2. Building a Stronger Foundation for Sustainable Growth through Three Key Initiatives
The new vision, formulated along with our Value Creation Plan 2027, represents what we aim to achieve by 2030, and will be realized through two phases. Phase 1 focuses on strengthening our foundation for growth, while Phase 2 leverages that foundation to achieve sustainable growth centered on our Diagnostics & Life Sciences domain.
In Value Creation Plan 2027, which corresponds to Phase 1, we aim to establish a solid foundation for growth by focusing on three key initiatives: structural reform to strengthen the profit base, improving portfolio management, and focusing on Diagnostics & Life Sciences.
Key Initiative 1. Structural Reform to Strengthen the Profit Base
The first key initiative of our Value Creation Plan 2027 is structural reform to strengthen the profit base. In addition to the business-specific reforms we have implemented to date, we will drive large-scale, group-wide reforms along two axes: improving profitability and enhancing capital efficiency. Our goal is to enhance our cash generation capabilities and build a more robust financial structure.
First, to improve profitability, we will focus on optimizing cost as well as locations and organizations. Regarding cost optimization, our operating profit margin has been somewhat lower than that of other medical device manufacturers. To improve this, we will conduct a thorough review of costs, examining both operational expenses and general and administrative expenses. For optimization of locations and organizations, we will consolidate functions, such as procurement, that were previously handled independently by group companies and business divisions. By integrating these functions across the entire group, we aim to eliminate inefficiencies and improve productivity through economies of scale. By consolidating these sites and centralizing functions, we will allocate group-wide resources more efficiently and enhance stronger collaboration between divisions. Furthermore, in global manufacturing, we will evaluate which sites in Asia, Europe, and the U.S. can most effectively manufacture and supply our products. Based on this evaluation, we will establish a flexible manufacturing system capable of responding swiftly to recent tariff issues in the U.S.
Next, to improve capital efficiency, we aim to enhance cash flow by prioritizing investments—primarily capital investments—based on their efficiency and by concentrating management resources on businesses and initiatives with significant impact. Simultaneously, we will move forward with the sale of unused assets that are not directly related to our business.
As a result of these reforms, we anticipate benefits by fiscal year 2027 of JPY 8 to 12 billion in improved profitability, and JPY 2 to 3 billion in improved capital efficiency, compared to fiscal year 2024.
Key Initiative 2. Improve Portfolio Management
The second key initiative is to improve our portfolio management. Let me begin by outlining the current status of our three business segments. In the Diabetes Management domain, as the market shifts toward continuous glucose monitoring (CGM) systems and the market for blood glucose monitoring (BGM) systems continues to contract, we aim to maintain profitability in our BGM business by implementing further cost reductions and strengthening focus areas to mitigate the sales decline. As for our CGM business, we will boost sales of Eversense®365, the industry’s only one-year CGM system launched in the U.S. in October 2024*1. In the Healthcare Solutions domain, while the market continues to grow steadily, structural changes driven by digital transformation of healthcare are underway. Here, our goal is to improve the profitability and efficiency of our clinical testing, healthcare IT, and drug development support businesses. Specific initiatives by group companies include Wemex, which provides healthcare IT solutions such as electronic medical record (EMR) systems and medical-receipt computers. Wemex will focus on creating synergies from businesses acquired in 2023 and on offering cloud-based solutions aligned with the Japanese government's push for digital transformation in healthcare. Additionally, we will advance the restructuring of LSI Medience, which operates our clinical testing business, and Mediford, which handles our drug development support business. In the Diagnostics & Life Sciences domain, we see high growth potential; consequently, we will focus our management resources on growth and development initiatives.
- *1
On September 4, 2025, PHC Holdings Corporation and its subsidiary Ascensia Diabetes Care announced that Ascensia has signed a memorandum of understanding to transfer the commercial operations for Eversense® Continuous Glucose Monitoring (CGM) systems to Eversense maker Senseonics Holdings, Inc. The companies are targeting to unite Eversense R&D, manufacturing, and commercial activities within Senseonics beginning January 1, 2026, subject to a definitive agreement.
https://ssl4.eir-parts.net/doc/6523/tdnet/2684179/00.pdf
To ensure the steady execution of growth strategies across these business domains, we have introduced return on invested capital (ROIC) as a key indicator for evaluating and positioning each business. By combining ROIC with the growth potential of each business, we have clarified their respective positions within our portfolio. Businesses will be strategically selected for the concentrated allocation of resources. For instance, businesses with both high growth potential and high ROIC are designated as Growth Business, and we will prioritize resource allocation to them. Meanwhile, businesses with low ROIC but high market growth potential are specified as Nurture Business, and we will make investments with the goal of generating cash. Looking ahead, we will establish a management system and processes to drive continuous improvement by setting target ROIC values for each business division.
In parallel with our ROIC-based business operations, we are also working to instill a group-wide awareness of the challenges and goals specific to each business. Given the high level of internal interest in portfolio selection and concentration, the introduction of ROIC serves as a means to deepen internal understanding of what investors focus on, as well as the significance and necessity of aligning our business activities with market rules.
Key Initiative 3. Focus on Diagnostics & Life Sciences
The third key initiative is to focus on Diagnostics & Life Sciences. To ensure our continued sustainable growth, it is vital not only to concentrate on growth areas with promising market growth, but also to identify fields where we can fully leverage our core strength—precision technologies. This approach aligns seamlessly with our mission and vision, reflecting our commitment to creating new value through precision technologies and shaping the future.
In today’s society, as people live longer, extending healthy life expectancy has become a critical global challenge—not just in Japan but worldwide. As advancements in diagnostics and therapies continue to unfold, particular attention is now focused on treatments involving polymers, genes, and cells. Recognizing that our potential to maximize the impact of precision technologies can be fully leveraged in this field, we have decided to prioritize the Diagnostics & Life Sciences domain.
Considering the social trends shaping this domain, the early detection of high-mortality diseases like cancer and the delivery of advanced, personalized treatments at a lower cost are becoming increasingly important. To address these needs, we aim to leverage our precision technologies to develop products and solutions that support more affordable diagnostics and advanced treatments. Furthermore, by utilizing our extensive sales network, which spans from research to clinical applications, our strong relationships of trust with customers, and our global manufacturing capabilities, we are committed to advancing healthcare solutions that reduce cancer-related mortality and improve treatment efficacy.
Our goal in this domain is twofold:
1. To be an innovator in cancer diagnostics solutions, enabling more accurate, timely, and simpler diagnoses,
2. To act as an accelerator and enabler of advanced cancer treatments, facilitating their early adoption.
To achieve these objectives, our initial focus during the current planning phase is to strengthen our business foundation. This includes integrating and streamlining our sales, manufacturing, and operations functions, which were previously conducted separately by each business unit. Building on this solid foundation, we aim to realize our vision for 2030 and beyond by expanding our business. This includes providing equipment for new drug development using cells and genes, and creating solutions such as the automation and acceleration of definitive disease diagnoses, as well as in vitro diagnostic (IVD) medical devices that make testing simpler.
4. The Dual Role of COO and CSO: Driving Strategy with Practical Execution
As both Chief Operating Officer (COO) and Chief Strategy Officer (CSO), I oversee management strategy, business development, and healthcare policy, while also being responsible for the product manufacturing, quality control, and procurement functions. My primary role is to ensure seamless coordination between strategy formulation and execution. I prioritize close collaboration with frontline teams to ensure that our strategies are implemented effectively and do not remain theoretical plans. For example, by organizing joint meetings between strategy and execution teams, we enable smoother information sharing and strive to enhance the accuracy of our strategy implementation.
COO: Transforming R&D and Enhancing Global Manufacturing Excellence
As COO, I have driven transformation in three main areas. First, we initiated a substantial review of our R&D structure. We discontinued the existing framework and established a new structure that facilitates smoother collaboration with each business unit. To further accelerate development and create innovation, we are now working to launch a dedicated R&D organization specializing in our Diagnostics & Life Sciences domain.
Second, we have focused on strengthening our manufacturing excellence. To globally expand our core strength in precision technologies in Japan, we are dispatching personnel with expertise to our sites outside of Japan to enhance our technological capabilities and improve productivity.
Third, we are advancing our quality management and procurement functions on a global scale. This includes strengthening our organizational structures to ensure consistent quality across the group. In addition to cross-functional collaboration in procurement in and outside of Japan, we are implementing cross-regional quality improvement initiatives, such as the annual group-wide Monozukuri (Manufacturing) Conference and manufacturing site-specific quality improvement activities.
CSO: Enhancing Corporate Planning Functions and Fostering Deeper Customer Insights
After my appointment as CSO, I added three critical functions to the Corporate Planning Department to enhance its strategic capabilities. The first is risk management. In response to the rapidly changing external environment, the Corporate Planning Department is spearheading efforts to strengthen this function. By ensuring that the entire group remains aware of potential changes and risks they pose, we can respond swiftly and effectively to unforeseen circumstances.
The second is the establishment of a comprehensive framework for voice of customer (VOC) activities. Previously handled by a small team, customer feedback is now managed and utilized on a group-wide scale under the Corporate Planning Department. As customer needs continue to evolve, this function ensures that the opinions and requests we collect are promptly shared with each business unit and reflected in our products and services.
The third is AI integration. With AI rapidly being adopted across society, leveraging it in business operations has become an urgent priority. We have adopted an agile approach to raising AI awareness, improving operational efficiency through AI, and integrating AI into our own products and services.
A Partnership Strategy for Achieving Mutual Growth in the Healthcare Industry
In the healthcare industry, many people are involved in a wide range of processes; building strong partnerships is the key to business success. We have driven the development and market expansion of innovative products through collaborations with partners such as Senseonics and 3DHISTECH. Additionally, we have partnered with institutions such as Wake Forest University in the U.S. and the Centre for Commercialization of Regenerative Medicine (CCRM) in Canada to support R&D and promote the adoption of advanced technologies in the Diagnostics & Life Sciences domain.
Another key pillar of our strategy is strengthening industry-government-academia collaboration. Building on our legacy of supporting the smooth operation of Japan’s universal health insurance system, we are deepening partnerships with government and academic institutions to contribute to advancing digital transformation (DX) in healthcare and regenerative medicine. For example, we are leading industry-wide transformation through initiatives like policy proposals via the Forum for Innovative Regenerative Medicine (FIRM) and the Japan Association of Medical Equipment Industries (JAMEI). We are also supporting for the nationwide rollout of electronic prescriptions and online eligibility verification systems.