Seeing the Bigger Picture: Changing Times

A major trend of the present age is the progress of globalization, and people, money, and goods, which are the "three resources of management," have expanded globally. In addition, in the present age, the importance of using intellectual resources consisting of elements such as technology, research, and databases is increasing, and innovation is materializing by connecting "real things" and "matter." As a result, along with the spread of affluence around the world, advances in medicine have led to population growth, longevity, aging populations, and the emergence of a consumer-dominated society. These are the "positives" brought about by globalization, while the "negatives" include various disparities, greenhouse gas emissions due to overexploitation of the earth's resources, and problems surfacing in political and economic systems.

Various movements have come up in such prosperous societies that possess both the "positives" and "negatives" of globalization. One of them is to work towards solving the problems facing the world through international cooperation, such as with SDGs. To achieve SDG targets, each company has a social responsibility (CSR), and investors and consumers are required to monitor and select companies through their ESG.

How will the trends of these times impact the pharmaceutical industry?

The first problem is the rising cost of social security, especially medical costs, due to aging and longevity. The demand for efficient and effective use of medical expenses has become an issue and separating self-help, mutual aid, and public aid has become increasingly important.
Among these, I believe that the role of selfhelp, i.e., self-care and self-medication where consumers themselves have a strong awareness of "maintaining their own health for their own sake", will continue to grow in the future.

Secondly, as mentioned above, I feel that the remarkable progress in intellectual resources such as technology, research, and databases has made interdisciplinary collaboration a necessity. In the medical field, I believe that we should work towards open innovation by using intellectual resources in all domains of different industries, including basic research, clinical medicine, and pharmaceutical research.

The third is that consumer needs are diversifying due to changes in work styles, lifestyles, development in communication technology, and most recently, the COVID-19 pandemic. With the significant changes in information transmission and product distribution channels, the retail business has also changed to meet the changing needs of consumers.

In particular, awareness and concern regarding health are increasing which is evident in examples such as information, environments, and online medical treatment where an individual's status can be discussed specifically, rather than in general terms like maintaining health and preventing illness in a way that is suitable for an individual and even facilitating early detection of diseases. During the COVID-19 pandemic, I feel that the spread of direct sales and delivery to consumers, such as online sales and online shopping services, has significantly changed the transmission of information and distribution channels for products, and the speed of these services has increased significantly.

Seeing the Details: Initiatives of the Taisho Pharmaceutical Group

What path should Taisho Pharmaceutical Group take amidst such trends of these times? I believe that it is important to view this change as an opportunity to take on challenges and move forward step by step in the direction in which we want to proceed.

Self-Medication Operation Group: In Japan, I think that the concept of self-help, mutual aid, and public aid, i.e., the idea of managing your own health for your own sake by yourself, is gaining traction. Because of this, I believe that it is important to enhance the support in promoting this idea. To do that, it is necessary to understand consumer needs and information, develop products that meet those needs, and expand distribution channels such as through online shopping and online sales. Given that the retail business is changing, it is also important to consider the response to changes in sales and distribution systems. Further, in terms of our businesses, the Company intends to deal with this through ingenuity amidst the changing business environments focusing on consumers, such as expanding into new areas like health foods and testing equipment.

Self-medication: Regarding our international business, we have been working on centralizing and integrating the quality, manufacturing, and information with UPSA SAS from France and the Vietnamese Duoc Hau Giang Pharmaceutical JSC, two companies which joined the Taisho Pharmaceutical Group in 2019. In addition, since our earnest entry into the OTC drug business in Southeast Asia in 2009, we have worked on strengthening our businesses focused on OTC drugs by using brand assets that have established themselves in the region through corporate M&A and brand acquisitions in other Southeast Asian countries as well. The idea is that the Company will continue to expand its business by leveraging its business model fostered in Japan, which includes aspects such as product development, brand development, and marketing know-how to open up the market in a bipolar system that includes the Southeast Asian market and the European market.

Regarding the Prescription Pharmaceutical Operation Group, the business environment continues to be harsh due to the progress in research, testing, and treatment methods caused by the changes in drug discovery targets and the development of new medical technology, in addition to the advancing reforms to the NHI drug price system.Under these circumstances, I believe that collaborative work, drug discovery, and clinical development that go beyond established domains are necessary. The Group is bolstering coordination with outside research facilities and other companies and incorporating cutting-edge technologies to strengthen its research and development capabilities and is working on expanding its pipeline early launch of new products to the market. In addition, by concentrating on new products while promoting and developing prescription pharmaceuticals, the Company will strive to expand its business by focusing on introducing products related to its key domains and releasing original drug products for third-party use.

In Closing

The Taisho Pharmaceutical Group aims to establish strong management foundations to ensure that the Japanese and international Self-Medication Operation Group and Prescription Pharmaceutical Operation Group continue to achieve steady growth and development amid global competition.

At present, pharmaceutical research is growing rapidly through the use of intellectual resources, and the environment around the company is also undergoing rapid changes including changes in what consumers want due to changes in people's lifestyles and changes to the information transmission and product distribution channels. The Taisho Pharmaceutical Group will build a management decision-making structure that can respond nimbly under a wide range of conditions, strive to reinforce corporate governance, and improve the Group-wide value-creation capabilities.

Finally, I would like to express our sincere thanks to everyone and ask for your continued understanding and support.

December, 2022