Alfresa : Human Resource Strategy

Non-Financial Strategy

Human Resource Strategy

Important Sustainability Issue 5

Links between Our Management and Human Resource Strategies

Providing products and services in every health-related field to become a Healthcare Consortium

	Group human resource strategy
Formulating human resource goals and steps to	Improving HR management skills and	Promoting the active participation of seniors
achieve them by job type to develop strong expertise	building a Group HR database
Fostering diversity	Enhancing Group training and	Increasing employee engagement
recruitment activities

Key requirements for Group employees

1. Strong sense of mission for work that supports life

A high sense of mission is one of the values required of an employee involved in work that supports life.

Willingness	2. High ethical standards that earn trust
to venture into	This is an important attribute for cultivating the sense of trust that is essential to be entrusted with
uncharted areas
	Strong	life-related work.
Ability to adapt	3. Willingness to venture into uncharted areas
expertise
to changing	This is the most important requirement for creating new value and business under the management
needed for
environments	environment at any given time.
	sustainable growth
		4. Ability to adapt to changing environments
	Strong	The ability to adapt quickly to new business opportunities and work environments, and to fully leverage
High ethical	unique capabilities, contributes to the results of the team.
sense	5. Strong expertise needed for sustainable growth
standards	of mission
that earn trust	for work that	As they work with one another, every employee needs to possess a wealth of knowledge and experi-
	supports life	ence and display their individuality and talents in order to enable the functions necessary for sustain-

able growth of the Group.

To achieve sustainable growth over the long term, the Alfresa Group's long-term goal is to become a "Healthcare Consortium that provides products and services in every health-related field." We believe that human resources are our most important asset for realizing this growth and that they are the driving force behind the Group's growth.

Our medium-term management plan outlines how we will become a Healthcare Consortium through the "enhancement of business models and creation of new value" and by realizing the "contribution to local health and treatments through united Group efforts." The plan also sets forth how we will reinforce the foundations of each business-the Ethical Pharmaceuticals Wholesaling Business, the Self-Medication Products Wholesaling Business, the Manufacturing Business, and the Medical-RelatedBusiness-as well as building up the entire Group on the organizational and human resource fronts.

To create total supply chain services and generate new value, we will expand functions such as development, API, manufacturing, logistics, sales, introduction/construction of digital technology, data services, and drug administration/ treatment, and formulate a collaborative team and set roles that will enable the entire Group to contribute to the achievement of the Community Health Care Vision. We will achieve this across the Group.To achieve these goals, we believe it is essential to appoint and position professionals with strong expertise who have abundant knowledge and experience in the necessary functions to achieve the sustainable growth of the Group, allowing them to demonstrate their individuality and talent fully.

We have established a Group human resource strategy to promote integrated efforts to achieve the Group's management policies. The strategy includes various HR-related measures based on the desired talent profile for each job category (10 categories). Additionally, the Group Human Resource Committee holds regular meetings to promote a unified approach to realizing the human resource strategy.

Under the human resource strategy, the head of the Group Human Resources Department convened 13 meetings to discuss planning, implementation, and deployment, reaching an agreement in conjunction with the presidents of each Group company. The Human Resource Committee will continue to drive the PDCA cycle, focusing on enhancing the effectiveness of the initiatives under the human resource strategy.

			Rollout at individual
			companies based on
				the Group human
	Consensus-building		resource strategy
Discussions of the human	on the human	Group human resource strategy
resource strategy by people	resource strategy	Sharing of issues following rollout
in the Group in charge of	Group human	resource strategy
human resources
	Consensus-building on the human	Rollout at individual	Rollout at individual Rollout at individual Rollout at individual Rollout at individual Rollout at individual Rollout at individual
Discussion of the direction the	resource strategy, including Group	companies	companies companies companies companies companies companies
company presidents
Group is heading

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Non-Financial Strategy

Human Resource Strategy

Group Human Resource Strategy for Becoming a Healthcare Consortium

due to a spouse's transfer. We will enhance our internal

Promoting the Active Participation of Seniors

The Alfresa Group needs from its employees a willingness to venture into uncharted areas, the ability to adapt to changing environments, high ethical standards that earn trust, a strong sense of mission for work that supports life, and the strong expertise needed for sustainable growth. We aim to be a collection of strong individuals, where people within the Alfresa Group put their individuality and talents on display while working together to achieve the Group's goals.

To realize the ideal laid out in the Group's principles of becoming a "Healthcare Consortium that provides products and services in every health-related field," we have developed a Group human resource strategy that has six components: formulating human resource goals and steps to achieve them, by job type, to develop strong expertise; improving HR management skills and building a Group HR database; promoting the active participation of seniors; fostering diversity; enhancing Group training and recruitment activities; and increasing employee engagement.

Human Resource Goals Aimed at Enhancing Expertise, by Job Type

We believe it is essential to promote and place professional human resources with strong expertise, who have abundant knowledge and experience and can fully demonstrate their individuality and talent. To this end, we have established 10 job categories based on customer service, logistics, science, production, corporate functions, and advanced specialty

Improving HR Management Skills and Building a Group HR Database

We will introduce a Groupwide talent management system with the aim of securing human resources to support the sustainable growth of the Group, strategically placing the right people in the right positions to enhance corporate value and shifting to high-value-added tasks by streamlining HR operations through digital transformation (DX). As a first step, we plan to introduce a talent management system at each Group company in the fiscal year ending March 31, 2024. The second step, starting in the fiscal year ending March 31, 2025, will be to integrate the Group's HR database and establish a data collection environment so we can foster job matching throughout the Group. We intend to maximize corporate value by promoting autonomous career development and facilitating the appropriate personnel placement.

	2nd STEP	Groupwide talent management system
Secure human resources	Place the right people in	Shift to high-value-added
	to promote the sustain-	the right positions to	tasks by streamlining HR
able growth of the Group	enhance corporate value	operations through DX

Group HR database

1st STEP

application system to facilitate these changes. To promote the appointment of women to management positions, we will drive a mindset shift among executives and managers regarding diversity and implement Groupwide support and programs to foster the development of female leaders and potential candidates.

The Alfresa Group's Diversity Policy https://alfresa.com/eng/csr/esg/social/employee/

4.4%	4.9%
As of March 31, 2022	As of March 31, 2023

Percentage of female managers

Targets for Women in Management Positions

At least 6.0% in the Alfresa Group by the

fiscal year ending March 31, 2026

At least 10.0% in the Alfresa Group by the

fiscal year ending March 31, 2031

Data on Promoting Women's Participation and Diversity (Groupwide)

The Alfresa Group aims to create a highly productive organization where all individuals, regardless of age, can maximize their abilities, as well as promote the transfer of skills to younger generations. To fully utilize senior employees' past experiences and skills, we are also considering their placement and employment in fields where they can make the most of their expertise.

Anticipating that the workforce will continue to shrink, we are considering extending the applicable age for our mandatory retirement system to 70, and we have introduced an executive retirement system. We are also promoting the appointment and placement of talented individuals, utilizing their expertise and extensive experience. Through such initia- tives, the Alfresa Group aims to support the active participation of talented people, both young and senior, accumulate knowledge and experience throughout the organization, and be a Group where individuals can demonstrate their unique personalities and talents.

Enhancing Group Training and Recruitment Activities

To foster strong individuals with solid expertise and to collectively become a robust organization, we have developed a human resource development program centered on two pillars: the Groupwide promotion of talent development and individual talent development unique to each Group company. As part of the former, we have put in place programs that aim

functions. To achieve advanced specialized functions in each category, we have introduced a new career path (called the Professional Career Group) in our personnel system. With this addition, we will promote career development focused on enhancing expertise in each job category.

Individual talent	Individual talent	Individual talent		Individual talent
management	management	management		management
systems for each	systems for each	systems for each	…	systems for each
Group company	Group company	Group company	Group company

Number of female executive officers*2

Percentage of female managers (%)

2021.3

4

5.7

2022.3

5

4.4*3

2023.3

7

4.9

to foster career development, enhance the management skills of executives and managers, and improve overall awareness (including heightened awareness of the Group's mission, diversity, and compliance, which form the foundation of the entire Group). Under the second pillar, individual talent

Human Resource Goals, by Job Type

(10 Categories)

1. Healthcare marketing specialist
2. Medical marketing specialist

Customer	3. Self-medication marketing specialist
service

1. Pharmacist
2. Dispensing pharmacy administration

6. Logistics

	New
Management	Professional Career
Career Group	Group

New career path in the human

resource system

Enhancing human resource development for individual Group

Fostering Diversity

We need people who can work together to achieve sustainable growth despite a shrinking working population. Following the Alfresa Group's Diversity Policy, we actively embrace diverse talent with abilities and expertise and create an environment where they can choose diverse workstyles. We foster a corporate culture where everyone who works together can thrive and maximize their abilities and expertise.

The Alfresa Group is committed to achieving a sustainable organization where all employees can continue to thrive

Promoting

women's

participation*1

Percentage of female regular employees (%)

Percentage of female new employees (%)

Average years of service of female employees

Average years of service of male employees

Difference of average years of service between female and male employees

29.9

59.0

11.8

19.0

7.2

30.8

59.2

11.2

18.8

7.6

32.5

63.7

11.8

18.7

6.9

development, we conduct training programs tailored to specific job roles to enhance expertise, as well as training programs addressing specific challenges unique to each Group company. Furthermore, to propel our efforts to foster strong individuals and become a robust organization, we will actively recruit talented individuals with specific expertise who can contribute immediately.

To facilitate employees' autonomous career development, we provide support for acquiring qualifications that require commuting to school in terms of expenses and leave time. To sustain continuous growth and create value in a rapidly changing environment, the Alfresa Group will continue

7. Science (research, development, reliability guarantee, etc.)

8. Production

9. Corporate functions (Administration Division)

General Career Group

companies and the

regardless of their life stage. In addition to actively recruiting and promoting women, we aim to realize diverse workstyles by implementing measures such as job changes and cross-­

Number of elderly workers (over age 60)

Number of workers with disabilities

1,428

292

1,524

295

1,517

300

strengthening such efforts related to human resources.

10. Advanced specialty functions (new business development, etc.)

entire Group

organizational job matching to accommodate life changes such as childbirth, child-rearing, caregiving, or relocation

*1 Number of full-time employees, excluding the "number of female executive officers" *2 Includes directors, Audit & Supervisory Board members, executive officers, and

some Company officers

*3 Ratios declined due to changes in the HR system in the fiscal year ended March 31, 2022.

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Non-Financial Strategy

Human Resource Strategy

Group Training Record (As of March 31, 2023)

Training program and purpose	Target		No. of		No. of		Training
		programs
	participants			hours
							held
Director and executive officer training		Acquire a basic mindset as management,	Directors and executive officers		Around 15		3 times		60 hours
	increase Company decision-making
		capability
AEP (Alfresa Group Executive Program)		Develop next-generation management	General managers		Around 15		8 times		70 hours
ASPAC (Alfresa Group Study Program		Cultivate global thinking and perspective	Branch/section managers to		Around 15		7 times		60 hours
Abroad Course)		executive officers/general managers
ABS (Alfresa Group Business School)		Nurture candidates for next-generation	Section managers to		Around 17		9 times		70 hours
	management		young branch managers
Training of female candidates for leader-		Train next-generation female leaders	Women in chief and		Around 20		2 times		41 hours
ship positions		assistant manager positions
Training for women in sales		Explore and take measures to address	Women in sales positions		Around 270		1 time		6 hours
	issues faced by women in sales positions
Diversity management training		Promote understanding of diversity as a	All Board members and managers at		Around 1,800		1 time		2 hours
	management strategy		consolidated Group companies
Third-Year Employees Seminar		Nurture a spirit to take on challenges	Employees in their third year		Around 200		4 times		4 hours
	among third-year employees
Fresh Members Seminar		Share the Group's principles, etc.	New recruits		Around 230		15 times		4 hours
Hospital sales representative training		Establish a marketing style to match the	Hospital sales representatives in		Around 10		9 times		70 hours
	environmental changes in hospitals		their early 30s
Training costs in the fiscal year ended March 31, 2023 (amount per employee*4): ¥25,487
*4 All Group employees
Increasing Employee Engagement	questions to evaluate the effectiveness of the human resource
To promote the implementation of our Group human resource	strategy and monitor the overall engagement level within the
strategy across the organization, in 2021, we began conduct-	Group. We will continue advancing the human resource strat-
ing employee engagement surveys. We established survey	egy initiatives based on our survey results.

I N T E R V I E W

The Thinking behind the Group Human Resource Strategy

(Human Capital Management)

source of strength. We believe that human capital management aligns with our Group management policies.

The Alfresa Group's area of business is the healthcare industry. This sector faces a challenging environment, marked by such factors as consecutive NHI drug price reductions and the pending expiration of patents for major pharmaceuticals. In the past, the road to success in the ethical pharmaceuticals wholesaling industry was to sell pharmaceuticals on a large scale to numerous patients. At present, we are not sticking to this model, and we are in an era when it is difficult to predict the future. We recognize the need to further specialize, advance, and diversify our business. To sustain growth, we have asked ourselves what kind of talent is necessary and how to ensure such talent can work and thrive. As a result of this deliberation, we have formulated a human resource strategy comprising six parts.

Q. What are some of your focuses in promoting the Group human resource strategy

(human capital management)?

The Alfresa Group's 22-24Mid-term Management Plan sets forth five requirements for our human resources: a willingness to venture into uncharted areas, a strong sense of mission for work that supports life, the ability to adapt to changing environments, high ethical standards that earn trust, and the strong expertise needed for sustainable growth.

In our newly established human resource strategy, we have clarified the ideal profiles of talent with the expertise to ensure that the entire Group moves in a consistent

employee engagement survey with the entire management team. In this manner, we strive to elevate our Group human resource strategy by truly focusing on the people we work with.

The Human Resource Committee, which serves as a forum for human resource personnel across the Alfresa Group, is the driving force behind promoting an understanding of and implementing the six elements of our human resource strategy. Over the past two years, the committee has met 13 times, demonstrating its role as an important source of strength for the Group.

Q. What is management's commitment to the Group's human resource strategy?

The management team is approaching the human resource strategy with determination and a sense of leadership and is deeply committed to its realization. Rather than leaving on-site issues solely to the Human Resources Department, the management team actively fosters a shared awareness with Group company presidents.

In 2022, our directors had a free-form discussion on the topic of human capital management. We reaffirmed our understanding that the achievements of our people working together are at the heart of efforts to enhance corporate value, as well as our recognition of the importance of nurturing the next generation of leaders who will shape our future. We also underscored the significance of conducting an annual employee engagement survey to gather feedback from the front lines.

Toshiki Tanaka

In charge of the Corporate strategy

Human Resources Planning, IT / Digital Transformation (DX) Director, Vice President & Executive Officer

Alfresa Holdings Corporation

Q. Please describe the background for formulating the Group human resource strategy (human capital management) and the thinking behind it.

The Alfresa Group is a vital part of the social infrastructure supporting public healthcare services. This ties into an excellent social mission and purpose for all of us working together in the Group. When new employees join the Alfresa Group, I tell them, "You've joined a great company. Be proud to tell your parents, relatives, and friends that you are part of the Alfresa Group. By working here, you are contributing to society."

The strength of the Alfresa Group's core business, the Ethical Pharmaceuticals Wholesaling Business, lies in a network that extends to medical institutions throughout Japan, facilitating the delivery of the necessary pharmaceuticals to the right place at the right time. More than any specific technologies or patents, human resources are at the core of our business. The Alfresa Group considers human resources to be its greatest asset and a

direction. We have also developed Groupwide career paths, including the Professional Career Group.

We also recognize it is extremely important to create an environment, system, and culture where our human resources-our greatest asset and source of strength- can demonstrate their diverse talents and work actively. We promote diversity to ensure that a wide range of people, including women and seniors, can actively contribute in various ways. For example, to promote wom- en's empowerment, we provide mindset shift training for both female employees and executives, and other management personnel. Each Group company has developed its own action plans in this regard.

Each year, we conduct an employee engagement survey with the aim of improving employee engagement. In addition to our own unique set of questions, we listen carefully to the people we work with to understand what our employees think. We share the results of the

Q. What message would you like to convey to Alfresa Group employees?

The Alfresa Group plays a crucial role in supporting the social infrastructure. To succeed in this, we need to be a strong corporate group that demonstrates stable performance and continues to grow.

We are committed to making every effort to create an environment where people can work with vitality, build diverse careers, and thrive. Our goal is to contribute to realizing a sustainable and healthy society, and we are delighted to see our employees engaging in their work with a strong sense of purpose, job satisfaction, and pride.

Bringing together each individual's perspectives to contribute to society will enhance the overall corporate value of the Group.

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Non-Financial Strategy

Human Resource Strategy

Respect for Human Rights

The Alfresa Group is dedicated to the realization of "a society in which everyone can live in good health." With our belief that respect for human rights is a fundamental requirement of a society in which everyone can live in good health, we have established the Alfresa Group's Human Rights Policy based on the Alfresa Group's Principles and the Alfresa Group's Basic Sustainability Policy.

The Alfresa Group is committed to respecting the human rights of all people affected by our business activities. In the event that any adverse impact on human rights occurs resulting from our business activities, we will take appropriate corrective actions to remediate the situation. We will also endeavor to ensure that our relationships with our business partners and other stakeholders do not contribute to adverse impacts on human rights.

The Alfresa Group's Human Rights Policy https://www.alfresa.com/eng/csr/esg/human_right/

Preparation of a Rewarding Work Environment and Promotion of Health

Advancement of Work-Life Balance

We are reducing overtime hours and encouraging the use of paid leave as a part of our aim to keep our employees motivated and working while raising labor productivity and advocating diverse workstyles in the context of advancing work-life balance. We are also striving to create an environment where people feel free to utilize childcare and nursing care leave. Some Group companies are introducing a job return system, an expansion of the scope of applicable people for short working hours for childcare, and the payment of a childcare allowance.

2021.3 2022.3 2023.3

Alfresa Group's Fresh-Up Campaign

This campaign is a Groupwide effort designed to promote work-life balance by aiming for "a clearly defined approach to work" and working as a Group on the themes of "no overtime day"*6 and encouraging the use of paid leave.

*6 Programs such as "no overtime day," "go-home-early day," "fresh-up day," and so forth involve deciding schedules at each Group company to promote the reduction of long working hours.

Certified Health and Productivity Management Outstanding Organization

In March 2023, a total of 11 Group companies became 2023 Certified Health and Productivity Management Outstanding Organizations, comprising eight companies in the large enterprise category and three companies in the small- to- medium-sized enterprise category. Alfresa Corporation and Alfresa Medical Service Corporation have received this certification in the large enterprise category for four years and three years, respectively, and TS Alfresa Corporation, RYUYAKU CO., LTD., and Alfresa Healthcare Corporation received the certification for the second consecutive year. Alfresa Fine Chemical Corporation received the certification for a third straight year in the small- to-medium-sized enterprise category.

Large enterprise category	Small- to-medium-sized enterprise
• Four consecutive years	category
• Three consecutive years
Alfresa Corporation
• Three consecutive years	Alfresa Fine Chemical Corporation
• Two consecutive years
Alfresa Medical Service Corporation
	Alfresa Holdings Corporation

Percentage of paid leave days taken*5 (%)

Number of people taking	Male
childcare leave	Female
Percentage of people taking	Male
childcare leave (%)	Female
Number of people taking
nursing care leave

48.0 62.3

26 44

142

174

12.6 21.1

98.6 98.9

13 16

66.2

70

130

38.9

97.9

10

• Two consecutive years	• Certified for the first time
TS Alfresa Corporation, RYUYAKU
CO., LTD., Alfresa Healthcare	Alfresa Shinohara Chemicals
Corporation	Corporation

• Certified for the first time
  Shikoku Alfresa Corporation, Meisho Co., Ltd., Tohoku Alfresa Corporation

*5 Includes contract and part-time employees

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