Alfresa : Social Mission

Non-Financial Strategy

The Alfresa Group's Social Mission​

Providing Social Infrastructure as a

Company That Handles Life-Related

Products

As a supplier of life-related pharmaceuticals, the Alfresa Group is key to social infrastructure. Given this status, our mission is to deliver pharmaceuticals to medical institutions and patients reliably, safely, and with sincerity. To deliver pharmaceuticals promptly and appropriately, we believe it is essential to have distribution bases located close to medical institutions, to have sufficient inventory, and to ensure accurate delivery with thorough temperature control.

The Alfresa Group currently has 16 logistics centers located across Japan's most populated prefectures. We also have four urban pharmaceutical centers in areas with high concentrations of medical institutions and dispensing phar- macies. Through these centers and more than 200 other distribution bases throughout Japan, we provide a stable supply of pharmaceuticals under all manner of conditions. The Alfresa Group also sources over 350,000 stock-keeping units (SKUs) from approximately 1,680 suppliers. Maintaining appropriate inventories at distribution bases throughout the country enables us to promptly deliver suitable pharmaceuticals to medical institutions and patients.

Pharmaceuticals need to be temperature-controlled throughout the distribution process, from the point of manufacture through to customer delivery. Pharmaceuticals involve a variety of modalities and require strict temperature control according to these characteristics. For example, some pharmaceuticals require ultra-low-temperature storage, at -90°C to -60°C. Others need to be stored and transported at temperatures of 2°C to 5°C. The Alfresa Group complies with PIC/S GDP, an international standard. In addition to strict temperature control, we maintain hygienic controls and engage in initiatives to prevent adulteration with counterfeit medications.

We must ensure that pharmaceuticals reach patients in a timely and appropriate manner. In handling life-related products, we cannot afford to make any errors in the quantities or types of products we deliver. The Alfresa Group is developing a packaged delivery system that mechanizes and automates processes at logistics centers-inspecting prod- ucts, providing visual checks, sealing, and delivering them directly to medical institutions. This system has eliminated delivery errors and the need for goods inspections. In addition to preventing various types of human errors, the system reduces contact time during delivery, helping to prevent infections during a pandemic. As no product inspections are needed, pharmaceuticals can be handled even by inexperienced people.

The Shizuoka Distribution Center, which began operating in May 2021, has four characteristics.

1. The center maintains abundant inventory to provide a stable supply that can be shipped with 99.9999% accuracy.
2. The center's temperature control and hygienic control system complies with GDP guidelines, including dock shel- ters and sophisticated air conditioning management, and allows for traceability.
3. The center is equipped with a crisis management system, including an in-house power generator capable of supplying electricity for up to 72 hours. The entire facility is seismically isolated, including the automated warehouse.
4. The center has a dedicated storage facility to accommo- date regenerative medicines.

Crisis Management Response in the Event of Emergencies​

The Alfresa Group has introduced several crisis management response measures. For example, we have seismically isolated buildings at all centers, including automated ware- houses, to reduce shaking in earthquakes and minimize damage from falling objects. In addition, logistics centers are equipped with standalone power generation systems, providing enough power for up to 72 hours of cold storage, air con- ditioning, and operation of various material-handling equipment. Logistics centers are arranged in a network so that the supply system can be switched from the affected center to a neighboring center in the event of a disaster.

The Alfresa Group has reinforced its business continuity plan (BCP) in preparation for a large-scale disaster or pandemic. Group companies engaged in the Ethical Pharmaceuticals Wholesaling Business have established a support system in preparation for a disaster. A nationwide system is in place so that even if distribution centers or branches in specific areas are affected by a disaster, other locations will be able to step in and continue supplying pharmaceuticals where they are needed. Since 2020 and throughout the COVID-19 pandemic, the Alfresa Group has continued a stable supply of pharmaceuticals by following its BCP and thoroughly implementing infection prevention practices and a rotational work shift system. The Group has adopted a new email system that is capable of remaining in use in times of disaster to secure post-disaster communication among Group companies. The Group's system operator, Alfresa System Corporation, has established a disaster recovery* system wherein backups of shared-usemission-critical systems are prepared, enabling a switchover to a second data center in the event that Alfresa System's data center is damaged.

In addition to our distribution and IT systems, we are enhancing our operational robustness. Based on our past experiences of earthquakes, we maintain disaster supplies

for employees (three days' worth of food, beverages, and other items). Some logistics centers have heliports and are equipped to provide emergency support in a disaster. Some logistics centers also use solar power generation systems. As well as being environmentally friendly, these systems provide power during an outage.

We will continue to develop our nationwide network to deliver appropriate pharmaceuticals to customers around Japan in a timely and accurate manner, both in normal times and in emergency situations.

• Disaster recovery: Rapid switching of a disaster-damaged computer system to a backup system

Specific Examples of Disaster Responses

One historical example of our disaster response was during Typhoon No. 15, which made landfall near the city of Chiba, in Chiba Prefecture, in September 2019, and broke records in the Kanto region. According to the Ministry of Internal Affairs and Communications, wind and other factors associated with the typhoon were responsible for at least one death and more than 90 severe injuries in the Tokyo metropolitan area and nearby Shizuoka Prefecture. Fallen trees and damaged buildings were observed in many areas: a pole from a golf driving range collapsed and hit a house in Ichihara, Chiba Prefecture, and two steel towers collapsed in the city of Kimitsu. The storm also caused large-scale power and water outages.

Our Chiba Distribution Center in Kisarazu City also sustained damage. Although we switched to in-house power generation during the blackout, goods remained at the warehouse as shipping within Chiba and Ibaraki prefectures was problematic. We overcame the closure of many expressways in the Tokyo metropolitan area, including the Tokyo Metropolitan Expressway and the Tokyo Bay Aqua-Line, by routing alternative shipments from the Saitama, Gunma, and Kanagawa distribution centers, continuing our supply of pharmaceuticals to medical institutions. As a result, we understand that medical facilities experienced no on-site shortages of pharmaceuticals.

During a period of record-heavy rainfall in western Japan

from June to July 2018, severe rain warnings were issued for 11 prefectures in the Kyushu, Shikoku, Chugoku, Kinki, and Tokai regions. Widespread flooding and landslides occurred simultaneously in various areas. Damage was particularly severe in Okayama, Hiroshima, and Ehime prefectures, where collapsed roads and interruptions of power, water, and other lifelines tremendously impacted people's lives. There were no disasters at Alfresa Group facilities, but some of our customers were affected. In accordance with our disaster response manual, marketing specialists at frontline sales offices contacted their customers, assessed the post-disaster situation, listened to their requests regarding patient care during medical treatment, and provided support, primarily by supplying pharmaceuticals.

The following are some examples of how we support our customers when they are unable to continue to provide medical treatment or other care to patients.

Our wholesalers of ethical pharmaceuticals, as well as Alfresa Healthcare Corporation, Alfresa Pharma Corporation, and other Group companies that do not wholesale ethical pharmaceuticals and pharmaceutical companies, supply disaster relief materials such as water, towels, masks, disin- fectant, shampoo, oral care products, and food. Suppose our customers are affected by flooding or other damage; in that case, we may also collaborate with local authorities on tasks such as mud removal, cleaning, and disinfection to support the resumption of patient care services.

During disasters or in times of emergency, it can be difficult to establish communication and assess situations without physically entering affected areas. To ensure the continuous supply of pharmaceuticals, we have implemented a system where vehicles can be registered in advance as emergency vehicles to be accessed even when transportation restrictions or traffic regulations are in place. Following the Great East Japan Earthquake, securing power and fuel was crucial for the delivery of pharmaceuticals. We are installing power generators at logistics centers and branches and establishing our own fueling station at the Koriyama Distribution Center to ensure delivery vehicles have adequate fuel supplies. We have also set up rooftop helipads to allow emergency support during disasters. As a group, we have introduced redundant communication methods, such as satellite phones, to prepare for the potential disruption of communication networks during disasters.

Suppose our customers can continue treating patients. In that case, we support them by maintaining supplies of pharmaceuticals and other products based on the BCP we have put in place in advance.

During the Great East Japan Earthquake in March 2011, the Hanamaki Distribution Center of Odashima Limited (now Tohoku Alfresa Corporation) served as a base, allowing seven wholesale companies in the prefecture to handle orders from evacuation centers and prefectural hospitals in coastal areas, as well as make joint deliveries.

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Alfresa Group Integrated Report 2023

Alfresa Group Integrated Report 2023

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Non-Financial Strategy

The Alfresa Group's Social Mission​

Aiming to Further Expand the

Social Infrastructure

May 2024 will mark the start of operations at our 17th logistics center, the Tsukuba Distribution Center. Looking forward, we also plan to build one logistics center each in the Chugoku and Shikoku areas.

The Tsukuba Distribution Center will involve capital expenditure of ¥24.6 billion (for land, buildings, equipment, and other items). The center will have the following four characteristics.

A State-of-the-Art Facility, Our Largest Distribution Center to Date

This facility is located in Tsukuba, Ibaraki Prefecture, at the intersection of the Joban Expressway and the Tokyo Metropolitan Expressway. It will offer convenient transportation access not only to all of Ibaraki, Tochigi, and Chiba prefectures but also to parts of Saitama and Tokyo.

Supplementing the existing Saitama, Kanagawa, Chiba, and Gunma distribution centers, as well as urban pharmaceutical centers, such as the Bunkyo, Meguro, and Edogawa pharmaceutical centers, the new facility will enhance our ability to supply medical institutions in the Kanto region, both in regular times and in emergencies. Leading-edge equipment such as depalletizing robots and cross-belt sorters will enable us to achieve high productivity and shipment accuracy.

Comprehensive BCP Response

The entire building will use a seismic isolation structure that minimizes damage even in an earthquake up to 6 Upper on the Japanese Seismic Intensity Scale. Additionally, we will have a large emergency power supply capable of operating for 72 hours, as well as water storage facilities to prepare for disruptions to water supply and sewerage. These systems will help us ensure a continuous supply of pharmaceuticals even during disasters.

Strict Temperature and Hygienic Controls in Accordance with GDP Guidelines

In quality control, we will comply with GDP guidelines, which call for strict temperature control, by installing dock shelters and double shutters at all shipping and receiving points. In addition, we will equip and maintain facilities with backup air conditioning and measures to prevent insects and rodents.

High-Precision,High-Quality Delivery of Pharmaceuticals We will utilize packaged deliveries for pharmaceuticals, eliminating the need for in-person inspection during delivery to our customers significantly reducing the inspection time for both parties. This method also helps prevent infections from spreading during pandemics. Furthermore, we will set up storage facilities for regenerative medicines, for which the market is forecast to expand, and build a system to handle ultra-low-temperature storage, transportation, and supply of materials. The facility will also be equipped to support the traceability management of specialty pharmaceuticals using NOVUMN, our support platform for personalized medicine.

"Creating and Delivering a Fresh Life for All"

Various regions are promoting the creation by 2025 of the Community-Based Integrated Care System, which will provide integrated healthcare, nursing care, and lifestyle support services. By fostering collaboration among hospitals, clinics, dispensing pharmacies, caregivers, and other related professionals within the community, this system is designed to provide a framework under which individuals can continue living in familiar communities until the end of their lives, even in severe care situations. By leveraging its extensive expertise in the Ethical Pharmaceuticals Wholesaling Business, the Alfresa Group is exploring the potential to contribute to regional healthcare and addressing societal challenges by delivering pharmaceuticals to patients in a reliable, safe, and sincere manner.

One example is an initiative that connects patients who have been suffering from rare diseases for many years with pharmaceuticals to treat such diseases. We use posters and other means to make patients in the community aware that they can consult with physicians on such matters. We also provide support by informing medical institutions about the availability of diagnostic reagents, helping to connect patients to treatment options.

52 Alfresa Group Integrated Report 2023