WAKAMOTO PHARMACEUTICAL CO.,LTD.

The Company conducts business under various pharmaceutical affairs-related regulations, including the Pharmaceuticals and Medical Devices Act, with approval, licensing, and monitoring systems applied at each stage of drug development, manufacturing, distribution, and sales. If these regulations are newly established or strengthened, business activities may be restricted and additional costs may arise, potentially having a material impact on the Company's financial position and business performance. The annual securities report does not describe specific countermeasures.

Prescription pharmaceuticals are subject to annual drug price revisions, creating a risk of continuous downward pressure on selling prices. Price declines are a direct factor in reducing net sales and may have a material impact on the Company's financial position and business performance. Since the drug pricing system is determined by policy, there are limits to what the Company can address on its own.

In ophthalmic solutions, which are the mainstay of the Company's prescription pharmaceuticals business, there is a risk of intensifying competition as switching to generic drugs progresses. A decline in the market share of core products could lead to a significant decrease in net sales, potentially having a material impact on the Company's financial position and business performance. The annual securities report does not describe specific countermeasures.

Pharmaceutical research and development requires significant expense, effort, and time, but even successful development does not guarantee commercially successful products. If the return on research and development investment is not expected, it may have a material impact on the Company's financial position and business performance. The annual securities report does not describe pipeline details or specific risk mitigation measures.

In the course of business activities, litigation related to product liability (PL) or environmental matters, among others, may be brought against the Company. If litigation occurs, in addition to damages and response costs, damage to corporate image may have a material impact on the Company's financial position and business performance. The annual securities report does not describe specific preventive measures or insurance arrangements.

If the supply of raw materials necessary for pharmaceutical manufacturing is halted due to circumstances at raw material manufacturers, this could hinder the stable supply of pharmaceuticals. Supply disruptions could lead to product shortages and loss of customer trust, potentially having a material impact on the Company's financial position and business performance through damage to the Company's reputation. The annual securities report does not describe specific countermeasures such as securing alternative suppliers.

If quality changes occur due to changes in raw materials or manufacturing methods, or if quality defects or lot rejections occur due to foreign matter contamination in products, stable supply of pharmaceuticals may become difficult. Quality issues carry risks of product recalls and administrative sanctions, and may have a material impact on the Company's financial position and business performance through damage to the Company's reputation. The annual securities report does not provide detailed descriptions of the quality control system.

The Company's production is concentrated at a single site, the Sagami-Oi Plant, and there is a risk that operations could be interrupted in the event of a large-scale disaster or accident in that area. Dependence on a single site increases vulnerability in terms of business continuity, and if a production halt becomes prolonged, it may have a material impact on the Company's financial position and business performance. The annual securities report does not describe specific countermeasures such as a business continuity plan (BCP).

There is a risk that business operations could be suspended due to system failures, computer viruses, or cyberattacks, as well as a risk of leakage of confidential information, including personal information. If business suspension or information leakage occurs, it may have a material impact on the Company's financial position and business performance through disruption of business activities, the incurrence of legal liability, and loss of trust. The annual securities report does not describe specific security measures.