Towa Pharmaceutical : FY2025(2nd quarter) Consolidated Financial Results for the Six Months Ended September 30, 2025(Based on Japanese GAAP) (403K／12P)

Company name: TOWA PHARMACEUTICAL CO., LTD.

Stock exchange listing: Tokyo

Stock code: 4553 URL https://www.towayakuhin.co.jp/ Representative: President and Representative Director Itsuro Yoshida

Inquiries: Director Toshikazu Kokubun TEL 06-6900-9102 Scheduled date to file Semi-annual Securities Report: November 11, 2025

Scheduled date to commence dividend payments: December 1, 2025 Preparation of supplementary material on financial results: Yes

Holding of first half financial results meeting: Yes (for analysts and institutional investors)

November 10, 2025

(Amounts less than one million yen are rounded down)

1. Consolidated financial results for the six months ended September 30, 2025 (from April 1, 2025 to September 30, 2025)

   1. Consolidated operating results (cumulative) Percentages indicate year-on-year changes

      	Net sales		Operating profit		Ordinary profit		Profit attributable to owners of parent
      	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
      Six months ended September 30, 2025	130,476	5.7	10,443	(0.7)	11,979	15.9	8,214	25.3
      Six months ended September 30, 2024	123,404	14.9	10,513	50.1	10,338	1.0	6,555	(5.7)

      Note : Comprehensive income For the six months ended September 30, 2025 : ¥10,204 million [119.2%]

      For the six months ended September 30, 2024 : ¥4,654million [(59.4)%]

      	Earnings per share	Diluted earnings per share
      	Yen	Yen
      Six months ended September 30, 2025	166.86	-
      Six months ended September 30, 2024	133.17	-

   2. Consolidated financial position

      	Total assets	Net assets	Equity ratio
      	Millions of yen	Millions of yen	%
      As of September 30, 2025	480,530	179,863	37.4
      As of March 31, 2025	470,823	171,625	36.5

      Reference : Equity As of September 30, 2025 : ¥179,863 million

      As of March 31, 2025 : ¥171,625million

2. Cash dividends

   	Annual dividends per share
   	1st quarter-end	2nd quarter-end	3rd quarter-end	Fiscal year-end	Total
   Year ended March 31, 2025	Yen -	Yen 30.00	Yen -	Yen 40.00	Yen 70.00
   Year ending March 31, 2026	-	40.00
   Year ending March 31, 2026 (Forecast)			-	40.00	80.00

   Note : Revisions to the forecasts of cash dividends most recently announced : None

3. Forecast of consolidated financial results for the year ending March 31, 2026 (from April 1, 2025 to March 31, 2026)

   Percentages indicate year-on-year changes

   	Net sales		Operating profit		Ordinary profit		Profit attributable to owners of parent		Earnings per share
   Full year	Millions of yen 280,000	% 7.9	Millions of yen 27,000	% 16.2	Millions of yen 25,300	% (3.3)	Millions of yen 17,700	% (6.8)	Yen 359.57

   Note : Revisions to the forecasts of consolidated financial results most recently announced : None

4. Notes

   1. Changes in significant subsidiaries during the six months ended September 30, 2025 (changes in specified subsidiaries resulting in the change in scope of consolidation):

      None

   2. Adoption of accounting treatment specific to the preparation of semi-annual consolidated financial statements:

      None

   3. Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements Changes in accounting policies due to revisions to accounting standards and other regulations: None Changes in accounting policies due to other reasons: None

      Changes in accounting estimates: None

      Restatement of prior period financial statements: None

   4. Number of issued shares (common shares)

      As of September 30, 2025

      51,516,000 shares

      As of March 31, 2025

      51,516,000 shares

      As of September 30, 2025

      2,288,103 shares

      As of March 31, 2025

      2,288,903 shares

      Total number of issued shares at the end of the period (including treasury shares) Number of treasury shares at the end of the period

      Average number of shares during the period (cumulative from the beginning of the fiscal year)

      Six months ended September 30, 2025

      49,227,440 shares

      Six months ended September 30, 2024

      49,223,123 shares

      Contents

      1. Overview of Operating Results and Financial Position 2

         1. Overviewofoperatingresults during the period 2

         2. Overviewoffinancial position during the period 4

         3. Explanation of consolidated financial forecasts and other forward-looking information 4

      2. Semi-annual consolidated Financial Statements and Key Notes 5

         1. Consolidatedbalancesheets 5

         2. Consolidated statements of income (cumulative) and consolidated statements of comprehensive income (cumulative) 7

            Consolidated statements of income (cumulative) 7

            Consolidated statements of comprehensive income (cumulative) 8

         3. Consolidated statements of cash flows 9

         4. Notesto consolidated financial statements 10

(Noteson segment information) 10

(Notes on significant changes in the amount of shareholders' equity) 10

(Notesongoingconcernassumption) 10

The forward-looking statements in this document are those determined as of the end of the first half of the consolidated fiscal year under review.

With the corporate philosophy of "Contribute to people's health and dedicate ourselves to people's genuine smiles," the Group has been working on various issues. The aim is to establish a foundation in new markets and new businesses and realize group synergies with each subsidiary while making the domestic generic drug business its core business in accordance with the "6th Medium-term Business Plan 2024-2026 PROACTIVE III" announced in June 2024.

As a result, operating results during the period are as follows.

Consolidated earnings (Millions of yen)

Net sales were up due to an increase in the volume of products supplied to the market as the production volume picked up at Towa Pharmaceutical. Operating profit, on the other hand, declined due to the poor performance of Sunsho Pharmaceutical Co., Ltd. and Towa Pharma International Holdings, S.L. (hereinafter referred to as "Towa INT").

In terms of business results, net sales were 130,476 million yen (up 5.7% year on year), operating profit came to 10,443 million yen (down 0.7% year on year), ordinary profit was 11,979 million yen (up 15.9% year on year) due to a gain of 1,555 million yen on valuation of derivatives, and profit attributable to owners of parent totaled 8,214 million yen (up 25.3% year on year).

Results by segment are as follows. Segment profit (loss) of the reporting segments is the figure before amortization of goodwill.

Results by segment (Millions of yen)

(Note) Segment profit (loss) is based on operating profit.

(Domestic segment)

In the generic drug industry in Japan, the Medical Insurance Committee of the Social Security Council in March 2024 set a new secondary goal to increase the value share of generic drugs to 65% or more by the end of FY2029, along with the main goal of increasing the volume share of generic drugs to 80% or more in all prefectures by the end of FY2029 while maintaining a stable supply of drugs. In addition to that, a treatment option using long-listed drugs was introduced in October 2024. Choosing this option will require an additional co-payment for some brand-name drugs for which generic drugs are available. As a result, the volume share in April-June 2025 reached 89.2% (according to the Japan Generic Medicines Association).

In the meantime, annual drug price revisions since FY2021 have been making the situation extremely severe for the pharmaceutical industry. Furthermore, due to a series of supply concerns stemming from quality problems at multiple generic drug companies that came to light in 2020, confidence in generic drugs has declined and the environment facing the generic drug industry has become increasingly tough.

Under these circumstances, The "Report of the Study Group on Industrial Structure for Achieving Stable Supply of Generic Drugs" published by the Ministry of Health, Labour and Welfare in May 2024 showed that the government will "establish an intensive reform period of about five years to ensure a manufacturing management and quality control system, secure stable supply capacity, and realize a sustainable industrial structure." In the scope of the FY2025 drug price revision, companies will be evaluated for their stable supply system using all of the corporate indicators that were under consideration, and the ratings for each company are scheduled to be made public after the FY2026 drug price revision. In addition, the "Basic Policy on Economic and Fiscal Management and Reform 2025 (Basic Policy 2025)" approved by the Cabinet in June 2025 states that the government will promote the restructuring of the generic drug industry with an eye to resolving its structure of high-mix low-volume production.

Under these circumstances, in order to fulfill our responsibility for a stable supply, we have introduced new facilities and increased the number of employees in the domestic generics business for increased production. The construction of Solid Formulation Facility No. 3 and Sterile Formulation Facility No. 2 at the Yamagata Plant was completed in November 2023, and shipments of products manufactured at Solid Formulation Facility No. 3 began in April 2024. In October 2025, Solid Formulation Facility No. 3 went into full operation after all the equipment installed there was up and running.We are working to increase the annual production capacity of the three plants from 14 billion tablets at the end of March 2024 to 17.5 billion tablets in FY2026.

In terms of manufacturing control and quality control, we not only comply with the GMP Ordinance, which is the standard for manufacturing control and quality control of pharmaceuticals, and other related laws and regulations, but also actively adopt international standards such as PIC/S GMP and ICH Guidelines, and work to ensure appropriate quality and safety of pharmaceuticals through our own systems and education and training.

To further strengthen quality control, we have introduced a QMS (Quality Management System) in addition to the MES (Manufacturing Execution System) and LIMS (Laboratory Information Management System) already in place. We will continue to strive for improvements in manufacturing control and quality control, aiming to prevent human errors before they occur.

Furthermore, in order to maintain and strengthen our stable supply system, we are striving to switch to multiple purchases of APIs and audit manufacturing sites, and are continuing to strengthen governance and ensure thorough compliance throughout the entire Group, from API manufacturing to formulation manufacturing, distribution and sales.

On the sales front, in May 2025, we started selling "RIVALUEN® LA Patch 25.92 mg/51.84 mg," Japan's first extended-release Rivastigmine transdermal formulation (twice weekly dosage), following its inclusion in the National Health Insurance drug price list. In June 2025, two new products with one ingredient were added to the National Health Insurance drug price list, bringing the total number of our generic drugs to 732 products with 314 ingredients (as of June 2025). Six new products with four ingredients are scheduled to be added to the list in December 2025.

As for the development of health-related businesses, in order to respond to the new medical system such as the community-based integrated care system, we will focus on the "Healthcare Passport" (that enables local medical professionals and residents to share health and medical information in both directions). We will realize diversified development of health-related businesses by forming synergies between each subsidiary and existing businesses from the viewpoint of treatment, prevention and nursing care support, and increasing products and services for maintaining and promoting health.

In the first half of the consolidated fiscal year, the domestic segment posted net sales of 104,915 million yen (up 7.8% year on year) and segment profit of 13,257 million yen (up 1.0% year on year) due to an increase in the volume of products supplied to the market as a result of higher production volume at Towa Pharmaceutical.

(Overseas segment)

In the overseas segment of the Group, we are engaged in the generic drug business in Europe and the U.S. through Towa INT to strengthen and expand the overseas drug business. We aim to keep sales and segment profits up by