Third Quarter Business Results for Fiscal 2020 Feburary 8, 2021(Monday) Director, Managing Executive Officer and CFO Muneki Handa
(Million yen)
Ratio to total sales Prescription Kampo Products 91.6% 0.4% 3.3% 4.7% ■■ Other prescription pharmaceuticals     ■ Healthcare         External sales by consolidated subsidiaries 2
Consequently, net sales and profits were up in comparison with the same period a year earlier. Net sales
+4.5% Net sales rose 4.5% year-on-year owing to the consolidation of a subsidiary in China. ■ ■ Sales of the 129 prescription Kampo products climbed 0.5% year-on-year. ■ Sales of healthcare products including OTC Kampo medicines increased 17.4% year-on-year. Operating profit
■ The cost-to-sales ratio was 41.5%, a rise of 0.4pt year-on-year. Although crude drug-related costs were absorbed by a rise in NHI drug price revisions, the increase in the cost-to-sales ratio reflects impact from external sales in China. ■ The SG&A ratio totaled 40.8%, a decline of 1.1pt year-on-year, mainly reflecting unused expenses in tandem with restricted activities due to impact from COVID-19. Ordinary profit
Comparison with the prescription pharmaceutical market
(Drug price basis) Gap with market: 4.8pt
Estimated  based on IQVIA JPM Apr.2019-Dec.2020. Sales trends by sales channel (Actual sale/selling price basis)
(67prescription) Skin irritation due to change in living environment and due to the use of masks HochuekkitO (Fatigue, decline in stamina) Bofutsushosan (Obesity) Kakkonto (Headache, fever) Jumihaidokuto (Dermatitis) Shosaikotokakikyosekko (Tonsillitis) Shoseiryuto (Bronchitis, nasal inflammation) BakumondotO ( cough, bronchitis) Decline in the number of patients with influenza or the common cold 3Q (Oct-Dec) Hangekobokuto (Anxiety, insomnia) Kamishoyosan (Irritability, anxiety) Maoto (Influenza, rheum/catarrh) hikujountanto (Influenza, common cold) 6
(YoY)
7
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2018
2019
2021 2022 Becoming a value-creation company that contributes to people’s health through its Kampo business Third Medium-Term Management Plan G Lowth Consolidated net sales Vision for Chinese operations Ratio of Jumb overseas sales in FY 2027
●Contribute to health of China’s citizens
Strategic challenges
1.  Sustainably expanding the Kampo market and establishing a presence 2.  Investing in growth and building business foundations in China 3.  Improving productivity using new technologies —AI, robotization, RPA 4.  Fostering a corporate culture through philosophy- based management and ddeveloping diverse human resources 5.  Promoting SDGs through the Kampo Value Chain
■ Positioned geriatric health; cancer (supportive care) and women’s health as the three important domains and aim to concentrate our activities in these domains ■ We plan to deploy a sales approach in the drug-fostering program formulations, growing formulations and three important domains

D) Drug-fostering program formulations    (G) Growing formulations

*1 Practical skills: Abdominal, tongue, pulse and other exams used in Kampo diagnostics *2 CME digital : Lifetime education on Kampo medicine for medical practitioners, including physicians (Continuing Medical  Education)
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MR Use various tools, including Zoom and LINE WORKS Owned media Website for medical practitioners Renewal Paid media m3.com, Nikkei Medical, etc. Provision of information by MRs that meet the needs of doctors Possible to view at anytime and as many times as wanted Online lectur Provision of information by lecturers to target medical institutions nationwide
【Target】Physicians that write nine or less Kampo prescriptions and physicians that do not write Kampo prescriptions 1Q-3Q actual ■No. of times held: 6;  ■Total number of viewers: 133,727
Area plans Provide detailed information taking into consideration regional traits and facility features “Introductory seminar on Kampo medicine” for physicians wanting to learn about Kampo □Examples of themes: Dizziness, headaches, stress, sleep disorders, introduction to Kampo, etc. 【Area Web lectures】 Lectures held: 207  Planned/scheduled lectures: 300 (Number of times) □Examples of lectures held: As a result of holding lectures on Kampo at university hospitals that have no track record in administering Kampo, there was a ripple effect to various areas, including new use of Kampo at related hospitals. 14 Medium-term Management Plan and Vision for the China Business FY 2020 Plan & Vision for the Crude Drug Platform Raw material crude drugs, drug pieces, raw ginseng, Yakushokudogen products, etc. Sales target Sales Sales image 3 billion yuan 240 million yuan target (about ¥4.0 billion) Front-loaded (about ¥51.0 billion) Vision for the Formulation Platform Classical prescription Chinese medicine complex formulations and traditional Chinese medicine (including M&A), etc. ]7 billion yuan Sales image (about ¥119 billion) *Exchange rate: ¥17/yuan (as of the time of the release of the Vision) 15

Policy
■ We aim to improve our corporate value by continually expanding our Kampo business and through growth investments in the China business, and by building foundations. Accordingly, we plan to implement stable dividends, taking into account factors such as medium/long-term profit levels and cash flow conditions. Note: The FY 2020 year-end dividend and payout ratio (forecast) are an estimate based on the assumption that the dividend resolution is approved at the 85th Ordinary General Meeting of Shareholders.
Corporate Communications Dept. Investor Relations Group investor_madoguchi@mail.tsumura.co.jp
Cautionary items regarding forecasts
o The materials and information provided in this presentation contain so-called forward-looking statements. Readers should be aware that the realization of these statements can be affected by a variety of risks and uncertainties and that actual results could differ significantly. o Changes in Japan or other foreign countries related to healthcare insurance systems or regulations set by medical treatment authorities on drug prices or other aspects of healthcare or in interest and foreign exchange rates could negatively impact the Company's performance or financial position. o In the unlikely event that sales of the Company’s core products currently on the market be halted or should sales substantially decline due to a defect, unforeseen side effect or some other factor, there could be a major impact on the Company's performance or financial position. appendix
Crude drug pieces 193.3 billion yuan (about ¥3 trillion) (Domestic production value) about ¥3.5 billion* Traditional Chinese medical products 458.7 billion yuan (about ¥7.2 trillion) (Domestic production value) about ¥179.5 billion* Source: National Bureau of Statistics of China, Ministry of Industry and Information Technology (MIIT)
*Source: Production statistics, including for Kampo formulations, Japan Kampo Medicine Manufacturers Association
Structure of the China business and capital ties: Ownership ratios as of the end of December 2020 Tsumura 100% Tsumura China Inc. stablished in December 2016 100% Procurement, selection and processing, and storage of raw material crude drugs and crude drug pieces (drug pieces) Sales in China of raw material crude drugs and crude drug pieces (drug pieces) processing, and storage of raw material crude drugs and crude drug pieces (drug pieces) Sales in China of raw material crude drugs and crude drug pieces (drug pieces) Newly added subsidiary since 2019 Crude drug PF Formulation PF