Alfresa : Progress on Important Sustainability Issues and the 22?24 Mid-term Management Plan

Medium- to Long-Term Strategy

Progress on Important Sustainability Issues and

the 22-24Mid-term Management Plan

Within the Alfresa Group's Principles, Our Philosophy and the Basic Sustainability Policy state that "we create and deliver a fresh life for all." To make this statement a reality, the Alfresa Group has established important sustainability issues- significant issues to be addressed over the medium to long term.

Furthermore, the 22-24Mid-term Management Plan sets forth five Group management policies, promoting initiatives

Process for Identifying Important Sustainability Issues

STEP 1

STEP 2

STEP 3

to address the Important Sustainability Issues.

Positioning of Important Sustainability Issues

Screen and organize social issues that the Group should address

In light of the latest trends and discussions in ESG fields, we identified and classified relevant issues based on global sustainability reporting guidelines, the SDGs Implementation Guiding Principles issued by the Japanese government, the evaluation

Organize the linkage between the Company's businesses and social issues, and identify priority issues We established a cross-departmentalcommittee to study these identified and classified issues based on their importance to the Alfresa Group and to our stakeholders, and

Examine and determine appropriateness The Corporate Governance Committee, which is chaired by an outside director, examined the identified issues deemed to be of high importance. After ensuring that the contents compiled were objective and appropriate, said issues were approved by the Board of Directors.

At the Alfresa Group, management begins with the Alfresa Group's Principles, which comprise three parts: Our Philosophy, Our Vision, and Our Promises. These principles serve as higher-level concepts for all that we do during the

Our Basic Sustainability Policy is a direct expression of Our Philosophy, declaring our commitment to contribute to the development of a society in which everyone can live in good health by conducting business activities based on such prin-

criteria of major ESG organizations, and the Alfresa Group's Basic Sustainability Policy.

mapped the elements of higher importance to enhance visibility.

course of our business activities.

Our Philosophy is that "we create and deliver a fresh life for all," while Our Vision is "we aim to become a Healthcare Consortium that provides products and services in every health-related field." Our Promises are to reliably, safely, and sincerely fulfill our mission as a social infrastructure company to supply pharmaceuticals and other lifesaving products through our business activities on a daily basis.

ciples and by addressing social and environmental issues. To realize its Basic Sustainability Policy, the Alfresa Group

has established important sustainability issues, which will have a major impact on enhancing value over the medium to long term.

Most Important

Importance to stakeholders

• Climate change countermeasures
• Environmental compliance
• Economic value
• Product life cycle management
• Employment, securing of talent, and labor management relations
• Service convenience
• Customer health and safety, privacy, customer satisfaction, etc.

1	Improvement of quality	4	Contribution to local
	of products and		communities
	services	5	Active participation of
2	Value creation and		human resources
	innovation	6	Compliance
3	Environmental	7	Risk management
	protection	8	Corporate governance

Alfresa Group's Important Sustainability Issues

	Important Issues		KPIs	Contribution to Social Issues (Created Value)
				1	Creation of a logistics network
					compliant with PIC/S GDP
			The Group helps resolve social	2	Establishment of a system to	• Increase efficiency of management at
	Improvement of			store and transport regenera-
1		issues, focusing on realizing a		medical institutions
quality of products	health-oriented society by always		tive medicines	• Advance healthcare services
3	Development of self-prevention
and services	providing reliable products and	• Improve the quality of life for customers
			services.		(SP) products	and patients
			4	Development of new pharmaceu-
					ticals and expansion of the
					consigned manufacturing function
			The Group promotes digital transfor-	1	Investment in M&A and new	• Contribute to workstyle reforms of
			medical practitioners
			mation (DX) and other initiatives in		business domains, including by
2	Value creation and		• Improve access to healthcare for patients
order to improve customer satisfaction		establishing new companies
	• Curb increases in social welfare costs
innovation	and productivity while also venturing	2	Investment in systems and DX
• Contribute to the development, manufacture,
			into new business domains related to	3	Furnishing of total supply chain	and distribution of new treatments and contrib-
			health and treatment.		services for regenerative medicines
				ute from the standpoint of economic security
			The Group has established the Alfresa			• Contribute to the attainment of a
3	Environmental		Group's Environmental Policy and
			carbon-free society
	strives to protect the environment	1	CO2 emissions
protection		• Contribute to a recycling society
	through business activities intended
			to realize a health-oriented society.			• Reduce waste
					Collaboration with local governments
			The Group contributes to local health	1	• Reliably supply pharmaceuticals
4	Contribution to		and treatments through business		to contribute to community healthcare
	activities conducted by each of its	2	Certification as community	(social infrastructure)
local communities		Group companies. These activities		cooperation pharmacies and	• Contribute to the Community-Based
			have been developed over many years		pharmacies cooperating with	Integrated Care System
			and are rooted in the community.		specialized medical facilities

Important		Most Important
	Importance to the Alfresa Group

	Important Issues		KPIs	Contribution to Social Issues (Created Value)
			The Group has established the	1	Ratio of women in management	• Realize and improve health
				positions
5	Active participation	Alfresa Group's Diversity Policy and	2	Percentage of male employees	management
takes steps to create an environment		• Improve engagement with employees
of human resources		taking childcare leave
where people can work together and	3	Improvement of the workplace	• Invigorate and cultivate diverse human
			display their individual talents.		environment	resources
				4	Investment in education
			The Group will promote sincere	1	Compliance training	• Contribute to healthcare while comply-
6			business activities premised on the
Compliance		2	Meetings of the Compliance
	external regulations, and social	• Maintain stable business activities
		and Risk Management
			observance of laws, internal and			ing with laws and regulations
			norms.		Committee
			The Group will formulate measures			• Maintain a reliable supply of pharma-
7			to respond to natural disasters,	1	Cybersecurity measures
Risk management		pandemics, system-related trou-	ceuticals during emergencies
	2	Provision of disaster response
	bles, and other events to ensure a	• Contribute to the maintenance of
		stable supply of health- and treat-		training and drills	medical service provision systems
			ment-related products and services.
				1	Individual investor relations	• Practice transparent corporate
			The Group promotes control and
				interviews and sharing of
8	Corporate		supervision over corporate man-		governance
		information with the Board
	agement in order to fulfill its		• Improve corporate value through
governance		corporate social responsibilities	2	of Directors	sustained growth
			and improve corporate value.	Evaluation of the Board of	• Return profits to stakeholders
				Directors' effectiveness

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Alfresa Group Integrated Report 2023

Alfresa Group Integrated Report 2023

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Medium- to Long-Term Strategy

Progress on Important Sustainability Issues and the 22-24Mid-term Management Plan

22-24Mid-term Management Plan

Leap into the Future

"An Evolving Healthcare Consortium"

To achieve the Group management targets set forth in the 22-24Mid-term Management Plan, we are steadily making progress on five Group management policies. In May 2023, we unveiled the Alfresa Group's Medium- to Long-Term Vision as an extension of the 22-24Mid-term Management Plan. Accordingly, we are further enhancing initiatives toward the Group's sustainable growth.

	Net Sales	Operating Income Margin
Targets for the	¥2.7 trillion	1.5% or higher
Fiscal Year Ending
March 31, 2025	Investment Plan (Cumulative)	Shareholder Returns

3	Contribution toward a sustainable society through
initiatives to protect the environment	Important Sustainability Issue 3
		Promote efforts to become				Promote the prevention of envi-
			Advance resource recycling		ronmental pollution and coexis-
		1 carbon neutral	2	3
			tence with living organisms

In line with the Alfresa Group's Environmental Policy, under the current medium-term management plan we have promoted initiatives centered on the three initiatives indicated above. Notably, in fiscal 2022 we implemented various initiatives toward realizing carbon neutrality, aiming to achieve the near-term target of a 10% reduction by the end of fiscal 2024 (compared with fiscal 2020 levels). Our initiatives included introducing renewable energy through the installation of solar panels, as well as promoting eco-driving, revising delivery routes, reducing gasoline consumption through the introduction of electric vehicles, and decreasing electricity consumption through measures such as shifting to LED lighting and increasing awareness of energy savings.

As a result of these measures, in fiscal 2022 we reduced CO2 emissions by 1,329 t-CO2 from the fiscal 2021 level, or around 1.9%.

Note: The Alfresa Group endorses the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

4	Promotion of a human resource strategy focused
on diversity	Important Sustainability Issue 5

¥120.0 billion

DOE of 2.4% or higher

1	Enhancement of business models and
creation of new value	Important Sustainability Issues 1	2

To strengthen and expand total supply chain services, we have invested in new businesses, mainly in the Ethical Pharmaceuticals Wholesaling Business. At the same time, we established Cell Resources Corporation, which aims to create a supply chain in the regenerative medicine domain. We also founded GEKKA WORKS Co., Ltd., to manage Docshiru, a membership -based online service for doctors aimed at promoting regional medical cooperation. Furthermore, we formed a business alliance with Yakubato Co., Ltd., which is expanding the business of an eponymous business. Yakubato is a service to

In 2020, we established the Alfresa Group's Diversity Policy to embrace diversity and allow employees to fully demonstrate their individuality and talents. We promoted various initiatives in this vein in the fiscal year ended March 31, 2023.

As an indicator of promoting women's participation in the workplace, we set a target for the ratio of women in management positions (6% or more by the fiscal year ending March 31, 2026). We are working to increase the ratio of female managers by conducting and analyzing employee awareness surveys, encouraging employees to take childcare leave and paid leave, and providing training for female leadership candidates (4.9% in the fiscal year ended March 31, 2023).

In addition, as part of our efforts to create a comfortable working environment and promote health, we are encouraging Group companies to acquire Health and Productivity Outstanding Organization certification. In the fiscal year ended March 31, 2023, 11 Group companies received this certification, including Alfresa Holdings Corporation.

Willingness to venture into uncharted areas

Ability	Strong
expertise
to adapt
needed for
to changing
sustainable
environments
growth

High	Strong
ethical	sense of
standards	mission
for work that
that earn trust
supports life

send prescriptions from medical institutions before they are filled at pharmacies.

By continuing these efforts to provide value to patients, healthcare professionals, manufacturers, and other stakeholders, we aim to achieve the goals of the 22-24Mid-Term Management Plan and the Alfresa Group's Medium- to Long-Term Vision.

2	Contribution to local health and
treatments through united Group efforts	Important Sustainability Issue 4

In the fiscal year ended March 31, 2023, we undertook initiatives in each business segment to address various issues and contribute to community health and medical care. In the Ethical Pharmaceuticals Wholesaling Business, while focusing on medical products such as medical devices, diagnostic reagents, and nutritional foods, we provided medical institutions with products related to COVID-19, along with drugs to treat the disease. In the Self-Medication Products Wholesaling Business, we focused on self-prevention (SP) products and new channels to deliver distinctive products through new sales channels. In the Manufacturing Business, we finalized a licensing agreement with K Pharma, Inc., for domestic development and manufacturing and marketing rights of a treatment for amyotrophic lateral sclerosis (ALS) and thereafter commenced development to meet unmet medical needs. In our Medical-Related Business, we strive to serve patients on a daily basis, aiming to be family pharmacies that are rooted in the community and cater to all stages of the lives of local residents.

Each business segment in the Group works together to strengthen our business model and create new value through collaboration and cooperation, allowing the Group to work as one to meet local healthcare needs and help realize the Community Health Care Vision.

5	Cultivation of a corporate culture with compliance
as its highest priority	Important Sustainability Issue 6

The Alfresa Group takes past violations of the Antimonopoly Act very seriously and has repeatedly implemented a PDCA cycle to prevent recurrence.

1. In the fiscal year ended March 31, 2023, we held two meetings of the Ethical Pharmaceuticals Wholesaling Business Subcommittee, which we established under the Compliance and Risk Management Committee to focus on compliance with the Antimonopoly Act. This committee confirmed the risk management status of each Group company and reported regularly to the Board of Directors to receive advice and direction, seeking to advance the establishment, development, and operation of an effective risk management system.

1. The management teams of Group companies have strengthened their commitments. They have accordingly submitted pledges to comply with the Antimonopoly Act and have developed action guidelines and guidelines for compliance with the Antimonopoly Act. In addition, they created Q&A materials and conducted educational training and comprehension tests. Furthermore, in addition to dedicated compliance departments and counseling hotlines, we have established a dedicated Groupwide counseling hotline staffed by attorneys specializing in the Antimonopoly Act and increased dia- logue with frontline salespeople.

1. As a checking function, frontline salespeople perform self-checks. Also, each implementation item is being monitored as part of internal control audits conducted by Group companies' internal audit departments.

1. The Alfresa Group is continuously implementing the PDCA cycle mentioned above and will continue to foster a corpo- rate culture that places uppermost importance on compliance.

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Alfresa Group Integrated Report 2023

Alfresa Group Integrated Report 2023

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