The Healthcare Solutions Domain provides products and services that support the frontlines of healthcare and drug discovery, mainly in Japan. This domain comprises LSI Medience (an LSIM business operating clinical testing services for medical institutions, including hematological, biochemical, microbiological, and gene-related testing), Wemex (a healthcare IT solutions business conducting development and sales of healthcare IT products mainly for medical institutions, including medical-receipt computers and electronic medical records), and Mediford (a CRO business operating research and development support services mainly for pharmaceutical companies, including non-clinical testing and clinical trials).

Fiscal Year 2024 Results

Operating Profit

*2 Adjusted for impairment loss

Operating profit increased significantly due to increased revenue, cost reductions, improved profitability of a recently acquired business, and the absence of impairment losses recorded in fiscal year 2023.

• Absence of impairment loss^*1 (JPY 12.7 bn) recorded in fiscal year 2023
• Cost reduction effects
• Profit improvement in acquired business
• Decrease in one-time restructuring costs

Operating profit margin: 7.2%

Domain Strategy

Koichiro Sato

Senior Executive Vice President,
Representative Director,
COO, CSO,
Head of Diabetes Management Domain,
Head of Healthcare Solutions Domain,
PHC Holdings Corporation

Improving Profitability and Efficiency

WEMEX: Creation of synergies with the acquired business and deployment/launch of cloud-based solutions

LSIM, Mediford: Restructuring business

Operating profit margin improvement: 2.0% (Fiscal Years 2024-2027)

Providing Solutions to Support Healthcare in Japan,
Where Challenges Are Emerging

Medical facilities in Japan have encountered a number of challenges lately, including an aging population and declining birthrate, uneven distribution of healthcare professionals, problematic work styles, increasing lifestyle-related diseases, and the high cost of advanced healthcare.

In the Healthcare Solutions domain, we are providing solutions to support the healthcare frontlines in Japan, while also helping to improve operational efficiency for medical institutions and healthcare professionals.

LSI Medience provides clinical testing services based on advanced testing and analysis technologies cultivated over many years. Alongside a diverse range of testing in areas such as biochemistry, hematology, immunology, and microbiology, LSIM has an additional focus on cancer and gene-related testing. In this way, it is helping to prevent, quickly and accurately diagnose, and effectively treat diseases.

Wemex launched Japan’s first medical-receipt computer in 1972. The company is helping to improve the operational efficiency of medical facilities by also providing electronic medical record and electronic medication history systems. In recent years, it has also increased sales of online eligibility check systems and electronic prescription systems, which are being adopted in line with the government’s promotion of healthcare DX policies. Aiming to achieve a 100% adoption rate of electronic medical records by 2030, Wemex is steadily capturing healthcare DX-related demand, which we anticipate will continue to increase going forward, through rapid policy response capabilities, robust customer base, and nationwide sales and support systems cultivated as a pioneer in the industry.

Mediford has developed an end-to-end support structure from drug discovery exploration to clinical trials, while enhancing services for new drug and healthcare development, including adoption of new technologies in both non-clinical and clinical fields. The company is helping to develop new and increasingly diverse treatments (modalities) through analysis technologies for each stage of research and development, and services for Japanese and global pharmaceutical companies and analytical laboratories.

We believe that medical facilities in Japan will need to further improve cost effectiveness going forward, while maintaining the quality of and access to healthcare. As an essential presence on the frontlines of healthcare, we will therefore continue to value feedback from our customers and to contribute to sustainable healthcare.

LSIM Business

Market Environment ＆ Outlook

Japanese Contract Clinical Testing Market Trends

Source: In-house research

Market Environment

• In contract testing, general and esoteric testing have shown signs of recovery, while the special demand for COVID-19 testing has declined.
• The number of facilities implementing FMS^*1/branches^*2 is increasing from the perspective of cost reduction and converting fixed costs to variable costs.

• *1FMS (FMS method): A service that supplies testing equipment, systems, reagents, consumables, etc. to hospital testing departments and provides testing laboratory management know-how.
• *2Branch (branch lab method): A method of conducting specimen testing within medical institutions. A service that introduces the necessary equipment, such as testing technicians, testing equipment, and testing systems, and operates testing laboratories.

Outlook

• While growth is expected in genetic testing and uninsured tests in the area of contract testing, price competition may intensify due to reductions in medical reimbursements.
• Demand for FMS/branches remains stable.

Products & Services

Clinical Testing Services

As part of our clinical testing services, we offer a diverse range of tests in biochemistry, hematology, immunology, microbiology, genetics, and other fields. We meet the need for greater accuracy and speed in advanced clinical testing through our laboratory automation systems. Additionally, we operate a sales network across Japan through which we deal with customers, including all medical institutions from university hospitals to clinics and administrative institutions, based on our many years of experience.

Source: In-house research

Strategy & Target

Business Strategy

Kenichi Uchino

Corporate Officer,
PHC Holdings Corporation/
President and Representative
Director,
LSI Medience Corporation

During fiscal year 2024, the clinical testing market in which LSI Medience operates experienced a major decline in demand for COVID-19-related testing, while at the same time demand for general clinical testing including biochemical testing has been recovering. We expect the compound annual growth rate (CAGR) of the clinical testing market in Japan to be around 1.5% by fiscal year 2027.

In our Value Creation Plan 2027, we recognize the pressing issue of improving profitability and efficiency. We seek to accelerate selection and concentration of growth by advancing regional strategies, including optimization of business locations and collaborations with local medical institutions and regional testing centers. We also seek to maximize the operating efficiency and enhance cost competitiveness of our Central Laboratory, which is our largest testing location. In the growing area of uninsured genetic testing, we will promote in vitro diagnostics (IVD), as part of companion diagnostics (CDx) in collaboration with partner companies and launch unique tests in collaboration with academic institutions. We will also expand our business scope by conducting risk testing targeting cancers and lifestyle-related diseases, with the aim of achieving revenue by CAGR of 2.1% by fiscal year 2027.

Healthcare IT Solutions Business

Market Environment ＆ Outlook

Healthcare Information Systems Market Trends

Source: In-house research

Market Environment

• In line with the promotion of healthcare DX in Japan, adoption of e-prescriptions is being promoted and full implementation of electronic medical record sharing services has started.
• Low-cost cloud-based EMRs are becoming predominant in newly established medical institutions.

Outlook

• Government policy in Japan aims to achieve a 100% adoption rate of electronic medical records by 2030, and with more than 40,000 medical institutions across Japan currently still using paper-based medical records, we expect continued growth going forward.
• With the backing of Japanese government policy and systems, and continued adoption by small- and medium-sized companies, we expect continued significant growth of the health management field going forward.

Products & Services

Strategy & Target

Business Strategy

Hideaki Takahashi

Corporate Officer,
PHC Holdings Corporation/
President and Representative
Director,
Wemex Corporation

To further expand our customer base, we integrated the operations of Wemex Healthcare Systems (WHS), previously a fully-owned subsidiary, into Wemex starting October 1, 2025. With this integration, we will strengthen our position as the market leader in healthcare IT in Japan and improve the value we offer by leveraging the solutions developed by our two companies. We will also capture opportunities and maximize revenue-generating opportunities presented by expanded demand driven by government-promoted healthcare DX.

Specifically, for clinics, we launched a cloud-based electronic medical record system in April 2024. By adding cloud-based options to our existing core product range, we will meet the diverse needs of customers and help drive digital transformation for a range of medical institutions. For pharmacies, in addition to electronic medication histories, we will implement solutions to support pharmacy management and increase the amount of time that pharmacists are able to spend with patients, by improving the operational efficiency of major pharmacy chains and drugstores. In the area of prevention and pre-symptomatic diseases, we are providing preventive medicine solutions that improve operational efficiencies for companies, health insurance associations, and others. In terms of telemedicine systems, we are supporting the creation of remote area healthcare and organ donation systems in Japan, while helping to reduce the workload of healthcare professionals and improve medical access for patients in Japan.

CRO Business

Market Environment ＆ Outlook

Japanese CRO Market Trends

Source: In-house research

Market Environment

• Several trends are leading to an expansion trend in both non-clinical and clinical trial markets in Japan, including the increasing trend in R&D expenses of Japanese and global pharmaceutical companies, the expansion of domestic clinical trials market due to efforts to eliminate drug loss/lag, and Japanese government measures to strengthen the market centered on domestic academia and bio-ventures.

Outlook

• The narrowing and deepening of target areas by pharmaceutical companies and the continued increasing trend in the number of pharmaceutical developments with new modalities are leading to a rising demand for CROs testing technology and responsiveness.

Products & Services

Non-Clinical Contract Research Service

Utilizing facilities that comply with GLP standards and state-of-the-art equipment, we conduct a wide variety of activities including tests for pharmaceutical approval applications, exploratory studies in the early stages of research and development, and consulting for private sector companies such as pharmaceutical and food companies, government and public offices, and academia.

Bioanalysis Service

We conduct development of analytical methods for drugs, such as metabolites and biomarkers, in biological samples, validation of analytical methods, and measurement of actual samples. We employ a range of methods to provide analytical services according to the applicable phase of research and development of new modalities.

Strategy & Target

Business Strategy

Kei Shimizu

Representative Director and President,
Mediford Corporation

Mediford is a leading contract research organization (CRO) in Japan, with an end-to-end support structure covering everything from non-clinical and clinical fields to post-marketing support. In recent years, drug development utilizing various basic technologies has extended past small molecule drugs to also include a range of other molecules from medium to large, including nucleic acid, antibody, and gene therapy drugs. At the same time, the industry in Japan is facing serious challenges of “drug loss” and “drug lag,” so the government is working to relax regulations and review its pharmaceutical structures. Looking globally, the increasing cost of drug development and long development timelines for approvals have been issues for many years. In the U.S. and Europe, the FDA and EMA have begun to strongly promote development and use of new approach methodologies (NAMs).

To address these trends in Japan and globally, we are leveraging our strengths in technological capabilities and state-of-the-art equipment to develop structures able to respond to increasingly diverse modalities and the expected growth of the clinical trial market. We are also strengthening our approach to academia and bio-ventures, while actively adopting new technologies to respond to NAMs. In this way, we will accurately capture market trends and quickly implement forward-looking initiatives to achieve our revenue targets.