regulations, and to safeguard assets, Rohto has established an Internal Audit Office(staffed by four employees) as an organization independent from sections that execute business to conduct internal
audits from a fair and objective standpoint, based on a mutually cooperative relationship with Audit & Supervisory Board
members. We also implement a management framework where subsidiaries are required to report to or seek approval
from the parent company on important matters in accordance with the Rohto Group Management Regulations. In regard
to risk management, we have a system in place where, if an unforeseen event occurs, a Crisis Management Committee
will be set up to promptly deal with the situation and prevent losses from arising or escalating while listening to theopinions of legal counsel and other outside advisors.

Amount of each type of consolidated
compensation, etc. (million yen)
Fixedcompensation

Performance-linked
compensation

183

22

Note: Information is only provided for those whose total amount of consolidated
compensation, etc. is 100 million yen or more.
ROHTO Well-being Report 2023

68

Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionCorporate GovernanceRisk Management

Compliance

Risk Management System

Basic Approach to Compliance

Risk management is based on the principle that each section takes appropriate preventive measures in anticipation ofrisks that may occur in the course of or in connection to the execution of operations, and that if a risk should occur, therisk is handled appropriately with the support of the related sections. We have a system in place where, if an unforeseen
event occurs, a Crisis Management Committee will be set up to promptly deal with the situation and prevent losses fromarising or escalating while listening to the opinions of legal counsel and other outside advisors. With regard to preventive
measures against the manifestation of potential risks, the Compliance Committee, an advisory committee to the Board of
Directors, oversees the formulation and promotion of company-wide plans for compliance risks, including risks relating to
ethics and legal compliance.

Over the years, the Group has earned the reputation of being trustworthy. We believe it is the trust placed in us that hashelped us grow to what we are today. To take the Group to the next level, we must meet the wants and expectations ofcustomers and all other stakeholders as a public organ of society. To make it possible, we have established a clear codeof conduct that guides each employee toward responsible, legally compliant behavior.

Business Risks
The business performance and financial condition of the Group are expected to be affected by a variety of risks
described below. Given the potential for those business risks, the Group is striving to avoid and handle the risk when it
occurs. This section contains the forward-looking statements made at the decision and assumption of the Group as ofthe end of fiscal 2022.
1

Risks related to legal
restrictions and system
and governmental actions

The Group’s businesses are subject to legal restrictions (including deregulations) under the Pharmaceutical and Medical Device
Act and related laws and regulations. Any future changes in those restrictions may have an impact on the Group’s businessresults and financial condition.

2

Risks associated withoverseas expansion

As the Group has expanded businesses globally, in recent years the share of overseas sales has reached certain levels (forfiscal 2022, overseas sales accounted for 43.5% of consolidated net sales). As a result, the unexpected deterioration of thepolitical or economic situation, or changes in the laws and regulations in any country or region may have an impact on theGroup’s business results and financial condition.

3

Risks associated with thereliance on specific clientcompanies

Currently, the top three client companies account for 35.3% of the volume of the Group’s business. This fact shows that, if theGroup suffers the loss of bad debts due to the financial difficulty, bankruptcy or a similar situation of any of those clientcompanies, it may have an impact on the Group’s business results and financial condition.

4

Risks associated with thedissolution of a businessalliance with othercompanies

The Group has built business alliances with other companies in various ways, such as joint development, joint distribution, andthe introduction of products (including the manufacturing and distribution of products under a license agreement). Accordingly,
if such an alliance is dissolved for any reason in the future, it may have an impact on the Group’s business results and financial
condition.

Risks associated with5business investment

To expand existing businesses and pursue new business development, as necessary, the Group will enhance existing businessalliances or form a new partnership within the Group and with other non-affiliated companies. For that purpose, the Group has
established and may establish new companies jointly with other entities; also, it has conducted and may conduct investment
activities, such as investing in existing corporations. Accordingly, if the corporate value or the market price of the stock or the
like of any portfolio company declines, it may have an impact on the Group’s business results and financial condition.

Risks associated withdiscontinuation of
distribution and recall of
products

If any of the Group’s products have trouble, such as a defect, unexpected side-effect, and the inclusion of foreign materials,
the Group is likely to be required to stop or end the distribution or recall them. It may have an impact on the Group’s businessresults and financial condition.

Risks related to intellectual
7 property rights andlitigation

If the Group fails to protect its intellectual property rights adequately, the competing power of the Group may be affected by
the exploitation of the Group’s technology and know-how by third parties. The Group intends not to infringe on a third party’s
intellectual property rights with the utmost attention and conducts research regarding the same. Nevertheless, in the event of
infringement on a third party’s intellectual property right, the third party is likely to file a claim for damages or another legal
proceeding against the Group; or the Group may be required to pay a certain amount of consideration or to make similar
performance. Those factors may have an impact on the Group’s business results and financial condition. Other than theintellectual property right-related action, the Group is exposed to litigation risk relating to product liability, environmental issues,and other matters. Accordingly, in some cases, the substance or the outcome of the litigation may have an impact on theGroup’s business results and financial condition.

Risks related to the
8 information system andinformation management

As the Group conducts business activities by using various information systems, the suspension or the malfunction of any
system may interfere with the efficient operation of the business. Also, retaining a vast amount of information, including
personal information, the Group is striving to establish its internal control structure and enhance information management.
However, if any information leak occurs, the loss of public confidence may have an impact on the Group’s business results andfinancial condition.

6

Risks associated withnatural and other disasters

The Group manufactures main products to be distributed domestically at the Osaka Plant, the Ueno Plant, etc. and ships themout from the Central Distribution Center or elsewhere. The Group has taken great care to the safety control; nevertheless, if theoperation of such factories and distribution center is shut down because of fire, earthquake, or other disasters, it may have an
impact on the Group’s business results and financial condition.

Risks associated with thefluctuation of the foreign
10exchange rate, stock
price, and interest

As the Group has been expanding its businesses globally, the fluctuation of the foreign exchange rate may have an impact on
the Group’s business results and financial condition. The Group also holds securities with market value and interest-bearing
liabilities; thus, the fluctuation or trend of stock price and interest may have an impact on the Group’s business results andfinancial condition.

9

11

Risks associated withaddressing climate change
and other societal
challenges

Climate change impacts are expected to cause raw material and fuel prices to continue rising, which may lead to increased
cost of sales. The Group’s businesses are also susceptible to changes in consumer and customer needs. Thus, if customer
needs for sustainability increase, rises in development costs to provide more sustainable products and services may have an
impact on the Group’s business results.

12

Risks related to otherexternal factors

The amount of shipments and returns of products fluctuates due to seasonal factors, such as cold summer, warm winter,
pollen dispersion, and the like. Also, the market price of products may fall unexpectedly in a harsh competitive environment.
Those factors may have an impact on the Group’s business results and financial condition.

Note: There are various other business risks. Thus, the above is not an exhaustive list of risks that may affect the Group.

69

ROHTO Well-being Report 2023

Compliance Promotion System
Based on the recognition that the promotion of compliance is one of the most important management issues, in 2020
we established a Compliance Committee chaired by the President and Chief Operating Officer. The Committee
comprehensively promotes compliance with social norms and the strengthening of corporate ethics, and promptly
reports important compliance matters the Committee is involved in to the Board of Directors. In March 2023, we createda Compliance Division to reinforce the compliance promotion system.

Initiatives to Instill Compliance Awareness
ROHTO Group Action Agenda for Compliance
The Group has developed ROHTO Group Action Agenda for Compliance, which summarize and explain the ethics andvalues that employees must observe. These guidelines serve as a code of conduct that guides employees when theyfind it difficult to make decisions on how to respond to customers and business partners or conduct day-to-day work.
Compliance awareness survey
We regularly conduct awareness surveys on all employees to ascertain current status and confirm effectiveness by
tracking changes over time and to periodically review compliance-related standards of conduct.
Training for managers and employees
We provide compliance webinars for division heads, and harassment training as part of training sessions for newly
appointed managers and leaders. Moreover, in 2022 we started providing all employees with compliance training thatconsists of lectures and tests, to bring home the importance of legal compliance and ensure their understanding of theGroup’s compliance system. The topics covered by compliance training for all employees include drug-induced suffering,which used to be taught to employees of the relevant sections only. We will continue working to enhance employees’
understanding of compliance on a Group-wide basis.
Greater dissemination of compliance information
We issue Compliance Newsletter every two months for all employees with the aim of sharing information on overall
compliance, including legal matters and harassment. In addition, we endeavor to routinely inculcate knowledge about,and raise awareness of, compliance, for example by giving a compliance quiz on our email newsletter every month. In
fiscal 2022, we issued a total of 60 email newsletters. In addition, managers are given compliance case studies on a
weekly basis as they are required to have higher levels of ethics and knowledge.

Anti-corruption
Our goal is to create a truly healthy and progressive society. To accomplish this goal, we deny and work to prevent any
form of corruption, including bribery. We do not respond to any act of obstruction or harassment, or any request for
unfair benefits. We do business in over 110 countries. Overseas, we must abide by the laws and common sense of thelocal country and follow the culture and customs of that country. However, we do not follow practices that are consideredwrong by international standards, such as bribery. Through our corporate activities, we will strive to contribute to theeconomic, social, and cultural development of the country in which we operate.

Internal and External Reporting Systems
The Group has a whistleblowing system and whistleblower contact points in place. These are aimed at detecting, at an
early stage, misconduct such as legal violations, internal rule breaches, human rights infringements, and conduct againstsocial norms, thereby preventing scandals; and at enhancing the soundness of Group management by carrying out
necessary rectification. The system was expanded by including 10 Group companies in January 2022, and introducing a
web-based channel in July 2023. In these ways, ongoing efforts have been made toward the system enhancement. The
Rohto Group Alert Line has two contact points. The former is an external phone contact point, and the latter is aninternet contact point which is administered by an internal Compliance Division. We have also created a Business Partner
Alert Line, a compliance contact point where the officers and employees of our business partners can consult or reporton the compliance violations of our Group personnel. We hope that this contact point for external partners will help us
detect and rectify compliance violations at an early stage by informing us of compliance issues that the Group itself isunaware or ignorant of.

ROHTO Well-being Report 2023

70

Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionDirectors and Audit & Supervisory Board Members (As of June 28, 2023)
Directors

Kunio Yamada

Masashi Sugimoto

Masaya Saito

Tatsuo Uemura

Chairman and Chief Executive Officer

President and Chief Operating Officer

Outside Director

April 1980
June 1991
June 1992

April 1984
Joined Takeda Pharmaceutical Company Limited
October 2009 President of Healthcare Company
April 2017
President and Representative Director of Takeda Consumer
Healthcare Company Limited
January 2019 Joined the Company, Strategic Advisor
June 2019
President and Chief Operating Officer of the Company (current
position)
August 2021 Representative Director and Chairman of Amato Pharmaceutical
Products, Ltd. (current position)

Executive Vice President
Chief Financial Officer (CFO)

Joined the Company
Director and Assistant to President of the Company
Senior Managing Director and General Manager of Sales
Department of the Company
June 1996
Executive Vice President of the Company
July 1998
Chairman of The Mentholatum Company (current position)
June 1999
President of the Company
June 2009
Chairman and Chief Executive Officer (CEO) of the Company
August 2018 Chairman (CEO) and President of the Company
June 2019
Chairman and Chief Executive Officer of the Company (current
position)
March 2021 Outside Director of Bacchus Bio innovation Co., Ltd. (current
position)

April 1986
May 1998
April 2008
June 2011
June 2017
June 2018

March 2022

Joined the Company
General Director of Rohto-Mentholatum (Vietnam) Co., Ltd.
Deputy General Manager of Corporate Planning & Administration
Department of the Company
Director and General Manager of Corporate Planning Departmentof the Company
Director of Headquarters for Promotion of Corporate Strategy of theCompany
Executive Vice President of the Company (current position)
President and Director of The Mentholatum Company (current
position)
Chief Executive Officer of Rohto-Mentholatum (Vietnam) Co., Ltd.
(current position)
Chief Financial Officer (CFO) of the Company (current position)

April 1986
Professor of School of Law, Senshu University
August 1990 Professor of College of Law and Politics,
Rikkyo University
April 1997
Professor of School of Law, Waseda
University
October 2003 Director of the 21st Century Center of
Excellence, Waseda Institute for Corporation
Law and Society Professor of Graduate
School of Law
June 2004
Outside Director of Jasdaq Securities
Exchange, Inc.
September 2004 Professor of Faculty of Law, Waseda
University
June 2006
Outside Director of Shiseido Company,
LimitedEriko Hayashi
Outside Director
September 2006 Dean of Faculty of Law and Dean of Schoolof Law, Waseda University
July 2008
Director of the Global Center of Excellence,
Waseda Institute for Corporation Law andSociety
April 2012
NHK Governor
April 2019
Professor Emeritus of Waseda University(current position)
July 2020
Outside Director of Meiji Yasuda Life
Insurance Company (current position)
May 2022
Outside Director of Shochiku Co., Ltd.
(current position)
June 2022
Outside Director of the Company (current
position)

October 2001 Registered as attorney at law, joined Oh-Ebashi Law Offices
June 2007
Registered as New York State Attorney
January 2010 Partner, Oh-Ebashi LPC & Partners
June 2010
Chief Representative of Shanghai Office, Oh-Ebashi LPC & Partners
March 2019 Outside Audit & Supervisory Board Member of Kaizen Platform, Inc. (current position)
November 2019 Established ERI LAW OFFICE. Assumed office as Representative (current position)
December 2019 Outside Director of Change Inc.
August 2021 Representative Employee, ERIO G.K. (current position)
March 2022 Outside Audit & Supervisory Board Member of Mujin, Inc. (current position)
June 2022
Outside Director of the Company (current position)

Audit & Supervisory Board Members

Shinichi Kunisaki

Hidetoshi Segi

Yasunori Kawasaki

Executive Vice President
Chief Technical Officer (CTO)

Managing Director
Chief Strategy Officer (CSO)

Director
Chief Human Resources Officer (CHRO)

April 1981
Joined Suntory Limited (currently, Suntory Holdings Limited)
January 2007 Joined the Company, Corporate Officer
February 2007 General Manager of Research & Development Department of theCompany
June 2010
Director of the Company
June 2017
Director of Headquarters for Promotion of Corporate Strategy of theCompany
June 2018
President and Representative Director of Qualitech Pharma Co.,
Ltd. (current position)
June 2020
Managing Director of the Company
E. Designer of Production/SCM Strategic Design Headquarters of
the Company
March 2022 Chief Technical Officer (CTO) of the Company (current position)
June 2023
Executive Vice President of the Company (current position)

April 1985
June 1997
June 2018
March 2022
June 2022
June 2023

April 1982
Joined Nippon Life Insurance Company
April 1986
Joined the Company
October 2011 Director, Michinoku Future Fund (current position)
July 2021
Corporate Officer of the Company
March 2023 Responsible for HR Development & Training, the Company (current
position)
June 2023
Director of the Company (current position)
Chief Human Resources Officer (CHRO) of the Company (current
position)

Joined Nippon Vicks KK (currently, P&G Japan G.K.)
Joined the Company
Director of the Company
Chief Strategy Officer (CSO) of the Company (current position)
Director of the Company
Managing Director of the Company (current position)

Masanori Kimura

Hideto Uemura

Audit & Supervisory Board member (Full-time)

Audit & Supervisory Board member (Full-time)

Outside Audit & Supervisory Board member

April 1982
May 2003

April 1982
May 2003
April 2009

April 1978
April 1983

July 2004
June 2005
May 2008
May 2009
May 2013
June 2016

Yoshie Okochi

Akie Iriyama

Haruka Mera

Director
Chief Communication Officer (CCO)

Outside Director

Outside Director

April 1998
Joined Mitsubishi Research Institute, Inc.
March 2011
August 2008 Assistant Professor of School of Management, University at Buffalo, July 2014
April 1992
Joined The Nikko Securities Co., Ltd. (current SMBC Nikko
The State University of New York
Securities Inc.)
August 2013 Associate Professor of Waseda Business School
June 2020
November 2007 Managing Director; General Manager, Corporate Planning Division April 2019
Professor of Waseda Business School (current position)of Aqualine Ltd.
June 2019
Outside Director of the Company (current position)
May 2017
Joined the Company
June 2020
Outside Director of Sanoh Industrial Co., Ltd. (current position)
March 2022 Executive Designer, Strategic Design Headquarters of the Company
December 2020 Outside Director of SEPTENI HOLDINGS CO., LTD. (current position)(current position)
June 2021
Outside Director of SORACOM, INC. (current position)
April 2022
Corporate Officer of the Company
March 2023 Deputy General Manager, Corporate Planning Division of theCompany (current position)
June 2023
Director of the Company (current position)
Chief Communication Officer (CCO) of the Company (current
position)
Unaffiliated Director of Morishita Jintan Co., Ltd. (current position)

71

ROHTO Well-being Report 2023

Launched READYFOR crowdfunding service
Founded READYFOR, Inc.
Representative Director & CEO of READYFOR, Inc. (current position)
Outside Director of the Company (current position)

Joined the Company
Corporate Officer and Deputy General Manager of Corporate
Planning & Administration Department
General Manager of General Affairs Division of the Company
General Manager of Manufacturing Business Department of theCompany
Director of the Company
General Manager of Corporate Planning & Administration
Department of the Company
General Manager of Healthcare Business Department of theCompany
General Manager of Agri-Farm Division of the Company
Audit & Supervisory Board Member of the Company (current position)

May 2010
May 2015
June 2017
June 2018
June 2020

Joined the Company
Deputy General Manager of Business Development of the Company
Deputy General Manager of Research & Development Departmentof the Company
Corporate Officer of the Company
Senior Corporate Officer, General Manager of Marketing
Department of the Company
Director of Headquarters for Promotion of Corporate Strategy of theCompany
Director and Head of Ueno Techno Center of the Company
Audit & Supervisory Board Member of the Company (current position)

Katsusuke Amano
Registered as attorney at law, joined Norio Tamura Law OfficeTransferred to Kitahama Law Office (currently Kitahama Law Office/Foreign Law Joint Enterprise)
January 1985 Partner of Kitahama Law Office (currently same as above)
February 2003 Outside Corporate Auditor of Aoyama Capital Co., Ltd. (current
position)
June 2010
Outside Director of Gunze Ltd.
June 2012
Outside Audit & Supervisory Board member of the Company(current position)
January 2020 Partner Attorney at Kitahama Law Office (current position)
March 2020 Outside Corporate Auditor of TOYO TIRE Co., Ltd. (current position)

Yasuhiro Tani
Outside Audit & Supervisory Board member
October 1981 Joined Asahi Accounting Co. (currently KPMG AZSA LLC)
April 1985
Registered as a certified public accountant
April 1986
Established Certified Public Accountant Tani Accounting Office(current position)
May 2003
Registered as a tax accountant
April 2006
Professor, GLOBIS University Graduate School of Management(current position)
June 2020
Outside Audit & Supervisory Board member of the Company(current position)
March 2021 Outside Director of Noritz Corporation (current position)

ROHTO Well-being Report 2023

72

Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionKey Financial Data (11-Year Summary)
(FY)

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Net sales (million yen)

129,146

143,822

151,774

167,016

154,599

171,742

183,582

188,327

181,287

199,646

238,664

Gross profit (million yen)

75,87386,15790,59999,226

91,344

101,049

109,624

114,240

106,726

116,170

137,421

Share of net sales (%)

58.8

59.9

59.7

59.4

59.1

58.8

59.7

60.7

58.9

58.2

57.6

61,493

69,33677,44083,54375,893

81,96288,812

91,154

83,73687,154103,461

47.6

48.2

51.0

50.0

49.1

47.7

48.3

48.4

46.2

43.7

43.4

14,38016,821

13,15915,683

15,451

19,087

20,812

23,08522,99029,01533,959

Share of net sales (%)

11.1

11.7

8.7

9.4

10.0

11.1

11.3

12.3

12.7

14.5

14.2

Ordinary income (million yen)

14,73017,10014,09815,33915,964

18,84918,97022,73523,91028,75035,568

Share of net sales (%)

11.4

11.9

9.3

9.2

10.3

11.0

10.3

12.1

13.2

14.4

14.9

8,087

8,947

8,631

9,098

10,011

9,289

9,799

15,41016,743

21,127

26,377

Share of net sales (%)

6.3

6.2

5.7

5.4

6.5

5.4

5.3

8.2

9.2

10.6

11.1

R&D expenses (million yen)

4,062

4,547

5,585

5,811

6,123

6,553

6,831

7,050

7,903

8,740

11,065

Depreciation (million yen)

5,256

5,735

6,059

6,044

5,552

5,593

6,159

6,058

6,376

7,232

7,418

Return on assets (ROA) (%)

10.3

10.9

8.3

8.6

8.8

10.0

9.5

10.9

10.8

11.5

12.2

Return on equity (ROE) (%)

9.2

9.4

8.4

8.3

8.8

7.6

7.6

11.4

11.7

12.7

13.6

Total asset turnover (Times)

0.90

0.92

0.89

0.94

0.86

0.90

0.92

0.90

0.82

0.80

0.82

Trade receivable turnover (Times)

4.05

4.44

4.22

3.80

3.24

3.54

3.86

3.94

3.66

4.01

4.25

Inventory turnover (Times)

6.89

7.04

6.91

7.32

6.63

6.89

6.50

6.19

6.19

6.50

6.40

Current ratio (%)

156.3

146.5

162.6

171.4

189.0

186.2

191.6

209.5

235.7

229.8

237.3

Equity ratio (%)

61.7

60.2

61.7

61.4

64.7

64.2

65.1

64.4

68.8

64.8

67.6

Interest coverage ratio (Times)

118.7

126.7

78.0

80.6

138.8

165.2

184.6

197.7

194.7

149.5

148.4

Debt-to-equity ratio (Times)

0.10

0.13

0.11

0.07

0.07

0.07

0.06

0.08

0.07

0.14

0.08

Total assets (million yen)

150,643

162,249

177,509

179,573

181,543

198,166

200,953

215,644

226,149

274,876

309,677

Net assets (million yen)

93,771

98,627

110,516

111,271

118,436

128,440

132,189

140,032

156,612

183,994

215,078

Free cash flow* (million yen)

6,107

6,041

2,268

5,258

3,917

8,140

11,500

9,635

9,771

10,844

17,748Cash and cash equivalents at end of period (million yen)

19,86723,02625,09322,49523,46630,06337,34544,66552,25470,90577,691

Net income per share (¥)

34.39

38.57

38.03

40.02

43.97

40.77

43.00

67.57

73.39

92.61

115.62

Net assets per share (¥)

394.91430.74482.09484.61515.48557.97573.71608.83681.71780.30916.93

Dividends per share (¥)

8.5

9

9.5

10

10.5

11

12.5

13

14

18

22

Dividend payout ratio (%)

24.7

23.3

25.0

25.0

23.9

27.0

29.1

19.2

19.1

19.4

19.0

Price-earnings ratio (Times)

18.7

23.6

22.5

25.6

23.7

36.5

33.0

21.9

20.1

19.9

24.0

Price-book value ratio (Times)

1.6

2.1

1.8

2.1

2.0

2.7

2.5

2.4

2.2

2.4

3.0

Business Performance

Selling, general and administrative expenses (million yen)
Share of net sales (%)
Operating income (million yen)

Profit attributable to owners of parent (million yen)

Profitability Indicators

Efficiency Indicators

Stability Indicators

Financial Position

Cash FlowsPer Share Information

Other Financial Information*Net cash provided by operating activities + Net cash used in investing activities

73

ROHTO Well-being Report 2023

(Note) 1. The provisional accounting treatment for business combinations has been finalized in fiscal 2020, 2021, and 2022. The figures for fiscal 2019, 2020, and 2021 have been restatedaccordingly.
2. The Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and other standards from the beginning of fiscal 2021,
and the figures for fiscal 2021 and beyond are after the application of the said accounting standard and other standards.
3. As of January 1, 2023, the Company conducted two-for-one stock split of its common stock. Per share information was calculated on the assumption that the stock split was
implemented at the beginning of fiscal 2012.
ROHTO Well-being Report 2023

74

Rohto’s
VisionNon-Financial Data
2017

2018

2019

2020

2021

1,400

1,474

1,529

1,595

1,599

1,628

Women (persons)

805

857

883

918

933

967

Men (persons)

595

617

646

677

666

661

Turnover rate* (%)

5.4

5.3

3.1

2.7

2.4

3.0

Participants in internal double jobs (persons)

49

70

54

98

123

123

Participants in external challenge work (persons)

63

81

81

62

52

49

Paid annual leave taken (%)

65.3

70.1

71.6

67.4

61.3

72.2

Ratio of female managers (%)

19.2

21.1

22.8

27.0

31.1

30.0

105

100

94

100

48

83

104

99

93

95

40

74

1

1

1

5

8

9

Uptake of parental leave among women (%)

98

93

95

100

100

97.6

Uptake of parental leave among men (%)

—

—

—

—

22.2

26.5

Return to work after parental leave among
women*2 (%)

96

100

95

98

100

97.6

Employment of people with disabilities (%)

1.84

2.08

2.10

2.30

2.42

2.30

Pleasantly surprised testimonials*3 (cases)

1,293

1,191

1,963

2,403

2,866

2,400

Improvements and findings (cases)

10,637

10,367

9,585

10,465

10,634

10,813

Women (persons)Men (persons)Rohto Pharmaceutical Co., Ltd.

Coexistencewith Society

Corporate
GovernanceFebruary 22, 1899

FoundedIncorporated

September 15, 1949

Capital6,504 million yen

Social Contributions
945

929

953

944

968

1,213

Environment

SharesShareholdings by Shareholder Type

Number of Shares Authorized 798,792,000 shares

Treasury Stock 3.40%

Number of Shares Issued

Business Operators 0.68%

228,138,954 shares(excl. 8,039,356 treasury stocks)

Number of Shareholders

Japanese Financial Instruments

18,688Japanese Companies
and Corporations 10.90%

Japanese Financial

Japanese Individuals

Institutions 36.09%

and Others 20.26%

Foreign Investors 28.67%

Major Shareholders (Top 10)
Shareholdings(thousand shares)

Voting stake (%)

The Master Trust Bank of Japan, Ltd. (Trust account)

38,236

16.76

Custody Bank of Japan, Ltd. (Trust account)

19,268

8.44

STATE STREET BANK AND TRUST COMPANY 505223

16,232

7.11

MUFG Bank, Ltd.

7,601

3.33

Kiyoko Yamada

5,937

2.60

Yamada Kosan Limited Private Company

5,615

2.46

Energy consumption (GJ)

321,829315,057

322,235

310,345

326,137

360,005

Sansho Kosan Co., Ltd.

5,096

2.23

Electricity consumption (1,000 kWh/year)

23,711

24,28925,11024,914

26,05528,645

Nippon Life Insurance Company

4,238

1.85

0.245

0.233

0.236

0.247

0.257

0.248

Kunio Yamada

3,908

1.71

City gas consumption (1,000 m3/year)

2,410

2,087

2,072

2,913

3,014

3,073

Rohto Group Shareholding Association

3,201

1.40

Per unit of net sales (m3/million yen)

25

20

19

29

30

29

290

266

271

248

263

276

3.0

2.5

2.5

2.5

2.6

15,772

14,66913,957

13,327

14,249*Per unit of net sales (1,000 kWh/million yen)

Water usage (1,000 m3/year)
Per unit of net sales (m3/million yen)
Total CO2 emissions (t/year) (Scope 1 and 2)
Per unit of net sales (t/million yen)

(Note) The Holding Ratio has been calculated by deducting the treasury stock (8,039,356 stocks).

2.4
4

13,120*4

0.163

0.141

0.131

0.132

0.141

0.114

Total CO2 emissions (t/year) (Scope 3)

—

—

—

—

168,720

193,926

Per unit of net sales (t/million yen)

—

—

—

—

1.667

1.681

Changes in Stock Price and Trading Volume
Changes in Stock Price and Trading Volume
Stock Price
(yen)
5,000

Trading Volume(thousand yen)
25,000

ROHTO Pharmaceuticaltrading volume
ROHTO Pharmaceuticalstock price

20,000

Health Management
Employees performing 8,000-step walking and 20-min.
brisk walking per day at the time of events (%)
Smoking rate (%)
Anemia among female employees (%)*Criteria: hemoglobin (Hb) levels < 10.9 g/dL (since 2020, < 12.0 g/dL)*1 Excludes mandatory retirees and part-time employees.
*2 Most people leave the Company due to a job relocation of their spouse.
*3 Positive responses such as letters of appreciation from customers

75

ROHTO Well-being Report 2023

Data
SectionNumber of Employees 7,176 (consolidated basis)
1,628 (non-consolidated basis)

Shareholder

Products and Quality

Donors to Karugamo Fund (persons)Sustainable Global
Environment

Company Profile
Company Name

Employees (persons)Uptake of parental leave (persons)Maximizing
Human Capital

2022

Employees and Workstyles

1

Realization of Well-being
through BusinessCorporate Data (as of March 31, 2023)
Rohto Pharmaceutical Co., Ltd. only (non-consolidated)(FY)

Value Creation
Story

41.0

44.4

48.5

29.3*552.3

15,000

54.9
2,500

11.6

7.7

0.1

0.1

1.9

2.8

10,000

5.1

4.9

5.1

14.3*6

14.8

14.2

5,000

*4 Changed the calculation standards to match the GHG Protocol from FY2021.
*5 Implemented in 2020 during Japan’s state of emergency.
*6 Changed the diagnostic criteria in 2020 (to align with the WHO criteria).

0

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023 (FY)ROHTO Well-being Report 2023

076

Rohto’s
VisionValue Creation
Story

Realization of Well-being
through BusinessMaximizing
Human Capital

Sustainable Global
Environment

Coexistencewith Society

Corporate
Governance

Data
SectionGlobal Network
Europe

Asia

33
31

Dax Cosmetics Spolka Z Organiczona
Odpowiedzlalnoscia

Mentholatum (Asia-Pacific) Ltd.

Mentholatum (China)
Pharmaceuticals Co., Ltd.

32

PT. Rohto Laboratories Indonesia

Rohto-Mentholatum (Vietnam)Co., Ltd.

Tianjin Rohto Herbal Medicine
Co., Ltd.

EuropeNorth America
19

11

2
21

1

4

Japan

30
The Mentholatum Company, Ltd.
(U. K.)

20

18
28

29

26

3
8

16

22

7

The Mentholatum Company, Inc.

5

14

13

6

15

17
Rohto Pharmaceutical Co., Ltd.

27

South America

23

Africa12

10

9Qualitech Pharma Co., Ltd.

24

35

25

Oceania
Rohto Mentholatum do Brasil Ltda

Mentholatum South Africa Pty. Ltd.

Rohto Group

Ophthalmos S. A.

Countries with business footprint

More than

34
36
Mentholatum Australasia Pty. Ltd.

The Company,

67 subsidiaries, and 15 affiliates 110 countries
As of March 31, 2023

Main Subsidiaries and Affiliates
Company NameJapan

14 consolidated subsidiaries
3 affiliated companies

accounted for by the equitymethod

15 other companies

Americas

9 consolidated subsidiaries
6 other companies

Asia

77

ROHTO Well-being Report 2023

Location

Company Name

Location

1 Qualitech Pharma Co., Ltd.

Minato-ku, Tokyo

19 Tianjin Rohto Herbal Medicine Co., Ltd.

Tianjin, China

2 Mayado Pharmaceutical Co., Ltd.

Kobe, Hyogo Pref.

20 Mentholatum Taiwan Ltd.

Taipei, Taiwan

3 Rohto Nitten Co., Ltd.

Nagoya, Aichi Pref.

21 Mentholatum (AP) Ltd., Korea Branch

Seoul, South Korea

4 Interstem Co., Ltd.

Hachioji, Tokyo

22 Rohto-Mentholatum (Thailand) Ltd.

Bangkok, Thailand

5 Amato Pharmaceutical Products, Ltd.

Toyonaka, Osaka Pref.

23 Rohto-Mentholatum (Malaysia) Sdn. Bhd.

Kuala Lumpur, Malaysia

6 MG Pharma Inc.

Ibaraki, Osaka Pref.

Singapore

7 Ceres Okinawa Co., Ltd.

Ogimi, Okinawa Pref.

company accounted for by theequity-method

24 Rohto-Mentholatum Singapore Office
25 PT. Rohto Laboratories Indonesia

Jakarta, Indonesia

8 Yaeyama Farm Co., Ltd. (Specific agricultural production company)

Ishigaki, Okinawa Pref.

11 other companies

26 Rohto-Mentholatum (Vietnam) Co., Ltd.

Binh Duong, Vietnam

9 Hokushinfoods Co., Ltd.

Ebetsu, Hokkaido Pref.

27 Rohto-Mentholatum (Lanka) Pvt. Ltd.

Colombo, Sri Lanka

10 The Mentholatum Company, Inc.

New York, U.S.A.

28 Rohto-Mentholatum (Cambodia) Co., Ltd.

Phnom Penh, Cambodia

11 Hydrox Laboratories, Inc.

Illinois, U.S.A

29 Rohto-Mentholatum (Myanmar) Co., Ltd.

Yangon, Myanmar

12 The Mentholatum Company of Canada, Ltd.

Ontario, Canada

30 Rohto-Mentholatum (Nepal) Pvt. Ltd.

Kathmandu, Nepal

13 Mentholatum de México S. A. de C. V.

Mexico City, Mexico

31 The Mentholatum Company, Ltd. (U. K.)

Scotland, U.K.

14 Rohto Mentholatum do Brasil Ltda

Sao Paulo, Brazil

32 Dax Cosmetics Spolka Z Organiczona Odpowiedzlalnoscia

Mazowieckie Province, Poland

15 Ophthalmos S. A.

Sao Paulo, Brazil

33 Rohto Mentholatum RU LLC

Moscow, Russia

16 Mentholatum (Asia-Pacific) Ltd.

Hong Kong, China

34 Mentholatum South Africa Pty. Ltd.

Cape Town, South Africa

17 Rohto Advanced Research HK Ltd.

Hong Kong, China

35 Rohto-Mentholatum (Kenya) Ltd.

Nairobi, Kenya

18 Mentholatum (China) Pharmaceuticals Co., Ltd.

Guangdong Province, China

36 Mentholatum Australasia Pty. Ltd.

Victoria, Australia

Asia

Europeand Africa
Oceania

13 consolidated subsidiaries
1 non-consolidated affiliated8 consolidated subsidiaries
1 other company
1 consolidated subsidiary

ROHTO Well-being Report 2023

78

Rohto Pharmaceutical Co., Ltd.
https://www.rohto.co.jp
1-8-1 Tatsumi-nishi, Ikuno-ku, Osaka, Japan 544-8666

Issued in November 2023
Printed in Japan