Message from the Director in Charge of Business Development

Actively Engaging in Growth Investment Even as We Strengthen Our Existing Businesses

The MEDIPAL Group has three business segments, which take on the role of social infrastructure supporting the health and lifestyles of people through the distribution of prescription pharmaceuticals, cosmetics, daily necessities, animal health products and raw materials for food processing. At present, these businesses serve as the Group’s business foundations, generating steady cashflows. Going forward, we are actively investing in people and facilities so that we can provide still greater value to society. With the domestic Japanese market in an advanced state of maturity, however, we believe that realizing the same sort of growth that we have in the past through our existing businesses alone will not be feasible. For the MEDIPAL Group to achieve sustained growth as a group amid such a business environment, we believe that it is important for us to strengthen new drug development for patients with rare diseases and to engage in active investment into our Animal Health Products and Food Processing Raw Materials Wholesale and Related Business, even as we deepen our existing infrastructure in the form of our distribution network, which serves as the Group’s strength, thereby diversifying our business portfolio.

The earnings structure of the prescription pharmaceutical wholesale industry is currently in the midst of a major transition period. Previously, revenue was generated through distribution and retail promotion functions in the field of primary care for lifestyle-related diseases. However, new drug development in this area has reached a turning point, with pharmaceuticals the patents for which have expired transitioning towards being generic drugs. At the same time, R&D at pharmaceutical companies is shifting towards specialty fields such as antibody drugs. This means that the market is becoming increasingly two-track, organized around specialty drugs on the one hand and generics on the other.

In response to these changes, the Group is making the most of our logistics capital, human capital and financial capital to advance our businesses developing drugs for ultra-rare diseases as a new business model.

Developing group businesses through greater use of our existing infrastructure in this way serves as the basic concept underpinning how we will improve the Group’s breadth and depth.

Our Efforts Across Specialty and Generic Drugs

In a Japanese prescription pharmaceutical market increasingly organized around the twin poles of generic and specialty drugs, the MEDIPAL Group is securing profitability in the specialty drug domain through our unique PFM^®* business model. PFM^® represents a system in which we invest in development-stage pharmaceuticals and share the risk of development with manufacturers or venture firms, then earn a return through exclusive distribution rights and royalties after the drug goes to market. In contrast to a typical investment fund, PFM^® lessens the royalty burden on the investee by adding a distribution revenue component, and allows the use of the national Area Logistics Centers (ALC^*). This initiative has now been running for over 12 years, and now boasts 14 pharmaceuticals in use in clinical settings.

In the generics field, the Group has also invested into AND PHARMA Co., Ltd., which holds shares in three Japanese generic pharmaceuticals manufacturers, and we are working to realize streamlined manufacturing and logistics by coordinating the firms under its aegis.

We are also investing into promising medical DX and biotechnology startups through our CVC fund established in collaboration with SBI Investment Co., Ltd.

* 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
* ALC: Area Logistics Center
A state-of-art distribution center that supplies prescription pharmaceuticals, medical materials, and clinical diagnostics reagents, etc., primarily to dispensing pharmacies, hospitals, and clinics

Adopting Different Approaches Across Asia and the West in Our Overseas Strategy

Our consolidated net sales are on the order of approximately ¥3.8 trillion, but almost all of this is made on the Japanese domestic market. Given that Japan’s population will steadily decline in future, it is essential for us to undertake initiatives to create revenue opportunities overseas for the sake of growth.

In Asia, through our comprehensive partnership with Sinopharm Group Co., Ltd., the largest pharmaceutical wholesaler in China, we have made 20% investments in the two Beijing pharmaceutical wholesalers. We are thus steadily collecting cash in the form of dividends while also advancing the deployment of Japanese products to the Chinese market through collaboration with the Sinopharm Group.

In the West, because distribution systems are already well established and newly entering the market as a pharmaceutical wholesaler is impractical, we plan to make progress through the sale of ultra-rare disease medications, which have very low patient numbers and high barriers to entry. At the current moment, we have acquired global rights for three medications for lysosomal storage diseases (LSDs) from JCR Pharmaceuticals Co., Ltd., and we are working on developing these as new medications by conducting clinical trials with a view to releasing them on the market soon. The ultra-rare disease medication development business that we are currently working on is expected to earn even higher profit margins than our legacy wholesale business after these drugs go on sale. At the same time, resolving the unmet medical needs of patients with ultra-rare diseases also embodies the idea of “trying to save as many lives as possible.” With our network covering medical institutions nationwide and our roughly 2,000 MR^*-certified practitioners, we also believe that this is a business the MEDIPAL Group is well-placed to pursue.

* MR: Medical Representatives
Person in charge of drug information at pharmaceutical companies

Shifting the Business Portfolio in a Better Direction by Strengthening the AGRO & Food Business

We are also working steadily to strengthen our Animal Health Products and Food Processing Raw Materials Wholesale and Related Business with the aim of diversifying the Group’s business portfolio.

In the food domain, we hold the largest share of the Japanese market for naturally-derived food materials (such as thickeners), and we converted MP Gokyo Food & Chemical Co., Ltd., which is also working on global expansion, into a subsidiary in October 2024.

In the animal health products domain, in January 2026, MP AGRO CO., LTD. acquired 100% of the shares of Cygni Holdings, Inc., which itself owns all shares of Cygni Corporation, which operates an e-commerce (EC) business for animal hospitals. Animal health product wholesale is spread across small-scale companies across different regions, so there is presently almost no nationwide wholesaler. We firmly believe that the synergy of MP AGRO CO., LTD., with its strengths in livestock in Hokkaido and Kyushu, and Cygni Corporation, with its strengths in companion animals¹ across the Tokyo metropolitan, Kansai and Chukyo areas has the potential to be a game changer in the industry by expanding and improving sales systems on a nationwide scale. Going forward, we will dedicate our efforts towards continuously improving and expanding each of these businesses.

1. An animal that has a companion-like presence and a close relationship with humans in daily life

Becoming a Company That Better Contributes to Society

The Group businesses support people in leading healthy lives, and we feel society’s expectations are also extremely high. As the social environment changes and technology develops, society’s needs are also diversifying and developing. To properly meet these needs, we not only need to evolve our existing businesses, but also orient ourselves to take on the challenge of creating value in new domains.

The MEDIPAL Group aims to continue to steadily make growth investments that have high social impact across the business fields of “Pharmaceuticals, Health, and Beauty,” thus pursuing sustainable growth in corporate value.