JMS CO., LTD.

There is a risk that changes in pharmaceutical and medical device-related laws and regulations in each country, delayed responses to unpredictable changes in the environment, or the occurrence of product quality issues could lead to a suspension of product supply. If this risk materializes, it may result in a decline in social credibility, reduced market competitiveness, payment of damages, increased operational burden due to product recalls, and reduced productivity. As countermeasures, the Group is continuously improving its quality management system based on its quality policy and mitigating risk by taking out product liability insurance and similar coverage.

There is a risk that market prices for products may decline due to reductions in official prices such as medical treatment fees and health insurance reimbursements accompanying healthcare cost containment measures in developed countries, or due to intensified competition from an increasing number of new entrants into emerging markets. If this risk materializes, it may result in decreased sales and reduced profit due to customers switching to competitors' products. As countermeasures, the Group closely monitors information on healthcare system reforms in each country, develops and provides high-value-added products, and strengthens price competitiveness by promoting optimal production across the Group.

Since discount amounts based on customers' sales performance are recorded based on estimates, there is a risk that differences may arise from actual sales results. If such differences occur, they may affect results such as decreased sales and reduced profit. As a countermeasure, the Group makes reasonable estimates by customer and by product based on past discount rates and sales performance amounts, striving to narrow the gap with the finalized discount amounts.

There is a risk that production may decrease or stop at domestic plants and overseas sites in Singapore, Indonesia, China, Philippines, and South Korea due to sudden manufacturing equipment failures, changes in laws and regulations, political changes, natural disasters such as earthquakes and volcanic eruptions, or the outbreak of epidemics, which could make it difficult to procure raw materials or secure manufacturing personnel. If this risk materializes, it may result in the Group being unable to fulfill its responsibility to supply products, as well as decreased sales and reduced profit. As countermeasures, the Group is advancing fail-safe initiatives including BCP measures such as regular inspection and maintenance of manufacturing equipment, diversifying dependency by considering alternative materials and suppliers, and alternative production within the Group.

There is a risk that the purchase price of raw materials may rise if crude oil and naphtha prices surge due to conditions in oil-producing countries, including geopolitical factors, since plastic (a petroleum product), the main raw material for products, is affected by such price movements. If this risk materializes, it may result in reduced profit due to an increase in manufacturing costs. As countermeasures, the Group strives to mitigate risk by diversifying procurement sources to secure stable supply channels and by conducting price negotiations at appropriate times while closely monitoring international market conditions for crude oil and naphtha.

There is a risk of being affected by foreign exchange rate fluctuations due to changes in exchange rates when translating the local currency-denominated profit and loss, assets, and liabilities of overseas subsidiaries into yen, as well as through foreign currency-denominated transactions in overseas product sales and purchases from overseas. If this risk materializes, it may affect the Group's business results and financial position. As a countermeasure, the Group strives to mitigate risk by securing a balance of transactions for each transaction currency and by executing forward exchange contracts.