Unlocking the potential of PHC Group to create more value

For over 20 years in the healthcare industry, working to improve human life and health, I have engaged in a wide range of businesses, including drug development, chemical manufacturing, artificial joints, biotech, and orthopedic clinic management. Throughout my career, I have pursued patient-first approaches to address issues in medical care, such as healthcare disparities, uneven access, and quality improvement.
As CEO, my goal is to bring my diverse business experiences to unlock the potential of PHC Group. Today, the healthcare industry is undergoing rapid changes, including a digital transformation. We are determined to grow PHC Group by incorporating fresh insights from a range of businesses and sectors rather than limiting ourselves to industry norms.
PHC Group offers a wide range of products and services from research to diagnosis, treatment, and prevention of disease, with a global presence in three domains: Diabetes Management, Healthcare Solutions, and Diagnostics & Life Sciences. By fully leveraging our global business capabilities, PHC Group will create value for our customers as well as society and contribute to helping solve medical and healthcare issues in these areas.

Creating synergies through the concept of “One PHC”, as revealed by dialogue with over 500 employees

As CEO I am an advocater for the concept of “One PHC”, which is the idea that as a business we are stronger when we bring together the unique individual strengths of companies across our Group. Each of our operating companies has a different history and expertise, but they also share a common thread as part of PHC Group. In order to achieve the greatest collective impact, we encourage our employees at every level and business unit, from R&D to sales to customer service, to incorporate the idea of One PHC into their daily work.
In my first quarter as CEO in 2024, I visited all of PHC Group’s key business locations around the world and led small roundtable discussions with more than 550 employees to engage in direct dialogue about how we can make a greater impact in precision technology for healthcare. Through these lively discussions, I listened to employees voices and received many suggestions for how we can grow our business. I was inspired by these earnest thoughts and aspirations for the Group.
One of the PHC Group’s strengths lies in our many touch points across the healthcare field, and we seek to leverage this strength by creating synergies through collaboration among the Group’s businesses. Recent examples include joint bidding for hospital contracts, shared customer service in overlapping regions, and a collaboration between business units like Clinical Testing and Healthcare IT Solutions to add new and improved services for our customers. We have also begun streamlining activities to standardize parts and reduce assembly labor hours among our adjacent businesses. Through collaborations between our interconnected businesses, we have expanded our geographic and customer coverage and ability to respond to customer needs.

Healthcare is becoming increasingly personalized

The digital transformation of the healthcare industry is of great interest to PHC Group. In some areas, digital technology is accelerating, helping researchers to automate and streamline their work processes and allowing healthcare providers to reach patients through telemedicine. Technologies such as AI-enhanced diagnostics and monitoring continue to be developed, and technology companies continue to enter the healthcare market.
In area like medical practice, the digital transformation has not progressed at the same rate. In Japan, tens of thousands of small medical clinics are operated by a single physician and a few staff members. These clinics face challenge like a lack of personnel and the inability to make substantial investments. We believe that in the medical frontlines closest to patients, digitization that automates tasks and saves time will be indispensable for increasing access to medical care, improving staff work environments, and reducing medical costs.
Moving forward, we believe that the nature of medical care itself will change to embrace more personalized medicine that tailors prevention, diagnosis, and treatment to each individual patient. While ten years ago, it may have been common to rely on an annual checkup for all health information, today more and more people wear smartwatches and other devices to measure blood pressure, heart rate, and sleep cycles and manage their health in real-time. We expect technological innovations and behavioral changes to manage health will continue, and we will continue to support it with innovations like the world’s first fully implantable continuous glucose monitoring (CGM) system.
As the global population ages, conditions like dementia and cancer are expected to grow, and it will become increasingly important to improve the access to and quality of treatment, prevention, and diagnosis. Treatments based on regenerative medicine are also expected to expand. To advance these opportunities, PHC Group has established a structure to engage in basic research related to regenerative medicine and non-clinical testing.

Each business domain has expertise in unique technology

PHC Group has three business domains: Diabetes Management, Healthcare Solutions, and Diagnostics & Life Sciences, and each offers unique value.
In the Diabetes Management business domain, the market has been shifting from blood glucose monitoring (BGM) systems to continuous glucose monitoring (CGM) systems in recent years. Our Ascensia BGM systems are distributed in more than 100 countries and regions, and this market is expanding in China, India, and Southeast Asia. At the same time, a shift to CGM is taking place in Europe and the United States. As the product mix changes, our challenge in the Diabetes Management domain is how we generate profits in the future.

The CGM system we offer, the Eversense^® CGM developed by Senseonics, is the industry’s first and only fully implantable system that enables the measurement of glucose levels over a long period. In April 2024, Eversense^® received iCGM* designation from the U.S. Food and Drug Administration (FDA), making it possible to link it with an insulin pump. We hope to offer this integrated system to patients who require continuous insulin administration in the near future. Once this fully implantable CGM system becomes more widely recognized as an innovative option for people with diabetes, we are confident that it will be a key driver in the market.

In the Healthcare Solutions business domain, Mediford Corporation is engaged in drug development support and will enhance its support services for Contract Research Organization (CRO) and analytical needs in the non-clinical and clinical testing fields, as well as services for global pharmaceutical companies and analytical laboratories. Other factors for growth include partnerships with pharmaceutical and biotech companies in cutting-edge scientific fields such as regenerative medicine. Also in this business domain, Wemex develops, distributes, and services medical-receipt computers, electronic medical record systems, and electronic medication history systems. One of its main strengths is the ability to serve a wide range of medical institutions such as clinics, pharmacies, and dental clinics across Japan. In the future, Wemex will offer data services to contribute to personalized medical care, including diagnosis, prescription of medicines tailored for patients, and guidance on medication.
The Diagnostics & Life Sciences business domain is a priority area for PHC Group’s growth. Ultra-low temperature freezers made by our Biomedical Division offer industry-leading energy-saving performance to support researchers and laboratories. We will also accelerate our operations toward the practical application of cell & gene therapy and cancer genome medicine. One example is the Live Cell Metabolic Analyzer (LiCellMo), which tracks indicators of cell metabolism in real time. Traditionally, cell metabolism analysis in cell culture requires researchers to take periodic measurements, rather than receiving continuous metabolic data. Allowing cells to be evaluated without interruption can offer researchers a deeper understanding of how those cells perform or respond to drugs. LiCellMo is an example of horizontal deployment of our technology across multiple businesses, leveraging both our laboratory expertise and technologies for measuring blood glucose levels.
In the anatomical pathology field, Epredia continues to offer digital pathology technology and has now begun manufacturing high-definition digitization technology for analyzing tissue specimens for research use. We are looking to offer this technology for integration with AI and other technologies to help aid in improving the speed and accuracy of cancer diagnosis.
In these examples and many others, PHC Group has a strong pipeline of unique and innovative technology, and integrating and expanding these capabilities will pave the way for our future growth. We are at a significant turning point in our evolution as a comprehensive healthcare company, where our companies work together as one united entity to address healthcare challenges.

Details on Mid-term Plan revisions to be released in November

In May 2024, we announced that we would conduct a revision of our Mid-term Plan (Value Creation Plan), which currently covers our goals through fiscal 2025. While the details of this revision will be released in November this year, our approach will have three parts. The first is a restructuring to enhance the earnings base. Over the course of 18 months, we will enhance our cash generation capability and improve our financial stability. The second is to improve portfolio management. We will examine our business units and new businesses with a mindset focused on Return on Invested Capital (ROIC). The third is to narrow the range of our growth strategies. While creating synergies across the businesses, we will focus on the Diagnostics & Life Sciences business domain, which is projected to grow significantly.

Creating a positive growth cycle through ESG management

PHC Group’s ESG strategy is now a core part of our business operations. For example, developing equipment that does not emit chlorofluorocarbon gases creates value for customers while contributing to our profits by increasing the competitive advantage of our products in terms of environmental sustainability.
In August 2023, PHC Group defined and announced 11 sustainability topics that are material to our business. This year, we will take action to achieve the targets we set for each of these materiality topics. For instance, addressing climate change is a priority for our Group, so we have expressed our commitment to the Science Based Targets initiative (SBTi) and are preparing to obtain official validation in FY2025. We have also begun efforts to calculate Scope 3 greenhouse gas (GHG) emissions and will formulate GHG emission reduction targets and action plans this fiscal year.
Furthermore, in order to comply with EU chlorofluorocarbon gas regulations starting in 2025, we are accelerating plans to make our ultra-low temperature freezers chlorofluorocarbon-free. We will continue to move forward with sustainability activities that respond to the needs and requirements of each country where we do business.
Regarding social sustainability, PHC Group remains committed to our mission to create healthcare solutions that improve lives. We also continue to build a diverse and inclusive workforce, with specific targets for female leadership.

In terms of governance, we comply with the Corporate Governance Code and operate a Board of Directors with diverse experience and expertise. This year, an incidence of inappropriate quality management at the Central Laboratory of LSI Medience Corporation, our wholly owned subsidiary in Japan, resulted in regrettable concern for patients, medical providers, customers, shareholders, investors, and other stakeholders. Based on a proposal made in the final report by the external investigative committee, we have reaffirmed our mission to offer clinical testing services and are committed to preventing such inappropriate business practices in the future. PHC Group will continue to monitor and enforce compliance obligations across our global businesses.

Our greatest strength: Precision technology powered by exceptional talent

By creating synergies both within and across our businesses, PHC Group will continuously create new value to help improve the lives of people and the health of society. Our most significant strengths are our precision technology capabilities and our outstanding people who bring these capabilities to their full potential. Moving forward, with “One PHC” as our shared mindset, we will further unite as a group to contribute to the future of healthcare. We invite you to join us in the continued growth and innovation of PHC Group.