IB1401 Global Marketing: Medipal Holdings Corporation Analysis Report

This report analyzes Medipal Holdings Corporation, a major Japanese pharmaceutical wholesaler, examining its global marketing strategies within the context of its macro-environment. It delves into the company's financial performance, political and social forces, and environmental considerations, including disaster planning and responses to the COVID-19 pandemic. The report includes a SWOT analysis, outlining Medipal's strengths, weaknesses, opportunities, and threats, and details its business strategies, such as reinvesting in distribution centers and adopting new technologies. The implementation of the company's business continuity plan, especially in response to natural disasters and the pandemic, is also discussed. The report concludes with earning forecasts and the company's position in the Fortune Global 500.

Name: Nguyen Ngoc Ky Thoa
Class: IB1401
Global Marketing
MEDIPAL HOLDINGS CORPORATION JAPAN
1. INTRODUCTION
MEDIPAL Group is one of the largest connecting groups linking manufacturers, health organizations and
retailers. MEDIPAL has built a wholesaler system that efficiently and reliably delivers the required
products at the required time, in just the required amount, by connecting manufacturers in the
pharmaceuticals, health, and beauty fields with medical institutions, dispensing pharmacies and retailers
all over the country, through its independently developed state-of-the-art distribution centers.
The basis of the wholesale business is the sourcing of products from manufacturers and the subsequent
delivery to customers. However, the pharmaceutical wholesaling in Japan differs from those in Europe
and the United States in the way that there are many manufacturers and customers. The existence of
MEDIPAL wholesalers:
 Simplifies distribution channels
 Makes it possible to handle everything from purchase to delivery in-house
 Creates close relationships with all clients: pharmaceutical companies, medical institutions, and
dispensing pharmacies.

2. MEDIPAL HOLDINGS RANK ON FORTUNE GLOBAL 500
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
295 309 310 330 411 454 424 381 418 436
Medipal rankings on the global 500 for the past 3 years have not changed much. However, from 2010
onwards, Medipal has dropped from 295 to 436 due to the strong growth of other industries such as
tourism, entertainment, technologies, aircraft, etc.
Apart from that, profit of MEDIPAL still increases steadily over years. Since 2013, the Government of
Japan has decided to allow more than 99% of over-the-counter medicines to be sold through the
Internet in Japan. This action aims to create convenience for consumers and encourage price
competition which in turn can help create a solid foundation for the Japanese pharmaceutical industry,
while also contributing to expanding the online business.
3. MACRO ENVIRONMENT
a. Economics and financial conditions
Income statements
Millions $ March 2018 March 2019 March 2020
Revenue 28,388.27 28,693.30 29,920.43
Gross Profit 1,938.44 1,989.46 2,062.49
Operating Income 399.35 446.08 488.48
Profit before tax 572.63 572.26 694.73
Net Income 313.80 309.83 349.21
Diluted EPS 1.35 1.30 1.52
March 2018
During the fiscal year under review, Medipal Pharmaceuticals wholesale business was stable due to a
recovery in personal spending against the backdrop of increased consumer confidence, as well as an
increase in demand from visitors to Japan. In this environment, MEDIPAL worked to enhance safe,
secure, high-quality and low-cost distribution functions.
In ended March 31, 2018, the Japanese economy continued on a adequate rising trend since a result of
the positive impact of government economic policies and improvement in the employment and income
environment.
March 2019
During March 2019, the economy of Japan continued on a moderate rising trend as a result of the
positive impact of government economic policies and improvement in the employment and income
environment.

Sales of prescription pharmaceuticals were flat compared with the March 2018 fiscal year as factors
consisting of growth in sales of new drugs offset the impact of National Health Insurance (NHI) drug
price revisions implemented on April 1, 2018 and promotion of the use of generic drugs.
Gross profit on ended March 31, 2019 was $1,989.46 million, contributing to improved business results
overall. Operating profit reached a record high of $446.08 million, an increase of 12.6% year on year.
The operating profit ratio also rose 0.2 percentage points from the previous fiscal year to 1.6%. This
increase was due primarily to a 0.06 percentage point rise in the ratio of gross profit to sales and a 0.1
percentage point decline in the ratio of selling, general and administrative expenses to sales.
March 2020
Consolidated net sales for the period totaled $349.21 million (2.2% increase compared with March
2019), operating profit was $488.48 million (6.6% increase).
While the fiscal year ended March 31 2020 initially saw a gradual recovery in Japan’s economy,
reflecting the effects of government economic policies and improvements in employment and income
and other factors, harsh conditions caused by the global COVID-19 pandemic are now ongoing, including
a downturn in economic activity. The MEDIPAL Group is devoting its full efforts to supporting people’s
lives and lifestyles with the mission of providing steady supplies of products at any time.b. Political and government forces
The spread of counterfeit drugs is becoming a severe problem worldwide. However, there is no door for
counterfeit drugs to enter the Japanese drug market. The main reasons for this are the development of
laws (the Pharmaceutical and Medical Device Act, etc) and compliance with these laws, as well as the
fact that nearly all prescription pharmaceutical distribution (roughly 96%) is performed by
pharmaceutical wholesalers.
In that sense, the Japanese pharmaceutical wholesale industry is also responsible for safety and social
costs. The MEDIPAL Group conducts lot traceability management, and employs a system that allows it to
determine what has been sold, when, to whom, and in what quantities.
In the event of a voluntary product recall by a pharmaceutical company, this system allows the MEDIPAL
Group, at the pharmaceutical company’s request, to rapidly provide information to the medical
institutions and other customers to whom the products have been sold, and recall those products.c. Social and environment forces
With regard to the distribution functions that are one of MEDIPAL's strengths, they are striving to
further raise productivity and develop functions in order to respond to long-term environmental
changes such as the decrease in the working-age population due to the declining birthrate and aging
population, and the increase in specialty pharmaceuticals.
Disaster planning:

 Natural disaster risk countermeasures
 Countermeasures against pandemics
Respect for human rights:
 Personnel development initiatives
 Systems to provide a pleasant working environment
 Diversity initiatives
 Human right protection initiatives
Environmental conservation:
 CO2 emissions reduction and initiatives to prevent global warming
 Waste processing and effective resource utilization
4. BUSINESS OVERVIEW
a. S.W.O.T analysis
Strength:
 Highly efficient large-scale distribution centers
 Distribution systems development capabilities
 Cash flow generation capabilities
 Cost competitiveness
Weakness:
 Chronic labor shortages
 Rising labor costs
 Profit structure that is easily affected by government policies
Opportunities:
 Nationwide expansion and shift to chains by retailers
 Growing demand for increased efficiency of the entire supply chains
 Increase in foreign visitors to Japan
Threats:
 Decreasing demand due to overall population decline
 Natural disasters
b. Business Strategies
Four key strategies of MEDIPAL respond to the issue of labor shortages is taking on research and
development and new technology challenges that go beyond the boundaries of wholesaling, and to
achieve sustainable growth as a social infrastructure company that delivers daily necessities.

Reinvesting profit in distribution centers and other facilities: to reinforce business foundation and
strengthen shipment capacity and improve distribution efficiency.
Establishment of new distribution model: introduces the latest technologies such as AI and robotics. In
this way, MEDIPAL will realize “people-friendly distribution” that responds to the decrease in the
working-age population and lightens the human workload while avoiding dangerous operations.
Productivity improvements accompanied by quality: continuously improve activities at existing
distribution centers, promote operations and allocate human resources. So that we can build a business
foundation capable of providing even higher quality and low-cost systems.
Strengthening human resources and organizations: these human resources can work together and
participate actively in order to demonstrate MEDIPAL’s comprehensive strength, while collaborating on
efforts with retailers, manufacturers and cooperating partners in pursuit of solutions to issues.
5. IMPLEMENTATION OF THE PLAN FOR FUTURE
MEDIPAL anticipates various risks and has drafted an effective Business Continuity Plan that allows it to
provide a steady supply of products, even in the event of large-scale natural disasters such as
earthquakes and pandemics, equipping the Group to fulfill its role as a social infrastructure company.
Disaster planning:
In 2000, the MEDIPAL Group created a Disaster Response Manual (for Natural Disasters) that contains
specific content regarding envisioned disaster damage, preparatory measures, operations in the event
of a disaster, emergency organization structures. The manual was partially revised following the Great
East Japan Earthquake.
In the event of an earthquake with a seismic intensity of 6-lower or above, the Group immediately
establishes the MEDIPAL Group Disaster Response Headquarters to confirm the safety of company
employees and their families in the affected areas. It also leads various response activities aimed at
business continuity.
Response to COVID-19:
(1) Safely and reliably delivering the products customers need at any time by preventing the spread
of infections among employees and at facilities:
 Gargling, thorough hand washing, mask wearing.
 Offset work hours, working from home.
 Temperature checks with thermal cameras and contactless thermometers.
 Cleaning/disinfection of warehouse entrances and vehicles.
 Disinfection of handrails, etc in facilities.
 Cleaning/disinfection of foldable containers and tote boxes.
(2) Reducing contact opportunities between people and between people and products:

 Scan inspection: a wireless terminal is used to scan tote box labels for inspection. This reduces
contact time between people.
 Full packaging and touch-free system: tote boxes are banded with packing tape, and are not
touched during the shipping process.
(3) Promotion of online diagnosis and medication counseling:
Medical institution  Online diagnosis  Customers  Online medication counselling  Pharmacy
Earning forecast:
It is not possible to make a reasonable calculation of the earnings forecast at this time (after March
2020) because of impacts from the spread and prolongation of the COVID-19 outbreak:
 Fewer patient visits to medical institutions
 Difficulty in predicting trends in inbound tourism consumption
 Changing consumption patterns due to people staying at home
It is forecast that in 2020, the ranking of MEDIPAL on the Global 500 may increase or not have many
changes due to the impact of the pandemic and the top ranking corporations above may be relegated
such as aircraft industry, entertainment, tourism, etc.
6. REFERENCES
https://baotintuc.vn/the-gioi/nhat-ban-coi-troi-cho-nganh-duoc-pham-20130604220811967.htm
https://fortune.com/global500/2019/medipal-holdings/
https://www.forbes.com/companies/medipal-holdings/#106f32c215b4
https://www.medipal.co.jp/english/ir/
https://www.dnb.com/business-directory/company-
profiles.medipal_holdings_corporation.0aed23dca0ed2536fcb666eb61b7f15f.html