FREUND : Report 2023

FREUND CORPORATION

FREUND Report 2023

Fiscal Year Ended February 28 2023

(From March 1, 2022 to February 28, 2023)

Contents

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

Manufacturing Process for Pharmaceutical Products and FREUND

Group's Business Scope				5
Overview of Business Segments and
Relationship with Society									6
10-Year Consolidated Financial Data of
FREUND Group									7
Top Message									8
From Business Site
New Management Structure of Group
Company								13
Our Global Five-Pillar Structure				14
Non-pharmaceutical Product Field:
Machinery							15
Non-pharmaceutical Product Field:
Food Preservatives						16
Sustainable Management Foundation		17
Company and Stock Information			22

Disclaimer	Forward looking
statement

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, 2023 (from March 1, 2022 to February 28, 2023). (However, new information available after March 2023 has also been included in this Report).

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.

Corporate Philosophy

"Develop the Future through Creativity®"

Management Vision

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

Values which the FREUND Group		Creating
holds precious
		special value
	Number	Aiming to be No.1 in
	each business
	ONE	segment
ONE	Only		Be
FREUND	ONE	ONE
	Putting clients' views 1st	Networking
	Aiming to be the Only ONE for		Unite to a "Be One" group
	clients 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 1969

Innovation period 1989

Growth period 1990-2019

To the future 2020-

1964-

1970-

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

Established in Kanda

1971

Developed and launched

1992

Established the "Hamamatsu Plant/

2014

Celebrated the 50th anniversary

2020

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

Management

Management

Management

Management

Machinery

Tsukasamachi, Chiyoda-ku, Tokyo

automated sugar and film

Hamamatsu Technology

since FREUND's founding

coating machine "HICOATER"

Development Research Center" in

Developed and launched data

Developed and launched testing

Developed continuous

Machinery

Machinery

Hamamatsu City, Shizuoka Prefecture

Machinery

integrity system "Smart DI"

machine for automated film

1978

Chemicals

Developed and launched food

granulation and drying system

coating machine "FM-2 model"

preservatives "Antimold-102"

1996

Management

Registered shares on the

"Granuformer concept model"

2021

Management

Established joint venture company

and manufacturing machine

1980

Established Freund Kasei

Over-The-Counter Market with

2015

Launched pharmaceutical

Freund-Chineway Pharmaceutical

"FM-5 model"

the Japan Securities Dealers

Chemicals

Management

Technology Center Co., Ltd. (China)

Corporation in Urawa City,

excipients for orally disintegrating

Association (later JASDAQ)

Chemicals

Developed and launched film

Saitama Prefecture

tablets "NONPAREIL-105 (150)"

Developed and launched food

Chemicals

coating liquid for pharmaceuticals

(currently Saitama City)

1997

Acquired Vector Corporation (U.S.)

Management

2016

Developed and launched tablet

preservative for fine detection

"FC-101" and "EC-101"

Machinery

(merged in March 2014)

(currently Freund-Vector Corporation)

solution "Antimold Mild FDS"

1969

Developed and launched fluid

1987

Developed and launched

2008

Developed and launched new tablet

printing machine "TABREX Rev."

Machinery

Machinery

Chemicals

2018

Developed and launched

Developed and launched tablet

Machinery

bed granulation, coating and

multiple function type food

coating machine "HICOATER FZ"

Machinery

automatic coating tool "TACT"

continuous granulation and

drying machine "FLOW COATER"

preservatives "Negamold"

2010

Management

Acquired Turbo Corporation

drying system "Granuformer"

Developed and launched tablet

Machinery

(currently Freund-Turbo Corporation)

2019

Established joint venture

coater "HICOATER HV"

Management

Net sales and

Established Freund Pharmatec Ltd.

company Parle Freund Machinery

Management

2022

Developed and launched near

Machinery

Private Limited (India)

in Ireland (transferred business to

operating profit trends

infrared technology "Smart MOIS"

Sigmoid Pharma Ltd. (Ireland) in

Net sales (LHS)

February 2016)

Management

Moved to the Tokyo Stock Exchange

2013

Launched tablet printing

standard market

Operating profit (RHS)

Machinery

machine "TABREX"

(¥ million)	*Fiscal year ended at the end of																																																				(¥ million)
February each year
20,000																																																										2,400
15,000																															Consolidated nancial results																			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	2023

FREUND REPORT 2023 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 its operations during the second quarter of FY02/24. 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

Cos.Mec S.r.l. Machinery
Development	Manufacturing	Sales
Joined the Group in 2020
Freund-Vector
European
Laboratories	Machinery
Sales	Laboratory

Established in 2014

Parle Freund Machinery

Private Limited Machinery

Manufacturing Laboratory

Established joint venture company in 2019

Freund-Chineway

Pharmaceutical

Technology Center

Co., Ltd. Machinery Chemicals

Sales

Laboratory

Shanghai FC Center opens in 2023 (planned)

FREUND

CORPORATION Machinery Chemicals

Development	Manufacturing	Sales	Laboratory

Freund-Turbo

Corporation
Machinery (Non-Pharmaceutical Products)
Development	Manufacturing		Sales	Laboratory

Joined the Group in 2010

Freund-Vector

Corporation Machinery

Development

Manufacturing

Sales

Laboratory

Joined the Group in 1997

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 fields such as food and industrial applications, we have added powder handling equipment that is used in the ancillary 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.

Sustainability policy

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	Product development/	Pharmaceutical excipient
manufacturing equipment
ware	Powder machinery equipment	manufacture/sales
(products)	for non-pharmaceutical use		Tablet printing ink
		Contract processing
	Powder handling equipment
	for manufacturing
	Tablet printing 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

( technologies )	FREUND Group's basic technologies
drug formulation
	FREUND CORPORATION	Freund-Vector Corporation
	Freund-Turbo Corporation	Cos.Mec S.r.l.

Revenue/Investments

Output

1 FinancialCapital

Sales increase, cash flow generation, ROE & EPS improvement

2 ManufacturingCapital

Provision of competitive products, top-level products

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 product field through likening its business model to "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 2023 4