Message from the Director in Charge of Business Development

Current Perceptions of New Businesses

We have developed four new business areas thus far: AR activities, PFM®*, PMS*, and digital businesses. We have grown these businesses so that today they generate some ¥9 billion in gross profit and are capable of contributing to MEDIPAL Group earnings.
We have nurtured these businesses for 10 years or more and many of them have already been handed over to Group companies where they are generating stable profits. We are now moving into the next phase where we need to create new sources of growth. We are working across the entire MEDIPAL Group to expand into new business fields. In the business fields of “Pharmaceuticals, Health, and Beauty,” we are exploring and ploughing new ground to develop new businesses that will contribute to the growth of the Group. I want to present information on the types of programs we are working on and the results being generated in a clearer format so that we can build a better understanding with our stakeholders.
PFM® has already grown into a business that generates steady profits and we expect demand for these services to rise further moving forward. We therefore need to develop more advanced strategies through to the final year of the 2027 MEDIPAL Medium-Term Vision. Some of the development costs for current business schemes are currently borne by MEDIPAL. In the future, we look to obtain manufacturing and marketing licenses with a view to moving into overseas markets. Our goals are exactly the same as when we took the PFM® concept and developed it further upstream in the value chain.

*PFM®：Project Finance & Marketing A business model in which MEDIPAL HOLDINGS CORPORATION invests in the development of new drugs of pharmaceutical companies in order to share in the risk and return.

*PMS：Post Marketing Surveillance Surveillance that the Japanese government requires companies to conduct after launching pharmaceuticals to verify their quality, efficacy, and safety. PMS consists of early postmarketing phase vigilance and Post-Marketing Surveillance.

Growth Strategies— Expansion of Overseas Business —

For the “Expansion of Overseas Business” strategy, one of the five growth strategies in the Medium-Term Vision, we are working on the development and commercialization of ultra-rare disease medications originated by JCR Pharmaceuticals Co., Ltd.. In September 2023, in partnership with JCR Pharmaceuticals, we secured a license to commercialize JR-446 overseas for mucopolysaccharidosis type IIIB (MPS IIIB or Sanfilippo syndrome type B) and concluded a contract on the joint development and commercialization of JR-446 in Japan. The clinical trial notification (CTN) for a Phase I/II study has been accepted by the Pharmaceuticals and Medical Devices Agency (PMDA) and the required reviews have been completed. The study is scheduled to start in Japan by September 2024. MPS IIIB is a type of lysosomal storage disease (LSD) that presents with severe central nervous system symptoms. It is an ultrarare disease that affects an estimated 500 to 1,000 individuals worldwide.*¹ There are currently no approved treatments available. To help patients suffering from this disease, we aim to gain approval for the JR-446 program and deliver the treatment to patients as soon as possible.
This business is completely different from the standard wholesaler business model we have pursued to date. We expect to grow earnings, but also think this business has significance for the broader community through the contributions it makes to patient treatment.

*¹Based on data from the Ministry of Health, Labour and Welfare’s public research and JCR’s own investigations.

Growth Strategies— Expansion of Prevention and Pre-disease Business and AGRO & FOOD Business —

Acquired as a subsidiary in May 2024, PreMedica Inc. offers test services that can visualize the risk of developing, for example, cerebral/myocardial infarction, dementia, pancreatic cancer, colon cancer, or chronic kidney disease. PreMedica’s tests are used by many annual health check services. The LOX-index® test investigates the risk of developing cerebral or myocardial infarction. PreMedica developed this test and obtained patent rights. This product is the most widely used test in this field of medicine in Japan, in terms of the number of medical facility users and the number of people tested.
For many years, the MEDIPAL Group has wanted to develop business at the pre-disease stages before people get sick. Through this new business scheme, we will pursue a growth strategy that combines the value-added testing services provided by PreMedica and the nationwide business resources of the MEDIPAL Group (including our network of medical institutions, sales resources, and distribution network). Another PreMedica test is Flora Scan®, which tests gut flora. The company expects to expand sales channels beyond the current medical institution route and into non-hospital channels, so we expect business synergies with all the MEDIPAL Group companies and not just the Prescription Pharmaceutical Wholesale Business.
¹ MP Gokyo Food & Chemical Co., Ltd., a subsidiary since March 2023, offers a wide range of products in the food and chemical raw materials fields. As well as gut flora testing, PreMedica Inc. is also starting to provide dietary guidance suited to the individual. We expect to create business synergies between PreMedica and MP Gokyo Food & Chemical, and think this will generate significant progress in the MEDIPAL Group growth strategy of “Expansion of Prevention and Pre-disease Business and AGRO & FOOD Business.”

Use of Human Capital

To implement new businesses and other ventures, in Japan we mostly appoint human resources from within the Group. We advertise positions internally as needed. We provide those human resources who have demonstrated a proactive attitude the opportunity to take on new challenges and further their career. This approach also has positive effects for the Group as a whole.
Some employees of the MEDIPAL Group have experience from pharmaceutical company or overseas postings, and we can draw on these human resources when developing our business overseas. It is not an easy task to recruit human resources in local markets or to obtain marketing authorization and then sell pharmaceuticals in compliance with local laws, so helping our employees develop this type of experience in their career can also help our business to grow in the future.
However, we can also make solid progress in business development through the recruitment of people with experience and a good track record for roles that require specialist expertise. Over the past few years, we have worked to recruit such expert human resources. As we progress new business initiatives, we have had to make upfront investments to secure and develop our human resources, but we are definitely starting to see the results today.

Investment in Growth

We are currently at the stage of actively making the growth investments needed for business portfolio prioritizations. Previously, most of the investment proposals were in the prescription pharmaceuticals area, such as PFM®*, but we have recently seen an increase in proposals in various other fields, including digital, testing, and foods. Our track record through the CVC fund amounts to 12 projects, including the investment in MNES Inc. in April 2024. The CVC fund considers over 70 proposals each year. The fund reviews in detail the potential returns and synergies with MEDIPAL Group businesses, and invests in programs that fit the fund’s criteria. The investment in MNES was aimed at the forthcoming era of “full cloud” implementations for medical information.
More recently, we have considered more proposals for large-scale investments, including in a business to develop rare disease medications overseas and to make a company a wholly owned subsidiary. These investments are an essential part of our business portfolio prioritizations and, although they also bring a certain amount of risk, we will continue to actively invest in this way to ensure future business growth.