President’s Message

In short it is the management philosophy of “contributing to people’s health and the advancement of society through creation of value in distribution.” We are responsible for a business that plays an important public role, delivering medicines and daily necessities that are essential to people’s lives and healthy living. You could say that our strongest belief has remained unchanged across every era, that is, a commitment to continuing to fulfill the important mission of providing social infrastructure that supports people’s day-to-day living whether in emergencies or in ordinary times, without fail.

Two events brought this idea sharply to the fore for me.

The first was the Great Hanshin-Awaji Earthquake of 1995. Even as they were experiencing the earthquake, our employees looked forward and thought only what our role as wholesalers should be and what we should do, quickly managing to maintain our provisioning activities. This could be said to be the incident that was at the start of our emergency response work.

The second was the distribution center system failure that occurred in 2004, the year I became president of MEDICEO CORPORATION. We were in a situation where we could see the products in front of us, but we were unable to deliver them, causing serious problems for our clients. This made me keenly feel the importance of being able to “reliably deliver the product needed, in just the amount needed.”

Learning from these experiences, we are conscious of preventing risks in advance and have refined functions that enable business continuity. These efforts have led to the development of today’s resilient corporate group systems.

The environment surrounding our business is undergoing structural change in the form of Japan’s aging society and declining birthrates, labor shortages, distribution issues and increasing costs of social security. Amid all this, we are pursuing sustainable growth as part of the “2027 MEDIPAL Medium-Term Vision: Change the Oroshi Forever—Constant Innovation.”

We are advancing five growth strategies (“Expansion of Overseas Business,” “Expansion of Prevention and Pre-disease Business and AGRO & FOOD Business,” “Enhancement of the Business with and in Digital,” “Building Sustainable Logistics Business,” and “Value Co-creation in Community Healthcare”), each of which is steadily delivering results. Specifically, we have established a business model for investing from the research and development phase of prescription pharmaceuticals through our partnership with JCR Pharmaceuticals Co., Ltd. We have also realized a new form of distribution termed “sharing logistics” through the establishment of MEDISKET CORPORATION. In addition, we are accelerating the expansion of the scope of our business activities by newly adding to our group PreMedica Inc., which is accelerating its business in the fields of preventive medicine and pre-disease, MP Gokyo Food & Chemical Co., Ltd., which is leading growth in the agro and food domains, and Cygni Corporation, which has strong business know-how in the companion animal¹ market.

As we head into a new era, the same ideas and ways of doing things with which we have grown as a pharmaceutical wholesaler in the past will not be enough to see us through. That is why we have to get ahead of change, and forge the path ahead by continuing to take on bold challenges and make proactive investments. While change takes time, we foresee that all of the growth strategy initiatives that we are currently advancing will contribute to greater revenue in the medium to long-term.

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

PALTAC CORPORATION has built up a solid position as the domestic number one wholesaler delivering daily necessities in the form of cosmetics, everyday goods, and OTC pharmaceuticals in the fields of “Beauty and Health.” To date, PALTAC has developed its own business as a listed company. Today, however, the business environment we find ourselves in is changing at an unprecedented pace, as we face things like an aging society and increased consumer interest in prevention and pre-disease. Treating this change as an opportunity, we decided to convert PALTAC to a wholly-owned subsidiary in order to maximize the degree of contribution we could make as a whole group in healthcare.

As the focus of healthcare and nursing shifts to local communities and the home, we are combining PALTAC’s strong distribution productivity with MEDIPAL’s exacting quality management know-how to create a unique “healthcare distribution platform.” By concentrating all the functions and personnel of both companies, we aim to create a sustainable and efficient new supply system that supports the lives of consumers all the way from treatment to prevention and day-to-day health. We believe that the unified group management brought about by converting PALTAC to a wholly-owned subsidiary is the realization of the “Change the Oroshi” vision that we have pursued for over 10 years. We have gone from being a collection of individual companies to being a resilient corporate group that works together to support consumers across a variety of contexts, seamlessly providing value across the fields of “Pharmaceuticals, Health, and Beauty.”

Key to driving business model transformation and forging a path to the future is talent.
We believe that the basis of healthcare is the connections between people, and that this is made up of real contact points. Without the thoughtfulness that is essential as a human being, our business would come to nothing. In that sense, you could say that what we deliver is not just products, but is in fact something that comes one step earlier, the thoughts and feelings of each and every one of our employees, who wish to give patients and consumers a healthier life. MEDIPAL needs employees who think for themselves how to solve the challenges our clients face, and can take action to achieve that. We are thus making efforts to develop “future-oriented human resources” who can see through to what matters about issues, independently ask questions and resolutely take action.

We also think it is important for leadership to engage in constant dialogue with employees. I think people at the top conveying to the organization as a whole what they intend by talking directly about their ideas and by showing this through their actions is what makes a culture take root wherein people take action on challenges without fear of change or failure.

My hope is that all of the employees brought together in the MEDIPAL Group will make this a company where they can find joy in what they do by working with the pride and belief that they themselves are supporting important social infrastructure. Each day I see our employees dealing sincerely with clients to address issues, and employees sharing knowledge with one another for solving such issues in workplaces where all kinds of challenges come up. We call the ways our employees support people’s healthy living and the ways our group companies expand, support and connect “Pharmaceuticals, Health, and Beauty” through their respective businesses an “Orchestra in Support of People’s Health.” Refining each person’s timbre (i.e., evolving their individuality), and combining this together (i.e., evolving organizations) acts as a starting point for innovation. We believe that this serves as an important foundation for corporate growth.

Continuing to provide society with uninterrupted distribution from upstream to downstream is itself the core of the sustainability that the Group should fulfill. We are driving optimization across the entire supply chain by, for example, reducing greenhouse gas emissions and promoting joint delivery, in order to combine solving social challenges with group growth.

Such social initiatives are naturally not something that the Group can do alone. Key here will be the spirit of prosperous coexistence. An attitude of working together with our clients and with partner companies who share our aspirations so that society as a whole can prosper is what will create a sustainable future.

The major assumption underpinning this coprosperity and coexistence is the firm trust of society. We have made it clear to employees that our fundamental orientation as a company is that compliance is what gains the trust of society. No matter the situation, we will preserve this as an unshakeable axis of management.

The MEDIPAL Group is currently in a phase where we are proactively investing in new businesses in order to ensure sustainable growth amid a rapidly changing environment. Given this context, we are striving for sustainable growth and to maximize corporate value as a company through business and financial activities that combine increased ROE and reduced cost of capital, based on the basic capital policy.

We position distributing profits to shareholders as one of the key issues for management. In response to this, we are flexibly buying back and cancelling our own stock with the aim of improving capital efficiency and further returning profits to shareholders, while carefully examining capital demand overall, as well as, in principle, steadily maintaining and improving our payout ratio.

Based on this approach, we have revised upward our dividend forecasts in order to further increase our returns to shareholders taking into account our future financial situation, as a result of coming to expect an increase in the Group profit levels in connection with the conversion of PALTAC CORPORATION to a wholly-owned subsidiary. Going forward, we will continue to strive to meet shareholder expectations through profit growth driven by business growth and by implementing appropriate capital policies. (See P.51 for details.)

People should envision a big, exciting dream and get straight to realizing their ideas. The conviction you have at the start should see you though, even as you make revisions from a variety of angles in response to various challenges. I feel this is where MEDIPAL finds itself today.

Our slogan, “Change the Oroshi,” represents the challenge of “leveraging our strengths in distribution to go beyond the bounds of distribution” while fulfilling our role as social infrastructure. This is something no one has achieved thus far, so it is a difficult undertaking, but by sowing the seeds of a variety of businesses in the form of investment, and by having high quality talent carefully gather and cultivate knowledge, we are getting a real sense that the scope of our business and the way we work is changing. We believe that driving this transformation will lead us to evolve into a corporate group that serves even more people, and we hope to continue to pursue this course that we have charted.

I hope we can continue to enjoy the constant support of all our stakeholders in these endeavors.