ROHTO PHARMACEUTICAL CO.,LTD.

The Company supplies products through domestic and overseas manufacturing sites, outsourcing partners, procurement sources, and logistics networks. In the event of natural disasters, pandemics, geopolitical risks, sharp increases in raw material and energy prices, or the suspension of operations at key supply chain nodes, stable supply of products may be disrupted. If disruptions occur at manufacturing or distribution sites, lost sales opportunities and costs associated with alternative procurement or recovery may affect business performance and financial condition. The Risk and Compliance Committee comprehensively manages company-wide risks, and each department has established a system for implementing preventive measures.

As the Company handles products related to health and daily life, such as pharmaceuticals, cosmetics, and functional foods, product defects, unexpected side effects, contamination, inappropriate labeling or advertising expressions, or quality control issues could lead to sales suspension, product recalls, administrative sanctions, damages claims, or damage to brand value. Recall and response costs, as well as loss of public trust, could have a material impact on business performance and financial condition. The Company positions the assurance of quality and safety as an important management issue, with each department implementing preventive measures in the course of daily operations.

Overseas sales account for 51.0% of consolidated net sales, and global expansion is central to the growth strategy. However, deterioration in political and economic conditions in various countries and regions, changes in laws, regulations, or administrative practices, foreign exchange fluctuations, conflicts or deteriorating security, infectious disease outbreaks, and differences in business customs could disrupt sales activities, production, procurement, and investment recovery. Should such events occur, they may affect business performance and financial condition. The Risk and Compliance Committee oversees and manages company-wide risks, including overseas risks.

The competitive environment may change significantly due to shifts in consumer needs, price competition, new entrants, technological innovation, and changes in distribution structures. If the Company is unable to implement appropriate product development, marketing, and pricing policies in response to changes in the market environment, this may affect business performance and financial condition through decreased sales, reduced profitability, and effects on inventory valuation. Each department has established a system to autonomously promote countermeasures based on market trends.

Research and development investments may not yield the expected results, and products or technologies under development may fail to reach market launch due to issues with efficacy, safety, quality, or regulatory compliance. In addition, capital investments, M&A, equity investments, joint development, licensing agreements, and business alliances may not achieve the anticipated results or synergies, potentially resulting in investment losses, impairment losses, development delays, or lost sales opportunities. These factors may affect business performance and financial condition.

The Company is subject to various domestic and overseas laws and regulations, including the Pharmaceuticals and Medical Devices Act, food-related laws, the Act against Unjustifiable Premiums and Misleading Representations, the Antimonopoly Act, the Act on the Protection of Personal Information, environmental laws, and import/export regulations of various countries. Regulatory changes (including deregulation) may impose constraints on product development, manufacturing, sales, and marketing activities. Increased regulatory compliance costs and lost sales opportunities may affect business performance and financial condition. The Risk and Compliance Committee oversees and manages legal and regulatory risks.

If officers, employees, group companies, or business partners engage in violations of laws, bribery, embezzlement, accounting fraud, human rights violations, environmental pollution, or similar misconduct, this could lead to administrative sanctions, damages claims, suspension of business relationships, or loss of public trust. In addition, if intellectual property rights are not adequately protected, or if the Company is found to have infringed on third-party intellectual property rights, this could result in a decline in competitiveness, damages claims, or payment of compensation. Outcomes of litigation related to product liability, environmental matters, transactions, and labor issues may also affect business performance and financial condition.

The intensification of natural disasters associated with climate change, rising raw material and energy prices, stricter environmental regulations, the introduction of new systems such as carbon taxes, and changes in environmental awareness among consumers and business partners could impose constraints on procurement, production, logistics, and sales activities. There is also a risk that shipments and returns may fluctuate due to abnormal weather such as cool summers or warm winters, or changes in pollen levels. If the Company's environmental response is assessed as insufficient, this could lead to a decline in public trust and brand value, affecting business performance and financial condition.

The Company holds personal information and confidential information of customers, business partners, and employees. Cyberattacks, unauthorized access, system failures, natural disasters, human error, or inadequate management by outsourcing partners could result in system outages, information leaks, data tampering, or business interruption. Should such events occur, recovery costs, damages claims, regulatory responses, and loss of public trust may affect business performance and financial condition. The Information Security Management Committee is responsible for cyber risk and personal information leakage risk, working in coordination with the Risk and Compliance Committee for management and oversight.

Due to the declining birthrate and aging population, increasing labor market fluidity, and intensifying competition for talent, the Company may be unable to secure and develop the personnel required for research and development, manufacturing, quality assurance, overseas business, and digital fields as planned. If responses to the working environment, occupational health and safety, and employee engagement are inadequate, this could lead to reduced productivity and organizational capability, as well as talent attrition, affecting business activities and performance. The Company positions the acquisition, development, and active participation of diverse talent, along with the enhancement of organizational capability, as important management issues, with each committee collaborating to address them.