Koichiro Sato
Senior Executive Vice President, Representative Director
Chief Operating Officer (COO)
Chief Strategy Officer (CSO)
Head of Diabetes Management domain
Head of Healthcare Solutions domain
Business Strategy
In November 2022, PHC Group announced our Mid-term Plan, “Value Creation Plan FY2022-2025.” Following this plan, we have been driving growth initiatives, such as restructuring the Group businesses including the business division split of LSI Medience, expanding our customer base through M&A in the Healthcare Solutions domain, and entering the cell and gene therapy field by developing a live cell metabolic analyzer.
On the other hand, the declining profitability of the BGM business, stagnating CGM user growth, delay of turnaround in the pathology business, inappropriate quality management at LSI Medience, and other factors have created a significant discrepancy between our current progress and the targets set in the Mid-term Plan. This situation has highlighted three critical issues: a decline in cash generation capability, deterioration in capital efficiency, and delays in achieving profitability in the three Growth Areas outlined in the plan.
As announced in May this year, we will revise our Mid-term Plan to prioritize addressing these challenges. Specifically, we will reassess the target values of the current Mid-term Plan, which concludes in FY2025, and implement a restructuring period until mid-FY2025 to focus on addressing the existing issues.
In the new Mid-term Plan, we will focus on three strategic initiatives: restructuring to enhance the earning base, improving portfolio management, and narrowing the scope of the Growth Areas.
Regarding restructuring to enhance the earning base, we see enhancing cash generation capability and improving financial stability as priority initiatives.
To improve our portfolio management, we will have a stricter capital cost mindset, introduce ROIC (return on invested capital) management, and proceed with a review and concentration of our portfolio. To narrow and focus the scope of Growth Areas, we will allocate more management resources to our Diagnostics & Life Sciences business.
In November this year, we plan to announce a new Mid-term Plan through FY27, including initiatives during the restructuring period.
PHC Group will seek to generate stable cash flow in our Foundation Areas and drive our growth primarily in the Diagnostics & Life Sciences domain.
Ryuichi Hirashima
Senior Executive Corporate Officer
Chief Administrative Officer (CAO)
Chief Human Resources Officer (CHRO)
Chief Transformation Officer (CTO)
Commitment to Driving Diversity and Improving Engagement
In our ESG efforts, social and governance themes are integral elements. Our focus in social sustainability lies in cultivating a dynamic organizational culture. This involves prioritizing the promotion of gender diversity at leadership levels, pursuing diversity in nationality and race in our Board of Directors, and enhancing employee engagement while striving to enrich employee education and skill development. We are dedicated to building a fair and vibrant workplace and contributing to sustainable growth and the health of society through these efforts.
In late FY23, we experienced a significant compliance issue within one of our Group companies, and it caused considerable concern and inconvenience to our customers and stakeholders. We take the findings of the external investigation committee very seriously and will work diligently to prevent any recurrence, to regain the trust of our customers and all related parties.
Since 2021, PHC Group has been implementing a unified HR platform across our major Group companies in Europe, North America, and Japan. The purpose of this platform is to create a central employee database for information sharing, training, and internal networking. We regard this platform as the cornerstone of our Group's human capital management strategy. Furthermore, this year, we defined 208 skill categories for our engineers in Group companies and worked to build a skills database. We intend to utilize this skills database to support employee recruitment, placement, education training, retention, and new business initiatives. Through these efforts, we aim to enhance employee engagement and, ultimately, grow our corporate value from the perspective of human capital.
Kaiju Yamaguchi
Executive Corporate Officer
Chief Financial Officer (CFO)
Enhancing Our Profitability and Financial Foundation to Achieve Sustainable Growth
Our consolidated revenue for FY2023 was JPY 353.9 billion (down 0.7% YoY), operating income was JPY 1.6 billion (down 92.2% YoY), and as for net profit/loss attributable to owners of the parent, we recorded a net loss of JPY 12.9 billion due to foreign exchange (FX) losses in addition to the decrease in operating profit.
In Diabetes Management, despite the positive impact of FX and revenue growth in blood glucose monitoring (BGM) markets in emerging countries, revenue and operating profit decreased due to the declining BGM market in developed countries. In Healthcare Solutions, despite capturing digital transformation-related demand and expanding the customer base through M&A, revenue and operating profit declined due to factors including the recovered demand for general and esoteric testing and the adoption rate of electronic prescriptions, both of which were lower than expected, and the recording of an impairment loss in the third quarter. As for Diagnostics & Life Sciences, declining demand for capital investment, mainly in the European and U.S. markets, had a negative impact. However, new product launches, price increases, and other factors mitigated the influence, and a tailwind from favorable FX resulted in higher revenue and operating profit despite the impact of increased costs related to FX and an impairment loss recorded in the second quarter.
Considering the lower financial results in FY2023 and decreased earning power, we need to improve our financial balance by enhancing our cash-generating ability. Consequently, we have decided to revise the Mid-term Plan (Value Creation Plan), which had targeted revenue of JPY 420 billion and operating profit of JPY 56 billion for the target year ending in FY2025, to enhance our earnings base, introduce return on invested capital (ROIC) to improve portfolio management, and to narrow the scope of our Growth Areas. We will announce the revised plan in November 2024, taking the opportunity to present specific initiatives and a portfolio-wide approach.
We will continue to enhance communications with our shareholders and investors and strive to continue to build their trust. We are truly grateful for your continued support.
Nobuaki Nakamura
Executive Corporate Officer
Head of Diagnostics & Life Sciences domain
Advancing Precision Healthcare through High-Quality Solutions in the Diagnostics & Life Sciences Domain
We provide precision instruments, reagents, related materials, and operation and data management software designed to help enable faster and more accurate diagnostic processes, including in vitro diagnostics and anatomical pathology testing. Our goal is to support more precise treatment decisions made by healthcare professionals.
This domain also provides equipment and services to support R&D and manufacturing in drug development processes. In addition, we seek to contribute to improving quality, cost, and delivery of cell and gene therapy, which is a promising approach to treatment for a range of diseases.
The following are updates on the three business units within our Diagnostics & Life Sciences domain: Our Biomedical Division has launched a series of ultra-low temperature freezers with industry-leading energy efficiency and added security features, along with a series of freezers that significantly minimize frost accumulation, which may cause damage and deterioration of freezer components . Moreover, leveraging PHC’s technological prowess in blood glucose monitoring systems, we have launched LiCellMo, a live-cell metabolic analyzer that continuously measures cellular metabolic changes, offering researchers a deeper understanding of how those cells perform or respond to drugs . This device represents our full-scale entry into the field of cell and gene therapy.
In our Pathology Division, we have introduced the SlideMate™ Laser printer, which enables high-resolution printing on microscope slides to improve patient sample traceability. This innovation received the “Best New Pathology Solution” award in the 8th annual MedTech Breakthrough Awards in 2024. Additionally, we launched the P480 Dx whole-slide digital scanner, a compact model of the P1000, the largest-capacity whole-slide scanner on the market. We also released the E1000 Dx™ Digital Pathology Solution, a new device for clinical use, in Europe and the UK. Through new technologies including digital pathology, we are committed to improving the efficiency of pathology processes and contributing to quicker and more precise diagnoses of cancer.
In our In-Vitro Diagnostics (IVD) Division, we integrated LSI Medience’s diagnostic reagents and instruments business with the IVD business in fiscal year 2023. The PATHFAST® compact immunoanalyzer, which is distributed by PHC IVD, has obtained FDA clearance for a high-sensitivity cardiac Troponin I test used to aid in the diagnosis of acute myocardial infarction, which we expect to significantly boost sales in the U.S. market. In Japan, we will accelerate the transition to the fully automated blood coagulation system STACIA CN10, aiming to enhance sales by leveraging synergies within the domain.