Procurement

Core Principles

The Otsuka group, as a total healthcare company, is committed to providing a stable supply of safe and reliable products that are trusted by all. In our group's procurement activities, the group considers human rights, working conditions, anti-corruption, and the environment, in addition to quality, safety, and stable supply. The group aims to implement sustainable procurement with our business partners, and strives to build a sustainable supply chain and improve the corporate value of both parties.

The Otsuka Group's Materiality and Related SDGs

Create More Sustainable Future
with Business Partners

Social Issues

Destabilization such as pandemics, geopolitical risks of raw material procurement and product supply due to supply chain disruption
Building a sustainable supply chain

Related SDGs

United Nations Sustainable Development Goals (SDGs): Goal 8 (Decent Work and Economic Growth), Goal 9 (Industry, Innovation and Infrastructure), Goal 10 (Reduced Inequalities), Goal 12 (Responsible Consumption and Production), and Goal 13 (Climate Action).

Strategy	Measures	Indicators
Building a strong and stable procurement system to respond to risks	Upstream supply chain visualization and risk identification and response	Response rate to identified risks Percentage of suppliers participating in the measures Response rate to questionnaires when incidents occurred
Promotion of responsible procurement	Building strong engagement with business partners to realize responsible procurement that takes human rights and the environment into consideration	Number of communications with suppliers

Sustainable Procurements With Our Suppliers

To share high ethical standards with all business partners and promote responsible business activities, the group has established the Otsuka Group Business Partner Code of Ethics.
In procurement activities, the group has established the Otsuka Group Procurement Policy to guide the group‘s actions and has developed the Otsuka Group Sustainable Procurement Guidelines for suppliers, while promoting awareness and implementation of these guidelines.
Furthermore, the group has established a Speak Up Line through which business partners, including suppliers, can consult and report any misconduct, violations of laws and regulations, or suspected violations by individuals associated with the group.

Otsuka Group Procurement Policy

Download our procurement policy here.

Select the suitable language to read our procurement policy.

Otsuka Group Sustainable Procurement Guidelines

Download our procurement guidelines here.

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Promotion System

To further strengthen the group’s efforts to address risks in raw material procurement and ensure a stable supply of products, the Sustainable Procurement Project* was launched in 2022, led by the director in charge of sustainability at Otsuka Holdings.
Under this project, the progress against activity targets and related challenges are reviewed and shared on a quarterly basis.
The project is built on two pillars: Stable Procurement, which aims to establish a robust procurement system that supports the delivery of high-quality products, and Responsible Procurement, which promotes ethical and sustainable procurement practices.

* Participants include directors and personnel responsible for procurement, production, IT, and compliance at Otsuka Holdings, Otsuka Pharmaceutical, Otsuka Pharmaceutical Factory, Taiho Pharmaceutical, Otsuka Warehouse, Otsuka Chemical, Otsuka Foods, Otsuka Medical Devices, EN Otsuka Pharmaceutical, Otsuka Techno, Okayama Taiho Pharmaceutical, Otsuka Packaging Industries, and JIMRO.

Promotion Structure of the Sustainable Procurement Project

Progress of Sustainable Procurement Activities

Year	Major Initiatives
2019	Established a cross-functional Sustainable Procurement Task Force Conducted the first supplier assessment* using the CSR Procurement Self-Assessment Questionnaire developed by the United Nations Global Compact Network Japan (2019-2023) and launched briefing sessions for suppliers
2020	Revised the Otsuka Group Procurement Policy applicable across the Group and established the Otsuka Group Sustainable Procurement Guidelines
2022	Launched the Sustainable Procurement Project Strengthened sustainable procurement initiatives based on two pillars: Stable Procurement and Responsible Procurement
2023	Responsible Procurement Introduced the Group's proprietary assessment framework and EcoVadis, an internationally recognized sustainability ratings platform, and established a Group-wide framework for supplier evaluation and improvement Revised the project's KPIs and roadmap
2024	Established the Otsuka Group Business Partner Code of Ethics Established the Otsuka Group Business Partner Speak Up Line Responsible Procurement Revised the Otsuka Group Procurement Policy and the Otsuka Group Sustainable Procurement Guidelines, enhancing supplier evaluation processes both in Japan and outside Japan Implementation and ongoing deployment of a Supplier Risk Management Program, including EcoVadis, across operating companies outside Japan Stable Procurement Launch of Resilire for centralized procurement data management Conducted briefing sessions for direct material suppliers in Japan Expanded the acquisition of Resilire consent and supplier site information registration to overseas suppliers
2025	Responsible Procurement Initiated a second-round assessment* (scheduled to continue through 2027) Began collaboration with related functions, including R&D, production, and quality, to expand the scope of activities beyond Tier 1 direct material suppliers Stable Procurement Conducted a Supplier Status Confirmation Survey during actual incidents to verify supplier response capabilities in the event of disasters and other emergencies
2026～	Responsible Procurement Further enhance supplier evaluation and improvement activities Stable Procurement Expanded Resilire to suppliers at overseas manufacturing sites

* Scope: Approximately 600 direct material suppliers of the Group's major operating companies in Japan.

Approach

Building Partnerships with Supplier Companies

The group endorses the aims of the Council on Promoting Partnership Building for Cultivating the Future, which is promoted by the Cabinet Office and the Small and Medium Enterprise Agency (SMEA) and has published a Declaration of Partnership Building to create relationships of trust and further strengthen cooperation with supplier companies.
Currently, nine companies have made the declaration: Otsuka Holdings, Otsuka Pharmaceutical, Otsuka Pharmaceutical Factory, Taiho Pharmaceutical, Otsuka Foods, Otsuka Chemical, Otsuka Packaging, EN Otsuka Pharmaceutical, and Otsuka Techno.

Implementing Supplier Due Diligence

To ensure a stable product supply, the group has conducted due diligence in new suppliers and risk assessments of key raw materials. The group has also implemented risk countermeasures for raw material procurement, such as identifying potential risks and sourcing from multiple suppliers.
While some of the group’s overseas and domestic operating companies already evaluate new suppliers based on human rights, labor conditions, anti-corruption measures, and environmental impact, expanding this evaluation to all group companies remains a challenge for the future.

Stable Procurement

To deliver high-quality products in a stable manner, the group is working to establish a robust and stable procurement framework. As part of these efforts, the group formed a cross-functional working team and introduced Resillire, a cloud-based supply chain risk management platform, in 2024 to centrally manage procurement information that had previously been managed independently by each group company. To support the operation of the platform, the group conducted briefing sessions for direct materials* suppliers in Japan and advanced the development of an information-sharing framework. In FY2025, approximately 80% of eligible suppliers cooperated with and participated in the initiative, facilitating progress in obtaining consent for information registration and registering business site information. In addition, Resilire was utilized during actual incidents to conduct a Supplier Status Confirmation Survey, which is designed to promptly assess supplier conditions in the event of a disaster. The response rate reached 100%, demonstrating that information can be collected more quickly and efficiently than under the previous process of individual confirmations. Going forward, the group plans to expand the initiative to overseas suppliers, enabling faster assessment of supply chain impacts arising from disasters and further enhancing initial response measures.

* Raw materials and components used directly in the manufacture of products, including materials that form part of the finished product and key materials consumed during the manufacturing process.

Responsible Procurement

Otsuka Group has promoted sustainable procurement initiatives across the Group since 2019 with the aim of realizing a sustainable supply chain that respects human rights, ensures appropriate working conditions, prevents corruption, and supports environmental conservation.
In 2019, the Group established the Otsuka Group Sustainable Procurement Task Force, comprising procurement personnel from Otsuka Holdings and major operating companies. The task force launched supplier briefing sessions and supplier assessments.
In the following year, the task force revised the Otsuka Group Procurement Policy and established the Otsuka Group Sustainable Procurement Guidelines. In addition to promoting supplier awareness and obtaining supplier agreement to these guidelines, the Group established a framework for continuous improvement through feedback on assessment results and ongoing dialogue with suppliers.
In 2022, in response to increasingly diverse social issues and rising risks surrounding supply chains, the Group launched the Otsuka Group Sustainable Procurement Project. In addition to the four areas of the UN Global Compact framework that had formed the basis of the Group's activities, namely human rights, labor, environment, and anti-corruption, the Group began implementing cross-functional initiatives to strengthen Stable Procurement in response to natural disasters and geopolitical risks.
Through this project, the Group has enhanced its common framework for supplier evaluation and improvement while expanding the scope of assessments and dialogue activities both within and outside Japan.
Furthermore, in 2023, the Group introduced EcoVadis, an internationally recognized sustainability ratings platform, in addition to its proprietary assessment framework, further enhancing its supplier evaluation and improvement process.
By 2023, the Group had completed assessments covering approximately 600 direct material suppliers of its major operating companies in Japan. Since 2025, the Group has been conducting a second-round assessment for the same supplier base. In addition, for all newly assessed suppliers, procurement personnel prepare feedback reports following the assessment process and use them as a tool for two-way communication aimed at promoting improvement. Where assessments identify potential sustainability-related risks, the Group provides support and follow-up in accordance with its corrective action policy.
Through collaboration with suppliers, the Group strives to enhance sustainability across the entire supply chain.

Roundtable Discussion with Responsible Procurement Promotion Members

Integrated Report P.78

Building a sustainable supply chain: Initiatives of the working group on responsible procurement

Results of Responsible Procurement Initiatives^*1

Scope: Approximately 600 direct material suppliers of the Group's major operating companies in Japan

Item	Unit	FY2024	FY2025	FY2026
Number of suppliers evaluated^*2 Japan	companies	―	389	170
Outside Japan	companies	365	150	273
Conducted interviews based on the corrective action policy	cases		7^*3

*1 From 2019 to 2023, approximately 600 direct-material suppliers of the group’s major operating companies in Japan were covered through supplier briefing sessions (583 suppliers), supplier assessments (653 suppliers: 597 in Japan and 56 outside Japan), and follow-up reviews (125 suppliers: 112 telephone interviews and 13 online interviews).
*2 Number of suppliers evaluated through either EcoVadis or the Otsuka SAQ. Actual results for 2024-2025; target for 2026.
*3 No material risks requiring escalation were identified in any case.

How Otsuka promotes responsible procurement through supplier monitoring

Message from Pharmavite

Ray Gosselin
EVP, Chief Operations Officer
Pharmavite, LLC

As a leader in the health and wellness industry with a commitment to responsibly produce the highest-quality products for our consumers, it is essential to Pharmavite that we continuously improve our efforts in sustainability. In my role as Chief Operations Officer at Pharmavite, I am charged with ensuring that our suppliers share our commitment to sustainability and understand the urgency of the issue.
The first step in our sustainability agenda is to gain transparency with our suppliers and their suppliers' sustainability performance, and taking proactive steps to do so reflects the important values of our organization: Do The Right Thing, Care Deeply, and Do Something. To that end, Pharmavite conducts individual sustainability performance assessments of our supply chain partners using EcoVadis, a global ESG rating company based on international standards. This assessment is a key factor for Pharmavite sourcing and supplier review as we believe this process is critical to our supply chain sustainability management.
We believe that this strategic initiative with our supply chain partners will enhance our mutual corporate values and pave the way for a more sustainable future.

Robust Supply Chain Network for the Stable Supply of Prescription Drugs

Otsuka Pharmaceutical established the Global Supply Chain Committee (GSCC) in 2017 to make decisions on key production and supply-related matters for anticancer drugs, orphan drugs, tuberculosis drugs and others to ensure a stable supply of pharmaceuticals in the global market. Otsuka Pharmaceutical and its overseas subsidiaries work together to strengthen the supply chain. As part of these efforts, additional manufacturing sites were established in 2022 to enhance supply chain resilience and support the stable supply of core products in global markets.

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