Provision of Stable Supplies

Establishment of a Stable Supply System

We have established a stable supply system for our products, by basing our manufacturing operations at our domestic plants while also in collaborating with partners both in Japan and overseas. We have constantly worked to increase the precision of our production plans by strengthening collaboration with the Sales & Marketing Division, Business Development & Management, overseas subsidiaries, and business partners. We have also taken proactive measures such as multiple sourcing of active pharmaceutical ingredients and optimizing the supply chains for the formulation and packaging of products. To further enhance our competitiveness, we continuously pursue cost reduction initiatives and actively strive to improve productivity at our plants, for example by shortening lead times.

Suzuka Plant

The Suzuka Plant is Sumitomo Pharma's core formulation plant. It has a state-of-the-art solid dosage formulation facility fully compliant with cGMP (the latest U.S. GMP^*1) and operates 24 hours a day to supply products globally.

• *1GMP (Good Manufacturing Practice): Standards for Manufacturing control and Quality control of Pharmaceuticals and Quasi-Pharmaceutical Products

Oita Plant

The Oita Plant is our manufacturing facility for "Meropen," Sumitomo Pharma's proprietary developed carbapenem antibiotics formulation. It is equipped with cGMP-compliant infrastructure for producing APIs and operates 24 hours a day, 365 days a year to ensure stable API production.

Strengthening the Global Supply Chain

To further strengthen our stable supply system, we continuously work to reinforce our global supply chain in response to globalization. This includes procuring raw materials and pharmaceutical intermediates from overseas as well as manufacturing at overseas plants.

In order to ensure the stable and sustainable procurement of the raw materials and other items used in our products, we continuously and systematically implement measures to prevent supply interruption. These include using multiple suppliers, considering alternative materials and maintaining appropriate inventory levels.

We are actively working to rebuild our supply chain to accommodate changes in product composition and the external environment, including incorporating overseas subcontractors in our product manufacturing and supply framework, while making optimal use of our own plants.

In our overseas procurement, in addition to responding to issues as a standard practice, we proactively work to prevent problems and eliminate supply uncertainties by building deeper relationships of trust through smooth communication with overseas business partners and procurement activities with integrity.

In addition, as part of its CSR-based procurement, we conduct fair, open and transparent transactions continuously, through such steps as complying with relevant laws and regulations and evaluating business partners.

For more information on our basic approach to procurement, please see "CSR-Based Procurement."

Responding to Changes in the Business Environment

The environment surrounding the pharmaceuticals industry in Japan is becoming increasingly challenging. Contributing factors include the promotion of the use of generic medicines and tighter controls on healthcare costs, such as reduction in NHI prices on long-listed brands.
Sumitomo Pharma has reached a turning point in the expansion of overseas operations, driven by the changes in the business environment of its overseas subsidiaries and partners. In Japan, we have seen an increase in the supply of products due to an insufficient supply of generic medicines and the expansion of product sales in the diabetes area.
In response to such changes in the business environment, we have been working to build a more resilient supply chain by maximizing the use of the Suzuka and Oita plants, with the aim of flexibly adapting to fluctuations in production volumes, establishing a stable and efficient production system and maintaining and enhancing cost competitiveness. In addition, we seek to minimize risks by identifying and visualizing risks in the supply chain. In logistics, based on our corporate GDP^*2 Guidelines, we endeavor to maintain and manage product quality during storage and transportation. Furthermore, we have a system in place to deliver products to our contracted pharmaceutical wholesalers within 48 hours of receiving an order (or to our neighboring regions within 24 hours). Going forward, while being committed first and foremost to the safe operation of our plants to ensure the stable supply of high-quality, safe and secure products, we will continue to strive to enhance production efficiency and reduce manufacturing costs.

• *2GDP (Good Distribution Practice): Standards for proper Distribution of Pharmaceuticals