Business Strategy. The First Section of the Tokyo Stock Exchange Qol Co., Ltd.

Transcription

1 Business Strategy The First Section of the Tokyo Stock Exchange 3034 Qol Co., Ltd.

2 Agenda Market Environment Our Strength Business Strategy Earnings Forecast Our Stores 2

3 Agenda Market Environment Our Strength Business Strategy Earnings Forecast Our Stores 3

4 Rate of separation of prescribing from dispensing Separation Rate (%) Qol s 20 th year anniversary Dec 20, 2012 Listed on the TSE the first section Establishment of Qol Co., Ltd Source: Data from Japan Pharmaceutical (year) Association 4

5 Market share A 6.6 trillion yen market (status quo) A 10 trillion yen market (assumed separation rate: 100%) Net sales of top 10 companies About 660 billion yen(10%) QOL Pharmacy/Other chains Individual pharmacies 5.94 trillion yen Pharmacy market is growing at a rate of 3-8% every year 5

6 Net share of dispensing pharmacies Outstanding in the pharmaceutical market A trillion yen market Medical institutions Deispensing pharmacies 55% 45% 6

7 Intensified competition Entering the pharmacy market Embarked on the pharmacy business Most of the operating profits come from the pharmacy business Pharmacy Unable to survive with only one pharmacy to one medical institution Drug wholesalers Pharmacy market 6.6 trillion yen Domestic DGS Expansion of pharmacies-within stores Expected to advance into the Japanese market SM:Super Market Foreign DGS SM GMS CVS Electronics New source of profits GMS:General Merchandise Store CVS:Convenience Store DGS:Drug Store 7

8 Market Ranking Net sales (Millions of yen) Net sales FY 2013/3 Net sales FY 2014/3(F) Location (HQ) Business segment Ain Pharmaciez INC. 154, ,000 (+17,440) Hokkaido Dispensing pharmacy, Drug and cosmetic store Nihon Chouzai Co., Ltd. 139, ,196 (+26,730) Tokyo Dispensing pharmacy, Staffing services, Manufacture and sales of pharmaceutical products Sogo Medical Co., Ltd. 86, ,044 (+13,386) Fukuoka Dispensing pharmacy, Medical institution support Qol Co., Ltd. 76, ,000 (+23,217) Tokyo Dispensing pharmacy, CSO business (other business) Medical System Network Co. Ltd. 54,827 63,164 (+8,337) Hokkaido Dispensing pharmacy, Pharmaceutical product network Total 512, , ,110 8

9 National drug price system and the environment Drug price:a Previous NHI drug price(tax included) Market price(b) B+(A 2%)=New NHI drug price(yen) New NHI drug price (tax included) Dispensing pharmacies: 55,000 stores nationwide NHI drug price revision occurred three years in a row decrease in income(especially individual pharmacies) Increase in M&A opportunities Apr Apr Oct Apr NHI drug price revision: NHI drug price revision NHI drug price revision NHI drug price revision 6% down Consumption tax Consumption tax Increase in M&A 5% 8% 8% 10% 2 years 18 months 6 months 9

10 Earnings structure Common dispensing pharmacy 10,000 yen per prescription (average) Technical fee 25% Drug margin 10% Profit 2,500 yen 750 yen Prescription drug sales 75% Point Sales of pharmacy business =Price per prescription Number of prescription Pharmacy income =Technical fee+(prescription drug sales Drug margin (%)) 10

11 Agenda Market Environment Our Strength Business Strategy Earnings Forecast Our Stores 11

12 Store deployment strategy Expansion of pharmacies that accept prescriptions from any medical institution Common deployment style Medical institution One-on-one Pharmacy Pharmacy QOL Pharmacy Pharmacy Pharmacy Medical Medical Pharmacy Pharmacy Medical institution institution institution Pharmacy Pharmacy Pharmacy Pharmacy LAWSON+QOL Pharmacy West Japan Railway Company Group Medical institution BIC CAMERA Medical institution 12

13 Establishing the dual business model Pharmacy and other business Qol A wide variety of businesses Pharmacy business Other business 1,000 CMRs QOL Pharmacy LAWSON CSO business Education support business BIC CAMERA West Japan Railway Company Group Clinical trial business Hospital shop business Publishing-related business *CSO: Contract Sales Organization 13

14 Agenda Market Environment Our Strength Business Strategy Earnings Forecast Our Stores 14

15 Our strength Maximizing the Qol Groups corporate value Aiming at No.1 in quality and quantity in the pharmacy market Pharmacy ++ Other ++ +α == Qol Collaboration with other industries Enhancing pharmacy system Call centre (24 hours) Others CSO business Clinical-trial business Others M&A Training pharmacist (categorized by disorder) IT investment Foresight Social value Others Net sales 300 billion yen Pharmacy business 240 billion yen Other business 60 billion yen Framework + Innovative High profit + Synergy effect Added values + Foresight Affirmative management + Maximizing shareholders value 15

16 Achieving net sales of 300 billion yen Plan Pharmacy business Other business Qol (consolidated) Net sales 240 billion yen 60 billion yen 300 billion yen Operating income 12 billion yen (5%) 12 billion yen (20%) 24 billion yen(8%) QOL Pharmacy LAWSON BIC CAMERA West Japan Railway Company Group M&A APO PLUS STATION 1,000 CMRs Staffing services (pharmacist, nurse etc.) Qol RD(clinical-trials) Changes in promotion (pharmaceuticals) Business Process Outsourcing(BPO) Expansion of pharmacy market Expansion of generic drug Increase in cost of regular MRs Intensified competition of inventing new medicine Qol s business portfolio 16

17 Achieving No.1 company in the market IT system Community medical cooperation Home healthcare The advanced system to achieve net sales of 300 billion yen The current system triggered inventing the QOL card Consumer-oriented pharmacy QOL QOL Pharmacy Pharmacy QOL QOL Pharmacy Pharmacy Customer Customer Information Information CRM CRM QOL QOL Pharmacy Pharmacy IT waiting room QOL card TV-phone health consultation Consultation at pharmacy Internet shopping function Electronic prescription QOL QOL Pharmacy Pharmacy QOL QOL Pharmacy Pharmacy Call centre Data centre 24 hours 365days available Electronic drug diary Certificated pharmacist Training specialists by specialty CRM:Customer Relationship Management: the strategy that a company uses to handle customer interactions 17

18 Training pharmacists Address highly advanced medical treatments QOL proprietary certification program ~Equip pharmacists with the latest medical information and specialized knowledge ~ 2011 Common 13 Specialties 525 pharmacists certificated 2011 Home healthcare Specialty 110 pharmacists certificated 2012 Chinese herbal medicine and OTC drug Specialty initiated (People) Certificated On training Total Chronic disorder Other disorder Cancer Cancer (expertise) Home healthcare Chinese herbal medicine OTC drug Total , ,253 1, , Expertise Cancer Certification Program initiated 18

19 Pharmacy conglomerate Our deployment strategy Consumer-oriented deployment Pharmacy business receive prescriptions from any medical institutions Enhancing pharmacists skills QOL Pharmacy LAWSON BIC CAMERA West Japan Railway Company Group Pharmacies are going to the next stage Common disorder Highly-advanced medical treatment Chronic disorder New pharmacy Sharing information via QOL card 19

20 Changes in consumer behavior One-on-one pharmacy Pharmacies receive prescriptions from any medical institutions (2012) 21.5% 22.4% LAWSON BIC CAMERA West Japan Railway Company Group Number of prescriptions are steadily increasing (2013) (2013) Expanding choices by introducing prescription 17.0% application 16.6% (2012) Source: DENTSU Key Performance Indicator research,

21 LAWSON business Improving brand image Net sales:yoy: Tripled Net sales/store:over 20 million yen/month expanded to seven stores(yoy:3 stores) FY2014/3 2Q new stores:4 stores(open: 5 stores, Closed: 1store, Cumulative total: 34 stores) Profitability-oriented deployment Profitability has improved since FY2014/3 1Q CVS:30 stores Profitability has improved since FY2014/3 1Q Pharmacy:22 stores New patient rate:30% (average) (Millions of yen) 700 CVS+Pharmacy FY2014/3 Net sales FY2013/3 Net sales FY2014/3 Stores FY2013/3 Stores (Stores) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 0 21

22 LAWSON business Profitability-oriented strategy Profitability has improved since FY2014/3 1Q CVS: 22 stores Pharmacy:12 stores Waste loss has improved since 1Q: 28stores Personnel ratio has improved since 1Q :26 stores SG and A ratio has improved since 1Q:24 stores Flagship Stores (Improved in profitability) (Thousands of yen) LAWSON QOL Pharmacy Net Sales Transitions 8,000 6,000 Apr-Mar Increase in income Apr-Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr-Sep 4,000 Apr-Sep 2,000 Apr-Sep 0 Apr-Mar -2,000 Shiroyama Trust Tower FY2013/3 Shiroyama Trust Tower FY2014/3 Toyosu 3- Chome FY2013/3 Toyosu 3- Chome FY2014/3 Shibuya 1- Chome FY2013/3 Shibuya 1- Chome FY2014/3-4,000 22

23 BIC CAMERA Yurakucho Store : Net sales: over 100 million yen (result of increasing brand awareness) Medical institutions: increased up to 3,000 institutions receiving over 1,000 prescriptions /month Shinjuku Higashiguchi Store (Bicqlo): Transferred to the basement floor and the number of prescription is increasing. (Medical institutions ) The Total Figure of BIC CAMERA Stores (Prescriptions) 5,000 4,500 4,000 3,752 3,983 Medical institutions 4,162 4,354 Prescriptions 4,563 2,684 2,750 2,700 2,650 3,500 3,525 2,600 3,000 2,528 2,550 2,500 2,488 2,505 2,500 2,000 2,464 2,450 1,500 2,406 2,400 1,000 2, , ,250 23

24 Collaboration with West Japan Railway Company Group Acquired two stores Nov Acquired Nishiumeda Store and Suita Store FY2013/3 Net sales:about 700 million yen (two stores total) Price per prescription:over 12,000 yen QOL Pharmacy (about 20 stores near Osaka loop line), Strategic dominance with Station QOL Pharmacy Station QOL Pharmacy OTC sales 300~400 (millions of yen)/month Number of prescriptions:steadily increasing (Medical institutions) 800 Station QOL Pharmacy Japan Railway Osaka Store (Prescriptions) 600 Station QOL Pharmacy Japan Railway Osaka Store Medical institutions Prescriptions

25 Huge change in MR activities Year Revision of Code of Pharmaceutical Marketing practices Affirmative approach to pharmaceutical companies The previous market environment is corrupting Increase in long-listed items and generic drugs Increase in general prescribing Not MR but EMR Promotion to sales activities APO PLUS STATION immediately adapted to the environment FY 2014/3 V-line recovery 25

26 CSO business Making rapid progress Number of domestic MRs:Maximum of 64,000 MRs Changes in promoting activities of pharmaceutical companies Lacking in new drugs Long-term listed drugs Generic drugs Various types of MRs as the result of developing new medicine of unmet medical needs category has been progressing APO PLUS STATION meets the needs MRs are shifting from new drugs Decreasing expenditure of MRs Number of companies Number of MRs Comparison with 2008 YoY Cumulative total , % 100.0% Domestic pharmaceutical companies , % 57.3% Foreign pharmaceutical companies CSO companies Wholesalers ,662 3, % 167.4% 37.1% 5.0% 0.6% An upward tendency Source: MR White Paper,

27 Status quo of CMR Recruiting more CMRs Net sales of APO PLUS STATION:3,356 million yen (FY 2014/3 2Q cumulative total), Operating income: going into the black FY 2014/3 Net sales of other business: 70% is occupied by APO PLUS STATION Operating income ratio: 20%(after business stabilization) 1,000 CMRs Training period of CMRs:2 months, 300 hours prior cost has been accounted CMR transfer to improve profitability CMR allocation to adjust to life-cycle management of pharmaceutical companies Number of CMRs Number of CMRs (plan) Recruiting more CMRs as the demand is isincreasing Nov 2012 Mar 2013 Apr 2013 June 2013 Sep /3(E) 2015/3(E) 2016/3(E) 27

28 Affirmative M&A Strength of Qol FY2013/3 3Q Acquisition of Lake Medical Co., Ltd.: 2 new stores FY2014/3 1Q Acquisition of Alpharm Co., Ltd. : M&A 1 store and planning to deploy some more stores Enhancing corporate value after M&A and establishing support of pharmacists dispatch Looking for some M&A in the 2H:Establishing M&A specialized department M&A is expected to increase in the next term as well. Sto re s A c qu ire d (Stores) /3 1H 18,041 million yen 2013/3 M&A: /3 1H 23,624 million yen 2014/3 M&A: /3 2014/ April May June July August September October November December January February March 28

29 Paradigm Shift Becoming a company that can adopt to the market change Stable (source of profit) <Organic growth> QOL Pharmacy Payout time <Growth> APO PLUS STATION Investment period <Innovation> LAWSON One-on-one pharmacies are steadily growing New stores facing university hospitals contribute to raising the prescription income Enhancing M&A:increase in opportunities Exploring the new market:investment for the future (LAWSON etc.) Profit-oriented deployment(lawson) 1,000 CMRs(APO PLUS STATION) BIC CAMERA West Japan Railway Company Group 29

30 Agenda Market Environment Our Strength Business Strategy Earnings Forecast Our Stores 30

31 FY2014/3 1H earnings highlight (Millions of yen) FY 2013/3 FY 2013/3(1H) FY2014/3(1H) YoY Increase (decrease) FY2014/3 (1H forecast) Net sales 76,783 33,967 49, % 15,055 47,500 Operating income 2, , % Ordinary income 2, , % Net income 1, % EPS(yen) % Number of stores (LAWSON) (30) (Unit:millions of yen, thousand prescriptions, yen) (18) (34) (16) Net sales of pharmacy business FY 2013/3(1H) FY 2014/3(1H) Increase (decrease) YoY Price per prescription FY 2013/3(1H) FY 2014/3(1H) Increase (decrease) YoY Existing stores 12,221 13,652 1, % Existing stores 11,116 10, % New stores 858 2,007 1, % New stores 6,375 9,734 3, % M&A 18,041 23,624 5, % M&A 8,770 9, % Total 31,121 39,284 8, % Total 9,456 9, % Number of prescriptions FY 2013/3(1H) FY 2014/3(1H) Increase (decrease) YoY M&A(pharmacy) of net sales:48.2% (consolidated) Existing stores 1,099 1, % Continuing affirmative M&A New stores % M&A 2,057 2, % Total 3,291 3, % 31

32 Consolidated Statements of Income (Millions of yen) 13/3(1H) 14/3(1H) Increase (decrease) Point Net sales YoY:+44.3% Net sales Cost (Pharmacy business) (Other business) % of sales 33,967 32,845 1,121 30, % 49,022 44,434 4,587 43, % 15,055 (11,589) (3,465) 13, % Pharmacy business +11,589 million yen Existing stores +1,431 million yen, New store +1,148 million yen, M&A +5,584 million yen LAWSON: +1,925 million yen(sales), OTC: +272 million yen, Total income SG and A expenses (Personnel expenses) % of sales % of sales (Personnel expenses) (Others) 5,436 3, % 2, % 1,335 1,565 7,476 5, % 4, % 1,978 2,242 (2,040) 1, % 1, % (643) (677) Shop: +1,205 million yen Other business +3,465 million yen Cause: APO PLUS STATION Cost to sales ratio YoY:-0.4% Pharmacy business +11,208 million yen FY 2013/3(1H):89.6% FY 2014/3(1H):91.5% +1.9% Other business +2,117 million yen Operating income % of sales % 1, % % FY 2013/3 (1H):90.8% FY 2014/3 (1H):68.3% -22.5% Operating income YoY:+67.8% Ordinary income Net income % of sales % 283 1, % % 77 Pharmacy business +398 million yen:1,504 million yen (YoY: +36.0%) Other business (going into the black):32 million yen Net personnel expenses % of sales 0.8% 6, % 9, % 2,683 Staffing services business of APO PLUS STATION is steadily growing CMR:Recruiting more CMRs as the demand is increasing % of sales 19.9% 19.3% -0.6% Total personnel expenses Recruiting 264 pharmacists, affirmative M&A 32

33 Consolidated Balance Sheets (Millions of yen) Cash and deposits FY 13/3 5,347 FY 14/3(1H) 6,234 Total assets +7,448 million yen Current assets +2,821 million yen Notes and accounts receivabletrade Inventory Total current assets Goodwill Total noncurrent assets Total assets 8,240 3,497 18,575 10,922 22,200 40,790 9,089 4,250 21,396 15,021 26,821 48,238 Notes and accounts receivable-trade +848 million yen Merchandise and finished goods +634 million yen Noncurrent asset +4,621 million yen Goodwill +4,099 million yen Total liabilities +3,836 million yen Interest-bearing liabilities +2,324 million yen Loans payable Total current liabilities Long-term loans payable Total noncurrent liabilities 3,904 18,292 7,910 9,321 4,077 20,095 8,893 11,355 (12,898 million yen 15,222 million yen) Short-term loans payable -23 million yen Bond +925 million yen Current portion of long-term debt +182 million yen Total liabilities 27,614 31,450 Long-term loans payable +983 million yen Current portion of long-term loans payable +196 million yen Capital stock Capital surplus Retained earnings Treasury stock Total shareholders equity 1,126 7,161 5, ,013 2,828 9,087 5, ,761 Net D/E ratio:0.54 times (FY 2013/3:0.58 times) (Interest-bearing liabilities-cash and deposits)/shareholders' equity Net assets +3,611 million yen Total net assets 13,175 16,787 Capital stock +1,702 million yen Total liabilities and net assets 40,790 48,238 Capital surplus +1,925 million yen 33

34 Consolidated Statements of Cash Flows (Millions of yen) FY2013/3 1H FY2014/3 1H Income before income taxes and minority interests: 994 million yen Net cash provided by (used in) operating activities Depreciation and amortization: 720 million yen Amortization of goodwill: 570 million yen Net cash provided by (used in) investing activities 1,783 5,231 Purchase of property, plant and equipment: 680 million yen Net cash provided by (used in) financing activities 72 5,110 Purchase of investments in subsidiaries: 4,266 million yen Proceeds from long-term loans payable: Net increase (decrease) in cash and cash equivalents 1, ,922 million yen Repayment of long-term loans payable: Cash and cash equivalents at the beginning of the period 2,984 5,268 1,958 million yen Proceeds from issuance of common stock: Cash and cash equivalents at the end of the period 1,984 6,107 3,381 million yen Expansion of investment capability 34

35 FY2014/3 earnings forecast Achieving net sales of 100 billion yen (Millions of yen) FY 2012/3 FY 2013/3 FY 2014/3(F) YoY Increase (decrease) Net sales 66,201 76, , % 23,216 Operating income 3,308 2,812 3, % 687 Ordinary income 3,238 2,829 3, % 570 Net income 1,560 1,349 1, % 50 EPS(yen) % Dividend(yen) Number of stores (LAWSON) (8) (30) (100) (70) (Millions of yen) 1 2 FY 2014/3 FY 2014/3 1H (Forecast) 2H (1-2) Initial plan (2H) Net sales 100,000 49,022 50,977 52,500 Operating income 3,500 1,016 2,483 2,600 Ordinary income 3,400 1,068 2,331 2,500 Net income 1, ,038 1,100 35

36 FY2014/3 Net sales and Income Forecast Net sales 100 billion yen Pharmacy business 90 billion yen Operating income 3.5 billion yen Other business 10 billion yen 90 Billion CSO 事 業 yen Qol L A W S O N West Japan Railway Company Group BIC CAMERA 3.5 billion yen 10 billion yen CSO business Other 36

37 Store location by prefecture Hokkaido 5 stores Shizuoka 4 stores Tottori 2 stores Oita 2 stores Aomori 2stores Yamanashi Okayama 7 stores Okinawa 2 stores Iwate Nagano 11 stores Shimane 3 stores Akita 9 stores Aichi 22 stores Hiroshima 8 stores Miyagi 19 stores Gifu 6 stores Yamaguchi Yamagata 6 stores Toyama 2 stores Kagawa 7 stores Fukushima 30 stores Ishikawa 3 stores Tokushima 4stores Ibaraki 25 stores Fukui 3 stores Kochi 2 stores Tochigi 22 stores Shiga 18 stores Ehime 1 store Gunma 3 stores Mie 1 store Fukuoka 5 stores Saitama 35 stores Nara 1 store Miyazaki Chiba 27 stores Wakayama Kagoshima Tokyo 96 stores Osaka 34 stores Nagasaki 2 stores Kanagawa 29 stores Kyoto 9 stores Kumamoto Niigata 3 stores Hyogo 10 stores Saga (By region) Kanto: 237 stores 49.4% Kinki : 73 stores 15.2% Tohoku: 66 stores 13.8% Chubu: 54 stores 11.3% Chugoku:20 stores 4.2% Shikoku: 14 stores 2.9% Kyusyu: 11stores 2.3% Hokkaido:5 stores 1.0% LAWSON:35 stores BIC CAMERA:4 stores West Japan Railway Company Group:1 store Shop:49 shops 480 Stores As of Nov

38 Generic drug ratio 32.0% 31.0% 30.0% 30.6% 30.7% 30.9% 31.0% 31.4% 31.6% 29.7% 29.8% 30.1% 30.2% FY2013/3 30.4% 30.5% FY2014/3 30.3% 29.0% 28.9% 29.1% 28.3% 28.0% 27.6% 27.0% 26.8% 26.0% 25.0% 24.0% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 38

39 Transitions Stores, sales and income (Profit: Millions of yen) (Net sales: Millions of yen) 8, ,000 7,000 Net sales Operating income Net income , , ,000 6, ,783 80,000 5, ,201 70,000 4, ,305 60,915 60,000 Liste d o n He rc u le s ,010 3,308 3,500 50,000 3,000 38,002 2,804 2,812 40, (stores) 2,000 24,827 2,031 30,000 1, , , ,137 1,560 1,349 1,400 20,000 10, /3 2008/3 2009/3 2010/3 2011/3 2012/3 2013/3 2014/3(E) 0 39

40 Financial indicator Indicator (%) ROE ROIC Dividend Payout Ratio 株 主 資 本 利 益 率 (ROE) 投 下 資 本 利 益 率 (ROIC) 配 当 性 向 (Dividend Payout Ratio) FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 FY 2008 FY

41 Agenda Market Environment Our Strength Business Strategy Earnings Forecast Our Stores 41

42 LAWSON+QOL Pharmacy 42

43 Station QOL Pharmacy Japan Railway Osaka Store Façade 43

44 Station QOL Pharmacy Japan Railway Osaka Store Inside 44

45 QOL Pharmacy Kasai Store (Hyogo) 45

46 Key words Ecology and Disaster Risk Management Solar panel Storage battery (lithium ) Roof planting 46

47 QOL Pharmacy Kasai Store Pharmacy recorder Bacteria elimination (nanoe) Electricity monitor 47

48 QOL Pharmacy Kasai Store Storage Generator Rain cellar (drinkable) 400l Emergency lightning Rain cellar left:200l right:150l 48