Integrated Report 2023

PHC Group Overview and VisionCEO Message

PHC Group contributes to the health of society through precision solutions to healthcare challenges

Shoji Miyazaki

PHC Holdings Corporation
President, Representative Director,
and CEO

Shoji Miyazaki

The healthcare industry and the environment surrounding our group

As a global group of healthcare companies, we know that both healthcare costs and healthcare disparities continue to be critical challenges around the world. In the healthcare industry, the COVID-19 pandemic accelerated the movement to utilize valuable healthcare and financial resources most effectively and efficiently. In addition, awareness of health promotion, prevention, and pre-symptomatic diseases is growing. The need for diversified medical equipment and services, and cutting-edge treatments such as cell and gene therapy and regenerative medicine, are gaining momentum. As an approach to addressing these healthcare issues and responding to global trends, the concept of Value-Based Healthcare, which seeks to maximize patient outcomes while optimizing healthcare costs, is becoming increasingly popular.

For many years, PHC Group has provided numerous high-quality precision products and services as leading brands to customers involved in a wide range of healthcare fields, from research to diagnosis, treatment, and prevention. Leveraging these strengths, we will contribute to Value-Based Healthcare and the health of society through our mission of creating new value for all stakeholders.

Our long history builds on manufacturing excellence with precision

Our company was founded in 1969 as Matsushita Kotobuki Electronics Co., Ltd. At the time, the company started by manufacturing small light bulbs. We later moved into infrared-heating kotatsu tables, and eventually transitioned into an era in which our main products included TVs, videotape recorders, and hard disks. We then expanded to products and services in the healthcare field, including sensors for blood glucose monitoring. In this way, our company has repeatedly transformed to develop products and provide services tailored to new challenges . In 2010, we changed our company name to Panasonic Healthcare Co., Ltd., and our company’s “second founding” was to enter the healthcare industry as a business domain. In 2014, our company was carved out from the Panasonic Group. The year 2014 marked a turning point, as we became independent from a large corporation and moved forward as a new company. Other turning points in our company’s history were in 2018, when we changed our corporate brand from Panasonic Healthcare to PHC, and in 2021, when we were listed on the Tokyo Stock Exchange. At the time of the carve-out in 2014, our revenue was approximately 90 billion yen. A decade after completing three large M&As, our revenue has grown to almost 350 billion yen, nearly four times higher than at our second founding. Even though the products we manufacture have changed, the source of our strength continues to be our history and DNA, which has enabled us to grow in response to the times without changing our commitment to precision manufacturing.

Another strength of our group is our diverse product portfolio and the diverse experiences and skills of our employees who support those products. These strengths enable us to provide high-quality precision products and services that have captured a leading position in each field of medical care and healthcare. Our products and services have earned a high reputation and trust from healthcare professionals. Our unique strength is the diversity of our offerings from upstream to downstream healthcare, including research, diagnosis, treatment, and prevention. This allows us to connect directly to almost all healthcare stakeholders, including medical institutions, research institutes, testing facilities, pharmaceutical manufacturers, healthcare providers, and patients.

Our group operates businesses that leverage these strengths with a focus on three business domains: “Diabetes Management,” which offers products such as blood glucose monitoring systems, “Healthcare Solutions,” which deals with areas such as healthcare IT and clinical testing, and “Diagnostics & Life Sciences,” which focuses on cancer diagnosis and equipment to support the development of new treatments and drugs. In this way, we provide a variety of types of value that contribute to Value-Based Healthcare, which seeks to maximize healthcare outcomes and optimize healthcare costs.

The meaning behind our mission statement and new Growth Areas

Our group’s mission is “We 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.” Our “diligent efforts” date back to the founding of our company. The “people” mentioned in our mission are all stakeholders involved in healthcare. The phrases “positive impact” and “improved lives” refer to our approach of providing new value through innovation as a global healthcare corporation. The phrase “contribute to the health of society” refers to the contribution unique to our businesses. In November 2022, we announced our Mid-Term Plan, or “Value Creation Plan FY2022-2025,” which embodies these concepts that underpin our mission.

Shoji Miyazaki

PHC Group seeks to provide value by contributing to Value-Based Healthcare. In our Mid-Term Plan, in addition to working to realize Value-Based Healthcare across three Growth Areas, we outlined our approach to ESG (environmental, social, and governance) management. In Diabetes Management, we are shifting our focus from BGM to CGM. For Healthcare Solutions, we are promoting digital transformation in healthcare and expanding and strengthening our customer base. In Diagnostics & Life Sciences, we are contributing to society by streamlining the development of cutting-edge treatments and growing as a company.

Synergies created by the diverse companies of PHC Group

Since our group is a collective entity, it is an essential part of our business to create and foster synergies between our group companies.

We work on a health management business as the main business of Healthcare Solutions. In April 2023, we integrated health management-related businesses, such as those providing health checkup and preventive medicine support, which were previously divided into two operating companies, into Wemex. Furthermore, PHC Corporation and LSI Medience each previously had separate diagnostic reagent businesses, which we integrated into PHC’s IVD Division in November 2023. We will quickly implement integration and restructuring within these organizations to create strategic synergies.

In terms of operations, we have enhanced the standards of our entire group by cultivating and sharing outstanding talent and technologies across our companies. For example, we strategically rotate team members from the Diagnostic Reagents Division to the LSIM business and engineers from the Biomedical Division to factories outside Japan in the Pathology business.

To help address issues related to physician shortages and the physician’s work style reforms, that will be enforced in Japan from fiscal year 2024, we intend to promote digital transformation in healthcare, and utilize telemedicine by leveraging synergies within the group and with partners.

Review of the fiscal year ended March 31, 2023, and our future plans

In the fiscal year ended March 31, 2023, although there were signs of economic recovery due to the relaxation of restrictions on economic activities as the number of new COVID-19 cases subsided, the future remained uncertain due to the worsening of the situation in Ukraine and soaring prices. Under these circumstances, our group’s revenue was 356.4 billion yen (up 4.7% year-on-year).

By segment, revenue for Diabetes Management increased due to the favorable impact of exchange rates. While streamlining our BGM business, we are steadily investing in and seek to grow our CGM business.

Revenue for Healthcare Solutions decreased due to the significant impact of a decrease in the volume of PCR testing for COVID-19 and a reduction in reimbursement of medical fees. Moving forward, we will capture new demand, including electronic prescriptions and health management businesses.

In Diagnostics & Life Sciences, revenue increased in both the Pathology business and Biomedical Division. We recognize that improving the profitability of the Pathology business (Epredia), which recorded an impairment loss, is a top priority and are working for greater profitability. In the Biomedical Division we will seek to increase sales of new products (including live cell metabolic analyzers) as advanced therapy development solutions and invest in the development of solutions for cell and gene therapy.

Establish high goals and meaningful direction as our foundations

I have said that our company’s greatest strength is our diverse product portfolio and the diverse skills and talents of our employees who contribute to those products. As a result we believe the development of each and every employee is the driving force behind the growth of our group. With this in mind, we aim to create a vibrant and dynamic workplace where diverse talents can learn new skills, solve problems as part of a team, and experience personal growth on a global scale. In order to create an environment that enables global collaboration and synergies among our businesses, we must build a corporate culture where each employee’s ideas can inspire innovation. We will also establish a corporate environment in which each employee can actively expand their career opportunities and achieve their own goals and aspirations, while at the same time working with colleagues toward the same vision based on the group’s growth strategy.

I sincerely hope that all stakeholders will learn how all of our employees make PHC Group unique and attractive. Obviously, it is important to communicate the strengths of our group to investors and our business partners and for customers to understand our group’s business and initiatives. In terms of hiring, it is also essential to clearly communicate our value to future employees. To distribute information that is clearly communicated to all such stakeholders, we must operate a loop of improvement. We need to further enhance our strengths over competitors while constantly looking for new ways to improve.

In addition to these improvements, I believe that it is extremely important to have high goals in everything. Unchallenging goals will yield low-impact results results. We ask management and each employee to set high goals and build up the mindset to take on challenges on their own. To encourage employees to set higher goals, we must ensure that they understand and share PHC Group’s mission and vision. We regularly communicate this message within our group by holding town hall meetings on a global scale. This new integrated report is also intended to convey this message to our employees.

Shoji Miyazaki

I have worked for PHC Group for many years since the days of Matsushita Kotobuki Electronics. I have always set high goals for myself, with the ultimate goal of surpassing our competitors. Based on the motto of “work hard and play hard,” many of my colleagues also took the initiative to challenge themselves to achieve high goals in their work. By always putting in our best effort, we have successfully transformed our company several times. I believe this is what enabled us to nearly quadruple our revenue from 90 billion yen at the time of our carve out to approximately 350 billion yen in about 10 years.

During a process of taking on challenging goals, anyone will make mistakes, encounter unexpected events, and have their plans disrupted. At such times, the most important thing is to notice mistakes and irregularities as soon as possible, determine how to proceed, and correct your course.

The world is constantly changing, and social issues are evolving along with these changes. PHC Group is committed to promptly identifying changing societal trends, setting high goals to boldly take on new challenges, and making pertinent business decisions from short-, medium-, and long-term perspectives. We will strive to contribute to Value-Based Healthcare and the health of society. We look forward to the further evolution and growth of PHC Group.

Shoji Miyazaki