FREUND : Report 2022

FREUND CORPORATION

FREUND Report 2022

Fiscal Year Ended February 28 2022

(From March 1, 2021 to February 28, 2022)

Contents

Profile						1
Milestones of FREUND Group					2
Global Network of FREUND Group			3
Value Creation Cycle of FREUND	4
Group
Manufacturing Process for

Profile

We have grown on the basis of our "Hardware (pharmaceutical product manufacturing equipment, pharmaceutical excipients and other products)" and "Software (drug formulation technologies)" business models. Currently, we have 6 Group companies in Asia, the U.S. and Europe, including Japan. We are expanding our business segment not only to pharmaceutical product field but also to non-pharmaceutical product field. Based on the Group's value of "ONE FREUND," we are promoting business activities aimed at "contributing to better medical care and health for people worldwide" in management vision.

Pharmaceutical Products and								5
FREUND Group's Business Scope
Overview of Business Segments and
Relationship with Society									6
10-Year Consolidated Financial Data
of FREUND Group									7
Top Message									8
Close-Up
							13
Pharmaceutical Product Field
Non-Pharmaceutical			15
Product Field
Sustainable Management				17
Foundation
Company and Stock Information				22

Disclaimer	Forward looking
statement

Corporate Philosophy

Develop the Future through Creativity®

Values which	ONE
the FREUND
Group holds
precious	FREUND

Management Vision

Contributing to better medical care and health for people worldwide, and creating and fostering technologies for fulfilling lives and food safety.

Creating special value

Aiming to be No. 1 in

Number each business segment

ONE

Only Be

ONE ONE

This Report contains forward looking plans, estimates, strategies, financial results and other statements. Such information is based on the most accurate information available at the time of production of this Report. Therefore, the Company's actual financial results may diverge largely from statements represented in this Report due to the influence of various risks and uncertainties. Influencing factors include the economic environment, competitive pressures, related regulations and laws, changes in product development conditions and fluctuations in foreign exchange rates relating to the Company's businesses. Furthermore, the factors influencing the Company's estimates and other statements are not limited to the above.

Note: The details of this Report are based on the results of the fiscal year ended February 28, 2022(from March 1, 2021 to February 28, 2022). (However, new information available after March 2022 has also been included in this Report.)

Putting clients' views 1st	Networking
Aiming to be the Only ONE for clients	Unite to a "Be One" group
and society

1

HISTORYof FREUND

Milestones of FREUND Group

Focusing on film coating technologies for tablets, we were the first in the world to succeed in developing "automated film coating machine" and "film coating liquid." Since our foundation in 1964,

FREUND CORPORATION has been on a path as a research and development type company based on granulation/coating technologies under corporate philosophy of "Develop the Future through Creativity®."

Founding period

Innovation period

Growth period

To the future

1964-1969

1970-1989

1990-2019

2020-

Founded amidst high economic growth period

Grew dramatically in line with economic growth of Japan

Expanded target markets to the world through globalization

Fly to the future with creativity

1964

Management Established in Kanda

1971

Machinery

Developed and launched

1992

Management Established the "Hamamatsu facility /

2014

Management

Celebrated the 50th anniversary

2020

Management

Acquired Cos.Mec S.r.l. (Italy)

Tsukasamachi, Chiyoda-ku, Tokyo

automated sugar and film coating

Technology Development Research

since FREUND's founding

Developed and launched

Machinery Developed and launched testing

machine "HICOATER"

Center" in Hamamatsu City,

Developed continuous granulation

Machinery

1978

Shizuoka Prefecture

Machinery

data integrity system "Smart DI"

machine "FM-2 model" and

Chemicals

Developed and launched

1996

and drying system "Granuformer

2021

Management

Established joint venture

manufacturing machine

food preservatives "Antimold-102"

Management

Registered shares on

concept model"

"FM-5 model" for automated film

1980

Established Freund Kasei

the Over-The-Counter Market with

2015

company Freund-Chineway

coating machine machine

Management

the Japan Securities Dealers

Chemicals

Launched pharmaceutical

Pharmaceutical Technology

Chemicals Developed and launched f

Corporation in Urawa City,

Association (later JASDAQ)

excipients for orally disintegrating

Center Co., Ltd. (China)

Saitama Prefecture

1997

tablets "NONPAREIL-105 (150)"

Chemicals

Developed and launched food

ilm coating liquid for

(currently Saitama City)

Management Acquired Vector Corporation (U.S.)

2016

pharmaceuticals "FC-101" and

(merged in March 2014)

(currently Freund-Vector Corporation)

Machinery

Developed and launched tablet

preservative for fine detection

"EC-101"

1987

Chemicals

Developed and launched

2008

Machinery

Developed and launched

imprinting machine "TABREX Rev."

solution "Antimold Mild FDS"

1969

Machinery Developed and launched fluid bed

2018

Developed and launched

Machinery

Developed and launched tablet

multiple function type food

new tablet coating machine

Machinery

granulation, coating and drying

preservatives "Negamold"

"HICOATER FZ"

continuous granulation and

automatic coating tool "TACT"

machine "FLOW COATER"

2010

Management

Acquired Turbo Corporation

drying system "Granuformer"

Machinery

Developed and launched

2019

Management

Established joint venture company

tablet coater "HICOATER HV"

(currently Freund-Turbo Corporation)

Management Established Freund Pharmatec Ltd.

Parle Freund Machinery Private

2022

Machinery

Developed and launched

Limited (India)

near infrared technology

in Ireland (transferred business to

"Smart MOIS"

Sigmoid Pharma Ltd. (Ireland) in

February 2016)

Management Moved to the Tokyo Stock

2013

Machinery

Launched tablet imprinting

Exchange standard market

(¥million)

machine "TABREX"

(¥million)

20,000

2,400

Net sales and operating profit trends

Net sales (LHS)

Operating profit (RHS)

*Fiscal year ended at the end of February each year

Consolidated nancial results

15,000

1,800

Non-consolidated nancial results

10,000

1,200

5,000 600

0																																																										0
1965	1966	1967	1968	1969	1970	1971	1972	1973	1974	1975	1976	1977	1978	1979	1980	1981	1982	1983	1984	1985	1986	1987	1988	1989	1990	1991	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022
																																																				FREUND REPORT 2022	2

GLOBAL NETWORK

Global Network of FREUND Group

In July 2021, we established the Shanghai FC Center, a technology development research center in China, and are preparing to start operations during FY02/23. As a result, our Group's global network in the pharmaceutical product field now consists of a five-pillar-structure including Japan, the U.S., India, Italy and China. The addition of manufacturing sites in India and Italy to the existing sites in Japan and the U.S. has strengthened the business development in the pharmaceutical emerging regions. For China, a huge pharmaceutical emerging market, we will handle both machinery and chemical products at the Shanghai FC Center to increase awareness of our products. Through these efforts, we will provide better products suited to the market, respond to regional needs for services including maintenance and cultivate high-quality local agents. With the establishment of a five-pillar-structure as a cornerstone, we aim to expand our global market share by pursuing synergies among group companies.

The business domains developed at each site and the functions of each site are as follows.

Evolving Regions

Freund-Vector

European Laboratories Machinery

Sales Laboratory

Cos.Mec S.r.l.	Machinery	FREUND CORPORATION Machinery Chemicals
Development Manufacturing	Sales

Joined the Group in 2020

Development Manufacturing Sales Laboratory

Parle Freund Machinery
Private Limited	Machinery
Manufacturing Laboratory

Freund-Turbo Corporation Machinery

(Non-Pharmaceutical Products)

Development Manufacturing Sales Laboratory

Established joint venture company in 2019	Freund-Vector
	Corporation Machinery
	Development Manufacturing Sales Laboratory
Freund-Chineway Pharmaceutical	Joined the Group in 1997
Technology Center Co., Ltd. Machinery	Chemicals
Sales Laboratory

Shanghai FC Center will start operations during FY02/23

3

Value Creation Cycle of FREUND Group

We have grown our solid dosage manufacturing equipment business, such as tablets and granules, and pharmaceutical
excipient business since founding. We are a unique research and development-oriented group of companies that are
involved in both formulation of machines and excipients in the pharmaceutical field, and are the only one of its kind in the
world. In recent years, while expanding our fundamental particle processing technologies into non-pharmaceutical product	Sustainability
fields such as food and industrial applications, we have added material handling equipment that is used in the ancillary	policy
processes for pharmaceutical products to our business domain and are promoting global business activities. Furthermore,
we are taking on the challenge of realizing sustained growth based on our management vision by launching our own
engineering services with a view to solving problems with existing equipment operating at our clients' manufacturing sites.

For FREUND Group, sustainability means aiming for sustained growth of stakeholders, the Group and society, based on our corporate philosophy of "Develop the Future through Creativity®". We will contribute through the value we provide to our clients in our corporate activities, while taking into consideration issues such as abnormal weather, resource depletion, deforestation, and human rights. We will also strive to contribute to the realization of a long-term sustainable society from an ESG (Environment, Social and Governance) perspective, taking into consideration D&I (Diversity & Inclusion).

Input

1. FinancialCapital
2. ManufacturingCapital
3. IntellectualCapital
4. HumanCapital
5. SocialCapital

Pharmaceutical/Food/	Development/Production Partner/
Ingredient Manufacturers		Academia
Collaboration	Sales	Procurement	Collaboration

	Pen			Ink
	machinery			chemical
	( equipment )			( product )
Hard	Pharmaceutical product			Medical excipients
manufacturing equipment	Product development/
ware	Powder machinery equipment	manufacture/sales
(products)	for non-pharmaceutical use			Printing ink
	Material handling equipment	Contract processing
	for manufacturing
	Tablet imprinting machine	Technical services	Functional food materials
	Measuring equipment	Engineering services	Food preservatives
	Particle processing technologies
	(pharmaceutical products/food/chemical applications)
	Mechatronics technologies DDS technologies
Soft	Intellectual property
ware	Japanese technologies			Overseas technologies
drug formulation	)
( technologies	Collaboration	Freund-Vector Corporation
		Cos.Mec S.r.l.
	FREUND CORPORATION
	Freund-Turbo Corporation		Parle Freund Machinery Private Limited
			Freund-Chineway Pharmaceutical
			Technology Center Co., Ltd.

Revenue/Investments

Output

1 FinancialCapital

Sales increase, cash flow generation, ROE & EPS improvement

2 ManufacturingCapital

Provision of competitive products, top-level productivity

3 IntellectualCapital

Brand strength enhancement

4 HumanCapital

Fostering excellent researchers and attracting global human resources

5 SocialCapital

Strengthening of inter-group coordination, expansion of global networks and expansion of collaboration with regions and clients

Outcome

Providing value to stakeholders

Shareholders/

Investors

Contributing to asset formation, increased visibility in

capital markets

Clients

Further cooperation as

a good partner and stable supply of reliable products

Employees

Respect for human rights, promoting individual growth and providing a comfortable and safe work environment

End Users

Enjoyment of good medicine and realization of good health and a prosperous life

Society

Contributing to civil society and international society

Pen + Ink

Business modeling of the machinery business "Pen" and chemical product business "Ink"

Since our inception, we have differentiated ourselves from our competitors in the pharmaceutical field through developing the business model of "Pen" machinery and "Ink" chemical products. Today, we have established ourselves as a leading company in the pharmaceutical manufacturing equipment industry.

wareHard + wareSoft

Unique value-added creation through the fusion of "hardware" and "software"

In addition to the research and development of "hardware" such as machinery equipment and chemicals, our Group possesses the "software" for particle processing technologies that fusing their superior performance. By integrating "hardware" and "software", we promote unique value-added creation to produce original in-house products, contract processing and technical services.

FREUND REPORT 2022 4