The pharmaceutical and healthcare market in which we operate is undergoing many environmental changes such as the changing values of individual consumers, increasing digitalization and rising medical expenditure as a result of the aging of society and we are entering a period of major reform.

The pharmaceutical business is facing a challenging business environment including NHI drug pricing reform and the increasing complexity of drug development and clinical trials. To continue providing a stable supply of high quality pharmaceuticals in such an environment, upfront investment in production facilities and new drug development is essential.

Also in our self-medication business segment, the environment has changed dramatically, with a rapid increase in online sales of self-medication products due to the impact of the COVID-19 pandemic. We need to strengthen our online business to meet this demand.

Meanwhile, demand for OTC drugs is growing around the world, especially in Asia, due to increasing populations and economic growth. To succeed in this market, it is important to offer products that meet consumer needs.

The Taisho Pharmaceutical Group is adapting to changes in the external environment in each of its businesses and flexibly implementing measures from a medium and long term perspective; however, this involves an overhaul of the business structure and new initiatives which will take time to contribute to business results and which will require upfront investment. We may run the risk of a deterioration in our financial position in the short term as a result. To address this risk, we have implemented a management buyout (MBO) and took the company private. Through this, we have freed ourselves of the short-term evaluation of the market and established a management structure for focusing entirely on measures.

All our employees are committed to working together to continue providing high quality products and services and contributing to society. I highly appreciate your continued support.

July, 2024