Towa Pharmaceutical : FY2025(3rd quarter) Consolidated Financial Results for the Nine Months Ended December 31, 2025(Based on Japanese GAAP) (182K／13P)

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

February 13, 2026

Inquiries: Director Toshikazu Kokubun TEL 06-6900-9102

Scheduled date to commence dividend payments: －

Preparation of supplementary material on financial results: Yes

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

(Amounts less than one million yen are rounded down)

1. Consolidated financial results for the nine months ended December 31, 2025 (from April 1, 2025 to December 31, 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	%
      Nine months ended December 31, 2025	204,065	5.3	19,490	4.7	23,988	10.3	17,082	16.8
      Nine months ended December 31, 2024	193,737	15.1	18,611	40.9	21,756	26.7	14,624	27.0

      Note : Comprehensive income For the nine months ended December 31, 2025 : ¥22,000 million [37.1%]

      For the nine months ended December 31, 2024 : ¥16,043 million [7.8%]

      	Earnings per share	Diluted earnings per share
      	Yen	Yen
      Nine months ended December 31, 2025	347.01	-
      Nine months ended December 31, 2024	297.10	-

   2. Consolidated financial position

      	Total assets	Net assets	Equity ratio
      	Millions of yen	Millions of yen	%
      As of December 31, 2025	488,886	189,689	38.8
      As of March 31, 2025	470,823	171,625	36.5

      Reference : Equity As of December 31, 2025 : ¥189,689 million

      As of December 31, 2024 : ¥171,625 million

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 Year ending March 31, 2026	Yen - -	Yen 30.00 40.00	Yen - -	Yen 40.00	Yen 70.00
   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
   	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
   Full year	280,000	7.9	27,000	16.2	25,300	(3.3)	17,700	(6.8)	359.57

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

4. Notes

   1. Changes in significant subsidiaries during the nine months ended December 31, 2025 (changes in specified subsidiaries resulting in the change in scope of consolidation):

      None

   2. Adoption of accounting treatment specific to the preparation of quarterly 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)

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)

Contents

1. Overview of Operating Results and Financial Position 2

   1. Overview of operating results during the period 2

   2. Overview of financial position during the period 4

   3. Explanation of consolidated financial forecasts and other forward-looking information 5

2. Quarterly Consolidated Financial Statements and Key Notes 6

   1. Consolidated balance sheets 6

   2. Consolidated statements of income (cumulative) and consolidated statements of comprehensive income (cumulative) 8

      Consolidated statements of income (cumulative) 8

      Consolidated statements of comprehensive income (cumulative) 9

   3. Consolidated statements of cash flows 10

   4. Notes to consolidated financial statements 11

(Notes on segment information) 11

(Notes on significant changes in the amount of shareholders' equity) 11

(Notes on going concern assumption) 11

1. Overview of Operating Results and Financial Position

   The forward-looking statements in this document are those determined as of the end of the quarterly consolidated accounting period.

   1. Overview of operating results during the period

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)

Both sales and profits were up due to an increase in sales volume as a result of the higher production volume at Towa Pharmaceutical and an increase in contract manufacturing in the European B2B business at Towa Pharma International Holdings, S.L. (hereinafter referred to as "Towa INT"), which offset the weaker performance of Sunsho Pharmaceutical Co., Ltd.

In terms of business results, net sales were 204,065 million yen (up 5.3% year on year), operating profit came to 19,490 million yen (up 4.7% year on year), ordinary profit was 23,988 million yen (up 10.3% year on year) due to a gain of 4,578 million yen on valuation of derivatives, and profit attributable to owners of parent totaled 17,082 million yen (up 16.8% 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 July-September 2025 reached 89.5% (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.

The government determined the scope of the FY2026 drug price revision in light of these policies. It will publish ratings of companies based on corporate indicators for evaluating their stable supply capability, and also exempt qualifying products from price-range consolidation. In addition to that, the minimum drug price for products that meet the deviation rate requirements will be raised again as last year. Products with particularly high medical necessity will be subject to the temporary re-pricing rule for unprofitable products. Furthermore, in order to create and maintain an appropriate competitive environment for generics, the government decided that authorized generics (AGs) will be priced the same as brand-name drugs when they are newly listed. With regard to the co-payment system for drugs, the co-payment amount for elective care using long-listed drugs (products listed on the NHI drug price list for an extended period) will be increased from one-fourth to one-half of the price difference. It was also decided that one-fourth of the drug cost for some OTC-like drugs will not be covered by insurance.

Under these circumstances, in order to fulfill our responsibility for stable supply, we are working to further increase production capacity in the domestic generics business. 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