July 31, 2020

(Tokyo Stock Exchange, First Section / Stock code: 3341)

Copyright 2020 NIHON CHOUZAI Co., Ltd. All rights reserved.

Financial Highlights

Consolidated Statement of Income

Net sales were up 6.2% YoY and 1.1% over plan due to strong sales in the Pharmaceutical Manufacturing and Sales Business. Operating profit was down 75.7% YoY, however, all segments were on target and significantly higher than planned.

1Q FY3/19

1Q FY3/20

1Q FY3/21

1Q FY3/21

Change

Vs. plan

YoY growth

(Millions of yen)

Results

Results

Plan

Results

vs. plan

rate

Net sales

59,305

64,316

67,534

68,306

771

1.1%

6.2％

Cost of sales

49,547

53,169

58,389

57,343

(1,046)

(1.8%)

7.9％

Gross profit

9,757

11,147

9,145

10,962

1,817

19.9%

(1.7％)

% to sales

16.5%

17.3%

13.5%

16.0%

-

-

-

SG&A expenses

9,256

9,377

10,534

10,533

(1)

0.0%

12.3％

% to sales

15.6%

14.6%

15.6%

15.4%

-

-

-

Consumption taxes

3,411

3,589

4,386

4,897

510

11.6%

36.4％

R&D expenses

549

624

829

654

(174)

(21.0%)

4.9％

Operating profit

501

1,770

(1,389)

429

1,818

-

(75.7％)

% to sales

0.8%

2.8%

-

0.6%

-

-

-

Ordinary profit

398

1,710

(1,441)

337

1,778

-

(80.3％)

% to sales

0.7%

2.7%

-

0.5%

-

-

-

Profit attributable to

40

833

(435)

356

791

-

(57.3％)

owners of parent

% to sales

0.1%

1.3%

-

0.5%

-

-

-

Net income per share (Yen) Note

1.28

27.81

(14.51)

11.88

26.39

-

(57.3%)

Note ： On April 1, 2020, the Company conducted a two-for-one stock split of common stock.

Net income per share has been calculated as if this stock split had taken place at the beginning of the fiscal year ended March 31, 2019.

Copyright (C) 2020 NIHON CHOUZAI Co., Ltd. All rights reserved.

2

Consolidated Balance Sheet

The main changes in total assets were an approximate 9.6 billion yen increase in cash and deposits and a 5.1 billion yen increase in merchandise and finished goods.

The main factors of change in liabilities were an approximate 10.4 billion yen increase in accounts payable-trade and an approximate 4.6 billion yen increase in long-term loans payable.

End of June

End of Mar.

End of June

YoY change

2019

2020

2020

YoY change

(%)

(Millions of yen)

(1Q FY3/20)

(FY3/20)

(1Q FY3/21)

Current assets

86,742

87,414

101,780

14,366

16.4%

Non-current assets

97,868

98,137

97,499

(637)

(0.6%)

Property, plant and

69,005

66,082

65,052

(1,030)

(1.6%)

equipment

Intangible assets

16,649

19,425

19,654

228

1.2%

Investments and other

12,213

12,628

12,793

164

1.3%

assets

Total assets

184,610

185,551

199,280

13,728

7.4%

Current liabilities

77,836

70,107

77,071

6,963

9.9%

Non-current liabilities

65,234

68,370

75,149

6,778

9.9%

Total liabilities

143,070

138,478

152,220

13,742

9.9%

Total net assets

41,539

47,072

47,059

(13)

0.0%

Shareholders' equity

41,534

47,072

47,059

(13)

0.0％

Equity ratio

22.5%

25.4%

23.6%

-

-

Copyright (C) 2020 NIHON CHOUZAI Co., Ltd. All rights reserved.

3

Dispensing Pharmacy Business / Statement of Income

Net sales were up 6.2% YoY, which was despite a decline in the number of prescriptions due to the spread of the COVID-19, due to higher prescription unit price, strengthening of existing stores, and the full-year effect of new store openings in the previous year. Despite the decline in the number of prescriptions, operating profit was 1.3 billion yen higher than forecast due to a smaller-than-expected decline in prescriptions.

1Q FY3/19

1Q FY3/20

1Q FY3/21

1Q FY3/21

Change

Vs. plan

YoY growth rate

Results

Results

Plan

Results

vs. plan

(Millions of yen)

Net sales

50,449

54,814

57,310

58,200

890

1.6%

6.2%

43,399

47,049

Cost of sales

51,274

50,515

(758)

(1.5%)

7.4%

Gross profit

7,050

7,765

6,035

7,684

1,648

27.3%

(1.0%)

% to sales

14.0%

14.2%

10.5%

13.2%

-

-

-

SG&A expenses

5,645

5,921

6,883

7,219

335

4.9%

21.9%

% to sales

11.2%

10.8%

12.0%

12.4%

-

-

-

Operating profit

1,404

1,843

(848)

464

1,312

-

(74.8%)

% to sales

2.8%

3.5%

-

0.8%

-

-

-

No. of pharmacies at the end

589

600

655

658

3

0.5%

9.7%

of each period (stores)

Prescription drug sales per

85

91

87

88

1

1.3%

(3.8%)

pharmacy

Note: Rounding down to the nearest unit

No. of pharmacies at the end of each period includes locations specializing in the sales of general merchandise.

Prescription drug sales per pharmacy = Prescription drug sales / Average No. of pharmacies during the period

Copyright (C) 2020 NIHON CHOUZAI Co., Ltd. All rights reserved.

4

Pharmaceutical Manufacturing and Sales Business / Statement of Income

Net sales were up 11.0% YoY and 1.6% over plan on the back of strong external sales.

Operating profit was up 4.4% YoY and 124.9% over plan due to higher sales YoY and despite the impact of the NHI drug price revisions. The spread of COVID-19 had an impact on research and development, which has been pushed back.

1Q FY3/19

1Q FY3/20

1Q FY3/21

1Q FY3/21

Change

Vs. plan

YoY growth rate

Results

Results

Plan

Results

vs. plan

(Millions of yen)

Net sales

9,754

10,881

11,887

12,073

185

1.6%

11.0%

Cost of sales

8,192

8,975

10,138

10,138

0

0.0%

13.0%

Gross profit

1,562

1,906

1,749

1,935

186

10.6%

1.5%

% to sales

16.0%

17.5%

14.7%

16.0%

-

-

-

SG&A expenses

1,503

1,107

1,378

1,101

(276)

(20.1%)

(0.5%)

% to sales

15.4%

10.2%

11.6%

9.1%

-

-

-

Operating profit

59

798

370

833

462

124.9%

4.4%

% to sales

0.6%

7.3%

3.1%

6.9%

-

-

-

Note: Rounding down to the nearest unit

Copyright (C) 2020 NIHON CHOUZAI Co., Ltd. All rights reserved.

5

Medical Professional Staffing and Placement Business / Statement of Income

Despite the impact of COVID-19 infection, Gross profit was up 4.6% over the plan due to a focus on the pharmacist placement business and expansion of the physician and registered salespeople placement business. We kept SG&A expenses under control and operating profit was up 25.0% over the plan.

1Q FY3/19

1Q FY3/20

1Q FY3/21

1Q FY3/21

Change

Vs. plan

YoY growth rate

Results

Results

Plan

Results

vs. plan

(Millions of yen)

Net sales

3,217

3,597

2,976

2,943

(32)

(1.1%)

(18.2％)

Cost of sales

1,958

2,026

1,607

1,511

(96)

(6.0%)

(25.4%)

Gross profit

1,258

1,570

1,368

1,431

63

4.6%

(8.8%)

% to sales

39.1%

43.7%

46.0%

48.7%

-

-

-

SG&A expenses

857

919

961

922

(38)

(4.0%)

0.4%

% to sales

26.7%

25.6%

32.3%

31.4%

-

-

-

Operating profit

401

651

407

509

101

25.0%

(21.9%)

% to sales

12.5%

18.1%

13.7%

17.3%

-

-

-

Note: Rounding down to the nearest unit

Copyright (C) 2020 NIHON CHOUZAI Co., Ltd. All rights reserved.

6

Reference Materials

Consolidated Results: Major Components of YoY Changes (Net Sales / Operating Profit)

(Billions of yen; figures are rounded to the nearest 100 million yen)

Net Sales

Operating Profit

Pharmaceutical

Contributions from

Existing

Manufacturing

pharmacies

Business sales

adjustment

Pharmacies opened

sales

+1.2

0.3

In FY3/19

(0.2)

+3.3

68.3

Hepatitis

C Drug

sales

Staffing and

(0.3)

Placement

Business sales

9 new

(0.7)

pharmacies

+0.3

64.3

1Q FY3/20

1Q FY3/21

Results

Results

Technical Fee unit price +0.5

1.8

Pharmaceutical

Manufacturing

adjustment

Business profits

+0.2

+0

Increases in

0.4

Consumption Taxes

and other Expenses,

Staffing and

etc. (1.9)

Placement

1Q FY3/20

Business

1Q FY3/21

profits

Results

Results

(0.1)

Copyright (C) 2020 NIHON CHOUZAI Co., Ltd. All rights reserved.

7

Reference Materials

Consolidated Results: Major Components of Changes vs. Plan (Net Sales / Operating Profit)

(Billions of yen; figures are rounded to the nearest 100 million yen)

Net Sales

Pharmaceutical

Manufacturing

Existing

Business sales

pharmacies

+0.2

sales

+1.1

Staffing and

Placement

adjustment

68.3

Business sales

(0.3)

(0)

New pharmacies +0.1

67.5

New pharmacies Opened in FY3/19 (0.3)

1Q FY3/21

1Q FY3/21

Plan

Results

Operating Profit

Pharmaceutical

Manufacturing

Business profits adjustment

+0.5 (0.1)

Staffing and Placement

Business profits0.4 +0.1

Cost cut, etc. +0.4

The number

of prescriptions +0.7

Technical Fee unit price +0.3

(1.4)

1Q FY3/21

1Q FY3/21

Plan

Results

Copyright (C) 2020 NIHON CHOUZAI Co., Ltd. All rights reserved.

8

FY3/21 Consolidated Forecast

FY3/18

FY3/19

FY3/20

FY3/21

YoY change

YoY growth rate

Results

Results

Results

Plan

(Millions of yen)

Net sales

241,274

245,687

268,520

291,813

23,292

+8.7%

Cost of sales

197,437

203,711

222,147

243,007

20,859

+9.4%

Gross profit

43,837

41,975

46,372

48,806

2,433

+5.2%

% to sales

18.2%

17.1%

17.3%

16.7%

-

-

SG&A expenses

33,250

35,242

38,779

42,302

3,522

+9.1%

% to sales

13.8%

14.3%

14.4%

14.5%

-

-

Consumption taxes

11,892

12,537

15,413

17,306

1,893

+12.3%

R&D expenses

2,784

2,764

2,991

3,487

496

+16.6%

Operating profit

10,587

6,733

7,593

6,504

(1,089)

(14.3%)

% to sales

4.4%

2.7%

2.8%

2.2%

-

-

Ordinary profit

10,138

6,077

7,405

6,266

(1,138)

(15.4%)

% to sales

4.2%

2.5%

2.8%

2.1%

-

-

Profit attributable to

6,104

3,790

6,697

3,122

(3,574)

(53.4%)

owners of parent

% to sales

2.5%

1.5%

2.5%

1.1%

-

-

Net income per share (Yen) Note

190.84

121.74

223.33

104.14

(119.19)

(53.4%)

Dividend per share (Yen) Note

25.00

25.00

25.00

25.00

-

-

Note: On April 1, 2020, the Company conducted a two-for-one stock split of common stock.

Net income per share and Dividend per share have been calculated as if this stock split had taken place at the beginning of the fiscal year ended March 31, 2018.

Copyright (C) 2020 NIHON CHOUZAI Co., Ltd. All rights reserved.

9

FY3/21 Business Segment Forecast

Dispensing pharmacy business

Pharmaceutical manufacturing and sales business

Medical professional staffing and placement business

FY3/18

FY3/19

FY3/20

FY3/21

YoY change

YoY

(Millions of yen)

Results

Results

Results

Plan

growth rate

Net sales

205,192

208,622

231,001

251,141

20,139

+8.7%

Gross profit

32,928

30,282

34,898

36,204

1,305

+3.7%

% to sales

16.0%

14.5%

15.1%

14.4％

-

-

Operating profit

12,411

8,707

9,785

8,606

(1,179)

(12.0%)

% to sales

6.0%

4.2%

4.2%

3.4％

-

-

Net sales

38,066

40,659

43,072

46,470

3,398

+7.9%

Gross profit

6,319

6,877

6,076

7,049

973

+16.0%

% to sales

16.6%

16.9%

14.1%

15.2%

-

-

Operating profit

1,194

1,885

1,301

1,459

158

+12.2%

% to sales

3.1%

4.6%

3.0%

3.1％

-

-

Net sales

11,970

13,083

12,721

11,855

(866)

(6.8%)

Gross profit

4,604

4,950

5,404

5,562

157

+2.9%

% to sales

38.5%

37.8%

42.5%

46.9％

-

-

Operating profit

1,842

1,478

1,851

1,687

(163)

(8.8%)

% to sales

15.4%

11.3%

14.6%

14.2％

-

-

Copyright (C) 2020 NIHON CHOUZAI Co., Ltd. All rights reserved.

10

1Q FY3/21 forecasts and results

Net Sales and Operating Income (Vs. plan)

Number of prescriptions and prescription unit price (Vs. plan)

  • Net sales reached the plan due to strong sales in the pharmaceutical manufacturing and sales business, despite the impact of the spread of COVID-19 in the dispensing pharmacy business.
  • Operating profit was on target in all businesses
  • The number of prescriptions decreased less than expected, and the number of prescriptions recovered from June
  • Primary long-term prescriptions increased but settled down, and prescription unit price is lower than planned.

Plan

Results

Number of prescriptions

Plan

（Millions of yen）

（Millions of yen）

（1,000 sheets）

80,000

600

68,306

429

1,200

1,167

70,000

67,534

400

1,110

200

60,000

1,1001,082

0

1,054

50,000

-200

1,001

40,000

-400

1,000

-600

964

30,000

-800

20,000

-1,000

900

10,000

-1,200

-1,400

0

-1,600

-1,389

800

Net sales

Operating profit

Apr.

May June

prescription unit price

Results

（Yen）

20,000

18,739

18,38118,172

17,988

18,00017,473

17,313

16,000

14,000

Apr. May June

Copyright (C) 2020 NIHON CHOUZAI Co., Ltd. All rights reserved.

11

Growth Strategy

Growth Strategy

  • Emphasis on a Well-Balanced Pharmacy Network

Growth by achieving the proper balance between "organic growth and acquisitions" and "hospital-front and hybrid pharmacies," as well as increasing sales of existing pharmacies

Dispensing Pharmacy

Business

  • Growth of the Pharmaceutical Manufacturing and Sales Business

Investments in R&D programs to increase the number of items for which we have obtained manufacturing approval and increase earnings

Pharmaceutical

Manufacturing and

Sales Business

  • Growth of the Medical Professional Staffing and Placement Business

Strengthen placement business and expand into new business fields

Medical Professional

Staffing and

Placement Business

Copyright (C) 2020 NIHON CHOUZAI Co., Ltd. All rights reserved.

13

Emphasis on a Well-Balanced Pharmacy Network (1)

Grow by opening many stores capable of rapid growth and stores with excellent growth potential

Pharmacy Openings

Organic growth and M&A

FY3/15

FY3/16

FY3/17

FY3/18

FY3/19

FY3/20

1Q FY3/21

Opened

29

27

42

36

32

65 note

9

Organic growth

28

22

21

23

26

35

4

M&A

1

5

21

13

6

30

5

Closed

12

11

12

8

19

13

1

No. of pharmacies at

511

527

557

585

598

650

658

the end of each period

• Including one location specializing in the sales of general merchandise

Note: Including one location that was converted from a store

specializing in the sale of general merchandise to a pharmacy

1Q FY3/21 Dispensing Pharmacy Business YoY Growth Rate

Existing Dispensing Pharmacy Sales

YoY change

Prescription

No. of

Prescription

drug sales

prescriptions

unit prices

+10%

+7.7%

Existing pharmacies

(0.3%)

(14.4%)

+16.4%

+5.8%

+5%

+3.7%

Pharmacies opened in

+3152.7%

+1610.7%

+90.1%

FY3/19

0%

Total

(0.3%)

+6.0%

(8.4%)

+15.6%

(0.9%)

(5%)

No. of prescriptions 3,278,000 Prescription unit price 17,473 yen

FY3/17 FY3/18

FY3/19 FY3/20

1Q FY3/21

Copyright (C) 2020 NIHON CHOUZAI Co., Ltd. All rights reserved.

14

Emphasis on a Well-Balanced Pharmacy Network (2)

Pharmacy Openings and Closings

Hospital-front pharmacies and

hybrid pharmacies

FY3/20

1Q FY3/21

Opened

65

9

Hospital-front pharmacies

38

4

(Pharmacies within hospital

( 8)

( 0)

premises)

Hybrid pharmacies

27

5

Closed

13

1

No. of pharmacies at the end of period

650

658

Note: Includes one location specializing in the sales of general merchandise and relocations to open pharmacies within hospital premises

Ratio of Pharmacies in Tokyo Area

Target for pct. of hybrid

pharmacies in 2030

41%

50%

50%

1Q

55%

FY3/21

Target

Hospital-front Hybrid

Hospital-frontHybridpharmacies pharmacies

pharmacies pharmacies

Composition of Pharmacy Network

Hospital-front pharmacies

Nationwide

(Pharmacies within hospital

premises)

Urban areas

Hybrid pharmacies

Pharmacy

No. of

pharmacies at

Region

openings

the end of period

1Q FY3/21

1Q FY3/21

Hokkaido

1

44

Tohoku

0

48

Kanto

5

333

Koshinetsu

0

24

Tokai

1

58

Kansai/Hokuriku

2

74

Chugoku/Shikoku

0

39

Kyushu/Okinawa

0

38

Total

9

658

Copyright (C) 2020 NIHON CHOUZAI Co., Ltd. All rights reserved.

15

Growth of the Pharmaceutical Manufacturing and Sales Business

Net sales

New NHI Listed Drugs

■ Net sales (YoY growth rate)

■ New NHI Listed Drugs Sold in June 2020: 16 items

+15%

+11.6%

+11.0%

+10%

+6.8%

+5.9%

+5.0%

+5.1%

+5%

+2.6%

0%

FY3/19

FY3/20

1Q

2Q

3Q

4Q

1Q

Scale of potential conversion to generic drugs (estimated*)

Name

Celecoxib Tablets 100mg "JG"

Celecoxib Tablets 200mg "JG"

Ezetimibe Tablets 10mg "JG"

Levocetirizine hydrochloride Tablets 10mg "JG"

Imidafenacin Tablets 0.1mg "JG"

Imidafenacin OD Tablets 0.1mg "JG"

Memantine Hydrochloride OD Tablets 5mg "JG"

Memantine Hydrochloride OD Tablets 10mg "JG"

101 billion yen

Name

Memantine Hydrochloride OD Tablets 20mg "JG"

Galantamine Hydrobromide OD Tablets 4mg "JG"

Galantamine Hydrobromide OD Tablets 8mg "JG"

Galantamine Hydrobromide OD Tablets 12mg "JG"

Dutasteride capsules 0.5mg AV "JG"

Tadalafil Tablets 2.5mg ZA "JG"

Tadalafil Tablets 5mg ZA "JG"

Rabeprazole Sodium Tablets 5mg "JG"

FY3/20 FY3/20 FY3/20 FY3/20 FY3/21

  • Calculated by multiplying the annual usage volume of the brand-name product by NHI drug price of Nihon Generic Co., Ltd.

Copyright (C) 2020 NIHON CHOUZAI Co., Ltd. All rights reserved.

16

Growth of the Medical Professional Staffing and Placement Business (1)

Growth of the Pharmacist Placement Business

Number of Customers

Steady growth of the pharmacist placement business

200%

Net sales

150%

139%

141%

100% 96%

100%

50%

0%

1Q FY3/18

1Q FY3/19

1Q FY3/20

1Q FY3/21

1Q FY3/18 customers = 100%

Number of Placement Customers / Contracts

200%

Number of custmers

150%

124%

118%

100%

99%

100%

50%

0%

1Q FY3/18 1Q FY3/19 1Q FY3/20 1Q FY3/21

Job-seeker registrations → Matching → Contracts → Sales

Number of contracts

150%

102%

100%

88%

86%

100%

50%

0%

1Q FY3/18 1Q FY3/19 1Q FY3/20 1Q FY3/21

1Q FY3/18 placements = 100%

Copyright (C) 2020 NIHON CHOUZAI Co., Ltd. All rights reserved.

17

Growth of the Medical Professional Staffing and Placement Business (2)

Growth of the Physician Placement Business

Net sales

Solid growth of physician placement business

1000%

Net sales

900%

886%

772%

800%

700%

600%

500%

400%

285%

300%

200%

100%

100%

0%

1Q FY3/18

1Q FY3/19

1Q FY3/20

1Q FY3/21

1Q FY3/18 sales = 100%

Number of Placement Customers / Contracts

650% Number of customers 595%

505%

450%

232%

250%

100%

50% 1Q FY3/18 1Q FY3/19 1Q FY3/20 1Q FY3/21

Job-seeker registrations → Matching → Contracts → Sales

550%

Number of contracts

445%

425%

450%

350%

220%

250%

100%

150%

50%

1Q FY3/18

1Q FY3/19

1Q FY3/20

1Q FY3/21

1Q FY3/18 customers and contracts = 100%

Copyright (C) 2020 NIHON CHOUZAI Co., Ltd. All rights reserved.

18

Precautions

Performance targets, plans, business activities and other forward-looking statements concerning Nihon Chouzai and its subsidiaries are based on information that was available when this presentation was made. There may be significant changes to these statements due to business and other risk factors and other uncertainties. These statements are not promises concerning future performance. Actual results of operations may differ significantly from the outlook in this presentation for a number of reasons. In addition, this presentation is not a solicitation to make an investment in Nihon Chouzai. Investment decisions are the responsibility of individual investors.

Inquiries:

Corporate Planning Department, Investor Relations Group

37F GranTokyo North Tower, 1-9-1, Marunouchi,

Chiyoda Ward, Tokyo 100-6737, JAPAN

TEL: +81-(0)3-6810-0800 (general)

E-mail:ir-info@nicho.co.jp

IR website: https://www.nicho.co.jp/corporate/ir/

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NIHON CHOUZAI Co. Ltd. published this content on 31 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 July 2020 06:05:17 UTC