Nikkei Medical PHC Group CEO Interview

PHC Holdings Corporation
President & CEO
Michael Kloss

PHC Holdings Corporation changed its company name in 2018 after the curve-out from Panasonic Group in 2014. The company acquired the diabetes care business from Bayer of Germany in 2016. Last year in 2019, the anatomical pathology business from Thermo Fisher Scientific and LSI Medience Corporation have just joined PHC group. Now, with 79 subsidiaries globally, and distribution networks in 125 countries, the PHC Group is transforming into a global healthcare company. Nikkei Medical interviewed the President and CEO Michael Kloss, who says, “PHC Group is now experiencing a very exciting moment.”

PHC Group’s Growth Strategy through Active Investments

Previously, the PHC Group mainly had three business areas; the Medical Equipment Business including SBGM systems by the Japanese subsidiary PHC Corporation, the Life Sciences Business mainly with laboratory/medical support equipment including Ultra Low Temperature (ULT) freezers and incubators, and the Healthcare IT Business centering on EMR, receipt systems, and medication history systems.

However, with the acquisition of Thermo Fisher’s anatomical pathology business and LSI Medience in 2019, the PHC Group is in the midst of the transformation to a global healthcare company with a diversified business portfolio. The number of employees has doubled from approximately 5,000 before the acquisition to approximately 10,000, and consolidated sales is expected to increase significantly from approximately JPY 190 billion in the FY ending March 2019.

Additionally, the company is also making far-sighted investments, such as development of next-generation diagnostics solution with Lunaphore Technologies SA of Switzerland, a developer of innovative equipment for cancer research and tissue diagnostics. Going forward, we will continuously invest in growth areas, and aim to become the leading provider of best-in-class precision and digital solutions in global diagnostics and life sciences, and healthcare services in Japan.

Acquisitions for Portfolio Expansion and Structural Transformation

Before the acquisitions of the anatomical pathology business (current Epredia) from Thermo Fisher Scientific and LSI Medience, the sales ratio for each business was rather out of balance, with 68% for Medical Equipment Business, 17% for Life Sciences Business, and 15% for Healthcare IT Business. Now, with Epredia and LSI Medience added to our business portfolio, we are transforming to a balanced structure by establishing more diverse and strong businesses including the Diabetes Management focusing on SBGM systems, Diagnostics and Life Science Business including anatomical pathology and laboratory/medical support equipment, and Healthcare Services centering on healthcare IT and clinical testing businesses. When you look across the world, very few companies have a unique portfolio like ours, and I believe that is our strong point.

Leading Company Status Demonstrated in Market Share

The market share of our main products is high, and we are proud to be widely received by our customers. In the Diabetes Management business, our BGM system has top share with 50% domestic share*1, and number three globally*2. In the Life Sciences business, both the ULT freezer and CO2 incubator are maintaining top shares in Japan*3, and number two globally*4. In the Healthcare IT business, EMR for clinics*5 have top share in Japan. As for clinical testing service, we are number three in Japan*6. Having 80% of our sales generated by product groups with top-class market share, is the foundation of our business. We would aim to maintain the high shares and keep on being the leading company in each field.

  • *1 Combined market share of Arkray and Sanwa for OEM products supplied by PHC.
    Calculated based on MIDAS 2017Q1-Q4 and estimated by in-house investigation.
    Copyright © 2020 IQVIA. All rights reserved.
  • *2 Aggregation of IQVIA MIDAS 2017 Q1-Q4 data and other syndicated sources. Copyright © 2020 IQVIA. All rights reserved.
  • *3 “Latest Trends and Future Potentiality of Tissue Engineering Related Market 2019” by Fuji Keizai Co., Ltd. (based on 2018 performance by volume)
  • *4 Research by Frost & Sullivan (Base: unit in FY2018)
  • *5 Survey by Yano Research Institute Ltd. (as of August 2019)
  • *6 Survey by Yano Research Institute Ltd. (as of June 2019)

Provide Seamless Service with the Synergy Effects Between Business Portfolios

Going forward, we will pursue synergies between our existing businesses and the newly acquired ones. Each of our businesses already have strong customer base. By each business mutually utilizing their customer base, I believe we can expand sales further. By horizontal collaboration between businesses, I think we can develop new diagnostics equipment and services.

For example, by linking the service systems between the EMR, a major product of our Healthcare IT business, and the clinical testing service provided by LSI Medience, external testing orders can be placed via the EMR screen, and test results will be imported to the EMR online. We can realize seamless linkage at clinics and hospitals, and further streamline the workflow for medical professionals.

Market Provider of Quality Products Made with Precise Technology

Our main products are highly regarded by our customers for its quality backed by precise technology.

In 2017, U.S. Diabetes Technology Society conducted an accuracy survey (Diabetes Technology Society Surveillance Program) of 18 models that account for 90% of BGM systems used by U.S. diabetes patients, and our CONTOUR NEXT model was approved to be 100% compliant with the BGM accuracy standard1).

Additionally, our Super Frost Plus Microscope Slides used in anatomical pathology are considered the gold standard of microscope slides for their transparency and performance. In the Life Sciences area, many of our ULT freezers and pharmaceutical refrigerators which are known for the environmental performance and reliability, are used as preservation solutions for valuable specimens and pharmaceuticals at universities and laboratories around the world. Also, we provide fast and reliable testing at the Central Laboratory in clinical testing, and prompt service through our support network in the Healthcare IT business. As you can see, our company’s main products and services are acclaimed by our customers for the high quality generated by precise technology and security from the reliable service network.

Our evolution does not end here. By integrating the precision nurtured over the years through manufacturing with new digital solutions, we aim to become a comprehensive healthcare solution provider that improves medical services for patients and drive further growth of the PHC Group.

  • 1) Klonoff DC, et al. Diabetes Care. 2018; 41: 1681-1688

PHC Group’s Diversity and Innovation

The advantage of the PHC Group with manufacturing sites in Japan and overseas and sales networks in over 125 countries, is the corporate culture that values diversity. We believe that accepting diverse gender, age, and nationality is essential to succeed as a global healthcare company. Approximately 10,000 employees with different languages and cultural backgrounds lead innovation, aiming to become the game changer in the healthcare industry.

With the corporate mission, “Contribute to the health of society through our diligent efforts to create healthcare solutions that have a positive impact and improve the lives of people,” the PHC Group will continue to provide new values to meet the needs of medical professionals, researchers, and patients.

(A sponsored article featured on Nikkei Medical Online April 2020)