Market opportunities

In the Japanese medical industry, the government takes the initiative in setting NHI drug prices and prescription dispensing fees. NHI drug prices are revised every year, while prescription dispensing fees are revised once every two years, and the industry environment is subject to strong governmental regulations. In addition, from 2025 onwards, the Japanese population of seniors aged 75 and over is expected to increase sharply, making increased medical costs unavoidable. The government has been implementing measures in rapid succession to control increasing medical costs. Continued severe NHI drug price and prescription dispensing fee revisions are expected in response to the tight financial conditions.

Dispensing Pharmacy Business

This harsh business environment becomes a factor behind the restructuring of the dispensing pharmacy industry, and there will likely be further consolidation as the number of pharmacies decreases. In order to survive under such an environment, we consider it necessary to increase sales at pharmacies and increase the number of pharmacists per pharmacy.
We have focused on opening NIHON CHOUZAI pharmacies, while flexibly conducting M&A according to strict standards. This has allowed us to open pharmacies that are not easily affected by revisions. In addition, by maintaining annual net sales per pharmacy at around 350 million yen, we are scaling up and adding functions to our pharmacies, in order to build a structure and constitution that can survive the industry reorganization.

Pharmaceutical Manufacturing and Sales Business

Considering policies to reduce medical costs, such as promotion of generic drug use and annual NHI drug price revisions, and the movement toward formularies already underway primarily at large hospitals will expand to regional formularies in the future, we highly expect the generic drug market to further expand and its production volume to increase, even after the volume-based target is reached.
New NHI drug price listing of generic drugs is done twice a year in June and December, making it possible to release drugs with expired patents. In 2020, we made new price listings for 11 ingredients and 21 items. We expect to see continued increases in sales with the steady launch of new products.
We are working on in-house production at NIHON CHOUZAI plants, with a focus on items that are contract manufactured at other companies. Although it does not directly contribute to sales growth as these items are already being sold to dispensing pharmacies in and outside of the Group and to other medical institutions, it will lead to improvements in the operating rate and gross margin ratio at our Group plants.

Medical Professional Staffing and Placement Business

The market size of human resource placements in fiscal 2018 was 16.6 billion yen for pharmacists, 19.7 billion yen for doctors, and 33.4 billion yen for nurses. There is still more room for growth in our pharmacist placement business, and the market size for doctors
and nurses are much larger than even that for pharmacists, so Market Size for Pharmacists, Doctors, and Nurses we can expect further expansion of our placement business. Going forward, we will continue to take advantage of the strengths we have built over time, including our brand strength, reliability, and ability to meet face-to-face with job seekers and job providers, so that we can further expand our business.