Message from the Director in Charge of Business Development

Steadily making growth investments with
high social significance in the business fields of
“Pharmaceuticals, Health, and Beauty”

Toshihide Yoda

Senior Managing Director,
In charge of IR and General Manager of Business Development Division
MEDIPAL HOLDINGS CORPORATION

Awareness of the Market Environment and Business Portfolio Prioritizations

The MEDIPAL Group’s core business is the wholesale business, which forms a pillar of our profitability. However, taking into account changes in Japan’s social environment, such as the declining birthrate and aging population and the falling population, we believe that we must not only strengthen our wholesale business, but also create businesses that will earn new revenue, in order to achieve sustained and consistent growth.

Amid this context, the MEDIPAL Group has put forward the idea of “Change the Oroshi” as part of our Medium-Term Vision, and we are advancing business portfolio prioritizations that do not depend solely on our existing business as a transformation aimed at realizing sustained growth, even under the challenging business conditions we foresee over the years to come.

The MEDIPAL Group has, for over ten years now, developed four new business areas: AR* activities, PFM®,* PMS* and digital businesses, etc. Many of these businesses have been handed over to Group companies, where they are generating stable profits. Now, as the next stage of our business development, by making use of the management resources such as our logistics facilities and human resources as well as our deep relationships with manufacturers and clients developed through our wholesale business, while at the same time making proactive growth investments, we aim to further expand our revenue sources through the launch of new businesses, among other efforts.

* AR: Assist Representatives
An internal designation given to Marketing Specialists(salespeople for the Prescription Pharmaceutical Wholesale Business), pharmacists, and others who have passed the MR qualification exam

* 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 and medical equipment, tools and clinical materials to verify their quality, efficacy, and safety. PMS consists of early postmarketing phase vigilance and Post-Marketing Surveillance.

Growth Investment Within the 2027 MEDIPAL Medium-Term Vision

The group is planning to make growth investments on the order of ¥100 billion under the Medium-Term Vision, which we have been undertaking since the fiscal year ended March 31, 2023. In the three years to the fiscal year ended March 31, 2025, we have made investments worth approximately ¥70 billion.

We view all of these investments, including the acquisition of MP Gokyo Food & Chemical Co., Ltd. as a consolidated subsidiary and the investments in developing orphan drugs, as essential to realizing the future growth of the Group. While the acquisition of MP Gokyo Food & Chemical Co., Ltd. as a consolidated subsidiary comes with impacts in the form of amortization of goodwill and intangible assets, it has also resulted in synergies within the Group, and there is a tangible sense that it has contributed to the growth of the Group over the medium to long term. On the other hand, when it comes to the investments in developing orphan drugs, we are presently at the stage where the costs of acquiring commercialization rights and performing clinical trials lead revenues. However, after getting approval for and selling pharmaceuticals, the business will be able to secure higher profit rates than our existing wholesale business, so we foresee this becoming one of the pillars of the MEDIPAL Group’s profits.

While businesses developing new drugs require significant investment, we view this is an important business, not only for the contribution it can make to patients suffering from intractable diseases and their families, but also because we foresee it resulting in high future profitability for our Group, and, at the same time, becoming a key to our efforts to expand our business overseas.

In February 2025, we took part in the WORLDSymposium™ 2025, held in San Diego, California, USA. The WORLDSymposium™ 2025 is an annual global research conference held in the USA under the theme of ultra-rare lysosomal storage diseases (LSDs) to report on the progress of the latest research into LSDs for researchers, physicians, patient advocacy groups and others. The conference saw an increase in lectures and speeches conveying a sense of progress in the development stage of drugs in the field of genetic treatments in particular. We also actively took part in meetings with patient advocacy groups, where we received a renewed sense of the high hopes for these new drugs, and obtained useful information for future development.

Informed in part by our experiences at the conference, we hope to gain approval and achieve commercialization as early as possible for our drug for treating MPS IIIB/Mucopolysaccharidosis type IIIB, which is one of the LSDs that the MEDIPAL Group is working on.

Investment in Growth

The current growth investment of the MEDIPAL Group is, in principle, limited to investments that have high social significance in the business fields of “Pharmaceuticals, Health, and Beauty.” Following on from our investments, we also work with our Group companies to create synergy effect with the existing businesses, and we are promoting efforts across each of these respective markets.

Naturally, the returns we can obtain through our investments are also important, and we view this as one of our key management challenges. Investment decisions are made following careful deliberation by the Board of Directors and the responsible departments for the relevant business from a variety of angles including risk, returns and feasibility.

Investment Through Corporate Venture Capital (CVC) Fund

In 2021, in collaboration with SBI Investment Co., Ltd., we established a CVC fund called the MEDIPAL Innovation Fund. Through this initiative, we are using the diverse sourcing functions of SBI Investment and their extensive investment experience to invest in and support the growth of startups in Japan and overseas. Our goal is to expand the earnings base and maximize corporate value, as well as to contribute to the realization of a sustainable economic society.

To date, we have considered investing in an exceptionally high number of projects. These include many promising projects that MEDIPAL alone would have struggled to find. We believe that the establishment of a CVC fund has been exceptionally impactful.

Through this fund, we have so far made investments in promising ventures in fields such as medical DX and bio-technology. There are a variety of patterns for how these investments may lead to returns. In principle, we hope to create new value through synergies achieved by working with the companies we have invested in, with this leading to increased sales or profit.

Realizing our “Ideal Situation” to Become a Company that Better Contributes to Society

The MEDIPAL Group boasts a strong network of manufacturers and clients fostered over many years through our wholesale business. We also possess a resilient logistics network spanning the whole of Japan. Treating the infrastructure of our existing business as a base upon which to create new businesses is the policy underpinning the MEDIPAL Group’s business development. Efficiently distributing human capital and financial capital and building relationships with exceptional partners will play an important part in carrying out this policy.

We will continue to work proactively to realize our “ideal situation” and become a company that better contributes to society.